Documenti di Didattica
Documenti di Professioni
Documenti di Cultura
KAPUNAN, J.:
In this petition for review on certiorari under Rule 45 of the
Revised Rules of Court, Emerald Garment Manufacturing
Corporation seeks to annul the decision of the Court of Appeals
dated 29 November 1990 in CA-G.R. SP No. 15266 declaring
petitioner's trademark to be confusingly similar to that of private
respondent and the resolution dated 17 May 1991 denying
petitioner's motion for reconsideration.
The record reveals the following antecedent facts:
On 18 September 1981, private respondent H.D. Lee Co., Inc., a
foreign corporation organized under the laws of Delaware, U.S.A.,
filed with the Bureau of Patents, Trademarks & Technology
Transfer (BPTTT) a Petition for Cancellation of Registration No. SR
5054 (Supplemental Register) for the trademark "STYLISTIC MR.
LEE" used on skirts, jeans, blouses, socks, briefs, jackets, jogging
suits, dresses, shorts, shirts and lingerie under Class 25, issued on
27 October 1980 in the name of petitioner Emerald Garment
Manufacturing Corporation, a domestic corporation organized and
existing under Philippine laws. The petition was docketed as Inter
Partes Case No. 1558. 1
Private respondent, invoking Sec. 37 of R.A. No. 166 (Trademark
Law) and Art. VIII of the Paris Convention for the Protection of
Industrial Property, averred that petitioner's trademark "so closely
resembled its own trademark, 'LEE' as previously registered and
used in the Philippines, and not abandoned, as to be likely, when
applied to or used in connection with petitioner's goods, to cause
confusion, mistake and deception on the part of the purchasing
public as to the origin of the goods." 2
In its answer dated 23 March 1982, petitioner contended that its
trademark was entirely and unmistakably different from that of
private respondent and that its certificate of registration was
legally and validly granted. 3
On 20 February 1984, petitioner caused the publication of its
application for registration of the trademark "STYLISTIC MR. LEE"
in the Principal Register." 4
On 27 July 1984, private respondent filed a notice of opposition to
petitioner's application for registration also on grounds that
petitioner's trademark was confusingly similar to its "LEE"
PROVE COMMERCIAL
USE THEREOF BEFORE FILING OF APPLICATION FOR
REGISTRATION. 15
In addition, petitioner reiterates the issues it raised in the Court of
Appeals:
I. THE ISSUE INVOLVED IN THIS CASE IS WHETHER OR
NOT PETITIONER'S TRADEMARK SYTLISTIC MR. LEE, IS
CONFUSINGLY SIMILAR WITH THE PRIVATE
RESPONDENT'S TRADEMARK LEE OR LEE-RIDER, LEELEENS AND LEE-SURES.
II. PETITIONER'S EVIDENCES ARE CLEAR AND
SUFFICIENT TO SHOW THAT IT IS THE PRIOR USER AND
ITS TRADEMARK IS DIFFERENT FROM THAT OF THE
PRIVATE RESPONDENT.
III. PETITIONER'S TRADEMARK IS ENTIRELY DIFFERENT
FROM THE PRIVATE RESPONDENT'S AND THE
REGISTRATION OF ITS TRADEMARK IS PRIMA
FACIE EVIDENCE OF GOOD FAITH.
IV. PETITIONER'S "STYLISTIC MR. LEE" TRADEMARK
CANNOT BE CONFUSED WITH PRIVATE RESPONDENT'S
LEE TRADEMARK. 16
Petitioner contends that private respondent is estopped from
instituting an action for infringement before the BPTTT under the
28
29
and
34
we noted that:
35
is better
38
47
numerous
vouchers representing various advertising expenses in the
Philippines for "LEE" products.
48
expenses were incurred only in 1981 and 1982 by LEE (Phils.), Inc.
after it entered into a licensing agreement with private
respondent on 11 May 1981. 49
Republic Act (R.A.) No. 166, the Philippine Trademark Law. Due to
this failure, the Bureau of Patents cancelled Escobar's certificate
of registration.
On May 27, 1981, Escobar reapplied for registration of the
cancelled trademark. Mirpuri filed his own application for
registration of Escobar's trademark. Escobar later assigned her
application to herein petitioner and this application was opposed
by private respondent. The case was docketed as Inter Partes
Case No. 2049 (IPC No. 2049).
In its opposition, private respondent alleged that:
"(a) The Opposer has adopted the trademark BARBIZON (word),
sometime in June 1933 and has then used it on various kinds of
wearing apparel. On August 14, 1934, Opposer obtained from the
United States Patent Office a more recent registration of the said
mark under Certificate of Registration No. 316,161. On March 1,
1949, Opposer obtained from the United States Patent Office a
more recent registration for the said trademark under Certificate
of Registration No. 507,214, a copy of which is herewith attached
as Annex `A.' Said Certificate of Registration covers the following
goods-- wearing apparel: robes, pajamas, lingerie, nightgowns
and slips;
(b) Sometime in March 1976, Opposer further adopted the
trademark BARBIZON and Bee design and used the said mark in
various kinds of wearing apparel. On March 15, 1977, Opposer
secured from the United States Patent Office a registration of the
Before ruling on the issues of the case, there is need for a brief
background on the function and historical development of
trademarks and trademark law.
A "trademark" is defined under R.A. 166, the Trademark Law, as
including "any word, name, symbol, emblem, sign or device or
any combination thereof adopted and used by a manufacturer or
merchant to identify his goods and distinguish them from those
manufactured, sold or dealt in by others."[11] This definition has
been simplified in R.A. No. 8293, the Intellectual Property Code of
the Philippines, which defines a "trademark" as "any visible sign
capable of distinguishing goods."[12] In Philippine jurisprudence,
the function of a trademark is to point out distinctly the origin or
ownership of the goods to which it is affixed; to secure to him,
who has been instrumental in bringing into the market a superior
article of merchandise, the fruit of his industry and skill; to assure
the public that they are procuring the genuine article; to prevent
fraud and imposition; and to protect the manufacturer against
substitution and sale of an inferior and different article as his
product.[13]
Modern authorities on trademark law view trademarks as
performing three distinct functions: (1) they indicate origin or
ownership of the articles to which they are attached; (2) they
guarantee that those articles come up to a certain standard of
quality; and (3) they advertise the articles they symbolize. [14]
From the foregoing, I conclude that the opposer has not made out
a case of probable damage by the registration of the respondentapplicant's mark BARBIZON.
WHEREFORE, the opposition should be, as it is hereby,
DISMISSED. Accordingly, Application Serial No. 19010, for the
registration of the trademark BARBIZON of respondent Lolita R.
Escobar, is given due course."[38]
The decision in IPC No. 686 was a judgment on the merits and it
was error for the Court of Appeals to rule that it was not. A
judgment is on the merits when it determines the rights and
liabilities of the parties based on the disclosed facts, irrespective
of formal, technical or dilatory objections. [39] It is not necessary
that a trial should have been conducted. If the court's judgment is
general, and not based on any technical defect or objection, and
the parties had a full legal opportunity to be heard on their
respective claims and contentions, it is on the merits although
there was no actual hearing or arguments on the facts of the
case.[40] In the case at bar, the Director of Patents did not dismiss
private respondent's opposition on a sheer technicality. Although
no hearing was conducted, both parties filed their respective
pleadings and were given opportunity to present evidence. They,
however, waived their right to do so and submitted the case for
decision based on their pleadings. The lack of evidence did not
deter the Director of Patents from ruling on the case, particularly
on the issue of prior use, which goes into the very substance of
the relief sought by the parties. Since private respondent failed to
prove prior use of its trademark, Escobar's claim of first use was
upheld.
The judgment in IPC No. 686 being on the merits, petitioner and
the Solicitor General allege that IPC No. 686 and IPC No. 2049 also
comply with the fourth requisite of res judicata, i.e., they involve
the same parties and the same subject matter, and have identical
causes of action.
Undisputedly, IPC No. 686 and IPC No. 2049 involve the same
parties and the same subject matter. Petitioner herein is the
assignee of Escobar while private respondent is the same
American corporation in the first case. The subject matter of both
cases is the trademark "Barbizon." Private respondent counterargues, however, that the two cases do not have identical causes
of action. New causes of action were allegedly introduced in IPC
No. 2049, such as the prior use and registration of the trademark
in the United States and other countries worldwide, prior use in
the Philippines, and the fraudulent registration of the mark in
violation of Article 189 of the Revised Penal Code. Private
respondent also cited protection of the trademark under the
Convention of Paris for the Protection of Industrial Property,
specifically Article 6bis thereof, and the implementation of Article
6bis by two Memoranda dated November 20, 1980 and October
25, 1983 of the Minister of Trade and Industry to the Director of
Patents, as well as Executive Order (E.O.) No. 913.
this date, the country obligated itself to honor and enforce the
provisions of the Convention.[49]
In the case at bar, private respondent anchors its cause of action
on the first paragraph of Article 6bis of the Paris Convention which
reads as follows:
"Article 6bis
(1) The countries of the Union undertake, either
administratively if their legislation so permits, or at the
request of an interested party, to refuse or to cancel the
registration and to prohibit the use, of a trademark which
constitutes a reproduction, an imitation, or a translation,
liable to create confusion, of a mark considered by the
competent authority of the country of registration or use
to be well-known in that country as being already the
mark of a person entitled to the benefits of this
Convention and used for identical or similar goods. These
provisions shall also apply when the essential part of the
mark constitutes a reproduction of any such well-known
mark or an imitation liable to create confusion therewith.
(2) A period of at least five years from the date of registration
shall be allowed for seeking the cancellation of such a mark. The
countries of the Union may provide for a period within which the
prohibition of use must be sought.
(3) No time limit shall be fixed for seeking the cancellation or the
prohibition of the use of marks registered or used in bad faith." [50]
This Article governs protection of wellknown trademarks. Under the first paragraph, each country of
the Union bound itself to undertake to refuse or cancel the
registration, and prohibit the use of a trademark which is a
reproduction, imitation or translation, or any essential part of
which trademark constitutes a reproduction, liable to create
confusion, of a mark considered by the competent authority of the
country where protection is sought, to be well-known in the
country as being already the mark of a person entitled to the
benefits of the Convention, and used for identical or similar
goods.
Article 6bis was first introduced at The Hague in 1925 and
amended in Lisbon in 1952.[51] It is a self-executing provision and
does not require legislative enactment to give it effect in the
member country.[52] It may be applied directly by the tribunals and
officials of each member country by the mere publication or
proclamation of the Convention, after its ratification according to
the public law of each state and the order for its execution. [53]
The essential requirement under Article 6bis is that the trademark
to be protected must be "well-known" in the country where
protection is sought. The power to determine whether a
trademark is well-known lies in the "competent authority of the
country of registration or use." This competent authority would be
words, since the first and second cases involved the same issue of
ownership, then the first case was a bar to the second case.
In the instant case, the issue of ownership of the trademark
"Barbizon" was not raised in IPC No. 686. Private respondent's
opposition therein was merely anchored on:
(a) "confusing similarity" of its trademark with that of Escobar's;
(b) that the registration of Escobar's similar trademark will cause
damage to private respondent's business reputation and goodwill;
and
(c) that Escobar's use of the trademark amounts to an unlawful
appropriation of a mark previously used in the Philippines which
act is penalized under Section 4 (d) of the Trademark Law.
In IPC No. 2049, private respondent's opposition set forth several
issues summarized as follows:
(a) as early as 1933, it adopted the word "BARBIZON" as
trademark on its products such as robes, pajamas, lingerie,
nightgowns and slips;
(b) that the trademark "BARBIZON" was registered with the
United States Patent Office in 1934 and 1949; and that variations
of the same trademark, i.e., "BARBIZON" with Bee design and
"BARBIZON" with the representation of a woman were also
registered with the U.S. Patent Office in 1961 and 1976;
(c) that these marks have been in use in the Philippines and in
many countries all over the world for over forty years. "Barbizon"
products have been advertised in international publications and
the marks registered in 36 countries worldwide;
(d) Escobar's registration of the similar trademark "BARBIZON" in
1974 was based on fraud; and this fraudulent registration was
cancelled in 1979, stripping Escobar of whatsoever right she had
to the said mark;
(e) Private respondent's trademark is entitled to protection as a
well-known mark under Article 6bis of the Paris Convention,
Executive Order No. 913, and the two Memoranda dated
November 20, 1980 and October 25, 1983 of the Minister of Trade
and Industry to the Director of Patents;
(f) Escobar's trademark is identical to private respondent's and its
use on the same class of goods as the latter's amounts to a
violation of the Trademark Law and Article 189 of the Revised
Penal Code.
IPC No. 2049 raised the issue of ownership of the trademark, the
first registration and use of the trademark in the United States
and other countries, and the international recognition and
reputation of the trademark established by extensive use and
advertisement of private respondent's products for over forty
years here and abroad. These are different from the issues of
confusing similarity and damage in IPC No. 686. The issue of
prior use may have been raised in IPC No. 686 but this claim was
limited to prior use in the Philippines only. Prior use in IPC No.
2049 stems from private respondent's claim asoriginator of the
word and symbol "Barbizon,"[66] as the first and registered user of
the mark attached to its products which have been sold and
advertised worldwide for a considerable number of years prior to
petitioner's first application for registration of her trademark in
the Philippines. Indeed, these are substantial allegations that
raised new issues and necessarily gave private respondent a new
cause of action.Res judicata does not apply to rights, claims or
demands, although growing out of the same subject matter,
which constitute separate or distinct causes of action and were
not put in issue in the former action.[67]
Respondent corporation also introduced in the second case a fact
that did not exist at the time the first case was filed and
terminated. The cancellation of petitioner's certificate of
registration for failure to file the affidavit of use arose only after
IPC No. 686. It did not and could not have occurred in the first
case, and this gave respondent another cause to oppose the
second application. Res judicata extends only to facts and
conditions as they existed at the time judgment was rendered and
to the legal rights and relations of the parties fixed by the facts so
determined.[68] When new facts or conditions intervene before the
second suit, furnishing a new basis for the claims and defenses of
the parties, the issues are no longer the same, and the former
judgment cannot be pleaded as a bar to the subsequent action. [69]
It is also noted that the oppositions in the first and second cases
are based on different laws. The opposition in IPC No. 686 was
based on specific provisions of the Trademark Law, i.e., Section 4
(d)[70]on confusing similarity of trademarks and Section 8 [71] on the
requisite damage to file an opposition to a petition for
registration. The opposition in IPC No. 2049 invoked the Paris
Convention, particularly Article 6bis thereof, E.O. No. 913 and the
two Memoranda of the Minister of Trade and Industry. This
opposition also invoked Article 189 of the Revised Penal Code
which is a statute totally different from the Trademark Law.
[72]
[75]
Agreement. Among those annexed is the Agreement on TradeRelated Aspects of Intellectual Property Rights or TRIPs.
[86]
to give the reason for the delay, we are inclined to give due
course to his appeal due to the unique and peculiar facts of the
case and the serious question of law it poses. In the now almost
trite but still good principle, technicality, when it deserts its
proper office as an aid to justice and becomes its great hindrance
and chief enemy, deserves scant consideration. [11]
Petitioner likewise contends that the appellate court erred in
ruling that respondent's cause of action has not prescribed since
delegates to the Warsaw Convention clearly intended the two (2)year limitation incorporated in Art. 29 as an absolute bar to suit
and not to be made subject to the various tolling provisions of the
laws of the forum. Petitioner argues that in construing the second
paragraph of Art. 29 private respondent cannot read into it
Philippine rules on interruption of prescriptive periods and state
that his extrajudicial demand has interrupted the period of
prescription.[12] American jurisprudence has declared that "Art. 29
(2) was not intended to permit forums to consider local limitation
tolling provisions but only to let local law determine whether an
action had been commenced within the two-year period, since the
method of commencing a suit varies from country to country." [13]
Within our jurisdiction we have held that the Warsaw Convention
can be applied, or ignored, depending on the peculiar facts
presented by each case.[14] Thus, we have ruled that the
Convention's provisions do not regulate or exclude liability for
other breaches of contract by the carrier or misconduct of its
officers and employees, or for some particular or exceptional type
having been filed seven (7) months after her arrival at her port of
destination, she failed to comply with par. 12, subpar. (a) (1), of
the Air Waybill which expressly provided that the person entitled
to delivery must make a complaint to the carrier in writing in case
of visible damage to the goods, immediately after discovery of the
damage and at the latest within 14 days from receipt of the
goods. Despite non-compliance therewith the Court held that by
private respondent's immediate submission of a formal claim to
petitioner, which however was not immediately entertained as it
was referred from one employee to another, she was deemed to
have substantially complied with the requirement. The Court
noted that with private respondent's own zealous efforts in
pursuing her claim it was clearly not her fault that the letter of
demand for damages could only be filed, after months of
exasperating follow-up of the claim, on 13 August 1990, and that
if there was any failure at all to file the formal claim within the
prescriptive period contemplated in the Air Waybill, this was
largely because of the carrier's own doing, the consequences of
which could not in all fairness be attributed to private respondent.
In the same vein must we rule upon the circumstances brought
before us. Verily, respondent filed his complaint more than two (2)
years later, beyond the period of limitation prescribed by the
Warsaw Convention for filing a claim for damages. However, it is
obvious that respondent was forestalled from immediately filing
an action because petitioner airline gave him the runaround,
answering his letters but not giving in to his demands. True,
Singapore Airlines in Manila conjunction tickets for Manila Singapore - Athens - Larnaca - Rome - Turin - Zurich - Geneva Copenhagen - New York. The petitioner was not a participating
airline in any of the segments in the itinerary under the said
conjunction tickets. In Geneva the petitioner decided to forego his
trip to Copenhagen and to go straight to New York and in the
absence of a direct flight under his conjunction tickets from
Geneva to New York, the private respondent on June 7, 1989
exchanged the unused portion of the conjunction ticket for a oneway ticket from Geneva to New York from the petitioner airline.
Petitioner issued its own ticket to the private respondent in
Geneva and claimed the value of the unused portion of the
conjunction ticket from the IATA[2] clearing house in
Geneva. Ncmmis
In September 1989, private respondent filed an action for
damages before the regional trial court of Cebu for the alleged
embarassment and mental anguish he suffered at the Geneva
Airport when the petitioners security officers prevented him from
boarding the plane, detained him for about an hour and allowed
him to board the plane only after all the other passengers have
boarded. The petitioner filed a motion to dismiss for lack of
over the lines of another carrier does so only as its agent" does
not apply herein, as neither Singapore Airlines nor the petitioner
issued a ticket to the private respondent covering the route of the
other. Since the conjunction tickets issued by Singapore Airlines
do not include the route covered by the ticket issued by the
petitioner, the petitioner airline submits that it did not act as an
agent of Singapore Airlines. Sdaa miso
Private respondent controverts the applicability of the Warsaw
Convention in this case. He posits that under Article 17 of the
Warsaw Convention[3] a carrier may be held liable for damages if
the "accident" occurred on board the airline or in the course of
"embarking or disembarking" from the carrier and that under
Article 25 (1)[4] thereof the provisions of the convention will not
apply if the damage is caused by the "willful misconduct" of the
carrier. He argues that his cause of action is based on the incident
at the pre-departure area of the Geneva airport and not during
the process of embarking nor disembarking from the carrier and
that security officers of the petitioner airline acted in bad faith.
Accordingly, this case is released from the terms of the
Convention. Private respondent argues that assuming that the
convention applies, his trip to nine cities in different countries
performed by different carriers under the conjunction tickets
issued in Manila by Singapore Airlines is regarded as a single
transaction; as such the final leg of his trip from Geneva to New
York with the petitioner airline is part and parcel of the original
contract of carriage perfected in Manila. Thus, the third option of
the plaintiff under Art. 28 (1) e.g., where the carrier has a place of
business through which the contract of carriage was made,
applies herein and the case was properly filed in the Philippines.
The private respondent seeks affirmance of the ruling of the lower
courts that the petitioner acted as an agent of Singapore Airlines
under the IATA Rules and as an agent of the principal carrier the
petitioner may be held liable under the contract of carriage
perfected in Manila, citing the judicial admission made by the
petitioner that it claimed the value of the unused portion of the
private respondents conjunction tickets from the IATA Clearing
House in Geneva where the accounts of both airlines are
respectively credited and debited. Accordingly, the petitioner
cannot now deny the contract of agency with Singapore Airlines
after it honored the conjunction tickets issued by the latter. Sdaad
The petition is without merit.
The Warsaw Convention to which the Republic of the Philippines is
a party and which has the force and effect of law in this country
applies to all international transportation of persons, baggage or
goods performed by an aircraft gratuitously or for hire. [5] As
enumerated in the Preamble of the Convention, one of the
objectives is "to regulate in a uniform manner the conditions of
international transportation by air". [6] The contract of carriage
entered into by the private respondent with Singapore Airlines,
and subsequently with the petitioner, to transport him to nine
cities in different countries with New York as the final destination
is a contract of international transportation and the provisions of
The issue raised in SP No. 31452 which is whether or not the trial
court committed grave abuse of discretion in ordering the
deposition of the petitioners security officer taken in Geneva to be
stricken off the record for failure of the said security officer to
appear before the Philippine consul in Geneva to answer the
cross-interrogatories filed by the private respondent does not
have to be resolved. The subsequent appearance of the said
security officer before the Philippine consul in Geneva on
September 19, 1994 and the answer to the cross-interrogatories
propounded by the private respondent was transmitted to the trial
court by the Philippine consul in Geneva on September 23,
1994[15] should be deemed as full compliance with the requisites
of the right of the private respondent to cross-examine the
petitioners witness. The deposition filed by the petitioner should
be reinstated as part of the evidence and considered together
with the answer to the cross-interrogatories.
WHEREFORE, the judgment of the appellate court in CA-G.R. SP
No. 30946 is affirmed. The case is ordered remanded to the court
of origin for further proceedings. The decision of the appellate
court in CA-G.R. SP. No. 31452 is set aside. The deposition of the
petitioners security officer is reinstated as part of the
evidence. Misj uris
SO ORDERED.
Melo, (Chairman), Vitug, Panganiban, and Purisima, JJ., concur.
SECOND DIVISION
Present:
- versus - QUISUMBING, J., Chairperson,
CARPIO,
CARPIO MORALES,
HON. ALBERTO A. LERMA, in TINGA, and
his capacity as Presiding Judge of VELASCO, JR., JJ.
Branch 256 of Regional Trial
Court of Muntinlupa City, and
PACIFIC GENERAL STEEL Promulgated:
MANUFACTURING
CORPORATION,
Respondents. January 7, 2008
x-----------------------------------------------------------------------------------------x
DECISION
would pay USD 1,224,000. KOGIES would install and initiate the
operation of the plant for which PGSMC bound itself to pay USD
306,000 upon the plants production of the 11-kg. LPG cylinder
samples. Thus, the total contract price amounted to USD
1,530,000.
On May 14, 1998, PGSMC replied that the two checks it issued
KOGIES were fully funded but the payments were stopped for
reasons previously made known to KOGIES.[7]
On June 15, 1998, KOGIES wrote PGSMC informing the latter that
PGSMC could not unilaterally rescind their contract nor dismantle
and transfer the machineries and equipment on mere imagined
violations by KOGIES. It also insisted that their disputes should be
settled by arbitration as agreed upon in Article 15, the arbitration
clause of their contract.
On July 29, 1998, KOGIES filed its Reply to Answer and Answer to
Counterclaim.[11] KOGIES denied it had altered the quantity and
lowered the quality of the machinery, equipment, and facilities it
delivered to the plant. It claimed that it had performed all the
undertakings under the contract and had already produced
certified samples of LPG cylinders. It averred that whatever was
unfinished was PGSMCs fault since it failed to procure raw
materials due to lack of funds. KOGIES, relying on Chung Fu
Industries (Phils.), Inc. v. Court of Appeals,[12] insisted that the
arbitration clause was without question valid.
Ten days after, on October 12, 1998, without waiting for the
resolution of its October 2, 1998 urgent motion for
reconsideration, KOGIES filed before the Court of Appeals (CA) a
petition for certiorari[18] docketed as CA-G.R. SP No. 49249,
seeking annulment of the July 23, 1998 and September 21, 1998
RTC Orders and praying for the issuance of writs of prohibition,
mandamus, and preliminary injunction to enjoin the RTC and
PGSMC from inspecting, dismantling, and transferring the
machineries and equipment in the Carmona plant, and to direct
the RTC to enforce the specific agreement on arbitration to
resolve the dispute.
Thereafter, KOGIES filed a Supplement to the Petition[20] in CAG.R. SP No. 49249 informing the CA about the October 19, 1998
RTC Order. It also reiterated its prayer for the issuance of the writs
of prohibition, mandamus and preliminary injunction which was
not acted upon by the CA. KOGIES asserted that the Branch
Sheriff did not have the technical expertise to ascertain whether
or not the machineries and equipment conformed to the
specifications in the contract and were properly installed.
finding of the RTC that PGSMC fully paid the price of USD
1,224,000, which was for all the machineries and equipment.
According to the CA, this determination by the RTC was a factual
finding beyond the ambit of a petition for certiorari.
Furthermore, the CA held that the petition for certiorari had been
filed prematurely since KOGIES did not wait for the resolution of
its urgent motion for reconsideration of the September 21, 1998
RTC Order which was the plain, speedy, and adequate remedy
available. According to the CA, the RTC must be given the
opportunity to correct any alleged error it has committed, and
The Issues
c.
d.
e.
f.
On July 17, 1998, at the time PGSMC filed its Answer incorporating
its counterclaims against KOGIES, it was not liable to pay filing
fees for said counterclaims being compulsory in nature. We stress,
however, that effective August 16, 2004 under Sec. 7, Rule 141,
as amended by A.M. No. 04-2-04-SC, docket fees are now required
to be paid in compulsory counterclaim or cross-claims.
The reason behind the rule is to enable the lower court, in the first
instance, to pass upon and correct its mistakes without the
intervention of the higher court.[30]
The September 21, 1998 RTC Order directing the branch sheriff to
inspect the plant, equipment, and facilities when he is not
competent and knowledgeable on said matters is evidently flawed
and devoid of any legal support. Moreover, there is an urgent
necessity to resolve the issue on the dismantling of the facilities
and any further delay would prejudice the interests of KOGIES.
Indeed, there is real and imminent threat of irreparable
destruction or substantial damage to KOGIES equipment and
machineries. We find the resort to certiorari based on the gravely
abusive orders of the trial court sans the ruling on the October 2,
1998 motion for reconsideration to be proper.
Petitioner claims the RTC and the CA erred in ruling that the
arbitration clause is null and void.
Petitioner is correct.
Established in this jurisdiction is the rule that the law of the place
where the contract is made governs. Lex loci contractus. The
contract in this case was perfected here in the Philippines.
Therefore, our laws ought to govern. Nonetheless, Art. 2044 of the
Civil Code sanctions the validity of mutually agreed arbitral clause
or the finality and binding effect of an arbitral award. Art. 2044
provides, Any stipulation that the arbitrators award or decision
shall be final, is valid, without prejudice to Articles 2038, 2039
and 2040. (Emphasis supplied.)
Under Sec. 24, the RTC does not have jurisdiction over disputes
that are properly the subject of arbitration pursuant to an
arbitration clause, and mandates the referral to arbitration in such
cases, thus:
xxxx
xxxx
xxxx
Thus, while the RTC does not have jurisdiction over disputes
governed by arbitration mutually agreed upon by the parties, still
the foreign arbitral award is subject to judicial review by the RTC
which can set aside, reject, or vacate it. In this sense, what this
Court held in Chung Fu Industries (Phils.), Inc. relied upon by
KOGIES is applicable insofar as the foreign arbitral awards, while
final and binding, do not oust courts of jurisdiction since these
arbitral awards are not absolute and without exceptions as they
are still judicially reviewable. Chapter 7 of RA 9285 has made it
clear that all arbitral awards, whether domestic or foreign, are
subject to judicial review on specific grounds provided for.
(4) Grounds for judicial review different in domestic and foreign
arbitral awards
The losing party who appeals from the judgment of the court
confirming an arbitral award shall be required by the appellate
court to post a counterbond executed in favor of the prevailing
The issues arising from the contract between PGSMC and KOGIES
on whether the equipment and machineries delivered and
installed were properly installed and operational in the plant in
Carmona, Cavite; the ownership of equipment and payment of the
contract price; and whether there was substantial compliance by
KOGIES in the production of the samples, given the alleged fact
that PGSMC could not supply the raw materials required to
produce the sample LPG cylinders, are matters proper for
arbitration. Indeed, we note that on July 1, 1998, KOGIES
instituted an Application for Arbitration before the KCAB in Seoul,
Korea pursuant to Art. 15 of the Contract as amended. Thus, it is
incumbent upon PGSMC to abide by its commitment to arbitrate.
For these reasons, the September 21, 1998 and October 19, 1998
RTC Orders pertaining to the grant of the inspection of the
equipment and machineries have to be recalled and nullified.
Anent the July 23, 1998 Order denying the issuance of the
injunctive writ paving the way for PGSMC to dismantle and
transfer the equipment and machineries, we find it to be in order
considering the factual milieu of the instant case.
(f) Either party may apply with the Court for assistance in
implementing or enforcing an interim measure ordered by an
arbitral tribunal.
(g) A party who does not comply with the order shall be liable for
all damages resulting from noncompliance, including all expenses,
and reasonable attorney's fees, paid in obtaining the orders
judicial enforcement. (Emphasis ours.)
(b) Take action that would prevent, or refrain from taking action
that is likely to cause, current or imminent harm or prejudice to
the arbitral process itself;
It is thus beyond cavil that the RTC has authority and jurisdiction
to grant interim measures of protection.
(2) The September 21, 1998 and October 19, 1998 RTC Orders in
Civil Case No. 98-117 are REVERSED and SET ASIDE;
No pronouncement as to costs.
SO ORDERED.
DECISION
KAPUNAN, J.:
land. The new foreign hire is faced with economic realities: decent
abode for oneself and/or for one's family, effective means of
transportation, allowance for the education of one's children,
adequate insurance against illness and death, and of course the
primary benefit of a basic salary/retirement compensation.
The principle "equal pay for equal work" does not find application
in the present case. The international character of the School
requires the hiring of foreign personnel to deal with different
nationalities and different cultures, among the student population.
We cannot agree.
x x x.
hires, and justify the exclusion of the former from the latter. To
include foreign-hires in a bargaining unit with local-hires would
not assure either group the exercise of their respective collective
bargaining rights.
SO ORDERED.