G.R. No. L-24295 - General Garments Corp. vs Director of Patents

Case Summary (G.R. No. L-24295)

Factual Background

The General Garments Corporation owned the trademark "Puritan" under Registration No. 10059 issued November 15, 1962 for assorted men’s wear including sweaters, shirts, jackets, undershirts and briefs. On March 9, 1964, Puritan Sportswear Corporation, a Pennsylvania corporation, petitioned the Philippine Patent Office to cancel that registration. The petition alleged prior ownership and prior use of the "Puritan" mark in the Philippines, asserted that such prior use had not been abandoned, and charged that the registration by General Garments Corporation had been obtained fraudulently and contrary to Sec. 17(c) in relation to Sec. 4(d) of the Trademark Law.

Procedural History

On March 30, 1964, petitioner moved to dismiss the cancellation petition. The motion raised several grounds but distilled to one legal issue: whether a foreign corporation not licensed and not doing business in the Philippines has capacity to seek cancellation of a trademark before the Philippine Patent Office. The Director of Patents denied the motion on August 6, 1964, and denied reconsideration on March 5, 1965. Petitioner filed a petition for review to the Supreme Court, which decided the matter on September 30, 1971.

Statutory Provisions in Issue

The Court reviewed the text and purpose of Sec. 17(c) and Sec. 4(d) of Republic Act No. 166. Sec. 17(c) permits "any person, who believes that he is or will be damaged by the registration of a mark or trade-name" to apply for cancellation upon prescribed grounds, including that the registration was obtained fraudulently or contrary to Section 4. Sec. 4(d) bars registration of marks that resemble previously used marks in the Philippines so as to be likely to cause confusion, mistake or deception. The Court also considered Secs. 68 and 69 of the Corporation Law that restrict unlicensed foreign corporations from transacting business or maintaining certain suits in the Philippines, and Sec. 37 of the Trademark Law concerning rights of foreign registrants under international conventions.

Contentions of Petitioner

Petitioner contended that Puritan Sportswear Corporation, being a foreign corporation not licensed to do and not doing business in the Philippines, is not comprehended within the statutory phrase "any person" entitled to seek cancellation under Sec. 17(c). Petitioner relied on Secs. 68 and 69 of the Corporation Law, which require a license to transact business and to maintain suits for recovery of debts, claims or demands, and argued that those requirements precluded respondent’s capacity to sue in the Philippines. Petitioner further argued that Sec. 21-A, as inserted by Republic Act No. 638, evidenced that Congress intended foreign corporations to pursue infringement suits only under the conditions set therein, including registration, and that Sec. 37 restricted benefits to foreign registrants only where the Philippines is a party to relevant international conventions.

Contentions of Respondent

Respondent maintained that it is a juridical person and that juridical personality suffices to invoke Sec. 17(c) to seek cancellation. Respondent asserted that it had prior use of the "Puritan" mark in the Philippines and that such use conferred rights it could protect against registration obtained by others. Respondent relied on precedents recognizing the right of foreign corporations not engaged in local business to protect corporate name, reputation and goodwill acquired through product use in the Islands, and argued that Sec. 37 was forward-looking and did not negate the statutory protection afforded to foreign owners of marks under existing provisions such as Sec. 2 and Sec. 4(d).

Prior Jurisprudence and Legislative Response

The Court examined controlling precedents. In Western Equipment & Supply Co. v. Reyes, 51 Phil. 115, the Court held that a foreign corporation not doing business in the Philippines but widely known there through use of its products had the right to maintain an action to protect its corporate and trade name and goodwill. In Asari Yoko Co., Ltd. v. Kee Boc, the Court sustained a Japanese corporation's opposition to local registration based on prior use in the Philippines. The Court contrasted those authorities with Mentholatum Co., Inc. v. Mangaliman (1941), 72 Phil. 524, where a foreign corporation doing business in the Philippines without a license could not prosecute an action for infringement. The legislative response to Mentholatum came in Republic Act No. 638, which added Sec. 21-A permitting foreign corporations to sue for infringement or unfair competition "whether or not it has been licensed to do business in the Philippines," but that provision relates to court actions for infringement and prescribes conditions including registration or assignment of the mark.

Court’s Ruling

The Court dismissed the petition for review and affirmed the resolution of the Director of Patents dated August 6, 1964, with costs. The decision rejected petitioner’s motion to dismiss and upheld the capacity of Puritan Sportswear Corporation to maintain an administrative proceeding for cancellation under Sec. 17(c) in relation to Sec. 4(d) of Republic Act No. 166. The opinion was delivered by Justice Makalintal, with several justices concurring and one justice reserving his vote.

Legal Reasoning

The Court first accepted that respondent is a juridical person and therefore a "person" within the scope of laws generally. The Court then addressed the specific prohibition in Secs. 68 and 69 of the Corporation Law, observing that those sections bar unlicensed foreign corporations from transacting business and from maintaining suits for recovery of debts, subject to a recognized exception for isolated transactions. The Court found, on authority of Western Equipment and Asari Yoko, that a foreign corporation which has established reputation and goodwill in the Philippines by lawful entry of goods bearing its mark may assert and protect its trademark rights here even though it does not transact business locally and lacks a license. The Court characterized the right to use a corporate or trade name as a property right in rem that may be protected in jurisdictions where the owner does not transact business. The Court distinguished the Mentholatum rule as addressing a different case of a foreign corporation actually doing business without a license. The Court further explained that Sec. 21-A was enacted to counteract Mentholatum by allowing foreign corporations to sue in Philippine courts for infringement irrespective of license, but that Sec. 21-A governs court actions for infringement and unfair competition and requires registration or assignment where applicable; it does not limit administrative cancellation proceedings under Sec. 17. Finally, the Court construe

Case Syllabus (G.R. No. L-24295)

Parties and Procedural Posture

General Garments Corporation was the registrant of the trademark "Puritan" under Registration No. 10059 issued November 15, 1962 for assorted men's wear.
Puritan Sportswear Corporation filed a petition in the Philippine Patent Office on March 9, 1964 for cancellation of the "Puritan" registration alleging prior ownership and use in the Philippines and fraudulent procurement of the registration.
General Garments Corporation moved to dismiss the cancellation petition on March 30, 1964 chiefly on the ground that the foreign petitioner lacked capacity to sue because it was not licensed to do business in the Philippines.
The Director of Patents denied the motion to dismiss on August 6, 1964 and denied reconsideration on March 5, 1965.
General Garments Corporation filed a petition for review to the Court challenging the Director's denial, and the Court resolved the appeal in the present decision.

Key Factual Allegations

General Garments Corporation held a Philippine registration of the trademark "Puritan" for sweaters, shirts, jackets, undershirts and briefs.
Puritan Sportswear Corporation alleged prior use of the "Puritan" mark in the Philippines and asserted that petitioner obtained its registration fraudulently and in violation of Section 17(c) in relation to Section 4(d) of the Trademark Law.
Puritan Sportswear Corporation was a foreign corporation organized under the laws of Pennsylvania, U.S.A., not licensed to do business and not doing business in the Philippines.

Statutory Framework

Republic Act No. 166 governs registration and cancellation of trademarks and includes Section 4(d) defining registrability and Section 17(c) providing grounds for cancellation.
Sections 68 and 69, Corporation Law impose licensing requirements for foreign corporations to transact business and to sue for recovery of debts in local courts.
Section 21-A (added by Republic Act No. 638) allows foreign corporations to sue for trademark infringement or unfair competition in Philippine courts whether or not licensed to do business.
Section 37 of the Trademark Law conditions certain rights of foreign registrants upon reciprocal international conventions to which the Philippines is a party.
Section 2 permits registration of marks owned by persons domiciled in foreign countries subject to reciprocity.
Sections 18 and 8 and Section 27 delineate administrative cognizance in the Patent Office and court jurisdiction respectively.

Issues Presented

Whether Puritan Sportswear Corporation, a foreign corporation not licensed to do business in the Philippines, had legal capacity to petition the Philippine Patent Office for cancellation under Section 17(c).
Whether the existence of Section 21-A and Section 37 or the Corporation Law licensing provisions precluded a foreign corporation from seeking cancellation of a local registration.

Contentions

General Garments Corporation contended that a foreign corporation not licensed to do business is not included within the phrase "any person" under Section 17(c) and therefore lacked capacity to apply for cancellation.
Puritan Sportswear Corporation maintained that it was a juridical person entitled to protec