FACTS:

In this case, Del Monte Corporation and Philippine Packing Corporation (Philpack) filed a complaint against Sunshine Sauce Manufacturing Industries for trademark infringement and unfair competition. Del Monte granted Philpack the right to manufacture and sell agricultural products, including catsup, using the Del Monte trademark and logo in the Philippines. Del Monte also authorized Philpack to register the Del Monte catsup bottle configuration with the Philippine Patent Office. Sunshine, on the other hand, was issued a Certificate of Registration to manufacture and sell various kinds of sauce, including catsup, under the brand name "Sunshine Fruit Catsup."

Del Monte and Philpack alleged that Sunshine was using their exclusively designed bottles and a logo that was confusingly similar to Del Monte's. Sunshine, however, denied the allegations and claimed that it had stopped using Del Monte bottles and that its logo was substantially different. The Regional Trial Court dismissed the complaint, finding no substantial similarities between the logos, that Sunshine had ceased using Del Monte bottles, and no malice or bad faith on Sunshine's part. The dismissal was affirmed by the Court of Appeals.

However, the Supreme Court disagreed with the lower courts' conclusion. The Court stated that a side-by-side comparison is not the sole determinant of similarity and that the average buyer does not meticulously examine each product. The Court emphasized that even with minute differences, similar labels can confuse consumers. Thus, the Court held that there was a possibility of confusion between the two products and remanded the case for further proceedings.

ISSUES:

1. Whether there is infringement or unfair competition between the products of Del Monte and Sunshine.

2. Whether the respondent court considered the relevant factors in determining the likelihood of confusion.

3. Whether the private respondent is guilty of trademark infringement.

4. Whether the private respondent is guilty of unfair competition.

5. Whether the court can award damages when the actual amount of damages cannot be determined with reasonable certainty.

6. Whether the court can award nominal damages in cases where a property right has been invaded.

RULING:

1. The court finds that there is infringement and unfair competition between the products of Del Monte and Sunshine. The court disagrees with the lower courts' conclusion that there was no infringement or unfair competition, noting that the lower courts failed to see the total picture and only focused on the minute differences between the labels. The court emphasizes that the ordinary buyer does not usually have the time or inclination to carefully scrutinize the labels and that confusion can arise from the general impression the labels create. It also highlights that the focus should be on the likelihood of confusion in the mind of the casual purchaser. Considering these factors, the court finds that the Sunshine label is a colorable imitation of the Del Monte trademark.

2. The court notes that the respondent court failed to consider several factors in determining the likelihood of confusion, such as the age, training, and education of the usual purchaser, the nature and cost of the article, and the conditions under which it is usually purchased. The court emphasizes that the cost of the goods largely determines the attitude of the purchaser and that mass products and low-priced articles are bought without great care. The court criticizes the respondent court for not taking these factors into consideration which should have affected its conclusion.

3. The private respondent is guilty of trademark infringement because it used the petitioner's registered trademark, despite the configuration of the bottle being registered in the Supplemental Register, which does not give rise to a presumption of ownership and exclusive use.

4. The private respondent is guilty of unfair competition because it used the petitioner's bottle to market a similar product, showing bad faith and intention to capitalize on the petitioner's reputation and goodwill.

5. Yes, when the actual amount of damages cannot be readily ascertained with reasonable certainty, the court may award damages based on a reasonable percentage of the defendant's gross sales or the value of services in connection with which the mark or trade name was used in the infringement. If the actual intent to mislead or defraud the complaining party is proven, the damages may be doubled. In addition, the court may grant injunction upon proper showing.

6. Yes, the court can award nominal damages in every obligation arising from any source enumerated in Article 1157 of the Civil Code or in every case where a property right has been invaded.

PRINCIPLES:

• Side-by-side comparison is not the final test of similarity in determining infringement or unfair competition.

• The general impression of the ordinary purchaser and the likelihood of confusion are key considerations.

• The court must consider the mark as a whole and not dissect it.

• The court cannot demand that purchasers be educated and must take their carelessness for granted.

• A confusing similarity will justify the intervention of equity.

• The defendant in cases of infringement often employs enough points of similarity to confuse the public with enough points of difference to confuse the courts.

• The buyer's recollection of the appearance of the product is important in making purchases.

• The court should be guided by its first impression in assessing the likelihood of confusion.

• The court must consider factors such as the cost of the goods, the nature of the product, and the conditions of purchase in determining likelihood of confusion.

• When a manufacturer chooses to use similar colors, letters, and symbols as a competitor's trademark without a reasonable explanation, it can be inferred that it was done deliberately to deceive.

• When there is doubt, the court should resolve it against the newcomer and in favor of the manufacturer who has already established favor with the public.

• Registration in the Principal Register gives rise to a presumption of the validity of the registration, ownership of the mark, and exclusive use. Registration in the Supplemental Register only proves actual use and is not subject to opposition or a basis for an action for infringement.

• Registration in the Principal Register is constructive notice of the registrant's claim of ownership, while registration in the Supplemental Register is merely proof of actual use.

• The intentional use of another's trademark or trade dress without permission, with the goal of misleading consumers and capitalizing on the reputation and goodwill of the original product, constitutes unfair competition.

• In determining unfair competition, factors such as evidence of intent to deceive, the extent of similarity between the competing products, the efforts made to differentiate the products, and the possibility of confusion among consumers are considered.

• In a trademark infringement case, the court may order the cancellation of the infringer's registration and the withdrawal of products bearing the infringing mark from the market.

• In assessing damages for trademark infringement, the injured party may recover either the reasonable profit they would have made or the actual profit made by the infringer. If the measure of damages cannot be readily ascertained, the court may award damages as it deems just and equitable.

• When the actual amount of damages cannot be readily ascertained, the court may award damages based on a reasonable percentage of the defendant's gross sales or the value of services in connection with the infringement.

• When actual intent to mislead or defraud is proven, the court may double the damages.

• In cases where a property right has been invaded, the court may award nominal damages.

• The court may grant injunction upon proper showing.