G.R. No.

L-27361 May 29, 1981

PARKE, DAVIS & COMPANY, plaintiff-appellant,
vs.
DOCTORS' PHARMACEUTICALS, INC. and V-LAB DRUGHOUSE CORPORATION, defendantsappellees.

ABAD SANTOS, J.:

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This is an appeal from the order of the Court of First Instance of Rizal dated August 22, 1966, in Civil
Case No. C-712, dismissing, on the ground of lack of cause of action, the complaint for damages for
infringement of patent and unfair competition, with preliminary injunction, filed by the herein
appellant against the herein appellees.
On May 5, 1966, Parke, Davis & Company filed with the Court of First Instance of Rizal, Caloocan
City Branch, the said Complaint with Preliminary Injunction against Doctors' Pharmaceuticals, Inc.,
otherwise referred to as defendant No. 1 and V-LAB Drughouse Corporation, otherwise referred to
as defendant No. 2, alleging, among others, that plaintiff is a foreign corporation organized and
existing under the laws of the State of Michigan, U.S.A., with principal office situated in Detroit
Michigan, U.S.A.; that the laws of the United States of America allow corporate or juristic citizens of
the Philippines to file in said country, actions for infringement of patents and for unfair competition:
that defendants 1 and 2 are corporations organized and existing under the laws of the Philippines
with offices respectivrely located at 354-B San Diego Street, Grace Park, Caloocan City and 126
Gen. Evangelista Street, Caloocan City; that on March 21, 1957, Letters Patent No. 279 was legally
issued to plaintiff' by the Patent Office of the Republic of the Philippines for an invention entitled
"Therapeutically Valuable Esters and Method for Obtaining the same"; that since that date, plaintiff
has been and still is, the owner of said Letters Patent No. 279 which is still in force in the Philippines;
that defendant No. 1 has knowingly infringed and is still knowingly infringing Claim 4 of said Letters
Patent No. 279 of plaintiff by selling, causing to be sold, using or causing to be used,
"Chloramphenicol Palmitate", the substance covered by said Claim 4 of said plaintiff's Letters Patent
No. 279, under the name "Venimicetin Suspension", willfully and without the consent or authorization
of plaintiff; that defendant No. 2 has likewise, knowingly infringed and is still knowingly investigation
Claim 4 of said letters Patent No. 279 by acting as distributor of defendant No. 1 of the latter's
medicine called "Venimicetin Suspension" which contains "Chloramphenicol Palmitate": that plaintiff,
through its wholly-owned local subsidiary, Parke, Davis & Company, Inc. a domestic corporation with
main office at Mandaluyong, Rizal, has at great expense, established a market and a continuing
demand for "Chloramphenicol Palmitate" in the Philippines and has for many years sold and is still
selling this product in the Philippines that defendants have derived unlawful gains and profits from
the aforesaid infringement to the great and irreparable injury, damage and prejudice of plaintiff, and
have deprive plaintiff of legitimate returns which plaintiff would have otherwise would have falsely
and deseptively concealed that the same contains "Chloramphenicol" and "Chloramphenicol
Palmitate" are entirely different substances; that defendants, advertising and selling "Venimicetin
Suspension", have falsely and deceptively use plaintiffs name and represented that defendant No. 1
holds a license from plaintiff for said medicine with, inter alia, the following words:
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First Compulsory License in the Philippines by Parke-Davis Company Detroit

Michigan, U.S.A.;
that plaintiff has never granted defendant No. 1 any kind of license for any product; that defendant
No. 1 has not even applied for a compulsory license under plaintiff's Letters Patent No. 279, the only
patent which covers "Chloramphenicol Palmitate"; that the compulsory licensing case between
plaintiff and defendant No. 1 in the Philippine Patent Office (Inter Partes Case No. 181) dealt with
plaintiff's Letters Patent No. 50 (which covers "Chloramphenicol") and not with plaintiff's Letters
Patent No. 279 (which covers "Chloramphenicol Palmitate"); that the resolution of the Director of
Patents fixing the terms and conditions of the compulsory license for "Chloramphenicol" has not yet
become final as the same is still subject to a pending motion for reconsideration; that even if said
resolution does become final, the compulsory license will not cover defendants' "Venimicetin
Suspension" which actually contains "Chloramphenicol Palmitate" and, therefore, defendants'
statement will still be false and misleading; and that defendants' use of the aforesaid false statement
is designed to induce persons to purchase and physicians to prescribe the use of "Venimicetin
Suspension" in the mistaken belief that it is Identical with the "Chloramphenicol Palmitate" product
manufactured and sold in the Philippines by plaintiff's subsidiary or that the active ingredient in said
product has been obtained from plaintiff and/or that said product has been made under the
supervision or control of plaintiff thereby causing damage or loss to plaintiff. On the basis of the
foregoing allegations, the plaintiff prayed, among others, that defendants be enjoined from
performing the acts complained of as infringement of patent and unfair competition and to pay the
plaintiff all damages due thereto by reason of said acts.
On May 6, 1966, the Court of First Instance issued an order which, among others, temporarily
restrained the defendants "from directly or indirectly selling, using, causing to be sold or causing to
be used any 'Chloramphenicol Palmitate' not manufactured by plaintiff or plaintiff's wholly-owned
subsidiary, Parke, Davis & Company, Inc." Alleging that the defendants have not complied with such
order, the plaintiff filed on May 24, 1966, a motion to punish defendants for contempt.
Before the court could act on the plaintiff's motion for contempt, the defendants filed a Motion to
Dismiss, dated May 25, 1966, alleging, among others, that the complaint states no cause of action
against them since defendant No. 1 "was granted a compulsory license to manufacture, use and sell
its own brands of medicinal preparation containing 'chloramphenicol'."
On June 17, 1966, the plaintiff filed its Opposition to Motion to Dismiss controverting, among others,
defendants' contention that the complaint states no cause of action. Plaintiff pointed out that the
defendants have confused the substance which is the subject matter of the complaint, namely,
"Chloramphenicol Palmitate", with the substance covered by the compulsory licensing case, namely,
"Chloramphenicol", and the Letters Patent subject of the complaint, namely, Letters Patent No. 279,
with the Letters Patent subject of the compulsory licensing case, namely, Letters Patent No. 50.
On June 27, 1966, the defendants filed their Reply to Opposition alleging, among others, that in
advertising and selling their product "Venimicetin Suspension," never do they state that the same
contains "Chloramphenicol Palmitate" They pointed out that even in the annexes of plaintiff's
complaint (consisting of the packages and labels allegedly used by the defendants in said product),

only the substance "Chloramphenicol" is stated showing that the substance involved is
Cloramphenicol and not "Chloramphenicol Palmitate".
On July 5, 1966, the plaintiff filed its Rejoinder to Reply to Opposition alleging among others, that
while the packages and labels of defendants' "Venimicetin Suspension" indicate that the same
contains "Chloramphenicol", the truth of the matter is that said product does not contains said
substance but the subtance covered by letters Patents No.279, namely, "Chloramphenicol
Palmitate". This, plaintiff pointed out, is expressly alleged in the complaint; thus, applying the rule
that a motion to dismiss hypothetically admits the truth of the allegations of the complaint,
defendants are guilty of (1) infringement of patent, by selling, causing to be sold, using or causing to
be used "Chloramphenicol Palmitate" in their medicine called "Venimicetin Suspension", and (2)
unfair competition, by concealing that said medicine contains "Chloramphenicol", and, by deceiving
and misleading the purchasers who are trade to believe that "Venimicetin Suspension" is covered by
a compulsory license from the plaintiff.
On the basis of the foregoing pleadings, the Court of First Instance of Rizal issued the order dated
August 22, 1966, which dismissed the complaint on the ground of lack of cause of action, to wit:
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xxx xxx xxx

After a careful consideration of the arguments for and against the motion to dismiss,
and in view of the fact that the substance covered by Letters Patent No. 50 and
Letters Patent No. 279 is the same and that is, the substance known as
"Chloramphenicol", because while under Letters Patent No. 50, the substance is
referred to as "Chloramphenicol", in Letters Patent No. 279; THE SUBSTANCE HAS
BEEN DENOMINATED AS Chloramphenicol Palmitate it is the opinion of the Court
that "Chloramphenicol" and "Chloramphenicol Palmitate are the same, the difference
being merely in the taste, and this Court to state that there was infringement of
Patent with respect to Letters Patent No. 279 would be tantamount to preventing the
defendant, Doctors" Pharmaceuticals, Inc., from exercising the right granted it by
Letters Patent No. 50. It would further render nugatory the decision of the Director of
Patents, affirmed by the Supreme Court, granting the defendant, Doctors'
Pharmaceuticals, Inc., the right to use and import "Chloramphenicol".
The defendant, V-Lab Drughouse Corporation being merely a sales representative of
the defendant, Doctors' Pharmaceuticals, Inc., and the Court being of the opinion
that there is no cause of action with respect to the principal defendant, is likewise of
the opinion that there is no cause of action with respect to the defendant, V-LAB
Drughouse Corporation.
It is likewise the opinion of this Court that there is no cause of action for unfair
competition because a perusal of the records of this case will show that under
paragraph 7 of the Resolution of the Director of Patents, Annex "C" of the Motion to
Dismiss, the petitioner (Doctors' Pharmaceuticals, Inc.) shall adopt and use its
owntrademarks or labels on all its products containing Chloramphenicol under
license from Parke. Davis, & Co., Inc., of Michigan, U.S.A.

The claim of the plaintiff that the representation:

First Compulsory License in the Philippines by Parke Davis Company, Detroit
Michigan, U.S.A.
is false and has a definite tendency to deceive possible purchasers and distort the facts is not welltaken in view of the above-mentioned (Par. 7) of the Resolution of the Director of Patents.
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WHEREFORE, finding the ground of lack of cause of action to be well-taken, this

case is ordered DISMISSED, without pronouncement as to costs. The restraining
order heretofore issued is hereby lifted and set aside. Having reached the above
conclusion, the Court will no longer pass upon the issue of contempt.
SO ORDERED.
Hence, the present appeal.
We are thus tasked with the resolution of the issue of whether or not the lower court correctly
dismissed the complaint for damages for infringement of patent and unfair competition on the ground
of failure to state a cause of action.
It is axiomatic that in resolving a motion to dismiss a complaint on the ground of failure to state a
cause of action, the court should hypothetically assume the truth of the factual allegations of the
complaint (except allegations of facts the falsity of which the court may take judicial notice of) and
determine whether on the basis thereof, the complainant is entitled to the relief demanded. Had the
lower court applied the foregoing formula, it would not have Dismissed, on the ground of failure to
state a cause of action, the complaint for damages for infringement of patent and unfair competition.
For, instead of hypothetically assuming the truth of the factual allegations of the complaint, the lower
court had ruled against their veracity and consequently concluded that the complaint states no cause
of action.
As can be gleaned from the appealed order, the pertinent portions of which We have heretofore
quoted, the lower court premised its ruling that there is no cause of action for infringement of patent
on the assumption that "Chloramphenicol" (the substance covered by Letters Patent No. 50) and
"Chloramphenicol Palmitate" (the substance covered by Letters Patent No. 279) are the same. Thus,
instead of hypothetically assuming the truth of the plaintiff's allegation that "Chloramphenicol" and
"Chloramphenicol Palmitate are two different substances, the lower court had ruled against its
veracity. This is clearly an error considering that the said assumed fact cannot qualify as something
which the court could take judicial notice of nor was it competent to so find in the absence of
evidence formally presented to that effect. The existence of two patents separately covering said
substances simply militates against said factual assumption and requires the presentation of
evidence sufficient to convince the court that said substances are indeed the same.
Had the lower court hypothetically assumed as true, for the purpose of the motion to dismiss, the
allegations in the complaint that "Chloramphenicol" and "Chloramphenicol Palmitate" are entirely
different substances and that "Venimicetin Suspension" actually contains "Chloramphenicol

Palmitate" and not "Chloramphenicol" as indicated in its package and label, it necessarily would
have to conclude that the complaint states causes of action for infringement of patent and for unfair
competition. For defendants would then be guilty of infringement of patent by selling, causing to be
sold, using and causing to be used "Chloramphenicol Palmitate", without the consent or authority of
the plaintiff as the holder of Letters Patent No. 279, Claim 4 of which allegedly covers said
substance. Sections 37 and 42 of R.A. No. 165 provide:
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SEC. 37. RIGHTS OF PATENTEES. A patentee shall have the exclusive right to
make, use and sell the patented machine, article or product, and to use the patented
process for the purpose of industry or commerce, throughout the territory of the
Philippines for the term of the patent; and such making, using, or selling by any
person without the authorization of the patentee, constitutes infringement of the
patent. (Emphasis supplied.)
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, to recover from the infringed, damages sustained by reason of the
infringement and to secure an injunction for the protection of his rights.
Likewise, the defendants would be guilty of unfair competition by falsely stating that defendant No. l's
medicine called "Venimicetin Suspension" contains "Chloramphenicol" when in fact it actually
contains "Chloramphenicol Palmitate", and that it is covered by a compulsory license from the
plaintiff. Section 29 of R.A. No. 166 provides,inter alia;
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In particular, and without in any way limiting the scope of unfair competition, the
following shall be deemed guilty of unfair competition:
xxx xxx xxx
(c) Any person who shall make any false statement in the course of trade ... .
Clearly, the lower court erred in dismissing, on the ground of failure to state a cause of action, the
complaint for damages for infringement of patent and unfair competition.
WHEREFORE, the appealed order of dismissal is hereby set aside and the complaint for damages
for infringement of patent and unfair competition is hereby reinstated. Without pronouncement as
costs.
Barredo (Chairman), Aquino, Guerrero * and De Castro, JJ., concur.

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[G.R. No. L-82542. September 29, 1988.]

BARRY JOHN PRICE, JOHN WATSON CLITHERON and JOHN BRADSHAW, Assignors to ALLEN &
HANBURYS, LTD., Petitioners, v. UNITED LABORATORIES, Respondent.
Castillo, Laman, Tan & Pantaleon Law Offices, for Petitioners.

Teodoro B. Pison for Respondent.

SYLLABUS

1. COMMERCIAL LAW; PATENTS LAW; ISSUANCE OF COMPULSORY LICENSE; PROPER AFTER A HEARING
AND CAREFUL CONSIDERATION OF THE EVIDENCE OF THE PARTIES AND IN DEFAULT OF AN AGREEMENT
BETWEEN THEM AS TO THE TERMS OF THE LICENSE. Under Section 36 of Republic Act No. 105 and under
Section 35 of P.D. No. 12 63, the terms and conditions of the compulsory license may be filed by the
Director of Patents after a hearing and careful consideration of the evidence of the parties and in default of
an agreement between them as to the terms of the license.
2. ID.; ID.; ID.; FACTUAL FINDINGS OF DIRECTOR WHEN SUPPORTER BY SUBSTANTIAL EVIDENT, NOT
DISTURBED ON APPEAL. The Directors finding that UNILAB has the capability to use the patented
compound in the manufacture of an anti-ulcer pharmaceutical preparation is a factual finding which is
supported by substantial evidence, hence, the Court of Appeals did not commit a reversible error in affirming
it (Philippine Nut Industry, Inc. v. Standard Brands, Inc., 65 SCRA 575; and other cited).
3. ID.; ID.; CAPABILITY TO USE PATENTED COMPOUND SHOULD EXIST DURING THE HEARING OF PETITION
FOR COMPULSORY LICENSING. Of indubitable relevance to this point is the evidence that UNILAB has
been engaged in the business of manufacturing drugs and pharmaceutical products for the past thirty (30)
years, that it is the leading drug manufacturer in the country, that it has the necessary equipment and
technological expertise for the development of solid dosage forms or for tablet, capsule, and liquid
preparations, and that it maintains standards and procedures to ensure the quality of its products. Even if it
were true, as alleged by the patentee (although it is denied by UNILAB), that its capability to use the
patented compound was only acquired after the petition for compulsory licensing had been filed, the
important thing is that such capability was proven to exist during the hearing of the petition.
4. ID.; ID.; GRANT OF A COMPULSORY LICENSE OVER ENTIRE PATENTED INVENTION, UPHELD; THERE IS
NO LAW REQUIRING THAT LICENSE BE LIMITED TO A SPECIFIC EMBODIMENT OF THE INVENTION, OR TO A
PARTICULAR CLAIM. The patented invention in this case relates to medicine and is necessary for public
health as it can be used as component in the manufacture of anti-ulcer medicine. The Director of Patents did
not err in granting a compulsory license over the entire patented invention for there is no law requiring that
the license be limited to a specific embodiment of the invention, or, to a particular claim.
5. CONSTITUTIONAL LAW; BILL OF RIGHTS; JUST COMPENSATION; NOT VIOLATED WHERE THERE IS
PAYMENT OF ROYALTIES ON SALES OF ANY PRODUCTS THE LICENSEE MAY MANUFACTURE USING ANY OF
ALL OF PATENTED COMPOUNDS. In any event, since the petitioner will be paid royalties on the sales of
any products the licensee may manufacture using any or all of the patented compounds, the petitioner
cannot complain of a deprivation of property rights without just compensation.

DECISION

GRIO-AQUINO, J.:

The petitioners are the owners-assignees of Philippine Patent No. 13540 which was granted to them on June
26, 1980 for a pharmaceutical compound known as "aminoalkyl furan derivatives." On October 1, 1982,
respondent United Laboratories, Inc. (or UNILAB) filed in the Philippine Patent Office a petition (Inter Partes
Case No. 1683, "United Laboratories, Inc. versus Barry John Price, John Watson Clitheron and John
Bradshaw, assignors to Allen & Hanburys Ltd.") for the issuance of a compulsory license to use the patented
compound in its own brands of medicines and pharmaceuticals and to sell, distribute, or otherwise dispose of
such medicines or pharmaceutical preparations in the country. The petition further alleged that the patent
relates to medicine and that petitioner, which has had long experience in the business of manufacturing and
selling pharmaceutical products, possesses the capability to use the subject compound in the manufacture of
a useful product or of making dosage formulations containing the said compound.
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After the hearing, the Philippine Patent Office rendered a decision on June 2, 1986, granting UNILAB a
compulsory license subject to ten (10) terms and conditions No. 3 of which provides as follows:
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"3. By virtue of this license, petitioner shall pay the respondent a royalty on all license products containing
the patented substance made and sold by the Petitioner in the amount equivalent to TWO AND ONE HALF
(2.5) PER CENT OF THE NET SALES in Philippine currency. The terms net sales means the gross billed for
the product pertaining to Letters Patent No. 13540 less
a) Transportation charges or allowances, if any, included in such amount;
b) Trade, quantity or cash discounts and brokers or agents or distributors commissions, if any, allowed or
paid;
c) Credits or allowances, if any, given or made on account with reflection or return of the product previously
delivered; and
d) Any tax, excise or government charge included in such amount, or measured by the production, sale,
transportation, use or delivery of the products.
"In case Petitioners product containing the patented substance shall contain one or more active ingredients
as admixed product, the royalty to be paid shall be determined in accordance with the following formula:

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Net Sales on Value of

Admixed Product Patented Substance
Royalty = _______ x 0.025 x _______
(Value of Patended Substance) Value of
Active Ingredients
"4. The royalties shall be computed after the end of each calendar quarter for all goods containing the
patented substance herein involved, made and sold during the preceding quarter and to be paid by the
Petitioner at its place of business on or before the thirtieth day of the month following the end of each
calendar quarter. Payments should be made to Respondents authorized representative in the Philippines;"
(pp. 35-36, Rollo.).
The patentees appealed the decision to the Court of Appeals (CA-G.R. No. SP-09308) which dismissed the
appeal on December 4, 1987. They have come to his Court praying for a review of the Appellate Courts
decision on the grounds that it erred:
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1. in upholding the Directors unilateral determination of the terms and conditions of the compulsory license,
without affording the parties an opportunity to negotiate the terms and conditions freely and by themselves;
2. in finding that the respondent possesses the legally required capability to make use of the petitioners
patented compound in the manufacture of a useful product;
3. in affirming the Directors award of the entire patent to the respondent, when only one claim of the patent
was controverted; and
4. in considering evidence that UNILABs capability to use the compound was acquired after, not before,
filing its petition for compulsory licensing.
The first assignment of error has no merit. The terms and conditions of the compulsory license were fixed by
the Director of Patents after a hearing and careful consideration of the evidence of the parties and in default
of an agreement between them as to the terms of the license. This he is authorized to do under Section 36
of Republic Act No. 165 which provides:
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"Sec. 36. GRANT OF LICENSE. If the Director finds that a case for the grant of license under Section 34
hereof has been made out, he may order the grant of an appropriate license and in default of agreement
among the parties as to the terms and conditions of the license he shall fix the terms and conditions of the

license in the order.

"The order of the Director granting a license under this Chapter when final, shall operate as a deed granting
a license executed by the patentee and the other parties in interest."
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and under Section 35 of P.D. 1263, amending portions of Republic Act No. 165 which reads:

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"Sec. 35. GRANT OF LICENSE. (1) If the Director finds that a case for the grant of a license under Sec. 34
hereof has been made out, he shall, within one hundred eighty (180) days from the date the petition was
filed, order the grant of an appropriate license. The order shall state the terms and conditions of the license
which he himself must fix in default of an agreement on the matter manifested or submitted by the parties
during the hearing."
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The Court of Appeals found that the 2.5% royalty fixed by the Director of Patents "is just and reasonable."
We quote its observations hereunder:
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"Respondent-appellant contends further that the 2.5% royalty rate is unfair to respondent-appellant as to
amount to an undue deprivation of its property right. We do not hold this view. The royalty rate of 2.5%
provided for by the Director of Patents is reasonable. Paragraph 3, Section 35-B, Republic Act No. 165, as
amended by Presidential Decree No. 1263, provides:
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(3) A compulsory license shall only be granted subject to the payment of adequate royalties commensurate
with the extent to which the invention is worked. However, royalty payments shall not exceed five per cent
(5%) of the net wholesale price (as defined in Section 33-A) of the products manufactured under the
license. If the product, substance, or process subject of the compulsory license is involved in an industrial
project approved by the Board of Investments, the royalty payable to the patentee or patentees shall not
exceed three per cent (3%) of the net wholesale price (as defined in Section 34-A) of the patented
commodity and or commodity manufactured under the patented process; the same rule of royalty shall be
paid whenever two or more patents are involved, which royalty shall be distributed to the patentees in rates
proportional to the extent of commercial use by the licensee giving preferential values to the holder of the
oldest subsisting product patent.
Thus, said provision grants to the Director of Patents the use of his sound discretion in fixing the percentage
for the royalty rate and We find that the Director of Patents committed no abuse of this discretion. Also,
there is always a presumption of regularity in the performance of ones official duties.
"Moreover, what UNILAB has with the compulsory license is the bare right to use the patented chemical
compound in the manufacture of a special product, without any technical assistance from herein respondentappellant. Besides, the special product to be manufactured by UNILAB will only be used, distributed, and
disposed locally. Therefore, the royalty rate of 2.5% is just and reasonable." (pp. 10-11, CA Decision, pp.
44-45, Rollo).
Furthermore, as pointed out in the respondents comment on the petition, identical terms and conditions had
been prescribed for the grant of compulsory license in a good number of patent cases (United Laboratories,
Inc. v. Boehringer Ingelheim, GMBH, IPC 929, July 27, 1981; United Laboratories, Inc. v. Bristol-Myers
Company, IPC 1179, Aug. 20, 1981; United Laboratories, Inc. v. E.R. Squibb & Sons, Inc., IPC 1349, Sept.
30, 1981; United Laboratories, Inc. v. Helmut Weber, Et Al., IPC 949, Dec. 13, 1982; Oceanic Pharmacal,
Inc. v. Gruppo Lepetit S.A., IPC 1549, Dec. 21, 1982; United Laboratories. Inc. v. Boehringer Ingelheim, IPC
1185, June 8, 1983; United Laboratories, Inc. v. Pfizer Corp., IPC 1184, June 10, 1983; Doctors
Pharmaceuticals, Inc. v. Maggi, Et Al., July 11, 1983; Drugmakers Laboratories v. Herningen, Et Al., IPC
1679, September 22, 1983; Superior Pharmacraft, Inc. v. Maggi, Et Al., IPC 1759, January 10, 1984; United
Laboratories, Inc. v. Van Gelder, Et Al., IPC 1627, June 29, 1984; Drugmakers Laboratories, Inc. v. Janssen
Pharmaceutical N.V., IPC 1555, August 27, 1984; United Laboratories Inc. v. Graham John Durant, Et Al.,
IPC 1731, August 14, 1987; United Laboratories, Inc. v. Albert Anthony Carr, IPC 1906, August 31, 1987).
cralawnad

The Directors finding that UNILAB has the capability to use the patented compound in the manufacture of
an anti-ulcer pharmaceutical preparation is a factual finding which is supported by substantial evidence,
hence, the Court of Appeals did not commit a reversible error in affirming it (Philippine Nut Industry, Inc. v.
Standard Brands, Inc., 65 SCRA 575; Sy Ching v. Gaw Liu, 44 SCRA 143; De Gala Sison v. Manalo, 8 SCRA
595; Goduco v. Court of Appeals, 14 SCRA 282; Ramos v. Pepsi-Cola Bottling Company of the P.I., 19 SCRA
289. Of indubitable relevance to this point is the evidence that UNILAB has been engaged in the business of
manufacturing drugs and pharmaceutical products for the past thirty (30) years, that it is the leading drug

manufacturer in the country, that it has the necessary equipment and technological expertise for the
development of solid dosage forms or for tablet, capsule, and liquid preparations, and that it maintains
standards and procedures to ensure the quality of its products. Even if it were true, as alleged by the
patentee (although it is denied by UNILAB), that its capability to use the patented compound was only
acquired after the petition for compulsory licensing had been filed, the important thing is that such capability
was proven to exist during the hearing of the petition.
The patented invention in this case relates to medicine and is necessary for public health as it can be used
as component in the manufacture of anti-ulcer medicine. The Director of Patents did not err in granting a
compulsory license over the entire patented invention for there is no law requiring that the license be limited
to a specific embodiment of the invention, or, to a particular claim. The invention in this case relates to new
aminoalkyl derivatives which have histamine H2 blocking activity, having the general formula (I) and
physiologically acceptable salts, N-oxides and hydrates thereof. The compound ranitidine hydrochloride
named in Claim 45 is also covered by General Claim I and several other sub-generic claims. Therefore, a
license for Claim 45 alone would not be fully comprehensive. In any event, since the petitioner will be paid
royalties on the sales of any products the licensee may manufacture using any or all of the patented
compounds, the petitioner cannot complain of a deprivation of property rights without just compensation.
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WHEREFORE, the petition for review is denied for lack of merit.

SO ORDERED.