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104. Western Equipment v Reyes
Dec. 2, 1927
Johns, J.
Short Version
Herman et. al. incorporated under the name Western Electric
Company,
inc., which is the name of an already-existing N corporation.
the N
corporation sued for unfair competition.
!nd won. "espite #eing unlicensed to do #usiness in the
$hilippines, %he
sole purpose of the action is to protect its reputation, its
corporate name, its
goodwill which it has esta#lished. %he rights to use the
corporate and trade
name is a property right, a right in rem, which it may assert
and protect
against all the world, e&en in 'urisdictions where it does
not transact#usiness, 'ust the same as it may protect its tangi#le
property, real or
personal, against trespass or con&ersion
!"cts
Western E(uipment and )upply Company, a Ne&ada Corporation
licensed to
do #usiness in the $hilippines, *led a case against Henry
Herman, $eter
+rien, anuel "ia/, 0elix apoy and !rtemio 1amora for unfair
competition, done #y incorporating under the name Western
Electric
Company, 2nc..
Western Electric Company, 2nc. is a New or3 corporation
which
manufactures electrical and telephone apparatuses and supplies.
Western
E(uipment and )upply Company imports this e(uipment. )uch
e(uipment,
and in turn the trademar3 of Western Electric Company has
ac(uired high
trade reputation throughout the world.
"espite this, Herman et. al. incorporated under the name Western
Electric
Company 2nc. $hilippine %elephone and %elegraph Co. 0iled a
protest to
the registration of the proposed corporation.
0idel !. 4eyes, "irector of the ureau of Commerce and 2ndustry,
o&erruled
the protest an issued a certi*cate of incorporation in fa&or
of Western
Electric Company, 2nc, which to a&oid confusion, 2 will
refer to as Herman.
4%C ruled in fa&or of the actual Western E(uipment. Hence
this appeal.
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#ssues
5. W+N a foreign corporation which has ne&er done #usiness
in the
$hilippines, and which is unlicensed and unregistered therein,
can
maintain an action to restrain residents and inha#itants of
the
$hilippine 2slands from organi/ing a corporation therein #earing
thename of such foreign corporation. 6es7
8. W+N a foreign corporation has a legal right to restrain the
"irector of
ureau of Commerce and 2ndustry from exercising his
discretion.
6es7
R"tio
5. %he sole purpose of the action is to protect its reputation,
its
corporate name, its goodwill which it has esta#lished. %he
rights to
use the corporate and trade name is a property right, a right in
rem,which it may assert and protect against all the world, e&en
in
'urisdictions where it does not transact #usiness, 'ust the same
as it
may protect its tangi#le property, real or personal, against
trespass or
con&ersion. )ince it is the trade and not the mar3 that is
to #e
protected, a trademar3 ac3nowledges no territorial #oundaries,
#ut
extends to e&ery mar3et where the traders goods ha&e
#ecome
3nown and identi*ed #y the use of the mar3. "i&ersion of
trade is
really the fundamental thing here, and if di&ersion of trade
#e
accomplished #y any means which are unfair, the aggrie&ed
party is
entitled to relief.8. %he "irectors discretion is su#'ect to
re&iew. 2f it was correct, it will
#e upheld. 2f it is incorrect, it will #e re&ersed #y the
court. 2t is
apparent here that the purpose of Herman in incorporating under
the
name Western Electric Company, 2nc, was to unfairly and
un'ustly
compete with the real Western Electric Company, 2nc. in
articles
which are manufactured and #ear the name of the latter.
Herman et al are actually as3ing the 9o&ernment to
permit
them to pirate the name of the Western Electric Company 2nc
#y
incorporating thereunder,s o they may decei&e the people of
the$hilippine 2slands into thin3ing that the goods they propose
to
sell are goods manufactured #y the real Western Electric. 2t
would #e a gross prostitution of the powers of go&ernment
to
utili/e those powers in such a way as to authori/e such a
fraud
upon the people go&erned.
