Palao vs. Florentino International, Inc.

Administrative bodies exercising quasi-judicial functions, such as the Intellectual Property Office, are not strictly bound by technical rules of procedure, and the rule requiring a certification of non-forum shopping may be satisfied by substantial compliance; a defective or belatedly authorized certification may be set aside pro hac vice where no wanton disregard of the rules is shown.

Divina Palao was the holder of Letters Patent No. UM-7789, a utility model issued by the Intellectual Property Office, while Florentino III International, Inc. was a corporation that sought cancellation of that patent. The controversy proceeded through the Intellectual Property Office's inter partes jurisdiction, governed by the Regulations on Inter Partes Proceedings (1998), which provided that the IPO "shall not be bound by the strict technical rules of procedure and evidence," and by the IPO's Uniform Rules on Appeal (IPO Office O. No. 12 [2002]), which prescribed the contents of an appeal memorandum and the Director General's authority to order completion of formal requirements.

Divina Palao was issued Letters Patent No. UM-7789 by the Intellectual Property Office for "A Ceramic Tile Installation on Non-Concrete Substrate Base Surfaces Adapted to Form Part of Furniture, Architectural Components and the Like." Florentino III International, Inc. filed a Petition for Cancellation of the letters patent before the Bureau of Legal Affairs of the Intellectual Property Office, alleging that the utility model was not original, new, or patentable, that it had been publicly known or used in the Philippines and had been the subject of several publications, and that Florentino, as well as many others, had been using the utility model well before Palao's application for a patent.

In Decision No. 2007-31 dated March 5, 2007, the Bureau of Legal Affairs denied the Petition for Cancellation, noting that the testimony and pictures Florentino offered in evidence failed to establish that the utility model was publicly known or used before Palao's application. Florentino's Motion for Reconsideration was denied in Resolution No. 2008-14 dated July 14, 2008.

On July 30, 2008, Florentino appealed to the Office of the Director General of the Intellectual Property Office. The appeal's Verification and Certification of Non-Forum Shopping was signed by Atty. John Labsky P. Maximo of the firm Balgos and Perez, but Florentino failed to attach a secretary's certificate or board resolution authorizing the firm to sign the verification and certification. On August 14, 2008, the Office of the Director General issued an Order requiring Florentino to submit proof that Atty. Maximo or Balgos and Perez was authorized to sign the Verification and Certification of Non-Forum Shopping.

On August 19, 2008, Florentino filed a Compliance, submitting a Certificate executed on August 15, 2008 by its Corporate Secretary, Melanie Marie A. C. Zosa-Tan, stating that at a meeting of the Board of Directors on August 14, 2008, a resolution was unanimously adopted authorizing Balgos & Perez, or any of its associates, to sign for and on behalf of the corporation the Verification and Certification on Non-Forum Shopping and other documents relevant to the appeal.

In his Order dated September 22, 2008, Director General Adrian S. Cristobal, Jr. dismissed Florentino's appeal. He noted that the Secretary's Certificate pertained to an August 14, 2008 Resolution and reasoned that the Certificate failed to establish the authority of Florentino's counsel to sign the Verification and Certification of Non-Forum Shopping as of the date of the filing of the appeal on July 30, 2008. Florentino then filed before the Court of Appeals a Petition for Review under Rule 43.

• Precise Compliance with the Certification Rule: Petitioner, in her pleadings before the Supreme Court, cited Philippine Public School Teachers Association vs. Heirs of Iligan and Philippine Airlines, Inc. vs. Flight Attendants & Stewards Association of the Philippines to emphasize the need for precise compliance with the rule on appending a certification of non-forum shopping.
• Validity of the Certification at Filing: Petitioner maintained that the required certification of non-forum shopping must be valid at the time of filing of the petition, and that an invalid certificate cannot be remedied by the subsequent submission of a secretary's certificate that vests authority only after the petition had been filed.

• Propriety of the Court of Appeals' Reversal: Whether the Court of Appeals erred in reversing the September 22, 2008 Order of Intellectual Property Office Director General Adrian S. Cristobal, Jr., and in reinstating respondent Florentino III International, Inc.'s appeal.

• Propriety of the Court of Appeals' Reversal: No. The Court of Appeals correctly reversed the Director General's Order and reinstated the appeal, because the Intellectual Property Office is not bound by strict technical rules of procedure and the defective certification of non-forum shopping was a venial lapse subject to substantial compliance.

• Propriety of the Court of Appeals' Reversal: The need for a certification of non-forum shopping to be attached to an appeal before the Office of the Director General is established by Section 3 and Section 4(e) of the IPO's Uniform Rules on Appeal. These requirements notwithstanding, the IPO's Regulations on Inter Partes Proceedings — in effect when respondent filed its appeal — provide under Rule 2, Section 6 that the IPO "shall not be bound by the strict technical rules of procedure and evidence," a rule in keeping with the general principle that administrative bodies are not bound by the technical niceties of law and procedure and that administrative due process cannot be fully equated with due process in its strict judicial sense. In conformity with this liberality, Section 5(b) of the Uniform Rules on Appeal expressly enables appellants who failed to comply with Section 4's formal requirements to subsequently complete their compliance. Given these premises, the Director General erred in rigidly applying a procedural rule and dismissing the appeal. The strict posture of Philippine Public School Teachers Association vs. Heirs of Iligan and Philippine Airlines, Inc. vs. Flight Attendants & Stewards Association of the Philippines was not entirely suitable, as both involved petitions filed before the Court of Appeals, i.e., judicial proceedings, whereas what is involved here is a quasi-judicial proceeding unfettered by the strict application of technical rules of procedure. Even in judicial proceedings, the Court has rebuked an overly strict application of the rules on certifications of non-forum shopping, as in Pacquing vs. Coca-Cola Philippines, Inc., which held that the rules on forum shopping should not be interpreted with such absolute literalness as to subvert their own ultimate and legitimate objective, and that substantial compliance is permitted under justifiable circumstances since the requirement, though mandatory, is not jurisdictional. Peak Ventures Corp. vs. Heirs of Villareal likewise declined to treat as fatally defective a verification and certification of non-forum shopping dated earlier than the petition itself. Even petitioner's own cited case, Philippine Public School Teachers Association, repudiated her position: although the Court acknowledged that the Court of Appeals was correct in the strict sense, it held that a strict application of the rule was not called for, and set aside the procedural defect pro hac vice in view of the peculiar circumstances, namely that the signatory was the former Acting General Manager who had previously been authorized to sign such certification. This case is attended by analogous circumstances: respondent's counsel, Balgos and Perez, had been representing respondent and signing documents for it since the original Petition for Cancellation was filed, so its act of signing for respondent on appeal before the Director General was not an aberration but a mere continuation of what it had previously done. It is reasonable, consistent with the precept of liberally applying procedural rules in administrative proceedings and with the room allowed by jurisprudence for substantial compliance, to construe the error as a venial lapse that should not be fatal to respondent's cause; no wanton disregard of the rules or risk of needless delay in the administration of justice is present, and construing the error as fatal would instead prevent a full ventilation of the parties' competing claims. As with Philippine Public School Teachers Association, it is permissible to set aside the procedural defect pro hac vice.

• Administrative bodies are not bound by strict technical rules of procedure — Administrative tribunals exercising quasi-judicial powers are unfettered by the rigidity of certain procedural requirements, subject to the observance of fundamental and essential requirements of due process in justiciable cases presented before them; technical rules of procedure and evidence are not strictly applied, and administrative due process cannot be fully equated with due process in its strict judicial sense. The Court applied this principle to hold that the IPO Director General erred in rigidly applying the certification of non-forum shopping requirement, since the IPO's own Regulations on Inter Partes Proceedings expressly provided that it "shall not be bound by the strict technical rules of procedure and evidence."
• Substantial compliance with the certification of non-forum shopping — Although the requirement of a certification of non-forum shopping is mandatory and cannot be altogether dispensed with or its requirements completely disregarded, it is not jurisdictional, and the rules on forum shopping should not be interpreted with such absolute literalness as to subvert their own ultimate and legitimate objective; substantial compliance is permitted under justifiable circumstances. The Court applied this doctrine to treat the defective certification signed by counsel without prior authority as a venial lapse rather than a fatal defect.
• Pro hac vice relaxation of procedural defects — Where special circumstances or compelling reasons are present, a procedural defect may be set aside pro hac vice, particularly where the authorization was submitted before the tribunal resolved to dismiss on the technical ground and where no wanton disregard of the rules or needless delay in the administration of justice would result. The Court applied this doctrine, finding the circumstances analogous to those in Philippine Public School Teachers Association vs. Heirs of Iligan, since respondent's counsel had continuously represented it since the original Petition for Cancellation.
• Completion of formal requirements under the IPO Uniform Rules on Appeal — Section 5(b) of the IPO's Uniform Rules on Appeal expressly enables appellants who failed to comply with Section 4's formal requirements to subsequently complete their compliance, reflecting the liberality accorded to administrative proceedings.

• "In administrative proceedings, technical rules of procedure and evidence are not strictly applied and administrative due process cannot be fully equated with due process in its strict judicial sense." — This passage states the general principle underlying the Court's ruling that the IPO Director General erred in strictly applying the certification of non-forum shopping requirement.
• "Strict compliance with the provision regarding the certificate of non-forum shopping underscores its mandatory nature in that the certification cannot be altogether dispensed with or its requirements completely disregarded. It does not, however, prohibit substantial compliance therewith under justifiable circumstances, considering especially that although it is obligatory, it is not jurisdictional." — Quoted from Pacquing vs. Coca-Cola Philippines, Inc., this passage supplies the canonical formulation of the substantial compliance rule applied to the defective certification.
• "It is reasonable, therefore-consistent with the precept of liberally applying procedural rules in administrative proceedings, and with the room allowed by jurisprudence for substantial compliance with respect to the rule on certifications of non-forum shopping-to construe the error committed by respondent as a venial lapse that should not be fatal to its cause." — This is the ratio decidendi of the case, characterizing the defective certification as a venial lapse rather than a fatal defect.
• "As with Philippine Public School Teachers Association, we consider it permissible to set aside, pro hac vice, the procedural defect." — This passage states the Court's disposition of the procedural defect, invoking the pro hac vice relaxation doctrine.

• Philippine Public School Teachers Association vs. Heirs of Iligan, 528 Phil. 1197 (2006) — Cited by petitioner for the strict rule on certifications of non-forum shopping, but distinguished and ultimately relied upon by the Court as repudiating petitioner's position; the Court found the case's "peculiar circumstances" analogous and applied its pro hac vice relaxation of the procedural defect.
• Philippine Airlines, Inc. vs. Flight Attendants & Stewards Association of the Philippines, 515 Phil. 579 (2006) — Cited by petitioner and the Director General for the rule that the certification must be valid at the time of filing; distinguished by the Court on the ground that it involved a petition filed before the Court of Appeals, a judicial proceeding, unlike the quasi-judicial proceeding at bar.
• Pacquing vs. Coca-Cola Philippines, Inc., 567 Phil. 323 (2008) — Relied upon for the rule that the certification of non-forum shopping requirement, though mandatory, is not jurisdictional and does not prohibit substantial compliance under justifiable circumstances.
• Peak Ventures Corp. vs. Heirs of Villareal, G.R. No. 184618, November 19, 2014, 741 SCRA 43 — Cited to show that the Court did not consider as fatally defective a verification and certification of non-forum shopping dated earlier than the petition itself.
• Huntington Steel Products, Inc. vs. National Labor Relations Commission, 485 Phil. 227 (2004) — Cited for the principle that while the requirement of strict compliance underscores the mandatory nature of the rule, it does not necessarily interdict substantial compliance under justifiable circumstances.
• Samalio vs. Court of Appeals, 494 Phil. 456 (2005) — Cited for the general principle that administrative bodies are not bound by the technical niceties of law and procedure.

• Section 3, IPO Uniform Rules on Appeal (IPO Office O. No. 12 [2002]) — Provides that an appeal to the Director General is perfected by filing an appeal memorandum in three legible copies with proof of service and payment of the applicable fee; cited to establish the mechanism for appeals to the Director General.
• Section 4(e), IPO Uniform Rules on Appeal — Requires that the appeal memorandum contain a certification of non-forum shopping; cited to establish the requirement that respondent failed to properly comply with.
• Section 5(b), IPO Uniform Rules on Appeal — Empowers the Director General to order the appellant to complete the formal requirements mentioned in Section 4; relied upon by the Court to show that the rules themselves contemplate subsequent completion of formal requirements.
• Rule 2, Section 6, Regulations on Inter Partes Proceedings (1998) — Provides that the IPO "shall not be bound by the strict technical rules of procedure and evidence" and that the Director or Hearing Officer may adopt a mode of proceedings consistent with fair play and conducive to the just, speedy and inexpensive disposition of cases; this was the controlling rule that rendered the Director General's strict application erroneous.
• Rule 42, Section 3 and Rule 7, Section 5, Rules of Court — Referenced in the cited Philippine Public School Teachers Association case in connection with the requirement that a certification of non-forum shopping be appended to or incorporated in the initiatory pleading.

Antonio T. Carpio (Chairperson), Diosdado M. Peralta, Jose Catral Mendoza, and Francis H. Jardeleza.