KABUSHI KAISHA ISETAN vs. INTERMEDIATE APPELLATE COURT, ET AL. trademark in the Philippines.

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
SECOND DIVISION
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
[G.R. No. 75420. November 15, 1991.] Petroleum Co. v. Consumers Co. of Ill. 169 F 2d 153).

KABUSHI KAISHA ISETAN, also known and trading as ISETAN CO., LTD., petitioner, vs. 6. ID.; PARIS CONVENTION FOR THE PROTECTION OF INDUSTRIAL PROPERTY; DOES
THE INTERMEDIATE APPELLATE COURT, THE DIRECTOR OF PATENTS, and ISETANN NOT AUTOMATICALLY EXCLUDE OTHER COUNTRIES FROM USING A TRADENAME USED
DEPARTMENT STORE, INC. respondents. 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.
Agcaoili & Associates for petitioner.

DECISION
Cruz, Durian, Agabin, Atienza, Alday & Tuason for private respondent.

GUTIERREZ, JR., J p:
SYLLABUS

This is a petition for review on certiorari which seeks to set aside — (1) the decision of
1. REMEDIAL LAW; ACTIONS; APPEALS; STRINGENT APPLICATION OF PERIOD OF APPEAL
the Court of Appeals dated June 2, 1986 in AC-G.R. SP No. 008873 entitled “Kabushi
APPLIED IN THE ABSENCE OF COMPELLING EQUITABLE CONSIDERATIONS FOR
Kaisha Isetan, also known and trading as Isetan Company Limited v. Isetann
RELAXATION OF RULE; CASE AT BAR. — The Court dismissed the petition in a resolution
Department Store, Inc.” dismissing the petitioner’s appeal from the decision of the
dated July 8, 1987, on the ground that it was filed fourteen (14) days later. However,
Director of Patents; and (2) the Resolution dated July 11, 1986 denying the petitioner’s
on motion for reconsideration, whereby the petitioner appealed to this Court on
motion for reconsideration.
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 As gathered from the records, the facts are as follows:
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
Petitioner Kabushi Kaisha Isetan is a foreign corporation organized and existing under
equitable considerations which call for the application of the rule enunciated in
the laws of Japan with business address at 14-1 Shinjuku, 3-Chrome, Shinjuku, Tokyo,
Serrano v. Court of Appeals (139 SCRA 179 [1985]) and Orata v. Intermediate Appellate
Japan. It is the owner of the trademark “Isetan” and the “Young Leaves Design”.
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. 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
2. ID.; EVIDENCE; FINDINGS OF FACT OF THE PATENT OFFICE, UPHELD ON APPEAL. —
“Tan” which was taken from “Tanji Kosuge the First”. The petitioner claims to have
Regarding the petitioner’s claims of substantial justice which led us to give due course,
expanded its line of business internationally from 1936 to 1974. The trademark
we decline to disturb the rulings of the Patent Office and the Court of Appeals. The rule
“Isetan” and “Young Leaves Design” were registered in Japan covering more than 34
is that the findings of facts of the Director of patents are conclusive on the Supreme
classes of goods. On October 3, 1983, the petitioner applied for the registration of
Court, provided they are supported by substantial evidence.
“Isetan” and “Young Leaves Design” with the Philippine Patent Office under Permanent
Serial Nos. 52422 and 52423 respectively, (Rollo, p. 43)
3. MERCANTILE LAW; TRADEMARKS; ACTUAL USE, PREREQUISITE TO ACQUISITION OF
OWNERSHIP. — A fundamental principle of Philippine Trademarks Law is that actual use
Private respondent, Isetann Department Store, on the other hand, is a domestic
in commerce in the Philippines is a pre-requisite to the acquisition of ownership over a
corporation organized and existing under the laws of the Philippines with business
trademark or a tradename.
address at 423-430 Rizal Avenue, Sta. Cruz, Manila, Philippines. LLjur

4. ID.; ID.; ID.; PRIOR REGISTRANT CANNOT CLAIM EXCLUSIVE USE OF TRADENAME. —
It claims that it used the word “Isetann” as part of its corporated name and on its
A prior registrant cannot claim exclusive use of the trademark unless it uses it in
products particularly on shirts in Joymart Department Store sometime in January 1979.
commerce.
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
5. ID.; ID.; ID.; MERE ADOPTION OF A PARTICULAR TRADENAME WITHOUT ACTUAL USE symbolizes the act of offering to the Supreme Being for business blessing.
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
On May 30, 1980 and May 20, 1980, the private respondent registered “Isetann
or trademark in the Philippines. It has absolutely no business goodwill in the
Department Store, Inc.” and Isetann and Flower Design in the Philippine Patent Office
Philippines. It is unknown to Filipinos except the very few who may have noticed it
under SR. Reg. Nos. 4701 and 4714, respectively, as well as with the Bureau of
while travelling abroad. It has never paid a single centavo of tax to the Philippine
Domestic Trade under Certificate of Registration No. 32020. (Rollo, pp. 43-44)
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
On November 28, 1980, the petitioner filed with the Phil. Patent Office two (2) petitions “WHEREFORE, all the foregoing considered, this Office is constrained to hold that the
for the cancellation of Certificates of Supplemental Registration Nos. SR-4717 and SR- herein Petitioner has not successfully made out a case of cancellation. Accordingly,
4701 stating among others that: Inter Partes Cases Nos. 1460 and 1461 are, as they are hereby, DISMISSED. Hence,
Respondent’s Certificate of Supplemental Registration No. 4717 issued on May 20,
1980 covering the tradename ‘ISETANN DEPT. STORE, INC. & FLOWER DESIGN’ are, as
” . . . except for the additional letter ‘N’ in the word “Isetan”, the mark registered by
they are hereby ordered to remain in full force and effect for the duration of their term
the registrant is exactly the same as the trademark ISETAN owned by the petitioner
unless sooner or later terminated by law.
and that the young leaves registered by the registrant is exactly the same as the
young leaves design owned by the petitioner.”
The corresponding application for registration in the Principal Register of the
Trademark and of the tradename aforesaid are hereby given due course.
The petitioner further alleged that private respondent’s 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 Let the records of these cases be transmitted to the Trademark Examining Division for
long established goodwill and popularity of the petitioner’s reputation, thereby causing appropriate action in accordance with this Decision.”
great and irreparable injury and damage to it (Rollo, p. 521). It argued that both the
petitioner’s and respondent’s goods move in the same channels of trade, and ordinary
On February 21, 1986, Isetan Company Limited moved for the reconsideration of said
people will be misled to believe that the products of the private respondent originated
decision but the motion was denied on April 2, 1986 (Rollo, pp. 355-359).
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.
From this adverse decision of the Director of Patents, the petitioner appealed to the
Intermediate Appellate Court (now Court of Appeals).
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 On June 2, 1986, the IAC dismissed the appeal on the ground that it was filed out of
committed the government to the protection of trademarks belonging not only to time.
Filipino citizens but also to those belonging to nationals of other member countries
who may seek protection in the Philippines. (Rollo, p. 522)
The petitioner’s motion for reconsideration was likewise denied in a resolution dated
July 11, 1986.
The petition was docketed as Inter Partes Cases Nos. 1460 and 1461 (Rollo, p. 514).
Hence, this petition.
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
Initially, the Court dismissed the petition in a resolution dated July 8, 1987, on the
of Isetann Department Store, Inc. which petition was docketed as SEC Case No. 2051
ground that it was filed fourteen (14) days later. However, on motion for
(Rollo, p. 524). On May 17, 1985, this petition was denied in a decision rendered by
reconsideration, whereby the petitioner appealed to this Court on equitable grounds
SEC’s Hearing Officer, Atty. Joaquin C. Garaygay. prcd
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
On appeal, the Commission reversed the decision of the Hearing Officer on February denial of substantive justice. The parties were then required to submit their
25, 1986. It directed the private respondent to amend its Articles of Incorporation memoranda. (Rollo, pp. 2-28; Resolution, pp. 271; 453).
within 30 days from finality of the decision.
After carefully considering the records of this case, we reiterate our July 8, 1987
On April 15, 1986, however, respondent Isetann Department Store filed a motion for resolution dismissing the petition. There are no compelling equitable considerations
reconsideration. (Rollo, pp. 325-353). And on September 10, 1987, the Commission which call for the application of the rule enunciated in Serrano v. Court of Appeals (139
reversed its earlier decision dated February 25, 1986 thereby affirming the decision SCRA 179 [1985]) and Orata v. Intermediate Appellate Court, et al. (185 SCRA 148
rendered by the Hearing Officer on May 17, 1985. The Commission stated that since [1990]) that considerations of substantial justice manifest in the petition may relax the
the petitioner’s trademark and tradename have never been used in commerce on the stringent application of technical rules so as not to defeat an exceptionally meritorious
petitioner’s products marketed in the Philippines, the trademark or tradename have petition. llcd
not acquired a reputation and goodwill deserving of protection from usurpation by local
competitors. (Rollo, p. 392)
There is no dispute and the petitioner does not question the fact that the appeal was
filed out of time.
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.
Not only was the appeal filed late in the Court of Appeals, the petition for review was
also filed late with us. In common parlance, the petitioner’s case is “twice dead” and
On January 24, 1986, the Director of Patents after notice and hearing rendered a joint may no longer be reviewed.
decision in Inter Partes Cases Nos. 1460 and 1461, the dispositive portion of which
reads:
The Court of Appeals correctly rejected the appeal on the sole ground of late filing
when it ruled:
“Perfection of an appeal within the time provided by law is jurisdictional, and failure to SECTION 2-A. Ownership of trademarks, tradenames and service marks; how acquired.
observe the period is fatal. — 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
The decision sought to be appealed is one rendered by the Philippine Patent Office, a
appropriate to his exclusive use a trademark, a tradename, or a service mark not so
quasi-judicial body. Consequently, under Section 23(c) of the Interim Rules of Court,
appropriated by another, to distinguish his merchandise, business or service from the
the appeal shall be governed by the provisions of Republic Act No. 5434, which
merchandise, business or service of others. The ownership or possession of a
provides in its Section 2;
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
SECTION 2. Appeals to Court of Appeals. — Appeals to the Court of Appeals shall be same extent as are other property rights known to this law. (As amended by R.A. No.
filed within fifteen (15) days from notice of the ruling, award, order, decision or 638)”
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
These provisions have been interpreted in Sterling Products International, Inc. v.
(15) days, then within ten (10) days from notice or publication, when required by law,
Farbenfabriken Bayer Actiengesellschaft (27 SCRA 1214 [1969]) in this way:
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 “A rule widely accepted and firmly entrenched because it has come down through the
executed as provided by existing law. years is that actual use in commerce or business is a prerequisite to the acquisition of
the right of ownership over a trademark.
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 xxx xxx xxx
the resolution denying the motion for reconsideration.”
” . . . Adoption alone of a trademark would not give exclusive right thereto. Such right
The petitioner received a copy of the Court of Appeals’ resolution denying its motion grows out of their actual use. Adoption is not use. One may make advertisements,
for reconsideration on July 17, 1986. It had only up to August 1, 1986 to file a petition issue circulars, give out price lists on certain goods; but these alone would not give
for review with us. The present petition was posted on August 2, 1986 and received by exclusive right of use. For trademark is a creation of use. The underlying reason for all
us on August 8, 1986. There is no question that it was again, filed late because the these is that purchasers have come to understand the mark as indicating the origin of
petitioner filed an ex-parte motion for admission explaining the delay. the wares. Flowing from this is the trader’s right to protection in the trade he has built
up and the goodwill he has accumulated from use of the trademark. . . . .”
The decision of the Patent Office has long become final and executory. So has the
Court of Appeals decision. In fact, a prior registrant cannot claim exclusive use of the trademark unless it uses it
in commerce.
Regarding the petitioner’s claims of substantial justice which led us to give due course,
we decline to disturb the rulings of the Patent Office and the Court of Appeals. We rule in Pagasa Industrial Corporation v. Court of Appeals (118 SCRA 526 [1982]):

A fundamental principle of Philippine Trademarks Law is that actual use in commerce “3. The Trademark law is very clear. It requires actual commercial use of the mark prior
in the Philippines is a pre-requisite to the acquisition of ownership over a trademark or to its registration. There is no dispute that respondent corporation was the first
a tradename. cdphil 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
The Trademark Law, Republic Act No. 166, as amended, under which this case was
considerable sales since its first use. The invoices (Exhibits 7, 7-a, and 8-b) submitted
heard and decided provides:
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
“SECTION 2. What are registrable. — Trademarks, tradenames and service marks for respondent must be clear, definite and free from inconsistencies. (Sy Ching v. Gaw
owned by persons, corporation, partnerships or associations domiciled in the Lui, 44 SCRA 148-149) ‘Samples’ are not for sale and therefore, the fact of exporting
Philippines and by persons, corporations, partnerships or associations domiciled in any them; to the Philippines cannot be considered to be equivalent to the ‘use’
foreign country may be registered in accordance with the provisions of this Act: contemplated by the law. Respondent did not expect income from such ’samples’.
Provided, That said trademarks, tradenames, or service marks are actually in use in There were no receipts to establish sale, and no proof were presented to show that
commerce and services not less than two months in the Philippines before the time the they were subsequently sold in the Philippines.” (Pagasa Industrial Corp. v. Court of
applications for registration are filed: And provided, further, That the country of which Appeals, 118 SCRA 526 [1982]; Emphasis Supplied)
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
The records show that the petitioner has never conducted any business in the
copy of the foreign law translated into the English language, by the government of the
Philippines. It has never promoted its tradename or trademark in the Philippines. It has
foreign country to the Government of the Republic of the Philippines. (As amended by
absolutely no business goodwill in the Philippines. It is unknown to Filipinos except the
R.A. No. 865).
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. LexLib
There can be no question from the records that the petitioner has never used its territoriality.” (2 Callmann, Unfair Competition and Trademarks, 1945, ed., p. 1006)
tradename or trademark in the Philippines. (Sterling Products International, Inc. v. Farbenfabriken Bayer Aktiengesellschaft, 27
SCRA 1214 [1969]; Emphasis supplied)
The petitioner’s witnesses, Mr. Mayumi Takayama and Mr. Hieoya Murakami, admitted
that: 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
1) The petitioner’s company is not licensed to do business in the Philippines;
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.
2) The petitioner’s trademark is not registered under Philippine law; and 169 F 2d 153).

3) The petitioner’s trademark is not being used on products in trade, manufacture, or The Paris Convention for the Protection of Industrial Property does not automatically
business in the Philippines. 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
It was also established from the testimony of Atty. Villasanta, petitioner’s witness, that
Transportation”, it does not necessarily follow that “Rapid” can no longer be registered
the petitioner has never engaged in promotional activities in the Philippines to
in Uganda, Fiji, or the Philippines.
popularize its trademark because not being engaged in business in the Philippines,
there is no need for advertising. The claim of the petitioner that millions of dollars have
been spent in advertising the petitioner’s products, refers to advertising in Japan or As stated by the Director of Patents —
other foreign places. No promotional activities have been undertaken in the
Philippines, by the petitioner’s own admission.
“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
Any goodwill, reputation, or knowledge regarding the name Isetann is purely the work marks. However, this Treaty provision clearly indicated the conditions which must exist
of the private respondent. Evidence was introduced on the extensive promotional before any trademark owner can claim and be afforded rights such as the Petitioner
activities of the private respondent. herein seeks and those conditions are that:

It might be pertinent at this point to stress that what is involved in this case is not so a) the mark must be internationally known or well known;
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
b) the subject of the right must be a trademark, not a patent or copyright or anything
differentiated from cases involving products bearing such familiar names as “Colgate”,
else;
“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 c) the mark must be for use in the same or similar kinds of goods, and
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
d) the person claiming must be the owner of the mark (The Parties Convention
him. The records show that among Filipinos, the name cannot claim to be
Commentary on the Paris Convention. Article by Dr. Bogach, Director General of the
internationally well-known.
World Intellectual Property Organization, Geneva, Switzerland, 1985)”.

The rule is that the findings of facts of the Director of Patents are conclusive on the
The respondent registered its trademark in 1979. It has continuously used that name
Supreme Court, provided they are supported by substantial evidence. (Chua Che v.
in commerce. It has established a goodwill through extensive advertising. The people
Phil. Patent Office, 13 SCRA 67 [1965]; Chung Te v. Ng Kian Giab, 18 SCRA 747 [1966];
who buy at Isetann Store do so because of Isetann’s efforts. There is no showing that
Marvex Commercial Co., Inc. v. Petra Hawpia & Co., 18 SCRA 1178 [1966]; Lim Kiah v.
the Japanese firm’s registration in Japan or Hongkong has any influence whatsoever on
Kaynee, Co. 25 SCRA 485 [1968]; Kee Boc v. Dir. of Patents, 34 SCRA 570 [1970].
the Filipino buying public. cdrep

The conclusions of the Director of Patents are likewise based on applicable law and
WHEREFORE, premises considered, the petition is hereby DISMISSED.
jurisprudence:

SO ORDERED.
“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 Fernan, C .J ., Paras and Bidin, JJ ., concur.
profit by infringement. LLphil
FIRST DIVISION
There is nothing new in what we now say. Plaintiff itself concedes (Brief for Plaintiff-
Appellant, p. 8 that the principle of territoriality of the Trademark law has been [G.R. No. L-28554. February 28, 1983.]
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