Philip Morris, Inc. v. Court of Appeals
REITERATIONFacts
The Antecedents: Petitioners, foreign corporations Philip Morris, Inc., Benson & Hedges (Canada), Inc., and Fabriques of Tabac Reunies, S.A., are registered owners of trademarks "MARK VII," "MARK TEN," and "LARK" for cigarettes. They filed suit against Fortune Tobacco Corporation (private respondent) for allegedly manufacturing and selling cigarettes under the confusingly similar trademark "MARK." Petitioners sought a writ of preliminary injunction to enjoin Fortune from continuing these acts. Procedural History: The Regional Trial Court (RTC) denied petitioners' prayer for a preliminary injunction, citing that petitioners were not doing business in the Philippines and that Fortune's trademark application was pending. The RTC also noted Fortune's authorization from the Bureau of Internal Revenue (BIR) to manufacture "MARK" cigarettes. Petitioners' motion for reconsideration was denied. Subsequently, the RTC denied a second motion for injunction, emphasizing the lack of proof of actual use of petitioners' products in the Philippines and the possibility of Fortune refiling its abandoned trademark application. The Petition: Petitioners filed a petition for certiorari before the Supreme Court. The Court of Appeals initially granted the preliminary injunction, finding a prima facie case for infringement based on Patent Office findings of confusing similarity and Fortune's abandoned application. However, upon Fortune's motion for reconsideration and offer to post a counterbond, the Court of Appeals lifted the injunction, citing potential prejudice to workers and loss of government tax revenue, and stating that petitioners would not suffer irreparable harm as they were not actively engaged in manufacturing in the Philippines. The Supreme Court is now tasked with resolving whether the Court of Appeals gravely abused its discretion in lifting the injunction.
Issue(s)
Whether the Court of Appeals committed grave abuse of discretion amounting to excess of jurisdiction when it required, contrary to law and jurisprudence, that petitioners must be using their registered trademarks actually in commerce in the Philippines to suffer irreparable injury due to the lifting of the injunction. Whether the Court of Appeals gravely abused its discretion amounting to excess of jurisdiction when it lifted the injunction in violation of Section 6 of Rule 58 of the Rules of Court. Whether the Court of Appeals committed grave abuse of discretion amounting to excess of jurisdiction by reversing its earlier finding of grave abuse of discretion by the trial court and authorizing private respondent to continue performing acts previously deemed contrary to equity and good conscience.
Ruling
The petition is DISMISSED. The Resolutions of the Court of Appeals dated September 14, 1989 and November 29, 1989 are AFFIRMED.
Ratio Decidendi
On the requirement of actual use in Philippine commerce for foreign corporations: The Court reiterated that while foreign corporations not doing business in the Philippines may have the capacity to sue for infringement under Section 21-A of the Trademark Law, the right to protection and the issuance of an injunction depend on the actual use of their trademarks in Philippine commerce, as mandated by Sections 2 and 2-A of the same law. Registration alone does not perfect a trademark right; actual use is a prerequisite. The Court found that petitioners' assertion of actual use was not sufficiently substantiated, especially given their admission of not doing business in the Philippines. The Court noted that while "MARK TEN" and "LARK" had certificates of registration based on prior use, "MARK VII" was registered based on foreign registration, and the evidence of continued use in Philippine commerce for all marks was scanty. The Court emphasized that the protection afforded by the Paris Convention does not negate the municipal law's requirement of actual use in commerce within the Philippines. On the lifting of the injunction and the role of a counterbond: The Court affirmed that the Court of Appeals acted within its prerogatives under Section 6, Rule 58 of the Revised Rules of Court in lifting the injunction. The rule allows dissolution if, despite the plaintiff's entitlement to an injunction, its continuance would cause great damage to the defendant, provided the defendant files a sufficient counterbond. The Court found that petitioners, not being engaged in manufacturing in the Philippines, would not suffer irreparable harm, and any potential damages could be compensated by the counterbond. Conversely, continuing the injunction would cause significant damage to Fortune, its workers, and government tax revenues. The Court also noted that the existence of a right to be protected and the violation thereof must be established by competent evidence, which was lacking for petitioners. On the alleged grave abuse of discretion by the Court of Appeals: The Court found no grave abuse of discretion. The Court of Appeals' initial decision to grant the injunction was based on a prima facie case, but its subsequent resolution to lift it, after considering the counterbond and the economic repercussions, was a valid exercise of discretion under Rule 58, Section 6. The Court highlighted that injunctions are interlocutory and subject to the control of the court before final judgment. The Court also pointed out that petitioners' own admissions of not doing business in the Philippines were inconsistent with their claim of irreparable injury, and that their right to exclusive ownership was controverted by Fortune's claims, thus not meeting the standard of being clear and undisputed for injunctive relief.
Main Doctrine
A foreign corporation, even if not doing business in the Philippines, may sue for trademark infringement under Section 21-A of the Trademark Law, provided reciprocity exists. However, the right to protection and the issuance of a preliminary injunction hinges on the actual use of the trademark in Philippine commerce, not solely on registration, and the existence of a clear and undisputed right, which must be proven by competent evidence.