[43] Sonic Steel Industries, Inc. v. Atty.
Chua (Recio) business as a manufacturer and distributor of zinc and
July 17, 2013 | PERALTA, J. | Canon 10, Rule 10.01
PETITIONER: SONIC STEEL INDUSTRIES, INC.
RESPONDENTS: ATTY. NONNATUS P. CHUA
SUMMARY: STEELCORP filed before the DOJ a complaint for violation of
the Intellectual Property Code against Sonic Steel Industries, Inc. STEELCORP
alleged that Sonic Steel’s product, “SUPERLUME” can only be manufactured
using the same technical information and registered patent used by
STEELCORP, and that both the technical information and patent has been
exclusively licensed to STEELCORP. Sonic Steel, on the other hand, contended
that STEELCORP’s patent is already expired, and that Atty. Chua, in refusing to
provide a copy of the alleged exclusive patent granted to STEELCORP,
deliberately misled the Court into believing that STEELCORP still has the
exclusive licensee rights to the subject patent. WoN Atty. Chua deliberately
misled the Court. - YES. because Atty Chua did not disclose that the Patent
No. 16269 had already expired. The Court found that under the Technical
Information and Patent License Agreement between STEELCORP and BIEC
International, Inc., the terms technical information and patent are SEPARATE
AND DISTINCT. At the time of the application for a search warrant against
Sonic Steel, the patent had already expired; thus, all STEELCORP has licensee
rights over currently is the technical information, NOT the patent. In a transcript
of the hearing during the application for a search warrant, every time the RTC
Judge would ask STEELCORP’s VP whether he had the subject patent, Atty.
Chua would quickly interrupt and state, “We reserve the right to present it, your
Honor.” By continuously refusing to present the Patent WHILE KNOWING
FULLY WELL that the Patent is already expired, Atty. Chua DELIBERATELY
MISLED the Court into thinking that STEELCORP still had licensee rights over
both the technical information and the patent. This is contrary to Canons 10 and
10.01 which state that a lawyer owes candor and good faith to the Courts, and
that a lawyer shall do no falsehood or mislead the Court. All things considered,
Atty. Chua was SUSPENDED for 6 months.
DOCTRINE: Candor in all their dealings is the very essence of a practitioner’s
honorable membership in the legal profession. Lawyers are required to act with
the highest standard of truthfulness, fair play and nobility in the conduct of
litigation and in their relations with their clients, the opposing parties, the other
counsels and the courts. They are bound by their oath to speak the truth and to
conduct themselves according to the best of their knowledge and discretion, and
with fidelity to the courts and their clients.
FACTS:
1. PARTIES:
a. Sonic Steel Industries, Inc. (complainant) → corporation doing
aluminum-zinc coated metal sheets known in the market as
Superzinc and Superlume.
b. Atty. Chua (respondent) → VP, Corporate Legal Counsel, and
Assistant Corp Secretary of Steel Corporation (STEELCORP)
c. STEELCORP → petitioner in another case where Sonic Steel is
the defendant [inaaway si Sonic Steel].
d. BIEC International, Inc. → grantor of Patent No. 16269 to
STEELCORP.
2. The controversy arose when STEELCORP applied for a Search Warrant in
RTC-Cavite against complainant, Sonic Steel Industries. Sonic Steel’s
properties were seized.
3. A week later, STEELCORP filed before the DOJ a complaint for violation
of Sec. 168 (Unfair Competition, Rights, Regulation and Remedies) of the
Intellectual Property Code against Sonic Steel. [this actual issue isn’t that
important but just in case he asks]
a. The acts of Sonic Steel of storing, selling, retailing, distributing,
importing, dealing with or otherwise disposing of “SUPERLUME”
metal sheet products which are similarly coated with aluminum-
zinc alloy and cannot be produced without utilizing the same
basic technical information AND the registered patent used by
STEELCORP to manufacture “GALVALUME” metal sheet
products, the ENTIRE PROCESS of which has been lawfully
and exclusively licensed to STEELCORP by BIEC
International, Inc., constitute unfair competition.
b. [Basically, STEELCORP is saying that Sonic Steel has a product
called “SUPERLUME” which is made using the same technical
information and patent as STEELCORP. The latter is saying na
bawal yung ginagawa ng Sonic Steel, because STEELCORP owns
the license to BOTH the technical information AND patent.]
4. Sonic Steel, in its defense, argues:
a. That STEELCORP’s patent has already expired.
b. That in the hearing for the application for a search warrant,
STEELCORP’s counsel, Atty. Chua, in refusing to provide a copy
of the alleged exclusive patent granted to STEELCORP,
deliberately misled the Court into believing that STEELCORP
still has the exclusive licensee rights to the subject patent when,
in fact, it was already expired.
5. The following is a portion of the transcript during the hearing for the search
warrant.:
a. “Judge Sadang of RTC-Cavite (directed to the VP of
STEELCORP): You also state that Steel Corporation owns a patent
exclusively licensed to Steel Corporation by BIEC International,
Inc. Do you have document to show that?
ATTY. CHUA: We reserve the presentation of the trademark
 license, your Honor.”
b. “Q: [Philippine Patent No. 16269], do you have a document
regarding that?
VP of STEELCORP: Yes, your Honor. It is in the office.
ATTY. CHUA: We reserve the right to present it, your
Honor.”
6. Atty. Chua counters that he never made an allegation or reservation that
STEELCORP owned Philippine Patent No. 16269. He asserts that he
merely reserved the right to present the trademark license exclusively
licensed to STEELCORP. Atty. Chua further argues that even
STEELCORP’s complaint merely stated that STEELCORP is the exclusive
licensee of the subject patent, and nowhere does the complaint allege that it
owns the said patent.
7. IBP’s Commission on Bar Discipline: recommended to suspend Atty. Chua
from the practice of law for 3 months.
8. IBP Board of Governors: Adopted the recommendation of Commission on
Bar Discipline, but modified the suspension to 6 months.
ISSUE:
1. WoN Atty. Chua deliberately misled the Court. - YES. because Atty Chua
did not disclose that the Patent No. 16269 had already expired.
RULING: WHEREFORE, premises considered, respondent Atty. Nonnatus P. Chua
is hereby SUSPENDED from the practice of law for six (6) months with
ADMONITION that a repetition of the same or similar act in the future will be dealt
with more severely.
RATIO:
Issue 1: Atty. Chua violated Canons 1 and 10.
1. We affirm in toto the findings and recommendations of the IBP.
2. Pertinent provisions of the CPR:
a. Canon 1 – A lawyer shall uphold the Constitution, obey the laws of
the land and promote respect for the law and legal process.
b. Rule 1.01 – A lawyer shall not engage in unlawful, dishonest and
immoral or deceitful conduct.
c. Canon 10 – A lawyer owes candor, fairness and good faith to
the court.
d. Rule 10.01 – A lawyer shall do no falsehood, nor consent to the
doing of any in Court, nor shall he mislead or allow the Court
to be misled by an artifice.
3. Lawyers are officers of the court, called upon to assist in the administration
of justice. They act as vanguards of our legal system, protecting and
upholding truth and the rule of law. They are expected to act with honesty
in all their dealings, especially with the court.
4. Verily, the Code of Professional Responsibility enjoins lawyers from
committing or consenting to any falsehood in court or from allowing
the courts to be misled by any artifice. Moreover, they are obliged to
observe the rules of procedure and not to misuse them to defeat the
ends of justice.
5. In the present case, it appears that in the application for a search warrant,
Atty. Chua claimed or made it appear that STEELCORP was the licensee of
the technical information and Philippine Patent No. 16269 at that time.
a. Under the Technical Information and Patent License Agreement
between STEELCORP and BIEC International, Inc., the terms
technical information and patent are SEPARATE AND
DISTINCT.
b. In the Complaint filed by STEELCORP in DOJ, STEELCORP
claimed that it was the licensee of BOTH technical information
and Patent No. 16269.
c. HOWEVER, the IBP found out that Patent No. 16269 had
already long expired at the time of the filing of the complaint. In
other words, STEELCORP now only has rights as a licensee of
the technical information, and NOT the patent anymore.
6. It also would appear that Atty. Chua was wanting in candor as regards his
dealings with the lower court. In the transcript of the hearing for a search
warrant [SEE FACT #5], Atty. Chua was quick to interrupt and manifest
his client’s reservation to present the subject license when asked by the
judge.
a. Atty. Chua was equally swift to end Judge Sadang’s inquiry over
the patent by reserving the right to present the same at another
time. While it is not the Commission’s province to dwell with
suppositions and hypotheses, it is well within its powers to make
reasonable inferences from established facts.
7. Given that Patent No. 16269 had been in expiry for more than five (5)
years when Judge Sadang propounded his questions, it logically
appears that Atty. Chua, in making such reservations in open court,
was trying to conceal from the former the fact of the patent’s
expiration so as to facilitate the grant of the search warrant in favor of
STEELCORP. This is contrary to the exacting standards of conduct
required from a member of the Bar.
8. Indeed, the practice of law is not a right but merely a privilege bestowed
upon by the State upon those who show that they possess, and continue to
possess, the qualifications required by law for the conferment of such
privilege.
a. One of those requirements is the observance of honesty and
candor. Candor in all their dealings is the very essence of a
practitioner’s honorable membership in the legal profession.
Lawyers are required to act with the highest standard of
truthfulness, fair play and nobility in the conduct of litigation and
in their relations with their clients, the opposing parties, the other
counsels and the courts. They are bound by their oath to speak the
truth and to conduct themselves according to the best of their
 knowledge and discretion, and with fidelity to the courts and their
clients.
9. From the foregoing, it is clear that Atty Chua violated Canons 1 and 10 and
Rules 1.01 and 10.01.
10. Thus, even at the risk of jeopardizing the probability of prevailing on
STEELCORP’s application for a search warrant, Atty. Chua should
have informed the court of the patent’s expiration so as to allow the
latter to make an informed decision given all available and pertinent
facts.