November 2013 Philippine Supreme Court Decisions on Civil Law

Here are select November 2013 rulings of the Supreme Court of the Philippines on civil law:

CIVIL CODE

Contracts; binding effect. It is hornbook doctrine in the law on contracts that the parties are bound by the stipulations, clauses, terms and conditions they have agreed to provided that such stipulations, clauses, terms and conditions are not contrary to law, morals, public order or public policy. Consolidated Industrial Gases, Inc. v. Alabang Medical Center, G.R. No. 181983, November 13, 2013.

Contracts; breach of; when moral damages may be awarded. In Francisco v. Ferrer,this Court ruled that moral damages may be awarded on the following bases:

To recover moral damages in an action for breach of contract, the breach must be palpably wanton, reckless, malicious, in bad faith, oppressive or abusive.

Under the provisions of this law, in culpa contractual or breach of contract, moral damages may be recovered when the defendant acted in bad faith or was guilty of gross negligence (amounting to bad faith) or in wanton disregard of his contractual obligation and, exceptionally, when the act of breach of contract itself is constitutive of tort resulting in physical injuries.

Moral damages may be awarded in breaches of contracts where the defendant acted fraudulently or in bad faith.

Bad faith does not simply connote bad judgment or negligence, it imports a dishonest purpose or some moral obliquity and conscious doing of a wrong, a breach of known duty through some motive or interest or ill will that partakes of the nature of fraud.

The person claiming moral damages must prove the existence of bad faith by clear and convincing evidence for the law always presumes good faith. It is not enough that one merely suffered sleepless nights, mental anguish, serious anxiety as the result of the actuations of the other party. Invariably such action must be shown to have been willfully done in bad faith or will ill motive. Mere allegations of besmirched reputation, embarrassment and sleepless nights are insufficient to warrant an award for moral damages. It must be shown that the proximate cause thereof was the unlawful act or omission of the [private respondent] petitioners.

An award of moral damages would require certain conditions to be met, to wit: (1) first, there must be an injury, whether physical, mental or psychological, clearly sustained by the claimant; (2) second, there must be culpable act or omission factually established; (3) third, the wrongful act or omission of the defendant is the proximate cause of the injury sustained by the claimant; and (4) fourth, the award of damages is predicated on any of the cases stated in Article 2219 of the Civil Code. Alejandro V. Tankeh v. Development Bank of the Philippines, et al., G.R. No. 171428, November 11, 2013.

Contracts; breach of; damages; exemplary damages; concept. Exemplary damages are discussed in Article 2229 of the Civil Code, as follows:

ART. 2229. Exemplary or corrective damages are imposed, by way of example or correction of the public good, in addition to moral, temperate, liquidated or compensatory damages.

Exemplary damages are further discussed in Articles 2233 and 2234, particularly regarding the pre-requisites of ascertaining moral damages and the fact that it is discretionary upon this Court to award them or not:

ART. 2233. Exemplary damages cannot be recovered as a matter of right; the court will decide whether or not they should be adjudicated.

ART. 2234. While the amount of the exemplary damages need not be proven, the plaintiff must show that he is entitled to moral, temperate or compensatory damages before the court may consider the question of whether or not exemplary damages should be awarded x x x

The purpose of exemplary damages is to serve as a deterrent to future and subsequent parties from the commission of a similar offense. The case of People v. Rante citing People v. Dalisay held that:

Also known as ‘punitive’ or ‘vindictive’ damages, exemplary or corrective damages are intended to serve as a deterrent to serious wrong doings, and as a vindication of undue sufferings and wanton invasion of the rights of an injured or a punishment for those guilty of outrageous conduct. These terms are generally, but not always, used interchangeably. In common law, there is preference in the use of exemplary damages when the award is to account for injury to feelings and for the sense of indignity and humiliation suffered by a person as a result of an injury that has been maliciously and wantonly inflicted, the theory being that there should be compensation for the hurt caused by the highly reprehensible conduct of the defendant—associated with such circumstances as willfulness, wantonness, malice, gross negligence or recklessness, oppression, insult or fraud or gross fraud—that intensifies the injury. The terms punitive or vindictive damages are often used to refer to those species of damages that may be awarded against a person to punish him for his outrageous conduct. In either case, these damages are intended in good measure to deter the wrongdoer and others like him from similar conduct in the future.

To justify an award for exemplary damages, the wrongful act must be accompanied by bad faith, and an award of damages would be allowed only if the guilty party acted in a wanton, fraudulent, reckless or malevolent manner. Alejandro V. Tankeh v. Development Bank of the Philippines, et al., G.R. No. 171428, November 11, 2013.

Contracts; fraud; concept; dolo incidente distinguished from dolo causante. In Solidbank Corporation v. Mindanao Ferroalloy Corporation, et al.,this Court elaborated on the distinction between dolo causante and dolo incidente: Fraud refers to all kinds of deception — whether through insidious machination, manipulation, concealment or misrepresentation — that would lead an ordinarily prudent person into error after taking the circumstances into account. In contracts, a fraud known as dolo causante or causal fraud is basically a deception used by one party prior to or simultaneous with the contract, in order to secure the consent of the other. Needless to say, the deceit employed must be serious. In contradistinction, only some particular or accident of the obligation is referred to by incidental fraud or dolo incidente, or that which is not serious in character and without which the other party would have entered into the contract anyway. Alejandro V. Tankeh v. Development Bank of the Philippines, et al., G.R. No. 171428, November 11, 2013.

Contracts; fraud; dolo incidente and dolo causante; effect on contracts.The distinction between fraud as a ground for rendering a contract voidable or as basis for an award of damages is provided in Article 1344: In order that fraud may make a contract voidable, it should be serious and should not have been employed by both contracting parties. Incidental fraud only obliges the person employing it to pay damages. (1270) There are two types of fraud contemplated in the performance of contracts: dolo incidente or incidental fraud and dolo causante or fraud serious enough to render a contract voidable.

This fraud or dolo which is present or employed at the time of birth or perfection of a contract may either be dolo causante or dolo incidente. The first, or causal fraud referred to in Article 1338, are those deceptions or misrepresentations of a serious character employed by one party and without which the other party would not have entered into the contract. Dolo incidente, or incidental fraud which is referred to in Article 1344, are those which are not serious in character and without which the other party would still have entered into the contract. Dolo causante determines or is the essential cause of the consent, while dolo incidente refers only to some particular or accident of the obligation. The effects of dolo causante are the nullity of the contract and the indemnification of damages, and dolo incidente also obliges the person employing it to pay damages.  Alejandro V. Tankeh v. Development Bank of the Philippines, et al., G.R. No. 171428, November 11, 2013.

Contracts; fraud; quantum of evidence required to prove existence of; clear and convincing evidence. Neither law nor jurisprudence distinguishes whether it is dolo incidente or dolo causante that must be proven by clear and convincing evidence. It stands to reason that both dolo incidente and dolo causante must be proven by clear and convincing evidence. The only question is whether this fraud, when proven, may be the basis for making a contract voidable (dolo causante), or for awarding damages (dolo incidente), or both.

The standard of proof required is clear and convincing evidence. This standard of proof is derived from American common law. It is less than proof beyond reasonable doubt (for criminal cases) but greater than preponderance of evidence (for civil cases). The degree of believability is higher than that of an ordinary civil case. Civil cases only require a preponderance of evidence to meet the required burden of proof. However, when fraud is alleged in an ordinary civil case involving contractual relations, an entirely different standard of proof needs to be satisfied. The imputation of fraud in a civil case requires the presentation of clear and convincing evidence. Mere allegations will not suffice to sustain the existence of fraud. The burden of evidence rests on the part of the plaintiff or the party alleging fraud. The quantum of evidence is such that fraud must be clearly and convincingly shown. Alejandro V. Tankeh v. Development Bank of the Philippines, et al., G.R. No. 171428, November 11, 2013.

Contracts; Reciprocal obligations; concept; for failing to perform all its correlative obligation under the reciprocal contract, a party cannot unilaterally demand performance by the other party. Reciprocal obligations are those which arise from the same cause, and in which each party is a debtor and a creditor of the other, such that the obligation of one is dependent upon the obligation of the other. They are to be performed simultaneously, so that the performance of one is conditioned upon the simultaneous fulfillment of the other.” In reciprocal obligations, neither party incurs in delay if the other does not comply or is not ready to comply in a proper manner with what is incumbent upon him. From the moment one of the parties fulfills his obligation, delay by the other begins.

In reciprocal obligations, before a party can demand the performance of the obligation of the other, the former must also perform its own obligation. Consolidated Industrial Gases, Inc. v. Alabang Medical Center, G.R. No. 181983, November 13, 2013.

Contracts; rescission; grounds. Rescission of a contract will not be permitted for a slight or casual breach, but only for such substantial and fundamental violations as would defeat the very object of the parties in making the agreement. Whether a breach is substantial is largely determined by the attendant circumstances. Consolidated Industrial Gases, Inc. v. Alabang Medical Center, G.R. No. 181983, November 13, 2013.

Damages; actual damages; concept; when awarded. For damages to be recovered, the best evidence obtainable by the injured party must be presented. Actual or compensatory damages cannot be presumed, but must be proved with reasonable degree of certainty. The Court cannot rely on speculation, conjecture or guesswork as to the fact and amount of damages, but must depend upon competent proof that they have been suffered and on evidence of the actual amount. If the proof is flimsy and unsubstantial, no damages will be awarded. Consolidated Industrial Gases, Inc. v. Alabang Medical Center, G.R. No. 181983, November 13, 2013.

Estoppel; cannot be made to apply against the government. Granting that the persons representing the government was negligent, the doctrine of estoppel cannot be taken against the Republic. It is a well-settled rule that the Republic or its government is not estopped by mistake or error on the part of its officials or agents.

In any case, even granting that the said official was negligent, the doctrine of estoppel cannot operate against the State. “It is a well-settled rule in our jurisdiction that the Republic or its government is usually not estopped by mistake or error on the part of its officials or agents (Manila Lodge No. 761 vs. CA, 73 SCRA 166, 186; Republic vs. Marcos, 52 SCRA 238, 244; Luciano vs. Estrella, 34 SCRA 769). Republic of the Philippines v. Antonio Bacas, et al., G.R. No. 182913, November 20, 2013.

Sales; sale of real property; authority of the agent must be in writing; otherwise the sale is null and void. Articles 1874 of the Civil Code provides:

Art. 1874. When a sale of a piece of land or any interest therein is through an agent, the authority of the latter shall be in writing; otherwise, the sale shall be void.

Likewise, Article 1878 paragraph 5 of the Civil Code specifically mandates that the authority of the agent to sell a real property must be conferred in writing, to wit:

Art. 1878. Special powers of attorney are necessary in the following cases:

(1) x x x

x x x

(5) To enter into any contract by which the ownership of an immovable is transmitted or acquired either gratuitously or for a valuable consideration;

x x x.

The foregoing provisions explicitly require a written authority when the sale of a piece of land is through an agent, whether the sale is gratuitously or for a valuable consideration. Absent such authority in writing, the sale is null and void. Spouses Eliseo R. Bautista and Emperatriz C. Bautista v. Spouses Mila Jalandoni and Antonio Jalandoni and Manila Credit Corporation, G.R. No. 171464/G.R. No. 199341, November 27, 2013.

Sales; sale of real property; buyer in good faith; conditions to prove good faith; failure to verify extent and nature of agent’s authority. A buyer in good faith is one who buys the property of another without notice that some other person has a right to or interest in such property. He is a buyer for value if he pays a full and fair price at the time of the purchase or before he has notice of the claim or interest of some other person in the property. “Good faith connotes an honest intention to abstain from taking unconscientious advantage of another.”To prove good faith, the following conditions must be present: (a) the seller is the registered owner of the land; (b) the owner is in possession thereof; and (3) at the time of the sale, the buyer was not aware of any claim or interest of some other person in the property, or of any defect or restriction in the title of the seller or in his capacity to convey title to the property. All these conditions must be present, otherwise, the buyer is under obligation to exercise extra ordinary diligence by scrutinizing the certificates of title and examining all factual circumstances to enable him to ascertain the seller’s title and capacity to transfer any interest in the property. Spouses Eliseo R. Bautista and Emperatriz C. Bautista v. Spouses Mila Jalandoni and Antonio Jalandoni and Manila Credit Corporation, G.R. No. 171464/G.R. No. 199341, November 27, 2013.

Sales; sale of real property on installment; grace period. Section 3(a) of R.A. 6552 provides that the total grace period corresponds to one month for every one year of installment payments made, provided that the buyer may exercise this right only once in every five years of the life of the contract and its extensions. The buyer’s failure to pay the installments due at the expiration of the grace period allows the seller to cancel the contract after 30 days from the buyer’s receipt of the notice of cancellation or demand for rescission of the contract by a notarial act.

Sale of real property on installment; cash surrender value; when the buyer is entitled thereto. Republic Act No. 6552, also known as the Maceda Law, or the Realty Installment Buyer Protection Act, has the declared public policy of “protecting buyers of real estate on installment payments against onerous and oppressive conditions.”

Section 3 of R.A. 6552 provides for the rights of a buyer who has paid at least two years of installments but defaults in the payment of succeeding installments. Section 3 provides that in all transactions or contracts involving the sale or financing of real estate on installment payments, including residential condominium apartments but excluding industrial lots, commercial buildings and sales to tenants under R.A. No. 3844, as amended by R.A. No. 6389, where the buyer has paid at least two years of installments, the buyer is entitled to the following rights in case he defaults in the payment of succeeding installments:

(a) To pay, without additional interest, the unpaid installments due within the total grace period earned by him which is hereby fixed at the rate of one month grace period for every one year of installment payments made: Provided, That this right shall be exercised by the buyer only once in every five years of the life of the contract and its extensions, if any.

(b) If the contract is cancelled, the seller shall refund to the buyer the cash surrender value of the payments on the property equivalent to fifty per cent of the total payments made, and, after five years of installments, an additional five per cent every year but not to exceed ninety per cent of the total payments made: Provided, That the actual cancellation of the contract shall take place after thirty days from receipt by the buyer of the notice of cancellation or the demand for rescission of the contract by a notarial act and upon full payment of the cash surrender value to the buyer.

Down payments, deposits or options on the contract shall be included in the computation of the total number of installment payments made. Gatchalian Realty, Inc. v. Evelyn Angeles, G.R. No. 202358, November 27, 2013.

Sales; sale of real property on installment; cancellation of; twin requirements of a notarized notice of cancellation and a refund of the cash surrender value. The Court has been consistent in ruling that a valid and effective cancellation under R.A. 6552 must comply with the mandatory twin requirements of a notarized notice of cancellation and a refund of the cash surrender value.

In Olympia Housing, Inc. v. Panasiatic Travel Corp., the Court ruled that the notarial act of rescission must be accompanied by the refund of the cash surrender value.

The actual cancellation of the contract can only be deemed to take place upon the expiry of a 30-day period following the receipt by the buyer of the notice of cancellation or demand for rescission by a notarial act and the full payment of the cash surrender value.

In Pagtalunan v. Dela Cruz Vda. De Manzano, the Court ruled that there is no valid cancellation of the Contract to Sell in the absence of a refund of the cash surrender value. It stated that “Sec. 3 (b) of R.A. No. 6552 requires refund of the cash surrender value of the payments on the property to the buyer before cancellation of the contract. The provision does not provide a different requirement for contracts to sell which allow possession of the property by the buyer upon execution of the contract like the instant case. Hence, petitioner cannot insist on compliance with the requirement by assuming that the cash surrender value payable to the buyer had been applied to rentals of the property after respondent failed to pay the installments due.” Gatchalian Realty, Inc. v. Evelyn Angeles, G.R. No. 202358, November 27, 2013.
SPECIAL LAWS

Land registration; application for land registration requires that the names and addresses of all adjoining owners and occupants be stated, if known, and if not known, to state the search made to find them; omission thereof constitutes fraud. The governing rule in the application for registration of lands at that time was Section 21 of Act 496 which provided for the form and content of an application for registration, and it provides that the application shall be in writing, signed and sworn to by applicant, or by some person duly authorized in his behalf. It shall also state the name in full and the address of the applicant, and also the names and addresses of all adjoining owners and occupants, if known; and, if not known, it shall state what search has been made to find them.

The reason behind the law was explained in the case of Fewkes vs. Vasquez,where it was noted that under Section 21 of the Land Registration Act an application for registration of land is required to contain, among others, a description of the land subject of the proceeding, the name, status and address of the applicant, as well as the names and addresses of all occupants of the land and of all adjoining owners, if known, or if unknown, of the steps taken to locate them. When the application is set by the court for initial hearing, it is then that notice (of the hearing), addressed to all persons appearing to have an interest in the lot being registered and the adjoining owners, and indicating the location, boundaries and technical description of the land being registered, shall be published in the Official Gazette for two consecutive times. It is this publication of the notice of hearing that is considered one of the essential bases of the jurisdiction of the court in land registration cases, for the proceedings being in rem, it is only when there is constructive seizure of the land, effected by the publication and notice, that jurisdiction over the res is vested on the court. Furthermore, it is such notice and publication of the hearing that would enable all persons concerned, who may have any rights or interests in the property, to come forward and show to the court why the application for registration thereof is not to be granted.Republic of the Philippines v. Antonio Bacas, et al., G.R. No. 182913, November 20, 2013.

Land registration; any title to inalienable public land is void ab initio; all proceedings of the Land Registration Court involving the such property is without legal effect, hence cannot attain finality. In Collado v. Court of Appeals and the Republic, the Court declared that any title to an inalienable public land is void ab initio. Any procedural infirmities attending the filing of the petition for annulment of judgment are immaterial since the LRC never acquired jurisdiction over the property. All proceedings of the LRC involving the property are null and void and, hence, did not create any legal effect. A judgment by a court without jurisdiction can never attain finality. The Land Registration Court has no jurisdiction over non-registrable properties, such as public navigable rivers which are parts of the public domain, and cannot validly adjudge the registration of title in favor of private applicant. Republic of the Philippines v. Antonio Bacas, et al., G.R. No. 182913, November 20, 2013.

Land registration; confirmation and registration of imperfect and incomplete title; qualifications. C.A. No. 141 governs the classification and disposition of lands of the public domain. Section 11 of C.A. No. 141 provides, as one of the modes of disposing public lands that are suitable for agriculture, the “confirmation of imperfect or incomplete titles.” Section 48, on the other hand, enumerates those who are considered to have acquired an imperfect or incomplete title over public lands and, therefore, entitled to confirmation and registration under the Land Registration Act.

As amended by P.D. No. 1073 on January 25, 1977, Section 48(b) of C.A. No. 141 provides:

Section 48. The following described citizens of the Philippines, occupying lands of the public domain or claiming to own any such lands or an interest therein, but whose titles have not been perfected or completed, may apply to the Court of First Instance [now Regional Trial Court] of the province where the land is located for confirmation of their claims and the issuance of a certificate of title therefor, under the Land Registration Act, to wit:

x x x x

(b) Those who by themselves or through their predecessors-in-interest have been in open, continuous, exclusive, and notorious possession and occupation of agricultural lands of the public domain, under a bona fide claim of acquisition or ownership, since June 12, 1945, or earlier, immediately preceding the filing of the application for confirmation of title except when prevented by war or force majeure. These shall be conclusively presumed to have performed all the conditions essential to a Government grant and shall be entitled to a certificate of title under the provisions of this chapter.

Prior to the amendment introduced by P.D. No. 1073, Section 48(b) of C.A. No. 141, then operated under the Republic Act (R.A.) No. 1942 (June 22, 1957) amendment, which reads:

(b) Those who by themselves or through their predecessors-in-interest have been in open, continuous, exclusive and notorious possession and occupation of agricultural lands of the public domain, under a bona fide claim of acquisition or ownership, for at least thirty years, immediately preceding the filing of the application for confirmation of title except when prevented by war or force majeure. These shall be conclusively presumed to have performed all the conditions essential to a Government grant and shall be entitled to a certificate of title under the provisions of this chapter.

xxx

In relation to C.A. No. 141, Section 14 of Presidential Decree P.D.) No. 1529 or the Property Registration Decree specifies those who are qualified to register their incomplete title over an alienable and disposable public land under the Torrens system. P.D. No. 1529, which was approved on June 11, 1978, superseded and codified all laws relative to the registration of property.

The pertinent portion of Section 14 of P.D. No. 1529 reads:

Section 14. Who may apply. The following persons may file in the proper Court of First Instance [now Regional Trial Court] an application for registration of title to land, whether personally or through their duly authorized representatives:

(1) Those who by themselves or through their predecessors-in-interest have been in open, continuous, exclusive and notorious possession and occupation of alienable and disposable lands of the public domain under a bona fide claim of ownership since June 12, 1945, or earlier.

Roman Catholic Archbishop of Manila v. Cresencia Sta. Teresa Ramos, assisted by her husband, Ponciano Francisco, G.R. No. 179181, November 18, 2013.

Land registration; confirmation and registration of imperfect and incomplete title; open, continuous, exclusive and notorious possession. The possession contemplated by Section 48(b) of C.A. No. 141 is actual, not fictional or constructive. In Carlos v Republic of the Philippines,the Court explained the character of the required possession, as follows:

The law speaks of possession and occupation. Since these words are separated by the conjunction and, the clear intention of the law is not to make one synonymous with the other. Possession is broader than occupation because it includes constructive possession. When, therefore, the law adds the word occupation, it seeks to delimit the all-encompassing effect of constructive possession. Taken together with the words open, continuous, exclusive and notorious, the word occupation serves to highlight the fact that for an applicant to qualify, his possession must not be a mere fiction. Actual possession of a land consists in the manifestation of acts of dominion over it of such a nature as a party would naturally exercise over his own property.

Proof of actual possession of the property at the time of the filing of the application is required because the phrase adverse, continuous, open, public, and in concept of owner,” the RCAM used to describe its alleged possession, is a conclusion of law,not an allegation of fact. Possession is open when it is patent, visible, apparent [and] notorious x x x continuous when uninterrupted, unbroken and not intermittent or occasional; exclusive when [the possession is characterized by acts manifesting] exclusive dominion over the land and an appropriation of it to [the applicant’s] own use and benefit; and notorious when it is so conspicuous that it is generally known and talked of by the public or the people in the neighborhood.”Roman Catholic Archbishop of Manila v. Cresencia Sta. Teresa Ramos, assisted by her husband, Ponciano Francisco, G.R. No. 179181, November 18, 2013.
Land registration; lands forming part of a military reservation are inalienable, hence not registrable. The law governing the applications was Commonwealth Act (C.A.) No. 141,as amended by RA 1942, particularly Sec. 48(b) which provided that those who by themselves or through their predecessors in interest have been in open, continuous, exclusive and notorious possession and occupation of agricultural lands of the public domain, under a bona fide claim of acquisition of ownership, for at least thirty years immediately preceding the filing of the application for confirmation of title except when prevented by war or force majeure. These shall be conclusively presumed to have performed all the conditions essential to a Government grant and shall be entitled to a certificate of title under the provisions of this chapter.

As can be gleaned therefrom, the necessary requirements for the grant of an application for land registration are the following:

1. The applicant must, by himself or through his predecessors-in-interest, have been in possession and occupation of the subject land;

2. The possession and occupation must be open, continuous, exclusive and notorious;

3. The possession and occupation must be under a bona fide claim of ownership for at least thirty years immediately preceding the filing of the application; and

4. The subject land must be an agricultural land of the public domain. As earlier stated, in 1938, President Quezon issued Presidential Proclamation No. 265, which took effect on March 31, 1938, reserving for the use of the Philippine Army parcels of the public domain situated in the barrios of Bulua and Carmen, then Municipality of Cagayan, Misamis Oriental. The subject parcels of land were withdrawn from sale or settlement or reserved for military purposes, “subject to private rights, if any there be.”

Such power of the President to segregate lands was provided for in Section 64(e) of the old Revised Administrative Code and C.A. No. 141 or the Public Land Act. Later, the power of the President was restated in Section 14, Chapter 4, Book III of the 1987 Administrative Code. When a property is officially declared a military reservation, it becomes inalienable and outside the commerce of man.It may not be the subject of a contract or of a compromise agreement. A property continues to be part of the public domain, not available for private appropriation or ownership, until there is a formal declaration on the part of the government to withdraw it from being such. In the case of Republic v. Court of Appeals and De Jesus, it was even stated that

Lands covered by reservation are not subject to entry, and no lawful settlement on them can be acquired.The claims of persons who have settled on, occupied, and improved a parcel of public land which is later included in a reservation are considered worthy of protection and are usually respected, but where the President, as authorized by law, issues a proclamation reserving certain lands and warning all persons to depart therefrom, this terminates any rights previously acquired in such lands by a person who was settled thereon in order to obtain a preferential right of purchase. And patents for lands which have been previously granted, reserved from sale, or appropriate, are void. Republic of the Philippines v. Antonio Bacas, et al., G.R. No. 182913, November 20, 2013.

Trademark registration; not a mode of acquiring ownership but merely creates presumption of the validity of the registration, of the registrant’s ownership of the trademark and of the exclusive right to the use thereof. It must be emphasized that registration of a trademark, by itself, is not a mode of acquiring ownership.If the applicant is not the owner of the trademark, he has no right to apply for its registration. Registration merely creates a prima facie presumption of the validity of the registration, of the registrant’s ownership of the trademark, and of the exclusive right to the use thereof. Such presumption, just like the presumptive regularity in the performance of official functions, is rebuttable and must give way to evidence to the contrary.

Clearly, it is not the application or registration of a trademark that vests ownership thereof, but it is the ownership of a trademark that confers the right to register the same. A trademark is an industrial property over which its owner is entitled to property rights which cannot be appropriated by unscrupulous entities that, in one way or another, happen to register such trademark ahead of its true and lawful owner. The presumption of ownership accorded to a registrant must then necessarily yield to superior evidence of actual and real ownership of a trademark.

The Court’s pronouncement in Berris Agricultural Co., Inc. v. Abyadang is instructive on this point:

The ownership of a trademark is acquired by its registration and its actual use by the manufacturer or distributor of the goods made available to the purchasing public. x x x A certificate of registration of a mark, once issued, constitutes prima facie evidence of the validity of the registration, of the registrant’s ownership of the mark, and of the registrant’s exclusive right to use the same in connection with the goods or services and those that are related thereto specified in the certificate. x x x In other words, the prima facie presumption brought about by the registration of a mark may be challenged and overcome in an appropriate action, x x x by evidence of prior use by another person, i.e. , it will controvert a claim of legal appropriation or of ownership based on registration by a subsequent user. This is because a trademark is a creation of use and belongs to one who first used it in trade or commerce.

Birkenstock Orthopaedi GmBH and Co. Kg, etc. v. Philippine Shoe Expo Marketing Corp., G.R. No. 194307, November 20, 2013.

 

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