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UNIFYING PHILIPPINE LAWS ON BUSINESS NAMES1

By
CESAR L. VILLANUEVA,2 B.S.C., LL.B., LL.M.
The Supreme Court has often reiterated the importance of the law governing business
names or trade names: "The law on trademarks and trade names is based on the principle of
business integrity and common justice. This law, both in letter and spirit, is laid upon the premise
that, while it encourages fair trade in every way and aims to foster, and not to hamper,
competition, no one, especially a trader, is justified in damaging or jeopardizing another's
business by fraud, deceit, trickery or unfair methods of any sort. This necessarily precludes the
trading by one dealer upon the good name and reputation built up by another.3
The business name or style does not embrace only conventional forms of business
designation but also any word or combination of words used to identify a business form other
business or occupation and may include such forms which are merely description of the business. 4
There are several statutes, rules and regulations governing business names or trade names
in the Philippines, aimed at achieving different ends and providing for different areas of
protection, and often leaving businessmen at a loss under which area of law they may be
protected in the conflict and confusion that has resulted.
The primary law governing business names or trade names is the Intellectual Property
Code of the Philippines5 (the IP Code), which defines trade name as the name or
designation identifying or distinguishing an enterprise. 6 Nevertheless, the provisions of the IP
Code do not provide for a reconciling system with other laws governing business name, nor do
they clearly provide for a hierarchical solution when the same or similar business name is
registered under different laws whose purpose and administrative functions are different from
those of the IP Code. For example, we have the Business Names Law, which stands
independently of, and has a different thrust from the IP Code and administered by a different
bureau of the Department of Trade and Industry (the DTI). We also have provisions in the
Corporation Code and the National International Revenue Code (the NIRC) providing for the
registration of corporate/partnership/business names.
This paper reviews the different statutory and administrative provisions and rulings
pertaining to, or governing, the registration, use and priority claims on business names or trade
names in the Philippines, and proposes a reconciling system that should produce proper
hierarchical priority and enforceability.

The original 1998 version of this paper was prepared and submitted as the required output of the
grant for Schoolyear 1997-1998 of the Justice Carmelino Alvendia Chair in the ATENEO COLLEGE OF
LAW.
2
The author is a partner of the law firm VILLANUEVA BERNARDO & GABIONZA, with offices at
12/F Antel Corporate Centre, 139 Valero Street, Salcedo Village, Makati City 1200 (Fax 8166741); and a
Professorial Lecturer of Corporation Law at the Ateneo College of Law.
3
La Chemise Lacoste, S.A. v. Fernandez , 129 SCRA 397 (1984).
4
People v. Chan Chin, (C.A.) 45 O.G. 39 64.
5
Republic Act No. 8293 (July, 1996), which became effective 1 January 1998.
6
Ibid, Sec. 121.3.

BUSINESS NAMES LAW


Act No. 3883,7 otherwise known as the Business Names Law, (the Law) regulates the
use in business transactions of names other than true names, and provides for the regulatory
power of the Bureau of Trade Regulation and Consumer Protection (the BTRCP) of the DTI, as
well as prescribing penalties for violations of its provisions. The DTI issued the Revised Rules
and Regulations Implementing Act No. 38838 (the Revised Rules and Regulations), which
provide also procedures for the registration of business names or trade names, revocation and
cancellation of certificates of registration, and the procedure of appeal of the decisions or orders
of the Director of BTRCP.9
1. Registration of Business Names/Trade Names Mandatory10
Section 1 of the Law makes it unlawful for any person to:
(a) use or sign in connection with business on any written or
printed receipts, including receipts for business taxes, duties
and fees and withdrawal or delivery receipts, or on any
written or printed evidence of any agreement or business
transaction; or
(b) to keep conspicuously exhibited in plain view in or at the
place where his business is conducted . . . any sign
announcing a firm name or business name or style other
than the true name;
without first registering such other name, or such firm name, or business name, or style, with the
BTRCP, together with his true name and that of any other person having a joint or common
interest with him in such contract, agreement, business transaction, or business.
It is implied from the provisions of the Law that it covers business name or style other
than the true name of any person, corporation, or partnership which is used or signed in
connection with its business.11 Consequently, in the Revised Rules and Regulations, the term
business name, firm name or style is defined to mean any name other than the true name of an
individual, corporate names, names of partnership, duly registered with the SEC, and the names
of cooperatives duly registered with the Bureau of Cooperative Development. 12 The Revised
Rules and Regulations expressly provide that juridical persons already registered with the SEC
and using only such corporate/partnership name may no longer register under the Business
Names Law.13
7

As amended by Act 4147 and RA 863.


Domestic Trade Administrative Order No. 8 Series of 1982, as amended.
9
Under the Revised Rules and Regulations, the decision or order of the Director of BTRCP shall
be final and executory after 15 days from receipt of the party, unless there is filed a motion for
reconsideration or an appeal is made to the Secretary of Trade and Industry. (Secs. 14 to 18). The decision
of the Secretary shall become final and executory after the lapse of 15 days from receipt of the parties,
unless the matter is brought to any court of competent jurisdiction for review. (Sec. 20).
10
Under the Revised Rules and Regulations, a formal application must be filed with the BTRCP,
accompanied by proper supporting documents (Secs. 3 to 7), and the payment of the registration fee (Sec.
8), and once the certificate of registration is issued, it shall expire after five (5) years from the date of
original registration and may be renewed within the first three (3) months following the expiration of the
original 5 year period. (Sec. 9)
11
GOPENGCO, MERCANTILE LAW COMPENDIUM (1983 ed.), at p. 748.
12
Sec. 1, Revised Rules and Regulations.
13
Sec. 3, ibid.
8

Strictly speaking, therefore, the Law has no application to the true names of individuals,
and to the registered firm names of corporations, partnerships and cooperatives. However, by its
operative effects, the Law recognizes priority of rights to registered firm names of corporations,
partnerships and cooperatives as to exclude them from being registered by other persons and
entities.
2. Purpose of the Law
The purpose of the Law is not to protect the goodwill of the business or its owner or
owners but to protect the public dealing with such business or owner or owners through the
disclosure of the names and real identity of the person or persons operating the business as well
as other facts in the records of the Bureau of Commerce [now the BTRCP]." 14
Since protection of the dealing public is its main purpose, as contrasted from preserving
or protecting the property rights of the owner of the business name or trade name, the Law does
not strictly provide for a legal system of priority over the use of business names. And yet, the
registration system under the Law, which prohibits any person or entity from using and/or
registering any business name or trade name which has been previously registered or one similar
thereto15 has the legal effect of preserving the priority interest over business names and trades
names duly registered with the BTRCP, and by necessary extension, those registered firm names
of corporations, partnerships and cooperatives duly registered with the proper government
agencies. Specifically, the Revised Rules and Regulations take into consideration business names
as likely to cause confusion or mistake in the minds of the public and prejudice the interest of
the owner of the registered business name, firm name or style.
3. Non-Registrable Business Names/Trade Names
Under the Revised Rules and Regulations the following names, firms names or styles
shall not be registrable:16
(a) Those which are or whose nature of business are illegal, immoral, scandalous,
of contrary to propriety, as well as those that are inimical to the security of
the State;
(b) Those which so nearly resemble a business name, firm name or style
previously registered with the DTI, the SEC, or any other government office
authorized by law to register names or styles, as likely to cause confusion or
mistake in the minds of the public and prejudice the interest of the owner of
the registered business name, firm name or style taking into consideration the
following:
(1)
(2)
(3)
(4)
(5)
(6)
(7)

nature of the business;


product or service handled;
location or place of business;
capitalization;
general appearance, spelling, sound and meaning;
use of dominant or descriptive words; and
such other factors as may be determined by the
Secretary of Trade and Industry.

Nevertheless, it is provided that the registered owner of firm name,


business name or style may allow the registration or use of the same by other
14

People v. Chan Chin, (C.A.) 45 O.G. 39 64.


Sec. 11(b), Revised Rules and Regulations.
16
Sec. 11, Revised Rules and Regulations, supra.
15

persons or entities by means of a franchise agreement entered into by and


between parties. The agreement shall undertake to guarantee compliance
with certain standards of quality of the products offered and/or the services
rendered as established by the owner who grants the franchise.
(c) Names style which by law or regulation cannot be appropriated;
(d) Names, words, terms, or expressions used to designate or distinguish, or
suggestive of quality of any class of goods, articles, merchandise, or service;
(e) Names or styles used by the government in its official non-proprietary
functions;
(f) The names or abbreviations of names, of any nation, intergovernmental or
international organization unless authorized by the competent authority of
that nation, inter-governmental or international organization;
(g) Names which misrepresent the nature of the business;
(h) Such other names and styles which, in the opinion of the Secretary of Trade
or the Director of the BTRCP or their authorized representatives, are
analogous to the above.
4. Sanctions Under the Law
The Law, in regulating the use in business transaction of names other than the true names,
provides for the protection thereof by giving the law some teeth to punish violators. Under
Section 4 of the Law any person violating the provisions of Section 1 shall be deemed guilty of a
misdemeanor, and upon conviction thereof, shall be fined not less than fifty pesos [P50.00] and
not more than two hundred pesos [P200.00] or imprisoned, not less that twenty [20] days and not
more than three [3] months, or both, in the discretion of the court."
The Law provides for criminal sanction against owners of business enterprise whose
business names and style, other than their true names, which have not been registered with the
BTRCP. The Law does not address nor provide remedies for registrants of business names against
third parties who usurp such names other than subjecting such third parties for using a business
name for their enterprise without complying with the registration requirements under the Law,
which is essentially a criminal complaint under the Law.
Also, the Law does not cover, nor is it the basis by which, the priority over the use of
business names or trade names may be resolved.
5. The Proper Role of the Law
Based on the foregoing, the Business Names Law constitutes in Philippine setting as the
coercive basic registration law compelling, under pains of criminal penalty, persons and entities
to register business names and trade names, whenever they do not constitute their true names.
However, its registration system has the effect of creating a priority system as to who has a better
right or priority to a particular business name or trade name.
Although implied in the language of the Law and clearly delineated in the Revised Rules
and Regulations that the Law has no application and does not cover registered corporate/
partnership/cooperative names, nevertheless by virtue of the provision of the Revised Rules and
Regulation declaring non-registrable under the Law such registered corporate/partnership/
cooperative names, the Law recognizes the priority of corporations/partnerships/cooperatives
over their registered names and would render them no longer registrable under the Law to any
other person or entity.

What cannot clearly be resolved under the terms of the Law and its Revised Rules and
Regulations is the situation where a business name or trade name has been duly registered under
the Law with the BTRCP, and only subsequently is the same or similar business name or trade
name as a corporate or partnership name of a entity duly registered with the SEC, or a
cooperative duly registered with the CDA. The solution is given under the Corporation Code.
LAWS ON CORPORATE, PARTNERSHIP AND COOPERATIVE NAMES
1. Significance of Corporate Name
Red Line Transp. Co. v. Rural Transit Co.,17 held that there is no law that empowers any
agency or court to authorize one corporation to assume the name of another corporation as a trade
name since the (then) Corporation Law18 required each corporation to adopt and certify a
distinctive name. It held that the incorporators constitute a body politic and corporate under the
name stated in the certificate and the corporation has the power of succession by its corporate
name.19 The Supreme Court in Red Line Transp. Co. went on to rule
The name of a corporation is therefore essential to its
existence. It cannot change its name except in the manner
provided by the statute. By that name alone is it authorized to
transact business. The law gives a corporation no express or
implied authority to assume another name that is unappropriated;
still less that of another corporation, which is expressly set apart
for it and protected by law. If any corporation can assume at
pleasure as an unregistered trade name the name of another
corporation, this practice would result in confusion and open the
door to frauds and evasions and difficulties of administration and
supervision.20
In one opinion, the SEC held that the corporate name distinguishes the corporation from
its members or stockholders and other corporations and entities; to avoid confusion therefore, the
Corporation Code prohibits it from adopting a name identical or deceptively similar to that of any
existing corporation or to any other name already protected by law or which is patently deceptive,
confusing or contrary to existing laws; and if the name being applied for is confusingly similar to
an existing name, the SEC having due notice of prior registration, shall refuse the registration of
any other corporation or partnership bearing confusingly similar name even if the existing
corporation authorizes the use thereof.21
The doctrine that a corporation has no legal authority to use a business name or trade
name other than its registered corporate name is deemed repealed under the terms of the Revised
Rules and Regulations which expressly allow corporations and partnership to apply to the
registration of business names or trade names when they are other than their registered
corporate/partnership names. 22
2. The Law Governing Corporate/Partnership Names

17

60 Phil. 549 (1934).


Act No. 1459, which was supplanted in 1980 by the Corporation Code.
19
Ibid, at pp. 554-555.
20
Ibid, at p. 555.
21
SEC Opinion, dated 5 June 1995.
22
See Secs. 3 and 6(b), Revised Rules and Regulations.
18

Under Section 18 of the Corporation Code,23 [n]o corporate name may be allowed by the
Securities and Exchange Commission (the SEC) if the proposed name is identical or
deceptively or confusingly similar to that of any existing corporation or to any other name already
protected by law or is patently deceptive, confusing or contrary to existing laws. When a change
in the corporate name is approved, the Commission shall issue as amended certificate of
incorporation under the amended name. The section therefore has two (2) thrusts, namely:
(a) That no corporation has a vested right to a name that is
deceptive, confusing or identical with another name; and
(b) That the approval by the SEC of the corporate name of a
corporation is always conditional on a better right to the
name of other persons or entities the use of which has been
registered and/or protected by other laws, or upon the
determination of the SEC that the name so registered as a
corporate name is deceptive or confusing or contrary to
existing laws.
The granting of the SEC registration to a corporation under its corporate name does not
place a priority right to said corporation to the use of the name, and in fact such corporation may
be compelled to change its name when it is shown that its registered corporate name is identical
or deceptively or confusingly similar to that of any other corporation or to any other name
already protected by law.
The SEC under the Corporation Code has not been designated nor considered as the
primary agency to rule upon priority and rights to business names even when used in the
incorporation process of corporations, and that therefore the grant of the primary franchise by the
SEC to corporations under a particular corporate name does not by itself produce a legal effect of
priority of rights to the corporate name vis--vis that name as registered with other government
agencies under different laws, or one that is already protected under a different law.
In fact, under the Guidelines issued by the SEC in the approval of corporate and
partnership names, it requires that the incorporators or partners shall submit a written undertaking
to change their corporate or partnership name in case there is another person, firm or entity with a
prior right to the use of said name or one similar to it.
3. Conflicts Between BTRCP and SEC Names
When a business name or trade name has been registered by another person or entity with
the BTRCP under the Business Names Law, the use thereof in the corporate name of a
corporation for purposes of incorporation does not, notwithstanding SEC approval of its
registration, grant to such incorporating entity priority and vested interest in such corporate name;
that in fact, Section 18 of the Corporation Code, and by the written undertaking of its
incorporators, the corporation is mandated to change such name and adopt a new one that is not
identical or deceptively or confusingly similar to that of any existing corporation or to any other
name already protected by law or is patently deceptive, confusing or contrary to existing laws.
The registration of the corporate name as part of the articles provision filed with the SEC
is a legal requirement for incorporation under the Corporation Code, by which the primary
franchise of the corporation will be granted and as the means for the public to distinguish such
corporation from other persons and entities. Nevertheless, registered corporate name does not
constitute the business name required under the Business Names Law to be registered with the
BTRCP since it constitutes the real name of the corporation. Therefore, the Business Names Law
and the registration of corporate/partnership names with the SEC should be considered as
23

Batasang Pambansa Blg. 68.

complementary laws composing the registration system covering business names and trade names
under Philippine laws.
In summary, when a name or style is adopted for the first time as the registered name of a
corporation or partnership with the SEC, in effect the Business Names Law grants a priority right
to the use thereof by the registered corporation or partnership to the exclusion of other persons
and entities who are then prohibited from registering such name or style as a business name or
trade name with the BTRCP. On the other hand, when a business name or trade name has been
previously registered with the BTRCP under the Business Names Law, under the clear provisions
of the Corporation Code, a corporation that manages to have it registered as its corporate name is
mandated to change its corporate name.
BUSINESS NAMES AND STYLES UNDER THE NIRC
1. The Registration Rules under the NIRC
Under Sec. 236 of the National Internal Revenue Code of 1997, 24 every person subject to
any internal revenue tax shall, on or before the commencement of business, register with the
appropriate Revenue District Officer, and such registration shall contain the taxpayers name,
style, place of residence, business and other required information, and for which he needs to pay
an annual registration fee. Failure to pay the required registration fee shall upon conviction for
each act or omission, be punished by a fine of not less that P5,000.00 but not more than
P20,000.00 and suffer imprisonment of not less than six (6) months but not more than two (2)
years.25
Under the similar terms of the NIRC of 1977, the BIR issued Revenue Memorandum
Order # 41-94 which modified the procedures in the registration of VAT, non-VAT, excise
taxpayers, and withholding agents, by providing only a single application for registration with the
BIR.26
The BIR has opined that the obligation of a taxpayer to register arises upon the
commencement of business, which involves the conduction of commercial activity and with the
intention of making profits. Preparatory acts by the taxpayer like registering a business name or
style with the BTRCP without actually conducting or starting any business activity will not give
rise to any obligation by the taxpayer to register with the BIR, and that no penalty may be
imposed on a taxpayer who merely registers a business or style without actually starting a
business.27
2. The Proper Role of Registering Business Names under the NIRC
The purpose of the NIRC requirements for registration of the business names and styles
of taxpayer is simply to provide for the effective implementation of the provisions of the tax
law.28 It does not provide for a system of priority on the use of business names and styles, much
less is it meant to provide any legal basis by which to resolve conflict in the use of business
names and styles among private individuals.
Consequently, other than in the realm of taxation, the provisions of the NIRC and
ancillary rules and regulations, relating to registration of business names and styles are generally
commercially irrelevant to businessmen, merchants, corporations and partnerships, except that
such registration with the BIR would constitute a system of registration which if prior in time
would serve as evidence of priority in use either under the Corporation Code or the IP Code.
24

Republic Act No. 8424 (1997), otherwise known as the Tax Reform Act of 1997.
Sec. 258 of the National Internal Revenue Code of 1997.
26
Using BIR Form # 1556-A.
27
BIR Ruling No. 075, 29 April 1991.
28
GOPENGCO, supra at p. 749.
25

BUSINESS NAMES/TRADE NAMES UNDER


THE INTELLECTUAL PROPERTY CODE
1. Present State Policy on Business Names and Trade Names
Although the IP Code declares that intellectual property bears a social function, 29 and
embodies the State recognition that an effective intellectual and industrial property system is
vital to the development of domestic and creative activity, when it defines the scope of
intellectual property rights, and while it includes trademarks and service marks specifically, it
does not include trade names30 as within the coverage of intellectual property. Therefore,
although business names and trade names are clearly within the coverage of the IP Code, it does
not consider trade names per se as constituting intellectual property rights, but merely as
designation identifying or distinguishing an enterprise, 31 known also as business identifier, 32
as distinguished from a trademark which distinguishes the goods, and a service mark which
distinguishes services, of an enterprise. 33
2. Comparison with the Repealed Rep. Act No. 166
While under Rep. Act No. 166, trade names were registrable with the Bureau of Patents, 34
the IP Code, which repealed Rep. Act No. 166, does not provide for a system of registration of
trade names or business names.
The prior use and appropriation of trademarks, trade names and service mark was the
hallmark principle under Rep. Act No. 166, expressed under Section 2-A thereof: "Anyone who
lawfully produces or deals in merchandise of any kind or who engages in any lawful business or
who renders any lawful service in commerce, and in the service rendered, may appropriate to his
exclusive use a trademark, a trade name, or a service mark not so appropriated by another, to
distinguish his merchandise, business or service from the merchandise, business or services of
others. The ownership or possession of a trademark, trade name, service mark, heretofore or
hereafter appropriated, as in this section provided, shall be recognized and protected in the same
manner and to the same extent as are other property rights known to the law.
The principle under Rep. Act No. 166 was that a trademark, trade name or service mark is
a creation of use and therefore actual use is a pre-requisite to exclusive ownership, and its
registration with the Philippine Patent Office was a mere administrative confirmation of the
existence of such right.35
The whole of Section 2-A has been deleted entirely in the IP Code and instead Section
122 of the IP Code now cryptically provides: The rights in a mark shall be acquired through
registration made validly in accordance with the provisions of this law. The principle under the
IP Code therefore is that when it comes to trademarks and service marks (but not as to trade
names), the operative act of acquiring ownership is compliance with the system of registration
provided therein, and that the provisions of the IP Code governing the registration of marks,
therefore cover only trade marks and service marks. 36
29

Sec. 2, Intellectual Property Code.


See Sec. 4.1 of the Code defining intellectual property rights.
31
Sec. 121.3. Intellectual Property Code.
32
Rule 100(l), Rules and Regulations.
33
Sec. 121.1, ibid.
34
Sec. 2 of Rep. Act. No. 166 expressly provides that trademarks, trade names, and service marks
are registrable in accordance with the provisions of the Act.
35
Marvex Commercial v. Petra Hawpia & Co., 18 SCRA 1178 (1966)
36
See Secs. 123 to 139, ibid.
30

3. Governing Rules of the Code on Business Names and Trade Names


Treating them separately from trademarks and service marks, the IP Code provides under
Section 165 on Trade Names or Business Names that [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.
Section 165.2 provides that 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. In particular, the section
defines unalwful act as 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.
The clear implications of the afore-quoted provisions of the IP Code, therefore, are as
follows:
(a) The IP Code does not provide for a system of registration of business names
and trade names, and in fact does not require registration under any other
legal system by which its protective mantle may be enforced;
(b) It grants a protective mantle to the prior user/owner of business names and
trade names (whether registered or not), against third parties who use such
business/trade names, that is likely to mislead the public;
(c) It declares it an unlawful act for a person or entity to subsequently use a
business name or trade name already used by a prior user/owner; and
(d) Against the unlawful acts of third parties, it affords in general terms the
same remedies to the prior user/owner of a business name or trade name as
in the case of infringement of trademarks and service marks.
4. Remedies Allowed to the Owner for Infringement of Trade Name
Although specific remedies for infringement of trademarks or service marks are provided
for by the IP Code, in the case of business names or trade names, the IP Code merely provides
that the remedies provided for in Sections 153 to 156 [governing cancellation of registration]
and Sections 166 and 167 [governing infringement of trademark and service marks] shall apply
mutatis mutandis.37 General reference to such remedies are also provided for under Rule 103(c)
of the implementing Rules and Regulations.
a. Petition for Cancellation of Registration
It is not clear how Sections 153 and 154, which cover petitions for cancellation of
trademarks and service marks, can be made to apply in case of unlawful use or employment of a
trade name by a third party, since there is no system of registration of trade name under the IP
Code that may be the subject of cancellation.
What may be applied is that the petition for cancellation of trademark or service mark
may be applied against the registrant thereof if the original owner of a trade name can show that
the registered trademark or service mark have unlawfully appropriated as part of such mark the
trade name belonging to the first owner/user. When a case for cancellation has been made out,
the Bureau shall order the cancellation of the registration when the case for such cancellation has
been made out.38
37

Sec. 165.4, Intellectual Property Code.


Secs. 153 and 154, ibid.

38

b. Remedies Against Infringement


Any person who shall, without the consent of the owner, subsequently uses the business
name or trade name, may be deemed guilty of infringement 39 for which he can be made liable for
damages, the measure of which shall be either the reasonable profit which the complaining party
would have made, had the defendant not infringed his rights, or the profits which the defendant
actually made out of the infringement, or in the event such measure of damages cannot be readily
ascertained with reasonable certainty, then the court may award as damages a reasonable
percentage based upon the amount of gross sales of the defendant or the value of the services in
connection with which the trade name was used in the infringement of the rights of the
complaining party.40
In cases where actual intent to mislead the public or to defraud the complainant is shown,
in the discretion of the court, the damages may be doubled. 41
On application of the complainant, the court may impound during the pendency of the
action, sales invoices and other documents evidencing sales, 42 and on proper showing, may also
grant injunction.43
5. Unfair Competition
The IP Code also governs unfair competition and provides that [a] person who has
identified in the mind of the public the goods he manufactures or deals in, his business or service
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.44
a. Acts of Unfair Competition
Under the Code, any person who shall employ deception or any other means contrary to
good faith by which he shall pass of 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.45
In particular, and without any way limiting the scope of protection against unfair
competition, the Code enumerates instances it deems to be unfair competition: 46
(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

39

Sec. 155, ibid.


Sec. 156, ibid.
41
Sec. 156.3, ibid.
42
Sec. 156.2, ibid.
43
Sec. 156.4, ibid.
44
Sec. 168, ibid.
45
Sec. 168.2, ibid.
46
Sec. 168.3, ibid.
40

(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.
6. Criminal Penalty for Acts of Infringement and Unfair Competition
An act of infringement or unfair competition, independent of the civil and administrative
sanctions imposed by the IP Code, shall incur criminal penalty of imprisonment of 2 years to 5
years and a fine ranging from P50,000.00 to P200,000.00.
7. Relationship of the Code with Other Laws
Since the IP Code has abandoned the system of registration with respect to business
names and trade names, and considers only prior use as the means of securing the benefits of
ownership over business names and trade names, there would be likely conflicts with the
provisions of other laws where the system of registration of business names or trade names is
required as the basis for priority right. In fact, the provisions of the IP Code on business names or
trade names based on priority of use, may run into conflict with provisions relating to trademarks
and service marks which is based on priority in registration.
a. Conflict with Registered Trademark or Service Mark
When a business name or trade name was in prior use, but subsequently another person
seeks to register under the Code a trademark or service mark which includes such previously used
trade name or one similar thereto, it would seem that the owner of the business name or trade
name may file an opposition to the registration of the mark. 47
An examination of the grounds given under Section 123 where a mark cannot be
registered however does not cover a situation when the proposed mark is similar to a business
name or trade name. What the section declares are non-registrable would be marks that are
identical with a registered mark belong to a different proprietor or a mark with an earlier filing
or priority date, or one that is likely to mislead the public, particularly as to the nature, quality,
characteristics or geographical origin of the goods or services. Nevertheless, under Section
165.2(b), the Code declares it unlawful for a third party to subsequently use the trade name of the
owner whether as a trade name or a mark or collective mark, or any such use of similar trade
name or mark, likely to mislead the public, which is clear statutory basis to the position that
prior use of business names and trade names secures priority use even as against trademarks and
service marks.
Since the Code allows the owner of a business name or trade name to file an action
similar to an action for cancellation of mark, it can only be presumed that there may be cases in
the future where registered marks can be the subject of a petition for cancellation when it uses a
business name or trade name previously used by petitioning person or entity. At that point, the
courts would have to resolve the hierarchical system between the priority right given to
trademarks and service marks by virtue of their registration, and the priority right recognized to
business names and trade names by virtue of their first use in point of time.
b. Relating to the Corporation Code and NIRC
Both the relevant provisions of the Corporation Code and the NIRC do not equate
priority interest over business names or trade names by virtue of registration with the appropriate
government agency. In particular, Section 18 of the Corporation Code clearly mandates that the
47

Sec. 134, ibid.

registration of a corporate name with the SEC is always subject to the prior rights of other
persons or entities who have registered such name. This is consistent with the principle on
business names embodied in the IP Code.
It is clear therefore that in the realm of corporate and partnership names, within the
jurisdiction of the SEC, registration thereof with the SEC does not grant priority interests thereto
since the SEC-registration yields to the owners of such names already protected by law. The
Code is the primary law that protects the first user/owner of business names or trade names,
which bases such priority right not on registration but on first use.
c. Conflicts Between the Code and Business Names Law
Under the Business Names Law, it is not prior use, but first registration with the BTRCP
that secures priority over a business name or trade name. Thus, under Section 11 of the Revised
Rules and Regulation what is not registrable are those [names, firm names or styles] which so
nearly resemble a business name, firm name or style previously registered with the Department of
Trade and Industry, the Securities and Exchange Commission or any other government office
authorized by law to register names or styles, as likely to cause confusion or mistake in the minds
of the public and prejudice the interest of the owner of the registered business name, firm name or
style. In the discussions hereunder therefore any reference to registration under the Business
Names Law would include registration with the SEC and the BIR.
The Business Names Law secures to the person or entity who is able to register a
business name or trade name with any government agency authorized to register such names, to
the exclusion of other persons or entities who may have previously used such business name or
trade name. In fact prior use by itself without register under the Business Names Law is not
considered as securing priority, as it even makes it criminal to make use of a business name or
trade name without having first registered the same with the BTRCP.
On the other hand the IP Code mandates that [n]otwithstanding 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 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 similar trade name or mark,
likely to mislead the public.48
There is a conflict between the provisions of the Business Names Law which prohibits
and makes criminal the prior use of business name and trade name without prior registration (and
gives priority to the owner of such name who has registered the same), and the provisions of the
IP Code that provides that in spite of such registration requirement priority in use is what secures
priority in right to business names and trade names. It would lead to a near-comical situation
where the prior use of a business name or trade name without registration would secure priority
interest but at the same time would subject the user/owner to criminal liability. The scenario
becomes more farcical when we realize that an attached agency of DTI, the Intellectual Property
Office, would be protecting the priority rights of the user/owner of a non-registered business
name or trade name, and another bureau, the BTRCP, would be mandated to undertake criminal
action against such use without prior registration.
Even with the issuance of the Rules and Regulations on Trademarks, Servicemarks,
Trade Names and Marked or Stamped Containers, the conflicting statutory rules have not been
been resolved. The Business Names Law is not one of the statutes repealed expressly by the IP
Code as under Section 239. Implied repeal cannot be any comfort because the thrust of the
Business Names Law, to protect the dealing public, is different from the thrust of the IP Code, to
secure proprietary rights to owners of intellectual properties; aside from the fact that the IP Code
recognizes under Sec. 165.2(a) the continuance of registration system under other laws:
Notwithstanding any laws or regulations providing for any obligation to register trade names,
48

Sec. 165(a)(b), ibid.

such names shall be protected, even prior to or without registration, against any unlawful act
committed by third parties.
When the issue is to the priority in use of business names or trade names, the IP Code is
the special law, and therefore the governing statute. In spite of the provisions of the Business
Names Law, first use in point of time of the business name or trade name, and not registration, is
what would secure priority rights and all concomitant proprietary interests in such business name
or trade name. Consequently, the Business Names Law becomes a coercive statute by which such
first user/owner is motivated to register the business name or trade name with the government for
the protection of the dealing public.
This would then bring us to the last conflicting point: how to resolve the issue between a
first user who has not previously registered the business name or trade name, and a subsequent
user who was able to register the name with the BTRCP. Under the Code, the subsequent
user/registrant has committed an unlawful act and for which he can be made civilly and
criminally liable; and that the first user would have rightful ownership over the business name or
trade name. On the other hand, under the Business Names Law, the first user cannot now seek a
registration of his business name or trade name because it has already been registered in the name
of the subsequent user, and in fact the first user is criminally liable for violating the Law.
An action by the first user/owner seeking to cancel the registration in the name of the
subsequent user/registrant would have no basis under the IP Code because it does not believe in,
and does not provide for, the system of registration and cancellation for business names and trade
names. Even under the Revised Rules and Regulations of the Business Names Law, the grounds
enumerated allowing a revocation or cancellation of a certificate of registration of business name
or trade name49 do not include priority of the first user/owner, as in fact it cannot include such
ground as it would be contrary to the main thrust of the Law making the first user/owner liable
criminally for failing to register.
Under the IP Code, the non-registered first user/owner would have a civil/administrative
cause of action against the subsequent user/registrant for infringement and unfair competition,
and can even seek to make him liable for criminal offense covered under Section 170. Whereas
the subsequent user/registrant could seek to have the non-registered first user/owner criminally
punished for violation of the Business Names Law.
d. Reconciling System Under the Present Laws
Considering the present state of the laws pertaining to business names or trade names, it
is recommended that consistent system to follow would be:
(1) The first use of a business name or trade name secures to the user priority
ownership and title to the name, and to the exclusion of subsequent users and
third parties, under the clear terms of the IP Code;
49

Section 12 of the Revised Rules and Regulations gives the following grounds by which the
BTRCP may revoke or cancel the certificate of registration: (a) Registration of firm name, business names
and styles mentioned in the provisions of Section 11 hereof; (b) Making any false statement in the
application for registration of the firm name, business name or style; (c) Firm names, business names or
styles which were not use publicly or exposed on a signboard in plain view of the public by the registrant
within a period of ninety (90) days from the date of registration, or non-use thereof; (d) Cancellation or
revocation of any license or permit to engage in the business by any authorized government agency, or
change in the line of business which does not conform with the registered business name or style; (e)
Registration of those which may be used in a manner that will endanger the security of the State; (f) Use of
the business name or style for an immoral or illegal purpose or in a business found to be involved in
immoral or unlawful activity; and (g) Failure to operate the business within a period of six (6) months from
registration of the business name.

(2) Such first user/owner is mandated by the Business Names Law to register the
business name or trade name with the BTRCP under pains of criminal
prosecution for failing to do so;
(3) On its own, the act of using or displaying a business name or trade name
without having first registered it with the proper government agency, mainly
the BTRCP, shall be subject to criminal punishment under the Business
Names Law, in order to protect the public who deal with commercial
establishments as to be able to identify the true owners thereof;
(4) The registration of a business name or trade name with the BTRCP, SEC,
BIR, or any proper government agency, should be considered as a disputable
presumption in favor of the registrant that he is the first user/owner of the
registered name, and any third party who alleges first use would have the
burden of proof;
(5) A person or entity who subsequently uses the business name or trade name
already belonging to the first user/owner shall be liable to the first
user/owner for infringement/unfair competition, and when done in bad faith
shall be criminally liable under the Code;
(6) Nevertheless, when the subsequent user has actually registered the business
name or trade name with the appropriate government agency, he shall have in
his favor the disputable presumption that he acted in good faith and
considered himself to be the first user/owner of the name, and he who
interposes otherwise would have the burden of proof;
(7) Upon showing of the proper facts, the subsequent user of a business name or
trade name shall always be obliged to desist from the further use of the name
in favor of the first user/owner, who must then be obliged to register his
business name or trade name in lieu of the subsequent user/registrant whose
registration shall then be cancelled.
The foregoing system, as an interim measure, would provide for the proper safeguarding
of the principle of first use embodied in the Code, and yet considers the situation of registrants
under the Business Names Law and other registration laws.
ADOPTING REGISTRATION AS THE EXCLUSIVE
SYSTEM FOR BUSINESS NAMES OR TRADE NAMES
As the IP Code has abandoned the doctrine of prior use as the basis for priority in right
over trademarks and service marks and mandated that registration is the operative act by which
the registrant secures the rights of ownership over trademarks and service marks, then the IP
Code should be amended to adopt the same system with respect to business names or trade
names, as to make the provisions consistent with the Business Names Law and other related laws.
Under the present system of the IP Code that relies upon prior use, it would be difficult to
find out whether an intended business name or trade name has already been appropriated since
you cannot rely upon the registration system of either the BTRCP, SEC or the BIR, and
practically compels a research among the leading establishments and enterprises within the 7,100
islands of the archipelago. The present system would also encourage scheming persons, who for
large profits (pay-offs), would be willing to perjure themselves to claim prior use of a business
name or trade name which has achieved a certain degree of public recognition.
Registration of business names and trade names as the operative act by which priority
rights shall be granted would afford a more consistent and reliable system as it affords
businessmen, merchants and commercial entities with a single means of determining which

business names or trade names have already been appropriated by merely referring to the index
system of the government agency mandated with the registration system, which would have been
the Intellectual Property Office.
Each year, businessmen, merchants and commercial entities pour millions of pesos into
building their goodwill based on their business names or trade names. At the very least the
government should afford them a reliable system of registration upon which they can secure the
proprietary interests.
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COMMERCIAL LAW REVIEW\LAW ON BUSINESS NAMES\VERSION 12-01-98