G.R. No. L-32160 January 30, 1982

DOMICIANO A. AGUAS, petitioner, vs.CONRADO G. DE LEON and COURT OF APPEALS, respondents.

FERNANDEZ, J.:

This is a petition for certiorari to review the decision of the Court of Appeals in CA G.R. NO. 37824-R entitled "Conrado G. de Leon, plaintiff-appelle vs. Dominciano Aguas and F.H. Aquino and Sons, defendants-appellants," the dispositive portion of which reads:

WHEREFORE, with the modification that plintiff-applee's award of moral damages is hereby redured to P3,000.00, the appealed judgment is hereby affirmed, in all othe respects, with costs against appellants. 1

On April 14, 1962, Conrado G. de Leon filed in the Court of First Instance of Rizal at Quezon City a complaint for infringement of patent against Domiciano A. Aguas and F. H. Aquino and Sons alleging that being the original first and sole inventor of certain new and useful improvements in the process of making mosaic pre-cast tiles, he lawfully filed and prosecuted an application for Philippine patent, and having complied in all respects with the statute and the rules of the Philippine Patent Office, Patent No. 658 was lawfully granted and issued to him; that said invention was new, useful, not known or used by others in this country before his invention thereof, not patented or described in any printed publication anywhere before his invention thereof, or more than one year prior to his application for patent thereof, not patented in any foreign country by him or his legal representatives on application filed more than one year prior to his application in this country; that plaintiff has the exclusive license to make, use and sell throughout the Philippines the improvements set forth in said Patent No. 658; that the invention patented by said Patent No. 658 is of great utility and of great value to plaintiff and of great benefit to the public who has demanded and purchased tiles embodying the said invention in very large quantities and in very rapidly increasing quant ies; that he has complied with the Philippine statues relating to marking patented tiles sold by him; that the public has in general acknowledged the validity of said Patent No. 658, and has respected plaintiff's right therein and thereunder; that the defendant Domiciano A. Aguas infringed Letters of Patent No. 658 by making, using and selling tiles embodying said patent invention and that defendant F. H. Aquino & Sons is guilty of infringement by making and furnishing to the defendant Domiciano A. Aguas the engravings, castings and devices designed and intended of tiles embodying plaintiff;s patented invention; that he has given direct and personal notice to the defendants of their said acts of infringement and requested them to desist, but nevertheless, defendants have refused and neglected to desist and have disregarded such request, and continue to so infringe causing great and irreparable damage to plaintiff; that if the aforesaid infringement is permitted to continue, further losses and damages and irreparable injury will be sustained by the plaintiff; that there is an urgent need for the immediate issuance of a preliminary injunction; that as a result of the defendants' wrongful conduct, plaintiff has suffered and the defendants are liable to pay him, in addition to actual damages and loss of profits which would be determined upon proper accounting, moral and exemplary or corrective damages in the sum of P90,000.00; that plaintiff has been compelled to go to court for the protection and enforcement of his and to engage the service of counsel, thereby incurring attorney's fees and expenses of litigation in the sum of P5,000.00. 2

On April 14, 1962, an order granting the plaintiff's petition for a Writ of Preliminary Injunction was issued. 3

On May 23, 1962, the defendant Domiciano A. Aguas filed his answer denying the allegations of the plaintiff and alleging that: the plaintiff is neither the original first nor sole inventor of the improvements in the process of making mosaic pre-cast tiles, the same having been used by several tile-making factories in the Philippines and abroad years before the alleged invention by de Leon; that Letters Patent No. 658 was unlawfully acquired by making it appear in the application in relation thereto that the process is new and that the plaintiff is the owner of the process when in truth and in fact the process incorporated in the patent application has been known and used in the Philippines by almost all tile makers long before the alleged use and registration of patent by plaintiff Conrado G. de Leon; that the registration of the alleged invention did not confer any right on the plaintiff because the registration was unlawfully secured and was a result of the gross misrepresentation on the part of the plaintiff that his alleged invention is a new and inventive process; that the allegation of the plaintiff that Patent No. 658 is of great value to plaintiff and of great benefit to the public is a mere conclusion of the plaintiff, the truth being that a) the invention of plaintiff is neither inventive nor new, hence, it is not patentable, b) defendant has been granted valid patents (Patents No. 108, 109, 110 issued on December 21, 1961) on designs for

concrete decorative wall tiles; and c) that he can not be guilty of infringement because his products are different from those of the plaintiff. 4

The trial court rendered a decision dated December 29, 1965, the dispositive portion of which reads:

WHEREFORE, judgment is hereby rendered in favor of plaintiff and against the defendants:

1. Declaring plaintiff's patent valid and infringed:

2. Granting a perpetual injunction restraining defendants, their officers, agents, employees, associates, confederates, and any and all persons acting under their authority from making and/or using and/or vending tiles embodying said patented invention or adapted to be used in combination embodying the same, and from making, manufacturing, using or selling, engravings, castings and devises designed and intended for use in apparatus for the making of tiles embodying plaintiff's patented invention, and from offering or advertising so to do, and from aiding and abetting or in any way contributing to the infringement of said patent;

3. Ordering that each and all of the infringing tiles, engravings, castings and devices, which are in the possession or under the control of defendants be delivered to plaintiff;

4. Ordering the defendants to jointly and severally pay to the plaintiff the following sums of money, to wit:

(a) P10,020.99 by way of actual damages;

(b) P50,000.00 by way of moral damages;

(c) P5,000.00 by way of exemplary damages;

(d) P5,000.00 by way of attorney's fees and

(e) costs of suit. 5

The defendant Domiciano Aguas appealed to the Court of Appeals, assigning the following errors. 6

I

THE TRIAL COURT ERRED IN NOT HOLDING THAT PLAINTIFF'S PATENT FOR THE 'PROCESS OF MAKING MOSAIC PRE-CAST TILE' IS INVALID BECAUSE SAID ALLEGED PROCESS IS NOT AN INVENTION OR DISCOVERY AS THE SAME HAS ALREADY LONG BEEN USED BY TILE MANUFACTURERS BOTH ABROAD AND IN THIS COUNTRY.

II

THE TRIAL COURT ERRED IN HOLDING THAT THE PATENT OF PLAINTIFF IS VALID BECAUSE IT IS AN IMPROVEMENT OR THE AGE-OLD TILE MAKING SYSTEM.

III

THE TRIAL COURT ERRED IN NOT ORDERING THE CANCELLATION OF PLAINTIFF-APPELLEE'S LETTERS PATENT NO. 658, EXHIBIT L, IN ACCORDANCE WITH THE PERTINENT PROVISIONS OF THE PATENT LAW, REPUBLIC ACT 165.

1

IV

THE TRIAL COURT ERRED IN HOLDING THAT DEFENDANT DOMICIANO A. AGUAS IS GUILTY OF INFRINGEMENT DESPITE THE FACT THAT PLAINTIFF'S PATENT IS NOT A VALID ONE.

V

THE TRIAL COURT ERRED IN NOT HOLDING THAT THE DEFENDANT COULD NEVER BE GUILTY OF INFRINGEMENT OF PLAINTIFF'S PATENT BECAUSE EVEN IN MATTERS NOT PATENTED BY THE PLAINTIFF - LIKE THE COMPOSITION AND PROPORTION OF INGREDIENTS USED AND THE STRUCTURAL DESIGNS OF THE MOULD AND THE TILE PRODUCED - THAT OF THE DEFENDANT ARE DIFFERENT.

VI

THE TRIAL COURT ERRED IN NOT DISMISSING THE COMPLAINT AND IN HOLDING THE DEFENDANT, INSTEAD OF THE PLAINTIFF, LIABLE FOR DAMAGES, AND ATTORNEY'S FEES.

On August 5, 1969, the Court of Appeals affirmed the decision of the trial court, with the modification that plaintiff-appellee's award of moral damages was reduced to P3,000.00. 7

The petitioner assigns the following errors supposedly committed by the Court of Appeals:

It is now respectfully submitted that the Court of Appeals committed the following errors involving questions of law, to wit:

First error. — When it did not conclude that the letters patent of the respondent although entitled on the cover page as a patent for improvements, was in truth and in fact, on the basis of the body of the same, a patent for the old and non-patentable process of making mosaic pre-cast tiles;

Second error. — When it did not conclude from the admitted facts of the case, particularly the contents of the letters patent, Exh. L and the pieces of physical evidence introduced consisting of samples of the tiles and catalouges, that the alleged improvements introduced by the respondent in the manufacture of mosaic pre-cast tiles are not patentable, the same being not new, useful and inventive.

Third error. — As a corollary, when it sentenced the herein petitioner to pay the damages enumerated in the decision of the lower court (Record on Appeal, pp. 74-75), as confirmed by it (the Court of Appeals), but with the modification that the amount of P50,000.00 moral damages was reduced to P3,000.00. 8

The facts, as found by the Court of Appeals, are:

The basic facts borne out by the record are to the effect that on December 1, 1959 plaintiff-appellee filed a patent application with the Philippine Patent Office, and on May 5, 1960, said office issued in his favor Letters Patent No. 658 for a "new and useful improvement in the process of making mosaic pre-cast tiles" (Exh, "L"); that defendant F.H. Aquino & Sons engraved the moulds embodying plaintiff's patented improvement for the manufacture of pre-cast tiles, plaintiff furnishing said defendant the actual model of the tiles in escayola and explained to said engraver the plans, specifications and the details of the engravings as he wanted them to be made, including an explanation of the lip width, artistic slope of easement and critical depth of the engraving

that plaintiff wanted for his moulds; that engraver Enrique Aquino knew that the moulds he was engraving for plaintiff were the latter's very own, which possession the new features and characteristics covered by plaintiff's parent; that defendant Aguas personally, as a building contractor, purchased from plaintiff, tiles shaped out of these moulds at the back of which was imprinted plaintiff's patent number (Exhs., "A" to "E"); that subsequently, through a representative, Mr. Leonardo, defendant Aguas requested Aquino to make engravings of the same type and bearing the characteristics of plaintiff's moulds; that Mr. Aquino knew that the moulds he was asked to engrave for defendant Aguas would be used to produce cement tiles similar to plaintiff's; that the moulds which F.H. Aquino & Sons eventually engraved for Aguas and for which it charged Aguas double the rate it charged plaintiff De Leon, contain the very same characteristic features of plaintiff's mould and that Aguas used these moulds in the manufacture of his tiles which he actually put out for sale to the public (Exhs. "1" to "3" and Exhs. "A" to "E"); that both plaintiff's and defendant Aguas' tiles are sculptured pre-cast wall tiles intended as a new feature of construction and wag ornamentation substantially Identical to each other in size, easement, lip width and critical depth of the deepest depression; and that the only significant difference between plaintiff's mould and that engraved by Aquino for Aguas is that, whereas plaintiff's mould turns out tiles 4 x 4 inches in size, defendant Aguas' mould is made to fit a 4-1/4 x 4-1/4 inch tile. 9

The patent right of the private respondent expired on May 5, 1977. 10 The errors will be discuss only to determine the right of said private respondent to damages.

The petitioner questioned the validity of the patent of the private respondent, Conrado G. de Leon, on the ground that the process, subject of said patent, is not an invention or discovery, or an improvement of the old system of making tiles. It should be noted that the private respondent does not claim to be the discoverer or inventor of the old process of tile-making. He only claims to have introduced an improvement of said process. In fact, Letters Patent No. 658 was issued by the Philippine Patent Office to the private respondent, Conrado G. de Leon, to protect his rights as the inventor of "an alleged new and useful improvement in the process of making mosaic pre-cast tiles." 11

Indeed, Section 7, Republic Act No. 165, as amended provides: "Any invention of a new and useful machine, manufactured product or substance, process, or an improvement of the foregoing, shall be patentable.

The Court of Appeals found that the private respondent has introduced an improvement in the process of tile-making because:

... we find that plaintiff-appellee has introduced an improvement in the process of tile-making, which proceeds not merely from mechanical skill, said improvement consisting among other things, in the new critical depth, lip width, easement and field of designs of the new tiles. The improved lip width of appellee's tiles ensures the durability of the finished product preventing the flaking off of the edges. The easement caused by the inclination of the protrusions of the patented moulds is for the purpose of facilitating the removal of the newly processed tile from the female die. Evidently, appellee's improvement consists in the solution to the old critical problem by making the protrusions on his moulds attain an optimum height, so that the engraving thereon would be deep enough to produce tiles for sculptured and decorative purposes, strong optimum thickness of appellee's new tiles of only 1/8 of an inch at the deepest easement (Exhs. "D" and "D-1") is a most critical feature, suggestive of discovery and inventiveness, especially considering that, despite said thinness, the freshly formed tile remains strong enough for its intended purpose.

While it is true that the matter of easement, lip width, depth, protrusions and depressions are known to some sculptors, still, to be able to produce a new and useful wall tile, by using them all together, amounts to an invention. More so, if the totality of all these features are viewed in combination with the Ideal composition of cement, sodium silicate and screened fine sand.

2

By using his improved process, plaintiff has succeeded in producing a new product - a concrete sculptured tile which could be utilized for walling and decorative purposes. No proof was adduced to show that any tile of the same kind had been produced by others before appellee. Moreover, it appears that appellee has been deriving considerable profit from his manufacture and sale of such tiles. This commercial success is evidence of patentability (Walker on Patents, Dellers Edition, Vol. I, p. 237). 12

The validily of the patent issued by the Philippines Patent Office in favor of the private respondent and the question over the inventiveness, novelty and usefulness of the improved process therein specified and described are matters which are better determined by the Philippines Patent Office. The technical staff of the Philippines Patent Office, composed of experts in their field, have, by the issuance of the patent in question, accepted the thinness of the private respondent's new tiles as a discovery. There is a presumption that the Philippines Patent Office has correctly determined the patentability of the improvement by the private respondent of the process in question.

Anent this matter, the Court of Appeals said:

Appellant has not adduced evidence sufficient to overcome the above established legal presumption of validity or to warrant reversal of the findings of the lower court relative to the validity of the patent in question. In fact, as we have already pointed out, the clear preponderance of evidence bolsters said presumption of validity of appellee's patent. There is no indication in the records of this case and this Court is unaware of any fact, which would tend to show that concrete wall tiles similar to those produced by appellee had ever been made by others before he started manufacturing the same. In fact, during the trial, appellant was challenged by appellee to present a tile of the same kind as those produced by the latter, from any earlier source but, despite the fact that appellant had every chance to do so, he could not present any. There is, therefore, no concrete proof that the improved process of tile-making described in appellee's patent was used by, or known to, others previous to his discovery thereof. 13

The contention of the petitioner Aguas that the letters patent of de Leon was actually a patent for the old and non-patentable process of making mosaic pre-cast tiles is devoid of merit. De Leon never claimed to have invented the process of tile-making. The Claims and Specifications of Patent No. 658 show that although some of the steps or parts of the old process of tile making were described therein, there were novel and inventive features mentioned in the process. Some of the novel features of the private respondent's improvements are the following: critical depth, with corresponding easement and lip width to such degree as leaves the tile as thin as 1/8 of an inch at its thinnest portion, Ideal composition of cement and fine river sand, among other ingredients that makes possible the production of tough and durable wall tiles, though thin and light; the engraving of deep designs in such a way as to make the tiles decorative, artistic and suitable for wall ornamentation, and the fact that the tiles can be mass produced in commercial quantities and can be conveniently stock-piled, handled and packed without any intolerable incidence of breakages. 14

The petitioner also contends that the improvement of respondent is not patentable because it is not new, useful and inventive. This contention is without merit.

The records disclose that de Leon's process is an improvement of the old process of tile making. The tiles produced from de Leon's process are suitable for construction and ornamentation, which previously had not been achieved by tiles made out of the old process of tile making. De Leon's invention has therefore brought about a new and useful kind of tile. The old type of tiles were usually intended for floors although there is nothing to prevent one from using them for walling purposes. These tiles are neither artistic nor ornamental. They are heavy and massive.

The respondent's improvement is indeed inventive and goes beyond the exercise of mechanical skill. He has introduced a new kind of tile for a new purpose. He has improved the old method of making tiles and pre-cast articles which were not satisfactory because of an intolerable number of breakages, especially if deep engravings are made on the tile. He has overcome the problem of producing decorative tiles with deep engraving, but with sufficient durability. 15 Durability inspite of the thinness and lightness of the tile, is assured, provided that a certain critical depth is maintained in relation to the dimensions of the tile. 16

The petitioner also claims that changing the design from embossed to engraved tiles is neither new nor inventive because the Machuca Tile Factory and the Pomona Tile Manufacturing Company have been manufacturing decorative wall tiles that are embossed as well as engraved; 17 that these tiles have also depth, lip width, easement and field of designs; 18 and that the private respondent had copied some designs of Pomona. 19

The Machuca tiles are different from that of the private respondent. The designs are embossed and not engraved as claimed by the petitioner. There may be depressions but these depressions are too shallow to be considered engraved. Besides, the Machuca tiles are heavy and massive.

There is no similarity between the Pomona Tiles and de Leon's tiles. The Pomona tiles are made of ceramics. 20 The process involved in making cement tiles is different from ceramic tiles. Cement tiles are made with the use of water, while in ceramics fire is used. As regards the allegation of the petitioner that the private respondent copied some designs of Pomona, suffice it to say that what is in issue here is the process involved in tile making and not the design.

In view of the foregoing, this Court finds that Patent No. 658 was legally issued, the process and/or improvement being patentable.

Both the trial court and the Court of Appeals found as a fact that the petitioner Domiciano A. Aguas did infringe de Leon's patent. There is no showing that this case falls under one of the exceptions when this Court may overrule the findings of fact of the Court of Appeals. The only issue then to be resolved is the amount of damages that should be paid by Aguas.

In its decision the Court of Appeals affirmed the amount of damages awarded by the lower court with the modification that the respondent is only entitled to P3,000.00 moral damages. 21

The lower court awarded the following damages: 22

a) P10,020.99 by way of actual damages;

b) P50,000.00 by way of moral damages;

c) P5,000.00 by way of exemplary damages;

d) P5,000.00 by way of attomey's fees and

e) Costs of suit

because:

An examination of the books of defendant Aguas made before a Commissioner reveals that during the period that Aguas was manufacturing and selling tiles similar to plaintiff's, he made a gross income of P3,340.33, which can be safely be considered the amount by which he enriched himself when he infringed plaintiff's patent. Under Sec. 42 of the Patent Law any patentee whose rights have been infringed is entitled to damages which, according to the circumstances of the case may be in a sum above the amount found as actual damages sustained provided the award does not exceed three times the amount of such actual damages. Considering the wantonness of the infringement committed by the defendants who knew all the time about the existence of plaintiff's patent, the Court feels there is reason to grant plaintiff maximum damages in the sum of P10,020.99. And in order to discourage patent infringements and to give more teeth to the provisions of the patent law thus promoting a stronger public policy committed to afford greater incentives and protection to inventors, the Court hereby awards plaintiff exemplary damages in the sum of P5,000.00 to be paid jointly and severally by defendants. Considering the status of plaintiff as a reputable businessman, and owner of the likewise reputed House of Pre-Cast, he is entitled to an award of moral damages in the sum of P50,000.00. 23

In reducing the amount of moral damages the Court of Appeals said:

3

As regards the question of moral damages it has been shown that as a result of the unlawful acts of infringment committed by defendants, plaintiff was unstandably very sad; he worried and became nervous and lost concentration on his work in connection with his tile business (pp. 28, 30, t.s.n., Feb. 28, 1964). In addition, plaintiff's character and reputation have been unnecessarily put in question because defendants, by their acts of infringement have created a doubt or suspicion in the public mind concerning the truth and honesty of plaintiff's advertisements and public announcements of his valid patent. Necessarily, said acts of defendants have caused plaintiff considerable mental suffering, considering especially, the fact that he staked everything on his pre-cast tile business (p. 36, t.s.n., Id.) The wantonness and evident bad faith characterizing defendants' prejudicial acts against plaintiff justify the assessment of moral damages in plaintiff's favor, though we do not believe the amount of P50,000.00 awarded by the lower court is warranted by the circumstances. We feel that said amount should be reduced to P3,000.00 by way of compensating appellee for his moral suffering. "Willful injury to property may be a legal ground for awarding moral damages if the court should find that, under the circumstances such damages are justly due" (Art. 2219 NCC).

There is no reason to reduce the amount of damages and attorneys fees awarded by the trial court as modified by the Court of Appeals.

WHEREFORE, the decision of the Court of Appeals in CA G.R. No. 37824-R appealed from is hereby affirmed, without pronouncement as to costs.

SO ORDERED.

Makasiar, Guerrero, Melencio-Herrera and Plana, JJ., concur.

Teehankee, J., took no part.

G.R. No. 118708 February 2, 1998

CRESER PRECISION SYSTEMS, INC., petitioner, vs.COURT OF APPEALS AND FLORO INTERNATIONAL CORP., respondents.

MARTINEZ, J.:

This petition for review on certiorari assails the decision 1 of the Court of Appeals dated November 9, 1994 in C.A.-G.R. SP No. 34425 entitled "Floro International Corp. vs. Hon. Tirso D.C Cruz and Creser Precision System, Inc.", the dispositive portion of which reads:

WHEREFORE, THE PETITION IS HEREBY GRANTED. THE COMPLAINT FOR INJUNCTION AND DAMAGES, CIVIL CASE NO. 93-1856 BEFORE THE RESPONDENT JUDGE IS HEREBY ORDERED DISMISSED AND HIS ORDERS THEREIN OF DECEMBER 29, 1993 AND MAY 11, 1994 ARE ORDERED SET ASIDE.

Private respondent is a domestic corporation engaged in the manufacture, production, distribution and sale of military armaments, munitions, airmunitions and other similar materials. 2

On January 23, 1990, private respondent was granted by the Bureau of Patents, Trademarks and Technology Transfer (BPTTT), a Letters Patent No. UM-6938 3 covering an aerial fuze which was published in the September-October-1990, Vol. III, No. 5 issue of the Bureau of Patent's Official Gazette. 4

Sometime in November 1993, private respondent, through its president, Mr. Gregory Floro, Jr., discovered that petitioner submitted samples of its patented aerial fuze to the Armed Forces of the Philippines (AFP) for testing. He learned that petitioner was claiming the aforesaid aerial fuze as its own and planning to bid and manufacture the same commercially without license or authority from private respondent. To protect its right, private respondent on December 3, 1993, sent a letter 5 to petitioner advising it of its existing patent and its rights thereunder, warning petitioner of a possible court action and/or application for injunction, should it proceed with the scheduled testing by the military on December 7, 1993.

In response to private respondent's demand, petitioner filed on December 8, 1993 a complaint 6 for injunction and damages arising from the alleged infringement before the Regional Trial Court of Quezon City, Branch 88. The complaint alleged, among others: that petitioner is the first, true and actual inventor of an aerial fuze denominated as "Fuze, PDR 77 CB4" which it developed as early as December 1981 under the Self-Reliance Defense Posture Program (SRDP) of the AFP; that sometime in 1986, petitioner began supplying the AFP with the said aerial fuze; that private respondent's aerial fuze is identical in every respect to the petitioner's fuze; and that the only difference between the two fuzes are miniscule and merely cosmetic in nature. Petitioner prayed that a temporary restraining order and/or writ of preliminary injunction be issued enjoining private respondent including any and all persons acting on its behalf from manufacturing, marketing and/or profiting therefrom, and/or from performing any other act in connection therewith or tending to prejudice and deprive it of any rights, privileges and benefits to which it is duly entitled as the first, true and actual inventor of the aerial fuze.

On December 10, 1993, the trial court issued a temporary restraining order. Thereafter, hearings were held on the application of petitioner for the issuance of a writ of preliminary injunction, with both parties presenting their evidence. After the hearings, the trial court directed the parties to submit their respective memoranda in support of their positions.

On December 27, 1993, private respondent submitted its memorandum 7 alleging that petitioner has no cause of action to file a complaint for infringement against it since it has no patent for the aerial fuze which it claims to have invented; that petitioner's available remedy is to file a petition for cancellation of patent before the Bureau of Patents; that private respondent as the patent holder cannot be stripped of its property right over the patented aerial fuze consisting of the exclusive right to manufacture, use and sell the same and that it stands to suffer irreparable damage and injury if it is enjoined from the exercise of its property rights over its patent.

On December 29, 1993, the trial court issued an Order 8 granting the issuance of a writ of preliminary injunction against private respondent the dispositive portion of which reads:

WHEREFORE, plaintiffs application for the issuance of a writ of preliminary injunction is granted and, upon posting of the corresponding bond by plaintiff in the amount of PHP 200,000.00, let the writ of preliminary injunction be issued by the branch Clerk of this Court enjoining the defendant and any and all persons acting on its behalf or by and under its authority, from manufacturing, marketing and/or selling aerial fuzes identical, to those of plaintiff, and from profiting therefrom, and/or from performing any other act in connection therewith until further orders from this Court.

Private respondent moved for reconsideration but this was denied by the trial court in its Order 9 of May 11, 1994, pertinent portions of which read:

For resolution before this Court is the Motion for Reconsideration filed by the defendant and the plaintiff's Opposition thereto. The Court finds no sufficient cause to reconsider its order dated December 29, 1993. During the hearing for the issuance of the preliminary injunction, the plaintiff has amply proven its entitlement to the relief prayed for. It is undisputed that the plaintiff has developed its aerial fuze way back in 1981 while the defendant began manufacturing the same only in 1987. Thus, it is only logical to conclude that it was the plaintiff's aerial fuze that was copied or imitated which gives the plaintiff the right to have the defendant enjoined "from manufacturing, marketing and/or selling aerial fuzes identical to those of the plaintiff, and from profiting therefrom and/or performing any other act in connection therewith until further orders from this Court." With regards to the defendant's assertion that an action for infringement may only be brought by "anyone possessing

4

right, title or interest to the patented invention," (Section 42, RA 165) qualified by Sec. 10, RA 165 to include only "the first true and actual inventor, his heirs, legal representatives or assignees, "this court finds the foregoing to be untenable. Sec. 10 merely enumerates the persons who may have an invention patented which does not necessarily limit to these persons the right to institute an action for infringement. Defendant further contends that the order in issue is disruptive of the status quo. On the contrary, the order issued by the Court in effect maintained the status quo. The last actual, peaceable uncontested status existing prior to this controversy was the plaintiff manufacturing and selling its own aerial fuzes PDR 77 CB4 which was ordered stopped through the defendant's letter. With the issuance of the order, the operations of the plaintiff continue. Lastly, this court believes that the defendant will not suffer irreparable injury by virtue of said order. The defendant's claim is primarily hinged on its patent (Letters Patent No. UM-6983) the validity of which is being questioned in this case.

WHEREFORE, premises considered, the Motion for Reconsideration is hereby denied for lack of merit.

SO ORDERED.

Aggrieved, private respondent on June 27, 1994, filed a petition for certiorari, mandamus and prohibition 10 before respondent Court of Appeals raising as grounds the following:

a. Petitioner has no cause of action for infringement against private respondent, the latter not having any patent for the aerial fuze which it claims to have invented and developed and allegedly infringed by private respondent;

b. the case being an action for cancellation or invalidation of private respondent's Letters Patent over its own aerial fuze, the proper venue is the Office of the Director of Patents;

c. The trial court acted in grave abuse of discretion and/or in excess of jurisdiction in finding that petitioner has fully established its clear title or right to preliminary injunction;

d. The trial court acted in grave abuse of discretion and/or in excess of jurisdiction in granting the preliminary injunction, it being disruptive of the status quo; and

e. The trial court acted in grave abuse of discretion and/or in excess of jurisdiction in granting the preliminary injunction thereby depriving private respondent of its property rights over the patented aerial fuze and cause it irreparable damages.

On November 9, 1994, the respondent court rendered the now assailed decision reversing the trial court's Order of December 29, 1993 and dismissing the complaint filed by petitioner.

The motion for reconsideration was also denied on January 17, 1995. 11 Hence, this present petition.

It is petitioner's contention that it can file, under Section 42 of the Patent Law (R.A. 165), an action for infringement not as a patentee but as an entity in possession of a right, title or interest in and to the patented invention. It advances the theory that while the absence of a patent may prevent one from lawfully suing another for infringement of said patent, such absence does not bar the first true and actual inventor of the patented invention from suing another who was granted a patent in a suit for declaratory or injunctive relief recognized under American patent laws. This remedy, petitioner points out, may be likened to a civil action for infringement under Section 42 of the Philippine Patent Law.

We find the above arguments untenable.

Section 42 of R.A. 165, otherwise known as the Patent Law, explicitly provides:

Sec. 42. Civil action for infringement. — Any patentee, or anyone possessing any right, title or interest in and to the patented invention, whose rights have been infringed, may bring a civil action before the proper Court of First Instance (now Regional Trial court), to recover from the infringer damages sustained by reason of the infringement and to secure an injunction for the protection of his right. . . .

Under the aforequoted law, only the patentee or his successors-in-interest may file an action for infringement. The phrase "anyone possessing any right, title or interest in and to the patented invention" upon which petitioner maintains its present suit, refers only to the patentee's successors-in-interest, assignees or grantees since actions for infringement of patent may be brought in the name of the person or persons interested, whether as patentee, assignees, or as grantees, of the exclusive right. 12 Moreover, there can be no infringement of a patent until a patent has been issued, since whatever right one has to the invention covered by the patent arises alone from the grant of patent. 13 In short, a person or entity who has not been granted letters patent over an invention and has not acquired any light or title thereto either as assignee or as licensee, has no cause of action for infringement because the right to maintain an infringement suit depends on the existence of the patent. 14

Petitioner admits it has no patent over its aerial fuze. Therefore, it has no legal basis or cause of action to institute the petition for injunction and damages arising from the alleged infringement by private respondent. While petitioner claims to be the first inventor of the aerial fuze, still it has no right of property over the same upon which it can maintain a suit unless it obtains a patent therefor. Under American jurisprudence, an inventor has no common-law right to a monopoly of his invention. He has the right to make, use and vend his own invention, but if he voluntarily discloses it, such as by offering it for sale, the world is free to copy and use it with impunity. A patent, however, gives the inventor the right to exclude all others. As a patentee, he has the exclusive right of making, using or selling the invention. 15

Further, the remedy of declaratory judgment or injunctive suit on patent invalidity relied upon by petitioner cannot be likened to the civil action for infringement under Section 42 of the Patent Law. The reason for this is that the said remedy is available only to the patent holder or his successors-in-interest. Thus, anyone who has no patent over an invention but claims to have a right or interest thereto can not file an action for declaratory judgment or injunctive suit which is not recognized in this jurisdiction. Said person, however, is not left without any remedy. He can, under Section 28 of the aforementioned law, file a petition for cancellation of the patent within three (3) years from the publication of said patent with the Director of Patents and raise as ground therefor that the person to whom the patent was issued is not the true and actual inventor. Hence, petitioner's remedy is not to file an action for injunction or infringement but to file a petition for cancellation of private respondent's patent. Petitioner however failed to do so. As such, it can not now assail or impugn the validity of the private respondent's letters patent by claiming that it is the true and actual inventor of the aerial fuze.

Thus, as correctly ruled by the respondent Court of Appeals in its assailed decision: "since the petitioner (private respondent herein) is the patentee of the disputed invention embraced by letters of patent UM No. 6938 issued to it on January 23, 1990 by the Bureau of Patents, it has in its favor not only the presumption of validity of its patent, but that of a legal and factual first and true inventor of the invention."

In the case of Aguas vs. De Leon, 16 we stated that:

The validity of the patent issued by the Philippine Patent Office in favor of the private respondent and the question over the investments, novelty and usefulness of the improved process therein specified and described are matters which are better determined by the Philippines Patent Office. The technical Staff of the Philippines Patent Office, composed of experts in their field, have, by the issuance of the patent in question, accepted the thinness of the private respondent's new tiles as a discovery. There is a presumption that the Philippine Patent Office has correctly determined the patentability of the improvement by the private respondent of the process in question.

In fine, in the absence of error or abuse of power or lack of jurisdiction or grave abuse of discretion, we sustain the assailed decision of the respondent Court of Appeal.

WHEREFORE, the decision of the Court of Appeals is hereby AFFIRMED. No pronouncement as to costs.

5

SO ORDERED.

Regalado, Melo, Puno and Mendoza, JJ., concur.

G.R. No. 97343 September 13, 1993

PASCUAL GODINES, petitioner, vs.THE HONORABLE COURT OF APPEALS, SPECIAL FOURTH DIVISION and SV-AGRO ENTERPRISES, INC., respondents.

Jesus S. Anonat for petitioner.

Arturo M. Alinio for private respondent.

ROMERO, J.:

Through this petition for review in certiorari of a decision of the Court of Appeals affirming the decision of the trial court, petitioner Pascual Godines seeks to reverse the adverse decision of the Court a quo that he was liable for infringement of patent and unfair competition. The dispositive portion of the assailed decision is hereby quoted to wit:

WHEREFORE, with the elimination of the award for attorney's fees, the judgment appealed from is hereby AFFIRMED, with costs against appellant. 1

The patent involved in this case is Letters Patent No. UM-2236 issued by the Philippine Patent Office to one Magdalena S. Villaruz on July 15, 1976. It covers a utility model for a hand tractor or power tiller, the main components of which are the following: "(1) a vacuumatic house float; (2) a harrow with adjustable operating handle; (3) a pair of paddy wheels; (4) a protective water covering for the engine main drive; (5) a transmission case; (6) an operating handle; (7) an engine foundation on the top midportion of the vacuumatic housing float to which the main engine drive is detachedly installed; (8) a frontal frame extension above the quarter — circularly shaped water covering hold (sic) in place the transmission case; (9) a V-belt connection to the engine main drive with transmission gear through the pulley, and (10) an idler pulley installed on the engine foundation." 2 The patented hand tractor works in the following manner: "the engine drives the transmission gear thru the V-belt, a driven pulley and a transmission shaft. The engine drives the transmission gear by tensioning of the V-belt which is controlled by the idler pulley. The V-belt drives the pulley attached to the transmission gear which in turn drives the shaft where the paddy wheels are attached. The operator handles the hand tractor through a handle which is inclined upwardly and supported by a pair of substanding pipes and reinforced by a U-shaped G.I. pipe at the V-shaped end." 3

The above mentioned patent was acquired by SV-Agro Industries Enterprises, Inc., herein private respondent, from Magdalena Villaruz, its chairman and president, by virtue of a Deed of Assignment executed by the latter in its favor. On October 31, 1979, SV-Agro Industries caused the publication of the patent in Bulletin Today, a newspaper of general circulation.

In accordance with the patent, private respondent manufactured and sold the patented power tillers with the patent imprinted on them. In 1979, SV-Agro Industries suffered a decline of more than 50% in sales in its Molave, Zamboanga del Sur branch. Upon investigation, it discovered that power tillers similar to those patented by private respondent were being manufactured and sold by petitioner herein. Consequently, private respondent notified Pascual Godines about the existing patent and demanded that the latter stop selling and manufacturing similar power tillers. Upon petitioner's failure to comply with the demand, SV-Agro Industries filed before the Regional Trial Court a complaint for infringement of patent and unfair competition.

After trial, the court held Pascual Godines liable for infringement of patent and unfair competition. The dispositive portion of the decision reads as follows:

WHEREFORE, premises considered, JUDGMENT is hereby rendered in favor of the plaintiff SV-Agro Industries Enterprises, Inc., and against defendant Pascual Godines:

1. Declaring the writ of preliminary injunction issued by this Court against defendant as permanent;

2. Ordering defendant Pascual Godines to pay plaintiff the sum of Fifty Thousand Pesos (P50,000.00) as damages to its business reputation and goodwill, plus the further sum of Eighty Thousand Pesos (P80,000.00) for unrealized profits during the period defendant was manufacturing and selling copied or imitation floating power tiller;

3. Ordering the defendant to pay the plaintiff, the further sum of Eight Thousand Pesos (P8,000.00) as reimbursement of attorney's fees and other expenses of litigation; and to pay the costs of the suit.

SO ORDERED. 4

The decision was affirmed by the appellate court.

Thereafter, this petition was filed. Petitioner maintains the defenses which he raised before the trial and appellate courts, to wit: that he was not engaged in the manufacture and sale of the power tillers as he made them only upon the special order of his customers who gave their own specifications; hence, he could not be liable for infringement of patent and unfair competition; and that those made by him were different from those being manufactured and sold by private respondent.

We find no merit in his arguments. The question of whether petitioner was manufacturing and selling power tillers is a question of fact better addressed to the lower courts. In dismissing the first argument of petitioner herein, the Court of Appeals quoted the findings of the court, to wit:

It is the contention of defendant that he did not manufacture or make imitations or copies of plaintiff's turtle power tiller as what he merely did was to fabricate his floating power tiller upon specifications and designs of those who ordered them. However, this contention appears untenable in the light of the following circumstances: 1) he admits in his Answer that he has been manufacturing power tillers or hand tractors, selling and distributing them long before plaintiff started selling its turtle power tiller in Zamboanga del Sur and Misamis Occidental, meaning that defendant is principally a manufacturer of power tillers, not upon specification and design of buyers, but upon his own specification and design; 2) it would be unbelievable that defendant would fabricate power tillers similar to the turtle power tillers of plaintiff upon specifications of buyers without requiring a job order where the specification and designs of those ordered are specified. No document was (sic) ever been presented showing such job orders, and it is rather unusual for defendant to manufacture something without the specification and designs, considering that he is an engineer by profession and proprietor of the Ozamis Engineering shop. On the other hand, it is also highly unusual for buyers to order the fabrication of a power tiller or hand tractor and allow defendant to manufacture them merely based on their verbal instructions. This is contrary to the usual business and manufacturing practice. This is not only time consuming, but costly because it involves a trial and error method, repeat jobs and material wastage. Defendant judicially admitted two (2) units of the turtle power tiller sold by him to Policarpio Berondo. 5

Of general acceptance is the rule imbedded in our jurisprudence that ". . . the jurisdiction of the Supreme Court in cases brought to it from the Court of Appeals in a petition for certiorari under Rule 45 of the Rules of Court is limited to the review of errors of law, and that said appellate court's findings of fact are conclusive upon this Court." 6

The fact that petitioner herein manufactured and sold power tillers without patentee's authority has been established by the courts despite petitioner's claims to the contrary.

The question now arises: Did petitioner's product infringe upon the patent of private respondent?

Tests have been established to determine infringement. These are (a) literal infringement; and (b) the doctrine of equivalents. 7 In using literal infringement as a test, ". . . resort must be had, in the first instance, to the words of the claim. If accused

6

matter clearly falls within the claim, infringement is made out and that is the end of it." 8

To determine whether the particular item falls within the literal meaning of the patent claims, the court must juxtapose the claims of the patent and the accused product within the overall context of the claims and specifications, to determine whether there is exact identity of all material elements. 9

The trial court made the following observation:

Samples of the defendant's floating power tiller have been produced and inspected by the court and compared with that of the turtle power tiller of the plaintiff (see Exhibits H to H-28). In appearance and form, both the floating power tillers of the defendant and the turtle power tiller of the plaintiff are virtually the same. Defendant admitted to the Court that two (2) of the power inspected on March 12, 1984, were manufactured and sold by him (see TSN, March 12, 1984, p. 7). The three power tillers were placed alongside with each other. At the center was the turtle power tiller of plaintiff, and on both sides thereof were the floating power tillers of defendant (Exhibits H to H-2). Witness Rodrigo took photographs of the same power tillers (front, side, top and back views for purposes of comparison (see Exhibits H-4 to H-28). Viewed from any perspective or angle, the power tiller of the defendant is identical and similar to that of the turtle power tiller of plaintiff in form, configuration, design and appearance. The parts or components thereof are virtually the same. Both have the circularly-shaped vacuumatic housing float, a paddy in front, a protective water covering, a transmission box housing the transmission gears, a handle which is V-shaped and inclined upwardly, attached to the side of the vacuumatic housing float and supported by the upstanding G.I. pipes and an engine base at the top midportion of the vacuumatic housing float to which the engine drive may be attached. In operation, the floating power tiller of the defendant operates also in similar manner as the turtle power tiller of plaintiff. This was admitted by the defendant himself in court that they are operating on the same principles. (TSN, August 19, 1987, p. 13) 10

Moreover, it is also observed that petitioner also called his power tiller as a floating power tiller. The patent issued by the Patent Office referred to a "farm implement but more particularly to a turtle hand tractor having a vacuumatic housing float on which the engine drive is held in place, the operating handle, the harrow housing with its operating handle and the paddy wheel protective covering." 11 It appears from the foregoing observation of the trial court that these claims of the patent and the features of the patented utility model were copied by petitioner. We are compelled to arrive at no other conclusion but that there was infringement.

Petitioner's argument that his power tillers were different from private respondent's is that of a drowning man clutching at straws.

Recognizing that the logical fallback position of one in the place of defendant is to aver that his product is different from the patented one, courts have adopted the doctrine of equivalents which recognizes that minor modifications in a patented invention are sufficient to put the item beyond the scope of literal infringement. 12 Thus, according to this doctrine, "(a)n infringement also occurs when a device appropriates a prior invention by incorporating its innovative concept and, albeit with some modification and change, performs substantially the same function in substantially the same way to achieve substantially the same result." 13 The reason for the doctrine of equivalents is that to permit the imitation of a patented invention which does not copy any literal detail would be to convert the protection of the patent grant into a hollow and useless thing. Such imitation would leave room for — indeed encourage — the unscrupulous copyist to make unimportant and insubstantial changes and substitutions in the patent which, though adding nothing, would be enough to take the copied matter outside the claim, and hence outside the reach of the law. 14

In this case, the trial court observed:

Defendant's witness Eduardo Cañete, employed for 11 years as welder of the Ozamis Engineering, and therefore actually involved in the making of the floating power tillers of defendant tried to explain the difference between the floating power tillers made by the defendant. But a careful examination between the two power tillers will show that they will operate on the same fundamental principles. And, according to establish jurisprudence, in infringement of

patent, similarities or differences are to be determined, not by the names of things, but in the light of what elements do, and substantial, rather than technical, identity in the test. More specifically, it is necessary and sufficient to constitute equivalency that the same function can be performed in substantially the same way or manner, or by the same or substantially the same, principle or mode of operation; but where these tests are satisfied, mere differences of form or name are immaterial. . . . 15

It also stated:

To establish an infringement, it is not essential to show that the defendant adopted the device or process in every particular; Proof of an adoption of the substance of the thing will be sufficient. "In one sense," said Justice Brown, "it may be said that no device can be adjudged an infringement that does not substantially correspond with the patent. But another construction, which would limit these words to exact mechanism described in the patent, would be so obviously unjust that no court could be expected to adopt it. . . .

The law will protect a patentee against imitation of his patent by other forms and proportions. If two devices do the same work in substantially the same way, and accomplish substantially the same result, they are the same, even though they differ in name, form, or shape. 16

We pronounce petitioner liable for infringement in accordance with Section 37 of Republic Act No. 165, as amended, providing, inter alia:

Sec. 37. Right 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 terms of the patent; and such making, using, or selling by any person without the authorization of the Patentee constitutes infringement of the patent. (Emphasis ours)

As far as the issue regarding unfair competition is concerned, suffice it to say that Republic Act No. 166, as amended, provides, inter alia:

Sec. 29. Unfair competition, rights and remedies. — . . .

xxx xxx xxx

In particular, and without in any way limiting the scope of unfair competition, the following shall be deemed guilty of unfair competition:

(a) Any person, who in selling his goods shall give them the general appearance of goods of another manufacturer or dealer, either as to the goods themselves or in the wrapping of the packages in which they are contained, or the devices or words thereon, or in any other feature of their appearance, which would be likely to influence purchasers that the goods offered are those of a manufacturer or dealer other than the actual manufacturer or dealer, or who otherwise clothes the goods with such appearance as shall deceive the public and defraud another of his legitimate trade. . . .

xxx xxx xxx

Considering the foregoing, we find no reversible error in the decision of the Court of Appeals affirming with modification the decision of the trial court.

WHEREFORE, premises considered, the decision of the Court of Appeals is hereby AFFIRMED and this petition DENIED for lack of merit.

Bidin, Melo and Vitug, JJ., concur.

7

Feliciano, J., is on leave.

G.R. L-45101 November 28, 1986

ROSARIO C. MAGUAN (formerly ROSARIO C. TAN), petitioner, vs.THE HONORABLE COURT OF APPEALS and SUSANA LUCHAN, respondents.

Ambrosio Padilla Law Offices for petitioner.

PARAS, J.:p

Submitted on December 9, 1977 for Our decision is this petition for review on certiorari of the two Resolutions of the Court of Appeals, the first dated July 6, 1976, setting aside its Decision of February 16, 1976 in CA-G.R. No. SP-04706, titled "SUSANA LUCHAN v. Hon. HONRADO, et al." wherein it ruled for the dismissal of the petition for lack of merit and at the same time nullifying the writ of preliminary injunction it had previously issued; and the second, dated November 4, 1976, denying the motion for reconsideration of the first resolution above-mentioned.

Petitioner is doing business under the firm name and style of SWAN MANUFACTURING" while private respondent is likewise doing business under the firm name and style of "SUSANA LUCHAN POWDER PUFF MANUFACTURING."

It is undisputed that petitioner is a patent holder of powder puff namely:

1. UM-423 (extended and/or renewed under Extension No. UM-109 for a period of 5 years from October 6, 1971)

2. UM-450 (extended and/or renewed under Extension No. UM110 for a period of 5 years from January 26, 1972)

3. UM 1184, for a period of 5years fromApril 5, 1974.(Petition, Rollo, pp. 6-7).

In a letter dated July 10, 1974 (Annex "D", Rollo, p. 86), petitioner informed private respondent that the powder puffs the latter is manufacturing and selling to various enterprises particularly those in the cosmetics industry, resemble Identical or substantially Identical powder puffs of which the former is a patent holder under Registration Certification Nos. Extension UM-109, Extension UM-110 and Utility Model No. 1184; petitioner explained such production and sale constitute infringement of said patents and therefore its immediate discontinuance is demanded, otherwise it will be compelled to take judicial action. (Rollo, pp. 7-8).

Private respondent replied stating that her products are different and countered that petitioner's patents are void because the utility models applied for were not new and patentable and the person to whom the patents were issued was not the true and actual author nor were her rights derived from such author. (Taken from allegations in the Answer, par. 4, Rollo, p. 93). And on July 25, 1974, private respondent assailed the validity of the patents involved and filed with the Philippine Patent Office petitions for cancellation of (1) Utility Model Letter Patent Extension No. UM-109 (Inter Partes Case No. 838, Susana Luchan v. Rosario C. Tan), (2) Utility Model Letters Patent No. UM-1184 (Inter Partes Case No. 839, Susana Luchan v. Rosario C. Tan), (3) Utility Model Letters Patent Extension No. UM-110 (Inter Partes Case No. 840, Susana Luchan v. Rosario C. Tan. (Taken from allegations in the Answer, par. 10, Rollo, pp. 94-95).

In view thereof, petitioner, on August 24, 1974, filed a complaint for damages with injunction and preliminary injunction against private respondent with the then Court of First Instance of Rizal, Pasig Branch, docketed as Civil Case No. 19908, for infringing the aforesaid letters patent, and prayed, among others, that a writ of preliminary injunction be immediately issued (Complaint, Rollo, p. 90).

In her answer, private respondent alleged that the products she is manufacturing and offering for sale are not Identical, or even only substantially Identical to the products covered by petitioner's patents and, by way of affirmative defenses, further alleged that petitioner's patents in question are void on the following grounds:

(1) at the time of filing of application for the patents involved, the utility models applied for were not new and patentable under Sec. 55 of R.A. 165, as amended by R.A. 864; and

(2) the person to whom the patents were issued was not the true and actual author of the utility models applied for, and neither did she derive her rights from any true and actual author of these utility models.

for the following reasons:

(a) since years prior to the filing of applications for the patents involved, powder puffs of the kind applied for were then already existing and publicly being sold in the market; both in the Philippines and abroad; and

(b) applicant's claims in her applications, of "construction" or process of manufacturing the utility models applied for, with respect to UM-423 and UM-450, were but a complicated and impractical version of an old, simple one which has been well known to the cosmetics industry since years previous to her filing of applications, and which belonged to no one except to the general public; and with respect to UM1184; her claim in her application of a unitary powder puff, was but an limitation of a product well known to the cosmetics industry since years previous to her firing of application, and which belonged to no one except to the general public; (Answer, Rollo, pp. 93-94).

On September 18, 1974, the trial court issued an Order (Annex "K", Rollo, p. 125) granting the preliminary injunction prayed for by petitioner. Consequently, the corresponding writ was subsequently issued (Annex "K-1", Rollo, p. 131) enjoining the herein private respondent (then defendant) and all other persons employed by her, her agents, servants and employees from directly or indirectly manufacturing, making or causing to be made, selling or causing to be sold, or using or causing to be used in accordance with, or embodying the utility models of the Philippine Patent Office Utility Model Letters Patent Nos. 423 (Extension No. UM-109), No. 450 (Extension No. UM-110), and Utility Model No. 1184 or from infringement upon or violating said letters patent in any way whatsoever (Annex " K-1 ", Rollo, p. 131).

Private respondent questioned the propriety of the trial court's issuance of the Writ of Preliminary Injunction arguing that since there is still a pending cancellation proceedings before the Philippine Patent Office concerning petitioner's patents, such cannot be the basis for preliminary injunction (Motion for Reconsideration, Rollo, p. 132).

In an Order dated September 11, 1975, the trial court denied private respondent's motion for reconsideration (Annex "N", Rollo, p. 142).

In challenging these Orders private respondent filed a petition for certiorari with the respondent court on September 29, 1975 (Annex "D", Rollo, pp. 148-171) reiterating among other things the invalidity of petitioner's patents and prayed that the trial court be restrained from enforcing or continuing to enforce the following:

8

(1) Order dated September 18, 1974, granting the preliminary injunction;

(2) Writ of preliminary injunction dated September 18, 1974; and

(3) Order dated September 11, 1974 denying petitioner's motion petition for reconsideration.

On October 15, 1975, the Writ of Preliminary Injunction was issued by the respondent Court of Appeals as follows:

NOW, THEREFORE, you, respondents, and/or any person/persons acting on your stead, are hereby ENJOINED to RESTRAIN from enforcing or continuing to enforce, the proceedings complained of in the petition to wit: 1) Order dated September 18, 1974, granting the preliminary injunction; 2) Writ of Preliminary Injunction dated September 18, 1974; and Order dated September 11, 1975, denying petitioner's motion for reconsideration, all issued in connection with Civil Case No. 19908, UNTIL FURTHER ORDERS FROM THIS COURT. (Annex "P", Rollo, p. 1.73)

On February 16, 1976, respondent court promulgated a decision the dispositive portion of which reads:

WHEREFORE, finding no merit in the herein petition, the same is hereby dismissed and the preliminary injunction previously issued by this Court is hereby set aside, with costs.

SO ORDERED. (CA Decision, Rollo, p. 189).

ln said decision respondent court stated that in disposing of the petition it tackled only the issue of whether the court a quo acted with grave abuse of discretion in issuing the challenged orders. It made clear the question of whether the patents have been infringed or not was not determined considering the court a quo has yet to decide the case on the merits (Ibid., p. 186).

Feeling aggrieved, private respondent moved to reconsider the afore-mentioned Decision based on the following grounds:

I

THAT THIS HONORABLE COURT ERRED IN NOT APPRECIATING THE EXISTENCE OF A FAIR QUESTION OF INVALIDITY OF PRIVATE RESPONDENT'S PATENTS.

II

THAT THIS HONORABLE COURT ERRED IN NOT REJECTING THE THEORY OF RESPONDENT JUDGE THAT HE HAS NO JURISDICTION TO INVALIDATE THE PATENTS UPON GROUND OF LACK OF NOVELTY OF THE PRODUCTS PATENTED. (Motion for Reconsideration, Rollo, p. 190).

Reviewing on reconsideration, respondent court gave weight to private respondent's allegation that the latter's products are not identical or even only substantially identical to the products covered by petitioner's patents. Said court noticed that contrary to the lower courts position that the court a quo had no jurisdiction to determine the question of invalidity of the patents, Section 45 and 46 of the Patent Law allow the court to make a finding on the validity or invalidity of patents and in the event there exists a fair question of its invalidity, the situation calls for a denial of the writ of preliminary injunction pending the evaluation of the evidence presented (Rollo, pp. 218-226). Thus, finding the lower court's position to have been opposed to Patent Law,

respondent court considered it a grave abuse of discretion when the court a quo issued the writ being questioned without looking into the defenses alleged by herein private respondent. Further, it considered the remedy of appeal, under the circumstances, to be inadequate.

Thus, on July 6, 1976, respondent court made a complete turnabout from its original decision and promulgated a Resolution, the dispositive portion of which reads:

WHEREFORE, our decision is hereby set aside. The writ of certiorari is ordered issued. Accordingly, the challenged orders, Exhibit H and H-1 and the order denying the motion for reconsideration (Annex "K", Petition), are hereby set aside. The writ of preliminary injunction previously ordered by this Court and ordered lifted by the Decision now being set aside is hereby reinstated and made permanent. Without pronouncement as to costs.

SO ORDERED. (CA Resolution, Rollo, p. 226).

In a Resolution dated November 4, 1976, respondent court, not persuaded by the grounds embodied in the motion for reconsideration filed by herein petitioner (Annex "V ", Rollo, p. 227), denied the same for lack of merit, thereby maintaining the same stand it took in its July 6, 1976 Resolution (Rollo, p. 281). Hence, this petition.

On December 3, 1976, without giving due course to the petition, this Court required respondent to file her Comment (Rollo, p. 290) which was filed on December 16, 1976 (Rollo, pp. 291-316). Thereafter, petitioner filed her Reply (Rollo, p. 323) and on May 30, 1977, the petition was given due course (Rollo, p. 345). Petitioner filed her brief on July 14, 1977 (Rollo, p. 351) while private respondent filed her brief on August 25, 1977 (Rollo, p. 359). Thereafter, petitioner having failed to file reply brief, the Court resolved to declare the case submitted for decision on December 9, 1977 (Rollo, p. 359).

The assignment of errors raised by the petitioner in this case (Rollo, pp. 15-16) may be reduced to three main issues:

(1) Whether or not in an action for infringement the Court a quo had jurisdiction to determine the invalidity of the patents at issue which invalidity was still pending consideration in the patent office.

(2) Whether or not the Court a quo committed grave abuse of discretion in the issuance of a writ of preliminary injunction.

(3) Whether or not certiorari is the proper remedy.

The first issue has been laid to rest in a number of cases where the Court ruled that "When a patent is sought to be enforced, the questions of invention, novelty or prior use, and each of them, are open to judicial examination." (Vargas v. F.M. Yaptico & Co. 40 Phil. 199 [1919]; Vargas v. Chua, 57 Phil. 790-791 [1933]; Frank and Gohn v. Kosuyana 59 Phil. 207 [1933]).

Under the present Patent Law, there is even less reason to doubt that the trial court has jurisdiction to declare the patents in question invalid. A patentee shall have the exclusive right to make, use and sell the patented article or product and the making, using, or selling by any person without the authorization of the patentee constitutes infringement of the patent (Sec. 37, R.A. 165). Any patentee whose rights have been infringed upon may bring an action before the proper CFI now (RTC) and to secure an injunction for the protection of his rights (Sec. 42, R.A. 165). Defenses in an action for infringement are provided for in Section 45 of the same law which in fact were availed of by private respondent in this case. Then, as correctly stated by respondent Court of Appeals, this conclusion is reinforced by Sec. 46 of the same law which provides that if the Court shall find the patent or any claim thereof invalid, the Director shall on certification of the final judgment ... issue an order cancelling the patent or the claims found invalid and shall publish a notice thereof in the Official Gazette." Upon such certification, it is ministerial on the part of the patent office to execute the judgment. (Rollo, pp. 221-222).

9

II.

The burden of proof to substantiate a charge of infringement is with the plaintiff. But where the plaintiff introduces the patent in evidence, and the same is in due form, there is created a prima facie presumption of its correctness and validity. The decision of the Commissioner (now Director) of Patent in granting the patent is presumed to be correct. The burden of going forward with the evidence (burden of evidence) then shifts to the defendant to overcome by competent evidence this legal presumption.

The question then in the instant case is whether or not the evidence introduced by private respondent herein is sufficient to overcome said presumption.

After a careful review of the evidence consisting of 64 exhibits and oral testimonies of five witnesses presented by private respondents before the Court of First Instance before the Order of preliminary injunction was issued as well as those presented by the petitioner, respondent Court of Appeals was satisfied that there is a prima facie showing of a fair question of invalidity of petitioner's patents on the ground of lack of novelty. As pointed out by said appellate court said evidence appeared not to have been considered at all by the court a quo for alleged lack of jurisdiction, on the mistaken notion that such question in within the exclusive jurisdiction of the patent office.

It has been repeatedly held that an invention must possess the essential elements of novelty , originality and precedence and for the patentee to be entitled to protection, the invention must be new to the world. Accordingly, a single instance of public use of the invention by a patentee for more than two years (now for more than one year only under Sec. 9 of the Patent Law) before the date of his application for his patent, will be fatal to, the validity of the patent when issued. (Frank, et al. v. Kosuyama Vargas v. F.M. Yaptico & Co. and Vargas v. Chua, et al., supra).

The law provides:

SEC. 9. Invention not considered new or patentable. — An invention shall not be considered new or capable of being patented if it was known or used by others in the Philippines before the invention thereof by the inventor named in an application for patent for the invention; or if it was patented or described in any printed publication in the Philippines or any foreign country more than one year before the application for a patent therefor; or if it had been in public use or on sale in the Philippines for more than one year before the application for a patent therefor; or if it is the subject matter of a validity issued patent in the Philippines granted on an application filed before the filing of the application for patent therefor.

Thus, more specifically, under American Law from which our Patent Law was derived (Vargas v. F.M. Yaptico & Co. supra) it is generally held that in patent cases a preliminary injunction will not issue for patent infringement unless the validity of the patent is clear and beyond question. The issuance of letters patent, standing alone, is not sufficient to support such drastic relief (8 Deller's Walker on Patents p. 406). In cases of infringement of patent no preliminary injunction will be granted unless the patent is valid and infringed beyond question and the record conclusively proves the defense is sham. (Ibid., p. 402)

In the same manner, under our jurisprudence, as a general rule because of the injurious consequences a writ of injunction may bring, the right to the relief demanded must be clear and unmistakable. (Sangki v. Comelec, 21 SCRA 1392; December 26, 1967) and the dissolution of the writ is proper where applicant has doubtful title to the disputed property. (Ramos v. C.A., 95 SCRA 359).

III.

It will be noted that the validity of petitioner's patents is in question for want of novelty. Private respondent contends that powder puffs Identical in appearance with that covered by petitioner's patents existed and were publicly known and used as early as 1963 long before petitioner was issued the patents in question. (List of Exhibits, Rollo, pp. 194-199). As correctly observed by respondent Court of Appeals, "since sufficient proofs have been introduced in evidence showing a fair question of the invalidity of the patents issued for such models, it is but right that the evidence be looked into, evaluated and determined on the merits so that the matter of whether the patents issued were in fact valid or not may be resolved." (Rollo, pp. 286-287).

All these notwithstanding, the trial court nonetheless issued the writ of preliminary injunction which under the circumstances should be denied.

For failure to determine first the validity of the patents before aforesaid issuance of the writ, the trial court failed to satisfy the two requisites necessary if an injunction is to issue, namely: the existence of the right to be protected and the violation of said right. (Buayan Cattle Co., Inc. v. Quintillan, 128 SCRA 276).

Under the above established principles, it appears obvious that the trial court committed a grave abuse of discretion which makes certiorari the appropriate remedy.

As found by respondent Court of Appeals, the injunctive order of the trial court is of so general a tenor that petitioner may be totally barred from the sale of any kind of powder puff. Under the circumstances, respondent appellate court is of the view that ordinary appeal is obviously inadequate. (Rollo, p. 288). A parallel was drawn from a decision of the Supreme Court in the case of Sanchez v. Hon. Court of Appeals, 69 SCRA 328 [1976] where the First Division of the Supreme Court ruled that "The prerogative writ of certiorari may be applied for by proper petition notwithstanding the existence of the regular remedy of an appeal in due cause when among other reasons, the broader interests of justice so require or an ordinary appeal is not an adequate remedy."

Private respondent maintains the position that the resolutions sought to be appealed from had long become final and executory for failure of Hon. Reynaldo P. Honrado, the trial court judge, to appeal by certiorari from the resolutions of respondent Court of Appeals. (Rollo, pp. 291-292).

Such contention is untenable.

There is no dispute that petitioner has seasonably petitioned. On the other hand, it is elementary that the trial judge is a mere nominal party as clearly provided in Section 5, Rule 65 of the Revised Rules of Court where it shall be the duty of such person or persons interested in sustaining the proceedings in court, "to appear and defend, both in his or their own behalf and in behalf of the court or judge affected by the proceedings."

Relative thereto "the judge whose order is under attack is merely a nominal party; wherefore, a judge in his official capacity should not be made to appear as a party seeking reversal of a decision that is unfavorable to the action taken by him." (Hon. Alcasid v. Samson, 102 Phil. 735-736; Tarona v. Sayo, 67 SCRA 508, 524; Lim Se v. Argel, 70 SCRA 378).

As to petitioner's claim of prescription, private respondent's contention that such refers to the filing of petitions for cancellation in the Patent Office under Sec. 28 of the Patent Law and not to a defense against an action for infringement under Sec. 45 thereof which may be raised anytime, is evident under aforesaid law.

PREMISES CONSIDERED, the assailed resolutions of the Court of Appeals are hereby AFFIRMED.

SO ORDERED.

Feria (Chairman), Fernan, Gutierrez, Jr., and Feliciano, * JJ., concur.

Alampay, J., took no part.

G.R. No. 113388 September 5, 1997

ANGELITA MANZANO, petitioner, vs.COURT OF APPEALS, and MELECIA MADOLARIA, as Assignor to NEW UNITED FOUNDRY MANUFACTURING CORPORATION, respondents.

BELLOSILLO, J.:

The primary purpose of the patent system is not the reward of the individual but the advancement of the arts and sciences. The function of a patent is to add to the sum of useful knowledge and one of the purposes of the patent system is to encourage dissemination of information concerning discoveries and inventions. This is a matter which is properly within the competence of the Patent Office the official action of which

10

has the presumption of correctness and may not be interfered with in the absence of new evidence carrying thorough conviction that the Office has erred. Since the Patent Office is an expert body preeminently qualified to determine questions of patentability, its findings must be accepted if they are consistent with the evidence, with doubts as to patentability resolved in favor of the Patent Office. 1

Petitioner Angelita Manzano filed with the Philippine Patent Office on 19 February 1982 an action for the cancellation of Letters Patent No. UM-4609 for a gas burner registered in the name of respondent Melecia Madolaria who subsequently assigned the letters patent to New United Foundry and Manufacturing Corporation (UNITED FOUNDRY, for brevity). Petitioner alleged that (a) the utility model covered by the letters patent, in this case, an LPG gas burner, was not inventive, new or useful; (b) the specification of the letters patent did not comply with the requirements of Sec. 14, RA No. 165, as amended; (c) respondent Melecia Madolaria was not the original, true and actual inventor nor did she derive her rights from the original, true and actual inventor of the utility model covered by the letters patent; and, (d) the letters patent was secured by means of fraud or misrepresentation. In support of her petition for cancellation petitioner further alleged that (a) the utility model covered by the letters patent of respondent had been known or used by others in the Philippines for more than one (1) year before she filed her application for letters patent on 9 December 1979; (b) the products which were produced in accordance with the utility model covered by the letters patent had been in public use or on sale in the Philippines for more than one (1) year before the application for patent therefor was filed.

Petitioner presented the following documents which she correspondingly marked as exhibits: (a) affidavit of petitioner alleging the existence of prior art, marked Exh. "A;" (b) a brochure distributed by Manila Gas Corporation disclosing a pictorial representation of Ransome Burner made by Ransome Torch and Burner Company, USA, marked Exh. "D;" and, (c) a brochure distributed by Esso Gasul or Esso Standard Eastern, Inc., of the Philippines showing a picture of another similar burner with top elevation view and another perspective view of the same burner, marked Exh. "E."

Testifying for herself petitioner narrated that her husband Ong Bun Tua worked as a helper in the UNITED FOUNDRY where respondent Melecia Madolaria used to be affiliated with from 1965 to 1970; that Ong helped in the casting of an LPG burner which was the same utility model of a burner for which Letters Patent No. UM-4609 was issued, and that after her husband's separation from the shop she organized Besco Metal Manufacturing (BESCO METAL, for brevity) for the casting of LPG burners one of which had the configuration, form and component parts similar to those being manufactured by UNITED FOUNDRY. Petitioner presented in evidence an alleged model of an LPG burner marked Exh. "K" and covered by the Letters Patent of respondent, and testified that it was given to her in January 1982 by one of her customers who allegedly acquired it from UNITED FOUNDRY. Petitioner also presented in evidence her own model of an LPG burner called "Ransome" burner marked Exh. "L," which was allegedly manufactured in 1974 or 1975 and sold by her in the course of her business operation in the name of BESCO METAL. Petitioner claimed that this "Ransome" burner (Exh. "L") had the same configuration and mechanism as that of the model which was patented in favor of private respondent Melecia Madolaria. Also presented by petitioner was a burner cup of an imported "Ransome" burner marked Exh "M" which was allegedly existing even before the patent application of private respondent.

Petitioner presented two (2) other witnesses, namely, her husband Ong Bun Tua and Fidel Francisco. Ong testified that he worked as a helper in the UNITED FOUNDRY from 1965 to 1970 where he helped in the casting of LPG burners with the same form, configuration and mechanism as that of the model covered by the Letters Patent issued to private respondent. Francisco testified that he had been employed with the Manila Gas Corporation from 1930 to 1941 and from 1952 up to 1969 where he retired as supervisor and that Manila Gas Corporation imported "Ransome" burners way back in 1965 which were advertised through brochures to promote their sale.

Private respondent, on the other hand, presented only one witness, Rolando Madolaria, who testified, among others, that he was the General Supervisor of the UNITED FOUNDRY in the foundry, machine and buffing section; that in his early years with the company, UNITED FOUNDRY was engaged in the manufacture of different kinds of gas stoves as well as burners based on sketches and specifications furnished by customers; that the company manufactured early models of single-piece types of burners where the mouth and throat were not detachable; that in the latter part of 1978 respondent Melecia Madolaria confided in him that complaints were being brought to her attention concerning the early models being manufactured; that he was then instructed by private respondent to cast several experimental models based on revised sketches and specifications; that private respondent again made some innovations; that after a few months, private respondent discovered the solution to all the defects of the earlier models and, based on her latest sketches and specifications, he was able to cast several models incorporating the additions to the innovations introduced in the models. Various tests were conducted on the latest model in the presence and under

the supervision of Melecia Madolaria and they obtained perfect results. Rolando Madolaria testified that private respondent decided to file her application for utility model patent in December 1979.

On 7 July 1986 the Director of Patents Cesar C. Sandiego issued Decision No. 86-56 denying the petition for cancellation and holding that the evidence of petitioner was not able to establish convincingly that the patented utility model of private respondent was anticipated. Not one of the various pictorial representations of business clearly and convincingly showed that the devices presented by petitioner was identical or substantially identical with the utility model of the respondent. The decision also stated that even assuming that the brochures depicted clearly each and every element of the patented gas burner device so that the prior art and patented device became identical although in truth they were not, they could not serve as anticipatory bars for the reason that they were undated. The dates when they were distributed to the public were not indicated and, therefore, were useless prior art references. The records and evidence also do not support the petitioner's contention that Letters Patent No. UM-4609 was obtained by means of fraud and/or misrepresentation. No evidence whatsoever was presented by petitioner to show that the then applicant Melecia Madolaria withheld with intent to deceive material facts which, if disclosed, would have resulted in the refusal by the Philippine Patent Office to issue the Letters Patent under inquiry.

Petitioner elevated the decision of the Director of Patents to the Court of Appeals which on 15 October 1993 affirmed the decision of the Director of Patents. Hence, this petition for review on certiorari alleging that the Court of Appeals erred (a) in relying on imaginary differences which in actuality did not exist between the model of private respondent covered by Letters Patent No. UM-4609 and the previously known model of Esso Standard Eastern, Inc., and Manila Gas Corporation, making such imaginary differences grounded entirely on speculation, surmises and conjectures; (b) in rendering judgment based on misapprehension of facts; (c) in relying mainly on the testimony of private respondent's sole witness Rolando Madolaria; and, (d) in not cancelling Letters Patent No. UM-4609 in the name of private respondent.

Petitioner submits that the differences cited by the Court of Appeals between the utility model of private respondent and the models of Manila Gas Corporation and Esso Standard Eastern, Inc., are more imaginary than real. She alleges that based on Exhs. "E," "E-1," "F" and "F-1" or the brochures of Manila Gas Corporation and Esso Standard Eastern, Inc., presented by petitioner, the cup-shaped burner mouth and threaded hole on the side are shown to be similar to the utility model of private respondent. The exhibits also show a detachable burner mouth having a plurality of upwardly existing undulations adopted to act as gas passage when the cover is attached to the top of said cup-shaped mouth all of which are the same as those in the patented model. Petitioner also denies as substantial difference the short cylindrical tube of the burner mouth appearing in the brochures of the burners being sold by Manila Gas Corporation and the long cylindered tube of private respondent's model of the gas burner.

Petitioner argues that the actual demonstration made during the hearing disclosed the similarities in form, operation and mechanism and parts between the utility model of private respondent and those depicted in the brochures. The findings of the Patent Office and the Court of Appeals that the brochures of Manila Gas Corporation and Esso Standard Eastern, Inc., are undated cannot overcome the fact of their circulation before private respondent filed her application for utility model patent. Petitioner thus asks this Court to take judicial notice of the fact that Esso Standard Eastern, Inc., disappeared before 1979 and reappeared only during the Martial Law years as Petrophil Corporation. Petitioner also emphasizes that the brochures indicated the telephone number of Manila Gas Corporation as 5-79-81 which is a five (5) numbered telephone number existing before 1975 because telephones in Metro Manila started to have six (6) numbers only after that year.

Petitioner further contends that the utility model of private respondent is absolutely similar to the LPG burner being sold by petitioner in 1975 and 1976, and also to the "Ransome" burner depicted in the old brochures of Manila Gas Corporation and Esso Standard Eastern, Inc., fabricated by Ransome Torch and Burner Company of Oakland, California, USA, especially when considered through actual physical examination, assembly and disassembly of the models of petitioner and private respondent. Petitioner faults the Court of Appeals for disregarding the testimonies of Ong Bun Tua and Fidel Francisco for their failure to produce documents on the alleged importation by Manila Gas Corporation of "Ransome" burners in 1965 which had the same configuration, form and mechanism as that of the private respondent's patented model.

Finally, it is argued that the testimony of private respondent's lone witness Rolando Madolaria should not have been given weight by the Patent Office and the Court of Appeals because it contained mere after-thoughts and pretensions.

11

We cannot sustain petitioner. Section 7 of RA No. 165, as amended, which is the law on patents, expressly provides —

Sec. 7. Inventians patentable. Any invention of a new and useful machine, manufactured product or substance, process or an improvement of any of the foregoing, shall be patentable.

Further, Sec. 55 of the same law provides —

Sec. 55. Design patents and patents for utility models. — (a) Any new, original and ornamental design for an article of manufacture and (b) any new model of implements or tools or of any industrial product or of part of the same, which does not possess the quality of invention, but which is of practical utility by reason of its form, configuration, construction or composition, may be protected by the author thereof, the former by a patent for a design and the latter by a patent for a utility model, in the same manner and subject to the same provisions and requirements as relate to patents for inventions insofar as they are applicable except as otherwise herein provided.

The element of novelty is an essential requisite of the patentability of an invention or discovery. If a device or process has been known or used by others prior to its invention or discovery by the applicant, an application for a patent therefor should be denied; and if the application has been granted, the court, in a judicial proceeding in which the validity of the patent is drawn in question, will hold it void and ineffective. 2 It has been repeatedly held that an invention must possess the essential elements of novelty, originality and precedence, and for the patentee to be entitled to the protection the invention must be new to the world. 3

In issuing Letters Patent No. UM-4609 to Melecia Madolaria for an "LPG Burner" on 22 July 1981, the Philippine Patent Office found her invention novel and patentable. The issuance of such patent creates a presumption which yields only to clear and cogent evidence that the patentee was the original and first inventor. The burden of proving want of novelty is on him who avers it and the burden is a heavy one which is met only by clear and satisfactory proof which overcomes every reasonable doubt. 4 Hence, a utility model shall not be considered "new" if before the application for a patent it has been publicly known or publicly used in this country or has been described in a printed publication or publications circulated within the country, or if it is substantially similar to any other utility model so known, used or described within the country. 5

As found by the Director of Patents, the standard of evidence sufficient to overcome the presumption of legality of the issuance of UM-4609 to respondent Madolaria was not legally met by petitioner in her action for the cancellation of the patent. Thus the Director of Patents explained his reasons for the denial of the petition to cancel private respondent's patent —

Scrutiny of Exhs. "D" and "E" readily reveals that the utility model (LPG Burner) is not anticipated. Not one of the various pictorial representations of burners clearly and convincingly show that the device presented therein is identical or substantially identical in construction with the aforesaid utility model. It is relevant and material to state that in determining whether novelty or newness is negatived by any prior art, only one item of the prior art may be used at a time. For anticipation to occur, the prior art must show that each element is found either expressly or described or under principles of inherency in a single prior art reference or that the claimed invention was probably known in a single prior art device or practice. (Kalman v. Kimberly Clark, 218 USPQ 781, 789)

Even assuming gratia arguendi that the aforesaid brochures do depict clearly on all fours each and every element of the patented gas burner device so that the prior art and the said patented device become identical, although in truth they are not, they cannot serve as anticipatory bars for the reason that they are undated. The dates when they were distributed to the public were not indicated and, therefore, they are useless prior art references.

xxx xxx xxx

Furthermore, and more significantly, the model marked Exh. "K" does not show whether or not it was manufactured and/or cast before the application for the issuance of patent for the LPG burner was filed by Melecia Madolaria.

With respect to Exh. "L," petitioner claimed it to be her own model of LPG burner allegedly manufactured sometime in 1974 or 1975 and sold by her in the course of her business operation in the name of Besco Metal Manufacturing, which burner was denominated as "Ransome" burner

xxx xxx xxx

But a careful examination of Exh. "L" would show that it does not bear the word "Ransome" which is the burner referred to as the product being sold by the Petitioner. This is not the way to prove that Exh. "L" anticipates Letters Patent No. UM-4609 through Exhs. "C" and "D." Another factor working against the Petitioner's claims is that an examination of Exh. "L" would disclose that there is no indication of the time or date it was manufactured. This Office, thus has no way of determining whether Exh. "L" was really manufactured before the filing of the aforesaid application which matured into Letters Patent No. UM-4609, subject matter of the cancellation proceeding.

At this juncture, it is worthwhile to point out that petitioner also presented Exh. "M" which is the alleged burner cup of an imported "Ransome" burner. Again, this Office finds the same as unreliable evidence to show anticipation. It observed that there is no date indicated therein as to when it was manufactured and/or imported before the filing of the application for issuance of patent of the subject utility model. What is more, some component parts of Exh. "M" are missing, as only the cup was presented so that the same could not be compared to the utility model (subject matter of this case) which consists of several other detachable parts in combination to form the complete LPG burner.

xxx xxx xxx

It must likewise be pointed out that Ong Bun Tua testified on the brochures allegedly of Manila Gas and of Esso Gasul marked Exhs. "E" and "F" and on the alleged fact that Manila Gas Corporation was importing from the United States "Ransome" burners. But the same could not be given credence since he himself admitted during cross-examination that he has never been connected with Manila Gas Corporation. He could not even present any importation papers relating to the alleged imported ransome burners. Neither did his wife. 6

The above findings and conclusions of the Director of Patent were reiterated and affirmed by the Court of Appeals. 7

The validity of the patent issued by the Philippine Patent Office in favor of private respondent and the question over the inventiveness, novelty and usefulness of the improved model of the LPG burner are matters which are better determined by the Patent Office. The technical staff of the Philippine Patent Office composed of experts in their field has by the issuance of the patent in question accepted private respondent's model of gas burner as a discovery. There is a presumption that the Office has correctly determined the patentability of the model 8 and such action must not be interfered with in the absence of competent evidence to the contrary.

The rule is settled that the findings of fact of the Director of Patents, especially when affirmed by the Court of Appeals, are conclusive on this Court when supported by substantial evidence. Petitioner has failed to show compelling grounds for a reversal of the findings and conclusions of the Patent Office and the Court of Appeals.

The alleged failure of the Director of Patents and the Court of Appeals to accord evidentiary weight to the testimonies of the witnesses of petitioner showing anticipation is not a justification to grant the petition. Pursuant to the requirement of clear and convincing evidence to overthrow the presumption of validity of a patent, it has been held that oral testimony to show anticipation is open to suspicion and if uncorroborated by cogent evidence, as what occurred in this case, it may be held insufficient. 9

Finally, petitioner would want this Court to review all over again the evidence she presented before the Patent Office. She argues that contrary to the decision of the Patent Office and the Court of Appeals, the evidence she presented clearly proves that the patented model of private respondent is no longer new and, therefore, fraud attended the acquisition of patent by private respondent.

It has been held that the question on priority of invention is one of fact. Novelty and utility are likewise questions of fact. The validity of patent is decided on the basis of factual inquiries. Whether evidence presented comes within the scope of prior art is a

12

factual issue to be resolved by the Patent Office. 10 There is question of fact when the doubt or difference arises as to the truth or falsehood of alleged facts or when the query necessarily invites calibration of the whole evidence considering mainly the credibility of witnesses, existence and relevance of specific surrounding circumstances, their relation to each other and to the whole and the probabilities of the situation. 11

Time and again we have held that it is not the function of the Supreme Court to analyze or weigh all over again the evidence and credibility of witnesses presented before the lower tribunal or office. The Supreme Court is not a trier of facts. Its jurisdiction is limited to reviewing and revising errors of law imputed to the lower court, its findings of fact being conclusive and not reviewable by this Court.

WHEREFORE, the Petition is DENIED. The Decision of the Court of Appeals affirming that of the Philippine Patent Office is AFFIRMED. Costs against petitioner.

SO ORDERED.

Vitug, Kapunan and Hermosisima, Jr., JJ., concur.

Footnotes

PEOPLE OF THE PHILIPPINES, G.R. No. 152950HON. LOURDES F. GATBALITE,Presiding Judge, Branch 56,Regional Trial Court, AngelesCity and ATTY. BENNIE NICDAO,Special Prosecutor, SpecialOperative Group, EconomicIntelligence & InvestigationBureau,Petitioners,Present:

- v e r s u s -

CHRISTOPHER CHOI,Respondent.

Promulgated:

August 3, 2006x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x

D E C I S I O N

CORONA, J.:

This petition for review on certiorari1[1] seeks the reversal of the decision2[2]

of the Court of Appeals (CA) dated April 10, 2002 in CA-G.R. SP No. 59587, the

dispositive portion of which read:

WHEREFORE, the petition for certiorari and prohibition is GRANTED. Search Warrant No. 99-17 is deemed NULL and VOID and SET ASIDE. Respondent ATTY. BENNY NICDAO is prohibited from using in evidence the articles seized by virtue of Search Warrant No. 99-17 in Crim. Case No. I.S. No. 99-8116.

SO ORDERED.3[3]

The factual antecedents follow.

1

2

3

On April 27, 1999, Mario P. Nieto, Intelligence Operative of the Economic

Intelligence and Investigation Bureau, Department of Finance, applied for a search

warrant with the Regional Trial Court (RTC) of Angeles City, Pampanga, Branch 56,4[4]

against respondent Christopher Choi for violation of Section 168, paragraphs 2 and 3

(a) and (c), in relation to Section 169 of RA 8293,5[5] also known as the Intellectual

Property Code.6[6]

After examination of the applicant and his witnesses, namely, Max

Cavalera and David Lee Sealey, Judge Lourdes F. Gatbalite issued Search Warrant

No. 99-17 dated April 27, 1999 worded as follows:

TO ANY PEACE OFFICER:

G r e e t i n g s:

It appearing to the satisfaction of the undersigned, after examining under oath in the form of searching and probing questions, the applicant, MARIO P. NIETO, Intelligence Operative, Economic Intelligence Investigation Bureau, Department of Finance, and his witnesses Max Cavalera and David Lee Sealey that there are good and sufficient reasons to believe that Christopher Choi of No. 25-13 Columbia Street, Carmenville Subd., Angeles City has in his possession, control and custody [r]eams and packs of fake Marlboro Red Cigarettes, as well as cardboard cases of fake Marlboro Red Cigarettes (each cardboard case contains two (2) [m]aster [c]ases of Marlboro and each [m]aster case contains fifty (50) reams) being distributed, kept and sold thereat in violation of Section 168, par. 2 and 3 (a) and (c) in relation to Section 169 of R.A. 8293;

You are hereby commanded to make an immediate search at anytime of the day or night of the above-premises and forthwith seize and take possession of the aforedescribed items found at the residence/warehouse of Christopher Choi at No. 25-13 Columbia Street, Carmenville Subd., Angeles City.

THEREFORE, seize and bring the said articles to the undersigned to be dealt with in accordance with law.

You are hereby further directed to submit a return within ten (10) days from today.

Given under my hand this 27th day of April, 1999 at Angeles City, Philippines.7[7]

The search was conducted on the same date.8[8]

On May 12, 1999, respondent filed a “motion to quash search warrant”9[9]

and a “supplemental motion to quash”10[10] on June 22, 1999. Both were denied by

4

5

6

7

8

9

10

13

Judge Gatbalite in an order dated November 29, 1999.11[11] Reconsideration was

likewise denied.12[12]

On June 19, 2000, respondent filed a petition for certiorari and

prohibition13[13] before the CA. He alleged that Judge Gatbalite committed grave abuse

of discretion in refusing to quash the search warrant, arguing that probable cause was

not sufficiently established as the examination conducted was not probing and

exhaustive and the warrant did not particularly describe the place to be searched.

Respondent also prayed that Atty. Bennie Nicdao14[14] be prohibited from using as

evidence the articles seized by virtue of the search warrant. This was granted by the

CA in a decision dated April 10, 2002.

According to the CA, in determining whether there was probable cause to

believe that the cigarettes purchased by Nieto were fake and in violation of RA 8293,15

[15] Judge Gatbalite failed to ask searching and probing questions of witness David Lee

Sealey.16[16] The examination of Sealey went this way:

Court:

Q There was testimony here given by Mr. Mario Nieto and Max Cavalera, that fake Marlboro cigarettes bought by them from Michael Chua, Christopher Choi and Johnny Chang were turned over to you for examination, is that correct?

A Yes, your Honor.

Q After the same had been turned over to you, what did you do with the said merchandise, if you did anything?

A I examined the sample of cigarettes and their packaging bearing the Marlboro Trade Marks which were suspected to be produc[ed] and manufactured by La Suerte or [with] the permission of Philip Morris.

Q What was the result of your examination?A Based on the packaging of the packs, the color

of the box and the printing on the front side of the packs and the cigarettes themselves, I concluded that they are counterfeit or unauthorized product[s].

Q Do you have any knowledge of this person named Christopher Choi?

A None, your Honor.

Q There is an affidavit here marked as exhibit, executed by one David Lee Sealey, do you know this David Lee Sealey?

A Yes, your Honor, I am the one.

Q Whose signature is this appearing on the printed name David Lee Sealey?

11

12

13

14

15

16

A This is my signature, your Honor.

Q Do you affirm and confirm other contents of this affidavit?

A Yes, your Honor.

Court:

That’s all.17[17]

In addition, the CA ruled that Judge Gatbalite committed grave abuse of

discretion when she merely relied on the conclusion of Sealey that the cigarettes he

received from Nieto were fake. She should have at least required Sealey to present

the alleged fake Marlboro cigarettes and the genuine ones for comparison, instead of

relying on his testimony alone. The CA reasoned that this was an absolute

requirement under the Supreme Court ruling in 20th Century Fox Film Corporation v.

Court of Appeals.18[18]

Hence, this petition.

The People of the Philippines aver that the CA erred in finding that Judge

Gatbalite committed grave abuse of discretion in issuing the search warrant allegedly

because she failed to determine probable cause pursuant to Sections 4 and 5 of Rule

126 of the Rules of Court.19[19] The People assail the finding of the CA that, in issuing

the search warrant, Judge Gatbalite purportedly did not comply strictly with the

requirement to determine the existence of probable cause by personally examining the

applicant and his witnesses through searching questions and answers. The People

also assert that the CA erred in applying the doctrine in 20th Century Fox Film

Corporation20[20] since it had already been superseded by Columbia Pictures, Inc. v.

Court of Appeals.21[21]

We rule for the People of the Philippines.

Sections 4 and 5 of Rule 126 state:

Sec. 4. Requisites for issuing search warrant. — A search warrant shall not issue except upon probable cause in connection with one specific offense to be determined personally by the judge after examination under oath or affirmation of the complainant and the witnesses he may produce, and particularly describing the place to be searched and the things to be seized which may be anywhere in the Philippines.

Sec. 5. Examination of complainant; record. — The judge must, before issuing the warrant, personally examine in the form of searching questions and answers, in writing and under oath, the complainant and the witnesses he may produce on facts personally known to them and attach to

17

18

19

20

21

14

the record their sworn statements, together with the affidavits submitted.

According to the foregoing provisions, a search warrant can be issued only upon a

finding of probable cause. Probable cause means such facts and circumstances which

would lead a reasonably discreet and prudent man to believe that an offense has been

committed and that the objects sought in connection with the offense are in the place

sought to be searched.22[22] The determination of the existence of probable cause

requires the following:

(1) the judge must examine the complainant and his witnesses

personally;

(2) the examination must be under oath and

(3) the examination must be reduced in writing in the form of

searching questions and answers.23[23]

The searching questions propounded to the applicant and the witnesses

depend largely on the discretion of the judge. Although there is no hard-and-fast rule

governing how a judge should conduct his examination, it is axiomatic that the

examination must be probing and exhaustive, not merely routinary, general,

peripheral, perfunctory or pro-forma.24[24] The judge must not simply rehash the

contents of the affidavit but must make his own inquiry on the intent and justification of

the application.25[25] The questions should not merely be repetitious of the averments

stated in the affidavits or depositions of the applicant and the witnesses.26[26] If the

judge fails to determine probable cause by personally examining the applicant and his

witnesses in the form of searching questions before issuing a search warrant, grave

abuse of discretion is committed.27[27]

The determination of probable cause does not call for the application of

rules and standards of proof that a judgment of conviction requires after trial on the

merits. As the term implies, probable cause is concerned with probability, not absolute

or even moral certainty. The standards of judgment are those of a reasonably prudent

man, not the exacting calibrations of a judge after a full-blown trial.28[28] No law or rule

states that probable cause requires a specific kind of evidence. No formula or fixed

rule for its determination exists.29[29] Probable cause is determined in the light of

22

23

24

25

26

27

28

29

conditions obtaining in a given situation.30[30] The entirety of the questions propounded

by the court and the answers thereto must be considered by the judge.31[31]

In this case, aside from the testimony of Sealey, petitioner judge also

heard the testimony of applicant Nieto:

Q: In connection with Search Warrant 99-17, are you the same Mario Nieto who is the applicant in this application for search warrant filed today April 27, 1999?

A: Yes, your Honor.

Q: Do you know this Christopher Choi referred to herein?

A: Yes, your Honor.

Q: Why do you know him?A: He was introduced to us by Michael Chua, your

Honor.

Q: As what?A: As the supplier for the goods.

Q: Subject of the application?A: Yes, your Honor, in violation of Section 169 of

R.A. 8293.

Q: How did you know him?A: When I was conducting a test-buy operation

against Mr. Michael Chua, Mr. Michael Chua told me that the bulk of supply if we need more supply we can get from the source, a certain Christopher Choi, who lives in the same village and who is actually the supplier for the entire region.

Q: Where did you see him. This Christopher Choi?A: I went to his house, your Honor.

Q: Where?A: At No. 25-13 Columbia St., Carmenville Subd.,

Angeles City, Pampanga.

Q: Upon arriving at the place what did you do?A: Upon arriving at the place, your Honor, I

introduced myself as the one who was referred by a certain Michael Chua who is interested in buying the Marlboro cigarettes from him and he accommodated me and showed me the sample that he has and I was able to procure the samples from him, the samples that like what we did to the others were inspected by certain Mr. David Lee Sealey, the representative and authority from the Philip Morris.

Q: Did you actually buy those samples?A: Yes, your Honor, I got the samples form Mr.

Christopher Choi and I submitted them to Mr. David Lee Sealey.

Q: How many Marlboro cigarettes did you buy?A: We bought only one ream, P17.00 per pack.

Q: Do you know from what particular place the house of Christopher Choi did he got (sic) those samples?

A: The volume stocks were found inside the house, they are almost everywhere in the house of Christopher Choi.

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Q: There is a sketch here attached to your application, can you point it out here?

A: Yes, your Honor, at the warehouse, in the storage room as shown in the lay out of the house, it is adjacent to the residential house as shown in the sketch.

Q: You went to the warehouse?A: We were shown [the] entire area by the

supplier, Christopher Choi. As a matter of fact he was trying to show us how much volume he has and his capacity to supply.32[32]

Max Cavalera, a witness who accompanied Nieto during the “test-buy”

operation,33[33] also testified:

Q How about this Christopher Choi?A As I’ve said earlier, he was one of those

identified by the informant storing and selling counterfeit Marlboro cigarettes, so on April 22, 1999 we conducted a surveillance and we were able to confirm that the said cigarettes are being stored at the subject place.

Q At what place?A At 25-13 Columbia St., Carmenville Subd.,

Angeles City. On April 23, 1999 at about 8:30 p.m., Mario Nieto and I again went to the subject place to conduct a test-buy operation. [A]fter Mr. Choi had been convinced of our intention to buy cigarettes from him, he brought us to his warehouse where he showed to us several cardboard cases of Marlboro cigarettes.34[34]

Given the foregoing testimonies and applying the established standards in

determining probable cause, we cannot say that Judge Gatbalite committed grave

abuse of discretion in issuing the search warrant. Her questions were sufficiently

probing, not at all superficial and perfunctory. The testimonies were consistent with

each other and the narration of facts was credible. The testimonies and other evidence

on record constituted adequate bases to establish probable cause that the alleged

offense had been committed.

Since probable cause is dependent largely on the opinion and findings of

the judge who conducted the examination and who had the opportunity to question the

applicant and his witnesses,35[35] the findings of the judge deserve great weight. The

reviewing court can overturn such findings only upon proof that the judge disregarded

the facts before him or ignored the clear dictates of reason.36[36] We thus find no

reason to disturb Judge Gatbalite’s findings.

Furthermore, as correctly pointed out by petitioners, 20th Century Fox Film

Corporation, insofar as it required the presentation of the master tapes for comparison

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with the pirated copies for a search warrant to issue, had already been superseded by

Columbia Pictures, Inc. v. Court of Appeals:

More to the point, it is felt that the reasonableness of the added requirement in 20th Century Fox calling for the production of the master tapes of the copyrighted films for determination of probable cause in copyright infringement cases needs revisiting and clarification.

xxx xxx xxx

In fine, the supposed pronunciamento in said case regarding the necessity for the presentation of the master tapes of the copyrighted films for the validity of search warrants should at most be understood to merely serve as a guidepost in determining the existence of probable cause in copyright infringement cases where there is doubt as to the true nexus between the master tape and the pirated copies. An objective and careful reading of the decision in said case could lead to no other conclusion than that said directive was hardly intended to be a sweeping and inflexible requirement in all or similar copyright infringement cases. Judicial dicta should always be construed within the factual matrix of their parturition, otherwise a careless interpretation thereof could unfairly fault the writer with the vice of overstatement and the reader with the fallacy of undue generalization.

xxx xxx xxx

It is evidently incorrect to suggest, as the ruling in 20th Century Fox may appear to do, that in copyright infringement cases, the presentation of master tapes of the copyrighted films is always necessary to meet the requirement of probable cause and that, in the absence thereof, there can be no finding of probable cause for the issuance of a search warrant. It is true that such master tapes are object evidence, with the merit that in this class of evidence the ascertainment of the controverted fact is made through demonstrations involving the direct use of the senses of the presiding magistrate. Such auxiliary procedure, however, does not rule out the use of testimonial or documentary evidence, depositions, admissions or other classes of evidence tending to prove the factum probandum, especially where the production in court of object evidence would result in delay, inconvenience or expenses out of proportion to its evidentiary value.

xxx xxx xxx

Accordingly, to restrict the exercise of discretion by a judge by adding a particular requirement (the presentation of master tapes, as intimated by 20th Century Fox) not provided nor implied in the law for a finding of probable cause is beyond the realm of judicial competence or statesmanship. It serves no purpose but to stultify and constrict the judicious exercise of a court’s prerogatives and to denigrate the judicial duty of determining the existence of probable cause to a mere ministerial or mechanical function. There is, to repeat, no law or rule which requires that the existence of probable cause is or should be determined solely by a specific kind of evidence. Surely, this could not have been contemplated by the framers of the Constitution, and we do not believe that the Court intended the statement in 20th Century Fox regarding master tapes as the dictum for all seasons and reasons in infringement cases.37[37] (emphasis supplied)

It is obvious that 20th Century Fox Film Corporation should not be applied

to the present case since this involves the offense of unfair competition and not

copyright infringement. More importantly, as pronounced by the Court in Columbia

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Pictures, Inc., the judge’s exercise of discretion should not be unduly restricted by

adding a requirement that is not sanctioned by law.

WHEREFORE, the petition is hereby GRANTED. The assailed decision

of the Court of Appeals dated April 10, 2002 in CA-G.R. SP No. 59587 is REVERSED

and SET ASIDE. Judgment is hereby rendered declaring Search Warrant No. 99-17

as VALID.

SO ORDERED.

[G.R. No. 113407. July 12, 2000]

LOTHAR SCHUARTZ, FRIEDEL VERDERBERG, UDOLF KUEHNE, DIETER FISCHER, JOHN BERNARD WATKINS, HARRY GREAVES, CHEN WOO CHIN, YOSHIMI IWASAKI, FABIO CARLI, MORTIMER THOMPSON, MALCOLM JOHN LAW, MICHIBAZU OCHI, KENJI SHIGEMATSU, ENI SHINOZAKI, ROBERT CABI-AKMAN, ARTHUR SPRENGER, REMY SIMOND and HEINRICH EVBERGGER, petitioners, vs. THE HONORABLE COURT OF APPEALS (SPECIAL FIFTH DIVISION) and THE BUREAU OF PATENTS, TRADEMARKS AND TECHNOLOGY TRANSFER, respondents.

R E S O L U T I O N

PARDO, J.:

Petitioners appeal via certiorari from the decision38[1]of the Court of Appeals dismissing their appeal from the resolution of the Director of Patents that denied with finality their petition for revival of patent applications.

On different dates, petitioners applied to the Bureau of Patents, Trademarks and Technology Transfer for registration of patents. They hired the law firm Siguion Reyna, Montecillo and Ongsiako to process their patent applications in the Philippines, respectively identified as follows:

ApplicantSerial No.

(1) Michibazu Ochi, Kenji Shigematsu and 2335439[2]

Eni Shinozaki- Issuance of letters patent for “Hackling Drum Room or Chamber at the Self-Feeding Equipment for Threshing of Upper Hackling System”

(2) Robert Cabi-Akman, Arthur Sprenger 2963040[3]

and Remy Simond- Issuance of letters patent for “Colour Value Measurement”

(3) Heinrich Evbergger- Issuance of letters 2989841[4]

patent for “Tool for Moulding the Top Past of a Plastic Container”

(4) Mortimer Thompson- Issuance of 3011242[5]

letters patent for “Tamper Evident Closures and Packages”

(5) Yoshimi Iwasaki- Issuance of letters 3054843[6]

patent for “Method Generation for Hot Gas

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by Incinerators”

(6 )John Bernard Watkins, Harry Greaves 3081944[7]

and Chen Woo Chin- Issuance of letters patent for “Preservation Composition”

(7) Fabio Carli- Issuance of letters patent 3196845[8]

for “Pharmaceutical Compositions”

(8) Lothar Schuartz, Friedel Verderberg, 3197446[9]

Rudolf Kuehne, and Dieter Fischer- Issuance of letters patent for “Process for Producing Copper-Laminated Base Material for Printed Circuit Boards”

(9) Malcolm John Law- Issuance of letters 3205047[10]

patent for “Electrodeposition of Chromium andChromium Bearing Alloys.” 48[11]

Petitioners’ patent applications lacked certain requirements and the Bureau informed the law firm about it, through correspondences called Office Actions. As petitioners’ law firm did not respond to these office actions within the prescribed time, notices of abandonment were sent on the following dates:

Serial Nos. Date of Office Action Date of Abandonment

(1) 23354 March 20, 1987 July 21, 1987

(2) 29630 June 18, 1986October 21, 1986

(3) 29898 June 11, 1987June 22, 1987

(4) 30112 June 3, 1987August 6, 1987

(5) 30548 June 10, 1987August 18, 1987

(6) 30819 January 28, 1987 July 28, 1987

(7) 31968 January 14, 1987 July 15, 1987

(8) 31974 July 23, 1987 September 24, 1987

(9) 32050 March 31, 1987 June 1, 198749[12]

On December 7, 1987, two employees of the law firm, George Bangkas and Rafael Rosas were dismissed from employment. Prior to the dismissal, these employees worked with the patent group of the law firm and had the duty, among others, of getting the firm’s letters and correspondence from the Bureau of Patents.

Immediately after their dismissal, the law firm conducted an inventory of all the documents entrusted to them. It was then that the firm learned about the notices of abandonment.

Thereafter, petitioners, through the law firm, filed with the Bureau of Patents separate petitions for revival of the patent applications on the following dates:

Serial Nos. Date Petition Filed

(1) 23354 March 3, 1988

(2) 29630 March 3, 1988

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(3) 30122 January 15, 1988/February 29, 1988

(4) 30548 January 25, 1988/March 1, 1988

(5) 30819 May 27, 1988/July 15, 1988

(6) 31968 January 21, 1988/March 1, 1988

(7) 31974 March 14, 1988

(8) 32050 March 17, 1988

For Serial No. 29898, the applicant abandoned his application, for which reason no petition for revival was filed.50[13]

On January 31, 1991, Director Luis M. Duka, Jr. of the Bureau of Patents denied all the petitions for revival because they were filed out of time. The dispositive portion specifically provides:

“WHEREFORE, in consideration of the foregoing premises, all the petitions for revival of the above-captioned abandoned applications bearing Serial Nos. 23354, 29630, 29898, 30112, 30548, 30819, 31968, 31974, and 32050, are hereby denied and no further petitions nor requests for reconsideration hereof shall be entertained hereafter.

“SO ORDERED.

“Makati, Metro Manila, Philippines, this 31st day of January 1991.

LUIS M. DUKA, JR.Director III” 51[14]

On February 14, 1991, petitioners appealed the above resolution of the Bureau of Patents to the Court of Appeals.52[15]

On August 13, 1992, the Court of Appeals dismissed the consolidated appeal for being filed beyond the 15-day reglementary period to appeal. There was an unreasonable delay before the petitions to revive applications were filed. Moreover, petitioners’ patent applications could not be a proper subject of a consolidated appeal because they covered separate and distinct subjects and had been treated by the Bureau of Patents as separate and individual applications. Specifically the decision provides:

“WHEREFORE, for reasons above stated and in the light of the applicable law on the matter, this petition for review on appeal from the order/decision of the Director of Bureau of Patents is hereby DISMISSED with costs against the appellants.

SO ORDERED.” 53[16]

On September 14, 1992, petitioners moved for reconsideration of the Court of Appeals’ decision, which the court denied on January 7, 1994. The appellate court found no cogent reason to justify the reversal or modification of its decision.54[17]

Aggrieved, petitioners filed the instant petition for review on certiorari.55[18]

At issue is the validity of the Court of Appeals’ dismissal of the consolidated appeal of petitioners from the Director of Patents’ denial of the revival of their patent applications.

Petitioners contend that the Court of Appeals committed grave abuse of discretion when it held that the consolidated appeal was filed out of time. They were appealing from the resolution of the Director of Patents dated January 31, 1991, which denied the petition for revival of the patent applications. They received a copy of the resolution, through their patent attorneys, on February 7, 1991, and filed the consolidated appeal seven (7) days after, or on February 14, 1991. According to petitioners, these dates clearly established that their appeal was seasonably filed.

The contention is not meritorious. If the facts above-mentioned were the sole basis of determining whether the appeal was filed on time, petitioners’ argument would be correct. However, petitioners lost sight of the fact that the petition could not be granted because of laches. Prior to the filing of the petition for revival of the patent application with the Bureau of Patents, an unreasonable period of time had lapsed due to the negligence of petitioners’ counsel. By such inaction, petitioners were deemed to have forfeited their right to revive their applications for patent.

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Facts show that the patent attorneys appointed to follow up the applications for patent registration had been negligent in complying with the rules of practice prescribed by the Bureau of Patents. The firm had been notified about the abandonment as early as June 1987, but it was only after December 7, 1987, when their employees Bangkas and Rosas had been dismissed, that they came to know about it. This clearly showed that petitioners’ counsel had been remiss in the handling of their clients’ applications.56[19]

“A lawyer’s fidelity to the cause of his client requires him to be ever mindful of the responsibilities that should be expected of him. A lawyer shall not neglect a legal matter entrusted to him.”57[20] In the instant case, petitioners’ patent attorneys not only failed to take notice of the notices of abandonment, but they failed to revive the application within the four-month period, as provided in the rules of practice in patent cases. These applications are deemed forfeited upon the lapse of such period.58[21]

Hence, we can not grant the present petition.59[22] The Court of Appeals did not err or gravely abuse its discretion in dismissing the petition for review.

WHEREFORE, the Court DENIES the petition for lack of merit. The Court AFFIRMS the decision of the Court of Appeals in CA-G. R. SP No. 24175.

No costs.

SO ORDERED.

Davide, Jr., C.J., (Chairman), Puno, Kapunan, and Ynares-Santiago, JJ., concur.

G.R. No. L-4720 January 19, 1909

CARLOS GSELL, plaintiff-appellee, vs.VALERIANO VELOSO YAP-JUE, defendant-appellant.

Chicote and Miranda, for appellant.Haussermann and Cohn, for appellee.

CARSON, J.:

This an appeal from a final order of the Court of First Instance of the city of Manila, in contempt proceedings prosecuted under the provisions of section 172 of the Code of Civil Procedure. The principal case to which these proceedings are ancillary, was an action to enjoin infringement of a patented process for the manufacture of curved handles for canes, parasols, and umbrellas. In that case plaintiff established his title to a valid patent covering the process in question, and obtained against this defendant a judgment, granting a perpetual injunction restraining its infringement, which judgment was affirmed by this court on appeal (6 Phil. Rep., 143.) The order was couched in the following terms:

It is ordered that the defendant abstain from manufacturing canes and umbrellas with a curved handle by means of a lamp or blowpipe fed with mineral oil or petroleum, which process was protected by patent No. 19228, issued in favor of Henry Gsell, and by him transferred to Carlos Gsell —

and the process therein mentioned is fully described in the following statement which accompanied the application for the patent:

After the canes have been cut for cane or umbrella handles, the outsides are thoroughly cleaned. This operation having been performed, they are then trimmed and the interior cleaned by means of a gimlet of about 15 centimeters in length operated by a wheel, by means of which the knots

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inside are broken. There is then introduced to a depth of about 15 centimeters a piece of very clean bamboo, which completely fills the hole made by the gimlet, thereby giving to the cane the necessary strength to resist the heat of the lamp or blowpipe without breaking or cracking.

This operation having been performed, the cane, the end of which is attached to a fixed point, is given the shape of a hook or some other form by means of fire and pressure. Once the cane has been shaped as desired, it is allowed to cool, and is then cleaned, varnished, and ornamented at will.

This industry requires skillful, handiwork, owing to the great risk engendered by the treatment of such fragile material as a light cane. On the other hand, however, it affords large profits to the workman.

NOTE. — The patent applied for shall be for the industrial product "cane handles for walking sticks and umbrellas, curved by means of a small lamp or blowpipe, fed by petroleum or mineral fuel."

Thereafter the defendant continued to manufacture curved cane handled for walking sticks and umbrellas by a process in all respectes identical with that used by the plaintiff under his patent, except only that he be substituted for a lamp fed with petroleum or mineral oil, lamp fed with alcohol, as appears from a stipulation entered into between plaintiff and defendant in the following terms:

The plaintiff and defendant agree upon the fact that the defendant has used and is still using a process for curving handles of canes and umbrellas identical with that described in the application for the patent by the plaintiff with the exception that he has substituted for the lamp fed with all other lamp fed with alcohol.

Contempt proceedings were instituted against the defendant in the month of February, 1904, the plaintiff in the original action alleging that the —

Defendant in disobediencce of the judgment of the same was and is now engaged in the unlawful manufacture of umbrella handles by the identical process described in and protected said patent, No. 19228, or a process so like the patented process as to be indistinguishable.

The trial court found the defendant "not guilty" of contempt as charged; and this court, on appeal, held that — a character that it could be made patent by the mere annunciation of the acts performed by the defendant, which are alleged to constitute the said violation. These acts were not clearly and manifestly contrary to the precise terms of the prohibition. According to the express language of the judgment, the prohibition is against the manufacture of canes and umbrellas with curved handles by means of the use of a cool or mineral oil-burning lamp or blowpipe and the parties have stipulated that the defendant did not use a coal or mineral oil-burning lamp but an alcohol-burning lamp.

The question, however, arises as to whether that prohibition included the substitution of alcohol for coal or mineral oil. In more abstract and general terms, the appellant propounds this question in his brief, as follows: "The question presented by this appeal is whether or not the use of a patented process by a third person, without license or authority therefor, constitutes an infringement when the alleged infringer has substituted in lieu of some unessential part of the patented process a well-known mechanical equivalent." It has seen that by its very terms this question implies in the present case the existence of two fundamental facts which must first be duly established, viz: (1) That the use of the lamp fed with petroleum or mineral oil was an unessential part of the patented process the use of which by the accused was prohibited by the said judgment; and (2) that alcohol is an equivalent and proper substitute, well known as such, for mineral oil or petroleum in connection with the said process. The appellant has failed to affirmatively establish either of these two essential facts. He has merely assumed their existence, without proving the same, thus begging the whole question. Consequently the contempt with which the accused is charged has not been fully and satisfactorily proved, and the order appealed from should accordingly be affirmed in so far as it holds that the defendant is not guilty of contempt. (7 Phil. Rep., 130).

Thereafter the plaintiff continued the use of the patented process, save only for the substitutions of a lamp fed by alcohol for a lamp fed by petroleum or mineral oil, and new proceedings were instituted under the provisions of section 172 for the purpose of enforcing the original injunction above cited. Substantially the same question is

submitted in these new proceedings as that submitted in the former case, but at the trial of this case testimony was introduced which, in our opinion, leaves no room for doubt, first, that alcohol is an equivalent or substitute, well known as such at the time when the patent was issued, for mineral oil or petroleum, in connection with blast lamps or blowpipes such as that which plaintiff uses in the patented process, and, second, that the use of a blast lamp or blowpipe fed with petroleum or mineral oil, rather than one fed with alcohol, is an unessential part of the patented process the use of which was prohibited by the said judgment.

It was clearly proven at the trial, that kerosene and alcohol blast lamps are agencies for producing and applying heat, well known throughout the world long prior to 1906, the date of the issue of the patent; that it is and for many years has been known that one may for all ordinary purposes be used in the place of the other, and especially for the purpose of applying heat in the manner described in the patent; that the only consideration which determines the employment of one in place of the other is the convenience of the user and the question of relative cost; and that the principle upon which both lamps work is substantially identical, the only difference in construction being occasioned by the application of this principle to oils of different physical and chemical composition.

The plaintiff does not and can not claim a patent upon the particular lamp used by him. The patent, however, gives him the exclusive right to the use of "la lamparilla o soplete, alimentada de petroleo o esencia mineral" (the small lamp or blowpipe fed with petroleum or mineral oil) in manufacturing curved handles for umbrellas and canes, to which reference is made in the above-cited descriptive statement and annexed note. "The small lamp or blowpipe" mentioned in the descriptive statement and annexed note which accompanied the application for the patent, evidently referred to the design of a blast lamp which was attached thereto; and in our opinion both plaintiff and defendant make use of a blast lamp substantially similar, in principle and design, to that referred to in the descriptive statement and the annexed note, for the exclusive use of which in the manufacture of curved handles, plaintiff holds a patent. True, defendant's blast lamp is fed with alcohol, and its shape varies in unimportant details, for the purpose of accommodating the principle, by which the flame is secured, to the different physical and chemical composition of the fuel used therein; but the principle on which it works, its mode of application, and its general design distinguish it in no essential particular from that used by the plaintiff. If the original design accompanying the statement had shown a blast lamp made of brass or delf, he would be a reckless advocate who would claim that the patent might lawfully be evaded by the use of a lamp made of iron or tin; or if the original design had shown a blast lamp 6 inches high with a nozzle 4 inches long it would hardly be seriously contended that the use of lamp 8 inches high with a nozzle 3 inches long would protect the ingenious individual, who in all other respects borrowed the patented process, from the consequences of an action for damages for infringement. But in the light of the evidence of record in this case, the reasoning upon which these hypothetical claims should be rejected applies with equal force to the contentions of the defendant, the ground for the rejection of the claims in each case being the same, and resting on the fact that unessential changes, which do not affect the principle of the blast lamp used in the patented process, or the mode of application of heat authorized by the patent, are not sufficient to support a contention that the process in one case is in any essential particular different from that used in the other.

Counsel for plaintif invokes the doctrine of "mechanical equivalents" in support of his contention, and indeed that doctrine is strikingly applicable to the facts in this case. This doctrine is founded upon sound rules of reason and logic, and unless restrained or modified by law in particular jurisdiction, is of universal application, so that it matters not whether a patent be issued by one sovereignty or another, the doctrine may properly be invoked to protect the patentee from colorable invasions of his patent under the guise of substitution of some part of his invention by some well known mechanical equivalent. Our attention has not been called to any provision of the patent law of Spain, which denies to patentees thereunder the just and equitable protection of the doctrine; and indeed a patent law which failed to recognize this doctrine would afford scant protection to inventors, for it is difficult if not impossible to conceive an invention, which is incapable of alteration or change in some unessential part, so as to bring that part outside of the express terms of any form of language which might be used in granting a patent for the invention; and has been well said by counsel for plaintiff, human ingenuity would be taxed beyond its powers in preparing a grant of a patent so comprehensive in its terms, "as to include within the express terms of its detailed description every possible alternative of form, size, shape, material, location, color, weight, etc., of every wheel, rod, bolt, nut, screw, plate, and other component parts of an invention."

The following citations from various decisions of the Federal Courts of the United States illustrate the application of the doctrine in that jurisdiction, and clearly point the way to the proper solution of the questions involved in the case at bar:

Can the defendant have the right of infringement, by substituting in lieu of some parts of the combination well-known mechanical equivalents? I am

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quite clear that be can not, both on principle and authority. It is not to be disputed that the inventor of an ordinary machine is, by his letters patent, protected against all mere formal alterations and against the substitution of mere mechanical equivalents. Why should not the inventor of a new combination receive the same protection? If he can not, then will his patent not be worth the parchment on which it is written.

If no one can be held to infringe a patent for a combination unless he uses all the parts of the combination and the identical machinery as that of the patentee, then will no patent for a combination be infringed; for certainly no one capable of operating a machine can be incapable of adopting some formal alteration in the machinery, or of substituting mechanical equivalents. No one infringes a patent for a combination who does not employ all of the ingredients of the combination; but if he employs all the ingredients, or adopts mere formal alterations, or substitutes, for one ingredient another which was well known at the date of the patent as a proper substitute for the one withdrawn, and which performs substantially the same function as the one withdrawn, he does infringe. (King vs. Louisville Cement Co., Fed. Cas., 7798.)

Bona fide inventors of a combination are as much entitled to equivalents as the inventors other patentable improvements; by which is meant that a patentee in such a case may substitute another ingredient for any one of the ingredients of his invention, if the ingredient substituted performs the same function as the one omitted and as well known at the date of his patent as a proper substitute for the one omitted in the patented combination. Apply that rule and it is clear that an alteration in a patented combination which merely substitutes another old ingredient for one of the ingredients in the patented combination, is an infringement of the patent, if the substitute performs the same function and was well known at the date of the patent as a proper substitute for the omitted ingredient. (Gould vs. Rees, 82 U.S., 187, 194.)

Mere formal alterations in a combination in letters patent are no defense to the charge of infringement and the withdrawal of one ingredient from the same and the substitution of another which was well known at the date of the patent as a proper substitute for the one withdrawn is a mere formal alteration of the combination if the ingredient substituted performs substantially the same function as the one withdrawn.

Bona fide inventors of a combination are as much entitled to suppress every other combination of the same ingredients to produce the same result, not substantially different from what they have invented and caused to be patented as to any other class of inventors. All alike have the right to suppress every colorable invasion of that which is secured to them by letters patent. (Seymour vs. Osborne, 78 U.S., 516, 556.)

A claim for the particular means and mode of operation described in the specification extends, by operation of law, to the equivalent of such means — not equivalent simply because the same result is thereby produced — but equivalent as being substantially the same device in structure, arrangement and mode of operation. (Burden vs. Corning, Fed. Cas., 2143. Gottfried vs. Philip Best Brewing Co., Fed. Cas., 5633.)

An equivalent device is such as a mechanic of ordinary skill in construction of similar machinery, having the forms, specifications and machine before him, could substitute in the place of the mechanism described without the exercise of the inventive faculty. (Burden vs. Corning, supra.)

All the elements of the invention in this case are old, and the rule in such cases, as before explained, undoubtedly is that a purpose can not invoke the doctrine of equivalents to suppress all other improvements of the old machine, but he is entitled to treat everyone as an infringer who makes, uses, or vends his patented improvement without any other change than the employment of a substitute for one of its elements, well known as such at the date of his invention, and which any constructor acquainted with the art will know how to comply. The reason for the qualification of the rule as stated is, that such change — that is, the mere substitution of a well- known element for another — where it appears that the substituted element was well known as a usual substitute for the element left out — is merely a formal one, and nothing better than a colorable evasion of the patent. (Union Sugar Refining Co. vs. Matthieson, Fed. Cas., 14399.)

Counsel for the defendant insists that, under Spanish law, none of the steps of the process described in the descriptive statement, save those mentioned in the "note" thereto attached are included in the patent, and that the patent rights secured thereunder are strictly limited to the precise language of the "note" attached to the descriptive statement; while counsel for plaintiff appears to think that the language of the patent covers any process or device whereby wood or cane may be bent or curved by the use of heat. But for the purpose of this decision it is not necessary to consider these questions, further than to hold, as we do, that under the doctrine of equivalents, the language of the note in the descriptive statement applies to the operation of applying heat for the purpose of curving handles or canes and umbrellas by means of a blast lamp fed with alcohol, as well as by means of a blast lamp fed with petroleum or mineral oil; and the defendant having admitted the fact that he applied heat for the purpose of curving handles for canes and umbrellas by means of a blast lamp fed with alcohol, he must be deemed to have contempt of violating the terms and the injunction issued in the principal case, wherein plaintiff was declared the owner of the patent in question, and defendant enjoined from its infringement.

The argument of counsel for defendant and appellant, based on the theory that the questions herein discussed and decided to have been heretofore settled by this court, and that the subject-matter of this proceeding is res adjudicata between the parties thereto is sufficiently refuted by the simple reading of the decision of this court in the case relied upon. (Gsell vs. Veloso, 7 Phil. Rep., 130.)

The judgment of the lower court should be and is hereby affirmed, with the costs of this instance against the appellant.

Arellano, C.J., Torres, Mapa, Willard, and Tracey, JJ., concur.

[G.R. No. 144309. November 23, 2001]

SOLID TRIANGLE SALES CORPORATION and ROBERT SITCHON, petitioners, vs. THE SHERIFF OF RTC QC, Branch 93; SANLY CORPORATION, ERA RADIO AND ELECTRICAL SUPPLY, LWT CO., INCORPORATED; ROD CASTRO, VICTOR TUPAZ and the PEOPLE OF THE PHILIPPINES, respondents.

D E C I S I O N

KAPUNAN, J.:

The petition at bar stems from two cases, Search Warrant Case No. Q-3324 (99) before Branch 93 of the Quezon City Regional Trial Court (RTC), and Civil Case No. Q-93-37206 for damages and injunctions before Branch 91 of the same court.

The facts are set forth in the Decision of the Court of Appeals dated July 6, 1999:

x x x on January 28, 1999, Judge Apolinario D. Bruselas, Jr., Presiding Judge of RTC, Branch 93, Quezon City, upon application of the Economic Intelligence and Investigation Bureau (EIIB), issued Search Warrant No. 3324 (99) against Sanly Corporation (Sanly), respondent, for violation of Section 168 of R.A. No. 8293 (unfair competition).

By virtue of Search Warrant No. 3324 (99), EIIB agents seized 451 boxes of Mitsubishi photographic color paper from respondent Sanly. xxx

Forthwith, Solid Triangle, through Robert Sitchon, its Marketing and Communication Manager, filed with the Office of the City Prosecutor, Quezon City, an affidavit complaint for unfair competition against the members of the Board of Sanly and LWT Co., Inc. (LWT), docketed as I.S. No. 1-99-2870.

Sitchon alleged that ERA Radio and Electrical Supply (ERA), owned and operated by LWT, is in conspiracy with Sanly in selling and/or distributing Mitsubishi brand photo paper to the damage and prejudice of Solid Triangle, [which claims to be the sole and exclusive distributor thereof, pursuant to an agreement with the Mitsubishi

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Corporation].

On February 4, 1999, petitioner Solid Triangle filed with Judge Bruselas’ sala an urgent ex parte motion for the transfer of custody of the seized Mitsubishi photo color paper stored in the office of EIIB.

On February 8, 1999, respondents Sanly, LWT and ERA moved to quash the search warrant which was denied by Judge Bruselas in an order dated March 5, 1999.

The said respondents filed a motion for reconsideration which was granted by Judge Bruselas in the first assailed order of March 18, 1999. Respondent Judge held that there is doubt whether the act complained of (unfair competition) is criminal in nature.

Petitioner Solid Triangle filed a motion for reconsideration contending that the quashal of the search warrant is not proper considering the pendency of the preliminary investigation in I.S. No. 1-99-2870 for unfair competition wherein the seized items will be used as evidence.

On March 26, 1999, Judge Bruselas issued the second assailed order denying Solid Triangle’s motion for reconsideration.

On March 29, 1999, petitioner Solid Triangle filed with Branch 91 of the same Court, presided by Judge Lita S. Tolentino-Genilo, Civil Case No. Q-99-37206 for damages and injunction with prayer for writs of preliminary injunction and attachment. Impleaded as defendants were Sanly, LWT and ERA.

On March 30, 1999, the defendants filed their opposition to the application for the issuance of writs of injunction and attachment.

On March 31, 1999, Judge Genilo denied petitioner’s application for a preliminary attachment on the ground that the application is not supported with an affidavit by the applicant, through its authorized officer, who personally knows the facts.

Meanwhile, on April 20, 1999, Judge Bruselas issued the third assailed order, the dispositive portion of which reads:

WHEREFORE, the foregoing premises considered, the court directs –

1) EIIB, Mr. Robert Sitchon and Solid Triangle Sales Corporation to divulge and report to the court the exact location of the warehouse where the goods subject of this proceeding are presently kept within seventy-two hours from receipt hereof;

2) Mr. Rober Sitchon and Solid Triangle Sales Corporation to appear and show cause why they should not be held in contempt of court for failure to obey a lawful order of the court at a hearing for the purpose on 12 May 1999 at 8:30 o’clock in the morning;

3) The Deputy Sheriff of this Court to take custody of the seized goods and cause their delivery to the person from whom the goods were seized without further lost [sic] of time;

Let a copy of this order be served by personal service upon Mr. Robert Sitchon and Solid Triangle Sales Corporation. Serve copies also to EIIB and the respondents Rod Castro and Sanly Corporation.

SO ORDERED.i[1]

Alleging grave abuse of discretion, petitioners questioned before the Court of Appeals the orders of Branch 93 of the Quezon City RTC granting private respondents’ motion for reconsideration and denying that of petitioners’, as well as the order dated April 20, 1999 directing petitioners to, among other things, show cause why they should not be held in contempt. Petitioners also assailed the order of the Quezon City RTC, Branch 91 denying their application for a writ of attachment. Upon the filing of the petition on April 26, 1999, the Court of Appeals issued a temporary restraining order to prevent Judge Bruselas from implementing the Order dated April 20, 1999.

On July 6, 1999, the Court of Appeals rendered judgment initially granting certiorari. It held that the quashing of the warrant deprived the prosecution of vital evidence to determine probable cause.

Admittedly, the City Prosecutor of Quezon City has filed a

complaint for unfair competition against private respondents and that the undergoing preliminary investigation is in progress. In the said proceedings, the prosecution inevitably will present the seized items to establish a prima facie case of unfair competition against private respondents.

Considering that Judge Bruselas quashed the search warrant, he practically deprived the prosecution of its evidence so vital in establishing the existence of probable cause.

Petitioners’ reliance on Vlasons Enterprises Corporation vs. Court of Appeals [155 SCRA 186 (1987).] is in order. Thus:

The proceeding for the seizure of property in virtue of a search warrant does not end with the actual taking of the property by the proper officers and its delivery, usually constructive, to the court. The order for the issuance of the warrant is not a final one and cannot constitute res judicata (Cruz vs. Dinglasan, 83 Phil. 333). Such an order does not ascertain and adjudicate the permanent status or character of the seized property. By its very nature, it is provisional, interlocutory (Marcelo vs. de Guzman, 114 SCRA 657). It is merely the first step in the process to determine the character and title of the property. That determination is done in the criminal action involving the crime or crimes in connection with which the search warrant was issued. Hence, such a criminal action should be prosecuted, or commenced if not yet instituted, and prosecuted. The outcome of the criminal action will dictate the disposition of the seized property.ii[2]

The appellate court further ruled that the affidavit of merits is not necessary for the order of preliminary attachment to issue considering that the petition itself is under oath:

The denial was based on the ground that the application is not supported by an affidavit of the applicant corporation, through its authorized officer, who personally knows the facts.

We cannot go along with respondent judge’s theory. In Consul vs. Consul [17 SCRA 667 (1996)], the Supreme Court held:

Affidavit of merits has a known purpose: Courts and parties should not require the machinery of justice to grind anew, if the prospects of a different conclusion cannot be reasonably reached should relief from judgment be granted. We look back at the facts here. The petition for relief is verified by petitioner himself. The merits of petitioner’s case are apparent in the recitals of the petition. Said petition is under oath. That oath, we believe, elevates the petition to the same category as a separate affidavit. To require defendant to append an affidavit of merits to his verified petition, to the circumstances, is to compel him to do the unnecessary. Therefore, the defect pointed by the court below is one of forms, not of substance. Result: Absence of a separate affidavit is of de minimis importance.iii[3]

Upon motion by respondents, however, the Court of Appeals reversed itself. In its “Amendatory Decision,” the appellate court held that there was no probable cause for the issuance of the search warrant. Accordingly, the evidence obtained by virtue of said warrant was inadmissible in the preliminary investigation.

x x x Under Sections 168 and 170 of R.A. 8293 (the Intellectual Property Code), there is unfair competition if the alleged offender has given to his goods the general appearance of the goods of another manufacturer or dealer and sells or passes them off as goods of that manufacturer or dealer in order to deceive or defraud the general public or the legitimate trader. Also, if he makes false statements in the course of trade to discredit the goods, business, or services of another.

Undisputedly, the seized goods from Sanly are genuine and not mere imitations. This is admitted by petitioners in their application for a search warrant and supporting affidavits, Annexes “A” to “D”, inclusive, in their April 27, 1999 Submission of Annexes to this Court. It bears stressing that there is no showing or allegation that Sanly has presented, sold, or passed off its photographic paper as goods which come from Solid Triangle. There is no attempt on its part to deceive.

Both Sanly and Solid Triangle sell genuine Mitsubishi products.

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Solid Triangle acquires its goods from Japan on the basis of its exclusive distributorship with Mitsubishi Corporation. While Sanly buys its goods from Hongkong, claiming it is a parallel importer, not an unfair competitor. As defined, a parallel importer is one which imports, distributes, and sells genuine products in the market, independently of an exclusive distributorship or agency agreement with the manufacturer. And, this is precisely what Sanly states as its commercial status.

Records show that Sanly sold its photographic paper purchased from Hongkong without altering its appearance. It is distributed in the same Mitsubishi box with its logo and distinguishing marks as marketed in Japan. The same brown paper with the Mitsubishi seal is wrapped around its products. Copies of the importation documents and the certification on imports issued by the Philippine government recognized Societe’ Generale’ d’ Surveillance (SGS) were appended to the motion to quash search warrant.

Thus, on factual basis, the real dispute is actually between Solid Triangle and the manufacturer Mitsubishi. If Solid Triangle feels aggrieved, it should sue Mitsubishi for damages, if at all for breach of its distributorship. But that is between them.

Certainly, there is here no probable cause to justify the issuance of a search warrant based on a criminal action for “unfair competition.”

Therefore, since there is no probable cause for unfair competition in this case, then the quashal of the search warrant by respondent Judge Bruselas is valid. This being the case, there is merit in the motion for reconsideration.

In ascertaining the legality of a search warrant and the validity of the search and seizure conducted by the EIIB agents by virtue of the warrant, it is essential that a crime has been committed or is being committed and that the things seized are fruits of the crime or the means by which it is committed.

The validity of a search and seizure is of constitutional dimensions. The right to privacy and the sanctity of a person’s house, papers and effects against unreasonable searches and seizures are not only ancient. They are also zealously protected.

x x x

Solid Triangle contends that the quashal of the search warrant deprived it of its right to prove a prima facie case of unfair competition in the preliminary investigation. We initially agreed with it.

While Solid Triangle has the right to present every single piece of evidence it can gather and muster, however, it has no right to prove its case through the use of illegally seized evidence secured in derogation of a constitutionally guaranteed right.

The constitutional provision that any evidence obtained in violation of the provision against unreasonable searches and seizures “shall be inadmissible for any purpose in any proceeding” finds application here. The goods seized without probable cause are fruits of the poisonous tree and cannot be used for the purpose of proving unfair competition during preliminary investigation proceedings.

The case of Vlasons Enterprises Corporation vs. Court of Appeals does not apply since it involved a different set of facts and issues.

On the contrary, it is the case of People vs. Court of Appeals [216 SCRA 101 (1992)] that governs, where the Supreme Court ruled that with the quashal of the search warrant, the seized goods could not be used as evidence for any purpose, in any proceeding.iv[4]

As regards the preliminary attachment, the appellate court found that there was no ground for the issuance of the writ because:

x x x Sanly does not deny that it sells Mitsubishi photographic color paper. But there is no showing that it attempts to depart from country, defraud Solid Triangle or the buying public, conceal or dispose of unjustly detained personal property, or commit any of the acts provided in Rule 57 of the 1997 Rules of Civil Procedure as grounds for the issuance of a writ of preliminary attachment.v[5]

Petitioners moved for reconsideration but the same was denied by the Court of Appeals in its Resolution dated August 4, 2000.

In assailing the Amendatory Decision of the Court of Appeals, petitioners argue

that:

I.

THE JUDGE WHO ISSUED A SEARCH WARRANT THAT HAS ALREADY BEEN IMPLEMENTED CANNOT QUASH THE WARRANT ANYMORE, AT LEAST WITHOUT WAITING FOR THE FINDINGS OF THE CITY PROSECUTOR WHO HAS THE EXCLUSIVE JURISDICTION TO DETERMINE PROBABLE CAUSE.

II.

IN THE PARALLEL IMPORTATION EFFECTED BY THE RESPONDENTS WITH DECEIT AND BAD FAITH, THERE EXISTS PROBABLE CAUSE THAT THE CRIME OF UNFAIR COMPETITION UNDER THE INTELLECTUAL PROPERTY CODE HAS BEEN COMMITTED BY THE RESPONDENTS.

III.

PETITIONERS’ APPLICATION FOR A WRIT OF ATTACHMENT CANNOT BE DENIED ON THE GROUND THAT AN AFFIDAVIT OF MERITS IS NOT APPENDED TO THE COMPLAINT, AS THE COURT OF APPEALS HAS ALREADY RULED, AND ON THE GROUND THAT THERE IS NO JUSTIFICATION FOR IT BECAUSE THE QUESTIONS PERTINENT THERETO ARE NOT BEFORE THE COURT OF APPEALS BUT BEFORE THE TRIAL COURT.

IV.

PETITIONERS CANNOT BE HELD LIABLE FOR CONTEMPT IN NOT RETURNING THE GOODS SUBJECT OF THE SEARCH WARRANT NOTWITHSTANDING THE REFUSAL OF THE COURT OF APPEALS TO RULE ON THIS POINT FURTHER WHICH IS A GRIEVOUS ERROR TO THE PREJUDICE OF THE PETITIONERS.vi[6]

Petitioners contend that the Constitution does not authorize the judge to reverse himself and quash the warrant, “especially after goods had been seized pursuant to the search warrant, and the prosecution is poised to push forward with the goods as evidence.”vii[7] In finding that doubt exists that a crime has been committed, it is argued that the judge “trench[ed] upon the prerogative and duty of the city prosecutor.”viii[8]

The contention has no merit.

It is undisputed that only judges have the power to issue search warrants.ix[9] This function is exclusively judicial. Article III of the Constitution unequivocally states:

Sec. 2. The right of the people to be secure in their persons, houses, papers, and effects against unreasonable searches and seizures of whatever nature and for any purpose shall be inviolable, and no search warrant or warrant of arrest shall issue except upon probable cause to be determined personally by the judge after examination under oath or affirmation of the complainant and the witnesses he may produce, and particularly describing the place to be searched and the persons or things to be seized. [Emphasis supplied.]

Inherent in the courts’ power to issue search warrants is the power to quash warrants already issued. In this connection, this Court has ruled that the motion to quash should be filed in the court that issued the warrant unless a criminal case has already been instituted in another court, in which case, the motion should be filed with the latter.x[10] The ruling has since been incorporated in Rule 126 of the Revised Rules of Criminal Procedure:

Sec. 14. Motion to quash a search warrant or to suppress evidence; where to file. – A motion to quash a search warrant and/or to suppress evidence obtained thereby may be filed in and acted upon only by the court where the action has been instituted. If no criminal action has been instituted, the motion may be filed in and resolved by the court that issued the search warrant. However, if such court failed to resolve the motion and a criminal case is subsequently filed in another court, the motion shall be resolved by the latter court.

In the determination of probable cause, the court must necessarily resolve whether or not an offense exists to justify the issuance or quashal of the search warrant. Prior to the revision of December 1, 2000, Rule 126 of the Rules of Court provided:

Sec. 3. Requisites for issuing search warrant. – A search warrant shall not issue but upon probable cause in connection with one specific offense to be determined personally by the judge after examination under oath or affirmation of the complainant and the witnesses he may produce, and particularly describing the place to be

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searched and the things to be seized. [Emphasis supplied.]xi[11]

Note that probable cause is defined as:

xxx the existence of such facts and circumstances which could lead a reasonably discreet and prudent man to believe that an offense has been committed and that the item(s), article(s) or object(s) sought in connection with said offense or subject to seizure and destruction by law is in the place to be searched.xii[12]

In Kenneth Roy Savage/K Angelin Export Trading vs. Taypin,xiii[13] the Court was confronted with a search warrant that was issued purportedly in connection with unfair competition involving design patents. The Court held that the alleged crime is not punishable under Article 189 of the Revised Penal Code, and accordingly, quashed the search warrant issued for the non-existent crime.

In the issuance of search warrants, the Rules of Court requires a finding of probable cause in connection with one specific offense to be determined personally by the judge after examination of the complainant and the witnesses he may produce, and particularly describing the place to be searched and the things to be seized. Hence, since there is no crime to speak of, the search warrant does not even begin to fulfill these stringent requirements and is therefore defective on its face. x x x.

A preliminary investigation, by definition, also requires a finding by the authorized officer of the commission of a crime. Previous to the 2000 revision, Section 1 of Rule 112 of the Rules of Court defined a preliminary investigation as “an inquiry or proceeding to determine whether there is sufficient ground to engender a well-founded belief that a crime cognizable by the Regional Trial Court has been committed and the respondent is probably guilty thereof, and should be held for trial.”xiv[14]

Section 2 of the same Rule enumerates who may conduct preliminary investigations:

Sec. 2. Officers authorized to conduct preliminary investigations. – The following may conduct preliminary investigations:

(a) Provincial or city fiscals and their assistants;(b) Judges of the Municipal Trial Courts and Municipal Circuit

Trial Courts;(c) National and Regional state prosecutors; and (d) Such other officers as may be authorized by law.

Their authority to conduct preliminary investigations shall include all crimes cognizable by the proper court in their respective territorial jurisdictions.xv[15]

The determination of probable cause during a preliminary investigation has been described as an executive function.xvi[16]

The proceedings for the issuance/quashal of a search warrant before a court on the one hand, and the preliminary investigation before an authorized officer on the other, are proceedings entirely independent of each other. One is not bound by the other’s finding as regards the existence of a crime. The purpose of each proceeding differs from the other. The first is to determine whether a warrant should issue or be quashed, and the second, whether an information should be filed in court.

When the court, in determining probable cause for issuing or quashing a search warrant, finds that no offense has been committed, it does not interfere with or encroach upon the proceedings in the preliminary investigation. The court does not oblige the investigating officer not to file an information for the court’s ruling that no crime exists is only for purposes of issuing or quashing the warrant. This does not, as petitioners would like to believe, constitute a usurpation of the executive function. Indeed, to shirk from this duty would amount to an abdication of a constitutional obligation.

The effect of the quashal of the warrant on the ground that no offense has been committed is to render the evidence obtained by virtue of the warrant “inadmissible for any purpose in any proceeding,” including the preliminary investigation. Article III of the Constitution provides:

Sec. 3. (1) x x x.

(2) Any evidence obtained in violation of this or the preceding section [Section 2] shall be inadmissible for any purpose in any proceeding.

It may be true that, as a result of the quashal of the warrant, the private complainant is deprived of vital evidence to establish his case, but such is the inevitable consequence.

Nevertheless, the inadmissibility of the evidence obtained through an illegal

warrant does not necessarily render the preliminary investigation academic. The preliminary investigation and the filing of the information may still proceed if, because of other (admissible) evidence, there exists “sufficient ground to engender a well-founded belief that a crime has been committed and the respondent is probably guilty thereof, and should be held for trial.” The finding by the court that no crime exists does not preclude the authorized officer conducting the preliminary investigation from making his own determination that a crime has been committed and that probable cause exists for purposes of filing the information.

Petitioners also argue that Section 14, Rule 126 of the Revised Rules of Criminal Procedure, supra, while intended “to resolve conflicts of responsibility between courts,” “does not expressly cover the situation where the criminal complaint is pending with the prosecutor.” In such a case, petitioners submit, the public prosecutor should be allowed to resolve the question of whether or not probable cause exists.xvii[17]

The Court finds this interpretation too contrived. Section 14, Rule 126 precisely covers situations like the one at bar. Section 14 expressly provides that a motion to quash a search warrant and/or to suppress evidence obtained thereby may be filed in and acted upon only by the court where the action has been instituted. Under the same section, the court which issued the search warrant may be prevented from resolving a motion to quash or suppress evidence only when a criminal case is subsequently filed in another court, in which case, the motion is to be resolved by the latter court. It is therefore puerile to argue that the court that issued the warrant cannot entertain motions to suppress evidence while a preliminary investigation is ongoing. Such erroneous interpretation would place a person whose property has been seized by virtue of an invalid warrant without a remedy while the goods procured by virtue thereof are subject of a preliminary investigation.

We now turn to the question of whether the facts, as presented before the trial court, constitute an offense.

Private respondents are alleged to have committed unfair competition in violation of Section 168 of the Intellectual Property Code, which states:

SEC. 168. Unfair Competition, Rights, Regulation and Remedies. – 168.1 A person who has identified in the mind of the public goods he manufactures or deals in, his business or services from those of others, whether or not a registered mark is employed, has a property right in the goodwill of the said goods, business or services so identified, which will be protected in the same manner as other property rights.

168.2 Any person who shall employ deception or any other means contrary to good faith by which he shall pass off the goods manufactured by him or in which he deals, or his business, or services for those of the one having established such goodwill, or who shall commit any acts calculated to produce said result, shall be guilty of unfair competition, and shall be subject to an action therefor.

168.3 In particular, and without in any way limiting the scope of protection against unfair competition, the following shall be deemed guilty of unfair competition:

(a) Any person, who is selling his goods and gives them the general appearance of goods of another manufacturer or dealer, either as to the goods themselves or in the wrapping of the packages in which they are contained, or the devices or words thereon, or in any other feature of their appearance, which would be likely to influence purchasers to believe that the goods offered are those of a manufacturer or dealer, other than the actual manufacturer or dealer, or who otherwise clothes the goods with such appearance as shall deceive the public and defraud another of his legitimate trade, or any subsequent vendor of such goods or any agent of any vendor engaged in selling such goods with a lie purpose;

(b) Any person who by any artifice, or device, or who employs any other means calculated to induce the false belief that such person is offering the service of another who has identified such services in the mind of the public; or

(c) Any person who shall make any false statement in the course of trade or who shall commit any other act contrary to good faith of a nature calculated to discredit the goods, business or services of another.

168.4 The remedies provided by Sections 156, 157 and 161 shall apply mutatis mutandis.

The same law, in Section 170, provides the penalty for violation of Section 168:

SEC. 170. Penalties. – Independent of the civil and administrative sanctions imposed by law, a criminal penalty of

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imprisonment from two (2) years to five (5) years and a fine ranging from Fifty thousand pesos (50,000) to Two hundred thousand pesos (200,000), shall be imposed on any person who is found guilty of committing any of the acts mentioned in Section 155, Section 168 and Subsection 169.1.

Petitioners submit that “the importation of even genuine goods can constitute a crime under the Intellectual Property Code so long as fraud or deceit is present.” The intent to deceive in this case, according to petitioners, is “patent” “from the following undisputed facts”:

(a) Before marketing its product, the respondents totally obliterated and erased the Emulsion Number and Type that was printed on the box/carton of the product because of which the source of the goods can no longer be traced.

(b) Respondents even covered the boxes with newspapers to conceal true identity.

(c) Being also engaged in the sale of photo equipments [sic] and having had the occasion of participating in the same exhibit with petitioner Solid Triangle several times already, respondents certainly knew that petitioner Solid Triangle is the sole and exclusive importer and distributor of Mitsubishi Photo Paper.

(d) Two agents of the EIIB were also able to confirm from a salesgirl of respondents that substantial quantity of stocks of Mitsubishi Photo Paper are available at respondents’ store and that the products are genuine, as they are duly authorized to sell and distribute it to interested customers.

(e) No better proof of unfair competition is the seizure of the goods, 451 boxes of Mitsubishi photographic color paper.xviii[18]

Petitioners further expound:

47. We may categorize the acts of the respondents as “underground sales and marketing” of genuine goods, undermining the property rights of petitioner Solid Triangle. The Court of Appeals itself recognized the rights of a dealer. The acts of the respondents were made to appropriate unjustly the goodwill of petitioner Solid Triangle, and goodwill is protected by the law on unfair competition.

48. Petitioner Solid Triangle has established a trade or business in which it had acquired goodwill and reputation that will be protected, and so, to permit respondents to continue importing and distributing Mitsubishi Photo Paper, would be to countenance the unlawful appropriation of the benefit of a goodwill which petitioner Solid Triangle has acquired and permit the respondent to grab the reputation or goodwill of the business of another.

49. x x x petitioners have a valid cause to complain against respondents for the criminal violation of the Intellectual Property Law when the latter made it appear that they were duly authorized to sell or distribute Mitsubishi Photo Paper in the Philippines, when in truth and in fact they were not, and when they were hiding their importation from the petitioners by such acts as removing the Emulsion Number and Type and covering the boxes with old newspapers.xix[19]

We disagree with petitioners and find that the evidence presented before the trial court does not prove unfair competition under Section 168 of the Intellectual Property Code. Sanly Corporation did not pass off the subject goods as that of another. Indeed, it admits that the goods are genuine Mitsubishi photographic paper, which it purchased from a supplier in Hong Kong.xx[20] Petitioners also allege that private respondents “made it appear that they were duly authorized to sell or distribute Mitsubishi Photo Paper in the Philippines.” Assuming that this act constitutes a crime, there is no proof to establish such an allegation.

We agree with petitioners, however, that the Court of Appeals went beyond the issues when it ruled that there were no grounds for the issuance of an order of preliminary attachment. The only issue raised with respect to the preliminary attachment was whether the application for the writ should have been denied because the same was not supported by an affidavit of the applicant corporation, through its authorized officer, who personally knows the facts. Whether there are sufficient grounds to justify the order is a matter best left to the trial court, which apparently has yet to hear the matter. Thus, we sustain the Court of Appeals’ original decision holding that an affidavit of merit is not necessary since the petition is verified by an authorized officer who personally knows the facts.

Similarly premature is whether petitioners’ failure to return the goods to respondents constituted indirect contempt. The assailed order dated April 20, 1999 was a “show cause” order. Before any hearing on the order could be held, petitioners promptly filed a petition for certiorari. Clearly, the trial court had yet to rule on the

matter, and for this Court now to hold petitioners’ act contemptuous would preempt said court.

WHEREFORE, the petition is GRANTED IN PART. The Amendatory Decision of the Court of Appeals dated March 31, 2000, as well as its Resolution dated August 4, 2000, is AFFIRMED insofar as it holds that (1) the Quezon City Regional Trial Court, Branch 93, has the power to determine the existence of a crime in quashing a search warrant and, (2) the evidence does not support a finding that the crime of unfair competition has been committed by respondents; and REVERSED insofar as it holds that (1) there are no grounds to warrant the issuance of a writ of preliminary attachment and (2) petitioners are guilty of contempt. The case is remanded for further proceedings to the courts of origin, namely, Branch 91 of RTC, Quezon City for resolution of the application for a writ of attachment, and Branch 93 of the same court for resolution of the application to cite petitioners for contempt.

Petitioners are ordered to return to respondent Sanly Corporation the 451 boxes of Mitsubishi photographic color paper seized by virtue of Search Warrant No. 3324 (99) issued by the Quezon City Regional Trial Court, Branch 93.

SO ORDERED.

Davide, Jr., C.J., (Chairman), Puno, Pardo, and Ynares-Santiago, JJ., concur.

SONY COMPUTER ENTERTAINMENT, INC., Petitioner,

- versus -

BRIGHT FUTURE TECHNOLOGIES, INC.,

Respondent.

G.R. No. 169156

Promulgated: February 15, 2007

x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

D E C I S I O N

CARPIO MORALES, J.:

On application of Inspector Rommel G. Macatlang of the Philippine

National Police, after a complaint was received from petitioner, Sony Computer

Entertainment, Inc. (SCEI), eight search warrants60[1] for copyright and trademark

infringement, of which Search Warrant Nos. 05-6336 and 05-6337 are relevant to the

present case, were issued by the Manila Regional Trial Court (RTC) Executive Judge

Antonio M. Eugenio, Jr. following which a raid was conducted on the premises of

respondent, Bright Future Technologies, Inc. (BFTI), on April 1, 2005. Seized during

the raid were the following items:

eight replicating machines five bonding machines four printing machines seven polycarbonate dryers one table for silk screen ten moulds two shredder machines one color blue centroller one dryer machine 92 boxes of assorted colors of paint 600 pieces of counterfeit Sony Playstation DVDs 285 boxes of blank CDs eight boxes of white blank CDs nine boxes of AL targets two boxes of sputtering targets 18 gallons of UV bonding adhesive four gallons of DVD bondage 21 gallons of phothum chemicals four gallons of CPS mesh prep, and nine gallons of CD lacquer.61[2]

60

61

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BFTI subsequently filed on April 5, 2005 before Branch 24 of the RTC

Manila presided by Judge Eugenio an Urgent Motion to Quash and/or to Exclude or

Suppress Evidence and Return Seized Articles,62[3] alleging as follows, quoted

verbatim:

1. The searching team entered the premises and conducted the search without any witness in violation of the Rules of Court;

2. The raiding team planted evidence of 600 compact discs at the scene while no witnesses were present;

3. Certification against forum shopping prescribed by law was not executed;

4. For search warrant to be valid, the master tapes must be presented;

5. The statement made by the affiants in their joint-affidavit in support of the application for the search warrant were false and perjurious;

6. No probable cause exists for the issuance of the warrant;

7. The search conducted was illegal;

8. The place to be searched was not described with particularity;

9. No bond was posted by the applicant.63[4]

SCEI filed an Opposition64[5] to the motion, to which BFTI filed a Reply,65[6]

the latter arguing that SCEI had no personality to represent the People of the

Philippines in the case and to file the opposition to the motion because SCEI’s agents

were mere witnesses of the applicant for the issuance of the search warrants.66[7]

On April 11, 2005, acting on a Very Urgent Motion to Inhibit67[8] filed by

SCEI to which BFTI interposed its objection, Judge Eugenio “voluntarily inhibited”

himself from the case.68[9] The case was thereafter raffled to Branch 21 of the Manila

RTC, presided by Judge Amor A. Reyes.69[10]

In the meantime or on April 14, 2005, SCEI, through counsel, filed with the

Department of Justice Task Force on Anti-Intellectual Property Piracy a complaint-

affidavit against the directors and officers of BFTI.70[11]

62

63

64

65

66

67

68

69

70

By Order71[12] dated April 18, 2005, the RTC denied BFTI’s motion to

quash the warrants, it finding that they were regularly issued and implemented, and

that a bond is not required in the application for their issuance.

BFTI filed a Motion for Reconsideration72[13] of the denial of its motion to

quash. It also filed joint motions “for the inhibition of the Honorable Judge Amor

Reyes,” “for reconsideration of the order of voluntary inhibition dated April 11, 2005,”

and “for the return of the case to the executive judge.”73[14]

In an Order dated May 20, 2005, Judge Reyes transmitted the records of

the case to the Executive Judge pursuant to A.M. No. 03-8-02.74[15] The case was then

re-raffled to Branch 8 of the Manila RTC, presided by Judge Felixberto T. Olalia, Jr.75

[16]

In addressing the issue of SCEI’s personality to appear in the

proceedings, the RTC held that it would treat SCEI’s counsel as “an officer of [the]

Court to argue the other side, so to speak, for the clarification of issues related to

search and seizure cases and to arrive at a better conclusion and resolution of issues

in this case.”76[17]

The RTC, however, found that the two-witness rule under Section 8 of

Rule 126 which provides:

SEC. 8. Search of house, room, or premises to be made in presence of two witnesses. ─ No search of a house, room or any other premise shall be made except in the presence of the lawful occupant thereof or any member of his family or in the absence of the latter, two witnesses of sufficient age and discretion residing in the same locality. (Underscoring supplied),

was violated and that the searching team’s use of a bolt cutter to open the searched

premises was unnecessary, hence, it granted BFTI’s Motion for Reconsideration of its

April 18, 2005 Order by Order of August 8, 2005.77[18]

BFTI subsequently filed on August 9, 2005 an Ex Parte Motion to Return

Seized Articles78[19] which the RTC granted, by Order of August 10, 2005, subject to

the filing of a bond.79[20] BFTI filed the required bond alright,80[21] and the seized items

were turned over to its custody.81[22]

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Hence, arose SCEI’s present Petition for Review on Certiorari under Rule

4582[23] which assails the August 8 and August 10, 2005 Orders of the court a quo,

contending that the RTC erred

(1) . . . when it disregarded [its] clear right . . . to appear and participate as a private complainant in the search warrant proceedings;

(2) . . . when it granted respondent’s Motion to Quash based on questions of alleged irregularities by the peace officers in enforcing the search warrants.

(a) . . . when it ruled that the use of the bolt cutter violated Section 7 of Rule 126.

(b) . . . when it ruled that the enforcement of the search warrant violated the two-witness rule provided in Section 8 of Rule 126;

[3] . . . when it ordered the immediate release of the seized property prior to the finality of the order quashing the search warrants.

(a) . . . when it released the seized properties by virtue of the filing of a bond by the respondent.83[24]

The issue of whether a private complainant, like SCEI, has the right to

participate in search warrant proceedings was addressed in the affirmative in United

Laboratories, Inc. v. Isip:84[25]

. . . [A] private individual or a private corporation complaining to the NBI or to a government agency charged with the enforcement of special penal laws, such as the BFAD, may appear, participate and file pleadings in the search warrant proceedings to maintain, inter alia, the validity of the search warrant issued by the court and the admissibility of the properties seized in anticipation of a criminal case to be filed; such private party may do so in collaboration with the NBI or such government agency. The party may file an opposition to a motion to quash the search warrant issued by the court, or a motion for the reconsideration of the court order granting such motion to quash.85[26] (Emphasis and underscoring supplied)

When SCEI then opposed BFTI’s Urgent Motion to Quash and/or to

Suppress or Exclude Evidence and Return Seized Articles (emphasis supplied), the

RTC correctly recognized the participation of SCEI in the proceedings.

As for the use of a bolt cutter to gain access to the premises of BFTI, it

was, under the circumstances, reasonable, contrary to the RTC’s finding that it was

unnecessary. For, as the RTC itself found, after the members of the searching team

introduced themselves to the security guards of BFTI and showed them the search

warrants, the guards refused to receive the warrants and to open the premises, they

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claiming that “they are not in control of the case.”86[27] The conditions required under

Section 7 of Rule 126 were thus complied with:

The officer, if refused admittance to the place of directed search after giving notice of his purpose and authority, may break open any outer or inner door or window of a house or any part of a house or anything therein to execute the warrant or liberate himself or any person lawfully aiding him when unlawfully detained therein. (Underscoring supplied)

The RTC’s finding that the two-witness rule governing the execution of

search warrant was not complied with, which rule is mandatory to ensure regularity in

the execution of the search warrant,87[28] is in order, however.

Observed the RTC:

At this point, it is worthy of note [sic] the two statements issued by Barangay Police Subrino P. de Castro and Gaudencio A. Masambique who affirmed in their testimonies in Court that, to wit:

x x x x

3. Noong ako ay makarating sa nasabing lugar nadatnan ko ang mga pulis at mga miyembro ng Raiding Team na nasa loob na ng gusali ng Bright Future at nagsisiyasat sa mga gamit at makinaryang naroroon. Pagkatapos ay nilapitan ako ng isang pulis at ipinatanggap sa akin ang nasabing search warrant.

The police were already searching (“nagsisiyasat”) the area of respondent BFTI in clear violation of the two-witness rule provided for by Section 8 of Rule 126. These statements of the two Barangay Police ostensibly arriving late while a search was going on was corroborated by Insp. Macatlang’s testimony that the Barangay officials arrived at about 11:30 PM to 12 AM.88[29] (Underscoring supplied)

The RTC did not thus err in ordering the quashal of the search warrants.

SCEI insists, however, that the searching team waited for the arrival of the

barangay officials who were summoned to witness the search,89[30] and that “[e]ven

when the enforcing officers were moving towards the actual BFTI premises . . . they

were accompanied at all times by one of the security guards on duty until the barangay

officials arrived.”90[31] SCEI’s position raises an issue of fact which is not proper for

consideration in a petition for review on certiorari before this Court under Rule 45,

which is supposed to cover only issues of law.91[32] In any event, a security guard may

not be considered a “lawful occupant” or “a member of [the lawful occupant’s] family”

under the earlier quoted Section 8 of Rule 126.

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As the two-witness rule was not complied with, the objects seized during

the April 1, 2005 search are inadmissible in evidence. Their return, on motion of BFTI,

was thus in order.92[33]

A final word. The RTC order requiring BFTI to file a bond to ensure the

return of the seized items should the Department of Justice find probable cause

against it in I.S. No. 2005-315, SCEI v. Anthony Bryan B. Sy, et al., has no basis in

law. Besides, the seized items being inadmissible in evidence, it would serve no

purpose to ensure their return.

WHEREFORE, the petition is DENIED.

The August 8, 2005 Order of the Regional Trial Court of Manila, Branch 8

granting the Urgent Motion to Quash filed by respondent, Bright Future Technologies,

Inc., is AFFIRMED.

The August 10, 2005 Order granting the Ex Parte Motion to Return Seized

Articles filed by respondent is AFFIRMED, with the MODIFICATION that the portion

requiring respondent to file a bond is SET ASIDE. Let the bond then filed by

respondent be CANCELLED.

SO ORDERED.

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