Shangri-La International Hotel Management, Ltd., et al vs.
Developers
Group of Companies, Inc.,
FACTS:
At the core of the controversy are the "Shangri-La" mark and "S" logo. Respondent DGCI
claims ownership of said mark and logo in the Philippines on the strength of its prior use
thereof within the country. As DGCI stresses at every turn, it filed on October 18, 1982
with the Bureau of Patents, Trademarks and Technology Transfer (BPTTT) pursuant to
Sections 2 and 4 of Republic Act (RA) No. 166,3 as amended, an application for
registration covering the subject mark and logo. On May 31, 1983, the BPTTT issued in
favor of DGCI the corresponding certificate of registration and since then, DGCI started
using the "Shangri-La" mark and "S" logo in its restaurant business.
On the other hand, the Kuok family owns and operates a chain of hotels with interest in
hotels and hotel-related transactions since 1969. As far back as 1962, it adopted the name
"Shangri-La" as part of the corporate names of all companies organized under the aegis
of the Kuok Group of Companies (the Kuok Group). The Kuok Group has used the name
"Shangri-La" in all Shangri-La hotels and hotel-related establishments around the world
which the Kuok Family owned. To centralize the operations of all Shangri-la hotels and
the ownership of the "Shangri-La" mark and "S" logo, the Kuok Group had incorporated
in Hong Kong and Singapore, among other places, several companies that form part of
the Shangri-La International Hotel Management Ltd. Group of Companies. EDSA
Shangri-La Hotel and Resort, Inc., and Makati Shangri-La Hotel and Resort, Inc. were
incorporated in the Philippines beginning 1987.
Later, respondent DGCI filed before the trial court a complaint for infringement against
petitioner alleging that DGCI had been the prior exclusive user and the registered owner
in the Philippines of said mark and logo. Petitioner Shangri-La argued that respondent
had no right to apply for the registration because it did not have prior actual commercial
use thereof. The trial court found for respondent. CA affirmed.
ISSUE:
Whether or not respondent’s prior use of the mark is a requirement for its registration
RULING:
Registration, without more, does not confer upon the registrant an absolute right to the
registered mark. The certificate of registration is merely a prima facie proof that the
registrant is the owner of the registered mark or trade name. Evidence of prior and
continuous use of the mark or trade name by another can overcome the presumptive
ownership of the registrant and may very well entitle the former to be declared owner in
an appropriate case.14
Among the effects of registration of a mark, as catalogued by the Court in Lorenzana v.
Macagba,15 are:
1. Registration in the Principal Register gives rise to a presumption of the validity of the
registration, the registrant's ownership of the mark, and his right to the exclusive use
thereof. x x x
2. Registration in the Principal Register is limited to the actual owner of the
trademark and proceedings therein pass on the issue of ownership, which may be
contested through opposition or interference proceedings, or, after
registration, in a petition for cancellation. xxx
Ownership of a mark or trade name may be acquired not necessarily by registration but
by adoption and use in trade or commerce. As between actual use of a mark without
registration, and registration of the mark without actual use thereof, the former prevails
over the latter. For a rule widely accepted and firmly entrenched, because it has come
down through the years, is that actual use in commerce or business is a pre-requisite to
the acquisition of the right of ownership.
While the present law on trademarks has dispensed with the requirement of prior actual
use at the time of registration, the law in force at the time of registration must be applied.
Under the provisions of the former trademark law, R.A. No. 166, as amended, hence, the
law in force at the time of respondent’s application for registration of trademark, the root
of ownership of a trademark is actual use in commerce.
Section 2 of said law requires that before a trademark can be registered, it must have been
actually used in commerce and service for not less than two months in the Philippines
prior to the filing of an application for its registration. Trademark is a creation of use and
therefore actual use is a pre-requisite to exclusive ownership and its registration with the
Philippine Patent Office is a mere administrative confirmation of the existence of such
right.
While the petitioners may not have qualified under Section 2 of R.A. No. 166 as a
registrant, neither did respondent DGCI, since the latter also failed to fulfill the 2-month
actual use requirement. What is worse, DGCI was not even the owner of the mark. For it
to have been the owner, the mark must not have been already appropriated (i.e., used) by
someone else. At the time of respondent DGCI’s registration of the mark, the same was
already being used by the petitioners, albeit abroad, of which DGCI’s president was fully
aware.
