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G.R. No. L-28554 February 28, 1983

UNNO
COMMERCIAL
ENTERPRISES,
INCORPORATED, petitioner,
vs.
GENERAL MILLING CORPORATION and TIBURCIO S. EVALLE, in his capacity as
Director of Patents,respondents.
Salem & Dionisio Law Office for petitioner.

However, there is testimony in the record (t.s.n., pp. 11-12,

Jan.17,1967, testimony of Jose Uy) to the effect that, indispensable,
"ALL MONTANA" wheat flour is a premium flour produced from
premium wheat coming from the State of Montana, U.S.A. It is
apparent that the trademark is primarily geographically descriptive of
the goods. It is therefore a matter overlooked by the Trademark
Examiner, and it is incumbent upon him to determine if the applicant
should claim and is qualified to claim distinctiveness under Section
4(f) of the Trademark Statute. Otherwise, it is registrable on the
Supplemental Register and should thus be registered therein.

Siguion Reyna, Montecillo, Bello & Ongsiako for private respondent.

TEEHANKEE, J.:
The Court affirms respondent Director of Patent's decision declaring respondent
General Milling Corporation as the prior user of the trademark "All Montana" on wheat
flour in the Philippines and ordering the cancellation of the certificate of registration for
the same trademark previously issued in favor of petitioner Unno Commercial
Enterprises, Incorporated, it appearing that Unno Commercial Enterprises, Inc. merely
acted as exclusive distributor of All Montana wheat flour in the Philippines. Only the
owner of a trademark, trade name or service mark may applly for its registration and
an importer, broker, indentor or distributor acquires no rights to the trademark of the
goods he is dealing with in the absence of a valid transfer or assignment of the trade
mark.
On December 11, 1962, respondent General Milling Corporation filed an application for
the registration of the trademark "All Montana" to be used in the sale of wheat flour. In
view of the fact that the same trademark was previously, registered in favor of
petitioner Unno Commercial Enterprises, Inc., the Chief Trademark Examiner of the
Philippines Patent Office declared an interference proceeding 1 between respondent
corporation's application (Serial No. 9732), as Junior - Party-Applicant and petitioner
company's registration (Registration No. 9589), as Senior Party-Applicant, docketed in
the Philippines Patent Office as Inter Partes Case No. 313, to determine which party
has previously adopted and used the trademark "All Montana".
Respondent General Milling Corporation, in its application for registration, alleged that
it started using the trademark "All Montana" on August 31, 1955 and subsequently was
licensed to use the same by Centennial Mills, Inc. by virtue of a deed of assignment
executed on September 20, 1962. On the other hand petitioner Unno Commercial
Enterprises, Inc. argued that the same trademark had been registered in its favor on
March 8, 1962 asserting that it started using the trademark on June 30, 1956, as
indentor or broker for S.H. Huang Bros. & Co., a local firm.
The Director of Patents, after hearing, ruled in favor of respondent General Milling
Corporation and rendered its decision as follows:

WHEREFORE, the Junior Party-Applicant is adjudged prior -user of the

trademark ALL MONTANA, but 'because it is primarily geographically
descriptive, the application is herein remanded to the Chief
Trademark Examiner for proper proceeding before issuance of the
certificate of registration.
The certificate of registration issued to the Senior Party is ordered
cancelled.
IT IS SO ORDERED.
After its motion for reconsideration was denied, petitioner brought the instant petition
seeking the reversal of the decision and praying that it be declared the owner and prior
user of the trademark "All Montana" on wheat flour.
Petitioner based its claim of ownership over the trademark in question by the fact that
it acted as an indentor or broker for S. H. Huang Bros. & Co., a local importer of wheat
flour, offering as evidence the various shipments, documents, invoices and other
correspondence of Centennial Mills, Inc., shipping thousand of bags of wheat flour
bearing the trademark "All Montana" to the Philippines. Petitioner argued that these
documents, invoices and correspondence proved the fact that it has been using the
trademark "All Montana" as early as 1955 in the concept of an owner and maintained
that anyone, whether he is only an importer, broker or indentor can appropriate, use
and own a particular mark of its own choice although he is not the manufacturer of the
goods he deals with. Relying on the provisions of Section 2-A of the Trademarks
Law 2 (Republic Act 166), petitioner insists that "the appropriation and ownership of a
particular trademark is not merely confined to producers or manufacturers but likewise
to anyone who lawfully deals in merchandise who renders any lawful service in
commerce, like petitioner in the case at bar. 3
The right to register trademark is based on ownership. 4 When the applicant is not the
owner of the trademark being applied for, he has no right to apply for the registration
of the same. 5 Under the Trademark Law only the owner of the trademark, trade name
or service mark used to distinguish his goods, business or service from the goods,
business or service of others is entitled to register the same. 6

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The term owner does not include the importer of the goods bearing the trademark,
trade name, service mark, or other mark of ownership, unless such importer is actually
the owner thereof in the country from which the goods are imported. A local importer,
however, may make application for the registration of a foreign trademark, trade name
or service mark if he is duly authorized by the actual owner of the name or other mark
of ownership. 7
Thus, this Court, has on several occasions ruled that where the applicant's alleged
ownership is not shown in any notarial document and the applicant appears to be
merely an importer or distributor of the merchandise covered by said trademark, its
application cannot be granted. 8
Moreover, the provision relied upon by petitioner (Sec. 2-A, Rep. Act No. 166) allows
one "who lawfully produces or deals in merchandise ... or who engages in any lawful
business or who renders any lawful service in commerce, by actual use thereof . . . (to)
appropriate to his exclusive use a trademark, or a service mark not so appropriated by
another. " In the case at bar, the evidence showed that the trademark "All Montana"
was owned and registered in the name of Centennial Mills, Inc. which later transferred
it to respondent General Milling Corporation by way of a deed of assignment. It is
undisputed that way back in March, 1955, Centennial Mills, Inc. under the tradename
Wenatchee Milling Co., exported flour to the Philippines, through its distributor, herein
petitioner Unno Commercial Enterprises, Inc. which acted as indentor or broker for the
firm S. H. Huang Bros. & Co. However, because of increased taxes and subsidies,
Centennial Mills discontinued shipments of flour in the Philippines and eventually sold
its brands for wheat flour, including "All Montana" brand to respondent General Milling
Corporation in consideration of 1,000 shares of stock of respondent corporation with a
par value of P100.00 per share or a total of P100,000.00. Respondent General Milling
Corporation, since the start of the operation in 1961 of its flour mills located in Lapulapu City, Cebu has been manufacturing and selling "All Montana" flour in the
Philippines.
As against petitioner's argument that respondent failed to establish convincingly the
ownership of the trademark "All Montana" by its assignor Centennial Mills, Inc., the
Director of Patents correctly found that ample evidence was presented that Centennial
Mills, Inc. was the owner and prior user in the Philippines of the trademark "All
Montana" through a local importer and broker. The Deed of Assignment itself
constitutes sufficient proof of its ownership of the trademark "All Montana," showing
that Centennial Mills was a corporation duly organized and existing under and by virtue
of the laws of the State of Oregon, U.S.A. with principal place and business at Portland,
Oregon, U.S.A. and the absolute and registered owner of several trademarks for wheat
flour, i.e. (Imperial, White Lily, Duck, General, Swan, White Horse, Vinta, El Paro,
Baker's Joy, Choice, Red Bowl All Montana and Dollar.) all of which were assigned by it
to respondent General Milling Corporation. The deed of assignment was signed by its
president, Dugald MacGregor, duly acknowledged before James Hunt, a notary public
for the State of Oregon, accompanied by a certification issued by the Secretary of
State of the State of Oregon stating that the said James Hunt is a duly qualified Notary
Public with full power and authority to take acknowledgments of all oaths and that full
faith and credit should be given to his official acts as notary public.

The Director of Patents likewise correctly rejected petitioner's contention that in a 1954
conference in Manila the ownership and use by petitioner of the brand "All Montana"
was agreed upon, on the contrary finding that "Details of that meeting were, however,
explained by Mr. Dugald MacGregor, President of Centennial Mills, Inc., as the Junior
Party's rebuttal witness. Mr. MacGregor confirmed holding such conference in a
restaurant in Manila with representatives of the Senior Party, namely; Messrs. Jose Uy,
Francisco Gonzales and S. H. Huang although he could not remember the name of the
restaurant. He further explained that his company owned the trademark; that it had
been using the mark in the United States; and that ownership of the mark had never
been conferred upon any other company, much less the Senior Party"; and "Inasmuch
as it was not the owner of the trademark, the Senior Party could not be regarded as
having used and adopted it, and had no right to apply for its registration. It
acknowledged that it was a mere importer of flour, and a mere importer and distributor
acquires no rights in the mark used on the imported goods by the foreign exporter in
the absence of an assignment of any kind ... Trademarks used and adopted on goods
manufactured or packed in a foreign country in behalf of a domestic importer, broker,
or indentor and distributor are presumed to be owned by the manufacturer or packer,
unless there is a written agreement clearly showing that ownership vests in the
importer, broker, indentor or distributor.
Thus, petitioner's contention that it is the owner of the mark "All Montana" because of
its certificate of registration issued by the Director of Patents, must fail, since
ownership of a trademark is not acquired by the mere fact of registration
alone. 9 Registration merely creates a prima facie presumption of the validity of the
registration, of the registrant's ownership of the trademark and of the exclusive right to
the use thereof. 10 Registration does not perfect a trademark right. 11 As conceded itself
by petitioner, evidence may be presented to overcome the presumption. Prior use by
one will controvert a claim of legal appropriation, by subsequent users. In the case at
bar, the Director of Patents found that "ample evidence was presented in the record
that Centennial Mills, Inc. was the owner and prior user in the Philippines of the
trademark 'All Montana' through a local importer and broker. Use of a trademark by a
mere importer, indentor or exporter (the Senior Party herein) inures to the benefit of
the foreign manufacturer whose goods are Identified by the trademark. The Junior
Party has hereby established a continuous chain of title and, consequently, prior
adoption and use" and ruled that "based on the facts established, it is safe to conclude
that the Junior Party has satisfactorily discharged the burden of proving priority of
adoption and use and is entitled to registration." It is well-settled that we are
precluded from making further inquiry, since the findings of fact of the Director of
Patents in the absence of any showing that there was grave abuse of discretion is
binding on us 12 and the findings of facts by the Director of Patents are deemed
conclusive in the Supreme Court provided that they are supported by substantial
evidence. 13 Petitioner has failed to show that the findings of fact of the Director of
Patents are not substantially supported by evidence nor that any grave abuse of
discretion was committed.
Finally, the Court finds without merit petitioner's argument that the Director of Patents
could not order the cancellation of' its certificate of registration in an interference
proceeding and that the question of whether or not a certificate of registration is to be
cancelled should have been brought in cancellation proceedings. Under Rule 178 of the

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Rules of the Patent Office in Trademark Cases, 14 the Director of Patents is expressly
authorized to order the cancellation of a registered mark or trade name or name or
other mark of ownership in an inter partes case, such as the interference proceeding at
bar. 15

"Isetan" and "Young Leaves Design" were registered in Japan covering more than 34
classes of goods. On October 3, 1983, the petitioner applied for the registration of
"Isetan" and "Young Leaves Design" with the Philippine Patent Office under Permanent
Serial Nos. 52422 and 52423 respectively. (Rollo, p. 43)

WHEREFORE, the appealed decision is hereby affirmed. No costs.

Private respondent, Isetann Department Store, on the other hand, is a domestic

corporation organized and existing under the laws of the Philippines with business
address at 423-430 Rizal Avenue, Sta. Cruz, Manila, Philippines.
It claims that it used the word "Isetann" as part of its corporated name and on its
products particularly on shirts in Joymart Department Store sometime in January 1979.
The suffix "Tann" means an altar, the place of offering in Chinese and this was adopted
to harmonize the corporate name and the corporate logo of two hands in cup that
symbolizes the act of offering to the Supreme Being for business blessing.

G.R. No. L-75420 November 15, 1991

KABUSHI KAISHA ISETAN, also known and trading as ISETAN CO.,
LTD., petitioner,
vs.
THE INTERMEDIATE APPELLATE COURT, THE DIRECTOR OF PATENTS, and
ISETANN DEPARTMENT STORE, INC., respondents.

GUTIERREZ, JR., J.:p

This is a petition for review on certiorari which seeks to set aside - (1) the decision of
the Court of Appeals dated June 2, 1986 in AC-G.R. SP No. 008873 entitled "Kabushi
Kaisha Isetan, also known and trading as Isetan Company Limited v. Isetann
Department Store, Inc." dismissing the petitioner's appeal from the decision of the
Director of Patents; and (2) the Resolution dated July 11, 1986 denying the petitioner's
motion for reconsideration.
As gathered from the records, the facts are as follows:
Petitioner Kabushi Kaisha Isetan is a foreign corporation organized and existing under
the laws of Japan with business address at 14-1 Shinjuku, 3-Chrome, Shinjuku, Tokyo,
Japan. It is the owner of the trademark "Isetan" and the "Young Leaves Design".
The petitioner alleges that it first used the trademark Isetan on November 5, 1936. It
states that the trademark is a combination of "Ise" taken from "Iseya" the first name
of the rice dealer in Kondo, Tokyo in which the establishment was first located and
"Tan" which was taken from "Tanji Kosuge the First". The petitioner claims to have
expanded its line of business internationally from 1936 to 1974. The trademark

On May 30, 1980 and May 20, 1980, the private respondent registered "Isetann
Department Store, Inc." and Isetann and Flower Design in the Philippine Patent Office
under SR. Reg. No. 4701 and 4714, respectively, as well as with the Bureau of
Domestic Trade under Certificate of Registration No. 32020. (Rollo, pp. 43-44)
On November 28, 1980, the petitioner filed with the Phil. Patent Office two (2) petitions
for the cancellation of Certificates of Supplemental Registration Nos. SR-4714 and SR4701 stating among others that:
. . . except for the additional letter "N" in the word "Isetan", the
mark registered by the registrant is exactly the same as the
trademark ISETAN owned by the petitioner and that the young leaves
registered by the registrant is exactly the same as the young leaves
design owned by the petitioner.
The petitioner further alleged that private respondent's act of registering a trademark
which is exactly the same as its trademark and adopting a corporate name similar to
that of the petitioner were with the illegal and immoral intention of cashing in on the
long established goodwill and popularity of the petitioner's reputation, thereby causing
great and irreparable injury and damage to it (Rollo, p. 521). It argued that both the
petitioner's and respondent's goods move in the same channels of trade, and ordinary
people will be misled to believe that the products of the private respondent originated
or emanated from, are associated with, or are manufactured or sold, or sponsored by
the petitioner by reason of the use of the challenged trademark.
The petitioner also invoked the Convention of Paris of March 20, 1883 for the
Protection of Industrial Property of which the Philippines and Japan are both members.
The petitioner stressed that the Philippines' adherence to the Paris Convention
committed to the government to the protection of trademarks belonging not only to
Filipino citizens but also to those belonging to nationals of other member countries who
may seek protection in the Philippines. (Rollo, p. 522)

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The petition was docketed as Inter Partes Cases Nos. 1460 and 1461 (Rollo, p. 514)
Meanwhile, the petitioner also filed with the Securities and Exchange Commission
(SEC) a petition to cancel the mark "ISETAN" as part of the registered corporate name
of Isetann Department Store, Inc. which petition was docketed as SEC Case No. 2051
(Rollo, p. 524) On May 17, 1985, this petition was denied in a decision rendered by
SEC's Hearing Officer, Atty. Joaquin C. Garaygay.
On appeal, the Commission reversed the decision of the Hearing Officer on February
25, 1986. It directed the private respondent to amend its Articles of Incorporation
within 30 days from finality of the decision.
On April 15, 1986, however, respondent Isetann Department Store filed a motion for
reconsideration. (Rollo, pp. 325-353). And on September 10, 1987, the Commission
reversed its earlier decision dated February 25, 1986 thereby affirming the decision
rendered by the Hearing Officer on May 17, 1985. The Commission stated that since
the petitioner's trademark and tradename have never been used in commerce on the
petitioner's products marketed in the Philippines, the trademark or tradename have not
acquired a reputation and goodwill deserving of protection from usurpation by local
competitors. (Rollo, p. 392).
This SEC decision which denied and dismissed the petition to cancel was submitted to
the Director of Patents as part of the evidence for the private respondent.
On January 24, 1986, the Director of Patents after notice and hearing rendered a joint
decision in Inter Partes Cases Nos. 1460 and 1461, the dispositive portion of which
reads:
WHEREFORE, all the foregoing considered, this Office is constrained
to hold that the herein Petitioner has not successfully made out a
case of cancellation. Accordingly, Inter Partes Cases Nos. 1460 and
1461 are, as they are hereby, DISMISSED. Hence, Respondent's
Certificate of Supplemental Registration No. 4714 issued on May 20,
1980 covering the tradename "ISETANN DEPT. STORE, INC. &
FLOWER DESIGN" are, as they are hereby, ordered to remain in full
force and effect for the duration of their term unless sooner or later
terminated by law.
The corresponding application for registration in the Principal Register
of the Trademark and of the tradename aforesaid are hereby given
due course.
Let the records of these cases be transmitted to the Trademark
Examining Division for appropriate action in accordance with this
Decision.

On February 21, 1986, Isetan Company Limited moved for the reconsideration of said
decision but the motion was denied on April 2, 1986 (Rollo, pp. 355-359).
From this adverse decision of the Director of Patents, the petitioner appealed to the
Intermediate Appellate Court (now Court of Appeals).
On June 2, 1986, the IAC dismissed the appeal on the ground that it was filed out of
time.
The petitioner's motion for reconsideration was likewise denied in a resolution dated
July 11, 1986.
Hence, this petition.
Initially, the Court dismissed the petition in a resolution dated July 8, 1987, on the
ground that it was filed fourteen (14) days late. However, on motion for
reconsideration, whereby the petitioner appealed to this Court on equitable grounds
stating that it has a strong and meritorious case, the petition was given due course in a
resolution dated May 19, 1988 to enable us to examine more fully any possible denial
of substantive justice. The parties were then required to submit their memoranda.
(Rollo, pp. 2-28; Resolution, pp. 271; 453)
After carefully considering the records of this case, we reiterate our July 8, 1987
resolution dismissing the petition. There are no compelling equitable considerations
which call for the application of the rule enunciated in Serrano v. Court of Appeals (139
SCRA 179 [1985]) and Orata v. Intermediate Appellate Court, et al. (185 SCRA 148
[1990]) that considerations of substantial justice manifest in the petition may relax the
stringent application of technical rules so as not to defeat an exceptionally meritorious
petition.
There is no dispute and the petitioner does not question the fact that the appeal was
filed out of time.
Not only was the appeal filed late in the Court of Appeals, the petition for review was
also filed late with us. In common parlance, the petitioner's case is "twice dead" and
may no longer be reviewed.
The Court of Appeals correctly rejected the appeal on the sole ground of late filing
when it ruled:
Perfection of an appeal within the time provided by law is
jurisdictional, and failure to observe the period is fatal.
The decision sought to be appealed is one rendered by the Philippine
Patent Office, a quasi-judicialbody. Consequently, under Section
23(c) of the Interim Rules of Court, the appeal shall be governed by

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the provisions of Republic Act No. 5434, which provides in its Section
2;
Sec. 2. Appeals to Court of Appeals. - Appeals to the Court of
Appeals shall be filed within fifteen (15) days from notice of the
ruling, award, order, decision or judgment or from the date of its last
publication, if publication is required by law for its effectivity; or in
case a motion for reconsideration is filed within that period of fifteen
(15) days, then within ten (10) days from notice or publication, when
required by law, of the resolution denying the motion for
reconsideration. No more than one motion for reconsideration shall
be allowed any party. If no appeal is filed within the periods here
fixed, the ruling, award, order, decision or judgment shall become
final and may be executed as provided by existing law.
Attention is invited to that portion of Section 2 which states that in
case a motion for reconsideration is filed, an appeal should be filed
within ten (10) days from notice of the resolution denying the motion
for reconsideration.

And provided, further, That the country of which the applicant for
registration is a citizen grants by law substantially similar privileges
to citizens of the Philippines, and such fact is officially certified, with
a certified true copy of the foreign law translated into the English
language, by the government of the foreign country to the
Government of the Republic of the Philippines. (As amended by R.A.
No. 865).
SEC. 2-A. Ownership of trademarks, tradenames and service marks;
how acquired. - Anyone who lawfully produces or deals in
merchandise of any kind or who engages in any lawful business, or
who renders any lawful service in commerce, by actual use thereof in
manufacture or trade, in business, and in the service rendered, may
appropriate to his exclusive use a trademark, a tradename, or a
service mark not so appropriated by another, to distinguish his
merchandise, business or service from the merchandise, business or
service of others. The ownership or possession of a trademark,
tradename, service mark, heretofore or hereafter appropriated, as in
this section provided, shall be recognized and protected in the same
manner and to the same extent as are other property rights known
to the law. (As amended by R.A. No. 638)"

The petitioner received a copy of the Court of Appeals' resolution denying and received
by us on August 8, 1986, its motion for reconsideration on July 17, 1986. It had only
up to August 1, 1986 to file a petition for review with us. The present petition was
posted on August 2, 1986. There is no question that it was, again, filed late because
the petitioner filed an ex-parte motion for admission explaining the delay.

These provisions have been interpreted in Sterling Products International, Inc. v.

Farbenfabriken Bayer Actiengesellschaft (27 SCRA 1214 [1969]) in this way:

The decision of the Patent Office has long become final and executory. So has the
Court of Appeal decision.

A rule widely accepted and firmly entrenched because it has come

down through the years is that actual use in commerce or business is
a prerequisite to the acquisition of the right of ownership over a
trademark.

Regarding the petitioner's claims of substantial justice which led us to give due course,
we decline to disturb the rulings of the Patent Office and the Court of Appeals.

xxx xxx xxx

A fundamental principle of Philippine Trademark Law is that actual use in commerce in

the Philippines is a pre-requisite to the acquisition of ownership over a trademark or a
tradename.
The trademark Law, Republic Act No. 166, as amended, under which this case heard
and decided provides:
SEC. 2. What are registrable.- Trademark, tradenames and service
marks owned by persons, corporation, partnerships or associations
domiciled in the Philippines and by persons, corporations,
partnerships or associations domicided in any foreign country may be
registered in accordance with the provisions of this Act: Provided,
That said trademarks, tradenames, or service marks are actually in
use in commerce and services not less than two months in the
Philippines before the time the applications for registration are filed:

... Adoption alone of a trademark would not give exclusive right

thereto. Such right grows out of their actual use. Adoption is not use.
One way make advertisements, issue circulars, give out price lists on
certain goods; but these alone would not give exclusive right of
use.For trademark is a creation of use. The underlying reason for all
these is that purchasers have come to understand the mark as
indicating the origin of the wares. Flowing from this is the trader's
right to protection in the trade he has built up and the goodwill he
has accumulated from use of the trademark. ...
In fact, a prior registrant cannot claim exclusive use of the trademark unless it uses it
in commerce.
We ruled in Pagasa Industrial Corporation v. Court of Appeals (118 SCRA 526 [1982]):

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3. The Trademark Law is very clear. It requires actual commercial

use of the mark prior to its registration. - There is no dispute that
respondent corporation was the first registrant, yet it failed to fully
substantiate its claim that it used in trade or business in the
Philippines the subject mark; it did not present proof to invest it with
exclusive, continuous adoption of the trademark which should consist
among others, of considerable sales since its first use. The invoices
(Exhibits 7, 7-a, and 8-b) submitted by respondent which were dated
way back in 1957 show that the zippers sent to the Philippines were
to be used as "samples" and "of no commercial value". The evidence
for respondent must be clear, definite and free from incosistencies.
(Sy Ching v. Gaw Lui. 44 SCRA 148-149) "Samples" are not for sale
and therefore, the fact of exporting them to the Philippines cannot be
considered to be equivalent to the "use" contemplated by the law.
Respondent did not expect income from such "samples". "There were
no receipts to establish sale, and no proof were presented to show
that they were subsequently sold in the Philippines." (Pagasa
Industrial Corp. v. Court of Appeals, 118 SCRA 526 [1982];
Emphasis Supplied)
The records show that the petitioner has never conducted any business in the
Philippines. It has never promoted its tradename or trademark in the Philippines. It has
absolutely no business goodwill in the Philippines. It is unknown to Filipinos except the
very few who may have noticed it while travelling abroad. It has never paid a single
centavo of tax to the Philippine government. Under the law, it has no right to the
remedy it seeks.
There can be no question from the records that the petitioner has never used its
tradename or trademark in the Philippines.
The petitioner's witnesses, Mr. Mayumi Takayama and Mr. Hieoya Murakami, admitted
that:
1) The petitioner's company is not licensed to do business in the Philippines;
2) The petitioner's trademark is not registered under Philippine law; and
3) The petitioner's trademark is not being used on products in trade, manufacture, or
business in the Philippines.
It was also established from the testimony of Atty. Villasanta, petitioner's witness, that
the petitioner has never engaged in promotional activities in the Philippines to
popularize its trademark because not being engaged in business in the Philippines,
there is no need for advertising. The claim of the petitioner that millions of dollars have
been spent in advertising the petitioner's products, refers to advertising in Japan or
other foreign places. No promotional activities have been undertaken in the Philippines,
by the petitioner's own admission.

Any goodwill, reputation, or knowledge regarding the name Isetann is purely the work
of the private respondent. Evidence was introduced on the extensive promotional
activities of the private respondent.
It might be pertinent at this point to stress that what is involved in this case is not so
much a trademark as a tradename. Isetann Department Store, Inc. is the name of a
store and not of product sold in various parts of the country. This case must be
differentiated from cases involving products bearing such familiar names as "colgate",
"Singer". "Toyota", or "Sony" where the products are marketed widely in the
Philippines. There is not product with the name "Isetann" popularized with that brand
name in the Philippines. Unless one goes to the store called Isetann in Manila, he
would never know what the name means. Similarly, until a Filipino buyer steps inside a
store called "Isetan" in Tokyo or Hongkong, that name would be completely alien to
him. The records show that among Filipinos, the name cannot claim to be
internationally well-known.
The rule is that the findings of facts of the Director of Patents are conclusive on the
Supreme Court, provided they are supported by substantial evidence. (Chua Che v.
Phil. Patent Office, 13 SCRA 67 [1965]; Chung Te v. Ng Kian Giab, 18 SCRA 747
[1966]; Marvex Commercial Co., Inc. v. Petra Hawpia & Co., 18 SCRA 1178 [1966];
Lim Kiah v. Kaynee, Co. 25 SCRA 485 [1968]; Kee Boc v. Dir. of Patents, 34 SCRA 570
[1970]).
The conclusions of the Director of Patents are likewise based on applicable law and
jurisprudence:
What is to be secured from unfair competition in a given territory is
the trade which one has in that particular territory. There is where
his business is carried on where the goodwill symbolized by the
trademark has immediate value; where the infringer may profit by
infringement.
There is nothing new in what we now say. Plaintiff itself concedes
(Brief for Plaintiff-Appellant, p. 88) that the principle of territoriality
of the Trademark Law has been recognized in the Philippines, citing
Ingenohl v. Walter E. Olsen, 71 L. ed. 762. As Callmann puts it, the
law of trademarks "rests upon the doctrine of nationality or
territoriality." (2 Callmann, Unfair Competition and Trademarks, 1945
ed., p. 1006) (Sterling Products International, Inc. v. Farbenfabriken
Bayer Aktiengesellachaft, 27 SCRA 1214 [1969]; Emphasis supplied)
The mere origination or adoption of a particular tradename without actual use thereof
in the market is insufficient to give any exclusive right to its use (Johnson Mfg. Co. v.
Leader Filling Stations Corp. 196 N.E. 852, 291 Mass. 394), even though such adoption
is publicly declared, such as by use of the name in advertisements, circulars, price
lists, and on signs and stationery. (Consumers Petrolum Co. v. Consumers Co. of ILL.
169 F 2d 153)

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The Paris Convention for the Protection of Industrial Property does not automatically
exclude all countries of the world which have signed it from using a tradename which
happens to be used in one country. To illustrate - If a taxicab or bus company in a town
in the United Kingdom or India happens to use the tradename "Rapid Transportation",
it does not necessarily follow that "Rapid" can no longer be registered in Uganda, Fiji,
or the Philippines.

G.R. No. L-75420 November 15, 1991

KABUSHI KAISHA ISETAN, also known and trading as ISETAN CO.,
LTD., petitioner,
vs.
THE INTERMEDIATE APPELLATE COURT, THE DIRECTOR OF PATENTS, and
ISETANN DEPARTMENT STORE, INC., respondents.

As stated by the Director of Patents Indeed, the Philippines is a signatory to this Treaty and, hence, we
must honor our obligation thereunder on matters concerning
internationally known or well known marks. However, this Treaty
provision clearly indicated the conditions which must exist before any
trademark owner can claim and be afforded rights such as the
Petitioner herein seeks and those conditions are that:
a) the mark must be internationally known or well known;
b) the subject of the right must be a trademark, not a patent or
copyright or anything else;
c) the mark must be for use in the same or similar kinds of goods;
and
d) the person claiming must be the owner of the mark (The Parties
Convention Commentary on the Paris Convention. Article by Dr.
Bogach, Director General of the World Intellectual Property
Organization, Geneva, Switzerland, 1985)
The respondent registered its trademark in 1979. It has continuously used that name
in commerce. It has established a goodwill through extensive advertising. The people
who buy at Isetann Store do so because of Isetann's efforts. There is no showing that
the Japanese firm's registration in Japan or Hongkong has any influence whatsoever on
the Filipino buying public.
WHEREFORE, premises considered, the petition is hereby DISMISSED.
SO ORDERED.

GUTIERREZ, JR., J.:p

This is a petition for review on certiorari which seeks to set aside - (1) the decision of
the Court of Appeals dated June 2, 1986 in AC-G.R. SP No. 008873 entitled "Kabushi
Kaisha Isetan, also known and trading as Isetan Company Limited v. Isetann
Department Store, Inc." dismissing the petitioner's appeal from the decision of the
Director of Patents; and (2) the Resolution dated July 11, 1986 denying the petitioner's
motion for reconsideration.
As gathered from the records, the facts are as follows:
Petitioner Kabushi Kaisha Isetan is a foreign corporation organized and existing under
the laws of Japan with business address at 14-1 Shinjuku, 3-Chrome, Shinjuku, Tokyo,
Japan. It is the owner of the trademark "Isetan" and the "Young Leaves Design".
The petitioner alleges that it first used the trademark Isetan on November 5, 1936. It
states that the trademark is a combination of "Ise" taken from "Iseya" the first name
of the rice dealer in Kondo, Tokyo in which the establishment was first located and
"Tan" which was taken from "Tanji Kosuge the First". The petitioner claims to have
expanded its line of business internationally from 1936 to 1974. The trademark
"Isetan" and "Young Leaves Design" were registered in Japan covering more than 34
classes of goods. On October 3, 1983, the petitioner applied for the registration of
"Isetan" and "Young Leaves Design" with the Philippine Patent Office under Permanent
Serial Nos. 52422 and 52423 respectively. (Rollo, p. 43)
Private respondent, Isetann Department Store, on the other hand, is a domestic
corporation organized and existing under the laws of the Philippines with business
address at 423-430 Rizal Avenue, Sta. Cruz, Manila, Philippines.
It claims that it used the word "Isetann" as part of its corporated name and on its
products particularly on shirts in Joymart Department Store sometime in January 1979.
The suffix "Tann" means an altar, the place of offering in Chinese and this was adopted
to harmonize the corporate name and the corporate logo of two hands in cup that
symbolizes the act of offering to the Supreme Being for business blessing.

IPL | 7/20/16 | 8

On May 30, 1980 and May 20, 1980, the private respondent registered "Isetann
Department Store, Inc." and Isetann and Flower Design in the Philippine Patent Office
under SR. Reg. No. 4701 and 4714, respectively, as well as with the Bureau of
Domestic Trade under Certificate of Registration No. 32020. (Rollo, pp. 43-44)
On November 28, 1980, the petitioner filed with the Phil. Patent Office two (2) petitions
for the cancellation of Certificates of Supplemental Registration Nos. SR-4714 and SR4701 stating among others that:
. . . except for the additional letter "N" in the word "Isetan", the
mark registered by the registrant is exactly the same as the
trademark ISETAN owned by the petitioner and that the young leaves
registered by the registrant is exactly the same as the young leaves
design owned by the petitioner.
The petitioner further alleged that private respondent's act of registering a trademark
which is exactly the same as its trademark and adopting a corporate name similar to
that of the petitioner were with the illegal and immoral intention of cashing in on the
long established goodwill and popularity of the petitioner's reputation, thereby causing
great and irreparable injury and damage to it (Rollo, p. 521). It argued that both the
petitioner's and respondent's goods move in the same channels of trade, and ordinary
people will be misled to believe that the products of the private respondent originated
or emanated from, are associated with, or are manufactured or sold, or sponsored by
the petitioner by reason of the use of the challenged trademark.
The petitioner also invoked the Convention of Paris of March 20, 1883 for the
Protection of Industrial Property of which the Philippines and Japan are both members.
The petitioner stressed that the Philippines' adherence to the Paris Convention
committed to the government to the protection of trademarks belonging not only to
Filipino citizens but also to those belonging to nationals of other member countries who
may seek protection in the Philippines. (Rollo, p. 522)
The petition was docketed as Inter Partes Cases Nos. 1460 and 1461 (Rollo, p. 514)
Meanwhile, the petitioner also filed with the Securities and Exchange Commission
(SEC) a petition to cancel the mark "ISETAN" as part of the registered corporate name
of Isetann Department Store, Inc. which petition was docketed as SEC Case No. 2051
(Rollo, p. 524) On May 17, 1985, this petition was denied in a decision rendered by
SEC's Hearing Officer, Atty. Joaquin C. Garaygay.
On appeal, the Commission reversed the decision of the Hearing Officer on February
25, 1986. It directed the private respondent to amend its Articles of Incorporation
within 30 days from finality of the decision.
On April 15, 1986, however, respondent Isetann Department Store filed a motion for
reconsideration. (Rollo, pp. 325-353). And on September 10, 1987, the Commission
reversed its earlier decision dated February 25, 1986 thereby affirming the decision

rendered by the Hearing Officer on May 17, 1985. The Commission stated that since
the petitioner's trademark and tradename have never been used in commerce on the
petitioner's products marketed in the Philippines, the trademark or tradename have not
acquired a reputation and goodwill deserving of protection from usurpation by local
competitors. (Rollo, p. 392).
This SEC decision which denied and dismissed the petition to cancel was submitted to
the Director of Patents as part of the evidence for the private respondent.
On January 24, 1986, the Director of Patents after notice and hearing rendered a joint
decision in Inter Partes Cases Nos. 1460 and 1461, the dispositive portion of which
reads:
WHEREFORE, all the foregoing considered, this Office is constrained
to hold that the herein Petitioner has not successfully made out a
case of cancellation. Accordingly, Inter Partes Cases Nos. 1460 and
1461 are, as they are hereby, DISMISSED. Hence, Respondent's
Certificate of Supplemental Registration No. 4714 issued on May 20,
1980 covering the tradename "ISETANN DEPT. STORE, INC. &
FLOWER DESIGN" are, as they are hereby, ordered to remain in full
force and effect for the duration of their term unless sooner or later
terminated by law.
The corresponding application for registration in the Principal Register
of the Trademark and of the tradename aforesaid are hereby given
due course.
Let the records of these cases be transmitted to the Trademark
Examining Division for appropriate action in accordance with this
Decision.
On February 21, 1986, Isetan Company Limited moved for the reconsideration of said
decision but the motion was denied on April 2, 1986 (Rollo, pp. 355-359).
From this adverse decision of the Director of Patents, the petitioner appealed to the
Intermediate Appellate Court (now Court of Appeals).
On June 2, 1986, the IAC dismissed the appeal on the ground that it was filed out of
time.
The petitioner's motion for reconsideration was likewise denied in a resolution dated
July 11, 1986.
Hence, this petition.

IPL | 7/20/16 | 9

Initially, the Court dismissed the petition in a resolution dated July 8, 1987, on the
ground that it was filed fourteen (14) days late. However, on motion for
reconsideration, whereby the petitioner appealed to this Court on equitable grounds
stating that it has a strong and meritorious case, the petition was given due course in a
resolution dated May 19, 1988 to enable us to examine more fully any possible denial
of substantive justice. The parties were then required to submit their memoranda.
(Rollo, pp. 2-28; Resolution, pp. 271; 453)
After carefully considering the records of this case, we reiterate our July 8, 1987
resolution dismissing the petition. There are no compelling equitable considerations
which call for the application of the rule enunciated in Serrano v. Court of Appeals (139
SCRA 179 [1985]) and Orata v. Intermediate Appellate Court, et al. (185 SCRA 148
[1990]) that considerations of substantial justice manifest in the petition may relax the
stringent application of technical rules so as not to defeat an exceptionally meritorious
petition.
There is no dispute and the petitioner does not question the fact that the appeal was
filed out of time.
Not only was the appeal filed late in the Court of Appeals, the petition for review was
also filed late with us. In common parlance, the petitioner's case is "twice dead" and
may no longer be reviewed.
The Court of Appeals correctly rejected the appeal on the sole ground of late filing
when it ruled:
Perfection of an appeal within the time provided by law is
jurisdictional, and failure to observe the period is fatal.
The decision sought to be appealed is one rendered by the Philippine
Patent Office, a quasi-judicialbody. Consequently, under Section
23(c) of the Interim Rules of Court, the appeal shall be governed by
the provisions of Republic Act No. 5434, which provides in its Section
2;
Sec. 2. Appeals to Court of Appeals. - Appeals to the Court of
Appeals shall be filed within fifteen (15) days from notice of the
ruling, award, order, decision or judgment or from the date of its last
publication, if publication is required by law for its effectivity; or in
case a motion for reconsideration is filed within that period of fifteen
(15) days, then within ten (10) days from notice or publication, when
required by law, of the resolution denying the motion for
reconsideration. No more than one motion for reconsideration shall
be allowed any party. If no appeal is filed within the periods here
fixed, the ruling, award, order, decision or judgment shall become
final and may be executed as provided by existing law.

Attention is invited to that portion of Section 2 which states that in

case a motion for reconsideration is filed, an appeal should be filed
within ten (10) days from notice of the resolution denying the motion
for reconsideration.
The petitioner received a copy of the Court of Appeals' resolution denying and received
by us on August 8, 1986, its motion for reconsideration on July 17, 1986. It had only
up to August 1, 1986 to file a petition for review with us. The present petition was
posted on August 2, 1986. There is no question that it was, again, filed late because
the petitioner filed an ex-parte motion for admission explaining the delay.
The decision of the Patent Office has long become final and executory. So has the
Court of Appeal decision.
Regarding the petitioner's claims of substantial justice which led us to give due course,
we decline to disturb the rulings of the Patent Office and the Court of Appeals.
A fundamental principle of Philippine Trademark Law is that actual use in commerce in
the Philippines is a pre-requisite to the acquisition of ownership over a trademark or a
tradename.
The trademark Law, Republic Act No. 166, as amended, under which this case heard
and decided provides:
SEC. 2. What are registrable.- Trademark, tradenames and service
marks owned by persons, corporation, partnerships or associations
domiciled in the Philippines and by persons, corporations,
partnerships or associations domicided in any foreign country may be
registered in accordance with the provisions of this Act: Provided,
That said trademarks, tradenames, or service marks are actually in
use in commerce and services not less than two months in the
Philippines before the time the applications for registration are filed:
And provided, further, That the country of which the applicant for
registration is a citizen grants by law substantially similar privileges
to citizens of the Philippines, and such fact is officially certified, with
a certified true copy of the foreign law translated into the English
language, by the government of the foreign country to the
Government of the Republic of the Philippines. (As amended by R.A.
No. 865).
SEC. 2-A. Ownership of trademarks, tradenames and service marks;
how acquired. - Anyone who lawfully produces or deals in
merchandise of any kind or who engages in any lawful business, or
who renders any lawful service in commerce, by actual use thereof in
manufacture or trade, in business, and in the service rendered, may
appropriate to his exclusive use a trademark, a tradename, or a
service mark not so appropriated by another, to distinguish his

IPL | 7/20/16 | 10

merchandise, business or service from the merchandise, business or

service of others. The ownership or possession of a trademark,
tradename, service mark, heretofore or hereafter appropriated, as in
this section provided, shall be recognized and protected in the same
manner and to the same extent as are other property rights known
to the law. (As amended by R.A. No. 638)"
These provisions have been interpreted in Sterling Products International, Inc. v.
Farbenfabriken Bayer Actiengesellschaft (27 SCRA 1214 [1969]) in this way:
A rule widely accepted and firmly entrenched because it has come
down through the years is that actual use in commerce or business is
a prerequisite to the acquisition of the right of ownership over a
trademark.
xxx xxx xxx
... Adoption alone of a trademark would not give exclusive right
thereto. Such right grows out of their actual use. Adoption is not use.
One way make advertisements, issue circulars, give out price lists on
certain goods; but these alone would not give exclusive right of
use.For trademark is a creation of use. The underlying reason for all
these is that purchasers have come to understand the mark as
indicating the origin of the wares. Flowing from this is the trader's
right to protection in the trade he has built up and the goodwill he
has accumulated from use of the trademark. ...
In fact, a prior registrant cannot claim exclusive use of the trademark unless it uses it
in commerce.
We ruled in Pagasa Industrial Corporation v. Court of Appeals (118 SCRA 526 [1982]):
3. The Trademark Law is very clear. It requires actual commercial
use of the mark prior to its registration. - There is no dispute that
respondent corporation was the first registrant, yet it failed to fully
substantiate its claim that it used in trade or business in the
Philippines the subject mark; it did not present proof to invest it with
exclusive, continuous adoption of the trademark which should consist
among others, of considerable sales since its first use. The invoices
(Exhibits 7, 7-a, and 8-b) submitted by respondent which were dated
way back in 1957 show that the zippers sent to the Philippines were
to be used as "samples" and "of no commercial value". The evidence
for respondent must be clear, definite and free from incosistencies.
(Sy Ching v. Gaw Lui. 44 SCRA 148-149) "Samples" are not for sale
and therefore, the fact of exporting them to the Philippines cannot be
considered to be equivalent to the "use" contemplated by the law.
Respondent did not expect income from such "samples". "There were

no receipts to establish sale, and no proof were presented to show

that they were subsequently sold in the Philippines." (Pagasa
Industrial Corp. v. Court of Appeals, 118 SCRA 526 [1982];
Emphasis Supplied)
The records show that the petitioner has never conducted any business in the
Philippines. It has never promoted its tradename or trademark in the Philippines. It has
absolutely no business goodwill in the Philippines. It is unknown to Filipinos except the
very few who may have noticed it while travelling abroad. It has never paid a single
centavo of tax to the Philippine government. Under the law, it has no right to the
remedy it seeks.
There can be no question from the records that the petitioner has never used its
tradename or trademark in the Philippines.
The petitioner's witnesses, Mr. Mayumi Takayama and Mr. Hieoya Murakami, admitted
that:
1) The petitioner's company is not licensed to do business in the Philippines;
2) The petitioner's trademark is not registered under Philippine law; and
3) The petitioner's trademark is not being used on products in trade, manufacture, or
business in the Philippines.
It was also established from the testimony of Atty. Villasanta, petitioner's witness, that
the petitioner has never engaged in promotional activities in the Philippines to
popularize its trademark because not being engaged in business in the Philippines,
there is no need for advertising. The claim of the petitioner that millions of dollars have
been spent in advertising the petitioner's products, refers to advertising in Japan or
other foreign places. No promotional activities have been undertaken in the Philippines,
by the petitioner's own admission.
Any goodwill, reputation, or knowledge regarding the name Isetann is purely the work
of the private respondent. Evidence was introduced on the extensive promotional
activities of the private respondent.
It might be pertinent at this point to stress that what is involved in this case is not so
much a trademark as a tradename. Isetann Department Store, Inc. is the name of a
store and not of product sold in various parts of the country. This case must be
differentiated from cases involving products bearing such familiar names as "colgate",
"Singer". "Toyota", or "Sony" where the products are marketed widely in the
Philippines. There is not product with the name "Isetann" popularized with that brand
name in the Philippines. Unless one goes to the store called Isetann in Manila, he
would never know what the name means. Similarly, until a Filipino buyer steps inside a
store called "Isetan" in Tokyo or Hongkong, that name would be completely alien to

IPL | 7/20/16 | 11

him. The records show that among Filipinos, the name cannot claim to be
internationally well-known.

provision clearly indicated the conditions which must exist before any
trademark owner can claim and be afforded rights such as the
Petitioner herein seeks and those conditions are that:

The rule is that the findings of facts of the Director of Patents are conclusive on the
Supreme Court, provided they are supported by substantial evidence. (Chua Che v.
Phil. Patent Office, 13 SCRA 67 [1965]; Chung Te v. Ng Kian Giab, 18 SCRA 747
[1966]; Marvex Commercial Co., Inc. v. Petra Hawpia & Co., 18 SCRA 1178 [1966];
Lim Kiah v. Kaynee, Co. 25 SCRA 485 [1968]; Kee Boc v. Dir. of Patents, 34 SCRA 570
[1970]).

a) the mark must be internationally known or well known;

b) the subject of the right must be a trademark, not a patent or
copyright or anything else;
c) the mark must be for use in the same or similar kinds of goods;
and

The conclusions of the Director of Patents are likewise based on applicable law and
jurisprudence:
What is to be secured from unfair competition in a given territory is
the trade which one has in that particular territory. There is where
his business is carried on where the goodwill symbolized by the
trademark has immediate value; where the infringer may profit by
infringement.
There is nothing new in what we now say. Plaintiff itself concedes
(Brief for Plaintiff-Appellant, p. 88) that the principle of territoriality
of the Trademark Law has been recognized in the Philippines, citing
Ingenohl v. Walter E. Olsen, 71 L. ed. 762. As Callmann puts it, the
law of trademarks "rests upon the doctrine of nationality or
territoriality." (2 Callmann, Unfair Competition and Trademarks, 1945
ed., p. 1006) (Sterling Products International, Inc. v. Farbenfabriken
Bayer Aktiengesellachaft, 27 SCRA 1214 [1969]; Emphasis supplied)

d) the person claiming must be the owner of the mark (The Parties
Convention Commentary on the Paris Convention. Article by Dr.
Bogach, Director General of the World Intellectual Property
Organization, Geneva, Switzerland, 1985)
The respondent registered its trademark in 1979. It has continuously used that name
in commerce. It has established a goodwill through extensive advertising. The people
who buy at Isetann Store do so because of Isetann's efforts. There is no showing that
the Japanese firm's registration in Japan or Hongkong has any influence whatsoever on
the Filipino buying public.
WHEREFORE, premises considered, the petition is hereby DISMISSED.
SO ORDERED.

The mere origination or adoption of a particular tradename without actual use thereof
in the market is insufficient to give any exclusive right to its use (Johnson Mfg. Co. v.
Leader Filling Stations Corp. 196 N.E. 852, 291 Mass. 394), even though such adoption
is publicly declared, such as by use of the name in advertisements, circulars, price
lists, and on signs and stationery. (Consumers Petrolum Co. v. Consumers Co. of ILL.
169 F 2d 153)
The Paris Convention for the Protection of Industrial Property does not automatically
exclude all countries of the world which have signed it from using a tradename which
happens to be used in one country. To illustrate - If a taxicab or bus company in a town
in the United Kingdom or India happens to use the tradename "Rapid Transportation",
it does not necessarily follow that "Rapid" can no longer be registered in Uganda, Fiji,
or the Philippines.
As stated by the Director of Patents Indeed, the Philippines is a signatory to this Treaty and, hence, we
must honor our obligation thereunder on matters concerning
internationally known or well known marks. However, this Treaty

G.R. No. 158589

June 27, 2006

PHILIP MORRIS, INC., BENSON & HEDGES (CANADA), INC., and FABRIQUES
DE TABAC REUNIES, S.A., (now known as PHILIP MORRIS PRODUCTS
S.A.), Petitioners,
vs.
FORTUNE TOBACCO CORPORATION, Respondent.
DECISION
GARCIA, J.:

IPL | 7/20/16 | 12

Via this petition for review under Rule 45 of the Rules of Court, herein petitioners Philip
Morris, Inc., Benson & Hedges (Canada) Inc., and Fabriques de Tabac Reunies, S.A.
(now Philip Morris Products S.A.) seek the reversal and setting aside of the following
issuances of the Court of Appeals (CA) in CA-G.R. CV No. 66619, to wit:
1. Decision dated January 21, 2003 1 affirming an earlier decision of the
Regional Trial Court of Pasig City, Branch 166, in its Civil Case No. 47374,
which dismissed the complaint for trademark infringement and damages
thereat commenced by the petitioners against respondent Fortune Tobacco
Corporation; and
2. Resolution dated
reconsideration.

May

30,

20032 denying

petitioners

motion

for

Petitioner Philip Morris, Inc., a corporation organized under the laws of the State of
Virginia, United States of America, is, per Certificate of Registration No. 18723 issued
on April 26, 1973 by the Philippine Patents Office (PPO), the registered owner of the
trademark "MARK VII" for cigarettes. Similarly, petitioner Benson & Hedges (Canada),
Inc., a subsidiary of Philip Morris, Inc., is the registered owner of the trademark "MARK
TEN" for cigarettes as evidenced by PPO Certificate of Registration No. 11147. And as
can be seen in Trademark Certificate of Registration No. 19053, another subsidiary of
Philip Morris, Inc., the Swiss company Fabriques de Tabac Reunies, S.A., is the
assignee of the trademark "LARK," which was originally registered in 1964 by Ligget
and Myers Tobacco Company. On the other hand, respondent Fortune Tobacco
Corporation, a company organized in the Philippines, manufactures and sells cigarettes
using the trademark "MARK."
The legal dispute between the parties started when the herein petitioners, on the claim
that an infringement of their respective trademarks had been committed, filed, on
August 18, 1982, a Complaint for Infringement of Trademark and Damages against
respondent Fortune Tobacco Corporation, docketed as Civil Case No. 47374 of the
Regional Trial Court of Pasig, Branch 166.
The decision under review summarized what happened next, as follows:
In the Complaint xxx with prayer for the issuance of a preliminary injunction,
[petitioners] alleged that they are foreign corporations not doing business in the
Philippines and are suing on an isolated transaction. xxx they averred that the
countries in which they are domiciled grant xxx to corporate or juristic persons of the
Philippines the privilege to bring action for infringement, xxx without need of a license
to do business in those countries. [Petitioners] likewise manifested [being registered
owners of the trademark "MARK VII" and "MARK TEN" for cigarettes as evidenced by
the corresponding certificates of registration and an applicant for the registration of the
trademark "LARK MILDS"]. xxx. [Petitioners] claimed that they have registered the
aforementioned trademarks in their respective countries of origin and that, by virtue of
the long and extensive usage of the same, these trademarks have already gained
international fame and acceptance. Imputing bad faith on the part of the [respondent],
petitioners claimed that the [respondent], without any previous consent from any of
the [petitioners], manufactured and sold cigarettes bearing the identical and/or
confusingly similar trademark "MARK" xxx Accordingly, they argued that [respondents]
use of the trademark "MARK" in its cigarette products have caused and is likely to

cause confusion or mistake, or would deceive purchasers and the public in general into
buying these products under the impression and mistaken belief that they are buying
[petitioners] products.
Invoking the provisions of the Paris Convention for the Protection of Industrial and
Intellectual Property (Paris Convention, for brevity), to which the Philippines is a
signatory xxx, [petitioners] pointed out that upon the request of an interested party, a
country of the Union may prohibit the use of a trademark which constitutes a
reproduction, imitation, or translation of a mark already belonging to a person entitled
to the benefits of the said Convention. They likewise argued that, in accordance with
Section 21-A in relation to Section 23 of Republic Act 166, as amended, they are
entitled to relief in the form of damages xxx [and] the issuance of a writ of preliminary
injunction which should be made permanent to enjoin perpetually the [respondent]
from violating [petitioners] right to the exclusive use of their aforementioned
trademarks.
[Respondent] filed its Answer xxx denying [petitioners] material allegations and xxx
averred [among other things] xxx that "MARK" is a common word, which cannot
particularly identify a product to be the product of the [petitioners] xxx
xxx
lawphil.net

xxx

xxx.

Meanwhile, after the [respondent] filed its Opposition (Records, Vo. I, p. 26), the
matter of the [petitioners] prayer for the issuance of a writ of preliminary injunction
was negatively resolved by the court in an Order xxx dated March 28, 1973. [The
incidental issue of the propriety of an injunction would eventually be elevated to the CA
and would finally be resolved by the Supreme Court in its Decision dated July 16, 1993
in G.R. No. 91332]. xxx.
xxx

xxx

xxx

After the termination of the trial on the merits xxx trial court rendered its Decision xxx
dated November 3, 1999 dismissing the complaint and counterclaim after making a
finding that the [respondent] did not commit trademark infringement against the
[petitioners]. Resolving first the issue of whether or not [petitioners] have capacity to
institute the instant action, the trial court opined that [petitioners] failure to present
evidence to support their allegation that their respective countries indeed grant
Philippine corporations reciprocal or similar privileges by law xxx justifies the dismissal
of the complaint xxx. It added that the testimonies of [petitioners] witnesses xxx
essentially declared that [petitioners] are in fact doing business in the Philippines, but
[petitioners] failed to establish that they are doing so in accordance with the legal
requirement of first securing a license. Hence, the court declared that [petitioners] are
barred from maintaining any action in Philippine courts pursuant to Section 133 of the
Corporation Code.
The issue of whether or not there was infringement of the [petitioners] trademarks by
the [respondent] was likewise answered xxx in the negative. It expounded that "in
order for a name, symbol or device to constitute a trademark, it must, either by itself
or by association, point distinctly to the origin or ownership of the article to which it is

IPL | 7/20/16 | 13

applied and be of such nature as to permit an exclusive appropriation by one person".

Applying such principle to the instant case, the trial court was of the opinion that the
words "MARK", "TEN", "LARK" and the Roman Numerals "VII", either alone or in
combination of each other do not by themselves or by association point distinctly to
the origin or ownership of the cigarettes to which they refer, such that the buying
public could not be deceived into believing that [respondents] "MARK" cigarettes
originated either from the USA, Canada, or Switzerland.
Emphasizing that the test in an infringement case is the likelihood of confusion or
deception, the trial court stated that the general rule is that an infringement exists if
the resemblance is so close that it deceives or is likely to deceive a customer exercising
ordinary caution in his dealings and induces him to purchase the goods of one
manufacturer in the belief that they are those of another. xxx. The trial court ruled that
the [petitioners] failed to pass these tests as it neither presented witnesses or
purchasers attesting that they have bought [respondents] product believing that they
bought [petitioners] "MARK VII", "MARK TEN" or "LARK", and have also failed to
introduce in evidence a specific magazine or periodical circulated locally, which
promotes and popularizes their products in the Philippines. It, moreover, elucidated
that the words consisting of the trademarks allegedly infringed by [respondent] failed
to show that they have acquired a secondary meaning as to identify them as
[petitioners] products. Hence, the court ruled that the [petitioners] cannot avail
themselves of the doctrine of secondary meaning.
As to the issue of damages, the trial court deemed it just not to award any to either
party stating that, since the [petitioners] filed the action in the belief that they were
aggrieved by what they perceived to be an infringement of their trademark, no
wrongful act or omission can be attributed to them. xxx.3 (Words in brackets supplied)
Maintaining to have the standing to sue in the local forum and that respondent has
committed trademark infringement, petitioners went on appeal to the CA whereat their
appellate recourse was docketed as CA-G.R. CV No. 66619.
Eventually, the CA, in its Decision dated January 21, 2003, while ruling for petitioners
on the matter of their legal capacity to sue in this country for trademark infringement,
nevertheless affirmed the trial courts decision on the underlying issue of respondents
liability for infringement as it found that:
xxx the appellants [petitioners] trademarks, i.e., "MARK VII", "MARK TEN" and
"LARK", do not qualify as well-known marks entitled to protection even without the
benefit of actual use in the local market and that the similarities in the trademarks in
question are insufficient as to cause deception or confusion tantamount to
infringement. Consequently, as regards the third issue, there is likewise no basis for
the award of damages prayed for by the appellants herein.4 (Word in bracket supplied)
With their motion for reconsideration having been denied by the CA in its equally
challenged Resolution of May 30, 2003, petitioners are now with this Court via this
petition for review essentially raising the following issues: (1) whether or not
petitioners, as Philippine registrants of trademarks, are entitled to enforce trademark
rights in this country; and (2) whether or not respondent has committed trademark
infringement against petitioners by its use of the mark "MARK" for its cigarettes, hence
liable for damages.

In its Comment,5 respondent, aside from asserting the correctness of the CAs finding
on its liability for trademark infringement and damages, also puts in issue the propriety
of the petition as it allegedly raises questions of fact.
The petition is bereft of merit.
Dealing first with the procedural matter interposed by respondent, we find that the
petition raises both questions of fact and law contrary to the prescription against
raising factual questions in a petition for review on certiorari filed before the Court. A
question of law exists when the doubt or difference arises as to what the law is on a
certain state of facts; there is a question of fact when the doubt or difference arises as
to the truth or falsity of alleged facts.6
Indeed, the Court is not the proper venue to consider factual issues as it is not a trier
of facts.7 Unless the factual findings of the appellate court are mistaken, absurd,
speculative, conflicting, tainted with grave abuse of discretion, or contrary to the
findings culled by the court of origin,8 we will not disturb them.
It is petitioners posture, however, that their contentions should
be treated as purely legal since they are assailing erroneous conclusions deduced from
a set of undisputed facts.
Concededly, when the facts are undisputed, the question of whether or not the
conclusion drawn therefrom by the CA is correct is one of law.9 But, even if we consider
and accept as pure questions of law the issues raised in this petition, still, the Court is
not inclined to disturb the conclusions reached by the appellate court, the established
rule being that all doubts shall be resolved in favor of the correctness of such
conclusions.10
Be that as it may, we shall deal with the issues tendered and determine whether the
CA ruled in accordance with law and established jurisprudence in arriving at its assailed
decision.
A "trademark" is any distinctive word, name, symbol, emblem, sign, or device, or any
combination thereof adopted and used by a manufacturer or merchant on his goods to
identify and distinguish them from those manufactured, sold, or dealt in by
others.11 Inarguably, a trademark deserves protection. For, as Mr. Justice Frankfurter
observed in Mishawaka Mfg. Co. v. Kresge Co.:12
The protection of trademarks is the laws recognition of the psychological function of
symbols. If it is true that we live by symbols, it is no less true that we purchase goods
by them. A trade-mark is a merchandising short-cut which induces a purchaser to
select what he wants, or what he has been led to believe what he wants. The owner of
a mark exploits this human propensity by making every effort to impregnate the
atmosphere of the market with the drawing power of a congenial symbol. Whatever the
means employed, the aim is the same - to convey through the mark, in the minds of
potential customers, the desirability of the commodity upon which it appears. Once this
is attained, the trade-mark owner has something of value. If another poaches upon the

IPL | 7/20/16 | 14

commercial magnetism of the symbol he has created, the owner can obtain legal
redress.
It is thus understandable for petitioners to invoke in this recourse their entitlement to
enforce trademark rights in this country, specifically, the right to sue for trademark
infringement in Philippine courts and be accorded protection against unauthorized use
of their Philippine-registered trademarks.
In support of their contention respecting their right of action, petitioners assert that, as
corporate nationals of member-countries of the Paris Union, they can sue before
Philippine courts for infringement of trademarks, or for unfair competition, without
need of obtaining registration or a license to do business in the Philippines, and without
necessity of actually doing business in the Philippines. To petitioners, these grievance
right and mechanism are accorded not only by Section 21-A of Republic Act (R.A.) No.
166, as amended, or the Trademark Law, but also by Article 2 of the Paris Convention
for the Protection of Industrial Property, otherwise known as the Paris Convention.
In any event, petitioners point out that there is actual use of their trademarks in the
Philippines as evidenced by the certificates of registration of their trademarks. The
marks "MARK TEN" and "LARK" were registered on the basis of actual use in
accordance with Sections 2-A13 and 5(a)14 of R.A. No. 166, as amended, providing for a
2-month pre-registration use in local commerce and trade while the registration of
"MARK VII" was on the basis of registration in the foreign country of origin pursuant to
Section 37 of the same law wherein it is explicitly provided that prior use in commerce
need not be alleged.15
Besides, petitioners argue that their not doing business in the Philippines, if that be the
case, does not mean that cigarettes bearing their trademarks are not available and
sold locally. Citing Converse Rubber Corporation v. Universal Rubber Products,
Inc.,16 petitioners state that such availability and sale may be effected through the acts
of importers and distributors.
Finally, petitioners would press on their entitlement to protection even in the absence
of actual use of trademarks in the country in view of the Philippines adherence to the
Trade Related Aspects of Intellectual Property Rights or the TRIPS Agreement and the
enactment of R.A. No. 8293, or the Intellectual Property Code (hereinafter the "IP
Code"), both of which provide that the fame of a trademark may be acquired through
promotion or advertising with no explicit requirement of actual use in local trade or
commerce.
Before discussing petitioners claimed entitlement to enforce trademark rights in the
Philippines, it must be emphasized that their standing to sue in Philippine courts had
been recognized, and rightly so, by the CA. It ought to be pointed out, however, that
the appellate court qualified its holding with a statement, following G.R. No. 91332,
entitled Philip Morris, Inc., et al. v. The Court of Appeals and Fortune Tobacco
Corporation,17 that such right to sue does not necessarily mean protection of their
registered marks in the absence of actual use in the Philippines.
Thus clarified, what petitioners now harp about is their entitlement to protection on the
strength of registration of their trademarks in the Philippines.

As we ruled in G.R. No. 91332,18 supra, so it must be here.

Admittedly, the registration of a trademark gives the registrant, such as petitioners,
advantages denied non-registrants or ordinary users, like respondent. But while
petitioners enjoy the statutory presumptions arising from such registration, 19 i.e., as to
the validity of the registration, ownership and the exclusive right to use the registered
marks, they may not successfully sue on the basis alone of their respective certificates
of registration of trademarks. For, petitioners are still foreign corporations. As such,
they ought, as a condition to availment of the rights and privileges vis--vis their
trademarks in this country, to show proof that, on top of Philippine registration, their
country grants substantially similar rights and privileges to Filipino citizens pursuant to
Section 21-A20 of R.A. No. 166.
In Leviton Industries v. Salvador,21 the Court further held that the aforementioned
reciprocity requirement is a condition sine qua non to filing a suit by a foreign
corporation which, unless alleged in the complaint, would justify dismissal thereof, a
mere allegation that the suit is being pursued under Section 21-A of R.A. No. 166 not
being sufficient. In a subsequent case, 22 however, the Court held that where the
complainant is a national of a Paris Convention- adhering country, its allegation that it
is suing under said Section 21-A would suffice, because the reciprocal agreement
between the two countries is embodied and supplied by the Paris Convention which,
being considered part of Philippine municipal laws, can be taken judicial notice of in
infringement suits.23
As well, the fact that their respective home countries, namely, the United States,
Switzerland and Canada, are, together with the Philippines, members of the Paris
Union does not automatically entitle petitioners to the protection of their trademarks in
this country absent actual use of the marks in local commerce and trade.
True, the Philippines adherence to the Paris Convention 24 effectively obligates the
country to honor and enforce its provisions25 as regards the protection of industrial
property of foreign nationals in this country. However, any protection accorded has to
be made subject to the limitations of Philippine laws. 26 Hence, despite Article 2 of the
Paris Convention which substantially provides that (1) nationals of member-countries
shall have in this country rights specially provided by the Convention as are consistent
with Philippine laws, and enjoy the privileges that Philippine laws now grant or may
hereafter grant to its nationals, and (2) while no domicile requirement in the country
where protection is claimed shall be required of persons entitled to the benefits of the
Union for the enjoyment of any industrial property rights, 27 foreign nationals must still
observe and comply with the conditions imposed by Philippine law on its nationals.
Considering that R.A. No. 166, as amended, specifically Sections 2 28 and 2-A29 thereof,
mandates actual use of the marks and/or emblems in local commerce and trade before
they may be registered and ownership thereof acquired, the petitioners cannot,
therefore, dispense with the element of actual use. Their being nationals of membercountries of the Paris Union does not alter the legal situation.
In Emerald Garment Mfg. Corporation v. Court of Appeals, 30 the Court reiterated its
rulings in Sterling Products International, Inc. v. Farbenfabriken Bayer
Aktiengesellschaft,31 Kabushi Kaisha Isetan v. Intermediate Appellate Court,32 and Philip
Morris v. Court of Appeals and Fortune Tobacco Corporation 33 on the importance of

IPL | 7/20/16 | 15

actual commercial use of a trademark in the Philippines notwithstanding the Paris

Convention:
The provisions of the 1965 Paris Convention relied upon by private respondent and
Sec. 21-A of the Trademark Law were sufficiently expounded upon and qualified in the
recent case of Philip Morris, Inc., et. al. vs. Court of Appeals:
xxx

xxx

xxx

Following universal acquiescence and comity, our municipal law on trademarks

regarding the requirements of actual use in the Philippines must subordinate an
international agreement inasmuch as the apparent clash is being decided by a
municipal tribunal. Xxx. Withal, the fact that international law has been made part of
the law of the land does not by any means imply the primacy of international law over
national law in the municipal sphere. Under the doctrine of incorporation as applied in
most countries, rules of International Law are given a standing equal, not superior, to
national legislative enactments.
xxx

xxx

xxx

In other words, (a foreign corporation) may have the capacity to sue for infringement
but the question of whether they have an exclusive right over their symbol as to
justify issuance of the controversial writ will depend on actual use of their trademarks
in the Philippines in line with Sections 2 and 2-A of the same law. It is thus
incongruous for petitioners to claim that when a foreign corporation not licensed to do
business in the Philippines files a complaint for infringement, the entity need not be
actually using its trademark in commerce in the Philippines. Such a foreign corporation
may have the personality to file a suit for infringement but it may not necessarily be
entitled to protection due to absence of actual use of the emblem in the local market.
Contrary to what petitioners suggest, the registration of trademark cannot be deemed
conclusive as to the actual use of such trademark in local commerce. As it were,
registration does not confer upon the registrant an absolute right to the registered
mark. The certificate of registration merely constitutes prima facie evidence that the
registrant is the owner of the registered mark. Evidence of non-usage of the mark
rebuts the presumption of trademark ownership,34 as what happened here when
petitioners no less admitted not doing business in this country.35
Most importantly, we stress that registration in the Philippines of trademarks does not
ipso facto convey an absolute right or exclusive ownership thereof. To borrow from
Shangri-La International Hotel Management, Ltd. v. Development Group of Companies,
Inc.36 trademark is a creation of use and, therefore, actual use is a pre-requisite to
exclusive ownership; registration is only an administrative confirmation of the
existence of the right of ownership of the mark, but does not perfect such right; actual
use thereof is the perfecting ingredient.37
Petitioners reliance on Converse Rubber Corporation 38 is quite misplaced, that case
being cast in a different factual milieu. There, we ruled that a foreign owner of a
Philippine trademark, albeit not licensed to do, and not so engaged in, business in the
Philippines, may actually earn reputation or goodwill for its goods in the country. But

unlike in the instant case, evidence of actual sales of Converse rubber shoes, such as
sales invoices, receipts and the testimony of a legitimate trader, was presented in
Converse.
This Court also finds the IP Code and the TRIPS Agreement to be inapplicable, the
infringement complaint herein having been filed in August 1982 and tried under the
aegis of R.A. No. 166, as amended. The IP Code, however, took effect only on January
1, 1998 without a provision as to its retroactivity.39 In the same vein, the TRIPS
Agreement was inexistent when the suit for infringement was filed, the Philippines
having adhered thereto only on December 16, 1994.
With the foregoing perspective, it may be stated right off that the registration of a
trademark unaccompanied by actual use thereof in the country accords the registrant
only the standing to sue for infringement in Philippine courts. Entitlement to protection
of such trademark in the country is entirely a different matter.
This brings us to the principal issue of infringement.
Section 22 of R.A. No. 166, as amended, defines what constitutes trademark
infringement, as follows:
Sec. 22. Infringement, what constitutes. Any person who shall use, without the
consent of the registrant, any reproduction, counterfeit, copy or colorable imitation of
any registered mark or tradename in connection with the sale, offering for sale, or
advertising of any goods, business or services on or in connection with which such use
is likely to cause confusion or mistake or to deceive purchasers or others as to the
source or origin of such goods or services, or identity of such business; or reproduce,
counterfeit, copy of color ably imitate any such mark or tradename and apply such
reproduction, counterfeit, copy or colorable imitation to labels, signs, prints, packages,
wrappers, receptacles or advertisements intended to be used upon or in connection
with such goods, business, or services, shall be liable to a civil action by the registrant
for any or all of the remedies herein provided.
Petitioners would insist on their thesis of infringement since respondents mark "MARK"
for cigarettes is confusingly or deceptively similar with their duly registered "MARK
VII," "MARK TEN" and "LARK" marks likewise for cigarettes. To them, the word "MARK"
would likely cause confusion in the trade, or deceive purchasers, particularly as to the
source or origin of respondents cigarettes.
The "likelihood of confusion" is the gravamen of trademark infringement. 40 But
likelihood of confusion is a relative concept, the particular, and sometimes peculiar,
circumstances of each case being determinative of its existence. Thus, in trademark
infringement cases, more than in other kinds of litigation, precedents must be
evaluated in the light of each particular case.41
In determining similarity and likelihood of confusion, jurisprudence has developed two
tests: the dominancy test and the holistic test. 42 The dominancy test43 sets sight on the
similarity of the prevalent features of the competing trademarks that might cause
confusion and deception, thus constitutes infringement. Under this norm, the question

IPL | 7/20/16 | 16

at issue turns on whether the use of the marks involved would be likely to cause
confusion or mistake in the mind of the public or deceive purchasers. 44
In contrast, the holistic test 45 entails a consideration of the entirety of the marks as
applied to the products, including the labels and packaging, in determining confusing
similarity.
Upon consideration of the foregoing in the light of the peculiarity of this case, we rule
against the likelihood of confusion resulting in infringement arising from the
respondents use of the trademark "MARK" for its particular cigarette product.
For one, as rightly concluded by the CA after comparing the trademarks involved in
their entirety as they appear on the products, 46 the striking dissimilarities are
significant enough to warn any purchaser that one is different from the other. Indeed,
although the perceived offending word "MARK" is itself prominent in petitioners
trademarks "MARK VII" and "MARK TEN," the entire marking system should be
considered as a whole and not dissected, because a discerning eye would focus not
only on the predominant word but also on the other features appearing in the labels.
Only then would such discerning observer draw his conclusion whether one mark would
be confusingly similar to the other and whether or not sufficient differences existed
between the marks.47
This said, the CA then, in finding that respondents goods cannot be mistaken as any of
the three cigarette brands of the petitioners, correctly relied on the holistic test.
But, even if the dominancy test were to be used, as urged by the petitioners, but
bearing in mind that a trademark serves as a tool to point out distinctly the origin or
ownership of the goods to which it is affixed, 48 the likelihood of confusion tantamount
to infringement appears to be farfetched. The reason for the origin and/or ownership
angle is that unless the words or devices do so point out the origin or ownership, the
person who first adopted them cannot be injured by any appropriation or imitation of
them by others, nor can the public be deceived.49
Since the word "MARK," be it alone or in combination with the word "TEN" and the
Roman numeral "VII," does not point to the origin or ownership of the cigarettes to
which they apply, the local buying public could not possibly be confused or deceived
that respondents "MARK" is the product of petitioners and/or originated from the
U.S.A., Canada or Switzerland. And lest it be overlooked, no actual commercial use of
petitioners marks in local commerce was proven. There can thus be no occasion for
the public in this country, unfamiliar in the first place with petitioners marks, to be
confused.
For another, a comparison of the trademarks as they appear on the goods is just one of
the appreciable circumstances in determining likelihood of confusion. Del Monte Corp.
v. CA50 dealt with another, where we instructed to give due regard to the "ordinary
purchaser," thus:
The question is not whether the two articles are distinguishable by their label when set
side by side but whether the general confusion made by the article upon the eye of the
casual purchaser who is unsuspicious and off his guard, is such as to likely result in his

confounding it with the original. As observed in several cases, the general impression
of the ordinary purchaser, buying under the normally prevalent conditions in trade and
giving the attention such purchasers usually give in buying that class of goods is the
touchstone.
When we spoke of an "ordinary purchaser," the reference was not to the "completely
unwary customer" but to the "ordinarily intelligent buyer" considering the type of
product involved.51
It cannot be over-emphasized that the products involved are addicting cigarettes
purchased mainly by those who are already predisposed to a certain brand.
Accordingly, the ordinary buyer thereof would be all too familiar with his brand and
discriminating as well. We, thus, concur with the CA when it held, citing a definition
found in Dy Buncio v. Tan Tiao Bok,52 that the "ordinary purchaser" in this case means
"one accustomed to buy, and therefore to some extent familiar with, the goods in
question."
Pressing on with their contention respecting the commission of trademark
infringement, petitioners finally point to Section 22 of R.A. No. 166, as amended. As
argued, actual use of trademarks in local commerce is, under said section, not a
requisite before an aggrieved trademark owner can restrain the use of his trademark
upon goods manufactured or dealt in by another, it being sufficient that he had
registered the trademark or trade-name with the IP Office. In fine, petitioners submit
that respondent is liable for infringement, having manufactured and sold cigarettes
with the trademark "MARK" which, as it were, are identical and/or confusingly similar
with their duly registered trademarks "MARK VII," "MARK TEN" and "LARK".
This Court is not persuaded.
In Mighty Corporation v. E & J Gallo Winery,53 the Court held that the following
constitute the elements of trademark infringement in accordance not only with Section
22 of R.A. No. 166, as amended, but also Sections 2, 2-A, 9-A54 and 20 thereof:
(a) a trademark actually used in commerce in the Philippines and registered in
the principal register of the Philippine Patent Office,
(b) is used by another person in connection with the sale, offering for sale, or
advertising of any goods, business or services or in connection with which
such use is likely to cause confusion or mistake or to deceive purchasers or
others as to the source or origin of such goods or services, or identity of such
business; or such trademark is reproduced, counterfeited, copied or colorably
imitated by another person and such reproduction, counterfeit, copy or
colorable imitation is applied to labels, signs, prints, packages, wrappers,
receptacles or advertisements intended to be used upon or in connection with
such goods, business or services as to likely cause confusion or mistake or to
deceive purchasers,
(c) the trademark is used for identical or similar goods, and

IPL | 7/20/16 | 17

(d) such act is done without the consent of the trademark registrant or
assignee.lawphil.net
As already found herein, while petitioners have registered the trademarks "MARK VII,"
"MARK TEN" and "LARK" for cigarettes in the Philippines, prior actual commercial use
thereof had not been proven. In fact, petitioners judicial admission of not doing
business in this country effectively belies any pretension to the contrary.
Likewise, we note that petitioners even failed to support their claim that their
respective marks are well-known and/or have acquired goodwill in the Philippines so as
to be entitled to protection even without actual use in this country in accordance with
Article 6bis55 of the Paris Convention. As correctly found by the CA, affirming that of
the trial court:
xxx the records are bereft of evidence to establish that the appellants [petitioners]
products are indeed well-known in the Philippines, either through actual sale of the
product or through different forms of advertising. This finding is supported by the fact
that appellants admit in their Complaint that they are not doing business in the
Philippines, hence, admitting that their products are not being sold in the local market.
We likewise see no cogent reason to disturb the trial courts finding that the appellants
failed to establish that their products are widely known by local purchasers as "(n)o
specific magazine or periodical published in the Philippines, or in other countries but
circulated locally" have been presented by the appellants during trial. The appellants
also were not able to show the length of time or the extent of the promotion or
advertisement made to popularize their products in the Philippines. 56
Last, but not least, we must reiterate that the issue of trademark infringement is
factual, with both the trial and appellate courts having peremptorily found allegations
of infringement on the part of respondent to be without basis. As we said time and
time again, factual determinations of the trial court, concurred in by the CA, are final
and binding on this Court.57
For lack of convincing proof on the part of the petitioners of actual use of their
registered trademarks prior to respondents use of its mark and for petitioners failure
to demonstrate confusing similarity between said trademarks, the dismissal of their
basic complaint for infringement and the concomitant plea for damages must be
affirmed. The law, the surrounding circumstances and the equities of the situation call
for this disposition.
WHEREFORE, the petition is hereby DENIED. Accordingly, the assailed decision and
resolution of the Court of Appeals are AFFIRMED.
Costs against the petitioners.
G.R. No. 159938

March 31, 2006

SO ORDERED.
SHANGRI-LA INTERNATIONAL HOTEL MANAGEMENT, LTD., SHANGRI-LA
PROPERTIES, INC., MAKATI SHANGRI-LA HOTEL & RESORT, INC., AND KUOK
PHILIPPINES
PROPERTIES,
INC., Petitioners,

IPL | 7/20/16 | 18

vs.
DEVELOPERS GROUP OF COMPANIES, INC., Respondent.

From the records, it appears that Shangri-La Hotel Singapore commissioned a

Singaporean design artist, a certain Mr. William Lee, to conceptualize and design the
logo of the Shangri-La hotels.

DECISION
GARCIA, J.:
In this petition for review under Rule 45 of the Rules of Court, petitioners Shangri-La
International Hotel Management, Ltd. (SLIHM), et al. assail and seek to set aside the
Decision dated May 15, 20031 of the Court of Appeals (CA) in CA-G.R. CV No. 53351
and its Resolution2 of September 15, 2003 which effectively affirmed with modification
an earlier decision of the Regional Trial Court (RTC) of Quezon City in Civil Case No. Q91-8476, an action for infringement and damages, thereat commenced by respondent
Developers Group of Companies, Inc. (DGCI) against the herein petitioners.
The facts:
At the core of the controversy are the "Shangri-La" mark and "S" logo. Respondent
DGCI claims ownership of said mark and logo in the Philippines on the strength of its
prior use thereof within the country. As DGCI stresses at every turn, it filed on October
18, 1982 with the Bureau of Patents, Trademarks and Technology Transfer (BPTTT)
pursuant to Sections 2 and 4 of Republic Act (RA) No. 166, 3 as amended, an
application for registration covering the subject mark and logo. On May 31, 1983, the
BPTTT issued in favor of DGCI the corresponding certificate of registration therefor, i.e.,
Registration No. 31904. Since then, DGCI started using the "Shangri-La" mark and "S"
logo in its restaurant business.
On the other hand, the Kuok family owns and operates a chain of hotels with interest
in hotels and hotel-related transactions since 1969. As far back as 1962, it adopted the
name "Shangri-La" as part of the corporate names of all companies organized under
the aegis of the Kuok Group of Companies (the Kuok Group). The Kuok Group has used
the name "Shangri-La" in all Shangri-La hotels and hotel-related establishments
around the world which the Kuok Family owned.
To centralize the operations of all Shangri-la hotels and the ownership of the "ShangriLa" mark and "S" logo, the Kuok Group had incorporated in Hong Kong and Singapore,
among other places, several companies that form part of the Shangri-La International
Hotel Management Ltd. Group of Companies. EDSA Shangri-La Hotel and Resort, Inc.,
and Makati Shangri-La Hotel and Resort, Inc. were incorporated in the Philippines
beginning 1987 to own and operate the two (2) hotels put up by the Kuok Group in
Mandaluyong and Makati, Metro Manila.
All hotels owned, operated and managed by the aforesaid SLIHM Group of Companies
adopted and used the distinctive lettering of the name "Shangri-La" as part of their
trade names.

During the launching of the stylized "S" Logo in February 1975, Mr. Lee gave the
following explanation for the logo, to wit:
The logo which is shaped like a "S" represents the uniquely Asean architectural
structures as well as keep to the legendary Shangri-la theme with the mountains on
top being reflected on waters below and the connecting centre [sic] line serving as the
horizon. This logo, which is a bold, striking definitive design, embodies both modernity
and sophistication in balance and thought.
Since 1975 and up to the present, the "Shangri-La" mark and "S" logo have been used
consistently and continuously by all Shangri-La hotels and companies in their
paraphernalia, such as stationeries, envelopes, business forms, menus, displays and
receipts.
The Kuok Group and/or petitioner SLIHM caused the registration of, and in fact
registered, the "Shangri-La" mark and "S" logo in the patent offices in different
countries around the world.
On June 21, 1988, the petitioners filed with the BPTTT a petition, docketed as Inter
Partes Case No. 3145, praying for the cancellation of the registration of the "ShangriLa" mark and "S" logo issued to respondent DGCI on the ground that the same were
illegally and fraudulently obtained and appropriated for the latter's restaurant business.
They also filed in the same office Inter Partes Case No. 3529, praying for the
registration of the same mark and logo in their own names.
Until 1987 or 1988, the petitioners did not operate any establishment in the
Philippines, albeit they advertised their hotels abroad since 1972 in numerous
business, news, and/or travel magazines widely circulated around the world, all readily
available in Philippine magazines and newsstands. They, too, maintained reservations
and booking agents in airline companies, hotel organizations, tour operators, tour
promotion organizations, and in other allied fields in the Philippines.
It is principally upon the foregoing factual backdrop that respondent DGCI filed a
complaint for Infringement and Damages with the RTC of Quezon City against the
herein petitioners SLIHM, Shangri-La Properties, Inc., Makati Shangri-La Hotel &
Resort, Inc., and Kuok Philippine Properties, Inc., docketed as Civil Case No. Q-918476 and eventually raffled to Branch 99 of said court. The complaint with prayer for
injunctive relief and damages alleged that DGCI has, for the last eight (8) years, been
the prior exclusive user in the Philippines of the mark and logo in question and the
registered owner thereof for its restaurant and allied services. As DGCI alleged in its
complaint, SLIHM, et al., in promoting and advertising their hotel and other allied
projects then under construction in the country, had been using a mark and logo
confusingly similar, if not identical, with its mark and "S" logo. Accordingly, DGCI

IPL | 7/20/16 | 19

sought to prohibit the petitioners, as defendants a quo, from using the "Shangri-La"
mark and "S" logo in their hotels in the Philippines.

known as the "Carvajal Restaurant" until December 1982, when respondent

took over said restaurant business.

In their Answer with Counterclaim, the petitioners accused DGCI of appropriating and
illegally using the "Shangri-La" mark and "S" logo, adding that the legal and beneficial
ownership thereof pertained to SLIHM and that the Kuok Group and its related
companies had been using this mark and logo since March 1962 for all their corporate
names and affairs. In this regard, they point to the Paris Convention for the Protection
of Industrial Property as affording security and protection to SLIHM's exclusive right to
said mark and logo. They further claimed having used, since late 1975, the
internationally-known and specially-designed "Shangri-La" mark and "S" logo for all the
hotels in their hotel chain.

2. He had traveled widely around Asia prior to 1982, and admitted knowing
the Shangri-La Hotel in Hong Kong as early as August 1982.

Pending trial on the merits of Civil Case No. Q-91-8476, the trial court issued a Writ of
Preliminary Injunction enjoining the petitioners from using the subject mark and logo.
The preliminary injunction issue ultimately reached the Court in G.R. No. 104583
entitled Developers Group of Companies, Inc. vs. Court of Appeals, et al. In a
decision4 dated March 8, 1993, the Court nullified the writ of preliminary injunction
issued by the trial court and directed it to proceed with the main case and decide it
with deliberate dispatch.
While trial was in progress, the petitioners filed with the court a motion to suspend
proceedings on account of the pendency before the BPTTT of Inter Partes Case No.
3145 for the cancellation of DGCI's certificate of registration. For its part, respondent
DGCI filed a similar motion in that case, invoking in this respect the pendency of its
infringement case before the trial court. The parties' respective motions to suspend
proceedings also reached the Court via their respective petitions in G.R. No. 114802,
entitled Developers Group of Companies, Inc. vs. Court of Appeals, et al. and G.R. No.
111580, entitled Shangri-La International Hotel Management LTD., et al. vs. Court of
Appeals, et al., which were accordingly consolidated.
In a consolidated decision dated June 21, 2001, the Court, limiting itself to the core
issue of whether, despite the petitioners' institution of Inter Partes Case No. 3145
before the BPTTT, herein respondent DGCI "can file a subsequent action for
infringement with the regular courts of justice in connection with the same registered
mark," ruled in the affirmative, but nonetheless ordered the BPTTT to suspend further
proceedings in said inter partes case and to await the final outcome of the main case.
5

Meanwhile, trial on the merits of the infringement case proceeded. Presented as DGCI's
lone witness was Ramon Syhunliong, President and Chairman of DGCI's Board of
Directors. Among other things, this witness testified that:
1. He is a businessman, with interest in lumber, hotel, hospital, trading and
restaurant businesses but only the restaurant business bears the name
"Shangri-La" and uses the same and the "S-logo" as service marks. The
restaurant now known as "Shangri-La Finest Chinese Cuisine" was formerly

3. The "S-logo" was one of two (2) designs given to him in December 1982,
scribbled on a piece of paper by a jeepney signboard artist with an office
somewhere in Balintawak. The unnamed artist supposedly produced the two
designs after about two or three days from the time he (Syhunliong) gave the
idea of the design he had in mind.
4. On October 15, 1982, or before the unknown signboard artist supposedly
created the "Shangri-La" and "S" designs, DGCI was incorporated with the
primary purpose of "owning or operating, or both, of hotels and restaurants".
5. On October 18, 1982, again prior to the alleged creation date of the mark
and logo, DGCI filed an application for trademark registration of the mark
"SHANGRI-LA FINEST CHINESE CUISINE & S. Logo" with the BPTTT. On said
date, respondent DGCI amended its Articles of Incorporation to reflect the
name of its restaurant, known and operating under the style and name of
"SHANGRI-LA FINEST CHINESE CUISINE." Respondent DGCI obtained
Certificate of Registration No. 31904 for the "Shangri-La" mark and "S" logo.
Eventually, the trial court, on the postulate that petitioners', more particularly
petitioner SLIHM's, use of the mark and logo in dispute constitutes an infringement of
DGCI's right thereto, came out with its decision 6 on March 8, 1996 rendering judgment
for DGCI, as follows:
WHEREFORE, judgment is hereby rendered in favor of [respondent DGCI] and against
[SLIHM, et al.] a) Upholding the validity of the registration of the service mark "Shangri-la"
and "S-Logo" in the name of [respondent];
b) Declaring [petitioners'] use of said mark and logo as infringement of
[respondent's] right thereto;
c) Ordering [petitioners], their representatives, agents, licensees, assignees
and other persons acting under their authority and with their permission, to
permanently cease and desist from using and/or continuing to use said mark
and logo, or any copy, reproduction or colorable imitation
thereof, in the promotion, advertisement, rendition of their hotel and allied
projects and services or in any other manner whatsoever;

IPL | 7/20/16 | 20

d) Ordering [petitioners] to remove said mark and logo from any premises,
objects, materials and paraphernalia used by them and/or destroy any and all
prints, signs, advertisements or other materials bearing said mark and logo in
their possession and/or under their control; and
e) Ordering [petitioners], jointly and severally, to indemnify [respondent] in
the amounts of P2,000,000.00 as actual and compensatory damages,
P500,000.00 as attorney's fee and expenses of litigation.

premise that international agreements, such as Paris Convention, must yield

to a municipal law, the question on the exclusive right over the mark and logo
would still depend on actual use in commerce in the Philippines.
Petitioners then moved for a reconsideration, which motion was denied by the CA in its
equally assailed Resolution of September 15, 2003.10
As formulated by the petitioners, the issues upon which this case hinges are:

Let a copy of this Decision be certified to the Director, Bureau of Patents, Trademarks
and Technology Transfer for his information and appropriate action in accordance with
the provisions of Section 25, Republic Act No. 166

1. Whether the CA erred in finding that respondent had the right to file an
application for registration of the "Shangri-La" mark and "S" logo although
respondent never had any prior actual commercial use thereof;

Costs against [petitioners].

SO ORDERED. [Words in brackets added.]

2. Whether the CA erred in finding that respondent's supposed use of the

identical "Shangri-La" mark and "S" logo of the petitioners was not evident
bad faith and can actually ripen into ownership, much less registration;

Therefrom, the petitioners went on appeal to the CA whereat their recourse was
docketed as CA G.R. SP No. 53351.

3. Whether the CA erred in overlooking petitioners' widespread prior use of

the "Shangri-La" mark and "S" logo in their operations;

As stated at the threshold hereof, the CA, in its assailed Decision of May 15,
2003,7 affirmed that of the lower court with the modification of deleting the award of
attorney's fees. The appellate court predicated its affirmatory action on the strength or
interplay of the following premises:

4. Whether the CA erred in refusing to consider that petitioners are entitled to

protection under both R.A. No. 166, the old trademark law, and the Paris
Convention for the Protection of Industrial Property;

1. Albeit the Kuok Group used the mark and logo since 1962, the evidence
presented shows that the bulk use of the tradename was abroad and not in
the Philippines (until 1987). Since the Kuok Group does not have proof of
actual use in commerce in the Philippines (in accordance with Section 2 of
R.A. No. 166), it cannot claim ownership of the mark and logo in accordance
with the holding in Kabushi Kaisha Isetan v. IAC 8, as reiterated in Philip
Morris, Inc. v. Court of Appeals.9
2. On the other hand, respondent has a right to the mark and logo by virtue
of its prior use in the Philippines and the issuance of Certificate of Registration
No. 31904.
3. The use of the mark or logo in commerce through the bookings made by
travel agencies is unavailing since the Kuok Group did not establish any
branch or regional office in the Philippines. As it were, the Kuok Group was
not engaged in commerce in the Philippines inasmuch as the bookings were
made through travel agents not owned, controlled or managed by the Kuok
Group.
4. While the Paris Convention protects internationally known marks, R.A. No.
166 still requires use in commerce in the Philippines. Accordingly, and on the

5. Whether the CA erred in holding that SLIHM did not have the right to
legally own the "Shangri-La" mark and "S" logo by virtue of and despite their
ownership by the Kuok Group;
6. Whether the CA erred in ruling that petitioners' use of the mark and logo
constitutes actionable infringement;
7. Whether the CA erred in awarding damages in favor of respondent despite
the absence of any evidence to support the same, and in failing to award relief
in favor of the petitioners; and
8. Whether petitioners should be prohibited from continuing their use of the
mark and logo in question.
There are two preliminary issues, however, that respondent DGCI calls our attention to,
namely:
1. Whether the certification against forum-shopping submitted on behalf of
the petitioners is sufficient;

IPL | 7/20/16 | 21

2. Whether the issues posed by petitioners are purely factual in nature hence
improper for resolution in the instant petition for review on certiorari.
DGCI claims that the present petition for review should be dismissed outright for
certain procedural defects, to wit: an insufficient certification against forum shopping
and raising pure questions of fact. On both counts, we find the instant petition formally
and substantially sound.
In its Comment, respondent alleged that the certification against forum shopping
signed by Atty. Lee Benjamin Z. Lerma on behalf and as counsel of the petitioners was
insufficient, and that he was not duly authorized to execute such document.
Respondent further alleged that since petitioner SLIHM is a foreign entity based in
Hong Kong, the Director's Certificate executed by Mr. Madhu Rama Chandra Rao,
embodying the board resolution which authorizes Atty. Lerma to act for SLIHM and
execute the certification against forum shopping, should contain the authentication by
a consular officer of the Philippines in Hong Kong.
In National Steel Corporation v. CA,11 the Court has ruled that the certification on nonforum shopping may be signed, for and in behalf of a corporation, by a specifically
authorized lawyer who has personal knowledge of the facts required to be disclosed in
such document. The reason for this is that a corporation can only exercise its powers
through its board of directors and/or its duly authorized officers and agents. Physical
acts, like the signing of documents, can be performed only by natural persons duly
authorized for the purpose.12
Moreover, Rule 7, Section 5 of the Rules of Court concerning the certification against
forum shopping does not require any consular certification if the petitioner is a foreign
entity. Nonetheless, to banish any lingering doubt, petitioner SLIHM furnished this
Court with a consular certification dated October 29, 2003 authenticating the Director's
Certificate authorizing Atty. Lerma to execute the certification against forum shopping,
together with petitioners' manifestation of February 9, 2004.
Respondent also attacks the present petition as one that raises pure questions of fact.
It points out that in a petition for review under Rule 45 of the Rules of Court, the
questions that may properly be inquired into are strictly circumscribed by the express
limitation that "the petition shall raise only questions of law which must be distinctly
set forth."13 We do not, however, find that the issues involved in this petition consist
purely of questions of fact. These issues will be dealt with as we go through the
questions raised by the petitioners one by one.
Petitioners' first argument is that the respondent had no right to file an application for
registration of the "Shangri-La" mark and "S" logo because it did not have prior actual
commercial use thereof. To respondent, such an argument raises a question of fact that
was already resolved by the RTC and concurred in by the CA.
First off, all that the RTC found was that respondent was the prior user and registrant
of the subject mark and logo in the Philippines. Taken in proper context, the trial

court's finding on "prior use" can only be interpreted to mean that respondent used the
subject mark and logo in the country before the petitioners did. It cannot be construed
as being a factual finding that there was prior use of the mark and logo before
registration.
Secondly, the question raised is not purely factual in nature. In the context of this
case, it involves resolving whether a certificate of registration of a mark, and the
presumption of regularity in the performance of official functions in the issuance
thereof, are sufficient to establish prior actual use by the registrant. It further entails
answering the question of whether prior actual use is required before there may be a
valid registration of a mark.
Under the provisions of the former trademark law, R.A. No. 166, as amended, which
was in effect up to December 31, 1997, hence, the law in force at the time of
respondent's application for registration of trademark, the root of ownership of a
trademark is actual use in commerce. Section 2 of said law requires that before a
trademark can be registered, it must have been actually used in commerce and service
for not less than two months in the Philippines prior to the filing of an application for its
registration.
Registration, without more, does not confer upon the registrant an absolute right to the
registered mark. The certificate of registration is merely a prima facie proof that the
registrant is the owner of the registered mark or trade name. Evidence of prior and
continuous use of the mark or trade name by another can overcome the presumptive
ownership of the registrant and may very well entitle the former to be declared owner
in an appropriate case.14
Among the effects of registration of a mark, as catalogued by the Court in Lorenzana v.
Macagba,15 are:
1. Registration in the Principal Register gives rise to a presumption of the
validity of the registration, the registrant's ownership of the mark, and his
right to the exclusive use thereof. x x x
2. Registration in the Principal Register is limited to the actual owner of the
trademark and proceedings therein pass on the issue of ownership,
which may be contested through opposition or interference
proceedings, or, after registration, in a petition for cancellation. xxx
[Emphasis supplied]1avvphil.et
Ownership of a mark or trade name may be acquired not necessarily by registration
but by adoption and use in trade or commerce. As between actual use of a mark
without registration, and registration of the mark without actual use thereof, the
former prevails over the latter. For a rule widely accepted and firmly entrenched,
because it has come down through the years, is that actual use in commerce or
business is a pre-requisite to the acquisition of the right of ownership. 16

IPL | 7/20/16 | 22

While the present law on trademarks 17 has dispensed with the requirement of prior
actual use at the time of registration, the law in force at the time of registration must
be applied, and thereunder it was held that as a condition precedent to registration of
trademark, trade name or service mark, the same must have been in actual use in the
Philippines before the filing of the application for registration. 18 Trademark is a creation
of use and therefore actual use is a pre-requisite to exclusive ownership and its
registration with the Philippine Patent Office is a mere administrative confirmation of
the existence of such right.19
By itself, registration is not a mode of acquiring ownership. When the applicant is not
the owner of the trademark being applied for, he has no right to apply for registration
of the same. Registration merely creates a prima faciepresumption of the validity of the
registration, of the registrant's ownership of the trademark and of the exclusive right to
the use thereof.20 Such presumption, just like the presumptive regularity in the
performance of official functions, is rebuttable and must give way to evidence to the
contrary.
Here, respondent's own witness, Ramon Syhunliong, testified that a jeepney signboard
artist allegedly commissioned to create the mark and logo submitted his designs only
in December 1982.21 This was two-and-a-half months after the filing of the
respondent's trademark application on October 18, 1982 with the BPTTT. It was also
only in December 1982 when the respondent's restaurant was opened for
business.22 Respondent cannot now claim before the Court that the certificate of
registration itself is proof that the two-month prior use requirement was complied with,
what with the fact that its very own witness testified otherwise in the trial court. And
because at the time (October 18, 1982) the respondent filed its application for
trademark registration of the "Shangri-La" mark and "S" logo, respondent was not
using these in the Philippines commercially, the registration is void.
Petitioners also argue that the respondent's use of the "Shangri-La" mark and "S" logo
was in evident bad faith and cannot therefore ripen into ownership, much less
registration. While the respondent is correct in saying that a finding of bad faith is
factual, not legal,23 hence beyond the scope of a petition for review, there are,
however, noted exceptions thereto. Among these exceptions are:

And these are naming but a few of the recognized exceptions to the rule.
The CA itself, in its Decision of May 15, 2003, found that the respondent's president
and chairman of the board, Ramon Syhunliong, had been a guest at the petitioners'
hotel before he caused the registration of the mark and logo, and surmised that he
must have copied the idea there:
Did Mr. Ramon Syhunliong, [respondent's] President copy the mark and devise from
one of [petitioners'] hotel (Kowloon Shangri-la) abroad? The mere fact that he was a
visitor of [petitioners'] hotel abroad at one time (September 27, 1982) establishes
[petitioners'] allegation that he got the idea there.29
Yet, in the very next paragraph, despite the preceding admission that the mark and
logo must have been copied, the CA tries to make it appear that the adoption of the
same mark and logo could have been coincidental:
The word or name "Shangri-la" and the S-logo, are not uncommon. The word
"Shangri-la" refers to a (a) remote beautiful imaginary place where life approaches
perfection or (b) imaginary mountain land depicted as a utopia in the novel Lost
Horizon by James Hilton. The Lost Horizon was a well-read and popular novel written in
1976. It is not impossible that the parties, inspired by the novel, both adopted the
mark for their business to conjure [a] place of beauty and pleasure.
The S-logo is, likewise, not unusual. The devise looks like a modified Old English
print.30
To jump from a recognition of the fact that the mark and logo must have been copied
to a rationalization for the possibility that both the petitioners and the respondent
coincidentally chose the same name and logo is not only contradictory, but also
manifestly mistaken or absurd. Furthermore, the "S" logo appears nothing like the "Old
English" print that the CA makes it out to be, but is obviously a symbol with oriental or
Asian overtones. At any rate, it is ludicrous to believe that the parties would come up
with the exact same lettering for the word "Shangri-La" and the exact same logo to
boot. As correctly observed by the petitioners, to which we are in full accord:

1. When the inference made is manifestly mistaken, absurd or impossible; 24

2. When there is grave abuse of discretion;25
3. When the judgment is based on a misapprehension of facts;26
4. When the findings of fact are conflicting;27 and
5. When the facts set forth in the petition as well as in the petitioner's main
and reply briefs are not disputed by the respondent.28

x x x When a trademark copycat adopts the word portion of another's trademark as his
own, there may still be some doubt that the adoption is intentional. But if he copies not
only the word but also the word's exact font and lettering style and in addition, he
copies also the logo portion of the trademark, the slightest doubt vanishes. It is then
replaced by the certainty that the adoption was deliberate, malicious and in bad faith. 31
It is truly difficult to understand why, of the millions of terms and combination of
letters and designs available, the respondent had to choose exactly the same mark and
logo as that of the petitioners, if there was no intent to take advantage of the goodwill
of petitioners' mark and logo.32

IPL | 7/20/16 | 23

One who has imitated the trademark of another cannot

infringement, particularly against the true owner of the mark,
coming to court with unclean hands.33 Priority is of no avail to
Good faith is required in order to ensure that a second user
advantage of the goodwill established by the true owner.

bring an action for

because he would be
the bad faith plaintiff.
may not merely take

This point is further bolstered by the fact that under either Section 17 of R.A. No. 166,
or Section 151 of R.A. No. 8293, or Article 6bis(3) of the Paris Convention, no time
limit is fixed for the cancellation of marks registered or used in bad faith. 34 This is
precisely why petitioners had filed an inter partes case before the BPTTT for the
cancellation of respondent's registration, the proceedings on which were suspended
pending resolution of the instant case.
Respondent DGCI also rebukes the next issue raised by the petitioners as being purely
factual in nature, namely, whether the CA erred in overlooking petitioners' widespread
prior use of the "Shangri-La" mark and "S" logo in their operations. The question,
however, is not whether there had been widespread prior use, which would have been
factual, but whether that prior use entitles the petitioners to use the mark and logo in
the Philippines. This is clearly a question which is legal in nature.
It has already been established in the two courts below, and admitted by the
respondent's president himself, that petitioners had prior widespread use of the mark
and logo abroad:
There is, to be sure, an impressive mass of proof that petitioner SLIHM and its
related companies abroad used the name and logo for one purpose or another x x
x.35 [Emphasis supplied]
In respondent's own words, "[T]he Court of Appeals did note petitioners' use of the
mark and logo but held that such use did not confer to them ownership or exclusive
right to use them in the Philippines." 36 To petitioners' mind, it was error for the CA to
rule that their worldwide use of the mark and logo in dispute could not have conferred
upon them any right thereto. Again, this is a legal question which is well worth delving
into.

government of the foreign country to the Government of the Republic of the

Philippines.
Section 2-A. Ownership of trademarks, trade names and service marks; how
acquired. - Anyone who lawfully produces or deals in merchandise of any kind or who
engages in any lawful business, or who renders any lawful service in commerce,
by actual use thereof in manufacture or trade, in business, and in the service
rendered, may appropriate to his exclusive use a trademark, a trade name, or a
servicemark not so appropriated by another, to distinguish his merchandise,
business or service from the merchandise, business or services of others. The
ownership or possession of a trademark, trade name, service mark, heretofore or
hereafter appropriated, as in this section provided, shall be recognized and protected in
the same manner and to the same extent as are other property rights known to this
law. [Emphasis supplied]
Admittedly, the CA was not amiss in saying that the law requires the actual use in
commerce of the said trade name and "S" logo in the Philippines. Hence, consistent
with its finding that the bulk of the petitioners' evidence shows that the alleged use of
the Shangri-La trade name was done abroad and not in the Philippines, it is
understandable for that court to rule in respondent's favor. Unfortunately, however,
what the CA failed to perceive is that there is a crucial difference between the
aforequoted Section 2 and Section 2-A of R.A. No. 166. For, while Section 2 provides
for what is registrable, Section 2-A, on the other hand, sets out how ownership is
acquired. These are two distinct concepts.
Under Section 2, in order to register a trademark, one must be the owner thereof and
must have actually used the mark in commerce in the Philippines for 2 months prior to
the application for registration. Since "ownership" of the trademark is required for
registration, Section 2-A of the same law sets out to define how one goes about
acquiring ownership thereof. Under Section 2-A, it is clear that actual use in commerce
is also the test of ownership but the provision went further by saying that the mark
must not have been so appropriated by another. Additionally, it is significant to note
that Section 2-A does not require that the actual use of a trademark must be within
the Philippines. Hence, under R.A. No. 166, as amended, one may be an owner of a
mark due to actual use thereof but not yet have the right to register such ownership
here due to failure to use it within the Philippines for two months.

R.A. No. 166, as amended, under which this case was heard and decided provides:
Section 2. What are registrable. - Trademarks, trade names and service
marks owned by persons, corporations, partnerships or associations domiciled in the
Philippines and by persons, corporations, partnerships or associations domiciled in any
foreign country may be registered in accordance with the provisions of this Act:
Provided, That said trademarks trade names, or service marks are actually in use in
commerce and services not less than two months in the Philippines before the
time the applications for registration are filed: And provided, further, That the country
of which the applicant for registration is a citizen grants by law substantially similar
privileges to citizens of the Philippines, and such fact is officially certified, with a
certified true copy of the foreign law translated into the English language, by the

While the petitioners may not have qualified under Section 2 of R.A. No. 166 as a
registrant, neither did respondent DGCI, since the latter also failed to fulfill the 2month actual use requirement. What is worse, DGCI was not even the owner of the
mark. For it to have been the owner, the mark must not have been already
appropriated (i.e., used) by someone else. At the time of respondent DGCI's
registration of the mark, the same was already being used by the petitioners, albeit
abroad, of which DGCI's president was fully aware.
It is respondent's contention that since the petitioners adopted the "Shangri-La" mark
and "S" logo as a mere corporate name or as the name of their hotels, instead of using
them as a trademark or service mark, then such name and logo are not trademarks.

IPL | 7/20/16 | 24

The two concepts of corporate name or business name and trademark or service mark,
are not mutually exclusive. It is common, indeed likely, that the name of a corporation
or business is also a trade name, trademark or service mark. Section 38 of R.A. No.
166 defines the terms as follows:
Sec. 38. Words and terms defined and construed - In the construction of this Act,
unless the contrary is plainly apparent from the context - The term "trade name"
includes individual names and surnames, firm names, trade names, devices or words
used by manufacturers, industrialists, merchants, agriculturists, and others to identify
their business, vocations or occupations; the names or titles lawfully adopted and
used by natural or juridical persons, unions, and any manufacturing, industrial,
commercial, agricultural or other organizations engaged in trade or commerce.
The term "trade mark" includes any word, name, symbol, emblem, sign or device or
any combination thereof adopted and used by a manufacturer or merchant to identify
his goods and distinguish them from those manufactured, sold or dealt in by others.
The term "service mark" means a mark used in the sale or advertising of services to
identify the services of one person and distinguish them from the services of
others and includes without limitation the marks, names, symbols, titles,
designations, slogans, character names, and distinctive features of radio or
other advertising. [Emphasis supplied]
Clearly, from the broad definitions quoted above, the petitioners can be considered as
having used the "Shangri-La" name and "S" logo as a tradename and service mark.
The new Intellectual Property Code (IPC), Republic Act No. 8293, undoubtedly shows
the firm resolve of the Philippines to observe and follow the Paris Convention by
incorporating the relevant portions of the Convention such that persons who may
question a mark (that is, oppose registration, petition for the cancellation thereof, sue
for unfair competition) include persons whose internationally well-known
mark, whether or not registered, is
identical with or confusingly similar to or constitutes a translation of a mark that is
sought to be registered or is actually registered.37
However, while the Philippines was already a signatory to the Paris Convention, the IPC
only took effect on January 1, 1988, and in the absence of a retroactivity clause, R.A.
No. 166 still applies.38 Under the prevailing law and jurisprudence at the time, the CA
had not erred in ruling that:
The Paris Convention mandates that protection should be afforded to internationally
known marks as signatory to the Paris Convention, without regard as to whether the
foreign corporation is registered, licensed or doing business in the Philippines. It goes
without saying that the same runs afoul to Republic Act No. 166, which requires the
actual use in commerce in the Philippines of the subject mark or devise. The apparent
conflict between the two (2) was settled by the Supreme Court in this wise -

"Following universal acquiescence and comity, our municipal law on trademarks

regarding the requirement of actual use in the Philippines must subordinate
an international agreement inasmuch as the apparent clash is being decided by a
municipal tribunal (Mortensen vs. Peters, Great Britain, High Court of Judiciary of
Scotland, 1906, 8 Sessions 93; Paras, International Law and World Organization, 1971
Ed., p. 20). Withal, the fact that international law has been made part of the law of the
land does not by any means imply the primacy of international law over national law in
the municipal sphere. Under the doctrine of incorporation as applied in most countries,
rules of international law are given a standing equal, not superior, to national
legislative enactments (Salonga and Yap, Public International Law, Fourth ed., 1974, p.
16)."39 [Emphasis supplied]
Consequently, the petitioners cannot claim protection under the Paris Convention.
Nevertheless, with the double infirmity of lack of two-month prior use, as well as bad
faith in the respondent's registration of the mark, it is evident that the petitioners
cannot be guilty of infringement. It would be a great injustice to adjudge the
petitioners guilty of infringing a mark when they are actually the originator and creator
thereof.
Nor can the petitioners' separate personalities from their mother corporation be an
obstacle in the enforcement of their rights as part of the Kuok Group of Companies and
as official repository, manager and operator of the subject mark and logo. Besides,
R.A. No. 166 did not require the party seeking relief to be the owner of the mark
but "any person who believes that he is or will be damaged by the registration of a
mark or trade name."40
WHEREFORE, the instant petition is GRANTED. The assailed Decision and Resolution of
the Court of Appeals dated May 15, 2003 and September 15, 2003, respectively, and
the Decision of the Regional Trial Court of Quezon City dated March 8, 1996 are hereby
SET ASIDE. Accordingly, the complaint for infringement in Civil Case No. Q-91-8476 is
ordered DISMISSED.
SO ORDERED.

IPL | 7/20/16 | 25

vs.
DEVELOPERS GROUP OF COMPANIES, INC., Respondent.
RESOLUTION
GARCIA, J.:
Before the Court is this Motion for Reconsideration filed by respondent Developers
Group of Companies, Inc. (DGCI) praying for the reversal of this Court's Decision 1 of
March 31, 2006, the dispositive portion of which reads:
WHEREFORE, the instant petition is GRANTED. The assailed Decision and Resolution of
the Court of Appeals dated May 15, 2003 and September 15, 2003, respectively, and
the Decision of the Regional Trial Court of Quezon City dated March 8, 1996 are hereby
SET ASIDE. Accordingly, the complaint for infringement in Civil Case No. Q-91-8476 is
ordered DISMISSED.
In its motion, respondent-movant DGCI raises the following grounds:
1. The certification of non-forum shopping submitted by petitioners is
insufficient;
2. The word "Shangri-La" and "S" logo were adopted and used by the Kuok
Group as part of their corporate names and the names of their hotels;
3. Petitioners' claim of legal and beneficial ownership of mark and logo is
baseless and unwarranted;
4. Change of theory from owner to one who may be damaged as entitled to
relief is not allowable;
5. Finding of registration in patent offices in different countries around the
world is inaccurate;
6. DGCI's registration of the "Shangri-La" mark and the "S" logo is valid
because there was at least two months use thereof prior to application;

G.R. No. 159938

January 22, 2007

SHANGRI-LA INTERNATIONAL HOTEL MANAGEMENT, LTD., SHANGRI-LA

PROPERTIES, INC., MAKATI SHANGRI-LA HOTEL & RESORT, INC., AND KUOK
PHILIPPINES
PROPERTIES,
INC., Petitioners,

7. Section 2-A of R.A. No. 166 requires the actual commercial use of
trademarks in the Philippines pursuant to the principle of territoriality
applicable to trademarks. Hence, petitioners' use of subject marks outside of
Philippine territory did not confer on them any ownership rights thereto under
Philippine laws;
8. The Regional Trial Court and the Court of Appeals' failure to find any bad
faith on the part of DGCI is conclusive on the Supreme Court;

IPL | 7/20/16 | 26

9. DGCI's use of the subject marks in the Philippines is entitled to protection

under the territoriality principle of trademarks.2
The bulk of the aforementioned grounds is a mere rehash of movants previous
arguments. While DGCI is correct in stating that a motion for reconsideration, by its
very nature, may tend to dwell on issues already resolved in the decision sought to be
reconsidered and that this should not be an obstacle for a reconsideration, 3 the hard
reality is that movant has failed to raise matters substantially plausible or compellingly
persuasive to warrant the desired course of action.
Considering that the grounds presently raised have been sufficiently considered, if not
squarely addressed, in the subject Decision, it behooves movant to convince the Court
that certain findings or conclusions in the Decision are contrary to law. As it is,
however, the instant motion does not raise any new or substantial legitimate ground or
reason to justify the reconsideration sought.1avvphi1.net
Movant DGCI would make capital on the alleged danger the subject Decision might
wreak upon Philippine trademark law, claiming that the decision in question would
render nugatory the protection intended by the trademark law to all Philippine
trademark registrants. This assertion is a baseless and sweeping statement. The
interpretation of Republic Act No. 166 in the Decision does not in any way diminish the
protection afforded tovalid trademark registrations made under said law. It was
glaringly obvious, however, from the testimony of movants own witness that DGCIs
registration of the subject mark and logo was void due to the existence of bad faith
and the absence of the requisite 2-month prior use. Despite movant's melodramatic
imputation of an abandonment of the territoriality principle, the Decision actually
upholds the principle but found that respondent DGCI was not entitled to protection
thereunder due to the double infirmity which attended its registration of the subject
mark and logo.
Anent DGCI's assertion of a change of theory on the part of the petitioners, suffice it to
say that the latter have never budged from seeking relief as rightful, legal and/or
beneficial owners of the mark and logo in dispute. The Decision ruled favorably on the
veracity of the petitioners' claim:
xxx It would be a great injustice to adjudge the petitioners guilty of infringing a mark
when they are actually the originator and creator thereof.
Nor can the petitioners' separate personalities from their mother corporation be an
obstacle in the enforcement of their rights as part of the Kuok Group of Companies and
as official repository, manager and operator of the subject mark and logo. Besides,
R.A. No. 166 did not require the party seeking relief to be the owner of the mark but
"any person who believes that he is or will be damaged by the registration of a mark or
trade name."4[Emphasis supplied]
Clearly, from the word "Besides" used in the context of the aforequoted paragraph, all
that the Decision says is that even if petitioners were not the owners, they would still

have a right of action under the law. There was never an attempt on their part at an
eleventh-hour change of theory, as movant DGCI wishes to portray.
WHEREFORE, the instant motion for reconsideration is DENIED for lack of merit.
SO ORDERED.

IPL | 7/20/16 | 27

G.R. No. 184850

October 20, 2010

E.Y.
INDUSTRIAL
SALES,
INC.
and
ENGRACIO
YAP, Petitioners,
vs.
SHEN DAR ELECTRICITY AND MACHINERY CO., LTD., Respondent.
DECISION
VELASCO, JR., J.:
The Case
This Petition for Review on Certiorari under Rule 45 seeks to nullify and reverse the
February 21, 2008 Decision1and the October 6, 2008 Resolution2 rendered by the Court
of Appeals (CA) in CA-G.R. SP No. 99356 entitled Shen Dar Electricity and Machinery
Co., Ltd. v. E.Y. Industrial Sales, Inc. and Engracio Yap.
The assailed decision reversed the Decision dated May 25, 2007 3 issued by the Director
General of the Intellectual Property Office (IPO) in Inter Partes Case No. 14-200400084. The IPO Director General upheld Certificate of Registration (COR) No. 4-1999005393 issued by the IPO for the trademark "VESPA" in favor of petitioner E.Y.
Industrial Sales, Inc. (EYIS), but ordered the cancellation of COR No. 4-1997-121492,
also for the trademark "VESPA," issued in favor of respondent Shen Dar Electricity and
Machinery Co., Ltd. (Shen Dar). The Decision of the IPO Director General, in effect,
affirmed the Decision dated May 29, 2006 4 issued by the Director of the Bureau of
Legal Affairs (BLA) of the IPO.
The Facts
EYIS is a domestic corporation engaged in the production, distribution and sale of air
compressors and other industrial tools and equipment.5 Petitioner Engracio Yap is the
Chairman of the Board of Directors of EYIS.6
Respondent Shen Dar is a Taiwan-based foreign corporation engaged in the
manufacture of air compressors.7
Both companies claimed to have the right to register the trademark "VESPA" for air
compressors.
From 1997 to 2004, EYIS imported air compressors from Shen Dar through sales
contracts. In the Sales Contract dated April 20, 2002, 8 for example, Shen Dar would

IPL | 7/20/16 | 28

supply EYIS in one (1) year with 24 to 30 units of 40-ft. containers worth of air
compressors identified in the Packing/Weight Lists simply as SD-23, SD-29, SD-31,
SD-32, SD-39, SD-67 and SD-68. In the corresponding Bill of Ladings, the items were
described merely as air compressors. 9 There is no documentary evidence to show that
such air compressors were marked "VESPA."

Shen Dar appealed the decision of the BLA Director to the Director General of the IPO.
In the appeal, Shen Dar raised the following issues:

On June 9, 1997, Shen Dar filed Trademark Application Serial No. 4-1997-121492 with
the IPO for the mark "VESPA, Chinese Characters and Device" for use on air
compressors and welding machines.10

2. Whether the registration of EYIS application was proper considering that

Shen Dar was the first to file an application for the mark; and

On July 28, 1999, EYIS filed Trademark Application Serial No. 4-1999-005393, also for
the mark "VESPA," for use on air compressors. 11 On January 18, 2004, the IPO issued
COR No. 4-1999-005393 in favor of EYIS. 12Thereafter, on February 8, 2007, Shen Dar
was also issued COR No. 4-1997-121492.13
In the meantime, on June 21, 2004, Shen Dar filed a Petition for Cancellation of EYIS
COR with the BLA.14 In the Petition, Shen Dar primarily argued that the issuance of the
COR in favor of EYIS violated Section 123.1 paragraphs (d), (e) and (f) of Republic Act
No. (RA) 8293, otherwise known as the Intellectual Property Code (IP Code), having
first filed an application for the mark. Shen Dar further alleged that EYIS was a mere
distributor of air compressors bearing the mark "VESPA" which it imported from Shen
Dar. Shen Dar also argued that it had prior and exclusive right to the use and
registration of the mark "VESPA" in the Philippines under the provisions of the Paris
Convention.15
In its Answer, EYIS and Yap denied the claim of Shen Dar to be the true owners of the
mark "VESPA" being the sole assembler and fabricator of air compressors since the
early 1990s. They further alleged that the air compressors that Shen Dar allegedly
supplied them bore the mark "SD" for Shen Dar and not "VESPA." Moreover, EYIS
argued that Shen Dar, not being the owner of the mark, could not seek protection from
the provisions of the Paris Convention or the IP Code.16
Thereafter, the Director of the BLA issued its Decision dated May 29, 2006 in favor of
EYIS and against Shen Dar, the dispositive portion of which reads:
WHEREFORE, premises considered, the Petition for Cancellation is, as it is hereby,
DENIED. Consequently, Certificate of Registration No. 4-1999-[005393] for the mark
"VESPA" granted in the name of E.Y. Industrial Sales, Inc. on 9 January 2007 is hereby
upheld.
Let the filewrapper of VESPA subject matter of this case be forwarded to the
Administrative, Financial and Human Resource Development Services Bureau for
issuance and appropriate action in accordance with this DECISION and a copy thereof
furnished to the Bureau of Trademarks for information and update of its records.
SO ORDERED.17

1. Whether the BLA Director erred in ruling that Shen Dar failed to present
evidence;

3. Whether the BLA Director correctly ruled that EYIS is the true owner of the
mark.18
Later, the IPO Director General issued a Decision dated May 25, 2007 upholding the
COR issued in favor of EYIS while cancelling the COR of Shen Dar, the dispositive
portion of which reads:
WHEREFORE, premises considered, the appeal is DENIED. Certificate of Registration
No. 4-1999-005393 for the mark VESPA for air compressor issued in favor of Appellee
is hereby upheld. Consequently, Certificate of Registration No. 4-1997-121492 for the
mark VESPA, Chinese Characters & Device for goods air compressor and spot welding
machine issued in favor of Appellant is hereby ordered cancelled.
Let a copy of this Decision as well as the records of this case be furnished and returned
to the Director of Bureau of Legal Affairs for appropriate action. Further, let also the
Directors of the Bureau of Trademarks, the Administrative, Financial and Human
Resources Development Services Bureau, and the Documentation, Information and
Technology Transfer Bureau be furnished a copy of this Decision for information,
guidance, and records purposes.19
Shen Dar appealed the above decision of the IPO Director General to the CA where
Shen Dar raised the following issues:
1. Whether Shen Dar is guilty of forum shopping;
2. Whether the first-to-file rule applies to the instant case;
3. Whether Shen Dar presented evidence of actual use;
4. Whether EYIS is the true owner of the mark "VESPA";
5. Whether the IPO Director General erred in cancelling Shen Dars COR No.
4-1997-121492 without a petition for cancellation; and
6. Whether Shen Dar sustained damages.20

IPL | 7/20/16 | 29

In the assailed decision, the CA reversed the IPO Director General and ruled in favor of
Shen Dar. The dispositive portion states:
WHEREFORE, premises considered, the petition is GRANTED. Consequently, the
assailed decision of the Director General of the Intellectual Property Office dated May
25, 2007 is hereby REVERSED and SET ASIDE. In lieu thereof, a new one is entered: a)
ordering the cancellation of Certificate of Registration No. 4-1999-005393 issued on
January 19, 2004 for the trademark VESPA in favor of E.Y. Industrial Sales, Inc.; b)
ordering the restoration of the validity of Certificate of Registration No. 4-1997-121492
for the trademark VESPA in favor of Shen Dar Electricity and Machinery Co., Ltd. No
pronouncement as to costs.

D. Whether this Honorable Court may review questions of fact considering

that the findings of the Court of Appeals and the IPO are in conflict and the
conclusions of the appellee court are contradicted by the evidence on record. 23
The Ruling of the Court
The appeal is meritorious.
First Issue:
Whether this Court may review the questions of fact presented

SO ORDERED.

21

In ruling for Shen Dar, the CA ruled that, despite the fact that Shen Dar did not
formally offer its evidence before the BLA, such evidence was properly attached to the
Petition for Cancellation. As such, Shen Dars evidence may be properly considered.
The CA also enunciated that the IPO failed to properly apply the provisions of Sec.
123.1(d) of RA 8293, which prohibits the registration of a trademark in favor of a party
when there is an earlier filed application for the same mark. The CA further ruled that
Shen Dar should be considered to have prior use of the mark based on the statements
made by the parties in their respective Declarations of Actual Use. The CA added that
EYIS is a mere importer of the air compressors with the mark "VESPA" as may be
gleaned from its receipts which indicated that EYIS is an importer, wholesaler and
retailer, and therefore, cannot be considered an owner of the mark.22
EYIS filed a motion for reconsideration of the assailed decision which the CA denied in
the assailed resolution.
Hence, the instant appeal.
Issues
EYIS and Yap raise the following issues in their petition:
A. Whether the Director General of the IPO correctly upheld the rights of
Petitioners over the trademark VESPA.
B. Whether the Director General of the IPO can, under the circumstances,
order the cancellation of Respondents certificate of registration for VESPA,
which has been fraudulently obtained and erroneously issued.
C. Whether the Honorable Court of Appeals was justified in reversing the
findings of fact of the IPO, which affirm the rights of Petitioner EYIS over the
trademark VESPA and when such findings are supported by the evidence on
record.

Petitioners raise the factual issue of who the true owner of the mark is. As a general
rule, this Court is not a trier of facts. However, such rule is subject to exceptions.
In New City Builders, Inc. v. National Labor Relations Commission, 24 the Court ruled
that:
We are very much aware that the rule to the effect that this Court is not a trier of facts
admits of exceptions. As we have stated in Insular Life Assurance Company, Ltd. vs.
CA:
[i]t is a settled rule that in the exercise of the Supreme Courts power of review, the
Court is not a trier of facts and does not normally undertake the re-examination of the
evidence presented by the contending parties during the trial of the case considering
that the findings of facts of the CA are conclusive and binding on the Court. However,
the Court had recognized several exceptions to this rule, to wit: (1) when the findings
are grounded entirely on speculation, surmises or conjectures; (2) when the inference
made is manifestly mistaken, absurd or impossible; (3) when there is grave abuse of
discretion; (4) when the judgment is based on a misapprehension of facts; (5) when
the findings of facts are conflicting; (6) when in making its findings the Court of
Appeals went beyond the issues of the case, or its findings are contrary to the
admissions of both the appellant and the appellee; (7) when the findings are
contrary to the trial court; (8) when the findings are conclusions without citation of
specific evidence on which they are based; (9) when the facts set forth in the petition
as well as in the petitioners main and reply briefs are not disputed by the respondent;
(10) when the findings of fact are premised on the supposed absence of evidence and
contradicted by the evidence on record; and (11) when the Court of Appeals manifestly
overlooked certain relevant facts not disputed by the parties, which, if properly
considered, would justify a different conclusion. (Emphasis supplied.)
In the instant case, the records will show that the IPO and the CA made differing
conclusions on the issue of ownership based on the evidence presented by the parties.
Hence, this issue may be the subject of this Courts review.
Second Issue:

IPL | 7/20/16 | 30

Whether evidence presented before the BLA must be formally offered

Preliminarily, it must be noted that the BLA ruled that Shen Dar failed to adduce
evidence in support of its allegations as required under Office Order No. 79, Series of
2005, Amendments to the Regulations on Inter Partes Proceedings, having failed to
formally offer its evidence during the proceedings before it. The BLA ruled:
At the outset, we note petitioners failure to adduce any evidence in support of its
allegations in the Petition for Cancellation. Petitioner did not file nor submit its marked
evidence as required in this Bureaus Order No. 2006-157 dated 25 January 2006 in
compliance with Office Order No. 79, Series of 2005, Amendments to the Regulations
on Inter Partes Proceedings.25 x x x
In reversing such finding, the CA cited Sec. 2.4 of BLA Memorandum Circular No. 03,
Series of 2005, which states:
Section 2.4. In all cases, failure to file the documentary evidences in accordance with
Sections 7 and 8 of the rules on summary proceedings shall be construed as a waiver
on the part of the parties. In such a case, the original petition, opposition, answer and
the supporting documents therein shall constitute the entire evidence for the parties
subject to applicable rules.
The CA concluded that Shen Dar needed not formally offer its evidence but merely
needed to attach its evidence to its position paper with the proper markings, 26 which it
did in this case.
The IP Code provides under its Sec. 10.3 that the Director General of the IPO shall
establish the procedure for the application for the registration of a trademark, as well
as the opposition to it:
Section 10. The Bureau of Legal Affairs.The Bureau of Legal Affairs shall have the
following functions:
xxxx
10.3. The Director General may by Regulations establish the procedure to govern the
implementation of this Section.
Thus, the Director General issued Office Order No. 79, Series of 2005 amending the
regulations on Inter Partes Proceedings, Sec. 12.1 of which provides:
Section 12. Evidence for the Parties
12.1. The verified petition or opposition, reply if any, duly marked affidavits of the
witnesses, and the documents submitted, shall constitute the entire evidence for the

petitioner or opposer. The verified answer, rejoinder if any, and the duly marked
affidavits and documents submitted shall constitute the evidence for the respondent.
Affidavits, documents and other evidence not submitted and duly marked in
accordance with the preceding sections shall not be admitted as evidence.
The preceding sections referred to in the above provision refer to Secs. 7.1, 8.1 and 9
which, in turn, provide:
Section 7. Filing of Petition or Opposition
7.1. The petition or opposition, together with the affidavits of witnesses and originals
of the documents and other requirements, shall be filed with the Bureau, provided,
that in case of public documents, certified copies shall be allowed in lieu of the
originals. The Bureau shall check if the petition or opposition is in due form as provided
in the Regulations particularly Rule 3, Section 3; Rule 4, Section 2; Rule 5, Section 3;
Rule 6, Section 9; Rule 7, Sections 3 and 5; Rule 8, Sections 3 and 4. For petition for
cancellation of layout design (topography) of integrated circuits, Rule 3, Section 3
applies as to the form and requirements. The affidavits, documents and other evidence
shall be marked consecutively as "Exhibits" beginning with the letter "A".
Section 8. Answer
8.1. Within three (3) working days from receipt of the petition or opposition, the
Bureau shall issue an order for the respondent to file an answer together with the
affidavits of witnesses and originals of documents, and at the same time shall notify all
parties required to be notified in the IP Code and these Regulations, provided, that in
case of public documents, certified true copies may be submitted in lieu of the
originals. The affidavits and documents shall be marked consecutively as "Exhibits"
beginning with the number "1".
Section 9. Petition or Opposition and Answer must be verified Subject to Rules 7 and
8 of these regulations, the petition or opposition and the answer must be verified.
Otherwise, the same shall not be considered as having been filed.
In other words, as long as the petition is verified and the pieces of evidence consisting
of the affidavits of the witnesses and the original of other documentary evidence are
attached to the petition and properly marked in accordance with Secs. 7.1 and 8.1
abovementioned, these shall be considered as the evidence of the petitioner. There is
no requirement under the abovementioned rules that the evidence of the parties must
be formally offered to the BLA.
In any case, as a quasi-judicial agency and as stated in Rule 2, Sec. 5 of the
Regulations on Inter Partes Proceedings, the BLA is not bound by technical rules of
procedure. The evidence attached to the petition may, therefore, be properly
considered in the resolution of the case.

IPL | 7/20/16 | 31

Third Issue:
Whether the IPO Director General can
validly cancel Shen Dars Certificate of Registration
In his Decision, the IPO Director General stated that, despite the fact that the instant
case was for the cancellation of the COR issued in favor of EYIS, the interests of justice
dictate, and in view of its findings, that the COR of Shen Dar must be cancelled. The
Director General explained:
Accordingly, while the instant case involves a petition to cancel the registration of the
Appellees trademark VESPA, the interest of justice requires that Certificate of
Registration No. 4-1997-121492 be cancelled. While the normal course of proceedings
should have been the filing of a petition for cancellation of Certificate of Registration
No. 4-1997-121492, that would involve critical facts and issues that have already been
resolved in this case. To allow the Applicant to still maintain in the Trademark Registry
Certificate of Registration No. 4-1997-121492 would nullify the exclusive rights of
Appellee as the true and registered owner of the mark VESPA and defeat the purpose
of the trademark registration system.27
Shen Dar challenges the propriety of such cancellation on the ground that there was no
petition for cancellation as required under Sec. 151 of RA 8293.
Office Order No. 79, Series of 2005, provides under its Sec. 5 that:
Section 5. Rules of Procedure to be followed in the conduct of hearing of Inter Partes
cases.The rules of procedure herein contained primarily apply in the conduct of
hearing of Inter Partes cases. The Rules of Court may be applied suppletorily. The
Bureau shall not be bound by strict technical rules of procedure and evidence but may
adopt, in the absence of any applicable rule herein, such mode of proceedings which is
consistent with the requirements of fair play and conducive to the just, speedy and
inexpensive disposition of cases, and which will give the Bureau the greatest possibility
to focus on the contentious issues before it. (Emphasis supplied.)
The above rule reflects the oft-repeated legal principle that quasi-judicial and
administrative bodies are not bound by technical rules of procedure. Such principle,
however, is tempered by fundamental evidentiary rules, including due process. Thus,
we ruled in Aya-ay, Sr. v. Arpaphil Shipping Corp.:28
That administrative quasi-judicial bodies like the NLRC are not bound by technical rules
of procedure in the adjudication of cases does not mean that the basic rules on proving
allegations should be entirely dispensed with. A party alleging a critical fact must still
support his allegation with substantial evidence. Any decision based on
unsubstantiated allegation cannot stand as it will offend due process.

x x x The liberality of procedure in administrative actions is subject to limitations

imposed by basic requirements of due process. As this Court said in Ang Tibay v. CIR,
the provision for flexibility in administrative procedure "does not go so far as to justify
orders without a basis in evidence having rational probative value." More specifically,
as held in Uichico v. NLRC:
It is true that administrative and quasi-judicial bodies like the NLRC are not bound by
the technical rules of procedure in the adjudication of cases. However, this procedural
rule should not be construed as a license to disregard certain fundamental evidentiary
rules.
This was later reiterated in Lepanto Consolidated Mining Company v. Dumapis: 29
While it is true that administrative or quasi-judicial bodies like the NLRC are not bound
by the technical rules of procedure in the adjudication of cases, this procedural rule
should not be construed as a license to disregard certain fundamental evidentiary
rules. The evidence presented must at least have a modicum of admissibility for it to
have probative value. Not only must there be some evidence to support a finding or
conclusion, but the evidence must be substantial. Substantial evidence is more than a
mere scintilla. It means such relevant evidence as a reasonable mind might accept as
adequate to support a conclusion. Thus, even though technical rules of evidence are
not strictly complied with before the LA and the NLRC, their decision must be based on
evidence that must, at the very least, be substantial.
The fact that no petition for cancellation was filed against the COR issued to Shen Dar
does not preclude the cancellation of Shen Dars COR. It must be emphasized that,
during the hearing for the cancellation of EYIS COR before the BLA, Shen Dar tried to
establish that it, not EYIS, was the true owner of the mark "VESPA" and, thus, entitled
to have it registered. Shen Dar had more than sufficient opportunity to present its
evidence and argue its case, and it did. It was given its day in court and its right to
due process was respected. The IPO Director Generals disregard of the procedure for
the cancellation of a registered mark was a valid exercise of his discretion.
Fourth Issue:
Whether the factual findings of the IPO are binding on the CA
Next, petitioners challenge the CAs reversal of the factual findings of the BLA that
Shen Dar and not EYIS is the prior user and, therefore, true owner of the mark. In
arguing its position, petitioners cite numerous rulings of this Court where it was
enunciated that the factual findings of administrative bodies are given great weight if
not conclusive upon the courts when supported by substantial evidence.
We agree with petitioners that the general rule in this jurisdiction is that the factual
findings of administrative bodies deserve utmost respect when supported by evidence.
However, such general rule is subject to exceptions.

IPL | 7/20/16 | 32

In Fuentes v. Court of Appeals,30 the Court established the rule of conclusiveness of

factual findings of the CA as follows:
Jurisprudence teaches us that "(a)s a rule, the jurisdiction of this Court in cases
brought to it from the Court of Appeals x x x is limited to the review and revision of
errors of law allegedly committed by the appellate court, as its findings of fact are
deemed conclusive. As such this Court is not duty-bound to analyze and weigh all over
again the evidence already considered in the proceedings below. This rule, however, is
not without exceptions." The findings of fact of the Court of Appeals, which are as a
general rule deemed conclusive, may admit of review by this Court:
(1) when the factual findings of the Court of Appeals and the trial court are
contradictory;
(2) when the findings are grounded entirely on speculation, surmises, or
conjectures;
(3) when the inference made by the Court of Appeals from its findings of fact
is manifestly mistaken, absurd, or impossible;
(4) when there is grave abuse of discretion in the appreciation of facts;
(5) when the appellate court, in making its findings, goes beyond the issues of
the case, and such findings are contrary to the admissions of both appellant
and appellee;
(6) when the judgment of the Court of Appeals is premised on a
misapprehension of facts;
(7) when the Court of Appeals fails to notice certain relevant facts which, if
properly considered, will justify a different conclusion;
(8) when the findings of fact are themselves conflicting;
(9) when the findings of fact are conclusions without citation of the specific
evidence on which they are based; and
(10) when the findings of fact of the Court of Appeals are premised on the
absence of evidence but such findings are contradicted by the evidence on
record. (Emphasis supplied.)
Thereafter, in Villaflor v. Court of Appeals, 31 this Court applied the above principle to
factual findings of quasi-judicial bodies, to wit:

Proceeding by analogy, the exceptions to the rule on conclusiveness of factual findings

of the Court of Appeals, enumerated in Fuentes vs. Court of Appeals, can also be
applied to those of quasi-judicial bodies x x x. (Emphasis supplied.)
Here, the CA identified certain material facts that were allegedly overlooked by the BLA
and the IPO Director General which it opined, when correctly appreciated, would alter
the result of the case. An examination of the IPO Decisions, however, would show that
no such evidence was overlooked.
First, as to the date of first use of the mark by the parties, the CA stated:
To begin with, when respondents-appellees filed its application for registration of the
VESPA trademark on July 28, 1999, they stated under oath, as found in their
DECLARATION OF ACTUAL USE, that their first use of the mark was on December 22,
1998. On the other hand, [Shen Dar] in its application dated June 09, 1997 stated,
likewise under oath in their DECLARATION OF ACTUAL USE, that its first use of the
mark was in June 1996. This cannot be made any clearer. [Shen Dar] was not only the
first to file an application for registration but likewise first to use said registrable
mark.32
Evidently, the CA anchors its finding that Shen Dar was the first to use the mark on the
statements of the parties in their respective Declarations of Actual Use. Such
conclusion is premature at best. While a Declaration of Actual Use is a notarized
document, hence, a public document, it is not conclusive as to the fact of first use of a
mark. The declaration must be accompanied by proof of actual use as of the date
claimed. In a declaration of actual use, the applicant must, therefore, present evidence
of such actual use.
The BLA ruled on the same issue, as follows:
More importantly, the private respondents prior adoption and continuous use of the
mark VESPA on air compressors is bolstered by numerous documentary evidence
consisting of sales invoices issued in the name of E.Y. Industrial and Bill of Lading
(Exhibits 4 to 375). Sales Invoice No. 12075 dated March 27, 1995 antedates
petitioners date of first use on January 1, 1997 indicated in its trademark application
filed on June 9, 1997 as well as the date of first use in June of 1996 as indicated in the
Declaration of Actual Use submitted on December 3, 2001 (Exhibit 385). The use by
respondent registrant in the concept of owner is shown by commercial documents,
sales invoices unambiguously describing the goods as "VESPA" air compressors. Private
respondents have sold the air compressors bearing the "VESPA" to various locations in
the Philippines, as far as Mindanao and the Visayas since the early 1990s. We carefully
inspected the evidence consisting of three hundred seventy-one (371) invoices and
shipment documents which show that VESPA air compressors were sold not only in
Manila, but to locations such as Iloilo City, Cebu City, Dumaguete City, Zamboanga
City, Cagayan de Oro City, Davao City, to name a few. There is no doubt that it is
through private respondents efforts that the mark "VESPA" used on air compressors
has gained business goodwill and reputation in the Philippines for which it has validly

IPL | 7/20/16 | 33

acquired trademark rights. Respondent E.Y. Industrials right has been preserved until
the passage of RA 8293 which entitles it to register the same. 33
Comparatively, the BLAs findings were founded upon the evidence presented by the
parties. An example of such evidence is Invoice No. 12075 dated March 29,
199534 where EYIS sold four units of VESPA air compressors to Veteran Paint Trade
Center. Shen Dar failed to rebut such evidence. The truth, as supported by the
evidence on record, is that EYIS was first to use the mark.
Moreover, the discrepancy in the date provided in the Declaration of Actual Use filed by
EYIS and the proof submitted was appropriately considered by the BLA, ruling as
follows:
On the contrary, respondent EY Industrial was able to prove the use of the mark
"VESPA" on the concept of an owner as early as 1991. Although Respondent E.Y.
indicated in its trademark application that its first use was in December 22, 1998, it
was able to prove by clear and positive evidence of use prior to such date.
In Chuang Te v. Ng Kian-Guiab and Director of Patents, L-23791, 23 November 1966,
the High Court clarified: Where an applicant for registration of a trademark states
under oath the date of his earliest use, and later on he wishes to carry back his first
date of use to an earlier date, he then takes on the greater burden of presenting "clear
and convincing evidence" of adoption and use as of that earlier date. (B.R. Baker Co.
vs. Lebrow Bros., 150 F. 2d 580.)35
The CA further found that EYIS is not a manufacturer of air compressors but merely
imports and sells them as a wholesaler and retailer. The CA reasoned:
Conversely, a careful perusal of appellees own submitted receipts shows that it is not
manufacturer but an importer, wholesaler and retailer. This fact is corroborated by the
testimony of a former employee of appellees. Admittedly too, appellees are importing
air compressors from [Shen Dar] from 1997 to 2004. These matters, lend credence to
[Shen Dars] claim that the letters SD followed by a number inscribed in the air
compressor is only to describe its type, manufacturer business name and capacity. The
VESPA mark is in the sticker which is attached to the air compressors. The ruling of the
Supreme Court, in the case of UNNO Commercial Enterprises, Inc. vs. General Milling
Corporation et al., is quite enlightening, thus We quote:
"The term owner does not include the importer of the goods bearing the trademark,
trade name, service mark, or other mark of ownership, unless such importer is actually
the owner thereof in the country from which the goods are imported. Thus, this Court,
has on several occasions ruled that where the applicants alleged ownership is not
shown in any notarial document and the applicant appears to be merely an importer or
distributor of the merchandise covered by said trademark, its application cannot be
granted."36

This is a non sequitur. It does not follow. The fact that EYIS described itself in its sales
invoice as an importer, wholesaler and retailer does not preclude its being a
manufacturer. Sec. 237 of the National Internal Revenue Code states:
Section 237. Issuance of Receipts or Sales or Commercial Invoices.All persons
subject to an internal revenue tax shall, for each sale and transfer of merchandise or
for services rendered valued at Twenty-five pesos (P25.00) or more, issue duly
registered receipts or sale or commercial invoices, prepared at least in duplicate,
showing the date of transaction, quantity, unit cost and description of merchandise or
nature of service: Provided, however, That where the receipt is issued to cover
payment made as rentals, commissions, compensation or fees, receipts or invoices
shall be issued which shall show the name, business style, if any, and address of the
purchaser, customer or client.
The original of each receipt or invoice shall be issued to the purchaser, customer or
client at the time the transaction is effected, who, if engaged in business or in the
exercise of profession, shall keep and preserve the same in his place of business for a
period of three (3) years from the close of the taxable year in which such invoice or
receipt was issued, while the duplicate shall be kept and preserved by the issuer, also
in his place of business, for a like period.
The Commissioner may, in meritorious cases, exempt any person subject to an internal
revenue tax from compliance with the provisions of this Section. (Emphasis supplied.)
Correlatively, in Revenue Memorandum No. 16-2003 dated May 20, 2003, the Bureau
of Internal Revenue defined a Sales Invoice and identified its required information as
follows:
Sales Invoices (SI)/Cash Invoice (CI) is written account of goods sold or services
rendered and the prices charged therefor used in the ordinary course of business
evidencing sale and transfer or agreement to sell or transfer of goods and services. It
contains the same information found in the Official Receipt.
Official Receipt (OR) is a receipt issued for the payment of services rendered or
goods sold. It contains the following information:
a. Business name and address;
b. Taxpayer Identification Number;
c. Name of printer (BIR Permit No.) with inclusive serial number of booklets
and date of issuance of receipts.
There is no requirement that a sales invoice should accurately state the nature of all
the businesses of the seller. There is no legal ground to state that EYIS "declaration" in

IPL | 7/20/16 | 34

its sales invoices that it is an importer, wholesaler and retailer is restrictive and would
preclude its being a manufacturer.

The term "any person" encompasses the true owner of the markthe prior and
continuous user.

From the above findings, there was no justifiable reason for the CA to disregard the
factual findings of the IPO. The rulings of the IPO Director General and the BLA
Director were supported by clear and convincing evidence. The facts cited by the CA
and Shen Dar do not justify a different conclusion from that of the IPO. Hence, the
findings of the BLA Director and the IPO Director General must be deemed as
conclusive on the CA.

Notably, the Court has ruled that the prior and continuous use of a mark may even
overcome the presumptive ownership of the registrant and be held as the owner of the
mark. As aptly stated by the Court in Shangri-la International Hotel Management, Ltd.
v. Developers Group of Companies, Inc.:37

Fifth Issue:
Whether EYIS is the true owner of the mark "VESPA"
In any event, given the length of time already invested by the parties in the instant
case, this Court must write finis to the instant controversy by determining, once and
for all, the true owner of the mark "VESPA" based on the evidence presented.
RA 8293 espouses the "first-to-file" rule as stated under Sec. 123.1(d) which states:
Section 123. Registrability. - 123.1. A mark cannot be registered if it:

Registration, without more, does not confer upon the registrant an absolute right to the
registered mark. The certificate of registration is merely a prima facie proof that the
registrant is the owner of the registered mark or trade name. Evidence of prior and
continuous use of the mark or trade name by another can overcome the presumptive
ownership of the registrant and may very well entitle the former to be declared owner
in an appropriate case.
xxxx
Ownership of a mark or trade name may be acquired not necessarily by registration
but by adoption and use in trade or commerce. As between actual use of a mark
without registration, and registration of the mark without actual use thereof, the
former prevails over the latter. For a rule widely accepted and firmly entrenched,
because it has come down through the years, is that actual use in commerce or
business is a pre-requisite to the acquisition of the right of ownership.

xxxx
xxxx
(d) Is identical with a registered mark belonging to a different proprietor or a mark
with an earlier filing or priority date, in respect of:
(i) The same goods or services, or
(ii) Closely related goods or services, or
(iii) If it nearly resembles such a mark as to be likely to deceive or cause
confusion. (Emphasis supplied.)
Under this provision, the registration of a mark is prevented with the filing of an earlier
application for registration. This must not, however, be interpreted to mean that
ownership should be based upon an earlier filing date. While RA 8293 removed the
previous requirement of proof of actual use prior to the filing of an application for
registration of a mark, proof of prior and continuous use is necessary to establish
ownership of a mark. Such ownership constitutes sufficient evidence to oppose the
registration of a mark.
Sec. 134 of the IP Code provides that "any person who believes that he would be
damaged by the registration of a mark x x x" may file an opposition to the application.

By itself, registration is not a mode of acquiring ownership. When the applicant is not
the owner of the trademark being applied for, he has no right to apply for registration
of the same. Registration merely creates a prima facie presumption of the validity of
the registration, of the registrants ownership of the trademark and of the exclusive
right to the use thereof. Such presumption, just like the presumptive regularity in the
performance of official functions, is rebuttable and must give way to evidence to the
contrary.
Here, the incontrovertible truth, as established by the evidence submitted by the
parties, is that EYIS is the prior user of the mark. The exhaustive discussion on the
matter made by the BLA sufficiently addresses the issue:
Based on the evidence, Respondent E.Y. Industrial is a legitimate corporation engaged
in buying, importing, selling, industrial machineries and tools, manufacturing, among
others since its incorporation in 1988. (Exhibit "1"). Indeed private respondents have
submitted photographs (Exhibit "376", "377", "378", "379") showing an assembly line
of its manufacturing or assembly process.1avvphi1
More importantly, the private respondents prior adoption and continuous use of the
mark "VESPA" on air compressors is bolstered by numerous documentary evidence

IPL | 7/20/16 | 35

consisting of sales invoices issued in the name of respondent EY Industrial and Bills of
Lading. (Exhibits "4" to "375"). Sales Invoice No. 12075 dated March 27, 1995
antedates petitioners date of first use in January 1, 1997 indicated in its trademark
application filed in June 9, 1997 as well as the date of first use in June of 1996 as
indicated in the Declaration of Actual Use submitted on December 3, 2001 (Exhibit
"385"). The use by respondent-registrant in the concept of owner is shown by
commercial documents, sales invoices unambiguously describing the goods as "VESPA"
air compressors. Private respondents have sold the air compressors bearing the
"VESPA" to various locations in the Philippines, as far as Mindanao and the Visayas
since the early 1990s. We carefully inspected the evidence consisting of three hundred
seventy one (371) invoices and shipment documents which show that "VESPA" air
compressors were sold not only in Manila, but to locations such as Iloilo City, Cebu
City, Dumaguete City, Zamboanga City, Cagayan de Oro City, Davao City to name a
few. There is no doubt that it is through private respondents efforts that the mark
"VESPA" used on air compressors has gained business goodwill and reputation in the
Philippines for which it has validly acquired trademark rights. Respondent EY
Industrials right has been preserved until the passage of RA 8293 which entitles it to
register the same. x x x38
On the other hand, Shen Dar failed to refute the evidence cited by the BLA in its
decision. More importantly, Shen Dar failed to present sufficient evidence to prove its
own prior use of the mark "VESPA." We cite with approval the ruling of the BLA:
[Shen Dar] avers that it is the true and rightful owner of the trademark "VESPA" used
on air compressors. The thrust of [Shen Dars] argument is that respondent E.Y.
Industrial Sales, Inc. is a mere distributor of the "VESPA" air compressors. We
disagree.
This conclusion is belied by the evidence. We have gone over each and every document
attached as Annexes "A", "A" 1-48 which consist of Bill of Lading and Packing Weight
List. Not one of these documents referred to a "VESPA" air compressor. Instead, it
simply describes the goods plainly as air compressors which is type "SD" and not
"VESPA". More importantly, the earliest date reflected on the Bill of Lading was on May
5, 1997. (Annex "A"-1). [Shen Dar] also attached as Annex "B" a purported Sales
Contract with respondent EY Industrial Sales dated April 20, 2002. Surprisingly,
nowhere in the document does it state that respondent EY Industrial agreed to sell
"VESPA" air compressors. The document only mentions air compressors which if
genuine merely bolsters respondent Engracio Yaps contention that [Shen Dar]
approached them if it could sell the "Shen Dar" or "SD" air compressor. (Exhibit "386")
In its position paper, [Shen Dar] merely mentions of Bill of Lading constituting
respondent as consignee in 1993 but never submitted the same for consideration of
this Bureau. The document is also not signed by [Shen Dar]. The agreement was not
even drafted in the letterhead of either [Shen Dar] nor [sic] respondent registrant.
Our only conclusion is that [Shen Dar] was not able to prove to be the owner of the
VESPA mark by appropriation. Neither was it able to prove actual commercial use in
the Philippines of the mark VESPA prior to its filing of a trademark application in 9 June
1997.39

As such, EYIS must be considered as the prior and continuous user of the mark
"VESPA" and its true owner. Hence, EYIS is entitled to the registration of the mark in
its name.
WHEREFORE, the petition is hereby GRANTED. The CAs February 21, 2008 Decision
and October 6, 2008 Resolution in CA-G.R. SP No. 99356 are hereby REVERSED and
SET ASIDE. The Decision dated May 25, 2007 issued by the IPO Director General in
Inter Partes Case No. 14-2004-00084 and the Decision dated May 29, 2006 of the BLA
Director of the IPO are hereby REINSTATED.
No costs.
SO ORDERED.

IPL | 7/20/16 | 36

However, registration proceedings of the subject applications were suspended in view

of an existing registration of the mark "BIRKENSTOCK AND DEVICE" under Registration
No. 56334 dated October 21, 1993 (Registration No. 56334) in the name of Shoe Town
International and Industrial Corporation, the predecessor-in-interest of respondent
Philippine Shoe Expo Marketing Corporation.6 In this regard, on May 27, 1997
petitioner filed a petition for cancellation of Registration No. 56334 on the ground that
it is the lawful and rightful owner of the Birkenstock marks (Cancellation Case). 7 During
its pendency, however, respondent and/or its predecessor-in-interest failed to file the
required 10th Year Declaration of Actual Use (10th Year DAU) for Registration No.
56334 on or before October 21, 2004,8 thereby resulting in the cancellation of such
mark.9 Accordingly, the cancellation case was dismissed for being moot and
academic.10

G.R. No. 194307

November 20, 2013

BIRKENSTOCK ORTHOPAEDIE GMBH AND CO. KG (formerly BIRKENSTOCK

ORTHOPAEDIE
GMBH),Petitioner,
vs.
PHILIPPINE SHOE EXPO MARKETING CORPORATION, Respondent.
DECISION
PERLAS-BERNABE, J.:
Assailed in this Petition for Review on Certiorari 1 are the Court of Appeals (CA)
Decision2 dated June 25, 2010 and Resolution3 dated October 27, 2010 in CA-G.R. SP
No. 112278 which reversed and set aside the Intellectual Property Office (IPO) Director
Generals Decision4 dated December 22, 2009 that allowed the registration of various
trademarks in favor of petitioner Birkenstock Orthopaedie GmbH & Co. KG.
The Facts
Petitioner, a corporation duly organized and existing under the laws of Germany,
applied for various trademark registrations before the IPO, namely: (a)
"BIRKENSTOCK" under Trademark Application Serial No. (TASN) 4-1994-091508 for
goods falling under Class 25 of the International Classification of Goods and Services
(Nice Classification) with filing date of March 11, 1994; (b) "BIRKENSTOCK BAD
HONNEF -RHEIN & DEVICE COMPRISING OF ROUND COMPANY SEAL AND
REPRESENTATION OF A FOOT, CROSS AND SUNBEA M" under TASN 4-1994-091509 for
goods falling under Class 25 of the Nice Classification with filing date of March 11,
1994; and (c) "BIRKENSTOCK BAD HONNEF-RHEIN & DEVICE COMPRISING OF ROUND
COMPANY SEAL AND REPRESENTATION OF A FOOT, CROSS AND SUNBEAM" under
TASN 4-1994-095043 for goods falling under Class 10 of the Nice Classification with
filing date of September 5, 1994 (subject applications). 5

The aforesaid cancellation of Registration No. 56334 paved the way for the publication
of the subject applications in the IPO e-Gazette on February 2, 2007. 11 In response,
respondent filed three (3) separate verified notices of oppositions to the subject
applications docketed as Inter Partes Case Nos. 14-2007-00108, 14-2007-00115, and
14-2007-00116,12 claiming, inter alia, that: (a) it, together with its predecessor-ininterest, has been using Birkenstock marks in the Philippines for more than 16 years
through the mark "BIRKENSTOCK AND DEVICE"; (b) the marks covered by the subject
applications are identical to the one covered by Registration No. 56334 and thus,
petitioner has no right to the registration of such marks; (c) on November 15, 1991,
respondents predecessor-in-interest likewise obtained a Certificate of Copyright
Registration No. 0-11193 for the word "BIRKENSTOCK" ; (d) while respondent and its
predecessor-in-interest failed to file the 10th Yea r DAU, it continued the use of
"BIRKENSTOCK AND DEVICE" in lawful commerce; and (e) to record its continued
ownership and exclusive right to use the "BIRKENSTOCK" marks, it has filed TASN 42006-010273 as a " re-application " of its old registration, Registration No. 56334. 13 On
November 13, 2007, the Bureau of Legal Affairs (BLA) of the IPO issued Order No.
2007-2051 consolidating the aforesaid inter partes cases (Consolidated Opposition
Cases).14
The Ruling of the BLA
In its Decision15 dated May 28, 2008, the BLA of the IPO sustained respondents
opposition, thus, ordering the rejection of the subject applications. It ruled that the
competing marks of the parties are confusingly similar since they contained the word
"BIRKENSTOCK" and are used on the same and related goods. It found respondent and
its predecessor-in-interest as the prior user and adopter of "BIRKENSTOCK" in the
Philippines, while on the other hand, petitioner failed to present evidence of actual use
in the trade and business in this country. It opined that while Registration No. 56334
was cancelled, it does not follow that prior right over the mark was lost, as proof of
continuous and uninterrupted use in trade and business in the Philippines was
presented. The BLA likewise opined that petitioners marks are not well -known in the
Philippines and internationally and that the various certificates of registration
submitted by petitioners were all photocopies and, therefore, not admissible as
evidence.16

IPL | 7/20/16 | 37

Aggrieved, petitioner appealed to the IPO Director General.

The petition is meritorious.

The Ruling of the IPO Director General

A. Admissibility of Petitioners Documentary Evidence.

In his Decision17 dated December 22, 2009, the IPO Director General reversed and set
aside the ruling of the BLA, thus allowing the registration of the subject applications.
He held that with the cancellation of Registration No. 56334 for respondents failure to
file the 10th Year DAU, there is no more reason to reject the subject applications on
the ground of prior registration by another proprietor.18 More importantly, he found that
the evidence presented proved that petitioner is the true and lawful owner and prior
user of "BIRKENSTOCK" marks and thus, entitled to the registration of the marks
covered by the subject applications.19 The IPO Director General further held that
respondents copyright for the word "BIRKENSTOCK" is of no moment since copyright
and trademark are different forms of intellectual property that cannot be
interchanged.20

In its Comment28 dated April 29, 2011, respondent asserts that the documentary
evidence submitted by petitioner in the Consolidated Opposition Cases, which are mere
photocopies, are violative of Section 8.1 of the Rules on Inter Partes Proceedings,
which requires certified true copies of documents and evidence presented by parties in
lieu of originals.29 As such, they should be deemed inadmissible.

Finding the IPO Director Generals reversal of the BLA unacceptable, respondent filed a
petition for review with the CA.
Ruling of the CA
In its Decision21 dated June 25, 2010, the CA reversed and set aside the ruling of the
IPO Director General and reinstated that of the BLA. It disallowed the registration of
the subject applications on the ground that the marks covered by such applications
"are confusingly similar, if not outright identical" with respondents mark. 22 It equally
held that respondents failure to file the 10th Year DAU for Registration No. 56334 "did
not deprive petitioner of its ownership of the BIRKENSTOCK mark since it has
submitted substantial evidence showing its continued use, promotion and
advertisement thereof up to the present." 23 It opined that when respondents
predecessor-in-interest adopted and started its actual use of "BIRKENSTOCK," there is
neither an existing registration nor a pending application for the same and thus, it
cannot be said that it acted in bad faith in adopting and starting the use of such
mark.24 Finally, the CA agreed with respondent that petitioners documentary evidence,
being mere photocopies, were submitted in violation of Section 8.1 of Office Order No.
79, Series of 2005 (Rules on Inter Partes Proceedings).
Dissatisfied, petitioner filed a Motion for Reconsideration 25 dated July 20, 2010, which
was, however, denied in a Resolution26 dated October 27, 2010. Hence, this petition.27
Issues Before the Court
The primordial issue raised for the Courts resolution is whether or not the subject
marks should be allowed registration in the name of petitioner.
The Courts Ruling

The Court is not convinced.

It is well-settled that "the rules of procedure are mere tools aimed at facilitating the
attainment of justice, rather than its frustration. A strict and rigid application of the
rules must always be eschewed when it would subvert the primary objective of the
rules, that is, to enhance fair trials and expedite justice. Technicalities should never be
used to defeat the substantive rights of the other party. Every party-litigant must be
afforded the amplest opportunity for the proper and just determination of his cause,
free from the constraints of technicalities."30"Indeed, the primordial policy is a faithful
observance of [procedural rules], and their relaxation or suspension should only be for
persuasive reasons and only in meritorious cases, to relieve a litigant of an injustice
not commensurate with the degree of his thoughtlessness in not complying with the
procedure prescribed."31 This is especially true with quasi-judicial and administrative
bodies, such as the IPO, which are not bound by technical rules of procedure. 32 On this
score, Section 5 of the Rules on Inter Partes Proceedings provides:
Sec. 5. Rules of Procedure to be followed in the conduct of hearing of Inter Partes
cases. The rules of procedure herein contained primarily apply in the conduct of
hearing of Inter Partes cases. The Rules of Court may be applied suppletorily. The
Bureau shall not be bound by strict technical rules of procedure and evidence but may
adopt, in the absence of any applicable rule herein, such mode of proceedings which is
consistent with the requirements of fair play and conducive to the just, speedy and
inexpensive disposition of cases, and which will give the Bureau the greatest possibility
to focus on the contentious issues before it. (Emphasis and underscoring supplied)
In the case at bar, while petitioner submitted mere photocopies as documentary
evidence in the Consolidated Opposition Cases, it should be noted that the IPO had
already obtained the originals of such documentary evidence in the related Cancellation
Case earlier filed before it. Under this circumstance and the merits of the instant case
as will be subsequently discussed, the Court holds that the IPO Director Generals
relaxation of procedure was a valid exercise of his discretion in the interest of
substantial justice.33
Having settled the foregoing procedural matter, the Court now proceeds to resolve the
substantive issues.
B. Registration and ownership of "BIRKENSTOCK."

IPL | 7/20/16 | 38

Republic Act No. (RA) 166, 34 the governing law for Registration No. 56334, requires the
filing of a DAU on specified periods,35 to wit:
Section 12. Duration. Each certificate of registration shall remain in force for twenty
years: Provided, That registrations under the provisions of this Act shall be cancelled
by the Director, unless within one year following the fifth, tenth and fifteenth
anniversaries of the date of issue of the certificate of registration, the registrant shall
file in the Patent Office an affidavit showing that the mark or trade-name is still in use
or showing that its non-use is due to special circumstance which excuse such non-use
and is not due to any intention to abandon the same, and pay the required fee.
The Director shall notify the registrant who files the above- prescribed affidavits of his
acceptance or refusal thereof and, if a refusal, the reasons therefor. (Emphasis and
underscoring supplied)
The aforementioned provision clearly reveals that failure to file the DAU within the
requisite period results in the automatic cancellation of registration of a trademark. In
turn, such failure is tantamount to the abandonment or withdrawal of any right or
interest the registrant has over his trademark. 36
In this case, respondent admitted that it failed to file the 10th Year DAU for
Registration No. 56334 within the requisite period, or on or before October 21, 2004.
As a consequence, it was deemed to have abandoned or withdrawn any right or
interest over the mark "BIRKENSTOCK." Neither can it invoke Section 236 37 of the IP
Code which pertains to intellectual property rights obtained under previous intellectual
property laws, e.g., RA 166, precisely because it already lost any right or interest over
the said mark.
Besides, petitioner has duly established its true and lawful ownership of the mark
"BIRKENSTOCK."
Under Section 238 of RA 166, which is also the law governing the subject applications,
in order to register a trademark, one must be the owner thereof and must have
actually used the mark in commerce in the Philippines for two (2) months prior to the
application for registration. Section 2-A 39 of the same law sets out to define how one
goes about acquiring ownership thereof. Under the same section, it is clear that actual
use in commerce is also the test of ownership but the provision went further by saying
that the mark must not have been so appropriated by another. Significantly, to be an
owner, Section 2-A does not require that the actual use of a trademark must be within
the Philippines. Thus, under RA 166, one may be an owner of a mark due to its actual
use but may not yet have the right to register such ownership here due to the owners
failure to use the same in the Philippines for two (2) months prior to registration. 40
It must be emphasized that registration of a trademark, by itself, is not a mode of
acquiring ownership.1wphi1 If the applicant is not the owner of the trademark, he has
no right to apply for its registration. Registration merely creates a prima facie
presumption of the validity of the registration, of the registrants ownership of the

trademark, and of the exclusive right to the use thereof. Such presumption, just like
the presumptive regularity in the performance of official functions, is rebuttable and
must give way to evidence to the contrary.41
Clearly, it is not the application or registration of a trademark that vests ownership
thereof, but it is the ownership of a trademark that confers the right to register the
same. A trademark is an industrial property over which its owner is entitled to property
rights which cannot be appropriated by unscrupulous entities that, in one way or
another, happen to register such trademark ahead of its true and lawful owner. The
presumption of ownership accorded to a registrant must then necessarily yield to
superior evidence of actual and real ownership of a trademark.
The Courts pronouncement in Berris Agricultural Co., Inc. v. Abyadang 42 is instructive
on this point:
The ownership of a trademark is acquired by its registration and its actual use by the
manufacturer or distributor of the goods made available to the purchasing public. x x x
A certificate of registration of a mark, once issued, constitutes prima facie evidence of
the validity of the registration, of the registrants ownership of the mark, and of the
registrants exclusive right to use the same in connection with the goods or services
and those that are related thereto specified in the certificate. x x x In other words, the
prima facie presumption brought about by the registration of a mark may be
challenged and overcome in an appropriate action, x x x by evidence of prior use by
another person, i.e. , it will controvert a claim of legal appropriation or of ownership
based on registration by a subsequent user. This is because a trademark is a creation
of use and belongs to one who first used it in trade or commerce. 43 (Emphasis and
underscoring supplied)
In the instant case, petitioner was able to establish that it is the owner of the mark
"BIRKENSTOCK." It submitted evidence relating to the origin and history of
"BIRKENSTOCK" and its use in commerce long before respondent was able to register
the same here in the Philippines. It has sufficiently proven that "BIRKENSTOCK" was
first adopted in Europe in 1774 by its inventor, Johann Birkenstock, a shoemaker, on
his line of quality footwear and thereafter, numerous generations of his kin
continuously engaged in the manufacture and sale of shoes and sandals bearing the
mark "BIRKENSTOCK" until it became the entity now known as the petitioner.
Petitioner also submitted various certificates of registration of the mark
"BIRKENSTOCK" in various countries and that it has used such mark in different
countries worldwide, including the Philippines.44
On the other hand, aside from Registration No. 56334 which had been cancelled,
respondent only presented copies of sales invoices and advertisements, which are not
conclusive evidence of its claim of ownership of the mark "BIRKENSTOCK" as these
merely show the transactions made by respondent involving the same. 45
In view of the foregoing circumstances, the Court finds the petitioner to be the true
and lawful owner of the mark "BIRKENSTOCK" and entitled to its registration, and that

IPL | 7/20/16 | 39

respondent was in bad faith in having it registered in its name. In this regard, the
Court quotes with approval the words of the IPO Director General, viz.:
The facts and evidence fail to show that [respondent] was in good faith in using and in
registering the mark BIRKENSTOCK. BIRKENSTOCK, obviously of German origin, is a
highly distinct and arbitrary mark. It is very remote that two persons did coin the same
or identical marks. To come up with a highly distinct and uncommon mark previously
appropriated by another, for use in the same line of business, and without any
plausible explanation, is incredible. The field from which a person may select a
trademark is practically unlimited. As in all other cases of colorable imitations, the
unanswered riddle is why, of the millions of terms and combinations of letters and
designs available, [respondent] had to come up with a mark identical or so closely
similar to the [petitioners] if there was no intent to take advantage of the goodwill

generated by the [petitioners] mark. Being on the same line of business, it is highly
probable that the [respondent] knew of the existence of BIRKENSTOCK and its use by
the [petitioner], before [respondent] appropriated the same mark and had it registered
in its name.46
WHEREFORE, the petition is GRANTED. The Decision dated June 25, 2010 and
Resolution dated October 27, 2010 of the Court of Appeals in CA-G.R. SP No. 112278
are REVERSED and SET ASIDE. Accordingly, the Decision dated December 22, 2009 of
the IPO Director General is hereby REINSTATED.
SO ORDERED.