Case Summary (G.R. No. 159938)
Procedural History
- RTC renders judgment in favor of DGCI (March 8, 1996): upholds DGCI’s registration validity; declares petitioners’ use infringing; issues permanent injunction; awards damages.
- CA affirms RTC decision with modification (May 15, 2003): deletes award of attorney’s fees.
- CA denies petitioners’ motion for reconsideration (September 15, 2003).
- Supreme Court grants petition for review (March 31, 2006), setting aside both lower courts’ decisions.
Issues
• Whether DGCI validly registered the mark without prior actual commercial use in the Philippines.
• Whether DGCI acted in bad faith by copying petitioners’ mark and logo.
• Whether petitioners’ prior (foreign) use conferred ownership or registration rights in the Philippines.
• The interplay of RA 166’s use requirement and the Paris Convention.
• Whether petitioners’ use constituted infringement.
Ownership and Registration Requirements under RA 166
• Section 2 requires actual use in commerce in the Philippines for at least two months before filing.
• Section 2-A confirms ownership arises from actual use, irrespective of registration.
• Registration is prima facie evidence of ownership, but this presumption is rebuttable by proof of prior use or bad faith.
• Under the law in effect at the time, priority lay with the first actual user, not merely the first registrant.
DGCI’s Prior Use and Good Faith
• DGCI’s own witness admitted that the “S” logo designs were created in December 1982, after DGCI’s October 18, 1982 application and mere weeks before restaurant opening.
• DGCI failed to prove two-month prior commercial use in the Philippines before application.
• The timing of design creation and filing demonstrates lack of prior use and indicia of copying petitioners’ mark.
Petitioners’ Prior Use and Bad Faith Registration
• Petitioners’ mark and logo had been in continuous worldwide use by the Kuok Group since 1962; DGCI’s president was personally familiar with the hotel mark.
• Identical word mark, font, lettering style and logo leave no reasonable doubt of intentional copying by DGCI.
• A bad-faith registrant cannot enforce rights against the true owner or originator of the mark.
International Law vs. Municipal Law
• The Paris Convention protects well-known marks but does not dispense with domestic requirements for use in commerce.
• As incorporated into Philippine law, the Paris Convention yields to RA 166’s two-month use requirement.
Supreme Court Ruling
• DGCI’s registration is
Case Syllabus (G.R. No. 159938)
Facts
- Respondent Developers Group of Companies, Inc. (DGCI) filed on October 18, 1982 with the Bureau of Patents, Trademarks and Technology Transfer (BPTTT) an application for registration of the “Shangri-La” mark and “S” logo, claiming prior use in its restaurant business.
- On May 31, 1983, BPTTT issued Certificate of Registration No. 31904 in favor of DGCI. DGCI began using the mark and logo in its restaurant, “Shangri-La Finest Chinese Cuisine.”
- The Kuok family (petitioners) had adopted “Shangri-La” as part of corporate names since 1962 and used the “Shangri-La” mark and “S” logo for their international hotel chain. They commissioned a stylized “S” logo in 1975 and consistently used both mark and logo in all hotel paraphernalia.
- Petitioners incorporated Philippine entities (EDSA Shangri-La Hotel and Resort, Inc. and Makati Shangri-La Hotel & Resort, Inc.) in 1987–1988.
- On June 21, 1988, petitioners filed before the BPTTT: (a) Inter Partes Case No. 3145 to cancel DGCI’s registration for alleged fraud and (b) Inter Partes Case No. 3529 to register the same mark/logo in their name.
- DGCI then commenced Civil Case No. Q-91-8476 for infringement and damages before the Regional Trial Court (RTC) of Quezon City, seeking injunctive relief and damages against petitioners’ use of the mark and logo in their Philippine hotels.
Procedural History
- The RTC issued a writ of preliminary injunction enjoining petitioners from using the mark and logo.
- The Supreme Court, in G.R. No. 104583 (March 8, 1993), nullified the writ and ordered the trial court to proceed to the merits.
- Proceedings were stayed pending two motions to suspend—petitioners invoking Inter Partes Case No. 3145 and DGCI invoking the infringement suit—until the Supreme Court’s consolidated G.R. Nos. 114802 & 111580 (June 21, 2001) permitted DGCI’s infringement suit to continue while suspending the inter partes case.
- Trial on the merits before RTC Branch 99 concluded with judgment for DGCI on March 8, 1996, upholding DGCI’s registration and finding infringement by petitioners, awarding damages (₱2,000,000 actual,