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SUPREME COURT REPORTS ANNOTATED VOLUME 437

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Case Title:
MCDONALDS CORPORATION and
MCGEORGE FOOD INDUSTRIES,
INC., petitioners, vs. L.C. BIG MAK
BURGER, INC., FRANCIS B. DY,
EDNA A. DY, RENE B. DY, WILLIAM B.
DY, JESUS AYCARDO, ARACELI
AYCARDO, and GRACE HUERTO,
respondents.
Citation: 437 SCRA 10
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10

SUPREME COURT REPORTS ANNOTATED

McDonalds Corporation vs. L.C. Big Mak Burger, Inc.
G.R. No. 143993. August 18, 2004.

MCDONALDS CORPORATION and MCGEORGE FOOD

INDUSTRIES, INC., petitioners, vs. L.C. BIG MAK BURGER,
INC., FRANCIS B. DY, EDNA A. DY, RENE B. DY, WILLIAM B.
DY, JESUS AYCARDO, ARACELI AYCARDO, and GRACE
HUERTO, respondents.
Remedial Law; Appeals; A party intending to appeal from a judgment
of the Court of Appeals may file with the Supreme Court a petition for
review under Section 1 of Rule 45 raising only questions of law; Question of
Law and Question of Fact Distinguished.A party intending to appeal
from a judgment of the Court of Appeals may file with this Court a petition
for review under Section 1 of Rule 45 raising only questions of law. A
question of law exists when the doubt or difference arises on what the law
is on a certain state of facts. There is a question of fact when the doubt or
difference arises on the truth or falsity of the alleged facts.
Trademarks and Trade Names; Infringement; Elements to Establish
Trademark Infringement.To establish trademark infringement, the
following elements must be shown: (1) the validity of plaintiff s mark; (2)
the plaintiff s ownership of the mark; and (3) the use of the mark or its
colorable imitation by the alleged infringer results in likelihood of
confusion. Of these, it is the element of likelihood of confusion that is the
gravamen of trademark infringement.
Same; Same; A mark is valid if it is distinctive and thus not barred
from registration under Section 4 of RA 166; Once registered, not only the
marks validity but also the registrants ownership of the mark is prima
facie presumed.A mark is valid if it is distinctive and thus not barred
from registration under Section 4 of RA 166. However, once registered, not
only the marks validity but also the registrants ownership of the mark is
prima facie presumed.
Same; Same; A mark which is not registered in the Principal Register
and thus not distinctive has no real protection.The Court also finds that
petitioners have duly established McDonalds exclusive ownership of the
Big Mac mark. Although Topacio and the Isaiyas Group registered the
Big Mac mark ahead of McDonalds, Topacio, as petitioners disclosed,
had already assigned his rights to McDonalds. The Isaiyas Group, on the
other hand, registered its trademark only in the Supplemental Register. A
mark which is not registered in the Principal Register, and thus not dis_______________
*

FIRST DIVISION.

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McDonalds Corporation vs. L.C. Big Mak Burger, Inc.

11

tinctive, has no real protection. Indeed, we have held that registration in

the Supplemental Register is not even a prima facie evidence of the
validity of the registrants exclusive right to use the mark on the goods
specified in the certificate.
Same; Same; Confusion of Goods and Confusion of Business
Distinguished.Section 22 covers two types of confusion arising from the
use of similar or colorable imitation marks, namely, confusion of goods
(product confusion) and confusion of business (source or origin confusion).
In Sterling Products International, Incorporated v. Farbenfabriken Bayer
Aktiengesellschaft, et al., the Court distinguished these two types of
confusion, thus: [Rudolf] Callman notes two types of confusion. The first is
the confusion of goods in which event the ordinarily prudent purchaser
would be induced to purchase one product in the belief that he was
purchasing the other. x x x The other is the confusion of business: Here
though the goods of the parties are different, the defendants product is
such as might reasonably be assumed to originate with the plaintiff, and
the public would then be deceived either into that belief or into the belief
that there is some connection between the plaintiff and defendant which,
in fact, does not exist.
Same; Same; Two Tests in Determining Likelihood of Confusion, the
Dominancy Test and the Holistic Test.In determining likelihood of
confusion, jurisprudence has developed two tests, the dominancy test and
the holistic test. The dominancy test focuses on the similarity of the
prevalent features of the competing trademarks that might cause
confusion. In contrast, the holistic test requires the court to consider the
entirety of the marks as applied to the products, including the labels and
packaging, in determining confusing similarity.
Same; Same; Court rejected the holistic test in Societe Des Produits
Nestl S.A. vs. Court of Appeals.In the 2001 case of Societe Des Produits
Nestl, S.A. v. Court of Appeals, the Court explicitly rejected the holistic
test in this wise: [T]he totality or holistic test is contrary to the elementary
postulate of the law on trademarks and unfair competition that confusing
similarity is to be determined on the basis of visual, aural, connotative
comparisons and overall impressions engendered by the marks in
controversy as they are encountered in the realities of the marketplace.
Same; Same; While proof of actual confusion is the best evidence of
infringement its absence is inconsequential.Petitioners failure to present
proof of actual confusion does not negate their claim of trademark
infringement. As noted in American Wire & Cable Co. v. Director of
Patents, Section 22 requires the less stringent standard of likelihood of
confusion only. While proof of actual confusion is the best evidence of
infringement, its absence is inconsequential.
12

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SUPREME COURT REPORTS ANNOTATED

McDonalds Corporation vs. L.C. Big Mak Burger, Inc.

Same; Unfair Competition; Essential Elements of Unfair Competition.

The essential elements of an action for unfair competition are: (1)
confusing similarity in the general appearance of the goods, and (2) intent
to deceive the public and defraud a competitor. The confusing similarity
may or may not result from similarity in the marks, but may result from
other external factors in the packaging or presentation of the goods. The
intent to deceive and defraud may be inferred from the similarity of the
appearance of the goods as offered for sale to the public. Actual fraudulent
intent need not be shown.
Same; Same; Trademark infringement is a form of unfair competition;
Trademark infringement constitutes unfair competition when there is not
merely likelihood of confusion but also actual or probable deception on the
public because of the general appearance of the goods.Unfair competition
is broader than trademark infringement and includes passing off goods
with or without trademark infringement. Trademark infringement is a
form of unfair competition.Trademark infringement constitutes unfair

competition when there is not merely likelihood of confusion, but also

actual or probable deception on the public because of the general
appearance of the goods. There can be trademark infringement without
unfair competition as when the infringer discloses on the labels containing
the mark that he manufactures the goods, thus preventing the public from
being deceived that the goods originate from the trademark owner.
Same; Same; Passing off (or palming off) takes place where the
defendant, by imitative devices on the general appearance of the goods,
misleads prospective purchasers into buying his merchandise under the
impression that they are buying that of his competitors.Passing off (or
palming off) takes place where the defendant, by imitative devices on the
general appearance of the goods, misleads prospective purchasers into
buying his merchandise under the impression that they are buying that of
his competitors.Thus, the defendant gives his goods the general
appearance of the goods of his competitor with the intention of deceiving
the public that the goods are those of his competitor.

PETITION for review on certiorari of the decision and resolution of

the Court of Appeals.
The facts are stated in the opinion of the Court.
Abello, Concepcion, Regala and Cruz for petitioners.
Vicente M. Joyas for respondents.
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13

McDonalds Corporation vs. L.C. Big Mak Burger, Inc.

CARPIO, J.:

The Case
1

This is a petition for review of

the Decision dated 26 November
2
1999 of the Court of Appeals finding respondent L.C. Big Mak
Burger, Inc. not liable for trademark infringement and unfair
competition and ordering petitioners to pay respondents P1,900,000
in damages, and of its Resolution dated 11 July 2000 denying
reconsideration. The Court
of Appeals Decision reversed the 5
3
September 1994 Decision of the Regional Trial Court of Makati,
Branch 137, finding respondent L.C. Big Mak Burger, Inc. liable for
trademark infringement and unfair competition.
The Facts
Petitioner McDonalds Corporation (McDonalds) is a corporation
organized under the laws of Delaware, United States. McDonalds
operates, by itself or through4 its franchisees, a global5 chain of fastfood restaurants. McDonalds owns a family of marks including the6
Big Mac mark for its double-decker hamburger sandwich.
McDonalds registered this trademark with the United
_______________
Under Rule 45 of the 1997 RULES OF CIVIL PROCEDURE.
Penned by Associate Justice Eloy R. Bello, Jr. with Presiding Justice Jainal D.
Rasul and Associate Justice Ruben T. Reyes concurring.
3 Penned by Judge Santiago Ranada, Jr.
4 Itself a registered service mark.
5 Some of McDonalds registered marks representing food items (f) and services
(s) are: McDONALDS HAMBURGERS (s); McDONALDS (f); RONALD
McDONALD (s); McDONALDLAND (s); McCHEESE & DESIGN (f); EGG
McMUFFIN (s); EGG McMUFFIN (f); McDONALD-LAND (f); McDONALDS &
ARCHES (s); McFEAST (f); McCHICKEN (f); McDONALDS & ARCHES (f);
McDONUTS (f); McPIZZA (f); McPIZZA (s); McHAPPY DAY (s); MINI MAC (s);
1
2

McDOUBLE (f); TOGETHER-McDONALDS & YOU (s); CHICKEN McNUGGETS

(f); McDONALDS & YOU (s); SUPER MAC (f); McSNACK (s); MAC FRIES (f);
McRIB (f); MAPLE McCRISP (f); LITE MAC (f); BIG MAC (s); CHICKEN
McSWISS (f); McMUFFIN (f); McD.L.T. (f). (McDonalds Corporation v. McBagels,
Inc., 649 F. Supp. 1268 [1986]).
6 Aside from Big Mac sandwiches, McDonalds menu includes cheeseburgers,
special sandwiches, fried french potatoes, chicken nuggets, fried
14

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SUPREME COURT REPORTS ANNOTATED

McDonalds Corporation vs. L.C. Big Mak Burger, Inc.
7

States Trademark Registry on 16 October 1979. Based on this

Home Registration, McDonalds applied for the registration of the
same mark in the Principal Register of the then Philippine Bureau
of Patents, Trademarks and Technology (PBPTT), now the
Intellectual Property Office (IPO). Pending approval of its
application, McDonalds introduced its Big Mac hamburger
sandwiches in the Philippine market in September 1981. On 18
July 1985, the PBPTT allowed registration of the Big Mac mark in
the Principal Register based on its Home Registration in the United
States.
Like
its other marks, McDonalds
displays the Big Mac mark in
8
9
items and paraphernalia in its restaurants, and in its outdoor and
indoor signages. From 1982 to 1990, McDonalds spent P10.5
million10 in advertisement for Big Mac hamburger sandwiches
alone.
Petitioner McGeorge Food Industries (petitioner McGeorge),
a
11
domestic corporation, is McDonalds Philippine franchisee.
Respondent L.C. Big Mak Burger, Inc. (respondent corporation)
is a domestic corporation which operates fast-food outlets
and snack
12
vans in Metro Manila and nearby provinces. Respondent
corporations
menu includes hamburger sandwiches and other food
13
items. Respondents Francis B. Dy, Edna A. Dy, Rene B. Dy,
William B. Dy, Jesus Aycardo, Araceli Aycardo, and Grace Huerto
(private respondents) are the incorporators,
stockholders and
14
directors of respondent corporation.
On 21 October 1988, respondent corporation applied with the
PBPTT for the registration of the Big Mak mark for its hamburger
sandwiches. McDonalds opposed respondent corporations
application on the ground that Big Mak was a colorable imitation
_______________
fish sandwiches, shakes, hot pies, sundaes, softdrinks, and other beverages.
7Certificate of Registration No. 1,126,102.
8 Table napkins, tray liners, cups and food wrappers.
9 Labels, promotional items and packages.
10 TSN (Arlene Manalo), 26 July 1990, pp. 34-35.
11 McDonalds and petitioner McGeorge are referred to as petitioners.
12 Rizal, Laguna, Bulacan and Quezon.
13 E.g. pizzas, noodles, siopaos, hotdog sandwiches, ham sandwiches, fish
burgers, fruit juices, softdrinks and other beverages.
14Respondent corporation and private respondents are referred to as
respondents.
15

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McDonalds Corporation vs. L.C. Big Mak Burger, Inc.

of its registered Big Mac mark for the same food products.
McDonalds also informed respondent Francis Dy (respondent Dy),
the chairman of the Board of Directors of respondent corporation, of
its exclusive right to the Big Mac mark and requested him to

desist from using the Big Mac mark or any similar mark.
Having received no reply from respondent Dy, petitioners on 6
June 1990 sued respondents in the Regional Trial Court of Makati,
Branch 137 (RTC), for trademark infringement and unfair
competition. In its Order of 11 July 1990, the RTC issued a
temporary restraining order (TRO) against respondents enjoining
them from using the Big Mak mark 15in the operation of their
business in the National Capital Region. On 16 August 1990,16 the
RTC issued a writ of preliminary injunction replacing the TRO.
In their Answer, respondents admitted that they have been using
the name Big Mak Burger for their fast-food business.
Respondents claimed, however, that McDonalds does not have an
exclusive right to the Big Mac mark or to any other similar mark.
Respondents point out that the Isaiyas Group of Corporations
(Isaiyas Group) registered the same mark for hamburger
sandwiches with the PBPTT on 31 March 1979. One Rodolfo
Topacio (Topacio) similarly registered the same mark on 24 June
1983, prior to McDonalds registration on 18 July 1985.
Alternatively, respondents claimed that they are not liable for
trademark infringement or for unfair competition, as the Big Mak
mark they sought to register does not constitute a colorable
imitation of the Big Mac mark. Respondents asserted that they
did not fraudulently pass off their hamburger
sandwiches as those
17
of petitioners Big Mac hamburgers. Respondents sought damages
in their counterclaim.
In their Reply, petitioners denied respondents claim that
McDonalds is not the exclusive owner of the Big Mac mark.
Petitioners asserted that while the Isaiyas Group and Topacio did
register the Big Mac mark ahead of McDonalds, the Isaiyas
Group did so only in the Supplemental Register of the PBPTT and
such registration does not provide any protection. McDonalds
_______________
Records, p. 37.
Ibid., pp. 457-458.
17 Ibid., pp. 414-426.
15
16

16

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SUPREME COURT REPORTS ANNOTATED

McDonalds Corporation vs. L.C. Big Mak Burger, Inc.

disclosed that it had acquired Topacios rights

to his registration in
18
a Deed of Assignment dated 18 May 1981.
The Trial Courts Ruling
On 5 September 1994, the RTC rendered judgment (RTC
Decision) finding respondent corporation liable for trademark
infringement and unfair competition. However, the RTC dismissed
the complaint against private respondents and the counterclaim
against petitioners for lack of merit and insufficiency of evidence.
The RTC held:
Undeniably, the mark B[ig] M[ac] is a registered trademark for plaintiff
McDonalds, and as such, it is entitled [to] protection against infringement.
xxxx
There exist some distinctions between the names B[ig] M[ac] and
B[ig] M[ak] as appearing in the respective signages, wrappers and
containers of the food products of the parties. But infringement goes
beyond the physical features of the questioned name and the original
name. There are still other factors to be considered.
xxxx
Significantly, the contending parties are both in the business of fastfood chains and restaurants. An average person who is hungry and wants
to eat a hamburger sandwich may not be discriminating enough to look for

a McDonalds restaurant and buy a B[ig] M[ac] hamburger. Once he sees

a stall selling hamburger sandwich, in all likelihood, he will dip into his
pocket and order a B[ig] M[ak] hamburger sandwich. Plaintiff
McDonalds fast-food chain has attained wide popularity and acceptance
by the consuming public so much so that its air-conditioned food outlets
and restaurants will perhaps not be mistaken by many to be the same as
defendant corporations mobile snack vans located along busy streets or
highways. But the thing is that what is being sold by both contending
parties is a food itema hamburger sandwich which is for immediate
consumption, so that a buyer may easily be confused or deceived into
thinking that the B[ig] M[ak] hamburger sandwich he bought is a foodproduct of plaintiff McDonalds, or a subsidiary or allied outlet thereof.
Surely, defendant corporation has its own secret ingredients to make its
hamburger sandwiches as palatable and as tasty as the other brands in
the market, considering the keen competition among mushrooming
hamburger stands and multinational fast-food chains and restaurants.
Hence,
_______________
18

Ibid., pp. 460-463.

17

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McDonalds Corporation vs. L.C. Big Mak Burger, Inc.

the trademark B[ig] M[ac] has been infringed by defendant corporation
when it used the name B[ig] M[ak] in its signages, wrappers, and
containers in connection with its food business. x x x x
Did the same acts of defendants in using the name B[ig] M[ak] as a
trademark or tradename in their signages, or in causing the name B[ig]
M[ak] to be printed on the wrappers and containers of their food products
also constitute an act of unfair competition under Section 29 of the
Trademark Law?
The answer is in the affirmative. x x x x
The x x x provision of the law concerning unfair competition is broader
and more inclusive than the law concerning the infringement of
trademark, which is of more limited range, but within its narrower range
recognizes a more exclusive right derived by the adoption and registration
of the trademark by the person whose goods or services are first associated
therewith. x x x Notwithstanding the distinction between an action for
trademark infringement and an action for unfair competition, however, the
law extends substantially the same relief to the injured party for both
cases. (See Sections 23 and 29 of Republic Act No. 166)
Any conduct may be said to constitute unfair competition if the effect is
to pass off on the public the goods of one man as the goods of another. The
choice of B[ig] M[ak] as tradename by defendant corporation is not
merely for sentimental reasons but was clearly made to take advantage of
the reputation, popularity and the established goodwill of plaintiff
McDonalds. For, as stated in Section 29, a person is guilty of unfair
competition who in selling his goods shall give them the general
appearance, of goods of another manufacturer or dealer, either as to the
goods themselves or in the wrapping of the packages in which they are
contained, or the devices or words thereon, or in any other feature of their
appearance, which would likely influence purchasers to believe that the
goods offered are those of a manufacturer or dealer other than the actual
manufacturer or dealer. Thus, plaintiffs have established their valid cause
of action against the defendants
for trademark infringement and unfair
19
competition and for damages.

The dispositive portion of the RTC Decision provides:

WHEREFORE, judgment is rendered in favor of plaintiffs McDonalds
Corporation and McGeorge Food Industries, Inc. and against defendant
L.C. Big Mak Burger, Inc., as follows:
1. The writ of preliminary injunction issued in this case on [16

August 1990] is made permanent;

_______________
19

Rollo, pp. 149-154.

18

18

SUPREME COURT REPORTS ANNOTATED

McDonalds Corporation vs. L.C. Big Mak Burger, Inc.
2. Defendant L.C. Big Mak Burger, Inc. is ordered to pay plaintiffs
actual damages in the amount of P400,000.00, exemplary damages
in the amount of P100,000.00, and attorneys fees and expenses of
litigation in the amount of P100,000.00;
3. The complaint against defendants Francis B. Dy, Edna A. Dy, Rene
B. Dy, Wiliam B. Dy, Jesus Aycardo, Araceli Aycardo and Grace
Huerto, as well as all counter-claims, are 20
dismissed for lack of
merit as well as for insufficiency of evidence.

Respondents appealed to the Court of Appeals.

The Ruling of the Court of Appeals
On 26 November 1999, the Court of Appeals rendered judgment
(Court of Appeals Decision) reversing the RTC Decision and
ordering McDonalds to pay respondents P1,600,000 as actual and
compensatory damages and P300,000 as moral damages. The Court
of Appeals held:
Plaintiffs-appellees in the instant case would like to impress on this Court
that the use of defendants-appellants of its corporate namethe whole
L.C. B[ig] M[ak] B[urger], I[nc]. which appears on their food packages,
signages and advertisements is an infringement of their trademark B[ig]
M[ac] which they use to identify [their] double decker sandwich, sold in a
Styrofoam box packaging material with the McDonalds logo of umbrella
M stamped thereon, together with the printed mark in red bl[o]ck capital
letters, the words being separated by a single space. Specifically, plaintiffsappellees argue that defendants-appellants use of their corporate name is
a colorable imitation of their trademark Big Mac.
xxxx
To Our mind, however, this Court is fully convinced that no colorable
imitation exists. As the definition dictates, it is not sufficient that a
similarity exists in both names, but that more importantly, the over-all
presentation, or in their essential, substantive and distinctive parts is
such as would likely MISLEAD or CONFUSE persons in the ordinary
course of purchasing the genuine article. A careful comparison of the way
the trademark B[ig] M[ac] is being used by plaintiffs-appellees and
corporate name L.C. Big Mak Burger, Inc. by defendants-appellants, would
readily reveal that no confusion could take place, or that the ordinary
purchasers would be misled by it. As pointed out by defendants-appellants,
the plaintiffs-appellees trademark is used to designate only one product, a
double decker sandwich sold in a Styrofoam box with the McDonalds
logo. On
_______________
20

Records, pp. 1431-1432.

19

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19

McDonalds Corporation vs. L.C. Big Mak Burger, Inc.

the other hand, what the defendants-appellants corporation is using is not
a trademark for its food product but a business or corporate name. They

use the business name L.C. Big Mak Burger, Inc. in their restaurant
business which serves diversified food items such as siopao, noodles, pizza,
and sandwiches such as hotdog, ham, fish burger and hamburger.
Secondly, defendants-appellants corporate or business name appearing in
the food packages and signages are written in silhouette red-orange letters
with the b and m in upper case letters. Above the words Big Mak are
the upper case letter L.C. Below the words Big Mak are the words
Burger, Inc. spelled out in upper case letters. Furthermore, said
corporate or business name appearing in such food packages and signages
is always accompanied by the company mascot, a young chubby boy named
Maky who wears a red T-shirt with the upper case m appearing therein
and a blue lower garment. Finally, the defendants-appellants food
packages are made of plastic material.
xxxx
x x x [I]t is readily apparent to the naked eye that there appears a vast
difference in the appearance of the product and the manner that the
tradename Big Mak is being used and presented to the public. As earlier
noted, there are glaring dissimilarities between plaintiffs-appellees
trademark and defendants-appellants corporate name. Plaintiffsappellees product carrying the trademark B[ig] M[ac] is a double decker
sandwich (depicted in the tray mat containing photographs of the various
food products xxx sold in a Styrofoam box with the McDonalds logo and
trademark in red, bl[o]ck capital letters printed thereon x x x at a price
which is more expensive than the defendants-appellants comparable food
products. In order to buy a Big Mac, a customer needs to visit an airconditioned McDonalds restaurant usually located in a nearby
commercial center, advertised and identified by its logothe umbrella
M, and its mascotRonald McDonald. A typical McDonalds restaurant
boasts of a playground for kids, a second floor to accommodate additional
customers, a drive-thru to allow customers with cars to make orders
without alighting from their vehicles, the interiors of the building are welllighted, distinctly decorated and painted with pastel colors x x x. In buying
a B[ig] M[ac], it is necessary to specify it by its trademark. Thus, a
customer needs to look for a McDonalds and enter it first before he can
find a hamburger sandwich which carry the mark Big Mac. On the other
hand, defendants-appellants sell their goods through snack vans x x x x
Anent the allegation that defendants-appellants are guilty of unfair
competition, we likewise find the same untenable.
Unfair competition is defined as the employment of deception or any
other means contrary to good faith by which a person shall pass off the
goods manufactured by him or in which he deals, or his business, or
service, for those of another who has already established good will for his
20

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SUPREME COURT REPORTS ANNOTATED

McDonalds Corporation vs. L.C. Big Mak Burger, Inc.

similar good, business or services, or any acts calculated to produce the

same result (Sec. 29, Rep. Act No. 166, as amended).
To constitute unfair competition therefore it must necessarily follow
that there was malice and that the entity concerned was in bad faith.
In the case at bar, We find no sufficient evidence adduced by plaintiffsappellees that defendants-appellants deliberately tried to pass off the
goods manufactured by them for those of plaintiffs-appellees. The mere
suspected similarity in the sound of the defendants-appellants corporate
name with the plaintiffs-appellees trademark is not sufficient evidence to
conclude unfair competition. Defendants-appellants explained that the
name M[ak] in their corporate name was derived from both the first
names of the mother and father of defendant Francis Dy, whose names are
Maxima and Kimsoy. With this explanation, it is up to the plaintiffsappellees to prove bad faith on the part of defendants-appellants. It is a
settled rule that the law always presumes good faith such that any person
who seeks to be awarded damages due to acts of another has
the burden of
21
proving that the latter acted in bad faith or with ill motive.

Petitioners sought reconsideration of the Court of Appeals Decision

but the appellate court denied their motion in its Resolution of 11

July 2000.
Hence, this petition for review.
Petitioners raise the following grounds for their petition:
I. THE COURT OF APPEALS ERRED IN FINDING THAT
RESPONDENTS CORPORATE NAME L.C. BIG MAK
BURGER, INC. IS NOT A COLORABLE IMITATION OF
THE MCDONALDS TRADEMARK BIG MAC, SUCH
COLORABLE IMITATION BEING AN ELEMENT OF
TRADEMARK INFRINGEMENT.
A. Respondents use the words Big Mak as trademark for
their products and not merely as their business or corporate
name.
B. As a trademark, respondents Big Mak is undeniably and
unquestionably similar to petitioners Big Mac trademark
based on the dominancy test and the idem sonans test
resulting inexorably in confusion on the part of the
consuming public.
II. THE COURT OF APPEALS ERRED IN REFUSING TO
CONSIDER THE INHERENT SIMILARITY BETWEEN
THE MARK BIG MAK AND THE WORD MARK BIG
MAC AS AN INDICATION OF
_______________
21

Rollo, pp. 233-237 (Capitalization in the original).

21

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21

McDonalds Corporation vs. L.C. Big Mak Burger, Inc.

RESPONDENTS INTENT TO DECEIVE OR DEFRAUD
FOR
22
PURPOSES OF ESTABLISHING UNFAIR COMPETITION.
Petitioners pray that we set aside the Court of Appeals Decision
and reinstate the RTC Decision.
In their Comment to the petition, respondents question the
propriety of this petition as it allegedly raises only questions of fact.
On the merits, respondents contend that the Court of Appeals
committed no reversible error in finding them not liable for
trademark infringement and unfair competition and in ordering
petitioners to pay damages.
The Issues
The issues are:
1. Procedurally, whether the questions raised in this petition
are proper for a petition for review under Rule 45.
2. On the merits, (a) whether respondents used the words Big
Mak not only as part of the corporate name L.C. Big Mak
Burger, Inc. but also as a trademark for their hamburger
products, and (b) whether respondent corporation is liable
for trademark infringement and unfair competition.23

The Courts Ruling

The petition has merit.
On Whether the Questions Raised in the Petition are
Proper for a Petition for Review

A party intending to appeal from a judgment of the Court of

Appeals may file with this
Court a petition for review under Section
24
1 of Rule 45 (Section 1) raising only questions of law. A question
_______________
Ibid., p. 24.
petitioners seek to hold liable respondent corporation only, the Courts
opinion will refer not only to the latter but also to all the respondents as all of
them filed the pleadings in this petition.
24 This provision states: Filing of petition with Supreme Court.A party
desiring to appeal by certiorari from a judgment or final order or resolution of the
Court of Appeals, the Sandiganbayan, the Regional Trial Court or other courts
whenever authorized by law, may file with the Su22

23While

22

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SUPREME COURT REPORTS ANNOTATED

McDonalds Corporation vs. L.C. Big Mak Burger, Inc.

of law exists when the doubt or difference arises on what the law is
on a certain state of facts. There is a question of fact when the
doubt
or difference arises on the truth or falsity of the alleged facts.
25
Here, petitioners raise questions of fact and law in assailing the
Court of Appeals findings on respondent corporations non-liability
for trademark infringement and unfair competition. Ordinarily, the
Court can deny due course to such a petition. In view, however, of
the contradictory findings of fact of the RTC and Court of Appeals,
the Court opts to accept the petition,
this being one of the
26
recognized exceptions to Section 1. We took a similar
course of
27
action in Asia Brewery, Inc. v. Court of Appeals
which also
involved a suit for trademark infringement and unfair competition
in which the trial court and the Court of Appeals arrived at
conflicting findings.
On the Manner Respondents Used
Big Mak in their Business
Petitioners contend that the Court of Appeals erred in ruling that
the corporate name L.C. Big Mak Burger, Inc. appears in the
packaging for respondents hamburger products and not the words
Big Mak only.
The contention has merit.
The evidence presented during the hearings on petitioners
motion for the issuance of a writ of preliminary injunction shows
that the plastic wrappings and plastic bags used by respondents for
their hamburger sandwiches bore the words Big Mak. The other
descriptive words burger and 100% pure beef
were set in smaller
28
type, along with the locations of branches. Respondents cash
invoices simply refer to their hamburger sandwiches as Big
_______________
preme Court a verified petition for review on certiorari. The petition shall raise
only questions of law which must be distinctly set forth.
25 Ramos v. Pepsi-Cola Bottling Co. of the Phils., 125 Phil. 701; 19 SCRA 289
(1967).
26 Ducusin v. Court of Appeals, 207 Phil. 248; 122 SCRA 280 (1983).
27 G.R. No. 103543, 5 July 1993, 224 SCRA 437.
28 Exhibits E-1 to 2, F-1 to 2 and G-1 to 2.
23

VOL. 437, AUGUST 18, 2004

McDonalds Corporation vs. L.C. Big Mak Burger, Inc.

23

29

Mak. It is respondents
snack vans that carry the words L.C. Big
30
Mak Burger, Inc.
It was only during the trial that respondents presented in
evidence the plastic wrappers and bags 31for their hamburger
sandwiches relied on by the Court of Appeals. Respondents plastic
wrappers and bags were identical with those petitioners presented
during the hearings for the injunctive writ except that the letters
L.C. and the words Burger, Inc. in respondents evidence were
added above and below the words Big Mak, respectively. Since
petitioners complaint was based on facts existing before and during
the hearings on the injunctive writ, the facts established during
those hearings are the proper factual bases for the disposition of the
issues raised in this petition.
On the Issue of Trademark Infringement
Section 22 (Section 22) of Republic Act No. 32166, as amended (RA
166), the law applicable to this case, defines trademark
infringement as follows:
Infringement, what constitutes.Any person who [1] shall use, without the
consent of the registrant, any reproduction, counterfeit, copy or colorable
imitation of any registered mark or trade-name in connection with the
sale, offering for sale, or advertising of any goods, business or services on
or in connection with which such use is likely to cause confusion or
mistake or to deceive purchasers or others as to the source or origin of
such goods or services, or identity of such business; or [2] reproduce,
counterfeit, copy, or colorably imitate any such mark or trade-name and
apply such reproduction, counterfeit, copy, or colorable imitation to labels,
signs, prints, packages, wrappers, receptacles or advertisements intended
to be used upon or in connection with such goods, business or services,
shall be liable to a civil 33action by the registrant for any or all of the
remedies herein provided.
_______________
Exhibits E, F and G.
L-10, L-16 to 27.
31Exhibits 34, 36-37.
32 RA 166 has been superseded by Republic Act No. 8293 (RA 8293), the
Intellectual Property Code of the Philippines, which took effect on 1 January 1998.
Section 22 is substantially identical with Section 16 of the United States 1946
Trademark Act (Lanham Act).
33Superseded by Section 155 of RA 8293 (Section 155).
29

30Exhibits

24

24

SUPREME COURT REPORTS ANNOTATED

McDonalds Corporation vs. L.C. Big Mak Burger, Inc.

Petitioners base their cause of action under the first part of

Section22, i.e. respondents allegedly used, without petitioners
consent, acolorable imitation of the Big Mac mark in advertising
and selling respondents hamburger sandwiches. This likely caused
confusion in the mind of the purchasing public on the source of the
hamburgers or the identity of the business.
To establish trademark infringement, the following elements
must be shown: (1) the validity of plaintiff s mark; (2) the plaintiff s
ownership of the mark; and (3) the use of the mark or its colorable
imitation 34by the alleged infringer results in likelihood of
confusion. Of these, it is the element of likelihood
of confusion
35
that is the gravamen of trademark infringement.
On the Validity of the Big Mac Mark
and McDonalds Ownership of such Mark
A mark is valid if it is distinctive and thus not barred from

36

registration under Section 4 of RA 166 (Section 4). However,

_______________
34 See A & H Sportswear Co. v. Victorias Secret Stores, Inc., 167 F.Supp.2d 770
(2001).
35 Shaleys Inc. v. Covalt, 704 F.2d 426 (1983). Also referred to as the lynchpin
(Suncoast Tours, Inc. v. Lambert Groups, Inc. 1999 WL 1034683 [1999]) or
touchstone (VMG Enterprises, Inc. v. F. Quesada and Franco, Inc., 788 F. Supp.
648 [1992]) of trademark infringement.
36 This provision states: Registration of trade-marks, trade-names and servicemarks on the principal register.There is hereby established a register of trademarks, trade-names and service-marks which shall be known as the principal
register. The owner of a trade-mark, trade-name or service-mark used to
distinguish his goods, business or services from the goods, business or services of
others shall have the right to register the same on the principal register, unless it:

(a) Consists of or comprises immoral, deceptive or scandalous matter; or

matter which may disparage or falsely suggest a connection with persons,
living or dead, institutions, beliefs, or national symbols, or bring them into
contempt or disrepute;
(b) Consists of or comprises the flag or coat of arms or other insignia of the
Philippines or any of its political subdivisions, or of any foreign nation, or
any simulation thereof;
(c) Consists of or comprises a name, portrait, or signature identifying a
particular living individual except by his written consent, or the name,
signature, or portrait of a deceased President of
25

VOL. 437, AUGUST 18, 2004

25

McDonalds Corporation vs. L.C. Big Mak Burger, Inc.

once registered, not only the marks validity but also
the
37
registrants ownership of the mark is prima facie presumed.
_______________
the Philippines, during the life of his widow, if any, except by the written
consent of the widow;
(d) Consists of or comprises a mark or trade-name which so resembles a mark
or trade-name registered in the Philippines or a mark or a trade-name
previously used in the Philippines by another and not abandoned, as to be
likely, when applied to or used in connection with the goods, business or
services of the applicant, to cause confusion or mistake or to deceive
purchasers; or
(e) Consists of a mark or trade-name which, when applied to or used in
connection with the goods, business or services of the applicant is merely
descriptive or deceptively misdescriptive of them, or when applied to or
used in connection with the goods, business or services of the applicant is
primarily geographically descriptive or deceptively misdescriptive of them,
or is primarily merely a surname;
(f) Except as expressly excluded in paragraphs (a), (b), (c) and (d) of this
section nothing herein shall prevent the registration of a mark or tradename used by the applicant which has become distinctive of the applicants
goods, business or services. The Director may accept as prima facie
evidence that the mark or trade-name has become distinctive, as applied to
or used in connection with the applicants goods, business or services, proof
of substantially exclusive and continuous use thereof as a mark or tradename by the applicant in connection with the sale of goods, business or
services for five years next preceding the date of the filing of the application
for its registration. This has been superseded by Section 123 of RA 8293.
37 Section 20, RA 166. This provision states: Certificate of registration prima
facie evidence of validity.A certificate of registration of a mark or trade-name
shall be prima facie evidence of the validity of the registration, the registrants

ownership of the mark or trade-name, and of the registrants exclusive right to use
the same in connection with the goods, business or services specified in the
certificate, subject to any conditions and limitations stated therein. This has been
superseded by Section 138 of RA 8293. Neither RA 166 nor RA 8293 provides when
the presumption of validity and ownership becomes indubitable. In contrast, under
the Lanham Act, as amended, (15 United States Code 1065), such takes place
once the trademark has become incontestable i.e. after the mark owner files
affidavits stating that the mark is registered and has been in continuous use for
five consecutive years; that there is no pending proceeding; and that there has
been no adverse decision concerning the regis26

26

SUPREME COURT REPORTS ANNOTATED

McDonalds Corporation vs. L.C. Big Mak Burger, Inc.

Respondents contend that of the two words in the Big Mac mark,
it is only the word Mac that is valid because the word Big is
generic and descriptive (proscribed under
Section 4[e]), and thus
38
incapable of exclusive appropriation.
The contention has no merit. The Big Mac mark, which should
39
be treated in its entirety and not dissected word for word, is
neither generic nor descriptive. Generic marks 40are commonly used
as the
name or description of a kind of goods, such42as Lite for
41
beer or Chocolate Fudge for chocolate soda drink. Descriptive
marks, on the other hand, convey the characteristics, functions,
qualities or ingredients of a43 product to one who has never seen it or
does not know
it exists, such as Arthriticare for arthritis
44
medication. On the contrary, Big Mac falls under the class of
fanciful or arbitrary marks as it bears no logical 45relation to the
actual characteristics of the product it represents. As such, it is
highly distinctive and thus valid. Significantly, the trademark
46
Little Debbie for snack cakes was found arbitrary or fanciful.
The Court also finds that petitioners have duly established
McDonalds exclusive ownership of the Big Mac mark. Although
Topacio and the Isaiyas Group registered the Big Mac mark ahead
of McDonalds, Topacio, as petitioners disclosed, had already
assigned his rights to McDonalds. The Isaiyas Group, on the other
_______________
trants ownership or right to registration (See Luis Vuitton Malletier and Oakley,
Inc. v. Veit, 211 F.Supp.2d 556 [2002]). However, both RA 166 (Section 12) and RA
8293 (Section 145) require the filing of the affidavit attesting to the continuous use
of the mark for five years and, under Section 145, failure to file such affidavit will
result in the removal of the mark from the Register.
38 Rollo, pp. 525-527.
39 Societe Des Produits Nestl, S.A. v. Court of Appeals, G.R. No. 112012, 4 April
2001, 356 SCRA 207; McKee Baking Co. v. Interstate Brands Corporation, 738 F.
Supp. 1272 (1990).
40 Societe Des Produits Nestl, S.A. v. Court of Appeals, supra note 39; Miller
Brewing Co. v. Heileman Brewing Co., 561 F.2d 75 (1977).
41 Miller Brewing Co. v. Heileman Brewing Co., supra note 40.
42 A. J. Canfield Co. v. Honickman, 808 F.2d 291 (1986).
43 Societe Des Produits Nestl, S.A. v. Court of Appeals, supra note 39 citing
43(A) of the Lanham Act, as amended.
44 Bernard v. Commerce Drug Co., 964 F.2d 1338 (1992).
45 Keebler Co. v. Rovira Biscuit Corp., 624 F.2d 366 (1980).
46 McKee Baking Co. v. Interstate Brands Corporation, supra note 39.
27

VOL. 437, AUGUST 18, 2004

27

McDonalds Corporation vs. L.C. Big Mak Burger, Inc.

hand, registered its trademark only in the Supplemental Register. A

mark which is not registered in the Principal

Register, and thus not
47
distinctive, has no real protection. Indeed, we have held that
registration in the Supplemental Register is not even a prima facie
evidence of the validity of the registrants exclusive
right to use the
48
mark on the goods specified in the certificate.
On Types of Confusion
Section 22 covers two types of confusion arising from the use of
similar or colorable imitation marks, namely, confusion of goods
(product confusion) and confusion of business (source or origin
confusion). In Sterling Products International, Incorporated v.
49
Farbenfabriken Bayer Aktiengesellschaft, et al.,
the Court
distinguished these two types of confusion, thus:
[Rudolf] Callman notes two types of confusion. The first is the confusion of
goods in which event the ordinarily prudent purchaser would be induced
to purchase one product in the belief that he was purchasing the other. x
x x The other is the confusion of business: Here though the goods of the
parties are different, the defendants product is such as might reasonably
be assumed to originate with the plaintiff, and the public would then be
deceived either into that belief or into the belief that there is some
connection between the plaintiff and defendant which, in fact, does not
exist.
50

Under Act No. 666, the first trademark law, infringement was
limited to confusion of goods51 only, when the infringing mark is used
on goods of a similar kind. Thus, no relief was afforded to
_______________
47 See A. MILLER AND M. DAVIS, INTELLECTUAL PROPERTY, PATENTS,
TRADEMARKS AND COPYRIGHT IN A NUTSHELL, pp. 177-178 (1983).
48 See Lorenzana v. Macagba, No. L-33773, 22 October 1987, 154 SCRA 723; La
Chemise Lacoste, S.A. v. Hon. Fernandez, etc., et al., 214 Phil. 332; 129 SCRA 373
(1984). RA 8293 no longer provides for a Supplemental Register and instead
mandates a single registry system (Section 137). Under Section 239, marks
registered in the Supplemental Register under RA 166 will remain in force but are
no longer subject to renewal.
49 137 Phil. 838; 27 SCRA 1214 (1969).
50 Enacted on 6 March 1903.
51 Section 3 of Act No. 666 provides: The ownership or possession of a trademark, heretofore or hereafter appropriated, as in the foregoing section provided,
shall be recognized and protected in the same manner and to the same extent, as
are other property rights known to the law. To

28

28

SUPREME COURT REPORTS ANNOTATED

McDonalds Corporation vs. L.C. Big Mak Burger, Inc.

the party whose registered mark or its colorable imitation is used

on different although related goods. To remedy this situation,
Congress enacted RA 166 on 20 June 1947. In defining trademark
infringement, Section 22 of RA 166 deleted the requirement in
question and expanded its scope to include such use of the mark or
its colorable imitation that is likely to result in confusion on the
source or 52origin of such goods or services, or identity of such
business. Thus, while there is confusion of goods when the
products are competing, confusion of business exists when the
products are
_______________
this end any person entitled to the exclusive use of a trade-mark to designate
the origin or ownership of goods he has made or deals in may recover damages in a
civil action from any person who has sold goods of a similar kind, bearing such
trade-mark, and the measure of the damages suffered, at the option of the

complaining party, shall be either the reasonable profit which the complaining
party would have made had the defendant not sold the goods with the trade-mark
aforesaid, or the profit which the defendant actually made out of the sale of the
goods with the trade-mark, and in cases where actual intent to mislead the public
or to defraud the owner of the trade-mark shall be shown, in the discretion of the
court, the damages may be doubled. The complaining party, upon proper showing,
may have a preliminary injunction, restraining the defendant temporarily from use
of the trade-mark pending the hearing, to be granted or dissolved in the manner
provided in the Code of Civil Procedure, and such injunction upon final hearing, if
the complainants property in the trade-mark and the defendants violation thereof
shall be fully established, shall be made perpetual, and this injunction shall be
part of the judgment for damages to be rendered in the same cause as above
provided. (Emphasis supplied)
52 The United States Congress had introduced the same amendment to the
Lanham Act in 1946. In 1962, the US Congress again amended Section 16 of the
Lanham Act (Sec. 43[A]) by deleting the phrase the source or origin of such
goods or services, or identity of such business in the definition of trademark
infringement. This led courts in that jurisdiction to hold that post-sale confusion by
the public at large (Esercizio v. Roberts, 944 F.2d 1235 [1991]. See also Koppers
Company, Inc. v. KrupKoppers, 517 F. Supp. 836 [1981]) or subliminal confusion,
defined as confusion on a subliminal or subconscious level, causing the consumer to
identify the properties and reputation of one product with those of another,
although he can identify the particular manufacturer of each, (Ortho
Pharmaceutical Corporation v. American Cyanamid Company, 361 F. Supp. 1032
[1973]. See also Farberware, Inc. v. Mr. Coffee, Inc., 740 F. Supp. 291 (1990);
Dreyfus Fund Incorporated v. Royal Bank of Canada, 525 F. Supp. 1108 [1981]) are
sufficient to sustain a trademark infringement claim. Section 155 substantially
reproduces Sec. 43(A).

29

VOL. 437, AUGUST 18, 2004

29

McDonalds Corporation vs. L.C. Big Mak Burger, Inc.

non-competing
but related enough to produce confusion of
53
affiliation.
On Whether Confusion of Goods and
Confusion of Business are Applicable
Petitioners claim that respondents use of the Big Mak mark on
respondents hamburgers results in confusion of goods, particularly
with respect to petitioners hamburgers labeled Big Mac. Thus,
petitioners alleged in their complaint:
1.15. Defendants have unduly prejudiced and clearly infringed upon the
property rights of plaintiffs in the McDonalds Marks, particularly the
mark B[ig] M[ac]. Defendants unauthorized acts are likely, and
calculated, to confuse, mislead or deceive the public into believing that the
products and services offered by defendant Big Mak Burger, and the
business it54 is engaged in, are approved and sponsored by, or affiliated with,
plaintiffs. (Emphasis supplied)

Since respondents used the Big Mak mark on the same goods, i.e.
hamburger sandwiches, that petitioners Big Mac mark is used,
trademark infringement through confusion of goods is a proper
issue in this case.
Petitioners also claim that respondents use of the Big Mak
mark in the sale of hamburgers, the same business that petitioners
are engaged in, results in confusion of business. Petitioners alleged
in their complaint:
1.10. For some period of time, and without the consent of plaintiff
McDonalds nor its licensee/franchisee, plaintiff McGeorge, and in clear
violation of plaintiffs exclusive right to use and/or appropriate the
McDonalds marks, defendant Big Mak Burger acting through individual
defendants, has been operating Big Mak Burger, a fast food restaurant
business dealing in the sale of hamburger and cheeseburger sandwiches,

french fries and other food products, and has caused to be printed on the
wrapper of defendants food products and incorporated in its signages the
name Big Mak Burger, which is confusingly similar to and/or is a
colorable imitation of the plaintiff McDonalds mark B[ig] M[ac], x x x.
Defendant Big Mak Burger has thus unjustly created the
impression
_______________
53

AGPALO,

THE

LAW

ON

TRADEMARK,

INFRINGEMENT

AND

UNFAIR

COMPETITION, 45-46 (2000).

54

Records, p. 5.

30

30

SUPREME COURT REPORTS ANNOTATED

McDonalds Corporation vs. L.C. Big Mak Burger, Inc.

that its business is approved and sponsored by, or affiliated with,

plaintiffs. x x x x
2.2 As a consequence of the acts committed by defendants, which
unduly prejudice and infringe upon the property rights of plaintiffs
McDonalds and McGeorge as the real owner and rightful proprietor, and
the licensee/franchisee, respectively, of the McDonalds marks, and which
are likely to have caused confusion or deceived the public as to the
true source, sponsorship or affiliation of defendants food products
and restaurant business, plaintiffs have suffered and continue to suffer
actual damages in the form of injury to their business reputation and
goodwill, and of the dilution of the distinctive
quality of the McDonalds
55
marks, in particular, the mark B[ig] M[ac]. (Emphasis supplied)

Respondents admit that their business includes selling hamburger

sandwiches, the same food product that petitioners sell using the
Big Mac mark. Thus, trademark infringement through confusion
of business is also a proper issue in this case.
Respondents assert that their Big Mak hamburgers cater
mainly to the low-income group while petitioners Big Mac
hamburgers cater to the middle and upper income groups. Even if
this is true, the likelihood of confusion of business remains, since
the low-income group might be led to believe that the Big Mak
hamburgers are the low-end hamburgers marketed by petitioners.
After all, petitioners have the exclusive right to use the Big Mac
mark. On the other hand, respondents would benefit by associating
their low-end hamburgers, through the use of the Big Mak mark,
with petitioners high-end Big Mac hamburgers, leading to
likelihood of confusion in the identity of business.
Respondents further claim that petitioners use the Big Mac
mark only on petitioners double-decker hamburgers, while
respondents use the Big Mak mark on hamburgers and other
products like siopao, noodles and pizza. Respondents also point out
that petitioners sell their Big Mac double-deckers in a styrofoam
box with the McDonalds logo and trademark in red, block letters
at a price more expensive than the hamburgers of respondents. In
contrast, respondents sell their Big Mak hamburgers in plastic
wrappers and plastic bags. Respondents further point out that
petitioners restaurants are air-conditioned buildings with drivethru service, compared to respondents mobile vans.
_______________
55

Ibid., pp. 4, 6-7.

31

VOL. 437, AUGUST 18, 2004

McDonalds Corporation vs. L.C. Big Mak Burger, Inc.

31

These and other factors respondents cite cannot negate the

undisputed fact that respondents use their Big Mak mark on
hamburgers, the same food product that petitioners sell with the
use of their registered mark Big Mac. Whether a hamburger is
single, double or triple-decker, and whether wrapped in plastic or
styrofoam, it remains the same hamburger food product. Even
respondents use of the Big Mak mark on non-hamburger food
products cannot excuse their infringement of petitioners registered
mark, otherwise registered marks will lose their protection under
the law.
The registered trademark owner may use his mark on the same
or similar products, in different segments of the market, and at
different price levels depending on variations of the products for
specific segments of the market. The Court has recognized that the
registered trademark owner enjoys protection in product and
market areas that are the normal potential expansion of his
business. Thus, the Court has declared:
Modern law recognizes that the protection to which the owner of a
trademark is entitled is not limited to guarding his goods or business from
actual market competition with identical or similar products of the parties,
but extends to all cases in which the use by a junior appropriator of a
trade-mark or trade-name is likely to lead to a confusion of source, as
where prospective purchasers would be misled into thinking that
the complaining party has extended his business into the field (see
148 ALR 56 et seq.; 53 Am Jur. 576) or is in any way connected with the
activities of the infringer; or when it forestalls the normal potential
56
expansion of his business (v. 148 ALR, 77, 84; 52 Am. Jur. 576, 577).
(Emphasis supplied)

On Whether Respondents Use of the Big Mak Mark Results in

Likelihood of Confusion
In determining likelihood of confusion, jurisprudence
has developed
57
two tests, the dominancy test and the holistic test. The dominancy
test focuses on the similarity of the prevalent features of the
competing trademarks that might cause confusion. In con_______________
Sta. Ana v. Maliwat, 133 Phil. 1006; 24 SCRA 1018 (1968).
Societe Des Produits Nestl, S.A. v. Court of Appeals, supra note 39; Emerald
Garment Manufacturing Corporation v. Court of Appeals, G.R. No. 100098, 29
December 1995, 251 SCRA 600.
56
57

32

32

SUPREME COURT REPORTS ANNOTATED

McDonalds Corporation vs. L.C. Big Mak Burger, Inc.

trast, the holistic test requires the court to consider the entirety of
the marks as applied to the products, including the labels and
packaging, in determining confusing similarity.
The Court of Appeals, in finding that there is no likelihood of
confusion that could arise in the use of respondents Big Mak
mark on hamburgers, relied on the holistic test. Thus, the Court of
Appeals ruled that it is not sufficient that a similarity exists in
both name(s), but that more importantly, the overall presentation,
or in their essential, substantive and distinctive parts is such as
would likely MISLEAD or CONFUSE persons in the ordinary
course of purchasing the genuine article. The holistic test considers
the two marks in their entirety, as they appear on the goods with
their labels and packaging. It is not enough to consider their
words
58
and compare the spelling and pronunciation of the words.
Respondents now vigorously argue that the Court of Appeals
application of the holistic test to this case is correct and in accord
with prevailing jurisprudence.

This Court, however, has relied on the dominancy test rather

than the holistic test. The dominancy test considers the dominant
features in the competing marks in determining whether they are
confusingly similar. Under the dominancy test, courts give greater
weight to the similarity of the appearance of the product arising
from the adoption of the dominant
features of the registered mark,
59
disregarding minor differences. Courts will consider more the
aural and visual impressions created by the marks in the public
mind, giving little weight to factors like prices, quality, sales outlets
and market segments.
60
Thus, in the 1954 case of Co Tiong Sa v. Director of Patents, the
Court ruled:
x x x It has been consistently held that the question of infringement of a
trademark is to be determined by the test of dominancy. Similarity in size,
form and color, while relevant, is not conclusive. If the competing
trademark contains the main or essential or dominant features of another,
and confusion and deception is likely to result, infringement takes place.
Duplication or imitation is not necessary; nor is it necessary that the
_______________
58

V. AMADOR, TRADEMARKS UNDER THE INTELLECTUAL PROPERTY CODE, 260

(1999).
59

Ibid., p. 263.

60

95 Phil. 1 (1954).

33

VOL. 437, AUGUST 18, 2004

33

McDonalds Corporation vs. L.C. Big Mak Burger, Inc.

infringing label should suggest an effort to imitate. (G. Heilman Brewing
Co. vs. Independent Brewing Co., 191 F., 489, 495, citing Eagle White Lead
Co. vs. Pflugh [CC] 180 Fed. 579). The question at issue in cases of
infringement of trademarks is whether the use of the marks involved
would be likely to cause confusion or mistakes in the mind of the public or
deceive purchasers. (Auburn Rubber Corporation vs. Honover Rubber Co.,
107 F. 2d 588; x x x) (Emphasis supplied.)

The Court reiterated the dominancy test in Lim Hoa v. Director of

61
62
Patents, Phil. Nut Industry, Inc. v. Standard Brands Inc.,
63
Converse Rubber Corporation v. Universal Rubber Products, Inc.,
64
and Asia Brewery, Inc. v. Court of Appeals. In the 2001 case of
65
Societe Des Produits Nestl, S.A. v. Court of Appeals, the Court
explicitly rejected the holistic test in this wise:
[T]he totality or holistic test is contrary to the elementary postulate of the
law on trademarks and unfair competition that confusing similarity is to
be determined on the basis of visual, aural, connotative comparisons and
overall impressions engendered by the marks in controversy as they are
encountered in the realities of the marketplace. (Emphasis supplied)

The test of dominancy is now explicitly incorporated into law in

Section 155.1 of the Intellectual Property Code which defines
infringement as the colorable imitation of a registered mark x x x
or a dominant feature thereof.
Applying the dominancy test, the Court finds that respondents
use of the Big Mak mark results in likelihood of confusion. First,
Big Mak sounds exactly the same as Big Mac. Second, the first
word in Big Mak is exactly the same as the first word in Big
Mac. Third, the first two letters in Mak are the same as the first
two letters in Mac. Fourth, the last letter in Mak while a k
sounds the same as c when the word Mak is pronounced. Fifth,
in Filipino, the letter k replaces c in spelling, thus Caloocan is
spelled Kalookan.
In short, aurally the two marks are the same, with the first word
of both marks phonetically the same, and the second word of

_______________
100 Phil. 214 (1956).
No. L-23035, 31 July 1975, 65 SCRA 575.
63 No. L-27906, 8 January 1987, 147 SCRA 154.
64 Supra note 27.
65 Supra note 39.
61
62

34

34

SUPREME COURT REPORTS ANNOTATED

McDonalds Corporation vs. L.C. Big Mak Burger, Inc.

both marks also phonetically the same. Visually, the two marks
have both two words and six letters, with the first word of both
marks having the same letters and the second word having the
same first two letters. In spelling, considering the Filipino
language, even the last letters of both marks are the same.
Clearly, respondents have adopted in Big Mak not only the
dominant but also almost all the features of Big Mac. Applied to
the same food product of hamburgers, the two marks will likely
result in confusion in the public mind.
The Court has taken into account the aural effects of the words
and letters contained in the marks in determining the issue of
confusing similarity. Thus, in Marvex Commercial Co., Inc. v. Petra
66
Hawpia & Co., et al., the Court held:
The following random list of confusingly similar sounds in the matter of
trademarks, culled from Nims, Unfair Competition and Trade Marks,
1947, Vol. 1, will reinforce our view that SALONPAS and LIONPAS are
confusingly similar in sound: Gold Dust and Gold Drop; Jantzen and
Jass-Sea; Silver Flash and Supper Flash; Cascarete and Celborite;
Celluloid and Cellonite; Chartreuse and Charseurs; Cutex and
Cuticlean; Hebe and Meje; Kotex and Femetex; Zuso and Hoo
Hoo. Leon Amdur, in his book Trade-Mark Law and Practice, pp. 419421, cities, as coming within the purview of the idem sonans rule, Yusea
and U-C-A, Steinway Pianos and Steinberg Pianos, and Seven-Up
and Lemon-Up. In Co Tiong vs. Director of Patents, this Court
unequivocally said that Celdura and Cordura are confusingly similar in
sound; this Court held in Sapolin Co. vs. Balmaceda, 67 Phil. 795 that the
name Lusolin is an infringement of the trademark Sapolin, as the
sound of the two names is almost the same. (Emphasis supplied)

Certainly, Big Mac and Big Mak for hamburgers create even
greater confusion, not only aurally but also visually.
Indeed, a person cannot distinguish Big Mac from Big Mak by
their sound. When one hears a Big Mac or Big Mak hamburger
advertisement over the radio, one would not know whether the
Mac or Mak ends with a c or a k.
Petitioners aggressive promotion of the Big Mac mark, as
borne by their advertisement expenses, has built goodwill and
reputation for such mark making it one of the easily recognizable
_______________
66

125 Phil. 295; 18 SCRA 1178 (1966).

35

VOL. 437, AUGUST 18, 2004

35

McDonalds Corporation vs. L.C. Big Mak Burger, Inc.

marks in the market today. This increases the likelihood that
consumers will mistakenly associate petitioners hamburgers and
business with those of respondents.
Respondents inability to explain sufficiently how and why they

came to choose Big Mak for their hamburger sandwiches indicates

their intent to imitate petitioners Big Mac mark. Contrary to the
Court of Appeals finding, respondents claim that their Big Mak
mark was inspired by the first names of respondent Dys mother
(Maxima) and father (Kimsoy) is not credible. As petitioners well
noted:
[R]espondents, particularly Respondent Mr. Francis Dy, could have arrived
at a more creative choice for a corporate name by using the names of his
parents, especially since he was allegedly driven by sentimental reasons.
For one, he could have put his fathers name ahead of his mothers, as is
usually done in this patriarchal society, and derived letters from said
names in that order. Or, he could have taken an equal number of letters
(i.e., two) from each name, as is the more usual thing done. Surely, the
more plausible reason behind Respondents choice of the word M[ak],
especially when taken in conjunction with the word B[ig], was their
intent to take advantage of Petitioners x x x B[ig] M[ac] trademark, with
their alleged sentiment-focused explanation merely thought of as a
convenient,
albeit unavailing, excuse or defense for such an unfair choice
67
of name.

Absent proof that respondents adoption of the Big

Mak mark was
68
due to honest mistake or was fortuitous, the inescapable
conclusion is that respondents adopted the Big Mak mark to
ride
69
on the coattails of the more established Big Mac mark. This
saves respondents much of the expense in advertising
to create
70
market recognition of their mark and hamburgers.
Thus, we hold that confusion is likely to result in the public
mind. We sustain petitioners claim of trademark infringement.
_______________
Rollo, pp. 588-589.
Time v. Life Television Co. of St. Paul, 123 F. Supp. 470 (1954);
69 Conde Nast Publications v. Vogue School of Fashion Modelling, 105 F. Supp.
67
68

325 (1952); Hanson v. Triangle Publications, 163 F.2d 74 (1947).

70 See Fisons Horticulture, Inc. v. Vigoro Industries, Inc., 30 F.3d 466 (1994).
36

36

SUPREME COURT REPORTS ANNOTATED

McDonalds Corporation vs. L.C. Big Mak Burger, Inc.

On the Lack of Proof of

Actual Confusion
Petitioners failure to present proof of actual confusion does not
negate their claim of trademark infringement. As
noted in
71
American Wire & Cable Co. v. Director of Patents, Section 22
requires the less stringent standard of likelihood of confusion only.
While proof of actual confusion72 is the best evidence of infringement,
its absence is inconsequential.
On the Issue of Unfair Competition
Section 29 (Section 29)
thus:

73

of RA 166 defines unfair competition,

xxxx
Any person who will employ deception or any other means contrary to
good faith by which he shall pass off the goods manufactured by him or in
which he deals, or his business, or services for those of the one having
established such goodwill, or who shall commit any acts calculated to
produce said result, shall be guilty of unfair competition, and shall be
subject to an action therefor.
In particular, and without in any way limiting the scope of unfair

competition, the following shall be deemed guilty of unfair competition:

(a) Any person, who in selling his goods shall give them the general
appearance of goods of another manufacturer or dealer, either as to
the goods themselves or in the wrapping of the packages in which
they are contained, or the devices or words thereon, or in any
feature of their appearance, which would be likely to influence
purchasers to believe that the goods offered are those of a
manufacturer or dealer, other than the actual manufacturer or
dealer, or who otherwise clothes the goods with such appearance as
shall deceive the public and defraud another of his legitimate
trade, or any subsequent vendor of such goods or any agent of any
vendor engaged in selling such goods with a like purpose;
(b) Any person who by any artifice, or device, or who employs any
other means calculated to induce the false belief that such person
is offering the services of another who has identified such services
in the mind of the public; or
_______________
71

No. L-26557, 18 February 1970, 31 SCRA 544.

72

PACCAR Inc. v. Tele Scan Technologies, L.L.C., 319 F.3d 243 (2003).

73

Reiterated in Section 168 of RA 8293.

37

VOL. 437, AUGUST 18, 2004

37

McDonalds Corporation vs. L.C. Big Mak Burger, Inc.

(c) Any person who shall make any false statement in the course of
trade or who shall commit any other act contrary to good faith of a
nature calculated to discredit the goods, business or services of
another. (Emphasis supplied)

The essential elements of an action for unfair competition are (1)

confusing similarity in the general appearance of the goods, and
(2)
74
intent to deceive the public and defraud a competitor. The
confusing similarity may or may not result from similarity in the
marks, but may result from other external factors in the packaging
or presentation of the goods. The intent to deceive and defraud may
be inferred from the similarity
of the appearance of the goods as
75
offered 76for sale to the public. Actual fraudulent intent need not be
shown.
Unfair competition is broader than trademark infringement and
includes passing off goods with or without trademark infringement.
77
Trademark infringement is a form of unfair competition.
Trademark infringement constitutes unfair competition when there
is not merely likelihood of confusion, but also actual or probable
deception on the public because of the general appearance of the
goods. There can be trademark infringement without unfair
competition as when the infringer discloses on the labels containing
the mark that he manufactures the goods, thus preventing the
public from being
deceived that the goods originate from the
78
trademark owner.
To support their claim of unfair competition, petitioners allege
that respondents fraudulently passed off their hamburgers as Big
Mac hamburgers. Petitioners add that respondents fraudulent
79
intent can be inferred from the similarity of the marks in question.
_______________
V. AMADOR, supra note 58 at p. 278.
Shell Co. of the Philippines, Ltd. v. Ins. Petroleum Refining Co., Ltd., 120 Phil.
434; 11 SCRA 436 (1964); La Insular v. Jao Oge, 42 Phil. 366 (1921).
76 Alhambra Cigar, Co. v. Mojica, 27 Phil. 266 (1914).
77 Co Tiong Sa v. Director of Patents, supra note 60; Clarke v. Manila Candy Co.,
36 Phil. 100 (1917).
74
75

78
79

See Q-Tips, Inc. v. Johnson & Johnson, 108 F.Supp 845 (1952).
Rollo, pp. 40-45.
38

38

SUPREME COURT REPORTS ANNOTATED

McDonalds Corporation vs. L.C. Big Mak Burger, Inc.

Passing off (or palming off) takes place where the defendant, by
imitative devices on the general appearance of the goods, misleads
prospective purchasers into buying his merchandise 80under the
impression that they are buying that of his competitors. Thus, the
defendant gives his goods the general appearance of the goods of his
competitor with the intention of deceiving the public that the goods
are those of his competitor.
The RTC described the respective marks and the goods of
petitioners and respondents in this wise:
The mark B[ig] M[ac] is used by plaintiff McDonalds to identify its
double decker hamburger sandwich. The packaging material is a
styrofoam box with the McDonalds logo and trademark in red with block
capital letters printed on it. All letters of the B[ig] M[ac] mark are also in
red and block capital letters. On the other hand, defendants B[ig] M[ak]
script print is in orange with only the letter B and M being capitalized
and the packaging material is plastic wrapper. x x x x Further, plaintiffs
logo and mascot are the umbrella M and Ronald McDonalds,
respectively, compared to the mascot of defendant Corporation which is a
chubby boy81called Macky displayed or printed between the words Big
and Mak. (Emphasis supplied)

Respondents point to these dissimilarities as proof that they did not

give their hamburgers the general appearance of petitioners Big
Mac hamburgers.
The dissimilarities in the packaging are minor compared to the
stark similarities in the words that give respondents Big Mak
hamburgers the general appearance of petitioners Big Mac
hamburgers. Section 29(a) expressly provides that the similarity in
the general appearance of the goods may be in the devices or
words used on the wrappings. Respondents have applied on their
plastic wrappers and bags almost the same words that petitioners
use on their styrofoam box. What attracts the attention of the
buying public are the words Big Mak which are almost the same,
aurally and visually, as the words Big Mac. The dissimilarities in
the material and other devices are insignificant compared to the
glaring similarity in the words used in the wrappings.
_______________
80
81

Suncoast Tours, Inc. v. Lambert Groups, Inc., 1999 WL 1034683 (1999).

Rollo, pp. 148-149.
39

VOL. 437, AUGUST 18, 2004

39

McDonalds Corporation vs. L.C. Big Mak Burger, Inc.

Section 29(a) also provides that the defendant gives his goods the
general appearance of goods of another manufacturer.
Respondents goods are hamburgers which are also the goods of
petitioners. If respondents sold egg sandwiches only instead of
hamburger sandwiches, their use of the Big Mak mark would not
give their goods the general appearance of petitioners Big Mac
hamburgers. In such case, there is only trademark infringement but
no unfair competition. However, since respondents chose to apply
the Big Mak mark on hamburgers, just like petitioners use of the
Big Mac mark on hamburgers, respondents have obviously clothed

their goods with the general appearance of petitioners goods.

Moreover, there is no notice to the public that the Big Mak
hamburgers are products of L.C. Big Mak Burger, Inc.
Respondents introduced during the trial plastic wrappers and bags
with the words L.C. Big Mak Burger, Inc. to inform the public of
the name of the seller of the hamburgers. However, petitioners
introduced during the injunctive hearings plastic wrappers and
bags with the Big Mak mark without the name L.C. Big Mak
Burger, Inc. Respondents belated presentation of plastic wrappers
and bags bearing the name of L.C. Big Mak Burger, Inc. as the
seller of the hamburgers is an after-thought designed to exculpate
them from their unfair business conduct. As earlier stated, we
cannot consider respondents evidence since petitioners complaint
was based on facts existing before and during the injunctive
hearings.
Thus, there is actually no notice to the public that the Big Mak
hamburgers are products of L.C. Big Mak Burger, Inc. and not
those of petitioners who have the exclusive right to the Big Mac
mark. This clearly shows respondents intent to deceive the public.
Had respondents placed a notice on their plastic wrappers and bags
that the hamburgers are sold by L.C. Big Mak Burger, Inc., then
they could validly claim that they did not intend to deceive the
public. In such case,82 there is only trademark infringement but no
unfair competition. Respondents, however, did not give such
notice. We hold that as found by the RTC, respondent corporation is
liable for unfair competition.
_______________
82

See Q-Tips, Inc. v. Johnson & Johnson, supra note 78.

40

40

SUPREME COURT REPORTS ANNOTATED

McDonalds Corporation vs. L.C. Big Mak Burger, Inc.

The Remedies Available to Petitioners

83

Under Section 23 (Section 23) in relation to Section 29 of RA 166,

a plaintiff who successfully maintains trademark infringement and
unfair competition claims is entitled to injunctive and monetary
reliefs. Here, the RTC did not err in issuing the injunctive writ of 16
August 1990 (made permanent in its Decision of 5 September 1994)
and in ordering the payment of P400,000 actual damages in favor of
petitioners. The injunctive writ is indispensable to prevent further
acts of infringement by respondent corporation. Also, the amount of
actual damages is a reasonable percentage (11.9%) of respondent
corporations gross sales for three (1988-1989 and 1991) of the
six
84
years (1984-1990) respondents have used the Big Mak mark.
The RTC also did not err in awarding
exemplary damages by
85
way of correction for the public good in view of the finding of unfair
competition where intent to deceive the public is essential. The
86
award of attorneys fees and expenses of litigation is also in order.
WHEREFORE, we GRANT the instant petition. We SET ASIDE
the Decision dated 26 November 1999 of the Court of Appeals and
its Resolution dated 11 July 2000 and REINSTATE the Decision
_______________
83 This provision reads: Actions, and damages and injunction for infringement.
Any person entitled to the exclusive use of a registered mark or trade-name may
recover damages in a civil action from any person who infringes his rights, and the
measure of the damages suffered shall be either the reasonable profit which the
complaining party would have made, had the defendant not infringed his said
rights, or the profit which the defendant actually made out of the infringement, or

in the event such measure of damages cannot be readily ascertained with

reasonable certainty, then the court may award as damages a reasonable
percentage based upon the amount of gross sales of the defendant of the value of
the services in connection with which the mark or trade-name was used in the
infringement of the rights of the complaining party. In cases where actual intent to
mislead the public or to defraud the complaining party shall be shown, in the
discretion of the court, the damages may be doubled.
The complaining party, upon proper showing, may also be granted injunction.
84 TSN, (Francis Dy), 15 March 1993, p. 32; TSN (Francis Dy), 22 March 1993,
pp. 1-2.
85 Article 2229, CIVIL CODE.
86 Article 2208(1), CIVIL CODE.
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VOL. 437, AUGUST 18, 2004

41

Salazar vs. People

dated 5 September 1994 of the Regional Trial Court of Makati,
Branch 137, finding respondent L.C. Big Mak Burger, Inc. liable for
trademark infringement and unfair competition.
SO ORDERED.
Davide, Jr. (C.J., Chairman), Quisumbing, Ynares-Santiago
and Azcuna, JJ., concur.
Petition granted, judgment and resolution set aside. That of the
trial court reinstated.
Note.The likelihood of confusion of goods or business is a
relative concept, to be determined only according to the particular,
and sometimes peculiar, circumstances of each case. (Canon
Kabushiki Kaisha vs. Court of Appeals, 336 SCRA 266 [2000])
o0o

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