Title
Conrad and Co., Inc. vs. Court of Appeals
Case
G.R. No. 115115
Decision Date
Jul 18, 1995
Conrad imported "SUNSHINE" biscuits, infringing Fitrite's trademark. Courts upheld Fitrite's rights, affirming jurisdiction over infringement despite pending cancellation proceedings.
trademark infringement
trademark registration
trademark ownership

Parties, Venue, and Governing Law

The RTC dismissed the complaint upon petitioner’s motion to dismiss. Private respondents then elevated the matter to the Court of Appeals. The Supreme Court review was pursued by petition for review, with petitioner further praying for a writ of preliminary injunction or a temporary restraining order, although neither was issued by the Court. The substantive issues involved the interaction between administrative cancellation proceedings before the BPTTT and a judicial action for infringement and injunction in the RTC. The legal provisions expressly discussed in the decision were Sec. 23 (actions, damages, and injunction for infringement), Sec. 27 (jurisdiction of the Regional Trial Court), and the doctrinal presumption arising from registration in the Principal Register, together with the BPTTT’s exclusive cognizance over administrative cancellation under Sec. 19 and the grounds for cancellation under Sec. 17.

Factual Background Alleged in the Complaint

For purposes of review, the Supreme Court treated the facts alleged in the complaint—narrated by the Court of Appeals and thus deemed hypothetically admitted—as the operative allegations. Private respondents alleged that Fitrite owned and used the trademark “SUNSHINE” in the Philippines since March 31, 1981 and that it applied in April 1982 for registration of “SUNSHINE” in both the Supplemental and Principal Registers. They alleged that the application in the Supplemental Register was approved on May 20, 1983, resulting in Certificate of Registration No. SR-6217 for twenty years, and that the application in the Principal Register was approved on March 22, 1990, resulting in Certificate of Registration No. 47590 for twenty years. Private respondents further alleged that Fitrite authorized Victoria Biscuits Co. in June 1984 to use the trademark and to manufacture, promote, sell, and distribute products bearing it.

Private respondents alleged that on September 7, 1990, Fitrite assigned the trademark “SUNSHINE AND DEVICE LABEL” along with its interest and business goodwill to Victoria Biscuits, and that since the issuance of Fitrite’s certificates, they had manufactured and sold biscuits and cookies at a massive scale under that trademark, achieving wide acceptability in Metro Manila and the provinces.

They then alleged discovery in June 1990 that Conrad had been importing, selling, and distributing biscuits and cookies and other food items bearing the trademark “SUNSHINE” without their consent. Private respondents alleged that Conrad was designated exclusive importer and dealer of the products of “Sunshine Biscuits, Inc.” on April 18, 1988, and that its first importation occurred on April 21, 1988, with a continuous course of importations up to the date of an affidavit dated May 30, 1990, consisting of 51,575 cartons amounting to $579,224.35. They alleged that Conrad’s acts were calculated to mislead and deceive purchasers into believing that Conrad’s “Sunshine” products originated from private respondents, thereby inducing patronage and damaging both the purchasing public and private respondents. They asserted that these acts constituted infringement and unfair competition in violation of rights protected by Republic Act No. 166, and that they could avail themselves of remedies for infringement under Sec. 23 and unfair competition under Sec. 29.

Trial Court Proceedings: Dismissal on Jurisdictional Grounds

Petitioner moved to dismiss the complaint, invoking, among others, litis pendentia, the doctrine of primary jurisdiction, and failure to state a cause of action. The RTC granted the motion. It reasoned that internationally accepted trademarks enjoyed protection under Philippine laws and that Conrad, as a purported beneficiary/agent/assignee of Sunshine Biscuits, Inc., should be considered bound by matters pending before the BPTTT. The RTC characterized the controversy as one in which the question of trademark ownership—raised in the administrative context—should be resolved under the BPTTT’s exclusive jurisdiction. The RTC further declared that forum shopping and litis pendentia applied because there was an action pending between the same parties for the same cause, concluding that the complaint was summarily dismissible.

Court of Appeals Proceedings: Reversal and Reinstatement

Private respondents appealed to the Court of Appeals (CA-G.R. CV No. 38822). In an Amended Decision dated 20 April 1994, the Court of Appeals reversed the RTC order and reinstated the complaint. The appellate court held, in substance, that petitioner filed a motion to dismiss instead of an answer, despite the fact that the asserted “affirmative defense” involved matters of fact outside the complaint’s allegations. It also emphasized that no evidence had been introduced before the outright dismissal, even though the issues implicated factual determinations.

The Court of Appeals further stated that it was not the registration or cancellability issue pending before the BPTTT that governed the infringement action. It reasoned that Fitrite already held certificates in both the Supplemental and Principal Registers, and that the judicial controversy was directed at whether Conrad’s importation, selling, and distribution of goods bearing the registered trademark without consent constituted infringement under Sec. 22 of Republic Act No. 166. The appellate court treated the cause of action as judicially cognizable, observing that the BPTTT proceeding was concerned with cancellation, while the RTC action was concerned with infringement.

It held that there was no identity of causes of action between the BPTTT cancellation case and the court action for infringement, and that, pending cancellation proceedings, the trademark belonged exclusively to Fitrite in the Philippines. It accordingly ordered the reinstatement of the complaint and required petitioner to file its answer. It also directed that the RTC may, for good cause, suspend the action pending the outcome of the cancellation proceeding subject to conditions.

Significantly, the Court of Appeals ordered petitioner to desist and refrain from importing, manufacturing, selling, and distributing in the Philippines any goods bearing the trademark “SUNSHINE & DEVICE LABEL” registered in private respondents’ name pending final decision in the RTC action. It treated that directive as an integral part of its amended decision and as the functional equivalent of the writ of injunction.

Issues Raised by Petitioner

Petitioner assigned several errors, principally contending that the Court of Appeals (1) wrongfully allowed issuance of injunctive relief despite pending cancellation proceedings; (2) disregarded the Paris Convention for the Protection of Industrial Property and a memorandum of the Minister of Trade dated November 20, 1980; (3) erred in holding that primary jurisdiction by the BPTTT was not applicable and that the judicial issues were not those of registerability or cancellability; (4) erred in holding litis pendentia did not apply; and (5) erred in directing the RTC to proceed, subject to possible suspension pending resolution of administrative cases between Sunshine Biscuits, Inc. and Fitrite.

Supreme Court’s Ruling on Primary Jurisdiction and the RTC’s Jurisdiction

The Supreme Court denied the petition and affirmed the Court of Appeals. It held that there was no reversible error in reinstating the case and directing petitioner to file an answer. The Court explained that while administrative cancellation of a registered trademark on the grounds enumerated in Sec. 17 fell under the exclusive cognizance of the BPTTT under Sec. 19, an action for infringement, unfair competition, and the corresponding injunction and damages relief remained explicitly within the competence and jurisdiction of ordinary courts.

The Court anchored this on the fact that private respondents were holders of Certificate of Registration No. 47590 (Principal Register). Citing Lorenzana vs. Macagba (as approved in Del Monte Corporation vs. Court of Appeals), the Supreme Court reiterated that registration in the Principal Register gives rise to a presumption of validity of the registration and of the registrant’s ownership and right to the exclusive use of the mark. It held that such registration could serve as a basis for an action for infringement. An invasion of that right entitled the registrant to court protection and relief.

The Supreme Court quoted and relied on Sec. 23 of Republic Act No. 166, authorizing damages and injunction for infringement upon proper showing, and on Sec. 27, which provided that all actions under the relevant chapters “shall be brought before the proper Regional Trial Court.” It therefore rejected petitioner’s effort to expand the doctrine of primary jurisdiction to oust the courts’ lawfully conferred authority. The Court characterized the proper effect of primary jurisdiction as postponement or suspension of judicial proceedings only as to issues requiring specialized administrative determination, not as a ground to dismiss a court case that is judicially cognizable.

The Supreme Court acknowledged the Court of Appeals’ own accommodation of the administrative proceeding: the RTC could be allowed, in its discretion and for good cause, to suspend the action pending resolution of the cancellation proceedings in the BPTTT.

Supreme Court’s Treatment of Developers Group and the Nature of the Infringement Issue

Petitioner invoked Developers Group of Companies vs. Court of Appeals (219 SCRA 715) to argue that the presence of technical factual issues required administrative expertise. The Supreme Court distinguished the context, emphasizing that the issue in the RTC action was not the technical question of whether the “SUNSHINE” mark was registerable or cancellable. Rather, the alleged judicial issue was whether Conrad’s acts of importing, selling, and distributing goods bearing the registered mark without the registra

...continue reading

Analyze Cases Smarter, Faster
Jur helps you analyze cases smarter to comprehend faster, building context before diving into full texts. AI-powered analysis, always verify critical details.

About Privacy Terms