SHANGRI-LA INTERNATIONAL HOTEL

MANAGEMENT V. DEVELOPERS GROUP

OF COMPANIES (G.R. NO. 159938)
Facts:
Respondent DGCI applied for and was granted registration of the ‘Shangri-
La’ mark and ‘S’ logo in its restaurant business. Petitioner Shangri-La, chain
of hotels and establishments owned by the Kuok family worldwide, moved to
cancel the registration of the mark on the ground that it was illegally and
fraudulently obtained and appropriated by respondents. Petitioner also moved
to register the mark and logo in its own name. Later, respondent DGCI filed
before the trial court a complaint for infringement against petitioner alleging
that DGCI had been the prior exclusive user and the registered owner in the
Philippines of said mark and logo. Petitioner Shangri-La argued that
respondent had no right to apply for the registration because it did not have
prior actual commercial use thereof. The trial court found for respondent. CA
affirmed.
Issue:
Whether or not respondent’s prior use of the mark is a requirement for its
registration.
Ruling: YES.
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. Under the provisions of the former trademark
law, R.A. No. 166, as amended, 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. 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.
While the petitioners may not have qualified under Section 2 of R.A. No. 166
as a registrant, neither did respondent DGCI, since the latter also failed to
fulfill the 2-month actual use requirement. What is worse, DGCI was not
even the owner of the mark. For it to have been the owner, the mark must not
have been already appropriated (i.e., used) by someone else. At the time of
respondent DGCI’s registration of the mark, the same was already being used
by the petitioners, albeit abroad, of which DGCI’s president was fully aware.