A foreign corporation, even if it has registered trademarks in the Philippines and possesses the capacity to sue for infringement under Section 21-A of the Trademark Law, is not automatically entitled to a writ of preliminary injunction unless it can establish actual use of its trademarks in commerce in the Philippines, as required by Sections 2 and 2-A of the Trademark Law, to demonstrate a clear and unmistakable right that is being violated and that would result in irreparable injury.

Petitioners are foreign corporations and registered owners of the trademarks "MARK VII," "MARK TEN," and "LARK" for cigarettes in the Philippines. They alleged that Fortune Tobacco Corporation's manufacture and sale of "MARK" cigarettes infringed their trademarks. Petitioners are not doing business in the Philippines but claimed to be suing on an isolated transaction and under the protection of international conventions and Philippine trademark law. The dispute centered on whether Fortune's use of "MARK" should be preliminarily enjoined pending the outcome of the main infringement case.

• Petitioners Philip Morris, Inc., Benson & Hedges (Canada), Inc., and Fabriques of Tabac Reunies, S.A. are foreign corporations, not doing business in the Philippines, but are registered owners of the cigarette trademarks "MARK VII," "MARK TEN," and "LARK" under certificates issued by the Philippine Patent Office.
• Private respondent Fortune Tobacco Corporation (Fortune) manufactures and sells cigarettes in the Philippines under the trademark "MARK."
• Petitioners filed an infringement suit against Fortune, seeking to enjoin Fortune from using the "MARK" trademark, alleging it was identical or confusingly similar to their registered marks.
• The RTC twice denied petitioners' application for a writ of preliminary injunction, primarily because petitioners were not doing business in the Philippines and Fortune had a pending application for its "MARK" trademark and authorization from the Bureau of Internal Revenue (BIR) to manufacture.
• The Philippine Patent Office had previously issued communications stating that Fortune's "MARK" was "confusingly similar" to petitioners' trademarks and that Fortune's initial application was deemed forfeited by abandonment, though a new application was later filed and pending.
• The Court of Appeals initially granted a writ of preliminary injunction, finding a prima facie case for infringement and that the RTC committed grave abuse of discretion.
• Subsequently, upon Fortune's motion to dissolve the injunction with an offer of a counterbond, and citing potential job losses and loss of government tax revenue, the Court of Appeals lifted the preliminary injunction, reasoning that petitioners would not suffer irreparable injury as they were not actually engaged in manufacturing cigarettes with the trademark in question in the Philippines and that a counterbond would cover any damages.

• Petitioners argued that the Court of Appeals gravely abused its discretion by requiring actual use of their registered trademarks in Philippine commerce as a condition for suffering irreparable injury, contrary to law and jurisprudence.
• They contended that lifting the injunction violated Section 6, Rule 58 of the Rules of Court, as the grounds were legally insufficient.
• Petitioners asserted that the CA's reversal, after finding grave abuse by the trial court, ignored the mandates of the Trademark Law, international commitments (Paris Convention), and Fortune's alleged judicial admission regarding its right to use "MARK."
• They claimed that as foreign corporations with registered trademarks, Section 21-A of the Trademark Law allows them to sue for infringement regardless of whether they are licensed to do business in the Philippines.
• Petitioners maintained that the Paris Convention protects their trademarks and does not require actual use in the Philippines for enjoyment of industrial property rights.
• They argued that infringement of their trademarks causes irreparable damage to their goodwill and reputation, which cannot be adequately compensated by a counterbond.

• Fortune Tobacco Corporation contended that petitioners were not entitled to an injunction because they were not doing business in the Philippines and thus could not suffer irreparable damage within Philippine territory.
• Fortune highlighted its authorization from the Bureau of Internal Revenue (BIR) to manufacture "MARK" cigarettes and its pending application for trademark registration with the Philippine Patent Office.
• It argued that "MARK" is a common word that cannot be exclusively appropriated.
• Fortune asserted that the lifting of the injunction was justified by its offer of a counterbond, which would sufficiently answer for any damages petitioners might suffer.
• It emphasized the significant economic impact if the injunction were maintained, including job losses for its workers and substantial loss of tax revenue for the government.
• Fortune claimed that petitioners' rights to their trademarks were disputed and not clear, thus an injunction was not warranted.

• Whether the Court of Appeals committed grave abuse of discretion in lifting the writ of preliminary injunction it had previously issued.
• Whether actual use of a registered trademark in Philippine commerce is necessary for a foreign corporation, not doing business in the Philippines, to be entitled to a writ of preliminary injunction against an alleged infringer.
• Whether the offer of a counterbond and considerations of potential economic damage to the respondent and the public (job losses, tax revenue loss) are sufficient grounds to dissolve a preliminary injunction in a trademark infringement case involving foreign registrants not doing business locally.

• The Supreme Court dismissed the petition and affirmed the Court of Appeals' resolutions lifting the writ of preliminary injunction.
• The Court held that while Section 21-A of the Trademark Law grants foreign corporations the capacity to sue for infringement irrespective of doing business in the Philippines, the entitlement to a preliminary injunction depends on establishing a clear right and irreparable injury, which in turn hinges on the actual use of their trademarks in the Philippines as per Sections 2 and 2-A of the Trademark Law.
• The Court reasoned that ownership of a trademark is acquired through actual use in commerce. Since petitioners admitted they were not doing business in the Philippines, their claim to an exclusive right protectable by injunction was doubtful, and they could not demonstrate irreparable injury from Fortune's activities.
• The Court found that petitioners' right or title to the trademarks for purposes of injunctive relief was controverted and not undisputed, a prerequisite for issuing an injunction. Mere registration does not confer an automatic right to injunction without proof of actual use and consequent injury.
• The Court also considered the economic repercussions, noting that maintaining the injunction would lead to job losses and diminution of tax revenues, while petitioners, not doing business locally, would suffer no direct damage. The counterbond posted by Fortune was deemed sufficient to cover any potential damages to petitioners.
• The lifting of the injunction was found to be within the Court of Appeals' prerogative under Section 6, Rule 58 of the Revised Rules of Court, especially when the plaintiff's right is not clear and the defendant could suffer great damage, compensable by a bond.

• Actual Use in Commerce for Trademark Ownership (Sections 2 and 2-A, R.A. 166) — A fundamental principle in Philippine Trademark Law is that actual use in commerce in the Philippines is a prerequisite to the acquisition of ownership over a trademark or tradename. The Court applied this by stating that petitioners' lack of actual use of their trademarks in Philippine commerce weakened their claim to an exclusive right that could be protected by a preliminary injunction, despite their registrations.
• Capacity of Foreign Corporations to Sue for Infringement (Section 21-A, R.A. 166) — Foreign corporations not doing business in the Philippines may sue for trademark infringement or unfair competition if their country grants similar privileges to Filipino citizens, provided they allege their personality to sue. The Court acknowledged petitioners had this capacity but distinguished it from the substantive right to injunctive relief, which requires more.
• Requirements for Preliminary Injunction (Rule 58, Revised Rules of Court) — A writ of preliminary injunction requires a clear and unmistakable right to be protected and that the acts against which the injunction is directed are violative of said right, causing irreparable injury. The Court found petitioners failed to establish a clear, undisputed right due to lack of actual local use.
• Irreparable Injury — This refers to harm that cannot be adequately compensated by damages or for which there is no certain pecuniary standard for measurement. The Court held that since petitioners were not engaged in local commerce with the subject trademarks, they would not suffer irreparable injury from the lifting of the injunction, and any potential damage could be covered by a counterbond.
• Damnum Absque Injuria — This means damage without legal injury. The Court implied this by stating that the possibility of irreparable damage without prior proof of transgression of an actual existing right is no ground for injunction.
• Primacy of Municipal Law in Municipal Sphere (Doctrine of Incorporation) — While international law (like the Paris Convention) is part of the law of the land, it does not necessarily imply primacy over national law in the municipal sphere. Rules of international law are generally given standing equal, not superior, to national legislative enactments. The Court subordinated the Paris Convention's provisions to the Trademark Law's requirement of actual use for protection within the Philippines.
• Discretion in Granting/Dissolving Injunctions (Section 6, Rule 58, Revised Rules of Court) — Courts have sound discretion to grant, deny, or dissolve injunctions. The Court of Appeals acted within its prerogative to dissolve the injunction based on factors like the plaintiff's unclear right, potential great damage to the defendant, and the defendant's filing of a counterbond.
• Interlocutory Nature of Preliminary Injunction — A writ of preliminary injunction is an interlocutory order, always under the control of the court before final judgment, and its grant or denial does not prejudge the merits of the main case. The Court emphasized this to show its reluctance to interfere with the CA's interlocutory order.

• "In other words, petitioners may have the capacity to sue for infringement irrespective of lack of business activity in the Philippines on account of Section 21-A of the Trademark Law but the question of whether they have an exclusive right over their symbol as to justify issuance of the controversial writ will depend on actual use of their trademarks in the Philippines in line with Sections 2 and 2-A of the same law."
• "It is thus incongruous for petitioners to claim that when a foreign corporation not licensed to do business in the Philippines files a complaint for infringement, the entity need not be actually using its trademark in commerce in the Philippines. Such a foreign corporation may have the personality to file a suit for infringement but it may not necessarily be entitled to protection due to absence of actual use of the emblem in the local market."
• "Indeed, to be entitled to an injunctive writ, petitioner must show that there exists a right to be protected and that the facts against which injunction is directed are violative of said right... dominion over trademarks is not acquired by the mere fact of registration alone and does not perfect a trademark right."
• "...before injunctive relief may properly issue, complainant's right or title must be undisputed and demonstrated on the strength of one's own title to such a degree as to unquestionably exclude dark clouds of doubt, rather than on the weakness of the adversary's evidence, inasmuch as the possibility of irreparable damage, without prior proof of transgression of an actual existing right, is no ground for injunction being mere damnum absque injuria."

• Kabushi Kaisha Isetan vs. Intermediate Appellate Court (203 SCRA 583 [1991]) — Cited to emphasize that actual use in commerce in the Philippines is a prerequisite to the acquisition of ownership over a trademark and that a prior registrant cannot claim exclusive use unless it uses the trademark in commerce.
• Sterling Products International, Inc. v. Farbenfabriken Bayer Actiengesellschaft (27 SCRA 1214 [1969]) — Referenced for the principle that actual use in commerce is a prerequisite to acquiring ownership of a trademark; adoption alone is insufficient.
• Pagasa Industrial Corporation v. Court of Appeals (118 SCRA 526 [1982]) — Used to illustrate that the Trademark Law requires actual commercial use of the mark prior to registration and that mere "samples" do not constitute such use.
• General Garments Corporation vs. Director of Patents (41 SCRA 50 [1971]) — Cited to explain that Section 21-A of the Trademark Law allows foreign corporations to sue for infringement "whether or not it has been licensed to do business in the Philippines."
• La Chemise Lacoste S.A. vs. Fernandez (129 SCRA 373 [1984]) — Referenced to show that while a foreign corporation not doing business in the Philippines may sue under Section 21-A, qualifying circumstances for asserting such right must be affirmatively pleaded. Also acknowledged the Philippines' adherence to the Paris Convention.
• Searth Commodities Corporation vs. Court of Appeals (207 SCRA 622 [1992]) — Cited for the rule that to be entitled to an injunctive writ, the petitioner must show an existing right to be protected and that the acts complained of violate that right.
• Unno Commercial Enterprises, Inc. vs. General Milling Corporation (120 SCRA 804 [1983]) — Used to support the statement that dominion over trademarks is not acquired by mere registration alone and does not perfect a trademark right.
• Talisay-Silay Milling Co., Inc. vs. CFI of Negros Occidental (42 SCRA 577 [1971]) — Cited for the principle that the possibility of irreparable damage, without prior proof of transgression of an actual existing right, is no ground for injunction, being mere damnum absque injuria.
• Villarosa vs. Teodoro, Sr. (100 Phil. 25 [1956]) — Referenced regarding the interlocutory nature of a writ of preliminary injunction and judicial deference to lower courts on such matters.
• Mortensen vs. Peters (Great Britain, High Court of Judiciary of Scotland, 1906) — Cited in the context of municipal law's application over international agreements within a municipal tribunal.
• Atlantic Mutual Ins. Co. vs. Cebu Stevedoring Co., Inc. (17 SCRA 1037 (1966)) — Referenced regarding the pleading requirements for a foreign corporation suing on an isolated transaction.

• Section 21-A, Republic Act No. 166 (Trademark Law) — Allows any foreign corporation whose mark is registered in the Philippines to bring an action for infringement, whether or not licensed to do business locally, provided its home country grants reciprocal rights to Philippine corporations. The Court held this grants capacity to sue but not an automatic right to injunctive relief without showing actual local use.
• Sections 2 and 2-A, Republic Act No. 166 (Trademark Law) — These sections require that trademarks be in actual use in commerce in the Philippines for at least two months before registration (Sec. 2, as amended by R.A. 865) and that ownership is acquired by actual use in manufacture or trade (Sec. 2-A). The Court heavily relied on these to deny injunctive relief due to petitioners' lack of actual local use.
• Section 22, Republic Act No. 166 (Trademark Law) — Defines trademark infringement. Petitioners based their main action on this section.
• Section 6, Rule 58, Revised Rules of Court — Outlines the grounds for objection to, or for motion of dissolution of, an injunction, including dissolution if the plaintiff can be fully compensated for damages and the defendant files a bond. The Court found the CA acted within its prerogative under this rule.
• Article 2, Paris Convention for the Protection of Industrial Property — Provides for national treatment and rights of priority for citizens of member countries. Petitioners invoked this, but the Court held that actual use under domestic law was still necessary for injunctive protection.
• Article 1431, New Civil Code (Estoppel) — Referenced in relation to petitioners' admission of not doing business in the Philippines being inconsistent with a claim of a right that can be breached for injunctive purposes.
• Section 4, Rule 129, Revised Rules of Court (Judicial Admissions) — Cited in conjunction with Article 1431, NCC, regarding petitioners' admissions.
• Section 3, Rule 58, Revised Rules of Court (Grounds for issuance of preliminary injunction) — Referenced for the requirement of an existing right to be protected.

• Feliciano, J. — Justice Feliciano dissented, arguing that the majority's interpretation of "actual use" for foreign trademark registrants seeking preliminary injunction was overly restrictive and undermined the protections afforded by the Trademark Law and the Paris Convention. He contended that:
  • Registration in the Principal Register under R.A. 166 (especially for "MARK TEN" and "LARK" based on prior use, and "MARK VII" based on foreign registration under Section 37) creates a prima facie evidence of validity, ownership, and exclusive right to use. This presumption includes the necessary prior use.
  • The requirement of continued use in commerce in the Philippines (Section 12, R.A. 166) can be satisfied by importation and sale by third-party distributors, not necessarily by the foreign owner itself doing business locally. Petitioners' goods were available in duty-free shops.
  • The absence of the foreign owner doing business locally does not mean they cannot suffer irreparable damage. Infringement can dilute goodwill, tarnish reputation, and pre-empt market expansion, damages not easily quantifiable or compensable by a counterbond.
  • The Patent Office examiners had already found "MARK" to be confusingly similar to petitioners' marks, strengthening the prima facie case for infringement.
  • The CA's initial grant of injunction was correct, and its subsequent dissolution based on economic hardship to Fortune and the government, and the offer of a counterbond, disregarded the nature of trademark rights and the irreparable harm caused by infringement.
  • The purpose of trademark protection extends to preventing consumer confusion and protecting the trademark owner's investment in goodwill, regardless of whether the owner directly sells in the local market.
  • The economic arguments of Fortune (loss of jobs, taxes) should not override established trademark rights, especially when the damage to Fortune from an injunction limited to the infringing mark "MARK" (not its entire business) would be quantifiable.