PHILIP MORRIS INC. vs. CA, Fortune Tobacco Corp.

foreign corporation to bring an action in Philippine courts for infringement of a

1993|Melo
Doctrine: A foreign corporation not doing business in the PH may have the personality
to file a suit for infringement BUT it may not necessarily be entitled to protection due to
absence of actual use of the emblem in the local market.
Facts:
Petitioners are foreign corporations not doing business in the Philippines. They
had certificates of registration with the Philippine Patent Office of the symbols "MARK
VII" "MARK TEN" and "LARK" as symbols for their cigarettes.
o Petitioners filed the complaint for infringement against the respondents for
selling cigarettes using the confusingly similar "MARK" and "LARK" symbols.
This was argued to be in contravention of Sec. 22 of the Trademark Law and
Article 2 of the Paris Convention (PH ratified) and and should be precluded
via a preliminary injunction.
mark or trade name, for unfair competition and false designation of origin and
false description, whether or not it has been licensed to do business in the
Philippines.
o However, Sec. 21-A was qualified in La Chemise Lacoste S.A.
vs. Fernandez to be that a foreign corporation not doing
business in the Philippines may have the right to sue in
Philippine Courts, but it is not enough to allege its alien origin.
It must also allege its personality to sue.
 ITC: Petitioners have alleged their personality to sue on the
basis of an isolated transaction.
o However, while Art. 2 of the Paris Convention says that: " no condition as
to the possession of a domicile or establishment in the country where
protection is claimed may be required of persons entitled to the benefits of the
Union for the enjoyment of any industrial property of any industrial property
rights, " the Court construed these laws along with Section 2 and 2-A of
the Trademark Law.

Fortune Tobacco argued that "MARK" is a common word that cannot be Sec. 2. What are registrable. — Trademarks,
exclusively appropriated (no discussion in the ratio regarding this argument). Moreover, tradenames and service marks owned by persons,
there is no irreparable damage that would be done to petitioners as they were not doing corporations, partnerships or associations domiciled in
the Philippines and by persons, corporations,
business in the Philippines and their allegedly trademarked marks/symbols were not
partnerships or associations domiciled in any foreign
being used in the Philippines. country may be registered in accordance with the
o In addition, respondents had a pending application for registration of "LARK" provisions of this Act; Provided, That said trademarks,
and "MARK" cigarettes with the Philippine Patent Office. Thus, the grant of tradenames, or service marks are actually in use in
WPI is premature. commerce and services not less than two months in
o BIR had authorized the defendants to manufacture "MARK" cigarettes. the Philippines before the time the applications for
o However, this authority is qualified in that "the grant does not give registration are filed; And provided, further, That the
you protection against any person or entity whose rights may be country of which the applicant for registration is a citizen
grants by law substantially similar privileges to citizens of
prejudiced by infringement or unfair competition in relation to your
the Philippines, and such fact is officially certified, with a
indicated trademarks/brands." certified true copy of the foreign law translated into the
English language, by the government of the foreign
Petitioners defend that doing business is not relevant to the injunction as the country to the Government of the Republic of the
injunction pertains to an infringement of a trademark right. Under the Trademark Law Philippines. (As amended by R.A. No. 865).
and the Paris Convention, they have the personality to file for an infringement suit in
this case. Sec. 2-A. Ownership of trademarks, tradenames and
service marks; how acquired. — Anyone who lawfully
produces or deals in merchandise of any kind or who
engages in any lawful business, or who renders any
ISSUE: W/N petitioners need to have their symbols actually used in the Philippines in lawful service in commerce, by actual use thereof in
order to have the exclusive right to use such - YES. manufacture or trade, in business, and in the service
rendered, may appropriate to his exclusive use a
HELD: trademark, a tradename, or a service mark not so
o Petitioners rely on Sec. 21-A of the Trademark Law1 to argue their position appropriated by another, to distinguish his merchandise,
that one does not need to do business or have the symbols be used in the business or service from the merchandise, business or
Philippines to be entitled to protection. The law and jurisprudence allow a service of others. The ownership or possession of a
trademark, tradename, service mark, heretofore or

1
Sec. 21-A. Any foreign corporation or juristic person to which a mark or trade-name has been foreign corporation or juristic person is a citizen or in which it is domiciled, by treaty, convention or law,
registered or assigned under this act may bring an action hereunder for infringement, for unfair grants a similar privilege to corporate or juristic persons of the Philippines.
competition, or false designation of origin and false description, whether or not it has been licensed to do
business in the Philippines under Act Numbered Fourteen hundred and fifty-nine, as amended, otherwise
known as the Corporation Law, at the time it brings complaint: Provided, That the country of which the said
 hereafter appropriated, as in this section provided, shall the thought of having to participate in throwing into the streets Filipino workers
be recognized and protected in the same manner and to engaged in the manufacture and sale of private respondent's "MARK"
the same extent as are other property rights known to the cigarettes who might be retrenched and forced to join the ranks of the many
law.
unemployed and unproductive as a result of the issuance of a simple writ of
o Following universal acquiescence and comity, municipal law on trademarks
preliminary injunction, as well as the dimunition of tax revenues.
regarding the requirement of ACTUAL USE in the Philippines must take
o If status quo is maintained, there is no damage suffered by the
precedence over an international agreement whenever there is conflict.
petitioner as they are not doing business in the PH.
Although international law is absorbed, this does not imply the primacy of
international law. WHEREFORE, the petition is hereby DISMISSED and the Resolutions of the Court
o Kabushi Kaisha Isetan vs. Intermediate Appellate Court: Thus, a fundamental of Appeals dated September 14, 1989 and November 29, 1989 are hereby
principle of Philippine Trademark Law is that actual use in commerce in the AFFIRMED.
Philippines is a pre-requisite to the acquisition of ownership over a trademark
or a tradename.
o The ratio is given in Sterling Products Intl. vs. Farbenfabriken Bayer
Actiengeseellschaft as: " Adoption alone of a trademark would not give
exclusive right thereto. Such right grows out of their actual use. Adoption
is not use. One may make advertisements, issue circulars, give out price lists
on certain goods; but these alone would not give exclusive right of use. For
trademark is a creation of use. The underlying reason for all these is that
purchasers have come to understand the mark as indicating the origin of the
wares. Flowing from this is the trader's right to protection in the trade he has
built up and the goodwill he has accumulated from use of the trademark.
o Actual commercial use of the mark is needed prior to
registration. Invoices which prove the sending of zippers as
"samples" and of "no commercial value" are insufficient. Samples are
not for same and exporting them to the PH cannot be considered
equivalent to "use" contemplated by law. In this case, there was no
income expected from the samples (Pagasa Industrial Corp. vs. CA).

ITC: Petitioners may have the capacity to sue for infringement irrespective of lack of
business activity in the Philippines on account of Section 21-A of the Trademark Law,
but the question whether they have an exclusive right over their symbol as to justify
issuance of the controversial writ will depend on actual use of their trademarks in
the Philippines in line with Sections 2 and 2-A of the same law.
 In this case, petitioners may have the personality to file a suit for
infringement but it may not necessarily be entitled to protection due to
absence of actual use of the emblem in the local market.
 It is difficult for the SC to grant the preliminary injunction out of deference of
the lower court, especially as it is a mere interlocutory order.
o Indeed, the RTC had even ruled that the petitioners have not yet
submitted copies/photographs of the registered marks as used in
cigarettes nor have respondents submitted actual labels and
packaging materials used in selling its "MARK" cigarettes.
 To be entitled to the writ, a right to be protected must be clearly shown to exist
and the facts against which the injunction is directed is violative of such right.
o While petitioners are holders of certificate of registration in the
Philippines of their symbols as admitted by private respondent, the
fact of exclusive ownership cannot be made to rest solely on
these documents since dominion over trademarks is not
acquired by the mere fact of registration alone and does not
perfect a trademark right.
 As for the economic repercussions of the case, the Court is bothered with