Navarro, et al. vs. Ermita, G.R. No. 180050, February 10, 2010 [Case digest]

 

Navarro, et al. vs. Ermita,

G.R. No. 180050,    February 10, 2010

En Banc, Peralta J.

Facts:

            The mother province of Surigao del Norte was created and established under R.A. No. 2786 on June 19, 1960. The province is composed of three main groups of islands: (1) the Mainland and Surigao City; (2) Siargao Island and Bucas Grande; and (3) Dinagat Island, which is composed of seven municipalities, namely, Basilisa, Cagdianao, Dinagat, Libjo, Loreto, San Jose, and Tubajon.

            Based on the official 2000 Census of Population and Housing conducted by the National Statistics Office (NSO), the population of the Province of Surigao del Norte as of May 1, 2000 was 481,416, broken down as follows:

Mainland                                             281,111

Surigao City                                        118,534

Siargao Island & Bucas Grande         93,354

Dinagat Island                                    106,951

            Under Section 461 of R.A. No. 7610, otherwise known as The Local Government Code, a province may be created if it has an average annual income of not less than ₱20 million based on 1991 constant prices as certified by the Department of Finance, and a population of not less than 250,000 inhabitants as certified by the NSO, or a contiguous territory of at least 2,000 square kilometers as certified by the Lands Management Bureau. The territory need not be contiguous if it comprises two or more islands or is separated by a chartered city or cities, which do not contribute to the income of the province.

            In July 2003, the Provincial Government of Surigao del Norte conducted a special census, with the assistance of an NSO District Census Coordinator, in the Dinagat Islands to determine its actual population in support of the house bill creating the Province of Dinagat Islands. The special census yielded a population count of 371,576 inhabitants in the proposed province. The NSO, however, did not certify the result of the special census. On July 30, 2003, Surigao del Norte Provincial Governor Robert Lyndon S. Barbers issued Proclamation No. 01, which declared as official, for all purposes, the 2003 Special Census in Dinagat Islands showing a population of 371,576.

            The Bureau of Local Government Finance certified that the average annual income of the proposed Province of Dinagat Islands for calendar year 2002 to 2003 based on the 1991 constant prices was ₱82,696,433.23. The land area of the proposed province is 802.12 square kilometers.

            On August 14, 2006 and August 28, 2006, the Senate and the House of Representatives, respectively, passed the bill creating the Province of Dinagat Islands. It was approved and enacted into law as R.A. No. 9355 on October 2, 2006 by President Gloria Macapagal-Arroyo.

            On December 2, 2006, a plebiscite was held in the mother Province of Surigao del Norte to determine whether the local government units directly affected approved of the creation of the Province of Dinagat Islands into a distinct and independent province comprising the municipalities of Basilisa, Cagdianao, Dinagat, Libjo (Albor), Loreto, San Jose, and Tubajon. The result of the plebiscite yielded 69,943 affirmative votes and 63,502 negative votes.

            Petitioners contended that the creation of the Province of Dinagat Islands under R.A. No. 9355 is not valid because it failed to comply with either the population or land area requirement prescribed by the Local Government Code. Petitioners contend that the proposed Province of Dinagat Islands is not qualified to become a province because it failed to comply with the land area or the population requirement, despite its compliance with the income requirement. It has a total land area of only 802.12 square kilometers, which falls short of the statutory requirement of at least 2,000 square kilometers. Moreover, based on the NSO 2000 Census of Population, the total population of the proposed Province of Dinagat Islands is only 106,951, while the statutory requirement is a population of at least 250,000 inhabitants.

 

Issue:

            Whether or not R.A. No. 9355 violates Section 10, Article X of the Constitution.

 

Held:

            Yes; The constitutional provision on the creation of a province in Section 10, Article X of the Constitution states: SEC. 10. No province, city, municipality, or barangay may be created, divided, merged, abolished, or its boundary substantially altered, except in accordance with the criteria established in the local government code and subject to approval by a majority of the votes cast in a plebiscite in the political units directly affected."

            Pursuant to the Constitution, the Local Government Code of 1991 prescribed the criteria for the creation of a province, thus: SEC. 461. Requisites for Creation. --     (a) A province may be created if it has an average annual income, as certified by the Department of Finance, of not less than Twenty million pesos (₱20,000,000.00) based on 1991 constant prices and either of the following requisites:

                        (i) a contiguous territory of at least two thousand (2,000) square kilometers, as certified by the Lands Management Bureau; or

                        (ii) a population of not less than two hundred fifty thousand (250,000) inhabitants as certified by the National Statistics Office:

                        Provided, That, the creation thereof shall not reduce the land area, population, and income of the original unit or units at the time of said creation to less than the minimum requirements prescribed herein.

            (b) The territory need not be contiguous if it comprises two (2) or more islands or is separated by a chartered city or cities which do not contribute to the income of the province.

            (c) The average annual income shall include the income accruing to the general fund, exclusive of special funds, trust funds, transfers, and non-recurring income.

            As a clarification of the territorial requirement, the Local Government Code requires a contiguous territory of at least 2,000 square kilometers, as certified by the Lands Management Bureau. However, the territory need not be contiguous if it comprises two (2) or more islands or is separated by a chartered city or cities that do not contribute to the income of the province.

            If a proposed province is composed of two or more islands, does "territory," under Sec. 461 of the Local Government Code, include not only the land mass above the water, but also that which is beneath it? Respondents in Tan insisted that when the Local Government Code speaks of the required territory of the province to be created, what is contemplated is not only the land area, but also the land and water over which the said province has jurisdiction and control. The respondents submitted that in this regard, the marginal sea within the three mile limit should be considered in determining the extent of the territory of the new province. The Court stated that "such an interpretation is strained, incorrect and fallacious."

            The last sentence of the first paragraph of Section 197 is most revealing. As so stated therein the "territory need not be contiguous if it comprises two or more islands." The use of the word territory in this particular provision of the Local Government Code and in the very last sentence thereof, clearly, reflects that "territory" as therein used, has reference only to the mass of land area and excludes the waters over which the political unit exercises control.

                Said sentence states that the "territory need not be contiguous." Contiguous means (a) in physical contact; (b) touching along all or most of one side; (c) near, [next, or adjacent (Webster's New World Dictionary, 1972 Ed., p. 307). "Contiguous," when employed as an adjective, as in the above sentence, is only used when it describes physical contact, or a touching of sides of two solid masses of matter. The meaning of particular terms in a statute may be ascertained by reference to words associated with or related to them in the statute (Animal Rescue League vs. Assessors, 138 A.L.R., p. 110). Therefore, in the context of the sentence above, what need not be "contiguous" is the "territory" — the physical mass of land area. There would arise no need for the legislators to use the word contiguous if they had intended that the term "territory" embrace not only land area but also territorial waters. It can be safely concluded that the word territory in the first paragraph of Section 197 is meant to be synonymous with "land area" only. The words and phrases used in a statute should be given the meaning intended by the legislature (82 C.J.S., p. 636). The sense in which the words are used furnished the rule of construction (In re Winton Lumber Co., 63 p. 2d., p. 664).

            The territorial requirement in the Local Government Code is adopted in the Rules and Regulations Implementing the Local Government Code of 1991 (IRR), thus: ART. 9. Provinces.—(a) Requisites for creation—A province shall not be created unless the following requisites on income and either population or land area are present:

(1) Income — An average annual income of not less than Twenty Million Pesos (₱20,000,000.00) for the immediately preceding two (2) consecutive years based on 1991 constant prices, as certified by DOF. The average annual income shall include the income accruing to the general fund, exclusive of special funds, special accounts, transfers, and nonrecurring income; and

(2) Population or land area - Population which shall not be less than two hundred fifty thousand (250,000) inhabitants, as certified by National Statistics Office; or land area which must be contiguous with an area of at least two thousand (2,000) square kilometers, as certified by LMB. The territory need not be contiguous if it comprises two (2) or more islands or is separated by a chartered city or cities which do not contribute to the income of the province. The land area requirement shall not apply where the proposed province is composed of one (1) or more islands. The territorial jurisdiction of a province sought to be created shall be properly identified by metes and bounds.

            However, the IRR went beyond the criteria prescribed by Section 461 of the Local Government Code when it added the italicized portion above stating that "[the land area requirement shall not apply where the proposed province is composed of one (1) or more islands." Nowhere in the Local Government Code is the said provision stated or implied. Under Section 461 of the Local Government Code, the only instance when the territorial or land area requirement need not be complied with is when there is already compliance with the population requirement. The Constitution requires that the criteria for the creation of a province, including any exemption from such criteria, must all be written in the Local Government Code. There is no dispute that in case of discrepancy between the basic law and the rules and regulations implementing the said law, the basic law prevails, because the rules and regulations cannot go beyond the terms and provisions of the basic law.

            Hence, the Court holds that the provision in Sec. 2, Art. 9 of the IRR stating that "the land area requirement shall not apply where the proposed province is composed of one (1) or more islands" is null and void.

 

            Where a rule or regulation has a provision not expressly stated or contained in the statute being implemented, that provision does not necessarily contradict the statute. A legislative rule is in the nature of subordinate legislation, designed to implement a primary legislation by providing the details thereof. All that is required is that the regulation should be germane to the objects and purposes of the law; that the regulation be not in contradiction to but in conformity with the standards prescribed by the law.

               

                R.A. No. 9355 expressly states that the Province of Dinagat Islands "contains an approximate land area of eighty thousand two hundred twelve hectares (80,212 hectares) or 802.12 sq. km., more or less, including Hibuson Island and approximately forty-seven (47) islets. R.A. No. 9355, therefore, failed to comply with the land area requirement of 2,000 square kilometers.

            The Province of Dinagat Islands also failed to comply with the population requirement of not less than 250,000 inhabitants as certified by the NSO. Based on the 2000 Census of Population conducted by the NSO, the population of the Province of Dinagat Islands as of May 1, 2000 was only 106,951.

            Although the Provincial Government of Surigao del Norte conducted a special census of population in Dinagat Islands in 2003, which yielded a population count of 371,000, the result was not certified by the NSO as required by the Local Government Code. Moreover, respondents failed to prove that with the population count of 371,000, the population of the original unit (mother Province of Surigao del Norte) would not be reduced to less than the minimum requirement prescribed by law at the time of the creation of the new province.

            To reiterate, when the Dinagat Islands was proclaimed a new province on December 3, 2006, it had an official population of only 106,951 based on the NSO 2000 Census of Population. Less than a year after the proclamation of the new province, the NSO conducted the 2007 Census of Population. The NSO certified that as of August 1, 2007, Dinagat Islands had a total population of only 120,813, which was still below the minimum requirement of 250,000 inhabitants.

            In fine, R.A. No. 9355 failed to comply with either the territorial or the population requirement for the creation of the Province of Dinagat Islands. Hence, R.A. No. 9355 is unconstitutional for its failure to comply with the criteria for the creation of a province prescribed in Sec. 461 of the Local Government Code.

 

 

Shang Real Properties Corp vs. St Francis Development, G.R. No. 190706, July 21, 2014 [Second Division] [Perlas-Bernabe] Case Digest

 

Shang Real Properties Corp vs. St Francis Development,

G.R. No. 190706               July 21, 2014

[Second Division] [Perlas-Bernabe]

  

Facts:

            Respondent – a domestic corporation engaged in the real estate business and the developer of the St. Francis Square Commercial Center, built sometime in 1992, located at Ortigas Center, Mandaluyong City, Metro Manila (Ortigas Center) – filed separate complaints against petitioners before the IPO - Bureau of Legal Affairs (BLA), namely: (a) an intellectual property violation case for unfair competition, false or fraudulent declaration, and damages arising from petitioners’ use and filing of applications for the registration of the marks "THE ST. FRANCIS TOWERS" and "THE ST. FRANCIS SHANGRI-LA PLACE," and (b) an inter partes case opposing the petitioners’ application for registration of the mark "THE ST. FRANCIS TOWERS" for use relative to the latter’s business, particularly the construction of permanent buildings or structures for residential and office purposes and (c) an inter partes case opposing the petitioners’ application for registration of the mark "THE ST. FRANCIS SHANGRI-LA PLACE."

                In its complaints, respondent alleged that it has used the mark "ST. FRANCIS" to identify its numerous property development projects located at Ortigas Center, such as the aforementioned St. Francis Square Commercial Center, a shopping mall called the "St. Francis Square," and a mixed-use realty project plan thatincludes the St. Francis Towers. Respondent added that as a result of its continuous use of the mark "ST. FRANCIS" in its real estate business,it has gained substantial goodwill with the public that consumers and traders closely identify the said mark with its property development projects. Accordingly, respondent claimed that petitioners could not have the mark "THE ST. FRANCIS TOWERS" registered in their names, and that petitioners’ use of the marks "THE ST. FRANCIS TOWERS" and "THE ST. FRANCIS SHANGRI-LA PLACE" in their own real estate development projects constitutes unfair competition as well as false or fraudulent declaration.

                Petitioners denied committing unfair competition and false or fraudulent declaration, maintaining that they could register the mark "THE ST. FRANCIS TOWERS" and "THE ST. FRANCIS SHANGRI-LA PLACE" under their names. They contended that respondent is barred from claiming ownership and exclusive use ofthe mark "ST. FRANCIS" because the same is geographically descriptive ofthe goods or services for which it is intended to be used. This is because respondent’s as well as petitioners’ real estate development projects are locatedalong the streets bearing the name "St. Francis," particularly, St. FrancisAvenue and St. Francis Street (now known as Bank Drive), both within the vicinity of the Ortigas Center.

                BLA  found that petitioners committed acts of unfair competition against respondent by its use of the mark "THE ST. FRANCIS TOWERS" but not with its use of the mark "THE ST. FRANCIS SHANGRI-LA PLACE." It, however, refused to award damages in the latter’s favor, considering that there was no evidence presented to substantiate the amount of damages it suffered due to the former’s acts. The BLA found that "ST. FRANCIS," being a name of a Catholic saint, may be considered as an arbitrary mark capable of registration when used in real estate development projects as the name has no direct connection or significance when used in association with real estate. The BLA neither deemed "ST. FRANCIS" as a geographically descriptive mark, opiningthat there is no specific lifestyle, aura, quality or characteristic that the real estate projects possess except for the fact that they are located along St. Francis Avenueand St. Francis Street (now known as Bank Drive), Ortigas Center. In this light, the BLA found that while respondent’s use of the mark "ST. FRANCIS" has not attained exclusivity considering that there are other real estate development projects bearing the name "St. Francis" in other areas, it must nevertheless be pointed out that respondent has been known to be the only real estate firm to transact business using such name within the Ortigas Center vicinity. Accordingly, the BLA considered respondent to have gained goodwill and reputation for its mark, which therefore entitles it to protection against the use by other persons, at least, to those doing business within the Ortigas Center.

                IPO Director-General Adrian S. Cristobal, Jr. affirmedthe rulings of the BLA. CA found petitioners guilty of unfair competition not only withrespect to their use of the mark "THE ST. FRANCIS TOWERS" but alsoof the mark "THE ST. FRANCIS SHANGRI-LA PLACE." Accordingly, itordered petitioners to cease and desist from using "ST. FRANCIS" singly or as part of a composite mark, as well as to jointly and severally pay respondent a fine in the amount of ₱200,000.00.

 

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."

 

Held:

            No; the Court finds the element of fraud to be wanting; hence, there can be no unfair competition. The CA’s contrary conclusion was faultily premised on its impression that respondent had the right to the exclusive use of the mark "ST. FRANCIS," for which the latter had purportedly established considerable goodwill. What the CA appears to have disregarded or been mistaken in its disquisition, however, is the geographically descriptive nature of the mark "ST. FRANCIS" which thus bars its exclusive appropriability, unless a secondary meaning is acquired. As deftly explained in the U.S. case of Great Southern Bank v. First Southern Bank: "descriptive geographical terms are in the ‘public domain’ in the sense that every seller should have the right to inform customers of the geographical origin of his goods. A ‘geographically descriptive term’ is any noun or adjective that designates geographical location and would tend to be regarded by buyers as descriptive of the geographic location of origin of the goods or services. A geographically descriptive term can indicate any geographic location on earth, such as continents, nations, regions, states, cities, streets and addresses, areas of cities, rivers, and any other location referred to by a recognized name. In order to determine whether or not the geographic term in question is descriptively used, the following question is relevant: (1) Is the mark the name of the place or region from which the goods actually come? If the answer is yes, then the geographic term is probably used in a descriptive sense, and secondary meaning is required for protection."

            In Burke-Parsons-Bowlby Corporation v. Appalachian Log Homes, Inc., it was held that secondary meaning is established when a descriptive mark no longer causes the public to associate the goods with a particular place, but to associate the goods with a particular source. In other words, it is not enough that a geographically-descriptive mark partakes of the name of a place known generally to the public to be denied registration as it is also necessary to show that the public would make a goods/place association – that is, to believe that the goods for which the mark is sought to be registered originate in that place. To hold such a belief, it is necessary, of course, that the purchasers perceive the mark as a place name, from which the question of obscurity or remoteness then comes to the fore. The more a geographical area is obscure and remote, it becomes less likely that the public shall have a goods/place association with such area and thus, the mark may not be deemed as geographically descriptive. However, where there is no genuine issue that the geographical significance of a term is its primary significance and where the geographical place is neither obscure nor remote, a public association of the goods with the place may ordinarily be presumed from the fact that the applicant’s own goods come from the geographical place named in the mark.

            Under Section 123.2 of the IP Code, specific requirements have to be met in order to conclude that a geographically-descriptive mark has acquired secondary meaning, to wit: (a) the secondary meaning must have arisen as a result of substantial commercial use of a mark in the Philippines; (b) such use must result in the distinctiveness of the mark insofar as the goods or the products are concerned; and (c) proof of substantially exclusive and continuous commercial use in the Philippines for five (5) years before the date on which the claim of distinctiveness is made. Unless secondary meaning has been established, a geographically-descriptive mark, due to its general public domain classification, is perceptibly disqualified from trademark registration.

           

            Respondent was not able to prove its compliance with the requirements stated in Section 123.2 of the IP Code to be able to conclude that it acquired a secondary meaning – and, thereby, an exclusive right – to the "ST. FRANCIS" mark, which is, as the IPO Director-General correctly pointed out, geographically-descriptive of the location in which its realty developments have been built, i.e., St. Francis Avenue and St. Francis Street (now known as "Bank Drive"). Verily, records would reveal that while it is true that respondent had been using the mark "ST. FRANCIS" since 1992, its use thereof has been merely confined to its realty projects within the Ortigas Center, as specifically mentioned. As its use of the mark is clearly limited to a certain locality, it cannot be said that there was substantial commercial use of the same recognized all throughout the country. Neither is there any showing of a mental recognition in buyers’ and potential buyers’ minds that products connected with the mark "ST. FRANCIS" are associated with the same source – that is, the enterprise of respondent. Thus, absent any showing that there exists a clear goods/service-association between the realty projects located in the aforesaid area and herein respondent as the developer thereof, the latter cannot be said to have acquired a secondary meaning as to its use of the "ST. FRANCIS" mark.

            In fact, even on the assumption that secondary meaning had been acquired, said finding only accords respondents protectional qualification under Section 168.1 of the IP Code as above quoted. Again, this does not automatically trigger the concurrence of the fraud element required under Section 168.2 of the IP Code, as exemplified by the acts mentioned in Section 168.3 of the same. Ultimately, as earlier stated, there can be no unfair competition without this element. In this respect, considering too the notoriety of the Shangri-La brand in the real estate industry which dilutes petitioners' propensity to merely ride on respondent's goodwill, the more reasonable conclusion is that the former's use of the marks "THE ST. FRANCIS TOWERS" and "THE ST. FRANCIS SHANGRI-LA PLACE" was meant only to identify, or at least associate, their real estate project/s with its geographical location.

            WHEREFORE, the petition is GRANTED. The Decision dated December 18, 2009 of the Court of Appeals in CA-G.R. SP No. 105425 is hereby REVERSED and SET ASIDE. Accordingly, the Decision dated September 3, 2008 of the Intellectual Property Office-Director General is REINSTATED.