Case Summary (G.R. No. 257608)
Undisputed Factual Background
Respondents, as owners/proprietors of the marks “Rolex” and the crown device, filed a trademark infringement suit and an application for injunctive relief against petitioner 246 Corporation, alleging the latter’s unauthorized use of “Rolex” in its business name and advertisements (“Rolex Music Lounge, KTV, Disco & Party Club”). Petitioner answered, raising special affirmative defenses including lack of cause of action because petitioner’s entertainment services are unrelated to respondents’ goods (watches, clocks, bracelets and parts), and challenged the verification and certification against forum shopping on the ground that Atty. Alonzo Ancheta, who signed those averments for respondents, was not authorized. Petitioner moved for a preliminary hearing on its affirmative defenses; a subpoena ad testificandum was issued for Atty. Ancheta; respondents filed a Comment/Opposition and a motion to quash the subpoena. The trial court quashed the subpoena and denied the motion for preliminary hearing with motion to dismiss; denial of reconsideration followed. Petitioner sought certiorari relief in the Court of Appeals, which dismissed the petition and denied reconsideration; the Supreme Court review followed.
Petitioner’s Principal Grounds for Review
Petitioner’s certiorari petition to the Supreme Court asserted that: (I) the Court of Appeals disregarded controlling precedents (Esso Standard Eastern and related cases) holding that no infringement occurs where parties deal in totally unrelated goods/services; (II) the CA wrongly treated the issues as questions of fact, depriving petitioner of substantive due process and conflicting with the rule that allegations of a complaint are hypothetically admitted when a motion to dismiss is grounded on lack of cause of action; (III) the CA erred in finding the trial court denied only the motion for preliminary hearing and not the motion to dismiss per se; (IV) the CA incorrectly ruled that Atty. Ancheta properly verified and certified the complaint despite absence of a special power of attorney, violating separate corporate personality and depriving the trial court of jurisdiction over respondents; and (V) the CA wrongly affirmed the quashal of the subpoena ad testificandum directed at Atty. Ancheta, allegedly violating Sections 9, Rule 132 and 7, Rule 133 of the 1989 Revised Rules on Evidence and controlling case law (People v. Rivera).
Issues Framed by the Court
The Supreme Court distilled the controversy into three primary issues: (1) whether the trial court’s October 27, 2000 order denied both the motion for preliminary hearing on affirmative defenses and the motion to dismiss per se; (2) if so, whether the trial court gravely abused its discretion in denying those motions; and (3) whether the trial court gravely abused its discretion in quashing the subpoena ad testificandum issued against Atty. Ancheta.
Supreme Court Finding on What the Trial Court Denied
The Supreme Court found that the trial court’s order clearly denied both the motion for preliminary hearing on affirmative defenses and the motion to dismiss the complaint based on said defenses. The dispositive portion of the order was quoted: “...the aforecited Motion For Preliminary Hearing On Defendant’s Affirmative Defenses With Motion To dismiss The Instant Complaint Based On Said Affirmative Defenses is denied.” The Court applied the presumption that matters raised within an issue were passed upon by the trial court absent evidence to the contrary.
Legal Standard on Preliminary Hearings and Trademark Inquiry
The Court explained that a preliminary hearing on affirmative defenses is discretionary under both the prior and current Rules of Civil Procedure. Under the 1997 Rules, Rule 16, Section 6 expressly provides that where no motion to dismiss has been filed, pleading grounds as affirmative defenses may be presented and, “in the discretion of the court,” a preliminary hearing may be had as if a motion to dismiss had been filed. The Supreme Court therefore concluded that the trial court acted within its discretion in denying petitioner’s request for a preliminary hearing. With respect to trademark law, the Court noted that under the old Trademark Law identical marks used on unrelated goods generally do not give rise to infringement (citing Esso Standard Eastern and related cases). However, Section 123.1(f) of the Intellectual Property Code (RA No. 8293) modifies that rule by precluding a junior user from using a well-known mark on unrelated goods or services when (1) the mark is well-known internationally and in the Philippines; (2) such use would indicate a connection between the unrelated goods/services and the owner of the registered mark; and (3) the interests of the owner of the registered mark are likely to be damaged by such use.
Section 123.1(f) and the Need for Full Trial on Factual Questions
The Court examined Section 123.1(f) and Rule 102 criteria for determining whether a mark is well-known (enumerating factors (a) through (l) including duration, market share, acquired distinctiveness, registration history, litigation outcomes, etc.). The Supreme Court concluded that the application of Section 123.1(f) involves fact-intensive inquiries—e.g., whether the mark is well-known in the Philippines, whether the use of the mark by the junior user indicates a connection, and whether the reg
...continue readingCase Syllabus (G.R. No. 257608)
Case Caption and Procedural Posture
- Petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure (G.R. No. 157216, November 20, 2003) assailing the Court of Appeals' November 28, 2002 Decision in CA-G.R. SP No. 64660 dismissing petitioner’s certiorari petition, and the Court of Appeals' Resolution dated February 13, 2003 denying petitioner’s motion for reconsideration.
- Trial court: Regional Trial Court of Quezon City, Branch 90, Presiding Judge Hon. Reynaldo B. Daway.
- Trial court docketed civil action: Civil Case No. Q-98-36172 (complaint for trademark infringement and damages with prayer for issuance of restraining order or writ of preliminary injunction).
- Court of Appeals opinion authored by Associate Justice Romeo A. Brawner, concurred in by Associate Justices Bienvenido L. Reyes and Danilo B. Pine (per footnote [1]).
- Petition to the Supreme Court authored by Justice Ynares‑Santiago; judgment rendered November 20, 2003, with concurrence by Chief Justice Davide, Jr., and Justices Panganiban, Carpio and Azcuna.
Factual Background
- On November 26, 1998, respondents Montres Rolex S.A. and Rolex Centre Phil., Limited filed a complaint against petitioner 246 Corporation for trademark infringement and damages, alleging use of the mark "Rolex" in petitioner’s business name “Rolex Music Lounge” and in newspaper advertisements reading “Rolex Music Lounge, KTV, Disco & Party Club.”
- Respondents alleged petitioner adopted and had been using the mark without authority since about July 1996.
- Petitioner, in its answer raising special affirmative defenses, contended:
- There was no trademark infringement because petitioner’s entertainment business (music lounge/KTV/disco/party club) was totally unrelated to respondents’ goods (watches, clocks, bracelets and parts), and therefore no likelihood of confusion would arise.
- The complaint was not properly verified and certified against forum shopping, asserting that Atty. Alonzo Ancheta, who signed the verification and certification, was not authorized to represent respondents.
- On July 21, 2000, petitioner filed a motion for preliminary hearing on its affirmative defenses (to have a hearing as if a motion to dismiss had been filed).
- The trial court issued a subpoena ad testificandum requiring Atty. Alonzo Ancheta to appear at the preliminary hearing.
- Respondents filed a Comment and Opposition to petitioner’s motion for preliminary hearing and a motion to quash the subpoena ad testificandum.
- In an Order dated October 27, 2000, the trial court granted respondents’ motion to quash the subpoena ad testificandum and denied petitioner’s motion for preliminary hearing on affirmative defenses with motion to dismiss the complaint (Order dispositive quoted in the opinion).
- Petitioner’s motion for reconsideration was denied on March 16, 2001.
- Petitioner filed a petition for certiorari with the Court of Appeals contesting the trial court’s October 27, 2000 and March 16, 2001 orders; the Court of Appeals dismissed the petition on November 28, 2002; petitioner’s motion for reconsideration at the CA was denied (Resolution dated February 13, 2003).
Issues Presented to the Supreme Court
- Whether the trial court’s October 27, 2000 Order denied only the motion for preliminary hearing on affirmative defenses or also denied petitioner’s motion to dismiss per se.
- If the October 27, 2000 Order denied the motion to dismiss per se, whether the trial court gravely abused its discretion in denying said motions.
- Whether the trial court gravely abused its discretion in quashing the subpoena ad testificandum issued against Atty. Alonzo Ancheta.
Petitioner’s Main Grounds (as raised in the petition)
- Ground I: The Court of Appeals purportedly perfunctorily disregarded controlling precedents (Esso Standard Eastern, Inc. v. Court of Appeals and United Cigarette Corporation and companion cases) holding that no trademark infringement occurs where contending parties deal with totally unrelated and non-competing goods and services.
- Ground II: The Court of Appeals allegedly erred in arbitrarily and capriciously holding that the issues raised were questions of fact, thereby violating petitioner’s substantive due process and the rule that allegations of the complaint are hypothetically admitted when a motion to dismiss is grounded upon lack of cause of action; petitioner also asserts that facts in respondents’ pleadings impliedly show lack of cause of action.
- Ground III: The Court of Appeals allegedly violated petitioner’s substantive due process by concluding that the October 20, 2000 order denied only the motion for preliminary hearing and not the motion to dismiss per se; petitioner argues the order did in fact constitute a denial on the merits of the motion to dismiss per se and that respondents’ Comment and Opposition traversed the merits of the motion to dismiss.
- Ground IV: The Court of Appeals allegedly violated petitioner’s substantive due process and the doctrine of separate corporate personality by ruling that Atty. Alonzo Ancheta properly verified and certified respondents’ complaint despite absence in the record of any special power of attorney authorizing him to represent Montres Rolex S.A.; petitioner contends that respondents did not voluntarily appear and that the trial court therefore lacked jurisdiction over respondents’ person.
- Ground V: The Court of Appeals allegedly erred in affirming the quashal of the subpoena against Atty. Ancheta, thereby violating petitioner’s rights and specific provisions of the rules of evidence (Section 9, Rule 132 and Section 7, Rule 133 of the 1989 Revised Rules on Evidence) and the Supreme Court’s ruling in People v. Rivera.
Trial Court Disposition and Language of Order
- Trial court’s dispositive language (quoted in the opinion) reads:
"IN VIEW OF THE FOREGOING, the aforecited Motion To Quash Subpoena Ad Testificandum is granted; and the aforecited Motion For Preliminary Hearing On Defendant's Affirmative Defenses With Motion To dismiss The Instant Complaint Based On Said Affirmative Defenses is denied." (Emphasis supplied in the source). - Trial court stated it had “carefully going over the pleadings” and found the arguments in the motion and the reply to be meritorious on one hand, and the arguments in the comments and opposition and rejoinder by plaintiffs likewise meritorious on the other, indicating the court ruled on the merits.
Supreme Court’s Findings on Whether the Motion to Dismiss Was Denied
- The Supreme Cour