W LAND HOLDINGS v. STARWOOD HOTELS, GR No.

222366, 2017-12-04

Issues:
whether or not the CA correctly affirmed the IPO DG's dismissal of W Land's Petition for Cancellation of
Starwood's "W'' mark.

Ruling: The petition is without merit.

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, 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.

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. Following the basic rule that he who
alleges must prove his case, the burden lies on the petitioner to show damage and non-use.

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," as acceptable proof of actual use.

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.

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.

In this case, Starwood has proven that it owns Philippine registered domain names, i.e.,
www.whotels.ph, www.wreservations.ph, www.whotel.ph, www.wreservation.ph, for its website that
showcase its mark.

Taken together, these facts and circumstances show that Starwood's use of its "W" mark through its
interactive website is intended to produce a discernible 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.

SHANG PROPERTIES REALTY CORPORATION v. ST. FRANCIS DEVELOPMENT CORPORATION, GR No.

190706, 2014-07-21
Issues:
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."

Ruling: NO.

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."

Here, the Court finds 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.

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 secondary meaning is 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.

Under Section 123.2[34] 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 the products are concerned; and (c) proof
of substantially exclusive and continuous commercial use in the Philippines for five (5) years before the date
on which the claim of distinctiveness is made.

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.

Principles:
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.

BPI FAMILY SAVINGS BANK v. ST. MICHAEL MEDICAL CENTER, GR No. 205469, 2015-03-25
Rehabilitation proceedings CANNOT be a remedy to a corporation that has NOT YET commenced
formal operations NOR have yet to earn income.

SMMCI's opening a credit line with BPI for the construction of the new hospital building was only a
PREPARATORY ACT to future operations.

Rehabilitation assumes that the corporation has been operational but for some reasons like economic
crisis or mismanagement had become distressed or insolvent, i.e., that it is generally unable to pay its
debts as they fall due in the... ordinary course of business or has liability that are greater than its assets
Thus, the basic issues in rehabilitation proceedings concern the viability and desirability of continuing the
business operations of the distressed corporation, all with a view of effectively restoring it to a state of
solvency or to its former healthy financial condition through the adoption of a rehabilitation plan.

It cannot be said that the petitioning corporation, SMMCI, had been in a position of successful operation
and solvency at the time the Rehabilitation Petition was filed on August 11, 2010. While it had indeed
"commenced business" through the preparatory act of opening a credit line with BPI Family to finance the
construction of a new hospital building for its future operations, SMMCI itself admits that it has not formally
operated nor earned any income since its incorporation. This simply means that there exists no viable
business concern to be restored.

A material financial commitment becomes significant in gauging the resolve, determination,

earnestness and good faith of the distressed corporation in financing the proposed rehabilitation
plan. This commitment may include the voluntary undertakings of the stockholders or the would-be
investors of the debtor-corporation indicating their readiness, willingness and ability to contribute funds or
property to guarantee the continued successful operation of the debtor corporation during the period of
rehabilitation aside from the harped on merger of St. Michael Hospital with SMMCI, the only proposed
source of revenue the Rehabilitation Plan suggests is the capital which would come from SMMCI's potential
investors, which negotiations are merely pending. Evidently, both propositions commonly border on the
speculative and, hence, hardly fit the description of a material financial commitment which would inspire
confidence that the rehabilitation would turn out to be successful. SMMCI likewise failed to include any
liquidation analysis in its Rehabilitation Plan.

The failure of the Rehabilitation Plan to state any material financial commitment to support
rehabilitation, as well as to include a liquidation analysis, translates to the conclusion that the RTC's
stated considerations for approval... are actually unsubstantiated, and hence, insufficient to decree
SMMCI's rehabilitation. It is well to... emphasize that the remedy of rehabilitation should be denied to
corporations that do not qualify under the Rules.

BANK OF THE PHILIPPINE ISLANDS VS SARABIA MANOR HOTEL CORPORATION

Issue: Whether or not the BPI’s opposition proper.

Held: No. In this light, case law has defined corporate rehabilitation as an attempt to conserve and
administer the assets of an insolvent corporation in the hope of its eventual return from financial stress to
solvency. It contemplates the continuance of corporate life and activities in an effort to restore and reinstate
the corporation to its former position of successful operation and liquidity. Verily, the purpose of
rehabilitation proceedings is to enable the company to gain a new lease on life and thereby allow
creditors to be paid their claims from its earnings.

Thus, rehabilitation shall be undertaken when it is shown that the continued operation of the corporation
is economically more feasible and its creditors can recover, by way of the present value of payments
projected in the plan, more, if the corporation continues as a going concern than if it is immediately
liquidated.

Among other rules that foster the foregoing policies, Section 23, Rule 4 of the Interim Rules of Procedure
on Corporate Rehabilitation (Interim Rules) states that a rehabilitation plan may be approved even over the
opposition of the creditors holding a majority of the corporation’s total liabilities if there is a showing that
rehabilitation is feasible and the opposition of the creditors is manifestly unreasonable. Also known as the “
cram-down” clause, this provision, which is currently incorporated in the FRIA, forces the creditors to accept
the terms and conditions of the rehabilitation plan, preferring long-term viability over immediate but
incomplete recovery.

In order to determine the feasibility of a proposed rehabilitation plan, it is imperative that a thorough
examination and analysis of the distressed corporation’s financial data must be conducted. If the
results of such examination and analysis show that there is a real opportunity to rehabilitate the
corporation in view of the assumptions made and financial goals stated in the proposed
rehabilitation plan, then it may be said that a rehabilitation is feasible. In this accord, the rehabilitation
court should not hesitate to allow the corporation to operate as an on-going concern, albeit under the
terms and conditions stated in the approved rehabilitation plan. On the other hand, if the results of the
financial examination and analysis clearly indicate that there lies no reasonable probability that the
distressed corporation could be revived and that liquidation would, in fact, better subserve the interests
of its stakeholders, then it may be said that a rehabilitation would not be feasible. In such case, the
rehabilitation court may convert the proceedings into one for liquidation.