MA. SHARMAINE R. MEDINA/RACKEY CRYSTAL TOP CORPORATION vs. GLOBAL QUEST VENTURES, INC.

The Court held that a certificate of trademark registration constitutes prima facie evidence of ownership, but this presumption is rebuttable by proof of prior use by another or by evidence that the registration was obtained fraudulently or contrary to the Intellectual Property Code. Although the Intellectual Property Code shifted the acquisition of trademark ownership from prior use to registration, bad faith or fraudulent registration remains a valid statutory ground for cancellation, and factual determinations on bad faith by the Intellectual Property Office are accorded great respect when supported by substantial evidence.

Global Quest Ventures, Inc. manufactures and sells gulaman jelly powder under the mark "Mr. Gulaman," which it commissioned from Benjamin Irao, Jr. and used in commerce since at least 1996. Ma. Sharmaine R. Medina filed a trademark application for "Mr. Gulaman (Stylized)" in 2005, prompting Global to oppose the application on the ground of prior ownership and use. Despite the opposition, the Intellectual Property Office issued a Certificate of Registration to Medina in 2006. Global subsequently filed a petition for cancellation, alleging that Medina’s registration was obtained through bad faith and fraud, and that Global held superior rights to the mark through prior use and assignment of the underlying copyright.

• Global Quest Ventures presented a 1996 Certificate of Copyright Registration for the "Mr. Gulaman" logo design, a Deed of Assignment from the creator Benjamin Irao, Jr., product packaging samples, and sales invoices demonstrating market use since 2000.
• The BLA-IPO compared the contested marks and found the dominant word "Mr. Gulaman" identical in style and presentation across both registrations.
• The BLA-IPO noted that Medina submitted photographs of Global’s actual product packaging in her own Declaration of Actual Use, indicating direct copying.
• Medina was declared in default after failing to file a verified answer within the reglementary period. Her separate certiorari petition challenging the default declaration attained finality in a prior Court of Appeals proceeding.
• The BLA-IPO, IPO Director General, and Court of Appeals uniformly held that Global established superior rights through prior use and that Medina’s registration was tainted by bad faith.

• Petitioner maintained that her declaration in default did not strip her right to contest the cancellation and that the IPO’s refusal to admit her answer violated due process.
• Petitioner argued that respondent’s documentary evidence, consisting of photocopies and allegedly altered sales invoices, violated the Best Evidence Rule and IPO procedural requirements.
• Petitioner contended that copyright registration does not confer trademark rights and that the two marks are visually and aurally distinct, precluding any likelihood of confusion.

• Respondent countered that the issue of default was already settled with finality in a separate appellate proceeding and could not be relitigated.
• Respondent argued that its ownership and prior use were sufficiently established through the copyright registration, product labels, sales invoices, and deed of assignment.
• Respondent emphasized that the Intellectual Property Office’s factual findings on bad faith and confusing similarity, grounded in administrative expertise and substantial evidence, warrant judicial deference.

• Procedural Issues: Whether the Court should review the Intellectual Property Office’s refusal to admit petitioner’s answer and the alleged denial of due process.
• Substantive Issues: Whether the Court of Appeals erred in affirming the cancellation of petitioner’s trademark registration; and whether the prima facie presumption of ownership from a certificate of registration was properly rebutted by evidence of prior use and bad faith under the Intellectual Property Code.

• Procedural: The Court declined to revisit the default declaration and due process claim, noting that the issue attained finality in C.A.-G.R. SP No. 100742. A party cannot relitigate a matter already resolved with final and executory effect.
• Substantive: The Court denied the petition and affirmed the cancellation. The Court ruled that a trademark certificate creates only a prima facie presumption of ownership, which yields to substantial evidence of prior use or proof of fraudulent or bad faith registration. Although the Intellectual Property Code establishes registration as the mode of acquiring ownership, it explicitly preserves cancellation for marks obtained fraudulently or contrary to law. The administrative agencies found substantial evidence that petitioner copied respondent’s mark and submitted respondent’s own packaging in her declaration of actual use. Factual determinations of the Intellectual Property Office, affirmed by the Court of Appeals and supported by substantial evidence, are binding on the Supreme Court in a Rule 45 petition, which is limited to questions of law.

• Prima Facie Presumption of Trademark Ownership and Rebuttal — A certificate of registration constitutes prima facie evidence of the validity of the registration, the registrant’s ownership, and the exclusive right to use the mark. This presumption is not absolute and may be rebutted by clear evidence that the registration was obtained through bad faith, fraud, or contrary to statutory provisions, or by proof of another party’s prior use that establishes superior equitable or legal rights. The Court applied this doctrine to hold that Medina’s registration yielded to Global’s documented prior use and the IPO’s finding of bad faith.
• Acquisition of Trademark Ownership under the IP Code vs. Prior Use — The Intellectual Property Code shifted the acquisition of trademark ownership from actual prior use to valid registration. However, the Court clarified that while registration now vests ownership, the law retains cancellation as a remedy against registrations obtained in bad faith or through fraud. The Court relied on this distinction to reject the argument that prior use alone cannot defeat a registered mark, emphasizing that bad faith nullifies the protective shield of registration.

• "Clearly, it is not the application or registration of a trademark that vests ownership thereof, but it is the ownership of a trademark that confers the right to register the same." — The Court invoked this principle to underscore that registration merely creates a rebuttable presumption and does not immunize a registrant who acquired the mark in bad faith or through fraud.
• "Bad faith means that the applicant or registrant has knowledge of prior creation, use and/or registration by another of an identical or similar trademark. In other words, it is copying and using somebody else's trademark." — The Court adopted this definition to establish that petitioner’s deliberate appropriation of respondent’s established mark, coupled with the submission of respondent’s packaging in official filings, satisfied the statutory threshold for bad faith and justified cancellation.

• Berris Agricultural Co., Inc. v. Abyadang — Cited to establish that trademark ownership is fundamentally rooted in use and that a certificate of registration yields to superior evidence of actual and prior use by another.
• Birkenstock Orthopaedie GmbH and Co. KG v. Phil. Shoe Expo Marketing Corp. — Followed for the rule that registration confers only a prima facie presumption of ownership, which must yield to actual ownership and cannot be used as an instrument of bad faith appropriation.
• Zuneca Pharmaceutical v. Natrapharm, Inc. — Analyzed to clarify the statutory shift from prior use to registration as the mode of acquiring ownership under the IP Code, while simultaneously affirming that bad faith remains an independent ground for cancellation regardless of the registration regime.
• Pascual v. Burgos — Invoked to reiterate that a Rule 45 petition is limited to questions of law and that the Supreme Court will not disturb factual findings of lower courts and administrative agencies when supported by substantial evidence.

• Section 122, Republic Act No. 8293 (Intellectual Property Code) — Cited to establish that rights in a mark are acquired through valid registration, marking the statutory departure from the prior use doctrine.
• Section 138, Republic Act No. 8293 — Cited to define the certificate of registration as prima facie evidence of validity, ownership, and exclusive right to use.
• Section 151.1(b), Republic Act No. 8293 — Cited as the operative legal basis for cancellation, providing that registration may be cancelled at any time if obtained fraudulently or contrary to the provisions of the Act.