July 19, 2016

G.R. No. 204605

INTELLECTUAL PROPERTY ASSOCIATION OF THE PHILIPPINES, Petitioner,

vs.
HON. PAQUITO OCHOA, IN HIS CAPACITY AS EXECUTIVE SECRETARY, HON. ALBERT DEL ROSARIO, IN HIS
CAPACITY AS SECRETARY OF THE DEPARTMENT OF FOREIGN AFFAIRS, AND HON. RICARDO BLANCAFLOR,
IN HIS CAPACITY AS THE DIRECTOR GENERAL OF THE INTELLECTUAL PROPERTY OFFICE OF THE
PHILIPPINES, Respondents.

DECISION

BERSAMIN, J.:

In this special civil action for certiorari and prohibition, the Intellectual Property Association of the Philippines (IPAP) seeks
to declare the accession of the Philippines to the Protocol Relating to the Madrid Agreement Concerning the International
Registration of Marks (Madrid Protocol) unconstitutional on the ground of the lack of concurrence by the Senate, and in
the alternative, to declare the implementation thereof as unconstitutional because it conflicts with Republic Act No. 8293,
otherwise known as the Intellectual Property Code of the Philippines (IP Code).1

We find and declare that the President's ratification is valid and constitutional because the Madrid Protocol, being an
executive agreement as determined by the Department of Foreign Affairs, does not require the concurrence of the
Senate.

Antecedents

The Madrid System for the International Registration of Marks (Madrid System), which is the centralized system providing
a one-stop solution for registering and managing marks worldwide, allows the trademark owner to file one application in
one language, and to pay one set of fees to protect his mark in the territories of up to 97 member-states.2 The Madrid
System is governed by the Madrid Agreement, concluded in 1891, and the Madrid Protocol, concluded in 1989.3

The Madrid Protocol, which was adopted in order to remove the challenges deterring some countries from acceding to
the Madrid Agreement, has two objectives, namely: (1) to facilitate securing protection for marks; and (2) to make the
management of the registered marks easier in different countries.4

In 2004; the Intellectual Property Office of the Philippines (IPOPHL), the government agency mandated to administer the
intellectual property system of the country and to implement the state policies on intellectual property; began considering
the country's accession to the Madrid Protocol. However, based on its assessment in 2005, the IPOPHL needed to first
improve its own operations before making the recommendation in favor of accession. The IPOPHL thus implemented
reforms to eliminate trademark backlogs and to reduce the turnaround time for the registration of marks. 5

In the meanwhile, the IPOPHL mounted a campaign for information dissemination to raise awareness of the Madrid
Protocol. It launched a series of consultations with stakeholders and various business groups regarding the Philippines'
accession to the Madrid Protocol. It ultimately arrived at the conclusion that accession would benefit the country and help
raise the level of competitiveness for Filipino brands. Hence, it recommended in September 2011 to the Department of
Foreign Affairs (DFA) that the Philippines should accede to the Madrid Protocol.6

After its own review, the DFA endorsed to the President the country's accession to the Madrid Protocol. Conformably with
its express authority under Section 9 of Executive Order No. 459 (Providing for the Guidelines in the Negotiation of
International Agreements and its Ratification) dated November 25, 1997, the DFA determined that the Madrid
Protocol was an executive agreement.1âwphi1 The IPOPHL, the Department of Science and Technology, and the
Department of Trade and Industry concurred in the recommendation of the DFA. 7

On March 27, 2012, President Benigno C. Aquino III ratified the Madrid Protocol through an instrument of accession, The
instrument of accession was deposited with the Director General of the World Intellectual Property Organization (WIPO)
on April 25, 2012.8 The Madrid Protocol entered into force in the Philippines on July 25, 2012.9

Petitioner IP AP, an association of more than 100 law firms and individual practitioners in Intellectual Property Law whose
main objective is to promote and protect intellectual property rights in the Philippines through constant assistance and
involvement in the legislation of intellectual property law,10 has commenced this special civil action for certiorari and
prohibition11 to challenge the validity of the President's accession to the Madrid Protocol without the concurrence of the
Senate. Citing Pimentel, Jr. v. Office of the Executive Secretary, the IPAP has averred:

Nonetheless, while the President has the sole authority to negotiate and enter into treaties, the Constitution provides a
limitation to his power by requiring the concurrence of 2/3 of all the members of the Senate for the validity of the treaty
entered into by him. Section 21, Article VII of the 1987 Constitution provides that "no treaty or international agreement
shall be valid and effective unless concurred in by at least two-thirds of all the Members of the Senate." The 1935 and the
1973 Constitution also required the concurrence by the legislature to the treaties entered into by the executive. 12

1
According to the IPAP, the Madrid Protocol is a treaty, not an executive agreement; hence, respondent DFA Secretary
Albert Del Rosario acted with grave abuse of discretion in determining the Madrid Protocol as an executive agreement.13

The IPAP has argued that the implementation of the Madrid Protocol in the Philippines; specifically the processing of
foreign trademark applications, conflicts with the IP Code,14 whose Section 125 states:

Sec. 125. Representation; Address for Service. - If the applicant is not domiciled or has no real and effective
commercial establishment in the Philippines; he shall designate by a written document filed in the office, the name and
address of a Philippine resident who may be served notices or process in proceedings affecting the mark. Such notices or
services may be served upon the person so designated by leaving a copy thereof at the address specified in the last
designation filed. If the person so designated cannot be found at the address given in the last designation, such notice or
process may be served upon the Director. (Sec. 3; R.A. No. 166 a)

It has posited that Article 2 of the Madrid Protocol provides in contrast:

Article 2
Securing Protection through International Registration

(1) Where an application for the registration of a mark has been filed with the Office of a Contracting Party, or where a
mark has been registered in the register of the Office of a Contracting Party, the person in whose name that application
(hereinafter referred to as "the basic application;') or that registration (hereinafter referred to as "the basic registration")
stands may, subject to the provisions of this Protocol secure protection for his mark in the territory of the Contracting
Parties, by obtaining the registration of that mark in the register of the International Bureau of the World Intellectual
Property Organization (hereinafter referred to as "the international registration," "the International Register," "the
International Bureau" and "the Organization'', respectively), provided that,

(i) where the basic application has been filed with the Office of a Contracting State or where the basic registration has
been made by such an Office, the person in whose name that application or registration stands is a national of that
Contracting State, or is domiciled, or has a real and effective industrial or commercial establishment, in the said
Contracting State,

(ii) where the basic application has been filed with the Office of a Contracting Organization or where the basic registration
has been made by such an Office, the person in whose name that application or registration stands is a national of a State
member of that Contracting Organization, or is domiciled, or has a real and effective industrial or commercial
establishment, in the territory of the said Contracting Organization.

(2) The application for international registration (hereinafter referred to as "the international application") shall be filed with
the International Bureau through the intermediary of the Office with which the basic application was filed or by which the
basic registration was made (hereinafter referred to as "the Office of origin"), as the case may be.

(3) Any reference in this Protocol to an "Office" or an "Office of a Contracting Party" shall be construed as a reference to
the office that is in charge, on behalf of a Contracting Party, of the registration of marks, and any reference in this Protocol
to "marks" shall be construed as a reference to trademarks and service marks.

(4) For the purposes of this Protocol, "territory of a Contracting Party" means, where the Contracting Party is a State, the
territory of that State and, where the Contracting Party is an intergovernmental organization, the territory in which the
constituting treaty of that intergovernmental organization applied.

The IPAP has insisted that Article 2 of the Madrid Protocol means that foreign trademark applicants may file their
applications through the International Bureau or the WIPO, and their applications will be automatically granted trademark
protection without the need for designating their resident agents in the country. 15

Moreover, the IPAP has submitted that the procedure outlined in the Guide to the International Registration of
Marks relating to representation before the International Bureau is the following, to wit:

Rule 3(1)(a) 09.02 References in the Regulations, Administrative Instructions or in this Guide to representation relate only
to representation before the International Bureau. The questions of the need for a representative before the Office of
origin or the Office of a designated Contracting Party (for example, in the event of a refusal of protection issued by such
an Office), who may act as a representative in such cases and the method of appointment, are outside the scope of the
Agreement, Protocol and Regulations and are governed by the law and practice of the Contracting Party concerned.

which procedure is in conflict with that under Section 125 of the IP Code, and constitutes in effect an amendment of the
local law by the Executive Department.16

The IPAP has prayed that the implementation of the Madrid Protocol in the Philippines be restrained in order to prevent
future wrongs considering that the IP AP and its constituency have a clear and unmistakable right not to be deprived of
the rights granted them by the IP Code and existing local laws. 17

In its comment in behalf of the respondents, the Office of the Solicitor General (OSG) has stated that the IPAP does not
have the locus standi to challenge the accession to the Madrid Protocol; that the IPAP cannot invoke the Court's original
jurisdiction absent a showing of any grave abuse of discretion on the part of the respondents; that the President's

2
ratification of the Madrid Protocol as an executive agreement is valid because the Madrid Protocol is only procedural,
does not create substantive rights, and does not require the amendment of the IP Code; that the IPAP is not entitled to the
restraining order or injunction because it suffers no damage from the ratification by the President, and there is also no
urgency for such relief; and the IPAP has no clear unmistakable right to the relief sought.18

Issues

The following issues are to be resolved, namely:

I. Whether or not the IP AP has locus standi to challenge the President's ratification of the Madrid Protocol;

II. Whether or not the President's ratification of the Madrid Protocol is valid and constitutional; and

III. Whether or not the Madrid Protocol is in conflict with the IP Code.

Ruling of the Court

The petition for certiorari and prohibition is without merit.

A. The issue of legal standing to sue, or locus standi

The IPAP argues in its reply19 that it has the locus standi to file the present case by virtue of its being an association
whose members stand to be injured as a result of the enforcement of the Madrid Protocol in the Philippines; that the injury
pertains to the acceptance and approval of applications submitted through the Madrid Protocol without local
representation as required by Section 125 of the IP Code; 20 and that such will diminish the rights granted by the IP Code
to Intellectual Property Law practitioners like the members of the IPAP.21

The argument of the IPAP is untenable.

Legal standing refers to "a right of appearance in a court of justice on a given question."22 According to Agan, Jr. v.
Philippine International Air Terminals Co., Inc.,23standing is "a peculiar concept in constitutional law because in some
cases, suits are not brought by parties who have been personally injured by the operation of a law or any other
government act but by concerned citizens, taxpayers or voters who actually sue in the public interest."

The Court has frequently felt the need to dwell on the issue of standing in public or constitutional litigations to sift the
worthy from the unworthy public law litigants seeking redress or relief. The following elucidation in De Castro v. Judicial
and Bar Council24offers the general understanding of the context of legal standing, or locus standi for that purpose, viz. :

In public or constitutional litigations, the Court is often burdened with the determination of the locus standi of the
petitioners due to the ever-present need to regulate the invocation of the intervention of the Court to correct any official
action or policy in order to avoid obstructing the efficient functioning of public officials and offices involved in public
service. It is required, therefore, that the petitioner must have a personal stake in the outcome of the controversy, for, as
indicated in Agan, Jr. v. Philippine International Air Terminals Co., Inc.:

The question on legal standing is whether such parties have "'alleged such a personal stake in the outcome of
the controversy as to assure that concrete adverseness which sharpens the presentation of issues upon which
the court so largely depends for illumination of difficult constitutional questions," Accordingly, it has been held
that the interest of a person assailing the constitutionality of a statute must be direct and personal. He must be
able to show, not only that the law or any government act is invalid, but also that he sustained or is in imminent
danger of sustaining some direct injury as a result of its enforcement, and not merely that he suffers thereby in
some indefinite way. It must appear that the person complaining has been or is about to be denied some right or
privilege to which he is lawfully entitled or that he is about to be subjected to some burdens or penalties by
reason of the statute or act complained of.

It is true that as early as in 1937, in People v. Vera, the Court adopted the direct injury test for determining whether a
petitioner in a public action had locus standi. There, the Court held that the person who would assail the validity of a
statute must have "a personal and substantial interest in the case such that he has sustained, or will sustain direct injury
as a result." Vera was followed in Custodio v. President of the Senate, Manila Race Horse Trainers' Association v. De la
Fuente, Anti-Chinese League of the Philippines v. Felix, and Pascual v. Secretary of Public Works.

Yet, the Court has also held that the requirement of locus standi, being a mere procedural technicality, can be waived by
the Court in the exercise of its discretion. For instance, in 1949, in Araneta v. Dinglasan, the Court liberalized the
approach when the cases had "transcendental importance." Some notable controversies whose petitioners did not pass
the direct injury test were allowed to be treated in the same way as in Araneta v. Dinglasan.

In the 1975 decision in Aquino v. Commission on Elections, this Court decided to resolve the issues raised by the petition
due to their "farreaching implications,'; even if the petitioner had no personality to file the suit. The liberal approach
of Aquino v. Commission on Elections has been adopted in several notable cases, permitting ordinary citizens, legislators,
and civic organizations to bring their suits involving the constitutionality or validity of laws, regulations, and rulings.

3
However, the assertion of a public right as a predicate for challenging a supposedly illegal or unconstitutional executive or
legislative action rests on the theory that the petitioner represents the public in general. Although such petitioner may not
be as adversely affected by the action complained against as are others, it is enough that he sufficiently demonstrates in
his petition that he is entitled to protection or relief from the Court in the vindication ofa public right.25

The injury that the IPAP will allegedly suffer from the implementation of the Madrid Protocol is imaginary, incidental and
speculative as opposed to a direct and material injury required by the foregoing tenets on locus standi. Additionally, as the
OSG points out in the comment,26 the IPAP has misinterpreted Section 125 of the IP Code on the issue of representation.
The provision only states that a foreign trademark applicant "shall designate by a written document filed in the office, the
name and address of a Philippine resident who may be served notices or process in proceedings affecting the mark;" it
does not grant anyone in particular the right to represent the foreign trademark applicant. Hence, the IPAP cannot justly
claim that it will suffer irreparable injury or diminution of rights granted to it by Section 125 of the IP Code from the
implementation of the Madrid Protocol.

Nonetheless, the IPAP also emphasizes that the paramount public interest involved has transcendental importance
because its petition asserts that the Executive Department has overstepped the bounds of its authority by thereby cutting
into another branch's functions and responsibilities.27 The assertion of the IPAP may be valid on this score. There is little
question that the issues raised herein against the implementation of the Madrid Protocol are of transcendental
importance. Accordingly, we recognize IPAP's locus standi to bring the present challenge. Indeed, the Court has adopted
a liberal attitude towards locus standi whenever the issue presented for consideration has transcendental significance to
the people, or whenever the issues raised are of paramount importance to the public. 28

B. Accession to the Madrid Protocol was constitutional

The IP AP submits that respondents Executive Secretary and DFA Secretary Del Rosario gravely abused their discretion
in determining that there was no need for the Philippine Senate's concurrence with the Madrid Protocol; that the Madrid
Protocol involves changes of national policy, and its being of a permanent character requires the Senate's
concurrence,29 pursuant to Section 21, Article VII of the Constitution, which states that "no treaty or international
agreement shall be valid and effective unless concurred in by at least two-thirds of all the Members of the Senate."

Before going further, we have to distinguish between treaties and international agreements, which require the Senate's
concurrence, on one hand, and executive agreements, which may be validly entered into without the Senate's
concurrence. Executive Order No. 459, Series of 1997,30 notes the following definitions, to wit:

Sec. 2. Definition of Terms.

a. International agreement - shall refer to a contract or understanding, regardless of nomenclature, entered into between
the Philippines and another government in written form and governed by international law, whether embodied in a single
instrument or in two or more related instruments.

b. Treaties - international agreements entered into by the Philippines which require legislative concurrence after
executive ratification. This term may include compacts like conventions, declarations, covenants and acts.

c. Executive Agreements - similar to treaties except that they do not require legislative concurrence.

The Court has highlighted the difference between treaties and executive agreements in Commissioner of Customs v.
Eastern Sea Trading,31 thusly:

International agreements involving political issues or changes of national policy and those involving international
arrangements of a permanent character usually take the form of treaties. But international agreements
embodying adjustments of detail carrying out well-established national policies and traditions and those involving
arrangements of a more or less temporary nature usually take the form of executive agreements.

In the Philippines, the DFA, by virtue of Section 9, Executive Order No. 459,32 is initially given the power to determine
whether an agreement is to be treated as a treaty or as an executive agreement. To determine the issue of whether DFA
Secretary Del Rosario gravely abused his discretion in making his determination relative to the Madrid Protocol, we review
the jurisprudence on the nature of executive agreements, as well as the subject matters to be covered by executive
agreements.

The pronouncement in Commissioner of Customs v. Eastern Sea Trading 33is instructive, to wit:

x x x The concurrence of said House of Congress is required by our fundamental law in the making of "treaties"
(Constitution of the Philippines; Article VII, Section 10[7]), which are, however, distinct and different from "executive
agreements," which may be validly entered into without such concurrence.

"Treaties are formal documents which require ratification with the approval of two thirds of the Senate. Executive
agreements become binding through executive action without the need of a vote by the Senate or by Congress.

xxxx

4
"x x x the right of the Executive to enter into binding agreements without the necessity of subsequent Congressional
approval has been confirmed by long usage. From the earliest days of our history we have entered into executive
agreements covering such subjects as commercial and consular relations, most-favored-nation rights, patent
rights, trademark and copyright protection, postal and navigation arrangements and the settlement of claims. The
validity of these has never been seriously questioned by our courts.

xxxx

Agreements with respect to the registration of trademarks have been concluded by the Executive with various
countries under the Act of Congress of March 3, 1881 (21 Stat. 502), x x x

xxxx

In this connection, Francis B. Sayre, former U.S. High Commissioner to the Philippines, said in his work on "The
Constitutionality of Trade Agreement Acts":

Agreements concluded by the President which fall short of treaties are commonly referred to as executive agreements
and are no less common in our scheme of government than are the more formal instruments - treaties and conventions.
They sometimes take the form of exchanges of notes and at other times that or more formal documents denominated
'agreements' or 'protocols'. The point where ordinary correspondence between this and other governments ends and
agreements - whether denominated executive agreements or exchanges of notes or otherwise - begin, may sometimes be
difficult of ready ascertainment. It would be useless to undertake to discuss here the large variety of executive
agreements as such, concluded from time to time. Hundreds of executive agreements, other than those entered into
under the trade-agreements act, have been negotiated with foreign governments. x x x It would seem to be sufficient, in
order to show that the trade agreements under the act of 1934 are not anomalous in character, that they are not treaties,
and that they have abundant precedent in our history, to refer to certain classes of agreements heretofore entered into by
the Executive without the approval of the Senate. They cover such subjects as the inspection of vessels, navigation
dues, income tax on shipping profits, the admission of civil airft, customs matters, and commercial relations
generally, international claims, postal matters, the registration of trademarks and copyrights, etcetera. Some of
them were concluded not by specific congressional authorization but in conformity with policies declared in acts
of Congress with respect to the general subject matter, such as tariff acts; while still others, particularly those with
respect of the settlement of claims against foreign governments, were concluded independently of any legislation.
(Emphasis ours)

As the foregoing pronouncement indicates, the registration of trademarks and copyrights have been the subject of
executive agreements entered into without the concurrence of the Senate. Some executive agreements have been
concluded in conformity with the policies declared in the acts of Congress with respect to the general subject matter.

It then becomes relevant to examine our state policy on intellectual property in general, as reflected in Section 2 of our IP
Code, to wit:

Section 2. Declaration of State Policy. - The State recognizes that an effective intellectual and industrial property
system is vital to the development of domestic and creative activity, facilitates transfer of technology, attracts
foreign investments, and ensures market access for our products. It shall protect and secure the exclusive rights
of scientists, inventors, artists and other gifted citizens to their intellectual property and creations, particularly
when beneficial to the people, for such periods as provided in this Act.

The use of intellectual property bears a social function. To this end, the State shall promote the diffusion of knowledge
and information for the promotion of national development and progress and the common good.

It is also the policy of the State to streamline administrative procedures of registering patents, trademarks and
copyright, to liberalize the registration on the transfer of technology; and to enhance the enforcement of intellectual
property rights in the Philippines.

In view of the expression of state policy having been made by the Congress itself, the IPAP is plainly mistaken in
asserting that "there was no Congressional act that authorized the accession of the Philippines to the Madrid Protocol."34

Accordingly, DFA Secretary Del Rosario’s determination and treatment of the Madrid Protocol as an executive agreement;
being in apparent contemplation of the express state policies on intellectual property as well as within his power under
Executive Order No. 459, are upheld. We observe at this point that there are no hard and fast rules on the propriety of
entering into a treaty or an executive agreement on a given subject as an instrument of international relations. The
primary consideration in the choice of the form of agreement is the parties' intent and desire to ft their international
agreement in the form they so wish to further their respective interests. The matter of form takes a back seat when it
comes to effectiveness and binding effect of the enforcement of a treaty or an executive agreement; inasmuch as all the
parties; regardless of the form, become obliged to comply conformably with the time-honored principle of pacta sunt
servanda.35The principle binds the parties to perform in good faith their parts in the agreements. 36

C. There is no conflict between the Madrid Protocol and the IP Code.

5
The IPAP also rests its challenge on the supposed conflict between the Madrid Protocol and the IP Code, contending that
the Madrid Protocol does away with the requirement of a resident agent under Section 125 of the IP Code; and that
the Madrid Protocol is unconstitutional for being in conflict with the local law, which it cannot modify.

The IPAP's contentions stand on a faulty premise. The method of registration through the IPOPHL, as laid down by the IP
Code, is distinct and separate from the method of registration through the WIPO, as set in the Madrid
Protocol. Comparing the two methods of registration despite their being governed by two separate systems of registration
is thus misplaced.

In arguing that the Madrid Protocol conflicts with Section 125 of the IP Code, the IP AP highlights the importance of the
requirement for the designation of a resident agent. It underscores that the requirement is intended to ensure that non-
resident entities seeking protection or privileges under Philippine Intellectual Property Laws will be subjected to the
country's jurisdiction. It submits that without such resident agent, there will be a need to resort to costly, time consuming
and cumbersome extraterritorial service of writs and processes.37

The IPAP misapprehends the procedure for examination under the Madrid Protocol, The difficulty, which the IPAP
illustrates, is minimal, if not altogether inexistent. The IPOPHL actually requires the designation of the resident agent
when it refuses the registration of a mark. Local representation is further required in the submission of the Declaration of
Actual Use, as well as in the submission of the license contract. 38 The Madrid Protocol accords with the intent and spirit of
the IP Code, particularly on the subject of the registration of trademarks. The Madrid Protocol does not amend or modify
the IP Code on the acquisition of trademark rights considering that the applications under the Madrid Protocol are still
examined according to the relevant national law, In that regard, the IPOPHL will only grant protection to a mark that meets
the local registration requirements.

WHEREFORE, this Court DISMISSES the petition for certiorari and prohibition for lack of merit; and ORDERS the
petitioner to pay the costs of suit.

SO ORDERED.

6
 SECOND DIVISION

G.R. No. 174379, August 31, 2016

E.I. DUPONT DE NEMOURS AND CO. (ASSIGNEE OF INVENTORS CARINI, DUNCIA AND
WONG), Petitioner, v. DIRECTOR EMMA C. FRANCISCO (IN HER CAPACITY AS DIRECTOR GENERAL OF THE
INTELLECTUAL PROPERTY OFFICE), DIRECTOR EPIFANIO M. EVASCO (IN HIS CAPACITY AS THE DHUECTOR
OF THE BUREAU OF PATENTS), AND THERAPHARMA, INC., Respondents.

DECISION

LEONEN, J.:

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

This resolves a Petition for Review on Certiorari1 assailing the Court of Appeals Amended Decision2 dated August 30,
2006, which denied the revival of Philippine Patent Application No. 35526, and the Court of Appeals Resolution 3 dated
January 31, 2006, which granted the intervention of Therapharma, Inc. in the revival proceedings.

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

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

The patent application was handled by Atty. Nicanor D. Mapili (Atty. Mapili), a local resident agent who handled a majority
of E.I. Dupont Nemours' patent applications in the Philippines from 1972 to 1996. 9

On December 19, 2000, E.I. Dupont Nemours' new counsel, Ortega, Del Castillo, Bacorro, Odulio, Calma, and
Carbonell,10 sent the Intellectual Property Office11 a letter requesting that an office action be issued on Philippine Patent
Application No. 35526.12

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

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

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

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

....

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

On May 29, 2002, E.I. Dupont Nemours replied to the office action by submitting a Power of Attorney executed by Miriam
Meconnahey, authorizing Ortega, Castillo, Del Castillo, Bacorro, Odulio, Calma, and Carbonell to prosecute and handle its
patent applications.15 On the same day, it also filed a Petition for Revival with Cost of Philippine Patent Application No.
35526.16

In its Petition for Revival, E.I. Dupont Nemours argued that its former counsel, Atty. Mapili, did not inform it about the
abandonment of the application, and it was not aware that Atty. Mapili had already died.17 It argued that it discovered Atty.
Mapili's death when its senior-level patent attorney visited the Philippines in 1996.18 It argued that it only had actual notice
of the abandonment on January 30, 2002, the date of Paper No. 2.19 Thus, it argued that its Petition for Revival was
7
properly filed under Section 113 of the 1962 Revised Rules of Practice before the Philippines Patent Office in Patent
Cases (1962 Revised Rules of Practice).20

On April 18, 2002, the Director of Patents denied the Petition for Revival for having been filed out of time.21 The
Resolution22 stated:
Propriety dictates that the well-settled rule on agency should be applied to this case to maintain the objectivity and
discipline of the Office. Therefore, for cases such as the instant case, let the Office maintain its position that mistakes of
the counsel bind the client,' regardless of the degree of negligence committed by the former counsel. Although it appears
that the former counsel, Arty. Nicanor Mapili was remiss in his obligations as counsel for the applicants, the Office cannot
revive the abandoned application because of the limitations provided in Rule 115. Clearly, the Petition for Revival was
filed beyond the reglementary period. Since the law and rules do not give the Director of Patents the discretion to stretch
the period for revival, the Office is constrained to apply Rule 115 to the instant case.

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

SO ORDERED.23
E.I. Dupont Nemours appealed the denial to the Director-General of the Intellectual Property Office on August 26,
2002.24 In the Decision25lawred dated October 22, 2003, Director-General Emma C. Francisco denied the appeal and
affirmed the Resolution of the Director of Patents.

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

On August 31, 2004, the Court of Appeals granted the Petition for Review.27 In allowing the Petition for Revival, the Court
of Appeals stated:
After an exhaustive examination of the records of this case, this Court believes that there is sufficient justification to relax
the application of the above-cited doctrine in this case, and to afford petitioner some relief from the gross negligence
committed by its former lawyer, Atty. Nicanor D. Mapili[.]
The Office of the Solicitor General, on behalf of the Intellectual Property Office, moved for reconsideration of this Decision
on September 22, 2004.29

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

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

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

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

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

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

The Court of Appeals likewise found that it erroneously based its August 31, 2004 Decision on E.I Dupont Nemours'
allegation that it took seven (7) to 13 years for the Intellectual Property Office to act on a patent application.44 It stated that
while it might have taken that long to issue the patent, it did not take that long for the Intellectual Property Office to act on
application.45 Citing Schuartz v. Court of Appeals,46 it found that both E.I. Dupont Nemours and Arty. Mapili were
inexcusably negligent in prosecuting the patent application.47

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

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

8
First, whether the Petition for Review on Certiorari complied with Rule 45, Section 4 of the Rules of Court when petitioner
failed to attach certain documents to support the allegations in the complaint;

Second, whether petitioner should have filed a petition for certiorari under Rule 65 of the Rules of Court;

Third, whether the Petition for Review on Certiorari raises questions of fact;

Fourth, whether the Court of Appeals erred in allowing the intervention of respondent Therapharma, Inc. in petitioner's
appeal;

Fifth, whether the Court of Appeals erred in denying petitioner's appeal for the revival of its patent application on the
grounds that (a) petitioner committed inexcusable negligence in the prosecution of its patent application; and (b) third-
party rights and the public interest would be prejudiced by the appeal;

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

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

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

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

Respondent Therapharma, Inc. argues that the Petition should be dismissed outright for being the wrong mode of
appeal.53 It argues that petitioner should have filed a petition for certiorari under Rule 65 since petitioner was assailing an
act done by the Court of Appeals in the exercise of its discretion. 54 It argues that petitions under Rule 45 are limited to
questions of law, and petitioner raised findings of fact that have already been affirmed by the Court of Appeals.55

Petitioner, on the other hand, argues that Rule 65 is only available when there is no appeal or any plain, speedy remedy
in the ordinary course of law. Since a petition for review under Rule 45 was still available to it, it argues that it correctly
availed itself of this remedy.56 Petitioner also argues that there are exceptions to the general rule on the conclusiveness of
the Court of Appeals' findings of fact.57 It argues that it was necessary for it to discuss relevant facts in order for it to show
that the Court of Appeals made a misapprehension of facts.58

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

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

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

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

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

II

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

9
Respondent Therapharma, Inc. argues that the Petition should have been outright dismissed since it failed to attach
certain documents to support its factual allegations and legal arguments, particularly: the annexes of the Petition for
Review it had filed before the Court of Appeals and the annexes in the Motion for Leave to Intervene it had filed.74 It
argues that petitioner's failure to attach the documents violates Rule 45, Section 4, which requires the submission of
material portions of the record.75

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

In Magsino v. De Ocampo,77 this Court applied the procedural guideposts in Galvez v. Court of Appeals78in determining
whether the Court of Appeals correctly dismissed a petition for review under Rule 42 for failure to attach relevant portions
of the record. Thus:
In Galvez v. Court of Appeals, a case that involved the dismissal of a petition for certiorari to assail an unfavorable ruling
brought about by the failure to attach copies of all pleadings submitted and other material portions of the record in the trial
court (like the complaint, answer and position paper) as would support the allegations of the petition, the Court recognized
three guideposts for the CA to consider in determining whether or not the rules of procedures should be relaxed, as
follows:
First, not all pleadings and parts of case records are required to be attached to the petition. Only those which are relevant
and pertinent must accompany it. The test of relevancy is whether the document in question will support the material
allegations in the petition, whether said document will make out a prima facie case of grave abuse of discretion as to
convince the court to give due course to the petition.

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

Third, a petition lacking an essential pleading or part of the case record may still be given due course or reinstated (if
earlier dismissed) upon showing that petitioner later submitted the documents required, or that it will serve the higher
interest of justice that the case be decided on the merits.79
Although Magsino referred to a petition for review under Rule 42 before the Court of Appeals, the procedural guideposts
cited in Magsino may apply to this case since the contents of a pleading under Rule 42 80 are substantially the same as the
contents of a pleading under Rule 45,81 in that both procedural rules require the submission of "material portions of the
record as would support the allegations of the petition."82

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

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

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

(2) Letters dated July 18, 1995, December 12, 1995, and December 29, 1995;89

(3) Declaration of Ms. Miriam Meconnahey dated June 25, 2002;90

(4) Spreadsheet of petitioner's patent applications handled by Atty. Mapili; 91

(5) Power of Attorney and Appointment of Resident Agent dated September 26, 1996; 92

(6) Letter dated December 19, 2000 requesting an Office Action on Patent Application No. 35526; 93

(7) Paper No. 2 dated January 30, 2002;94

(8) Petition for Revival dated January 30, 2002 with attached Power of Attorney and Appointment of Resident Agent; 95

(9) Resolution dated July 24, 2002 by Director of the Bureau of Patents;96 and

(10) Notice of and Memorandum on Appeal before the Director-General of the Intellectual Property Office.97

The third procedural guidepost in Magsino was complied with upon the submission of these documents. Petitioner,
therefore, has substantially complied with Rule 45, Section 4 of the Rules of Court.

III

Appeal is not a right but a mere privilege granted by statute.98 It may only be exercised in accordance with the law that
grants it.

Accordingly, the Court of Appeals is not bound by the rules of procedure in administrative agencies. The procedural rules
10
of an administrative agency only govern proceedings within the agency. Once the Court of Appeals has given due course
to an appeal from a ruling of an administrative agency, the proceedings before it are governed by the Rules of Court.

However, petitioner argues that intervention should not have been allowed on appeal 99 since the revival of a patent
application is ex parte and is "strictly a contest between the examiner and the applicant"100under Sections 78101 and
79102 of the 1962 Revised Rules of Practice.103 It argues that the disallowance of any intervention is to ensure the
confidentiality of the proceedings under Sections 13 and 14 of the 1962 Revised Rules of Practice.104

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

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

....

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

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

266. Procedure on appeal to the Supreme Court.—For the procedure on appeal to the Supreme Court, from the final
decisions of the Director of Patents, see sections 63 to 73, inclusive, of Republic Act No. 165 (patent law).
Particularly instructive is Section 73 of Republic Act No. 165, which provides:
Section 73. Rules of Court applicable. — In all other matters not herein provided, the applicable provisions of the Rules of
Court shall govern.
Republic Act No. 165 has since been amended by Republic Act No. 8293, otherwise known as the Intellectual Property
Code of the Philippines (Intellectual Property Code), in 1997. This is the applicable law with regard to the revival of
petitioner's patent application. Section 7(7.1)(a) of the Intellectual Property Code states:
SECTION 7. The Director General and Deputies Director General. —

7.1. Functions. — The Director General shall exercise the following powers and functions:

....

b. Exercise exclusive appellate jurisdiction over all decisions rendered by the Director of Legal Affairs, the Director of
Patents, the Director of Trademarks, and the Director of the Documentation, Information and Technology Transfer
Bureau. The decisions of the Director General in the exercise of his appellate jurisdiction in respect of the decisions of the
Director of Patents, and the Director of Trademarks shall be appealable to the Court of Appeals in accordance with the
Rules of Court; and those in respect of the decisions of the Director of Documentation, Information and Technology
Transfer Bureau shall be appealable to the Secretary of Trade and Industry[.] (Emphasis supplied)
Thus, it is the Rules of Court, not the 1962 Revised Rules of Practice, which governs the Court of Appeals' proceedings in
appeals from the decisions of the Director-General of the Intellectual Property Office regarding the revival of patent
applications.

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

SECTION 1. Who may intervene. — A person who has a legal interest in the matter in litigation, or in the success of either
of the parties, or an interest against both, or is so situated as to be adversely affected by a distribution or other disposition
of property in the custody of the court or of an officer thereof may, with leave of court, be allowed to intervene in the
action. The court shall consider whether or not the intervention will unduly delay or prejudice the adjudication of the rights
of the original parties, and whether or not the intervenor's rights may be fully protected in a separate proceeding.
The only questions the court need to consider in a motion to intervene are whether the intervenor has standing to
intervene, whether the motion will unduly delay the proceedings or prejudice rights already established, and whether the
intervenor's rights may be protected in a separate action.108

If an administrative agency's procedural rules expressly prohibit an intervention by third parties, the prohibition is limited
only to the proceedings before the administrative agency. Once the matter is brought before the Court of Appeals in a
petition for review, any prior prohibition on intervention does not apply since the only question to be determined is whether
the intervenor has established a right to intervene under the Rules of Court.
11
In this case, respondent Therapharma, Inc. filed its Motion for Leave to Intervene 109 before the Court of Appeals, not
before the Intellectual Property Office. In assessing whether to grant the intervention, the Court of Appeals considered
respondent Therapharma, Inc.'s legal interest in the case and its other options for the protection of its interests. 110 This
was within the discretion of the Court of Appeals under the Rules of Court.

Respondent Therapharma, Inc. was able to show that it had legal interest to intervene in the appeal of petitioner's revival
of its patent application. While its intervention may have been premature as no patent has been granted yet, petitioner's
own actions gave rise to respondent Therapharma, Inc.'s right to protect its losartan product.

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

As early as December 11, 2003, petitioner through Merck was already sending communications threatening legal action if
respondent Therapharma, Inc. continued to develop and market losartan in the Philippines. The letter stated:
Merck is strongly committed to the protection of its valuable intellectual property rights, including the subject losartan
patents. While fair competition by sale of pharmaceutical products which are domestically produced legally is always
welcomed by Merck and MSD Philippines, Merck will vigorously pursue all available legal remedies against any
unauthorized manufacturer, distributor or supplier of losartan in countries where its patents are in force and where such
activity is prohibited by law. Thus, Merck is committed to preventing the distribution of losartan in the Philippines if it
originates from, or travels through, a country in which Merck holds patent rights.113 (Emphasis supplied)
This letter was presented before the Court of Appeals, which eventually granted the revival of the patent application in its
August 31, 2004 Decision. Petitioner had no pending patent application for its losartan product when it threatened
respondent Therapharma, Inc. with legal action. 114

Respondent Therapharma, Inc. expressed its willingness to enter into a Non-Use and Confidentiality Contract if there was
a pending patent application.115 After several negotiations on the clauses of the contract,116 the parties were unable to
come to an agreement. In its letter dated May 24, 2004,117respondent Therapharma, Inc. expressed its frustration on
petitioner's refusal to give a clear answer on whether it had a pending patent application:
For easy reference, we have reproduced below paragraph 5 of the Confidentiality and Non-Use Agreement
("Confidentiality Agreement"), underscoring your proposed amendment:
"THERAPHARMA agrees that upon receipt of Specifications and Claims of Application No. 35526 or at any time
thereafter, before it becomes part of the public domain, through no fault of THERAPHARMA, it will not, either directly or
indirectly, alone, or through, on behalf of, or in conjunction with any other person or entity, make use of any information
contained therein, particularly the product covered by its claims and the equivalents thereof, in any manner whatsoever."
We find your proposed insertion odd. What may be confidential, and which we agree you have every right to protect by
way of the Confidentiality Agreement, are the Specifications and Claims in the patent application, not the product per se.
The product has been in the market for years. Hence, how can it be confidential? Or is the ambiguity intended to create a
legal handle because you have no cause of action against us should we launch our own version of the losartan product?

....

Finally, the questions we posed in our previous letters are plain and simple — Is the Philippine Patent Application No.
35526 still pending before the IPO, i.e., it has neither been withdrawn by your licensor nor denied registration by
the IPO for any reason whatsoever? When did your licensor file said application with the IPO? These questions are
easy to answer, unless there is an intention to mislead. You are also aware that the IPO is the only government agency
that can grant letters patent. This is why we find disturbing your statement that the pendency of the patent application
before the IPO is "not relevant". Hence, unless we receive unequivocal answers to the questions above, we regret that we
cannot agree to execute the Confidentiality Agreement; otherwise, we may be acknowledging by contract a right that you
do not have, and never will have, by law. 118 (Emphasis and underscoring in the original)
The threat of legal action against respondent Therapharma, Inc. was real and imminent. If respondent Therapharma, Inc.
waited until petitioner was granted a patent application so it could file a petition for compulsory licensing and petition for
cancellation of patent under Section 240119 and Section 247120 of the 1962 Revised Rules of Practice,121 its continued
marketing of Lifezar would be considered as an infringement of petitioner's patent.

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

In the 1962 Revised Rules of Practice, the Bureau of Patents, Trademarks, and Technology Transfer previously required
secrecy in pending patent applications. Section 13 states:
13. Pending applications are preserved in secrecy. — No information will be given to anyone respecting the filing by any
particular person of any application for a patent, the pendency of any particular case before the Office, or the subject
matter of any particular application, unless the same is authorized by the applicant in writing, and unless it shall be
necessary, in the opinion of the Director of Patents for the proper conduct of business before the Office.
The Intellectual Property Code, however, changed numerous aspects of the old patent law. The Intellectual Property Code
was enacted not only to amend certain provisions of existing laws on trademark, patent, and copyright, but also to honor
the country's commitments under the World Trade Organization - Agreement on Trade-Related Aspects of Intellectual
Property Rights (TRIPS Agreement), a treaty that entered force in the Philippines on January 1, 1995. 122

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

12
Lawmakers, however, expressed their concern over the extension of the period of protection for registered
patents.125 Under Section 21126 of Republic Act No. 165, a patent had a term of 17 years. The Intellectual Property Code
extended the period to 20 years.127

During the interpellations before the House of Representatives, then Representative Neptali Gonzales II (Gonzales)
explained that under the Intellectual Property Code, the period of protection would have been shortened because of the
publication requirement:
MR. TAÑADA. Under the proposed measure, Your Honor, what is the period of protection that is given to the holder of the
patent registered?

MR. GONZALES. Seventeen years from grant of patent, Mr. Speaker. Unlike before . . .

MR. TAÑADA. Under the present law, Mr. Speaker.

MR. GONZALES. I mean 17 years from filing, Mr. Speaker, unlike before which is 20 years from grant. Okay.

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

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

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

Now, why from filing, Mr. Speaker? Because the patent holder applicant is now required to publish in a manner easily
understood by a person trained or with the same skill as that of a patent holder. And from that time this is published, this
process covered by the patent is already made available. In fact, from the time that it is published, any interested person
may even examine and go over the records as filed with the BPTTT and, therefore, this new technology or new invention
is now made available to persons equipped or possessed with the same skills as that of the patent holder. And that is the
reason why the patent is — the time of the patent is now tacked from the time it is filed because as a compromise it is now
mandatory to publish the said patent together with its description - the description of the process and even would, at times
demand the deposit of sample of the industrial design, Mr. Speaker. 128
Gonzales further clarified that the publication requirements of the Intellectual Property Code would necessarily shorten the
period for confidentiality of patent applications:
MR. MONFORT. Now, another question is, (another is) you know, the time from the filing of the date up to publication
which is the period of pendency or confidentiality, may I know how many years will it take, that confidentiality period,
variability.

MR. GONZALES. Eighteen months, Mr. Speaker.

MR. MONFORT. How many?

MR. GONZALES. Eighteen months.

MR. MONFORT. I do not think it is 18 months.

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

On the other hand, the law requires that after 18 months, it should now be published. When it is now published, naturally,
it ceases to be confidential in character because it is now ready for examination. It is now ready for possible copying of
any interested person because the application, as we have repeatedly said on the floor, would require the filing of a
description of the invention that can be carried out by a person similarly trained in the arts and sciences as that of the
patent holder.129
Thus, the absolute secrecy required by the 1962 Revised Rules of Practice would not be applicable to a patent application
before the Intellectual Property Office. Section 13 of the 1962 Revised Rules of Practice does not appear in the
Intellectual Property Code,130 in the Rules and Regulations on Inventions,131 or in the Revised Implementing Rules and
Regulations for Patents, Utility Models and Industrial Design. 132 The Intellectual Property Code now states that all patent
applications must be published in the Intellectual Property Office Gazette and that any interested party may inspect all
documents submitted to the Intellectual Property Office. The patent application is only confidential before its publication.
Sections 44 and 45 of the Intellectual Property Code provide:
SECTION 44. Publication of Patent Application. —

44.1. The patent application shall be published in the IPO Gazette together with a search document established by or on
behalf of the Office citing any documents that reflect prior art, after the expiration of eighteen (18) months from the filing
date or priority date.
13
44.2. After publication of a patent application, any interested party may inspect the application documents filed with the
Office.

44.3. The Director General, subject to the approval of the Secretary of Trade and Industry, may prohibit or restrict the
publication of an application, if in his opinion, to do so would be prejudicial to the national security and interests of the
Republic of the Philippines. (n)

SECTION 45. Confidentiality Before Publication. — A patent application, which has not yet been published, and all related
documents, shall not be made available for inspection without the consent of the applicant.
It was inaccurate, therefore, for petitioner to argue that secrecy in patent applications prevents any intervention from
interested parties. The confidentiality in patent applications under the Intellectual Property Code is not absolute since a
party may already intervene after the publication of the application.

IV

An abandoned patent application may only be revived within four (4) months from the date of abandonment. No extension
of this period is provided by the 1962 Revised Rules of Practice. Section 113 states:
113. Revival of abandoned application. — An application abandoned for failure to prosecute may be revived as a pending
application if it is shown to the satisfaction of the Director that the delay was unavoidable. An abandoned application may
be revived as a pending application within four months from the date of abandonment upon good cause shown and upon
the payment of the required fee of P25. An application not revived within the specified period shall be deemed forfeited.
Petitioner argues that it was not negligent in the prosecution of its patent application 133 since it was Atty. Mapili or his heirs
who failed to inform it of crucial developments with regard to its patent application.134It argues that as a client in a foreign
country, it does not have immediate supervision over its local counsel so it should not be bound by its counsel's
negligence.135 In any case, it complied with all the requirements for the revival of an abandoned application under Rule
113 of the 1962 Revised Rules of Practice.136

Respondents, on the other hand, argue that petitioner was inexcusably and grossly negligent in the prosecution of its
patent application since it allowed eight (8) years to pass before asking for a status update on its
application.137 Respondent Intellectual Property Office argues that petitioner's inaction for eight (8) years constitutes
actual abandonment.138 It also points out that from the time petitioner submitted its new Special Power of Attorney on
September 29, 1996, it took them another four (4) years to request a status update on its application. 139

Under Chapter VII, Section 111(a) of the 1962 Revised Rules of Practice, a patent application is deemed abandoned if the
applicant fails to prosecute the application within four months from the date of the mailing of the notice of the last action by
the Bureau of Patents, Trademarks, and Technology Transfer, and not from applicant's actual notice. Section 111 (a)
states:
Chapter VII
TIME FOR RESPONSE BY APPLICANT; ABANDONMENT OF APPLICATION

111. Abandonment for failure to respond within the time limit. — (a) If an applicant fails to prosecute his application within
four months after the date when the last official notice of action by the Office was mailed to him, or within such time as
may be fixed (rule 112), the application will become abandoned.
According to the records of the Bureau of Patents, Trademarks, and Technology Transfer Chemical Examining Division,
petitioner filed Philippine Patent Application No. 35526 on July 10, 1987. It was assigned to an examiner on June 7, 1988.
An Office Action was mailed to petitioner's agent, Atty. Mapili, on July 19, 1988. Because petitioner failed to respond
within the allowable period, the application was deemed abandoned on September 20, 1988. 140 Under Section 113,
petitioner had until January 20, 1989 to file for a revival of the patent application. Its Petition for Revival, however, was
filed on May 30, 2002,14113 years after the date of abandonment.

Section 113 has since been superseded by Section 133.4 of the Intellectual Property Code, Rule 930 of the Rules and
Regulations on Inventions, and Rule 929 of the Revised Implementing Rules and Regulations for Patents, Utility Models
and Industrial Design. The period of four (4) months from the date of abandonment, however, remains unchanged. The
Intellectual Property Code even provides for a shorter period of three (3) months within which to file for revival:
SECTION 133. Examination and Publication. —

....

133.4. An abandoned application may be revived as a pending application within three (3) months from the date of
abandonment, upon good cause shown and the payment of the required fee.
Rule 930 of the Rules and Regulations on Inventions provides:
Rule 930. Revival of application. - An application deemed withdrawn for failure to prosecute may be revived as a pending
application within a period of four (4) months from the mailing date of the notice of withdrawal if it is shown to the
satisfaction of the Director that the failure was due to fraud, accident, mistake or excusable negligence.

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

An application not revived in accordance with this rule shall be deemed forfeited.
Rule 929 of the Revised Implementing Rules and Regulations for Patents, Utility Models and Industrial Design provides:
Rule 929. Revival of Application. - An application deemed withdrawn for failure to prosecute may be revived as a pending
application within a period of four (4) months from the mailing date of the notice of withdrawal if it is shown to the
satisfaction of the Director that the failure was due to fraud, accident, mistake, or excusable negligence.

14
A petition to revive an application deemed withdrawn shall be accompanied by:

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

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

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

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

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

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

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

Petitioner's resident agent, Atty. Mapili, was undoubtedly negligent in failing to respond to the Office Action sent by the
Bureau of Patents, Trademarks, and Technology Transfer on June 19, 1988. Because of his negligence, petitioner's
patent application was declared abandoned. He was again negligent when he failed to revive the abandoned application
within four (4) months from the date of abandonment.

Petitioner tries to disown Atty. Mapili's conduct by arguing that it was not informed of the abandonment of its patent
application or of Atty. Mapili's death. By its own evidence, however, petitioner requested a status update from Atty. Mapili
only on July 18, 1995, eight (8) years after the filing of its application. 144It alleged that it only found out about Atty. Mapili's
death sometime in March 1996, as a result of its senior patent attorney's visit to the Philippines. 145 Although it was in
petitioner's discretion as a foreign client to put its complete trust and confidence on its local resident agent, there was a
correlative duty on its part to be diligent in keeping itself updated on the progress of its patent applications. Its failure to be
informed of the abandonment of its patent application was caused by its own lack of prudence.

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

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

Upon learning of Atty. Mapili's death, petitioner issued a Power of Attorney and Appointment of Resident Agent in favor of
Bito, Lozada, Ortega & Castillo on March 25, 1996.148 Despite the immediate action in the substitution of its resident
agent, it only requested a status update of Philippine Patent Application No. 35526 from the Intellectual Property Office on
December 14, 2000,149 or four (4) years after it learned of Atty. Mapili's death.

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

Contrary to the posturing of petitioner, Schuartz is applicable.

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

This Court found that although the Court of Appeals may have erred in counting the period for appeal, it could not grant
the Petition. This Court stated:
[Petitioners lost sight of the fact that the petition could not be granted because of laches. Prior to the filing of the petition
for revival of the patent application with the Bureau of Patents, an unreasonable period of time had lapsed due to the
negligence of petitioners' counsel. By such inaction, petitioners were deemed to have forfeited their right to revive their
15
applications for patent.

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

"A lawyer's fidelity to the cause of his client requires him to be ever mindful of the responsibilities that should be expected
of him. A lawyer shall not neglect a legal matter entrusted to him." In the instant case, petitioners' patent attorneys not
only failed to take notice of the notices of abandonment, but they failed to revive the application within the four-month
period, as provided in the rules of practice in patent cases. These applications are deemed forfeited upon the lapse of
such period.155 (Emphasis supplied)
Petitioner attempts to distinguish itself from Schuartz by arguing that the petitioners in Schuartz had actual notice of
abandonment while petitioner here was only able to have actual notice when it received Paper No. 2.

The four (4)-month period in Section 111156 of the 1962 Revised Rules of Practice, however, is not counted
from actual notice of abandonment but from mailing of the notice. Since it appears from the Intellectual Property Office's
records that a notice of abandonment was mailed to petitioner's resident agent on July 19, 1988, 157 the time for taking
action is counted from this period. Petitioner's patent application cannot be revived simply because the period for revival
has already lapsed and no extension of this period is provided for by the 1962 Revised Rules of Practice.

VI

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

Petitioner argues that its patent application was filed on July 10, 1987, within 12 months from the prior filing of a U.S.
patent application on July 11, 1986.158 It argues that it is protected from becoming part of the public domain because of
convention priority under the Paris Convention for the Protection of Industrial Property and Section 9 of Republic Act No.
165.159

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

Under Section 31 of the Intellectual Property Code, a right of priority is given to any patent applicant who has previously
applied for a patent in a country that grants the same privilege to Filipinos. Section 31 states:
SECTION 31. Right of Priority. — An application for patent filed by any person who has previously applied for the same
invention in another country which by treaty, convention, or law affords similar privileges to Filipino citizens, shall be
considered as filed as of the date of filing the foreign application: Provided, That:

a. the local application expressly claims priority;

b. it is filed within twelve (12) months from the date the earliest foreign application was filed; and

c. a certified copy of the foreign application together with an English translation is filed within six (6) months from the date
of filing in the Philippines.
A patent applicant with the right of priority is given preference in the grant of a patent when there are two or more
applicants for the same invention. Section 29 of the Intellectual Property Code provides:
SECTION 29. First to File Rule. — If two (2) or more persons have made the invention separately and independently of
each other, the right to the patent shall belong to the person who filed an application for such invention, or where two or
more applications are filed for the same invention, to the applicant who has the earliest filing date or, the earliest priority
date.
Since both the United States162 and the Philippines163 are signatories to the Paris Convention for the Protection of
Industrial Property, an applicant who has filed a patent application in the United States may have a right of priority over
the same invention in a patent application in the Philippines.164 However, this right of priority does not immediately entitle
a patent applicant the grant of a patent. A right of priority is not equivalent to a patent. Otherwise, a patent holder of any
member-state of the Paris Convention need not apply for patents in other countries where it wishes to exercise its patent.

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

VII

The grant of a patent is to provide protection to any inventor from any patent infringement. 165 Once an invention is
disclosed to the public, only the patent holder has the exclusive right to manufacture, utilize, and market the
invention.166 In Creser Precision Systems v. Court of Appeals:167
Under American jurisprudence, an inventor has no common-law right to a monopoly of his invention. He has the right to
make, use and vend his own invention, but if he voluntarily discloses it, such as by offering it for sale, the world is free to

16
copy and use it with impunity. A patent, however, gives the inventor the right to exclude all others. As a patentee, he has
the exclusive right of making, using or selling the invention.168
Under the Intellectual Property Code, a patent holder has the right to "to restrain, prohibit and prevent" 169 any
unauthorized person or entity from manufacturing, selling, or importing any product derived from the patent. However,
after a patent is granted and published in the Intellectual Property Office Gazette, 170 any interested third party "may
inspect the complete description, claims, and drawings of the patent."171

The grant of a patent provides protection to the patent holder from the indiscriminate use of the invention. However, its
mandatory publication also has the correlative effect of bringing new ideas into the public consciousness. After the
publication of the patent, any person may examine the invention and develop it into something further than what the
original patent holder may have envisioned. After the lapse of 20 years, 172 the invention becomes part of the public
domain and is free for the public to use. In Pearl and Dean v. Shoemart, Inc.:173
To be able to effectively and legally preclude others from copying and profiting from the invention, a patent is a primordial
requirement. No patent, no protection. The ultimate goal of a patent system is to bring new designs and technologies into
the public domain through disclosure. Ideas, once disclosed to the public without the protection of a valid patent, are
subject to appropriation without significant restraint.

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

The law attempts to strike an ideal balance between the two interests:
"(The p)atent system thus embodies a carefully fted bargain for encouraging the creation and disclosure of new useful and
non-obvious advances in technology and design, in return for the exclusive right to practice the invention for a number of
years. The inventor may keep his invention secret and reap its fruits indefinitely. In consideration of its disclosure and the
consequent benefit to the community, the patent is granted. An exclusive enjoyment is guaranteed him for 17 years, but
upon the expiration of that period, the knowledge of the invention inures to the people, who are thus enabled to practice it
and profit by its use."
The patent law has a three-fold purpose: "first, patent law seeks to foster and reward invention; second, it promotes
disclosures of inventions to stimulate further innovation and to permit the public to practice the invention once the patent
expires; third, the stringent requirements for patent protection, seek to ensure that ideas in the public domain remain
therefor the free use of the public."

It is only after an exhaustive examination by the patent office that a patent is issued. Such an in-depth investigation is
required because "in rewarding a useful invention, the rights and welfare of the community must be fairly dealt with and
effectively guarded. To that end, the prerequisites to obtaining a patent are strictly observed and when a patent is issued,
the limitations on its exercise are equally strictly enforced. To begin with, a genuine invention or discovery must be
demonstrated lest in the constant demand for new appliances, the heavy hand of tribute be laid on each slight
technological advance in art."174 (Emphasis supplied)
In addition, a patent holder of inventions relating to food or medicine does not enjoy absolute monopoly over the patent.
Both Republic Act No. 165 and the Intellectual Property Code provide for compulsory licensing. Compulsory licensing is
defined in the Intellectual Property Code as the "grant a license to exploit a patented invention, even without the
agreement of the patent owner."175

Under Republic Act No. 165, a compulsory license may be granted to any applicant three (3) years after the grant of a
patent if the invention relates to food or medicine necessary for public health or safety. 176In Smith Kline & French
Laboratories, Ltd. vs. Court of Appeals:177
Section 34 of R.A. No. 165, even if the Act was enacted prior to the Philippines' adhesion to the [Paris] Convention, fits
well within the aforequoted provisions of Article 5 of the Paris Convention. In the explanatory note of Bill No. 1156 which
eventually became R.A. No. 165, the legislative intent in the grant of a compulsory license was not only to afford others an
opportunity to provide the public with the quantity of the patented product, but also to prevent the growth of monopolies.
Certainly, the growth of monopolies was among the abuses which Section A, Article 5 of the Convention foresaw, and
which our Congress likewise wished to prevent in enacting R.A. No. 165. 178
The patent holder's proprietary right over the patent only lasts for three (3) years from the grant of the patent, after which
any person may be allowed to manufacture, use, or sell the invention subject to the payment of royalties:
The right to exclude others from the manufacturing, using, or vending an invention relating to food or medicine should be
conditioned to allowing any person to manufacture, use, or vend the same after a period of three years from the date of
the grant of the letters patent. After all, the patentee is not entirely deprived of any proprietary right. In fact, he has been
given the period of three years of complete monopoly over the patent. Compulsory licensing of a patent on food or
medicine without regard to the other conditions imposed in Section 34 is not an undue deprivation of proprietary interests
over a patent right because the law sees to it that even after three years of complete monopoly something is awarded to
the inventor in the form of a bilateral and workable licensing agreement and a reasonable royalty to be agreed upon by
the parties and in default of such agreement, the Director of Patent may fix the terms and conditions of the license. 179
A patent is a monopoly granted only for specific purposes and objectives. Thus, its procedures must be complied with to
attain its social objective. Any request for leniency in its procedures should be taken in this context. Petitioner, however,
has failed to convince this court that the revival of its patent application would have a significant impact on the
pharmaceutical industry.

Hypertension, or high blood pressure, is considered a "major risk factor for cardiovascular disease" 180such as "heart
disease, stroke, kidney failure and blindness."181 In a study conducted by the World Health Organization, 25% of adults
aged 21 years and older in the Philippines suffer from high blood pressure.182 According to the Department of Health,
17
heart disease remains the leading cause of mortality in the Philippines. 183 Angiotensin II Receptor Blocking Imidazole or
"losartan" is one of the medications used for the treatment of hypertension.184

In a study conducted by the Philippine Institute for Development Studies, "affordability of drugs remains a serious
problem"185 in the Philippines. It found that because of the cost of drugs, accessibility to drugs become prohibitive for the
lowest-earning households and are "even more prohibitive for the unemployed and indigent."186 Several measures have
been enacted by the government to address the high costs of medicine, among them, parallel drug importation 187 and the
passage of Republic Act No. 9502, otherwise known as the Universally Accessible Cheaper and Quality Medicines Act of
2008.188 Figures submitted by respondent Therapharma, Inc., however, also show that the presence of competition in the
local pharmaceutical market may ensure the public access to cheaper medicines.

According to respondent Therapharma, Inc., the retail price of petitioner's losartan product, Cozaar, decreased within one
(1) month of respondent Therapharma, Inc.'s entry into the market:189
BRAND TRADER RETAIL PRICE RETAIL PRICE
As of Lifezar's first entry into the market on Within one month from Lifezar's entry or by
June 4, 2004 July 4, 2004

LIFEZAR Therapharma 50 mg - P20.20 50mg - P20.20

50mg - P39.50 50mg - P39.50

COZAAR Merck
100mg - P55.00 100 - P44.00
Respondent Therapharma, Inc. also presented figures showing that there was a 44% increase in the number of losartan
units sold within five (5) months of its entry into the market.190 More Filipinos are able to purchase losartan products when
there are two (2) different players providing competitive prices in the market.

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

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

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

SO ORDERED.

18
 SECOND DIVISION

G.R. No. 202423 : January 28, 2013

CHESTER UYCO, WINSTON UYCHIYONG, and CHERRY C. UYCO-ONG, Petitioners, v. VICENTE LO,Respondents.

RESOLUTION

BRION, J.:

We resolve the motion for reconsideration1 dated October 22, 2012 filed by petitioners Chester Uyco, Winston Uychiyong
and Cherry C. Uyco-Ong to set aside the Resolution2 dated September 12, 2012 of this Court, which affirmed the
decision3 dated March 9, 2012 and the resolution4 dated June 21, 2012 of the Court of Appeals (CA) in CA-G.R. SP No.
111964. The CA affirmed the resolution5 dated September 1, 2008 of the Department of Justice (DOJ). Both the CA and
the DOJ found probable cause to charge the petitioners with false designation of origin, in violation of Section 169.1, in
relation with Section 170, of Republic Act No. (RA) 8293, otherwise known as the "Intellectual Property Code of the
Philippines."6?r?l1

The disputed marks in this case are the "HIPOLITO & SEA HORSE & TRIANGULAR DEVICE," "FAMA," and other related
marks, service marks and trade names of Casa Hipolito S.A. Portugal appearing in kerosene burners. Respondent
Vicente Lo and Philippine Burners Manufacturing Corporation (PBMC) filed a complaint against the officers of Wintrade
Industrial SalesCorporation (Wintrade), including petitioners Chester Uyco, Winston Uychiyong and Cherry Uyco-Ong,
and of National Hardware, including Mario Sy Chua, for violation of Section 169.1, in relation to Section 170, of RA 8293.

Lo claimed in his complaint that Gasirel-Industria de Comercio e Componentes para Gass, Lda. (Gasirel), the owner of
the disputed marks, executed a deed of assignment transferring these marks in his favor, to be used in all countries
except for those in Europe and America.7 In a test buy, Lo purchased from National Hardware kerosene burners with the
subject marks and the designations "Made in Portugal" and "Original Portugal" in the wrappers. These products were
manufactured by Wintrade. Lo claimed that as the assignee for the trademarks, he had not authorized Wintrade to use
these marks, nor had Casa Hipolito S.A. Portugal. While a prior authority was given to Wintrades predecessor-in-interest,
Wonder Project & Development Corporation (Wonder), Casa Hipolito S.A. Portugal had already revoked this authority
through a letter of cancellation dated May 31, 1993.8 The kerosene burners manufactured by Wintrade have caused
confusion, mistake and deception on the part of the buying public. Lo stated that the real and genuine burners are those
manufactured by its agent, PBMC.

In their Answer, the petitioners stated that they are the officers of Wintrade which owns the subject trademarks and their
variants. To prove this assertion, they submitted as evidence the certificates of registration with the Intellectual Property
Office. They alleged that Gasirel, not Lo, was the real party-in-interest. They allegedly derived their authority to use the
marks from Casa Hipolito S.A. Portugal through Wonder, their predecessor-in-interest. Moreover, PBMC had already
ceased to be a corporation and, thus, the licensing agreement between PBMC and Lo could not be given effect,
particularly because the agreement was not notarized and did not contain the provisions required by Section 87 of RA
8293. The petitioners pointed out that Lo failed to sufficiently prove that the burners bought from National Hardware were
those that they manufactured. But at the same time, they also argued that the marks "Made in Portugal" and "Original
Portugal" are merely descriptive and refer to the source of the design and the history of manufacture.

In a separate Answer, Chua admitted that he had dealt with Wintrade for several years and had sold its products. He had
not been aware that Wintrade had lost the authority to manufacture, distribute, and deal with products containing the
subject marks, and he was never informed of Wintrades loss of authority. Thus, he could have not been part of any
conspiracy.

After the preliminary investigation, the Chief State Prosecutor found probable cause to indict the petitioners for violation of
Section 169.1, in relation with Section 170, of RA 8293. This law punishes any person who uses in commerce any false
designation of origin which is likely to cause confusion or mistake as to the origin of the product. The law seeks to protect
the public; thus, even if Lo does not have the legal capacity to sue, the State can still prosecute the petitioners to prevent
damage and prejudice to the public.

On appeal, the DOJ issued a resolution affirming the finding of probable case. It gave credence to Los assertion that he is
the proper assignee of the subject marks. More importantly, it took note of the petitioners admission that they used the
words "Made in Portugal" when in fact, these products were made in the Philippines. Had they intended to refer to the
source of the design or the history of the manufacture, they should have explicitly said so in their packaging. It then
concluded that the petitioners defenses would be better ventilated during the trial and that the admissions of the
petitioners make up a sufficient basis for probable cause.

The CA found no grave abuse of discretion on the part of the DOJ and affirmed the DOJs ruling.

When the petitioners filed their petition before us, we denied the petition for failure to sufficiently show any reversible error
in the assailed judgment to warrant the exercise of the Courts discretionary power.

We find no reversible error on the part of the CA and the DOJ to merit reconsideration. The petitioners reiterate their
argument that the products bought during the test buy bearing the trademarks in question were not manufactured by, or in
any way connected with, the petitioners and/or Wintrade. They also allege that the words "Made in Portugal" and "Original
Portugal" refer to the origin of the design and not to the origin of the goods.
19
The petitioners again try to convince the Court that they have not manufactured the products bearing the marks "Made in
Portugal" and "Original Portugal" that were bought during the test buy. However, their own admission and the statement
given by Chua bear considerable weight.

The admission in the petitioners Joint Affidavit is not in any way hypothetical, as they would have us believe. They narrate
incidents that have happened. They refer to Wintrades former association with Casa Hipolito S.A. Portugal; to their
decision to produce the burners in the Philippines; to their use of the disputed marks; and to their justification for their use.
It reads as follows:

24. As earlier mentioned, the predecessor-in-interest of Wintrade was the former exclusive licensee of Casa Hipolito SA of
Portugal since the 1970s, and that Wintrade purchased all the rights on the said trademarks prior to the closure of said
company. Indeed, the burners sold by Wintrade used to be imported from Portugal, but Wintrade later on discovered the
possibility of obtaining these burners from other sources or of manufacturing the same in the Philippines.

Wintrades decision to procure these burners from sources other than Portugal is certainly its management prerogative.
The presence of the words "made in Portugal" and "original Portugal" on the wrappings of the burners and on the burners
themselves which are manufactured by Wintrade is an allusion to the fact that the origin of the design of said burners can
be traced back to Casa Hipolito SA of Portugal, and that the history of the manufacture of said burners are rooted in
Portugal. These words were not intended to deceive or cause mistake and confusion in the minds of the buying
public.9?r?l1

Chua, the owner of National Hardware the place where the test buy was conducted admits that Wintrade has been
furnishing it with kerosene burners with the markings "Made in Portugal" for the past 20 years, to wit:

5. I hereby manifests (sic) that I had been dealing with Wintrade Industrial Sales Corporation (WINTRADE for brevity) for
around 20 years now by buying products from it. I am not however aware that WINTRADE was no longer authorized to
deal, distribute or sell kerosene burner bearing the mark HIPOLITO and SEA HORSE Device, with markings "Made in
Portugal" on the wrapper as I was never informed of such by WINTRADE nor was ever made aware of any notices posted
in the newspapers informing me of such fact. Had I been informed, I would have surely stopped dealing with
WINTRADE.10?r?l1

Thus, the evidence shows that petitioners, who are officers of Wintrade, placed the words "Made in Portugal" and
"Original Portugal" with the disputed marks knowing fully well because of their previous dealings with the Portuguese
company that these were the marks used in the products of Casa Hipolito S.A. Portugal. More importantly, the products
that Wintrade sold were admittedly produced in the Philippines, with no authority from Casa Hipolito S.A. Portugal. The
law on trademarks and trade names precisely precludes a person from profiting from the business reputation built by
another and from deceiving the public as to the origins of products. These facts support the consistent findings of the
State Prosecutor, the DOJ and the CA that probable cause exists to charge the petitioners with false designation of origin.
The fact that the evidence did not come from Lo, but had been given by the petitioners, is of no significance.

The argument that the words "Made in Portugal" and "Original Portugal" refer to the origin of the design and not to the
origin of the goods does not negate the finding of probable cause; at the same time, it is an argument that the petitioners
are not barred by this Resolution from raising as a defense during the hearing of the case.

WHEREFORE, premises considered, we hereby DENY the motion for reconsideration for lack of merit.

SO ORDERED.

20
 Republic of the Philippines
SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 180677 February 18, 2013

VICTORIO P. DIAZ, Petitioner,

vs.
PEOPLE OF THE PHILIPPINES AND LEVI STRAUSS [PHILS.], INC., Respondents.

DECISION

BERSAMIN, J.:

It is the tendency of the allegedly infringing mark to be confused with the registered trademark that is the gravamen of the
offense of infringement of a registered trademark. The acquittal of the accused should follow if the allegedly infringing
mark is not likely to cause confusion. Thereby, the evidence of the State does not satisfy the quantum of proof beyond
reasonable doubt.

Accused Victorio P. Diaz (Diaz) appeals the resolutions promulgated on July 17, 2007 1 and November 22, 2007,2whereby
the Court of Appeals (CA), respectively, dismissed his appeal in C.A.-G.R. CR No. 30133 for the belated filing of the
appellant's brief, and denied his motion for reconsideration. Thereby, the decision rendered on February 13, 2006 in
Criminal Case No. 00-0318 and Criminal Case No. 00-0319 by the Regional Trial Court, Branch 255, in Las Pifias City
(RTC) convicting him for two counts of infringement of trademark were affirmed. 3

Antecedents

On February 10, 2000, the Department of Justice filed two informations in the RTC of Las Piñas City, charging Diaz with
violation of Section 155, in relation to Section 170, of Republic Act No. 8293, also known as the Intellectual Property Code
of the Philippines (Intellectual Property Code), to wit:

Criminal Case No. 00-0318

That on or about August 28, 1998, and on dates prior thereto, in Las Pinas City, and within the jurisdiction of this
Honorable Court, the abovenamed accused, with criminal intent to defraud Levi’s Strauss (Phil.) Inc. (hereinafter referred
to as LEVI’S), did then and there, willfully, unlawfully, feloniously, knowingly and intentionally engaged in commerce by
reproducing, counterfeiting, copying and colorably imitating Levi’s registered trademarks or dominant features thereof
such as the ARCUATE DESIGN, TWO HORSE BRAND, TWO HORSE PATCH, TWO HORSE LABEL WITH
PATTERNED ARCUATE DESIGN, TAB AND COMPOSITE ARCUATE/TAB/TWO HORSE PATCH, and in connection
thereto, sold, offered for sale, manufactured, distributed counterfeit patches and jeans, including other preparatory steps
necessary to carry out the sale of said patches and jeans, which likely caused confusion, mistake, and /or deceived the
general consuming public, without the consent, permit or authority of the registered owner, LEVI’S, thus depriving and
defrauding the latter of its right to the exclusive use of its trademarks and legitimate trade, to the damage and prejudice of
LEVI’S.

CONTRARY TO LAW.4

Criminal Case No. 00-0319

That on or about August 28, 1998, and on dates prior thereto, in Las Pinas City, and within the jurisdiction of this
Honorable Court, the abovenamed accused, with criminal intent to defraud Levi’s Strauss (Phil.) Inc. (hereinafter referred
to as LEVI’S), did then and there, willfully, unlawfully, feloniously, knowingly and intentionally engaged in commerce by
reproducing, counterfeiting, copying and colorably imitating Levi’s registered trademarks or dominant features thereof
such as the ARCUATE DESIGN, TWO HORSE BRAND, TWO HORSE PATCH, TWO HORSE LABEL WITH
PATTERNED ARCUATE DESIGN, TAB AND COMPOSITE ARCUATE/TAB/TWO HORSE PATCH, and in connection
thereto, sold, offered for sale, manufactured, distributed counterfeit patches and jeans, including other preparatory steps
necessary to carry out the sale of said patches and jeans, which likely caused confusion, mistake, and /or deceived the
general consuming public, without the consent, permit or authority of the registered owner, LEVI’S, thus depriving and
defrauding the latter of its right to the exclusive use of its trademarks and legitimate trade, to the damage and prejudice of
LEVI’S.

CONTRARY TO LAW.5

The cases were consolidated for a joint trial. Diaz entered his pleas of not guilty to each information on June 21, 2000.6

1. Evidence of the Prosecution

Levi Strauss and Company (Levi’s), a foreign corporation based in the State of Delaware, United States of America, had
been engaged in the apparel business. It is the owner of trademarks and designs of Levi’s jeans like LEVI’S 501, the
21
arcuate design, the two-horse brand, the two-horse patch, the two-horse patch with pattern arcuate, and the composite
tab arcuate. LEVI’S 501 has the following registered trademarks, to wit: (1) the leather patch showing two horses pulling a
pair of pants; (2) the arcuate pattern with the inscription "LEVI STRAUSS & CO;" (3) the arcuate design that refers to "the
two parallel stitching curving downward that are being sewn on both back pockets of a Levi’s Jeans;" and (4) the tab or
piece of cloth located on the structural seam of the right back pocket, upper left side. All these trademarks were registered
in the Philippine Patent Office in the 1970’s, 1980’s and early part of 1990’s. 7

Levi Strauss Philippines, Inc. (Levi’s Philippines) is a licensee of Levi’s. After receiving information that Diaz was selling
counterfeit LEVI’S 501 jeans in his tailoring shops in Almanza and Talon, Las Piñas City, Levi’s Philippines hired a private
investigation group to verify the information. Surveillance and the purchase of jeans from the tailoring shops of Diaz
established that the jeans bought from the tailoring shops of Diaz were counterfeit or imitations of LEVI’S 501. Levi’s
Philippines then sought the assistance of the National Bureau of Investigation (NBI) for purposes of applying for a search
warrant against Diaz to be served at his tailoring shops. The search warrants were issued in due course. Armed with the
search warrants, NBI agents searched the tailoring shops of Diaz and seized several fake LEVI’S 501 jeans from them.
Levi’s Philippines claimed that it did not authorize the making and selling of the seized jeans; that each of the jeans were
mere imitations of genuine LEVI’S 501 jeans by each of them bearing the registered trademarks, like the arcuate design,
the tab, and the leather patch; and that the seized jeans could be mistaken for original LEVI’S 501 jeans due to the
placement of the arcuate, tab, and two-horse leather patch.8

2. Evidence of the Defense

On his part, Diaz admitted being the owner of the shops searched, but he denied any criminal liability.

Diaz stated that he did not manufacture Levi’s jeans, and that he used the label "LS Jeans Tailoring" in the jeans that he
made and sold; that the label "LS Jeans Tailoring" was registered with the Intellectual Property Office; that his shops
received clothes for sewing or repair; that his shops offered made-to-order jeans, whose styles or designs were done in
accordance with instructions of the customers; that since the time his shops began operating in 1992, he had received no
notice or warning regarding his operations; that the jeans he produced were easily recognizable because the label "LS
Jeans Tailoring," and the names of the customers were placed inside the pockets, and each of the jeans had an "LSJT"
red tab; that "LS" stood for "Latest Style;" and that the leather patch on his jeans had two buffaloes, not two horses. 9

Ruling of the RTC

On February 13, 2006, the RTC rendered its decision finding Diaz guilty as charged, disposing thus:

WHEREFORE, premises considered, the Court finds accused Victorio P. Diaz, a.k.a. Vic Diaz, GUILTY beyond
reasonable doubt of twice violating Sec. 155, in relation to Sec. 170, of RA No. 8293, as alleged in the Informations in
Criminal Case Nos. 00-0318 & 00-0319, respectively, and hereby sentences him to suffer in each of the cases the penalty
of imprisonment of TWO (2) YEARS of prision correcional, as minimum, up to FIVE (5) YEARS of prision correcional, as
maximum, as well as pay a fine of ₱50,000.00 for each of the herein cases, with subsidiary imprisonment in case of
insolvency, and to suffer the accessory penalties provided for by law.

Also, accused Diaz is hereby ordered to pay to the private complainant Levi’s Strauss (Phils.), Inc. the following, thus:

1. ₱50,000.00 in exemplary damages; and

2. ₱222,000.00 as and by way of attorney’s fees.

Costs de officio.

SO ORDERED.10

Ruling of the CA

Diaz appealed, but the CA dismissed the appeal on July 17, 2007 on the ground that Diaz had not filed his appellant’s
brief on time despite being granted his requested several extension periods.

Upon denial of his motion for reconsideration, Diaz is now before the Court to plead for his acquittal.

Issue

Diaz submits that:

THE COURT OF APPEALS VIOLATED EXISTING LAW AND JURISPRUDENCE WHEN IT APPLIED RIGIDLY THE
RULE ON TECHNICALITIES AND OVERRIDE SUBSTANTIAL JUSTICE BY DISMISSING THE APPEAL OF THE
PETITIONER FOR LATE FILING OF APPELLANT’S BRIEF.11

Ruling

The Court first resolves whether the CA properly dismissed the appeal of Diaz due to the late filing of his appellant’s brief.

22
Under Section 7, Rule 44 of the Rules of Court, the appellant is required to file the appellant’s brief in the CA "within forty-
five (45) days from receipt of the notice of the clerk that all the evidence, oral and documentary, are attached to the
record, seven (7) copies of his legibly typewritten, mimeographed or printed brief, with proof of service of two (2) copies
thereof upon the appellee." Section 1(e) of Rule 50 of the Rules of Court grants to the CA the discretion to dismiss an
appeal either motu proprio or on motion of the appellee should the appellant fail to serve and file the required number of
copies of the appellant’s brief within the time provided by the Rules of Court.12

The usage of the word may in Section 1(e) of Rule 50 indicates that the dismissal of the appeal upon failure to file the
appellant’s brief is not mandatory, but discretionary. Verily, the failure to serve and file the required number of copies of
the appellant’s brief within the time provided by the Rules of Court does not have the immediate effect of causing the
outright dismissal of the appeal. This means that the discretion to dismiss the appeal on that basis is lodged in the CA, by
virtue of which the CA may still allow the appeal to proceed despite the late filing of the appellant’s brief, when the
circumstances so warrant its liberality. In deciding to dismiss the appeal, then, the CA is bound to exercise its sound
discretion upon taking all the pertinent circumstances into due consideration.

The records reveal that Diaz’s counsel thrice sought an extension of the period to file the appellant’s brief. The first time
was on March 12, 2007, the request being for an extension of 30 days to commence on March 11, 2007. The CA granted
his motion under its resolution of March 21, 2007. On April 10, 2007, the last day of the 30-day extension, the counsel
filed another motion, seeking an additional 15 days. The CA allowed the counsel until April 25, 2007 to serve and file the
appellant’s brief. On April 25, 2007, the counsel went a third time to the CA with another request for 15 days. The CA still
granted such third motion for extension, giving the counsel until May 10, 2007. Notwithstanding the liberality of the CA, the
counsel did not literally comply, filing the appellant’s brief only on May 28, 2007, which was the 18th day beyond the third
extension period granted.

Under the circumstances, the failure to file the appellant’s brief on time rightly deserved the outright rejection of the
appeal. The acts of his counsel bound Diaz like any other client. It was, of course, only the counsel who was well aware
that the Rules of Court fixed the periods to file pleadings and equally significant papers like the appellant’s brief with the
lofty objective of avoiding delays in the administration of justice.

Yet, we have before us an appeal in two criminal cases in which the appellant lost his chance to be heard by the CA on
appeal because of the failure of his counsel to serve and file the appellant’s brief on time despite the grant of several
extensions the counsel requested. Diaz was convicted and sentenced to suffer two indeterminate sentences that would
require him to spend time in detention for each conviction lasting two years, as minimum, to five years, as maximum, and
to pay fines totaling ₱100,000.00 (with subsidiary imprisonment in case of his insolvency). His personal liberty is now no
less at stake. This reality impels us to look beyond the technicality and delve into the merits of the case to see for
ourselves if the appeal, had it not been dismissed, would have been worth the time of the CA to pass upon. After all, his
appellant’s brief had been meanwhile submitted to the CA. While delving into the merits of the case, we have uncovered a
weakness in the evidence of guilt that cannot be simply ignored and glossed over if we were to be true to our oaths to do
justice to everyone.

We feel that despite the CA being probably right in dismissing the excuses of oversight and excusable negligence
tendered by Diaz’s counsel to justify the belated filing of the appellant’s brief as unworthy of serious consideration, Diaz
should not be made to suffer the dire consequence. Any accused in his shoes, with his personal liberty as well as his
personal fortune at stake, expectedly but innocently put his fullest trust in his counsel’s abilities and professionalism in the
handling of his appeal. He thereby delivered his fate to the hands of his counsel. Whether or not those hands were
efficient or trained enough for the job of handling the appeal was a learning that he would get only in the end. Likelier than
not, he was probably even unaware of the three times that his counsel had requested the CA for extensions. If he were
now to be left to his unwanted fate, he would surely suffer despite his innocence. How costly a learning it would be for
him! That is where the Court comes in. It is most important for us as dispensers of justice not to allow the inadvertence or
incompetence of any counsel to result in the outright deprivation of an appellant’s right to life, liberty or property. 13

We do not mind if this softening of judicial attitudes be mislabeled as excessive leniency. With so much on the line, the
people whose futures hang in a balance should not be left to suffer from the incompetence, mindlessness or lack of
professionalism of any member of the Law Profession. They reasonably expect a just result in every litigation. The courts
must give them that just result. That assurance is the people’s birthright. Thus, we have to undo Diaz’s dire fate.

Even as we now set aside the CA’s rejection of the appeal of Diaz, we will not remand the records to the CA for its review.
In an appeal of criminal convictions, the records are laid open for review. To avoid further delays, therefore, we take it
upon ourselves to review the records and resolve the issue of guilt, considering that the records are already before us.

Section 155 of R.A. No. 8293 defines the acts that constitute infringement of trademark, viz:

Remedies; Infringement. — Any person who shall, without the consent of the owner of the registered mark:

155.1. Use in commerce any reproduction, counterfeit, copy, or colorable imitation of a registered mark or the same
container or a dominant feature thereof in connection with the sale, offering for sale, distribution, advertising of any goods
or services including other preparatory steps necessary to carry out the sale of any goods or services on or in connection
with which such use is likely to cause confusion, or to cause mistake, or to deceive; or

155.2. Reproduce, counterfeit, copy or colorably imitate a registered mark or a dominant feature thereof and apply such
reproduction, counterfeit, copy or colorable imitation to labels, signs, prints, packages, wrappers, receptacles or
advertisements intended to be used in commerce upon or in connection with the sale, offering for sale, distribution, or

23
advertising of goods or services on or in connection with which such use is likely to cause confusion, or to cause mistake,
or to deceive, shall be liable in a civil action for infringement by the registrant for the remedies hereinafter set forth:
Provided, That the infringement takes place at the moment any of the acts stated in Subsection 155.1 or this subsection
are committed regardless of whether there is actual sale of goods or services using the infringing material.

The elements of the offense of trademark infringement under the Intellectual Property Code are, therefore, the following:

1. The trademark being infringed is registered in the Intellectual Property Office;

2. The trademark is reproduced, counterfeited, copied, or colorably imitated by the infringer;

3. The infringing mark is used in connection with the sale, offering for sale, or advertising of any goods, business
or services; or the infringing mark is applied to labels, signs, prints, packages, wrappers, receptacles or
advertisements intended to be used upon or in connection with such goods, business or services;

4. The use or application of the infringing mark is likely to cause confusion or mistake or to deceive purchasers or
others as to the goods or services themselves or as to the source or origin of such goods or services or the
identity of such business; and

5. The use or application of the infringing mark is without the consent of the trademark owner or the assignee
thereof.14

As can be seen, the likelihood of confusion is the gravamen of the offense of trademark infringement. 15 There are two
tests to determine likelihood of confusion, namely: the dominancy test, and the holistic test. The contrasting concept of
these tests was explained in Societes Des Produits Nestle, S.A. v. Dy, Jr., thus:

x x x. The dominancy test focuses on the similarity of the main, prevalent or essential features of the competing
trademarks that might cause confusion. Infringement takes place when the competing trademark contains the essential
features of another. Imitation or an effort to imitate is unnecessary. The question is whether the use of the marks is likely
to cause confusion or deceive purchasers.

The holistic test considers the entirety of the marks, including labels and packaging, in determining confusing similarity.
The focus is not only on the predominant words but also on the other features appearing on the labels. 16

As to what test should be applied in a trademark infringement case, we said in McDonald’s Corporation v. Macjoy
Fastfood Corporation17 that:

In trademark cases, particularly in ascertaining whether one trademark is confusingly similar to another, no set rules can
be deduced because each case must be decided on its merits. In such cases, even more than in any other litigation,
precedent must be studied in the light of the facts of the particular case. That is the reason why in trademark cases,
jurisprudential precedents should be applied only to a case if they are specifically in point.

The case of Emerald Garment Manufacturing Corporation v. Court of Appeals,18 which involved an alleged trademark
infringement of jeans products, is worth referring to. There, H.D. Lee Co., Inc. (H.D. Lee), a corporation based in the
United States of America, claimed that Emerald Garment’s trademark of "STYLISTIC MR. LEE" that it used on its jeans
products was confusingly similar to the "LEE" trademark that H.D. Lee used on its own jeans products. Applying the
holistic test, the Court ruled that there was no infringement.

The holistic test is applicable here considering that the herein criminal cases also involved trademark infringement in
relation to jeans products. Accordingly, the jeans trademarks of Levi’s Philippines and Diaz must be considered as a
whole in determining the likelihood of confusion between them. The maong pants or jeans made and sold by Levi’s
Philippines, which included LEVI’S 501, were very popular in the Philippines. The consuming public knew that the original
LEVI’S 501 jeans were under a foreign brand and quite expensive. Such jeans could be purchased only in malls or
boutiques as ready-to-wear items, and were not available in tailoring shops like those of Diaz’s as well as not acquired on
a "made-to-order" basis. Under the circumstances, the consuming public could easily discern if the jeans were original or
fake LEVI’S 501, or were manufactured by other brands of jeans. Confusion and deception were remote, for, as the Court
has observed in Emerald Garments:

First, the products involved in the case at bar are, in the main, various kinds of jeans. These are not your ordinary
household items like catsup, soy sauce or soap which are of minimal cost. Maong pants or jeans are not inexpensive.
Accordingly, the casual buyer is predisposed to be more cautious and discriminating in and would prefer to mull over his
purchase. Confusion and deception, then, is less likely. In Del Monte Corporation v. Court of Appeals, we noted that:

.... Among these, what essentially determines the attitudes of the purchaser, specifically his inclination to be cautious, is
the cost of the goods. To be sure, a person who buys a box of candies will not exercise as much care as one who buys an
expensive watch. As a general rule, an ordinary buyer does not exercise as much prudence in buying an article for which
he pays a few centavos as he does in purchasing a more valuable thing. Expensive and valuable items are normally
bought only after deliberate, comparative and analytical investigation. But mass products, low priced articles in wide use,
and matters of everyday purchase requiring frequent replacement are bought by the casual consumer without great
care....

24
Second, like his beer, the average Filipino consumer generally buys his jeans by brand. He does not ask the sales clerk
for generic jeans but for, say, a Levis, Guess, Wrangler or even an Armani. He is, therefore, more or less knowledgeable
and familiar with his preference and will not easily be distracted.

Finally, in line with the foregoing discussions, more credit should be given to the "ordinary purchaser." Cast in this
particular controversy, the ordinary purchaser is not the "completely unwary consumer" but is the "ordinarily intelligent
buyer" considering the type of product involved.

The definition laid down in Dy Buncio v. Tan Tiao Bok is better suited to the present case. There, the "ordinary purchaser"
was defined as one "accustomed to buy, and therefore to some extent familiar with, the goods in question. The test of
fraudulent simulation is to be found in the likelihood of the deception of some persons in some measure acquainted with
an established design and desirous of purchasing the commodity with which that design has been associated. The test is
not found in the deception, or the possibility of deception, of the person who knows nothing about the design which has
been counterfeited, and who must be indifferent between that and the other. The simulation, in order to be objectionable,
must be such as appears likely to mislead the ordinary intelligent buyer who has a need to supply and is familiar with the
article that he seeks to purchase.19

Diaz used the trademark "LS JEANS TAILORING" for the jeans he produced and sold in his tailoring shops. His
trademark was visually and aurally different from the trademark "LEVI STRAUSS & CO" appearing on the patch of original
jeans under the trademark LEVI’S 501. The word "LS" could not be confused as a derivative from "LEVI STRAUSS" by
virtue of the "LS" being connected to the word "TAILORING", thereby openly suggesting that the jeans bearing the
trademark "LS JEANS TAILORING" came or were bought from the tailoring shops of Diaz, not from the malls or boutiques
selling original LEVI’S 501 jeans to the consuming public.

There were other remarkable differences between the two trademarks that the consuming public would easily perceive.
Diaz aptly noted such differences, as follows:

The prosecution also alleged that the accused copied the "two horse design" of the petitioner-private complainant but
the evidence will show that there was no such design in the seized jeans. Instead, what is shown is "buffalo design."
Again, a horse and a buffalo are two different animals which an ordinary customer can easily distinguish. x x x.

The prosecution further alleged that the red tab was copied by the accused. However, evidence will show that the red tab
used by the private complainant indicates the word "LEVI’S" while that of the accused indicates the letters "LSJT" which
means LS JEANS TAILORING. Again, even an ordinary customer can distinguish the word LEVI’S from the letters LSJT.

xxxx

In terms of classes of customers and channels of trade, the jeans products of the private complainant and the accused
cater to different classes of customers and flow through the different channels of trade. The customers of the private
complainant are mall goers belonging to class A and B market group – while that of the accused are those who belong to
class D and E market who can only afford Php 300 for a pair of made-toorder pants.20 x x x.

Moreover, based on the certificate issued by the Intellectual Property Office, "LS JEANS TAILORING" was a registered
trademark of Diaz. He had registered his trademark prior to the filing of the present cases. 21 The Intellectual Property
Office would certainly not have allowed the registration had Diaz’s trademark been confusingly similar with the registered
trademark for LEVI’S 501 jeans.

Given the foregoing, it should be plain that there was no likelihood of confusion between the trademarks involved.
Thereby, the evidence of guilt did not satisfy the quantum of proof required for a criminal conviction, which is proof beyond
reasonable doubt. According to Section 2, Rule 133 of the Rules of Court, proof beyond a reasonable doubt does not
mean such a degree of proof as, excluding possibility of error, produces absolute certainty. Moral certainty only is
required, or that degree of proof which produces conviction in an unprejudiced mind. Consequently, Diaz should be
acquitted of the charges.

WHEREFORE, the Court ACQUITS petitioner VICTORIO P. DIAZ of the crimes of infringement of trademark charged in
Criminal Case No. 00-0318 and Criminal Case No. 00-0319 for failure of the State to establish his guilt by proof beyond
reasonable doubt.

No pronouncement on costs of suit.

SO ORDERED.

25
 FIRST DIVISION

G.R. No. 166391, October 21, 2015

MICROSOFT CORPORATION, Petitioner, v. ROLANDO D. MANANSALA AND/OR MEL MANANSALA, DOING

BUSINESS AS DATAMAN TRADING COMPANY AND/OR COMIC ALLEY, Respondent.

DECISION

BERSAMIN, J.:

This appeal seeks to overturn the decision promulgated on February 27, 2004, 1 whereby the Court of Appeals (CA)
dismissed the petition for certiorari filed by petitioner to annul the orders of the Department of Justice (DOJ) dated March
20, 2000,2 May 15, 2001,3 and January 27, 20034 dismissing the criminal charge of violation of Section 29 of Presidential
Decree No. 49 (Decree on Intellectual Property) it had instituted against the respondents; and the resolution promulgated
on December 6, 2004 denying its motion for reconsideration.5

Antecedents

The CA summarized the factual and procedural antecedents thusly:

Petitioner (Microsoft Corporation) is the copyright and trademark owner of all rights relating to all versions and editions of
Microsoft software (computer programs) such as, but not limited to, MS-DOS (disk operating system), Microsoft Encarta,
Microsoft Windows, Microsoft Word, Microsoft Excel, Microsoft Access, Microsoft Works, Microsoft Powerpoint, Microsoft
Office, Microsoft Flight Simulator and Microsoft FoxPro, among others, and their user's guide/manuals.

Private Respondent-Rolando Manansala is doing business under the name of DATAMAN TRADING COMPANY and/or
COMIC ALLEY with business address at 3rd Floor, University Mall Building, Tail Avc, Manila.

Private Respondent Manansala, without authority from petitioner, was engaged in distributing and selling Microsoft
computer software programs.

On November 3, 1997, Mr. John Benedict A. Sacriz, a private investigator accompanied by an agent from the National
Bureau of Investigation (NBI) was able to purchase six (6) CD-ROMs containing various computer programs belonging to
petitioner.

As a result of the test-purchase, the agent from the NBI applied for a search warrant to search the premises of the private
respondent.

On November 17, 1997, a Search Warrant was issued against the premises of the private respondent.

On November 19, 1997, the search warrant was served on the private respondent's premises and yielded several illegal
copies of Microsoft programs.

Subsequently, petitioner, through Atty. Teodoro Kalaw IV tiled an Affidavit-Complaint in the DOJ based on the results of
the search and seizure operation conducted on private respondent's premises.

However, in a Resolution dated March 20, 2000, public respondent State Prosecutor dismissed the charge against private
respondent for violation of Section 29 P.D. 49 in this wise, to quote:
'The evidence is extant in the records to show that respondent is selling Microsoft computer software programs bearing
the copyrights and trademarks owned by Microsoft Corporation. There is, however, no proof that respondent was the one
who really printed or copied the products of complainant for sale in his store.

WHEREFORE, it is hereby, recommended that respondent be charged for violation of Article 189 of the Revised Penal
Code. The charge for violation of Section 29 of PD No. 49 is recommended dismissed for lack of evidence.'
Petitioner filed a Motion for Partial Reconsideration arguing that printing or copying is not essential in the crime of
copyright infringement under Section 29 of PD No. 49.

On May 15, 2001, the public respondent issued a Resolution denying the Motion for Partial Reconsideration.

Thereafter, petitioner filed a Petition for Review with the DOJ, which denied the petition for review. 6
Dissatisfied with the outcome of its appeal, the petitioner filed its petition for certiorari in the CA to annul the DOJ's
dismissal of its petition for review on the ground of grave abuse of discretion amounting to lack or excess of jurisdiction on
the part of the DOJ.

On February 27, 2004, the CA rendered the assailed decision affirming the dismissal by the DOJ, 7disposing as follows:
WHEREFORE, premises considered, the instant petition is DENIED. Consequently, the Orders dated March 20, 2000,
May 15, 2001 and January 27, 2003 respectively are hereby AFFIRMED.

SO ORDERED.8
Issue

The petitioner insists that printing or copying was not essential in the commission of the crime of copyright infringement
under Section 29 of Presidential Decree No. 49; hence, contrary to the holding of the DOJ, as upheld by the CA, the mere
selling of pirated computer software constituted copyright infringement.9
26
 Ruling of the Court

The appeal is meritorious.

Although the general rule is that the determination of the existence of probable cause by the public prosecutor is not to be
judicially scrutinized because it is an executive function, an exception exists when the determination is tainted with grave
abuse of discretion.10 Bearing this in mind, we hold that the DOJ committed grave abuse of discretion in sustaining the
public prosecutor's dismissal of the charge of copyright infringement under Section 29 of Presidential Decree No. 49 on
the ground of lack of evidence because the public prosecutor thereby flagrantly disregarded the existence of acts
sufficient to engender the well-founded belief that the crime of copyright infringement had been committed, and that the
respondent was probably guilty thereof.11

Section 5 of Presidential Decree No. 49 specifically defined copyright as an exclusive right in the following manner:
Section 5. Copyright shall consist in the exclusive right;

(A) To print, reprint, publish, copy, distribute, multiply, sell, and make photographs, photo-engravings, and pictorial
illustrations of the works;

(B) To make any translation or other version or extracts or arrangements or adaptations thereof; to dramatize it if it be a
non-dramatic work; to convert it into a non-dramatic work if it be a drama; to complete or execute if it be a model or
design;

(C) To exhibit, perform, represent, produce, or reproduce, the work in any manner or by any method whatever for profit or
otherwise; it not reproduced in copies for sale, to sell any manuscript or any record whatsoever thereof;

(D) To make any other use or disposition of the work consistent with the laws of the land.
Accordingly, the commission of any of the acts mentioned in Section 5 of Presidential Decree No. 49 without the copyright
owner's consent constituted actionable copyright infringement. In Columbia Pictures, Inc. v. Court of Appeals,12 the Court
has emphatically declared:
Infringement of a copyright is a trespass on a private domain owned and occupied by the owner of the copyright, and,
therefore, protected by law, and infringement of copyright, or piracy, which is a synonymous term in this connection,
consists in the doing by any person, without the consent of the owner of the copyright, of anything the sole right to do
which is conferred by statute on the owner of the copyright.
The "gravamen of copyright infringement," according to NBI-Microsoft Corporation v. Hwang:13
is not merely the unauthorized manufacturing of intellectual works but rather the unauthorized performance of any of the
acts covered by Section 5. Hence, any person who performs any of the acts under Section 5 without obtaining the
copyright owners prior consent renders himself civilly and criminally liable for copyright infringement.14
The CA stated in the assailed decision as follows:
A reading of Section 5 (a) of the Copyright Law shows that the acts enumerated therein are punctuated by commas and
the last phrase is conjoined by the words 'and'. Clearly, the same should be interpreted to mean as 'relating to one
another' because it is basic in legal hermeneutics that the word 'and' is not meant to separate words but is a conjunction
used to denote a 'joinder' or 'union'.

In the book of Noli C. Diaz entitled as STATUTORY CONSTRUCTION, the word 'and' was defined as a 'conjunction
connecting words or phrases expressing the idea that the latter is to be added to or taken along with the first'. Stated
differently, the word 'and' is a conjunction pertinently defined as meaning 'together with', 'joined with', 'along or together
with', 'added to or linked to' used to conjoin 'word with word', 'phrase with phrase', 'clause with clause'. The word 'and'
does not mean 'or', it is a conjunction used to denote a joinder or union, 'binding together', relating the one to the other.

Hence the key to interpret and understand Section 5 (a) of P.D. 49 is the word 'and'. From the foregoing definitions of the
word 'and' it is unmistakable that to hold a person liable under the said provision of law, all the acts enumerated therein
must be present and proven. As such, it is not correct to construe the acts enumerated therein as being separate or
independent from one another.

In the case at bar, petitioner failed to allege and adduce evidence showing that the private respondent is the one who
copied, replicated or reproduced the software programs of the petitioner. In other words, 'sale' alone of pirated copies of
Microsoft software programs does not constitute copyright infringement punishable under P.D. 49.15
The CA erred in its reading and interpretation of Section 5 of Presidential Decree No. 49. Under the rules on syntax, the
conjunctive word "and" denotes a "joinder or union" of words, phrases, or clause;16 it is different from the disjunctive word
"or" that signals disassociation or independence. 17 However, a more important rule of statutory construction dictates that
laws should be construed in a manner that avoids absurdity or unreasonableness. 18 As the Court pointed out
in Automotive Parts & Equipment Company, Inc. v. Lingad:19
Nothing is better settled then that courts are not to give words a meaning which would lead to absurd or unreasonable
consequence. That is a principle that goes back to In re Allen decided on October 29, 1903, where it was held that a literal
interpretation is to be rejected if it would be unjust or lead to absurd results. That is a strong argument against its
adoption. The words of Justice Laurel are particularly apt. Thus: 'The fact that the construction placed upon the statute by
the appellants would lead to an absurdity is another argument for rejecting it x x x.'

It is of the essence of judicial duty to construe statutes so as to avoid such a deplorable result. That has long been a
judicial function. A literal reading of a legislative act which could be thus characterized is to be avoided if the language
thereof can be given a reasonable application consistent with the legislative purpose. In the apt language of Frankfurter: A
decent respect for the policy of Congress must save us from imputing to it a self-defeating, if not disingenuous purpose.
Certainly, we must reject a construction that at best amounts to a manifestation of verbal ingenuity but hardly satisfies the
test of rationality on which law must be based.20

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The conjunctive "and" should not be taken in its ordinary acceptation, but should be construed like the disjunctive "or" if
the literal interpretation of the law would pervert or obscure the legislative intent. 21 To accept the CA's reading and
interpretation is to accept absurd results because the violations listed in Section 5(a) of Presidential Decree No. 49 - "To
print, reprint, publish, copy, distribute, multiply, sell, and make photographs, photo-engravings, and pictorial illustrations of
the works" — cannot be carried out on all of the classes of works enumerated in Section 2 of Presidential Decree No.
49, viz.:
Section 2. - The Rights granted by this Decree shall, from the moment of creation, subsist with respect to any of the
following classes of works:

(A) Books, including composite and encyclopedic works, manuscripts, directories, and gazetteers;

(B) Periodicals, including pamphlets and newspapers;

(C) Lectures, sermons, addresses, dissertations prepared for oral delivery;

(D) Letters;

(E) Dramatic or dramatico-musical compositions; choreographic works and entertainments in dumb shows, the acting
form of which is fixed in writing or otherwise;

(F) Musical compositions, with or without words;

(G) Works of drawing, painting, architecture, sculpture, engraving, lithography, and other works of art; models or designs
for works of art;

(H) Reproductions of a work of art;

(I) Original ornamental designs or models for articles of manufacture, whether or not patentable, and other works of
applied art;

(J) Maps, plans, sketches, and charts;

(K) Drawings, or plastic works of a scientific or technical character;

(L) Photographic works and works produced by a process analogous to photography; lantern slides;

(M) Cinematographic works and works produced by a process analogous to cinematography or any process for making
audio-visual recordings;

(N) Computer programs;

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

(P) Dramatization, translations, adaptations, abridgements, arrangements and other alterations of literary, musical or
artistic works or of works of the Philippine Government as herein defined, which shall be protected as provided in Section
8 of this Decree.

(Q) Collection of literary, scholarly, or artistic works or of works referred to in Section 9 of this Decree which by reason of
the selection and arrangement of their contents constitute intellectual creations, the same to be protected as such in
accordance with Section 8 of this Decree.

(R) Other literary, scholarly, scientific and artistic works.

Presidential Decree No. 49 thereby already acknowledged the existence of computer programs as works or creations
protected by copyright.22 To hold, as the CA incorrectly did, that the legislative intent was to require that the computer
programs be first photographed, photo-engraved, or pictorially illustrated as a condition for the commission of copyright
infringement invites ridicule. Such interpretation of Section 5(a) of Presidential Decree No. 49 defied logic and common
sense because it focused on terms like "copy," "multiply," and "sell," but blatantly ignored terms like "photographs,"
"photo-engravings," and "pictorial illustrations." Had the CA taken the latter words into proper account, it would have
quickly seen the absurdity of its interpretation.

The mere sale of the illicit copies of the software programs was enough by itself to show the existence of probable cause
for copyright infringement. There was no need for the petitioner to still prove who copied, replicated or reproduced the
software programs. Indeed, the public prosecutor and the DOJ gravely abused their discretion in dismissing the
petitioner's charge for copyright infringement against the respondents for lack of evidence. There was grave abuse of
discretion because the public prosecutor and the DOJ acted whimsically or arbitrarily in disregarding the settled
jurisprudential rules on finding the existence of probable cause to charge the offender in court. Accordingly, the CA erred
in upholding the dismissal by the DOJ of the petitioner's petition for review. We reverse.

WHEREFORE, the Court GRANTS the petition for review on certiorari; REVERSES and SETS ASIDE the decision
promulgated on February 27, 2004 in C.A.-G.R. SP No. 76402; DIRECTS the Department of Justice to render the proper
resolution to charge respondent ROLANDO D. MANANSALA and/or MEL MANANSALA, doing business as
DATAMAN TRADING COMPANY and/or COMIC ALLEY in accordance with this decision; and ORDERS the
respondents to pay the costs of suit.

SO ORDERED.
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