EN BANC
G.R. No. 204605, July 19, 2016
INTELLECTUAL PROPERTY ASSOCIATION OF THE PHILIPPINES, Petitioner,
v. 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
1989.3chanrobleslaw
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.4chanrobleslaw
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.5chanrobleslaw
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.6chanrobleslaw
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 Department of
Trade and Industry concurred in the recommendation of the
DFA.7chanrobleslaw
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, 2012.9chanrobleslaw
Petitioner IPAP, 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:
chanRoblesvirtualLawlibrary
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.13chanrobleslaw
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:
chanRoblesvirtualLawlibrary
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:
chanRoblesvirtualLawlibrary
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.15chanrobleslaw
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:
chanRoblesvirtualLawlibrary
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.16chanrobleslaw
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
IPAP 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.17chanrobleslaw
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.18chanrobleslaw
Issues
The following issues are to be resolved, namely:
chanRoblesvirtualLawlibrary
I Whether or not the IPAP has locus standi to challenge the President's
ratification of the Madrid Protocol;
II
III Whether or not the President's ratification of the Madrid Protocol is valid and
constitutional; and cralawlawlibrary
IV
V 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.21chanrobleslaw
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.,23 standing 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 Council24 offers the general understanding of the context of
legal standing, or locus standi for that purpose, viz.:
chanRoblesvirtualLawlibrary
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 "far-reaching 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 of a public
right.25cralawred
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.28chanrobleslaw
B.
Accession to the
Madrid Protocol was constitutional
The IPAP 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:
chanRoblesvirtualLawlibrary
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:
chanRoblesvirtualLawlibraryInternational 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 Trading33 is
instructive, to wit:
chanRoblesvirtualLawlibrary
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 trade-marks 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":ChanRoblesVirtualawlibrary
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:
chanRoblesvirtualLawlibrary
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."34chanrobleslaw
Accordingly, DFA Secretary Del Rosario's 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.35 The principle binds the parties to perform in
good faith their parts in the agreements.36chanrobleslaw
processes.37chanrobleslaw
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.chanRoblesvirtualL

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
IPAP 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 extra-territorial service of writs and
 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 General’s 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, respondent’s 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 respondent’s
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 petitioner’s 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
respondent’s 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 respondent’s
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 General’s 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
respondent’s mark.22 It equally held that respondent’s 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 respondent’s 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 petitioner’s 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 Court’s resolution is whether or not the
subject marks should be allowed registration in the name of petitioner.
The Court’s Ruling
The petition is meritorious.
A. Admissibility of Petitioner’s 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 General’s 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 owner’s 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.1âwphi1 If the applicant is not the owner of the
trademark, he has no right to apply for its registration. Registration merely
creates a prima facie presumption of the validity of the registration, of the
registrant’s ownership of the trademark, and of the exclusive right to the use
thereof. 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 Court’s 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
registrant’s ownership of the mark, and of the registrant’s 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
[petitioner’s] if there was no intent to take advantage of the goodwill generated
by the [petitioner’s] 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.
 Republic of the Philippines
Supreme Court
Baguio City
SECOND DIVISION
SUPERIOR COMMERCIAL ENTERPRISES, INC.,
Petitioner,
- versus -
KUNNAN ENTERPRISES LTD. AND SPORTS CONCEPT & DISTRIBUTOR, INC.,
Respondents. -- -
G.R. No. 169974
April 20, 2010
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 names[8] KENNEX,[9]
KENNEX & DEVICE,[10] PRO KENNEX[11] 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, 1991 fraudulently 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 SUPERIOR in 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
SUPERIOR was 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 General’s 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 Cointreau’s 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 Ecole’s
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 mark’s 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 Ecole’s directress, Ms. Lourdes L. Dayrit. Thus, Cointreau
concluded that Ecole’s 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 Ecole’s opposition to the subject mark, necessarily resulting in the
rejection of Cointreau’s 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 establishCointreau’s 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 BLA’s decision, thus, granting Cointreau’s 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 Cointreau’s undisputed use of such mark since
1895 for its culinary school in Paris, France (in which petitioner’s 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 General’s reversal of the BLA’s Decision unacceptable,
Ecole filed a Petition for Review16 dated June 7, 2008 with the CA.
Ruling of the CA
In its Decision dated December 23, 2008, the CA affirmed the IPO Director
General’s 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 Cointreau’s right to register the subject mark cannot
be barred by Ecole’s 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 Court’s resolution is whether the CA was correct in
upholding the IPO Director General’s 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 Cointreau’s application for registration of the subject mark.
The Court’s 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.
Petitioner’s 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 owner’s
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, Cointreau’s 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.1âwphi1
These provisions shall also apply when the essential part of the mark
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 Ecole’s averred first use of the same in the
Philippines in 1948, of which the latter was fully aware thereof. In fact, Ecole’s
present directress, Ms. Lourdes L. Dayrit (and even its foundress, Pat Limjuco
Dayrit), had trained in Cointreau’s 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 Ecole’s directress
was fully aware, being an alumna of the latter’s 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.