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General Garments v Director of Patents

41 SCRA 50

Foreign Corporation
Legal Requirements prior to transacting business
Resurreccion, Ronnie C.

Facts:
The General Garments Corporation, (GGC) organized and existing under the laws of the Philippines, is
the owner of the trademark "Puritan," and duly registered in the Philippine Patent Office, for assorted
men's wear, such as sweaters, shirts, jackets, undershirts and briefs.

On the other hand, Puritan Sportswear Corporation, (PSC) is organized and existing in and under the
laws of the state of Pennsylvania, U.S.A.

On May 1964, PSC filed a petition with the Philippine Patent Office for the cancellation of the trademark
"Puritan" registered in the name of GGC alleging PSC’s ownership and prior use in the Philippines of the
said trademark on the same kinds of goods, which use it had not abandoned; and alleging further that
the registration thereof by General Garments Corporation had been obtained fraudulently and in
violation of Section 17(c) of Republic Act No. 166.

GGC moved to dismiss the petition on the ground that PSC had no legal capacity to file a suit against
GGC because PSC is a foreign corporation and not licensed to do business and not doing business in the
Philippines. However, Director of Patents (DP) denied the motion to dismiss of GGC.

Aggrieved, GGC appealed to the SC. It argued that PSC is not considered as a person under Philippine
Laws who may apply for cancellation of a trademark.

Issue: WON Puritan Sportswear Corporation has legal capacity to maintain a suit in the Philippine Patent
Office for cancellation of a trademark registered.

Ruling: Yes. The fact that PSC may not transact business 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
demand without such license (Secs. 68 and 69, Corporation Law) does not make PSC any less a juridical
person. Indeed an exception to the license requirement has been recognized in this jurisdiction, namely,
where a foreign corporation sues on an isolated transaction.

In Marshall-Wells Co. v. Elser & Co, SC said that 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.

PSC is not suing for infringement or unfair competition but for cancellation under Section 17. The first
kind of action, it maybe stated, is cognizable by the Courts of First Instance. The second partakes of an
administrative proceeding before the Patent Office. And while a suit for infringement requires that the
mark or tradename alleged to have been infringed has been "registered or assigned" to the suing
foreign corporation, a suit for cancellation of the registration of a mark or tradename has no such
requirement.

The right to the use of the corporate or trade name is a property right, a right in rem, which it may
assert and protect 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.

Petition dismissed. PSC won.