G.R. No. 159938. March 31, 2006.* in trade or commerce.

As between actual use of a mark without

registration, and registration of the mark without actual use
SHANGRI-LA INTERNATIONAL HOTEL MANAGEMENT, LTD., thereof, the former prevails over the latter. For a rule widely
SHANGRI-LA PROPERTIES, INC., MAKATI SHANGRI-LA HOTEL & accepted and firmly entrenched, because it has come down
RESORT, INC., AND KUOK PHILIPPINES PROPERTIES, INC., through the years, is that actual use in commerce or business is a
petitioners, vs. DEVELOPERS GROUP OF COMPANIES, INC., pre-requisite to the acquisition of the right of ownership.
respondent.
Same; Same; The present law on trademarks has dispensed with the
requirement of prior use at the time of registration.—While the
Civil Procedure; Forum Shopping; In National Steel Corporation v. present law on trademarks has dispensed with the requirement of
CA, 388 SCRA 85 (2002), the Supreme Court has ruled that the prior actual use at the time of registration, the law in force at the
certification on non-forum shopping may be signed, for and in time of registration must be applied, and thereunder it was held
behalf of a corporation, by a specifically authorized lawyer who has that as a condition precedent to registration of trademark, trade
personal knowledge of the facts required to be disclosed in such name or service mark, the same must have been in actual use in the
document.—In National Steel Corporation v. CA, 388 SCRA 85 Philippines before the filing of the application for registration.
(2002), the Court has ruled that the certification on non-forum Trademark is a creation of use and therefore actual use is a pre-
shopping may be signed, for and in behalf of a corporation, by a requisite to exclusive ownership and its registration with the
specifically authorized lawyer who has personal knowledge of the Philippine Patent Office is a mere administrative confirmation of
facts required to be disclosed in such document. The reason for this the existence of such right.
is that a corporation can only exercise its powers through its board Civil Procedure; Appeals; Finding of bad faith is factual, not legal;
of directors and/or its duly authorized officers and agents. Physical Exceptions.—While the respondent is correct in saying that a
acts, like the signing of documents, can be performed only by finding of bad faith is factual, not legal, hence beyond the scope of
natural persons duly authorized for the purpose. a petition for review, there are, however, noted exceptions thereto.
Same; Same; Rule 7, Section 5 of the Rules of Court concerning the Among these exceptions are: 1. When the inference made is
certification against forum shopping does not require any consular manifestly mistaken, absurd or impossible; 2. When there is grave
certification if the petitioner is a foreign entity.—Rule 7, Section 5 abuse of discretion; 3. When the judgment is based on a
of the Rules of Court concerning the certification against forum misapprehension of facts; 4. When the findings of fact are
shopping does not require any consular certification if the conflicting; and 5. When the facts set forth in the petition as well as
petitioner is a foreign entity. Nonetheless, to banish any lingering in the petitioner’s main and reply briefs are not disputed by the
doubt, petitioner SLIHM furnished this Court with a consular respondent.
certification dated October 29, 2003 authenticating the Director’s Intellectual Property Code; Trademarks; One who has imitated the
Certificate authorizing Atty. Lerma to execute the certification trademark of another cannot bring an action for infringement,
against forum shopping, together with petitioners’ manifestation of particularly against the true owner of the mark, because he would
February 9, 2004. be coming to court with unclean hands.—One who has imitated the
Intellectual Property Code; Trademarks; Section 2 of R.A. No. 166 trademark of another cannot bring an action for infringement,
which was in effect up to December 31, 1997, requires that before particularly against the true owner of the mark, because he would
a trademark can be registered, it must have been actually used in be coming to court with unclean hands. Priority is of no avail to the
Shangri-La International Hotel Management, Ltd. vs. Developers bad faith plaintiff. Good faith is required in order to ensure that a
Group of Companies, Inc. commerce and service for not less than second user may not merely take advantage of the goodwill
two months in the Philippines prior to the filing of an application for established by the true owner. This point is further bolstered by the
its registration.—Under the provisions of the former trademark fact that under either Section 17 of R.A. No. 166, or Section 151 of
law, R.A. No. 166, as amended, which was in effect up to December R.A. No. 8293, or Article 6bis(3) of the Paris Convention, no time
31, 1997, hence, the law in force at the time of respondent’s limit is fixed for the cancellation of marks registered or used in bad
application for registration of trademark, the root of ownership of faith. This is precisely why petitioners had filed an inter partes case
a trademark is actual use in commerce. Section 2 of said law before the BPTTT for the cancellation of respondent’s registration,
requires that before a trademark can be registered, it must have the proceedings on which were suspended pending resolution of
been actually used in commerce and service for not less than two the instant case.
months in the Philippines prior to the filing of an application for its Same; Same; Under Section 2 of R.A. No. 166, as amended, in order
registration. to register a trademark, one must be the owner thereof and must
Same; Same; Registration without more, does not confer upon the have actually used the mark in commerce in the Philippines for 2
registrant an absolute right to the registered mark.—Registration, months prior to the application for registration.—Under Section 2,
without more, does not confer upon the registrant an absolute in order to register a trademark, one must be the owner thereof
right to the registered mark. The certificate of registration is merely and must have actually used the mark in commerce in the
a prima facie proof that the registrant is the owner of the registered Philippines for 2 months prior to the application for registration.
mark or trade name. Evidence of prior and continuous use of the Since “ownership” of the trademark is required for registration,
mark or trade name by another can overcome the presumptive Section 2-A of the same law sets out to define how one goes about
ownership of the registrant and may very well entitle the former to acquiring ownership thereof. Under Section 2-A, it is clear that
be declared owner in an appropriate case. actual use in commerce is also the test of ownership but the
provision went further by saying that the mark must not have been
Same; Same; As between actual use of a mark without registration, so appropriated by another. Additionally, it is significant to note
and registration of the mark without actual use thereof, the former that Section 2-A does not require that the actual use of a trademark
prevails over the latter.—Ownership of a mark or trade name may must be within the Philippines. Hence, under R.A. No. 166, as
be acquired not necessarily by registration but by adoption and use 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 During the launching of the stylized "S" Logo in February 1975, Mr.
failure to use it within the Philippines for two months. Lee gave the following explanation for the logo, to wit:

Same; Same; R.A. No. 166, as amended, has no retroactive The logo which is shaped like a "S" represents the uniquely Asean
application.—While the Philippines was already a signatory to the architectural structures as well as keep to the legendary Shangri-la
Paris Convention, the IPC only took effect on January 1, 1988, and theme with the mountains on top being reflected on waters below
in the absence of a retroactivity clause, R.A. No. 166 still applies. 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.

DECISION 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
GARCIA, J.:
stationeries, envelopes, business forms, menus, displays and
receipts.
In this petition for review under Rule 45 of the Rules of Court,
petitioners Shangri-La International Hotel Management, Ltd.
The Kuok Group and/or petitioner SLIHM caused the registration
(SLIHM), et al. assail and seek to set aside the Decision dated May
of, and in fact registered, the "Shangri-La" mark and "S" logo in the
15, 20031 of the Court of Appeals (CA) in CA-G.R. CV No. 53351 and
patent offices in different countries around the world.
its Resolution2 of September 15, 2003 which effectively affirmed
with modification an earlier decision of the Regional Trial Court
(RTC) of Quezon City in Civil Case No. Q-91-8476, an action for On June 21, 1988, the petitioners filed with the BPTTT a petition,
infringement and damages, thereat commenced by respondent docketed as Inter Partes Case No. 3145, praying for the cancellation
Developers Group of Companies, Inc. (DGCI) against the herein of the registration of the "Shangri-La" mark and "S" logo issued to
petitioners. 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.
The facts:
3529, praying for the registration of the same mark and logo in their
own names.
At the core of the controversy are the "Shangri-La" mark and "S"
logo. Respondent DGCI claims ownership of said mark and logo in
Until 1987 or 1988, the petitioners did not operate any
the Philippines on the strength of its prior use thereof within the
establishment in the Philippines, albeit they advertised their hotels
country. As DGCI stresses at every turn, it filed on October 18, 1982
abroad since 1972 in numerous business, news, and/or travel
with the Bureau of Patents, Trademarks and Technology Transfer
magazines widely circulated around the world, all readily available
(BPTTT) pursuant to Sections 2 and 4 of Republic Act (RA) No.
in Philippine magazines and newsstands. They, too, maintained
166,3 as amended, an application for registration covering the
reservations and booking agents in airline companies, hotel
subject mark and logo. On May 31, 1983, the BPTTT issued in favor
organizations, tour operators, tour promotion organizations, and in
of DGCI the corresponding certificate of registration therefor, i.e.,
other allied fields in the Philippines.
Registration No. 31904. Since then, DGCI started using the "Shangri-
La" mark and "S" logo in its restaurant business.
It is principally upon the foregoing factual backdrop that
respondent DGCI filed a complaint for Infringement and Damages
On the other hand, the Kuok family owns and operates a chain of
with the RTC of Quezon City against the herein petitioners SLIHM,
hotels with interest in hotels and hotel-related transactions since
Shangri-La Properties, Inc., Makati Shangri-La Hotel & Resort, Inc.,
1969. As far back as 1962, it adopted the name "Shangri-La" as part
and Kuok Philippine Properties, Inc., docketed as Civil Case No. Q-
of the corporate names of all companies organized under the aegis
91-8476 and eventually raffled to Branch 99 of said court. The
of the Kuok Group of Companies (the Kuok Group). The Kuok Group
complaint with prayer for injunctive relief and damages alleged that
has used the name "Shangri-La" in all Shangri-La hotels and hotel-
DGCI has, for the last eight (8) years, been the prior exclusive user
related establishments around the world which the Kuok Family
in the Philippines of the mark and logo in question and the
owned.
registered owner thereof for its restaurant and allied services. As
DGCI alleged in its complaint, SLIHM, et al., in promoting and
To centralize the operations of all Shangri-la hotels and the advertising their hotel and other allied projects then under
ownership of the "Shangri-La" mark and "S" logo, the Kuok Group construction in the country, had been using a mark and logo
had incorporated in Hong Kong and Singapore, among other places, confusingly similar, if not identical, with its mark and "S" logo.
several companies that form part of the Shangri-La International Accordingly, DGCI sought to prohibit the petitioners, as defendants
Hotel Management Ltd. Group of Companies. EDSA Shangri-La a quo, from using the "Shangri-La" mark and "S" logo in their hotels
Hotel and Resort, Inc., and Makati Shangri-La Hotel and Resort, Inc. in the Philippines.
were incorporated in the Philippines beginning 1987 to own and
operate the two (2) hotels put up by the Kuok Group in
In their Answer with Counterclaim, the petitioners accused DGCI of
Mandaluyong and Makati, Metro Manila.
appropriating and illegally using the "Shangri-La" mark and "S" logo,
adding that the legal and beneficial ownership thereof pertained to
All hotels owned, operated and managed by the aforesaid SLIHM SLIHM and that the Kuok Group and its related companies had been
Group of Companies adopted and used the distinctive lettering of using this mark and logo since March 1962 for all their corporate
the name "Shangri-La" as part of their trade names. names and affairs. In this regard, they point to the Paris Convention
for the Protection of Industrial Property as affording security and
From the records, it appears that Shangri-La Hotel Singapore protection to SLIHM's exclusive right to said mark and logo. They
commissioned a Singaporean design artist, a certain Mr. William further claimed having used, since late 1975, the internationally-
Lee, to conceptualize and design the logo of the Shangri-La hotels. 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 the BPTTT. On said date, respondent DGCI amended its
court issued a Writ of Preliminary Injunction enjoining the Articles of Incorporation to reflect the name of its
petitioners from using the subject mark and logo. The preliminary restaurant, known and operating under the style and
injunction issue ultimately reached the Court in G.R. No. 104583 name of "SHANGRI-LA FINEST CHINESE CUISINE."
entitled Developers Group of Companies, Inc. vs. Court of Appeals, Respondent DGCI obtained Certificate of Registration No.
et al. In a decision4 dated March 8, 1993, the Court nullified the writ 31904 for the "Shangri-La" mark and "S" logo.
of preliminary injunction issued by the trial court and directed it to
proceed with the main case and decide it with deliberate dispatch. Eventually, the trial court, on the postulate that petitioners', more
particularly petitioner SLIHM's, use of the mark and logo in dispute
While trial was in progress, the petitioners filed with the court a constitutes an infringement of DGCI's right thereto, came out with
motion to suspend proceedings on account of the pendency before its decision on March 8, 1996 rendering judgment for DGCI, as
the BPTTT of Inter Partes Case No. 3145 for the cancellation of follows:
DGCI's certificate of registration. For its part, respondent DGCI filed
a similar motion in that case, invoking in this respect the pendency WHEREFORE, judgment is hereby rendered in favor of [respondent
of its infringement case before the trial court. The parties' DGCI] and against [SLIHM, et al.] -
respective motions to suspend proceedings also reached the Court
via their respective petitions in G.R. No. 114802, entitled
a) Upholding the validity of the registration of the service
Developers Group of Companies, Inc. vs. Court of Appeals, et al. and
mark "Shangri-la" and "S-Logo" in the name of
G.R. No. 111580, entitled Shangri-La International Hotel
[respondent];
Management LTD., et al. vs. Court of Appeals, et al., which were
accordingly consolidated.
b) Declaring [petitioners'] use of said mark and logo as
infringement of [respondent's] right thereto;
In a consolidated decision 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 c) Ordering [petitioners], their representatives, agents,
respondent DGCI "can file a subsequent action for infringement licensees, assignees and other persons acting under their
with the regular courts of justice in connection with the same authority and with their permission, to permanently
registered mark," ruled in the affirmative, but nonetheless ordered cease and desist from using and/or continuing to use said
the BPTTT to suspend further proceedings in said inter partes case mark and logo, or any copy, reproduction or colorable
and to await the final outcome of the main case. imitation

Meanwhile, trial on the merits of the infringement case proceeded. thereof, in the promotion, advertisement, rendition of
Presented as DGCI's lone witness was Ramon Syhunliong, President their hotel and allied projects and services or in any other
and Chairman of DGCI's Board of Directors. Among other things, manner whatsoever;
this witness testified that:
d) Ordering [petitioners] to remove said mark and logo
1. He is a businessman, with interest in lumber, hotel, from any premises, objects, materials and paraphernalia
hospital, trading and restaurant businesses but only the used by them and/or destroy any and all prints, signs,
restaurant business bears the name "Shangri-La" and advertisements or other materials bearing said mark and
uses the same and the "S-logo" as service marks. The logo in their possession and/or under their control; and
restaurant now known as "Shangri-La Finest Chinese
Cuisine" was formerly known as the "Carvajal Restaurant" e) Ordering [petitioners], jointly and severally, to
until December 1982, when respondent took over said indemnify [respondent] in the amounts of P2,000,000.00
restaurant business. as actual and compensatory damages, P500,000.00 as
attorney's fee and expenses of litigation.
2. He had traveled widely around Asia prior to 1982, and
admitted knowing the Shangri-La Hotel in Hong Kong as Let a copy of this Decision be certified to the Director, Bureau of
early as August 1982. Patents, Trademarks and Technology Transfer for his information
and appropriate action in accordance with the provisions of Section
3. The "S-logo" was one of two (2) designs given to him in 25, Republic Act No. 166
December 1982, scribbled on a piece of paper by a
jeepney signboard artist with an office somewhere in Costs against [petitioners].
Balintawak. The unnamed artist supposedly produced the
two designs after about two or three days from the time SO ORDERED. [Words in brackets added.]
he (Syhunliong) gave the idea of the design he had in
mind.
Therefrom, the petitioners went on appeal to the CA whereat their
recourse was docketed as CA G.R. SP No. 53351.
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 As stated at the threshold hereof, the CA, in its assailed Decision of
of "owning or operating, or both, of hotels and May 15, 2003, affirmed that of the lower court with the
restaurants". modification of deleting the award of attorney's fees. The appellate
court predicated its affirmatory action on the strength or interplay
of the following premises:
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 1. Albeit the Kuok Group used the mark and logo since
"SHANGRI-LA FINEST CHINESE CUISINE & S. Logo" with 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 8. Whether petitioners should be prohibited from
actual use in commerce in the Philippines (in accordance continuing their use of the mark and logo in question.
with Section 2 of R.A. No. 166), it cannot claim ownership
of the mark and logo in accordance with the holding in There are two preliminary issues, however, that respondent DGCI
Kabushi Kaisha Isetan v. IAC, as reiterated in Philip Morris, calls our attention to, namely:
Inc. v. Court of Appeals.
1. Whether the certification against forum-shopping
2. On the other hand, respondent has a right to the mark submitted on behalf of the petitioners is sufficient;
and logo by virtue of its prior use in the Philippines and
the issuance of Certificate of Registration No. 31904.
2. Whether the issues posed by petitioners are purely
factual in nature hence improper for resolution in the
3. The use of the mark or logo in commerce through the instant petition for review on certiorari.
bookings made by travel agencies is unavailing since the
Kuok Group did not establish any branch or regional
DGCI claims that the present petition for review should be
office in the Philippines. As it were, the Kuok Group was
dismissed outright for certain procedural defects, to wit: an
not engaged in commerce in the Philippines inasmuch as
insufficient certification against forum shopping and raising pure
the bookings were made through travel agents not
questions of fact. On both counts, we find the instant petition
owned, controlled or managed by the Kuok Group.
formally and substantially sound.

4. While the Paris Convention protects internationally

In its Comment, respondent alleged that the certification against
known marks, R.A. No. 166 still requires use in commerce
forum shopping signed by Atty. Lee Benjamin Z. Lerma on behalf
in the Philippines. Accordingly, and on the premise that
and as counsel of the petitioners was insufficient, and that he was
international agreements, such as Paris Convention, must
not duly authorized to execute such document. Respondent further
yield to a municipal law, the question on the exclusive
alleged that since petitioner SLIHM is a foreign entity based in Hong
right over the mark and logo would still depend on actual
Kong, the Director's Certificate executed by Mr. Madhu Rama
use in commerce in the Philippines.
Chandra Rao, embodying the board resolution which authorizes
Atty. Lerma to act for SLIHM and execute the certification against
Petitioners then moved for a reconsideration, which motion was forum shopping, should contain the authentication by a consular
denied by the CA in its equally assailed Resolution of September 15, officer of the Philippines in Hong Kong.
2003.1
In National Steel Corporation v. CA, the Court has ruled that the
As formulated by the petitioners, the issues upon which this case certification on non-forum shopping may be signed, for and in
hinges are: behalf of a corporation, by a specifically authorized lawyer who has
personal knowledge of the facts required to be disclosed in such
1. Whether the CA erred in finding that respondent had document. The reason for this is that a corporation can only
the right to file an application for registration of the exercise its powers through its board of directors and/or its duly
"Shangri-La" mark and "S" logo although respondent authorized officers and agents. Physical acts, like the signing of
never had any prior actual commercial use thereof; documents, can be performed only by natural persons duly
authorized for the purpose.12
2. Whether the CA erred in finding that respondent's
supposed use of the identical "Shangri-La" mark and "S" Moreover, Rule 7, Section 5 of the Rules of Court concerning the
logo of the petitioners was not evident bad faith and can certification against forum shopping does not require any consular
actually ripen into ownership, much less registration; certification if the petitioner is a foreign entity. Nonetheless, to
banish any lingering doubt, petitioner SLIHM furnished this Court
3. Whether the CA erred in overlooking petitioners' with a consular certification dated October 29, 2003 authenticating
widespread prior use of the "Shangri-La" mark and "S" the Director's Certificate authorizing Atty. Lerma to execute the
logo in their operations; certification against forum shopping, together with petitioners'
manifestation of February 9, 2004.
4. Whether the CA erred in refusing to consider that
petitioners are entitled to protection under both R.A. No. Respondent also attacks the present petition as one that raises
166, the old trademark law, and the Paris Convention for pure questions of fact. It points out that in a petition for review
the Protection of Industrial Property; 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
5. Whether the CA erred in holding that SLIHM did not
must be distinctly set forth." We do not, however, find that the
have the right to legally own the "Shangri-La" mark and
issues involved in this petition consist purely of questions of fact.
"S" logo by virtue of and despite their ownership by the
These issues will be dealt with as we go through the questions
Kuok Group;
raised by the petitioners one by one.

6. Whether the CA erred in ruling that petitioners' use of

Petitioners' first argument is that the respondent had no right to
the mark and logo constitutes actionable infringement;
file an application for registration of the "Shangri-La" mark and "S"
logo because it did not have prior actual commercial use thereof.
7. Whether the CA erred in awarding damages in favor of To respondent, such an argument raises a question of fact that was
respondent despite the absence of any evidence to already resolved by the RTC and concurred in by the CA.
support the same, and in failing to award relief in favor of
the petitioners; and
First off, all that the RTC found was that respondent was the prior
user and registrant of the subject mark and logo in the Philippines.
Taken in proper context, the trial court's finding on "prior use" can By itself, registration is not a mode of acquiring ownership. When
only be interpreted to mean that respondent used the subject mark the applicant is not the owner of the trademark being applied for,
and logo in the country before the petitioners did. It cannot be he has no right to apply for registration of the same. Registration
construed as being a factual finding that there was prior use of the merely creates a prima facie presumption of the validity of the
mark and logo before registration. registration, of the registrant's ownership of the trademark and of
the exclusive right to the use thereof. Such presumption, just like
Secondly, the question raised is not purely factual in nature. In the the presumptive regularity in the performance of official functions,
context of this case, it involves resolving whether a certificate of is rebuttable and must give way to evidence to the contrary.
registration of a mark, and the presumption of regularity in the
performance of official functions in the issuance thereof, are Here, respondent's own witness, Ramon Syhunliong, testified that
sufficient to establish prior actual use by the registrant. It further a jeepney signboard artist allegedly commissioned to create the
entails answering the question of whether prior actual use is mark and logo submitted his designs only in December 1982. This
required before there may be a valid registration of a mark. was two-and-a-half months after the filing of the respondent's
trademark application on October 18, 1982 with the BPTTT. It was
Under the provisions of the former trademark law, R.A. No. 166, as also only in December 1982 when the respondent's restaurant was
amended, which was in effect up to December 31, 1997, hence, the opened for business. Respondent cannot now claim before the
law in force at the time of respondent's application for registration Court that the certificate of registration itself is proof that the two-
of trademark, the root of ownership of a trademark is actual use in month prior use requirement was complied with, what with the fact
commerce. Section 2 of said law requires that before a trademark that its very own witness testified otherwise in the trial court. And
can be registered, it must have been actually used in commerce and because at the time (October 18, 1982) the respondent filed its
service for not less than two months in the Philippines prior to the application for trademark registration of the "Shangri-La" mark and
filing of an application for its registration. "S" logo, respondent was not using these in the Philippines
commercially, the registration is void.
Registration, without more, does not confer upon the registrant an
absolute right to the registered mark. The certificate of registration Petitioners also argue that the respondent's use of the "Shangri-La"
is merely a prima facie proof that the registrant is the owner of the mark and "S" logo was in evident bad faith and cannot therefore
registered mark or trade name. Evidence of prior and continuous ripen into ownership, much less registration. While the respondent
use of the mark or trade name by another can overcome the is correct in saying that a finding of bad faith is factual, not legal,
presumptive ownership of the registrant and may very well entitle hence beyond the scope of a petition for review, there are,
the former to be declared owner in an appropriate case. however, noted exceptions thereto. Among these exceptions are:

Among the effects of registration of a mark, as catalogued by the 1. When the inference made is manifestly mistaken,
Court in Lorenzana v. Macagba, are: absurd or impossible;

1. Registration in the Principal Register gives rise to 2. When there is grave abuse of discretion;
a presumption of the validity of the registration, the
registrant's ownership of the mark, and his right to the 3. When the judgment is based on a misapprehension of
exclusive use thereof. x x x facts;

2. Registration in the Principal Register is limited to the 4. When the findings of fact are conflicting; and
actual owner of the trademark and proceedings therein
pass on the issue of ownership, which may be contested 5. When the facts set forth in the petition as well as in the
through opposition or interference proceedings, or, after petitioner's main and reply briefs are not disputed by the
registration, in a petition for cancellation. xxx respondent.

[Emphasis supplied] And these are naming but a few of the recognized exceptions to the
rule.
Ownership of a mark or trade name may be acquired not
necessarily by registration but by adoption and use in trade or The CA itself, in its Decision of May 15, 2003, found that the
commerce. As between actual use of a mark without registration, respondent's president and chairman of the board, Ramon
and registration of the mark without actual use thereof, the former Syhunliong, had been a guest at the petitioners' hotel before he
prevails over the latter. For a rule widely accepted and firmly caused the registration of the mark and logo, and surmised that he
entrenched, because it has come down through the years, is that must have copied the idea there:
actual use in commerce or business is a pre-requisite to the
acquisition of the right of ownership.
Did Mr. Ramon Syhunliong, [respondent's] President copy the mark
and devise from one of [petitioners'] hotel (Kowloon Shangri-la)
While the present law on trademarks has dispensed with the abroad? The mere fact that he was a visitor of [petitioners'] hotel
requirement of prior actual use at the time of registration, the law abroad at one time (September 27, 1982) establishes [petitioners']
in force at the time of registration must be applied, and thereunder allegation that he got the idea there.
it was held that as a condition precedent to registration of
trademark, trade name or service mark, the same must have been
Yet, in the very next paragraph, despite the preceding admission
in actual use in the Philippines before the filing of the application
that the mark and logo must have been copied, the CA tries to make
for registration. Trademark is a creation of use and therefore actual
it appear that the adoption of the same mark and logo could have
use is a pre-requisite to exclusive ownership and its registration
been coincidental:
with the Philippine Patent Office is a mere administrative
confirmation of the existence of such right.
The word or name "Shangri-la" and the S-logo, are not uncommon. There is, to be sure, an impressive mass of proof that petitioner
The word "Shangri-la" refers to a (a) remote beautiful imaginary SLIHM and its related companies abroad used the name and logo
place where life approaches perfection or (b) imaginary mountain for one purpose or another x x x.35 [Emphasis supplied]
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. In respondent's own words, "[T]he Court of Appeals did note
It is not impossible that the parties, inspired by the novel, both petitioners' use of the mark and logo but held that such use did not
adopted the mark for their business to conjure [a] place of beauty confer to them ownership or exclusive right to use them in the
and pleasure. Philippines." To petitioners' mind, it was error for the CA to rule
that their worldwide use of the mark and logo in dispute could not
The S-logo is, likewise, not unusual. The devise looks like a modified have conferred upon them any right thereto. Again, this is a legal
Old English print. question which is well worth delving into.

To jump from a recognition of the fact that the mark and logo must R.A. No. 166, as amended, under which this case was heard and
have been copied to a rationalization for the possibility that both decided provides:
the petitioners and the respondent coincidentally chose the same
name and logo is not only contradictory, but also manifestly Section 2. What are registrable. - Trademarks, trade names and
mistaken or absurd. Furthermore, the "S" logo appears nothing like service marks owned by persons, corporations, partnerships or
the "Old English" print that the CA makes it out to be, but is associations domiciled in the Philippines and by persons,
obviously a symbol with oriental or Asian overtones. At any rate, it corporations, partnerships or associations domiciled in any foreign
is ludicrous to believe that the parties would come up with the country may be registered in accordance with the provisions of this
exact same lettering for the word "Shangri-La" and the exact same Act: Provided, That said trademarks trade names, or service marks
logo to boot. As correctly observed by the petitioners, to which we are actually in use in commerce and services not less than two
are in full accord: months in the Philippines before the time the applications for
registration are filed: And provided, further, That the country of
x x x When a trademark copycat adopts the word portion of which the applicant for registration is a citizen grants by law
another's trademark as his own, there may still be some doubt that substantially similar privileges to citizens of the Philippines, and
the adoption is intentional. But if he copies not only the word but such fact is officially certified, with a certified true copy of the
also the word's exact font and lettering style and in addition, he foreign law translated into the English language, by the government
copies also the logo portion of the trademark, the slightest doubt of the foreign country to the Government of the Republic of the
vanishes. It is then replaced by the certainty that the adoption was Philippines.
deliberate, malicious and in bad faith.31
Section 2-A. Ownership of trademarks, trade names and service
It is truly difficult to understand why, of the millions of terms and marks; how acquired. - Anyone who lawfully produces or deals in
combination of letters and designs available, the respondent had to merchandise of any kind or who engages in any lawful business, or
choose exactly the same mark and logo as that of the petitioners, if who renders any lawful service in commerce, by actual use thereof
there was no intent to take advantage of the goodwill of in manufacture or trade, in business, and in the service rendered,
petitioners' mark and logo.32 may appropriate to his exclusive use a trademark, a trade name, or
a servicemark not so appropriated by another, to distinguish his
One who has imitated the trademark of another cannot bring an merchandise, business or service from the merchandise, business
action for infringement, particularly against the true owner of the or services of others. The ownership or possession of a trademark,
mark, because he would be coming to court with unclean trade name, service mark, heretofore or hereafter appropriated, as
hands. Priority is of no avail to the bad faith plaintiff. Good faith is in this section provided, shall be recognized and protected in the
required in order to ensure that a second user may not merely take same manner and to the same extent as are other property rights
advantage of the goodwill established by the true owner. known to this law. [Emphasis supplied]

This point is further bolstered by the fact that under either Section Admittedly, the CA was not amiss in saying that the law requires
17 of R.A. No. 166, or Section 151 of R.A. No. 8293, or Article 6bis(3) the actual use in commerce of the said trade name and "S" logo in
of the Paris Convention, no time limit is fixed for the cancellation of the Philippines. Hence, consistent with its finding that the bulk of
marks registered or used in bad faith. This is precisely why the petitioners' evidence shows that the alleged use of the Shangri-
petitioners had filed an inter partes case before the BPTTT for the La trade name was done abroad and not in the Philippines, it is
cancellation of respondent's registration, the proceedings on which understandable for that court to rule in respondent's favor.
were suspended pending resolution of the instant case. 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
Respondent DGCI also rebukes the next issue raised by the
is registrable, Section 2-A, on the other hand, sets out
petitioners as being purely factual in nature, namely, whether the
how ownership is acquired. These are two distinct concepts.
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, Under Section 2, in order to register a trademark, one must be the
which would have been factual, but whether that prior use entitles owner thereof and must have actually used the mark in commerce
the petitioners to use the mark and logo in the Philippines. This is in the Philippines for 2 months prior to the application for
clearly a question which is legal in nature. 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
It has already been established in the two courts below,
clear that actual use in commerce is also the test of ownership but
and admitted by the respondent's president himself, that
the provision went further by saying that the mark must not have
petitioners had prior widespread use of the mark and logo abroad:
been so appropriated by another. Additionally, it is significant to
note that Section 2-A does not require that the actual use of a
trademark must be within the Philippines. Hence, under R.A. No.
166, as amended, one may be an owner of a mark due to actual use The Paris Convention mandates that protection should be afforded
thereof but not yet have the right to register such ownership here to internationally known marks as signatory to the Paris
due to failure to use it within the Philippines for two months. Convention, without regard as to whether the foreign corporation
is registered, licensed or doing business in the Philippines. It goes
While the petitioners may not have qualified under Section 2 of R.A. without saying that the same runs afoul to Republic Act No. 166,
No. 166 as a registrant, neither did respondent DGCI, since the which requires the actual use in commerce in the Philippines of the
latter also failed to fulfill the 2-month actual use requirement. subject mark or devise. The apparent conflict between the two (2)
What is worse, DGCI was not even the owner of the mark. For it to was settled by the Supreme Court in this wise -
have been the owner, the mark must not have been already
appropriated (i.e., used) by someone else. At the time of "Following universal acquiescence and comity, our municipal law
respondent DGCI's registration of the mark, the same was already on trademarks regarding the requirement of actual use in the
being used by the petitioners, albeit abroad, of which DGCI's Philippines must subordinate an international agreement inasmuch
president was fully aware. as the apparent clash is being decided by a municipal tribunal
(Mortensen vs. Peters, Great Britain, High Court of Judiciary of
It is respondent's contention that since the petitioners adopted the Scotland, 1906, 8 Sessions 93; Paras, International Law and World
"Shangri-La" mark and "S" logo as a mere corporate name or as the Organization, 1971 Ed., p. 20). Withal, the fact that international
name of their hotels, instead of using them as a trademark or law has been made part of the law of the land does not by any
service mark, then such name and logo are not trademarks. The two means imply the primacy of international law over national law in
concepts of corporate name or business name and trademark or the municipal sphere. Under the doctrine of incorporation as
service mark, are not mutually exclusive. It is common, indeed applied in most countries, rules of international law are given a
likely, that the name of a corporation or business is also a trade standing equal, not superior, to national legislative enactments
name, trademark or service mark. Section 38 of R.A. No. 166 (Salonga and Yap, Public International Law, Fourth ed., 1974, p.
defines the terms as follows: 16)." [Emphasis supplied]

Sec. 38. Words and terms defined and construed - In the Consequently, the petitioners cannot claim protection under the
construction of this Act, unless the contrary is plainly apparent from Paris Convention. Nevertheless, with the double infirmity of lack of
the context - The term "trade name" includes individual names and two-month prior use, as well as bad faith in the respondent's
surnames, firm names, trade names, devices or words used by registration of the mark, it is evident that the petitioners cannot be
manufacturers, industrialists, merchants, agriculturists, and others guilty of infringement. It would be a great injustice to adjudge the
to identify their business, vocations or occupations; the names or petitioners guilty of infringing a mark when they are actually the
titles lawfully adopted and used by natural or juridical persons, originator and creator thereof.
unions, and any manufacturing, industrial, commercial, agricultural
or other organizations engaged in trade or commerce. Nor can the petitioners' separate personalities from their mother
corporation be an obstacle in the enforcement of their rights as
The term "trade mark" includes any word, name, symbol, emblem, part of the Kuok Group of Companies and as official repository,
sign or device or any combination thereof adopted and used by a manager and operator of the subject mark and logo. Besides, R.A.
manufacturer or merchant to identify his goods and distinguish No. 166 did not require the party seeking relief to be the owner of
them from those manufactured, sold or dealt in by others. the mark but "any person who believes that he is or will be
damaged by the registration of a mark or trade name."40
The term "service mark" means a mark used in the sale or
advertising of services to identify the services of one person and WHEREFORE, the instant petition is GRANTED. The assailed
distinguish them from the services of others and includes without Decision and Resolution of the Court of Appeals dated May 15,
limitation the marks, names, symbols, titles, designations, slogans, 2003 and September 15, 2003, respectively, and the Decision of the
character names, and distinctive features of radio or other Regional Trial Court of Quezon City dated March 8, 1996 are hereby
advertising. [Emphasis supplied] SET ASIDE. Accordingly, the complaint for infringement in Civil Case
No. Q-91-8476 is ordered DISMISSED.
Clearly, from the broad definitions quoted above, the petitioners
can be considered as having used the "Shangri-La" name and "S" SO ORDERED.
logo as a tradename and service mark.

The new Intellectual Property Code (IPC), Republic Act No. 8293,
undoubtedly shows the firm resolve of the Philippines to observe
and follow the Paris Convention by incorporating the relevant
portions of the Convention such that persons who may question a
mark (that is, oppose registration, petition for the cancellation
thereof, sue for unfair competition) include persons whose
internationally well-known mark, whether or not registered, is
identical with or confusingly similar to or constitutes a translation
of a mark that is sought to be registered or is actually registered.

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. Under
the prevailing law and jurisprudence at the time, the CA had not
erred in ruling that: