ED. A. KELLER & CO., LTD., PLAINTIFF AND APPELLEE, VS. KINKWA MERIYASU CO. (P. I.), INC., DEFENDANT AND APPELLANT.

This is an appeal from a judgment of the Court of First Instance of Manila,
dated October 13, 1931, in an action for infringement of trade-mark and unfair
competition under Act No. 666 as amended by Act No. 3423.

On December 2, 1930, the plaintiff-appellee filed in said court its complaint
alleging in substance that on October 24, 1904, it duly registered in the
Philippine Islands its trade-mark, consisting of the picture of a peacock (pavo
real), which it again registered on March 12, 1924; that. for forty years last
past it has been selling high grade men’s undershirts of a distinctive pattern
and design in Manila and elsewhere in the Philippine Islands under said
trade-mark, and its goods became generally known to the buying public by the
name of “PAVO”or “Marca PAVO”; that the defendant has sold and is offering for
sale in the Philippine Islands a cheap imitation of the plaintiff’s goods
stamping thereon a trade-mark consisting of the picture of a turkey with the
name “PAVO” or “Marca Pavo” printed thereon; that there is such a similarity
between the trade-mark used by the defendant and the plaintiffs that the buying
public has been and is being deceived thereby to the grave damage and injury of
the plaintiff’s business; that plaintiff has suffered damages to the extent of
P10,000 and prays for an order of injunction against the defendant and an
accounting of profits realized by the defendant from its unlawful and unfair
competition in the use of said deceptive trade-mark.

The defendant, on January 31, 1931, answered with a general denial and set
up, as a special defense, that its trade-mark, consisting of the picture of a
turkey and the words “Marca Pavo”, was acquired by the defendant from other
firms which had been using the same for fifteen years; that the words and
trade-mark “Marca Pavo” used by the plaintiff instead of the correct words
“Marca Pavon” are an infringement on the defendant’s trade-mark and that
defendant prays damages resulting from such infringement in the sum of P2,000
and injunction restraining the plaintiff from using the words or label “Marca
Pavo” or “Pavo”; in other respects, the prayer of the cross complaint is similar
to the prayer of the complaint. On February 14, 1931, the plaintiff filed a
general denial to the cross complaint.

The court below, in a well considered decisio.n, dismissed the cross
complaint and rendered judgment in favor of the plaintiff, granting a permanent
injunction prohibiting the defendant from using its alleged trade-mark on
undershirts and fixing the plaintiff’s damages at P10,000.

The first assignment of error of the defendant-appellant is as follows: “The
court below erred in holding that defendant’s registered trade-mark has
infringed plaintiff’s, whereas as a matter of fact it might have been
otherwise.”

A comparison of the alleged trade-marks used by appellant and appellee
respectively during the period when the infringement took place, that is, during
the years 1928 to 1931, with the original certificates filed by them, reveals at
a glance that neither the appellant nor the appellee was using the identical
trade-mark authorized by its original certificate. Essentially, therefore, the
action is not for infringement of trade-mark but rather for unfair competition
under section 7 of Act No. 666 as amended by Act No. 3423 (1927).

The evidence in the court below satisfactorily establishes that the plaintiff
has been selling its goods continuously since at least the year 1913 under the
trade name of “Marca Pavo” and established under that trade name a reputation
for its goods and a volume of business of substantial value. The defendant first
commenced selling imitation goods under the trade name “MARCA Pavo” in 1928. It
well knew that the plaintiff’s goods were sold under the trade name of “Marca
Pavo” because it bought 50 dozen “Marca Pavo” undershirts from the plaintiff on
February 28, 1928. Thereafter, it imported and sold large quantities of goods
almost identically in appearance with plaintiff’s, using the words “Marca Pavo”
in conspicuous letters over the picture of a turkey as its trade name. We have
carefully examined the exhibits and the testimony produced at the trial and we
hold that they amply sustain the conclusion of the court below thafthe defendant
was guilty of unfair competition in its use of the alleged trade-mark which is
enjoined by the judgment appealed from.

The second assignment of error is covered by what we have said with regard to
the first error.

The third assignment of error is that the court erred in “allowing damage to
the plaintiff, especially in an amount at once excessive, not supported by
evidence and contrary to law.” We find no force in the argument that the
plaintiff under the facts established is not entitled to any dama’ges. The only
question that needs to be discussed is whether P10,000 is an excessive amount.

The appellant insists that there should be deducted from the gross profits,
as found by the court below, the following items of expense as stated in its
brief: Ocean freight, marine insurance, landing charges and transportation, 10
per cent to 15 per cent of the cost of the goods in Japan (estimated at 12 per
cent); customs duties, 25 per cent ad valorem; discounts on sales, 1 per cent to
8 per cent (on basis of 2 per cent on selling price); overhead expenses for
selling, etc. based on average of 5 per cent, sales taxes, 1 per cent.

According to appellant’s own admission, the only evidence concerning these
expenses is the oral testimony of the defendant’s manager, part of which is
quoted in appellant’s brief. We have read the complete testimony and find
nowhere any reference to a specific amount actually paid for any of the expenses
above listed. The manager’s testimony is confined to general estimates. The
profits found by the court below were realized upon the sale of 1,828 dozen of
underwear specifically set out in the defendant’s invoices shown in Exhibits K
to K-12. The books and receipts kept by the defendant should, and doubtless do,
show the exact amount paid, if any, on the items of expense above listed. This
conclusive evidence was in the possession of the defendant and should have been
produced, if the defendant honestly desired to enlighten the court as to the
correct amount of the necessary and proper expenses that were actually paid.

The judgment below is affirmed with costs against the appellant. So ordered.

Malcolm, Ostrand, Villa-Real, Abad Santos, Hull, Vickers, and
Imperial, JJ., concur.