Shangri-La International Hotel Management Ltd. v. Developers Group of Companies Inc.

GR 159938, 31 March 2006, Second

Division, Garcia [J]

Facts:

Respondent DGCI applied for and was granted registration of the ‘Shangri-La’ mark and ‘S’ logo in its
restaurant business. Petitioner Shangri-La, chain of hotels and establishments owned by the Kuok
family worldwide, moved to cancel the registration of the mark on the ground that it was illegally
and fraudulently obtained and appropriated by respondents. Petitioner also moved to register the
mark and logo in its own name. 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: YES.

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.