FACTS:

Petitioner Tabacalera, a foreign corporation, owns several trademarks registered with the BPTTT. They authorized La Flor de la Isabela, Inc. to manufacture and sell cigars using their trademarks. Respondent Ripoll, a former employee of petitioners, organized Tabaqueria, a domestic corporation engaged in the manufacture of cigars. Petitioners filed complaints with the SEC and DTI, seeking the cancellation of Tabaqueria's corporate name and alleging unfair competition. They also filed a criminal complaint against Ripoll. The DOJ recommended the dismissal of the criminal complaint, but the Secretary of Justice later reversed the recommendation. Petitioners sought a cease and desist order, which was opposed by respondents. The DTI issued a temporary restraining order and ruled that there was no similarity between the products of the parties.

The case involves a dispute between Tabacalera and Tabaqueria, both engaged in the manufacture and sale of cigars. The main issue revolves around alleged unfair competition, particularly the use of similar logos, brand names, and markings on their products. Both companies argue about the confusion or distinction of their logos.

The complainant, Tabacalera, accused Tabaqueria of causing confusion and deception among consumers by using similar packaging and labels. Tabacalera claimed that their products are well-known and have been in the market for a long time.

Tabacalera argued that Tabacalera Davao's cigar products, including their packaging and labels, are confusingly similar to their own products. They claimed that the respondent's use of the brand "Flor de Manila" and the appearance of their packaging are likely to mislead consumers.

After considering the arguments, the DTI issued a partial injunction. It ordered Tabacalera Davao to cease using a certain type of packaging but allowed the sale of existing stocks. The DTI also required Tabacalera Davao to make changes in their packaging to differentiate it from Tabacalera's products.

Petitioners filed a complaint against Tabaqueria and Ripoll for trademark infringement and unfair competition, alleging that they imitated the combination of colors and etchings used by petitioners on their cigar products and boxes. The DTI issued orders directing respondents to make changes in their packaging and engraving. Petitioners filed a motion for reconsideration, which was denied. They then filed a petition for certiorari with the CA, which was also denied. Petitioners filed the present petition.

ISSUES:

1. Did the Court of Appeals err in not declaring the Orders of the Public Respondent as null and void for being rendered with Grave Abuse of Discretion amounting to Lack or Excess of Jurisdiction?

2. Did the Court of Appeals err in not ruling that the invasion of the petitioners' rights is substantial and material?

3. Did the Court of Appeals err in ruling that the petitioners' right to the exclusive use of the Tabacalera Trademarks and Design was not clear and unmistakable?

4. Did the Court of Appeals err in ruling that there is no urgent and paramount necessity for the issuance of a writ of injunction?

5. Whether the conditions of "actual occupancy" and "possession at all times" were imposed as requirements for the issuance of the injunctive writ.

6. Whether the petitioners have shown an urgent and paramount necessity for the issuance of a writ of preliminary injunction.

RULING:

1. The Court denied the petition. The Court held that the Orders of the Department of Trade and Industry (DTI) were not rendered in grave abuse of discretion amounting to lack or excess of jurisdiction. The Court stated that the mere fact that the Court of Appeals ruled that the DTI prejudged the main case does not establish grave abuse of discretion. The DTI was merely trying to justify the issuance of the writ of preliminary injunction, and this cannot be considered as a whimsical or capricious exercise of discretion.

2. The Court further held that the petitioners failed to establish that they are entitled to a writ of preliminary injunction. In order for an injunctive relief to be granted, the applicant must show that: (1) the right of the complainant is clear and unmistakable; (2) the invasion of the right sought to be protected is material and substantial; and (3) there is an urgent and paramount necessity for the writ to prevent serious damage. The Court emphasized that the term "and" in enumerating these elements signifies a joinder or union, meaning all three conditions must be met.

3. The Court held that both "actual occupancy" and "possession at all times" were imposed as conditions upon respondent. The use of the term "and" indicates that all of the mentioned elements must concur for the issuance of the injunction. The absence of even one of the elements would be fatal to the application for the writ.

4. The Court ruled that the petitioners failed to show that there was an urgent and paramount necessity for the issuance of the writ of injunction to prevent serious damage. They did not substantiate their claim that the drop in sales was a result of the acts complained of against the private respondent. Without presenting evidence to prove their allegations, the petitioners' arguments cannot be given any merit.

PRINCIPLES:

• Grave abuse of discretion requires a capricious and whimsical exercise of judgment that amounts to an excess or lack of jurisdiction.

• Not every error in the proceedings or every erroneous conclusion of law or fact constitutes grave abuse of discretion.

• In order for an injunctive relief to be granted, the applicant must establish that their right is clear and unmistakable, the invasion of the right is material and substantial, and there is an urgent and paramount necessity for the writ to prevent serious damage.

• The issuance of an injunction is addressed to the sound discretion of the Court and should not be granted while the rights between the parties are undetermined, except in extraordinary cases where material and irreparable injury will be done. It is an action in equity appropriate only when there can be no compensation in damages for the injury sustained and where no adequate remedy in law exists.

• A preliminary injunction is a temporary order granted prior to final judgment, requiring a person to refrain from a particular act. It is justified by the urgency and should be based on evidence showing that the action complained of must be stayed to prevent irreparable injury or render the final judgment ineffectual.

• The evidence submitted at the hearing on the motion for the preliminary injunction is not conclusive of the principal action, which has yet to be decided.

• An injunction is a limitation upon the freedom of action of the defendant and should not be granted lightly or precipitately.

• An injunction should only be granted when the court is fully satisfied that the law permits it and the emergency demands it.

• The issuance of an injunction is a delicate exercise of power and should only be extended in cases of great injury where courts of law cannot provide an adequate remedy in damages.

• A preliminary injunction may be granted in cases of extreme urgency, where the right is very clear, where considerations of relative inconvenience favor the complainant, where there is a willful and unlawful invasion of the plaintiff's rights against his protest and remonstrance, and when there is a continuing injury.