ASSIGNMENT FOR OCTOBER 7, 2014

Rights of a Patentee

A.M. No. 99-20-09-SC Resolution Clarifying Guidelines on the Application for

Enforceability of Search Warrants.

Sec. 71
A.M. NO. 02-1-06-SC Rule on Search and Seizure in Civil Actions for
Infringement of Intellectual Property Rights
Limitations
Sec. 72
Roma Drug vs. RTC of Guagua, Pampanga, G.R. No. 149907, April 16, 2009

A.M. No. 10-3-10-SC Special Rules on Intellectual Property Litigation

Infringement
Sec. 76
Creser Precision vs. Floro International, G.R. No. 118708, February 2, 1998
Smith Kline Beckman vs. CA & Tryco Pharma Corp, GR. 126627, August 14,
2003

Licensing
Secs. 85 & 93
Voluntary & Compulsory
Barry John Price vs. United Laboratories, G.R. No. 82542, September 29,
1998
Smith Kline vs. Doctors Pharmaceuticals, G.R. No. 121867, July 24, 1997
Smith Kline vs. Danlex Research, G.R. No. 121267, October 23, 2001

Utility Models
Sec. 108
Del Rosario vs. CA & Janito Corporation, G.R. 115106, March 15, 1996

Industrial Design
Sec. 112

PART IV SEARCH AND SEIZURE

(SmithKline), a duly registered corporation which is the local distributor of

SECOND DIVISION
ROMA DRUG and ROMEO
RODRIGUEZ, as Proprietor
of ROMA DRUG,
Petitioners,

- versus -

G.R. No. 149907

pharmaceutical

Present:

corporation. The local SmithKline has since merged with Glaxo Wellcome

QUISUMBING, J.,
Chairperson,
CARPIO-MORALES,
TINGA,
VELASCO, and
BRION, JJ.

products

manufactured

by

its

parent

London-based

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.

Promulgated:
THE REGIONAL TRIAL COURT
OF GUAGUA, PAMPANGA, THE
PROVINCIAL PROSECUTOR OF
PAMPANGA, BUREAU OF FOOD
& DRUGS (BFAD) and GLAXO
SMITHKLINE,
Respondents.

The NBI subsequently filed a complaint against Rodriguez for violation

April 16, 2009

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 inSan Fernando, Pampanga. The section prohibits the

x----------------------------------------------------------------------------x

sale of counterfeit drugs, which under Section 3(b)(3), includes an

DECISION

unregistered imported drug product. The term unregistered signifies the

TINGA, J.:

lack of registration with the Bureau of Patent, Trademark and Technology

Transfer of a trademark, tradename or other identification mark of a drug in

On 14 August 2000, a team composed of the National Bureau of

Investigation (NBI) operatives and inspectors of the Bureau of Food and

the name of a natural or juridical person, the process of which is governed

under Part III of the Intellectual Property Code.

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, AngelesCity. The raiding team seized several imported
medicines,

including Augmentin (375mg.)

tablets, Orbenin (500mg.)

capsules, Amoxil(250mg.) capsules and Ampiclox (500mg.).[2] It appears that

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.

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

During

preliminary

investigation,

Rodriguez

challenged

the

Provincial Prosecutor and Bureau of Food and Drugs (BFAD). On the

constitutionality of the SLCD. However, Assistant Provincial Prosecutor

constitutional issue, Glaxo Smithkline asserts the rule that the SLCD is

Celerina C. Pineda skirted the challenge and issued a Resolution dated 17

presumed constitutional, arguing that both Section 15, Article II and Section

August 2001 recommending that Rodriguez be charged with violation of

11, Article XIII are not self-executing provisions, the disregard of which can

Section 4(a) of the SLCD. The recommendation was approved by Provincial

give rise to a cause of action in the courts. It adds that Section 11, Article

Prosecutor Jesus Y. Manarang approved the recommendation.[3]

XIII in particular cannot be work to the oppression and unlawful of the

property rights of the legitimate manufacturers, importers or distributors,

Hence, the present Petition for Prohibition questing the RTC-Guagua

who take pains in having imported drug products registered before the

Pampanga and the Provincial Prosecutor to desist from further prosecuting

BFAD. Glaxo Smithkline further claims that the SLCD does not in fact

Rodriguez, and that Sections 3(b)(3), 4 and 5 of the SLCD be declared

conflict with the aforementioned constitutional provisions and in fact are in

unconstitutional. In gist, Rodriguez asserts that the challenged provisions

accord with constitutional precepts in favor of the peoples right to health.

contravene three provisions of the Constitution. The first is the equal

protection clause of the Bill of Rights. The two other provisions are Section

The Office of the Solicitor General casts the question as one of policy

11, Article XIII, which mandates that the State make essential goods, health

wisdom of the law that is, beyond the interference of the judiciary.[5] Again,

and other social services available to all the people at affordable cost; and

the presumption of constitutionality of statutes is invoked, and the assertion

Section 15, Article II, which states that it is the policy of the State to protect

is made that there is no clear and unequivocal breach of the Constitution

and promote the right to health of the people and instill health consciousness

presented by the SLCD.

among them.
II.
Through its Resolution dated 15 October 2001, the Court issued a
temporary restraining order enjoining the RTC from proceeding with the trial

The constitutional aspect of this petition raises obviously interesting

against Rodriguez, and the BFAD, the NBI and Glaxo Smithkline from

questions. However, such questions have in fact been mooted with the

prosecuting the petitioners.[4]

passage in 2008 of Republic Act No. 9502, also known as the Universally
Accessible Cheaper and Quality Medicines Act of 2008.[6]

Glaxo Smithkline and the Office of the Solicitor General (OSG) have
opposed the petition, the latter in behalf of public respondents RTC,

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: Pro
vided,
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 noncommercial 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)

Had the Court proceeded to directly confront the constitutionality of

It may be that Rep. Act No. 9502 did not expressly repeal any

the assailed provisions of the SLCD, it is apparent that it would have at least

provision of the SLCD. However, it is clear that the SLCOs classification of

placed in doubt the validity of the provisions. As written, the law makes a

unregistered imported drugs as counterfeit drugs, and of corresponding

criminal of any person who imports an unregistered drug regardless of the

criminal penalties therefore are irreconcilably in the imposition conflict with

purpose, even if the medicine can spell life or death for someone in

Rep. Act No. 9502 since the latter indubitably grants private third persons

the Philippines. It does not accommodate the situation where the drug is out

the unqualified right to import or otherwise use such drugs. Where a statute

of stock in the Philippines, beyond the reach of a patient who urgently

of later date, such as Rep. Act No. 9502, clearly reveals an intention on the

depends on it. It does not allow husbands, wives, children, siblings, parents

part of the legislature to abrogate a prior act on the subject that intention

to import the drug in behalf of their loved ones too physically ill to travel and

must be given effect.[9] When a subsequent enactment covering a field of

avail of the meager personal use exemption allotted by the law. It

operation coterminus with a prior statute cannot by any reasonable

discriminates, at the expense of health, against poor Filipinos without means

construction be given effect while the prior law remains in operative existence

to travel abroad to purchase less expensive medicines in favor of their

because of irreconcilable conflict between the two acts, the latest legislative

wealthier brethren able to do so. Less urgently perhaps, but still within the

expression prevails and the prior law yields to the extent of the

range of constitutionally protected behavior, it deprives Filipinos to choose a

conflict.[10] Irreconcilable inconsistency between two laws embracing the

less expensive regime for their health care by denying them a plausible and

same subject may exist when the later law nullifies the reason or purpose of

safe means of purchasing medicines at a cheaper cost.

the earlier act, so that the latter loses all meaning and function. [11] Legis
posteriors priores contrarias abrogant.

The absurd results from this far-reaching ban extends to implications

that deny the basic decencies of humanity. The law would make criminals of

For the reasons above-stated, the prosecution of petitioner is no

doctors

from

abroad
such

on
as

medical
the

missions

of such

International

humanitarian

longer warranted and the quested writ of prohibition should accordingly be

organizations

Red

Cross,

issued.

the International Red Crescent, Medicin Sans Frontieres, and other likeminded groups who necessarily bring their own pharmaceutical drugs when

III.

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,

SECOND DIVISION

at civil costs, the importation of unregistered drugs. It equates the importers

[G.R. No. 118708. February 2, 1998]

of such drugs, many of whom motivated to do so out of altruism or basic

CRESER PRECISION SYSTEMS, INC., petitioner, vs. COURT OF APPEALS

AND FLORO INTERNATIONAL CORP., respondents.

human

counterfeit

DECISION

pharmaceutical drugs for reasons of profit at the expense of public safety.

MARTINEZ, J.:

love,

with

the

malevolents

who

would

alter

or

Note that the SLCD is a special law, and the traditional treatment of penal
provisions of special laws is that of malum prohibitumor punishable
regardless of motive or criminal intent. For a law that is intended to help
save

lives,

the

SLCD

has

revealed

itself

as

heartless,

soullesslegislative piece.

The challenged provisions of the SLCD apparently proscribe a range of

constitutionally permissible behavior. It is laudable that with the passage of
Rep. Act No. 9502, the State has reversed course and allowed for a sensible
and

compassionate

approach

with

respect

to

the

importation

of

pharmaceutical drugs urgently necessary for the peoples constitutionallyrecognized 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

dated15

October

made PERMANENT. No pronouncements as to costs.

SO ORDERED.

2001 is

hereby

This petition for review on certiorari assails the decision[1]. The decision
of the Court of Appeals was penned by Justice Gloria C. Paras and concurred
in by Justice Salome A. Montoya and Justice Hector L. Hofilea.
1 of the Court of Appeals dated November 9, 1994 in C.A.-G.R. SP. No.
34425 entitled Floro International Corp. vs. Hon. Tirso D.C Cruz and Creser
Precision System, Inc., the dispositive portion of which reads:
WHEREFORE, THE PETITION IS HEREBY GRANTED. THE COMPLAINT
FOR INJUNCTION AND DAMAGES, CIVIL CASE NO. 93-1856 BEFORE THE
RESPONDENT JUDGE IS HEREBY ORDERED DISMISSED AND HIS
ORDERS THEREIN OF DECEMBER 29, 1993 AND MAY 11, 1994 ARE
ORDERED SET ASIDE.
Private respondent is a domestic corporation engaged in the
manufacture, production, distribution and sale of military armaments,
munitions, airmunitions and other similar materials.[2]
On January 23, 1990, private respondent was granted by the Bureau of
Patents, Trademarks and Technology Transfer (BPTTT), a Letters Patent No.
UM-6938[3] covering an aerial fuze which was published in the SeptemberOctober 1990, Vol. III, No. 5 issue of the Bureau of Patents Official Gazette.[4]
Sometime in November 1993, private respondent, through its president,
Mr. Gregory Floro, Jr., discovered that petitioner submitted samples of its
patented aerial fuze to the Armed Forces of the Philippines (AFP) for testing.
He learned that petitioner was claiming the aforesaid aerial fuze as its own
and planning to bid and manufacture the same commercially without license
or authority from private respondent. To protect its right, private respondent
on December 3, 1993, sent a letter[5] to petitioner advising it fro its existing
patent and its rights thereunder, warning petitioner of a possible court action
and/or application for injunction, should it proceed with the scheduled
testing by the military on December 7, 1993.
In response to private respondents demand, petitioner filed on
December 8, 1993 a complaint[6] for injunction and damages arising from the
alleged infringement before the Regional Trial Court of Quezon City, Branch
88. The complaint alleged, among others: that petitioner is the first, true and
actual inventor of an aerial fuze denominated as Fuze, PDR 77 CB4 which
is developed as early as December 1981 under the Self-Reliance Defense
Posture Program (SRDP) of the AFP; that sometime in 1986, petitioner began
supplying the AFP with the said aerial fuze; that private respondents aerial
fuze is identical in every respect to the petitioners fuze; and that the only
difference between the two fuzes are miniscule and merely cosmetic in
nature. Petitioner prayed that a temporary restraining order and/or writ of

preliminary injunction be issued enjoining private respondent including any

and all persons acting on its behalf from manufacturing, marketing and/or
profiting therefrom, and/or from performing any other act in connection
therewith or tending to prejudice and deprive it of any rights, privileges and
benefits to which it is duly entitled as the first, true and actual inventor of
the aerial fuze.
On December 10, 1993, the trial court issued a temporary restraining
order. Thereafter, hearings were held on the application of petitioner for the
issuance of a writ of preliminary injunction, with both parties presenting
their evidence. After the hearings, the trial court directed the parties to
submit their respective memoranda in support of their positions.
On December 27, 1993, private respondent submitted its
memorandum[7] alleging that petitioner has no cause of action to file a
complaint of infringement against it since it has no patent for the aerial
fuze which it claims to have invented; that petitioners available remedy is to
file a petition for cancellation of patent before the Bureau of Patents; that
private respondent as the patent holder cannot be stripped of its property
right over the patented aerial fuze consisting of the exclusive right to
manufacture, use and sell the same and that it stands to suffer irreparable
damage and injury if it is enjoined from the exercise of its property right over
its patent.
On December 29, 1993, the trial court issued an Order[8] granting the
issuance of a writ of preliminary injunction against private respondent the
dispositive portion of which reads:
WHEREFORE, plaintiffs application for the issuance of a writ of preliminary
injunction is granted and, upon posting of the corresponding bond by
plaintiff in the amount of PHP 200,000.00, let the writ of preliminary
injunction be issued by the branch Clerk of this Court enjoining the
defendant and any and all persons acting on its behalf or by and under its
authority, from manufacturing, marketing and/or selling aerial fuzes
identical, to those of plaintiff, and from profiting therefrom, and/or from
performing any other act in connection therewith until further orders from
this Court.
Private respondent moved for reconsideration but this was denied by the
trial courts in its Order[9] of May 11, 1994, pertinent portions of which read:
For resolution before this Court is the Motion for Reconsideration filed by
the defendant and the plaintiffs Opposition thereto. The Court finds no
sufficient cause to reconsider its order dated December 29, 1993. During the
hearing for the issuance of the preliminary injunction, the plaintiff has amply
proven its entitlement to the relief prayed for. It is undisputed that the
plaintiff has developed its aerial fuze way back in 1981 while the defendant
began manufacturing the same only in 1987. Thus, it is only logical to
conclude that it was the plaintiffs aerial fuze that was copied or imitated
which gives the plaintiff the right to have the defendant enjoined from
manufacturing, marketing and/or selling aerial fuzes identical to those of the
plaintiff, and from profiting therefrom and/or performing any other act in
connection therewith until further orders from this Court. With regards to
the defendants assertion that an action for infringement may only be
brought by anyone possessing right, title or interest to the patented

invention, (Section 42, RA 165) qualified by Section 10, RA 165 to include

only the first true and actual inventor, his heirs, legal representatives to
assignees, this court finds the foregoing to be untenable. Sec. 10 merely
enumerates the persons who may have an invention patented which does not
necessarily limit to these persons the right to institute an action for
infringement. Defendant further contends that the order in issue is
disruptive of the status quo. On the contrary, the order issued by the Court
in effect maintained the status quo. The last actual , peaceable uncontested
status existing prior to this controversy was the plaintiff manufacturing and
selling its own aerial fuzes PDR 77 CB4 which was ordered stopped through
the defendants letter. With issuance of the order, the operations of the
plaintiff continue. Lastly, this court believes that the defendant will not suffer
irreparable injury by virtue of said order. The defendants claim is primarily
hinged on its patent (Letters Patent No. UM-6983) the validity of which is
being questioned in this case.
WHEREFORE, premises considered, the Motion for Reconsideration is hereby
denied for lack of merit.
SO ORDERED.
Aggrieved, private respondent on June 27, 1994, filed a petition
for certiorari, mandamus and prohibition[10]before respondent Court of
Appeals raising as grounds the following:
a.

Petitioner has no cause of action for infringement against

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

b.

The case being an action for cancellation or invalidation of

private respondents Letters Patent over its own aerial fuze,
the proper venue is the Office of the Director of Patents;

c.

The trial court acted in grave abuse of discretion and or in

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

d.

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

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

e.

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

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

On November 9, 1994, the respondent court rendered the now assailed

decision reversing the trial courts Order of December 29, 1993 and
dismissing the complaint filed by petitioner.
The motion for reconsideration was also denied on January 17,
1995.[11] Hence, this present petition.
It is petitioners contention that it can file, under Section 42 of the
Patent Law (R.A. 165), an action for infringement not as a patentee but as an
entity in possession of a right, title or interest in and to the patented

invention. It advances the theory that while the absence of a patent may
prevent one from lawfully suing another for infringement of said patent, such
absence does not bar the first true and actual inventor of the patented
invention from suing another who was granted a patent in a suit for
declaratory or injunctive relief recognized under American patent laws. This
remedy, petitioner points out, may be likened to a civil action for
infringement under Section 42 of the Philippine Patent Law.
We find the above arguments untenable.
Section 42 of R.A. 165, otherwise known as the Patent Law, explicitly
provides:
SECTION. 42. Civil action for infringement. Any patentee, or anyone
possessing any right, title or interest in and to the patented invention, whose
rights have been infringed, may bring a civil action before the proper Court of
First Instance (now Regional Trial court), to recover from the infringer
damages sustained by reason of the infringement and to secure an injunction
for the protection of his right. x x x
Under the aforequoted law, only the patentee or his successors-ininterest may file an action for infringement. The phrase anyone possessing
any right, title or interest in and to the patented invention upon which
petitioner maintains its present suit, refers only to the patentees successorsin-interest, assignees or grantees since actions for infringement of patent
may be brought in the name of the person or persons interested, whether as
patentee, assignees or grantees, of the exclusive right.[12] Moreover, there can
be no infringement of a patent until a patent has been issued, since whatever
right one has to the invention covered by the patent arises alone from the
grant of patent.[13] In short, a person or entity who has not been granted
letters patent over an invention and has not acquired any right or title
thereto either as assignee or as licensee, has no cause of action for
infringement because the right to maintain an infringement suit depends on
the existence of the patent.[14]
Petitioner admits it has no patent over its aerial fuze. Therefore, it has
no legal basis or cause of action to institute the petition for injunction and
damages arising from the alleged infringement by private respondent. While
petitioner claims to be the first inventor of the aerial fuze, still it has no right
of property over the same upon which it can maintain a suit unless it obtains
a patent therefor. Under American jurisprudence, and inventor has no
common-law right to a monopoly of his invention. He has the right to make,
use and vend his own invention, but if he voluntarily discloses it, such as by
offering it for sale, the world is free to copy and use it with impunity. A
patent, however, gives the inventor the right to exclude all others. As a
patentee, he has the exclusive right of making, using or selling the
invention.[15]
Further, the remedy of declaratory judgment or injunctive suit on patent
invalidity relied upon by petitioner cannot be likened to the civil action for
infringement under Section 42 of the Patent Law. The reason for this is that
the said remedy is available only to the patent holder or his successors-ininterest. Thus, anyone who has no patent over an invention but claims to
have a right or interest thereto can not file an action for declaratory judgment
or injunctive suit which is not recognized in this jurisdiction. Said person,

however, is not left without any remedy. He can, under Section 28 of the
aforementioned law, file a petition for cancellation of the patent within three
(3) years from the publication of said patent with the Director of Patents and
raise as ground therefor that the person to whom the patent was issued is
not the true and actual inventor. Hence, petitioners remedy is not to file an
action for injunction or infringement but to file a petition for cancellation of
private respondent patent. Petitioner however failed to do so. As such, it can
not now assail or impugn the validity of the private respondents letters
patent by claiming that it is the true and actual inventor of the aerial fuze.
Thus, as correctly ruled by the respondent Court of Appeals in its
assailed decision: since the petitioner (private respondent herein) is the
patentee of the disputed invention embraced by letters of patent UM No. 6938
issued to it on January 23, 1990 by the Bureau of Patents, it has in its favor
not only the presumption of validity of its patent, but that of a legal and factual
first and true inventor of the invention.
In the case of Aguas vs. De Leon,[16] we stated that:
The validity of the patent issued by the Philippine Patent Office in favor of
the private respondent and the question over the investments, novelty and
usefulness of the improved process therein specified and described are
matters which are better determined by the Philippines patent Office,
composed of experts in their field, have, by the issuance of the patent in
question, accepted the thinness of the private respondents new tiles as a
discovery. There is a presumption that the Philippine Patent Office has
correctly determined the patentability of the improvement by the private
respondent of the process in question.
In fine, in the absence of error or abuse of power or lack or jurisdiction
or grave abuse of discretion, we sustain the assailed decision of the
respondent Court of Appeal.
WHEREFORE, the decision of the Court of Appeals is hereby
AFFIRMED. No pronouncement as to costs.
SO ORDERED.

THIRD DIVISION
[G.R. No. 121867. July 24, 1997]
SMITH KLINE & FRENCH LABORATORIES, LTD., petitioner, vs. COURT
OF APPEALS, BUREAU OF PATENTS, TRADEMARKS AND
TECHNOLOGY TRANSFER and DOCTORS PHARMACEUTICALS,
INC.respondents.
DECISION
DAVIDE, JR., J.:

This is an appeal under Rule 45 of the Rules of Court from the

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

invention which is disclosed and claimed in Letters Patent

No. 12207;
2. That the license granted herein shall be for the
remaining life of said Letters Patent No. 12207 unless this
license is terminated in the manner hereinafter provided
and that no right or license is hereby granted to [private
respondent] under any patent to [petitioner] or [sic] other
than recited herein;

Petitioner is a foreign corporation with principal office at Welwyn Garden

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

3. By virtue of this license, [private respondent] shall pay

[petitioner] a royalty on all license products containing the
patented substance made and sold by [private respondent]
in the amount equivalent to TWO AND ONE HALF
PERCENT (2.5%) of the net sales in Philippine
currency. The term "net scale" [sic] means the gross
amount billed for the product pertaining to Letters Patent
No. 12207, less --

Private respondent is a domestic corporation engaged in the business of

manufacturing and distributing pharmaceutical products. On 30 March
1987, it filed a petition for compulsory licensing[3] with the BPTTT for
authorization to manufacture its own brand of medicine from the
drugCimetidine and to market the resulting product in the Philippines. The
petition was filed pursuant to the provisions of Section 34 of Republic Act No.
165 (An Act Creating a Patent Office Prescribing Its Powers and Duties,
Regulating the Issuance of Patents, and Appropriating Funds Therefor),
which provides for the compulsory licensing of a particular patent after the
expiration of two years from the grant of the latter if the patented invention
relates to, inter alia, medicine or that which is necessary for public health or
public safety. Private respondent alleged that the grant of Philippine Letters
Patent No. 12207 was issued on 29 November 1978; that the petition was
filed beyond the two-year protective period provided in Section 34 of R.A. No.
165; and that it had the capability to work the patented product or make use
of it in its manufacture of medicine.
Petitioner opposed, arguing that private respondent had no cause of
action and lacked the capability to work the patented product; the petition
failed to specifically divulge how private respondent would use or improve the
patented product; and that private respondent was motivated by the
pecuniary gain attendant to the grant of a compulsory license. Petitioner
also maintained that it was capable of satisfying the demand of the local
market in the manufacture and marketing of the medicines covered by the
patented product. Finally, petitioner challenged the constitutionality of
Sections 34 and 35 of R.A. No. 165 for violating the due process and equal
protection clauses of the Constitution.
After appropriate proceedings, the BPTTT handed down its decision on
14 February 1994, with the dispositive portion thereof providing:
NOW, THEREFORE, by virtue of the powers vested in this Office by
Republic Act No. 165, as amended by Presidential Decree No. 1263,
there is hereby issued a license in favor of the herein [private
respondent], United Laboratories, Inc., [sic] under Letters Patent No.
12207 issued on November 29, 1978, subject to the following terms
and conditions:
1. That [private respondent] be hereby granted a nonexclusive and non-transferable license to manufacture, use
and sell in the Philippines its own brands of
pharmaceutical products containing [petitioner's] patented

(a) Transportation charges or allowances, if any, included

in such amount;
(b) Trade, quantity or cash discounts and broker's or
agent's or distributor's commissions, if any, allowed or
paid;
(c) Credits or allowances, if any, given or made on account
of rejection or return of the patented product previously
delivered; and
(d) Any tax, excise or government charge included in such
amount, or measured by the production sale,
transportation, use of delivery of the products.
In case [private respondent's] product containing the
substance shall contain one or more active ingredients
therewith, said product hereinafter identified as admixed
the royalty to be paid shall be determined in accordance
following formula:

patented
admixed
product,
with the

Net Sales on

Value of

Patented
Product x 0.025 x

ROYALTY
Substance

Patented

Value of Other

= Admixed
Value

of

Substance
Active Ingredients
4. The royalties shall be computed after the end of each calendar
quarter to all goods containing the patented substance herein
involved, made and sold during the precedent quarter and to be paid
by [private respondent] at its place of business on or before the
thirtieth day of the month following the end of each calendar

quarter. Payments should be made to [petitioner's] authorized

representative in the Philippines;
5. [Private respondent] shall keep records in sufficient detail to
enable [petitioner] to determine the royalties payable and shall
further permit its books and records to be examined from time to
time at [private respondent's] premises during office hours, to the
extent necessary to be made at the expense of [petitioner] by a
certified public accountant appointed by [petitioner] and acceptable
to [private respondent].
6. [Private respondent] shall adopt and use its own trademark or
labels on all its products containing the patented substance herein
involved;
7. [Private respondent] shall comply with the laws on drugs and
medicine requiring previous clinical tests and approval of proper
government authorities before selling to the public its own products
manufactured under the license;
8. [Petitioner] shall have the right to terminate the license granted to
[private respondent] by giving the latter thirty (30) days notice in
writing to that effect, in the event that [private respondent]
default [sic] in the payment of royalty provided herein or if [private
respondent] shall default in the performance of other covenants or
conditions of this agreement which are to be performed by [private
respondent]:
(a) [Private respondent] shall have the right
provided it is not in default to payment or
royalties or other obligations under this
agreement, to terminate the license granted to
its, [sic] giving [petitioner] thirty (30) days-notice
in writing to that effect;
(b) Any termination of this license as provided
for above shall not in any way operate to deny
[petitioner] its rights or remedies, either at
laws [sic] or
equity,
or
relieve
[private
respondent] of the payment of royalties or
satisfaction of other obligations incurred prior to
the effective date of such termination; and
(c) Notice of termination of this license shall be
filed with the Bureau of Patents, Trademarks
and Technology Transfer.
9. In case of dispute as to the enforcement of the provisions of this
license, the matter shall be submitted for arbitration before the
Director of Bureau of Patents, Trademarks and Technology Transfer
or any ranking official of the Bureau of Patents, Trademarks and
Technology Transfer duly delegated by him;
10. This License shall inure to the benefit of each of the parties
herein, to the subsidiaries and assigns of [petitioner] and to the
successors and assigns of [private respondent]; and

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

Petitioner then appealed to the Court of Appeals by way of a petition for
review, which was docketed as CA-G.R. SP No. 33520. Petitioner claimed
that the appealed decision was erroneous because:
I
... [IT] VIOLATES INTERNATIONAL LAW AS EMBODIED IN THE
PARIS CONVENTION FOR THE PROTECTION OF INDUSTRIAL
PROPERTY AND MUST ACCORDINGLY BE SET ASIDE AND
MODIFIED.
II
... [IT] IS AN INVALID EXERCISE OF POLICE POWER.
III
CONCEDING ARGUENDO THE QUESTIONED DECISIONS
VALIDITY, THE BPTTTS PRONOUNCEMENT FIXING THE
ROYALTY AT 2.5% OF THE NET WHOLESALE PRICE IN
PHILIPPINE CURRENCY WAS RENDERED WITHOUT ANY
FACTUAL BASIS AND AMOUNTS TO EXPROPRIATION OF
PRIVATE PROPERTY WITHOUT JUST COMPENSATION WHICH
IS VIOLATIVE OF THE CONSTITUTION.
IV
... [IT] SHOULD NOT HAVE PROCEEDED TO DECIDE THE
CASE BELOW FOR FAILURE OF PRIVATE RESPONDENT TO
AFFIRMATIVELY PROVE THE JURISDICTIONAL FACT OF
PUBLICATION.[5]
In its decision of 4 November 1994,[6] the Court of Appeals affirmed in
toto the challenged decision. We quote its findings and conclusion upon
which the affirmance is anchored, viz.:
An assiduous scrutiny of the impugned decision of the public
respondent reveals that the same is supported by substantial
evidence. It appears that at the time of the filing of the petition for
compulsory license on March 24, 1987, the subject letters Patent
No. 12207 issued on November 29, 1978 has been in effect for more
than two (2) years. The patented invention relates to compound
and compositions used in inhibiting certain actions of the
histamine, hence, it relates to medicine. Moreover, after hearing
and careful consideration of the evidence presented, the Director of
Patents ruled that - there is ample evidence to show that [private
respondent] possesses such capability, having competent
personnel, machines and equipment as well as permit to
manufacture different drugs containing patented active ingredients
such as ethambutol of American Cyanamid and Ampicillin and
Amoxicillin of Beecham Groups, Ltd.
As to the claim by the petitioner that it has the capacity to work the
patented product although it was not shown that any pretended
abuse has been committed, thus the reason for granting
compulsory license is intended not only to give a chance to others

10

to supply the public with the quantity of the patented article but
especially to prevent the building up of patent monopolities [sic].
[Parke Davis v. Doctors Pharmaceuticals, Inc., 14 SCRA 1053].
We find that the granting of compulsory license is not simply
because Sec. 34 (1) e, RA 165 allows it in cases where the invention
relates to food and medicine. The Director of Patents also
considered in determining that the applicant has the capability to
work or make use of the patented product in the manufacture of a
useful product. In this case, the applicant was able to show that
Cimetidine, (subject matter of latters Patent No. 12207) is necessary
for the manufacture of an anti-ulcer drug/medicine, which is
necessary for the promotion of public health. Hence, the award of
compulsory license is a valid exercise of police power.
We do not agree to [sic] petitioners contention that the fixing of the
royalty at 2.5% of the net wholesale price amounted to
expropriation of private property without just compensation.
Paragraph 3, Section 35-B, R.A. No. 165, as amended by P.D. No.
1267, states:
SEC. 35-B. Terms and Conditions of Compulsory License.
(1). x x x
(2). x x x
(3). A compulsory license shall only be granted subject to the payment of
adequate royalties commensurate with the extent to which the invention is
worked. However, royalty payments shall not exceed five percent (5%) of the
net wholesale price (as defined in Section 33-A) of the products
manufactured under the license.
If the product, substance, or process subject of the compulsory license is
involved in an industrial project approved by the Board of Investments, the
royalty payable to the patentee or patentees shall not exceed three percent
(3%) of the net wholesale price (as defined in Section 34-A) of the patented
commodity and/or commodity manufactured under the patented process, the
same rate of royalty shall be paid whenever two or more patents are involved,
which royalty shall be distributed to the patentees in rates proportional to
the extent of commercial use by the licensee giving preferential values to the
holder of the oldest subsisting product patent.
The foregoing provision grants the Director of Patents the use of his sound
discretion in fixing the percentage for the royalty rate. In the instant case,
the Director of Patents exercised his discretion and ruled that a rate of 2.5%
of the net wholesale price is fair enough for the parties. In Parke Davis &
Co. vs. DPI and Tiburcio, [L-27004, August 6, 1983, 124 SCRA 115] it was
held that - liberal treatment in trade relations should be afforded to local
industry for as reasoned out by respondent company, it is so difficult to
compete with the industrial grants [sic] of the drug industry, among them
being the petitioner herein, that it always is necessary that the local drug
companies should sell at much lower (than) the prices of said foreign drug
entities. Besides, foreign produce licensor can later on ask for an increase
in percentage rate of royalty fixed by the Director of Patents if local sales of

license should increase. Further, in Price vs. UNILAB, the award of royalty
rate of 2.5% was deemed to be just and reasonable, to wit [166 SCRA 133]:
Moreover, what UNILAB has with the compulsory license is the bare right to
use the patented chemical compound in the manufacture of a special
product, without any technical assistance from herein respondentappellant. Besides, the special product to be manufactured by UNILAB will
only be used, distributed, and disposed locally. Therefore, the royalty rate of
2.5% is just and reasonable.
It appearing that herein petitioner will be paid royalties on the sales of any
products [sic] the licensee may manufacture using any or all of the patented
compounds, the petitioner cannot complain of a deprivation of property
rights without just compensation [Price v. UNILAB, L-82542, September 19,
1988].
We take note of the well-crafted petition submitted by petitioner albeit the
legal milieu and a good number of decided cases militate against the grounds
posited by petitioner. In sum, considering the well-entrenched jurisprudence
sustaining the position of respondents, We reiterate the rule in Basay Mining
Corporation vs. SEC, to the effect that The legal presumption is that official duty has been performed. And it is
particularly strong as regards administrative agencies vested with powers
said to be quasi-judicial in nature, in connection with the enforcement of
laws affecting particular fields of activity, the proper regulation and/or
promotion of which requires a technical or special training, aside from a good
knowledge and grasp of the overall conditions, relevant to said field,
obtaining in the nations. The policy and practice underlying our
Administrative Law is that courts of justice should respect the findings of fact
of said administrative agencies, unless there is absolutely no evidence in
support thereof or such evidence is clearly, manifestly and patently
insubstantial. [G.R. No. 76695, October 3, 1988, Minute Resolution;
Beautifont, Inc., et al. v.Court of Appeals, et al., G.R. No. 50141, January 29,
1988]
Its motion for reconsideration having been denied in the resolution [7] of
31 August 1995, petitioner filed the instant petition for review
oncertiorari with the following assignment of errors:
I
THE HON. COURT OF APPEALS ERRED IN NOT HOLDING THAT
THE BPTTT'S DECISION VIOLATES INTERNATIONAL LAW AS
EMBODIED IN (A) THE PARIS CONVENTION FOR THE
PROTECTION OF INDUSTRIAL PROPERTY AND (B) THE GATT
TREATY, URUGUAY ROUND, AND MUST ACCORDINGLY BE SET
ASIDE AND MODIFIED.
II
THE HON. COURT OF APPEALS ERRED IN NOT HOLDING THAT
THE BPTTT'S DECISION IS AN INVALID EXERCISE OF POLICE
POWER, ABSENT ANY SHOWING BY EVIDENCE OF AN
OVERWHELMING PUBLIC NEED FOR A COMPULSORY LICENSE
OVER CIMETIDINE IN FAVOR OF PRIVATE RESPONDENT.

11

III
THE HON. COURT OF APPEALS ERRED IN NOT HOLDING THAT
THE BPTTT'S PRONOUNCEMENT FIXING THE ROYALTY FOR AN
INVOLUNTARY LICENSE AT 2.5% OF THE NET WHOLESALE
PRICE IN PHILIPPINE CURRENCY WAS RENDERED WITHOUT ANY
FACTUAL BASIS AND AMOUNTS TO EXPROPRIATION OF PRIVATE
PROPERTY WITHOUT JUST COMPENSATION AND IS IN
VIOLATION OF THE CONSTITUTIONAL RIGHT TO DUE PROCESS.
IV
THE HON. COURT OF APPEALS ERRED IN NOT HOLDING THE
BPTTT'S ACTION WAS RENDERED NULL AND VOID FOR FAILURE
OF PRIVATE RESPONDENT TO AFFIRMATIVELY PROVE THE
JURISDICTIONAL FACT OF PUBLICATION AS REQUIRED BY LAW.
We resolved to give due course to the petition and required the parties to
submit their respective memoranda, which they did, with that of public
respondent filed only on 7 February 1997.
After a careful perusal of the pleadings and evaluation of the arguments
adduced by the parties, we find this petition to be without merit.
In its first assigned error, petitioner invokes Article 5 of the Paris
Convention for the Protection of Industrial Property,[8] or Paris Convention,
for short, of which the Philippines became a party thereto only in
1965.[9] Pertinent portions of said Article 5, Section A, provide:
A.

xxx
(2)

Each country of the union shall have the

right to take legislative measures providing
for the grant of compulsory licenses to
prevent the abuses which might result
from the exercise of the exclusive rights
conferred by the patent, for example,
failure to work.

xxx
(4)

A compulsory license may not be applied

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

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

explicitly respects the right of member countries to adopt legislative

measures to provide for the grant of compulsory licenses to prevent abuses

which might result from the exercise of the exclusive rights conferred by the
patent. An example provided of possible abuses is "failure to work;" however,
as such is merely supplied by way of an example, it is plain that the treaty
does not preclude the inclusion of other forms or categories of abuses.
Section 34 of R.A. No. 165, even if the Act was enacted prior to the
Philippines adhesion to the Convention, fits well within the aforequoted
provisions of Article 5 of the Paris Convention. In the explanatory note of Bill
No. 1156 which eventually became R.A. No. 165, the legislative intent in the
grant of a compulsory license was not only to afford others an opportunity to
provide the public with the quantity of the patented product, but also to
prevent the growth of monopolies.[10] Certainly, the growth of monopolies was
among the abuses which Section A, Article 5 of the Convention foresaw, and
which our Congress likewise wished to prevent in enacting R.A. No. 165.
R.A. No. 165, as amended by Presidential Decree No. 1263, promulgated
on 14 December 1977, provides for a system of compulsory licensing under a
particular patent. Sections 34 and 35, Article Two, of Chapter VIII read as
follows:
SEC. 34. Grounds for Compulsory Licensing. -- (1) Any person may
apply to the Director for the grant of a license under a particular
patent at any time after the expiration of two years from the date of
the grant of the patent, under any of the following circumstances:
(a)
If the patented invention is not being worked
within the Philippines on a commercial scale, although
capable of being so worked, without satisfactory reason;
(b)
If the demand for the patented article in the
Philippines is not being met to an adequate extent and on
reasonable terms;
(c)
If, by reason of refusal of the patentee to grant a
license or licenses on reasonable terms, or by reason of
the conditions attached by the patentee to licensee or to
the purchase, lease or use of the patented article or
working of the patented process or machine for
production, the establishment of any new trade or
industry in the Philippines is prevented, or the trade or
industry therein is unduly restrained;
(d)
If the working of the invention within the
country is being prevented or hindered by the importation
of the patented article; or
(e)
If the patented invention or article relates to food
or medicine or manufactured products or substances which
can be used as food or medicine, or is necessary for public
health or public safety.
(2)
In any of the above cases, a compulsory license shall be
granted to the petitioner provided that he has proved his capability
to work the patented product or to make use of the patented
product in the manufacture of a useful product, or to employ the
patented process.

12

(3)
The term "worked" or "working" as used in this section means
the manufacture and sale of the patented article, of the patented
machine, or the application of the patented process for production,
in or by means of a definite and substantial establishment or
organization in the Philippines and on a scale which is reasonable
and adequate under the circumstances. Importation shall not
constitute "working."
xxx
SEC. 35. Grant of License. -- (1) If the Director finds that a case for
the grant is a license under Section 34 hereof has been made out,
he shall, within one hundred eighty days from the date the petition
was filed, order the grant of an appropriate license. The order shall
state the terms and conditions of the license which he himself must
fix in default of an agreement on the matter manifested or
submitted by the parties during the hearing.
(2)
A compulsory license sought under Section 34-B shall be
issued within one hundred twenty days from the filing of the
proponent's application or receipt of the Board of Investment's
endorsement.
The case at bar refers more particularly to subparagraph (e) of
paragraph 1 of Section 34 -- the patented invention or article relates to food
or medicine or manufactured products or substances which can be used as
food or medicine, or is necessary for public health or public safety. And it
may not be doubted that the aforequoted provisions of R.A. No. 165, as
amended, are not in derogation of, but are consistent with, the recognized
right of treaty signatories under Article 5, Section A(2) of the Paris
Convention.
Parenthetically, it must be noted that paragraph (4) of Section A, Article
5 of the Paris Convention setting time limitations in the application for a
compulsory license refers only to an instance where the ground therefor is
"failure to work or insufficient working," and not to any ground or
circumstance as the treaty signatories may reasonably determine.
Neither may petitioner validly invoke what it designates as the GATT
Treaty, Uruguay Round. This act is better known as the Uruguay Final Act
signed for the Philippines on 15 April 1994 by Trade and Industry Secretary
Rizalino Navarro.[11] Forming integral parts thereof are the Agreement
Establishing the World Trade Organization, the Ministerial Declarations and
Decisions, and the Understanding on Commitments in Financial
Services.[12] The Agreement establishing the World Trade Organization
includes various agreements and associated legal instruments. It was only
on 14 December 1994 that the Philippine Senate, in the exercise of its power
under Section 21 of Article VII of the Constitution, adopted Senate Resolution
No. 97 concurring in the ratification by the President of the Agreement. The
President signed the instrument of ratification on 16 December 1994.[13] But
plainly, this treaty has no retroactive effect. Accordingly, since the
challenged BPTTT decision was rendered on 14 February 1994, petitioner
cannot avail of the provisions of the GATT treaty.

facts of the latter are conclusive, unless: (1) the conclusion is a finding
grounded entirely on speculation or conjecture; (2) the inference made is
manifestly absurd; (3) there is grave abuse of discretion in the appreciation of
facts; (4) the judgment is premised on a misapprehension of facts; (5) the
findings of fact are conflicting; and (6) the Court of Appeals, in making its
findings, went beyond the issues of the case and the same is contrary to the
admissions of both the appellant and appellee.[14] Petitioner has not
convinced us that the instant case falls under any of the exceptions. On the
contrary, we find the findings of fact and conclusions of respondent Court of
Appeals and that of the BPTTT to be fully supported by the evidence and the
applicable law and jurisprudence on the matter.
Petitioners claim of violations of the due process and eminent domain
clauses of the Bill of Rights are mere conclusions which it failed to
convincingly support. As to due the process argument, suffice it to say that
full-blown adversarial proceedings were conducted before the BPTTT
pursuant to the Patent Law. We agree with the Court of Appeals that the
BPTTT exhaustively studied the facts and its findings were fully supported by
substantial evidence.
It cannot likewise be claimed that petitioner was unduly deprived of its
property rights, as R.A. No. 165 not only grants the patent holder a protective
period of two years to enjoy his exclusive rights thereto; but subsequently,
the law recognizes just compensation in the form of royalties.[15]
In Parke, Davies & Co. v. Doctors' Pharmaceuticals, Inc.,[16] we held:
The right to exclude others from the manufacturing, using, or
vending an invention relating to, food or medicine should be
conditioned to allowing any person to manufacture, use, or vend
the same after a period of three [now two] years from the date of the
grant of the letters patent. After all, the patentee is not entirely
deprived of any proprietary right. In fact, he has been given the
period of three years [now two years] of complete monopoly over the
patent. Compulsory licensing of a patent on food or medicine
without regard to the other conditions imposed in Section 34 [now
Section 35] is not an undue deprivation of proprietary interests over
a patent right because the law sees to it that even after three years
of complete monopoly something is awarded to the inventor in the
form of bilateral and workable licensing agreement and a
reasonable royalty to be agreed upon by the parties and in default
of such an agreement, the Director of Patents may fix the terms and
conditions of the license.
As to the fourth assigned error, we hold that petitioner can no longer
assail the jurisdiction of the BPTTT, raising this issue only for the first time
on appeal. In Pantranco North Express, Inc. v. Court of Appeals,[17] we ruled
that where the issue of jurisdiction is raised for the first time on appeal, the
party invoking it is so barred on the ground of laches or estoppel under the
circumstances therein stated. It is now settled that this rule applies with
equal force to quasi-judicial bodies[18] such as the BPTTT. Here, petitioner
have not furnished any cogent reason to depart from this rule.

The second and third assigned errors relate more to the factual findings
of the Court of Appeals. Well-established is the principle that the findings of

13

WHEREFORE, the petition is hereby DENIED and the challenged

decision of the Court of Appeals in CA-G.R. SP No. 33520 is AFFIRMED in
toto.
Costs against petitioner.
SO ORDERED.

a) Transportation charges or allowances, if

any, included in such amount;
b) Trade, quantity or cash discounts and
broker's
or
agent's
or
distributor's
commissions, if any, allowed or paid;
c) Credits or allowances, if any, given or
made on account with reflection or return of
the product previously delivered; and

Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 82542 September 29, 1988
BARRY JOHN PRICE, JOHN WATSON CLITHERON and JOHN
BRADSHAW, Assignors to ALLEN & HANBURYS, LTD., petitioners,
vs.
UNITED LABORATORIES, respondent.

d) Any tax, excise or government charge

included in such amount, or measured by
the production, sale, transportation, use or
delivery of the products.
In case Petitioner's product containing the patented
substance shall contain one or more active ingredients as
admixed product, the royalty to be paid shall be determined
in accordance with the following formula:
Net
Sales
on
Admixed Product Patented Substance

Value

of

Castillo, Laman, Tan & Pantaleon Law Offices for petitioners.

Royalty = _______________ x 0.025 x ___________________

Teodoro B. Pison for respondent.

(Value
of
Pa
tended Substance) Active Ingredients

GRIO-AQUINO, J.:

4. The royalties shall be computed after the end of each

calendar quarter for all goods containing the patented
substance herein involved, made and sold during the
preceding quarter and to be paid by the Petitioner at its
place of business on or before the thirtieth day of the month
following the end of each calendar quarter. Payments should
be made to Respondent's authorized representative in the
Philippines; (pp. 35-36, Rollo.)

The petitioners are the owners-assignees of Philippine Patent No. 13540

which was granted to them on June 26,1980 for a pharmaceutical compound
known as "aminoalkyl furan derivatives." On October 1, 1982, respondent
United Laboratories, Inc. (or UNILAB) filed in the Philippine Patent Office a
petition Inter Partes Case No. 1683, "United Laboratories, Inc. versus Barry
John Price, John Watson CLITHERON and John Bradshaw, assignors to
Allen & Hanburys Ltd.') for the issuance of a compulsory license to use the
patented compound in its own brands of medicines and pharmaceuticals and
to sell, distribute, or otherwise dispose of such medicines or pharmaceutical
preparations in the country. The petition further alleged that the patent
relates to medicine and that petitioner, which has had long experience in the
business of manufacturing and selling pharmaceutical products, possesses
the capability to use the subject compound in the manufacture of a useful
product or of making dosage formulations containing the said compound.
After the hearing, the Philippine Patent Office rendered a decision on June 2,
1986, granting UNILAB a compulsory license subject to ten (1 0) terms and
conditions No. 3 of which provides as follows:
3. By virtue of this license, petitioner shall pay the
respondent a royalty on all license products containing the
patented substance made and sold by the Petitioner in the
amount equivalent to TWO AND ONE HALF (2.5) PER CENT
OF THE NET SALES in Philippine currency. The terms 'net
sales' means the gross billed for the product pertaining to
Letters Patent No. 13540 less-

Value

of

The patentees appealed the decision to the Court of Appeals (CA-G.R. No. SP09308) which dismissed the appeal on December 4, 1 987. They have come
to his Court praying for a review of the Appellate Court's decision on the
grounds that it erred:
1. in upholding the Director's unilateral determination of the
terms and conditions of the compulsory license, without
affording the parties an opportunity to negotiate the terms
and conditions freely and by themselves;
2. in finding that the respondent possess the legally required
capability to make use of the petitioner's patented compound
in the manufacture of a useful product;
3. in affirming the Director's award of the entire patent to the
respondent, when only one claim of the patent was
controverted and

14

4. in considering evidence that UNILABs capability to use the

compound was acquired after, not before, filing its petition
for compulsory licensing.
The first assignment of error has no merit. The terms and conditions of the
compulsory license were fixed by the Director of Patents after a hearing and
careful consideration of the evidence of the parties and in default of an
agreement between them as to the terms of the license. This he is authorized
to do under Section 36 of Republic Act No. 165 which provides:
Sec. 36. GRANT OF LICENSE.If the Director finds that a
case for the grant of license under Section 34, hereof made
out, he may order the grant of an appropriate license and in
default of agreement among the parties as to the terms and
conditions of the license he shall fix the terms and
conditions of the license in the order.
The order of the Director granting a license under this
Chapter, when final, shall operate as a deed granting alicense executed by the patentee and the other patties in
interest.
and under Section 35 of P.D. 1263, amending portions of Republic Act
No.165 which reads:
Sec. 35. GRANT OF LICENSE.(1)If the Director finds that a
case for the grant of a license under Sec. 34 hereof has been
made out, he shall within one hundred eighty (180) days
from the date the petition was filed, order the grant of an
appropriate license. The order shall state the terms and
conditions of the license which he himself must fix in default
of an agreement on the matter manifested or submitted by
the parties during the hearing.
The Court of Appeals found that the 2.5% royalty fixed by the Director of
Patents 'is just and reasonable.' We quote its observations hereunder:
Respondent-appellant contends further that the 2.5% royalty
rate is unfair to respondent-appellant as to amount to an
undue deprivation of its property right. We do not hold this
view. The royalty rate of 2.5% provided for by the Director of
Patents is reasonable. Paragraph 3, Section 35-B, Republic
Act No. 165, as amended by Presidential Decree No. 1263,
provides:
(3) A compulsory license shall only be
granted subject to the payment of adequate
royalties commensurate with the extent to
which the invention is worked. However,
royalty payments shall not exceed five per
cent (5%) of the net wholesale price (as
defined in Section 33-A) of the products
manufactured under the license. If the
product, substance, or process subject of
the compulsory license is involved in an
industrial project approved by the Board of

Investments, the royalty payable to the

patentee or patentees shall not exceed three
per cent (3%) of the net wholesale price (as
defined in Section 34-A) of the patented
commodity
and/or
commodity
manufactured under the patented process;
the same rule of royalty shall be paid
whenever two or more patents are involved,
which royalty shall be distributed to the
patentees in rates proportional to the extent
of commercial use by the licensee giving
preferential values to the holder of the oldest
subsisting product patent.
Thus, said provision grants to the Director of Patents the use
of his sound discretion in fixing the percentage for the
royalty rate and We find that the Director of Patents
committed no abuse of this discretion. Also, there is always a
presumption of regularity in the performance of one's official
duties.
Moreover, what UNILAB has with the compulsory license is
the bare right to use the patented chemical compound in the
manufacture of a special product, without any technical
assistance from herein respondent-appellant. Besides, the
special product to be manufactured by UNILAB will only be
used, distributed, and disposed locally. Therefore, the royalty
rate of 2.5% is just and reasonable. (pp. 10-11, CA Decision,
pp. 44-45, Rollo)
Furthermore, as pointed out in the respondent's comment on the petition,
Identical terms and conditions had been prescribed for the grant of
compulsory license in a good number of patent cases (United Laboratories,
Inc. vs. Boehringer Ingelhelm, GMBH, IPC 929, July 27, 1981; United
Laboratories, Inc. vs. Bristol-Myers Company, IPC 1179, Aug. 20, 1981;
United Laboratories, Inc. vs. E.R. Squibb & Sons, Inc., IPC 1349, Sept. 30,
1981; United Laboratories, Inc. vs. Helmut Weber, et al., IPC 949, Dec.
13,1982; Oceanic Pharmacal Inc. vs. Gruppo Lepetit S.A. IPC 1549, Dec. 21,
1982; United Laboratories. Inc. vs. Boehringer Ingelheim, IPC 1185, June 8,
1983; United Laboratories, Inc. vs. Pfizer Corp., IPC 1184, June 10,, 1983;
Doctors Pharmaceuticals, Inc. vs. Maggi, et al., July 11, 1983; Drugmaker's
Laboratories v. Herningen et al., IPC 1679, September 22,1983; Superior
Pharmacraft Inc. vs. Maggi, et al., IPC 1759, January 10, 1984; United
Laboratories, Inc. vs. Van Gelder et al., IPC 1627, June 29, 1984;
Drugmaker's Laboratories, Inc. vs. Janssen Pharmaceutical N.V. IPC 1555,
August 27,1984; United Laboratories Inc. vs. Graham John Durant et al.,
IPC 1731, August 14, 1987; United Laboratories, Inc. vs. Albert Anthony
Carr, IPC 1906, August 31, 1987).
The Director's finding that UNILAB has the capability to use the patented
compound in the manufacture of an anti-ulcer pharmaceutical preparation is
a factual finding which is supported by substantial evidence, hence, the
Court of Appeals did not commit a reversible error in affirming it (Philippine
Nut Industry, Inc. vs. Standard Brands, Inc., 65 SCRA 575; Sy Ching vs.
Gaw Liu 44 SCRA 143; De Gala Sison vs. Manalo, 8 SCRA 595; Goduco vs.

15

Court of Appeals, 14 SCRA 282; Ramos vs. Pepsi-Cola Bottling Company of

the P.I., 19 SCRA 289. Of indubitable relevance to this point is the evidence
that UNILAB has been engaged in the business of manufacturing drugs and
pharmaceutical products for the past thirty (30) years, that it is the leading
drug manufacturer in the country, that it has the necessary equipment and
technological expertise for the development of solid dosage forms or for
tablet, capsule, and liquid preparations, and that it maintains standards and
procedures to ensure the quality of its products. Even if it were true, as
alleged by the patentee (although it is denied by UNILAB), that its capability
to use the patented compound was only acquired after the petition for
compulsory licensing had been filed, the important thing is that such
capability was proven to exist during the hearing of the petition.
The patented invention in this case relates to medicine and is necessary for
public health as it can be used as component in the manufacture of antiulcer medicine. The Director of Patents did not err in granting a compulsory
license over the entire patented invention for there is no law requiring that
the license be limited to a specific embodiment of the invention, or, to a
particular claim. The invention in this case relates to new aminoalkyl
derivatives which have histamine H 2 blocking activity, having the general
formula (I) and physiologically acceptable salts, Noxides and dehydrates
thereof. The compound ranitidine hydrochloride named in Claim 45 is also
covered by General Claim I and several other sub-generic claims. Therefore, a
license for Claim 45 alone would not be fully comprehensive. In any event,
since the petitioner will be paid royalties on the sales of any products the
licensee may manufacture using any or all of the patented compounds, the
petitioner cannot complain of a deprivation of property rights without just
compensation.
WHEREFORE, the petition for review is denied for lack of merit.
SO ORDERED.

[G. R. No. 126627. August 14, 2003]

SMITH

KLINE
BECKMAN
CORPORATION, petitioner,
HONORABLE COURT OF APPEALS and TRYCO
CORPORATION, respondents.

vs. THE
PHARMA

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
petitioners patented Albendazole.[5]
On motion of petitioner, Branch 125 of the Caloocan RTC issued a
temporary restraining order against private respondent enjoining it from
committing acts of patent infringement and unfair competition. [6] A writ of
preliminary injunction was subsequently issued.[7]
Private respondent in its Answer[8] averred that Letters Patent No. 14561
does not cover the substance Albendazole for nowhere in it does that word
appear; that even if the patent were to include Albendazole, such substance
is unpatentable; that the Bureau of Food and Drugs allowed it to
manufacture and market Impregon with Albendazole as its known ingredient;
that there is no proof that it passed off in any way its veterinary products as
those of petitioner; that Letters Patent No. 14561 is null and void, the
application for the issuance thereof having been filed beyond the one year
period from the filing of an application abroad for the same invention covered
thereby, in violation of Section 15 of Republic Act No. 165 (The Patent Law);
and that petitioner is not the registered patent holder.
Private respondent lodged a Counterclaim against petitioner for such
amount of actual damages as may be proven; P1,000,000.00 in moral
damages; P300,000.00 in exemplary damages; and P150,000.00 in
attorneys fees.
Finding for private respondent, the trial court rendered a Decision dated
July 23, 1991,[9] the dispositive portion of which reads:
WHEREFORE, in view of the foregoing, plaintiffs complaint should be, as it
is hereby, DISMISSED. The Writ of injunction issued in connection with the
case is hereby ordered DISSOLVED.
The Letters Patent No. 14561 issued by the then Philippine Patents Office is
hereby declared null and void for being in violation of Sections 7, 9 and 15 of
the Patents Law.

16

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.

IMPREGON DRUG, IS INCLUDED IN PETITIONERS LETTERS

PATENT NO. 14561, AND THAT CONSEQUENTLY TRYCO IS
ANSWERABLE FOR PATENT INFRINGEMENT.

Defendant Tryco Pharmaceutical Corporation is hereby awarded P330,000.00

actual damages and P100,000.00 attorneys fees as prayed for in its
counterclaimbut said amount awarded to defendant is subject to the lien on
correct payment of filing fees.

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

SO ORDERED. (Underscoring supplied)

On appeal, the Court of Appeals, by Decision of April 21,
1995,[10] upheld the trial courts finding that private respondent was not
liable for any infringement of the patent of petitioner in light of the latters
failure to show that Albendazole is the same as the compound subject of
Letters Patent No. 14561. Noting petitioners admission of the issuance by
the U.S. of a patent for Albendazole in the name of Smith Kline and French
Laboratories which was petitioners former corporate name, the appellate
court considered the U.S. patent as implying that Albendazole is different
from methyl 5 propylthio-2-benzimidazole carbamate. It likewise found that
private respondent was not guilty of deceiving the public by misrepresenting
that Impregon is its product.
The appellate court, however, declared that Letters Patent No. 14561
was not void as it sustained petitioners explanation that Patent Application
Serial No. 18989 which was filed on October 8, 1976 was a divisional
application of Patent Application Serial No. 17280 filed on June 17, 1975
with the Philippine Patent Office, well within one year from petitioners filing
on June 19, 1974 of its Foreign Application Priority Data No. 480,646 in the
U.S. covering the same compound subject of Patent Application Serial No.
17280.
Applying Section 17 of the Patent Law, the Court of Appeals thus ruled
that Patent Application Serial No. 18989 was deemed filed on June 17, 1995
or still within one year from the filing of a patent application abroad in
compliance with the one-year rule under Section 15 of the Patent Law. And
it rejected the submission that the compound in Letters Patent No. 14561
was not patentable, citing the jurisprudentially established presumption that
the Patent Offices determination of patentability is correct. Finally, it ruled
that petitioner established itself to be the one and the same assignee of the
patent notwithstanding changes in its corporate name. Thus the appellate
court disposed:
WHEREFORE, the judgment appealed from
is AFFIRMED with the MODIFICATION that the
orders for the nullification of Letters Patent No.
14561 and for its cancellation are deleted
therefrom.
SO ORDERED.
Petitioners motion for reconsideration of the Court of Appeals decision
having been denied[11] 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 TRYCOS

Petitioner argues that under the doctrine of equivalents for determining

patent infringement, Albendazole, the active ingredient it alleges was
appropriated by private respondent for its drug Impregon, is substantially the
same as methyl 5 propylthio-2-benzimidazole carbamate covered by its
patent since both of them are meant to combat worm or parasite infestation
in animals. It cites the unrebutted testimony of its witness Dr. Godofredo C.
Orinion (Dr. Orinion) that the chemical formula in Letters Patent No. 14561
refers to the compound Albendazole. Petitioner adds that the two substances
substantially do the same function in substantially the same way to achieve
the same results, thereby making them truly identical. Petitioner thus
submits that the appellate court should have gone beyond the literal
wordings used in Letters Patent No. 14561, beyond merely applying the
literal infringement test, for in spite of the fact that the word Albendazole
does not appear in petitioners letters patent, it has ably shown by evidence
its sameness with methyl 5 propylthio-2-benzimidazole carbamate.
Petitioner likewise points out that its application with the Philippine
Patent Office on account of which it was granted Letters Patent No. 14561
was merely a divisional application of a prior application in the U. S. which
granted a patent for Albendazole. Hence, petitioner concludes that both
methyl 5 propylthio-2-benzimidazole carbamate and the U.S.-patented
Albendazole are dependent on each other and mutually contribute to produce
a single result, thereby making Albendazole as much a part of Letters Patent
No. 14561 as the other substance is.
Petitioner concedes in its Sur-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 attorneys fees as not falling
under any of the instances enumerated by law where recovery of attorneys
fees is allowed.
In its Comment,[14] private respondent contends that application of
the doctrine of equivalents would not alter the outcome of the case,
Albendazole and methyl 5 propylthio-2-benzimidazole carbamate being two
different compounds with different chemical and physical properties. It
stresses that the existence of a separate U.S. patent for Albendazole indicates
that the same and the compound in Letters Patent No. 14561 are different
from each other; and that since it was on account of a divisional application
that the patent for methyl 5 propylthio-2-benzimidazole carbamate was
issued, then, by definition of a divisional application, such a compound is

17

just one of several independent inventions alongside Albendazole under

petitioners original patent application.
As has repeatedly been held, only questions of law may be raised in a
petition for review on certiorari before this Court. Unless the factual findings
of the appellate court are mistaken, absurd, speculative, conjectural,
conflicting, tainted with grave abuse of discretion, or contrary to the findings
culled by the court of origin,[15] this Court does not review them.
From an examination of the evidence on record, this Court finds nothing
infirm in the appellate courts conclusions with respect to the principal issue
of whether private respondent committed patent infringement to the
prejudice of petitioner.
The burden of proof to substantiate a charge for patent infringement
rests on the plaintiff.[16] In the case at bar, petitioners evidence consists
primarily of its Letters Patent No. 14561, and the testimony of Dr. Orinion,
its general manager in the Philippines for its Animal Health Products
Division, by which it sought to show that its patent for the compound methyl
5 propylthio-2-benzimidazole carbamate also covers the substance
Albendazole.
From a reading of the 9 claims of Letters Patent No. 14561 in relation to
the other portions thereof, no mention is made of the compound
Albendazole. All that the claims disclose are: the covered invention, that is,
the compound methyl 5 propylthio-2-benzimidazole carbamate; the
compounds being anthelmintic but nontoxic for animals or its ability to
destroy parasites without harming the host animals; and the patented
methods, compositions or preparations involving the compound to maximize
its efficacy against certain kinds of parasites infecting specified animals.
When the language of its claims is clear and distinct, the patentee is
bound thereby and may not claim anything beyond them.[17] And so are the
courts bound which may not add to or detract from the claims matters not
expressed or necessarily implied, nor may they enlarge the patent beyond the
scope of that which the inventor claimed and the patent office allowed, even if
the patentee may have been entitled to something more than the words it
had chosen would include.[18]
It bears stressing that the mere absence of the word Albendazole in
Letters Patent No. 14561 is not determinative of Albendazoles non-inclusion
in the claims of the patent. While Albendazole is admittedly a chemical
compound that exists by a name different from that covered in petitioners
letters patent, the language of Letter Patent No. 14561 fails to yield anything
at all regarding Albendazole. And no extrinsic evidence had been adduced to
prove that Albendazole inheres in petitioners patent in spite of its omission
therefrom or that the meaning of the claims of the patent embraces the same.
While petitioner concedes that the mere literal wordings of its patent
cannot establish private respondents infringement, it urges this Court to
apply the doctrine of equivalents.
The doctrine of equivalents provides that an infringement also takes
place when a device appropriates a prior invention by incorporating its
innovative concept and, although with some modification and change,
performs substantially the same function in substantially the same way to

achieve substantially the same result.[19] Yet again, a scrutiny of petitioners

evidence fails to convince this Court of the substantial sameness of
petitioners patented compound and Albendazole. While both compounds
have the effect of neutralizing parasites in animals, identity of result does not
amount to infringement of patent unless Albendazole operates in
substantially the same way or by substantially the same means as the
patented compound, even though it performs the same function and achieves
the same result.[20] In other words, the principle or mode of operation must
be the same or substantially the same.[21]
The doctrine of equivalents thus requires satisfaction of the functionmeans-and-result test, the patentee having the burden to show that all three
components of such equivalency test are met.[22]
As stated early on, petitioners evidence fails to explain how Albendazole
is in every essential detail identical to methyl 5 propylthio-2-benzimidazole
carbamate. Apart from the fact that Albendazole is an anthelmintic agent
like methyl 5 propylthio-2-benzimidazole carbamate, nothing more is
asserted and accordingly substantiated regarding the method or means by
which Albendazole weeds out parasites in animals, thus giving no
information on whether that method is substantially the same as the manner
by which petitioners compound works. The testimony of Dr. Orinion lends
no support to petitioners cause, he not having been presented or qualified as
an expert witness who has the knowledge or expertise on the matter of
chemical compounds.
As for the concept of divisional applications proffered by petitioner, it
comes into play when two or more inventions are claimed in a single
application but are of such a nature that a single patent may not be issued
for them.[23] The applicant thus is required to divide, that is, to limit the
claims to whichever invention he may elect, whereas those inventions not
elected may be made the subject of separate applications which are called
divisional applications.[24] What this only means is that petitioners methyl
5 propylthio-2-benzimidazole carbamate is an invention distinct from the
other inventions claimed in the original application divided out, Albendazole
being one of those other inventions. Otherwise, methyl 5 propylthio-2benzimidazole 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 attorneys fees in favor of private
respondent. The claimed actual damages of P330,000.00 representing lost
profits or revenues incurred by private respondent as a result of the issuance
of the injunction against it, computed at the rate of 30% of its
alleged P100,000.00 monthly gross sales for eleven months, were supported
by the testimonies of private respondents President[25] and Executive VicePresident that the average monthly sale of Impregon wasP100,000.00 and
that sales plummeted to zero after the issuance of the injunction. [26] While
indemnification for actual or compensatory damages covers not only the loss
suffered (damnum emergens) but also profits which the obligee failed to
obtain (lucrum cessans or ganacias frustradas), it is necessary to prove the
actual amount of damages with a reasonable degree of certainty based on
competent proof and on the best evidence obtainable by the injured
party.[27] The testimonies of private respondents officers are not the

18

competent proof or best evidence obtainable to establish its right to actual or

compensatory damages for such damages also require presentation of
documentary evidence to substantiate a claim therefor.[28]
In the same vein, this Court does not sustain the grant by the appellate
court of attorneys fees to private respondent anchored on Article 2208 (2) of
the Civil Code, private respondent having been allegedly forced to litigate as a
result of petitioners suit. Even if a claimant is compelled to litigate with
third persons or to incur expenses to protect its rights, still attorneys fees
may not be awarded where no sufficient showing of bad faith could be
reflected in a partys persistence in a case other than an erroneous conviction
of the righteousness of his cause.[29]There exists no evidence on record
indicating that petitioner was moved by malice in suing private respondent.
This Court, however, grants private respondent temperate or moderate
damages in the amount of P20,000.00 which it finds reasonable under the
circumstances, it having suffered some pecuniary loss the amount of which
cannot, from the nature of the case, be established with certainty.[30]
WHEREFORE, the assailed decision of the Court of Appeals is hereby
AFFIRMED with MODIFICATION. The award of actual or compensatory
damages and attorneys fees to private respondent, Tryco Pharma
Corporation, is DELETED; instead, it is hereby awarded the amount
of P20,000.00 as temperate or moderate damages.
SO ORDERED.

[G.R. No. 121267. October 23, 2001]

SMITH

KLINE
&
FRENCH
LABORATORIES,
LTD. plaintiffappellee, vs. COURT OF APPEALS and DANLEX RESEARCH
LABORATORIES, INC., defendant-appellant.

DECISION
KAPUNAN, J.:
This petition for review on certiorari assails the Decision dated January
27, 1995 of the Court of Appeals in CA-G.R. SP No. 33770[1] which affirmed
the decision of the Bureau of Patents, Trademarks and Technology Transfer
(BPTTT) granting a compulsory license to private respondent Danlex
Research
Laboratories
for
the
use
of
the
pharmaceutical
product Cimetidine. Likewise assailed is the July 25, 1995 Resolution of the
Court of Appeals denying the motion for reconsideration filed by petitioner
Smith Kline and French Laboratories, Ltd.
Petitioner is the assignee of Letters Patent No. 12207 covering the
pharmaceutical product Cimetidine, which relates to derivatives of
heterocyclicthio or lower alkoxy or amino lower alkyl thiourea, ureas or
guanadines. Said patent was issued by the BPTTT to Graham John Durant,
John Collin Emmett and Robin Genellin on November 29, 1978.[2]

On August 21, 1989, private respondent filed with the BPTTT a petition
for compulsory license to manufacture and produce its own brand of
medicines usingCimetidine. Private respondent invoked Section 34 (1) (e) of
Republic Act No. 165,[3] (the Patent Law) the law then governing patents,
which states that an application for the grant of a compulsory license under
a particular patent may be filed with the BPTTT at any time after the lapse of
two (2) years from the date of grant of such patent, if the patented invention
or article relates to food or medicine, or manufactured substances which can
be used as food or medicine, or is necessary for public health or public
safety.[4] The petition for compulsory license stated that Cimetidine is useful
as an antihistamine and in the treatment of ulcers, and that private
respondent is capable of using the patented product in the manufacture of a
useful product.[5]
Petitioner opposed the petition for compulsory license, arguing that the
private respondent had no cause of action and failed to allege how it intended
to work the patented product. Petitioner further stated that its manufacture,
use and sales of Cimetidine satisfied the needs of the Philippine market,
hence, there was no need to grant a compulsory license to private respondent
to manufacture, use and sell the same. Finally, petitioner also claimed that
the grant of a compulsory license to private respondent would not promote
public safety and that the latter was only motivated by pecuniary gain.[6]
After both parties were heard, the BPTTT rendered a decision directing
the issuance of a compulsory license to private respondent to use,
manufacture and sell in the Philippines its own brand of pharmaceutical
products containing Cimetidine and ordered the payment by private
respondent to petitioner of royalties at the rate of 2.5% of net sales in
Philippine currency.[7]
Petitioner thereafter filed with the Court of Appeals a petition for review
of the decision of the BPTTT, raising the following arguments: (1) the BPTTTs
decision is violative of the Paris Convention for the Protection of Industrial
Property; (2) said decision is an invalid exercise of police power; (3) the rate of
royalties payable to petitioner as fixed by the BPTTT was rendered without
factual basis and amounts to an expropriation of private property without
just compensation; (4) the petition for compulsory license should have been
dismissed by the BPTTT for failure to prove the jurisdictional requirement of
publication.[8]
On January 27, 1995, the Court of Appeals promulgated its Decision,
the dispositive portion of which states:
WHEREFORE, the petition is DENIED, and the decision of the Bureau of
Patents, Trademarks and Technology Transfer is hereby AFFIRMED, with
costs against the Petitioner.
SO ORDERED.[9]
In affirming the decision of the BPTTT, the appellate court held that the
grant of a compulsory license to private respondent for the manufacture and
use ofCimetidine is in accord with the Patent Law since the patented product
is medicinal in nature, and therefore necessary for the promotion of public
health and safety.[10] It explained further that the provisions of the Patent
Law permitting the grant of a compulsory license are intended not only to
give a chance to others to supply the public with the quantity of the patented

19

article but especially to prevent the building up of patent

monopolies.[11] Neither did the appellate court find the royalty rate of 2.5% of
net sales fixed by the BPTTT unreasonable, considering that what was
granted under the compulsory license is only the right to
manufactureCimetidine, without any technical assistance from petitioner,
and royalty rates identical to that fixed by the BPTTT have been prescribed
for the grant of compulsory license in a good number of patent cases.[12] The
Court of Appeals also ruled that contrary to petitioners claim, private
respondent complied with the requirement of publication under the Patent
Law and had submitted proof of such compliance.[13]
Not satisfied with the appellate courts decision, petitioner filed a motion
for reconsideration thereof as well as a motion for the issuance of a
temporary restraining order against private respondents sister company,
Montreal Pharmaceutical, Inc. to refrain from marketing a product similar
to Cimetidine, but both motions were denied by the Court of Appeals in its
Resolution of July 25, 1995.[14]
Petitioner thus filed the present petition on September 15, 1995, with
the following assignment of errors:
I. The respondent Court erred in upholding the validity of the
decision of public respondent BPTTT which is an arbitrary
exercise of police power and is violative of international law.
II. The respondent Court erred in holding that compulsory
licensing will not create a confusion that the patented product is
the brainchild of private respondent Danlex and not of
petitioner.
III.Assuming that the grant of compulsory license is in order, the
respondent Court still erred in holding that the BPTTT decision
fixing the royalty at 2.5% of the net wholesale price in peso does
not amount to expropriation of private property without just
compensation.
IV.The respondent Court erred in finding that the jurisdictional
requirement of publication in a newspaper of general circulation
for three (3) consecutive weeks has been complied with by
private respondent Danlex.[15]
While petitioner concedes that the State in the exercise of police power
may regulate the manufacture and use of medicines through the enactment
and implementation of pertinent laws, it states that such exercise is valid
only if the means employed are reasonably necessary for the accomplishment
of the purpose and if not unduly oppressive.[16] According to petitioner, the
grant of a compulsory license to private respondent is an invalid exercise of
police power since it was not shown that there is an overwhelming public
necessity for such grant, considering that petitioner is able to provide an
adequate supply of Cimetidine to satisfy the needs of the Philippine
market. Petitioner also claims that the grant of a compulsory license to
private respondent unjustly deprives it of a reasonable return on its
investment.[17] It argues further that the provisions of the Patent Law on
compulsory licensing contravene the Convention of Paris for the Protection of
Industrial Property[18] (Paris Convention), which allegedly permits the
granting of a compulsory license over a patented product only to prevent

abuses which might result from the exercise of the exclusive rights conferred
by the patent,[19] or on the ground of failure to work or insufficient working of
the patented product, within four years from the date of filing of the patent
application or three years from the date of grant of the patent, whichever
expires last.[20] Petitioner opines that the inclusion of grounds for the grant of
a compulsory license in Section 34 of the Patent Law other than those
provided under the Paris Convention constitutes a violation of the
Philippines obligation to adhere to the provisions of said treaty.[21]
It is also contended by petitioner that the grant of a compulsory license
to private respondent will allow the latter to liberally manufacture and sell
medicinal products containing Cimetidine without even extending to
petitioner due recognition for pioneering the development and worldwide
acceptance of said invention, and will unreasonably dilute petitioners right
over the patent.[22]
Petitioner likewise asseverates that the rate of royalty fixed by the
BPTTT at 2.5% of net sales is grossly inadequate, taking into consideration
its huge investments of money, time and other resources in the research and
development, as well as marketing of Cimetidine. It is further alleged that
such rate has no factual basis since the appellate court and the BPTTT relied
solely on analogous cases and did not explain how such rate was arrived
at.[23]
Lastly, petitioner claims that the appellate court erred in ruling that
private respondent had complied with the requirement of publication of the
notice of the filing of the petition for compulsory license because private
respondent failed to formally offer in evidence copies of the notice of filing of
the petition and notice of the date of hearing thereof as published and the
affidavits of publication thereof. Thus, it says, the BPTTT did not properly
acquire jurisdiction over the petition for compulsory license.[24]
In its Comment to the Petition, private respondent adopted the
reasoning of the Court of Appeals in the assailed decision and prayed that
the petition be denied for lack of merit.[25]
The petition has no merit.
The Court of Appeals did not err in affirming the validity of the grant by
the BPTTT of a compulsory license to private respondent for the use,
manufacture and sale of Cimetidine. The said grant is in accord with Section
34 of the Patent Law which provides:
Grounds for Compulsory Licensing.(1) Any person may apply to the
Director for the grant of a license under a particular patent at any time
after the expiration of two years from the date of the grant of the
patent, under any of the following circumstances:
(a) If the patented invention is not being worked within the Philippines on a
commercial scale, although capable of being so worked, without satisfactory
reason;
(b) If the demand of the patented article in the Philippines is not being met to
an adequate extent and on reasonable terms;
(c) If, by reason of refusal of the patentee to grant a license or licenses on
reasonable terms, or by reason of the conditions attached by the patentee to

20

licensee or to the purchase, lease or use of the patented article or working of

the patented process or machine for production, the establishment of any
new trade or industry in the Philippines is prevented, or the trade or industry
therein is unduly restrained;
(d) If the working of the invention within the country is being prevented or
hindered by the importation of the patented article;
(e) If the patented invention or article relates to food or medicine or
manufactured substances which can be used as food or medicine, or is
necessary for public health or public safety.
(2) In any of the above cases, a compulsory license shall be granted to
the petitioner provided that he has proved his capability to work the
patented product or to make use of the patented product in the
manufacture of a useful product, or to employ the patented process.
(3) The term worked or working as used in this section means the
manufacture and sale of the patented article, of patented machine, or the
application of the patented process for production, in or by means of a
definite and substantial establishment or organization in the Philippines and
on
a
scale
which
is
reasonable
and
adequate
under
the
circumstances. Importation shall not constitute working. (Emphasis
supplied.)
The grant of the compulsory license satisfies the requirements of the
foregoing provision. More than ten years have passed since the patent
for Cimetidine was issued to petitioner and its predecessors-in-interest, and
the compulsory license applied for by private respondent is for the use,
manufacture and sale of a medicinal product. Furthermore, both the
appellate court and the BPTTT found that private respondent had the
capability to work Cimetidine or to make use thereof in the manufacture of a
useful product.

supplied by way of an example, it is plain that the treaty does not

preclude the inclusion of other forms of categories of abuses.
Section 34 of R.A. No. 165, even if the Act was enacted prior to the
Philippines adhesion to the Convention, fits well within the aforequoted
provisions of Article 5 of the Paris Convention. In the explanatory note of Bill
No. 1156 which eventually became R.A. No. 165, the legislative intent in
the grant of a compulsory license was not only to afford others an
opportunity to provide the public with the quantity of the patented
product, but also to prevent the growth of monopolies [Congressional
Record, House of Representatives, 12 May 957, 998]. Certainly, the growth
of monopolies was among the abuses which Section A, Article 5 of the
Convention foresaw, and which our Congress likewise wished to prevent
in enacting R.A. No. 165.[28] (Emphasis supplied.)
Neither does the Court agree with petitioner that the grant of the
compulsory license to private respondent was erroneous because the same
would lead the public to think that the Cimetidine is the invention of private
respondent and not of petitioner. Such fears are unfounded since, as the
appellate court pointed out in the assailed decision, by the grant of the
compulsory license, private respondent as licensee explicitly acknowledges
that petitioner is the source of the patented product Cimetidine.[29] Even
assuming arguendo that such confusion may indeed occur, the disadvantage
is far outweighed by the benefits resulting from the grant of the compulsory
license, such as an increased supply of pharmaceutical products
containing Cimetidine, and the consequent reduction in the prices thereof.[30]

Petitioners contention that Section 34 of the Patent Law contravenes

the Paris Convention because the former provides for grounds for the grant of
a compulsory license in addition to those found in the latter, is likewise
incorrect. Article 5, Section A(2) of the Paris Convention states:

There is likewise no basis for the allegation that the grant of a

compulsory license to private respondent results in the deprivation of
petitioners property without just compensation. It must be pointed out that
as owner of Letters Patent No. 12207, petitioner had already enjoyed
exclusive rights to manufacture, use and sellCimetidine for at least two years
from its grant in November, 1978. Even if other entities like private
respondent are subsequently allowed to manufacture, use and sell the
patented invention by virtue of a compulsory license, petitioner as owner of
the patent would still receive remuneration for the use of such product in the
form of royalties.

Each country of the union shall have the right to take legislative measures
providing for the grant of compulsory licenses to prevent the abuses which
might result from the exercise of the exclusive rights conferred by the patent,
for example, failure to work.[26]

Anent the perceived inadequacy of the royalty awarded to petitioner, the

Court of Appeals correctly held that the rate of 2.5% of net wholesale price
fixed by the Director of the BPTTT is in accord with the Patent Law. Said
law provides:

This issue has already been resolved by this Court in the case of Smith
Kline & French Laboratories, Ltd. vs. Court of Appeals,[27] where petitioner
herein questioned the BPTTTs grant of a compulsory license to Doctors
Pharmaceuticals, Inc. also for the manufacture, use and sale
of Cimetidine. We found no inconsistency between Section 34 and the Paris
Convention and held that:

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

It is thus clear that Section A(2) of Article 5 [of the Paris Convention]
unequivocally and explicitly respects the right of member countries to
adopt legislative measures to provide for the grant of compulsory
licenses to prevent abuses which might result from the exercise of the
exclusive rights conferred by the patent. An example provided of
possible abuses is failure to work; however, as such, is merely

xxx
Section 35-B. Terms and Conditions of Compulsory License. (1) A
compulsory license shall be non-exclusive, but this shall be without
prejudice to the licensees right to oppose an application for such a new
license.

21

(2) The terms and conditions of a compulsory license, fixed in accordance

with Section 35, may contain obligations and restrictions both for the
licensee and for the registered owner of the patent.
(3) A compulsory license shall only be granted subject to the payment of
adequate royalties commensurate with the extent to which the
invention is worked. However, royalty payments shall not exceed five
percent (5%) of the net wholesale price (as defined in Section 33-A) of the
products manufactured under the license. If the product, substance, or
process subject of the compulsory license is involved in an industrial project
approved by the Board of Investments, the royalty payable to the patentee or
patentees shall not exceed three percent (3%) of the net wholesale price (as
defined in Section 33-A) of the patented commodity/and or commodity
manufactured under the patented process; the same rate of royalty shall be
paid whenever two or more patents are involved; which royalty shall be
distributed to the patentees in rates proportional to the extent of commercial
use by the licensee giving preferential values to the holder of the oldest
subsisting product patent.
xxx
Under the aforequoted provisions, in the absence of any agreement
between the parties with respect to a compulsory license, the Director of the
BPTTT may fix the terms thereof, including the rate of the royalty payable to
the licensor. The law explicitly provides that the rate of royalty shall not
exceed five percent (5%) of the net wholesale price.
The Court agrees with the appellate courts ruling that the rate of royalty
payments fixed by the Director of the BPTTT is reasonable. The appellate
court, citingPrice vs. United Laboratories,[31] ruled as such, considering that
the compulsory license awarded to private respondent consists only of the
bare right to use the patented invention in the manufacture of another
product, without any technical assistance from the licensor.[32] Furthermore,
this Court had earlier noted in the Pricecase that identical royalty rates have
been prescribed by the Director of the BPTTT in numerous patent cases.[33]
There was thus no error on the part of the Court of Appeals in affirming
the royalty rate fixed by the Director of the BPTTT, since it was not shown
that the latter erred or abused his discretion in prescribing said rate. The
rule is that factual findings of administrative bodies, which are considered as
experts in their respective fields, are accorded not only respect but even
finality if the same are supported by substantial evidence.[34]
Finally, as to the alleged lack of jurisdiction of the BPTTT over the
petition filed by private respondent for failure to comply with the publication
requirement under Section 35-F of R.A. No. 165, the Court holds that
petitioner is estopped from questioning the same since it did not raise the
issue of lack of jurisdiction at the earliest possible opportunity, i.e., during
the hearings before the BPTTT.[35] The Court notes that petitioner raised this
contention for the first time when it appealed the case to the appellate court.
WHEREFORE, the petition is hereby DENIED for lack of merit and the
Decision of the Court of Appeals is hereby AFFIRMED.
SO ORDERED.

FIRST DIVISION

[G.R. No. 115106. March 15, 1996]

ROBERTO L. DEL ROSARIO, petitioner, vs. COURT OF APPEALS AND

JANITO CORPORATION, respondents.
DECISION
BELLOSILLO, J.:
Roberto del Rosario petitions this Court to review the decision of the
Court of Appeals[1] which set aside the order of the Regional Trial Court of
Makati granting a writ of preliminary injunction in his favor.
The antecedents: On 18 January 1993 petitioner filed a complaint for
patent infringement against private respondent Janito Corporation.[2]Roberto
L. del Rosario alleged that he was a patentee of an audio equipment and
improved audio equipment commonly known as the sing-along system
or karaoke under Letters Patent No. UM-5269 dated 2 June 1983 as well as
Letters Patent No. UM-6237 dated 14 November 1986 issued by the Director
of Patents. The effectivity of both Letters Patents was for five (5) years and
was extended for another five (5) years starting 2 June 1988 and 14
November 1991, respectively. He described his sing-along system as a handy
multi-purpose compact machine which incorporates an amplifier speaker,
one or two tape mechanisms, optional tuner or radio and microphone mixer
with features to enhance ones voice, such as the echo or reverb to stimulate
an opera hall or a studio sound, with the whole system enclosed in one
cabinet casing.
In the early part of 1990 petitioner learned that private respondent was
manufacturing a sing-along system bearing the trademark miyata ormiyata
karaoke substantially similar if not identical to the sing-along system covered
by the patents issued in his favor. Thus he sought from the trial court the
issuance of a writ of preliminary injunction to enjoin private respondent, its
officers and everybody elsewhere acting on its behalf, from using, selling and
advertising the miyata or miyata karaoke brand, the injunction to be made
permanent after trial, and praying for damages, attorneys fees and costs of
suit.
On 5 February 1993 the trial court temporarily restrained private
respondent from manufacturing, using and/or selling and advertising
themiyata sing-along system or any sing-along system substantially identical
to the sing-along system patented by petitioner until further orders.
On 24 February 1993 the trial court issued a writ of preliminary
injunction upon a bond on the basis of its finding that petitioner was a

22

holder of a utility model patent for a sing-along system and that without his
approval and consent private respondent was admittedly manufacturing and
selling its own sing-along system under the brand name miyata which was
substantially similar to the patented utility model[3] of petitioner.
Private respondent assailed the order of 24 February 1993 directing the
issuance of the writ by way of a petition for certiorari with prayer for the
issuance of a writ of preliminary injunction and a temporary restraining
order before respondent Court of Appeals.
On 15 November 1993 respondent appellate court granted the writ and
set aside the questioned order of the trial court. It expressed the view that
there was no infringement of the patents of petitioner by the fact alone that
private respondent had manufactured the miyata karaoke or audio system,
and that the karaoke system was a universal product manufactured,
advertised and marketed in most countries of the world long before the
patents were issued to petitioner. The motion to reconsider the grant of the
writ was denied;[4] hence, the instant petition for review.
This petition alleges that: (a) it was improper for the Court of Appeals to
consider questions of fact in a certiorari proceeding; (b) the Court of Appeals
erred in taking judicial notice of private respondents self-serving
presentation of facts; (c) the Court of Appeals erred in disregarding the
findings of fact of the trial court; and, (d) there was no basis for the Court of
Appeals to grant a writ of preliminary injunction in favor of private
respondent.[5]
Petitioner argues that in a certiorari proceeding, questions of fact are
not generally permitted the inquiry being limited essentially to whether the
tribunal has acted without or in excess of jurisdiction or with grave abuse of
discretion; that respondent court should not have disturbed but respected
instead the factual findings of the trial court; that the movant has a clear
legal right to be protected and that there is a violation of such right by
private respondent. Thus, petitioner herein claims, he has satisfied the legal
requisites to justify the order of the trial court directing the issuance of the
writ of injunction. On the other hand, in the absence of a patent to justify
the manufacture and sale by private respondent of sing-along systems, it is
not entitled to the injunctive relief granted by respondent appellate court.
The crux of the controversy before us hinges on whether respondent
Court of Appeals erred in finding the trial court to have committed grave
abuse of discretion in enjoining private respondent from manufacturing,
selling and advertising the miyata karaoke brand sing-along system for being
substantially similar if not identical to the audio equipment covered by
letters patent issued to petitioner.
Injunction is a preservative remedy for the protection of substantive
rights or interests. It is not a cause of action in itself but merely a
provisional remedy, an adjunct to a main suit. The controlling reason for the
existence of the judicial power to issue the writ is that the court may thereby
prevent a threatened or continuous irremediable injury to some of the parties
before their claims can be thoroughly investigated and advisedly
adjudicated. It is to be resorted to only when there is a pressing necessity to
avoid injurious consequences which cannot be remedied under any standard
of compensation. The application of the writ rests upon an alleged existence

of an emergency or of a special reason for such an order before the case can
be regularly heard, and the essential conditions for granting such temporary
injunctive relief are that the complaint alleges facts which appear to be
sufficient to constitute a cause of action for injunction and that on the entire
showing from both sides, it appears, in view of all the circumstances, that
the injunction is reasonably necessary to protect the legal rights of plaintiff
pending the litigation.[6]
A preliminary injunction may be granted at any time after the
commencement of the action and before judgment when it is established that
the defendant is doing, threatens, or is about to do, or is procuring or
suffering to be done, some act probably in violation of the plaintiffs
rights. Thus, there are only two requisites to be satisfied if an injunction is to
issue, namely, the existence of the right to be protected, and that the facts
against which the injunction is to be directed are violative of said right.[7]
For the writ to issue the interest of petitioner in the controversy or the
right he seeks to be protected must be a present right, a legal right which
must be shown to be clear and positive.
In this regard Sec. 55 of R.A. 165 as amended, known as The Patent
Law, provides
Sec. 55. Design patents and patents for utility models. - (a) Any new, original,
and ornamental design for an article of manufacture and (b) new model or
implements or tools or of any Industrial product or of part of the same, which
does not possess the quality of invention but which is of practical utility by
reason of its form, configuration, construction or composition, may be
protected by the author thereof, the former by a patent for a design and the
latter by a patent for a utility model, in the same manner and subject to the
same provisions and requirements as relate to patents for inventions insofar
as they are applicable, except as otherwise herein provide x x x
Admittedly, petitioner is a holder of Letters Patent No. UM-5629 dated 2
June 1985 issued for a term of five (5) years from the grant of a Utility Model
herein described
The construction of an audio equipment comprising a substantially cubical
casing having a window at its rear and upper corner fitted with a slightly
inclined control panel, said cubical (casing) having a vertical partition wall
therein defining a rear compartment and a front compartment, and said front
compartment serving as a speaker baffle; a transistorized amplifier circuit
having an echo section and writhed in at least the printed circuit boards
placed inside said rear compartment of said casing and attached to said
vertical partition wall, said transistorized amplifier circuit capable of being
operated from outside, through various controls mounted on said control
panel of such casing; a loud speaker fitted inside said front compartment of
said casing and connected to the output of the main audio amplifier section
of said transistorized amplifier circuit and a tape player mounted on the top
wall of said casing and said tape player being connected in conventional
manner to said transistorized amplifier circuit.[8]

23

Again, on 14 November 1986 petitioner was granted Letters Patent No.

UM-6237 for a term of five (5) years from the grant of a Utility Model
described as
In an audio equipment consisting of a first cubical casing having an opening
at its rear and upper rear portion and a partition therein forming a rear
compartment and a front compartment serving as a loud speaker baffle, a
control panel formed by vertical and horizontal sections, a transistorized
amplifier circuit wired in at least two printed circuit boards attached at the
back of said control panel, a first loud speaker fitted inside said first
compartment of such first casing and connected to the output of said
transistorized amplifier circuit; the improvement wherein said control panel
being removably fitted to said first cubical casing and further comprises a set
of tape recorder and tape player mounted on the vertical section of said
control panel and said recorder and player are likewise connected to said
transistorized amplifier circuit; a second cubical casing having an opening at
its rear, said second cubical casing having (being ?) provided with a vertical
partition therein defining a rear compartment and a front compartment, said
rear compartment being provided with a door and enclosing therein a set of
tape racks and said front compartment serving as loud speaker baffle, said
second cubical casing being adapted to said first cubical casing so that said
first and second casings are secured together in compact and portable form;
and a second loud speaker fitted inside said front compartment of said
casing and connected to the output of said amplifier circuit.[9]
The terms of both Letters Patents were extended for another
five (5) years each, the first beginning 2 June 1988 and the second, 14
November 1991.
The Patent Law expressly acknowledges that any new model of
implements or tools of any industrial product even if not possessed of the
quality of invention but which is of practical utility is entitled to a patent for
utility model.[10] Here, there is no dispute that the letters patent issued to
petitioner are for utility models of audio equipment.
In issuing, reissuing or withholding patents and extensions thereof, the
Director of Patents determines whether the patent is new and whether the
machine or device is the proper subject of patent. In passing on an
application, the Director decides not only questions of law but also questions
of fact, i.e. whether there has been a prior public use or sale of the article
sought to be patented.[11] Where petitioner introduces the patent in evidence,
if it is in due form, it affords a prima facie presumption of its correctness and
validity. The decision of the Director of Patents in granting the patent is
always presumed to be correct, and the burden then shifts to respondent to
overcome this presumption by competent evidence.[12]
Under Sec. 55 of The Patent Law a utility model shall not be considered
new if before the application for a patent it has been publicly known or
publicly used in this country or has been described in a printed publication
or publications circulated within the country, or if it is substantially similar
to any other utility model so known, used or described within the
country. Respondent corporation failed to present before the trial court
competent evidence that the utility models covered by the Letters Patents

issued to petitioner were not new. This is evident from the testimony of
Janito Cua, President of respondent Janito Corporation, during the hearing
on the issuance of the injunction, to wit Q. Mr. Cua, you testified that there are (sic) so many other
companies which already have (sic) the sing-along system even
before the patent application of Mr. del Rosario and as a
matter of fact you mentioned Sanyo, Sony and Sharp, is that
right?
A.

Musicmate and Asahi.

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

More than that because x x x

Q. Now you will agree with me that in your statement Sharp you
put the date as 1985 agreed?
A.

No.

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

Maybe I informed him already.

xxx

xxx

xxx

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

Since it is urgent it is more or less.

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

Sanyo is wrong.

Q. It is not 1985?
A.

Sanyo is 1979 I think.

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

A.

Panasonic I think.

Q. So you dont think this is also correct.

A.

The date?

Q. So you dont think also that this allegation here that they
manufactured in 1986 is correct?
A.

Wrong. Earlier.

24

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

A.

I think earlier.

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

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

More or less. We said more or less.

Q. Nakabutshi by Asahi Electronics that is also wrong?

A.

No, that is 1979.

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

A.

Correct. More or less.

Q. Skylers 1985 is that correct or wrong?

A.

It is more or less because it is urgent. We dont have time to

exact the date.

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

not also sure?
A.

95% sure.

Q. Now you are sure 1981.

A.

This one because x x x

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

More or less.

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

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

No, I dont have it because x x x

Q. No. I am satisfied with your answer. Now Mr. Witness, you

dont also have a proof that Akai instrument that you said was
also in the market before 1982? You dont have any written
proof. any advertisement?
A.

I have the product.

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

No.[13]

As may be gleaned herein, the rights of petitioner as a patentee have

been sufficiently established, contrary to the findings and conclusions of

respondent Court of Appeals. Consequently, under Sec. 37 of The Patent law,

petitioner as a patentee shall have the exclusive right to make, use and sell
the patented machine, article or product for the purpose of industry or
commerce, throughout the territory of the Philippines for the term of the
patent, and such making, using or selling by any person without
authorization of the patentee constitutes infringement of his patent.
Petitioner established before the trial court that respondent Janito
Corporation was manufacturing a similar sing-along system bearing the
trademark miyata which infringed his patented models. He also alleged that
both his own patented audio equipment and respondents sing-along system
were constructed in a casing with a control panel, the casing having a
vertical partition wall defining the rear compartment from the front
compartment, with the front compartment consisting of a loud speaker
baffle, both containing a transistorized amplifier circuit capable of being
operated from outside through various controls mounted on the control
panel, and that both had loud speakers fitted inside the front compartment
of the casing and connected to the output of the main audio amplifier section
both having a tape recorder and a tape player mounted on the control panel
with the tape recorder and tape player being both connected to the
transistorized amplifier circuit.[14]
Respondent Janito Corporation denied that there was any violation of
petitioners patent rights, and cited the differences between its miyata
equipment and petitioners audio equipment. But, it must be emphasized,
respondent only confined its comparison to the first model, Utility Model No.
5269, and completely disregarded Utility Model No. 6237 which improved on
the first. As described by respondent corporation,[15]these differences are
First. Under Utility Model 5269, the unit is a substantially cubical
casing with a window at its rear and upper corner fitted with slightly inclined
control panel, while the miyata equipment is a substantially rectangular
casing with panel vertically positioned.
Second. Under Utility Model 5269, the cubical casing has a vertical
partition wall defining a rear compartment and a front compartment serving
as a speaker baffle, while the miyata equipment has no rear compartment
and front compartment in its rectangular casing; it has only a front
compartment horizontally divided into 3 compartments like a 3-storey
building, the 1st compartment being a kit, the 2nd also the speaker, and the
3rd are kits.
Third. Under Utility Model No. 5269, a transistorized amplifier circuit
with an echo section wired in at least 2 printed circuit boards is placed inside
the rear compartment of the casing and attached to the vertical partition
wall, the printed circuit board having 1 amplifier and 1 echo, while in
the miyata equipment the amplifier is mainly IC (Integrated Circuit) powered with 8 printed circuit boards almost all of which are IC controlled,
with 1 amplifier with power supply, 1 main tuner, 1 equalizer (3-band), 1 IC
controlled volume control, 1 echo IC, 1 tape pream, 1 instrument and 1
wireless microphone.
Fourth. Under Utility Model 5269, 4 printed circuits are placed inside
the compartment of its casing attached to the vertical partition wall, while in

25

the miyata, the 7 printed circuit boards (PCB) are attached to the front panel
and 1 attached to the horizontal divider.
Fifth. Under Utility Model 5269, there are various controls mounted on
the control panel of the casing, while in miyata, the various controls are all
separated from the printed circuit boards and the various controls are all
attached thereto.
Sixth. Under Utility Model 5269, a loud speaker fitted inside the front
compartment of the casing is connected to the output of the main audio
amplifier section of the transistorized amplifier circuit, while in miyata, there
is no other way but to use 2 loud speakers connected to the amplifier.

WHEREFORE, the Decision of the Court of Appeals dated 15 November

1993 is REVERSED and SET ASIDE and the Order of the trial court dated 24
February 1993 granting petitioner the writ of injunction is REINSTATED.
The trial court is directed to continue with the proceedings on the main
action pending before it in order to resolve with dispatch the issues therein
presented.
SO ORDERED.

Seventh. Under Utility Model 5269, a tape player is mounted on the top
wall of the casing, while in miyata, 2 tape players are used mounted side by
side at the front.
It is elementary that a patent may be infringed where the essential or
substantial features of the patented invention are taken or appropriated, or
the device, machine or other subject matter alleged to infringe is
substantially identical with the patented invention. In order to infringe a
patent, a machine or device must perform the same function, or accomplish
the same result by identical or substantially identical means and the
principle or mode of operation must be substantially the same.[16]
It may be noted that respondent corporation failed to present before the
trial court a clear, competent and reliable comparison between its own model
and that of petitioner, and disregarded completely petitioners Utility Model
No. 6237 which improved on his first patented model. Notwithstanding the
differences cited by respondent corporation, it did not refute and disprove the
allegations of petitioner before the trial court that: (a) both are used by a
singer to sing and amplify his voice; (b) both are used to sing with a minusone or multiplex tapes, or that both are used to play minus-one or standard
cassette tapes for singing or for listening to; (c) both are used to sing with a
minus-one tape and multiplex tape and to record the singing and the
accompaniment; (d) both are used to sing with live accompaniment and to
record the same; (e) both are used to enhance the voice of the singer using
echo effect, treble, bass and other controls; (g) both are equipped with
cassette tape decks which are installed with one being used for playback and
the other, for recording the singer and the accompaniment, and both may
also be used to record a speakers voice or instrumental playing, like the
guitar and other instruments; (h) both are encased in a box-like cabinets;
and, (i) both can be used with one or more microphones.[17]

A. M. NO. 99-20-09-SC
[JANUARY 25, 2000].

A. M. NO. 99-20-09-SC
JANUARY 25, 2000

RESOLUTION CLARIFYING GUIDELINES ON THE APPLICATION FOR

AND ENFORCEABILITY OF SEARCH WARRANTS

In the interest of an effective administration of justice and pursuant to the

powers vested in the Supreme Court by the Constitution, the following are
authorized to act on all applications for search warrants involving heinous
crimes, illegal gambling, dangerous drugs and illegal possession

of

firearms:chan robles virtual law library

The Executive Judge and Vice Executive Judges of Regional Trial Courts,
Manila and Quezon City, filed by the Philippine National Police (PNP), the
National Bureau of Investigation (NBI), The Presidential Anti-Organized
Crime Task Force (PAOC-TF) and the Reaction Against Crime Task Force
(REACT-TF) with the Regional Trial Courts of Manila and Quezon City. chan

Clearly, therefore, both petitioners and respondents models involve

substantially the same modes of operation and produce substantially the
same if not identical results when used.

robles virtual law library

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

agencies, for the search of places to be particularly described therein, and

The applications shall be personally endorsed by the Heads of the said

the seizure of property or things as prescribed in the Rules of Court, and to
issue the warrants, if justified, which may be served in places outside the
territorial jurisdiction of said courts.cralaw
The authorized judges shall keep a special docket book listing the details of

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the applications and the result of the searches and seizures made pursuant
to the warrants issued. chan robles virtual law library
This Resolution is effective immediately and shall continue until further
orders from this Court and shall be an exception to the provisions of Circular
No. 13 dated 1 October 1985 and Circular No. 19 dated 4 August
1987.cralaw
This Resolution supersedes Administrative Order No. 20-97, issued on 12
February 1997, and Administrative Order No. 46-97, issued on 19 March
1997.chan robles virtual law library
The Court Administrator shall implement this Resolution.cralaw
Enacted this 25th day of January 2000.

Davide, Jr., C.J., Bellosillo, Melo, Puno, Vitug, Kapunan, Mendoza,

Panganiban, Quisumbing, Purisima, Pardo, Buena, Gonzaga-Reyes, YnaresSantiago, and De Leon, Jr., JJ., concur.

Section 4. Verified application and affidavits. - The applicant shall file a

verified application alleging the ground upon which it is based and the
specific description and location of the documents and articles to be
searched, inspected, copied or seized and their value. It shall also state the
names of the applicant, his representative, witnesses and counsel who will
attend the search in the event that the application is granted. The application
shall be supported by affidavits of witnesses who personally know the facts
and by authenticated or certified documents.

The applicant shall undertake in his application that he will not use any of
the documents, articles or information obtained by reason of the search and
seizure for any purpose other than in the action in which the writ is issued.

January 30, 2002

RULE ON SEARCH AND SEIZURE IN CIVIL ACTIONS FOR

INFRINGEMENT OF INTELLECTUAL PROPERTY RIGHTS
The Rule shall take effect on February 15, 2002 following its, publication in
two (2) newspapers of general circulation on or before January 30, 2002.
RULE ON SEARCH AND SEIZURE IN CIVIL ACTIONS
INFRINGEMENT OF INTELLECTUAL PROPERTY RIGHTS

Section 3. Where application filed. - The application shall be filed with any of
the Regional Trial Courts of the judicial region designated to try violations of
intellectual property rights stationed at the place where the alleged violation
occurred or is to occur, or me place to be searched, at the election of the
applicant. Provided, however, that where the complaint for infringement has
a1ready been filed, the application shall be made in the court where the case
is rending.

The application shall contain a certification against forum shopping as

prescribed by Section 5, Rule 7 of the 1997 Rules of Civil Procedure.

Republic of the Philippines

SUPREME COURT
Manila
A.M. No. 02-1-06-SC

holder or his duly authorized representative in a pending civil action for

infringement or who intends to commence such an action may apply ex
parte for the issuance of a writ of search and seizure directing the alleged
infringing defendant or expected adverse party to admit into his premises the
persons named in the order and to allow the search, inspection, copying,
photographing, audio and audiovisual recording or seizure of any document
and article specified in the order.

FOR

Section 1. Coverage. - This Rule shall govern the provisional seizure and
impounding of documents and articles in pending and intended civil actions
for the purpose of preventing infringement and preserving relevant evidence
in regard to alleged infringement under Republic Act No. 8293, otherwise
known as the Intellectual property Code of the Philippines, Article 50 of the
Agreement on Trade Related Aspects of intellectual Property Rights,
otherwise known as TRIPS and other related laws and international
conventions.
Section 2. The writ of search and seizure. - Where any delay is likely to cause
irreparable harm to the intellectual property right holder or where there is
demonstrable risk of evidence being destroyed, the intellectual property right

Section 5. Examination of applicant; record; confidentiality of proceedings. The application shall be acted upon within twenty-four (24) hours from its
filing; The judge must, before issuing the writ, examine in the form of
searching questions and answers, in writing and under oath or affirmation,
the applicant and the witnesses he may produce on facts personally known
to them. The examination of the applicant and his witnesses shall be
recorded. Their sworn statements and their affidavits shall form part of the
record of the case.
The hearing on the application for the writ shall be held in the chambers of
the judge. Court personnel shall maintain the confidentiality of the
application proceeding.lawphi1.net
The court may require the applicant to give other information necessary for
the identification of the articles and documents to be searched, inspected,
copied or seized and the premises to be searched. Where feasible, it may
direct the applicant to submit copies and photographs of the documents or
articles to be seized and impounded.
Section 6. Grounds for the issuance of the order. - Before the Order can be
issued, the evidence proffered by the applicant and personally evaluated by
the judge must show that:
(a) the applicant is the right holder or his duly authorized
representative;

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(b) there is probable cause to believe that the applicant's right is

being infringed or that such infringement is imminent and there is
a prima facie case for final relief against the alleged infringing
defendant or expected adverse party;

The bond shall be conditioned on the undertaking of the applicant that he

will pay all the costs which may be adjudged to defendant or expected
adverse party and all damages which me latter may sustain by reason of me
issuance of the writ.

(c) damage, potential or actual, likely to be caused to the applicant is

irreparable;

Section 10. When writ shall be served. - The writ shall be served only on
weekdays and from 8 o'clock in the morning to 5 o'clock in the afternoon.
However, the court may direct that the writ be served on any day and any
time for compelling reasons stated in the application and duly proved.

(d) there is demonstrable risk of evidence that the alleged infringing

defendant or expected adverse party may destroy, hide or remove the
documents or articles before any application inter partes can be
made; and
(e) the documents and articles to be seized constitute evidence of the
alleged infringing defendant's or expected adverse party's infringing
activity or that they infringe upon the intellectual property right of
the applicant or that they are used or intended to be used as means
of infringing the applicant's intellectual property right.
Section 7. When writ may issue. - If the judge is satisfied with the proof of
facts upon which the application is based, he shall issue the writ requiring
the search, inspection or copying of the subject documents or articles or
commanding the sheriff to take them into his custody subject to the control
of the court. The enforcement of the writ shall be supervised by an
independent Commissioner to be appointed by the court.
Section 8. Contents of the writ. - The writ shall contain the following:
(a) an order to the alleged infringing defendant, expected adverse
party or to the person who appears to be in charge or in control of
the premises or residing or working therein to permit the persons
named in the writ to enter into the premises for the purpose of
searching, inspecting, copying, or removing from the premises and
transferring to the custody of the sheriff and subject to the control of
the court the subject documents and articles;
(b) an order to the alleged infringing defendant, expected adverse
party or to the person in charge or in control of the premises to
disclose to the sheriff serving the writ the location of the documents
and articles subject of the writ;
(c) the period when the writ shall be enforced which in no case shall
be more than ten (10) days from the date of issuance by the court;
(d) the names of the applicant or his agent or representative and the
Commissioner who shall supervise the enforcement of the writ; and
(e) other terms and conditions that will insure the proper execution
of the writ with due regard to the rights of the alleged infringing
defendant or expected adverse party.
It shall also contain a warning that violation of any of the terms and
conditions of the writ shall constitute contempt of court.
Section 9. Bond and its conditions. - The applicant shall be required to post
a cash bond, surety bond or other equivalent security executed in favor of the
defendant or expected adverse party in a reasonable amount to be fixed by
me court in its order granting me issuance of a writ of search and seizure.

Section 11. To whom writ shall be served. - The writ shall be served on the
alleged infringing defendant or expected adverse party in the place to be
searched.
If the alleged infringing defendant or expected adverse party cannot be found
in the premises, the writ shall be served on his agent or representative. In the
absence of an agent or representative, it shall be served on the person in
charge or in control of the premises, or residing or working therein who is of
sufficient age and discretion. If such person is absent, the sheriff or proper
officer shall post the papers on the premises and proceed with the
enforcement of the writ.
Section 12. Commissioner, duties, qualifications and fees. - The enforcement
of the writ shall be supervised by the independent Commissioner appointed
by the court. In the performance of his duty, the Commissioner shall:
(a) give impartial advise to the alleged infringing defendant, expected
adverse party or to the person in charge of the premises to be
searched as to the meaning and coverage of the writ;
(b) attempt to achieve agreement on a suitable search procedure;
(c) assess what documents or articles come within the terms of the
writ;
(d) ensure the accuracy of the list of documents and articles
searched, inspected, copied or seized by the sheriff;
(e) prepare his own report on the search and seizure and verify and
sign the return prepared by the sheriff; and
(f) generally, assist in the proper execution of the writ.
The Commissioner shall be a member of the Philippine Bar and of proven
competence, integrity and probity. He shall receive such reasonable
compensation as may be determined by the court which can be charged as
cost of suit.
Section 13. Search to be conducted in the presence of defendant, his
representative, person in charge of the premises or witnesses. - The premises
may not be searched except in the presence of the alleged infringing
defendant, expected adverse party or his representative or the person in
charge or in control of the premises or residing or working m therein who
shall be given the opportunity to read the writ before its enforcement and
seek its interpretation from the Commissioner. In the absence of the latter,
two persons of sufficient age and discretion residing in the same locality shall
be allowed to witness the search or in the absence of the latter, two persons
of sufficient age and discretion residing in the nearest locality.

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Section 14. Manner of search and seizure; duties of the sheriff. - Upon
service of the writ in accordance with section 11 hereof, sheriff, under the
supervision of the Commissioner, shall search for the documents and articles
specified in the writ, and take them in his custody subject to the control of
the court.
If the subject articles are not capable of manual delivery, the sheriff shall
attach to them a tag or label stating the fact of seizure and warning all
persons from tampering with them.
The sheriff shall, in the presence of the applicant or his representative, and
under the supervision of the Commissioner, prepare a detailed list of the
seized documents and articles. He shall give an accurate copy of the same to
the alleged infringing defendant, expected adverse party, his agent or
representative, to the person in charge or in control of the premises or
residing or working therein in whose presence the search and seizure were
made. In the absence of the person in charge or in control of the premises or
residing or working therein, the sheriff must, in the presence of at least two
witnesses of sufficient age and discretion residing in the same locality, leave
a copy of the receipt in the place in which he found the seized property.
Where no witnesses are available in the same locality, the copy of the receipt
shall be left by the sheriff in the presence of two witnesses residing in the
nearest locality. The applicant or his representative and the Commissioner
shall also be given a copy of the receipt.

computer from the custody of the alleged infringing defendant, expected

adverse party or person in charge or in control of the premises or residing or
working therein.
Section 17. Sheriff's return. - The sheriff who executed the writ shall, within
three (3) days from its enforcement, make a verified return to the court which
issued the writ. The return shall contain a full statement of the proceedings
under the writ and a complete inventory of the documents and articles
searched, inspected or copied or seized and impounded, with copies served
on the applicant, the defendant or expected adverse party and the
Commissioner.
If not all of the documents and articles enumerated in the order and writ
were seized, the sheriff shall so report to the court and state is the reasons
therefor. All objections of the defendant, expected adverse party or person in
charge of the premises on the manner and regularity of the service of the writ
shall be included by the sheriff in his return.
Section 18. Discharge of writ by the defendant or expected adverse party. Without waiting for return to be filed by the sheriff, the defendant, expected
adverse party or the party whose property has been searched, inspected,
copied or seized may file a motion with the court which issued the writ for its
discharge with prayer for the return of the documents and articles seized.
The writ may be discharged on any of the following grounds:

After the sheriff has taken possession of the documents and articles, he shall
deliver them to a bonded warehouse or government warehouse for
safekeeping. The applicant or his representative shall be allowed access to
said materials for the purpose of examining them.

(a) that the writ was improperly or irregularly issued, or excessively

enforced;

The applicant shall be responsible for the necessary expenses incurred ill the
seizure and safekeeping of the documents and articles in a bonded
warehouse or government warehouse.

(c) that tile safeguards provided in the writ have been violated by the
applicant or the sheriff; or

Section 15. Use of reasonable force to effect writ. - The sheriff, if refused
admittance to the premises after giving notice of his purpose and authority or
in absence of the alleged infringing defendant or expected adverse party, his
agent or representative, or person in charge or in control of the premises or
residing or working therein who is of sufficient age and discretion, may use
reasonable force to gain entry to the premises or any part of the building or
anything therein, to enforce the writ or to liberate himself or any person
lawfully aiding him when unlawfully detained therein.
Section 16. Seizure of computer disks other storage devices. - The seizure of
a computer disk or any storage device may be executed in any of the
following manner:

(b) that the bond is insufficient;

(d) that the documents and articles seized are not infringing copies or
means for making the materials alleged to infringe the intellectual
property right of the applicant.
The writ may be discharged in a summary hearing by the court after notice to
the applicant, the sheriff and the Commissioner.
If the court finds that the bond is insufficient, it shall order a. new bond to be
filed by the applicant within a reasonable time. The discharge of the writ
based on the insufficiency of the bond may only be made if the applicant fails
to post the new bond within the period fixed by the court.

(c) by printing out the Contents of the disk or device with a the use of
a printer.

Section 19. Proceedings on return. - Five (5) days after issuance of the writ,
the issuing judge shall ascertain if the writ has not been served or the return
has been made by the sheriff. If the writ was not served or no return was
made, it shall summon the sheriff and the applicant to whom the writ was
issued and require them to explain why the writ was not served or why no
return has been filed as the case may be. If the return has been made, the
judge shall, after notice to the applicant, the alleged infringing defendant or
expected adverse party, the sheriff and the Commissioner, ascertain whether
the provisions of this Rule and applicable laws have been complied with.

When the computer disks or storage devices cannot be readily removed from
the computer to which they are fitted, the sheriff may take the subject

Section 20. Failure to file complaint. - The writ shall also. Upon motion of the
expected adverse party, be set aside and the seized documents and articles

(a) by the physical taking thereof;

(b) by Copying its contents in a suitable device or disk provided by
the applicant; or

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returned to the expected adverse party if no case is filed with the appropriate
court or authority within thirty-one (31) calendar days from the date of
issuance of the writ.
Section 21. Claim for damages. - Where the writ is discharged on any of die
grounds provided in this Rule, or where it is found after trial that there has
been no infringement or threat of infringement of an intellectual property
right, the court. Upon motion of the alleged infringing defendant or expected
adverse party and after due hearing, shall order the applicant to compensate
the defendant or expected adverse party upon the cash bond, surety bond or
other equivalent security for any injury or damage the latter suffered by the
issuance and enforcement of the writ. Should the damages exceed the
amount of the bond, the applicant shall be liable for the payment of the
excess.
When a complaint is already filed in court, the motion shall be filed with the
same court during the trial or before appeal is perfected or before judgment
becomes executory, with due notice to the applicant, setting forth the facts
showing the defendant's right to damage's and the amount thereof. The
award of damages shall be included in the judgment in the main case.
Where no complaint is filed against the expected adverse party, the motion
shall be filed with the court which issued the writ. In such a case, the court
shall set the motion for summary hearing and immediately determine the
expected adverse party's right to damages.

application for said writ. If a formal complaint is filed thereafter, the Clerk of
Court may make a. reassessment of the filing fee.
Section 24. Separate logbook. - In every court, there shall be a logbook
under the custody of the Clerk of Court wherein shall be docketed and
entered within twenty-four (24) hours after the issuance or denial of the writ
of search and seizure, the filing of such application and other particulars
thereof. All the subsequent proceedings concerning the writ of search and
seizure shall be faithfully recorded in the separate logbook.
Section 25. Effect of violation. - A violation of any of the terms and
conditions of the order and the writ of search and seizure or any provision of
this Rule shall constitute contempt of court.
Section 26. Writ not a bar to other measures. - The availment of the writ of
search and seizure under this Rule shall not prevent the applicant from
resorting to other provisional measures or remedies provided in existing laws
and procedural rules.
Section 27. Effectivity. - This Rule shall take effect on February 15, 2002
after its publication in two (2) newspapers of general circulation not later
than January 30, 2002.

A judgment in favor of the applicant in its principal claim, should not

necessarily bar the alleged infringing defendant from recovering damages
where he suffered losses by reason of the wrongful issuance or enforcement
of the writ.
The damages provided for in this section shall be independent from the
damages claimed by the defendant in his counterclaim.
Section 22. Judgment. - If it appears after trial that the seized documents
and articles are found to infringe the intellectual property right of the
applicant or that they constitute the means for the production of infringing
goods, the court shall order their destruction or donation to charitable,
educational or religious institutions with the prohibition against bringing the
same into the channels of commerce. In the latter case, infringing
trademarks or trade names found on labels, tags and other portions of the
infringing materials shall be removed or defaced before the donation. In no
case shall the infringing materials be returned to the defendant.
If the court finds no infringement, the seized materials shall be immediately
returned to the defendant.
Section 23. Direct filing, provisional docketing and deposit of prescribed filing
fee. - The Regional Trial Courts specially designated to try violations of
intellectual property rights shall keep a distinct and separate logbook for
writs of search and seizure. The application for a writ of search and seizure
filed directly with the said courts shall be given a provisional docket number.
The prescribed filing fee shall be deposited with the branch clerk of court and
properly receipted for and transmitted to the Clerk of Court within twentyfour (24) hours from issuance of the order granting or denying the

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