24 La Chemise Lacoste, S.A. vs.
Fernandez o Both the opposition case and the petition for cancellation
May 21, 1984 | Gutierrez, Jr., J.
Nature of Case: Petition for certiorari with preliminary injunction to review the
order of the Regional Trial Court
Digest Maker: Santos
SUMMARY: Hemandas & Co was issued a supplemental register for the
trademark “CHEMISE LACOSTE & CROCODILE SERVICE.” When they
applied for an application for the registration of the trademark, the
petitioner foreign corporation filed a petition for cancellation. Petitioner also
filed a letter-complaint to the NBI and the NBI was able to secure search
warrants and conduct an investigation. However, the RTC recalled its
previous order and quashed the search warrants. The RTC ordered the
seized items to be returned to Hemandas. The Supreme Court held that
the quashal of the search warrants was improper because the grounds
invoked by Hemandas were matters of defense. The registration in the
Supplemental Register is not prima facie evidence of Hemandas’
ownership of the trademark. Petitioner is the rightful owner of the
trademark.
Petition for certiorari with preliminary injunction
Facts
 Petitioner La Chemise Lacoste S.A. is a foreign corporation,
organized and existing under the laws of France and not doing
business in the Philippines.
o Actual owner of the trademarks “LACOSTE”, “CHEMISE
LACOSTE”, “CROCODILE DEVICE” and a composite mark
consisting of the word “LACOSTE” and a representation of a
crocodile/alligator.
o Petitioner has been using the trademarks 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.
 1975: Hemandas & Co., a duly license domestic firm, applied for and
was issued supplemental register for the trademark “CHEMISE
LACOSTE & CROCODILE SERVICE”
 November 21, 1980: Petitioner filed an application for the registration
of the trademark “Crocodile Device” and “Lacoste”
o “Crocodile Device” was approved for publication while
“Lacoste” was opposed by Games and Garments (IPC No.
1658)
 1982: Petitioner filed a Petition for Cancellation of Hemandas & Co’s
supplemental register
have been considered by the Supreme Court in Hemandas v
Hon Roberto Ongpin
 March 21, 1983: Petitioner filed with the NBI an letter-complaint
alleging the acts of unfair competition being committed by Hemandas
and requesting their assistance in his apprehension and prosecution
 NBI: conducted an investigation and subsequently filed with the RTC
2 applications for the issuance of search warrants
o Search warrants meant to authorize the search of the
premises used and occupied by the Lacoste Sports Center
and Games and Garments which are both owned and
operated by Hemandas
 RTC: Issued search warrants for violation of Art 189 of the RPC
 NBI agents executed the two search warrants and found and seized
various goods and articles described
 Hemandas filed a motion to quash the search warrants and alleged:
o Trademark used by him was different from petitioner’s
trademark
o Pending the resolution of IPC No. 1658 before the patent
office, any criminal or civil action on the same subject matter
and parties would be premature
 Petitioner filed opposition to the MTQ arguing that it was fatally
defective because it cited no valid ground for the quashal of the
search warrants
 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
o The release of the goods will be fatal to the case of the
People should prosecution follow in court
 RTC: recalled and set aside the search warrants, the NBI agents or
officers in custody were ordered to return the same to Hemandas
 Therefore, petitioner filed the present petition for certiorari to the
Supreme Court
 Respondent argues:
o Petitioner has no capacity to sue before Philippine courts
o Respondent judge didn’t commit GAOD in issuing the order
 Hemandas argues:
o Petitioner failed to allege essential facts bearing upon its
capacity to sue before Philippine courts
 Petitioner is not doing business and is not licensed
to do business in the Philippines
 Cites the case of Leviton Industries v Salvador
o Petitioner was doing business in the Philippines but was not
licensed to do so
 Applicable ruling is Mentholatum Co v Mangaliman
 o Respondent court didn’t commit grave abuse of discretion in
issuing the questioned order
Issue: WN motion to quash should’ve been granted by the RTC  NO
Held
Court addresses Hemandadas’ arguments
 Leviton case is not applicable. It involved a complaint for unfair
competition under Section 21-A of RA 166.1
o SC: Not enough for Leviton, a foreign corporation organized
and existing under the laws of the state of New York, to
merely allege that it is a foreign corporation. Compliance with
the requirements dictated under Section 21-A, RA 166 was
necessary.
o Foreign corporation may have right to sue before Philippine
courts but our rules on pleadings require that the qualifying
circumstances necessary for the assertion od such right
should first be affirmatively pleaded.
o Leviton not applicable because in contradistinction, the
present case involves a violation of Article 189 of the RPC.
 Mentholatum case is likewise not applicable. In that case, a foreign
corporation and its distributing agent in the Philippines filed a
complaint for infringement of trademark and unfair competition.
o The distributing agent was admittedly selling product of its
principal in the latter’s name or for the latter’s account. Thus,
this Court held that whatever transactions the agent had
executed in view of the law, the principal did it itself. And, the
principal 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.
o 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,
which is an independent entity which buys and then markets
not only products of the petitioner. Rustans is not a mere
agent or conduit.
Petitioner is not doing business in the Philippines
1
“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 time 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.”
 Omnibus Investment Code IRR, Rule I, Section 1(g) defines “doing
business” as one which includes:
o (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.
o (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.
 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 suit may be maintained because a foreign corporation doesn’t need
a license to sue before Philippine courts for infringement of trademark
and unfair competition
 Western Equipment and Supply Co v Reyes: 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 inhabitants 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.
o Sole purpose of the action: 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.
o Since it is the trade and not the mark that is to be protected,
a trade- mark 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.
  Furthermore, the nature of this case is criminal. What preceded this
petition for certiorari was a letter- complaint filed before the NBI
charging Hemandas with a criminal offense. If prosecution follows
after the preliminary investigation, the State will also be an aggrieved
party.
o Court cannot allow a possible violator of our criminal statutes
to escape prosecution upon a far- fetched contention that the
aggrieved party or victim of a crime has no standing to sue.
Court recognizes our duties and the rights of foreign states under the
Paris Convention for the Protection of Industrial Property
 The Philippines and France are both parties of the Convention. The
Court is 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.2
 Vanity Fair Inc v T. Eaton Co: US Circuit Court of Appeals
commented on the extraterritorial application of the Paris
Convention:
o 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.’
o The Convention is premised on the principle that each
nation’s law shall only have territorial application. The
protection has its source in, and is subject to the limitations
of, the law of the country where it is used in commerce, not
the law of the foreign national’s own country.
 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.
 Ministry of Trade issued a memorandum on November 20, 198
addressed to the Director of the Patents Office:
o “to reject all pending applications for Philippine registration of
signature and other world famous trademarks by applicants
other than its original owners or users.”
o The conflicting claims over internationally known trademarks
involve such name brands as Lacoste, Jordache, Gloria
2
See notes for cited provisions
Vanderbilt, Sasson, Fila, Pierre Cardin, Gucci, Christian Dior,
Oscar de la Renta, Calvin Klein, Givenchy, Ralph Lauren,
Geoffrey Beene, Lanvin and Ted Lapidus.
o It is further directed that, in cases 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.
 This memorandum is a clear manifestation of our avowed adherence
to a policy of cooperation and amity with all nations.
 The treaty 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.
The grounds invoked by Hemandas in his MTQ are not appropriate for
quashing a warrant
 The grounds invoked are matters of defense which should be
ventilated during the trial on the merits of the case.
o Court fails to understand how the Judge 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.
 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. There is no general formula or fixed rule for the
determination of the existence of probable cause.
o Stonehill v Diokno: 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.”
o 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.
 In this case: 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 the witnesses.
o 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.
 o 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.
 There was no compelling reason for the reversal.
o 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.
o 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.
Hemandas registration is only in the Supplemental Register
 Hemandas relied heavily on the argument that he is the holder of a
certificate of registration of the trademark “CHEMISE LACOSTE &
CROCODILE DEVICE”
 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.
o Such cannot be filed with the Bureau of Customs in order to
exclude from the Philippines, foreign goods bearing
infringement marks or trade names
o It is not subject to opposition, although it may be cancelled
after its issuance. Neither may it be the subject of
interference proceedings.
o 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.
 Registration in the Supplemental Register serves as notice that the
registrant is using or has appropriated the trademark.
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
the user must still overcome before he can claim legal
ownership
 And even in cases where presumption and precept may factually be
reconciled, we have held that the presumption is rebuttable, not
conclusive
The proceedings pending before the Patent Office don’t partake of a
prejudicial question
 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.
 In this case: 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.
 No civil action pends not has been instituted.
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.
 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
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.
 The law on trademarks and tradenames is based on the principle of
business integrity and common justice.
 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.
o 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.
Court 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.”
Dispositive: WHEREFORE, the petition in G.R. NOS. 63797-97 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.
Notes
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, and
indications of source or appellations of origin, and the repression of
unfair competition.
ARTICLE 2
“(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
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.
“(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.
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)

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.