SECOND DIVISION

G.R. No. 222366, December 04, 2017

W LAND HOLDINGS, INC., Petitioner, v. STARWOOD HOTELS AND RESORTS

WORLDWIDE, INC., Respondent.

DECISION

PERLAS-BERNABE, J.:

Assailed in this petition for review on certiorari1 are the Decision2 dated June 22, 2015
and the Resolution3 dated January 7, 2016 of the Court of Appeals (CA) in CA-G.R. SP
No. 133825 affirming the Decision4 dated January 10, 2014 of the Intellectual Property
Office (IPO) - Director General (IPO DG), which, in turn, reversed the Decision5 dated
May 11, 2012 of the IPO Bureau of Legal Affairs (BLA) in Inter Partes Case No. 14-
2009-00143, and accordingly, dismissed petitioner W Land Holdings, Inc.'s (W Land)
petition for cancellation of the trademark "W" registered in the name of respondent
Starwood Hotels and Resorts, Worldwide, Inc. (Starwood).

The Facts

On December 2, 2005, Starwood filed before the IPO an application for registration of
the trademark "W" for Classes 436 and 447 of the International Classification of Goods
and Services for the Purposes of the Registration of Marks8 (Nice Classification).9 On
February 26, 2007, Starwood's application was granted and thus, the "W" mark was
registered in its name.10 However, on April 20, 2006, W Land applied11 for the
registration of its own "W" mark for Class 36,12 which thereby prompted Starwood to
oppose the same.13 In a Decision14 dated April 23, 2008, the BLA found merit in
Starwood's opposition, and ruled that W Land's "W" mark is confusingly similar with
Starwood's mark,15 which had an earlier filing date. W Land filed a motion for
reconsideration16 on June 11, 2008, which was denied by the BLA in a
Resolution17 dated July 23, 2010.

On May 29, 2009, W Land filed a Petition for Cancellation18 of Starwood's mark for non-
use under Section 151.119 of Republic Act No. 8293 or the "Intellectual Property Code
of the Philippines" (IP Code),20 claiming that Starwood has failed to use its mark in the
Philippines because it has no hotel or establishment in the Philippines rendering the
services covered by its registration; and that Starwood's "W" mark application and
registration barred its own "'W" mark application and registration for use on real
estate.21

In its defense,22 Starwood denied having abandoned the subject mark on the ground of
non-use, asserting that it filed with the Director of Trademarks a notarized Declaration
of Actual Use23 (DAU)24 with evidence of use on December 2, 2008,25 which was not
rejected. In this relation, Starwood argued that it conducts hotel and leisure business
both directly and indirectly through subsidiaries and franchisees, and operates
interactive websites for its W Hotels in order to accommodate its potential clients
worldwide.26 According to Starwood, apart from viewing agents, discounts, promotions,
and other marketing fields being offered by it, these interactive websites allow
Philippine residents to make reservations and bookings, which presuppose clear and
convincing use of the "W'' mark in the Philippines.27

The BLA Ruling

In a Decision28 dated May 11, 2012, the BLA ruled in W Land's favor, and accordingly
ordered the cancellation of Starwood's registration for the "W" mark. The BLA found
that the DAU and the attachments thereto submitted by Starwood did not prove actual
use of the "W" mark in the Philippines, considering that the "evidences of use" attached
to the DAU refer to hotel or establishments that are located abroad.29 In this regard,
the BLA opined that "the use of a trademark as a business tool and as contemplated
under [Section 151.1 (c) of RA 8293] refers to the actual attachment thereof to goods
and services that are sold or availed of and located in the Philippines."30

Dissatisfied, Starwood appealed31 to the IPO DG.

The IPO DG Ruling

In a Decision32 dated January 10, 2014, the IPO DG granted Starwood's

appeal,33 thereby dismissing W Land's Petition for Cancellation. Contrary to the BLA's
findings, the IPO DG found that Starwood's submission of its DAU and attachments,
coupled by the acceptance thereof by the IPO Bureau of Trademarks, shows that the
"W" mark still bears a "registered" status. Therefore, there is a presumption that
Starwood sufficiently complied with the registration requirements for its mark.34 The
IPO DG likewise held that the absence of any hotel or establishment owned by
Starwood in the Philippines bearing the "W" mark should not be equated to the absence
of its use in the country, opining that Starwood's pieces of evidence, particularly its
interactive website, indicate actual use in the Philippines,35 citing Rule 20536 of the
Trademark Regulations, as amended by IPO Office Order No. 056-13.37 Finally, the IPO
DG stressed that since Starwood is the undisputed owner of the "W" mark for use in
hotel and hotel-related services, any perceived damage on the part of W Land in this
case should be subordinated to the essence of protecting Starwood's intellectual
property rights. To rule otherwise is to undermine the intellectual property system.38

Aggrieved, W Land filed a petition for review39 under Rule 43 of the Rules of Court
before the CA.

The CA Ruling

In a Decision40 dated June 22, 2015, the CA affirmed the IPO DG ruling. At the onset,
the CA observed that the hotel business is peculiar in nature in that the offer, as well as
the acceptance of room reservations or bookings wherever in the world is an
indispensable element. As such, the actual existence or presence of a hotel in one place
is not necessary before it can be considered as doing business therein.41 In this regard,
the CA recognized that the internet has become a powerful tool in allowing businesses
to reach out to consumers in a given market without being physically present thereat;
thus, the IPO DG correctly held that Starwood's interactive websites already indicate its
actual use in the Philippines of the "W" mark.42 Finally, the CA echoed the IPO DG's
finding that since Starwood is the true owner of the "W" mark - as shown by the fact
that Starwood had already applied for the registration of this mark even before W Land
was incorporated - its registration over the same should remain valid, absent any
showing that it has abandoned the use thereof.43

Unperturbed, W Land moved for reconsideration,44 but was denied in a

Resolution45 dated January 7, 2016; hence, this petition.

The Issue Before the Court

The essential issue for the Court's resolution is whether or not the CA correctly affirmed
the IPO DG's dismissal of W Land's Petition for Cancellation of Starwood's "W'' mark.

The Court's Ruling

The petition is without merit.

The IP Code defines a "mark" as "any visible sign capable of distinguishing the goods
(trademark) or services (service mark) of an enterprise."46 Case law explains that
"[t]rademarks deal with the psychological function of symbols and the effect of these
symbols on the public at large."47 It is a merchandising short-cut, and, "[w]hatever the
means employed, the aim is the same to convey through the mark, in the minds of
potential customers, the desirability of the commodity upon which it appears."48 Thus,
the protection of trademarks as intellectual property is intended not only to preserve
the goodwill and reputation of the business established on the goods or services
bearing the mark through actual use over a period of time, but also to safeguard the
public as consumers against confusion on these goods or services.49 As viewed by
modern authorities on trademark law, trademarks perform three (3) distinct functions:
(1) they indicate origin or ownership of the articles to which they are attached; (2) they
guarantee that those articles come up to a certain standard of quality; and (3) they
advertise the articles they symbolize.50

In Berris Agricultural Co., Inc. v. Abyadang,51 this Court explained that "[t]he
ownership of a trademark is acquired by its registration and its actual use by the
manufacturer or distributor of the goods made available to the purchasing public. x x x.
A certificate of registration of a mark, once issued, constitutes prima facie evidence of
the validity of the registration, of the registrant's ownership of the mark, and of the
registrant's exclusive right to use the same in connection with the goods or services
and those that are related thereto specified in the certificate."52 However, "the prima
facie presumption brought about by the registration of a mark may be challenged and
overcome, in an appropriate action, by proof of[, among others,] non-use of the
mark, except when excused."53

The actual use of the mark representing the goods or services introduced and
transacted in commerce over a period of time creates that goodwill which the law seeks
to protect. For this reason, the IP Code, under Section 124.2,54 requires the registrant
or owner of a registered mark to declare "actual use of the mark" (DAU) and present
evidence of such use within the prescribed period. Failing in which, the IPO DG may
cause the motu propio removal from the register of the mark's registration.55 Also, any
person, believing that "he or she will be damaged by the registration of a mark," which
has not been used within the Philippines, may file a petition for cancellation.56 Following
the basic rule that he who alleges must prove his case,57 the burden lies on the
petitioner to show damage and non-use.

The IP Code and the Trademark Regulations have not specifically defined "use."
However, it is understood that the "use" which the law requires to maintain the
registration of a mark must be genuine, and not merely token. Based on foreign
authorities,58 genuine use may be characterized as a bona fide use which results or
tends to result, in one way or another, into a commercial interaction or
transaction "in the ordinary course of trade."59

What specific act or acts would constitute use of the mark sufficient to keep its
registration in force may be gleaned from the Trademark Regulations, Rule 205 of
which reads:

RULE 205. Contents of the Declaration and Evidence of Actual Use. — The declaration
shall be under oath, must refer to only one application or registration, must contain
the name and address of the applicant or registrant declaring that the mark is in
actual use in the Philippines, list of goods where the mark is attached; list the
name or names and the exact location or locations of the outlet or
outlets where the products are being sold or where the services are being
rendered, recite sufficient facts to show that the mark described in the
application or registration is being actually used in the Philippines and,
specifying the nature of such use. The declarant shall attach five labels as actually
used on the goods or the picture of the stamped or marked container visibly and legibly
showing the mark as well as proof of payment of the prescribed fee. [As amended by
Office Order No. 08 (2000)] (Emphases supplied)

The Trademark Regulations was amended by Office Order No. 056-13. Particularly, Rule
205 now mentions certain items which "shall be accepted as proof of actual use of the
mark:"

RULE 205. Contents of the Declaration and Evidence of Actual Use.—

(a) The declaration shall be under oath and filed by the applicant or registrant (or the
authorized officer in case of a juridical entity) or the attorney or authorized
representative of the applicant or registrant. The declaration must refer to only one
application or registration, shall contain the name and address of the applicant or
registrant declaring that the mark is in actual use in the Philippines, the list of goods or
services where the mark is used, the name/s of the establishment and address where
the products are being sold or where the services are being rendered. If the goods or
services are available only by online purchase, the website must be indicated on the
form in lieu of name or address of the establishment or outlet. The applicant or
registrant may include other facts to show that the mark described in the application or
registration is actually being used in the Philippines. The date of first use shall not be
required.

(b) Actual use for some of the goods and services in the same class shall constitute use
for the entire class of goods and services. Actual use for one class shall be considered
use for related classes. In the event that some classes are not covered in the
declaration, a subsequent declaration of actual use may be filed for the other classes of
goods or services not included in the first declaration, provided that the subsequent
declaration is filed within the three year period or the extension period, in case an
extension of time to file the declaration was timely made. In the event that no
subsequent declaration of actual use for the other classes of goods and services is filed
within the prescribed period, the classes shall be automatically dropped from the
application or registration without need of notice to the applicant or registrant.

(c) The following shall be accepted as proof of actual use of the mark: (1) labels
of the mark as these are used; (2) downloaded pages from the website of the
applicant or registrant clearly showing that the goods are being sold or the
services are being rendered in the Philippines; (3) photographs (including digital
photographs printed on ordinary paper) of goods bearing the marks as these are
actually used or of the stamped or marked container of goods and of the
establishment/s where the services are being rendered; (4) brochures or advertising
materials showing the actual use of the mark on the goods being sold or services being
rendered in the Philippines; (5) for online sale, receipts of sale of the goods or
services rendered or other similar evidence of use, showing that the goods are
placed on the market or the services are available in the Philippines or that the
transaction took place in the Philippines; (6) copies of contracts for services
showing the use of the mark. Computer printouts of the drawing or reproduction of
marks will not be accepted as evidence of use.

(d) The Director may, from time to time, issue a list of acceptable evidence of
use and those that will not be accepted by the Office. (Emphases and
underscoring supplied)

Office Order No. 056-13 was issued by the IPO DG on April 5, 2013, pursuant to his
delegated rule-making authority under Section 7 of the IP Code.60 The rationale for this
issuance, per its whereas clauses, is to further "the policy of the [IPO] to streamline
administrative procedures in registering trademarks" and in so doing, address the need
"to clarify what will be accepted as proof of use." In this regard, the parameters and list
of evidence introduced under the amended Trademark Regulations are thus mere
administrative guidelines which are only meant to flesh out the types of acceptable
evidence necessary to prove what the law already provides, i.e., the requirement of
actual use. As such, contrary to W Land's postulation,61 the same does not diminish or
modify any substantive right and hence, may be properly applied to "all pending and
registered marks,"62 as in Starwood's "W" mark for hotel / hotel reservation services
being rendered or, at the very least, made available in the Philippines.

Based on the amended Trademark Regulations, it is apparent that the IPO has now
given due regard to the advent of commerce on the internet. Specifically, it now
recognizes, among others, "downloaded pages from the website of the applicant or
registrant clearly showing that the goods are being sold or the services are being
rendered in the Philippines," as well as "for online sale, receipts of sale of the goods or
services rendered or other similar evidence of use, showing that the goods are placed
on the market or the services are available in the Philippines or that the transaction
took place in the Philippines,"63 as acceptable proof of actual use. Truly, the Court
discerns that these amendments are but an inevitable reflection of the realities of the
times. In Mirpuri v. CA,64 this Court noted that "[a]dvertising on the Net and
cybershopping are turning the Internet into a commercial marketplace:"65
The Internet is a decentralized computer network linked together through routers and
communications protocols that enable anyone connected to it to communicate with
others likewise connected, regardless of physical location. Users of the Internet have a
wide variety of communication methods available to them and a tremendous wealth of
information that they may access. The growing popularity of the Net has been driven in
large part by the World Wide Web, i.e., a system that facilitates use of the Net by
sorting through the great mass of information available on it. Advertising on the Net
and cybershopping are turning the Internet into a commercial
marketplace.66 (Emphasis and underscoring supplied)

Thus, as modes of advertising and acquisition have now permeated into virtual zones
over cyberspace, the concept of commercial goodwill has indeed evolved:

In the last half century, the unparalleled growth of industry and the rapid development
of communications technology have enabled trademarks, tradenames and other
distinctive signs of a product to penetrate regions where the owner does not actually
manufacture or sell the product itself. Goodwill is no longer confined to the
territory of actual market penetration; it extends to zones where the marked
article has been fixed in the public mind through advertising. Whether in the
print, broadcast or electronic communications medium, particularly on the
Internet, advertising has paved the way for growth and expansion of the
product by creating and earning a reputation that crosses over borders,
virtually turning the whole world into one vast marketplace.67 (Emphasis and
underscoring supplied)

Cognizant of this current state of affairs, the Court therefore agrees with the IPO DG,
as affirmed by the CA, that the use of a registered mark representing the owner's
goods or services by means of an interactive website may constitute proof of actual use
that is sufficient to maintain the registration of the same. Since the internet has turned
the world into one vast marketplace, the owner of a registered mark is clearly entitled
to generate and further strengthen his commercial goodwill by actively marketing and
commercially transacting his wares or services throughout multiple platforms on the
internet. The facilities and avenues present in the internet are, in fact, more prominent
nowadays as they conveniently cater to the modern-day consumer who desires to
procure goods or services at any place and at any time, through the simple click of a
mouse, or the tap of a screen. Multitudinous commercial transactions are accessed,
brokered, and consummated everyday over websites. These websites carry the mark
which represents the goods or services sought to be transacted. For the owner, he
intentionally exhibits his mark to attract the customers' interest in his goods or
services. The mark displayed over the website no less serves its functions of indicating
the goods or services' origin and symbolizing the owner's goodwill than a mark
displayed in the physical market. Therefore, there is no less premium to recognize
actual use of marks through websites than their actual use through traditional means.
Indeed, as our world evolves, so too should our appreciation of the law. Legal
interpretation - as it largely affects the lives of people in the here and now - never
happens in a vacuum. As such, it should not be stagnant but dynamic; it should not be
ensnared in the obsolete but rather, sensitive to surrounding social realities.

It must be emphasized, however, that the mere exhibition of goods or services over the
internet, without more, is not enough to constitute actual use. To reiterate, the "use"
contemplated by law is genuine use - that is, a bona fide kind of use tending towards a
commercial transaction in the ordinary course of trade. Since the internet creates a
borderless marketplace, it must be shown that the owner has actually
transacted, or at the very least, intentionally targeted customers of a
particular jurisdiction in order to be considered as having used the trade mark
in the ordinary course of his trade in that country. A showing of an actual
commercial link to the country is therefore imperative. Otherwise, an
unscrupulous registrant would be able to maintain his mark by the mere expedient of
setting up a website, or by posting his goods or services on another's site, although no
commercial activity is intended to be pursued in the Philippines. This type of token use
renders inutile the commercial purpose of the mark, and hence, negates the reason to
keep its registration active. As the IP Code expressly requires, the use of the
mark must be "within the Philippines." This is embedded in Section 151 of the IP
Code on cancellation, which reads:

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 he is or will be damaged by the registration of a mark under this Act as follows:

(a) Within five (5) years from the date of the registration of the mark under this Act.

(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. If the registered
mark becomes the generic name for less than all of the goods or services for which it is
registered, a petition to cancel the registration for only those goods or services may be filed.
A registered mark shall not be deemed to be the generic name of goods or services solely
because such mark is also used as a name of or to identify a unique product or service. The
primary significance of the registered mark to the relevant public rather than purchaser
motivation shall be the test for determining whether the registered mark has become the
generic name of goods or services on or in connection with which it has been used.

(c) At any time, if the registered owner of the mark without legitimate reason fails to use
the mark within the Philippines, or to cause it to be used in the Philippines by virtue of
a license during an uninterrupted period of three (3) years or longer. (Emphasis and
underscoring supplied)

The hotel industry is no stranger to the developments and advances in technology. Like
most businesses nowadays, hotels are utilizing the internet to drive almost every
aspect of their operations, most especially the offering and accepting of room
reservations or bookings, regardless of the client or customer base. The CA explained
this booking process in that the "business transactions commence with the placing of
room reservations, usually by or through a travel agent who acts for or in behalf of his
principal, the hotel establishment. [The] reservation is first communicated to the
reservations and booking assistant tasked to handle the transaction. After the
reservation is made, the specific room reserved for the guest will be blocked and will
not be offered to another guest. As such, on the specified date of arrival, the room
reserved will be available to the guest."68

In this accord, a hotel's website has now become an integral element of a hotel
business. Especially with the uptrend of international travel and tourism, the hotel's
website is now recognized as an efficient and necessary tool in advertising and
promoting its brand in almost every part of the world. More so, interactive websites
that allow customers or clients to instantaneously book and pay for, in advance,
accommodations and other services of a hotel anywhere in the world, regardless of the
hotel's actual location, dispense with the need for travel agents or hotel employees to
transact the reservations for them. In effect, the hotel's website acts as a bridge or
portal through which the hotel reaches out and provides its services to the
client/customer anywhere in the world, with the booking transaction completed at the
client/customer's own convenience. It is in this sense that the CA noted that the "actual
existence or presence of a hotel in one place is not necessary before it can be
considered as doing business therein."69

As earlier intimated, mere use of a mark on a website which can be accessed anywhere
in the world will not automatically mean that the mark has been used in the ordinary
course of trade of a particular country. Thus, the use of mark on the internet must be
shown to result into a within-State sale, or at the very least, discernibly intended to
target customers that reside in that country. This being so, the use of the mark on
an interactive website, for instance, may be said to target local customers
when they contain specific details regarding or pertaining to the target State,
sufficiently showing an intent towards realizing a within-State commercial
activity or interaction. These details may constitute a local contact phone number,
specific reference being available to local customers, a specific local webpage, whether
domestic language and currency is used on the website, and/or whether domestic
payment methods are accepted.70 Notably, this paradigm of ascertaining local details to
evince within-state commercial intent is subscribed to by a number of jurisdictions,
namely, the European Union, Hong Kong, Singapore, Malaysia, Japan, Australia,
Germany, France, Russia, and the United Kingdom.71 As for the U.S. - where most of
our intellectual property laws have been patterned72 - there have been no decisions to
date coming from its Trademark Trial and Appeal Board involving cases challenging the
validity of mark registrations through a cancellation action based on the mark's internet
use. However, in International Bancorp LLC v. Societe des Bains de Mer et du Cercle
des Etrangers a Monaco,73 it was ruled that mere advertising in the U.S. combined with
rendering of services to American customers in a foreign country constituted "use" for
the purpose of establishing trademark rights in the U.S.

In this case, Starwood has proven that it owns Philippine registered domain
names,74 i.e., www.whotels.ph, www.wreservations.ph, www.whotel.ph, www.wreserva
tion.ph, for its website that showcase its mark. The website is readily accessible to
Philippine citizens and residents, where they can avail and book amenities and other
services in any of Starwood's W Hotels worldwide. Its website also readily provides a
phone number75 for Philippine consumers to call for information or other concerns. The
website further uses the English language76 - considered as an official language in this
country77 - which the relevant market in the Philippines understands and often uses in
the daily conduct of affairs. In addition, the prices for its hotel accommodations and/or
services can be converted into the local currency or the Philippine Peso.78 Amidst all of
these features, Starwood's "W" mark is prominently displayed in the website through
which consumers in the Philippines can instantaneously book and pay for their
accommodations, with immediate confirmation, in any of its W Hotels. Furthermore, it
has presented data showing a considerably growing number of internet users in the
Philippines visiting its website since 2003, which is enough to conclude that Starwood
has established commercially-motivated relationships with Philippine consumers.79

Taken together, these facts and circumstances show that Starwood's use of its "W"
mark through its interactive website is intended to produce a discernable commercial
effect or activity within the Philippines, or at the very least, seeks to establish
commercial interaction with local consumers. Accordingly, Starwood's use of the "W"
mark in its reservation services through its website constitutes use of the mark
sufficient to keep its registration in force.

To be sure, Starwood's "W" mark is registered for Classes 43, i.e., for hotel, motel,
resort and motor inn services, hotel reservation services, restaurant, bar and
catering services, food and beverage preparation services, cafe and cafeteria services,
provision of conference, meeting and social function facilities, under the Nice
Classification.80 Under Section 152.3 of the IP Code, "[t]he use of a mark in connection
with one or more of the goods or services belonging to the class in respect of which the
mark is registered shall prevent its cancellation or removal in respect of all other goods
or services of the same class." Thus, Starwood's use of the "W" mark for reservation
services through its website constitutes use of the mark which is already sufficient to
protect its registration under the entire subject classification from non-use cancellation.
This, notwithstanding the absence of a Starwood hotel or establishment in the
Philippines.

Finally, it deserves pointing out that Starwood submitted in 2008 its DAU with evidence
of use which the IPO, through its Director of Trademarks and later by the IPO DG in the
January 10, 2014 Decision, had accepted and recognized as valid. The Court finds no
reason to disturb this recognition. According to jurisprudence, administrative agencies,
such as the IPO, by means of their special knowledge and expertise over matters falling
within their jurisdiction are in a better position to pass judgment on this issue.81 Thus,
their findings are generally accorded respect and finality, as long as they are supported
by substantial evidence. In this case, there is no compelling basis to reverse the IPO
DG's findings - to keep Starwood's registration for the "W" mark in force - as they are
well supported by the facts and the law and thus, deserve respect from this Court.

WHEREFORE, the petition is DENIED. The Decision dated June 22, 2015 and the
Resolution dated January 7, 2016 of the Court of Appeals in CA-G.R. SP No. 133825 are
hereby AFFIRMED.

SO ORDERED.