G.R. No.

179127 December 24, 2008

IN-N-OUT BURGER, INC., petitioner, vs. SEHWANI, INCORPORATED AND/OR BENITA’S FRITES, INC., respondents.

Petitioner IN-N-OUT BURGER, INC., a business entity incorporated under the laws of California, United States (US) of America, which is a signatory
to the Convention of Paris on Protection of Industrial Property and the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS).
Petitioner is engaged mainly in the restaurant business, but it has never engaged in business in the Philippines. 3

Respondents Sehwani, Incorporated and Benita Frites, Inc. are corporations organized in the Philippines.4

On 2 June 1997, petitioner filed trademark and service mark applications with the Bureau of Trademarks (BOT) of the IPO for "IN-N-OUT" and "IN-
N-OUT Burger & Arrow Design." Petitioner later found out, through the Official Action Papers issued by the IPO on 31 May 2000, that respondent
Sehwani, Incorporated had already obtained Trademark Registration for the mark "IN N OUT (the inside of the letter "O" formed like a star)."5 By
virtue of a licensing agreement, Benita Frites, Inc. was able to use the registered mark of respondent Sehwani, Incorporated.

Petitioner eventually filed on 4 June 2001 before the Bureau of Legal Affairs (BLA) of the IPO an administrative complaint against respondents for
unfair competition and cancellation of trademark registration. Petitioner averred in its complaint that it is the owner of the trade name IN-N-OUT and
the following trademarks: (1) "IN-N-OUT"; (2) "IN-N-OUT Burger & Arrow Design"; and (3) "IN-N-OUT Burger Logo." These trademarks are registered
with the Trademark Office of the US and in various parts of the world, are internationally well-known, and have become distinctive of its business
and goods through its long and exclusive commercial use.6 Petitioner pointed out that its internationally well-known trademarks and the mark of the
respondents are all registered for the restaurant business and are clearly identical and confusingly similar. Petitioner claimed that respondents are
making it appear that their goods and services are those of the petitioner, thus, misleading ordinary and unsuspecting consumers that they are
purchasing petitioner’s products.7

Following the filing of its complaint, petitioner sent on 18 October 2000 a demand letter directing respondent Sehwani, Incorporated to cease and
desist from claiming ownership of the mark "IN-N-OUT" and to voluntarily cancel its trademark registration. In a letter-reply dated 23 October 2000,
respondents refused to accede to petitioner’ demand, but expressed willingness to surrender the registration of respondent Sehwani, Incorporated
of the "IN N OUT" trademark for a fair and reasonable consideration. 8

Petitioner was able to register the mark "Double Double" on 4 July 2002, based on their application filed on 2 June 1997.9 It alleged that respondents
also used this mark, as well as the menu color scheme. Petitioners also averred that respondent Benita’s receipts bore the phrase, "representing IN-
N-OUT Burger."10 It should be noted that that although respondent Sehwahi, Incorporated registered a mark which appeared as "IN N OUT (the
inside of the letter "O" formed like a star)," respondents used the mark "IN-N-OUT."11

To counter petitioner’s complaint, respondents filed before the BLA-IPO an Answer with Counterclaim. Respondents asserted therein that they had
been using the mark "IN N OUT" in the Philippines since 15 October 1982. On 15 November 1991, respondent Sehwani, Incorporated filed with the
then Bureau of Patents, Trademarks and Technology Transfer (BPTTT) an application for the registration of the mark "IN N OUT (the inside of the
letter "O" formed like a star)." Upon approval of its application, a certificate of registration of the said mark was issued in the name of respondent
Sehwani, Incorporated on 17 December 1993. On 30 August 2000, respondents Sehwani, Incorporated and Benita Frites, Inc. entered into a Licensing
Agreement, wherein the former entitled the latter to use its registered mark, "IN N OUT." Respondents asserted that respondent Sehwani,
Incorporated, being the registered owner of the mark "IN N OUT," should be accorded the presumption of a valid registration of its mark with the
exclusive right to use the same. Respondents argued that none of the grounds provided under the Intellectual Property Code for the cancellation of
a certificate of registration are present in this case. Additionally, respondents maintained that petitioner had no legal capacity to sue as it had never
operated in the Philippines.12

Subsequently, the IPO Director of Legal Affairs, Estrellita Beltran-Abelardo, rendered a Decision dated 22 December 2003,13 in favor of petitioner.
According to said Decision, petitioner had the legal capacity to sue in the Philippines, since its country of origin or domicile was a member of and a
signatory to the Convention of Paris on Protection of Industrial Property. And although petitioner had never done business in the Philippines, it was
widely known in this country through the use herein of products bearing its corporate and trade name. Petitioner’s marks are internationally well-
known, given the world-wide registration of the mark "IN-N-OUT," and its numerous advertisements in various publications and in the Internet.
Moreover, the IPO had already declared in a previous inter partes case that "In-N-Out Burger and Arrow Design" was an internationally well-known
mark. Given these circumstances, the IPO Director for Legal Affairs pronounced in her Decision that petitioner had the right to use its tradename and
mark "IN-N-OUT" in the Philippines to the exclusion of others, including the respondents. However, respondents used the mark "IN N OUT" in good
faith and were not guilty of unfair competition, since respondent Sehwani, Incorporated did not evince any intent to ride upon petitioner’s goodwill
by copying the mark "IN-N-OUT Burger" exactly. The inside of the letter "O" in the mark used by respondents formed a star. In addition, the simple
act of respondent Sehwani, Incorporated of inquiring into the existence of a pending application for registration of the "IN-N-OUT" mark was not
deemed fraudulent. The dispositive part of the Decision of the IPO Director for Legal Affairs reads:

With the foregoing disquisition, Certificate of Registration No. 56666 dated 17 December 1993 for the mark "IN-N-OUT" (the inside of the letter "O"
formed like a star) issued in favor of Sehwani, Incorporated is hereby CANCELLED. Consequently, respondents Sehwani, Inc. and Benita’s Frites are
hereby ordered to permanently cease and desist from using the mark "IN-N-OUT" and "IN-N-OUT BURGER LOGO" on its goods and in its business.
With regards the mark "Double-Double," considering that as earlier discussed, the mark has been approved by this Office for publication and that as
shown by evidence, Complainant is the owner of the said mark, Respondents are so hereby ordered to permanently cease and desist from using the
mark Double-Double. NO COSTS. 14

Both parties filed their respective Motions for Reconsideration of the aforementioned Decision. Respondents’ Motion for Reconsideration15 and
petitioner’s Motion for Partial Reconsideration16 were denied by the IPO Director for Legal Affairs in Resolution No. 2004-1817 dated 28 October
2004 and Resolution No. 2005-05 dated 25 April 2005,18 respectively.

Subsequent events would give rise to two cases before this Court, G.R. No. 171053 and G.R. No. 179127, the case at bar.

G.R. No. 171053

On 29 October 2004, respondents received a copy of Resolution No. 2004-18 dated 28 October 2004 denying their Motion for Reconsideration. Thus,
on 18 November 2004, respondents filed an Appeal Memorandum with IPO Director General Emma Francisco (Director General Francisco). However,
in an Order dated 7 December 2004, the appeal was dismissed by the IPO Director General for being filed beyond the 15-day reglementary period to
appeal.

Respondents appealed to the Court of Appeals via a Petition for Review under Rule 43 of the Rules of Court, filed on 20 December 2004 and docketed
as CA-G.R. SP No. 88004, challenging the dismissal of their appeal by the IPO Director General, which effectively affirmed the Decision dated 22
December 2003 of the IPO Director for Legal Affairs ordering the cancellation of the registration of the disputed trademark in the name of respondent
Sehwani, Incorporated and enjoining respondents from using the same. In particular, respondents based their Petition on the following grounds:

THE IPO DIRECTOR GENERAL COMMITTED GRAVE ERROR IN DISMISSING APPEAL NO. 14-2004-00004 ON A MERE TECHNICALITY

THE BUREAU OF LEGAL AFFAIR’S (SIC) DECISION AND RESOLUTION (1) CANCELLING RESPONDENT’S CERTIFICATE OF REGISTRATION FOR THE
MARK "IN-N-OUT," AND (2) ORDERING PETITIONERS TO PERMANENTLY CEASE AND DESIST FROM USING THE SUBJECT MARK ON ITS GOODS
AND BUSINESS ARE CONTRARY TO LAW AND/OR IS NOT SUPPORTED BY EVIDENCE.

Respondents thus prayed:

WHEREFORE, petitioners respectfully pray that this Honorable Court give due course to this petition, and thereafter order the Office of the Director
General of the Intellectual Property Office to reinstate and give due course to [respondent]’s Appeal No. 14-2004-00004.

Other reliefs, just and equitable under the premises, are likewise prayed for.

On 21 October 2005, the Court of Appeals rendered a Decision denying respondents’ Petition in CA-G.R SP No. 88004 and affirming the Order dated
7 December 2004 of the IPO Director General. The appellate court confirmed that respondents’ appeal before the IPO Director General was filed out
of time and that it was only proper to cancel the registration of the disputed trademark in the name of respondent Sehwani, Incorporated and to
permanently enjoin respondents from using the same. Effectively, the 22 December 2003 Decision of IPO Director of Legal Affairs was likewise
affirmed. On 10 November 2005, respondents moved for the reconsideration of the said Decision. On 16 January 2006, the Court of Appeals denied
their motion for reconsideration.

Dismayed with the outcome of their petition before the Court of Appeals, respondents raised the matter to the Supreme Court in a Petition for Review
under Rule 45 of the Rules of Court, filed on 30 January 2006, bearing the title Sehwani, Incorporated v. In-N-Out Burger and docketed as G.R. No.
171053.19

This Court promulgated a Decision in G.R. No. 171053 on 15 October 2007,20 finding that herein respondents failed to file their Appeal Memorandum
before the IPO Director General within the period prescribed by law and, consequently, they lost their right to appeal. The Court further affirmed the
Decision dated 22 December 2003 of the IPO Director of Legal Affairs holding that herein petitioner had the legal capacity to sue for the protection
of its trademarks, even though it was not doing business in the Philippines, and ordering the cancellation of the registration obtained by herein
respondent Sehwani, Incorporated of the internationally well-known marks of petitioner, and directing respondents to stop using the said marks.
Respondents filed a Motion for Reconsideration of the Decision of this Court in G.R. No. 171053, but it was denied with finality in a Resolution dated
21 January 2008.

G.R. No. 179127

Upon the denial of its Partial Motion for Reconsideration of the Decision dated 22 December 2003 of the IPO Director for Legal Affairs, petitioner was
able to file a timely appeal before the IPO Director General on 27 May 2005.

During the pendency of petitioner’s appeal before the IPO Director General, the Court of Appeals already rendered on 21 October 2005 its Decision
dismissing respondents’ Petition in CA-G.R. SP No. 88004.

In a Decision dated 23 December 2005, IPO Director General Adrian Cristobal, Jr. found petitioner’s appeal meritorious and modified the Decision
dated 22 December 2003 of the IPO Director of Legal Affairs. The IPO Director General declared that respondents were guilty of unfair competition.
Despite respondents’ claims that they had been using the mark since 1982, they only started constructing their restaurant sometime in 2000, after
petitioner had already demanded that they desist from claiming ownership of the mark "IN-N-OUT." Moreover, the sole distinction of the mark
registered in the name of respondent Sehwani, Incorporated, from those of the petitioner was the star inside the letter "O," a minor difference which
still deceived purchasers. Respondents were not even actually using the star in their mark because it was allegedly difficult to print. The IPO Director
General expressed his disbelief over the respondents’ reasoning for the non-use of the star symbol. The IPO Director General also considered
respondents’ use of petitioner’s registered mark "Double-Double" as a sign of bad faith and an intent to mislead the public. Thus, the IPO Director
General ruled that petitioner was entitled to an award for the actual damages it suffered by reason of respondents’ acts of unfair competition,
exemplary damages, and attorney’s fees.21 The fallo of the Decision reads:

WHEREFORE, premises considered, the [herein respondents] are held guilty of unfair competition. Accordingly, Decision No. 2003-02 dated 22
December 2003 is hereby MODIFIED as follows:

[Herein Respondents] are hereby ordered to jointly and severally pay [herein petitioner]:

1. Damages in the amount of TWO HUNDRED TWELVE THOUSAND FIVE HUNDRED SEVENTY FOUR AND 28/100(P212,574.28);
2. Exemplary damages in the amount of FIVE HUNDRED THOUSAND PESOS (P500,000.00);
3. Attorney’s fees and expenses of litigation in the amount of FIVE HUNDRED THOUSAND PESOS (P500,000.00).

All products of [herein respondents] including the labels, signs, prints, packages, wrappers, receptacles and materials used by them in committing
unfair competition should be without compensation of any sort be seized and disposed of outside the channels of commerce.

Let a copy of this Decision be furnished the Director of Bureau of Legal Affairs for appropriate action, and the records be returned to her for proper
disposition. Further, let a copy of this Decision be furnished the Documentation, Information and Technology Transfer Bureau for their information
and records purposes.22

Aggrieved, respondents were thus constrained to file on 11 January 2006 before the Court of Appeals another Petition for Review under Rule 43 of
the Rules of Court, docketed as CA-G.R. SP No. 92785. Respondents based their second Petition before the appellate court on the following grounds:

THE IPO DIRECTOR GENERAL COMMITTED GRAVE ERROR IN HOLDING PETITIONERS LIABLE FOR UNFAIR COMPETITION AND IN ORDERING THEM
TO PAY DAMAGES AND ATTORNEY’S FEES TO RESPONDENTS

THE IPO DIRECTOR GENERAL COMMITTED GRAVE ERROR IN AFFIRMING THE BUREAU OF LEGAL AFFAIR’S DECISION (1) CANCELLING
PETITIONER’S CERTIFICATE OF REGISTRATION FOR THE MARK "IN-N-OUT," AND (2) ORDERING PETITIONERS TO PERMANENTLY CEASE AND
DESIST FROM USING THE SUBJECT MARK ON ITS GOODS AND BUSINESS
Respondents assailed before the appellate court the foregoing 23 December 2005 Decision of the IPO Director General, alleging that their use of the
disputed mark was not tainted with fraudulent intent; hence, they should not be held liable for damages. They argued that petitioner had never
entered into any transaction involving its goods and services in the Philippines and, therefore, could not claim that its goods and services had already
been identified in the mind of the public. Respondents added that the disputed mark was not well-known. Finally, they maintained that petitioner’s
complaint was already barred by laches.23

At the end of their Petition in CA-G.R. SP No. 92785, respondents presented the following prayer:

WHEREFORE, [respondents herein] respectfully pray that this Honorable Court:

(a) upon the filing of this petition, issue a temporary restraining order enjoining the IPO and [petitioner], their agents, successors and assigns, from
executing, enforcing and implementing the IPO Director General’s Decision dated 23 December 2005, which modified the Decision No. 2003-02 dated
22 December 2003 of the BLA, until further orders from this Honorable Court.
(b) after notice and hearing, enjoin the IPO and [petitioner], their agents, successors and assigns, from executing, enforcing and implementing the
Decision dated 23 December 2005 of the Director General of the IPO in IPV No. 10-2001-00004 and to maintain the status quo ante pending the
resolution of the merits of this petition; and
(c) after giving due course to this petition:

 reverse and set aside the Decision dated 23 December 2005 of the Director General of the IPO in IPV No. 10-2001-00004 finding the
[respondents] guilty of unfair competition and awarding damages and attorney’s fees to the respondent

 in lieu thereof, affirm Decision No. 2003-02 of the BLA dated 22 December 2003 and Resolution No. 2005-05 of the BLA dated 25 April
2005, insofar as it finds [respondents] not guilty of unfair competition and hence not liable to the [petitioner] for damages and attorney’s
fees;

 reverse Decision No. 2003-02 of the BLA dated 22 December 2003, and Resolution No. 2005-05 of the BLA dated 25 April 2005, insofar as
it upheld [petitioner]’s legal capacity to sue; that [petitioner]’s trademarks are well-known; and that respondent has the exclusive right to
use the same; and
(iv) make the injunction permanent.

[Respondents] also pray for other reliefs, as may deemed just or equitable.24

On 18 July 2006, the Court of Appeals promulgated a Decision25 in CA-G.R. SP No. 92785 reversing the Decision dated 23 December 2005 of the
IPO Director General.

The Court of Appeals, in its Decision, initially addressed petitioner’s assertion that respondents had committed forum shopping by the institution of
CA-G.R. SP No. 88004 and CA-G.R. SP No. 92785. It ruled that respondents were not guilty of forum shopping, distinguishing between the respondents’
two Petitions. The subject of Respondents’ Petition in CA-G.R SP No. 88004 was the 7 December 2004 Decision of the IPO Director General dismissing
respondents’ appeal of the 22 December 2003 Decision of the IPO Director of Legal Affairs. Respondents questioned therein the cancellation of the
trademark registration of respondent Sehwani, Incorporated and the order permanently enjoining respondents from using the disputed trademark.
Respondents’ Petition in CA-G.R. SP No. 92785 sought the review of the 23 December 2005 Decision of the IPO Director General partially modifying
the 22 December 2003 Decision of the IPO Director of Legal Affairs. Respondents raised different issues in their second petition before the appellate
court, mainly concerning the finding of the IPO Director General that respondents were guilty of unfair competition and the awarding of actual and
exemplary damages, as well as attorney’s fees, to petitioner.

The Court of Appeals then proceeded to resolve CA-G.R. SP No. 92785 on jurisdictional grounds not raised by the parties. The appellate court declared
that Section 163 of the Intellectual Property Code specifically confers upon the regular courts, and not the BLA-IPO, sole jurisdiction to hear and
decide cases involving provisions of the Intellectual Property Code, particularly trademarks. Consequently, the IPO Director General had no jurisdiction
to rule in its Decision dated 23 December 2005 on supposed violations of these provisions of the Intellectual Property Code.

In the end, the Court of Appeals decreed:

WHEREFORE, the Petition is GRANTED. The Decision dated 23 December 2005 rendered by the Director General of the Intellectual Property Office
of the Philippines in Appeal No. 10-05-01 is REVERSED and SET ASIDE. Insofar as they pertain to acts governed by Article 168 of R.A. 8293 and other
sections enumerated in Section 163 of the same Code, respondent’s claims in its Complaint docketed as IPV No. 10-2001-00004 are hereby
DISMISSED.26

The Court of Appeals, in a Resolution dated 31 July 2007,27 denied petitioner’s Motion for Reconsideration of its aforementioned Decision.

Hence, the present Petition, where petitioner raises the following issues:

I
WHETHER OR NOT THE COURT OF APPEALS ERRED IN ISSUING THE QUESTIONED DECISION DATED 18 JULY 2006 AND RESOLUTION DATED 31
JULY 2007 DECLARING THAT THE IPO HAS NO JURISDICTION OVER ADMINISTRATIVE COMPLAINTS FOR INTELLECTUAL PROPERTY RIGHTS
VIOLATIONS;

II
WHETHER OR NOT THE INSTANT PETITION IS FORMALLY DEFECTIVE; AND

III
WHETHER OR NOT THE COURT OF APPEALS ERRED IN ISSUING THE QUESTIONED DECISION DATED 18 JULY 2006 AND RESOLUTION DATED 31
JULY 2007 DECLARING THAT SEHWANI AND BENITA ARE NOT GUILTY OF: (A) SUBMITTING A PATENTLY FALSE CERTIFICATION OF NON-FORUM
SHOPPING; AND (B) FORUM SHOPPING PROPER.28

As previously narrated herein, on 15 October 2007, during the pendency of the present Petition, this Court already promulgated its Decision29 in
G.R. No. 171053 on 15 October 2007, which affirmed the IPO Director General’s dismissal of respondents’ appeal for being filed beyond the
reglementary period, and left the 22 December 2003 Decision of the IPO Director for Legal Affairs, canceling the trademark registration of respondent
Sehwani, Incorporated and enjoining respondents from using the disputed marks.
Before discussing the merits of this case, this Court must first rule on the procedural flaws that each party has attributed to the other.

Formal Defects of the Petition

Respondents contend that the Verification/Certification executed by Atty. Edmund Jason Barranda of Villaraza and Angangco, which petitioner
attached to the present Petition, is defective and should result in the dismissal of the said Petition.

Respondents point out that the Secretary’s Certificate executed by Arnold M. Wensinger on 20 August 2007, stating that petitioner had authorized
the lawyers of Villaraza and Angangco to represent it in the present Petition and to sign the Verification and Certification against Forum Shopping,
among other acts, was not properly notarized. The jurat of the aforementioned Secretary’s Certificate reads:

Subscribed and sworn to me this 20th day of August 2007 in Irving California.

Rachel A. Blake (Sgd.)

Notary Public30

Respondents aver that the said Secretary’s Certificate cannot properly authorize Atty. Barranda to sign the Verification/Certification on behalf of
petitioner because the notary public Rachel A. Blake failed to state that: (1) petitioner’s Corporate Secretary, Mr. Wensinger, was known to her; (2)
he was the same person who acknowledged the instrument; and (3) he acknowledged the same to be his free act and deed, as required under
Section 2 of Act No. 2103 and Landingin v. Republic of the Philippines.31

Respondents likewise impugn the validity of the notarial certificate of Atty. Aldrich Fitz B. Uy, on Atty. Baranda’s Verification/Certification attached to
the instant Petition, noting the absence of (1) the serial number of the commission of the notary public; (2) the office address of the notary public;
(3) the roll of attorneys’ number and the IBP membership number; and (4) a statement that the Verification/Certification was notarized within the
notary public’s territorial jurisdiction, as required under the 2004 Rules on Notarial Practice. 32

Section 2 of Act No. 2103 and Landingin v. Republic of the Philippines are not applicable to the present case. The requirements enumerated therein
refer to documents which require an acknowledgement, and not a mere jurat.

A jurat is that part of an affidavit in which the notary certifies that before him/her, the document was subscribed and sworn to by the executor.
Ordinarily, the language of the jurat should avow that the document was subscribed and sworn to before the notary public. In contrast, an
acknowledgment is the act of one who has executed a deed in going before some competent officer or court and declaring it to be his act or deed.
It involves an extra step undertaken whereby the signor actually declares to the notary that the executor of a document has attested to the notary
that the same is his/her own free act and deed.33 A Secretary’s Certificate, as that executed by petitioner in favor of the lawyers of the Angangco
and Villaraza law office, only requires a jurat.34

Even assuming that the Secretary’s Certificate was flawed, Atty. Barranda may still sign the Verification attached to the Petition at bar. A pleading is
verified by an affidavit that the affiant has read the pleading and that the allegations therein are true and correct of his personal knowledge or based
on authentic records. 35 The party itself need not sign the verification. A party’s representative, lawyer or any other person who personally knows
the truth of the facts alleged in the pleading may sign the verification.36 Atty. Barranda, as petitioner’s counsel, was in the position to verify the truth
and correctness of the allegations of the present Petition. Hence, the Verification signed by Atty. Barranda substantially complies with the formal
requirements for such.

Moreover, the Court deems it proper not to focus on the supposed technical infirmities of Atty. Baranda’s Verification. It must be borne in mind that
the purpose of requiring a verification is to secure an assurance that the allegations of the petition has been made in good faith; or are true and
correct, not merely speculative. This requirement is simply a condition affecting the form of pleadings, and non-compliance therewith does not
necessarily render it fatally defective. Indeed, verification is only a formal, not a jurisdictional requirement. In the interest of substantial justice, strict
observance of procedural rules may be dispensed with for compelling reasons.37 The vital issues raised in the instant Petition on the jurisdiction of
the IPO Director for Legal Affairs and the IPO Director General over trademark cases justify the liberal application of the rules, so that the Court may
give the said Petition due course and resolve the same on the merits.

This Court agrees, nevertheless, that the notaries public, Rachel A. Blake and Aldrich Fitz B. Uy, were less than careful with their jurats or notarial
certificates. Parties and their counsel should take care not to abuse the Court’s zeal to resolve cases on their merits. Notaries public in the Philippines
are reminded to exert utmost care and effort in complying with the 2004 Rules on Notarial Practice. Parties and their counsel are further charged
with the responsibility of ensuring that documents notarized abroad be in their proper form before presenting said documents before Philippine courts.

Forum Shopping

Petitioner next avers that respondents are guilty of forum shopping in filing the Petition in CA-G.R. SP No. 92785, following their earlier filing of the
Petition in CA-G.R SP No. 88004. Petitioner also asserts that respondents were guilty of submitting to the Court of Appeals a patently false Certification
of Non-forum Shopping in CA-G.R. SP No. 92785, when they failed to mention therein the pendency of CA-G.R SP No. 88004.

Forum shopping is the institution of two or more actions or proceedings grounded on the same cause on the supposition that one or the other court
would make a favorable disposition. It is an act of malpractice and is prohibited and condemned as trifling with courts and abusing their processes.
In determining whether or not there is forum shopping, what is important is the vexation caused the courts and parties-litigants by a party who asks
different courts and/or administrative bodies to rule on the same or related causes and/or grant the same or substantially the same reliefs and in the
process creates the possibility of conflicting decisions being rendered by the different bodies upon the same issues.38

Forum shopping is present when, in two or more cases pending, there is identity of (1) parties (2) rights or causes of action and reliefs prayed for,
and (3) the identity of the two preceding particulars is such that any judgment rendered in the other action, will, regardless of which party is
successful, amount to res judicata in the action under consideration.39

After a cursory look into the two Petitions in CA-G.R. SP No. 88004 and CA-G.R. SP No. 92785, it would at first seem that respondents are guilty of
forum shopping.

There is no question that both Petitions involved identical parties, and raised at least one similar ground for which they sought the same relief. Among
the grounds stated by the respondents for their Petition in CA-G.R SP No. 88004 was that "[T]he Bureau of Legal Affair’s (sic) Decision and Resolution
(1) canceling [herein respondent Sehwani, Incorporated]’s certificate of registration for the mark ‘IN-N-OUT’ and (2) ordering [herein respondents]
to permanently cease and desist from using the subject mark on its goods and business are contrary to law and/or is (sic) not supported by
evidence."40 The same ground was again invoked by respondents in their Petition in CA-G.R. SP No. 92785, rephrased as follows: "The IPO Director
General committed grave error in affirming the Bureau of Legal Affair’s (sic) Decision (1) canceling [herein respondent Sehwani, Incorporated]’s
certificate of registration for the mark "IN-N-OUT," and (2) ordering [herein respondents] to permanently cease and desist from using the subject
mark on its goods and business."41 Both Petitions, in effect, seek the reversal of the 22 December 2003 Decision of the IPO Director of Legal Affairs.
Undoubtedly, a judgment in either one of these Petitions affirming or reversing the said Decision of the IPO Director of Legal Affairs based on the
merits thereof would bar the Court of Appeals from making a contrary ruling in the other Petition, under the principle of res judicata.

Upon a closer scrutiny of the two Petitions, however, the Court takes notice of one issue which respondents did not raise in CA-G.R. SP No. 88004,
but can be found in CA-G.R. SP No. 92785, i.e., whether respondents are liable for unfair competition. Hence, respondents seek additional reliefs in
CA-G.R. SP No. 92785, seeking the reversal of the finding of the IPO Director General that they are guilty of unfair competition, and the nullification
of the award of damages in favor of petitioner resulting from said finding. Undoubtedly, respondents could not have raised the issue of unfair
competition in CA-G.R. SP No. 88004 because at the time they filed their Petition therein on 28 December 2004, the IPO Director General had not
yet rendered its Decision dated 23 December 2005 wherein it ruled that respondents were guilty thereof and awarded damages to petitioner.

In arguing in their Petition in CA-G.R. SP No. 92785 that they are not liable for unfair competition, it is only predictable, although not necessarily
legally tenable, for respondents to reassert their right to register, own, and use the disputed mark. Respondents again raise the issue of who has the
better right to the disputed mark, because their defense from the award of damages for unfair competition depends on the resolution of said issue
in their favor. While this reasoning may be legally unsound, this Court cannot readily presume bad faith on the part of respondents in filing their
Petition in CA-G.R. SP No. 92785; or hold that respondents breached the rule on forum shopping by the mere filing of the second petition before the
Court of Appeals.

True, respondents should have referred to CA-G.R. SP No. 88004 in the Certification of Non-Forum Shopping, which they attached to their Petition in
CA-G.R. SP No. 92785. Nonetheless, the factual background of this case and the importance of resolving the jurisdictional and substantive issues
raised herein, justify the relaxation of another procedural rule. Although the submission of a certificate against forum shopping is deemed obligatory,
it is not jurisdictional.42 Hence, in this case in which such a certification was in fact submitted, only it was defective, the Court may still refuse to
dismiss and, instead, give due course to the Petition in light of attendant exceptional circumstances.

The parties and their counsel, however, are once again warned against taking procedural rules lightly. It will do them well to remember that the
Courts have taken a stricter stance against the disregard of procedural rules, especially in connection with the submission of the certificate against
forum shopping, and it will not hesitate to dismiss a Petition for non-compliance therewith in the absence of justifiable circumstances.

The Jurisdiction of the IPO

The Court now proceeds to resolve an important issue which arose from the Court of Appeals Decision dated 18 July 2006 in CA-G.R. SP No. 92785.
In the afore-stated Decision, the Court of Appeals adjudged that the IPO Director for Legal Affairs and the IPO Director General had no jurisdiction
over the administrative proceedings below to rule on issue of unfair competition, because Section 163 of the Intellectual Property Code confers
jurisdiction over particular provisions in the law on trademarks on regular courts exclusively. According to the said provision:

Section 163. Jurisdiction of Court.–All actions under Sections 150, 155, 164, and 166 to 169 shall be brought before the proper courts with appropriate
jurisdiction under existing laws.

The provisions referred to in Section 163 are: Section 150 on License Contracts; Section 155 on Remedies on Infringement; Section 164 on Notice of
Filing Suit Given to the Director; Section 166 on Goods Bearing Infringing Marks or Trade Names; Section 167 on Collective Marks; Section 168 on
Unfair Competition, Rights, Regulation and Remedies; and Section 169 on False Designations of Origin, False Description or Representation.

The Court disagrees with the Court of Appeals.

Section 10 of the Intellectual Property Code specifically identifies the functions of the Bureau of Legal Affairs, thus:

Section 10. The Bureau of Legal Affairs.–The Bureau of Legal Affairs shall have the following functions:

10.1 Hear and decide opposition to the application for registration of marks; cancellation of trademarks; subject to the provisions of Section 64,
cancellation of patents and utility models, and industrial designs; and petitions for compulsory licensing of patents;

10.2 (a) Exercise original jurisdiction in administrative complaints for violations of laws involving intellectual property rights; Provided, That its
jurisdiction is limited to complaints where the total damages claimed are not less than Two hundred thousand pesos (P200,000): Provided, futher,
That availment of the provisional remedies may be granted in accordance with the Rules of Court. The Director of Legal Affairs shall have the power
to hold and punish for contempt all those who disregard orders or writs issued in the course of the proceedings.

(b) After formal investigation, the Director for Legal Affairs may impose one (1) or more of the following administrative penalties:

(i) The issuance of a cease and desist order which shall specify the acts that the respondent shall cease and desist from and shall require him to
submit a compliance report within a reasonable time which shall be fixed in the order;

(ii) The acceptance of a voluntary assurance of compliance or discontinuance as may be imposed. Such voluntary assurance may include one or more
of the following:

(1) An assurance to comply with the provisions of the intellectual property law violated;
(2) An assurance to refrain from engaging in unlawful and unfair acts and practices subject of the formal investigation
(3) An assurance to recall, replace, repair, or refund the money value of defective goods distributed in commerce; and
(4) An assurance to reimburse the complainant the expenses and costs incurred in prosecuting the case in the Bureau of Legal Affairs.

The Director of Legal Affairs may also require the respondent to submit periodic compliance reports and file a bond to guarantee compliance of his
undertaking.

(iii) The condemnation or seizure of products which are subject of the offense. The goods seized hereunder shall be disposed of in such manner as
may be deemed appropriate by the Director of Legal Affairs, such as by sale, donation to distressed local governments or to charitable or relief
institutions, exportation, recycling into other goods, or any combination thereof, under such guidelines as he may provide;
(iv) The forfeiture of paraphernalia and all real and personal properties which have been used in the commission of the offense;
(v) The imposition of administrative fines in such amount as deemed reasonable by the Director of Legal Affairs, which shall in no case be less than
Five thousand pesos (P5,000) nor more than One hundred fifty thousand pesos (P150,000). In addition, an additional fine of not more than One
thousand pesos (P1,000) shall be imposed for each day of continuing violation;
(vi) The cancellation of any permit, license, authority, or registration which may have been granted by the Office, or the suspension of the validity
thereof for such period of time as the Director of Legal Affairs may deem reasonable which shall not exceed one (1) year;
(vii) The withholding of any permit, license, authority, or registration which is being secured by the respondent from the Office;
(viii) The assessment of damages;
(ix) Censure; and
(x) Other analogous penalties or sanctions.

10.3 The Director General may by Regulations establish the procedure to govern the implementation of this Section.43 (Emphasis provided.)

Unquestionably, petitioner’s complaint, which seeks the cancellation of the disputed mark in the name of respondent Sehwani, Incorporated, and
damages for violation of petitioner’s intellectual property rights, falls within the jurisdiction of the IPO Director of Legal Affairs.

The Intellectual Property Code also expressly recognizes the appellate jurisdiction of the IPO Director General over the decisions of the IPO Director
of Legal Affairs, to wit:

Section 7. The Director General and Deputies Director General. 7.1 Fuctions.–The Director General shall exercise the following powers and functions:
xxxx

b) Exercise exclusive appellate jurisdiction over all decisions rendered by the Director of Legal Affairs, the Director of Patents, the Director of
Trademarks, and the Director of Documentation, Information and Technology Transfer Bureau. The decisions of the Director General in the exercise
of his appellate jurisdiction in respect of the decisions of the Director of Patents, and the Director of Trademarks shall be appealable to the Court of
Appeals in accordance with the Rules of Court; and those in respect of the decisions of the Director of Documentation, Information and Technology
Transfer Bureau shall be appealable to the Secretary of Trade and Industry;

The Court of Appeals erroneously reasoned that Section 10(a) of the Intellectual Property Code, conferring upon the BLA-IPO jurisdiction over
administrative complaints for violations of intellectual property rights, is a general provision, over which the specific provision of Section 163 of the
same Code, found under Part III thereof particularly governing trademarks, service marks, and tradenames, must prevail. Proceeding therefrom, the
Court of Appeals incorrectly concluded that all actions involving trademarks, including charges of unfair competition, are under the exclusive
jurisdiction of civil courts.

Such interpretation is not supported by the provisions of the Intellectual Property Code. While Section 163 thereof vests in civil courts jurisdiction
over cases of unfair competition, nothing in the said section states that the regular courts have sole jurisdiction over unfair competition cases, to the
exclusion of administrative bodies. On the contrary, Sections 160 and 170, which are also found under Part III of the Intellectual Property Code,
recognize the concurrent jurisdiction of civil courts and the IPO over unfair competition cases. These two provisions read:

Section 160. Right of Foreign Corporation to Sue in Trademark or Service Mark Enforcement Action.–Any foreign national or juridical person who
meets the requirements of Section 3 of this Act and does not engage in business in the Philippines may bring a civil or administrative action hereunder
for opposition, cancellation, infringement, unfair competition, or false designation of origin and false description, whether or not it is licensed to do
business in the Philippines under existing laws.

xxxx

Section 170. Penalties.–Independent of the civil and administrative sanctions imposed by law, a criminal penalty of imprisonment from two (2) years
to five (5) years and a fine ranging from Fifty thousand pesos (P50,000) to Two hundred thousand pesos (P200,000), shall be imposed on any person
who is found guilty of committing any of the acts mentioned in Section 155, Section168, and Subsection169.1.

Based on the foregoing discussion, the IPO Director of Legal Affairs had jurisdiction to decide the petitioner’s administrative case against respondents
and the IPO Director General had exclusive jurisdiction over the appeal of the judgment of the IPO Director of Legal Affairs.

Unfair Competition

The Court will no longer touch on the issue of the validity or propriety of the 22 December 2003 Decision of the IPO Director of Legal Affairs which:
(1) directed the cancellation of the certificate of registration of respondent Sehwani, Incorporated for the mark "IN-N-OUT" and (2) ordered
respondents to permanently cease and desist from using the disputed mark on its goods and business. Such an issue has already been settled by
this Court in its final and executory Decision dated 15 October 2007 in G.R. No. 171053, Sehwani, Incorporated v. In-N-Out Burger,44 ultimately
affirming the foregoing judgment of the IPO Director of Legal Affairs. That petitioner has the superior right to own and use the "IN-N-OUT" trademarks
vis-à-vis respondents is a finding which this Court may no longer disturb under the doctrine of conclusiveness of judgment. In conclusiveness of
judgment, any right, fact, or matter in issue directly adjudicated or necessarily involved in the determination of an action before a competent court
in which judgment is rendered on the merits is conclusively settled by the judgment therein and cannot again be litigated between the parties and
their privies whether or not the claims, demands, purposes, or subject matters of the two actions are the same.45

Thus, the only remaining issue for this Court to resolve is whether the IPO Director General correctly found respondents guilty of unfair competition
for which he awarded damages to petitioner.

The essential elements of an action for unfair competition are (1) confusing similarity in the general appearance of the goods and (2) intent to deceive
the public and defraud a competitor. The confusing similarity may or may not result from similarity in the marks, but may result from other external
factors in the packaging or presentation of the goods. The intent to deceive and defraud may be inferred from the similarity of the appearance of the
goods as offered for sale to the public. Actual fraudulent intent need not be shown.46

In his Decision dated 23 December 2005, the IPO Director General ably explains the basis for his finding of the existence of unfair competition in this
case, viz:

The evidence on record shows that the [herein respondents] were not using their registered trademark but that of the [petitioner]. [Respondent]
SEHWANI, INC. was issued a Certificate of Registration for IN N OUT (with the Inside of the Letter "O" Formed like a Star) for restaurant business in
1993. The restaurant opened only in 2000 but under the name IN-N-OUT BURGER. Apparently, the [respondents] started constructing the restaurant
only after the [petitioner] demanded that the latter desist from claiming ownership of the mark IN-N-OUT and voluntarily cancel their trademark
registration. Moreover, [respondents] are also using [petitioner’s] registered mark Double-Double for use on hamburger products. In fact, the burger
wrappers and the French fries receptacles the [respondents] are using do not bear the mark registered by the [respondent], but the [petitioner’s]
IN-N-OUT Burger’s name and trademark IN-N-OUT with Arrow design.

There is no evidence that the [respondents] were authorized by the [petitioner] to use the latter’s marks in the business. [Respondents’] explanation
that they are not using their own registered trademark due to the difficulty in printing the "star" does not justify the unauthorized use of the
[petitioner’s] trademark instead.

Further, [respondents] are giving their products the general appearance that would likely influence purchasers to believe that these products are
those of the [petitioner]. The intention to deceive may be inferred from the similarity of the goods as packed and offered for sale, and, thus, action
will lie to restrain such unfair competition. x x x.
xxxx

[Respondents’] use of IN-N-OUT BURGER in busineses signages reveals fraudulent intent to deceive purchasers. Exhibit "GG," which shows the
business establishment of [respondents] illustrates the imitation of [petitioner’s] corporate name IN-N-OUT and signage IN-N-OUT BURGER. Even
the Director noticed it and held:

"We also note that In-N-Out Burger is likewise, [petitioner’s] corporate name. It has used the "IN-N-OUT" Burger name in its restaurant business in
Baldwin Park, California in the United States of America since 1948. Thus it has the exclusive right to use the tradenems "In-N-Out" Burger in the
Philippines and the respondents’ are unlawfully using and appropriating the same."

The Office cannot give credence to the [respondent’s] claim of good faith and that they have openly and continuously used the subject mark since
1982 and is (sic) in the process of expanding its business. They contend that assuming that there is value in the foreign registrations presented as
evidence by the [petitioner], the purported exclusive right to the use of the subject mark based on such foreign registrations is not essential to a
right of action for unfair competition. [Respondents] also claim that actual or probable deception and confusion on the part of customers by reason
of respondents’ practices must always appear, and in the present case, the BLA has found none. This Office finds the arguments untenable.

In contrast, the [respondents] have the burden of evidence to prove that they do not have fraudulent intent in using the mark IN-N-OUT. To prove
their good faith, [respondents] could have easily offered evidence of use of their registered trademark, which they claimed to be using as early as
1982, but did not.

[Respondents] also failed to explain why they are using the marks of [petitioner] particularly DOUBLE DOUBLE, and the mark IN-N-OUT Burger and
Arrow Design. Even in their listing of menus, [respondents] used [Appellants’] marks of DOUBLE DOUBLE and IN-N-OUT Burger and Arrow Design.
In addition, in the wrappers and receptacles being used by the [respondents] which also contained the marks of the [petitioner], there is no notice
in such wrappers and receptacles that the hamburger and French fries are products of the [respondents]. Furthermore, the receipts issued by the
[respondents] even indicate "representing IN-N-OUT." These acts cannot be considered acts in good faith. 47

Administrative proceedings are governed by the "substantial evidence rule." A finding of guilt in an administrative case would have to be sustained
for as long as it is supported by substantial evidence that the respondent has committed acts stated in the complaint or formal charge. As defined,
substantial evidence is such relevant evidence as a reasonable mind may accept as adequate to support a conclusion.48 As recounted by the IPO
Director General in his decision, there is more than enough substantial evidence to support his finding that respondents are guilty of unfair competition.

With such finding, the award of damages in favor of petitioner is but proper. This is in accordance with Section 168.4 of the Intellectual Property
Code, which provides that the remedies under Sections 156, 157 and 161 for infringement shall apply mutatis mutandis to unfair competition. The
remedies provided under Section 156 include the right to damages, to be computed in the following manner:

Section 156. Actions, and Damages and Injunction for Infringement.–156.1 The owner of a registered mark may recover damages from any person
who infringes his rights, and the measure of the damages suffered shall be either the reasonable profit which the complaining party would have
made, had the defendant not infringed his rights, or the profit which the defendant actually made out of the infringement, or in the event such
measure of damages cannot be readily ascertained with reasonable certainty, then the court may award as damages a reasonable percentage based
upon the amount of gross sales of the defendant or the value of the services in connection with which the mark or trade name was used in the
infringement of the rights of the complaining party.

In the present case, the Court deems it just and fair that the IPO Director General computed the damages due to petitioner by applying the reasonable
percentage of 30% to the respondents’ gross sales, and then doubling the amount thereof on account of respondents’ actual intent to mislead the
public or defraud the petitioner,49 thus, arriving at the amount of actual damages of P212,574.28.

Taking into account the deliberate intent of respondents to engage in unfair competition, it is only proper that petitioner be awarded exemplary
damages. Article 2229 of the Civil Code provides that such damages may be imposed by way of example or correction for the public good, such as
the enhancement of the protection accorded to intellectual property and the prevention of similar acts of unfair competition. However, exemplary
damages are not meant to enrich one party or to impoverish another, but to serve as a deterrent against or as a negative incentive to curb socially
deleterious action.50 While there is no hard and fast rule in determining the fair amount of exemplary damages, the award of exemplary damages
should be commensurate with the actual loss or injury suffered.51 Thus, exemplary damages of P500,000.00 should be reduced to P250,000.00
which more closely approximates the actual damages awarded.

In accordance with Article 2208(1) of the Civil Code, attorney’s fees may likewise be awarded to petitioner since exemplary damages are awarded to
it. Petitioner was compelled to protect its rights over the disputed mark. The amount of P500,000.00 is more than reasonable, given the fact that the
case has dragged on for more than seven years, despite the respondent’s failure to present countervailing evidence. Considering moreover the
reputation of petitioner’s counsel, the actual attorney’s fees paid by petitioner would far exceed the amount that was awarded to it.52

IN VIEW OF THE FOREGOING, the instant Petition is GRANTED. The assailed Decision of the Court of Appeals in CA-G.R. SP No. 92785, promulgated
on 18 July 2006, is REVERSED. The Decision of the IPO Director General, dated 23 December 2005, is hereby REINSTATED IN PART, with the
modification that the amount of exemplary damages awarded be reduced to P250,000.00.

G.R. No. 174379 August 31, 2016

E.I DUPONT DE NEMOURS AND CO., (assignee of inventors Carino, Duncia and Wong), Petitioner vs. DIR. EMMA C. FRANCISCO (in
her capacity as DIR-GEN OF IPO), DIR. EPIFANIO M. VELASCO (in his capacity as the DIR. OF THE BUREAU OF PATENTS, and
THERAPHARMA, INC., Respondents

A patent is granted to provide rights and protection to the inventor after an invention is disclosed to the public. It also seeks to restrain and prevent
unauthorized persons from unjustly profiting from a protected invention. However, ideas not covered by a patent are free for the public to use and
exploit. Thus, there are procedural rules on the application and grant of patents established to protect against any infringement. To balance the
public interests involved, failure to comply with strict procedural rules will result in the failure to obtain a patent.

This resolves a Petition for Review on Certiorari 1 assailing the Court of Appeals Amended Decision2 dated August 30, 2006, which denied the revival
of Philippine Patent Application No. 35526, and the Court of Appeals Resolution3 dated January 31, 2006, which granted the intervention of
Therapharma, Inc. in the revival proceedings.

E.I. Dupont Nemours and Company (E.I. Dupont Nemours) is an American corporation organized under the laws of the State of Delaware. 4 It is the
assignee of inv~ntors David John Carini, John Jonas Vytautas Duncia, and Pancras Chor Bun Wong, all citizens of the United States of America.5

On July 10, 1987, E.I. Dupont Nemours filed Philippine Patent Application No. 35526 before the Bureau of Patents, Trademarks, and Technology
Transfer.6 The application was for Angiotensin II Receptor Blocking Imidazole (losartan), an invention related to the treatment of hypertension and
congestive heart failure.7 The product was produced and marketed by Merck, Sharpe, and Dohme Corporation (Merck), E.I. Dupont Nemours'
licensee, under the brand names Cozaar and Hyzaar.8

The patent application was handled by Atty. Nicanor D. Mapili (Atty. Mapili), a local resident agent who handled a majority of E.I. Dupont Nemours'
patent applications in the Philippines from 1972 to 1996.9

On December 19, 2000, E.I. Dupont Nemours' new counsel, Ortega, Del Castillo, Bacorro, Odulio, Calma, and Carbonell,10 sent the Intellectual
Property Office11 a letter requesting that an office action be issued on Philippine Patent Application No. 35526. 12

In response, Patent Examiner Precila O. Bulihan of Intellectual Property Office sent an office action marked Paper No. 2 on January 30, 2002,13
which stated:

The appointed attorney on record was the late Atty. Nicanor D. Mapili. The reconstituted documents provided no documents that will show that the
authority to prosecute the instant application is now transferred to the present counsel. No official revocation on record is available.

Therefore, an official revocation of the Power of Attorney of the former counsel and the appointment of the present by the applicant is therefore
required before further action can be undertaken.
....

1. Contrary to what was alleged, the Chemical Examining Division's (CED) record will show that as far as the said division is concern[ ed], it did not
fail to issue the proper and timely action on the instant application. CED record shows that the subject application was assigned to the examiner on
June 7, 1988. A month after that was July 19, 1988, the first Office Action was mailed but was declared abandoned as of September 20, 1988 for
applicant's failure to respond within the period as prescribed under Rule 112. Since then, no other official transactions were recorded. Tlris record is
complemented by the Examiner-in-charge's own record ....
....

2. It was noted that it took thirteen (13) long years for the applicant to request for such Office Action. This is not expected of the applicant since it
is an acceptable fact that almost all inventors/ applicants wish for the early disposition for their applications.14

On May 29, 2002, E.I. Dupont Nemours replied to the office action by submitting a Power of Attorney executed by Miriam Meconnahey, authorizing
Ortega, Castillo, Del Castillo, Bacorro, Odulio, Calma, and Carbonell to prosecute and handle its patent applications. 15 On the same day, it also filed
a Petition for Revival with Cost of Philippine Patent Application No. 35526. 16

In its Petition for Revival, E.I. Dupont Nemours argued that its former counsel, Atty. Mapili, did not inform it about the abandonment of the application,
and it was not aware that Atty. Mapili had already died. 17 It argued that it discovered Atty. Mapili's death when its senior-level patent attorney
visited the Philippines in 1996. 18 It argued that it only had actual notice of the abandonment on January 30, 2002, the date of Paper No. 2. 19 Thus,
it argued that its Petition for Revival was properly filed under Section 113 of the 1962 Revised Rules of Practice before the Philippines Patent Office
in Patent Cases (1962 Revised Rules of Practice).20

On April 18, 2002, the Director of Patents denied the Petition for Revival for having been filed out of time.21 The Resolution22 stated:

Propriety dictates that the well-settled rule on agency should be applied to this case to maintain the objectivity and discipline of the Office. Therefore,
for cases such as the instant case, let the Office maintain its position that mistakes of the counsel bind the client,' regardless of the degree of
negligence committed by the former counsel. Although it appears that the former counsel, Atty. Nicanor Mapili was remiss in his obligations as counsel
for the applicants, the Office cannot revive the abandoned application because of the limitations provided in Rule 115. Clearly, the Petition for Revival
was filed beyond the reglementary period. Since the law and rules do not give the Director of Patents the discretion to stretch the period for revival,
the Office is constrained to apply Rule 115 to the instant case.

In view of the foregoing considerations, applicants' petition to revive the subject application is hereby denied.

SO ORDERED.23

E.I. Dupont Nemours appealed the denial to the Director-General of the Intellectual Property Office on August 26, 2002.24 In the Decision25 dated
October 22, 2003, Director-General Emma C. Francisco denied the appeal and affirmed the Resolution of the Director of Patents.

On November 21, 2003, petitioner filed before the Court of Appeals a Petition for Review seeking to set aside the Intellectual Property Office's Decision
dated October 22, 2003. 26

On August 31, 2004, the Court of Appeals granted the Petition for Review. 27 In allowing the Petition for Revival, the Court of Appeals stated:
After an exhaustive examination of the records of this case, this Court believes that there is sufficient justification to relax the application of the
above-cited doctrine in this case, and to afford petitioner some relief from the gross negligence committed by its former lawyer, Atty. Nicanor D.
Mapili[.]28

The Office of the Solicitor General, on behalf of the Intellectual Property Office, moved for reconsideration of this Decision on September 22, 2004.
29

In the interim, Therapharma, Inc. moved for leave to intervene and admit the Attached Motion for Reconsideration dated October 11, 200430 and
argued that the Court of Appeals' August 31, 2004 Decision directly affects its "vested" rights to sell its own product. 31

Therapharma, Inc. alleged that on January 4, 2003, it filed before the Bureau of Food and Drugs its own application for a losartan product "Lifezar,"
a medication for hypertension, which the Bureau granted.32 It argued that it made a search of existing patent applications for similar products before
its application, and that no existing patent registration was found since E.I. Dupont Nemours' application for its losartan product was considered
abandoned by the Bureau of Patents, Trademarks, and Technology Transfer.33 It alleged that sometime in 2003 to 2004, there was an exchange of
correspondence between Therapharma, Inc. and Merck. In this exchange, Merck informed Therapharma, Inc. that it was pursuing a patent on the
losartan products in the Philippines and that it would pursue any legal action necessary to protect its product.34

On January 31, 2006, the Court of Appeals issued the Resolution35 granting the Motion· for Leave to Intervene. According to the Court of Appeals,
Therapharma, Inc. had an interest in the revival of E.I. Dupont Nemours' patent application since it was the local competitor for the losartan product.
36 It stated hat even if the Petition for Review was premised on the revival of the patent application, Therapharma, Inc.' s intervention was not
premature since E.I. Dupont Nemours, through Merck, already threatened Therapharma, Inc. with legal action if it continued to market its losartan
product.37

E.I. Dupont Nemours moved for reconsideration on February 22, 2006, assailing the Court of Appeals' January 31, 2006 Resolution.38

On August 30,. 2006, the Court of Appeals resolved both Motions for Reconsideration and rendered the Amended Decision39 reversing its August 31,
2004 Decision.

The Court of Appeals ruled that the public interest would be prejudiced by the revival of E.I. Dupont Nemours' application.40 It found that losartan
was used to treat hypertension, "a chronic ailment afflicting an estimated 12.6 million Filipinos,"41 and noted that the presence of competition lowered
the price for losartan products. 42 It also found that the revival of the application prejudiced Therapharma, Inc.' s interest, in that it had already
invested more than P20,000,000.00 to develop its own losartan product and that it acted in good faith when it marketed its product.43

The Court of Appeals likewise found that it erroneously based its August 31, 2004 Decision on E.I Dupont Nemours' allegation that it took seven (7)
to 13 years for the Intellectual Property Office to act on a patent application. 44 It stated that while it might have taken that long to issue the patent,
it did not take that long for the Intellectual Property Office to act on application.45 Citing Schuartz v. Court of Appeals,46 it found that both E.I.
Dupont Nemours and Atty. Mapili were inexcusably negligent in

prosecuting the patent application.47

On October 19, 2006, petitioner E.I. Dupont Nemours filed before this Court this Petition for Review on Certiorari.48 Both respondents Intellectual
Property Office and Therapharma, Inc. were directed to comment on the comment on the Petition.49 Upon submission of their respective
Comments,50 petitioner was directed to file its Consolidated Reply. 51 Thereafter, the parties were directed to file their respective memoranda. 52

The arguments of the parties present several issues for this Court's resolution, as follows:

First, whether the Petition for Review on Certiorari complied with Rule 45, Section 4 of the Rules of Court when petitioner failed to attach certain
documents to support the allegations in the complaint;
Second, whether petitioner should have filed a petition for certiorari under Rule 65 of the Rules of Court;
Third, whether the Petition for Review on Certiorari raises questions of fact;
Fourth, whether the Court of Appeals erred in allowing the intervention of respondent Therapharma, Inc. in petitioner's appeal;\
Fifth, whether the Court of Appeals erred in denying petitioner's appeal for the revival of its patent application on the grounds that (a) petitioner
committed inexcusable negligence in the prosecution of its patent application; and (b) third-party rights and the public interest would be prejudiced
by the appeal;

Sixth, whether Schuartz applies to this case in that the negligence of a patent applicant's counsel binds the applicant; and

Lastly, whether the invention has already become part of public domain.

I
The question of whether the Court of Appeals may resolve a motion for intervention is a question that assails an interlocutory order and requests a
review of a lower court's exercise of discretion. Generally, a petition for certiorari under Rule 65 of the Rules of Court will lie to raise this issue in a
limited manner. There must be a clear showing of grave abuse of discretion for writ of certiorari to be issued.

However, when the Court of Appeals has already resolved the question of intervention and the merits of the case, an appeal through a petition for
review on certiorari under Rule 45 of the Rules of Court is the proper remedy.

Respondent Therapharma, Inc. argues that the Petition should be dismissed outright for being the wrong mode of appeal.53 It argues that petitioner
should have filed a petition for certiorari under Rule 65 since petitioner was assailing an act done by the Court of Appeals in the exercise of its
discretion. 54 It argues that petitions under Rule 45 are limited to questions of law, and petitioner raised findings of fact that have already been
affirmed by the Court of Appeals. 55 Petitioner, on the other hand, argues that Rule 65 is only available when there is no appeal or any plain, speedy
remedy in the ordinary course of law. Since a petition for review under Rule 45 was still available to it, it argues that it correctly availed itself of this
remedy. 56 Petitioner also argues that there are exceptions to the general rule on the conclusiveness of the Court of Appeals' findings of fact. 57 It
argues that it was necessary for it to discuss relevant facts in order for it to show that the Court of Appeals made a misapprehension of facts. 58

The special civil action of certiorari under Rule 65 is intended to correct errors of jurisdiction. 59 Courts lose competence in relation to an order if it
acts in grave abuse of discretion amounting to lack or excess of jurisdiction.60 A petition for review under Rule 45, on the other hand, is a mode of
appeal intended to correct errors of judgment.61 Errors of judgment are errors committed by a court within its jurisdiction.62 This includes a review
of the conclusions of law63 of the lower court and, in appropriate cases, evaluation of the admissibility, weight, and inference from the evidence
presented.

Intervention results in an interlocutory order ancillary to a principal action.64 Its grant or denial is subject to the sound discretion of the court.65
Interlocutory orders, or orders that do not make a final disposition of the merits of the main controversy or cause of action,66 are generally not
reviewable.67 The only exception is a limited one, in that when there is no plain, speedy, and adequate remedy, and where it can be shown that the
court acted without, in excess, or with such grave abuse of discretion that such action ousts it of jurisdiction.

Judicial economy, or the goal to have cases prosecuted with the least cost to the parties,68 requires that unnecessary or frivolous reviews of orders
by the trial court, which facilitate the resolution of the main merits of the case, be reviewed together with the main merits of the case. After all, it
would be more efficient for an appellate court to review a case in its entire context when the case is finally disposed.

The question of whether intervention is proper is a question of law. Settled is the distinction between a question of law and a question of fact. A
question of fact arises when there is doubt as to the truth or falsity of certain facts.69 A question of law, on the other hand, arises when "the appeal
raises doubt as to the applicable law on a certain set of facts." 70 The test often used by this Court to determine whether there is a question of fact
or a question of law "is not the appellation given to such question by the party raising the same; rather, it is whether the appellate court can determine
the issue raised without reviewing or evaluating the evidence, in which case, it is a question of law; otherwise it is a question of fact."71

Petitioner raises the question of whether Republic Act No. 165 allows the Court of Appeals to grant a motion for intervention. This necessarily requires
a determination of whether Rule 19 of the Rules of Court 72 applies in appeals of cases filed under Republic Act No. 165. The determination of this
question does not require a review of re-evaluation of the evidence. It requires a determination of the applicable law.

II
If a petition fails to attach material portions of the record, it may still be given due course if it falls under certain exceptions. Although Rule 45, Section
4 of the Rules of Court requires that the petition "be accompanied by ... such material portions of the record as would support the petition," the
failure to do so will not necessarily warrant the outright dismissal of the complaint. 73

Respondent Therapharma, Inc. argues that the Petition should have been outright dismissed since it failed to attach certain documents to support its
factual allegations and legal arguments, particularly: the annexes of the Petition for Review it had filed before the Court of Appeals and the annexes
in the Motion for Leave to Intervene it had filed. 74 It argues that petitioner's failure to attach the documents violates Rule 45, Section 4, which
requires the submission of material portions of the record. 75

On the other hand, petitioner argues that it was able to attach the Court of Appeals Decision dated August 31, 2004, the Resolution dated January
31, 2006, and the Amended Decision dated August 30, 2006, all of which were sufficient for this Court to give due course to its Petition. 76

In Magsino v. De Ocampo, 77 this Court applied the procedural guideposts in Galvez v. Court of Appeals 78 in determining whether the Court of
Appeals correctly dismissed a petition for review under Rule 42 for failure to attach relevant portions of the record. Thus:

In Galvez v. Court of Appeals, a case that involved the dismissal of a petition for certiorari to assail an unfavorable ruling brought about by the failure
to attach copies of all pleadings submitted and other material portions of the record in the trial court (like the complaint, answer and position paper)
as would support the allegations of the petition, the Court recognized three guideposts for the CA to consider in determining whether or not the rules
of procedures should be relaxed, as follows:

First, not all pleadings and parts of case records are required to be attached to the petition. Only those which are relevant and pertinent must
accompany it. The test of relevancy is whether the document in question will support the material allegations in the petition, whether said document
will make out a prima facie case of grave abuse of discretion as to convince the court to give due course to the petition.

Second, even if a document is relevant and pertinent to the petition, it need not be appended if it is shown that the contents thereof can also [sic]
found in another document already attached to the petition. Thus, if the material allegations in a position paper are summarized in a questioned
judgment, it will suffice that only a certified true copy of the judgment is attached.

Third, a petition lacking an essential pleading or part of the case record may still be given due course or reinstated (if earlier dismissed) upon showing
that petitioner later submitted the documents required, or that it will serve the higher interest of justice that the case be decided on the merits.79

Although Magsino referred to a petition for review under Rule 42 before the Court of Appeals, the procedural guideposts cited in Mafilsino may apply
to this case since the contents of a pleading under Rule 4280 are substantially the same as the contents of a pleading under Rule 45,81 in that both
procedural rules require the submission of "material portions of the record as would support the allegations of the petition."82

In support of its Petition for Review on Certiorari, petitioner attached the Court of Appeals Decision dated August 31, 2004, 83 the Resolution dated
January 31, 2006,84 and the Amended Decision dated August 30, 2006.85 The Court of Appeals Resolution and Amended Decision quoted extensive
portions of its rollo in support of its rulings. 86 These conclusions were sufficient to convince this Court not to outright dismiss the Petition but to
require respondents to first comment on the Petition, in satisfaction of the first and second procedural guideposts in Magsino.

Upon filing of its Consolidated Reply,87 petitioner was able to attach the following additional documents:

(1) Petition for Review filed before the Court of Appeals;88

(2) Letters dated July 18, 1995, December 12, 1995, and December 29, 1995;89
(3) Declaration of Ms. Miriam Meconnahey dated June 25, 2002;90
(4) Spreadsheet of petitioner's patent applications handled by Atty. Mapili;91
(5) Power of Attorney and Appointment of Resident Agent dated September 26, 1996;92
(6) Letter dated December 19, 2000 requesting an Office Action on Patent Application No. 35526;93
(7) Paper No. 2 dated January 30, 2002;94
(8) Petition for Revival dated January 30, 2002 with attached Power of Attorney and Appointment of Resident Agent;95
(9) Resolution dated July 24, 2002 by Director of the Bureau of Patents;96 and
(10) Notice of and Memorandum on Appeal before the DirectorGeneral of the Intellectual Property Office.97

The third procedural guidepost in Magsino was complied with upon the submission of these documents. Petitioner, therefore, has substantially
complied with Rule 45, Section 4 of the Rules of Court.
III
Appeal is not a right but a mere privilege granted by statute.98 It may only be exercised in accordance with the law that grants it.

Accordingly, the Court of Appeals is not bound by the rules of procedure in administrative agencies. The procedural rules of an administrative agency
only govern proceedings within the agency. Once the Court of Appeals has given due course to an appeal from a ruling of an administrative agency,
the proceedings before it are governed by the Rules of Court.

However, petitioner argues that intervention should not have been allowed on appeal99 since the revival of a patent application is ex parte and is
"strictly a contest between the examiner and the applicant"100 under Sections 78101 and 79102 of the 1962 Revised Rules of Practice. 103 It argues
that the disallowance of any intervention is to ensure the confidentiality of the proceedings under Sections 13 and 14 of the 1962 Revised Rules of
Practice. 104

Respondents argue that the 1962 Revised Rules of Practice is only applicable before the Intellectual Property Office. 105 In particular, respondent
Therapharma, Inc. argues that the issue before the Court of Appeals was beyond the realm of patent examination proceedings since it did not involve
the patentability of petitioner's invention. 106 It further argues that its intervention did not violate the confidentiality of the patent application
proceedings since petitioner was not required to divulge confidential information regarding its patent application. 107

In the 1962 Revised Rules of Practice, final decisions of the Director of Patents are appealed to this Court and governed by Republic Act No. 165. In
particular:

PARTX PETITION AND APPEALS

....

CHAPTER IV APPEALS TO THE SUPREME COURT FROM FINAL ORDERS OR DECISIONS OF THE DIRECTOR OF PATENTS IN EX PARTE AND
INTER PARTES PROCEEDINGS

265. Appeals to the Supreme Court in ex parte and inter partes proceedings.-Any person who is dissatisfied with the final decision of the Director of
Patents, (affirming that of a Principal Examiner) denying him a patent for an invention, industrial design or utility model; any person who is dissatisfied
with any final decision of the Director of Patents (affirming that of the Executive Examiner) in any proceeding; and any party who is dissatisfied with
any final decision of the Director of Patents in an inter partes proceeding, may appeal such final decision to the Supreme Court within thirty days
from the date he receives a copy of such decision. (Republic Act No. 165, section 16, as amended by section 3, Republic Act No. 864.)

266. Procedure on appeal to the Supreme Court.-For the procedure on appeal to the Supreme Court, from the final decisions of the Director of
Patents, see sections 63 to 73, inclusive, of Republic Act No. 165 (patent law).

Particularly instructive is Section 73 of Republic Act No. 165, which provides:

Section 73. Rules of Court applicable. - In all other matters not herein provided, the applicable provisions of the Rules of Court shall govern.

Republic Act No. 165 has since been amended by Republic Act No. 8293, otherwise known as the Intellectual Property Code of the Philippines
(Intellectual Property Code), in 1997. This is the applicable law with regard to the revival of petitioner's patent application. Section 7 (7.1 )(a) of the
Intellectual Property Code states:

SECTION 7. The Director General and Deputies Director General. -

7 .1. Functions. - The Director General shall exercise the following powers and functions:
....

b. Exercise exclusive appellate jurisdiction over all decisions rendered by the Director of Legal Affairs, the Director of Patents, the Director of
Trademarks, and the Director of the Documentation, Information and Technology Transfer Bureau. The decisions of the Director General in the
exercise of his appellate jurisdiction in respect of the decisions of the Director of Patents, and the Director of Trademarks shall be appealable to the
Court of Appeals in accordance with the Rules of Court; and those in respect of the decisions of the Director of Documentation, Information and
Technology Transfer Bureau shall be appealable to the Secretary of Trade and Industry[.] (Emphasis supplied)

Thus, it is the Rules of Court, not the 1962 Revised Rules of Practice, which governs the Court of Appeals' proceedings in appeals from the decisions
of the Director-General of the Intellectual Property Office regarding the revival of patent applications.

Rule 19 of the Rules of Court provides that a court has the discretion to determine whether to give due course to an intervention. Rule 19, Section 1
states:

RULE 19 INTERVENTION

SECTION 1. Who may intervene. -A person who has a legal interest in the matter in litigation, or in the success of either of the parties, or an interest
against both, or is so situated as to be adversely affected by a distribution or other disposition of property in the custody of the court or of an officer
thereof may, with leave of court, be allowed to intervene in the action. The court shall consider whether or not the intervention will unduly delay or
prejudice the adjudication of the rights of the original parties, and whether or not the intervenor's rights may be fully protected in a separate
proceeding.

The only questions the court need to consider in a motion to intervene are whether the intervenor has standing to intervene, whether the motion will
/ unduly delay the proceedings or prejudice rights already established, and whether the intervenor's rights may be protected in a separate action.108

If an administrative agency's procedural rules expressly prohibit an intervention by third parties, the prohibition is limited only to the proceedings
before the administrative agency. Once the matter is brought before the Court of Appeals in a petition for review, any prior prohibition on intervention
does not apply since the only question to be determined is whether the intervenor has established a right to intervene under the Rules of Court.

In this case, respondent Therapharma, Inc. filed its Motion for Leave to Intervene 109 before the Court of Appeals, not before the Intellectual Property
Office. In assessing whether to grant the intervention, the Court of Appeals considered respondent Therapharma, Inc.' s legal interest in the case
and its other options for the protection of its interests. 110 This was within the discretion of the Court of Appeals under the Rules of Court.
Respondent Therapharma, Inc. was able to show that it had legal interest to intervene in the appeal of petitioner's revival of its patent application.
While its intervention may have been premature as no patent has been granted yet, petitioner's own actions gave rise to respondent Therapharma,
Inc.' s right to protect its losartan product.

Respondent Therapharma, Inc. filed an application for product registration before the Bureau of Food and Drugs on June 4, 2003 and was granted a
Certificate of Product Registration on January 27, 2004. 111 It conducted patent searches from October 15, 1995 and found that no patent application
for losartan had been filed either before the Bureau of Patents, Trademarks, and Technology Transfer or before the Intellectual Property Office.112

As early as December 11, 2003, petitioner through Merck was already sending communications threatening legal action if respondent Therapharma,
Inc. continued to develop and market losartan in the Philippines. The letter stated:

Merck is strongly committed to the protection of its valuable intellectual property rights, including the subject losartan patents. While fair competition
by sale of pharmaceutical products which are domestically produced legally is always welcomed by Merck and MSD Philippines, Merck will vigorously
pursue all available legal remedies against any unauthorized manufacturer, distributor or supplier of losartan in countries where its patents are in
force and where such activity is prohibited by law. Thus, Merck is committed to preventing the distribution of losartan in the Philippines if it originates
from, or travels through, a country in which Merck holds patent rights. 113 (Emphasis supplied)

This letter was presented before the Court of Appeals, which eventually granted the revival of the patent application in its August 31, 2004 Decision.
Petitioner had no pending patent application for its losartan product when it threatened respondent Therapharma, Inc. with legal action.114

Respondent Therapharma, Inc. expressed its willingness to enter into a Non-Use and Confidentiality Contract if there was a pending patent application.
115 After several negotiations on the clauses of the contract, 116 the parties were unable to come to an agreement. In its letter dated May 24, 2004,
117 respondent Therapharma, Inc. expressed its frustration on petitioner's refusal to give a clear answer on whether it had a pending patent
application:

For easy reference, we have reproduced below paragraph 5 of the Confidentiality and Non-Use Agreement ("Confidentiality Agreement"), underscoring
your proposed amendment:

"THERAPHARMA agrees that upon receipt of Specifications and Claims of Application No. 35526 or at any time thereafter, before it becomes part of
the public domain, through no fault of THERAPHARMA, it will not, either directly or indirectly, alone, or through, on behalf of, or in conjunction with
any other person or entity, make use of any information contained therein, particularly the product covered by its claims and the equivalents thereof,
in any manner whatsoever."

We find your proposed insertion odd. What may be confidential, and which we agree you have every right to protect by way of the Confidentiality
Agreement, are the Specifications and Claims in the patent application, not the product per se. The product has been in the market for years. Hence,
how can it be confidential? Or is the ambiguity intended to create a legal handle because you have no cause of action against us should we launch
our own version of the losartan product?
....

Finally, the questions we posed in our previous letters are plain and simple - Is the Philippine Patent Application No. 35526 still pending before the
IPO, i.e., it has neither been withdrawn by your licensor nor denied registration by the IPO for any reason whatsoever? When did your licensor file
said application with the IPO? These questions are easy to answer, unless there is an intention to mislead. You are also

aware that the IPO is the only government agency that can grant letters patent. This is why we find disturbing your statement that the pendency of
the patent application before the IPO is "not relevant". Hence, unless we receive unequivocal answers to the questions above, we regret that we
cannot agree to execute the Confidentiality Agreement; otherwise, we may be acknowledging by contract a right that you do not have, and never
will have, by law. 118 (Emphasis and underscoring in the original)

The threat of legal action against respondent Therapharma, Inc. was real and imminent. If respondent Therapharma, Inc. waited until petitioner was
granted a patent application so it could file a petition for compulsory licensing and petition for cancellation of patent under Section 240119 and
Section 247 120 of the 1962 Revised Rules of Practice, 121 its continued marketing of Lifezar would be considered as an infringement of petitioner's
patent.

Even assuming that the Intellectual Property Office granted the revival of Philippine Patent Application No. 35526 back in 2000, petitioner's claim of
absolute confidentiality in patent proceedings is inaccurate.

In the 1962 Revised Rules of Practice, the Bureau of Patents, Trademarks, and Technology Transfer previously required secrecy in pending patent
applications. Section 13 states:

13. Pending applications are preserved in secrecy.-No information will be given to anyone respecting the filing by any particular person of any
application for a patent, the pendency of any particular case before the Office, or the subject matter of any particular application, unless the same is
authorized by the applicant in writing, and unless it shall be necessary, in the opinion of the Director of Patents for the proper conduct of business
before the Office.

The Intellectual Property Code, however, changed numerous aspects of the old patent law. The Intellectual Property Code was enacted not only to
amend certain provisions of existing laws on trademark, patent, and copyright, but also to honor the country's commitments under the World Trade
Organization - Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement), a treaty that entered force in the Philippines
on January 1, 1995.122

The mandatory disclosure requirement in the TRIPS Agreement123 precipitated the shift from a first-to-invent system to a first-to-file system. The
first-to-file system required citizens of foreign countries to register their patents in the Philippines before they can sue for infringement. 124

Lawmakers, however, expressed their concern over the extension of the period of protection for registered patents. 125 Under Section 21 126 of
Republic Act No. 165, a patent had a term of 17 years. The Intellectual Property Code extended the period to 20 years. 127

During the interpellations before the House of Representatives, then Representative Neptali Gonzales II (Gonzales) explained that under the
Intellectual Property Code, the period of protection would have been shortened because of the publication requirement:

MR. TANADA. Under the proposed measure, Your Honor, what is the period of protection that is given to the holder of the patent registered?
MR. GONZALES. Seventeen years from grant of patent, Mr. Speaker. Unlike before ...
MR. TANADA. Under the present law, Mr. Speaker.
MR. GONZALES. I mean 17 years from filing, Mr. Speaker, unlike before which is 20 years from grant. Okay.

I am sorry, Mr. Speaker. Seventeen years from filing under the existing law, 20 years from grant under the proposed measure. It would appear, Mr.
Speaker, that the proposed measure seeks to extend the grant of the patent.

MR. TA.NADA. But you have made the period of protection longer, Mr. Speaker.

MR. GONZALES. On the contrary, Mr. Speaker, when a similar question was previously propounded before, actually Mr. Speaker, it may decrease in
fact the period of protection, Mr. Speaker. Because unlike before 17 years from grant, Mr. Speaker, now 20 years from application or from filing but
actually, Mr. Speaker, it normally takes three to four years before a patent is actually granted even under the proposed measure. Because as you can
see[,] publication in the BPTTT Gazette would even taken place after 18 months from filing. In other words, the procedure itself is such a manner
that normally takes a period of about three years to finally grant the patent. So even if 20 years is given from the time of filing actually in essence it
will be the same, Mr. Speaker, because under the existing law 17 years from grant. But even under our existing law from the time that a patent
application is filed it also takes about three to four years, Mr. Speaker, to grant the same.

Now, why from filing, Mr. Speaker? Because the patent holder applicant is now required to publish in a manner easily understood by a person trained
or with the same skill as that of a patent holder. And from that time this is published, this process covered by the patent is already made available.
In fact, from the time that it is published, any interested person may even examine and go over the records as filed with the BPTTT and, therefore,
this new technology or new invention is now made available to persons equipped or possessed with the same skills as that of the patent holder. And
that is the reason why the patent is - the time of the patent is now tacked from the time it is filed because as a compromise it is now mandatory to
publish the said patent together with its description - the description of the process and even would, at times demand the deposit of sample of the
industrial design, Mr. Speaker. 128

Gonzales further clarified that the publication requirements of the Intellectual Property Code would necessarily shorten the period for confidentiality
of patent applications:

MR. MONFORT. Now, another question is, (another is) you know, the time from the filing of the date up to publication which is the period of pendency
or confidentiality, may I know how many years will it take, that confidentiality period, variability.
MR. GONZALES. Eighteen months, Mr. Speaker.
MR. MONFORT. How many?
MR. GONZALES. Eighteen months.
MR. MONFORT. I do not think it is 18 months.

MR. GONZALES. It is provided for in the law, Mr. Speaker, because prior to the publication, naturally, the records become confidential because the
essence of a patent, trademark, or copyright is to give the author or the inventor exclusive right to work on his own invention. And that is his
invention, and naturally, it is but right that he should have the exclusive right over his invention.

On the other hand, the law requires that after 18 months, it should now be published. When it is now published, naturally, it ceases to be confidential
in character because it is now ready for examination. It is now ready for possible copying of any interested person because the application, as we
have repeatedly said on the floor, would require the filing of a description of the invention that can be carried out by a Eerson similarly trained in the
arts and sciences as that of the patent holder.129

Thus, the absolute secrecy required by the 1962 Revised Rules of Practice would not be applicable to a patent application before the Intellectual
Property Office. Section 13 of the 1962 Revised Rules of Practice does not appear in the Intellectual Property Code, 130 in the Rules and Regulations
on Inventions, 131 or in the Revised Implementing Rules and Regulations for Patents, Utility Models and Industrial Design. 132 The Intellectual
Property Code now states that all patent applications must be published in the Intellectual Property Office Gazette and that any interested party may
inspect all documents submitted to the Intellectual Property Office. The patent application is only confidential before its publication. Sections 44 and
45 of the Intellectual Property Code provide:

SECTION 44. Publication of Patent Application. -

44.1. The patent application shall be published in the IPO Gazette together with a search document established by or on behalf of the Office citing
any documents that reflect prior art, after the expiration of eighteen (18) months from the filing date or priority date.
44.2. After publication of a patent application, any interested party may inspect the application documents filed with the Office.
44.3. The Director General, subject to the approval of the Secretary of Trade and Industry, may prohibit or restrict the publication of an application,
if in his opinion, to do so would be prejudicial to the national security and interests of the Republic of the Philippines. (n)

SECTION 45. Confidentiality Before Publication. -A patent application, which has not yet been published, and all related documents, shall not be made
available for inspection without the consent of the applicant.

It was inaccurate, therefore, for petitioner to argue that secrecy in patent applications prevents any intervention from interested parties. The
confidentiality in patent applications under the Intellectual Property Code is not absolute since a party may already intervene after the publication of
application.

IV
An abandoned patent application may only be revived within four (4) months from the date of abandonment. No extension of this period is provided
by the 1962 Revised Rules of Practice. Section 113 states:

113. Revival of abandoned application.-An application abandoned for failure to prosecute may be revived as a pending application if it is shown to
the satisfaction of the Director that the delay was unavoidable. An abandoned application may be revived as a pending application within four months
from the date of abandonment upon good cause shown and upon the payment of the required fee of ₱25. An application not revived within the
specified period shall be deemed forfeited.

Petitioner argues that it was not negligent in the prosecution of its patent application133 since it was Atty. Mapili or his heirs who failed to inform it
of crucial developments with regard to its patent application. 134 It argues that as a client in a foreign country, it does not have immediate supervision
over its local counsel so it should not be bound by its counsel's negligence. 135 In any case, it complied with all the requirements for the revival of
an abandoned application under Rule 113 of the 1962 Revised Rules of Practice. 136
Respondents, on the other hand, argue that petitioner was inexcusably and grossly negligent in the prosecution of its patent application since it
allowed eight (8) years to pass before asking for a status update on its application. 137 Respondent Intellectual Property Office argues that petitioner's
inaction for eight (8) years constitutes actual abandonment. 138 It also points out that from the time petitioner submitted its new Special Power of
Attorney on September 29, 1996, it took them another four (4) years to request a status update on its application. 139

Under Chapter VII, Section 1 ll(a) of the 1962 Revised Rules of Practice, a patent application is deemed abandoned if the applicant fails to prosecute
the application within four months from the date of the mailing of J the notice of the last action by the Bureau of Patents, Trademarks, and Technology
Transfer, and not from applicant's actual notice. Section 11 l(a) states:

Chapter VII TIME FOR RESPONSE BY APPLICANT; ABANDONMENT OF APPLICATION

111. Abandonment for failure to respond within the time limit.-

(a) If an applicant fails to prosecute his application within four months after the date when the last official notice of action by the Office was mailed
to him, or within such time as may be fixed (rule 112), the application will become abandoned.

According to the records of the Bureau of Patents, Trademarks, and Technology Transfer Chemical Examining Division, petitioner filed Philippine
Patent Application No. 35526 on July 10, 1987. It was assigned to an examiner on June 7, 1988. An Office Action was mailed to petitioner's agent,
Atty. Mapili, on July 19, 1988. Because petitioner failed to respond within the allowable period, the application was deemed abandoned on September
20, 1988.140 Under Section 113, petitioner had until January 20, 1989 to file for a revival of the patent application. Its Petition for Revival, however,
was filed on May 30, 2002, 141 13 years after the date of abandonment.

Section 113 has since been superseded by Section 133.4 of the Intellectual Property Code, Rule 930 of the Rules and Regulations on Inventions, and
Rule 929 of the Revised Implementing Rules and Regulations for Patents, Utility Models and Industrial Design. The period of four (4) months from
the date of abandonment, however, remains unchanged. The Intellectual Property Code even provides for a shorter period of three (3) months within
which to file for revival:

SECTION 133. Examination and Publication. –

....

133.4. An abandoned application may be revived as a pending application within three (3) months from the date of abandonment, upon good cause
shown and the payment of the required fee.

Rule 930 of the Rules and Regulations on Inventions provides:

Rule 930. Revival of application. - An application deemed withdrawn for failure to prosecute may be revived as a pending application within a

period of four (4) months from the mailing date of the notice of withdrawal if it is shown to the satisfaction of the Director that the failure was due
to fraud, accident, mistake or excusable negligence.

A petition to revive an application deemed withdrawn must be accompanied by (1) a showing of the cause of the failure to prosecute, (2) a complete
proposed response, and (3) the required fee.

An application not revived in accordance with this rule shall be deemed forfeited.

Rule 929 of the Revised Implementing Rules and Regulations for Patents, Utility Models and Industrial Design provides:

Rule 929. Revival of Application. - An application deemed withdrawn for failure to prosecute may be revived as a pending application within a period
of four (4) months from the mailing date of the notice of withdrawal if it is shown to the satisfaction of the Director that the failure was due to fraud,
accident, mistake, or excusable negligence. A petition to revive an application deemed withdrawn shall be accompanied by:

(a) A showing of a justifiable reason for the failure to prosecute;

(b) A complete proposed response; and
(c) Full payment of the required fee.

No revival shall be granted to an application that has been previously revived with cost.

An application not revived in accordance with this Rule shall be deemed forfeited.

Even if the delay was unavoidable, or the failure to prosecute was due to fraud, accident, mistake, or excusable negligence, or the Petition was
accompanied by a complete proposed response, or all fees were paid, the Petition would still be denied since these regulations only provide a four
(4 )- month period within which to file for the revival of the application. The rules do not provide any exception that could extend this four (4)-month
period to 13 years.

Petitioner’s patent application, therefore, should not be revived since it was filed beyond the allowable period.

V
Even assuming that the four (4)-month period could be extended, petitioner was inexcussably negligent in the prosecution of its patent application.

Negligence is inexcusable if its commission could have been avoided through ordinary diligence and prudence. 142 It is also settled that negligence
of counsel binds the client as this "ensures against the resulting uncertainty and tentativeness of proceedings if clients were allowed to merely disown.
143 their counsels' conduct."

Petitioner's resident agent, Atty. Mapili, was undoubtedly negligent in failing to respond to the Office Action sent by the Bureau of Patents, Trademarks,
and Technology Transfer on June 19, 1988. Because of his negligence, petitioner's patent application was declared abandoned. He was again negligent
when he failed to revive the abandoned application within four (4) months from the date of abandonment.
Petitioner tries to disown Atty. Mapili 's conduct by arguing that it was not informed of the abandonment of its patent application or of Atty. Mapili's
death. By its own evidence, however, petitioner requested a status update from Atty. Mapili only on July 18, 1995, eight (8) years after the filing of
its application. 144 It alleged that it only found out about Atty. Mapili 's death sometime in March 1996, as a result of its senior patent attorney's visit
to the Philippines. 145 Although it was in petitioner's discretion as a foreign client to put its complete trust and confidence on its local resident agent,
there was a correlative duty on its part to be diligent in keeping itself updated on the progress of its patent applications. Its failure to be informed of
the abandonment of its patent application was caused by its own lack of prudence.

In Bernardo v. Court of Appeals, 146 "[n]o prudent party will leave the fate of his case entirely to his lawyer .... It is the duty of a party-litigant to be
in contact with his counsel from time to time in order to be informed of the progress of his case." 147

Even if Atty. Mapili's death prevented petitioner from submitting a petition for revival on time, it was clearly negligent when it subsequently failed to
immediately apprise itself of the status of its patent application.

Upon learning of Atty. Mapili’s death, petitioner issued a Power of Attorney and Appointment of Resident Agent in favor of Bito, Lozada, Ortega &
Castillo on March 25, 1996. 148 Despite the immediate action in the substitution of its resident agent, it only requested a status update of Philippine
Patent Application No. 35526 from the Intellectual Property Office on December 14, 2000, 149 or four (4) years after it learned of Atty. Mapili' s
death.

Petitioner attempts to explain that it took them four (4) years to request a status update because the Bureau of Patents, Trademarks, and Technology
Transfer failed to take any action when it submitted its Power of Attorney and Appointment of Resident Agent in favor of Bito, Lozada, Ortega &
Castillo.150 The Power of Attorney, however, shows that it was only to inform the Bureau that all notices relating to its pending patent applications
should be sent to it. Philippine Patent Application No. 35526 was declared abandoned on September 20, 1988. As far as the Bureau was concerned,
it was a forfeited application that had already been archived. It was not the Bureau's duty to resurrect previous notices of forfeited and abandoned
applications to be sent to new resident agents unless a specific status update was requested. Considering that petitioner only requested a status
update on December 14, 2000, it was only then that the Intellectual Property Office would start sending notices to it.

Contrary to the posturing of petitioner, Schuartz is applicable.

In Schuartz, several foreign inventors seeking to file patent applications in the Philippines hired the law firm Siguion Reyna, Montecillo and Ongsiako
to process their applications. 151 The Bureau of Patents, Trademarks, and Technology Transfer mailed the law firm several notices of abandonment
on its patent applications from June 1987 to September 1987. The law firm only found out about this in December 1987, after it dismissed two (2)
of its employees in charge of handling correspondences from the Bureau. 152 The law firm filed petitions for revival of its patent applications from
March 1988, all of which were denied by the Director of the Bureau of Patents for being filed out of time. 153 An appeal was subsequently filed
before the Court of Appeals but was dismissed for being filed beyond the reglementary period. 154

This Court found that although the Court of Appeals may have erred in counting the period for appeal, it could not grant the Petition. This Court
stated:

[P]etitioners lost sight of the fact that the petition could not be granted because of laches. Prior to the filing of the petition for revival of the patent
application with the Bureau of Patents, an unreasonable period of time had lapsed due to the negligence of petitioners' counsel. By such inaction,
petitioners were deemed to have forfeited their right to revive their applications for patent.

Facts show that the patent attorneys appointed to follow up the applications for patent registration had been negligent in complying with the rules
of practice prescribed by the Bureau of Patents.1âwphi1 The firm had been notified about the abandonment as early as June 1987, but it was only
after December 7, 1987, when their employees Bangkas and Rosas had been dismissed, that they came to know about it. This clearly showed that
petitioners' counsel had been remiss in the handling of their clients' applications.

"A lawyer's fidelity to the cause of his client requires him to be ever mindful of the responsibilities that should be expected of him. A lawyer shall not
neglect a legal matter entrusted to him." In the instant case, petitioners' patent attorneys not only failed to take notice of the notices of abandonment,
but they failed to revive the application within the four-month period, as provided in the rules of practice in patent cases. These applications are
deemed forfeited upon the lapse of such period. 155 (Emphasis supplied)

Petitioner attempts to distinguish itself from Schuartz by arguing that the petitioners in Schuartz had actual notice of abandonment while petitioner
here was only able to have actual notice when it received Paper No. 2.

The four (4 )-month period in Section 111 156of the 1962 Revised Rules of Practice, however, is not counted from actual notice of abandonment but
from mailing of the notice. Since it appears from the Intellectual Property Office's records that a notice of abandonment was mailed to petitioner's
resident agent on July 19, 1988,157 the time for taking action is counted from this period. Petitioner's patent application cannot be revived simply
because the period for revival has already lapsed and no extension of this period is provided for by the 1962 Revised Rules of Practice.

VI
The right of priority given to a patent applicant is only relevant when there are two or more conflicting patent applications on the same invention.
Because a right of priority does not automatically grant letters patent to an applicant, possession of a right of priority does not confer any property
rights on the applicant in the absence of an actual patent.

Petitioner argues that its patent application was filed on July 10, 1987, within 12 months from the prior filing of a U.S. patent application on July 11,
1986.158 It argues that it is protected from becoming part of the public domain because of convention priority under the Paris Convention for the
Protection of Industrial Property and Section 9 of Republic Act No. 165. 159

Respondent Therapharma, Inc., on the other hand, argues that a mere patent application does not vest any right in the applicant before the issuance
of the patent.160 It argues that the "priority date" argued by petitioner is only relevant in determining who has a better right to the patent among
the other applicants who subsequently apply for the same invention. 161

Under Section 31 of the Intellectual Property Code, a right of priority is given to any patent applicant who has previously applied for a patent in a
country that grants the same privilege to Filipinos. Section 31 states:

SECTION 31. Right of Priority. - An application for patent filed by any person who has previously applied for the same invention in another country
which by treaty, convention, or law affords similar privileges to Filipino citizens, shall be considered as filed as of the date of filing the foreign
application: Provided, That:
a. the local application expressly claims priority;
b. it is filed within twelve (12) months from the date the earliest foreign application was filed; and
c. a certified copy of the foreign application together with an English translation is filed within six (6) months from the date of filing in the Philippines.

A patent applicant with the right of priority is given preference in the grant of a patent when there are two or more applicants for the same invention.
Section 29 of the Intellectual Property Code provides:

SECTION 29. First to File Rule. - If two (2) or more persons have made the invention separately and independently of each other, the right to the
patent shall belong to the person who filed an application for such invention, or where two or more applications are filed for the same invention, to
the applicant who has the earliest filing date or, the earliest priority date.

Since both the United States162 and the Philippines163 are signatories to the Paris Convention for the Protection of Industrial Property, an applicant
who has filed a patent application in the United States may have a right of priority over the same invention in a patent application in the Philippines.164
However, this right of priority does not immediately entitle a patent applicant the grant of a patent. A right of priority is not equivalent to a patent.
Otherwise, a patent holder of any member-state of the Paris Convention need not apply for patents in other countries where it wishes to exercise its
patent.

It was, therefore, inaccurate for petitioner to argue that its prior patent application in the United States removed the invention from the public domain
in the Philippines. This argument is only relevant if respondent Therapharma, Inc. had a conflicting patent application with the Intellectual Property
Office. A right of priority has no bearing in a case for revival of an abandoned patent application.

VII

The grant of a patent is to provide protection to any inventor from any patent infringement. 165 Once an invention is disclosed to the public, only
the patent holder has the exclusive right to manufacture, utilize, and market the invention.166 In Creser Precision Systems v. Court of Appeals:167

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. 168

Under the Intellectual Property Code, a patent holder has the right to "to restrain, prohibit and prevent" 169 any unauthorized person or entity from
manufacturing, selling, or importing any product derived from the patent. However, after a patent is granted and published in the Intellectual Property
Office Gazette, 170 any interested third party "may inspect the complete description, claims, and drawings of the patent." 171

The grant of a patent provides protection to the patent holder from the indiscriminate use of the invention. However, its mandatory publication also
has the correlative effect of bringing new ideas into the public consciousness. After the publication of the patent, any person may examine the
invention and develop it into something further than what the original patent holder may have envisioned. After the lapse of 20 years, 172 the
invention becomes part of the public domain and is free for the public to use. In Pearl and Dean v. Shoemart, Inc.: 173

To be able to effectively and legally preclude others from copying and profiting from the invention, a patent is a primordial requirement. No patent,
no protection. The ultimate goal of a patent system is to bring new designs and technologies into the public domain through disclosure. Ideas, once
disclosed to the public without the protection of a valid patent, are subject to appropriation without significant restraint.

On one side of the coin is the public which will benefit from new ideas; on the other are the inventors who must be protected. As held in Bauer & Cie
vs. O'Donnell, "The act secured to the inventor the exclusive right to make use, and vend the thing patented, and consequently to prevent others
from exercising like privileges without the consent of the patentee. It was passed for the purpose of encouraging useful invention and promoting new
and useful inventions by the protection and stimulation new and useful inventions by the protection and stimulation given to inventive genius, and
was intended to secure to the public, after the lapse of the exclusive privileges granted the benefit of such inventions and improvements."

The law attempts to strike an ideal balance between the interests:

"(The p)atent system thus embodies a carefully varafted bargain for encouraging the creation and disclosure of new useful and non-obvious advances
in technology and design, in return for the exclusive right to practice the invention for a number of years. The inventor may keep his invention secret
and reap its fruits indefinitely. In consideration of its disclosure and the consequent benefit to the community, the patent is granted. An exclusive
enjoyment is guaranteed him for 17 years, but upon the expiration of that period, the knowledge of the invention inures to the people, who are thus
enabled to practice it and profit by its use."

The patent law has a three-fold purpose: "first, patent law seeks to foster and reward invention; second, it promotes disclosures of inventions to
stimulate further innovation and to permit the public to practice the invention once the patent expires; third, the stringent requirements for patent
protection. seek to ensure that ideas in the public domain remain there for the free use of the public."

It is only after an exhaustive examination by the patent office that a patent is issued. Such an in-depth investigation is required because "in rewarding
a useful invention, the rights and welfare of the community must be fairly dealt with and effectively guarded. To that end, the prerequisites to
obtaining a patent are strictly observed and when a patent is issued, the limitations on its exercise are equally strictly enforced. To begin with, a
genuine invention or discovery must be demonstrated lest in the constant demand for new appliances, the heavy hand of tribute be laid on each
slight technological advance in art."174 (Emphasis supplied)

In addition, a patent holder of inventions relating to food or medicine does not enjoy absolute monopoly over the patent. Both Republic Act No. 165
and the Intellectual Property Code provide for compulsory licensing. Compulsory licensing is defined in the Intellectual Property Code as the "grant a
license to exploit a patented invention, even without the agreement of the patent owner." 175

Under Republic Act No. 165, a compulsory license may be granted to any applicant three (3) years after the grant of a patent if the invention relates
to food or medicine necessary for public health or safety. 176 In Smith Kline & French Laboratories, Ltd. vs. Court of Appeals: 177

Section 34 of R.A. No. 165, even if the Act was enacted prior to the Philippines' adhesion to the [Paris] 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. 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. 178

The patent holder’s proprietary right over the patent only lasts for three (3) years from the grant of the patent, after which any person may be
allowed to manufacture, use or sell the invention subject to the payment of royalties:

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 fact, 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 Patent may fix the terms and conditions of the license.179

A patent is a monopoly granted only for specific purposes and objectives. Thus, its procedures must be complied with to attain its social objective.
Any request for leniency in its procedures should be taken in this context. Petitioner, however, has failed to convince this court that the revival of its
patent application would have a significant impact on the pharmaceutical industry.

Hypertension, or high blood pressure, is considered a "major risk factor for cardiovascular disease" 180 such as "heart disease, stroke, kidney failure
and blindness." 181 In a study conducted by the World Health Organization, 25% of adults aged 21 years and older in the Philippines suffer from
high blood pressure. 182 According to the Department of Health, heart disease remains the leading cause of mortality in the Philippines. 183
Angiotensin II Receptor Blocking Imidazole or "losartan" is one of the medications used for the treatment ofhypertension. 184

In a study conducted by the Philippine Institute for Development Studies, "affordability of drugs remains a serious problem" 185 in the Philippines. It
found that because of the cost of drugs, accessibility to drugs become prohibitive for the lowest-earning households and are "even more prohibitive
for the u:nemployed and indigent." 186 Several measures have been enacted by the government to address the high costs of medicine, among them,
parallel drug importation187 and the passage of Republic Act No. 9502, otherwise known as the Universally Accessible Cheaper and Quality Medicines
Act of 2008. 188 Figures submitted by respondent Therapharma, Inc., however, also show that the presence of competition in the local pharmaceutical
market may ensure the public access to cheaper medicines.

According to respondent Therapharma, Inc., the retail price of petitioner's losartan product, Cozaar, decreased within one (1) month of respondent
Therapharma, Inc.' s entry into the market: 189

Respondent Therapharma, Inc. also presented figures showing that there was a 44% increase in the number of losartan units sold within five (5)
months of its entry into the market. 190 More Filipinos are able to purchase losartan products when there are two (2) different players providing
competitive prices in the market.

Lifezar, and another of respondent Therapharma, Inc.'s products, Combizar, have also been recommended as cheaper alternative losartan medication,
since they were priced "50 percent less than foreign brands." 191

Public interest will be prejudiced if, despite petitioner's inexcusable negligence, its Petition for Revival is granted.1awp++i1 Even without a pending
patent application and the absence of any exception to extend the period for revival, petitioner was already threatening to pursue legal action against
respondent Therapharma, Inc. if it continued to develop and market its losartan product, Lifezar. 192 Once petitioner is granted a patent for its
losartan products, Cozaar and Hyzaar, the loss of competition in the market for losartan products may result in higher prices. For the protection of
public interest, Philippine Patent Application No. 35526 should be considered a forfeited patent application.

WHEREFORE, the Petition is DENIED. The Resolution dated January 31, 2006 and the Amended Decision dated August 30, 2006 of the Court of
Appeals are AFFIRMED.

G.R. No. 148222 August 15, 2003

PEARL & DEAN (PHIL.), INCORPORATED, Petitioner, vs. SHOEMART, INC, and NORTH EDSA MARKETING, INC, Respondents.

In the instant petition for review on certiorari under Rule 45 of the Rules of Court, petitioner Pearl & Dean (Phil.) Inc. (P & D) assails the May 22,
2001 decision1 of the Court of Appeals reversing the October 31, 1996 decision2 of the Regional Trial Court of Makati, Branch 133, in Civil Case No.
92-516 which declared private respondents Shoemart Inc. (SMI) and North Edsa Marketing Inc. (NEMI) liable for infringement of trademark and
copyright, and unfair competition.

FACTUAL ANTECEDENTS

The May 22, 2001 decision of the Court of Appeals3 contained a summary of this dispute:

"Plaintiff-appellant Pearl and Dean (Phil.), Inc. is a corporation engaged in the manufacture of advertising display units simply referred to as light
boxes. These units utilize specially printed posters sandwiched between plastic sheets and illuminated with back lights. Pearl and Dean was able to
secure a Certificate of Copyright Registration dated January 20, 1981 over these illuminated display units. The advertising light boxes were marketed
under the trademark "Poster Ads". The application for registration of the trademark was filed with the Bureau of Patents, Trademarks and Technology
Transfer on June 20, 1983, but was approved only on September 12, 1988, per Registration No. 41165. From 1981 to about 1988, Pearl and Dean
employed the services of Metro Industrial Services to manufacture its advertising displays.

Sometime in 1985, Pearl and Dean negotiated with defendant-appellant Shoemart, Inc. (SMI) for the lease and installation of the light boxes in SM
City North Edsa. Since SM City North Edsa was under construction at that time, SMI offered as an alternative, SM Makati and SM Cubao, to which
Pearl and Dean agreed. On September 11, 1985, Pearl and Dean’s General Manager, Rodolfo Vergara, submitted for signature the contracts covering
SM Cubao and SM Makati to SMI’s Advertising Promotions and Publicity Division Manager, Ramonlito Abano. Only the contract for SM Makati, however,
was returned signed. On October 4, 1985, Vergara wrote Abano inquiring about the other contract and reminding him that their agreement for
installation of light boxes was not only for its SM Makati branch, but also for SM Cubao. SMI did not bother to reply.

Instead, in a letter dated January 14, 1986, SMI’s house counsel informed Pearl and Dean that it was rescinding the contract for SM Makati due to
non-performance of the terms thereof. In his reply dated February 17, 1986, Vergara protested the unilateral action of SMI, saying it was without
basis. In the same letter, he pushed for the signing of the contract for SM Cubao.
Two years later, Metro Industrial Services, the company formerly contracted by Pearl and Dean to fabricate its display units, offered to construct light
boxes for Shoemart’s chain of stores. SMI approved the proposal and ten (10) light boxes were subsequently fabricated by Metro Industrial for SMI.
After its contract with Metro Industrial was terminated, SMI engaged the services of EYD Rainbow Advertising Corporation to make the light boxes.
Some 300 units were fabricated in 1991. These were delivered on a staggered basis and installed at SM Megamall and SM City.

Sometime in 1989, Pearl and Dean, received reports that exact copies of its light boxes were installed at SM City and in the fastfood section of SM
Cubao. Upon investigation, Pearl and Dean found out that aside from the two (2) reported SM branches, light boxes similar to those it manufactures
were also installed in two (2) other SM stores. It further discovered that defendant-appellant North Edsa Marketing Inc. (NEMI), through its marketing
arm, Prime Spots Marketing Services, was set up primarily to sell advertising space in lighted display units located in SMI’s different branches. Pearl
and Dean noted that NEMI is a sister company of SMI.

In the light of its discoveries, Pearl and Dean sent a letter dated December 11, 1991 to both SMI and NEMI enjoining them to cease using the subject
light boxes and to remove the same from SMI’s establishments. It also demanded the discontinued use of the trademark "Poster Ads," and the
payment to Pearl and Dean of compensatory damages in the amount of Twenty Million Pesos (P20,000,000.00).

Upon receipt of the demand letter, SMI suspended the leasing of two hundred twenty-four (224) light boxes and NEMI took down its advertisements
for "Poster Ads" from the lighted display units in SMI’s stores. Claiming that both SMI and NEMI failed to meet all its demands, Pearl and Dean filed
this instant case for infringement of trademark and copyright, unfair competition and damages.

In denying the charges hurled against it, SMI maintained that it independently developed its poster panels using commonly known techniques and
available technology, without notice of or reference to Pearl and Dean’s copyright. SMI noted that the registration of the mark "Poster Ads" was only
for stationeries such as letterheads, envelopes, and the like. Besides, according to SMI, the word "Poster Ads" is a generic term which cannot be
appropriated as a trademark, and, as such, registration of such mark is invalid. It also stressed that Pearl and Dean is not entitled to the reliefs prayed
for in its complaint since its advertising display units contained no copyright notice, in violation of Section 27 of P.D. 49. SMI alleged that Pearl and
Dean had no cause of action against it and that the suit was purely intended to malign SMI’s good name. On this basis, SMI, aside from praying for
the dismissal of the case, also counterclaimed for moral, actual and exemplary damages and for the cancellation of Pearl and Dean’s Certification of
Copyright Registration No. PD-R-2558 dated January 20, 1981 and Certificate of Trademark Registration No. 4165 dated September 12, 1988.

NEMI, for its part, denied having manufactured, installed or used any advertising display units, nor having engaged in the business of advertising. It
repleaded SMI’s averments, admissions and denials and prayed for similar reliefs and counterclaims as SMI."

The RTC of Makati City decided in favor of P & D:

Wherefore, defendants SMI and NEMI are found jointly and severally liable for infringement of copyright under Section 2 of PD 49, as amended, and
infringement of trademark under Section 22 of RA No. 166, as amended, and are hereby penalized under Section 28 of PD 49, as amended, and
Sections 23 and 24 of RA 166, as amended. Accordingly, defendants are hereby directed:

(1) to pay plaintiff the following damages:

(a) actual damages - ₱16,600,000.00, representing profits derived by defendants as a result of infringement of plaintiff’s copyright from 1991 to 1992
(b) moral damages - ₱1,000.000.00
(c) exemplary damages - ₱1,000,000.00
(d) attorney’s fees - ₱1,000,000.00 plus

(e) costs of suit;

(2) to deliver, under oath, for impounding in the National Library, all light boxes of SMI which were fabricated by Metro Industrial Services and EYD
Rainbow Advertising Corporation;
(3) to deliver, under oath, to the National Library, all filler-posters using the trademark "Poster Ads", for destruction; and
(4) to permanently refrain from infringing the copyright on plaintiff’s light boxes and its trademark "Poster Ads".

Defendants’ counterclaims are hereby ordered dismissed for lack of merit.

SO ORDERED.4

On appeal, however, the Court of Appeals reversed the trial court:

Since the light boxes cannot, by any stretch of the imagination, be considered as either prints, pictorial illustrations, advertising copies, labels, tags
or box wraps, to be properly classified as a copyrightable class "O" work, we have to agree with SMI when it posited that what was copyrighted were
the technical drawings only, and not the light boxes themselves, thus:

42. When a drawing is technical and depicts a utilitarian object, a copyright over the drawings like plaintiff-appellant’s will not extend to the actual
object. It has so been held under jurisprudence, of which the leading case is Baker vs. Selden (101 U.S. 841 (1879). In that case, Selden had obtained
a copyright protection for a book entitled "Selden’s Condensed Ledger or Bookkeeping Simplified" which purported to explain a new system of
bookkeeping. Included as part of the book were blank forms and illustrations consisting of ruled lines and headings, specially designed for use in
connection with the system explained in the work. These forms showed the entire operation of a day or a week or a month on a single page, or on
two pages following each other. The defendant Baker then produced forms which were similar to the forms illustrated in Selden’s copyrighted books.
The Court held that exclusivity to the actual forms is not extended by a copyright. The reason was that "to grant a monopoly in the underlying art
when no examination of its novelty has ever been made would be a surprise and a fraud upon the public; that is the province of letters patent, not
of copyright." And that is precisely the point. No doubt aware that its alleged original design would never pass the rigorous examination of a patent
application, plaintiff-appellant fought to foist a fraudulent monopoly on the public by conveniently resorting to a copyright registration which merely
employs a recordal system without the benefit of an in-depth examination of novelty.

The principle in Baker vs. Selden was likewise applied in Muller vs. Triborough Bridge Authority [43 F. Supp. 298 (S.D.N.Y. 1942)]. In this case, Muller
had obtained a copyright over an unpublished drawing entitled "Bridge Approach – the drawing showed a novel bridge approach to unsnarl traffic
congestion". The defendant constructed a bridge approach which was alleged to be an infringement of the new design illustrated in plaintiff’s drawings.
In this case it was held that protection of the drawing does not extend to the unauthorized duplication of the object drawn because copyright extends
only to the description or expression of the object and not to the object itself. It does not prevent one from using the drawings to construct the object
portrayed in the drawing.
In two other cases, Imperial Homes Corp. v. Lamont, 458 F. 2d 895 and Scholtz Homes, Inc. v. Maddox, 379 F. 2d 84, it was held that there is no
copyright infringement when one who, without being authorized, uses a copyrighted architectural plan to construct a structure. This is because the
copyright does not extend to the structures themselves.

In fine, we cannot find SMI liable for infringing Pearl and Dean’s copyright over the technical drawings of the latter’s advertising display units.
xxx xxx xxx

The Supreme Court trenchantly held in Faberge, Incorporated vs. Intermediate Appellate Court that the protective mantle of the Trademark Law
extends only to the goods used by the first user as specified in the certificate of registration, following the clear mandate conveyed by Section 20 of
Republic Act 166, as amended, otherwise known as the Trademark Law, which reads:

SEC. 20. Certification of registration prima facie evidence of validity.- A certificate of registration of a mark or trade-name shall be prima facie evidence
of the validity of the registration, the registrant’s ownership of the mark or trade-name, and of the registrant’s exclusive right to use the same in
connection with the goods, business or services specified in the certificate, subject to any conditions and limitations stated therein." (underscoring
supplied)

The records show that on June 20, 1983, Pearl and Dean applied for the registration of the trademark "Poster Ads" with the Bureau of Patents,
Trademarks, and Technology Transfer. Said trademark was recorded in the Principal Register on September 12, 1988 under Registration No. 41165
covering the following products: stationeries such as letterheads, envelopes and calling cards and newsletters.

With this as factual backdrop, we see no legal basis to the finding of liability on the part of the defendants-appellants for their use of the words
"Poster Ads", in the advertising display units in suit. Jurisprudence has interpreted Section 20 of the Trademark Law as "an implicit permission to a
manufacturer to venture into the production of goods and allow that producer to appropriate the brand name of the senior registrant on goods other
than those stated in the certificate of registration." The Supreme Court further emphasized the restrictive meaning of Section 20 when it stated,
through Justice Conrado V. Sanchez, that:

Really, if the certificate of registration were to be deemed as including goods not specified therein, then a situation may arise whereby an applicant
may be tempted to register a trademark on any and all goods which his mind may conceive even if he had never intended to use the trademark for
the said goods. We believe that such omnibus registration is not contemplated by our Trademark Law.

While we do not discount the striking similarity between Pearl and Dean’s registered trademark and defendants-appellants’ "Poster Ads" design, as
well as the parallel use by which said words were used in the parties’ respective advertising copies, we cannot find defendants-appellants liable for
infringement of trademark. "Poster Ads" was registered by Pearl and Dean for specific use in its stationeries, in contrast to defendants-appellants
who used the same words in their advertising display units. Why Pearl and Dean limited the use of its trademark to stationeries is simply beyond us.
But, having already done so, it must stand by the consequence of the registration which it had caused.

xxx xxx xxx

We are constrained to adopt the view of defendants-appellants that the words "Poster Ads" are a simple contraction of the generic term poster
advertising. In the absence of any convincing proof that "Poster Ads" has acquired a secondary meaning in this jurisdiction, we find that Pearl and
Dean’s exclusive right to the use of "Poster Ads" is limited to what is written in its certificate of registration, namely, stationeries.

Defendants-appellants cannot thus be held liable for infringement of the trademark "Poster Ads".

There being no finding of either copyright or trademark infringement on the part of SMI and NEMI, the monetary award granted by the lower court
to Pearl and Dean has no leg to stand on.

WHEREFORE, premises considered, the assailed decision is REVERSED and SET ASIDE, and another is rendered DISMISSING the complaint and
counterclaims in the above-entitled case for lack of merit.5

Dissatisfied with the above decision, petitioner P & D filed the instant petition assigning the following errors for the Court’s consideration:

A. THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT NO COPYRIGHT INFRINGEMENT WAS COMMITTED BY RESPONDENTS SM AND
NEMI;

B. THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT NO INFRINGEMENT OF PEARL & DEAN’S TRADEMARK "POSTER ADS" WAS
COMMITTED BY RESPONDENTS SM AND NEMI;

C. THE HONORABLE COURT OF APPEALS ERRED IN DISMISSING THE AWARD OF THE TRIAL COURT, DESPITE THE LATTER’S FINDING, NOT
DISPUTED BY THE HONORABLE COURT OF APPEALS, THAT SM WAS GUILTY OF BAD FAITH IN ITS NEGOTIATION OF ADVERTISING CONTRACTS
WITH PEARL & DEAN.

D. THE HONORABLE COURT OF APPEALS ERRED IN NOT HOLDING RESPONDENTS SM AND NEMI LIABLE TO PEARL & DEAN FOR ACTUAL, MORAL
& EXEMPLARY DAMAGES, ATTORNEY’S FEES AND COSTS OF SUIT.6

ISSUES

In resolving this very interesting case, we are challenged once again to put into proper perspective four main concerns of intellectual property law —
patents, copyrights, trademarks and unfair competition arising from infringement of any of the first three. We shall focus then on the following issues:

(1) if the engineering or technical drawings of an advertising display unit (light box) are granted copyright protection (copyright certificate of
registration) by the National Library, is the light box depicted in such engineering drawings ipso facto also protected by such copyright?

(2) or should the light box be registered separately and protected by a patent issued by the Bureau of Patents Trademarks and Technology Transfer
(now Intellectual Property Office) — in addition to the copyright of the engineering drawings?

(3) can the owner of a registered trademark legally prevent others from using such trademark if it is a mere abbreviation of a term descriptive of his
goods, services or business?
ON THE ISSUE OF COPYRIGHT INFRINGEMENT

Petitioner P & D’s complaint was that SMI infringed on its copyright over the light boxes when SMI had the units manufactured by Metro and EYD
Rainbow Advertising for its own account. Obviously, petitioner’s position was premised on its belief that its copyright over the engineering drawings
extended ipso facto to the light boxes depicted or illustrated in said drawings. In ruling that there was no copyright infringement, the Court of Appeals
held that the copyright was limited to the drawings alone and not to the light box itself. We agree with the appellate court.

First, petitioner’s application for a copyright certificate — as well as Copyright Certificate No. PD-R2588 issued by the National Library on January 20,
1981 — clearly stated that it was for a class "O" work under Section 2 (O) of PD 49 (The Intellectual Property Decree) which was the statute then
prevailing. Said Section 2 expressly enumerated the works subject to copyright:

SEC. 2. The rights granted by this Decree shall, from the moment of creation, subsist with respect to any of the following works:
xxx xxx xxx

(O) Prints, pictorial illustrations, advertising copies, labels, tags, and box wraps;
xxx xxx xxx

Although petitioner’s copyright certificate was entitled "Advertising Display Units" (which depicted the box-type electrical devices), its claim of
copyright infringement cannot be sustained.

Copyright, in the strict sense of the term, is purely a statutory right. Being a mere statutory grant, the rights are limited to what the statute confers.
It may be obtained and enjoyed only with respect to the subjects and by the persons, and on terms and conditions specified in the statute.7
Accordingly, it can cover only the works falling within the statutory enumeration or description.8

P & D secured its copyright under the classification class "O" work. This being so, petitioner’s copyright protection extended only to the technical
drawings and not to the light box itself because the latter was not at all in the category of "prints, pictorial illustrations, advertising copies, labels,
tags and box wraps." Stated otherwise, even as we find that P & D indeed owned a valid copyright, the same could have referred only to the technical
drawings within the category of "pictorial illustrations." It could not have possibly stretched out to include the underlying light box. The strict
application9 of the law’s enumeration in Section 2 prevents us from giving petitioner even a little leeway, that is, even if its copyright certificate was
entitled "Advertising Display Units." What the law does not include, it excludes, and for the good reason: the light box was not a literary or artistic
piece which could be copyrighted under the copyright law. And no less clearly, neither could the lack of statutory authority to make the light box
copyrightable be remedied by the simplistic act of entitling the copyright certificate issued by the National Library as "Advertising Display Units."

In fine, if SMI and NEMI reprinted P & D’s technical drawings for sale to the public without license from P & D, then no doubt they would have been
guilty of copyright infringement. But this was not the case. SMI’s and NEMI’s acts complained of by P & D were to have units similar or identical to
the light box illustrated in the technical drawings manufactured by Metro and EYD Rainbow Advertising, for leasing out to different advertisers. Was
this an infringement of petitioner’s copyright over the technical drawings? We do not think so.

During the trial, the president of P & D himself admitted that the light box was neither a literary not an artistic work but an "engineering or marketing
invention."10 Obviously, there appeared to be some confusion regarding what ought or ought not to be the proper subjects of copyrights, patents
and trademarks. In the leading case of Kho vs. Court of Appeals,11 we ruled that these three legal rights are completely distinct and separate from
one another, and the protection afforded by one cannot be used interchangeably to cover items or works that exclusively pertain to the 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. 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.

ON THE ISSUE OF PATENT INFRINGEMENT

This brings us to the next point: if, despite its manufacture and commercial use of the light boxes without license from petitioner, private respondents
cannot be held legally liable for infringement of P & D’s copyright over its technical drawings of the said light boxes, should they be liable instead for
infringement of patent? We do not think so either.

For some reason or another, petitioner never secured a patent for the light boxes. It therefore acquired no patent rights which could have protected
its invention, if in fact it really was. And because it had no patent, petitioner could not legally prevent anyone from manufacturing or commercially
using the contraption. In Creser Precision Systems, Inc. vs. Court of Appeals,12 we held that "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. x x x (A)n inventor has
no common law right to a monopoly of his invention. He has the right to make use of and vend his 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, selling or using the invention.13 On the assumption that petitioner’s advertising units were patentable
inventions, petitioner revealed them fully to the public by submitting the engineering drawings thereof to the National Library.

To be able to effectively and legally preclude others from copying and profiting from the invention, a patent is a primordial requirement. No patent,
no protection. The ultimate goal of a patent system is to bring new designs and technologies into the public domain through disclosure.14 Ideas,
once disclosed to the public without the protection of a valid patent, are subject to appropriation without significant restraint.15

On one side of the coin is the public which will benefit from new ideas; on the other are the inventors who must be protected. As held in Bauer & Cie
vs. O’Donnel,16 "The act secured to the inventor the exclusive right to make use, and vend the thing patented, and consequently to prevent others
from exercising like privileges without the consent of the patentee. It was passed for the purpose of encouraging useful invention and promoting new
and useful inventions by the protection and stimulation given to inventive genius, and was intended to secure to the public, after the lapse of the
exclusive privileges granted the benefit of such inventions and improvements."

The law attempts to strike an ideal balance between the two interests:
"(The p)atent system thus embodies a carefully crafted bargain for encouraging the creation and disclosure of new useful and non-obvious advances
in technology and design, in return for the exclusive right to practice the invention for a number of years. The inventor may keep his invention secret
and reap its fruits indefinitely. In consideration of its disclosure and the consequent benefit to the community, the patent is granted. An exclusive
enjoyment is guaranteed him for 17 years, but upon the expiration of that period, the knowledge of the invention inures to the people, who are thus
enabled to practice it and profit by its use."17

The patent law has a three-fold purpose: "first, patent law seeks to foster and reward invention; second, it promotes disclosures of inventions to
stimulate further innovation and to permit the public to practice the invention once the patent expires; third, the stringent requirements for patent
protection seek to ensure that ideas in the public domain remain there for the free use of the public."18

It is only after an exhaustive examination by the patent office that a patent is issued. Such an in-depth investigation is required because "in rewarding
a useful invention, the rights and welfare of the community must be fairly dealt with and effectively guarded. To that end, the prerequisites to
obtaining a patent are strictly observed and when a patent is issued, the limitations on its exercise are equally strictly enforced. To begin with, a
genuine invention or discovery must be demonstrated lest in the constant demand for new appliances, the heavy hand of tribute be laid on each
slight technological advance in art."19

There is no such scrutiny in the case of copyrights nor any notice published before its grant to the effect that a person is claiming the creation of a
work. The law confers the copyright from the moment of creation20 and the copyright certificate is issued upon registration with the National Library
of a sworn ex-parte claim of creation.

Therefore, not having gone through the arduous examination for patents, the petitioner cannot exclude others from the manufacture, sale or
commercial use of the light boxes on the sole basis of its copyright certificate over the technical drawings.

Stated otherwise, what petitioner seeks is exclusivity without any opportunity for the patent office (IPO) to scrutinize the light box’s eligibility as a
patentable invention. The irony here is that, had petitioner secured a patent instead, its exclusivity would have been for 17 years only. But through
the simplified procedure of copyright-registration with the National Library — without undergoing the rigor of defending the patentability of its
invention before the IPO and the public — the petitioner would be protected for 50 years. This situation could not have been the intention of the law.

In the oft-cited case of Baker vs. Selden21 , the United States Supreme Court held that only the expression of an idea is protected by copyright, not
the idea itself. In that case, the plaintiff held the copyright of a book which expounded on a new accounting system he had developed. The publication
illustrated blank forms of ledgers utilized in such a system. The defendant reproduced forms similar to those illustrated in the plaintiff’s copyrighted
book. The US Supreme Court ruled that:

"There is no doubt that a work on the subject of book-keeping, though only explanatory of well known systems, may be the subject of a copyright;
but, then, it is claimed only as a book. x x x. But there is a clear distinction between the books, as such, and the art, which it is, intended to illustrate.
The mere statement of the proposition is so evident that it requires hardly any argument to support it. The same distinction may be predicated of
every other art as well as that of bookkeeping. A treatise on the composition and use of medicines, be they old or new; on the construction and use
of ploughs or watches or churns; or on the mixture and application of colors for painting or dyeing; or on the mode of drawing lines to produce the
effect of perspective, would be the subject of copyright; but no one would contend that the copyright of the treatise would give the exclusive right
to the art or manufacture described therein. The copyright of the book, if not pirated from other works, would be valid without regard to the novelty
or want of novelty of its subject matter. The novelty of the art or thing described or explained has nothing to do with the validity of the copyright.
To give to the author of the book an exclusive property in the art described therein, when no examination of its novelty has ever been officially made,
would be a surprise and a fraud upon the public. That is the province of letters patent, not of copyright. The claim to an invention of discovery of an
art or manufacture must be subjected to the examination of the Patent Office before an exclusive right therein can be obtained; and a patent from
the government can only secure it.

The difference between the two things, letters patent and copyright, may be illustrated by reference to the subjects just enumerated. Take the case
of medicines. Certain mixtures are found to be of great value in the healing art. If the discoverer writes and publishes a book on the subject (as
regular physicians generally do), he gains no exclusive right to the manufacture and sale of the medicine; he gives that to the public. If he desires to
acquire such exclusive right, he must obtain a patent for the mixture as a new art, manufacture or composition of matter. He may copyright his book,
if he pleases; but that only secures to him the exclusive right of printing and publishing his book. So of all other inventions or discoveries.

The copyright of a book on perspective, no matter how many drawings and illustrations it may contain, gives no exclusive right to the modes of
drawing described, though they may never have been known or used before. By publishing the book without getting a patent for the art, the latter
is given to the public. x x x

Now, whilst no one has a right to print or publish his book, or any material part thereof, as a book intended to convey instruction in the art, any
person may practice and use the art itself which he has described and illustrated therein. The use of the art is a totally different thing from a
publication of the book explaining it. The copyright of a book on bookkeeping cannot secure the exclusive right to make, sell and use account books
prepared upon the plan set forth in such book. Whether the art might or might not have been patented, is a question, which is not before us. It was
not patented, and is open and free to the use of the public. And, of course, in using the art, the ruled lines and headings of accounts must necessarily
be used as incident to it.

The plausibility of the claim put forward by the complainant in this case arises from a confusion of ideas produced by the peculiar nature of the art
described in the books, which have been made the subject of copyright. In describing the art, the illustrations and diagrams employed happened to
correspond more closely than usual with the actual work performed by the operator who uses the art. x x x The description of the art in a book,
though entitled to the benefit of copyright, lays no foundation for an exclusive claim to the art itself. The object of the one is explanation; the object
of the other is use. The former may be secured by copyright. The latter can only be secured, if it can be secured at all, by letters patent." (underscoring
supplied)

ON THE ISSUE OF TRADEMARK INFRINGEMENT

This issue concerns the use by respondents of the mark "Poster Ads" which petitioner’s president said was a contraction of "poster advertising." P &
D was able to secure a trademark certificate for it, but one where the goods specified were "stationeries such as letterheads, envelopes, calling cards
and newsletters."22 Petitioner admitted it did not commercially engage in or market these goods. On the contrary, it dealt in electrically operated
backlit advertising units and the sale of advertising spaces thereon, which, however, were not at all specified in the trademark certificate.

Under the circumstances, the Court of Appeals correctly cited Faberge Inc. vs. Intermediate Appellate Court,23 where we, invoking Section 20 of the
old Trademark Law, ruled that "the certificate of registration issued by the Director of Patents can confer (upon petitioner) the exclusive right to use
its own symbol only to those goods specified in the certificate, subject to any conditions and limitations specified in the certificate x x x. One who has
adopted and used a trademark on his goods does not prevent the adoption and use of the same trademark by others for products which are of a
different description."24 Faberge, Inc. was correct and was in fact recently reiterated in Canon Kabushiki Kaisha vs. Court of Appeals.25

Assuming arguendo that "Poster Ads" could validly qualify as a trademark, the failure of P & D to secure a trademark registration for specific use on
the light boxes meant that there could not have been any trademark infringement since registration was an essential element thereof.1âwphi1

ON THE ISSUE OF UNFAIR COMPETITION

If at all, the cause of action should have been for unfair competition, a situation which was possible even if P & D had no registration.26 However,
while the petitioner’s complaint in the RTC also cited unfair competition, the trial court did not find private respondents liable therefor. Petitioner did
not appeal this particular point; hence, it cannot now revive its claim of unfair competition.

But even disregarding procedural issues, we nevertheless cannot hold respondents guilty of unfair competition.

By the nature of things, there can be no unfair competition under the law on copyrights although it is applicable to disputes over the use of trademarks.
Even a name or phrase incapable of appropriation as a trademark or tradename may, by long and exclusive use by a business (such that the name
or phrase becomes associated with the business or product in the mind of the purchasing public), be entitled to protection against unfair
competition.27 In this case, there was no evidence that P & D’s use of "Poster Ads" was distinctive or well-known. As noted by the Court of Appeals,
petitioner’s expert witnesses himself had testified that " ‘Poster Ads’ was too generic a name. So it was difficult to identify it with any company,
honestly speaking."28 This crucial admission by its own expert witness that "Poster Ads" could not be associated with P & D showed that, in the mind
of the public, the goods and services carrying the trademark "Poster Ads" could not be distinguished from the goods and services of other entities.

This fact also prevented the application of the doctrine of secondary meaning. "Poster Ads" was generic and incapable of being used as a trademark
because it was used in the field of poster advertising, the very business engaged in by petitioner. "Secondary meaning" means that a word or phrase
originally incapable of exclusive appropriation with reference to an article in the market (because it is geographically or otherwise descriptive) might
nevertheless have been used for so long and so exclusively by one producer with reference to his article that, in the trade and to that branch of the
purchasing public, the word or phrase has come to mean that the article was his property.29 The admission by petitioner’s own expert witness that
he himself could not associate "Poster Ads" with petitioner P & D because it was "too generic" definitely precluded the application of this exception.

Having discussed the most important and critical issues, we see no need to belabor the rest.

All told, the Court finds no reversible error committed by the Court of Appeals when it reversed the Regional Trial Court of Makati City.

WHEREFORE, the petition is hereby DENIED and the decision of the Court of Appeals dated May 22, 2001 is AFFIRMED in toto.

G.R. No. 113388 September 5, 1997

ANGELITA MANZANO, petitioner, vs. COURT OF APPEALS, and MELECIA MADOLARIA, as Assignor to NEW UNITED FOUNDRY
MANUFACTURING CORP, respondents.

The primary purpose of the patent system is not the reward of the individual but the advancement of the arts and sciences. The function of a patent
is to add to the sum of useful knowledge and one of the purposes of the patent system is to encourage dissemination of information concerning
discoveries and inventions. This is a matter which is properly within the competence of the Patent Office the official action of which has the
presumption of correctness and may not be interfered with in the absence of new evidence carrying thorough conviction that the Office has erred.
Since the Patent Office is an expert body preeminently qualified to determine questions of patentability, its findings must be accepted if they are
consistent with the evidence, with doubts as to patentability resolved in favor of the Patent Office.1

Petitioner Angelita Manzano filed with the Philippine Patent Office on 19 February 1982 an action for the cancellation of Letters Patent No. UM-4609
for a gas burner registered in the name of respondent Melecia Madolaria who subsequently assigned the letters patent to New United Foundry and
Manufacturing Corporation (UNITED FOUNDRY, for brevity). Petitioner alleged that (a) the utility model covered by the letters patent, in this case,
an LPG gas burner, was not inventive, new or useful; (b) the specification of the letters patent did not comply with the requirements of Sec. 14, RA
No. 165, as amended; (c) respondent Melecia Madolaria was not the original, true and actual inventor nor did she derive her rights from the original,
true and actual inventor of the utility model covered by the letters patent; and, (d) the letters patent was secured by means of fraud or
misrepresentation. In support of her petition for cancellation petitioner further alleged that (a) the utility model covered by the letters patent of
respondent had been known or used by others in the Philippines for more than one (1) year before she filed her application for letters patent on 9
December 1979; (b) the products which were produced in accordance with the utility model covered by the letters patent had been in public use or
on sale in the Philippines for more than one (1) year before the application for patent therefor was filed.

Petitioner presented the following documents which she correspondingly marked as exhibits: (a) affidavit of petitioner alleging the existence of prior
art, marked Exh. "A;" (b) a brochure distributed by Manila Gas Corporation disclosing a pictorial representation of Ransome Burner made by Ransome
Torch and Burner Company, USA, marked Exh. "D;" and, (c) a brochure distributed by Esso Gasul or Esso Standard Eastern, Inc., of the Philippines
showing a picture of another similar burner with top elevation view and another perspective view of the same burner, marked Exh. "E."

Testifying for herself petitioner narrated that her husband Ong Bun Tua worked as a helper in the UNITED FOUNDRY where respondent Melecia
Madolaria used to be affiliated with from 1965 to 1970; that Ong helped in the casting of an LPG burner which was the same utility model of a burner
for which Letters Patent No. UM-4609 was issued, and that after her husband's separation from the shop she organized Besco Metal Manufacturing
(BESCO METAL, for brevity) for the casting of LPG burners one of which had the configuration, form and component parts similar to those being
manufactured by UNITED FOUNDRY. Petitioner presented in evidence an alleged model of an LPG burner marked Exh. "K" and covered by the Letters
Patent of respondent, and testified that it was given to her in January 1982 by one of her customers who allegedly acquired it from UNITED FOUNDRY.
Petitioner also presented in evidence her own model of an LPG burner called "Ransome" burner marked Exh. "L," which was allegedly manufactured
in 1974 or 1975 and sold by her in the course of her business operation in the name of BESCO METAL. Petitioner claimed that this "Ransome" burner
(Exh. "L") had the same configuration and mechanism as that of the model which was patented in favor of private respondent Melecia Madolaria.
Also presented by petitioner was a burner cup of an imported "Ransome" burner marked Exh "M" which was allegedly existing even before the patent
application of private respondent.

Petitioner presented two (2) other witnesses, namely, her husband Ong Bun Tua and Fidel Francisco. Ong testified that he worked as a helper in the
UNITED FOUNDRY from 1965 to 1970 where he helped in the casting of LPG burners with the same form, configuration and mechanism as that of
the model covered by the Letters Patent issued to private respondent. Francisco testified that he had been employed with the Manila Gas Corporation
from 1930 to 1941 and from 1952 up to 1969 where he retired as supervisor and that Manila Gas Corporation imported "Ransome" burners way back
in 1965 which were advertised through brochures to promote their sale.

Private respondent, on the other hand, presented only one witness, Rolando Madolaria, who testified, among others, that he was the General
Supervisor of the UNITED FOUNDRY in the foundry, machine and buffing section; that in his early years with the company, UNITED FOUNDRY was
engaged in the manufacture of different kinds of gas stoves as well as burners based on sketches and specifications furnished by customers; that
the company manufactured early models of single-piece types of burners where the mouth and throat were not detachable; that in the latter part of
1978 respondent Melecia Madolaria confided in him that complaints were being brought to her attention concerning the early models being
manufactured; that he was then instructed by private respondent to cast several experimental models based on revised sketches and specifications;
that private respondent again made some innovations; that after a few months, private respondent discovered the solution to all the defects of the
earlier models and, based on her latest sketches and specifications, he was able to cast several models incorporating the additions to the innovations
introduced in the models. Various tests were conducted on the latest model in the presence and under the supervision of Melecia Madolaria and they
obtained perfect results. Rolando Madolaria testified that private respondent decided to file her application for utility model patent in December 1979.

On 7 July 1986 the Director of Patents Cesar C. Sandiego issued Decision No. 86-56 denying the petition for cancellation and holding that the evidence
of petitioner was not able to establish convincingly that the patented utility model of private respondent was anticipated. Not one of the various
pictorial representations of business clearly and convincingly showed that the devices presented by petitioner was identical or substantially identical
with the utility model of the respondent. The decision also stated that even assuming that the brochures depicted clearly each and every element of
the patented gas burner device so that the prior art and patented device became identical although in truth they were not, they could not serve as
anticipatory bars for the reason that they were undated. The dates when they were distributed to the public were not indicated and, therefore, were
useless prior art references. The records and evidence also do not support the petitioner's contention that Letters Patent No. UM-4609 was obtained
by means of fraud and/or misrepresentation. No evidence whatsoever was presented by petitioner to show that the then applicant Melecia Madolaria
withheld with intent to deceive material facts which, if disclosed, would have resulted in the refusal by the Philippine Patent Office to issue the Letters
Patent under inquiry.

Petitioner elevated the decision of the Director of Patents to the Court of Appeals which on 15 October 1993 affirmed the decision of the Director of
Patents. Hence, this petition for review on certiorari alleging that the Court of Appeals erred (a) in relying on imaginary differences which in actuality
did not exist between the model of private respondent covered by Letters Patent No. UM-4609 and the previously known model of Esso Standard
Eastern, Inc., and Manila Gas Corporation, making such imaginary differences grounded entirely on speculation, surmises and conjectures; (b) in
rendering judgment based on misapprehension of facts; (c) in relying mainly on the testimony of private respondent's sole witness Rolando Madolaria;
and, (d) in not cancelling Letters Patent No. UM-4609 in the name of private respondent.

Petitioner submits that the differences cited by the Court of Appeals between the utility model of private respondent and the models of Manila Gas
Corporation and Esso Standard Eastern, Inc., are more imaginary than real. She alleges that based on Exhs. "E," "E-1," "F" and "F-1" or the brochures
of Manila Gas Corporation and Esso Standard Eastern, Inc., presented by petitioner, the cup-shaped burner mouth and threaded hole on the side are
shown to be similar to the utility model of private respondent. The exhibits also show a detachable burner mouth having a plurality of upwardly
existing undulations adopted to act as gas passage when the cover is attached to the top of said cup-shaped mouth all of which are the same as
those in the patented model. Petitioner also denies as substantial difference the short cylindrical tube of the burner mouth appearing in the brochures
of the burners being sold by Manila Gas Corporation and the long cylindered tube of private respondent's model of the gas burner.

Petitioner argues that the actual demonstration made during the hearing disclosed the similarities in form, operation and mechanism and parts
between the utility model of private respondent and those depicted in the brochures. The findings of the Patent Office and the Court of Appeals that
the brochures of Manila Gas Corporation and Esso Standard Eastern, Inc., are undated cannot overcome the fact of their circulation before private
respondent filed her application for utility model patent. Petitioner thus asks this Court to take judicial notice of the fact that Esso Standard Eastern,
Inc., disappeared before 1979 and reappeared only during the Martial Law years as Petrophil Corporation. Petitioner also emphasizes that the
brochures indicated the telephone number of Manila Gas Corporation as 5-79-81 which is a five (5) numbered telephone number existing before 1975
because telephones in Metro Manila started to have six (6) numbers only after that year.

Petitioner further contends that the utility model of private respondent is absolutely similar to the LPG burner being sold by petitioner in 1975 and
1976, and also to the "Ransome" burner depicted in the old brochures of Manila Gas Corporation and Esso Standard Eastern, Inc., fabricated by
Ransome Torch and Burner Company of Oakland, California, USA, especially when considered through actual physical examination, assembly and
disassembly of the models of petitioner and private respondent. Petitioner faults the Court of Appeals for disregarding the testimonies of Ong Bun
Tua and Fidel Francisco for their failure to produce documents on the alleged importation by Manila Gas Corporation of "Ransome" burners in 1965
which had the same configuration, form and mechanism as that of the private respondent's patented model.

Finally, it is argued that the testimony of private respondent's lone witness Rolando Madolaria should not have been given weight by the Patent Office
and the Court of Appeals because it contained mere after-thoughts and pretensions.

We cannot sustain petitioner. Section 7 of RA No. 165, as amended, which is the law on patents, expressly provides —

Sec. 7. Inventians patentable. Any invention of a new and useful machine, manufactured product or substance, process or an improvement of any
of the foregoing, shall be patentable.

Further, Sec. 55 of the same 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) any
new model of 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 provided.

The element of novelty is an essential requisite of the patentability of an invention or discovery. If a device or process has been known or used by
others prior to its invention or discovery by the applicant, an application for a patent therefor should be denied; and if the application has been
granted, the court, in a judicial proceeding in which the validity of the patent is drawn in question, will hold it void and ineffective.2 It has been
repeatedly held that an invention must possess the essential elements of novelty, originality and precedence, and for the patentee to be entitled to
the protection the invention must be new to the world.3

In issuing Letters Patent No. UM-4609 to Melecia Madolaria for an "LPG Burner" on 22 July 1981, the Philippine Patent Office found her invention
novel and patentable. The issuance of such patent creates a presumption which yields only to clear and cogent evidence that the patentee was the
original and first inventor. The burden of proving want of novelty is on him who avers it and the burden is a heavy one which is met only by clear
and satisfactory proof which overcomes every reasonable doubt.4 Hence, 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.5

As found by the Director of Patents, the standard of evidence sufficient to overcome the presumption of legality of the issuance of UM-4609 to
respondent Madolaria was not legally met by petitioner in her action for the cancellation of the patent. Thus the Director of Patents explained his
reasons for the denial of the petition to cancel private respondent's patent —

Scrutiny of Exhs. "D" and "E" readily reveals that the utility model (LPG Burner) is not anticipated. Not one of the various pictorial representations of
burners clearly and convincingly show that the device presented therein is identical or substantially identical in construction with the aforesaid utility
model. It is relevant and material to state that in determining whether novelty or newness is negatived by any prior art, only one item of the prior
art may be used at a time. For anticipation to occur, the prior art must show that each element is found either expressly or described or under
principles of inherency in a single prior art reference or that the claimed invention was probably known in a single prior art device or practice. (Kalman
v. Kimberly Clark, 218 USPQ 781, 789)

Even assuming gratia arguendi that the aforesaid brochures do depict clearly on all fours each and every element of the patented gas burner device
so that the prior art and the said patented device become identical, although in truth they are not, they cannot serve as anticipatory bars for the
reason that they are undated. The dates when they were distributed to the public were not indicated and, therefore, they are useless prior art
references.

Furthermore, and more significantly, the model marked Exh. "K" does not show whether or not it was manufactured and/or cast before the application
for the issuance of patent for the LPG burner was filed by Melecia Madolaria.

With respect to Exh. "L," petitioner claimed it to be her own model of LPG burner allegedly manufactured sometime in 1974 or 1975 and sold by her
in the course of her business operation in the name of Besco Metal Manufacturing, which burner was denominated as "Ransome" burner

But a careful examination of Exh. "L" would show that it does not bear the word "Ransome" which is the burner referred to as the product being sold
by the Petitioner. This is not the way to prove that Exh. "L" anticipates Letters Patent No. UM-4609 through Exhs. "C" and "D." Another factor working
against the Petitioner's claims is that an examination of Exh. "L" would disclose that there is no indication of the time or date it was manufactured.
This Office, thus has no way of determining whether Exh. "L" was really manufactured before the filing of the aforesaid application which matured
into Letters Patent No. UM-4609, subject matter of the cancellation proceeding.

At this juncture, it is worthwhile to point out that petitioner also presented Exh. "M" which is the alleged burner cup of an imported "Ransome"
burner. Again, this Office finds the same as unreliable evidence to show anticipation. It observed that there is no date indicated therein as to when
it was manufactured and/or imported before the filing of the application for issuance of patent of the subject utility model. What is more, some
component parts of Exh. "M" are missing, as only the cup was presented so that the same could not be compared to the utility model (subject matter
of this case) which consists of several other detachable parts in combination to form the complete LPG burner.

It must likewise be pointed out that Ong Bun Tua testified on the brochures allegedly of Manila Gas and of Esso Gasul marked Exhs. "E" and "F" and
on the alleged fact that Manila Gas Corporation was importing from the United States "Ransome" burners. But the same could not be given credence
since he himself admitted during cross-examination that he has never been connected with Manila Gas Corporation. He could not even present any
importation papers relating to the alleged imported ransome burners. Neither did his wife.6

The above findings and conclusions of the Director of Patent were reiterated and affirmed by the Court of Appeals.7

The validity of the patent issued by the Philippine Patent Office in favor of private respondent and the question over the inventiveness, novelty and
usefulness of the improved model of the LPG burner are matters which are better determined by the Patent Office. The technical staff of the Philippine
Patent Office composed of experts in their field has by the issuance of the patent in question accepted private respondent's model of gas burner as
a discovery. There is a presumption that the Office has correctly determined the patentability of the model8 and such action must not be interfered
with in the absence of competent evidence to the contrary.

The rule is settled that the findings of fact of the Director of Patents, especially when affirmed by the Court of Appeals, are conclusive on this Court
when supported by substantial evidence. Petitioner has failed to show compelling grounds for a reversal of the findings and conclusions of the Patent
Office and the Court of Appeals.

The alleged failure of the Director of Patents and the Court of Appeals to accord evidentiary weight to the testimonies of the witnesses of petitioner
showing anticipation is not a justification to grant the petition. Pursuant to the requirement of clear and convincing evidence to overthrow the
presumption of validity of a patent, it has been held that oral testimony to show anticipation is open to suspicion and if uncorroborated by cogent
evidence, as what occurred in this case, it may be held insufficient.9

Finally, petitioner would want this Court to review all over again the evidence she presented before the Patent Office. She argues that contrary to
the decision of the Patent Office and the Court of Appeals, the evidence she presented clearly proves that the patented model of private respondent
is no longer new and, therefore, fraud attended the acquisition of patent by private respondent.

It has been held that the question on priority of invention is one of fact. Novelty and utility are likewise questions of fact. The validity of patent is
decided on the basis of factual inquiries. Whether evidence presented comes within the scope of prior art is a factual issue to be resolved by the
Patent Office.10 There is question of fact when the doubt or difference arises as to the truth or falsehood of alleged facts or when the query
necessarily invites calibration of the whole evidence considering mainly the credibility of witnesses, existence and relevance of specific surrounding
circumstances, their relation to each other and to the whole and the probabilities of the situation.11

Time and again we have held that it is not the function of the Supreme Court to analyze or weigh all over again the evidence and credibility of
witnesses presented before the lower tribunal or office. The Supreme Court is not a trier of facts. Its jurisdiction is limited to reviewing and revising
errors of law imputed to the lower court, its findings of fact being conclusive and not reviewable by this Court.

WHEREFORE, the Petition is DENIED. The Decision of the Court of Appeals affirming that of the Philippine Patent Office is AFFIRMED. Costs against
petitioner.
G.R. No. 97343 September 13, 1993
PASCUAL GODINES, petitioner, vs. COURT OF APPEALS, and SV-AGRO ENTERPRISES, INC., respondents.

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."2 The patented hand tractor works in the following manner: "the engine drives the 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.7 In using literal
infringement as a test, ". . . resort must be had, in the first 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."8 To determine whether the particular item falls within the literal 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." 11 It 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. 12 Thus, according to this doctrine, "(a)n infringement also occurs when 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." 13 The reason for the doctrine of equivalents is that to permit 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. . . .
xxx xxx xxx

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.

G. R. No. 126627 August 14, 2003

SMITH KLINE BECKMAN CORP., Petitioner, vs. THE HONORABLE COURT OF APPEALS and TRYCO PHARMA CORP. Respondents.

Smith Kline Beckman Corporation (petitioner), a corporation existing by virtue of the laws of the state of Pennsylvania, United States of America
(U.S.) and licensed to do business in the Philippines, filed on October 8, 1976, as assignee, before the Philippine Patent Office (now Bureau of Patents,
Trademarks and Technology Transfer) an application for patent over an invention entitled "Methods and Compositions for Producing Biphasic
Parasiticide Activity Using Methyl 5 Propylthio-2-Benzimidazole Carbamate." The application bore Serial No. 18989.

On September 24, 1981, Letters Patent No. 145611 for the aforesaid invention was issued to petitioner for a term of seventeen (17) years.

The letters patent provides in its claims2 that the patented invention consisted of a new compound named methyl 5 propylthio-2-benzimidazole
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 Corporation (private respondent) 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 gastro-intestinal 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 Regional Trial Court (RTC).3 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, infringed Claims 2, 3, 4, 7, 8 and 9 of Letters Patent No. 145614 as well as committed unfair
competition under Article 189, paragraph 1 of the Revised Penal Code and Section 29 of Republic Act No. 166 (The Trademark Law) for advertising
and selling as its own the drug Impregon although the same contained petitioner’s patented Albendazole.5

On motion of petitioner, Branch 125 of the Caloocan RTC issued a temporary restraining order against private respondent enjoining it from committing
acts of patent infringement and unfair competition.6 A writ of preliminary injunction was subsequently issued.7

Private respondent in its Answer8 averred that Letters Patent No. 14561 does not cover the substance Albendazole for nowhere in it does that word
appear; that even if the patent were to include Albendazole, such substance is unpatentable; that the Bureau of Food and Drugs allowed it to
manufacture and market Impregon with Albendazole as its known ingredient; that there is no proof that it passed off in any way its veterinary
products as those of petitioner; that Letters Patent No. 14561 is null and void, the application for the issuance thereof having been filed beyond the
one year period from the filing of an application abroad for the same invention covered thereby, in violation of Section 15 of Republic Act No. 165
(The Patent Law); and that petitioner is not the registered patent holder.

Private respondent lodged a Counterclaim against petitioner for such amount of actual damages as may be proven; ₱1,000,000.00 in moral damages;
₱300,000.00 in exemplary damages; and ₱150,000.00 in attorney’s fees.

Finding for private respondent, the trial court rendered a Decision dated July 23, 1991,9 the dispositive portion of which reads:

WHEREFORE, in view of the foregoing, plaintiff’s complaint should be, as it is hereby, DISMISSED. The Writ of injunction issued in connection with
the case is hereby ordered DISSOLVED.

The Letters Patent No. 14561 issued by the then Philippine Patents Office is hereby declared null and void for being in violation of Sections 7, 9 and
15 of the Patents Law.

Pursuant to Sec. 46 of the Patents Law, the Director of Bureau of Patents is hereby directed to cancel Letters Patent No. 14561 issued to the plaintiff
and to publish such cancellation in the Official Gazette.

Defendant Tryco Pharmaceutical Corporation is hereby awarded P330,000.00 actual damages and P100,000.00 attorney’s fees as prayed for in its
counterclaim but said amount awarded to defendant is subject to the lien on correct payment of filing fees.

SO ORDERED. (Underscoring supplied)

On appeal, the Court of Appeals, by Decision of April 21, 1995,10 upheld the trial court’s finding that private 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 Letters Patent
No. 14561. Noting petitioner’s admission of the issuance by the U.S. of a patent for Albendazole in the name of Smith Kline and French Laboratories
which was petitioner’s former corporate name, the appellate court considered the U.S. patent as implying that Albendazole is different from methyl
5 propylthio-2-benzimidazole carbamate. It likewise found that private respondent was not guilty of deceiving the public by misrepresenting that
Impregon is its product.

The appellate court, however, declared that Letters Patent No. 14561 was not void as it sustained petitioner’s explanation that Patent Application
Serial No. 18989 which was filed on October 8, 1976 was a divisional application of Patent Application Serial No. 17280 filed on June 17, 1975 with
the Philippine Patent Office, well within one year from petitioner’s filing on June 19, 1974 of its Foreign Application Priority Data No. 480,646 in the
U.S. covering the same compound subject of Patent Application Serial No. 17280.

Applying Section 17 of the Patent Law, the Court of Appeals thus ruled that Patent Application Serial No. 18989 was deemed filed on June 17, 1995
or still within one year from the filing of a patent application abroad in compliance with the one-year rule under Section 15 of the Patent Law. And it
rejected the submission that the compound in Letters Patent No. 14561 was not patentable, citing the jurisprudentially established presumption that
the Patent Office’s determination of patentability is correct. Finally, it ruled that petitioner established itself to be the one and the same assignee of
the patent notwithstanding changes in its corporate name. Thus the appellate court disposed:
WHEREFORE, the judgment appealed from is AFFIRMED with the MODIFICATION that the orders for the nullification of Letters Patent No. 14561 and
for its cancellation are deleted therefrom.

SO ORDERED.

Petitioner’s motion for reconsideration of the Court of Appeals’ decision having been denied11 the present petition for review on certiorari12 was
filed, assigning as errors the following:

I. THE COURT OF APPEALS GRAVELY ERRED IN NOT FINDING THAT ALBENDAZOLE, THE ACTIVE INGREDIENT IN TRYCO’S "IMPREGON" DRUG, IS
INCLUDED IN PETITIONER’S LETTERS PATENT NO. 14561, AND THAT CONSEQUENTLY TRYCO IS ANSWERABLE FOR PATENT INFRINGEMENT.

II. THE COURT OF APPEALS GRAVELY ERRED IN AWARDING TO PRIVATE RESPONDENT TRYCO PHARMA CORPORATION P330,000.00 ACTUAL
DAMAGES AND P100,000.00 ATTORNEY’S FEES.

Petitioner argues that under the doctrine of equivalents for determining patent infringement, Albendazole, the active ingredient it alleges was
appropriated by private respondent for its drug Impregon, is substantially the same as methyl 5 propylthio-2-benzimidazole carbamate covered by
its patent since both of them are meant to combat worm or parasite infestation in animals. It cites the "unrebutted" testimony of its witness Dr.
Godofredo C. Orinion (Dr. Orinion) that the chemical formula in Letters Patent No. 14561 refers to the compound Albendazole. Petitioner adds that
the two substances substantially do the same function in substantially the same way to achieve the same results, thereby making them truly identical.
Petitioner thus submits that the appellate court should have gone beyond the literal wordings used in Letters Patent No. 14561, beyond merely
applying the literal infringement test, for in spite of the fact that the word Albendazole does not appear in petitioner’s letters patent, it has ably shown
by evidence its sameness with methyl 5 propylthio-2-benzimidazole carbamate.

Petitioner likewise points out that its application with the Philippine Patent Office on account of which it was granted Letters Patent No. 14561 was
merely a divisional application of a prior application in the U. S. which granted a patent for Albendazole. Hence, petitioner concludes that both methyl
5 propylthio-2-benzimidazole carbamate and the U.S.-patented Albendazole are dependent on each other and mutually contribute to produce a single
result, thereby making Albendazole as much a part of Letters Patent No. 14561 as the other substance is.

Petitioner concedes in its Sur-Rejoinder13 that although methyl 5 propylthio-2-benzimidazole carbamate is not identical with Albendazole, the former
is an improvement or improved version of the latter thereby making both substances still substantially the same.

With respect to the award of actual damages in favor of private respondent in the amount of ₱330,000.00 representing lost profits, petitioner assails
the same as highly speculative and conjectural, hence, without basis. It assails too the award of ₱100,000.00 in attorney’s fees as not falling under
any of the instances enumerated by law where recovery of attorney’s fees is allowed.

In its Comment,14 private respondent contends that application of the doctrine of equivalents would not alter the outcome of the case, Albendazole
and methyl 5 propylthio-2-benzimidazole carbamate being two different compounds with different chemical and physical properties. It stresses that
the existence of a separate U.S. patent for Albendazole indicates that the same and the compound in Letters Patent No. 14561 are different from
each other; and that since it was on account of a divisional application that the patent for methyl 5 propylthio-2-benzimidazole carbamate was issued,
then, by definition of a divisional application, such a compound is just one of several independent inventions alongside Albendazole under petitioner’s
original patent application.

As has repeatedly been held, only questions of law may be raised in a petition for review on certiorari before this Court. Unless the factual findings
of the appellate court are mistaken, absurd, speculative, conjectural, conflicting, tainted with grave abuse of discretion, or contrary to the findings
culled by the court of origin,15 this Court does not review them.

From an examination of the evidence on record, this Court finds nothing infirm in the appellate court’s conclusions with respect to the principal issue
of whether private respondent committed patent infringement to the prejudice of petitioner.

The burden of proof to substantiate a charge for patent infringement rests on the plaintiff.16 In the case at bar, petitioner’s evidence consists primarily
of its Letters Patent No. 14561, and the testimony of Dr. Orinion, its general manager in the Philippines for its Animal Health Products Division, by
which it sought to show that its patent for the compound methyl 5 propylthio-2-benzimidazole carbamate also covers the substance Albendazole.

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 compound’s 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.17 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.18

It bears stressing that the mere absence of the word Albendazole in Letters Patent No. 14561 is not determinative of Albendazole’s 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.19 Yet again, a scrutiny of petitioner’s evidence fails to convince this Court of the substantial sameness of petitioner’s
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.20 In other words, the principle or mode of operation must be the same or
substantially the same.21

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.22

As stated early on, petitioner’s evidence fails to explain how Albendazole is in every essential detail identical to methyl 5 propylthio-2-benzimidazole
carbamate. Apart from the fact that Albendazole is an anthelmintic agent like methyl 5 propylthio-2-benzimidazole carbamate, nothing more is
asserted and accordingly substantiated regarding the method or means by which Albendazole weeds out parasites in animals, thus giving no
information on whether that method is substantially the same as the manner by which petitioner’s compound works. The testimony of Dr. Orinion
lends no support to petitioner’s cause, he not having been presented or qualified as an expert witness who has the knowledge or expertise on the
matter of chemical compounds.

As for the concept of divisional applications proffered by petitioner, it comes into play when two or more inventions are claimed in a single application
but are of such a nature that a single patent may not be issued for them.23 The applicant thus is required "to divide," that is, to limit the claims to
whichever invention he may elect, whereas those inventions not elected may be made the subject of separate applications which are called "divisional
applications."24 What this only means is that petitioner’s methyl 5 propylthio-2-benzimidazole carbamate is an invention distinct from the other
inventions claimed in the original application divided out, Albendazole being one of those other inventions. Otherwise, methyl 5 propylthio-2-
benzimidazole carbamate would not have been the subject of a divisional application if a single patent could have been issued for it as well as
Albendazole.1âwphi1

The foregoing discussions notwithstanding, this Court does not sustain the award of actual damages and attorney’s fees in favor of private respondent.
The claimed actual damages of ₱330,000.00 representing lost profits or revenues incurred by private respondent as a result of the issuance of the
injunction against it, computed at the rate of 30% of its alleged ₱100,000.00 monthly gross sales for eleven months, were supported by the testimonies
of private respondent’s President25 and Executive Vice-President that the average monthly sale of Impregon was ₱100,000.00 and that sales
plummeted to zero after the issuance of the injunction.26 While indemnification for actual or compensatory damages covers not only the loss suffered
(damnum emergens) but also profits which the obligee failed to obtain (lucrum cessans or ganacias frustradas), it is necessary to prove the actual
amount of damages with a reasonable degree of certainty based on competent proof and on the best evidence obtainable by the injured party.27
The testimonies of private respondent’s officers are not the competent proof or best evidence obtainable to establish its right to actual or compensatory
damages for such damages also require presentation of documentary evidence to substantiate a claim therefor.28

In the same vein, this Court does not sustain the grant by the appellate court of attorney’s fees to private respondent anchored on Article 2208 (2)
of the Civil Code, private respondent having been allegedly forced to litigate as a result of petitioner’s suit. Even if a claimant is compelled to litigate
with third persons or to incur expenses to protect its rights, still attorney’s fees may not be awarded where no sufficient showing of bad faith could
be reflected in a party’s persistence in a case other than an erroneous conviction of the righteousness of his cause.29 There exists no evidence on
record indicating that petitioner was moved by malice in suing private respondent.

This Court, however, grants private respondent temperate or moderate damages in the amount of ₱20,000.00 which it finds reasonable under the
circumstances, it having suffered some pecuniary loss the amount of which cannot, from the nature of the case, be established with certainty.30

WHEREFORE, the assailed decision of the Court of Appeals is hereby AFFIRMED with MODIFICATION. The award of actual or compensatory damages
and attorney’s fees to private respondent, Tryco Pharma Corporation, is DELETED; instead, it is hereby awarded the amount of P20,000.00 as
temperate or moderate damages.

SO ORDERED.

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 1 of the Court of Appeals dated November 9, 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-69383 covering an aerial fuze which was 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 letter5 to petitioner advising it of its existing patent and its rights 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 complaint6 for injunction and damages arising from the alleged
infringement before the 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 7 alleging that 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 8 granting the issuance of a writ of 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 Order9 of May 11, 1994, pertinent portions of which read:

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 10 before respondent Court of Appeals
raising as grounds the following:

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. 11 Hence, this present 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. 12 Moreover, 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. 13 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. 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, 16 we stated that:

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.

G.R. No. 161295 June 29, 2005

JESSIE G. CHING, petitioner, vs. WILLIAM SALINAS, SR., WILLIAM SALINAS, JR., JOSEPHINE SALINAS, JENNIFER SALINAS,
ALONTO SOLAIMAN SALLE, JOHN ERIC SALINAS, NOEL YABUT (BOD and Officers of WILAWARE PRODUCT CORP), respondents.

Jessie G. Ching is the owner and general manager of Jeshicris Manufacturing Co., the maker and manufacturer of a Utility Model, described as "Leaf
Spring Eye Bushing for Automobile" made up of plastic.

On September 4, 2001, Ching and Joseph Yu were issued by the National Library Certificates of Copyright Registration and Deposit of the said work
described therein as "Leaf Spring Eye Bushing for Automobile." On September 20, 2001, Ching requested the (NBI) for police/investigative assistance
for the apprehension and prosecution of illegal manufacturers, producers and/or distributors of the works.5

After due investigation, the NBI filed applications for search warrants in the RTC of Manila against William Salinas, Sr. and the officers and members
of the BOD of Wilaware Product Corporation. It was alleged that the respondents therein reproduced and distributed the said models penalized under
Sections 177.1 and 177.3 of RA No. 8293. The applications sought the seizure of the following:

a.) Undetermined quantity of Leaf spring eye bushing for automobile that are made up of plastic polypropylene;
b.) Undetermined quantity of Leaf spring eye bushing for automobile that are made up of polyvinyl chloride plastic;
c.) Undetermined quantity of Vehicle bearing cushion that is made up of polyvinyl chloride plastic;
d.) Undetermined quantity of Dies and jigs, patterns and flasks used in the manufacture/fabrication of items a to d;
e.) Evidences of sale which include delivery receipts, invoices and official receipts.6

The RTC granted the application and issued Search Warrant Nos. 01-2401 and 01-2402 for the seizure of the aforecited articles.In the inventory
submitted by the NBI agent, it appears that the following articles/items were seized based on the search warrants:

Leaf Spring eye bushing

a) Plastic Polypropylene
b) Polyvinyl Chloride Plastic
c) Vehicle bearing cushion
Diesel Mold xxx

The respondents filed a motion to quash the search warrants on the following grounds:

2. The copyright registrations were issued in violation of the Intellectual Property Code on the ground that:
a) the subject matter of the registrations are not artistic or literary;
b) the subject matter of the registrations are spare parts of automobiles;
meaning – there (sic) are original parts that they are designed to replace. Hence, they are not original.

The respondents averred that the works covered by the certificates issued by the National Library are not artistic in nature; they are considered
automotive spare parts and pertain to technology. They aver that the models are not original, and as such are the proper subject of a patent, not
copyright.

In opposing the motion, the petitioner averred that the court which issued the search warrants was not the proper forum in which to articulate the
issue of the validity of the copyrights issued to him. Citing the ruling of the Court in Malaloan v. CA the petitioner stated that a search warrant is
merely a judicial process designed by the Rules of Court in anticipation of a criminal case. Until his copyright was nullified in a proper proceeding, he
enjoys rights of a registered owner/holder thereof.

On January 3, 2002, the trial court issued an Order granting the motion, and quashed the search warrant on its finding that there was no probable
cause for its issuance. The court ruled that the work covered by the certificates issued to the petitioner pertained to solutions to technical problems,
not literary and artistic as provided in Article 172 of the Intellectual Property Code.

His MR of the order having been denied by the trial court’s the petitioner filed a petition for certiorari in the CA, contending that the RTC had no
jurisdiction to delve into and resolve the validity of the copyright certificates issued to him by the National Library. He insisted that his works are
covered by Sections 172.1 and 172.2 of the Intellectual Property Code. The petitioner averred that the copyright certificates are prima facie evidence
of its validity, citing the ruling of the US CA in Wildlife Express Corporation v. Carol Wright Sales, Inc.13 The petitioner asserted that the respondents
failed to adduce evidence to support their motion to quash the search warrants. The petitioner noted that respondent William Salinas, Jr. was not
being honest, as he was able to secure a similar copyright registration of a similar product from the National Library on January 14, 2002.

CA rendered judgment dismissing the petition; that the RTC did not commit any grave abuse of its discretion in issuing the assailed order, to wit:

It is settled that preliminarily, there must be a finding that a specific offense must have been committed to justify the issuance of a search warrant.
In a number of cases decided by the Supreme Court, the same is explicitly provided, thus:

"The probable cause must be in connection with one specific offense, and the judge must, before issuing the warrant, personally examine in the form
of searching questions and answers, in writing and under oath, the complainant and any witness he may produce, on facts personally known to them
and attach to the record their sworn statements together with any affidavit submitted.

"In the determination of probable cause, the court must necessarily resolve whether or not an offense exists to justify the issuance or quashal of the
search warrant."

In the instant case, the petitioner is praying for the reinstatement of the search warrants issued, but subsequently quashed, for the offense of
Violation of Class Designation of Copyrightable Works under Section 177.1 in relation to Section 177.3 of RA 8293, when the objects subject of the
same, are patently not copyrightable.

It is worthy to state that the works protected under the Law on Copyright are: literary or artistic works (Sec. 172) and derivative works (Sec. 173).
The Leaf Spring Eye Bushing and Vehicle Bearing Cushion fall on neither classification. Accordingly, if, in the first place, the item subject
of the petition is not entitled to be protected by the law on copyright, how can there be any violation?

The petitioner’s motion for reconsideration of the said decision suffered the same fate. The petitioner forthwith filed the present petition for review
on certiorari, contending that the revocation of his copyright certificates should be raised in a direct action and not in a search warrant proceeding.

The petitioner posits that even assuming ex argumenti that the trial court may resolve the validity of his copyright in a proceeding to quash a search
warrant for allegedly infringing items, the RTC committed a GAD when it declared that his works are not copyrightable in the first place. He claims
that RA 8293, which took effect on January 1, 1998, provides in no uncertain terms that copyright protection automatically attaches to a work by the
sole fact of its creation, irrespective of its mode or form of expression, as well as of its content, quality or purpose. The law gives a non-inclusive
definition of "work" as referring to original intellectual creations in the literary and artistic domain protected from the moment of their creation; and
includes original ornamental designs or models for articles of manufacture, whether or not registrable as an industrial design and other works of
applied art under Section 172.1(h) of RA 8293.

As such, the petitioner insists, notwithstanding the classification of the works as either literary and/or artistic, the said law, likewise, encompasses
works which may have a bearing on the utility aspect to which the petitioner’s utility designs were classified. According to the petitioner, what the
Copyright Law protects is the author’s intellectual creation, regardless of whether it is one with utilitarian functions or incorporated in a useful article
produced on an industrial scale.

The petitioner also maintains that the law does not provide that the intended use or use in industry of an article eligible for patent bars or invalidates
its registration under the Law on Copyright. The test of protection for the aesthetic is not beauty and utility, but art for the copyright and invention
of original and ornamental design for design patents. In like manner, the fact that his utility designs or models for articles of manufacture have been
expressed in the field of automotive parts, or based on something already in the public domain does not automatically remove them from the
protection of the Law on Copyright.

The petitioner faults the CA for ignoring Section 218 of R.A. No. 8293 which gives the same presumption to an affidavit executed by an author who
claims copyright ownership of his work.

The petitioner adds that a finding of probable cause to justify the issuance of a search warrant means merely a reasonable suspicion of the commission
of the offense. It is not equivalent to absolute certainty or a finding of actual and positive cause.18 He assists that the determination of probable
cause does not concern the issue of whether or not the alleged work is copyrightable. He maintains that to justify a finding of probable cause in the
issuance of a search warrant, it is enough that there exists a reasonable suspicion of the commission of the offense.

The petitioner contends that he has in his favor the benefit of the presumption that his copyright is valid; hence, the burden of overturning this
presumption is on the alleged infringers, the respondents herein. But this burden cannot be carried in a hearing on a proceeding to quash the search
warrants, as the issue therein is whether there was probable cause for the issuance of the search warrant. The petitioner concludes that the issue of
probable cause should be resolved without invalidating his copyright.
In their comment, the respondents aver that the work of the petitioner is essentially a technical solution to the problem of wear and tear in
automobiles, the substitution of materials, i.e., from rubber to plastic matter of polyvinyl chloride, an oil resistant soft texture plastic material strong
enough to endure pressure brought about by the vibration of the counter bearing and thus brings bushings. Such work, the respondents assert, is
the subject of copyright under Section 172.1 of RA 8293. The respondents posit that a technical solution in any field of human activity which is novel
may be the subject of a patent, and not of a copyright. They insist that the certificates issued by the National Library are only certifications that, at
a point in time, a certain work was deposited in the said office. Furthermore, the registration of copyrights does not provide for automatic protection.
Citing Section 218.2(b) of RA. 8293, the respondents aver that no copyright is said to exist if a party categorically questions its existence and legality.
Moreover, under Section 2, Rule 7 of the Implementing Rules of R.A. No. 8293, the registration and deposit of work is not conclusive as to copyright
outlay or the time of copyright or the right of the copyright owner. The respondents maintain that a copyright exists only when the work is covered
by the protection of R.A. No. 8293.

The petition has no merit.

The RTC had jurisdiction to delve into and resolve the issue whether the petitioner’s utility models are copyrightable and, if so, whether he is the
owner of a copyright over the said models. Upon the filing of the application for search warrant, the RTC was duty-bound to determine whether
probable cause existed, in accordance with Section 4, Rule 126 of the Rules of Criminal Procedure:

SEC. 4. Requisite for issuing search warrant. – A search warrant shall not issue but upon probable cause in connection with one specific offense to
be determined personally by the judge after examination under oath or affirmation of the complainant and the witnesses he may produce, and,
particularly, describing the place to be searched and the things to be seized.

In Solid Triangle Sales Corporation v. The Sheriff of RTC QC, Br. 93,19 the Court held that in the determination of probable cause, the court must
necessarily resolve whether or not an offense exists to justify the issuance of a search warrant or the quashal of one already issued by the court.
Indeed, probable cause is deemed to exist only where facts and circumstances exist which could lead a reasonably cautious and prudent man to
believe that an offense has been committed or is being committed. Besides, in Section 3, Rule 126 of the Rules of Criminal Procedure, a search
warrant may be issued for the search and seizure of personal property (a) subject of the offense; (b) stolen or embezzled and other proceeds
or fruits of the offense; or (c) used or intended to be used as the means of committing an offense.

The RTC is mandated under the Constitution and Rules of Criminal Procedure to determine probable cause. The court cannot abdicate its constitutional
obligation by refusing to determine whether an offense has been committed.20 The absence of probable cause will cause the outright nullification of
the search warrant.21

For the RTC to determine whether the crime for infringement under R.A. No. 8293 as alleged in an application is committed, the petitioner-applicant
was burdened to prove that (a) respondents Jessie Ching and Joseph Yu were the owners of copyrighted material; and (b) the copyrighted material
was being copied and distributed by the respondents. Thus, the ownership of a valid copyright is essential.22

Ownership of copyrighted material is shown by proof of originality and copyrightability. By originality is meant that the material was not copied, and
evidences at least minimal creativity; that it was independently created by the author and that it possesses at least same minimal degree of creativity.
Copying is shown by proof of access to copyrighted material and substantial similarity between the two works. The applicant must thus demonstrate
the existence and the validity of his copyright because in the absence of copyright protection, even original creation may be freely copied.

By requesting the NBI to investigate and, if feasible, file an application for a search warrant for infringement under RA 8293 against the respondents,
the petitioner thereby authorized the RTC (in resolving the application), to delve into and determine the validity of the copyright which he claimed he
had over the utility models. The petitioner cannot seek relief from the RTC based on his claim that he was the copyright owner over the utility models
and, at the same time, repudiate the court’s jurisdiction to ascertain the validity of his claim without running afoul to the doctrine of estoppel.

To discharge his burden, the applicant may present the certificate of registration covering the work or, in its absence, other evidence. A copyright
certificate provides prima facie evidence of originality which is one element of copyright validity. It constitutes prima facie evidence of both validity
and ownership and the validity of the facts stated in the certificate. The presumption of validity to a certificate of copyright registration merely orders
the burden of proof. The applicant should not ordinarily be forced, in the first instance, to prove all the multiple facts that underline the validity of
the copyright unless the respondent, effectively challenging them, shifts the burden of doing so to the applicant. Indeed, Section 218.2 of RA 8293
provides:

218.2. In an action under this Chapter:

(a) Copyright shall be presumed to subsist in the work or other subject matter to which the action relates if the defendant does not put in issue the
question whether copyright subsists in the work or other subject matter; and
(b) Where the subsistence of the copyright is established, the plaintiff shall be presumed to be the owner of the copyright if he claims to be the
owner of the copyright and the defendant does not put in issue the question of his ownership.

A certificate of registration creates no rebuttable presumption of copyright validity where other evidence in the record casts doubt on the question.
In such a case, validity will not be presumed.30

To discharge his burden of probable cause for the issuance of a search warrant for violation of RA 8293, the petitioner-applicant submitted to the
RTC Certificate of Copyright Registration Nos. 2001-197 and 2001-204, issued by the National Library covering work identified as Leaf Spring Eye
Bushing for Automobile and Vehicle Bearing Cushion both classified under Section 172.1(h) of R.A. No. 8293, to wit:

SEC. 172. Literary and Artistic Works. – 172.1. Literary and artistic works, hereinafter referred to as "works," are original intellectual creations in the
literary and artistic domain protected from the moment of their creation and shall include in particular: ...

(h) Original ornamental designs or models for articles of manufacture, whether or not registrable as an industrial design, and other works of applied
art.

Related to the provision is Section 171.10, which provides that a "work of applied art" is an artistic creation with utilitarian functions or incorporated
in a useful article, whether made by hand or produced on an industrial scale.

But, as gleaned from the specifications appended to the application for a copyright certificate filed by the petitioner, the said Leaf Spring Eye Bushing
for Automobile is merely a utility model described as comprising a generally cylindrical body having a co-axial bore that is centrally located and
provided with a perpendicular flange on one of its ends and a cylindrical metal jacket surrounding the peripheral walls of said body, with the bushing
made of plastic that is either polyvinyl chloride or polypropylene. Likewise, the Vehicle Bearing Cushion is illustrated as a bearing cushion comprising
a generally semi-circular body having a central hole to secure a conventional bearing and a plurality of ridges provided therefore, with said cushion
bearing being made of the same plastic materials. Plainly, these are not literary or artistic works. They are not intellectual creations in the literary
and artistic domain, or works of applied art. They are certainly not ornamental designs or one having decorative quality or value.

It bears stressing that the focus of copyright is the usefulness of the artistic design, and not its marketability. The central inquiry is whether the article
is a work of art. Works for applied art include all original pictorials, graphics, and sculptural works that are intended to be or have been embodied in
useful article regardless of factors such as mass production, commercial exploitation, and the potential availability of design patent protection.34

As gleaned from the description of the models and their objectives, these articles are useful articles which are defined as one having an intrinsic
utilitarian function that is not merely to portray the appearance of the article or to convey information. Indeed, while works of applied art, original
intellectual, literary and artistic works are copyrightable, useful articles and works of industrial design are not. A useful article may be copyrightable
only if and only to the extent that such design incorporates pictorial, graphic, or sculptural features that can be identified separately from, and are
capable of existing independently of the utilitarian aspects of the article.

We agree with the contention of the petitioner (citing Section 171.10 of R.A. No. 8293), that the author’s intellectual creation, regardless of whether
it is a creation with utilitarian functions or incorporated in a useful article produced on an industrial scale, is protected by copyright law. However,
the law refers to a "work of applied art which is an artistic creation." It bears stressing that there is no copyright protection for works of applied art
or industrial design which have aesthetic or artistic features that cannot be identified separately from the utilitarian aspects of the article.36 Functional
components of useful articles, no matter how artistically designed, have generally been denied copyright protection unless they are separable from
the useful article.37

In this case, the petitioner’s models are not works of applied art, nor artistic works. They are utility models, useful articles, albeit with no artistic
design or value. Thus, the petitioner described the utility model as follows:

LEAF SPRING EYE BUSHING FOR AUTOMOBILE

Known bushings inserted to leaf-spring eye to hold leaf-springs of automobile are made of hard rubber. These rubber bushings after a time, upon
subjecting them to so much or intermittent pressure would eventually wore (sic) out that would cause the wobbling of the leaf spring.

The primary object of this utility model, therefore, is to provide a leaf-spring eye bushing for automobile that is made up of plastic.

Another object of this utility model is to provide a leaf-spring eye bushing for automobiles made of polyvinyl chloride, an oil resistant soft texture
plastic or polypropylene, a hard plastic, yet both causes cushion to the leaf spring, yet strong enough to endure pressure brought about by the up
and down movement of said leaf spring.

Yet, an object of this utility model is to provide a leaf-spring eye bushing for automobiles that has a much longer life span than the rubber bushings.

Still an object of this utility model is to provide a leaf-spring eye bushing for automobiles that has a very simple construction and can be made using
simple and ordinary molding equipment.

A further object of this utility model is to provide a leaf-spring eye bushing for automobile that is supplied with a metal jacket to reinforce the plastic
eye bushing when in engaged with the steel material of the leaf spring.

These and other objects and advantages will come to view and be understood upon a reading of the detailed description when taken in conjunction
with the accompanying drawings.

Figure 1 is an exploded perspective of a leaf-spring eye bushing according to the present utility model;
Figure 2 is a sectional view taken along line 2-2 of Fig. 1;
Figure 3 is a longitudinal sectional view of another embodiment of this utility model;
Figure 4 is a perspective view of a third embodiment; and
Figure 5 is a sectional view thereof.

Referring now to the several views of the drawings wherein like reference numerals designated same parts throughout, there is shown a utility model
for a leaf-spring eye bushing for automobile generally designated as reference numeral 10.

Said leaf-spring eye bushing 10 comprises a generally cylindrical body 11 having a co-axial bore 12 centrally provided thereof.

As shown in Figs. 1 and 2, said leaf-spring eye bushing 10 is provided with a perpendicular flange 13 on one of its ends and a cylindrical metal jacket
14 surrounding the peripheral walls 15 of said body 11. When said leaf-spring bushing 10 is installed, the metal jacket 14 acts with the leaf-spring
eye (not shown), which is also made of steel or cast steel. In effect, the bushing 10 will not be directly in contact with steel, but rather the metal
jacket, making the life of the bushing 10 longer than those without the metal jacket.

In Figure 2, the bushing 10 as shown is made of plastic, preferably polyvinyl chloride, an oil resistant soft texture plastic or a hard polypropylene
plastic, both are capable to endure the pressure applied thereto, and, in effect, would lengthen the life and replacement therefor.

Figure 3, on the other hand, shows the walls 16 of the co-axial bore 12 of said bushing 10 is insertably provided with a steel tube 17 to reinforce the
inner portion thereof. This steel tube 17 accommodates or engages with the leaf-spring bolt (not shown) connecting the leaf spring and the
automobile’s chassis.

Figures 4 and 5 show another embodiment wherein the leaf eye bushing 10 is elongated and cylindrical as to its construction. Said another
embodiment is also made of polypropylene or polyvinyl chloride plastic material. The steel tube 17 and metal jacket 14 may also be applied to this
embodiment as an option thereof.38

VEHICLE BEARING CUSHION

Known bearing cushions inserted to bearing housings for vehicle propeller shafts are made of hard rubber. These rubber bushings after a time, upon
subjecting them to so much or intermittent pressure would eventually be worn out that would cause the wobbling of the center bearing.
The primary object of this utility model therefore is to provide a vehicle-bearing cushion that is made up of plastic.

Another object of this utility model is to provide a vehicle bearing cushion made of polyvinyl chloride, an oil resistant soft texture plastic material
which causes cushion to the propeller’s center bearing, yet strong enough to endure pressure brought about by the vibration of the center bearing.

Yet, an object of this utility model is to provide a vehicle-bearing cushion that has a much longer life span than rubber bushings.

Still an object of this utility model is to provide a vehicle bearing cushion that has a very simple construction and can be made using simple and
ordinary molding equipment.

These and other objects and advantages will come to view and be understood upon a reading of the detailed description when taken in conjunction
with the accompanying drawings.

Figure 1 is a perspective view of the present utility model for a vehicle-bearing cushion; and
Figure 2 is a sectional view thereof.

Referring now to the several views of the drawing, wherein like reference numeral designate same parts throughout, there is shown a utility model
for a vehicle-bearing cushion generally designated as reference numeral 10.

Said bearing cushion 10 comprises of a generally semi-circular body 11, having central hole 12 to house a conventional bearing (not shown). As
shown in Figure 1, said body 11 is provided with a plurality of ridges 13 which serves reinforcing means thereof.

The subject bearing cushion 10 is made of polyvinyl chloride, a soft texture oil and chemical resistant plastic material which is strong, durable and
capable of enduring severe pressure from the center bearing brought about by the rotating movement of the propeller shaft of the vehicle.39

A utility model is a technical solution to a problem in any field of human activity which is new and industrially applicable. It may be, or may relate to,
a product, or process, or an improvement of any of the aforesaid.40 Essentially, a utility model refers to an invention in the mechanical field. This is
the reason why its object is sometimes described as a device or useful object.41 A utility model varies from an invention, for which a patent for
invention is, likewise, available, on at least three aspects: first, the requisite of "inventive step"42 in a patent for invention is not required; second,
the maximum term of protection is only seven years43 compared to a patent which is twenty years,44 both reckoned from the date of the application;
and third, the provisions on utility model dispense with its substantive examination45 and prefer for a less complicated system.

Being plain automotive spare parts that must conform to the original structural design of the components they seek to replace, the Leaf Spring Eye
Bushing and Vehicle Bearing Cushion are not ornamental. They lack the decorative quality or value that must characterize authentic works of applied
art. They are not even artistic creations with incidental utilitarian functions or works incorporated in a useful article. In actuality, the personal
properties described in the search warrants are mechanical works, the principal function of which is utility sans any aesthetic embellishment.

Neither are we to regard the Leaf Spring Eye Bushing and Vehicle Bearing Cushion as included in the catch-all phrase "other literary, scholarly,
scientific and artistic works" in Section 172.1(a) of R.A. No. 8293. Applying the principle of ejusdem generis which states that "where a statute
describes things of a particular class or kind accompanied by words of a generic character, the generic word will usually be limited to things of a
similar nature with those particularly enumerated, unless there be something in the context of the state which would repel such inference,"46 the
Leaf Spring Eye Bushing and Vehicle Bearing Cushion are not copyrightable, being not of the same kind and nature as the works enumerated in
Section 172 of R.A. No. 8293.

No copyright granted by law can be said to arise in favor of the petitioner despite the issuance of the certificates of copyright registration and the
deposit of the Leaf Spring Eye Bushing and Vehicle Bearing Cushion. Indeed, in Joaquin, Jr. v. Drilon47 and Pearl & Dean (Phil.), Incorporated v.
Shoemart, Incorporated,48 the Court ruled that:

Copyright, in the strict sense of the term, is purely a statutory right. It is a new or independent right granted by the statute, and not simply a pre-
existing right regulated by it. Being a statutory grant, the rights are only such as the statute confers, and may be obtained and enjoyed only with
respect to the subjects and by the persons, and on terms and conditions specified in the statute. Accordingly, it can cover only the works falling
within the statutory enumeration or description.

That the works of the petitioner may be the proper subject of a patent does not entitle him to the issuance of a search warrant for violation of
copyright laws. In Kho v. Court of Appeals49 and Pearl & Dean (Phil.), Incorporated v. Shoemart, Incorporated,50 the Court ruled that "these
copyright and patent rights are completely distinct and separate from one another, and the protection afforded by one cannot be used interchangeably
to cover items or works that exclusively pertain to the others." The Court expounded further, thus:

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.

The petitioner cannot find solace in the ruling of the United States Supreme Court in Mazer v. Stein51 to buttress his petition. In that case, the
artifacts involved in that case were statuettes of dancing male and female figures made of semi-vitreous china. The controversy therein centered on
the fact that although copyrighted as "works of art," the statuettes were intended for use and used as bases for table lamps, with electric wiring,
sockets and lampshades attached. The issue raised was whether the statuettes were copyright protected in the United States, considering that the
copyright applicant intended primarily to use them as lamp bases to be made and sold in quantity, and carried such intentions into effect. At that
time, the Copyright Office interpreted the 1909 Copyright Act to cover works of artistic craftsmanship insofar as their form, but not the utilitarian
aspects, were concerned. After reviewing the history and intent of the US Congress on its copyright legislation and the interpretation of the copyright
office, the US Supreme Court declared that the statuettes were held copyrightable works of art or models or designs for works of art. The High Court
ruled that:

"Works of art (Class G) – (a) – In General. This class includes works of artistic craftsmanship, in so far as their form but not their mechanical or
utilitarian aspects are concerned, such as artistic jewelry, enamels, glassware, and tapestries, as well as all works belonging to the fine arts, such as
paintings, drawings and sculpture. …"
So we have a contemporaneous and long-continued construction of the statutes by the agency charged to administer them that would allow the
registration of such a statuette as is in question here.52

The High Court went on to state that "[t]he dichotomy of protection for the aesthetic is not beauty and utility but art for the copyright and the
invention of original and ornamental design for design patents." Significantly, the copyright office promulgated a rule to implement Mazer to wit:

… [I]f "the sole intrinsic function of an article is its utility, the fact that the work is unique and attractively shaped will not qualify it as a work of art."

In this case, the bushing and cushion are not works of art. They are, as the petitioner himself admitted, utility models which may be the subject of a
patent.

Petition is hereby DENIED for lack of merit. The assailed Decision and Resolution of the Court of Appeals in CA-G.R. SP No. 70411 are AFFIRMED.
Search Warrant Nos. 01-2401 and 01-2402 issued on October 15, 2001 are ANNULLED AND SET ASIDE. Costs against the petitioner.