Corp Law Case Digests

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1 FAR EAST INTL VS. KOGYO On December 26, 1956, the Far East International Import & Export Corporation, Far East for short, organized under Philippine Laws, entered into a Contract of Sale of Steel Scrap with the Nankai Kogyo Co., Ltd., Nankai for short, a foreign corporation organized under Japanese Laws with address at Osaka, Japan. The buyer sign in Japan and the seller in Manila, Philippines. Upon perfection of the contract and after having been informed of the readiness to ship and that the Export License was to expire on March 18, 1957,Nankai opened a letter for credit (No. 38/80049) with the China BankingCorporation, issued by the Nippon Kangyo, Ltd., Tokyo, Japan, in the amountof $312,500.00 on January 30, 1957. On March 15, 1957, only four (4) daysbefore the expiration of the Far East licence, three (3) boats sent by Nankai arrived in the Philippines, one to load in Manila, the other two at Poro Point, San Fernando, La Union, and Tacloban, Leyte, respectively. On March 19, 1957, the expiration of the export license, only 1,058.6 metric tonsof scrap steel was loaded on the SS Mina (loading in Manila). The loading wasaccordingly stopped. The boat at Poro Point was also unloaded of the 200 metric tons, for the same reason. An agreement was reached wherby the Far East would seek an extension of the license. However, the untimely death of President Magsaysay and the taking over by President Garcia changed the picture, for the latter and/or his agents refused to extend the license. The two boats sailed to Japan without any cargo, the third (SS Mina) only 1,058.6 metric tons. On April 27, 1957, Nankai confirmed and acknowleged delivery of the 1,058.6 metric tons of steel scrap, but asked for damages amounting to $148,135.00 consisting of dead freight charges, damages, bank charges, phone and cable expenses (Exh. F). On May 4, 1957, Far East wrote the Everett Steamship Corporation, requesting the issuance of a complete set of the Bill of Lading for the shipment, in order that payment thereof be effected against the Letter of Credit. Under date of May 7, 1957, the Everett informed Far East that they were not in a position to comply because the Bill of Lading was issued and signed in Tokyo by the Master of the boat, upon request of the Charterer, defendant herein. As repeated requests, both against the shipping agent and the buyers (Nankai), for the issuance of the of Bill Lading were ignored, Far East filed on May 16, 1957, the present complaint for Specific Performance, damages, a writ of preliminiry mandatory injunction directed against Nankai and the shipping company, to issue and deliver to the plaintiff, a complete set of negotiable of Lading for the 1,058.6 metric tons of scrap and a writ of preliminary injunction against the China Banking Corporation and the Nankai to maintain the Letter Credit. The lower court issued on May 17, 1957 an ex parte writ of preliminary injunction, after Far East had posted a bond in the amount of P50,000.00. Defendant assigned six (6) errors allegedly committed by the lower court, which may be consolidated into two propositions: to wit — (1) Whether or not the trial court acquired jurisdiction over the subject matter and over the person of the defendant-appellant; and (2) the propriety of the award.

2 Defendant contends that Philippine Courts have no jurisdiction to take cognizance of the case because the Nankai is not doing business in the islands; and that while it has entered into the transaction in question, same, however, does not constitute "doing business", so as to make it amenable to summons and subject it to the Court's jurisdiction. It bolstered this claim by a provision in the contract which provides that "In case of disputes, Board of Arbitration may be formed in Japan. Decision of the Board of Arbitration shall be final and binding on both BUYER and SELLER". In the instant case, the testimony of Atty. Pablo Ocampo that appellant was doing business in the Philippines corroborated by no less than Nabuo Yoshida, one of appellant's officers, that he was sent to the Philippines by his company to look into the operation of mines, thereby revealing the defendant's desire to continue engaging in business here, after receiving the shipment of the iron under consideration, making the Philippines a base thereof. The rule stated in the preceding section that the doing of a single act doesnot constitute business within the meaning of statutes prescribing the conditions to be complied with the foreign corporations must be qualified to this extent, that a single act may bring the corporation. In such a case, the single act of transaction is not merly incidental or casual, but is of such character as distinctly to indicate a purpose on the part of the foreign corporation to do other business in the state, and to make the state a basis of operations for the conduct of a part of corporation's ordinary business. (17 Fletchers Cyc. of Corporations, sec. 8470, pp. 572-573, and authorities cited therein.) (Emphasis ours.) It is finally noted that when defendant's motion to dismiss in the Micronesian case was denied, it immediately brought the matter to this Court on Prohibition seeking to restrain the Workmen's Compensation mission from exercising jurisdiction over the controversy. In the present case, the defendant, while entering a Special Appearance to contest the jurisdiction of the Court, pursued its defense further by filing its Answer and going into trial. There is no appeal on the lower court's findings that the failure of the appellee herein to make full shipment of the scrap was due, not to the fault of said appellee, but to the action and intervention of the Philippine Government, which was beyond the control of the plaintiff. This aspect of the case is particularly covered by paragraph 13 of the contract, heretofore reproduced.. COMMUNICATION G.R. August 22, 1996 MATERIALS AND DESIGN, No. INC et al vs.CA et al. 102223

FACTS: Petitioners COMMUNICATION MATERIALS AND DESIGN, INC., (CMDI) and ASPAC MULTI-TRADE INC., (ASPAC) are both domestic corporations.. Private Respondents ITEC, INC. and/or ITEC, INTERNATIONAL, INC. (ITEC) are corporations duly organized and existing under the laws of the State of Alabama, USA. There is no dispute that ITEC is a foreign corporation not licensed to do business in the Philippines. ITEC entered into a contract with ASPAC referred to as “Representative Agreement”. Pursuant to the contract, ITEC engaged ASPAC as its “exclusive representative” in the Philippines for the sale of ITEC’s products, in consideration of which, ASPAC was paid a stipulated commission. Through a “License

3 Agreement” entered into by the same parties later on, ASPAC was able to incorporate and use the name “ITEC” in its own name. Thus , ASPAC Multi-Trade, Inc. became legally and publicly known as ASPAC-ITEC (Philippines). One year into the second term of the parties’ Representative Agreement, ITEC decided to terminate the same, because petitioner ASPAC allegedly violated its contractual commitment as stipulated in their agreements. ITEC charges the petitioners and another Philippine Corporation, DIGITAL BASE COMMUNICATIONS, INC. (DIGITAL), the President of which is likewise petitioner Aguirre, of using knowledge and information of ITEC’s products specifications to develop their own line of equipment and product support, which are similar, if not identical to ITEC’s own, and offering them to ITEC’s former customer. The complaint was filed with the RTC-Makati by ITEC, INC. Defendants filed a MTD the complaint on the following grounds: (1) That plaintiff has no legal capacity to sue as it is a foreign corporation doing business in the Philippines without the required BOI authority and SEC license, and (2) that plaintiff is simply engaged in forum shopping which justifies the application against it of the principle of “forum non conveniens”. The MTD was denied. Petitioners elevated the case to the respondent CA on a Petition for Certiorari and Prohibition under Rule 65 of the Revised ROC. It was dismissed as well. MR denied, hence this Petition for Review on Certiorari under Rule 45. ISSUE: 1. Did the Philippine court acquire jurisdiction over the person of the petitioner corp, despite allegations of lack of capacity to sue because of non-registration? 2. Can the Philippine court give due course to the suit or dismiss it, on the principle of forum non convenience? HELD: petition dismissed. 1. YES; We are persuaded to conclude that ITEC had been “engaged in” or “doing business” in the Philippines for some time now. This is the inevitable result after a scrutiny of the different contracts and agreements entered into by ITEC with its various business contacts in the country. Its arrangements, with these entities indicate convincingly that ITEC is actively engaging in business in the country. A foreign corporation doing business in the Philippines may sue in Philippine Courts although not authorized to do business here against a Philippine citizen or entity who had contracted with and benefited by said corporation. To put it in another way, a party is estopped to challenge the personality of a corporation after having acknowledged the same by entering into a contract with it. And the doctrine of estoppel to deny corporate existence applies to a foreign as well as to domestic corporations. One who has dealt with a corporation of foreign origin as a corporate entity is estopped to deny its corporate existence and capacity. In Antam Consolidated Inc. vs. CA et al. we expressed our chagrin over this commonly used scheme of defaulting local companies which are being sued by unlicensed foreign companies not engaged in business in the Philippines to invoke the lack of capacity to sue of such foreign companies. Obviously, the

4 same ploy is resorted to by ASPAC to prevent the injunctive action filed by ITEC to enjoin petitioner from using knowledge possibly acquired in violation of fiduciary arrangements between the parties. 2. YES; Petitioner’s insistence on the dismissal of this action due to the application, or non application, of the private international law rule of forum non conveniens defies well-settled rules of fair play. According to petitioner, the Philippine Court has no venue to apply its discretion whether to give cognizance or not to the present action, because it has not acquired jurisdiction over the person of the plaintiff in the case, the latter allegedly having no personality to sue before Philippine Courts. This argument is misplaced because the court has already acquired jurisdiction over the plaintiff in the suit, by virtue of his filing the original complaint. And as we have already observed, petitioner is not at liberty to question plaintiff’s standing to sue, having already acceded to the same by virtue of its entry into the Representative Agreement referred to earlier. Thus, having acquired jurisdiction, it is now for the Philippine Court, based on the facts of the case, whether to give due course to the suit or dismiss it, on the principle of forum non convenience. Hence, the Philippine Court may refuse to assume jurisdiction in spite of its having acquired jurisdiction. Conversely, the court may assume jurisdiction over the case if it chooses to do so; provided, that the following requisites are met: 1) That the Philippine Court is one to which the parties may conveniently resort to; 2) That the Philippine Court is in a position to make an intelligent decision as to the law and the facts; and, 3) That the Philippine Court has or is likely to have power to enforce its decision. The aforesaid requirements having been met, and in view of the court’s disposition to give due course to the questioned action, the matter of the present forum not being the “most convenient” as a ground for the suit’s dismissal, deserves scant consideration.

Western Equipment and Supply Co. vs. Reyes (GR 27897, 2 December 1927)

Facts: On 4 May 1925, the Western Equipment and Supply Company, through its duly authorized agent, Felix C. Reyes, applied to the Director of the Bureau of Commerce and Industry for the issuance of a license to engage in business in the Philippine Islands and on 20 May 1926, the Director issued in favor of Western Equipment a provisional license for that purpose which was made permanent on 23 August 1926. On the other hand, Western Electric Company, Inc., has never been licensed to engage in business in the Philippine Islands, and has never engaged in business therein. From and since the issuance of said provisional license of 20 May1926, to Western Equipment, it has been and still is engaged in importing and selling in the Philippine Islands electrical and telephone apparatus and supplies manufactured by

5 Western Electric (as well as those manufactured by other factories). Electrical and telephone apparatus and supplies manufactured by Western Electric have been sold in foreign and interstate commerce for the past 50 years, and have acquired high trade reputation throughout the world. At the present time the greater part of all telephone equipment used in Manila, and elsewhere in the Philippine Islands, was manufactured by Western Electric, and sold by it for exportation to the Philippine Islands. A Philippine Corporation known as the Electric Supply Company, Inc. (where Henry Herman is its President and General Manager), has been importing the manufactures into the Philippine Islands for the purpose of selling the same therein, and that the defendant Henry Herman, is the President and General Manager of said corporation. The words “Western Electric” have been registered by Western Electric Company, Inc., as a trademark under the provisions of the Act of Congress of 20 February 1905, in the office of the Commissioner of Patents at Washington, District of Columbia, and said trade-mark remains in force. On 15 October 1926, Henry Herman, Peter O’Brien, Manuel B. Diaz, Felipe Mapoy and Artemio Zamora signed and filed articles of incorporation with Fidel A. Reyes, as Director of the Bureau of Commerce and Industry, with the intention of organizing a domestic corporation under the Philippine Corporation Law to be known as the Western Electric Company, Inc., for the purpose, among other things, of manufacturing, buying, selling and dealing generally in electrical and telephone apparatus and supplies. On20 October 1926, W. Z. Smith was authorized by the Board of Directors of Western Electric to take all necessary steps for the issuance of a license to said company to engage in business in the Philippine Islands,and to accept service of summons and process in all legal proceedings against said company, and on 21 October 1926, Smith filed a written application for the issuance of such license with the Director of the Bureau of Commerce and Industry, which application, however, has not yet been acted upon. On 18 October 1926, the Philippine Telephone and Telegraph Co., by its general manager, Smith, lodged with the Director of the Bureau of Commerce and Industry its protest against the registration of the proposed corporation by Henry Herman, Peter O’Brien, Manuel B. Diaz, Felipe Mapoy and Artemio Zamora, to be known as the Western Electric Company, Inc., as a domestic corporation under the Philippine Corporation Law. On 23 October 1926, Western Equipment and Western Electric filed in the CFI of Manila a complaint against Herman, et. al. They alleged that the purpose of the latter in attempting to incorporate under the corporate name of Western Electric Company, Inc., is to profit and trade upon Western Electric’s business and reputation, by misleading and deceiving the public into purchasing the goods manufactured or sold by them as

6 those of Western Electric, in violation of the provisions of Act 666 of the Philippine Commission, particularly section 4 thereof. The lower court rendered judgment for Western Equipment and Western Electric as prayed for in their complaint, and made the temporary injunction permanent, from which Herman, et. al. appealed. The Supreme Court affirmed the judgment of the lower court, with costs. 1. Questions raised in the case Intellectual Property Law, 2004 ( 8 ) 1) “Has a foreign corporation which has never done business in the Philippine Islands, and which is unlicensed and unregistered therein, any right to maintain an action to restrain residents and inhabitants of the Philippine Islands from organizing a corporation therein bearing the same name as such foreign corporation, when said residents and inhabitants have knowledge of the existence of such foreign corporation, having dealt with it, and sold its manufactures, and when said foreign corporation is widely and favorably known in the Philippine Islands through the use therein of its products bearing its corporate and trade name, and when the purpose of the proposed domestic corporation is to deal in precisely the same goods as those of the foreign corporation?” (2) “Has an unregistered corporation which has not transacted business in the Philippine Islands, but which has acquired a valuable goodwill and high reputation therein, through the sale, by importers, and the extensive use within the Islands of its products bearing either its corporate name, or trade-

7 mark consisting of its corporate name, a legal right to restrain an officer of the Government of the Philippine Islands, i. e., the Director of Commerce and Industry, with knowledge of those facts, from issuing a certificate of incorporation to residents of the Philippine Islands who attempt to organize a corporation for the purpose of pirating the corporate name of such foreign corporation, of engaging in the same business as such foreign corporation, and of defrauding the public into thinking that its goods are those of such foreign corporation, and of defrauding such foreign corporation and its local dealers of their legitimate trade?” 2. Noncompliance of a foreign corporation an affirmative defense when case involves legal or contract rise arising from business transacted in the Philippines; Not applicable in present case In the case of Marshall-Wells Co. vs. Henry W. Elser & Co. (46 Phil., 70, 76), the court held that “the noncompliance of a foreign corporation with the statute may be pleaded as an affirmative defense. There after, it must appear from the evidence, first, that the plaintiff is a foreign corporation, second, that it is doing business in the Philippines, and third, that it has not obtained the proper license as provided by the statute.” Herein, however, Western Electric Company, Inc., which has never engaged in business in the Philippine Islands, is not seeking to enforce any legal or contract rights arising from, or growing out of, any business which it has transacted in the Philippine Islands. 3. Sole purpose of present action The sole purpose of the action is 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. 4.

8 Trademark acknowledges no territorial boundary but extends to every market where the trader’s goods are known 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. Rights to the use of its corporate and trade name is a property right, a right in rem, which it may assert and protect against all the world, in any of the courts of the world—even in jurisdictions where it does not transact business—just the same as it may protect its tangible property, real or personal, against trespass, or conversion. 5. Requisite justifying injunction to restrain competition In Walter E. Olsen & Co. vs. Lambert (42 Phil., 633, 640), it was said that “in order that competition in business should be unfair in the sense necessary to justify the granting of an injunction to restrain such competition it must appear that there has been, or is likely to be, a diversion of trade from the business of the complainant to that of the wrongdoer, as a consequence of the adoption by the latter of means or methods generally recognized as unfair. In most, if not all, of the cases in which relief has hitherto been granted against unfair competition the means and methods adopted by the wrongdoer in order to divert the coveted trade from his rival have been such as were calculated to deceive and mislead the public into thinking that the goods or business of the wrongdoer are the goods or business of the rival. Diversion of trade is really the fundamental Intellectual Property Law, 2004 ( 9 )

9 As first enunciated in Marshall-Wells Co. v. Elser & Co. 1 "the object of the statute (Secs. 68 and 69, Corporation Law) was not to prevent the foreign corporation from performing single acts, but to prevent it from acquiring a domicile for the purpose of business without taking the steps necessary to render it amenable to suit in the local courts ... the implication of the law (being) that it was never the purpose of the legislature to exclude a foreign corporation which happens to obtain an isolated order for business from the Philippines, from securing redress in the Philippine Courts. ..." The principle has since then been applied in a number of other cases. 2 To recognize respondent as a juridical person, however, does not resolve the issue in this case. It should be postulated at this point that respondent is not suing in our courts "for the recovery of any debt, claim or demand," for which a license to transact business in the Philippines is required by Section 69 of the Corporation Law, subject only to the exception already noted. Respondent went to the Philippine Patent Office on a petition for cancellation of a trademark registered by petitioner, invoking Section 17(c) in relations to Section 4(d) of the Trademark Law. A more or less analogous question arose in Western Equipment & Supply Co. v. Reyes, 51 Phil. 115. The syllabus of the report, which is a correct statement of the doctrine laid down in the decision, reads as follows: A foreign corporation which has never done ... business in the Philippine Islands and which is unlicensed and unregistered to do business here, but is widely and favorably known in the Islands through the use therein of its products bearing its corporate and trade name has a legal right to maintain an action in the Islands. PUMA SPORTSCHUHFABRIKEN RUDOLF DASSLER, vs.THE INTERMEDIATE APPELLATE COURT and MIL-ORO CORPORATION, respondents. K.G., petitioner MANUFACTURING

This is a petition for review by way of certiorari of the Court of Appeals' decision which reversed the order of the Regional Trial Court and dismissed the civil case filed by the petitioner on the grounds of litis pendentia and lack of legal capacity to sue. On July 25, 1985, the petitioner, a foreign corporation duly organized and existing under the laws of the Federal Republic of Germany and the manufacturer and producer of "PUMA PRODUCTS," filed a complaint for infringement of patent or trademark with a prayer for the issuance of a writ of preliminary injunction against the private respondent before the Regional Trial Court of Makati. n this petition for review, the petitioner contends that the Court of appeals erred in holding that: (1) it had no legal capacity to sue; (2) the doctrine of lis pendens is applicable as a ground for dismissing the case and (3) the writ of injunction was improperly issued. Petitioner maintains that it has substantially complied with the requirements of Section 21-A of Republic Act R.A. No. 166, as amended. According to the petitioner, its complaint specifically alleged that it is not doing business in the Philippines and is suing under the said Repulbic Act; that Section 21-A thereof provides that "the country of which the said 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" but does not mandatorily require that such reciprocity between the Federal Republic of

10 Germany and the Philippines be pleaded; that such reciprocity arrangement is embodied in and supplied by the Union Convention for the Protection of Industrial Property Paris Convention) to which both the Philippines and Federal Republic of Germany are signatories and that since the Paris 'Convention is a treaty which, pursuant to our Constitution, forms part of the law of the land, our courts are bound to take judicial notice of such treaty, and, consequently, this fact need not be averred in the complaint. We agree. In the leading case of La Chemise Lacoste, S.A .v. Fernandez, (129 SCRA 373), we ruled: But even assuming the truth of the private respondents allegation that the petitioner failed to allege material facto in its petition relative to capacity to sue, the petitioner may still maintain the present suit against respondent Hernandes. As early as 1927, this Court was, and it still is, of the view that a foreign corporation not doing business in the Philippines needs no license to sue before Philippine courts for infringement of trademark and unfair competition. Thus, in Western Equipment and Supply Co. v. Reyes (51 Phil. 11 5), this Court held that 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 residents and inhabitants thereof 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. Thus, the Court of Appeals likewise erred in holding that the requisites of lis pendens were present so as to justify the dismissal of the case below. As regards the propriety of the issuance of the writ of preliminary injunuction, the records show that herein private respondent was given the opportunity to present its counter-evidence against the issuance thereof but it intentionally refused to do so to be consistent with its theory that the civil case should be dismissed in the first place. Considering the fact that "PUMA" is an internationally known brand name, it is pertinent to reiterate the directive to lower courts, which equally applies to administrative agencies, found in La Chemise Lacoste, S.A. v. Fernandez, supra): One 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. No less than the President, in issuing Executive Order No. 913 dated October 7, 1983 to strengthen the powers of the Minister of Trade and Industry for the protection of consumers, stated that, among other acts, the dumping of substandard, imitated, hazardous, and cheap goods, the infringement of internationally known tradenames and trademarks, and the unfair trade Practices of business firms have reached such proportions as to constitute economic sabotage. We buy a kitchen appliance, a household tool, perfume,

11 face powder, other toilet articles, watches, brandy or whisky, and items of clothing like jeans, T-shirts, neckties, etc. — the list is quite lengthy — pay good money relying on the brand name as guarantee of its quality and genuine nature only to explode in bitter frustration and helpless anger because the purchased item turns out to be a shoddy imitation, albeit a clever looking counterfeit, of the quality product. Judges all over the country are well advised to remember that court processes should not be used as instruments to, unwittingly or otherwise, aid counterfeiters and intellectual pirates, tie the hands of the law as it seeks to protect the Filipino consuming public and frustrate executive and administrative implementation of solemn commitments pursuant to international conventions and treaties. (at p. 403)

LE CHEMISE LACOSTEv. Fernandez (1984) 1)The petitioner is a foreign corporation, organized and existing under t h e laws of France and not doing business in the Philippines. It is the actual owner of the trademarks "LACOSTE," "CHEMISE LACOSTE," "CROCODILE DEVICE"and a composite mark consisting of the word "LACOSTE" and a representationof a crocodile /alligator used on clothings and other goods specifically sportingapparels sold in many parts of the world and which have been marketed in thePhilippines since 1964.2 ) H e m a n d a s & C o . , a d u l y l i c e n s e d d o m e s t i c f i r m a p p l i e d f o r a n d w a s issued Reg. No. SR-2225 (SR stands for Supplemental Register) for thetrademark "CHEMISE LACOSTE & CROCODILE DEVICE" by the PhilippinePatent Office for use on T-shirts, sportswear and other garment products of thec o m p a n y . T h e m a i n b a s i s o f t h e p r i v a t e r e s p o n d e n t ' s c a s e i s i t s c l a i m o f alleged prior registration.3 ) P e t i t i o n e r f i l e d w i t h the NBI a letter-complaint alleging therein the acts of unfair competition b e i n g c o m m i t t e d b y H e m a n d a s a n d r e q u e s t i n g t h e i r assistance in his apprehension and prosecution4 ) N B I conducted an investigation and s u b s e q u e n t l y f i l e d w i t h t h e respondent court two applications for the issuance of search warrants w/c wasgranted.5 ) T h e N B I a g e n t s e x e c u t e d t h e t w o s e a r c h w a r r a n t s a n d a s a r e s u l t o f t h e search found and seized various goods and articles described in the warrants.6 ) L C : g r a n t e d H e r n a n d a s ’ M Q s e a r c h w a r r a n t . 7)LE CHEMISE LACOSTE filed a petition for certiorari with preliminaryinjunction before SC asks us to set aside as null and void, the order of JudgeFernandez granting the motion to quash the search wan-ants previously issuedby him and ordering the return of the seized items.

8)Hem and as C O M M E N T : petitioner being a foreign corporation failed to allege essential factsbearing upon its capacity to sue before Philippine courts.not only is the petitioner not doing business in the Philippines but it also isnot licensed to do business in the Philippines.HELD 1:

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LE CHEMISE LACOSTE is a foreign corporation not doingbusiness in the Philippines. The marketing of its products in the Philippines isdone through an exclusive distributor, Rustan Commercial Corporation. The latter is an independent entity which buys and then markets not only products of thep e t i t i o n e r b u t a l s o m a n y o t h e r p r o d u c t s b e a r i n g e q u a l l y w e l l k n o w n a n d established trademarks and tradenames. In other words, Rustan is not a mereagent or conduit of the petitioner.H E L D 2 : B u t e v e n a s s u m i n g t h e t r u t h o f t h e P R ’ s a l l e g a t i o n t h a t LE CHEMISE LACOSTEfailed to allege material facts in its petition relative tocapacity to sue,LE CHEMISE LACOSTE may still maintain the present suitagainst respondent Hemandas .R A T I O 2 : A s e a r l y a s 1 9 2 7 , t h i s C o u r t w a s , a n d i t s t i l l i s , o f t h e v i e w t h a t a foreign corporation not doing business in the Philippines needs no license to suebefore Philippine courts for infringement of trademark and unfair competition.H E LD 3 : M o r e i m p o r t a n t i s t h e n a t u r e o f t h e c a s e w h i c h l e d t o t h i s p e t i t i o n . What preceded this petition for certiorari was a letter-complaint filed before theNBI charging Hemandas with a criminal offense, i.e., violation of Article 189 of the Revised Penal Code. If prosecution follows after the completion of thepreliminary investigation be ing conducted by the Sp ecial Prosecutor theinformation shall be in the name of the People of the Philippines and no longer the petitioner which is only an aggrieved party since a criminal offense isessentially an act against the State. It is the latter which is principally the injuredparty although there is a private right violated. Petitioner's capacity to sue wouldbecome, therefore, of not much significance in the main case. We cannot allow apossible violator of our criminal statutes to escape prosecution upon a far-fetchedcontention that the aggrieved party or victim of a crime has no standing to sue.

MARSHALL-WELLS CO.v. HENRY W. ELSER & CO. (1924)1)Marshall-Wells Company(an Oregon corporation) sued Henry W. Elser &Co., Inc.(a domestic corporation) in CFI Manila for the unpaid balance on a bill of goods sold by plaintiff to defendant.2) HENRY W. ELSER & CO. (Defendant) demurred to the complaint on thestatutory ground that: MARSHALL-WELLS CO has no legal capacity to sue since its c o m p l a i n t d o e s n o t s h o w t h a t i t h a s c o m p l i e d w i t h t h e l a w s o f t h e Philippine Islands in that which is required of foreign corporations desiringto

13 do business in the Philippine Islands, neither does it show that it wasauthorized to do business in the Philippine Islands. 3)Section 69 of the CL states: "No foreign corporation shall be permitted to maintain by itself or assignee any suit for the recovery of any debt, claim, or demand whatever,unless it shall have the license prescribed in section 68 of the law."I S S U E : I s the obtaining of the license prescribed in s e c t i o n 6 8 , a s amended, of the Corporation Law a condition precedent to the maintaining of anykind of action in the courts of the Philippine Islands by a foreign corporation?HELD: For Oregon C. T h e i m p l i c a t i o n o f t h e l a w i s t h a t i t w a s n e v e r t h e p u r p o s e o f t h e Legislature to exclude a foreign corporation which happens to obtain an isolatedorder for business from the Philippines, from securing redress in the Philippinecourts, and thus, in effect, to permit persons to avoid their contracts made withs u c h f o r e i g n c o r p o r a t i o n s . T h e e f f e c t o f t h e s t a t u t e p r e v e n t i n g f o r e i g n corporations from doing business and from bringing actions in the local courts,except on compliance with elaborate requirements, must not be unduly extendedor improperly applied. It should not be construed to extend beyond the plainmeaning of its terms, considered in connection with its object, and in connectionwith the spirit of the entire law.R A T I O : T h e o b j e c t o f t h e s t a t u t e w a s t o s u b j e c t t h e f o r e i g n c o r p o r a t i o n doing business in the Philippines to the jurisdiction of its courts. The object of thestatute was not to prevent the foreign corporation from performing single acts,but to prevent it from acquiring a domicile for the purpose of business without taking the steps necessary to render it amenable to suit in the local courts.

GENERAL GARMENTS v. DIR OF PATENTS andPURITAN SPORTSWEARCORP.(1971) 1)General Garments Corporation (organized and existing under the laws o f the Philippines) is the owner of the trademark "Puritan," registered in the PPOfor assorted men's wear, such as sweaters, shirts jackets, undershirts and briefs.2)Puritan Sportswear Corporation (organized and existing in and under thelaws of the state of Pennsylvania, U.S.A.) filed a petition with the PPOfor thecancellation of the trademark"Puritan" registered in the name of GeneralGarments Corporation:alleging ownership and prior use in the Philippines of the said trademarkon the same kinds of goods, which use it had not abandoned3 ) G e n e r a l G a r m e n t s C o r p o r a t i o n m o v e d t o d i s m i s s c o n t e n d i n g t h a t : that Puritan Sportswear Corporation (being a foreign corporation which isnot licensed to do and is not doing business in the Philippines) is notconsidered as a person under Philippine laws and consequently is notc o m p r e h e n d e d w i t h i n t h e t e r m " a n y p e r s o n " w h o m a y a p p l y f o r cancellation of a mark or trade-name under Section 17(c) of t h e Trademark Law aforequoted.I S S U E : W O N Puritan Sportswear

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C o r p o r a t i o n ( w h i c h i s a f o r e i g n corporation not licensed to do b u s i n e s s a n d n o t d o i n g b u s i n e s s i n t h e Philippines) has legal capacity to maintain a suit in the PPO for cancellation of atrademark registered thereon?H E L D : T h a t P u r i t a n S p o r t s w e a r C o r p o r a t i o n ( r e s p o n d e n t ) i s a j u r i d i c a l person should be beyond serious dispute. The fact that it may not tra nsactbusiness in the Philippines unless it has obtained a license for that purpose, nor maintain a suit in Philippine courts for the recovery of any debt, claim or demandw i t h o u t s u c h l i c e n s e ( S e c . 6 8 a n d 6 9 , C o r p o r a t i o n L a w ) d o e s n o t m a k e respondent any less a juridical person. Indeed an exception to the licenserequirement has been recognized in this jurisdiction, namely, where a foreigncorporation sues on an isolated transaction (as first enunciated in Marshall-WellsCo. v. Elser & Co.) However, to recognize Puritan Sportswear Corporation (respondent)as a juridicial person does not resolve the issue in this case. It should bepostulated at this point thatrespondent is not suing in our courts "for therecovery of any debt, claim or demand," for which a license to transactbusiness in the Philippines is required by Section 69 of the Corporation Law, subject only to the exception already noted. Respondent went to thePPO on a petition for cancellation of a trademark registered by petitioner,invoking the Trademark Law.

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