G.R. No. 195011-19 - Singian, Jr. vs. Sandiganbayan

Case Summary (G.R. No. 195011-19)

Factual Background

Levi Strauss & Co. was the long-established owner of the word mark "LEVI'S" since 1946 and licensed the mark to Levi Strauss Phils., Inc. for use in the Philippines. Antonio Sevilla originally registered the mark LIVE'S for goods in Class 25 and later assigned his rights to Antonio L. Guevarra, who used the mark in commerce. In 1995 Levi Strauss commissioned a consumer survey known as Project Cherokee 5, which reported that a substantial proportion of respondents associated LIVE'S with LEVI'S. On December 13, 1995 petitioner filed a Petition for Cancellation of Trademark Registration No. 53918 for LIVE'S before the then Bureau of Patents, Trademarks and Technology Transfer.

Procedural History Before the IPO-BLA

The Intellectual Property Office Bureau of Legal Affairs issued a Decision dated January 29, 2009 denying petitioner's cancellation action and declaring respondents' LIVE'S registration valid and subsisting. The IPO-BLA found no confusing similarity, emphasizing differences in pronunciation, spelling, meaning, design, price, and trade channels, and it relied in part on the Court's earlier pronouncements in G.R. No. 162311.

Proceedings Before the IPO Director General

The IPO Director General issued a Decision dated August 13, 2012 that affirmed the IPO-BLA ruling. The IPO-DG likewise declined to sustain petitioner's contention of confusing similarity and cited the holdings in G.R. No. 162311 in support of its conclusion.

Petition for Review Before the Court of Appeals

Petitioner sought review under Rule 43 before the Court of Appeals. In a Decision dated September 26, 2014 the CA dismissed the petition on the grounds that the controversy had become moot because Registration No. 53918 had been assigned to a third party, Dale Sy, during the pendency of the cancellation proceeding, and that G.R. No. 162311 operated as res judicata. The CA denied reconsideration in a Resolution dated July 28, 2015.

Issues Before the Supreme Court

The Supreme Court identified the issues as whether the CA correctly ruled that the case was moot and that G.R. No. 162311 was res judicata, and whether petitioner's Petition for Cancellation should be granted on the ground of confusing similarity between the "LEVI'S" mark and the LIVE'S mark.

Supreme Court on Mootness and Transferee Pendente Lite

The Court held that the CA erred in finding mootness. It explained that the assignment of Registration No. 53918 to Dale Sy occurred on July 31, 2012 during pendency of the cancellation action, and that the registration remained valid and subsisting, set to expire on November 16, 2022. The Court applied the doctrine governing transferees pendente lite and held that a transferee stands in the shoes of the transferor and is bound by the pending proceedings, citing G.R. No. 235279 and Rule 3, Section 19 of the 1997 Rules of Civil Procedure as construed in Sunfire Trading, Inc. v. Guy.

Supreme Court on Res Judicata and Preliminary Investigation

The Court held that G.R. No. 162311 did not operate as res judicata. It reasoned that the prior case arose from preliminary investigation and a prosecutorial dismissal for lack of probable cause, which are investigative and administrative in character and do not produce final judgments on the merits susceptible of preclusion. The Court relied on decisions such as Imingan v. The Office of the Honorable Ombudsman, Encinas v. Agustin, Jr., and Manila Electric Company v. Atilano to distinguish investigative determinations from adjudicative final judgments necessary for res judicata to apply.

Decision to Adjudicate the Merits and Governing Test

Because the CA improperly dismissed the petition, the Supreme Court exercised its discretion to resolve the merits rather than remand. The Court applied the procedural and substantive standards of the Rules for Intellectual Property Rights Cases and adopted the Dominancy Test as the governing test for confusing similarity, noting the en banc ruling in Kolin Electronics Co., Inc. v. Kolin Philippines International, Inc. which abandoned the Holistic Test and relied on the legislative framework embodied in Section 155 of Republic Act No. 8293.

Comparative Analysis of the Marks Under the Dominancy Test

The Court compared the dominant features of petitioner's "LEVI'S" marks and respondents' stylized LIVE'S mark. Both marks consist of the same five letters with an apostrophe before the final S and share identical visual composition with only the positions of the letters "E" and "I" interchanged; both displayed the letter "E" in lowercase amid other uppercase letters in stylized versions. The Court concluded that respondents' LIVE'S mark was essentially an anagram of petitioner's dominant word and that the aural and visual impressions could mislead an ordinary purchaser.

Consideration of Labels, Market Context, and Survey Evidence

The Court observed that the products were competing goods and that actual product labels and trade dress bore similar color schemes, borders, fringe banners, and textual additives, including the use of the number "105" juxtaposed to petitioner's "501," supporting a finding of colorable i

Case Syllabus (G.R. No. 195011-19)

Parties and Procedural Posture

Levi Strauss & Co. is a foreign corporation and owner of the word mark "LEVI'S" since 1946 and licensor of Levi Strauss Phils., Inc. for use in the Philippines.
Antonio Sevilla was the original registrant of the LIVE'S mark covering goods in Class 25 and later assigned his rights to Antonio L. Guevarra doing business as Vogue Traders Clothing Company.
Petitioner filed a Petition for Cancellation of Trademark Registration No. 53918 for LIVE'S on December 13, 1995 before the then-BPTTT (now IPO).
The IPO-BLA denied the petition in a Decision dated January 29, 2009, and the IPO Director General affirmed in a Decision dated August 13, 2012.
Petitioner filed a petition for review under Rule 43 with the Court of Appeals, which dismissed the petition on grounds of mootness and res judicata in a Decision dated September 26, 2014 and denied reconsideration on July 28, 2015.
The assailed CA decisions were brought to the Supreme Court in a petition for review on certiorari under Rule 45.

Key Factual Allegations

Petitioner submitted evidence that it extensively and continuously used the "LEVI'S" mark on Class 25 goods and that LSPI obtained a non-exclusive license in 1972.
In 1995 LSPI commissioned a consumer survey codenamed Project Cherokee 5 which found that 86% of respondents associated "LIVE'S" with "LEVI'S" and 90% read the stylized LIVE'S as "LEVI'S."
Respondents maintained that LIVE'S differed in spelling, pronunciation, trade dress, price, and distribution and that registration by the IPO evidenced lack of colorable imitation.
Registration No. 53918 for LIVE'S was assigned to a third party, Dale Sy, on July 31, 2012, during the pendency of the cancellation proceeding, and the registration remained valid and subsisting until November 16, 2022 according to the IPO database.

Procedural History

The petition for cancellation filed with the BPTTT/IPO was adjudicated administratively with the IPO-BLA denying cancellation and the IPO Director General affirming that denial.
Petitioner elevated the case to the Court of Appeals by petition under Rule 43, where the CA dismissed the petition as moot due to assignment to Dale Sy and as barred by res judicata by reference to G.R. No. 162311.
Petitioner moved for reconsideration in the CA, which was denied, and thereafter filed a petition for certiorari with the Supreme Court.

Issues Presented

Whether the Court of Appeals correctly ruled that the case was rendered moot and academic by the assignment of Registration No. 53918 and that G.R. No. 162311 operated as res judicata.
Whether the LIVE'S mark should be cancelled on the ground that it is confusingly similar or a colorable imitation of petitioner’s "LEVI'S" marks.

Ruling and Disposition

The petition for review on certiorari was granted in favor of Levi Strauss & Co..
The Decision dated September 26, 2014 and the Resolution dated July 28, 2015 of the Court of Appeals were reversed and set aside.
Trademark Registration No. 53918 for the mark LIVE'S was cancelled.

Reasoning — Mootness and Transfer of Interest

The CA erred in holding the case moot because the assignment of the registration to Dale Sy occurred pendente lite and the registration remained valid and subsisting, such that cancellation still had practical legal effect.
The Court applied the doctrine of transferee pendente lite and held that a transferee acquires the rights subject to the pending litigation and is bound by the eventual resolution, citing Sunfire Trading, Inc. v. Guy and Rule 3, Section 19 of the 1997 Rules of Civil Procedure.
Accordingly, the assignment to Dale Sy did not render the case moot or deprive the Court of authority to adjudicate the cancellation petition.

Reasoning — Res Judicata and Preliminary Investigation

The Court held that res judicata requires a final judgment on the merits rendered by a court of competent jurisdiction and identified the elements necessary for its application.
G.R. No. 162311 was not a final judgment on the merits and therefore did not operate as res judicata because it arose from preliminary investigation proceedings and a departmental determination by the DOJ, which are administrative and inquisitorial rather than adjudicatory.
The Court reviewed jurisprudence distinguishing preliminary investigations from judicial or quasi-judicial proceedings and reiterated that dismissals at preliminary investigation cannot be treated as conclusive judgments for res jud