PHILIPPINE SUPREME
COURT
DECISIONS
FIRST DIVISION
246 CORPORATION,
DOING BUSINESS UNDER THE NAME
AND STYLE OF ROLEX
MUSIC LOUNGE,
Petitioner,
G.R.
No.
157216
November 20, 2003
-versus-
HON. REYNALDO B.
DAWAY, IN HIS CAPACITY AS PRESIDING JUDGE
OF BRANCH 90 OF
THE REGIONAL TRIAL OF QUEZON CITY,
MONTES ROLEX S.A.
AND ROLEX CENTRE PHIL. LIMITED,
Respondents.
D E C I S I O N
YNARES-SANTIAGO,
J.:chanroblesvirtuallawlibrary
This is a Petition
for Review on Certiorari under Rule 45 of the 1997
Rules of Civil Procedure assailing the November 28, 2002 Decision[1]
of the Court of Appeals in CA-G.R. SP No. 64660 which dismissed the
petition
for certiorari filed by petitioner, as well as the Resolution[2]
dated February 13, 2003 denying its motion for reconsideration.chanrobles virtuallaw libraryred
The undisputed facts
show that on November 26, 1998, respondents Montres Rolex S.A. and
Rolex
Centre Phil., Limited, owners/proprietors of Rolex and Crown Device,
filed
against petitioner 246 Corporation the instant suit for trademark
infringement
and damages with prayer for the issuance of a restraining order or writ
of preliminary injunction[3]
before the Regional Trial Court of Quezon City, Branch 90. Respondents
alleged that sometime in July 1996, petitioner adopted and, since then,
has been using without authority the mark "Rolex" in its business name
"Rolex Music Lounge" as well as in its newspaper advertisements as:
"Rolex
Music Lounge, KTV, Disco & Party Club."chanrobles virtuallaw libraryred
In its answer raising
special affirmative defenses, petitioner argued that respondents have
no
cause of action because no trademark infringement exist; that no
confusion
would arise from the use by petitioner of the mark "Rolex" considering
that its entertainment business is totally unrelated to the items
catered
by respondents such as watches, clocks, bracelets and parts thereof. It
also contended that the complaint was not properly verified and
certified
against forum shopping considering that Atty. Alonzo Ancheta, the
counsel
of record of respondents who signed the verification and certification,
was not authorized to represent respondents.[4]chanrobles virtuallaw libraryred
On July 21, 2000, petitioner
filed a motion for preliminary hearing on its affirmative defenses.[5]
Subsequently, on motion of petitioner, the trial court issued a
subpoena
ad testificandum requiring Atty. Alonzo Ancheta to appear at the
preliminary
hearing.[6]
Respondents, in the meantime, filed a Comment and Opposition[7]
to the motion for preliminary hearing and a motion to quash the
subpoena
ad testificandum.chanrobles virtuallaw libraryred
In an Order dated October
27, 2000, the trial court quashed the subpoena ad testificandum and
denied
petitioner's motion for preliminary hearing on affirmative defenses
with
motion to dismiss.[8]chanrobles virtuallaw libraryred
With the denial of the
motion for reconsideration on March 16, 2001, petitioner filed a
petition
for certiorari with the Court of Appeals contending that the trial
court
gravely abused its discretion in issuing the October 27, 2000 and March
16, 2001 orders.chanrobles virtuallaw libraryred
On November 28, 2002,
the Court of Appeals dismissed the petition. The motion for
reconsideration
filed by petitioner was denied. Hence, the instant petition anchored on
the following grounds:chanrobles virtuallaw libraryred
I
IN ISSUING THE
ASSAILED
DECISIONS, THE HONORABLE COURT OF APPEALS PERFUNCTORILY BRUSHED ASIDE
THE
CONTROLLING PRECEDENTS LAID DOWN BY THIS HONORABLE COURT IN ESSO
STANDARD
EASTERN, INC. VS. COURT OF APPEALS AND UNITED CIGARETTE CORPORATION AND
OTHER COMPANION CASES HOLDING THAT NO TRADEMARK INFRINGEMENT CAN
POSSIBLY
OCCUR WHERE THE CONTENDING PARTIES DEAL WITH GOODS AND SERVICES THAT
ARE
TOTALLY UNRELATED AND NON-COMPETING WITH EACH OTHER.chanrobles virtuallaw libraryred II
IN ARBITRARILY AND
CAPRICIOUSLY
RULING THAT THE ISSUES RAISED IN PETITIONER'S CERTIORARI PETITION ARE
QUESTIONS
OF FACT, THE HONORABLE COURT OF APPEALS VIOLATED NOT ONLY PETITIONERS
SUBSTANTIVE
DUE PROCESS RIGHTS BUT ALSO THE WELL-SETTLED RULE THAT THE ALLEGATIONS
OF THE COMPLAINT IS HYPOTHETICALLY ADMITTED WHEN THE MOTION TO DISMISS
IS GROUNDED UPON LACK OF CAUSE OF ACTION. MOREOVER, INDEPENDENT OF THE
HYPOTHETICALLY ADMITTED FACTS EMBODIED IN THE COMPLAINT A QUO, THERE
ARE
SELF-EVIDENT FACTS AND IMPLIEDLY ADMITTED FACTS CONTAINED IN PRIVATE
RESPONDENTS'
PLEADINGS THAT WOULD CLEARLY AND UNMISTAKABLY SHOW PRIVATE RESPONDENTS'
LACK OF CAUSE OF ACTION AGAINST HEREIN PETITIONER.chanrobles virtuallaw libraryred III
THE HONORABLE
COURT
OF APPEALS VIOLATED PETITIONER'S RIGHT TO SUBSTANTIVE DUE PROCESS WHEN
IT ARBITRARILY AND CAPRICIOUSLY RULED THAT WHAT WAS SPECIFICALLY DENIED
IN THE ASSAILED OCTOBER 20, 2000 ORDER IS PETITIONER'S MOTION FOR
PRELIMINARY
HEARING ON DEFENDANT'S AFFIRMATIVE DEFENSES AND NOT PETITIONER'S MOTION
TO DISMISS PER SE CONSIDERING THAT:chanrobles virtuallaw libraryred
A. THERE
IS
ABSOLUTELY NOTHING IN THE ORDER DATED OCTOBER 20, 2000 OF RESPONDENT
JUDGE
WHICH SUGGESTS THAT THE RESOLUTION OF PETITIONER'S MOTION TO DISMISS
PER
SE WAS HELD IN ABEYANCE BY THE RESPONDENT JUDGE. HENCE THE SAID ORDER
DATED
OCTOBER 20, 2000 ALSO CONSTITUTES A DENIAL ON THE MERITS OF
PETITIONER'S
MOTION TO DISMISS PER SE AND NOT MERELY OF PETITIONER'S MOTION FOR
PRELIMINARY
HEARING THEREON.
B. PRIVATE
RESPONDENTS'
COMMENT AND OPPOSITION DATED 11 AUGUST 2000, WHICH WAS CITED AND
SUSTAINED
BY RESPONDENT JUDGE, CLEARLY TRAVERSED THE MERITS OF THE GROUNDS FOR
PETITIONER'S
MOTION TO DISMISS PER SE. HENCE, THE SAID 20 OCTOBER 2000 ORDER'S
DENIAL
OF PETITIONER'S MOTION IS NOT LIMITED TO THE MOTION FOR PRELIMINARY
HEARING
BUT ALSO CONSTITUTES A DENIAL OF PETITIONER'S MOTION TO DISMISS PER SE.chanrobles virtuallaw libraryred IV
IN ARBITRARILY AND
CAPRICIOUSLY
RULING THAT ATTY. ALONZO ANCHETA PROPERLY VERIFIED AND CERTIFIED
PRIVATE
RESPONDENTS' COMPLAINT A QUO, THE HONORABLE COURT OF APPEALS VIOLATED
NOT
ONLY PETITIONER'S SUBSTANTIVE DUE PROCESS RIGHTS, BUT ALSO THE DOCTRINE
OF SEPARATE CORPORATE PERSONALITY; CONSIDERING THAT THE RECORDS OF THIS
CASE IS (sic) COMPLETELY BEREFT AND DEVOID OF ANY DULY EXECUTED SPECIAL
POWER OF ATTORNEY, EMANATING FROM PRIVATE RESPONDENTS, WHICH EXPLICITLY
AND SPECIFICALLY AUTHORIZES ATTY. ALONZO ANCHETA TO REPRESENT PRIVATE
RESPONDENTS
MONTRES ROLEX S.A. IN THE FILING OF THE COMPLAINT A QUO. BY REASON
THEREOF,
PRIVATE RESPONDENTS COULD NOT BE DEEMED TO HAVE VOLUNTARILY APPEARED
BEFORE
THE RESPONDENT JUDGE; CONSEQUENTLY, THE TRIAL COURT COULD NOT HAVE
VALIDLY
ACQUIRED JURISDICTION OVER THE PERSON OF PRIVATE RESPONDENTS.chanrobles virtuallaw libraryred V
IN ARBITRARILY AND
CAPRICIOUSLY
AFFIRMING RESPONDENT JUDGE'S QUASHAL OF THE SUBPOENA DATED 14 AUGUST
2000
DIRECTED AGAINST ATTY. ALONZO ANCHETA, THE HONORABLE COURT OF APPEALS
VIOLATED
NOT ONLY PETITIONER'S SUBSTANTIVE DUE PROCESS RIGHTS, BUT ALSO SECTION
9, RULE 132 AND SECTION 7 RULE 133 OF THE 1989 REVISED RULES ON
EVIDENCE,
AND THE RULING OF THIS HONORABLE COURT IN THE CASE OF PEOPLE VS. RIVERA.[9]chanrobles virtuallaw libraryred
Simply put, the issues
are as follows: (1) whether the trial court denied not only
petitioner's
motion for preliminary hearing on its affirmative defenses but its
motion
to dismiss as well; (2) if the answer is in the affirmative, whether or
not the trial court gravely abused its discretion in denying said
motions;
and (3) whether the trial court gravely abused its discretion in
quashing
the subpoena ad testificandum issued against Atty. Ancheta.chanrobles virtuallaw libraryred
Anent the first issue,
we find that what was denied in the order dated October 27, 2000 was
not
only the motion for preliminary hearing but the motion to dismiss as
well.
A reading of the dispositive portion of said order shows that the trial
court neither qualified its denial nor held in abeyance the ruling on
petitioner's
motion to dismiss thus:chanrobles virtuallaw libraryred
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.[10]
(Emphasis
supplied.)chanrobles virtuallaw libraryred
In issuing the assailed
order, the trial court ruled on the merits of petitioner's Motion to
Dismiss
vis-à-vis respondents' Comment and Opposition which clearly
traversed
the affirmative defenses raised by petitioner, to wit:chanrobles virtuallaw libraryred
After
carefully
going over the pleadings, this Court finds, on the first motion that
the
arguments raised in the said motion and the reply filed in connection
thereto
appear to be meritorious; and on the second motion, that the arguments
raised in the comments and opposition and the rejoinder filed by the
plaintiffs
likewise appear to be meritorious.[11]chanrobles virtuallaw libraryred
Moreover, it is
presumed
that all matters within an issue raised in a case were passed upon by
the
court. In the absence of evidence to the contrary, the presumption is
that
the court a quo discharged its task properly.[12]chanrobles virtuallaw libraryred
In Municipality of
Biñan
Laguna v. Court of Appeals,[13]
decided under the old Rules of Civil Procedure, it was held that a
preliminary
hearing permitted under Rule 16, Section 5, is not mandatory even when
the same is prayed for. It rests largely on the sound discretion of the
trial court, thus-chanrobles virtuallaw libraryred
Sec. 5.
Pleading
grounds as affirmative defenses.- Any of the grounds for dismissal
provided
for in this Rule, except improper venue, may be pleaded as an
affirmative
defense, and a preliminary hearing may he had thereon as if a motion to
dismiss had been filed. (Emphasis supplied.)
The use of the word
"may"
in the aforequoted provision shows that such a hearing is not a matter
of right demandable from the trial court; it is not mandatory but
discretionary.
"May" is an auxiliary verb indicating liberty, opportunity, permission
and possibility.[14]
Such interpretation is specifically stated under the 1997
Rules of Civil Procedure. Rule 16, Section 6, now provides that a
grant
of a preliminary hearing rests on the sound discretion of the court, to
wit:chanroblesvirtuallawlibrary
SEC. 6.
Pleading
grounds as affirmative defenses. — If no motion to dismiss has been
filed,
any of the grounds for dismissal provided for in this Rule may be
pleaded
as an affirmative defense in the answer and, in the discretion of the
court,
a preliminary hearing may be had thereon as if a motion to dismiss had
been filed. (Emphasis supplied.) chanrobles virtuallaw libraryred
In the case at bar, the
Court of Appeals did not err in finding that no abuse of discretion
could
be ascribed to the trial court's denial of petitioner's motion for
preliminary
hearing on its affirmative defenses with motion to dismiss. The issue
of
whether or not a trademark infringement exists, is a question of fact
that
could best be determined by the trial court.chanrobles virtuallaw libraryred
Under the old Trademark
Law[15]
where the goods for which the identical marks are used are unrelated,
there
can be no likelihood of confusion and there is therefore no
infringement
in the use by the junior user of the registered mark on the entirely
different
goods.[16]
This ruling, however, has been to some extent, modified by Section
123.1(f)
of the Intellectual Property Code (Republic
Act No. 8293), which took effect on January 1, 1998. The said
section
reads:chanrobles virtual law library
Sec. 123.
Registrability.
— 123.1. A mark cannot be registered if it:chanroblesvirtuallawlibrary x
x
x
x x
x
x x x
(f) Is identical
with,
or confusingly similar to, or constitutes a translation of a mark
considered
well-known in accordance with the preceding paragraph, which is
registered
in the Philippines with respect to goods or services which are not
similar
to those with respect to which registration is applied for: Provided,
That
use of the mark in relation to those goods or services would indicate a
connection between those goods or services, and the owner of the
registered
mark: Provided, further, That the interest of the owner of the
registered
mark are likely to be damaged by such use; (Emphasis supplied.) chanrobles virtuallaw libraryred
A junior user of a
well-known
mark on goods or services which are not similar to the goods or
services,
and are therefore unrelated, to those specified in the certificate of
registration
of the well-known mark is precluded from using the same on the entirely
unrelated goods or services, subject to the following requisites, to
wit:chanrobles virtuallaw libraryred
1. The mark
is well-known internationally and in the Philippines. Under Rule 102 of
the Rules and Regulations on Trademarks; Service Marks, Trade Names and
Marked or Stamped Containers,[17]
in determining whether a mark is well known, the following criteria or
any combination thereof may be taken into account:chanrobles virtuallaw libraryred
(a) the
duration,
extent and geographical area of any use of the mark, in particular, the
duration, extent and geographical area of any promotion of the mark,
including
advertising or publicity and presentation, at fairs or exhibitions, of
the goods and/or services to which the mark applies;chanrobles virtuallaw libraryred
(b) the market
share
in the Philippines and in other countries, of the goods and/or services
to which the mark applies;
(c) the degree
of the
inherent or acquired distinction of the mark;chanrobles virtuallaw libraryred
(d) the
quality-image
or reputation acquired by the mark;chanrobles virtuallaw libraryred
(e) the extent
to which
the mark has been registered in the world;chanrobles virtuallaw libraryred
(f) the
exclusivity
of the registration attained by the mark in the world;chanrobles virtuallaw libraryred
(g) the extent
to which
the mark has been used in the world;chanrobles virtuallaw libraryred
(h) the
exclusivity
of use attained by the mark in the world;chanrobles virtuallaw libraryred
(i) the
commercial value
attributed to the mark in the world;chanrobles virtuallaw libraryred
(j) the record
of successful
protection of the rights in the mark;chanrobles virtuallaw libraryred
(k) the outcome
of litigations
dealing with the issue of whether the mark is a well-known mark; andchanrobles virtuallaw libraryred
(l) the presence
of
absence of identical or similar marks validly registered for or used on
identical or similar goods or services and owned by persons other than
the person claiming that his mark is a well-known mark.chanrobles virtuallaw libraryred
2. The use of the
well-known
mark on the entirely unrelated goods or services would indicate a
connection
between such unrelated goods or services and those goods or services
specified
in the certificate of registration in the well known mark. This
requirement
refers to the likelihood of confusion of origin or business or some
business
connection or relationship between the registrant and the user of the
mark.chanrobles virtuallaw libraryred
3. The interests
of
the owner of the well-known mark are likely to be damaged. For
instance,
if the registrant will be precluded from expanding its business to
those
unrelated good, or services, or if the interests of the registrant of
the
well-known mark will be damaged because of the inferior quality of the
good or services of the user.[18]chanrobles virtuallaw libraryred
Section 123.1(f) is
clearly
in point because the Music Lounge of petitioner is entirely unrelated
to
respondents' business involving watches, clocks, bracelets, etc.
However,
the Court cannot yet resolve the merits of the present controversy
considering
that the requisites for the application of Section 123.1(f), which
constitute
the kernel issue at bar, clearly require determination facts of which
need
to be resolved at the trial court. The existence or absence of these
requisites
should be addressed in a full blown hearing and not on a mere
preliminary
hearing. The respondent must be given ample opportunity to prove its
claim,
and the petitioner to debunk the same.chanrobles virtuallaw libraryred
The same is true with
respect to the issue of whether Atty. Alonzo Ancheta was properly
authorized
to sign the verification and certification against forum shopping in
behalf
of respondents. This could be properly resolved during the trial
together
with the substantive issues raised by petitioner.chanrobles virtuallaw libraryred
Considering that the
trial court correctly denied petitioner's motion for preliminary
hearing
on its affirmative defenses with motion to dismiss, there exists no
reason
to compel Atty. Ancheta to testify. Hence, no abuse of discretion was
committed
by the trial court in quashing the subpoena ad testificandum issued
against
Atty. Ancheta.chanrobles virtuallaw libraryred
Grave abuse of discretion
implies such capricious and whimsical exercise of judgment as
equivalent
to lack of jurisdiction, or, in other words, where the power is
exercised
in an arbitrary or despotic manner by reason of passion or personal
hostility,
and it must be so patent and gross as to amount to an evasion of
positive
duty or to a virtual refusal to perform the duty enjoined or to act at
all in contemplation of law. None of these was committed by the trial
court;
hence, the Court of Appeals correctly dismissed the petition.chanrobles virtuallaw libraryred
WHEREFORE, in view of
all the foregoing, the petition for review on certiorari filed by
petitioner
is DENIED. The November 28, 2002 Decision and the February 13, 2003
Resolution
of the Court of Appeals in CA-G.R. SP No. 64660 which dismissed the
petition
for certiorari filed by petitioner are AFFIRMED.cralaw:red
SO ORDERED.chanrobles virtuallaw libraryred
Davide, Jr., C.J., Panganiban,
Carpio and Azcuna, JJ., concur.chanrobles virtuallaw libraryred
____________________________
Endnotes:chanroblesvirtuallawlibrary
[1]
Rollo, p. 51, penned by Associate Justice Romeo A. Brawner and
concurred
in by Associate Justices Bienvenido L. Reyes and Danilo B. Pine.
[2]
Rollo, p. 61.chanrobles virtuallaw libraryred
[3]
Docketed as Civil Case No. Q-98-36172, Rollo, p. 62.chanrobles virtuallaw libraryred
[4]
Answer, Rollo, pp. 138–139; See also pp. 134–137.chanrobles virtuallaw libraryred
[5]
Rollo, p. 147.chanrobles virtuallaw libraryred
[6]
Petition, Rollo, p. 10.chanrobles virtuallaw libraryred
[7]
Rollo, p. 170.chanrobles virtuallaw libraryred
[8]
Rollo, p. 214.chanrobles virtuallaw libraryred
[9]
Petition, pp. 17–19.chanrobles virtuallaw libraryred
[10]
Op. cit., note 8.chanrobles virtuallaw libraryred
[11]
Id.chanrobles virtuallaw libraryred
[12]
Spouses Vicky Tan Toh v. Solid Bank Corporation, G.R. No. 154183, 7
August
2003.
[13]
G.R. No. 94733, 17 February 1993, 219 SCRA 69.chanrobles virtuallaw libraryred
[14]
Municipality of Binan Laguna, supra, pp. 75–76.chanrobles virtuallaw libraryred
[15]
Republic Act No. 166.chanrobles virtuallaw libraryred
[16]
Esso Standard Eastern, Inc. v. Court of Appeals, 201 Phil. 803 (1982);
Hickok, Manufacturing Co., Inc. v. Court of Appeals, 201 Phil. 853
(1982);
Faberge, Inc. v. Intermediate Appellate Court, G.R. No. 71189, 4
November
1992, 215 SCRA 316.chanrobles virtuallaw libraryred
[17]
Amended by Office Order No. 17 dated 1 December 1998.chanrobles virtuallaw libraryred
[18]
Ruben E. Agpalo, The Law on Trademark Infringement and Unfair
Competition,
2000 Edition, pp. 168–170.chanrobles virtuallaw libraryred
chanrobles virtuallaw libraryred
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