Wilson Ong Ching Kian Chuan vs. Court of Appeals

A preliminary injunction cannot issue where the applicant's right is disputed and not clear and unmistakable; the existence of foreign copyright registrations in another entity's name sufficiently raises reasonable doubt as to the validity of the applicant's copyright. In resolving a Rule 65 certiorari petition on the propriety of a preliminary injunction, the appellate court may restrain enforcement of the trial court's writ but may not adjudicate the merits of the main infringement case.

Ong imported vermicelli from China National Cereals Oils and Foodstuffs Import and Export Corporation in Beijing under the firm name C.K.C. Trading and repacked it in cellophane wrappers bearing a two-dragon design and the TOWER trademark; he obtained a Certificate of Copyright Registration from the National Library for that design. Tan also imported vermicelli from the same company's Qingdao branch and repacked it in a nearly identical wrapper. P.D. No. 49 governs copyright and authorizes an injunction to restrain infringement.

Ong imported vermicelli from China National Cereals Oils and Foodstuffs Import and Export Corporation, based in Beijing, China, under the firm name C.K.C. Trading. He repacked the vermicelli in cellophane wrappers bearing a design of two dragons and the TOWER trademark on the uppermost portion. On June 9, 1993, he acquired a Certificate of Copyright Registration from the National Library over the said design. Tan, for his part, repacked vermicelli he imported from the same company but based in Qingdao, China, in a nearly identical wrapper.

On September 16, 1993, Ong filed a verified complaint for infringement of copyright with damages and a prayer for a temporary restraining order or writ of preliminary injunction in the Regional Trial Court of Quezon City. He alleged that he held the Certificate of Copyright Registration over the cellophane wrapper with the two-dragon design and that Tan used an identical wrapper in his business. In his prayer for preliminary injunction, in addition to damages, he asked that Tan be restrained from using the wrapper, and he said he would post a bond to guarantee payment of damages resulting from the issuance of the writ. The trial court issued a temporary restraining order on the same date the complaint was filed.

Tan filed an opposition to Ong's application for a writ of preliminary injunction with a counter-application for the issuance of a similar writ against Ong. Tan alleged that Ong was not entitled to an injunction because Ong did not have a clear right over the use of the Pagoda and Lungkow vermicelli trademarks, which were registered in the name of China National Cereals Oil and Foodstuffs Import and Export Corporation, Shandong Cereals and Oils Branch (Ceroilfood Shandong), based in Qingdao, China. Tan averred that he was the exclusive distributor in the Philippines of the Pagoda and Lungkow vermicelli and was solely authorized to use the trademark. He added that Ong merely copied the two-dragon design from Ceroilfood Shandong, which had Certificates of Registration issued by different countries, and concluded that Ong's Certificate of Copyright Registration was invalid for lack of originality. On September 30, 1993, Ong countered Tan's opposition.

On October 13, 1993, the trial court issued the writ of preliminary injunction in Ong's favor upon his filing of a P100,000.00 bond. Tan filed a motion to dissolve the writ, but the trial court denied it on December 15, 1993; the motion for reconsideration was also denied on March 1, 1994. Tan then elevated the case to the Court of Appeals via a special civil action for certiorari with a prayer for a temporary restraining order and/or writ of preliminary injunction. Ong opposed Tan's prayer on the ground that the trial court did not commit grave abuse of discretion in issuing the writ in his favor.

After oral argument, the Court of Appeals rendered a decision on August 8, 1994, setting aside the trial court's order. On January 3, 1995, it modified its August 8, 1994 order by deleting the phrase that the order and writ were set aside as issued with grave abuse of discretion, while maintaining the resolution in all other respects and issuing a writ of preliminary injunction enjoining enforcement of the RTC's writ upon a P200,000.00 bond. The parties submitted memoranda pursuant to the Court of Appeals' January 16, 1996 resolution, and on August 27, 1997, the appellate court set aside the RTC resolutions and order and made its injunction permanent. In the proceedings before the Court of Appeals, Tan presented copies of certificates of copyright registration in the name of Ceroilfood Shandong issued by at least twenty countries and regions worldwide; although unauthenticated, he claimed they were sufficient to provide a sampling of the evidence needed to determine whether a preliminary injunction should issue. He alleged that the PAGODA BRAND trademark was registered in China on October 31, 1979, while the LUNGKOW VERMICELLI WITH TWO-DRAGON DEVICE trademark was registered on August 15, 1985. The Court of Appeals declared that Ong's wrapper was a copy of Ceroilfood Shandong's wrapper, a finding the Supreme Court later held premature because the merits of the infringement case remained for the trial court.

• Entitlement to Injunction under P.D. No. 49: Petitioner argued that as holder of the Certificate of Copyright Registration for the twin-dragon design, he was entitled to protection under P.D. No. 49, which allows an injunction in case of infringement.
• Respondent's Lack of Registered Copyright: Petitioner maintained that private respondent had no registered copyright and merely relied on his principal's foreign trademark, which cannot prevail over petitioner's Philippine copyright.
• Clear and Unmistakable Right: Petitioner asserted that issuance of a preliminary injunction must be based on a clear and unmistakable right, which he had and which private respondent invaded.
• Confusion and Interference: Petitioner claimed that the Court of Appeals' August 8, 1994 decision and January 3, 1995 resolution resulted in confusion and that the Court of Appeals interfered with the trial court's judicial discretion, despite the appellate court's earlier deletion of the finding of grave abuse of discretion.
• Prejudgment of Merits: Petitioner argued that the Court of Appeals made its own findings and conclusions, pre-empting the trial court and pre-judging the case, leaving the trial court with nothing to rule upon.

• No Clear Right / Lack of Originality: Respondent countered that Ong had no clear right over the copyrighted wrapper because the PAGODA trademark and label were first adopted, used, and registered by Ceroilfood Shandong in China and nearly twenty countries; Ong was not the original creator but merely copied the design.
• Foreign Registrations as Evidence: Respondent argued that copies of certificates of copyright registration in Ceroilfood Shandong's name, though unauthenticated, sufficiently raised a sampling of evidence for determining whether preliminary injunction should issue.
• Exclusive Distributorship: Respondent averred that he was the exclusive distributor in the Philippines of Pagoda and Lungkow vermicelli and was solely authorized to use the trademark.
• Registration Dates: Respondent alleged that the PAGODA BRAND trademark was registered in China on October 31, 1979, while the LUNGKOW VERMICELLI WITH TWO-DRAGON DEVICE trademark was registered on August 15, 1985.

• Propriety of Preliminary Injunction: Whether the issuance of a writ of preliminary injunction was proper.
• Grave Abuse of Discretion by Court of Appeals: Whether the Court of Appeals committed grave abuse of discretion when it set aside the trial court's order and issued a judgment touching on the merits.
• Clear and Unmistakable Right: Whether petitioner's copyright registration under P.D. No. 49 established a clear and unmistakable right justifying injunctive relief against private respondent.
• Premature Adjudication of Merits: Whether the Court of Appeals prematurely adjudicated the merits of the copyright infringement case by declaring petitioner's wrapper a copy of Ceroilfood Shandong's wrapper.

• Propriety of Preliminary Injunction: No. A preliminary injunction cannot issue because petitioner's right was not clear and unmistakable; the certificates of copyright in Ceroilfood Shandong's name raised reasonable doubt as to the validity of Ong's copyright.
• Grave Abuse of Discretion by Court of Appeals: No as to setting aside the trial court's order and issuing its own injunctive relief; the Court of Appeals did not abuse its discretion in restraining enforcement of the RTC's writ, but it exceeded its certiorari jurisdiction when it ruled on the merits.
• Clear and Unmistakable Right: No. The right is disputed and yet to be determined; injunctive relief requires a clear and unmistakable right and urgent necessity to prevent serious damage.
• Premature Adjudication of Merits: Yes. The Court of Appeals went beyond the issue of grave abuse of discretion in granting the writ and prematurely declared Ong's wrapper a copy of Ceroilfood Shandong's; that matter remains for the trial court.

• Propriety of Preliminary Injunction: The grant of preliminary injunction rests on the sound discretion of the court, with the caveat that it should be made with extreme caution. It depends chiefly on the extent of doubt on the validity of the copyright, the existence of infringement, and the damages sustained by such infringement. A person entitled to copyright must be the original creator of the work, having created it by his own skill, labor and judgment without directly copying or evasively imitating the work of another. Here, the copies of certificates of copyright registered in the name of Ceroilfood Shandong sufficiently raised reasonable doubt. With such doubt, preliminary injunction was unavailing. Medina vs. City Sheriff, Manila held that where the complainant's title was disputed, injunction was not proper. Thus, Ong's right was not clearly and unmistakably demonstrated; it was in dispute and yet to be determined. To be entitled to an injunctive writ, petitioner must show the existence of a clear and unmistakable right and an urgent and paramount necessity for the writ to prevent serious damage. Developers Group of Companies, Inc. vs. Court of Appeals held that absent proof of a legal right and the injury sustained by the plaintiff, an order granting an injunctive writ will be set aside for having been issued with grave abuse of discretion. Conformably, there was no abuse of discretion by the Court of Appeals when it issued its own order to restrain enforcement of the preliminary injunction issued by the trial court.
• Grave Abuse of Discretion by Court of Appeals: Ong's claim that the Court of Appeals contradicted itself by deleting the phrase that the trial court's order and writ were set aside as issued with grave abuse of discretion, while at the same time issuing a writ of preliminary injunction in Tan's favor, was without logical basis. The appellate court merely restated in its own words the issue raised in the petition: from whether the RTC committed grave abuse of discretion to whether Tan was entitled to injunctive relief. It then clarified that the relief sought was a prohibition against Ong and his agents from enforcing the writ of preliminary injunction. Properly understood, an order enjoining the enforcement of a writ of preliminary injunction issued by the RTC in a certiorari proceeding under Rule 65 effectively sets aside the RTC order for being issued with grave abuse of discretion.
• Clear and Unmistakable Right: The right asserted by Ong was precisely what was in dispute. The foreign certificates of copyright registration in Ceroilfood Shandong's name raised reasonable doubt as to the validity of Ong's copyright. Without proof of a clear legal right and the injury sustained, injunctive relief could not issue. The Court of Appeals therefore acted within its discretion when it restrained enforcement of the trial court's preliminary injunction.
• Premature Adjudication of Merits: The complaint initially filed with the RTC was for infringement of copyright. The trial court's resolution subject of Tan's petition under Rule 65 before the Court of Appeals concerned the correctness of the grant of the writ of preliminary injunction. The only issue brought before the Court of Appeals involved the grave abuse of discretion allegedly committed by the trial court in granting the writ. In declaring that Ong's wrapper was a copy of Ceroilfood Shandong's wrapper, the Court of Appeals went beyond that issue and touched on the merits of the infringement case, which remained to be decided by the trial court. It was premature for the Court of Appeals to declare that the design of Ong's wrapper was a copy of the wrapper allegedly registered by Ceroilfood Shandong. That matter remained for decision after appropriate proceedings at the trial court.

• Preliminary Injunction — Clear and Unmistakable Right — A writ of preliminary injunction is not a matter of right; it rests on the sound discretion of the court, exercised with extreme caution. The applicant must show the existence of a clear and unmistakable right and an urgent and paramount necessity for the writ to prevent serious damage. In this case, Ong's copyright was disputed; the foreign registrations in Ceroilfood Shandong's name raised reasonable doubt, so no clear right was shown.
• Copyright — Originality Requirement — A person entitled to copyright must be the original creator of the work; the work must have been created by his own skill, labor and judgment without directly copying or evasively imitating the work of another. The Court applied this requirement in assessing whether Ong's certificate could support injunctive relief, and the doubt as to originality precluded the writ.
• Reasonable Doubt on Validity of Copyright — The grant of a preliminary injunction depends chiefly on the extent of doubt on the validity of the copyright, the existence of infringement, and the damages sustained by such infringement. Copies of certificates of copyright registered in the name of Ceroilfood Shandong sufficiently raised reasonable doubt, making preliminary injunction unavailing.
• Scope of Certiorari under Rule 65 in Injunction Cases — An order enjoining the enforcement of a writ of preliminary injunction issued by the RTC in a certiorari proceeding under Rule 65 effectively sets aside the RTC order for being issued with grave abuse of discretion. However, the appellate court may not adjudicate the merits of the main case; it may only resolve the issue of grave abuse of discretion. The Court of Appeals properly restrained enforcement but erred in declaring Ong's wrapper a copy of Ceroilfood Shandong's wrapper, which was premature.

• "A person to be entitled to a copyright must be the original creator of the work. He must have created it by his own skill, labor and judgment without directly copying or evasively imitating the work of another." — This states the originality requirement for copyright, which the Court used to assess whether Ong's certificate could support injunctive relief.
• "The grant of preliminary injunction in a case rests on the sound discretion of the court with the caveat that it should be made with extreme caution." — This articulates the standard governing preliminary injunctions, emphasizing judicial caution before issuing the writ.
• "In our view, the copies of the certificates of copyright registered in the name of Ceroilfood Shandong sufficiently raise reasonable doubt. With such a doubt preliminary injunction is unavailing." — This is the ratio decidendi on why Ong's prayer for injunctive relief was denied.
• "The Court of Appeals in declaring that the wrapper of petitioner is a copy of Ceroilfood Shandong's wrapper went beyond that issue touched on the merits of the infringement case, which remains to be decided by the trial court." — This defines the jurisdictional limit of the appellate court in a Rule 65 certiorari proceeding concerning a preliminary injunction.

• Medina vs. City Sheriff, Manila, 276 SCRA 133, 139 (1997) — Cited for the rule that where the complainant's title is disputed, injunction is not proper. The Court relied on it to deny injunctive relief because Ong's copyright was disputed.
• Developers Group of Companies, Inc. vs. Court of Appeals, 219 SCRA 715, 722-723 (1993) — Cited for the rule that absent proof of a legal right and the injury sustained by the plaintiff, an order granting an injunctive writ will be set aside for having been issued with grave abuse of discretion.
• Arcega vs. Court of Appeals, 275 SCRA 176, 180 (1997) — Cited for the requisites of an injunctive writ: the existence of a clear and unmistakable right and an urgent and paramount necessity for the writ to prevent serious damage.
• Bataclan vs. Court of Appeals, 175 SCRA 764, 770 (1989) — Cited for the caveat that the grant of a preliminary injunction rests on the sound discretion of the court and should be made with extreme caution.
• Hoffman vs. Le Traunik, 209 Federal Reporter 375, 379 — Cited for the originality requirement in copyright: the creator must have created the work by his own skill, labor and judgment without directly copying or evasively imitating the work of another.

• P.D. No. 49, Chapter 1, Section 2 — Defines the classes of works protected from the moment of creation, including prints, pictorial illustrations, advertising copies, labels, tags, and box wraps. Petitioner invoked this provision to claim copyright protection over the two-dragon wrapper design.
• P.D. No. 49, Chapter II, Article VI, Section 28 — Provides that any person infringing a copyright shall be liable to an injunction restraining such infringement. Petitioner cited this as the basis for injunctive relief.
• Rule 65, Rules of Court — Governs certiorari proceedings. The Court explained that an order enjoining the enforcement of a writ of preliminary injunction issued by the RTC in a certiorari proceeding under Rule 65 effectively sets aside the RTC order for being issued with grave abuse of discretion.

Justices Bellosillo, Mendoza, Buena, and De Leon concurred.