068. Shangri-La v.

Court of Appeals
G.R. No. 111580/21 June 2001/Petition for Review
Shangri-La International Hotel Management, Ltd.; Shangri-La Properties, Inc.; Makati Shangri-La Hotel
and Resort, Inc.; and Kuok Philippine Properties, Inc. – petitioners
Court of Appeals, Hon. Felix De Guzman (Judge of the RTC of Quezon City, Branch 99), and Developers
Group of Companies, Inc. – respondents
G.R. No. 114802
Developers Group of Companies, Inc. – petitioner
Court of Appeals, Hon. Ignacio S. Sapalo (Director, Bureau of Patents, Trademarks, and Technology
Transfer), and Shangri-La International Hotel Management, Ltd. – respondents
Decision by J. Ynares-Santiago, Digest by Pip
Short Version: SLG filed a complaint for cancellation of trademark against DGCI. DGCI had already
registered the disputed mark and logo, whereas SLG only filed an application for registration after filing
the complaint. While the case was pending before the BPTTT, SLG filed a motion before the RTC for
suspension of proceedings in the infringement case pending resolution of the administrative proceedings.
The RTC denied the motion. DGCI tried to pull the same trick (i.e. suspension of proceedings) before the
BPTTT, but the BPTTT also refused to suspend the administrative proceedings despite the pendency of
the infringement case.

The SC ruled that an infringement case can and should proceed independently from a cancellation
case with the BPTTT so as to afford the owner of certificates of registration redress and injunctive writs.
In the same light, the case before the BPTTT should also continue independently from the infringement
case so as to determine whether a registered mark may ultimately be cancelled.

In this case, however, the proceedings before the BPTTT were suspended in view of the fact that the
RTC later issued a decision finding not only that SLG had infringed DGCI’s rights, but that DGCI had a
better right to the registration of the mark and logo. The RTC’s determination of that particular issue,
made permissible under Section 161 of R.A. 8293, rendered the administrative proceedings moot and
academic.

Facts: In June 1988, the Shangri-La Group (see list of petitioners in the first case above, from hereon
they will be “SLG” for brevity) filed with the Bureau of Patents, Trademarks, and Technology Transfer
(“BPTTT”) a petition praying for the cancellation of the registration of the “Shangri-La” mark and “S”
device/logo issued to the Developers Group of Companies, Inc. (“DGCI”).

SLG alleged that the mark and logo were illegally and fraudulently obtained and appropriated for
DGCI’s restaurant business. According to SLG, it was the legal and beneficial owner of the mark and
logo, which had been used for its corporate affairs and business since March 1962. The mark and logo
were then made as a special design for SLG’s international hotels in 1975. In contrast, DGCI only began
using the mark and logo in 1982.

At the same time, SLG filed an application with the BPTTT to register the disputed mark and logo.
DGCI filed an opposition to the application.

Nearly three years later, in April 1991, DGCI instituted with the RTC of Quezon City a complaint for
infringement and damages, with prayer for injunction, against SLG. SLG sought to suspend the
proceedings in the infringement case in view of the pending administrative proceedings before the
BPTTT. The RTC denied SLG’s motion, prompting SLG to file both a Motion for Reconsideration and a
Motion to Inhibit against the Presiding Judge, Felix M. De Guzman. The RTC denied both motions.
 SLG filed a petition for certiorari before the Court of Appeals to question the RTC’s orders. The CA
dismissed the petition and SLG’s subsequent MR. SLG then filed this petition before the Supreme Court.

Meanwhile, in October 1991, DGCI also filed an urgent motion to suspend proceedings before the
BPTTT in view of the infringement case it had lodged before the RTC of Quezon City. The BPTTT
denied the motion and DGCI’s later MR was also denied. DGCI filed a petition for certiorari, mandamus,
and prohibition before the CA, questioning the BPTTT’s orders. The CA also dismissed DGCI’s petition,
causing DGCI to bring the case up for review before the SC. This case was later consolidated with SLG’s
petition.

While the consolidated cases were pending before the SC, the RTC ruled in favor of DGCI in March
1996 and found that SLG had infringed upon the former’s rights. SLG appealed that decision to the CA.

Issue1: May a party2 file a subsequent action for infringement with the regular courts despite a pending
administrative case for cancellation of mark filed against that party? YES.

(1) Should the infringement case have been dismissed or at least suspended in view of the prior and
pending administrative proceedings? NO.
(2) Should the proceedings before the BPTTT have been suspended in view of the pending
infringement case? NO. (As a general rule. For the exception, see below.)

Ruling:

Ratio: As provided in Section 151.2 of the Intellectual Property Code—

“Notwithstanding the foregoing provisions, the court or the administrative agency vested with
jurisdiction to hear and adjudicate any action to enforce the rights to a registered mark shall
likewise exercise jurisdiction to determine whether the registration of said mark may be cancelled
in accordance with this Act. The filing of a suit to enforce the registered mark with the proper
court or agency shall exclude any other court or agency from assuming jurisdiction over a
subsequently filed petition to cancel the same mark. On the other hand, the earlier filing of
petition to cancel the mark with the Bureau of Legal Affairs shall not constitute a
prejudicial question that must be resolved before an action to enforce the rights to same
registered mark may be decided.”

Further, Section 7 of Rule 8 of the Regulations on Inter Partes proceedings also provides that—

“The filing of a suit to enforce the registered mark with the proper court or Bureau shall exclude
any other court or agency from assuming jurisdiction over a subsequently filed petition to cancel
the same mark. On the other hand, the earlier filing of petition to cancel the mark with the
Bureau shall not constitute a prejudicial question that must be resolved before an action to
enforce the rights to same registered mark may be decided.”

Applying the foregoing provisions to this case, the fact that SLG filed an earlier case for
cancellation of mark and logo before the BPTTT does not bar DGCI from later filing an
infringement case against SLG with respect to the mark and logo.

1
Issue was framed by the Court. See the numbers below for my interpretation of the issues, haha.
2
i.e. DGCI
 The Court explained the rationale thus: the case filed by DGCI was based on its certificate of
registration covering the disputed mark and logo. Until cancelled by BPTTT or by an infringement court,
the certificate of registration remains valid and constitutes prima facie evidence of the validity of the
registration, the registrant’s ownership of the mark or trade-name, and of the registrant’s exclusive right to
use the same in connection with the goods, business or services specified in the certificate. The certificate
in this case was still valid and subsisting, hence DGCI was within its rights when it filed an infringement
and damages suit against those it saw to be infringing upon its rights.

In addition, the Court viewed the issues raised before the BPTTT and RTC as very different. The
BPTTT was tasked with determining whether DGCI’s mark and logo should be cancelled in view of
SLG’s claim of prior ownership over the mark and logo. The RTC, in contrast, was faced with ruling on
whether SLG infringed on DGCI’s rights. Citing Conrad and Company, Inc. v. Court of Appeals, the
Court stressed that the BPTTT has exclusive jurisdiction over cancellation of trademark cases pursuant to
the Trademark Law, whereas the RTC has broader jurisdiction covering infringement or unfair
competition, among others.

In short, an infringement case can and should proceed independently from a cancellation case
with the Bureau so as to afford the owner of certificates of registration redress and injunctive writs.
In the same light, the case before the BPTTT should also continue independently from the
infringement case so as to determine whether a registered mark may ultimately be cancelled.

HOWEVER!!!

In this case, the RTC did not just determine whether DGCI’s rights had been infringed. In its
March 1996 decision, it also upheld the validity and preference of DGCI’s registration over SLG’s.
The Court, citing Section 161 of R.A. 8293 verbatim, ruled that the trial court “may determine the right to
registration, order the cancellation of the registration, in whole or in part, and otherwise rectify the
register with respect to the registration of any party to the action in the exercise of this. Judgment and
orders shall be certified by the court to the Director, who shall make appropriate entry upon the records of
the Bureau, and shall be controlled thereby.”

Since the RTC already ruled on the validity of the registration of the mark and logo, the
cancellation case before the BPTTT was rendered moot. Allowing BPTTT to proceed with the
cancellation case could lead to a ruling that would contradict the RTC’s decision, which would be
anathema to the orderly administration of justice.

The Court thus ordered the suspension of proceedings before the BPTTT pending final determination
of the infringement case then pending before the CA.

Voting: C.J. Davide, Jr., Puno and Pardo, JJ., concur.

Kapunan, J., no part.