pintl cases

8/12/2019 Pintl Cases

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JOSE B.L. REYES, in behalf of the ANTI-BASES COALITION(ABC), petitioner,vs.RAMON BAGATSING, as Mayor of the City of Manila, respondent.

Lorenzo M. Taada Jose W. Diokno and Haydee B. Yorac for petitioner.

The Solicitor General for respondent.

FERNANDO, C.J.:+. wph!1

This Court, in this case of first impression, at least as to some aspects, iscalled upon to delineate the boundaries of the protected area of the cognaterights to free speech and peaceable assembly, 1against an alleged intrusionby respondent Mayor Ramon Bagatsing. Petitioner, retired Justice JB L.Reyes, on behalf of the Anti-Bases Coalition sought a permit from the City ofManila to hold a peaceful march and rally on October 26, 1983 from 2:00 to

5:00 in the afternoon, starting from the Luneta, a public park, to the gates ofthe United States Embassy, hardly two blocks away. Once there, and in anopen space of public property, a short program would be held. 2During thecourse of the oral argument, 3it was stated that after the delivery of two briefspeeches, a petition based on the resolution adopted on the last day by theInternational Conference for General Disbarmament, World Peace and theRemoval of All Foreign Military Bases held in Manila, would be presented toa representative of the Embassy or any of its personnel who may be there sothat it may be delivered to the United States Ambassador. The march wouldbe attended by the local and foreign participants of such conference. Therewas likewise an assurance in the petition that in the exercise of theconstitutional rights to free speech and assembly, all the necessary stepswould be taken by it "to ensure a peaceful march and rally." 4

The filing of this suit for mandamus with alternative prayer for writ ofpreliminary mandatory injunction on October 20, 1983 was due to the factthat as of that date, petitioner had not been informed of any action taken onhis request on behalf of the organization to hold a rally. On October 25, 1983,the answer of respondent Mayor was filed on his behalf by Assistant SolicitorGeneral Eduardo G. Montenegro. 5It turned out that on October 19, suchpermit was denied. Petitioner was unaware of such a fact as the denial wassent by ordinary mail. The reason for refusing a permit was due to policeintelligence reports which strongly militate against the advisability of issuingsuch permit at this time and at the place applied for." 6To be more specific,

reference was made to persistent intelligence reports affirm[ing] the plans ofsubversive/criminal elements to infiltrate and/or disrupt any assembly or

congregations where a large number of people is expected toattend." 7Respondent Mayor suggested, however, in accordance with therecommendation of the police authorities, that "a permit may be issued forthe rally if it is to be held at the Rizal Coliseum or any other enclosed areawhere the safety of the participants themselves and the general public maybe ensured." 8

The oral argument was heard on October 25, 1983, the very same day the

answer was filed. The Court then deliberated on the matter. That sameafternoon, a minute resolution was issued by the Court granting themandatory injunction prayed for on the ground that there was no showing ofthe existence of a clear and present danger of a substantive evil that could

justify the denial of a permit. On this point, the Court was unanimous, butthere was a dissent by Justice Aquino on the ground that the holding of arally in front of the US Embassy would be violative of Ordinance No. 7295 ofthe City of Manila. The last sentence of such minute resolution reads: "Thisresolution is without prejudice to a more extended opinion." 9Hence thisdetailed exposition of the Court's stand on the matter.

1. It is thus clear that the Court is called upon to protect the exercise of the

cognate rights to free speech and peaceful assembly, arising from the denialof a permit. The Constitution is quite explicit: "No law shall be passedabridging the freedom of speech, or of the press, or the right of the peoplepeaceably to assemble and petition the Government for redress ofgrievances." 10Free speech, like free press, may be Identified with the libertyto discuss publicly and truthfully any matter of public concern withoutcensorship or punishment. 11There is to be then no previous restraint on thecommunication of views or subsequent liability whether in libelsuits, 12prosecution for sedition, 13or action for damages, 14or contemptproceedings 15unless there be a clear and present danger of a substantiveevil that [the State] has a right to prevent." 16Freedom of assembly connotesthe right people to meet peaceably for consultation and discussion of matters

Of public concern.17

It is entitled to be accorded the utmost deference andrespect. It is hot to be limited, much less denied, except on a showing, as 'sthe case with freedom of expression, of a clear and present danger of asubstantive evil that the state has a right to prevent. 18Even prior to the 1935Constitution, Justice Maicolm had occasion to stress that it is a necessaryconsequence of our republican institutions and complements the right of freespeech. 19To paraphrase opinion of Justice Rutledge speaking for themajority of theAmerican Supreme Court Thomas v. Collins, 20it was not byaccident or coincidence that the right to freedom of speech and of the presswere toupled in a single guarantee with the and to petition the rights of thepeople peaceably to assemble and to petition the government for redress ofgrievances. All these rights, while not Identical, are inseparable. the every

case, therefo re there is a limitation placed on the exercise of this right, thejudiciary is called upon to examine the effects of the challenged


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governmental actuation. The sole justification for a limitation on the exerciseof this right, so fundamental to the maintenance of democratic institutions, isthe danger, of a character both grave and imminent, of a serious evil topublic safety, public morals, public health, or any other legitimate publicinterest. 21

2. Nowhere is the rationale that underlies the freedom of expression andpeaceable assembly better expressed than in this excerpt from an opinion of

Justice Frankfurter: "It must never be forgotten, however, that the Bill ofRights was the child of the Enlightenment. Back of the guaranty of freespeech lay faith in the power of an appeal to reason by all the peacefulmeans for gaining access to the mind. It was in order to avert force andexplosions due to restrictions upon rational modes of communication that theguaranty of free speech was given a generous scope. But utterance in acontext of violence can lose its significance as an appeal to reason andbecome part of an instrument of force. Such utterance was not meant to besheltered by the Constitution." 22What was rightfully stressed is theabandonment of reason, the utterance, whether verbal or printed, being in acontext of violence. It must always be remembered that this right likewiseprovides for a safety valve, allowing parties the opportunity to give vent to

their-views, even if contrary to the prevailing climate of opinion. For if thepeaceful means of communication cannot be availed of, resort to non-peaceful means may be the only alternative. Nor is this the sole reason forthe expression of dissent. It means more than just the right to be heard of theperson who feels aggrieved or who is dissatisfied with things as they are. Itsvalue may lie in the fact that there may be something worth hearing from thedissenter. That is to ensure a true ferment of Ideas. There are, of course,well-defined limits. What is guaranteed is peaceable assembly. One may notadvocate disorder in the name of protest, much less preach rebellion underthe cloak of dissent. The Constitution frowns on disorder or tumult attendinga rally or assembly. resort to force is ruled out and outbreaks of violence tobe avoided. The utmost calm though is not required. As pointed out in an

early Philippine case, penned in 1907 to be precise, United States v.Apurado: 23"It is rather to be expected that more or less disorder will markthe public assembly of the people to protest against grievances whether realor imaginary, because on such occasions feeling is always wrought to a highpitch of excitement, and the greater the grievance and the more intense thefeeling, the less perfect, as a rule, will be the disciplinary control of theleaders over their irresponsible followers." 24It bears repeating that for theconstitutional right to be invoked, riotous conduct, injury to property, and actsof vandalism must be avoided, To give free rein to one's destructive urges isto call for condemnation. It is to make a mockery of the high estate occupiedby intellectual liberty in our scheme of values.

3. There can be no legal objection, absent the existence of a clear andpresent danger of a substantive evil, on the choice of Luneta as the place

where the peace rally would start. The Philippines is committed to the viewexpressed in the plurality opinion, of 1939 vintage, of Justice Robertsin Hague v. CIO:25Whenever the title of streets and parks may rest, theyhave immemorially been held in trust for the use of the public and, time out ofmind, have been used for purposes of assembly, communicating thoughtsbetween citizens, and discussing public questions. Such use of the streetsand public places has, from ancient times, been a part of the privileges,immunities, rights, and liberties of citizens. The privilege of a citizen of the

United States to use the streets and parks for communication of views onnational questions may be regulated in the interest of all; it is not absolute,but relative, and must be exercised in subordination to the general comfortand convenience, and in consonance with peace and good order; but it mustnot, in the guise of regulation, be abridged or denied. 26The above excerptwas quoted with approval in Primicias v. Fugoso. 27Primicias made explicitwhat was implicit in Municipality of Cavite v. Rojas," 28a 1915 decision,where this Court categorically affirmed that plazas or parks and streets areoutside the commerce of man and thus nullified a contract that leased PlazaSoledad of plaintiff-municipality. Reference was made to such plaza "being apromenade for public use," 29which certainly is not the only purpose that itcould serve. To repeat, there can be no valid reason why a permit should notbe granted for the or oposed march and rally starting from a public dark thatis the Luneta.

4. Neither can there be any valid objection to the use of the streets, to thegates of the US Embassy, hardly two block-away at the RoxasBoulevard. Primicias v. Fugoso has resolved any lurking doubt on the matter.In holding that the then Mayor Fugoso of the City of Manila should grant apermit for a public meeting at Plaza Miranda in Quiapo, this Courtcategorically declared: "Our conclusion finds support in the decision in thecase of Willis Cox vs. State of New Hampshire, 312 U.S., 569. In that case,the statute of New Hampshire P. L. chap. 145, section 2, providing that 'noparade or procession upon any ground abutting thereon, shall 'De permitted

unless a special license therefor shall first be explained from the selectmenof the town or from licensing committee,' was construed by the SupremeCourt of New Hampshire as not conferring upon the licensing boardunfettered discretion to refuse to grant the license, and held valid. And theSupreme Court of the United States, in its decision (1941) penned by ChiefJustice Hughes affirming the judgment of the State Supreme Court, held that'a statute requiring persons using the public streets for a parade orprocession to procure a special license therefor f rom the local authorities isnot an unconstitutional abridgment of the rights of assembly or of freedom ofspeech and press, where, as the statute is construed by the state courts, thelicensing authorities are strictly limited, in the issuance of licenses, to aconsideration of the time, place, and manner of the parade or procession,with a view to conserving the public convenience and of affording anopportunity to provide proper policing, and are not invested with arbitrary


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discretion to issue or refuse license, ... " 30Nor should the point made byChief Justice Hughes in a subsequent portion of the opinion be ignored,"Civil liberties, as guaranteed by the Constitution, imply the existence of anorganized society maintaining public order without which liberty itself wouldbe lost in the excesses of unrestricted abuses. The authority of a municipalityto impose regulations in order to assure the safety and convenience of thepeople in the use of public highways has never been regarded asinconsistent with civil liberties but rather as one of the means of safeguarding

the good order upon which they ultimately depend. The control of travel onthe streets of cities is the most familiar illustration of this recognition of socialneed. Where a restriction of the use of highways in that relation is designedto promote the public convenience in the interest of all, it cannot bedisregarded by the attempted exercise of some civil right which in othercircumstances would be entitled to protection." 31

5. There is a novel aspect to this case, If the rally were confined to Luneta,no question, as noted, would have arisen. So, too, if the march would end atanother park. As previously mentioned though, there would be a shortprogram upon reaching the public space between the two gates of the UnitedStates Embassy at Roxas Boulevard. That would be followed by the handing

over of a petition based on the resolution adopted at the closing session ofthe Anti-Bases Coalition. The Philippines is a signatory of the ViennaConvention on Diplomatic Relations adopted in 1961. It was concurred in bythe then Philippine Senate on May 3, 1965 and the instrument of ratificationwas signed by the President on October 11, 1965, and was thereafterdeposited with the Secretary General of the United Nations on November 15.

As of that date then, it was binding on the Philippines. The second paragraphof the Article 22 reads: "2. The receiving State is under a special duty to takeappropriate steps to protect the premises of the mission against any intrusionor damage and to prevent any disturbance of the peace of the mission orimpairment of its dignity. " 32The Constitution "adopts the generally acceptedprinciples of international law as part of the law of the land. ..." 33To the

extent that the Vienna Convention is a restatement of the generally acceptedprinciples of international law, it should be a part of the law of theland. 34That being the case, if there were a clear and present danger of anyintrusion or damage, or disturbance of the peace of the mission, orimpairment of its dignity, there would be a justification for the denial of thepermit insofar as the terminal point would be the Embassy. Moreover,respondent Mayor relied on Ordinance No. 7295 of the City of Manilaprohibiting the holding or staging of rallies or demonstrations within a radiusof five hundred (500) feet from any foreign mission or chancery and for otherpurposes. Unless the ordinance is nullified, or declared ultra vires, itsinvocation as a defense is understandable but not decisive, in view of theprimacy accorded the constitutional rights of free speech and peaceableassembly. Even if shown then to be applicable, that question the confrontsthis Court.

6. There is merit to the observation that except as to the novel aspects of alitigation, the judgment must be confined within the limits of previousdecisions. The law declared on past occasions is, on the whole, a safe guide,So it has been here. Hence, as noted, on the afternoon of the hearing,October 25, 1983, this Court issued the minute resolution granting themandatory injunction allowing the proposed march and rally scheduled forthe next day. That conclusion was inevitable ill the absence of a clear andpresent danger of a substantive, evil to a legitimate public interest. There

was no justification then to deny the exercise of the constitutional rights oftree speech and peaceable assembly. These rights are assured by ourConstitution and the Universal Declaration of Human Rights. 35Theparticipants to such assembly, composed primarily of those in attendance atthe International Conference for General Disbarmament, World Peace andthe Removal of All Foreign Military Bases would start from the Luneta.proceeding through Roxas Boulevard to the gates of the United StatesEmbassy located at the same street. To repeat, it is settled law that as topublic places, especially so as to parks and streets, there is freedom ofaccess. Nor is their use dependent on who is the applicant for the permit,whether an individual or a group. If it were, then the freedom of accessbecomes discriminatory access, giving rise to an equal protection question.The principle under American doctrines was given utterance by Chief JusticeHughes in these words: "The question, if the rights of free speech andpeaceable assembly are to be preserved, is not as to the auspices underwhich the meeting is held but as to its purpose; not as to The relations of thespeakers, but whether their utterances transcend the bounds of the freedomof speech which the Constitution protects." 36There could be danger topublic peace and safety if such a gathering were marked by turbulence. Thatwould deprive it of its peaceful character. Even then, only the guilty partiesshould be held accountable. It is true that the licensing official, hererespondent Mayor, is not devoid of discretion in determining whether or not apermit would be granted. It is not, however, unfettered discretion. Whileprudence requires that there be a realistic appraisal not of what may possiblyoccur but of what mayprobably occur, given all the relevant circumstances,still the assumption especially so where the assembly is scheduled for aspecific publicplace is that the permit must be for the assembly being heldthere. The exercise of such a right, in the language of Justice Roberts,speaking for the American Supreme Court, is not to be "abridged on the pleathat it may be exercised in some other place." 37

7. In fairness to respondent Mayor, he acted on the belief that Navarro v.Villegas38and Pagkakaisa ng Manggagawang Pilipino (PMP.) v.Bagatsing,

39called for application. While the General rule is that a permit

should recognize the right of the applicants to hold their assembly at a publicplace of their choice, another place may be designated by the licensingauthority if it be shown that there is a clear and present danger of asubstantive evil if no such change were made. In the Navarro and the


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Pagkakaisa decisions, this Court was persuaded that the clear and presentdanger test was satisfied. The present situation is quite different. Hence thedecision reached by the Court. The mere assertion that subversives mayinfiltrate the ranks of the demonstrators does not suffice. Not that it should beoverlooked. There was in this case, however, the assurance of GeneralNarciso Cabrera, Superintendent, Western Police District, MetropolitanPolice Force, that the police force is in a position to cope with suchemergency should it arise That is to comply with its duty to extend protection

to the participants of such peaceable assembly. Also from him came thecommendable admission that there were the least five previousdemonstrations at the Bayview hotel Area and Plaza Ferguson in front of theUnited States Embassy where no untoward event occurred. It was madeclear by petitioner, through counsel, that no act offensive to the dignity of theUnited States Mission in the Philippines would take place and that, asmentioned at the outset of this opinion, "all the necessary steps would betaken by it 'to ensure a peaceful march and rally.' "40Assistant SolicitorGeneral Montenegro expressed the view that the presence of policemen mayin itself be a provocation. It is a sufficient answer that they should stay at adiscreet distance, but ever ready and alert to cope with any contingency.There is no need to repeat what was pointed out by Chief Justice Hughes inCox that precisely, it is the duty of the city authorities to provide the properpolice protection to those exercising their right to peaceable assembly andfreedom of expression.

8. By way of a summary The applicants for a permit to hold an assemblyshould inform the licensing authority of the date, the public place where andthe time when it will take place. If it were a private place, only the consent ofthe owner or the one entitled to its legal possession is required. Suchapplication should be filed well ahead in time to enable the public officialconcerned to appraise whether there may be valid objections to the grant ofthe permit or to its grant but at another public place. It is an indispensablecondition to such refusal or modification that the clear and present danger

test be the standard for the decision reached. If he is of the view that there issuch an imminent and grave danger of a substantive evil, the applicants mustbe heard on the matter. Thereafter, his decision, whether favorable oradverse, must be transmitted to them at the earliest opportunity. Thus if sominded, then, can have recourse to the proper judicial authority. Free speechand peaceable assembly, along with the other intellectual freedoms, arehighly ranked in our scheme of constitutional values. It cannot be too stronglystressed that on the judiciary, even more so than on the otherdepartmentsrests the grave and delicate responsibility of assuring respectfor and deference to such preferred rights. No verbal formula, no sanctifyingphrase can, of course, dispense with what has been so felicitiously termed byJustice Holmes "as the sovereign prerogative of judgment." Nonetheless, thepresumption must be to incline the weight of the scales of justice on the sideof such rights, enjoying as they do precedence and primacy. Clearly then, to

the extent that there may be inconsistencies between this resolution and thatof Navarro v. Villegas, that case ispro tanto modified. So it was made clearin the original resolution of October 25, 1983.

9. Respondent Mayor posed the issue of the applicability of Ordinance No.7295 of the City of Manila prohibiting the holding or staging of rallies ordemonstrations within a radius of five hundred (500) feet from any foreignmission or chancery and for other purposes. It is to be admitted that it finds

support In the previously quoted Article 22 of the Vienna Convention onDiplomatic Relations. There was no showing, however, that the distancebetween the chancery and the embassy gate is less than 500 feet. Even if itcould be shown that such a condition is satisfied. it does not follow thatrespondent Mayor could legally act the way he did. The validity of his denialof the permit sought could still be challenged. It could be argued that a caseof unconstitutional application of such ordinance to the exercise of the right ofpeaceable assembly presents itself. As in this case there was no proof thatthe distance is less than 500 feet, the need to pass on that issue wasobviated, Should it come, then the qualification and observation of JusticesMakasiar and Plana certainly cannot be summarily brushed aside. The highestate accorded the rights to free speech and peaceable assembly demands

nothing less.

10. Ordinarily, the remedy in cases of this character is to set aside the denialor the modification of the permit sought and order the respondent official, togrant it. Nonetheless, as there was urgency in this case, the proposed marchand rally being scheduled for the next day after the hearing, this Court. in theexercise of its conceded authority, granted the mandatory injunction in theresolution of October 25, 1983. It may be noted that the peaceful character ofthe peace march and rally on October 26 was not marred by any untowardincident. So it has been in other assemblies held elsewhere. It is quitereassuring such that both on the part of the national government and thecitizens, reason and moderation have prevailed. That is as it should be.

WHEREFORE, the mandatory injunction prayed for is granted. No costs

SHANGRI-LA INTERNATIONAL HOTEL MANAGEMENT, LTD.,SHANGRI-LA PROPERTIES, INC., MAKATI SHANGRI-LA HOTEL &RESORT, INC., AND KUOK PHILIPPINES PROPERTIES,

INC., Petitioners,


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vs.DEVELOPERS GROUP OF COMPANIES, INC., Respondent.

D E C I S I O N

GARCIA, J.:

In this petition for review under Rule 45 of the Rules of Court, petitioners

Shangri-La International Hotel Management, Ltd. (SLIHM), et al. assail andseek to set aside the Decision dated May 15, 20031of the Court of Appeals(CA) in CA-G.R. CV No. 53351 and its Resolution2of September 15, 2003which effectively affirmed with modification an earlier decision of theRegional Trial Court (RTC) of Quezon City in Civil Case No. Q-91-8476, anaction for infringement and damages, thereat commenced by respondentDevelopers Group of Companies, Inc. (DGCI) against the herein petitioners.

The 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 Philippineson the strength of its prior use thereof within the country. As DGCI stressesat every turn, it filed on October 18, 1982 with the Bureau of Patents,Trademarks and Technology Transfer (BPTTT) pursuant to Sections 2 and 4of Republic Act (RA) No. 166,3as amended, an application for registrationcovering the subject mark and logo. On May 31, 1983, the BPTTT issued infavor of DGCI the corresponding certificate of registration therefor, i.e.,Registration No. 31904. 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 withinterest 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 allcompanies organized under the aegis of the Kuok Group of Companies (theKuok Group). The Kuok Group has used the name "Shangri-La" in allShangri-La hotels and hotel-related establishments around the world whichthe 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 HongKong and Singapore, among other places, several companies that form partof the Shangri-La International Hotel Management Ltd. Group of Companies.EDSA Shangri-La Hotel and Resort, Inc., and Makati Shangri-La Hotel andResort, Inc. were incorporated in the Philippines beginning 1987 to own and

operate the two (2) hotels put up by the Kuok Group in Mandaluyong andMakati, Metro Manila.

All hotels owned, operated and managed by the aforesaid SLIHM Group ofCompanies adopted and used the distinctive lettering of the name "Shangri-La" as part of their trade names.

From the records, it appears that Shangri-La Hotel Singapore commissioneda Singaporean design artist, a certain Mr. William Lee, to conceptualize anddesign the logo of the Shangri-La hotels.

During the launching of the stylized "S" Logo in February 1975, Mr. Lee gavethe following explanation for the logo, to wit:

The logo which is shaped like a "S" represents the uniquely Aseanarchitectural structures as well as keep to the legendary Shangri-la themewith the mountains on top being reflected on waters below and theconnecting centre [sic] line serving as the horizon. This logo, which is a bold,striking definitive design, embodies both modernity and sophistication inbalance and thought.

Since 1975 and up to the present, the "Shangri-La" mark and "S" logo havebeen used consistently and continuously by all Shangri-La hotels andcompanies in their paraphernalia, such as stationeries, envelopes, businessforms, menus, displays and receipts.

The Kuok Group and/or petitioner SLIHM caused the registration of, and infact registered, the "Shangri-La" mark and "S" logo in the patent offices indifferent countries around the world.

On June 21, 1988, the petitioners filed with the BPTTT a petition, docketedas Inter Partes Case No. 3145, praying for the cancellation of the registrationof the "Shangri-La" mark and "S" logo issued to respondent DGCI on theground that the same were illegally and fraudulently obtained and

appropriated for the latter's restaurant business. They also filed in the sameoffice Inter Partes Case No. 3529, praying for the registration of the samemark and logo in their own names.

Until 1987 or 1988, the petitioners did not operate any establishment in thePhilippines, albeit they advertised their hotels abroad since 1972 innumerous business, news, and/or travel magazines widely circulated aroundthe world, all readily available in Philippine magazines and newsstands.They, too, maintained reservations and booking agents in airline companies,hotel organizations, tour operators, tour promotion organizations, and inother allied fields in the Philippines.

It is principally upon the foregoing factual backdrop that respondent DGCIfiled a complaint for Infringement and Damages with the RTC of Quezon City
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against the herein petitioners SLIHM, Shangri-La Properties, Inc., MakatiShangri-La Hotel & Resort, Inc., and Kuok Philippine Properties, Inc.,docketed as Civil Case No. Q-91-8476 and eventually raffled to Branch 99 ofsaid court. The complaint with prayer for injunctive relief and damagesalleged that DGCI has, for the last eight (8) years, been the prior exclusiveuser in the Philippines of the mark and logo in question and the registeredowner thereof for its restaurant and allied services. As DGCI alleged in itscomplaint, SLIHM, et al., in promoting and advertising their hotel and otherallied projects then under construction in the country, had been using a markand logo confusingly similar, if not identical, with its mark and "S" logo.

Accordingly, DGCI sought to prohibit the petitioners, as defendants a quo,from using the "Shangri-La" mark and "S" logo in their hotels in thePhilippines.

In their Answer with Counterclaim, the petitioners accused DGCI ofappropriating and illegally using the "Shangri-La" mark and "S" logo, addingthat the legal and beneficial ownership thereof pertained to SLIHM and thatthe Kuok Group and its related companies had been using this mark andlogo since March 1962 for all their corporate names and affairs. In thisregard, they point to the Paris Convention for the Protection of Industrial

Property as affording security and protection to SLIHM's exclusive right tosaid mark and logo. They further claimed having used, since late 1975, theinternationally-known and specially-designed "Shangri-La" mark and "S" logofor all the hotels in their hotel chain.

Pending trial on the merits of Civil Case No. Q-91-8476, the trial court issueda Writ of Preliminary Injunction enjoining the petitioners from using thesubject mark and logo. The preliminary injunction issue ultimately reachedthe Court in G.R. No. 104583 entitled Developers Group of Companies, Inc.vs. Court of Appeals, et al. In a decision4dated March 8, 1993, the Courtnullified the writ of preliminary injunction issued by the trial court and directedit to proceed with the main case and decide it with deliberate dispatch.

While trial was in progress, the petitioners filed with the court a motion tosuspend proceedings on account of the pendency before the BPTTT of InterPartes Case No. 3145 for the cancellation of DGCI's certificate ofregistration. For its part, respondent DGCI filed a similar motion in that case,invoking in this respect the pendency of its infringement case before the trialcourt. The parties' respective motions to suspend proceedings also reachedthe Court via their respective petitions in G.R. No. 114802, entitledDevelopers Group of Companies, Inc. vs. Court of Appeals, et al. and G.R.No. 111580, entitled Shangri-La International Hotel Management LTD., et al.vs. Court of Appeals, et al., which were accordingly consolidated.

In a consolidated decision5dated June 21, 2001, the Court, limiting itself tothe core issue of whether, despite the petitioners' institution of Inter Partes

Case No. 3145 before the BPTTT, herein respondent DGCI "can file asubsequent action for infringement with the regular courts of justice inconnection with the same registered mark," ruled in the affirmative, butnonetheless ordered the BPTTT to suspend further proceedings in said interpartes case and to await the final outcome of the main case.

Meanwhile, trial on the merits of the infringement case proceeded. Presentedas DGCI's lone witness was Ramon Syhunliong, President and Chairman of

DGCI's Board of Directors. Among other things, this witness testified that:

1. He is a businessman, with interest in lumber, hotel, hospital,trading and restaurant businesses but only the restaurant businessbears the name "Shangri-La" and uses the same and the "S-logo" asservice marks. The restaurant now known as "Shangri-La FinestChinese Cuisine" was formerly known as the "Carvajal Restaurant"until December 1982, when respondent took over said restaurantbusiness.

2. He had traveled widely around Asia prior to 1982, and admittedknowing the Shangri-La Hotel in Hong Kong as early as August

1982.

3. The "S-logo" was one of two (2) designs given to him in December1982, scribbled on a piece of paper by a jeepney signboard artistwith an office somewhere in Balintawak. The unnamed artistsupposedly produced the two designs after about two or three daysfrom the time he (Syhunliong) gave the idea of the design he had inmind.

4. On October 15, 1982, or before the unknown signboard artistsupposedly created the "Shangri-La" and "S" designs, DGCI wasincorporated with the primary purpose of "owning or operating, orboth, of hotels and restaurants".

5. On October 18, 1982, again prior to the alleged creation date ofthe mark and logo, DGCI filed an application for trademarkregistration of the mark "SHANGRI-LA FINEST CHINESE CUISINE& S. Logo" with the BPTTT. On said date, respondent DGCIamended its Articles of Incorporation to reflect the name of itsrestaurant, known and operating under the style and name of"SHANGRI-LA FINEST CHINESE CUISINE." Respondent DGCIobtained Certificate of Registration No. 31904 for the "Shangri-La"mark and "S" logo.
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Eventually, the trial court, on the postulate that petitioners', more particularlypetitioner SLIHM's, use of the mark and logo in dispute constitutes aninfringement of DGCI's right thereto, came out with its decision6on March 8,1996 rendering judgment for DGCI, as follows:

WHEREFORE, judgment is hereby rendered in favor of [respondent DGCI]and against [SLIHM, et al.] -

a) Upholding the validity of the registration of the service mark"Shangri-la" and "S-Logo" in the name of [respondent];

b) Declaring [petitioners'] use of said mark and logo as infringementof [respondent's] right thereto;

c) Ordering [petitioners], their representatives, agents, licensees,assignees and other persons acting under their authority and withtheir permission, to permanently cease and desist from using and/orcontinuing to use said mark and logo, or any copy, reproduction orcolorable imitation

thereof, in the promotion, advertisement, rendition of their hotel andallied projects and services or in any other manner whatsoever;

d) Ordering [petitioners] to remove said mark and logo from anypremises, objects, materials and paraphernalia used by them and/ordestroy any and all prints, signs, advertisements or other materialsbearing said mark and logo in their possession and/or under theircontrol; and

e) Ordering [petitioners], jointly and severally, to indemnify[respondent] in the amounts of P2,000,000.00 as actual and

compensatory damages, P500,000.00 as attorney's fee andexpenses of litigation.

Let a copy of this Decision be certified to the Director, Bureau of Patents,Trademarks and Technology Transfer for his information and appropriateaction in accordance with the provisions of Section 25, Republic Act No. 166

Costs against [petitioners].

SO ORDERED. [Words in brackets added.]

Therefrom, the petitioners went on appeal to the CA whereat their recoursewas docketed as CA G.R. SP No. 53351.

As stated at the threshold hereof, the CA, in its assailed Decision of May 15,2003,7affirmed that of the lower court with the modification of deleting theaward of attorney's fees. The appellate court predicated its affirmatory actionon the strength or interplay of the following premises:

1. Albeit the Kuok Group used the mark and logo since 1962, theevidence presented shows that the bulk use of the tradename wasabroad and not in the Philippines (until 1987). Since the Kuok Group

does not have proof of actual use in commerce in the Philippines (inaccordance with Section 2 of R.A. No. 166), it cannot claimownership of the mark and logo in accordance with the holding inKabushi Kaisha Isetan v. IAC8,as reiterated in Philip Morris, Inc. v.Court of Appeals.9

2. On the other hand, respondent has a right to the mark and logo byvirtue of its prior use in the Philippines and the issuance of Certificateof Registration No. 31904.

3. The use of the mark or logo in commerce through the bookingsmade by travel agencies is unavailing since the Kuok Group did not

establish any branch or regional office in the Philippines. As it were,the Kuok Group was not engaged in commerce in the Philippinesinasmuch as the bookings were made through travel agents notowned, controlled or managed by the Kuok Group.

4. While the Paris Convention protects internationally known marks,R.A. No. 166 still requires use in commerce in the Philippines.

Accordingly, and on the premise that international agreements, suchas Paris Convention, must yield to a municipal law, the question onthe exclusive right over the mark and logo would still depend onactual use in commerce in the Philippines.

Petitioners then moved for a reconsideration, which motion was denied bythe CA in its equally assailed Resolution of September 15, 2003.10

As formulated by the petitioners, the issues upon which this case hinges are:

1. Whether the CA erred in finding that respondent had the right tofile an application for registration of the "Shangri-La" mark and "S"logo although respondent never had any prior actual commercial usethereof;

2. Whether the CA erred in finding that respondent's supposed use

of the identical "Shangri-La" mark and "S" logo of the petitioners was
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not evident bad faith and can actually ripen into ownership, muchless registration;

3. Whether the CA erred in overlooking petitioners' widespread prioruse of the "Shangri-La" mark and "S" logo in their operations;

4. Whether the CA erred in refusing to consider that petitioners areentitled to protection under both R.A. No. 166, the old trademark law,

and the Paris Convention for the Protection of Industrial Property;

5. Whether the CA erred in holding that SLIHM did not have the rightto legally own the "Shangri-La" mark and "S" logo by virtue of anddespite their ownership by the Kuok Group;

6. Whether the CA erred in ruling that petitioners' use of the markand logo constitutes actionable infringement;

7. Whether the CA erred in awarding damages in favor of respondentdespite the absence of any evidence to support the same, and infailing to award relief in favor of the petitioners; and

8. Whether petitioners should be prohibited from continuing their useof the mark and logo in question.

There are two preliminary issues, however, that respondent DGCI calls ourattention to, namely:

1. Whether the certification against forum-shopping submitted onbehalf of the petitioners is sufficient;

2. Whether the issues posed by petitioners are purely factual in

nature hence improper for resolution in the instant petition for reviewon certiorari.

DGCI claims that the present petition for review should be dismissed outrightfor certain procedural defects, to wit: an insufficient certification against forumshopping and raising pure questions of fact. On both counts, we find theinstant petition formally and substantially sound.

In its Comment, respondent alleged that the certification against forumshopping signed by Atty. Lee Benjamin Z. Lerma on behalf and as counsel ofthe petitioners was insufficient, and that he was not duly authorized to

execute such document. Respondent further alleged that since petitionerSLIHM is a foreign entity based in Hong Kong, the Director's Certificate

executed by Mr. Madhu Rama Chandra Rao, embodying the board resolutionwhich authorizes Atty. Lerma to act for SLIHM and execute the certificationagainst forum shopping, should contain the authentication by a consularofficer of the Philippines in Hong Kong.

In National Steel Corporation v. CA,11the Court has ruled that thecertification on non-forum shopping may be signed, for and in behalf of acorporation, by a specifically authorized lawyer who has personal knowledge

of the facts required to be disclosed in such document. The reason for this isthat a corporation can only exercise its powers through its board of directorsand/or its duly authorized officers and agents. Physical acts, like the signingof documents, can be performed only by natural persons duly authorized forthe purpose.12

Moreover, Rule 7, Section 5 of the Rules of Court concerning the certificationagainst forum shopping does not require any consular certification if thepetitioner is a foreign entity. Nonetheless, to banish any lingering doubt,petitioner SLIHM furnished this Court with a consular certification datedOctober 29, 2003 authenticating the Director's Certificate authorizing Atty.Lerma to execute the certification against forum shopping, together with

petitioners' manifestation of February 9, 2004.

Respondent also attacks the present petition as one that raises purequestions of fact. It points out that in a petition for review under Rule 45 ofthe Rules of Court, the questions that may properly be inquired into arestrictly circumscribed by the express limitation that "the petition shall raiseonly questions of law which must be distinctly set forth."13We do not,however, find that the issues involved in this petition consist purely ofquestions of fact. These issues will be dealt with as we go through thequestions raised by the petitioners one by one.

Petitioners' first argument is that the respondent had no right to file an

application for registration of the "Shangri-La" mark and "S" logo because itdid not have prior actual commercial use thereof. To respondent, such anargument raises a question of fact that was already resolved by the RTC andconcurred in by the CA.

First off, all that the RTC found was that respondent was the prior user andregistrant of the subject mark and logo in the Philippines. Taken in propercontext, the trial court's finding on "prior use" can only be interpreted to meanthat respondent used the subject mark and logo in the country before thepetitioners did. It cannot be construed as being a factual finding that therewas prior use of the mark and logo before registration.
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Secondly, the question raised is not purely factual in nature. In the context ofthis case, it involves resolving whether a certificate of registration of a mark,and the presumption of regularity in the performance of official functions inthe issuance thereof, are sufficient to establish prior actual use by theregistrant. It further entails answering the question of whether prior actualuse is required before there may be a valid registration of a mark.

Under the provisions of the former trademark law, R.A. No. 166, as

amended, which was in effect up to December 31, 1997, hence, the law inforce at the time of respondent's application for registration of trademark, theroot of ownership of a trademark is actual use in commerce. Section 2 of saidlaw requires that before a trademark can be registered, it must have beenactually used in commerce and service for not less than two months in thePhilippines prior to the filing of an application for its registration.

Registration, without more, does not confer upon the registrant an absoluteright to the registered mark. The certificate of registration is merely aprimafacieproof that the registrant is the owner of the registered mark or tradename. Evidence of prior and continuous use of the mark or trade name byanother 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 inLorenzana v. Macagba,15are:

1. Registration in the Principal Register gives rise toa presumptionof the validity of the registration, the registrant'sownership of the mark, and his right to the exclusive use thereof. x xx

2. Registration in the Principal Register is limited to the actualownerof the trademark and proceedings therein pass on the issueof ownership, which may be contested through opposition orinterference proceedings, or, after registration, in a petition forcancellation. xxx

[Emphasis supplied]1avvphil.et

Ownership of a mark or trade name may be acquired not necessarily byregistration but by adoption and use in trade or commerce. As betweenactual use of a mark without registration, and registration of the mark withoutactual use thereof, the former prevails over the latter. For a rule widelyaccepted and firmly entrenched, because it has come down through the

years, is that actual use in commerce or business is a pre-requisite to theacquisition of the right of ownership.16

While the present law on trademarks17has dispensed with the requirement ofprior actual use at the time of registration, the law in force at the time ofregistration must be applied, and thereunder it was held that as a conditionprecedent to registration of trademark, trade name or service mark, the samemust have been in actual use in the Philippines before the filing of theapplication for registration.18Trademark is a creation of use and thereforeactual use is a pre-requisite to exclusive ownership and its registration withthe Philippine Patent Office is a mere administrative confirmation of theexistence of such right.19

By itself, registration is not a mode of acquiring ownership. When theapplicant is not the owner of the trademark being applied for, he has no rightto apply for registration of the same. Registration merely creates aprimafaciepresumption of the validity of the registration, of the registrant'sownership of the trademark and of the exclusive right to the usethereof.20Such presumption, just like the presumptive regularity in theperformance of official functions, is rebuttable and must give way to evidenceto the contrary.

Here, respondent's own witness, Ramon Syhunliong, testified that a jeepney

signboard artist allegedly commissioned to create the mark and logosubmitted his designs only in December 1982.21This was two-and-a-halfmonths after the filing of the respondent's trademark application on October18, 1982 with the BPTTT. It was also only in December 1982 when therespondent's restaurant was opened for business.22Respondent cannot nowclaim before the Court that the certificate of registration itself is proof that thetwo-month prior use requirement was complied with, what with the fact thatits very own witness testified otherwise in the trial court. And because at thetime (October 18, 1982) the respondent filed its application for trademarkregistration of the "Shangri-La" mark and "S" logo, respondent was not usingthese in the Philippines commercially, the registration is void.

Petitioners also argue that the respondent's use of the "Shangri-La" markand "S" logo was in evident bad faith and cannot therefore ripen intoownership, much less registration. While the respondent is correct in sayingthat a finding of bad faith is factual, not legal,23hence beyond the scope of apetition for review, there are, however, noted exceptions thereto. Amongthese exceptions are:

1. When the inference made is manifestly mistaken, absurd orimpossible;24

2. When there is grave abuse of discretion;25

3. When the judgment is based on a misapprehension of facts;26
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4. When the findings of fact are conflicting;27and

5. When the facts set forth in the petition as well as in the petitioner'smain and reply briefs are not disputed by the respondent.28

And these are naming but a few of the recognized exceptions to the rule.

The CA itself, in its Decision of May 15, 2003, found that the respondent's

president and chairman of the board, Ramon Syhunliong, had been a guestat the petitioners' hotel before he caused the registration of the mark andlogo, and surmised that he must have copied the idea there:

Did Mr. Ramon Syhunliong, [respondent's] President copy the mark anddevise from one of [petitioners'] hotel (Kowloon Shangri-la) abroad? Themere fact that he was a visitor of [petitioners'] hotel abroad at one time(September 27, 1982) establishes [petitioners'] allegation that he got the ideathere.29

Yet, in the very next paragraph, despite the preceding admission that themark and logo must have been copied, the CA tries to make it appear thatthe adoption of the same mark and logo could have been coincidental:

The word or name "Shangri-la" and the S-logo, are not uncommon. The word"Shangri-la" refers to a (a) remote beautiful imaginary place where lifeapproaches perfection or (b) imaginary mountain land depicted as a utopia inthe novel Lost Horizon by James Hilton. The Lost Horizon was a well-readand popular novel written in 1976. It is not impossible that the parties,inspired by the novel, both adopted the mark for their business to conjure [a]place of beauty and pleasure.

The S-logo is, likewise, not unusual. The devise looks like a modified Old

English print.30

To jump from a recognition of the fact that the mark and logo must have beencopied to a rationalization for the possibility that both the petitioners and therespondent coincidentally chose the same name and logo is not onlycontradictory, but also manifestly mistaken or absurd. Furthermore, the "S"logo appears nothing like the "Old English" print that the CA makes it out tobe, but is obviously a symbol with oriental or Asian overtones. At any rate, itis ludicrous to believe that the parties would come up with the exact samelettering for the word "Shangri-La" and the exact same logo to boot. Ascorrectly observed by the petitioners, to which we are in full accord:

x x x When a trademark copycat adopts the word portion of another'strademark as his own, there may still be some doubt that the adoption is

intentional. But if he copies not only the word but also the word's exact fontand lettering style and in addition, he copies also the logo portion of thetrademark, the slightest doubt vanishes. It is then replaced by the certaintythat the adoption was deliberate, malicious and in bad faith.31

It is truly difficult to understand why, of the millions of terms and combinationof letters and designs available, the respondent had to choose exactly thesame mark and logo as that of the petitioners, if there was no intent to take

advantage of the goodwill of petitioners' mark and logo.

32

One who has imitated the trademark of another cannot bring an action forinfringement, particularly against the true owner of the mark, because hewould be coming to court with unclean hands.33Priority is of no avail to thebad faith plaintiff. Good faith is required in order to ensure that a second usermay not merely take advantage of the goodwill established by the trueowner.

This point is further bolstered by the fact that under either Section 17 of R.A.No. 166, or Section 151 of R.A. No. 8293, or Article 6bis(3) of the ParisConvention, no time limit is fixed for the cancellation of marks registered or

used in bad faith.34

This is precisely why petitioners had filed an inter partescase before the BPTTT for the cancellation of respondent's registration, theproceedings on which were suspended pending resolution of the instantcase.

Respondent DGCI also rebukes the next issue raised by the petitioners asbeing purely factual in nature, namely, whether the CA erred in overlookingpetitioners' widespread prior use of the "Shangri-La" mark and "S" logo intheir operations. The question, however, is not whether there had beenwidespread prior use, which would have been factual, but whether that prioruse entitles the petitioners to use the mark and logo in the Philippines. This isclearly a question which is legal in nature.

It has already been established in the two courts below, and admitted by therespondent's president himself, that petitioners had prior widespread use ofthe mark and logo abroad:

There is, to be sure, animpressive mass of proof that petitioner SLIHMand its related companies abroad used the name and logo for one purposeor another x x x.35[Emphasis supplied]

In respondent's own words, "[T]he Court of Appeals did note petitioners' useof the mark and logo but held that such use did not confer to them ownership

or exclusive right to use them in the Philippines."

36

To petitioners' mind, itwas error for the CA to rule that their worldwide use of the mark and logo in
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dispute could not have conferred upon them any right thereto. Again, this is alegal question which is well worth delving into.

R.A. No. 166, as amended, under which this case was heard and decidedprovides:

Section 2. What are registrable. - Trademarks, trade names and servicemarks owned by persons, corporations, partnerships or associations

domiciled in the Philippines and by persons, corporations, partnerships orassociations domiciled in any foreign country may be registered inaccordance with the provisions of this Act: Provided, That said trademarkstrade names, or service marks are actually in use in commerce andservices not less than two months in the Philippines before the time theapplications for registration are filed: And provided, further, That the countryof which the applicant for registration is a citizen grants by law substantiallysimilar privileges to citizens of the Philippines, and such fact is officiallycertified, with a certified true copy of the foreign law translated into theEnglish language, by the government of the foreign country to theGovernment of the Republic of the Philippines.

Section 2-A. Ownership of trademarks, trade names and service marks; howacquired. - Anyone who lawfully produces or deals in merchandise of anykind or who engages in any lawful business, or who renders any lawfulservice in commerce, by actual usethereof in manufacture or trade, inbusiness, and in the service rendered, may appropriate to his exclusive use atrademark, a trade name, or a servicemark not so appropriated byanother, to distinguish his merchandise, business or service from themerchandise, business or services of others. The ownership or possession ofa trademark, trade name, service mark, heretofore or hereafter appropriated,as in this section provided, shall be recognized and protected in the samemanner and to the same extent as are other property rights known to thislaw. [Emphasis supplied]

Admittedly, the CA was not amiss in saying that the law requires the actualuse in commerce of the said trade name and "S" logo in thePhilippines. Hence, consistent with its finding that the bulk of the petitioners'evidence shows that the alleged use of the Shangri-La trade name was doneabroad and not in the Philippines, it is understandable for that court to rule inrespondent's favor. Unfortunately, however, what the CA failed to perceive isthat there is a crucial difference between the aforequoted Section 2 andSection 2-A of R.A. No. 166. For, while Section 2 provides for whatisregistrable,Section 2-A, on the other hand, sets out how ownership isacquired. These are two distinct concepts.

Under Section 2, in order to register a trademark, one must be the ownerthereof and must have actually used the mark in commerce in the Philippinesfor 2 months prior to the application for registration. Since "ownership" of thetrademark is required for registration, Section 2-A of the same law sets out todefine how one goes about acquiring ownership thereof. Under Section 2-A,it is clear that actual use in commerce is also the test of ownership but theprovision went further by saying that the mark must not have been soappropriated by another. Additionally, it is significant to note that Section 2-Adoes not require that the actual use of a trademark must be within thePhilippines. Hence, under R.A. No. 166, as amended, one may be an ownerof a mark due to actual use thereof but not yet have the right to register suchownership here due to failure to use it within the Philippines for two months.

While the petitioners may not have qualified under Section 2 of R.A. No. 166as a registrant, neither did respondent DGCI, since the latter also failed tofulfill the 2-month actual use requirement. What is worse, DGCI was not eventhe owner of the mark. For it to have been the owner, the mark must nothave been already appropriated ( i.e.,used) by someone else. At the time ofrespondent DGCI's registration of the mark, the same was already beingused by the petitioners, albeit abroad, of which DGCI's president was

fully aware.

It is respondent's contention that since the petitioners adopted the "Shangri-La" mark and "S" logo as a mere corporate name or as the name of theirhotels, instead of using them as a trademark or service mark, then suchname and logo are not trademarks. The two concepts of corporate name orbusiness name and trademark or service mark, are not mutually exclusive. Itis common, indeed likely, that the name of a corporation or business is also atrade name, trademark or service mark. Section 38 of R.A. No. 166 definesthe terms as follows:

Sec. 38. Words and terms defined and construed - In the construction of this

Act, unless the contrary is plainly apparent from the context - The term "tradename" includes individual names and surnames, firm names, trade names,devices or words used by manufacturers, industrialists, merchants,agriculturists, and others to identify their business, vocations or occupations;the names or titles lawfully adopted and used by natural or juridicalpersons, unions, and any manufacturing, industrial, commercial, agriculturalor other organizations engaged in trade or commerce.

The term "trade mark" includes any word, name, symbol, emblem, sign ordevice or any combination thereof adopted and used by a manufacturer ormerchant to identify his goods and distinguish them from thosemanufactured, sold or dealt in by others.


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The term "service mark" means a mark used in the sale or advertising ofservices to identify the services of one person and distinguish them fromthe services of others and includes without limitation the marks,names, symbols, titles, designations, slogans, character names, anddistinctive features of radio or other advertising. [Emphasis supplied]

Clearly, from the broad definitions quoted above, the petitioners can beconsidered as having used the "Shangri-La" name and "S" logo as a

tradename and service mark.

The new Intellectual Property Code (IPC), Republic Act No. 8293,undoubtedly shows the firm resolve of the Philippines to observe and followthe Paris Convention by incorporating the relevant portions of the Conventionsuch that persons who may question a mark (that is, oppose registration,petition for the cancellation thereof, sue for unfair competition) includepersons whose internationally well-known mark, whether or not registered, is

identical with or confusingly similar to or constitutes a translation of a markthat is sought to be registered or is actually registered.37

However, while the Philippines was already a signatory to the ParisConvention, the IPC only took effect on January 1, 1988, and in the absenceof a retroactivity clause, R.A. No. 166 still applies.38Under the prevailing lawand jurisprudence at the time, the CA had not erred in ruling that:

The Paris Convention mandates that protection should be afforded tointernationally known marks as signatory to the Paris Convention, withoutregard as to whether the foreign corporation is registered, licensed or doingbusiness in the Philippines. It goes without saying that the same runs afoul toRepublic Act No. 166, which requires the actual use in commerce in thePhilippines of the subject mark or devise. The apparent conflict between thetwo (2) was settled by the Supreme Court in this wise -

"Following universal acquiescence and comity, our municipal law ontrademarks regarding the requirement of actual use in the Philippinesmust subordinate an international agreement inasmuch as the apparentclash is being decided by a municipal tribunal (Mortensen vs. Peters, GreatBritain, High Court of Judiciary of Scotland, 1906, 8 Sessions 93; Paras,International Law and World Organization, 1971 Ed., p. 20). Withal, the factthat international law has been made part of the law of the land does not byany means imply the primacy of international law over national law in themunicipal sphere. Under the doctrine of incorporation as applied in mostcountries, rules of international law are given a standing equal, not superior,to national legislative enactments (Salonga and Yap, Public InternationalLaw, Fourth ed., 1974, p. 16)."39[Emphasis supplied]

Consequently, the petitioners cannot claim protection under the ParisConvention. Nevertheless, with the double infirmity of lack of two-month prioruse, as well as bad faith in the respondent's registration of the mark, it isevident that the petitioners cannot be guilty of infringement. It would be agreat injustice to adjudge the petitioners guilty of infringing a mark when theyare actually the originator and creator thereof.

Nor can the petitioners' separate personalities from their mother corporation

be an obstacle in the enforcement of their rights as part of the Kuok Group ofCompanies and as official repository, manager and operator of the subjectmark and logo. Besides, R.A. No. 166 did not require the party seeking reliefto be the owner of the mark but"any person who believes that he is or will bedamaged by the registration of a mark or trade name."40

WHEREFORE, the instant petition is GRANTED. The assailed Decision andResolution of the Court of Appeals dated May 15, 2003 and September 15,2003, respectively, and the Decision of the Regional Trial Court of QuezonCity dated March 8, 1996 are hereby SET ASIDE. Accordingly, the complaintfor infringement in Civil Case No. Q-91-8476 is ordered DISMISSED.

SO ORDERED

PHILIP MORRIS, INC., BENSON & HEDGES (CANADA), INC., ANDFABRIQUES OF TABAC REUNIES, S.A.,petitionersvs.THE COURT OF APPEALS AND FORTUNE TOBACCOCORPORATION, respondents.

Quasha, Asperilla, Ancheta, Pea & Nolasco Law Office for petitioners.

Teresita Gandionco-Oledan for private respondent.

MELO, J .:

In the petition before us, petitioners Philip Morris, Inc., Benson and Hedges(Canada), Inc., and Fabriques of Tabac Reunies, S.A., are ascribingwhimsical exercise of the faculty conferred upon magistrates by Section 6,Rule 58 of the Revised Rules of Court when respondent Court of Appealslifted the writ of preliminary injunction it earlier had issued against Fortune
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Tobacco Corporation, herein private respondent, from manufacturing andselling "MARK" cigarettes in the local market.

Banking on the thesis that petitioners' respective symbols "MARK VII","MARK TEN", and "LARK", also for cigarettes, must be protected againstunauthorized appropriation, petitioners twice solicited the ancillary writ in thecourse the main suit for infringement but the court of origin wasunpersuaded.

Before we proceed to the generative facts of the case at bar, it must beemphasized that resolution of the issue on the propriety of lifting the writ ofpreliminary injunction should not be construed as a prejudgment of the suitbelow. Aware of the fact that the discussion we are about to enter intoinvolves a mere interlocutory order, a discourse on the aspect infringementmust thus be avoided. With these caveat, we shall now shift our attention tothe events which spawned the controversy.

As averred in the initial pleading, Philip Morris, Incorporated is a corporationorganized under the laws of the State of Virginia, United States of America,and does business at 100 Park Avenue, New York, New York, United States

of America. The two other plaintiff foreign corporations, which are wholly-owned subsidiaries of Philip Morris, Inc., are similarly not doing business inthe Philippines but are suing on an isolated transaction. As registered owners"MARK VII", "MARK TEN", and "LARK" per certificates of registration issuedby the Philippine Patent Office on April 26, 1973, May 28, 1964, and March25, 1964, plaintiffs-petitioners asserted that defendant Fortune TobaccoCorporation has no right to manufacture and sell cigarettes bearing theallegedly identical or confusingly similar trademark "MARK" in contraventionof Section 22 of the Trademark Law, and should, therefore, be precludedduring the pendency of the case from performing the acts complainedof viaa preliminary injunction (p. 75, Court of Appeals Rolloin AC-G.R. SPNo. 13132).

For its part, Fortune Tobacco Corporation admitted petitioners' certificates ofregistration with the Philippine Patent Office subject to the affirmative andspecial defense on misjoinder of party plaintiffs. Private respondent allegedfurther that it has been authorized by the Bureau of Internal Revenue tomanufacture and sell cigarettes bearing the trademark "MARK", and that"MARK" is a common word which cannot be exclusively appropriated (p.158,Court of Appeals Rolloin A.C.-G.R. SP No. 13132). On March 28, 1983,petitioners' prayer for preliminary injunction was denied by the PresidingJudge of Branch 166 of the Regional Trial Court of the National CapitalJudicial Region stationed at Pasig, premised upon the following propositions:

Plaintiffs admit in paragraph 2 of the complaint that ". . . theyarenot doing business in the Philippines and are suing on anisolated transaction . . .". This simply means that they are notengaged in the sale, manufacture, importation, expor[t]ationand advertisement of their cigarette products in thePhilippines. With this admission, defendant asks: ". . . howcould defendant's "MARK" cigarettes cause the former"irreparable damage" within the territorial limits of thePhilippines?" Plaintiffs maintain that since their trademarksare entitled to protection by treaty obligation under Article 2of the Paris Convention of which the Philippines is a memberand ratified by Resolution No. 69 of the Senate of thePhilippines and as such, have the force and effect of lawunder Section 12, Article XVII of our Constitution and sincethis is an action for a violation or infringement of a t rademarkor trade name by defendant, such mere allegation issufficient even in the absence of proof to support it. To themind of the Court, precisely, this is the issue in the maincase to determine whether or not there has been an invasionof plaintiffs' right of property to such trademark or tradename. This claim of plaintiffs is disputed by defendant inparagraphs 6 and 7 of the Answer; hence, this cannot bemade a basis for the issuance of a writ of preliminaryinjunction.

There is no dispute that the First Plaintiff is the registeredowner of trademar[k] "MARK VII" with Certificate ofRegistration No. 18723, dated April 26,1973 while theSecond Plaintiff is likewise the registered owner oftrademark "MARK TEN" under Certificate of Registration No.11147, dated May 28, 1963 and the Third Plaintiff is aregistrant of trademark "LARK" as shown by Certificate ofRegistration No. 10953 dated March 23, 1964, in addition toa pending application for registration of trademark "MARKVII" filed on November 21, 1980 under Application Serial No.43243, all in the Philippine Patent Office. In same themanner, defendant has a pending application for registrationof the trademark "LARK" cigarettes with the PhilippinePatent Office under Application Serial No. 44008. Defendantcontends that since plaintiffs are "not doing business in thePhilippines" coupled the fact that the Director of Patents hasnot denied their pending application for registration of itstrademark "MARK", the grant of a writ of preliminaryinjunction is premature. Plaintiffs contend that this act(s) ofdefendant is but a subterfuge to give semblance of good


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faith intended to deceive the public and patronizers intobuying the products and create the impression thatdefendant's goods are identical with or come from the samesource as plaintiffs' products or that the defendant is alicensee of plaintiffs when in truth and in fact the former isnot. But the fact remains that with its pending application,defendant has embarked in the manufacturing, selling,distributing and advertising of "MARK" cigarettes. Thequestion of good faith or bad faith on the part of defendantare matters which are evidentiary in character which have tobe proven during the hearing on the merits; hence, until andunless the Director of Patents has denied defendant'sapplication, the Court is of the opinion and so holds thatissuance a writ of preliminary injunction would not lie.

There is no question that defendant has been authorized bythe Bureau of Internal Revenue to manufacture cigarettesbearing the trademark "MARK" (Letter of Ruben B. Ancheta,

Acting Commissioner addressed to Fortune TobaccoCorporation dated April 3, 1981, marked as Annex "A",defendant's "OPPOSITION, etc." dated September 24,1982). However, this authority is qualified . . . that the saidbrands have been accepted and registered by the PatentOffice not later than six (6) months after you have beenmanufacturing the cigarettes and placed the same in themarket." However, this grant ". . . does not give youprotection against any person or entity whose rights may beprejudiced by infringement or unfair competition in relation toyour indicated trademarks/brands". As aforestated, theregistration of defendant's application is still pending in thePhilippine Patent Office.

It has been repeatedly held in this jurisdiction as well as inthe United States that the right or title of the applicant forinjunction remedy must be clear and free from doubt.Because of the disastrous and painful effects of aninjunction, Courts should be extremely careful, cautious andconscionable in the exercise of its discretion consistent with

justice, equity and fair play.

There is no power the exercise of which ismore delicate which requires greatercaution, deliberation, and sound discretion,or (which is) more dangerous in a doubtful

case than the issuing of an injunction; it isthe strong arm of equity that never ought to

be extended unless to cases of great injury,where courts of law cannot afford anadequate or commensurate remedy indamages. The right must be clear, the injuryimpending or threatened, so as to beaverted only by the protecting preventiveprocess of injunction. (Bonaparte v.Camden, etc. N. Co., 3 F. Cas. No. 1, 617,Baldw. 205, 217.)

Courts of equity constantly decline to laydown any rule which injunction shall begranted or withheld. There is wisdom in thiscourse, for it is impossible to foresee allexigencies of society which may requiretheir aid to protect rights and restrainwrongs. (Merced M. Go v. Freemont, 7 Gal.317, 321; 68 Am. Dec. 262.)

It is the strong arm of the court; and to

render its operation begin and useful, it mustbe exercised with great discretion, and whennecessary requires it. (Attorney-General v.Utica Inc. Co., P. John Ch. (N.Y.) 371.)

Having taken a panoramic view of the position[s] of bothparties as viewed from their pleadings, the picture reducedto its minimum size would be this: At the crossroads are thetwo (2) contending parties, plaintiffs vigorously asserting therights granted by law, treaty and jurisprudence to restraindefendant in its activities of manufacturing, selling,distributing and advertising its "MARK" cigarettes and now

comes defendant who countered and refused to berestrained claiming that it has been authorized temporarilyby the Bureau of Internal Revenue under certain conditionsto do so as aforestated coupled by its pending application forregistration of trademark "MARK" in the Philippine PatentOffice. This circumstance in itself has created a disputebetween the parties which to the mind of the Court does notwarrant the issuance of a writ of preliminary injunction.

It is well-settled principle that courts ofequity will refuse an application for theinjunctive remedy where the principle of law

on which the right to preliminary injunctionrests is disputed and will admit of doubt,


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without a decision of the court of lawestablishing such principle although satisfiedas to what is a correct conclusion of lawupon the facts. The fact, however, that thereis no such dispute or conflict does not initself constitute a justifiable ground for thecourt to refuse an application for theinjunctive relief. (Hackensack Impr. Commn.v. New Jersey Midland P. Co., 22 N.J. Eg.94.)

Hence, the status quoexisting between the parties prior tothe filing of this case should be maintained. For after all, aninjunction, without reference to the parties, should be violent,vicious nor even vindictive. (pp. 338-341, Rolloin G.R. No.91332.)

In the process of denying petitioners' subsequent motion for reconsiderationof the order denying issuance of the requested writ, the court of origin tookcognizance of the certification executed on January 30, 1984 by the

Philippine Patent Office attesting to the fact that private respondent'sapplication for registration is still pending appropriate action. Apart from thiscommunication, what prompted the trial court judge to entertain the idea ofprematurity and untimeliness of petitioners' application for a writ ofpreliminary injunction was the letter from the Bureau of Internal Revenuedate February 2, 1984 which reads:

MRS. TERESITA GANDIONGCO OLEDANLegal CounselFortune Tobacco Corporation

Madam:

In connection with your letter dated January 25, 1984,reiterating your query as to whether your label approvalautomatically expires or becomes null and void after six (6)months if the brand is not accepted and by the patent office,please be informed that no provision in the Tax Code orrevenue regulation that requires an applicant to comply withthe aforementioned condition order that his label approvedwill remain valid and existing.

Based on the document you presented, it shows thatregistration of this particular label still pending resolution bythe Patent Office. These being so , you may therefore

continue with the production said brand of cigarette until thisOffice is officially notified that the question of ownership of"MARK" brand is finally resolved.


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ManufacturedTobacco

TaxDivisio

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AN-P6531-

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(p. 348, Rollo.)

It appears from the testimony of Atty. Enrique Madarang, Chief of theTrademark Division of the then Philippine Patent Office that Fortune'sapplication for its trademark is still pending before said office (p. 311, Rollo).

Petitioners thereafter cited supervening events which supposedly transpiredsince March 28, 1983, when the trial court first declined issuing a writ ofpreliminary injunction, that could alter the results of the case in that Fortune'sapplication had been rejected, nay, barred by the Philippine Patent Office,and that the application had been forfeited by abandonment, but the trial

court nonetheless denied the second motion for issuance of the injunctivewrit on April 22, 1987, thus:

For all the prolixity of their pleadings and testimonialevidence, the plaintiffs-movants have fallen far short of thelegal requisites that would justify the grant of the writ ofpreliminary injunction prayed for. For one, they did not evenbother to establish by competent evidence that the productssupposedly affected adversely by defendant's trademarknow subject of an application for registration with thePhilippine Patents Office, are in actual use in the Philippines.For another, they concentrated their fire on the alleged

abandonment and forfeiture by defendant of said applicationfor registration.

The Court cannot

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