HEIRS OF KING SI BIAK, NAMELY, ALBERT KING AND ARTHUR KING, PETITIONERS, VS. PANCITERIA LIDO CHINESE CUISINE CO., RESPONDENT.

Heirs of King Si Biak versus Panciteria Lido Chinese Cuisine

The Case

This is a petition for review brought by the heirs of King Si Biak, namely the brothers Albert King and Arthur King, against Panciteria Lido Chinese Cuisine Co. The heirs asked the Supreme Court to set aside the resolutions of the Court of Appeals that dismissed their appeal on purely procedural grounds, and to reinstate the cancellation of two trademark registrations covering the Lido marks. The case matters because it tests the interaction between the rule that trademark ownership is acquired through registration and the settled exception that a registration obtained in bad faith or contrary to law confers no protectable rights at all.

Procedural History

The case began with two petitions for cancellation filed by the brothers King before the Bureau of Legal Affairs of the Intellectual Property Office. In a decision dated December 18, 2020, the Adjudication Officer granted the petitions and cancelled the two Lido registrations. Panciteria Lido Chinese Cuisine Co. appealed to the Director of the Bureau of Legal Affairs. In a decision dated December 30, 2022, the Director affirmed the Adjudication Officer, holding that the registrations were made in bad faith and that the heirs were real parties in interest.

Panciteria Lido Chinese Cuisine Co. then appealed to the Office of the Director General of the Intellectual Property Office. In a decision dated December 18, 2023, the Director General reversed, holding that ownership of a trademark is acquired through registration and that the heirs were not real parties in interest. The brothers King filed a motion for extension of time and then a petition for review with the Court of Appeals. In a resolution dated March 25, 2024, the Court of Appeals denied the motion for extension and dismissed the petition for having been filed fifteen days beyond the reglementary period, also citing procedural defects in the verification, the affidavit of service, and the certification against forum shopping. The Court of Appeals denied reconsideration in a resolution dated February 12, 2025. Hence this petition for review before the Supreme Court.

Facts

The Lido Restaurant traces its origins to as early as 1936. It was owned by Eng Son Co., a partnership established in 1997 between King Si Biak and Annie Alipio. The partnership was organized for the specific purpose of operating the Lido Restaurant, and it continuously used the Lido name in connection with its business.

When the business relationship between the partners deteriorated, Alipio filed her own application in 2008 to register the trademark Panciteria Lido. King Si Biak opposed the application. In a decision dated November 19, 2010, the Bureau of Legal Affairs ruled that the right to register the trademark Panciteria Lido belonged to Eng Son Co., because Alipio herself admitted that the partnership owned the business. That decision became final.

King Si Biak passed away in 2010, leaving the brothers King as his heirs. Alipio then entered into a new partnership with other individuals and formed Panciteria Lido Chinese Cuisine Co. In 2012, that new company applied for and obtained registration of the two subject Lido marks. The heirs of King Si Biak responded by filing petitions for cancellation, which the Adjudication Officer and the Bureau Director granted, but which the Director General refused to sustain.

Issues

• Whether or not the Court of Appeals erred in dismissing the petition for review on the ground that it was filed out of time and on the procedural defects it cited.
• Whether or not the trademark registrations of Panciteria Lido Chinese Cuisine Co. were validly obtained under the Intellectual Property Code.
• Whether or not the heirs of King Si Biak are real parties in interest in the cancellation proceedings.

Applicable Provisions

Section 122 of the Intellectual Property Code provides:

The rights in a mark shall be acquired through registration made validly in accordance with the provisions of this law.

This is the general rule on acquisition of trademark ownership, but the decision stresses that the phrase made validly qualifies the rule, so that a registration obtained in bad faith or contrary to the Code vests no protectable rights.

Section 151.1(b) of the Intellectual Property Code provides:

Section 151. Cancellation. 151.1. A petition to cancel a registration of a mark under this Act may be filed with the Bureau of Legal Affairs by any person who believes that they are or will be damaged by the registration of a mark under this Act as follows: (b) At any time, if the registered mark becomes the generic name for the goods or services, or a portion thereof, for which it is registered, or has been abandoned, or its registration was obtained fraudulently or contrary to the provisions of this Act, or if the registered mark is being used by, or with the permission of, the registrant so as to misrepresent the source of the goods or services on or in connection with which the mark is used.

This is the express statutory ground for cancelling a registration obtained fraudulently or contrary to the Code, and it is the provision under which the subject registrations were cancelled.

Article 1821 of the Civil Code provides:

Article 1821. Notice to any partner of any matter relating to partnership affairs, and the knowledge of the partner acting in the particular matter, acquired while a partner or then present to his mind, and the knowledge of any other partner who reasonably could and should have communicated it to the acting partner, operate as notice to or knowledge of the partnership, except in the case of fraud on the partnership, committed by or with the consent of that partner.

This provision charges the respondent partnership with Alipio's knowledge that the right to register the Lido mark belonged to Eng Son Co., which is the basis for the finding of bad faith.

Ruling

On the procedural issue, the Court held that the petition is meritorious and that compelling reasons justify relaxing the rules. The right to appeal is a statutory privilege that must be exercised in the manner and within the period fixed by law, and failure to comply leads to loss of the right. Nevertheless, the Court relaxed the rules here for three reasons. First, the petition is impressed with substantive merit, presenting a prima facie case that the registrations were procured in bad faith and raising substantial questions on the ownership of a mark that constitutes partnership property. Second, the delay was not substantial and was adequately explained, since the petitioners moved for a fifteen-day extension before the period expired and the delay was not deliberate. Third, the petitioners promptly moved for reconsideration and substantially complied with the requirements pointed out by the Court of Appeals, curing the defects in the verification, the certification against forum shopping, and the affidavit of service.

On the substantive issue, the Court held that the registrations were not validly obtained and must be cancelled. It acknowledged that under Section 122 ownership of a trademark is acquired through valid registration, and that prior use no longer confers ownership as it did under the former Trademark Law. But the Court emphasized that this rule is qualified, because Section 122 requires that the registration be made validly, and a registration procured in bad faith or contrary to the Code is not one made validly. The Court found that the Lido mark had long been used by Eng Son Co., that this prior use was recognized by the Intellectual Property Office as early as 2010, and that the respondent could not disclaim knowledge because Alipio, one of its partners, was directly involved in the operations of Panciteria Lido and was a party to the earlier administrative case. Under Article 1821, her knowledge is the knowledge of the partnership. Citing its earlier rulings, the Court held that a partner who applies for registration of a mark despite knowledge that it belongs to the partnership acts in bad faith, and the application is unregistrable. The Court added that even setting bad faith aside, the registrations would remain infirm under Section 165.2, which protects a trade name whether or not registered, because the respondent appropriated the distinctive Lido identity associated with Eng Son Co.

On the issue of real party in interest, the Court held that the heirs possess sufficient legal interest. Whatever proprietary interest King Si Biak held in Eng Son Co. passed to his heirs upon his death under the rules on succession. While that hereditary interest did not automatically vest in them ownership over specific partnership assets prior to liquidation, it gave them sufficient legal interest to challenge acts impairing their predecessor's partnership interest. The Court also rejected the argument that King Si Biak's death vested exclusive rights in Alipio, because partnership property belongs to the partnership, no partner may appropriate specific partnership property as their own, and dissolution by death does not terminate the partnership until the winding up of its affairs is completed.

Doctrine

Ownership of a trademark is acquired through registration made validly in accordance with the Intellectual Property Code, and prior use no longer confers ownership. However, the requirement that the registration be made validly means that a registration procured in bad faith or contrary to the Code does not give rise to protectable trademark rights and remains subject to cancellation under Section 151.1(b). A partner who registers a mark knowing that it belongs to the partnership acts in bad faith, and under Article 1821 the partnership is charged with that partner's knowledge. Partnership property remains partnership property until liquidation and lawful distribution, and the heirs of a deceased partner have sufficient legal interest to challenge the unlawful registration of partnership property.

Disposition

The petition was granted. The Court reversed and set aside the resolutions of the Court of Appeals, reversed the decision of the Director General, reinstated the decision of the Adjudication Officer as affirmed by the Bureau Director insofar as consistent with the decision, and cancelled the two trademark registrations in favor of Panciteria Lido Chinese Cuisine Co.

Remember This

Registration made validly is the rule, but a registration obtained in bad faith is void and confers no trademark rights. Examiners use this case to test the exception to the registration rule, the imputation of a partner's knowledge to the partnership, and the liberal application of procedural rules where substantial justice so requires.