FIRST DIVISION

[G.R. No. 164324. August 14, 2009.]

TANDUAY DISTILLERS, INC. , petitioner, vs . GINEBRA SAN MIGUEL,

INC. , respondent.

DECISION

CARPIO , J : p

The Case
Tanduay Distillers, Inc. (Tanduay) led this Petition for Review on Certiorari 1
assailing the Court of Appeals' Decision dated 9 January 2004 2 as well as the
Resolution dated 2 July 2004 3 in CA-G.R. SP No. 79655 denying the Motion for
Reconsideration. In the assailed decision, the Court of Appeals (CA) a rmed the
Regional Trial Court's Orders 4 dated 23 September 2003 and 17 October 2003 which
respectively granted Ginebra San Miguel, Inc.'s (San Miguel) prayer for the issuance of a
temporary restraining order (TRO) and writ of preliminary injunction. The Regional Trial
Court of Mandaluyong City, Branch 214 (trial court), enjoined Tanduay "from
committing the acts complained of, and, speci cally, to cease and desist from
manufacturing, distributing, selling, offering for sale, advertising, or otherwise using in
commerce the mark "Ginebra", and manufacturing, producing, distributing, or otherwise
dealing in gin products which have the general appearance of, and which are
confusingly similar with", San Miguel's marks, bottle design, and label for its gin
products. 5
The Facts
Tanduay, a corporation organized and existing under Philippine laws, has been
engaged in the liquor business since 1854. In 2002, Tanduay developed a new gin product
distinguished by its sweet smell, smooth taste, and affordable price. Tanduay claims that
it engaged the services of an advertising rm to develop a brand name and a label for its
new gin product. The brand name eventually chosen was "Ginebra Kapitan" with the
representation of a revolutionary Kapitan on horseback as the dominant feature of its
label. Tanduay points out that the label design of "Ginebra Kapitan" in terms of color
scheme, size and arrangement of text, and other label features were precisely selected to
distinguish it from the leading gin brand in the Philippine market, "Ginebra San Miguel".
Tanduay also states that the "Ginebra Kapitan" bottle uses a resealable twist cap to
distinguish it from "Ginebra San Miguel" and other local gin products with bottles which
use the crown cap or tansan. 6
After ling the trademark application for "Ginebra Kapitan" with the Intellectual
Property O ce (IPO) and after securing the approval of the permit to manufacture and sell
"Ginebra Kapitan" from the Bureau of Internal Revenue, Tanduay began selling "Ginebra
Kapitan" in Northern and Southern Luzon areas in May 2003. In June 2003, "Ginebra
Kapitan" was also launched in Metro Manila. 7
On 13 August 2003, Tanduay received a letter from San Miguel's counsel. The letter
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 informed Tanduay to immediately cease and desist from using the mark "Ginebra" and
from committing acts that violate San Miguel's intellectual property rights. 8
On 15 August 2003, San Miguel led a complaint for trademark infringement, unfair
competition and damages, with applications for issuance of TRO and Writ of Preliminary
Injunction against Tanduay before the Regional Trial Court of Mandaluyong. The case was
ra ed to Branch 214 and docketed as IP Case No. MC-03-01 and Civil Case No. MC-03-
073. 9
On 25 and 29 August and 4 September 2003, the trial court conducted hearings on
the TRO. San Miguel submitted ve a davits, but only one a ant, Mercedes Abad, was
presented for cross-examination because the trial court ruled that such examination would
be inconsistent with the summary nature of a TRO hearing. 1 0 San Miguel submitted the
following pieces of evidence: 1 1 ScaHDT

1. A davit of Mercedes Abad, President and Managing Director of the

research rm NFO Trends, Inc. (NFO Trends), to present, among others, market
survey results which prove that gin drinkers associate the term "Ginebra" with San
Miguel, and that the consuming public is being misled that "Ginebra Kapitan" is a
product of San Miguel;

2. Market Survey results conducted by NFO Trends to determine the

brand associations of the mark "Ginebra" and to prove that the consuming public
is confused as to the manufacturer of "Ginebra Kapitan";

3. A davit of Ramon Cruz, San Miguel's Group Product Manager, to

prove, among others, the prior right of San Miguel to the mark "Ginebra" as shown
in various applications for, and registrations of, trademarks that contain the mark
"Ginebra". His a davit included documents showing that the mark "Ginebra" has
been used on San Miguel's gin products since 1834;

4. A davits of Leopoldo Guanzon, Jr., San Miguel's Trade and Promo

Merchandising Head for North Luzon Area, and Juderick Crescini, San Miguel's
District Sales Supervisor for South Luzon-East Area, to prove, among others, that
Tanduay's salesmen or distributors misrepresent "Ginebra Kapitan" as San
Miguel's product and that numerous retailers of San Miguel's gin products are
confused as to the manufacturer of "Ginebra Kapitan"; and

5. A davit of Jose Reginald Pascual, San Miguel's District Sales

Supervisor for the North-Greater Manila Area, to prove, among others, that gin
drinkers confuse San Miguel to be the manufacturer of "Ginebra Kapitan" due to
the use of the dominant feature "Ginebra".

Tanduay led a Motion to Strike Out Hearsay A davits and Evidence, which motion
was denied by the trial court. Tanduay presented witnesses who a rmed their a davits in
open court, as follows: 1 2
1. Ramoncito Bugia, General Services Manager of Tanduay. Attached
to his a davit were various certi cates of registration of trademarks containing
the word "Ginebra" obtained by Tanduay and other liquor companies, to prove
that the word "Ginebra" is required to be disclaimed by the IPO. The a davit also
attested that there are other liquor companies using the word "Ginebra" as part of
their trademarks for gin products aside from San Miguel and Tanduay.
2. Herbert Rosales, Vice President of J. Salcedo and Associates, Inc.,
the advertising and promotions company hired by Tanduay to design the label of
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 "Ginebra Kapitan". His a davit attested that the label was designed to make it
"look absolutely different from the Ginebra San Miguel label".

On 23 September 2003, the trial court issued a TRO prohibiting Tanduay from
manufacturing, selling and advertising "Ginebra Kapitan". 1 3 The dispositive portion reads
in part:
WHEREFORE, the application for temporary restraining order is hereby
GRANTED and made effective immediately. Plaintiff is directed to post a bond of
ONE MILLION PESOS (Php1,000,000.00) within ve (5) days from issuance
hereof, otherwise, this restraining order shall lose its e cacy. Accordingly,
defendant Tanduay Distillers, Inc., and all persons and agents acting for and in
behalf are enjoined to cease and desist from manufacturing, distributing, selling,
offering for sale and/or advertising or otherwise using in commerce the mark
"GINEBRA KAPITAN" which employs, thereon, or in the wrappings, sundry items,
cartons and packages thereof, the mark "GINEBRA" as well as from using the
bottle design and labels for its gin products during the effectivity of this
temporary restraining order unless a contrary order is issued by this Court. 1 4

On 3 October 2003, Tanduay led a petition for certiorari with the CA. 1 5 Despite
Tanduay's Urgent Motion to Defer Injunction Hearing, the trial court continued to conduct
hearings on 8, 9, 13 and 14 October 2003 for Tanduay to show cause why no writ of
preliminary injunction should be issued. 1 6 On 17 October 2003, the trial court granted San
Miguel's application for the issuance of a writ of preliminary injunction. 1 7 The dispositive
portion of the Order reads: cTCADI

WHEREFORE, the plaintiff's application for a writ of preliminary injunction

is GRANTED. Upon plaintiff's ling of an injunctive bond executed to the
defendant in the amount of P20,000,000.00 (TWENTY MILLION) PESOS, let a Writ
of Preliminary Injunction issue enjoining the defendant, its employees, agents,
representatives, dealers, retailers or assigns, and any all persons acting on its
behalf, from committing the acts complained of, and, speci cally, to cease and
desist from manufacturing, distributing, selling, offering for sale, advertising, or
otherwise using in commerce the mark "GINEBRA", and manufacturing, producing,
distributing or otherwise dealing in gin products which have the general
appearance of, and which are confusingly similar with, plaintiff's marks, bottle
design and label for its gin products.

SO ORDERED. 1 8

On 22 October 2003, Tanduay led a supplemental petition in the CA assailing the

injunction order. On 10 November 2003, the CA issued a TRO enjoining the trial court from
implementing its injunction order and from further proceeding with the case. 1 9 On 23
December 2003, the CA issued a resolution directing the parties to appear for a hearing on
6 January 2004 to determine the need for the issuance of a writ of preliminary injunction.
20

On 9 January 2004, the CA rendered a Decision dismissing Tanduay's petition and

supplemental petition. On 28 January 2004, Tanduay moved for reconsideration which was
denied in a Resolution dated 2 July 2004. 2 1
Aggrieved by the decision dismissing the petition and supplemental petition and by
the resolution denying the Motion for Reconsideration, Tanduay elevated the case before
this Court.

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 The Trial Court's Orders
In the Order dated 23 September 2003, the trial court stated that during the
hearings conducted on 25 and 29 August and on 4 and 11 September 2003, the following
facts have been established:
1. San Miguel has registered the trademark "Ginebra San Miguel";
2. There is a close resemblance between "Ginebra San Miguel" and
"Ginebra Kapitan";
3. The close similarity between "Ginebra San Miguel" and "Ginebra
Kapitan" may give rise to confusion of goods since San Miguel and
Tanduay are competitors in the business of manufacturing and selling
liquors; and
4. "Ginebra", which is a well-known trademark, was adopted by Tanduay
to bene t from the reputation and advertisement of the originator of
the mark "Ginebra San Miguel", and to convey to the public the
impression of some supposed connection between the manufacturer
of the gin product sold under the name "Ginebra San Miguel" and the
new gin product "Ginebra Kapitan". 2 2
aTEScI

Based on these facts, the trial court concluded that San Miguel had demonstrated a
clear, positive, and existing right to be protected by a TRO. Otherwise, San Miguel would
suffer irreparable injury if infringement would not be enjoined. Hence, the trial court
granted the application for a TRO and set the hearing for preliminary injunction. 2 3
In the Order dated 17 October 2003, the trial court granted the application for a writ
of preliminary injunction. The trial court ruled that while a corporation acquires a trade
name for its product by choice, it should not select a name that is confusingly similar to
any other name already protected by law or is patently deceptive, confusing, or contrary to
existing law. 2 4
The trial court pointed out that San Miguel and its predecessors have continuously
used "Ginebra" as the dominant feature of its gin products since 1834. On the other hand,
Tanduay led its trademark application for "Ginebra Kapitan" only on 7 January 2003. The
trial court declared that San Miguel is the prior user and registrant of "Ginebra" which has
become closely associated to all of San Miguel's gin products, thereby gaining popularity
and goodwill from such name. 2 5
The trial court noted that while the subject trademarks are not identical, it is
obviously clear that the word "Ginebra" is the dominant feature in the trademarks. The trial
court stated that there is a strong indication that confusion is likely to occur since one
would inevitably be led to conclude that both products are affiliated with San Miguel due to
the distinctive mark "Ginebra" which is readily identi ed with San Miguel. The trial court
concluded that ordinary purchasers would not examine the letterings or features printed
on the label but would simply be guided by the presence of the dominant mark "Ginebra".
Any difference would pale in signi cance in the face of evident similarities in the dominant
features and overall appearance of the products. The trial court emphasized that the
determinative factor was whether the use of such mark would likely cause confusion on
the part of the buying public, and not whether it would actually cause confusion on the part
of the purchasers. Thus, Tanduay's choice of "Ginebra" as part of the trademark of "Ginebra
Kapitan" tended to show Tanduay's intention to ride on the popularity and established
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 goodwill of "Ginebra San Miguel". 2 6
The trial court held that to constitute trademark infringement, it was not necessary
that every word should be appropriated; it was su cient that enough be taken to deceive
the public in the purchase of a protected article. 2 7
The trial court conceded to Tanduay's assertion that the term "Ginebra" is a generic
word; hence, it is non-registrable because generic words are by law free for all to use.
However, the trial court relied on the principle that even if a word is incapable of
appropriation as a trademark, the word may still acquire a proprietary connotation through
long and exclusive use by a business entity with reference to its products. The purchasing
public would associate the word to the products of a business entity. The word thus
associated would be entitled to protection against infringement and unfair competition.
The trial court held that this principle could be made to apply to this case because San
Miguel has shown that it has established goodwill of considerable value, such that its gin
products have acquired a well-known reputation as just "Ginebra". In essence, the word
"Ginebra" has become a popular by-word among the consumers and they had closely
associated it with San Miguel. 2 8
On the other hand, the trial court held that Tanduay failed to substantiate its claim
against the issuance of the injunctive relief. 2 9
The Ruling of the Court of Appeals
In resolving the petition and supplemental petition, the CA stated that it is
constrained to limit itself to the determination of whether the TRO and the writ of
preliminary injunction were issued by the trial court with grave abuse of discretion
amounting to lack of jurisdiction. 3 0
To warrant the issuance of a TRO, the CA ruled that the a davits of San Miguel's
witnesses and the fact that the registered trademark "Ginebra San Miguel" exists are
enough to make a nding that San Miguel has a clear and unmistakable right to prevent
irreparable injury because gin drinkers confuse San Miguel to be the manufacturer of
"Ginebra Kapitan". 3 1 TEAaDC

The CA enumerated the requisites for an injunction: (1) there must be a right in esse
or the existence of a right to be protected and (2) the act against which the injunction is to
be directed is a violation of such right. The CA stated that the trademarks "Ginebra San
Miguel" and "Ginebra Kapitan" are not identical, but it is clear that the word "Ginebra" is the
dominant feature in both trademarks. There was a strong indication that confusion was
likely to occur. One would be led to conclude that both products are a liated with San
Miguel because the distinctive mark "Ginebra" is identi ed with San Miguel. It is the mark
which draws the attention of the buyer and leads him to conclude that the goods
originated from the same manufacturer. 3 2
The CA observed that the gin products of "Ginebra San Miguel" and "Ginebra
Kapitan" possess the same physical attributes with reference to their form, composition,
texture, or quality. The CA upheld the trial court's ruling that San Miguel has su ciently
established its right to prior use and registration of the mark "Ginebra" as a dominant
feature of its trademark. "Ginebra" has been identi ed with San Miguel's goods, thereby, it
acquired a right in such mark, and if another infringed the trademark, San Miguel could
invoke its property right. 3 3
The Issue
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 The central question for resolution is whether San Miguel is entitled to the writ of
preliminary injunction granted by the trial court as a rmed by the CA. For this reason, we
shall deal only with the questioned writ and not with the merits of the case pending before
the trial court.
The Ruling of the Court
Clear and Unmistakable Right
Section 1, Rule 58 of the Rules of Court de nes a preliminary injunction as an
order granted at any stage of a proceeding prior to the judgment or nal order,
requiring a party or a court, agency, or a person to refrain from a particular act or acts.
A preliminary injunction is a provisional remedy for the protection of substantive
rights and interests. It is not a cause of action in itself but merely an adjunct to the main
case. Its objective is to prevent a threatened or continuous irreparable injury to some of
the parties before their claims can be thoroughly investigated and advisedly adjudicated. It
is resorted to only when there is a pressing need to avoid injurious consequences which
cannot be remedied under any standard compensation. 3 4
Section 3, Rule 58 of the Rules of Court provides:
SECTION 3. Grounds for issuance of a writ of preliminary injunction.
— A preliminary injunction may be granted when it is established:
(a) That the applicant is entitled to the relief demanded, and the
whole or part of such relief consists in restraining the commission or
continuance of the act or acts complained of, or in requiring the
performance of an act or acts, either for a limited period or perpetually;
(b) That the commission, continuance or non-performance of
the act or acts complained of during the litigation would probably work
injustice to the applicant; or
(c) That a party, court, agency or a person is doing, threatening,
or is attempting to do, or is procuring or suffering to be done, some act or
acts probably in violation of the rights of the applicant respecting the
subject of the action or proceeding, and tending to render the judgment
ineffectual.CSTDIE

Before an injunctive writ is issued, it is essential that the following requisites are
present: (1) the existence of a right to be protected and (2) the acts against which the
injunction is directed are violative of the right. The onus probandi is on the movant to show
that the invasion of the right sought to be protected is material and substantial, that the
right of the movant is clear and unmistakable, and that there is an urgent and paramount
necessity for the writ to prevent serious damage. 3 5
San Miguel claims that the requisites for the valid issuance of a writ of preliminary
injunction were clearly established. The clear and unmistakable right to the exclusive use
of the mark "Ginebra" was proven through the continuous use of "Ginebra" in the
manufacture, distribution, marketing and sale of gin products throughout the Philippines
since 1834. To the gin-drinking public, the word "Ginebra" does not simply indicate a kind
of beverage; it is now synonymous with San Miguel's gin products. 3 6
San Miguel contends that "Ginebra" can be appropriated as a trademark, and there
was no error in the trial court's provisional ruling based on the evidence on record.
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 Assuming that "Ginebra" is a generic word which is proscribed to be registered as a
trademark under Section 123.1 (h) 3 7 of Republic Act No. 8293 or the Intellectual Property
Code (IP Code), 3 8 it can still be appropriated and registered as a trademark under Section
123.1 (j) 3 9 in relation to Section 123.2 4 0 of the IP Code, considering that "Ginebra" is also
a mark which designates the kind of goods produced by San Miguel. 4 1 San Miguel alleges
that although "Ginebra", the Spanish word for "gin", may be a term originally incapable of
exclusive appropriation, jurisprudence dictates that the mark has become distinctive of
San Miguel's products due to its substantially exclusive and continuous use as the
dominant feature of San Miguel's trademarks since 1834. Hence, San Miguel is entitled to
a nding that the mark is deemed to have acquired a secondary meaning. 4 2 San Miguel
states that Tanduay failed to present any evidence to disprove its claims; thus, there is no
basis to set aside the grant of the TRO and writ of preliminary injunction. 4 3
San Miguel states that its disclaimer of the word "Ginebra" in some of its registered
marks is without prejudice to, and did not affect, its existing or future rights over "Ginebra",
especially since "Ginebra" has demonstrably become distinctive of San Miguel's products.
4 4 San Miguel adds that it did not disclaim "Ginebra" in all of its trademark registrations
and applications like its registration for "Ginebra Cruz de Oro", "Ginebra Ka Miguel",
"Ginebra San Miguel" bottle, "Ginebra San Miguel", and "Barangay Ginebra". 4 5
Tanduay asserts that not one of the requisites for the valid issuance of a preliminary
injunction is present in this case. Tanduay argues that San Miguel cannot claim the
exclusive right to use the generic word "Ginebra" for its gin products based on its
registration of the composite marks "Ginebra San Miguel", "Ginebra S. Miguel 65", and "La
Tondeña Cliq! Ginebra Mix", because in all of these registrations, San Miguel disclaimed
any exclusive right to use the non-registrable word "Ginebra" for gin products. 4 6 Tanduay
explains that the word "Ginebra", which is disclaimed by San Miguel in all of its registered
trademarks, is an unregistrable component of the composite mark "Ginebra San Miguel".
Tanduay argues that this disclaimer further means that San Miguel does not have an
exclusive right to the generic word "Ginebra". 4 7 Tanduay states that the word "Ginebra"
does not indicate the source of the product, but it is merely descriptive of the name of the
product itself and not the manufacturer thereof. 4 8
Tanduay submits that it has been producing gin products under the brand names
Ginebra 65, Ginebra Matador, and Ginebra Toro without any complaint from San Miguel.
Tanduay alleges that San Miguel has not led any complaint against other liquor
companies which use "Ginebra" as part of their brand names such as Ginebra Pinoy, a
registered trademark of Webengton Distillery; Ginebra Presidente and Ginebra Luzon as
registered trademarks of Washington Distillery, Inc.; and Ginebra Lucky Nine and Ginebra
Santiago as registered trademarks of Distileria Limtuaco & Co., Inc. 4 9 Tanduay claims that
the existence of these products, the use and registration of the word "Ginebra" by other
companies as part of their trademarks belie San Miguel's claim that it has been the
exclusive user of the trademark containing the word "Ginebra" since 1834. DSIaAE

Tanduay argues that before a court can issue a writ of preliminary injunction, it is
imperative that San Miguel must establish a clear and unmistakable right that is entitled to
protection. San Miguel's alleged exclusive right to use the generic word "Ginebra" is far
from clear and unmistakable. Tanduay claims that the injunction issued by the trial court
was based on its premature conclusion that "Ginebra Kapitan" infringes "Ginebra San
Miguel". 5 0
In Levi Strauss & Co. v. Clinton Apparelle, Inc., 5 1 we held:
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 While the matter of the issuance of a writ of preliminary injunction is
addressed to the sound discretion of the trial court, this discretion must be
exercised based upon the grounds and in the manner provided by law. The
exercise of discretion by the trial court in injunctive matters is generally not
interfered with save in cases of manifest abuse. And to determine whether there
was grave abuse of discretion, a scrutiny must be made of the bases, if any,
considered by the trial court in granting injunctive relief. Be it stressed that
injunction is the strong arm of equity which must be issued with great caution
and deliberation, and only in cases of great injury where there is no
commensurate remedy in damages. 5 2

The CA upheld the trial court's ruling that San Miguel has su ciently established its
right to prior use and registration of the word "Ginebra" as a dominant feature of its
trademark. The CA ruled that based on San Miguel's extensive, continuous, and
substantially exclusive use of the word "Ginebra", it has become distinctive of San Miguel's
gin products; thus, a clear and unmistakable right was shown.
We hold that the CA committed a reversible error. The issue in the main case is San
Miguel's right to the exclusive use of the mark "Ginebra". The two trademarks "Ginebra San
Miguel" and "Ginebra Kapitan" apparently differ when taken as a whole, but according to
San Miguel, Tanduay appropriates the word "Ginebra" which is a dominant feature of San
Miguel's mark.
It is not evident whether San Miguel has the right to prevent other business entities
from using the word "Ginebra". It is not settled (1) whether "Ginebra" is indeed the
dominant feature of the trademarks, (2) whether it is a generic word that as a matter of
law cannot be appropriated, or (3) whether it is merely a descriptive word that may be
appropriated based on the fact that it has acquired a secondary meaning.
The issue that must be resolved by the trial court is whether a word like "Ginebra"
can acquire a secondary meaning for gin products so as to prohibit the use of the word
"Ginebra" by other gin manufacturers or sellers. This boils down to whether the word
"Ginebra" is a generic mark that is incapable of appropriation by gin manufacturers.
In Asia Brewery, Inc. v. Court of Appeals, 5 3 the Court ruled that "pale pilsen" are
generic words, "pale" being the actual name of the color and "pilsen" being the type of beer,
a light bohemian beer with a strong hops avor that originated in Pilsen City in
Czechoslovakia and became famous in the Middle Ages, and hence incapable of
appropriation by any beer manufacturer. 5 4 Moreover, Section 123.1 (h) of the IP Code
states that a mark cannot be registered if it "consists exclusively of signs that are generic
for the goods or services that they seek to identify".
In this case, a cloud of doubt exists over San Miguel's exclusive right relating to the
word "Ginebra". San Miguel's claim to the exclusive use of the word "Ginebra" is clearly still
in dispute because of Tanduay's claim that it has, as others have, also registered the word
"Ginebra" for its gin products. This issue can be resolved only after a full-blown trial.
In Ong Ching Kian Chuan v. Court of Appeals, 5 5 we held that in the absence of proof
of a legal right and the injury sustained by the movant, the trial court's order granting the
issuance of an injunctive writ will be set aside, for having been issued with grave abuse of
discretion. acHETI

We nd that San Miguel's right to injunctive relief has not been clearly and
unmistakably demonstrated. The right to the exclusive use of the word "Ginebra" has yet to
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 be determined in the main case. The trial court's grant of the writ of preliminary injunction
in favor of San Miguel, despite the lack of a clear and unmistakable right on its part,
constitutes grave abuse of discretion amounting to lack of jurisdiction.
Prejudging the Merits of the Case
Tanduay alleges that the CA, in upholding the issuance of the writ of preliminary
injunction, has prejudged the merits of the case since nothing is left to be decided by the
trial court except the amount of damages to be awarded to San Miguel. 5 6
San Miguel claims that neither the CA nor the trial court prejudged the merits of
the case. San Miguel states that the CA did not rule on the ultimate correctness of the
trial court's evaluation and appreciation of the evidence before it, but merely found that
the assailed Orders of the trial court are supported by the evidence on record and that
Tanduay was not denied due process. 5 7 San Miguel argues that the CA only upheld the
trial court's issuance of the TRO and writ of preliminary injunction upon a nding that
there was su cient evidence on record, as well as legal authorities, to warrant the trial
court's preliminary findings of fact. 5 8
The instructive ruling in Manila International Airport Authority v. Court of Appeals
59 states:
Considering the far-reaching effects of a writ of preliminary injunction, the
trial court should have exercised more prudence and judiciousness in its issuance
of the injunction order. We remind trial courts that while generally the grant of a
writ of preliminary injunction rests on the sound discretion of the court taking
cognizance of the case, extreme caution must be observed in the exercise of such
discretion. The discretion of the court a quo to grant an injunctive writ must be
exercised based on the grounds and in the manner provided by law. Thus, the
Court declared in Garcia v. Burgos:
"It has been consistently held that there is no power the exercise of
which is more delicate, which requires greater caution, deliberation and
sound discretion, or more dangerous in a doubtful case, than the issuance
of an injunction. It is the strong arm of equity that should never be
extended unless to cases of great injury, where courts of law cannot afford
an adequate or commensurate remedy in damages.
Every court should remember that an injunction is a limitation upon
the freedom of action of the defendant and should not be granted lightly or
precipitately. It should be granted only when the court is fully satis ed that
the law permits it and the emergency demands it." (Emphasis in the
original)cEASTa

We believe that the issued writ of preliminary injunction, if allowed, disposes of

the case on the merits as it effectively enjoins the use of the word "Ginebra" without the
benefit of a full-blown trial. In Rivas v. Securities and Exchange Commission, 6 0 we ruled
that courts should avoid issuing a writ of preliminary injunction which would in effect
dispose of the main case without trial. The issuance of the writ of preliminary injunction
had the effect of granting the main prayer of the complaint such that there is practically
nothing left for the trial court to try except the plaintiff's claim for damages.
Irreparable Injury
Tanduay points out that the supposed damages that San Miguel will suffer as a
result of Tanduay's infringement or unfair competition cannot be considered irreparable
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 because the damages are susceptible of mathematical computation. Tanduay invokes
Section 156.1 of the IP Code 6 1 as the basis for the computation of damages. 6 2
San Miguel avers that it stands to suffer irreparable injury if the manufacture and
sale of Tanduay's "Ginebra Kapitan" are not enjoined. San Miguel claims that the rough
estimate of the damages 6 3 it would incur is simply a guide for the trial court in
computing the appropriate docket fees. San Miguel asserts that the full extent of the
damage it would suffer is di cult to measure with any reasonable accuracy because it
has invested hundreds of millions over a period of 170 years to establish goodwill and
reputation now being enjoyed by the "Ginebra San Miguel" mark. 6 4 San Miguel refutes
Tanduay's claim that the injury which San Miguel stands to suffer can be measured with
reasonable accuracy as the legal formula to determine such injury is provided in Section
156.1 of the IP Code. San Miguel reasons that if Tanduay's claim is upheld, then there
would never be a proper occasion to issue a writ of preliminary injunction in relation to
complaints for infringement and unfair competition, as the injury which the owner of the
mark suffers, or stands to suffer, will always be susceptible of mathematical
computation. 6 5
In Levi Strauss & Co. v. Clinton Apparelle, Inc., 6 6 this Court upheld the appellate
court's ruling that the damages Levi Strauss & Co. had suffered or continues to suffer
may be compensated in terms of monetary consideration. This Court, quoting
Government Service Insurance System v. Florendo, 6 7 held:
. . . a writ of injunction should never issue when an action for damages
would adequately compensate the injuries caused. The very foundation of the
jurisdiction to issue the writ of injunction rests in the probability of irreparable
injury, inadequacy of pecuniary compensation and the prevention of the
multiplicity of suits, and where facts are not shown to bring the case within these
conditions, the relief of injunction should be refused.

Based on the a davits and market survey report submitted during the injunction
hearings, San Miguel has failed to prove the probability of irreparable injury which it will
stand to suffer if the sale of "Ginebra Kapitan" is not enjoined. San Miguel has not
presented proof of damages incapable of pecuniary estimation. At most, San Miguel
only claims that it has invested hundreds of millions over a period of 170 years to
establish goodwill and reputation now being enjoyed by the "Ginebra San Miguel" mark
such that the full extent of the damage cannot be measured with reasonable accuracy.
Without the submission of proof that the damage is irreparable and incapable of
pecuniary estimation, San Miguel's claim cannot be the basis for a valid writ of
preliminary injunction. CcHDSA

WHEREFORE , we GRANT the petition. We SET ASIDE the Decision of the Court
of Appeals dated 9 January 2004 and the Resolution dated 2 July 2004 in CA-G.R. SP
No. 79655. We declare VOID the Order dated 17 October 2003 and the corresponding
writ of preliminary injunction issued by Branch 214 of the Regional Trial Court of
Mandaluyong City in IP Case No. MC-03-01 and Civil Case No. MC-03-073.
The Regional Trial Court of Mandaluyong City, Branch 214, is directed to continue
expeditiously with the trial to resolve the merits of the case.
SO ORDERED.
Puno, C.J., Corona, Leonardo-de Castro and Bersamin, JJ., concur.

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 Footnotes
1. Under Rule 45 of the Rules of Court.
2. Penned by Associate Justice Andres B. Reyes, Jr. with Associate Justices Buenaventura
J. Guerrero and Rosmari D. Carandang, concurring.
3. Penned by Associate Justice Andres B. Reyes, Jr. with Associate Justices Buenaventura
J. Guerrero and Rosmari D. Carandang, concurring.
4. Penned by Judge Edwin D. Sorongon.
5. Rollo, Vol. I, p. 541.
6. Id. at 12-15.
7. Id.
8. Id. at 16.
9. Rollo, Vol. I, pp. 16-18; rollo, Vol. II, p. 1028.
10. Rollo, Vol. II, p. 1029.
11. Id. at 1029-1030.
12. Rollo, Vol. I, p. 20.
13. Id. at 19-21.
14. Id. at 227.
15. Id. at 21.
16. Id. at 22.
17. Id. at 25.
18. Id. at 541.
19. Id. at 25-26.
20. Id. at 26.
21. Id. at 126, 132.
22. Id. at 226.
23. Id. at 226-227.
24. Id. at 538.
25. Id.
26. Id. at 538-539.
27. Id. at 539.
28. Id. at 540.
29. Id. at 541.
30. Id. at 103-104.
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 31. Id. at 111.
32. Id. at 124-125.
33. Id. at 125-126.
34. Del Rosario v. Court of Appeals, 325 Phil. 424, 431 (1996).
35. Kho v. Court of Appeals, 429 Phil. 140, 150 (2002).
36. Rollo, Vol. II, p. 1487.
37. Section 123. Registrability. — 123.1. A mark cannot be registered if it:
xxx xxx xxx

(h) Consists exclusively of signs that are generic for the goods or services that they seek
to identify;

xxx xxx xxx

38. An Act Prescribing the Intellectual Property Code and Establishing the Intellectual
Property Office, Providing for its Powers and Functions, and for other Purposes.
Approved on 6 June 1997 and took effect on 1 January 1998.
39. Section 123. Registrability. — 123.1. A mark cannot be registered if it:

xxx xxx xxx

(j) Consists exclusively of signs or of indications that may serve in trade to designate the
kind, quality, quantity, intended purpose, value, geographical origin, time or production of
the goods or rendering of the services, or other characteristics of the goods or services;

40. Section 123.2. As regards signs or devices mentioned in paragraphs (j), (k), and (l),
nothing shall prevent the registration of any such sign or device which has become
distinctive in relation to the goods for which registration is requested as a result of the
use that have been made of it in commerce in the Philippines. The Office may accept as
prima facie evidence that the mark has become distinctive, as used in connection with
the applicant's goods or services in commerce, proof of substantially exclusive and
continuous use thereof by the applicant in commerce in the Philippines for five (5) years
before the date on which the claim of distinctiveness is made.

41. Rollo, Vol. II, pp. 1444-1445.

42. Id. at 1448-1449.
43. Id. at 1449.
44. Id. at 1463-1464.
45. Id. at 1465-1466.
46. Id. at 1508, 1514, 1610, 1614, 1617, 1620.
San Miguel's Certificate of Registration No. 7484 for the mark "Ginebra San Miguel"
says, "The word "Ginebra" is disclaimed apart from the mark as shown". Certificate of
Registration No. 42568 for the trademark "Ginebra San Miguel" says: "Applicant
disclaimed the word "Ginebra" apart from the mark as shown". Certificate of Registration
No. 53688 for the mark "Ginebra S. Miguel 65" says: "The word Ginebra 65 is
disclaimed". Certificate of Registration No. 4-1996-113597 for the mark "La Tondeña
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 Cliq! Ginebra Mix & Stylized Letters Ltd. With crown device inside a rectangle" disclaimed
the words "Ginebra Mix".

47. Id. at 1537.

48. Id. at 1579-1580.
49. Id. at 1510-1511.
50. Id. at 1581-1582.
51. G.R. No. 138900, 20 September 2005, 470 SCRA 236.

52. Id. at 253.

53. G.R. No. 103543, 5 July 1993, 224 SCRA 437, 448.
54. Id. at 449.
55. 415 Phil. 365, 374-375 (2001).

56. Rollo, Vol. II, p. 1590.

57. Id. at 1497.
58. Id. at 1440.
59. 445 Phil. 369, 383-384 (2003), citing Gov. Garcia v. Hon. Burgos, 353 Phil. 740 (1998).

60. G.R. No. 53772, 4 October 1990, 190 SCRA 295, 305.

61. Section 156.1. The owner of a registered mark may recover damages from any person
who infringes his rights, and the measure of the damages suffered shall be either the
reasonable profit which the complaining party would have made, had the defendant not
infringed his rights, or the profit which the defendant actually made out of the
infringement, or in the event such measure of damages cannot be readily ascertained
with reasonable certainty, then the court may award as damages a reasonable
percentage based upon the amount of gross sales of the defendant.
62. Rollo, Vol. II, pp. 1584-1585.
63. Rollo, Vol. I, p. 307.
San Miguel's prayer in the Complaint filed with the trial court includes:
xxx xxx xxx

f. ordering the Defendant to pay Plaintiff:

i) damages in either the amount equal to double all profits made out of the sale and
distribution of "Ginebra Kapitan" and/or of Defendant's other gin products bearing the
mark "Ginebra", the reasonable profit which Plaintiff would have made had Defendant
not violated its intellectual property rights, or a reasonable percentage determined by this
Honorable Court based upon the gross sales of Defendant's infringing and/or unfairly
competing products, as well as other pecuniary loss, estimated to be at least
P25,000,000.00.
ii) exemplary damages in an amount not less than P75,000,000.00

iii) Attorney's fees and expenses of litigation in an amount not less than P1,000,000.00;
and
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 iv) Costs of suits.

64. Rollo, Vol. II, pp. 1490-1491.

65. Id. at 1494.
66. Supra note 51 at 256-257.
67. G.R. No. 48603, 29 September 1989, 178 SCRA 76, 87.

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