G.R. Nos. 63796-97. May 21, 1984
LA CHEMISE LACOSTE, S. A., PETITIONER, VS. HON. OSCAR C. FERNANDEZ, PRESIDING JUDGE OF BRANCH XLIX, REGIONAL TRIAL COURT, NATIONAL CAPITAL JUDICIAL REGION, MANILA AND GOBINDRAM …
GUTIERREZ, JR., J.:
acquire an unbecoming reputation among the manufacturing and trading
centers of the world as a haven for intellectual pirates imitating and
illegally profiting from trademarks and tradenames which have
established themselves in international or foreign trade.
Before this Court is a petition for certiorari with preliminary
injunction filed by La Chemise Lacoste, S.A., a well known European
Manufacturer of clothings and sporting apparels sold in the
international market and bearing the trademarks “LACOSTE”, “CHEMISE
LACOSTE”, “CROCODILE DEVICE” and a composite mark consisting of the word
“LACOSTE” and a representation of a crocodile/alligator. The
petitioner asks us to set aside as null and void, the order of Judge
Oscar C. Fernandez, of Branch XLIX, Regional Trial Court, National
Capital Judicial Region, granting the motion to quash the search
warrants previously issued by him and ordering the return of the seized
items.
The facts are not seriously disputed. The petitioner is a foreign
corporation, organized and existing under the laws of France and not
doing business in the Philippines. It is undeniable from the records
that it is the actual owner of the abovementioned trademarks used on
clothings and other goods specifically sporting apparels sold in many
parts of the world and which have been marketed in the Philippines since
1964. The main basis of the private respondent’s case is its claim of
alleged prior registration.
In 1975, Hemandas & Co., a duly licensed domestic firm applied for
and was issued Reg. No. SR-2225 (SR stands for Supplemental Register)
for the trademark “CHEMISE LACOSTE & CROCODILE DEVICE” by the
Philippine Patent Office for use on T-shirts, sportswear and other
garment products of the company. Two years later, it applied for the
registration of the same trademark under the Principal Register. The
Patent Office eventually issued an order dated March 3, 1977 which
states that:
xxx xxx xxx
“x x x Considering that the mark was already registered in the
Supplemental Register in favor of herein applicant, the Office has no
other recourse but to allow the application, however, Reg. No. SR-2225
is now being contested in a Petition for Cancellation docketed as IPC
No. 1046, still registrant is presumed to be the owner of the mark until
after the registration is declared cancelled.”
Thereafter, Hemandas & Co. assigned to respondent Gobindram Hemandas
all rights, title, and interest in the trademark “CHEMISE LACOSTE &
DEVICE”.
On November 21, 1980, the petitioner filed its application for
registration of the trademark “Crocodile Device” (Application Serial No.
43242) and “Lacoste” (Application Serial No. 43241). The former was
approved for publication while the latter was opposed by Games and
Garments in Inter Partes Case NO. 1658. In 1982, the petitioner filed a
Petition for the Cancellation of Reg. No. SR-2225 docketed as Inter
Partes Case No. 1689. Both cases have now been considered by this Court
in Hemandas v. Hon. Roberto Ongpin (G.R. No. 65659).
On March 21, 1983, the petitioner filed with the National Bureau of
Investigation (NBI) a letter-complaint alleging therein the acts of
unfair competition being committed by Hemandas and requesting their
assistance in his apprehension and prosecution. The NBI conducted an
investigation and subsequently filed with the respondent court two
applications for the issuance of search warrants which would authorize
the search of the premises used and occupied by the Lacoste Sports
Center and Games and Garments both owned and operated by Hemandas.
The respondent court issued Search Warrant Nos. 83-128 and 83-129 for
violation of Article 189 of the Revised Penal Code, “it appearing to the
satisfaction of the judge after examining under oath applicant and his
witnesses that there are good and sufficient reasons to believe that
Gobindram Hemandas x x x has in his control and possession in his
premises the x x x properties subject of the offense.” (Rollo,
pp. 67 and 69) The NBI agents executed the two search warrants and as a
result of the search found and seized various goods and articles
described in the warrants.
Hemandas filed a motion to quash the search warrants alleging that the
trademark used by him was different from petitioner’s trademark and that
pending the resolution of IPC No. 1658 before the Patent Office, any
criminal or civil action on the same subject matter and between the same
parties would be premature.
The petitioner filed its opposition to the motion arguing that the
motion to quash was fatally defective as it cited no valid ground for
the quashal of the search warrants and that the grounds alleged in the
motion were absolutely without merit. The State Prosecutor likewise
filed his opposition on the grounds that the goods seized were
instrument of a crime and necessary for the resolution of the case on
preliminary investigation and that the release of the said goods would
be fatal to the case of the People should prosecution follow in court.
The respondent court was, however, convinced that there was no probable
cause to justify the issuance of the search warrants. Thus, in its
order dated March 22, 1983, the search warrants were recalled and set
aside and the NBI agents or officers in custody of the seized items were
ordered to return the same to Hemandas. (Rollo, p. 25)
The petitioner anchors the present petition on the following issues:
“Did respondent judge act with grave abuse of discretion amounting to lack of jurisdiction,
“(i) in reversing the finding of probable cause which he himself
had made in issuing the search warrants, upon allegations which are
matters of defense and as such can be raised and resolved only upon
trial on the merits; and“(ii) finding that the issuance of the search warrants is
premature in the face of the fact that (a) Lacoste’s registration of the
subject trademarks is still pending with the Patent Office with
opposition from Hemandas; and (b) the subject trademarks had been
earlier registered by Hemandas in his name in the Supplemental Register
of the Philippine Patent Office?
Respondent, on the other hand, centers his arguments on the following issues:
I
THE PETITIONER HAS NO CAPACITY TO SUE BEFORE PHILIPPINE COURTS.
II
THE RESPONDENT JUDGE DID NOT COMMIT A GRAVE ABUSE OF DISCRETION
TANTAMOUNT TO LACK OF JURISDICTION IN ISSUING THE ORDER DATED APRIL 22,
1983.
Hemandas argues in his comment on the petition for certiorari that
the petitioner being a foreign corporation failed to allege essential
facts bearing upon its capacity to sue before Philippine courts. He
states that not only is the petitioner not doing business in the
Philippines but it also is not licensed to do business in the
Philippines. He also cites the case of Leviton Industries v. Salvador
(114 SCRA 420) to support his contention. The Leviton case, however,
involved a complaint for unfair competition under Section 21-A of
Republic Act No. 166 which provides:
“Sec. 21-A. Any foreign corporation or juristic person to which a
mark or tradename has been registered or assigned under this Act may
bring an action hereunder for infringement, 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 tine it brings the complaint; Provided, That the
country of which the said foreign corporation or juristic person is a
citizen, or in which it is domiciled, by treaty, convention or law,
grants a similar privilege to corporate or juristic persons of the
Philippines.”
We held that it was not enough for Leviton, a foreign corporation
organized and existing under the laws of the State of New York, United
States of America, to merely allege that it is a foreign corporation.
It averred in Paragraph 2 of its complaint that its action was being
filed under the provisions of Section 21-A of Republic Act No. 166, as
amended. Compliance with the requirements imposed by the abovecited
provision was necessary because Section 21-A of Republic Act No. 166
having explicitly laid down certain conditions in a specific proviso,
the same must be expressly averred before a successful prosecution may
ensue. It is therefore, necessary for the foreign corporation to comply
with these requirements or aver why it should be exempted from them, if
such was the case. The foreign corporation may have the right to sue
before Philippine courts, but our rules on pleadings require that the
qualifying circumstances necessary for the assertion of such right
should first be affirmatively pleaded.
In contradistinction, the present case involves a complaint for violation of Article 189 of the Revised Penal Code. The Leviton case is not applicable.
Asserting a distinctly different position from the Leviton argument,
Hemandas argued in his brief that the petitioner was doing business in
the Philippines but was not licensed to do so. To support this
argument, he states that the applicable ruling is the case of Mentholatum Co., Inc. v. Mangaliman,
(72 Phil. 524) where Mentholatum Co. Inc., a foreign corporation and
Philippine-American Drug Co., the former’s exclusive distributing agent
in the Philippines filed a complaint for infringement of trademark and
unfair competition against the Mangalimans.
The argument has no merit. The Mentholatum case is distinct
from and inapplicable to the case at bar. Philippine-American Drug Co.,
Inc., was admittedly selling products of its principal, Mentholatum
Co., Inc., in the latter’s name or for the latter’s account. Thus, this
Court held that “whatever transactions the Philippine-American Drug
Co., Inc. had executed in view of the law, the Mentholatum Co., Inc.,
did it itself. And, the Mentholatum Co., Inc., being a foreign
corporation doing business in the Philippines without the license
required by Section 68 of the Corporation Law, it may not prosecute this
action for violation of trademark and unfair competition.”
In the present case, however, the petitioner is a foreign corporation
not doing business in the Philippines. The marketing of its products in
the Philippines is done through an exclusive distributor, Rustan
Commercial Corporation. The latter is an independent entity which buys
and then markets not only products of the petitioner but also many other
products bearing equally well-known and established trademarks and
tradenames. In other words, Rustan is not a mere agent or conduit of
the petitioner.
The rules and regulations promulgated by the Board of Investments
pursuant to its rule-making power under Presidential Decree No. 1789,
otherwise known as the Omnibus Investment Code, support a finding that
the petitioner is not doing business in the Philippines. Rule I, Sec. 1
(g) of said rules and regulations defines “doing business” as one which
includes, inter alia:
“(1) x x x A foreign firm which does business through middlemen
acting on their own names, such as indentors, commercial brokers or
commission merchants, shall not be deemed doing business in the
Philippines. But such indentors, commercial brokers or commission
merchants shall be the ones deemed to be doing business in the
Philippines.“(2) Appointing a representative or distributor who is domiciled
in the Philippines, unless said representative or distributor has an
independent status, i.e., it transacts business in its name and for its
account, and not in the name or for the account of a principal. Thus,
where a foreign firm is represented by a person or local company which
does not act in its name but in the name of the foreign firm, the latter
is doing business in the Philippines.”xxx xxx xxx
Applying the above provisions to the facts of this case, we find and
conclude that the petitioner is not doing business in the Philippines.
Rustan is actually a middleman acting and 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 petitioner failed to allege material facts in its petition relative
to capacity to sue, the petitioner may still maintain the present suit
against respondent Hemandas. As early as 1927, this Court was, and it
still is, of the view that a foreign corporation not doing business in
the Philippines needs no license to sue before Philippine courts for
infringement of trademark and unfair competition. Thus, in Western Equipment and Supply Co. v. Reyes
(51 Phil. 115), this Court held that a foreign corporation which has
never done any business in the Philippines and which is unlicensed and
unregistered to do business here, but is widely and favorably known in
the Philippines through the use therein of its products bearing its
corporate and tradename, has a legal right to maintain an action in the
Philippines to restrain the residents and inhabitants thereof from
organizing a corporation therein bearing the same name as the foreign
corporation, when it appears that they have personal knowledge of the
existence of such a foreign corporation, and it is apparent that the
purpose of the proposed domestic corporation is to deal and trade in the
same goods as those of the foreign corporation.
We further held:
xxx xxx xxx
“x x x That company is not here seeking to enforce any legal or
contract, rights arising from, or growing out of, any business which it
has transacted in the Philippine Islands. The sole purpose of the
action:“‘Is to protect its reputation, its corporate name, its goodwill,
whenever that reputation, corporate name or goodwill have, through the
natural development of its trade, established themselves.’ And it
contends that its rights to the use of its corporate and trade name:“‘Is a property right, a right in rem, which it may assert and
protect against all the world, 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. Citing sec. 10, Nims on Unfair Competition and
Trademarks and cases cited; secs. 21-22, Hopkins on TradeMarks, Trade
Names and Unfair Competition and cases cited.’ That point is sustained
by the authorities, and is well stated in Hanover Star Mining Co. v.
Allen and Wheeler Co. (208 Fed., 513), in which the syllabus says:“‘Since it is the trade and not the mark that is to be protected, a
trademark acknowledges no territorial boundaries of municipalities or
states or nations, but extends to every market where the trader’s goods
have become known and identified by the use of the mark.'”
Our recognizing the capacity of the petitioner to sue is not by any
means novel or precedent setting. Our jurisprudence is replete with
cases illustrating instances when foreign corporations not doing
business in the Philippines may nonetheless sue in our courts. In East Board Navigation Ltd., v. Ysmael and Co., Inc. (102 Phil 1), we recognized a right of foreign corporation to sue on isolated transactions. In General Garments Corp. v. Director of Patents
(41 SCRA 50), we sustained the right of Puritan Sportswear Corp., a
foreign corporation not licensed to do and not doing business in the
Philippines, to file a petition for cancellation of a trademark before
the Patent Office.
More important is the nature of the case which led to this petition. What preceded this petition for certiorari was
a letter-complaint filed before the NBI charging Hemandas with a
criminal offense, i.e., violation of Article 189 of the Revised Penal
Code. If prosecution follows after the completion of the preliminary
investigation being conducted by the Special 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 is
essentially an act against the State. It is the latter which is
principally the injured party although there is a private right
violated. Petitioner’s capacity to sue would become, therefore, of not
much significance in the main case. We cannot allow a possible violator
of our criminal statutes to escape prosecution upon a farfetched
contention that the 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 for unfair competition or infringement of trademarks
of a foreign corporation, we are moreover recognizing our duties and the
rights of foreign states under the Paris Convention for the Protection
of Industrial Property to which the Philippines and France are parties.
We are simply interpreting and enforcing a solemn international
commitment of the Philippines embodied in a multilateral treaty to which
we are a party and which we entered into because it is in our national
interest to do so.
The Paris Convention provides in part that:
ARTICLE 1
“(1) The countries to which the present Convention applies
constitute themselves into a Union for the protection of industrial
property.“(2) The protection of industrial property is concerned with
patents, utility models, industrial designs, trademarks service marks,
trade names, indications of source or appellations of origin, and the
repression of unfair competition.xxx xxx xxx
ARTICLE 2
“(1) Nationals of each of the countries of the Union shall, as
regards the protection of industrial property, enjoy in all the other
countries of the Union the advantages that their respective laws now
grant, or may hereafter grant, to nationals, without prejudice to the
rights specially provided by the present Convention. Consequently, they
shall have the same protection as the latter, and the same legal remedy
against any infringement of their rights, provided they observe the
conditions and formalities imposed upon nationals.xxx xxx xxx
ARTICLE 6bis
“(1) The countries of the Union undertake, either
administratively if their legislation so permits, or at the request of
an interested party, to refuse or to cancel the registration and to
prohibit the use of a trademark which constitutes a reproduction,
imitation or translation, liable to create confusion, of a mark
considered by the competent authority of the country of registration or
use to be well-known in that country as being already the mark of a
person entitled to the benefits of the present Convention and used for
identical or similar goods. These provisions shall also apply when the
essential part of the mark constitutes a reproduction of any such
well-known mark or an imitation liable to create confusion therewith.xxx xxx xxx
ARTICLE 8
“A trade name shall be protected in all the countries of the
Union without the obligation of filing or registration, whether or not
it farms part of a trademark.xxx xxx xxx
ARTICLE 10bis
“(1) The countries of the Union are bound to assure to persons
entitled to the benefits of the Union effective protection against
unfair competition.xxx xxx xxx
ARTICLE 10ter
“(1) The countries of the Union undertake to assure to
nationals of the other countries of the Union appropriate legal remedies
to repress effectively all the acts referred to in Articles 9, 10 and
10bis.“(2) They undertake, further, to provide measures to permit
syndicates and associations which represent the industrialists,
producers or traders concerned and the existence of which is not
contrary to the laws of their countries, to take action in the Courts or
before the administrative authorities, with a view to the repression of
the acts referred to in Articles 9, 10 and 10bis, in so far as the law
of the country in which protection is claimed allows such action by the
syndicates and associations of that country.xxx xxx xxx
ARTICLE 17
“Every country party to this Convention undertakes to adopt, in
accordance with its constitution, the measures necessary to ensure the
application of this Convention.“It is understood that at the time an instrument of ratification
or accession is deposited on behalf of a country; such country will be
in a position under its domestic law to give effect to the provisions of
this Convention.” (61 O.G 8010)xxx xxx xxx
In Vanity Fair Mills, Inc. v. T. Eaton Co. (234 F. 2d 633) the
United States Circuit Court of Appeals had occasion to comment on the
extraterritorial application of the Paris Convention. It said that:
“[11] The International Convention is essentially a compact
between the various member countries to accord in their own countries to
citizens of the other contracting parties trademark and other rights
comparable to those accorded their own citizens by their domestic law.
The underlying principle is that foreign nationals should be given the
same treatment in each of the member countries as that country makes
available to its own citizens. In addition, the Convention sought to
create uniformity in certain respects by obligating each member nation
‘to assure to nationals of countries of the Union an effective
protection against unfair competition.’“[12] The Convention is not premised upon the idea that the
trade-mark and related laws of each member nation shall be given
extraterritorial application, but on exactly the converse principle
that each nation’s law shall have only territorial application. Thus a
foreign national of a member nation using his trademark in commerce in
the United States is accorded extensive protection here against
infringement and other types of unfair competition by virtue of United
States membership in the Convention. But that protection has its source
in, and is subject to the limitations of, American law, not the law of
the foreign national’s own country.” x x x.By the same token, the petitioner should be given the same
treatment in the Philippines as we make available to our own citizens.
We are obligated to assure to nationals of “countries of the Union” an
effective protection against unfair competition in the same way that
they are obligated to similarly protect Filipino citizens and firms.Pursuant to this obligation, the Ministry of Trade on November 20,
1980 issued a memorandum addressed to the Director of the Patents Office
directing the latter –xxx xxx xxx
“x x x to reject all pending applications for Philippine
registration of signature and other world famous trademarks by
applicants other than its original owners or users.“The conflicting claims aver internationally known trademarks
involve such name brands as Lacoste, Jordache, Gloria Vanderbilt,
Sasson, Fila, Pierre Cardin, Gucci, Christian Dior, Oscar de la Renta,
Calvin Klein, Givenchy, Ralph Lauren, Geoffrey Beene, Lanvin and Ted
Lapidus.“It is further directed that, incases where warranted, Philippine
registrants of such trademarks should be asked to surrender their
certificates of registration, if any, to avoid suits for damages and
other legal action by the trademarks’ foreign or local owners or
original users.”
The memorandum is a clear manifestation of our avowed adherence to a
policy of cooperation and amity with all nations it is not, as wrongly
alleged by the private respondent, a personal policy of Minister Luis
Villafuerte which expires once he leaves the Ministry of Trade. For a
treaty or convention is not a mere moral obligation to be enforced or
not at the whims of an incumbent head of a Ministry. It creates a
legally binding obligation on the parties founded on the generally
accepted principle of international law of pacta sunt servanda which has
been adopted as part of the law of our land. (Constitution, Art. II,
Sec. 3). The memorandum reminds the Director of Patents of his legal
duty to obey both law and treaty. It must also be obeyed.
Hemandas further contends that the respondent court did not commit grave
abuse of discretion in issuing the questioned order of April 22, 1983.
A review of the grounds invoked by Hemandas in his motion to quash the
search warrants reveals the fact that they are not appropriate for
quashing a warrant. They are matters of defense which should be
ventilated during the trial on the merits of the case. For instance, on
the basis of the facts before the Judge, we fail to understand how he
could treat a bare allegation that the respondent’s trademark is
different from the petitioner’s trademark as a sufficient basis to grant
the motion to quash. We will treat the issue of prejudicial question
later. Granting that respondent Hemandas was only trying to show the
absence of probable cause, we, nonetheless, hold the arguments to be
untenable.
As 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 judge after examination under oath or affirmation
of the complainant and the witnesses he may produce (Constitution, Art.
IV, Sec. 3). Probable cause has traditionally meant such facts and
circumstances antecedent to the issuance of the warrant that are in
themselves sufficient to induce a cautious man to rely upon them and act
in pursuance thereof (People v. Sy Juco, 64 Phil. 667).
This concept of probable cause was amplified and modified by our ruling in Stonehill v. Diokno,
(20 SCRA 383) that probable cause “presupposes the introduction of
competent proof that the party against whom it is sought has performed particular acts, or committed specific omissions, violating a given provision of our criminal laws.”
The question of whether or not probable cause exists is one which must
be decided in the light of the conditions obtaining in given situations
(Central Bank v. Morfe, 20 SCRA 507). We agree that there is no
general formula or fixed rule for the determination of the existence of
probable cause since, as we have recognized in Luna v. Plaza (26 SCRA
310), the existence depends to a large degree upon the finding or
opinion of the judge conducting the examination. However, the findings
of the judge should not disregard the facts before him nor run counter
to the clear dictates of reason. More so it is plain that our country’s
ability to abide by international commitments is at stake.
The records show that the NBI agents at the hearing of the application
for the warrants before respondent court presented three witnesses under
oath, sworn statements, and various exhibits in the form of clothing
apparels manufactured by Hemandas but carrying the trademark Lacoste.
The respondent court personally interrogated Ramon Esguerra, Samuel
Fiji, and Mamerto Espatero by means of searching questions. After
hearing the testimonies and examining the documentary evidence, the
respondent court was convinced that there were good and sufficient
reasons for the issuance of the warrant. And it then issued the
warrant.
The respondent court, therefore, complied with the constitutional and
statutory requirements for the issuance of a valid search warrant. At
that point in time, it was fully convinced that there existed probable
cause. But after hearing the motion to quash and the oppositions
thereto, the respondent court executed a complete turnabout and declared
that there was no probable cause to justify its earlier issuance of the
warrants.
True, 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. In this case, there was no
compelling justification for the about face. The allegation that vital
facts were deliberately suppressed or concealed by the petitioner
should have been assessed more carefully because the object of the
quashal was the return of items already seized and easily examined by
the court. The items were alleged to be fake and quite obviously would
be needed as evidence in the criminal prosecution. Moreover, an
application for a search warrant is heard ex parte. It is neither a
trial nor a part of the trial. Action on these applications must be
expedited for time is of the essence. Great reliance has to be accorded
by the judge to the testimonies under oath of the complainant and the
witnesses. The allegation of Hemandas that the applicant withheld
information from the respondent court was clearly no basis to order the
return of the seized items.
Hemandas relied heavily below and before us on the argument that it is
the holder of a certificate of registration of the trademark “CHEMISE
LACOSTE & CROCODILE DEVICE”. Significantly, such registration is
only in the Supplemental Register.
A certificate of registration in the Supplemental Register is not prima
facie evidence of the validity of registration, of the registrant’s
exclusive right to use the same in connection with the goods, business,
or services specified in the certificate. Such a certificate of
registration cannot be filed, with effect, with the Bureau of Customs in
order to exclude from the Philippines, foreign goods bearing
infringement marks or trade names (Rule 124, Revised Rules of Practice
Before the Phil. Pat. Off in Trademark Cases; Martin, Philippine
Commercial Laws, 1981, Vol. 2, pp. 513-515).
Section 19-A of Republic Act 166 as amended not only provides for
the keeping of the supplemental register in addition to the principal
register but specifically directs that:xxx xxx xxx
“The certificates of registration for marks and trade names
registered on the supplemental register shall be conspicuously different
from certificates issued for marks and trade names registered on the
principal register.”xxx xxx xxx
The reason is explained by a leading commentator on Philippine Commercial Laws:
“The registration of a mark upon the supplemental register is not, as in
the case of the principal register, prima facie evidence of (1) the
validity of registration; (2) registrant’s ownership of the mark; and
(3) registrant’s exclusive right to use the mark. It is not subject to
opposition, although it may be cancelled after its issuance. Neither
may it be the subject of interference proceedings. Registration on the
supplemental register is not constructive notice of registrant’s claim
of ownership. A supplemental register is provided for the registration
of marks which are not registrable on the principal register because
of some defects (conversely, defects which make a mark unregistrable on
the principal register, yet do not bar them from the supplemental
register.)’ (Agbayani, II Commercial Laws of the Philippines, 1978, p.
514, citing Uy Hong Mo v. Titay & Co., et al., Dec. No. 254 of
Director of Patents, Apr. 30, 1963;”
Registration in the Supplemental Register, therefore, serves as notice
that the registrant is using or has appropriated the trademark. By the
very fact that the trademark cannot as yet be entered in the Principal
Register, all who deal with it should be on guard that there are certain
defects, some obstacles which the user must still overcome before he
can claim legal ownership of the mark or ask the courts to vindicate his
claims of an exclusive right to the use of the same. It would be
deceptive for a party with nothing more than a registration in the
Supplemental Register to posture before courts of justice as if the
registration is in the Principal Register.
The reliance of the private respondent on the last sentence of the
Patent office action on application Serial No. 30954 that “registrant is
presumed to be the owner of the mark until after the registration is
declared cancelled” is, therefore, misplaced and grounded on shaky
foundation. The supposed presumption not only runs counter to the
precept embodied in Rule 124 of the Revised Rules of Practice Before the
Philippine Patent Office in Trademark Cases but considering all the
facts ventilated before us in the four interrelated petitions involving
the petitioner and the respondent, it is devoid of factual basis. And
even in cases where presumption and precept may factually be reconciled,
we have held that the presumption is rebuttable, not conclusive,
(People v. Lim Hoa, G. R. No. L-10612, May 30, 1958, Unreported). One
may be declared an unfair competitor even if his competing trademark is
registered (Parke, Davis & Co. v. Kiu Foo & Co., et al., 60
Phil. 928; La Yebana Co. v. Chua Seco & Co., 14 Phil. 534).
By the same token, the argument that the application was premature in
view of the pending case before the Patent Office is likewise without
legal basis.
The proceedings pending before the Patent Office involving IPC No. 1658
do not partake of the nature of a prejudicial question which must first
be definitely resolved.
Section 5 of Rule 111 of the Rules of Court provides that:
“A petition for the suspension of the criminal action based upon
the pendency of a pre-judicial question in a civil case, may only be
presented by any party before or during the trial of the criminal
action.”
The case which suspends the criminal prosecution must be a civil case
which is determinative of the innocence or, subject to the availability
of other defenses, the guilt of the accused. The pending case before
the Patent Office is an administrative proceeding and not a civil case.
The decision of the Patent Office cannot be finally determinative of
the private respondent’s innocence of the charges against him. In Flordelis v. Castillo (58 SCRA 301), we held that:
“As clearly delineated in the aforecited provisions of the new
Civil Code and the Rules of Court, and as uniformly applied in numerous
decisions of this Court, (Berbari v. Concepcion, 40 Phil. 837 (1920);
Aleria v. Mendoza, 83 Phil. 427 (1949); People v. Aragon, 94 Phil. 357
(1954); Brito-Sy v. Malate Taxicab & Garage, Inc., 102 Phil. 482
(1957); Mendiola v. Macadael, 1 SCRA 593; Benitez v. Concepcion, 2 SCRA
178; Zapante v. Montesa, 4 SCRA 510; Jimenez v. Averia, 22 SCRA 1380.)
In Buenaventura v. Ocampo (55 SCRA 271) the doctrine of prejudicial
question was held inapplicable because no criminal case but merely an
administrative case and a civil suit were involved. The Court, however,
held that, in view of the peculiar circumstances of that case, the
respondents’ suit for damages in the lower court was premature as it was
filed during the pendency of an administrative case against the
respondents before the POLCOM. ‘The possibility cannot be overlooked,’
said the Court, ‘that the POLCOM may hand down a decision adverse to the
respondents, in which case the damage suit will become unfounded and
baseless for wanting in cause of action.’) the doctrine of pre-judicial
question comes into play generally in a situation where a civil action
and a criminal action both pend and there exists in the former an issue
which must be preemptively resolved before the criminal action may
proceed, because howsoever the issue raised in the civil action is
resolved would be determinative juris et de jure of the guilt or
innocence of the accused in the criminal case.”
In the present case, no civil action pends nor has any been instituted.
What was pending was an administrative case before the Patent Office.
Even assuming that there could be an administrative proceeding with
exceptional or special circumstances which render a criminal prosecution
premature pending the promulgation of the administrative decision, no
such peculiar circumstances are present in this case.
Moreover, we take note of the action taken by the Patents Office and the
Minister of Trade and affirmed by the Intermediate Appellate Court in
the case of La Chemise Lacoste S. A. v. Ram Sadhwani (AC-G.R. No. SP-13356, June 17, 1983).
The same November 20, 1980 memorandum of the Minister of Trade discussed
in this decision was involved in the appellate court’s decision. The
Minister as the “implementing authority” under Article 6bis of the Paris
Convention for the protection of Industrial Property instructed the
Director of Patents to reject applications for Philippine registration
of signature and other world famous trademarks by applicants other than
its original owners or users. The brand “Lacoste” was specifically
cited together with Jordache, Gloria Vanderbilt, Sasson, Fila, Pierre
Cardin, Gucci, Christian Dior, Oscar dela Renta, Calvin Klein, Givenchy,
Ralph Laurence, Geoffrey Beene, Lanvin, and Ted Lapidus. The Director
of Patents was likewise ordered to require Philippine registrants of
such trademarks to surrender their certificates of registration.
Compliance by the Director of Patents was challenged.
The Intermediate Appellate Court, in the La Chemise Lacoste S.A. v. Sadhwani
decision which we cite with approval, sustained the power of the
Minister of Trade to issue the implementing memorandum and, after going
over the evidence in the records, affirmed the decision of the
Director of Patents declaring La Chemise Lacoste S.A. the owner of the
disputed trademark and crocodile or alligator device. The Intermediate Appellate Court speaking through Mr. Justice Vicente V. Mendoza stated:
“In the case at bar, the Minister of Trade, as ‘the competent
authority of the country of registration,’ has found that among other
well-known trademarks ‘Lacoste’ is the subject of conflicting claims.
For this reason, applications for its registration must be rejected or
refused, pursuant to the treaty obligation of the Philippines.“Apart from this finding, the annexes to the opposition, which La
Chemise Lacoste S.A. filed in the Patent Office, show that it is the
owner of the trademark ‘Lacoste’ and the device consisting of a
representation of a crocodile or alligator by the prior adoption and use
of such mark and device on clothing, sports apparel and the like. La
Chemise Lacoste S.A. obtained registration of these mark and device and
was in fact issued renewal certificates by the French National
Industrial Property Office.xxx xxx xxx
“Indeed, due process is a rule of reason. In the case at bar the
order of the Patent Office is based not only on the undisputed fact of
ownership of the trademark by the appellee but on a prior determination
by the Minister of Trade, as the competent authority under the Paris
Convention, that the trademark 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
exalt form over substance to say that under the circumstances, due
process requires that a hearing should be held before the application is
acted upon.“The appellant cites section 9 of Republic Act No. 166; which
requires notice and hearing whenever an opposition to the registration
of a trademark is made. This provision does not apply, however, to
situations covered by the Paris Convention, where the appropriate
authorities have determined that a well-known trademark is already that
of another person. In such cases, the countries signatories to the
Convention are obliged to refuse or to cancel the registration of the
mark by any other person or authority. In this case, it is not disputed
that the trademark Lacoste is such a well known mark that a hearing,
such as that provided in Republic Act No.166, would be superfluous.”
The issue of due process was raised and fully discussed in the appellate
court’s decision. The court ruled that due process was not violated.
In the light of the foregoing it is quite plain that the prejudicial question argument is without merit.
We 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 the trademarks “LACOSTE”, “CHEMISE LACOSTE”,
the crocodile or alligator device, and the composite mark of LACOSTE and
the representation of the crocodile or alligator. Any pretensions of
the private respondent that he is the owner are absolutely without
basis. Any further ventilation of the issue of ownership before the
Patent Office will be a superfluity and a dilatory tactic.
The issue of whether or not the trademark used by the private respondent
is different from the petitioner’s trade mark is a matter of defense
and will be better resolved in the criminal proceedings before a court
of justice instead of raising it as a preliminary matter in an
administrative proceeding.
The purpose of the law protecting a trademark cannot be overemphasized.
They are to point out distinctly the origin or ownership of the article
to which it is affixed, to secure to him, who has been instrumental in
bringing into market a superior article of merchandise, the fruit of his
industry and skill, and to prevent fraud and imposition (Etepha v.
Director of Patents, 16 SCRA 495).
The legislature has enacted laws to regulate the use of trademarks and
provide for the protection thereof. Modern trade and commerce demands
that depredations on legitimate trade marks of non-nationals including
those who have not shown prior registration thereof should not be
countenanced. The law against such depredations is not 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 goods they are buying. (Asari Yoko Co., Ltd. v. Kee Boc, 1
SCRA 1; General Garments Corporation v. Director of Patents, 41 SCRA
50).
The law on trademarks and tradenames is based on the principle of
business integrity and common justice. This 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 justified in damaging or jeopardizing another’s
business by fraud, deceipt, trickery or unfair methods of any sort.
This necessarily precludes the trading by one dealer upon the good name
and reputation built up by another (Baltimore v. Moses, 182 Md 229, 34 A
(2d) 338).
The records show that the goodwill and reputation of the petitioner’s
products bearing the trademark LACOSTE date back even before 1964 when
LACOSTE clothing apparels were first marketed in the Philippines. To
allow Hemandas to continue using the trademark Lacoste for the simple
reason that he was the first registrant in the Supplemental Register of a
trademark used in international commerce and not belonging to him is to
render nugatory the very essence of the law on trademarks and
tradenames.
We now proceed to the consideration of the petition in Gobindram Hemandas Sujanani v. Hon. Roberto V. Ongpin, et al. (G.R. No. 65659).
Actually, three other petitions involving the same trademark and device have been filed with this Court.
In Hemandas & Co. v. Intermediate Appellate Court, et al. (G.R. No. 63504), the petitioner asked for the following relief:
“IN VIEW OF ALL THE FOREGOING, it is respectfully prayed (a) that
the Resolutions of the respondent Court of January 3, 1983 and February
24, 1983 be nullified; and that the Decision of the same respondent
Court of June 30, 1983 be declared to be the law on the matter; (b) that
the Director of Patents be directed to issue the corresponding
registration certificate in the Principal Register; and (c) granting
upon the petitioner such other legal and equitable remedies as are
justified by the premises.”
On December 5, 1983, we issued the following resolution:
“Considering the allegations contained, issues raised and the
arguments adduced in the petition for review, the respondent’s comment
thereon, and petitioner’s reply to said comment, the Court Resolved to
DENY the petition for lack of merit.“The Court further Resolved to CALL the attention of the
Philippine Patent Office to the pendency in this Court of G.R. No.
63796-97 entitled ‘La Chemise Lacoste, S.A. v. Hon. Oscar C. Fernandez
and Gobindram Hemandas’ which was given due course on June 13, 1983 and
to the fact that G. R. No. 63928-29 entitled ‘Gobindram Hemandas v. La
Chemise Lacoste, S. A., et al.’ filed on May 9, 1983 was dismissed for
lack of merit on September 12, 1983. Both petitions involve the same
dispute over the use of the trademark ‘Chemise Lacoste’.”
The second case of Gobindram Hemandas v. La Chemise Lacoste S.A., et al. (G.R. No. 63928-29) prayed for the following:
“1. On the petition for issuance of writ of preliminary injunction, an order be issued after due hearing:
“1. Enjoining and restraining respondents Company,
attorneys-in-fact, and Estanislao Granados from further proceedings in
the unfair competition charges pending with the Ministry of Justice
filed against petitioner;“2. Enjoining and restraining respondents Company and its
attorneys-in-fact from causing undue publication in newspapers of
general circulation on their unwarranted claim that petitioner’s
products are FAKE pending proceedings hereof; and“3. Enjoining and restraining respondents Company and its
attorneys-in-fact from sending further threatening letters to
petitioner’s customers unjustly stating that petitioner’s products they
are dealing in are FAKE and threatening them with confiscation and
seizure thereof.“II. On the main petition, judgment be rendered:
“1. Awarding and granting the issuance of the Writ of
Prohibition, prohibiting, stopping, and restraining respondents from
further committing the acts complained of;“2. Awarding and granting the issuance of the Writ of
Mandamus, ordering and compelling respondents National Bureau of
Investigation, its aforenamed agents, and State Prosecutor Estanislao
Granados to immediately comply with the Order of the Regional Trial
Court, National Capital Judicial Region, Branch XLIX, Manila, dated
April 22, 1983, which directs the immediate return of the seized items
under Search Warrants Nos. 83-128 and 83-129;“3. Making permanent any writ of injunction that may have been
previously issued by this Honorable Court in the petition at bar; and“4. Awarding such other and further relief as may be just and equitable in the premises.”
As earlier stated, this petition was dismissed for lack of merit on
September 12, 1983. Acting on a motion for reconsideration, the Court
on November 23, 1983 resolved to deny the motion for lack of merit and
declared the denial to be final.
Hemandas v. Hon. Roberto Ongpin (G.R. No. 65659) is the third petition.
In this last petition, the petitioner prays for the setting aside as
null and void and for the prohibiting of the enforcement of the
following memorandum of respondent Minister Roberto Ongpin:
“MEMORANDUM :
FOR : THE DIRECTOR OF PATENTS
Philippine Patent Office
x —————————————————————————— x
“Pursuant to Executive Order No. 913 dated 7 October 1983 which
strengthens the rule-making and adjudicatory powers of the Minister of
Trade and Industry and provides inter alia, that ‘such
rulemaking and adjudicatory powers should be revitalized in order that
the Minister of Trade and Industry can x x x apply more swift and
effective solutions and remedies to old and new problems x x x such as
the infringement of internationally-known tradenames and trademarks . .
.’ and in view of the decision of the Intermediate Appellate Court in
the case of LA CHEMISE LACOSTE, S.A., versus RAM SADWHANI [AC-G.R. Sp.
No. 13359 (17) June 1983] which affirms the validity of the MEMORANDUM
of then Minister Luis R. Villafuerte dated 20 November 1980 confirming
our obligations under the PARIS CONVENTION FOR THE PROTECTION OF
INDUSTRIAL PROPERTY to which the Republic of the Philippines is a
signatory, you are hereby directed to implement measures necessary to
effect compliance with our obligations under said CONVENTION in general,
and, more specifically, to honor our commitment under Section 6 bis
thereof, as follows:“1. Whether the trademark under consideration is well-known in
the Philippines or is a mark already belonging to a person entitled to
the benefits of the CONVENTION, this should be established, pursuant to
Philippine Patent Office procedures in inter partes and ex parte cases,
according to any of the following criteria or any combination thereof:“(a) a declaration by the Minister of Trade and Industry that
the trademark being considered is already well-known in the Philippines
such that permission for its use by other than its original owner will
constitute a reproduction, imitation, translation or other
infringement;“(b) that the trademark is used in commerce internationally,
supported by proof 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 or other measure of international trade and commerce;“(c) that the trademark is duly registered in the industrial
property office(s) of another country or countries, taking into
consideration the dates of such registration;“(d) that the trademark has been long established and obtained
goodwill and general international consumer recognition as belonging to
one owner or source;“(e) that the trademark actually belongs to a party claiming
ownership and has the right to registration under the provisions of the
aforestated PARIS CONVENTION.“2. The word trademark, as used in this MEMORANDUM, shall
include tradenames, service marks, logos, signs, emblems, insignia or
other similar devices used for identification and recognition by
consumers.“3. The Philippine Patent Office shall refuse all applications
for, or cancel the registration of, trademarks which constitute a
reproduction, translation or imitation of a trademark owned by a person,
natural or corporate, who is a citizen of a country signatory to the
PARIS CONVENTION FOR THE PROTECTION OF INDUSTRIAL PROPERTY.“4. The Philippine Patent Office shall give due course to the
Opposition in cases already or hereafter filed against the registration
of trademarks entitled to protection of Section 6 bis of said
PARIS CONVENTION as outlined above, by remanding applications filed by
one not entitled to such protection for final disallowance by the
Examination Division.“5. All pending applications for Philippine registration of
signature and other world famous trademarks filed by applicants other
than their original owners or users shall be rejected forthwith. Where
such applicants have already obtained registration contrary to the
abovementioned PARIS CONVENTION and/or Philippine Law, they shall be
directed to surrender their Certificates of Registration to the
Philippine Patent Office for immediate cancellation proceedings.“6. Consistent with the foregoing, you are hereby directed to
expedite the hearing and to decide without delay the following cases
pending before your Office:“1. INTER PARTES CASE NO. 1689 – Petition filed by La Chemise
Lacoste, S.A. for the cancellation of Certificate of Registration No.
SR-2225 issued to Gobindram Hemandas, assignee of Hemandas and Company;“2. INTER PARTIES CASE NO. 1658 – Opposition filed by Games
and Garments Co. against the registration of the trademark Lacoste
sought by La Chemise Lacoste, S. A.;“3. INTER PARTES CASE. NO. 1786 – Opposition filed by La
Chemise Lacoste, S.A. against the registration of trademark Crocodile
Device and Skiva sought by one Wilson Chua.'”
Considering our discussions in G.R. Nos. 63796-97, we find the petition
in G.R. No. 65659 to be patently without merit and accordingly deny it
due course.
In complying with the order to decide without delay the cases specified
in the memorandum, the Director of Patents shall limit himself to the
ascertainment of facts in issues not resolved by this decision and apply
the law as expounded by this Court to those facts.
One final point. It is essential that we stress our concern at the
seeming inability of law enforcement officials to stem the tide of fake
and counterfeit consumer items flooding the Philippine market or
exported abroad from our country. The greater victim is not so much the
manufacturer whose product is being faked but the Filipino consuming
public and in the case of exportations, our image abroad. No less than
the President, in issuing Executive Order No. 913 dated October 7, 1983
to strengthen the powers of the Minister of Trade and Industry for the
protection of consumers, stated that, among other acts, the dumping of
substandard, imitated, hazardous, and cheap goods, the infringement of
internationally known tradenames and trademarks, and the unfair trade
practices of business firms has reached such proportions as to
constitute economic sabotage. We buy a kitchen appliance, a household
tool, perfume, face powder, other toilet articles, watches, brandy or
whisky, and items of clothing like jeans, T-shirts, neckties, etc. – the
list is quite lengthy – and pay good money relying on the brand name as
guarantee of its quality and genuine nature only to explode in bitter
frustration and helpless anger because the purchased item turns out to
be a shoddy imitation, albeit a clever looking counterfeit, of the
quality product. Judges all over the country are well advised to
remember that court processes should not be used as instruments to,
unwittingly or otherwise, aid counterfeiters and intellectual pirates,
tie the hands of the law as it seeks to protect the Filipino consuming
public and frustrate executive and administrative implementation of
solemn commitments pursuant to international conventions and treaties.
WHEREFORE, the petition in G.R. NOS. 63796-97 is hereby GRANTED. The
order dated April 22, 1983 of the respondent regional trial court is
REVERSED and SET ASIDE. Our Temporary Restraining Order dated April 29,
1983 is made PERMANENT. The petition in G.R. NO. 65659 is DENIED due
course for lack of merit. Our Temporary Restraining Order dated
December 5, 1983 is LIFTED and SET ASIDE effective immediately.
SO ORDERED.
Teehankee, (Chairman), Melencio-Herrera, Plana, Relova, and De la Fuente, JJ., concur.