G.R. No.

L-28554 February 28, 1983

UNNO
COMMERCIAL
ENTERPRISES,
INCORPORATED,
petitioner,
vs.
GENERAL MILLING CORPORATION and TIBURCIO S. EVALLE, in his capacity as
Director of Patents, respondents.
FACTS : The Court affirms respondent Director of Patent's decision declaring
respondent General Milling Corporation as the prior user of the trademark "All
Montana" on wheat flour in the Philippines and ordering the cancellation of the
certificate of registration for the same trademark previously issued in favor of
petitioner Unno Commercial Enterprises, Incorporated, it appearing that Unno
Commercial Enterprises, Inc. merely acted as exclusive distributor of All Montana
wheat flour in the Philippines. Only the owner of a trademark, trade name or service
mark may 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.. Respondent General Milling Corporation,
in its application for registration, alleged that it started using the trademark "All
Montana" on August 31, 1955 and subsequently was licensed to use the same by
Centennial Mills, Inc. by virtue of a deed of assignment executed on September 20,
1962. On the other hand petitioner Unno Commercial Enterprises, Inc. argued that the
same trademark had been registered in its favor on March 8, 1962 asserting that it
started using the trademark on June 30, 1956, as indentor or broker for S.H. Huang
Bros. & Co., a local firm.
The Director of Patents, after hearing, ruled in favor of respondent General Milling
Corporation. and rendered its decision as follows:
ISSUE : Whether or not director of patents can issue cancellation of the certification of
registration?
HELD : The Court finds without merit petitioner's argument that the Director of Patents
could not order the cancellation of' its certificate of registration in an interference
proceeding and that the question of whether or not a certificate of registration is to be
cancelled should have been brought in cancellation proceedings. Under Rule 178 of the
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.
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, petitioner's contention that it is the owner of the mark "All Montana" because of
its certificate of registration issued by the Director of Patents, must fail, since
ownership of a trademark is not acquired by the mere fact of registration alone. 9
Registration merely creates a prima facie presumption of the validity of the
registration, of the registrant's ownership of the trademark and of the exclusive right to
the use thereof. 10 Registration does not perfect a trademark right. 11 As conceded itself
by petitioner, evidence may be presented to overcome the presumption. Prior use by
one will controvert a claim of legal appropriation, by subsequent users. In the case at
bar, the Director of Patents found that "ample evidence was presented in the record
that Centennial Mills, Inc. was the owner and prior user in the Philippines of the
trademark 'All Montana' through a local importer and broker. Use of a trademark by a
mere importer, indentor or exporter (the Senior Party herein) inures to the benefit of
the foreign manufacturer whose goods are Identified by the trademark. The Junior
Party has hereby established a continuous chain of title and, consequently, prior
adoption and use" and ruled that "based on the facts established, it is safe to conclude
that the Junior Party has satisfactorily discharged the burden of proving priority of
adoption and use and is entitled to registration." It is well-settled that we are
precluded from making further inquiry, since the findings of fact of the Director of
Patents in the absence of any showing that there was grave abuse of discretion is
binding on us 12 and the findings of facts by the Director of Patents are deemed
conclusive in the Supreme Court provided that they are supported by substantial
evidence. 13 Petitioner has failed to show that the findings of fact of the Director of
Patents are not substantially supported by evidence nor that any grave abuse of
discretion was committed.

Kabushi Kaisha Isetan vs. lAC

GR 75420, 15 November 1991;
Second Division, Gutierrez Jr., (J)
Facts: Kabushi Kaisha Isetan is a Japanese corporation, and owner of the trademark
Isetan and the Young leave design. Isetann Department Store, on the other hand,
is a domestic corporation, and owner fo the trademark Isetann and flover design. In
1980, Kabushi Kaisha Isetan field petitions for the cancellation of the supplemental
registration of Isetann with the Philippine Patent Office. It also filed for the cancellation
of the mark Isetan from the corporate name of Isetann Department Store with the
SEC. Both the SEC and the Director of Patents, eventually, ruled against Kabushi
Kaisha Isetan. It appealed to the intermediate Appellate Court, which denied the
petition for being filed out of time. Issue: Whether Kabushi Kaisha Isetan has the right
to seek for the cancellation of the word Isetan from the corporate name of Isetann
Department Store.
Held: No.
A Fundamental principle in Trademark Law is that the actual use in commerce in the
Philippines is a pre-requisite to the acquisition of ownership over a trademark or a
tradename. Kabushi Kaisha Isetan has never conducted any business in the Philippines.
It has never promoted its trademark or tradename 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 traveling 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.
Isetann Department Store is entitled to use its trademark in the Philippines.

Philip Morris and its subsidiaries filed the complaint for infringement and damages
against Fortune Tobacco before the Pasig Regional Trial Court (RTC) for manufacturing
and selling cigarettes bearing the trademark Mark which is identical and confusingly
similar to Philip Morris trademarks. The said act was dismissed. Hence, this petition at
bar.
Issue/s:
Whether or not there has been an invasion of plaintiffs right of property to such
trademark or trade name.
PHILIP MORRIS, INC. VS COURT OF APPEALS
G.R. No. 91332

July 16, 1993

PHILIP MORRIS, INC., BENSON & HEDGES (CANADA), INC, AND FABRIQUES OF TABAC
REUNIES,
S.A
petitioners,
vs.
THE COURT OF APPEALS AND FORTUNE TOBACCO CORPORATION, respondents.

Discussions:
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. 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

Facts:
This is a petition for review under Rule 45 of the Rules of Court, to seek the reversal
and setting aside of the following issuances of the Court of Appeals (CA).
Ruling/s:
Philip Morris, Inc. and two other petitioners 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, from manufacturing and selling MARK
cigarettes in the local market. Banking on the thesis that petitioners respective
symbols MARK VII, MARK TEN, and MARK, also for cigarettes, must be protected
against unauthorized appropriation.

All petitioners are not doing business in the Philippines but are suing on an isolated
transaction, They Invoked provisions of the Paris Convention for the Protection of
Industrial and Intellectual Property. 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.

No. There is no proof that any of petitioners 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.

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
trade name.

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.

Countries in which they are domiciled grant to corporate or juristic

persons of the Philippines the privilege to bring action for
infringement, 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
o
registered the trademarks in their respective countries of origin

by virtue of the long and extensive usage of the same, these

trademarks have already gained international fame and
acceptance

[respondent], without any previous consent from any of the

[petitioners], manufactured and sold cigarettes bearing the
identical and/or confusingly similar trademark MARK

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.
Invoked provisions of the Paris Convention for the Protection of
Industrial and Intellectual Property (Paris Convention)
o
Philippines is a signatory, [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. 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 [and] the issuance of a writ
of preliminary injunction which should be made permanent.
[Respondent] filed its Answer denying [petitioners] material
allegations and averred [among other things] that MARK is a common
word, which cannot particularly identify a product to be the product of
the [petitioners]
After the termination of the trial on the merits trial court rendered its
Decision dated November 3, 1999 dismissing the complaint and counterclaim
after making a finding that the [respondent] did not commit trademark
infringement against the [petitioners].
The issue of whether or not there was infringement of the
[petitioners] trademarks by the [respondent] was likewise answered
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.
o

PHILIP MORRIS, INC. VS. FORTUNE TOBACCO CORPORATION (Equal Standing

of International Law and Municipal Law)
Penned by: GARCIA, J.:
Petition for review under Rule 45 of the Rules of Court, 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: PETITION
DENIED
Decision dated January 21, 20031 affirming an earlier decision of the Regional Trial
Court of Pasig City, Branch 166, in its Civil Case No. 47374

Dismissed the complaint for trademark infringement and damages

thereat commenced by the petitioners against respondent Fortune Tobacco
Corporation; and
2. Resolution dated May 30, 20032 denying petitioners motion for reconsideration.

1.

FACTS OF THE CASE:

Petitioner Philip Morris, Inc., a corporation (State of Virginia, U.S.A), is the
registered owner of the trademark MARK VII for cigarettes. (per
Certificate of Registration No. 18723 issued on April 26, 1973 by the Philippine
Patents Office (PPO)

Similarly, petitioner Benson & Hedges (Canada), Inc., a subsidiary of

Philip Morris, Inc., is the registered owner of the trademark MARK TEN for
cigarettes (PPO Certificate of Registration No. 11147)

Fabriques de Tabac Reunies, S.A. (Swiss company), another subsidiary of

Philip Morris, Inc., is the assignee of the trademark LARK, (Trademark
Certificate of Registration No. 19053) (originally registered in 1964 by Ligget
and Myers Tobacco Company)

Respondent Fortune Tobacco Corporation, a company organized in the

Philippines, manufactures and sells cigarettes using the trademark MARK.

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:
o
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.

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. (Appellate recourse docket CA-G.R. CV No. 66619)
o
CA decision on January 21, 2003 (while ruling for petitioners on the
matter of their legal capacity to sue in this country for trademark
infringement) affirmed the trial courts decision on the
underlying issue of respondents liability for infringement.
Motion for reconsideration denied by the CA (Resolution of May 30,
2003)

ISSUES

Petitioners seek petition for review (Court of Appeals):

o
(1) whether or not petitioners, as Philippine registrants of
trademarks, are entitled to enforce trademark rights in this
country;
o
(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.

Respondent: issue the propriety of the petition as it allegedly raises

questions of fact.
The petition is bereft of merit.
Petition raises both questions of fact and law
o
question of law exists when the doubt or difference arises as to
what the law is on a certain state of facts
o
question of fact when the doubt or difference arises as to the truth
or falsity of alleged facts

Court is not the proper venue to consider factual issues as it

is not a trier of facts

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, we will not disturb them
Petitioners: contentions should be treated as purely legal since they are
assailing erroneous conclusions deduced from a set of undisputed facts
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.
o
A trademark deserves protection.

PETITIONER:

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.
o
Right and mechanism are accorded by

Section 21-A of Republic Act (R.A.) No. 166 or the

Trademark Law, as amended

Article 2 of the Paris Convention for the Protection of

Industrial Property, aka Paris Convention.

Not doing business in the Philippines does not mean that cigarettes bearing
their trademarks are not available and sold locally. Citing Converse Rubber
Corporation v. Universal Rubber Products, Inc., such availability and sale
may be effected through the acts of importers and distributors.
Entitlement to protection even in the absence of actual use of
trademarks in the country
o
Philippines adherence to the Trade Related Aspects of
Intellectual Property Rights or the TRIPS Agreement

o
o

enactment of R.A. No. 8293, or the Intellectual Property Code

(IP Code)
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
o
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.
HELD/RATIO:
As we ruled in G.R. No. 91332,18 :
1. RECIPROCITY REQUIREMENT

Registration of a trademark gives the registrant (petitioners) advantages

denied non-registrants or ordinary users (respondent)
o
validity of the registration
o
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.
o
Petitioners: still foreign corporations
o
condition to availment of the rights and privileges & their
trademarks in this country:

On top of Philippine registration, their country grants

substantially similar rights and privileges to Filipino
citizens pursuant to Section 21-A20 of R.A. No. 166.

In Leviton Industries v. Salvador

o
Court: reciprocity requirement is a condition sine qua non to filing
a suit by a foreign corporation

Unless alleged in the complaint, would justify dismissal

o
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

being considered part of Philippine municipal laws,

can be taken judicial notice of in infringement suits.
2. REGISTRATION VERSUS ACUAL USE!!

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.

Philippines adherence to the Paris Convention effectively obligates the

country to honor and enforce its provisions( as regards the protection of
industrial property of foreign nationals in this country)
o
However, any protection accorded has to be made subject to
the limitations of Philippine laws.
o
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 national

(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

foreign nationals must still observe and comply with

the conditions imposed by Philippine law on its
nationals.
R.A. No. 166 (as amended, specifically Sections 228 and 2-A29), mandates
actual use of the marks and/or emblems in local commerce and trade
before they may be registered and ownership thereof acquired
o
the petitioners cannot, therefore, dispense with the element
of actual use.
o
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, the Court reiterated

its rulings in Sterling Products International, Inc. v. Farbenfabriken Bayer
Aktiengesellschaft, Kabushi Kaisha Isetan v. Intermediate Appellate Court, and
Philip Morris v. Court of Appeals and Fortune Tobacco Corporation on the
importance of ACTUAL COMMERCIAL USE OF A TRADEMARK in the
Philippines notwithstanding the Paris Convention:
o
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 :

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.

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.

A foreign corporation) may have the capacity to sue for

infringement but 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.

Registration of trademark cannot be deemed conclusive as to the actual

use of such trademark in local commerce.
o
registration does not confer upon the registrant an absolute right
to the registered mark.
o
merely constitutes prima facie evidence that the registrant is the
owner of the registered mark.
o
Evidence of non-usage of the mark rebuts the presumption of
trademark ownership
We stress that registration in the Philippines of trademarks does not ipso
facto convey an absolute right or exclusive ownership thereof.
o
Shangri-La
International
Hotel
Management,
Ltd.
v.
Development Group of Companies, Inc.

Trademark is a creation of use

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

does not perfect such right; actual use thereof is

the perfecting ingredient.

Petitioners reliance on Converse Rubber Corporation is quite

misplaced
o
different factual milieu
o
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.
o
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
o
the infringement complaint filed in August 1982 and tried under the
aegis of R.A. No. 166, as amended.
o
The IP Code (January 1, 1998) no provision on retroactivity; TRIPS
Agreement (December 16, 1994)
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.

The trial court came out with its decision rendering judgment in favor for R. P appealed
to the CA which affirmed that of the lower courts decision and further denied their MR.
Issue:
Whether or not prior use of a mark is a requirement for registration.
Ruling:
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
respondents 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.

Shangri-la International Hotel Management v. Developers Group of Companies (G.R.

No. 159938)
Facts:
R claims ownership SHANGRI-LA mark and S logo in the Philippines on the strength
of its prior use thereof within the country. It filed an application pursuant to Sections 2
and 4 of RA No. 166 as amended and was issued corresponding certificate of
registration and since then, started using the mark and 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 and has adopted the name
Shangri-La as part of the corporate names of all companies organized under its
aegis. 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 several
companies that form part of the SLIHM and has 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.
P filed an Inter Partes Case, praying for the cancellation of the registration of the mark
and logo issued to R on the ground that the same were illegally and fraudulently
obtained and appropriated.
R filed a complaint for TMI & Damages alleging that it has, for the last 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.
P pointed the Paris Convention for the Protection of Industrial Property as affording
security and protection to SLIHMs exclusive right to said mark and logo claiming
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.

While the present law on trademarks 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.
Here, respondents 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. This was two-and-a-half months after the filing of the respondents
trademark application on October 18, 1982 with the BPTTT. It was also only in
December 1982 when the respondents restaurant was opened for business.
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.
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. Unfortunately, however, what
the CA failed to perceive is that there is a crucial difference between the
aforequoted Section 2 and Section 2-A of R.A. No. 166. For, while Section 2
provides for what is registrable, Section 2-A, on the other hand, sets out how
ownership is acquired. These are two distinct concepts.
Under Section 2, in order to register a trademark, one must be the owner thereof and
must have actually used the mark in commerce in the Philippines for 2 months prior to
the application for registration.Since ownership of the trademark is required for
registration, Section 2-A of the same law sets out to define how one goes about
acquiring ownership thereof. Under Section 2-A, it is clear that actual use in commerce
is also the test of ownership but the provision went further by saying that the mark
must not have been so appropriated by another. Additionally, it is significant to note
that Section 2-A does not require that the actual use of a trademark must be

within the
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 RA. No. 166 as
a registrant neither did respondent DGCI, since the latter also failed to fulfill the 2month actual use requirement. What is worse, DGCI was not even the owner of the
mark. For it to have been the owner, the mark must not have been already
appropriated (i.e.,used) by someone else. At the time of respondent DGCIs
registration of the mark, the same was already being used by the petitioners,
albeit abroad, of which DGCIs president was fully aware.
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. 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 respondents 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.
WHEREFORE, the instant petition is GRANTED. The assailed Decision and Resolution of
the CA and the RTC are hereby SET ASIDE. Accordingly, the complaint for is ordered
DISMISSED.

EY Industrial vs. Shen Dar

Tuesday, February 3, 2015
Facts:

EY Industrial Sales is a domestic corporation engaged in the production,

distribution and sale of air compressors.
Shen Dar is a Taiwan-based foreign corporation engaged in the manufacture
of compressors.
From 1997-2004, EY Industrial imported air compressors from Shen Dar.
In 1997, Shen Dar filed a Trademark Application with the Intellectual Property
Office (IPO) for the mark Vespa for the use of air compressors. It was approved in
2007.
In 1999, EY Industrial filed a Trademark Application also for the mark VESPA
for the use of air compressors. It was approved in 2004.
Shen Dar filed a Petition for Cancellation of the Industrials EYES COR with the
Bureau of Legal Affairs contending that: a. there was a violation of Section 123.1 (D)
of the Intellectual Property Code which provides that: A mark cannot be registered if it

is identical to a mark with an earlier filing or priority date. b. EY Industrial is only a

For a rule widely accepted and firmly entrenched, because it has come down through

distributor of the air compressors

the years, is that actual use in commerce or business is a pre-requisite to the

On the other hand, EY Industrial alleged that it is the sole assembler and
fabricator of VESPA air compressors since the early 1990s and that Shen Dar supplied

acquisition of the right of ownership. It is non sequitur to hold that porque EYIS is a
distributor, it is no longer the owner.

them air compressors with the mark SD and not VESPA

FIRST-TO-FILE RULE

Issues:
1. Who between EY Industrial and Shen Dar is entitled to the trademark VESPA. EY
INDUSTRIAL SALES

Under Section 123.1 of IPO provision, the registration of a mark is prevented with the
filing of an earlier application for registration.

2. WON the Bureau of Legal Affairs has the power to cancel the application of Shen Dar
even if it is Shen Dar who filed the case? YES

This must not, however, be interpreted to mean that ownership should be based upon
an earlier filing date.

While RA 8293 (IPC) removed the previous requirement of proof

of actual use prior to the filing of an application for registration of a mark, proof of
Held:

prior and continuous use is necessary to establish ownership of a mark.

Such

ownership constitutes sufficient evidence to oppose the registration of a mark.

1st: EY INDUSTRIAL has the right to the trademark.

When we talk about trademark, we are just talking about the mark. It does not include
the product. Shen Dar is the manufacturer of the product, but they did not name the
Based on the evidence, EYIS owns the VESPA trademark; it has prior use, as shown

product as VESPA. It was EY that named the VESPA, and used the VESPA, even though

by various sales invoices.

they were only the distributors. It was EY that actually used the trademark through the
use of receipts, and other documents.

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

The first to file rule According to the SC that Shen Dar filed under the old IPC where

without registration, and registration of the mark without actual use thereof, the

prior use is the one applied.

former prevails over the latter.

2nd: BLA has the power to cancel the application.

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.

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 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.

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.

Remember, EYs application was the one granted, and it is Shen Dars application that
was cancelled. It does not mean that even you were the one who filed, it your
application cannot be cancelled. The BLA, who has jurisdiction over the case, were able
to determine that it is Shen Dars trademark that should not have been issued with
registration, even it is the plaintiff.

Philippines; and (iv) BIRKENSTOCK is not well -known in the Philippines and
internationally. The IPO Director General set aside the BLAs ruling. The IPO Director
General found Birkenstock Orthopaedie to be the true and lawful owner and prior user
of

the

BIRKENSTOCK

marks.

The

IPO

Director

General

further

held

that

BIRKENSTOCK AND DEVICE is no longer an impediment to the registration of

BIRKENSTOCK as the formers registration had been cancelled on account of the
registrants failure to file the 10th year Declaration of Use. The Court of Appeals
reinstated the decision of the BLA.

The Supreme Court ruled in favor of Birkenstock Orthopaedie for the following reasons:
BIRKENSTOCK ORTHOPAEDIE GMBH AND CO. KG (formerly BIRKENSTOCK

(i) under the former trademark law, Republic Act 166, failure to file the Declaration of

ORTHOPAEDIE

Use results in the automatic cancellation of the trademark which in turn is tantamount

GMBH),

v.PHILIPPINE

SHOE

EXPO

MARKETING

CORPORATIONG.R. No. 194307 promulgated on November 20, 2013

to the abandonment or withdrawal of the registrants right or interest over the trade
mark. Applying this rule, the registrant is deemed to have abandoned its right or

Birkenstock Orthopaedie GMBH (Birkenstock Orthopaedie) applied for the trademark

registration of BIRKENSTOCK with the IPO.

Philippine Shoe Expo opposed the

application on account of prior use for more than 16 years and registration of the mark
BIRKENSTOCK AND DEVICE. The Bureau of legal Affairs (BLA) sustained the
opposition because: (i) the competing marks are confusingly similar and are used on
the same and related goods; (ii) Birkenstock Orthopaedie failed to prove actual use of
the mark in trade and business in the Philippines; (iii) prior right over the mark was
not lost even though the registration of BIRKENSTOCK AND DEVICE was cancelled,
as there was proof of the marks continuous and uninterrupted use in commerce in the

interest over the mark BIRKENSTOCK AND DEVICE on account of its failure to file the
10th year Declaration of Use; and (ii) Birkenstock Orthopaedie proved its true and
lawful ownership of the mark Birkenstock. Evidence was submitted on (i) the use of
the mark in Europe since 1774, when its inventor, Johann Birkenstock, used the mark
on his line of quality footwear, which use was continued by numerous generations of
his kin; and (ii) the worldwide registration of the mark BIRKENSTOCK. The Supreme
Court did not find credible the evidence of Philippine Shoe Expo as it was able to
submit only copies of sales invoices and advertisements, which showed merely its
transactions involving the same. The Supreme Court found the registration of

BIRKENSTOCK AND DEVICE to have been done in bad faith and found it highly

evidence of actual and real ownership of a trademark. In the words of the Supreme

incredible

Court:

that

Philippine

Shoe

Expo

came

up

on

its

own

with

the

mark

BIRKENSTOCK, obviously of German origin and a highly distinct and arbitrary mark.
The Supreme Court pointed out that Philippine Shoe Expo obviously knew of the
existence of

BIRKENSTOCK and its use by Birkenstock Orthopaedie and that it

clearly intended to take advantage of the goodwill generated by the BIRKENSTOCK

mark.

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
rightswhich 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

Finally, the Supreme Court reiterated the principle that registration of the trademark

presumption of ownership accorded to a registrant must then necessarily yield to

merely creates a prima facie presumption of ownership which yields to superior

superior evidence of actual and real ownership of a trademark.