McDonald's Corporation and McGeorge Food Industries, Inc. vs. L.C. Big Mak Burger, Inc.

[SEC-AC NO. 426. January 3, 1994.] McDONALD'S CORPORATION and McGEORGE FOOD INDUSTRIES, INC. , petitioners-appellants , vs . L.C. BIG MAK BURGER, INC., respondent-appellee . D E C I S I O N This is an appeal from the Orders of Hearing Officers in SEC Case No. 4255, entitled "Mc Donald's Corporation and McGeorge Food Industries, Inc. v. L.C. Big Mak Burger, Inc.", dated 14 January 1993 and 18 May 1993 . The appealed Order of 14 January 1993 dismissed the petition where petitioners are seeking the change of the corporate name of respondent-appellee to some other name which is not confusingly or deceptively similar to petitioners-appellants' mark "Big Mac" claiming exclusive right to use and/or authorize the use of the same mark, the name they adopted for their flagship product. The Order dated 18 May 1993 is a denial of the motion for reconsideration to the Order of 14 January 1993. The case and the facts as set forth in the appealed Orders and other records are as follows: Petitioners-appellants filed on May 13, 1992 a petition in SEC Case No. 4255 seeking to enjoin and restrain the respondent-appellee and its agents or representatives from using "L.C. Big Mak Burger, Inc." as its corporate name, and from doing any acts or things likely to induce the belief on the part of the public that respondent-appellee's products are in anyway connected with petitioners-appellants products. The petitioners-appellants also prayed that respondent-appellee be ordered to amend its articles of incorporation to change its present corporate name to some other corporate name which is not confusingly or deceptively similar to petitioners-appellants' trademark, "Big Mac". After the hearing on the application for a writ of preliminary injunction, respondent "L.C. Big Mac" filed a motion to dismiss dated 4 August 1992, praying for the dismissal of the petition on the ground that the Commission has no jurisdiction over the nature of the action or suit, and that the petition states no cause of action. On 17 August 1992, respondent filed their Reply to Comment/Opposition (to Motion to Dismiss). On 8 December 1992, respondent filed a Supplemental Motion to Dismiss interposing additional grounds for their prayer for the dismissal of the petition, to wit: (a) that "Big Mak Burger" was first used and registered by respondent and, hence, it is entitled to its use as a corporate name; (b) that a Filipino corporation such as respondent is entitled to protection against harassment by foreign corporation; and (c) that petitioners are barred by laches. Then came the assailed Order dated 14 January 1993 where the Hearing Officer dismissed the petition stating, among others, that even hypothetically admitting the truth of the factual allegations in the petition, the same cannot prevail over the convincing evidence presented in support of respondents' motion to dismiss. On 23 February 1993, petitioners filed a motion for reconsideration to the said Order of 14 January 1993. On 2 March 1993, respondent likewise filed a motion for reconsideration, reiterating their prayer for the dismissal of the petition on the ground of lack of jurisdiction and that the petition states no cause of action. On 5 March 1993, petitioners filed an Opposition to respondents' motion for reconsideration: On 29 March 1993, petitioners filed a Reply to respondents' Opposition to Petitioners' Motion for Reconsideration. On 18 May 1993, the hearing officer denied the separate motions for reconsideration filed by petitioners and respondent, as well as the opposition thereto. The foregoing Orders were appealed to this Commission En Banc. The issues for resolution in this case are: (1) Whether or not the respondent-appellee had acquired the prior and exclusive right to the use of the name "Big Mak" as part of its corporate name; and (2) Whether or not the corporate name adopted by respondent-appellee is identical or deceptively or confusingly similar to petitioners-appellants' trademark "Big Mac", or patently deceptive, confusing, or contrary to existing laws. Petitioners-appellants maintain that the respondent-appellee's use of the corporate name, notably the words "Big Mak" which are given undue emphasis and are usually printed in big and bold letters as compared to the other words which are in miniscule letters, is confusing, or is patently deceptive to the public as it tends to associate respondent-appellee's products with petitioners-appellants' "Big Mac"; that McDonald's trademark "Big Mac", although granted its Certificate of Registration No. 34591 in the Principal Register of the Bureau of Patents only on 18 July 1985, was first introduced in the Philippine market on the very first day that a McDonald's restaurant started doing business in the Philippines on 27 September 1981; that in fact, to protect its right over its trademarks and to give value thereto, McDonald's had as early as 2 February 1979, filed an application for trademark registration for its trademark "Big Mac" with the then Philippine Patents Office; that the trademark application per registration of the mark "Big Mac" was allowed under the Philippine Trademarks Law, based on its U.S. Trademark Registration No. 1, 126, 102 issued on 16 October 1979 and which indicates 1957 as the year when the mark "Big Mac" was first used in commerce; that respondent-appellees' corporation came into existence only on 11 December 1987, long after McDonald's first introduced its "Big Mac" in the Philippines; that to make it appear that their use of the words "Big Mac" was earlier than the date of McDonald's BPTTT Certificate of Registration, respondent-appellee points to a Sanitary Permit earlier granted on 11 January 1985 to a certain Conchita Dy who, as appellee claims, was its predecessor-in interest; that considering that respondent-appellee's products are of the same type and nature as those of petitioners-appellants and the fact that the use and adoption of respondent-appellee' for its corporate name "L.C. Big Mak Burger, Inc." constituted an unlawful appropriation of a mark protected by law. The petitioners-appellants filed the instant appeal. Petitioners-appellants contend: THE HEARING OFFICERS COMMITTED GRAVE AND SERIOUS ERROR (1) IN RULING THAT THE RESPONDENT-APPELLEE HAD ACQUIRED THE PRIOR AND EXCLUSIVE RIGHT TO THE USE OF THE NAME "BIG MAK", (2) IN RULING THAT THE CORPORATE NAME ADOPTED BY THE RESPONDENT-APPELLEE IS NOT IDENTICAL OR CONFUSINGLY SIMILAR TO THE TRADEMARK "BIG MAK" OF PETITIONERS-APPELLANTS; and (3) WHEN THEY GRANTED THE RESPONDENT-APPELLEE'S MOTION TO DISMISS ON THE BASIS OF A GROUND NOT ENUMERATED UNDER RULE VI, SECTION 1, OF THE NEW RULES OF PROCEDURE OF THE COMMISSION. THE HEARING OFFICERS COMMITTED GRAVE AND SERIOUS ERROR IN RULING THAT THE RESPONDENT-APPELLEE HAD ACQUIRED THE PRIOR AND EXCLUSIVE RIGHT TO THE USE OF THE NAME "BIG MAC" Petitioners-appellants posited that the conclusion in the questioned Orders that the respondent-appellee had acquired prior right over the use of the mark "Big Mak" is not in accord with the evidence presented and existing laws and jurisprudence. prcd The contention is without merit. As correctly pointed out by the Hearing Officers, the assertion by the respondent-appellee that it has in its favor the prior use and registration of the trade name "Big Mak Burger" which entitled it to the use thereof and in the light of the petition and the relief sought thereby, it becomes evident that the main issue is, which of the parties has acquired the prior and exclusive right to the use of the name "Big Mak". " . . . Tradenames are acquired by adoption and use and belong to the one who first uses them and gives them a value in a particular market or field, notwithstanding that subsequent user may have been the first to register the same." Petitioners-appellants alleged that "Big Mac" was introduced in the Philippine market when it started doing business on 27 September 1981. However, no proof was ever presented to substantiate this allegation. On the other hand, respondent-appellee has presented evidence that "Big Mak" has been used by its predecessor-in-interest as early as 1980, where even before petitioners-appellants started their business operation in the Philippines, the tradename "Big Mak" has already been appropriated and used by a certain Conchita Dy in partnership with her brother, Francis Dy. Conchita Dy has sold her entire shares in the establishment "Big Mak" on 19 October 1987 in favor of her brother and partner, Francis Dy who, with other parties, formed "L.C. Big Mak" Burger, Inc." Respondent-appellee's predecessor-in-interest registered and used the name "Big Mak Burger" as early as 23 October 1981. In an Affidavit dated 7 December 1992, which was adopted as direct testimony during the hearing on the motion to dismiss on 17 December 1992, Francis Dy, President of the respondent-appellee corporation, alleged, among others, (1) that the words "Big Mak" was derived from the combined name of their parents "Maxima" which is the name of their mother, and "Kim Soy" which is the name of the father; (2) that the first letters "L.C. " stands for "Lucena City", (3) that in 1984, Conchita Dy became his business partner and caused the procurement of the Certificate of Registration of Business Name "Big Mak Burger"; that since 1980, they have continuously used the words "Big Mak Burger" in their business and adopted the same when they formed a corporation engaged in the food business, they adopted the name "L.C. Big Mak Burgers Inc.". Since one of the issues here is the priority in registration and usage of the name pursuant to the principle of "prius tempore, potior jure" (first in time, stronger in right), as correctly pointed out by the Hearing Officer, the registration of the Business Name of the respondent-appellee's predecessor-in-interest since October 1981 gave said name the protection it deserves under the law. While appellants argue that there is infringement of their trademark, the reckoning point of such an issue should commence not from the introduction of the trademark but from the date of registration. In the case at bar, since the trademark of petitioners-appellant was registered after the use and registration of appellee's business name it is the respondent-appellee who should be given protection under Section 18 of the Corporation Code because, based on records, it is the one with prior use and registration. The Rules on the Adoption of Corporate Name of the Commission provide: "xxx xxx xxx (c) the name should not be similar to one already used by another corporation as partnership. If the proposed name contains a word similar to a word already used as part of the firm name or style of a registered company, the proposed name must contain two other words different from the name of the company already registered."(Guidelines in the Approval of Corporate and Partnership Names, September 7, 1977). Applying said Rules, the corporate name of respondent-appellee is not composed of just two (2) words. It consists of two (2) letters and four (4) words, all of which should be taken together in establishing respondent-appellee's corporate identity. The mere reading or pronunciation of petitioners-appellants' trademark does not evoke the same idea or sound as the corporate name "L.C. Big Mak Burger", which respondent-appellee had priority of registration and usage or vice-versa. Respondent-Appellee's corporate name is "L.C. Big Mak Burger, Inc.", the corporate name that the petitioners-appellants would want to be expunge from the records of the Commission. By comparison, petitioners-appellants' trademark "Big Mac", a known mark for MacDonald's hamburger sandwiches product, is very distinct from that of appellee's "L.C. Big Mak Burger, Inc." In this regard, we can say that the Hearing Officer correctly ruled respondent-appellee's prior adoption of the name "L.C. Big Mak Burger, Inc." as part of its corporate name. The right to the exclusive use of a corporate name with freedom from infringement by similarity is determined by priority of adoption. (1 Thompson, p. 80 citing Munn v. Americana Co., 82 N. Eq. 63, 88 Atl. 30) THE HEARING OFFICERS COMMITTED GRAVE AND SERIOUS ERROR WHEN THEY RULED THAT THE CORPORATE NAME ADOPTED BY THE RESPONDENT-APPELLEE IS NOT IDENTICAL OR CONFUSINGLY SIMILAR TO THE TRADEMARK "BIG MAC" OF THE PETITIONERS-APPELLANTS. The Hearing Officer did not err in ruling that the corporate name adopted by the respondent-appellee is not identical or confusingly similar to the trademark "Big Mac" of the petitioners-appellants. Our Corporation Code, in its Section 18, expressly provides: "No corporate name may be allowed by the Securities and Exchange Commission if the proposed name is identical or confusingly similar to that of any existing corporation or to any other name already protected by law or is patently deceptive, confusing or contrary to existing law where a corporate name is approved, the Commission shall issue an amended certificate of incorporation under the amended name." To come within its scope, two (2) requisites must be proven, namely: 1. that the complainant corporation acquired a prior right over the use of such corporate name (already discussed in the first assigned error); and 2. the proposed name is either: a. identical, or b. deceptively or confusingly similar to that of any existing corporation or to any other name already protected by law; or c. patently deceptive, confusing or contrary to existing law. The second requisite does not exist in this case. In determining the existence of confusing similarity in corporate names, the test is whether the similarity is such as to mislead a person using ordinary care and discrimination. In so doing, the Court must look at the record as well as the names themselves. (Ohio Nat. Life Ins. Co. v. Ohio Life Ins. Co., 210 NE 2d 298) While the corporate names of petitioners-appellants and respondent-appellee are not identical, a reading of the petitioners-appellants trademark "Big Mac" and respondent-appellee's "L.C. Big Mak Burger, Inc." would not lead one to conclude that one is affiliated or associated with one another, as petitioners-appellants' names "McDonald" and Big Mac" are known in the country and abroad as the McDonald's Group of Companies and products. The two (2) entities have different main objectives and both cater generally to people of means who, as a rule, exercise careful scrutiny of the identity of the entity with which they deal and are interested not only in the entity but in the products as well. As observed by the Hearing Officer, in addition to the two (2) initials "L. C." before the coined word "Big Mak", as well as the indication that said entity is a corporation, would not suffice to deceive the ordinary consumers that in purchasing the products or goods of respondent-appellee, they are dealing with the petitioners-appellants in this case, or vice-versa. Petitioners-appellants argued that the dominant use in respondent-appellees' signs of the words "Big Mak" is the source of confusion. This is not correct. First, there is no evidence that petitioners-appellants have signs similar to what respondent-appellee is using. Second, the words are not identical or similar or even phonetically the same as petitioners-appellants trademark. Third, there is no distinction between respondent-appellee's corporate name and petitioners-appellants' trademark as one refers to a business establishment while the other pertains to one of their many products. Fourth, the general appearance, spelling and meaning of the words being assailed by petitioners-appellants are entirely different from their trademark. Likewise, Section 18 of the Corporation Code refers to names and does not contemplate trademarks, as a valid and legal basis for the cancellation of a corporate name. Since the certificate of registration of petitioners-appellants trademark is limited to goods, the exclusive right protected is limited to its product bearing "Big Mac". THE HEARING OFFICERS COMMITTED GRAVE AND SERIOUS ERROR WHEN IT GRANTED RESPONDENT-APPELLEE'S MOTION TO DISMISS ON THE BASIS OF A GROUND NOT ENUMERATED UNDER RULE VI, SECTION 1, OF THE NEW RULES OF PROCEDURE OF THE COMMISSION. Petitioners-appellants are claiming that the Hearing Officer is without authority to resolve a motion to dismiss on the basis of the grounds and evidence presented by both parties in the hearings conducted for the purpose. The issue of exclusivity and priority of rights is an ingredient of the claim of petitioners-appellants that their trademark is a name protected by law as envisioned by Section 18 of the Corporation Code. The absence of a showing in their petition that they have exclusive and prior rights goes into the very existence of a valid cause of action. We cannot fault the Hearing Officer who appreciated the bases of respondent-appellee's motion to dismiss as being meritorious. By going into the very crux of the petition, the Hearing Officer need not conduct a full blown hearing when the basis for dismissing the petition is very apparent from the results of the hearings conducted in the resolution of the motion to dismiss. Respondent-appellee, on the other hand, is seeking for the dismissal of the case below on jurisdictional grounds. However, as correctly pointed out by the Hearing Officer, the same cannot be sustained in view of the nature of the relief applied for when taken in the light of Section 18 of the Corporation Code. We find that the Hearing Officer issued the appealed Orders based on substantial evidence submitted by the parties. "In cases filed before administrative or quasi-judicial bodies, a fact may be deemed established if it is supported by substantial evidence, or that amount of relevant evidence which a reasonable mind might accept as adequate to justify a conclusion." (Section 5, Rule 133, Rules of Court) " . . . in reviewing administrative decisions, the reviewing court cannot reexamine the sufficiency of the evidence as if originally instituted therein and received additional evidence that was not submitted to the administrative agency concerned. The findings of facts must be respected, so long as they are supported by substantial evidence . . . ". (Police Commission v. Lood, et al., G.R. No. L-34637, February 24, 1984; Timbancaya v. Vicente, et al., G.R. No. L-19100, December 27, 1963, 199 Phil. 169) WHEREFORE the Orders appealed from is hereby AFFIRMED. The instant appeal is hereby DISMISSED for lack of merit. SO ORDERED. (SGD.) ROSARIO N. LOPEZ Chairman Did not participate (SGD.) RODOLFO L. SAMARISTA (SGD.) MERLE O. MANUEL Associate Commissioner Associate Commissioner Did not participate (SGD.) FE ELOISA C. GLORIA (SGD.) PERFECTO R. YASAY, JR. Associate Commissioner Associate Commissioner