DE LA RAMA STEAMSHIP CO., PLAINTIFF-APPELLEE, VS. NATIONAL DEVELOPMENT CO., DEFENDANT-APPELLANT.

This case originated in the Court of First Instance of Manila as Civil Case No. 25161, entitled
“De la Rama Steamship Co. Inc., plaintiff, versus National Development Company,
defendant”.  This is the third time that this case has come up
to this Court.

This case is the outcome of an agreement entered into on October
26, 1949 between the De la Rama Steamship Co. Inc.
(hereinafter referred to as De la Rama) and the National Development Company (hereinafter
referred to as NDC), whereby De la Rama undertook the management of the three vessels known as “Doña Aurora”,
“Doña Nati” and “Doña Alicia” which had been purchased by the
Philippine Government from Japan with the advice and technical supervision of De la Rama.  In the
management contract it was provided that De la Rama
had the option to buy the vessels
at the fifth year following the
purchase and delivery of each of the vessels, at a price which is to consist of the cost price of each vessel, plus such expenses as
De la Rama may have incurred in connection with the
construction, outfitting, provisioning and operation thereof; but should De la Rama fail to exercise the right of option it should be
reimbursed of the expenses it incurred in manning, equipping, fueling,
overhauling and repairing the vessels, and the payment of loading commission,
discharging commission, overriding commission, sub-agent’s commission etc.

The first time that this case came up to this Court was in G. R.
No. L-8784, decided on May 21, 1956,
which involved the principal question regarding the right granted by the
management contract to NDC to cancel upon one year’s notice the general agency
granted De la Rama. 
The NDC decided to cancel the contract but was opposed by De la Rama, which alleged that
it had been granted the option to purchase the vessels and that in 1952
it exercised that right of option.  In
the decision in G.R. No.L-8784 this Court upheld the right of NDC to cancel the
management contract, and the option of De la Rama to
purchase the vessels was declared ineffective.

The right of NDC to cancel the management contract having been upheld by this Court and
De la Rama’s right to exercise the option to purchase
the vessels could not thereby be exercised, De la Rama
filed on August 21, 1956 a “Supplemental Pleading” in Civil Case No.
25161 then pending in the Court of First Instance of Manila.  This supplemental pleading, in the nature of
a supplemental complaint, gave rise to the proceeding which later brought Civil
Case No. 25161 to this Court for the second time in G.R. No. L-25659.^[1]
Under the first cause of action of the “Supplemental Pleading”, De la
Rama demanded that NDC refrain from using the names
“Doña Aurora”, “Doña
Nati” and ‘”Doña Alicia” on the three vessels subject of
the original action, claiming that it had acquired exclusive pro­perty right to
the use of said names of the three vessels as trade names; under the second
cause of action, De la Rama sought the payment to it by the NDC of P1,505,603.82
as reimbursement for various advances and expenses it had made in behalf
of, and commissions earned as agent of, NDC; and under the third cause of
action, De la Rama sought the payment of P1,000,000
as damages on account of NDC’s continued use of the
names “Doña Aurora”, “Dona Nati” and “Doña Alicia”, on the vessels that De la Rama had turned over
to it (NDC), and P100,000 as expenses
and attorney’s fees.^[2]

Over the opposition of
NDC to the admission of the “Supplemental Pleading”, upon the
grounds that De la Rama could not file a supplemental pleading because it had
already been held in G. R. No. L-8784 that it had no right of
action and a party may not file
a supplemental pleading if it had
no valid and subsisting cause of
action, and that all the causes pleaded were only remotely connected with, and
not material to, the original action in Civil Case No. 25161, the lower court,
in an order dated October 18,
1956, granted De la Rama’s motion to file the
“Supplemental Pleading”.^[3]

In its answer to De la Rama’s
supplemental pleading, NDC denied De la Rama’s
exclusive right to use the names “Doña
Aurora”, “Dona Nati“, and “Doña
Alicia” on the vessels
upon the ground that said names (except Doña Nati) represented names of wives of former Presidents of
the Philippines and could not be appropriated by a private individual; NDC
averred that the alleged advances and commissions claimed in the second cause of
action were never alleged and claimed in the original complaint and should be
deemed barred and dismissed together with the original principal action; NDC
also averred that the demands in the third cause of action were unreasonable,
and that De la Rama had tried to retain all the
benefits arising from the operation of the vessels and shifted to NDC the liabilities and obligations.  NDC also set forth special defenses
and a counterclaim, alleging that De la Rama was
under obligation to submit a
true and correct accounting of the operation of the three vessels, and to remit
to NDC the amounts due to the latter from January 1, 1954 to the dates the
vessels were separately returned; and that plaintiff had charged excessive
commissions of 17-1/2% when the reasonable rate should only be 9.45% after the
notice of cancellation, and should account for and deliver to NDC the excess
commissions actually received.^[4]

In its reply to NDC’s answer, and in
its answer to NDC’s counterclaim, De la Rama alleged that the names “Doña
Aurora”, Doña Nati”
and “Doña Alicia” were its property, having
used the name “Doña” on its vessels in its shipping business
even before the last war and had acquired a vested right on that trade name, that the
claims for reimbursement and/or payment of advances and/or expenses made, and
commissions earned by virtue and pursuant to the management contract matured
after the filing of the amended complaint^[5];
that true and correct ac­counting of the operations of the vessels had always
been submitted to NDC.  De la Rama denied, for lack of knowledge or information
sufficient to form a belief, the allegations in defendant’s counterclaim.^[6]

On March 20, 1957, the trial court, in consonance with its order
given in open court on March 8, 1957, considering that the case involved mainly
accounting, issued an order appointing a
Board of Accountants to make an examination of the accounts submitted by
De la Rama to determine what amount is due De la Rama and what amount is due NDC, and to make such
recommendations as, in its opinion, are proper. 
The Court appointed Mr. Gregorio Lecaros, then
President of the Philippine Institute of Accountants, to represent the court
and to act as chairman of the Board; Mr. Miguel Caliñgasan,
comptroller of De la Rama, recommended by counsel for
De la Rama, to represent De la Rama; and Delfin
Diangco, accountant and manager of the shipping department of NDC,
recommended by counsel for NDC,
to represent the NDC.  The deputy clerk
of court of the branch of the Court of First Instance of
Manila where the case was pending was appointed secretary of the
Board.  The order of the court provided
for the compensation of the members of the Board of Accountants and its
Secretary.  The court gave the Board
thirty days from the date of qualification by its members within which to
receive the evidence and thereafter another thirty days within which to submit
its report.^[7]

The Chairman of the Board
of Accountants, on April 13, 1959, submitted his report and recommendations to
the court.  Based on said report and
recommendations the trial court rendered its decision, dated April
29, 1959, the dispositive portion of which reads as follows:

“IN VIEW OF ALL
THE FOREGOING CONSI­DERATION, the Court hereby renders judgment:

“(a)  Approving the report and recommendations of
Mr. Gregorio S. Licaros, Chairman, Board of
Governors, Development Bank of the Philippines, dated April 13, 1959, and
ordering defendant National Development Company to pay to plaintiff the sum of
P244,277.81, representing the balance of the advances made by plaintiff’s
operation of the Doña Nati,
Doña Alicia and Doña
Aurora, with legal interest thereof from January 24, 1955.

“(b)  Enjoining and restraining defendant
perpetually from using the ‘Doña‘ name or title on
any of its vessels; and

“(c)  Ordering
defendant to pay plaintiff, nominal or temperate damages in the sum of
P20,000.00, and attorney’s fees in the amount of P20,000.00.

“With costs against
the defendant.”^[8]

From the above-mentioned decision NDC interposed an appeal to this
Court, docketed herein as G.R. No. L-15659. 
This is the second time that Civil Case No. 25161 of the Court of First
Instance of Manila came up to this Court.

In its decision in G.R. No. L-15659 this Court upheld NDC’s contention that the causes of action in the
“Supplemental Pleading” were not in any way relevant and material to
the original action of De la Rama to compel the NDC
to sell the three “Doña” vessels to it, and
that, therefore, the “Supplemental Pleading” was improperly
admitted.  This Court also sustained the
con­tention of the NDC that the lower court did not follow the suggestion of
the Chairman of the Board of Account­ants to give opportunity to the NDC to
submit its objections to the amounts stated in the report of the chairman of
the board.  This Court therefore, set
aside the decision appealed from. 
However, in the interest of a prompt termination of the suit, this Court
ordered the remand of the case to the court below “with instructions to
enroll the pleadings and papers starting with the ‘supplemental pleading’,
registering the complaint, collecting the corresponding fee based on the
amounts demanded in the complaint and entering the complaint and all the papers
in the dockets of the court.” This Court also gave instructions “to
give the defendant NDC the opportunity to submit its objections to the report
of the board of accountants and to have a hearing on this report in accordance
with the rules as above pointed
out”, and “thereafter the action shall proceed or continue in
accordance with this decision”.^[9]

So the case was before the trial court for the third
proceedings.  The trial court complied
with the instructions of this Court, as stated in the decision in G.R. No.
L-15659. After the trial court had repeatedly given the NDC the opportunity to
file its objections, if any, to the report submitted by the Chairman of the Board of Accountants, and the NDC failed so to do, the trial court rendered its decision dated February 23, 1966, the dispositive part of which reads:

“WHEREFORE, judgment is hereby rendered approving the
conclusions and recommendations contained in the aforesaid Report of April 13, 1959, and ordering
defendant National Development Company to pay to the plaintiff De la Rama Steamship Co., Inc., the sum of P244,227.81 with legal
interest thereon from January 24, 1955
until fully paid.

“With costs against the defendant.”^[10]

On February 24, 1966 De la Rama filed a
motion for the partial execution of the decision dated April 29, 1959 regarding
the damages in the sum of P20,000.00 and attorney’s fees in the sum of P20,000
on the ground that those portions of the decision had not been appealed from
and had therefore become the “law of the case” as far as the parties
were concerned.^[11]
NDC filed its
opposition to the motion
on the ground that the decision of April
29, 1959 was “set aside” by the Supreme Court, and
consequently there was no legal basis for execution.

On March
18, 1966 the lower
court issued an “order and/or amendatory decision”, the concluding
portion of which reads as follows:

“PREMISES CONSIDERED, plaintiff’s motion of February 23, 1966 for partial
execution is hereby denied.  Instead, in
the interest of justice, and the
decision of this Court of February 7, 1966
not having yet become final, the same is hereby amended by adding thereto the
findings of fact and conclusion of law made above, and by amending its dispositive part to read as follows:

“WHEREFORE, judgment is hereby rendered:

“(a)  Enjoining and restraining the defendant
perpetually from using the “Doña” name or
title on any of its vessels;

“(b)  Approving the conclusions and recommendations
contained in the aforesaid
Report of April 13, 1959, and ordering the defendant National Development Company to pay to the plaintiff De la Rama Steamship Co., Inc., the sum of P244,222.81 with legal interest thereon from January 24, 1955 until fully paid; and

“(c)  Ordering the defendant to pay to the plaintiff
by way of damages, as and/or attorney’s fee, the amount of P20,000.00.  Said decision of February 7, 1966 is maintained in all other respects.

“With costs against the defendant.”^[12]

From both the decision dated February 7, 1966 and the amendatory decision dated March 18, 1966 NDC ap­pealed directly
to this Court, because of the amount involved, stating that it would raise
questions both of fact and of law^[13].  The
present appeal is the third time that
this case^[14] has come up to this Court.

NDC in its brief, assigns six errors which, it claims, were
committed by the lower court in deciding the case.

The first four errors refer to the lower court’s having adopted in
toto the findings and recommendations of the
Board of Accountants, as contained
in the Report submitted to the court dated April 13, 1959, regarding:

1.    “the net results of the operational expenses of the ‘Doña‘ vessels;”

2.    “the inventory of equipment, supplies, materials, provisions,
fuel, etc. on board the vessels upon the delivery thereof;”

3.   
“the commission on cargos
booked and loaded after delivery of the vessels; ” and

4.    “the additional charges to
NDC;”

The fifth error assigned is that

5. “The lower
court erred in holding that the plaintiff is entitled to the preferential right
to the use of the ‘Doña‘ names and enjoining and
restraining the defendant-appellant perpetually from using the ‘Doña‘ names or title on any of its vessels.”

The sixth error assigned is that

6. “The lower
court, finally, erred in condemning defendant-appellant to pay to the
plaintiff-appellee the sum of P244,227.81 with legal
interest thereon from Jan. 24, 1955 until fully paid and also the sum of
P20,000.00 by way of damages and attorney’s fees.”

In support of its first assignment of error, that the lower court
erred in adopting in toto the findings
and recommendations of the Board of Accountants regarding the net results of
the operational expenses of the “Doña”
vessels, as contained in the Board’s Report submitted to the Court, dated April
13, 1959, NDC con­tends that De la Rama had
overcharged NDC as per NDC Report dated April 10, 1959 in the amount of
P53,393.94 before the cancellation of the contract and P12,705.59 after the
cancellation of the contract as 17-1/2% commissions on “arbitraries”
which cannot be included in the terms “cargo freight” or
“freight revenue” on the basis of which alone De la Rama should receive the agency commissions as per paragraph
4 of the management contract; that De la Rama had
also charged excess commissions in the amount of P803,973.94, as shown in the
NDC audit verification report dated April 10, 1959, on freight revenues and
passage revenues after the cancellation of the management contract effective
July 11, 1955, because the 17-1/2% commission on “freight revenue”
and the 10% commission on “passage
revenue” under the management contract were applicable only while said
contract was in force, such that after the rescission of said contract, until
the vessels were returned, De la Rama operated the
vessels at its own risk and should be entitled only to 7-1/2% commission on
freight revenues and 7-1/2% commission on passage revenues which rates were
those agreed upon by NDC and A. V. Rocha and Company; that De la Rama overcharged NDC P46,627.83 as expenses for
advertising, which should have been borne by De la Rama
pursuant to stipulation No. 4 of the management contract which in part reads:

“x x x in
consideration of said overriding commission, De la Rama
shall assume all expenses of the service with respect to sub-agents’
commissions, advertising, entertaining, documentation of cargo office rent and
expenses, telephone costs and general travelling
expenses.  Cable and telegram expenses,
however, shall be directly chargeable to the respective vessels’s
voyage accounts.”

but which De la Rama
charged directly to the miscellan­eous expense accounts of the respective
voyage account of the vessels; that De la Rama also
overcharged NDC, without specifying the amount, for expenses for entertainment,
telephone costs, general traveling expenses, sub-agents’ commission of cargo,
all of which NDC must assume pursuant to paragraph 4 of the management
contract; that NDC was overcharged
P4,710.94 for subsistence, which amount was spent not for the meals of the passengers, officers, and crew, but for various parties
and, which, not having been previously authorized by NDC, should be chargeable to De la Rama; that De la Rama overcharged
operational expenses in the amount of P192,376.35 which were without supporting vouchers; that there was an understatement of the operational income of NDC vessels in the amount of P27,418.56; that the operational
expenses of the NDC vessels was overcharged for various expenses in the amount of P5,462.09.^[15]

In support of its second assignment of error, that the lower
court erred in adopting in toto the
findings and recommendations of the Board
of Accountants regarding the inventory
of equipment, supplies, materials, provisions, fuels, etc. on board the vessels
upon the delivery thereof to NDC as contained in the report dated April 13,
1959, NDC contends that De la Rama’s claim on this matter was only P626,304.70,
but Schedule B (Exh. PP), purporting to be the final
inventory, showed only a total of P573,979.53 as against NDC audit report dated March 31, 1958 in
the amount of only P496,637.10.^[16]

In support of the third assignment
of error, that the lower court erred
in adopting in toto the findings and recommendations of the Board of Accountants regarding the
commission on cargos booked and loaded after
delivery of the vessels as
contained in the Board’s Report dated April 13, 1959, NDC avers that when the
“Doña Alicia” was delivered to NDC the
latter honored the De la Rama commitments on cargo and passengers without however
stipulating the commissions to
be earned by De la Rama; that the claim of De la Rama for P16,927.72, or 9-1/2% of P178,186.56, freight revenues
was 7% higher than those charged for the same service and should be reduced
to 2-1/2% only; that De la Rama also overcharged NDC in the amount of P113.75 passage commission, because De la Rama should not be allowed to charge more than
7-1/2% which NDC pays to its present agent.^[17]

In its fourth assignment
of error, that the lower court erred in adopting
in toto the recommendations of
the Board of Accountants regarding the additional charges to NDC as contained
in the Board’s Report dated April 13, 1959, NDC avers that of the P21,998.11 claimed by De la Rama, the bills for general
averages in the amount of P20,478.52 for “Doña
Alicia” and “Doña Aurora” were for
services that were normal duties of the relationship between NDC and De la Rama, and were therefore without basis, more so because all of De la Rama’s
expenses including travel, hotel and entertainment expenses of its officials
incident thereto in the amount of P51,583.33 had been included in the casualty
account claimed by De la Rama and the designated adjuster, Funch, Edye, and Co., already
collected their fees of P6,000; so that said amount of P20,478.52 should have been disallowed.^[18]

In refutation of the reasons adduced by NDC in support of its
four assignments of error, De la Rama contends that the alleged errors involve principally factual matters which had
been twice resolved by the lower court – first in the decision of April 29,
1959 and again in the decisions
of February 7 and March 18, 1966, and those alleged errors relate to matters
that NDC had been given many opportunities to object to in the lower court, but
which it did not do; that for having
failed to object, NDC is bound by the findings embodied in the report.^[19]

We
sustain the stand of De la Rama.  NDC complains against the adoption in toto by
the trial court of the findings
and recommendations of the Board of Accountants.  We find the actuation of the trial court to
be in accordance with Rule 33, Section 11, of the Rules of Court -? which
authorizes the trial court to render judgment, after the report of the
commissioner has been set for hearing, by adopting, modifying, or rejecting the
report in whole or in part.  The report of the Board of Accountants in the case at bar
is similar to the report of the commissioner,
or referee, as provided in Rule
33 of the Rules of Court.  This Court, in
the case of Apurillo v. Greciano,^[20] held that the trial Judge’s adoption in
toto of the findings of the Commissioner is allowed under Rule 33 of the Rules of Court.  In the case at bar, NDC’s
repeated failures to file its objections, if any, to the report, left the trial
court no other choice but to render judgment based on the report.  Section 11 of Rule 33 of the Rules of Court
was taken from Section 140 of the former Code of Civil Procedure (Act
190).  Interpreting Section 140 of the
said Code of Civil Procedure, this Court, in the case of Kreidt
vs. E. C. McCullough & Co.^[21], held:

“. . . Section 140 of the Code of Civil
Procedure must be interpreted as placing upon the litigant parties the duty of
discovering and exhibiting to the court the reasons, if any there be, why the report should not be confirmed; and
it is not ordinarily incumbent upon the court to discover
the errors that may lurk therein.  The
duty which the law imposes upon the court is to render judgment in accordance
with the report; and this will ordinarily be done unless the party aggrieved
shall, in a manner conformable with proper practice, demonstrate the
existence of error in the report.  It is
an elementary rule of procedure that the exceptions to the referee’s report
should specifically point out the error, or errors relied upon by the party
excepting, when the report comes up for confirmation the court can not be expected to rehear the case upon the entire record, but will review only so much as may be drawn in
question by proper exceptions….

“When a referee is appointed he becomes for the time being an
accredited agent and an officer of the court, and the reference is clearly a
judicial proceeding.  What the referee
does while acting within the scope of his authority is, therefore, in the
contemplation of law, done by the court itself. 
Hence his conclusions must be assumed to be correct until error is
properly shown ….  It follows that when
the referee has examined the evidence and reached his conclusions of fact and
law, those conclusions have a presumption in their favor both of law and of
reason.  It would be impossible to
administer justice on any other theory than that as facts are found and determined in
accordance with the proper procedure of the court they must be assumed to be true until the contrary is
shown.”

In the case at bar, NDC neglected to perform the duty of pointing
and demonstrating the alleged errors in the report of the Board of Accountants,
in spite of the fact that this Court in G.R. No.
L-15659 had ordered the case to be remanded to the lower court precisely in
order that NDC might be given the opportunity, which it claimed it had
previously been deprived of by the trial court, to submit its objections to the
report, and to have a hearing on the report, notwithstanding the repeated
opportunities given to it by the trial court for a period of three years to submit its objections.  On this matter, the following is what the
trial court said in its decision which is now appealed to this Court:

“…and, as directed by the Supreme Court,
the defendant was given repeated opportunities to submit its objections to the
Report of the Chairman of the Board. 
Unfortunately, however, the defendant’s conduct for the last three years
amounts to waiver of its right to be heard on the subject report, to paraphrase
the language of the Supreme Court in this regard in its decision quoted above.  Thus, defendant NDC requested and was granted
on October 10, 1963 a
first extension of time to submit its objections to the Report (p. 1342, Re­cords).  As late as October 30, 1963 (p.
1390, Records), that is, after several
extensions of time totalling more than one (1) year,
this Court granted NDC a final
and last extension of three weeks within which to submit NDC’s
objections, if any, to said Report.  This
period expired without the filing by defendant NDC of ob­jections, if any, to
said Report; but this Court, notwithstanding the absence of any objection to
said Report, and with a view to giving the defendant a last chance to
assail any part of said Report, exercised its discretion to, as it did, set said Report for hearing on May 3, 1965 (p. 1395, Records), and thereafter on
May 6, May 28, July 9, August 5, September 16, October 22 and November 12, 1965, which hearings were cancelled at the instance
and request of the defendant.  At the hearing on November 12, 1965 the parties agreed that defendant be
granted two weeks within which
to file its objections, if
any, to said Report; that
plaintiff shall submit its reply to the objections within a similar period and
that if the defendant failed to file the objections
within said stipulated period it shall be deemed to have waived its right to do
so.  The defendant again failed to file its
objections to said Report, and instead filed an urgent motion, dated November
26, 1965, to extend the period, but said urgent motion was filed after several
days after the expiration of the period granted for the purpose in this Court’s
Order of November 12, 1965, and as the
defendant actually failed to file the intended objections within the extension
of time prayed for in said urgent motion (see Order of this Court of December
7, 1965), on motion of the plaintiff this Court found no other alternative
proper under the circumstances mentioned above than to issue its Order of
December 13, 1965 to the effect that said Report was deemed submitted for
decision and/or approval as of the last mentioned date.”^[22]

The appellant having failed to file its objections to the report,
it was the duty imposed by the law upon the court, to quote again Kriedt vs. E. C. McCullough & Co. supra,
“to render judgment in accordance with the report”, as though the
facts had been found by the judge himself.

If a party fails to file
opportunely his objections to the report of the commissioner or referee, such
that the record does not disclose the objections thereto, as in the instant
case, questions relating to the report cannot be reviewed and he cannot dispute
the finding in the report or escape the legal consequences flowing therefrom.  Thus, in
the case of Santos v. de Guzman and Martinez,^[23] this Court ruled:

“By way of emphasis, we now desire to add that if a party
desires to chal­lenge the findings of a referee, he must do so by timely
and specific exceptions to the referee’s report. If he fails to make such exceptions and the report is
confirmed by the trial judge, he is bound by the findings and cannot be heard
to dispute their truthfulness or escape the legal consequences flowing therefrom.  Questions
relating to the report of a referee can be reviewed only where the record
discloses the exceptions taken thereto.”

Another reason why NDC’s first four
assignments of errors should no longer be considered is that, as appears in the
trial court’s decision, NDC agreed
that should it fail to file its objections within two weeks from November 12, 1965, “it shall be
deemed to have waived its
right to do so.” Furthermore, it has been repeated time and
again by this Court, that issues not raised in the lower court cannot be raised
for the first time on appeal.^[24]
In the recent case of Kalalo v. Luz^[25]
this Court refused to consider on appeal the correctness of the amount due from
appellant to appellee as found by the Commissioner,
it being too late to question on appeal its correctness, the same
not having been submitted to the trial court for resolution.

It has also been held, in this connection, that when the findings
of the Commissioner are approved by the trial court, they will not generally be
disturbed by the reviewing court, unless the findings are unsupported by the
evidence.^[26]
The trial court adopted the findings and recommendations embodied in the Report
in the instant case “after a careful consideration of said report an after
a careful evaluation of the pertinent data and figures taken from authentic
records as to which the members of the Board of Accountants are in
agreement.”^[27]

In support of the fifth assignment of error, that the lower court
erred in holding that De la Rama is entitled to the
preferential right to the use of the “Doña”
names and enjoining and restraining NDC perpetually from using the “Doña” names on any of its vessels, NDC argues that as
owner of the vessels it had registered the “Doña”
names in the Bureau of Customs with full knowledge and consent of De la Rama which, therefore, is now estopped
from questioning the right, or from denying the ownership, of NDC over the
“Doña” names (Art. 1431 Civil Code).^[28]
De la Rama, on the other hand, maintains that the
findings and conclusion of the lower court on this matter, quoting the
pertinent portion of the lower court’s decision, are well founded.

In the amendatory decision, dated March 18, 1966, the lower court
found that De la Rama had been in the shipping
business since 1933 and had adopted, prior to the war in 1941, the word “Doña” in designating its vessels; that the three
ocean-going vessels that it operated under the management contract were named
“Dona Nati” after the wife of the late Don
Esteban de la Rama, who was founder of the steamship
company; “Doña Alicia” after the late wife
of former President Elpidio Quirino;
and “Dona Aurora” after the late widow of President Manuel Quezon; that there is unrebutted
testimony that in the shipping business, goodwill and reputation are inevitably
acquired by the names given to a vessel.^[29]

NDC’s contention, in its answer, that
De la Rama, a private firm, could not appropriate
said names (except “Doña Nati“)
on the ground that those are names of wives of former Presidents, does not have
a legal basis.  Under Section 4 (c) of
Rep. Act No. 166
as amended, which apparently is the basis of the contention of NDC, what is
prohibited from being appropriated and being registered are trade-names consisting of,
or com­prising, a name identifying a particular living individual, or the name
of a deceased
President of the Philippines.  The
names of deceased wives of Presidents are not included in the prohibition.  Moreover, Section 4 (f) of said Act does not prohibit the registration, and hence
appropriation, of a trade-name that has become distinctive; and the substantial
and exclusive use of a trade-name for five
years is accepted as prima
facie proof that the trade-name has become distinctive.  And this Court has said, in Ang vs. Teodoro^[30],
that even a name or phrase not capable of appropriation as a trade name may, by
long and exclusive use by a business with reference thereto or to its products,
acquire a proprietary con­notation, such that, to the purchasing public, the name or
phrase becomes associated with the
service or
the products of the business, and so it is entitled to pro­tection
against unfair competition.

Neither is the claim of estoppel, allegedly based on acquiescence, in that NDC had
registered with full knowledge and/or consent of De la Rama
the “Doña” names in the Bureau of Customs,
tenable.  A reading of Sections 1166 to
1176 of the Revised Administrative Code, under which the “Doña” vessels were presumably registered, would show that the primary purpose of the
registration is to determine the ownership of the vessels, although for
registration it is necessary that the vessel should have a name as a
prerequisite under the provision of Section 1170.  De la Rama
certainly could not, and had no right, to oppose the registration of the vessels by NDC because the vessels were in fact owned by NDC.  Neither could De la Rama
then oppose the registration of the
“Doña”
names of the vessels for it was De la Rama
itself that gave those names when it operated the vessels, and it had also an
expectant right to become owners of said vessels. 
De la Rama’s consent to the registration of the
vessels as owned by NDC did not necessarily imply that it also consented to NDC’s appropriation of the “Doña”
names, for almost immediately after the right of NDC to cancel the management
contract had been upheld by this Court in G. R. No. L-8784, decided on May 21, 1956, De la Rama formally notified, on
August 10, 1956 NDC or its agent to “refrain from using, announcing or in
any manner referring to the three vessels here in question as the ‘Doña Aurora,’ ‘Doña Nati‘ or ‘Doña Alicia’.”^[31]
From these facts it cannot reasonably be urged that De la Rama
is estopped from preventing NDC to use the “Doña” names on its vessels.  Anent this matter,
it has been held that:

“x x x an estoppel will not ordinarily arise from a consent given
under an excusable misapprehension of facts. 
x x x.  likewise, the estoppel
will not be given effect beyond the precise thing
consented to and matters which are necessarily, or at least, reasonably, to be
implied therefrom.” (28 Am Jur
2d, pp. 662-663.)

And even if it be assumed, gratia argumenti,
that De la Rama acquiesced to the registration
of the “Dona” names of the vessels, as NDC contends, that acquiescence
could not necessarily estop De la Rama to claim
its right to said names, after the conditions had changed, that is, when
the management contract had been cancelled by NDC. Regarding this matter it has been held that:

“Acquiescence in the past does not necessarily estop a party from changing his course of conduct as to the
future, especially where there has been a change in conditions.” (28 Am Jur 2d, p. 675.)

NDC does not dispute the fact that the “Dona” names had
been originally used by De la Rama^[32],
and accord­ing to the lower court De la Rama had been
using the “Doña” names even before the war,
and that said names have acquired goodwill and reputation.  Goodwill is protected by the law on
unfair competition.  Goodwill is easily
damaged, and is easily vulnerable to assault, through the brand which
symbolizes it.  When a person has
established a trade or business in
which he has used a name or device to designate his goods, he will be protected in the
use of
the name or
device.  “Such person has a
right to complain when another adopts this symbol or manner of making of
his goods so as to mis­lead the public into purchasing the same as and for the
goods of the complainant.”^[33]

“The
good will in business is a valuable
asset, and in
modern commercial life it is frequently built upon a trade-name.  Any trade-mark or name …which has become of a
pecuniary value or a business advantage, becomes a property right, and, as such, is entitled to the protection afforded by the courts”
(American Agricultural Chemical Co. v. Moore, 17 F (2d) 196, 199.)

In Ang v. Teodoro^[34]
this Court said:

“The owner of a trade-mark or trade-name has a property right
in which he is entitled to protection, since there is damage to him from
confusion of reputation or goodwill in the mind of the public as well as confusion of goods.  The modern trend is to give emphasis to the
unfairness of the acts and to treat the issue as a fraud.”

To permit NDC to continue using the “Dona” names would
be to countenance the unlawful appropriation of the benefit of a goodwill which
De la Rama has acquired as a result of continued
usage and large expense; it would be tantamount to permitting NDC to grab the reputation or goodwill
of the business of another.^[35]
We find that the decision of the trial court on this matter is in accordance
with the law on unfair competition.

Regarding NDC’s sixth assignment of
error, that the lower court
erred in condemning defendant-appellant to pay to the plaintiff-appellee the sum of P244,227.81 with legal interest thereon
from January 24, 1955 until fully paid and also the sum of P20,000 by way of
damages and attorney’s fees, We believe that no such error was committed by the
lower court.  The view We have expressed regarding
the first four errors assigned by NDC fully
supports the correctness of the lower court’s holding that NDC should pay De la Rama
the sum of P244,227.81 with
legal interest, as stated in the decision.  The facts and circumstances extant in
the record, likewise, amply warrant the award to De la Rama of the sum of P20,000.00
by way of damages and attorney’s fees.

WHEREFORE, the decision appealed from is affirmed, with costs against the
defendant-appellant National Development Company.

IT IS SO ORDERED.

Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Ruiz Castro,
Fernando, and Barredo,
JJ., concur.

Teehankee and Villamor, JJ., did not take part.

Makasiar, J., on leave.

^[1]
Decided on November 30, 1962.

^[2]
Record on Appeal, pages 2-12.

^[3]
Record on Appeal, pages 15-22.

^[4]
Record on Appeal, pages 23-37.

^[5]
The amended complaint was filed on
February 22, 1955, while
the supplemental pleading was filed on August
21, 1956.

^[6]
Record on Appeal, pages 37-40.

^[7]
Record on Appeal, pages 41-43.

^[8]
Record on Appeal, pages 81-121.

^[9]
Words between quotation marks are as quoted from the decision in G.R. No. L-15659.

^[10]
Record on Appeal, page 138.

^[11]
Record on Appeal, pages 139-142.

^[12]
Record on Appeal, pages 156-157.

^[13]
Record on Appeal, pages 158-159.

^[14]
Civil Case No. 25161 of the Court of First Instance of Manila.

^[15]
Appellant’s Brief,
pages 12-29. In its brief erroneously refers to the report of the Board of Accountants as dated April 29, 1959. The correct date of
the repot is April 13, 1959.

^[16]
Appellant’s Brief, pages 30-34.

^[17]
Appellant’s Brief, pages 34-37.

^[18]
Appellant’s Brief, pages 37-40.

^[19]
Appellee’s Brief, pages 10-13.

^[20]
G.R. No. L-23683, July 30, 1969;
28 SCRA 1054, 1059-1060.

^[21]
37 Phil. 474, 482.

^[22]
Record on Appeal, pages 135-137;
underscoring supplied.

^[23]
45 Phil. 646, 649.

^[24]
Tan Machan vs.
Gan Aya de la Trinidad, 3
Phil. 684; Soriano vs. Ramirez, 44 Phil. 519.

^[25]
G. R. No. L-27782, July 31, 1970.

^[26]
Masmussen vs. Gresley,
8 Cir., 77 F (2d) 252; Dickinson vs. Riley, 8 Cir. 86 F (2d) 385; Small v. Kiel 101 F (2d) 444.

^[27]
Record on Appeal, page 137.

^[28]
Appellant’s Brief, pages 40-43.

^[29]
Record on Appeal, pages 153-154.

^[30]
74 Phil. 50.

^[31]
Record on Appeal, pages 5, 28-29.

^[32]
Appellant’s Brief, page 42.

^[33]
Harry D. Nims, Unfair Competition and
Trade Marks, Vol. I, page 49.

^[34]
74 Phil. 50, 55.

^[35]
Ang Si Heng vs.
Wellington Dept. Store, Inc., 92 Phil. 448.