G.R. No. L-26966 October 30, 1970
DE LA RAMA STEAMSHIP CO., plaintiff-appellee, vs. NATIONAL DEVELOPMENT CO., defendant-appellant.

FACTS

This case originated from a management contract dated October 26, 1949, whereby De la Rama Steamship Co. Inc. (De la Rama) undertook the management of three vessels (“Doña Aurora,” “Doña Nati,” and “Doña Alicia”) purchased by the Philippine Government from Japan, with De la Rama having an option to purchase the vessels at the fifth year. The National Development Company (NDC) later cancelled the contract, a right upheld by the Supreme Court in G.R. No. L-8784 (May 21, 1956), which also declared De la Rama’s exercise of the purchase option ineffective. Subsequently, De la Rama filed a “Supplemental Pleading” in the lower court (Civil Case No. 25161) with three causes of action: (1) to enjoin NDC from using the vessel names, claiming exclusive property right to them as trade names; (2) to seek reimbursement of P1,505,603.82 for advances, expenses, and commissions; and (3) to claim damages and attorney’s fees for NDC’s continued use of the names. The lower court admitted the pleading and appointed a Board of Accountants to examine the accounts. Based on the Chairman’s report, the lower court rendered a decision on April 29, 1959, ordering NDC to pay De la Rama P244,277.81, enjoining NDC from using the “Doña” name on its vessels, and awarding damages and attorney’s fees. NDC appealed to the Supreme Court in G.R. No. L-15659, which set aside the decision, ruling the supplemental pleading was improperly admitted as its causes of action were not relevant to the original action. However, the Supreme Court remanded the case with instructions to enroll the pleading as a separate complaint, collect the corresponding fees, and give NDC opportunity to object to the accountant’s report. On remand, after NDC failed to file objections despite opportunities, the lower court rendered a decision on February 23, 1966, approving the accountant’s report and ordering NDC to pay De la Rama P244,227.81 with legal interest. De la Rama also moved for partial execution of the unappealed portions (damages and attorney’s fees) of the 1959 decision, which the lower court granted in an order/amendatory decision dated March 18, 1966. NDC appealed the 1966 decision.

ISSUE

The main issues raised by NDC on appeal were: (1) whether the lower court erred in approving the report of the Board of Accountants without giving NDC a chance to object and be heard; (2) whether the lower court erred in ordering the payment of P244,227.81 with interest; (3) whether the lower court erred in awarding P20,000 as damages and attorney’s fees; and (4) whether the lower court erred in perpetually enjoining NDC from using the “Doña” name on its vessels.

RULING

The Supreme Court affirmed the lower court’s decision. It held that the lower court complied with the Supreme Court’s instructions in G.R. No. L-15659 by giving NDC repeated opportunities to file its objections to the accountant’s report, which NDC failed to do; thus, the lower court correctly approved the report. The Court found no error in ordering NDC to pay De la Rama the sum of P244,227.81 with legal interest, as this was supported by the facts and the accountant’s report. The award of P20,000 as damages and attorney’s fees was also deemed warranted by the facts and circumstances of the case. Regarding the injunction, the Court upheld the lower court’s order perpetually enjoining NDC from using the “Doña” name on its vessels, ruling that De la Rama had acquired an exclusive right to the use of “Doña” as a trade name in its shipping business, having used it even before the war, and NDC’s continued use constituted unfair competition. The decision appealed from was affirmed, with costs against NDC.