E.I Dupont de Nemours and Co. v.

 
vs.
IPO Director Emma Francisco

G.R. No. 174379, August 21, 2016

SECOND DIVISION, LEONEN

Patent; Public interest; A patent is granted to provide rights and protection to the inventor
after an invention is disclosed to the public. To balance the public interests involved, failure
to comply with strict procedural rules will result in the failure to obtain a patent.

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

On July 10, 1987, through its local resident agent, Atty. Nicanor D. Mapili, the petitioner, E.I.
Dupont Nemours filed Philippine Patent Application No. 35526 before the Bureau of Patents, for
Angiotensin II Receptor Blocking Imidazole (losartan), an invention related to the treatment of
hypertension and congestive heart failure. 

13 years later or on December 19, 2000, the petitioner’s new counsel, Ortega, et al, sent the
Intellectual Property Office (IPO) a letter requesting that an office action be issued on Philippine
Patent Application No. 35526.

On April 18, 2002, the Director of Patents denied the Petition for Revival the same having been
filed out of time.

An appeal to the Office of the Director-General Emma C. Francisco was also denied, thereby,
affirming the Resolution of the Director of Patents.

Petitioners filed before the CA a Petition for Review seeking to set aside the IPO's Decision
dated October 22, 2003.

On August 31, 2004, the CA granted the Petition for Review, thereby allowing the Petition for
Revival.

The Office of the Solicitor General, on behalf of the Intellectual Property Office, moved for
reconsideration of this Decision.
Therapharma, Inc. moved for leave to intervene and argued that the CA’s August 31, 2004
Decision directly affects its "vested" rights to sell its own product. 

On January 31, 2006, the CA issued the Resolution granting the Motion for Leave to Intervene. 

Petitioner moved for reconsideration on February 22, 2006, assailing the CA’s January 31, 2006
Resolution.

On August 30, 2006, the CA resolved both Motions for Reconsideration and rendered the
Amended Decision reversing its earlier Decision.

The CA ruled that the public interest would be prejudiced by the revival of petitioner’s
application. It found that losartan was used to treat hypertension, "a chronic ailment afflicting an
estimated 12.6 million Filipinos," and noted that the presence of competition lowered the price
for losartan products.

October 19, 2006, petitioner filed before the Supreme Court a Petition for Review on Certiorari.

Is the CA correct when it denied the petitioner's appeal for the revival of its patent
application on the grounds that (a) petitioner committed inexcusable negligence in the
prosecution of its patent application; and (b) third-party rights and the public interest
would be prejudiced by the appeal?

Yes. The denial of said application was proper.

The SC citing Section 133.4 of the Intellectual Property Code, Rule 930 of the Rules and
Regulations on Inventions, which provides that, “ x x x an application deemed withdrawn for
failure to prosecute may be revived as a pending application within a period of four (4) months
from the mailing date of the notice of withdrawal if it is shown to the satisfaction of the Director
that the failure was due to fraud, accident, mistake or excusable negligence.”

Moreover, even if the delay was unavoidable, or the failure to prosecute was due to fraud,
accident, mistake, or excusable negligence, the Petition would still be denied since the rules do
not provide any exception that could extend this four (4)-month period to 13 years.

Public interest will be prejudiced if, despite petitioner's inexcusable negligence, its Petition for
Revival is granted. Once petitioner is granted a patent, the loss of competition in the market for
losartan products may result in higher prices.

For the protection of public interest, said application should be considered a forfeited patent
application.
 PHILIPPINE ECONOMIC ZONE AUTHORITY, Petitioner,

v.

PILHINO SALES CORPORATION, Respondent.

G.R. No. 185765, September 28, 2016

SECOND DIVISION, LEONEN

Obligations and Contracts; Rescission of a Contract of Sale . The restoration of the

contracting parties to their original state is the very essence of rescission. 

Mutual restitution under Article 1191 is, however, no license for the negation of
contractually stipulated liquidated damages.

Although the provisions of a contract are legally null and void, the stipulated method of
computing liquidated damages may be accepted as evidence of the intent of the parties. The
provisions, therefore, can be basis for finding a factual anchor for liquidated damages. The
liable party may nevertheless present better evidence to establish a more accurate basis for
awarding damages. In this case, the respondent failed to do so.

On October 4, 1997, the PEZA published an invitation to bid for its acquisition of two brand new
fire truck units.

Among the three (3) companies which participated in the bidding, Pilhino secured the contract
with a stipulation that Pilhino was to deliver to the PEZA two FF3HP brand fire trucks within 45
days of receipt of a purchase order from the PEZA. 

A further stipulation stated that “in case of failure to deliver… on the date specified, the Supplier
agrees to pay penalty at the rate of 1/10 of 1% of the total contract price for each day
commencing on the first day after the date stipulated above.”

As Pilhino still failed to comply, despite repeated demands, the PEZA filed before the RTC a
Complaint for rescission of contract and damages. 
The RTC ruled for the PEZA. 

Subsequently, the CA partly granted Pilhino’s appeal by deleting the forfeiture of Pilhino’s
performance bond and pegging the liquidated damages due from it to the PEZA in the amount of
P1,400,000.00.

PEZA moved for reconsideration, but was denied by the CA.

Hence, this Petition for Review on Certiorari.

Petitioner asks for the reinstatement of the RTC’s award asserting that it already suffered damage
when respondent Pilhino Sales Corporation failed to deliver the trucks on time; that the
contractually stipulated penalty of 1/10 of 1% of the contract price for every day of delay was
neither unreasonable nor contrary to law, morals, or public order; that the stipulation on
liquidated damages was freely entered into by it and respondent; and that the CA’s computation
had no basis in fact and law.

On the other hand, respondent suggests that with the rescission of its contract with petitioner
must have come the negation of the contractual stipulation on liquidated damages and the
obliteration of its liability for such liquidated damages.

Is an award based on contractually stipulated liquidated damages  proper notwithstanding

the rescission of the same contract stipulating it?

Yes. The award for liquidated damages is proper.

Although the provisions of a contract are legally null and void, the stipulated method of
computing liquidated damages may be accepted as evidence of the intent of the parties. 

The provisions, therefore, can be basis for finding a factual anchor for liquidated damages. The
liable party may nevertheless present better evidence to establish a more accurate basis for
awarding damages. In this case, however, the respondent failed to do so.

A contract of sale, such as that entered into by petitioner and respondent, entails reciprocal
obligations. 

Rescission on account of breach of reciprocal obligations is provided for in Article 1191 of the
Civil Code:

“ The power to rescind obligations is implied in reciprocal ones, in case one of the obligors
should not comply with what is incumbent upon him.
The injured party may choose between the fulfillment and the rescission of the obligation, with
the payment of damages in either case. 

x x x.”

The restoration of the contracting parties to their original state is the very essence of rescission. 

Rescission creates the obligation to return the object of the contract. It can be carried out only
when the one who demands rescission can return whatever he may be obliged to restore. 

Contrary to respondent’s assertion, mutual restitution under Article 1191 is, however, no license
for the negation of contractually stipulated liquidated damages.

PHILIPPINE NATIONAL BANK, Petitioner, 

v. 

HEIRS OF THE LATE IRENEO AND CARIDAD ENTAPA, Respondents.

SECOND DIVISION, LEONEN

G.R. No. 215072, September 07, 2016

Political Law: Rendition of Decision; Article VIII of the Constitution: Section 14: No
decision shall be rendered by any court without expressing therein clearly and distinctly
the facts and the law on which it is based.
x x x”

Remedial Law: Rule 36 of the Rules of Court provides: Section 1. Rendition of judgments
and final orders. — A judgment or final order determining the merits of the case shall be in
writing personally and directly prepared by the judge, stating clearly and distinctly the
facts and the law on which it is based, signed by him, and filed with the clerk of the court.

The Constitution requires that a court must state the factual and legal grounds on which its
decisions are based. Any decision that fails to adhere to this mandate is void.

Caridad Entapa (Entapa) and her children, co-owners of parcels of land, executed a Special
Power of Attorney authorizing Joseph Gonzaga to enter into legal transactions on their behalf.
Gonzaga executed a real estate mortgage over Lot No. 2665 in favor of the PHILIPPINE
NATIONAL BANK (PNB) to guarantee his loan but failed to pay the same. The PNB emerged
as the winning bidder, in a public bidding, thus, a Certificate of Sale was issued in the bank's
favor.

Rosario Entapa Orpeza (Orpeza), representing Entapa's other heirs, who learned of the
foreclosure sale, went to the PNB to repurchase of the property. Her request was subsequently
approved. As one of the conditions, a deposit of P178,336.19, 20% of the recomputed amount
was paid as well as the realty taxes on the property.

Subsequently, Orpeza discovered that 5 families were already residing and planting crops on Lot
No. 2665, by virtue of Certificates of Land Ownership (CLOA) issued by the Department of
Agrarian Reform (DAR). She went to the PNB to ask for an explanation and to request the bank
to file a case to annul the CLOAs but PNB did not offer an explanation instead, it issued a
certification declaring that according to their records, there had been no transfer of said lot to the
DAR.

In contrast to PNB’s claim, copies of the Deed of Sale, Deed of Transfer, and Voluntary Offer of
Sale of said lot by the PNB to the DAR were secured by Orpeza. It is also discovered that the lot
was voluntarily offered for Comprehensive Agrarian Reform Program coverage by PNB.

Orpeza demanded the return of the downpayment from the PNB. PNB refused to take action,
hence, the action for collection was filed with the Regional Trial Court (RTC)
The RTC ordered the PNB to return the initial downpayment, realty taxes, exemplary damages,
moral damages and attorney's fees of 15% of the amount due, with legal interest, the repurchase
not having materialized.

At the Court of Appeals petitioner argued that (1) the trial court's Decision violated the
Constitution and the Rules of Civil Procedure when it failed to state the facts and law on which
its ruling was based, and (2) the trial court erred in ordering it to return the payments.

The CA nullified the RTC Decision and remanded the case to latter.

The CA found that RTC Decision did not contain analysis of the evidence of the parties or
reference to any legal basis to reach its conclusions.

PNB moved for reconsideration which was denied by the CA.

Aggrieved, petitioner went to the Supreme Court on a Petition for Review on Certiorari arguing
that the CA erred in rendering judgment on the merits despite nullifying the RTC Decision and
remanding the case. It also argues that the CA should not have held them liable to return the
amount representing initial downpayment of respondents plus legal interest until paid.

Is the Court of Appeals correct in nullifying the Regional Trial Court Decision?
Yes. A court must state the factual and legal basis for its decisions; otherwise, its decisions are
void.

Article 8, Section 14 of the Constitution provides:

“No decision shall be rendered by any court without expressing therein clearly and distinctly the
facts and the law on which it is based.

x x x .”

Further, Section 1, Rule 36 of the Rules of Court provides-

Section 1. Rendition of judgments and final orders. A judgment or final order determining the
merits of the case shall be in writing personally and directly prepared by the judge, stating
clearly and distinctly the facts and the law on which it is based, signed by him, and filed with the
clerk of the court.

The Court of Appeals, in nullifying the Decision of the trial court, stated that it "contained no
reference to any legal basis in reaching its conclusions" nor did it "cite any legal authority or
principle to support its conclusion that the bank is liable."