3-D Industries, Inc. v. Northern Islands Co., Inc.

THIRD DIVISION

[G.R. No. 209265. November 24, 2021.]

3-D INDUSTRIES, INC., petitioner,vs. NORTHERN ISLANDS COMPANY, INC., respondent.

NOTICE

Sirs/Mesdames :

Please take notice that the Court, Third Division, issued a Resolution datedNovember 24, 2021, which reads as follows:

"G.R. No. 209265 (3-D Industries, Inc. v. Northern Islands Company, Inc.). — For resolution is a Petition for Review on Certiorari1 under Rule 45 of the Rules of Court, assailing the Decision 2 dated May 22, 2013 and Resolution 3 dated September 24, 2013 of the Court of Appeals (CA) in C.A.-G.R. SP No. 127921. The CA affirmed the Decision 4 dated November 26, 2012 of the Regional Trial Court (RTC) of Pasig City, Branch 159 in Civil Case No. 70359 finding petitioner 3-D Industries, Inc. liable for breach of contract, trademark infringement, and unfair competition and ordering the payment of temperate and exemplary damages, attorney's fees, and costs of litigation.

Facts of the Case

In a License Agreement executed on April 16, 2004, petitioner granted respondent Northern Islands Company, Inc. (NICI) the exclusive right to use the "3D" trademarks and goodwill on household appliances and other products manufactured, imported, distributed, and sold in the Philippines for a period of 20 years. Petitioner also agreed that it would not use the trademarks and goodwill for the duration of the Agreement. Petitioner's board of directors issued a resolution dated March 23, 2004, authorizing Paulino Delfin Pe (Pe), then the corporate president, to sign the agreement on behalf of petitioner. 5

Several months later, petitioner sent letters to NICI's dealers and distributors denying the validity of the Agreement. Petitioner resumed selling and marketing its appliances bearing the 3D trademarks to buyers other than NICI. NICI also claims that petitioner waged a systematic campaign to undermine NICI's reputation, going so far as instructing manufacturers and suppliers in China not to proceed with further shipment of goods and appliances to NICI. 6 Thus, on April 25, 2005, 7 NICI filed a Complaint 8 with the RTC for breach of contract, trademark infringement, unfair competition, and damages with a prayer for injunction to stop petitioner from making false representations with dealers, distributors, suppliers, as well as pertinent government agencies such as the Bureau of Customs. 9

In its Answer, 10 petitioner admitted that it had repudiated the License Agreement and had warned manufacturers and suppliers that NICI had no authority to use the 3D trademarks. However, it maintained that it was justified to do so because the Agreement was invalid from the beginning, supposedly because Pe had not been duly authorized to sign the contract on its behalf. Petitioner alleged that the board resolution appointing Pe as 3-D's representative was defective because not all members of the board had been properly notified of the meeting when the said resolution was issued. Petitioner also claimed that the License Agreement constituted a sale of substantially all of petitioner's assets and as such, required the vote of stockholders owning at least 2/3 of its outstanding stock during a meeting called for such purpose in accordance with Article 40 of B.P. Blg. 68 (Corporation Code). 11

The RTC granted NICI's prayer for an injunction, but shortly after, the presiding judge recused himself from the case at petitioner's instance. The case was re-raffled and assigned to a new judge. Not long thereafter, the case was raffled for a second time because the replacement judge was promoted. Judge Nicanor A. Manalo Jr. of RTC Pasig Branch 157 took over the case. On September 17, 2010, he ordered the case be assigned to a commercial court. And so finally, the case was transferred to RTC Pasig Branch 159, which presided over the subsequent proceedings. 12

Petitioner moved to clarify whether the Interim Rules of Procedure Governing Intra-Corporate Controversies should apply in this case. In an Order dated October 10, 2011, the RTC said that it would apply the Interim Rules due to the nature of the case and with the view of securing a just, summary, and speedy disposition of the case. 13

Petitioner moved for reconsideration, arguing that the case is an ordinary civil action for breach of contract cognizable by the regular courts. Based on this, petitioner argued that the commercial court lacked jurisdiction and moved for the dismissal of the complaint. In its Order dated January 12, 2012, the RTC denied petitioner's motion to dismiss but clarified that the applicable rules are the Rules of Procedure for Intellectual Property Rights Cases. Thereafter, pre-trial and trial ensued. 14 CAIHTE

On April 13, 2012, respondent NICI terminated its presentation of evidence as plaintiff. Petitioner was then scheduled to begin its presentation on June 15, 2012. Petitioner was supposed to present three witnesses, namely: Atty. Alvin Agustin Ignacio, Leo Pulido, and Gilbert G. Guy. However, on said date, petitioner moved for a resetting because its intended witness for the day was unavailable. The RTC granted the resetting but ordered petitioner to always be ready with an alternate witness in case the next intended witness would not be available in the subsequent hearings. 15

At the next hearing, petitioner presented Atty. Ignacio, who was also cross-examined by respondent's counsel. Petitioner was scheduled to continue its presentation September 27, 2012. However, on said date, its intended witness, Leo Pulido, did not appear. Petitioner's counsel cited a "personal problem" as the reason for Pulido's absence and moved for cancellation of the hearing as he had no other available witness for that day. Respondent objected and moved that petitioner be declared to have waived its right to present further evidence. In its Order dated September 27, 2012, the trial court granted NICI's motion and deemed the case submitted for decision. Petitioner filed a motion for reconsideration arguing that it made no such waiver because it had already presented one witness and included the testimonies of the witnesses at the injunction hearing in support of its evidence in chief. Furthermore, petitioner argued that even assuming that Leo Pulido's testimony was waived, it had made a reservation that it would present other witnesses as may be necessary during the trial. Petitioner requested liberality in the application of the rules just as it had done with NICI in previous instances. 16

In its Opposition, 17 respondent pointed out that petitioner was unable to give any meritorious reason for the delay in presenting its evidence and that it was unable to give the names of its other witnesses, clearly indicating that it actually had none. Furthermore, respondent clarified that although there had been an instance when it also failed to present its intended witness, it still made good use of the court's time by stipulating on extant factual issues. In contrast, the hearing on September 27, 2012 was totally wasted. 18

In an Order 19 dated November 19, 2012, the RTC denied petitioner's motion for reconsideration and reaffirmed its earlier order because NICI was furnished a copy of the motion only one day before the scheduled hearing, in violation of the 3-day notice rule. Despite this procedural defect, the RTC passed upon the grounds of the motion and opined that petitioner's failure to present any witness was unjustified and only worked to unduly delay the case, noting that in the pre-trial order, there was no reservation for petitioner to present witnesses other than those it had identified during pre-trial. The RTC also noted that even at that point, petitioner had yet to identify the other witnesses it was intending to present, much less the necessity of their testimony. 20

Ruling of the Regional Trial Court

After declaring petitioner to have waived its right to present further evidence, the RTC rendered a Decision 21 on the merits on November 26, 2012.

The RTC held that the License Agreement was valid and binding, even though it was only notarized on December 6, 2004. There was no dispute that at the time it was signed on April 16, 2004, Pe was still the president of 3-D because he resigned only on September 30, 2004. The RTC gave credence to the Board Resolution dated March 23, 2004 authorizing Pe to sign the License Agreement in behalf of 3-D. Furthermore, the RTC held that the License Agreement, as a notarized document, enjoys the presumption of regularity and is conclusive as to the truthfulness of its contents. The Intellectual Property Office had also taken cognizance of the document. 22

The RTC held that petitioner violated the License Agreement. Citing Article 1308 of the New Civil Code (NCC), contracts bind the parties, and their validity or compliance cannot be left to the will of one party. Petitioner admitted that it had unilaterally repudiated the agreement without filing the proper court action. In its Answer, petitioner averred that it sent letters to NICI's suppliers, distributors, and dealers informing them that it has disowned and denied the validity of the agreement. Petitioner also admitted that it continued to use the 3D marks and goodwill and that it would sell and market appliances and other products bearing the marks. 23 DETACa

Consequently, the RTC also held that petitioner had violated Sec. 168.3 (c) of R.A. 8293, otherwise known as the Intellectual Property Code (IPC). The RTC also found petitioner liable under Sec. 155 of the IPC. 24

The RTC cited the following enumeration of the elements of trademark infringement under the IPC as held in Societe Des Produits Nestle, S.A. v. Dy, Jr.: 25

1. The trademark being infringed is registered in the Intellectual Property Office; however, in infringement of trade name, the same need not be registered;

2. The trademark or trade name is reproduced, counterfeited, copied, or colorably imitated by the infringer;

3. The infringing mark or trade name is used in connection with the sale, offering for sale, or advertising of any goods, business or services; or the infringing mark or trade name is applied to labels, signs, prints, packages, wrappers, receptacles or advertisements intended to be used upon or in connection with such goods, business or services;

4. The use or application of the infringing mark or trade name is likely to cause confusion or mistake or to deceive purchasers or others as to the goods or services themselves or as to the source or origin of such goods or services or the identify of such business; and

5. It is without the consent of the trademark or trade name owner or the assignee thereof. 26

The RTC ruled that all the elements were proven, and held that while NICI had the exclusive right to use the trademarks under the License Agreement, petitioner cannot reproduce said marks and sell goods bearing them to buyers. By violating the agreement, petitioner caused confusion among purchasers as to the source or origin of such goods. Therefore, the RTC held that petitioner was liable to pay damages in accordance with Secs. 156 and 168.4 of the IPC and Article 1170, NCC. Because the exact amount of damages could not be ascertained, the RTC awarded temperate damages. It also awarded exemplary damages for petitioner's wanton, fraudulent, and malevolent repudiation and violation of the License Agreement and the IPC. The RTC also awarded attorney's fees to NICI as it was constrained to incur expenses to protect its interests. 27 Thus, the dispositive of the RTC's Decision states:

WHEREFORE, premises considered, judgment is hereby rendered in favor of the plaintiff against the defendant. The defendant 3-D Industries, Inc. is hereby declared liable for breach of contract, trademark infringement and unfair competition.

The defendant is therefore permanently enjoined from using the 3-D trademarks and good will over the same marks during the lifetime of its License Agreement with plaintiff dated April 16, 2004.

The defendant is likewise directed to pay the plaintiff Northern Islands Co., Inc. the following:

1. Five Million Pesos (P5,000,000.00), as and by way of temperate damages;

2. Two Million Pesos (P2,000,000.00), as and by way of exemplary damages; and

3. Five Hundred Thousand Pesos (P500,000.00), as and by way of attorney's fees and expenses of litigation.

Further, the defendant's counterclaim is hereby DISMISSED for lack of merit.

SO ORDERED.28 (Emphasis in the original)

Petitioner filed a Petition for Review Ad Cautelam29 before the CA, assailing the RTC's Decision and praying for the case to be remanded to the RTC for continuation of trial. 30 Petitioner assigned the following errors: (1) the RTC violated its right to due process when it considered petitioner to have waived its right to present evidence and by deciding the case based on the evidence presented by NICI; and (2) the RTC erred in treating its motion for reconsideration as a mere scrap of paper. 31

Ruling of the Court of Appeals

In the assailed Decision, 32 the CA noted that a petition ad cautelam is not provided for in the rules and opined that it was filed for the strategic purpose of preserving the period to assail the judgment rendered by the RTC. The CA viewed it as a technical maneuver deserving outright dismissal. Nevertheless, in the interest of justice, the CA looked into the merits of 3-D's petition ad cautelam, finding no merit in it and affirming the RTC's Decision in toto. 33 Petitioner moved for reconsideration, but the same was denied in the assailed Resolution. 34

Hence, this petition. aDSIHc

Petitioner's arguments

Petitioner 3-D prays for the case to be remanded to the trial court for continuation of proceedings on four principal grounds: first, that the trial court was too strict in finding the absence of petitioner's witness at the hearing on September 27, 2012 as unjustifiable; second, petitioner had other witnesses to present on the hearing scheduled on October 25, 2012; third, petitioner never waived its right to present evidence because it had already presented one witness and also reproduced the testimonies of witnesses presented during the injunction hearing; and fourth, by dismissing petitioner's motion for reconsideration to the RTC Order dated September 27, 2012 as a mere scrap of paper, the trial court failed to apply prevailing jurisprudence which relaxed the application of the 3-day notice rule. 35

Respondent's arguments

In its Comment/Opposition, 36 NICI clarified that the RTC did not consider petitioner to have waived its right to present all of its evidence because it admitted and considered evidence already presented prior to the September 27, 2012 hearing, including the testimonies of Gilbert G. Guy and Alvin T. Ignacio and the documentary evidence introduced during their examination even though such documents had not been formally offered. NICI argues that this was an act of leniency on the part of the trial court. NICI reiterated that petitioner failed to provide a meritorious reason for the delay in the presentation of evidence, made worse by the fact that it could not disclose the names of its other witnesses. In any case, NICI argues that petitioner's defense was sufficiently ventilated, because Pulido's testimony would have added nothing to petitioner's evidence in chief as he was only going to testify monetary losses, attorney's fees, and litigation expenses. 37

Issues

The merits of the petition revolve around the following issues:

1. Whether or not petitioner had waived its right to present further evidence;

2. Whether or not RTC's treatment of petitioner's motion for reconsideration was in accordance with the rules or prevailing jurisprudence.

Ruling of the Court

The petition lacks merit.

From the outset, it ought to be pointed out that the instant petition and the petition ad cautelam filed before the CA sought to assail the RTC's Decision. As such, one would expect that the arguments presented by petitioner would be in relation to said Decision. However, it is quite clear that the arguments raised by petitioner has no relation to the RTC's ratiocination in its Decision. Instead, what petitioner raises are arguments against the RTC's Orders dated September 27, 2012 and November 19, 2012 in a bid to have this case remanded to the RTC for continuation of trial. Clearly, said orders were merely interlocutory — not final orders that finally disposed of the case. In Heirs of Timbang Dimaampao v. Atty. Alug, 38 We distinguished a "final judgment or order" from an "interlocutory order" as follows:

A final judgment or order is one that finally disposes of a case, leaving nothing more to be done by the Court in respect thereto, e.g., an adjudication on the merits which, on the basis of the evidence presented at the trial, declares categorically what the rights and obligations of the parties are and which party is in the right; or a judgment or order that dismisses an action on the ground, for instance, of res judicata or prescription. Once rendered, the task of the Court is ended, as far as deciding the controversy or determining the rights and liabilities of the litigants is concerned. Nothing more remains to be done by the Court except to await the parties' next move . . . and ultimately, of course, to cause the execution of the judgment once it becomes "final" or, to use the established and more distinctive term, "final and executory."

xxx xxx xxx

Conversely, an order that does not finally dispose of the case, and does not end the Court's task of adjudicating the parties' contentions and determining their rights and liabilities as regards each other, but obviously indicates that other things remain to be done by the Court, is "interlocutory," e.g., an order denying a motion to dismiss under Rule 16 of the Rules . . . Unlike a "final" judgment or order, which is appealable, as above pointed out, an "interlocutory" order may not be questioned on appeal except only as part of on appeal that may eventually be taken from the final judgment rendered in the case. 39

To Our mind, the Petition for Review Ad Cautelam filed with the CA was intended to assail interlocutory orders but was disguised as a petition assailing the RTC's final judgment. The remedy against an interlocutory order not subject of an appeal is an appropriate special civil action under Rule 65. 40 Thus, if petitioner intended relief from the RTC's Orders dated September 27, 2012 and November 19, 2012, it ought to have filed a Rule 65 petition assailing such orders. For this reason alone, the CA had the wherewithal to dismiss the petition ad cautelam as an improper remedy. Concurrently, the instant petition is procedurally defective. But even if it were not, We find no reason to remand this case for continuation of trial.

As a matter of due process, a case is remanded to the trial court only if the parties had not been given an opportunity to present evidence on the merits. But where the parties have presented their respective evidence or had waived their opportunity to present evidence, a remand is superfluous and would only work to unduly impose on the time and dockets of the courts. 41 The right to present evidence may be waived expressly or impliedly, the latter taking on various forms, such as when a party repeatedly fails to discharge its burden of evidence. Thus, a request for continuance of trial is not a matter of right. It cannot be demanded by a party from a trial court, which has the discretion whether to postpone trial or to declare that a party has waived his right to present evidence considering the peculiar circumstances obtaining in each case with a view to doing substantial justice. 42 If there is no manifest abuse of discretion resulting in a denial of justice, appellate courts will not disturb the trial court's pronouncement. 43 In Dy Teban Trading, Inc. v. Dy, 44 We said:

Trial courts successfully perform their duty to afford a party his or her right to due process when he or she is granted meaningful and sufficient opportunity to participate in the proceedings. Trial courts, however, do not have the duty to submit to unreasonable, dilatory, or negligent acts of the parties in handling their own cases. While parties to a case possess the right to due process, they have the correlative duty to exercise it properly and not use it as an excuse for their negligence or deliberate tactics to delay a case. 45

Courts have the duty to regulate the proceedings before it and must not allow the trial of a case to depend on the negligence or dilatory tactics of parties and their lawyers. 46

It is worth noting that in rendering its decision, the RTC took into consideration the evidence petitioner had presented up until September 27, 2012. Thus, the trial court should be understood to have ruled that petitioner impliedly waived the right to present further evidence. The question, therefore, is whether the trial court erred in cutting short petitioner's presentation of evidence. We rule that it did not. ETHIDa

This case had already been pending for seven years at the time that the RTC rendered its Decision. Thus, the RTC acted within reason to avoid any further delay by instructing petitioner to always have a "back-up" witness in case the intended witness for the day would be unavailable. Petitioner was negligent and failed to heed this warning. As found by both the CA and the RTC, petitioner failed to adequately explain Leo Pulido's absence and why it had no "back-up" witnesses despite previous warnings. 47 The petition merely asserts that Pulido was absent because of a "personal problem." 48 but fails to elaborate on this. The petition also asserts that petitioner's counsel had "stated the reason why he could not make available the presence of other witness to take the place of Mr. Pulido." 49 And yet, it fails to specify what that reason was. This is hardly convincing. In ignoring the trial court's admonitions, petitioner flouted the rules to the prejudice of speedy and orderly proceedings. As such, We find no reversible error in the CA's affirmation of the RTC's decision to cut short petitioner's presentation of evidence.

The Rules of Court mandates that every written motion required to be heard and the notice of the hearing thereof shall be served in such a manner as to ensure its receipt by the other party at least three days before the date of hearing. 50 As rightly pointed out by petitioner, in Preysler Jr. v. Manila Southcoast Dev't. Corporation, 51 We said that the 3-day notice rule may be relaxed. Thus:

As an integral component of the procedural due process, the three-day notice required by the Rules is not intended for the benefit of the movant. Rather, the requirement is for the purpose of avoiding surprises that may be sprung upon the adverse party, who must be given time to study and meet the arguments in the motion before a resolution of the court. Principles of natural justice demand that the right of a party should not be affected without giving it an opportunity to be heard.

The test is the presence of opportunity to be heard, as well as to have time to study the motion and meaningfully oppose or controvert the grounds upon which it is based. 52

In this case, the RTC granted respondent NICI time to file a comment to petitioner's motion for reconsideration. As such, the intent of the rule had been served. However, We must hasten to remind petitioner that liberality in the construction of procedural rules is appropriate only in exceptional cases. As a rule, the Rules of Court must be strictly followed. In Hon. Fortich v. Hon. Corona53 We said:

Procedural rules, we must stress, should be treated with utmost respect and due regard since they are designed to facilitate the adjudication of cases to remedy the worsening problem of delay in the resolution of rival claims and in the administration of justice. The requirement is in pursuance to the bill of rights inscribed in the Constitution which guarantees that "all persons shall have a right to the speedy disposition of their eases before all judicial, quasi-judicial and administrative bodies." The adjudicatory bodies and the parties to a case are thus enjoined to abide strictly by the rules. While it is true that a litigation is not a game of technicalities, it is equally true that even case must be prosecuted in accordance with the prescribed procedure to ensure an orderly and speedy administration of justice. There have been some instances wherein this Court allowed a relaxation in the application of the rules, but this flexibility was "never intended to forge a bastion for erring litigants to violate the rules with impunity." A liberal interpretation and application of the rules of procedure can be resorted to only in proper cases and under justifiable causes and circumstances. 54 (Emphasis supplied; citations omitted.)

In this case, there is no explanation why petitioner furnished respondent a copy of its motion for reconsideration only one day before the scheduled hearing. The RTC would have acted within its duty if it had summarily dismissed petitioner's motion, but since the RTC did show liberality to petitioner, it makes no practical difference to reverse the CA on this point. Suffice it to say, We think that the petitioner's arguments on this point are not enough to reverse the CA, much less to justify remand to the trial court. cSEDTC

WHEREFORE, the petition is DENIED. The Decision dated May 22, 2013 and the Resolution dated September 24, 2013 of the Court of Appeals in C.A.-G.R. SP No. 127921 are hereby AFFIRMED.

SO ORDERED."

By authority of the Court:

(SGD.) MISAEL DOMINGO C. BATTUNG IIIDivision Clerk of Court

Footnotes

1. Rollo, pp. 3-29.

2. Penned by Associate Justice Normandie B. Pizarro, with the concurrence of Associates Justices Remedios A. Salazar-Fernando and Zenaida T. Galapate-Laguilles; id. at 35-48.

3. Id. at 51-52.

4. Penned by Judge Rodolfo R. Bonifacio; id. at 196-209.

5. Id. at 55, 68-69, and 196-197.

6. Id. at 36-37.

7. Id. at 5.

8. Id. at 53-64.

9. Id.

10. Id. at 68-79.

11. Id.

12. Id. at 37-38.

13. Id. at 8.

14. Id. at 39.

15. Id. at 189-190.

16. Id. at 178-183.

17. Id. at 185-191.

18. Id.

19. Id. at 193-195.

20. Id.

21. Supra note 4.

22. Rollo, pp. 199-201.

23. Id. at 205.

24. Id. at 206-207.

25. 641 Phil. 345 (2010).

26. Id. at 357-358; rollo, p. 207.

27. Rollo, pp. 208-209.

28. Id. at 209.

29. Id. at 210-234.

30. Id. at 234.

31. Id. at 220-221.

32. Supra note 2.

33. Rollo, pp. 43-49.

34. Supra note 3.

35. Rollo, pp. 17-29.

36. Id. at 282-318.

37. Id. at 288-318.

38. 754 Phil. 236 (2015).

39. Id. at 244-245, citing Denso (Phils.), Inc. v. Intermediate Appellate Court, 232 Phil. 256, 263-264 (1987), citing Investments, Inc. v. Court of Appeals, 231 Phil. 302, 307-308 (1987).

40. Pahila-Garrido v. Tortogo, 671 Phil. 320, 335 (2011).

41. Sps. Morales v. CA, 349 Phil. 262, 269-270 (1998).

42. Dy Teban Trading, Inc. v. Dy, 814 Phil. 564, 584 (2017), citing Reyes v. CA, 335 Phil. 206, 213 (1997).

43. Pepsi-Cola Products Phils., Inc. v. CA, 359 Phil. 859, 867 (1998).

44. 814 Phil. 564 (2017).

45. Id. at 586.

46. Id.

47. Rollo, p. 46.

48. Id. at 18.

49. Id.

50. Ti v. Diño, 820 Phil. 330, 338 (2017).

51. 635 Phil. 598 (2010).

52. Id. at 605, citing Jehan Shipping Corporation v. National Food Authority, 514 Phil. 166, 173-174 (2005).

53. 359 Phil. 210 (1998).

54. Id. at 220.