G.R. No. L-30266 - Universal Rubber Products, Inc. vs. Court of Appeals

Case Summary (G.R. No. L-30266)

Factual Background

The underlying suit was filed by CONVERSE RUBBER CORPORATION and EDWARDSON MANUFACTURING CO., INC. against UNIVERSAL RUBBER PRODUCTS, INC. for unfair competition and damages. During trial before HON. PEDRO C. NAVARRO, Judge of the Court of First Instance of Rizal, private respondents requested issuance of a subpoena duces tecum directed to the treasurer of petitioner to produce "all sales invoices, sales books and ledgers wherein are recorded the sales of Plymouth Star Player rubber shoes from the time the corporation started manufacturing and selling said shoes up to the present." The subpoena was issued on February 13, 1968, commanding production on February 26, 1968 and March 8, 1968.

Trial Court Proceedings

On March 4, 1968, UNIVERSAL RUBBER PRODUCTS, INC. filed a motion to quash the subpoena duces tecum on grounds that the documents were numerous and voluminous, that no good cause had been shown, and that the books were not relevant. The trial court denied the motion by order dated May 6, 1968, and later denied a motion for reconsideration by order dated June 28, 1968.

Proceedings in the Court of Appeals

Petitioner filed a petition for certiorari with preliminary injunction on August 6, 1968, alleging grave abuse of discretion by the trial judge in refusing to quash the subpoena duces tecum. The Court of Appeals issued a temporary restraining order on September 25, 1968 enjoining implementation of the trial court's May 6, 1968 order, but thereafter, according to the record, the respondent court rendered its decision denying the petition for certiorari for lack of merit.

Issues Presented

The petition framed three assignments of error: the Court of Appeals erred in finding that the petition and annexes did not demonstrate clear abuse of discretion; the issuance of the subpoena duces tecum was an arbitrary exercise of judicial power; and the subpoena constituted a fishing bill and should have been quashed. More broadly, the Court was called upon to decide whether issuance of a subpoena duces tecum for corporate sales records is proper in a suit for unfair competition.

Parties' Contentions

Petitioner urged that liability for unfair competition should be determined before discovery for accounting is permitted; that respondent CONVERSE RUBBER CORPORATION was a foreign corporation not licensed to do business in the Philippines and had no registrable goodwill; and that the subpoena was an improper fishing bill. Private respondents contended that the subpoena was specific in designating the books to be produced and that those sales records were essential and relevant to ascertain damages or defendant's profits under Sec. 23, R.A. 166.

Applicable Legal Principles

The Court cited established principles that a party seeking issuance of a subpoena duces tecum must show by clear and unequivocal proof that the document sought contains relevant and material evidence and must describe the precise book or document with sufficient particularity. The Court also noted that a subpoena duces tecum may be quashed if its issuance is unreasonable or oppressive, if relevancy does not appear, or if the moving party fails to advance reasonable costs, invoking Sec. 4, Rule 23, Revised Rules of Court and the cited precedents Arnaldo v. Locsin; People v. Topacio and Santiago; and Liebenow v. Philippine Vegetable Oil Co.

Court's Analysis on Unfair Competition and Damages

The Court observed that in trademark infringement and unfair competition actions an accounting and recovery of the defendant's profits are incident to relief, and that equity may require the wrongdoer to account for gains akin to a trustee's liability for profits. Interpreting Sec. 23, R.A. 166, the Court explained that the statute affords three alternative measures of damages: reasonable profit the complainant would have made absent infringement; the profit the defendant actually made from the infringement; or, where these cannot be ascertained with reasonable certainty, a reasonable percentage based on the defendant's gross sales. The Court held that production of defendant's sales records is therefore relevant and material in such suits to permit calculation of damages under the statutory alternatives.

Court's Ruling on the Subpoena and Related Arguments

The Court found the description of the books in the subpoena to be sufficiently particular and therefore not subject to quashal on that ground. It rejected petitioner's argument that liability must be established before an accounting may proceed, reasoning that the complaint for unfair competition seeks both injunction and damages and that permitting discovery for accounting during the suit vindicates the remedy Congress provided in Sec. 23, R.A. 166. The Court also addressed petitioner's contention that responde

Case Syllabus (G.R. No. L-30266)

Parties and Procedural Posture

Universal Rubber Products, Inc. was the petitioner and defendant in the trial court action for unfair competition.
The respondents included Converse Rubber Corporation, Edwardson Manufacturing Co., Inc., and Hon. Pedro C. Navarro as the trial judge.
Private respondents prosecuted a civil suit for unfair competition and sought a subpoena duces tecum requiring production of the petitioner's sales invoices, sales books, and ledgers for Plymouth Star Player rubber shoes.
The trial court issued the subpoena duces tecum dated February 13, 1968, directing production on February 26, 1968 and March 8, 1968.
Petitioner filed a motion to quash the subpoena on March 4, 1968, which the trial court denied by order dated May 6, 1968, and denied reconsideration on June 28, 1968.
Universal Rubber Products, Inc. filed a petition for certiorari with preliminary injunction in the Court of Appeals on August 6, 1968, and the Court of Appeals issued a temporary restraining order on September 25, 1968.
The Court of Appeals rendered a decision denying the petition for certiorari for lack of merit on November 12, 1966, as reflected in the record.
The Supreme Court, through Guerr ero, J., considered the petition but ultimately dismissed it as moot and academic.

Key Facts

Private respondents presented about nine witnesses and various documentary evidence before requesting the subpoena duces tecum.
The subpoena specifically described the records as "all sales invoices, sales books and ledgers wherein are recorded the sales of Plymouth Star Player rubber shoes from the time the corporation started manufacturing and selling said shoes up to the present."
Petitioner argued that the subpoena was unreasonable and oppressive because the books were numerous and voluminous, that no good cause existed for issuance, and that the records were irrelevant to the case.
Petitioner later manifested on April 2, 1977 that its establishment had completely burned on May 3, 1970, together with all records responsive to the subpoena.
Private respondents asserted that the books were necessary to establish the defendant's profits and to compute damages under the statutory remedy for unfair competition.

Issues Presented

Whether issuance of the subpoena duces tecum was proper in a suit for unfair competition.
Whether the subpoena duces tecum was an unreasonable, oppressive, or fishing subpoena subject to quashal.
Whether the complainant must first secure a finding of liability before discovery for accounting may proceed.
Whether the foreign status or licensing of Converse Rubber Corporation affected its right to seek relief in the Philippines.

Contentions

Petitioner contended that the Court of Appeals erred in finding no clear abuse of discretion by the trial judge and that the subpoena amounted to an arbitrary exercise of judicial power and a fishing bill.
Petitioner further contended that liability should be determined prior to any discovery for accounting and that Converse Rubber Corporation lacked capacity as an unlicensed foreign corporation and lacked goodwill.
Private respondents contended that the subpoena was specifically and sufficiently describ