FULL TEXT:

G.R. No. 148222 August 15, 2003

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

DECISION
CORONA, J.:
In the instant petition for review on certiorari under Rule 45 of the Rules of Court, petitioner
Pearl & Dean (Phil.) Inc. (P & D) assails the May 22, 2001 decision 1 of the Court of Appeals
reversing the October 31, 1996 decision2of the Regional Trial Court of Makati, Branch 133, in
Civil Case No. 92-516 which declared private respondents Shoemart Inc. (SMI) and North Edsa
Marketing Inc. (NEMI) liable for infringement of trademark and copyright, and unfair competition.
FACTUAL ANTECEDENTS
The May 22, 2001 decision of the Court of Appeals3 contained a summary of this dispute:
“Plaintiff-appellant Pearl and Dean (Phil.), Inc. is a corporation engaged in the manufacture of
advertising display units simply referred to as light boxes. These units utilize specially printed
posters sandwiched between plastic sheets and illuminated with back lights. Pearl and Dean
was able to secure a Certificate of Copyright Registration dated January 20, 1981 over these
illuminated display units. The advertising light boxes were marketed under the trademark
“Poster Ads”. The application for registration of the trademark was filed with the Bureau of
Patents, Trademarks and Technology Transfer on June 20, 1983, but was approved only on
September 12, 1988, per Registration No. 41165. From 1981 to about 1988, Pearl and Dean
employed the services of Metro Industrial Services to manufacture its advertising displays.
Sometime in 1985, Pearl and Dean negotiated with defendant-appellant Shoemart, Inc. (SMI)
for the lease and installation of the light boxes in SM City North Edsa. Since SM City North Edsa
was under construction at that time, SMI offered as an alternative, SM Makati and SM Cubao, to
which Pearl and Dean agreed. On September 11, 1985, Pearl and Dean’s General Manager,
Rodolfo Vergara, submitted for signature the contracts covering SM Cubao and SM Makati to
SMI’s Advertising Promotions and Publicity Division Manager, Ramonlito Abano. Only the
contract for SM Makati, however, was returned signed. On October 4, 1985, Vergara wrote
Abano inquiring about the other contract and reminding him that their agreement for installation
of light boxes was not only for its SM Makati branch, but also for SM Cubao. SMI did not bother
to reply.
Instead, in a letter dated January 14, 1986, SMI’s house counsel informed Pearl and Dean that
it was rescinding the contract for SM Makati due to non-performance of the terms thereof. In his
reply dated February 17, 1986, Vergara protested the unilateral action of SMI, saying it was
without basis. In the same letter, he pushed for the signing of the contract for SM Cubao.
Two years later, Metro Industrial Services, the company formerly contracted by Pearl and Dean
to fabricate its display units, offered to construct light boxes for Shoemart’s chain of stores. SMI
approved the proposal and ten (10) light boxes were subsequently fabricated by Metro Industrial
for SMI. After its contract with Metro Industrial was terminated, SMI engaged the services of
EYD Rainbow Advertising Corporation to make the light boxes. Some 300 units were fabricated
in 1991. These were delivered on a staggered basis and installed at SM Megamall and SM City.
Sometime in 1989, Pearl and Dean, received reports that exact copies of its light boxes were
installed at SM City and in the fastfood section of SM Cubao. Upon investigation, Pearl and
Dean found out that aside from the two (2) reported SM branches, light boxes similar to those it
manufactures were also installed in two (2) other SM stores. It further discovered that
defendant-appellant North Edsa Marketing Inc. (NEMI), through its marketing arm, Prime Spots
Marketing Services, was set up primarily to sell advertising space in lighted display units located
in SMI’s different branches. Pearl and Dean noted that NEMI is a sister company of SMI.
In the light of its discoveries, Pearl and Dean sent a letter dated December 11, 1991 to both SMI
and NEMI enjoining them to cease using the subject light boxes and to remove the same from
SMI’s establishments. It also demanded the discontinued use of the trademark “Poster Ads,”
and the payment to Pearl and Dean of compensatory damages in the amount of Twenty Million
Pesos (P20,000,000.00).
Upon receipt of the demand letter, SMI suspended the leasing of two hundred twenty-four (224)
light boxes and NEMI took down its advertisements for “Poster Ads” from the lighted display
units in SMI’s stores. Claiming that both SMI and NEMI failed to meet all its demands, Pearl and
Dean filed this instant case for infringement of trademark and copyright, unfair competition and
damages.
In denying the charges hurled against it, SMI maintained that it independently developed its
poster panels using commonly known techniques and available technology, without notice of or
reference to Pearl and Dean’s copyright. SMI noted that the registration of the mark “Poster
Ads” was only for stationeries such as letterheads, envelopes, and the like. Besides, according
to SMI, the word “Poster Ads” is a generic term which cannot be appropriated as a trademark,
and, as such, registration of such mark is invalid. It also stressed that Pearl and Dean is not
entitled to the reliefs prayed for in its complaint since its advertising display units contained no
copyright notice, in violation of Section 27 of P.D. 49. SMI alleged that Pearl and Dean had no
cause of action against it and that the suit was purely intended to malign SMI’s good name. On
this basis, SMI, aside from praying for the dismissal of the case, also counterclaimed for moral,
actual and exemplary damages and for the cancellation of Pearl and Dean’s Certification of
Copyright Registration No. PD-R-2558 dated January 20, 1981 and Certificate of Trademark
Registration No. 4165 dated September 12, 1988.
NEMI, for its part, denied having manufactured, installed or used any advertising display units,
nor having engaged in the business of advertising. It repleaded SMI’s averments, admissions
and denials and prayed for similar reliefs and counterclaims as SMI.”
The RTC of Makati City decided in favor of P & D:
Wherefore, defendants SMI and NEMI are found jointly and severally liable for infringement of
copyright under Section 2 of PD 49, as amended, and infringement of trademark under Section
22 of RA No. 166, as amended, and are hereby penalized under Section 28 of PD 49, as
amended, and Sections 23 and 24 of RA 166, as amended. Accordingly, defendants are hereby
directed:
(1) to pay plaintiff the following damages:
(a) actual damages – P16,600,000.00, representing profits derived by defendants as a result of
infringement of plaintiff’s copyright from 1991 to 1992
(b) moral damages – P1,000.000.00
(c) exemplary damages – P1,000,000.00
(d) attorney’s fees – P1,000,000.00
plus
(e) costs of suit;
(2) to deliver, under oath, for impounding in the National Library, all light boxes of SMI which
were fabricated by Metro Industrial Services and EYD Rainbow Advertising Corporation;
(3) to deliver, under oath, to the National Library, all filler-posters using the trademark “Poster
Ads”, for destruction; and
(4) to permanently refrain from infringing the copyright on plaintiff’s light boxes and its trademark
“Poster Ads”.
Defendants’ counterclaims are hereby ordered dismissed for lack of merit.
SO ORDERED.4
On appeal, however, the Court of Appeals reversed the trial court:
Since the light boxes cannot, by any stretch of the imagination, be considered as either prints,
pictorial illustrations, advertising copies, labels, tags or box wraps, to be properly classified as a
copyrightable class “O” work, we have to agree with SMI when it posited that what was
copyrighted were the technical drawings only, and not the light boxes themselves, thus:
42. When a drawing is technical and depicts a utilitarian object, a copyright over the drawings
like plaintiff-appellant’s will not extend to the actual object. It has so been held under
jurisprudence, of which the leading case is Baker vs. Selden(101 U.S. 841 (1879). In that case,
Selden had obtained a copyright protection for a book entitled “Selden’s Condensed Ledger or
Bookkeeping Simplified” which purported to explain a new system of bookkeeping. Included as
part of the book were blank forms and illustrations consisting of ruled lines and headings,
specially designed for use in connection with the system explained in the work. These forms
showed the entire operation of a day or a week or a month on a single page, or on two pages
following each other. The defendant Baker then produced forms which were similar to the forms
illustrated in Selden’s copyrighted books. The Court held that exclusivity to the actual forms is
not extended by a copyright. The reason was that “to grant a monopoly in the underlying art
when no examination of its novelty has ever been made would be a surprise and a fraud upon
the public; that is the province of letters patent, not of copyright.” And that is precisely the point.
No doubt aware that its alleged original design would never pass the rigorous examination of a
patent application, plaintiff-appellant fought to foist a fraudulent monopoly on the public by
conveniently resorting to a copyright registration which merely employs a recordal system
without the benefit of an in-depth examination of novelty.
The principle in Baker vs. Selden was likewise applied in Muller vs. Triborough Bridge
Authority [43 F. Supp. 298 (S.D.N.Y. 1942)]. In this case, Muller had obtained a copyright over
an unpublished drawing entitled “Bridge Approach – the drawing showed a novel bridge
approach to unsnarl traffic congestion”. The defendant constructed a bridge approach which
was alleged to be an infringement of the new design illustrated in plaintiff’s drawings. In this
case it was held that protection of the drawing does not extend to the unauthorized duplication
of the object drawn because copyright extends only to the description or expression of the
object and not to the object itself. It does not prevent one from using the drawings to construct
the object portrayed in the drawing.
In two other cases, Imperial Homes Corp. v. Lamont, 458 F. 2d 895 and Scholtz Homes, Inc. v.
Maddox, 379 F. 2d 84, it was held that there is no copyright infringement when one who, without
being authorized, uses a copyrighted architectural plan to construct a structure. This is because
the copyright does not extend to the structures themselves.
In fine, we cannot find SMI liable for infringing Pearl and Dean’s copyright over the technical
drawings of the latter’s advertising display units.
xxx xxx xxx
The Supreme Court trenchantly held in Faberge, Incorporated vs. Intermediate Appellate
Court that the protective mantle of the Trademark Law extends only to the goods used by the
first user as specified in the certificate of registration, following the clear mandate conveyed by
Section 20 of Republic Act 166, as amended, otherwise known as the Trademark Law, which
reads:
SEC. 20. Certification of registration prima facie evidence of validity.- A certificate of registration
of a mark or trade-name shall be prima facie evidence of the validity of the registration, the
registrant’s ownership of the mark or trade-name, and of the registrant’s exclusive right to use
the same in connection with the goods, business or services specified in the certificate, subject
to any conditions and limitations stated therein.” (underscoring supplied)
The records show that on June 20, 1983, Pearl and Dean applied for the registration of the
trademark “Poster Ads” with the Bureau of Patents, Trademarks, and Technology Transfer. Said
trademark was recorded in the Principal Register on September 12, 1988 under Registration
No. 41165 covering the following products: stationeries such as letterheads, envelopes and
calling cards and newsletters.
With this as factual backdrop, we see no legal basis to the finding of liability on the part of the
defendants-appellants for their use of the words “Poster Ads”, in the advertising display units in
suit. Jurisprudence has interpreted Section 20 of the Trademark Law as “an implicit permission
to a manufacturer to venture into the production of goods and allow that producer to appropriate
the brand name of the senior registrant on goods other than those stated in the certificate of
registration.” The Supreme Court further emphasized the restrictive meaning of Section 20
when it stated, through Justice Conrado V. Sanchez, that:
Really, if the certificate of registration were to be deemed as including goods not specified
therein, then a situation may arise whereby an applicant may be tempted to register a trademark
on any and all goods which his mind may conceive even if he had never intended to use the
trademark for the said goods. We believe that such omnibus registration is not contemplated by
our Trademark Law.
While we do not discount the striking similarity between Pearl and Dean’s registered trademark
and defendants-appellants’ “Poster Ads” design, as well as the parallel use by which said words
were used in the parties’ respective advertising copies, we cannot find defendants-appellants
liable for infringement of trademark. “Poster Ads” was registered by Pearl and Dean for specific
use in its stationeries, in contrast to defendants-appellants who used the same words in their
advertising display units. Why Pearl and Dean limited the use of its trademark to stationeries is
simply beyond us. But, having already done so, it must stand by the consequence of the
registration which it had caused.
xxx xxx xxx
We are constrained to adopt the view of defendants-appellants that the words “Poster Ads” are
a simple contraction of the generic term poster advertising. In the absence of any convincing
proof that “Poster Ads” has acquired a secondary meaning in this jurisdiction, we find that Pearl
and Dean’s exclusive right to the use of “Poster Ads” is limited to what is written in its certificate
of registration, namely, stationeries.
Defendants-appellants cannot thus be held liable for infringement of the trademark “Poster Ads”.
There being no finding of either copyright or trademark infringement on the part of SMI and
NEMI, the monetary award granted by the lower court to Pearl and Dean has no leg to stand on.
xxx xxx xxx
WHEREFORE, premises considered, the assailed decision is REVERSED and SET ASIDE, and
another is rendered DISMISSING the complaint and counterclaims in the above-entitled case
for lack of merit.5
Dissatisfied with the above decision, petitioner P & D filed the instant petition assigning the
following errors for the Court’s consideration:
A. THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT NO COPYRIGHT
INFRINGEMENT WAS COMMITTED BY RESPONDENTS SM AND NEMI;
B. THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT NO INFRINGEMENT
OF PEARL & DEAN’S TRADEMARK “POSTER ADS” WAS COMMITTED BY RESPONDENTS
SM AND NEMI;
C. THE HONORABLE COURT OF APPEALS ERRED IN DISMISSING THE AWARD OF THE
TRIAL COURT, DESPITE THE LATTER’S FINDING, NOT DISPUTED BY THE HONORABLE
COURT OF APPEALS, THAT SM WAS GUILTY OF BAD FAITH IN ITS NEGOTIATION OF
ADVERTISING CONTRACTS WITH PEARL & DEAN.
D. THE HONORABLE COURT OF APPEALS ERRED IN NOT HOLDING RESPONDENTS SM
AND NEMI LIABLE TO PEARL & DEAN FOR ACTUAL, MORAL & EXEMPLARY DAMAGES,
ATTORNEY’S FEES AND COSTS OF SUIT.6

ISSUES
In resolving this very interesting case, we are challenged once again to put into proper
perspective four main concerns of intellectual property law — patents, copyrights, trademarks
and unfair competition arising from infringement of any of the first three. We shall focus then on
the following issues:
(1) if the engineering or technical drawings of an advertising display unit (light box) are granted
copyright protection (copyright certificate of registration) by the National Library, is the light box
depicted in such engineering drawings ipso facto also protected by such copyright?
(2) or should the light box be registered separately and protected by a patent issued by the
Bureau of Patents Trademarks and Technology Transfer (now Intellectual Property Office) — in
addition to the copyright of the engineering drawings?
(3) can the owner of a registered trademark legally prevent others from using such trademark if
it is a mere abbreviation of a term descriptive of his goods, services or business?
ON THE ISSUE OF COPYRIGHT INFRINGEMENT
Petitioner P & D’s complaint was that SMI infringed on its copyright over the light boxes when
SMI had the units manufactured by Metro and EYD Rainbow Advertising for its own account.
Obviously, petitioner’s position was premised on its belief that its copyright over the engineering
drawings extended ipso facto to the light boxes depicted or illustrated in said drawings. In ruling
that there was no copyright infringement, the Court of Appeals held that the copyright was
limited to the drawings alone and not to the light box itself. We agree with the appellate court.
First, petitioner’s application for a copyright certificate — as well as Copyright Certificate No.
PD-R2588 issued by the National Library on January 20, 1981 — clearly stated that it was for a
class “O” work under Section 2 (O) of PD 49 (The Intellectual Property Decree) which was the
statute then prevailing. Said Section 2 expressly enumerated the works subject to copyright:
SEC. 2. The rights granted by this Decree shall, from the moment of creation, subsist with
respect to any of the following works:
xxx xxx xxx
(O) Prints, pictorial illustrations, advertising copies, labels, tags, and box wraps;
xxx xxx xxx
Although petitioner’s copyright certificate was entitled “Advertising Display Units” (which
depicted the box-type electrical devices), its claim of copyright infringement cannot be
sustained.
Copyright, in the strict sense of the term, is purely a statutory right. Being a mere statutory
grant, the rights are limited to what the statute confers. It may be obtained and enjoyed only with
respect to the subjects and by the persons, and on terms and conditions specified in the
statute.7 Accordingly, it can cover only the works falling within the statutory enumeration or
description.8
P & D secured its copyright under the classification class “O” work. This being so, petitioner’s
copyright protection extended only to the technical drawings and not to the light box itself
because the latter was not at all in the category of “prints, pictorial illustrations, advertising
copies, labels, tags and box wraps.” Stated otherwise, even as we find that P & D indeed owned
a valid copyright, the same could have referred only to the technical drawings within the
category of “pictorial illustrations.” It could not have possibly stretched out to include the
underlying light box. The strict application9 of the law’s enumeration in Section 2 prevents us
from giving petitioner even a little leeway, that is, even if its copyright certificate was entitled
“Advertising Display Units.” What the law does not include, it excludes, and for the good reason:
the light box was not a literary or artistic piece which could be copyrighted under the copyright
law. And no less clearly, neither could the lack of statutory authority to make the light box
copyrightable be remedied by the simplistic act of entitling the copyright certificate issued by the
National Library as “Advertising Display Units.”
In fine, if SMI and NEMI reprinted P & D’s technical drawings for sale to the public without
license from P & D, then no doubt they would have been guilty of copyright infringement. But
this was not the case. SMI’s and NEMI’s acts complained of by P & D were to have units similar
or identical to the light box illustrated in the technical drawings manufactured by Metro and EYD
Rainbow Advertising, for leasing out to different advertisers. Was this an infringement of
petitioner’s copyright over the technical drawings? We do not think so.
During the trial, the president of P & D himself admitted that the light box was neither a literary
not an artistic work but an “engineering or marketing invention.” 10 Obviously, there appeared to
be some confusion regarding what ought or ought not to be the proper subjects of copyrights,
patents and trademarks. In the leading case of Kho vs. Court of Appeals,11 we ruled that these
three legal rights are completely distinct and separate from one another, and the protection
afforded by one cannot be used interchangeably to cover items or works that exclusively pertain
to the others:
Trademark, copyright and patents are different intellectual property rights that cannot be
interchanged with one another. A trademark is any visible sign capable of distinguishing the
goods (trademark) or services (service mark) of an enterprise and shall include a stamped or
marked container of goods. In relation thereto, a trade name means the name or designation
identifying or distinguishing an enterprise. Meanwhile, the scope of a copyright is confined to
literary and artistic works which are original intellectual creations in the literary and artistic
domain protected from the moment of their creation. Patentable inventions, on the other hand,
refer to any technical solution of a problem in any field of human activity which is new, involves
an inventive step and is industrially applicable.

ON THE ISSUE OF PATENT INFRINGEMENT

This brings us to the next point: if, despite its manufacture and commercial use of the light
boxes without license from petitioner, private respondents cannot be held legally liable for
infringement of P & D’s copyright over its technical drawings of the said light boxes, should they
be liable instead for infringement of patent? We do not think so either.
For some reason or another, petitioner never secured a patent for the light boxes. It therefore
acquired no patent rights which could have protected its invention, if in fact it really was. And
because it had no patent, petitioner could not legally prevent anyone from manufacturing or
commercially using the contraption. In Creser Precision Systems, Inc. vs. Court of Appeals,12 we
held that “there can be no infringement of a patent until a patent has been issued, since
whatever right one has to the invention covered by the patent arises alone from the grant of
patent. x x x (A)n inventor has no common law right to a monopoly of his invention. He has the
right to make use of and vend his invention, but if he voluntarily discloses it, such as by offering
it for sale, the world is free to copy and use it with impunity. A patent, however, gives the
inventor the right to exclude all others. As a patentee, he has the exclusive right of making,
selling or using the invention.13 On the assumption that petitioner’s advertising units were
patentable inventions, petitioner revealed them fully to the public by submitting the engineering
drawings thereof to the National Library.
To be able to effectively and legally preclude others from copying and profiting from the
invention, a patent is a primordial requirement. No patent, no protection. The ultimate goal of a
patent system is to bring new designs and technologies into the public domain through
disclosure.14 Ideas, once disclosed to the public without the protection of a valid patent, are
subject to appropriation without significant restraint.15
On one side of the coin is the public which will benefit from new ideas; on the other are the
inventors who must be protected. As held in Bauer & Cie vs. O’Donnel,16 “The act secured to the
inventor the exclusive right to make use, and vend the thing patented, and consequently to
prevent others from exercising like privileges without the consent of the patentee. It was passed
for the purpose of encouraging useful invention and promoting new and useful inventions by the
protection and stimulation given to inventive genius, and was intended to secure to the public,
after the lapse of the exclusive privileges granted the benefit of such inventions and
improvements.”
The law attempts to strike an ideal balance between the two interests:
“(The p)atent system thus embodies a carefully crafted bargain for encouraging the creation and
disclosure of new useful and non-obvious advances in technology and design, in return for the
exclusive right to practice the invention for a number of years. The inventor may keep his
invention secret and reap its fruits indefinitely. In consideration of its disclosure and the
consequent benefit to the community, the patent is granted. An exclusive enjoyment is
guaranteed him for 17 years, but upon the expiration of that period, the knowledge of the
invention inures to the people, who are thus enabled to practice it and profit by its use.”17
The patent law has a three-fold purpose: “first, patent law seeks to foster and reward invention;
second, it promotes disclosures of inventions to stimulate further innovation and to permit the
public to practice the invention once the patent expires; third, the stringent requirements for
patent protection seek to ensure that ideas in the public domain remain there for the free use of
the public.”18
It is only after an exhaustive examination by the patent office that a patent is issued. Such an in-
depth investigation is required because “in rewarding a useful invention, the rights and welfare
of the community must be fairly dealt with and effectively guarded. To that end, the prerequisites
to obtaining a patent are strictly observed and when a patent is issued, the limitations on its
exercise are equally strictly enforced. To begin with, a genuine invention or discovery must be
demonstrated lest in the constant demand for new appliances, the heavy hand of tribute be laid
on each slight technological advance in art.”19
There is no such scrutiny in the case of copyrights nor any notice published before its grant to
the effect that a person is claiming the creation of a work. The law confers the copyright from the
moment of creation20 and the copyright certificate is issued upon registration with the National
Library of a sworn ex-parte claim of creation.
Therefore, not having gone through the arduous examination for patents, the petitioner cannot
exclude others from the manufacture, sale or commercial use of the light boxes on the sole
basis of its copyright certificate over the technical drawings.
Stated otherwise, what petitioner seeks is exclusivity without any opportunity for the patent
office (IPO) to scrutinize the light box’s eligibility as a patentable invention. The irony here is
that, had petitioner secured a patent instead, its exclusivity would have been for 17 years only.
But through the simplified procedure of copyright-registration with the National Library — without
undergoing the rigor of defending the patentability of its invention before the IPO and the public
— the petitioner would be protected for 50 years. This situation could not have been the
intention of the law.
In the oft-cited case of Baker vs. Selden21, the United States Supreme Court held that only the
expression of an idea is protected by copyright, not the idea itself. In that case, the plaintiff held
the copyright of a book which expounded on a new accounting system he had developed. The
publication illustrated blank forms of ledgers utilized in such a system. The defendant
reproduced forms similar to those illustrated in the plaintiff’s copyrighted book. The US Supreme
Court ruled that:
“There is no doubt that a work on the subject of book-keeping, though only explanatory of well
known systems, may be the subject of a copyright; but, then, it is claimed only as a book. x x x.
But there is a clear distinction between the books, as such, and the art, which it is, intended to
illustrate. The mere statement of the proposition is so evident that it requires hardly any
argument to support it. The same distinction may be predicated of every other art as well as that
of bookkeeping. A treatise on the composition and use of medicines, be they old or new; on the
construction and use of ploughs or watches or churns; or on the mixture and application of
colors for painting or dyeing; or on the mode of drawing lines to produce the effect of
perspective, would be the subject of copyright; but no one would contend that the copyright of
the treatise would give the exclusive right to the art or manufacture described therein. The
copyright of the book, if not pirated from other works, would be valid without regard to the
novelty or want of novelty of its subject matter. The novelty of the art or thing described or
explained has nothing to do with the validity of the copyright. To give to the author of the book
an exclusive property in the art described therein, when no examination of its novelty
has ever been officially made, would be a surprise and a fraud upon the public. That is
the province of letters patent, not of copyright. The claim to an invention of discovery of
an art or manufacture must be subjected to the examination of the Patent Office before
an exclusive right therein can be obtained; and a patent from the government can only
secure it.
The difference between the two things, letters patent and copyright, may be illustrated by
reference to the subjects just enumerated. Take the case of medicines. Certain mixtures are
found to be of great value in the healing art. If the discoverer writes and publishes a book on
the subject (as regular physicians generally do), he gains no exclusive right to the
manufacture and sale of the medicine; he gives that to the public. If he desires to acquire
such exclusive right, he must obtain a patent for the mixture as a new art, manufacture or
composition of matter. He may copyright his book, if he pleases; but that only secures to
him the exclusive right of printing and publishing his book. So of all other inventions or
discoveries.
The copyright of a book on perspective, no matter how many drawings and illustrations it may
contain, gives no exclusive right to the modes of drawing described, though they may never
have been known or used before. By publishing the book without getting a patent for the art, the
latter is given to the public.
xxx
Now, whilst no one has a right to print or publish his book, or any material part thereof, as a
book intended to convey instruction in the art, any person may practice and use the art itself
which he has described and illustrated therein. The use of the art is a totally different thing
from a publication of the book explaining it. The copyright of a book on bookkeeping cannot
secure the exclusive right to make, sell and use account books prepared upon the plan set forth
in such book. Whether the art might or might not have been patented, is a question, which is not
before us. It was not patented, and is open and free to the use of the public. And, of course, in
using the art, the ruled lines and headings of accounts must necessarily be used as incident to
it.
The plausibility of the claim put forward by the complainant in this case arises from a confusion
of ideas produced by the peculiar nature of the art described in the books, which have been
made the subject of copyright. In describing the art, the illustrations and diagrams employed
happened to correspond more closely than usual with the actual work performed by the operator
who uses the art. x x x The description of the art in a book, though entitled to the benefit of
copyright, lays no foundation for an exclusive claim to the art itself. The object of the one
is explanation; the object of the other is use. The former may be secured by copyright.
The latter can only be secured, if it can be secured at all, by letters patent.” (underscoring
supplied)
ON THE ISSUE OF TRADEMARK INFRINGEMENT
This issue concerns the use by respondents of the mark “Poster Ads” which petitioner’s
president said was a contraction of “poster advertising.” P & D was able to secure a trademark
certificate for it, but one where the goods specified were “stationeries such as letterheads,
envelopes, calling cards and newsletters.”22 Petitioner admitted it did not commercially engage
in or market these goods. On the contrary, it dealt in electrically operated backlit advertising
units and the sale of advertising spaces thereon, which, however, were not at all specified in the
trademark certificate.
Under the circumstances, the Court of Appeals correctly cited Faberge Inc. vs. Intermediate
Appellate Court,23where we, invoking Section 20 of the old Trademark Law, ruled that “the
certificate of registration issued by the Director of Patents can confer (upon petitioner) the
exclusive right to use its own symbol only to those goods specified in the certificate, subject to
any conditions and limitations specified in the certificate x x x. One who has adopted and used a
trademark on his goods does not prevent the adoption and use of the same trademark by
others for products which are of a different description.”24 Faberge, Inc. was correct and was in
fact recently reiterated in Canon Kabushiki Kaisha vs. Court of Appeals.25
Assuming arguendo that “Poster Ads” could validly qualify as a trademark, the failure of P & D to
secure a trademark registration for specific use on the light boxes meant that there could not
have been any trademark infringement since registration was an essential element thereof.
ON THE ISSUE OF UNFAIR COMPETITION
If at all, the cause of action should have been for unfair competition, a situation which was
possible even if P & D had no registration. 26 However, while the petitioner’s complaint in the
RTC also cited unfair competition, the trial court did not find private respondents liable therefor.
Petitioner did not appeal this particular point; hence, it cannot now revive its claim of unfair
competition.
But even disregarding procedural issues, we nevertheless cannot hold respondents guilty of
unfair competition.
By the nature of things, there can be no unfair competition under the law on copyrights although
it is applicable to disputes over the use of trademarks. Even a name or phrase incapable of
appropriation as a trademark or tradename may, by long and exclusive use by a business (such
that the name or phrase becomes associated with the business or product in the mind of the
purchasing public), be entitled to protection against unfair competition. 27 In this case, there was
no evidence that P & D’s use of “Poster Ads” was distinctive or well-known. As noted by the
Court of Appeals, petitioner’s expert witnesses himself had testified that ” ‘Poster Ads’ was too
generic a name. So it was difficult to identify it with any company, honestly speaking.” 28 This
crucial admission by its own expert witness that “Poster Ads” could not be associated with P & D
showed that, in the mind of the public, the goods and services carrying the trademark “Poster
Ads” could not be distinguished from the goods and services of other entities.
This fact also prevented the application of the doctrine of secondary meaning. “Poster Ads” was
generic and incapable of being used as a trademark because it was used in the field of poster
advertising, the very business engaged in by petitioner. “Secondary meaning” means that a
word or phrase originally incapable of exclusive appropriation with reference to an article in the
market (because it is geographically or otherwise descriptive) might nevertheless have been
used for so long and so exclusively by one producer with reference to his article that, in the
trade and to that branch of the purchasing public, the word or phrase has come to mean that the
article was his property. 29 The admission by petitioner’s own expert witness that he himself
could not associate “Poster Ads” with petitioner P & D because it was “too generic” definitely
precluded the application of this exception.
Having discussed the most important and critical issues, we see no need to belabor the rest.
All told, the Court finds no reversible error committed by the Court of Appeals when it reversed
the Regional Trial Court of Makati City.
WHEREFORE, the petition is hereby DENIED and the decision of the Court of Appeals dated
May 22, 2001 is AFFIRMED in toto.
SO ORDERED.

CASE DIGEST

PEARL & DEAN (PHIL.), INC. vs SHOEMART, INC GR No. 148222 (August 15,2003)
Posted on May 12, 2017

FACTS: Pearl and Dean is a corporation engaged in the manufacture of advertising display
units referred to as light boxes and these light boxes were marketed under the trademark Poster
Ads. Pearl and Dean entered into a contract with Shoemart, Inc. for the lease and installation of
the light boxes in SM North Edsa. However, due to construction constraints, Shoemart, Inc
offered as an alternative SM Makati and SM Cubao.

After Pearl and Dean’s contract was rescinded, exact copies of its light boxes were
installed in various SM malls, fabricated by Metro Industrial Services and later by EYD Rainbow
Advertising Corporation. Pearl and Dean sent a letter to Shoemart and its sister company, North
Edsa Marketing to cease using the light boxes and to remove them from the malls, and
demanded the discontinued used of the trademark “Poster Ads”.

Unsatisfied with the compliance of its demands, Pearl and Dean sued Shoemart which
was ruled by the trial court in their favor. On appeal, however, the Court of Appeals reversed the
trial court’s decision.

ISSUE: Whether Pearl and Dean’s copyright registration for its light boxes and the trademark
registration of “Poster Ads” preclude Shoemart and North Edsa Marketing from using the same.

HELD:

No, Pearl and Dean secured its copyright under the classification class “o” work. This
being so, its protection extended only to the technical drawings and not to the light box itself.
Pearl and Dean cannot exclude others from the manufacture, sale and commercial use over the
light boxes on the sole basis of its copyright, certificated over the technical drawings. It cannot
be the intention of the law that the right of exclusivity would be granted for a longer time through
the simplified procedure of copyright registration with the National Library, without the rigor of
defending the patentability of its “invention” before the IPO and the public.

On the other hand, there has been no evidence that Pearl and Dean’s use of “Poster Ads”
was distinctive or well known. “Poster Ads” was too generic a name to identify it to a specific
company or entity. “Poster Ads” was generic and incapable of being used as a trademark
because it was used in the field of poster advertising, the very business engaged by Pearl and
Dean. Furthermore, Pearl and Dean’s exclusive right to the use of “Poster Ads” is limited to what
is written in its certificate of registration. Shoemart cannot be held liable for the infringement of
the trademark.

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

DECISION
DE LEON, JR., J.:

Before us is a petition for review on certiorari of the Decision[1] dated May 24, 1993 of the
Court of Appeals setting aside and declaring as null and void the Orders [2] dated February 10,
1992 and March 19, 1992 of the Regional Trial Court, Branch 90, of Quezon City granting the
issuance of a writ of preliminary injunction.
The facts of the case are as follows:
On December 20, 1991, petitioner Elidad C. Kho filed a complaint for injunction and
damages with a prayer for the issuance of a writ of preliminary injunction, docketed as Civil
Case No. Q-91-10926, against the respondents Summerville General Merchandising and
Company (Summerville, for brevity) and Ang Tiam Chay.
The petitioners complaint alleges that petitioner, doing business under the name and style
of KEC Cosmetics Laboratory, is the registered owner of the copyrights Chin Chun Su and Oval
Facial Cream Container/Case, as shown by Certificates of Copyright Registration No. 0-1358
and No. 0-3678; that she also has patent rights on Chin Chun Su & Device and Chin Chun
Su for medicated cream after purchasing the same from Quintin Cheng, the registered owner
thereof in the Supplemental Register of the Philippine Patent Office on February 7, 1980 under
Registration Certificate No. 4529; that respondent Summerville advertised and sold petitioners
cream products under the brand name Chin Chun Su, in similar containers that petitioner uses,
thereby misleading the public, and resulting in the decline in the petitioners business sales and
income; and, that the respondents should be enjoined from allegedly infringing on the copyrights
and patents of the petitioner.
 The respondents, on the other hand, alleged as their defense that Summerville is the
exclusive and authorized importer, re-packer and distributor of Chin Chun Su products
manufactured by Shun Yi Factory of Taiwan; that the said Taiwanese manufacturing company
authorized Summerville to register its trade name Chin Chun Su Medicated Cream with the
Philippine Patent Office and other appropriate governmental agencies; that KEC Cosmetics
Laboratory of the petitioner obtained the copyrights through misrepresentation and falsification;
and, that the authority of Quintin Cheng, assignee of the patent registration certificate, to
distribute and market Chin Chun Su products in the Philippines had already been terminated by
the said Taiwanese Manufacturing Company.
After due hearing on the application for preliminary injunction, the trial court granted the
same in an Order dated February 10, 1992, the dispositive portion of which reads:

ACCORDINGLY, the application of plaintiff Elidad C. Kho, doing business under the style of
KEC Cosmetic Laboratory, for preliminary injunction, is hereby granted. Consequentially, plaintiff
is required to file with the Court a bond executed to defendants in the amount of five hundred
thousand pesos (P500,000.00) to the effect that plaintiff will pay to defendants all damages
which defendants may sustain by reason of the injunction if the Court should finally decide that
plaintiff is not entitled thereto.

SO ORDERED.[3]

The respondents moved for reconsideration but their motion for reconsideration was denied by
the trial court in an Order dated March 19, 1992.[4]
On April 24, 1992, the respondents filed a petition for certiorari with the Court of Appeals,
docketed as CA-G.R. SP No. 27803, praying for the nullification of the said writ of preliminary
injunction issued by the trial court. After the respondents filed their reply and almost a month
after petitioner submitted her comment, or on August 14 1992, the latter moved to dismiss the
petition for violation of Supreme Court Circular No. 28-91, a circular prohibiting forum shopping.
According to the petitioner, the respondents did not state the docket number of the civil case in
the caption of their petition and, more significantly, they did not include therein a certificate of
non-forum shopping. The respondents opposed the petition and submitted to the appellate court
a certificate of non-forum shopping for their petition.
On May 24, 1993, the appellate court rendered a Decision in CA-G.R. SP No. 27803 ruling
in favor of the respondents, the dispositive portion of which reads:

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

SO ORDERED.[5]

In granting the petition, the appellate court ruled that:

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

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

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

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

The petitioner filed a motion for reconsideration. This she followed with several motions to
declare respondents in contempt of court for publishing advertisements notifying the public of
the promulgation of the assailed decision of the appellate court and stating that genuine Chin
Chun Su products could be obtained only from Summerville General Merchandising and Co.
In the meantime, the trial court went on to hear petitioners complaint for final injunction and
damages. On October 22, 1993, the trial court rendered a Decision [7] barring the petitioner from
using the trademark Chin Chun Su and upholding the right of the respondents to use the same,
but recognizing the copyright of the petitioner over the oval shaped container of her beauty
cream. The trial court did not award damages and costs to any of the parties but to their
respective counsels were awarded Seventy-Five Thousand Pesos (P75,000.00) each as
attorneys fees. The petitioner duly appealed the said decision to the Court of Appeals.
On June 3, 1994, the Court of Appeals promulgated a Resolution [8] denying the petitioners
motions for reconsideration and for contempt of court in CA-G.R. SP No. 27803.
Hence, this petition anchored on the following assignment of errors:
I

RESPONDENT HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE

OF DISCRETION AMOUNTING TO LACK OF JURISDICTION IN FAILING TO RULE
ON PETITIONERS MOTION TO DISMISS.

II
 RESPONDENT HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE
OF DISCRETION AMOUNTING TO LACK OF JURISDICTION IN REFUSING TO
PROMPTLY RESOLVE PETITIONERS MOTION FOR RECONSIDERATION.

III

IN DELAYING THE RESOLUTION OF PETITIONERS MOTION FOR

RECONSIDERATION, THE HONORABLE COURT OF APPEALS DENIED
PETITIONERS RIGHT TO SEEK TIMELY APPELLATE RELIEF AND VIOLATED
PETITIONERS RIGHT TO DUE PROCESS.

IV

RESPONDENT HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE

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

The petitioner faults the appellate court for not dismissing the petition on the ground of
violation of Supreme Court Circular No. 28-91. Also, the petitioner contends that the appellate
court violated Section 6, Rule 9 of the Revised Internal Rules of the Court of Appeals when it
failed to rule on her motion for reconsideration within ninety (90) days from the time it is
submitted for resolution. The appellate court ruled only after the lapse of three hundred fifty-four
(354) days, or on June 3, 1994. In delaying the resolution thereof, the appellate court denied the
petitioners right to seek the timely appellate relief. Finally, petitioner describes as arbitrary the
denial of her motions for contempt of court against the respondents.
We rule in favor of the respondents.
Pursuant to Section 1, Rule 58 of the Revised Rules of Civil Procedure, one of the grounds
for the issuance of a writ of preliminary injunction is a proof that the applicant is entitled to the
relief demanded, and the whole or part of such relief consists in restraining the commission or
continuance of the act or acts complained of, either for a limited period or perpetually. Thus, a
preliminary injunction order may be granted only when the application for the issuance of the
same shows facts entitling the applicant to the relief demanded. [10] This is the reason why we
have ruled that it must be shown that the invasion of the right sought to be protected is material
and substantial, that the right of complainant is clear and unmistakable, and, that there is an
urgent and paramount necessity for the writ to prevent serious damage.[11]
In the case at bar, the petitioner applied for the issuance of a preliminary injunctive order on
the ground that she is entitled to the use of the trademark on Chin Chun Su and its container
based on her copyright and patent over the same. We first find it appropriate to rule on whether
the copyright and patent over the name and container of a beauty cream product would entitle
the registrant to the use and ownership over the same to the exclusion of others.
Trademark, copyright and patents are different intellectual property rights that cannot be
interchanged with one another. A trademark is any visible sign capable of distinguishing the
goods (trademark) or services (service mark) of an enterprise and shall include a stamped or
marked container of goods.[12] In relation thereto, a trade name means the name or designation
identifying or distinguishing an enterprise.[13] Meanwhile, the scope of a copyright is confined to
literary and artistic works which are original intellectual creations in the literary and artistic
domain protected from the moment of their creation.[14] Patentable inventions, on the other hand,
refer to any technical solution of a problem in any field of human activity which is new, involves
an inventive step and is industrially applicable.[15]
Petitioner has no right to support her claim for the exclusive use of the subject trade name
and its container. The name and container of a beauty cream product are proper subjects of a
trademark inasmuch as the same falls squarely within its definition. In order to be entitled to
exclusively use the same in the sale of the beauty cream product, the user must sufficiently
prove that she registered or used it before anybody else did. The petitioners copyright and
patent registration of the name and container would not guarantee her the right to the exclusive
use of the same for the reason that they are not appropriate subjects of the said intellectual
rights. Consequently, a preliminary injunction order cannot be issued for the reason that the
petitioner has not proven that she has a clear right over the said name and container to the
exclusion of others, not having proven that she has registered a trademark thereto or used the
same before anyone did.
We cannot likewise overlook the decision of the trial court in the case for final injunction and
damages. The dispositive portion of said decision held that the petitioner does not have
trademark rights on the name and container of the beauty cream product. The said decision on
the merits of the trial court rendered the issuance of the writ of a preliminary injunction moot and
academic notwithstanding the fact that the same has been appealed in the Court of Appeals.
This is supported by our ruling in La Vista Association, Inc. v. Court of Appeals[16], to wit:

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

La Vista categorically pronounced that the issuance of a final injunction renders any question on
the preliminary injunctive order moot and academic despite the fact that the decision granting a
final injunction is pending appeal. Conversely, a decision denying the applicant-plaintiffs right to
a final injunction, although appealed, renders moot and academic any objection to the prior
dissolution of a writ of preliminary injunction.
The petitioner argues that the appellate court erred in not dismissing the petition for
certiorari for non-compliance with the rule on forum shopping. We disagree. First, the petitioner
improperly raised the technical objection of non-compliance with Supreme Court Circular No.
28-91 by filing a motion to dismiss the petition for certiorari filed in the appellate court. This is
prohibited by Section 6, Rule 66 of the Revised Rules of Civil Procedure which provides that (I)n
petitions for certiorari before the Supreme Court and the Court of Appeals, the provisions of
Section 2, Rule 56, shall be observed. Before giving due course thereto, the court may require
the respondents to file their comment to, and not a motion to dismiss, the petition xxx (italics
supplied). Secondly, the issue was raised one month after petitioner had filed her
answer/comment and after private respondent had replied thereto. Under Section 1, Rule 16 of
the Revised Rules of Civil Procedure, a motion to dismiss shall be filed within the time for but
before filing the answer to the complaint or pleading asserting a claim. She therefore could no
longer submit a motion to dismiss nor raise defenses and objections not included in the
answer/comment she had earlier tendered. Thirdly, substantial justice and equity require this
Court not to revive a dissolved writ of injunction in favor of a party without any legal right thereto
merely on a technical infirmity. The granting of an injunctive writ based on a technical ground
rather than compliance with the requisites for the issuance of the same is contrary to the
primary objective of legal procedure which is to serve as a means to dispense justice to the
deserving party.
The petitioner likewise contends that the appellate court unduly delayed the resolution of
her motion for reconsideration. But we find that petitioner contributed to this delay when she
filed successive contentious motions in the same proceeding, the last of which was on October
27, 1993, necessitating counter-manifestations from private respondents with the last one being
filed on November 9, 1993. Nonetheless, it is well-settled that non-observance of the period for
deciding cases or their incidents does not render such judgments ineffective or void.[17] With
respect to the purported damages she suffered due to the alleged delay in resolving her motion
for reconsideration, we find that the said issue has likewise been rendered moot and academic
by our ruling that she has no right over the trademark and, consequently, to the issuance of a
writ of preliminary injunction.
Finally, we rule that the Court of Appeals correctly denied the petitioners several motions for
contempt of court. There is nothing contemptuous about the advertisements complained of
which, as regards the proceedings in CA-G.R. SP No. 27803 merely announced in plain and
straightforward language the promulgation of the assailed Decision of the appellate court.
Moreover, pursuant to Section 4 of Rule 39 of the Revised Rules of Civil Procedure, the said
decision nullifying the injunctive writ was immediately executory.
WHEREFORE, the petition is DENIED. The Decision and Resolution of the Court of
Appeals dated May 24, 1993 and June 3, 1994, respectively, are hereby AFFIRMED. With costs
against the petitioner.
SO ORDERED.

CASE DIGEST
Elidad C. Kho vs. Court of Appeals, Summerville General Merchandising Company and
Ang Tiam Chay (G.R. No. 115758, March 19, 2002, 379 SCRA 410)

FACTS:
Petitioner‘s allegations are that they are doing business under the name and style of KEC
Cosmetics Laboratory, registered owner of Chin Chun Su and oval facial cream container/case,
and alleges that she also has patent rights on Chin Chun Su and Device and Chin Chun Su
Medicated Cream after purchasing the same from Quintin Cheng, the registered owner thereof
in the supplemental register of the Philippine Patent Office and that Summerville advertised and
sold petitioner’s cream products under the brand name Chin Chun Su, in similar containers that
petitioner uses, thereby misleading the public, and resulting in the decline in the petitioner’s
business sales and income; and, that the respondents should be enjoined from allegedly
infringing on the copyrights and patents of the petitioner.

The respondents, on the other hand, alleged as their defense that (1) Summerville is the
exclusive and authorized importer, re-packer and distributor of Chin Chun Su products
manufactured by Shun Yi factory of Taiwan, (2) that the said Taiwanese manufacturing company
authorized Summerville to register its trade name Chin Chun Cu Medicated Cream with the
Philippine Patent office and Other appropriate governmental agencies; (3) that KEC Cosmetics
Laboratory of the petitioner obtained the copyrights through misrepresentation and falsification;
and, (4) that the authority of Quintin Cheng, assignee of the patent registration certificate, to
distribute and market Chin Chun Su products in the Philippines had already terminated by the
said Taiwanese manufacturing company.

ISSUE:
Whether or not Kho has the sole right using the package of Chin Chun Su products

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

NOTE:
Trademark, copyright, and patents are different intellectual property rights that cannot be
interchanged with one another. A trademark is any visible sign capable of distinguishing the
goods (trademark) or services (service mark) of an enterprise and shall include a stamped or
marked container goods. In relation thereto, a trade name means the name or designation
identifying or distinguishing an enterprise. Meanwhile, the scope of copyright is confined to
literary and artistic works which are original intellectual creations in the literary and artistic
domain protected from the moment of their creation. Patentable inventions, on the other
hand, refer to any technical solution of a problem in any field of human activity which is new,
involves an inventive step and is industrial applicable.
 FULL TEXT
G.R. No. 167715 November 17, 2010

PHIL PHARMAWEALTH, INC., Petitioner, vs. PFIZER, INC. and PFIZER (PHIL.)
INC., Respondents.

DECISION

PERALTA, J.:

Before the Court is a petition for review on certiorari seeking to annul and set aside the
Resolutions dated January 18, 20051 and April 11, 20052 by the Court of Appeals (CA) in CA-
G.R. SP No. 82734.

The instant case arose from a Complaint 3 for patent infringement filed against petitioner Phil
Pharmawealth, Inc. by respondent companies, Pfizer, Inc. and Pfizer (Phil.), Inc., with the
Bureau of Legal Affairs of the Intellectual Property Office (BLA-IPO). The Complaint alleged as
follows:

xxxx

6. Pfizer is the registered owner of Philippine Letters Patent No. 21116 (the "Patent")
which was issued by this Honorable Office on July 16, 1987. The patent is valid until July
16, 2004. The claims of this Patent are directed to "a method of increasing the
effectiveness of a beta-lactam antibiotic in a mammalian subject, which comprises co-
administering to said subject a beta-lactam antibiotic effectiveness increasing amount of
a compound of the formula IA." The scope of the claims of the Patent extends to a
combination of penicillin such as ampicillin sodium and beta-lactam antibiotic like
sulbactam sodium.

7. Patent No. 21116 thus covers ampicillin sodium/sulbactam sodium (hereafter

"Sulbactam Ampicillin"). Ampicillin sodium is a specific example of the broad beta-lactam
antibiotic disclosed and claimed in the Patent. It is the compound which efficacy is being
enhanced by co-administering the same with sulbactam sodium. Sulbactam sodium, on
the other hand, is a specific compound of the formula IA disclosed and claimed in the
Patent.

8. Pfizer is marketing Sulbactam Ampicillin under the brand name "Unasyn." Pfizer's
"Unasyn" products, which come in oral and IV formulas, are covered by Certificates of
Product Registration ("CPR") issued by the Bureau of Food and Drugs ("BFAD") under
the name of complainants. The sole and exclusive distributor of "Unasyn" products in the
Philippines is Zuellig Pharma Corporation, pursuant to a Distribution Services Agreement
it executed with Pfizer Phils. on January 23, 2001.

9. Sometime in January and February 2003, complainants came to know that

respondent [herein petitioner] submitted bids for the supply of Sulbactam Ampicillin to
several hospitals without the consent of complainants and in violation of the
complainants' intellectual property rights. x x x
 xxxx

10. Complainants thus wrote the above hospitals and demanded that the latter
immediately cease and desist from accepting bids for the supply [of] Sulbactam
Ampicillin or awarding the same to entities other than complainants. Complainants, in
the same letters sent through undersigned counsel, also demanded that respondent
immediately withdraw its bids to supply Sulbactam Ampicillin.

11. In gross and evident bad faith, respondent and the hospitals named in paragraph 9
hereof, willfully ignored complainants' just, plain and valid demands, refused to comply
therewith and continued to infringe the Patent, all to the damage and prejudice of
complainants. As registered owner of the Patent, Pfizer is entitled to protection under
Section 76 of the IP Code.

x x x x4

Respondents prayed for permanent injunction, damages and the forfeiture and impounding of
the alleged infringing products. They also asked for the issuance of a temporary restraining
order and a preliminary injunction that would prevent herein petitioner, its agents,
representatives and assigns, from importing, distributing, selling or offering the subject product
for sale to any entity in the Philippines.

In an Order5 dated July 15, 2003 the BLA-IPO issued a preliminary injunction which was
effective for ninety days from petitioner's receipt of the said Order.

Prior to the expiration of the ninety-day period, respondents filed a Motion for Extension of Writ
of Preliminary Injunction6 which, however, was denied by the BLA-IPO in an Order7 dated
October 15, 2003.

Respondents filed a Motion for Reconsideration but the same was also denied by the BLA-IPO
in a Resolution8dated January 23, 2004.

Respondents then filed a special civil action for certiorari with the CA assailing the October 15,
2003 and January 23, 2004 Resolutions of the BLA-IPO. Respondents also prayed for the
issuance of a preliminary mandatory injunction for the reinstatement and extension of the writ of
preliminary injunction issued by the BLA-IPO.

While the case was pending before the CA, respondents filed a Complaint 9 with the Regional
Trial Court (RTC) of Makati City for infringement and unfair competition with damages against
herein petitioner. In said case, respondents prayed for the issuance of a temporary restraining
order and preliminary injunction to prevent herein petitioner from importing, distributing, selling
or offering for sale sulbactam ampicillin products to any entity in the Philippines. Respondents
asked the trial court that, after trial, judgment be rendered awarding damages in their favor and
making the injunction permanent.

On August 24, 2004, the RTC of Makati City issued an Order 10 directing the issuance of a
temporary restraining order conditioned upon respondents' filing of a bond.

In a subsequent Order11 dated April 6, 2005, the same RTC directed the issuance of a writ of
preliminary injunction "prohibiting and restraining [petitioner], its agents, representatives and
assigns from importing, distributing or selling Sulbactam Ampicillin products to any entity in the
Philippines."

Meanwhile, on November 16, 2004, petitioner filed a Motion to Dismiss 12 the petition filed with
the CA on the ground of forum shopping, contending that the case filed with the RTC has the
same objective as the petition filed with the CA, which is to obtain an injunction prohibiting
petitioner from importing, distributing and selling Sulbactam Ampicillin products.

On January 18, 2005, the CA issued its questioned Resolution 13 approving the bond posted by
respondents pursuant to the Resolution issued by the appellate court on March 23, 2004 which
directed the issuance of a temporary restraining order conditioned upon the filing of a bond. On
even date, the CA issued a temporary restraining order 14 which prohibited petitioner "from
importing, distributing, selling or offering for sale Sulbactam Ampicillin products to any hospital
or to any other entity in the Philippines, or from infringing Pfizer Inc.'s Philippine Patent No.
21116 and impounding all the sales invoices and other documents evidencing sales by
[petitioner] of Sulbactam Ampicillin products."

On February 7, 2005, petitioner again filed a Motion to Dismiss 15 the case for being moot and
academic, contending that respondents' patent had already lapsed. In the same manner,
petitioner also moved for the reconsideration of the temporary restraining order issued by the
CA on the same basis that the patent right sought to be protected has been extinguished due to
the lapse of the patent license and on the ground that the CA has no jurisdiction to review the
order of the BLA-IPO as said jurisdiction is vested by law in the Office of the Director General of
the IPO.

On April 11, 2005, the CA rendered its presently assailed Resolution denying the Motion to
Dismiss, dated November 16, 2004, and the motion for reconsideration, as well as Motion to
Dismiss, both dated February 7, 2005.

Hence, the present petition raising the following issues:

a) Can an injunctive relief be issued based on an action of patent infringement when the
patent allegedly infringed has already lapsed?

b) What tribunal has jurisdiction to review the decisions of the Director of Legal Affairs of
the Intellectual Property Office?

c) Is there forum shopping when a party files two actions with two seemingly different
causes of action and yet pray for the same relief?16

In the first issue raised, petitioner argues that respondents' exclusive right to monopolize the
subject matter of the patent exists only within the term of the patent. Petitioner claims that since
respondents' patent expired on July 16, 2004, the latter no longer possess any right of
monopoly and, as such, there is no more basis for the issuance of a restraining order or
injunction against petitioner insofar as the disputed patent is concerned.

The Court agrees.

Section 37 of Republic Act No. (RA) 165, 17 which was the governing law at the time of the
issuance of respondents' patent, provides:
Section 37. Rights of patentees.  A patentee shall have the exclusive right to make, use and
sell the patented machine, article or product, and to use the patented process for the purpose of
industry or commerce, throughout the territory of the Philippines for the term of the patent; and
such making, using, or selling by any person without the authorization of the patentee
constitutes infringement of the patent.18

It is clear from the above-quoted provision of law that the exclusive right of a patentee to make,
use and sell a patented product, article or process exists only during the term of the patent. In
the instant case, Philippine Letters Patent No. 21116, which was the basis of respondents in
filing their complaint with the BLA-IPO, was issued on July 16, 1987. This fact was admitted by
respondents themselves in their complaint. They also admitted that the validity of the said
patent is until July 16, 2004, which is in conformity with Section 21 of RA 165, providing that the
term of a patent shall be seventeen (17) years from the date of issuance thereof. Section 4,
Rule 129 of the Rules of Court provides that an admission, verbal or written, made by a party in
the course of the proceedings in the same case, does not require proof and that the admission
may be contradicted only by showing that it was made through palpable mistake or that no such
admission was made. In the present case, there is no dispute as to respondents' admission that
the term of their patent expired on July 16, 2004. Neither is there evidence to show that their
admission was made through palpable mistake. Hence, contrary to the pronouncement of the
CA, there is no longer any need to present evidence on the issue of expiration of respondents'
patent.

On the basis of the foregoing, the Court agrees with petitioner that after July 16, 2004,
respondents no longer possess the exclusive right to make, use and sell the articles or products
covered by Philippine Letters Patent No. 21116.

Section 3, Rule 58, of the Rules of Court lays down the requirements for the issuance of a writ
of preliminary injunction, viz:

(a) That the applicant is entitled to the relief demanded, and the whole or part of such
relief consists in restraining the commission or continuance of the acts complained of, or
in requiring the performance of an act or acts, either for a limited period or perpetually;

(b) That the commission, continuance or non-performance of the act or acts complained
of during the litigation would probably work injustice to the applicant; or

(c) That a party, court, or agency or a person is doing, threatening, or attempting to do,
or is procuring or suffering to be done, some act or acts probably in violation of the rights
of the applicant respecting the subject of the action or proceeding, and tending to render
the judgment ineffectual.

In this connection, pertinent portions of Section 5, Rule 58 of the same Rules provide that if the
matter is of extreme urgency and the applicant will suffer grave injustice and irreparable injury, a
temporary restraining order may be issued ex parte.

From the foregoing, it can be inferred that two requisites must exist to warrant the issuance of
an injunctive relief, namely: (1) the existence of a clear and unmistakable right that must be
protected; and (2) an urgent and paramount necessity for the writ to prevent serious damage.19
In the instant case, it is clear that when the CA issued its January 18, 2005 Resolution
approving the bond filed by respondents, the latter no longer had a right that must be protected,
considering that Philippine Letters Patent No. 21116 which was issued to them already expired
on July 16, 2004. Hence, the issuance by the CA of a temporary restraining order in favor of the
respondents is not proper.

In fact, the CA should have granted petitioner's motion to dismiss the petition for certiorari filed
before it as the only issue raised therein is the propriety of extending the writ of preliminary
injunction issued by the BLA-IPO. Since the patent which was the basis for issuing the
injunction, was no longer valid, any issue as to the propriety of extending the life of the
injunction was already rendered moot and academic.

As to the second issue raised, the Court, is not persuaded by petitioner's argument that,
pursuant to the doctrine of primary jurisdiction, the Director General of the IPO and not the CA
has jurisdiction to review the questioned Orders of the Director of the BLA-IPO.

It is true that under Section 7(b) of RA 8293, otherwise known as the Intellectual Property Code
of the Philippines, which is the presently prevailing law, the Director General of the IPO
exercises exclusive appellate jurisdiction over all decisions rendered by the Director of the BLA-
IPO. However, what is being questioned before the CA is not a decision, but an interlocutory
order of the BLA-IPO denying respondents' motion to extend the life of the preliminary injunction
issued in their favor.

RA 8293 is silent with respect to any remedy available to litigants who intend to question an
interlocutory order issued by the BLA-IPO. Moreover, Section 1(c), Rule 14 of the Rules and
Regulations on Administrative Complaints for Violation of Laws Involving Intellectual Property
Rights simply provides that interlocutory orders shall not be appealable. The said Rules and
Regulations do not prescribe a procedure within the administrative machinery to be followed in
assailing orders issued by the BLA-IPO pending final resolution of a case filed with them.
Hence, in the absence of such a remedy, the provisions of the Rules of Court shall apply in a
suppletory manner, as provided under Section 3, Rule 1 of the same Rules and Regulations.
Hence, in the present case, respondents correctly resorted to the filing of a special civil action
for certiorari with the CA to question the assailed Orders of the BLA-IPO, as they cannot appeal
therefrom and they have no other plain, speedy and adequate remedy in the ordinary course of
law. This is consistent with Sections 120 and 4,21 Rule 65 of the Rules of Court, as amended.

In the first place, respondents' act of filing their complaint originally with the BLA-IPO is already
in consonance with the doctrine of primary jurisdiction.

This Court has held that:

[i]n cases involving specialized disputes, the practice has been to refer the same to an
administrative agency of special competence in observance of the doctrine of primary
jurisdiction. The Court has ratiocinated that it cannot or will not determine a controversy
involving a question which is within the jurisdiction of the administrative tribunal prior to the
resolution of that question by the administrative tribunal, where the question demands the
exercise of sound administrative discretion requiring the special knowledge, experience and
services of the administrative tribunal to determine technical and intricate matters of fact, and a
uniformity of ruling is essential to comply with the premises of the regulatory statute
administered. The objective of the doctrine of primary jurisdiction is to guide a court in
determining whether it should refrain from exercising its jurisdiction until after an administrative
agency has determined some question or some aspect of some question arising in the
proceeding before the court. It applies where the claim is originally cognizable in the courts and
comes into play whenever enforcement of the claim requires the resolution of issues which,
under a regulatory scheme, has been placed within the special competence of an administrative
body; in such case, the judicial process is suspended pending referral of such issues to the
administrative body for its view.22

Based on the foregoing, the Court finds that respondents' initial filing of their complaint with the
BLA-IPO, instead of the regular courts, is in keeping with the doctrine of primary jurisdiction
owing to the fact that the determination of the basic issue of whether petitioner violated
respondents' patent rights requires the exercise by the IPO of sound administrative discretion
which is based on the agency's special competence, knowledge and experience.

However, the propriety of extending the life of the writ of preliminary injunction issued by the
BLA-IPO in the exercise of its quasi-judicial power is no longer a matter that falls within the
jurisdiction of the said administrative agency, particularly that of its Director General. The
resolution of this issue which was raised before the CA does not demand the exercise by the
IPO of sound administrative discretion requiring special knowledge, experience and services in
determining technical and intricate matters of fact. It is settled that one of the exceptions to the
doctrine of primary jurisdiction is where the question involved is purely legal and will ultimately
have to be decided by the courts of justice.23 This is the case with respect to the issue raised in
the petition filed with the CA.

Moreover, as discussed earlier, RA 8293 and its implementing rules and regulations do not
provide for a procedural remedy to question interlocutory orders issued by the BLA-IPO. In this
regard, it bears to reiterate that the judicial power of the courts, as provided for under the
Constitution, includes the authority of the courts to determine in an appropriate action the
validity of the acts of the political departments.24 Judicial power also includes the duty of the
courts of justice to settle actual controversies involving rights which are legally demandable and
enforceable, and to determine whether or not there has been a grave abuse of discretion
amounting to lack or excess of jurisdiction on the part of any branch or instrumentality of the
Government.25 Hence, the CA, and not the IPO Director General, has jurisdiction to determine
whether the BLA-IPO committed grave abuse of discretion in denying respondents' motion to
extend the effectivity of the writ of preliminary injunction which the said office earlier issued.

Lastly, petitioner avers that respondents are guilty of forum shopping for having filed separate
actions before the IPO and the RTC praying for the same relief.

The Court agrees.

Forum shopping is defined as the act of a party against whom an adverse judgment has been
rendered in one forum, of seeking another (and possibly favorable) opinion in another forum
(other than by appeal or the special civil action of certiorari), or the institution of two (2) or more
actions or proceedings grounded on the same cause on the supposition that one or the other
court would make a favorable disposition.26

The elements of forum shopping are: (a) identity of parties, or at least such parties that
represent the same interests in both actions; (b) identity of rights asserted and reliefs prayed for,
the reliefs being founded on the same facts; (c) identity of the two preceding particulars, such
that any judgment rendered in the other action will, regardless of which party is successful,
amount to res judicata in the action under consideration.27

There is no question as to the identity of parties in the complaints filed with the IPO and the
RTC.

Respondents argue that they cannot be held guilty of forum shopping because their complaints
are based on different causes of action as shown by the fact that the said complaints are
founded on violations of different patents.

The Court is not persuaded.

Section 2, Rule 2 of the Rules of Court defines a cause of action as the act or omission by
which a party violates a right of another. In the instant case, respondents' cause of action in
their complaint filed with the IPO is the alleged act of petitioner in importing, distributing, selling
or offering for sale Sulbactam Ampicillin products, acts that are supposedly violative of
respondents' right to the exclusive sale of the said products which are covered by the latter's
patent. However, a careful reading of the complaint filed with the RTC of Makati City would
show that respondents have the same cause of action as in their complaint filed with the IPO.
They claim that they have the exclusive right to make, use and sell Sulbactam Ampicillin
products and that petitioner violated this right. Thus, it does not matter that the patents upon
which the complaints were based are different. The fact remains that in both complaints the
rights violated and the acts violative of such rights are identical.

In fact, respondents seek substantially the same reliefs in their separate complaints with the IPO
and the RTC for the purpose of accomplishing the same objective.

It is settled by this Court in several cases that the filing by a party of two apparently different
actions but with the same objective constitutes forum shopping. 28 The Court discussed this
species of forum shopping as follows:

Very simply stated, the original complaint in the court a quo which gave rise to the instant
petition was filed by the buyer (herein private respondent and his predecessors-in-interest)
against the seller (herein petitioners) to enforce the alleged perfected sale of real estate. On the
other hand, the complaint in the Second Case seeks to declare such purported sale involving
the same real property "as unenforceable as against the Bank," which is the petitioner herein. In
other words, in the Second Case, the majority stockholders, in representation of the Bank, are
seeking to accomplish what the Bank itself failed to do in the original case in the trial court. In
brief, the objective or the relief being sought, though worded differently, is the same, namely, to
enable the petitioner Bank to escape from the obligation to sell the property to respondent.29

In Danville Maritime, Inc. v. Commission on Audit,30 the Court ruled as follows:

In the attempt to make the two actions appear to be different, petitioner impleaded different
respondents therein – PNOC in the case before the lower court and the COA in the case before
this Court and sought what seems to be different reliefs. Petitioner asks this Court to set aside
the questioned letter-directive of the COA dated October 10, 1988 and to direct said body to
approve the Memorandum of Agreement entered into by and between the PNOC and petitioner,
while in the complaint before the lower court petitioner seeks to enjoin the PNOC from
conducting a rebidding and from selling to other parties the vessel "T/T Andres Bonifacio," and
for an extension of time for it to comply with the paragraph 1 of the memorandum of agreement
and damages. One can see that although the relief prayed for in the two (2) actions are
ostensibly different, the ultimate objective in both actions is the same, that is, the approval of the
sale of vessel in favor of petitioner, and to overturn the letter directive of the COA of October 10,
1988 disapproving the sale.31

In the instant case, the prayer of respondents in their complaint filed with the IPO is as follows:

A. Immediately upon the filing of this action, issue an ex parte order (a) temporarily
restraining respondent, its agents, representatives and assigns from importing,
distributing, selling or offering for sale Sulbactam Ampicillin products to the hospitals
named in paragraph 9 of this Complaint or to any other entity in the Philippines, or from
otherwise infringing Pfizer Inc.'s Philippine Patent No. 21116; and (b) impounding all the
sales invoices and other documents evidencing sales by respondent of Sulbactam
Ampicillin products.

B. After hearing, issue a writ of preliminary injunction enjoining respondent, its agents,
representatives and assigns from importing, distributing, selling or offering for sale
Sulbactam Ampicillin products to the hospitals named in paragraph 9 of the Complaint or
to any other entity in the Philippines, or from otherwise infringing Pfizer Inc.'s Philippine
Patent No. 21116; and

C. After trial, render judgment:

(i) declaring that respondent has infringed Pfizer Inc.'s Philippine Patent No.
21116 and that respondent has no right whatsoever over complainant's patent;

(ii) ordering respondent to pay complainants the following amounts:

(a) at least ₱1,000,000.00 as actual damages;

(b) ₱700,000.00 as attorney's fees and litigation expenses;

(d) ₱1,000,000.00 as exemplary damages; and

(d) costs of this suit.

(iii) ordering the condemnation, seizure or forfeiture of respondent's infringing

goods or products, wherever they may be found, including the materials and
implements used in the commission of infringement, to be disposed of in such
manner as may be deemed appropriate by this Honorable Office; and

(iv) making the injunction permanent.32

In an almost identical manner, respondents prayed for the following in their complaint filed with
the RTC:

(a) Immediately upon the filing of this action, issue an ex parte order:
 (1) temporarily restraining Pharmawealth, its agents, representatives and assigns
from importing, distributing, selling or offering for sale infringing sulbactam
ampicillin products to various government and private hospitals or to any other
entity in the Philippines, or from otherwise infringing Pfizer Inc.'s Philippine
Patent No. 26810.

(2) impounding all the sales invoices and other documents evidencing sales by
pharmawealth of sulbactam ampicillin products; and

(3) disposing of the infringing goods outside the channels of commerce.

(b) After hearing, issue a writ of preliminary injunction:

(1) enjoining Pharmawealth, its agents, representatives and assigns from

importing, distributing, selling or offering for sale infringing sulbactam ampicillin
products to various government hospitals or to any other entity in the Philippines,
or from otherwise infringing Patent No. 26810;

(2) impounding all the sales invoices and other documents evidencing sales by
Pharmawealth of sulbactam ampicillin products; and

(3) disposing of the infringing goods outside the channels of commerce.

(c) After trial, render judgment:

(1) finding Pharmawealth to have infringed Patent No. 26810 and declaring
Pharmawealth to have no right whatsoever over plaintiff's patent;

(2) ordering Pharmawealth to pay plaintiffs the following amounts:

(i) at least ₱3,000,000.00 as actual damages;

(ii) ₱500,000.00 as attorney's fees and ₱1,000,000.00 as litigation

expenses;

(iii) ₱3,000,000.00 as exemplary damages; and

(iv) costs of this suit.

(3) ordering the condemnation, seizure or forfeiture of Pharmawealth's infringing

goods or products, wherever they may be found, including the materials and
implements used in the commission of infringement, to be disposed of in such
manner as may be deemed appropriate by this Honorable Court; and

(4) making the injunction permanent.33

It is clear from the foregoing that the ultimate objective which respondents seek to achieve in
their separate complaints filed with the RTC and the IPO, is to ask for damages for the alleged
violation of their right to exclusively sell Sulbactam Ampicillin products and to permanently
prevent or prohibit petitioner from selling said products to any entity. Owing to the substantial
identity of parties, reliefs and issues in the IPO and RTC cases, a decision in one case will
necessarily amount to res judicata in the other action.

It bears to reiterate that what is truly important to consider in determining whether forum
shopping exists or not is the vexation caused the courts and parties-litigant by a party who asks
different courts and/or administrative agencies to rule on the same or related causes and/or to
grant the same or substantially the same reliefs, in the process creating the possibility of
conflicting decisions being rendered by the different fora upon the same issue.341avvphi1

Thus, the Court agrees with petitioner that respondents are indeed guilty of forum shopping.

Jurisprudence holds that if the forum shopping is not considered willful and deliberate, the
subsequent case shall be dismissed without prejudice, on the ground of either litis pendentia or
res judicata.35 However, if the forum shopping is willful and deliberate, both (or all, if there are
more than two) actions shall be dismissed with prejudice. 36 In the present case, the Court finds
that respondents did not deliberately violate the rule on non-forum shopping. Respondents may
not be totally blamed for erroneously believing that they can file separate actions simply on the
basis of different patents. Moreover, in the suit filed with the RTC of Makati City, respondents
were candid enough to inform the trial court of the pendency of the complaint filed with the BLA-
IPO as well as the petition for certiorari filed with the CA. On these bases, only Civil Case No.
04-754 should be dismissed on the ground of litis pendentia.

WHEREFORE, the petition is PARTLY GRANTED. The assailed Resolutions of the Court of
Appeals, dated January 18, 2005 and April 11, 2005, in CA-G.R. No. 82734,
are REVERSED and SET ASIDE. The petition for certiorari filed with the Court of Appeals
is DISMISSED for being moot and academic.

Civil Case No. 04-754, filed with the Regional Trial Court of Makati City, Branch 138, is
likewise DISMISSED on the ground of litis pendentia.

SO ORDERED.

CASE DIGEST
Phil. Pharmawealth, Inc. v. Pfizer, Inc. & Pfizer (Phil.), Inc. G.R. No. 167715, 17 November
2010

Facts:
Pfizer is the registered owner of a patent pertaining to Sulbactam Ampicillin. It is
marketed under the brand name “Unasyn.” Sometime in January and February 2003, Pfizer
discovered that Pharmawealth submitted bids for the supply of Sulbactam Ampicillin to several
hospitals without the Pfizer’s consent. Pfizer then demanded that the hospitals cease and desist
from accepting such bids. Pfizer also demanded that Pharmawealth immediately withdraw its
bids to supply Sulbactam Ampicillin. Pharmawealth and the hospitals ignored the demands.
 Pfizer then filed a complaint for patent infringement with a prayer for permanent
injunction and forfeiture of the infringing products. A preliminary injunction effective for 90 days
was granted by the IPO’s Bureau of Legal Affairs (IPO-BLA). Upon expiration, a motion for
extension filed by Pfizer was denied. Pfizer filed a Special Civil Action for Certiorari in the Court
of Appeals (CA) assailing the denial.

While the case was pending in the CA, Pfizer filed with the Regional Trial Court of Makati
(RTC) a complaint for infringement and unfair competition, with a prayer for injunction. The RTC
issued a temporary restraining order, and then a preliminary injunction.

Pharmawealth filed a motion to dismiss the case in the CA, on the ground of forum
shopping. Nevertheless, the CA issued a temporary restraining order. Pharmawealth again filed
a motion to dismiss, alleging that the patent, the main basis of the case, had already lapsed,
thus making the case moot, and that the CA had no jurisdiction to review the order of the IPO-
BLA because this was granted to the Director General. The CA denied all the motions.
Pharmawealth filed a petition for review on Certiorari with the Supreme Court.

Issues:

a) Can an injunctive relief be issued based on an action of patent infringement when the patent
allegedly infringed has already lapsed?
b) What tribunal has jurisdiction to review the decisions of the Director of Legal Affairs of the
Intellectual Property Office?
c) Is there forum shopping when a party files two actions with two seemingly different causes of
action and yet pray for the same relief?

Held:

a) No. The provision of R.A. 165, from which the Pfizer’s patent was based, clearly states that
"[the] patentee shall have the exclusive right to make, use and sell the patented machine, article
or product, and to use the patented process for the purpose of industry or commerce,
throughout the territory of the Philippines for the term of the patent; and such making, using, or
selling by any person without the authorization of the patentee constitutes infringement of the
patent."

Clearly, the patentee’s exclusive rights exist only during the term of the patent. Since the patent
was registered on 16 July 1987, it expired, in accordance with the provisions of R.A. 165, after
17 years, or 16 July 2004. Thus, after 16 July 2004, Pfizer no longer possessed the exclusive
right to make, use, and sell the products covered by their patent. The CA was wrong in issuing a
temporary restraining order after the cut-off date.

b) According to IP Code, the Director General of the IPO exercises exclusive jurisdiction over
decisions of the IPO-BLA. The question in the CA concerns an interlocutory order, and not a
decision. Since the IP Code and the Rules and Regulations are bereft of any remedy regarding
interlocutory orders of the IPO-BLA, the only remedy available to Pfizer is to apply the Rules
and Regulations suppletorily. Under the Rules, a petition for certiorari to the CA is the proper
remedy. This is consistent with the Rules of Court. Thus, the CA had jurisdiction.

c) Yes. Forum shopping is defined as the act of a party against whom an adverse judgment has
been rendered in one forum, of seeking another (and possibly favorable) opinion in another
forum (other than by appeal or the special civil action of certiorari), or the institution of two (2) or
more actions or proceedings grounded on the same cause on the supposition that one or the
other court would make a favorable disposition.

The elements of forum shopping are: (a) identity of parties, or at least such parties that
represent the same interests in both actions; (b) identity of rights asserted and reliefs prayed for,
the reliefs being founded on the same facts; (c) identity of the two preceding particulars, such
that any judgment rendered in the other action will, regardless of which party is successful,
amount to res judicata in the action under consideration. This instance meets these elements.

The parties are clearly identical. In both the complaints in the BLA-IPO and RTC, the rights
allegedly violated and the acts allegedly violative of such rights are identical, regardless of
whether the patents on which the complaints were based are different. In both cases, the
ultimate objective of Pfizer was to ask for damages and to permanently prevent Pharmawealth
from selling the contested products. Relevantly, the Supreme Court has decided that the filing of
two actions with the same objective, as in this instance, constitutes forum shopping.

Owing to the substantial identity of parties, reliefs and issues in the IPO and RTC cases, a
decision in one case will necessarily amount to res judicata in the other action.

FULL TEXT
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.

DECISION
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 warrant 1 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 people’s 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; xxx 7
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)
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 SLCO’s 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 prohibitum–or 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 people’s 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.
SO ORDERED.

CASE DIGEST

FACTS: In 2000, Roma Drug, owned by Romeo Rodriguez, was raided by the NBI upon
request of Smithkline – a pharmaceutical company (now Glaxo Smithkline). RD is
apparently one of 6 pharmacies who were directly importing 5 medicine brands produced by
Smithkline from abroad. RD is not purchasing those medicines via local Smithkline – the
authorized distributor of Smithkline in the Philippines. Smithkline Phil. avers that because
the medicines were not purchased from a Philippine registered counterpart of Smithkline
then the products imported by RD are considered as counterfeit or “unregistered imported
drug product” – as defined by R.A. No. 8203 or the “Special Law on Counterfeit Drugs.”
Notwithstanding RD’s motion for reconsideration, the provincial prosecutor recommended
that Rodriguez be tried. Rodriguez assails the constitutionality of RA 8203 averring, among
other things, that it has violated his right to equal protection as it banned him access from
such medicines.
ISSUE: Whether or not R.A. No. 8203 violates equal protection.
HELD: Yes. The Supreme Court denounced R.A. No. 8203 for it violated equal protection. It
does not allow private 3rd parties to import such medicines abroad even in cases of life and
death nor does it allow the importation by 3 rd parties in cases wherein the stocks of such
medicine would run out. It discriminates at the expense of Filipinos who cannot travel
abroad to purchase such medicines yet need them badly. Nevertheless, the flawed intention
of Congress had been abrogated by the passage of RA 9502 “Universally Accessible
Cheaper and Quality Medicines Act of 2008” and its IRR. This law does not expressly repeal
SLCD but it emphasized that any medicine introduced into the Philippines by its patent
holder be accessible to anyone. It provides that the right to import drugs and medicines
shall be available to any government agency OR ANY PRIVATE 3 rd PARTY. The SC noted
that this law provided and recognized the constitutionally-guaranteed right of the public to
health.

FULL TEXT
G. R. No. 126627 August 14, 2003
SMITH KLINE BECKMAN CORPORATION, Petitioner,
vs.
THE HONORABLE COURT OF APPEALS and TRYCO PHARMA
CORPORATION, Respondents.

DECISION
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. 14561 1 for the aforesaid invention was issued to
petitioner for a term of seventeen (17) years.
The letters patent provides in its claims 2 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. 14561 4 as well as committed unfair
competition under Article 189, paragraph 1 of the Revised Penal Code and Section 29 of
Republic Act No. 166 (The Trademark Law) for advertising and selling as its own the drug
Impregon although the same contained petitioner’s patented Albendazole. 5
On motion of petitioner, Branch 125 of the Caloocan RTC issued a temporary restraining
order against private respondent enjoining it from committing acts of patent infringement
and unfair competition.6 A writ of preliminary injunction was subsequently issued. 7
Private respondent in its Answer8 averred that Letters Patent No. 14561 does not cover the
substance Albendazole for nowhere in it does that word appear; that even if the patent were
to include Albendazole, such substance is unpatentable; that the Bureau of Food and Drugs
allowed it to manufacture and market Impregon with Albendazole as its known ingredient;
that there is no proof that it passed off in any way its veterinary products as those of
petitioner; that Letters Patent No. 14561 is null and void, the application for the issuance
thereof having been filed beyond the one year period from the filing of an application abroad
for the same invention covered thereby, in violation of Section 15 of Republic Act No. 165
(The Patent Law); and that petitioner is not the registered patent holder.
Private respondent lodged a Counterclaim against petitioner for such amount of actual
damages as may be proven; P1,000,000.00 in moral damages; P300,000.00 in exemplary
damages; and P150,000.00 in attorney’s fees.
Finding for private respondent, the trial court rendered a Decision dated July 23, 1991, 9 the
dispositive portion of which reads:
WHEREFORE, in view of the foregoing, plaintiff’s complaint should be, as it is hereby,
DISMISSED. The Writ of injunction issued in connection with the case is hereby ordered
DISSOLVED.
The Letters Patent No. 14561 issued by the then Philippine Patents Office is hereby
declared null and void for being in violation of Sections 7, 9 and 15 of the Patents Law.
Pursuant to Sec. 46 of the Patents Law, the Director of Bureau of Patents is hereby directed
to cancel Letters Patent No. 14561 issued to the plaintiff and to publish such cancellation in
the Official Gazette.
Defendant Tryco Pharmaceutical Corporation is hereby awarded P330,000.00 actual
damages and P100,000.00 attorney’s fees as prayed for in its counterclaim but said amount
awarded to defendant is subject to the lien on correct payment of filing fees.
SO ORDERED. (Underscoring supplied)
On appeal, the Court of Appeals, by Decision of April 21, 1995, 10 upheld the trial court’s
finding that private respondent was not liable for any infringement of the patent of petitioner
in light of the latter’s failure to show that Albendazole is the same as the compound subject
of Letters Patent No. 14561. Noting petitioner’s admission of the issuance by the U.S. of a
patent for Albendazole in the name of Smith Kline and French Laboratories which was
petitioner’s former corporate name, the appellate court considered the U.S. patent as
implying that Albendazole is different from methyl 5 propylthio-2-benzimidazole carbamate.
It likewise found that private respondent was not guilty of deceiving the public by
misrepresenting that Impregon is its product.
The appellate court, however, declared that Letters Patent No. 14561 was not void as it
sustained petitioner’s explanation that Patent Application Serial No. 18989 which was filed
on October 8, 1976 was a divisional application of Patent Application Serial No. 17280 filed
on June 17, 1975 with the Philippine Patent Office, well within one year from petitioner’s
filing on June 19, 1974 of its Foreign Application Priority Data No. 480,646 in the U.S.
covering the same compound subject of Patent Application Serial No. 17280.
Applying Section 17 of the Patent Law, the Court of Appeals thus ruled that Patent
Application Serial No. 18989 was deemed filed on June 17, 1995 or still within one year
from the filing of a patent application abroad in compliance with the one-year rule under
Section 15 of the Patent Law. And it rejected the submission that the compound in Letters
Patent No. 14561 was not patentable, citing the jurisprudentially established presumption
that the Patent Office’s determination of patentability is correct. Finally, it ruled that
petitioner established itself to be the one and the same assignee of the patent
notwithstanding changes in its corporate name. Thus the appellate court disposed:
WHEREFORE, the judgment appealed from is AFFIRMED with the MODIFICATION that
the orders for the nullification of Letters Patent No. 14561 and for its cancellation are
deleted therefrom.
SO ORDERED.
Petitioner’s motion for reconsideration of the Court of Appeals’ decision having been
denied11 the present petition for review on certiorari 12 was filed, assigning as errors the
following:
I. THE COURT OF APPEALS GRAVELY ERRED IN NOT FINDING THAT ALBENDAZOLE,
THE ACTIVE INGREDIENT IN TRYCO’S “IMPREGON” DRUG, IS INCLUDED IN
PETITIONER’S LETTERS PATENT NO. 14561, AND THAT CONSEQUENTLY TRYCO IS
ANSWERABLE FOR PATENT INFRINGEMENT.
II. THE COURT OF APPEALS GRAVELY ERRED IN AWARDING TO PRIVATE
RESPONDENT TRYCO PHARMA CORPORATION P330,000.00 ACTUAL DAMAGES AND
P100,000.00 ATTORNEY’S FEES.
Petitioner argues that under the doctrine of equivalents for determining patent infringement,
Albendazole, the active ingredient it alleges was appropriated by private respondent for its
drug Impregon, is substantially the same as methyl 5 propylthio-2-benzimidazole carbamate
covered by its patent since both of them are meant to combat worm or parasite infestation
in animals. It cites the “unrebutted” testimony of its witness Dr. Godofredo C. Orinion (Dr.
Orinion) that the chemical formula in Letters Patent No. 14561 refers to the compound
Albendazole. Petitioner adds that the two substances substantially do the same function in
substantially the same way to achieve the same results, thereby making them truly identical.
Petitioner thus submits that the appellate court should have gone beyond the literal
wordings used in Letters Patent No. 14561, beyond merely applying the literal infringement
test, for in spite of the fact that the word Albendazole does not appear in petitioner’s letters
patent, it has ably shown by evidence its sameness with methyl 5 propylthio-2-
benzimidazole carbamate.
Petitioner likewise points out that its application with the Philippine Patent Office on account
of which it was granted Letters Patent No. 14561 was merely a divisional application of a
prior application in the U. S. which granted a patent for Albendazole. Hence, petitioner
concludes that both methyl 5 propylthio-2-benzimidazole carbamate and the U.S.-patented
Albendazole are dependent on each other and mutually contribute to produce a single
result, thereby making Albendazole as much a part of Letters Patent No. 14561 as the other
substance is.
Petitioner concedes in its Sur-Rejoinder 13 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 attorney’s
fees as not falling under any of the instances enumerated by law where recovery of
attorney’s fees is allowed.
In its Comment,14 private respondent contends that application of the doctrine of equivalents
would not alter the outcome of the case, Albendazole and methyl 5 propylthio-2-
benzimidazole carbamate being two different compounds with different chemical and
physical properties. It stresses that the existence of a separate U.S. patent for Albendazole
indicates that the same and the compound in Letters Patent No. 14561 are different from
each other; and that since it was on account of a divisional application that the patent for
methyl 5 propylthio-2-benzimidazole carbamate was issued, then, by definition of a
divisional application, such a compound is just one of several independent inventions
alongside Albendazole under petitioner’s original patent application.
As has repeatedly been held, only questions of law may be raised in a petition for review on
certiorari before this Court. Unless the factual findings of the appellate court are mistaken,
absurd, speculative, conjectural, conflicting, tainted with grave abuse of discretion, or
contrary to the findings culled by the court of origin, 15 this Court does not review them.
From an examination of the evidence on record, this Court finds nothing infirm in the
appellate court’s conclusions with respect to the principal issue of whether private
respondent committed patent infringement to the prejudice of petitioner.
The burden of proof to substantiate a charge for patent infringement rests on the
plaintiff.16 In the case at bar, petitioner’s evidence consists primarily of its Letters Patent No.
14561, and the testimony of Dr. Orinion, its general manager in the Philippines for its Animal
Health Products Division, by which it sought to show that its patent for the compound methyl
5 propylthio-2-benzimidazole carbamate also covers the substance Albendazole.
From a reading of the 9 claims of Letters Patent No. 14561 in relation to the other portions
thereof, no mention is made of the compound Albendazole. All that the claims disclose are:
the covered invention, that is, the compound methyl 5 propylthio-2-benzimidazole
carbamate; the compound’s being anthelmintic but nontoxic for animals or its ability to
destroy parasites without harming the host animals; and the patented methods,
compositions or preparations involving the compound to maximize its efficacy against
certain kinds of parasites infecting specified animals.
When the language of its claims is clear and distinct, the patentee is bound thereby and
may not claim anything beyond them.17 And so are the courts bound which may not add to
or detract from the claims matters not expressed or necessarily implied, nor may they
enlarge the patent beyond the scope of that which the inventor claimed and the patent office
allowed, even if the patentee may have been entitled to something more than the words it
had chosen would include.18
It bears stressing that the mere absence of the word Albendazole in Letters Patent No.
14561 is not determinative of Albendazole’s non-inclusion in the claims of the patent. While
Albendazole is admittedly a chemical compound that exists by a name different from that
covered in petitioner’s letters patent, the language of Letter Patent No. 14561 fails to yield
anything at all regarding Albendazole. And no extrinsic evidence had been adduced to
prove that Albendazole inheres in petitioner’s patent in spite of its omission therefrom or that
the meaning of the claims of the patent embraces the same.
While petitioner concedes that the mere literal wordings of its patent cannot establish
private respondent’s infringement, it urges this Court to apply the doctrine of equivalents.
The doctrine of equivalents provides that an infringement also takes place when a device
appropriates a prior invention by incorporating its innovative concept and, although with
some modification and change, performs substantially the same function in substantially the
same way to achieve substantially the same result. 19 Yet again, a scrutiny of petitioner’s
evidence fails to convince this Court of the substantial sameness of petitioner’s patented
compound and Albendazole. While both compounds have the effect of neutralizing
parasites in animals, identity of result does not amount to infringement of patent unless
Albendazole operates in substantially the same way or by substantially the same means as
the patented compound, even though it performs the same function and achieves the same
result.20 In other words, the principle or mode of operation must be the same or
substantially the same.21
The doctrine of equivalents thus requires satisfaction of the function-means-and-result test,
the patentee having the burden to show that all three components of such equivalency test
are met.22
As stated early on, petitioner’s evidence fails to explain how Albendazole is in every
essential detail identical to methyl 5 propylthio-2-benzimidazole carbamate. Apart from the
fact that Albendazole is an anthelmintic agent like methyl 5 propylthio-2-benzimidazole
carbamate, nothing more is asserted and accordingly substantiated regarding the method or
means by which Albendazole weeds out parasites in animals, thus giving no information on
whether that method is substantially the same as the manner by which petitioner’s
compound works. The testimony of Dr. Orinion lends no support to petitioner’s cause, he
not having been presented or qualified as an expert witness who has the knowledge or
expertise on the matter of chemical compounds.
As for the concept of divisional applications proffered by petitioner, it comes into play when
two or more inventions are claimed in a single application but are of such a nature that a
single patent may not be issued for them. 23 The applicant thus is required “to divide,” that is,
to limit the claims to whichever invention he may elect, whereas those inventions not
elected may be made the subject of separate applications which are called “divisional
applications.”24 What this only means is that petitioner’s methyl 5 propylthio-2-benzimidazole
carbamate is an invention distinct from the other inventions claimed in the original
application divided out, Albendazole being one of those other inventions. Otherwise, methyl
5 propylthio-2-benzimidazole carbamate would not have been the subject of a divisional
application if a single patent could have been issued for it as well as Albendazole.
The foregoing discussions notwithstanding, this Court does not sustain the award of actual
damages and attorney’s fees in favor of private respondent. The claimed actual damages
of 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 respondent’s President 25 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
respondent’s officers are not the competent proof or best evidence obtainable to establish
its right to actual or compensatory damages for such damages also require presentation of
documentary evidence to substantiate a claim therefor. 28
In the same vein, this Court does not sustain the grant by the appellate court of attorney’s
fees to private respondent anchored on Article 2208 (2) of the Civil Code, private
respondent having been allegedly forced to litigate as a result of petitioner’s suit. Even if a
claimant is compelled to litigate with third persons or to incur expenses to protect its rights,
still attorney’s fees may not be awarded where no sufficient showing of bad faith could be
reflected in a party’s persistence in a case other than an erroneous conviction of the
righteousness of his cause.29 There exists no evidence on record indicating that petitioner
was moved by malice in suing private respondent.
This Court, however, grants private respondent temperate or moderate damages in the
amount of 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 attorney’s fees to
private respondent, Tryco Pharma Corporation, is DELETED; instead, it is hereby awarded
the amount of P20,000.00 as temperate or moderate damages.
SO ORDERED.

CASE DIGEST
FACTS: Smith Kline is a US corporation licensed to do business in the Philippines. In 1981,
a patent was issued to it for its invention entitled “Methods and Compositions for Producing
Biphasic Parasiticide Activity Using Methyl 5 Propylthio-2-Benzimidazole Carbamate.” The
invention is a means to fight off gastrointestinal parasites from various cattles and pet
animals.
Tryco Pharma is a local corporation engaged in the same business as Smith Kline.
Smith Kline sued Tryco Pharma because the latter was selling a veterinary product called
Impregon which contains a drug called Albendazole which fights off gastro-intestinal
roundworms, lungworms, tapeworms and fluke infestation in carabaos, cattle and goats.
Smith Kline is claiming that Albendazole is covered in their patent because it 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. And that
Albendazole is actually patented under Smith Kline in the US.
Tryco Pharma averred that nowhere in Smith Kline’s patent does it mention that
Albendazole is present but even if it were, the same is “unpatentable”.
Smith Kline thus invoked the doctrine of equivalents, which implies that the two substances
substantially do the same function in substantially the same way to achieve the same
results, thereby making them truly identical for in spite of the fact that the word Albendazole
does not appear in Tryco Paharma’s letters of patent, it has ably shown by evidence its
sameness with methyl 5 propylthio-2-benzimidazole carbamate.
ISSUE: Whether or not there is patent infringement in this case
HELD: No. Smith Kline failed to prove that Albendazole is a compound inherent in the
patented invention. Nowhere in the patent is the word Albendazole found. When the
language of its claims is clear and distinct, the patentee is bound thereby and may not claim
anything beyond them. Further, there was a separate patent for Albendazole given by the
US which implies that Albendazole is indeed separate and distinct from the patented
compound here.
A scrutiny of Smith Kline’s evidence fails to prove the substantial sameness of the patented
compound and Albendazole. While both compounds have the effect of neutralizing
parasites in animals, identity of result does not amount to infringement of patent unless
Albendazole operates in substantially the same way or by substantially the same means as
the patented compound, even though it performs the same function and achieves the same
result. In other words, the principle or mode of operation must be the same or substantially
the same.
The doctrine of equivalents thus requires satisfaction of the function-means-and-result test,
the patentee having the burden to show that all three components of such equivalency test
are met.