134 vs 151

Section 134. Opposition. - Any person who believes that he would be damaged by the
registration of a mark may, upon payment of the required fee and within thirty (30) days
after the publication referred to in Subsection 133.2, file with the Office an opposition to
the application. Such opposition shall be in writing and verified by the oppositor or by
any person on his behalf who knows the facts, and shall specify the grounds on which it
is based and include a statement of the facts relied upon. Copies of certificates of
registration of marks registered in other countries or other supporting documents
mentioned in the opposition shall be filed therewith, together with the translation
in English, if not in the English language. For good cause shown and upon payment
of the required surcharge, the time for filing an opposition may be extended by the
Director of Legal Affairs, who shall notify the applicant of such extension. The
Regulations shall fix the maximum period of time within which to file the opposition.
(Sec. 8, R.A. No. 165a)

SECTION 151. Cancellation. —

151.1. A petition to cancel a registration of a mark under this Act may be filed with the
Bureau of Legal Affairs by any person who believes that he is or will be damaged by the
registration of a mark under this Act as follows:

a. Within five (5) years from the date of the registration of the mark under this Act.

b. At any time, if the registered mark becomes the generic name for the goods or
services, or a portion thereof, for which it is registered, or has been abandoned, or its
registration was obtained fraudulently or contrary to the provisions of this Act, or if the
registered mark is being used by, or with the permission of, the registrant so as to
misrepresent the source of the goods or services on or in connection with which the
mark is used. If the registered mark becomes the generic name for less than all of the
goods or services for which it is registered, a petition to cancel the registration for only
those goods or services may be filed. A registered mark shall not be deemed to be the
generic name of goods or services solely because such mark is also used as a name of
or to identify a unique product or service. The primary significance of the registered
mark to the relevant public rather than purchaser motivation shall be the test for
determining whether the registered mark has become the generic name of goods or
services on or in connection with which it has been used.

c. At any time, if the registered owner of the mark without legitimate reason fails to use
the mark within the Philippines, or to cause it to be used in the Philippines by virtue of a
license during an uninterrupted period of three (3) years or longer.

151.2. 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. (Sec. 17, R.A.
No. 166a)

SIMILARITIES
File by any person who OPPOSITION
believes that he is or will be
damaged by the registration of
a mark.
DISSIMILARITIES
Within 30 days after
publication
Requirements: Copies of
certificates of registration
of marks registered in
other countries or other
supporting documents
mentioned in the
opposition shall be filed
therewith, together with
the translation in English,
if not in the English
language
CANCELLATION
Within 5 years from date
of registration
Requirements when to
file:
1. Registered mark
becomes the generic
name for the goods or
services, or a portion
thereof, for which it is
registered.
2. Has been abandoned

3. registration was
obtained fraudulently or
contrary to the provisions
of this Act

4. registered mark is
being used by, or with the
permission

5. registered mark
becomes the generic
name for less than all of
the goods or services for
which it is registered
The registered owner of
the mark without
legitimate reason fails to
use the mark within the
 Philippines, or to cause it
to be used in the
Philippines by virtue of a
license during an
uninterrupted period of
three (3) years or longer.

155 vs 168

SECTION 155. Remedies; Infringement. — Any person who shall, without the consent
of the owner of the registered mark:

155.1. Use in commerce any reproduction, counterfeit, copy, or colorable imitation

of a registered mark or the same container or a dominant feature thereof in
connection with the sale, offering for sale, distribution, advertising of any goods
or services including other preparatory steps necessary to carry out the sale of
any goods or services on or in connection with which such use is likely to cause
confusion, or to cause mistake, or to deceive; or

155.2. Reproduce, counterfeit, copy or colorably imitate a registered mark or a dominant

feature thereof and apply such reproduction, counterfeit, copy or colorable
imitation to labels, signs, prints, packages, wrappers, receptacles or
advertisements intended to be used in commerce upon or in connection with the
sale, offering for sale, distribution, or advertising of goods or services on or in
connection with which such use is likely to cause confusion, or to cause mistake, or
to deceive, shall be liable in a civil action for infringement by the registrant for the
remedies hereinafter set forth: Provided, That the infringement takes place at the
moment any of the acts stated in Subsection 155.1 or this subsection are committed
regardless of whether there is actual sale of goods or services using the infringing
material. (Sec. 22, R.A. No 166a)

SECTION 168. Unfair Competition, Rights, Regulation and Remedies. —

168.1. A person who has identified in the mind of the public the goods he manufactures
or deals in, his business or services from those of others, whether or not a registered
mark is employed, has a property right in the goodwill of the said goods, business
or services so identified, which will be protected in the same manner as other
property rights.

168.2. Any person who shall employ deception or any other means contrary to good
faith by which he shall pass off the goods manufactured by him or in which he deals, or
his business, or services for those of the one having established such goodwill , or who
shall commit any acts calculated to produce said result, shall be guilty of unfair
competition, and shall be subject to an action therefor.

168.3. In particular, and without in any way limiting the scope of protection against
unfair competition, the following shall be deemed guilty of unfair competition:

a. Any person, who is selling his goods and gives them the general appearance of
goods of another manufacturer or dealer, either as to the goods themselves or in the
wrapping of the packages in which they are contained, or the devices or words thereon,
or in any other feature of their appearance, which would be likely to influence
purchasers to believe that the goods offered are those of a manufacturer or dealer,
other than the actual manufacturer or dealer, or who otherwise clothes the goods with
such appearance as shall deceive the public and defraud another of his legitimate
trade, or any subsequent vendor of such goods or any agent of any vendor engaged in
selling such goods with a like purpose;

b. Any person who by any artifice, or device, or who employs any other means
calculated to induce the false belief that such person is offering the services of
another who has identified such services in the mind of the public; or

c. Any person who shall make any false statement in the course of trade or who
shall commit any other act contrary to good faith of a nature calculated to discredit the
goods, business or services of another. 168.4. The remedies provided by Sections
156, 157 and 161 shall apply mutatis mutandis. (Sec. 29, R.A. No. 166a)

159.3

159.3. Where the infringement complained of is contained in or is part of paid

advertisement in a newspaper, magazine, or other similar periodical or in an electronic
communication, the remedies of the owner of the right infringed as against the publisher
or distributor of such newspaper, magazine, or other similar periodical or electronic
communication shall be limited to an injunction against the presentation of such
advertising matter in future issues of such newspapers, magazines, or other similar
periodicals or in future transmissions of such electronic communications. The limitations
of this subparagraph shall apply only to innocent infringers: Provided, That such
injunctive relief shall not be available to the owner of the right infringed with respect to
an issue of a newspaper, magazine, or other similar periodical or an electronic
communication containing infringing matter where restraining the dissemination of such
infringing matter in any particular issue of such periodical or in an electronic
communication would delay the delivery of such issue or transmission of such electronic
communication is customarily conducted in accordance with the sound business
practice, and not due to any method or device adopted to evade this section or to
prevent or delay the issuance of an injunction or restraining order with respect to such
infringing matter. (n)

165

SECTION 165. Trade Names or Business Names. —

165.1. A name or designation may not be used as a trade name if by its nature or the
use to which such name or designation may be put, it is contrary to public order or
morals and if, in particular, it is liable to deceive trade circles or the public as to the
nature of the enterprise identified by that name.

165.2. a. Notwithstanding any laws or regulations providing for any obligation to register
trade names, such names shall be protected, even prior to or without registration,
against any unlawful act committed by third parties. b. In particular, any subsequent use
of the trade name by a third party, whether as a trade name or a mark or collective
mark, or any such use of a similar trade name or mark, likely to mislead the public, shall
be deemed unlawful.

165.3. The remedies provided for in Sections 153 to 156 and Sections 166 and 167
shall apply mutatis mutandis.

165.4. Any change in the ownership of a trade name shall be made with the transfer of
the enterprise or part thereof identified by that name. The provisions of Subsections
149.2 to 149.4 shall apply mutatis mutandis

169

SECTION 169. False Designations of Origin; False Description or Representation. —

169.1. Any person who, on or in connection with any goods or services, or any
container for goods, uses in commerce any word, term, name, symbol, or device, or any
combination thereof, or any false designation of origin, false or misleading description of
fact, or false or misleading representation of fact, which:

a. Is likely to cause confusion, or to cause mistake, or to deceive as to the affiliation,

connection, or association of such person with another person, or as to the origin,
sponsorship, or approval of his or her goods, services, or commercial activities by
another person; or

b. In commercial advertising or promotion, misrepresents the nature, characteristics,

qualities, or geographic origin of his or her or another person's goods, services, or
commercial activities, shall be liable to a civil action for damages and injunction
provided in Sections 156 and 157 of this Act by any person who believes that he or she
is or is likely to be damaged by such act.

169.2. Any goods marked or labelled in contravention of the provisions of this Section
shall not be imported into the Philippines or admitted entry at any customhouse of the
Philippines. The owner, importer, or consignee of goods refused entry at any
customhouse under this section may have any recourse under the customs revenue
laws or may have the remedy given by this Act in cases involving goods refused entry
or seized. (Sec. 30, R.A. No. 166a)

Shang Properties Corp vs ST. Francis Development Corp.

Assailed in this petition for review on certiorari 1 is the Decision2 dated December 18,
2009 of the Court of Appeals (CA) in CA-G.R. SP No. 105425 which affirmed with
modification the Decision3 dated September 3, 2008 of the Intellectual Property Office
(IPO) Director-General. The CA: (a) affirmed the denial of the application for registration
of the mark "ST. FRANCIS TOWERS" filed by petitioners Shang Properties Realty
Corporation and Shang Properties, Inc. (petitioners); ( b) found petitioners to have
committed unfair competition for using the marks "THE ST. FRANCIS TOWERS" and
"THE ST. FRANCIS SHANGRI-LA PLACE"; (c) ordered petitioners to cease and desist
from using "ST. FRANCIS" singly or as part of a composite mark; and (d) ordered
petitioners to jointly and severally pay respondent St. Francis Square Development
Corporation (respondent) a fine in the amount of ₱200,000.00.

The Facts

Respondent – a domestic corporation engaged in the real estate business and the
developer of the St. Francis Square Commercial Center, built sometime in 1992, located
at Ortigas Center, Mandaluyong City, Metro Manila (Ortigas Center) 4 – filed separate
complaints against petitioners before the IPO - Bureau of Legal Affairs (BLA), namely:
(a) an intellectual property violation case for unfair competition, false or fraudulent
declaration, and damages arising from petitioners’ use and filing of applications for the
registration of the marks "THE ST. FRANCIS TOWERS" and "THE ST. FRANCIS
SHANGRI-LA PLACE," docketed as IPV Case No. 10-2005-00030 (IPV Case); and (b)
an inter partes case opposing the petitioners’ application for registration of the mark
"THE ST. FRANCIS TOWERS" for use relative to the latter’s business, particularly the
construction of permanent buildings or structures for residential and office purposes,
docketed as Inter PartesCase No. 14-2006-00098 (St. Francis Towers IP Case); and (c)
an inter partes case opposing the petitioners’ application for registration of the mark
"THE ST. FRANCIS SHANGRI-LA PLACE," docketed as IPC No. 14-2007-00218 (St.
Francis Shangri-La IP Case).5

In its complaints, respondent alleged that it has used the mark "ST. FRANCIS" to
identify its numerous property development projects located at Ortigas Center, such as
the aforementioned St. Francis Square Commercial Center, a shopping mall called the
"St. Francis Square," and a mixed-use realty project plan thatincludes the St. Francis
Towers. Respondent added that as a result of its continuous use of the mark "ST.
FRANCIS" in its real estate business,it has gained substantial goodwill with the public
that consumers and traders closely identify the said mark with its property development
projects. Accordingly, respondent claimed that petitioners could not have the mark "THE
ST. FRANCIS TOWERS" registered in their names, and that petitioners’ use of the
marks "THE ST. FRANCIS TOWERS" and "THE ST. FRANCIS SHANGRI-LA PLACE"
in their own real estate development projects constitutes unfair competition as well as
false or fraudulent declaration.6

Petitioners denied committing unfair competition and false or fraudulent declaration,

maintaining that they could register the mark "THE ST. FRANCIS TOWERS" and "THE
ST. FRANCIS SHANGRI-LA PLACE" under their names. They contended that
respondent is barred from claiming ownership and exclusive use ofthe mark "ST.
FRANCIS" because the same is geographically descriptive ofthe goods or services for
which it is intended to be used. 7 This is because respondent’s as well as petitioners’ real
estate development projects are locatedalong the streets bearing the name "St.
Francis," particularly, St. FrancisAvenue and St. Francis Street (now known as Bank
Drive),8 both within the vicinity of the Ortigas Center.

The BLA Rulings

On December 19, 2006, the BLA rendered a Decision 9 in the IPV Case, and found that
petitioners committed acts of unfair competition against respondent by its use of the
mark "THE ST. FRANCIS TOWERS" but not with its use of the mark "THE ST.
FRANCIS SHANGRI-LA PLACE." It, however, refused to award damages in the latter’s
favor, considering that there was no evidence presented to substantiate the amount of
damages it suffered due to the former’s acts. The BLA found that "ST. FRANCIS," being
a name of a Catholic saint, may be considered as an arbitrary mark capable of
registration when used in real estate development projects as the name has no direct
connection or significance when used in association with real estate. The BLA neither
deemed "ST. FRANCIS" as a geographically descriptive mark, opiningthat there is no
specific lifestyle, aura, quality or characteristic that the real estate projects possess
except for the fact that they are located along St. Francis Avenueand St. Francis Street
(now known as Bank Drive), Ortigas Center. In this light, the BLA found that while
respondent’s use of the mark "ST. FRANCIS" has not attained exclusivity considering
that there are other real estate development projects bearing the name "St. Francis" in
other areas,10 it must nevertheless be pointed out that respondent has been known to
be the only real estate firm to transact business using such name within the Ortigas
Center vicinity. Accordingly, the BLA considered respondent to have gained goodwill
and reputation for its mark, which therefore entitles it to protection against the use by
other persons, at least, to those doing business within the Ortigas Center. 11

Meanwhile, on March 28, 2007, the BLA rendered a Decision 12 in the St. Francis
Towers IP Case, denying petitioners’ application for registration of the mark "THE ST.
FRANCIS TOWERS." Excluding the word "TOWERS" in view of petitioners’ disclaimer
thereof, the BLA ruled that petitioners cannot register the mark "THE ST. FRANCIS"
since it is confusingly similar to respondent’s"ST. FRANCIS" marks which are registered
with the Department of Trade and Industry(DTI). It held that respondent had a better
right over the use of the mark "ST. FRANCIS" because of the latter’s appropriation and
continuous usage thereof for a long period of time. 13 A little over a year after, or on
March 31, 2008, the BLA then rendered a Decision 14 in the St. Francis Shangri-La IP
Case, allowing petitioners’ application for registration of the mark "THE ST. FRANCIS
SHANGRI-LA PLACE." It found that respondent cannot preclude petitioners from using
the mark "ST. FRANCIS" as the records show that the former’s use thereof had not
been attended with exclusivity. More importantly, it found that petitioners had
adequately appended the word "Shangri-La" to its composite mark to distinguish it from
that of respondent, in which case, the former had removed any likelihood of confusion
that may arise from the contemporaneous use by both parties of the mark "ST.
FRANCIS."

Both parties appealed the decision in the IPV Case, while petitioners appealed the
decision in the St. Francis Towers IP Case. Due to the identity of the parties and issues
involved, the IPO Director-General ordered the consolidation of the separate
appeals.15 Records are, however, bereft of any showing that the decision in the St.
Francis Shangri-La IP Casewas appealed by either party and, thus, is deemed to have
lapsed into finality.

The IPO Director-General Ruling

In a Decision16 dated September 3, 2008, then IPO Director-General Adrian S.

Cristobal, Jr. affirmedthe rulings of the BLA that: (a) petitioners cannot register the mark
"THEST. FRANCIS TOWERS"; and (b) petitioners are not guilty of unfair competition in
its use of the mark "THE ST. FRANCIS SHANGRI-LA PLACE." However, the IPO
DirectorGeneral reversed the BLA’s findingthat petitioners committed unfair competition
through their use of the mark "THE ST. FRANCIS TOWERS," thus dismissing such
charge. He foundthat respondent could not be entitled to the exclusive use of the mark
"ST. FRANCIS," even at least to the locality where it conducts its business, because it is
a geographically descriptive mark, considering that it was petitioners’ as well as
respondent’s intention to use the mark "ST. FRANCIS"in order to identify, or at least
associate, their real estate development projects/businesses with the place or location
where they are situated/conducted, particularly, St. Francis Avenue and St. Francis
Street (now known as Bank Drive), Ortigas Center. He further opined that respondent’s
registration of the name "ST. FRANCIS" with the DTI is irrelevant since what should be
controlling are the trademark registrations with the IPO itself. 17 Also, the IPO Director-
General held that since the parties are both engaged in the real estate business, it
would be "hard to imagine that a prospective buyer will be enticed to buy, rent or
purchase [petitioners’] goods or servicesbelieving that this is owned by [respondent]
simply because of the name ‘ST. FRANCIS.’ The prospective buyer would necessarily
discuss things with the representatives of [petitioners] and would readily know that this
does not belong to [respondent]."18

Disagreeing solely with the IPO Director-General’s ruling on the issue of unfair
competition (the bone of contention in the IPV Case), respondent elevated the sameto
the CA.

In contrast, records do not show that either party appealed the IPO Director-General’s
ruling on the issue ofthe registrability of the mark "THE ST. FRANCIS TOWERS" (the
bone of contention in the St. Francis Towers IP Case). As such, said pronouncement
isalso deemed to have lapsed into finality.

The CA Ruling

In a Decision19 dated December 18, 2009, the CA found petitioners guilty of unfair

competition not only withrespect to their use of the mark "THE ST. FRANCIS TOWERS"
but alsoof the mark "THE ST. FRANCIS SHANGRI-LA PLACE." Accordingly, itordered
petitioners to cease and desist from using "ST. FRANCIS" singly or as part of a
composite mark, as well as to jointly and severally pay respondent a fine in the amount
of ₱200,000.00.

The CA did not adhere to the IPO Director-General’s finding that the mark "ST.
FRANCIS" is geographically descriptive, and ruled that respondent – which has
exclusively and continuously used the mark "ST. FRANCIS" for more than a decade,
and,hence, gained substantial goodwill and reputation thereby – is very muchentitled to
be protected against the indiscriminate usage by other companies of the
trademark/name it has so painstakingly tried to establish and maintain. Further, the CA
stated that even on the assumption that "ST. FRANCIS" was indeed a geographically
descriptive mark, adequateprotection must still begiven to respondent pursuant to the
Doctrine of Secondary Meaning.20

Dissatisfied, petitioners filed the present petition.

The Issue Before the Court

With the decisions in both Inter PartesCases having lapsed into finality, the sole issue
thus left for the Court’s resolution is whether or not petitioners are guilty of unfair
competition in using the marks "THE ST. FRANCIS TOWERS" and "THE ST. FRANCIS
SHANGRI-LA PLACE."

The Court’s Ruling

The petition is meritorious.

Section 168 of Republic Act No. 8293, 21 otherwise known as the "Intellectual Property
Code of the Philippines" (IP Code), provides for the rules and regulations on unfair
competition.

To begin, Section 168.1 qualifies who is entitled to protection against unfair competition.
It states that "[a]person who has identified in the mind of the public the goods he
manufacturesor deals in, his business or services from those of others, whether or not a
registered mark is employed, has a property right in the goodwill of the said goods,
business or services so identified, which will be protected inthe same manner as other
property rights."

Section 168.2proceeds to the core of the provision, describing forthwith who may be
found guilty of and subject to an action of unfair competition – that is, "[a]ny person who
shall employ deception or any other means contrary to good faith by which he shall
pass off the goods manufactured by him or in which he deals, or his business, or
services for those of the one having established such goodwill, or who shall commit any
acts calculated to produce said result x x x."

Without limiting its generality, Section 168.3goes on to specify examples of acts which
are considered as constitutive of unfair competition, viz.:

168.3. In particular, and without in any way limiting the scope of protection against
unfair competition, the following shall be deemed guilty of unfair competition:

(a) Any person who is selling his goods and gives them the general appearance
of goods of another manufacturer or dealer, either as to the goods themselves or
in the wrapping of the packages in which they are contained, or the devices or
words thereon, or in any other feature of their appearance, which would be likely
to influence purchasers to believe that the goods offered are those of a
manufacturer or dealer, other than the actual manufacturer or dealer, or who
otherwise clothes the goods with such appearance as shall deceive the public
and defraud another of his legitimate trade, or any subsequent vendor ofsuch
goods or any agent of any vendor engaged in selling such goods with a like
purpose;

(b) Any person who by any artifice, or device, or who employs any other means
calculated to induce the false belief that such person is offering the service of
another who has identified such services in the mind of the public; or

(c) Any person who shall make any false statement in the course of trade or who
shall commit any other act contrary to good faith of a nature calculated to
discredit the goods, business or services of another.
Finally, Section 168.4 dwells on a matter of procedure by stating that the "[t]he remedies
provided by Sections 156,22 157,23 and 16124 shall apply mutatis mutandis."

The statutory attribution of the unfair competition concept is wellsupplemented by

jurisprudential pronouncements. In the recent case of Republic Gas Corporation v.
Petron Corporation,25 the Court has echoed the classic definition of the term which is
"‘the passing off (or palming off) or attempting to pass off upon the public of the goods
or business of one person as the goods or business of another with the end and
probable effect of deceiving the public.’ Passing off (or palming off) takes place where
the defendant, by imitative devices on the general appearance of the goods, misleads
prospective purchasers into buying his merchandise under the impression that they are
buying that of his competitors. [In other words], the defendant gives his goods the
general appearance of the goods of his competitor with the intention of deceiving the
publicthat the goods are those of his competitor." 26 The "true test" of unfair competition
has thus been "whether the acts of the defendant have the intent of deceiving or are
calculated to deceive the ordinary buyer making his purchases under the ordinary
conditions of theparticular trade to which the controversy relates." Based on the
foregoing, it is therefore essential to prove the existence of fraud, or the intent to
deceive, actual or probable,27 determined through a judicious scrutiny of the factual
circumstances attendant to a particular case. 28

Here, the Court finds the element of fraud to be wanting; hence, there can be no unfair
competition. The CA’scontrary conclusion was faultily premised on its impression that
respondenthad the right to the exclusive use of the mark "ST. FRANCIS," for which the
latter had purportedly established considerable goodwill. What the CA appears to have
disregarded or been mistaken in its disquisition, however, is the
geographicallydescriptive nature of the mark "ST. FRANCIS" which thus bars its
exclusive appropriability, unless a secondary meaning is acquired. As deftly explained
in the U.S. case of Great Southern Bank v. First Southern Bank: 29 "[d]escriptive
geographical terms are inthe ‘public domain’ in the sense that every seller should have
the right to inform customers of the geographical origin of his goods. A ‘geographically
descriptive term’ is any noun or adjective that designates geographical location and
would tend to be regarded by buyers as descriptive of the geographic location of origin
of the goods or services. A geographically descriptive term can indicate any geographic
location on earth, such as continents, nations, regions, states, cities, streets and
addresses, areas of cities, rivers, and any other location referred to by a recognized
name. In order to determine whether or not the geographic term in question is
descriptively used, the following question is relevant: (1) Is the mark the name of the
place or region from which the goods actually come? If the answer is yes, then the
geographic term is probably used in a descriptive sense, and secondary meaning is
required for protection."30

In Burke-Parsons-Bowlby Corporation v. Appalachian Log Homes, Inc., 31 it was held

that secondary meaningis established when a descriptive mark no longer causes the
public to associate the goods with a particular place, but to associate the goods with a
particular source.In other words, it is not enough that a geographically-descriptive mark
partakes of the name of a place known generally to the public to be denied registration
as it is also necessary to show that the public would make a goods/place association –
that is, to believe that the goods for which the mark is sought to be registered originatein
that place.1âwphi1 To hold sucha belief, it is necessary, of course, that the purchasers
perceive the mark as a place name, from which the question of obscurity or remoteness
then comes to the fore.32 The more a geographical area is obscure and remote, it
becomes less likely that the public shall have a goods/place association with such area
and thus, the mark may not be deemed as geographically descriptive. However, where
there is no genuine issue that the geographical significance of a term is its primary
significanceand where the geographical place is neither obscure nor remote, a public
association of the goods with the place may ordinarily be presumed from the fact that
the applicant’s own goods come from the geographical place named in the mark. 33

Under Section 123.234 of the IP Code, specific requirements have to be met in order to
conclude that a geographically-descriptive mark has acquired secondary meaning, to
wit: (a) the secondary meaning must have arisen as a result of substantial commercial
use of a mark in the Philippines; (b) such use must result in the distinctiveness of the
mark insofar as the goods or theproducts are concerned; and (c) proof of substantially
exclusive and continuous commercial use in the Philippines for five (5) years beforethe
date on which the claim of distinctiveness is made. Unless secondary meaning has
been established, a geographically-descriptive mark, dueto its general public domain
classification, is perceptibly disqualified from trademark registration. Section 123.1(j) of
the IP Code states this rule as follows:

SEC. 123. Registrability. –

123.1 A mark cannot be registered if it:

xxxx

(j) Consists exclusively of signs orof indications that may serve in trade to designate the
kind, quality, quantity, intended purpose, value, geographical origin, time or production
of the goods or rendering of the services, or other characteristics of the goods or
services; (Emphasis supplied) x x x x

Cognizant of the foregoing, the Court disagrees with the CA that petitioners committed
unfair competition due to the mistaken notion that petitioner had established goodwill for
the mark "ST. FRANCIS" precisely because said circumstance, by and of itself, does
not equateto fraud under the parameters of Section 168 of the IP Code as above-cited.
In fact, the records are bereft of any showing thatpetitioners gave their goods/services
the general appearance that it was respondent which was offering the same to the
public. Neither did petitioners employ any means to induce the public towards a false
belief that it was offering respondent’s goods/services. Nor did petitioners make any
false statement or commit acts tending to discredit the goods/services offered by
respondent. Accordingly, the element of fraud which is the core of unfair competition
had not been established.
Besides, respondent was not able toprove its compliance with the requirements stated
in Section 123.2 of the IP Code to be able to conclude that it acquired a secondary
meaning – and, thereby, an exclusive right – to the "ST. FRANCIS" mark, which is, as
the IPO Director-General correctly pointed out, geographically-descriptive of the location
in which its realty developments have been built, i.e., St. Francis Avenue and St.
Francis Street (now known as "Bank Drive"). Verily, records would reveal that while it is
true that respondent had been using the mark "ST. FRANCIS" since 1992, its use
thereof has been merely confined to its realty projects within the Ortigas Center, as
specifically mentioned.As its use of the mark is clearly limited to a certain locality, it
cannot be said thatthere was substantial commercial use of the same recognizedall
throughout the country. Neither is there any showing of a mental recognition in buyers’
and potential buyers’ minds that products connected with the mark "ST. FRANCIS" are
associated with the same source 35 – that is, the enterprise of respondent. Thus, absent
any showing that there exists a clear goods/service-association between the realty
projects located in the aforesaid area and herein respondent as the developer thereof,
the latter cannot besaid to have acquired a secondary meaning as to its use of the "ST.
FRANCIS" mark.

In fact, even on the assumption that secondary meaning had been acquired, said
finding only accords respondents protectional qualification under Section 168.1 of the IP
Code as above quoted. Again, this does not automatically trigger the concurrence of the
fraud element required under Section 168.2 of the IP Code, as exemplified by the acts
mentioned in Section 168.3 of the same. Ultimately, as earlier stated, there can be no
unfair competition without this element. In this respect, considering too the notoriety of
the Shangri-La brand in the real estate industry which dilutes petitioners' propensity to
merely ride on respondent's goodwill, the more reasonable conclusion is that the
former's use of the marks "THE ST. FRANCIS TOWERS" and "THE ST. FRANCIS
SHANGRI-LA PLACE" was meant only to identify, or at least associate, their real estate
project/s with its geographical location. As aptly observed by the IPO DirectorGeneral: 36

In the case at hand, the parties are business competitors engaged in real estate or
property development, providing goods and services directly connected thereto. The
"goods" or "products" or "services" are real estate and the goods and the services
attached to it or directly related to it, like sale or lease of condominium units, offices, and
commercial spaces, such as restaurants, and other businesses. For these kinds of
goods or services there can be no description of its geographical origin as precise and
accurate as that of the name of the place where they are situated. (Emphasis and
underscoring supplied)

Hence, for all the reasons above-discussed, the Court hereby grants the instant petition,
and, thus, exonerates petitioners from the charge of unfair competition in the IPV Case.
As the decisions in the Inter Partes Cases were not appealed, the registrability issues
resolved therein are hereby deemed to have attained finality and, therefore, are now
executory.
WHEREFORE, the petition is GRANTED. The Decision dated December 18, 2009 of
the Court of Appeals in CA-G.R. SP No. 105425 is hereby REVERSED and SET
ASIDE. Accordingly, the Decision dated September 3, 2008 of the Intellectual Property
Office-Director General is REINSTATED.

SO ORDERED.

W Land Holdings inc. Starwood Hotels

Assailed in this petition for review on certiorari1 are the Decision2 dated June 22, 2015
and the Resolution3 dated January 7, 2016 of the Court of Appeals (CA) in CA-G.R. SP
No. 133825 affirming the Decision 4 dated January 10, 2014 of the Intellectual Property
Office (IPO) - Director General (IPO DG), which, in turn, reversed the Decision 5 dated
May 11, 2012 of the IPO Bureau of Legal Affairs (BLA) in Inter Partes Case No. 14-
2009-00143, and accordingly, dismissed petitioner W Land Holdings, Inc.'s (W Land)
petition for cancellation of the trademark "W" registered in the name of respondent
Starwood Hotels and Resorts, Worldwide, Inc. (Starwood).

The Facts

On December 2, 2005, Starwood filed before the IPO an application for registration of
the trademark "W" for Classes 43 6 and 447 of the International Classification of Goods
and Services for the Purposes of the Registration of Marks 8 (Nice Classification).9 On
February 26, 2007, Starwood's application was granted and thus, the "W" mark was
registered in its name.10 However, on April 20, 2006, W Land applied 11 for the
registration of its own "W" mark for Class 36, 12 which thereby prompted Starwood to
oppose the same.13 In a Decision14 dated April 23, 2008, the BLA found merit in
Starwood's opposition, and ruled that W Land's "W" mark is confusingly similar with
Starwood's mark,15 which had an earlier filing date. W Land filed a motion for
reconsideration16 on June 11, 2008, which was denied by the BLA in a
Resolution17 dated July 23, 2010.

On May 29, 2009, W Land filed a Petition for Cancellation 18 of Starwood's mark for non-
use under Section 151.119 of Republic Act No. 8293 or the "Intellectual Property Code of
the Philippines" (IP Code),20 claiming that Starwood has failed to use its mark in the
Philippines because it has no hotel or establishment in the Philippines rendering the
services covered by its registration; and that Starwood's "W" mark application and
registration barred its own "'W" mark application and registration for use on real estate. 21

In its defense,22 Starwood denied having abandoned the subject mark on the ground of
non-use, asserting that it filed with the Director of Trademarks a notarized Declaration of
Actual Use23 (DAU)24 with evidence of use on December 2, 2008, 25 which was not
rejected. In this relation, Starwood argued that it conducts hotel and leisure business
both directly and indirectly through subsidiaries and franchisees, and operates
interactive websites for its W Hotels in order to accommodate its potential clients
worldwide.26 According to Starwood, apart from viewing agents, discounts, promotions,
and other marketing fields being offered by it, these interactive websites allow Philippine
residents to make reservations and bookings, which presuppose clear and convincing
use of the "W'' mark in the Philippines.27

The BLA Ruling

In a Decision28 dated May 11, 2012, the BLA ruled in W Land's favor, and accordingly
ordered the cancellation of Starwood's registration for the "W" mark. The BLA found that
the DAU and the attachments thereto submitted by Starwood did not prove actual use of
the "W" mark in the Philippines, considering that the "evidences of use" attached to the
DAU refer to hotel or establishments that are located abroad. 29 In this regard, the BLA
opined that "the use of a trademark as a business tool and as contemplated under
[Section 151.1 (c) of RA 8293] refers to the actual attachment thereof to goods and
services that are sold or availed of and located in the Philippines." 30

Dissatisfied, Starwood appealed31 to the IPO DG.

The IPO DG Ruling

In a Decision32 dated January 10, 2014, the IPO DG granted Starwood's

appeal,33 thereby dismissing W Land's Petition for Cancellation. Contrary to the BLA's
findings, the IPO DG found that Starwood's submission of its DAU and attachments,
coupled by the acceptance thereof by the IPO Bureau of Trademarks, shows that the
"W" mark still bears a "registered" status. Therefore, there is a presumption that
Starwood sufficiently complied with the registration requirements for its mark. 34 The IPO
DG likewise held that the absence of any hotel or establishment owned by Starwood in
the Philippines bearing the "W" mark should not be equated to the absence of its use in
the country, opining that Starwood's pieces of evidence, particularly its interactive
website, indicate actual use in the Philippines, 35 citing Rule 20536 of the Trademark
Regulations, as amended by IPO Office Order No. 056-13. 37 Finally, the IPO DG
stressed that since Starwood is the undisputed owner of the "W" mark for use in hotel
and hotel-related services, any perceived damage on the part of W Land in this case
should be subordinated to the essence of protecting Starwood's intellectual property
rights. To rule otherwise is to undermine the intellectual property system. 38

Aggrieved, W Land filed a petition for review 39 under Rule 43 of the Rules of Court
before the CA.

The CA Ruling

In a Decision40 dated June 22, 2015, the CA affirmed the IPO DG ruling. At the onset,
the CA observed that the hotel business is peculiar in nature in that the offer, as well as
the acceptance of room reservations or bookings wherever in the world is an
indispensable element. As such, the actual existence or presence of a hotel in one
place is not necessary before it can be considered as doing business therein. 41 In this
regard, the CA recognized that the internet has become a powerful tool in allowing
businesses to reach out to consumers in a given market without being physically
present thereat; thus, the IPO DG correctly held that Starwood's interactive websites
already indicate its actual use in the Philippines of the "W" mark. 42 Finally, the CA
echoed the IPO DG's finding that since Starwood is the true owner of the "W" mark - as
shown by the fact that Starwood had already applied for the registration of this mark
even before W Land was incorporated - its registration over the same should remain
valid, absent any showing that it has abandoned the use thereof. 43

Unperturbed, W Land moved for reconsideration, 44 but was denied in a

Resolution45 dated January 7, 2016; hence, this petition.

The Issue Before the Court

The essential issue for the Court's resolution is whether or not the CA correctly affirmed
the IPO DG's dismissal of W Land's Petition for Cancellation of Starwood's "W'' mark.

The Court's Ruling

The petition is without merit.

The IP Code defines a "mark" as "any visible sign capable of distinguishing the goods
(trademark) or services (service mark) of an enterprise." 46 Case law explains that
"[t]rademarks deal with the psychological function of symbols and the effect of these
symbols on the public at large."47 It is a merchandising short-cut, and, "[w]hatever the
means employed, the aim is the same to convey through the mark, in the minds of
potential customers, the desirability of the commodity upon which it appears." 48 Thus,
the protection of trademarks as intellectual property is intended not only to preserve the
goodwill and reputation of the business established on the goods or services bearing
the mark through actual use over a period of time, but also to safeguard the public as
consumers against confusion on these goods or services. 49 As viewed by modern
authorities on trademark law, trademarks perform three (3) distinct functions: (1) they
indicate origin or ownership of the articles to which they are attached; (2) they
guarantee that those articles come up to a certain standard of quality; and (3) they
advertise the articles they symbolize.50

In Berris Agricultural Co., Inc. v. Abyadang,51 this Court explained that "[t]he 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." 52 However, "the prima facie presumption
brought about by the registration of a mark may be challenged and overcome, in an
appropriate action, by proof of[, among others,] non-use of the mark, except when
excused."53

The actual use of the mark representing the goods or services introduced and
transacted in commerce over a period of time creates that goodwill which the law seeks
to protect. For this reason, the IP Code, under Section 124.2, 54 requires the registrant or
owner of a registered mark to declare "actual use of the mark" (DAU) and present
evidence of such use within the prescribed period. Failing in which, the IPO DG may
cause the motu propio removal from the register of the mark's registration. 55 Also, any
person, believing that "he or she will be damaged by the registration of a mark," which
has not been used within the Philippines, may file a petition for cancellation. 56 Following
the basic rule that he who alleges must prove his case, 57 the burden lies on the
petitioner to show damage and non-use.

The IP Code and the Trademark Regulations have not specifically defined "use."
However, it is understood that the "use" which the law requires to maintain the
registration of a mark must be genuine, and not merely token. Based on foreign
authorities,58 genuine use may be characterized as a bona fide use which results or
tends to result, in one way or another, into a commercial interaction or
transaction "in the ordinary course of trade."59

What specific act or acts would constitute use of the mark sufficient to keep its
registration in force may be gleaned from the Trademark Regulations, Rule 205 of
which reads:

RULE 205. Contents of the Declaration and Evidence of Actual Use. — The

declaration shall be under oath, must refer to only one application or registration,
must contain the name and address of the applicant or registrant declaring that the
mark is in actual use in the Philippines, list of goods where the mark is attached; list
the name or names and the exact location or locations of the outlet or
outlets where the products are being sold or where the services are being rendered,
recite sufficient facts to show that the mark described in the application or
registration is being actually used in the Philippines and, specifying the nature of
such use. The declarant shall attach five labels as actually used on the goods or the
picture of the stamped or marked container visibly and legibly showing the mark as well
as proof of payment of the prescribed fee. [As amended by Office Order No. 08 (2000)]
(Emphases supplied)

The Trademark Regulations was amended by Office Order No. 056-13. Particularly,
Rule 205 now mentions certain items which "shall be accepted as proof of actual use of
the mark:"

RULE 205. Contents of the Declaration and Evidence of Actual Use.—

(a) The declaration shall be under oath and filed by the applicant or registrant (or the
authorized officer in case of a juridical entity) or the attorney or authorized
representative of the applicant or registrant. The declaration must refer to only one
application or registration, shall contain the name and address of the applicant or
registrant declaring that the mark is in actual use in the Philippines, the list of goods or
services where the mark is used, the name/s of the establishment and address where
the products are being sold or where the services are being rendered. If the goods or
services are available only by online purchase, the website must be indicated on the
form in lieu of name or address of the establishment or outlet. The applicant or
registrant may include other facts to show that the mark described in the application or
registration is actually being used in the Philippines. The date of first use shall not be
required.

(b) Actual use for some of the goods and services in the same class shall constitute use
for the entire class of goods and services. Actual use for one class shall be considered
use for related classes. In the event that some classes are not covered in the
declaration, a subsequent declaration of actual use may be filed for the other classes of
goods or services not included in the first declaration, provided that the subsequent
declaration is filed within the three year period or the extension period, in case an
extension of time to file the declaration was timely made. In the event that no
subsequent declaration of actual use for the other classes of goods and services is filed
within the prescribed period, the classes shall be automatically dropped from the
application or registration without need of notice to the applicant or registrant.

(c) The following shall be accepted as proof of actual use of the mark: (1) labels of
the mark as these are used; (2) downloaded pages from the website of the
applicant or registrant clearly showing that the goods are being sold or the
services are being rendered in the Philippines; (3) photographs (including digital
photographs printed on ordinary paper) of goods bearing the marks as these are
actually used or of the stamped or marked container of goods and of the
establishment/s where the services are being rendered; (4) brochures or advertising
materials showing the actual use of the mark on the goods being sold or services being
rendered in the Philippines; (5) for online sale, receipts of sale of the goods or
services rendered or other similar evidence of use, showing that the goods are
placed on the market or the services are available in the Philippines or that the
transaction took place in the Philippines; (6) copies of contracts for services showing
the use of the mark. Computer printouts of the drawing or reproduction of marks will not
be accepted as evidence of use.

(d) The Director may, from time to time, issue a list of acceptable evidence of use
and those that will not be accepted by the Office. (Emphases and underscoring
supplied)

Office Order No. 056-13 was issued by the IPO DG on April 5, 2013, pursuant to his
delegated rule-making authority under Section 7 of the IP Code. 60 The rationale for this
issuance, per its whereas clauses, is to further "the policy of the [IPO] to streamline
administrative procedures in registering trademarks" and in so doing, address the need
"to clarify what will be accepted as proof of use." In this regard, the parameters and list
of evidence introduced under the amended Trademark Regulations are thus mere
administrative guidelines which are only meant to flesh out the types of acceptable
evidence necessary to prove what the law already provides, i.e., the requirement of
actual use. As such, contrary to W Land's postulation, 61 the same does not diminish or
modify any substantive right and hence, may be properly applied to "all pending and
registered marks,"62 as in Starwood's "W" mark for hotel / hotel reservation services
being rendered or, at the very least, made available in the Philippines.

Based on the amended Trademark Regulations, it is apparent that the IPO has now
given due regard to the advent of commerce on the internet. Specifically, it now
recognizes, among others, "downloaded pages from the website of the applicant or
registrant clearly showing that the goods are being sold or the services are being
rendered in the Philippines," as well as "for online sale, receipts of sale of the goods or
services rendered or other similar evidence of use, showing that the goods are placed
on the market or the services are available in the Philippines or that the transaction took
place in the Philippines," 63 as acceptable proof of actual use. Truly, the Court discerns
that these amendments are but an inevitable reflection of the realities of the times.
In Mirpuri v. CA,64 this Court noted that "[a]dvertising on the Net and cybershopping are
turning the Internet into a commercial marketplace:" 65

The Internet is a decentralized computer network linked together through routers and
communications protocols that enable anyone connected to it to communicate with
others likewise connected, regardless of physical location. Users of the Internet have a
wide variety of communication methods available to them and a tremendous wealth of
information that they may access. The growing popularity of the Net has been driven in
large part by the World Wide Web, i.e., a system that facilitates use of the Net by
sorting through the great mass of information available on it. Advertising on the Net
and cybershopping are turning the Internet into a commercial
marketplace.66 (Emphasis and underscoring supplied)

Thus, as modes of advertising and acquisition have now permeated into virtual zones
over cyberspace, the concept of commercial goodwill has indeed evolved:

In the last half century, the unparalleled growth of industry and the rapid development of
communications technology have enabled trademarks, tradenames and other distinctive
signs of a product to penetrate regions where the owner does not actually manufacture
or sell the product itself. Goodwill is no longer confined to the territory of actual
market penetration; it extends to zones where the marked article has been fixed
in the public mind through advertising. Whether in the print, broadcast or
electronic communications medium, particularly on the Internet, advertising has
paved the way for growth and expansion of the product by creating and earning a
reputation that crosses over borders, virtually turning the whole world into one
vast marketplace.67 (Emphasis and underscoring supplied)

Cognizant of this current state of affairs, the Court therefore agrees with the IPO DG, as
affirmed by the CA, that the use of a registered mark representing the owner's goods or
services by means of an interactive website may constitute proof of actual use that is
sufficient to maintain the registration of the same. Since the internet has turned the
world into one vast marketplace, the owner of a registered mark is clearly entitled to
generate and further strengthen his commercial goodwill by actively marketing and
commercially transacting his wares or services throughout multiple platforms on the
internet. The facilities and avenues present in the internet are, in fact, more prominent
nowadays as they conveniently cater to the modern-day consumer who desires to
procure goods or services at any place and at any time, through the simple click of a
mouse, or the tap of a screen. Multitudinous commercial transactions are accessed,
brokered, and consummated everyday over websites. These websites carry the mark
which represents the goods or services sought to be transacted. For the owner, he
intentionally exhibits his mark to attract the customers' interest in his goods or services.
The mark displayed over the website no less serves its functions of indicating the goods
or services' origin and symbolizing the owner's goodwill than a mark displayed in the
physical market. Therefore, there is no less premium to recognize actual use of marks
through websites than their actual use through traditional means. Indeed, as our world
evolves, so too should our appreciation of the law. Legal interpretation - as it largely
affects the lives of people in the here and now - never happens in a vacuum. As such, it
should not be stagnant but dynamic; it should not be ensnared in the obsolete but
rather, sensitive to surrounding social realities.

It must be emphasized, however, that the mere exhibition of goods or services over the
internet, without more, is not enough to constitute actual use. To reiterate, the "use"
contemplated by law is genuine use - that is, a bona fide kind of use tending towards a
commercial transaction in the ordinary course of trade. Since the internet creates a
borderless marketplace, it must be shown that the owner has actually transacted,
or at the very least, intentionally targeted customers of a particular jurisdiction in
order to be considered as having used the trade mark in the ordinary course of
his trade in that country. A showing of an actual commercial link to the country is
therefore imperative. Otherwise, an unscrupulous registrant would be able to maintain
his mark by the mere expedient of setting up a website, or by posting his goods or
services on another's site, although no commercial activity is intended to be pursued in
the Philippines. This type of token use renders inutile the commercial purpose of the
mark, and hence, negates the reason to keep its registration active. As the IP Code
expressly requires, the use of the mark must be "within the Philippines." This is
embedded in Section 151 of the IP Code on cancellation, which reads:

SECTION 151. Cancellation. — 151.1. A petition to cancel a registration of a mark

under this Act may be filed with the Bureau of Legal Affairs by any person who believes
that he is or will be damaged by the registration of a mark under this Act as follows:

(a) Within five (5) years from the date of the registration of the mark under this Act.
(b) At any time, if the registered mark becomes the generic name for the goods or
services, or a portion thereof, for which it is registered, or has been abandoned, or
its registration was obtained fraudulently or contrary to the provisions of this Act, or
 if the registered mark is being used by, or with the permission of, the registrant so
as to misrepresent the source of the goods or services on or in connection with
which the mark is used. If the registered mark becomes the generic name for less
than all of the goods or services for which it is registered, a petition to cancel the
registration for only those goods or services may be filed. A registered mark shall
not be deemed to be the generic name of goods or services solely because such
mark is also used as a name of or to identify a unique product or service. The
primary significance of the registered mark to the relevant public rather than
purchaser motivation shall be the test for determining whether the registered mark
has become the generic name of goods or services on or in connection with which it
has been used.
(c) At any time, if the registered owner of the mark without legitimate reason fails
to use the mark within the Philippines, or to cause it to be used in the
Philippines by virtue of a license during an uninterrupted period of three (3) years
or longer. (Emphasis and underscoring supplied)

The hotel industry is no stranger to the developments and advances in technology. Like
most businesses nowadays, hotels are utilizing the internet to drive almost every aspect
of their operations, most especially the offering and accepting of room reservations or
bookings, regardless of the client or customer base. The CA explained this booking
process in that the "business transactions commence with the placing of room
reservations, usually by or through a travel agent who acts for or in behalf of his
principal, the hotel establishment. [The] reservation is first communicated to the
reservations and booking assistant tasked to handle the transaction. After the
reservation is made, the specific room reserved for the guest will be blocked and will not
be offered to another guest. As such, on the specified date of arrival, the room reserved
will be available to the guest."68

In this accord, a hotel's website has now become an integral element of a hotel
business. Especially with the uptrend of international travel and tourism, the hotel's
website is now recognized as an efficient and necessary tool in advertising and
promoting its brand in almost every part of the world. More so, interactive websites that
allow customers or clients to instantaneously book and pay for, in advance,
accommodations and other services of a hotel anywhere in the world, regardless of the
hotel's actual location, dispense with the need for travel agents or hotel employees to
transact the reservations for them. In effect, the hotel's website acts as a bridge or
portal through which the hotel reaches out and provides its services to the
client/customer anywhere in the world, with the booking transaction completed at the
client/customer's own convenience. It is in this sense that the CA noted that the "actual
existence or presence of a hotel in one place is not necessary before it can be
considered as doing business therein." 69

As earlier intimated, mere use of a mark on a website which can be accessed anywhere
in the world will not automatically mean that the mark has been used in the ordinary
course of trade of a particular country. Thus, the use of mark on the internet must be
shown to result into a within-State sale, or at the very least, discernibly intended to
target customers that reside in that country. This being so, the use of the mark on an
interactive website, for instance, may be said to target local customers when they
contain specific details regarding or pertaining to the target State, sufficiently
showing an intent towards realizing a within-State commercial activity or
interaction. These details may constitute a local contact phone number, specific
reference being available to local customers, a specific local webpage, whether
domestic language and currency is used on the website, and/or whether domestic
payment methods are accepted.70 Notably, this paradigm of ascertaining local details to
evince within-state commercial intent is subscribed to by a number of jurisdictions,
namely, the European Union, Hong Kong, Singapore, Malaysia, Japan, Australia,
Germany, France, Russia, and the United Kingdom. 71 As for the U.S. - where most of
our intellectual property laws have been patterned 72 - there have been no decisions to
date coming from its Trademark Trial and Appeal Board involving cases challenging the
validity of mark registrations through a cancellation action based on the mark's internet
use. However, in International Bancorp LLC v. Societe des Bains de Mer et du Cercle
des Etrangers a Monaco,73 it was ruled that mere advertising in the U.S. combined with
rendering of services to American customers in a foreign country constituted "use" for
the purpose of establishing trademark rights in the U.S.

In this case, Starwood has proven that it owns Philippine registered domain
names,74 i.e., www.whotels.ph, www.wreservations.ph, www.whotel.ph, www.wreservati
on.ph, for its website that showcase its mark. The website is readily accessible to
Philippine citizens and residents, where they can avail and book amenities and other
services in any of Starwood's W Hotels worldwide. Its website also readily provides a
phone number75 for Philippine consumers to call for information or other concerns. The
website further uses the English language 76 - considered as an official language in this
country77 - which the relevant market in the Philippines understands and often uses in
the daily conduct of affairs. In addition, the prices for its hotel accommodations and/or
services can be converted into the local currency or the Philippine Peso. 78 Amidst all of
these features, Starwood's "W" mark is prominently displayed in the website through
which consumers in the Philippines can instantaneously book and pay for their
accommodations, with immediate confirmation, in any of its W Hotels. Furthermore, it
has presented data showing a considerably growing number of internet users in the
Philippines visiting its website since 2003, which is enough to conclude that Starwood
has established commercially-motivated relationships with Philippine consumers. 79

Taken together, these facts and circumstances show that Starwood's use of its "W"
mark through its interactive website is intended to produce a discernable commercial
effect or activity within the Philippines, or at the very least, seeks to establish
commercial interaction with local consumers. Accordingly, Starwood's use of the "W"
mark in its reservation services through its website constitutes use of the mark sufficient
to keep its registration in force.

To be sure, Starwood's "W" mark is registered for Classes 43, i.e., for hotel, motel,
resort and motor inn services, hotel reservation services, restaurant, bar and catering
services, food and beverage preparation services, cafe and cafeteria services, provision
of conference, meeting and social function facilities, under the Nice
Classification.80 Under Section 152.3 of the IP Code, "[t]he use of a mark in connection
with one or more of the goods or services belonging to the class in respect of which the
mark is registered shall prevent its cancellation or removal in respect of all other goods
or services of the same class." Thus, Starwood's use of the "W" mark for reservation
services through its website constitutes use of the mark which is already sufficient to
protect its registration under the entire subject classification from non-use cancellation.
This, notwithstanding the absence of a Starwood hotel or establishment in the
Philippines.

Finally, it deserves pointing out that Starwood submitted in 2008 its DAU with evidence
of use which the IPO, through its Director of Trademarks and later by the IPO DG in the
January 10, 2014 Decision, had accepted and recognized as valid. The Court finds no
reason to disturb this recognition. According to jurisprudence, administrative agencies,
such as the IPO, by means of their special knowledge and expertise over matters falling
within their jurisdiction are in a better position to pass judgment on this issue. 81 Thus,
their findings are generally accorded respect and finality, as long as they are supported
by substantial evidence. In this case, there is no compelling basis to reverse the IPO
DG's findings - to keep Starwood's registration for the "W" mark in force - as they are
well supported by the facts and the law and thus, deserve respect from this Court.

WHEREFORE, the petition is DENIED. The Decision dated June 22, 2015 and the
Resolution dated January 7, 2016 of the Court of Appeals in CA-G.R. SP No. 133825
are hereby AFFIRMED.

SO ORDERED.

Coca Cola Bottlers Phils vs Quintin Gome

Is the hoarding of a competitor's product containers punishable as unfair competition

under the Intellectual Property Code (IP Code, Republic Act No. 8293) that would entitle
the aggrieved party to a search warrant against the hoarder? This is the issue we
grapple with in this petition for review on certiorari involving two rival multinational
softdrink giants; petitioner Coca-Cola Bottlers, Phils., Inc. (Coca-Cola) accuses Pepsi
Cola Products Phils., Inc. (Pepsi), represented by the respondents, of hoarding empty
Coke bottles in bad faith to discredit its business and to sabotage its operation in
Bicolandia.

BACKGROUND

The facts, as culled from the records, are summarized below.

On July 2, 2001, Coca-Cola applied for a search warrant against Pepsi for hoarding
Coke empty bottles in Pepsi's yard in Concepcion Grande, Naga City, an act allegedly
penalized as unfair competition under the IP Code. Coca-Cola claimed that the bottles
must be confiscated to preclude their illegal use, destruction or concealment by the
respondents.1 In support of the application, Coca-Cola submitted the sworn statements
of three witnesses: Naga plant representative Arnel John Ponce said he was informed
that one of their plant security guards had gained access into the Pepsi compound and
had seen empty Coke bottles; acting plant security officer Ylano A. Regaspi said he
investigated reports that Pepsi was hoarding large quantities of Coke bottles by
requesting their security guard to enter the Pepsi plant and he was informed by the
security guard that Pepsi hoarded several Coke bottles; security guard Edwin
Lirio stated that he entered Pepsi's yard on July 2, 2001 at 4 p.m. and saw empty Coke
bottles inside Pepsi shells or cases. 2

Municipal Trial Court (MTC) Executive Judge Julian C. Ocampo of Naga City, after
taking the joint deposition of the witnesses, issued Search Warrant No. 2001-01 3 to
seize 2,500 Litro and 3,000 eight and 12 ounces empty Coke bottles at Pepsi's Naga
yard for violation of Section 168.3 (c) of the IP Code. 4 The local police seized and
brought to the MTC's custody 2,464 Litro and 4,036 eight and 12 ounces empty Coke
bottles, 205 Pepsi shells for Litro, and 168 Pepsi shells for smaller (eight and 12
ounces) empty Coke bottles, and later filed with the Office of the City Prosecutor of
Naga a complaint against two Pepsi officers for violation of Section 168.3 (c) in relation
to Section 170 of the IP Code. 5 The named respondents, also the respondents in this
petition, were Pepsi regional sales manager Danilo E. Galicia (Galicia) and its Naga
general manager Quintin J. Gomez, Jr. (Gomez).

In their counter-affidavits, Galicia and Gomez claimed that the bottles came from
various Pepsi retailers and wholesalers who included them in their return to make up for
shortages of empty Pepsi bottles; they had no way of ascertaining beforehand the
return of empty Coke bottles as they simply received what had been delivered; the
presence of the bottles in their yard was not intentional nor deliberate; Ponce and
Regaspi's statements are hearsay as they had no personal knowledge of the alleged
crime; there is no mention in the IP Code of the crime of possession of empty bottles;
and that the ambiguity of the law, which has a penal nature, must be construed strictly
against the State and liberally in their favor. Pepsi security guards Eduardo E. Miral and
Rene Acebuche executed a joint affidavit stating that per their logbook, Lirio did not visit
or enter the plant premises in the afternoon of July 2, 2001.

The respondents also filed motions for the return of their shells and to quash the search
warrant. They contended that no probable cause existed to justify the issuance of the
search warrant; the facts charged do not constitute an offense; and their Naga plant
was in urgent need of the shells.

Coca-Cola opposed the motions as the shells were part of the evidence of the crime,
arguing that Pepsi used the shells in hoarding the bottles. It insisted that the issuance of
warrant was based on probable cause for unfair competition under the IP Code, and
that the respondents violated R.A. 623, the law regulating the use of stamped or marked
bottles, boxes, and other similar containers.

THE MTC RULINGS

On September 19, 2001, the MTC issued the first assailed order 6 denying the twin
motions. It explained there was an exhaustive examination of the applicant and its
witnesses through searching questions and that the Pepsi shells are prima facie
evidence that the bottles were placed there by the respondents.

In their motion for reconsideration, the respondents argued for the quashal of the
warrant as the MTC did not conduct a probing and exhaustive examination; the
applicant and its witnesses had no personal knowledge of facts surrounding the
hoarding; the court failed to order the return of the "borrowed" shells; there was no
crime involved; the warrant was issued based on hearsay evidence; and the seizure of
the shells was illegal because they were not included in the warrant.

On November 14, 2001, the MTC denied the motion for reconsideration in the second
assailed order,7 explaining that the issue of whether there was unfair competition can
only be resolved during trial.

The respondents responded by filing a petition for certiorari under Rule 65 of the
Revised Rules of Court before the Regional Trial Court (RTC) of Naga City on the
ground that the subject search warrant was issued without probable cause and that the
empty shells were neither mentioned in the warrant nor the objects of the perceived
crime.

THE RTC RULINGS

On May 8, 2002, the RTC voided the warrant for lack of probable cause and the non-
commission of the crime of unfair competition, even as it implied that other laws may
have been violated by the respondents. The RTC, though, found no grave abuse of
discretion on the part of the issuing MTC judge. 8 Thus,

Accordingly, as prayed for, Search Warrant No. 2001-02 issued by the Honorable
Judge Julian C. Ocampo III on July 2, 2001 is ANNULLED and SET ASIDE. The
Orders issued by the Pairing Judge of Br. 1, MTCC of Naga City dated
September 19, 2001 and November 14, 2001 are also declared VOID and SET
ASIDE. The City Prosecutor of Naga City and SPO1 Ernesto Paredes are
directed to return to the Petitioner the properties seized by virtue of Search
Warrant No. 2001-02. No costs.

SO ORDERED.9

In a motion for reconsideration, which the RTC denied on July 12, 2002, the petitioner
stressed that the decision of the RTC was contradictory because it absolved Judge
Ocampo of grave abuse of discretion in issuing the search warrant, but at the same time
nullified the issued warrant. The MTC should have dismissed the petition when it found
out that Judge Ocampo did not commit any grave abuse of discretion.

Bypassing the Court of Appeals, the petitioner asks us through this petition for review
on certiorari under Rule 45 of the Rules of Court to reverse the decision of the RTC.
Essentially, the petition raises questions against the RTC's nullification of the warrant
when it found no grave abuse of discretion committed by the issuing judge.

THE PETITION and

THE PARTIES' POSITIONS

In its petition, the petitioner insists the RTC should have dismissed the respondents'
petition for certiorari because it found no grave abuse of discretion by the MTC in
issuing the search warrant. The petitioner further argues that the IP Code was enacted
into law to remedy various forms of unfair competition accompanying globalization as
well as to replace the inutile provision of unfair competition under Article 189 of the
Revised Penal Code. Section 168.3(c) of the IP Code does not limit the scope of
protection on the particular acts enumerated as it expands the meaning of unfair
competition to include "other acts contrary to good faith of a nature calculated to
discredit the goods, business or services of another." The inherent element of unfair
competition is fraud or deceit, and that hoarding of large quantities of a competitor's
empty bottles is necessarily characterized by bad faith. It claims that its Bicol bottling
operation was prejudiced by the respondents' hoarding and destruction of its empty
bottles.

The petitioner also argues that the quashal of the search warrant was improper because
it complied with all the essential requisites of a valid warrant. The empty bottles were
concealed in Pepsi shells to prevent discovery while they were systematically being
destroyed to hamper the petitioner's bottling operation and to undermine the capability
of its bottling operations in Bicol.

The respondents counter-argue that although Judge Ocampo conducted his own
examination, he gravely erred and abused his discretion when he ignored the rule on
the need of sufficient evidence to establish probable cause; satisfactory and convincing
evidence is essential to hold them guilty of unfair competition; the hoarding of empty
Coke bottles did not cause actual or probable deception and confusion on the part of
the general public; the alleged criminal acts do not show conduct aimed at deceiving the
public; there was no attempt to use the empty bottles or pass them off as the
respondents' goods.

The respondents also argue that the IP Code does not criminalize bottle hoarding, as
the acts penalized must always involve fraud and deceit. The hoarding does not make
them liable for unfair competition as there was no deception or fraud on the end-users.

THE ISSUE
Based on the parties' positions, the basic issue submitted to us for resolution is whether
the Naga MTC was correct in issuing Search Warrant No. 2001-01 for the seizure of the
empty Coke bottles from Pepsi's yard for probable violation of Section 168.3 (c) of the
IP Code. This basic issue involves two sub-issues, namely, the substantive issue of
whether the application for search warrant effectively charged an offense, i.e., a
violation of Section 168.3 (c) of the IP Code; and the procedural issue of whether the
MTC observed the procedures required by the Rules of Court in the issuance of search
warrants.

OUR RULING

We resolve to deny the petition for lack of merit.

We clarify at the outset that while we agree with the RTC decision, our agreement is
more in the result than in the reasons that supported it. The decision is correct in
nullifying the search warrant because it was issued on an invalid substantive basis - the
acts imputed on the respondents do not violate Section 168.3 (c) of the IP Code. For
this reason, we deny the present petition.

The issuance of a search warrant 10 against a personal property11 is governed by Rule

126 of the Revised Rules of Court whose relevant sections state:

Section 4. Requisites for issuing search warrant. - A search warrant shall not
issue except upon probable cause in connection with one specific offense to
be determined personally by the judge after examination under oath or
affirmation of the complainant and the witnesses he may produce, and
particularly describing the place to be searched and the things to be seized which
may be anywhere in the Philippines.

Section 5. Examination of complainant; record. - The judge must, before issuing

the warrant, personally examine in the form of searching questions and
answers, in writing and under oath, the complainant and the witnesses he
may produce on facts personally known to them and attach to the record their
sworn statements together with the affidavits submitted.

Section 6. Issuance and form of search warrant. - If the judge is satisfied of the
existence of facts upon which the application is based or that there is probable
cause to believe that they exist, he shall issue the warrant, which must be
substantially in the form prescribed by these Rules. [Emphasis supplied]

To paraphrase this rule, a search warrant may be issued only if there is probable cause
in connection with a specific offense alleged in an application based on the personal
knowledge of the applicant and his or her witnesses. This is the substantive requirement
in the issuance of a search warrant. Procedurally, the determination of probable cause
is a personal task of the judge before whom the application for search warrant is filed,
as he has to examine under oath or affirmation the applicant and his or her witnesses in
the form of "searching questions and answers" in writing and under oath. The warrant, if
issued, must particularly describe the place to be searched and the things to be seized.

We paraphrase these requirements to stress that they have substantive and procedural
aspects. Apparently, the RTC recognized this dual nature of the requirements and,
hence, treated them separately; it approved of the way the MTC handled the procedural
aspects of the issuance of the search warrant but found its action on the substantive
aspect wanting. It therefore resolved to nullify the warrant, without however expressly
declaring that the MTC gravely abused its discretion when it issued the warrant applied
for. The RTC's error, however, is in the form rather than the substance of the decision
as the nullification of the issued warrant for the reason the RTC gave was equivalent to
the declaration that grave abuse of discretion was committed. In fact, we so rule as the
discussions below will show.

Jurisprudence teaches us that probable cause, as a condition for the issuance of a

search warrant, is such reasons supported by facts and circumstances as will warrant a
cautious man in the belief that his action and the means taken in prosecuting it are
legally just and proper. Probable cause requires facts and circumstances that would
lead a reasonably prudent man to believe that an offense has been committed and the
objects sought in connection with that offense are in the place to be searched. 12 Implicit
in this statement is the recognition that an underlying offense must, in the first place,
exist. In other words, the acts alleged, taken together, must constitute an offense and
that these acts are imputable to an offender in relation with whom a search warrant is
applied for.

In the context of the present case, the question is whether the act charged - alleged to
be hoarding of empty Coke bottles - constitutes an offense under Section 168.3 (c) of
the IP Code. Section 168 in its entirety states:

SECTION 168. Unfair Competition, Rights, Regulation and Remedies. -

168.1. A person who has identified in the mind of the public the goods he
manufactures or deals in, his business or services from those of others, whether
or not a registered mark is employed, has a property right in the goodwill of the
said goods, business or services so identified, which will be protected in the
same manner as other property rights.

168.2. Any person who shall employ deception or any other means contrary to
good faith by which he shall pass off the goods manufactured by him or in which
he deals, or his business, or services for those of the one having established
such goodwill, or who shall commit any acts calculated to produce said result,
shall be guilty of unfair competition, and shall be subject to an action therefor.

168.3. In particular, and without in any way limiting the scope of protection
against unfair competition, the following shall be deemed guilty of unfair
competition:
 (a) Any person, who is selling his goods and gives them the general
appearance of goods of another manufacturer or dealer, either as to the
goods themselves or in the wrapping of the packages in which they are
contained, or the devices or words thereon, or in any other feature of their
appearance, which would be likely to influence purchasers to believe that
the goods offered are those of a manufacturer or dealer, other than the
actual manufacturer or dealer, or who otherwise clothes the goods with
such appearance as shall deceive the public and defraud another of his
legitimate trade, or any subsequent vendor of such goods or any agent of
any vendor engaged in selling such goods with a like purpose;

(b) Any person who by any artifice, or device, or who employs any other
means calculated to induce the false belief that such person is offering the
services of another who has identified such services in the mind of the
public; or

(c) Any person who shall make any false statement in the course of trade
or who shall commit any other act contrary to good faith of a nature
calculated to discredit the goods, business or services of another.

168.4. The remedies provided by Sections 156, 157 and 161 shall apply mutatis
mutandis. (Sec. 29,R.A. No. 166a)

The petitioner theorizes that the above section does not limit the scope of protection on
the particular acts enumerated as it expands the meaning of unfair competition to
include "other acts contrary to good faith of a nature calculated to discredit the goods,
business or services of another." Allegedly, the respondents' hoarding of Coca Cola
empty bottles is one such act.

We do not agree with the petitioner's expansive interpretation of Section 168.3 (c).

"Unfair competition," previously defined in Philippine jurisprudence in relation with R.A.

No. 166 and Articles 188 and 189 of the Revised Penal Code, is now covered by
Section 168 of the IP Code as this Code has expressly repealed R.A. No. 165 and R.A.
No. 166, and Articles 188 and 189 of the Revised Penal Code.

Articles 168.1 and 168.2, as quoted above, provide the concept and general rule on the
definition of unfair competition. The law does not thereby cover every unfair act
committed in the course of business; it covers only acts characterized by "deception or
any other means contrary to good faith" in the passing off of goods and services as
those of another who has established goodwill in relation with these goods or services,
or any other act calculated to produce the same result.

What unfair competition is, is further particularized under Section 168.3 when it provides
specifics of what unfair competition is "without in any way limiting the scope of
protection against unfair competition." Part of these particulars is provided under
Section 168.3(c) which provides the general "catch-all" phrase that the petitioner cites.
Under this phrase, a person shall be guilty of unfair competition "who shall commit any
other act contrary to good faith of a nature calculated to discredit the goods, business or
services of another."

From jurisprudence, unfair competition has been defined as the passing off (or palming
off) or attempting to pass off upon the public the goods or business of one person as the
goods or business of another with the end and probable effect of deceiving the public. It
formulated the "true test" of unfair competition: whether the acts of defendant are such
as are calculated to deceive the ordinary buyer making his purchases under the
ordinary conditions which prevail in the particular trade to which the controversy
relates.13 One of the essential requisites in an action to restrain unfair competition is
proof of fraud; the intent to deceive must be shown before the right to recover can
exist.14 The advent of the IP Code has not significantly changed these rulings as they
are fully in accord with what Section 168 of the Code in its entirety provides. Deception,
passing off and fraud upon the public are still the key elements that must be present for
unfair competition to exist.

The act alleged to violate the petitioner's rights under Section 168.3 (c) is hoarding
which we gather to be the collection of the petitioner's empty bottles so that they can be
withdrawn from circulation and thus impede the circulation of the petitioner's bottled
products. This, according to the petitioner, is an act contrary to good faith - a conclusion
that, if true, is indeed an unfair act on the part of the respondents. The critical question,
however, is not the intrinsic unfairness of the act of hoarding; what is critical for
purposes of Section 168.3 (c) is to determine if the hoarding, as charged, "is of a nature
calculated to discredit the goods, business or services" of the petitioner.

We hold that it is not. Hoarding as defined by the petitioner is not even an act within the
contemplation of the IP Code.

The petitioner's cited basis is a provision of the IP Code, a set of rules that refer to a
very specific subject - intellectual property. Aside from the IP Code's actual substantive
contents (which relate specifically to patents, licensing, trademarks, trade names,
service marks, copyrights, and the protection and infringement of the intellectual
properties that these protective measures embody), the coverage and intent of the
Code is expressly reflected in its "Declaration of State Policy" which states:

Section 2. Declaration of State Policy. - The State recognizes that an

effective intellectual and industrial property system is vital to the development of
domestic and creative activity, facilitates transfer of technology, attracts foreign
investments, and ensures market access for our products. It shall protect and
secure the exclusive rights of scientists, inventors, artists and other gifted
citizens to their intellectual property and creations, particularly when beneficial to
the people, for such periods as provided in this Act.
 The use of intellectual property bears a social function. To this end, the State
shall promote the diffusion of knowledge and information for the promotion of
national development and progress and the common good.

It is also the policy of the State to streamline administrative procedures of

registering patents, trademarks and copyright, to liberalize the registration on the
transfer of technology, and to enhance the enforcement of intellectual property
rights in the Philippines. (n)

"Intellectual property rights" have furthermore been defined under Section 4 of the Code
to consist of: a) Copyright and Related Rights; b) Trademarks and Service Marks; c)
Geographic Indications; d) IndustrialDesigns; e) Patents; f) Layout-Designs
(Topographies) of Integrated Circuits; and g)Protection of Undisclosed Information.

Given the IP Code's specific focus, a first test that should be made when a question
arises on whether a matter is covered by the Code is to ask if it refers to an intellectual
property as defined in the Code. If it does not, then coverage by the Code may be
negated.

A second test, if a disputed matter does not expressly refer to an intellectual property
right as defined above, is whether it falls under the general "unfair competition" concept
and definition under Sections 168.1 and 168.2 of the Code. The question then is
whether there is "deception" or any other similar act in "passing off" of goods or services
to be those of another who enjoys established goodwill.

Separately from these tests is the application of the principles of statutory construction
giving particular attention, not so much to the focus of the IP Code generally, but to the
terms of Section 168 in particular. Under the principle of "noscitur a sociis," when a
particular word or phrase is ambiguous in itself or is equally susceptible of various
meanings, its correct construction may be made clear and specific by considering the
company of words in which it is found or with which it is associated. 15

As basis for this interpretative analysis, we note that Section 168.1 speaks of a person

who has earned goodwill with respect to his goods and services and who is entitled to
protection under the Code, with or without a registered mark. Section 168.2, as
previously discussed, refers to the general definition of unfair competition. Section
168.3, on the other hand, refers to the specific instances of unfair competition,
with Section 168.1 referring to the sale of goods given the appearance of the goods of
another; Section 168.2, to the inducement of belief that his or her goods or services are
that of another who has earned goodwill; while the disputed Section 168.3 being a
"catch all" clause whose coverage the parties now dispute.

Under all the above approaches, we conclude that the "hoarding" - as defined and
charged by the petitioner - does not fall within the coverage of the IP Code and of
Section 168 in particular. It does not relate to any patent, trademark, trade name or
service mark that the respondents have invaded, intruded into or used without proper
authority from the petitioner. Nor are the respondents alleged to be fraudulently
"passing off" their products or services as those of the petitioner. The respondents are
not also alleged to be undertaking any representation or misrepresentation that would
confuse or tend to confuse the goods of the petitioner with those of the respondents,
or vice versa. What in fact the petitioner alleges is an act foreign to the Code, to the
concepts it embodies and to the acts it regulates; as alleged, hoarding inflicts unfairness
by seeking to limit the opposition's sales by depriving it of the bottles it can use for these
sales.

In this light, hoarding for purposes of destruction is closer to what another law - R.A. No.
623 - covers, to wit:

SECTION 1. Persons engaged or licensed to engage in the manufacture, bottling

or selling of soda water, mineral or aerated waters, cider, milk, cream, or other
lawful beverages in bottles, boxes, casks, kegs, or barrels, and other similar
containers, with their names or the names of their principals or products, or other
marks of ownership stamped or marked thereon, may register with the Philippine
Patent Office a description of the names or are used by them, under the same
conditions, rules, and regulations, made applicable by law or regulation to the
issuance of trademarks.

SECTION 2. It shall be unlawful for any person, without the written consent of the
manufacturer, bottler or seller who has successfully registered the marks of
ownership in accordance with the provisions of the next preceding section, to fill
such bottles, boxes, kegs, barrels, or other similar containers so marked or
stamped, for the purpose of sale, or to sell, dispose of, buy, or traffic in, or
wantonly destroy the same, whether filled or not, or to use the same for
drinking vessels or glasses or for any other purpose than that registered
by the manufacturer, bottler or seller. Any violation of this section shall be
punished by a fine or not more than one hundred pesos or imprisonment of not
more than thirty days or both.

As its coverage is defined under Section 1, the Act appears to be a measure that may
overlap or be affected by the provisions of Part II of the IP Code on "The Law on
Trademarks, Service Marks and Trade Names." What is certain is that the IP Code has
not expressly repealed this Act. The Act appears, too, to have specific reference to a
special type of registrants - the manufacturers, bottlers or sellers of soda water, mineral
or aerated waters, cider, milk, cream, or other lawful beverages in bottles, boxes, casks,
kegs, or barrels, and other similar containers - who are given special protection with
respect to the containers they use. In this sense, it is in fact a law of specific coverage
and application, compared with the general terms and application of the IP Code. Thus,
under its Section 2, it speaks specifically of unlawful use of containers and even of the
unlawfulness of their wanton destruction - a matter that escapes the IP Code's
generalities unless linked with the concepts of "deception" and "passing off" as
discussed above.
Unfortunately, the Act is not the law in issue in the present case and one that the parties
did not consider at all in the search warrant application. The petitioner in fact could not
have cited it in its search warrant application since the "one specific offense" that the
law allows and which the petitioner used was Section 168.3 (c). If it serves any purpose
at all in our discussions, it is to show that the underlying factual situation of the present
case is in fact covered by another law, not by the IP Code that the petitioner cites.
Viewed in this light, the lack of probable cause to support the disputed search warrant at
once becomes apparent.

Where, as in this case, the imputed acts do not violate the cited offense, the ruling of
this Court penned by Mr. Justice Bellosillo is particularly instructive:

In the issuance of search warrants, the Rules of Court requires a finding of

probable cause in connection with one specific offense to be determined
personally by the judge after examination of the complainant and the witnesses
he may produce, and particularly describing the place to be searched and the
things to be seized. Hence, since there is no crime to speak of, the search
warrant does not even begin to fulfill these stringent requirements and is
therefore defective on its face. The nullity of the warrant renders moot and
academic the other issues raised in petitioners' Motion to Quash and Motion for
Reconsideration. Since the assailed search warrant is null and void, all property
seized by virtue thereof should be returned to petitioners in accordance with
established jurisprudence.16

Based on the foregoing, we conclude that the RTC correctly ruled that the petitioner's
search warrant should properly be quashed for the petitioner's failure to show that the
acts imputed to the respondents do not violate the cited offense. There could not have
been any probable cause to support the issuance of a search warrant because no crime
in the first place was effectively charged. This conclusion renders unnecessary any
further discussion on whether the search warrant application properly alleged that the
imputed act of holding Coke empties was in fact a "hoarding" in bad faith aimed to
prejudice the petitioner's operations, or whether the MTC duly complied with the
procedural requirements for the issuance of a search warrant under Rule 126 of the
Rules of Court.

WHEREFORE, we hereby DENY the petition for lack of merit. Accordingly, we confirm

that Search Warrant No. 2001-01, issued by the Municipal Trial Court, Branch 1, Naga
City, is NULL and VOID. Costs against the petitioner.

SO ORDERED.

Uyco vs Lo January 3013

We resolve the motion for reconsideration 1 dated October 22, 2012 filed by petitioners
Chester Uyco, Winston Uychiyong and Cherry C. Uyco-Ong to set aside the
Resolution2 dated September 12, 2012 of this Court, which affirmed the decision 3 dated
March 9, 2012 and the resolution 4 dated June 21, 2012 of the Court of Appeals (CA) in
CA-G.R. SP No. 111964. The CA affirmed the resolution 5 dated September 1, 2008 of
the Department of Justice (DOJ). Both the CA and the DOJ found probable cause to
charge the petitioners with false designation of origin, in violation of Section 169.1, in
relation with Section 170, of Republic Act No. (RA) 8293, otherwise known as the
"Intellectual Property Code of the Philippines." 6

The disputed marks in this case are the "HIPOLITO & SEA HORSE & TRIANGULAR
DEVICE," "FAMA," and other related marks, service marks and trade names of Casa
Hipolito S.A. Portugal appearing in kerosene burners. Respondent Vicente Lo and
Philippine Burners Manufacturing Corporation (PBMC) filed a complaint against the
officers of Wintrade Industrial SalesCorporation (Wintrade), including petitioners
Chester Uyco, Winston Uychiyong and Cherry Uyco-Ong, and of National Hardware,
including Mario Sy Chua, for violation of Section 169.1, in relation to Section 170, of RA
8293.

Lo claimed in his complaint that Gasirel-Industria de Comercio e Componentes para

Gass, Lda. (Gasirel), the owner of the disputed marks, executed a deed of assignment
transferring these marks in his favor, to be used in all countries except for those in
Europe and America.7 In a test buy, Lo purchased from National Hardware kerosene
burners with the subject marks and the designations "Made in Portugal" and "Original
Portugal" in the wrappers. These products were manufactured by Wintrade. Lo claimed
that as the assignee for the trademarks, he had not authorized Wintrade to use these
marks, nor had Casa Hipolito S.A. Portugal. While a prior authority was given to
Wintrade’s predecessor-in-interest, Wonder Project & Development Corporation
(Wonder), Casa Hipolito S.A. Portugal had already revoked this authority through a
letter of cancellation dated May 31, 1993. 8 The kerosene burners manufactured by
Wintrade have caused confusion, mistake and deception on the part of the buying
public. Lo stated that the real and genuine burners are those manufactured by its agent,
PBMC.

In their Answer, the petitioners stated that they are the officers of Wintrade which owns
the subject trademarks and their variants. To prove this assertion, they submitted as
evidence the certificates of registration with the Intellectual Property Office. They
alleged that Gasirel, not Lo, was the real party-in-interest. They allegedly derived their
authority to use the marks from Casa Hipolito S.A. Portugal through Wonder, their
predecessor-in-interest. Moreover, PBMC had already ceased to be a corporation and,
thus, the licensing agreement between PBMC and Lo could not be given effect,
particularly because the agreement was not notarized and did not contain the provisions
required by Section 87 of RA 8293. The petitioners pointed out that Lo failed to
sufficiently prove that the burners bought from National Hardware were those that they
manufactured. But at the same time, they also argued that the marks "Made in Portugal"
and "Original Portugal" are merely descriptive and refer to the source of the design and
the history of manufacture.

In a separate Answer, Chua admitted that he had dealt with Wintrade for several years
and had sold its products. He had not been aware that Wintrade had lost the authority to
manufacture, distribute, and deal with products containing the subject marks, and he
was never informed of Wintrade’s loss of authority. Thus, he could have not been part of
any conspiracy.

After the preliminary investigation, the Chief State Prosecutor found probable cause to
indict the petitioners for violation of Section 169.1, in relation with Section 170, of RA
8293. This law punishes any person who uses in commerce any false designation of
origin which is likely to cause confusion or mistake as to the origin of the product. The
law seeks to protect the public; thus, even if Lo does not have the legal capacity to sue,
the State can still prosecute the petitioners to prevent damage and prejudice to the
public.

On appeal, the DOJ issued a resolution affirming the finding of probable case. It gave
credence to Lo’s assertion that he is the proper assignee of the subject marks. More
importantly, it took note of the petitioners’ admission that they used the words "Made in
Portugal" when in fact, these products were made in the Philippines. Had they intended
to refer to the source of the design or the history of the manufacture, they should have
explicitly said so in their packaging. It then concluded that the petitioners’ defenses
would be better ventilated during the trial and that the admissions of the petitioners
make up a sufficient basis for probable cause.

The CA found no grave abuse of discretion on the part of the DOJ and affirmed the
DOJ’s ruling.

When the petitioners filed their petition before us, we denied the petition for failure to
sufficiently show any reversible error in the assailed judgment to warrant the exercise of
the Court’s discretionary power.

We find no reversible error on the part of the CA and the DOJ to merit reconsideration.
The petitioners reiterate their argument that the products bought during the test buy
bearing the trademarks in question were not manufactured by, or in any way connected
with, the petitioners and/or Wintrade. They also allege that the words "Made in Portugal"
and "Original Portugal" refer to the origin of the design and not to the origin of the
goods.

The petitioners again try to convince the Court that they have not manufactured the
products bearing the marks "Made in Portugal" and "Original Portugal" that were bought
during the test buy. However, their own admission and the statement given by Chua
bear considerable weight.
The admission in the petitioners’ Joint Affidavit is not in any way hypothetical, as they
would have us believe. They narrate incidents that have happened. They refer to
Wintrade’s former association with Casa Hipolito S.A. Portugal; to their decision to
produce the burners in the Philippines; to their use of the disputed marks; and to their
justification for their use. It reads as follows:

24. As earlier mentioned, the predecessor-in-interest of Wintrade was the former

exclusive licensee of Casa Hipolito SA of Portugal since the 1970’s, and that Wintrade
purchased all the rights on the said trademarks prior to the closure of said company.
Indeed, the burners sold by Wintrade used to be imported from Portugal, but Wintrade
later on discovered the possibility of obtaining these burners from other sources or of
manufacturing the same in the Philippines.

Wintrade’s decision to procure these burners from sources other than Portugal is
certainly its management prerogative. The presence of the words "made in Portugal"
and "original Portugal" on the wrappings of the burners and on the burners themselves
which are manufactured by Wintrade is an allusion to the fact that the origin of the
design of said burners can be traced back to Casa Hipolito SA of Portugal, and that the
history of the manufacture of said burners are rooted in Portugal. These words were not
intended to deceive or cause mistake and confusion in the minds of the buying public. 9

Chua, the owner of National Hardware — the place where the test buy was conducted
— admits that Wintrade has been furnishing it with kerosene burners with the markings
"Made in Portugal" for the past 20 years, to wit:

5. I hereby manifests (sic) that I had been dealing with Wintrade Industrial Sales
Corporation (WINTRADE for brevity) for around 20 years now by buying products from
it. I am not however aware that WINTRADE was no longer authorized to deal, distribute
or sell kerosene burner bearing the mark HIPOLITO and SEA HORSE Device, with
markings "Made in Portugal" on the wrapper as I was never informed of such by
WINTRADE nor was ever made aware of any notices posted in the newspapers
informing me of such fact. Had I been informed, I would have surely stopped dealing
with WINTRADE.101âwphi1

Thus, the evidence shows that petitioners, who are officers of Wintrade, placed the
words "Made in Portugal" and "Original Portugal" with the disputed marks knowing fully
well — because of their previous dealings with the Portuguese company — that these
were the marks used in the products of Casa Hipolito S.A. Portugal. More importantly,
the products that Wintrade sold were admittedly produced in the Philippines, with no
authority from Casa Hipolito S.A. Portugal. The law on trademarks and trade names
precisely precludes a person from profiting from the business reputation built by another
and from deceiving the public as to the origins of products. These facts support the
consistent findings of the State Prosecutor, the DOJ and the CA that probable cause
exists to charge the petitioners with false designation of origin. The fact that the
evidence did not come from Lo, but had been given by the petitioners, is of no
significance.
The argument that the words "Made in Portugal" and "Original Portugal" refer to the
origin of the design and not to the origin of the goods does not negate the finding of
probable cause; at the same time, it is an argument that the petitioners are not barred
by this Resolution from raising as a defense during the hearing of the case.

WHEREFORE, premises considered, we hereby DENY the motion for reconsideration

for lack of merit.

SO ORDERED.