KABUSHI KAISHA ISETAN, ALSO KNOWN AND TRADING AS ISETAN CO., LTD., PETITIONER, VS. THE INTERMEDIATE APPELLATE COURT, THE DIRECTOR OF PATENTS, AND ISETANN DEPARTMENT STORE, INC.,…

This is a petition for review on certiorari which seeks to
set aside – (1) the decision of the Court of Appeals dated June 2, 1986 in
AC-G.R. SP No. 008873 entitled “Kabushi Kaisha Isetan, also known and trading
as Isetan Company Limited v. Isetann Department Store, Inc.” dismissing
the petitioner’s appeal from the decision of the Director of Patents; and (2)
the Resolution dated July 11, 1986 denying the petitioner’s motion for
reconsideration.

As gathered from the records, the facts are as follows:

Petitioner Kabushi Kaisha Isetan is a foreign corporation
organized and existing under the laws of Japan with business address at 14-1
Shinjuku, 3-Chrome, Shinjuku, Tokyo, Japan. It is the owner of the trademark “Isetan” and the “Young
Leaves Design”.

The petitioner alleges that it first used the trademark Isetan on
November 5, 1936. It states that the
trademark is
a combination of “Ise” taken from “Iseya” the first
name of the rice dealer in Kondo, Tokyo in which the establishment was first
located and “Tan” which was taken from “Tanji Kosuge the
First”. The petitioner claims to
have expanded its line of business internationally from 1936 to 1974. The trademark “Isetan” and
“Young Leaves Design” were registered in Japan covering more than 34 classes of
goods. On October 3, 1983, the
petitioner applied for the registration of “Isetan” and “Young
Leaves Design” with the Philippine Patent Office under Permanent Serial Nos. 52422
and 52423 respectively. (Rollo, p. 43)

Private respondent, Isetann Department Store, on the other hand,
is a domestic corporation organized and existing under the laws of the
Philippines with business address at 423-430 Rizal Avenue, Sta. Cruz, Manila, Philippines.

It claims that it used the word “Isetann” as part of
its corporate name and on its products particularly on shirts in Joymart
Department Store sometime in January 1979. The suffix “Tann” means an altar, the place of offering in
Chinese and this was adopted to harmonize the corporate name and the corporate
logo of two hands in cup that
symbolizes the act of offering to the Supreme Being for business blessing.

On May 30, 1980 and May
20, 1980, the private respondent registered “Isetann Department Store,
Inc.” and Isetann and Flower Design in the Philippine Patent Office under
SR. Reg. Nos.4701 and 4714, respectively, as well as with the Bureau of
Domestic Trade under Certificate of Registration No. 32020. (Rollo, pp. 43­-44)

On November 28, 1980, the
petitioner filed with the Phil. Patent Office two (2) petitions for the cancellation of Certificates of Supplemental Registration Nos.
SR-4714 and SR-4701 stating among others that:

“xxx except for the
additional letter ‘N’ in the word “Isetan”, the mark registered by
the registrant is exactly the same as the trademark ISETAN owned by the
petitioner and that the young leaves registered by the registrant is exactly
the same as the young leaves design owned by the petitioner.”

The petitioner further
alleged that private respondent’s act of registering a trademark which is exactly the same as its
trademark and adopting a corporate
name similar to that of the petitioner were with the illegal and immoral
intention of cashing in on the long established goodwill and popularity of the
petitioner’s reputation, thereby causing great and irreparable injury and
damage to it (Rollo, p. 521). It argued
that both the petitioner’s and respondent’s goods move in the same channels of trade, and ordinary people will be misled to
believe that the products of the private respondent originated or emanated
from, are associated with, or are manufactured or sold, or sponsored by the
petitioner by reason of the use of the challenged trademark.

The petitioner also invoked the Convention of Paris of March 20,
1883 for the Protection of Industrial Property of which the Philippines and
Japan are both members. The petitioner
stressed that the Philippines’ adherence to the Paris Convention committed the government to the protection of
trademarks belonging not only to Filipino citizens but also to those belonging to nationals of other member countries who may seek
protection in the Philippines. (Rollo,
p. 522)

The petition was docketed
as Inter Partes Cases Nos. 1460 and 1461 (Rollo, p. 514)

Meanwhile, the petitioner also filed with the Securities and
Exchange Commission (SEC) a petition to cancel the mark “ISETAN” as
part of the registered corporate name of Isetann Department Store, Inc. which
petition was docketed as SEC Case No. 2051 (Rollo, p. 524). On May 17, 1985, this petition was denied in a decision rendered
by SEC’s Hearing Officer, Atty. Joaquin C. Garaygay.

On appeal, the Commission reversed the decision of the Hearing
Officer on February 25, 1986. It
directed the private respondent to amend its Articles of Incorporation within 30 days from finality of
the decision.

On April 15, 1986, however, respondent Isetann Department Store
filed a motion for reconsideration. (Rollo, pp. 325-353). And on
September 10, 1987, the Commission reversed its earlier decision dated February
25, 1986 thereby affirming the decision rendered by the Hearing Officer on May
17, 1985. The Commission stated that
since the petitioner’s trademark and tradename have never been used in commerce
on the petitioner’s products marketed in the Philippines, the trademark or
tradename have not acquired a reputation and goodwill deserving of protection
from usurpation by local competitors. (Rollo, p. 392).

This SEC decision which denied and dismissed the petition to
cancel was submitted to the Director of Patents as part of the evidence for the
private respondent.

On January 24, 1986, the Director of Patents after notice and
hearing rendered a joint decision in Inter Partes Cases Nos. 1460 and 1461, the
dispositive portion of which reads:

“WHEREFORE, all the foregoing considered, this Office is
constrained to hold that the herein Petitioner has not successfully made out a
case of cancellation. Accordingly,
Inter Partes Cases Nos. 1460 and 1461 are, as they are hereby, DISMISSED. Hence, Respondent’s Certificate of Supplemental Registration No. 4714
issued on May 20, 1980 covering the tradename ‘ISETANN DEPT. STORE, INC. &
FLOWER DESIGN’ are, as they are hereby, ordered to remain in full force and
effect for the duration of their term unless sooner or later terminated by law.

The corresponding application for registration in the Principal
Register of the Trademark and of the tradename aforesaid are hereby given due
course.

Let the records of these cases be transmitted to the Trademark
Examining Division for appropriate action in accordance with this
Decision.”

On February 21, 1986,
Isetan Company Limited moved for the reconsideration of said decision but the
motion was denied on April 2, 1986 (Rollo, pp. 355-359).

From this adverse
decision of the Director of Patents, the petitioner appealed to the
Intermediate Appellate Court (now Court of Appeals).

On June 2, 1986, the IAC
dismissed the appeal on the ground that it was filed out of time.

The petitioner’s motion
for reconsideration was likewise denied in a resolution dated July 11, 1986.

Hence, this petition.

Initially, the Court
dismissed the petition in a resolution dated July 8, 1987, on the ground that
it was filed fourteen (14) days late. However, on motion for reconsideration, whereby the petitioner appealed
to this Court on equitable grounds stating that it has a strong and meritorious
case, the petition was given due course in a resolution dated May 19, 1988 to
enable us to examine more fully any possible denial of substantive
justice. The parties were then required
to submit their memoranda. (Rollo, pp.
2-28; Resolution, pp. 271; 453)

After carefully
considering the records of this case, we reiterate our July 8, 1987
resolution dismissing the petition. There are no compelling equitable
considerations which call for the application of the rule enunciated in Serrano
v. Court of Appeals (139 SCRA 179 [1985]) and Orata v. Intermediate Appellate Court, et al. (185 SCRA 148 [1990]) that considerations of substantial
justice manifest in the petition may relax the stringent application of
technical rules so as not to defeat an exceptionally
meritorious petition.

There is no dispute and
the petitioner does not question the fact that the appeal was filed out of
time.

Not only was the appeal
filed late in the Court of Appeals, the petition for review was also filed late
with us. In common parlance, the
petitioner’s case is “twice dead” and may no longer be reviewed.

The Court of Appeals
correctly rejected the appeal on the sole ground of late filing when it ruled:

“Perfection of an appeal within the time provided by law is
jurisdictional, and failure to observe the period is fatal.

The decision sought to be appealed is one rendered by the
Philippine Patent Office, a quasi-judicial body. Consequently, under Section 23(c) of the Interim Rules of Court,
the appeal shall be governed by the provisions of Republic Act No. 5434, which
provides in its Section 2;

SEC. 2. Appeals to Court of Appeals.
– Appeals to the Court of Appeals shall be filed within fifteen (15) days from
notice of the ruling, award, order, decision or judgment or from the date of
its last publication, if publication is required by law for its effectivity; or
in case a motion for reconsideration is filed within that period of fifteen (15) days, then within ten (10) days
from notice or publication, when required by law, of the resolution denying the
motion for reconsideration. No more
than one motion for reconsideration shall be allowed any party. If no appeal is filed within the periods
here fixed, the ruling, award, order, decision or judgment shall become final
and may be executed as provided by existing law.

Attention is invited to that portion of Section 2 which states that
in case a motion for reconsideration is filed, an appeal should be filed within
ten (10) days from notice of the resolution denying the motion for
reconsideration.”

The petitioner received a
copy of the Court of Appeals’ resolution denying its motion for reconsideration
on July 17, 1986. It had only up to
August 1, 1986 to file a petition for review with us. The present petition was posted on August 2, 1986 and received by
us on August 8, 1986. There is no
question that it was, again, filed late because the petitioner filed an ex-parte motion for admission
explaining the delay.

The decision of the Patent Office has long become final and
executory. So has the Court of Appeals
decision.

Regarding the petitioner’s claims of substantial justice which
led us to give due course, we decline to disturb the rulings of the Patent
Office and the Court of Appeals.

A fundamental principle of Philippine Trademark Law is that
actual use in commerce in the Philippines is a pre-requisite to the acquisition
of ownership over a trademark or a tradename.

The Trademark Law,
Republic Act No. 166, as amended, under which this case was heard and decided
provides:

“SEC. 2. What are
registrable. – Trademarks, tradenames and service marks owned by
persons, corporation, partnerships or associations domiciled in the Philippines
and by persons, corporations, partnerships or associations domiciled in any
foreign country may be registered in accordance with the provisions of this
Act: Provided, That said trademarks,
tradenames, or service marks are actually in use in commerce and services not
less than two months in the Philippines before the time the applications for
registration are filed: And
provided, further, That the country of which the applicant for
registration is a citizen grants by law substantially similar privileges to
citizens of the Philippines, and such fact is officially certified, with a
certified true copy of the foreign law translated into the English language, by
the government of the foreign country to the Government of the Republic of the
Philippines. (As amended by R. A. No.
865)

SEC. 2-A. Ownership of
trademarks, tradenames and service marks; how
acquired. – Anyone who lawfully produces or deals in merchandise of any
kind or who engages in any lawful business, or who renders any lawful service
in commerce, by actual use thereof in manufacture or trade, in business, and in
the service rendered, may appropriate to his exclusive use a trademark, a
tradename, or a service mark not so appropriated by another, to distinguish his
merchandise, business or service from the merchandise, business or service of
others. The ownership or possession of
a trademark, tradename, service mark, heretofore or hereafter appropriated, as in
this section provided, shall be recognized and protected in the same manner and
to the same extent as are other property rights known to the law. (As amended by R.A. No. 638)”

These provisions have been interpreted in Sterling Products
International, Inc. v. Farbenfabriken Bayer Actiengesellschaft
(27 SCRA 1214 [1969]) in this way:

“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
prerequisite to the acquisition of the right of ownership over a trademark.

xxx                            xxx                               xxx

“xxx Adoption alone of a trademark
would not give exclusive right thereto. Such right grows out of their actual use. Adoption is not use. One
may make advertisements, issue circulars, give out price lists on certain
goods; but these alone would not give exclusive right of use. For trademark is a creation of use. The underlying reason for all these is that purchasers have come
to understand the mark as indicating the origin of the wares. Flowing from this is the trader’s right to
protection in the trade he has built up and the goodwill he has accumulated
from use of the trademark. x x x.“

In fact, a prior registrant cannot claim exclusive use of the
trademark unless it uses it in commerce.

We ruled in Pagasa Industrial Corporation v.
Court of Appeals (118 SCRA 526 [1982]):

“3.
The Trademark Law is very
clear. It requires actual commercial use of the mark prior to its
registration. There is no
dispute that respondent corporation was the first registrant, yet it failed to
fully substantiate its claim that it used in trade or business in the
Philippines the subject mark; it did not present proof to invest it with
exclusive, continuous adoption of the trademark which should consist among
others, of considerable sales since its first use. The invoices (Exhibits 7, 7-a, and 8-b) submitted by respondent
which were dated way back in 1957 show that the zippers sent to the Philippines
were to be used as ‘samples’ and ‘of no commercial value’. The evidence for respondent must be clear, definite
and free from inconsistencies. (Sy
Ching v. Gaw Lui, 44 SCRA 148-149) ‘Samples’ are not for sale and therefore,
the fact of exporting them to the Philippines cannot be considered to be equivalent to the ‘use’ contemplated by the
law. Respondent did not expect income
from such ‘samples’. There were no
receipts to establish sale, and
no proof were presented to show that they were subsequently sold in the
Philippines.” (Pagasa
Industrial Corp. v. Court of Appeals, 118 SCRA
526 [1982]; Emphasis
Supplied)

The records show that the petitioner has never conducted any
business in the Philippines. It has
never promoted its tradename or trademark in the Philippines. It has absolutely no business goodwill in
the Philippines. It is unknown to
Filipinos except the very few
who may have noticed it while travelling abroad. It has never paid a single centavo of tax to the Philippine
government. Under the law, it has no
right to the remedy it seeks.

There can be no question from the records that the petitioner has
never used its tradename or trademark in the Philippines.

The petitioner’s witnesses, Mr. Mayumi Takayama and Mr. Hieoya
Murakami, admitted that:

1)  The petitioner’s company
is not licensed to do business in the Philippines;

2)  The petitioner’s
trademark is not registered under Philippine law; and

3)  The petitioner’s
trademark is not being used on products in trade, manufacture, or business in
the Philippines.

It was also established from the testimony of Atty. Villasanta,
petitioner’s witness, that the petitioner has never engaged in promotional
activities in the Philippines to
popularize its trademark because not being engaged in business in the Philippines, there is no need
for advertising. The claim of the
petitioner that millions of dollars have been spent in advertising the
petitioner’s products, refers to advertising in Japan or other foreign places. No promotional activities have been undertaken in the Philippines, by
the petitioner’s own admission.

Any goodwill, reputation, or knowledge regarding the name Isetann
is purely the work of the private respondent. Evidence was introduced on the extensive promotional activities of the
private respondent.

It might be pertinent at this point to stress that what is
involved in this case is not so much a trademark
as a tradename. Isetann Department
Store, Inc. is the name of a store and not of products sold in various parts of
the country. This case must be
differentiated from cases involving products bearing such familiar names as
“Colgate”, “Singer”, “Toyota”, or
“Sony” where the products are marketed widely in the
Philippines. There is no product with
the name “Isetann” popularized with that brand name in the
Philippines. Unless one goes to the
store called Isetann in Manila, he would never know what the name means. Similarly, until a Filipino buyer steps
inside a store called “Isetan” in Tokyo or Hongkong, that name would
be completely alien to him. The records
show that among Filipinos, the name cannot claim to be internationally
well-known.

The rule is that the findings of facts of the Director of Patents
are conclusive on the Supreme Court, provided they are supported by substantial
evidence. (Chua Che v. Phil. Patent
Office, 13 SCRA 67 [1965]; Chung Te v. Ng Kian Giab, 18 SCRA 747 [1966]; Marvex
Commercial Co., Inc. v. Petra Hawpia & Co., 18 SCRA 1178 [1966]; Lim Kiah
v. Kaynee, Co. 25 SCRA 485 [1968]; Kee Boc v. Dir. of Patents, 34 SCRA 570
[1970]).

The conclusions of the Director of Patents are likewise
based on applicable law and jurisprudence:

“What is to be secured from
unfair competition in a given territory
is the trade which one has in that
particular territory. There is where his business is carried on where the goodwill symbolized
by the trademark has immediate value; where the infringer may profit by
infringement.

There is nothing new in what we now say. Plaintiff itself concedes (Brief for Plaintiff-Appellant, p. 88) that the principle of territoriality of
the Trademark Law has
been recognized in the Philippines, citing Ingenohl v. Walter E. Olsen, 71 L.
ed. 762. As Callmann puts it, the law
of trademarks ‘rests upon the doctrine of nationality or territoriality.’ (2
Callmann, Unfair Competition and Trademarks, 1945 ed., p. 1006) (Sterling Products International,
Inc. v. Farbenfabriken Bayer Aktiengesellachaft,
27 SCRA 1214 [1969]; Emphasis supplied)

The mere origination or adoption of a particular tradename
without actual use thereof in the market is insufficient to give any exclusive
right to its use (Johnson Mfg.
Co. v. Leader Filling Stations Corp. 196 N.E. 852, 291 Mass.394), even though
such adoption is publicly declared, such as by use of the name in advertisements, circulars, price lists, and
on signs and stationery. (Consumers
Petroleum Co. v. Consumers Co. of ILL. 169 F 2d 153)

The Paris Convention for
the Protection of Industrial Property does not automatically exclude all
countries of the world which have signed it from using a tradename which happens to be used in one country. To illustrate – If a taxicab or bus company
in a town in the United Kingdom or India happens to use the tradename “Rapid
Transportation”, it does not
necessarily follow that “Rapid” can no longer be registered in
Uganda, Fiji, or the Philippines.

As stated by the Director
of Patents –

“Indeed, the Philippines is a signatory to this Treaty and,
hence, we must honor our obligation thereunder on matters concerning
internationally known or well known marks. However, this Treaty provision clearly indicated the conditions which
must exist before any trademark owner can claim and be afforded rights such as
the Petitioner herein seeks and those conditions are that:

a) the mark must be internationally known or well
known;

b) the subject of the right must be a trademark,
not a patent or copyright or
anything else;

c) the mark must be for use in the same or similar kinds of goods; and

d) the person claiming must be the owner of the
mark (The Parties Convention Commentary on the Paris Convention. Article by Dr. Bogach, Director General of
the World Intellectual Property Organization, Geneva, Switzerland, 1985)”

The respondent registered its trademark in 1979. It has continuously used that name in
commerce. It has established a goodwill
through extensive advertising. The
people who buy at Isetann Store do so because of Isetann’s efforts. There is no showing that the Japanese firm’s
registration in Japan or Hongkong has any influence whatsoever on the Filipino
buying public.

WHEREFORE, premises considered, the petition is hereby
DISMISSED.

SO ORDERED.

Fernan, C.J., (Chairman), Paras,
and Bidin, JJ., concur.

Padilla, J., see separate
opinion.