169877-2014-Shang Properties Realty Corp. v. St. Francis
169877-2014-Shang Properties Realty Corp. v. St. Francis
DECISION
PERLAS-BERNABE , J : p
Assailed in this petition for review on certiorari 1 is the Decision 2 dated December
18, 2009 of the Court of Appeals (CA) in CA-G.R. SP No. 105425 which a rmed with
modi cation the Decision 3 dated September 3, 2008 of the Intellectual Property O ce
(IPO) Director-General. The CA: (a) a rmed the denial of the application for registration of
the mark "ST. FRANCIS TOWERS" led 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 (c) ordered petitioners to jointly and
severally pay respondent St. Francis Square Development Corporation (respondent) a ne
in the amount of P200,000.00.
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 — led 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 ling 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 o ce purposes, docketed as Inter
Partes Case 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 that includes 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
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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 CSIcTa
Section 168.2 proceeds 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 . . . ."
Without limiting its generality, Section 168.3 goes 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 in uence purchasers to believe that the goods offered
are those of a manufacturer or dealer, other than the actual
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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 arti ce, 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 identi ed 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 161 24 shall apply mutatis mutandis."
The statutory attribution of the unfair competition concept is well-supplemented by
jurisprudential pronouncements. In the recent case of Republic Gas Corporation v. Petron
Corporation, 25 the Court has echoed the classic de nition 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 public
that 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 the particular 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 TAcCDI
Here, the Court nds the element of fraud to be wanting; hence, there can be no
unfair competition. The CA's contrary conclusion was faultily premised on its impression
that respondent had 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 geographically-descriptive
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 in the '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
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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
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 equate to fraud under the parameters of Section 168 of the IP Code as above-
cited. In fact, the records are bereft of any showing that petitioners gave their
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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 to prove 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 con ned to its realty projects within the Ortigas Center, as speci cally mentioned.
As its use of the mark is clearly limited to a certain locality, it cannot be said that there was
substantial commercial use of the same recognized all 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 be said 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
nding only accords respondents protectional quali cation 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 exempli ed 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 Director-General: 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, o ces, and commercial spaces, such as restaurants, and other businesses.
For these kinds of foods 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 nality 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 .
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Accordingly, the Decision dated September 3, 2008 of the Intellectual Property O ce-
Director General is REINSTATED . CHaDIT
SO ORDERED .
Carpio, Brion, Peralta * and Perez, JJ., concur.
Footnotes
* Designated Additional Member per Raffle dated July 16, 2014.
1. Rollo, pp. 3-33.
2. Id. at 68-95. Penned by Associate Justice Jane Aurora C. Lantion, with Associate Justices
Mario L. Guarina III and Mariflor P. Punzalan Castillo, concurring.
3. Id. at 98-114. Penned by IPO Director-General Adrian S. Cristobal, Jr.