CASE 1

SECOND DIVISION

G.R. No. 115758      March 19, 2002

ELIDAD C. KHO, doing business under the name and style of KEC COSMETICS LABORATORY,
petitioner,
vs.
HON. COURT OF APPEALS, SUMMERVILLE GENERAL MERCHANDISING and
COMPANY, and ANG TIAM CHAY, respondents.

DE LEON, JR., J.:

Before us is a petition for review on certiorari of the Decision1 dated May 24, 1993 of the Court of
Appeals setting aside and declaring as null and void the Orders 2 dated February 10, 1992 and March
19, 1992 of the Regional Trial Court, Branch 90, of Quezon City granting the issuance of a writ of
preliminary injunction.

The facts of the case are as follows:

On December 20, 1991, petitioner Elidad C. Kho filed a complaint for injunction and damages with a
prayer for the issuance of a writ of preliminary injunction, docketed as Civil Case No. Q-91-10926,
against the respondents Summerville General Merchandising and Company (Summerville, for
brevity) and Ang Tiam Chay.

The petitioner's complaint alleges that petitioner, doing business under the name and style of KEC
Cosmetics Laboratory, is the registered owner of the copyrights Chin Chun Su and Oval Facial
Cream Container/Case, as shown by Certificates of Copyright Registration No. 0-1358 and No. 0-
3678; that she also has patent rights on Chin Chun Su & Device and Chin Chun Su for medicated
cream after purchasing the same from Quintin Cheng, the registered owner thereof in the
Supplemental Register of the Philippine Patent Office on February 7, 1980 under Registration
Certificate No. 4529; that respondent Summerville advertised and sold petitioner's cream products
under the brand name Chin Chun Su, in similar containers that petitioner uses, thereby misleading
the public, and resulting in the decline in the petitioner's business sales and income; and, that the
respondents should be enjoined from allegedly infringing on the copyrights and patents of the
petitioner.

The respondents, on the other hand, alleged as their defense that Summerville is the exclusive and
authorized importer, re-packer and distributor of Chin Chun Su products manufactured by Shun Yi
Factory of Taiwan; that the said Taiwanese manufacturing company authorized Summerville to
register its trade name Chin Chun Su Medicated Cream with the Philippine Patent Office and other
appropriate governmental agencies; that KEC Cosmetics Laboratory of the petitioner obtained the
copyrights through misrepresentation and falsification; and, that the authority of Quintin Cheng,
assignee of the patent registration certificate, to distribute and market Chin Chun Su products in the
Philippines had already been terminated by the said Taiwanese Manufacturing Company.

After due hearing on the application for preliminary injunction, the trial court granted the same in an
Order dated February 10, 1992, the dispositive portion of which reads:
 ACCORDINGLY, the application of plaintiff Elidad C. Kho, doing business under the style of
KEC Cosmetic Laboratory, for preliminary injunction, is hereby granted. Consequentially,
plaintiff is required to file with the Court a bond executed to defendants in the amount of five
hundred thousand pesos (P500,000.00) to the effect that plaintiff will pay to defendants all
damages which defendants may sustain by reason of the injunction if the Court should finally
decide that plaintiff is not entitled thereto.

SO ORDERED.3

The respondents moved for reconsideration but their motion for reconsideration was denied by the
trial court in an Order dated March 19, 1992. 4

On April 24, 1992, the respondents filed a petition for certiorari with the Court of Appeals, docketed
as CA-G.R. SP No. 27803, praying for the nullification of the said writ of preliminary injunction issued
by the trial court. After the respondents filed their reply and almost a month after petitioner submitted
her comment, or on August 14 1992, the latter moved to dismiss the petition for violation of Supreme
Court Circular No. 28-91, a circular prohibiting forum shopping. According to the petitioner, the
respondents did not state the docket number of the civil case in the caption of their petition and,
more significantly, they did not include therein a certificate of non-forum shopping. The respondents
opposed the petition and submitted to the appellate court a certificate of non-forum shopping for their
petition.

On May 24, 1993, the appellate court rendered a Decision in CA-G.R. SP No. 27803 ruling in favor
of the respondents, the dispositive portion of which reads:

WHEREFORE, the petition is hereby given due course and the orders of respondent court
dated February 10, 1992 and March 19, 1992 granting the writ of preliminary injunction and
denying petitioners' motion for reconsideration are hereby set aside and declared null and
void. Respondent court is directed to forthwith proceed with the trial of Civil Case No. Q-91-
10926 and resolve the issue raised by the parties on the merits.

SO ORDERED.5

In granting the petition, the appellate court ruled that:

The registration of the trademark or brandname "Chin Chun Su" by KEC with the
supplemental register of the Bureau of Patents, Trademarks and Technology Transfer
cannot be equated with registration in the principal register, which is duly protected by the
Trademark Law. 1âwphi1.nêt

xxx      xxx      xxx

As ratiocinated in La Chemise Lacoste, S.S. vs. Fernandez, 129 SCRA 373, 393:

"Registration in the Supplemental Register, therefore, serves as notice that the

registrant is using or has appropriated the trademark. By the very fact that the
trademark cannot as yet be on guard and there are certain defects, some obstacles
which the use must still overcome before he can claim legal ownership of the mark or
ask the courts to vindicate his claims of an exclusive right to the use of the same. It
would be deceptive for a party with nothing more than a registration in the
 Supplemental Register to posture before courts of justice as if the registration is in
the Principal Register.

The reliance of the private respondent on the last sentence of the Patent office action
on application Serial No. 30954 that 'registrants is presumed to be the owner of the
mark until after the registration is declared cancelled' is, therefore, misplaced and
grounded on shaky foundation. The supposed presumption not only runs counter to
the precept embodied in Rule 124 of the Revised Rules of Practice before the
Philippine Patent Office in Trademark Cases but considering all the facts ventilated
before us in the four interrelated petitions involving the petitioner and the respondent,
it is devoid of factual basis. As even in cases where presumption and precept may
factually be reconciled, we have held that the presumption is rebuttable, not
conclusive, (People v. Lim Hoa, G.R. No. L-10612, May 30, 1958, Unreported). One
may be declared an unfair competitor even if his competing trademark is registered
(Parke, Davis & Co. v. Kiu Foo & Co., et al., 60 Phil 928; La Yebana Co. v. chua
Seco & Co., 14 Phil 534)."6

The petitioner filed a motion for reconsideration. This she followed with several motions to declare
respondents in contempt of court for publishing advertisements notifying the public of the
promulgation of the assailed decision of the appellate court and stating that genuine Chin Chun
Su products could be obtained only from Summerville General Merchandising and Co.

In the meantime, the trial court went on to hear petitioner's complaint for final injunction and
damages. On October 22, 1993, the trial court rendered a Decision 7 barring the petitioner from using
the trademark Chin Chun Su and upholding the right of the respondents to use the same, but
recognizing the copyright of the petitioner over the oval shaped container of her beauty cream. The
trial court did not award damages and costs to any of the parties but to their respective counsels
were awarded Seventy-Five Thousand Pesos (P75,000.00) each as attorney's fees. The petitioner
duly appealed the said decision to the Court of Appeals.

On June 3, 1994, the Court of Appeals promulgated a Resolution 8 denying the petitioner's motions
for reconsideration and for contempt of court in CA-G.R. SP No. 27803.

Hence, this petition anchored on the following assignment of errors:

RESPONDENT HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE OF

DISCRETION AMOUNTING TO LACK OF JURISDICTION IN FAILING TO RULE ON
PETITIONER'S MOTION TO DISMISS.

II

RESPONDENT HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE OF

DISCRETION AMOUNTING TO LACK OF JURISDICTION IN REFUSING TO PROMPTLY
RESOLVE PETITIONER'S MOTION FOR RECONSIDERATION.

III
 IN DELAYING THE RESOLUTION OF PETITIONER'S MOTION FOR RECONSIDERATION,
THE HONORABLE COURT OF APPEALS DENIED PETITIONER'S RIGHT TO SEEK
TIMELY APPELLATE RELIEF AND VIOLATED PETITIONER'S RIGHT TO DUE PROCESS.

IV

RESPONDENT HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE OF

DISCRETION AMOUNTING TO LACK OF JURISDICTION IN FAILING TO CITE THE
PRIVATE RESPONDENTS IN CONTEMPT.9

The petitioner faults the appellate court for not dismissing the petition on the ground of violation of
Supreme Court Circular No. 28-91. Also, the petitioner contends that the appellate court violated
Section 6, Rule 9 of the Revised Internal Rules of the Court of Appeals when it failed to rule on her
motion for reconsideration within ninety (90) days from the time it is submitted for resolution. The
appellate court ruled only after the lapse of three hundred fifty-four (354) days, or on June 3, 1994.
In delaying the resolution thereof, the appellate court denied the petitioner's right to seek the timely
appellate relief. Finally, petitioner describes as arbitrary the denial of her motions for contempt of
court against the respondents.

We rule in favor of the respondents.

Pursuant to Section 1, Rule 58 of the Revised Rules of Civil Procedure, one of the grounds for the
issuance of a writ of preliminary injunction is a proof that the applicant is entitled to the relief
demanded, and the whole or part of such relief consists in restraining the commission or
continuance of the act or acts complained of, either for a limited period or perpetually. Thus, a
preliminary injunction order may be granted only when the application for the issuance of the same
shows facts entitling the applicant to the relief demanded. 10 This is the reason why we have ruled
that it must be shown that the invasion of the right sought to be protected is material and substantial,
that the right of complainant is clear and unmistakable, and, that there is an urgent and paramount
necessity for the writ to prevent serious damage.11

In the case at bar, the petitioner applied for the issuance of a preliminary injunctive order on the
ground that she is entitled to the use of the trademark on Chin Chun Su and its container based on
her copyright and patent over the same. We first find it appropriate to rule on whether the copyright
and patent over the name and container of a beauty cream product would entitle the registrant to the
use and ownership over the same to the exclusion of others.

Trademark, copyright and patents are different intellectual property rights that cannot be
interchanged with one another. A trademark is any visible sign capable of distinguishing the goods
(trademark) or services (service mark) of an enterprise and shall include a stamped or marked
container of goods.12 In relation thereto, a trade name means the name or designation identifying or
distinguishing an enterprise.13 Meanwhile, the scope of a copyright is confined to literary and artistic
works which are original intellectual creations in the literary and artistic domain protected from the
moment of their creation.14 Patentable inventions, on the other hand, refer to any technical solution of
a problem in any field of human activity which is new, involves an inventive step and is industrially
applicable.15

Petitioner has no right to support her claim for the exclusive use of the subject trade name and its
container. The name and container of a beauty cream product are proper subjects of a trademark
inasmuch as the same falls squarely within its definition. In order to be entitled to exclusively use the
same in the sale of the beauty cream product, the user must sufficiently prove that she registered or
used it before anybody else did. The petitioner's copyright and patent registration of the name and
container would not guarantee her the right to the exclusive use of the same for the reason that they
are not appropriate subjects of the said intellectual rights. Consequently, a preliminary injunction
order cannot be issued for the reason that the petitioner has not proven that she has a clear right
over the said name and container to the exclusion of others, not having proven that she has
registered a trademark thereto or used the same before anyone did.

We cannot likewise overlook the decision of the trial court in the case for final injunction and
damages. The dispositive portion of said decision held that the petitioner does not have trademark
rights on the name and container of the beauty cream product. The said decision on the merits of the
trial court rendered the issuance of the writ of a preliminary injunction moot and academic
notwithstanding the fact that the same has been appealed in the Court of Appeals. This is supported
by our ruling in La Vista Association, Inc. v. Court of Appeals16, to wit:

Considering that preliminary injunction is a provisional remedy which may be granted at any
time after the commencement of the action and before judgment when it is established that
the plaintiff is entitled to the relief demanded and only when his complaint shows facts
entitling such reliefs xxx and it appearing that the trial court had already granted the
issuance of a final injunction in favor of petitioner in its decision rendered after trial on the
merits xxx the Court resolved to Dismiss the instant petition having been rendered moot and
academic. An injunction issued by the trial court after it has already made a clear
pronouncement as to the plaintiff's right thereto, that is, after the same issue has been
decided on the merits, the trial court having appreciated the evidence presented, is proper,
notwithstanding the fact that the decision rendered is not yet final xxx. Being an ancillary
remedy, the proceedings for preliminary injunction cannot stand separately or proceed
independently of the decision rendered on the merit of the main case for injunction. The
merit of the main case having been already determined in favor of the applicant, the
preliminary determination of its non-existence ceases to have any force and effect. (italics
supplied)

La Vista categorically pronounced that the issuance of a final injunction renders any question on the
preliminary injunctive order moot and academic despite the fact that the decision granting a final
injunction is pending appeal. Conversely, a decision denying the applicant-plaintiff's right to a final
injunction, although appealed, renders moot and academic any objection to the prior dissolution of a
writ of preliminary injunction.

The petitioner argues that the appellate court erred in not dismissing the petition for certiorari for
non-compliance with the rule on forum shopping. We disagree. First, the petitioner improperly raised
the technical objection of non-compliance with Supreme Court Circular No. 28-91 by filing a motion
to dismiss the petition for certiorari filed in the appellate court. This is prohibited by Section 6, Rule
66 of the Revised Rules of Civil Procedure which provides that "(I)n petitions for certiorari before the
Supreme Court and the Court of Appeals, the provisions of Section 2, Rule 56, shall be observed.
Before giving due course thereto, the court may require the respondents to file their comment
to, and not a motion to dismiss, the petition xxx (italics supplied)". Secondly, the issue was raised
one month after petitioner had filed her answer/comment and after private respondent had replied
thereto. Under Section 1, Rule 16 of the Revised Rules of Civil Procedure, a motion to dismiss shall
be filed within the time for but before filing the answer to the complaint or pleading asserting a claim.
She therefore could no longer submit a motion to dismiss nor raise defenses and objections not
included in the answer/comment she had earlier tendered. Thirdly, substantial justice and equity
require this Court not to revive a dissolved writ of injunction in favor of a party without any legal right
thereto merely on a technical infirmity. The granting of an injunctive writ based on a technical ground
rather than compliance with the requisites for the issuance of the same is contrary to the primary
objective of legal procedure which is to serve as a means to dispense justice to the deserving party.
The petitioner likewise contends that the appellate court unduly delayed the resolution of her motion
for reconsideration. But we find that petitioner contributed to this delay when she filed successive
contentious motions in the same proceeding, the last of which was on October 27, 1993,
necessitating counter-manifestations from private respondents with the last one being filed on
November 9, 1993. Nonetheless, it is well-settled that non-observance of the period for deciding
cases or their incidents does not render such judgments ineffective or void. 17 With respect to the
purported damages she suffered due to the alleged delay in resolving her motion for reconsideration,
we find that the said issue has likewise been rendered moot and academic by our ruling that she has
no right over the trademark and, consequently, to the issuance of a writ of preliminary injunction.
1âwphi1.nêt

Finally, we rule that the Court of Appeals correctly denied the petitioner's several motions for
contempt of court. There is nothing contemptuous about the advertisements complained of which, as
regards the proceedings in CA-G.R. SP No. 27803 merely announced in plain and straightforward
language the promulgation of the assailed Decision of the appellate court. Moreover, pursuant to
Section 4 of Rule 39 of the Revised Rules of Civil Procedure, the said decision nullifying the
injunctive writ was immediately executory.

WHEREFORE, the petition is DENIED. The Decision and Resolution of the Court of Appeals dated
May 24, 1993 and June 3, 1994, respectively, are hereby AFFIRMED. With costs against the
petitioner.

SO ORDERED.

Bellosillo, Mendoza, Quisumbing, and Buena, JJ., concur.

FACTS:

Petitioner Elidad C. Kho filed a complaint for injunction and damages with a prayer for the
issuance of a writ of preliminary injunction against Summerville alleging that petitioner is the
registered owner of the copyrights Chin Chun Su and Oval Facial Cream Container/Case; that
she also has patent rights on Chin Chun Su after purchasing the same from Quintin Cheng, the
registered owner thereof; that respondent Summerville advertised and sold petitioner’s cream
products under the brand name Chin Chun Su, in similar containers that petitioner uses, thereby
misleading the public, and resulting in the decline in the petitioner’s business sales and income;
and, that the respondents should be enjoined from allegedly infringing on the copyrights and
patents of the petitioner.

The respondents alleged that Summerville is the exclusive and authorized importer, re-packer
and distributor of Chin Chun Su products manufactured by Shun Yi Factory of Taiwan.

The RTC ruled in favor of KEC.

After the denial of their motion for reconsideration, respondents filed a petition for certiorari
with the CA, praying for the nullification of the said writ of preliminary injunction issued by the
trial court. The CA rendered a Decision in favor of the respondents.
In the meantime, the trial court went on to hear petitioner’s complaint for final injunction and
damages. The trial court rendered a Decision barring the petitioner from using the trademark
Chin Chun Su and upholding the right of the respondents to use the same, but recognizing the
copyright of the petitioner over the oval shaped container of the  beauty cream.

The petitioner appealed to the CA.

The CA denied the petitioner’s motions for reconsideration. Hence, this petition.

ISSUE:

Whether the copyright and patent over the name and container of a beauty cream product would
entitle the registrant to the use and ownership over the same to the exclusion of others.

RULING:

We rule in favor of the respondents.

Trademark, copyright and patents are different intellectual property rights that cannot be
interchanged with one another.

A trademark is any visible sign capable of distinguishing the goods (trademark) or services
(service mark) of an enterprise and shall include a stamped or marked container of goods. In
relation thereto, a trade name means the name or designation identifying or distinguishing an
enterprise.

Meanwhile, the scope of a copyright is confined to literary and artistic works which are original
intellectual creations in the literary and artistic domain protected from the moment of their
creation. Patentable inventions, on the other hand, refer to any technical solution of a problem in
any field of human activity which is new, involves an inventive step and is industrially
applicable.

Petitioner has no right to support her claim for the exclusive use of the subject trade name and its
container. The name and container of a beauty cream product are proper subjects of a trademark
inasmuch as the same falls squarely within its definition. In order to be entitled to exclusively
use the same in the sale of the beauty cream product, the user must sufficiently prove that she
registered or used it before anybody else did. The petitioner’s copyright and patent registration of
the name and container would not guarantee her the right to the exclusive use of the same for the
reason that they are not appropriate subjects of the said intellectual rights.

Consequently, a preliminary injunction order cannot be issued for the reason that the petitioner
has not proven that she has a clear right over the said name and container to the exclusion of
others, not having proven that she has registered a trademark thereto or used the same before
anyone did.

KHO V. CA (CASE DIGEST. G.R. NO. 115758)

CASE DIGEST: 429 Phil. 140. SECOND DIVISION [ G.R. No. 115758,
March 19, 2002 ] ELIDAD C. KHO, DOING BUSINESS UNDER THE
NAME AND STYLE OF KEC COSMETICS LABORATORY,
PETITIONER, VS. HON. COURT OF APPEALS, SUMMERVILLE
GENERAL MERCHANDISING AND COMPANY, AND ANG TIAM
CHAY, RESPONDENTS. DE LEON, JR., J.:

FACTS: On December 20, 1991, petitioner Elidad C. Kho filed a complaint for
injunction and damages with a prayer for the issuance of a writ of preliminary
injunction, docketed as Civil Case No. Q-91-10926, against the respondents
Summerville General Merchandising and Company (Summerville, for brevity)
and Ang Tiam Chay.

The petitioner’s complaint alleges that petitioner, doing business under the name
and style of KEC Cosmetics Laboratory, is the registered owner of the copyrights
Chin Chun Su and Oval Facial Cream Container/Case, as shown by Certificates of
Copyright Registration No. 0-1358 and No. 0-3678; that she also has patent
rights on Chin Chun Su & Device and Chin Chun Su for medicated cream after
purchasing the same from Quintin Cheng, the registered owner thereof in the
Supplemental Register of the Philippine Patent Office on February 7, 1980 under
Registration Certificate No. 4529; that respondent Summerville advertised and
sold petitioner’s cream products under the brand name Chin Chun Su, in similar
containers that petitioner uses, thereby misleading the public, and resulting in
the decline in the petitioner’s business sales and income; and, that the
respondents should be enjoined from allegedly infringing on the copyrights and
patents of the petitioner.

The respondents, on the other hand, alleged as their defense that Summerville is
the exclusive and authorized importer, re-packer and distributor of Chin Chun Su
products manufactured by Shun Yi Factory of Taiwan; that the said Taiwanese
manufacturing company authorized Summerville to register its trade name Chin
Chun Su Medicated Cream with the Philippine Patent Office and other
appropriate governmental agencies; that KEC Cosmetics Laboratory of the
petitioner obtained the copyrights through misrepresentation and falsification;
and, that the authority of Quintin Cheng, assignee of the patent registration
certificate, to distribute and market Chin Chun Su products in the Philippines
had already been terminated by the said Taiwanese Manufacturing Company.

After due hearing on the application for preliminary injunction, the trial court
granted the same in an Order dated February 10, 1992. Motion for
reconsideration, denied.

On April 24, 1992, the respondents filed a petition for certiorari with the Court of
Appeals, docketed as CA-G.R. SP No. 27803, praying for the nullification of the
said writ of preliminary injunction issued by the trial court. After the respondents
filed their reply and almost a month after petitioner submitted her comment, or
on August 14 1992, the latter moved to dismiss the petition for violation of
Supreme Court Circular No. 28-91, a circular prohibiting forum shopping.
According to the petitioner, the respondents did not state the docket number of
the civil case in the caption of their petition and, more significantly, they did not
include therein a certificate of non-forum shopping. The respondents opposed
the petition and submitted to the appellate court a certificate of non-forum
shopping for their petition.

On May 24, 1993, the appellate court rendered a Decision in CA-G.R. SP No.
27803 ruling in favor of the respondents.

The petitioner filed a motion for reconsideration. This she followed with several
motions to declare respondents in contempt of court for publishing
advertisements notifying the public of the promulgation of the assailed decision
of the appellate court and stating that genuine Chin Chun Su products could be
obtained only from Summerville General Merchandising and Co.

In the meantime, the trial court went on to hear petitioner’s complaint for final
injunction and damages. On October 22, 1993, the trial court rendered a
Decision[7] barring the petitioner from using the trademark Chin Chun Su and
upholding the right of the respondents to use the same, but recognizing the
copyright of the petitioner over the oval shaped container of her beauty cream.
The trial court did not award damages and costs to any of the parties but to their
respective counsels were awarded Seventy-Five Thousand Pesos (P75,000.00)
each as attorney’s fees. The petitioner duly appealed the said decision to the
Court of Appeals.

On June 3, 1994, the Court of Appeals promulgated a Resolution[8] denying the

petitioner’s motions for reconsideration and for contempt of court in CA-G.R. SP
No. 27803.

The petitioner faults the appellate court for not dismissing the petition on the
ground of violation of Supreme Court Circular No. 28-91. Also, the petitioner
contends that the appellate court violated Section 6, Rule 9 of the Revised
Internal Rules of the Court of Appeals when it failed to rule on her motion for
reconsideration within ninety (90) days from the time it is submitted for
resolution. The appellate court ruled only after the lapse of three hundred fifty-
four (354) days, or on June 3, 1994. In delaying the resolution thereof, the
appellate court denied the petitioner’s right to seek the timely appellate relief.
Finally, petitioner describes as arbitrary the denial of her motions for contempt
of court against the respondents.
ISSUE: [1] Would the copyright and patent over the name and container of a
beauty cream product entitle the registrant to the use and ownership over the
same to the exclusion of others?

[2] Should an injunctive writ (plus damages) issue?

HELD: We rule in favor of the respondents. WHEREFORE, the

petition is DENIED. The Decision and Resolution of the Court of
Appeals dated May 24, 1993 and June 3, 1994, respectively, are hereby
AFFIRMED. With costs against the petitioner.

Trademark, copyright and patents are different intellectual property rights that
cannot be interchanged with one another. A trademark is any visible sign capable
of distinguishing the goods (trademark) or services (service mark) of an
enterprise and shall include a stamped or marked container of goods.[12] In
relation thereto, a trade name means the name or designation identifying or
distinguishing an enterprise.[13] Meanwhile, the scope of a copyright is
confined to literary and artistic works which are original intellectual
creations in the literary and artistic domain protected from the
moment of their creation.[14] Patentable inventions, on the other hand, refer
to any technical solution of a problem in any field of human activity which is new,
involves an inventive step and is industrially applicable.[15]
Petitioner has no right to support her claim for the exclusive use of the subject
trade name and its container. The name and container of a beauty cream product
are proper subjects of a trademark inasmuch as the same falls squarely within its
definition. In order to be entitled to exclusively use the same in the sale of the
beauty cream product, the user must sufficiently prove that she registered or used
it before anybody else did. The petitioner’s copyright and patent registration of
the name and container would not guarantee her the right to the exclusive use of
the same for the reason that they are not appropriate subjects of the said
intellectual rights. Consequently, a preliminary injunction order cannot
be issued for the reason that the petitioner has not proven that she has a clear
right over the said name and container to the exclusion of others, not having
proven that she has registered a trademark thereto or used the same before
anyone did.

FINAL INJUNCTION AND DAMAGES: We cannot likewise overlook the

decision of the trial court in the case for final injunction and damages. The
dispositive portion of said decision held that the petitioner does not have
trademark rights on the name and container of the beauty cream product. The
said decision on the merits of the trial court rendered the issuance of the writ of a
preliminary injunction moot and academic notwithstanding the fact that the
same has been appealed in the Court of Appeals.

[10] Section 4, Rule 58, Revised Rules of Civil Procedure.

[11] Sy v. Court of Appeals, 313 SCRA 328 (1999).
[12] Section 121.1, Republic Act No. 8293.
[13] Section 121.3, Republic Act. No. 8293.
[14] Section 172, Republic Act No. 8293.
[15] Section 21, Republic Act No. 8293.
[16] 278 SCRA 498, 506 quoting Solid Homes, Inc. v. LA Vista, G.R. No. 71150
dated April 20, 1988 (unpublished).
[17] De Roma v. Court of Appeals, 152 SCRA 205, 209 (1987).

CASE 2
 THIRD DIVISION

G.R. No. 120900             July 20, 2000

CANON KABUSHIKI KAISHA, petitioner,

vs.
COURT OF APPEALS and NSR RUBBER CORPORATION, respondents.

GONZAGA-REYES, J.:

Before us is a petition for review that seeks to set aside the Decision dated February 21, 1995 of the
1 

Court of Appeals in CA-GR SP No. 30203, entitled "Canon Kabushiki Kaisha vs. NSR Rubber
Corporation" and its Resolution dated June 27, 1995 denying the motion for reconsideration of
herein petitioner Canon Kabushiki Kaisha (petitioner).

On January 15, 1985, private respondent NSR Rubber Corporation (private respondent) filed an
application for registration of the mark CANON for sandals in the Bureau of Patents, Trademarks,
and Technology Transfer (BPTTT). A Verified Notice of Opposition was filed by petitioner, a foreign
corporation duly organized and existing under the laws of Japan, alleging that it will be damaged by
the registration of the trademark CANON in the name of private respondent. The case was docketed
as Inter Partes Case No. 3043.

Petitioner moved to declare private respondent in default for its failure to file its answer within the
prescribed period. The BPTTT then declared private respondent in default and allowed petitioner to
present its evidence ex-parte.

Based on the records, the evidence presented by petitioner consisted of its certificates of registration
for the mark CANON in various countries covering goods belonging to class 2 (paints, chemical
products, toner, and dye stuff). Petitioner also submitted in evidence its Philippine Trademark
Registration No. 39398, showing its ownership over the trademark CANON also under class 2.

On November 10, 1992, the BPTTT issued its decision dismissing the opposition of petitioner and
giving due course to private respondent's application for the registration of the trademark CANON.
On February 16, 1993, petitioner appealed the decision of the BPTTT with public respondent Court
of Appeals that eventually affirmed the decision of BPTTT. Hence, this petition for review.

Petitioner anchors this instant petition on these grounds:

A) PETITIONER IS ENTITLED TO EXCLUSIVE USE OF THE MARK CANON BECAUSE IT

IS ITS TRADEMARK AND IS USED ALSO FOR FOOTWEAR.
 B) TO ALLOW PRIVATE RESPONDENT TO REGISTER CANON FOR FOOTWEAR IS TO
PREVENT PETITIONER FROM USING CANON FOR VARIOUS KINDS OF FOOTWEAR,
WHEN IN FACT, PETITIONER HAS EARLIER USED SAID MARK FOR SAID GOODS.

C) PETITIONER IS ALSO ENTITLED TO THE RIGHT TO EXCLUSIVELY USE CANON TO

PREVENT CONFUSION OF BUSINESS.

D) PETITIONER IS ALSO ENTITLED TO THE EXCLUSIVE USE OF CANON BECAUSE IT

FORMS PART OF ITS CORPORATE NAME, PROTECTED BY THE PARIS
CONVENTION. 2

The BPTTT and the Court of Appeals share the opinion that the trademark "CANON" as used by
petitioner for its paints, chemical products, toner, and dyestuff, can be used by private respondent
for its sandals because the products of these two parties are dissimilar. Petitioner protests the
appropriation of the mark CANON by private respondent on the ground that petitioner has used and
continues to use the trademark CANON on its wide range of goods worldwide. Allegedly, the
corporate name or tradename of petitioner is also used as its trademark on diverse goods including
footwear and other related products like shoe polisher and polishing agents. To lend credence to its
claim, petitioner points out that it has branched out in its business based on the various goods
carrying its trademark CANON , including footwear which petitioner contends covers sandals, the
3 

goods for which private respondent sought to register the mark CANON. For petitioner, the fact
alone that its trademark CANON is carried by its other products like footwear, shoe polisher and
polishing agents should have precluded the BPTTT from giving due course to the application of
private respondent.

We find the arguments of petitioner to be unmeritorious. Ordinarily, the ownership of a trademark or

tradename is a property right that the owner is entitled to protect as mandated by the Trademark
4 

Law. However, when a trademark is used by a party for a product in which the other party does not
5 

deal, the use of the same trademark on the latter's product cannot be validly objected to. 6

A review of the records shows that with the order of the BPTTT declaring private respondent in
default for failure to file its answer, petitioner had every opportunity to present ex-parte all of its
evidence to prove that its certificates of registration for the trademark CANON cover footwear. The
certificates of registration for the trademark CANON in other countries and in the Philippines as
presented by petitioner, clearly showed that said certificates of registration cover goods belonging to
class 2 (paints, chemical products, toner, dyestuff). On this basis, the BPTTT correctly ruled that
since the certificate of registration of petitioner for the trademark CANON covers class 2 (paints,
chemical products, toner, dyestuff), private respondent can use the trademark CANON for its goods
classified as class 25 (sandals). Clearly, there is a world of difference between the paints, chemical
products, toner, and dyestuff of petitioner and the sandals of private respondent.

Petitioner counters that notwithstanding the dissimilarity of the products of the parties, the trademark
owner is entitled to protection when the use of by the junior user "forestalls the normal expansion of
his business". Petitioner's opposition to the registration of its trademark CANON by private
7 

respondent rests upon petitioner's insistence that it would be precluded from using the mark CANON
for various kinds of footwear, when in fact it has earlier used said mark for said goods. Stretching
this argument, petitioner claims that it is possible that the public could presume that petitioner would
also produce a wide variety of footwear considering the diversity of its products marketed worldwide.

We do not agree. Even in this instant petition, except for its bare assertions, petitioner failed to
attach evidence that would convince this Court that petitioner has also embarked in the production of
footwear products. We quote with approval the observation of the Court of Appeals that:
 "The herein petitioner has not made known that it intends to venture into the business of
producing sandals. This is clearly shown in its Trademark Principal Register (Exhibit "U")
where the products of the said petitioner had been clearly and specifically described as
"Chemical products, dyestuffs, pigments, toner developing preparation, shoe polisher,
polishing agent". It would be taxing one's credibility to aver at this point that the production of
sandals could be considered as a possible "natural or normal expansion" of its business
operation". 8

In Faberge, Incorporated vs. Intermediate Appellate Court, the Director of patents allowed the junior
9 

user to use the trademark of the senior user on the ground that the briefs manufactured by the junior
user, the product for which the trademark BRUTE was sought to be registered, was unrelated and
non-competing with the products of the senior user consisting of after shave lotion, shaving cream,
deodorant, talcum powder, and toilet soap. The senior user vehemently objected and claimed that it
was expanding its trademark to briefs and argued that permitting the junior user to register the same
trademark would allow the latter to invade the senior user's exclusive domain. In sustaining the
Director of Patents, this Court said that since "(the senior user) has not ventured in the production of
briefs, an item which is not listed in its certificate of registration, (the senior user), cannot and should
not be allowed to feign that (the junior user) had invaded (the senior user's) exclusive domain." We 10 

reiterated the principle that the certificate of registration confers upon the trademark owner the
exclusive right to use its own symbol only to those goods specified in the certificate, subject to the
conditions and limitations stated therein. Thus, the exclusive right of petitioner in this case to use the
11 

trademark CANON is limited to the products covered by its certificate of registration.

Petitioner further argues that the alleged diversity of its products all over the world makes it plausible
that the public might be misled into thinking that there is some supposed connection between private
respondent's goods and petitioner. Petitioner is apprehensive that there could be confusion as to the
origin of the goods, as well as confusion of business, if private respondent is allowed to register the
mark CANON. In such a case, petitioner would allegedly be immensely prejudiced if private
respondent would be permitted to take "a free ride on, and reap the advantages of, the goodwill and
reputation of petitioner Canon". In support of the foregoing arguments, petitioner invokes the rulings
12 

in Sta. Ana vs. Maliwat , Ang vs. Teodoro and Converse Rubber Corporation vs. Universal Rubber
13  14 

Products, Inc. .
15 

The likelihood of confusion of goods or business is a relative concept, to be determined only

according to the particular, and sometimes peculiar, circumstances of each case. Indeed, in
16 

trademark law cases, even more than in other litigation, precedent must be studied in the light of the
facts of the particular case. Contrary to petitioner's supposition, the facts of this case will show that
17 

the cases of Sta. Ana vs. Maliwat,, Ang vs. Teodoro and Converse Rubber Corporation vs. Universal
Rubber Products, Inc. are hardly in point. The just cited cases involved goods that were confusingly
similar, if not identical, as in the case of Converse Rubber Corporation vs. Universal Rubber
Products, Inc. Here, the products involved are so unrelated that the public will not be misled that
there is the slightest nexus between petitioner and the goods of private respondent.

In cases of confusion of business or origin, the question that usually arises is whether the respective
goods or services of the senior user and the junior user are so related as to likely cause confusion of
business or origin, and thereby render the trademark or tradenames confusingly similar. Goods are
18 

related when they belong to the same class or have the same descriptive properties; when they
possess the same physical attributes or essential characteristics with reference to their form,
composition, texture or quality. They may also be related because they serve the same purpose or
19 

are sold in grocery stores. 20

Thus, in Esso Standard Eastern, Inc. vs. Court of Appeals, this Court ruled that the petroleum
products on which the petitioner therein used the trademark ESSO, and the product of respondent,
cigarettes are "so foreign to each other as to make it unlikely that purchasers would think that
petitioner is the manufacturer of respondent's goods" . Moreover, the fact that the goods involved
21 

therein flow through different channels of trade highlighted their dissimilarity, a factor explained in
this wise:

"The products of each party move along and are disposed through different channels of
distribution. The (petitioner's) products are distributed principally through gasoline service
and lubrication stations, automotive shops and hardware stores. On the other hand, the
(respondent's) cigarettes are sold in sari-sari stores, grocery store, and other small
distributor outlets. (Respondnet's) cigarettes are even peddled in the streets while
(petitioner's) 'gasul' burners are not. Finally, there is a marked distinction between oil and
tobacco, as well as between petroleum and cigarettes. Evidently, in kind and nature the
products of (respondent) and of (petitioner) are poles apart." 22

Undoubtedly, the paints, chemical products, toner and dyestuff of petitioner that carry the trademark
CANON are unrelated to sandals, the product of private respondent. We agree with the BPTTT,
following the Esso doctrine, when it noted that the two classes of products in this case flow through
different trade channels. The products of petitioner are sold through special chemical stores or
distributors while the products of private respondent are sold in grocery stores, sari-sari stores and
department stores. Thus, the evident disparity of the products of the parties in the case at bar
23 

renders unfounded the apprehension of petitioner that confusion of business or origin might occur if
private respondent is allowed to use the mark CANON.

In its bid to bar the registration of private respondent of the mark CANON, petitioner invokes the
protective mantle of the Paris Convention. Petitioner asserts that it has the exclusive right to the
mark CANON because it forms part of its corporate name or tradename, protected by Article 8 of the
Paris Convention, to wit:

"A tradename shall be protected in all the countries of the Union without the obligation of
filing or registration, whether or not it forms part of a trademark."

Public respondents BPTTT and the Court of Appeals allegedly committed an oversight when they
required petitioner to prove that its mark is a well-known mark at the time the application of private
respondent was filed. Petitioner questions the applicability of the guidelines embodied in the
Memorandum of then Minister of Trade and Industry Roberto Ongpin (Ongpin) dated October 25,
1983 which according to petitioner implements Article 6bis of the Paris Convention, the provision
referring to the protection of trademarks. The memorandum reads:

"a) the mark must be internationally known;

b) the subject of the right must be a trademark, not a patent or copyright or anything else;

c) the mark must be for use in the same or similar class of goods;

d) the person claiming must be the owner of the mark."

According to petitioner, it should not be required to prove that its trademark is well-known and that
the products are not similar as required by the quoted memorandum. Petitioner emphasizes that the
guidelines in the memorandum of Ongpin implement Article 6bis of the Paris Convention, the
provision for the protection of trademarks, not tradenames. Article 6bis of the Paris Convention
states:

(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, imitation or 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 the present 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 or used in bad faith."

Petitioner insists that what it seeks is the protection of Article 8 of the Paris Convention, the provision
that pertains to the protection of tradenames. Petitioner believes that the appropriate memorandum
to consider is that issued by the then Minister of Trade and Industry, Luis Villafuerte, directing the
Director of patents to:

"reject all pending applications for Philippine registration of signature and other world famous
trademarks by applicants other than the original owners or users."

As far as petitioner is concerned, the fact that its tradename is at risk would call for the protection
granted by Article 8 of the Paris Convention. Petitioner calls attention to the fact that Article 8, even
as embodied in par. 6, sec. 37 of RA 166, mentions no requirement of similarity of goods. Petitioner
claims that the reason there is no mention of such a requirement, is "because there is a difference
between the referent of the name and that of the mark" and that "since Art. 8 protects the
24 

tradename in the countries of the Union, such as Japan and the Philippines, Petitioner's tradename
should be protected here." 25

We cannot uphold petitioner's position.

The term "trademark" is defined by RA 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 for those manufactured, sold or dealt in by
others." Tradename is defined by the same law as including "individual names and surnames, firm
26 

names, tradenames, devices or words used by manufacturers, industrialists, merchants,

agriculturists, and others to identify their business, vocations, or occupations; the names or titles
lawfully adopted and used by natural or juridical persons, unions, and any manufacturing, industrial,
commercial, agricultural or other organizations engaged in trade or commerce." Simply put, a trade
27 

name refers to the business and its goodwill; a trademark refers to the goods. 28

The Convention of Paris for the Protection of Industrial Property, otherwise known as the Paris
Convention, of which both the Philippines and Japan, the country of petitioner, are signatories , is a
29 

multilateral treaty that seeks to protect industrial property consisting of patents, utility models,
industrial designs, trademarks, service marks, trade names and indications of source or appellations
of origin, and at the same time aims to repress unfair competition. We agree with public
30 

respondents that the controlling doctrine with respect to the applicability of Article 8 of the Paris
Convention is that established in Kabushi Kaisha Isetan vs. Intermediate Appellate Court. As 31 

pointed out by the BPTTT:

"Regarding the applicability of Article 8 of the Paris Convention, this Office believes that
there is no automatic protection afforded an entity whose tradename is alleged to have been
infringed through the use of that name as a trademark by a local entity.

In Kabushiki Kaisha Isetan vs. The Intermediate Appellate Court, et. al., G.R. No. 75420, 15
November 1991, the Honorable Supreme Court held that:

'The Paris Convention for the Protection of Industrial Property does not automatically
exclude all countries of the world which have signed it from using a tradename which
happens to be used in one country. To illustrate – if a taxicab or bus company in a
town in the United Kingdom or India happens to use the tradename "Rapid
Transportation", it does not necessarily follow that "Rapid" can no longer be
registered in Uganda, Fiji, or the Philippines.

This office is not unmindful that in the Treaty of Paris for the Protection of Intellectual
Property regarding well-known marks and possible application thereof in this case.
Petitioner, as this office sees it, is trying to seek refuge under its protective mantle, claiming
that the subject mark is well known in this country at the time the then application of NSR
Rubber was filed.

However, the then Minister of Trade and Industry, the Hon. Roberto V. Ongpin, issued a
memorandum dated 25 October 1983 to the Director of Patents, a set of guidelines in the
implementation of Article 6bis (sic) of the Treaty of Paris. These conditions are:

a) the mark must be internationally known;

b) the subject of the right must be a trademark, not a patent or copyright or anything
else;

c) the mark must be for use in the same or similar kinds of goods; and

d) the person claiming must be the owner of the mark (The Parties Convention
Commentary on the Paris Convention. Article by Dr. Bogsch, Director General of the
World Intellectual Property Organization, Geneva, Switzerland, 1985)'

From the set of facts found in the records, it is ruled that the Petitioner failed to comply with
the third requirement of the said memorandum that is the mark must be for use in the same
or similar kinds of goods. The Petitioner is using the mark "CANON" for products belonging
to class 2 (paints, chemical products) while the Respondent is using the same mark for
sandals (class 25). Hence, Petitioner's contention that its mark is well-known at the time the
Respondent filed its application for the same mark should fail. " 32

Petitioner assails the application of the case of Kabushi Kaisha Isetan vs. Intermediate Appellate
Court to this case. Petitioner points out that in the case of Kabushi Kaisha Isetan vs. Intermediate
Appellate Court, petitioner therein was found to have never at all conducted its business in the
Philippines unlike herein petitioner who has extensively conducted its business here and also had its
trademark registered in this country. Hence, petitioner submits that this factual difference renders
inapplicable our ruling in the case of Kabushi Kaisha Isetan vs. Intermediate Appellate Court that
Article 8 of the Paris Convention does not automatically extend protection to a tradename that is in
danger of being infringed in a country that is also a signatory to said treaty. This contention deserves
scant consideration. Suffice it to say that the just quoted pronouncement in the case of Kabushi
Kaisha Isetan vs. Intermediate Appellate Court, was made independent of the factual finding that
petitioner in said case had not conducted its business in this country.

WHEREFORE, in view of the foregoing, the instant petition for review on certiorari is DENIED for
lack of merit.

SO ORDERED.

Melo, (Chairman), Vitug, Panganiban, and Pursima, JJ., concur.

CANON KABUSHIKI KAISHA vs. COURT OF APPEALS 

G.R. No. 120900, July 20, 2000 

FACTS:

            On January 15, 1985, private respondent NSR Rubber Corporation filed an application
for registration of the mark CANON for sandals in the Bureau of Patents, Trademarks, and
Technology Transfer (BPTTT). Canon Kabushiki Kaisha filed a Verified Notice of Opposition
alleging that it will be damaged by the registration of the trademark CANON in the name of
private respondent since they were using the same trademark for their footwear line of
products.  The private respondent will also use the name Canon for its footwear products.

Based on the records, the evidence presented by petitioner consisted of its certificates of
registration for the mark CANON in various countries covering goods belonging to class 2,
paints, chemical products, toner, and dye stuff. Petitioner also submitted in evidence its
Philippine Trademark Registration No. 39398, showing its ownership over the trademark
CANON.

The BPTTT, on November 10, 1992, issued its decision dismissing the opposition of
petitioner and giving due course to NSR's application for the registration of the trademark
CANON. Canon Kabushiki Kaisha filed an appeal with the Court of Appeals that eventually
affirmed the decision of the BPTTT.

ISSUE:

            Is the use of trademark, CANON, by the private respondent affects the business of
Canon Kabushiki Kaisha who has an existing ownership of a trademark also known as
CANON?

HELD:

            The Supreme Court says that ordinarily, the ownership of a trademark or tradename is a
property right that the owner is entitled to protect as mandated by the Trademark Law. However,
when a trademark is used by a party for a product in which the other party does not deal, the
use of the same trademark on the latter's product cannot be validly objected to.

            The BPTTT correctly ruled that since the certificate of registration of petitioner for the
trademark CANON covers class 2 (paints, chemical products, toner, dyestuff), private
respondent can use the trademark CANON for its goods classified as class 25 (sandals).
Clearly, there is a world of difference between the paints, chemical products, toner, and dyestuff
of petitioner and the sandals of private respondent.

CANON KABUSHIKI KAISHA vs. CA and NSR RUBBER

CORP
CANON KABUSHIKI KAISHA vs. CA and NSR RUBBER CORP
G.R. NO. 120900
DATE: July 20, 2000
PONENTE: Gonzaga-Reyes, J.

FACTS: NSR Rubber Corp., filed an application for registration of the mark CANON for sandals  (Class
25) in the Bureau of Patents, Trademarks, and Technology Transfer (BPTTT). The application was
opposed by Canon Kabushiki Kaisha (CKK), a foreign corp. under the laws of Japan.

NSR was declared in default upon motion of CKK. CKK presented as its evidence certificates of
registration for the mark CANON in various countries and in the Philippines covering goods belonging to
Class 2 (paints, chemical products, toner and dyestuff).

Ruling of the BPTTT: denied the opposition of CKK and granted the application of NSR Rubber Corp.

CA: affirmed

Both lower courts ruled that there is a dissimilarity between the products of CKK and NSR, i.e. CKK:
paints, chemical products, toner and dyestuff; while NSR: sandals

ISSUE/S:
1. WON CKK trademark is violated. NO.
2. WON CKK can exclusively use ‘CANON’ as protected by the Paris Convention. NO.

RULING:
Ordinarily, the ownership of a trademark or tradename is a property right that the owner is entitled to
protect as mandated by the Trademark Law. However, when a trademark is used by a party for a product
in which the other party does not deal, the use of the same trademark on the latter’s product cannot be
validly objected to.

The certificates of registration for the trademark CANON in other countries and in the Philippines clearly
showed that said certificates cover goods belonging to class 2 (paints, chemical products, toner, dyestuff).
As such, NSR t can use the trademark CANON for its goods classified as class 25 (sandals). Clearly,
there is a world of difference between the paints, chemical products, toner, and dyestuff and sandals.

The certificate of registration confers upon the trademark owner the exclusive right to use its own
symbol only to those goods specified in the certificate, subject to the conditions and limitations stated
therein. Thus, the exclusive right of CKK to use the trademark CANON is limited to the products covered
by its certificate of registration.
The likelihood of confusion of goods or business is a relative concept, to be determined only according to
the particular, and sometimes peculiar, circumstances of each case. Indeed, in trademark law cases,
even more than in other litigation, precedent must be studied in the light of the facts of the particular case.

Here, the products involved are so unrelated that the public will not be misled that there is the slightest
nexus between petitioner and the goods of private respondent.

Goods are related when they belong to the same class or have the same descriptive properties; when
they possess the same physical attributes or essential characteristics with reference to their form,
composition, texture or quality. They may also be related because they serve the same purpose or are
sold in grocery stores.

Here, the paints, chemical products, toner and dyestuff of CKK that carry the trademark CANON are
unrelated to sandals, the product of NSR. The two classes of products in this case flow through different
trade channels. The products of CKK are sold through special chemical stores or distributors while the
products of NSR are sold in grocery stores, sari-sari stores and department stores.

 A tradename refers to the business and its goodwill while a trademark refers to the goods.

Regarding the applicability of Article 8 of the Paris Convention (“A tradename shall be protected in all the
countries of the Union without the obligation of filing or registration, whether or not it forms part of a
trademark.), there is no automatic protection afforded an entity whose tradename is alleged to have been
infringed through the use of that name as a trademark by a local entity. However, the then Minister of
Trade and Industry, the Hon. Roberto V. Ongpin, issued a memorandum dated 25 October 1983 to the
Director of Patents, a set of guidelines in the implementation of Article 6bis (sic) of the Treaty of Paris.

These conditions are:

1.) the mark must be internationally known;
2.) the subject of the right must be a trademark, not a patent or copyright or anything else;
3.) the mark must be for use in the same or similar kinds of goods; and
4.) the person claiming must be the owner of the mark

CKK failed to comply with the third requirement of the said memorandum. CKK is using the
mark “CANON” for products belonging to class 2 (paints, chemical products) while NSR is using the same
mark for sandals (class 25).
CASE 3

EN BANC

G.R. No. L-20354 July 28, 1969

GERARDO SAMSON, JR., Petitioner, vs. FELIPE TARROZA and

DIRECTOR OF PATENTS, Respondents.
Hermenegildo V. Lopez for petitioner.
Isaac S. Puno, Jr. for respondent Felipe Tarroza.
Office of the Solicitor General for respondent Director of Patents.

FERNANDO, J.: chanrobles virtual law library

          With the statutory recognition of patentability based on the

"practical utility" concept 1 thus rendering clear that a patent is not
solely to be earned under the "flash of genius" theory, 2 this petition
for the cancellation of a utility model patent for a Side Tilting-
Dumping Wheelbarrow granted to respondent Felipe A. Tarroza was
correctly denied by respondent Director of Patents. Petitioner
Gerardo Samson, Jr., himself the grantee of a utility model patent
for a Dumping and Detachable Wheelbarrow, lacked any legal
justification for such a plea. So respondent Director ruled. Not
satisfied, petitioner elevated the matter to us for review. There is no
reason why a different outcome is to be expected. His appeal must
fail.
chanroblesvirtualawlibrary chanrobles virtual law library

          Petitioner was, on May 22, 1958, awarded Utility Model

Patent No. 27 for the above type of wheelbarrow which, as noted in
the decision, "consists of a wheeled carriage base and an upper
pivoted and detachable carrying tray. The carriage base is
comprised of a wheel and two equal lengths of continuous pipes
bent to provide wheel forks at the front and at the rear to support
the back portion of the tray, with the ends of the pipes being
adopted as the carrying handles for the wheelbarrow. The two pipes
thus bent are joined together by cross braces in the front and at the
rear. The tray is removably pivoted at its front end through hook
catches at its bottom corners, to the forward cross brace, and its
rear end rests solidly over the rear portion of the legs. To dump the
load the user pulls a dumping handle at the back end to cause the
tray to pivot upwardly about the front brace to a position of about
45 degrees with the horizontal and with its front end panel being
supported by the wheel." 3  chanrobles virtual law library

          Respondent's Side Tilting-Dumping Wheelbarrow, on the

other hand, consists "of a wheeled carriage made of tubular frames
essentially as in petitioner's. Welded transversely to the parallel
frames are two brackets provided with holes designed to
complement similar holes on brackets provided on the tray. The
brackets on the tray are so placed that with the provision of a bolt
through the openings the tray may be tilted approximately 170
degrees to the left or to the right of the wheelbarrow with its axis
running longitudinally through the center of the bottom face of the
tray." 4 
chanrobles virtual law library

          There is an express recognition under the Patent Law, as

already noted, that any new model of implements or tools or of any
industrial product even if not possessed of the quality of invention
but which is of "practical utility" is entitled to a "patent for a utility
model." From the above description of the side tilting-dumping
wheelbarrow, the product of respondent's ingenuity and industry, it
is quite apparent that it has a place in the market and possesses
what the statute refers to as "practical utility." The requirement
explicitly set forth in the statute has thus been met. Respondent
Tarroza is entitled to its benefits. The grant to him of a patent for a
utility model is in accordance with law. There was no reason,
therefore, for its cancellation. So it was held by the Director of
Patents. That decision as already noted should stand. chanroblesvirtualawlibrary chanrobles virtual law library

          Moreover, in appeals from a decision of the Director of

Patents, only questions of law may be reviewed, findings of facts
being conclusive unless unsupported by substantial evidence. So it
was decided in Che v. Philippines Patent Office. 5 As was emphasized
in Bagano v. Director of Patents: "It is almost trite to state here that
in cases of the nature as the one at bar, only questions of law are to
be raised in order that this Court could exercise its appellate
jurisdiction and review the decision." 6 The above well-settled
doctrines suffice to demonstrate that this petition for review, as
noted at the outset, is without merit. It was not error then, to
reiterate, for the respondent Director of Patents to deny the
cancellation of the utility patent granted respondent Tarroza. To
borrow from the language of the Che opinion: "Even on the sole
issue alone, the petition for review must fail." chanrobles virtual law library

          Another alleged error was imputed to respondent Director of

Patents. It would find fault with his failing to hold that respondent
Tarroza "was not the true and actual" author of the mechanical
contrivance for which he was granted a utility model patent. This is
what the appealed decision has to say on this point: "Petitioner's
theory with respect to the second ground for cancellation, to wit:
that respondent is not the true and actual inventor or designer of
the utility model is premised on the fact that because of the
proximity of the two, the petitioner and the respondent being
brothers-in-law, and living in adjoining residential lots, the latter
has had ample time and opportunity to observe and copy the
former's wheelbarrow. But the testimonial evidence thus presented
is not clear, satisfactory, and free from doubt, in the face of
allegations to the contrary by the respondent." 7 The futility of such
an assignment of error is thus apparent. Again, it is factual in
character. It is not for us, as noted above, to review or revise the
same, there being no showing of a lack of substantial evidence in
support thereof. chanroblesvirtualawlibrary chanrobles virtual law library

          WHEREFORE, the decision of April 13, 1962 of respondent

Director of Patents denying the petition for the cancellation of Utility
Model Letters Patent No. 62 in favor of respondent Tarroza is hereby
affirmed. With costs against petitioner.

Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Zaldivar,

Sanchez, Castro, Capistrano, Teehankee and Barredo, JJ., concur.

CASE 4

Republic of the Philippines

SUPREME COURT
Manila

FIRST DIVISION

G.R. No. L-32160 January 30, 1982

DOMICIANO A. AGUAS, petitioner,
vs.
CONRADO G. DE LEON and COURT OF APPEALS, respondents.
FERNANDEZ, J.:

This is a petition for certiorari to review the decision of the Court of Appeals in CA G.R. NO. 37824-R
entitled "Conrado G. de Leon, plaintiff-appelle vs. Dominciano Aguas and F.H. Aquino and Sons,
defendants-appellants," the dispositive portion of which reads:

WHEREFORE, with the modification that plintiff-applee's award of moral damages is

hereby redured to P3,000.00, the appealed judgment is hereby affirmed, in all othe
respects, with costs against appellants. 1

On April 14, 1962, Conrado G. de Leon filed in the Court of First Instance of Rizal at Quezon City a
complaint for infringement of patent against Domiciano A. Aguas and F. H. Aquino and Sons alleging that
being the original first and sole inventor of certain new and useful improvements in the process of making
mosaic pre-cast tiles, he lawfully filed and prosecuted an application for Philippine patent, and having
complied in all respects with the statute and the rules of the Philippine Patent Office, Patent No. 658 was
lawfully granted and issued to him; that said invention was new, useful, not known or used by others in
this country before his invention thereof, not patented or described in any printed publication anywhere
before his invention thereof, or more than one year prior to his application for patent thereof, not patented
in any foreign country by him or his legal representatives on application filed more than one year prior to
his application in this country; that plaintiff has the exclusive license to make, use and sell throughout the
Philippines the improvements set forth in said Patent No. 658; that the invention patented by said Patent
No. 658 is of great utility and of great value to plaintiff and of great benefit to the public who has
demanded and purchased tiles embodying the said invention in very large quantities and in very rapidly
increasing quant ies; that he has complied with the Philippine statues relating to marking patented tiles
sold by him; that the public has in general acknowledged the validity of said Patent No. 658, and has
respected plaintiff's right therein and thereunder; that the defendant Domiciano A. Aguas infringed Letters
of Patent No. 658 by making, using and selling tiles embodying said patent invention and that defendant
F. H. Aquino & Sons is guilty of infringement by making and furnishing to the defendant Domiciano A.
Aguas the engravings, castings and devices designed and intended of tiles embodying plaintiff;s patented
invention; that he has given direct and personal notice to the defendants of their said acts of infringement
and requested them to desist, but nevertheless, defendants have refused and neglected to desist and
have disregarded such request, and continue to so infringe causing great and irreparable damage to
plaintiff; that if the aforesaid infringement is permitted to continue, further losses and damages and
irreparable injury will be sustained by the plaintiff; that there is an urgent need for the immediate issuance
of a preliminary injunction; that as a result of the defendants' wrongful conduct, plaintiff has suffered and
the defendants are liable to pay him, in addition to actual damages and loss of profits which would be
determined upon proper accounting, moral and exemplary or corrective damages in the sum of
P90,000.00; that plaintiff has been compelled to go to court for the protection and enforcement of his and
to engage the service of counsel, thereby incurring attorney's fees and expenses of litigation in the sum of
P5,000.00. 2

On April 14, 1962, an order granting the plaintiff's petition for a Writ of Preliminary Injunction was issued. 3

On May 23, 1962, the defendant Domiciano A. Aguas filed his answer denying the allegations of the
plaintiff and alleging that: the plaintiff is neither the original first nor sole inventor of the
improvements in the process of making mosaic pre-cast tiles, the same having been used by several
tile-making factories in the Philippines and abroad years before the alleged invention by de Leon;
that Letters Patent No. 658 was unlawfully acquired by making it appear in the application in relation
thereto that the process is new and that the plaintiff is the owner of the process when in truth and in
fact the process incorporated in the patent application has been known and used in the Philippines
by almost all tile makers long before the alleged use and registration of patent by plaintiff Conrado
G. de Leon; that the registration of the alleged invention did not confer any right on the plaintiff
because the registration was unlawfully secured and was a result of the gross misrepresentation on
the part of the plaintiff that his alleged invention is a new and inventive process; that the allegation of
the plaintiff that Patent No. 658 is of great value to plaintiff and of great benefit to the public is a
mere conclusion of the plaintiff, the truth being that a) the invention of plaintiff is neither inventive nor
new, hence, it is not patentable, b) defendant has been granted valid patents (Patents No. 108, 109,
110 issued on December 21, 1961) on designs for concrete decorative wall tiles; and c) that he can
not be guilty of infringement because his products are different from those of the plaintiff. 4

The trial court rendered a decision dated December 29, 1965, the dispositive portion of which reads:

WHEREFORE, judgment is hereby rendered in favor of plaintiff and against the

defendants:

1. Declaring plaintiff's patent valid and infringed:

2. Granting a perpetual injunction restraining defendants, their officers, agents,

employees, associates, confederates, and any and all persons acting under their
authority from making and/or using and/or vending tiles embodying said patented
invention or adapted to be used in combination embodying the same, and from
making, manufacturing, using or selling, engravings, castings and devises designed
and intended for use in apparatus for the making of tiles embodying plaintiff's
patented invention, and from offering or advertising so to do, and from aiding and
abetting or in any way contributing to the infringement of said patent;

3. Ordering that each and all of the infringing tiles, engravings, castings and devices,
which are in the possession or under the control of defendants be delivered to
plaintiff;

4. Ordering the defendants to jointly and severally pay to the plaintiff the following
sums of money, to wit:

(a) P10,020.99 by way of actual damages;

(b) P50,000.00 by way of moral damages;

(c) P5,000.00 by way of exemplary damages;

(d) P5,000.00 by way of attorney's fees and

(e) costs of suit. 5

The defendant Domiciano Aguas appealed to the Court of Appeals, assigning the following errors. 6

THE TRIAL COURT ERRED IN NOT HOLDING THAT PLAINTIFF'S PATENT FOR
THE 'PROCESS OF MAKING MOSAIC PRE-CAST TILE' IS INVALID BECAUSE
SAID ALLEGED PROCESS IS NOT AN INVENTION OR DISCOVERY AS THE
SAME HAS ALREADY LONG BEEN USED BY TILE MANUFACTURERS BOTH
ABROAD AND IN THIS COUNTRY.

II
 THE TRIAL COURT ERRED IN HOLDING THAT THE PATENT OF PLAINTIFF IS
VALID BECAUSE IT IS AN IMPROVEMENT OR THE AGE-OLD TILE MAKING
SYSTEM.

III

THE TRIAL COURT ERRED IN NOT ORDERING THE CANCELLATION OF

PLAINTIFF-APPELLEE'S LETTERS PATENT NO. 658, EXHIBIT L, IN
ACCORDANCE WITH THE PERTINENT PROVISIONS OF THE PATENT LAW,
REPUBLIC ACT 165.

IV

THE TRIAL COURT ERRED IN HOLDING THAT DEFENDANT DOMICIANO A.

AGUAS IS GUILTY OF INFRINGEMENT DESPITE THE FACT THAT PLAINTIFF'S
PATENT IS NOT A VALID ONE.

THE TRIAL COURT ERRED IN NOT HOLDING THAT THE DEFENDANT COULD
NEVER BE GUILTY OF INFRINGEMENT OF PLAINTIFF'S PATENT BECAUSE
EVEN IN MATTERS NOT PATENTED BY THE PLAINTIFF - LIKE THE
COMPOSITION AND PROPORTION OF INGREDIENTS USED AND THE
STRUCTURAL DESIGNS OF THE MOULD AND THE TILE PRODUCED - THAT OF
THE DEFENDANT ARE DIFFERENT.

VI

THE TRIAL COURT ERRED IN NOT DISMISSING THE COMPLAINT AND IN

HOLDING THE DEFENDANT, INSTEAD OF THE PLAINTIFF, LIABLE FOR
DAMAGES, AND ATTORNEY'S FEES.

On August 5, 1969, the Court of Appeals affirmed the decision of the trial court, with the modification
that plaintiff-appellee's award of moral damages was reduced to P3,000.00. 7

The petitioner assigns the following errors supposedly committed by the Court of Appeals:

It is now respectfully submitted that the Court of Appeals committed the following
errors involving questions of law, to wit:

First error. — When it did not conclude that the letters patent of the respondent
although entitled on the cover page as a patent for improvements, was in truth and in
fact, on the basis of the body of the same, a patent for the old and non-patentable
process of making mosaic pre-cast tiles;

Second error. — When it did not conclude from the admitted facts of the case,
particularly the contents of the letters patent, Exh. L and the pieces of physical
evidence introduced consisting of samples of the tiles and catalouges, that the
alleged improvements introduced by the respondent in the manufacture of mosaic
pre-cast tiles are not patentable, the same being not new, useful and inventive.
 Third error. — As a corollary, when it sentenced the herein petitioner to pay the
damages enumerated in the decision of the lower court (Record on Appeal, pp. 74-
75), as confirmed by it (the Court of Appeals), but with the modification that the
amount of P50,000.00 moral damages was reduced to P3,000.00. 8

The facts, as found by the Court of Appeals, are:

The basic facts borne out by the record are to the effect that on December 1, 1959
plaintiff-appellee filed a patent application with the Philippine Patent Office, and on
May 5, 1960, said office issued in his favor Letters Patent No. 658 for a "new and
useful improvement in the process of making mosaic pre-cast tiles" (Exh, "L"); that
defendant F.H. Aquino & Sons engraved the moulds embodying plaintiff's patented
improvement for the manufacture of pre-cast tiles, plaintiff furnishing said defendant
the actual model of the tiles in escayola and explained to said engraver the plans,
specifications and the details of the engravings as he wanted them to be made,
including an explanation of the lip width, artistic slope of easement and critical depth
of the engraving that plaintiff wanted for his moulds; that engraver Enrique Aquino
knew that the moulds he was engraving for plaintiff were the latter's very own, which
possession the new features and characteristics covered by plaintiff's parent; that
defendant Aguas personally, as a building contractor, purchased from plaintiff, tiles
shaped out of these moulds at the back of which was imprinted plaintiff's patent
number (Exhs., "A" to "E"); that subsequently, through a representative, Mr.
Leonardo, defendant Aguas requested Aquino to make engravings of the same type
and bearing the characteristics of plaintiff's moulds; that Mr. Aquino knew that the
moulds he was asked to engrave for defendant Aguas would be used to produce
cement tiles similar to plaintiff's; that the moulds which F.H. Aquino & Sons
eventually engraved for Aguas and for which it charged Aguas double the rate it
charged plaintiff De Leon, contain the very same characteristic features of plaintiff's
mould and that Aguas used these moulds in the manufacture of his tiles which he
actually put out for sale to the public (Exhs. "1" to "3" and Exhs. "A" to "E"); that both
plaintiff's and defendant Aguas' tiles are sculptured pre-cast wall tiles intended as a
new feature of construction and wag ornamentation substantially Identical to each
other in size, easement, lip width and critical depth of the deepest depression; and
that the only significant difference between plaintiff's mould and that engraved by
Aquino for Aguas is that, whereas plaintiff's mould turns out tiles 4 x 4 inches in size,
defendant Aguas' mould is made to fit a 4-1/4 x 4-1/4 inch tile. 9

The patent right of the private respondent expired on May 5, 1977. 10 The errors will be discuss only to
determine the right of said private respondent to damages.

The petitioner questioned the validity of the patent of the private respondent, Conrado G. de Leon,
on the ground that the process, subject of said patent, is not an invention or discovery, or an
improvement of the old system of making tiles. It should be noted that the private respondent does
not claim to be the discoverer or inventor of the old process of tile-making. He only claims to have
introduced an improvement of said process. In fact, Letters Patent No. 658 was issued by the
Philippine Patent Office to the private respondent, Conrado G. de Leon, to protect his rights as the
inventor of "an alleged new and useful improvement in the process of making mosaic pre-cast
tiles." 11 Indeed, Section 7, Republic Act No. 165, as amended provides: "Any invention of a new and
useful machine, manufactured product or substance, process, or an improvement of the foregoing, shall
be patentable.
The Court of Appeals found that the private respondent has introduced an improvement in the
process of tile-making because:

... we find that plaintiff-appellee has introduced an improvement in the process of tile-
making, which proceeds not merely from mechanical skill, said improvement
consisting among other things, in the new critical depth, lip width, easement and field
of designs of the new tiles. The improved lip width of appellee's tiles ensures the
durability of the finished product preventing the flaking off of the edges. The
easement caused by the inclination of the protrusions of the patented moulds is for
the purpose of facilitating the removal of the newly processed tile from the female
die. Evidently, appellee's improvement consists in the solution to the old critical
problem by making the protrusions on his moulds attain an optimum height, so that
the engraving thereon would be deep enough to produce tiles for sculptured and
decorative purposes, strong optimum thickness of appellee's new tiles of only 1/8 of
an inch at the deepest easement (Exhs. "D" and "D-1") is a most critical feature,
suggestive of discovery and inventiveness, especially considering that, despite said
thinness, the freshly formed tile remains strong enough for its intended purpose.

While it is true that the matter of easement, lip width, depth, protrusions and
depressions are known to some sculptors, still, to be able to produce a new and
useful wall tile, by using them all together, amounts to an invention. More so, if the
totality of all these features are viewed in combination with the Ideal composition of
cement, sodium silicate and screened fine sand.

By using his improved process, plaintiff has succeeded in producing a new product -
a concrete sculptured tile which could be utilized for walling and decorative purposes.
No proof was adduced to show that any tile of the same kind had been produced by
others before appellee. Moreover, it appears that appellee has been deriving
considerable profit from his manufacture and sale of such tiles. This commercial
success is evidence of patentability (Walker on Patents, Dellers Edition, Vol. I, p.
237). 12

The validily of the patent issued by the Philippines Patent Office in favor of the private respondent
and the question over the inventiveness, novelty and usefulness of the improved process therein
specified and described are matters which are better determined by the Philippines Patent Office.
The technical staff of the Philippines Patent Office, composed of experts in their field, have, by the
issuance of the patent in question, accepted the thinness of the private respondent's new tiles as a
discovery. There is a presumption that the Philippines Patent Office has correctly determined the
patentability of the improvement by the private respondent of the process in question.

Anent this matter, the Court of Appeals said:

Appellant has not adduced evidence sufficient to overcome the above established
legal presumption of validity or to warrant reversal of the findings of the lower court
relative to the validity of the patent in question. In fact, as we have already pointed
out, the clear preponderance of evidence bolsters said presumption of validity of
appellee's patent. There is no indication in the records of this case and this Court is
unaware of any fact, which would tend to show that concrete wall tiles similar to
those produced by appellee had ever been made by others before he started
manufacturing the same. In fact, during the trial, appellant was challenged by
appellee to present a tile of the same kind as those produced by the latter, from any
earlier source but, despite the fact that appellant had every chance to do so, he could
 not present any. There is, therefore, no concrete proof that the improved process of
tile-making described in appellee's patent was used by, or known to, others previous
to his discovery thereof. 13

The contention of the petitioner Aguas that the letters patent of de Leon was actually a patent for the
old and non-patentable process of making mosaic pre-cast tiles is devoid of merit. De Leon never
claimed to have invented the process of tile-making. The Claims and Specifications of Patent No.
658 show that although some of the steps or parts of the old process of tile making were described
therein, there were novel and inventive features mentioned in the process. Some of the novel
features of the private respondent's improvements are the following: critical depth, with
corresponding easement and lip width to such degree as leaves the tile as thin as 1/8 of an inch at
its thinnest portion, Ideal composition of cement and fine river sand, among other ingredients that
makes possible the production of tough and durable wall tiles, though thin and light; the engraving of
deep designs in such a way as to make the tiles decorative, artistic and suitable for wall
ornamentation, and the fact that the tiles can be mass produced in commercial quantities and can be
conveniently stock-piled, handled and packed without any intolerable incidence of breakages. 14

The petitioner also contends that the improvement of respondent is not patentable because it is not
new, useful and inventive. This contention is without merit.

The records disclose that de Leon's process is an improvement of the old process of tile making.
The tiles produced from de Leon's process are suitable for construction and ornamentation, which
previously had not been achieved by tiles made out of the old process of tile making. De Leon's
invention has therefore brought about a new and useful kind of tile. The old type of tiles were usually
intended for floors although there is nothing to prevent one from using them for walling purposes.
These tiles are neither artistic nor ornamental. They are heavy and massive.

The respondent's improvement is indeed inventive and goes beyond the exercise of mechanical skill.
He has introduced a new kind of tile for a new purpose. He has improved the old method of making
tiles and pre-cast articles which were not satisfactory because of an intolerable number of
breakages, especially if deep engravings are made on the tile. He has overcome the problem of
producing decorative tiles with deep engraving, but with sufficient durability. 15 Durability inspite of the
thinness and lightness of the tile, is assured, provided that a certain critical depth is maintained in relation
to the dimensions of the tile. 16

The petitioner also claims that changing the design from embossed to engraved tiles is neither new
nor inventive because the Machuca Tile Factory and the Pomona Tile Manufacturing Company have
been manufacturing decorative wall tiles that are embossed as well as engraved; 17 that these tiles
have also depth, lip width, easement and field of designs; 18 and that the private respondent had copied
some designs of Pomona. 19

The Machuca tiles are different from that of the private respondent. The designs are embossed and not
engraved as claimed by the petitioner. There may be depressions but these depressions are too shallow
to be considered engraved. Besides, the Machuca tiles are heavy and massive.

There is no similarity between the Pomona Tiles and de Leon's tiles. The Pomona tiles are made of
ceramics. 20 The process involved in making cement tiles is different from ceramic tiles. Cement tiles are
made with the use of water, while in ceramics fire is used. As regards the allegation of the petitioner that
the private respondent copied some designs of Pomona, suffice it to say that what is in issue here is the
process involved in tile making and not the design.
In view of the foregoing, this Court finds that Patent No. 658 was legally issued, the process and/or
improvement being patentable.

Both the trial court and the Court of Appeals found as a fact that the petitioner Domiciano A. Aguas
did infringe de Leon's patent. There is no showing that this case falls under one of the exceptions
when this Court may overrule the findings of fact of the Court of Appeals. The only issue then to be
resolved is the amount of damages that should be paid by Aguas.

In its decision the Court of Appeals affirmed the amount of damages awarded by the lower court with
the modification that the respondent is only entitled to P3,000.00 moral damages. 21

The lower court awarded the following damages: 22

a) P10,020.99 by way of actual damages;

b) P50,000.00 by way of moral damages;

c) P5,000.00 by way of exemplary damages;

d) P5,000.00 by way of attomey's fees and

e) Costs of suit

because:

An examination of the books of defendant Aguas made before a Commissioner

reveals that during the period that Aguas was manufacturing and selling tiles similar
to plaintiff's, he made a gross income of P3,340.33, which can be safely be
considered the amount by which he enriched himself when he infringed plaintiff's
patent. Under Sec. 42 of the Patent Law any patentee whose rights have been
infringed is entitled to damages which, according to the circumstances of the case
may be in a sum above the amount found as actual damages sustained provided the
award does not exceed three times the amount of such actual damages. Considering
the wantonness of the infringement committed by the defendants who knew all the
time about the existence of plaintiff's patent, the Court feels there is reason to grant
plaintiff maximum damages in the sum of P10,020.99. And in order to discourage
patent infringements and to give more teeth to the provisions of the patent law thus
promoting a stronger public policy committed to afford greater incentives and
protection to inventors, the Court hereby awards plaintiff exemplary damages in the
sum of P5,000.00 to be paid jointly and severally by defendants. Considering the
status of plaintiff as a reputable businessman, and owner of the likewise reputed
House of Pre-Cast, he is entitled to an award of moral damages in the sum of
P50,000.00. 23

In reducing the amount of moral damages the Court of Appeals said:

As regards the question of moral damages it has been shown that as a result of the
unlawful acts of infringment committed by defendants, plaintiff was unstandably very
sad; he worried and became nervous and lost concentration on his work in
connection with his tile business (pp. 28, 30, t.s.n., Feb. 28, 1964). In addition,
plaintiff's character and reputation have been unnecessarily put in question because
 defendants, by their acts of infringement have created a doubt or suspicion in the
public mind concerning the truth and honesty of plaintiff's advertisements and public
announcements of his valid patent. Necessarily, said acts of defendants have caused
plaintiff considerable mental suffering, considering especially, the fact that he staked
everything on his pre-cast tile business (p. 36, t.s.n., Id.) The wantonness and
evident bad faith characterizing defendants' prejudicial acts against plaintiff justify the
assessment of moral damages in plaintiff's favor, though we do not believe the
amount of P50,000.00 awarded by the lower court is warranted by the
circumstances. We feel that said amount should be reduced to P3,000.00 by way of
compensating appellee for his moral suffering. "Willful injury to property may be a
legal ground for awarding moral damages if the court should find that, under the
circumstances such damages are justly due" (Art. 2219 NCC).

There is no reason to reduce the amount of damages and attorneys fees awarded by the trial court
as modified by the Court of Appeals.

WHEREFORE, the decision of the Court of Appeals in CA G.R. No. 37824-R appealed from is
hereby affirmed, without pronouncement as to costs.

SO ORDERED.

Makasiar, Guerrero, Melencio-Herrera and Plana, JJ., concur.

Teehankee, J., took no part.

CASE DIGEST: Aguas vs. De Leon

111 SCRA 238 (1982)

FACTS:

            This is a petition for certiorari to review the decision of the Court of
Appeals.

            On April 14, 1962, respondent Conrado de Leon filed in the CFI of
Rizal at Quezon City a complaint for infringement of patent against
petitioner Domiciano Aguas and F.H. Aquino and Sons alleging among
others that being the original first and sole inventor of certain new and
useful improvements in the process of making mosaic pre-cast tiles, and
thereafter lawfully acquired from the Philippine Patent Office, Patent No.
658, the latter infringed the same by making, using and selling tiles
embodying said patent invention. A writ of Preliminary Injuction was
subsequently issued.

            Petitioner Aguas, in his answer, denied the allegations and instead
averred inter alia that respondent De Leon is neither the original first nor
sole inventor of the improvements in the process of making mosaic pre-
cast tiles, the same having been used by several tile-making factories both
here and abroad years before the alleged invention by De Leon; hence, it is
not patentable.

            The trial court and the Court of Appeals, upon appeal rendered
judgment in favor of respondent de Leon. Thus, this petition.

ISSUE:

            Whether or not the alleged invention or discovery of respondent is

patentable.

HELD:

            Yea. x x x It should be noted that the private respondent does not
claim to be the discoverer or inventor of the old process of tile-making. He
only claims to have introduced an improvement of said process. In fact,
Letters Patent No. 658 was issued by the Philippine Patent Office to the
private respondent Conrado G. De Leon, to protect his rights as the
inventor of “ an alleged new and useful improvement in the process of
making pre-cast tiles.” Indeed, section 7, Republic Act No. 165, as
amended provides: “ Any invention of a new and useful machine,
manufactured product or substance, process, or an improvement of the
foregoing, shall be patentable.”

CASE 5

Republic of the Philippines

SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 118708 February 2, 1998

CRESER PRECISION SYSTEMS, INC., petitioner,

vs.
COURT OF APPEALS AND FLORO INTERNATIONAL CORP., respondents.
MARTINEZ, J.:

This petition for review on certiorari assails the decision   of the Court of Appeals dated November 9,
1

1994 in C.A.-G.R. SP No. 34425 entitled "Floro International Corp. vs. Hon. Tirso D.C Cruz and
Creser Precision System, Inc.", the dispositive portion of which reads:

WHEREFORE, THE PETITION IS HEREBY GRANTED. THE COMPLAINT FOR

INJUNCTION AND DAMAGES, CIVIL CASE NO. 93-1856 BEFORE THE
RESPONDENT JUDGE IS HEREBY ORDERED DISMISSED AND HIS ORDERS
THEREIN OF DECEMBER 29, 1993 AND MAY 11, 1994 ARE ORDERED SET
ASIDE.

Private respondent is a domestic corporation engaged in the manufacture, production, distribution

and sale of military armaments, munitions, airmunitions and other similar materials.  2

On January 23, 1990, private respondent was granted by the Bureau of Patents, Trademarks and
Technology Transfer (BPTTT), a Letters Patent No. UM-6938  covering an aerial fuze which was
3

published in the September-October-1990, Vol. III, No. 5 issue of the Bureau of Patent's
Official Gazette.4

Sometime in November 1993, private respondent, through its president, Mr. Gregory Floro,
Jr., discovered that petitioner submitted samples of its patented aerial fuze to the Armed
Forces of the Philippines (AFP) for testing. He learned that petitioner was claiming the
aforesaid aerial fuze as its own and planning to bid and manufacture the same commercially
without license or authority from private respondent. To protect its right, private respondent
on December 3, 1993, sent a letter  to petitioner advising it of its existing patent and its rights
5

thereunder, warning petitioner of a possible court action and/or application for injunction,
should it proceed with the scheduled testing by the military on December 7, 1993.

In response to private respondent's demand, petitioner filed on December 8, 1993 a

complaint  for injunction and damages arising from the alleged infringement before the
6

Regional Trial Court of Quezon City, Branch 88. The complaint alleged, among others: that
petitioner is the first, true and actual inventor of an aerial fuze denominated as "Fuze, PDR 77
CB4" which it developed as early as December 1981 under the Self-Reliance Defense Posture
Program (SRDP) of the AFP; that sometime in 1986, petitioner began supplying the AFP with
the said aerial fuze; that private respondent's aerial fuze is identical in every respect to the
petitioner's fuze; and that the only difference between the two fuzes are miniscule and merely
cosmetic in nature. Petitioner prayed that a temporary restraining order and/or writ of
preliminary injunction be issued enjoining private respondent including any and all persons
acting on its behalf from manufacturing, marketing and/or profiting therefrom, and/or from
performing any other act in connection therewith or tending to prejudice and deprive it of any
rights, privileges and benefits to which it is duly entitled as the first, true and actual inventor
of the aerial fuze.

On December 10, 1993, the trial court issued a temporary restraining order. Thereafter,
hearings were held on the application of petitioner for the issuance of a writ of preliminary
injunction, with both parties presenting their evidence. After the hearings, the trial court
directed the parties to submit their respective memoranda in support of their positions.
On December 27, 1993, private respondent submitted its memorandum   alleging that
7

petitioner has no cause of action to file a complaint for infringement against it since it has no
patent for the aerial fuze which it claims to have invented; that petitioner's available remedy
is to file a petition for cancellation of patent before the Bureau of Patents; that private
respondent as the patent holder cannot be stripped of its property right over the
patented aerial fuze consisting of the exclusive right to manufacture, use and sell the same
and that it stands to suffer irreparable damage and injury if it is enjoined from the exercise of
its property rights over its patent.

On December 29, 1993, the trial court issued an Order   granting the issuance of a writ of
8

preliminary injunction against private respondent the dispositive portion of which reads:

WHEREFORE, plaintiffs application for the issuance of a writ of preliminary

injunction is granted and, upon posting of the corresponding bond by plaintiff
in the amount of PHP 200,000.00, let the writ of preliminary injunction be
issued by the branch Clerk of this Court enjoining the defendant and any and
all persons acting on its behalf or by and under its authority, from
manufacturing, marketing and/or selling aerial fuzes identical, to those of
plaintiff, and from profiting therefrom, and/or from performing any other act in
connection therewith until further orders from this Court.

Private respondent moved for reconsideration but this was denied by the trial court in its
Order  of May 11, 1994, pertinent portions of which read:
9

For resolution before this Court is the Motion for Reconsideration filed by the
defendant and the plaintiff's Opposition thereto. The Court finds no sufficient
cause to reconsider its order dated December 29, 1993. During the hearing for
the issuance of the preliminary injunction, the plaintiff has amply proven its
entitlement to the relief prayed for. It is undisputed that the plaintiff has
developed its aerial fuze way back in 1981 while the defendant began
manufacturing the same only in 1987. Thus, it is only logical to conclude that it
was the plaintiff's aerial fuze that was copied or imitated which gives the
plaintiff the right to have the defendant enjoined "from manufacturing,
marketing and/or selling aerial fuzes identical to those of the plaintiff, and from
profiting therefrom and/or performing any other act in connection therewith
until further orders from this Court." With regards to the defendant's assertion
that an action for infringement may only be brought by "anyone possessing
right, title or interest to the patented invention," (Section 42, RA 165) qualified
by Sec. 10, RA 165 to include only "the first true and actual inventor, his heirs,
legal representatives or assignees, "this court finds the foregoing to be
untenable. Sec. 10 merely enumerates the persons who may have an invention
patented which does not necessarily limit to these persons the right to
institute an action for infringement. Defendant further contends that the order
in issue is disruptive of the status quo. On the contrary, the order issued by
the Court in effect maintained the status quo. The last actual, peaceable
uncontested status existing prior to this controversy was the plaintiff
manufacturing and selling its own aerial fuzes PDR 77 CB4 which was ordered
stopped through the defendant's letter. With the issuance of the order, the
operations of the plaintiff continue. Lastly, this court believes that the
defendant will not suffer irreparable injury by virtue of said order. The
defendant's claim is primarily hinged on its patent (Letters Patent No. UM-6983)
the validity of which is being questioned in this case.
 WHEREFORE, premises considered, the Motion for Reconsideration is hereby
denied for lack of merit.

SO ORDERED.

Aggrieved, private respondent on June 27, 1994, filed a petition for certiorari, mandamus and
prohibition   before respondent Court of Appeals raising as grounds the following:
10

a. Petitioner has no cause of action for infringement against private

respondent, the latter not having any patent for the aerial fuze which it claims
to have invented and developed and allegedly infringed by private respondent;

b. the case being an action for cancellation or invalidation of private

respondent's Letters Patent over its own aerial fuze, the proper venue is the
Office of the Director of Patents;

c. The trial court acted in grave abuse of discretion and/or in excess of

jurisdiction in finding that petitioner has fully established its clear title or right
to preliminary injunction;

d. The trial court acted in grave abuse of discretion and/or in excess of

jurisdiction in granting the preliminary injunction, it being disruptive of the
status quo; and

e. The trial court acted in grave abuse of discretion and/or in excess of

jurisdiction in granting the preliminary injunction thereby depriving private
respondent of its property rights over the patented aerial fuze and cause it
irreparable damages.

On November 9, 1994, the respondent court rendered the now assailed decision reversing the
trial court's Order of December 29, 1993 and dismissing the complaint filed by petitioner.

The motion for reconsideration was also denied on January 17, 1995.   Hence, this present
11

petition.

It is petitioner's contention that it can file, under Section 42 of the Patent Law (R.A. 165), an
action for infringement not as a patentee but as an entity in possession of a right, title or
interest in and to the patented invention. It advances the theory that while the absence of a
patent may prevent one from lawfully suing another for infringement of said patent, such
absence does not bar the first true and actual inventor of the patented invention from suing
another who was granted a patent in a suit for declaratory or injunctive relief recognized
under American patent laws. This remedy, petitioner points out, may be likened to a civil
action for infringement under Section 42 of the Philippine Patent Law.

We find the above arguments untenable.

Section 42 of R.A. 165, otherwise known as the Patent Law, explicitly provides:

Sec. 42. Civil action for infringement. — Any patentee, or anyone possessing

any right, title or interest in and to the patented invention, whose rights have
been infringed, may bring a civil action before the proper Court of First
 Instance (now Regional Trial court), to recover from the infringer damages
sustained by reason of the infringement and to secure an injunction for the
protection of his right. . . .

Under the aforequoted law, only the patentee or his successors-in-interest may file an action
for infringement. The phrase "anyone possessing any right, title or interest in and to the
patented invention" upon which petitioner maintains its present suit, refers only to the
patentee's successors-in-interest, assignees or grantees since actions for infringement of
patent may be brought in the name of the person or persons interested, whether as patentee,
assignees, or as grantees, of the exclusive right.   Moreover, there can be no infringement of
12

a patent until a patent has been issued, since whatever right one has to the invention covered
by the patent arises alone from the grant of patent.   In short, a person or entity who has not
13

been granted letters patent over an invention and has not acquired any light or title thereto
either as assignee or as licensee, has no cause of action for infringement because the right
to maintain an infringement suit depends on the existence of the patent.  14

Petitioner admits it has no patent over its aerial fuze. Therefore, it has no legal basis or cause
of action to institute the petition for injunction and damages arising from the alleged
infringement by private respondent. While petitioner claims to be the first inventor of
the aerial fuze, still it has no right of property over the same upon which it can maintain a suit
unless it obtains a patent therefor. Under American jurisprudence, an inventor has no
common-law right to a monopoly of his invention. He has the right to make, use and vend his
own invention, but if he voluntarily discloses it, such as by offering it for sale, the world is
free to copy and use it with impunity. A patent, however, gives the inventor the right to
exclude all others. As a patentee, he has the exclusive right of making, using or selling the
invention. 15

Further, the remedy of declaratory judgment or injunctive suit on patent invalidity relied upon
by petitioner cannot be likened to the civil action for infringement under Section 42 of the
Patent Law. The reason for this is that the said remedy is available only to the patent holder
or his successors-in-interest. Thus, anyone who has no patent over an invention but claims
to have a right or interest thereto can not file an action for declaratory judgment or injunctive
suit which is not recognized in this jurisdiction. Said person, however, is not left without any
remedy. He can, under Section 28 of the aforementioned law, file a petition for cancellation of
the patent within three (3) years from the publication of said patent with the Director of
Patents and raise as ground therefor that the person to whom the patent was issued is not
the true and actual inventor. Hence, petitioner's remedy is not to file an action for injunction
or infringement but to file a petition for cancellation of private respondent's patent. Petitioner
however failed to do so. As such, it can not now assail or impugn the validity of the private
respondent's letters patent by claiming that it is the true and actual inventor of the aerial fuze.

Thus, as correctly ruled by the respondent Court of Appeals in its assailed decision: "since
the petitioner (private respondent herein) is the patentee of the disputed invention embraced
by letters of patent UM No. 6938 issued to it on January 23, 1990 by the Bureau of Patents, it
has in its favor not only the presumption of validity of its patent, but that of a legal and
factual first and true inventor of the invention."

In the case of Aguas vs. De Leon,   we stated that:

16

The validity of the patent issued by the Philippine Patent Office in favor of the
private respondent and the question over the investments, novelty and
usefulness of the improved process therein specified and described are
 matters which are better determined by the Philippines Patent Office. The
technical Staff of the Philippines Patent Office, composed of experts in their
field, have, by the issuance of the patent in question, accepted the thinness of
the private respondent's new tiles as a discovery. There is a presumption that
the Philippine Patent Office has correctly determined the patentability of the
improvement by the private respondent of the process in question.

In fine, in the absence of error or abuse of power or lack of jurisdiction or grave abuse of
discretion, we sustain the assailed decision of the respondent Court of Appeal.

WHEREFORE, the decision of the Court of Appeals is hereby AFFIRMED. No pronouncement

as to costs.

SO ORDERED.

Regalado, Melo, Puno and Mendoza, JJ., concur.

Creser Precision Systems Inc. v CA and Floro

International Co. GR NO. 118708, February 2, 1998
Facts: 

Respondent was granted by the Bureau of Patents, Trademarks and Technology

Transfer (BPTTT) a Letter of patent for its aerial fuze on January 23, 1990.
Sometime in 1993, respondent discovered that the petitioner submitted samples
of its patented aerial fuze to the AFP for testing claiming to be his own. To
protect its right, respondent sent letter of warning to petitioner on a possible
court action should it proceed its testing by the AFP. In response the petitioner
filed a complaint for injunction and damages arising from alleged infringement
before the RTC asserting that it is the true and actual inventor of the aerial fuze
which it developed on 1981 under the Self Reliance Defense Posture Program of
the AFP. It has been supplying the military of the aerial fuze since then and that
the fuze of the respondent is similar as that of the petitioner. Petitioner prayed for
restraining order and injunction from marketing, manufacturing and profiting
from the said invention by the respondent. The trial court ruled in favor of the
petitioner citing the fact that it was the first to develop the aerial fuze since
1981 thsu it concludes that it is the petitioner’s aerial fuze that was copied by the
respondent. Moreover, the claim of respondent is solely based on its letter of
patent which validity is being questioned. On appeal, respondent argued that the
petitioner has no cause of action since he has no right to assert there being no
patent issued to his aerial fuze. The Court of Appeals reversed the decision of the
trial court dismissing the complaint of the petitioner. It was the contention of the
petitioner that it can file under Section 42 of the Patent Law an action for
infringement not as a patentee but as an entity in possession of a right, title or
interest to the patented invention. It theorizes that while the absence of a patent
prevents one from lawfully suing another for infringement of said patent, such
absence does not bar the true and actual inventor of the patented invention from
suing another in the same nature as a civil action for infringement.
CRESER PRECISION SYSTEM INC. VS. CA AND
FLORO INTERNATIONAL CORP.
CRESER PRECISION SYSTEM INC. VS. CA  AND FLORO INTERNATIONAL CORP.
GR No. 118708
February 2, 1998
PONENTE: MARTINEZ, J.

FACTS:

Private respondent Floro is a domestic corporation engaged in the manufacture, production, distribution

and sale of military armaments, munitions, airmunitions and other similar materials. On Jan. 23, 1990,
private respondent Floro was granted by the Bureau of Patents, Trademarks and Technology Transfer a
Letters Patent covering an aerial fuze.

However, Floro’s President, Mr. Gregory Floro discovered that petitioner Creser submitted samples of its
patented aerial fuze to the Armed Forces of the Philippines (AFP) for testing and that petitioner is claiming
the aerial fuze as its own and planning to bid and manufacture it commercially.

Petitioner Creser contends that it is the first, true and actual inventor of an aerial fuze denominated as
which it developed as early as December 1981 under the Self-Reliance Defense Posture Program
(SRDP) of the AFP; that sometime in 1986, petitioner began supplying the AFP with the said aerial fuze;
that private respondent's aerial fuze is identical in every respect to the petitioner's fuze; and that the only
difference between the two fuzes are miniscule and merely cosmetic in nature.

Petitioner prayed that a temporary restraining order and/or writ of preliminary injunction be issued
enjoining private respondent including any and all persons acting on its behalf from manufacturing,
marketing and/or profiting therefrom, and/or from performing any other act in connection therewith or
tending to prejudice and deprive it of any rights, privileges and benefits to which it is duly entitled as the
first, true and actual inventor of the aerial fuze.

RTC issued a TRO and later on granted the preliminary injunction filed by plaintiff against private
respondent. While CA reversed the RTC’s decision and dismissed the complaint filed by petitioner.

ISSUE: Whether Petitioner can file an action for infringement not as a patentee but as an entity in
possession of a right, title or interest in and to the patented invention?

RULING:

NO. Section 42 of R.A. 165, otherwise known as the Patent Law, explicitly provides:
Sec. 42. Civil action for infringement. — Any patentee, or anyone possessing any right, title or interest in
and to the patented invention, whose rights have been infringed, may bring a civil action before the proper
Court of First Instance (now Regional Trial court), to recover from the infringer damages sustained by
reason of the infringement and to secure an injunction for the protection of his right. . . .

There can be no infringement of a patent until a patent has been issued,  since whatever right one has to 
the invention covered by the patent arises alone from the grant of patent. In short, a person or entity who
has not been granted letters patent over an invention and has not acquired any light or title thereto either
as assignee or as licensee, has no cause of action for infringement because the right to maintain an
infringement suit depends on the existence of the patent.

Petitioner admits it has no patent over its aerial fuze. Therefore, it has no legal basis or cause of action to
institute the petition for injunction and damages arising from the alleged infringement by private
respondent. While petitioner claims to be the first inventor of the aerial fuze, still it has no right of property
over the same upon which it can maintain a suit unless it obtains a patent therefor.
CASE 6

Republic of the Philippines

SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 115106 March 15, 1996

ROBERTO L. DEL ROSARIO, petitioner,

vs.
COURT OF APPEALS AND JANITO CORPORATION, respondents.

BELLOSILLO, J.:p

Roberto del Rosario petitions this Court to review the decision of the Court of Appeals 1 which set aside the order of the Regional Trial Court
of Makati granting a writ of preliminary injunction in his favor.

The antecedents: On 18 January 1993 petitioner filed a complaint for patent infringement against
private respondent Janito Corporation.  Roberto L. del Rosario alleged that he was a patentee of an
2

audio equipment and improved audio equipment commonly known as the sing-along System
or karaoke under Letters Patent No. UM-5269 dated 2 June 1983 as well as Letters Patent No. UM-
6237 dated 14 November 1986 issued by the Director of Patents. The effectivity of both Letters
Patents was for five (5) years and was extended for another five (5) years starting 2 June 1988 and
14 November 1991, respectively. He described his sing-along system as a handy multi-purpose
compact machine which incorporates an amplifier speaker, one or two tape mechanisms, optional
tuner or radio and microphone mixer with features to enhance one's voice, such as the echo or
reverb to stimulate an opera hall or a studio sound, with the whole system enclosed in one cabinet
casing.

In the early part of 1990 petitioner learned that private respondent was manufacturing a sing-along
system bearing the trademark miyata or miyata karaoke substantially similar if not identical to the
sing-along system covered by the patents issued in his favor. Thus he sought from .the trial court the
issuance of a writ of preliminary injunction to enjoin private respondent, its officers and everybody
elsewhere acting on its behalf, from using, selling and advertising the miyata or miyata
karaoke brand, the injunction to be made permanent after trial, and praying for damages, attorney's
fees and costs of suit.

On 5 February 1993 the trial court temporarily restrained private respondent from manufacturing,
using and/or selling and advertising the miyata sing-along system or any sing-along system
substantially identical to the sing-along system patented by petitioner until further orders.
On 24 February 1993 the trial court issued a writ of preliminary injunction upon a bond on the basis
of its finding that petitioner was a holder of a utility model patent for a sing-along system and that
without his approval and consent private respondent was admittedly manufacturing and selling its
own sing-along system under the brand name miyata which was substantially similar to the patented
utility mode   of petitioner.
3

Private respondent assailed the order of 24 February 1993 directing the issuance of the writ by way
of a petition for certiorari with prayer for the issuance of a writ of preliminary injunction and a
temporary restraining order before respondent Court of Appeals.

On 15 November 1993 respondent appellate court granted the writ and set aside the questioned
order of the trial court. It expressed the view that there was no infringement of the patents of
petitioner by the fact alone that private respondent had manufactured the miyata karaoke or audio
system, and that the karaoke system was a universal product manufactured, advertised and
marketed in most countries of the world long before the patents were issued to petitioner. The
motion to reconsider the grant of the writ was denied;  hence, the instant petition for review.
4

This petition alleges that: (a) it was improper for the Court of Appeals to consider questions of fact in
a certiorari proceeding; (b) the Court of Appeals erred in taking judicial notice of private respondent's
self-serving presentation of facts; (c) the Court of Appeals erred in disregarding the findings of fact of
the trial court; and, (d) there was no basis for the Court of Appeals to grant a writ of preliminary
injunction in favor of private respondent. 5

Petitioner argues that in a certiorari proceeding questions of fact are not generally permitted the
inquiry being limited essentially to whether the tribunal has acted without or in excess of jurisdiction
or with grave abuse of discretion; that respondent court should not have disturbed but respected
instead the factual findings of the trial court; that the movant has a clear legal right to be protected
and that there is a violation of such right by private respondent. Thus, petitioner herein claims, he
has satisfied the legal requisites to justify the order of the trial court directing the issuance of the writ
of injunction. On the other hand, in the absence of a patent to justify the manufacture and sale by
private respondent of sing-along systems, it is not entitled to the injunctive relief granted by
respondent appellate court.

The crux of the controversy before us hinges on whether respondent Court of Appeals erred in
finding the trial court to have committed grave abuse of discretion in enjoining private respondent
from manufacturing, selling and advertising the miyata karaoke brand sing-along system for being
substantially similar if not identical to the audio equipment covered by letters patent issued to
petitioner.

Injunction is a preservative remedy for the protection of substantive rights or interests. It is not a
cause of action in itself but merely a provisional remedy, an adjunct to a main suit. The controlling
reason for the existence of the judicial power to issue the writ is that the court may thereby prevent a
threatened or continuous irremediable injury to some of the parties before their claims can be
thoroughly investigated and advisedly adjudicated. It is to be resorted to only when there is a
pressing necessity to avoid injurious consequences which cannot be remedied under any standard
of compensation. The application of the writ rests upon an alleged existence of an emergency or of a
special reason for such an order before the case can be regularly heard, and the essential
conditions for granting such temporary injunctive relief are that the complaint alleges facts which
appear to be sufficient to constitute a cause of action for injunction and that on the entire showing
from both sides, it appears, in view of all the circumstances, that the injunction is reasonably
necessary to protect the legal rights of plaintiff pending the litigation.6
A preliminary injunction may be granted at any time after the commencement of the action and
before judgment when it is established that the defendant is doing, threatens, or is about to do, or is
procuring or suffering to be done, some act probably in violation of the plaintiff's rights. Thus, there
are only two requisites to be satisfied if an injunction is to issue, namely, the existence of the right to
be protected, and that the facts against which the injunction is to be directed are violative of said
right.
7

For the writ to issue the interest of petitioner in the controversy or the right he seeks to be protected
must be a present right, a legal right which must be shown to be clear and positive.

In this regard Sec. 55 of R.A. 165 as amended, known as The Patent Law, provides —

Sec. 55. Design patents and patents for utility models. — (a) Any new, original, and
ornamental design for an article of manufacture and (b) new model or implements or
tools or of any industrial product or of part of the same, which does not possess the
quality of invention but which is of practical utility by reason of its form, configuration,
construction or composition, may be protected by the author thereof, the former by a
patent for a design and the latter by a patent for a utility model, in the same manner
and subject to the same provisions and requirements as relate to patents for
inventions insofar as they are applicable, except as otherwise herein provide . . . .

Admittedly, petitioner is a holder of Letters Patent No. UM-5629 dated 2 June 1985 issued for a term
of five (5) years from the grant of a Utility Model herein described —

The construction of an audio equipment comprising a substantially cubical casing

having a window at its rear and upper corner fitted with a slightly inclined control
panel, said cubical (casing) having a vertical partition wall therein defining a rear
compartment and a front compartment, and said front compartment serving as a
speaker baffle; a transistorized amplifier circuit having an echo section and writhed in
at least the printed circuit boards placed inside said rear compartment of said casing
and attached to said vertical partition wall, said transistorized amplifier circuit capable
of being operated from outside, through various controls mounted on said control
panel of such casing; a loud speaker fitted inside said front compartment of said
casing and connected to the output of the main audio amplifier section of said
transistorized amplifier circuit and a tape player mounted on the top wall of said
casing and said tape player being connected in conventional manner to said
transistorized amplifier circuit.
8

Again, on 14 November 1986 petitioner was granted Letters Patent No. UM-6237 for a term of five
(5) years from the grant of a Utility Model described as —

In an audio equipment consisting of a first cubical casing having an opening at its

rear and upper rear portion and a partition therein forming a rear compartment and a
front compartment serving as a loud speaker baffle, a control panel formed by
vertical and horizontal sections, a transistorized amplifier circuit wired in at least two
printed circuit boards attached at the back of said control panel, a first loud speaker
fitted inside said first compartment of such first casing and connected to the output of
said transistorized amplifier circuit; the improvement wherein said control panel being
removably fitted to said first cubical casing and further comprises a set of tape
recorder and tape player mounted on the vertical section of said control panel and
said recorder and player are likewise connected to said transistorized amplifier
circuit; a second cubical casing having an opening at its rear, said second cubical
 casing having (being?) provided with a vertical partition therein defining a rear
compartment and a front compartment, said rear compartment being provided with a
door and enclosing therein a set of tape racks and said front compartment serving as
loud speaker baffle, said second cubical casing being adapted to said first cubical
casing so that said first and second casings are secured together in compact and
portable form; and a second loud speaker fitted inside said front compartment of said
casing and connected to the output of said amplifier circuit. 9

The terms of both Letters Patents were extended for another five (5) years each, the first beginning
2 June 1988 and the second, 14 November 1991.

The Patent Law expressly acknowledges that any new model of implements or tools of any industrial
product even if not possessed of the quality of invention but which is of practical utility is entitled to a
patent for utility model.   Here, there is no dispute that the letters patent issued to petitioner are for
10

utility models of audio equipment.

In issuing, reissuing or withholding patents and extensions thereof, the Director of Patents
determines whether the patent is new and whether the machine or device is the proper subject of
patent. In passing on an application, the Director decides not only questions of law but also
questions of fact, i.e. whether there has been a prior public use or sale of the article sought to be
patented.   Where petitioner introduces the patent in evidence, if it is in due form, it affords a prima
11

facie presumption of its correctness and validity. The decision of the Director of Patents in granting
the patent is always presumed to be correct, and the burden then shifts to respondent to overcome
this presumption by competent evidence.  12

Under Sec. 55 of The Patent Law a utility model shall not be considered "new" if before the
application for a patent it has been publicly known or publicly used in this country or has been
described in a printed publication or publications circulated within the country, or if it is substantially
similar to any other utility model so known, used or described within the country. Respondent
corporation failed to present before the trial court competent evidence that the utility models covered
by the Letters Patents issued to petitioner were not new. This is evident from the testimony of Janito
Cua, President of respondent Janito Corporation, during the hearing on the issuance of the
injunction, to wit —

Q. Mr. Cua, you testified that there are (sic) so many other
companies which already have (sic) the sing-along system even
before the patent application of Mr. del Rosario and as a matter of
fact you mentioned Sanyo, Sony and Sharp, is that right?

A. Musicmate and Asahi.

Q. Now do you recall that your lawyer filed with this Honorable Court
an Urgent Motion to Lift Temporary Restraining Order of this
Honorable Court. I am sure you were the one who provided him with
the information about the many other companies selling the sing-
along system, is that right? These 18 which you enumerated here.

A. More than that because. . . .

Q. Now you will agree with me that in your statement Sharp you put
the date as 1985 agreed?
A. No.

Q. You mean your lawyer was wrong when he put the word Sharp
1985?

A. Maybe I informed him already.

x x x           x x x          x x x

Q. You mean your lawyer was wrong in alleging to this Court that
Sharp manufactured and sold (in) 1985 as found in the Urgent
Motion?

A. Since it is urgent it is more or less.

Q. The same also with Sanyo 1985 which you put, more or less?

A. Sanyo is wrong.

Q. It is not 1985?

A. Sanyo is 1979 I think.

Q. So this is also wrong. Panasonic 1986 is also wrong?

A. Panasonic I think.

Q. So you don't think this is also correct.

A. The date?

Q. So you don't think also that this allegation here that they
manufactured in 1986 is correct?

A. Wrong. Earlier.

Q. National by Precision Electronic 1986 this is also wrong?

A. I think earlier.

Q. So that means all your allegations here from 2 to 5 are wrong?

OK. By Philipps Philippines 1986, this is also correct or wrong?

A. More or less. We said more or less.

Q. Nakabutshi by Asahi Electronics that is also wrong?

A. No that is 1979.

Q. Electone by DICO 1989 is this correct or wrong?

 A. Correct. More or less.

Q. Skylers 1985 is that correct or wrong?

A. It is more or less because it is urgent. We don't have time to exact

the date.

Q. Musicmate of G.A. Yupangco 1981 this is more or less? You are

not also sure?

A. 95% sure.

Q. Now you are sure 1981.

A. This one because. . . .

Q. Mr. Witness so you are now trying to tell this Honorable Court that
all your allegations here of the dates in this Urgent Motion except for
Musicmate which you are only 95% sure they are all wrong or they
are also more or less or not sure, is that right?

A. More or less.

Q. Now do you have any proof, any advertisement, anything in writing

that would show that all these instruments are in the market, do you
have it.

A. No I don't have it because. . . .

Q. No I am satisfied with your answer. Now Mr. Witness, you don't

also have a proof that Akai instrument that you said was also in the
market before 1982? You don't have any written proof, any
advertisement?

A. I have the product.

Q. But you have not brought the product in (sic) this Honorable Court,
right?

A. No. 13

As may be gleaned herein, the rights of petitioner as a patentee have been sufficiently established,
contrary to the findings and conclusions of respondent Court of Appeals. Consequently, under Sec.
37 of The Patent law, petitioner as a patentee shall have the exclusive right to make, use and sell
the patented machine, article or product for the purpose of industry or commerce, throughout the
territory of the Philippines for the term of the patent, and such making, using or selling by any person
without authorization of the patentee constitutes infringement of his patent.

Petitioner established before the trial court that respondent Janito Corporation was manufacturing a
similar sing-along system bearing the trademark miyata which infringed his patented models. He
also alleged that both his own patented audio equipment and respondent's sing-along system were
constructed in a casing with a control panel, the casing having a vertical partition wall defining the
rear compartment from the front compartment, with the front compartment consisting of a loud
speaker baffle, both containing a transistorized amplifier circuit capable of being operated from
outside through various controls mounted on the control panel, and that both had loud speakers
fitted inside the front compartment of the casing and connected to the output of the main audio
amplifier section both having a tape recorder and a tape player mounted on the control panel with
the tape recorder and tape player being both connected to the transistorized amplifier circuit.  14

Respondent Janito Corporation denied that there was any violation of petitioner's patent rights, and
cited the differences between its miyata equipment and petitioner's audio equipment. But, it must be
emphasized, respondent only confined its comparison to the first model, Utility Model No. 5269, and
completely disregarded Utility Model No. 6237 which improved on the first. As described by
respondent corporation,   these differences are —
15

First. Under Utility Model 5269, the unit is a substantially cubical casing with a
window at its rear and upper corner fitted with slightly inclined control panel, while
the miyata equipment is a substantially rectangular casing with panel vertically
positioned.

Second. Under Utility Model 5269, the cubical casing has a vertical partition wall
defining a rear compartment and a front compartment serving as a speaker baffle,
while the miyata equipment has no rear compartment and front compartment in its
rectangular casing; it has only a front compartment horizontally divided into 3
compartments like a 3-storey building, the 1st compartment being a kit, the 2nd also
the speaker, and the 3rd are kits.

Third. Under Utility Model No. 5269, a transistorized amplifier circuit with an echo
section wired in at least 2 printed circuit boards is placed inside the rear
compartment of the casing and attached to the vertical partition wall, the printed
circuit board having 1 amplifier and 1 echo, while in the miyata equipment the
amplifier is mainly IC (Integrated Circuit) — powered with 8 printed circuit boards
almost all of which are IC controlled, with 1 amplifier with power supply, 1 main tuner,
1 equalizer (3-band), 1 IC controlled volume control, 1 echo IC, 1 tape pream, 1
instrument and 1 wireless microphone.

Fourth. Under Utility Model 5269, 4 printed circuits are placed inside the
compartment of its casing attached to the vertical partition wall, while in the miyata,
the 7 printed circuit boards (PCB) are attached to the front panel and 1 attached to
the horizontal divider.

Fifth. Under Utility Model 5269, there are various controls mounted on the control
panel of the casing, while in miyata, the various controls are all separated from the
printed circuit boards and the various controls are all attached thereto.

Sixth. Under Utility Model 5269, a loud speaker fitted inside the front compartment of
the casing is connected to the output of the main audio amplifier section of the
transistorized amplifier circuit, while in miyata, there is no other way but to use 2 loud
speakers connected to the amplifier.

Seventh. Under Utility Model 5269, a tape player is mounted on the top wall of the
casing, while in miyata, 2 tape players are used mounted side by side at the front.
It is elementary that a patent may be infringed where the essential or substantial features of the
patented invention are taken or appropriated, or the device, machine or other subject matter alleged
to infringe is substantially identical with the patented invention. In order to infringe a patent, a
machine or device must perform the same function, or accomplish the same result by identical or
substantially identical means and the principle or mode of operation must be substantially the
same.  16

It may be noted that respondent corporation failed to present before the trial court a clear, competent
and reliable comparison between its own model and that of petitioner, and disregarded completely
petitioner's utility Model No. 6237 which improved on his first patented model. Notwithstanding the
differences cited by respondent corporation, it did not refute and disprove the allegations of
petitioner before the trial court that: (a) both are used by a singer to sing and amplify his voice; (b)
both are used to sing with a minus-one or multiplex tapes, or that both are used to play minus-one or
standard cassette tapes for singing or for listening to; (c) both are used to sing with a minus-one
tape and multiplex tape and to record the singing and the accompaniment; (d) both are used to sing
with live accompaniment and to record the same; (e) both are used to enhance the voice of the
singer using echo effect, treble, bass and other controls; (g) both are equipped with cassette tape
decks which are installed with one being used for playback and the other, for recording the singer
and the accompaniment, and both may also be used to record a speaker's voice or instrumental
playing, like the guitar and other instruments; (h) both are
encased in a box-like cabinets; and, (i) both can be used with one or more microphones.  7 1

Clearly, therefore, both petitioner's and respondent's models involve substantially the same modes
of operation and produce substantially the same if not identical results when used.

In view thereof, we find that petitioner had established before the trial court prima facie proof of
violation of his rights as patentee to justify the issuance of a writ of preliminary injunction in his favor
during the pendency of the main suit for damages resulting from the alleged infringement.

WHEREFORE, the Decision of the Court of Appeals dated 15 November 1993 is REVERSED and
SET ASIDE and the Order of the trial court dated 24 February 1993 granting petitioner the writ of
injunction is REINSTATED.

The trial court is directed to continue with the proceedings on the main action pending before it in
order to resolve with dispatch the issues therein presented.

SO ORDERED.

Padilla, Vitug, Kapunan and Hermosisima, Jr., JJ., concur.

CASE 7

Republic of the Philippines

SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 97343 September 13, 1993

PASCUAL GODINES, petitioner,
vs.
THE HONORABLE COURT OF APPEALS, SPECIAL FOURTH DIVISION and SV-AGRO
ENTERPRISES, INC., respondents.

Jesus S. Anonat for petitioner.

Arturo M. Alinio for private respondent.

ROMERO, J.:

Through this petition for review in certiorari of a decision of the Court of Appeals affirming the
decision of the trial court, petitioner Pascual Godines seeks to reverse the adverse decision of the
Court a quo that he was liable for infringement of patent and unfair competition. The dispositive
portion of the assailed decision is hereby quoted to wit:

WHEREFORE, with the elimination of the award for attorney's fees, the judgment
appealed from is hereby AFFIRMED, with costs against appellant. 1

The patent involved in this case is Letters Patent No. UM-2236 issued by the Philippine Patent
Office to one Magdalena S. Villaruz on July 15, 1976. It covers a utility model for a hand tractor or
power tiller, the main components of which are the following: "(1) a vacuumatic house float; (2) a
harrow with adjustable operating handle; (3) a pair of paddy wheels; (4) a protective water covering
for the engine main drive; (5) a transmission case; (6) an operating handle; (7) an engine foundation
on the top midportion of the vacuumatic housing float to which the main engine drive is detachedly
installed; (8) a frontal frame extension above the quarter — circularly shaped water covering hold
(sic) in place the transmission case; (9) a V-belt connection to the engine main drive with
transmission gear through the pulley, and (10) an idler pulley installed on the engine
foundation."  The patented hand tractor works in the following manner: "the engine drives the
2

transmission gear thru the V-belt, a driven pulley and a transmission shaft. The engine drives the
transmission gear by tensioning of the V-belt which is controlled by the idler pulley. The V-belt drives
the pulley attached to the transmission gear which in turn drives the shaft where the paddy wheels
are attached. The operator handles the hand tractor through a handle which is inclined upwardly and
supported by a pair of substanding pipes and reinforced by a U-shaped G.I. pipe at the V-shaped
end."3

The above mentioned patent was acquired by SV-Agro Industries Enterprises, Inc., herein private
respondent, from Magdalena Villaruz, its chairman and president, by virtue of a Deed of Assignment
executed by the latter in its favor. On October 31, 1979, SV-Agro Industries caused the publication
of the patent in Bulletin Today, a newspaper of general circulation.

In accordance with the patent, private respondent manufactured and sold the patented power tillers
with the patent imprinted on them. In 1979, SV-Agro Industries suffered a decline of more than 50%
in sales in its Molave, Zamboanga del Sur branch. Upon investigation, it discovered that power tillers
similar to those patented by private respondent were being manufactured and sold by petitioner
herein. Consequently, private respondent notified Pascual Godines about the existing patent and
demanded that the latter stop selling and manufacturing similar power tillers. Upon petitioner's failure
to comply with the demand, SV-Agro Industries filed before the Regional Trial Court a complaint for
infringement of patent and unfair competition.

After trial, the court held Pascual Godines liable for infringement of patent and unfair competition.
The dispositive portion of the decision reads as follows:
 WHEREFORE, premises considered, JUDGMENT is hereby rendered in favor of the
plaintiff SV-Agro Industries Enterprises, Inc., and against defendant Pascual
Godines:

1. Declaring the writ of preliminary injunction issued by this Court against defendant
as permanent;

2. Ordering defendant Pascual Godines to pay plaintiff the sum of Fifty Thousand
Pesos (P50,000.00) as damages to its business reputation and goodwill, plus the
further sum of Eighty Thousand Pesos (P80,000.00) for unrealized profits during the
period defendant was manufacturing and selling copied or imitation floating power
tiller;

3. Ordering the defendant to pay the plaintiff, the further sum of Eight Thousand
Pesos (P8,000.00) as reimbursement of attorney's fees and other expenses of
litigation; and to pay the costs of the suit.

SO ORDERED. 4

The decision was affirmed by the appellate court.

Thereafter, this petition was filed. Petitioner maintains the defenses which he raised before the trial
and appellate courts, to wit: that he was not engaged in the manufacture and sale of the power tillers
as he made them only upon the special order of his customers who gave their own specifications;
hence, he could not be liable for infringement of patent and unfair competition; and that those made
by him were different from those being manufactured and sold by private respondent.

We find no merit in his arguments. The question of whether petitioner was manufacturing and selling
power tillers is a question of fact better addressed to the lower courts. In dismissing the first
argument of petitioner herein, the Court of Appeals quoted the findings of the court, to wit:

It is the contention of defendant that he did not manufacture or make imitations or

copies of plaintiff's turtle power tiller as what he merely did was to fabricate his
floating power tiller upon specifications and designs of those who ordered them.
However, this contention appears untenable in the light of the following
circumstances: 1) he admits in his Answer that he has been manufacturing power
tillers or hand tractors, selling and distributing them long before plaintiff started
selling its turtle power tiller in Zamboanga del Sur and Misamis Occidental, meaning
that defendant is principally a manufacturer of power tillers, not upon specification
and design of buyers, but upon his own specification and design; 2) it would be
unbelievable that defendant would fabricate power tillers similar to the turtle power
tillers of plaintiff upon specifications of buyers without requiring a job order where the
specification and designs of those ordered are specified. No document was (sic) ever
been presented showing such job orders, and it is rather unusual for defendant to
manufacture something without the specification and designs, considering that he is
an engineer by profession and proprietor of the Ozamis Engineering shop. On the
other hand, it is also highly unusual for buyers to order the fabrication of a power tiller
or hand tractor and allow defendant to manufacture them merely based on their
verbal instructions. This is contrary to the usual business and manufacturing practice.
This is not only time consuming, but costly because it involves a trial and error
method, repeat jobs and material wastage. Defendant judicially admitted two (2) units
of the turtle power tiller sold by him to Policarpio Berondo.5
Of general acceptance is the rule imbedded in our jurisprudence that ". . . the jurisdiction of the
Supreme Court in cases brought to it from the Court of Appeals in a petition for certiorari under Rule
45 of the Rules of Court is limited to the review of errors of law, and that said appellate court's
findings of fact are conclusive upon this Court." 6

The fact that petitioner herein manufactured and sold power tillers without patentee's authority has
been established by the courts despite petitioner's claims to the contrary.

The question now arises: Did petitioner's product infringe upon the patent of private respondent?

Tests have been established to determine infringement. These are (a) literal infringement; and (b)
the doctrine of equivalents.  In using literal infringement as a test, ". . . resort must be had, in the first
7

instance, to the words of the claim. If accused matter clearly falls within the claim, infringement is
made out and that is the end of it."  To determine whether the particular item falls within the literal
8

meaning of the patent claims, the court must juxtapose the claims of the patent and the accused
product within the overall context of the claims and specifications, to determine whether there is
exact identity of all material elements. 9

The trial court made the following observation:

Samples of the defendant's floating power tiller have been produced and inspected
by the court and compared with that of the turtle power tiller of the plaintiff (see
Exhibits H to H-28). In appearance and form, both the floating power tillers of the
defendant and the turtle power tiller of the plaintiff are virtually the same. Defendant
admitted to the Court that two (2) of the power inspected on March 12, 1984, were
manufactured and sold by him (see TSN, March 12, 1984, p. 7). The three power
tillers were placed alongside with each other. At the center was the turtle power tiller
of plaintiff, and on both sides thereof were the floating power tillers of defendant
(Exhibits H to H-2). Witness Rodrigo took photographs of the same power tillers
(front, side, top and back views for purposes of comparison (see Exhibits H-4 to H-
28). Viewed from any perspective or angle, the power tiller of the defendant is
identical and similar to that of the turtle power tiller of plaintiff in form, configuration,
design and appearance. The parts or components thereof are virtually the same.
Both have the circularly-shaped vacuumatic housing float, a paddy in front, a
protective water covering, a transmission box housing the transmission gears, a
handle which is V-shaped and inclined upwardly, attached to the side of the
vacuumatic housing float and supported by the upstanding G.I. pipes and an engine
base at the top midportion of the vacuumatic housing float to which the engine drive
may be attached. In operation, the floating power tiller of the defendant operates also
in similar manner as the turtle power tiller of plaintiff. This was admitted by the
defendant himself in court that they are operating on the same principles. (TSN,
August 19, 1987, p. 13)  10

Moreover, it is also observed that petitioner also called his power tiller as a floating power tiller. The
patent issued by the Patent Office referred to a "farm implement but more particularly to a turtle hand
tractor having a vacuumatic housing float on which the engine drive is held in place, the operating
handle, the harrow housing with its operating handle and the paddy wheel protective covering."   It 11

appears from the foregoing observation of the trial court that these claims of the patent and the
features of the patented utility model were copied by petitioner. We are compelled to arrive at no
other conclusion but that there was infringement.
Petitioner's argument that his power tillers were different from private respondent's is that of a
drowning man clutching at straws.

Recognizing that the logical fallback position of one in the place of defendant is to aver that his
product is different from the patented one, courts have adopted the doctrine of equivalents which
recognizes that minor modifications in a patented invention are sufficient to put the item beyond the
scope of literal infringement.   Thus, according to this doctrine, "(a)n infringement also occurs when
12

a device appropriates a prior invention by incorporating its innovative concept and, albeit with some
modification and change, performs substantially the same function in substantially the same way to
achieve substantially the same result."   The reason for the doctrine of equivalents is that to permit
13

the imitation of a patented invention which does not copy any literal detail would be to convert the
protection of the patent grant into a hollow and useless thing. Such imitation would leave room for —
indeed encourage — the unscrupulous copyist to make unimportant and insubstantial changes and
substitutions in the patent which, though adding nothing, would be enough to take the copied matter
outside the claim, and hence outside the reach of the law.  14

In this case, the trial court observed:

Defendant's witness Eduardo Cañete, employed for 11 years as welder of the

Ozamis Engineering, and therefore actually involved in the making of the floating
power tillers of defendant tried to explain the difference between the floating power
tillers made by the defendant. But a careful examination between the two power
tillers will show that they will operate on the same fundamental principles. And,
according to establish jurisprudence, in infringement of patent, similarities or
differences are to be determined, not by the names of things, but in the light of what
elements do, and substantial, rather than technical, identity in the test. More
specifically, it is necessary and sufficient to constitute equivalency that the same
function can be performed in substantially the same way or manner, or by the same
or substantially the same, principle or mode of operation; but where these tests are
satisfied, mere differences of form or name are immaterial. . . . 
15

It also stated:

To establish an infringement, it is not essential to show that the defendant adopted

the device or process in every particular; Proof of an adoption of the substance of the
thing will be sufficient. "In one sense," said Justice Brown, "it may be said that no
device can be adjudged an infringement that does not substantially correspond with
the patent. But another construction, which would limit these words to exact
mechanism described in the patent, would be so obviously unjust that no court could
be expected to adopt it. . . .

The law will protect a patentee against imitation of his patent by other forms and
proportions. If two devices do the same work in substantially the same way, and
accomplish substantially the same result, they are the same, even though they differ
in name, form, or shape.  16

We pronounce petitioner liable for infringement in accordance with Section 37 of Republic Act No.
165, as amended, providing, inter alia:

Sec. 37. Right of Patentees. — A patentee shall have the exclusive right to make,
use and sell the patented machine, article or product, and to use the patented
process for the purpose of industry or commerce, throughout the territory of the
 Philippines for the terms of the patent; and such making, using, or selling by any
person without the authorization of the Patentee constitutes infringement of the
patent. (Emphasis ours)

As far as the issue regarding unfair competition is concerned, suffice it to say that Republic Act No.
166, as amended, provides, inter alia:

Sec. 29. Unfair competition, rights and remedies. — . . .

xxx xxx xxx

In particular, and without in any way limiting the scope of unfair competition, the
following shall be deemed guilty of unfair competition:

(a) Any person, who in selling his goods shall give them the general appearance of
goods of another manufacturer or dealer, either as to the goods themselves or in the
wrapping of the packages in which they are contained, or the devices or words
thereon, or in any other feature of their appearance, which would be likely to
influence purchasers that the goods offered are those of a manufacturer or dealer
other than the actual manufacturer or dealer, or who otherwise clothes the goods
with such appearance as shall deceive the public and defraud another of his
legitimate trade. . . .

x x x           x x x          x x x

Considering the foregoing, we find no reversible error in the decision of the Court of Appeals
affirming with modification the decision of the trial court.

WHEREFORE, premises considered, the decision of the Court of Appeals is hereby AFFIRMED and
this petition DENIED for lack of merit.

Bidin, Melo and Vitug, JJ., concur.

Feliciano, J., is on leave.

CASE 8

SECOND DIVISION

G.R. No. 134217 : May 11, 2000

KENNETH ROY SAVAGE/K ANGELIN EXPORT TRADING,

owned and managed by GEMMA DEMORAL-
SAVAGE, Petitioners, v.  JUDGE APRONIANO B. TAYPIN,
Presiding Judge, RTC-BR. 12, Cebu City, CEBU PROVINCIAL
PROSECUTOR'S OFFICE, NATIONAL BUREAU OF
INVESTIGATION, Region VII, Cebu City, JUANITA NG
MENDOZA, MENDCO DEVELOPMENT CORPORATION, ALFREDO
SABJON and DANTE SOSMEA, Respondents.

DECISION
 BELLOSILLO, J.:

Petitioners KENNETH ROY SAVAGE and K ANGELIN EXPORT

TRADING, owned and managed by GEMMA DEMORAL-
SAVAGE, seek to nullify the search warrant issued by
respondent Judge Aproniano B. Taypin of the Regional Trial
Court, Br. 12 Cebu City, which resulted in the seizure of
certain pieces of wrought iron furniture from the factory of
petitioners located in Biasong, Talisay, Cebu. Their motion to
quash the search warrant was denied by respondent Judge
as well as their motion to reconsider the denial. Hence, this
petition for certiorari.

The antecedent facts: Acting on a complaint lodged by

private respondent Eric Ng Mendoza, president and general
manager of Mendco Development Corporation
(MENDCO),1 Supervising Agent Jose Ermie Monsanto of the
National Bureau of Investigation (NBI) filed an application
for search warrant with the Regional Trial Court of Cebu
City.2 The application sought the authorization to search the
premises of K Angelin Export International located in
Biasong, Talisay, Cebu, and to seize the pieces of wrought
iron furniture found therein which were allegedly the object
of unfair competition involving design patents, punishable
under Art. 189 of the Revised Penal Code as amended. The
assailed Search Warrant No. 637-10-1697-12 was issued by
respondent Judge on 16 October 1997 and executed in the
afternoon of the following day by NBI agents.3 Seized from
the factory were several pieces of furniture, indicated in
the Inventory Sheet  attached to the Return of Search
Warrant, and all items seized have remained in NBI custody
up to the present.4
cräläwvirtualibräry

On 30 October 1997 petitioners moved to quash the search

warrant alleging that: (a) the crime they were accused of did
not exist; (b) the issuance of the warrant was not based on
probable cause; (c) the judge failed to ask the witnesses
searching questions; and, (d) the warrant did not particularly
describe the things to be seized.5 cräläwvirtualibräry
On 10 November 1997 petitioners filed a Supplemental
Motion to Quash where they additionally alleged that the
assailed warrant was applied for without a certification
against forum shopping.6 On 30 January 1998 respondent
Judge denied the Motion to Quash and the Supplemental
Motion to Quash.7 On 2 March 1998 petitioners moved to
reconsider the denial of their motion to quash and alleged
substantially the same grounds found in their original Motion
to Quash but adding thereto two (2) new grounds, namely:
(a) respondent court has no jurisdiction over the subject-
matter; and, (b) respondent court failed to "substantiate"
the order sought to be reconsidered.8 The denial of their last
motion9 prompted petitioners to come to this Court. Court

The principal issues that must be addressed in this petition

are: (a) questions involving jurisdiction over the offense; (b)
the need for a certification of non-forum shopping; and, (c)
the existence of the crime.

Petitioners claim that respondent trial court had no

jurisdiction over the offense since it was not designated as a
special court for Intellectual Property Rights  (IPR), citing in
support thereof Supreme Court Administrative Order No.
113-95 designating certain branches of the Regional Trial
Courts, Metropolitan Trial Courts and Municipal Trial Courts
in Cities as Special Courts for IPR. The courts enumerated
therein are mandated to try and decide violations of IPR
including Art. 189 of the Revised Penal Code  committed
within their respective territorial jurisdictions. The sala of
Judge Benigno G. Gaviola of the RTC-Br. 9, Cebu City, was
designated Special Court for IPR for the 7th Judicial
Region.10 Subsequently Supreme Court Administrative Order
No.104-96 was issued providing that jurisdiction over all
violations of IPR was thereafter confined to the Regional
Trial Courts.11
cräläwvirtualibräry

The authority to issue search warrants was not among those

mentioned in the administrative orders. But the Court has
consistently ruled that a search warrant is merely a process
issued by the court in the exercise of its ancillary jurisdiction
and not a criminal action which it may entertain pursuant to
its original jurisdiction.12 The authority to issue search
warrants is inherent in all courts and may be effected
outside their territorial jurisdiction.13 In the instant case, the
premises searched located in Biasong, Talisay, Cebu, are well
within the territorial jurisdiction of the respondent court.14 cräläwvirtualibräry

Petitioners apparently misconstrued the import of the

designation of Special Courts for IPR. Administrative Order
No. 113-95 merely specified which court could "try and
decide" cases involving violations of IPR. It did not, and
could not, vest exclusive jurisdiction with regard to all
matters (including the issuance of search warrants and other
judicial processes) in any one court. Jurisdiction is conferred
upon courts by substantive law; in this case, BP Blg.129, and
not by a procedural rule, much less by an administrative
order.15 The power to issue search warrants for violations of
IPR has not been exclusively vested in the courts
enumerated in Supreme Court Administrative Order No.113-
95.

Petitioners next allege that the application for a search

warrant should have been dismissed outright since it was
not accompanied by a certification of non-forum shopping,
citing as authority therefor Washington Distillers, Inc. v.
Court of Appeals.16 In that case, we sustained the quashal of
the search warrant because the applicant had been guilty of
forum shopping as private respondent sought a search
warrant from the Manila Regional Trial Court only after he
was denied by the courts of Pampanga. The instant case
differs significantly, for here there is no allegation of forum-
shopping, only failure to acquire a certification against
forum-shopping. The Rules of Court as amended requires
such certification only from initiatory pleadings, omitting any
mention of "applications."17 In contrast, Supreme Court
Circular 04-94, the old rule on the matter, required such
certification even from "applications." Our ruling
in Washington Distillers required no such certification from
applications for search warrants. Hence, the absence of such
certification will not result in the dismissal of an application
for search warrant.

The last question to be resolved is whether unfair

competition involving design patents punishable under Art.
189 of the Revised Penal Code exists in this case. Prosecutor
Ivan Herrero seems to agree as he filed the corresponding
Information against petitioners on 17 March
1998.18 However, since the IPR Code took effect on 1
January 1998 any discussion contrary to the view herein
expressed would be pointless. The repealing clause of the
Code provides -

All Acts and parts of Acts inconsistent herewith, more

particularly, Republic Act No. 165, as amended; Republic Act
No. 166, as amended; and Articles 188 and 189 of the
Revised Penal Code; Presidential Decree No. 49, including
Presidential Decree No. 285, as amended, are hereby
repealed (italics ours).19
cräläwvirtualibräry

The issue involving the existence of "unfair competition" as a

felony involving design patents, referred to in Art. 189 of
the Revised Penal Code,  has been rendered moot and
academic by the repeal of the article.

The search warrant cannot even be issued by virtue of a

possible violation of the IPR Code. The assailed acts
specifically alleged were the manufacture and fabrication of
wrought iron furniture similar to that patented by MENDCO,
without securing any license or patent for the same, for the
purpose of deceiving or defrauding Mendco and the buying
public.20 The Code defines "unfair competition" thus - Lexj
uris

168.2. Any person who shall employ deception or any other

means contrary to good faith by which he shall pass off the
goods manufactured by him or in which he deals, or his
business, or services for those of the one having established
such goodwill, or shall commit any acts calculated to produce
said result, shall be guilty of unfair competition, and shall be
subject to an action therefor.

168.3. In particular, and without in any way limiting the

scope of protection against unfair competition, the following
shall be deemed guilty of unfair competition:

(a) Any person who is selling his goods and gives them the
general appearance of goods of another manufacturer or
dealer, either as to the goods themselves or in the wrapping
of the packages in which they are contained, or the devices
or words thereon, or in any other feature of their appearance
which would be likely to influence purchasers to believe that
the goods offered are those of a manufacturer or dealer,
other than the actual manufacturer or dealer, or who
otherwise clothes the goods with such appearance as shall
deceive the public and defraud another of his legitimate
trade, or any subsequent vendor of such goods or any agent
of any vendor engaged in selling such goods with a like
purpose;

(b) Any person who by any artifice, or device, or who

employs any other means calculated to induce the false
belief that such person is offering the services of another
who has identified such services in the mind of the public; or

(c) Any person who shall make any false statement in the
course of trade or who shall commit any other act contrary to
good faith of a nature calculated to discredit goods,
businesses or services of another.21 cräläwvirtualibräry

There is evidently no mention of any crime of "unfair

competition" involving design patents in the controlling
provisions on Unfair Competition. It is therefore unclear
whether the crime exists at all, for the enactment of RA 8293
did not result in the reenactment of Art. 189 of
the Revised Penal Code.  In the face of this ambiguity, we
must strictly construe the statute against the State and
liberally in favor of the accused,22 for penal statutes cannot
be enlarged or extended by intendment, implication or any
equitable consideration.23 Respondents invoke jurisprudence
to support their contention that "unfair competition" exists
in this case.24 However, we are prevented from applying
these principles, along with the new provisions on Unfair
Competition found in the IPR Code,  to the alleged acts of the
petitioners, for such acts constitute patent infringement as
defined by the same Code-Juri smis

Sec. 76. Civil Action for Infringement. -  76.1. The making,

using, offering for sale, selling, or importing a patented
product or a product obtained directly or indirectly from a
patented process, or the use of a patented process without
authorization of the patentee constitutes patent
infringement.25cräläwvirtualibräry

Although this case traces its origins to the year 1997 or

before the enactment of the IPR Code, we are constrained to
invoke the provisions of the Code. Article 22 of the Revised
Penal Code provides that penal laws shall be applied
retrospectively, if such application would be beneficial to the
accused.26 Since the IPR Code effectively obliterates the
possibility of any criminal liability attaching to the acts
alleged, then that Code must be applied here.

In the issuance of search warrants, the Rules of Court

requires a finding of probable cause in connection with one
specific offense to be determined personally by the judge
after examination of the complainant and the witnesses he
may produce, and particularly describing the place to be
searched and the things to be seized.27 Hence, since there is
no crime to speak of, the search warrant does not even begin
to fulfill these stringent requirements and is therefore
defective on its face. The nullity of the warrant renders moot
and academic the other issues raised in petitioners' Motion
to Quash and Motion for Reconsideration.  Since the assailed
search warrant is null and void, all property seized by virtue
thereof should be returned to petitioners in accordance with
established jurisprudence.28 cräläwvirtualibräry
In petitioners' Reply with Additional Information  they allege
that the trial court denied their motion to transfer their case
to a Special Court for IPR. We have gone through the records
and we fail to find any trace of such motion or even a copy of
the order denying it. All that appears in the records is a copy
of an order granting a similar motion filed by a certain Minnie
Dayon with regard to Search Warrant No. 639-10-1697-
12.29 This attachment being immaterial we shall give it no
further attention.

WHEREFORE , the Order of the Regional Trial Court, Br. 12,

Cebu City, dated 30 January 1998, denying the Motion to
Quash Search Warrant No. 637-10-1697-12  dated 30
October 1997 and the Supplemental Motion to Quash  dated
10 November 1997 filed by petitioners, as well as the Order
dated 8 April 1998 denying petitioners' Motion for
Reconsideration dated 2 March 1998, is SET ASIDE. Search
Warrant No. 637-10-1697-12 issued on 16 October 1997 is
ANNULLED and SET ASIDE, and respondents are ordered to
return to petitioners the property seized by virtue of the
illegal search warrant.

SO ORDERED.

Mendoza, Quisumbing, and Buena,  JJ.,  concur.

De Leon, Jr.,  J.,  on leave.

KENNETH ROY SAVAGE/K ANGELIN EXPORT TRADING, owned and

managed by GEMMA DEMORAL-SAVAGE vs. JUDGE APRONIANO B.
TAYPIN, Presiding Judge, RTC-BR. 12, Cebu City, CEBU PROVINCIAL
PROSECUTOR'S OFFICE, NATIONAL BUREAU OF INVESTIGATION,
Region VII, Cebu City, JUANITA NG MENDOZA, MENDCO
DEVELOPMENT CORPORATION, ALFREDO SABJON and DANTE
SOSMEÑA
G.R. No. 134217, May 11, 2000 

FACTS: Petitioners Savage, seek to nullify the search warrant issued by

respondent Judge Aproniano B. Taypin of the Regional Trial Court, Br. 12
Cebu City, which resulted in the seizure of certain pieces of wrought iron
furniture from the factory of petitioners located in Biasong, Talisay, Cebu.

The complaint was lodged by private respondent Eric Ng Mendoza,

president and general manager of Mendco Development Corporation
(MENDCO), alleging that Savage’s products are the object of unfair
competition involving design patents, punishable under Art. 189 of the
Revised Penal Code as amended. Savage contends however, that there
was no existence of offense leading to the issuance of a search warrant
and eventual seizure of its products.

ISSUE: Whether or not unfair competition involving design patents are

punishable under Article 189 of the Revised Penal Code.

HELD: To provide a clear view, the Intellectual Property Code took effect
on January 1, 1998. The repealing clause of the IPC provides that Articles
188 and 189 of the Revised Penal Code (RPC), Presidential Decree No.
49, are hereby repealed The issue involving the existence of "unfair
competition" as a felony involving design patents, referred to in Art. 189 of
the Revised Penal Code, has been rendered moot and academic by the
repeal of the article. Hence, the search warrant cannot even be issued by
virtue of a possible violation of the IPR Code.

There is no mention of any crime of "unfair competition" involving design

patents in the controlling provisions on Unfair Competition of the RPC. It is
therefore unclear whether the crime exists at all, for the enactment of RA
8293 did not result in the reenactment of Art. 189 of the Revised Penal
Code.

The court is are prevented from applying these principles, along with the
new provisions on Unfair Competition found in the IPR Code, to the alleged
acts of the petitioners, for such acts constitute patent infringement as
defined by the same Code

Although the case traces its origins to the year 1997 or before the
enactment of the IPR Code, Article 22 of the Revised Penal Code provides
that penal laws shall be applied retrospectively, if such application would be
beneficial to the accused. Since the IPR Code effectively obliterates the
possibility of any criminal liability attaching to the acts alleged, then RPC
provisions must be applied.
CASE 9

DIVISION

[ GR No. 121867, Jul 24, 1997 ]

SMITH KLINE v. CA +

DECISION
342 Phil. 187

DAVIDE, JR., J.:

This is an appeal under Rule 45 of the Rules of Court from the decision [1] of
4 November 1994 of the Court of Appeals in CA-G.R. SP No. 33520, which
affirmed the 14 February 1994 decision[2]  of the Director of the Bureau of
Patents, Trademarks and Technology Transfer (BPTTT) granting a
compulsory non-exclusive and non-transferable license to private
respondent to manufacture, use and sell in the Philippines its own brands
of pharmaceutical products containing petitioner's patented
pharmaceutical product known as Cimetidine.

Petitioner is a foreign corporation with principal office at Welwyn Garden

City, England. It owns Philippine Letters Patent No. 12207 issued by the
BPTTT for the patent of the drug Cimetidine.

Private respondent is a domestic corporation engaged in the business of

manufacturing and distributing pharmaceutical products. On 30 March
1987, it filed a petition for compulsory licensing[3] with the BPTTT for
authorization to manufacture its own brand of medicine from the drug
Cimetidine and to market the resulting product in the Philippines. The
petition was filed pursuant to the provisions of Section 34 of Republic Act
No. 165 (An Act Creating a Patent Office Prescribing Its Powers and Duties,
Regulating the Issuance of Patents, and Appropriating Funds Therefor),
which provides for the compulsory licensing of a particular patent after the
expiration of two years from the grant of the latter if the patented invention
relates to, inter alia, medicine or that which is necessary for public health or
public safety. Private respondent alleged that the grant of Philippine Letters
Patent No. 12207 was issued on 29 November 1978; that the petition was
filed beyond the two-year protective period provided in Section 34 of R.A.
No. 165; and that it had the capability to work the patented product or
make use of it in its manufacture of medicine.

Petitioner opposed, arguing that private respondent had no cause of action

and lacked the capability to work the patented product; the petition failed
to specifically divulge how private respondent would use or improve the
patented product; and that private respondent was motivated by the
pecuniary gain attendant to the grant of a compulsory license. Petitioner
also maintained that it was capable of satisfying the demand of the local
market in the manufacture and marketing of the medicines covered by the
patented product. Finally, petitioner challenged the constitutionality of
Sections 34 and 35 of R.A. No. 165 for violating the due process and equal
protection clauses of the Constitution.

After appropriate proceedings, the BPTTT handed down its decision on 14

February 1994, with the dispositive portion thereof providing:

NOW, THEREFORE, by virtue of the powers vested in this Office by

Republic Act No. 165, as amended by Presidential Decree No. 1263, there is
hereby issued a license in favor of the herein [private respondent], United
Laboratories, Inc., [sic] under Letters Patent No. 12207 issued on
November 29, 1978, subject to the following terms and conditions:
1. That [private respondent] be hereby granted a non-exclusive and non-
transferable license to manufacture, use and sell in the Philippines its own
brands of pharmaceutical products containing [petitioner's] patented
invention which is disclosed and claimed in Letters Patent No. 12207;

2. That the license granted herein shall be for the remaining life of said
Letters Patent No. 12207 unless this license is terminated in the manner
hereinafter provided and that no right or license is hereby granted to
[private respondent] under any patent to [petitioner] or [sic] other than
recited herein;
3. By virtue of this license, [private respondent] shall pay [petitioner] a
royalty on all license products containing the patented substance made and
sold by [private respondent] in the amount equivalent to TWO AND ONE
HALF PERCENT (2.5%) of the net sales in Philippine currency. The term
"net scale" [sic] means the gross amount billed for the product pertaining to
Letters Patent No. 12207, less --

(a) Transportation charges or allowances, if any, included in such amount;

(b) Trade, quantity or cash discounts and broker's or agent's or distributor's

commissions, if any, allowed or paid;

(c) Credits or allowances, if any, given or made on account of rejection or

return of the patented product previously delivered; and

(d) Any tax, excise or government charge included in such amount, or

measured by the production sale, transportation, use of delivery of the
products.

In case [private respondent's] product containing the patented substance

shall contain one or more active ingredients admixed therewith, said
product hereinafter identified as admixed product, the royalty to be paid
shall be determined in accordance with the following formula:

Net Sales on             Value of Patented

ROYALTY = Admixed Product x 0.025 x Substance

Value of Patented Value of Other

Substance                    Active Ingredients

4. The royalties shall be computed after the end of each calendar quarter to
all goods containing the patented substance herein involved, made and sold
during the precedent quarter and to be paid by [private respondent] at its
place of business on or before the thirtieth day of the month following the
end of each calendar quarter. Payments should be made to [petitioner's]
authorized representative in the Philippines;

5. [Private respondent] shall keep records in sufficient detail to enable

[petitioner] to determine the royalties payable and shall further permit its
books and records to be examined from time to time at [private
respondent's] premises during office hours, to the extent necessary to be
made at the expense of [petitioner] by a certified public accountant
appointed by [petitioner] and acceptable to [private respondent].

6. [Private respondent] shall adopt and use its own trademark or labels on
all its products containing the patented substance herein involved;

7. [Private respondent] shall comply with the laws on drugs and medicine
requiring previous clinical tests and approval of proper government
authorities before selling to the public its own products manufactured
under the license;

8. [Petitioner] shall have the right to terminate the license granted to

[private respondent] by giving the latter thirty (30) days notice in writing to
that effect, in the event that [private respondent] default [sic] in the
payment of royalty provided herein or if [private respondent] shall default
in the performance of other covenants or conditions of this agreement
which are to be performed by [private respondent]:

(a) [Private respondent] shall have the right provided it is not in default to
payment or royalties or other obligations under this agreement, to
terminate the license granted to its, [sic] giving [petitioner] thirty (30)
days-notice in writing to that effect;

(b) Any termination of this license as provided for above shall not in any
way operate to deny [petitioner] its rights or remedies, either at laws [sic]
or equity, or relieve [private respondent] of the payment of royalties or
satisfaction of other obligations incurred prior to the effective date of such
termination; and

(c) Notice of termination of this license shall be filed with the Bureau of
Patents, Trademarks and Technology Transfer.
9. In case of dispute as to the enforcement of the provisions of this license,
the matter shall be submitted for arbitration before the Director of Bureau
of Patents, Trademarks and Technology Transfer or any ranking official of
the Bureau of Patents, Trademarks and Technology Transfer duly delegated
by him;

10. This License shall inure to the benefit of each of the parties herein, to
the subsidiaries and assigns of [petitioner] and to the successors and
assigns of [private respondent]; and

11. This license take [sic] effect immediately.[4]

Petitioner then appealed to the Court of Appeals by way of a petition for

review, which was docketed as CA-G.R. SP No. 33520. Petitioner claimed
that the appealed decision was erroneous because:

... [IT] VIOLATES INTERNATIONAL LAW AS EMBODIED IN THE PARIS

CONVENTION FOR THE PROTECTION OF INDUSTRIAL PROPERTY
AND MUST ACCORDINGLY BE SET ASIDE AND MODIFIED.

II

... [IT] IS AN INVALID EXERCISE OF POLICE POWER.

III

CONCEDING ARGUENDO THE QUESTIONED DECISION'S VALIDITY,

THE BPTTT'S PRONOUNCEMENT FIXING THE ROYALTY AT 2.5% OF
THE NET WHOLESALE PRICE IN PHILIPPINE CURRENCY WAS
RENDERED WITHOUT ANY FACTUAL BASIS AND AMOUNTS TO
EXPROPRIATION OF PRIVATE PROPERTY WITHOUT JUST
COMPENSATION WHICH IS VIOLATIVE OF THE CONSTITUTION.

IV

... [IT] SHOULD NOT HAVE PROCEEDED TO DECIDE THE CASE

BELOW FOR FAILURE OF PRIVATE RESPONDENT TO
AFFIRMATIVELY PROVE THE JURISDICTIONAL FACT OF
PUBLICATION.[5]

In its decision of 4 November 1994,[6] the Court of Appeals affirmed in toto

the challenged decision. We quote its findings and conclusion upon which
the affirmance is anchored, viz.:

An assiduous scrutiny of the impugned decision of the public respondent

reveals that the same is supported by substantial evidence. It appears that
at the time of the filing of the petition for compulsory license on March 24,
1987, the subject letters Patent No. 12207 issued on November 29, 1978 has
been in effect for more than two (2) years. The patented invention relates to
compound and compositions used in inhibiting certain actions of the
histamine, hence, it relates to medicine. Moreover, after hearing and
careful consideration of the evidence presented, the Director of Patents
ruled that - "there is ample evidence to show that [private respondent]
possesses such capability, having competent personnel, machines and
equipment as well as permit to manufacture different drugs containing
patented active ingredients such as ethambutol of American Cyanamid and
Ampicillin and Amoxicillin of Beecham Groups, Ltd."

As to the claim by the petitioner that it has the capacity to work the
patented product although it was not shown that any pretended abuse has
been committed, thus the reason for granting compulsory license "is
intended not only to give a chance to others to supply the public with the
quantity of the patented article but especially to prevent the building up of
patent monopolities [sic]." [Parke Davis v. Doctors Pharmaceuticals, Inc.,
14 SCRA 1053].

We find that the granting of compulsory license is not simply because Sec.
34 (1) e, RA 165 allows it in cases where the invention relates to food and
medicine. The Director of Patents also considered in determining that the
applicant has the capability to work or make use of the patented product in
the manufacture of a useful product. In this case, the applicant was able to
show that Cimetidine, (subject matter of latters Patent No. 12207) is
necessary for the manufacture of an anti-ulcer drug/medicine, which is
necessary for the promotion of public health. Hence, the award of
compulsory license is a valid exercise of police power.

We do not agree to [sic] petitioner's contention that the fixing of the royalty
at 2.5% of the net wholesale price amounted to expropriation of private
property without just compensation.

Paragraph 3, Section 35-B, R.A. No. 165, as amended by P.D. No. 1267,
states:
"SEC. 35-B. Terms and Conditions of Compulsory License.

(1). x x x

(2). x x x

(3).  A compulsory license shall only be granted subject to the payment of

adequate royalties commensurate with the extent to which the invention is
worked. However, royalty payments shall not exceed five percent (5%) of
the net wholesale price (as defined in Section 33-A) of the products
manufactured under the license.

If the product, substance, or process subject of the compulsory license is

involved in an industrial project approved by the Board of Investments, the
royalty payable to the patentee or patentees shall not exceed three percent
(3%) of the net wholesale price (as defined in Section 34-A) of the patented
commodity and/or commodity manufactured under the patented process,
the same rate of royalty shall be paid whenever two or more patents are
involved, which royalty shall be distributed to the patentees in rates
proportional to the extent of commercial use by the licensee giving
preferential values to the holder of the oldest subsisting product patent."
The foregoing provision grants the Director of Patents the use of his sound
discretion in fixing the percentage for the royalty rate. In the instant case,
the Director of Patents exercised his discretion and ruled that a rate of 2.5%
of the net wholesale price is fair enough for the parties. In Parke Davis &
Co. vs. DPI and Tiburcio, [L-27004, August 6, 1983, 124 SCRA 115] it was
held that - "liberal treatment in trade relations should be afforded to local
industry for as reasoned out by respondent company, it is so difficult to
compete with the industrial grants [sic] of the drug industry, among them
being the petitioner herein, that it always is necessary that the local drug
companies should sell at much lower (than) the prices of said foreign drug
entities." Besides, foreign produce licensor can later on ask for an increase
in percentage rate of royalty fixed by the Director of Patents if local sales of
license should increase. Further, in Price vs. UNILAB, the award of royalty
rate of 2.5% was deemed to be just and reasonable, to wit [166 SCRA 133]:

"Moreover, what UNILAB has with the compulsory license is the bare right
to use the patented chemical compound in the manufacture of a special
product, without any technical assistance from herein respondent-
appellant. Besides, the special product to be manufactured by UNILAB will
only be used, distributed, and disposed locally. Therefore, the royalty rate
of 2.5% is just and reasonable."

It appearing that herein petitioner will be paid royalties on the sales of any
products [sic] the licensee may manufacture using any or all of the patented
compounds, the petitioner cannot complain of a deprivation of property
rights without just compensation [Price v. UNILAB, L-82542, September
19, 1988].

We take note of the well-crafted petition submitted by petitioner albeit the

legal milieu and a good number of decided cases militate against the
grounds posited by petitioner. In sum, considering the well-entrenched
jurisprudence sustaining the position of respondents, We reiterate the rule
in Basay Mining Corporation vs. SEC, to the effect that -

"The legal presumption is that official duty has been performed. And it is
particularly strong as regards administrative agencies vested with powers
said to be quasi-judicial in nature, in connection with the enforcement of
laws affecting particular fields of activity, the proper regulation and/or
promotion of which requires a technical or special training, aside from a
good knowledge and grasp of the overall conditions, relevant to said field,
obtaining in the nations. The policy and practice underlying our
Administrative Law is that courts of justice should respect the findings of
fact of said administrative agencies, unless there is absolutely no evidence
in support thereof or such evidence is clearly, manifestly and patently
insubstantial. [G.R. No. 76695, October 3, 1988, Minute Resolution;
Beautifont, Inc., et al. v. Court of Appeals, et al., G.R. No. 50141, January
29, 1988]

Its motion for reconsideration having been denied in the resolution [7] of 31
August 1995, petitioner filed the instant petition for review on certiorari
with the following assignment of errors:

THE HON. COURT OF APPEALS ERRED IN NOT HOLDING THAT THE

BPTTT'S DECISION VIOLATES INTERNATIONAL LAW AS EMBODIED
IN (A) THE PARIS CONVENTION FOR THE PROTECTION OF
INDUSTRIAL PROPERTY AND (B) THE GATT TREATY, URUGUAY
ROUND, AND MUST ACCORDINGLY BE SET ASIDE AND MODIFIED.

II

THE HON. COURT OF APPEALS ERRED IN NOT HOLDING THAT THE

BPTTT'S DECISION IS AN INVALID EXERCISE OF POLICE POWER,
ABSENT ANY SHOWING BY EVIDENCE OF AN OVERWHELMING
PUBLIC NEED FOR A COMPULSORY LICENSE OVER CIMETIDINE IN
FAVOR OF PRIVATE RESPONDENT.

III

THE HON. COURT OF APPEALS ERRED IN NOT HOLDING THAT THE

BPTTT'S PRONOUNCEMENT FIXING THE ROYALTY FOR AN
INVOLUNTARY LICENSE AT 2.5% OF THE NET WHOLESALE PRICE IN
PHILIPPINE CURRENCY WAS RENDERED WITHOUT ANY FACTUAL
BASIS AND AMOUNTS TO EXPROPRIATION OF PRIVATE PROPERTY
WITHOUT JUST COMPENSATION AND IS IN VIOLATION OF THE
CONSTITUTIONAL RIGHT TO DUE PROCESS.

IV

THE HON. COURT OF APPEALS ERRED IN NOT HOLDING THE

BPTTT'S ACTION WAS RENDERED NULL AND VOID FOR FAILURE OF
PRIVATE RESPONDENT TO AFFIRMATIVELY PROVE THE
JURISDICTIONAL FACT OF PUBLICATION AS REQUIRED BY LAW.

We resolved to give due course to the petition and required the parties to
submit their respective memoranda, which they did, with that of public
respondent filed only on 7 February 1997.

After a careful perusal of the pleadings and evaluation of the arguments

adduced by the parties, we find this petition to be without merit.

In its first assigned error, petitioner invokes Article 5 of the Paris

Convention for the Protection of Industrial Property,[8] or "Paris
Convention," for short, of which the Philippines became a party thereto
only in 1965.[9] Pertinent portions of said Article 5, Section A, provide:

A.       x x x

(2)         Each country of the union shall have the right to take legislative
measures providing for the grant of compulsory licenses to prevent the
abuses which might result from the exercise of the exclusive rights
conferred by the patent, for example, failure to work.

xxx

(4)         A compulsory license may not be applied for on the ground of

failure to work or insufficient working before the expiration of a period of
four years from the date of filing of the patent application or three years
from the date of the grant of the patent, whichever period expires last; it
shall be refused if the patentee justifies his inaction by legitimate reasons.
Such a compulsory license shall be non-exclusive and shall not be
transferable, even in the form of the grant of a sub-license, except with that
part of the enterprise or goodwill which exploits such license.

It is thus clear that Section A(2) of Article 5 above unequivocally and

explicitly respects the right of member countries to adopt legislative
measures to provide for the grant of compulsory licenses to prevent abuses
which might result from the exercise of the exclusive rights conferred by the
patent. An example provided of possible abuses is "failure to work;"
however, as such is merely supplied by way of an example, it is plain that
the treaty does not preclude the inclusion of other forms or categories of
abuses.

Section 34 of R.A. No. 165, even if the Act was enacted prior to the
Philippines' adhesion to the Convention, fits well within the aforequoted
provisions of Article 5 of the Paris Convention. In the explanatory note of
Bill No. 1156 which eventually became R.A. No. 165, the legislative intent in
the grant of a compulsory license was not only to afford others an
opportunity to provide the public with the quantity of the patented product,
but also to prevent the growth of monopolies.[10] Certainly, the growth of
monopolies was among the abuses which Section A, Article 5 of the
Convention foresaw, and which our Congress likewise wished to prevent in
enacting R.A. No. 165.

R.A. No. 165, as amended by Presidential Decree No. 1263, promulgated on

14 December 1977, provides for a system of compulsory licensing under a
particular patent. Sections 34 and 35, Article Two, of Chapter VIII read as
follows:

SEC. 34. Grounds for Compulsory Licensing. -- (1) Any person may apply
to the Director for the grant of a license under a particular patent at any
time after the expiration of two years from the date of the grant of the
patent, under any of the following circumstances:
(a)           If the patented invention is not being worked within the
Philippines on a commercial scale, although capable of being so worked,
without satisfactory reason;

(b)           If the demand for the patented article in the Philippines is not
being met to an adequate extent and on reasonable terms;

(c)           If, by reason of refusal of the patentee to grant a license or licenses

on reasonable terms, or by reason of the conditions attached by the
patentee to licensee or to the purchase, lease or use of the patented article
or working of the patented process or machine for production, the
establishment of any new trade or industry in the Philippines is prevented,
or the trade or industry therein is unduly restrained;

(d)           If the working of the invention within the country is being

prevented or hindered by the importation of the patented article; or

(e)           If the patented invention or article relates to food or medicine or

manufactured products or substances which can be used as food or
medicine, or is necessary for public health or public safety.

(2)      In any of the above cases, a compulsory license shall be granted to

the petitioner provided that he has proved his capability to work the
patented product or to make use of the patented product in the
manufacture of a useful product, or to employ the patented process.

(3)      The term "worked" or "working" as used in this section means the
manufacture and sale of the patented article, of the patented machine, or
the application of the patented process for production, in or by means of a
definite and substantial establishment or organization in the Philippines
and on a scale which is reasonable and adequate under the circumstances.
Importation shall not constitute "working."

xxx

SEC. 35. Grant of License. -- (1) If the Director finds that a case for the
grant is a license under Section 34 hereof has been made out, he shall,
within one hundred eighty days from the date the petition was filed, order
the grant of an appropriate license. The order shall state the terms and
conditions of the license which he himself must fix in default of an
agreement on the matter manifested or submitted by the parties during the
hearing.

(2)      A compulsory license sought under Section 34-B shall be issued

within one hundred twenty days from the filing of the proponent's
application or receipt of the Board of Investment's endorsement.
The case at bar refers more particularly to subparagraph (e) of paragraph 1
of Section 34 -- the patented invention or article relates to food or medicine
or manufactured products or substances which can be used as food or
medicine, or is necessary for public health or public safety. And it may not
be doubted that the aforequoted provisions of R.A. No. 165, as amended,
are not in derogation of, but are consistent with, the recognized right of
treaty signatories under Article 5, Section A(2) of the Paris Convention.

Parenthetically, it must be noted that paragraph (4) of Section A, Article 5

of the Paris Convention setting time limitations in the application for a
compulsory license refers only to an instance where the ground therefor is
"failure to work or insufficient working," and not to any ground or
circumstance as the treaty signatories may reasonably determine.

Neither may petitioner validly invoke what it designates as the GATT

Treaty, Uruguay Round. This act is better known as the Uruguay Final Act
signed for the Philippines on 15 April 1994 by Trade and Industry Secretary
Rizalino Navarro.[11] Forming integral parts thereof are the Agreement
Establishing the World Trade Organization, the Ministerial Declarations
and Decisions, and the Understanding on Commitments in Financial
Services.[12] The Agreement establishing the World Trade Organization
includes various agreements and associated legal instruments. It was only
on 14 December 1994 that the Philippine Senate, in the exercise of its power
under Section 21 of Article VII of the Constitution, adopted Senate
Resolution No. 97 concurring in the ratification by the President of the
Agreement. The President signed the instrument of ratification on 16
December 1994.[13] But plainly, this treaty has no retroactive effect.
Accordingly, since the challenged BPTTT decision was rendered on 14
February 1994, petitioner cannot avail of the provisions of the GATT treaty.
The second and third assigned errors relate more to the factual findings of
the Court of Appeals. Well-established is the principle that the findings of
facts of the latter are conclusive, unless: (1) the conclusion is a finding
grounded entirely on speculation or conjecture; (2) the inference made is
manifestly absurd; (3) there is grave abuse of discretion in the appreciation
of facts; (4) the judgment is premised on a misapprehension of facts; (5) the
findings of fact are conflicting; and (6) the Court of Appeals, in making its
findings, went beyond the issues of the case and the same is contrary to the
admissions of both the appellant and appellee.[14] Petitioner has not
convinced us that the instant case falls under any of the exceptions. On the
contrary, we find the findings of fact and conclusions of respondent Court
of Appeals and that of the BPTTT to be fully supported by the evidence and
the applicable law and jurisprudence on the matter.

Petitioner's claim of violations of the due process and eminent domain

clauses of the Bill of Rights are mere conclusions which it failed to
convincingly support. As to due the process argument, suffice it to say that
full-blown adversarial proceedings were conducted before the BPTTT
pursuant to the Patent Law. We agree with the Court of Appeals that the
BPTTT exhaustively studied the facts and its findings were fully supported
by substantial evidence.

It cannot likewise be claimed that petitioner was unduly deprived of its

property rights, as R.A. No. 165 not only grants the patent holder a
protective period of two years to enjoy his exclusive rights thereto; but
subsequently, the law recognizes just compensation in the form of royalties.
[15]

In Parke, Davies & Co. v. Doctors' Pharmaceuticals, Inc.,[16] we held:

The right to exclude others from the manufacturing, using, or vending an

invention relating to, food or medicine should be conditioned to allowing
any person to manufacture, use, or vend the same after a period of three
[now two] years from the date of the grant of the letters patent. After all,
the patentee is not entirely deprived of any proprietary right. In fact, he has
been given the period of three years [now two years] of complete monopoly
over the patent. Compulsory licensing of a patent on food or medicine
without regard to the other conditions imposed in Section 34 [now Section
35] is not an undue deprivation of proprietary interests over a patent right
because the law sees to it that even after three years of complete monopoly
something is awarded to the inventor in the form of bilateral and workable
licensing agreement and a reasonable royalty to be agreed upon by the
parties and in default of such an agreement, the Director of Patents may fix
the terms and conditions of the license.
As to the fourth assigned error, we hold that petitioner can no longer assail
the jurisdiction of the BPTTT, raising this issue only for the first time on
appeal. In Pantranco North Express, Inc. v. Court of Appeals, [17] we ruled
that where the issue of jurisdiction is raised for the first time on appeal, the
party invoking it is so barred on the ground of laches or estoppel under the
circumstances therein stated. It is now settled that this rule applies with
equal force to quasi-judicial bodies[18] such as the BPTTT. Here, petitioner
have not furnished any cogent reason to depart from this rule.

WHEREFORE, the petition is hereby DENIED and the challenged decision

of the Court of Appeals in CA-G.R. SP No. 33520 is AFFIRMED in toto.

Costs against petitioner.

SO ORDERED.

Narvasa, C.J., (Chairman), Melo, Francisco, and Panganiban, JJ., concur.

SMITH KLINE BECKMAN CORP. v. COURT OF

APPEALS
SMITH KLINE BECKMAN CORP. v. COURT OF APPEALS
G.R. NO. 126627
August 14, 2003
CARPIO-MORALES, J

FACTS:
Smith Kline Beckman Corp. (US corporation) filed as assignee, before the Philippine Patent Office an
application for patent over an invention entitled Methods and Compositions for Producing Biphasic
Parasiticide Activity Using Methyl 5 Propylthio-2-Benzimidazole Carbamate.Letters Patent for the
aforesaid invention was issued to petitioner for a term of 17 years, which provides that the patented
invention consisted of a new com ound named methyl 5 propylthio-2benzimidazole carbamate and the
methods or compositions utilizing the compound as an active ingredient in fighting infections caused by
gastrointestinal parasites and lungworms in animals such as swine, sheep, cattle, goats, horses, and
even pet animals. 
Tryco Pharma Corp. is a domestic corporation that manufactures, distributes and sells veterinary
products, including Impregon, a drug that has Albendazole for its active ingredient and is claimed to be
effective against gastrointestinal roundworms, lungworms, tapeworms and fluke infestation in carabaos,
cattle and goats.

Petitioner sued private respondent for infringement of patent and unfair competition before the Caloocan
City RTC. It claimed that its patent covers or includes the substance Albendazole such that private
respondent, by manufacturing, selling, using, and causing to be sold and used the drug Impregon without
its authorization, committed infringement and unfair competition under RPC and The Trademark Law for
advertising and selling as its own the drug Impregon although the same contained petitioner’s patented
Albendazole.

Private respondent averred that petitioner’s letter patent does not cover the substance Albendazole for
nowhere in it does that word appear.

RTC ruled for the Respondent. CA upheld trial court’s ruling and held that respondent was not liable for
any infringement of the patent of petitioner in light of the latter’s failure to show that Albendazole is the
same as the compound subject of its Letters Patent, considered the U.S. patent as implying that
Albendazole is different from methyl 5 propylthio-2-benzimidazole carbamate, and likewise found that
private respondent was not guilty of deceiving the public by misrepresenting that Impregon is its product.

ISSUE/S: Whether private respondent committed patent infringement to the prejudice of petitioner.

RULING: NO. From a reading of the 9 claims of Letters Patent No. 14561 in relation to the other portions
thereof, no mention is made of the compound Albendazole. All that the claims disclose are: the covered
invention, that is, the compound methyl 5 propylthio-2-benzimidazole carbamate; the compounds being
anthelmintic but nontoxic for animals or its ability to destroy parasites without harming the host animals;
and the patented methods, compositions or preparations involving the compound to maximize its efficacy
against certain kinds of parasites infecting specified animals.

When the language of its claims is clear and distinct, the patentee is bound thereby and may not claim
anything beyond them. And so are the courts bound which may not add to or detract from the claims
matters not expressed or necessarily implied, nor may they enlarge the patent beyond the scope of that
which the inventor claimed and the patent office allowed, even if the patentee may have been entitled to
something more than the words it had chosen would include. The mere absence of the word Albendazole
in Letters Patent No. 14561 is not determinative of Albendazoles non-inclusion in the claims of the patent.
While Albendazole is admittedly a chemical compound that exists by a name different from that covered
in petitioner’s letters patent, the language of Letter Patent No. 14561 fails to yield anything at all regarding
Albendazole. And no extrinsic evidence had been adduced to prove that Albendazole inheres in
petitioner’s patent in spite of its omission therefrom or that the meaning of the claims of the patent
embraces the same.

While petitioner concedes that the mere literal wordings of its patent cannot establish private respondent’s
infringement, it urges this Court to apply the doctrine of equivalents. The doctrine of equivalents
provides that an infringement also takes place when a device appropriates a prior invention by
incorporating its innovative concept and, although with some modification and change, performs
substantially the same function in substantially the same way to achieve substantially the same
result.

A scrutiny of petitioner’s evidence fails to convince this Court of the substantial sameness of petitioners
patented compound and Albendazole. While both compounds have the effect of neutralizing parasites in
animals, identity of result does not amount to infringement of patent unless Albendazole operates in
substantially the same way or by substantially the same means as the patented compound, even though
it performs the same function and achieves the same result. In other words, the principle or mode of
operation must be the same or substantially the same.
The doctrine of equivalents thus requires satisfaction of the function-means-and-result test, the patentee
having the burden to show that all three components of such equivalency test are met. As stated early on,
petitioners evidence fails to explain how Albendazole is in every essential detail identical to methyl 5
propylthio-2-benzimidazole carbamate.
CASE 10

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. L-22221             August 31, 1965

PARKE, DAVIS and COMPANY, petitioner,

vs.
DOCTORS' PHARMACEUTICALS, INC., ET AL., respondents.

Ross, Selph and Carrascoso for petitioner.

Manuel Serapio, Jr., for respondent Doctors' Pharmaceuticals, Inc.
Solicitor General for respondent Director of Patents.

BAUTISTA ANGELO, J.:

Parke Davis & Company, petitioner herein, is a foreign corporation organized and existing under the
laws of the State of Michigan, U.S.A., with principal office in the City of Detroit, and as such is the
owner of a patent entitled "Process for the Manufacturing of Antibiotics" (Letters Patent No. 50)
which was issued by the Philippine Patent Office on February 9, 1950. The patent relates to a
chemical compound represented by a formula commonly called chloramphenicol. The patent
contains ten claims, nine of which are process claims, and the other is a product claim to the
chemical substance chloramphenicol.

Respondent Doctors' Pharmaceuticals, Inc., on the other hand, is a domestic corporation duly
organized under our Corporation Law with principal office situated in Caloocan City. On October 9,
1959, its general manager wrote a letter to Parke Davis & Company requesting that it be granted a
voluntary license "to manufacture and produce our own brand of medicine, containing
chloramphenicol, and to use, sell, distribute, or otherwise dispose of the same in the Philippines
under such terms and conditions as may be deemed reasonable and mutually satisfactory," to which
Parke Davis & Company replied requesting information concerning the facilities and plans for the
manufacture of chloramphenicol of Doctors' Pharmaceuticals, Inc. The latter answered saying that it
did not intend to manufacture chloramphenicol itself but its purpose was merely to use it in its own
brand of medicinal preparations, emphasizing that its request for license was based on an express
provision of the Philippine law which has reference to patents that had been in existence for more
than three years from their dates of issue. Hence, it reiterated its request that said license be
granted under such terms and conditions as may be reasonable and mutually satisfactory.

As apparently Parke Davis & Company was not inclined to grant the request for a voluntary license,
Doctors' Pharmaceuticals, Inc. filed on March 11, 1960 a petition with the Director of Patents, which
was later amended, praying that it be granted a compulsory license under Letters Patent No. 50
granted to Parke Davis & Company based on the following grounds: (1) the patented invention
relates to medicine and is necessary for public health and safety; (2) Parke Davis & Company is
unwilling to grant petitioner a voluntary license under said patent by reason of which the production
and manufacture of needed medicine containing chloramphenicol has been unduly restrained to a
certain extent that it is becoming a monopoly; (3) the demand for medicine
containing chloramphenicol is not being met to an adequate extent and on reasonable prices; and
(4) the patented invention is not being worked in the Philippines on a commercial scale. In its
petition, Doctors' Pharmaceuticals, Inc. prayed that it be authorized to manufacture, use, and sell its
own products containing chloramphenicol as well as choose its own brand or trademark.

Parke Davis & Company filed a written opposition setting up the following affirmative defenses: (1) a
compulsory license may only be issued to one who will work the patent and respondent does not
intend to work it itself but merely to import the patented product; (2) respondent has not requested
any license to work the patented invention in the Philippines; (3) respondent is not competent to
work the patented invention; (4) to grant respondent the requested license would be against public
interest and would only serve its monetary interest; and (6) the patented invention is not necessary
for public health and safety.

At the hearing held on November 14, 1962, respondent abandoned the second, third and fourth
grounds of its petition and confined itself merely to the first ground, to wit: that the patented invention
relates to medicine and is necessary for public health and safety. Then, after the parties had
presented oral and documentary evidence and submitted memoranda in support of their contentions,
the Director of Patents rendered on November 15, 1963 his decision granting to respondent the
license prayed for. The following is the dispositive part of the decision:

WHEREFORE, the Respondent-Patentee is hereby ordered to grant the Petitioner a license

under Letters Patent No. 50. The parties hereto are hereby ordered to submit to me, within
THIRTY (30) days from their receipt of a copy of this decision a licensing agreement, and in
default thereof, they may submit within the same period their respective proposals. It must be
shown that negotiations as to the terms and conditions thereof have been made between the
parties, and if there are points of disagreement I shall fix such terms and conditions.

If, within the said period, no licensing agreement is filed or no negotiations therefor
transpires between the parties, I shall issue the licensing agreement in such terms and
conditions as may be just and reasonable under the circumstances.

In due time, Parke Davis & Company interposed the present petition for review.

In this appeal, Parke, Davis & Company imputes to the Director of Patents eleven errors which may
be briefly stated as follows:

1. Respondent has not proven the ground relied upon by it in its petition;

2. Respondent Doctors' Pharmaceuticals, Inc. has no intention to work the patent but merely
to import the patented article chloramphenicol;

3. Petitioner's invention is being worked in the Philippines;

4. Respondent is not competent to work petitioner's patented invention, that is, to

manufacture chloramphenicol and sell the same in the Philippines;

5. The grant of the license is against public interest;

 6. The license requested by respondent will not serve any legitimate purpose;

7. Respondent is not competent to use the license requested;

8. The theory that a compulsory license under a patented invention, after the expiration of
three years after the grant of the letters patent, may be granted to one who petitions for a
license, is erroneous;

9. Respondent Director of Patents cannot issue an in personam order against petitioner to

grant the licence;

10. Respondent Director of Patents erred in not considering the defenses interposed by
petitioner to the application for license; and

11. Respondent Director of Patents erred in rendering his decision ordering petitioner to
grant a compulsory license to co-respondent Doctors' Pharmaceuticals, Inc.

As may be gleaned from the errors above pointed out, the principal issue raised by petitioner boils
down to whether or not the Director of Patents gravely abused his discretion in ordering the grant of
compulsory license to respondent under Section 34(d) of Republic Act No. 165 for the manufacture
of preparations containing chloramphenicol under Letters Patent No. 50 issued to petitioner despite
the written objection interposed against it by the latter based on the ground therein enumerated.

The pertinent statutory provisions that govern the issues raised herein are found in Chapter VIII of
Republic Act No. 165, as amended, which for ready reference are hereunder quoted:

CHAPTER VIII. — Compulsory Licensing

SEC. 34. Grounds for compulsory license. — Any person may apply to the Director for the
grant of a license under a particular patent at any time after the expiration of three years
from the date of the grant of the patent, under any of the following circumstances:

(a) If the patented invention is not being worked within the Philippines on a commercial
scale, although capable of being so worked, without satisfactory reason;

(b) If the demand for the patented article in the Philippines is not being met to an adequate
extent and on reasonable terms, without satisfactory reason;

(c) If by reason of the refusal of the patentee to grant a license or licenses on reasonable
terms, or by reason of the conditions attached by the patentee to licenses or to the purchase,
lease or use of the patented article or working of the patented process or machine of
production the establishment of any new trade or industry in the Philippines is prevented, or
the trade or industry therein is unduly restrained; or

(d) If the patented invention relates to food or medicine or is necessary for public health or
public safety.

The term "worked" or "working" as used in this section means the manufacture and sale of a
patented article, or the carrying on of a patented process or the use of a patented machine for
production, in or by means of a definite and substantial establishment or organization in the
Philippines and on a scale which is adequate and reasonable under the circumstances.
 SEC. 35. Notice and hearing. — Upon the filing of a petition under section thirty-four hereof,
notice shall be given in the same manner and form as that provided in section thirty-one,
Chapter VII hereof.

SEC. 36. Grant of license. — If The Director finds that a case for the grant of a license under
section thirty-four hereof has been made out, he may order the grant of an appropriate
license and in default of an agreement among the parties as to the terms and conditions of
the license he shall fix the terms and conditions of the license in the order.

The order of the Director granting a license under this Chapter, when final, shall operate as a
deed granting a license executed by the patentee and the other parties in interest.

A cursory reading of the provisions above-quoted will reveal that any person may apply for the grant
of a license under any of the circumstances stated in Section 34 (a), (b), (c) or (d), which are in the
disjunctive, showing that any of the circumstances thus enumerated would be sufficient to support
the grant, as evidenced by the use of the particle "or" between paragraphs (c) and (d). As may be
noted, each of these circumstances stands alone and is independent of the others. And from them
we can see that in order that any person may be granted a license under a particular patented
invention relating to medicine under Section 34(d), it is sufficient that the application be made after
the expiration of three years from the date of the grant of the patent and that the Director should find
that a case for granting such license has been made out. Since in the instant case it is admitted by
petitioner that the chemical substance chloramphenicol is a medicine, while Letters Patent No. 50
covering said substance were granted to Parke Davis & Company on February 9, 1950, and the
instant application for license under said patent was only filed in 1960, verily the period that had
elapsed then is more than three years, and so the conditions for the grant of the license had been
fulfilled. We find, therefore, no error in the decision of the Director of Patents on this aspect of the
controversy.

The claim that respondent has not proven the ground it relies upon in its petition to the effect
that chloramphenicol is not only a medicine but is indispensable to public health and safety is not
quite correct, for the main reliance of respondent is on the fact that chloramphenicol is an invention
that is related to medicine and as such it comes under Section 34(d) of Republic Act 165.
Respondent does not predicate its claim on the fact that invention is necessary for public health or
public safety, although either ground is recognized as valid in itself for the grant of a license under
said Section 34(d). Indeed, it is sufficient that the invention be related to medicine. It is not required
that it be at the same time necessary for public health or public safety. Moreover, the claim of
petitioner that the word "necessary" means "indispensable" does not hold water, for necessity admits
of many degrees, as it is clearly explained in Bouvier's Law Dictionary.  1

But, even if we assume that the patented invention is not only related to medicine but to one that is
also indispensable or necessary to public health and public safety, here we can say that both
conditions are present, since according to Dr. Leon V. Picache, who testified in this case, the
substance chloramphenicol is one that constitutes an effective cure for gastro-enteritis diseases,
while the inventor's own specifications attest that chloramphenicol is a "therapeutic agent notably in
the case of shigella pradysenteria. Chloramphenicol is much more active than streptomycin" and "is
the first antibiotic exhibiting a high degree of activity against gram negative bacteria which is
therapeutically effective upon oral administration" (Exhibit 6). Again, Dr. Querbral-Greaga in the
June, 1961 issue of the Scientific Digest, a publication of the Manila Medical Society, affirmed that
antibiotics like chloramphenicol have played a very important role in the control of diarrhea-enteritis
which is the third most rampant killer of infants in this country.
The claim that a compulsory license cannot be granted to respondent because the latter does not
intend to work the patented invention itself but merely to import it has also no legal nor factual basis.
In the first place, Section 34 of Republic Act No. 165 does not require the petitioner of a license to
work the patented invention if the invention refers to medicine, for the term "worked" or "working"
used in said section does not apply to the circumstance mentioned in subsection (d), which relates
to medicine or to one necessary for public health and public safety. Indeed, the Director of Patents
has already correctly stated in previous cases that, in its strict sense, the term "worked" or "working"
mentioned in the last paragraph of Section 34 of the Patent Law "has no applicability to those cited
patented matters and the qualification of the petitioner to work the invention is immaterial, it being
not a condition precedent before any person may apply for the grant of the license." In the second
place, it is not the intention of respondent to work or manufacture the patented invention itself but
merely to manufacture its brand of medicinal preparations containing such substance. And even if it
be required that respondent should work itself the invention that it intends to use in the manufacture
of its own brand of medicinal preparations said respondent would not be found wanting for it is
staffed with adequate and competent personnel and technicians; it has several laboratories where
medicines are prepared for safety and quality; it is equipped with machines for subdividing
antibiotics; and it has capsule-filling machines and adequate personnel and facilities to test the
quality of chloramphenicol.

Finally, we may add that it is not a valid ground to refuse the license applied for the fact that the
patentee is working the invention and as such has the exclusive right to the invention for a term of 17
years (Sections 20 & 21, Republic Act 165) as claimed in the third assignment of error, the reason
for it being that the provision permitting the grant of compulsory license is intended not only to give a
chance to others to supply the public with the quantity of the patented article but especially to
prevent the building up of patent monopolies. 2

The point is raised that the grant of the license is against public interest for it would force Parke,
Davis & Company to close or stop manufacturing the patented invention which would thereby
adversely affect local employment and prejudice technology and chemical manufacturing and cut off
the local supply of medicinal products. It should be noted, however, that respondent does not intend
to compete with petitioner in the manufacture of chloramphenicol for it would either obtain the same
from petitioner or would import whatever it may need in the manufacture of its own brand of
medicinal preparations. But even assuming that the consequence the petitioner has envisioned may
come true if the license is granted, still that should not stand in the way of the grant for that is in line
with an express provision of our law. The grant of such license may work disadvantage on petitioner
but the law must be observed until modified or repealed. On the other hand, there is the advantage
that the importation of chloramphenicol might redound to the benefit of the public in general as it will
increase the supply of medicines in our country containing chloramphenicol thereby reducing
substantially the price of this drug.

We find no merit in the contention that the Director of Patents erred in ordering the grant of the
patent to respondent for the simple reason that the application does not automatically entitle the
person applying to such a grant as was done by said Director. Though in substance such is the
effect of the grant, it cannot however be said that the Director of Patents automatically ordered the
grant of the license for it was only after hearing and a careful consideration of the evidence that he
ordered the grant. In fact, the decision states that the Director has carefully weighed the evidence of
the parties and the arguments in support of their contentions and that it was only after analyzing the
same that he became convinced of the right of respondent to the compulsory license he prayed for.

Finally, with regard to the contention that petitioner is entitled to the exclusive use of the invention for
a term which under the law extends to 17 years, suffice it for us to quote what the Director of Patents
says on this point:
 The right to exclude others from the manufacturing, using, or vending an invention relating to
food or medicine should be conditioned to allowing any person to manufacture, use, or vend
the same after a period of three years from the date of the grant of the letters patent. After
all, the patentee is not entirely deprived of any proprietary right. In act, he has been given the
period of three years of complete monopoly over the patent. Compulsory licensing of a
patent on food or medicine without regard to the other conditions imposed in Section 34 is
not an undue deprivation of proprietary interests over a patent right because the law sees to
it that even after three years of complete monopoly something is awarded to the inventor in
the form of a bilateral and workable licensing agreement and a reasonable royalty to be
agreed upon by the parties and in default of such agreement, the Director of Patents may fix
the terms and conditions of the license. (See Sec. 36, Rep. Act No. 165)

WHEREFORE, the decision appealed from is affirmed, with costs against petitioner.

Bengzon, C.J., Concepcion, Reyes, J.B.L., Dizon, Regala, Makalintal, Bengzon, J.P., and Zaldivar,
JJ., concur.

CASE DIGEST: Parke Davis vs. Doctors

Pharmaceuticals
PARKE DAVIS and COMPANY vs. DOCTORS' PHARMACEUTICALS,
INC., ET AL. 

G.R. No. L-22221, August 31, 1965

FACTS:

Parke Davies and Company is an owner of a Patent entitled "Process for

the Manufacturing of Antibiotics" (Letters Patent No. 50) which was issued
by the Philippine Patent Office on February 9, 1950. The patent relates to a
chemical compound represented by a formula commonly called
chloramphenicol. The patent contains ten claims, nine of which are process
claims, and the other is a product claim to the chemical substance
chloramphenicol.

Doctors’ Pharmaceuticals Inc. requested that it be granted a voluntary

license to manufacture and produce our own brand of medicine, containing
chloramphenicol, and to use, sell, distribute, or otherwise dispose of the
same in the Philippines under such terms and conditions as may be
deemed reasonable and mutually satisfactory, which Parke Davies
declined.

Doctors’ Pharmaceuticals Inc. filed a petition with the Director of Patents

requesting the Director to grant a compulsory license. After careful
evaluation and hearings, the Director granted the request of Doctors’
Pharmaceuticals.

ISSUE:

Is the decision of the Director of Patents in granting Doctor’s

Pharmaceutical Inc. compulsory license to use the substance
chloramphenicol, valid?

HELD:

Yes the decision of the Director of Patents in granting Doctor’s

Pharmaceutical Inc. compulsory license to use the substance
chloramphenicol is valid. The Supreme Court says that patents issued to
foods and medicines are not exclusive so as not to prevent the building up
of patent monopolies. Public benefit is foremost. The Court dismissed the
contention of Parke Davies that the Director of Patents erred in granting
compulsory license. The decision appealed from is affirmed, with costs
against petitioner.
 
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