G.R. No. L-10738; January 14, 1916
RUEDA HERMANOS & CO., plaintiff-appellant, vs. FELIX PAGLINAWAN & CO., defendant-appellant.

FACTS:
Rueda Hermanos & Co. (plaintiff), a long-time manufacturer of chocolate candy, registered a trademark for its “Pastillas Finas No. 5” product in 1910. The product consisted of five flat, circular pieces packaged in a cylindrical wrapper of a specific color and quality. In March 1914, Felix Paglinawan & Co. (defendant) began manufacturing a similar chocolate candy with peanuts, also packaged as five flat, circular pieces in a cylindrical wrapper of practically identical size, shape, and paper quality/color. The labels on both packages contained similar wording, layout, and type size, with only minor differences in shading, italics, and specific names/addresses. The plaintiff filed a civil action for damages due to unfair competition. The trial court ruled in favor of the plaintiff, granting a permanent injunction and awarding P1,200 in damages. Both parties appealed: the defendant contested liability, and the plaintiff argued the damages awarded were insufficient. The defendant also moved for a new trial based on newly discovered evidence regarding a discrepancy in the plaintiff’s registered trademark, but the trial court found no material difference.

ISSUE:
Whether the defendant is liable for unfair competition based on the substantial similarity of its product’s packaging and labeling to that of the plaintiff, likely to deceive an ordinary purchaser.

RULING:
Yes, the defendant is liable for unfair competition. The Supreme Court affirmed the trial court’s judgment.

The Court applied the established test for unfair competition: whether the goods have been given an appearance likely to deceive the ordinary purchaser exercising ordinary care. The Court found that the overall appearance of the defendant’s productconsidering the identical commodity (chocolate candy with peanuts), the similar cylindrical package size and shape, the same wrapper color and quality, and the substantially similar label layout and wordingcreated a general appearance so similar as to likely deceive an ordinary purchaser. Minor differences in label details (shading, italics, names, addresses) were insufficient to distinguish the products in the eyes of the ordinary buyer.

The Court held that intent to deceive could be inferred from the striking similarity in the appearance of the goods as packed and offered for sale. This inference was strengthened by evidence that a member of the defendant company, prior to manufacturing, had gained access to the plaintiff’s factory under false pretenses to learn its manufacturing process, thereby demonstrating knowledge of the plaintiff’s product appearance.

Regarding damages, the Court found no reason to disturb the trial court’s calculation. The court below, having examined the plaintiff’s sales records, reasonably attributed a portion of the sales decline in the plaintiff’s “Pastillas Finas No. 5” specifically to the defendant’s unfair competition, setting the damages at P1,200 based on an estimated monthly loss and net profit per case. The plaintiff’s claim for higher damages was unsupported by sufficient evidence presented to the Supreme Court.

The judgment of the trial court was affirmed in its entirety.