G.R. No. L-24295. September 30, 1971.
GENERAL GARMENTS CORPORATION, petitioner, vs. THE DIRECTOR OF PATENTS and PURITAN SPORTSWEAR CORPORATION, respondents.

FACTS

Petitioner General Garments Corporation is the registered owner of the trademark “Puritan” for assorted men’s wear under a Philippine Patent Office registration issued in 1962. Respondent Puritan Sportswear Corporation, a Pennsylvania, U.S.A. corporation not licensed to do and not doing business in the Philippines, filed a petition for cancellation of said trademark. It alleged ownership and prior use in the Philippines of the identical mark on the same goods, claiming petitioner’s registration was obtained fraudulently and violated Sections 4(d) and 17(c) of the Trademark Law ( Republic Act No. 166 ).
Petitioner moved to dismiss the cancellation petition, contending that respondent foreign corporation, lacking a license to do business in the country, had no legal capacity to sue under Philippine law. The Director of Patents denied the motion to dismiss and the subsequent motion for reconsideration. Petitioner thus elevated the case via a petition for review, arguing that respondent is not a “person” within the meaning of Section 17(c) of the Trademark Law, which allows “any person” who believes they will be damaged to apply for cancellation.

ISSUE

Whether a foreign corporation not licensed to do and not doing business in the Philippines has the legal capacity to institute a cancellation proceeding against a registered trademark in the Philippine Patent Office.

RULING

Yes, the foreign corporation has legal capacity. The Court rejected petitioner’s contention. While Sections 68 and 69 of the Corporation Law generally require a foreign corporation to obtain a license to do business before it can maintain a suit in Philippine courts for recovery of a debt or demand, this rule admits of exceptions, such as for isolated transactions. More importantly, the present case does not involve an action to enforce contractual rights or recover a debt arising from business transacted in the Philippines.
The suit is one to protect a property right—the trademark and the goodwill associated with it—which is a right in rem. Citing Western Equipment & Supply Co. v. Reyes, the Court held that a foreign corporation has a legal right to maintain an action to protect its reputation, corporate name, and goodwill established through the use of its products in the Philippines, even without having transacted business locally. The purpose is to prevent damage to its intellectual property, not to enforce business-related claims. The Court also noted that the Trademark Law itself, in Section 2, allows registration by foreign entities under conditions of reciprocity, implying capacity to protect such marks. The petition was dismissed, affirming the Director of Patents’ resolution.