G.R. No. L-28554 February 28, 1983
9732), as Junior - Party-Applicant and petitioner company's registration
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.
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
1 of the trademark ALL MONTANA, but 'because it is primarily
interference proceeding between respondent corporation's application (Serial
No.
(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:
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.
WHEREFORE, the Junior Party-Applicant is adjudged prior -user
 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.
2
Relying on the provisions of Section 2-A of the Trademarks Law (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
3
commerce, like petitioner in the case at bar.
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
6
the same.
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
7
the actual owner of the name or other mark of ownership.
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
8
said trademark, its application cannot be granted.
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 Lapu-lapu 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
10
and of the exclusive right to the use thereof. Registration does not perfect a
11
trademark right. 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 THE INTERMEDIATE APPELLATE COURT, THE DIRECTOR OF PATENTS,
Junior Party has hereby established a continuous chain of title and, and ISETANN DEPARTMENT STORE, INC., respondents.
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
GUTIERREZ, JR., J.:p
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
This is a petition for review on certiorari which seeks to set aside - (1) the
12
any showing that there was grave abuse of discretion is binding on us and the
decision of the Court of Appeals dated June 2, 1986 in AC-G.R. SP No. 008873
findings of facts by the Director of Patents are deemed conclusive in the
entitled "Kabushi Kaisha Isetan, also known and trading as Isetan Company
Supreme Court provided that they are supported by substantial
Limited v. Isetann Department Store, Inc." dismissing the petitioner's appeal
13
evidence. Petitioner has failed to show that the findings of fact of the
from the decision of the Director of Patents; and (2) the Resolution dated July
Director of Patents are not substantially supported by evidence nor that any
11, 1986 denying the petitioner's motion for reconsideration.
grave abuse of discretion was committed.
As gathered from the records, the facts are as follows:
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 Petitioner Kabushi Kaisha Isetan is a foreign corporation organized and existing
an interference proceeding and that the question of whether or not a under the laws of Japan with business address at 14-1 Shinjuku, 3-Chrome,
certificate of registration is to be cancelled should have been brought in Shinjuku, Tokyo, Japan. It is the owner of the trademark "Isetan" and the
cancellation proceedings. Under Rule 178 of the Rules of the Patent Office in "Young Leaves Design".
14
Trademark Cases, the Director of Patents is expressly authorized to order
the cancellation of a registered mark or trade name or name or other mark of The petitioner alleges that it first used the trademark Isetan on November 5,
ownership in an inter partes case, such as the interference proceeding at bar. 15
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
WHEREFORE, the appealed decision is hereby affirmed. No costs. 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
G.R. No. L-75420 November 15, 1991
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
KABUSHI KAISHA ISETAN, also known and trading as ISETAN CO.,
petitioner applied for the registration of "Isetan" and "Young Leaves Design"
LTD., petitioner,
with the Philippine Patent Office under Permanent Serial Nos. 52422 and 52423
vs.
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.
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 SR-4701 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:
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.

WHEREFORE, all the foregoing considered, this Office is
constrained to hold that the herein Petitioner has not successfully
Initially, the Court dismissed the petition in a resolution dated July 8, 1987, on
made out a case of cancellation. Accordingly, Inter Partes Cases
the ground that it was filed fourteen (14) days late. However, on motion for
Nos. 1460 and 1461 are, as they are hereby, DISMISSED. Hence,
reconsideration, whereby the petitioner appealed to this Court on equitable
Respondent's Certificate of Supplemental Registration No. 4714
grounds stating that it has a strong and meritorious case, the petition was given
issued on May 20, 1980 covering the tradename "ISETANN DEPT.
due course in a resolution dated May 19, 1988 to enable us to examine more fully
STORE, INC. & FLOWER DESIGN" are, as they are hereby,
any possible denial of substantive justice. The parties were then required to
ordered to remain in full force and effect for the duration of
submit their memoranda. (Rollo, pp. 2-28; Resolution, pp. 271; 453)
their term unless sooner or later terminated by law.
After carefully considering the records of this case, we reiterate our July 8,
The corresponding application for registration in the Principal
1987 resolution dismissing the petition. There are no compelling equitable
Register of the Trademark and of the tradename aforesaid are
considerations which call for the application of the rule enunciated in Serrano v.
hereby given due course.
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, A rule widely accepted and firmly entrenched because it has come
corporations, partnerships or associations domicided in any down through the years is that actual use in commerce or business
foreign country may be registered in accordance with the is a prerequisite to the acquisition of the right of ownership over
provisions of this Act: Provided, That said trademarks, a trademark.
tradenames, or service marks are actually in use in commerce and
services not less than two months in the Philippines before the xxx xxx xxx
time the applications for registration are filed: And provided,
... Adoption alone of a trademark would not give exclusive right
further, That the country of which the applicant for registration
thereto. Such right grows out of their actual use. Adoption is not
is a citizen grants by law substantially similar privileges to
use. One way make advertisements, issue circulars, give out price
citizens of the Philippines, and such fact is officially certified,
lists on certain goods; but these alone would not give exclusive
with a certified true copy of the foreign law translated into the
right of use.For trademark is a creation of use. The underlying
English language, by the government of the foreign country to the
reason for all these is that purchasers have come to understand
Government of the Republic of the Philippines. (As amended by
the mark as indicating the origin of the wares. Flowing from this
R.A. No. 865).
is the trader's right to protection in the trade he has built up and
SEC. 2-A. Ownership of trademarks, tradenames and service the goodwill he has accumulated from use of the trademark. ...
marks; how acquired. - Anyone who lawfully produces or deals in
In fact, a prior registrant cannot claim exclusive use of the trademark unless it
merchandise of any kind or who engages in any lawful business, or
uses it in commerce.
who renders any lawful service in commerce, by actual use thereof
in manufacture or trade, in business, and in the service rendered,
We ruled in Pagasa Industrial Corporation v. Court of Appeals (118 SCRA 526
may appropriate to his exclusive use a trademark, a tradename, or
[1982]):
a service mark not so appropriated by another, to distinguish his
merchandise, business or service from the merchandise, business 3. The Trademark Law is very clear. It requires actual commercial
or service of others. The ownership or possession of a trademark, use of the mark prior to its registration. - There is no dispute
tradename, service mark, heretofore or hereafter appropriated, that respondent corporation was the first registrant, yet it failed
as in this section provided, shall be recognized and protected in to fully substantiate its claim that it used in trade or business in
the same manner and to the same extent as are other property the Philippines the subject mark; it did not present proof to
rights known to the law. (As amended by R.A. No. 638)" invest it with exclusive, continuous adoption of the trademark
which should consist among others, of considerable sales since its
These provisions have been interpreted in Sterling Products International, Inc.
first use. The invoices (Exhibits 7, 7-a, and 8-b) submitted by
v. Farbenfabriken Bayer Actiengesellschaft (27 SCRA 1214 [1969]) in this way:
 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)
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
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.
G.R. No. 91332 July 16, 1993
PHILIP MORRIS, INC., BENSON & HEDGES (CANADA), INC., AND
FABRIQUES OF TABAC REUNIES, S.A.,petitioners
vs.
THE COURT OF APPEALS AND FORTUNE TOBACCO
CORPORATION, respondents.
Quasha, Asperilla, Ancheta, Pea & Nolasco Law Office for petitioners.
Teresita Gandionco-Oledan for private respondent.
MELO, J.:
In the petition before us, petitioners Philip Morris, Inc., Benson and Hedges
(Canada), Inc., and Fabriques of Tabac Reunies, S.A., are ascribing whimsical
exercise of the faculty conferred upon magistrates by Section 6, Rule 58 of the
Revised Rules of Court when respondent Court of Appeals lifted the writ of
preliminary injunction it earlier had issued against Fortune Tobacco Corporation,
herein private respondent, from manufacturing and selling "MARK" cigarettes in
the local market.
Banking on the thesis that petitioners' respective symbols "MARK VII", "MARK
TEN", and "LARK", also for cigarettes, must be protected against unauthorized
appropriation, petitioners twice solicited the ancillary writ in the course the
main suit for infringement but the court of origin was unpersuaded.
Before we proceed to the generative facts of the case at bar, it must be
emphasized that resolution of the issue on the propriety of lifting the writ of
preliminary injunction should not be construed as a prejudgment of the suit
below. Aware of the fact that the discussion we are about to enter into involves
a mere interlocutory order, a discourse on the aspect infringement must thus be
avoided. With these caveat, we shall now shift our attention to the events which
spawned the controversy.
As averred in the initial pleading, Philip Morris, Incorporated is a corporation
organized under the laws of the State of Virginia, United States of America,
and does business at 100 Park Avenue, New York, New York, United States of
America. The two other plaintiff foreign corporations, which are wholly-owned
subsidiaries of Philip Morris, Inc., are similarly not doing business in the
Philippines but are suing on an isolated transaction. As registered owners "MARK
VII", "MARK TEN", and "LARK" per certificates of registration issued by the
Philippine Patent Office on April 26, 1973, May 28, 1964, and March 25, 1964,
plaintiffs-petitioners asserted that defendant Fortune Tobacco Corporation has
no right to manufacture and sell cigarettes bearing the allegedly identical or
confusingly similar trademark "MARK" in contravention of Section 22 of the
Trademark Law, and should, therefore, be precluded during the pendency of the
case from performing the acts complained of via a preliminary injunction (p. 75,
Court of Appeals Rollo in AC-G.R. SP No. 13132).
For its part, Fortune Tobacco Corporation admitted petitioners' certificates of
registration with the Philippine Patent Office subject to the affirmative and
special defense on misjoinder of party plaintiffs. Private respondent alleged
further that it has been authorized by the Bureau of Internal Revenue to
manufacture and sell cigarettes bearing the trademark "MARK", and that
"MARK" is a common word which cannot be exclusively appropriated (p.158,
Court of Appeals Rollo in A.C.-G.R. SP No. 13132). On March 28, 1983,
petitioners' prayer for preliminary injunction was denied by the Presiding Judge
of Branch 166 of the Regional Trial Court of the National Capital Judicial Region
stationed at Pasig, premised upon the following propositions:
Plaintiffs admit in paragraph 2 of the complaint that ". . . they
are
not doing business in the Philippines and are suing on an isolated
transaction . . .". This simply means that they are not engaged in
the sale, manufacture, importation, expor[t]ation and
advertisement of their cigarette products in the Philippines. With
this admission, defendant asks: ". . . how could defendant's
"MARK" cigarettes cause the former "irreparable damage" within
the territorial limits of the Philippines?" Plaintiffs maintain that
since their trademarks are entitled to protection by treaty
obligation under Article 2 of the Paris Convention of which the
Philippines is a member and ratified by Resolution No. 69 of the
Senate of the Philippines and as such, have the force and effect
of law under Section 12, Article XVII of our Constitution and
since this is an action for a violation or infringement of a
trademark or trade name by defendant, such mere allegation is
sufficient even in the absence of proof to support it. To the mind
of the Court, precisely, this is the issue in the main case to
determine whether or not there has been an invasion of plaintiffs'
right of property to such trademark or trade name. This claim of
plaintiffs is disputed by defendant in paragraphs 6 and 7 of the
Answer; hence, this cannot be made a basis for the issuance of a
writ of preliminary injunction.
There is no dispute that the First Plaintiff is the registered
owner of trademar[k] "MARK VII" with Certificate of
Registration No. 18723, dated April 26,1973 while the Second
Plaintiff is likewise the registered owner of trademark "MARK
TEN" under Certificate of Registration No. 11147, dated May 28,
1963 and the Third Plaintiff is a registrant of trademark "LARK"
as shown by Certificate of Registration No. 10953 dated March
23, 1964, in addition to a pending application for registration of
trademark "MARK VII" filed on November 21, 1980 under
Application Serial No. 43243, all in the Philippine Patent Office.
In same the manner, defendant has a pending application for
registration of the trademark "LARK" cigarettes with the
Philippine Patent Office under Application Serial No. 44008.
Defendant contends that since plaintiffs are "not doing business
in the Philippines" coupled the fact that the Director of Patents
has not denied their pending application for registration of its
trademark "MARK", the grant of a writ of preliminary injunction is
premature. Plaintiffs contend that this act(s) of defendant is but
a subterfuge to give semblance of good faith intended to deceive
the public and patronizers into buying the products and create the
impression that defendant's goods are identical with or come
from the same source as plaintiffs' products or that the
defendant is a licensee of plaintiffs when in truth and in fact the
former is not. But the fact remains that with its pending
application, defendant has embarked in the manufacturing, selling,
distributing and advertising of "MARK" cigarettes. The question
of good faith or bad faith on the part of defendant are matters
which are evidentiary in character which have to be proven during
the hearing on the merits; hence, until and unless the Director of
Patents has denied defendant's application, the Court is of the
opinion and so holds that issuance a writ of preliminary injunction
would not lie.
There is no question that defendant has been authorized by the
Bureau of Internal Revenue to manufacture cigarettes bearing
the trademark "MARK" (Letter of Ruben B. Ancheta, Acting
Commissioner addressed to Fortune Tobacco Corporation dated
April 3, 1981, marked as Annex "A", defendant's "OPPOSITION,
etc." dated September 24, 1982). However, this authority is
qualified . . . that the said brands have been accepted and
registered by the Patent Office not later than six (6) months
after you have been manufacturing the cigarettes and placed the
same in the market." However, this grant ". . . does not give you
protection against any person or entity whose rights may be
prejudiced by infringement or unfair competition in relation to
your indicated trademarks/brands". As aforestated, the
registration of defendant's application is still pending in the
Philippine Patent Office.
It has been repeatedly held in this jurisdiction as well as in the
United States that the right or title of the applicant for
injunction remedy must be clear and free from doubt. Because of
the disastrous and painful effects of an injunction, Courts should
be extremely careful, cautious and conscionable in the exercise of
its discretion consistent with justice, equity and fair play.
There is no power the exercise of which is more
delicate which requires greater caution,
deliberation, and sound discretion, or (which is)
more dangerous in a doubtful case than the issuing
of an injunction; it is the strong arm of equity that
never ought to be extended unless to cases of great
injury, where courts of law cannot afford an
adequate or commensurate remedy in damages. The
right must be clear, the injury impending or
threatened, so as to be averted only by the
protecting preventive process of injunction.
(Bonaparte v. Camden, etc. N. Co., 3 F. Cas. No. 1,
617, Baldw. 205, 217.)
Courts of equity constantly decline to lay down any
rule which injunction shall be granted or withheld.
There is wisdom in this course, for it is impossible
to foresee all exigencies of society which may
require their aid to protect rights and restrain
wrongs. (Merced M. Go v. Freemont, 7 Gal. 317, 321;
68 Am. Dec. 262.)
It is the strong arm of the court; and to render its
operation begin and useful, it must be exercised
with great discretion, and when necessary requires
it. (Attorney-General v. Utica Inc. Co., P. John Ch.
(N.Y.) 371.)
Having taken a panoramic view of the position[s] of both parties
as viewed from their pleadings, the picture reduced to its
minimum size would be this: At the crossroads are the two (2)
contending parties, plaintiffs vigorously asserting the rights
granted by law, treaty and jurisprudence to restrain defendant in
 its activities of manufacturing, selling, distributing and cognizance of the certification executed on January 30, 1984 by the Philippine
advertising its "MARK" cigarettes and now comes defendant who Patent Office attesting to the fact that private respondent's application for
countered and refused to be restrained claiming that it has been registration is still pending appropriate action. Apart from this communication,
authorized temporarily by the Bureau of Internal Revenue under what prompted the trial court judge to entertain the idea of prematurity and
certain conditions to do so as aforestated coupled by its pending untimeliness of petitioners' application for a writ of preliminary injunction was
application for registration of trademark "MARK" in the Philippine the letter from the Bureau of Internal Revenue date February 2, 1984 which
Patent Office. This circumstance in itself has created a dispute reads:
between the parties which to the mind of the Court does not
warrant the issuance of a writ of preliminary injunction. MRS. TERESITA GANDIONGCO OLEDAN
Legal Counsel
It is well-settled principle that courts of equity will Fortune Tobacco Corporation
refuse an application for the injunctive remedy
where the principle of law on which the right to Madam:
preliminary injunction rests is disputed and will
In connection with your letter dated January 25, 1984,
admit of doubt, without a decision of the court of
reiterating your query as to whether your label approval
law establishing such principle although satisfied as
automatically expires or becomes null and void after six (6)
to what is a correct conclusion of law upon the
months if the brand is not accepted and by the patent office,
facts. The fact, however, that there is no such
please be informed that no provision in the Tax Code or revenue
dispute or conflict does not in itself constitute a
regulation that requires an applicant to comply with the
justifiable ground for the court to refuse an
aforementioned condition order that his label approved will remain
application for the injunctive relief. (Hackensack
valid and existing.
Impr. Commn. v. New Jersey Midland P. Co., 22 N.J.
Eg. 94.)
Based on the document you presented, it shows that registration
of this particular label still pending resolution by the Patent
Hence, the status quo existing between the parties prior to the
Office. These being so , you may therefore continue with the
filing of this case should be maintained. For after all, an
production said brand of cigarette until this Office is officially
injunction, without reference to the parties, should be violent,
notified that the question of ownership of "MARK" brand is finally
vicious nor even vindictive. (pp. 338-341, Rollo in G.R. No. 91332.)
resolved.(p. 348, Rollo.)
In the process of denying petitioners' subsequent motion for reconsideration of
the order denying issuance of the requested writ, the court of origin took
It appears from the testimony of Atty. Enrique Madarang, Chief of the
Trademark Division of the then Philippine Patent Office that Fortune's
application for its trademark is still pending before said office (p. 311, Rollo).
Petitioners thereafter cited supervening events which supposedly transpired
since March 28, 1983, when the trial court first declined issuing a writ of
preliminary injunction, that could alter the results of the case in that Fortune's
application had been rejected, nay, barred by the Philippine Patent Office, and
that the application had been forfeited by abandonment, but the trial court
nonetheless denied the second motion for issuance of the injunctive writ on
April 22, 1987, thus:
For all the prolixity of their pleadings and testimonial evidence,
the plaintiffs-movants have fallen far short of the legal requisites
that would justify the grant of the writ of preliminary injunction
prayed for. For one, they did not even bother to establish by
competent evidence that the products supposedly affected
adversely by defendant's trademark now subject of an application
for registration with the Philippine Patents Office, are in actual
use in the Philippines. For another, they concentrated their fire
on the alleged abandonment and forfeiture by defendant of said
application for registration.
The Court cannot help but take note of the fact that in their
complaint plaintiffs included a prayer for issuance preliminary
injunction. The petition was duly heard, and thereafter matter
was assiduously discussed lengthily and resolved against plaintiffs
in a 15-page Order issued by the undersigned's predecessor on
March 28, 1983. Plaintiffs' motion for reconsideration was denied
in another well-argued 8 page Order issued on April 5, 1984,, and
the matter was made to rest.
However, on the strength of supposed changes in the material
facts of this case, plaintiffs came up with the present motion
citing therein the said changes which are: that defendant's
application had been rejected and barred by the Philippine Patents
Office, and that said application has been deemed abandoned and
forfeited. But defendant has refiled the same.
Plaintiffs' arguments in support of the present motion appear to
be a mere rehash of their stand in the first above-mentioned
petition which has already been ruled upon adversely against them.
Granting that the alleged changes in the material facts are
sufficient grounds for a motion seeking a favorable grant of what
has already been denied, this motion just the same cannot
prosper.
In the first place there is no proof whatsoever that any of
plaintiffs' products which they seek to protect from any adverse
effect of the trademark applied for by defendant, is in actual use
and available for commercial purposes anywhere in the Philippines.
Secondly as shown by plaintiffs' own evidence furnished by no less
than the chief of Trademarks Division of the Philippine Patent
Office, Atty. Enrique Madarang, the abandonment of an
application is of no moment, for the same can always be refiled.
He said there is no specific provision in the rules prohibiting such
refiling (TSN, November 21, 1986, pp. 60 & 64, Raviera). In fact,
according to Madarang, the refiled application of defendant is
now pending before the Patents Office. Hence, it appears that
the motion has no leg to stand on. (pp. 350-351, Rolloin G. R. No.
91332.)
Confronted with this rebuff, petitioners filed a previous petition
for certiorari before the Court, docketed as G.R. No. 78141, but the petition
was referred to the Court of Appeals.
The Court of Appeals initially issued a resolution which set aside the court of
origin's order dated April 22, 1987, and granted the issuance of a writ of
preliminary injunction enjoining Fortune, its agents, employees, and
representatives, from manufacturing, selling, and advertising "MARK"
cigarettes. The late Justice Cacdac, speaking for the First Division of the Court
of Appeals in CA-G.R. SP No. 13132, remarked:
There is no dispute that petitioners are the registered owners of
the trademarks for cigarettes "MARK VII", "MARK TEN", and
"LARK".(Annexes B, C and D, petition). As found and reiterated by
the Philippine Patent Office in two (2) official communications
dated April 6, 1983 and January 24, 1984, the trademark "MARK"
is "confusingly similar" to the trademarks of petitioners, hence
registration was barred under Sec. 4 (d) of Rep. Act. No. 166, as
amended (pp. 106, 139, SCA rollo). In a third official
communication dated April 8, 1986, the trademark application of
private respondent for the "MARK" under Serial No. 44008 filed
on February 13, 1981 which was declared abandoned as of
February 16, 1986, is now deemed forfeited, there being no
revival made pursuant to Rule 98 of the Revised Rules of
Practitioners in Trademark Cases." (p. 107, CA rollo). The
foregoing documents or communications mentioned by petitioners
as "the changes in material facts which occurred after March 28,
1983", are not also questioned by respondents.
Pitted against the petitioners' documentary evidence,
respondents pointed to (1) the letter dated January 30, 1979 (p.
137, CA rollo) of Conrado P. Diaz, then Acting Commissioner of
Internal Revenue, temporarily granting the request of private
respondent for a permit to manufacture two (2) new brands of
cigarettes one of which is brand "MARK" filter-type blend, and (2)
the certification dated September 26, 1986 of Cesar G. Sandico,
Director of Patents (p. 138, CA rollo) issued upon the written
request of private respondents' counsel dated September 17,
1986 attesting that the records of his office would show that the
"trademark MARK" for cigarettes is now the subject of a pending
application under Serial No. 59872 filed on September 16, 1986.
Private respondent's documentary evidence provides the reasons
neutralizing or weakening their probative values. The penultimate
paragraph of Commissioner Diaz' letter of authority reads:
Please be informed further that the authority
herein granted does not give you protection against
any person or entity whose rights may be prejudiced
by infringement or unfair competition in relation to
your above-named brands/trademark.
while Director Sandico's certification contained similar conditions
as follows:
This Certification, however, does not give
protection as against any person or entity whose
right may be prejudiced by infringement or unfair
competition in relation to the aforesaid trademark
nor the right to register if contrary to the
provisions of the Trademark Law, Rep. Act No. 166
 as amended and the Revised Rules of Practice in
Trademark Cases.
The temporary permit to manufacture under the trademark
"MARK" for cigarettes and the acceptance of the second
application filed by private respondent in the height of their
dispute in the main case were evidently made subject to the
outcome of the said main case or Civil Case No. 47374 of the
respondent Court. Thus, the Court has not missed to note the
absence of a mention in the Sandico letter of September 26, 1986
of any reference to the pendency of the instant action filed on
August 18, 1982. We believe and hold that petitioners have shown
a prima facie case for the issuance of the writ of prohibitory
injunction for the purposes stated in their complaint and
subsequent motions for the issuance of the prohibitory writ.
(Buayan Cattle Co. vs. Quintillan, 125 SCRA 276)
The requisites for the granting of preliminary injunction are the
existence of the right protected and the facts against which the
injunction is to be directed as violative of said right. (Buayan
Cattle Co. vs. Quintillan, supra; Ortigas & Co. vs. Ruiz, 148 SCRA
326). It is a writ framed according to the circumstances of the
case commanding an act which the Court regards as essential to
justice and restraining an act it deems contrary to equity and
good conscience (Rosauro vs. Cuneta, 151 SCRA 570). If it is not
issued, the defendant may, before final judgment, do or continue
the doing of the act which the plaintiff asks the court to restrain,
and thus make ineffectual the final judgment rendered
afterwards granting the relief sought by the plaintiff (Calo vs.
Roldan, 76 Phil. 445). Generally, its grant or denial rests upon the
sound discretion of the Court except on a clear case of abuse
(Belish Investment & Finance Co. vs. State House, 151 SCRA 636).
Petitioners' right of exclusivity to their registered trademarks
being clear and beyond question, the respondent court's denial of
the prohibitive writ constituted excess of jurisdiction and grave
abuse discretion. If the lower court does not grant preliminary
injunction, the appellate court may grant the same. (Service
Specialists, Inc. vs. Sheriff of Manila, 145 SCRA 139). (pp. 165-
167, Rollo in G.R. No. 91332.)
After private respondent Fortune's motion for reconsideration was rejected, a
motion to dissolve the disputed writ of preliminary injunction with offer to post
a counterbond was submitted which was favorably acted upon by the Court of
Appeals, premised on the filing of a sufficient counterbond to answer for
whatever perjuicio petitioners may suffer as a result thereof, to wit:
The private respondent seeks to dissolve the preliminary
injunction previously granted by this Court with an offer to file a
counterbond. It was pointed out in its supplemental motion that
lots of workers employed will be laid off as a consequence of the
injunction and that the government will stand to lose the amount
of specific taxes being paid by the
private respondent. The specific taxes being paid is the sum total
of P120,120, 295.98 from January to July 1989.
The petitioners argued in their comment that the damages caused
by the infringement of their trademark as well as the goodwill it
generates are incapable of pecuniary estimation and monetary
evaluation and not even the counterbond could adequately
compensate for the damages it will incur as a result of the
dissolution of the bond. In addition, the petitioner further argued
 that doing business in the Philippines is not relevant as the
injunction pertains to an infringement of a trademark right.
After a thorough re-examination of the issues involved and the
arguments advanced by both parties in the offer to file a
counterbond and the opposition thereto, WE believe that there
are sound and cogent reasons for US to grant the dissolution of
the writ of preliminary injunction by the offer of the private
respondent to put up a counterbond to answer for whatever
damages the petitioner may suffer as a consequence of the
dissolution of the preliminary injunction.
The petitioner will not be prejudiced nor stand to suffer
irreparably as a consequence of the lifting of the preliminary
injunction considering that they are not actually engaged in the
manufacture of the cigarettes with the trademark in question and
the filing of the counterbond will amply answer for such damages.
While the rule is that an offer of a counterbond does not operate
to dissolve an injunction previously granted, nevertheless, it is
equally true that an injunction could be dissolved only upon good
and valid grounds subject to the sound discretion of the court. As
WE have maintained the view that there are sound and good
reasons to lift the preliminary injunction, the motion to file a
counterbond is granted. (pp. 53-54, Rollo in G.R. No. 91332.)
Petitioners, in turn, filed their own motion for re-examination geared towards
reimposition of the writ of preliminary injunction but to no avail (p. 55, Rollo in
G.R. No. 91332).
Hence, the instant petition casting three aspersions that respondent court
gravely abused its discretion tantamount to excess of jurisdiction when:
I. . . . it required, contrary to law and jurisprudence, that in order
that petitioners may suffer irreparable injury due to the lifting
of the injunction, petitioners should be using actually their
registered trademarks in commerce in the Philippines;
II. . . . it lifted the injunction in violation of section 6 of Rule 58
of the Rules of Court; and
III. . . . after having found that the trial court had committed
grave abuse of discretion and exceeded its jurisdiction for having
refused to issue the writ of injunction to restrain private
respondent's acts that are contrary to equity and good
conscience, it made a complete about face for legally insufficient
grounds and authorized the private respondent to continue
performing the very same acts that it had considered contrary to
equity and good conscience, thereby ignoring not only the
mandates of the Trademark Law, the international commitments
of the Philippines, the judicial admission of private respondent
that it will have no more right to use the trademark "MARK" after
the Director of Patents shall have rejected the application to
register it, and the admonitions of the Supreme Court. (pp. 24-25,
Petition; pp. 25-26,Rollo.)
To sustain a successful prosecution of their suit for infringement, petitioners,
as foreign corporations not engaged in local commerce, rely on section 21-A of
the Trademark Law reading as follows:
 Sec. 21-A. Any foreign corporation or juristic person to which a
mark or trade-name has been registered or assigned under this
act may bring an action hereunder for infringement, for unfair
competition, or false designation of origin and false description,
whether or not it has been licensed to do business in the
Philippines under Act Numbered Fourteen hundred and fifty-nine,
as amended, otherwise known as the Corporation Law, at the time
it brings complaint: Provided, That the country of which the said
foreign corporation or juristic person is a citizen or in which it is
domiciled, by treaty, convention or law, grants a similar privilege
to corporate or juristic persons of the Philippines. (As inserted by
Sec. 7 of Republic Act No. 638.)
to drive home the point that they are not precluded from
initiating a cause of action in the Philippines on account of the
principal perception that another entity is pirating their symbol
without any lawful authority to do so. Judging from a perusal of
the aforequoted Section 21-A, the conclusion reached by
petitioners is certainly correct for the proposition in support
thereof is embedded in the Philippine legal jurisprudence.
Indeed, it was stressed in General Garments Corporation vs. Director of
Patents (41 SCRA 50 [1971]) by then Justice (later Chief Justice) Makalintal
that:
Parenthetically, it may be stated that the ruling in the
Mentholatum case was subsequently derogated when Congress,
purposely to "counteract the effects" of said case, enacted
Republic Act No. 638, inserting Section 21-A in the Trademark
Law, which allows a foreign corporation or juristic person to bring
an action in Philippine courts for infringement of a mark or
tradename, for unfair competition, or false designation of origin
and false description, "whether or not it has been licensed to do
business in the Philippines under Act Numbered Fourteen hundred
and fifty-nine, as amended, otherwise known as the Corporation
Law, at the time it brings complaint."
Petitioner argues that Section 21-A militates against
respondent's capacity to maintain a suit for cancellation, since it
requires, before a foreign corporation may bring an action, that
its trademark or tradename has been registered under the
Trademark Law. The argument misses the essential point in the
said provision, which is that the foreign corporation is allowed
thereunder to sue "whether or not it has been licensed to do
business in the Philippines" pursuant to the Corporation Law
(precisely to counteract the effects of the decision in the
Mentholatum case). (at p. 57.)
However, on May, 21, 1984, Section 21-A, the provision under consideration, was
qualified by this Court in La Chemise Lacoste S.A. vs. Fernandez (129 SCRA 373
[1984]), to the effect that a foreign corporation not doing business in the
Philippines may have the right to sue before Philippine Courts, but existing
adjective axioms require that qualifying circumstances necessary for the
assertion of such right should first be affirmatively pleaded (2 Agbayani
Commercial Laws of the Philippines, 1991 Ed., p. 598; 4 Martin, Philippine
Commercial Laws, Rev. Ed., 1986, p. 381). Indeed, it is not sufficient for a
foreign corporation suing under Section 21-A to simply allege its alien origin.
Rather, it must additionally allege its personality to sue. Relative to this
condition precedent, it may be observed that petitioners were not remiss in
averring their personality to lodge a complaint for infringement (p. 75, Rollo in
AC-G.R. SP No. 13132) especially so when they asserted that the main action for
infringement is anchored on an isolated transaction (p. 75, Rollo in AC-G.R. SP
No. 13132; Atlantic Mutual Ins. Co. vs. Cebu Stevedoring Co., Inc., 17 SCRA 1037
(1966), 1 Regalado, Remedial Law Compendium, Fifth Rev. Ed., 1988, p. 103).
Another point which petitioners considered to be of significant interest, and
which they desire to impress upon us is the protection they enjoy under the
Paris Convention of 1965 to which the Philippines is a signatory. Yet, insofar as
this discourse is concerned, there is no necessity to treat the matter with an
extensive response because adherence of the Philippines to the 1965
international covenant due to pact sunt servanda had been acknowledged in La
Chemise (supra at page 390).
Given these confluence of existing laws amidst the cases involving trademarks,
there can be no disagreement to the guiding principle in commercial law that
foreign corporations not engaged in business in the Philippines may maintain a
cause of action for infringement primarily because of Section 21-A of the
Trademark Law when the legal standing to sue is alleged, which petitioners have
done in the case at hand.
In assailing the justification arrived at by respondent court when it recalled the
writ of preliminary injunction, petitioners are of the impression that actual use
of their trademarks in Philippine commercial dealings is not an indispensable
element under Article 2 of the Paris Convention in that:
(2) . . . . no condition as to the possession of a domicile or
establishment in the country where protection is claimed may be
required of persons entitled to the benefits of the Union for the
enjoyment of any industrial property of any industrial property
rights. (p. 28, Petition; p. 29, Rollo in G.R. No. 91332.)
Yet petitioners' perception along this line is nonetheless resolved by Sections 2
and 2-A of the Trademark Law which speak loudly, about necessity of actual
commercial use of the trademark in the local forum:
Sec. 2. What are registrable. Trademarks, tradenames 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, 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 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). (Kabushi Kaisha Isetan vs.
Intermediate Appellate Court, 203 SCRA 583 [1991], at pp. 589-
590; emphasis supplied.)
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).
The aforequoted basic provisions of our Trademark Law, according to Justice
Gutierrez, Jr., in Kabushi Kaisha Isetan vs. Intermediate Appellate Court (203
SCRA 583 [1991]), have been construed in this manner:
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.
xxx xxx xxx
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 may 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 rule[d] 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 inconsistencies. (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 is unknown to Filipino 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.
(at pp. 589-591.)
In other words, petitioners may have the capacity to sue for infringement
irrespective of lack of business activity in the Philippines on account of Section
21-A of the Trademark Law but the question 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 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.
Going back to the first assigned error, we can not help but notice the manner
the ascription was framed which carries with it the implied but unwarranted
assumption of the existence of petitioners' right to relief. It must be
emphasized that this aspect of exclusive dominion to the trademarks, together
with the corollary allegation of irreparable injury, has yet to be established by
petitioners by the requisite quantum of evidence in civil cases. It cannot be
denied that our reluctance to issue a writ of preliminary injunction is due to
judicial deference to the lower courts, involved as there is mere interlocutory
order (Villarosa vs. Teodoro, Sr., 100 Phil. 25 [1956]). In point of adjective law,
the petition has its roots on a remedial measure which is but ancillary to the
main action for infringement still pending factual determination before the
court of origin. It is virtually needless to stress the obvious reality that critical
facts in an infringement case are not before us more so when even Justice
Feliciano's opinion observes that "the evidence is scanty" and that petitioners
"have yet to submit copies or photographs of their registered marks as used in
cigarettes" while private respondent has not, for its part, "submitted the actual
labels or packaging materials used in selling its "Mark" cigarettes." Petitioners
therefore, may not be permitted to presume a given state of facts on their so
called right to the trademarks which could be subjected to irreparable injury
and in the process, suggest the fact of infringement. Such a ploy would
practically place the cart ahead of the horse. To our mind, what appears to be
the insurmountable barrier to petitioners' portrayal of whimsical exercise of
discretion by the Court of Appeals is the well-taken remark of said court that:
The petitioner[s] will not be prejudiced nor stand to suffer
irreparably as a consequence of the lifting of the preliminary
 injunction considering that they are not actually engaged in the
manufacture of the cigarettes with the trademark in question and
the filing of the counterbond will amply answer for such damages.
(p. 54. Rollo in G.R. No. 91332.)
More telling are the allegations of petitioners in their complaint (p.
319, Rollo G.R. No. 91332) as well as in the very petition filed with this Court (p.
2, Rollo in G.R. No. 91332) indicating that they are not doing business in the
Philippines, for these frank representations are inconsistent and incongruent
with any pretense of a right which can breached (Article 1431, New Civil Code;
Section 4, Rule 129; Section 3, Rule 58, Revised Rules of Court). Indeed, to be
entitled to an injunctive writ, petitioner must show that there exists a right to
be protected and that the facts against which injunction is directed are
violative of said right (Searth Commodities Corporation vs. Court of Appeals,
207 SCRA 622 [1992]). It may be added in this connection that albeit
petitioners are holders of certificate of registration in the Philippines of their
symbols as admitted by private respondent, the fact of exclusive ownership
cannot be made to rest solely on these documents since dominion over
trademarks is not acquired by the mere fact of registration alone and does not
perfect a trademark right (Unno Commercial Enterprises, Inc. vs. General
Milling Corporation, 120 SCRA 804 [1983]).
Even if we disregard the candid statements of petitioners anent the absence of
business activity here and rely on the remaining statements of the complaint
below, still, when these averments are juxtaposed with the denials and
propositions of the answer submitted by private respondent, the supposed right
of petitioners to the symbol have thereby been controverted. This is not to say,
however, that the manner the complaint was traversed by the answer is
sufficient to tilt the scales of justice in favor of private respondent. Far from
it. What we are simply conveying is another basic tenet in remedial law that
before injunctive relief may properly issue, complainant's right or title must be
undisputed and demonstrated on the strength of one's own title to such a
degree as to unquestionably exclude dark clouds of doubt, rather than on the
weakness of the adversary's evidence, inasmuch as the possibility of irreparable
damage, without prior proof of transgression of an actual existing right, is no
ground for injunction being mere damnum absque injuria (Talisay-Silay Milling
Co., Inc. vs. CFI of Negros Occidental, 42 SCRA 577 [1971]; Francisco, Rules of
Court, Second ed., 1985, p. 225; 3 Martin, Rules of Court, 1986 ed., p. 82).
On the economic repercussion of this case, we are extremely bothered by the
thought of having to participate in throwing into the streets Filipino workers
engaged in the manufacture and sale of private respondent's "MARK" cigarettes
who might be retrenched and forced to join the ranks of the many unemployed
and unproductive as a result of the issuance of a simple writ of preliminary
injunction and this, during the pendency of the case before the trial court, not
to mention the diminution of tax revenues represented to be close to a quarter
million pesos annually. On the other hand, if the status quo is maintained, there
will be no damage that would be suffered by petitioners inasmuch as they are
not doing business in the Philippines.
With reference to the second and third issues raised by petitioners on the
lifting of the writ of preliminary injunction, it cannot be gainsaid that
respondent court acted well within its prerogatives under Section 6, Rule 58 of
the Revised Rules of Court:
Sec. 6. Grounds for objection to, or for motion of dissolution of
injunction. The injunction may be refused or, if granted ex
parte, may be dissolved, upon the insufficiency of the complaint as
shown by the complaint itself, with or without notice to the
adverse party. It may also be refused or dissolved on other
grounds upon affidavits on the part of the defendants which may
be opposed by the plaintiff also by affidavits. It may further be
 refused or, if granted, may be dissolved, if it appears after
hearing that although the plaintiff is entitled to the injunction,
the issuance or continuance thereof, as the case may be, would
cause great damage to the defendant while the plaintiff can be
fully compensated for such damages as he may suffer, and the
defendant files a bond in an amount fixed by the judge
conditioned that he will pay all damages which the plaintiff may
suffer by the refusal or the dissolution of the injunction. If it
appears that the extent of the preliminary injunction granted is
too great, it must be modified.
Under the foregoing rule, injunction may be refused, or, if granted, may be
dissolved, on the following instances:
(1) If there is insufficiency of the complaint as shown by the
allegations therein. Refusal or dissolution may be granted in this
case with or without notice to the adverse party.
(2) If it appears after hearing that although the plaintiff is
entitled to the injunction, the issuance or continuance thereof
would cause great damage to the defendant, while the plaintiff
can be fully compensated for such damages as he may suffer. The
defendant, in this case, must file a bond in an amount fixed by the
judge conditioned that he will pay all damages which plaintiff may
suffer by the refusal or the dissolution of the injunction.
(3) On the other grounds upon affidavits on the part of the
defendant which may be opposed by the plaintiff also affidavits.
Modification of the injunction may also be ordered by the court if
it appears that the extent of the preliminary injunction granted is
too great. (3 Martin, Rules of Court, 1986 ed., p. 99;
Francisco, supra, at p. 268.)
In view of the explicit representation of petitioners in the complaint that they
are not engaged in business in the Philippines, it inevitably follows that no
conceivable damage can be suffered by them not to mention the foremost
consideration heretofore discussed on the absence of their "right" to be
protected. At any rate, and assuming in gratia argumenti that respondent court
erroneously lifted the writ it previously issued, the same may be cured by appeal
and not in the form of a petition for certiorari (Clark vs. Philippine Ready Mix
Concrete Co., 88 Phil. 460 [1951]). Verily, and mindful of the rule that a writ of
preliminary injunction is an interlocutory order which is always under the control
of the court before final judgment, petitioners' criticism must fall flat on the
ground, so to speak, more so when extinction of the previously issued writ can
even be made without previous notice to the adverse party and without a
hearing (Caluya vs. Ramos, 79 Phil. 640 [1974]; 3 Moran, Rules of Court, 1970
ed., p. 81).
WHEREFORE, the petition is hereby DISMISSED and the Resolutions of the
Court of Appeals dated September 14, 1989 and November 29, 1989 are hereby
AFFIRMED.
SO ORDERED.
Bidin, J., concurs.
Davide, Jr., concurs in the result.
Romero, J. took no part.
 SECOND DIVISION

PHILIP MORRIS, INC., BENSON & G.R. No. 158589

HEDGES (CANADA), INC., and
FABRIQUES DE TABAC REUNIES, Present:
S.A., (now known as PHILIP MORRIS
PRODUCTS S.A.), PUNO, J., Chairperson,
Petitioners, SANDOVAL-GUTIERREZ,
CORONA,
AZCUNA, and
- versus - GARCIA, JJ.

FORTUNE TOBACCO CORPORATION, Promulgated:

Respondent.
June 27, 2006
x------------------------------------------------------------------------------------x
D E C I S I O N
GARCIA, J.:
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 May 30, 2003[2] denying petitioners motion
for reconsideration.
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, 1973by 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 PPOCertificate 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, aComplaint 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
thePhilippines 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 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 Orderxxx 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, 1993in G.R. No.
91332]. xxx.
xxx xxx xxx
After the termination of the trial on the merits xxx trial
court rendered its Decision xxx datedNovember 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 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 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. Philippine courts had been recognized, and rightly so, by the CA. It ought to be
166, as amended, or the Trademark Law, but also by Article 2 of the Paris pointed out, however, that the appellate court qualified its holding with a
Convention for the Protection of Industrial Property, otherwise known as statement, following G.R. No. 91332, entitled Philip Morris, Inc., et al. v. The
the Paris Convention. 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
In any event, petitioners point out that there is actual use of their of actual use in the Philippines.
trademarks in thePhilippines as evidenced by the certificates of registration of Thus clarified, what petitioners now harp about is their entitlement to
their trademarks. The marks MARK TEN and LARK were registered on the basis protection on the strength of registration of their trademarks in
[13] [14]
of actual use in accordance with Sections 2-A and 5(a) of R.A. No. 166, as the Philippines.
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 As we ruled in G.R. No. 91332,[18] supra, so it must be here.
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] Admittedly, the registration of a trademark gives the registrant,
such as petitioners,advantages denied non-registrants or ordinary users, like

Besides, petitioners argue that their not doing business in respondent. But while petitioners enjoy the statutory presumptions arising from

the Philippines, if that be the case, does not mean that cigarettes bearing their such registration,[19] i.e., as to the validity of the registration, ownership and the

trademarks are not available and sold locally. Citing Converse Rubber exclusive right to use the registered marks, they may not successfully sue on

Corporation v. Universal Rubber Products, Inc., [16] petitioners state that such the basis alone of their respective certificates of registration of trademarks.

availability and sale may be effected through the acts of importers and For, petitioners are still foreign corporations. As such, they ought, as a

distributors. condition to availment of the rights and privileges vis--vis their trademarks in

Finally, petitioners would press on their entitlement to protection even in the this country, to show proof that, on top of Philippine registration, their

absence of actual use of trademarks in the country in view of the Philippines country grants substantially similar rights and privileges to Filipino citizens

adherence to the Trade Related Aspects of Intellectual Property Rights or the pursuant to Section 21-A[20] of R.A. No. 166.

TRIPS Agreement and the enactment of R.A. No. 8293, or the Intellectual In Leviton Industries v. Salvador,[21] the Court further held that the

Property Code (hereinafter the IP Code), both of which provide that the fame aforementioned reciprocity requirement is a condition sine qua non to filing a

of a trademark may be acquired through promotion or advertising with no suit by a foreign corporation which, unless alleged in the complaint, would justify

explicit requirement of actual use in local trade or commerce. 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
Before discussing petitioners claimed entitlement to enforce trademark Court held that where the complainant is a national of a Paris Convention-
rights in thePhilippines, it must be emphasized that their standing to sue in 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.
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 countryabsent 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 provisions [25] 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-
A[29] 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 member-countries of the Paris Union does not alter
the legal situation.
In Emerald Garment Mfg. Corporation v. Court of Appeals ,[30] the Court
reiterated itsrulings in Sterling Products International, Inc. v. Farbenfabriken
[23]
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 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 notipso 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 onDecember 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 For one, as rightly concluded by the CA after comparing the trademarks
mark MARK for cigarettes is confusingly or deceptively involved in their entirety as they appear on the products, [46] the striking
similar with their duly registered MARK VII, MARK TEN and LARK marks dissimilarities are significant enough to warn any purchaser that one is
likewise for cigarettes. To them, the word MARK would likely cause confusion in different from the other. Indeed, although the perceived offending word MARK
the trade, or deceive purchasers, particularly as to the source or origin of is itself prominent in petitioners trademarks MARK VII and MARK TEN, the
respondents cigarettes. 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
The likelihood of confusion is the gravamen of trademark infringement. on the other features appearing in the labels. Only then would such discerning
[40]
But likelihood of confusion is a relative concept, the particular, and observer draw his conclusion whether one mark would be confusingly similar to
sometimes peculiar, circumstances of each case being determinative of its the other and whether or not sufficient differences existed between the
existence. Thus, in trademark infringement cases, more than in other kinds of marks.[47]
litigation, precedents must be evaluated in the light of each particular case. [41]
This said, the CA then, in finding that respondents goods cannot be
In determining similarity and likelihood of confusion, mistaken as any of the three cigarette brands of the petitioners, correctly
jurisprudence has developed twotests: the dominancy test and the holistic test. relied on the holistic test.
[42]
The dominancy test [43]
sets sight on the similarity of the prevalent features But, even if the dominancy test were to be used, as urged by the
of the competing trademarks that might cause confusion and deception, thus petitioners, but bearing in mind that a trademark serves as a tool to point out
constitutes infringement. Under this norm, the question at issue turns on distinctly the origin or ownership of the goods to which it is affixed, [48] the
whether the use of the marks involved would be likely to cause confusion or likelihood of confusion tantamount to infringement appears to be
mistake in the mind of the public or deceive purchasers. [44] farfetched. The reason for the origin and/or ownership angle is that unless the
In contrast, the holistic test[45] entails a consideration of the entirety of words or devices do so point out the origin or ownership, the person who first
the marks as applied to the products, including the labels and packaging, in adopted them cannot be injured by any appropriation or imitation of them by
determining confusing similarity. others, nor can the public be deceived.[49]

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.
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. CA [50]
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,
havingmanufactured 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-
A[54] 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 Last, but not least, we must reiterate that the
issue of trademark infringement is factual, with both the trial and appellate
(d) such act is done without the consent of the trademark
courts having peremptorily found allegations of infringement on the part of
registrant or assignee.
respondent to be without basis. As we said time and time again, factual
As already found herein, while petitioners have registered
determinations of the trial court, concurred in by the CA, are final and binding
the trademarks MARK VII,MARK TEN and LARK for cigarettes in the
on this Court.[57]
Philippines, prior actual commercial use thereof had not been proven. In fact,
petitioners judicial admission of not doing business in this country effectively
For lack of convincing proof on the part of the petitioners of actual use
belies any pretension to the contrary.
of their registered trademarks prior to respondents use of its mark and for
petitioners failure to demonstrate confusing similarity between said
Likewise, we note that petitioners even failed to support their claim that
trademarks, the dismissal of their basic complaint for infringement and the
their respective marks are well-known and/or have acquired goodwill in
concomitant plea for damages must be affirmed. The law, the surrounding
the Philippines so as to be entitled to protection even without actual use in this
circumstances and the equities of the situation call for this disposition.
country in accordance with Article 6bis [55] of the Paris Convention. As correctly
WHEREFORE, the petition is hereby DENIED. Accordingly, the assailed
found by the CA, affirming that of the trial court:
decision and resolution of the Court of Appeals are AFFIRMED.

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]
G.R. No. 159938 March 31, 2006
SHANGRI-LA INTERNATIONAL HOTEL MANAGEMENT, LTD., SHANGRI-
LA PROPERTIES, INC., MAKATI SHANGRI-LA HOTEL & RESORT, INC.,
AND KUOK PHILIPPINES PROPERTIES, INC., Petitioners,
vs.
DEVELOPERS GROUP OF COMPANIES, INC., Respondent.
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. Q-91-8476, 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
"Shangri-La" 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.
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.
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 "Shangri-La" 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-91-8476 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 sought to prohibit the petitioners, as
defendants a quo, from using the "Shangri-La" mark and "S" logo in their hotels
in the Philippines.
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.
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 decision5 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.
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 known as the "Carvajal Restaurant" until December 1982, when
respondent took over said restaurant business.
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.
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;
 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.
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
Costs against [petitioners].
SO ORDERED. [Words in brackets added.]
Therefrom, the petitioners went on appeal to the CA whereat their recourse
was docketed as CA G.R. SP No. 53351.
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:
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 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:
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;
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;
3. Whether the CA erred in overlooking petitioners' widespread prior use
of the "Shangri-La" mark and "S" logo in their operations;
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;
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;
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 non-forum 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
13
questions of law which must be distinctly set forth." 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
16
ownership.
While the present law on trademarks17 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
18
application for registration. 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
20
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, 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:
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
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,
29
1982) establishes [petitioners'] allegation that he got the idea there.
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:
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
One who has imitated the trademark of another cannot bring an action for
infringement, particularly against the true owner of the mark, because he would
be coming to court with unclean hands.33 Priority is of no avail to the bad faith
plaintiff. Good faith is required in order to ensure that a second user may not
merely take advantage of the goodwill established by the true owner.
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 6 bis(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.
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 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.
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 2-month 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. 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]
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.
CANCIO C. GARCIA
Associate Justice

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.
 SHANGRI-LA INTERNATIONAL HOTEL G.R. No. 159938 dated March 8, 1996 are hereby SET ASIDE. Accordingly,
MANAGEMENT, LTD., SHANGRI-LA the complaint for infringement in Civil Case No. Q-91-8476
PROPERTIES, INC., MAKATI SHANGRI-LA Present: is ordered DISMISSED.
HOTEL & RESORT, INC., AND KUOK
PHILIPPINES PROPERTIES, INC., PUNO, C.J., Chairperson, In its motion, respondent-movant DGCI raises the following grounds:
Petitioners, SANDOVAL-GUTIERREZ,
CORONA, 1. The certification of non-forum shopping submitted
AZCUNA, and by petitioners is insufficient;
GARCIA, JJ.
2. The word Shangri-La and S logo were adopted and
- versus - used by the Kuok Group as part of their corporate names
and the names of their hotels;

Promulgated: 3. Petitioners' claim of legal and beneficial ownership

of mark and logo is baseless and unwarranted;
DEVELOPERS GROUP OF COMPANIES,
INC., January 22, 2007 4. Change of theory from owner to one who may be
Respondent. damaged as entitled to relief is not allowable;
x-----------------------------------------------------------------------------------------
-x 5. Finding of registration in patent offices in different
countries around the world is inaccurate;

R E S O L U T I O N 6. DGCI's registration of the Shangri-La mark and the

S logo is valid because there was at least two months use
GARCIA, J.: thereof prior to application;

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
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' that DGCIs registration of the subject mark and logo was void due to the
failure to find any bad faith on the part of DGCI is existence of bad faith and the absence of the requisite 2-month prior use.
conclusive on the Supreme Court;
Despite movant's melodramatic imputation of an abandonment of the

9. DGCI's use of the subject marks in the Philippines is territoriality principle, theDecision actually upholds the principle but found that
entitled to protection under the territoriality principle of respondent DGCI was not entitled to protectionthereunder due to the double
trademarks.[2] 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,

The bulk of the aforementioned grounds is a mere rehash of movants previous suffice it to say that the latterhave never budged from seeking relief
arguments. While DGCI is correct in stating that a motion for reconsideration, as rightful, legal and/or beneficial owners of the mark and logo indispute.
by its very nature, may tend to dwell on issues already resolved in the The Decision ruled favorably on the veracity of the petitioners' claim:
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 xxx It would be a great injustice to adjudge the petitioners guilty
substantially plausible or compellingly persuasive to warrant the desired course of infringing a mark when they are actually the originator and
of action. creator thereof.

Nor can the petitioners' separate personalities from their mother

Considering that the grounds presently raised have been sufficiently corporation be an obstacle in the enforcement of their rights as
considered, if not squarelyaddressed, in the subject Decision, part of the Kuok Group of Companies and as official repository,
it behooves movant to convince the Court that certain findings or conclusions manager and operator of the subject mark and logo. Besides, R.A.
in the Decision are contrary to law. As it is, however, the instant motion does No. 166 did not require the party seeking relief to be the owner
not raise any new or substantial legitimate ground or reason to justify the 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
reconsideration sought.
supplied]
Movant DGCI would make capital on the alleged danger the subject Decision
might wreak upon Philippine trademark law, claiming that the decision in
Clearly, from the word Besides used in the context of
question would render nugatory the protectionintended by the trademark law to
the aforequoted paragraph, all that the Decisionsays is that even if petitioners
all Philippine trademark registrants. This assertion is a baseless and sweeping
were not the owners, they would still have a right of action under the law. There
statement. The interpretation of Republic Act No. 166 in the Decision does not
was never an attempt on their part at an eleventh-hour change of theory,
in any way diminish
as movant DGCI wishes to portray.
the protection afforded to valid trademark registrations made under said law.
It was glaringly obvious, however, from the testimony of movants own witness
WHEREFORE, the instant motion for reconsideration is DENIED for lack of
merit.

SO ORDERED.
E.Y. INDUSTRIAL SALES, INC. G.R. No. 184850 cancellation of COR No. 4-1997-121492, also for the trademark VESPA, issued
and ENGRACIO YAP, in favor of respondent Shen Dar Electricity and Machinery Co., Ltd. (Shen
Petitioners, Present:
Dar). The Decision of the IPO Director General, in effect, affirmed the
CORONA, C.J., Chairperson,
VELASCO, JR., Decision dated May 29, 2006[4] issued by the Director of the Bureau of Legal
- versus - LEONARDO - DE CASTRO, Affairs (BLA) of the IPO.
DEL CASTILLO, and
PEREZ, JJ. The Facts
SHEN DAR ELECTRICITY AND Promulgated:
MACHINERY CO., LTD.,
EYIS is a domestic corporation engaged in the production, distribution
Respondent. October 20, 2010
x---------------------------------------------------------------------------------------- and sale of air compressors and other industrial tools and equipment.
[5]
-x Petitioner Engracio Yap is the Chairman of the Board of Directors of EYIS. [6]

D E C I S I O N Respondent Shen Dar is a Taiwan-based foreign corporation engaged in

the manufacture of air compressors.[7]
VELASCO, JR., J.:

Both companies claimed to have the right to register the trademark

The Case VESPA for air compressors.

This Petition for Review on Certiorari under Rule 45 seeks to nullify and reverse From 1997 to 2004, EYIS imported air compressors from Shen Dar
the February 21, 2008 Decision[1] and the October 6, 2008 through sales contracts. In the Sales Contract dated April 20, 2002, [8] for
Resolution[2] rendered by the Court of Appeals (CA) in CA-G.R. SP No. 99356 example, Shen Dar would supply EYIS in one (1) year with 24 to 30 units of 40-
entitled Shen Dar Electricity and Machinery Co., Ltd. v. E.Y. Industrial Sales, ft. containers worth of air compressors identified in the Packing/Weight Lists
Inc. and Engracio Yap. 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
The assailed decision reversed the Decision dated May 25, 2007 [3] issued by the compressors.[9] There is no documentary evidence to show that such air
Director General of the Intellectual Property Office (IPO) in Inter Partes Case compressors were marked VESPA.
No. 14-2004-00084. The IPO Director General upheld Certificate of
Registration (COR) No. 4-1999-005393 issued by the IPO for the trademark On June 9, 1997, Shen Dar filed Trademark Application Serial No. 4-
VESPA in favor of petitioner E.Y. Industrial Sales, Inc. (EYIS), but ordered the 1997-121492 with the IPO for the mark VESPA, Chinese Characters and Device
for use on air compressors and welding machines.[10]

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. [12] Thereafter,
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]
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:
1. Whether the BLA Director erred in ruling that Shen Dar failed
to present evidence;
2. Whether the registration of EYIS application was proper
considering that Shen Dar was the first to file an application for
the mark; and
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. WHEREFORE, premises considered, the petition is
Certificate of Registration No. 4-1999-005393 for the mark GRANTED. Consequently, the assailed decision of the Director
VESPA for air compressor issued in favor of Appellee is hereby General of the Intellectual Property Office dated May 25, 2007
upheld. Consequently, Certificate of Registration No. 4-1997- is hereby REVERSED and SET ASIDE. In lieu thereof, a new one
121492 for the mark VESPA, Chinese Characters & Device for is entered: a) ordering the cancellation of Certificate of
goods air compressor and spot welding machine issued in favor of Registration No. 4-1999-005393 issued on January 19, 2004 for
Appellant is hereby ordered cancelled. the trademark VESPA in favor of E.Y. Industrial Sales, Inc.; b)
ordering the restoration of the validity of Certificate of
Let a copy of this Decision as well as the records of this Registration No. 4-1997-121492 for the trademark VESPA in
case be furnished and returned to the Director of Bureau of Legal favor of Shen Dar Electricity and Machinery Co., Ltd. No
Affairs for appropriate action. Further, let also the Directors of pronouncement as to costs.
the Bureau of Trademarks, the Administrative, Financial and
Human Resources Development Services Bureau, and the SO ORDERED.[21]
Documentation, Information and Technology Transfer Bureau be
furnished a copy of this Decision for information, guidance, and
records purposes.[19] 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
Shen Dar appealed the above decision of the IPO Director General to
may be properly considered. The CA also enunciated that the IPO failed to
the CA where Shen Dar raised the following issues:
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
1. Whether Shen Dar is guilty of forum shopping;
application for the same mark. The CA further ruled that Shen Dar should be
2. Whether the first-to-file rule applies to the instant case;
considered to have prior use of the mark based on the statements made by the
3. Whether Shen Dar presented evidence of actual use;
parties in their respective Declarations of Actual Use. The CA added that EYIS
4. Whether EYIS is the true owner of the mark VESPA;
is a mere importer of the air compressors with the mark VESPA as may be
5. Whether the IPO Director General erred in cancelling Shen Dars
gleaned from its receipts which indicated that EYIS is an importer, wholesaler
COR No. 4-1997-121492 without a petition for cancellation; and
and retailer, and therefore, cannot be considered an owner of the mark. [22]
6. Whether Shen Dar sustained damages.[20]

EYIS filed a motion for reconsideration of the assailed decision which

In the assailed decision, the CA reversed the IPO Director General and
the CA denied in the assailed resolution.
ruled in favor of Shen Dar.The dispositive portion states:

Hence, the instant appeal.

 Issues 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
EYIS and Yap raise the following issues in their petition: subject to exceptions.

A. Whether the Director General of the IPO correctly In New City Builders, Inc. v. National Labor Relations Commission ,[24] the
upheld the rights of Petitioners over the trademark Court ruled that:
VESPA.

We are very much aware that the rule to the effect that
B. Whether the Director General of the IPO can, under
this Court is not a trier of facts admits of exceptions. As we have
the circumstances, order the cancellation of Respondents
stated in Insular Life Assurance Company, Ltd. vs. CA :
certificate of registration for VESPA, which has been
fraudulently obtained and erroneously issued.
[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
C. Whether the Honorable Court of Appeals was
and does not normally undertake the re-examination of the
justified in reversing the findings of fact of the IPO,
evidence presented by the contending parties during the
which affirm the rights of Petitioner EYIS over the
trial of the case considering that the findings of facts of
trademark VESPA and when such findings are supported by
the CA are conclusive and binding on the Court. However,
the evidence on record.
the Court had recognized several exceptions to this rule,
to wit: (1) when the findings are grounded entirely on
D. Whether this Honorable Court may review questions
speculation, surmises or conjectures; (2) when the
of fact considering that the findings of the Court of
inference made is manifestly mistaken, absurd or
Appeals and the IPO are in conflict and the conclusions of
impossible; (3) when there is grave abuse of discretion; (4)
the appellee court are contradicted by the evidence on
when the judgment is based on a misapprehension of facts;
record.[23]
(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
The Ruling of the Court admissions of both the appellant and the appellee; (7) when
the findings are contrary to the trial court; (8) when the
The appeal is meritorious. findings are conclusions without citation of specific
evidence on which they are based; (9) when the facts set
First Issue: forth in the petition as well as in the petitioners main and
Whether this Court may review the questions of fact presented 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:
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.
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.
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 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, 1995[34] 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 its sales invoices that it is an importer, wholesaler and
retailer is restrictive and would preclude its being a manufacturer.
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.
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:
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. The term any person encompasses the true owner of the
markthe prior and continuous user.
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]
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
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.
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 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
x[38]
 commercial use in the Philippines of the mark VESPA prior to its
On the other hand, Shen Dar failed to refute the evidence cited by the filing of a trademark application in 9 June 1997.[39]

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 As such, EYIS must be considered as the prior and continuous user of

the ruling of the BLA: the mark VESPA and its true owner. Hence, EYIS is entitled to the registration
of the mark in its name.
[Shen Dar] avers that it is the true and rightful owner of WHEREFORE, the petition is hereby GRANTED. The CAs February 21, 2008
the trademark VESPA used on air compressors. The thrust of Decision and October 6, 2008 Resolution in CA-G.R. SP No.
[Shen Dars] argument is that respondent E.Y. Industrial Sales, 99356 are hereby REVERSED and SET ASIDE. The Decision dated May 25,
Inc. is a mere distributor of the VESPA air compressors. We
2007 issued by the IPO Director General in Inter Partes Case No. 14-2004-
disagree.
00084 and the Decision dated May 29, 2006 of the BLA Director of the IPO
This conclusion is belied by the evidence. We have gone are hereby REINSTATED.
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 No costs.
these documents referred to a VESPA air compressor. Instead, it
simply describes the goods plainly as air compressors which is
SO ORDERED.
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 G.R. No. 194307 November 20, 2013
Bureau. The document is also not signed by [Shen Dar]. The
agreement was not even drafted in the letterhead of either [Shen BIRKENSTOCK ORTHOPAEDIE GMBH AND CO. KG (formerly
Dar] nor [sic] respondent registrant. Our only conclusion is that BIRKENSTOCK ORTHOPAEDIE GMBH),Petitioner,
[Shen Dar] was not able to prove to be the owner of the VESPA
mark by appropriation. Neither was it able to prove actual
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
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
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-in-interest, 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 4-2006-010273 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
Aggrieved, petitioner appealed to the IPO Director General.
The Ruling of the IPO Director General
17
In his Decision 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
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 Resolution 26 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 petition is meritorious.
A. Admissibility of Petitioners Documentary Evidence.
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.
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."
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
37
236 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 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 ESTELA M. PERLAS-BERNABE
December 22, 2009 of the IPO Director General is hereby REINSTATED. Associate Justice

SO ORDERED.