G.R. No.

149907 April 16, 2009

ROMA DRUG and ROMEO RODRIGUEZ, as Proprietor of ROMA DRUG, Petitioners,
vs.
THE REGIONAL TRIAL COURT OF GUAGUA, PAMPANGA, THE PROVINCIAL PROSECUTOR OF PAMPANGA,
BUREAU OF FOOD & DRUGS (BFAD) and GLAXO SMITHKLINE, Respondents.
D E C I S I O N
TINGA, J.:
On 14 August 2000, a team composed of the National Bureau of Investigation (NBI) operatives and
inspectors of the Bureau of Food and Drugs (BFAD) conducted a raid on petitioner Roma Drug, a
duly registered sole proprietorship of petitioner Romeo Rodriguez (Rodriguez) operating a drug store
located at San Matias, Guagua, Pampanga. The raid was conducted pursuant to a search
warrant1 issued by the Regional Trial Court (RTC), Branch 57, Angeles City. The raiding team seized
several imported medicines, including Augmentin (375mg.) tablets, Orbenin (500mg.) capsules, Amoxil
(250mg.) capsules and Ampiclox (500mg.).2 It appears that Roma Drug is one of six drug stores which
were raided on or around the same time upon the request of SmithKline Beecham Research Limited
(SmithKline), a duly registered corporation which is the local distributor of pharmaceutical products
manufactured by its parent London-based corporation. The local SmithKline has since merged with
Glaxo Wellcome Phil. Inc to form Glaxo SmithKline, private respondent in this case. The seized
medicines, which were manufactured by SmithKline, were imported directly from abroad and not
purchased through the local SmithKline, the authorized Philippine distributor of these products.
The NBI subsequently filed a complaint against Rodriguez for violation of Section 4 (in relation to
Sections 3 and 5) of Republic Act No. 8203, also known as the Special Law on Counterfeit Drugs (SLCD),
with the Office of the Provincial Prosecutor in San Fernando, Pampanga. The section prohibits the sale
of counterfeit drugs, which under Section 3(b)(3), includes "an unregistered imported drug product."
The term "unregistered" signifies the lack of registration with the Bureau of Patent, Trademark and
Technology Transfer of a trademark, tradename or other identification mark of a drug in the name of a
natural or juridical person, the process of which is governed under Part III of the Intellectual Property
Code.
In this case, there is no doubt that the subject seized drugs are identical in content with their
Philippine-registered counterparts. There is no claim that they were adulterated in any way or
mislabeled at least. Their classification as "counterfeit" is based solely on the fact that they were
imported from abroad and not purchased from the Philippine-registered owner of the patent or
trademark of the drugs.
During preliminary investigation, Rodriguez challenged the constitutionality of the SLCD. However,
Assistant Provincial Prosecutor Celerina C. Pineda skirted the challenge and issued a Resolution dated
17 August 2001 recommending that Rodriguez be charged with violation of Section 4(a) of the SLCD.
The recommendation was approved by Provincial Prosecutor Jesus Y. Manarang approved the
recommendation.3
Hence, the present Petition for Prohibition questing the RTC-Guagua Pampanga and the Provincial
Prosecutor to desist from further prosecuting Rodriguez, and that Sections 3(b)(3), 4 and 5 of the SLCD
be declared unconstitutional. In gist, Rodriguez asserts that the challenged provisions contravene three
provisions of the Constitution. The first is the equal protection clause of the Bill of Rights. The two
other provisions are Section 11, Article XIII, which mandates that the State make "essential goods,
health and other social services available to all the people at affordable cost;" and Section 15, Article
II, which states that it is the policy of the State "to protect and promote the right to health of the
people and instill health consciousness among them."
Through its Resolution dated 15 October 2001, the Court issued a temporary restraining order enjoining
the RTC from proceeding with the trial against Rodriguez, and the BFAD, the NBI and Glaxo Smithkline
from prosecuting the petitioners.4
Glaxo Smithkline and the Office of the Solicitor General (OSG) have opposed the petition, the latter in
behalf of public respondents RTC, Provincial Prosecutor and Bureau of Food and Drugs (BFAD). On the
constitutional issue, Glaxo Smithkline asserts the rule that the SLCD is presumed constitutional, arguing
that both Section 15, Article II and Section 11, Article XIII "are not self-executing provisions, the
disregard of which can give rise to a cause of action in the courts." It adds that Section 11, Article XIII
in particular cannot be work "to the oppression and unlawful of the property rights of the legitimate
manufacturers, importers or distributors, who take pains in having imported drug products registered
before the BFAD." Glaxo Smithkline further claims that the SLCD does not in fact conflict with the
aforementioned constitutional provisions and in fact are in accord with constitutional precepts in favor
of the peoples right to health.
The Office of the Solicitor General casts the question as one of policy wisdom of the law that is,
beyond the interference of the judiciary.5 Again, the presumption of constitutionality of statutes is
invoked, and the assertion is made that there is no clear and unequivocal breach of the Constitution
presented by the SLCD.
II.
The constitutional aspect of this petition raises obviously interesting questions. However, such
questions have in fact been mooted with the passage in 2008 of Republic Act No. 9502, also known as
the "Universally Accessible Cheaper and Quality Medicines Act of 2008".6
Section 7 of Rep. Act No. 9502 amends Section 72 of the Intellectual Property Code in that the later
law unequivocally grants third persons the right to import drugs or medicines whose patent were
registered in the Philippines by the owner of the product:
Sec. 7. Section 72 of Republic Act No. 8293, otherwise known as the Intellectual Property Code of the
Philippines, is hereby amended to read as follows:
"Sec. 72. Limitations of Patent Rights. The owner of a patent has no right to prevent third parties
from performing, without his authorization, the acts referred to in Section 71 hereof in the following
circumstances:
"72.1. Using a patented product which has been put on the market in the Philippines by the owner of
the product, or with his express consent, insofar as such use is performed after that product has been
so put on the said market: Provided, That, with regard to drugs and medicines, the limitation on patent
rights shall apply after a drug or medicine has been introduced in the Philippines or anywhere else in
the world by the patent owner, or by any party authorized to use the invention: Provided,
further, That the right to import the drugs and medicines contemplated in this section shall be
available to any government agency or any private third party;
"72.2. Where the act is done privately and on a non-commercial scale or for a non-commercial purpose:
Provided, That it does not significantly prejudice the economic interests of the owner of the patent;
"72.3. Where the act consists of making or using exclusively for experimental use of the invention for
scientific purposes or educational purposes and such other activities directly related to such scientific
or educational experimental use;
"72.4. In the case of drugs and medicines, where the act includes testing, using, making or selling the
invention including any data related thereto, solely for purposes reasonably related to the
development and submission of information and issuance of approvals by government regulatory
agencies required under any law of the Philippines or of another country that regulates the
manufacture, construction, use or sale of any product: Provided, That, in order to protect the data
submitted by the original patent holder from unfair commercial use provided in Article 39.3 of the
Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement), the
Intellectual Property Office, in consultation with the appropriate government agencies, shall issue the
appropriate rules and regulations necessary therein not later than one hundred twenty (120) days after
the enactment of this law;
"72.5. Where the act consists of the preparation for individual cases, in a pharmacy or by a medical
professional, of a medicine in accordance with a medical shall apply after a drug or medicine has been
introduced in the Philippines or anywhere else in the world by the patent owner, or by any party
authorized to use the invention: Provided, further, That the right to import the drugs and medicines
contemplated in this section shall be available to any government agency or any private third party;
xxx7
The unqualified right of private third parties such as petitioner to import or possess "unregistered
imported drugs" in the Philippines is further confirmed by the "Implementing Rules to Republic Act No.
9502" promulgated on 4 November 2008.8 The relevant provisions thereof read:
Rule 9. Limitations on Patent Rights. The owner of a patent has no right to prevent third parties from
performing, without his authorization, the acts referred to in Section 71 of the IP Code as enumerated
hereunder:
(i) Introduction in the Philippines or Anywhere Else in the World.
Using a patented product which has been put on the market in the Philippines by the owner of the
product, or with his express consent, insofar as such use is performed after that product has been so
put on the said market:Provided, That, with regard to drugs and medicines, the limitation on patent
rights shall apply after a drug or medicine has been introduced in the Philippines or anywhere else in
the world by the patent owner, or by any party authorized to use the invention: Provided, further,
That the right to import the drugs and medicines contemplated in this section shall be available to any
government agency or any private third party. (72.1)1avvphi1
The drugs and medicines are deemed introduced when they have been sold or offered for sale
anywhere else in the world. (n)
It may be that Rep. Act No. 9502 did not expressly repeal any provision of the SLCD. However, it is
clear that the SLCOs classification of "unregistered imported drugs" as "counterfeit drugs," and of
corresponding criminal penalties therefore are irreconcilably in the imposition conflict with Rep. Act
No. 9502 since the latter indubitably grants private third persons the unqualified right to import or
otherwise use such drugs. Where a statute of later date, such as Rep. Act No. 9502, clearly reveals an
intention on the part of the legislature to abrogate a prior act on the subject that intention must be
given effect.9 When a subsequent enactment covering a field of operation coterminus with a prior
statute cannot by any reasonable construction be given effect while the prior law remains in operative
existence because of irreconcilable conflict between the two acts, the latest legislative expression
prevails and the prior law yields to the extent of the conflict.10 Irreconcilable inconsistency between
two laws embracing the same subject may exist when the later law nullifies the reason or purpose of
the earlier act, so that the latter loses all meaning and function.11 Legis posteriors priores contrarias
abrogant.
For the reasons above-stated, the prosecution of petitioner is no longer warranted and the quested
writ of prohibition should accordingly be issued.
III.
Had the Court proceeded to directly confront the constitutionality of the assailed provisions of the
SLCD, it is apparent that it would have at least placed in doubt the validity of the provisions. As
written, the law makes a criminal of any person who imports an unregistered drug regardless of the
purpose, even if the medicine can spell life or death for someone in the Philippines. It does not
accommodate the situation where the drug is out of stock in the Philippines, beyond the reach of a
patient who urgently depends on it. It does not allow husbands, wives, children, siblings, parents to
import the drug in behalf of their loved ones too physically ill to travel and avail of the meager
personal use exemption allotted by the law. It discriminates, at the expense of health, against poor
Filipinos without means to travel abroad to purchase less expensive medicines in favor of their
wealthier brethren able to do so. Less urgently perhaps, but still within the range of constitutionally
protected behavior, it deprives Filipinos to choose a less expensive regime for their health care by
denying them a plausible and safe means of purchasing medicines at a cheaper cost.
The absurd results from this far-reaching ban extends to implications that deny the basic decencies of
humanity. The law would make criminals of doctors from abroad on medical missions of such
humanitarian organizations such as the International Red Cross, the International Red Crescent,
Medicin Sans Frontieres, and other
like-minded groups who necessarily bring their own pharmaceutical drugs when they embark on their
missions of mercy. After all, they are disabled from invoking the bare "personal use" exemption
afforded by the SLCD.
Even worse is the fact that the law is not content with simply banning, at civil costs, the importation of
unregistered drugs. It equates the importers of such drugs, many of whom motivated to do so out of
altruism or basic human love, with the malevolents who would alter or counterfeit pharmaceutical
drugs for reasons of profit at the expense of public safety. Note that the SLCD is a special law, and the
traditional treatment of penal provisions of special laws is that of malum prohibitumor punishable
regardless of motive or criminal intent. For a law that is intended to help save lives, the SLCD has
revealed itself as a heartless, soulless legislative piece.
The challenged provisions of the SLCD apparently proscribe a range of constitutionally permissible
behavior. It is laudable that with the passage of Rep. Act No. 9502, the State has reversed course and
allowed for a sensible and compassionate approach with respect to the importation of pharmaceutical
drugs urgently necessary for the peoples constitutionally-recognized right to health.
WHEREFORE, the petition is GRANTED in part. A writ of prohibition is hereby ISSUED commanding
respondents from prosecuting petitioner Romeo Rodriguez for violation of Section 4 or Rep. Act No.
8203. The Temporary Restraining Order dated 15 October 2001 is hereby made PERMANENT. No
pronouncements as to costs.











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-6938 3 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 letter 5 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 complaint 6 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 Order 9 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
itsaerial 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
sellingaerial 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
patentedaerial 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. 126627 August 14, 2003
SMITH KLINE BECKMAN CORPORATION, Petitioner,
vs.
THE HONORABLE COURT OF APPEALS and TRYCO PHARMA CORPORATION, Respondents.
D E C I S I O N
CARPIO-MORALES, J.:
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 petitioners 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; P1,000,000.00 in moral damages; P300,000.00 in exemplary damages; and P150,000.00 in
attorneys 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, plaintiffs 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 attorneys 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 courts finding that
private respondent was not liable for any infringement of the patent of petitioner in light of the
latters failure to show that Albendazole is the same as the compound subject of Letters Patent No.
14561. Noting petitioners admission of the issuance by the U.S. of a patent for Albendazole in the
name of Smith Kline and French Laboratories which was petitioners 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
petitioners 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 petitioners 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 Offices 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.
Petitioners 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 TRYCOS "IMPREGON" DRUG, IS INCLUDED IN PETITIONERS 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 ATTORNEYS 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
petitioners 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 P330,000.00 representing lost profits, petitioner assails the same as highly speculative and
conjectural, hence, without basis. It assails too the award of P100,000.00 in attorneys fees as not
falling under any of the instances enumerated by law where recovery of attorneys 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 petitioners 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 courts
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, petitioners 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 compounds being
anthelmintic but nontoxic for animals or its ability to destroy parasites without harming the host
animals; and the patented methods, compositions or preparations involving the compound to maximize
its efficacy against certain kinds of parasites infecting specified animals.
When the language of its claims is clear and distinct, the patentee is bound thereby and may not claim
anything beyond them.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 Albendazoles non-inclusion in the claims of the patent. While Albendazole is
admittedly a chemical compound that exists by a name different from that covered in petitioners
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
petitioners 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
respondents 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 petitioners evidence fails to convince this Court of the
substantial sameness of petitioners patented compound and Albendazole. While both compounds have
the effect of neutralizing parasites in animals, identity of result does not amount to infringement of
patent unless Albendazole operates in substantially the same way or by substantially the same means
as the patented compound, even though it performs the same function and achieves the same
result.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, petitioners 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 petitioners compound works. The testimony of Dr. Orinion lends no support to
petitioners 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
petitioners 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.1wphi1
The foregoing discussions notwithstanding, this Court does not sustain the award of actual damages and
attorneys fees in favor of private respondent. The claimed actual damages of P330,000.00
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 P100,000.00 monthly gross sales for
eleven months, were supported by the testimonies of private respondents President25 and Executive
Vice-President that the average monthly sale of Impregon was P100,000.00 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 respondents 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 attorneys 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 petitioners suit. Even if a claimant is compelled to litigate
with third persons or to incur expenses to protect its rights, still attorneys fees may not be awarded
where no sufficient showing of bad faith could be reflected in a partys 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 P20,000.00 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 attorneys 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.













G.R. No. 82542 September 29, 1988
BARRY JOHN PRICE, JOHN WATSON CLITHERON and JOHN BRADSHAW, Assignors to ALLEN & HANBURYS,
LTD., petitioners,
vs.
UNITED LABORATORIES, respondent.
Castillo, Laman, Tan & Pantaleon Law Offices for petitioners.
Teodoro B. Pison for respondent.

GRIO-AQUINO, J.:
The petitioners are the owners-assignees of Philippine Patent No. 13540 which was granted to them on
June 26,1980 for a pharmaceutical compound known as "aminoalkyl furan derivatives." On October 1,
1982, respondent United Laboratories, Inc. (or UNILAB) filed in the Philippine Patent Office a petition
Inter Partes Case No. 1683, "United Laboratories, Inc. versus Barry John Price, John Watson CLITHERON
and John Bradshaw, assignors to Allen & Hanburys Ltd.') for the issuance of a compulsory license to use
the patented compound in its own brands of medicines and pharmaceuticals and to sell, distribute, or
otherwise dispose of such medicines or pharmaceutical preparations in the country. The petition
further alleged that the patent relates to medicine and that petitioner, which has had long experience
in the business of manufacturing and selling pharmaceutical products, possesses the capability to use
the subject compound in the manufacture of a useful product or of making dosage formulations
containing the said compound.
After the hearing, the Philippine Patent Office rendered a decision on June 2, 1986, granting UNILAB a
compulsory license subject to ten (1 0) terms and conditions No. 3 of which provides as follows:
3. By virtue of this license, petitioner shall pay the respondent a royalty on all license products
containing the patented substance made and sold by the Petitioner in the amount equivalent to TWO
AND ONE HALF (2.5) PER CENT OF THE NET SALES in Philippine currency. The terms 'net sales' means
the gross billed for the product pertaining to Letters Patent No. 13540 less-
a) Transportation charges or allowances, if any, included in such amount;
b) Trade, quantity or cash discounts and broker's or agent's or distributor's commissions, if any, allowed
or paid;
c) Credits or allowances, if any, given or made on account with reflection or return of the product
previously delivered; and
d) Any tax, excise or government charge included in such amount, or measured by the production, sale,
transportation, use or delivery of the products.
In case Petitioner's product containing the patented substance shall contain one or more active
ingredients as admixed product, the royalty to be paid shall be determined in accordance with the
following formula:
Net Sales on Value of
Admixed Product Patented Substance
Royalty = _______________ x 0.025 x ___________________
(Value of Pa Value of
tended Substance) Active Ingredients
4. The royalties shall be computed after the end of each calendar quarter for all goods containing the
patented substance herein involved, made and sold during the preceding quarter and to be paid by the
Petitioner at its place of business on or before the thirtieth day of the month following the end of each
calendar quarter. Payments should be made to Respondent's authorized representative in the
Philippines; (pp. 35-36, Rollo.) The patentees appealed the decision to the Court of Appeals (CA-G.R.
No. SP-09308) which dismissed the appeal on December 4, 1 987. They have come to his Court praying
for a review of the Appellate Court's decision on the grounds that it erred:
1. in upholding the Director's unilateral determination of the terms and conditions of the compulsory
license, without affording the parties an opportunity to negotiate the terms and conditions freely and
by themselves;
2. in finding that the respondent possess the legally required capability to make use of the petitioner's
patented compound in the manufacture of a useful product;
3. in affirming the Director's award of the entire patent to the respondent, when only one claim of the
patent was controverted and
4. in considering evidence that UNILABs capability to use the compound was acquired after, not before,
filing its petition for compulsory licensing.
The first assignment of error has no merit. The terms and conditions of the compulsory license were
fixed by the Director of Patents after a hearing and careful consideration of the evidence of the parties
and in default of an agreement between them as to the terms of the license. This he is authorized to
do under Section 36 of Republic Act No. 165 which provides:
Sec. 36. GRANT OF LICENSE.If the Director finds that a case for the grant of license under Section 34,
hereof made out, he may order the grant of an appropriate license and in default of agreement among
the parties as to the terms and conditions of the license he shall fix the terms and conditions of the
license in the order.
The order of the Director granting a license under this Chapter, when final, shall operate as a deed
granting a- license executed by the patentee and the other patties in interest.
and under Section 35 of P.D. 1263, amending portions of Republic Act No.165 which reads:
Sec. 35. GRANT OF LICENSE.(1)If the Director finds that a case for the grant of a license under Sec. 34
hereof has been made out, he shall within one hundred eighty (180) days from the date the petition
was filed, order the grant of an appropriate license. The order shall state the terms and conditions of
the license which he himself must fix in default of an agreement on the matter manifested or
submitted by the parties during the hearing.
The Court of Appeals found that the 2.5% royalty fixed by the Director of Patents 'is just and
reasonable.' We quote its observations hereunder:
Respondent-appellant contends further that the 2.5% royalty rate is unfair to respondent-appellant as
to amount to an undue deprivation of its property right. We do not hold this view. The royalty rate of
2.5% provided for by the Director of Patents is reasonable. Paragraph 3, Section 35-B, Republic Act No.
165, as amended by Presidential Decree No. 1263, provides:
(3) A compulsory license shall only be granted subject to the payment of adequate royalties
commensurate with the extent to which the invention is worked. However, royalty payments shall not
exceed five per cent (5%) of the net wholesale price (as defined in Section 33-A) of the products
manufactured under the license. If the product, substance, or process subject of the compulsory
license is involved in an industrial project approved by the Board of Investments, the royalty payable to
the patentee or patentees shall not exceed three per cent (3%) of the net wholesale price (as defined
in Section 34-A) of the patented commodity and/or commodity manufactured under the patented
process; the same rule of royalty shall be paid whenever two or more patents are involved, which
royalty shall be distributed to the patentees in rates proportional to the extent of commercial use by
the licensee giving preferential values to the holder of the oldest subsisting product patent.
Thus, said provision grants to the Director of Patents the use of his sound discretion in fixing the
percentage for the royalty rate and We find that the Director of Patents committed no abuse of this
discretion. Also, there is always a presumption of regularity in the performance of one's official duties.
Moreover, what UNILAB has with the compulsory license is the bare right to use the patented chemical
compound in the manufacture of a special product, without any technical assistance from herein
respondent-appellant. Besides, the special product to be manufactured by UNILAB will only be used,
distributed, and disposed locally. Therefore, the royalty rate of 2.5% is just and reasonable. (pp. 10-11,
CA Decision, pp. 44-45, Rollo)
Furthermore, as pointed out in the respondent's comment on the petition, Identical terms and
conditions had been prescribed for the grant of compulsory license in a good number of patent cases
(United Laboratories, Inc. vs. Boehringer Ingelhelm, GMBH, IPC 929, July 27, 1981; United Laboratories,
Inc. vs. Bristol-Myers Company, IPC 1179, Aug. 20, 1981; United Laboratories, Inc. vs. E.R. Squibb &
Sons, Inc., IPC 1349, Sept. 30, 1981; United Laboratories, Inc. vs. Helmut Weber, et al., IPC 949, Dec.
13,1982; Oceanic Pharmacal Inc. vs. Gruppo Lepetit S.A. IPC 1549, Dec. 21, 1982; United Laboratories.
Inc. vs. Boehringer Ingelheim, IPC 1185, June 8, 1983; United Laboratories, Inc. vs. Pfizer Corp., IPC
1184, June 10,, 1983; Doctors Pharmaceuticals, Inc. vs. Maggi, et al., July 11, 1983; Drugmaker's
Laboratories v. Herningen et al., IPC 1679, September 22,1983; Superior Pharmacraft Inc. vs. Maggi, et
al., IPC 1759, January 10, 1984; United Laboratories, Inc. vs. Van Gelder et al., IPC 1627, June 29,
1984; Drugmaker's Laboratories, Inc. vs. Janssen Pharmaceutical N.V. IPC 1555, August 27,1984; United
Laboratories Inc. vs. Graham John Durant et al., IPC 1731, August 14, 1987; United Laboratories, Inc.
vs. Albert Anthony Carr, IPC 1906, August 31, 1987).
The Director's finding that UNILAB has the capability to use the patented compound in the manufacture
of an anti-ulcer pharmaceutical preparation is a factual finding which is supported by substantial
evidence, hence, the Court of Appeals did not commit a reversible error in affirming it (Philippine Nut
Industry, Inc. vs. Standard Brands, Inc., 65 SCRA 575; Sy Ching vs. Gaw Liu 44 SCRA 143; De Gala Sison
vs. Manalo, 8 SCRA 595; Goduco vs. Court of Appeals, 14 SCRA 282; Ramos vs. Pepsi-Cola Bottling
Company of the P.I., 19 SCRA 289. Of indubitable relevance to this point is the evidence that UNILAB
has been engaged in the business of manufacturing drugs and pharmaceutical products for the past
thirty (30) years, that it is the leading drug manufacturer in the country, that it has the necessary
equipment and technological expertise for the development of solid dosage forms or for tablet,
capsule, and liquid preparations, and that it maintains standards and procedures to ensure the quality
of its products. Even if it were true, as alleged by the patentee (although it is denied by UNILAB), that
its capability to use the patented compound was only acquired after the petition for compulsory
licensing had been filed, the important thing is that such capability was proven to exist during the
hearing of the petition.
The patented invention in this case relates to medicine and is necessary for public health as it can be
used as component in the manufacture of anti-ulcer medicine. The Director of Patents did not err in
granting a compulsory license over the entire patented invention for there is no law requiring that the
license be limited to a specific embodiment of the invention, or, to a particular claim. The invention in
this case relates to new aminoalkyl derivatives which have histamine H 2 blocking activity, having the
general formula (I) and physiologically acceptable salts, Noxides and dehydrates thereof. The
compound ranitidine hydrochloride named in Claim 45 is also covered by General Claim I and several
other sub-generic claims. Therefore, a license for Claim 45 alone would not be fully comprehensive. In
any event, since the petitioner will be paid royalties on the sales of any products the licensee may
manufacture using any or all of the patented compounds, the petitioner cannot complain of a
deprivation of property rights without just compensation. WHEREFORE, the petition for review is
denied for lack of merit.
G.R. No. 121867 July 24, 1997
SMITH KLINE & FRENCH LABORATORIES, LTD., petitioner,
vs.
COURT OF APPEALS, BUREAU OF PATENTS, TRADEMARKS AND TECHNOLOGY TRANSFER and DOCTORS
PHARMACEUTICALS, INC. respondents.

DAVIDE, JR., J.:
This is an appeal under Rule 45 of the Rules of Court from the decision 1 4 November 1994 of the Court
of Appeals in CA-G.R. SP No. 33520, which affirmed the 14 February 1994 decision 2 of the Director of
the Bureau of Patents, Trademarks and Technology Transfer (BPTTT) granting a compulsory non-
exclusive and non-transferable license to private respondent to manufacture, use and sell in the
Philippines its own brands of pharmaceutical products containing petitioner's patented pharmaceutical
product known as Cimetidine.
Petitioner is a foreign corporation with principal office at Welwyn Garden City, England. It owns
Philippine Letters Patent No. 12207 issued by the BPTTT for the patent of the drug Cimetidine.
Private respondent is a domestic corporation engaged in the business of manufacturing and distributing
pharmaceutical products. On 30 March 1987, it filed a petition for compulsory licensing 3 with the
BPTTT for authorization to manufacture its own brand of medicine from the drug Cimetidine and to
market the resulting product in the Philippines. The petition was filed pursuant to the provisions of
Section 34 of Republic Act No. 165 (An Act Creating a Patent Office Prescribing Its Powers and Duties,
Regulating the Issuance of Patents, and Appropriating Funds Therefor), which provides for the
compulsory licensing of a particular patent after the expiration of two years from the grant of the
latter if the patented invention relates to, inter alia, medicine or that which is necessary for public
health or public safety. Private respondent alleged that the grant of Philippine Letters Patent No.
12207 was issued on 29 November 1978; that the petition was filed beyond the two-year protective
period provided in Section 34 of R.A. No. 165; and that it had the capability to work the patented
product or make use of it in its manufacture of medicine.
Petitioner opposed, arguing that private respondent had no cause of action and lacked the capability to
work the patented product; the petition failed to specifically divulge how private respondent would
use or improve the patented product; and that private respondent was motivated by the pecuniary gain
attendant to the grant of a compulsory license. Petitioner also maintained that it was capable of
satisfying the demand of the local market in the manufacture and marketing of the medicines covered
by the patented product. Finally, petitioner challenged the constitutionality of Sections 34 and 35 of
R.A. No. 165 for violating the due process and equal protection clauses of the Constitution.
After appropriate proceedings, the BPTTT handed down its decision on 14 February 1994, with the
dispositive portion thereof providing:
NOW, THEREFORE, by virtue of the powers vested in this Office by Republic Act No. 165, as amended
by Presidential Decree No. 1263, there is hereby issued a license in favor of the herein [private
respondent], United Laboratories, Inc., [sic] under Letters Patent No. 12207 issued on November 29,
1978, subject to the following terms and conditions:
1. That [private respondent] be hereby granted a non-exclusive and non-transferable license to
manufacture, use and sell in the Philippines its own brands of pharmaceutical products containing
[petitioner's] patented invention which is disclosed and claimed in Letters Patent No. 12207;
2. That the license granted herein shall be for the remaining life of said Letters Patent No. 12207
unless this license is terminated in the manner hereinafter provided and that no right or license is
hereby granted to [private respondent] under any patent to [petitioner] or [sic] other than recited
herein;
5. By virtue of this license, [private respondent] shall pay [petitioner] a royalty on all license products
containing the patented substance made and sold by [private respondent] in the amount equivalent to
TWO AND ONE HALF PERCENT (2.5%) of the net sales in Philippine currency. The term "net scale" [sic]
means the gross amount billed for the product pertaining to Letters Patent No. 12207, less
(a) Transportation charges or allowances, if any, included in such amount;
(b) Trade, quantity or cash discounts and broker's or agent's or distributor's commissions, if any,
allowed or paid;
(c) Credits or allowances, if any, given or made on account of rejection or return of the patented
product previously delivered; and
(d) Any tax, excise or government charge included in such amount, or measured by the production sale,
transportation, use of delivery of the products.
In case [private respondent's] product containing the patented substance shall contain one or more
active ingredients admixed therewith, said product hereinafter identified as admixed product, the
royalty to be paid shall be determined in accordance with the following formula:
Net Sales on Value of Patented
ROYALTY = Admixed Product x 0.025 x Substance

Value of Patented Value of Other
Substance Active Ingredients
4. The royalties shall be computed after the end of each calendar quarter to all goods containing the
patented substance herein involved, made and sold during the precedent quarter and to be paid by
[private respondent] at its place of business on or before the thirtieth day of the month following the
end of each calendar quarter. Payments should be made to [petitioner's] authorized representative in
the Philippines;
5. [Private respondent] shall keep records in sufficient detail to enable [petitioner] to determine the
royalties payable and shall further permit its books and records to be examined from time to time at
[private respondent's] premises during office hours, to the extent necessary to be made at the expense
of [petitioner] by a certified public accountant appointed by [petitioner] and acceptable to [private
respondent].
6. [Private respondent] shall adopt and use its own trademark or labels on all its products containing
the patented substance herein involved;
7. [Private respondent] shall comply with the laws on drugs and medicine requiring previous clinical
tests and approval of proper government authorities before selling to the public its own products
manufactured under the license;
8. [Petitioner] shall have the right to terminate the license granted to [private respondent] by giving
the latter thirty (30) days notice in writing to that effect, in the event that [private respondent]
default [sic] in the payment of royalty provided herein or if [private respondent] shall default in the
performance of other convenants or conditions of this agreement which are to be performed by
[private respondent]:
(a) [Private respondent] shall have the right provided it is not in default to payment or royalties or
other obligations under this agreement, to terminate the license granted to its, [sic] giving [petitioner]
thirty (30) days-notice in writing to that effect;
(b) Any termination of this license as provided for above shall not in any way operate to deny
[petitioner] its rights or remedies, either at laws [sic] or equity, or relieve [private respondent] of the
payment of royalties or satisfaction of other obligations incurred prior to the effective date of such
termination; and
(c) Notice of termination of this license shall be filed with the Bureau of Patents, Trademarks and
Technology Transfer.
9. In case of dispute as to the enforcement of the provisions of this license, the matter shall be
submitted for arbitration before the Director of Bureau of Patents, Trademarks and Technology
Transfer or any ranking official of the Bureau of Patents, Trademarks and Technology Transfer duly
delegated by him.
10. This License shall inure to the benefit of each of the parties herein, to the subsidiaries and assigns
of [petitioner] and to the successors and assigns of [private respondent]; and
11. This license take [sic] effect immediately. 4
Petitioner then appealed to the Court of Appeals by way of a petition for review, which was docketed
as CA-G.R. SP No. 33520. Petitioner claimed that the appealed decision was erroneous because:
I
. . . [IT] VIOLATES INTERNATIONAL LAW AS EMBODIED IN THE PARIS CONVENTION FOR THE PROTECTION
OF INDUSTRIAL PROPERTY AND MUST ACCORDINGLY BE SET ASIDE AND MODIFIED.
II
. . . [IT] IS AN INVALID EXERCISE OF POLICE POWER.
III
CONCEDING ARGUENDO THE QUESTIONED DECISION'S VALIDITY, THE BPTTT'S PRONOUNCEMENT FIXING
THE ROYALTY AT 2.5% OF THE NET WHOLESALE PRICE IN PHILIPPINE CURRENCY WAS RENDERED
WITHOUT ANY FACTUAL BASIS AND AMOUNTS TO EXPROPRIATION OF PRIVATE PROPERTY WITHOUT JUST
COMPENSATION WHICH IS VIOLATE OF THE CONSTITUTION.
IV
. . . [IT] SHOULD NOT HAVE PROCEEDED TO DECIDE THE CASE BELOW FOR FAILURE OF PRIVATE
RESPONDENT TO AFFIRMATIVELY PROVE THE JURISDICTIONAL FACT OF PUBLICATION. 5
In its decision of 4 November 1994, 6 the Court of Appeals affirmed in toto the challenged decision. We
quote its findings and conclusion upon which the affirmance is anchored, viz.:
An assiduous scrutiny of the impugned decision of the public respondent reveals that the same is
supported by substantial evidence. It appears that at the time of the filing of the petition for
compulsory license on March 24, 1987, the subject letters Patent No. 12207 issued on November 29,
1978 has been in effect for more than two (2) years. The patented invention relates to compound and
compositions used in inhibiting certain actions of the histamine, hence, it relates to medicine.
Moreover, after hearing and careful consideration of the evidence presented, the Director of Patents
ruled that "there is ample evidence to show that [private respondent] possesses such capability,
having competent personnel, machines and equipment as well as permit to manufacture different
drugs containing patented active ingredients such as ethambutol of American Cyanamid and Ampicillin
and Amoxicillin of Beecham Groups, Ltd."
As to the claim by the petitioner that it has the capacity to work the patented product although it was
not shown that any pretended abuse has been committed, thus the reason for granting compulsory
license "is intended not only to give a chance to others to supply the public with the quantity of the
patented article but especially to prevent the building up of patent monopolities [sic]." [Parke Davis v.
Doctors Pharmaceuticals, Inc., 14 SCRA 1053].
We find that the granting of compulsory license is not simply because Sec. 34 (1) e, RA 165 allows it in
cases where the invention relates to food and medicine. The Director of Patents also considered in
determining that the applicant has the capability to work or make use of the patented product in the
manufacture of a useful product. In this case, the applicant was able to show that Cimetidine, (subject
matter of latters Patent No. 12207) is necessary for the manufacture of an anti-ulcer drug/medicine,
which is necessary for the promotion of public health. Hence, the award of compulsory license is a
valid exercise of police power.
We do not agree to [sic] petitioner's contention that the fixing of the royalty at 2.5% of the net
wholesale price amounted to expropriation of private property without just compensation.
Paragraph 3, Section 35-B, R.A. No. 165, as amended by P.D. No. 1267, states:
Sec. 35-B. Terms and Conditions of Compulsory License.
(1) . . .
(2) . . .
(3) A compulsory license shall only be granted subject to the payment of adequate royalties
commensurate with the extent to which the invention is worked. However, royalty payments shall not
exceed five percent (5%) of the net wholesale price (as defined in Section 33-A) of the products
manufactured under the license.
If the product, substance, or process subject of the compulsory license is involved in an industrial
project approved by the Board of Investments, the royalty payable to the patentee or patentees shall
not exceed three percent (3%) of the net wholesale price (as defined in Section 34-A) of the patented
commodity and/or commodity manufactured under the patented process, the same rate of royalty shall
be distributed to the patentees in rates proportional to the extent of commercial use by the licensee
giving preferential values to the holder of the oldest subsisting product patent.
The foregoing provision grants the Director of Patents the use of his sound discretion in fixing the
percentage for the royalty rate. In the instant case, the Director of Patents exercised his discretion and
ruled that a rate of 2.5% of the net wholesale price is fair enough for the parties. In Parke Davis & Co.
vs. DPI and Tiburcio, [L-27004, August 6, 1983, 124 SCRA 115] it was held that "liberal treatment in
trade relations should be afforded to local industry for as reasoned out by respondent company, it is so
difficult to compete with the industrial grants [sic] of the drug industry, among them being the
petitioner herein, that it always is necessary that the local drug companies should sell at much lower
(than) the prices of said foreign drug entities." Besides, foreign produce licensor can later on ask for an
increase in percentage rate of royalty fixed by the Director of Patents if local sales of license should
increase. Further, in Price vs. UNILAB, the award of royalty rate of 2.5% was deemed to be just and
reasonable, to wit [166 SCRA 133]:
Moreover, what UNILAB has with the compulsory license is the bare right to use the patented chemical
compound in the manufacture of a special product, without any technical assistance from herein
respondent-appellant. Besides, the special product to be manufactured by UNILAB will only be used,
distributed, and disposed locally. Therefore, the royalty rate of 2.5% is just and reasonable.
It appearing that herein petitioner will be paid royalties on the sales of any products [sic] the licensee
may manufacture using any or all of the patented compounds, the petitioner cannot complain of a
deprivation of property rights without just compensation [Price v. UNILAB, L-82542, September 19,
1988].
We take note of the well-crafted petition submitted by petitioner albeit the legal milieu and a good
number of decided cases militate against the grounds posited by petitioner. In sum, considering the
well-entrenched jurisprudence sustaining the position of respondents, We reiterate the rule in Basay
Mining Corporation vs.SEC, to the effect that
The legal presumption is that official duty has been performed. And it is particularly strong as regards
administrative agencies vested with powers said to be quasi-judicial in nature, in connection with the
enforcement of laws affecting particular fields of activity, the proper regulation and/or promotion of
which requires a technical or special training, aside from a good knowledge and grasp of the overall
conditions, relevant to said field, obtaining in the nations. The policy and practice underlying our
Administrative Law is that courts of justice should respect the findings of fact of said administrative
agencies, unless there is absolutely no evidence in support thereof or such evidence is clearly,
manifestly and patently insubstantial. [G.R. No. 76695, October 3, 1988, Minute Resolution; Beautifont,
Inc., et al. v. Court of Appeals, et al., G.R. No. 50141, January 29, 1988]
Its motion for reconsideration having been denied in the resolution 7 of 31 August 1995, petitioner filed
the instant petition for review on certiorari with the following assignment of errors:
I
THE HON. COURT OF APPEALS ERRED IN NOT HOLDING THAT THE BPTTT'S DECISION VIOLATES
INTERNATIONAL LAW AS EMBODIED IN (A) THE PARIS CONVENTION FOR THE PROTECTION OF INDUSTRIAL
PROPERTY AND (B) THE GATT TREATY, URUGUAY ROUND, AND MUST ACCORDINGLY BE SET ASIDE AND
MODIFIED.
II
THE HON. COURT OF APPEALS ERRED IN NOT HOLDING THAT THE BPTTT'S DECISION IS AN INVALID
EXERCISE OF POLICE POWER, ABSENT ANY SHOWING BY EVIDENCE OF AN OVERWHELMING PUBLIC NEED
FOR A COMPULSORY LICENSE OVER CIMETIDINE IN FAVOR OF PRIVATE RESPONDENT.
III
THE HON. COURT OF APPEALS ERRED IN NOT HOLDING THAT THE BPTTT'S PRONOUNCEMENT FIXING THE
ROYALTY FOR AN INVOLUNTARY LICENSE AT 2.5% OF THE NET WHOLESALE PRICE IN PHILIPPINE
CURRENCY WAS RENDERED WITHOUT ANY FACTUAL BASIS AND AMOUNTS TO EXPORTATION OF PRIVATE
PROPERTY WITHOUT JUST COMPENSATION AND IS IN VIOLATION OF THE CONSTITUTIONAL RIGHT TO
DUE PROCESS.
IV
THE HON. COURT OF APPEALS ERRED IN NOT HOLDING THE BPTTT'S ACTION WAS RENDERED NULL AND
VOID FOR FAILURE OF PRIVATE RESPONDENT TO AFFIRMATIVELY PROVE THE JURISDICTIONAL FACT OF
PUBLICATION AS REQUIRED BY LAW.
We resolved to give due course to the petition and required the parties to submit their respective
memoranda, which they did, with that of public respondent filed only on 7 February 1997.
After a careful perusal of the pleadings and evaluation of the arguments adduced by the parties, we
find this petition to be without merit.
In its first assigned error, petitioner invokes Article 5 of the Paris Convention for the Protection of
Industrial Property, 8 or "Paris Convention," for short, of which the Philippines became a party thereto
only in 1965. 9 Pertinent portions of said Article 5, Section A, provide:
A. . . .
(2) Each country of the union shall have the right to take legislative measures providing for the grant of
compulsory licenses to prevent the abuses which might result from the exercise of the exclusive rights
conferred by the patent, for example, failure to work.
xxx xxx xxx
(4) A compulsory license may not be applied for on the ground of failure to work or insufficient working
before the expiration of a period of four years from the date of filing of the patent application or three
years from the date of the grant of the patent, whichever period expires last; it shall be refused if the
patentee justifies his inaction by legitimate reasons. Such a compulsory license shall be non-exclusive
and shall not be transferable, even in the form of the grant of a sub-license, except with that part of
the enterprise or goodwill which exploits such license.
In is thus clear that Section A (2) of Article 5 above unequivocally and explicitly respects the right of
member countries to adopt legislative measures to provide for the grant of compulsory licenses to
prevent abuses which might result from the exercise of the exclusive rights conferred by the patent. An
example provided of possible abuses is "failure to work;" however, as such is merely supplied by way of
an example, it is plain that the treaty does not preclude the inclusion of other forms or categories of
abuses.
Section 34 of R.A. No. 165, even if the Act was enacted prior to the Philippines' adhesion to the
Convention, fits well within the aforequoted provisions of Article 5 of the Paris Convention. In the
explanatory note of Bill No. 1156 which eventually became R.A. No. 165, the legislative intent in the
grant of a compulsory license was not only to afford others an opportunity to provide the public with
the quantity of the patented product, but also to prevent the growth of monopolies. 10 Certainly, the
growth of monopolies was among the abuses which Section A, Article 5 of the Convention foresaw, and
which our Congress likewise wished to prevent in enacting R.A. No. 165.
R.A. No. 165, as amended by Presidential Decree No. 1263, promulgated on 14 December 1977,
provides for a system of compulsory licensing under a particular patent. Sections 34 and 35, Article
Two, of Chapter VIII read as follows:
Sec. 34. Grounds for Compulsory Licensing (1) Any person may apply to the Director for the grant of
a license under a particular patent at any time after the expiration of two years from the date of the
grant of the patent, under any of the following circumstances:
(a) If the patented invention is not being worked within the Philippines on a commercial scale,
although capable of being so worked, without satisfactory reason;
(b) If the demand for the patented article in the Philippines is not being met to an adequate extent
and on reasonable terms;
(c) If, by reason of refusal of the patentee to grant a license or licenses on reasonable terms, or by
reason of the conditions attached by the patentee to licensee or to the purchase, lease or use of the
patented article or working of the patented process or machine for production, the establishment of
any new trade or industry in the Philippines is prevented, or the trade or industry therein is unduly
restrained;
(d) If the working of the invention within the country is being prevented or hindered by the importation
of the patented article; or
(e) If the patented invention or article relates to food or medicine or manufactured products or
substances which can be used as food or medicine, or is necessary for public health or public safety.
(2) In any of the above cases, a compulsory license shall be granted to the petitioner provided that he
has proved his capability to work the patented product or to make use of the patented product in the
manufacture of a useful product, or to employ the patented process.
(3) The term "worked" or "working" as used in this section means the manufacture and sale of the
patented article, of the patented machine, or the application of the patented process for production,
in or by means of a definite and substantial establishment or organization in the Philippines and on a
scale which is reasonable and adequate under the circumstances. Importation shall not constitute
"working."
xxx xxx xxx
Sec. 35. Grant of License. (1) If the Director finds that a case for the grant is a license under Section
34 hereof has been made out, he shall, within one hundred eighty days from the date the petition was
filed, order the grant of an appropriate license. The order shall state the terms and conditions of the
license which he himself must fix in default of an agreement on the matter manifested or submitted by
the parties during the hearing.
(2) A compulsory license sought under Section 34-B shall be issued within one hundred twenty days
from the filing of the proponent's application or receipt of the Board of Investment's endorsement.
The case at bar refers more particularly to subparagraph (e) of paragraph 1 of Section 34 the
patented invention or article relates to food or medicine or manufactured products or substances
which can be used as food or medicine, or is necessary for public health or public safety. And it may
not be doubted that the aforequoted provisions of R.A. No. 165, as amended, are not in derogation of,
but are consistent with, the recognized right of treaty signatories under Article 5, Section A (2) of the
Paris Convention.
Parenthetically, it must be noted that paragraph (4) of Section A, Article 5 of the Paris Convention
setting time limitations in the application for a compulsory license refers only to an instance where the
ground therefor is "failure to work or insufficient working," and not to any ground or circumstance as
the treaty signatories may reasonably determine.
Neither may petitioner validly invoke what it designates as the GATT Treaty, Uruguay Round. This act
is better known as the Uruguay Final Act signed for the Philippines on 15 April 1994 by Trade and
Industry Secretary Rizalino Navarro. 11 Forming integral parts thereof are the Agreement Establishing
the World Trade Organization, the Ministerial Declarations and Decisions, and the Understanding on
Commitments in Financial Services. 12 The Agreement establishing the World Trade Organization
includes various agreements and associated legal instruments. It was only on 14 December 1994 that
the Philippine Senate, in the exercise of its power under Section 21 of Article VII of the Constitution,
adopted Senate Resolution No. 97 concurring in the ratification by the President of the Agreement. The
President signed the instrument of ratification on 16 December 1994. 13 But plainly, this treaty has no
retroactive effect. Accordingly, since the challenged BPTTT decision was rendered on 14 February
1994, petitioner cannot avail of the provisions of the GATT treaty.
The second and third assigned errors relate more to the factual findings of the Court of Appeals. Well-
established is the principle that the findings of facts of the latter are conclusive, unless: (1) the
conclusion is a finding grounded entirely on speculation or conjecture; (2) the inference made is
manifestly absurd; (3) there is grave abuse of discretion in the appreciation of facts; (4) the judgment
is premised on a misapprehension of facts; (5) the findings of fact are conflicting; and (6) the Court of
Appeals, in making its findings, went beyond the issues of the case and the same is contrary to the
admissions of both the appellant and appellee. 14 Petitioner has not convinced us that the instant case
falls under any of the exceptions. On the contrary, we find the findings of fact and conclusions of
respondent Court of Appeals and that of the BPTTT to be fully supported by the evidence and the
applicable law and jurisprudence on the matter.
Petitioner's claim of violations of the due process and eminent domain clauses of the Bill of Rights are
mere conclusions which it failed to convincingly support. As to due the process argument, suffice it to
say that full-blown adversarial proceedings were conducted before the BPTTT pursuant to the Patent
Law. We agree with the Court of Appeals that the BPTTT exhaustively studied the facts and its findings
were fully supported by substantial evidence.
It cannot likewise be claimed that petitioner was unduly deprived of its property rights, as R.A. No. 165
not only grants the patent holder a protective period of two years to enjoy his exclusive rights thereto;
but subsequently, the law recognizes just compensation in the form of royalties. 15
In Parke, Davis & Co. v. Doctors' Pharmaceuticals, Inc., 16 we held:
The right to exclude others from the manufacturing, using, or vending an invention relating to, food or
medicine should be conditioned to allowing any person to manufacture, use, or vend the same after a
period of three [now two] years from the date of the grant of the letters patent. After all, the
patentee is not entirely deprived of any proprietary right. In fact, he has been given the period of
three years [now two years] of complete monopoly over the patent. Compulsory licensing of a patent
on food or medicine without regard to the other conditions imposed in Section 34 [now Section 35] is
not an undue deprivation of proprietary interests over a patent right because the law sees to it that
even after three years of complete monopoly something is awarded to the inventor in the form of
bilateral and workable licensing agreement and a reasonable royalty to be agreed upon by the parties
and in default of such an agreement, the Director of Patents may fix the terms and conditions of the
license.
As to the fourth assigned error, we hold that petitioner can no longer assail the jurisdiction of the
BPTTT, raising this issue only for the first time on appeal. In Pantranco North Express, Inc. v. Court of
Appeals, 17 we ruled that where the issue of jurisdiction is raised for the first time on appeal, the
party invoking it is so barred on the ground of laches or estoppel under the circumstances therein
stated. It is now settled that this rule applies with equal force to quasi-judicial bodies 18 such as the
BPTTT. Here, petitioner have not furnished any cogent reason to depart from this rule.
WHEREFORE, the petition is hereby DENIED and the challenged decision of the Court of Appeals in CA-
G.R. SP No. 33520 is AFFIRMED in toto.
Costs against petitioner.










G.R. No. 121267 October 23, 2001
SMITH KLINE & FRENCH LABORATORIES, LTD. plaintiff-appellee,
vs.
COURT OF APPEALS and DANLEX RESEARCH LABORATORIES, INC., defendant-appellant.
KAPUNAN, J.:
This petition for review on certiorari assails the Decision dated January 27, 1995 of the Court of
Appeals in CA-G.R. SP No. 337701 which affirmed the decision of the Bureau of Patents, Trademarks
and Technology Transfer (BPTTT) granting a compulsory license to private respondent Danlex Research
Laboratories for the use of the pharmaceutical product Cimetidine. Likewise assailed is the July 25,
1995 Resolution of the Court of Appeals denying the motion for reconsideration filed by petitioner
Smith Kline and French Laboratories, Ltd.
Petitioner is the assignee of Letters Patent No. 12207 covering the pharmaceutical product Cimetidine,
which relates to derivatives of heterocyclicthio or lower alkoxy or amino lower alkyl thiourea, ureas or
guanadines. Said patent was issued by the BPTTT to Graham John Durant, John Collin Emmett and
Robin Genellin on November 29, 1978.2
On August 21, 1989, private respondent filed with the BPTTT a petition for compulsory license to
manufacture and produce its own brand of medicines using Cimetidine. Private respondent invoked
Section 34 (1) (e) of Republic Act No. 165,3 (the Patent Law) the law then governing patents, which
states that an application for the grant of a compulsory license under a particular patent may be filed
with the BPTTT at any time after the lapse of two (2) years from the date of grant of such patent, if
the patented invention or article relates to food or medicine, or manufactured substances which can
be used as food or medicine, or is necessary for public health or public safety.4 The petition for
compulsory license stated that Cimetidine is useful as an antihistamine and in the treatment of ulcers,
and that private respondent is capable of using the patented product in the manufacture of a useful
product.5
Petitioner opposed the petition for compulsory license, arguing that the private respondent had no
cause of action and failed to allege how it intended to work the patented product. Petitioner further
stated that its manufacture, use and sales of Cimetidine satisfied the needs of the Philippine market,
hence, there was no need to grant a compulsory license to private respondent to manufacture, use and
sell the same. Finally, petitioner also claimed that the grant of a compulsory license to private
respondent would not promote public safety and that the latter was only motivated by pecuniary gain.6
After both parties were heard, the BPTTT rendered a decision directing the issuance of a compulsory
license to private respondent to use, manufacture and sell in the Philippines its own brand of
pharmaceutical products containing Cimetidine and ordered the payment by private respondent to
petitioner of royalties at the rate of 2.5% of net sales in Philippine currency.7
Petitioner thereafter filed with the Court of Appeals a petition for review of the decision of the BPTTT,
raising the following arguments: (1) the BPTTT's decision is violative of the Paris Convention for the
Protection of Industrial Property; (2) said decision is an invalid exercise of police power; (3) the rate of
royalties payable to petitioner as fixed by the BPTTT was rendered without factual basis and amounts
to an expropriation of private property without just compensation; (4) the petition for compulsory
license should have been dismissed by the BPTTT for failure to prove the jurisdictional requirement of
publication.8
On January 27, 1995, the Court of Appeals promulgated its Decision, the dispositive portion of which
states:
WHEREFORE, the petition is DENIED, and the decision of the Bureau of Patents, Trademarks and
Technology Transfer is hereby AFFIRMED, with costs against the Petitioner.
SO ORDERED.9
In affirming the decision of the BPTTT, the appellate court held that the grant of a compulsory license
to private respondent for the manufacture and use of Cimetidine is in accord with the Patent Law since
the patented product is medicinal in nature, and therefore necessary for the promotion of public
health and safety.10 It explained further that the provisions of the Patent Law permitting the grant of
a compulsory license are intended not only to give a chance to others to supply the public with the
quantity of the patented article but especially to prevent the building up of patent
monopolies.11 Neither did the appellate court find the royalty rate of 2.5% of net sales fixed by the
BPTTT unreasonable, considering that what was granted under the compulsory license is only the right
to manufacture Cimetidine, without any technical assistance from petitioner, and royalty rates
identical to that fixed by the BPTTT have been prescribed for the grant of compulsory license in a good
number of patent cases.12 The Court of Appeals also ruled that contrary to petitioner's claim, private
respondent complied with the requirement of publication under the Patent Law and had submitted
proof of such compliance.13
Not satisfied with the appellate court's decision, petitioner filed a motion for reconsideration thereof
as well as a motion for the issuance of a temporary restraining order against private respondent's sister
company, Montreal Pharmaceutical, Inc. to refrain from marketing a product similar to Cimetidine, but
both motions were denied by the Court of Appeals in its Resolution of July 25, 1995.14
Petitioner thus filed the present petition on September 15, 1995, with the following assignment of
errors:
I. The respondent Court erred in upholding the validity of the decision of public respondent BPTTT
which is an arbitrary exercise of police power and is violative of international law.
II. The respondent Court erred in holding that compulsory licensing will not create a confusion that the
patented product is the brainchild of private respondent Danlex and not of petitioner.
III.Assuming that the grant of compulsory license is in order, the respondent Court still erred in holding
that the BPTTT decision fixing the royalty at 2.5% of the net wholesale price in peso does not amount
to expropriation of private property without just compensation.
IV.The respondent Court erred in finding that the jurisdictional requirement of publication in a
newspaper of general circulation for three (3) consecutive weeks has been complied with by private
respondent Danlex.15
While petitioner concedes that the State in the exercise of police power may regulate the manufacture
and use of medicines through the enactment and implementation of pertinent laws, it states that such
exercise is valid only if the means employed are reasonably necessary for the accomplishment of the
purpose and if not unduly oppressive.16 According to petitioner, the grant of a compulsory license to
private respondent is an invalid exercise of police power since it was not shown that there is an
overwhelming public necessity for such grant, considering that petitioner is able to provide an
adequate supply of i to satisfy the needs of the Philippine market. Petitioner also claims that the grant
of a compulsory license to private respondent unjustly deprives it of a reasonable return on its
investment.17 It argues further that the provisions of the Patent Law on compulsory licensing
contravene the Convention of Paris for the Protection of Industrial Property18 (Paris Convention),
which allegedly permits the granting of a compulsory license over a patented product only to prevent
abuses which might result from the exercise of the exclusive rights conferred by the patent,19 or on
the ground of failure to work or insufficient working of the patented product, within four years from
the date of filing of the patent application or three years from the date of grant of the patent,
whichever expires last.20 Petitioner opines that the inclusion of grounds for the grant of a compulsory
license in Section 34 of the Patent Law other than those provided under the Paris Convention
constitutes a violation of the Philippines' obligation to adhere to the provisions of said treaty.21
It is also contended by petitioner that the grant of a compulsory license to private respondent will
allow the latter to liberally manufacture and sell medicinal products containing Cimetidine without
even extending to petitioner due recognition for pioneering the development and worldwide
acceptance of said invention, and will unreasonably dilute petitioner's right over the patent.22
Petitioner likewise asseverates that the rate of royalty fixed by the BPTTT at 2.5% of net sales is
grossly inadequate, taking into consideration its huge investments of money, time and other resources
in the research and development, as well as marketing of Cimetidine. It is further alleged that such
rate has no factual basis since the appellate court and the BPTTT relied solely on analogous cases and
did not explain how such rate was arrived at.23
Lastly, petitioner claims that the appellate court erred in ruling that private respondent had complied
with the requirement of publication of the notice of the filing of the petition for compulsory license
because private respondent failed to formally offer in evidence copies of the notice of filing of the
petition and notice of the date of hearing thereof as published and the affidavits of publication
thereof. Thus, it says, the BPTTT did not properly acquire jurisdiction over the petition for compulsory
license.24
In its Comment to the Petition, private respondent adopted the reasoning of the Court of Appeals in
the assailed decision and prayed that the petition be denied for lack of merit.25
The petition has no merit.
The Court of Appeals did not err in affirming the validity of the grant by the BPTTT of a compulsory
license to private respondent for the use, manufacture and sale of Cimetidine. The said grant is in
accord with Section 34 of the Patent Law which provides:
Grounds for Compulsory Licensing. (1) Any person may apply to the Director for the grant of a license
under a particular patent at any time after the expiration of two years from the date of the grant of
the patent, under any of the following circumstances:
(a) If the patented invention is not being worked within the Philippines on a commercial scale,
although capable of being so worked, without satisfactory reason;
(b) If the demand of the patented article in the Philippines is not being met to an adequate extent and
on reasonable terms;
(c) If, by reason of refusal of the patentee to grant a license or licenses on reasonable terms, or by
reason of the conditions attached by the patentee to licensee or to the purchase, lease or use of the
patented article or working of the patented process or machine for production, the establishment of
any new trade or industry in the Philippines is prevented, or the trade or industry therein is unduly
restrained;
(d) If the working of the invention within the country is being prevented or hindered by the importation
of the patented article;
(e) If the patented invention or article relates to food or medicine or manufactured substances which
can be used as food or medicine, or is necessary for public health or public safety.
(2) In any of the above cases, a compulsory license shall be granted to the petitioner provided that he
has proved his capability to work the patented product or to make use of the patented product in the
manufacture of a useful product, or to employ the patented process.
(3) The term "worked" or "working" as used in this section means the manufacture and sale of the
patented article, of patented machine, or the application of the patented process for production, in or
by means of a definite and substantial establishment or organization in the Philippines and on a scale
which is reasonable and adequate under the circumstances. Importation shall not constitute "working".
(Emphasis supplied.)
The grant of the compulsory license satisfies the requirements of the foregoing provision. More than
ten years have passed since the patent for Cimetidine was issued to petitioner and its predecessors-in-
interest, and the compulsory license applied for by private respondent is for the use, manufacture and
sale of a medicinal product. Furthermore, both the appellate court and the BPTTT found that private
respondent had the capability to workCimetidine or to make use thereof in the manufacture of a useful
product.
Petitioner's contention that Section 34 of the Patent Law contravenes the Paris Convention because the
former provides for grounds for the grant of a compulsory license in addition to those found in the
latter, is likewise incorrect. Article 5, Section A(2) of the Paris Convention states:
Each country of the union shall have the right to take legislative measures providing for the grant of
compulsory licenses to prevent the abuses which might result from the exercise of the exclusive rights
conferred by the patent, for example, failure to work.26
This issue has already been resolved by this Court in the case of Smith Kline & French Laboratories,
Ltd. vs. Court of Appeals,27 where petitioner herein questioned the BPTTT's grant of a compulsory
license to Doctors Pharmaceuticals, Inc. also for the manufacture, use and sale of Cimetidine. We
found no inconsistency between Section 34 and the Paris Convention and held that:
It is thus clear that Section A(2) of Article 5 [of the Paris Convention] unequivocally and explicitly
respects the right of member countries to adopt legislative measures to provide for the grant of
compulsory licenses to prevent abuses which might result from the exercise of the exclusive rights
conferred by the patent. An example provided of possible abuses is "failure to work;" however, as such,
is merely supplied by way of an example, it is plain that the treaty does not preclude the inclusion of
other forms of categories of abuses.
Section 34 of R.A. No. 165, even if the Act was enacted prior to the Philippines' adhesion to the
Convention, fits well within the aforequoted provisions of Article 5 of the Paris Convention. In the
explanatory note of Bill No. 1156 which eventually became R.A. No. 165, the legislative intent in the
grant of a compulsory license was not only to afford others an opportunity to provide the public with
the quantity of the patented product, but also to prevent the growth of monopolies [Congressional
Record, House of Representatives, 12 May 957, 998]. 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. 165.28(Emphasis supplied.)
Neither does the Court agree with petitioner that the grant of the compulsory license to private
respondent was erroneous because the same would lead the public to think that the Cimetidine is the
invention of private respondent and not of petitioner. Such fears are unfounded since, as the appellate
court pointed out in the assailed decision, by the grant of the compulsory license, private respondent
as licensee explicitly acknowledges that petitioner is the source of the patented
product Cimetidine.29 Even assuming arguendo that such confusion may indeed occur, the
disadvantage is far outweighed by the benefits resulting from the grant of the compulsory license, such
as an increased supply of pharmaceutical products containing Cimetidine, and the consequent
reduction in the prices thereof.30
There is likewise no basis for the allegation that the grant of a compulsory license to private
respondent results in the deprivation of petitioner's property without just compensation. It must be
pointed out that as owner of Letters Patent No. 12207, petitioner had already enjoyed exclusive rights
to manufacture, use and sell Cimetidine for at least two years from its grant in November, 1978. Even
if other entities like private respondent are subsequently allowed to manufacture, use and sell the
patented invention by virtue of a compulsory license, petitioner as owner of the patent would still
receive remuneration for the use of such product in the form of royalties.
Anent the perceived inadequacy of the royalty awarded to petitioner, the Court of Appeals correctly
held that the rate of 2.5% of net wholesale price fixed by the Director of the BPTTT is in accord with
the Patent Law. Said law provides:
Sec. 35. Grant of License.(1) If the Director finds that a case for the grant of a license under Section
34 hereof has been made out, he shall, within one hundred eighty days from the date the petition was
filed, order the grant of an appropriate license. The order shall state the terms and conditions of the
license which he himself must fix in default of an agreement on the matter manifested or submitted by
the parties during the hearing.
x x x
Section 35-B. Terms and Conditions of Compulsory License. (1) A compulsory license shall be non-
exclusive, but this shall be without prejudice to the licensee's right to oppose an application for such a
new license.
(2) The terms and conditions of a compulsory license, fixed in accordance with Section 35, may contain
obligations and restrictions both for the licensee and for the registered owner of the patent.
(3) A compulsory license shall only be granted subject to the payment of adequate royalties
commensurate with the extent to which the invention is worked. However, royalty payments shall not
exceed five percent (5%) of the net wholesale price (as defined in Section 33-A) of the products
manufactured under the license. If the product, substance, or process subject of the compulsory
license is involved in an industrial project approved by the Board of Investments, the royalty payable to
the patentee or patentees shall not exceed three percent (3%) of the net wholesale price (as defined in
Section 33-A) of the patented commodity/and or commodity manufactured under the patented
process; the same rate of royalty shall be paid whenever two or more patents are involved; which
royalty shall be distributed to the patentees in rates proportional to the extent of commercial use by
the licensee giving preferential values to the holder of the oldest subsisting product patent.
x x x
Under the aforequoted provisions, in the absence of any agreement between the parties with respect
to a compulsory license, the Director of the BPTTT may fix the terms thereof, including the rate of the
royalty payable to the licensor. The law explicitly provides that the rate of royalty shall not exceed
five percent (5%) of the net wholesale price.
The Court agrees with the appellate court's ruling that the rate of royalty payments fixed by the
Director of the BPTTT is reasonable. The appellate court, citing Price vs. United Laboratories,31 ruled
as such, considering that the compulsory license awarded to private respondent consists only of the
bare right to use the patented invention in the manufacture of another product, without any technical
assistance from the licensor.32 Furthermore, this Court had earlier noted in the Price case that
identical royalty rates have been prescribed by the Director of the BPTTT in numerous patent cases.33
There was thus no error on the part of the Court of Appeals in affirming the royalty rate fixed by the
Director of the BPTTT, since it was not shown that the latter erred or abused his discretion in
prescribing said rate. The rule is that factual findings of administrative bodies, which are considered as
experts in their respective fields, are accorded not only respect but even finality if the same are
supported by substantial evidence.34
Finally, as to the alleged lack of jurisdiction of the BPTTT over the petition filed by private respondent
for failure to comply with the publication requirement under Section 35-F of R.A. No. 165, the Court
holds that petitioner is estopped from questioning the same since it did not raise the issue of lack of
jurisdiction at the earliest possible opportunity, i.e., during the hearings before the BPTTT.35 The
Court notes that petitioner raised this contention for the first time when it appealed the case to the
appellate court.
WHEREFORE, the petition is hereby DENIED for lack of merit and the Decision of the Court of Appeals is
hereby AFFIRMED.




























G.R. No. 115106 March 15, 1996
ROBERTO L. DEL ROSARIO, petitioner,
vs.
COURT OF APPEALS AND JANITO CORPORATION, respondents.

BELLOSILLO, J.:p
Roberto del Rosario petitions this Court to review the decision of the Court of Appeals 1 which set aside
the order of the Regional Trial Court of Makati granting a writ of preliminary injunction in his favor.
The antecedents: On 18 January 1993 petitioner filed a complaint for patent infringement against
private respondent Janito Corporation. 2 Roberto L. del Rosario alleged that he was a patentee of an
audio equipment and improved audio equipment commonly known as the sing-along System
or karaoke under Letters Patent No. UM-5269 dated 2 June 1983 as well as Letters Patent No. UM-6237
dated 14 November 1986 issued by the Director of Patents. The effectivity of both Letters Patents was
for five (5) years and was extended for another five (5) years starting 2 June 1988 and 14 November
1991, respectively. He described his sing-along system as a handy multi-purpose compact machine
which incorporates an amplifier speaker, one or two tape mechanisms, optional tuner or radio and
microphone mixer with features to enhance one's voice, such as the echo or reverb to stimulate an
opera hall or a studio sound, with the whole system enclosed in one cabinet casing.
In the early part of 1990 petitioner learned that private respondent was manufacturing a sing-along
system bearing the trademark miyata or miyata karaoke substantially similar if not identical to the
sing-along system covered by the patents issued in his favor. Thus he sought from .the trial court the
issuance of a writ of preliminary injunction to enjoin private respondent, its officers and everybody
elsewhere acting on its behalf, from using, selling and advertising the miyata or miyata karaoke brand,
the injunction to be made permanent after trial, and praying for damages, attorney's fees and costs of
suit.
On 5 February 1993 the trial court temporarily restrained private respondent from manufacturing, using
and/or selling and advertising the miyata sing-along system or any sing-along system substantially
identical to the sing-along system patented by petitioner until further orders.
On 24 February 1993 the trial court issued a writ of preliminary injunction upon a bond on the basis of
its finding that petitioner was a holder of a utility model patent for a sing-along system and that
without his approval and consent private respondent was admittedly manufacturing and selling its own
sing-along system under the brand name miyata which was substantially similar to the patented utility
mode 3 of petitioner.
Private respondent assailed the order of 24 February 1993 directing the issuance of the writ by way of
a petition for certiorari with prayer for the issuance of a writ of preliminary injunction and a temporary
restraining order before respondent Court of Appeals.
On 15 November 1993 respondent appellate court granted the writ and set aside the questioned order
of the trial court. It expressed the view that there was no infringement of the patents of petitioner by
the fact alone that private respondent had manufactured the miyata karaoke or audio system, and that
the karaoke system was a universal product manufactured, advertised and marketed in most countries
of the world long before the patents were issued to petitioner. The motion to reconsider the grant of
the writ was denied; 4 hence, the instant petition for review.
This petition alleges that: (a) it was improper for the Court of Appeals to consider questions of fact in
a certiorariproceeding; (b) the Court of Appeals erred in taking judicial notice of private respondent's
self-serving presentation of facts; (c) the Court of Appeals erred in disregarding the findings of fact of
the trial court; and, (d) there was no basis for the Court of Appeals to grant a writ of preliminary
injunction in favor of private respondent. 5
Petitioner argues that in a certiorari proceeding questions of fact are not generally permitted the
inquiry being limited essentially to whether the tribunal has acted without or in excess of jurisdiction
or with grave abuse of discretion; that respondent court should not have disturbed but respected
instead the factual findings of the trial court; that the movant has a clear legal right to be protected
and that there is a violation of such right by private respondent. Thus, petitioner herein claims, he has
satisfied the legal requisites to justify the order of the trial court directing the issuance of the writ of
injunction. On the other hand, in the absence of a patent to justify the manufacture and sale by
private respondent of sing-along systems, it is not entitled to the injunctive relief granted by
respondent appellate court.
The crux of the controversy before us hinges on whether respondent Court of Appeals erred in finding
the trial court to have committed grave abuse of discretion in enjoining private respondent from
manufacturing, selling and advertising the miyata karaoke brand sing-along system for being
substantially similar if not identical to the audio equipment covered by letters patent issued to
petitioner.
Injunction is a preservative remedy for the protection of substantive rights or interests. It is not a
cause of action in itself but merely a provisional remedy, an adjunct to a main suit. The controlling
reason for the existence of the judicial power to issue the writ is that the court may thereby prevent a
threatened or continuous irremediable injury to some of the parties before their claims can be
thoroughly investigated and advisedly adjudicated. It is to be resorted to only when there is a pressing
necessity to avoid injurious consequences which cannot be remedied under any standard of
compensation. The application of the writ rests upon an alleged existence of an emergency or of a
special reason for such an order before the case can be regularly heard, and the essential conditions
for granting such temporary injunctive relief are that the complaint alleges facts which appear to be
sufficient to constitute a cause of action for injunction and that on the entire showing from both sides,
it appears, in view of all the circumstances, that the injunction is reasonably necessary to protect the
legal rights of plaintiff pending the litigation. 6
A preliminary injunction may be granted at any time after the commencement of the action and before
judgment when it is established that the defendant is doing, threatens, or is about to do, or is
procuring or suffering to be done, some act probably in violation of the plaintiff's rights. Thus, there
are only two requisites to be satisfied if an injunction is to issue, namely, the existence of the right to
be protected, and that the facts against which the injunction is to be directed are violative of said
right. 7
For the writ to issue the interest of petitioner in the controversy or the right he seeks to be protected
must be a present right, a legal right which must be shown to be clear and positive.
In this regard Sec. 55 of R.A. 165 as amended, known as The Patent Law, provides
Sec. 55. Design patents and patents for utility models. (a) Any new, original, and ornamental design
for an article of manufacture and (b) new model or implements or tools or of any industrial product or
of part of the same, which does not possess the quality of invention but which is of practical utility by
reason of its form, configuration, construction or composition, may be protected by the author thereof,
the former by a patent for a design and the latter by a patent for a utility model, in the same manner
and subject to the same provisions and requirements as relate to patents for inventions insofar as they
are applicable, except as otherwise herein provide . . . .
Admittedly, petitioner is a holder of Letters Patent No. UM-5629 dated 2 June 1985 issued for a term of
five (5) years from the grant of a Utility Model herein described
The construction of an audio equipment comprising a substantially cubical casing having a window at
its rear and upper corner fitted with a slightly inclined control panel, said cubical (casing) having a
vertical partition wall therein defining a rear compartment and a front compartment, and said front
compartment serving as a speaker baffle; a transistorized amplifier circuit having an echo section and
writhed in at least the printed circuit boards placed inside said rear compartment of said casing and
attached to said vertical partition wall, said transistorized amplifier circuit capable of being operated
from outside, through various controls mounted on said control panel of such casing; a loud speaker
fitted inside said front compartment of said casing and connected to the output of the main audio
amplifier section of said transistorized amplifier circuit and a tape player mounted on the top wall of
said casing and said tape player being connected in conventional manner to said transistorized
amplifier circuit. 8
Again, on 14 November 1986 petitioner was granted Letters Patent No. UM-6237 for a term of five (5)
years from the grant of a Utility Model described as
In an audio equipment consisting of a first cubical casing having an opening at its rear and upper rear
portion and a partition therein forming a rear compartment and a front compartment serving as a loud
speaker baffle, a control panel formed by vertical and horizontal sections, a transistorized amplifier
circuit wired in at least two printed circuit boards attached at the back of said control panel, a first
loud speaker fitted inside said first compartment of such first casing and connected to the output of
said transistorized amplifier circuit; the improvement wherein said control panel being removably
fitted to said first cubical casing and further comprises a set of tape recorder and tape player mounted
on the vertical section of said control panel and said recorder and player are likewise connected to said
transistorized amplifier circuit; a second cubical casing having an opening at its rear, said second
cubical casing having (being?) provided with a vertical partition therein defining a rear compartment
and a front compartment, said rear compartment being provided with a door and enclosing therein a
set of tape racks and said front compartment serving as loud speaker baffle, said second cubical casing
being adapted to said first cubical casing so that said first and second casings are secured together in
compact and portable form; and a second loud speaker fitted inside said front compartment of said
casing and connected to the output of said amplifier circuit. 9
The terms of both Letters Patents were extended for another five (5) years each, the first beginning 2
June 1988 and the second, 14 November 1991.
The Patent Law expressly acknowledges that any new model of implements or tools of any industrial
product even if not possessed of the quality of invention but which is of practical utility is entitled to a
patent for utility model. 10Here, there is no dispute that the letters patent issued to petitioner are for
utility models of audio equipment.
In issuing, reissuing or withholding patents and extensions thereof, the Director of Patents determines
whether the patent is new and whether the machine or device is the proper subject of patent. In
passing on an application, the Director decides not only questions of law but also questions of fact, i.e.
whether there has been a prior public use or sale of the article sought to be patented. 11 Where
petitioner introduces the patent in evidence, if it is in due form, it affords a prima facie presumption
of its correctness and validity. The decision of the Director of Patents in granting the patent is always
presumed to be correct, and the burden then shifts to respondent to overcome this presumption by
competent evidence. 12
Under Sec. 55 of The Patent Law a utility model shall not be considered "new" if before the application
for a patent it has been publicly known or publicly used in this country or has been described in a
printed publication or publications circulated within the country, or if it is substantially similar to any
other utility model so known, used or described within the country. Respondent corporation failed to
present before the trial court competent evidence that the utility models covered by the Letters
Patents issued to petitioner were not new. This is evident from the testimony of Janito Cua, President
of respondent Janito Corporation, during the hearing on the issuance of the injunction, to wit
Q. Mr. Cua, you testified that there are (sic) so many other companies which already have (sic) the
sing-along system even before the patent application of Mr. del Rosario and as a matter of fact you
mentioned Sanyo, Sony and Sharp, is that right?
A. Musicmate and Asahi.
Q. Now do you recall that your lawyer filed with this Honorable Court an Urgent Motion to Lift
Temporary Restraining Order of this Honorable Court. I am sure you were the one who provided him
with the information about the many other companies selling the sing-along system, is that right? These
18 which you enumerated here.
A. More than that because. . . .
Q. Now you will agree with me that in your statement Sharp you put the date as 1985 agreed?
A. No.
Q. You mean your lawyer was wrong when he put the word Sharp 1985?
A. Maybe I informed him already.
xxx xxx xxx
Q. You mean your lawyer was wrong in alleging to this Court that Sharp manufactured and sold (in)
1985 as found in the Urgent Motion?
A. Since it is urgent it is more or less.
Q. The same also with Sanyo 1985 which you put, more or less?
A. Sanyo is wrong.
Q. It is not 1985?
A. Sanyo is 1979 I think.
Q. So this is also wrong. Panasonic 1986 is also wrong?
A. Panasonic I think.
Q. So you don't think this is also correct.
A. The date?
Q. So you don't think also that this allegation here that they manufactured in 1986 is correct?
A. Wrong. Earlier.
Q. National by Precision Electronic 1986 this is also wrong?
A. I think earlier.
Q. So that means all your allegations here from 2 to 5 are wrong? OK. By Philipps Philippines 1986, this
is also correct or wrong?
A. More or less. We said more or less.
Q. Nakabutshi by Asahi Electronics that is also wrong?
A. No that is 1979.
Q. Electone by DICO 1989 is this correct or wrong?
A. Correct. More or less.
Q. Skylers 1985 is that correct or wrong?
A. It is more or less because it is urgent. We don't have time to exact the date.
Q. Musicmate of G.A. Yupangco 1981 this is more or less? You are not also sure?
A. 95% sure.
Q. Now you are sure 1981.
A. This one because. . . .
Q. Mr. Witness so you are now trying to tell this Honorable Court that all your allegations here of the
dates in this Urgent Motion except for Musicmate which you are only 95% sure they are all wrong or
they are also more or less or not sure, is that right?
A. More or less.
Q. Now do you have any proof, any advertisement, anything in writing that would show that all these
instruments are in the market, do you have it.
A. No I don't have it because. . . .
Q. No I am satisfied with your answer. Now Mr. Witness, you don't also have a proof that Akai
instrument that you said was also in the market before 1982? You don't have any written proof, any
advertisement?
A. I have the product.
Q. But you have not brought the product in (sic) this Honorable Court, right?
A. No. 13
As may be gleaned herein, the rights of petitioner as a patentee have been sufficiently established,
contrary to the findings and conclusions of respondent Court of Appeals. Consequently, under Sec. 37
of The Patent law, petitioner as a patentee shall have the exclusive right to make, use and sell the
patented machine, article or product for the purpose of industry or commerce, throughout the
territory of the Philippines for the term of the patent, and such making, using or selling by any person
without authorization of the patentee constitutes infringement of his patent.
Petitioner established before the trial court that respondent Janito Corporation was manufacturing a
similar sing-along system bearing the trademark miyata which infringed his patented models. He also
alleged that both his own patented audio equipment and respondent's sing-along system were
constructed in a casing with a control panel, the casing having a vertical partition wall defining the
rear compartment from the front compartment, with the front compartment consisting of a loud
speaker baffle, both containing a transistorized amplifier circuit capable of being operated from
outside through various controls mounted on the control panel, and that both had loud speakers fitted
inside the front compartment of the casing and connected to the output of the main audio amplifier
section both having a tape recorder and a tape player mounted on the control panel with the tape
recorder and tape player being both connected to the transistorized amplifier circuit. 14
Respondent Janito Corporation denied that there was any violation of petitioner's patent rights, and
cited the differences between its miyata equipment and petitioner's audio equipment. But, it must be
emphasized, respondent only confined its comparison to the first model, Utility Model No. 5269, and
completely disregarded Utility Model No. 6237 which improved on the first. As described by respondent
corporation, 15 these differences are
First. Under Utility Model 5269, the unit is a substantially cubical casing with a window at its rear and
upper corner fitted with slightly inclined control panel, while the miyata equipment is a substantially
rectangular casing with panel vertically positioned.
Second. Under Utility Model 5269, the cubical casing has a vertical partition wall defining a rear
compartment and a front compartment serving as a speaker baffle, while the miyata equipment has no
rear compartment and front compartment in its rectangular casing; it has only a front compartment
horizontally divided into 3 compartments like a 3-storey building, the 1st compartment being a kit, the
2nd also the speaker, and the 3rd are kits.
Third. Under Utility Model No. 5269, a transistorized amplifier circuit with an echo section wired in at
least 2 printed circuit boards is placed inside the rear compartment of the casing and attached to the
vertical partition wall, the printed circuit board having 1 amplifier and 1 echo, while in
the miyataequipment the amplifier is mainly IC (Integrated Circuit) powered with 8 printed circuit
boards almost all of which are IC controlled, with 1 amplifier with power supply, 1 main tuner, 1
equalizer (3-band), 1 IC controlled volume control, 1 echo IC, 1 tape pream, 1 instrument and 1
wireless microphone.
Fourth. Under Utility Model 5269, 4 printed circuits are placed inside the compartment of its casing
attached to the vertical partition wall, while in the miyata, the 7 printed circuit boards (PCB) are
attached to the front panel and 1 attached to the horizontal divider.
Fifth. Under Utility Model 5269, there are various controls mounted on the control panel of the casing,
while in miyata, the various controls are all separated from the printed circuit boards and the various
controls are all attached thereto.
Sixth. Under Utility Model 5269, a loud speaker fitted inside the front compartment of the casing is
connected to the output of the main audio amplifier section of the transistorized amplifier circuit,
while in miyata, there is no other way but to use 2 loud speakers connected to the amplifier.
Seventh. Under Utility Model 5269, a tape player is mounted on the top wall of the casing, while
inmiyata, 2 tape players are used mounted side by side at the front.
It is elementary that a patent may be infringed where the essential or substantial features of the
patented invention are taken or appropriated, or the device, machine or other subject matter alleged
to infringe is substantially identical with the patented invention. In order to infringe a patent, a
machine or device must perform the same function, or accomplish the same result by identical or
substantially identical means and the principle or mode of operation must be substantially the
same. 16
It may be noted that respondent corporation failed to present before the trial court a clear, competent
and reliable comparison between its own model and that of petitioner, and disregarded completely
petitioner's utility Model No. 6237 which improved on his first patented model. Notwithstanding the
differences cited by respondent corporation, it did not refute and disprove the allegations of petitioner
before the trial court that: (a) both are used by a singer to sing and amplify his voice; (b) both are used
to sing with a minus-one or multiplex tapes, or that both are used to play minus-one or standard
cassette tapes for singing or for listening to; (c) both are used to sing with a minus-one tape and
multiplex tape and to record the singing and the accompaniment; (d) both are used to sing with live
accompaniment and to record the same; (e) both are used to enhance the voice of the singer using
echo effect, treble, bass and other controls; (g) both are equipped with cassette tape decks which are
installed with one being used for playback and the other, for recording the singer and the
accompaniment, and both may also be used to record a speaker's voice or instrumental playing, like
the guitar and other instruments; (h) both are
encased in a box-like cabinets; and, (i) both can be used with one or more microphones. 17
Clearly, therefore, both petitioner's and respondent's models involve substantially the same modes of
operation and produce substantially the same if not identical results when used.
In view thereof, we find that petitioner had established before the trial court prima facie proof of
violation of his rights as patentee to justify the issuance of a writ of preliminary injunction in his favor
during the pendency of the main suit for damages resulting from the alleged infringement.
WHEREFORE, the Decision of the Court of Appeals dated 15 November 1993 is REVERSED and SET ASIDE
and the Order of the trial court dated 24 February 1993 granting petitioner the writ of injunction is
REINSTATED.
The trial court is directed to continue with the proceedings on the main action pending before it in
order to resolve with dispatch the issues therein presented.