G.R. No.

159938

March 31, 2006

SHANGRI-LA INTERNATIONAL HOTEL MANAGEMENT, LTD., SHANGRILA PROPERTIES, IN ., MA!ATI SHANGRI-LA HOTEL " RESORT, IN ., AND !#O! PHILIPPINES PROPERTIES, IN ., Petitioners, vs. DE$ELOPERS GRO#P O% OMPANIES, IN ., Respondent. DECISION GAR IA, J.: In this petition for review under Rule 45 of the Rules of Court, petitioners Shangri !a International "otel #anage$ent, !td. %S!I"#&, et al. assail and see' to set aside the De(ision dated #a) *5, +,,-* of the Court of .ppeals %C.& in C. /.R. C0 No. 5--5* and its Resolution+ of Septe$1er *5, +,,- whi(h effe(tivel) affir$ed with $odifi(ation an earlier de(ision of the Regional 2rial Court %R2C& of 3ue4on Cit) in Civil Case No. 3 5* 6478, an a(tion for infringe$ent and da$ages, thereat (o$$en(ed 1) respondent Developers /roup of Co$panies, In(. %D/CI& against the herein petitioners. 2he fa(ts9 .t the (ore of the (ontrovers) are the :Shangri !a: $ar' and :S: logo. Respondent D/CI (lai$s ownership of said $ar' and logo in the Philippines on the strength of its prior use thereof within the (ountr). .s D/CI stresses at ever) turn, it filed on O(to1er *6, *56+ with the ;ureau of Patents, 2rade$ar's and 2e(hnolog) 2ransfer %;P222& pursuant to Se(tions + and 4 of Repu1li( .(t %R.& No. *88,- as a$ended, an appli(ation for registration (overing the su1<e(t $ar' and logo. On #a) -*, *56-, the ;P222 issued in favor of D/CI the (orresponding (ertifi(ate of registration therefor, i.e., Registration No. -*5,4. Sin(e then, D/CI started using the :Shangri !a: $ar' and :S: logo in its restaurant 1usiness. On the other hand, the =uo' fa$il) owns and operates a (hain of hotels with interest in hotels and hotel related transa(tions sin(e *585. .s far 1a(' as *58+, it adopted the na$e :Shangri !a: as part of the (orporate na$es of all (o$panies organi4ed under the aegis of the =uo' /roup of Co$panies %the =uo' /roup&. 2he =uo' /roup has used the na$e :Shangri !a: in all Shangri !a hotels and hotel related esta1lish$ents around the world whi(h the =uo' >a$il) owned. 2o (entrali4e the operations of all Shangri la hotels and the ownership of the :Shangri !a: $ar' and :S: logo, the =uo' /roup had in(orporated in "ong =ong and Singapore, a$ong other pla(es, several (o$panies that for$ part of the Shangri !a International "otel #anage$ent !td. /roup of Co$panies. EDS. Shangri !a "otel and Resort, In(., and #a'ati Shangri !a "otel and Resort, In(. were in(orporated in the Philippines 1eginning *567 to own and operate the two %+& hotels put up 1) the =uo' /roup in #andalu)ong and #a'ati, #etro #anila.

.ll hotels owned, operated and $anaged 1) the aforesaid S!I"# /roup of Co$panies adopted and used the distin(tive lettering of the na$e :Shangri !a: as part of their trade na$es. >ro$ the re(ords, it appears that Shangri !a "otel Singapore (o$$issioned a Singaporean design artist, a (ertain #r. ?illia$ !ee, to (on(eptuali4e and design the logo of the Shangri !a hotels. During the laun(hing of the st)li4ed :S: !ogo in >e1ruar) *575, #r. !ee gave the following e@planation for the logo, to wit9 2he logo whi(h is shaped li'e a :S: represents the uniAuel) .sean ar(hite(tural stru(tures as well as 'eep to the legendar) Shangri la the$e with the $ountains on top 1eing refle(ted on waters 1elow and the (onne(ting (entre Bsi(C line serving as the hori4on. 2his logo, whi(h is a 1old, stri'ing definitive design, e$1odies 1oth $odernit) and sophisti(ation in 1alan(e and thought. Sin(e *575 and up to the present, the :Shangri !a: $ar' and :S: logo have 1een used (onsistentl) and (ontinuousl) 1) all Shangri !a hotels and (o$panies in their paraphernalia, su(h as stationeries, envelopes, 1usiness for$s, $enus, displa)s and re(eipts. 2he =uo' /roup andDor petitioner S!I"# (aused the registration of, and in fa(t registered, the :Shangri !a: $ar' and :S: logo in the patent offi(es in different (ountries around the world. On Eune +*, *566, the petitioners filed with the ;P222 a petition, do('eted as Inter Partes Case No. -*45, pra)ing for the (an(ellation of the registration of the :Shangri !a: $ar' and :S: logo issued to respondent D/CI on the ground that the sa$e were illegall) and fraudulentl) o1tained and appropriated for the latterFs restaurant 1usiness. 2he) also filed in the sa$e offi(e Inter Partes Case No. -5+5, pra)ing for the registration of the sa$e $ar' and logo in their own na$es. Gntil *567 or *566, the petitioners did not operate an) esta1lish$ent in the Philippines, al1eit the) advertised their hotels a1road sin(e *57+ in nu$erous 1usiness, news, andDor travel $aga4ines widel) (ir(ulated around the world, all readil) availa1le in Philippine $aga4ines and newsstands. 2he), too, $aintained reservations and 1oo'ing agents in airline (o$panies, hotel organi4ations, tour operators, tour pro$otion organi4ations, and in other allied fields in the Philippines. It is prin(ipall) upon the foregoing fa(tual 1a('drop that respondent D/CI filed a (o$plaint for Infringe$ent and Da$ages with the R2C of 3ue4on Cit) against the herein petitioners S!I"#, Shangri !a Properties, In(., #a'ati Shangri !a "otel H Resort, In(., and =uo' Philippine Properties, In(., do('eted as Civil Case No. 3 5* 6478 and eventuall) raffled to ;ran(h 55 of said (ourt. 2he (o$plaint with pra)er for in<un(tive relief and da$ages alleged that D/CI has, for the last eight %6& )ears, 1een the prior

e@(lusive user in the Philippines of the $ar' and logo in Auestion and the registered owner thereof for its restaurant and allied servi(es. .s D/CI alleged in its (o$plaint, S!I"#, et al., in pro$oting and advertising their hotel and other allied pro<e(ts then under (onstru(tion in the (ountr), had 1een using a $ar' and logo (onfusingl) si$ilar, if not identi(al, with its $ar' and :S: logo. .((ordingl), D/CI sought to prohi1it the petitioners, as defendants a Auo, fro$ using the :Shangri !a: $ar' and :S: logo in their hotels in the Philippines. In their .nswer with Counter(lai$, the petitioners a((used D/CI of appropriating and illegall) using the :Shangri !a: $ar' and :S: logo, adding that the legal and 1enefi(ial ownership thereof pertained to S!I"# and that the =uo' /roup and its related (o$panies had 1een using this $ar' and logo sin(e #ar(h *58+ for all their (orporate na$es and affairs. In this regard, the) point to the Paris Convention for the Prote(tion of Industrial Propert) as affording se(urit) and prote(tion to S!I"#Fs e@(lusive right to said $ar' and logo. 2he) further (lai$ed having used, sin(e late *575, the internationall) 'nown and spe(iall) designed :Shangri !a: $ar' and :S: logo for all the hotels in their hotel (hain. Pending trial on the $erits of Civil Case No. 3 5* 6478, the trial (ourt issued a ?rit of Preli$inar) In<un(tion en<oining the petitioners fro$ using the su1<e(t $ar' and logo. 2he preli$inar) in<un(tion issue ulti$atel) rea(hed the Court in /.R. No. *,456entitled Developers /roup of Co$panies, In(. vs. Court of .ppeals, et al. In a de(ision4 dated #ar(h 6, *55-, the Court nullified the writ of preli$inar) in<un(tion issued 1) the trial (ourt and dire(ted it to pro(eed with the $ain (ase and de(ide it with deli1erate dispat(h. ?hile trial was in progress, the petitioners filed with the (ourt a $otion to suspend pro(eedings on a((ount of the penden() 1efore the ;P222 of Inter Partes Case No. -*45 for the (an(ellation of D/CIFs (ertifi(ate of registration. >or its part, respondent D/CI filed a si$ilar $otion in that (ase, invo'ing in this respe(t the penden() of its infringe$ent (ase 1efore the trial (ourt. 2he partiesF respe(tive $otions to suspend pro(eedings also rea(hed the Court via their respe(tive petitions in /.R. No. **46,+, entitled Developers /roup of Co$panies, In(. vs. Court of .ppeals, et al. and /.R. No. ***56,, entitled Shangri !a International "otel #anage$ent !2D., et al. vs. Court of .ppeals, et al., whi(h were a((ordingl) (onsolidated. In a (onsolidated de(ision5 dated Eune +*, +,,*, the Court, li$iting itself to the (ore issue of whether, despite the petitionersF institution of Inter Partes Case No. -*45 1efore the ;P222, herein respondent D/CI :(an file a su1seAuent a(tion for infringe$ent with the regular (ourts of <usti(e in (onne(tion with the sa$e registered $ar',: ruled in the affir$ative, 1ut nonetheless ordered the ;P222 to suspend further pro(eedings in said inter partes (ase and to await the final out(o$e of the $ain (ase. #eanwhile, trial on the $erits of the infringe$ent (ase pro(eeded. Presented as D/CIFs lone witness was Ra$on S)hunliong, President and Chair$an of D/CIFs ;oard of Dire(tors. .$ong other things, this witness testified that9

*. "e is a 1usiness$an, with interest in lu$1er, hotel, hospital, trading and restaurant 1usinesses 1ut onl) the restaurant 1usiness 1ears the na$e :Shangri !a: and uses the sa$e and the :S logo: as servi(e $ar's. 2he restaurant now 'nown as :Shangri !a >inest Chinese Cuisine: was for$erl) 'nown as the :Carva<al Restaurant: until De(e$1er *56+, when respondent too' over said restaurant 1usiness. +. "e had traveled widel) around .sia prior to *56+, and ad$itted 'nowing the Shangri !a "otel in "ong =ong as earl) as .ugust *56+. -. 2he :S logo: was one of two %+& designs given to hi$ in De(e$1er *56+, s(ri11led on a pie(e of paper 1) a <eepne) sign1oard artist with an offi(e so$ewhere in ;alintawa'. 2he unna$ed artist supposedl) produ(ed the two designs after a1out two or three da)s fro$ the ti$e he %S)hunliong& gave the idea of the design he had in $ind. 4. On O(to1er *5, *56+, or 1efore the un'nown sign1oard artist supposedl) (reated the :Shangri !a: and :S: designs, D/CI was in(orporated with the pri$ar) purpose of :owning or operating, or 1oth, of hotels and restaurants:. 5. On O(to1er *6, *56+, again prior to the alleged (reation date of the $ar' and logo, D/CI filed an appli(ation for trade$ar' registration of the $ar' :S".N/RI !. >INES2 C"INESE CGISINE H S. !ogo: with the ;P222. On said date, respondent D/CI a$ended its .rti(les of In(orporation to refle(t the na$e of its restaurant, 'nown and operating under the st)le and na$e of :S".N/RI !. >INES2 C"INESE CGISINE.: Respondent D/CI o1tained Certifi(ate of Registration No. -*5,4 for the :Shangri !a: $ar' and :S: logo. Eventuall), the trial (ourt, on the postulate that petitionersF, $ore parti(ularl) petitioner S!I"#Fs, use of the $ar' and logo in dispute (onstitutes an infringe$ent of D/CIFs right thereto, (a$e out with its de(ision8 on #ar(h 6, *558 rendering <udg$ent for D/CI, as follows9 ?"ERE>ORE, <udg$ent is here1) rendered in favor of Brespondent D/CIC and against BS!I"#, et al.C a& Gpholding the validit) of the registration of the servi(e $ar' :Shangri la: and :S !ogo: in the na$e of BrespondentCI 1& De(laring BpetitionersFC use of said $ar' and logo as infringe$ent of BrespondentFsC right theretoI (& Ordering BpetitionersC, their representatives, agents, li(ensees, assignees and other persons a(ting under their authorit) and with their per$ission, to per$anentl) (ease and desist fro$ using andDor (ontinuing to use said $ar' and logo, or an) (op), reprodu(tion or (olora1le i$itation

thereof, in the pro$otion, advertise$ent, rendition of their hotel and allied pro<e(ts and servi(es or in an) other $anner whatsoeverI d& Ordering BpetitionersC to re$ove said $ar' and logo fro$ an) pre$ises, o1<e(ts, $aterials and paraphernalia used 1) the$ andDor destro) an) and all prints, signs, advertise$ents or other $aterials 1earing said $ar' and logo in their possession andDor under their (ontrolI and e& Ordering BpetitionersC, <ointl) and severall), to inde$nif) BrespondentC in the a$ounts of P+,,,,,,,,.,, as a(tual and (o$pensator) da$ages, P5,,,,,,.,, as attorne)Fs fee and e@penses of litigation. !et a (op) of this De(ision 1e (ertified to the Dire(tor, ;ureau of Patents, 2rade$ar's and 2e(hnolog) 2ransfer for his infor$ation and appropriate a(tion in a((ordan(e with the provisions of Se(tion +5, Repu1li( .(t No. *88 Costs against BpetitionersC. SO ORDERED. B?ords in 1ra('ets added.C 2herefro$, the petitioners went on appeal to the C. whereat their re(ourse was do('eted as C. /.R. SP No. 5--5*. .s stated at the threshold hereof, the C., in its assailed De(ision of #a) *5, +,,-,7 affir$ed that of the lower (ourt with the $odifi(ation of deleting the award of attorne)Fs fees. 2he appellate (ourt predi(ated its affir$ator) a(tion on the strength or interpla) of the following pre$ises9 *. .l1eit the =uo' /roup used the $ar' and logo sin(e *58+, the eviden(e presented shows that the 1ul' use of the tradena$e was a1road and not in the Philippines %until *567&. Sin(e the =uo' /roup does not have proof of a(tual use in (o$$er(e in the Philippines %in a((ordan(e with Se(tion + of R... No. *88&, it (annot (lai$ ownership of the $ar' and logo in a((ordan(e with the holding in =a1ushi =aisha Isetan v. I.C6, as reiterated in Philip #orris, In(. v. Court of .ppeals.5 +. On the other hand, respondent has a right to the $ar' and logo 1) virtue of its prior use in the Philippines and the issuan(e of Certifi(ate of Registration No. -*5,4. -. 2he use of the $ar' or logo in (o$$er(e through the 1oo'ings $ade 1) travel agen(ies is unavailing sin(e the =uo' /roup did not esta1lish an) 1ran(h or regional offi(e in the Philippines. .s it were, the =uo' /roup was not engaged in (o$$er(e in the Philippines inas$u(h as the 1oo'ings were $ade through travel agents not owned, (ontrolled or $anaged 1) the =uo' /roup.

4. ?hile the Paris Convention prote(ts internationall) 'nown $ar's, R... No. *88 still reAuires use in (o$$er(e in the Philippines. .((ordingl), and on the pre$ise that international agree$ents, su(h as Paris Convention, $ust )ield to a $uni(ipal law, the Auestion on the e@(lusive right over the $ar' and logo would still depend on a(tual use in (o$$er(e in the Philippines. Petitioners then $oved for a re(onsideration, whi(h $otion was denied 1) the C. in its eAuall) assailed Resolution of Septe$1er *5, +,,-.*, .s for$ulated 1) the petitioners, the issues upon whi(h this (ase hinges are9 *. ?hether the C. erred in finding that respondent had the right to file an appli(ation for registration of the :Shangri !a: $ar' and :S: logo although respondent never had an) prior a(tual (o$$er(ial use thereofI +. ?hether the C. erred in finding that respondentFs supposed use of the identi(al :Shangri !a: $ar' and :S: logo of the petitioners was not evident 1ad faith and (an a(tuall) ripen into ownership, $u(h less registrationI -. ?hether the C. erred in overloo'ing petitionersF widespread prior use of the :Shangri !a: $ar' and :S: logo in their operationsI 4. ?hether the C. erred in refusing to (onsider that petitioners are entitled to prote(tion under 1oth R... No. *88, the old trade$ar' law, and the Paris Convention for the Prote(tion of Industrial Propert)I 5. ?hether the C. erred in holding that S!I"# did not have the right to legall) own the :Shangri !a: $ar' and :S: logo 1) virtue of and despite their ownership 1) the =uo' /roupI 8. ?hether the C. erred in ruling that petitionersF use of the $ar' and logo (onstitutes a(tiona1le infringe$entI 7. ?hether the C. erred in awarding da$ages in favor of respondent despite the a1sen(e of an) eviden(e to support the sa$e, and in failing to award relief in favor of the petitionersI and 6. ?hether petitioners should 1e prohi1ited fro$ (ontinuing their use of the $ar' and logo in Auestion. 2here are two preli$inar) issues, however, that respondent D/CI (alls our attention to, na$el)9 *. ?hether the (ertifi(ation against foru$ shopping su1$itted on 1ehalf of the petitioners is suffi(ientI

+. ?hether the issues posed 1) petitioners are purel) fa(tual in nature hen(e i$proper for resolution in the instant petition for review on (ertiorari. D/CI (lai$s that the present petition for review should 1e dis$issed outright for (ertain pro(edural defe(ts, to wit9 an insuffi(ient (ertifi(ation against foru$ shopping and raising pure Auestions of fa(t. On 1oth (ounts, we find the instant petition for$all) and su1stantiall) sound. In its Co$$ent, respondent alleged that the (ertifi(ation against foru$ shopping signed 1) .tt). !ee ;en<a$in J. !er$a on 1ehalf and as (ounsel of the petitioners was insuffi(ient, and that he was not dul) authori4ed to e@e(ute su(h do(u$ent. Respondent further alleged that sin(e petitioner S!I"# is a foreign entit) 1ased in "ong =ong, the Dire(torFs Certifi(ate e@e(uted 1) #r. #adhu Ra$a Chandra Rao, e$1od)ing the 1oard resolution whi(h authori4es .tt). !er$a to a(t for S!I"# and e@e(ute the (ertifi(ation against foru$ shopping, should (ontain the authenti(ation 1) a (onsular offi(er of the Philippines in "ong =ong. In National Steel Corporation v. CA,** the Court has ruled that the (ertifi(ation on non foru$ shopping $a) 1e signed, for and in 1ehalf of a (orporation, 1) a spe(ifi(all) authori4ed law)er who has personal 'nowledge of the fa(ts reAuired to 1e dis(losed in su(h do(u$ent. 2he reason for this is that a (orporation (an onl) e@er(ise its powers through its 1oard of dire(tors andDor its dul) authori4ed offi(ers and agents. Ph)si(al a(ts, li'e the signing of do(u$ents, (an 1e perfor$ed onl) 1) natural persons dul) authori4ed for the purpose.*+ #oreover, Rule 7, Se(tion 5 of the Rules of Court (on(erning the (ertifi(ation against foru$ shopping does not reAuire an) (onsular (ertifi(ation if the petitioner is a foreign entit). Nonetheless, to 1anish an) lingering dou1t, petitioner S!I"# furnished this Court with a (onsular (ertifi(ation dated O(to1er +5, +,,- authenti(ating the Dire(torFs Certifi(ate authori4ing .tt). !er$a to e@e(ute the (ertifi(ation against foru$ shopping, together with petitionersF $anifestation of >e1ruar) 5, +,,4. Respondent also atta('s the present petition as one that raises pure Auestions of fa(t. It points out that in a petition for review under Rule 45 of the Rules of Court, the Auestions that $a) properl) 1e inAuired into are stri(tl) (ir(u$s(ri1ed 1) the e@press li$itation that :the petition shall raise onl) Auestions of law whi(h $ust 1e distin(tl) set forth.:*- ?e do not, however, find that the issues involved in this petition (onsist purel) of Auestions of fa(t. 2hese issues will 1e dealt with as we go through the Auestions raised 1) the petitioners one 1) one. PetitionersF first argu$ent is that the respondent had no right to file an appli(ation for registration of the :Shangri !a: $ar' and :S: logo 1e(ause it did not have prior a(tual (o$$er(ial use thereof. 2o respondent, su(h an argu$ent raises a Auestion of fa(t that was alread) resolved 1) the R2C and (on(urred in 1) the C..

>irst off, all that the R2C found was that respondent was the prior user and registrant of the su1<e(t $ar' and logo in the Philippines. 2a'en in proper (onte@t, the trial (ourtFs finding on :prior use: (an onl) 1e interpreted to $ean that respondent used the su1<e(t $ar' and logo in the (ountr) 1efore the petitioners did. It (annot 1e (onstrued as 1eing a fa(tual finding that there was prior use of the $ar' and logo 1efore registration. Se(ondl), the Auestion raised is not purel) fa(tual in nature. In the (onte@t of this (ase, it involves resolving whether a (ertifi(ate of registration of a $ar', and the presu$ption of regularit) in the perfor$an(e of offi(ial fun(tions in the issuan(e thereof, are suffi(ient to esta1lish prior a(tual use 1) the registrant. It further entails answering the Auestion of whether prior a(tual use is reAuired 1efore there $a) 1e a valid registration of a $ar'. Gnder the provisions of the for$er trade$ar' law, R... No. *88, as a$ended, whi(h was in effe(t up to De(e$1er -*, *557, hen(e, the law in for(e at the ti$e of respondentFs appli(ation for registration of trade$ar', the root of ownership of a trade$ar' is a(tual use in (o$$er(e. Se(tion + of said law reAuires that 1efore a trade$ar' (an 1e registered, it $ust have 1een a(tuall) used in (o$$er(e and servi(e for not less than two $onths in the Philippines prior to the filing of an appli(ation for its registration. Registration, without $ore, does not (onfer upon the registrant an a1solute right to the registered $ar'. 2he (ertifi(ate of registration is $erel) a prima facie proof that the registrant is the owner of the registered $ar' or trade na$e. Eviden(e of prior and (ontinuous use of the $ar' or trade na$e 1) another (an over(o$e the presu$ptive ownership of the registrant and $a) ver) well entitle the for$er to 1e de(lared owner in an appropriate (ase.*4 .$ong the effe(ts of registration of a $ar', as (atalogued 1) the Court in !oren4ana v. #a(ag1a,*5 are9 *. Registration in the Prin(ipal Register gives rise to a &r'()*&+,o- of the validit) of the registration, the registrantFs ownership of the $ar', and his right to the e@(lusive use thereof. @ @ @ +. Registration in the Prin(ipal Register is .,*,+'/ +o +h' ac+)a. o0-'r of the trade$ar' and pro(eedings therein pass on the issue of ownership, whi(h *a1 2' co-+'(+'/ +hro)3h o&&o(,+,o- or ,-+'r4'r'-c' &roc''/,-3(, or, a4+'r r'3,(+ra+,o-, ,- a &'+,+,o- 4or ca-c'..a+,o-. @@@ BE$phasis suppliedC1avvphil.et Ownership of a $ar' or trade na$e $a) 1e a(Auired not ne(essaril) 1) registration 1ut 1) adoption and use in trade or (o$$er(e. .s 1etween a(tual use of a $ar' without registration, and registration of the $ar' without a(tual use thereof, the for$er prevails over the latter. >or a rule widel) a((epted and fir$l) entren(hed, 1e(ause it has (o$e down through the )ears, is that a(tual use in (o$$er(e or 1usiness is a pre reAuisite to the a(Auisition of the right of ownership.*8

?hile the present law on trade$ar's*7 has dispensed with the reAuire$ent of prior a(tual use at the ti$e of registration, the law in for(e at the ti$e of registration $ust 1e applied, and thereunder it was held that as a (ondition pre(edent to registration of trade$ar', trade na$e or servi(e $ar', the sa$e $ust have 1een in a(tual use in the Philippines 1efore the filing of the appli(ation for registration.*6 2rade$ar' is a (reation of use and therefore a(tual use is a pre reAuisite to e@(lusive ownership and its registration with the Philippine Patent Offi(e is a $ere ad$inistrative (onfir$ation of the e@isten(e of su(h right.*5 ;) itself, registration is not a $ode of a(Auiring ownership. ?hen the appli(ant is not the owner of the trade$ar' 1eing applied for, he has no right to appl) for registration of the sa$e. Registration $erel) (reates a prima facie presu$ption of the validit) of the registration, of the registrantFs ownership of the trade$ar' and of the e@(lusive right to the use thereof.+, Su(h presu$ption, <ust li'e the presu$ptive regularit) in the perfor$an(e of offi(ial fun(tions, is re1utta1le and $ust give wa) to eviden(e to the (ontrar). "ere, respondentFs own witness, Ra$on S)hunliong, testified that a <eepne) sign1oard artist allegedl) (o$$issioned to (reate the $ar' and logo su1$itted his designs onl) in De(e$1er *56+.+* 2his was two and a half $onths after the filing of the respondentFs trade$ar' appli(ation on O(to1er *6, *56+ with the ;P222. It was also onl) in De(e$1er *56+ when the respondentFs restaurant was opened for 1usiness.++ Respondent (annot now (lai$ 1efore the Court that the (ertifi(ate of registration itself is proof that the two $onth prior use reAuire$ent was (o$plied with, what with the fa(t that its ver) own witness testified otherwise in the trial (ourt. .nd 1e(ause at the ti$e %O(to1er *6, *56+& the respondent filed its appli(ation for trade$ar' registration of the :Shangri !a: $ar' and :S: logo, respondent was not using these in the Philippines (o$$er(iall), the registration is void. Petitioners also argue that the respondentFs use of the :Shangri !a: $ar' and :S: logo was in evident 1ad faith and (annot therefore ripen into ownership, $u(h less registration. ?hile the respondent is (orre(t in sa)ing that a finding of 1ad faith is fa(tual, not legal,+- hen(e 1e)ond the s(ope of a petition for review, there are, however, noted e@(eptions thereto. .$ong these e@(eptions are9 *. ?hen the inferen(e $ade is $anifestl) $ista'en, a1surd or i$possi1leI+4 +. ?hen there is grave a1use of dis(retionI+5 -. ?hen the <udg$ent is 1ased on a $isapprehension of fa(tsI+8 4. ?hen the findings of fa(t are (onfli(tingI+7 and 5. ?hen the fa(ts set forth in the petition as well as in the petitionerFs $ain and repl) 1riefs are not disputed 1) the respondent.+6 .nd these are na$ing 1ut a few of the re(ogni4ed e@(eptions to the rule.

2he C. itself, in its De(ision of #a) *5, +,,-, found that the respondentFs president and (hair$an of the 1oard, Ra$on S)hunliong, had 1een a guest at the petitionersF hotel 1efore he (aused the registration of the $ar' and logo, and sur$ised that he $ust have (opied the idea there9 Did #r. Ra$on S)hunliong, BrespondentFsC President (op) the $ar' and devise fro$ one of BpetitionersFC hotel %=owloon Shangri la& a1roadK 2he $ere fa(t that he was a visitor of BpetitionersFC hotel a1road at one ti$e %Septe$1er +7, *56+& esta1lishes BpetitionersFC allegation that he got the idea there.+5 Let, in the ver) ne@t paragraph, despite the pre(eding ad$ission that the $ar' and logo $ust have 1een (opied, the C. tries to $a'e it appear that the adoption of the sa$e $ar' and logo (ould have 1een (oin(idental9 2he word or na$e :Shangri la: and the S logo, are not un(o$$on. 2he word :Shangri la: refers to a %a& re$ote 1eautiful i$aginar) pla(e where life approa(hes perfe(tion or %1& i$aginar) $ountain land depi(ted as a utopia in the novel !ost "ori4on 1) Ea$es "ilton. 2he !ost "ori4on was a well read and popular novel written in *578. It is not i$possi1le that the parties, inspired 1) the novel, 1oth adopted the $ar' for their 1usiness to (on<ure BaC pla(e of 1eaut) and pleasure. 2he S logo is, li'ewise, not unusual. 2he devise loo's li'e a $odified Old English print.-, 2o <u$p fro$ a re(ognition of the fa(t that the $ar' and logo $ust have 1een (opied to a rationali4ation for the possi1ilit) that 1oth the petitioners and the respondent (oin(identall) (hose the sa$e na$e and logo is not onl) (ontradi(tor), 1ut also $anifestl) $ista'en or a1surd. >urther$ore, the :S: logo appears nothing li'e the :Old English: print that the C. $a'es it out to 1e, 1ut is o1viousl) a s)$1ol with oriental or .sian overtones. .t an) rate, it is ludi(rous to 1elieve that the parties would (o$e up with the e@a(t sa$e lettering for the word :Shangri !a: and the e@a(t sa$e logo to 1oot. .s (orre(tl) o1served 1) the petitioners, to whi(h we are in full a((ord9 @ @ @ ?hen a trade$ar' (op)(at adopts the word portion of anotherFs trade$ar' as his own, there $a) still 1e so$e dou1t that the adoption is intentional. ;ut if he (opies not onl) the word 1ut also the wordFs e@a(t font and lettering st)le and in addition, he (opies also the logo portion of the trade$ar', the slightest dou1t vanishes. It is then repla(ed 1) the (ertaint) that the adoption was deli1erate, $ali(ious and in 1ad faith.-* It is trul) diffi(ult to understand wh), of the $illions of ter$s and (o$1ination of letters and designs availa1le, the respondent had to (hoose e@a(tl) the sa$e $ar' and logo as that of the petitioners, if there was no intent to ta'e advantage of the goodwill of petitionersF $ar' and logo.-+ One who has i$itated the trade$ar' of another (annot 1ring an a(tion for infringe$ent, parti(ularl) against the true owner of the $ar', 1e(ause he would 1e (o$ing to (ourt with un(lean hands.-- Priorit) is of no avail to the 1ad faith plaintiff. /ood faith is reAuired in

order to ensure that a se(ond user $a) not $erel) ta'e advantage of the goodwill esta1lished 1) the true owner. 2his point is further 1olstered 1) the fa(t that under either Se(tion *7 of R... No. *88, or Se(tion *5* of R... No. 6+5-, or .rti(le 8bis%-& of the Paris Convention, no ti$e li$it is fi@ed for the (an(ellation of $ar's registered or used in 1ad faith.-4 2his is pre(isel) wh) petitioners had filed an inter partes (ase 1efore the ;P222 for the (an(ellation of respondentFs registration, the pro(eedings on whi(h were suspended pending resolution of the instant (ase. Respondent D/CI also re1u'es the ne@t issue raised 1) the petitioners as 1eing purel) fa(tual in nature, na$el), whether the C. erred in overloo'ing petitionersF widespread prior use of the :Shangri !a: $ar' and :S: logo in their operations. 2he Auestion, however, is not whether there had 1een widespread prior use, whi(h would have 1een fa(tual, 1ut whether that prior use entitles the petitioners to use the $ar' and logo in the Philippines. 2his is (learl) a Auestion whi(h is legal in nature. It has alread) 1een esta1lished in the two (ourts 1elow, and admitted by the respondent's president himself, that petitioners had prior widespread use of the $ar' and logo a1road9 2here is, to 1e sure, an ,*&r'((,5' *a(( o4 &roo4 that petitioner S!I"# and its related (o$panies a1road used the na$e and logo for one purpose or another @ @ @.-5 BE$phasis suppliedC In respondentFs own words, :B2Che Court of .ppeals did note petitionersF use of the $ar' and logo 1ut held that su(h use did not (onfer to the$ ownership or e@(lusive right to use the$ in the Philippines.:-8 2o petitionersF $ind, it was error for the C. to rule that their worldwide use of the $ar' and logo in dispute (ould not have (onferred upon the$ an) right thereto. .gain, this is a legal Auestion whi(h is well worth delving into. R... No. *88, as a$ended, under whi(h this (ase was heard and de(ided provides9 Se(tion +. ?hat are r'3,(+ra2.'. 2rade$ar's, trade na$es and servi(e $ar's o0-'/ 1) persons, (orporations, partnerships or asso(iations do$i(iled in the Philippines and 1) persons, (orporations, partnerships or asso(iations do$i(iled in an) foreign (ountr) $a) 1e registered in a((ordan(e with the provisions of this .(t9 Provided, 2hat said trade$ar's trade na$es, or servi(e $ar's are ac+)a..1 ,- )(' ,- co**'rc' a-/ ('r5,c'( -o+ .'(( +ha- +0o *o-+h( ,- +h' Ph,.,&&,-'( 1efore the ti$e the appli(ations for registration are filed9 .nd provided, further, 2hat the (ountr) of whi(h the appli(ant for registration is a (iti4en grants 1) law su1stantiall) si$ilar privileges to (iti4ens of the Philippines, and su(h fa(t is offi(iall) (ertified, with a (ertified true (op) of the foreign law translated into the English language, 1) the govern$ent of the foreign (ountr) to the /overn$ent of the Repu1li( of the Philippines. Se(tion + .. O0-'r(h,& of trade$ar's, trade na$es and servi(e $ar'sI how a(Auired. .n)one who lawfull) produ(es or deals in $er(handise of an) 'ind or who engages in

an) lawful 1usiness, or who renders an) lawful servi(e in (o$$er(e, 1) ac+)a. )(' thereof in $anufa(ture or trade, in 1usiness, and in the servi(e rendered, $a) appropriate to his e@(lusive use a trade$ar', a trade na$e, or a servi(e$ar' -o+ (o a&&ro&r,a+'/ 21 a-o+h'r, to distinguish his $er(handise, 1usiness or servi(e fro$ the $er(handise, 1usiness or servi(es of others. 2he ownership or possession of a trade$ar', trade na$e, servi(e $ar', heretofore or hereafter appropriated, as in this se(tion provided, shall 1e re(ogni4ed and prote(ted in the sa$e $anner and to the sa$e e@tent as are other propert) rights 'nown to this law. BE$phasis suppliedC .d$ittedl), the C. was not a$iss in sa)ing that the law reAuires the a(tual use in (o$$er(e of the said trade na$e and :S: logo in the Philippines. "en(e, (onsistent with its finding that the 1ul' of the petitionersF eviden(e shows that the alleged use of the Shangri !a trade na$e was done a1road and not in the Philippines, it is understanda1le for that (ourt to rule in respondentFs favor. Gnfortunatel), however, what the C. failed to per(eive is that there is a (ru(ial differen(e 1etween the aforeAuoted Se(tion + and Se(tion + . of R... No. *88. >or, while Se(tion + provides for what is registrable, Se(tion + ., on the other hand, sets out how ownership is a(Auired. 2hese are two distin(t (on(epts. Gnder Se(tion +, in order to register a trade$ar', one $ust 1e the owner thereof and $ust have a(tuall) used the $ar' in (o$$er(e in the Philippines for + $onths prior to the appli(ation for registration. Sin(e :ownership: of the trade$ar' is reAuired for registration, Se(tion + . of the sa$e law sets out to define how one goes a1out a(Auiring ownership thereof. Gnder Se(tion + ., it is (lear that a(tual use in (o$$er(e is also the test of ownership 1ut the provision went further 1) sa)ing that the $ar' $ust not have 1een so appropriated 1) another. .dditionall), it is signifi(ant to note that Se(tion + . does not reAuire that the a(tual use of a trade$ar' $ust 1e within the Philippines. "en(e, under R... No. *88, as a$ended, one $a) 1e an owner of a $ar' due to a(tual use thereof 1ut not )et have the right to register su(h ownership here due to failure to use it within the Philippines for two $onths. ?hile the petitioners $a) not have Aualified under Se(tion + of R... No. *88 as a registrant, neither did respondent D/CI, sin(e the latter also failed to fulfill the + $onth a(tual use reAuire$ent. ?hat is worse, D/CI was not even the owner of the $ar'. >or it to have 1een the owner, the $ar' $ust not have 1een alread) appropriated %i.e., used& 1) so$eone else. .t the ti$e of respondent D/CIFs registration of the $ar', the sa$e was alread) 1eing used 1) the petitioners, al1eit a1road, of whi(h D/CIFs president was full) aware. It is respondentFs (ontention that sin(e the petitioners adopted the :Shangri !a: $ar' and :S: logo as a $ere (orporate na$e or as the na$e of their hotels, instead of using the$ as a trade$ar' or servi(e $ar', then su(h na$e and logo are not trade$ar's. 2he two (on(epts of (orporate na$e or 1usiness na$e and trade$ar' or servi(e $ar', are not $utuall) e@(lusive. It is (o$$on, indeed li'el), that the na$e of a (orporation or 1usiness is also a trade na$e, trade$ar' or servi(e $ar'. Se(tion -6 of R... No. *88 defines the ter$s as follows9

Se(. -6. ?ords and ter$s defined and (onstrued In the (onstru(tion of this .(t, unless the (ontrar) is plainl) apparent fro$ the (onte@t 2he ter$ :trade na$e: in(ludes individual na$es and surna$es, fir$ na$es, trade na$es, devi(es or words used 1) $anufa(turers, industrialists, $er(hants, agri(ulturists, and others to identif) their 1usiness, vo(ations or o((upationsI the -a*'( or +,+.'( .a04)..1 a/o&+'/ a-/ )('/ 21 -a+)ra. or 6)r,/,ca. &'r(o-(, unions, and an) $anufa(turing, industrial, (o$$er(ial, agri(ultural or other organi4ations engaged in trade or (o$$er(e. 2he ter$ :trade $ar': in(ludes an) word, na$e, s)$1ol, e$1le$, sign or devi(e or an) (o$1ination thereof adopted and used 1) a $anufa(turer or $er(hant to identif) his goods and distinguish the$ fro$ those $anufa(tured, sold or dealt in 1) others. 2he ter$ :servi(e $ar': $eans a $ar' used in the sale or advertising of servi(es to identif) the s'r5,c'( o4 o-' &'r(o- a-/ /,(+,-3),(h +h'* 4ro* +h' ('r5,c'( o4 o+h'r( a-/ ,-c.)/'( 0,+ho)+ .,*,+a+,o- +h' *ar7(, -a*'(, (1*2o.(, +,+.'(, /'(,3-a+,o-(, (.o3a-(, charac+'r -a*'(, a-/ /,(+,-c+,5' 4'a+)r'( o4 ra/,o or o+h'r a/5'r+,(,-3. BE$phasis suppliedC Clearl), fro$ the 1road definitions Auoted a1ove, the petitioners (an 1e (onsidered as having used the :Shangri !a: na$e and :S: logo as a tradena$e and servi(e $ar'. 2he new Intelle(tual Propert) Code %IPC&, Repu1li( .(t No. 6+5-, undou1tedl) shows the fir$ resolve of the Philippines to o1serve and follow the Paris Convention 1) in(orporating the relevant portions of the Convention su(h that persons who $a) Auestion a $ar' %that is, oppose registration, petition for the (an(ellation thereof, sue for unfair (o$petition& in(lude persons whose internationall) well 'nown $ar', whether or not registered, is identi(al with or (onfusingl) si$ilar to or (onstitutes a translation of a $ar' that is sought to 1e registered or is a(tuall) registered.-7 "owever, while the Philippines was alread) a signator) to the Paris Convention, the IPC onl) too' effe(t on Eanuar) *, *566, and in the a1sen(e of a retroa(tivit) (lause, R... No. *88 still applies.-6 Gnder the prevailing law and <urispruden(e at the ti$e, the C. had not erred in ruling that9 2he Paris Convention $andates that prote(tion should 1e afforded to internationall) 'nown $ar's as signator) to the Paris Convention, without regard as to whether the foreign (orporation is registered, li(ensed or doing 1usiness in the Philippines. It goes without sa)ing that the sa$e runs afoul to Repu1li( .(t No. *88, whi(h reAuires the a(tual use in (o$$er(e in the Philippines of the su1<e(t $ar' or devise. 2he apparent (onfli(t 1etween the two %+& was settled 1) the Supre$e Court in this wise :>ollowing universal a(Auies(en(e and (o$it), o)r *)-,c,&a. .a0 o- +ra/'*ar7( r'3ar/,-3 +h' r'8),r'*'-+ o4 ac+)a. )(' ,- +h' Ph,.,&&,-'( *)(+ ()2or/,-a+' a,-+'r-a+,o-a. a3r''*'-+ inas$u(h as the apparent (lash is 1eing de(ided 1) a $uni(ipal

tri1unal %#ortensen vs. Peters, /reat ;ritain, "igh Court of Eudi(iar) of S(otland, *5,8, 6 Sessions 5-I Paras, International !aw and ?orld Organi4ation, *57* Ed., p. +,&. ?ithal, the fa(t that international law has 1een $ade part of the law of the land does not 1) an) $eans i$pl) the pri$a() of international law over national law in the $uni(ipal sphere. Gnder the do(trine of in(orporation as applied in $ost (ountries, rules of international law are given a standing eAual, not superior, to national legislative ena(t$ents %Salonga and Lap, Pu1li( International !aw, >ourth ed., *574, p. *8&.:-5 BE$phasis suppliedC ConseAuentl), the petitioners (annot (lai$ prote(tion under the Paris Convention. Nevertheless, with the dou1le infir$it) of la(' of two $onth prior use, as well as 1ad faith in the respondentFs registration of the $ar', it is evident that the petitioners (annot 1e guilt) of infringe$ent. It would 1e a great in<usti(e to ad<udge the petitioners guilt) of infringing a $ar' when the) are a(tuall) the originator and (reator thereof. Nor (an the petitionersF separate personalities fro$ their $other (orporation 1e an o1sta(le in the enfor(e$ent of their rights as part of the =uo' /roup of Co$panies and as offi(ial repositor), $anager and operator of the su1<e(t $ar' and logo. ;esides, R... No. *88 did not reAuire the part) see'ing relief to 1e the owner of the $ar' 1ut :an) person who 1elieves that he is or will 1e da$aged 1) the registration of a $ar' or trade na$e.:4, ?"ERE>ORE, the instant petition is /R.N2ED. 2he assailed De(ision and Resolution of the Court of .ppeals dated #a) *5, +,,- and Septe$1er *5, +,,-, respe(tivel), and the De(ision of the Regional 2rial Court of 3ue4on Cit) dated #ar(h 6, *558 are here1) SE2 .SIDE. .((ordingl), the (o$plaint for infringe$ent in Civil Case No. 3 5* 6478 is ordered DIS#ISSED. SO ORDERED.