WESTERN EQUIPMENT AND SUPPLY COMPANY vs.

CA
GR No. 27897 – Dec. 2, 1927 – Johns

SUBJECT: Tradenames; right of the tradename owner.

FACTS:
Western Equipment and Supply Company (plaintiff) is a foreign corporation organized under
the laws of the State of Nevada. On or about May 4, 1925, through its duly authorized agent,
Felix Reyes (plaintiff), Western Equipment applied to Fidel Reyes (defendant), the Director of
the Bureau of Commerce and Industry, for the issuance of a license to engage in business in the
Philippines. On May 20, 1926, said director issued in favor of Western Equipment a provisional
license for that purpose which was made permanent on Aug. 23, 1926.

Since May 20, 1926, Western Equipment has been and still is engaged in importing and selling
in the Philippines electrical and telephone apparatus and supplies manufactures by Western
Electric Company, also a foreign corporation organized under the laws of the State of New York.

Western Electric Company has never been engaged in business in the Philippines. It is a
manufacturer of electrical and telephone apparatus and supplies which have been sold in
foreign and interstate commerce for the past 50 years, and have acquired high trade reputation
throughout the world. Also, it has acquired a valuable goodwill and high reputation in the PH,
through sale, by importers, and the extensive use with the country of its products bearing
either its corporate name or trade-mark ‘Western Electric’. The words ‘Western Electric’ have
been registered by Western Electric as a trade-mark under the provisions of the Act of Congress
of Feb. 20, 1905, in the office of the Commissioner of Patents at Washington, DC, and said mark
remains in force as the property of said plaintiff to this date.

A Philippine corporation known as the Electric Supply Company, Inc.,’ has been importing the
manufactures of Western Electric into the Philippines for the purpose of selling the same
therein. Defendant Henry Herman is the President and General Manager of said corporation.

On October 15, 1926, Defendants Henry Herman, Peter O’Brien, Manuel Diaz, Felipe Mapoy
and Artemio Zamora signed and filed articles of incorporation with defendant Fidel Reyes, the
Director of the Bureau of Commerce and Industry, with the intention of organizing a domestic
corporation under the PH 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. The filing was done with knowledge of the
existence of the plaintiff Western Electric Company, Inc., of its corporate name, of its trade-
mark, ‘Western Electric’ and of the fact that the manufactures of said plaintiff bearing its trade-
mark or corporate name are in general use in the PH and in the US.

On Oct. 18, 1926, plaintiff W.Z. Smith, President and General Manager of Western Equipment,
lodged with the Director of the Bureau of Commerce and Industry its protest against the
registration of the proposed incorporation by the defendants upon the ground among others,
that the corporate name by which said defendants desire to be known, being identical with that
of the plaintiff Western Equipment and Supply Company, will deceive and mislead the public
purchasing electrical and telephone apparatus and supplies.

On Oct. 20, 1926, plaintiff Smith filed a written application for the issuance of a license to
engage in business in the PH with the defendant Director of the Bureau of Commerce and
Industry.

The Director of the Bureau of Commerce and Industry announced his intention to overrule said
protest and will, unless judicially restrained therefrom, issue to the other defendants herein a
certificate of incorporation, constituting said defendants a PH body politic and corporate under
the name of ‘Western Electric Company, Inc.’

CFI: ruled in favor of the plaintiffs.

ISSUE: WON a foreign company, which has never engaged business in the PH, can restrain a
Philippine citizen from organizing a corporation bearing the same name as such foreign
corporation?

HELD: Yes.
A foreign corporation which has never done any 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 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. 


An unregistered foreign corporation which has not personally transacted business in the
Philippine Islands, but which has acquired 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-mark, has a legal right to restrain an officer of the
Government, who has full knowledge of those facts, from issuing a certificate of incorporation
to residents of the Philippine Islands who are attempting to organize a corporation for the
purpose of pirating the corporate name of the foreign corporation and of engaging in the same
business, for the purpose of making the public believe that the goods which it proposes to sell
are the goods of the foreign corporation and of defrauding it and its local dealers of their
legitimate trade.

The purpose of such a suit is to protect its reputation, corporate name and goodwill which have
been established through the natural development of its trade over a long period of years, in
the doing of which it does not seek to enforce any legal or contract rights arising from, or
growing out of, any business which it has transacted in the Philippine Islands.
Under such a state of facts, the, right to the use of the corporate and trade name of a foreign
corporation is a property right, a right in rem, which it may assert and protect in any of the
courts of the world even in countries where it does not personally transact any business.

In such a case, it is the trade and not the mark that is to be protected, 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.

Western Electric Company, Inc., has been in existence as a corporation for over 50 years, during
which time it has established a reputation all over the world including the Philippine Islands, for
the kind and quality of its manufactured articles. It is very apparent that the whole purpose and
intent of Herman and his associates in seeking to incorporate another corporation under the
identical name of Western Electric Company, Inc., and for the same identical purpose as that of
the plaintiff, is to trespass upon and profit by its good name and business reputation. The very
fact that Herman and his associates have sought the use of that particular name for that
identical purpose is conclusive evidence of the fraudulent intent with which it is done.

Judgment of the lower court is affirmed.