FIRST DIVISION | G.R. No.

100098 | December 29, 1995

EMERALD GARMENT MANUFACTURING CORPORATION, petitioner, vs. HON. COURT OF APPEALS, BUREAU OF PATENTS, TRADEMARKS AND
TECHNOLOGY TRANSFER and H.D. LEE COMPANY, INC., respondents.

KAPUNAN, J.:

In this petition for review on certiorari under Rule 45 of the Revised Rules of Court, Emerald Garment Manufacturing Corporation seeks to annul
the decision of the Court of Appeals dated 29 November 1990 in CA-G.R. SP No. 15266 declaring petitioner's trademark to be confusingly similar to
that of private respondent and the resolution dated 17 May 1991 denying petitioner's motion for reconsideration.

The record reveals the following antecedent facts:

On 18 September 1981, private respondent H.D. Lee Co., Inc., a foreign corporation organized under the laws of Delaware, U.S.A., filed with the
Bureau of Patents, Trademarks & Technology Transfer (BPTTT) a Petition for Cancellation of Registration No. SR 5054 (Supplemental Register) for
the trademark "STYLISTIC MR. LEE" used on skirts, jeans, blouses, socks, briefs, jackets, jogging suits, dresses, shorts, shirts and lingerie under Class
25, issued on 27 October 1980 in the name of petitioner Emerald Garment Manufacturing Corporation, a domestic corporation organized and
existing under Philippine laws. The petition was docketed as Inter Partes Case No. 1558. 1

Private respondent, invoking Sec. 37 of R.A. No. 166 (Trademark Law) and Art. VIII of the Paris Convention for the Protection of Industrial Property,
averred that petitioner's trademark "so closely resembled its own trademark, 'LEE' as previously registered and used in the Philippines, and not
abandoned, as to be likely, when applied to or used in connection with petitioner's goods, to cause confusion, mistake and deception on the part of
the purchasing public as to the origin of the goods." 2

In its answer dated 23 March 1982, petitioner contended that its trademark was entirely and unmistakably different from that of private
respondent and that its certificate of registration was legally and validly granted. 3

On 20 February 1984, petitioner caused the publication of its application for registration of the trademark "STYLISTIC MR. LEE" in the Principal
Register." 4

On 27 July 1984, private respondent filed a notice of opposition to petitioner's application for registration also on grounds that petitioner's
trademark was confusingly similar to its "LEE" trademark. 5 The case was docketed as Inter Partes Case No. 1860.

On 21 June 1985, the Director of Patents, on motion filed by private respondent dated 15 May 1985, issued an order consolidating Inter Partes
Cases Nos. 1558 and 1860 on grounds that a common question of law was involved. 6

On 19 July 1988, the Director of Patents rendered a decision granting private respondent's petition for cancellation and opposition to registration.

The Director of Patents found private respondent to be the prior registrant of the trademark "LEE" in the Philippines and that it had been using said
mark in the Philippines. 7

Moreover, the Director of Patents, using the test of dominancy, declared that petitioner's trademark was confusingly similar to private
respondent's mark because "it is the word 'Lee' which draws the attention of the buyer and leads him to conclude that the goods originated from
the same manufacturer. It is undeniably the dominant feature of the mark." 8

On 3 August 1988, petitioner appealed to the Court of Appeals and on 8 August 1988, it filed with the BPTTT a Motion to Stay Execution of the 19
July 1988 decision of the Director of Patents on grounds that the same would cause it great and irreparable damage and injury. Private respondent
submitted its opposition on 22 August 1988. 9

On 23 September 1988, the BPTTT issued Resolution No. 88-33 granting petitioner's motion to stay execution subject to the following terms and
conditions:

1. That under this resolution, Respondent-Registrant is authorized only to dispose of its current stock using the mark "STYLISTIC MR. LEE";

2. That Respondent-Registrant is strictly prohibited from further production, regardless of mode and source, of the mark in question (STYLISTIC MR.
LEE) in addition to its current stock;

3. That this relief Order shall automatically cease upon resolution of the Appeal by the Court of Appeals and, if the Respondent's appeal loses, all
goods bearing the mark "STYLISTIC MR. LEE" shall be removed from the market, otherwise such goods shall be seized in accordance with the law.

SO ORDERED. 10

On 29 November 1990, the Court of Appeals promulgated its decision affirming the decision of the Director of Patents dated 19 July 1988 in all
respects. 11

In said decision the Court of Appeals expounded, thus:

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Whether or not a trademark causes confusion and is likely to deceive the public is a question of fact which is to be resolved by applying the "test of
dominancy", meaning, if the competing trademark contains the main or essential or dominant features of another by reason of which confusion
and deception are likely to result, then infringement takes place; that duplication or imitation is not necessary, a similarity in the dominant features
of the trademark would be sufficient.

The word "LEE" is the most prominent and distinctive feature of the appellant's trademark and all of the appellee's "LEE" trademarks. It is the mark
which draws the attention of the buyer and leads him to conclude that the goods originated from the same manufacturer. While it is true that
there are other words such as "STYLISTIC", printed in the appellant's label, such word is printed in such small letters over the word "LEE" that it is
not conspicuous enough to draw the attention of ordinary buyers whereas the word "LEE" is printed across the label in big, bold letters and of the
same color, style, type and size of lettering as that of the trademark of the appellee. The alleged difference is too insubstantial to be noticeable.
Even granting arguendo that the word "STYLISTIC" is conspicuous enough to draw attention, the goods may easily be mistaken for just another
variation or line of garments under the ap appelle's "LEE" trademarks in view of the fact that the appellee has registered trademarks which use
other words in addition to the principal mark "LEE" such as "LEE RIDERS", "LEESURES" and "LEE LEENS". The likelihood of confusion is further made
more probable by the fact that both parties are engaged in the same line of business. It is well to reiterate that the determinative factor in
ascertaining whether or not the marks are confusingly similar to each other is not whether the challenged mark would actually cause confusion or
deception of the purchasers but whether the use of such mark would likely cause confusion or mistake on the part of the buying public.

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The appellee has sufficiently established its right to prior use and registration of the trademark "LEE" in the Philippines and is thus entitled to
protection from any infringement upon the same. It is thus axiomatic that one who has identified a peculiar symbol or mark with his goods thereby
acquires a property right in such symbol or mark, and if another infringes the trademark, he thereby invokes this property right.

The merchandise or goods being sold by the parties are not that expensive as alleged to be by the appellant and are quite ordinary commodities
purchased by the average person and at times, by the ignorant and the unlettered. Ordinary purchasers will not as a rule examine the small
letterings printed on the label but will simply be guided by the presence of the striking mark "LEE". Whatever difference there may be will pale in
insignificance in the face of an evident similarity in the dominant features and overall appearance of the labels of the parties. 12

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On 19 December 1990, petitioner filed a motion for reconsideration of the above-mentioned decision of the Court of Appeals.

Private respondent opposed said motion on 8 January 1991 on grounds that it involved an impermissible change of theory on appeal. Petitioner
allegedly raised entirely new and unrelated arguments and defenses not previously raised in the proceedings below such as laches and a claim that
private respondent appropriated the style and appearance of petitioner's trademark when it registered its "LEE" mark under Registration No.
44220. 13

On 17 May 1991, the Court of Appeals issued a resolution rejecting petitioner's motion for reconsideration and ruled thus:

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A defense not raised in the trial court cannot be raised on appeal for the first time. An issue raised for the first time on appeal and not raised timely
in the proceedings in the lower court is barred by estoppel.

The object of requiring the parties to present all questions and issues to the lower court before they can be presented to this Court is to have the
lower court rule upon them, so that this Court on appeal may determine whether or not such ruling was erroneous. The purpose is also in
furtherance of justice to require the party to first present the question he contends for in the lower court so that the other party may not be taken
by surprise and may present evidence to properly meet the issues raised.

Moreover, for a question to be raised on appeal, the same must also be within the issues raised by the parties in their pleadings. Consequently,
when a party deliberately adopts a certain theory, and the case is tried and decided based upon such theory presented in the court below, he will
not be permitted to change his theory on appeal. To permit him to do so would be unfair to the adverse party. A question raised for the first time
on appeal, there having opportunity to raise them in the court of origin constitutes a change of theory which is not permissible on appeal.

In the instant case, appellant's main defense pleaded in its answer dated March 23, 1982 was that there was "no confusing similarity between the
competing trademark involved. On appeal, the appellant raised a single issue, to wit:

The only issue involved in this case is whether or not respondent-registrant's trademark "STYLISTIC MR. LEE" is confusingly similar with the
petitioner's trademarks "LEE or LEERIDERS, LEE-LEENS and LEE-SURES."

Appellant's main argument in this motion for reconsideration on the other hand is that the appellee is estopped by laches from asserting its right to
its trademark. Appellant claims although belatedly that appellee went to court with "unclean hands" by changing the appearance of its trademark
to make it identical to the appellant's trademark.

Neither defenses were raised by the appellant in the proceedings before the Bureau of Patents. Appellant cannot raise them now for the first time
on appeal, let alone on a mere motion for reconsideration of the decision of this Court dismissing the appellant's appeal.

While there may be instances and situations justifying relaxation of this rule, the circumstance of the instant case, equity would be better served by
applying the settled rule it appearing that appellant has not given any reason at all as to why the defenses raised in its motion for reconsideration
was not invoked earlier. 14

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Twice rebuffed, petitioner presents its case before this Court on the following assignment of errors:

I. THE COURT OF APPEALS ERRED IN NOT FINDING THAT PRIVATE RESPONDENT CAUSED THE ISSUANCE OF A FOURTH "LEE" TRADEMARK
IMITATING THAT OF THE PETITIONER'S ON MAY 5, 1989 OR MORE THAN EIGHT MONTHS AFTER THE BUREAU OF PATENT'S DECISION DATED JULY
19, 1988.

II. THE COURT OF APPEALS ERRED IN RULING THAT THE DEFENSE OF ESTOPPEL BY LACHES MUST BE RAISED IN THE PROCEEDINGS BEFORE THE
BUREAU OF PATENTS, TRADEMARKS AND TECHNOLOGY TRANSFER.

III. THE COURT OF APPEALS ERRED WHEN IT CONSIDERED PRIVATE RESPONDENT'S PRIOR REGISTRATION OF ITS TRADEMARK AND DISREGARDED
THE FACT THAT PRIVATE RESPONDENT HAD FAILED TO PROVE COMMERCIAL
USE THEREOF BEFORE FILING OF APPLICATION FOR REGISTRATION. 15

In addition, petitioner reiterates the issues it raised in the Court of Appeals:

I. THE ISSUE INVOLVED IN THIS CASE IS WHETHER OR NOT PETITIONER'S TRADEMARK SYTLISTIC MR. LEE, IS CONFUSINGLY SIMILAR WITH THE
PRIVATE RESPONDENT'S TRADEMARK LEE OR LEE-RIDER, LEE-LEENS AND LEE-SURES.
II. PETITIONER'S EVIDENCES ARE CLEAR AND SUFFICIENT TO SHOW THAT IT IS THE PRIOR USER AND ITS TRADEMARK IS DIFFERENT FROM THAT OF
THE PRIVATE RESPONDENT.

III. PETITIONER'S TRADEMARK IS ENTIRELY DIFFERENT FROM THE PRIVATE RESPONDENT'S AND THE REGISTRATION OF ITS TRADEMARK IS PRIMA
FACIE EVIDENCE OF GOOD FAITH.

IV. PETITIONER'S "STYLISTIC MR. LEE" TRADEMARK CANNOT BE CONFUSED WITH PRIVATE RESPONDENT'S LEE TRADEMARK. 16

Petitioner contends that private respondent is estopped from instituting an action for infringement before the BPTTT under the equitable principle
of laches pursuant to Sec. 9-A of R.A. No. 166, otherwise known as the Law on Trade-marks, Trade-names and Unfair Competition:

Sec. 9-A. Equitable principles to govern proceedings. In opposition proceedings and in all other inter partes proceedings in the patent office
under this act, equitable principles of laches, estoppel, and acquiescence, where applicable, may be considered and applied.

Petitioner alleges that it has been using its trademark "STYLISTIC MR. LEE" since 1 May 1975, yet, it was only on 18 September 1981 that private
respondent filed a petition for cancellation of petitioner's certificate of registration for the said trademark. Similarly, private respondent's notice of
opposition to petitioner's application for registration in the principal register was belatedly filed on 27 July 1984. 17

Private respondent counters by maintaining that petitioner was barred from raising new issues on appeal, the only contention in the proceedings
below being the presence or absence of confusing similarity between the two trademarks in question. 18

We reject petitioner's contention.

Petitioner's trademark is registered in the supplemental register. The Trademark Law (R.A. No. 166) provides that "marks and tradenames for the
supplemental register shall not be published for or be subject to opposition, but shall be published on registration in the Official Gazette." 19 The
reckoning point, therefore, should not be 1 May 1975, the date of alleged use by petitioner of its assailed trademark but 27 October 1980, 20 the
date the certificate of registration SR No. 5054 was published in the Official Gazette and issued to petitioner.

It was only on the date of publication and issuance of the registration certificate that private respondent may be considered "officially" put on
notice that petitioner has appropriated or is using said mark, which, after all, is the function and purpose of registration in the supplemental
register. 21 The record is bereft of evidence that private respondent was aware of petitioner's trademark before the date of said publication and
issuance. Hence, when private respondent instituted cancellation proceedings on 18 September 1981, less than a year had passed.

Corollarily, private respondent could hardly be accused of inexcusable delay in filing its notice of opposition to petitioner's application for
registration in the principal register since said application was published only on 20 February 1984. 22 From the time of publication to the time of
filing the opposition on 27 July 1984 barely five (5) months had elapsed. To be barred from bringing suit on grounds of estoppel and laches, the
delay must be
lengthy. 23

More crucial is the issue of confusing similarity between the two trademarks. Petitioner vehemently contends that its trademark "STYLISTIC MR.
LEE" is entirely different from and not confusingly similar to private respondent's "LEE" trademark.

Private respondent maintains otherwise. It asserts that petitioner's trademark tends to mislead and confuse the public and thus constitutes an
infringement of its own mark, since the dominant feature therein is the word "LEE."

The pertinent provision of R.A. No. 166 (Trademark Law) states thus:

Sec. 22. Infringement, what constitutes. Any person who shall use, without the consent of the registrant, any reproduction, counterfeit, copy or
colorable imitation of any registered mark or trade-name in connection with the sale, offering for sale, or advertising of any goods, business or
services on or in connection with which such use is likely to cause confusion or mistake or to deceive purchasers or others as to the source or origin
of such goods or services, or identity of such business; or reproduce, counterfeit, copy or colorably imitable any such mark or trade-name and apply
such reproduction, counterfeit, copy, or colorable imitation to labels, signs, prints, packages, wrappers, receptacles or advertisements intended to
be used upon or in connection with such goods, business or services; shall be liable to a civil action by the registrant for any or all of the remedies
herein provided.

Practical application, however, of the aforesaid provision is easier said than done. In the history of trademark cases in the Philippines, particularly in
ascertaining whether one trademark is confusingly similar to or is a colorable imitation of another, no set rules can be deduced. Each case must be
decided on its own merits.

In Esso Standard Eastern, Inc. v. Court of Appeals, 24 we held:

. . . But likelihood of confusion is a relative concept; to be determined only according to the particular, and sometimes peculiar, circumstances of
each case. It is unquestionably true that, as stated in Coburn vs. Puritan Mills, Inc.: "In trademark cases, even more than in other litigation,
precedent must be studied in the light of the facts of the particular case."

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Likewise, it has been observed that:

In determining whether a particular name or mark is a "colorable imitation" of another, no all-embracing rule seems possible in view of the great
number of factors which must necessarily be considered in resolving this question of fact, such as the class of product or business to which the
article belongs; the product's quality, quantity, or size, including its wrapper or container; the dominant color, style, size, form, meaning of letters,
words, designs and emblems used; the nature of the package, wrapper or container; the character of the product's purchasers; location of the
business; the likelihood of deception or the mark or name's tendency to confuse;
etc. 25

Proceeding to the task at hand, the essential element of infringement is colorable imitation. This term has been defined as "such a close or
ingenious imitation as to be calculated to deceive ordinary purchasers, or such resemblance of the infringing mark to the original as to deceive an
ordinary purchaser giving such attention as a purchaser usually gives, and to cause him to purchase the one supposing it to be the other." 26
Colorable imitation does not mean such similitude as amounts to identity. Nor does it require that all the details be literally copied. Colorable
imitation refers to such similarity in form, content, words, sound, meaning, special arrangement, or general appearance of the trademark or
tradename with that of the other mark or tradename in their over-all presentation or in their essential, substantive and distinctive parts as would
likely mislead or confuse persons in the ordinary course of purchasing the genuine article. 27

In determining whether colorable imitation exists, jurisprudence has developed two kinds of tests the Dominancy Test applied in Asia Brewery,
Inc. v. Court of Appeals 28 and other cases 29 and the Holistic Test developed in Del Monte Corporation v. Court of Appeals 30 and its proponent
cases. 31

As its title implies, the test of dominancy focuses on the similarity of the prevalent features of the competing trademarks which might cause
confusion or deception and thus constitutes infringement.

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. . . If the competing trademark contains the main or essential or dominant features of another, and confusion and deception is likely to result,
infringement takes place. Duplication or imitation is not necessary; nor it is necessary that the infringing label should suggest an effort to imitate.
[C. Neilman Brewing Co. v. Independent Brewing Co., 191 F., 489, 495, citing Eagle White Lead Co., vs. Pflugh (CC) 180 Fed. 579]. The question at
issue in cases of infringement of trademarks is whether the use of the marks involved would be likely to cause confusion or mistakes in the mind of
the public or deceive purchasers. (Auburn Rubber Corporation vs. Honover Rubber Co., 107 F. 2d 588; . . .) 32

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On the other side of the spectrum, the holistic test mandates that the entirety of the marks in question must be considered in determining
confusing similarity.

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In determining whether the trademarks are confusingly similar, a comparison of the words is not the only determinant factor. The trademarks in
their entirety as they appear in their respective labels or hang tags must also be considered in relation to the goods to which they are attached. The
discerning eye of the observer must focus not only on the predominant words but also on the other features appearing in both labels in order that
he may draw his conclusion whether one is confusingly similar to the other. 33

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Applying the foregoing tenets to the present controversy and taking into account the factual circumstances of this case, we considered the
trademarks involved as a whole and rule that petitioner's "STYLISTIC MR. LEE" is not confusingly similar to private respondent's "LEE" trademark.

Petitioner's trademark is the whole "STYLISTIC MR. LEE." Although on its label the word "LEE" is prominent, the trademark should be considered as
a whole and not piecemeal. The dissimilarities between the two marks become conspicuous, noticeable and substantial enough to matter
especially in the light of the following variables that must be factored in.

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,
soysauce 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, 34 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. . . .

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 35 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."

There is no cause for the Court of Appeal's apprehension that petitioner's products might be mistaken as "another variation or line of garments
under private respondent's 'LEE' trademark". 36 As one would readily observe, private respondent's variation follows a standard format
"LEERIDERS," "LEESURES" and "LEELEENS." It is, therefore, improbable that the public would immediately and naturally conclude that petitioner's
"STYLISTIC MR. LEE" is but another variation under private respondent's "LEE" mark.

As we have previously intimated the issue of confusing similarity between trademarks is resolved by considering the distinct characteristics of each
case. In the present controversy, taking into account these unique factors, we conclude that the similarities in the trademarks in question are not
sufficient as to likely cause deception and confusion tantamount to infringement.

Another way of resolving the conflict is to consider the marks involved from the point of view of what marks are registrable pursuant to Sec. 4 of
R.A. No. 166, particularly paragraph 4 (e):
CHAPTER II-A. The Principal Register
(Inserted by Sec. 2, Rep. Act No. 638.)

Sec. 4. Registration of trade-marks, trade-names and service-marks on the principal register. There is hereby established a register of trade-
marks, trade-names and service-marks which shall be known as the principal register. The owner of a trade-mark, trade-name or service-mark used
to distinguish his goods, business or services from the goods, business or services of others shall have the right to register the same on the principal
register, unless it:

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(e) Consists of a mark or trade-name which, when applied to or used in connection with the goods, business or services of the applicant is merely
descriptive or deceptively misdescriptive of them, or when applied to or used in connection with the goods, business or services of the applicant is
primarily geographically descriptive or deceptively misdescriptive of them, or is primarily merely a surname; (Emphasis ours.)

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"LEE" is primarily a surname. Private respondent cannot, therefore, acquire exclusive ownership over and singular use of said term.

. . . It has been held that a personal name or surname may not be monopolized as a trademark or tradename as against others of the same name or
surname. For in the absence of contract, fraud, or estoppel, any man may use his name or surname in all legitimate ways. Thus, "Wellington" is a
surname, and its first user has no cause of action against the junior user of "Wellington" as it is incapable of exclusive appropriation. 37

In addition to the foregoing, we are constrained to agree with petitioner's contention that private respondent failed to prove prior actual
commercial use of its "LEE" trademark in the Philippines before filing its application for registration with the BPTTT and hence, has not acquired
ownership over said mark.

Actual use in commerce in the Philippines is an essential prerequisite for the acquisition of ownership over a trademark pursuant to Sec. 2 and 2-A
of the Philippine Trademark Law (R.A. No. 166) which explicitly provides that:

CHAPTER II. Registration of Marks and Trade-names.

Sec. 2. What are registrable. Trade-marks, trade-names, and service marks owned by persons, corporations, partnerships or associations
domiciled in the Philippines and by persons, corporations, partnerships, or associations domiciled in any foreign country may be registered in
accordance with the provisions of this act: Provided, That said trade-marks, trade-names, or service marks are actually in use in commerce and
services not less than two months in the Philippines before the time the applications for registration are filed: And Provided, further, That the
country of which the applicant for registration is a citizen grants by law substantially similar privileges to citizens of the Philippines, and such fact is
officially certified, with a certified true copy of the foreign law translated into the English language, by the government of the foreign country to the
Government of the Republic of the Philippines. (As amended.) (Emphasis ours.)

Sec. 2-A. Ownership of trade-marks, trade-names and service-marks; how acquired. Anyone who lawfully produces or deals in merchandise of
any kind or who engages in lawful business, or who renders any lawful service in commerce, by actual use hereof in manufacture or trade, in
business, and in the service rendered; may appropriate to his exclusive use a trade-mark, a trade-name, or a service-mark not so appropriated by
another, to distinguish his merchandise, business or services from others. The ownership or possession of trade-mark, trade-name, service-mark,
heretofore or hereafter appropriated, as in this section provided, shall be recognized and protected in the same manner and to the same extent as
are other property rights to the law. (As amended.) (Emphasis ours.)

The provisions of the 1965 Paris Convention for the Protection of Industrial Property 38 relied upon by private respondent and Sec. 21-A of the
Trademark Law (R.A. No. 166) 39 were sufficiently expounded upon and qualified in the recent case of Philip Morris, Inc. v. Court of Appeals: 40

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Following universal acquiescence and comity, our municipal law on trademarks regarding the requirement of actual use in the Philippines must
subordinate an international agreement inasmuch as the apparent clash is being decided by a municipal tribunal (Mortisen vs. Peters, Great Britain,
High Court of Judiciary of Scotland, 1906, 8 Sessions, 93; Paras, International Law and World Organization, 1971 Ed., p. 20). Withal, the fact that
international law has been made part of the law of the land does not by any means imply the primacy of international law over national law in the
municipal sphere. Under the doctrine of incorporation as applied in most countries, rules of international law are given a standing equal, not
superior, to national legislative enactments.

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In other words, (a foreign corporation) may have the capacity to sue for infringement irrespective of lack of business activity in the Philippines on
account of Section 21-A of the Trademark Law but the question of whether they have an exclusive right over their symbol as to justify issuance of
the controversial writ will depend on actual use of their trademarks in the Philippines in line with Sections 2 and 2-A of the same law. It is thus
incongruous for petitioners to claim that when a foreign corporation not licensed to do business in the Philippines files a complaint for
infringement, the entity need not be actually using its trademark in commerce in the Philippines. Such a foreign corporation may have the
personality to file a suit for infringement but it may not necessarily be entitled to protection due to absence of actual use of the emblem in the
local market.

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Undisputably, private respondent is the senior registrant, having obtained several registration certificates for its various trademarks "LEE,"
"LEERIDERS," and "LEESURES" in both the supplemental and principal registers, as early as 1969 to 1973. 41 However, registration alone will not
suffice. In Sterling Products International, Inc. v.Farbenfabriken Bayer Aktiengesellschaft, 42 we declared:

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A rule widely accepted and firmly entrenched because it has come down through the years is that actual use in commerce or business is a
prerequisite in the acquisition of the right of ownership over a trademark.

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It would seem quite clear that adoption alone of a trademark would not give exclusive right thereto. Such right "grows out of their actual use."
Adoption is not use. One may make advertisements, issue circulars, give out price lists on certain goods; but these alone would not give exclusive
right of use. For trademark is a creation of use. The underlying reason for all these is that purchasers have come to understand the mark as
indicating the origin of the wares. Flowing from this is the trader's right to protection in the trade he has built up and the goodwill he has
accumulated from use of the trademark. Registration of a trademark, of course, has value: it is an administrative act declaratory of a pre-existing
right. Registration does not, however, perfect a trademark right. (Emphasis ours.)

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To augment its arguments that it was, not only the prior registrant, but also the prior user, private respondent invokes Sec. 20 of the Trademark
Law, thus:

Sec. 20. Certificate of registration prima facie evidence of validity. A certificate of registration of a mark or tradename shall be a prima
facie evidence of the validity of the registration, the registrant's ownership of the mark or trade-name, and of the registrant's exclusive right to use
the same in connection with the goods, business or services specified in the certificate, subject to any conditions and limitations stated therein.

The credibility placed on a certificate of registration of one's trademark, or its weight as evidence of validity, ownership and exclusive use, is
qualified. A registration certificate serves merely as prima facie evidence. It is not conclusive but can and may be rebutted by controverting
evidence.

Moreover, the aforequoted provision applies only to registrations in the principal register. 43 Registrations in the supplemental register do not enjoy
a similar privilege. A supplemental register was created precisely for the registration of marks which are not registrable on the principal register
due to some defects. 44

The determination as to who is the prior user of the trademark is a question of fact and it is this Court's working principle not to disturb the findings
of the Director of Patents on this issue in the absence of any showing of grave abuse of discretion. The findings of facts of the Director of Patents
are conclusive upon the Supreme Court provided they are supported by substantial evidence. 45

In the case at bench, however, we reverse the findings of the Director of Patents and the Court of Appeals. After a meticulous study of the records,
we observe that the Director of Patents and the Court of Appeals relied mainly on the registration certificates as proof of use by private respondent
of the trademark "LEE" which, as we have previously discussed are not sufficient. We cannot give credence to private respondent's claim that its
"LEE" mark first reached the Philippines in the 1960's through local sales by the Post Exchanges of the U.S. Military Bases in the Philippines 46 based
as it was solely on the self-serving statements of Mr. Edward Poste, General Manager of Lee (Phils.), Inc., a wholly owned subsidiary of the H.D. Lee,
Co., Inc., U.S.A., herein private respondent. 47 Similarly, we give little weight to the numerous
vouchers representing various advertising expenses in the Philippines for "LEE" products. 48 It is well to note that these expenses were incurred
only in 1981 and 1982 by LEE (Phils.), Inc. after it entered into a licensing agreement with private respondent on 11 May 1981. 49

On the other hand, petitioner has sufficiently shown that it has been in the business of selling jeans and other garments adopting its "STYLISTIC MR.
LEE" trademark since 1975 as evidenced by appropriate sales invoices to various stores and retailers. 50

Our rulings in Pagasa Industrial Corp. v. Court of Appeals 51 and Converse Rubber Corp. v. Universal Rubber Products, Inc., 52respectively, are
instructive:

The Trademark Law is very clear. It requires actual commercial use of the mark prior to its registration. There is no dispute that respondent
corporation was the first registrant, yet it failed to fully substantiate its claim that it used in trade or business in the Philippines the subject mark; it
did not present proof to invest it with exclusive, continuous adoption of the trademark which should consist among others, of considerable sales
since its first use. The invoices submitted by respondent which were dated way back in 1957 show that the zippers sent to the Philippines were to
be used as "samples" and "of no commercial value." The evidence for respondent must be clear, definite and free from inconsistencies. "Samples"
are not for sale and therefore, the fact of exporting them to the Philippines cannot be considered to be equivalent to the "use" contemplated by
law. Respondent did not expect income from such "samples." There were no receipts to establish sale, and no proof were presented to show that
they were subsequently sold in the Philippines.

xxx xxx xxx

The sales invoices provide the best proof that there were actual sales of petitioner's product in the country and that there was actual use for a
protracted period of petitioner's trademark or part thereof through these sales.

For lack of adequate proof of actual use of its trademark in the Philippines prior to petitioner's use of its own mark and for failure to establish
confusing similarity between said trademarks, private respondent's action for infringement must necessarily fail.

WHEREFORE, premises considered, the questioned decision and resolution are hereby REVERSED and SET ASIDE.

SO ORDERED.

Bellosillo and Hermosisima, Jr., JJ., concur.

THIRD DIVISION | G.R. No. 148222 | August 15, 2003

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

CORONA, J.:

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

FACTUAL ANTECEDENTS

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

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

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

Instead, in a letter dated January 14, 1986, SMIs house counsel informed Pearl and Dean that it was rescinding the contract for SM Makati due to
non-performance of the terms thereof. In his reply dated February 17, 1986, Vergara protested the unilateral action of SMI, saying it was without
basis. In the same letter, he pushed for the signing of the contract for SM Cubao.

Two years later, Metro Industrial Services, the company formerly contracted by Pearl and Dean to fabricate its display units, offered to construct
light boxes for Shoemarts chain of stores. SMI approved the proposal and ten (10) light boxes were subsequently fabricated by Metro Industrial for
SMI. After its contract with Metro Industrial was terminated, SMI engaged the services of EYD Rainbow Advertising Corporation to make the light
boxes. Some 300 units were fabricated in 1991. These were delivered on a staggered basis and installed at SM Megamall and SM City.

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

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

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

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

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

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

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

(1) to pay plaintiff the following damages:

(a) actual damages - P16,600,000.00, representing profits derived by defendants as a result of infringement of plaintiffs copyright from 1991 to
1992; (b) moral damages - P1,000.000.00; (c) exemplary damages - P1,000,000.00; (d) attorneys fees - P1,000,000.00 plus (e) costs of suit;

(2) to deliver, under oath, for impounding in the National Library, all light boxes of SMI which were fabricated by Metro Industrial Services and EYD
Rainbow Advertising Corporation;
(3) to deliver, under oath, to the National Library, all filler-posters using the trademark "Poster Ads", for destruction; and

(4) to permanently refrain from infringing the copyright on plaintiffs light boxes and its trademark "Poster Ads".

Defendants counterclaims are hereby ordered dismissed for lack of merit. SO ORDERED.4

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

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

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

The principle in Baker vs. Selden was likewise applied in Muller vs. Triborough Bridge Authority [43 F. Supp. 298 (S.D.N.Y. 1942)]. In this case, Muller
had obtained a copyright over an unpublished drawing entitled "Bridge Approach the drawing showed a novel bridge approach to unsnarl traffic
congestion". The defendant constructed a bridge approach which was alleged to be an infringement of the new design illustrated in plaintiffs
drawings. In this case it was held that protection of the drawing does not extend to the unauthorized duplication of the object drawn because
copyright extends only to the description or expression of the object and not to the object itself. It does not prevent one from using the drawings
to construct the object portrayed in the drawing.

In two other cases, Imperial Homes Corp. v. Lamont, 458 F. 2d 895 and Scholtz Homes, Inc. v. Maddox, 379 F. 2d 84, it was held that there is no
copyright infringement when one who, without being authorized, uses a copyrighted architectural plan to construct a structure. This is because the
copyright does not extend to the structures themselves.

In fine, we cannot find SMI liable for infringing Pearl and Deans copyright over the technical drawings of the latters advertising display units.

xxx xxx xxx

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

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

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

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

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

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

xxx xxx xxx

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

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

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

xxx xxx xxx

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

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

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

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

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

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

ISSUES

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

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

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

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

ON THE ISSUE OF COPYRIGHT INFRINGEMENT

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

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

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

xxx xxx xxx

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

xxx xxx xxx

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

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

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

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

During the trial, the president of P & D himself admitted that the light box was neither a literary not an artistic work but an "engineering or
marketing invention."10 Obviously, there appeared to be some confusion regarding what ought or ought not to be the proper subjects of
copyrights, patents and trademarks. In the leading case of Kho vs. Court of Appeals,11 we ruled that these three legal rights are completely distinct
and separate from one another, and the protection afforded by one cannot be used interchangeably to cover items or works that exclusively
pertain to the others:
Trademark, copyright and patents are different intellectual property rights that cannot be interchanged with one another. A trademark is any
visible sign capable of distinguishing the goods (trademark) or services (service mark) of an enterprise and shall include a stamped or marked
container of goods. In relation thereto, a trade name means the name or designation identifying or distinguishing an enterprise. Meanwhile, the
scope of a copyright is confined to literary and artistic works which are original intellectual creations in the literary and artistic domain protected
from the moment of their creation. Patentable inventions, on the other hand, refer to any technical solution of a problem in any field of human
activity which is new, involves an inventive step and is industrially applicable.

ON THE ISSUE OF PATENT INFRINGEMENT

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

For some reason or another, petitioner never secured a patent for the light boxes. It therefore acquired no patent rights which could have
protected its invention, if in fact it really was. And because it had no patent, petitioner could not legally prevent anyone from manufacturing or
commercially using the contraption. In Creser Precision Systems, Inc. vs. Court of Appeals,12 we held that "there can be no infringement of a patent
until a patent has been issued, since whatever right one has to the invention covered by the patent arises alone from the grant of patent. x x x (A)n
inventor has no common law right to a monopoly of his invention. He has the right to make use of and vend his invention, but if he voluntarily
discloses it, such as by offering it for sale, the world is free to copy and use it with impunity. A patent, however, gives the inventor the right to
exclude all others. As a patentee, he has the exclusive right of making, selling or using the invention. 13 On the assumption that petitioners
advertising units were patentable inventions, petitioner revealed them fully to the public by submitting the engineering drawings thereof to the
National Library.

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

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

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

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

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

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

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

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

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

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

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

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

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

xxx

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

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

ON THE ISSUE OF TRADEMARK INFRINGEMENT

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

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

Assuming arguendo that "Poster Ads" could validly qualify as a trademark, the failure of P & D to secure a trademark registration for specific use on
the light boxes meant that there could not have been any trademark infringement since registration was an essential element thereof.1wphi1

ON THE ISSUE OF UNFAIR COMPETITION

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

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

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

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

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

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

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

SO ORDERED.
G.R. No. 174379 | August 31, 2016

E.I DUPONT DE NEMOURS AND CO., (assignee of inventors Carino, Duncia and Wong), Petitioner vs. DIRECTOR EMMA C. FRANCISCO (in ger
capacity as DIRECTOR GENERAL OF THE INTELLECTUAL PROPERTY OFFICE), DIRECTOR EPIFANIO M. VELASCO (in his capacity as the DIRECTOR OF
THE BUREAU OF PATENTS, and THERAPHARMA, INC., Respondents

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 Certiorari 1 assailing the Court of Appeals Amended Decision2 dated August 30, 2006, which denied the
revival of Philippine Patent Application No. 35526, and the Court of Appeals Resolution 3dated January 31, 2006, which granted the intervention of
Therapharma, Inc. in the revival proceedings.

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

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

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

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

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

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

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

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

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

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

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

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

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

In view of the foregoing considerations, applicants' petition to revive the subject application is hereby denied. SO ORDERED.23

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

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

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

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

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

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

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

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

On August 30,. 2006, the Court of Appeals resolved both Motions for Reconsideration and rendered the Amended Decision 39 reversing its August
31, 2004 Decision.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

(8) Petition for Revival dated January 30, 2002 with attached Power of Attorney and Appointment of Resident Agent; 95
(9) Resolution dated July 24, 2002 by Director of the Bureau of Patents;96 and

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

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

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

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

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

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

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

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.

In this case, respondent Therapharma, Inc. filed its Motion for Leave to Intervene 109 before the Court of Appeals, not before the Intellectual
Property Office. In assessing whether to grant the intervention, the Court of Appeals considered respondent Therapharma, Inc.' s legal interest in
the case and its other options for the protection of its interests. 110 This was within the discretion of the Court of Appeals under the Rules of Court.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The Intellectual Property Code, however, changed numerous aspects of the old patent law. The Intellectual Property Code was enacted not only to
amend certain provisions of existing laws on trademark, patent, and copyright, but also to honor the country's commitments under the World
Trade Organization - Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement), a treaty that entered force in the
Philippines on January 1, 1995.122
The mandatory disclosure requirement in the TRIPS Agreement123 precipitated the shift from a first-to-invent system to a first-to-file system. The
first-to-file system required citizens of foreign countries to register their patents in the Philippines before they can sue for infringement. 124

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

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

MR. TANADA. Under the proposed measure, Your Honor, what is the period of protection that is given to the holder of the patent registered?

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

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

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

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

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

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

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

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

MR. MONFORT. Now, another question is, (another is) you know, the time from the filing of the date up to publication which is the period of
pendency or confidentiality, may I know how many years will it take, that confidentiality period, variability.

MR. GONZALES. Eighteen months, Mr. Speaker.

MR. MONFORT. How many?

MR. GONZALES. Eighteen months.

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

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

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

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

SECTION 44. Publication of Patent Application. -

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

44.2. After publication of a patent application, any interested party may inspect the application documents filed with the Office.

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

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

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

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

Petitioner argues that it was not negligent in the prosecution of its patent application133 since it was Atty. Mapili or his heirs who failed to inform it
of crucial developments with regard to its patent application. 134 It argues that as a client in a foreign country, it does not have immediate
supervision over its local counsel so it should not be bound by its counsel's negligence. 135 In any case, it complied with all the requirements for the
revival of an abandoned application under Rule 113 of the 1962 Revised Rules of Practice. 136

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

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

Chapter VII | TIME FOR RESPONSE BY APPLICANT; ABANDONMENT OF APPLICATION

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

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

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

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

SECTION 133. Examination and Publication. . . . .

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

Rule 930 of the Rules and Regulations on Inventions provides:

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

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

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

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

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

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

(a) A showing of a justifiable reason for the failure to prosecute; (b) A complete proposed response; and (c) Full payment of the required fee.

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

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

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

Petitioners patent application, therefore, should not be revived since it was filed beyond the allowable period.
V. Even assuming that the four (4)-month period could be extended, petitioner was inexcussably negligent in the prosecution of its patent
application.

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

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

Petitioner tries to disown Atty. Mapili 's conduct by arguing that it was not informed of the abandonment of its patent application or of Atty.
Mapili's death. By its own evidence, however, petitioner requested a status update from Atty. Mapili only on July 18, 1995, eight (8) years after the
filing of its application. 144 It alleged that it only found out about Atty. Mapili 's death sometime in March 1996, as a result of its senior patent
attorney's visit to the Philippines. 145Although 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. Mapilis 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. 1 52 The law firm filed petitions for revival of its patent
applications from March 1988, all of which were denied by the Director of the Bureau of Patents for being filed out of time. 153 An appeal was
subsequently filed before the Court of Appeals but was dismissed for being filed beyond the reglementary period. 154

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

Facts show that the patent attorneys appointed to follow up the applications for patent registration had been negligent in complying with the rules
of practice prescribed by the Bureau of Patents.1wphi1 The firm had been notified about the abandonment as early as June 1987, but it was only
after December 7, 1987, when their employees Bangkas and Rosas had been dismissed, that they came to know about it. This clearly showed that
petitioners' counsel had been remiss in the handling of their clients' applications.

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

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

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

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

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

Respondent Therapharma, Inc., on the other hand, argues that a mere patent application does not vest any right in the applicant before the
issuance of the patent.160 It argues that the "priority date" argued by petitioner is only relevant in determining who has a better right to the patent
among the other applicants who subsequently apply for the same invention. 161
Under Section 31 of the Intellectual Property Code, a right of priority is given to any patent applicant who has previously applied for a patent in a
country that grants the same privilege to Filipinos. Section 31 states:

SECTION 31. Right of Priority. - An application for patent filed by any person who has previously applied for the same invention in another country
which by treaty, convention, or law affords similar privileges to Filipino citizens, shall be considered as filed as of the date of filing the foreign
application: Provided, That:

a. the local application expressly claims priority;

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

c. a certified copy of the foreign application together with an English translation is filed within six (6) months from the date of filing in the
Philippines.

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

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

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

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

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

Under American jurisprudence, an inventor has no common-law right to a monopoly of his invention. He has the right to make, use and vend his
own invention, but if he voluntarily discloses it, such as by offering it for sale, the world is free to copy and use it with impunity. A patent, however,
gives the inventor the right to exclude all others. As a patentee, he has the exclusive right of making, using or selling the invention. 168

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

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

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

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

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

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

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

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

In addition, a patent holder of inventions relating to food or medicine does not enjoy absolute monopoly over the patent. Both Republic Act No.
165 and the Intellectual Property Code provide for compulsory licensing. Compulsory licensing is defined in the Intellectual Property Code as the
"grant a license to exploit a patented invention, even without the agreement of the patent owner." 175
Under Republic Act No. 165, a compulsory license may be granted to any applicant three (3) years after the grant of a patent if the invention relates
to food or medicine necessary for public health or safety. 176 In Smith Kline & French Laboratories, Ltd. vs. Court of Appeals: 177

Section 34 of R.A. No. 165, even if the Act was enacted prior to the Philippines' adhesion to the [Paris] Convention, fits well within the aforequoted
provisions of Article 5 of the Paris Convention. In the explanatory note of Bill No. 1156 which eventually became R.A. No. 165, the legislative intent
in the grant of a compulsory license was not only to afford others an opportunity to provide the public with the quantity of the patented product,
but also to prevent the growth of monopolies. Certainly, the growth of monopolies was among the abuses which Section A, Article 5 of the
Convention foresaw, and which our Congress likewise wished to prevent in enacting R.A. No. 165. 178

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

The right to exclude others from the manufacturing, using or vending an invention relating to food or medicine should be conditioned to allowing
any person to manufacture, use or vend the same after a period of three years from the date of the grant of the letters patent. After all, the
patentee is not entirely deprived of any proprietary right. In fact, he has been given the period of three years of complete monopoly over the
patent. Compulsory licensing of a patent on food or medicine without regard to the other conditions imposed in Section 34 is not an undue
deprivation of proprietary interests over a patent right because the law sees to it that even after three years of complete monopoly something is
awarded to the inventor in the form of a bilateral and workable licensing agreement and a reasonable royalty to be agreed upon by the parties and
in default of such agreement, the Director of Patent may fix the terms and conditions of the license.179

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

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

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

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

BRAND TRADER RETAIL PRICE RETAIL PRICE Within one

As of Lifezar's first entry month from Lifezar's entry
into the market on June 4, or by July 4, 2004
2004

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

COZAAR Merck 50 mg - P39.50 50 mg - P39.50

100 mg - 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.1awp++i1Even 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.