Diaz vs. People of the Philippines and Levi Strauss [Phils.], Inc.

Likelihood of confusion in trademark infringement cases involving jeans products must be determined using the holistic test, which considers the entirety of the marks, including labels and packaging, rather than just the predominant features.

Levi Strauss and Company, owner of the trademarks for Levi's jeans (including the arcuate design, two-horse patch, and tab), through its Philippine licensee, received information that Diaz was selling counterfeit jeans. Surveillance and subsequent NBI raids on Diaz's tailoring shops yielded the seizure of jeans bearing marks similar to Levi's. Diaz maintained that he used his own registered "LS Jeans Tailoring" mark, featuring buffaloes instead of horses and an "LSJT" tab, and sold made-to-order jeans to a different market segment.

• Charges: Diaz was charged with two counts of infringement of trademark under Section 155, in relation to Section 170, of Republic Act No. 8293 for allegedly reproducing, counterfeiting, copying, and colorably imitating Levi's registered trademarks (arcuate design, two-horse brand, two-horse patch, tab) in connection with the sale of jeans.
• Prosecution's Evidence: Levi's Philippines, a licensee, hired investigators and coordinated with the NBI after receiving reports of counterfeit sales. NBI agents searched Diaz's tailoring shops and seized jeans bearing what Levi's claimed were its registered trademarks. The private complainant asserted that the seized jeans were imitations likely to cause confusion or deception.
• Defense's Evidence: Diaz admitted owning the shops but denied criminal liability. He stated he used the mark "LS Jeans Tailoring" (registered with the IPO), where "LS" stood for "Latest Style." His jeans were made-to-order, featured an "LSJT" red tab, and included a leather patch depicting two buffaloes, not two horses. He sold these jeans for approximately Php 300 to lower-income customers.

• Procedural Dismissal: The CA violated existing law and jurisprudence by rigidly applying technicalities and overriding substantial justice when it dismissed the appeal for the late filing of the appellant's brief.
• No Likelihood of Confusion: The "LS Jeans Tailoring" mark is visually and aurally distinct from "Levi Strauss & Co." The patch features buffaloes instead of horses, and the tab reads "LSJT" instead of "Levi's." The products cater to different market classes and flow through different channels of trade (tailoring shops vs. malls).

• Procedural Dismissal: The CA properly exercised its discretion under Section 1(e), Rule 50 of the Rules of Court to dismiss the appeal, as Diaz's counsel failed to file the appellant's brief on time despite being granted multiple extensions.
• Likelihood of Confusion: The seized jeans bore dominant features of Levi's registered trademarks (arcuate, tab, leather patch) and were likely to cause confusion or deceive the general consuming public.

• Procedural Dismissal: Whether the CA erred in dismissing the appeal for the late filing of the appellant's brief, thereby overriding substantial justice.
• Trademark Infringement: Whether the petitioner's "LS Jeans Tailoring" mark is likely to cause confusion with the registered "Levi's" trademark, thereby constituting infringement under the Intellectual Property Code.

• Procedural Dismissal: The CA's dismissal of the appeal was set aside. While the CA has the discretion to dismiss an appeal for failure to file the appellant's brief on time under Section 1(e), Rule 50 of the Rules of Court, the Court relaxed the procedural rule because the accused's personal liberty was at stake. An accused should not suffer the dire consequences of counsel's inadvertence or incompetence when substantial justice demands a review of the merits.
• Trademark Infringement: No trademark infringement was established. The holistic test, rather than the dominancy test, is applicable to jeans products. Considering the marks in their entirety, "LS Jeans Tailoring" with a buffalo patch and "LSJT" tab is visually and aurally different from "Levi's 501" with a two-horse patch and "Levi's" tab. Furthermore, the products cater to different classes of customers and flow through different channels of trade. The IPO's prior registration of "LS Jeans Tailoring" also indicated an absence of confusing similarity. Consequently, the evidence did not satisfy proof beyond reasonable doubt.

• Likelihood of Confusion as the Gravamen of Trademark Infringement — The essence of trademark infringement is the tendency of the allegedly infringing mark to be confused with the registered trademark. Absent such likelihood of confusion, acquittal is mandated.
• Holistic Test vs. Dominancy Test — The dominancy test focuses on the similarity of the main, prevalent, or essential features of the competing trademarks. The holistic test considers the entirety of the marks, including labels and packaging, in determining confusing similarity. For jeans products, the holistic test is the applicable standard.
• Relaxation of Procedural Rules in Criminal Appeals — The dismissal of an appeal for failure to file an appellant's brief is discretionary, not mandatory. Courts may relax procedural rules to serve substantial justice, particularly when the personal liberty of the accused is at stake, preventing the accused from suffering due to the negligence or incompetence of counsel.

• "It is the tendency of the allegedly infringing mark to be confused with the registered trademark that is the gravamen of the offense of infringement of a registered trademark. The acquittal of the accused should follow if the allegedly infringing mark is not likely to cause confusion."
• "The holistic test considers the entirety of the marks, including labels and packaging, in determining confusing similarity. The focus is not only on the predominant words but also on the other features appearing on the labels."
• "With so much on the line, the people whose futures hang in a balance should not be left to suffer from the incompetence, mindlessness or lack of professionalism of any member of the Law Profession."

• Societes Des Produits Nestle, S.A. v. Dy, Jr., G.R. No. 172276 — Followed. Defined and differentiated the dominancy and holistic tests for determining likelihood of confusion.
• McDonald’s Corporation v. Macjoy Fastfood Corporation, G.R. No. 166115 — Followed. Stated that no set rules can be deduced in trademark cases; precedent must be studied in light of the particular facts.
• Emerald Garment Manufacturing Corporation v. Court of Appeals, G.R. No. 100098 — Followed. Applied the holistic test in a trademark infringement case involving jeans, emphasizing that buyers of expensive jeans are more cautious and discerning.
• Del Monte Corporation v. Court of Appeals — Followed. Cited for the proposition that the cost of goods determines the purchaser's inclination to be cautious; expensive items are bought after deliberate investigation.
• Dy Buncio v. Tan Tiao Bok — Followed. Defined the "ordinary purchaser" as one accustomed to buy and familiar with the goods in question.

• Section 155, Republic Act No. 8293 (Intellectual Property Code) — Defines the acts constituting infringement of trademark, specifically the unauthorized use in commerce of any reproduction, counterfeit, copy, or colorable imitation of a registered mark likely to cause confusion.
• Section 170, Republic Act No. 8293 — Provides the penalties for trademark infringement.
• Section 7, Rule 44, Rules of Court — Requires the filing of the appellant's brief within 45 days from notice.
• Section 1(e), Rule 50, Rules of Court — Grants the Court of Appeals the discretion to dismiss an appeal for failure to file the appellant's brief on time.
• Section 2, Rule 133, Rules of Court — Defines proof beyond reasonable doubt as moral certainty, not absolute certainty.

Maria Lourdes P. A. Sereno (Chief Justice), Teresita J. Leonardo-De Castro, Martin S. Villarama, Jr., Bienvenido L. Reyes.