July 19, 2016

G.R. No. 204605

INTELLECTUAL PROPERTY ASSOCIATION OF THE PHILIPPINES, Petitioner,

vs.
HON. PAQUITO OCHOA, IN HIS CAPACITY AS EXECUTIVE SECRETARY, HON. ALBERT DEL
ROSARIO, IN HIS CAPACITY AS SECRETARY OF THE DEPARTMENT OF FOREIGN AFFAIRS,
AND HON. RICARDO BLANCAFLOR, IN HIS CAPACITY AS THE DIRECTOR GENERAL OF THE
INTELLECTUAL PROPERTY OFFICE OF THE PHILIPPINES, Respondents.

DECISION

BERSAMIN, J.:

In this special civil action for certiorari and prohibition, the Intellectual Property Association of the
Philippines (IPAP) seeks to declare the accession of the Philippines to the Protocol Relating to the
Madrid Agreement Concerning the International Registration of Marks (Madrid
Protocol) unconstitutional on the ground of the lack of concurrence by the Senate, and in the
alternative, to declare the implementation thereof as unconstitutional because it conflicts with
Republic Act No. 8293, otherwise known as the Intellectual Property Code of the Philippines (IP
Code).1

We find and declare that the President's ratification is valid and constitutional because the Madrid
Protocol, being an executive agreement as determined by the Department of Foreign Affairs, does
not require the concurrence of the Senate.

Antecedents

The Madrid System for the International Registration of Marks (Madrid System), which is the
centralized system providing a one-stop solution for registering and managing marks worldwide,
allows the trademark owner to file one application in one language, and to pay one set of fees to
protect his mark in the territories of up to 97 member-states.2 The Madrid System is governed by
the Madrid Agreement, concluded in 1891, and the Madrid Protocol, concluded in 1989.3

The Madrid Protocol, which was adopted in order to remove the challenges deterring some countries
from acceding to the Madrid Agreement, has two objectives, namely: (1) to facilitate securing
protection for marks; and (2) to make the management of the registered marks easier in different
countries.4

In 2004; the Intellectual Property Office of the Philippines (IPOPHL), the government agency
mandated to administer the intellectual property system of the country and to implement the state
policies on intellectual property; began considering the country's accession to the Madrid
Protocol. However, based on its assessment in 2005, the IPOPHL needed to first improve its own
operations before making the recommendation in favor of accession. The IPOPHL thus implemented
reforms to eliminate trademark backlogs and to reduce the turnaround time for the registration of
marks.5

In the meanwhile, the IPOPHL mounted a campaign for information dissemination to raise
awareness of the Madrid Protocol. It launched a series of consultations with stakeholders and
various business groups regarding the Philippines' accession to the Madrid Protocol. It ultimately
arrived at the conclusion that accession would benefit the country and help raise the level of
competitiveness for Filipino brands. Hence, it recommended in September 2011 to the Department
of Foreign Affairs (DFA) that the Philippines should accede to the Madrid Protocol.6

After its own review, the DFA endorsed to the President the country's accession to the Madrid
Protocol. Conformably with its express authority under Section 9 of Executive Order No.
459 (Providing for the Guidelines in the Negotiation of International Agreements and its
Ratification) dated November 25, 1997, the DFA determined that the Madrid Protocol was an
executive agreement. The IPOPHL, the Department of Science and Technology, and the
1w phi 1

Department of Trade and Industry concurred in the recommendation of the DFA.7

On March 27, 2012, President Benigno C. Aquino III ratified the Madrid Protocol through an
instrument of accession, The instrument of accession was deposited with the Director General of the
World Intellectual Property Organization (WIPO) on April 25, 2012.8 The Madrid Protocol entered into
force in the Philippines on July 25, 2012.9

Petitioner IP AP, an association of more than 100 law firms and individual practitioners in Intellectual
Property Law whose main objective is to promote and protect intellectual property rights in the
Philippines through constant assistance and involvement in the legislation of intellectual property
law,10 has commenced this special civil action for certiorari and prohibition11 to challenge the validity
of the President's accession to the Madrid Protocol without the concurrence of the Senate.
Citing Pimentel, Jr. v. Office of the Executive Secretary, the IPAP has averred:

Nonetheless, while the President has the sole authority to negotiate and enter into treaties, the
Constitution provides a limitation to his power by requiring the concurrence of 2/3 of all the members
of the Senate for the validity of the treaty entered into by him. Section 21, Article VII of the 1987
Constitution provides that "no treaty or international agreement shall be valid and effective unless
concurred in by at least two-thirds of all the Members of the Senate." The 1935 and the 1973
Constitution also required the concurrence by the legislature to the treaties entered into by the
executive.12

According to the IPAP, the Madrid Protocol is a treaty, not an executive agreement; hence,
respondent DFA Secretary Albert Del Rosario acted with grave abuse of discretion in determining
the Madrid Protocol as an executive agreement.13

The IPAP has argued that the implementation of the Madrid Protocol in the Philippines; specifically
the processing of foreign trademark applications, conflicts with the IP Code,14 whose Section 125
states:

Sec. 125. Representation; Address for Service. - If the applicant is not domiciled or has no real
and effective commercial establishment in the Philippines; he shall designate by a written document
filed in the office, the name and address of a Philippine resident who may be served notices or
process in proceedings affecting the mark. Such notices or services may be served upon the person
so designated by leaving a copy thereof at the address specified in the last designation filed. If the
person so designated cannot be found at the address given in the last designation, such notice or
process may be served upon the Director. (Sec. 3; R.A. No. 166 a)

It has posited that Article 2 of the Madrid Protocol provides in contrast:

Article 2

Securing Protection through International Registration

(1) Where an application for the registration of a mark has been filed with the Office of a Contracting
Party, or where a mark has been registered in the register of the Office of a Contracting Party, the
person in whose name that application (hereinafter referred to as "the basic application;') or that
registration (hereinafter referred to as "the basic registration") stands may, subject to the provisions
of this Protocol secure protection for his mark in the territory of the Contracting Parties, by obtaining
the registration of that mark in the register of the International Bureau of the World Intellectual
Property Organization (hereinafter referred to as "the international registration," "the International
Register," "the International Bureau" and "the Organization'', respectively), provided that,

(i) where the basic application has been filed with the Office of a Contracting State or where the
basic registration has been made by such an Office, the person in whose name that application or
registration stands is a national of that Contracting State, or is domiciled, or has a real and effective
industrial or commercial establishment, in the said Contracting State,

(ii) where the basic application has been filed with the Office of a Contracting Organization or where
the basic registration has been made by such an Office, the person in whose name that application
or registration stands is a national of a State member of that Contracting Organization, or is
domiciled, or has a real and effective industrial or commercial establishment, in the territory of the
said Contracting Organization.

(2) The application for international registration (hereinafter referred to as "the international
application") shall be filed with the International Bureau through the intermediary of the Office with
which the basic application was filed or by which the basic registration was made (hereinafter
referred to as "the Office of origin"), as the case may be.

(3) Any reference in this Protocol to an "Office" or an "Office of a Contracting Party" shall be
construed as a reference to the office that is in charge, on behalf of a Contracting Party, of the
registration of marks, and any reference in this Protocol to "marks" shall be construed as a reference
to trademarks and service marks.

(4) For the purposes of this Protocol, "territory of a Contracting Party" means, where the Contracting
Party is a State, the territory of that State and, where the Contracting Party is an intergovernmental
organization, the territory in which the constituting treaty of that intergovernmental organization
applied.

The IPAP has insisted that Article 2 of the Madrid Protocol means that foreign trademark applicants
may file their applications through the International Bureau or the WIPO, and their applications will
be automatically granted trademark protection without the need for designating their resident agents
in the country In contrast with the IP COde.15

Moreover, the IPAP has submitted that the procedure outlined in the Guide to the International
Registration of Marks relating to representation before the International Bureau is the following, to
wit:

Rule 3(1)(a) 09.02 References in the Regulations, Administrative Instructions or in this Guide to
representation relate only to representation before the International Bureau. The questions of the
need for a representative before the Office of origin or the Office of a designated Contracting Party
(for example, in the event of a refusal of protection issued by such an Office), who may act as a
representative in such cases and the method of appointment, are outside the scope of the
Agreement, Protocol and Regulations and are governed by the law and practice of the Contracting
Party concerned.
which procedure is in conflict with that under Section 125 of the IP Code, and constitutes in effect an
amendment of the local law by the Executive Department.16

The IPAP has prayed that the implementation of the Madrid Protocol in the Philippines be restrained
in order to prevent future wrongs considering that the IP AP and its constituency have a clear and
unmistakable right not to be deprived of the rights granted them by the IP Code and existing local
laws.17

In its comment in behalf of the respondents, the Office of the Solicitor General (OSG) has stated that
the IPAP does not have the locus standi to challenge the accession to the Madrid Protocol; that the
IPAP cannot invoke the Court's original jurisdiction absent a showing of any grave abuse of
discretion on the part of the respondents; that the President's ratification of the Madrid Protocol as
an executive agreement is valid because the Madrid Protocol is only procedural, does not create
substantive rights, and does not require the amendment of the IP Code; that the IPAP is not entitled
to the restraining order or injunction because it suffers no damage from the ratification by the
President, and there is also no urgency for such relief; and the IPAP has no clear unmistakable right
to the relief sought.18

Issues

The following issues are to be resolved, namely:

I. Whether or not the IP AP has locus standi to challenge the President's ratification of the Madrid
Protocol;

II. Whether or not the President's ratification of the Madrid Protocol is valid and constitutional; and

III. Whether or not the Madrid Protocol is in conflict with the IP Code.

Ruling of the Court

The petition for certiorari and prohibition is without merit.

A.

The issue of legal standing to sue, or locus standi

The IPAP argues in its reply19 that it has the locus standi to file the present case by virtue of its being
an association whose members stand to be injured as a result of the enforcement of the Madrid
Protocol in the Philippines; that the injury pertains to the acceptance and approval of applications
submitted through the Madrid Protocol without local representation as required by Section 125 of the
IP Code;20 and that such will diminish the rights granted by the IP Code to Intellectual Property Law
practitioners like the members of the IPAP.21

The argument of the IPAP is untenable.

Legal standing refers to "a right of appearance in a court of justice on a given question."22 According
to Agan, Jr. v. Philippine International Air Terminals Co., Inc.,23standing is "a peculiar concept in
constitutional law because in some cases, suits are not brought by parties who have been personally
injured by the operation of a law or any other government act but by concerned citizens, taxpayers
or voters who actually sue in the public interest."
The Court has frequently felt the need to dwell on the issue of standing in public or constitutional
litigations to sift the worthy from the unworthy public law litigants seeking redress or relief. The
following elucidation in De Castro v. Judicial and Bar Council24offers the general understanding of the
context of legal standing, or locus standi for that purpose, viz. :

In public or constitutional litigations, the Court is often burdened with the determination of the locus
standi of the petitioners due to the ever-present need to regulate the invocation of the intervention of
the Court to correct any official action or policy in order to avoid obstructing the efficient functioning
of public officials and offices involved in public service. It is required, therefore, that the petitioner
must have a personal stake in the outcome of the controversy, for, as indicated in Agan, Jr. v.
Philippine International Air Terminals Co., Inc.:

The question on legal standing is whether such parties have "'alleged such a personal stake
in the outcome of the controversy as to assure that concrete adverseness which sharpens
the presentation of issues upon which the court so largely depends for illumination of
difficult constitutional questions," Accordingly, it has been held that the interest of a person
assailing the constitutionality of a statute must be direct and personal. He must be able to
show, not only that the law or any government act is invalid, but also that he sustained or is
in imminent danger of sustaining some direct injury as a result of its enforcement, and not
merely that he suffers thereby in some indefinite way. It must appear that the person
complaining has been or is about to be denied some right or privilege to which he is lawfully
entitled or that he is about to be subjected to some burdens or penalties by reason of the
statute or act complained of.

It is true that as early as in 1937, in People v. Vera, the Court adopted the direct injury test for
determining whether a petitioner in a public action had locus standi. There, the Court held that the
person who would assail the validity of a statute must have "a personal and substantial interest in
the case such that he has sustained, or will sustain direct injury as a result." Vera was followed
in Custodio v. President of the Senate, Manila Race Horse Trainers' Association v. De la Fuente,
Anti-Chinese League of the Philippines v. Felix, and Pascual v. Secretary of Public Works.

Yet, the Court has also held that the requirement of locus standi, being a mere procedural
technicality, can be waived by the Court in the exercise of its discretion. For instance, in 1949,
in Araneta v. Dinglasan, the Court liberalized the approach when the cases had "transcendental
importance." Some notable controversies whose petitioners did not pass the direct injury test were
allowed to be treated in the same way as in Araneta v. Dinglasan.

In the 1975 decision in Aquino v. Commission on Elections, this Court decided to resolve the issues
raised by the petition due to their "farreaching implications,'; even if the petitioner had no personality
to file the suit. The liberal approach of Aquino v. Commission on Elections has been adopted in
several notable cases, permitting ordinary citizens, legislators, and civic organizations to bring their
suits involving the constitutionality or validity of laws, regulations, and rulings.

However, the assertion of a public right as a predicate for challenging a supposedly illegal or
unconstitutional executive or legislative action rests on the theory that the petitioner represents the
public in general. Although such petitioner may not be as adversely affected by the action
complained against as are others, it is enough that he sufficiently demonstrates in his petition that he
is entitled to protection or relief from the Court in the vindication ofa public right.25

The injury that the IPAP will allegedly suffer from the implementation of the Madrid Protocol is
imaginary, incidental and speculative as opposed to a direct and material injury required by the
foregoing tenets on locus standi. Additionally, as the OSG points out in the comment,26 the IPAP has
misinterpreted Section 125 of the IP Code on the issue of representation. The provision only states
that a foreign trademark applicant "shall designate by a written document filed in the office, the name
and address of a Philippine resident who may be served notices or process in proceedings affecting
the mark;" it does not grant anyone in particular the right to represent the foreign trademark
applicant. Hence, the IPAP cannot justly claim that it will suffer irreparable injury or diminution of
rights granted to it by Section 125 of the IP Code from the implementation of the Madrid Protocol.

Nonetheless, the IPAP also emphasizes that the paramount public interest involved has
transcendental importance because its petition asserts that the Executive Department has
overstepped the bounds of its authority by thereby cutting into another branch's functions and
responsibilities.27 The assertion of the IPAP may be valid on this score. There is little question that
the issues raised herein against the implementation of the Madrid Protocol are of transcendental
importance. Accordingly, we recognize IPAP's locus standi to bring the present challenge. Indeed,
the Court has adopted a liberal attitude towards locus standi whenever the issue presented for
consideration has transcendental significance to the people, or whenever the issues raised are of
paramount importance to the public.28

B.

Accession to the

Madrid Protocol was constitutional

The IP AP submits that respondents Executive Secretary and DFA Secretary Del Rosario gravely
abused their discretion in determining that there was no need for the Philippine Senate's
concurrence with the Madrid Protocol; that the Madrid Protocol involves changes of national policy,
and its being of a permanent character requires the Senate's concurrence,29 pursuant to Section 21,
Article VII of the Constitution, which states that "no treaty or international agreement shall be valid
and effective unless concurred in by at least two-thirds of all the Members of the Senate."

Before going further, we have to distinguish between treaties and international agreements, which
require the Senate's concurrence, on one hand, and executive agreements, which may be validly
entered into without the Senate's concurrence. Executive Order No. 459, Series of 1997,30 notes the
following definitions, to wit:

Sec. 2. Definition of Terms.

a. International agreement - shall refer to a contract or understanding, regardless of nomenclature,

entered into between the Philippines and another government in written form and governed by
international law, whether embodied in a single instrument or in two or more related instruments.

b. Treaties - international agreements entered into by the Philippines which require legislative
concurrence after executive ratification. This term may include compacts like conventions,
declarations, covenants and acts.

c. Executive Agreements - similar to treaties except that they do not require legislative
concurrence.

The Court has highlighted the difference between treaties and executive agreements
in Commissioner of Customs v. Eastern Sea Trading,31 thusly:
International agreements involving political issues or changes of national policy and those involving
international arrangements of a permanent character usually take the form of treaties. But
international agreements embodying adjustments of detail carrying out well-established national
policies and traditions and those involving arrangements of a more or less temporary nature usually
take the form of executive agreements.

In the Philippines, the DFA, by virtue of Section 9, Executive Order No. 459,32 is initially given the
power to determine whether an agreement is to be treated as a treaty or as an executive agreement.
To determine the issue of whether DFA Secretary Del Rosario gravely abused his discretion in
making his determination relative to the Madrid Protocol, we review the jurisprudence on the nature
of executive agreements, as well as the subject matters to be covered by executive agreements.

The pronouncement in Commissioner of Customs v. Eastern Sea Trading33is instructive, to wit:

x x x The concurrence of said House of Congress is required by our fundamental law in the making
of "treaties" (Constitution of the Philippines; Article VII, Section 10[7]), which are, however, distinct
and different from "executive agreements," which may be validly entered into without such
concurrence.

"Treaties are formal documents which require ratification with the approval of two thirds of the
Senate. Executive agreements become binding through executive action without the need of a vote
by the Senate or by Congress.

xxxx

"x x x the right of the Executive to enter into binding agreements without the necessity of subsequent
Congressional approval has been confirmed by long usage. From the earliest days of our history we
have entered into executive agreements covering such subjects as commercial and consular
relations, most-favored-nation rights, patent rights, trademark and copyright protection, postal
and navigation arrangements and the settlement of claims. The validity of these has never been
seriously questioned by our courts.

xxxx

Agreements with respect to the registration of trademarks have been concluded by the
Executive with various countries under the Act of Congress of March 3, 1881 (21 Stat. 502), x x x

xxxx

In this connection, Francis B. Sayre, former U.S. High Commissioner to the Philippines, said in his
work on "The Constitutionality of Trade Agreement Acts":

Agreements concluded by the President which fall short of treaties are commonly referred to as
executive agreements and are no less common in our scheme of government than are the more
formal instruments - treaties and conventions. They sometimes take the form of exchanges of notes
and at other times that or more formal documents denominated 'agreements' or 'protocols'. The point
where ordinary correspondence between this and other governments ends and agreements -
whether denominated executive agreements or exchanges of notes or otherwise - begin, may
sometimes be difficult of ready ascertainment. It would be useless to undertake to discuss here the
large variety of executive agreements as such, concluded from time to time. Hundreds of executive
agreements, other than those entered into under the trade-agreements act, have been negotiated
with foreign governments. x x x It would seem to be sufficient, in order to show that the trade
agreements under the act of 1934 are not anomalous in character, that they are not treaties, and
that they have abundant precedent in our history, to refer to certain classes of agreements
heretofore entered into by the Executive without the approval of the Senate. They cover such
subjects as the inspection of vessels, navigation dues, income tax on shipping profits, the
admission of civil aircraft, customs matters, and commercial relations generally, international
claims, postal matters, the registration of trademarks and copyrights, etcetera. Some of them
were concluded not by specific congressional authorization but in conformity with policies
declared in acts of Congress with respect to the general subject matter, such as tariff
acts; while still others, particularly those with respect of the settlement of claims against foreign
governments, were concluded independently of any legislation. (Emphasis ours)

As the foregoing pronouncement indicates, the registration of trademarks and copyrights have been
the subject of executive agreements entered into without the concurrence of the Senate. Some
executive agreements have been concluded in conformity with the policies declared in the acts of
Congress with respect to the general subject matter.

It then becomes relevant to examine our state policy on intellectual property in general, as reflected
in Section 2 of our IP Code, to wit:

Section 2. Declaration of State Policy. - The State recognizes that an effective intellectual and
industrial property system is vital to the development of domestic and creative activity,
facilitates transfer of technology, attracts foreign investments, and ensures market access
for our products. It shall protect and secure the exclusive rights of scientists, inventors,
artists and other gifted citizens to their intellectual property and creations, particularly when
beneficial to the people, for such periods as provided in this Act.

The use of intellectual property bears a social function. To this end, the State shall promote the
diffusion of knowledge and information for the promotion of national development and progress and
the common good.

It is also the policy of the State to streamline administrative procedures of registering

patents, trademarks and copyright, to liberalize the registration on the transfer of technology; and
to enhance the enforcement of intellectual property rights in the Philippines.

In view of the expression of state policy having been made by the Congress itself, the IPAP is plainly
mistaken in asserting that "there was no Congressional act that authorized the accession of the
Philippines to the Madrid Protocol."34

Accordingly, DFA Secretary Del Rosarios determination and treatment of the Madrid Protocol as an
executive agreement; being in apparent contemplation of the express state policies on intellectual
property as well as within his power under Executive Order No. 459, are upheld. We observe at this
point that there are no hard and fast rules on the propriety of entering into a treaty or an executive
agreement on a given subject as an instrument of international relations. The primary consideration
in the choice of the form of agreement is the parties' intent and desire to craft their international
agreement in the form they so wish to further their respective interests. The matter of form takes a
back seat when it comes to effectiveness and binding effect of the enforcement of a treaty or an
executive agreement; inasmuch as all the parties; regardless of the form, become obliged to comply
conformably with the time-honored principle of pacta sunt servanda.35The principle binds the parties
to perform in good faith their parts in the agreements.36

c.
There is no conflict between the Madrid Protocol and the IP Code.

The IPAP also rests its challenge on the supposed conflict between the Madrid Protocol and the IP
Code, contending that the Madrid Protocol does away with the requirement of a resident agent under
Section 125 of the IP Code; and that the Madrid Protocol is unconstitutional for being in conflict with
the local law, which it cannot modify.

The IPAP's contentions stand on a faulty premise. The method of registration through the IPOPHL,
as laid down by the IP Code, is distinct and separate from the method of registration through the
WIPO, as set in the Madrid Protocol. Comparing the two methods of registration despite their being
governed by two separate systems of registration is thus misplaced.

In arguing that the Madrid Protocol conflicts with Section 125 of the IP Code, the IP AP highlights the
importance of the requirement for the designation of a resident agent. It underscores that the
requirement is intended to ensure that non-resident entities seeking protection or privileges under
Philippine Intellectual Property Laws will be subjected to the country's jurisdiction. It submits that
without such resident agent, there will be a need to resort to costly, time consuming and
cumbersome extraterritorial service of writs and processes.37

The IPAP misapprehends the procedure for examination under the Madrid Protocol, The difficulty,
which the IPAP illustrates, is minimal, if not altogether inexistent. The IPOPHL actually requires the
designation of the resident agent when it refuses the registration of a mark. Local representation is
further required in the submission of the Declaration of Actual Use, as well as in the submission of
the license contract.38 The Madrid Protocol accords with the intent and spirit of the IP Code,
particularly on the subject of the registration of trademarks. The Madrid Protocol does not amend or
modify the IP Code on the acquisition of trademark rights considering that the applications under
the Madrid Protocol are still examined according to the relevant national law, In that regard, the
IPOPHL will only grant protection to a mark that meets the local registration requirements.

WHEREFORE, this Court DISMISSES the petition for certiorari and prohibition for lack of merit;
and ORDERS the petitioner to pay the costs of suit.

SO ORDERED.

LUCAS P. BERSAMIN
Associate Justice

WE CONCUR:
 Republic of the Philippines
SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 194307 November 20, 2013

BIRKENSTOCK ORTHOPAEDIE GMBH AND CO. KG (formerly BIRKENSTOCK ORTHOPAEDIE

GMBH),Petitioner,
vs.
PHILIPPINE SHOE EXPO MARKETING CORPORATION, Respondent.

DECISION

PERLAS-BERNABE, J.:

Assailed in this Petition for Review on Certiorari1 are the Court of Appeals (CA) Decision2 dated June
25, 2010 and Resolution3 dated October 27, 2010 in CA-G.R. SP No. 112278 which reversed and
set aside the Intellectual Property Office (IPO) Director Generals Decision4 dated December 22,
2009 that allowed the registration of various trademarks in favor of petitioner Birkenstock
Orthopaedie GmbH & Co. KG.

The Facts

Petitioner, a corporation duly organized and existing under the laws of Germany, applied for various
trademark registrations before the IPO, namely: (a) "BIRKENSTOCK" under Trademark Application
Serial No. (TASN) 4-1994-091508 for goods falling under Class 25 of the International Classification
of Goods and Services (Nice Classification) with filing date of March 11, 1994; (b) "BIRKENSTOCK
BAD HONNEF -RHEIN & DEVICE COMPRISING OF ROUND COMPANY SEAL AND
REPRESENTATION OF A FOOT, CROSS AND SUNBEA M" under TASN 4-1994-091509 for goods
falling under Class 25 of the Nice Classification with filing date of March 11, 1994; and (c)
"BIRKENSTOCK BAD HONNEF-RHEIN & DEVICE COMPRISING OF ROUND COMPANY SEAL
AND REPRESENTATION OF A FOOT, CROSS AND SUNBEAM" under TASN 4-1994-095043 for
goods falling under Class 10 of the Nice Classification with filing date of September 5, 1994 (subject
applications).5

However, registration proceedings of the subject applications were suspended in view of an existing
registration of the mark "BIRKENSTOCK AND DEVICE" under Registration No. 56334 dated
October 21, 1993 (Registration No. 56334) in the name of Shoe Town International and Industrial
Corporation, the predecessor-in-interest of respondent Philippine Shoe Expo Marketing
Corporation.6 In this regard, on May 27, 1997 petitioner filed a petition for cancellation of Registration
No. 56334 on the ground that it is the lawful and rightful owner of the Birkenstock marks
(Cancellation Case).7 During its pendency, however, respondent and/or its predecessor-in-interest
failed to file the required 10th Year Declaration of Actual Use (10th Year DAU) for Registration No.
56334 on or before October 21, 2004,8 thereby resulting in the cancellation of such
mark.9 Accordingly, the cancellation case was dismissed for being moot and academic.10

The aforesaid cancellation of Registration No. 56334 paved the way for the publication of the subject
applications in the IPO e-Gazette on February 2, 2007.11 In response, respondent filed three (3)
separate verified notices of oppositions to the subject applications docketed as Inter Partes Case
Nos. 14-2007-00108, 14-2007-00115, and 14-2007-00116,12 claiming, inter alia, that: (a) it, together
with its predecessor-in-interest, has been using Birkenstock marks in the Philippines for more than
16 years through the mark "BIRKENSTOCK AND DEVICE"; (b) the marks covered by the subject
applications are identical to the one covered by Registration No. 56334 and thus, petitioner has no
right to the registration of such marks; (c) on November 15, 1991, respondents predecessor-in-
interest likewise obtained a Certificate of Copyright Registration No. 0-11193 for the word
"BIRKENSTOCK" ; (d) while respondent and its predecessor-in-interest failed to file the 10th Yea r
DAU, it continued the use of "BIRKENSTOCK AND DEVICE" in lawful commerce; and (e) to record
its continued ownership and exclusive right to use the "BIRKENSTOCK" marks, it has filed TASN 4-
2006-010273 as a " re-application " of its old registration, Registration No. 56334.13 On November 13,
2007, the Bureau of Legal Affairs (BLA) of the IPO issued Order No. 2007-2051 consolidating the
aforesaid inter partes cases (Consolidated Opposition Cases).14

The Ruling of the BLA

In its Decision15 dated May 28, 2008, the BLA of the IPO sustained respondents opposition, thus,
ordering the rejection of the subject applications. It ruled that the competing marks of the parties are
confusingly similar since they contained the word "BIRKENSTOCK" and are used on the same and
related goods. It found respondent and its predecessor-in-interest as the prior user and adopter of
"BIRKENSTOCK" in the Philippines, while on the other hand, petitioner failed to present evidence of
actual use in the trade and business in this country. It opined that while Registration No. 56334 was
cancelled, it does not follow that prior right over the mark was lost, as proof of continuous and
uninterrupted use in trade and business in the Philippines was presented. The BLA likewise opined
that petitioners marks are not well -known in the Philippines and internationally and that the various
certificates of registration submitted by petitioners were all photocopies and, therefore, not
admissible as evidence.16

Aggrieved, petitioner appealed to the IPO Director General.

The Ruling of the IPO Director General

In his Decision17 dated December 22, 2009, the IPO Director General reversed and set aside the
ruling of the BLA, thus allowing the registration of the subject applications. He held that with the
cancellation of Registration No. 56334 for respondents failure to file the 10th Year DAU, there is no
more reason to reject the subject applications on the ground of prior registration by another
proprietor.18 More importantly, he found that the evidence presented proved that petitioner is the true
and lawful owner and prior user of "BIRKENSTOCK" marks and thus, entitled to the registration of
the marks covered by the subject applications.19 The IPO Director General further held that
respondents copyright for the word "BIRKENSTOCK" is of no moment since copyright and
trademark are different forms of intellectual property that cannot be interchanged.20

Finding the IPO Director Generals reversal of the BLA unacceptable, respondent filed a petition for
review with the CA.

Ruling of the CA

In its Decision21 dated June 25, 2010, the CA reversed and set aside the ruling of the IPO Director
General and reinstated that of the BLA. It disallowed the registration of the subject applications on
the ground that the marks covered by such applications "are confusingly similar, if not outright
identical" with respondents mark.22 It equally held that respondents failure to file the 10th Year DAU
for Registration No. 56334 "did not deprive petitioner of its ownership of the BIRKENSTOCK mark
since it has submitted substantial evidence showing its continued use, promotion and advertisement
thereof up to the present."23 It opined that when respondents predecessor-in-interest adopted and
started its actual use of "BIRKENSTOCK," there is neither an existing registration nor a pending
application for the same and thus, it cannot be said that it acted in bad faith in adopting and starting
the use of such mark.24 Finally, the CA agreed with respondent that petitioners documentary
evidence, being mere photocopies, were submitted in violation of Section 8.1 of Office Order No. 79,
Series of 2005 (Rules on Inter Partes Proceedings).

Dissatisfied, petitioner filed a Motion for Reconsideration25 dated July 20, 2010, which was, however,
denied in a Resolution26 dated October 27, 2010. Hence, this petition.27

Issues Before the Court

The primordial issue raised for the Courts resolution is whether or not the subject marks should be
allowed registration in the name of petitioner.

The Courts Ruling

The petition is meritorious.

A. Admissibility of Petitioners Documentary Evidence.

In its Comment28 dated April 29, 2011, respondent asserts that the documentary evidence submitted
by petitioner in the Consolidated Opposition Cases, which are mere photocopies, are violative of
Section 8.1 of the Rules on Inter Partes Proceedings, which requires certified true copies of
documents and evidence presented by parties in lieu of originals.29 As such, they should be deemed
inadmissible.

The Court is not convinced.

It is well-settled that "the rules of procedure are mere tools aimed at facilitating the attainment of
justice, rather than its frustration. A strict and rigid application of the rules must always be eschewed
when it would subvert the primary objective of the rules, that is, to enhance fair trials and expedite
justice. Technicalities should never be used to defeat the substantive rights of the other party. Every
party-litigant must be afforded the amplest opportunity for the proper and just determination of his
cause, free from the constraints of technicalities."30 "Indeed, the primordial policy is a faithful
observance of [procedural rules], and their relaxation or suspension should only be for persuasive
reasons and only in meritorious cases, to relieve a litigant of an injustice not commensurate with the
degree of his thoughtlessness in not complying with the procedure prescribed."31 This is especially
true with quasi-judicial and administrative bodies, such as the IPO, which are not bound by technical
rules of procedure.32 On this score, Section 5 of the Rules on Inter Partes Proceedings provides:

Sec. 5. Rules of Procedure to be followed in the conduct of hearing of Inter Partes cases. The
rules of procedure herein contained primarily apply in the conduct of hearing of Inter Partes cases.
The Rules of Court may be applied suppletorily. The Bureau shall not be bound by strict technical
rules of procedure and evidence but may adopt, in the absence of any applicable rule herein, such
mode of proceedings which is consistent with the requirements of fair play and conducive to the just,
speedy and inexpensive disposition of cases, and which will give the Bureau the greatest possibility
to focus on the contentious issues before it. (Emphasis and underscoring supplied)

In the case at bar, while petitioner submitted mere photocopies as documentary evidence in the
Consolidated Opposition Cases, it should be noted that the IPO had already obtained the originals of
such documentary evidence in the related Cancellation Case earlier filed before it. Under this
circumstance and the merits of the instant case as will be subsequently discussed, the Court holds
that the IPO Director Generals relaxation of procedure was a valid exercise of his discretion in the
interest of substantial justice.33

Having settled the foregoing procedural matter, the Court now proceeds to resolve the substantive
issues.

B. Registration and ownership of "BIRKENSTOCK."

Republic Act No. (RA) 166,34 the governing law for Registration No. 56334, requires the filing of a
DAU on specified periods,35 to wit:

Section 12. Duration. Each certificate of registration shall remain in force for twenty years:
Provided, That registrations under the provisions of this Act shall be cancelled by the Director,
unless within one year following the fifth, tenth and fifteenth anniversaries of the date of issue of the
certificate of registration, the registrant shall file in the Patent Office an affidavit showing that the
mark or trade-name is still in use or showing that its non-use is due to special circumstance which
excuse such non-use and is not due to any intention to abandon the same, and pay the required fee.

The Director shall notify the registrant who files the above- prescribed affidavits of his acceptance or
refusal thereof and, if a refusal, the reasons therefor. (Emphasis and underscoring supplied)

The aforementioned provision clearly reveals that failure to file the DAU within the requisite period
results in the automatic cancellation of registration of a trademark. In turn, such failure is tantamount
to the abandonment or withdrawal of any right or interest the registrant has over his trademark.36

In this case, respondent admitted that it failed to file the 10th Year DAU for Registration No. 56334
within the requisite period, or on or before October 21, 2004. As a consequence, it was deemed to
have abandoned or withdrawn any right or interest over the mark "BIRKENSTOCK." Neither can it
invoke Section 23637 of the IP Code which pertains to intellectual property rights obtained under
previous intellectual property laws, e.g., RA 166, precisely because it already lost any right or
interest over the said mark.

Besides, petitioner has duly established its true and lawful ownership of the mark "BIRKENSTOCK."

Under Section 238 of RA 166, which is also the law governing the subject applications, in order to
register a trademark, one must be the owner thereof and must have actually used the mark in
commerce in the Philippines for two (2) months prior to the application for registration. Section 2-
A39 of the same law sets out to define how one goes about acquiring ownership thereof. Under the
same section, it is clear that actual use in commerce is also the test of ownership but the provision
went further by saying that the mark must not have been so appropriated by another. Significantly, to
be an owner, Section 2-A does not require that the actual use of a trademark must be within the
Philippines. Thus, under RA 166, one may be an owner of a mark due to its actual use but may not
yet have the right to register such ownership here due to the owners failure to use the same in the
Philippines for two (2) months prior to registration.40

It must be emphasized that registration of a trademark, by itself, is not a mode of acquiring

ownership. If the applicant is not the owner of the trademark, he has no right to apply for its
1wphi1

registration. Registration merely creates a prima facie presumption of the validity of the registration,
of the registrants ownership of the trademark, and of the exclusive right to the use thereof. Such
presumption, just like the presumptive regularity in the performance of official functions, is rebuttable
and must give way to evidence to the contrary.41

Clearly, it is not the application or registration of a trademark that vests ownership thereof, but it is
the ownership of a trademark that confers the right to register the same. A trademark is an industrial
property over which its owner is entitled to property rights which cannot be appropriated by
unscrupulous entities that, in one way or another, happen to register such trademark ahead of its
true and lawful owner. The presumption of ownership accorded to a registrant must then necessarily
yield to superior evidence of actual and real ownership of a trademark.

The Courts pronouncement in Berris Agricultural Co., Inc. v. Abyadang42 is instructive on this point:

The ownership of a trademark is acquired by its registration and its actual use by the manufacturer
or distributor of the goods made available to the purchasing public. x x x A certificate of registration
of a mark, once issued, constitutes prima facie evidence of the validity of the registration, of the
registrants ownership of the mark, and of the registrants exclusive right to use the same in
connection with the goods or services and those that are related thereto specified in the certificate. x
x x In other words, the prima facie presumption brought about by the registration of a mark may be
challenged and overcome in an appropriate action, x x x by evidence of prior use by another person,
i.e. , it will controvert a claim of legal appropriation or of ownership based on registration by a
subsequent user. This is because a trademark is a creation of use and belongs to one who first used
it in trade or commerce.43(Emphasis and underscoring supplied)

In the instant case, petitioner was able to establish that it is the owner of the mark "BIRKENSTOCK."
It submitted evidence relating to the origin and history of "BIRKENSTOCK" and its use in commerce
long before respondent was able to register the same here in the Philippines. It has sufficiently
proven that "BIRKENSTOCK" was first adopted in Europe in 1774 by its inventor, Johann
Birkenstock, a shoemaker, on his line of quality footwear and thereafter, numerous generations of
his kin continuously engaged in the manufacture and sale of shoes and sandals bearing the mark
"BIRKENSTOCK" until it became the entity now known as the petitioner. Petitioner also submitted
various certificates of registration of the mark "BIRKENSTOCK" in various countries and that it has
used such mark in different countries worldwide, including the Philippines.44

On the other hand, aside from Registration No. 56334 which had been cancelled, respondent only
presented copies of sales invoices and advertisements, which are not conclusive evidence of its
claim of ownership of the mark "BIRKENSTOCK" as these merely show the transactions made by
respondent involving the same.45

In view of the foregoing circumstances, the Court finds the petitioner to be the true and lawful owner
of the mark "BIRKENSTOCK" and entitled to its registration, and that respondent was in bad faith in
having it registered in its name. In this regard, the Court quotes with approval the words of the IPO
Director General, viz.:

The facts and evidence fail to show that [respondent] was in good faith in using and in registering the
mark BIRKENSTOCK. BIRKENSTOCK, obviously of German origin, is a highly distinct and arbitrary
mark. It is very remote that two persons did coin the same or identical marks. To come up with a
highly distinct and uncommon mark previously appropriated by another, for use in the same line of
business, and without any plausible explanation, is incredible. The field from which a person may
select a trademark is practically unlimited. As in all other cases of colorable imitations, the
unanswered riddle is why, of the millions of terms and combinations of letters and designs available,
[respondent] had to come up with a mark identical or so closely similar to the [petitioners] if there
was no intent to take advantage of the goodwill generated by the [petitioners] mark. Being on the
same line of business, it is highly probable that the [respondent] knew of the existence of
BIRKENSTOCK and its use by the [petitioner], before [respondent] appropriated the same mark and
had it registered in its name.46

WHEREFORE, the petition is GRANTED. The Decision dated June 25, 2010 and Resolution dated
October 27, 2010 of the Court of Appeals in CA-G.R. SP No. 112278 are REVERSED and SET
ASIDE. Accordingly, the Decision dated December 22, 2009 of the IPO Director General is hereby
REINSTATED.

SO ORDERED.

ESTELA M. PERLAS-BERNABE
Associate Justice

WE CONCUR:
 Republic of the Philippines
Supreme Court
Baguio City

SECOND DIVISION

SUPERIOR COMMERCIAL G.R. No. 169974

ENTERPRISES, INC.,
Petitioner, Present:

CARPIO, J., Chairperson,

- versus - BRION,
DEL CASTILLO,
ABAD, and
PEREZ, JJ.
KUNNAN ENTERPRISES LTD.
AND SPORTS CONCEPT & Promulgated:
DISTRIBUTOR, INC., April 20, 2010
Respondents. -- -

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

DECISION

BRION, J.:

We review in this petition for review on certiorari[1] the (1) decision[2] of the
Court of Appeals (CA) in CA-G.R. CV No. 60777 that reversed the ruling of the
Regional Trial Court of Quezon City, Branch 85 (RTC),[3] and dismissed the
petitioner Superior Commercial Enterprises, Inc.s (SUPERIOR) complaint for
trademark infringement and unfair competition (with prayer for preliminary
injunction) against the respondents Kunnan Enterprises Ltd. (KUNNAN) and
Sports Concept and Distributor, Inc. (SPORTS CONCEPT); and (2) the CA
resolution[4] that denied SUPERIORs subsequent motion for reconsideration. The
RTC decision that the CA reversed found the respondents liable for trademark
infringement and unfair competition, and ordered them to pay
SUPERIOR P2,000,000.00 in damages, P500,000.00 as attorneys fees, and costs of
the suit.

THE FACTUAL ANTECEDENTS

On February 23, 1993, SUPERIOR[5] filed a complaint for trademark

infringement and unfair competition with preliminary injunction against
KUNNAN[6] and SPORTS CONCEPT[7] with the RTC, docketed as Civil Case No.
Q-93014888.

In support of its complaint, SUPERIOR first claimed to be the owner of the

trademarks, trading styles, company names and business
[8] [9] [10] [11]
names KENNEX, KENNEX & DEVICE, PRO KENNEX and PRO-
KENNEX (disputed trademarks).[12] Second, it also asserted its prior use of these
trademarks, presenting as evidence of ownership the Principal and Supplemental
Registrations of these trademarks in its name. Third, SUPERIOR also alleged that
it extensively sold and advertised sporting goods and products covered by its
trademark registrations. Finally, SUPERIOR presented as evidence of its
ownership of the disputed trademarks the preambular clause of the Distributorship
Agreement dated October 1, 1982 (Distributorship Agreement) it executed with
KUNNAN, which states:

Whereas, KUNNAN intends to acquire the ownership of

KENNEX trademark registered by the [sic] Superior in
the Philippines. Whereas, the [sic] Superior is desirous of having been
appointed [sic] as the sole distributor by KUNNAN in the territory of
the Philippines. [Emphasis supplied.][13]

In its defense, KUNNAN disputed SUPERIORs claim of ownership and

maintained that SUPERIOR as mere distributor from October 6, 1982 until
December 31, 1991fraudulently registered the trademarks in its
name. KUNNAN alleged that it was incorporated in 1972, under the name
KENNEX Sports Corporation for the purpose of manufacturing and selling
sportswear and sports equipment; it commercially marketed its products in
different countries, including the Philippines since 1972.[14] It created and first used
PRO KENNEX, derived from its original corporate name, as a distinctive
trademark for its products in 1976. KUNNAN also alleged that it registered the
PRO KENNEX trademark not only in the Philippines but also in 31 other
countries, and widely promoted the KENNEX and PRO KENNEX trademarks
through worldwide advertisements in print media and sponsorships of known
tennis players.

On October 1, 1982, after the expiration of its initial distributorship

agreement with another company,[15] KUNNAN appointed SUPERIOR as its
exclusive distributor in the Philippines under a Distributorship Agreement whose
pertinent provisions state:[16]

Whereas, KUNNAN intends to acquire ownership of KENNEX

trademark registered by the Superior in the Philippines. Whereas,
the Superior is desirous of having been appointed [sic] as the sole
distributor by KUNNAN in the territory of the Philippines.

Now, therefore, the parties hereto agree as follows:

1. KUNNAN in accordance with this Agreement, will appoint the

sole distributorship right to Superior in the Philippines, and this
Agreement could be renewed with the consent of both parties upon
the time of expiration.

2. The Superior, in accordance with this Agreement, shall assign

the ownership of KENNEX trademark, under the registration of
Patent Certificate No. 4730 dated 23 May 1980 to KUNNAN on
the effects [sic] of its ten (10) years contract of
distributorship, and it is required that the ownership of the said
trademark shall be genuine, complete as a whole and without any
defects.

3. KUNNAN will guarantee to the Superior that no other third parties

will be permitted to supply the KENNEX PRODUCTS in
the Philippines except only to the Superior. If KUNNAN violates this
stipulation, the transfer of the KENNEX trademark shall be null and
void.
 4. If there is a necessity, the Superior will be appointed, for the
protection of interest of both parties, as the agent in the Philippines
with full power to exercise and granted the power of attorney, to
pursue any case of Pirating, Infringement and Counterfeiting the [sic]
KENNEX trade mark in the Philippine territory.

5. The Superior will be granted from [sic] KUNNANs approval before

making and selling any KENNEX products made in
the Philippines and the other countries, and if this is the situation,
KUNNAN is entitled to have a royalty of 5%-8% of FOB as the right.

6. Without KUNNANs permission, the Superior cannot procure other

goods supply under KENNEX brand of which are not available to
supply [sic] by KUNNAN. However, in connection with the sporting
goods, it is permitted that the Superior can procure them under
KENNEX brand of which are not available to be supplied by
KUNNAN. [Emphasis supplied.]

Even though this Agreement clearly stated that SUPERIOR was obligated to
assign the ownership of the KENNEX trademark to KUNNAN, the latter claimed
that the Certificate of Registration for the KENNEX trademark remained with
SUPERIOR because Mariano Tan Bon Diong (Mr. Tan Bon Diong), SUPERIORs
President and General Manager, misled KUNNANs officers into believing that
KUNNAN was not qualified to hold the same due to the many requirements set by
the Philippine Patent Office that KUNNAN could not meet.[17] KUNNAN further
asserted that SUPERIOR deceived it into assigning its applications for registration
of the PRO KENNEX trademark in favor of SUPERIOR, through an Assignment
Agreement dated June 14, 1983 whose pertinent provisions state:[18]

1. In consideration of the distributorship relationship between

KUNNAN and Superior, KUNNAN, who is the seller in the
distributorship relationship, agrees to assign the following trademark
applications owned by itself in the Philippines to Superior who is the
buyer in the distributorship relationship.

Trademark Application Number Class

PROKENNEX 49999 28
PROKENNEX 49998 25
 PROKENNEX 49997 18

2. Superior shall acknowledge that KUNNAN is still the real

and truthful owner of the abovementioned trademarks, and shall
agree that it will not use the right of the abovementioned
trademarks to do anything which is unfavourable or harmful to
KUNNAN.

3. Superior agrees that it will return back the abovementioned

trademarks to KUNNAN without hesitation at the request of
KUNNAN at any time. KUNNAN agrees that the cost for the
concerned assignment of the abovementioned trademarks shall be
compensated by KUNNAN.

4. Superior agrees that the abovementioned trademarks when

requested by KUNNAN shall be clean and without any incumbency.

5. Superior agrees that after the assignment of the abovementioned

trademarks, it shall have no right to reassign or license the said
trademarks to any other parties except KUNNAN. [Emphasis supplied]

Prior to and during the pendency of the infringement and unfair

competition case before the RTC, KUNNAN filed with the now defunct
Bureau of Patents, Trademarks and Technology Transfer[19] separate
Petitions for the Cancellation of Registration Trademark Nos. 41032, SR 6663,
40326, 39254, 4730 and 49998, docketed as Inter Partes Cases Nos. 3709, 3710,
3811, 3812, 3813 and 3814, as well as Opposition to Application Serial Nos.
84565 and 84566, docketed as Inter Partes Cases Nos. 4101 and 4102
(Consolidated Petitions for Cancellation) involving the KENNEX and PRO
KENNEX trademarks.[20] In essence, KUNNAN filed the Petition for Cancellation
and Opposition on the ground that SUPERIOR fraudulently registered and
appropriated the disputed trademarks; as mere distributor and not as lawful owner,
it obtained the registrations and assignments of the disputed trademarks in
violation of the terms of the Distributorship Agreement and Sections 2-A and 17 of
Republic Act No. 166, as amended.[21]
On December 3, 1991, upon the termination of its distributorship agreement
with SUPERIOR, KUNNAN appointed SPORTS CONCEPT as its new
distributor.Subsequently, KUNNAN also caused the publication of a Notice and
Warning in the Manila Bulletins January 29, 1993 issue, stating that (1) it is the
owner of the disputed trademarks; (2) it terminated its Distributorship Agreement
with SUPERIOR; and (3) it appointed SPORTS CONCEPT as its exclusive
distributor. This notice prompted SUPERIOR to file its Complaint for
Infringement of Trademark and Unfair Competition with Preliminary Injunction
against KUNNAN.[22]

The RTC Ruling

On March 31, 1998, the RTC issued its decision[23] holding KUNNAN liable for
trademark infringement and unfair competition. The RTC also issued a writ of
preliminary injunction enjoining KUNNAN and SPORTS CONCEPT from using
the disputed trademarks.

The RTC found that SUPERIOR sufficiently proved that it was the first user
and owner of the disputed trademarks in the Philippines, based on the findings of
the Director of Patents in Inter Partes Case No. 1709 and 1734 that SUPERIOR
was rightfully entitled to register the mark KENNEX as user and owner thereof. It
also considered the Whereas clause of the Distributorship Agreement, which
categorically stated that KUNNAN intends to acquire ownership of [the]
KENNEX trademark registered by SUPERIORin the Philippines. According to the
RTC, this clause amounts to KUNNANs express recognition of SUPERIORs
ownership of the KENNEX trademarks.[24]
KUNNAN and SPORTS CONCEPT appealed the RTCs decision to the CA where
the appeal was docketed as CA-G.R. CV No. 60777. KUNNAN maintained
that SUPERIORwas merely its distributor and could not be the owner of the
disputed trademarks. SUPERIOR, for its part, claimed ownership based on its prior
use and numerous valid registrations.

Intervening Developments:
The IPO and CA Rulings

In the course of its appeal to the CA, KUNNAN filed on December 19, 2003
a Manifestation and Motion praying that the decision of the Bureau of Legal
Affairs (BLA) of the Intellectual Property Office (IPO), dated October 30,
2003, in the Consolidated Petitions for Cancellation be made of record and be
considered by the CA in resolving the case.[25] The BLA ruled in this decision

In the case at bar, Petitioner-Opposer (Kunnan) has

overwhelmingly and convincingly established its rights to the mark PRO
KENNEX. It was proven that actual use by Respondent-Registrant is not
in the concept of an owner but as a mere distributor (Exhibits I, S to S-1,
P and P-1 and Q and Q-2) and as enunciated in the case of Crisanta Y.
Gabriel vs. Dr. Jose R. Perez, 50 SCRA 406, a mere distributor of a
product bearing a trademark, even if permitted to use said trademark has
no right to and cannot register the said trademark.

WHEREFORE, there being sufficient evidence to prove that the

Petitioner-Opposer (KUNNAN) is the prior user and owner of the
trademark PRO-KENNEX, the consolidated Petitions for Cancellation
and the Notices of Opposition are hereby GRANTED. Consequently,
the trademark PRO-KENNEX bearing Registration Nos. 41032, 40326,
39254, 4730, 49998 for the mark PRO-KENNEX issued in favor of
Superior Commercial Enterprises, Inc., herein Respondent-Registrant
under the Principal Register and SR No. 6663 are
hereby CANCELLED. Accordingly, trademark application Nos. 84565
and 84566, likewise for the registration of the mark PRO-KENNEX are
hereby REJECTED.

Let the file wrappers of PRO-KENNEX subject matter of these cases be

forwarded to the Administrative Finance and Human Resources
Development Services Bureau (AFHRDSB) for appropriate action in
accordance with this Decision and a copy thereof be furnished the
Bureau of Trademarks (BOT) for information and update of its record.[26]

On February 4, 2005, KUNNAN again filed another Manifestation

requesting that the IPO Director Generals decision on appeal dated December
8, 2004, denying SUPERIORs appeal, be given weight in the disposition of the
case.[27] The dispositive portion of the decision reads:[28]

WHEREFORE, premises considered, there is no cogent reason to

disturb Decision No. 2003-35 dated 30 October 2003 rendered by the
Director of the Bureau of Legal Affairs.Accordingly, the instant appeal
is DENIED and the appealed decision is hereby AFFIRMED.
We take judicial notice that SUPERIOR questioned the IPO Director Generals
ruling before the Court of Appeals on a petition for review under Rule 43 of the
Rules of Court, docketed as CAG.R. SP No. 87928 (Registration Cancellation
Case). On August 30, 2007, the CA rendered its decision dismissing SUPERIORs
petition.[29] On December 3, 2007, the CA decision was declared final and
executory and entry of judgment was accordingly made. Hence, SUPERIORs
registration of the disputed trademarks now stands effectively cancelled.
The CA Ruling

On June 22, 2005, the CA issued its decision in CA-G.R. CV No. 60777,
reversing and setting aside the RTCs decision of March 31, 1998.[30] It
dismissed SUPERIORs Complaint for Infringement of Trademark and Unfair
Competition with Preliminary Injunction on the ground that SUPERIOR failed to
establish by preponderance of evidence its claim of ownership over the KENNEX
and PRO KENNEX trademarks. The CA found the Certificates of Principal and
Supplemental Registrations and the whereas clause of the Distributorship
Agreement insufficient to support SUPERIORs claim of ownership over the
disputed trademarks.

The CA stressed that SUPERIORs possession of the aforementioned Certificates of

Principal Registration does not conclusively establish its ownership of the disputed
trademarks as dominion over trademarks is not acquired by the fact of registration
alone;[31] at best, registration merely raises a presumption of ownership that can be
rebutted by contrary evidence.[32] The CA further emphasized that the Certificates
of Supplemental Registration issued in SUPERIORs name do not even enjoy the
presumption of ownership accorded to registration in the principal register; it does
not amount to a prima facie evidence of the validity of registration or of the
registrants exclusive right to use the trademarks in connection with the goods,
business, or services specified in the certificate.[33]
In contrast with the failure of SUPERIORs evidence, the CA found that
KUNNAN presented sufficient evidence to rebut SUPERIORs presumption of
ownership over the trademarks. KUNNAN established that SUPERIOR, far from
being the rightful owner of the disputed trademarks, was merely KUNNANs
exclusive distributor. This conclusion was based on three pieces of evidence that,
to the CA, clearly established that SUPERIOR had no proprietary interest over the
disputed trademarks.
 First, the CA found that the Distributorship Agreement, considered in its
entirety, positively confirmed that SUPERIOR sought to be the KUNNANs
exclusive distributor.The CA based this conclusion on the following provisions of
the Distributorship Agreement:

(1) that SUPERIOR was desirous of [being] appointed as the sole

distributor by KUNNAN in the territory of the Philippines;

(2) that KUNNAN will appoint the sole distributorship right

to Superior in the Philippines; and

(3) that no third parties will be permitted to supply KENNEX

PRODUCTS in the Philippines except only to Superior.

The CA thus emphasized that the RTC erred in unduly relying on the first
whereas clause, which states that KUNNAN intends to acquire ownership of [the]
KENNEX trademark registered by SUPERIOR in the Philippines without
considering the entirety of the Distributorship Agreement indicating that
SUPERIOR had been merely appointed by KUNNAN as its distributor.
Second, the CA also noted that SUPERIOR made the express undertaking in
the Assignment Agreement to acknowledge that KUNNAN is still the real and
truthful owner of the [PRO KENNEX] trademarks, and that it shall agree that it
will not use the right of the abovementioned trademarks to do anything which is
unfavourable or harmful to KUNNAN. To the CA, these provisions are clearly
inconsistent with SUPERIORs claim of ownership of the disputed trademarks. The
CA also observed that although the Assignment Agreement was a private
document, its authenticity and due execution was proven by the similarity of Mr.
Tan Bon Diongs signature in the Distributorship Agreement and the Assignment
Agreement.

Third, the CA also took note of SUPERIORs Letter dated November 12,
1986 addressed to Brig. Gen. Jose Almonte, identifying itself as the sole and
exclusive licensee and distributor in the Philippines of all its KENNEX and PRO-
KENNEX products. Attached to the letter was an agreement with KUNNAN,
identifying the latter as the foreign manufacturer of all KENNEX products. The
CA concluded that in this letter, SUPERIOR acknowledged its status as a
distributor in its dealings with KUNNAN, and even in its transactions with third
persons.

Based on these reasons, the CA ruled that SUPERIOR was a mere

distributor and had no right to the registration of the disputed trademarks since the
right to register a trademark is based on ownership. Citing Section 4 of Republic
Act No. 166[34] and established jurisprudence,[35] the CA held that SUPERIOR as
an exclusive distributor did not acquire any proprietary interest in the principals
(KUNNANs) trademark.

The CA denied SUPERIORs motion for reconsideration for lack of merit in its
Resolution dated October 4, 2005.

THE PETITION

In the present petition, SUPERIOR raises the following issues:

I.
WHETHER OR NOT THE COURT OF APPEALS ERRED IN
HOLDING THAT PETITIONER SUPERIOR IS NOT THE TRUE
AND RIGHTFUL OWNER OF THE TRADEMARKS KENNEX
AND PRO-KENNEX IN THE PHILIPPINES

II.

WHETHER OR NOT THE HONORABLE COURT OF APPEALS

ERRED IN HOLDING THAT PETITIONER SUPERIOR IS A
MERE DISTRIBUTOR OF RESPONDENT KUNNAN IN
THE PHILIPPINES

III.

WHETHER OR NOT THE HONORABLE COURT OF APPEALS

ERRED IN REVERSING AND SETTING ASIDE THE DECISION
OF THE REGIONAL TRIAL COURT OF QUEZON CITY IN
CIVIL CASE NO. Q-93-14888, LIFTING THE PRELIMINARY
INJUNCTION ISSUED AGAINST RESPONDENTS KUNNAN
AND SPORTS CONCEPT AND DISMISSING THE COMPLAINT
 FOR INFRINGEMENT OF TRADEMARK AND UNFAIR
COMPETITION WITH PRELIMINARY INJUNCTION

THE COURTS RULING

We do not find the petition meritorious.

On the Issue of Trademark Infringement

We first consider the effect of the final and executory decision in the Registration
Cancellation Case on the present case. This decision - rendered after the CA
decision for trademark infringement and unfair competition in CA-G.R. CV No.
60777 (root of the present case) - states:
As to whether respondent Kunnan was able to overcome the
presumption of ownership in favor of Superior, the former sufficiently
established the fraudulent registration of the questioned trademarks
by Superior. The Certificates of Registration No. SR-4730
(Supplemental Register) and 33487 (Principal Register) for the
KENNEX trademark were fraudulently obtained by
petitioner Superior. Even before PROKENNEX products were imported
by Superior into the Philippines, the same already enjoyed popularity in
various countries and had been distributed worldwide, particularly
among the sports and tennis enthusiasts since 1976. Riding on the said
popularity, Superior caused the registration thereof in
the Philippines under its name when it knew fully well that it did not
own nor did it manufacture the PROKENNEX
products. Superior claimed ownership of the subject marks and failed to
disclose in its application with the IPO that it was merely a distributor of
KENNEX and PROKENNEX products in the Philippines.

While Superior accepted the obligation to assign Certificates of

Registration Nos. SR-4730 and 33487 to Kunnan in exchange for the
appointment by the latter as its exclusive distributor, Superior however
breached its obligation and failed to assign the same to Kunnan. In a
letter dated 13 February 1987, Superior, through Mr. Tan Bon Diong,
misrepresented to Kunnan that the latter cannot own trademarks in
the Philippines. Thus, Kunnan was misled into assigning to Superior its
 (Kunnans) own application for the disputed trademarks. In the same
assignment document, however. Superior was bound to ensure that the
PROKENNEX trademarks under Registration Nos. 40326, 39254, and
49998 shall be returned to Kunnan clean and without any incumbency
when requested by the latter.

In fine, We see no error in the decision of the Director General of the

IPO which affirmed the decision of the Director of the Bureau of Legal
Affairs canceling the registration of the questioned marks in the name of
petitioner Superior and denying its new application for registration, upon
a finding that Superior is not the rightful owner of the subject marks.

WHEREFORE, the foregoing considered, the petition is DISMISSED.

The CA decided that the registration of the KENNEX and PRO
KENNEX trademarks should be cancelled because SUPERIOR was not the
owner of, and could not in the first place have validly registered these
trademarks. Thus, as of the finality of the CA decision on December 3, 2007,
these trademark registrations were effectively cancelled and SUPERIOR was no
longer the registrant of the disputed trademarks.

Section 22 of Republic Act No. 166, as amended (RA 166),[36] the law
applicable to this case, defines trademark infringement as follows:
Section 22. Infringement, what constitutes. Any person who
[1] shall use, without the consent of the registrant, any reproduction,
counterfeit, copy or colorable imitation of any registered mark or trade-
name in connection with the sale, offering for sale, or advertising
of any goods, business or services on or in connection with which such
use is likely to cause confusion or mistake or to deceive purchasers or
others as to the source or origin of such goods or services, or identity of
such business; or [2] reproduce, counterfeit, copy, or colorably
imitate any such mark or trade-name and apply such reproduction,
counterfeit, copy, or colorable imitation to labels, signs, prints, packages,
wrappers, receptacles or advertisements intended to be used upon or in
connection with such goods, business or services, shall be liable to a
civil action by the registrant for any or all of the
remedies herein provided. [Emphasis supplied]

Essentially, Section 22 of RA 166 states that only a registrant of a mark can file a
case for infringement. Corollary to this, Section 19 of RA 166 provides that any
right conferred upon the registrant under the provisions of RA 166[37] terminates
when the judgment or order of cancellation has become final, viz:
Section 19. Cancellation of registration. - If the Director finds that a case for
cancellation has been made out he shall order the cancellation of the registration.
The order shall not become effective until the period for appeal has elapsed, or if
appeal is taken, until the judgment on appeal becomes final. When the order or
judgment becomes final, any right conferred by such registration upon the
registrant or any person in interest of record shall terminate. Notice of
cancellation shall be published in the Official Gazette. [Emphasis supplied.]

Thus, we have previously held that the cancellation of registration of a

trademark has the effect of depriving the registrant of protection from infringement
from the moment judgment or order of cancellation has become final.[38]

In the present case, by operation of law, specifically Section 19 of RA 166,

the trademark infringement aspect of SUPERIORs case has been rendered moot
and academic in view of the finality of the decision in the Registration
Cancellation Case. In short, SUPERIOR is left without any cause of action for
trademark infringement since the cancellation of registration of a trademark
deprived it of protection from infringement from the moment judgment or order of
cancellation became final. To be sure, in a trademark infringement, title to the
trademark is indispensable to a valid cause of action and such title is shown by its
certificate of registration.[39] With its certificates of registration over the disputed
trademarks effectively cancelled with finality, SUPERIORs case for trademark
infringement lost its legal basis and no longer presented a valid cause of action.

Even assuming that SUPERIORs case for trademark infringement had not been
rendered moot and academic, there can be no infringement committed by
KUNNAN who was adjudged with finality to be the rightful owner of the disputed
trademarks in the Registration Cancellation Case. Even prior to the cancellation of
the registration of the disputed trademarks, SUPERIOR as a mere distributor and
not the owner cannot assert any protection from trademark infringement as it had
no right in the first place to the registration of the disputed trademarks. In fact,
jurisprudence holds that in the absence of any inequitable conduct on the part of
the manufacturer, an exclusive distributor who employs the trademark of the
manufacturer does not acquire proprietary rights of the manufacturer, and a
registration of the trademark by the distributor as such belongs to the
manufacturer, provided the fiduciary relationship does not terminate before
application for registration is filed.[40] Thus, the CA in the Registration
Cancellation Case correctly held:

As a mere distributor, petitioner Superior undoubtedly had no

right to register the questioned mark in its name. Well-entrenched in our
jurisdiction is the rule that the right to register a trademark should be
based on ownership. When the applicant is not the owner of the
trademark being applied for, he has no right to apply for the registration
of the same. Under the Trademark Law, only the owner of the
trademark, trade name or service mark used to distinguish his goods,
business or service from the goods, business or service of others is
entitled to register the same.An exclusive distributor does not acquire
any proprietary interest in the principals trademark and cannot register it
in his own name unless it is has been validly assigned to him.

In addition, we also note that the doctrine of res judicata bars SUPERIORs
present case for trademark infringement. The doctrine of res judicata embraces
two (2) concepts: the first is "bar by prior judgment" under paragraph (b) of Rule
39, Section 47, and the second is "conclusiveness of judgment" under paragraph (c)
thereof.

In the present case, the second concept conclusiveness of judgment

applies. Under the concept of res judicata by conclusiveness of judgment, a final
judgment or decree on the merits by a court of competent jurisdiction is conclusive
of the rights of the parties or their privies in all later suits on points and matters
determined in the former suit.[41] Stated differently, facts and issues actually and
directly resolved in a former suit cannot again be raised in any future case between
the same parties, even if the latter suit may involve a different cause of
action.[42] This second branch of the principle of res judicata bars the re-litigation
of particular facts or issues in another litigation between the same parties on a
different claim or cause of action.[43]

Because the Registration Cancellation Case and the present case involve the
same parties, litigating with respect to and disputing the same trademarks, we are
bound to examine how one case would affect the other. In the present case, even if
the causes of action of the Registration Cancellation Case (the cancellation of
trademark registration) differs from that of the present case (the improper or
unauthorized use of trademarks), the final judgment in the Registration
Cancellation Case is nevertheless conclusive on the particular facts and issues that
are determinative of the present case.

To establish trademark infringement, the following elements must be

proven: (1) the validity of plaintiffs mark; (2) the plaintiffs ownership of the
mark; and (3) the use of the mark or its colorable imitation by the alleged infringer
results in likelihood of confusion.[44]

Based on these elements, we find it immediately obvious that the second

element the plaintiffs ownership of the mark was what the Registration
Cancellation Case decided with finality. On this element depended the validity of
the registrations that, on their own, only gave rise to the presumption of, but was
not conclusive on, the issue of ownership.[45]
In no uncertain terms, the appellate court in the Registration Cancellation
Case ruled that SUPERIOR was a mere distributor and could not have been
the owner, and was thus an invalid registrant of the disputed
trademarks. Significantly, these are the exact terms of the ruling the CA arrived at
in the present petition now under our review. Thus, whether with one or the other,
the ruling on the issue of ownership of the trademarks is the same. Given, however,
the final and executory ruling in the Registration Cancellation Case on the issue of
ownership that binds us and the parties, any further discussion and review of the
issue of ownership although the current CA ruling is legally correct and can stand
on its own merits becomes a pointless academic discussion.

On the Issue of Unfair Competition

Our review of the records shows that the neither the RTC nor the CA made
any factual findings with respect to the issue of unfair competition. In its
Complaint, SUPERIOR alleged that:[46]

17. In January 1993, the plaintiff learned that the defendant Kunnan
Enterprises, Ltd., is intending to appoint the defendant Sports Concept
and Distributors, Inc. as its alleged distributor for sportswear and
sporting goods bearing the trademark PRO-KENNEX. For this reason,
 on January 20, 1993, the plaintiff, through counsel, wrote the defendant
Sports Concept and Distributors Inc. advising said defendant that the
trademark PRO-KENNEX was registered and owned by the plaintiff
herein.

18. The above information was affirmed by an announcement made by

the defendants in The Manila Bulletin issue of January 29, 1993,
informing the public that defendant Kunnan Enterprises, Ltd. has
appointed the defendant Sports Concept and Distributors, Inc. as its
alleged distributor of sportswear and sporting goods and equipment
bearing the trademarks KENNEX and PRO-KENNEX which trademarks
are owned by and registered in the name of plaintiff herein as alleged
hereinabove.

xxxx

27. The acts of defendants, as previously complained herein, were

designed to and are of the nature so as to create confusion with the
commercial activities of plaintiff in the Philippines and is liable to
mislead the public as to the nature and suitability for their purposes of
plaintiffs business and the defendants acts are likely to discredit the
commercial activities and future growth of plaintiffs business.

From jurisprudence, unfair competition has been defined as the passing off
(or palming off) or attempting to pass off upon the public of the goods or business
of one person as the goods or business of another with the end and probable effect
of deceiving the public. The essential elements of unfair competition[47] are (1)
confusing similarity in the general appearance of the goods; and (2) intent to
deceive the public and defraud a competitor.[48]

Jurisprudence also formulated the following true test of unfair

competition: whether the acts of the defendant have the intent of deceiving or are
calculated to deceive the ordinary buyer making his purchases under the ordinary
conditions of the particular trade to which the controversy relates. One of the
essential requisites in an action to restrain unfair competition is proof of fraud; the
intent to deceive, actual or probable must be shown before the right to recover can
exist.[49]
 In the present case, no evidence exists showing that KUNNAN ever
attempted to pass off the goods it sold (i.e. sportswear, sporting goods and
equipment) as those of SUPERIOR. In addition, there is no evidence of bad faith
or fraud imputable to KUNNAN in using the disputed trademarks.
Specifically, SUPERIOR failed to adduce any evidence to show that KUNNAN by
the above-cited acts intended to deceive the public as to the identity of the goods
sold or of the manufacturer of the goods sold. In McDonalds Corporation v. L.C.
Big Mak Burger, Inc.,[50] we held that there can be trademark infringement without
unfair competition such as when the infringer discloses on the labels containing
the mark that he manufactures the goods, thus preventing the public from
being deceived that the goods originate from the trademark owner. In this
case, no issue of confusion arises because the same manufactured products are
sold; only the ownership of the trademarks is at issue. Furthermore, KUNNANs
January 29, 1993 notice by its terms prevents the public from being deceived that
the goods originated from SUPERIOR since the notice clearly indicated that
KUNNAN is the manufacturer of the goods bearing the trademarks KENNEX and
PRO KENNEX. This notice states in full:[51]

NOTICE AND WARNING

Kunnan Enterprises Ltd. is the owner and first user of the

internationally-renowned trademarks KENNEX and PRO KENNEX for
sportswear and sporting goods and equipment.Kunnan Enterprises Ltd.
has registered the trademarks KENNEX and PRO KENNEX in the
industrial property offices of at least 31 countries worldwide where
KUNNAN Enterprises Ltd. has been selling its sportswear and sporting
goods and equipment bearing the KENNEX and PRO KENNEX
trademarks.

Kunnan Enterprises Ltd. further informs the public that it had

terminated its Distributorship Agreement with Superior Commercial
Enterprises, Inc. on December 31, 1991. As a result, Superior
Commercial Enterprises, Inc. is no longer authorized to sell
sportswear and sporting goods and equipment manufactured by
Kunnan Enterprises Ltd. and bearing the trademarks KENNEX
and PRO KENNEX.

xxxx
 In its place, KUNNAN has appointed SPORTS CONCEPT AND
DISTRIBUTORS, INC. as its exclusive Philippine distributor of
sportswear and sporting goods and equipment bearing the trademarks
KENNEX and PRO KENNEX. The public is advised to buy sporting
goods and equipment bearing these trademarks only from SPORTS
CONCEPT AND DISTRIBUTORS, INC. to ensure that the
products they are buying are manufactured by Kunnan Enterprises
Ltd. [Emphasis supplied.]

Finally, with the established ruling that KUNNAN is the rightful owner of
the trademarks of the goods that SUPERIOR asserts are being unfairly sold by
KUNNAN under trademarks registered in SUPERIORs name, the latter is left with
no effective right to make a claim. In other words, with the CAs final ruling in the
Registration Cancellation Case, SUPERIORs case no longer presents a valid cause
of action. For this reason, the unfair competition aspect of the SUPERIORs case
likewise falls.

WHEREFORE, premises considered, we DENY Superior Commercial

Enterprises, Inc.s petition for review on certiorari for lack of merit. Cost against
petitioner Superior Commercial Enterprises, Inc.
SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 185830 June 5, 2013

ECOLE DE CUISINE MANILLE (CORDON BLEU OF THE PHILIPPINES), INC., Petitioner,

vs.
RENAUD COINTREAU & CIE and LE CORDON BLEU INT'L., B.V., Respondents.

DECISION

PERLAS-BERNABE, J.:

Assailed in this petition for review on certiorari1 is the December 23, 2008 Decision2 of the Court of
Appeals (CA) in CA-G.R. SP No. 104672 which affirmed in toto the Intellectual Property Office (IPO)
Director Generals April 21, 2008 Decision3 that declared respondent Renaud Cointreau & Cie
(Cointreau) as the true and lawful owner of the mark "LE CORDON BLEU & DEVICE" and thus, is
entitled to register the same under its name.

The Facts

On June 21, 1990, Cointreau, a partnership registered under the laws of France, filed before the
(now defunct) Bureau of Patents, Trademarks, and Technology Transfer (BPTTT) of the Department
of Trade and Industry a trademark application for the mark "LE CORDON BLEU & DEVICE" for
goods falling under classes 8, 9, 16, 21, 24, 25, 29, and 30 of the International Classification of
Goods and Services for the Purposes of Registrations of Marks ("Nice Classification") (subject
mark). The application was filed pursuant to Section 37 of Republic Act No. 166, as amended (R.A.
No. 166), on the basis of Home Registration No. 1,390,912, issued on November 25, 1986 in
France. Bearing Serial No. 72264, such application was published for opposition in the March-April
1993 issue of the BPTTT Gazette and released for circulation on May 31, 1993.4

On July 23, 1993, petitioner Ecole De Cuisine Manille, Inc. (Ecole) filed an opposition to the subject
application, averring that: (a) it is the owner of the mark "LE CORDON BLEU, ECOLE DE CUISINE
MANILLE," which it has been using since 1948 in cooking and other culinary activities, including in
its restaurant business; and (b) it has earned immense and invaluable goodwill such that Cointreaus
use of the subject mark will actually create confusion, mistake, and deception to the buying public as
to the origin and sponsorship of the goods, and cause great and irreparable injury and damage to
Ecoles business reputation and goodwill as a senior user of the same.5

On October 7, 1993, Cointreau filed its answer claiming to be the true and lawful owner of the
subject mark. It averred that: (a) it has filed applications for the subject marks registration in various
jurisdictions, including the Philippines; (b) Le Cordon Bleu is a culinary school of worldwide acclaim
which was established in Paris, France in 1895; (c) Le Cordon Bleu was the first cooking school to
have set the standard for the teaching of classical French cuisine and pastry making; and (d) it has
trained students from more than eighty (80) nationalities, including Ecoles directress, Ms. Lourdes L.
Dayrit. Thus, Cointreau concluded that Ecoles claim of being the exclusive owner of the subject
mark is a fraudulent misrepresentation.6
During the pendency of the proceedings, Cointreau was issued Certificates of Registration Nos.
60631 and 54352 for the marks "CORDON BLEU & DEVICE" and "LE CORDON BLEU PARIS 1895
& DEVICE" for goods and services under classes 21 and 41 of the Nice Classification, respectively.7

The Ruling of the Bureau of Legal Affairs

In its Decision8 dated July 31, 2006, the Bureau of Legal Affairs (BLA) of the IPO sustained Ecoles
opposition to the subject mark, necessarily resulting in the rejection of Cointreaus application.9 While
noting the certificates of registration obtained from other countries and other pertinent materials
showing the use of the subject mark outside the Philippines, the BLA did not find such evidence
sufficient to establishCointreaus claim of prior use of the same in the Philippines. It emphasized that
the adoption and use of trademark must be in commerce in the Philippines and not abroad. It then
concluded that Cointreau has not established any proprietary right entitled to protection in the
Philippine jurisdiction because the law on trademarks rests upon the doctrine of nationality or
territoriality.10

On the other hand, the BLA found that the subject mark, which was the predecessor of the mark "LE
CORDON BLEU MANILLE" has been known and used in the Philippines since 1948 and registered
under the name "ECOLE DE CUISINE MANILLE (THE CORDON BLEU OF THE PHILIPPINES),
INC." on May 9, 1980.11

Aggrieved, Cointreau filed an appeal with the IPO Director General.

The Ruling of the IPO Director General

In his Decision dated April 21, 2008, the IPO Director General reversed and set aside the BLAs
decision, thus, granting Cointreaus appeal and allowing the registration of the subject mark.12 He
held that while Section 2 of R.A. No. 166 requires actual use of the subject mark in commerce in the
Philippines for at least two (2) months before the filing date of the application, only the owner thereof
has the right to register the same, explaining that the user of a mark in the Philippines is not ipso
facto its owner. Moreover, Section 2-A of the same law does not require actual use in the Philippines
to be able to acquire ownership of a mark.13

In resolving the issue of ownership and right to register the subject mark in favor of Cointreau, he
considered Cointreaus undisputed use of such mark since 1895 for its culinary school in Paris,
France (in which petitioners own directress, Ms. Lourdes L. Dayrit, had trained in 1977). Contrarily,
he found that while Ecole may have prior use of the subject mark in the Philippines since 1948, it
failed to explain how it came up with such name and mark. The IPO Director General therefore
concluded that Ecole has unjustly appropriated the subject mark, rendering it beyond the mantle of
protection of Section 4(d)14 of R.A. No. 166.15

Finding the IPO Director Generals reversal of the BLAs Decision unacceptable, Ecole filed a
Petition for Review16dated June 7, 2008 with the CA.

Ruling of the CA

In its Decision dated December 23, 2008, the CA affirmed the IPO Director Generals Decision in
toto.17 It declared Cointreau as the true and actual owner of the subject mark with a right to register
the same in the Philippines under Section 37 of R.A. No. 166, having registered such mark in its
country of origin on November 25, 1986.18
The CA likewise held that Cointreaus right to register the subject mark cannot be barred by Ecoles
prior use thereof as early as 1948 for its culinary school "LE CORDON BLEU MANILLE" in the
Philippines because its appropriation of the mark was done in bad faith. Further, Ecole had no
certificate of registration that would put Cointreau on notice that the former had appropriated or has
been using the subject mark. In fact, its application for trademark registration for the same which
was just filed on February 24, 1992 is still pending with the IPO.19

Hence, this petition.

Issues Before the Court

The sole issue raised for the Courts resolution is whether the CA was correct in upholding the IPO
Director Generals ruling that Cointreau is the true and lawful owner of the subject mark and thus,
entitled to have the same registered under its name.

At this point, it should be noted that the instant case shall be resolved under the provisions of the old
Trademark Law, R.A. No. 166, which was the law in force at the time of Cointreaus application for
registration of the subject mark.

The Courts Ruling

The petition is without merit.

In the petition, Ecole argues that it is the rightful owner of the subject mark, considering that it was
the first entity that used the same in the Philippines. Hence, it is the one entitled to its registration
and not Cointreau.

Petitioners argument is untenable.

Under Section 220 of R.A. No. 166, in order to register a trademark, one must be the owner thereof
and must have actually used the mark in commerce in the Philippines for two (2) months prior to the
application for registration. Section 2-A21 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 Philippines. Thus, as correctly mentioned by the
CA, under R.A. No. 166, one may be an owner of a mark due to its actual use but may not yet have
the right to register such ownership here due to the owners failure to use the same in the Philippines
for two (2) months prior to registration.22

Nevertheless, foreign marks which are not registered are still accorded protection against
infringement and/or unfair competition. At this point, it is worthy to emphasize that the Philippines
and France, Cointreaus country of origin, are both signatories to the Paris Convention for the
Protection of Industrial Property (Paris Convention).23 Articles 6bis and 8 of the Paris Convention
state:

ARTICLE 6bis

(1) The countries of the Union undertake, ex officio if their legislation so permits, or at the request of
an interested party, to refuse or to cancel the registration, and to prohibit the use, of a trademark
which constitutes a reproduction, an imitation, or a translation, liable to create confusion, of a mark
considered by the competent authority of the country of registration or use to be well known in that
country as being already the mark of a person entitled to the benefits of this Convention and used for
identical or similar goods. These provisions shall also apply when the essential part of the mark
1wphi1

constitutes a reproduction of any such well-known mark or an imitation liable to create confusion
therewith.

ARTICLE 8

A trade name shall be protected in all the countries of the Union without the obligation of filing or
registration, whether or not it forms part of a trademark. (Emphasis and underscoring supplied)

In this regard, Section 37 of R.A. No. 166 incorporated Article 8 of the Paris Convention, to wit:

Section 37. Rights of foreign registrants. - Persons who are nationals of, domiciled in, or have a
bona fide or effective business or commercial establishment in any foreign country, which is a party
to any international convention or treaty relating to marks or trade-names, or the repression of unfair
competition to which the Philippines may be a party, shall be entitled to the benefits and subject to
the provisions of this Act to the extent and under the conditions essential to give effect to any such
convention and treaties so long as the Philippines shall continue to be a party thereto, except as
provided in the following paragraphs of this section.

xxxx

Trade-names of persons described in the first paragraph of this section shall be protected without
the obligation of filing or registration whether or not they form parts of marks.

xxxx

In view of the foregoing obligations under the Paris Convention, the Philippines is obligated to
assure nationals of the signatory-countries that they are afforded an effective protection against
violation of their intellectual property rights in the Philippines in the same way that their own
countries are obligated to accord similar protection to Philippine nationals.24 "Thus, under Philippine
law, a trade name of a national of a State that is a party to the Paris Convention, whether or not the
trade name forms part of a trademark, is protected "without the obligation of filing or registration."25

In the instant case, it is undisputed that Cointreau has been using the subject mark in France since
1895, prior to Ecoles averred first use of the same in the Philippines in 1948, of which the latter was
fully aware thereof. In fact, Ecoles present directress, Ms. Lourdes L. Dayrit (and even its foundress,
Pat Limjuco Dayrit), had trained in Cointreaus Le Cordon Bleu culinary school in Paris, France.
Cointreau was likewise the first registrant of the said mark under various classes, both abroad and in
the Philippines, having secured Home Registration No. 1,390,912 dated November 25, 1986 from its
country of origin, as well as several trademark registrations in the Philippines.26

On the other hand, Ecole has no certificate of registration over the subject mark but only a pending
application covering services limited to Class 41 of the Nice Classification, referring to the operation
of a culinary school. Its application was filed only on February 24, 1992, or after Cointreau filed its
trademark application for goods and services falling under different classes in 1990. Under the
foregoing circumstances, even if Ecole was the first to use the mark in the Philippines, it cannot be
said to have validly appropriated the same.
It is thus clear that at the time Ecole started using the subject mark, the same was already being
used by Cointreau, albeit abroad, of which Ecoles directress was fully aware, being an alumna of
the latters culinary school in Paris, France. Hence, Ecole cannot claim any tinge of ownership
whatsoever over the subject mark as Cointreau is the true and lawful owner thereof. As such, the
IPO Director General and the CA were correct in declaring Cointreau as the true and lawful owner of
the subject mark and as such, is entitled to have the same registered under its name.

In any case, the present law on trademarks, Republic Act No. 8293, otherwise known as the
Intellectual Property Code of the Philippines, as amended, has already dispensed with the
requirement of prior actual use at the time of registration.27 Thus, there is more reason to allow the
registration of the subject mark under the name of Cointreau as its true and lawful owner.

As a final note, "the function of a trademark is to point out distinctly the origin or ownership of the
goods (or services) to which it is affixed; to secure to him, who has been instrumental in bringing into
the market a superior article of merchandise, the fruit of his industry and skill; to assure the public
that they are procuring the genuine article; to prevent fraud and imposition; and to protect the
manufacturer against substitution and sale of an inferior and different article as his product."28 As
such, courts will protect trade names or marks, although not registered or properly selected as
trademarks, on the broad ground of enforcing justice and protecting one in the fruits of his toil.29

WHEREFORE, the petition is DENIED. Accordingly, the December 23, 2008 Decision of the Court of
Appeals in CA-G.R. SP No. 104672 is hereby AFFIRMED in toto.

SO ORDERED.

ESTELA M. PERLAS-BERNABE
Associate Justice

WE CONCUR: