GENERAL GARMENTS CORPORATION, PETITIONER, VS. THE DIRECTOR OF PATENTS AND PURITAN SPORTSWEAR CORPORATION, RESPONDENTS.

The General Garments Corporation, organized and existing under the
laws of the Philippines, is the owner of the trademark “Puritan,”
under Registration No. 10059 issued on November 15, 1962 by the Philippine
Patent Office, for assorted men’s wear, such as sweaters, shirts, jackets,
undershirts and briefs.

On March 9, 1964 the Puritan Sportswear Corporation, organized
and existing in and under the laws of the state of Pennsylvania, U.S.A., filed
a petition with the Philippine Patent Office for the cancellation of the
trademark “Puritan” registered in the name of General Garments
Corporation, alleging ownership and prior use in the Philippines of the said
trademark on the same kinds of goods, which use it had not abandoned; and
alleging further that the registration thereof by General Garments Corporation
had been obtained fraudulently and in violation of Section 17(c) of Republic
Act No. 166, as amended, in relation to Section 4(d) thereof.

On March 30, 1964 General Garments Corporation moved to dismiss
the petition on several grounds, all of which may be synthesized in one single
issue:  whether or not Puritan Sportswear
Corporation, which is a foreign corporation not licensed to do business and not
doing business in the Philippines, has legal capacity to maintain a suit in the
Philippine Patent Office for cancellation of a trademark registered
therein.  The Director of Patents denied
the motion to dismiss on August 6, 1964,
and denied likewise the motion for reconsideration on March 5, 1965, whereupon General Garments
Corporation, hereinafter referred to as petitioner, filed the instant petition
for review.

Section 17(c) and Section 4(d) of the Trademark Law provide
respectively as follows:

“Sec. 17.  Grounds for
cancellation. – Any person, who believes that he is or will be damaged by the
registration of a mark or trade-name, may, upon the payment of the prescribed
fee, apply to cancel said registration upon any of the following grounds:

x          x          x          x

(c)  That the registration was obtained
fraudulently or contrary to the provisions of section four, Chapter II thereof;
x x x”

“Sec. 4.  Registration
of trademarks, trade-names and service-marks which shall be known as the
principal register.  The owner of a
trade-mark, trade-name or service-mark used to distinguish his goods, business
or services from the goods, business or services of others shall have the right
to register the same on the principal register, unless it:

x          x          x          x

(d)  Consists of or comprises a mark or trade-name
which so resembles a mark or trade-name registered in the Philippines or a mark
or trade-name previously used in the Philippines by another and not abandoned,
as to be likely, when applied to or used in connection with goods, business or
services of the applicant, to cause confusion or mistake or to deceive
purchasers; or x x x“

Petitioner contends that Puritan Sportswear Corporation
(hereinafter referred to as respondent), being a foreign corporation which is
not licensed to do and is not doing business in the Philippines, is not
considered as a person under Philippine Laws and consequently is not comprehended
within the term “any person” who may apply for cancellation of a mark or
trade-name under Section 17(c) of the Trademark Law aforequoted.  That respondent is a juridical person should
be beyond serious dispute.  The fact that
it may not transact business in the Philippines unless it has obtained a
license for that purpose, nor maintain a suit in Philippine courts for the
recovery of any debt, claim or demand without such license (Secs.
68 and 69, Corporation Law) does not make respondent any less a juridical
person.  Indeed an exception to the
license requirement has been recognized in this jurisdiction, namely, where a
foreign corporation sues on an isolated transaction.  As first enunciated in Marshall-Wells Co., v.
Elser & Co.,^[1]
“the object of the statute (Secs. 68 and 69,
Corporation Law) was not to prevent the foreign corporation from performing
single acts, but to prevent it from acquiring a domicile for the purpose of
business without taking the steps necessary to render it amenable to suit in
the local courts… the implication of the law (being) that it was never the
purpose of the legislature to exclude a foreign corporation which happens to
obtain an isolated order for business from the Philippines, from securing
redress in the Philippine Courts…” The principle has since then been applied
in a number of other cases.^[2]

To recognize respondent as a juridical person, however, does not
resolve the issue in this case.  It
should be postulated at this point that respondent is not suing in our courts
“for the recovery of any debt, claim or demand,” for which a license
to transact business in the Philippines
is required by Section 69 of the Corporation Law, subject only to the exception
already noted.  Respondent went to the
Philippine Patent Office on a petition for cancellation of a trademark
registered by petitioner, invoking Section 17(c) in relation to Section 4(d) of
the Trademark Law.  A more or less
analogous question arose in Western Equipment & Supply Co. v. Reyes, 51
Phil. 115.  The syllabus of the report,
which is a correct statement of the doctrine laid down in the decision, reads
as follows:

“A foreign corporation which has never done x x x business in the Philippine
Islands and which is unlicensed and unregistered to do business here, but is
widely and favorably known in the Islands through the use therein of its
products bearing its corporate and trade name has a legal right to maintain an
action in the Islands.

x          x          x          x

“The purpose of such a suit is to protect its reputation,
corporate name and goodwill which has been established through the natural
development of its trade for a long period of years, in the doing of which it
does not seek to enforce any legal or contract rights arising from, or growing
out of any business which it has transacted in the Philippine Islands.

“The right to the use of the corporate or trade name is a
property right, a right in rem, which
it may assert and protect in any of the courts of the world – even in
jurisdictions where it does not transact business – just the same as it may
protect its tangible property, real or personal against trespass or
conversion.”

In Asari Yoko Co., Ltd. v. Kee Boc (Jan. 20, 1961) 1 SCRA 1,
the plaintiff, a Japanese corporation which had acquired prior use in the
Philippines of the trademark “RACE” for men’s shirts and undershirts but
which had not shown prior registration thereof, successfully maintained a suit
opposing the application of the defendant, a local businessman, to register the
same trademark for similar goods produced by him.  This Court said:  “The lawful entry into the Philippines
of goods bearing the trademark since 1949 should entitle the owner of the
trademark to the right to use the same to the exclusion of others.  Modern trade and commerce demands that depredations
on legitimate trademarks of non-nationals should not be countenanced.” It
may be added here that the law against such depredations is not only for the
protection of the owner of the trademark who has acquired prior use thereof but
also, and more importantly, for the protection of purchasers from confusion,
mistake or deception as to the goods they are buying.  This is clear from a reading of Section 4(d)
of the Trademark Law.

Petitioner argues that the ruling in Western Equipment has been
superseded by the later decision of this Court in Mentholatum
Co., Inc. v. Mangaliman (1941), 72 Phil. 524, where
it was held that inasmuch as Mentholatum Co., Inc.
was a foreign corporation doing business in the Philippines without the license
required by Section 68 of the Corporation Law it could not prosecute an action
for infringement of its trademark which was the subject of local
registration.  The court itself, however,
recognized a distinction between the two cases, in that in Western Equipment
the foreign corporation was not engaged in business in the Philippines, and
observed that if it had been so engaged without first obtaining a license
“another and a very different question would be presented.”

Parenthetically, it may be stated that the ruling in the Mentholatum case was subsequently derogated when Congress,
purposely to “counteract the effects” of said case, enacted Republic
Act No. 638, inserting Section 21-A in the Trademark Law, which allows a
foreign corporation or juristic person to bring an action in Philippine courts
for infringement of a mark or trade-name, for unfair competition, or false
designation of origin and false description, “whether or not it has been
licensed to do business in the Philippines under Act Numbered Fourteen hundred
and fifty-nine, as amended, otherwise known as the Corporation Law, at the time
it brings complaint.”

Petitioner argues that Section 21-A militates against
respondent’s capacity to maintain a suit for cancellation, since it requires,
before a foreign corporation may bring an action, that its trademark or tradename has been registered under the Trademark Law.  The argument misses the essential point in
the said provision, which is that the foreign corporation is allowed thereunder to sue “whether or not it has been licensed
to do business in the Philippines”
pursuant to the Corporation Law (precisely to counteract the effects of the
decision in the Mentholatum case).

In any event, respondent in the present case is not suing for
infringement or unfair competition under Section 21-A, but for cancellation
under Section 17, on one of the grounds enumerated in Section 4.  The first kind of action, it may be stated,
is cognizable by the Courts of First Instance (Sec. 27); the second partakes of
an administrative proceeding before the Patent Office (Sec. 18, in relation to
Sec. 8).  And while a suit under Section
21-A requires that the mark or tradename alleged to
have been infringed has been “registered or assigned” to the suing
foreign corporation, a suit for cancellation of the registration of a mark or tradename under Section 17 has no such requirement.  For such mark or trade-name should not have
been registered in the first place (and consequently may be cancelled if so
registered) if it “consists of or comprises a mark or tradename
which so resembles a mark or trade-name… previously used in the Philippines
by another and not abandoned, as to be likely, when applied to or used in
connection with goods, business or services of the applicant, to cause
confusion or mistake or to deceive purchasers;…”(Sec. 4d).

Petitioner’s last argument is that under Section 37 of the
Trademark Law respondent is not entitled to the benefits of said law because
the Philippines is not a signatory to any international treaty or convention
relating to marks or tradenames or to the repression
of unfair competition.  Section 37 reads
in part:

“SEC. 37.  Rights of
foreign registrants.  – Persons who
are nationals of, domiciled in, or have a bona fide or effective business or commercial
establishment in any foreign country, which is a party to any international
convention or treaty relating to marks or trade-names, or the repression of
unfair competition to which the Philippines may be a party, shall be entitled
to the benefits and subject to the provisions of this Act to the extent and
under the conditions essential to give effect to any such convention and
treaties so long as the Philippines shall continue to be a party thereto,
except as provided in the following paragraphs of this section.”

As correctly pointed out by respondents, this provision was
incorporated in the law in anticipation of the eventual adherence of the Philippines
to any international convention or treaty for the protection of industrial
property.  It speaks of persons who are
nationals of, domiciled in, or have a bona fide or effective
business or commercial establishment in any foreign country, which is a party
to any international convention or treaty relating to industrial property to
which the Philippines
may be a party.  In other words, the
provision will be operative only when the Philippines
becomes a party to such a convention or treaty. 
That this was the intention of Congress is clear from the explanatory
note to House Bill No. 1157 (now Republic Act 166), in reference to Section 37,
which is the only provision in Chapter XI of the Trademark Law on Foreign
Industrial Property:  “The necessary
provisions to qualify the Philippines under the international convention for
the protection of industrial property have been specifically incorporated in
the Act.”^[3]
In the meantime, regardless of Section 37, aliens or foreign corporations are
accorded benefits under the law.  Thus,
under Section 2, for instance, the trade-marks, trade-names and service-marks owned
by persons, corporations, partnerships or associations domiciled in any foreign
country may be registered in the Philippines, provided that the country of
which the applicant for registration is a citizen grants by law substantially
similar privileges to citizens of the Philippines.

Wherefore, the petition is dismissed, and the resolution
of the Director of Patents dated August
6, 1964 is affirmed, with costs.

Concepcion, C.J., Reyes, J.B.L., Dizon, Zaldivar, Castro,
Fernando, Teehankee, Barredo,
and Villamor,
JJ., concur.

Makasiar, J., reserves his vote.

^[1]
46 Phil. 70, 74 (1924).

^[2]
Central Republic Bank and Trust Co. v. Bustamente
(1941) 71 Phil. 359; Pacific Vegetable Oil Corporation v. Singzon, L-7919, April 29, 1955; Eastboard
Navigation, Ltd., v. Juan Ysmael Co., Inc.
(1957) 102 Phil. 1; Atlantic Mutual Insurance Co., v. Cebu Stevedoring Co., Inc. (1966) 17 SCRA 1037.

^[3]
Congressional Record, House of Representatives, Vol. II, No. 51, May 12, 1947,
at page 1016.