FIRST DIVISION

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

UNNO COMMERCIAL ENTERPRISES, INCORPORATED, Petitioner, v. GENERAL MILLING CORPORATION and
TIBURCIO S. EVALLE, in his capacity as Director of Patents,Respondents.
Salem & Dionisio Law Office for Petitioner.
Siquion Reyna, Montecillo, Bello & Ongsiako for Private Respondent.

SYLLABUS

1. MERCANTILE LAW; TRADEMARK; RIGHT TO REGISTER IT, BASED ON OWNERSHIP. 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. Under the Trademark Law only
the owner of the trademark, trade name or service mark used to distinguish his goods, business or service from the goods,
business or service of others is entitled to register the same. A local importer, however, may make application for the
registration of a foreign trademark, trade name or other mark of ownership.
2. ID.; ID.; OWNER; SCOPE UNDER THE TRADEMARK LAW. 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.
3. ID.; ID.; DEED OF ASSIGNMENT; PROOF OF OWNERSHIP. 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, Bakers Joy, Choice, Red Bowl, All Montana and Dollar) all of which were assigned by it to respondent General Milling
Corporation.
4. ID.; ID.; OWNERSHIP NOT ACQUIRED BY REGISTRATION ALONE. Petitioners 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. 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.
Registration does not perfect a 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.
5. REMEDIAL LAW; EVIDENCE; FINDINGS OF FACT BY THE DIRECTOR OF PATENTS; CONCLUSIVE IF SUPPORTED BY
SUBSTANTIAL EVIDENCE. It is well-settled that we are precluded from making further inquiry, since the findings of fact of
the Director of Patents in the absence of any showing that there was grave abuse of discretion is binding on us and the
findings of facts by the Director of Patents are deemed conclusive in the Supreme Court provided that they are supported by
substantial evidence. Petitioner has failed to show that the findings of fact of the Director of Patents are not substantially
supported by evidence nor that any grave abuse of discretion was committed.
6. MERCANTILE LAW; DIRECTOR OF PATENTS; AUTHORITY TO ORDER CANCELLATION OF A REGISTERED MARK OR
TRADENAME IN AN INTER PARTES CASE. Finally, the Court finds without merit petitioners argument that the Director of
Patents could not order the cancellation of its certificate of registration in an interference proceeding and that the question of
whether or not a certificate of registration is to be cancelled should have been brought in cancellation proceedings. Under
Rule 178 of the Rules of the Patent Office in 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 ownership in an inter partes case, such as the
interference proceeding at bar.

DECISION

TEEHANKEE, J.:

The Court affirms respondent Director of Patents 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 apply for its registration and an importer, broker, indentor or
distributor acquires no rights to the trademark of the goods he is dealing with in the absence of a valid transfer or
assignment of the trade mark.
On December 11, 1962, respondent General Milling Corporation filed an application for the registration of the trademark "All
Montana" to be used in the sale of wheat flour. In view of the fact, that the same trademark was previously registered in
favor of petitioner Unno Commercial Enterprises, Inc., the Chief Trademark Examiner of the Philippines Patent Office declared
an interference proceeding 1 between respondent corporations application (Serial No. 9732), as Junior/Party-Applicant, and
petitioner companys registration (Registration No. 9589), as Senior Party-Applicant, docketed in the Philippines Patent Office
as Inter Partes Case No. 313, to determine which party has previously adopted and used the trademark "All Montana."
Respondent General Milling Corporation, in its application for registration, alleged that it started using the trademark "All
Montana" on August 31, 1955 and subsequently was licensed to use the same by Centennial Mills, Inc. by virtue of a deed of
assignment executed on September 20, 1962. On the other hand, petitioner Unno Commercial Enterprises, Inc. argued that
the same trademark had been registered in its favor on March 8, 1962 asserting that it started using the trademark on June
30, 1956, as indentor or broker for S.H. Huang Bros. & Co., a local firm.chanrobles law library : red
The Director of Patents, after hearing, ruled in favor of respondent General Milling Corporation and rendered its decision as
follows:jgc:chanrobles.com.ph
"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 of the trademark ALL MONTANA, but because it is primarily
geographically descriptive, the application is herein remanded to the Chief Trademark Examiner for proper proceeding before
issuance of the certificate of registration.
"The certificate of registration issued to the Senior Party is ordered cancelled.
"IT IS SO ORDERED."cralaw virtua1aw library
After its motion for reconsideration was denied, petitioner brought the instant petition seeking the reversal of the decision
and praying that it be declared the owner and prior user of the trademark "All Montana" on wheat flour.
Petitioner based its claim of ownership over the trademark in question by the fact that it acted as an indentor or broker for S.
H. Huang Bros. & Co., a local importer of wheat flour, offering as evidence the various shipments, documents, invoices and
other correspondence of Centennial Mills, Inc., shipping thousand of bags of wheat flour bearing the trademark "All Montana"
to the Philippines. Petitioner argued that these documents, invoices and correspondence proved the fact that it has been
using the trademark "All Montana" as early as 1955 in the concept of an owner and maintained that anyone, whether he is
only an importer, broker or indentor can appropriate, use and own a particular mark of its own choice although he is not the
manufacturer of the goods he deals with. Relying on the provisions of Section 2-A of the Trademarks Law 2 (Republic Act
166), petitioner insists that "the appropriation and ownership of a particular trademark is not merely confined to producers or
manufacturers but likewise to anyone who lawfully deals in merchandise who renders any lawful service in commerce, like
petitioner in the case at bar." 3
The right to register trademark is based on ownership. 4 When the applicant is not the owner of the trademark being applied
for, he has no right to apply for the registration of the same. 5 Under the Trademark Law only the owner of the trademark,
trade name or service mark used to distinguish his goods, business or service from the goods, business or service of others is
entitled to register the same. 6
The term owner does not include the importer of the goods bearing the trademark, trade name, service mark, or other mark
of ownership, unless such importer is actually the owner thereof in the country from which the goods are imported. A local
importer, however, may make application for the registration of a foreign trademark, trade name or service mark if he is duly
authorized by the actual owner of the name or other mark of ownership. 7
Thus, this Court, has on several occasions ruled that where the 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. 8
Moreover, the provision relied upon by petitioner (Sec. 2-A, Rep. Act No. 166) allows one "who lawfully produces or deals in
merchandise . . . or who engages in any lawful business or who renders any lawful service in commerce, by actual use
thereof . . . (to) appropriate to his exclusive use a trademark, or a service mark not so appropriated by another." In the case
at bar, the evidence showed that the trademark "All Montana" was owned and registered in the name of Centennial Mills, Inc.
which later transferred it to respondent General Milling Corporation by way of a deed of assignment. It is undisputed that way

back in March, 1955, Centennial Mills, Inc. under the tradename Wenatchee Milling Co., exported flour to the Philippines,
through its distributor, herein petitioner Unno Commercial Enterprises, Inc. which acted as indentor or broker for the firm S.
H. Huang Bros. & Co. However, because of increased taxes and subsidies, Centennial Mills discontinued shipments of flour in
the Philippines and eventually sold its brands for wheat flour, including "All Montana" brand to respondent General Milling
Corporation in consideration of 1,000 shares of stock of respondent corporation with a par value of P100.00 per share or a
total of P100,000.00. Respondent General Milling Corporation, since the start of the operation in 1961 of its flour mills
located in Lapu-lapu City, Cebu has been manufacturing and selling "All Montana" flour in the Philippines.chanrobles law
library : red
As against petitioners 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, Bakers
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 petitioners 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 Partys 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."cralaw virtua1aw
library
Thus, petitioners 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 registrants ownership of the
trademark and of the exclusive right to the use thereof. 10 Registration does not perfect a trademark right. 11 As conceded
itself by petitioner, evidence may be presented to overcome the presumption. Prior use by one will controvert a claim of legal
appropriation by subsequent users. In the case at bar, the Director of Patents found that "ample evidence was presented in
the record that Centennial Mills, Inc. was the owner and prior user in the Philippines of the trademark All Montana through a
local importer and broker. Use of a trademark by a mere importer, indentor or exporter (the Senior Party herein) inures to
the benefit of the foreign manufacturer whose goods are identified by the trademark. The Junior Party has hereby established
a continuous chain of title and, consequently, prior adoption and use" and ruled that "based on the facts established, it is
safe to conclude that the Junior Party has satisfactorily discharged the burden of proving priority of adoption and use and is
entitled to registration." It is well-settled that we are precluded from making further inquiry, since the findings of fact of the
Director of Patents in the absence of any showing that there was grave abuse of discretion is binding on us 12 and the
findings of facts by the Director of Patents are deemed conclusive in the Supreme Court provided that they are supported by
substantial evidence. 13 Petitioner has failed to show that the findings of fact of the Director of Patents are not substantially
supported by evidence nor that any grave abuse of discretion was committed.cralawnad
Finally, the Court finds without merit petitioners argument that the Director of Patents could not order the cancellation of its
certificate of registration in an interference proceeding and that the question of whether or not a certificate of registration is
to be cancelled should have been brought in cancellation proceedings. Under Rule 178 of the Rules of the Patent Office in
Trademark Cases, 14 the Director of Patents is expressly authorized to order the cancellation of a registered mark or trade
name or name or other mark of ownership in an inter partes case, such as the interference proceeding at bar. 15
WHEREFORE, the appealed decision is hereby affirmed. No costs.
Melencio-Herrera, Plana, Vazquez, Relova and Gutierrez, Jr., JJ., concur.

SECOND DIVISION
[G.R. No. 75420. November 15, 1991.]
KABUSHI KAISHA ISETAN, also known and trading as ISETAN CO., LTD., Petitioner, v. THE INTERMEDIATE
APPELLATE COURT, THE DIRECTOR OF PATENTS, and ISETANN DEPARTMENT STORE, INC. respondents.
Agcaoili & Associates for Petitioner.
Cruz, Durian, Agabin, Atienza, Alday & Tuason for Private Respondent.

SYLLABUS

1. REMEDIAL LAW; ACTIONS; APPEALS; STRINGENT APPLICATION OF PERIOD OF APPEAL APPLIED IN THE ABSENCE OF
COMPELLING EQUITABLE CONSIDERATIONS FOR RELAXATION OF RULE; CASE AT BAR. The Court dismissed the petition in
a resolution dated July 8, 1987, on the ground that it was filed fourteen (14) days later. However, on motion for
reconsideration, whereby the petitioner appealed to this Court on equitable grounds stating that it has a strong and
meritorious case, the petition was given due course in a resolution dated May 19, 1988 to enable us to examine more fully
any possible denial of substantive justice. The parties were then required to submit their memoranda. After carefully
considering the records of this case, we reiterate our July 8, 1987 resolution dismissing the petition. There are no compelling
equitable considerations which call for the application of the rule enunciated in Serrano v. Court of Appeals (139 SCRA 179
[1985]) and Orata v. Intermediate Appellate Court, Et. Al. (185 SCRA 148 [1990]) that considerations of substantial justice
manifest in the petition may relax the stringent application of technical rules so as not to defeat an exceptionally meritorious
petition.
2. ID.; EVIDENCE; FINDINGS OF FACT OF THE PATENT OFFICE, UPHELD ON APPEAL. Regarding the petitioners 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. 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.
3. MERCANTILE LAW; TRADEMARKS; ACTUAL USE, PREREQUISITE TO ACQUISITION OF OWNERSHIP. A fundamental
principle of Philippine Trademarks 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.
4. ID.; ID.; ID.; PRIOR REGISTRANT CANNOT CLAIM EXCLUSIVE USE OF TRADENAME. A prior registrant cannot claim
exclusive use of the trademark unless it uses it in commerce.
5. ID.; ID.; ID.; MERE ADOPTION OF A PARTICULAR TRADENAME WITHOUT ACTUAL USE THEREOF, INSUFFICIENT; CASE AT
BAR. 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 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 Petroleum Co. v. Consumers Co.
of Ill. 169 F 2d 153).
6. ID.; PARIS CONVENTION FOR THE PROTECTION OF INDUSTRIAL PROPERTY; DOES NOT AUTOMATICALLY EXCLUDE OTHER
COUNTRIES FROM USING A TRADENAME USED IN ONE COUNTRY. The Paris Convention for the Protection of Industrial
Property does not automatically exclude all countries of the world have signed it from using a tradename which happens to
be used in one country.

DECISION

GUTIERREZ, JR., J.:

This is a petition for review on certiorari which seeks to set aside (1) the decision of the Court of Appeals dated June 2,
1986 in AC-G.R. SP No. 008873 entitled "Kabushi Kaisha Isetan, also known and trading as Isetan Company Limited v.
Isetann Department Store, Inc." dismissing the petitioners appeal from the decision of the Director of Patents; and (2) the
Resolution dated July 11, 1986 denying the petitioners motion for reconsideration.

As gathered from the records, the facts are as follows:chanrob1es virtual 1aw library
Petitioner Kabushi Kaisha Isetan is a foreign corporation organized and existing under the laws of Japan with business
address at 14-1 Shinjuku, 3-Chrome, Shinjuku, Tokyo, Japan. It is the owner of the trademark "Isetan" and the "Young
Leaves Design."
The petitioner alleges that it first used the trademark Isetan on November 5, 1936. It states that the trademark is a
combination of "Ise" taken from "Iseya" the first name of the rice dealer in Kondo, Tokyo in which the establishment was first
located and "Tan" which was taken from "Tanji Kosuge the First." The petitioner claims to have expanded its line of business
internationally from 1936 to 1974. The trademark "Isetan" and "Young Leaves Design" were registered in Japan covering
more than 34 classes of goods. On October 3, 1983, the petitioner applied for the registration of "Isetan" and "Young Leaves
Design" with the Philippine Patent Office under Permanent Serial Nos. 52422 and 52423 respectively, (Rollo, p. 43)
Private respondent, Isetann Department Store, on the other hand, is a domestic corporation organized and existing under the
laws of the Philippines with business address at 423-430 Rizal Avenue, Sta. Cruz, Manila, Philippines.chanrobles
virtualawlibrary chanrobles.com:chanrobles.com.ph
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 alter, 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. Nos. 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-4717 and SR-4701 stating among others that:jgc:chanrobles.com.ph
". . . 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."cralaw virtua1aw library
The petitioner further alleged that private respondents act of registering a trademark which is exactly the same as its trade
mark 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 petitioners reputation, thereby causing great and irreparable injury
and damage to it (Rollo, p. 521). It argued that both the petitioners and respondents 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 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 SECs Hearing Officer,
Atty. Joaquin C. Garaygay.chanrobles.com : virtual law library
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 petitioners trademark and
tradename have never been used in commerce on the petitioners 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:jgc:chanrobles.com.ph

"WHEREFORE, all the foregoing considered, this Office is constrained to hold that the herein Petitioner has not successfully
made out a case of cancellation. Accordingly, Inter Partes Cases Nos. 1460 and 1461 are, as they are hereby, DISMISSED.
Hence, Respondents Certificate of Supplemental Registration No. 4717 issued on May 20, 1980 covering the tradename
ISETANN DEPT. STORE, INC. & FLOWER DESIGN are, as they are hereby ordered to remain in full force and effect for the
duration of their term unless sooner or later terminated by law.
The corresponding application for registration in the Principal Register of the Trademark and of the tradename aforesaid are
hereby given due course.
Let the records of these cases be transmitted to the Trademark Examining Division for appropriate action in accordance with
this Decision."cralaw virtua1aw library
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 petitioners motion for reconsideration was likewise denied in a resolution dated July 11, 1986.
Hence, this petition.
Initially, the Court dismissed the petition in a resolution dated July 8, 1987, on the ground that it was filed fourteen (14) days
later. However, on motion for reconsideration, whereby the petitioner appealed to this Court on equitable grounds stating that
it has a strong and meritorious case, the petition was given due course in a resolution dated May 19, 1988 to enable us to
examine more fully any possible denial of substantive justice. The parties were then required to submit their memoranda.
(Rollo, pp. 2-28; Resolution, pp. 271; 453).
After carefully considering the records of this case, we reiterate our July 8, 1987 resolution dismissing the petition. There are
no compelling equitable considerations which call for the application of the rule enunciated in Serrano v. Court of Appeals
(139 SCRA 179 [1985]) and Orata v. Intermediate Appellate Court, Et. Al. (185 SCRA 148 [1990]) that considerations of
substantial justice manifest in the petition may relax the stringent application of technical rules so as not to defeat an
exceptionally meritorious petition.chanrobles lawlibrary : rednad
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 petitioners 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:jgc:chanrobles.com.ph
"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-judicial body. 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;
SECTION 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."cralaw virtua1aw
library
The petitioner received a copy of the Court of Appeals resolution denying 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 and
received by us on August 8, 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 Appeals decision.
Regarding the petitioners 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 Trademarks 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.chanrobles virtual lawlibrary
The Trademark Law, Republic Act No. 166, as amended, under which this case was heard and decided
provides:jgc:chanrobles.com.ph
"SECTION 2. What are registrable. Trademarks, tradenames and service marks owned by persons, corporation,
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).
SECTION 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 this law. (As amended by R.A. No. 638)"
These provisions have been interpreted in Sterling Products International, Inc. v. Farbenfabriken Bayer Actiengesellschaft (27
SCRA 1214 [1969]) in this way:jgc:chanrobles.com.ph
"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.
x

". . . 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 traders right to protection in the
trade he has built up and the goodwill he has accumulated from use of the trademark. . . . ."cralaw virtua1aw library
In fact, a prior registrant cannot claim exclusive use of the trademark unless it uses it in commerce.
We rule in Pagasa Industrial Corporation v. Court of Appeals (118 SCRA 526 [1982]):jgc:chanrobles.com.ph
"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 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.cralawnad
There can be no question from the records that the petitioner has never used its tradename or trademark in the Philippines.
The petitioners witnesses, Mr. Mayumi Takayama and Mr. Hieoya Murakami, admitted that:chanrob1es virtual 1aw library
1) The petitioners company is not licensed to do business in the Philippines;
2) The petitioners trademark is not registered under Philippine law; and

3) The petitioners 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, petitioners 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
petitioners products, refers to advertising in Japan or other foreign places. No promotional activities have been undertaken
in the Philippines, by the petitioners own admission.
Any goodwill, reputation, or knowledge regarding the name Isetann is purely the work of the privateRespondent. Evidence
was introduced on the extensive promotional activities of the privateRespondent.
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 products 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 no 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:jgc:chanrobles.com.ph
"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.chanrobles law library
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 Petroleum 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 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:chanrob1es virtual 1aw library
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 Isetanns efforts. There is no
showing that the Japanese firms registration in Japan or Hongkong has any influence whatsoever on the Filipino buying
public.chanrobles virtual lawlibrary
WHEREFORE, premises considered, the petition is hereby DISMISSED.

SO ORDERED.

THIRD DIVISION
[G.R. No. 91332. July 16, 1993.]
PHILIP MORRIS, INC., BENSON & HEDGES (CANADA), INC., AND FABRIQUES OF TABAC REUNIES,
S.A., Petitioners, v. THE COURT OF APPEALS AND FORTUNE TOBACCO CORPORATION, Respondents.
Quasha, Asperilla, Ancheta, Pea & Nolasco Law Office, for Petitioners.
Teresita Gandionco-Oledan for Private Respondent.

SYLLABUS

1. MERCANTILE LAW; TRADEMARK LAW; FOREIGN CORPORATION NOT ENGAGED IN LOCAL COMMERCE, MAY SUE FOR
INFRINGEMENT. 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 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 Philippine legal jurisprudence.
2. ID.; ID.; ID.; ALLEGATION OF PERSONALITY TO SUE, MANDATORY REQUIREMENT. On May 21, 1984, Section 21-A, the
provision under consideration, was qualified by this Court in La Chemise Lacoste S.A. v. 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
especially so when they asserted that the main action for infringement is anchored on an isolated transaction (Atlantic Mutual
Ins. Co. v. Cebu Stevedoring Co., Inc., 17 SCRA 1037 [1966], 1 Regalado, Remedial Law Compendium, Fifth Rev. Ed., 1988,
p. 103)
3. ID.; ID.; ID.; ID.; CASE AT BAR. 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.
4. ID.; ID.; ACTUAL COMMERCIAL USE OF TRADEMARK, NECESSARY FOR ACQUISITION OF OWNERSHIP THEREOF. 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. Yet petitioners perception along this line is nonetheless resolved by Sections 2 and 2-A of
the Trademark Law which speak loudly about the necessity of actual commercial use of the trademark in the local forum.
5. INTERNATIONAL LAW; RULES ON INTERNATIONAL LAW GIVEN AN EQUAL STANDING, NOT SUPERIOR, TO NATIONAL
LEGISLATIVE ENACTMENTS; CASE AT BAR. Following universal acquiescene 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 v. 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. 6).
6. REMEDIAL LAW; PROVISIONAL REMEDIES; PRELIMINARY INJUNCTION; RELUCTANCE TO ISSUE WRIT, DEFERENCE TO
LOWER COURTS OVER ASSAILED INTERLOCUTORY ORDERS. 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 a
mere interlocutory order (Villarosa v. 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.
7. ID.; ID.; ID.; EXISTENCE OF RIGHT TO BE PROTECTED, INDISPENSABLE; NOT MET IN CASE AT BAR. More telling are
the allegations of petitioners in their complaint as well as in the very petition filed with this Court 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 be 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 v. 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. v. General Milling Corporation, 120 SCRA 804 [1983]).
8. ID.; ID.; ID.; PRIOR PROOF OF TRANSGRESSION OF ACTUAL EXISTING RIGHT, INDISPENSABLE REQUIREMENT. What
we are simply conveying is another basic tenet in remedial law that before injunctive relief may properly issue, complainants
right or title must be undisputed and demonstrated on the strength of ones own title to such a degree as to unquestionably
exclude dark clouds of doubt, rather than on the weakness of the adversarys evidence, inasmuch as the possibility of
irreparable damages, 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. v. 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).
9. ID.; ID.; ID.; GROUNDS FOR DENIAL AND/OR DISSOLUTION OF WRIT. Under Section 6, Rule 58 of the Revised Rules of
Court, 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 the plaintiff may suffer by the refusal or the dissolution of the injunction. (3) On other grounds
upon affidavits on the part of the defendant which may be opposed by the plaintiff also by 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.)
10. ID.; ID.; ID.; FOREIGN CORPORATION NOT DOING BUSINESS IN THE PHILIPPINES NOT ENTITLED TO ISSUANCE OF
WRIT OF PRELIMINARY INJUNCTION IN THE ABSENCE OF THEIR RIGHT TO BE PROTECTED; CASE AT BAR. 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. 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.
11. ID.; ID.; ID.; ERRONEOUS LIFTING OF WRIT MAY BE CURED BY APPEAL AND NOT BY PETITION FOR CERTIORARI.
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 v. Philippine Ready Mix Concrete Co., 88 Phil. 460 [1951]).
12. ID.; ID.; ID.; WRIT MAY BE DISSOLVED WITHOUT PREVIOUS NOTICE TO ADVERSE PARTY AND WITHOUT HEARING.
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 v.
Ramos, 79 Phil. 640 [1947]; 3 Moran, Rules of Court, 1970 ed., p. 81).

DECISION

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.chanrobles
lawlibrary : rednad
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 of 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 of
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 of "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 AC-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:chanrob1es virtual 1aw library
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
defendants "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
the same 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 by 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 defendants 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 defendants
application, the Court is of the opinion and so holds that issuance of 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", defendants "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 defendants 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 benign 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
advertising its "MARK" cigarettes and now comes defendant who countered and refused to be restrained claiming that it has
been authorized temporarily by the Bureau of Internal Revenue under certain conditions to do so as aforestated coupled by
its pending application for registration of trademark "MARK" in the Philippine Patent Office. This circumstance in itself has
created a dispute between the parties which to the mind of the Court does not warrant the issuance of a writ of preliminary
injunction.
"It is well-settled principle that courts of equity will refuse an application for the injunctive remedy where the principle of law
on which the right to preliminary injunction rests is disputed and will admit of doubt, without a decision of the court of law
establishing such principle although satisfied as to what is a correct conclusion of law upon the facts. The fact, however, that
there is no such dispute or conflict does not in itself constitute a justifiable ground for the court to refuse an application for
the injunctive relief." (Hackensack Impr. Commn. v. New Jersey Midland P. Co., 22 N.J. Eg. 94.)chanrobles virtual lawlibrary
Hence, the status quo existing between the parties prior to the filing of this case should be maintained. For after all, an
injunction, without reference to the parties, should not be violent, vicious nor even vindictive. (pp. 338-341, Rollo in G.R. No.
91332.)
In the process of denying petitioners subsequent motion for reconsideration of the order denying issuance of the requested
writ, the court of origin took cognizance of the certification executed on January 30, 1984 by the Philippine Patent Office
attesting to the fact that private respondents application for registration is still pending appropriate action. Apart from this
communication, what prompted the trial court judge to entertain the idea of prematurity and untimeliness of petitioners
application for a writ of preliminary injunction was the letter from the Bureau of Internal Revenue dated February 2, 1984
which reads:chanrob1es virtual 1aw library
MRS. TERESITA GANDIONGCO OLEDAN
Legal Counsel
Fortune Tobacco Corporation
Madam:chanrob1es virtual 1aw library
In connection with your letter dated January 25, 1984, reiterating your query as to whether your label approval automatically
expires or becomes null and void after six (6) months if the brand is not accepted and by the patent office, please be
informed that no provision in the Tax Code or revenue regulation that requires an applicant to comply with the
aforementioned condition in order that his label approved will remain valid and existing.
Based on the document you presented, it shows that registration of this particular label is still pending resolution by the
Patent Office. These being so, you may therefore continue with the production of said brand of cigarette until this Office is
officially notified that the question of ownership of "MARK" brand is finally resolved.
Very truly yours,
TEODORO D. PAREO
Chief, Manufactured Tobacco
Tax Division
TAN-P6531-D 2830-A-6
(p. 348, Rollo.)
It appears from the testimony of Atty. Enrique Madarang, Chief of the Trademark Division of the then Philippine Patent Office
that Fortunes 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 Fortunes 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:chanrob1es
virtual 1aw library
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 defendants 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 of a writ of
preliminary injunction. The petition was duly heard, and thereafter the matter was assiduously discussed lengthily and
resolved against plaintiffs in a 15-page Order issued by the undersigneds 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 defendants 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, Rollo in G.R. No. 91332.)chanrobles law library : red
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 origins 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:chanrob1es virtual 1aw library
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 "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 respondents documentary evidence provides the reasons neutralizing or weakening their probative values. The
penultimate paragraph of Commissioner Diaz letter of authority reads:jgc:chanrobles.com.ph
"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/trademarks."cralaw virtua1aw library

while Director Sandicos certification contained similar conditions as follows:jgc:chanrobles.com.ph

"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."cralaw virtua1aw
library
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. v. 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. v. Quintillan, supra; Ortigas & Co. v. 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 v. Cuneta, 119 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 v. 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. v. State House, 151 SCRA 636). Petitioners right of exclusivity to their
registered trademarks being clear and beyond question, the respondent courts denial of the prohibitive writ constituted
excess of jurisdiction and grave abuse of discretion. If the lower court does not grant preliminary injunction, the appellate
court may grant the same. (Service Specialists, Inc. v. Sheriff of Manila, 145 SCRA 139). (pp. 165-167, Rollo in G.R. No.
91332.)chanrobles lawlibrary : rednad
After private respondent Fortunes 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:chanrob1es virtual 1aw library
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:chanrob1es virtual 1aw library
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 respondents 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:chanrob1es virtual 1aw library
SECTION 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 Philippine legal jurisprudence.
Indeed, it was stressed in General Garments Corporation v. Director of Patents (41 SCRA 50 [1971]) by then Justice (later
Chief Justice) Makalintal that:chanrob1es virtual 1aw library
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."cralaw virtua1aw library
Petitioner argues that Section 21-A militates against respondents 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. v. 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. v. 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.chanrobles.com:cralaw:red
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:chanrob1es virtual 1aw library
(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 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 the necessity of actual commercial use of the trademark in the local forum:chanrob1es virtual 1aw library
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 v. Intermediate Appellate Court, 203 SCRA 583 [1991], at pp. 589-590; italics ours.)
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 v. 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).chanrobles.com.ph :
virtual law library
The aforequoted basic provisions of our Trademark Law, according to Justice Gutierrez, Jr., in Kabushi Kaisha Isetan v.
Intermediate Appellate Court (203 SCRA 583 [1991]), have been construed in this manner:chanrob1es virtual 1aw library
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.
x

These provisions have been interpreted in Sterling Products International, Inc. v. Farbenfabriken Bayer Actiengesellschaft (27
SCRA 1214 [1969]) in this way:jgc:chanrobles.com.ph
"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.
x

". . . 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 traders right to protection in the
trade he has built up and the goodwill he has accumulated from use of the trademark . . ."cralaw virtua1aw library
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]):jgc:chanrobles.com.ph
"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 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. (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 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.
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 a mere interlocutory order
(Villarosa v. 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 Felicianos opinion observes that "the evidence is scanty" and that petitioners "have yet to submit actual 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:chanrob1es virtual 1aw library
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 in 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 be 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 v. 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. v. 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, complainants right or title must be undisputed and demonstrated on the
strength of ones own title to such a degree as to unquestionably exclude dark clouds of doubt, rather than on the weakness
of the adversarys 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. v. 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 respondents "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:chanrob1es virtual 1aw library

Section 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:chanrob1es
virtual 1aw library
(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
the plaintiff may suffer by the refusal or the dissolution of the injunction.
(3) On other grounds upon affidavits on the part of the defendant which may be opposed by the plaintiff also by 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 forcertiorari (Clark v. 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 v. Ramos, 79 Phil. 640 [1947]; 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.

Republic of the Philippines

Supreme Court
Manila

SECOND DIVISION

PHILIP MORRIS, INC., BENSON & HEDGES

(CANADA), INC., and FABRIQUES DE TABAC
REUNIES, S.A., (now known as PHILIP
MORRIS PRODUCTS S.A.),
Petitioners,
- versus FORTUNE TOBACCO CORPORATION,
Respondent.

G.R. No. 158589

Present:
PUNO, J., Chairperson,
SANDOVAL-GUTIERREZ,
CORONA,
AZCUNA, and
GARCIA, JJ.
Promulgated:

June 27, 2006

x------------------------------------------------------------------------------------x

DECISION
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, 1973 by the Philippine Patents Office (PPO), the registered owner of
the trademark MARK VII for cigarettes. Similarly, petitioner Benson & Hedges (Canada), Inc., a subsidiary of Philip Morris,
Inc., is the registered owner of the trademark MARK TEN for cigarettes as evidenced by PPO Certificate of Registration No.
11147. And as can be seen in Trademark Certificate of Registration No. 19053, another subsidiary of Philip Morris, Inc., the
Swiss company Fabriques de Tabac Reunies, S.A., is the assignee of the trademark LARK,which was originally registered in

1964 by Ligget and Myers Tobacco Company. On the other hand, respondent Fortune Tobacco Corporation, a company
organized in the Philippines, manufactures and sells cigarettes using the trademark MARK.

The legal dispute between the parties started when the herein petitioners, on the claim that an infringement of their
respective trademarks had been committed, filed, on August 18, 1982, a Complaint for Infringement of Trademark and
Damages against respondent Fortune Tobacco Corporation, docketed as Civil Case No. 47374 of the Regional Trial Court of
Pasig, Branch 166.
The decision under review summarized what happened next, as follows:
In the Complaint xxx with prayer for the issuance of a preliminary injunction, [petitioners] alleged that they
are foreign corporations not doing business in the Philippines and are suing on an isolated transaction. xxx
they averred that the countries in which they are domiciled grant xxx to corporate or juristic persons of
the Philippines the privilege to bring action for infringement, xxx without need of a license to do business in
those countries. [Petitioners] likewise manifested [being registered owners of the trademark MARK VII and
MARK TEN for cigarettes as evidenced by the corresponding certificates of registration and an applicant for
the registration of the trademark LARK MILDS]. xxx. [Petitioners] claimed that they have registered the
aforementioned trademarks in their respective countries of origin and that, by virtue of the long and
extensive usage of the same, these trademarks have already gained international fame and
acceptance. Imputing bad faith on the part of the [respondent], petitioners claimed that the [respondent],
without any previous consent from any of the [petitioners], manufactured and sold cigarettes bearing the
identical and/or confusingly similar trademark MARK xxx Accordingly, they argued that [respondents] use of
the trademark MARK in its cigarette products have caused and is likely to cause confusion or mistake, or
would deceive purchasers and the public in general into buying these products under the impression and
mistaken belief that they are buying [petitioners] products.
Invoking the provisions of the Paris Convention for the Protection of Industrial and Intellectual
Property (Paris Convention, for brevity), to which the Philippines is a signatory xxx, [petitioners] pointed out
that upon the request of an interested party, a country of the Union may prohibit the use of a trademark
which constitutes a reproduction, imitation, or translation of a mark already belonging to a person entitled to
the benefits of the said Convention. They likewise argued that, in accordance with Section 21-A in relation to
Section 23 of Republic Act 166, as amended, they are entitled to relief in the form of damages xxx [and] the
issuance of a writ of preliminary injunction which should be made permanent to enjoin perpetually the
[respondent] from violating [petitioners] right to the exclusive use of their aforementioned trademarks.
[Respondent] filed its Answer xxx denying [petitioners] material allegations and xxx averred [among other
things] xxx that MARK is a common word, which cannot particularly identify a product to be the product of
the [petitioners] xxx
xxx xxx xxx.
Meanwhile, after the [respondent] filed its Opposition (Records, Vo. I, p. 26), the matter of the [petitioners]
prayer for the issuance of a writ of preliminary injunction was negatively resolved by the court in
an Order xxx dated March 28, 1973. [The incidental issue of the propriety of an injunction would eventually
be elevated to the CA and would finally be resolved by the Supreme Court in its Decision dated July 16,
1993 in G.R. No. 91332]. xxx.
xxx xxx xxx
After the termination of the trial on the merits xxx trial court rendered its Decision xxx
dated November 3, 1999 dismissing the complaint and counterclaim after making a finding that the
[respondent] did not commit trademark infringement against the [petitioners]. Resolving first the issue of
whether or not [petitioners] have capacity to institute the instant action, the trial court opined that
[petitioners] failure to present evidence to support their allegation that their respective countries indeed
grant Philippine corporations reciprocal or similar privileges by law xxxjustifies 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. 166, as amended, or the Trademark Law,but also by Article 2 of
the Paris Convention for the Protection of Industrial Property, otherwise known as the Paris Convention.

In any event, petitioners point out that there is actual use of their trademarks in the Philippines as evidenced by the
certificates of registration of their trademarks. The marks MARK TEN and LARK were registered on the basis of actual use in
accordance with Sections 2-A[13] and 5(a)[14] of R.A. No. 166, as amended, providing for a 2-month pre-registration use in
local commerce and trade while the registration of MARK VII was on the basis of registration in the foreign country of origin
pursuant to Section 37 of the same law wherein it is explicitly provided that prior use in commerce need not be alleged. [15]

Besides, petitioners argue that their not doing business in the Philippines, if that be the case, does not mean that
cigarettes bearing their trademarks are not available and sold locally. Citing Converse Rubber Corporation v. Universal

Rubber Products, Inc.,[16] petitioners state that such availability and sale may be effected through the acts of importers and
distributors.
Finally, petitioners would press on their entitlement to protection even in the absence of actual use of trademarks in the
country in view of the Philippines adherence to the Trade Related Aspects of Intellectual Property Rights or the TRIPS
Agreement and the enactment of R.A. No. 8293, or the Intellectual Property Code (hereinafter the IP Code), both of which
provide that the fame of a trademark may be acquired through promotion or advertising with no explicit requirement of
actual use in local trade or commerce.
Before discussing petitioners claimed entitlement to enforce trademark rights in the Philippines, it must be
emphasized that their standing to sue in Philippine courts had been recognized, and rightly so, by the CA. It ought to be
pointed out, however, that the appellate court qualified its holding with a statement, following G.R. No. 91332, entitled Philip
Morris, Inc., et al. v. The Court of Appeals and Fortune Tobacco Corporation, [17]that such right to sue does not necessarily
mean protection of their registered marks in the absence of actual use in the Philippines.
Thus clarified, what petitioners now harp about is their entitlement to protection on the strength of registration
of their trademarks in the Philippines.
As we ruled in G.R. No. 91332,[18] supra, so it must be here.
Admittedly,

the registration of a trademark

gives the registrant,

such as petitioners, advantages denied non-

registrants or ordinary users, like respondent. But while petitioners enjoy the statutory presumptions arising from such
registration,[19] i.e., as to the validity of the registration, ownership and the exclusive right to use the registered marks, they
may not successfully sue on the basis alone of their respective certificates of registration of trademarks. For, petitioners are
still foreign corporations. As such, they ought, as a condition to availment of the rights and privileges vis--vis their
trademarks in this country, to show proof that, on top of Philippine registration, their country grants substantially
similar rights and privileges to Filipino citizens pursuant to Section 21-A[20] of R.A. No. 166.
In Leviton Industries v. Salvador,[21] the Court further held that the aforementioned reciprocity requirement is a
condition sine qua non to filing a suit by a foreign corporation which, unless alleged in the complaint, would justify dismissal
thereof, a mere allegation that the suit is being pursued under Section 21-A of R.A. No. 166 not being sufficient. In a
subsequent case,[22] however, the Court held that where the complainant is a national of a Paris Convention- adhering
country, its allegation that it is suing under said Section 21-A would suffice, because the reciprocal agreement between the
two countries is embodied and supplied by the Paris Convention which, being considered part of Philippine municipal laws,
can be taken judicial notice of in infringement suits. [23]
As well, the fact that their respective home countries, namely, the United States, Switzerland and Canada, are,
together with the Philippines, members of the Paris Union does not automatically entitle petitioners to the protection of their
trademarks in this country absent actual use of the marks in local commerce and trade.
True, the Philippines adherence to the Paris Convention[24] effectively obligates the country to honor and enforce its
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 its rulings in Sterling Products
International, Inc. v. Farbenfabriken Bayer Aktiengesellschaft, [31] Kabushi Kaisha Isetan v. Intermediate Appellate Court,
[32]

and Philip Morris v. Court of Appeals and Fortune Tobacco Corporation [33] on the importance of actual commercial use of a

trademark in the Philippines notwithstanding the Paris Convention:

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

xxx xxx xxx

Following universal acquiescence and comity, our municipal law on trademarks regarding the
requirements of actual use in the Philippines must subordinate an international agreement inasmuch as the
apparent clash is being decided by a municipal tribunal. Xxx. Withal, the fact that international law has been
made part of the law of the land does not by any means imply the primacy of international law over national
law in the municipal sphere. Under the doctrine of incorporation as applied in most countries, rules of
International Law are given a standing equal, not superior, to national legislative enactments.
xxx xxx xxx
In other words, (a foreign corporation) may have the capacity to sue for infringement but the question of
whether they have an exclusive right over their symbol as to justify issuance of the controversial writ will
depend on actual use of their trademarks in the Philippines in line with Sections 2 and 2-A of the same
law. It is thus incongruous for petitioners to claim that when a foreign corporation not licensed to do
business in the Philippines files a complaint for infringement, the entity need not be actually using its
trademark in commerce in the Philippines. Such a foreign corporation may have the personality to file a suit
for infringement but it may not necessarily be entitled to protection due to absence of actual use of the
emblem in the local market.
Contrary to what petitioners suggest, the registration of trademark cannot be deemed conclusive as to the actual use
of such trademark in local commerce. As it were, registration does not confer upon the registrant an absolute right to the
registered mark. The certificate of registration merely constitutes prima facie evidence that the registrant is the owner of the
registered mark. Evidence of non-usage of the mark rebuts the presumption of trademark ownership, [34] as what happened
here when petitioners no less admitted not doing business in this country.[35]
Most importantly, we stress that registration in the Philippines of trademarks does not ipso facto convey an absolute
right or exclusive ownership thereof. To borrow from Shangri-La International Hotel Management, Ltd. v. Development Group
of Companies, Inc.[36] trademark is a creation of use and, therefore, actual use is a pre-requisite to exclusive ownership;
registration is only an administrative confirmation of the existence of the right of ownership of the mark, but does not perfect
such right; actual use thereof is the perfecting ingredient. [37]
Petitioners reliance on Converse Rubber Corporation[38] is quite misplaced, that case being cast in a different factual
milieu. There, we ruled that a foreign owner of a Philippine trademark, albeit not licensed to do, and not so engaged in,
business in the Philippines, may actually earn reputation or goodwill for its goods in the country. But unlike in the instant

case, evidence of actual sales of Converse rubber shoes, such as sales invoices, receipts and the testimony of a legitimate
trader, was presented in Converse.
This Court also finds the IP Code and the TRIPS Agreement to be inapplicable, the infringement complaint herein having been
filed in August 1982 and tried under the aegis of R.A. No. 166, as amended. The IP Code, however, took effect only
on January 1, 1998 without a provision as to its retroactivity.[39] In the same vein, the TRIPS Agreement was inexistent when
the suit for infringement was filed, the Philippines having adhered thereto only on December 16, 1994.

With the foregoing perspective, it may be stated right off that the registration of a trademark unaccompanied by actual use
thereof in the country accords the registrant only the standing to sue for infringement in Philippine courts. Entitlement to
protection of such trademark in the country is entirely a different matter.

This brings us to the principal issue of infringement.

Section 22 of R.A. No. 166, as amended, defines what constitutes trademark infringement, as follows:
Sec. 22. Infringement, what constitutes. Any person who shall use, without the consent of the registrant,
any reproduction, counterfeit, copy or colorable imitation of any registered mark or tradename in connection
with the sale, offering for sale, or advertising of any goods, business or services on or in connection with
which such use is likely to cause confusion or mistake or to deceive purchasers or others as to the source or
origin of such goods or services, or identity of such business; or reproduce, counterfeit, copy of color ably
imitate any such mark or tradename and apply such reproduction, counterfeit, copy or colorable imitation to
labels, signs, prints, packages, wrappers, receptacles or advertisements intended to be used upon or in
connection with such goods, business, or services, shall be liable to a civil action by the registrant for any or
all of the remedies herein provided.

Petitioners would insist on their thesis of infringement since respondents mark MARK for cigarettes is confusingly or
deceptively similar withtheir duly registered MARK VII, MARK TEN and LARK marks likewise for cigarettes. To them, the word
MARK would likely cause confusion in the trade, or deceive purchasers, particularly as to the source or origin of respondents
cigarettes.

The likelihood of confusion is the gravamen of trademark infringement. [40] But likelihood of confusion is a relative
concept, the particular, and sometimes peculiar, circumstances of each case being determinative of its existence. Thus, in
trademark infringement cases, more than in other kinds of litigation, precedents must be evaluated in the light of each
particular case.[41]

In determining similarity and likelihood of confusion, jurisprudence has developed two tests: the dominancy test and
the holistic test.[42] The dominancy test[43] sets sight on the similarity of the prevalent features of the competing trademarks
that might cause confusion and deception, thus constitutes infringement. Under this norm, the question at issue turns on
whether the use of the marks involved would be likely to cause confusion or mistake in the mind of the public or deceive
purchasers.[44]
In contrast, the holistic test[45] entails a consideration of the entirety of the marks as applied to the products,
including the labels and packaging, in determining confusing similarity.

Upon consideration of the foregoing in the light of the peculiarity of this case, we rule against the likelihood of
confusion resulting in infringement arising from the respondents use of the trademark MARK for its particular cigarette
product.
For one, as rightly concluded by the CA after comparing the trademarks involved in their entirety as they appear on
the products,[46] the striking dissimilarities are significant enough to warn any purchaser that one is different from the
other. Indeed, although the perceived offending word MARK is itself prominent in petitioners trademarks MARK VII and MARK
TEN, the entire marking system should be considered as a whole and not dissected, because a discerning eye would focus
not only on the predominant word but also on the other features appearing in the labels. Only then would such discerning
observer draw his conclusion whether one mark would be confusingly similar to the other and whether or not sufficient
differences existed between the marks.[47]
This said, the CA then, in finding that respondents goods cannot be mistaken as any of the three cigarette brands of
the petitioners, correctly relied on the holistic test.
But, even if the dominancy test were to be used, as urged by the petitioners, but bearing in mind that a trademark
serves as a tool to point out distinctly the origin or ownership of the goods to which it is affixed, [48] the likelihood of confusion
tantamount to infringement appears to be farfetched. The reason for the origin and/or ownership angle is that unless the
words or devices do so point out the origin or ownership, the person who first adopted them cannot be injured by any
appropriation or imitation of them by others, nor can the public be deceived. [49]
Since the word MARK, be it alone or in combination with the word TEN and the Roman numeral VII, does not point to
the origin or ownership of the cigarettes to which they apply, the local buying public could not possibly be confused or
deceived that respondents MARK is the product of petitioners and/or originated from the U.S.A., Canada or Switzerland. And
lest it be overlooked, no actual commercial use of petitioners marks in local commerce was proven. There can thus be no
occasion for the public in this country, unfamiliar in the first place with petitioners marks, to be confused.

For another, a comparison of the trademarks as they appear on the goods is just one of the appreciable
circumstances in determining likelihood of confusion. Del Monte Corp. v. 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, having manufactured and sold cigarettes with the trademark MARK which, as it were,
are identical and/or confusingly similar with their duly registered trademarks MARK VII, MARK TEN and LARK.
This Court is not persuaded.
In Mighty Corporation v. E & J Gallo Winery,[53] the Court held that the following constitute the elements of
trademark infringement in accordance not only with Section 22 of R.A. No. 166, as amended, but also Sections 2, 2-A, 9A[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
(d) such act is done without the consent of the trademark registrant or assignee.
As already found herein, while petitioners have

registered

the trademarks MARK VII, MARK

TEN

and

LARK

for

cigarettes in the Philippines, prior actual commercial use thereof had not been proven. In fact, petitioners judicial admission
of not doing business in this country effectively belies any pretension to the contrary.

Likewise, we note that petitioners even failed to support their claim that their respective marks are well-known
and/or have acquired goodwill in the Philippines so as to be entitled to protection even without actual use in this country in
accordance with Article 6bis[55] of the Paris Convention. As correctly found by the CA, affirming that of the trial court:
xxx the records are bereft of evidence to establish that the appellants [petitioners] products are
indeed well-known in the Philippines, either through actual sale of the product or through different forms of
advertising. This finding is supported by the fact that appellants admit in their Complaint that they are not
doing business in the Philippines, hence, admitting that their products are not being sold in the local
market. We likewise see no cogent reason to disturb the trial courts finding that the appellants failed to
establish that their products are widely known by local purchasers as (n)o specific magazine or periodical
published in the Philippines, or in other countries but circulated locally have been presented by the
appellants during trial. The appellants also were not able to show the length of time or the extent of the
promotion or advertisement made to popularize their products in the Philippines.[56]

Last, but not least, we must reiterate that the issue of trademark infringement is factual, with both the trial and
appellate courts having peremptorily found allegations of infringement on the part of respondent to be without basis. As we
said time and time again, factual determinations of the trial court, concurred in by the CA, are final and binding on this
Court.[57]

For lack of convincing proof on the part of the petitioners of actual use of their registered trademarks prior to
respondents use of its mark and for petitioners failure to demonstrate confusing similarity between said trademarks, the
dismissal of their basic complaint for infringement and the concomitant plea for damages must be affirmed. The law, the
surrounding circumstances and the equities of the situation call for this disposition.
WHEREFORE, the petition is hereby DENIED. Accordingly, the assailed decision and resolution of the Court of
Appeals are AFFIRMED.
Costs against the petitioners.
SO ORDERED.

Republic of the Philippines

Supreme Court
Manila
SECOND DIVISION
SHANGRI-LA INTERNATIONAL HOTEL MANAGEMENT,
LTD.,
SHANGRI-LA
PROPERTIES,
INC.,
MAKATI
SHANGRI-LA HOTEL & RESORT, INC., AND KUOK
PHILIPPINES PROPERTIES, INC.,
Petitioners,

G.R. No. 159938

Present:

- versus -

PUNO, J., Chairperson,

SANDOVAL-GUTIERREZ,
CORONA,
AZCUNA, and
GARCIA, JJ.

DEVELOPERS GROUP OF COMPANIES, INC.,

Respondent.

Promulgated:
March 31, 2006

x-----------------------------------------------------------------------------------x
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, 2003 [1] of the Court of Appeals (CA) in CA-G.R. CV
No. 53351 and its Resolution[2] 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 inHong 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 nameShangri-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 conceptualizeand 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
SLIHMs 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 decision[4] 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 ofInter Partes Case No. 3145 for the cancellation of DGCIs 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. andG.R. No. 111580,
entitled Shangri-La International Hotel Management LTD., et al. vs. Court of Appeals, et al., which were accordingly
consolidated.

In a consolidated decision[5] 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 DGCIs lone witness was Ramon Syhunliong,
President and Chairman of DGCIs 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 ShangriLa mark and S logo.
Eventually, the trial court, on the postulate that petitioners, more particularly petitioner SLIHMs, use of the mark and logo in
dispute constitutes an infringement of DGCIs 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 [respondents] 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 attorneys 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 attorneys 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 thePhilippines.

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 ShangriLa mark and S logo by virtue of and despite their ownership by the Kuok Group;
Whether the CA erred in ruling that petitioners' use of the mark and logo constitutes
actionable infringement;

6.
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 datedOctober 29, 2003 authenticating the Director's Certificate authorizing
Atty. Lerma to execute the certification against forum shopping, together with petitioners manifestation of February 9, 2004.
Respondent also attacks the present petition as one that raises pure questions of fact. It points out that in a petition for
review under Rule 45 of the Rules of Court, the questions that may properly be inquired into are strictly circumscribed by the
express limitation that the petition shall raise only questions of law which must be distinctly set forth. [13] We do not, however,
find that the issues involved in this petition consist purely of questions of fact. These issues will be dealt with as we go
through the questions raised by the petitioners one by one.
Petitioners' first argument is that the respondent had no right to file an application for registration of the Shangri-La mark
and S logo because it did not have prior actual commercial use thereof. To respondent, such an argument raises a question of
fact that was already resolved by the RTC and concurred in by the CA.
First off, all that the RTC found was that respondent was the prior user and registrant of the subject mark and logo in
the Philippines. Taken in proper context, the trial courts 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 aprima 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]

Ownership of a mark or trade name may be acquired not necessarily by registration but by adoption and use in trade or
commerce. As between actual use of a mark without registration, and registration of the mark without actual use thereof, the
former prevails over the latter. For a rule widely accepted and firmly entrenched, because it has come down through the
years, is that actual use in commerce or business is a pre-requisite to the acquisition of the right of ownership. [16]
While the present law on trademarks [17] has dispensed with the requirement of prior actual use at the time of registration, the
law in force at the time of registration must be applied, and thereunder it was held that as a condition precedent to
registration of trademark, trade name or service mark, the same must have been in actual use in the Philippines before the
filing of the application for registration. [18] Trademark is a creation of use and therefore actual use is a pre-requisite to
exclusive ownership and its registration with the Philippine Patent Office is a mere administrative confirmation of the
existence of such right.[19]
By itself, registration is not a mode of acquiring ownership. When the applicant is not the owner of the trademark being
applied for, he has no right to apply for registration of the same. Registration merely creates a prima facie presumption of the
validity of the registration, of the registrant's ownership of the trademark and of the exclusive right to the use thereof.
[20]

Such presumption, just like the presumptive regularity in the performance of official functions, is rebuttable and must give

way to evidence to the contrary.

Here, respondent's own witness, Ramon Syhunliong, testified that a jeepney signboard artist allegedly commissioned to
create the mark and logo submitted his designs only in December 1982. [21] This was two-and-a-half months after the filing of
the respondents trademark application onOctober 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.
2.

When the inference made is manifestly mistaken, absurd or impossible; [24]

When there is grave abuse of discretion;[25]

3.
4.
5.

When the judgment is based on a misapprehension of facts; [26]

When the findings of fact are conflicting;[27] and
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 respondents president and chairman of the board, Ramon
Syhunliong, had been a guest at the petitioners' hotel before he caused the registration of the mark and logo, and surmised
that he must have copied the idea there:
Did Mr. Ramon Syhunliong, [respondent's] President copy the mark and devise from one of [petitioners]
hotel (Kowloon Shangri-la) abroad? The mere fact that he was a visitor of [petitioners] hotel abroad at one
time (September 27, 1982) establishes [petitioners] allegation that he got the idea there. [29]

Yet, in the very next paragraph, despite the preceding admission that the mark and logo must have been copied, the CA tries
to make it appear that the adoption of the same mark and logo could have been coincidental:
The word or name Shangri-la and the S-logo, are not uncommon. The word Shangri-la refers to a
(a) remote beautiful imaginary place where life approaches perfection or (b) imaginary mountain land
depicted as a utopia in the novel Lost Horizon by James Hilton. The Lost Horizon was a well-read and
popular novel written in 1976. It is not impossible that the parties, inspired by the novel, both adopted the
mark for their business to conjure [a] place of beauty and pleasure.
The S-logo is, likewise, not unusual. The devise looks like a modified Old English print. [30]

To jump from a recognition of the fact that the mark and logo must have been copied to a rationalization for the possibility
that both the petitioners and the respondent coincidentally chose the same name and logo is not only contradictory, but also
manifestly mistaken or absurd. Furthermore, the S logo appears nothing like the Old English print that the CA makes it out to
be, but is obviously a symbol with oriental or Asian overtones. At any rate, it is ludicrous to believe that the parties would
come up with the exact same lettering for the word Shangri-La and the exact same logo to boot. As correctly observed by
the petitioners, to which we are in full accord:
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 6bis(3) of the Paris Convention, no time limit is fixed for the cancellation of marks registered or used in bad faith.
[34]

This is precisely why petitioners had filed an inter partes case before the BPTTT for the cancellation of respondent's

registration, the proceedings on which were suspended pending resolution of the instant case.

Respondent DGCI also rebukes the next issue raised by the petitioners as being purely factual in nature, namely, whether the
CA erred in overlooking petitioners' widespread prior use of the Shangri-La mark and S logo in their operations. The question,
however, is not whether there had been widespread prior use, which would have been factual, but whether that prior use
entitles the petitioners to use the mark and logo in the Philippines. This is clearly a question which is legal in nature.

It has already been established in the two courts below, and admitted by the respondents 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 respondents favor. Unfortunately, however, what the CA failed to perceive is that there is a crucial difference
between the

aforequoted Section

and

Section

2-A of

R.A.

No.

166. For,

while Section

provides

is registrable, Section 2-A, on the other hand, sets out how ownership is acquired. These are two distinct concepts.

for

what

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 2A 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 DGCIs 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 s ervices 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 theParis 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
ofinternational law are given a standing equal, not superior, to national legislative
enactments (Salonga and Yap, Public International Law, Fourth ed., 1974, p. 16). [39]
[Emphasis supplied]

Consequently, the petitioners cannot claim protection under the Paris Convention. Nevertheless, with the double infirmity of
lack of two-month prior use, as well as bad faith in the respondent's registration of the mark, it is evident
that the petitioners cannot be guilty of infringement. It would be a great injustice to adjudge the petitioners guilty of
infringing a mark when they are actually the originator and creator thereof.
Nor can the petitioners' separate personalities from their mother corporation be an obstacle in the enforcement of their rights
as part of the Kuok Group of Companies and as official repository, manager and operator of the subject mark and logo.
Besides, R.A. No. 166 did not require the party seeking relief to be the owner of the mark but any person who believes that
he is or will be damaged by the registration of a mark or trade name. [40]

WHEREFORE, the instant petition is GRANTED. The assailed Decision and Resolution of the Court of Appeals dated May 15,
2003 and September 15, 2003, respectively, and the Decision of the Regional Trial Court of Quezon City dated March 8,
1996 are

hereby SET

ordered DISMISSED.

SO ORDERED.

ASIDE.

Accordingly,

the

complaint

for

infringement

in

Civil

Case

No.

Q-91-8476

is

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

G.R. No. 159938

Present:
PUNO, C.J., Chairperson,
SANDOVAL-GUTIERREZ,
CORONA,
AZCUNA, and
GARCIA, JJ.

- versus -

DEVELOPERS GROUP OF COMPANIES, INC.,

Respondent.

Promulgated:
January 22, 2007

x------------------------------------------------------------------------------------------x
RESOLUTION
GARCIA, J.:

Before the Court is this Motion for Reconsideration filed by respondent Developers Group of Companies, Inc. (DGCI) praying
for the reversal of this Court's Decision[1] of March 31, 2006, the dispositive portion of which reads:
WHEREFORE, the instant petition is GRANTED. The assailed Decision and Resolution of the Court
of Appeals dated May 15, 2003 and September 15, 2003, respectively, and the Decision of the
Regional Trial Court of Quezon City dated March 8, 1996 are hereby SET ASIDE. Accordingly, the
complaint for infringement in Civil Case No. Q-91-8476 is ordered DISMISSED.
In its motion, respondent-movant DGCI raises the following grounds:
1.

The certification of non-forum shopping submitted by petitioners is insufficient;

2.

The word Shangri-La and S logo were adopted and used by the Kuok Group as part of their
corporate names and the names of their hotels;

3.

Petitioners' claim of legal and beneficial ownership of mark and logo is baseless and
unwarranted;

4.

Change of theory from owner to one who may be damaged as entitled to relief is not
allowable;

5.

Finding of registration in patent offices in different countries around the world is inaccurate;

6.

DGCI's registration of the Shangri-La mark and the S logo is valid because there was at least
two months use thereof prior to application;

7.

Section 2-A of R.A. No. 166 requires the actual commercial use of trademarks in the
Philippines pursuant to the principle of territoriality applicable to trademarks. Hence, petitioners' use
of subject marks outside of Philippine territory did not confer on them any ownership rights thereto
under Philippine laws;

8.

The Regional Trial Court and the Court of Appeals' failure to find any bad faith on the part of
DGCI is conclusive on the Supreme Court;

9.

DGCI's use of the subject marks in the Philippines is entitled to protection under the
territoriality principle of trademarks. [2]

The bulk of the aforementioned grounds is a mere rehash of movants previous arguments. While DGCI is correct in stating
that a motion for reconsideration, by its very nature, may tend to dwell on issues already resolved in the decision sought to
be reconsidered and that this should not be an obstacle for a reconsideration,[3] the hard reality is that movant has failed to
raise matters substantially plausible or compellingly persuasive to warrant the desired course of action.

Considering that the grounds presently raised have been sufficiently considered, if not squarely addressed, in the subject
Decision, it behooves movant to convince the Court that certain findings or conclusions in the Decision are contrary to law. As
it is, however, the instant motion does not raise any new or substantial legitimate ground or reason to justify the
reconsideration sought.
Movant DGCI would make capital on the alleged danger the subject Decision might wreak upon Philippine trademark law,
claiming that the decision in question would render nugatory the protection intended by the trademark law to all Philippine
trademark registrants. This assertion is a baseless and sweeping statement. The interpretation of Republic Act No. 166 in
the Decision does not in any way diminish the protection afforded to valid trademark registrations made under said law. It
was glaringly obvious, however, from the testimony of movants own witness that DGCIs registration of the subject mark and
logo

was void due

to

the

existence

of

bad

faith

and

the

absence

of

the

requisite

2-month

prior

use.

Despite movant's melodramatic imputation of an abandonment of the territoriality principle, the Decision actually upholds
the principle but found that respondent DGCI was not entitled to protection thereunder due to the double infirmity which
attended its registration of thesubject mark and logo.

Anent DGCI's assertion

of

change

of

theory on

the

part

of

the

petitioners,

suffice

it

to

say

that

the latter have never budged from seeking relief as rightful, legal and/or beneficial owners of the mark and logo in dispute.
The Decision ruled favorably on the veracity of the petitioners' claim:
xxx It would be a great injustice to adjudge the petitioners guilty of infringing a mark when they are actually
the originator and creator thereof.
Nor can the petitioners' separate personalities from their mother corporation be an obstacle in the
enforcement of their rights as part of the Kuok Group of Companies and as official repository, manager and
operator of the subject mark and logo. Besides, R.A. No. 166 did not require the party seeking relief to be
the owner of the mark but any person who believes that he is or will be damaged by the registration of a
mark or trade name.[4] [Emphasis supplied]

Clearly, from the word Besides used in the context of the aforequoted paragraph, all that the Decision says is that even if
petitioners were not the owners, they would still have a right of action under the law. There was never an attempt on their
part at an eleventh-hour change of theory, as movant DGCI wishes to portray.
WHEREFORE, the instant motion for reconsideration is DENIED for lack of merit.

SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION

E.Y. INDUSTRIAL SALES, INC. G.R. No. 184850

and ENGRACIO YAP,
Petitioners, Present:
CORONA, C.J., Chairperson,
VELASCO, JR.,
- versus - LEONARDO - DE CASTRO,
DEL CASTILLO, and
PEREZ, JJ.
SHEN DAR ELECTRICITY AND Promulgated:
MACHINERY CO., LTD.,
Respondent. October 20, 2010
x-----------------------------------------------------------------------------------------x
DECISION
VELASCO, JR., J.:

The Case

This Petition for Review on Certiorari under Rule 45 seeks to nullify and reverse the February 21, 2008 Decision [1] and the
October 6, 2008 Resolution[2] rendered by the Court of Appeals (CA) in CA-G.R. SP No. 99356 entitled Shen Dar Electricity
and Machinery Co., Ltd. v. E.Y. Industrial Sales, Inc. and Engracio Yap.

The assailed decision reversed the Decision dated May 25, 2007 [3] issued by the Director General of the Intellectual Property
Office (IPO) in Inter Partes Case No. 14-2004-00084. The IPO Director General upheld Certificate of Registration (COR) No.
4-1999-005393 issued by the IPO for the trademark VESPA in favor of petitioner E.Y. Industrial Sales, Inc. (EYIS), but
ordered the cancellation of COR No. 4-1997-121492, also for the trademark VESPA, issued in favor of respondent Shen Dar
Electricity and Machinery Co., Ltd. (Shen Dar). The Decision of the IPO Director General, in effect, affirmed the Decision
dated May 29, 2006[4] issued by the Director of the Bureau of Legal Affairs (BLA) of the IPO.

The Facts

EYIS is a domestic corporation engaged in the production, distribution and sale of air compressors and other
industrial tools and equipment.[5] Petitioner Engracio Yap is the Chairman of the Board of Directors of EYIS.[6]

Respondent Shen Dar is a Taiwan-based foreign corporation engaged in the manufacture of air compressors. [7]

Both companies claimed to have the right to register the trademark VESPA for air compressors.

From 1997 to 2004, EYIS imported air compressors from Shen Dar through sales contracts. In the Sales Contract
dated April 20, 2002,[8] for example, Shen Dar would supply EYIS in one (1) year with 24 to 30 units of 40-ft. containers

worth of air compressors identified in the Packing/Weight Lists simply as SD-23, SD-29, SD-31, SD-32, SD-39, SD-67 and
SD-68. In the corresponding Bill of Ladings, the items were described merely as air compressors. [9] There is no documentary
evidence to show that such air compressors were marked VESPA.

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

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. Certificate of Registration No. 4-1999005393 for the mark VESPA for air compressor issued in favor of Appellee is hereby upheld. Consequently,
Certificate of Registration No. 4-1997-121492 for the mark VESPA, Chinese Characters & Device for goods
air compressor and spot welding machine issued in favor of Appellant is hereby ordered cancelled.
Let a copy of this Decision as well as the records of this case be furnished and returned to the
Director of Bureau of Legal Affairs for appropriate action. Further, let also the Directors of the Bureau of
Trademarks, the Administrative, Financial and Human Resources Development Services Bureau, and the
Documentation, Information and Technology Transfer Bureau be furnished a copy of this Decision for
information, guidance, and records purposes. [19]

Shen Dar appealed the above decision of the IPO Director General to the CA where Shen Dar raised the following
issues:

1.

Whether Shen Dar is guilty of forum shopping;

2.

Whether the first-to-file rule applies to the instant case;

3.

Whether Shen Dar presented evidence of actual use;

4.

Whether EYIS is the true owner of the mark VESPA;

5.

Whether the IPO Director General erred in cancelling Shen Dars COR No. 4-1997-121492 without a petition for
cancellation; and

6.

Whether Shen Dar sustained damages.[20]

In the assailed decision, the CA reversed the IPO Director General and ruled in favor of Shen Dar. The dispositive
portion states:
WHEREFORE, premises considered, the petition is GRANTED. Consequently, the assailed decision of
the Director General of the Intellectual Property Office dated May 25, 2007 is hereby REVERSED and SET
ASIDE. In lieu thereof, a new one is entered: a) ordering the cancellation of Certificate of Registration No. 41999-005393 issued on January 19, 2004 for the trademark VESPA in favor of E.Y. Industrial Sales, Inc.; b)
ordering the restoration of the validity of Certificate of Registration No. 4-1997-121492 for the trademark
VESPA in favor of Shen Dar Electricity and Machinery Co., Ltd. No pronouncement as to costs.
SO ORDERED.[21]

In ruling for Shen Dar, the CA ruled that, despite the fact that Shen Dar did not formally offer its evidence before the
BLA, such evidence was properly attached to the Petition for Cancellation. As such, Shen Dars evidence may be properly
considered. The CA also enunciated that the IPO failed to properly apply the provisions of Sec. 123.1(d) of RA 8293, which
prohibits the registration of a trademark in favor of a party when there is an earlier filed application for the same mark. The
CA further ruled that Shen Dar should be considered to have prior use of the mark based on the statements made by the
parties in their respective Declarations of Actual Use. The CA added that EYIS is a mere importer of the air compressors with

the mark VESPA as may be gleaned from its receipts which indicated that EYIS is an importer, wholesaler and retailer, and
therefore, cannot be considered an owner of the mark.[22]

EYIS filed a motion for reconsideration of the assailed decision which the CA denied in the assailed resolution.

Hence, the instant appeal.

Issues

EYIS and Yap raise the following issues in their petition:

A.

Whether the Director General of the IPO correctly upheld the rights of Petitioners over the
trademark VESPA.

B.

Whether the Director General of the IPO can, under the circumstances, order the cancellation
of Respondents certificate of registration for VESPA, which has been fraudulently obtained and
erroneously issued.

C.

Whether the Honorable Court of Appeals was justified in reversing the findings of fact of the
IPO, which affirm the rights of Petitioner EYIS over the trademark VESPA and when such findings
are supported by the evidence on record.

D.

Whether this Honorable Court may review questions of fact considering that the findings of the
Court of Appeals and the IPO are in conflict and the conclusions of the appellee court are
contradicted by the evidence on record.[23]

The Ruling of the Court

The appeal is meritorious.

First Issue:
Whether this Court may review the questions of fact presented

Petitioners raise the factual issue of who the true owner of the mark is. As a general rule, this Court is not a trier of
facts. However, such rule is subject to exceptions.

In New City Builders, Inc. v. National Labor Relations Commission,[24] the Court ruled that:
We are very much aware that the rule to the effect that this Court is not a trier of facts admits of
exceptions. As we have stated in Insular Life Assurance Company, Ltd. vs. CA:
[i]t is a settled rule that in the exercise of the Supreme Courts power of review, the Court is not a
trier of facts and does not normally undertake the re-examination of the evidence presented by the
contending parties during the trial of the case considering that the findings of facts of the CA are
conclusive and binding on the Court. However, the Court had recognized several exceptions to this
rule, to wit: (1) when the findings are grounded entirely on speculation, surmises or conjectures;
(2) when the inference made is manifestly mistaken, absurd or impossible; (3) when there is grave
abuse of discretion; (4) when the judgment is based on a misapprehension of facts; (5) when the
findings of facts are conflicting; (6) when in making its findings the Court of Appeals went beyond
the issues of the case, or its findings are contrary to the admissions of both the appellant and the
appellee; (7) when the findings are contrary to the trial court; (8) when the findings are
conclusions without citation of specific evidence on which they are based; (9) when the facts set

forth in the petition as well as in the petitioners main and reply briefs are not disputed by the
respondent; (10) when the findings of fact are premised on the supposed absence of evidence and
contradicted by the evidence on record; and (11) when the Court of Appeals manifestly overlooked
certain relevant facts not disputed by the parties, which, if properly considered, would justify a
different conclusion. (Emphasis supplied.)

In the instant case, the records will show that the IPO and the CA made differing conclusions on the issue of
ownership based on the evidence presented by the parties. Hence, this issue may be the subject of this Courts review.
Second Issue:
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
implementation of this Section.

may

by Regulations establish

the

procedure

to

govern

the

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 quasijudicial 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.
b.
c.

Business name and address;

Taxpayer Identification Number;
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]

On the other hand, Shen Dar failed to refute the evidence cited by the BLA in its decision. More importantly, Shen
Dar failed to present sufficient evidence to prove its own prior use of the mark VESPA. We cite with approval the ruling of the
BLA:
[Shen Dar] avers that it is the true and rightful owner of the trademark VESPA used on air
compressors. The thrust of [Shen Dars] argument is that respondent E.Y. Industrial Sales, Inc. is a mere
distributor of the VESPA air compressors. We disagree.
This conclusion is belied by the evidence. We have gone over each and every document attached as
Annexes A, A 1-48 which consist of Bill of Lading and Packing Weight List. Not one of these documents
referred to a VESPA air compressor. Instead, it simply describes the goods plainly as air compressors which
is type SD and not VESPA. More importantly, the earliest date reflected on the Bill of Lading was on May 5,
1997. (Annex A-1). [Shen Dar] also attached as Annex B a purported Sales Contract with respondent EY

Industrial Sales dated April 20, 2002. Surprisingly, nowhere in the document does it state that respondent
EY Industrial agreed to sell VESPA air compressors. The document only mentions air compressors which if
genuine merely bolsters respondent Engracio Yaps contention that [Shen Dar] approached them if it could
sell the Shen Dar or SD air compressor. (Exhibit 386) In its position paper, [Shen Dar] merely mentions of
Bill of Lading constituting respondent as consignee in 1993 but never submitted the same for consideration
of this Bureau. The document is also not signed by [Shen Dar]. The agreement was not even drafted in the
letterhead of either [Shen Dar] nor [sic] respondent registrant. Our only conclusion is that [Shen Dar] was
not able to prove to be the owner of the VESPA mark by appropriation. Neither was it able to prove actual
commercial use in the Philippines of the mark VESPA prior to its filing of a trademark application in 9 June
1997.[39]

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

No costs.

SO ORDERED.

SECOND DIVISION
G.R. No. 194307, November 20, 2013
BIRKENSTOCK ORTHOPAEDIE GMBH AND CO. KG (FORMERLY BIRKENSTOCK ORTHOPAEDIE
GMBH), Petitioner, v. PHILIPPINE SHOE EXPO MARKETING CORPORATION, Respondent.
DECISION
PERLASBERNABE, J.:
Assailed in this Petition for Review on Certiorari1 are the Court of Appeals (CA) Decision2 dated June 25, 2010 and
Resolution3 dated October 27, 2010 in CAG.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) 41994091508 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 HONNEFRHEIN & DEVICE COMPRISING OF ROUND COMPANY SEAL AND
REPRESENTATION OF A FOOT, CROSS AND SUNBEAM under TASN 41994091509 for goods falling under Class 25 of the
Nice Classification with filing date of March 11, 1994; and (c) BIRKENSTOCK BAD HONNEFRHEIN & DEVICE COMPRISING
OF ROUND COMPANY SEAL AND REPRESENTATION OF A FOOT, CROSS AND SUNBEAM under TASN 41994095043 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 predecessorininterest 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 predecessorininterest failed to file the required 10 th 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.9Accordingly, 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
eGazette 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. 14200700108, 14200700115, and 142007
00116,12 claiming, inter alia, that: (a) it, together with its predecessorininterest, 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 predecessorininterest likewise obtained a Certificate of Copyright
Registration No. 011193 for the word BIRKENSTOCK; (d) while respondent and its predecessorininterest failed to file
the 10th Year 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 42006010273 as a reapplication of
its old registration, Registration No. 56334.13 On November 13, 2007, the Bureau of Legal Affairs (BLA) of the IPO issued
Order No. 20072051 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 predecessorin 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 wellknown 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
In his Decision17 dated December 22, 2009, the IPO Director General reversed and set aside the ruling of the BLA, thus
allowing the registration of the subject applications. He held that with the cancellation of Registration No. 56334 for

respondents failure to file the 10th Year DAU, there is no more reason to reject the subject applications on the ground of prior
registration by another proprietor.18 More importantly, he found that the evidence presented proved that petitioner is the true
and lawful owner and prior user of BIRKENSTOCK marks and thus, entitled to the registration of the marks covered by the
subject applications.19 The IPO Director General further held that respondents copyright for the word BIRKENSTOCK is of
no moment since copyright and trademark are different forms of intellectual property that cannot be interchanged. 20
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 predecessorininterest 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 Reconsideration25 dated July 20, 2010, which was, however, denied in a
Resolution26 dated October 27, 2010. Hence, this petition.27
Issues Before the Court
The primordial issue raised for the Courts resolution is whether or not the subject marks should be allowed registration in
the name of petitioner.
The Courts Ruling
The 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 wellsettled 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 partylitigant 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 quasijudicial 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 tradename is still in use or showing that its nonuse is due
to special circumstance which excuse such nonuse 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 10 th Year DAU for Registration No. 56334 within the requisite period,
or on or before October 21, 2004. As a consequence, it was deemed to have abandoned or withdrawn any right or interest
over the mark BIRKENSTOCK. Neither can it invoke Section 236 37 of the IP Code which pertains to intellectual property
rights obtained under previous intellectual property laws, e.g., RA 166, precisely because it already lost any right or interest
over the said mark.
Besides, petitioner has duly established its true and lawful ownership of the mark BIRKENSTOCK.
Under Section 238 of RA 166, which is also the law governing the subject applications, in order to register a trademark, one
must be the owner thereof and must have actually used the mark in commerce in the Philippines for two (2) months prior to
the application for registration. Section 2A39of 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 2A
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. 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. Abyadang42 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, theprima 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 tQ 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 CAG.R. SP No. 112278 are REVERSED and SET ASIDE. Accordingly, the Decision dated December 22,
2009 of the IPO Director General is herebyREINSTATED.
SO ORDERED.