Republic of the Philippines

SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 179127 December 24, 2008
IN-N-OUT BURGER, INC., petitioner,
vs.
SEHWANI, INCORPORATED AND/OR BENITAS FRITES,
INC., respondents.
D E C I S I O N
CHICO-NAZARIO, J.:
This is a Petition for Review on Certiorari under Rule 45 of the Rules of
Court, seeking to reverse the Decision
1
dated 18 July 2006 rendered by
the Court of Appeals in CA-G.R. SP No. 92785, which reversed the
Decision
2
dated 23 December 2005 of the Director General of the
Intellectual Property Office (IPO) in Appeal No. 10-05-01. The Court of
Appeals, in its assailed Decision, decreed that the IPO Director of Legal
Affairs and the IPO Director General do not have jurisdiction over
cases involving unfair competition.
Petitioner IN-N-OUT BURGER, INC., a business entity incorporated
under the laws of California, United States (US) of America, which is a
signatory to the Convention of Paris on Protection of Industrial
Property and the Agreement on Trade Related Aspects of Intellectual
Property Rights (TRIPS). Petitioner is engaged mainly in the restaurant
business, but it has never engaged in business in the Philippines.
3

Respondents Sehwani, Incorporated and Benita Frites, Inc. are
corporations organized in the Philippines.
4

On 2 June 1997, petitioner filed trademark and service mark
applications with the Bureau of Trademarks (BOT) of the IPO for "IN-
N-OUT" and "IN-N-OUT Burger & Arrow Design." Petitioner later found
out, through the Official Action Papers issued by the IPO on 31 May
2000, that respondent Sehwani, Incorporated had already obtained
Trademark Registration for the mark "IN N OUT (the inside of the
letter "O" formed like a star)."
5
By virtue of a licensing agreement,
Benita Frites, Inc. was able to use the registered mark of respondent
Sehwani, Incorporated.
Petitioner eventually filed on 4 June 2001 before the Bureau of Legal
Affairs (BLA) of the IPO an administrative complaint against
respondents for unfair competition and cancellation of trademark
registration. Petitioner averred in its complaint that it is the owner of
the trade name IN-N-OUT and the following trademarks: (1) "IN-N-
OUT"; (2) "IN-N-OUT Burger & Arrow Design"; and (3) "IN-N-OUT
Burger Logo." These trademarks are registered with the Trademark
Office of the US and in various parts of the world, are internationally
well-known, and have become distinctive of its business and goods
through its long and exclusive commercial use.
6
Petitioner pointed out
that its internationally well-known trademarks and the mark of the
respondents are all registered for the restaurant business and are
clearly identical and confusingly similar. Petitioner claimed that
respondents are making it appear that their goods and services are
those of the petitioner, thus, misleading ordinary and unsuspecting
consumers that they are purchasing petitioners products.
7

Following the filing of its complaint, petitioner sent on 18 October 2000
a demand letter directing respondent Sehwani, Incorporated to cease
and desist from claiming ownership of the mark "IN-N-OUT" and to
voluntarily cancel its trademark registration. In a letter-reply dated 23
October 2000, respondents refused to accede to petitioner demand,
but expressed willingness to surrender the registration of respondent
Sehwani, Incorporated of the "IN N OUT" trademark for a fair and
reasonable consideration.
8

Petitioner was able to register the mark "Double Double" on 4 July
2002, based on their application filed on 2 June 1997.
9
It alleged that
respondents also used this mark, as well as the menu color scheme.
Petitioners also averred that respondent Benitas receipts bore the
phrase, "representing IN-N-OUT Burger."
10
It should be noted that that
although respondent Sehwahi, Incorporated registered a mark which
appeared as "IN N OUT (the inside of the letter "O" formed like a
star)," respondents used the mark "IN-N-OUT."
11

To counter petitioners complaint, respondents filed before the BLA-
IPO an Answer with Counterclaim. Respondents asserted therein that
they had been using the mark "IN N OUT" in the Philippines since 15
October 1982. On 15 November 1991, respondent Sehwani,
Incorporated filed with the then Bureau of Patents, Trademarks and
Technology Transfer (BPTTT) an application for the registration of the
mark "IN N OUT (the inside of the letter "O" formed like a star)." Upon
approval of its application, a certificate of registration of the said mark
was issued in the name of respondent Sehwani, Incorporated on 17
December 1993. On 30 August 2000, respondents Sehwani,
Incorporated and Benita Frites, Inc. entered into a Licensing
Agreement, wherein the former entitled the latter to use its registered
mark, "IN N OUT." Respondents asserted that respondent Sehwani,
Incorporated, being the registered owner of the mark "IN N OUT,"
should be accorded the presumption of a valid registration of its mark
with the exclusive right to use the same. Respondents argued that
none of the grounds provided under the Intellectual Property Code for
the cancellation of a certificate of registration are present in this case.
Additionally, respondents maintained that petitioner had no legal
capacity to sue as it had never operated in the Philippines.
12

Subsequently, the IPO Director of Legal Affairs, Estrellita Beltran-
Abelardo, rendered a Decision dated 22 December 2003,
13
in favor of
petitioner. According to said Decision, petitioner had the legal capacity
to sue in the Philippines, since its country of origin or domicile was a
member of and a signatory to the Convention of Paris on Protection of
Industrial Property. And although petitioner had never done business
in the Philippines, it was widely known in this country through the use
herein of products bearing its corporate and trade name. Petitioners
marks are internationally well-known, given the world-wide registration
of the mark "IN-N-OUT," and its numerous advertisements in various
publications and in the Internet. Moreover, the IPO had already
declared in a previous inter partes case that "In-N-Out Burger and
Arrow Design" was an internationally well-known mark. Given these
circumstances, the IPO Director for Legal Affairs pronounced in her
Decision that petitioner had the right to use its tradename and mark
"IN-N-OUT" in the Philippines to the exclusion of others, including the
respondents. However, respondents used the mark "IN N OUT" in
good faith and were not guilty of unfair competition, since respondent
Sehwani, Incorporated did not evince any intent to ride upon
petitioners goodwill by copying the mark "IN-N-OUT Burger" exactly.
The inside of the letter "O" in the mark used by respondents formed a
star. In addition, the simple act of respondent Sehwani, Incorporated
of inquiring into the existence of a pending application for registration
of the "IN-N-OUT" mark was not deemed fraudulent. The dispositive
part of the Decision of the IPO Director for Legal Affairs reads:
With the foregoing disquisition, Certificate of Registration
No. 56666 dated 17 December 1993 for the mark "IN-N-
OUT" (the inside of the letter "O" formed like a star) issued
in favor of Sehwani, Incorporated is hereby CANCELLED.
Consequently, respondents Sehwani, Inc. and Benitas Frites
are hereby ordered to permanently cease and desist from
using the mark "IN-N-OUT" and "IN-N-OUT BURGER LOGO"
on its goods and in its business. With regards the mark
"Double-Double," considering that as earlier discussed, the
mark has been approved by this Office for publication and
that as shown by evidence, Complainant is the owner of the
said mark, Respondents are so hereby ordered to
permanently cease and desist from using the mark Double-
Double. NO COSTS.
14

Both parties filed their respective Motions for Reconsideration of the
aforementioned Decision. Respondents Motion for
Reconsideration
15
and petitioners Motion for Partial
Reconsideration
16
were denied by the IPO Director for Legal Affairs in
Resolution No. 2004-18
17
dated 28 October 2004 and Resolution No.
2005-05 dated 25 April 2005,
18
respectively.
Subsequent events would give rise to two cases before this Court, G.R.
No. 171053 and G.R. No. 179127, the case at bar.
G.R. No. 171053
On 29 October 2004, respondents received a copy of Resolution No.
2004-18 dated 28 October 2004 denying their Motion for
Reconsideration. Thus, on 18 November 2004, respondents filed an
Appeal Memorandum with IPO Director General Emma Francisco
(Director General Francisco). However, in an Order dated 7 December
2004, the appeal was dismissed by the IPO Director General for being
filed beyond the 15-day reglementary period to appeal.
Respondents appealed to the Court of Appeals via a Petition for
Review under Rule 43 of the Rules of Court, filed on 20 December
2004 and docketed as CA-G.R. SP No. 88004, challenging the
dismissal of their appeal by the IPO Director General, which effectively
affirmed the Decision dated 22 December 2003 of the IPO Director for
Legal Affairs ordering the cancellation of the registration of the
disputed trademark in the name of respondent Sehwani, Incorporated
and enjoining respondents from using the same. In particular,
respondents based their Petition on the following grounds:
THE IPO DIRECTOR GENERAL COMMITTED GRAVE ERROR
IN DISMISSING APPEAL NO. 14-2004-00004 ON A MERE
TECHNICALITY
THE BUREAU OF LEGAL AFFAIRS (SIC) DECISION AND
RESOLUTION (1) CANCELLING RESPONDENTS
CERTIFICATE OF REGISTRATION FOR THE MARK "IN-N-
OUT," AND (2) ORDERING PETITIONERS TO PERMANENTLY
CEASE AND DESIST FROM USING THE SUBJECT MARK ON
ITS GOODS AND BUSINESS ARE CONTRARY TO LAW
AND/OR IS NOT SUPPORTED BY EVIDENCE.
Respondents thus prayed:
WHEREFORE, petitioners respectfully pray that this
Honorable Court give due course to this petition, and
thereafter order the Office of the Director General of the
Intellectual Property Office to reinstate and give due course
to [respondent]s Appeal No. 14-2004-00004.
Other reliefs, just and equitable under the premises, are
likewise prayed for.
On 21 October 2005, the Court of Appeals rendered a Decision
denying respondents Petition in CA-G.R SP No. 88004 and affirming
the Order dated 7 December 2004 of the IPO Director General. The
appellate court confirmed that respondents appeal before the IPO
Director General was filed out of time and that it was only proper to
cancel the registration of the disputed trademark in the name of
respondent Sehwani, Incorporated and to permanently enjoin
respondents from using the same. Effectively, the 22 December 2003
Decision of IPO Director of Legal Affairs was likewise affirmed. On 10
November 2005, respondents moved for the reconsideration of the
said Decision. On 16 January 2006, the Court of Appeals denied their
motion for reconsideration.
Dismayed with the outcome of their petition before the Court of
Appeals, respondents raised the matter to the Supreme Court in a
Petition for Review under Rule 45 of the Rules of Court, filed on 30
January 2006, bearing the title Sehwani, Incorporated v. In-N-Out
Burger and docketed as G.R. No. 171053.
19

This Court promulgated a Decision in G.R. No. 171053 on 15 October
2007,
20
finding that herein respondents failed to file their Appeal
Memorandum before the IPO Director General within the period
prescribed by law and, consequently, they lost their right to appeal.
The Court further affirmed the Decision dated 22 December 2003 of
the IPO Director of Legal Affairs holding that herein petitioner had the
legal capacity to sue for the protection of its trademarks, even though
it was not doing business in the Philippines, and ordering the
cancellation of the registration obtained by herein respondent
Sehwani, Incorporated of the internationally well-known marks of
petitioner, and directing respondents to stop using the said marks.
Respondents filed a Motion for Reconsideration of the Decision of this
Court in G.R. No. 171053, but it was denied with finality in a
Resolution dated 21 January 2008.
G.R. No. 179127
Upon the denial of its Partial Motion for Reconsideration of the
Decision dated 22 December 2003 of the IPO Director for Legal Affairs,
petitioner was able to file a timely appeal before the IPO Director
General on 27 May 2005.
During the pendency of petitioners appeal before the IPO Director
General, the Court of Appeals already rendered on 21 October 2005 its
Decision dismissing respondents Petition in CA-G.R. SP No. 88004.
In a Decision dated 23 December 2005, IPO Director General Adrian
Cristobal, Jr. found petitioners appeal meritorious and modified the
Decision dated 22 December 2003 of the IPO Director of Legal Affairs.
The IPO Director General declared that respondents were guilty of
unfair competition. Despite respondents claims that they had been
using the mark since 1982, they only started constructing their
restaurant sometime in 2000, after petitioner had already demanded
that they desist from claiming ownership of the mark "IN-N-OUT."
Moreover, the sole distinction of the mark registered in the name of
respondent Sehwani, Incorporated, from those of the petitioner was
the star inside the letter "O," a minor difference which still deceived
purchasers. Respondents were not even actually using the star in their
mark because it was allegedly difficult to print. The IPO Director
General expressed his disbelief over the respondents reasoning for the
non-use of the star symbol. The IPO Director General also considered
respondents use of petitioners registered mark "Double-Double" as a
sign of bad faith and an intent to mislead the public. Thus, the IPO
Director General ruled that petitioner was entitled to an award for the
actual damages it suffered by reason of respondents acts of unfair
competition, exemplary damages, and attorneys fees.
21
The fallo of
the Decision reads:
WHEREFORE, premises considered, the [herein
respondents] are held guilty of unfair competition.
Accordingly, Decision No. 2003-02 dated 22 December 2003
is hereby MODIFIED as follows:
[Herein Respondents] are hereby ordered to jointly and
severally pay [herein petitioner]:
1. Damages in the amount of TWO HUNDRED TWELVE
THOUSAND FIVE HUNDRED SEVENTY FOUR AND
28/100(P212,574.28);
2. Exemplary damages in the amount of FIVE HUNDRED
THOUSAND PESOS (P500,000.00);
3. Attorneys fees and expenses of litigation in the amount
of FIVE HUNDRED THOUSAND PESOS (P500,000.00).
All products of [herein respondents] including the labels,
signs, prints, packages, wrappers, receptacles and materials
used by them in committing unfair competition should be
without compensation of any sort be seized and disposed of
outside the channels of commerce.
Let a copy of this Decision be furnished the Director of
Bureau of Legal Affairs for appropriate action, and the
records be returned to her for proper disposition. Further, let
a copy of this Decision be furnished the Documentation,
Information and Technology Transfer Bureau for their
information and records purposes.
22

Aggrieved, respondents were thus constrained to file on 11 January
2006 before the Court of Appeals another Petition for Review under
Rule 43 of the Rules of Court, docketed as CA-G.R. SP No. 92785.
Respondents based their second Petition before the appellate court on
the following grounds:
THE IPO DIRECTOR GENERAL COMMITTED GRAVE ERROR
IN HOLDING PETITIONERS LIABLE FOR UNFAIR
COMPETITION AND IN ORDERING THEM TO PAY DAMAGES
AND ATTORNEYS FEES TO RESPONDENTS
THE IPO DIRECTOR GENERAL COMMITTED GRAVE ERROR
IN AFFIRMING THE BUREAU OF LEGAL AFFAIRS DECISION
(1) CANCELLING PETITIONERS CERTIFICATE OF
REGISTRATION FOR THE MARK "IN-N-OUT," AND (2)
ORDERING PETITIONERS TO PERMANENTLY CEASE AND
DESIST FROM USING THE SUBJECT MARK ON ITS GOODS
AND BUSINESS
Respondents assailed before the appellate court the foregoing 23
December 2005 Decision of the IPO Director General, alleging that
their use of the disputed mark was not tainted with fraudulent intent;
hence, they should not be held liable for damages. They argued that
petitioner had never entered into any transaction involving its goods
and services in the Philippines and, therefore, could not claim that its
goods and services had already been identified in the mind of the
public. Respondents added that the disputed mark was not well-
known. Finally, they maintained that petitioners complaint was already
barred by laches.
23

At the end of their Petition in CA-G.R. SP No. 92785, respondents
presented the following prayer:
WHEREFORE, [respondents herein] respectfully pray that
this Honorable Court:
(a) upon the filing of this petition, issue a temporary
restraining order enjoining the IPO and [petitioner], their
agents, successors and assigns, from executing, enforcing
and implementing the IPO Director Generals Decision dated
23 December 2005, which modified the Decision No. 2003-
02 dated 22 December 2003 of the BLA, until further orders
from this Honorable Court.
(b) after notice and hearing, enjoin the IPO and [petitioner],
their agents, successors and assigns, from executing,
enforcing and implementing the Decision dated 23
December 2005 of the Director General of the IPO in IPV No.
10-2001-00004 and to maintain the status quo ante pending
the resolution of the merits of this petition; and
(c) after giving due course to this petition:
(i) reverse and set aside the Decision dated 23
December 2005 of the Director General of the IPO
in IPV No. 10-2001-00004 finding the
[respondents] guilty of unfair competition and
awarding damages and attorneys fees to the
respondent
(ii) in lieu thereof, affirm Decision No. 2003-02 of
the BLA dated 22 December 2003 and Resolution
No. 2005-05 of the BLA dated 25 April 2005,
insofar as it finds [respondents] not guilty of
unfair competition and hence not liable to the
[petitioner] for damages and attorneys fees;
(iii) reverse Decision No. 2003-02 of the BLA dated
22 December 2003, and Resolution No. 2005-05 of
the BLA dated 25 April 2005, insofar as it upheld
[petitioner]s legal capacity to sue; that
[petitioner]s trademarks are well-known; and that
respondent has the exclusive right to use the
same; and
(iv) make the injunction permanent.
[Respondents] also pray for other reliefs, as may deemed
just or equitable.
24

On 18 July 2006, the Court of Appeals promulgated a Decision
25
in CA-
G.R. SP No. 92785 reversing the Decision dated 23 December 2005 of
the IPO Director General.
The Court of Appeals, in its Decision, initially addressed petitioners
assertion that respondents had committed forum shopping by the
institution of CA-G.R. SP No. 88004 and CA-G.R. SP No. 92785. It ruled
that respondents were not guilty of forum shopping, distinguishing
between the respondents two Petitions. The subject of Respondents
Petition in CA-G.R SP No. 88004 was the 7 December 2004 Decision of
the IPO Director General dismissing respondents appeal of the 22
December 2003 Decision of the IPO Director of Legal Affairs.
Respondents questioned therein the cancellation of the trademark
registration of respondent Sehwani, Incorporated and the order
permanently enjoining respondents from using the disputed
trademark. Respondents Petition in CA-G.R. SP No. 92785 sought the
review of the 23 December 2005 Decision of the IPO Director General
partially modifying the 22 December 2003 Decision of the IPO Director
of Legal Affairs. Respondents raised different issues in their second
petition before the appellate court, mainly concerning the finding of
the IPO Director General that respondents were guilty of unfair
competition and the awarding of actual and exemplary damages, as
well as attorneys fees, to petitioner.
The Court of Appeals then proceeded to resolve CA-G.R. SP No. 92785
on jurisdictional grounds not raised by the parties. The appellate court
declared that Section 163 of the Intellectual Property Code specifically
confers upon the regular courts, and not the BLA-IPO, sole jurisdiction
to hear and decide cases involving provisions of the Intellectual
Property Code, particularly trademarks. Consequently, the IPO Director
General had no jurisdiction to rule in its Decision dated 23 December
2005 on supposed violations of these provisions of the Intellectual
Property Code.
In the end, the Court of Appeals decreed:
WHEREFORE, the Petition is GRANTED. The Decision
dated 23 December 2005 rendered by the Director General
of the Intellectual Property Office of the Philippines in Appeal
No. 10-05-01 is REVERSED and SET ASIDE. Insofar as
they pertain to acts governed by Article 168 of R.A. 8293
and other sections enumerated in Section 163 of the same
Code, respondents claims in its Complaint docketed as IPV
No. 10-2001-00004 are hereby DISMISSED.
26

The Court of Appeals, in a Resolution dated 31 July 2007,
27
denied
petitioners Motion for Reconsideration of its aforementioned Decision.
Hence, the present Petition, where petitioner raises the following
issues:
I
WHETHER OR NOT THE COURT OF APPEALS ERRED IN
ISSUING THE QUESTIONED DECISIONDATED 18 JULY 2006
AND RESOLUTION DATED 31 JULY 2007 DECLARING THAT
THE IPO HAS NO JURISDICTION OVER ADMINISTRATIVE
COMPLAINTS FOR INTELLECTUAL PROPERTY RIGHTS
VIOLATIONS;
II
WHETHER OR NOT THE INSTANT PETITION IS FORMALLY
DEFECTIVE; AND
III
WHETHER OR NOT THE COURT OF APPEALS ERRED IN
ISSUING THE QUESTIONED DECISIONDATED 18 JULY 2006
AND RESOLUTION DATED 31 JULY 2007 DECLARING THAT
SEHWANI AND BENITA ARE NOT GUILTY OF: (A)
SUBMITTING A PATENTLY FALSE CERTIFICATION OF NON-
FORUM SHOPPING; AND (B) FORUM SHOPPING PROPER.
28

As previously narrated herein, on 15 October 2007, during the
pendency of the present Petition, this Court already promulgated its
Decision
29
in G.R. No. 171053 on 15 October 2007, which affirmed the
IPO Director Generals dismissal of respondents appeal for being filed
beyond the reglementary period, and left the 22 December 2003
Decision of the IPO Director for Legal Affairs, canceling the trademark
registration of respondent Sehwani, Incorporated and enjoining
respondents from using the disputed marks.
Before discussing the merits of this case, this Court must first rule on
the procedural flaws that each party has attributed to the other.
Formal Defects of the Petition
Respondents contend that the Verification/Certification executed by
Atty. Edmund Jason Barranda of Villaraza and Angangco, which
petitioner attached to the present Petition, is defective and should
result in the dismissal of the said Petition.
Respondents point out that the Secretarys Certificate executed by
Arnold M. Wensinger on 20 August 2007, stating that petitioner had
authorized the lawyers of Villaraza and Angangco to represent it in the
present Petition and to sign the Verification and Certification against
Forum Shopping, among other acts, was not properly notarized. The
jurat of the aforementioned Secretarys Certificate reads:
Subscribed and sworn to me this 20
th
day of August 2007 in
Irving California.
Rachel A. Blake (Sgd.)
Notary Public
30

Respondents aver that the said Secretarys Certificate cannot properly
authorize Atty. Barranda to sign the Verification/Certification on behalf
of petitioner because the notary public Rachel A. Blake failed to state
that: (1) petitioners Corporate Secretary, Mr. Wensinger, was known
to her; (2) he was the same person who acknowledged the
instrument; and (3) he acknowledged the same to be his free act and
deed, as required under Section 2 of Act No. 2103 and Landingin v.
Republic of the Philippines.
31

Respondents likewise impugn the validity of the notarial certificate of
Atty. Aldrich Fitz B. Uy, on Atty. Barandas Verification/Certification
attached to the instant Petition, noting the absence of (1) the serial
number of the commission of the notary public; (2) the office address
of the notary public; (3) the roll of attorneys number and the IBP
membership number; and (4) a statement that the
Verification/Certification was notarized within the notary publics
territorial jurisdiction, as required under the 2004 Rules on Notarial
Practice.
32

Section 2 of Act No. 2103 and Landingin v. Republic of the
Philippines are not applicable to the present case. The requirements
enumerated therein refer to documents which require an
acknowledgement, and not a mere jurat.
A jurat is that part of an affidavit in which the notary certifies that
before him/her, the document was subscribed and sworn to by the
executor. Ordinarily, the language of the jurat should avow that the
document was subscribed and sworn to before the notary public. In
contrast, an acknowledgment is the act of one who has executed a
deed in going before some competent officer or court and declaring it
to be his act or deed. It involves an extra step undertaken whereby
the signor actually declares to the notary that the executor of a
document has attested to the notary that the same is his/her own free
act and deed.
33
A Secretarys Certificate, as that executed by petitioner
in favor of the lawyers of the Angangco and Villaraza law office, only
requires a jurat.
34

Even assuming that the Secretarys Certificate was flawed, Atty.
Barranda may still sign the Verification attached to the Petition at bar.
A pleading is verified by an affidavit that the affiant has read the
pleading and that the allegations therein are true and correct of his
personal knowledge or based on authentic records.
35
The party itself
need not sign the verification. A partys representative, lawyer or any
other person who personally knows the truth of the facts alleged in the
pleading may sign the verification.
36
Atty. Barranda, as petitioners
counsel, was in the position to verify the truth and correctness of the
allegations of the present Petition. Hence, the Verification signed by
Atty. Barranda substantially complies with the formal requirements for
such.
Moreover, the Court deems it proper not to focus on the supposed
technical infirmities of Atty. Barandas Verification. It must be borne in
mind that the purpose of requiring a verification is to secure an
assurance that the allegations of the petition has been made in good
faith; or are true and correct, not merely speculative. This requirement
is simply a condition affecting the form of pleadings, and non-
compliance therewith does not necessarily render it fatally defective.
Indeed, verification is only a formal, not a jurisdictional requirement.
In the interest of substantial justice, strict observance of procedural
rules may be dispensed with for compelling reasons.
37
The vital issues
raised in the instant Petition on the jurisdiction of the IPO Director for
Legal Affairs and the IPO Director General over trademark cases justify
the liberal application of the rules, so that the Court may give the said
Petition due course and resolve the same on the merits.
This Court agrees, nevertheless, that the notaries public, Rachel A.
Blake and Aldrich Fitz B. Uy, were less than careful with their jurats or
notarial certificates. Parties and their counsel should take care not to
abuse the Courts zeal to resolve cases on their merits. Notaries public
in the Philippines are reminded to exert utmost care and effort in
complying with the 2004 Rules on Notarial Practice. Parties and their
counsel are further charged with the responsibility of ensuring that
documents notarized abroad be in their proper form before presenting
said documents before Philippine courts.
Forum Shopping
Petitioner next avers that respondents are guilty of forum shopping in
filing the Petition in CA-G.R. SP No. 92785, following their earlier filing
of the Petition in CA-G.R SP No. 88004. Petitioner also asserts that
respondents were guilty of submitting to the Court of Appeals a
patently false Certification of Non-forum Shopping in CA-G.R. SP No.
92785, when they failed to mention therein the pendency of CA-G.R SP
No. 88004.
Forum shopping is the institution of two or more actions or
proceedings grounded on the same cause on the supposition that one
or the other court would make a favorable disposition. It is an act of
malpractice and is prohibited and condemned as trifling with courts
and abusing their processes. In determining whether or not there is
forum shopping, what is important is the vexation caused the courts
and parties-litigants by a party who asks different courts and/or
administrative bodies to rule on the same or related causes and/or
grant the same or substantially the same reliefs and in the process
creates the possibility of conflicting decisions being rendered by the
different bodies upon the same issues.
38

Forum shopping is present when, in two or more cases pending, there
is identity of (1) parties (2) rights or causes of action and reliefs
prayed for, and (3) the identity of the two preceding particulars is such
that any judgment rendered in the other action, will, regardless of
which party is successful, amount to res judicata in the action under
consideration.
39

After a cursory look into the two Petitions in CA-G.R. SP No. 88004 and
CA-G.R. SP No. 92785, it would at first seem that respondents are
guilty of forum shopping.
There is no question that both Petitions involved identical parties, and
raised at least one similar ground for which they sought the same
relief. Among the grounds stated by the respondents for their Petition
in CA-G.R SP No. 88004 was that "[T]he Bureau of Legal Affairs (sic)
Decision and Resolution (1) canceling [herein respondent Sehwani,
Incorporated]s certificate of registration for the mark IN-N-OUT and
(2) ordering [herein respondents] to permanently cease and desist
from using the subject mark on its goods and business are contrary to
law and/or is (sic) not supported by evidence."
40
The same ground was
again invoked by respondents in their Petition in CA-G.R. SP No.
92785, rephrased as follows: "The IPO Director General committed
grave error in affirming the Bureau of Legal Affairs (sic) Decision (1)
canceling [herein respondent Sehwani, Incorporated]s certificate of
registration for the mark "IN-N-OUT," and (2) ordering [herein
respondents] to permanently cease and desist from using the subject
mark on its goods and business."
41
Both Petitions, in effect, seek the
reversal of the 22 December 2003 Decision of the IPO Director of
Legal Affairs. Undoubtedly, a judgment in either one of these Petitions
affirming or reversing the said Decision of the IPO Director of Legal
Affairs based on the merits thereof would bar the Court of Appeals
from making a contrary ruling in the other Petition, under the principle
of res judicata.
Upon a closer scrutiny of the two Petitions, however, the Court takes
notice of one issue which respondents did not raise in CA-G.R. SP No.
88004, but can be found in CA-G.R. SP No. 92785, i.e., whether
respondents are liable for unfair competition. Hence, respondents seek
additional reliefs in CA-G.R. SP No. 92785, seeking the reversal of the
finding of the IPO Director General that they are guilty of unfair
competition, and the nullification of the award of damages in favor of
petitioner resulting from said finding. Undoubtedly, respondents could
not have raised the issue of unfair competition in CA-G.R. SP No.
88004 because at the time they filed their Petition therein on 28
December 2004, the IPO Director General had not yet rendered its
Decision dated 23 December 2005 wherein it ruled that respondents
were guilty thereof and awarded damages to petitioner.
In arguing in their Petition in CA-G.R. SP No. 92785 that they are not
liable for unfair competition, it is only predictable, although not
necessarily legally tenable, for respondents to reassert their right to
register, own, and use the disputed mark. Respondents again raise the
issue of who has the better right to the disputed mark, because their
defense from the award of damages for unfair competition depends on
the resolution of said issue in their favor. While this reasoning may be
legally unsound, this Court cannot readily presume bad faith on the
part of respondents in filing their Petition in CA-G.R. SP No. 92785; or
hold that respondents breached the rule on forum shopping by the
mere filing of the second petition before the Court of Appeals.
True, respondents should have referred to CA-G.R. SP No. 88004 in
the Certification of Non-Forum Shopping, which they attached to their
Petition in CA-G.R. SP No. 92785. Nonetheless, the factual background
of this case and the importance of resolving the jurisdictional and
substantive issues raised herein, justify the relaxation of another
procedural rule. Although the submission of a certificate against forum
shopping is deemed obligatory, it is not jurisdictional.
42
Hence, in this
case in which such a certification was in fact submitted, only it was
defective, the Court may still refuse to dismiss and, instead, give due
course to the Petition in light of attendant exceptional circumstances.
The parties and their counsel, however, are once again warned against
taking procedural rules lightly. It will do them well to remember that
the Courts have taken a stricter stance against the disregard of
procedural rules, especially in connection with the submission of the
certificate against forum shopping, and it will not hesitate to dismiss a
Petition for non-compliance therewith in the absence of justifiable
circumstances.
The Jurisdiction of the IPO
The Court now proceeds to resolve an important issue which arose
from the Court of Appeals Decision dated 18 July 2006 in CA-G.R. SP
No. 92785. In the afore-stated Decision, the Court of Appeals
adjudged that the IPO Director for Legal Affairs and the IPO Director
General had no jurisdiction over the administrative proceedings below
to rule on issue of unfair competition, because Section 163 of the
Intellectual Property Code confers jurisdiction over particular provisions
in the law on trademarks on regular courts exclusively. According to
the said provision:
Section 163. Jurisdiction of Court.All actions under Sections
150, 155, 164, and 166 to 169 shall be brought before the
proper courts with appropriate jurisdiction under existing
laws.
The provisions referred to in Section 163 are: Section 150 on License
Contracts; Section 155 on Remedies on Infringement; Section 164 on
Notice of Filing Suit Given to the Director; Section 166 on Goods
Bearing Infringing Marks or Trade Names; Section 167 on Collective
Marks; Section 168 on Unfair Competition, Rights, Regulation and
Remedies; and Section 169 on False Designations of Origin, False
Description or Representation.
The Court disagrees with the Court of Appeals.
Section 10 of the Intellectual Property Code specifically identifies the
functions of the Bureau of Legal Affairs, thus:
Section 10. The Bureau of Legal Affairs.The Bureau of
Legal Affairs shall have the following functions:
10.1 Hear and decide opposition to the application for
registration of marks; cancellation of trademarks;
subject to the provisions of Section 64, cancellation of
patents and utility models, and industrial designs; and
petitions for compulsory licensing of patents;
10.2 (a) Exercise original jurisdiction in administrative
complaints for violations of laws involving
intellectual property rights; Provided, That its
jurisdiction is limited to complaints where the total
damages claimed are not less than Two hundred
thousand pesos (P200,000): Provided, futher, That
availment of the provisional remedies may be
granted in accordance with the Rules of Court. The
Director of Legal Affairs shall have the power to hold and
punish for contempt all those who disregard orders or writs
issued in the course of the proceedings.
(b) After formal investigation, the Director for Legal Affairs
may impose one (1) or more of the following administrative
penalties:
(i) The issuance of a cease and desist order which
shall specify the acts that the respondent shall
cease and desist from and shall require him to
submit a compliance report within a reasonable
time which shall be fixed in the order;
(ii) The acceptance of a voluntary assurance of
compliance or discontinuance as may be imposed.
Such voluntary assurance may include one or
more of the following:
(1) An assurance to comply with the
provisions of the intellectual property
law violated;
(2) An assurance to refrain from
engaging in unlawful and unfair acts
and practices subject of the formal
investigation
(3) An assurance to recall, replace,
repair, or refund the money value of
defective goods distributed in
commerce; and
(4) An assurance to reimburse the
complainant the expenses and costs
incurred in prosecuting the case in the
Bureau of Legal Affairs.
The Director of Legal Affairs may also
require the respondent to submit
periodic compliance reports and file a
bond to guarantee compliance of his
undertaking.
(iii) The condemnation or seizure of products
which are subject of the offense. The goods seized
hereunder shall be disposed of in such manner as
may be deemed appropriate by the Director of
Legal Affairs, such as by sale, donation to
distressed local governments or to charitable or
relief institutions, exportation, recycling into other
goods, or any combination thereof, under such
guidelines as he may provide;
(iv) The forfeiture of paraphernalia and all real
and personal properties which have been used in
the commission of the offense;
(v) The imposition of administrative fines in such
amount as deemed reasonable by the Director of
Legal Affairs, which shall in no case be less than
Five thousand pesos (P5,000) nor more than One
hundred fifty thousand pesos (P150,000). In
addition, an additional fine of not more than One
thousand pesos (P1,000) shall be imposed for
each day of continuing violation;
(vi) The cancellation of any permit, license,
authority, or registration which may have
been granted by the Office, or the suspension
of the validity thereof for such period of time as
the Director of Legal Affairs may deem reasonable
which shall not exceed one (1) year;
(vii) The withholding of any permit, license,
authority, or registration which is being secured by
the respondent from the Office;
(viii) The assessment of damages;
(ix) Censure; and
(x) Other analogous penalties or sanctions.
10.3 The Director General may by Regulations establish the
procedure to govern the implementation of this
Section.
43
(Emphasis provided.)
Unquestionably, petitioners complaint, which seeks the cancellation of
the disputed mark in the name of respondent Sehwani, Incorporated,
and damages for violation of petitioners intellectual property rights,
falls within the jurisdiction of the IPO Director of Legal Affairs.
The Intellectual Property Code also expressly recognizes the appellate
jurisdiction of the IPO Director General over the decisions of the IPO
Director of Legal Affairs, to wit:
Section 7. The Director General and Deputies Director
General. 7.1 Fuctions.The Director General shall exercise
the following powers and functions:
x x x x
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
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;
The Court of Appeals erroneously reasoned that Section 10(a) of the
Intellectual Property Code, conferring upon the BLA-IPO jurisdiction
over administrative complaints for violations of intellectual property
rights, is a general provision, over which the specific provision of
Section 163 of the same Code, found under Part III thereof particularly
governing trademarks, service marks, and tradenames, must prevail.
Proceeding therefrom, the Court of Appeals incorrectly concluded that
all actions involving trademarks, including charges of unfair
competition, are under the exclusive jurisdiction of civil courts.
Such interpretation is not supported by the provisions of the
Intellectual Property Code. While Section 163 thereof vests in civil
courts jurisdiction over cases of unfair competition, nothing in the said
section states that the regular courts have sole jurisdiction over unfair
competition cases, to the exclusion of administrative bodies. On the
contrary, Sections 160 and 170, which are also found under Part III of
the Intellectual Property Code, recognize the concurrent jurisdiction of
civil courts and the IPO over unfair competition cases. These two
provisions read:
Section 160. Right of Foreign Corporation to Sue in
Trademark or Service Mark Enforcement Action.Any foreign
national or juridical person who meets the requirements of
Section 3 of this Act and does not engage in business in the
Philippines may bring a civil or administrative
action hereunder for opposition, cancellation, infringement,
unfair competition, or false designation of origin and false
description, whether or not it is licensed to do business in
the Philippines under existing laws.
x x x x
Section 170. Penalties.Independent of the civil
and administrative sanctions imposed by law, a criminal
penalty of imprisonment from two (2) years to five (5) years
and a fine ranging from Fifty thousand pesos (P50,000) to
Two hundred thousand pesos (P200,000), shall be imposed
on any person who is found guilty of committing any of the
acts mentioned in Section 155, Section168, and
Subsection169.1.
Based on the foregoing discussion, the IPO Director of Legal Affairs
had jurisdiction to decide the petitioners administrative case against
respondents and the IPO Director General had exclusive jurisdiction
over the appeal of the judgment of the IPO Director of Legal Affairs.
Unfair Competition
The Court will no longer touch on the issue of the validity or propriety
of the 22 December 2003 Decision of the IPO Director of Legal Affairs
which: (1) directed the cancellation of the certificate of registration of
respondent Sehwani, Incorporated for the mark "IN-N-OUT" and (2)
ordered respondents to permanently cease and desist from using the
disputed mark on its goods and business. Such an issue has already
been settled by this Court in its final and executory Decision dated 15
October 2007 in G.R. No. 171053, Sehwani, Incorporated v. In-N-Out
Burger,
44
ultimately affirming the foregoing judgment of the IPO
Director of Legal Affairs. That petitioner has the superior right to own
and use the "IN-N-OUT" trademarks vis--vis respondents is a finding
which this Court may no longer disturb under the doctrine of
conclusiveness of judgment. In conclusiveness of judgment, any right,
fact, or matter in issue directly adjudicated or necessarily involved in
the determination of an action before a competent court in which
judgment is rendered on the merits is conclusively settled by the
judgment therein and cannot again be litigated between the parties
and their privies whether or not the claims, demands, purposes, or
subject matters of the two actions are the same.
45

Thus, the only remaining issue for this Court to resolve is whether the
IPO Director General correctly found respondents guilty of unfair
competition for which he awarded damages to petitioner.
The essential elements of an action for unfair competition are (1)
confusing similarity in the general appearance of the goods and (2)
intent to deceive the public and defraud a competitor. The confusing
similarity may or may not result from similarity in the marks, but may
result from other external factors in the packaging or presentation of
the goods. The intent to deceive and defraud may be inferred from the
similarity of the appearance of the goods as offered for sale to the
public. Actual fraudulent intent need not be shown.
46

In his Decision dated 23 December 2005, the IPO Director General
ably explains the basis for his finding of the existence of unfair
competition in this case, viz:
The evidence on record shows that the [herein respondents]
were not using their registered trademark but that of the
[petitioner]. [Respondent] SEHWANI, INC. was issued a
Certificate of Registration for IN N OUT (with the Inside of
the Letter "O" Formed like a Star) for restaurant business in
1993. The restaurant opened only in 2000 but under the
name IN-N-OUT BURGER. Apparently, the [respondents]
started constructing the restaurant only after the [petitioner]
demanded that the latter desist from claiming ownership of
the mark IN-N-OUT and voluntarily cancel their trademark
registration. Moreover, [respondents] are also using
[petitioners] registered mark Double-Double for use on
hamburger products. In fact, the burger wrappers and the
French fries receptacles the [respondents] are using do not
bear the mark registered by the [respondent], but the
[petitioners] IN-N-OUT Burgers name and trademark IN-N-
OUT with Arrow design.
There is no evidence that the [respondents] were authorized
by the [petitioner] to use the latters marks in the business.
[Respondents] explanation that they are not using their own
registered trademark due to the difficulty in printing the
"star" does not justify the unauthorized use of the
[petitioners] trademark instead.
Further, [respondents] are giving their products the general
appearance that would likely influence purchasers to believe
that these products are those of the [petitioner]. The
intention to deceive may be inferred from the similarity of
the goods as packed and offered for sale, and, thus, action
will lie to restrain such unfair competition. x x x.
x x x x
[Respondents] use of IN-N-OUT BURGER in busineses
signages reveals fraudulent intent to deceive purchasers.
Exhibit "GG," which shows the business establishment of
[respondents] illustrates the imitation of [petitioners]
corporate name IN-N-OUT and signage IN-N-OUT BURGER.
Even the Director noticed it and held:
"We also note that In-N-Out Burger is likewise,
[petitioners] corporate name. It has used the "IN-
N-OUT" Burger name in its restaurant business in
Baldwin Park, California in the United States of
America since 1948. Thus it has the exclusive right
to use the tradenems "In-N-Out" Burger in the
Philippines and the respondents are unlawfully
using and appropriating the same."
The Office cannot give credence to the [respondents] claim
of good faith and that they have openly and continuously
used the subject mark since 1982 and is (sic) in the process
of expanding its business. They contend that assuming that
there is value in the foreign registrations presented as
evidence by the [petitioner], the purported exclusive right to
the use of the subject mark based on such foreign
registrations is not essential to a right of action for unfair
competition. [Respondents] also claim that actual or
probable deception and confusion on the part of customers
by reason of respondents practices must always appear,
and in the present case, the BLA has found none. This Office
finds the arguments untenable.
In contrast, the [respondents] have the burden of evidence
to prove that they do not have fraudulent intent in using the
mark IN-N-OUT. To prove their good faith, [respondents]
could have easily offered evidence of use of their registered
trademark, which they claimed to be using as early as 1982,
but did not.
[Respondents] also failed to explain why they are using the
marks of [petitioner] particularly DOUBLE DOUBLE, and the
mark IN-N-OUT Burger and Arrow Design. Even in their
listing of menus, [respondents] used [Appellants] marks of
DOUBLE DOUBLE and IN-N-OUT Burger and Arrow Design.
In addition, in the wrappers and receptacles being used by
the [respondents] which also contained the marks of the
[petitioner], there is no notice in such wrappers and
receptacles that the hamburger and French fries are
products of the [respondents]. Furthermore, the receipts
issued by the [respondents] even indicate "representing IN-
N-OUT." These acts cannot be considered acts in good
faith.
47

Administrative proceedings are governed by the "substantial evidence
rule." A finding of guilt in an administrative case would have to be
sustained for as long as it is supported by substantial evidence that the
respondent has committed acts stated in the complaint or formal
charge. As defined, substantial evidence is such relevant evidence as a
reasonable mind may accept as adequate to support a conclusion.
48
As
recounted by the IPO Director General in his decision, there is more
than enough substantial evidence to support his finding that
respondents are guilty of unfair competition.
With such finding, the award of damages in favor of petitioner is but
proper. This is in accordance with Section 168.4 of the Intellectual
Property Code, which provides that the remedies under Sections 156,
157 and 161 for infringement shall apply mutatis mutandis to unfair
competition. The remedies provided under Section 156 include the
right to damages, to be computed in the following manner:
Section 156. Actions, and Damages and Injunction for
Infringement.156.1 The owner of a registered mark may
recover damages from any person who infringes his rights,
and the measure of the damages suffered shall be either the
reasonable profit which the complaining party would have
made, had the defendant not infringed his rights, or the
profit which the defendant actually made out of the
infringement, or in the event such measure of damages
cannot be readily ascertained with reasonable certainty, then
the court may award as damages a reasonable percentage
based upon the amount of gross sales of the defendant or
the value of the services in connection with which the mark
or trade name was used in the infringement of the rights of
the complaining party.
In the present case, the Court deems it just and fair that the IPO
Director General computed the damages due to petitioner by applying
the reasonable percentage of 30% to the respondents gross sales,
and then doubling the amount thereof on account of respondents
actual intent to mislead the public or defraud the petitioner,
49
thus,
arriving at the amount of actual damages of P212,574.28.
Taking into account the deliberate intent of respondents to engage in
unfair competition, it is only proper that petitioner be awarded
exemplary damages. Article 2229 of the Civil Code provides that such
damages may be imposed by way of example or correction for the
public good, such as the enhancement of the protection accorded to
intellectual property and the prevention of similar acts of unfair
competition. However, exemplary damages are not meant to enrich
one party or to impoverish another, but to serve as a deterrent against
or as a negative incentive to curb socially deleterious action.
50
While
there is no hard and fast rule in determining the fair amount of
exemplary damages, the award of exemplary damages should be
commensurate with the actual loss or injury suffered.
51
Thus,
exemplary damages of P500,000.00 should be reduced to P250,000.00
which more closely approximates the actual damages awarded.
In accordance with Article 2208(1) of the Civil Code, attorneys fees
may likewise be awarded to petitioner since exemplary damages are
awarded to it. Petitioner was compelled to protect its rights over the
disputed mark. The amount of P500,000.00 is more than reasonable,
given the fact that the case has dragged on for more than seven
years, despite the respondents failure to present countervailing
evidence. Considering moreover the reputation of petitioners counsel,
the actual attorneys fees paid by petitioner would far exceed the
amount that was awarded to it.
52

IN VIEW OF THE FOREGOING, the instant Petition is GRANTED.
The assailed Decision of the Court of Appeals in CA-G.R. SP No. 92785,
promulgated on 18 July 2006, is REVERSED. The Decision of the IPO
Director General, dated 23 December 2005, is hereby REINSTATED
IN PART, with the modification that the amount of exemplary
damages awarded be reduced to P250,000.00.
SO ORDERED.

Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 167715 November 17, 2010
PHIL PHARMAWEALTH, INC., Petitioner,
vs.
PFIZER, INC. and PFIZER (PHIL.) INC., Respondents.
D E C I S I O N
PERALTA, J.:
Before the Court is a petition for review on certiorari seeking to annul
and set aside the Resolutions dated January 18, 2005
1
and April 11,
2005
2
by the Court of Appeals (CA) in CA-G.R. SP No. 82734.
The instant case arose from a Complaint
3
for patent infringement filed
against petitioner Phil Pharmawealth, Inc. by respondent companies,
Pfizer, Inc. and Pfizer (Phil.), Inc., with the Bureau of Legal Affairs of
the Intellectual Property Office (BLA-IPO). The Complaint alleged as
follows:
x x x x
6. Pfizer is the registered owner of Philippine Letters Patent
No. 21116 (the "Patent") which was issued by this
Honorable Office on July 16, 1987. The patent is valid until
July 16, 2004. The claims of this Patent are directed to "a
method of increasing the effectiveness of a beta-lactam
antibiotic in a mammalian subject, which comprises co-
administering to said subject a beta-lactam antibiotic
effectiveness increasing amount of a compound of the
formula IA." The scope of the claims of the Patent extends
to a combination of penicillin such as ampicillin sodium and
beta-lactam antibiotic like sulbactam sodium.
7. Patent No. 21116 thus covers ampicillin sodium/sulbactam
sodium (hereafter "Sulbactam Ampicillin"). Ampicillin sodium
is a specific example of the broad beta-lactam antibiotic
disclosed and claimed in the Patent. It is the compound
which efficacy is being enhanced by co-administering the
same with sulbactam sodium. Sulbactam sodium, on the
other hand, is a specific compound of the formula IA
disclosed and claimed in the Patent.
8. Pfizer is marketing Sulbactam Ampicillin under the brand
name "Unasyn." Pfizer's "Unasyn" products, which come in
oral and IV formulas, are covered by Certificates of Product
Registration ("CPR") issued by the Bureau of Food and
Drugs ("BFAD") under the name of complainants. The sole
and exclusive distributor of "Unasyn" products in the
Philippines is Zuellig Pharma Corporation, pursuant to a
Distribution Services Agreement it executed with Pfizer Phils.
on January 23, 2001.
9. Sometime in January and February 2003, complainants
came to know that respondent [herein petitioner] submitted
bids for the supply of Sulbactam Ampicillin to several
hospitals without the consent of complainants and in
violation of the complainants' intellectual property rights. x x
x
x x x x
10. Complainants thus wrote the above hospitals and
demanded that the latter immediately cease and desist from
accepting bids for the supply [of] Sulbactam Ampicillin or
awarding the same to entities other than complainants.
Complainants, in the same letters sent through undersigned
counsel, also demanded that respondent immediately
withdraw its bids to supply Sulbactam Ampicillin.
11. In gross and evident bad faith, respondent and the
hospitals named in paragraph 9 hereof, willfully ignored
complainants' just, plain and valid demands, refused to
comply therewith and continued to infringe the Patent, all to
the damage and prejudice of complainants. As registered
owner of the Patent, Pfizer is entitled to protection under
Section 76 of the IP Code.
x x x x
4

Respondents prayed for permanent injunction, damages and the
forfeiture and impounding of the alleged infringing products. They also
asked for the issuance of a temporary restraining order and a
preliminary injunction that would prevent herein petitioner, its agents,
representatives and assigns, from importing, distributing, selling or
offering the subject product for sale to any entity in the Philippines.
In an Order
5
dated July 15, 2003 the BLA-IPO issued a preliminary
injunction which was effective for ninety days from petitioner's receipt
of the said Order.
Prior to the expiration of the ninety-day period, respondents filed a
Motion for Extension of Writ of Preliminary Injunction
6
which, however,
was denied by the BLA-IPO in an Order
7
dated October 15, 2003.
Respondents filed a Motion for Reconsideration but the same was also
denied by the BLA-IPO in a Resolution
8
dated January 23, 2004.
Respondents then filed a special civil action for certiorari with the CA
assailing the October 15, 2003 and January 23, 2004 Resolutions of
the BLA-IPO. Respondents also prayed for the issuance of a
preliminary mandatory injunction for the reinstatement and extension
of the writ of preliminary injunction issued by the BLA-IPO.
While the case was pending before the CA, respondents filed a
Complaint
9
with the Regional Trial Court (RTC) of Makati City for
infringement and unfair competition with damages against herein
petitioner. In said case, respondents prayed for the issuance of a
temporary restraining order and preliminary injunction to prevent
herein petitioner from importing, distributing, selling or offering for
sale sulbactam ampicillin products to any entity in the Philippines.
Respondents asked the trial court that, after trial, judgment be
rendered awarding damages in their favor and making the injunction
permanent.
On August 24, 2004, the RTC of Makati City issued an Order
10
directing
the issuance of a temporary restraining order conditioned upon
respondents' filing of a bond.
In a subsequent Order
11
dated April 6, 2005, the same RTC directed
the issuance of a writ of preliminary injunction "prohibiting and
restraining [petitioner], its agents, representatives and assigns from
importing, distributing or selling Sulbactam Ampicillin products to any
entity in the Philippines."
Meanwhile, on November 16, 2004, petitioner filed a Motion to
Dismiss
12
the petition filed with the CA on the ground of forum
shopping, contending that the case filed with the RTC has the same
objective as the petition filed with the CA, which is to obtain an
injunction prohibiting petitioner from importing, distributing and selling
Sulbactam Ampicillin products.
On January 18, 2005, the CA issued its questioned
Resolution
13
approving the bond posted by respondents pursuant to
the Resolution issued by the appellate court on March 23, 2004 which
directed the issuance of a temporary restraining order conditioned
upon the filing of a bond. On even date, the CA issued a temporary
restraining order
14
which prohibited petitioner "from importing,
distributing, selling or offering for sale Sulbactam Ampicillin products to
any hospital or to any other entity in the Philippines, or from infringing
Pfizer Inc.'s Philippine Patent No. 21116 and impounding all the sales
invoices and other documents evidencing sales by [petitioner] of
Sulbactam Ampicillin products."
On February 7, 2005, petitioner again filed a Motion to Dismiss
15
the
case for being moot and academic, contending that respondents'
patent had already lapsed. In the same manner, petitioner also moved
for the reconsideration of the temporary restraining order issued by
the CA on the same basis that the patent right sought to be protected
has been extinguished due to the lapse of the patent license and on
the ground that the CA has no jurisdiction to review the order of the
BLA-IPO as said jurisdiction is vested by law in the Office of the
Director General of the IPO.
On April 11, 2005, the CA rendered its presently assailed Resolution
denying the Motion to Dismiss, dated November 16, 2004, and the
motion for reconsideration, as well as Motion to Dismiss, both dated
February 7, 2005.
Hence, the present petition raising the following issues:
a) Can an injunctive relief be issued based on an action of
patent infringement when the patent allegedly infringed has
already lapsed?
b) What tribunal has jurisdiction to review the decisions of
the Director of Legal Affairs of the Intellectual Property
Office?
c) Is there forum shopping when a party files two actions
with two seemingly different causes of action and yet pray
for the same relief?
16

In the first issue raised, petitioner argues that respondents' exclusive
right to monopolize the subject matter of the patent exists only within
the term of the patent. Petitioner claims that since respondents' patent
expired on July 16, 2004, the latter no longer possess any right of
monopoly and, as such, there is no more basis for the issuance of a
restraining order or injunction against petitioner insofar as the
disputed patent is concerned.
The Court agrees.
Section 37 of Republic Act No. (RA) 165,
17
which was the governing
law at the time of the issuance of respondents' patent, provides:
right to make, use and sell the patented machine, article or product,
and to use the patented process for the purpose of industry or
commerce, throughout the territory of the Philippines for the term of
the patent; and such making, using, or selling by any person without
the authorization of the patentee constitutes infringement of the
patent.
18

It is clear from the above-quoted provision of law that the exclusive
right of a patentee to make, use and sell a patented product, article or
process exists only during the term of the patent. In the instant case,
Philippine Letters Patent No. 21116, which was the basis of
respondents in filing their complaint with the BLA-IPO, was issued on
July 16, 1987. This fact was admitted by respondents themselves in
their complaint. They also admitted that the validity of the said patent
is until July 16, 2004, which is in conformity with Section 21 of RA 165,
providing that the term of a patent shall be seventeen (17) years from
the date of issuance thereof. Section 4, Rule 129 of the Rules of Court
provides that an admission, verbal or written, made by a party in the
course of the proceedings in the same case, does not require proof
and that the admission may be contradicted only by showing that it
was made through palpable mistake or that no such admission was
made. In the present case, there is no dispute as to respondents'
admission that the term of their patent expired on July 16, 2004.
Neither is there evidence to show that their admission was made
through palpable mistake. Hence, contrary to the pronouncement of
the CA, there is no longer any need to present evidence on the issue
of expiration of respondents' patent.
On the basis of the foregoing, the Court agrees with petitioner that
after July 16, 2004, respondents no longer possess the exclusive right
to make, use and sell the articles or products covered by Philippine
Letters Patent No. 21116.
Section 3, Rule 58, of the Rules of Court lays down the requirements
for the issuance of a writ of preliminary injunction, viz:
(a) That the applicant is entitled to the relief demanded, and
the whole or part of such relief consists in restraining the
commission or continuance of the acts complained of, or in
requiring the performance of an act or acts, either for a
limited period or perpetually;
(b) That the commission, continuance or non-performance
of the act or acts complained of during the litigation would
probably work injustice to the applicant; or
(c) That a party, court, or agency or a person is doing,
threatening, or attempting to do, or is procuring or suffering
to be done, some act or acts probably in violation of the
rights of the applicant respecting the subject of the action or
proceeding, and tending to render the judgment ineffectual.
In this connection, pertinent portions of Section 5, Rule 58 of the same
Rules provide that if the matter is of extreme urgency and the
applicant will suffer grave injustice and irreparable injury, a temporary
restraining order may be issued ex parte.
From the foregoing, it can be inferred that two requisites must exist to
warrant the issuance of an injunctive relief, namely: (1) the existence
of a clear and unmistakable right that must be protected; and (2) an
urgent and paramount necessity for the writ to prevent serious
damage.
19

In the instant case, it is clear that when the CA issued its January 18,
2005 Resolution approving the bond filed by respondents, the latter no
longer had a right that must be protected, considering that Philippine
Letters Patent No. 21116 which was issued to them already expired on
July 16, 2004. Hence, the issuance by the CA of a temporary
restraining order in favor of the respondents is not proper.
In fact, the CA should have granted petitioner's motion to dismiss the
petition for certiorari filed before it as the only issue raised therein is
the propriety of extending the writ of preliminary injunction issued by
the BLA-IPO. Since the patent which was the basis for issuing the
injunction, was no longer valid, any issue as to the propriety of
extending the life of the injunction was already rendered moot and
academic.
As to the second issue raised, the Court, is not persuaded by
petitioner's argument that, pursuant to the doctrine of primary
jurisdiction, the Director General of the IPO and not the CA has
jurisdiction to review the questioned Orders of the Director of the BLA-
IPO.
It is true that under Section 7(b) of RA 8293, otherwise known as the
Intellectual Property Code of the Philippines, which is the presently
prevailing law, the Director General of the IPO exercises exclusive
appellate jurisdiction over all decisions rendered by the Director of the
BLA-IPO. However, what is being questioned before the CA is not a
decision, but an interlocutory order of the BLA-IPO denying
respondents' motion to extend the life of the preliminary injunction
issued in their favor.
RA 8293 is silent with respect to any remedy available to litigants who
intend to question an interlocutory order issued by the BLA-IPO.
Moreover, Section 1(c), Rule 14 of the Rules and Regulations on
Administrative Complaints for Violation of Laws Involving Intellectual
Property Rights simply provides that interlocutory orders shall not be
appealable. The said Rules and Regulations do not prescribe a
procedure within the administrative machinery to be followed in
assailing orders issued by the BLA-IPO pending final resolution of a
case filed with them. Hence, in the absence of such a remedy, the
provisions of the Rules of Court shall apply in a suppletory manner, as
provided under Section 3, Rule 1 of the same Rules and Regulations.
Hence, in the present case, respondents correctly resorted to the filing
of a special civil action for certiorari with the CA to question the
assailed Orders of the BLA-IPO, as they cannot appeal therefrom and
they have no other plain, speedy and adequate remedy in the ordinary
course of law. This is consistent with Sections 1
20
and 4,
21
Rule 65 of
the Rules of Court, as amended.
In the first place, respondents' act of filing their complaint originally
with the BLA-IPO is already in consonance with the doctrine of primary
jurisdiction.
This Court has held that:
[i]n cases involving specialized disputes, the practice has been to refer
the same to an administrative agency of special competence in
observance of the doctrine of primary jurisdiction. The Court has
ratiocinated that it cannot or will not determine a controversy involving
a question which is within the jurisdiction of the administrative tribunal
prior to the resolution of that question by the administrative tribunal,
where the question demands the exercise of sound administrative
discretion requiring the special knowledge, experience and services of
the administrative tribunal to determine technical and intricate matters
of fact, and a uniformity of ruling is essential to comply with the
premises of the regulatory statute administered. The objective of the
doctrine of primary jurisdiction is to guide a court in determining
whether it should refrain from exercising its jurisdiction until after an
administrative agency has determined some question or some aspect
of some question arising in the proceeding before the court. It applies
where the claim is originally cognizable in the courts and comes into
play whenever enforcement of the claim requires the resolution of
issues which, under a regulatory scheme, has been placed within the
special competence of an administrative body; in such case, the
judicial process is suspended pending referral of such issues to the
administrative body for its view.
22

Based on the foregoing, the Court finds that respondents' initial filing
of their complaint with the BLA-IPO, instead of the regular courts, is in
keeping with the doctrine of primary jurisdiction owing to the fact that
the determination of the basic issue of whether petitioner violated
respondents' patent rights requires the exercise by the IPO of sound
administrative discretion which is based on the agency's special
competence, knowledge and experience.
However, the propriety of extending the life of the writ of preliminary
injunction issued by the BLA-IPO in the exercise of its quasi-judicial
power is no longer a matter that falls within the jurisdiction of the said
administrative agency, particularly that of its Director General. The
resolution of this issue which was raised before the CA does not
demand the exercise by the IPO of sound administrative discretion
requiring special knowledge, experience and services in determining
technical and intricate matters of fact. It is settled that one of the
exceptions to the doctrine of primary jurisdiction is where the question
involved is purely legal and will ultimately have to be decided by the
courts of justice.
23
This is the case with respect to the issue raised in
the petition filed with the CA.
Moreover, as discussed earlier, RA 8293 and its implementing rules
and regulations do not provide for a procedural remedy to question
interlocutory orders issued by the BLA-IPO. In this regard, it bears to
reiterate that the judicial power of the courts, as provided for under
the Constitution, includes the authority of the courts to determine in
an appropriate action the validity of the acts of the political
departments.
24
Judicial power also includes the duty of the courts of
justice to settle actual controversies involving rights which are legally
demandable and enforceable, and to determine whether or not there
has been a grave abuse of discretion amounting to lack or excess of
jurisdiction on the part of any branch or instrumentality of the
Government.
25
Hence, the CA, and not the IPO Director General, has
jurisdiction to determine whether the BLA-IPO committed grave abuse
of discretion in denying respondents' motion to extend the effectivity
of the writ of preliminary injunction which the said office earlier issued.
Lastly, petitioner avers that respondents are guilty of forum shopping
for having filed separate actions before the IPO and the RTC praying
for the same relief.
The Court agrees.
Forum shopping is defined as the act of a party against whom an
adverse judgment has been rendered in one forum, of seeking another
(and possibly favorable) opinion in another forum (other than by
appeal or the special civil action of certiorari), or the institution of two
(2) or more actions or proceedings grounded on the same cause on
the supposition that one or the other court would make a favorable
disposition.
26

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

There is no question as to the identity of parties in the complaints filed
with the IPO and the RTC.
Respondents argue that they cannot be held guilty of forum shopping
because their complaints are based on different causes of action as
shown by the fact that the said complaints are founded on violations of
different patents.
The Court is not persuaded.
Section 2, Rule 2 of the Rules of Court defines a cause of action as the
act or omission by which a party violates a right of another. In the
instant case, respondents' cause of action in their complaint filed with
the IPO is the alleged act of petitioner in importing, distributing, selling
or offering for sale Sulbactam Ampicillin products, acts that are
supposedly violative of respondents' right to the exclusive sale of the
said products which are covered by the latter's patent. However, a
careful reading of the complaint filed with the RTC of Makati City
would show that respondents have the same cause of action as in their
complaint filed with the IPO. They claim that they have the exclusive
right to make, use and sell Sulbactam Ampicillin products and that
petitioner violated this right. Thus, it does not matter that the patents
upon which the complaints were based are different. The fact remains
that in both complaints the rights violated and the acts violative of
such rights are identical.
In fact, respondents seek substantially the same reliefs in their
separate complaints with the IPO and the RTC for the purpose of
accomplishing the same objective.
It is settled by this Court in several cases that the filing by a party of
two apparently different actions but with the same objective
constitutes forum shopping.
28
The Court discussed this species of
forum shopping as follows:
Very simply stated, the original complaint in the court a quo which
gave rise to the instant petition was filed by the buyer (herein private
respondent and his predecessors-in-interest) against the seller (herein
petitioners) to enforce the alleged perfected sale of real estate. On the
other hand, the complaint in the Second Case seeks to declare such
purported sale involving the same real property "as unenforceable as
against the Bank," which is the petitioner herein. In other words, in
the Second Case, the majority stockholders, in representation of the
Bank, are seeking to accomplish what the Bank itself failed to do in the
original case in the trial court. In brief, the objective or the relief being
sought, though worded differently, is the same, namely, to enable the
petitioner Bank to escape from the obligation to sell the property to
respondent.
29

In Danville Maritime, Inc. v. Commission on Audit,
30
the Court ruled as
follows:
In the attempt to make the two actions appear to be different,
petitioner impleaded different respondents therein PNOC in the case
before the lower court and the COA in the case before this Court and
sought what seems to be different reliefs. Petitioner asks this Court to
set aside the questioned letter-directive of the COA dated October 10,
1988 and to direct said body to approve the Memorandum of
Agreement entered into by and between the PNOC and petitioner,
while in the complaint before the lower court petitioner seeks to enjoin
the PNOC from conducting a rebidding and from selling to other
parties the vessel "T/T Andres Bonifacio," and for an extension of time
for it to comply with the paragraph 1 of the memorandum of
agreement and damages. One can see that although the relief prayed
for in the two (2) actions are ostensibly different, the ultimate
objective in both actions is the same, that is, the approval of the sale
of vessel in favor of petitioner, and to overturn the letter directive of
the COA of October 10, 1988 disapproving the sale.
31

In the instant case, the prayer of respondents in their complaint filed
with the IPO is as follows:
A. Immediately upon the filing of this action, issue an ex
parte order (a) temporarily restraining respondent, its
agents, representatives and assigns from importing,
distributing, selling or offering for sale Sulbactam Ampicillin
products to the hospitals named in paragraph 9 of this
Complaint or to any other entity in the Philippines, or from
otherwise infringing Pfizer Inc.'s Philippine Patent No.
21116; and (b) impounding all the sales invoices and other
documents evidencing sales by respondent of Sulbactam
Ampicillin products.
B. After hearing, issue a writ of preliminary injunction
enjoining respondent, its agents, representatives and
assigns from importing, distributing, selling or offering for
sale Sulbactam Ampicillin products to the hospitals named in
paragraph 9 of the Complaint or to any other entity in the
Philippines, or from otherwise infringing Pfizer Inc.'s
Philippine Patent No. 21116; and
C. After trial, render judgment:
(i) declaring that respondent has infringed Pfizer
Inc.'s Philippine Patent No. 21116 and that
respondent has no right whatsoever over
complainant's patent;
(ii) ordering respondent to pay complainants the
following amounts:
(a) at least P1,000,000.00 as actual
damages;
(b) P700,000.00 as attorney's fees and
litigation expenses;
(d) P1,000,000.00 as exemplary
damages; and
(d) costs of this suit.
(iii) ordering the condemnation, seizure or
forfeiture of respondent's infringing goods or
products, wherever they may be found, including
the materials and implements used in the
commission of infringement, to be disposed of in
such manner as may be deemed appropriate by
this Honorable Office; and
(iv) making the injunction permanent.
32

In an almost identical manner, respondents prayed for the following in
their complaint filed with the RTC:
(a) Immediately upon the filing of this action, issue an ex
parte order:
(1) temporarily restraining Pharmawealth, its
agents, representatives and assigns from
importing, distributing, selling or offering for sale
infringing sulbactam ampicillin products to various
government and private hospitals or to any other
entity in the Philippines, or from otherwise
infringing Pfizer Inc.'s Philippine Patent No. 26810.
(2) impounding all the sales invoices and other
documents evidencing sales by pharmawealth of
sulbactam ampicillin products; and
(3) disposing of the infringing goods outside the
channels of commerce.
(b) After hearing, issue a writ of preliminary injunction:
(1) enjoining Pharmawealth, its agents,
representatives and assigns from importing,
distributing, selling or offering for sale infringing
sulbactam ampicillin products to various
government hospitals or to any other entity in the
Philippines, or from otherwise infringing Patent
No. 26810;
(2) impounding all the sales invoices and other
documents evidencing sales by Pharmawealth of
sulbactam ampicillin products; and
(3) disposing of the infringing goods outside the
channels of commerce.
(c) After trial, render judgment:
(1) finding Pharmawealth to have infringed Patent
No. 26810 and declaring Pharmawealth to have no
right whatsoever over plaintiff's patent;
(2) ordering Pharmawealth to pay plaintiffs the
following amounts:
(i) at least P3,000,000.00 as actual
damages;
(ii) P500,000.00 as attorney's fees
and P1,000,000.00 as litigation
expenses;
(iii) P3,000,000.00 as exemplary
damages; and
(iv) costs of this suit.
(3) ordering the condemnation, seizure or
forfeiture of Pharmawealth's infringing goods or
products, wherever they may be found, including
the materials and implements used in the
commission of infringement, to be disposed of in
such manner as may be deemed appropriate by
this Honorable Court; and
(4) making the injunction permanent.
33

It is clear from the foregoing that the ultimate objective which
respondents seek to achieve in their separate complaints filed with the
RTC and the IPO, is to ask for damages for the alleged violation of
their right to exclusively sell Sulbactam Ampicillin products and to
permanently prevent or prohibit petitioner from selling said products to
any entity. Owing to the substantial identity of parties, reliefs and
issues in the IPO and RTC cases, a decision in one case will necessarily
amount to res judicata in the other action.
It bears to reiterate that what is truly important to consider in
determining whether forum shopping exists or not is the vexation
caused the courts and parties-litigant by a party who asks different
courts and/or administrative agencies to rule on the same or related
causes and/or to grant the same or substantially the same reliefs, in
the process creating the possibility of conflicting decisions being
rendered by the different fora upon the same issue.
34
1avvphi1
Thus, the Court agrees with petitioner that respondents are indeed
guilty of forum shopping.
Jurisprudence holds that if the forum shopping is not considered willful
and deliberate, the subsequent case shall be dismissed without
prejudice, on the ground of either litis pendentia or res
judicata.
35
However, if the forum shopping is willful and deliberate,
both (or all, if there are more than two) actions shall be dismissed with
prejudice.
36
In the present case, the Court finds that respondents did
not deliberately violate the rule on non-forum shopping. Respondents
may not be totally blamed for erroneously believing that they can file
separate actions simply on the basis of different patents. Moreover, in
the suit filed with the RTC of Makati City, respondents were candid
enough to inform the trial court of the pendency of the complaint filed
with the BLA-IPO as well as the petition for certiorari filed with the CA.
On these bases, only Civil Case No. 04-754 should be dismissed on the
ground of litis pendentia.
WHEREFORE, the petition is PARTLY GRANTED. The assailed
Resolutions of the Court of Appeals, dated January 18, 2005 and April
11, 2005, in CA-G.R. No. 82734, are REVERSED and SET ASIDE.
The petition for certiorari filed with the Court of Appeals
is DISMISSED for being moot and academic.
Civil Case No. 04-754, filed with the Regional Trial Court of Makati City,
Branch 138, is likewise DISMISSED on the ground of litis pendentia.
SO ORDERED.



























Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. Nos. 160054-55 July 21, 2004
MANOLO P. SAMSON, petitioner,
vs.
HON. REYNALDO B. DAWAY, in his capacity as Presiding Judge,
Regional Trial Court of Quezon City, Branch 90, PEOPLE OF THE
PHILIPPINES and CATERPILLAR, INC., respondents.
D E C I S I O N

YNARES-SANTIAGO, J.:
Assailed in this petition for certiorari is the March 26, 2003 Order
1
of the
Regional Trial Court of Quezon City, Branch 90, which denied petitioners
(1) motion to quash the information; and (2) motion for reconsideration of
the August 9, 2002 Order denying his motion to suspend the arraignment
and other proceedings in Criminal Case Nos. Q-02-108043-44. Petitioner
also questioned its August 5, 2003 Order
2
which denied his motion for
reconsideration.
The undisputed facts show that on March 7, 2002, two informations for
unfair competition under Section 168.3 (a), in relation to Section 170, of
the Intellectual Property Code (Republic Act No. 8293), similarly worded
save for the dates and places of commission, were filed against petitioner
Manolo P. Samson, the registered owner of ITTI Shoes. The accusatory
portion of said informations read:
That on or about the first week of November 1999 and
sometime prior or subsequent thereto, in Quezon City,
Philippines, and within the jurisdiction of this Honorable Court,
above-named accused, owner/proprietor of ITTI Shoes/Mano
Shoes Manufactuirng Corporation located at Robinsons Galleria,
EDSA corner Ortigas Avenue, Quezon City, did then and there
willfully, unlawfully and feloniously distribute, sell and/or offer
for sale CATERPILLAR products such as footwear, garments,
clothing, bags, accessories and paraphernalia which are closely
identical to and/or colorable imitations of the authentic
Caterpillar products and likewise using trademarks, symbols
and/or designs as would cause confusion, mistake or deception
on the part of the buying public to the damage and prejudice of
CATERPILLAR, INC., the prior adopter, user and owner of the
following internationally: "CATERPILLAR", "CAT", "CATERPILLAR
& DESIGN", "CAT AND DESIGN", "WALKING MACHINES" and
"TRACK-TYPE TRACTOR & DESIGN."
CONTRARY TO LAW.
3

On April 19, 2002, petitioner filed a motion to suspend arraignment and
other proceedings in view of the existence of an alleged prejudicial question
involved in Civil Case No. Q-00-41446 for unfair competition pending with
the same branch; and also in view of the pendency of a petition for review
filed with the Secretary of Justice assailing the Chief State Prosecutors
resolution finding probable cause to charge petitioner with unfair
competition. In an Order dated August 9, 2002, the trial court denied the
motion to suspend arraignment and other proceedings.
On August 20, 2002, petitioner filed a twin motion to quash the
informations and motion for reconsideration of the order denying motion to
suspend, this time challenging the jurisdiction of the trial court over the
offense charged. He contended that since under Section 170 of R.A. No.
8293, the penalty4 of imprisonment for unfair competition does not exceed
six years, the offense is cognizable by the Municipal Trial Courts and not by
the Regional Trial Court, per R.A. No. 7691.
In its assailed March 26, 2003 Order, the trial court denied petitioners twin
motions.6 A motion for reconsideration thereof was likewise denied on
August 5, 2003.
Hence, the instant petition alleging that respondent Judge gravely abused
its discretion in issuing the assailed orders.
The issues posed for resolution are (1) Which court has jurisdiction over
criminal and civil cases for violation of intellectual property rights? (2) Did
the respondent Judge gravely abuse his discretion in refusing to suspend
the arraignment and other proceedings in Criminal Case Nos. Q-02-108043-
44 on the ground of (a) the existence of a prejudicial question; and (b)
the pendency of a petition for review with the Secretary of Justice on the
finding of probable cause for unfair competition?
Under Section 170 of R.A. No. 8293, which took effect on January 1, 1998,
the criminal penalty for infringement of registered marks, unfair
competition, false designation of origin and false description or
representation, is imprisonment from 2 to 5 years and a fine ranging from
Fifty Thousand Pesos to Two Hundred Thousand Pesos, to wit:
SEC. 170. Penalties. Independent of the civil and
administrative sanctions imposed by law, a criminal penalty of
imprisonment from two (2) years to five (5) years and a fine
ranging from Fifty thousand pesos (P50,000.00) to Two hundred
thousand pesos (P200,000.00), shall be imposed on any person
who is found guilty of committing any of the acts mentioned in
Section 155 [Infringement], Section 168 [Unfair Competition]
and Section 169.1 [False Designation of Origin and False
Description or Representation].
Corollarily, Section 163 of the same Code states that actions (including
criminal and civil) under Sections 150, 155, 164, 166, 167, 168 and 169
shall be brought before the proper courts with appropriate jurisdiction
under existing laws, thus
SEC. 163. Jurisdiction of Court. All actions under Sections 150,
155, 164 and 166 to 169 shall be brought before the proper
courts with appropriate jurisdiction under existing laws.
(Emphasis supplied)
The existing law referred to in the foregoing provision is Section 27 of R.A.
No. 166 (The Trademark Law) which provides that jurisdiction over cases
for infringement of registered marks, unfair competition, false designation
of origin and false description or representation, is lodged with the Court of
First Instance (now Regional Trial Court)
SEC. 27. Jurisdiction of Court of First Instance. All actions
under this Chapter [V Infringement] and Chapters VI [Unfair
Competition] and VII [False Designation of Origin and False
Description or Representation], hereof shall be brought before
the Court of First Instance.
We find no merit in the claim of petitioner that R.A. No. 166 was expressly
repealed by R.A. No. 8293. The repealing clause of R.A. No. 8293, reads
SEC. 239. Repeals. 239.1. All Acts and parts of
Acts inconsistent herewith, more particularly Republic Act
No. 165, as amended; Republic Act No. 166, as amended;
and Articles 188 and 189 of the Revised Penal Code; Presidential
Decree No. 49, including Presidential Decree No. 285, as
amended, are hereby repealed. (Emphasis added)
Notably, the aforequoted clause did not expressly repeal R.A. No. 166 in its
entirety, otherwise, it would not have used the phrases "parts of Acts" and
"inconsistent herewith;" and it would have simply stated "Republic Act No.
165, as amended; Republic Act No. 166, as amended; and Articles 188 and
189 of the Revised Penal Code; Presidential Decree No. 49, including
Presidential Decree No. 285, as amended are hereby repealed." It would
have removed all doubts that said specific laws had been rendered without
force and effect. The use of the phrases "parts of Acts"and "inconsistent
herewith" only means that the repeal pertains only to provisions which are
repugnant or not susceptible of harmonization with R.A. No. 8293.6 Section
27 of R.A. No. 166, however, is consistent and in harmony with Section 163
of R.A. No. 8293. Had R.A. No. 8293 intended to vest jurisdiction over
violations of intellectual property rights with the Metropolitan Trial Courts, it
would have expressly stated so under Section 163 thereof.
Moreover, the settled rule in statutory construction is that in case of conflict
between a general law and a special law, the latter must prevail.
Jurisdiction conferred by a special law to Regional Trial Courts must prevail
over that granted by a general law to Municipal Trial Courts.7
In the case at bar, R.A. No. 8293 and R.A. No. 166 are special
laws8 conferring jurisdiction over violations of intellectual property rights to
the Regional Trial Court. They should therefore prevail over R.A. No. 7691,
which is a general law.9 Hence, jurisdiction over the instant criminal case
for unfair competition is properly lodged with the Regional Trial Court even
if the penalty therefor is imprisonment of less than 6 years, or from 2 to 5
years and a fine ranging from P50,000.00 to P200,000.00.
In fact, to implement and ensure the speedy disposition of cases involving
violations of intellectual property rights under R.A. No. 8293, the Court
issued A.M. No. 02-1-11-SC dated February 19, 2002 designating certain
Regional Trial Courts as Intellectual Property Courts. On June 17, 2003, the
Court further issued a Resolution consolidating jurisdiction to hear and
decide Intellectual Property Code and Securities and Exchange Commission
cases in specific Regional Trial Courts designated as Special Commercial
Courts.
The case of Mirpuri v. Court of Appeals,10 invoked by petitioner finds no
application in the present case. Nowhere inMirpuri did we state
that Section 27 of R.A. No. 166 was repealed by R.A. No. 8293. Neither
did we make a categorical ruling therein that jurisdiction over cases for
violation of intellectual property rights is lodged with the Municipal Trial
Courts. The passing remark in Mirpuri on the repeal of R.A. No. 166 by R.A.
No. 8293 was merely a backgrounder to the enactment of the present
Intellectual Property Code and cannot thus be construed as a jurisdictional
pronouncement in cases for violation of intellectual property rights.
Anent the second issue, petitioner failed to substantiate his claim that there
was a prejudicial question. In his petition, he prayed for the reversal of the
March 26, 2003 order which sustained the denial of his motion to suspend
arraignment and other proceedings in Criminal Case Nos. Q-02-108043-44.
For unknown reasons, however, he made no discussion in support of said
prayer in his petition and reply to comment. Neither did he attach a copy of
the complaint in Civil Case No. Q-00-41446 nor quote the pertinent portion
thereof to prove the existence of a prejudicial question.
At any rate, there is no prejudicial question if the civil and the criminal
action can, according to law, proceed independently of each other.11 Under
Rule 111, Section 3 of the Revised Rules on Criminal Procedure, in the
cases provided in Articles 32, 33, 34 and 2176 of the Civil Code, the
independent civil action may be brought by the offended party. It shall
proceed independently of the criminal action and shall require only a
preponderance of evidence.
In the case at bar, the common element in the acts constituting unfair
competition under Section 168 of R.A. No. 8293 is fraud.12 Pursuant to
Article 33 of the Civil Code, in cases of defamation, fraud, and physical
injuries, a civil action for damages, entirely separate and distinct from the
criminal action, may be brought by the injured party. Hence, Civil Case No.
Q-00-41446, which as admitted13 by private respondent also relate to
unfair competition, is an independent civil action under Article 33 of the
Civil Code. As such, it will not operate as a prejudicial question that will
justify the suspension of the criminal cases at bar.
Section 11 (c), Rule 116 of the Revised Rules on Criminal Procedure
provides
SEC. 11. Suspension of arraignment. Upon motion by the
proper party, the arraignment shall be suspended in the
following cases
x x x x x x x x x
(c) A petition for review of the resolution of the prosecutor is
pending at either the Department of Justice, or the Office of the
President; Provided, that the period of suspension shall not
exceed sixty (60) days counted from the filing of the petition
with the reviewing office.
While the pendency of a petition for review is a ground for suspension of
the arraignment, the aforecited provision limits the deferment of the
arraignment to a period of 60 days reckoned from the filing of the petition
with the reviewing office. It follows, therefore, that after the expiration of
said period, the trial court is bound to arraign the accused or to deny the
motion to defer arraignment.
In the instant case, petitioner failed to establish that respondent Judge
abused his discretion in denying his motion to suspend. His pleadings and
annexes submitted before the Court do not show the date of filing of the
petition for review with the Secretary of Justice.14 Moreover, the Order
dated August 9, 2002 denying his motion to suspend was not appended to
the petition. He thus failed to discharge the burden of proving that he was
entitled to a suspension of his arraignment and that the questioned orders
are contrary to Section 11 (c), Rule 116 of the Revised Rules on Criminal
Procedure. Indeed, the age-old but familiar rule is that he who alleges must
prove his allegations.
In sum, the dismissal of the petition is proper considering that petitioner
has not established that the trial court committed grave abuse of discretion.
So also, his failure to attach documents relevant to his allegations warrants
the dismissal of the petition, pursuant to Section 3, Rule 46 of the Rules of
Civil Procedure, which states:
SEC. 3. Contents and filing of petition; effect of non-
compliance with requirements. The petition shall contain
the full names and actual addresses of all the petitioners and
respondents, a concise statement of the matters involved, the
factual background of the case, and the grounds relied upon for
the relief prayed for.
It shall be filed in seven (7) clearly legible copies together with
proof of service thereof on the respondent with the original copy
intended for the court indicated as such by the petitioner, and
shall be accompanied by a clearly legible duplicate
original or certified true copy of the judgment, order,
resolution, or ruling subject thereof, such material
portions of the record as are referred to therein, and
other documents relevant or pertinent thereto.
x x x x x x x x x
The failure of the petitioner to comply with any of the
foregoing requirements shall be sufficient ground for the
dismissal of the petition. (Emphasis added)
WHEREFORE, in view of all the foregoing, the petition is dismissed.
SO ORDERED.
Davide, Jr., C.J., (Chairman), Quisumbing, Carpio, and Azcuna, JJ., concur.


Republic of the Philippines
SUPREME COURT
THIRD DIVISION
G.R. No.148420 December 15, 2005
ANDREA TAN, CLARITA LLAMAS, VICTOR ESPINA and LUISA
ESPINA, Petitioners,
vs.
BAUSCH & LOMB, INC., Respondent.
D E C I S I O N
CORONA, J.:
Assailed in this petition for review
1
are the decision
2
and resolution
3
of
the Court of Appeals which set aside the December 22, 1998 order
4
of
Judge Genis Balbuena of Branch 21, Regional Trial Court (RTC), Cebu
City and ordered the transfer of Criminal Case No. CBU-45890 to
Branch 9, RTC, Cebu City.
The antecedents follow.
On April 8, 1997, an information
5
for violation of paragraph 1, Article
189
6
of the Revised Penal Code (RPC) was filed before Branch 21,
RTC, Cebu City against petitioners Andrea Tan, Clarita Llamas, Victor
Espina and Luisa Espina of Best Buy Mart, Inc. The information read:
That on or about June 27, 1996 and sometime prior or subsequent
thereto, in the City of Cebu, Philippines, and within the jurisdiction of
this Honorable Court, abovementioned accused, conspiring and
mutually helping each other, did then and there willfully, unlawfully
and feloniously distribute and sell counterfeit RAY BAN sunglasses
bearing the appearance and trademark of RAY BAN in the aforesaid
store wherein they have direct control, supervision and management
thereby inducing the public to believe that these goods offered by
them are those of RAY BAN to the damage and prejudice of BAUSCH
AND LOMB, INC., the exclusive owner and user of trademark RAY BAN
on sunglasses.
7

On January 21, 1998, respondent filed a motion to transfer the case to
Branch 9, RTC, Cebu City. Administrative Order No. 113-95
8
(A.O. No.
113-95) designated the said branch as the special court in Region VII
to handle violations of intellectual property rights.
On March 2, 1998, petitioners filed a motion to quash
9
the information
on the ground that the RTC had no jurisdiction over the offense
charged against them. The penalty
10
provided by the RPC for the crime
was within the jurisdiction of the Municipal Trial Court in Cities (MTCC).
On March 6, 1998, respondent filed an opposition to the motion to
quash,
11
explaining that BP 129 had already transferred the exclusive
jurisdiction to try and decide violations of intellectual property rights
from the MTC and MTCC to the RTC and that the Supreme Court had
also issued Administrative Order No. 104-96 (A.O. No. 104-
96)
12
deleting and withdrawing the designation of several branches of
the MTC and MTCC as special intellectual property courts.
On December 22, 1998, the court a quo denied respondents motion to
transfer the case and granted petitioners motion to quash. It ruled:
Accused [wa]s charged for violation of Art. 189 of Revised Penal Code
the penalty for which is prision correccionalin its minimum period or a
fine ranging from P500.00 to P2,000.00, or both. Hence, within the
jurisdiction of the metropolitan and municipal trial courts (Sec. 32(2),
B.P. Blg. 129, as amended).
Administrative Orders Nos. 113-95 and 104-96, cited by plaintiff,
cannot prevail over the express provisions of Batas Pambansa Blg.
129, as amended, jurisdiction of courts being a matter of substantive
law.
If this Court has no jurisdiction over the case, the same is true with
Branch 9 of the same court, Therefore, the motion to transfer the case
to the latter should fail.
WHEREFORE, premises considered, the motion to transfer is denied,
while the motion to quash is granted. The case is thus dismissed.
SO ORDERED.
13

Respondent received the order on January 21, 1999 but filed neither
an appeal nor a motion for reconsideration. Rather, it filed a petition
for certiorari
14
in the Court of Appeals on March 23, 1999 or one (1)
day beyond the period allowed in Section 4, Rule 65
15
of the Rules of
Court.
Respondents procedural lapses notwithstanding, the appellate court
gave due course to the petition and set aside the trial court order:
WHEREFORE, the petition is GIVEN DUE COURSE and GRANTED.
The assailed Order of December 22, 1998 isVACATED and another is
entered ordering the transfer of Crim. Case No. CBU-45890 to Branch
9 of the Regional Trial Court of Cebu City, and directing the public
respondent to accordingly transmit the records thereof.
SO ORDERED.
16

Hence, the present petition for review, centered on the following
issues:
I. THE COURT OF APPEALS SERIOUSLY ERRED IN NOT DISMISSING
THE PETITION OF RESPONDENT THAT IS FRAUGHT WITH FATAL
INFIRMITIES.
II. THE COURT OF APPEALS SERIOUSLY ERRED IN REVERSING THE
CORRECT RULING OF THE TRIAL COURT THAT THE REGIONAL TRIAL
COURT HAS NO JURISDICTION OVER THE OFFENSE OF UNFAIR
COMPETITION UNDER ARTICLE 189 OF THE REVISED PENAL CODE.
17

There is no merit in the petition.
As to the first assigned error, petitioners contend that the Court of
Appeals erred in giving due course to the petition for certiorari because
respondent failed to appeal or file a motion for reconsideration of the
trial courts order granting the motion to quash. Worse, respondent
filed the petition in the appellate court one day after the reglementary
period expired.
Needless to state, the acceptance of a petition for certiorari as well as
the grant of due course thereto is, in
general, addressed to the sound discretion of the court.
18

Besides, the provisions of the Rules of Court, which are technical rules,
may be relaxed in certain exceptional situations.
19
Where a rigid
application of the rule that certiorari cannot be a substitute for appeal
will result in a manifest failure or miscarriage of justice, it is within our
power to suspend the rules or exempt a particular case from its
operation.
20

Under certain special circumstances,
21
a petition for certiorari may be
given due course notwithstanding that no motion for reconsideration
was filed in the lower court. The exception applies in this case since
the order of the trial court was, as will be discussed later, a patent
nullity.
Likewise, the one-day delay in the filing of the petition may be excused
on the basis of equity to afford respondent the chance to prove the
merits of the complaint.
In Yao v. Court of Appeals,
22
we held:
In the interest of substantial justice, procedural rules of the most
mandatory character in terms of compliance may be relaxed. In other
words, if strict adherence to the letter of the law would result in
absurdity and manifest injustice or where the merit of a partys cause
is apparent and outweighs consideration of non-compliance with
certain formal requirements, procedural rules should definitely be
liberally construed. A party-litigant is to be given the fullest opportunity
to establish the merits of his complaint or defense rather than for him
to lose life, liberty, honor or property on mere technicalities.
Hence, the only relevant issue left for our resolution is whether or not
the jurisdiction over the crime allegedly committed by petitioners is
vested on the RTC.
Section 5 (5) of the 1987 Constitution empowers the Supreme Court to
promulgate rules concerning pleading, practice and procedure in all
courts. The limitations to this rule-making power are the following: the
rules must (a) provide a simplified and inexpensive procedure for the
speedy disposition of cases; (b) be uniform for all courts of the same
grade and (c) not diminish, increase or modify substantive rights.
23
As
long as these limits are met, the argument used by petitioners that the
Supreme Court, through A.O. Nos. 113-95 and 104-96, transgressed
on Congress sole power to legislate, cannot be sustained.
A.O. No. 113-95 designated special intellectual property courts to
promote the efficient administration of justice and to ensure the
speedy disposition of intellectual property cases.
A.O. No. 104-96,
24
on the other hand, was issued pursuant to Section
23 of BP 129
25
which transferred the jurisdiction over such crimes from
the MTC and MTCC to the RTC and which furthermore gave the
Supreme Court the authority to designate certain branches of the RTC
to exclusively handle special cases in the interest of the speedy and
efficient administration of justice. Accordingly, the RTC was vested
with the exclusive and original jurisdiction to try and decide intellectual
property cases.
The transfer of jurisdiction from the MTC and MTCC to the RTC did not
in any way affect the substantive rights of petitioners. The
administrative orders did not change the definition or scope of the
crime of unfair competition with which petitioners were charged.
Both administrative orders therefore have the force and effect of law,
having been validly issued by the Supreme Court in the exercise of its
constitutional rule-making power. The trial court, being a subordinate
court, should have followed the mandate of the later A.O. 104-96
which vested jurisdiction over the instant case on the RTC. Thus, the
appellate court correctly found that the court a quo committed grave
abuse of discretion.
Furthermore, the order of the trial court was a patent nullity. In
resolving the pending incidents of the motion to transfer and motion to
quash, the trial court should not have allowed petitioners to collaterally
attack the validity of A.O. Nos. 113-95 and 104-96. We have ruled time
and again that the constitutionality or validity of laws, orders, or such
other rules with the force of law cannot be attacked collaterally. There
is a legal presumption of validity of these laws and rules. Unless a law
or rule is annulled in a direct proceeding, the legal presumption of its
validity stands.
26
The trial courts order was consequently null and void.
The transfer of this case to Branch 9, RTC, Cebu City, however, is no
longer possible. A.M. No. 03-03-03-SC
27
consolidated the intellectual
property courts and commercial SEC courts in one RTC branch in a
particular locality to streamline the court structure and to promote
expediency. The RTC branch so designated will try and decide cases
involving violations of intellectual property rights, and cases formerly
cognizable by the Securities and Exchange Commission. It is now
called a special commercial court. In Region VII, the designated
special commercial court is Branch 11, RTC, Cebu City. The transfer of
this case to that court is therefore warranted.
WHEREFORE, the Court of Appeals decision dated October 20, 2000
is hereby AFFIRMED with theMODIFICATION that Criminal Case
No. CBU-45890 shall be transferred to Branch 11, RTC, Cebu City. Let
the records of the case be transmitted thereto and the case tried and
decided with dispatch.
Costs against petitioners.
SO ORDERED.