1.

Q: Corp A has been using the term “St. Francis” for 20 years to identify its numerous
property development projects along St. Francis Street and St. Francis Avenue at Ortigas
Center. These projects include St. Francis Commercial Center, St. Francis Square, and St.
Francis Towers. Corp A filed an intellectual property violation case for unfair competition
against Corp B. This stemmed from Corp B’s application for the registration of the mark
“St. Francis Shangri-La Place.” Corp B maintained that Corp A is barred from claiming
ownership of the term “St. Francis” because it is geographically descriptive of the goods
or services for which it is intended to be used. Can Corp A claim ownership over the term
“St. Francis”?

A: NO. Generally, geographically descriptive terms are in the public domain. Hence, it cannot be
appropriated except if it acquires secondary meaning. Under the IP Code, the requisites for a
geographically descriptive mark to acquire secondary meaning are:
a) The secondary meaning must have arisen as a result of substantial commercial use of a mark
in the Philippines;
b) Such use must have resulted in the distinctiveness of the mark insofar as the goods or the
products are concerned;
c) Proof of substantially exclusive and commercial use in the Philippines for 5 years before the
date on which the claim of distinctiveness is made.

Even though the Corp A has been using the term for 20 years already, its use is merely confined
to its projects within a specific area. Since its mark is limited to a certain locality, it failed the first
requisite since cannot be said that there is substantial commercial use of the same which is
recognized throughout the country. Also, Corp A failed to comply with the 2nd requisite because
it failed to show proof of any association between the realty projects as the good and it as the
developer of said good. (Shang Property Realty Corporation v. St. Francis Development
Corporation, G.R. No. 190706, July 21, 2014)

2.
Q: Corporation A is the registered owner of the trademark “Z”. Two months later,
Corporation B filed an application to register the same trademark “Z” under its own name.
This clash prompted Corporation B, to file an action to cancel Corporation A’s trademark
registration on the ground that Corporation A failed to use its mark because it had no hotel
or establishment in the Philippines rendering the services covered by its registration.
Corporation A asserted its right over the trademark “Z” and argued that it operates an
interactive website to accommodate its potential clients across the world. The website
allows Filipino citizens to make reservations and bookings online – clearly showing the
use of the trademark in the Philippines. Is Corporation A deemed to be using the trademark
“Z”, which it registered under its name?

A: YES. According to the case of W. Land Holdings v. Starworld Hotels, 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. 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. (W. Land Holdings v. Starworld
Hotels, G.R. No. 222366, December 4, 2017).
3.
Q: Spouses X and Y are the owners and sole proprietors of St. Michael Diagnostic and Skin
Care Laboratory Services and Hospital (St. Michael Hospital), a 5-storey secondary level
hospital. With a vision to upgrade St. Michael Hospital into a modern, well-equipped and
full service tertiary 11- storey hospital, Sps. X and Y purchased two (2) parcels of land
adjoining their existing property and incorporated A, with which entity they planned to
eventually consolidate St. Michael Hospital's operations. To finance the costs of
construction, A applied for a loan with petitioner B which gave a credit line of up to
P35,000,000.00, secured by a Real Estate Mortgage belonging to Sps. X and Y, on a portion
of which stands the hospital building being constructed. However, after
the construction, A was still neither operational nor earning revenues. Hence, it was only
able to pay the interest on its loan, over a two-year period, from the income of St. Michael
Hospital. B demanded immediate payment of the entire loan obligation and, soon after,
filed a petition for extrajudicial foreclosure of the real properties covered by the mortgage
and there was an auction sale. A filed a Petition for Corporate Rehabilitation (Rehabilitation
Petition), before the RTC, with prayer for the issuance of a Stay Order as it foresaw the
impossibility of meeting its obligation to B, its purported sole creditor. Is it proper for the
courts to approve A’s Rehabilitation Plan?

A: No. Rehabilitation assumes that the corporation has been operational but for some reasons
like economic crisis or mismanagement had become distressed or insolvent. 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. In this case, it cannot be said that the petitioning corporation, A, had been in a position of
successful operation and solvency at the time the Rehabilitation Petition was filed. While it had
indeed "commenced business" through the preparatory act of opening a credit line with B to
finance the construction of a new hospital building for its future operations, A 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. Perforce, the remedy of corporate
rehabilitation is improper, thus rendering the dispositions of the courts a quo infirm. (BPI Family
Savings Bank V. St. Michael Medical Center, GR No. 205469, 2015-03-25)

4.
Q: Company A obtained a loan from Bank B in order to finance the construction of a hotel
building. The loan was secured by real estate mortgages over several parcels of land
owned by Company A and a comprehensive surety agreement was signed by its
stockholders. By virtue of a merger, Bank C assumed all of Bank B’s rights against
Company A. Company A incurred cash flow problems and it therafter filed a Petition for
Corporate Rehabilitation before the RTC as it foresaw the impossibility to meet its
maturing obligations to its creditors. RTC approved Company A’s rehabilitation plan with
interest rate at 6.75%.
Bank C opposed saying that the cost of funds was at a 10% p.a. threshold. Is Company A’s
rehabilitation plan feasible?

A: Yes, the rules on corporate rehabilitation have been crafted in order to give companies leeway
to deal with debilitating financial predicaments in the hope of reaching a sustainable operating
form if only to best accommodate the various interests of all its stakeholders. Section 23, Rule 4
of the Interim Rules of Procedure on Corporate Rehabilitation or the “cram-down” provision is
necessary to curb the majority creditors’ natural tendency to dictate their own terms and
conditions to the rehabilitation, absent due regard to the greater long-term benefit of all
stakeholders.