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Republic of the Philippines

SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 120553 June 17, 1997
PHILTRANCO SERVICE ENTERPRISES, INC. and ROGACIONES MANILHIG, petitioner,
vs.
COURT OF APPEALS and HEIRS OF THE LATE RAMON ACUESTA, respondents.
DAVIDE, JR., J.:
The petitioners interposed this appeal by way of a petition for review under Rule 45 of
the Rules of Court from the 31 January 1995 Decision of the Court of Appeals in CA-G.R.
CV No. 41140 1 affirming the 22 January 1993 2Decision of Branch 31 of the Regional
Trial Court, Calbayog City, in Civil Case No. 373, which ordered the petitioners to pay the
private respondents damages as a result of a vehicular accident.
Civil Case No. 373 was an action against herein petitioners for damages instituted by the
heirs of Ramon A. Acuesta, namely, Gregorio O. Acuesta; Julio O. Acuesta; Ramon O.
Acuesta, Jr.; Baltazar O. Acuesta; Rufino O. Acuesta; Maximo O. Acuesta; Neri O. Acuesta;
Iluminada O. Acuesta; Rosario Acuesta-Sanz; and Pamfilo O. Acuesta. Atty. Julio O.
Acuesta also appeared as counsel for the plaintiffs (herein private respondents). 3 The
private respondents alleged that the petitioners were guilty of gross negligence,
recklessness, violation of traffic rules and regulations, abandonment of victim, and
attempt to escape from a crime.
To support their allegations, the private respondents presented eight witnesses. On 10
February 1992, after the cross-examination of the last witness, the private respondents'
counsel made a reservation to present a ninth witness. The case was then set for
continuation of the trial on 30 and 31 March 1992. Because of the non-appearance of the
petitioners' counsel, the 30 March 1992 hearing was cancelled. The next day, private
respondents' counsel manifested that he would no longer present the ninth witness. He
thereafter made an oral offer of evidence and rested the case. The trial court summarized
private respondents' evidence in this wise:
[I]n the early morning of March 24, 1990, about 6:00 o'clock, the
victim Ramon A. Acuesta was riding in his easy rider bicycle (Exhibit
"O"), along the Gomez Street of Calbayog City. The Gomez Street is
along the side of Nijaga Park. On the Magsaysay Blvd., also in Calbayog
City, defendant Philtranco Service Enterprises, Inc. (Philtranco for
brevity) Bus No. 4025 with plate No. EVA-725 driven by defendant
Rogasiones Manilhig y Dolira was being pushed by some persons in
order to start its engine. The Magsaysay Blvd. runs perpendicular to
Gomez St. and the said Philtranco bus 4025 was heading in the
general direction of the said Gomez Street. Some of the persons who
were pushing the bus were on its back, while the others were on the
sides. As the bus was pushed, its engine started thereby the bus
continued on its running motion and it occurred at the time when
Ramon A. Acuesta who was still riding on his bicycle was directly in
front of the said bus. As the engine of the Philtranco bus started
abruptly and suddenly, its running motion was also enhanced by the
said functioning engine, thereby the subject bus bumped on the victim
Ramon A. Acuesta who, as a result thereof fell and, thereafter, was run
over by the said bus. The bus did not stop although it had already

bumped and ran [sic] over the victim; instead, it proceeded running
towards the direction of the Rosales Bridge which is located at one
side of the Nijaga Park and towards one end of the Gomez St., to which
direction the victim was then heading when he was riding on his
bicycle. P/Sgt. Yabao who was then jogging thru the Gomez Street and
was heading and meeting the victim Ramon A. Acuesta as the latter
was riding on his bicycle, saw when the Philtranco bus was being
pushed by some passengers, when its engine abruptly started and
when the said bus bumped and ran over the victim. He approached
the bus driver defendant Manilhig herein and signalled to him to stop,
but the latter did not listen. So the police officer jumped into the bus
and introducing himself to the driver defendant as policeman, ordered
the latter to stop. The said defendant driver stopped the Philtranco
bus near the Nijaga Park and Sgt. Yabao thereafter, told the driver to
proceed to the Police Headquarter which was only 100 meters away
from Nijaga Park because he was apprehensive that the said driver
might be harmed by the relatives of the victim who might come to the
scene of the accident. Then Sgt. Yabao cordoned the scene where the
vehicular accident occurred and had P/Cpl. Bartolome Bagot, the
Traffic Investigator, conduct an investigation and make a sketch of the
crime scene. Sgt. Yambao Yabao was only about 20 meters away when
he saw the bus of defendant Philtranco bumped [sic] and [sic] ran over
the victim. From the place where the victim was actually bumped by
the bus, the said vehicle still had run to a distance of about 15 meters
away. 4
For their part, the petitioners filed an Answer 5 wherein they alleged that petitioner
Philtranco exercised the diligence of a good father of a family in the selection and
supervision of its employees, including petitioner Manilhig who had excellent record as a
driver and had undergone months of rigid training before he was hired. Petitioner
Manilhig had always been a prudent professional driver, religiously observing traffic
rules and regulations. In driving Philtranco's buses, he exercised the diligence of a very
cautious person.
As might be expected, the petitioners had a different version of the incident. They alleged
that in the morning of 24 March 1990, Manilhig, in preparation for his trip back to Pasay
City, warmed up the engine of the bus and made a few rounds within the city proper of
Calbayog. While the bus was slowly and moderately cruising along Gomez Street, the
victim, who was biking towards the same direction as the bus, suddenly overtook two
tricycles and swerved left to the center of the road. The swerving was abrupt and so
sudden that even as Manilhig applied the brakes and blew the bus horn, the victim was
bumped from behind and run over by the bus. It was neither willful nor deliberate on
Manilhig's part to proceed with the trip after his bus bumped the victim, the truth being
that when he looked at his rear-view window, he saw people crowding around the
victim, with others running after his bus. Fearing that he might be mobbed, he moved
away from the scene of the accident and intended to report the incident to the police.
After a man boarded his bus and introduced himself as a policeman, Manilhig gave
himself up to the custody of the police and reported the accident in question.
The petitioners further claimed that it was the negligence of the victim in overtaking two
tricycles, without taking precautions such as seeing first that the road was clear, which
caused the death of the victim. The latter did not even give any signal of his intention to
overtake. The petitioners then counterclaimed for P50,000 as and for attorney's fees; P1
million as moral damages; and P50,000 for litigation expenses.

However, the petitioners were not able to present their evidence, as they were deemed
to have waived that right by the failure of their counsel to appear at the scheduled
hearings on 30 and 31 March 1992. The trial court then issued an Order 6 declaring the
case submitted for decision. Motions for the reconsideration of the said Order were both
denied.
On 22 January 1992, the trial court handed down a decision ordering the petitioners to
jointly and severally pay the private respondents the following amounts:
1) P55, 615.72 as actual damages;
2) P200,000 as death indemnity for the death of the victim Ramon A.
Acuesta;
3) P1 million as moral damages;
4) P500,000 by way of exemplary damages;
5) P50,000 as attorney's fees; and
6) the costs of suit. 7
Unsatisfied with the judgment, the petitioners appealed to the Court of Appeals imputing
upon the trial court the following errors:
(1) in preventing or barring them from presenting their evidence;
(2) in finding that petitioner Manilhig was at fault;
(3) in not finding that Ramon was the one at fault and his own fault caused, or at least
contributed to, his unfortunate accident;
(4) in awarding damages to the private respondents; and
(5) in finding that petitioner Philtranco was solidarily liable with Manilhig for damages. 8
In its decision of 31 January 1995, the Court of Appeals affirmed the decision of the trial
court. It held that the petitioners were not denied due process, as they were given an
opportunity to present their defense. The records show that they were notified of the
assignment of the case for 30 and 31 March 1992. Yet, their counsel did not appear on
the said dates. Neither did he file a motion for postponement of the hearings, nor did he
appeal from the denial of the motions for reconsideration of the 31 March 1992 Order of
the trial court. The petitioners have thereby waived their right to present evidence. Their
expectation that they would have to object yet to a formal offer of evidence by the private
respondents was "misplaced," for it was within the sound discretion of the court to allow
oral offer of evidence.
As to the second and third assigned errors, the respondent court disposed as follows:
. . . We cannot help but accord with the lower court's finding on
appellant Manilhig's fault. First, it is not disputed that the bus driven
by appellant Manilhig was being pushed at the time of the unfortunate
happening. It is of common knowledge and experience that when a
vehicle is pushed to a jump-start, its initial movement is far from slow.
Rather, its movement is abrupt and jerky and it takes a while before
the vehicle attains normal speed. The lower court had thus enough
basis to conclude, as it did, that the bumping of the victim was due to
appellant Manilhig's actionable negligence and inattention. Prudence
should have dictated against jump-starting the bus in a busy section of
the city. Militating further against appellants' posture was the fact that
the precarious pushing of subject bus to a jumpstart was done where
the bus had to take a left turn, thereby making the move too risky to
take. The possibility that pedestrians on Gomez Street, where the bus
turned left and the victim was biking, would be unaware of a vehicle
being pushed to a jumpstart, was too obvious to be overlooked. Verily,
contrary to their bare arguments, there was gross negligence on the
part of appellants.

The doctrine of last clear chance theorized upon by appellants, is


inapplicable under the premises because the victim, who was bumped
from behind, obviously, did not of course anticipate a Philtranco bus
being pushed from a perpendicular street.
The respondent court sustained the awards of moral and exemplary damages and of
attorney's fees, for they are warranted under Articles 2206, 2231, and 2208(1),
respectively, of the Civil Code. Anent the solidary liability of petitioner Philtranco, the
same finds support in Articles 2180 and 2194 of the said Code. The defense that
Philtranco exercised the diligence of a good father of a family in the selection and
supervision of its employees crumbles in the face of the gross negligence of its driver,
which caused the untimely death of the victim.
Their motion for reconsideration having been denied, the petitioners came to us claiming
that the Court of Appeals gravely erred
I
. . . IN HOLDING THAT PETITIONERS WAIVED THEIR RIGHT TO
PRESENT THEIR EVIDENCE, AND THAT PETITIONERS WERE NOT
DENIED DUE PROCESS.
II
. . . IN APPLYING ART. 2194, INSTEAD OF ART. 2180, OF THE CIVIL
CODE, AND IN HOLDING THAT PETITIONER PHILTRANCO CAN NOT
INVOKE THE DEFENSE OF DILIGENCE OF A GOOD FATHER OF A
FAMILY.
III
. . . IN AWARDING DAMAGES TO RESPONDENTS AND/OR IN NOT
FINDING THE TRIAL COURT'S AWARD OF DAMAGES EXCESSIVE.
We resolved to give due course to the petition and required the parties to submit their
respective memoranda after due consideration of the allegations, issues, and arguments
adduced in the petition, the comment thereon by the private respondents, and the reply
to the comment filed by the petitioners. The petitioners filed their memorandum in due
time; while the private respondents filed theirs only on 3 January 1997, after their
counsel was fined in the amount of P1,000 for failure to submit the required
memorandum.
The first imputed error is without merit. The petitioners and their counsel, Atty. Jose
Buban, were duly notified in open court of the order of the trial court of 10 February
1992 setting the case for hearing on 30 and 31 March 1992. 9 On both dates neither the
petitioners nor their counsel appeared. In his motion for reconsideration, 10 Atty. Buban
gave the following reasons for his failure to appear on the said hearings:
1. That when this case was called on March 27, 1992, counsel was
very much indisposed due to the rigors of a very hectic campaign as
he is a candidate for City Councilor of Tacloban; he wanted to leave for
Calbayog City, but he was seized with slight fever on the morning of
said date; but then, during the last hearing, counsel was made to
understand that plaintiffs would formally offer their exhibits in
writing, for which reason, counsel for defendants waited for a copy of
said formal offer, but counsel did not receive any copy as counsel for
plaintiffs opted to formally offer their exhibits orally in open court;
2. That counsel for defendants, in good faith believed that he would be
given reasonable time within which to comment on the formal offer in
writing, only to know that counsel for plaintiffs orally offered their
exhibits in open court and that the same were admitted by the
Honorable Court; and that when this case was called on March 30 and

31, 1992, the undersigned counsel honestly believed that said


schedule would be cancelled, pending on the submission of the
comments made by the defendants on the formal offer; but it was not
so, as the exhibits were admitted in open court. 11
In its order of 26 May 1992, the trial court denied the motion, finding it to be "devoid of
meritorious basis," as Atty. Buban could have filed a motion for postponement. 12 Atty.
Buban then filed a motion to reconsider 13 the order of denial, which was likewise denied
by the trial court in its order of 12 August 1992. 14 Nothing more was done by the
petitioners after receipt of the order of 12 August 1992. A perusal of the first and second
motions for reconsideration discloses absence of any claim that the petitioners have
meritorious defenses. Clearly, therefore, the trial court committed no error in declaring
the case submitted for decision on the basis of private respondent's evidence.
The second imputed error is without merit either.
Civil Case No. 373 is an action for damages based on quasi-delict 15 under Article 2176
and 2180 of the Civil Code against petitioner Manilhig and his employer, petitioner
Philtranco, respectively. These articles pertinently provide:
Art. 2176. Whoever by act or omission causes damage to another,
there being fault or negligence, is obliged to pay for the damage done.
Such fault or negligence, if there is no pre-existing contractual relation
between the parties, is called a quasi-delict and is governed by the
provisions of this Chapter.
Art. 2180. The obligation imposed by Article 2176 is demandable not
only for one's own acts or omissions, but also for those of persons for
whom one is responsible.
xxx xxx xxx
The owners and managers of an establishment or enterprise are
likewise responsible for damages caused by their employees in the
service of the branches in which the latter are employed or on the
occasion of their functions.
Employers shall be liable for the damages caused by their employees
and household helpers acting within the scope of their assigned tasks
even though the former are not engaged in any business or industry.
xxx xxx xxx
The responsibility treated of in this article shall cease when the
persons herein mentioned prove that they observed all the diligence
of a good father of a family to prevent damage.
We have consistently held that the liability of the registered owner of a public service
vehicle, like petitioner Philtranco, 16 for damages arising from the tortious acts of the
driver is primary, direct, and joint and several or solidarywith the driver. 17 As to
solidarity, Article 2194 expressly provides:
Art. 2194. The responsibility of two or more persons who are liable
for a quasi-delict is solidary.
Since the employer's liability is primary, direct and solidary, its only recourse if
the judgment for damages is satisfied by it is to recover what it has paid from
its employee who committed the fault or negligence which gave rise to the
action based on quasi-delict. Article 2181 of the Civil Code provides:
Art. 2181. Whoever pays for the damage caused by his dependents or
employees may recover from the latter what he has paid or delivered
in satisfaction of the claim.
There is, however, merit in the third imputed error.

The trial court erroneously fixed the "death indemnity" at P200,000. The private
respondents defended the award in their Opposition to the Motion for Reconsideration
by saying that "[i]n the case of Philippine Airlines, Inc. vs.Court of Appeals, 185 SCRA 110,
our Supreme Court held that the award of damages for death is computed on the basis of
the life expectancy of the deceased." In that case, the "death indemnity" was computed by
multiplying the victim's gross annual income by his life expectancy, less his yearly living
expenses. Clearly then, the "death indemnity" referred to was the additional indemnity
for the loss of earning capacity mentioned in Article 2206(1) of the Civil Code, and not
the basic indemnity for death mentioned in the first paragraph thereof. This article
provides as follows:
Art. 2206. The amount of damages for death caused by a crime or
quasi-delict shall be at least three thousand pesos, even though there
may have been mitigating circumstances. In addition:
(1) The defendant shall be liable for the loss of the earning capacity of
the deceased, and the indemnity shall be paid to the heirs of the latter;
such indemnity shall in every case be assessed and awarded by the
court, unless the deceased on account of permanent physical disability
not caused by the defendant, had no earning capacity at the time of his
death;
(2) If the deceased was obliged to give support according to the
provisions of article 291, the recipient who is not an heir called to the
decedent's inheritance by the law of testate or intestate succession,
may demand support from the person causing the death, for a period
of not exceeding five years, the exact duration to be fixed by the court;
(3) The spouse, legitimate and illegitimate descendants and
ascendants of the deceased may demand moral damages for mental
anguish by reason of the death of the deceased.
We concur with petitioners' view that the trial court intended the award of "P200,000.00
as death indemnity" not as compensation for loss of earning capacity. Even if the trial
court intended the award as indemnity for loss of earning capacity, the same must be
struck out for lack of basis. There is no evidence on the victim's earning capacity and life
expectancy.
Only indemnity for death under the opening paragraph of Article 2206 is due, the
amount of which has been fixed by current jurisprudence at P50,000. 18
The award of P1 million for moral damages to the heirs of Ramon Acuesta has no
sufficient basis and is excessive and unreasonable. This was based solely on the
testimony of one of the heirs, Atty. Julio Acuesta, contained in his "Direct Testimony . . .
As Plaintiff, conducted by Himself," 19 to wit:
Q. What was your feeling or reaction as a result of
the death of your father Ramon A. Acuesta?
A. We, the family members, have suffered much
from wounded feelings, moral shock, mental
anguish, sleepless nights, to which we are entitled
to moral damages at the reasonable amount of ONE
MILLION (P1,000,000.00) PESOS or at the sound
discretion of this Hon. Court.
Since the other heirs of the deceased did not take the witness stand, the trial court had
no basis for its award of moral damages to those who did not testify thereon.
Moral damages are emphatically not intended to enrich a plaintiff at the expense of the
defendant. They are awarded only to allow the former to obtain means, diversion, or
amusements that will serve to alleviate the moral suffering he has undergone due to the

defendant's culpable action and must, perforce, be proportional to the suffering


inflicted. 20 In light of the circumstances in this case, an award of P50,000 for moral
damages is in order.
The award of P500,000 for exemplary damages is also excessive. In quasi-delicts,
exemplary damages may be awarded if the party at fault acted with gross
negligence. 21 The Court of Appeals found that there was gross negligence on the part of
petitioner Manilhig. 22 Under Article 2229 of the Civil Code, exemplary damages are
imposed by way of example or correction for the public good, in addition to the moral,
temperate, liquidated, or compensatory damages. Considering its purpose, it must be fair
and reasonable in every case and should not be awarded to unjustly enrich a prevailing
party. In the instant case, an award of P50,000 for the purpose would be adequate, fair,
and reasonable.
Finally, the award of P50,000 for attorney's fees must be reduced. The general rule is
that attorney's fees cannot be recovered as part of damages because of the policy that no
premium
should
be
placed
on
the
right
to
litigate. 23 Stated otherwise, the grant of attorney's fees as part of damages is the
exception rather than the rule, as counsel's fees are not awarded every time a party
prevails in a suit. 24 Such attorney's fees can be awarded in the cases enumerated in
Article 2208 of the Civil Code, and in all cases it must be reasonable. In the instant case,
the counsel for the plaintiffs is himself a co-plaintiff; it is then unlikely that he demanded
from his brothers and sisters P100,000 as attorney's fees as alleged in the complaint and
testified
to
by
him. 25 He did not present any written contract for his fees. He is, however, entitled to a
reasonable amount for attorney's fees, considering that exemplary damages are
awarded. Among the instances mentioned in Article 2208 of the Civil Code when
attorney's fees may be recovered is "(1) when exemplary damages are awarded." Under
the circumstances in this case, an award of P25,000 for attorney's fees is reasonable.
The petitioners did not contest the award for actual damages fixed by the trial court.
Hence, such award shall stand.
IN VIEW OF THE FOREGOING, the petition is hereby partly granted and the challenged
decision of CA-G.R. CV No. 41140 is AFFIRMED, subject to modifications as to the
damages awarded, which are reduced as follows:
(a) Death indemnity, from P200,000 to P50,000;
(b) Moral damages, from P1 million to P50,000;
(c) Exemplary damages, from P500,000 to P50,000; and
(d) Attorney's fees, from P50,000 to P25,000.
No pronouncements as to costs in this instance.
SO ORDERED.

SECOND DIVISION
[G.R. No. L-37733. September 30, 1982.]
ALMARIO T. SALTA, Petitioner, v. HON. JUDGE JESUS DE VEYRA, in his capacity as
Presiding Judge of the CFI of Manila, Branch XIV and PHILIPPINE NATIONAL
BANK, Respondents.
[G.R. No. L-38035. September 30, 1982.]
PHILIPPINE NATIONAL BANK, Petitioner, v. HON. AMANTE P. PURISIMA, as Judge of
the Court of First Instance of Manila, Branch VII and ALMARIO SALTA, Respondents.
Dakila F. Castro & Associates for Petitioner.
Jesus de Veyra for his own behalf.
Nestor L. Kalaw, Edgardo M. Magtalas and Juan C. Gatmaitan for Respondents.
SYNOPSIS
Petitioner Salta was employed as branch manager of the Philippine National Bank (PNB).
As such, his duty was to grant loans or to recommend the granting of loans, depending on
the the amount of the loan applied for. PNB filed two civil complaints against Salta
charging him of indiscriminately granting certain loans in a manner characterized by
negligence, fraud, and manifest partiality, and upon securities not commensurate with
the amount of the loans. The two civil cases were assigned to two different salas of the
Court of First Instance of Manila. At the same time, the bank caused to be filed, a criminal
case, based on the same acts. Petitioner was acquitted in the criminal case on the ground
that the elements of the crime charged were not proven. Based on his aquittal petitioner
filcd a Motion to Dismiss in each of the two civil cases. The two presiding judges in the
separate civil cases took diametrically opposing views. One judge denied his motion and
the other granted it. Hence, these petitions by the blank in one case and by Salta in the
other.
The Supreme Court affirmed the order denying thc motion to dismiss and reversed the
order granting the said motion. It held that since the civil actions very clearly alleged
fraud and negligence as having given rise to the cause of action averred in the
complaints, the civil actions can be maintained regardless of the outcome of the criminal
action.
SYLLABUS
1. REMEDIAL LAW; CRIMINAL PROCEDURE; PROSECUTION OF CIVIL ACTIONS;
ALLEGATION OF FRAUD WARRANTS SEPARATE AND INDEPENDENT CIVIL ACTIONS.
The filing in this case of a civil action separate from the criminal action is fully warranted
under the provision of Article 33 of the New Civil Code. The criminal case is for the
prosecution of an offense the main element of which is fraud, one of the kinds of crime
mentioned in the aforecited provision. Based on the same acts for which the criminal
action was filed, the civil actions very clearly alleged fraud and negligence as having
given rise to the cause of action averred in the complaints. The following allegation in the
complaints unmistakably shows that the complaints do contain sufficient averment of

fraud: "That there was fraud committed by the defendant in granting the aforesaid loans
which rendered him liable for his acts, which fraud is positively and easily identifiable in
the
manner
and
scheme
aforementioned."cralaw
virtua1aw
library
2. ID.; ID.; ID; ID.; CIVIL ACTION MAY PROSPER REGARDLESS OF RESULT OF CRIMINAL
ACTION; RATIONALE. It is significant to note that under Article 31 of the New Civil
Code, it is made clear that the civil action permitted therein to be filed separately from
the criminal action may proceed independently of the criminal proceedings "regardless
of the result of the latter." It seems perfectly reasonable to conclude that the civil actions
mentioned in Article 33, permitted in the same manner to be filed separately from the
criminal case, may proceed similarly regardless of the result of the criminal case.
3. ID.; ID.; ID.; ALLEGATION OF NEGLIGENCE WARRANTS FILING OF INDEPENDENT
CIVIL ACTION. That there is allegation of negligence is also unmistakably shown when
the complaint states that "the defendant as manager of Malolos Branch, in gross violation
of the bank rules and regulations, and without exercising necessary prudence, . . . .
extended a number of credit accommodations. . ." On this allegation of negligence alone,
the civil case may be maintained as an entirely independent action from the criminal
case. Consequently, Section 3(c), Rule III of the Revised Rules of Court has no application
thereto.
DECISION
DE CASTRO, J.:
In these two cases, the only issue to be resolved is whether a decision of acquittal in a
criminal case operates to dismiss a separate civil action filed on the basis of the same
facts as alleged in the criminal case, which is for violation of Republic Act No. 3019,
otherwise
known
as
the
Anti-Graft
and
Corrupt
Practices
Act.
The petitioner, Almario T. Salta, in G.R. No. L-37733, takes the affirmative stand on the
issue as above indicated, as he made manifest in his motion to dismiss Civil Case No.
79583, of the CFI of Manila, Branch XIV, which was, however, denied by Hon. Jesus de
Veyra, presiding. In a similar motion aforementioned petitioner sought to dismiss
another civil case (Civil Case No. 88343), pending before Branch VII of the same CFI of
Manila, presided over by Hon. Amante Purisima who granted the motion to dismiss.
We have, therefore, the unedifying spectacle of two cases involving the same issue
disposed of by two judges in a manner directly in opposition of each other. For a uniform
ruling that would authoritatively settle this regrettable conflict of opinion, the two cases
have been consolidated for a single decision. For purposes of convenience, however,
although the petitioner in G.R. No. L-37733, Almario T. Salta, is the private respondent in
the other case, G.R. No. L-38035, in which the petitioner is the Philippine National Bank,
We shall refer in this decision to Salta as "petitioner," and the PNB, as "respondent
bank."cralaw
virtua1aw
library
Petitioner was an employee of the PNB assigned as Manager of the Malolos branch. As
such, his duty was, among others, to himself grant loans, or only to recommend the

granting of loans, depending on the amount of the loan applied for. In the performance of
this particular duty, he is supposed to exercise care and prudence, and with utmost
diligence, observe the policies, rules and regulations of the bank.
In disregard of the pertinent rules, regulations and policies of the respondent bank,
petitioner indiscriminately granted certain loans mentioned in the complaints filed by
PNB, in manner characterized by negligence, fraud and manifest partiality, and upon
securities not commensurate with the amount of the loans. This is how the respondent
bank found petitioner to have discharged his duties as branch manager of the bank, and
so it filed a civil action in the CFI of Manila (Civil Case No. 79583, Branch XIV) on April
22, 1970, and another case (Civil Case No. 88343, Branch VII) on September 23, 1972, to
recover losses the bank suffered. At the same time the bank caused to be filed, based on
the same acts, a criminal case with the Circuit Criminal Court of the Fifth Judicial District
at San Fernando, Pampanga, Criminal Case No. CCC-V-668, for violation of the Anti-Graft
and
Corrupt
Practices
Act.
In the criminal case, the Court, on motion to dismiss filed by the defense, after the
prosecution has rested, granted the motion in a 64-page Resolution, the dispositive
portion
of
which
reads:jgc:chanrobles.com.ph
"CONFORMABLY WITH ALL THE FOREGOING, therefore, the Motion to Dismiss
(Demurrer) to Evidence) should be as it is hereby granted and accused ALMARIO T.
SALTA ACQUITTED of the offense charged in the Information the prosecution having to
prove the essential ingredience and/or elements of the crime charged, with costs de
oficio."
1
With his acquittal in the criminal case, petitioner filed Motions to Dismiss in each of the
two civil cases, based on Section 3(c), Rule III of the Revised Rules of Court which
provides:jgc:chanrobles.com.ph
"(c) extinction of the penal action does not carry with it extinction of the civil, unless the
extinction proceeds from a declaration in a final judgment that the fact from which the
civil
might
arise
did
not
exist.
.
.
."
2
It is in the resolution of the motions to dismiss that Judges de Veyra and Purisima of the
CFI of Manila took diametrically opposing views, the former denying the motion, the
latter
granting
it.
We sustain the order denying the motion to dismiss as issued by Judge de Veyra, which,
for its brevity, but clear and convincing, We quote as follows:jgc:chanrobles.com.ph

To begin with, the filing in this case of a civil action separate from the criminal action is
fully warranted under the provision of Article 33 of the New Civil Code. 4 The criminal
case is for the prosecution of an offense the main element of which is fraud, one of the
kinds of crime mentioned in the aforecited provision. Based on the same acts for which
the criminal action was filed, the civil actions very clearly alleged fraud and negligence as
having given rise to the cause of action averred in the complaints. It needs hardly any
showing to demonstrate this fact, which petitioner disputes, particularly as to the
sufficiency of the allegation of fraud in the civil complaints. Definitely, We hold that the
following allegation in the complaints unmistakably shows that the complaints do
contain
sufficient
averment
of
fraud:jgc:chanrobles.com.ph
"13. That there was fraud committed by the defendant in granting the aforesaid loans
which rendered him liable for his acts, which fraud is positively and easily identifiable in
the
manner
and
scheme
aforementioned."
5
That there is allegation of negligence is also unmistakably shown when the complaint
states that "the defendant manager of Malolos Branch, in gross violation of the rules and
regulations, and without exercising necessary prudence, . . . extended a number of credit
accommodation . . ." 6 On this allegation of negligence alone, the civil case may be
maintained as an entirely independent action from the criminal case. Consequently,
Section 3(c), Rule III of the Revised Rules of Court has no application thereto.
The ruling in the case of PNB v. Bagamaspad, 7 involving the same respondent herein,
and also against its branch manager, unherringly charts the course to be followed in final
resolution
of
these
cases.
Thus

"The trial court based in the civil liability the appellants herein on the provisions of
Article 1718 and 1719 of the Civil Code, defining and enumerating the duties and
obligations of an agent and his liability for failure to comply with such duty. . . . A careful
study and consideration of the record, however, convinces us and we agree with the trial
court that the defendants-appellants have not only violated instructions of the plaintiff
Bank, including things which the bank wanted done or not done, all of which were fully
understood by them, but they (appellants) also violated standing regulations regarding
the granting of loans, and what is more, thru their carelessness, laxity and negligence,
they allowed bans to be granted to persons who were not entitled to secure loans." 8
If petitioners civil liability is, as alleged in the complaint, based on negligence, apart from
the averment of fraud, then on the strength of the aforesaid ruling, the civil action can be
maintained
regardless
of
the
outcome
of
the
criminal
action.

"Having been acquitted by the Circuit Court of the charges of violation of the Anti-Graft
Law, Defendant now seeks the dismissal of the civil case which arose from the same set
of facts. The motion to dismiss must be denied for the reason that acquittal in the
criminal case will not be an obstacle for the civil case to prosper unless in the criminal
case the Court makes a finding that even civilly the accused would not be liable there
is no such a finding. Apart from this, Plaintiff in this present civil case bases its case
either on fraud or negligence evidence that only requires a preponderance, unlike
beyond reasonable doubt which is the requisite in criminal cases.

The opinion of former Justice J.B.L. Reyes in Dionisio v. Alvendia 9 is not only
enlightening,
but
authoritative.
Thus

"The

It is significant to note that under Article 31 11 of the New Civil Code, it is made clear

motion

to

dismiss

is,

therefore,

denied

for

lack

of

merit."

". . . in the case of an independent civil actions under the Civil Code, the result of the
criminal case, whether acquittal or conviction, would be entirely irrelevant to the civil
action. This seems to be the spirit of the law when it decided to make these actions
`entirely separate and distinct from the criminal action (Articles 22, 33, 34 and 2177).
Hence in these cases, I think Rule 107 Sec. 1(d) does not apply." 10

that the civil action permitted therein to be filed separately from the criminal action may
proceed independently of the criminal proceedings "regardless of the result of the
latter." It seems perfectly reasonable to conclude that the civil actions mentioned in
Article 33, permitted in the same manner to be filed separately from the criminal case,
may proceed similarly regardless of the result of the criminal case.
Indeed, when the law has allowed a civil case related to a criminal case, to be filed
separately and to proceed independently even during the pendency of the latter case, the
intention is patent to make the courts disposition of the criminal case of no effect
whatsoever on the separate civil case. This must be so because the offenses specified in
Article 33 are of such a nature, unlike other offenses not mentioned, that they may be
made the subject of a separate civil action because of the distinct separability of their
respective juridical cause or basis of action. This is clearly illustrated in the case of
swindling, a specie of an offense committed by means of fraud, where the civil case may
be filed separately and proceed independently of the criminal case, regardless of the
result of the latter.chanrobles virtualawlibrary chanrobles.com:chanrobles.com.ph
The wisdom of the provision of Article 33 of the New Civil Code is to be found in the fact
that when the civil action is reserved to be filed separately, the criminal case is
prosecuted by the prosecuting officer alone without intervention from, private counsel
representing the interest of the offended party. It is but just that when, as in the present
instance, the prosecution of the criminal case is left to the government prosecutor
undertake, any mistake or mishandling of the case committed by the latter should not
work to the prejudice of the offend party whose interest would thus be protected by the
measure contemplated by Article 33 and Article 2177 12 of the New Civil Code.
Prescinding from the foregoing, it should be stated with emphasis, for its decisive effect
on how the issue raised in this case should be disposed of, that in no manner may the
resolution of the Circuit Criminal Court be read as positively stating that the fact from
which the civil action might arise did not exist, as required in the provision relied upon
by petitioner, Section 3(C), Rule III of the Revised Rules of Court. As Judge de Veyra put
it, "acquittal in the criminal case will not be an obstacle for the civil case to prosper
unless in the criminal case the Court makes a finding that even civilly, the accused would
not be liable there is no such finding." There, indeed, could not be such finding
because the criminal court, aware that the civil case is not before it, would be acting in
excess of jurisdiction if it were to make any pronouncement in effect disposing of a case
pending before another court, over which it had not acquired jurisdiction. Even if this
were authorized by the Rules of Court, the validity of such rule would be open to serious
doubt as it would be affecting a matter of jurisdiction, which is substantive in character,
considering the constitutional limitation of the rule-making power of the Supreme Court,
that
said
rules
should
not
increase
or
diminish
substantive
rights.chanroblesvirtualawlibrary
WHEREFORE, the order denying the motion to dismiss issued in Civil Case No. 79583 of
the Court of First Instance of Manila (G. R. No. L-37733) is affirmed, while the order
granting a similar motion in Civil Case No. 88343 of the same court (G. R. No. L-38035) is
reversed. Let the records of these two (2) cases be remanded to their respective courts of
origin
for
proper
further
proceedings.
No
costs.
SO ORDERED.

Republic of the Philippines


SUPREME COURT
Manila
FIRST DIVISION
G.R. No. L-38037 January 28, 1974
ROQUE ENERVIDA, petitioner,
vs.
LAURO DE LA TORRE and ROSA DE LA TORRE, respondents.
Gregorio A. Palabrica for petitioner.
Manuel Ruiz for respondents.
ESGUERRA, J.:1wph1.t
In this appeal certified by the Court of Appeals to this Court as involving purely a
question of law, We affirm the dismissal order dated March 29, 1966, of the Court of First
Instance of Davao in its Civil Case No. 3886, entitled "Roque Enervida vs. Lauro de la
Torre and Rosa de la Torre," but modify the award of damages by eliminating moral
damages.
The dispositive portion of said Order reads as follows:
Considering the fact that the plaintiff has no cause of action against
the defendants and has no legal capacity to sue, and considering
further that he is prompted with malice and bad faith in taking this
action to Court by alleging false statements in his complaint, this
Court hereby orders the dismissal of the case and also order the
plaintiff to pay unto the defendants the sum of TWO THOUSAND
(P2,000.00) PESOS in concept of actual moral and exemplary damages
and also for payment of attorney's fees. If the plaintiff has been guided
or advised by any attorney to allege in the complaint the falsities
mentioned above, the latter should deserve to be investigated for
malpractice and to be weeded out of the profession, if, after due
hearing the facts and the law may warrant.
The essential facts that led to the filing of this action as set forth by the Court of Appeals
are as follows: Plaintiff-appellant, now petitioner Roque Enervida, filed a complaint
against the defendant-spouses Lauro de la Torre and Rosa de la Torre, praying that the
deed of sale executed on December 3, 1957, by his deceased father, Ciriaco Enervida,
over a parcel of land covered by a Homestead Patent be declared null and void for having
been executed within the prohibited period of five years, in violation of the provision, of
Section 118 of Commonwealth Act 141, otherwise known as the Public Land Law. He
further prayed that he be allowed to repurchase said parcel of land for being the
legitimate son and sole heir of his deceased father.
In due time, defendants filed their answer, stating among others that the plaintiff has no
cause of action against them as his father, Ciriaco Enervida, is still living; that it is not
true that plaintiff is the only son of Ciriaco Enervida as he has also other living children,
namely, Juan, Filomena, Nieves and Antonio, all surnamed "Enervida"; and that the sale
of the property in question did not take place within the prohibited period provided for
in Section 118 of the Public Land Law, the sale having taken place on November 20,
1957, although ratified and acknowledged on December 3, 1957, before a Notary Public.
On September 9, 1965, during the pre-trial conference on the case, plaintiff-appellant
reiterated what he alleged in his reply to defendants' answer and admitted that his
father, Ciriaco Enervida, is still living and that he has four other living brothers and
sisters who were not joined as party-plaintiffs. He also admitted that the sale of the land

in question actually took place on November 20, 1957, but was formalized only on
December 3, 1957. He likewise admitted the authenticity of a certified true copy of
Original Certificate of Title No. P-1744 covering the land in question wherein it is stated
that the Homestead Patent No. H-169512 on which the title is based was issued to
Ciriaco Enervida way back on November 17, 1952.
In view of plaintiff's admission of the material facts at the pre-trial conference, the
defendants spouses were constrained to ask for summary judgment, pursuant to Rule 34,
in relation with Section 3, Rule 20 of the Rules of Court, on the ground that there is no
genuine issue on the case because with plaintiff's admissions it is evident that the sale in
question was not executed within the prohibited five-year period imposed by Section
118 of Commonwealth Act 141.<re||an1w> They reasoned out that from November
17, 1952, when the Homestead Patent was issued in favor of the patentee, up to
December 3, 1957, when the alleged sale took place, more than five years had already
elapsed, so that even if the patentee wanted to exercise his right to repurchase as
provided for in Section 119 of the Public Land Law, from November 20, 1957, when the
sale actually took place up to December 3, 1962, when plaintiff's complaint was filed he
could not do so because the five-year period had already elapsed. Defendants claim that
plaintiff has no cause of action against them because the patentee, Ciriaco Enervida, is
still living and plaintiff's right to repurchase the homestead of his father could be availed
of only when the latter is already dead. Acting upon defendants' motion for summary
judgment, the Court a quo issued the now questioned Order of March 29, 1966,
dismissing the complaint. Hence the present appeal.
Plaintiff-appellant maintains that the trial court erred:
1. In finding that the appellant made untruthful statement of facts and
that he failed to correct the alleged falsity regarding the death of his
father and that he is the only heir;
2. In finding that the appellant lacked the legal capacity to sue because
his father is still very much alive and in finding that his father is the
only person authorized to bring the action;
3. In finding that the sale of the property in question was
consummated on November 20, 1957, and in holding that the right to
repurchase has expired on November 20, 1962, and so the complaint
was filed beyond the time required by law;
4. In finding that the appellant has no cause of action and that he acted
in bad faith in filing the complaint and in awarding damages and
attorney's fees;
5. That the lower court erred in not directing reconveyance and in not
divesting appellees of their title to the land upon payment of the
repurchase price.
Recapitulating the assigned errors, it results that the main issue presented for
determination is whether the court a quo committed an error in dismissing the case
based on defendants' motion for summary judgment. Section 2 and 3 of Rule 34 and
Section 3 of Rule 20 of the Rules of Court explicitly provide regarding the matter:
Section 2 Summary Judgment for defending party A party
against whom a claim, counterclaim, or cross-claim is asserted or a
declaratory relief is sought may, at anytime, move with supporting
affidavits for a summary judgment in his favor as to all or any part
thereof. (Rule 34)
Section 3 Motion and proceedings thereon The motion shall be
served at least ten (10) days before the time specified for the hearing.
The adverse party prior to the day of hearing may serve opposing

affidavits. After the hearing, the judgment sought shall be rendered


forthwith if the pleadings, depositions, and admissions on file
together with the affidavits, show that, except as to the amount of
damages, there is no genuine issue as to any material fact and that the
moving party is entitled to a judgment as a matter of law. (Rule 34)
Section 3 Judgment on the pleadings and summary judgment at
pre-trial. If at the pre-trial the court finds that facts exist upon which a
judgment on the pleadings or a summary judgment may be made, it
may render judgment on the pleadings or a summary judgment as
justice may require. (Rule 20)
Summary Judgment should be availed of as an effective method of disposing civil actions
where there is no genuine issue as to any material fact. Here it was clearly shown at the
pre-trial conference that plaintiff-appellant, now petitioner, virtually admitted that his
father, Ciriaco Enervida, the patentee, is still living; that petitioner is not the sole heir as
he has other brothers and sisters who were also living, contrary to his allegations in the
complaint under oath, that he was the sole heir. As the patentee is still living, plaintiffappellant could not have, on his own right, sought the repurchase of the land as it would
be violative of Section 119 of the Public Land Law which reads:
Section 110 Every conveyance of land acquired under the free
patent or homestead provisions, when proper, shall be subject to
repurchase by the applicant, his widow or legal heirs, within a period of
five years from the date of conveyance.
This Court, through then Associate, now Chief Justice, Makalintal, previously ruled that
where the vendor is still living, it is he alone who has the right of redemption. 1 It is clear,
therefore, that the complaint is without basis and there is no cause of action and the
plaintiff-appellant has no legal capacity to sue. On this score alone, the petition should be
denied. But the petitioner contends that the sale was made within the prohibitory period,
in contravention of Section 118 of the Public Land Law, 2 without recalling the fact that
during the pre-trial conference he never denied but admitted the fact that the actual sale
of the land in question was made on November 20, 1957, albeit formalized only on
December 3, 1957. In Soriano, et al. v. Latoo, 87 Phil. 757, 760, this Court ruled:
The formal objection to the deed of sale is of no moment. We agree
with the trial Judge that had not this instrument been notarized at all,
the same would have been fully effective as between the parties under
Art. 1261 of the old civil code in force at the time of the conveyance.
All the elements of a valid contract were present: subject matter,
capacity and consent of the parties and lawful consideration.
Also to be noted is the fact that appellant did not deny the authenticity of a certified copy
of Original Certificate of Title No. P-1744 covering the land in question where it appears
that Homestead Patent No. H169512 was issued to Ciriaco Enervida, appellant's father,
way back on November 17, 1952. In this connection, Recido v. Refaso 3 is pertinent. This
Court speaking through then Chief Justice Bengzon in said case said:
A Sale by Petra: There is no question that on June 14, 1948, the
Refasos bought her one-half share in the homestead. Nevertheless, she
now attacks the validity of her conveyance, pointing out to the legal
prohibition against sales of homesteads "from the date of application
and for a term of five years from and after the date of issuance of the
patent." To Petra, the law prohibits the sale of the homestead not only
during the period between application and issuance of the patent but
also during the five years after such issuance. And, she argues, my sale

was void because it was made in 1948 before the issuance of the
patent in 1949.
Agreeing to her first legal proposition or major premise, the Court of
Appeals held, contrary to her contention, that issuance of the patent
took place in 1941. And as the sale had been made in 1948 - seven
years afterwards it was valid. Said Court explained that the
issuance of the patent in this case occurred in 1941, when the Director
of Lands signed the order for the issuance of the patent. This opinion,
Petra challenged, insisting that the patent had been issued in 1949 not
1941.
Her contention must be overruled in the light of our decision in Tinio
v. Frances, 51 Off. Gaz. 6205, wherein construing this identical
prohibition, we ruled that the patent is deemed issued upon
promulgation of the order of the Director of Lands for the issuance
thereof in this case 1941.
For the purpose of computing the five-year prohibition against alienation of homesteads,
it is to be reiterated and emphasized that the patent is deemed issued upon
promulgation of the order for issuance thereof by the Director of Lands. This being the
case, We see no violation of the provisions of either Section 118 or 119 of the Public Land
Law committed by herein respondents because even assuming that the sale sought to be
nullified was made on December 3, 1957, as claimed by appellant, still the same was
made well beyond the five-year period provided by Section 118 of Commonwealth Act
141.
On the strength of the admissions by plaintiff-appellant at the pre-trial conference which
the latter never bothered to oppose or deny in a later motion or by counter-affidavits, the
order granting summary judgment was indeed proper (Jugador v. Vera). 4
Lastly, the plaintiff-appellant assailed the award of damages and attorney's fees by the
court a quo to respondents. Article 2208 of the New Civil Code on attorney's fees
specifically provides:
Article 2208 In the absence of stipulation, attorney's fees and
expenses of litigation, other than judicial costs, can not be recovered,
except:
xxx xxx xxx
xxx xxx xxx
(4) In case of a clearly unfounded civil action or proceeding against
the plaintiff;
xxx xxx xxx
As the case at bar is clearly an unfounded civil action, the respondents may recover
attorney's fees. InDeogracias Malonzo vs. Gregoria Galang, 5 this Court, applying the
above doctrine, said:
As to attorney's fees, the award is correct and proper, in view of the
finding of the trial court and of the Court of Appeals that petitioner's
action against respondents is clearly unfounded, since Article 2208,
par. (4), of the New Civil Code authorizes the recovery of attorney's
fees "in case of a clearly unfounded civil action or proceeding against
the plaintiff." This provision applies equally in favor of a defendant
under a counter-claim for attorney's fees (as in this case), considering
that a counter-claim is a complaint by the defendant against the
original plaintiff (Pongos vs. Hidalgo Enterprises, Inc., et al., 84 Phil.
499) wherein the defendant is the plaintiff and the original plaintiff
the defendant.

However, with regard to the award of TWO THOUSAND PESOS "in concept of actual,
moral and exemplary damages ...", the same is not proper for it would ran counter to the
decision of this Court in the case aforecited where it was ruled:
Finally, with respect to moral damages, we are inclined to agree with
petitioner that these damages are not recoverable herein,
notwithstanding the finding of the trial court and the Court of Appeals
that his complaint against respondents were clearly unfounded or
unreasonable. It will be observed that unlike compensatory or actual
damages which are generally recoverable in tort cases as long as there
is satisfactory proof thereof (Art. 2202), the Code has chosen to
enumerate the cases in which moral damages, may be recovered (Art.
2219). A like enumeration is made in regard to the recovery of
attorney's fees as an item of damage (Art. 2208). But the two
enumerations differ in the case of a clearly unfounded suit, which is
expressly mentioned in Art. 2208 (par. 4), as justifying an award of
attorney's fees, but is not included in the enumeration of Art. 2219 in
respect to moral damages. It is true that Art. 2219 also provides that
moral damages may be awarded in "analogous cases" to those
enumerated, but we do not think the Code intended" a clearly
unfounded civil action or proceedings" to be one of these analogous
cases wherein moral damages may be recovered, or it would have
expressly mentioned it in Art. 2219, as it did in Art. 2208; or else
incorporated Art. 2208 by reference in Art. 2219. Besides, Art. 2219
Specifically mentions "quasi-delicts causing physical injuries", as an
instance when moral damages may be allowed, thereby implying that
all other quasi-delicts not resulting in physical injuries are excluded
(Strebel vs. Figueras, 96 Phil. 321), excepting, of course, the special
torts referred to in Art. 309, par. 9, Art. 2219) and in Arts. 21, 26, 27,
28, 29, 30, 32, and 34, 35 on the chapter on human relations (par. 10,
Art. 2219).
Furthermore, while no proof of pecuniary loss is necessary in order
that moral damages may be awarded, the amount of indemnity being
left to the discretion of the court (Art. 2216), it is, nevertheless,
essential that the claimant satisfactorily prove the existence of the
factual basis of the damage (Art. 2217) and its causal relation to
defendant's acts. This is so because moral damages, though incapable
of pecuniary estimation, are in the category of an award designed to
compensate the claimant for actual injury suffered and not to impose
a penalty on the wrongdoer (Algara vs. Sandejas, 27 Phil. 294). The
trial court and the Court of Appeals both seem to be of the opinion
that the mere fact that respondent were sued without any legal
foundation entitled them to an award of moral damages, hence they
made no definite finding as to what the supposed moral damages
suffered consist of. Such a conclusion would make of moral damages a
penalty, which they are not, rather than a compensation for actual
injury suffered, which they are intended to be. Moral damages, in
other words, are not corrective or exemplary damages.
WHEREFORE, the dismissal order is hereby affirmed with the modification that only
attorney's fees in the amount of P1,500 are hereby awarded to the respondents. No
Costs.
Makalintal, C.J., Teehankee and Muoz Palma, JJ., concur.1wph1.t

Castro and Makasiar, JJ., concur in the result.

Republic of the Philippines


SUPREME COURT
Manila
EN BANC
January 30, 1965

G.R. No. L-18337


CHUA CHE, petitioner,
vs.
PHILIPPINES PATENT OFFICE and SY TUO, respondents.
Chipeco & Alcaraz, Jr. for petitioner.
Perfecto E. de Vera for respondents.
PAREDES, J.:
This is a petition to review the decision of the Director of Patents, in Inter Partes Case No.
161, denying the application of petitioner Chua Che for the registration of "T.M. X-7" for
use on soap Class 51, being manufactured by said Chua Che, upon the opposition of
respondent Sy Tuo.
Under date of October 30, 1958, Chua Che presented with the Philippines Patent Office a
petition praying for the registration in his favor the trade name "X-7". The petition,
states:
The undersigned CHUA CHE, a citizen of China, a resident of 2804 Limay St.,
Tondo, Manila, and doing business at same address, has adopted and used the
trademark "X-7" shown in the accompanying Drawing.
In accordance with the requirements of law, the undersigned declares that this
trademark
1. Was first used by him on June 10, 1957.
2. Was first used by him in commerce in or with the Philippines on June 10,
1957.
3. Has been continuously used by him in trade in or with the Philippines for
more than one year.
4. Is, on the date of this application, actually used by him on the following
goods, classified according to the Official Classification of Goods (Rule 82):
Class 51 Soap
5. Is applied to the goods or to the packages containing the same, by placing
thereon a printed label on which the trademark is shown, or by directly
impressing the mark to the goods.
The corresponding declaration, which was under oath, contained, among others, the
following:
3. That he believes himself to be the lawful owner of the trademark sought to be
registered.
4. That the said trademark is in actual use in commerce in or with the
Philippines not less than two months before this application is filed.
5. That no other person, partnership, corporation, or association, to the best of
his knowledge and belief, has the right to use said trademark in the Philippines,
either in the identical form or in any such near resemblance thereto as might be
calculated to deceive.
Under date of July 6, 1959, an Examiner of the Department of Commerce and Industry,
submitted a report recommending the allowance of the application, which report was
approved by the Supervising TM Examiner. After the Notice of allowance was published
in the Official Gazette, as required, respondent Sy Tuo presented a "Notice of
Opposition," dated October 15, 1959, anchoring said opposition on the following
allegations:

1. The registration of the trademark "X-7" as applied for by CHUA CHE will not
only violate the rights and interests of the Oppositor over his registered
trademark "X-7" covered by Certificate of Registration No. 5,000, issued April
21, 1951, but will also tend to mislead the purchasing public and make it
convenient for unscrupulous dealers to pass off the goods of the applicant
CHUA CHE, for those of the oppositor SY TUO, to the injury of both the
oppositor and the public.
2. The registration of the said trademark "X-7" in the name of CHUA CHE will be
in violation of, and will run counter to, Section 4 (d) of Republic Act No. 166, as
amended, because it is confusingly similar to the trademark "X-7" covered by
Registration No. 5,000 previously registered to, and being used by the
oppositor and is not abandoned.
The Oppositor SY TUO, doing business as the Western Cosmetic Laboratory will
rely on the following facts:
(a) Oppositor has prior use of the trademark "X-7" as he has been
using it extensively and continuously since July 31, 1952, while the
applicant, Chua Che, allegedly used his trademark only since June 10,
1957.1wph1.t
(b) Oppositor's mark "X-7" is distinctive and his invented mark and
not merely an ordinary, common and weak mark.
(c) The oppositor and the applicant use the trademark "X-7" for allied
and closely related products.
(d) The oppositor has spent a huge amount by way of advertising and
advertising his "X-7" brand.
(e) The oppositor has spent a big amount in expanding his business
for the manufacture of toilet soap and crystal laundry soap with his
already popular "X-7" brand.
(f) The trademark applied for by the applicant Chua Che consists of
the trademark "X-7" and anyone is likely to be misled as to the source
or origin by the close resemblance or identity with the trademark "X7" of the oppositor.
Attached to the Opposition were labels (samples) being used by oppositor on his
products, which clearly show "X-7".
Petitioner herein presented an Answer to Notice of Opposition, claiming among others
that the grounds of opposition are not correct, since although it is admitted that "X-7" is
registered in the name of oppositor, said trademark is not being used on soap, but purely
toilet articles. After the presentation of the Answer the case was heard, wherein the
parties presented their respective evidence, both testimonial and documentary. In the
memoranda of the contenders, they limited the principal issues, thus
Oppositor SY TUO
The registration of the trademark "X-7" in the name of applicant CHUA CHE will
likely mislead the public so as to make them believe that said goods are
manufactured or sponsored by or in some way in trade associated with
opposer.
Applicant CHUA CHE
In Inter Partes proceedings, the principal issue is "priority of adoption and use."
Since opposer has not yet used "X-7" mark on soap, but will still use it,
applicant should be entitled to the registration of the same.
The Director of Patents rendered judgment on January 18, 1961, the pertinent portions
of which read:

Based on those facts there is no question that opposer's first use of the
trademark X-7 on July 31, 1953, is prior to applicant's first use of the mark on
June 10, 1957. The only question then in this case is whether or not purchasers
of X-7 perfume, lipstick and nail polish would likely upon seeing X-7 laundry
soap, attribute common origin to the products or assume that there existed
some kind of trade connection between applicant and opposer.
Opposer's record shows that he has been using since July 31, 1953 the
trademark X-7 on perfume, lipstick and nail polish; that he has spent
substantial amounts of money in building upon the goodwill of this trademark
through advertisements in all kinds of media through newspapers of general
circulation, by means of billboards in various places in the Philippines, and also
over the radio and television. In these advertisements opposer has spent about
P120,000.00. There is no question that opposer enjoys a valuable goodwill in
the trademark X-7.
The products of the parties, while specifically different, are products intended
for use in the home and usually have common purchasers. Furthermore, the use
of X-7 for laundry soap is but a natural expansion of business of the opposer. In
fact, herein opposer in 1956, prior to the alleged date of first use by
respondent-applicant of the trademark X-7 for laundry soap on June 10, 1957,
had made steps in expanding the use of this trademark to granulated soap.
Under these circumstances, it is concluded that the average purchasers are
likely to associate X-7 laundry soap with X-7 perfume, lipstick and nail polish or
to think that the products have common origin or sponsorship.
IN VIEW OF THE ABOVE FINDINGS, the opposition in this case should be as it is
hereby sustained and consequently Application Serial No. 6941, of Chua Che, is
also hereby rejected.
OPPOSITION SUSTAINED
The above judgment is now before Us, applicant-appellant claiming that it was error for
the Director to conclude that opposer SY TUO had priority to use the trademark in
question, and that the use by appellant of the trademark "X-7" on granulated soap to be
manufactured and sold by him, would likely mislead purchasers.
At the very outset, we would like to state that in cases of the nature of the one at bar,
only questions of law should be raised, and the only exception to this rule, meaning that
findings of facts may be reviewed, is when such findings are not supported by substantial
evidence (Sec. 2, Rule 44, Revised Rules). The finding of the Director of Patents Office to
the effect that opposer-appellee Sy Tuo had priority of use and adoption of the
trademark "X-7", is for all intents and purposes, one of fact. This being the case, such
finding becomes conclusive to this Court. Even on this sole issue alone, the petition for
review must fall.
However, there are other matters which must be clarified. For instance, the fact that
appellee has not yet used the trademark "X-7" on granulated soap, the product on which
appellant wants to use the said trademark. The circumstance of non-actual use of the
mark on granulated soap by appellee, does not detract from the fact that he has already a
right to such a trademark and should, therefore, be protected. The observation of the
Director of Patents to the effect that "the average purchasers are likely to associate X-7
laundry soap with X-7 perfume, lipstick and nail polish or to think that the products have
common origin or sponsorship," is indeed well taken. It has been pointed out by
appellant that the product upon which the trademark X-7 will be used (laundry soap) is
different from those of appellee's, and therefore no infringement and/or confusion may
result. We find no merit in the above contention, for it has been held that while it is no
longer necessary to establish that the goods of the parties possess the same descriptive

properties, as previously required under the Trade Mark Act of 1905, registration of a
trademark should be refused in cases where there is a likelihood of confusion, mistake,
or deception, even though the goods fall into different categories. (Application of Sylvan
Sweets Co., 205 F. 2nd, 207.) The products of appellee are common household items
nowadays, in the same manner as laundry soap. The likelihood of purchasers to associate
those products to a common origin is not far-fetched. Both from the standpoint of
priority of use and for the protection of the buying public and, of course, appellee's rights
to the trademark "X-7", it becomes manifest that the registration of said trademark in
favor of applicant-appellant should be denied.
PREMISES CONSIDERED, the decision sought to be reviewed should be, as it is hereby
affirmed in all respects, with costs against appellant CHUA CHE in both instances.

Republic of the Philippines


SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 75067 February 26, 1988
PUMA SPORTSCHUHFABRIKEN RUDOLF DASSLER, K.G., petitioner
vs.
THE INTERMEDIATE APPELLATE COURT and MIL-ORO MANUFACTURING
CORPORATION, respondents.
GUTIERREZ, JR., J.:
This is a petition for review by way of certiorari of the Court of Appeals' decision which
reversed the order of the Regional Trial Court and dismissed the civil case filed by the
petitioner on the grounds of litis pendentia and lack of legal capacity to sue.
On July 25, 1985, the petitioner, a foreign corporation duly organized and existing under
the laws of the Federal Republic of Germany and the manufacturer and producer of
"PUMA PRODUCTS," filed a complaint for infringement of patent or trademark with a
prayer for the issuance of a writ of preliminary injunction against the private respondent
before the Regional Trial Court of Makati.
Prior to the filing of the said civil suit, three cases were pending before the Philippine
Patent Office, namely:
Inter Partes Case No. 1259 entitled 'PUMA SPORTSCHUHFABRIKEN v.
MIL-ORO MANUFACTURING CORPORATION, respondent-applicant
which is an opposition to the registration of petitioner's trademark
'PUMA and DEVICE' in the PRINCIPAL REGISTER;
Inter Partes Case No. 1675 similarly entitled, 'PUMA
SPORTSCHUHFABRIKEN RUDOLF DASSLER, K.G., petitioner, versus
MIL-ORO MANUFACTURING CORPORATION, respondent-registrant,'
which is a case for the cancellation of the trademark registration of
the petitioner; and
Inter Partes Case No. 1945 also between the same parties this time
the petitioner praying for the cancellation of private respondent's
Certificate of Registration No. 26875 (pp. 40-41, 255, Rollo) (pp. 51 52, Rollo)
On July 31, 1985, the trial court issued a temporary restraining order, restraining the
private respondent and the Director of Patents from using the trademark "PUMA' or any
reproduction, counterfeit copy or colorable imitation thereof, and to withdraw from the
market all products bearing the same trademark.
On August 9, 1985, the private respondent filed a motion to dismiss on the grounds that
the petitioners' complaint states no cause of action, petitioner has no legal personality to
sue, and litis pendentia.
On August 19, 1985, the trial court denied the motion to dismiss and at the same time
granted the petitioner's application for a writ of injunction. The private respondents
appealed to the Court of Appeals.
On June 23, 1986, the Court of Appeals reversed the order of the trial court and ordered
the respondent judge to dismiss the civil case filed by the petitioner.
In reversing the order of the trial court, the Court of Appeals ruled that the requisites of
lis pendens as ground for the motion to dismiss have been met. It said:
Obviously, the parties are Identical. They are the same protagonists.
As to the second requisite, which is Identity of rights and reliefs
prayed for, both sides maintain that they are the rightful owners of

the trademark "PUMA" for socks and belts such that both parties seek
the cancellation of the trademark of the other (see prayer in private
respondent's complaint, pp, 54-55, Rollo, Annex "A" to the Petition).
Inevitably, in either the lower court or in the Patent Office, there is a
need to resolve the issue as to who is the rightful owner of the
TRADEMARK 'PUMA' for socks and belts.After all,the right to register
a trademark must be based on ownership thereof (Operators Inc. v.
Director of Patents, L-17910, Oct. 29,1965,15 SCRA 147). Ownership
of the trademark is an essential requisite to be proved by the
applicant either in a cancellation case or in a suit for infringement of
trademark. The relief prayed for by the parties in Inter Partes Cases
Nos. 1259, 1675 and 1945 and Civil Case No. 11189 before
respondent court seek for the cancellation of usurper's trademark,
and the right of the legal owner to have exclusive use of said
trademark. From the totality of the obtaining circumstances, the
rights of the respective parties are dependent upon the resolution of a
single issue, that is, the rightful ownership of the trademark in
question. The second requisite needed to justify a motion to dismiss
based on lis pendens is present.
As to the third requisite, the decisions and orders of administrative
agencies rendered pursuant to their quasi-judicial authority have
upon their finality the character of res judicata (Brilliantes v. Castro,
99 Phil. 497). The rule which forbids the re-opening of a matter once
judicially determined by competent authority applies as well to
judicial acts of public executive and administrative officers and boards
acting within their jurisdiction as to the judgments of Courts having
general judicial powers (Brilliantes vs. Castro, supra). It may be
recalled that the resolution and determination of the issue on
ownership are both within the jurisdiction of the Director of Patents
and the Regional Trial Court (Sec 25, RA 166). It would thus be
confusing for two (2) different forums to hear the same case and
resolve a main and determinative issue with both forums risking the
possibility of arriving at different conclusions. In the construction of
laws and statutes regarding jurisdiction, one must interpret them in a
complementary manner for it is presumed that the legislature does
not intend any absurdity in the laws it makes (Statutory Construction,
Martin, p. 133). Ms is precisely the reason why both decisions of the
Director of Patents and Regional Trial Court are appealable to the
Intermediate Appellate Court (Sec. 9, BP 129), as both are co-equal in
rank regarding the cases that may fall within their jurisdiction.
The record reveals that on March 31, 1986, the Philippine Patent
Office rendered a decision in Inter Partes Cases Nos. 1259 and 1675
whereby it concluded that petitioner is the prior and actual adaptor of
the trademark 'PUMA and DEVICE used on sports socks and belts, and
that MIL-ORO CORPORATION is the rightful owner thereof. ... (pp. 6-7,
CA decision, pp. 51-52, Rollo)
With regard to the petitioner's legal capacity to sue, the Court of Appeals likewise held
that it had no such capacity because it failed to allege reciprocity in its complaint:
As to private respondent's having no legal personality to sue, the
record discloses that private respondent was suing under Sec. 21-A of
Republic Act No. 166, as amended (p. 50, Annex "A", Petition). This is

the exception to the general rule that a foreign corporation doing


business in the Philippines must secure a license to do business
before said foreign corporation could maintain a court or
administrative suit (Sec. 133, Corporation Code, in relation to Sec. 21A, RA 638, as amended). However, there are some conditions which
must be met before that exception could be made to apply, namely: (a)
the trademark of the suing corporation must be registered in the
Philippines, or that it be the assignee thereof: and (b) that there exists
a reciprocal treatment to Philippine Corporations either by law or
convention by the country of origin of the foreign corporation (Sec.
21-A Trademark Law). Petitioner recognizes that private respondent
is the holder of several certificates of registration, otherwise, the
former would not have instituted cancellation proceedings in the
Patent's Office. Petitioner actually zeroes on the second requisite
provided by Section 21-A of the Trademark Law which is the private
respondent's failure to allege reciprocity in the complaint. ...
Citing the case of Leviton Industries v. Salvador (114 SCRA 420), it further ruled:
Failure to allege reciprocity, it being an essential fact under the
trademark law regarding its capacity to sue before the Philippine
courts, is fatal to the foreign corporations' cause. The Concurring
Opinion of Chief Justice Aquino on the same case is more emphatic
when he said:
Respondent Leviton Manufacturing Co. Inc., alleged in par. 2 of its complaint for unfair
competition that its action 'is being filed under the provisions of Section 21-A of Republic
Act No. 166, as amended.' Respondent is bound by the allegation in its complaint. It
cannot sue under Section 21-A because it has not complied with the requirements hereof
that (1) its trademark Leviton has been registered with the Patent Office and (2) that it
should show that the State of New York grants to Philippine Corporations the privilege to
bring an action for unfair competition in that state. Respondent 'Leviton has to comply
with those requirements before it can be allowed to maintain an action for unfair
competition. (p. 9, CA decision). (p. 55, Rollo).
The Court of Appeals further ruled that in issuing the writ of preliminary injunction, the
trial court committed grave abuse of discretion because it deprived the private
respondent of its day in court as the latter was not given the chance to present its
counter-evidence.
In this petition for review, the petitioner contends that the Court of appeals erred in
holding that: (1) it had no legal capacity to sue; (2) the doctrine of lis pendens is
applicable as a ground for dismissing the case and (3) the writ of injunction was
improperly issued.
Petitioner maintains that it has substantially complied with the requirements of Section
21-A of Republic Act R.A. No. 166, as amended. According to the petitioner, its complaint
specifically alleged that it is not doing business in the Philippines and is suing under the
said Repulbic Act; that Section 21-A thereof provides that "the country of which the said
corporation or juristic person is a citizen, or in which it is domiciled, by treaty,
convention or law, grants a similar privilege to corporate or juristic persons of the
Philippines" but does not mandatorily require that such reciprocity between the Federal
Republic of Germany and the Philippines be pleaded; that such reciprocity arrangement
is embodied in and supplied by the Union Convention for the Protection of Industrial
Property Paris Convention) to which both the Philippines and Federal Republic of
Germany are signatories and that since the Paris 'Convention is a treaty which, pursuant
to our Constitution, forms part of the law of the land, our courts are bound to take

judicial notice of such treaty, and, consequently, this fact need not be averred in the
complaint.
We agree.
In the leading case of La Chemise Lacoste, S.A .v. Fernandez, (129 SCRA 373), we ruled:
But even assuming the truth of the private respondents allegation that
the petitioner failed to allege material facto in its petition relative to
capacity to sue, the petitioner may still maintain the present suit
against respondent Hernandes. As early as 1927, this Court was, and it
still is, of the view that a foreign corporation not doing business in the
Philippines needs no license to sue before Philippine courts for
infringement of trademark and unfair competition. Thus, in Western
Equipment and Supply Co. v. Reyes (51 Phil. 11 5), this Court held that a
foreign corporation which has never done any business in the
Philippines and which is unlicensed and unregistered to do business
here, but is widely and favorably known in the Philippines through
the use therein of its products bearing its corporate and tradename,
has a legal right to maintain an action in the Philippines to restrain the
residents and inhabitants thereof from organizing a corporation
therein bearing the same name as the foreign corporation, when it
appears that they have personal knowledge of the existence of such a
foreign corporation, and it is apparent that the purpose of the
proposed domestic corporation is to deal and trade in the same goods
as those of the foreign corporation.
Quoting the Paris Convention and the case of Vanity Fair Mills, Inc. v. T. Eaton, Co. (234 F.
2d 633), this Court further said:
By the same token, the petitioner should be given the same treatment
in the Philippines as we make available to our own citizens. We are
obligated to assure to nationals of 'countries of the Union' an effective
protection against unfair competition in the same way that they are
obligated to similarly protect Filipino citizens and firms.
Pursuant to this obligation, the Ministry of Trade on November
20,1980 issued a memorandum addressed to the Director of the
Patents Office directing the latter -xxx xxx xxx
... [T]o reject all pending applications for Philippine registration of
signature and other world famous trademarks by applicants other
than its original owners or users.
The conflicting claims over internationally known trademarks involve
such name brands as Lacoste, Jordache, Gloria Vanderbilt, Sasson, Fila,
Pierre Cardin, Gucci, Christian Dior, Oscar de la Renta, Calvin Klein,
Givenchy, Ralph Lauren, Geoffrey Beene, Lanvin and Ted Lapidus.
It is further directed that, in cases where warranted, Philippine
registrants of such trademarks should be asked to surrender their
certificates of registration, if any, to avoid suits for damages and other
legal action by the trademarks' foreign or local owners or original
users.
The memorandum is a clear manifestation of our avowed adherence
to a policy of cooperation and amity with an nations. It is not, as
wrongly alleged by the private respondent, a personal policy of
Minister Luis Villafuerte which expires once he leaves the Ministry of
trade. For a treaty or convention is not a mere moral obligation to be

enforced or not at the whims of an incumbent head of a Ministry. It


creates a legally binding obligation on the parties founded on the
generally accepted principle of international law of pacta sunt
servanda which has been adopted as part of the law of our land.
(Constitution, Art. II, Sec. 3). The memorandum reminds the Director
of Patents of his legal duty to obey both law and treaty. It must also be
obeyed. (at pp. 389-390, La Chemise Lacoste, S.A. v. Fernandez, supra).
In the case of of Cerverse Rubber Corporation V. Universal Rubber Products, Inc. (174 SCRA
165), we likewise re-aafirmed our adherence to the Paris Convention:
The ruling in the aforecited case is in consonance with the Convention
of Converse Rubber Corporation v. Universal Rubber Products, Inc. (I
47 SCRA 165), we likewise re-affirmed our adherence to the Paris
Convention: the Union of Paris for the Protection of Industrial
Property to which the Philippines became a party on September 27,
1965. Article 8 thereof provides that 'a trade name [corporation
name] shall be protected in all the countries of the Union without the
obligation of filing or registration, whether or not it forms part of the
trademark.'
The object of the Convention is to accord a national of a member
nation extensive protection 'against infringement and other types of
unfair competition [Vanity Fair Mills, Inc. v. T. Eaton Co., 234 F. 2d
633]." (at p. 165)
The mandate of the aforementioned Convention finds implementation
in Section 37 of RA No. 166, otherwise known as the trademark Law:
Rights of Foreign Registrants. Persons who are nationals of,
domiciled in, or have a bona fide or effective business or commercial
establishment in any foreign country, which is a party to an
international convention or treaty relating to marks or tradenames on
the represssion of unfair competition to which the Philippines may be
party, shall be entitled to the benefits and subject to the provisions of
this Act ...
Tradenames of persons described in the first paragraph of this section
shall be protected without the obligation of filing or registration
whether or not they form part of marks.
We, therefore, hold that the petitioner had the legal capacity to file the action below.
Anent the issue of lis pendens as a ground for a motion to dismiss, the petitioner submits
that the relief prayed for in its civil action is different from the relief sought in the Inter
Partes cases. More important, however, is the fact that for lis pendens to be a valid
ground for the dismissal of a case, the other case pending between the same parties and
having the same cause must be a court action. As we have held in Solancho v. Ramos (19
SCRA 848):
As noted above, the defendants contend that the pendency of an
administrative between themselves and the plaintiff before the
Bureau of Lands is a sufficient ground to dismiss the action. On the
other hand, the plaintiff, believing that this ground as interposed by
the defendants is a sufficient ground for the dismissal of his
complaint, filed a motion to withdraw his free patent application No.
16649.
This is not what is contemplated under the law because under section
1(d), Rule 16 (formerly Rule 8) of the Rules of Court, one of the
grounds for the dismissal of an action is that "there is another action

pending between the same parties for the same cause." Note that the
Rule uses the phrase another action. This phrase should be construed
in line with Section 1 of Rule 2, which defines the word action, thus-Action means an ordinary suit in a court of justice
by which one party prosecutes another for the
enforcement or protection of alright, or the
prevention or redress of a wrong. Every other
remedy is a special proceeding.
It is,therefore,very clear that the Bureau of Land is not covered under
the aforementioned provisions of the Rules of Court. (at p. 851)
Thus, the Court of Appeals likewise erred in holding that the requisites of lis
pendens were present so as to justify the dismissal of the case below.
As regards the propriety of the issuance of the writ of preliminary injunuction, the
records show that herein private respondent was given the opportunity to present its
counter-evidence against the issuance thereof but it intentionally refused to do so to be
consistent with its theory that the civil case should be dismissed in the first place.
Considering the fact that "PUMA" is an internationally known brand name, it is pertinent
to reiterate the directive to lower courts, which equally applies to administrative
agencies, found in La Chemise Lacoste, S.A. v. Fernandez, supra):
One final point. It is essential that we stress our concern at the
seeming inability of law enforcement officials to stem the tide of fake
and counterfeit consumer items flooding the Philippine market or
exported abroad from our country. The greater victim is not so much
the manufacturer whose product is being faked but the Filipino
consuming public and in the case of exportations, our image abroad.
No less than the President, in issuing Executive Order No. 913 dated
October 7, 1983 to strengthen the powers of the Minister of Trade and
Industry for the protection of consumers, stated that, among other
acts, the dumping of substandard, imitated, hazardous, and cheap
goods, the infringement of internationally known tradenames and
trademarks, and the unfair trade Practices of business firms have
reached such proportions as to constitute economic sabotage. We buy
a kitchen appliance, a household tool, perfume, face powder, other
toilet articles, watches, brandy or whisky, and items of clothing like
jeans, T-shirts, neckties, etc. the list is quite lengthy pay good
money relying on the brand name as guarantee of its quality and
genuine nature only to explode in bitter frustration and helpless anger
because the purchased item turns out to be a shoddy imitation, albeit
a clever looking counterfeit, of the quality product. Judges all over the
country are well advised to remember that court processes should not
be used as instruments to, unwittingly or otherwise, aid
counterfeiters and intellectual pirates, tie the hands of the law as it
seeks to protect the Filipino consuming public and frustrate executive
and administrative implementation of solemn commitments pursuant
to international conventions and treaties. (at p. 403)
WHEREFORE, the appealed decision of the Court of Appeals dated June 23, 1986 is
REVERSED and SET ASIDE and the order of the Regional Trial Court of Makati is hereby
Reinstated.SO ORDERED.

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