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24 La Chemise Lacoste, S.A. vs.

Fernandez o Both the opposition case and the petition for cancellation
May 21, 1984 | Gutierrez, Jr., J. have been considered by the Supreme Court in Hemandas v
Hon Roberto Ongpin
Nature of Case: Petition for certiorari with preliminary injunction to review the  March 21, 1983: Petitioner filed with the NBI an letter-complaint
order of the Regional Trial Court alleging the acts of unfair competition being committed by Hemandas
Digest Maker: Santos and requesting their assistance in his apprehension and prosecution
 NBI: conducted an investigation and subsequently filed with the RTC
SUMMARY: Hemandas & Co was issued a supplemental register for the 2 applications for the issuance of search warrants
trademark “CHEMISE LACOSTE & CROCODILE SERVICE.” When they o Search warrants meant to authorize the search of the
applied for an application for the registration of the trademark, the premises used and occupied by the Lacoste Sports Center
petitioner foreign corporation filed a petition for cancellation. Petitioner also and Games and Garments which are both owned and
filed a letter-complaint to the NBI and the NBI was able to secure search operated by Hemandas
warrants and conduct an investigation. However, the RTC recalled its  RTC: Issued search warrants for violation of Art 189 of the RPC
previous order and quashed the search warrants. The RTC ordered the  NBI agents executed the two search warrants and found and seized
seized items to be returned to Hemandas. The Supreme Court held that various goods and articles described
the quashal of the search warrants was improper because the grounds  Hemandas filed a motion to quash the search warrants and alleged:
invoked by Hemandas were matters of defense. The registration in the
o Trademark used by him was different from petitioner’s
Supplemental Register is not prima facie evidence of Hemandas’
trademark
ownership of the trademark. Petitioner is the rightful owner of the
o Pending the resolution of IPC No. 1658 before the patent
trademark.
office, any criminal or civil action on the same subject matter
and parties would be premature
Petition for certiorari with preliminary injunction
 Petitioner filed opposition to the MTQ arguing that it was fatally
Facts defective because it cited no valid ground for the quashal of the
search warrants
 Petitioner La Chemise Lacoste S.A. is a foreign corporation,
organized and existing under the laws of France and not doing  State Prosecutor likewise filed his opposition on the grounds that the
business in the Philippines. goods seized were instrument of a crime and necessary for the
o Actual owner of the trademarks “LACOSTE”, “CHEMISE resolution of the case on preliminary investigation
o The release of the goods will be fatal to the case of the
LACOSTE”, “CROCODILE DEVICE” and a composite mark
consisting of the word “LACOSTE” and a representation of a People should prosecution follow in court
crocodile/alligator.  RTC: recalled and set aside the search warrants, the NBI agents or
o Petitioner has been using the trademarks on clothings and officers in custody were ordered to return the same to Hemandas
other goods specifically sporting apparels sold in many parts  Therefore, petitioner filed the present petition for certiorari to the
of the world and which have been marketed in the Supreme Court
Philippines since 1964.  Respondent argues:
 1975: Hemandas & Co., a duly license domestic firm, applied for and o Petitioner has no capacity to sue before Philippine courts
was issued supplemental register for the trademark “CHEMISE o Respondent judge didn’t commit GAOD in issuing the order
LACOSTE & CROCODILE SERVICE”  Hemandas argues:
 November 21, 1980: Petitioner filed an application for the registration o Petitioner failed to allege essential facts bearing upon its
of the trademark “Crocodile Device” and “Lacoste” capacity to sue before Philippine courts
o “Crocodile Device” was approved for publication while  Petitioner is not doing business and is not licensed
“Lacoste” was opposed by Games and Garments (IPC No. to do business in the Philippines
1658)  Cites the case of Leviton Industries v Salvador
 1982: Petitioner filed a Petition for Cancellation of Hemandas & Co’s o Petitioner was doing business in the Philippines but was not
supplemental register licensed to do so
 Applicable ruling is Mentholatum Co v Mangaliman
o Respondent court didn’t commit grave abuse of discretion in  Omnibus Investment Code IRR, Rule I, Section 1(g) defines “doing
issuing the questioned order business” as one which includes:
o (1) x x x A foreign firm which does business through
Issue: WN motion to quash should’ve been granted by the RTC  NO middlemen acting on their own names, such as indentors,
commercial brokers or commission merchants, shall not be
Held deemed doing business in the Philippines. But such
Court addresses Hemandadas’ arguments indentors, commercial brokers or commission merchants
 Leviton case is not applicable. It involved a complaint for unfair shall be the ones deemed to be doing business in the
competition under Section 21-A of RA 166.1 Philippines.
o SC: Not enough for Leviton, a foreign corporation organized o (2) Appointing a representative or distributor who is
and existing under the laws of the state of New York, to domiciled in the Philippines, unless said representative or
merely allege that it is a foreign corporation. Compliance with distributor has an independent status, i.e., it transacts
the requirements dictated under Section 21-A, RA 166 was business in its name and for its account, and not in the name
necessary. or for the account of a principal Thus, where a foreign firm is
o Foreign corporation may have right to sue before Philippine represented by a person or local company which does not
courts but our rules on pleadings require that the qualifying act in its name but in the name of the foreign firm, the latter
circumstances necessary for the assertion od such right is doing business in the Philippines.
should first be affirmatively pleaded.  Applying the above provisions to the facts of this case, we find and
o Leviton not applicable because in contradistinction, the conclude that the petitioner is not doing business in the Philippines.
present case involves a violation of Article 189 of the RPC. Rustan is actually a middleman acting and transacting business in its
 Mentholatum case is likewise not applicable. In that case, a foreign own name and or its own account and not in the name or for the
corporation and its distributing agent in the Philippines filed a account of the petitioner.
complaint for infringement of trademark and unfair competition.
o The distributing agent was admittedly selling product of its But suit may be maintained because a foreign corporation doesn’t need
principal in the latter’s name or for the latter’s account. Thus, a license to sue before Philippine courts for infringement of trademark
this Court held that whatever transactions the agent had and unfair competition
executed in view of the law, the principal did it itself. And, the  Western Equipment and Supply Co v Reyes: A foreign corporation
principal being a foreign corporation doing business in the which has never done any business in the Philippines and which is
Philippines without the license required by Section 68 of the unlicensed and unregistered to do business here, but is widely and
Corporation Law, it may not prosecute this action for favorably known in the Philippines through the use therein of its
violation of trademark and unfair competition. products bearing its corporate and tradename, has a legal right to
o In the present case, however, the petitioner is a foreign maintain an action in the Philippines to restrain the inhabitants from
corporation not doing business in the Philippines. The organizing a corporation therein bearing the same name as the
marketing of its products in the Philippines is done through foreign corporation, when it appears that they have personal
an exclusive distributor, Rustan Commercial Corporation, knowledge of the existence of such a foreign corporation, and it is
which is an independent entity which buys and then markets apparent that the purpose of the proposed domestic corporation is to
not only products of the petitioner. Rustans is not a mere deal and trade in the same goods as those of the foreign corporation.
agent or conduit. o Sole purpose of the action: to protect its reputation, its
corporate name, its goodwill, whenever that reputation,
Petitioner is not doing business in the Philippines corporate name or goodwill have, through the natural
development of its trade, established themselves.
1
o Since it is the trade and not the mark that is to be protected,
“Sec. 21-A. Any foreign corporation or juristic person to which a mark or tradename has been registered or assigned a trade- mark acknowledges no territorial boundaries of
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 municipalities or states or nations, but extends to every
Hundred and Fifty-Nine, as amended, otherwise known as the Corporation Law, at the time it brings the complaint; market where the trader’s goods have become known and
Provided, That the country of which the said foreign corporation or juristic person is a citizen, or in which it is domiciled, identified by the use of the mark.
by treaty, convention or law, grants a similar privilege to corporate or juristic persons of the Philippines.”
 Furthermore, the nature of this case is criminal. What preceded this Vanderbilt, Sasson, Fila, Pierre Cardin, Gucci, Christian Dior,
petition for certiorari was a letter- complaint filed before the NBI Oscar de la Renta, Calvin Klein, Givenchy, Ralph Lauren,
charging Hemandas with a criminal offense. If prosecution follows Geoffrey Beene, Lanvin and Ted Lapidus.
after the preliminary investigation, the State will also be an aggrieved o It is further directed that, in cases where warranted,
party. Philippine registrants of such trademarks should be asked to
o Court cannot allow a possible violator of our criminal statutes surrender their certificates of registration, if any, to avoid
to escape prosecution upon a far- fetched contention that the suits for damages and other legal action by the trademarks’
aggrieved party or victim of a crime has no standing to sue. foreign or local owners or original users.
 This memorandum is a clear manifestation of our avowed adherence
Court recognizes our duties and the rights of foreign states under the to a policy of cooperation and amity with all nations.
Paris Convention for the Protection of Industrial Property  The treaty creates a legally binding obligation on the parties founded
 The Philippines and France are both parties of the Convention. The on the generally accepted principle of international law of pacta sunt
Court is simply interpreting and enforcing a solemn international servanda which has been adopted as part of the law of our land.
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 The grounds invoked by Hemandas in his MTQ are not appropriate for
national interest to do so.2 quashing a warrant
 Vanity Fair Inc v T. Eaton Co: US Circuit Court of Appeals  The grounds invoked are matters of defense which should be
commented on the extraterritorial application of the Paris ventilated during the trial on the merits of the case.
Convention: o Court fails to understand how the Judge could treat a bare
o The underlying principle is that foreign nationals should be allegation that the respondent’s trademark is different from
given the same treatment in each of the member countries the petitioner’s trademark as a sufficient basis to grant the
as that country makes available to its own citizens. In motion to quash.
addition, the Convention sought to create uniformity in  The question of whether or not probable cause exists is one which
certain respects by obligating each member nation ‘to assure must be decided in the light of the conditions obtaining in given
to nationals of countries of the Union an effective protection situations. There is no general formula or fixed rule for the
against unfair competition.’ determination of the existence of probable cause.
o The Convention is premised on the principle that each o Stonehill v Diokno: probable cause “presupposes the
nation’s law shall only have territorial application. The introduction of competent proof that the party against whom
protection has its source in, and is subject to the limitations it is sought has performed particular acts, or committed
of, the law of the country where it is used in commerce, not specific omissions, violating a given provision of our criminal
the law of the foreign national’s own country. laws.”
 By the same token, the petitioner should be given the same o However, the findings of the judge should not disregard the
treatment in the Philippines as we make available to our own facts before him nor run counter to the clear dictates of
citizens. We are obligated to assure to nationals of “countries of the reason. More so it is plain that our country’s ability to abide
Union” an effective protection against unfair competition in the same by international commitments is at stake.
way that they are obligated to similarly protect Filipino citizens and  In this case: The records show that the NBI agents at the hearing of
firms. the application for the warrants before respondent court presented
 Ministry of Trade issued a memorandum on November 20, 198 three witnesses under oath, sworn statements, and various exhibits
addressed to the Director of the Patents Office: in the form of clothing apparels manufactured by Hemandas but
o “to reject all pending applications for Philippine registration of carrying the trademark Lacoste. The respondent court personally
signature and other world famous trademarks by applicants interrogated the witnesses.
other than its original owners or users.” o The respondent court, therefore, complied with the
o The conflicting claims over internationally known trademarks constitutional and statutory requirements for the issuance of
involve such name brands as Lacoste, Jordache, Gloria a valid search warrant. At that point in time, it was fully
convinced that there existed probable cause.
2
See notes for cited provisions
o But after hearing the motion to quash and the oppositions The proceedings pending before the Patent Office don’t partake of a
thereto, the respondent court executed a complete turnabout prejudicial question
and declared that there was no probable cause to justify its  The case which suspends the criminal prosecution must be a civil
earlier issuance of the warrants. case which is determinative of the innocence or, subject to the
 There was no compelling reason for the reversal. availability of other defenses, the guilt of the accused.
o The allegation that vital facts were deliberately suppressed  In this case: The pending case before the Patent Office is an
or concealed by the petitioner should have been assessed administrative proceeding and not a civil case. The decision of the
more carefully because the object of the quashal was the Patent Office cannot be finally determinative of the private
return of items already seized and easily examined by the respondent’s innocence of the charges against him.
court. The items were alleged to be fake and quite obviously  No civil action pends not has been instituted.
would be needed as evidence in the criminal prosecution.
o Moreover, an application for a search warrant is heard ex Petitioner is the owner of the trademarks “LACOSTE”, “CHEMISE
parte. It is neither a trial nor a part of the trial. Action on LACOSTE”, the crocodile or alligator device, and the composite mark
these applications must be expedited for time is of the of LACOSTE and the representation of the crocodile or alligator.
essence.  Purpose of the law protecting a trademark: to point out distinctly the
origin or ownership of the article to which it is affixed, to secure to
Hemandas registration is only in the Supplemental Register him, who has been instrumental in bringing into market a superior
 Hemandas relied heavily on the argument that he is the holder of a article of merchandise, the fruit of his industry and skill, and to
certificate of registration of the trademark “CHEMISE LACOSTE & prevent fraud and imposition.
CROCODILE DEVICE”  The law on trademarks and tradenames is based on the principle of
 A certificate of registration in the Supplemental Register is not prima business integrity and common justice.
facie evidence of the validity of registration, of the registrant’s  Records show that the goodwill and reputation of the petitioner’s
exclusive right to use the same in connection with the goods, products bearing the trademark LACOSTE date back even before
business, or services specified in the certificate. 1964 when LACOSTE clothing apparels were first marketed in the
o Such cannot be filed with the Bureau of Customs in order to Philippines.
exclude from the Philippines, foreign goods bearing o To allow Hemandas to continue using the trademark Lacoste
infringement marks or trade names for the simple reason that he was the first registrant in the
o It is not subject to opposition, although it may be cancelled Supplemental Register of a trademark used in international
after its issuance. Neither may it be the subject of commerce and not belonging to him is to render nugatory the
interference proceedings. very essence of the law on trademarks and tradenames.
o Registration on the supplemental register is not constructive
notice of registrant’s claim of ownership. A supplemental Court final point: “It is essential that we stress our concern at the seeming
register is provided for the registration of marks which are inability of law enforcement officials to stem the tide of fake and counterfeit
not registrable on the principal register because of some consumer items flooding the Philippine market or exported abroad from our
defects. country. The greater victim is not so much the manufacturer whose product is
 Registration in the Supplemental Register serves as notice that the being faked but the Filipino consuming public and in the case of exportations,
registrant is using or has appropriated the trademark. our image abroad.”
o 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 Dispositive: WHEREFORE, the petition in G.R. NOS. 63797-97 is hereby
the user must still overcome before he can claim legal GRANTED. The order dated April 22, 1983 of the respondent regional trial
ownership court is REVERSED and SET ASIDE. Our Temporary Restraining Order
 And even in cases where presumption and precept may factually be dated April 29, 1983 is made PERMANENT. The petition in G.R. NO. 65659
reconciled, we have held that the presumption is rebuttable, not is DENIED due course for lack of merit. Our Temporary Restraining Order
conclusive dated December 5, 1983 is LIFTED and SET ASIDE, effective immediately.
SO ORDERED.
Notes “(2) They undertake, further, to provide measures to permit syndicates and
ARTICLE 1 associations which represent the industrialists, producers or traders
“(1) The countries to which the present Convention applies constitute concerned and the existence of which is not contrary to the laws of their
themselves into a Union for the protection of industrial property. 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
(2) The protection of industrial property is concerned with patents, utility 10bis, in so far as the law of the country in which protection is claimed allows
models, industrial designs, trademarks service marks, trade names, and such action by the syndicates and associations of that country.
indications of source or appellations of origin, and the repression of
unfair competition. 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
ARTICLE 2 Convention.
“(2) 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 “It is understood that at the time an instrument of ratification or accession is
the advantages that their respective laws now grant, or may hereafter grant, deposited on behalf of a country; such country will be in a position under its
to nationals, without prejudice to the rights specially provided by the present domestic law to give effect to the provisions of this Convention.” (61 O.G.
Convention. Consequently, they shall have the same protection as the latter, 8010)
and the same legal remedy against any infringement of their rights, provided
they observe the conditions and formalities imposed upon nationals.

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.

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 forms part of a trademark.

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.

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.