La Chemise Lacoste, S.A. v. Fernandez
REITERATIONFacts
The Antecedents: La Chemise Lacoste, S.A. (Lacoste), a French corporation, is the owner of the trademarks "LACOSTE," "CHEMISE LACOSTE," and a "CROCODILE DEVICE," which have been marketed in the Philippines since 1964. Gobindram Hemandas (Hemandas), through Hemandas & Co., obtained Registration No. SR-2225 in the Supplemental Register for the trademark "CHEMISE LACOSTE & CROCODILE DEVICE" in 1975. Hemandas & Co. later assigned its rights to Hemandas. Lacoste filed applications for registration of its trademarks "Crocodile Device" and "Lacoste" in 1980 and a petition for cancellation of Hemandas' registration in 1982. Procedural History: Lacoste filed a letter-complaint with the National Bureau of Investigation (NBI) alleging unfair competition by Hemandas. The NBI secured two search warrants from the Regional Trial Court (RTC) against Hemandas for violation of Article 189 of the Revised Penal Code. The RTC initially found probable cause and issued the warrants. Subsequently, Hemandas filed a motion to quash the warrants, arguing that his trademark was different, the action was premature due to pending Patent Office cases, and the search warrants lacked probable cause. The RTC granted the motion to quash, recalling the warrants and ordering the return of seized items. Lacoste filed a petition for certiorari with the Supreme Court, assailing the RTC's order as grave abuse of discretion. The Petition: Lacoste seeks to set aside the RTC's order quashing the search warrants, arguing that the judge committed grave abuse of discretion by reversing his finding of probable cause based on matters of defense and by deeming the issuance of the warrants premature.
Issue(s)
Whether the respondent judge committed grave abuse of discretion amounting to lack of jurisdiction in reversing his finding of probable cause for the issuance of search warrants. Whether the respondent judge committed grave abuse of discretion in finding the issuance of search warrants premature. Whether a foreign corporation not doing business in the Philippines has the capacity to sue before Philippine courts. Whether the pendency of administrative proceedings before the Patent Office constitutes a prejudicial question that would render a criminal action premature; and the ownership of the trademarks.
Ruling
The Supreme Court GRANTED the petition in G.R. Nos. 63796-97, REVERSED and SET ASIDE the order dated April 22, 1983 of the respondent regional trial court, and made permanent its Temporary Restraining Order dated April 29, 1983. The petition in G.R. No. 65659 was DENIED due course for lack of merit, and its Temporary Restraining Order dated December 5, 1983 was LIFTED and SET ASIDE. SO ORDERED.
Ratio Decidendi
On the Respondent Judge's Grave Abuse of Discretion in Reversing the Finding of Probable Cause: The Court held that the respondent judge committed grave abuse of discretion amounting to lack of jurisdiction. The judge initially found probable cause after examining witnesses and evidence, issuing the search warrants. However, he later reversed this finding upon a motion to quash, based on allegations that were matters of defense and should be ventilated during trial. The Court emphasized that an application for a search warrant is heard ex parte, and judges must accord great reliance to sworn testimonies. The allegation of suppressed facts was deemed insufficient justification for recalling seized items, which were crucial evidence. The judge's "complete turnabout" lacked compelling justification, especially when the issue involved potential violations of international commitments. On the Respondent Judge's Grave Abuse of Discretion in Finding the Issuance of Search Warrants Premature: The Court found this argument untenable. The grounds raised in the motion to quash, such as the alleged difference in trademarks and the pendency of Patent Office cases, were considered matters of defense, not valid grounds for quashing a warrant. The Court reiterated that probable cause requires competent proof of specific acts violating criminal laws, and the judge's initial finding satisfied this standard. The subsequent reversal was not based on new evidence but on arguments that should be addressed during trial. On the Capacity of a Foreign Corporation Not Doing Business in the Philippines to Sue: The Court affirmed that a foreign corporation not doing business in the Philippines has the capacity to sue before Philippine courts to protect its trademark and goodwill. Citing established jurisprudence (Western Equipment and Supply Co. v. Reyes, East Board Navigation Ltd. v. Ysmael and Co., Inc., General Garments Corp. v. Director of Patents), the Court explained that such suits are not to enforce rights arising from business transacted in the Philippines but to protect property rights in their name and goodwill. The Court also highlighted the Philippines' obligations under the Paris Convention for the Protection of Industrial Property, which mandates effective protection against unfair competition for nationals of member countries. On the Prejudicial Question Argument and Ownership of Trademarks: The Court ruled that the pendency of administrative proceedings before the Patent Office does not constitute a prejudicial question that would suspend a criminal action. A prejudicial question typically arises when a civil case must be resolved first, and its outcome is determinative of the guilt or innocence in the criminal case. The Patent Office proceedings were administrative, not civil, and their resolution would not be juris et de jure determinative of Hemandas' guilt. The Court also noted that the Paris Convention, particularly Article 6bis, obliges member countries to protect well-known trademarks, and administrative actions should align with these international commitments, as demonstrated by a prior decision of the Intermediate Appellate Court in a related case. The Court found that the evidence overwhelmingly supported Lacoste's ownership of the trademarks "LACOSTE," "CHEMISE LACOSTE," and the "crocodile or alligator device." Any claims by Hemandas were deemed without basis, and further ventilation of ownership before the Patent Office was considered a superfluity and a dilatory tactic. The Court emphasized that allowing Hemandas to use the trademark based solely on his Supplemental Register registration would negate the essence of trademark law, which protects against confusion and deception.
Main Doctrine
A foreign corporation not doing business in the Philippines may sue before Philippine courts to protect its trademark and goodwill, even if it has no license to do business. The issuance of search warrants requires a determination of probable cause based on competent proof of specific acts violating criminal laws, and a judge's reversal of such finding without compelling justification constitutes grave abuse of discretion. Registration in the Supplemental Register does not grant prima facie evidence of ownership or exclusive right to use a trademark.