February 11, 2016

The Supreme Court rejected a request to lift a permanent injunction banning the sale of ZYNAPS, an anti-convulsant drug for epilepsy.  In a Petition for Review seeking to set aside a Court of Appeals’ decision permanently enjoining the sale of ZYNAPS, the Supreme Court ruled that the issue has become moot in view of the trial court’s decision on the merits of a trademark infringement case.  This is an important procedural case regarding the effect of a final decision on the merits when there is a pending appeal on an ancillary writ such as those involving a temporary restraining order or preliminary injunction.

The case originated from a complaint filed by Natrapharm, Inc., a local pharmaceutical company, which manufactures and sells a medicine for heart and stroke patients under the “ZYNAPSE” trademark.  Natrapharm filed a case against Zuneca Pharmaceutical, the distributor of ZYNAPS, for trademark infringement with a prayer for a temporary restraining order or a writ for preliminary injunction.  In its Answer, Zuneca alleged that it was the first to use the mark “ZYNAPS” based on a product registration issued in 2003.  On the other hand, Natrapharm only obtained its trademark registration for “ZYNAPSE” in 2007.

The Regional Trial Court (RTC) initially rejected Natrapharm’s application for a temporary restraining order (TRO) or writ of preliminary injunction.  The Court of Appeals (CA) affirmed that decision noting that there was no showing that Natrapharm had a clear and existing right that will be violated by Zuneca’s continued sale of “ZYNAPS”.  Thereafter, despite the CA’s earlier resolution denying Natrapharm’s application for a TRO or writ of preliminary injunction, the CA issued a decision upholding the allegations of Natrapharm that it is entitled to injunctive relief on the basis of its trademark registration and permanently enjoined Zuneca from commercial use of “ZYNAPS”.  Zuneca then filed a motion for reconsideration, which was denied.  Hence, this present Petition for Review.

While the Petition for Review is pending, the RTC issued a decision adjudicating the merits of the main issue of trademark infringement in favor of Natrapharm and permanently enjoined Zuneca from using “ZYNAPS”.  Because of this decision, Natrapharm argued that the present Petition for Review is now moot as it involved an ancillary writ and the RTC has now issued a decision on the merits and permanently enjoined Zuneca.

The Supreme Court agreed with Natrapharm.  It found that the issue raised in the Petition for Review has been rendered moot by the RTC’s decision on the merits.  The Supreme Court reasoned that the present Petition for Review stemmed from a denial of a preliminary injunction, which like any interlocutory order cannot survive the main case of which it is incident because an ancillary writ of preliminary injunction loses its force and effect after a decision on the main issues of the case.  The Court cited the case of Casilan v. Ybanez for the proposition that it can no longer review the present Petition because “no action can be taken thereon without reviewing the judgment on the merits.”

The Court said that the present Petition stems from an interlocutory appeal involving the denial of an application for preliminary injunction, which is a mere ancillary writ.  As such, since a decision on the merits has been rendered, which includes in its disposition a permanent injunction, the Court can no longer issue a ruling on the Petition.  The proper remedy now is an appeal from the decision in the main case, which has already been filed and currently pending.  Therefore, the Supreme Court denied the Petition for Review as moot.

This case illustrates the procedural effect when there is an appeal on the issuance of an ancillary writ and while such appeal is pending, a final judgment on the merits of the main case is issued by the trial court.  The issue on the interlocutory appeal becomes moot, and the proper recourse for the losing party is an appeal on the final decision.  Such situation presents a dilemma to litigants who are contemplating on pursuing an appeal that is ancillary to the main issue, when there is a possibility that a judgement on the merits will be issued in the main case.  Litigants will therefore have to weigh the risk of continuing with such an interlocutory appeal, against the possibility that such appeal will become moot.  With court delays still being a common experience for all litigants, this presents a difficult balancing act especially when the interlocutory order involves a high stake issue like an injunction that suspends the sales of a party’s goods.