COMMERCIAL LAW

G.R. No. 174912 July 24, 2013 BPI EMPLOYEES UNION !A"AO CI#Y $UBU %BPIEU !A"AO CI#Y $UBU& '(. BAN) O$ #*E P*ILIPPINE ISLAN!S %BPI&, AN! BPI O$$ICERS CLARO M. REYES, CECIL CONANAN AN! GEMMA "ELE+ Commercial Law; Banks; Outsourcing of function; From the very definition of banks as provided under the General Banking Law, it can easily be discerned that banks perform only two ( ! main or basic functions " deposit and loan functions# $hus, cashiering, distribution and bookkeeping are but ancillary functions whose outsourcing is sanctioned under %B& %ircular 'o# ()** as well as +#,# 'o# (-# MEN!O+A, J., FACTS: A subsidiary of the Bank of the Philippine Islands (BPI), BPI Operations ana!e"ent Corporation (BO C) is fun#tionin! and operatin! as an entirely separate and distin#t entity $hi#h pro%ides and&or handles support ser%i#es for banks and other finan#ial institutions' (nder its ser%i#e a!ree"ent $ith the BPI in #onfor"ity $ith BPI Cir#ular )o' *+,,, BO C undertook to pro%ide ser%i#es su#h as #he#k #learin!, deli%ery of bank state"ents, fund transfers, #ard produ#tion, operations a##ountin! and #ontrol and #ash ser%i#in!' This not$ithstandin!, no BPI e"ployee $as displa#ed althou!h those perfor"in! the fun#tions no$ transferred to BO C, $ere !i%en other assi!n"ents' ean$hile, a #o"plaint for unfair labor pra#ti#e ((-P) $as filed by anila Chapter of BPI ."ployees (nion (BPI.(/ etro anila/F(B()' The #ase $as de#ided by the -abor Arbiter in fa%or of the (nion $hi#h $as re%ersed by the )ational -abor 0elations Co""ission ()-0C)' The petition for #ertiorari of BPI.(/ etro anila/F(B( $as denied by the Court of Appeals' The ser%i#e a!ree"ent $as i"ple"ented in 1a%ao City and BPI $hile Far .ast Bank and Trust Co"pany (F.BTC) had a "er!er' BO C then handled the BPI2s #ashierin! fun#tion and F.BTC2s #ashierin!, distribution and bookkeepin! fun#tions' The fun#tions and t$el%e for"er F.BTC e"ployees $ere transferred to BO C' Su#h transfer $as ob3e#ted to by the BPI ."ployees (nion/1a%ao City F(B( ((nion) #lai"in! that those fun#tions belon!ed to BPI e"ployees and that the (nion is depri%ed of "e"bership of the said personnel' In the (nion2s for"al protest, it asked for !rie%an#e pro#edure under the Colle#ti%e Bar!ainin! A!ree"ent (CBA) but BPI instead, proposed a -abor ana!e"ent Conferen#e' BPI in%oked its "ana!e"ent prero!ati%e $hile the (nion #ontended the under"inin! of the (nion2s e4isten#e' The 1epart"ent of -abor and ."ploy"ent (1O-.) issued an order for #o"pulsory arbitration under the )-0C $hi#h uphold the %alidity of the ser%i#e a!ree"ent and dis"issed the unfair labor pra#ti#e #har!e a!ainst BPI' It held that the ser%i#es and fun#tions !i%en to BO C did not %iolate the e"ployees2 ri!ht to self/or!ani5ation' oreo%er, 1epart"ent Order (1O) )o' *6 series of *778 did not apply but instead BSP Cir#ular )o' *+,,' The Court of Appeals (CA) affir"ed the resolution $ith "odifi#ations' oreo%er, the appellate #ourt a!reed that BPI2s transa#tions $ere sub3e#t to the rules and re!ulations of the Ban!ko Sentral n! Pilipinas (BSP)' ISS(.: 9:.T:.0 OF )OT T:. ACT OF BPI OF O(TSO(0CI); TO BO C ITS F()CTIO)S OF CAS:I.0I);, 1IST0IB(TIO) A)1 BOO<<..PI); IS I) CO)FO0 IT= 9IT: T:. -A9'

:.-1: AFFI0 ATI>.' The a#tions are authori5ed by the CBP Cir#ular )o'*+,,, series of *77+' The transa#tions of BPI are sub3e#t to the rules and re!ulations of Ban!ko Sentral n! Plipinas' 1'O' )o'*6 Series of *778 pro%ides the allo$ed #ontra#tin! or sub#ontra#tin! a#ti%ities' Se# ? (d) ho$e%er does not li"it or prohibit the BSP in issuin! rules and re!ulations or #ir#ulars re!ardin! the deter"ination of ser%i#es to be #ontra#ted out' CBP Cir#ular )o' *+,, indi#ates the an#illary fun#tions of banks and are allo$ed bein! outsour#ed' The a#ts of BPI in outsour#in! the #ashierin! and a##ountin! re@uire"ents of the 1a%ao City are san#tioned by CBP Cir#ular )o' *+,,' Those fun#tions are not dire#tly related to the #ore a#ti%ities of banks and do not "ana!e deposit transa#tions' BPI did not %iolate 1'O' )o' *6 be#ause the fun#tions $ere not related or not inte!ral to the "ain business or operations su#h as the lendin! of funds obtained in the for" of deposits' 1eposit and loan fun#tions are the bank2s basi# fun#tions' Therefore, #ashierin!, distribution and bookkeepin! are an#illary fun#tions allo$ed both in 1'O' )o' *6 and CBP Cir#ular )o' *+,,'

G.R. No(. 1-11.3/1-12.2/1-1319

July 24, 2013

A(012 #345021l(, I26. '(. P70l15 I2(u41263 Co., I26. %2o8 C71490( P70l0::023( I2(u41263 I26.&/P70l15 I2(u41263 Co., I26. %2o8 C71490( P70l0::023( I2(u41263 I26.& '(. W3(9802; S70::02< Co4:o4190o2 12; A(012 #345021l(, I26./W3(9802; S70::02< Co4:o4190o2 '(. P70l15 I2(u41263 6o., I26. 12; A(012 #345021l(, I26. "ILLARAMA, JR., J., FACTS: On April *A, *77A, )i#hi"en Corporation shipped to (ni%ersal otors Corporation ((ni%ersal otors) B*7 pa#ka!es #ontainin! *B6 units of brand ne$ )issan Pi#kup Tru#k 1ouble Cab C4B "odel, on board the %essel S&S DCalayan IrisE fro" Fapan to anila' The ship"ent $as insured $ith Phila" a!ainst all risks' On April B6, *77A, the #arryin! %essel arri%ed at the port of anila' 9hen the ship"ent $as unloaded by the staff of Asian Ter"inals, In#' (ATI), it $as found that the pa#ka!e "arked as 6+/BCA/CB<&* $as in bad order' The Turn O%er Sur%ey of Bad Order Car!oes dated April B*, *77A identified t$o pa#ka!es, labeled 6+/BCA/CB<&* and 6+&B+8&8C<&B as bein! dented and broken' On ay **, *77A, the ship"ent $as $ithdra$n by 0'F' 0e%illa Custo"s Brokera!e, In#' fro" CFS 9arehouse in Pier )o'A, and deli%ered to its $arehouse' A##ordin! to the bad order sur%ey #ondu#ted, it $as found that one Fra"e A4le Sub $ithout -90 $as deeply dented on the buffle plate $hile si4 Fra"e Asse"bly $ith Bush $ere defor"ed and "isali!ned' On Au!ust C, *77A, (ni%ersal otors filed a for"al #lai" for da"a!es a!ainst 9est$ind, ATI and 0'F' 0e%illa Custo"s Brokera!e, In#' As its de"ands re"ained unheeded, it sou!ht reparation fro" Phila" in the a"ount of P?++,7A8'*A' As subro!ee of the ri!hts of (ni%ersal otors, Phila" filed a #o"plaint for da"a!es before the 0TC of akati City a!ainst 9est$ind, ATI and 0' F' 0e%illa Custo"s Brokera!e, In#' The 0TC rendered 3ud!"ent in fa%or of Phila", findin! 9est$ind and ATI 3ointly and se%erally liable' The trial #ourt held that both ATI and 9est$ind failed to obser%e the e4traordinary dili!en#e in ATI2s unloadin! of the #ar!oes fro" the #arryin! %essel and 9est$ind2s super%ision and #ontrol of the pro#ess' The #ourt absol%ed 0'F' 0e%illa Custo"s Brokera!e, In#' fro" liability in li!ht of its findin! that the #ar!oes had been da"a!ed before deli%ery to the #onsi!nee' 9est$ind2s otion for 0e#onsideration ha%in! been denied, it appealed to the CA'

The appellate #ourt a##ordin!ly affir"ed 9est$ind2s and ATI2s 3oint and solidary liability for the da"a!e to only one unit of Fra"e A4le Sub $ithout -o$er inside Case )o' 6+/BCA/CB<&*' It held that $hile ATI is liable for the ne!li!en#e of its e"ployees $ho #arried out the offloadin! of #ar!oes fro" the ship to the pier, 9est$ind is si"ilarly liable for its failure to e4er#ise e4traordinary dili!en#e in the #are of the #ar!oes durin! unloadin! thereof by ATI2s personnel, it ha%in! full #ontrol and super%ision o%er the dis#har!in! operation' ISS(.: B.T9..) 9.T9I)1 A)1 ATI 9:IC: S:O(-1 B. :.-1 -IAB-. FO0 T:. 1A A;.1 CA0;O.S'

:.-1: BOT: OF T:. ' The Court found both petitioners 9est$ind and ATI, 3ointly and se%erally, liable for the da"a!e to the #ar!o' It obser%ed that $hile the staff of ATI undertook the physi#al unloadin! of the #ar!oes fro" the #arryin! %essel, 9est$ind2s duty offi#er e4er#ised full super%ision and #ontrol o%er the entire pro#ess' Co""on #arriers, fro" the nature of their business and for reasons of publi# poli#y, are bound to obser%e e4traordinary dili!en#e in the %i!ilan#e o%er the !oods transported by the"' The e4traordinary responsibility of the #o""on #arrier lasts fro" the ti"e the !oods are un#onditionally pla#ed in the possession of, and re#ei%ed by the #arrier for transportation until the sa"e are deli%ered, a#tually or #onstru#ti%ely, by the #arrier to the #onsi!nee, or to the person $ho has a ri!ht to re#ei%e the"' It is settled in "ariti"e la$ 3urispruden#e that #ar!oes $hile bein! unloaded !enerally re"ain under the #ustody of the #arrier' The 1a"a!e Sur%ey 0eport re%eals that Case )o' 6+/BCA/CB<&* $as da"a!ed by ATI ste%edores due to o%er ti!htenin! of a #able slin! hold durin! dis#har!e fro" the %essel2s hat#h to the pier' Sin#e the da"a!e to the #ar!o $as in#urred durin! the dis#har!e of the ship"ent and $hile under the super%ision of the #arrier, the latter is liable for the da"a!e #aused to the #ar!o' :o$e%er, this does not ne#essarily "ean that ATI is $ithout liability for the da"a!ed #ar!o' The fun#tions of an arrastre operator in%ol%e the handlin! of #ar!o deposited on the $harf or bet$een the establish"ent of the #onsi!nee or shipper and the ship2s ta#kle' Bein! the #ustodian of the !oods dis#har!ed fro" a %essel, an arrastre operator2s duty is to take !ood #are of the !oods and to turn the" o%er to the party entitled to their possession' Apart fro" ATI2s ste%edores bein! dire#tly in #har!e of the physi#al unloadin! of the #ar!o, its fore"an pi#ked the #able slin! that $as used to hoist the pa#ka!es for transfer to the do#k' And the fa#t that B*, of the B*7 pa#ka!es $ere unloaded $ith the sa"e slin! unhar"ed, "anifests that there $as indeed inade@uate #are in handlin! and dis#har!in! Case )o' 6+/BCA/CB<&*'

G.R. No. 17=-44 July 29, 2013 B12> o? 973 P70l0::023 I(l12;( '(. S141@01 Mo9o4 *o93l Co4:o4190o2

Commercial Law; Corporate Rehabilitation # %ase law defines corporate rehabilitation as an attempt to conserve and administer the assets of an insolvent corporation in the hope of its eventual return from financial stress to solvency# .t contemplates the continuance of corporate life activities in an effort to restore and reinstate the corporation to its former position of successful operation and li/uidity# PERLAS BERNABE, J., FACTS: Sarabia is a land"ark hotel in Iloilo, $hi#h fa"e rose fro" its renderin! of @uality ser%i#es' As part of its e4pansion pro!ra", Sarabia entered into a P*A6,666,666'66 spe#ial loan pa#ka!e $ith Far .ast Bank and trust Co"pany (F.BTC)' As stipulated, said a"ount $ill be used to fund the #onstru#tion of a fi%e/storey hotel buildin! in the na"e of the hotel' Prior to the finality of the loan a!ree"ent, F.BTC entered into a "er!er $ith BPI, by %irtue of $hi#h the latter assu"ed all of the for"er2s ri!hts a!ainst Sarabia' (pon Sarabia2s e4e#ution of real estate "ort!a!es o%er se%eral par#els of lands it o$ns as se#urity, the loan a!ree"ent $ith BPI be#a"e final and bindin!' On the other hand, Sarabia #ontra#ted Santa Ana/AF Constru#tion Corporation (Santa Ana) to undertake the #onstru#tion of the buildin!' (nfortunately, before the buildin! $as fully done, Santa Ana defaulted and abandoned the pro3e#tGlea%in! Sarabia $ith no other #hoi#e but to finish the buildin! by its o$n "eans' But, $hile the buildin! had been #o"pleted, it took a !reat toll on Sarabia $here it $as not able to pay all its "atured obli!ations $ith BPI under the loan a!ree"ent' Its situation e%en $orsened $hen the hotel industry e4perien#ed a slide in the 7&** terrorist atta#ks and the i"pellin! Abu Sayyaf threat in the #ountry' At that, Sarabia filed for a rehabilitation pro!ra" before the 0TC of Iloilo City' (pon re#o""endation of the #ourt/appointed re#ei%er -iberty B' >alderra"a, the 0TC appro%ed the Sarabia2s rehabilitation, de#larin! a"on! others, that the pay"ent dues of Sarabia be ad3usted to a period fro" B66B/B6*,, $ith interest rates fro" 8/*CH spread throu!hout the $hole duration, and the releasin! of the surety obli!ations of Sarabia to BPI' BPI appealed to the Court of Appeals (CA) but the appellate #ourt only affir"ed the 0TC2s de#ision althou!h $ith "odifi#ations in reinstatin! the surety obli!ations of Sarabia to petitioner bank' ISS(.: 9:.T:.0 O0 )OT SA0ABIA IS .)TIT-.1 TO A 0.:ABI-ITATIO) P-A) TA<I); I)TO CO)SI1.0ATIO) ITS AT(0.1 OB-I;ATIO)S 9IT: BPI' :.-1: AFFI0 ATI>.' The Supre"e Court upheld that to ensure that #o"panies and #orporations are prote#ted fro" the debilitatin! finan#ial $hips $hi#h #o"e in the e4er#ise of an industry, rehabilitation pro!ra"s "ay be per"itted by the #ourts upon sho$in! of #lear proof that the #o"pany has the ability to pay and !enerate the in#o"e needed to offset the finan#ial obli!ations $ithout sa#rifi#in! its e4isten#e as a #orporate business' BPI a%erred that the rehabilitation plan did not !i%e re!ard to its interest as a se#ured #reditor relati%e to the e4tended loan repay"ent period' The 0TC re%ie$ed the situation and appre#iated the attendin! #ir#u"stan#es #orre#tly' As per the re#o""endation of the re#ei%er, Sarabia has the #apa#ity to !enerate funds to ans$er its pendin! obli!ations to BPI' All that Sarabia e%er needed is a"ple ti"e to rise and #olle#t itself ane$ after in#urrin! hu!e defi#its fro" its shoulderin! of its buildin! #onstru#tion abandoned by Santa Ana'

The SC noted as $ell that in the !rantin! of Sarabia2s petition for rehabilitation, BPI2s interest as a #reditor is not only #onsidered but also prote#ted be#ause the interest rates the 0TC appointed to be paid by Sarabia are responsi%e to the interest rate that BPI nor"ally a##ords to its usual #lients' )either are the interests too lo$ so as to pre3udi#e BPI nor are they too hi!h so as to i"pose too hea%y a burden on Sarabia' ore to the point is the SC2s #itation of Se#tion B+, 0ule C of the Interi" 0ules of Pro#edure on Corporate 0ehabilitation (Interi" 0ules) $hi#h states that: a rehabilitation plan may be approved even over the opposition of the creditors holding a ma0ority of the corporation1s total liabilities if there is a showing that rehabilitation is feasible and the opposition of the creditors is manifestly unreasonable#

G.R. No. 17=773 Ju23 17, 2013 MI#SUBIS*I MO#ORS P*ILIPPINES SALARIE! EMPLOYEES UNION %MMPSEU& '(. MI#SUBIS*I MO#ORS P*ILIPPINES CORPORA#ION.

Insurance; Collateral Source Rule. $he collateral source rule applies in order to place the responsibility for losses on the party causing them# .ts application is 0ustified so that the wrongdoer should not benefit from the e2penditures made by the in0ured party or take advantage of contracts or other relations that may e2ist between the in0ured party and third persons# $hus, it finds no application to cases involving no3fault insurances under which the insured is indemnified for losses by insurance companies, regardless of who was at fault in the incident generating the losses# !EL CAS#ILLO, J., FACTS: Pursuant to Se#tion C of the parties2 Colle#ti%e Bar!ainin! A!ree"ent (CBA) #o%erin! the period Au!ust *, *77? to Fuly +*, *777, hospitali5ation insuran#e benefits for the #o%ered dependents shall be pro%ided for' The #o"pany shall obtain !roup hospitali5ation insuran#e #o%era!e or assu"e under a self/insuran#e basis, hospitali5ation for the dependents of re!ular e"ployees up to a "a4i"u" a"ount of forty thousand pesos (PC6,666'66) per #onfine"ent' .a#h e"ployee shall pay one hundred pesos (P*66'66) per "onth throu!h salary dedu#tion as his share in the pay"ent of the insuran#e pre"iu"' 9hen the CBA e4pired on Fuly +*, *777, the parties e4e#uted another CBA effe#ti%e Au!ust *, *777 to Fuly +*, B66B in#orporatin! the sa"e pro%isions on dependents2 hospitali5ation insuran#e benefits but no$ in the in#reased a"ount of PA6,666'66' On separate o##asions, three "e"bers of PS.(, na"ely, .rnesto Calida, :er"ie Fuan Oabel and Fo#elyn artin, filed #lai"s for rei"burse"ent of hospitali5ation e4penses of their dependents' PC paid only a portion of their hospitali5ation insuran#e #lai"s, not the full a"ount' Clai"in! that under the CBA, they are entitled to hospital benefits a"ountin! to PB8,CB8'*6, P?,8?7'+A and P,,*B+',6, respe#ti%ely, $hi#h should not be redu#ed by the a"ounts paid by .1ICard and by Prosper, the three asked for rei"burse"ent fro" PC' :o$e%er, PC denied the #lai"s #ontendin! that double insuran#e $ould result if the said e"ployees $ould re#ei%e fro" the #o"pany the full a"ount of hospitali5ation e4penses despite ha%in! already re#ei%ed pay"ent of portions thereof fro" other health insuran#e pro%iders' On Au!ust B,, B666, PS.( referred the dispute to the )ational Con#iliation and ediation Board and re@uested for pre%enti%e "ediation' On O#tober +, B666, the #ase $as referred to >oluntary Arbitrator 0olando Capo#yan for resolution of the issue in%ol%in! the interpretation of the sub3e#t CBA pro%ision' 9hen asked by PS.(, the Insuran#e Co""ission, throu!h Atty' 0i#hard 1a%id C' Funk II (Atty' Funk) of the Clai"s Ad3udi#ation 1i%ision, rendered that, in the absen#e of an Other Insuran#e pro%ision in these #o%era!e, the #ourts ha%e unifor"ly held that an insured is entitled to re#ei%e the insuran#e benefits $ithout re!ard to the a"ount of total benefits pro%ided by other insuran#es' The result is #onsistent $ith publi# poli#y underlyin! the #ollateral sour#e rule I that is, the #ourts ha%e usually #on#luded that the liability of a health or a##ident insurer is not redu#ed by other possible sour#es of inde"nifi#ation or #o"pensation' In B66B, the >oluntary Arbitrator found PC liable to pay&rei"burse the a"ount of hospitali5ation e4penses already paid by other health insuran#e #o"panies' It $as held that the e"ployees "ay de"and si"ultaneous pay"ent fro" both the CBA and their dependents2 separate health insuran#e $ithout resultin! to double insuran#e, sin#e separate pre"iu"s $ere paid for ea#h #ontra#t' PC then filed a Petition for 0e%ie$ $ith Prayer for the Issuan#e of a Te"porary 0estrainin! Order and&or 9rit of Preli"inary In3un#tion before the CA' On ar#h +*, B66?, the CA re%ersed and set aside the de#ision of the >oluntary Arbitrator' It ruled that despite the la#k of a pro%ision $hi#h bars re#o%ery in #ase of pay"ent by other insurers, the pro%ision

stipulatin! that pay"ent should be "ade dire#tly to the hospital and that the #lai" should be supported by a#tual hospital and do#tor2s bills' This "eans that the e"ployees shall only be paid a"ounts not #o%ered by other health insuran#e $hi#h is "ore in keepin! $ith the prin#iple of inde"nity in insuran#e #ontra#ts' It #learly intended to "ake PC liable only for e4penses a#tually in#urred by an e"ployee2s @ualified dependent' ISS(.: 9:.T:.0 O0 )OT T:. . B.0/. P-O=..S ()1.0 T:. CBA A0. .)TIT-.1 TO F(-- 0.I B(0S. .)T OF .1ICA- .JP.)S.S I)C(00.1 B= T:.I0 1.P.)1.)TS 0.;A01-.SS OF A)= A O()TS PAI1 B= T:. -ATT.02S OT:.0 :.A-T: I)S(0A)C. P0O>I1.0' :.-1: ).;ATI>.' The #ollateral sour#e rule applies in order to pla#e the responsibility for losses on the party #ausin! the"' Its appli#ation is 3ustified so that KLthe $ron!doer should not benefit fro" the e4penditures "ade by the in3ured party or take ad%anta!e of #ontra#ts or other relations that "ay e4ist bet$een the in3ured party and third persons'E Thus, the SC ruled that, it finds no appli#ation to #ases in%ol%in! no/fault insuran#es under $hi#h the insured is inde"nified for losses by insuran#e #o"panies, re!ardless of $ho $as at fault in the in#ident !eneratin! the losses' PC, bein! a no/fault insurer, #annot be obli!ed to pay the hospitali5ation e4penses of the dependents of its e"ployees $hi#h had already been paid by the separate health insuran#e pro%iders of said dependents' oreo%er, the #onditions set forth in the CBA pro%ision indi#ate an intention to li"it PC2s liability only to a#tual e4penses in#urred by the e"ployees2 dependents, that is, e4#ludin! the a"ounts paid by dependents2 other health insuran#e pro%iders' The #ondition that pay"ent should be dire#t to the hospital and do#tor i"plies that PC is only liable to pay "edi#al e4penses a#tually shouldered by the e"ployees2 dependents' This #ondition is ob%iously intended to th$art not only fraudulent #lai"s but also double #lai"s for the sa"e loss of the dependents of the #o%ered e"ployees' The sub3e#t CBA pro%ision is an insuran#e #ontra#t, therefore the ri!hts and obli!ations of the parties "ust be deter"ined in a##ordan#e $ith the !eneral prin#iples of insuran#e la$' The CBA, bein! in the nature of a non/life insuran#e #ontra#t and essentially a #ontra#t of inde"nity, it obli!ates PC to inde"nify the #o%ered e"ployees2 "edi#al e4penses in#urred by their dependents but only up to the e4tent of the e4penses a#tually in#urred' This is #onsistent $ith the prin#iple of inde"nity $hi#h pros#ribes the insured fro" re#o%erin! !reater than the loss'

GR 1-=-30 Ju23 =, 2013 ECOLE !E CUISINE MANILLE %COR!ON BLEU O$ #*E P*ILIPPINES&, INC., '(. RENAU! COIN#REAU A CIE AN! LE COR!ON BLEU IN#BL., B.".

Commercial Law; Intellectual Property Law; ra!emark; Section "#$% R.$. &o. '((. Ownership of tra!emarks% tra!e names an! ser)ice marks; how ac*uire!. 4nyone who lawfully produces or deals in merchandise of any kind or who engages in any lawful business, or who renders any lawful service in commerce, by actual use thereof in manufacture or trade, in business, and in the service rendered, mayappropriate to his e2clusive use a trademark, a trade name, or a service mark from the merchandise, business, or service of others# $he ownership or possession of a trademark, trade name or service mark not so appropriated by another, to distinguish his merchandise, business or service from the merchandise, business or services of others# $he ownership or possession of a trademark, trade name, service mark, heretofore or hereafter appropriated, as in this section provided, shall be recogni5ed and protected in the same manner and to the same e2tent as are other property rights known to this law# PERLAS BERNABE, J., FACTS: 0espondent Cointreau, a Fren#h re!istered partnership, filed before the then Bureau of Patents, Trade"arks, and Te#hnolo!y Transfer a trade"ark appli#ation for D-e Cordon Bleu M 1e%i#e,E a "ark it had been usin! sin#e *,7A in its #ulinary s#hool in Fran#e' This $as opposed by .#ole 1e Cuisine anille, In#' $hi#h subse@uently filed an appli#ation for re!istration, #lai"in! to be the o$ner of the "ark D-e Cordon Bleu, .#ole de Cuisine anilleE' It a%erred that, sin#e *7C, it had been usin! the "ark for its o$n #ookin! and other a#ti%ities in the Philippines' It #lai"ed, too, that .#ole2s dire#tress $as an alu"na of the Fran#e/based #ulinary institute, e%iden#e that it had kno$led!e of an entity that had the prior use of the "ark' The Bureau of -e!al Affairs of the no$ Intelle#tual Property Offi#e re3e#ted Cointreau2s appli#ation' It e"phasi5ed the need of adoption and use of the trade"ark in #o""er#e in the Philippines and not abroad' (pon appeal to the 1ire#tor ;eneral of the IPO ho$e%er, this de#ision $as re%ersed, allo$in! for the re!istration of Cointeau2s trade"ark' It held that $hile the a#tual use of the sub3e#t "ark in #o""er#e in the Philippines is re@uired, only the o$ner has the ri!ht to re!ister the sa"e' :en#e, the user of the "ark in the Philippines is not ipso facto the o$ner' The Court of Appeals, in rulin! a!ainst .#ole2s petition for re%ie$, affir"ed the IPO 1ire#tor ;eneral2s de#ision, de#larin! Cointreau as the true and a#tual o$ner of the sub3e#t "ark, ha%in! the ri!ht to re!ister it in the Philippines pursuant to Se#' +8 of 0A *??' It also ruled that .#ole2s prior use of the "ark in the Philippines #ould not ha%e barred respondent2s ri!ht to re!ister be#ause its appropriation of the "ark $as done in bad faith' ISS(.: 9:.T:.0 O0 )OT COI)T0.A( IS T:. T0(. A)1 -A9F(- O9).0 OF T:. S(BF.CT A0<' :.-1: AFFI0 ATI>.' The Supre"e Court de#ided that Cointreau is the true and la$ful o$ner of the sub3e#t "ark, ha%in! its use sin#e *,7A, prior to .#ole2s alle!ed first use in *7C,' Be#ause .#ole had no #ertifi#ate of re!istration o%er the "ark, and it kne$ of Cointreau2s prior use, its dire#tress and founder bein! both alu"ni of said #ulinary s#hool, its subse@uent appli#ation for re!istration $as tainted $ith bad faith' The old Trade"ark -a$, $hi#h $as in for#e at the ti"e of Cointreau2s appli#ation, pro%ided in Se#' B that there "ust be a#tual use of the "ark in #o""er#e in the Philippines for B "onths prior the appli#ation for re!istration' Para!raph A of the sa"e se#tion defined ho$ to a#@uire o$nershipN that the a#tual use in

#o""er#e is the test of o$nership, pro%ided that it had not been appropriated by another' The Court noted that Se#' B/A did not re@uire the a#tual use of the "ark to be $ithin the Philippines' ."phasis $as also !i%en to the fa#t that Philippines and Fran#e are both si!natories to the Paris Con%ention, and are obli!ated to afford nationals of both #ountries effe#ti%e prote#tion a!ainst the %iolation of their intelle#tual property ri!hts' Further"ore, under the Intelle#tual Property Code, the present la$ !o%ernin! trade"arks, the re@uire"ent of prior a#tual use at the ti"e of re!istration is no lon!er re@uired' O