A.C. No. 6942 - Sonic Steel Industries, Inc. vs. Chua

Complainant: Sonic Steel Industries, Inc., a corporation engaged in manufacturing and distributing zinc and aluminum-zinc coated metal sheets marketed as Superzinc and Superlume.
Respondent: Atty. Nonnatus P. Chua, who serves as Vice-President, Corporate Legal Counsel, and Assistant Corporate Secretary of Steel Corporation (STEELCORP).

On September 5, 2005, STEELCORP, with assistance from the National Bureau of Investigation, applied for a search warrant.
The Regional Trial Court (RTC) of Cavite City, Branch 17, issued the search warrant after receiving supporting documents.
Following the granting of the warrant, Sonic Steel’s factory was searched and various properties were seized.

Affidavit of Mr. Antonio Lorenzana (Executive Vice-President of STEELCORP) in support of the search warrant application.
Transcript of Stenographic Notes (TSN) from the searching inquiry conducted by Judge Melchor Sadang, RTC of Cavite City, Branch 17, which includes an exchange between Mr. Lorenzana and the judge.
Complaint-Affidavit executed by respondent and filed before the Department of Justice, wherein respondent raised a separate infringement complaint.

In his statements before the court and the Department of Justice, respondent presented STEELCORP as the exclusive licensee of Philippine Patent No. 16269 on Hot Dip Coating of Ferrous Strands.

It was claimed that STEELCORP was licensed to manufacture metal sheets (GALVALUME) using specific technical information and a patent purportedly granted by the Philippine Intellectual Property Office.

Falsely asserting that Letters Patent No. 16269 was active, when in fact it had lapsed (issued August 25, 1983, and expired well before the events, becoming public domain by approximately 2000).
Refusing to present a copy of the patent during the hearing, thus preventing the court from ascertaining its true status.

By misrepresenting the status of the patent, respondent’s actions allegedly induced the RTC to grant a search warrant based on erroneous premises.

After the issuance of the search warrant, STEELCORP filed a complaint before the Department of Justice for violation of Section 168 in relation to Section 170 of Republic Act No. 8293 against Sonic Steel and its officers.
Separately, respondent initiated a complaint for patent infringement against the complainant, reiterating STEELCORP’s exclusive license over the process.
The Integrated Bar of the Philippines (IBP) was involved when the complaint-affidavit was referred for investigation.

The IBP Commission on Bar Discipline initially recommended a three-month suspension with the warning that any repetition of such conduct would attract harsher sanctions.
Subsequently, on August 17, 2007, the IBP Board of Governors, through Resolution No. XVIII-2007-76, suspended respondent for six (6) months.
A Motion for Reconsideration filed by respondent was denied on January 14, 2012.

The controversy also centers on the interpretation of the TECHNICAL INFORMATION AND PATENT LICENSE AGREEMENT between STEELCORP and BIEC International, Inc.

The agreement distinguishes between “technical information” and “the patent.”
While STEELCORP had rights as a licensee of the technical information, its claim over Patent No. 16269 was in question due to its expiration.

It was determined that respondent mischaracterized STEELCORP’s rights by implying an all-encompassing license over both elements, which was misleading given the patent had long expired.

Attorney Chua reserved the presentation of the trademark license and patent document when questioned, thereby withholding critical evidence.
The respondent’s quick interjection and reservation of rights to present the documents raised suspicions about his candor, especially since the patent had expired several years earlier.

Whether respondent, Atty. Nonnatus P. Chua, misleadingly asserted that STEELCORP was the exclusive licensee of an expired patent, thereby intentionally deceiving the court and the Department of Justice.
Whether respondent’s refusal to produce the patent document during the court proceedings constitutes a breach of his duty to be candid and truthful.
Whether such actions by respondent, in misrepresenting material facts related to the validity of the patent and the corresponding license, merit the sanction of suspension from the practice of law.
Whether the deception and misrepresentation resulted in an unjust issuance of a search warrant, adversely affecting the rights and business operations of the complainant.