Cases - Atty Ladja

7/23/2019 Cases - Atty Ladja

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G.R. No. 108670 September 21, 1994

LBC EXPRESS, INC., petitioner,

vs.

THE C!RT " #PPE#LS, #$L" %. C#RLT, &'( R!R#L B#N) "

L#B#SN, INC., respondents.

In this Petition for Review on Certiorari

, petitioner LBC questions the

decision 1of respondent Court of Appeals affirming the judgment of the

Regional rial Court of !ipolog Cit", Branch #, awarding moral and e$emplar"

damages, reim%ursement of P&',(((.((, and costs of suit) %ut deleting the

amount of attorne"*s fees.

Private respondent Adolfo Carloto, incum%ent President+anager of private

respondent Rural Ban- of La%ason, alleged that on ovem%er /', /0#1, he

was in Ce%u Cit" transacting %usiness with the Central Ban- Regional 2ffice.

3e was instructed to proceed to anila on or %efore ovem%er '/, /0#1 to

follow+up the Rural Ban-*s plan of pa"ment of rediscounting o%ligations with

Central Ban-*s main office in anila. 23e then purchased a round trip planetic-et to anila. 3e also phoned his sister 4lsie Carloto+Concha to send him

24 3256A! P4626 7P/,(((.((8 for his poc-et mone" in going to anila

and some rediscounting papers thru petitioner*s LBC 2ffice at !ipolog Cit". *

2n ovem%er /9, /0#1, rs. Concha thru her cler-, Adelina Antigo consigned

thru LBC !ipolog Branch the pertinent documents and the sum of 24

3256A! P4626 7P/,(((.((8 to respondent Carloto at o. ' :re"hound

6u%division, ;inasangan, Pardo, Ce%u Cit". his was evidenced %" LBC Air

Cargo, Inc., Cashpac- !eliver" Receipt o. &1#(


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moral damages in the amount of P/(,(((.(() e$emplar"

damages in the amount of P


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@e also hold that respondents failed to show that petitioner LBC*s late deliver"

of the cashpac- was motivated %" personal malice or %ad faith, whether

intentional or thru gross negligence. In fact, it was proved during the trial that

the cashpac- was consigned on ovem%er /9, /0#1, a >rida". It was sent to

Ce%u on ovem%er /0, /0#1, the ne$t %usiness da". Considering this

circumstance, petitioner cannot %e charged with gross neglect of dut". Bad faith

under the law can not %e presumed) it must %e esta%lished %" clearer and

convincing evidence. 1*Again, the un%ro-en jurisprudence is that in %reach ofcontract cases where the defendant is not shown to have acted fraudulentl" or

in %ad faith, lia%ilit" for damages is limited to the natural and pro%a%le

consequences of the %ranch of the o%ligation which the parties had foreseen or

could reasona%le have foreseen. he damages, however, will not include

lia%ilit" for moral damages. 14

Prescinding from these premises, the award of e$emplar" damages made %"

the respondent court would have no legal leg to support itself. 5nder Article

''&' of the Civil Code, in a contractual or quasi+contractual relationship,

e$emplar" damages ma" %e awarded onl" if the defendant had acted in Ea

wanton, fraudulent, rec-less, oppressive, or malevolent manner.E heesta%lished facts of not so warrant the characteriDation of the action of

petitioner LBC.

I FI4@ @34R42>, the !ecision of the respondent court dated 6eptem%er

&(, /00' is R4F4R64! and 64 A6I!4) and the Complaint in Civil Case o.

&9=0 is ordered !I6I664!. o costs.

62 2R!4R4!.

G.R. No. 141994. -&'&r/ 17, 200+

"ILIPIN#S BR#$C#STING NETR), INC.,petitioner, vs.#G%E$IC#L #N$ E$!C#TIN#L CENTERBICL CHRISTI#NCLLEGE " %E$ICINE, 3#%ECBCC% &'( #NGELIT# ".#G, respondents.

T5e C&e

his petition for reviewG/Hassails the 1 anuar" /000 !ecision G'Hand '9anuar" '((( Resolution of the Court of Appeals in CA+:.R. CF o. 1(/ilipinas Broadcasting etwor-, Inc. andits %roadcasters 3ermogenes Alegre and Carmelo Rima lia%le for li%el andordered them to solidaril" pa" Ago edical and 4ducational Center+BicolChristian College of edicine moral damages, attorne"s fees and costs of suit.

T5e #'tee(e't

4$pos is a radio documentar"G1Hprogram hosted %" Carmelo el Rima7Rima8 and 3ermogenes un Alegre 7Alegre8. Gilipinas Broadcasting etwor-, Inc. 7>BI8.4$pos is heard over LegaDpi Cit", the Al%a" municipalities and other Bicolareas.G9H

In the morning of /1 and /< !ecem%er /0#0, Rima and Alegre e$posedvarious alleged complaints from students, teachers and parents against Ago

edical and 4ducational Center+Bicol Christian College of edicine 7A4C8and its administrators. Claiming that the %roadcasts were defamator", A4Cand Angelita Ago 7Ago8, as !ean of A4Cs College of edicine, filed acomplaint for damagesG=Hagainst >BI, Rima and Alegre on '= >e%ruar" /00(.Juoted are portions of the allegedl" li%elous %roadcasts

-!N #LEGRE

Let us %egin with the less %urdensome /o 5&:e 5;(re' t&et';('= t5oe t5e/ 5&:e p&e( &;re&(/. 6everal students hadapproached me stating that the" had consulted with the !4C6 which told them

that there is no such regulation. If GthereH is no such regulation wh" is A4Cdoing the sameK

$$$

6econd E&r;er #%EC t(e't ' P5/&; T5er&p/ 5&( omp;&'e( t5&tt5e ore 'ot reo='@e( b/ $ECS. $$$
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hird St(e't &re reAre( to t&et (oe 'ot 5&:e &' 'trtor 5 =ree( or mo'e/ o' t5e p&rt o#%EC &(m'tr&to'. a-e the su%ject Anatom" students would pa" for thesu%ject upon enrolment %ecause it is offered %" the school. 3owever therewould %e no instructor for such su%ject. 6tudents would %e informed that coursewould %e moved to a later date %ecause the school is still searching for theappropriate instructor.

$$$

It is a pu%lic -nowledge that the Ago edical and 4ducational Center hassurvived and has %een surviving for the past few "ears since its inception%ecause of funds support from foreign foundations. If "ou will ta-e a loo- at theA4C premises "oull find out that the names of the %uildings there are foreignsoundings. here is a c!onald 3all. @h" not ose RiDal or Bonifacio 3allKhat is a ver" concrete and undenia%le evidence that the support of foreignfoundations for A4C is su%stantial, isnt itK @ith the report which is the %asisof the e$pose in !RC toda", it would %e ver" eas" for detractors and enemiesof the Ago famil" to stop the flow of support of foreign foundations who assistthe medical school on the %asis of the latters purpose. But if the purpose of the

institution 7A4C8 is to deceive students at cross purpose with its reason for%eing it is possi%le for these foreign foundations to lift or suspend theirdonations temporaril".G#H

$$$

' t5e ot5er 5&'(, t5e &(m'tr&tor o #%ECBCC%, #%EC Se'eH=5 S5oo; &'( t5e #%ECI'ttte o %& Comm'&to' ' t5ereort to m'm@e epe'e ' term o &;&r/ &re &borb'= or o't'eto &ept re>et.>or e$ample how man" teachers in A4C are formerteachers of Aquinas 5niversit" %ut were removed %ecause of immoralit"K !oesit mean that the present administration of A4C have the total definite moralfoundation from catholic administrator of Aquinas 5niversit". I will prove to "ou

m" friends, that #%EC & (mp'= =ro'(, =&rb&=e, 'ot mere;/ o mor&;&'( p5/&; mt. Pro%a%l" the" onl" qualif" in terms of intellect. he !eanof 6tudent Affairs of A4C is ustita Lola, as the famil" name implies. 6he istoo old to wor-, %eing an old woman. Is the A4C administration e$ploiting thever" GeHnterprising or compromising and undemanding LolaK Could it %e thatA4C is just patientl" ma-ing use of !ean ustita Lola were if she is ver" old.As in atmospheric situation Dero visi%ilit" the plane cannot land, meaning she isver" old, low pa" follows. B" the wa", !ean ustita Lola is also the chairman of

the committee on scholarship in A4C. 6he had retired from Bicol 5niversit" along time ago %ut A4C has patientl" made use of her.

$$$

%EL RI%#

$$$ " friends %ased on the e$pose, A4C is a dumping ground for moral andph"sicall" misfit people. @hat does this meanK Immoral and ph"sicall" misfitsas teachers.

a" I sa" Im sorr" to !ean ustita Lola. But this is the truth. he truth is this,that "our are no longer f it to teach. ?ou are too old. As an aviation, "our case isDero visi%ilit". !ont insist.

$$$ @h" did A4C still a%sor% her as a teacher, a dean, and chairman of thescholarship committee at that. he reason is practical cost saving in salaries,%ecause an old person is not fastidious, so long as she has mone" to %u" theingredient of %eetle juice. he elderl" can get %" thats wh" she 7Lola8 was ta-enin as !ean.

$$$

$$$ 2n our end our tas- is to attend to the interests of students. It is li-el" thatthe students would %e influenced %" evil. 5e' t5e/ beome member ooet/ ot(e o &mp ?;; be ;&b;te r&t5er t5&' &et.@hat do"ou e$pect from a doctor who while stud"ing at A4C is so much %urdenedwith unreasona%le impositionK @hat do "ou e$pect from a student who asidefrom peculiar pro%lems %ecause not all students are rich in their struggle toimprove their social status are even more %urdened with false regulations.$$$G0H74mphasis supplied8

he complaint further alleged that A4C is a reputa%le learning institution.@ith the supposed e$poss, >BI, Rima and Alegre transmitted maliciousimputations, and as such, destro"ed plaintiffs 7A4C and Ago8 reputation.A4C and Ago included >BI as defendant for allegedl" failing to e$ercise duediligence in the selection and supervision of its emplo"ees, particularl" Rimaand Alegre.

2n /# une /00(, >BI, Rima and Alegre, through Att". RoDil LoDares,filed an AnswerG/(Halleging that the %roadcasts against A4C were fair and true.
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>BI, Rima and Alegre claimed that the" were plainl" impelled %" a sense ofpu%lic dut" to report the goings+on in A4C, Gwhich isH an institution im%uedwith pu%lic interest.

hereafter, trial ensued. !uring the presentation of the evidence for thedefense, Att". 4dmundo Cea, colla%orating counsel of Att". LoDares, filed aotion to !ismissG//H on >BIs %ehalf. he trial court denied the motion todismiss. Consequentl", >BI filed a separate Answer claiming that it e$ercised

due diligence in the selection and supervision of Rima and Alegre. >BIclaimed that %efore hiring a %roadcaster, the %roadcaster should 7/8 file anapplication) 7'8 %e interviewed) and 7&8 undergo an apprenticeship and trainingprogram after passing the interview. >BI li-ewise claimed that it alwa"sreminds its %roadcasters to o%serve truth, fairness and o%jectivit" in their%roadcasts and to refrain from using li%elous and indecent language. oreover,>BI requires all %roadcasters to pass the Kapisanan ng mga Brodkaster saPilipinas 7;BP8 accreditation test and to secure a ;BP permit.

2n /1 !ecem%er /00', the trial court rendered a !ecision G/'Hfinding >BIand Alegre lia%le for li%el e$cept Rima. he trial court held that the %roadcastsare li%elousper se. he trial court rejected the %roadcasters claim that theirutterances were the result of straight reporting %ecause it had no factual %asis.he %roadcasters did not even verif" their reports %efore airing them to showgood faith. In holding >BI lia%le for li%el, the trial court found that >BI failedto e$ercise diligence in the selection and supervision of its emplo"ees.

In a%solving Rima from the charge, the trial court ruled that Rimas onl"participation was when he agreed with Alegres e$pos. he trial court foundRimas statement within the %ounds of freedom of speech, e$pression, and ofthe press. he dispositive portion of the decision reads

@34R4>2R4, premises considered, this court f inds for theplaintiff. Co'(er'= t5e (e=ree o (&m&=e &e( b/ t5e o'tro:er&;tter&'e, ?55 &re 'ot o'( b/ t5 ort to be re&;;/ :er/ ero &'((&m&='=, &'( t5ere be'= 'o 5o?'= t5&t '(ee( t5e e'ro;;me't op;&'t 5oo; (roppe(, defendants 3ermogenes un Alegre, r. and>ilipinas Broadcasting etwor- 7owner of the radio station !RC8, are here%"jointl" and severall" ordered to pa" plaintiff Ago edical and 4ducationalCenter+Bicol Christian College of edicine 7A4C+BCC8 the amountof P&((,(((.(( moral damages, plus P&(,(((.(( reim%ursement of attorne"sfees, and to pa" the costs of suit.

62 2R!4R4!.G/&H74mphasis supplied8

Both parties, namel", >BI, Rima and Alegre, on one hand, and A4Cand Ago, on the other, appealed the decision to the Court of Appeals. he Courtof Appeals affirmed the trial courts judgment with modification. he appellatecourt made Rima solidaril" lia%le with >BI and Alegre. he appellate courtdenied Agos claim for damages and attorne"s fees %ecause the %roadcastswere directed against A4C, and not against her. he dispositive portion of theCourt of Appeals decision reads

HERE"RE, the decision appealed from is here%" #""IR%E$, su%ject tothe modification that %roadcaster el Rima is SLI$#RILD #$-!$GE$lia%lewith >BGIH and 3ermoGgHenes Alegre.

S R$ERE$.G/1H

>BI, Rima and Alegre filed a motion for reconsideration which the Courtof Appeals denied in its '9 anuar" '((( Resolution.

3ence, >BI filed this petition.G/


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e$penses on its emplo"ees salaries) and 7&8 A4C %urdened the students withunreasona%le imposition and false regulations.G/9H

he Court of Appeals held that >BI failed to e$ercise due diligence in theselection and supervision of its emplo"ees for allowing Rima and Alegre toma-e the radio %roadcasts without the proper ;BP accreditation. he Court ofAppeals denied Agos claim for damages and attorne"s fees %ecause theli%elous remar-s were directed against A4C, and not against her. he Court

of Appeals adjudged >BI, Rima and Alegre solidaril" lia%le to pa" A4C moraldamages, attorne"s fees and costs of suit.

Ie

>BI raises the following issues for resolution

I. @3434R 34 BR2A!CA66 AR4 LIB4L256)

II. @3434R A4C I6 4IL4! 2 2RAL !AA:46)

III. @3434R 34 A@AR! 2> A2R4?6 >446 I6 PR2P4R) and

IF. @3434R >BI I6 62LI!ARIL? LIABL4 @I3 RIA A! AL4:R4>2R PA?4 2> 2RAL !AA:46, A2R4?6 >446 A!C266 2> 65I.

T5e Cort R;'=

@e den" the petition.

his is a civil action for damages as a result of the allegedl" defamator"

remar-s of Rima and Alegre against A4C.G/=H

@hile A4C did not point outclearl" the legal %asis for its complaint, a reading of the complaint reveals thatA4Cs cause of action is %ased on Articles &( and && of the Civil Code. Article&(G/#HauthoriDes a separate civil action to recover civil lia%ilit" arising from acriminal offense. 2n the other hand, Article && G/0Hparticularl" provides that theinjured part" ma" %ring a separate civil action for damages in cases ofdefamation, fraud, and ph"sical injuries. A4C also invo-es Article /0 G'(Hof theCivil Code to justif" its claim for damages. A4C cites Articles '/=9 G'/Hand'/#(G''Hof the Civil Code to hold >BI solidaril" lia%le with Rima and Alegre.

I.Whether the broadcasts are libelous

A li%el G'&His a pu%lic and malicious imputation of a crime, or of a vice ordefect, real or imaginar", or an" act or omission, condition, status, orcircumstance tending to cause the dishonor, discredit, or contempt of a naturalor juridical person, or to %lac-en the memor" of one who is dead. G'1H

here is no question that the %roadcasts were made pu%lic and imputed toA4C defects or circumstances tending to cause it dishonor, discredit and

contempt. Rima and Alegres remar-s such as greed for mone" on the part ofA4Cs administrators) A4C is a dumping ground, gar%age of $$$ moral andph"sical misfits) and A4C students who graduate will %e lia%ilities rather thanassets of the societ" are li%elousperse. a-en as a whole, the %roadcastssuggest that A4C is a mone"+ma-ing institution where ph"sicall" and morall"unfit teachers a%ound.

3owever, >BI contends that the %roadcasts are not malicious. >BIclaims that Rima and Alegre were plainl" impelled %" their civic dut" to air thestudents gripes. >BI alleges that there is no evidence that ill will or spitemotivated Rima and Alegre in ma-ing the %roadcasts. >BI further points outthat Rima and Alegre e$erted efforts to o%tain A4Cs side and gave Ago theopportunit" to defend A4C and its administrators. >BI concludes that since

there is no malice, there is no li%el.

>BIs contentions are untena%le.

4ver" defamator" imputation is presumed malicious. G'


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figures. 5nder this privilege, a repu%lisher who accuratelyand disinterestedl"reports certain defamator" statements made against pu%lic figures is shieldedfrom lia%ilit", regardless of the repu%lishers su%jective awareness of the truth orfalsit" of the accusation.G'0HRima and Alegre cannot invo-e the privilege ofneutral reportage %ecause unfounded comments a%ound in the %roadcasts.oreover, there is no e$isting controvers" involving A4C when the%roadcasts were made. he privilege of neutral reportage applies where thedefamed person is a pu%lic figure who is involved in an e$isting controvers",

and a part" to that controvers" ma-es the defamator" statement.G&(H

3owever, >BI argues vigorousl" that malice in law does not appl" to thiscase. Citing Borjal v. Court of Appeals,G&/H>BI contends that the %roadcastsfall within the coverage of qualifiedl" privileged communications for %eingcommentaries on matters of pu%lic interest. 6uch %eing the case, A4C shouldprove malice in fact or actual malice. 6ince A4C allegedl" failed to proveactual malice, there is no li%el.

>BIs reliance on Borjalis misplaced. In Borjal, the Court elucidated onthe doctrine of fair comment, thus

G>Hair commentaries on matters of pu%lic interest are privileged and constitute a

valid defense in an action for li%el or slander. he doctrine of fair commentmeans that while in general ever" discredita%le imputation pu%licl" made isdeemed false, %ecause ever" man is presumed innocent until his guilt isjudiciall" proved, and ever" false imputation is deemed malicious, nevertheless,when the discredita%le imputation is directed against a pu%lic person in hispu%lic capacit", it is not necessaril" actiona%le. I' or(er t5&t 5(re(t&b;e mpt&to' to & pb; o&; m&/ be &to'&b;e, t mtet5er be & &;e &;;e=&to' o &t or & omme't b&e( o' & &;eppoto'. I t5e omme't &' epreo' o op'o', b&e( o'et&b;5e( &t,then it is immaterial that the opinion happens to %emista-en, as long as it might reasona%l" %e inferred from the facts.G&'H74mphasis supplied8

rue, A4C is a private learning institution whose %usiness of educatingstudents is genuinel" im%ued with pu%lic interest. he welfare of the "outh ingeneral and A4Cs students in particular is a matter which the pu%lic has theright to -now. hus, similar to the newspaper articles in Borjal, the su%ject%roadcasts dealt with matters of pu%lic interest. 3owever, unli-e in Borjal, thequestioned %roadcasts are 'ot%ased on et&b;5e( &t. he recordsupports the following findings of the trial court

$$$ Although defendants claim that the" were motivated %" consistent reportsof students and parents against plaintiff, "et, defendants have not presented incourt, nor even gave name of a single student who made the complaint tothem, much less present written complaint or petition to that effect. o acceptthis defense of defendants is too dangerous %ecause it could easil" give licenseto the media to malign people and esta%lishments %ased on flims" e$cuses thatthere were reports to them although the" could not satisfactoril" esta%lish it.6uch la$it" would encourage careless and irresponsi%le %roadcasting which is

inimical to pu%lic interests.

6econdl", there is reason to %elieve that defendant radio %roadcasters, contrar"to the mandates of their duties, did not verif" and anal"De the truth of thereports %efore the" aired it, in order to prove that the" are in good faith.

Alegre contended that plaintiff school had no permit and is not accredited tooffer Ph"sical herap" courses. ?et, plaintiff produced a certificate coming from!4C6 that as of 6ept. '', /0#= or more than ' "ears %efore the controversial%roadcast, accreditation to offer Ph"sical herap" course had alread" %eengiven the plaintiff, which certificate is signed %" no less than the 6ecretar" of4ducation and Culture herself, Lourdes R. Juisum%ing 74$h. C+re%uttal8.

!efendants could have easil" -nown this were the" careful enough to verif".And "et, defendants were ver" categorical and sounded too positive when the"made the erroneous report that plaintiff had no permit to offer Ph"sical herap"courses which the" were offering.

he allegation that plaintiff was getting tremendous aids from foreignfoundations li-e cdonald >oundation prove not to %e true also. he truth isthere is no cdonald >oundation e$isting. Although a %ig %uilding of plaintiffschool was given the name cdonald %uilding, that was onl" in order to honorthe first missionar" in Bicol of plaintiffs religion, as e$plained %" !r. Lita Ago.Contrar" to the claim of defendants over the air, not a single centavo appears to%e received %" plaintiff school from the aforementioned c!onald >oundationwhich does not e$ist.

!efendants did not even also %other to prove their claim, though denied %" !ra.Ago, that when medical students fail in one su%ject, the" are made to repeat allthe other su%jectGsH, even those the" have alread" passed, nor their claim thatthe school charges la%orator" fees even if there are no la%oratories in theschool. o evidence was presented to prove the %ases for these claims, atleast in order to give sem%lance of good faith.
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oreover, where the %roadcast is li%elousper se, the law impliesdamages.G1BI adds that the instant case doesnot fall under the enumeration in Article ''(# G1#Hof the Civil Code.

he award of attorne"s fees is not proper %ecause A4C failed to justif"satisfactoril" its claim for attorne"s fees. A4C did not adduce evidence towarrant the award of attorne"s fees. oreover, %oth the trial and appellatecourts failed to e$plicitl" state in their respective decisions the rationale for theaward of attorne"s fees.G10HIn Inter$Asia Investment Industries, Inc. v. Courtof Appeals,Gt&to', ?t5ot ?55 t5e &?&r( & o';o' ?t5ot & preme,t b& be'= mproper;/ ;et to pe;&to' &'( o'>etre. In all events,the court must e$plicitl" state in the te$t of the decision, and not onl" in the

decretal portion thereof, the legal reason for the award of attorne"s fees.GBI maintains that its %roadcasters, including Rima and Alegre, undergo aver" regimented process %efore the" are allowed to go on air. hose who appl"

for %roadcaster are su%jected to interviews, e$aminations and anapprenticeship program.

>BI further argues that Alegres age and lac- of training are irrelevant tohis competence as a %roadcaster. >BI points out that the minor deficiencies inthe ;BP accreditation of Rima and Alegre do not in an" wa" prove that >BIdid not e$ercise the diligence of a good father of a famil" in selecting andsupervising them. Rimas accreditation lapsed due to his non+pa"ment of the;BP annual fees while Alegres accreditation card was dela"ed allegedl" forreasons attri%uta%le to the ;BP anila 2ffice. >BI claims that mem%ership inthe ;BP is merel" voluntar" and not required %" an" law or governmentregulation.

>BIs arguments do not persuade us.

he %asis of the present action is a tort. oint tort feasors are jointl" andseverall" lia%le for the tort which the" commit. GBIs radio program4$pos when the" aired the %roadcasts. >BI neither alleged nor proved thatRima and Alegre went %e"ond the scope of their wor- at that time. here wasli-ewise no showing that >BI did not authoriDe and ratif" the defamator"%roadcasts.
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10/35

oreover, there is insufficient evidence on record that >BI e$ercised duediligence in the e;eto' andper:o'of its emplo"ees, particularl" Rimaand Alegre. >BI merel" showed that it e$ercised diligence in the e;eto'ofits %roadcasters without introducing an" evidence to prove that it o%served thesame diligence in the per:o'of Rima and Alegre. >BI did not show howit e$ercised diligence in supervising its %roadcasters. >BIs alleged constantreminder to its %roadcasters to o%serve truth, fairness and o%jectivit" and torefrain from using li%elous and indecent language is not enough to prove due

diligence in the supervision of its %roadcasters. Adequate training of the%roadcasters on the industr"s code of conduct, sufficient information on li%ellaws, and continuous evaluation of the %roadcasters performance are %ut a fewof the man" wa"s of showing diligence in the supervision of %roadcasters.

>BI claims that it has ta-en all the precaution in the e;eto'of Rimaand Alegre as %roadcasters, %earing in mind their qualifications. 3owever, noclear and convincing evidence shows that Rima and Alegre underwent >BIsregimented process of application. >urthermore, >BI admits that Rima andAlegre had deficiencies in their ;BP accreditation,GBIsrequirements %efore it hires a %roadcaster. 6ignificantl", mem%ership in the;BP, while voluntar", indicates the %roadcasters strong commitment to o%servethe %roadcast industr"s rules and regulations. Clearl", these circumstances

show >BIs lac- of diligence in selecting andsupervising Rima and Alegre.3ence, >BI is solidaril" lia%le to pa" damages together with Rima and Alegre.

HERE"RE, we !4? the instant petition. @e A>>IR the !ecision of1 anuar" /000 and Resolution of '9 anuar" '((( of the Court of Appeals inCA+:.R. CF o. 1(/ICAI2 that the award of moraldamages is reduced from P&((,((( to P/ilipino, Inc. de Ce%u,E7Clu%, for short8, is a civic corporation organiDed under the laws of thePhilippines with an original authoriDed capital stoc- of P'',(((.((, whichwas su%sequentl" increased to P'((,(((.((, among others, to itEproporcionar, operar, " mantener un campo de golf, tenis, gimnesio7g"mnasiums8, juego de %olos 7%owling alle"s8, mesas de %illar " pool, "toda clase de juegos no prohi%idos por le"es generales " ordenanDasgenerales) " desarollar " cultivar deportes de toda clase " denominacioncualquiera para el recreo " entrenamiento saluda%le de sus miem%ros "accionistasE 7sec. ', 4scritura de Incorporacion del Clu% >ilipino, Inc. 4$h.

A8. either in the articles or %"+laws is there a provision relative todividends and their distri%ution, although it is covenanted that upon itsdissolution, the Clu%*s remaining assets, after pa"ing de%ts, shall %edonated to a charita%le Philippine Institution in Ce%u 7Art. '=, 4statutos del

Clu%, 4$h. A+a.8.

he Clu% owns and operates a clu% house, a %owling alle", a golf course7on a lot leased from the government8, and a %ar+restaurant where it sellswines and liquors, soft drin-s, meals and short orders to its mem%ers andtheir guests. he bar-restaurantwas a necessar" incident to the operationof the clu% and its golf+course. he clu% is operated mainl" with fundsderived from mem%ership fees and dues. @hatever profits it had, wereused to defra" its overhead e$penses and to improve its golf+course. In/0


11/35

during the ta$ "ears /019 to /0


12/35

purpose, as stated in its articles and %"+laws. It is a familiar rule that theactual purpose is not controlled %" the corporate form or %" the commercialaspect of the %usiness prosecuted, %ut ma" %e shown %" e$trinsicevidence, including the %"+laws and the method of operation. >rom thee$trinsic evidence adduced, the a$ Court concluded that the Clu% is notengaged in the %usiness as a %ar-eeper and restaurateur.

oreover, for a stoc- corporation to e$ist, two requisites must %e compliedwith, to wit 7/8 a capital stoc- divided into shares and 7'8 an authorit" todistri%ute to the holders of such shares, dividends or allotments of thesurplus profits on the %asis of the shares held 7sec. &, Act o. /1


13/35

'. In the same transaction stated a%ove, the supplier agreed

to give the compan" a discount of P=(.(( which !anilo

ercado did not report to the compan")

&. 2n arch '#, /0#red R. elon of !umaguete Cit",

for the fa%rication of ru%%er stamps, for the total amount of

P'#.99. !anilo ercado paid the amount of P'(.(( to >red

R. elon and appropriated for his personal use the %alance

of P#.99.

In addition, private respondent, !anilo ercado violated

compan" rules and regulations in the following instances

/. 2n une


14/35

/. @hether or not matters of emplo"ment affecting the

P2C+4!C, a government+owned and controlled

corporation, are within the jurisdiction of the La%or Ar%iter

and the LRC.

'. Assuming the affirmative, whether or not the La%or Ar%iter

and the LRC are justified in ordering the reinstatement of

private respondent, pa"ment of his savings, and

proportionate /&th month pa" and pa"ment of damages as

well as attorne"*s fee.

Petitioner P2C+4!C alleges that it is a corporation wholl" owned and

controlled %" the government) that the 4nerg" !evelopment Corporation is

a su%sidiar" of the Philippine ational 2il Compan" which is a government

entit" created under Presidential !ecree o. &&1, as amended) that %eing a

government+owned and controlled corporation, it is governed %" the Civil

6ervice Law as provided for in 6ection /, Article OII+B of the /0=&

Constitution, 6ection


15/35

As regards the second issue, the record shows that P2C+4!C*s

accusations of dishonest" and violations of compan" rules are not

supported %" evidence. onetheless, while ac-nowledging the rule that

administrative %odies are not governed %" the strict rules of evidence,

petitioner P2C+4!C alleges that the la%or ar%iter*s propensit" to decide

the case through the position papers su%mitted %" the parties is violative of

due process there%" rendering the decision null and void 7Ibid., p. /098.

2n the other hand, private respondent contends that as can %e seen from

petitioner*s otion for Reconsideration andNor Appeal dated ul" '#, /0#9

7Anne$ E>E of the Petition, Rollo, pp. urthermore, it has %een consistentl" held that findings of administrative

agencies which have acquired e$pertise %ecause their jurisdiction is

confined to specific matters are accorded not onl" respect %ut even finalit"

7Asian Construction and !evelopment Corporation vs. LRC, /#= 6CRA

=#1 Gul" '=, /00(H) LopeD 6ugar Corporation vs. >ederation of >ree

@or-ers, /#0 6CRA /=0 GAugust &(, /00(H8. udicial review %" this Court

does not go so far as to evaluate the sufficienc" of the evidence %ut is

limited to issues of jurisdiction or grave a%use of discretion 7>ilipinas

anufacturers Ban- vs. LRC, /#' 6CRA #1# G>e%ruar" '#, /00(H8. A

careful stud" of the records shows no su%stantive reason to depart from

these esta%lished principles.

@hile it is true that loss of trust or %reach of confidence is a valid ground for

dismissing an emplo"ee, such loss or %reach of trust must have some %asis

7:u%ac v. LRC, /#= 6CRA 1/' Gul" /&, /00(H8. As found %" the La%or

Ar%iter, the accusations of petitioner P2C+4!C against private

respondent ercado have no %asis. rs. Leonardo odado, from whom

the nipa shingles were purchased, sufficientl" e$plained in her affidavit

7Rollo, p. &98 that the total purchase price of P/,9#(.(( was paid %"

respondent ercado as agreed upon. he alleged discount given %" rs.

odado is not supported %" evidence as well as the alleged appropriation

of P#.99 from the cost of fa%rication of ru%%er stamps. he La%or Ar%iter,li-ewise, found no evidence to support the alleged violation of compan"

rules. 2n the contrar", he found respondent ercado*s e$planation in his

affidavit 7Rollo, pp. +1(8 as to the alleged violations to %e satisfactor".

oreover, these findings were never contradicted %" petitioner petitioner

P2C+4!C.

PR4I646 C26I!4R4!, the petition is !4I4! and the resolution of

respondent LRC dated ul" &, /0#= is A>>IR4! with the modification

that the moral damages are reduced to en housand 7P/(,(((.((8 Pesos,

and the e$emplar" damages reduced to >ive housand 7P


16/35

N#TIN#L C#L C%P#ND,plaintiff+appellee,

vs.

THE CLLECTR " INTERN#L REEN!E,defendant+appellant.

his action was %rought in the Court of >irst Instance of the Cit" of anila

on the /=th da" of ul", /0'&, for the purpose of recovering the sum of

P/',(11.9#, alleged to have %een paid under protest %" the plaintiff

compan" to the defendant, as specific ta$ on '1,(#0.& tons of coal. 6aid

compan" is a corporation created %" Act o. '=(< of the Philippine

Legislature for the purpose of developing the coal industr" in the Philippine

Islands and is actuall" engaged in coal mining on reserved lands %elonging

to the :overnment. It claimed e$emption from ta$es under the provision of

sections /1 and /< of Act o. '=/0, and pra"ed for a judgment ordering the

defendant to refund to the plaintiff said sum of P/',(11.9#, with legal

interest from the date of the presentation of the complaint, and costs

against the defendant.

he defendant answered den"ing generall" and specificall" all the materialallegations of the complaint, e$cept the legal e$istence and personalit" of

the plaintiff. As a special defense, the defendant alleged 7a8 that the sum of

P/',(11.9# was paid %" the plaintiff without protests, and 7%8 that said sum

was due and owing from the plaintiff to the :overnment of the Philippine

Islands under the provisions of section /109 of the Administrative Code and

pra"ed that the complaint %e dismissed, with costs against the plaintiff.

5pon the issue thus presented, the case was %rought on for trial. After a

consideration of the evidence adduced %" %oth parties, the 3onora%le

Pedro Conception, judge, held that the words Elands owned%" an" person,

etc.,E in section /< of Act o. '=/0 should %e understood to meanElands eld in leaseor usufruct,E in harmon" with the other provision of said

Act) that the coal lands possessed %" the plaintiff, %elonging to the

:overnment, fell within the provisions of section /< of Act o. '=/0) and

that a ta$ of P(.(1 per ton of /,(/9 -ilos on each ton of coal e$tracted

therefrom, as provided in said section, was the onl" ta$ which should %e

collected from the plaintiff) and sentenced the defendant to refund to the

plaintiff the sum of P//,(#/.// which is the difference %etween the amount

collected under section /109 of the Administrative Code and the amount

which should have %een collected under the provisions of said section /< of

Act o. '=/0. >rom that sentence the defendant appealed, and now ma-es

the following assignments of error

I. he court %elow erred in holding that section /< of Act o. '=/0 does not

refer to coal lands owned %" persons and corporations.

II. he court %elow erred in holding that the plaintiff was not su%ject to the

ta$ prescri%ed in section /109 of the Administrative Code.

he question confronting us in this appeal is whether the plaintiff is su%ject

to the ta$es under section /< of Act o. '=/0, or to the specific ta$es under

section /109 of the Administrative Code.

he plaintiff corporation was created on the /(th da" of arch, /0/=, %" Act

o. '=(


17/35

the :overnor+:eneral, %" Proclamation o. &0, withdrew Efrom settlement,

entr", sale or other disposition, all coal+%earing pu%lic lands within the

Province of am%oanga, !epartment of indanao and 6ulu, and the Island

of Polillo, Province of a"a%as.E Almost immediatel" after the issuance of

said proclamation the ational Coal Compan" too- possession of the coal

lands within the said reservation, with an area of a%out 1(( hectares,

without an" further formalit", contract or lease. 2f the &(,((( shares of

stoc- issued %" the compan", the :overnment of the Philippine Islands is

the owner of '0,#(0 shares, that is, of 00 /N& per centum of the whole

capital stoc-.

If we understand the theor" of the plaintiff+appellee, it is, that it claims to %e

the owner of the land from which it has mined the coal in question and is

therefore su%ject to the provisions of section /< of Act o. '=/0 and not to

the provisions of the section /109 of the Administrative Code. hat

contention of the plaintiff leads us to an e$amination of the evidence upon

the question of the ownership of the land from which the coal in question

was mined. @as the plaintiff the owner of the land from which the coal inquestion was minedK If the evidence shows the affirmative, then the

judgment should %e affirmed. If the evidence shows that the land does not

%elong to the plaintiff, then the judgment should %e reversed, unless the

plaintiff*s rights fall under section & of said Act.

he onl" witness presented %" the plaintiff upon the question of the

ownership of the land in question was r. !almacio Costas, who stated that

he was a mem%er of the %oard of directors of the plaintiff corporation) that

the plaintiff corporation too- possession of the land in question %" virtue of

the proclamation of the :overnor+:eneral, -nown as Proclamation o. &0

of the "ear /0/=) that no document had %een issued in favor of the plaintiffcorporation) that said corporation had received no permission from the

6ecretar" of Agriculture and atural Resources) that it too- possession of

said lands covering an area of a%out 1(( hectares, from which the coal in

question was mined, solel", %" virtue of said proclamation 74$hi%it B, o.

&08.

6aid proclamation 74$hi%it B8 was issued %" >rancis Burton 3arrison, then

:overnor+:eneral, on the /#th da" of 2cto%er, /0/=, and provided

EPursuant to the provision of section =/ of Act o. 0'9, I here%" withdraw

from settlement, entr", sale, or other disposition, all coal+%earing pu%lic

lands within the Province of am%oanga, !epartment of indanao and

6ulu, and the Island of Polillo, Province of a"a%as.E It will %e noted that

said proclamation onl" provided that all coal+%earing pu%lic lands within

said province and island should %e withdrawn from settlement, entr", sale,

or other disposition. here is nothing in said proclamation which authoriDes

the plaintiff or an" other person to enter upon said reversations and to mine

coal, and no provision of law has %een called to our attention, %" virtue of

which the plaintiff was entitled to enter upon an" of the lands so reserved %"

said proclamation without first o%taining permission therefor.

he plaintiff is a private corporation. he mere fact that the :overnment

happens to the majorit" stoc-holder does not ma-e it a pu%lic corporation.

Act o. '=(


18/35

lands of the pu%lic domain in the Philippine Island shall not %e disposed of

in an" manner e$cept as provided in this Act,E there%" giving a clear

indication that no Ecoal+%earing lands of the pu%lic domainE had %een

disposed of %" virtue of said proclamation.

either is there an" provision in Act o. '=(< creating the ational Coal

Compan", nor in the amendments thereof found in Act o. '#'', which

authoriDes the ational Coal Compan" to enter upon an" of the reserved

coal lands without first having o%tained permission from the 6ecretar" of

Agriculture and atural Resources.lawpi1.net

he following propositions are full" sustained %" the facts and the law

7/8 he ational Coal Compan" is an ordinar" private corporation organiDed

under Act o. '=(


19/35

he lower court had some trou%le in determining what was the correct

interpretation of section /< of said Act, %" reason of what he %elieved to %e

some difference in the interpretation of the language used in 6panish and

4nglish. @hile there is some ground for confusion in the use of the

language in 6panish and 4nglish, we are persuaded, considering all the

provisions of said Act, that said section /< has reference onl" to persons,

firms, associations or corporations which had alread", prior to the e$istence

of said Act, %ecome the owners of coal lands. 6ection /< cannot certaint"

refer to Eholders or lessees of coal lands* for the reason that practicall" all of

the other provisions of said Act has reference to lessees or holders. If

section /< means that the persons, firms, associations, or corporation

mentioned therein are holders or lessees of coal lands onl", it is difficult to

understand wh" the internal revenue dut" and ta$ in said section was made

different from the o%ligations mentioned in section & of said Act, imposed

upon lessees or holders.

>rom all of the foregoing, it seems to %e made plain that the plaintiff is

neither a lessee nor an owner of coal+%earing lands, and is, therefore, notsu%ject to an" other provisions of Act o. '=/0. But, is the plaintiff su%ject

to the provisions of section /109 of the Administrative CodeK

6ection /109 of the Administrative Code provides that Eon all coal and co-e

there shall %e collected, per metric ton, fift" centavos.E 6aid section 7/1098

is a part of article, 9 which provides for specific ta$es. 6aid article provides

for a specific internal revenue ta$ upon all things manufactured or produced

in the Philippine Islands for domestic sale or consumption, and upon things

imported from the 5nited 6tates or foreign countries. It having %een

demonstrated that the plaintiff has produced coal in the Philippine Islands

and is not a lessee or owner of the land from which the coal was produced,we are clearl" of the opinion, and so hold, that it is su%ject to pa" the

internal revenue ta$ under the provisions of section /109 of the

Administrative Code, and is not su%ject to the pa"ment of the internal

revenue ta$ under section /< of Act o. '=/0, nor to an" other provisions of

said Act.

herefore, the judgment appealed from is here%" revo-ed, and the

defendant is here%" relieved from all responsi%ilit" under the complaint.

And, without an" finding as to costs, it is so ordered.

G.R. No. 41+70 September 6, 19*4

RE$ LINE TR#NSPRT#TIN C.,petitioner+appellant,

vs.

R!R#L TR#NSIT C., LT$.,respondent+appellee.

B!TTE, (.)

his case is %efore us on a petition for review of an order of the Pu%lic

6ervice Commission entered !ecem%er '/, /0&', granting to the Rural

ransit Compan", Ltd., a certificate of pu%lic convenience to operate atransportation service %etween Ilagan in the Province of Isa%ela and

uguegarao in the Province of Caga"an, and additional trips in its e$isting

e$press service %etween anila uguegarao.

2n une 1, /0&', the Rural ransit Compan", Ltd., a Philippine corporation,

filed with the Pu%lic Compan" 6ervice Commission an application in which

it is stated in su%stance that it is the holder of a certificate or pu%lic

convenience to operate a passenger %us service %etween anila and

uguegarao) that it is the onl" operator of direct service %etween said points

and the present authoriDed schedule of onl" one trip dail" is not sufficient)

that it will %e also to the pu%lic convenience to grant the applicant a

certificate for a new service %etween uguegarao and Ilagan.

2n ul" '', /0&', the appellant, Red Line ransportation Compan", filed an

opposition to the said application alleging in su%stance that as to the

service %etween uguegarao and Ilagan, the oppositor alread" holds a

certificate of pu%lic convenience and is rendering adequate and satisfactor"


20/35

service) that the granting of the application of the Rural ransit Compan",

Ltd., would not serve pu%lic convenience %ut would constitute a ruinous

competition for the oppositor over said route.

After testimon" was ta-en, the commission, on !ecem%er '/, /0&',

approved the application of the Rural ransit Compan", Ltd., and ordered

that the certificate of pu%lic convenience applied for %e Eissued to the

applicant Rural ransit Compan", Ltd.,E with the condition, among others,

that Eall the other terms and conditions of the various certificates of pu%lic

convenience of the herein applicant and herein incorporated are made a

part hereof.E

2n anuar" /1, /0&&, the oppositor Red Line ransportation Compan" filed

a motion for rehearing and reconsideration in which it called the

commission*s attention to the fact that there was pending in the Court of

>irst Instance of anila case . 1'&1&, an application for the voluntar"

dissolution of the corporation, Rural ransit Compan", Ltd. 6aid motion for

reconsideration was set down for hearing on arch '1, /0&&. 2n arch '&,

/0&&, the Rural ransit Compan", Ltd., the applicant, filed a motion for

postponement. his motion was verified %" . 2lsen who swears Ethat he

was the secretar" of the Rural ransit Compan", Ltd., in the a%ove entitled

case.E 5pon the hearing of the motion for reconsideration, the commission

admitted without o%jection the following documents filed in said case o.

1'&1& in the Court of >irst Instance of anila for the dissolution of the Rural

ransit Compan", Ltd. the petition for dissolution dated ul" 9, /0&', the

decision of the said Court of >irst Instance of anila, dated >e%ruar" '#,

/0&&, decreeing the dissolution of the Rural ransit Compan", Ltd.

At the trial of this case %efore the Pu%lic 6ervice Commission an issue wasraised as to who was the real part" in interest ma-ing the application,

whether the Rural ransit Compan", Ltd., as appeared on the face of the

application, or the Bachrach otor Compan", Inc., using name of the Rural

ransit Compan", Ltd., as a trade name. he evidence given %" the

applicant*s secretar", 2lsen, is certainl" ver" du%ious and confusing, as

ma" %e seen from the following

J. @ill "ou please answer the question whether it is the

Bachrach otor Compan" operating under the trade name of the

Rural ransit Compan", Limited, or whether it is the Rural ransit

Compan", Limited in its own name this application was filedK

A. he Bachrach otor Compan" is the principal stoc-holder.

J. Please answer the question.

46P4L4A. 2%jecion porque la pregunta "a ha sido contestada.

54. Puede contestar.

A. I do not -now what the legal construction or relationship

e$isting %etween the two.

5!:4. I do not -now what is in "our mind %" not telling the real

applicant in this caseK

A. It is the Rural ransit Compan", Ltd.

5!:4. As an entit" %" itself and not %" the Bachrach otor

Compan"K

A. I do not -now. I have not given that phase of the matter

much thought, as in previous occassion had not necessitated.

5!:4. In filing this application, "ou filed it for the operator on that

lineK Is it not

A. ?es, sir.

5!:4. @ho is that operatorK

A. he Rural ransit Compan", Ltd.


21/35

5!:4. B" itself, or as a commercial name of the Bachrach otor

Compan"K

A. I cannot sa".

46P4L4A. he Rural ransit Compan", Ltd., is a corporation dul"

esta%lished in accordance with the laws of the Philippine Islands.

5!:4. According to the records of this commission the Bachrach

otor Compan" is the owner of the certificates and the Rural

ransit Compan", Ltd., is operating without an" certificate.

5!:4. If "ou filed this application for the Rural ransit Compan",

Ltd., and afterwards it is found out that the Rural ransit Compan",

Ltd., is not an operator, ever"thing will %e turned down.

5!:4. " question was, when "ou filed this application "ou

evidentl" made it for the operatorK

A. ?es, sir.

5!:4. @ho was that operator "ou had in mindK

A. According to the status of the ownership of the certificates

of the former Rural ransit Compan", the operator was the operator

authoriDed in case o. '&'/= to whom all of the assets of the

former Rural ransit Compan" were sold.

5!:4. Bachrach otor Compan"K

A. All actions have %een prosecuted in the name of the Rural

ransit Compan", Ltd.

5!:4. ?ou mean the Bachrach otor Compan", Inc., doing

%usiness under the name of the Rural ransit Compan", Ltd.K

A. ?es, sir.

L2C;@22!. I move that this case %e dismissed, "our 3onor, on

the ground that this application was made in the name of one part"

%ut the real owner is another part".

46P4L4A. @e o%ject to that petition.

5!:4. I will have that in mind when I decide the case. If I agree

with "ou ever"thing would %e finished.

he Bachrach otor Compan", Inc., entered no appearance and ostensi%l"

too- no part in the hearing of the application of the Rural ransit Compan",

Ltd. It ma" %e a matter of some surprise that the commission did not on its

own motion order the amendment of the application %" su%stituting the

Bachrach otor Compan", Inc., as the applicant. 3owever, the hearing

proceeded on the application as filed and the decision of !ecem%er ',

/0&', was rendered in favor of the Rural ransit Compan", Ltd., and the

certificate ordered to %e issued in its name, in the face of the evidence that

the said corporation was not the real part" in interest. In its said decision,

the commission undertoo- to meet the o%jection %" referring to its

resolution of ovem%er '9, /0&', entered in another case. his resolution

in case o. '&'/= concludes as follows

Premises considered we here%" authoriDe the Bachrach otor Co.,

Inc., to continue using the name of ERural ransit Co., Ltd.,E as its

trade name in all the applications, motions or other petitions to %e

filed in this commission in connection with said %usiness and that

this authorit" is given retroactive effect as of the date, of filing of theapplication in this case, to wit, April '0, /0&(.

@e -now of no law that empowers the Pu%lic 6ervice Commission or an"

court in this jurisdiction to authoriDe one corporation to assume the name of

another corporation as a trade name. Both the Rural ransit Compan", Ltd.,

and the Bachrach otor Co., Inc., are Philippine corporations and the ver"


22/35

law of their creation and continued e$istence requires each to adopt and

certif" a distinctive name. he incorporators Econstitute a %od" politic and

corporate under te name stated in te certificate .E 76ection //, Act o.

/1. i. C. (s.6wedish at. Assn., '(< Illinois GAppellate CourtsH,

1'#, 1&1.8

he order of the commission of ovem%er '9, /0&', authoriDing the

Bachrach otor Co., Incorporated, to assume the name of the Rural ransit

Co., Ltd. li-ewise in corporated, as its trade name %eing void, and accepting

the order of !ecem%er '/, /0&', at its face as granting a certificate of

pu%lic convenience to the applicant Rural ransit Co., Ltd., the said order

last mentioned is set aside and vacated on the ground that the Rural ransit

Compan", Ltd., is not the real part" in interest and its application was

fictitious.

In view of the dissolution of the Rural ransit Compan", Ltd. %" judicialdecree of >e%ruar" '#, /0&&, we do not see how we can assess costs

against said respondent, Rural ransit Compan", Ltd.

G.R. No. L28*+1 -;/ 28, 1977

!NIERS#L %ILLS CRPR#TIN, petitioner,

vs.

!NIERS#L TEXTILE %ILLS, INC., respondent.

Appeal from the order of the 6ecurities and 4$change Commission in

6.4.C. Case o. /(=0, entitled In the atter of the *ni(ersal +etile ills,

Inc. (s. *ni(ersal ills Corporation, a petition to have appellant change its

corporate name on the ground that such name is Econfusingl" and

deceptivel" similarE to that of appellee, which petition the Commission

granted.

According to the order, Ethe 5niversal e$tile ills, Inc. was organ on

!ecem%er '0, /0


23/35

some similarit", it is not confusing or deceptive) that the onl"

reason that respondent changed its name was %ecause it

e$panded its %usiness to include the manufacture of fa%rics

of all -inds) and that the word *te$tile* in petitioner*s name is

dominant and prominent enough to distinguish the two. It

further argues that petitioner failed to present evidence of

confusion or deception in the ordinar" course of %usiness)

that the onl" supposed confusion proved %" complainantarose out of an e$traordinar" occurrence a disastrous

fire. 7pp. /9+/=, Record.8

5pon these premises, the Commission held

>rom the facts proved and the jurisprudence on the matter,

it appears necessar" under the circumstances to enjoin the

respondent 5niversal ills Corporation from further using its

present corporate name. udging from what has alread"

happened, confusion is not onl" apparent, %ut possi%le. It

does not matter that the instance of confusion %etween the

two corporate names was occasioned onl" %" a fire or an

e$traordinar" occurrence. It is precisel" the dut" of this

Commission to prevent such confusion at all times and

under all circumstances not onl" for the purpose of

protecting the corporations involved %ut more so for the

protection of the pu%lic.

In toda"*s modern %usiness life where people go %"

tradenames and corporate images, the corporate name

%ecomes the more important. his Commission cannot

close its e"es to the fact that usuall" it is the sound of all the

other words composing the names of %usiness corporations

that stic-s to the mind of those who deal with them. he

word Ete$tileE in 5niversal e$tile ills, Inc.* can not possi%l"

assure the e$clusion of all other entities with similar namesfrom the mind of the pu%lic especiall" so, if the %usiness

the" are engaged in are the same, li-e in the instant case.

his Commission further ta-es cogniDance of the fact that

when respondent filed the amendment changing its name to

5niversal ills Corporation, it correspondingl" filed a written

underta-ing dated une


24/35

@e %elieve it is not. Indeed, it cannot %e said that the impugned order is

ar%itrar" and capricious. Clearl", it has rational %asis. he corporate names

in question are not Identical, %ut the" are indisputa%l" so similar that even

under the test of Ereasona%le care and o%servation as the pu%lic generall"

are capa%le of using and ma" %e e$pected to e$erciseE invo-ed %"

appellant, @e are apprehensive confusion will usuall" arise, considering

that under the second amendment of its articles of incorporation on August

/1, /091, appellant included among its primar" purposes theEmanufacturing, d"eing, finishing and selling of fa%rics of all -indsE in which

respondent had %een engaged for more than a decade ahead of petitioner.

>actuall", the Commission found e$istence of such confusion, and there is

evidence to support its conclusion. 6ince respondent is not claiming

damages in this proceeding, it is, of course, immaterial whether or not

appellant has acted in good faith, %ut @e cannot perceive wh" of all names,

it had to choose a name alread" %eing used %" another firm engaged in

practicall" the same %usiness for more than a decade enjo"ing well earned

patronage and goodwill, when there are so man" other appropriate names

it could possi%l" adopt without arousing an" suspicion as to its motive and,

more importantl", an" degree of confusion in the mind of the pu%lic which

could mislead even its own customers, e$isting or prospective. Premises

considered, there is no warrant for our interference.

As this is purel" a case of injunction, and considering the time that has

elapsed since the facts complained of too- place, this decision should not

%e deemed as foreclosing an" further remed" which appellee ma" have for

the protection of its interests.

@34R4>2R4, with the reservation alread" mentioned, the appealed

decision is affirmed. Costs against petitioners.

G.R. No. 101897. %&r5 +, 199*.

LDCE!% " THE PHILIPPINES, INC., petto'er, :. C!RT "

#PPE#LS, LDCE!% " #P#RRI, LDCE!% " C#B#G#N, LDCE!% "

C#%#L#NI!G#N, INC., LDCE!% " L#LL, INC., LDCE!% " T!#,

INC., B!HI LDCE!%, CENTR#L LDCE!% " C#T#N$!#NES, LDCE!%

" S!THERN PHILIPPINES, LDCE!% " E#STERN %IN$#N#, INC.

&'( ESTERN P#NG#SIN#N LDCE!%, INC., repo'(e't.

Juisum%ing, orres 4vangelista Law 2ffices and Am%rosio Padilla for

petitioner.

Antonio . u"les and Purungan, Chato, Chato, arriela an Law 2ffices

for respondents.

>roilan 6io%al for @estern Pangasinan L"ceum.

6?LLAB56

/. C2RP2RAI2 LA@) C2RP2RA4 A46) R4:I6RAI2 2>

PR2P264! A4 @3IC3 I6 I!4ICAL 2R C2>56I:L? 6IILAR

2 3A 2> A? 4OI6I: C2RP2RAI2, PR23IBI4!)

C2>56I2 A! !4C4PI2 4>>4CIF4L? PR4CL5!4! B? 34

APP4!I: 2> :42:RAP3IC A46 2 34 @2R! EL?C45E.

he Articles of Incorporation of a corporation must, among other things, set

out the name of the corporation. 6ection /# of the Corporation Code

esta%lishes a restrictive rule insofar as corporate names are concerned

E6ection /#. Corporate name. o corporate name ma" %e allowed %" the

6ecurities an 4$change Commission if the proposed name is identical or

deceptivel" or confusingl" similar to that of an" e$isting corporation or to

an" other name alread" protected %" law or is patentl" deceptive, confusing

or contrar" to e$isting laws. @hen a change in the corporate name is

approved, the Commission shall issue an amended certificate ofincorporation under the amended name.E he polic" underl"ing the

prohi%ition in 6ection /# against the registration of a corporate name which

is Eidentical or deceptivel" or confusingl" similarE to that of an" e$isting

corporation or which is Epatentl" deceptiveE or Epatentl" confusingE or

Econtrar" to e$isting laws,E is the avoidance of fraud upon the pu%lic which

would have occasion to deal with the entit" concerned, the evasion of legal


25/35

o%ligations and duties, and the reduction of difficulties of administration and

supervision over corporations. @e do not consider that the corporate

names of private respondent institutions are Eidentical with, or deceptivel"

or confusingl" similarE to that of the petitioner institution. rue enough, the

corporate names of private respondent entities all carr" the word EL"ceumE

%ut confusion and deception are effectivel" precluded %" the appending of

geographic names to the word EL"ceum.E hus, we do not %elieve that the

EL"ceum of AparriE can %e mista-en %" the general pu%lic for the L"ceum ofthe Philippines, or that the EL"ceum of CamalaniuganE would %e confused

with the L"ceum of the Philippines.

'. I!.) I!.) !2CRI4 2> 64C2!AR? 4AI:) 564 2> @2R!

EL?C45,E 2 A4!4! @I3 4OCL56IFI?. It is claimed,

however, %" petitioner that the word EL"ceumE has acquired a secondar"

meaning in relation to petitioner with the result that word, although originall"

a generic, has %ecome appropria%le %" petitioner to the e$clusion of other

institutions li-e private respondents herein. he doctrine of secondar"

meaning originated in the field of trademar- law. Its application has,

however, %een e$tended to corporate names sine the right to use a

corporate name to the e$clusion of others is %ased upon the same principle

which underlies the right to use a particular trademar- or tradename. In

Philippine ut Industr", Inc. v. 6tandard Brands, Inc., the doctrine of

secondar" meaning was ela%orated in the following terms E . . . a word or

phrase originall" incapa%le of e$clusive appropriation with reference to an

article on the mar-et, %ecause geographicall" or otherwise descriptive,

might nevertheless have %een used so long and so e$clusivel" %" one

producer with reference to his article that, in that trade and to that %ranch of

the purchasing pu%lic, the word or phrase has come to mean that the article

was his product.E he question which arises, therefore, is whether or notthe use %" petitioner of EL"ceumE in its corporate name has %een for such

length of time and with such e$clusivit" as to have %ecome associated or

identified with the petitioner institution in the mind of the general pu%lic 7or

at least that portion of the general pu%lic which has to do with schools8. he

Court of Appeals recogniDed this issue and answered it in the negative

E5nder the doctrine of secondar" meaning, a word or phrase originall"

incapa%le of e$clusive appropriation with reference to an article in the

mar-et, %ecause geographical or otherwise descriptive might nevertheless

have %een used so long and so e$clusivel" %" one producer with reference

to this article that, in that trade and to that group of the purchasing pu%lic,

the word or phrase has come to mean that the article was his produce 7Ana

Ang vs. ori%io eodoro, =1 Phil. 56I:L? 2R !4C4PIF4L? 6IILAR 2

A234R C2RP2RA4 4I?*6 A4. petitioner institution is not


26/35

entitled to a legall" enforcea%le e$clusive right to use the word EL"ceumE in

its corporate name and that other institutions ma" use EL"ceumE as part of

their corporate names. o determine whether a given corporate name is

EidenticalE or Econfusingl" or deceptivel" similarE with another entit"*s

corporate name, it is not enough to ascertain the presence of EL"ceumE or

ELiceoE in %oth names. 2ne must evaluate corporate names in their entiret"

and when the name of petitioner is ju$taposed with the names of private

respondents, the" are not reasona%l" regarded as EidenticalE orEconfusingl" or deceptivel" similarE with each other.

! 4 C I 6 I 2

>4LICIA2, p

Petitioner is an educational institution dul" registered with the 6ecurities

and 4$change Commission 7E64CE8. @hen it first registered with the 64C

on '/ 6eptem%er /0


27/35

Commissioner ulio 6ulit held that the corporate name of petitioner and that

of the L"ceum of Baguio, Inc. were su%stantiall" identical %ecause of the

presence of a EdominantE word, i.e., EL"ceum,E the name of the

geographical location of the campus %eing the onl" word which

distinguished one from the other corporate name. he 64C also noted that

petitioner had registered as a corporation ahead of the L"ceum of Baguio,

Inc. in point of time, / and ordered the latter to change its name to another

name Enot similar or identical GwithHE the names of previousl" registeredentities.

he L"ceum of Baguio, Inc. assailed the 2rder of the 64C %efore the

6upreme Court in a case doc-eted as :.R. o. L+19


28/35


29/35

%" one producer with reference to his article that, in that trade and to that

%ranch of the purchasing pu%lic, the word or phrase has come to mean that

the article was his product.E /'

he question which arises, therefore, is whether or not the use %" petitioner

of EL"ceumE in its corporate name has %een for such length of time and with

such e$clusivit" as to have %ecome associated or identified with the

petitioner institution in the mind of the general pu%lic 7or at least that portionof the general pu%lic which has to do with schools8. he Court of Appeals

recogniDed this issue and answered it in the negative

E5nder the doctrine of secondar" meaning, a word or phrase originall"

incapa%le of e$clusive appropriation with reference to an article in the

mar-et, %ecause geographical or otherwise descriptive might nevertheless

have %een used so long and so e$clusivel" %" one producer with reference

to this article that, in that trade and to that group of the purchasing pu%lic,

the word or phrase has come to mean that the article was his produce 7Ana

Ang vs. ori%io eodoro, =1 Phil.


30/35

during @orld @ar II, @estern Pangasinan L"ceum should %e deemed to

have lost all rights it ma" have acquired %" virtue of its past registration. It

might %e noted that the @estern Pangasinan L"ceum, Inc. registered with

the 64C soon after petitioner had filed its own registration on '/ 6eptem%er

/0


31/35

As a result of Private Respondent*s refusal to amend its Articles of

Incorporation, Petitioners filed with the 64C, on 9 >e%ruar" /0#


32/35

protect against the world in the same manner as it ma" protect its tangi%le

propert", real or personal, against trespass or conversion. It is regarded, to

a certain e$tent, as a propert" right and one which cannot %e impaired or

defeated %" su%sequent appropriation %" another corporation in the same

field 7Red Line ransportation Co. vs. Rural ransit Co., 6eptem%er #,

/0&1, '( Phil rancisco

2"ster 3ouse v. ihich, =< @ash. '=1, /&1 Pac. 0'/8. In this regard, thereis no dou%t with respect to Petitioners* prior adoption of* the name

**P3ILIP6E as part of its corporate name. Petitioners Philips 4lectrical and

Philips Industrial were incorporated on '0 August /0


33/35

of all t"pes and their accessories since &( 6eptem%er /0'', as evidenced

%" Certificate of Registration o. /9or its part, Philips 4lectrical also includes, among its primar" purposes, the

following

o develop manufacture and deal in electrical products,

including electronic, mechanical and other similar products .

. . 7p. &(, Record of 64C Case o. '=1&8

:iven Private Respondent*s aforesaid underlined primar" purpose, nothing

could prevent it from dealing in the same line of %usiness of electrical

devices, products or supplies which fall under its primar" purposes.

Besides, there is showing that Private Respondent not onl" manufacturedand sold %allasts for fluorescent lamps with their corporate name printed

thereon %ut also advertised the same as, among others, 6tandard Philips

76, %efore the 64C, pp. /1, /=, '


34/35

the popularit" and esta%lished goodwill of said petitioner*s %usiness

throughout the worldE 7ollo, p. /&=8. he su%sequent appropriator of the

name or one confusingl" similar thereto usuall" see-s an unfair advantage,

a free ride of another*s goodwill 7American :old 6tar others, Inc. v.

ational :old 6tar others, Inc., et al, #0 App !C '90, /0/ > 'd 1##8.

In allowing Private Respondent the continued use of its corporate name,

the 64C maintains that the corporate names of Petitioners P3ILIP64L4CRICAL LAP6. IC. and P3ILIP6 I!56RIAL !4F4L2P4,

IC. contain at least two words different from that of the corporate name of

respondent 6A!AR! P3ILIP6 C2RP2RAI2, which words will readil"

identif" Private Respondent from Petitioners and vice+versa.

rue, under the :uidelines in the Approval of Corporate and Partnership

ames formulated %" the 64C, the proposed name Eshould not %e similar

to one alread" used %" another corporation or partnership. If the proposed

name contains a word alread" used as part of the firm name or st"le of a

registered compan") te proposed name must contain two oter words

different from te company already registeredE74mphasis ours8. It is then

pointed out that Petitioners Philips 4lectrical and Philips Industrial have two

words different from that of Private Respondent*s name.

@hat is lost sight of, however, is that P3ILIP6 is a trademar- or trade name

which was registered as far %ac- as /0''. Petitioners, therefore, have the

e$clusive right to its use which must %e free from an" infringement %"

similarit". A corporation has an e$clusive right to the use of its name, which

ma" %e protected %" injunction upon a principle similar to that upon which

persons are protected in the use of trademar-s and tradenames 7/# C..6.

2R4, the !ecision of the Court of Appeals dated &/ ul" /00(,

and its Resolution dated '( ovem%er /00(, are 64 A6I!4 and a new


35/35

one entered 42II: private respondent from using EP3ILIP6E as a

feature of its corporate name, and 2R!4RI: the 6ecurities and

4$change Commission to amend private respondent*s Articles of

Incorporation %" deleting the word P3ILIP6 from the corporate name of

private respondent.

o costs.

62 2R!4R4!.

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