La Chemise Lacoste vs Hon Oscar Fernandez

8/20/2019 La Chemise Lacoste vs Hon Oscar Fernandez

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Republic of the PhilippinesSUPREME COURT

Manila

FIRST DIVISION

G.R. No. L-63796-97 May 2, 1984

LA CHEMISE LACOSTE, S. A., petitioner,vs.HON. OSCAR C. FERNANDEZ, !"#$%$&' ()%'" o* +!a& LI , R"'$o&a/ T!$a/Co)!0, Na0$o&a/ Ca $0a/ ()%$ $a/ R"'$o&, Ma&$/a a&% GO+INDRAM HEMANDAS,respondents.

G.R. No. L-6 6 9 May 2/, 1984

GO+INDRAM HEMANDAS S (ANANI, petitioner,vs.HON. RO+ERTO . ONG IN, $& $# a a $0y a# M$&$#0"! o* T!a%" a&% I&%)#0!y, a&%HON. CESAR SAN DIEGO, $& $# a a $0y a# D$!" 0o! o* a0"&0#, respondents.

Castillo, Laman, Tan & Pantaleon for petitioners in 63796-97.

Ramon C. Fernandez for private respondent in 63796-97 and petitioner in 65659.

G TIERREZ, (R.,J.:

It is among this Court's concerns that the Philippines should not acquire an unbecomingreputation among the manufacturing and trading centers of the world as a haven forintellectual pirates imitating and illegally profiting from trademarks and tradenameswhich have established themselves in international or foreign trade.

Before this Court is a petition for ertiorari with preliminary in unction filed by !aChemise !acoste, ".#., a well known $uropean manufacturer of clothings and sportingapparels sold in the international market and bearing the trademarks %!#C&" $%%C($)I"$ !#C&" $%, %C*&C&+I!$ +$ IC$% and a composite mark consisting of

the word %!#C&" $% and a representation of a crocodile-alligator. he petitioner asksus to set aside as null and void, the order of udge &scar C. ernande/, of Branch 0!I0,*egional rial Court, 1ational Capital 2udicial *egion, granting the motion to quash thesearch warrants previously issued by him and ordering the return of the sei/ed items.

he facts are not seriously disputed. he petitioner is a foreign corporation, organi/edand e3isting under the laws of rance and not doing business in the Philippines, It isundeniable from the records that it is the actual owner of the abovementioned



trademarks used on clothings and other goods specifically sporting apparels sold inmany parts of the world and which have been marketed in the Philippines since 4567,

he main basis of the private respondent's case is its claim of alleged prior registration.

In 4589, (emandas : Co., a duly licensed domestic firm applied for and was issued

*eg. 1o. "*;<<<9 ="* stands for "upplemental *egister> for the trademark %C($)I"$!#C&" $ : C*&C&+I!$ +$ IC$% by the Philippine Patent &ffice for use on ;shirts,sportswear and other garment products of the company. wo years later, it applied forthe registration of the same trademark under the Principal *egister. he Patent &fficeeventually issued an order dated )arch ?, 4588 which states that@

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... Considering that the mark was already registered in the "upplemental*egister in favor of herein applicant, the &ffice has no other recourse butto allow the application, however, *eg. 1o. "*;<<<9 is now being

contested in a Petition for Cancellation docketed as IPC 1o. 4A76, stillregistrant is presumed to be the owner of the mark until after theregistration is declared cancelled.

hereafter, (emandas : Co. assigned to respondent obindram (emandas all rights,title, and interest in the trademark %C($)I"$ !#C&" $ : +$ IC$%.

&n 1ovember <4, 45 A, the petitioner filed its application for registration of thetrademark %Crocodile +evice% =#pplication "erial 1o. 7?<7<> and %!acoste% =#pplication"erial 1o. 7?<74>. he former was approved for publication while the latter was opposedby ames and arments in Inter Partes Case 1o. 469 . In 45 <, the petitioner filed a

Petition for the Cancellation of *eg. 1o. "*;<<<9 docketed as Inter Partes Case 1o.46 5. Both cases have now been considered by this Court in !emandas v. !on.Ro"erto #n$pin = .*. 1o. 69695>.

&n )arch <4, 45 ?, the petitioner filed with the 1ational Bureau of Investigation =1BI> aletter;complaint alleging therein the acts of unfair competition being committed by(emandas and requesting their assistance in his apprehension and prosecution. he1BI conducted an investigation and subsequently filed with the respondent court twoapplications for the issuance of search warrants which would authori/e the search of thepremises used and occupied by the !acoste "ports Center and ames and armentsboth owned and operated by (emandas.

he respondent court issued "earch Darrant 1os. ?;4< and ?;4<5 for violation of #rticle 4 5 of the *evised Penal Code, %it appearing to the satisfaction of the udge after e3amining under oath applicant and his witnesses that there are good and sufficientreasons to believe that obindram (emandas ... has in his control and possession inhis premises the ... properties sub ect of the offense,% =*ollo, pp. 68 and 65> he 1BIagents e3ecuted the two search warrants and as a result of the search found andsei/ed various goods and articles described in the warrants.



(emandas filed a motion to quash the search warrants alleging that the trademark usedby him was different from petitioner's trademark and that pending the resolution of IPC1o. 469 before the Patent &ffice, any criminal or civil action on the same sub ectmatter and between the same parties would be premature.

he petitioner filed its opposition to the motion arguing that the motion to quash wasfatally defective as it cited no valid ground for the quashal of the search warrants andthat the grounds alleged in the motion were absolutely without merit. he "tateProsecutor likewise filed his opposition on the grounds that the goods sei/ed wereinstrument of a crime and necessary for the resolution of the case on preliminaryinvestigation and that the release of the said goods would be fatal to the case of thePeople should prosecution follow in court.

he respondent court was, however, convinced that there was no probable cause to ustify the issuance of the search warrants. hus, in its order dated )arch <<, 45 ?, thesearch warrants were recalled and set aside and the 1BI agents or officers in custody of

the sei/ed items were ordered to return the same to (emandas. =*ollo, p. <9>he petitioner anchors the present petition on the following issues@

+id respondent udge act with grave abuse of discretion amounting to lackof urisdiction,

=i> in reversing the finding of probable cause which he himself had made inissuing the search warrants, upon allegations which are matters ofdefense and as such can be raised and resolved only upon trial on themeritsE and

=ii> in finding that the issuance of the search warrants is premature in theface of the fact that =a> !acoste's registration of the sub ect trademarks isstill pending with the Patent &ffice with opposition from (emandasE and=b> the sub ect trademarks had been earlier registered by (emandas in hisname in the "upplemental *egister of the Philippine Patent &fficeF

*espondent, on the other hand, centers his arguments on the following issues@

I

($ P$ I I&1$* (#" 1& C#P#CI G & "H$ B$ &*$ P(I!IPPI1$ C&H* ".II

($ *$"P&1+$1 2H+ $ +I+ 1& C&))I # *# $ #BH"$ & +I"C*$ I&1#1 #)&H1 & !#C & 2H*I"+IC I&1 I1 I""HI1 ($ &*+$* +# $+ #P*I!

<<, 45 ?.



(emandas argues in his comment on the petition for ertiorari that the petitioner being aforeign corporation failed to allege essential facts bearing upon its capacity to suebefore Philippine courts. (e states that not only is the petitioner not doing business inthe Philippines but it also is not licensed to do business in the Philippines. (e also citesthe case of Leviton %nd stries v. 'alvador =447 "C*# 7<A> to support his contention he

Leviton case, however, involved a complaint for unfair competition under "ection <4;#of *epublic #ct 1o. 466 which provides@

"ec. <4 J #. #ny foreign corporation or uristic person to which a mark ortradename has been registered or assigned under this #ct may bring anaction hereunder for infringement, for unfair competition, or falsedesignation of origin and false description, whether or not it has beenlicensed to do business in the Philippines under #ct numbered ourteen(undred and ifty;1ine, as amended, otherwise known as the Corporation!aw, at the time it brings the complaintE Provided , hat the country ofwhich the said foreign corporation or uristic person is a citi/en, or in which

it is domiciled, by treaty, convention or law, grants a similar privilege tocorporate or uristic persons of the Philippines.

De held that it was not enough for !eviton, a foreign corporation organi/ed and e3istingunder the laws of the "tate of 1ew Gork, Hnited "tates of #merica, to merely allege thatit is a foreign corporation. It averred in Paragraph < of its complaint that its action wasbeing filed under the provisions of "ection <4;# of *epublic #ct 1o. 466, as amended.Compliance with the requirements imposed by the abovecited provision was necessarybecause "ection <4;# of *epublic #ct 1o. 466 having e3plicitly laid down certainconditions in a specific proviso, the same must be e3pressly averred before asuccessful prosecution may ensue. It is therefore, necessary for the foreign corporation

to comply with these requirements or aver why it should be e3empted from them, if suchwas the case. he foreign corporation may have the right to sue before Philippinecourts, but our rules on pleadings require that the qualifying circumstances necessaryfor the assertion of such right should first be affirmatively pleaded.

In contradistinction, the present case involves a complaint for violation of #rticle 4 5 ofthe *evised Penal Code. he Leviton case is not applicable.

#sserting a distinctly different position from the !eviton argument, (emandas argued inhis brief that the petitioner was doing business in the Philippines but was not licensed todo so. o support this argument, he states that the applicable ruling is the case of(ent)olat m Co., %n . v. (an$aliman @ =8< Phil. 9<7> where )entholatum Co. Inc., aforeign corporation and Philippine;#merican +rug Co., the former's e3clusivedistributing agent in the Philippines filed a complaint for infringement of trademark andunfair competition against the )angalimans.

he argument has no merit. T)e (ent)olat m case is distinct from and inapplicable tothe case at bar. Philippine #merican +rug Co., Inc., was admittedly selling products ofits principal )entholatum Co., Inc., in the latter's name or for the latter's account. hus,



this Court held that %whatever transactions the Philippine;#merican +rug Co., Inc. hade3ecuted in view of the law, the )entholatum Co., Inc., did it itself. #nd, the)entholatum Co., Inc., being a foreign doing business in the Philippines without thelicense required by "ection 6 of the Corporation !aw, it may not prosecute this actionfor violation of trademark and unfair competition.%

In the present case, however, the petitioner is a foreign corporation not doing businessin the Philippines. he marketing of its products in the Philippines is done through ane3clusive distributor, *ustan Commercial Corporation he latter is an independent entitywhich buys and then markets not only products of the petitioner but also many otherproducts bearing equally well;known and established trademarks and tradenames. inother words, *ustan is not a mere agent or conduit of the petitioner.

he rules and regulations promulgated by the Board of Investments pursuant to its rule;making power under Presidential +ecree 1o. 48 5, otherwise known as the &mnibusInvestment Code, support a finding that the petitioner is not doing business in the

Philippines. *ule I, "ec. 4 =g> of said rules and regulations defines %doing business% asone% which includes, inter alia*

=4> ... # foreign firm which does business through middlemen acting ontheir own names, such as indentors, commercial brokers or commissionmerchants, shall not be deemed doing business in the Philippines. Butsuch indentors, commercial brokers or commission merchants shall be theones deemed to be doing business in the Philippines.

=<> #ppointing a representative or distributor who is domiciled in thePhilippines, unless said representative or distributor has an independent

status, i.e., it transacts business in its name and for its account, and not inthe name or for the account of a principal hus, where a foreign firm isrepresented by a person or local company which does not act in its namebut in the name of the foreign firm the latter is doing business in thePhilippines.

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#pplying the above provisions to the facts of this case, we find and conclude that thepetitioner is not doing business in the Philippines. *ustan is actually a middleman actingand transacting business in its own name and or its own account and not in the name or

for the account of the petitioner.But even assuming the truth of the private respondent's allegation that the petitionerfailed to allege material facts in its petition relative to capacity to sue, the petitioner maystill maintain the present suit against respondent (emandas. #s early as 45<8, thisCourt was, and it still is, of the view that a foreign corporation not doing business in thePhilippines needs no license to sue before Philippine courts for infringement oftrademark and unfair competition. hus, in +estern ipment and ' ppl Co. v.



Re es =94 Phil. 449>, this Court held that a foreign corporation which has never doneany business in the Philippines and which is unlicensed and unregistered to dobusiness here, but is widely and favorably known in the Philippines through the usetherein of its products bearing its corporate and tradename, has a legal right to maintainan action in the Philippines to restrain the residents and inhabitants thereof from

organi/ing a corporation therein bearing the same name as the foreign corporation,when it appears that they have personal knowledge of the e3istence of such a foreigncorporation, and it is apparent that the purpose of the proposed domestic corporation isto deal and trade in the same goods as those of the foreign corporation.

De further held@

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... hat company is not here seeking to enforce any legal or control rightsarising from, or growing out of, any business which it has transacted in the

Philippine Islands. he sole purpose of the action@Is to protect its reputation, its corporate name, its goodwill, whenever thatreputation, corporate name or goodwill have, through the naturaldevelopment of its trade, established themselves.' #nd it contends that itsrights to the use of its corporate and trade name@

Is a property right, a right in rem, which it may assert and protect againstall the world, in any of the courts of the world;even in urisdictions where itdoes not transact business; ust the same as it may protect its tangibleproperty, real or personal, against trespass, or conversion. Citing sec. 4A,

1ims on Hnfair Competition and rade)arks and cases citedE secs. <4;<<,(opkins on rade)arks, rade 1ames and Hnfair Competition and casescited.' hat point is sustained by the authorities, and is well stated in!anover 'tar (inin$ Co. v. /llen and +)eeler Co . =<A ed., 94?>. inwhich the syllabus says@

"ince it is the trade and not the mark that is to be protected, a trade;markacknowledges no territorial boundaries of municipalities or states ornations, but e3tends to every market where the trader's goods havebecome known and Identified by the use of the mark.

&ur recogni/ing the capacity of the petitioner to sue is not by any means novel orprecedent setting. &ur urisprudence is replete with cases illustrating instances whenforeign corporations not doing business in the Philippines may nonetheless sue in ourcourts. In ast 0oard 1avi$ation Ltd, v. 2smael and Co., %n . =4A< Phil. 4>, werecogni/ed a right of foreign corporation to sue on isolated transactions. In eneral

arments Corp. v. 4ire tor of Patents =74 "C*# 9A>, we sustained the right of Puritan"portswear Corp., a foreign corporation not licensed to do and not doing business in thePhilippines, to file a petition for cancellation of a trademark before the Patent &ffice.



)ore important is the nature of the case which led to this petition. Dhat preceded thispetition for ertiorari was a letter complaint filed before the 1BI charging (emandas witha criminal offense, i.e., violation of #rticle 4 5 of the *evised Penal Code. If prosecutionfollows after the completion of the preliminary investigation being conducted by the"pecial Prosecutor the information shall be in the name of the People of the Philippines

and no longer the petitioner which is only an aggrieved party since a criminal offense isessentially an act against the "tate. It is the latter which is principally the in ured partyalthough there is a private right violated. Petitioner's capacity to sue would become,therefore, of not much significance in the main case. De cannot snow a possibleviolator of our criminal statutes to escape prosecution upon a far;fetched contention thatthe aggrieved party or victim of a crime has no standing to sue.

In upholding the right of the petitioner to maintain the present suit before our courts forunfair competition or infringement of trademarks of a foreign corporation, we aremoreover recogni/ing our duties and the rights of foreign states under the ParisConvention for the Protection of Industrial Property to which the Philippines and rance

are parties. De are simply interpreting and enforcing a solemn internationalcommitment of the Philippines embodied in a multilateral treaty to which we are a partyand which we entered into because it is in our national interest to do so.

he Paris Convention provides in part that@

#* IC!$ 4

=4> he countries to which the present Convention applies constitutethemselves into a Hnion for the protection of industrial property.

=<> he protection of industrial property is concerned with patents, utilitymodels, industrial designs, trademarks service marks, trade names, andindications of source or appellations of origin, and the repression of unfaircompetition.

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#* IC!$ <

=<> 1ationals of each of the countries of the Hnion shall as regards theprotection of industrial property, en oy in all the other countries of the

Hnion the advantages that their respective laws now grant, or mayhereafter grant, to nationals, without pre udice to the rights speciallyprovided by the present Convention. Consequently, they shall have thesame protection as the latter, and the same legal remedy against anyinfringement of their rights, provided they observe the conditions andformalities imposed upon nationals.

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#* IC!$ 6

=4> he countries of the Hnion undertake, either administratively if theirlegislation so permits, or at the request of an interested party, to refuse orto cancel the registration and to prohibit the use of a trademark which

constitutes a reproduction, imitation or translation, liable to createconfusion, of a mark considered by the competent authority of the countryof registration or use to be well;known in that country as being already themark of a person entitled to the benefits of the present Convention andused for Identical or similar goods. hese provisions shall also apply whenthe essential part of the mark constitutes a reproduction of any such well;known mark or an imitation liable to create confusion therewith.

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#* IC!$

# trade name shall be protected in all the countries of the Hnion withoutthe obligation of filing or registration, whether or not it forms part of a trademark.

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#* IC!$ 4Abis

=4> he countries of the Hnion are bound to assure to persons entitled tothe benefits of the Hnion effective protection against unfair competition.

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#* IC!$ 4Ater

=4> he countries of the Hnion undertake to assure to nationals of theother countries of the Hnion appropriate legal remedies to represseffectively all the acts referred to in #rticles 5, 4A and lAbis.

=<> hey undertake, further, to provide measures to permit syndicates andassociations which represent the industrialists, producers or traders

concerned and the e3istence of which is not contrary to the laws of theircountries, to take action in the Courts or before the administrativeauthorities, with a view to the repression of the acts referred to in #rticles5, 4A and 4Abis, in so far as the law of the country in which protection isclaimed allows such action by the syndicates and associations of thatcountry.

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#* IC!$ 48

$very country party to this Convention undertakes to adopt, in accordancewith its constitution, the measures necessary to ensure the application ofthis Convention.

It is understood that at the time an instrument of ratification or accession isdeposited on behalf of a countryE such country will be in a position underits domestic law to give effect to the provisions of this Convention. =64&. . A4A>

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In anit Fair (ills, %n . v. T aton Co. =<?7 . <d 6??> the Hnited "tates Circuit Court of #ppeals had occasion to comment on the e3traterritorial application of the ParisConvention It said that@

K44L he International Convention is essentially a compact between thevarious member countries to accord in their own countries to citi/ens ofthe other contracting parties trademark and other rights comparable tothose accorded their own citi/ens by their domestic law. he underlyingprinciple is that foreign nationals should be given the same treatment ineach of the member countries as that country makes available to its ownciti/ens. In addition, the Convention sought to create uniformity in certainrespects by obligating each member nation 'to assure to nationals ofcountries of the Hnion an effective protection against unfair competition.'

K4<L he Convention is not premised upon the Idea that the trade;markand related laws of each member nation shall be given e3tra;territorialapplication, but on e3actly the converse principle that each nation's lawshall have only territorial application. hus a foreign national of a membernation using his trademark in commerce in the Hnited "tates is accordede3tensive protection here against infringement and other types of unfaircompetition by virtue of Hnited "tates membership in the Convention. Butthat protection has its source in, and is sub ect to the limitations of,

#merican law, not the law of the foreign national's own country. ...

By the same token, the petitioner should be given the same treatment in the Philippines

as we make available to our own citi/ens. De are obligated to assure to nationals of%countries of the Hnion% an effective protection against unfair competition in the sameway that they are obligated to similarly protect ilipino citi/ens and firms.

Pursuant to this obligation, the )inistry of rade on 1ovember <A, 45 A issued amemorandum addressed to the +irector of the Patents &ffice directing the latter@

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... to re ect all pending applications for Philippine registration of signatureand other world famous trademarks by applicants other than its originalowners or users.

he conflicting claims over internationally known trademarks involve such

name brands as !acoste, 2ordache, loria anderbilt, "asson, ila, PierreCardin, ucci, Christian +ior, &scar de la *enta, Calvin lein, ivenchy,*alph !auren, eoffrey Beene, !anvin and ed !apidus.

It is further directed that, in cases where warranted, Philippine registrantsof such trademarks should be asked to surrender their certificates ofregistration, if any, to avoid suits for damages and other legal action by thetrademarks' foreign or local owners or original users.

he memorandum is a clear manifestation of our avowed adherence to a policy ofcooperation and amity with all nations. It is not, as wrongly alleged by the private

respondent, a personal policy of )inister !uis illafuerte which e3pires once he leavesthe )inistry of rade. or a treaty or convention is not a mere moral obligation to beenforced or not at the whims of an incumbent head of a )inistry. It creates a legallybinding obligation on the parties founded on the generally accepted principle ofinternational law of pa ta s nt servanda which has been adopted as part of the law ofour land. =Constitution, #rt. II, "ec. ?>. he memorandum reminds the +irector ofPatents of his legal duty to obey both law and treaty. It must also be obeyed.

(emandas further contends that the respondent court did not commit grave abuse ofdiscretion in issuing the questioned order of #pril <<, 45 ?.

# review of the grounds invoked by (emandas in his motion to quash the searchwarrants reveals the fact that they are not appropriate for quashing a warrant. hey arematters of defense which should be ventilated during the trial on the merits of the case.

or instance, on the basis of the facts before the 2udge, we fail to understand how hecould treat a bare allegation that the respondent's trademark is different from thepetitioner's trademark as a sufficient basis to grant the motion to quash. De will treat theissue of pre udicial question later. ranting that respondent (emandas was only tryingto show the absence of probable cause, we, nonetheless, hold the arguments to beuntenable.

#s a mandatory requirement for the issuance of a valid search warrant, the Constitution

requires in no uncertain terms the determination of probable cause by the udge aftere3amination under oath or affirmation of the complainant and the witnesses he mayproduce =Constitution, #rt. I , "ec. ?>. Probable cause has traditionally meant such factsand circumstances antecedent to the issuance of the warrant that are in themselvessufficient to induce a cautious man to rely upon them and act in pursuance thereof=People v. "y 2uco, 67 Phil. 668>.



his concept of probable cause was amplified and modified by our ruling in 'tone)ill v.4io no, =<A "C*# ? ?> that probable cause %presupposes the introduction of competentproof that the party against whom it is sought has performed parti lar acts, orcommitted specific omissions, violating a given provision of our criminal laws.%

he question of whether or not probable cause e3ists is one which must be decided inthe light of the conditions obtaining in given situations =Central Bank v. )orfe, <A "C*#9A8>. De agree that there is no general formula or fi3ed rule for the determination of thee3istence of probable cause since, as we have recogni/ed in L na v. Plaza =<6 "C*#?4A>, the e3istence depends to a large degree upon the finding or opinion of the udgeconducting the e3amination. (owever, the findings of the udge should not disregard thefacts before him nor run counter to the clear dictates of reason. )ore so it is plain thatour country's ability to abide by international commitments is at stake.

he records show that the 1BI agents at the hearing of the application for the warrantsbefore respondent court presented three witnesses under oath, sworn statements, and

various e3hibits in the form of clothing apparels manufactured by (emandas butcarrying the trademark !acoste. he respondent court personally interrogated *amon$sguerra, "amuel i i, and )amerto $spatero by means of searching questions. #fterhearing the testimonies and e3amining the documentary evidence, the respondent courtwas convinced that there were good and sufficient reasons for the issuance of thewarrant. #nd it then issued the warrant.

he respondent court, therefore, complied with the constitutional and statutoryrequirements for the issuance of a valid search warrant. #t that point in time, it was fullyconvinced that there e3isted probable cause. But after hearing the motion to quash andthe oppositions thereto, the respondent court e3ecuted a complete turnabout and

declared that there was no probable cause to ustify its earlier issuance of the warrants.rue, the lower court should be given the opportunity to correct its errors, if there be

any, but the rectification must, as earlier stated be based on sound and valid grounds. Inthis case, there was no compelling ustification for the about face. he allegation thatvital facts were deliberately suppressed or concealed by the petitioner should havebeen assessed more carefully because the ob ect of the quashal was the return of itemsalready sei/ed and easily e3amined by the court. he items were alleged to be fake andquite obviously would be needed as evidence in the criminal prosecution. )oreover, anapplication for a search warrant is heard e parte. It is neither a trial nor a part of thetrial. #ction on these applications must be e3pedited for time is of the essence. reatreliance has to be accorded by the udge to the testimonies under oath of thecomplainant and the witnesses. he allegation of (emandas that the applicant withheldinformation from the respondent court was clearly no basis to order the return of thesei/ed items.

(emandas relied heavily below and before us on the argument that it is the holder of acertificate of registration of the trademark %C($)I"$ !#C&" $ : C*&C&+I!$+$ IC$%. "ignificantly, such registration is only in the "upplemental *egister.



# certificate of registration in the "upplemental *egister is not prima fa ie evidence ofthe validity of registration, of the registrant's e3clusive right to use the same inconnection with the goods, business, or services specified in the certificate. "uch acertificate of registration cannot be filed, with effect, with the Bureau of Customs in order to e3clude from the Philippines, foreign goods bearing infringement marks or trade

names =*ule 4<7, *evised *ules of Practice Before the Phil. Pat. &ff. in rademarkCasesE )artin, Philippine Commercial !aws, 45 4, ol. <, pp. 94?;949>.

"ection 45;# of *epublic #ct 466 as amended not only provides for the keeping of thesupplemental register in addition to the principal register but specifically directs that@

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he certificates of registration for marks and trade names registered onthe supplemental register shall be conspicuously different from certificatesissued for marks and trade names on the principal register.

333 333 333

he reason is e3plained by a leading commentator on Philippine Commercial !aws@

he registration of a mark upon the supplemental register is not, as in thecase of the principal register, prima facie evidence of =4> the validity ofregistrationE =<> registrant's ownership of the markE and =?> registrant'se3clusive right to use the mark. It is not sub ect to opposition, although itmay be cancelled after its issuance. 1either may it be the sub ect ofinterference proceedings. *egistration on the supplemental register is not

constructive notice of registrant's claim of ownership. # supplementalregister is provided for the registration of marks which are not registrableon the principal register because of some defects =conversely, defectswhich make a mark unregistrable on the principal register, yet do not barthem from the supplemental register.> =#gbayani, II Commercial !aws ofthe Philippines, 458 , p. 947, citing Hy (ong )o v. itay : Co., et al., +ec.1o. <97 of +irector of Patents, #pr. ?A, 456?>E

*egistration in the "upplemental *egister, therefore, serves as notice that the registrantis using or has appropriated the trademark. By the very fact that the trademark cannotas yet be entered in the Principal *egister, all who deal with it should be on guard that

there are certain defects, some obstacles which the user must "till overcome before hecan claim legal ownership of the mark or ask the courts to vindicate his claims of ane3clusive right to the use of the same. It would be deceptive for a party with nothingmore than a registration in the "upplemental *egister to posture before courts of usticeas if the registration is in the Principal *egister.

he reliance of the private respondent on the last sentence of the Patent office actionon application "erial 1o. ?A597 that %registrant is presumed to be the owner of the mark



until after the registration is declared cancelled% is, therefore, misplaced and groundedon shaky foundation, he supposed presumption not only runs counter to the preceptembodied in *ule 4<7 of the *evised *ules of Practice before the Philippine Patent&ffice in rademark Cases but considering all the facts ventilated before us in the fourinterrelated petitions involving the petitioner and the respondent, it is devoid of factual

basis. #nd even in cases where presumption and precept may factually be reconciled,we have held that the presumption is rebuttable, not conclusive, =People v. !im (oa,.*. 1o. !4A64<, )ay ?A, 459 , Hnreported>. &ne may be declared an unfair

competitor even if his competing trademark is registered =Parke, +avis : Co. v. iu oo: Co., et al., 6A Phil. 5< E !a Gebana Co. v. Chua "eco : Co., 47 Phil. 9?7>.

By the same token, the argument that the application was premature in view of thepending case before the Patent &ffice is likewise without legal basis.

he proceedings pending before the Patent &ffice involving IPC Co. 469 do notpartake of the nature of a pre udicial question which must first be definitely resolved.

"ection 9 of *ule 444 of the *ules of Court provides that@

# petition for the suspension of the criminal action based upon thependency of a pre; udicial question in a civil case, may only be presentedby any party before or during the trial of the criminal action.

he case which suspends the criminal prosecution must be a civil case which isdeterminative of the innocence or, sub ect to the availability of other defenses, the guiltof the accused. he pending case before the Patent &ffice is an administrativeproceeding and not a civil case. he decision of the Patent &ffice cannot be finally

determinative of the private respondent's innocence of the charges against him.In Flordelis v. Castillo =9 "C*# ?A4>, we held that@

#s clearly delineated in the aforecited provisions of the new Civil Codeand the *ules of Court, and as uniformly applied in numerous decisions of this Court, =Berbari v. Concepcion, 7A Phil. ?8 =45<A>E #leria v. )endo/a,

? Phil. 7<8 =4575>E People v. #ragon, 57 Phil. ?98 =4597>E Brito;"y v.)alate a3icab : arage, Inc., 4A< Phil 7 < =4598>E )endiola v.)acadael, 4 "C*# 95?E Benite/ v. Concepcion, < "C*# 48 E Mapante v.)ontesa, 7 "C*# 94AE 2imene/ v. #veria, << "C*# 4? A.> In

Buenaventura v. &campo =99 "C*# <84> the doctrine of pre udicialquestion was held inapplicable because no criminal case but merely anadministrative case and a civil suit were involved. he Court, however,held that, in view of the peculiar circumstances of that case, therespondents' suit for damages in the lower court was premature as it wasfiled during the pendency of an administrative case against therespondents before the P&!C&). ' he possibility cannot be overlooked,'said the Court, 'that the P&!C&) may hand down a decision adverse to





#part from this finding, the anne3es to the opposition, which !a Chemise!acoste ".#. filed in the Patent &ffice, show that it is the owner of thetrademark '!acoste' and the device consisting of a representation of acrocodile or alligator by the prior adoption and use of such mark anddevice on clothing, sports apparel and the like. !a Chemise !acoste ".#,

obtained registration of these mark and device and was in fact issuedrenewal certificates by the rench 1ational Industry Property &ffice.

333 333 333

Indeed, due process is a rule of reason. In the case at bar the order of thePatent &ffice is based not only on the undisputed fact of ownership of thetrademark by the appellee but on a prior determination by the )inister of

rade, as the competent authority under the Paris Convention, that thetrademark and device sought to be registered by the appellant are well;known marks which the Philippines, as party to the Convention, is bound

to protect in favor of its owners. it would be to e3alt form over substance tosay that under the circumstances, due process requires that a hearingshould be held before the application is acted upon.

he appellant cites section 5 of *epublic #ct 1o. 466, which requiresnotice and hearing whenever an opposition to the registration of atrademark is made. his provision does not apply, however, to situationscovered by the Paris Convention, where the appropriate authorities havedetermined that a well;known trademark is already that of another person.In such cases, the countries signatories to the Convention are obliged torefuse or to cancel the registration of the mark by any other person or

authority. In this case, it is not disputed that the trademark !acoste is sucha well;known mark that a hearing, such as that provided in *epublic #ct1o. 466, would be superfluous.

he issue of due process was raised and fully discussed in the appellate court'sdecision. he court ruled that due process was not violated.

In the light of the foregoing it is quite plain that the pre udicial question argument iswithout merit.

De have carefully gone over the records of all the cases filed in this Court and find

more than enough evidence to sustain a finding that the petitioner is the owner of thetrademarks %!#C&" $%, %C($)I"$ !#C&" $%, the crocodile or alligator device, andthe composite mark of !#C&" $ and the representation of the crocodile or alligator.

#ny pretensions of the private respondent that he is the owner are absolutely withoutbasis. #ny further ventilation of the issue of ownership before the Patent &ffice will be asuperfluity and a dilatory tactic.



he issue of whether or not the trademark used by the private respondent is differentfrom the petitioner's trade mark is a matter of defense and will be better resolved in thecriminal proceedings before a court of ustice instead of raising it as a preliminary matter in an administrative proceeding.

he purpose of the law protecting a trademark cannot be overemphasi/ed. hey are topoint out distinctly the origin or ownership of the article to which it is affi3ed, to secure tohim, who has been instrumental in bringing into market a superior article ofmerchandise, the fruit of his industry and skill, and to prevent fraud and imposition=$tepha v. +irector of Patents, 46 "C*# 759>.

he legislature has enacted laws to regulate the use of trademarks and provide for theprotection thereof. )odern trade and commerce demands that depredations onlegitimate trade marks of non;nationals including those who have not shown priorregistration thereof should not be countenanced. he law against such depredations isnot only for the protection of the owner of the trademark but also, and more importantly,

for the protection of purchasers from confusion, mistake, or deception as to the goodsthey are buying. =#sari Goko Co., !td. v. ee Boc, 4 "C*# 4E eneral armentsCorporation v. +irector of Patents, 74 "C*# 9A>.

he law on trademarks and tradenames is based on the principle of business integrityand common ustice' his law, both in letter and spirit, is laid upon the premise that,while it encourages fair trade in every way and aims to foster, and not to hamper,competition, no one, especially a trader, is ustified in damaging or eopardi/inganother's business by fraud, deceipt, trickery or unfair methods of any sort. hisnecessarily precludes the trading by one dealer upon the good name and reputationbuilt up by another =Baltimore v. )oses, 4 < )d <<5, ?7 # =<d> ?? >.

he records show that the goodwill and reputation of the petitioner's products bearingthe trademark !#C&" $ date back even before 4567 when !#C&" $ clothingapparels were first marketed in the Philippines. o allow (emandas to continue usingthe trademark !acoste for the simple reason that he was the first registrant in the"upplemental *egister of a trademark used in international commerce and notbelonging to him is to render nugatory the very essence of the law on trademarks andtradenames.

De now proceed to the consideration of the petition in o"indram !emandas "uiananiu. !on. Ro"erto &ngpin, et al. = .*. 1o. 69695>.

#ctually, three other petitions involving the same trademark and device have been filedwith this Court.

In !emandas & Co. v. %ntermediate /ppellate Co rt, et al . = .*. 1o. 6?9A7> thepetitioner asked for the following relief@



I1 I$D & #!! ($ &*$ &I1 , it is respectfully prayed =a> that the*esolutions of the respondent Court of 2anuary ?, 45 ? and ebruary <7,45 ? be nullifiedE and that the +ecision of the same respondent Court of2une ?A, 45 ? be declared to be the law on the matterE =b> that the+irector of Patents be directed to issue the corresponding registration

certificate in the Principal *egisterE and =c> granting upon the petitionersuch other legal and equitable remedies as are ustified by the premises.

&n +ecember 9, 45 ?, we issued the following resolution@

Considering the allegations contained, issues raised and the argumentsadduced in the petition for review, the respondent's comment thereon, andpetitioner's reply to said comment, the Court *esolved to +$1G thepetition for lack of merit.

he Court further *esolved to C#!! the attention of the Philippine Patent

&ffice to the pendency in this Court of .*. 1o. 96?856;58 entitled '!aChemise !acoste, ".#. v. (on. &scar C. ernande/ and obindram(emandas' which was given due course on 2une 47, 45 ? and to the factthat .*. 1o. 6?5< ;<5 entitled ' obindram (emandas v. !a Chemise!acoste, ".#., et al.' filed on )ay 5, 45 ? was dismissed for lack of meriton "eptember 4<, 45 ?. Both petitions involve the same dispute over theuse of the trademark 'Chemise !acoste'.

he second case of o"indram !emandas vs. La C)emise La oste, './., et al. = .*.1o. 6?5< ;<5> prayed for the following@

I. &n the petition for issuance of writ of preliminary in unction, an order beissued after due hearing@

l. $n oining and restraining respondents Company, attorneys;in;fact, and$stanislao ranados from further proceedings in the unfair competitioncharges pending with the )inistry of 2ustice filed against petitionerE

<. $n oining and restraining respondents Company and its attorneys;in;fact from causing undue publication in newspapers of general circulationon their unwarranted claim that petitioner's products are # $ pendingproceedings hereofE and

?. $n oining and restraining respondents Company and its attorneys;in;fact from sending further threatening letters to petitioner's customersun ustly stating that petitioner's products they are dealing in are # $ andthreatening them with confiscation and sei/ure thereof.

II. &n the main petition, udgment be rendered@





which the *epublic of the Philippines is a signatory, you are hereby directed toimplement measures necessary to effect compliance with our obligations under saidconvention in general, and, more specifically, to honor our commitment under 'e tion 6"is thereof, as follows@

4. Dhether the trademark under consideration is well;known in thePhilippines or is a mark already belonging to a person entitled to thebenefits of the C&1 $1 I&1, this should be established, pursuant toPhilippine Patent &ffice procedures in inter partes and e3 parte cases,according to any of the following criteria or any combination thereof@

=a> a declaration by the )inister of rade and Industry that' the trademarkbeing considered is already well;known in the Philippines such thatpermission for its use by other than its original owner will constitute areproduction, imitation, translation or other infringementE

=b> that the trademark is used in commerce internationally, supported byproof that goods bearing the trademark are sold on an international scale,advertisements, the establishment of factories, sales offices,distributorships, and the like, in different countries, including volume orother measure of international trade and commerceE

=c> that the trademark is duly registered in the industrial property office=s>of another country or countries, taking into consideration the dates of suchregistrationE

=d> that the trademark has been long established and obtained goodwill

and general international consumer recognition as belonging to one owner or sourceE

=e> that the trademark actually belongs to a party claiming ownership andhas the right to registration under the provisions of the aforestated P#*I"C&1 $1 I&1.

<. he word trademark, as used in this )$)&*#1+H), shall includetradenames, service marks, logos, signs, emblems, insignia or othersimilar devices used for Identification and recognition by consumers.

?. he Philippine Patent &ffice shall refuse all applications for, or cancelthe registration of, trademarks which constitute a reproduction, translationor imitation of a trademark owned by a person, natural or corporate, whois a citi/en of a country signatory to the P#*I" C&1 $1 I&1 &* ($P*& $C I&1 & I1+H" *I#! P*&P$* G.

7. he Philippine Patent &ffice shall give due course to the &pposition incases already or hereafter filed against the registration of trademarks



entitled to protection of 'e tion 6 "is of said P#*I" C&1 $1 I&1 asoutlined above, by remanding applications filed by one not entitled to suchprotection for final disallowance by the $3amination +ivision.

9. #ll pending applications for Philippine registration of signature and other

world famous trademarks filed by applicants other than their originalowners or users shall be re ected forthwith. Dhere such applicants havealready obtained registration contrary to the abovementioned P#*I"C&1 $1 I&1 and-or Philippine !aw, they shall be directed to surrendertheir Certificates of *egistration to the Philippine Patent &ffice forimmediate cancellation proceedings.

6. Consistent with the foregoing, you are hereby directed to e3pedite thehearing and to decide without delay the following cases pending beforeyour &ffice@

4. I1 $* P#* $" C#"$ 1&. 46 5;Petition filed by !a Chemise !acoste,".#. for the cancellation of Certificate of *egistration 1o. "*;<<<9 issuedto obindram (emandas, assignee of (emandas and CompanyE

<. I1 $* P#* $" C#"$ 1&. 469 ;&pposition filed by ames andarments Co. against the registration of the trademark !acoste sought by

!a Chemise !acoste, ".#.E

?. I1 $* P#* $" C#"$ 1&. 48 6;&pposition filed by !a Chemise!acoste, ".#. against the registration of trademark Crocodile +evice and"kiva sought by one Dilson Chua.

Considering our discussions in .*. 1os. 6?856;58, we find the petition in .*. 1o.69695 to be patently without merit and accordingly deny it due course.

In complying with the order to decide without delay the cases specified in thememorandum, the +irector of Patents shall limit himself to the ascertainment of facts inissues not resolved by this decision and apply the law as e3pounded by this Court tothose facts.

&ne final point. It is essential that we stress our concern at the seeming inability of lawenforcement officials to stem the tide of fake and counterfeit consumer items flooding

the Philippine market or e3ported abroad from our country. he greater victim is not somuch the manufacturer whose product is being faked but the ilipino consuming publicand in the case of e3portations, our image abroad. 1o less than the President, inissuing $3ecutive &rder 1o. 54? dated &ctober 8, 45 ? to strengthen the powers of the)inister of rade and Industry for the protection of consumers, stated that, among otheracts, the dumping of substandard, imitated, ha/ardous, and cheap goods, theinfringement of internationally known tradenames and trademarks, and the unfair tradepractices of business firms has reached such proportions as to constitute economic



sabotage. De buy a kitchen appliance, a household tool, perfume, face powder, othertoilet articles, watches, brandy or whisky, and items of clothing like eans, ;shirts, neck,ties, etc. J the list is quite length J and pay good money relying on the brand name asguarantee of its quality and genuine nature only to e3plode in bitter frustration andgenuine nature on helpless anger because the purchased item turns out to be a shoddy

imitation, albeit a clever looking counterfeit, of the quality product. 2udges all over thecountry are well advised to remember that court processes should not be used asinstruments to, unwittingly or otherwise, aid counterfeiters and intellectual pirates, tie thehands of the law as it seeks to protect the ilipino consuming public and frustratee3ecutive and administrative implementation of solemn commitments pursuant tointernational conventions and treaties.

D($*$ &*$, the petition in .*. 1&". 6?858;58 is hereby *#1 $+. he orderdated #pril <<, 45 ? of the respondent regional trial court is *$ $*"$+ and "$

#"I+$. &ur emporary *estraining &rder dated #pril <5, 45 ? is ma=i.e. P$*)#1$1 .he petition in .*. 1&. 69695 is +$1I$+ due course for lack of merit. &ur emporary

*estraining &rder dated +ecember 9, 45 ? is !I $+ and "$ #"I+$, effectiveimmediately.

"& &*+$*$+.

Tee)an ee :C)airman;, (elen io-!errera, Plana, Relova and 4e la F ente, <<., on r.

he !awphil Pro ect ; #rellano !aw oundation

Documents

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