[Republic Act No. 10372] “9A. 1.
“9A. 1. Exercise original jurisdiction to resolve disputes relating to the terms of a license involving the author’s
AN ACT AMENDING CERTAIN PROVISIONS OF
REPUBLIC ACT NO. 8293, OTHERWISE KNOWN AS THE “INTELLECTUAL PROPERTY CODE OF THE
PHILIPPINES”. AND FOR OTHER PURPOSES
Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled:
SECTION 1. Section 6 of Republic Act No. 8293, otherwise known as the “Intellectual Property Code of the
Philippines”,
“SEC. 6. The Organization Structure of the IPO.
“6.2. The Office shall be divided into seven (7) Bureaus, each of which shall be headed by a Director and
assisted by an Assistant Director. These Bureaus are:
“(f) The administrative. Financial and Personnel Services Bureaus and
“(g) The Bureaus of Copyright and Other Related Rights.”
Sec. 2. Section 7 of Republic Act No. 8293 is hereby amended to read as follows:
“Sec. 7. The Director General and Deputies Director General.
“(b) Exercise exclusive appellate jurisdiction over all decisions rendered by the Director of Legal Affairs, the
Director of Patents, the Director of Trademarks, the Director of Copyright and Other Related Rights, and the
Director of the Documentation, Information and Technology Transfer Bureau. The decisions of the Director
General in the exercise of his appellate jurisdiction in respect of the decision of the Direction of Patents, the
Director of Trademarks and Director of Copyright and Other Related Rights shall be appealable of the Court of
Appeals in accordance with the rules of Court; and those in respect of the decisions of the Director of the
Documentation, Information and Technology Transfer Bureau shall be appealable to the Secretary of Trade
and Industry;
“(c) Undertake enforcement functions supported by concerned agencies such as the Philippine National
Police, the National Bureau of Investigation, the Bureau of Customs, the Optical media Board, and the local
government units, among others;
“(d) Conduct visits during reasonable hours to establishments and businesses engaging in activities violating
intellectual property rights and provisions of this act based on report, information or complaint received by the
office; and
“(e) Such other functions in furtherance of protecting IP rights and objectives of this Act.”
Sec. 3. A new Section 9A is hereby inserted after section 9 of Republic Act No. 8293, to read as follows:
“Sec. 9A. The Bureau of Copyright and Other Related Rights. The Bureau of Copyright and Other Related
Rights shall have the following functions:
right to public performance or other communication of his work;
“9A. 2. Accept, review and decide on application for the accreditation of collective management organization
or similar entities;
“9A. 3. Conduct studies and researches in the field of copyright and related rights; and
“9A. 4. Provide other copyright and related rights service and charge reasonable fees therefore.”
Sec. 4. Section 171.3. of Republic Act No. 8293 is hereby amended to read as follows:
“Sec. 171. Definitions.
“171.3 ‘Communication to the public or communicate to the public’ means any communication to the public,
including broadcasting, rebroadcasting, retransmitting by cable, broadcasting and retransmitting by satellite,
and includes the making of a work available to the public by wire or wireless means in such a way that
members of the public may access these works from a place and time individually chosen by them.”
Sec. 5. Section 171.9. of Republic Act No. 8293 is hereby amended to read as follows:
“171.9. “Reproduction is the making of one (1) or more copies, temporary or permanent in whole or in part, of
a work or a sound recording in any manner or form without prejudice to the provisions of Section 185 of this
Act (Sec. 41[E]. P.D. No. 49a)”
Sec. 6. These shall be two new subsections to be added at the end of Section 171.11. to be known as 171.2
and 171.13. both to read as follows:
“171.12 ‘Technological measure’ means any technology, device or component that in the normal courses of its
operation, restricts acts in respect of a work, performance or sound recording, which are not authorized by the
authors, performers or producers of sound recordings concerned or permitted by law;
“171.3. ‘Rights management information’ means information which identifies the work , sound recording or
performance ; the author of the work, producer of the sound recording or performer of the performance; the
owner of any right in the work, sound recording or information about the terms and conditions of the use of the
work, sound recording or performance; and any number or code that represent such information when any of
these items is attached to a copy of the works , sound recording or fixation or performance or appears in
conjunction with the communication to the public of a work, sound recording or performance.”
Sec. 7. The Chapter Title of Chapter VII, Part IV, the Law on Copyright, is hereby amended to read as follows:
CHAPTER VII
“TRANSFER ASSIGNMENT AND LICENSING OF COPYRIGHT”
Sec. 8. Section 180 of Republic Act No. 8293 is hereby amended to read as follows:
“Sec. 180. Rights of Assignee of Licensee 180.1. The copyright may be assigned of licensed in whole or in
part within the scope of the assignment or license, the assignee or licensee is entitled to all the rights and
remedies which the assignor or licensor had with respect to the copyright.
“180.2. The copyright is not deemed assigned or licensed inter vivos, in whole or in part, unless there is a
written indication of such intention.
“180.4. Any exclusivity in the economic rights in a work may be exclusively licensed. Within the scope of the
exclusive license the licensee is entitled to all the rights and remedies which the licensor had with respect to
the copyright.
“180.5. The copyright owner has the right to regular statement of accounts from the assignee or the licensee
with regard to assigned or licensed work..”
“Sec. 9. Section 181 of Republic Act No. 8293 is hereby amended to read as follows:
“Sec. 181. Copyright and Material Object. The copyright is distinct from the property in the material object
subject to it. Consequently the transfer assignment or licensing of the copyright shall not itself constitute a
transfer of the material object. Nor shall a transfer or assignment of the sole copy or of one or several copies
of the work imply transfer assignment or licensing of the copyright (Sec. 16. P.D. No. 49)”
Sec. 10. Section 183 Republic Act No. 8293 is hereby amended to read as follows:
“Sec. 183. Designation of Society. The owners of copyright and related rights or their heirs may designate a
society of artists, writer, composers, and other right-holders to collectively manage their economic or moral
rights on their behalf. For the said societies to enforce the rights on their members, they shall be first secure
the necessary accreditation from the Intellectual Property Office. (Sec. 32. P.D No. 49a)”
Sec. 11. Section 184. 1. Of Republic act No. 8293 is hereby amended to read as follows:
“Sec. 184. Limitation on Copyright.
“(1) The reproduction or distribution of published articles or materials in a specialized format exclusively for the
use of the blind, visually and reading-impaired persons: Provided, That such copies and distribution shall be
made on a nonprofit basis and shall indicate the copyright owner and the date of the original publication.”
“Sec. 12. Section 185.1. of Republic Act No. 8293 is hereby amended to read as follows:
“Sec. 185. Fair Use of Copyrighted Work. 185.1. The fair use of a copyrighted work for criticism, comment,
news reporting, teaching including limited number of copies for the classroom use, scholarship, researched,
and similar purposes is not an infringement of copyright. DE compilation ,which is understood here to be the
production of the code and translation of the form of a computer program to achieve the interoperability of an
independently created computer program with other programs may also constitute fair use under the criteria
established by this section, to the extent that such de compilation is done for the purpose of obtaining the
information necessary to achieve such interoperability.
Sec. 13. Section 188.1. of Republic Act No. 8293 is hereby amended to read as follows:
”Sec. 13. Section 188. Reproduction by Libraries. 188.1. Notwithstanding the provision of Subsection 177.1.,
any library or achieve whose activities are not for profit may, without the authorization of the author or
copyright owner, make a limited number of copies of the work, as may be necessary for such institutions to
fulfill their mandate, by reprographic reproduction:
“(c) Where the making of such limited copies is in order to preserve and, if necessary in the event that is lost,
destroyed or rendered unusable, replace a copy, or to replace, in the permanent collection of another similar
library or achieve, a copy which has been lost, destroyed or rendered unusable and copies are not available
with the publisher.”
Sec. 14. Section 190.1. and 190.2. of Republic Act No. 8293 are deleted in their entirety.
Sec.15. Section 190.3. of Republic Act No. 8293 hereby renumbered and amended as the sole provision
under section 190 to read as follows:
“Sec. 190. Importation and Exportation of Infringing Materials. Subject to the approval of the Secretary of
Finance, the Commissioner of Customs is hereby empowered to make rules and regulations for preventing the
importation or exportation of infringing articles prohibited under Part IV of this Act and under relevant treaties
and convention to which the Philippines may be a part and seizing and condemning and disposing of the same
in case they are discovered after they have been imported or before they exported. (Sec. 30. P.D. No. 49)”
Sec. 16. Section 191 of Republic Act No. 8293 is hereby amended to read as follows:
“Sec. 191. Deposit and Notice of Deposit with the National Library and the Supreme Court Library. At any time
during the subsistence of the copyright, the owner of the copyright or of any exclusive right in the work may,
for the purpose of completing the records of the National Library and the Supreme Court Library, register and
deposit with them, by personal delivery or by registered mail, two (2) copies or reproductions of the work such
form as Directors of said libraries may prescribe in accordance with regulations: Provided, That only works in a
field of law shall be deposited with the Supreme Court Library. Such registration and deposit is not a condition
of copyright protection.”
Sec. 17. Section 198 of Republic Act No. 8293 is hereby amended to read as follows:
“Sec. 198. Term of Moral Rights. – 198.1. The right of an author under Section 193.1 shall last during of the
lifetime of the author and in perpetuity after his death while the rights under Section 193.2. 193.3 and 193.4
shall be coterminous with the economics rights, the moral rights shall not be assignable or subject to license.
The person or persons to be charge with the posthumous enforcement of these rights shall be named in a
written instrument which shall be filed with the National Library. In default of such person or persons, such
enforcement shall devolve upon either the author’s heirs, and in default of the heirs, the Director of the
National Library.”
Sec. 18. Section 203 of Republic Act No. 8293 is hereby amended to read as follows:

”203.2. The right of authorizing the direct or indirect reproduction of their performances fixed in sound
recording or audiovisual works or fixations in any manner of form;

“203.3 Subject to the provisions of Section 206. The right of authorizing the first public distribution of the
original and copies of their performance fixed in sound recording or audiovisual works or fixations through sale
or rental of other forms of transfer of ownership;

“203.4. The right of authorizing the commercial rental to the public of the original and copies of their
performances fixed in sound recordings or audiovisual works or fixations, even after distribution of them by or
pursuant to the authorization by the performer and;

“203.5. The right of authorizing the making available to the public of their performances fixed in sound
recordings or audiovisual works or fixations by wire or wireless means, in such a way that member of the
public access them from a place and time individually chosen by them (Sec. 42 P.D No. 49A).”

Sec. 19 Section 204.1 of Republic Act No. 8293 is hereby amended to read as follows:

“204.1. Independently of a performer’s economic rights, the performer shall, as regards his live aural
performance or performances fixed in sound recordings or audiovisual works or fixations, have the rights to
claim to be to be identified as the performer of his performances, except where the omission is dictated by the
manner of the use of performance, and to object to any distortion, mutilation or other modification of is
performances that would be prejudicial to his reputation.”

G.R. No. 179127             December 24, 2008
IN-N-OUT BURGER, INC., petitioner, vs. SEHWANI, INCORPORATED AND/OR BENITA’S FRITES,
INC., respondents.
DECISION
CHICO-NAZARIO, J.:
This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, seeking to reverse the
Decision1 dated 18 July 2006 rendered by the Court of Appeals in CA-G.R. SP No. 92785, which reversed the
Decision2 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 petitioner’s
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 Benita’s 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 petitioner’s 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.
Petitioner’s 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
petitioner’s 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 Benita’s 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 Reconsideration15 and petitioner’s 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 AFFAIR’S (SIC) DECISION AND RESOLUTION (1) CANCELLING
RESPONDENT’S 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 petitioner’s 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 petitioner’s 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 petitioner’s 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 attorney’s 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. Attorney’s 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
ATTORNEY’S FEES TO RESPONDENTS
THE IPO DIRECTOR GENERAL COMMITTED GRAVE ERROR IN AFFIRMING THE BUREAU OF
LEGAL AFFAIR’S DECISION (1) CANCELLING PETITIONER’S 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 petitioner’s 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 General’s 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 attorney’s 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
attorney’s 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 Decision25 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 petitioner’s 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 attorney’s 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, respondent’s 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 petitioner’s 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 DECISION DATED 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 DECISION DATED 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 Decision29 in G.R. No. 171053 on 15 October 2007, which affirmed the IPO Director
General’s 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 Secretary’s 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 Secretary’s Certificate reads:
Subscribed and sworn to me this 20th day of August 2007 in Irving California.
Rachel A. Blake (Sgd.)
Notary Public30
Respondents aver that the said Secretary’s 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) petitioner’s 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.
Baranda’s 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 public’s 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 Secretary’s 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 Secretary’s 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 party’s 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 petitioner’s 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. Baranda’s
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
Court’s 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 Affair’s (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 Affair’s (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, petitioner’s complaint, which seeks the cancellation of the disputed mark in the name of
respondent Sehwani, Incorporated, and damages for violation of petitioner’s 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:
xxxx
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.
xxxx
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 petitioner’s
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-à-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 [petitioner’s] 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 [petitioner’s]
IN-N-OUT Burger’s name and trademark IN-N-OUT with Arrow design.
There is no evidence that the [respondents] were authorized by the [petitioner] to use the latter’s
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
[petitioner’s] 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.
xxxx
[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 [petitioner’s] 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, [petitioner’s] 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 [respondent’s] 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, attorney’s 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 respondent’s failure to present countervailing evidence. Considering
moreover the reputation of petitioner’s counsel, the actual attorney’s 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.

G.R. No. 167715               November 17, 2010
PHIL PHARMAWEALTH, INC., Petitioner, vs. PFIZER, INC. and PFIZER (PHIL.) INC., Respondents.
DECISION
PERALTA, J.:
Before the Court is a petition for review on certiorari seeking to annul and set aside the Resolutions dated
January 18, 20051 and April 11, 20052 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:
xxxx
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
xxxx
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 x4
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 Order5 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
Injunction6 which, however, was denied by the BLA-IPO in an Order7 dated October 15, 2003.
Respondents filed a Motion for Reconsideration but the same was also denied by the BLA-IPO in a
Resolution8 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 Order11 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 order14 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:
Section 37. Rights of patentees.  A patentee shall have the exclusive 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 ₱1,000,000.00 as actual damages;
(b) ₱700,000.00 as attorney's fees and litigation expenses;
(d) ₱1,000,000.00 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 ₱3,000,000.00 as actual damages;
(ii) ₱500,000.00 as attorney's fees and ₱1,000,000.00 as litigation expenses;
(iii) ₱3,000,000.00 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.