G.R. No. 194307. November 20, 2013.* trademark, by itself, is not a mode of acquiring ownership.
s not a mode of acquiring ownership. If the applicant is not the
BIRKENSTOCK ORTHOPAEDIE GMBH AND CO. KG (formerly BIRKENSTOCK
ORTHOPAEDIE GMBH), petitioner, vs. PHILIPPINE SHOE EXPO MARKETING
CORPORATION, respondent.
Actions; Procedural Rules and Technicalities; 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.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.
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. This
is especially true with quasi-judicial and administrative bodies, such as the IPO, which
are not bound by technical rules of procedure.
Mercantile Law; Intellectual Property Rights; Trademarks; Under Section 2 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.Under Section 2 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-A of the same law sets out to define
how one goes about acquiring ownership thereof. Under the same section, it is clear
that actual use in commerce is also the test of ownership but the provision went
further by saying that the mark must not have been so appropriated by another.
Significantly, to be an owner, Section 2-A does not require that the actual use of a
trademark must be within the Philippines. Thus, under RA 166, one may be an owner
of a mark due to its actual use but may not yet have the right to register such
ownership here due to the owners failure to use the same in the Philippines for two
(2) months prior to registration.
Same; Same; Same; Registration merely creates a prima facie presumption of the
validity of the registration, of the registrants ownership of the trademark, and of the
exclusive right to the use thereof.It must be emphasized that registration of a
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
registrants ownership of the trademark, and of the exclusive right to the use thereof.
Such presumption, just like the presumptive regularity in the performance of official
functions, is rebuttable and must give way to evidence to the contrary.
Same; Same; 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.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.
PETITION for review on certiorari of the decision and resolution of the Court of
Appeals.
The facts are stated in the opinion of the Court.
Angara, Abello, Concepcion, Regala & Cruz for petitioner.
Brondial Law Office for respondent.
PERLAS-BERNABE, J.:
Assailed in this Petition for Review on Certiorari1 are the Court of Appeals (CA)
Decision2 dated June 25, 2010 and Resolution3 dated October 27, 2010 in CA-G.R.
SP No. 112278 which reversed and set aside the Intellectual Property Office (IPO)
Director Generals Decision4 dated December 22, 2009 that allowed the registration
of various trademarks in favor of petitioner Birkenstock Orthopaedie GmbH & Co. KG.
The Facts
Petitioner, a corporation duly organized and existing under the laws of Germany,
applied for various trademark registrations before the IPO, namely: (a)
BIRKENSTOCK under Trademark Application Serial No. (TASN) 4-1994-091508 for
goods falling under Class 25 of the International Classification of Goods and Services
(Nice Classification) with filing date of March 11, 1994; (b) BIRKENSTOCK BAD
HONNEFRHEIN & DEVICE COMPRISING OF ROUND COMPANY SEAL AND
REPRESENTATION OF A FOOT, CROSS AND SUNBEAM 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).
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.
The aforesaid cancellation of Registration No. 56334 paved the way for the
publication of the subject applications in the IPO e-Gazette on February 2, 2007.11 In
response, respondent filed three (3) separate verified notices of oppositions to the
subject applications docketed as Inter Partes Case Nos. 14-2007-00108, 14-2007-
00115, and 14-2007-00116,12 claiming, inter alia, that: (a) it, together with its
predecessor-in-interest, has been using Birkenstock marks in the Philippines for more
than 16 years through the mark BIRKENSTOCK AND DEVICE; (b) the marks
covered by the subject applications are identical to the one covered by Registration
No. 56334 and thus, petitioner has no right to the registration of such marks; (c) on
November 15, 1991, respondents predecessor-in-interest likewise obtained a
Certificate of Copyright Registration No. 0-11193 for the word BIRKENSTOCK; (d)
while respondent and its predecessor-in-interest failed to file the 10th Year 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).
The Ruling of the BLA
In its Decision dated May 28, 2008, the BLA of the IPO sustained respondents
opposition, thus, ordering the rejection of the subject applications. It ruled that the
competing marks of the parties are confusingly similar since they contained the word
BIRKENSTOCK and are used on the same and related goods. It found respondent
and its predecessor-in-interest as the prior user and adopter of BIRKENSTOCK in
the Philippines, while on the other hand, petitioner failed to present evidence of
actual use in the trade and business in this country. It opined that while Registration
No. 56334 was cancelled, it does not follow that prior right over the mark was lost, as
proof of continuous and uninterrupted use in trade and business in the Philippines
was presented. The BLA likewise opined that petitioners marks are not well-known in
the Philippines and internationally and that the various certificates of registration
submitted by petitioners were all photocopies and, therefore, not admissible as
evidence.
Aggrieved, petitioner appealed to the IPO Director General.
The Ruling of the IPO Director General
In his Decision dated December 22, 2009, the IPO Director General reversed and set
aside the ruling of the BLA, thus allowing the registration of the subject applications.
He held that with the cancellation of Registration No. 56334 for respondents failure
to file the 10th Year DAU, there is no more reason to reject the subject applications
on the ground of prior registration by another proprietor. 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. The IPO Director General further held that
respondents copyright for the word BIRKENSTOCK is of no moment since copyright
and trademark are different forms of intellectual property that cannot be
interchanged.
Finding the IPO Director Generals reversal of the BLA unacceptable, respondent filed
a petition for review with the CA.
Ruling of the CA
In its Decision dated June 25, 2010, the CA reversed and set aside the ruling of the
IPO Director General and reinstated that of the BLA. It disallowed the registration of
the subject applications on the ground that the marks covered by such applications
are confusingly similar, if not outright identical with respondents mark. It equally
held that respondents failure to file the 10th Year DAU for Registration No. 56334
did not deprive petitioner of its ownership of the BIRKENSTOCK mark since it has
submitted substantial evidence showing its continued use, promotion and
advertisement thereof up to the present. It opined that when respondents
predecessor-in-interest adopted and started its actual use of BIRKENSTOCK, there
is neither an existing registration nor a pending application for the same and thus, it
cannot be said that it acted in bad faith in adopting and starting the use of such
mark. Finally, the CA agreed with respondent that petitioners documentary evidence,
being mere photocopies, were submitted in violation of Section 8.1 of Office Order
No. 79, Series of 2005 (Rules on Inter Partes Proceedings).
Dissatisfied, petitioner filed a Motion for Reconsideration dated July 20, 2010, which which is consistent with the requirements of fair play and conducive to the just,
was, however, denied in a Resolution26 dated October 27, 2010. Hence, this petition. 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
Issues Before the Court underscoring supplied)

The primordial issue raised for the Courts resolution is whether or not the subject In the case at bar, while petitioner submitted mere photocopies as documentary
marks should be allowed registration in the name of petitioner. 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
The Courts Ruling
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
The petition is meritorious.
Generals relaxation of procedure was a valid exercise of his discretion in the interest
A. Admissibility of Petitioners of substantial justice.

Documentary Evidence. Having settled the foregoing procedural matter, the Court now proceeds to resolve
the substantive issues.
In its Comment dated April 29, 2011, respondent asserts that the documentary
evidence submitted by petitioner in the Consolidated Opposition Cases, which are B. Registration and ownership of BIRKENSTOCK.
mere photocopies, are violative of Section 8.1 of the Rules on Inter Partes
Republic Act No. (RA) 166,34 the governing law for Registration No. 56334, requires
Proceedings, which requires certified true copies of documents and evidence
the filing of a DAU on specified periods, to wit:
presented by parties in lieu of originals. As such, they should be deemed
inadmissible.
124.2. The applicant or the registrant shall file a declaration of actual use of the
mark with evidence to that effect, as prescribed by the Regulations within three (3)
The Court is not convinced.
years from the filing date of the application. Otherwise, the application shall be
It is well-settled that the rules of procedure are mere tools aimed at facilitating the refused or the mark shall be removed from the Register by the Director.
attainment of justice, rather than its frustration. A strict and rigid application of the
Sec. 145. Duration.A certificate of registration shall remain in force for ten (10)
rules must always be eschewed when it would subvert the primary objective of the
years: Provided, That the registrant shall file a declaration of actual use and evidence
rules, that is, to enhance fair trials and expedite justice. Technicalities should never
to that effect, or shall show valid reasons based on the existence of obstacles to such
be used to defeat the substantive rights of the other party. Every party-litigant must
use, as prescribed by the Regulations, within one (1) year from the fifth anniversary
be afforded the amplest opportunity for the proper and just determination of his
of the date of the registration of the mark. Otherwise, the mark shall be removed
cause, free from the constraints of technicalities.30 Indeed, the primordial policy is
from the Register by the Office.
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
In the same manner, Rules 204 and 801 of the Rules and Regulations on Trademarks
an injustice not commensurate with the degree of his thoughtlessness in not
provide:
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 Rule 204. Declaration of Actual Use.The Office will not require any proof of use in
procedure.32 On this score, Section 5 of the Rules on Inter Partes Proceedings commerce in the processing of trademark applications. However, without need of any
provides: notice from the Office, all applicants or registrants shall file a declaration of actual
use of the mark with evidence to that effect within three years, without possibility of
Sec. 5. Rules of Procedure to be followed in the conduct of hearing of Inter Partes
extension, from the filing date of the application. Otherwise, the application shall be
cases.The rules of procedure herein contained primarily apply in the conduct of
refused or the mark shall be removed from the register by the Director motu proprio.
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 Rule 801. Duration.A certificate of registration shall remain in force for ten (10)
may adopt, in the absence of any applicable rule herein, such mode of proceedings years, Provided, That without need of any notice from the Office, the registrant shall
file a declaration of actual use and evidence to that effect, or shall show valid reasons
based on the existence of obstacles to such use, as prescribed by these Regulations,
within one (1) year from the fifth anniversary of the date of the registration of the
mark. Otherwise, the Office shall remove the mark from the Register. Within one (1)
month from receipt of the declaration of actual use or reason for non-use, the
Examiner shall notify the registrant of the action taken thereon such as acceptance or
refusal.
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.
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 Section 2 of RA 166
provides:
Sec. 2. What are registrable.Trademarks, trade names and service marks owned
by persons, corporations, partnerships or associations domiciled in the Philippines and
by persons, corporations, partnerships or associations domiciled in any foreign
country may be registered in accordance with the provisions of this Act: Provided,
That said trademarks, trade names, or service marks are actually in use in commerce
and services not less than two months in the Philippines before the time the
applications for registration are filed; And provided, further, That the country of
which the applicant for registration is a citizen grants by law substantially similar
privileges to citizens of the Philippines, and such fact is officially certified, with a
certified true copy of the foreign law translated into the English language, by the
government of the foreign country to the Government of the Republic of the
Philippines.
39 Section 2-A, which was added by RA 638 to RA 166, provides:
Sec. 2-A. Ownership of trademarks, trade names 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 lawful service in commerce, by
actual use thereof in manufacture or trade, in business, and in the service rendered,
may appropriate to his exclusive use a trademark, a trade name, or a service mark
not so appropriated by another, to distinguish his merchandise, business or service
from the merchandise, business or services of others. The ownership or possession of
a trademark, trade name, service mark, heretofore or hereafter appropriated, as in
this section provided, shall be recognized and protected in the same manner and to
the same extent as are other property rights known to this law.
Trademark is an industrial property over which its owner is entitled to property rights
which cannot be appropriated by unscrupulous entities that, in one way or another,
happen to register such trademark ahead of its true and lawful owner. The
presumption of ownership accorded to a registrant must then necessarily yield to
superior evidence of actual and real ownership of a trademark. The Courts
pronouncement in Berris Agricultural Co., Inc. v. Abyadang is instructive on this
point:
The ownership of a trademark is acquired by its registration and its actual use by the
manufacturer or distributor of the goods made available to the purchasing public.
x x x A certificate of registration of a mark, once issued, constitutes prima facie
evidence of the validity of the registration, of the registrants ownership of the mark,
and of the registrants exclusive right to use the same in connection with the goods
or services and those that are related thereto specified in the certificate. x x x In
other words, the prima facie presumption brought about by the registration of a mark
may be challenged and overcome in an appropriate action, x x x by evidence of prior
use by another person, i.e., it will controvert a claim of legal appropriation or of
ownership based on registration by a subsequent user. This is because a trademark is
a creation of use and belongs to one who first used it in trade or commerce.
(Emphasis and underscoring supplied)
In the instant case, petitioner was able to establish that it is the owner of the mark SO ORDERED.
BIRKENSTOCK. It submitted evidence relating to the origin and history of
BIRKENSTOCK and its use in commerce long before respondent was able to register Brion (Acting Chairperson), Del Castillo, Perez and Reyes,** JJ., concur.
the same here in the Philippines. It has sufficiently proven that BIRKENSTOCK was
Petition granted, judgment and resolution reversed and set aside.
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
Notes.A trademark is any distinctive word, name, symbol, emblem, sign, or device,
continuously engaged in the manufacture and sale of shoes and sandals bearing the
or any combination thereof, adopted and used by a manufacturer or merchant on his
mark BIRKENSTOCK until it became the entity now known as the petitioner.
goods to identify and distinguish them from those manufactured, sold, or dealt by
Petitioner also submitted various certificates of registration of the mark
others. Inarguably, a trademark deserves protection. (Prosource International, Inc.
BIRKENSTOCK in various countries and that it has used such mark in different
vs. Horphag Research Management SA, 605 SCRA 523 [2009])
countries worldwide, including the Philippines.
o0o
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.

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

The facts and evidence fail to show that [respondent] was in good faith in using and
in registering the mark BIRKENSTOCK. BIRKENSTOCK, obviously of German origin, is
a highly distinct and arbitrary mark. It is very remote that two persons did coin the
same or identical marks. To come up with a highly distinct and uncommon mark
previously appropriated by another, for use in the same line of business, and without
any plausible explanation, is incredible. The field from which a person may select a
trademark is practically unlimited. As in all other cases of colorable imitations, the
unanswered

riddle is why, of the millions of terms and combinations of letters and designs
available, [respondent] had to come up with a mark identical or so closely similar to
the [petitioners] if there was no intent to take advantage of the goodwill generated
by the [petitioners] mark. Being on the same line of business, it is highly probable
that the [respondent] knew of the existence of BIRKENSTOCK and its use by the
[petitioner], before [respondent] appropriated the same mark and had it registered in
its name.46

WHEREFORE, the petition is GRANTED. The Decision dated June 25, 2010 and
Resolution dated October 27, 2010 of the Court of Appeals in CA-G.R. SP No. 112278
are REVERSED and SET ASIDE. Accordingly, the Decision dated December 22, 2009
of the IPO Director General is hereby REINSTATED.
 G.R. No. 169974. April 20, 2010.*
SUPERIOR COMMERCIAL ENTERPRISES, INC., petitioner, vs. KUNNAN
ENTERPRISES LTD. AND SPORTS CONCEPT & DISTRIBUTOR, INC.,
respondents.
Mercantile Law; Trademarks; Trademark Infringement, Defined.Section 22 of
Republic Act No. 166, as amended (RA 166), 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 tradename 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 tradename 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.
Civil Procedure; Trademarks; Trademark Infringement; Parties; Section 22 of
Republic Act (RA) No. 166 states that only a registrant of a mark can file a case for
infringement; 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.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 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.
Same; Judgments; Res Judicata; 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.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. 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. 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.
Mercantile Law; Trademarks; Trademark Infringement; Elements that must be proven
to establish trademark infringement.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.
Same; Same; Same; Unfair Competition, Defined.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 are (1) confusing similarity in the general
appearance of the goods; and (2) intent to deceive the public and defraud a
competitor.
Same; Same; Same; Same; There can be trademark infringement without unfair
competition.In McDonalds Corporation v. L.C. Big Mak Burger, Inc., 437 SCRA 10
(2004), 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.
PETITION for review on certiorari of the decision and resolution of the Court of
Appeals.
The facts are stated in the opinion of the Court.
Arturo Z. Sioson for petitioner.
Sycip, Salazar, Hernandez & Gatmaitan for respondents.
BRION, J.:
We review in this petition for review on certiorari1 the (1) decision2 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 resolution4 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, SUPERIOR5 filed a complaint for trademark infringement and
unfair competition with preliminary injunction against KUNNAN6 and SPORTS
CONCEPT7 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 names8 KENNEX,9
KENNEX & DEVICE,
PRO KENNEX11 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.]
In its defense, KUNNAN disputed SUPERIORs claim of ownership and maintained that
SUPERIORas 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.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,KUNNAN appointed SUPERIOR as its exclusive distributor in the
Philippines under a Distributorship Agreement whose pertinent provisions state:
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:
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 Transfer19 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.
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.
The RTC Ruling
On March 31, 1998, the RTC issued its decision23 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.
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 dissigns should be
delivered to this Court or the plaintiff and be accordingly destroyed;
b.) Defendants are hereby ordered to render an accounting of the sales from the
time it commenced using the marks and trade names of the plaintiff up to the time of
judgment, including the profits derived from said sales;
c.) Defendants are hereby ordered to pay plaintiff the amount of P2,000,000.00
which is the reasonable profit which plaintiff could have made, had not defendant
infringed the plaintiffs trademarks;
d.) Defendants are likewise ordered to pay plaintiffs attorneys fees and expenses of WHEREFORE, premises considered, there is no cogent reason to disturb Decision No.
litigation in the amount of P500,000.00; 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
e.) Defendants should pay the cost of the suit. AFFIRMED.

Intervening Developments: 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
The IPO and CA Rulings
Court, docketed as CA-G.R. SP No. 87928 (Registration Cancellation Case). On August
30, 2007, the CA rendered its decision dismissing SUPERIORs petition.29 On
In the course of its appeal to the CA, KUNNAN filed on December 19, 2003 a
December 3, 2007, the CA decision was declared final and executory and entry of
Manifestation and Motion praying that the decision of the Bureau of Legal Affairs
judgment was accordingly made. Hence, SUPERIORs registration of the disputed
(BLA) of the Intellectual Property Office (IPO), dated October 30, 2003, in the
trademarks now stands effectively cancelled.
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
The CA Ruling
In the case at bar, Petitioner-Opposer (Kunnan) has over-whelmingly and
On June 22, 2005, the CA issued its decision in CA-G.R. CV No. 60777, reversing and
convincingly established its rights to the mark PRO KENNEX. It was proven that
setting aside the RTCs decision of March 31, 1998.30 It dismissed SUPERIORs
actual use by Respondent-Registrant is not in the concept of an owner but as a mere
Complaint for Infringement of Trademark and Unfair Competition with Preliminary
distributor (Exhibits I, S to S-1, P and P-1 and Q and Q-2) and as
Injunction on the ground that SUPERIOR failed to establish by preponderance of
enunciated in the case of Crisanta Y. Gabriel vs. Dr. Jose R. Perez, 50 SCRA 406, a
evidence its claim of ownership over the KENNEX and PRO KENNEX trademarks. The
mere distributor of a product bearing a trademark, even if permitted to use said
CA found the Certificates of Principal and Supplemental Registrations and the
trademark has no right to and cannot register the said trademark.
whereas clause of the Distributorship Agreement insufficient to support SUPERIORs
claim of ownership over the disputed trademarks.
WHEREFORE, there being sufficient evidence to prove that the Petitioner-Opposer
(KUNNAN) is the prior user and owner of the trademark PRO-KENNEX, the
The CA stressed that SUPERIORs possession of the aforementioned Certificates of
consolidated Petitions for Cancellation and the Notices of Opposition are hereby
Principal Registration does not conclusively establish its ownership of the disputed
GRANTED. Consequently, the trademark PRO-KENNEX bearing Registration Nos.
trade-marks as dominion over trademarks is not acquired by the fact of registration
41032, 40326, 39254, 4730, 49998 for the mark PRO-KENNEX issued in favor of
alone;31 at best, registration merely raises a presumption of ownership that can be
Superior Commercial Enterprises, Inc., herein Respondent-Registrant under the
rebutted by contrary evidence. The CA further emphasized that the Certificates of
Principal Register and SR No. 6663 are hereby CANCELLED. Accordingly, trademark
Supplemental Registration issued in SUPERIORs name do not even enjoy the
application Nos. 84565 and 84566, likewise for the registration of the mark PRO-
presumption of ownership accorded to registration in the principal register; it does
KENNEX are hereby REJECTED.
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,
Let the file wrappers of PRO-KENNEX subject matter of these cases be forwarded to
business, or services specified in the certificate.33
the Administrative Finance and Human Resources Development Services Bureau
(AFHRDSB) for appropriate action in accordance with this Decision and a copy thereof
In contrast with the failure of SUPERIORs evidence, the CA found that KUNNAN
be furnished the Bureau of Trademarks (BOT) for information and update of its
presented sufficient evidence to rebut SUPERIORs presumption of ownership over
record.
the trademarks. KUNNAN established that SUPERIOR, far from being the rightful
owner of the disputed trademarks, was merely KUNNANs exclusive distributor. This
On February 4, 2005, KUNNAN again filed another Mani-festation requesting that the
conclusion was based on three pieces of evidence that, to the CA, clearly established
IPO Director Generals decision on appeal dated December 8, 2004, denying
that SUPERIOR had no proprietary interest over the disputed trademarks.
SUPERIORs appeal, be given weight in the disposition of the case. The dispositive
portion of the decision reads:
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. 16634 and
established jurisprudence,35 the CA held that SUPERIOR as an exclusive
distributordid 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 decisionrendered 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.
tradename 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 16637 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.]

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 Superior Commercial Enterprises, Inc. vs.
Kunnan Enterprises Ltd. 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 tradename 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
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.
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, SUPERIORas 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 conceptconclusiveness of judgmentapplies.
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 markwas 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 ownershipalthough the
current CA ruling is legally correct and can stand on its own meritsbecomes 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:
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.
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 competition47 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
to sell sportswear and sporting goods and equipment manufactured by Kunnan
Enterprises Ltd. and bearing the trademarks KENNEX and PRO KENNEX.
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.
Carpio (Chairperson), Del Castillo, Abad and Perez, JJ., concur.
Petition denied.
o0o

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
 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 INTL.,
B.V., respondents.
Intellectual Properties; Trademarks; Under Section 2 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.Under Section 2 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-A of the same law sets out to define how one goes about acquiring ownership
thereof. Under Section 2-A, it is clear that actual use in commerce is also the test of
ownership but the provision went further by saying that the mark must not have
been so appropriated by another. Additionally, it is significant to note that Section 2-A
does not require that the actual use of a trademark must be within the Philippines.
Thus, as correctly mentioned by the CA, under R.A. No. 166, one may be an owner of
a mark due to its actual use but may not yet have the right to register such
ownership here due to the owners failure to use the same in the Philippines for two
(2) months prior to registration.
Same; Same; Trademark Infringement; Foreign marks which are not registered are
still accorded protection against infringement and/or unfair competition.
Nevertheless, foreign marks which are not registered are still accorded protection
against infringement and/or unfair competition. At this point, it is worthy to
emphasize that the Philippines and France, Cointreaus country of origin, are both
signatories to the Paris Convention for the Protection of Industrial Property (Paris
Convention).
Same; Same; Same; Paris Convention; The Philippines is obligated to assure nationals
of the signatory-countries to the Paris Convention 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.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. 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.
Same; Same; Intellectual Property Code of the Philippines (R.A. No. 8293); 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.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. Thus, there is more
reason to allow the registration of the subject mark under the name of Cointreau as
its true and lawful owner.
Same; Same; Same; 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.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. 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.
PETITION for review on certiorari of a decision of the Court of Appeals.
The facts are stated in the opinion of the Court.
Romulo, Mabanta, Buenaventura, Sayoc & De Los Angeles for petitioner.
Perucles R. Casuela for respondents Renaud Cointreau & Cie and Le Cordon Bleu
International, B.V.
PERLAS-BERNABE, J.:
Assailed in this petition for review on certiorari1 is the December 23, 2008 Decision2
of the Court of Appeals (CA) in CA-G.R. SP No. 104672 which affirmed in toto the
Intellectual Property Office (IPO) Director Generals April 21, 2008 Decision3 that
declared respondent Renaud Cointreau & Cie (Cointreau) as the true and lawful
owner of the mark LE CORDON BLEU & DEVICE and thus, is entitled to register the
same under its name.
The Facts
On June 21, 1990, Cointreau, a partnership registered under the laws of France, filed
before the (now defunct) Bureau of Patents, Trademarks, and Technology Transfer
(BPTTT) of the Department of Trade and Industry a trademark application for the
mark LE CORDON BLEU & DEVICE for goods falling under classes 8, 9, 16, 21, 24,
25, 29, and 30 of the International Classification of Goods and Services for the
Purposes of Registrations of Marks (Nice Classification) (subject mark). The
application was filed pursuant to Section 37 of Republic Act No. 166, as amended
(R.A. No. 166), on the basis of Home Registration No. 1,390,912, issued on
November 25, 1986 in France. Bearing Serial No. 72264, such application was
published for opposition in the March-April 1993 issue of the BPTTT Gazette and
released for circulation on May 31, 1993.4
On 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.

On July 23, 1993, petitioner Ecole De Cuisine Manille, Inc. (Ecole) filed an opposition The Ruling of the IPO Director General_2017
to the subject application, averring that: (a) it is the owner of the mark LE CORDON
In his Decision dated April 21, 2008, the IPO Director General reversed and set aside
BLEU, ECOLE DE CUISINE MANILLE, which it has been using since 1948 in cooking
the BLAs decision, thus, granting Cointreaus appeal and allowing the registration of
and other culinary activities, including in its restaurant business; and (b) it has
the subject mark.12 He held that while Section 2 of R.A. No. 166 requires actual use
earned immense and invaluable goodwill such that Cointreaus use of the subject
of the subject mark in commerce in the Philippines for at least two (2) months before
mark will actually create confusion, mistake, and deception to the buying public as to
the filing date of the application, only the owner thereof has the right to register the
the origin and sponsorship of the goods, and cause great and irreparable injury and
same, explaining that the user of a mark in the Philippines is not ipso facto its owner.
damage to Ecoles business reputation and goodwill as a senior user of the same.
Moreover, Section 2-A of the same law does not require actual use in the Philippines
On October 7, 1993, Cointreau filed its answer claiming to be the true and lawful to be able to acquire ownership of a mark.13
owner of the subject mark. It averred that: (a) it has filed applications for the subject
In resolving the issue of ownership and right to register the subject mark in favor of
marks registration in various jurisdictions, including the Philippines; (b) Le Cordon
Cointreau, he considered Cointreaus undisputed use of such mark since 1895 for its
Bleu is a culinary school of worldwide acclaim which was established in Paris, France
culinary school in Paris, France (in which petitioners own directress, Ms. Lourdes L.
in 1895; (c) Le Cordon Bleu was the first cooking school to have set the standard for
Dayrit, had trained in 1977). Contrarily, he found that while Ecole may have prior use
the teaching of classical French cuisine and pastry making; and (d) it has trained
of the subject mark in the Philippines since 1948, it failed to explain how it came up
students from more than eighty (80) nationalities, including Ecoles directress, Ms.
with such name and mark. The IPO Director General therefore concluded that Ecole
Lourdes L. Dayrit. Thus, Cointreau concluded that Ecoles claim of being the exclusive
has unjustly appropriated the subject mark, rendering it beyond the mantle of
owner of the subject mark is a fraudulent misrepresentation.6=
protection of Section 4(d)14 of R.A. No. 166.
During the pendency of the proceedings, Cointreau was issued Certificates of
Finding the IPO Director Generals reversal of the BLAs Decision unacceptable, Ecole
Registration Nos. 60631 and 54352 for the marks CORDON BLEU & DEVICE and LE
filed a Petition for Review16 dated June 7, 2008 with the CA.
CORDON BLEU PARIS 1895 & DEVICE for goods and services under classes 21 and
41 of the Nice Classification, respectively.7
Ruling of the CA
The Ruling of the Bureau of Legal Affairs
In its Decision dated December 23, 2008, the CA affirmed the IPO Director Generals
Decision in toto.17 It declared Cointreau as the true and actual owner of the subject
In its Decision8 dated July 31, 2006, the Bureau of Legal Affairs (BLA) of the IPO
mark with a right to register the same in the Philippines under Section 37 of R.A. No.
sustained Ecoles opposition to the subject mark, necessarily resulting in the rejection
166, having registered such mark in its country of origin on November 25, 1986.18
of Cointreaus application.9 While noting the certificates of registration obtained from
other countries and other pertinent materials showing the use of the subject mark
The CA likewise held that Cointreaus right to register the subject mark cannot be
outside the Philippines, the BLA did not find such evidence sufficient to establish
barred by Ecoles prior use thereof as early as 1948 for its culinary school LE
Cointreaus claim of prior use of the same in the Philippines. It emphasized that the
CORDON BLEU MANILLE in the Philippines because its appropriation of the mark was
adoption and use of trademark must be in commerce in the Philippines and not
done in bad faith. Further, Ecole had no certificate of registration that would put
abroad. It then concluded that Cointreau has not established any proprietary right
Cointreau on notice that the former had appropriated or has been using the subject
entitled to protection in the Philippine jurisdiction because the law on trademarks
mark. In fact, its application for trademark registration for the same which was just
rests upon the doctrine of nationality or territoriality.
filed on February 24, 1992 is still pending with the IPO.19
Hence, this petition.
Issues Before the Court
The sole issue raised for the Courts resolution is whether the CA was correct in
upholding the IPO Director Generals ruling that Cointreau is the true and lawful
owner of the subject mark and thus, entitled to have the same registered under its
name.
At this point, it should be noted that the instant case shall be resolved under the
provisions of the old Trademark Law, R.A. No. 166, which was the law in force at the
time of Cointreaus application for registration of the subject mark.
The Courts Ruling
The petition is without merit.
In the petition, Ecole argues that it is the rightful owner of the subject mark,
considering that it was the first entity that used the same in the Philippines. Hence, it
is the one entitled to its registration and not Cointreau.
Petitioners argument is untenable.
Under Section 220 of R.A. No. 166, in order to register a trademark, one must be the
owner thereof and must have actually used the mark in commerce in the Philippines
for two (2) months prior to the application for registration. Section 2-A21 of the same
law sets out to define how one goes about acquiring ownership thereof. Under
Section 2-A, it is clear that actual use in commerce is also the test of ownership but
the provision went further by saying that the mark must not have been so
appropriated by another. Additionally, it is significant to note that Section 2-A does
not require that the actual use of a trademark must be within the Philippines. Thus,
as correctly mentioned by the CA, under R.A. No. 166, one may be an owner of a
mark due to its actual use but may not yet have the right to register such ownership
here due to the owners failure to use the same in the Philippines for two (2) months
prior to registration.22
Nevertheless, foreign marks which are not registered are still accorded protection
against infringement and/or unfair competition. At this point, it is worthy to
emphasize that the Philippines and France, Cointreaus country of origin, are both
signatories to the Paris Convention for the Protection of Industrial Property (Paris
Convention).23 Articles 6bis and 8 of the Paris Convention state:
ARTICLE 6bis
(1) The countries of the Union undertake, ex officio if their legislation so permits, or
at the request of an interested party, to refuse or to cancel the registration, and to
prohibit the use, of a trademark which constitutes a reproduction, an imitation, or a
translation, liable to create confusion, of a mark considered by the competent
authority of the country of registration or use to be well known in that country as
being already the mark of a person entitled to the benefits of this Convention and
used for identical or similar goods. These provisions shall also apply when the
essential part of the mark 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.
In the instant case, it is undisputed that Cointreau has been using the subject mark in SO ORDERED.
France since 1895, prior to Ecoles averred first use of the same in the Philippines in
1948, of which the latter was fully aware thereof. In fact, Ecoles present directress, Sereno (CJ.),** Brion (Acting Chairperson), *** Perez and Leonen, **** JJ., concur.
Ms. Lourdes L. Dayrit (and even its foundress, Pat Limjuco Dayrit), had trained in
Petition denied, judgment affirmed in toto.
Cointreaus Le Cordon Bleu culinary school in Paris, France. Cointreau was likewise
the first registrant of the said mark under various classes, both abroad and in the
o0o
Philippines, having secured Home Registration No. 1,390,912 dated November 25,
1986 from its country of origin, as well as several trademark registrations in the
Philippines.26

On the other hand, Ecole has no certificate of registration over the subject mark but
only a pending application covering services limited to Class 41 of the Nice
Classification, referring to the operation of a culinary school. Its application was filed
only on February 24, 1992, or after Cointreau filed its trademark application for goods
and services falling under different classes in 1990. Under the foregoing
circumstances, even if Ecole was the first to use the mark in the Philippines, it cannot
be said to have validly appropriated the same.

It is thus clear that at the time Ecole started using the subject mark, the same was
already being used by Cointreau, albeit abroad, of which Ecoles directress was fully
aware, being an alumna of the latters culinary school in Paris, France. Hence, Ecole
cannot claim any tinge of ownership whatsoever over the subject mark as Cointreau
is the true and lawful owner thereof. As such, the IPO Director General and the CA
were correct in declaring Cointreau as the true and lawful owner of the subject mark
and as such, is entitled to have the same registered under its name.

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

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

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