105. Western Equipments and Supply Co. v.

Reyes
Dec. 2, 1927
Johns
Digest by PS Magno

Short Version:
Western is foreign company engaged in dealing with
telephone equipment and apparatus. Is seeks to
prevent Reyes et al, from incorporating a domestic
corp in the PH with substantially the same name,
while Reyes et al, question Westerns capacity to sue
since it is no licensed to do business in the PH. The SC
ruled that Western has standing. In doing so, it
distinguishes between infringement of trademark
suits, and suits for unfair competition. This case falls
under unfair competition, and Western does not need
a license in order to have standing.

Facts:
Western is a foreign corp (Nevada and New York)
engaged in the business of telephone equipment and
apparatus. It must be noted that is has been engaged
in commerce and is well known in the trade in all
countries of the world for 50 years, and at the time of
the suit, most of the telephone equipment used in the
PH were manufactured and sold by Western. It is
alleged that of such equipment used around the
world has been manufactured and/or sold by
Western.
Western Electric Company, Inc. has been
registered as a trade-mark under the Act of
Congress of Feb. 20, 1905
Note that Western has applied for a
provisional license to engage in business in
the PH on May 20, 1926, and this was made
permanent on Aug. 23, 1926

Defendants OBrien, Diaz, Mapoy, and Zamora all seek
to incorporate a domestic corporation in the PH to be
known as Western Electric Company, Inc.
Note that all of them have been associated
with Western as employees, or stockholders,
or agents, whatever
The point is, they have actual knowledge of
the company and how it does its business

Defendant Reyes is the Director of Bureau of
Commerce and Industry. Reyes subsequently has
made known to the would-be incorporators that he
intends to rule in their favor, amidst a protest from
Western.

Western sough a temporary restraining order from
the lower court. Defendants question Westerns
standing to sue. Lower court granted. Hence, this suit.

Issue and Dispositive:
Does Western have standing to sue? Yes. This is a suit
for unfair competition, not a suit for infringement of
trademark.

Ratio:
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 products
bearing either its corporate name, or trade-mark
consisting of its corporate name, a legal right to
restrain an officer of the 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?
Paos note: I dont exactly understand why
Western is considered as a corp NOT doing
business in the PH since it has already
applied for a provisional license which was
then made permanent. But I think it has to
do with the fact that Western agreed to such
stipulation of facts during the pre-trial

SC says yes, Western has standing
Generally, opponents who want to question
the standing of foreign corps must follow
this rule:
o The noncompliance of a foreign
corporation with the statute may be
pleaded as an affirmative defense.
Thereafter, 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. (Marshal-Wells Co. v.
Elser & Co.)
But, it must be noted that the sole purpose
of the action of Western is to:
o 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."
Western contends that its rights to the use of
its corporate and trade name:
o Is a property right, a right in rem,
which 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.
o Since it is the trade and not the
mark that is to be protect, 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.

SC agrees with Western, saying that defendants are
confused as to Westerns standing because the failed
to distinguished between suits for unfair competition,
and suits for infringement of trademark
xxx a confusion of the bases of two classes of
suits, those for infringements of trade-
marks, and those for unfair competition in
trade
In the former, title to the trade-marks is
indispensable to a good cause of action;
in the latter, no proprietary interest in the
words, names, or means by which the fraud
is perpetrated is requisite to maintain a suit
to enjoin it.
o It is sufficient that the complainant
is entitled to the custom the
goodwill of a business, and that
this goodwill is injured, or is about
to be injured, by the palming off of
the goods of another as his.

SC notes that the purpose and intent of the
defendants is was to unfairly and unjustly compete in
the PH with Western in (the manufacture and selling
of telephone equipment and apparatus)
They are basically asking the Government of
the PH to permit them to pirate the name of
Western, by incorporating xxx
So that they may deceive the public into
thinking that the goods they are
manufacturing and selling are those of the
real (Western)
It would be a prostitution of the powers of
government to allow such an act