G.R. No. 190706 July 21, 2014
SHANG PROPERTIES REALTY CORPORATION (formerly THE SHANG GRAND TOWER CORPORATION) and SHANG PROPERTIES, INC. (formerly EDSA PROPERTIES HOLDINGS, INC.), Petitioners, vs. ST. FRANCIS DEVELOPMENT CORPORATION, Respondent.

FACTS

Respondent St. Francis Development Corporation, a real estate developer, filed complaints before the Intellectual Property Office (IPO) against petitioners Shang Properties Realty Corporation and Shang Properties, Inc. The complaints involved: (1) an intellectual property violation (IPV) case for unfair competition and damages due to petitioners’ use and application for registration of the marks “THE ST. FRANCIS TOWERS” and “THE ST. FRANCIS SHANGRI-LA PLACE”; and (2) inter partes cases opposing said trademark applications. Respondent claimed prior and continuous use of the mark “ST. FRANCIS” for its property development projects (e.g., St. Francis Square Commercial Center) in Ortigas Center since 1992, gaining substantial goodwill. Petitioners countered that “ST. FRANCIS” is geographically descriptive, as both parties’ projects are located along streets named St. Francis Avenue and St. Francis Street in Ortigas Center.
The IPO Bureau of Legal Affairs (BLA) initially found petitioners guilty of unfair competition for using “THE ST. FRANCIS TOWERS” but not for “THE ST. FRANCIS SHANGRI-LA PLACE,” denied the application for “THE ST. FRANCIS TOWERS,” but allowed the application for “THE ST. FRANCIS SHANGRI-LA PLACE.” The IPO Director-General affirmed the denial of the “ST. FRANCIS TOWERS” application and the finding of no unfair competition for “ST. FRANCIS SHANGRI-LA PLACE,” but reversed the unfair competition finding for “ST. FRANCIS TOWERS,” dismissing the charge. The Director-General deemed “ST. FRANCIS” geographically descriptive. The Court of Appeals reversed, finding petitioners guilty of unfair competition for both marks, ordering them to cease using “ST. FRANCIS” and to pay a fine. The decisions in the inter partes cases (on registrability) had lapsed into finality, leaving only the unfair competition issue for Supreme Court review.

ISSUE

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 Supreme Court ruled that petitioners are not guilty of unfair competition. The Court held that the term “ST. FRANCIS” is primarily geographically descriptive. It denotes the location of the parties’ real estate projects along St. Francis Avenue and St. Francis Street in Ortigas Center. A geographically descriptive term cannot be exclusively appropriated by one entity unless it has acquired a “secondary meaning” that is, it has become distinctive of the applicant’s goods or services in commerce. The Court found that respondent failed to prove that “ST. FRANCIS” had acquired secondary meaning in connection with its real estate business. The evidence did not establish that the public primarily associated “ST. FRANCIS” with respondent’s properties rather than with the geographical location. Furthermore, the Court found no evidence of fraudulent intent or bad faith on petitioners’ part to deceive the public or pass off their goods as those of respondent, which is essential for a finding of unfair competition. The marks used by petitioners (“THE ST. FRANCIS TOWERS” and “THE ST. FRANCIS SHANGRI-LA PLACE”) were deemed sufficiently distinct from respondent’s “ST. FRANCIS” marks, especially as “Shangri-La” was a known brand of petitioners. The Court reversed the CA decision and reinstated the IPO Director-General’s ruling dismissing the unfair competition charge.