G.R. No. 217781 - San Miguel Pure Foods Co., Inc. vs. Foodsphere, Inc.

Case Summary (G.R. No. 217781)

Petitioners and Respondents

Two consolidated petitions: (1) SMPFCI (G.R. No. 217781) seeks review only insofar as the CA’s April 8, 2015 Resolution deleted from the CA’s September 24, 2014 Decision an award of exemplary damages; (2) Foodsphere (G.R. No. 217788) seeks to reverse the CA’s September 24, 2014 Decision and April 8, 2015 Resolution insofar as the CA declared Foodsphere guilty of unfair competition and imposed relief.

Key Dates and Procedural History

SMPFCI filed its complaint with the IPO’s BLA on November 4, 2010, alleging trademark infringement and unfair competition. The BLA dismissed the complaint on July 17, 2012. On appeal, the IPO Director General (September 10, 2013) found no trademark infringement but held Foodsphere liable for unfair competition, awarding nominal damages (P100,000) and attorney’s fees (P300,000) and ordering injunctive/seizure relief. The CA issued rulings: March 6, 2014 (Eleventh Division) affirmed absence of trademark infringement; September 24, 2014 (Fourteenth Division) affirmed unfair competition liability and initially awarded exemplary damages in addition to nominal damages and attorney’s fees; April 8, 2015 CA Resolution deleted the exemplary damages award as SMPFCI did not pray for exemplary damages in its dispositive prayers. The consolidated petitions were filed with the Supreme Court (G.R. Nos. 217781 and 217788), and the Supreme Court ultimately denied both petitions and affirmed the CA’s decision and resolution.

Facts Material to Relief Sought

SMPFCI introduced its “FIESTA” ham in 1980 and later registered the “FIESTA” mark; it claims extensive goodwill, annual sales figures, and promotional expenditures. Foodsphere introduced “PISTA” ham in 2006 and used packaging and promotional materials from about 2006–2009, including switching to a paper ham bag resembling SMPFCI’s bag, employing red as a dominant color, and using a front-layout image of a partly sliced ham with fruits. SMPFCI alleged that the packaging, trade dress, and the word “PISTA” (a Tagalog cognate of “FIESTA”) were confusingly similar to its mark and trade dress, causing likelihood and actual confusion and resulting in alleged foregone income. Foodsphere asserted distinctiveness of marks (use of housemarks “CDO” and “PUREFOODS”), prior and lawful use of “PISTA” and other marks, estoppel by SMPFCI’s inaction against other “FIESTA” users, and that purchasers are discerning and unlikely to be confused.

Claims, Relief Sought, and Defenses

SMPFCI’s claims: trademark infringement under Sections 155 and related provisions of R.A. No. 8293 (the Intellectual Property Code) and unfair competition under Section 168; claimed actual damages (specific sums for foregone income), exemplary damages, attorney’s fees, and injunctive and seizure relief. Foodsphere’s defenses included assertion of lawful registration and prior use of its mark, the presence of housemarks reducing likelihood of confusion, existence of other registrations and users of “FIESTA,” lack of exclusivity over packaging elements, and absence of fraudulent intent or actual likelihood of confusion.

Applicable Law and Legal Standards

Constitutional framework applicable: the 1987 Constitution (decision date post‑1990). Statutory and doctrinal law applied: Intellectual Property Code (R.A. No. 8293), especially Section 168 on unfair competition; Civil Code provisions cited in the analysis of damages (Articles 2221, 2233, 2234). The settled legal test for unfair competition focuses on passing off: whether the defendant’s goods have the general appearance likely to influence purchasers to believe they are those of another, and whether the defendant’s acts are intended or calculated to deceive ordinary buyers under ordinary trading conditions. The essential elements of unfair competition are (1) confusing similarity in general appearance of the goods and (2) intent to deceive the public and defraud a competitor; actual fraudulent intent need not be proven because intent may be inferred from the similarities.

Administrative and Appellate Findings (BLA, IPO Director General, CA)

The BLA dismissed SMPFCI’s complaint on multiple grounds, including priority of Foodsphere’s 2006 usage/registration of “PISTA,” prescription, and lack of persuasive evidence of confusion or unfair competition. The IPO Director General reversed in part: finding no trademark infringement (applying dominancy and holistic tests and giving weight to Foodsphere’s registration), but finding Foodsphere guilty of unfair competition because its overall packaging and presentation created the general appearance likely to influence purchasers, and inferring intent to deceive from the switch to similar packaging and layout; the Director General ordered nominal damages (P100,000), attorney’s fees (P300,000), injunctive relief, and seizure/disposal. The CA (Eleventh Division) affirmed absence of trademark infringement; the CA (Fourteenth Division) affirmed unfair competition liability but, after clarification, deleted an award of exemplary damages in a subsequent resolution because SMPFCI had not prayed for exemplary damages in the dispositive portion.

Supreme Court’s Analysis on Exemplary Damages and Relief

The Supreme Court examined whether the CA properly deleted the exemplary damages award. It applied the controlling principle that the dispositive portion (fallo) of a judgment controls over the opinion in the body; the Court found no basis to apply the exception that the body should prevail where the body unmistakably shows a mistake in the dispositive portion. Here, the dispositive portions of the Director General’s decision (and the CA’s adoption of that decision) did not include exemplary damages; therefore the deletion was proper. On substantive entitlement, the Court reiterated the Civil Code prerequisites for exemplary damages: exemplary damages are discretionary, awarded only in addition to compensatory damages and only after the claimant has established entitlement to moral, temperate, liquidated, or compensatory damages; further, the wrongful act must be accompanied by bad faith

Case Syllabus (G.R. No. 217781)

Case Caption and Nature of Proceedings

Consolidated petitions: G.R. No. 217781 (San Miguel Pure Foods Company, Inc. — SMPFCI) and G.R. No. 217788 (Foodsphere, Inc.).
Both petitions are filed as Petitions for Review on Certiorari under Rule 45 of the Rules of Court.
The issues arise from the Court of Appeals (CA) Decisions and Resolution (including a Decision dated September 24, 2014 and a Resolution dated April 8, 2015) in CA-G.R. SP No. 131945, and antecedent administrative rulings of the Bureau of Legal Affairs (BLA) and the Office of the Director General of the Intellectual Property Office (IPO).
Relief sought: SMPFCI in G.R. No. 217781 challenges the CA’s deletion of exemplary damages from its September 24, 2014 Decision; Foodsphere in G.R. No. 217788 seeks to reverse and set aside the CA’s September 24, 2014 Decision and April 8, 2015 Resolution declaring it guilty of unfair competition and holding it liable for damages.

Procedural History

November 4, 2010: SMPFCI filed a Complaint for trademark infringement and unfair competition with prayer for preliminary injunction and TRO before the BLA of the IPO under Sections 155 and 168 of R.A. No. 8293 (IP Code).
July 17, 2012: BLA Director rendered Decision dismissing SMPFCI’s complaint for lack of merit for multiple reasons (see BLA Decision section).
September 10, 2013: Office of the Director General partially granted SMPFCI’s appeal — affirmed no trademark infringement but found Foodsphere guilty of unfair competition; ordered nominal damages P100,000.00, attorney’s fees P300,000.00, cease and desist and seizure/disposal of offending materials.
October 8 and October 29, 2013: SMPFCI and Foodsphere, respectively, filed Petitions for Review with the Court of Appeals.
March 6, 2014: CA Eleventh Division denied SMPFCI’s petition, affirming the Director General’s finding of no trademark infringement.
September 24, 2014: CA Fourteenth Division denied Foodsphere’s petition, affirming the Director General’s finding that Foodsphere was guilty of unfair competition and ordering damages.
April 8, 2015: CA clarified its September 24, 2014 Decision and resolved to delete exemplary damages from the body of its Decision on the ground SMPFCI never prayed for exemplary damages.
June 13, 2016: In a separate docket (G.R. No. 215475), the Court denied SMPFCI's Petition for Review on Certiorari for failure to sufficiently show reversible error as to earlier CA rulings finding no trademark infringement.
June 8, 2015: Both SMPFCI and Foodsphere filed the instant Petitions for Review on Certiorari docketed as G.R. Nos. 217781 and 217788, respectively.
June 20, 2018: Supreme Court rendered decision denying both petitions and affirming the CA Decision dated September 24, 2014 and Resolution dated April 8, 2015.

Antecedent Facts — Parties, Products and Market Conduct

Parties:
- SMPFCI: Manufacturer, seller and distributor of food products; owner of the registered trademark "PUREFOODS FIESTA HAM" (FIESTA ham).
- Foodsphere, Inc.: Manufacturer, seller and distributor of food products; its ham products bear the "CDO" house mark and the mark "PISTA".
SMPFCI’s FIESTA ham:
- First introduced in 1980.
- Sold in numerous supermarkets nationwide with average annual sales of P10,791,537.25.
- Allegedly enjoys goodwill and public association with sumptuous ham of great taste, superior quality, and food safety.
- SMPFCI claims continuous promotion expenditures totaling no less than P3,678,407.95.
- SMPFCI also claims a trade dress combining the word "FIESTA" and a figure of a partly sliced ham on a plate with fruits has earned goodwill.
Foodsphere’s PISTA ham and marketing:
- Introduced in 2006; aggressively promoted in 2007 as a “real premium ham.”
- 2008: SMPFCI launched “Dapat ganito ka-espesyal” campaign using promotional material showing a whole/sliced ham with fruits, being sliced with a knife and held by a fork.
- 2008: Foodsphere launched a “Christmas Ham with Taste” campaign featuring a similar picture.
- 2009: Foodsphere launched a “Make Christmas even more special” campaign which SMPFCI alleges directly copied SMPFCI’s campaign.
- 2009: Foodsphere introduced a paper ham bag which SMPFCI alleges looked significantly similar to SMPFCI’s paper ham bag and trade dress.
Alleged points of similarity:
- Use of the words "FIESTA" and "PISTA" (PISTA translates to fiesta/feast/festival).
- Phonetic and visual resemblance: similar pronunciation, same number of syllables, shared consonants and vowels, similar general appearance on packages.
- Both products sold in same channels, sometimes in same freezer or supermarket section, and both use imagery of partly sliced ham with fruits and predominantly red packaging elements.

SMPFCI’s Allegations and Remedies Sought

Causes of action asserted:
- Trademark infringement based on likelihood of confusion as to origin.
- Unfair competition/passing off based on confusing similarity of general appearance and alleged intent by Foodsphere to deceive and defraud.
Particular allegations:
- Foodsphere’s use of “PISTA” and similar trade dress was intended to capitalize on SMPFCI’s goodwill and mislead consumers into believing Foodsphere’s goods were produced by, licensed by, or associated with SMPFCI.
- Actual confusion and likelihood of confusion asserted due to similarities in marks, packaging, and marketing.
Damages and relief claimed:
- Actual damages: claimed failure to realize income of at least P27,668,538.38 and estimated foregone income of P899,294.77 per month.
- Prayer for attorney's fees.
- Prayer for exemplary damages (SMPFCI later contends it did specifically pray for exemplary damages in pleadings).
- Requests for injunctions, seizure and forfeiture of infringing products and properties used in the infringing acts.

Foodsphere’s Defenses and Counter-Assertions

Denial of trademark infringement and unfair competition charges.
Key defenses raised:
- Visual and aural distinctiveness: "PISTA" is used with Foodsphere’s house mark "CDO"; SMPFCI’s mark bears the house mark "PUREFOODS", making confusion improbable.
- Prior use and registration: Foodsphere claimed prior use of "PISTA" since 2006 and registration filed in 2006; Foodsphere also asserted prior use and registration of "HOLIDAY" from 1970 and registration in 1986, arguing SMPFCI’s registration of "FIESTA" occurred in 2007.
- Existence of other "FIESTA" registrations and products in the marketplace (e.g., "FIESTA TROPICALE", "HAPPY FIESTA", "ARO FIESTA HAM", "ROYAL FIESTA", "PUREGOLD FIESTA HAM"), asserting SMPFCI’s inaction against them as basis for estoppel in pais.
- Packaging differences and consumer discernment: trademarks and housemarks are boldly printed; ham bags are given to consumers after purchase (thus not influencing purchase decision); hams are higher-priced items bought by informed consumers; booths are manned by different promodisers.
- Color usage history: Foodsphere claimed prior use of red color on boxes and asserted SMPFCI itself switched from green to red in 2009.
- Argument that similarity in general appearance alone does not establish unfair competition; no demonstrable fraudulent intent; no proof of likelihood of confusion or actual deception.

BLA (Bureau of Legal Affairs) Decision — July 17, 2012

The BLA dismissed SMPFCI’s complaint for lack of merit based on multiple grounds:
- Trademark infringement: Foodsphere began using "PISTA" in 2006 and filed an application in 2006, whereas SMPFCI’s application for "FIESTA" was filed and approved only in 2007, meaning SMPFCI had no cause of action.
- Prescription: SMPFCI’s complaint was filed beyond the four-year prescriptive period prescribed under the Rules and Regulation on Administrative Complaints for Violation of Law Involving Intellectual Property Rights.
- Evidence issues: Testimonies and surveys introduced by SMPFCI were found self-serving.
- Comparative confusion: Comparison of the competing marks would not lead to confusion or deception to the public.
- Unfair competition: SMPFCI faile