G.R. No. 111580 - Shangri-la International Hotel Management Ltd. vs. Court of Appeals

Case Summary (G.R. No. 111580)

Factual Background

On June 21, 1988, the Shangri-La Group filed an inter partes petition with the BPTTT, docketed as Inter Partes Case No. 3145, seeking cancellation of the registration of the “Shangri-La” mark and the “S” device/logo issued to Developers Group of Companies, Inc. The Shangri-La Group alleged prior use dating to March 1962 and a special design created in 1975, and claimed that Developers Group only first used the mark in 1982. The Shangri-La Group also filed its own application for registration of the mark and logo, which prompted an opposition from Developers Group docketed as Inter Partes Case No. 3529.

Administrative Proceedings before the BPTTT

Developers Group filed an urgent motion in Inter Partes Case No. 3145 to suspend the administrative proceeding on the ground that it had already filed an infringement suit in the regular courts. The BPTTT, through Director Ignacio S. Sapalo, denied the motion on January 10, 1992, and denied reconsideration on February 11, 1992. Developers Group then sought relief from the Court of Appeals by petition for certiorari, mandamus and prohibition, which the Court of Appeals dismissed on March 29, 1994.

The Infringement Action and Trial Court Proceedings

On April 15, 1991, Developers Group instituted Civil Case No. Q-91-8476 in the Regional Trial Court, Quezon City, Branch 99, for infringement and damages against the Shangri-La Group. The Shangri-La Group moved to suspend the infringement proceedings because of the pending BPTTT inter partes cancellation proceedings. The trial court denied the motion to suspend in a resolution dated January 16, 1992, and subsequently denied the Shangri-La Group’s motion for reconsideration and motion to inhibit the presiding judge. The trial court later rendered a decision on March 8, 1996, finding for plaintiff Developers Group, upholding the validity of Developers Group’s registration, declaring defendants’ use an infringement, issuing injunctive relief, ordering destruction or removal of infringing materials, and awarding damages and attorney’s fees.

Intermediate Appellate Proceedings

The Shangri-La Group sought certiorari with the Court of Appeals from the trial court’s denial of suspension and denial of inhibition. The Court of Appeals dismissed that petition on February 15, 1993, and denied reconsideration. Developers Group sought relief from the Court of Appeals against the BPTTT denials, but the Court of Appeals dismissed that petition on March 29, 1994. The RTC judgment of March 8, 1996 is on appeal to the Court of Appeals.

Issues Presented to the Supreme Court

The consolidated petitions presented two principal issues: whether the trial court and Court of Appeals gravely abused their discretion in refusing to dismiss or suspend the infringement case pending the BPTTT cancellation proceedings; and whether the presiding judge should have inhibited himself. The companion petition questioned whether the BPTTT erred in denying Developers Group’s motion to suspend its administrative proceedings in deference to the then-pending infringement suit.

Applicable Law and Rules

The Court examined Section 151.2 of Republic Act No. 8293, which provides that a court or administrative agency that adjudicates an action to enforce rights to a registered mark may also determine whether the registration may be cancelled, and that filing a suit to enforce a registered mark with the proper court or agency shall exclude other courts or agencies from assuming jurisdiction over a subsequently filed petition to cancel the same mark. The Court also relied on Rule 8, Section 7 of the Regulations on Inter Partes Proceedings, which contains parallel language. The Court further noted Section 161, Republic Act No. 8293, authorizing courts, in any action involving a registered mark, to determine the right to registration and order cancellation and to certify judgments to the Director for entry in the Bureau’s records. The Court referred to prior law under Republic Act No. 166 (Sections 20, 22, 23, and 25) and the jurisprudence in Conrad and Company, Inc. v. Court of Appeals to delineate the separate competencies of administrative cancellation proceedings and court actions for infringement and damages.

Legal Positions of the Parties

The Shangri-La Group contended that the pending administrative cancellation proceeding deprived the trial court of jurisdiction or required suspension of the infringement case, and that the presiding judge should have inhibited himself. Developers Group maintained that its valid certificate of registration constituted prima facie evidence of validity and ownership and that it could bring an infringement action notwithstanding an earlier-filed administrative cancellation petition. The BPTTT asserted authority to adjudicate cancellation but denied that its proceedings should automatically bar a court infringement action.

Supreme Court’s Reasoning on Jurisdiction and Parallel Proceedings

The Court held that filing of an administrative cancellation proceeding by the Shangri-La Group did not bar Developers Group from instituting an infringement action in the regular courts. The Court read Section 151.2, Republic Act No. 8293, and Rule 8, Section 7 to mean that a suit to enforce a registered mark filed with the proper court or bureau excludes later-filed petitions to cancel from assuming jurisdiction, but that an earlier-filed administrative petition does not constitute a prejudicial question that must be resolved before an infringement action may proceed. The Court emphasized that a certificate of registration, here Certificate of Registration No. 31904, remains valid and subsisting until cancelled and thereby serves as prima facie evidence of validity, ownership, and exclusive right to use the mark, permitting the registrant to seek injunctive relief and damages.

The Court’s Treatment of the RTC Judgment and Mootness of Petition

The Court recognized that the RTC, in Civil Case No. Q-91-8476, had gone beyond procedural propriety and passed upon the right to registration by upholding Developers Group’s registration. Citing Section 161, Republic Act No. 8293, the Court acknowledged that the infringement court has authority to determine the right to registration and to order cancellation, with certification to the Bureau. Because the RTC had adjudicate

Case Syllabus (G.R. No. 111580)

Parties and Procedural Posture

Shangri-La International Hotel Management, Ltd., Shangri-La Properties, Inc., Makati Shangri-La Hotel and Resort, Inc., and Kuok Philippine Properties, Inc. filed an inter partes petition with the Bureau of Patents, Trademarks and Technology Transfer to cancel registration of the "Shangri-La" mark and "S" device/logo.
Developers Group of Companies, Inc. is the registrant of Certificate of Registration No. 31904 against which the cancellation petition was directed and later filed a civil action for infringement.
The BPTTT denied Developers Group's urgent motion to suspend administrative proceedings and denied its motion for reconsideration.
The Regional Trial Court, Branch ninety-nine, Quezon City, denied Shangri-La Group's motions to suspend the infringement case and to inhibit the presiding judge, prompting certiorari to the Court of Appeals.
The two consolidated petitions to this Court are G.R. No. 111580 and G.R. No. 114802 and were consolidated for resolution on February 2, 1998.

Key Factual Allegations

Shangri-La Group alleged prior and continuous use of the "Shangri-La" mark and the specially designed "S" logo since March 1962 and 1975 respectively.
Developers Group claimed first use of the mark in 1982 and relied on its certificate of registration to sue for infringement.
Shangri-La Group filed Inter Partes Case No. 3145 for cancellation of Developers Group's registration and opposed Developers Group's registration application in Inter Partes Case No. 3529.
Developers Group filed Civil Case No. Q-91-8476 for infringement on April 15, 1991, which prompted Shangri-La Group to move for suspension of the infringement proceedings.

Issues Presented

Whether the filing of an administrative petition for cancellation with the BPTTT bars a subsequently filed civil action for infringement based on the same registered mark.
Whether the trial judge should have inhibited himself from trying the infringement case.
Whether the Court of Appeals gravely abused its discretion in denying certiorari from the RTC's refusal to suspend or inhibit.

Contentions of the Parties

Shangri-La Group contended that the administrative cancellation proceeding has priority and that the infringement case should be dismissed or suspended.
Developers Group contended that its valid certificate of registration is prima facie evidence of ownership and that it could enforce its rights through an infringement suit notwithstanding the pending cancellation petition.
The Bureau, through its director, defended the denial of suspension and maintained jurisdiction to resolve the cancellation petition independently.

Statutory Framework

Section 151.2, Republic Act No. 8293 provides that a court or administrative agency exercising jurisdiction to enforce rights in a registered mark may al