Heirs of King Si Biak vs. Panciteria Lido Chinese Cuisine Co.

A trademark registration obtained in bad faith—by an applicant with knowledge of another entity's prior use and ownership of the mark—is not a registration made validly under the Intellectual Property Code and does not confer protectable trademark rights; it is subject to cancellation under Section 151.1(b).

The dispute concerns the Lido marks used by a restaurant business. Eng Son Co. was a partnership between King Si Biak and Annie Alipio. The statutory backdrop is the Intellectual Property Code's regime on trademark ownership through valid registration, cancellation of registrations obtained fraudulently or contrary to the Code, and protection of trade names even without registration.

The Lido Restaurant was owned by Eng Son Co., a partnership established in 1997 between King Si Biak and Annie Alipio. The Lido Restaurant traces its origins to as early as 1936. King Si Biak and Alipio organized Eng Son Co. for the specific purpose of operating the Lido Restaurant, after which the partnership continuously used the Lido name in connection with its business. The "Lido" mark and its Chinese equivalent had long been used in connection with the restaurant business operated by Eng Son Co.

When the business relationship between King Si Biak and Alipio deteriorated, Alipio filed in 2008 her own application for registration of the trademark "Panciteria Lido" for restaurant falling under Class 43. King Si Biak opposed the application, and the case was docketed as IPC No. 14-2009-00213. In a Decision dated November 19, 2010, the BLA ruled that the right to register the trademark "Panciteria Lido" belonged to Eng Son Co., considering Alipio's own admission that the partnership owned the business. The BLA further ruled that, even assuming the partnership had been dissolved at Alipio's instance, such dissolution did not terminate the partnership, which continued to exist until the winding up of its affairs. This Decision had since attained finality.

King Si Biak passed away in 2010, leaving the brothers King as his heirs. Alipio, on the other hand, entered into a new partnership with other individuals and formed respondent Panciteria Lido Chinese Cuisine Co. (PLCCC). In 2012, PLCCC applied for the registration of the subject Lido marks. The applications were granted, prompting the heirs to file the petitions for cancellation.

The BLA Adjudication Officer found that the mark "Lido" was first adopted and used in commerce as part of the name "Panciteria Lido," which later became the Lido Restaurant; that King Si Biak and Alipio formed Eng Son Co. to operate the restaurant; and that the partnership continuously used the Lido name in connection with its business. The Adjudication Officer also found that PLCCC's registered marks incorporated the dominant word element "Lido," so the disputed marks belonged to Eng Son Co., not PLCCC, and PLCCC's registrations could not prevail over the partnership's superior ownership rights. The BLA Director found that PLCCC registered the subject marks in bad faith, having prior knowledge that the Lido mark belonged to Eng Son Co.; that absent any showing the partnership had been liquidated and its assets lawfully distributed, ownership of the Lido mark remained with Eng Son Co.; and that the brothers, having succeeded to King Si Biak's proprietary interest in the partnership, were real parties-in-interest. The IPO Director General held that ownership of a trademark is acquired through registration rather than prior use; that neither Eng Son Co. nor King Si Biak had an existing trademark registration or pending application covering the subject marks; that PLCCC validly acquired ownership upon registration; that PLCCC did not act in bad faith; and that the brothers were not real parties-in-interest because PLCCC, not Eng Son Co., owned the marks.

The brothers then filed a Motion for Extension of Time to File Petition for Review, followed by a Petition for Review with the CA. The CA denied the motion and dismissed the petition for being filed 15 days beyond the reglementary period and for procedural defects, including failure to indicate competent evidence of identity in the verification and affidavit of service, omission of the parties' respective addresses, and failure to state the notary public's updated MCLE compliance in the verification and certification against forum shopping. The brothers moved for reconsideration, explaining the delay and attaching the MCLE certification, a corrected verification and certification against forum shopping stating their address with competent evidence of identity, and a photocopy of the affidavit of service with competent evidence of identity of the server. The CA denied the motion for reconsideration, prompting this Petition for Review.

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• Procedural Relaxation: Whether the CA erred in dismissing the petition for review for late filing and procedural defects, or whether the rules may be relaxed in the interest of substantial justice.
• Validity of Trademark Registration: Whether PLCCC's registrations of the Lido marks were validly obtained under the Intellectual Property Code despite Eng Son Co.'s prior use and PLCCC's alleged bad faith.
• Partnership Property: Whether the Lido marks remained partnership property of Eng Son Co. after King Si Biak's death, absent liquidation and distribution.
• Real Party-in-Interest: Whether the brothers King, as heirs of King Si Biak, are real parties-in-interest to file the petitions for cancellation.
• Trade Name Protection: Whether Section 165.2 of the Intellectual Property Code protects Eng Son Co.'s trade name against PLCCC's registration of the Lido marks.

• Procedural Relaxation: Yes. The CA erred in dismissing the petition on procedural grounds; the SC relaxed the rules because the petition had substantive merit, the 15-day delay was brief and explained, and petitioners promptly cured the defects.
• Validity of Trademark Registration: No. Although Section 122 provides that rights are acquired through registration, only a valid registration confers rights; PLCCC's registrations were procured in bad faith and contrary to the IP Code, so they are cancellable under Section 151.1(b).
• Partnership Property: No. The marks remained partnership property; the death of King Si Biak dissolved but did not terminate Eng Son Co., which continued until winding up, and no liquidation or lawful transfer was shown.
• Real Party-in-Interest: Yes. As heirs, petitioners succeeded to King Si Biak's proprietary interest and had sufficient legal interest to challenge the unlawful registration of partnership property.
• Trade Name Protection: Yes. Section 165.2 protects Eng Son Co.'s trade name even without registration; PLCCC's registration of marks dominated by "Lido" was likely to mislead the public and was void.

• Procedural Relaxation: As a general rule, a petition filed out of time should be dismissed. The right to appeal is neither a natural right nor part of due process but merely a statutory privilege that must be exercised in the manner and in accordance with law. Failure to comply leads to loss of the right to appeal. Nevertheless, the SC has relaxed procedural rules in appeals due to strong considerations of fairness and justice and in extraordinary situations. Although perfection of an appeal within the reglementary period is mandatory, the rule may be suspended when compelling reasons warrant or when the purpose of justice requires it. Here, compelling reasons exist. First, the petition is impressed with substantive merit: it presents a prima facie case that respondent's trademark registrations were procured in bad faith, with prior knowledge of another entity's prior use and long-standing identification with the mark, and raises substantial questions on acquisition and ownership of trademark rights where the mark constitutes partnership property. Second, the delay was not substantial and was adequately explained. Before the period expired, petitioners moved for a 15-day extension, later explaining that certain documentary attachments had not yet been issued. The explanation is supported by the dates on the certifications and annexes eventually attached. Although the petition was filed 15 days beyond the original deadline, nothing suggests the delay was deliberate or intended to delay proceedings. Third, petitioners promptly moved for reconsideration and substantially complied with the requirements pointed out by the CA: they submitted the missing MCLE certification of the notary public, corrected the verification and certification against forum shopping to include the parties' addresses and competent evidence of identity, and attached the required proof of identity in the affidavit of service. These prompt corrective measures demonstrate good faith. Taken together, the substantial issues, relatively brief delay, and prompt correction justify liberal application of the Rules.

• Validity of Trademark Registration: Section 122 of the Intellectual Property Code provides that "[t]he rights in a mark shall be acquired through registration made validly in accordance with the provisions of this law." Under the present statutory framework, ownership of a trademark is acquired through valid registration; unlike under the former Trademark Law, prior use no longer confers ownership over a mark. The rule is not without qualification. Section 122 provides that trademark rights arise only from registration "made validly" in accordance with the IP Code. This recognizes that not every registration automatically vests protectable trademark rights. A registration procured in bad faith or otherwise obtained contrary to the IP Code is not one made validly and does not give rise to protectable trademark rights. Such registrations remain subject to cancellation under Section 151.1(b). The SC reiterated these principles in Campbridge Waterproofing Systems, Inc. vs. Greenseal Products (M) Sdn. Bhd., which cited Zuneca Pharmaceutical vs. Natrapharm, Inc. for the rule that ownership is acquired through registration. Campbridge also clarified that the certificate of registration remains only prima facie evidence of validity and ownership, in recognition of instances when the certificate does not reflect the true owner, such as when registration was done in bad faith or contrary to law. Medina vs. Global Quest Ventures, Inc. stated that registrations done in bad faith or contrary to the IP Code may still be a basis for cancellation. Zuneca confirmed that marks registered in bad faith or contrary to law should never have been registered, and the registration is void and shall be cancelled after proper proceedings. As applied, the records establish that the "Lido" mark and its Chinese equivalent had long been used in connection with the restaurant business operated by Eng Son Co. The Lido Restaurant traces its origins to as early as 1936. King Si Biak and Alipio later organized Eng Son Co. for the specific purpose of operating the Lido Restaurant, after which the partnership continuously used the Lido name. This prior use had been recognized by the IPO as early as 2010 in IPC No. 14-2009-00213, where the IPO ruled that the right to register "Panciteria Lido," which incorporates the same dominant element "Lido," belonged to Eng Son Co., not to Alipio or King Si Biak individually. Respondent cannot disclaim this knowledge. One of its partners, Alipio, was directly involved in the operations of Panciteria Lido and was a party to the earlier administrative case. Under Article 1821 of the Civil Code, notice to or knowledge acquired by a partner concerning partnership affairs operates as notice to or knowledge of the partnership. There being no showing that the exception under Article 1821 applies, respondent is legally charged with Alipio's knowledge that the right to register the Lido mark belonged to Eng Son Co. In Zulueta vs. Cyma Greek Taverna Co., the SC held that a partner who applies for registration of a mark despite knowledge that the mark belongs to the partnership acts in bad faith, such that the application is unregistrable and does not confer valid trademark rights. Where it is found that (i) an entity has prior use, creation, and/or registration of a trademark and (ii) the applicant has knowledge of that prior use, creation, and/or registration, the trademark application is unregistrable due to bad faith. The same principle governs this case. Through Alipio, respondent knew that the right to register the Lido mark belonged to Eng Son Co., yet it caused the registration of the subject marks in its own name. This bad faith precluded respondent from acquiring protectable trademark rights and warranted cancellation under Section 151.1(b).

• Partnership Property: Under the Civil Code, property acquired by a partnership belongs to the partnership itself. While a partner has an interest in the partnership, no partner may appropriate specific partnership property as exclusively their own. Although the death of a partner causes the dissolution of the partnership, it does not terminate the partnership, which continues until the winding up of its affairs has been completed. Until liquidation has been concluded and the partnership assets lawfully distributed, partnership property retains its character as partnership property. Here, nothing in the records establishes that Eng Son Co. was ever liquidated or that the winding up of its affairs was ever undertaken. Neither is there any evidence that ownership of the subject marks was lawfully transferred to Alipio or respondent. Absent such showing, Alipio could not claim exclusive ownership over them, much less cause their registration in the name of another partnership. The IPO Director General's conclusion that King Si Biak's death vested exclusive rights over the disputed marks in Alipio cannot be sustained.

• Real Party-in-Interest: Contrary to the IPO Director General's ruling, petitioners possess sufficient legal interest to maintain the cancellation proceedings. Whatever proprietary interest King Si Biak held in Eng Son Co. passed, upon his death, to his heirs in accordance with the rules on succession. While such hereditary interest did not automatically vest in petitioners ownership over specific partnership assets prior to liquidation, it nevertheless gave them a sufficient legal interest to challenge acts allegedly impairing their predecessor's partnership interest, including the alleged unlawful registration of partnership property.

• Trade Name Protection: Even if the question of bad faith were laid aside, respondent's registrations would remain infirm under Section 165.2. This provision protects a trade name, whether or not registered, against any subsequent use by a third party that is likely to mislead the public. For decades, Eng Son Co. conducted business under the names "Lido," "Panciteria Lido," and "Lido Restaurant." By registering marks dominated by the distinctive "Lido" identity associated with Eng Son Co., respondent appropriated Eng Son Co.'s protected trade name. Such registration falls squarely within the prohibition of Section 165.2 and is void on that ground.

• Registration as mode of acquiring trademark ownership — Under Section 122 of the IP Code, rights in a mark are acquired through registration made validly in accordance with the Code; prior use no longer confers ownership. But registration is only prima facie evidence of validity and ownership, and it does not confer protectable rights if obtained in bad faith or contrary to law.
• Bad faith registration and knowledge of prior use — A trademark application is unregistrable where (i) an entity has prior use, creation, and/or registration of the mark and (ii) the applicant knows of that prior use, creation, and/or registration. Such knowledge establishes bad faith, and the registration does not confer valid trademark rights. In this case, Alipio's knowledge as partner was imputed to PLCCC under Article 1821, so PLCCC registered in bad faith.
• Partnership property and dissolution — Property acquired by a partnership belongs to the partnership; no partner may appropriate specific partnership property as exclusively their own. Death of a partner dissolves but does not terminate the partnership, which continues until winding up. Until liquidation and lawful distribution, partnership property retains its character. Applied: no liquidation of Eng Son Co., so the Lido marks remained partnership property.
• Trade name protection — Section 165.2 protects a trade name even prior to or without registration against any subsequent use by a third party likely to mislead the public. PLCCC's registration of Lido marks appropriated Eng Son Co.'s protected trade name and was void.
• Real party-in-interest of heirs — Heirs of a deceased partner acquire the partner's proprietary interest by succession. Although they do not automatically own specific partnership assets before liquidation, they have sufficient legal interest to challenge acts impairing the predecessor's partnership interest, including unlawful registration of partnership property.
• Liberal application of procedural rules — The right to appeal is statutory and must generally be exercised strictly, but rules may be relaxed for compelling reasons or when justice requires. Factors: substantive merit, brief and explained delay, prompt correction of procedural defects, and good faith.
• Dominancy test — In determining confusing similarity, focus is on the prevalent or dominant features of competing marks; descriptive or generic components are given little weight. Here "Lido" was the dominant and only source-identifying feature; "Cocina Tsina" was merely descriptive of a Chinese eatery.

• "The rights in a mark shall be acquired through registration made validly in accordance with the provisions of this law." — Section 122 as quoted by the SC; the phrase "made validly" is the textual basis for requiring that registration be lawful and in good faith.
• "A registration procured in bad faith or otherwise obtained contrary to the provisions of the Intellectual Property Code is not one made validly and does not give rise to protectable trademark rights." — The core holding: bad-faith registration is not a valid registration and cannot create enforceable trademark rights.
• "Where in the course of a trademark application, it is found that: (i) an entity has prior use, creation and/or registration of a trademark; and (ii) the applicant has knowledge of the said prior use, creation and/or registration—the trademark application is unregistrable due to the attendance of bad faith on the part of the applicant, and the same should be denied." — The SC's quoted formulation from Zulueta vs. Cyma Greek Taverna Co., setting the two-part bad-faith test applied to PLCCC.
• "Until liquidation has been concluded and the partnership assets lawfully distributed, partnership property retains its character as partnership property." — The partnership-property rule applied to reject the claim that King Si Biak's death vested exclusive rights in Alipio.

• Campbridge Waterproofing Systems, Inc. vs. Greenseal Products (M) Sdn. Bhd., G.R. No. 269302, January 22, 2025 — Relied on; reiterated that registration must be valid and that bad-faith registrations may be cancelled.
• Zuneca Pharmaceutical vs. Natrapharm, Inc., 882 Phil. 278 (2020) — Cited; established that under the IP Code ownership is acquired through registration, but bad-faith registrations are void and cancellable.
• Medina vs. Global Quest Ventures, Inc., 896 Phil. 47 (2021) — Cited; held registrations done in bad faith or contrary to the IP Code may be a basis for cancellation under Section 151(b).
• Zulueta vs. Cyma Greek Taverna Co., 934 Phil. 34 (2023) — Controlling; a partner who registers a mark knowing it belongs to the partnership acts in bad faith, and the application is unregistrable.
• Ramirez vs. Elomina, 898 Phil. 725 (2021) — Cited; the right to appeal is a statutory privilege and must be exercised in accordance with the Rules.
• Neypes vs. Court of Appeals, 506 Phil. 613 (2005) — Cited; procedural rules may be relaxed in extraordinary situations.
• Republic vs. Martinez, 881 Phil. 359 (2020) — Cited; perfection of an appeal is mandatory but may be suspended for compelling reasons.
• Abrigo vs. Commission on Audit, 921 Phil. 1067 (2022) — Cited; substantial issues warrant relaxation of procedural rules.

• Section 122, Republic Act No. 8293 (Intellectual Property Code) — Rights in a mark are acquired through registration made validly in accordance with the Code; the SC applied this to require valid registration and to reject PLCCC's registration as invalid due to bad faith.
• Section 151.1(b), Republic Act No. 8293 — A petition to cancel a registration may be filed at any time if the registration was obtained fraudulently or contrary to the Act; the SC applied this to cancel PLCCC's registrations.
• Section 165.2, Republic Act No. 8293 — Trade names are protected even prior to or without registration, and subsequent use by a third party likely to mislead the public is unlawful; the SC applied this to protect Eng Son Co.'s Lido trade name and void PLCCC's registration.
• Article 1821, Civil Code — Notice to or knowledge of a partner relating to partnership affairs operates as notice to or knowledge of the partnership; the SC imputed Alipio's knowledge to PLCCC.
• Articles 1768 and 1811, Civil Code — Property acquired by a partnership belongs to the partnership, and no partner may appropriate specific partnership property as exclusively their own; the SC applied this to hold the Lido marks remained partnership property.
• Article 1830(5), Civil Code — Death of a partner causes dissolution of the partnership; the SC recognized that King Si Biak's death dissolved but did not terminate Eng Son Co.
• Article 1829, Civil Code — Dissolution does not terminate the partnership, which continues until winding up; the SC applied this to hold partnership property retained its character absent liquidation.
• Articles 777 and 1841, Civil Code — Succession and a partner's interest; the SC applied these to hold the heirs had sufficient legal interest to sue.
• Section 4, Rule 43, Rules of Court — The appeal period invoked by the CA; the SC relaxed the rule under exceptional circumstances.

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