FIRST DIVISION

[G.R. No. 118192. October 23, 1997.]

PRO LINE SPORTS CENTER, INC., and QUESTOR CORPORATION ,

petitioners, vs . COURT OF APPEALS, UNIVERSAL ATHLETICS
INDUSTRIAL PRODUCTS, INC., and MONICO SEHWANI , respondents.

Sycip, Salazar, Hernandez, and Gatmaitan for petitioners.

Makalintal, Barot, Torres, and Ibarra for private respondents.

SYNOPSIS

By virtue of its merger with A.G. Spalding Bros., Inc., petitioner QUESTOR became
the owner of the trademark "Spalding." Petitioner PRO LINE is the exclusive distributor of
"Spalding" sports products. PRO LINE sent a letter-complaint to the NBI regarding the
alleged manufacture of fake "Spalding" balls by respondent UNIVERSAL. By virtue of a
Search Warrant, the NBI seized and con scated basketballs and volleyballs marked
"Spalding" from the premises of UNIVERSAL. PRO LINE and QUESTOR led a criminal
complaint for unfair competition against Monico Sehwani and others but the same was
dropped for the reason that it was doubtful whether QUESTOR had indeed acquired the
registration rights over the mark "Spalding" from A.G. Spalding Bros., Inc., and
complainants failed to adduce an actual receipt for the sale of "Spalding" balls by
UNIVERSAL. On petition for review, the Ministry of Justice overturned the dismissal and
ordered the ling of an information for unfair competition against Sehwani, but the trial
court dismissed the said charge. Upon appeal, this decision of dismissal was upheld.
Thereafter, UNIVERSAL and Sehwani led a civil case for damages charging that PRO LINE
and QUESTOR maliciously and without legal basis committed acts to their damage and
prejudice. The trial court granted the claim of UNIVERSAL declaring that the series of acts
complained of were "instituted with improper, malicious, capricious motives and without
sufficient justification." The Court of Appeals affirmed the trial court's decision.
The Supreme Court held that PRO LINE and QUESTOR cannot be adjudged liable for
damages for the alleged unfounded suit. Respondents Universal and Sehwani were unable
to prove the essential elements of the crime of malicious prosecution, namely, absence of
probable cause and legal malice on the part of petitioners. CcAIDa

SYLLABUS

1. CIVIL LAW; MALICIOUS PROSECUTION; ELEMENTS; NOT PRESENT. — PRO

LINE and QUESTOR cannot be adjudged liable for damages for the alleged unfounded suit.
The complainants were unable to prove two (2) essential elements of the crime of
malicious prosecution, namely, absence of probable cause and legal malice on the part of
petitioners. UNIVERSAL incurred expenses and other costs in defending itself from the
accusation. But, as Chief Justice Fernando would put it, "the expenses and annoyance of
litigation form part of the social burden of living in a society which seeks to attain social
control through law." Thus we see no cogent reason for the award of damages, exorbitant
as it may seem, in favor of UNIVERSAL. To do so would be to arbitrarily impose a penalty
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 on petitioners' right to litigate. The criminal complaint for unfair competition, including all
other legal remedies incidental thereto, was initiated by petitioners in their honest belief
that the charge was meritorious. For indeed it was. The law brands business practices
which are unfair, unjust or deceitful not only as contrary to public policy but also as inimical
to private interests.
2. ID.; ID.; ID.; ABSENCE OF PROBABLE CAUSE; NOT PRESENT. — UNIVERSAL
failed to show that the filing of a Criminal Case against PRO LINE and QUESTOR was bereft
of probable cause. Probable cause is the existence of such facts and circumstances as
would excite the belief in a reasonable mind, acting on the facts within the knowledge of
the prosecutor, that the person charged was guilty of the crime for which he was
prosecuted. In the case before us, then Minister of Justice Ricardo Puno found probable
cause when he reversed the Provincial Fiscal who initially dismissed the complaint and
directed him instead to le the corresponding Information for unfair competition against
private respondents herein. The existence of probable cause for unfair competition by
UNIVERSAL is derivable from the facts and circumstances of the case. The illegal sale and
manufacture of "Spalding" balls and seized "Spalding" products and instruments from
UNIVERSAL's factory was su cient prima facie evidence to warrant the prosecution of
private respondents. That a corporation other than the certi ed owner of the trademark is
engaged in the unauthorized manufacture of products bearing the same trademark
engenders a reasonable belief that a criminal offense for unfair competition is being
committed.
3. ID.; ID.; ID.; LEGAL MALICE; NOT PRESENT. — PRO LINE and QUESTOR could
not have been moved by legal malice in instituting the criminal complaint for unfair
competition which led to the ling of the Information. Malice is an inexcusable intent to
injure, oppress, vex, annoy or humiliate. We cannot conclude that petitioners were impelled
solely by a desire to in ict needless and unjusti ed vexation and injury on UNIVERSAL's
business interests. A resort to judicial processes is not per se evidence of ill will upon
which a claim for damages may be based. A contrary rule would discourage peaceful
recourse to the courts of justice and induce resort to methods less than legal, and perhaps
even violent. PRO LINE as the authorized agent of QUESTOR exercised sound judgment in
taking the necessary legal steps to safeguard the interest of its principal with respect to
the trademark in question. If the process resulted in the closure and padlocking of
UNIVERSAL's factory and the cessation of its business operations, these were unavoidable
consequences of petitioners' valid and lawful exercise of their right. One who makes use of
his own legal right does no injury. Qui jur suo utitur nullum damnum facit. If damage results
from a person's exercising his legal rights, it is damnum absque injuria.
4. COMMERCIAL LAW; UNFAIR COMPETITION; PRESENT EVEN IF SELLING NOT
PROVED. — Respondents' act may constitute unfair competition even if the element of
selling has not been proved. To hold that the act of selling is an indispensable element of
the crime of unfair competition is illogical because if the law punishes the seller of
imitation goods, then with more reason should the law penalize the manufacturer. In U.S.
vs. Manuel, the Court ruled that the test of unfair competition is whether certain goods
have been intentionally clothed with an appearance which is likely to deceive the ordinary
purchasers exercising ordinary care. In this case, it was observed by the Minister of
Justice that the manufacture of the "Spalding" balls was obviously done to deceive would-
be buyers. The projected sale would have pushed through were it not for the timely seizure
of the goods made by the NBI. That there was intent to sell or distribute the product to the
public cannot also be disputed given the number of goods manufactured and the nature of
the machinery and other equipment installed in the factory.
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 5. REMEDIAL LAW; CIVIL ACTIONS; COUNTERCLAIM; PARTAKES THE NATURE
OF INDEPENDENT ACTION. — A counterclaim partakes of the nature of a complaint and/or
a cause of action against the plaintiffs. It is in itself a distinct and independent cause of
action, so that when properly stated as such, the defendant becomes, in respect to the
matter stated by him, an actor, and there are two simultaneous actions pending between
the same parties, where each is at the same time both a plaintiff and defendant. A
counterclaim stands on the same footing and is to be tested by the same rules, as if it
were an independent action.
6. ID.; CRIMINAL PROCEDURE; PROSECUTION OF OFFENSES; INTERVENTION
OF OFFENDED PARTIES IN CRIMINAL ACTION; EFFECT; CASE AT BAR. — Petitioners'
counterclaim for damages based on the illegal and unauthorized manufacture of "Spalding"
balls constitutes an independent cause of action which can be the subject of a separate
complaint for damages against UNIVERSAL. However, this separate civil action cannot
anymore be pursued as it is already barred by res judicata, the judgment in the criminal
case (against Sehwani) involving both the criminal and civil aspects of the case for unfair
competition. Petitioners PRO LINE and QUESTOR, upon whose initiative the criminal action
for unfair competition against respondent UNIVERSAL was led, did not institute a
separate civil action for damages nor reserve their right to do so. Thus the civil aspect for
damages was deemed instituted in the criminal case. No better manifestation of the intent
of petitioners to recover damages in the criminal case can be expressed than their active
participation in the prosecution of the civil aspect of the criminal case through the
intervention of their private prosecutor. Obviously, such intervention could only be for the
purpose of recovering damages or indemnity because the offended party is not entitled to
represent the People of the Philippines in the prosecution of a public offense. Section 16,
Rule 110, of the Rules of Court requires that the intervention of the offended party in the
criminal action can be made only if he has not waived the civil action nor expressly
reserved his right to institute it separately. In an acquittal on the ground that an essential
element of the crime was not proved, it is fundamental that the accused cannot be held
criminally nor civilly liable for the offense. Although Art. 28 of the New Civil Code
authorizes the ling of a civil action separate and distinct from the criminal proceedings,
the right of petitioners to institute the same is not unfettered. Civil liability arising from the
crime is deemed instituted and determined in the criminal proceedings where the offended
party did not waive nor reserve his right to institute it separately. This is why we now hold
that the nal judgment rendered therein constitutes a bar to the present counterclaim for
damages based upon the same cause. acHETI

DECISION

BELLOSILLO , J : p

This case calls for a revisit of the demesne of malicious prosecution and its
implications.
This petition stemmed from a criminal case for unfair competition led by Pro Line
Sports Center, Inc. (PRO LINE) and Questor Corporation (QUESTOR) against Monico
Sehwani, president of Universal Athletics and Industrial Products, Inc. (UNIVERSAL). In that
case Sehwani was exonerated. As a retaliatory move, Sehwani and UNIVERSAL led a civil
case for damages against PRO LINE and QUESTOR for what they perceived as the
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 wrongful and malicious filing of the criminal action for unfair competition against them.
But first, the dramatis personae. By virtue of its merger with A.G. Spalding Bros., Inc.,
on 31 December 1971, 1 petitioner QUESTOR, a US-based corporation, became the owner
of the trademark "Spalding" appearing in sporting goods, implements and apparatuses.
Co-petitioner PRO LINE, a domestic corporation, is the exclusive distributor of "Spalding"
sports products in the Philippines. 2 Respondent UNIVERSAL, on the other hand, is a
domestic corporation engaged in the sale and manufacture of sporting goods while co-
respondent Monico Sehwani is impleaded in his capacity as president of the corporation.
On 11 February 1981, or sixteen years ago, Edwin Dy Buncio, General Manager of
PRO LINE, sent a letter-complaint to the National Bureau of Investigation (NBI) regarding
the alleged manufacture of fake "Spalding" balls by UNIVERSAL. On 23 February 1981 the
NBI applied for a search warrant with the then Court of First Instance, Br. 23, Pasig, Rizal,
then presided over by Judge Rizalina Bonifacio Vera. On that same day Judge Vera issued
Search Warrant No. 2-81 authorizing the search of the premises of UNIVERSAL in Pasig. In
the course of the search, some 1,200 basketballs and volleyballs marked "Spalding" were
seized and con scated by the NBI. Three (3) days later, on motion of the NBI, Judge Vera
issued another order, this time to seal and padlock the molds, rubber mixer, boiler and
other instruments at UNIVERSAL's factory. All these were used to manufacture the fake
"Spalding" products, but were simply too heavy to be removed from the premises and
brought under the actual physical custody of the court. However, on 28 April 1981, on
motion of UNIVERSAL, Judge Vera ordered the lifting of the seal and padlock on the
machineries, prompting the People of the Philippines, the NBI, together with PRO LINE and
QUESTOR, to le with the Court of Appeals a joint petition for certiorari and prohibition
with preliminary injunction (CA G.R. No. 12413) seeking the annulment of the order of 28
April 1981. On 18 May 1981, the appellate court issued a temporary restraining order
enjoining Judge Vera from implementing her latest order. cdasia

Meanwhile, on 26 February 1981, PRO LINE and QUESTOR led a criminal complaint
for unfair competition against respondent Monico Sehwani together with Robert, Kisnu,
Arjan and Sawtri, all surnamed Sehwani, and Arcadio del los Reyes before the Provincial
Fiscal of Rizal (I. S. No. 81-2040). The complaint was dropped on 24 June 1981 for the
reason that it was doubtful whether QUESTOR had indeed acquired the registration rights
over the mark "Spalding" from A. G. Spalding Bros., Inc., and complainants failed to adduce
an actual receipt for the sale of "Spalding" balls by UNIVERSAL. 3
On 9 July 1981 a petition for review seeking reversal of the dismissal of the
complaint was led with the Ministry of Justice. While this was pending, the Court of
Appeals rendered judgment on 4 August 1981 in CA G.R. No. 12413 a rming the order of
Judge Vera which lifted the seal and padlock on the machineries of UNIVERSAL. The
People, NBI, PRO LINE and QUESTOR challenged the decision of the appellate court before
this Court in G.R. No. 57814. On 31 August 1981 we issued a temporary restraining order
against the Court of Appeals vis-a-vis the aforesaid decision.
In connection with the criminal complaint for unfair competition, the Minister of
Justice issued on 10 September 1981 a Resolution overturning the earlier dismissal of the
complaint and ordered the Provincial Fiscal of Rizal to le an Information for unfair
competition against Monico Sehwani. The Information was accordingly led on 29
December 1981 with then Court of First Instance of Rizal, docketed as Crim. Case No.
45284, and raffled to Br. 21 presided over by Judge Gregorio Pineda.
Sehwani pleaded not guilty to the charge. But, while he admitted to having
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 manufactured "Spalding" basketballs and volleyballs, he nevertheless stressed that this
was only for the purpose of complying with the requirement of trademark registration with
the Philippine Patent O ce. He cited Chapter 1, Rule 43, of the Rules of Practice on
Trademark Cases , which requires that the mark applied for be used on applicant's goods
for at least sixty (60) days prior to the ling of the trademark application and that the
applicant must show substantial investment in the use of the mark. He also disclosed that
UNIVERSAL applied for registration with the Patent Office on 20 February 1981.
After the prosecution rested its case, Sehwani led a demurrer to evidence arguing
that the act of selling the manufactured goods was an essential and constitutive element
of the crime of unfair competition under Art. 189 of the Revised Penal Code, and the
prosecution was not able to prove that he sold the products. In its Order of 12 January
1981 the trial court granted the demurrer and dismissed the charge against Sehwani.
PRO LINE and QUESTOR impugned before us in G.R. No. 63055 the dismissal of the
criminal case. In our Resolution of 2 March 1983 we consolidated G.R. No. 63055 with G.R.
No. 57814 earlier led. On 20 April 1983 we dismissed the petition in G.R. No. 63055
nding that the dismissal by the trial court of Crim. Case No. 45284 was based on the
merits of the case which amounted to an acquittal of Sehwani. Considering that the issue
raised in G.R. No. 58714 had already been rendered moot and academic by the dismissal
of Crim. Case No. 45284 and the fact that the petition in G.R. No. 63055 seeking a review
of such dismissal had also been denied, the Court likewise dismissed the petition in G.R.
No. 58714. The dismissal became nal and executory with the entry of judgment made on
10 August 1983.
Thereafter, UNIVERSAL and Sehwani led a civil case for damages with the Regional
Trial Court of Pasig 4 charging that PRO LINE and QUESTOR maliciously and without legal
basis committed the following acts to their damage and prejudice: (a) procuring the
issuance by the Pasig trial court of Search Warrant No. 2-81 authorizing the NBI to raid the
premises of UNIVERSAL; (b) procuring an order from the same court authorizing the
sealing and padlocking of UNIVERSAL's machineries and equipment resulting in the
paralyzation and virtual closure of its operations; (c) securing a temporary restraining
order from the Court of Appeals to prevent the implementation of the trial court's order of
28 April 1981 which authorized the lifting of the seal and padlock on the subject
machineries and equipment to allow UNIVERSAL to resume operations; (d) securing a
temporary restraining order from the High Tribunal against the Court of Appeals and
charging the latter with grave abuse of discretion for holding that the order of 28 April
1981 was judiciously issued, thus prolonging the continued closure of UNIVERSAL's
business; (e) initiating the criminal prosecution of Monica Sehwani for unfair competition
under Art. 189 of the Penal Code; and, (g) appealing the order of acquittal in Crim. Case
No. 45284 directly to the Supreme Court with no other purpose than to delay the
proceedings of the case and prolong the wrongful invasion of UNIVERSAL's rights and
interests.
Defendants PRO LINE and QUESTOR denied all the allegations in the complaint and
led a counterclaim for damages based mainly on the unauthorized and illegal
manufacture by UNIVERSAL of athletic balls bearing the trademark "Spalding."
The trial court granted the claim of UNIVERSAL declaring that the series of acts
complained of were "instituted with improper, malicious, capricious motives and without
su cient justi cation." It ordered PRO LINE and QUESTOR jointly and severally to pay
UNIVERSAL and Sehwani P676,000.00 as actual and compensatory damages,
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 P250,000.00 as moral damages, P250,000.00 as exemplary damages 5 and P50,000.00
as attorney's fees. The trial court at the same time dismissed the counterclaim of PRO
LINE and QUESTOR.
The Court of Appeals a rmed the decision of the lower court but reduced the
amount of moral damages to P150,000.00 and exemplary damages to P100,000.00.
Two (2) issues are raised before us: (a) whether private respondents Sehwani and
UNIVERSAL are entitled to recover damages for the alleged wrongful recourse to court
proceedings by petitioners PRO LINE and QUESTOR; and, (b) whether petitioners'
counterclaim should be sustained.
PRO LINE and QUESTOR cannot be adjudged liable for damages for the alleged
unfounded suit. The complainants were unable to prove two (2) essential elements of the
crime of malicious prosecution, namely, absence of probable cause and legal malice on
the part of petitioners.
UNIVERSAL failed to show that the ling of Crim. Case No. 45284 was bereft of
probable cause. Probable cause is the existence of such facts and circumstances as
would excite the belief in a reasonable mind, acting on the facts within the knowledge of
the prosecutor, that the person charged was guilty of the crime for which he was
prosecuted. 6 In the case before us, then Minister of Justice Ricardo C. Puno found
probable cause when he reversed the Provincial Fiscal who initially dismissed the
complaint and directed him instead to le the corresponding Information for unfair
competition against private respondents herein. 7 The relevant portions of the directive are
quoted hereunder:
The intent on the part of Universal Sports to deceive the public and to
defraud a competitor by the use of the trademark "Spalding" on basketballs and
volleyballs seems apparent. As President of Universal and as Vice President of
the Association of Sporting Goods Manufacturers, Monico Sehwani should have
known of the prior registration of the trademark "Spalding" on basketballs and
volleyballs when he filed the application for registration of the same trademark on
February 20, 1981, in behalf of Universal, with the Philippine Patent O ce. He
was even noti ed by the Patent O ce through counsel on March 9, 1981, that
"Spalding" was duly registered with said o ce in connection with sporting goods,
implements and apparatus by A.G. Spalding & Bros., Inc. of the U.S.A.
That Universal has been selling these allegedly misbranded "Spalding"
balls has been controverted by the rms allegedly selling the goods. However,
there is su cient proof that Universal manufactured balls with the trademark
"Spalding" as admitted by Monico himself and as shown by the goods
confiscated by virtue of the search warrant.

Jurisprudence abounds to the effect that either a seller or a manufacturer

of imitation goods may be liable for violation of Section 29 of Rep. Act No. 166
(Alexander v. Sy Bok, 97 Phil. 57). This is substantially the same rule obtaining in
statutes and judicial construction since 1903 when Act No. 666 was approved
(Finlay Fleming vs. Ong Tan Chuan, 26 Phil. 579) . . . 8

The existence of probable cause for unfair competition by UNIVERSAL is derivable

from. the facts and circumstances of the case. The a davit of Graciano Lacanaria, a
former employee of UNIVERSAL, attesting to the illegal sale and manufacture of "Spalding"
balls and seized "Spalding" products and instruments from UNIVERSAL's factory was
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 sufficientprima facie evidence to warrant the prosecution of private respondents. That a
corporation other than the certi ed owner of the trademark is engaged in the unauthorized
manufacture of products bearing the same trademark engenders a reasonable belief that
a criminal offense for unfair competition is being committed.
Petitioners PRO LINE and QUESTOR could not have been moved by legal malice in
instituting the criminal complaint for unfair competition which led to the ling of the
Information against Sehwani. Malice is an inexcusable intent to injure, oppress, vex, annoy
or humiliate. We cannot conclude that petitioners were impelled solely by a desire to in ict
needless and unjusti ed vexation and injury on UNIVERSAL's business interests. A resort
to judicial processes is not per se evidence of ill will upon which a claim for damages may
be based. A contrary rule would discourage peaceful recourse to the courts of justice and
induce resort to methods less than legal, and perhaps even violent. 9
We are more disposed, under the circumstances, to hold that PRO LINE as the
authorized agent of QUESTOR exercised sound judgment in taking the necessary legal
steps to safeguard the interest of its principal with respect to the trademark in question. If
the process resulted in the closure and padlocking of UNIVERSAL's factory and the
cessation of its business operations, these were unavoidable consequences of petitioners'
valid and lawful exercise of their right. One who makes use of his own legal right does no
injury. Qui jure suo utitur nullum damnum facit. If damage results from a person's
exercising his legal rights, it is damnum absque injuria. 1 0
Admittedly, UNIVERSAL incurred expenses and other costs in defending itself from
the accusation. But, as Chief Justice Fernando would put it, "the expenses and annoyance
of litigation form part of the social burden of living in a society which seeks to attain social
control through law." 1 1 Thus we see no cogent reason for the award of damages,
exorbitant as it may seem, in favor of UNIVERSAL. To do so would be to arbitrarily impose
a penalty on petitioners' right to litigate.
The criminal complaint for unfair competition, including all other legal remedies
incidental thereto, was initiated by petitioners in their honest belief that the charge was
meritorious. For indeed it was. The law brands business practices which are unfair, unjust
or deceitful not only as contrary to public policy but also as inimical to private interests. In
the instant case, we nd quite aberrant Sehwani's reason for the manufacture of 1,200
"Spalding" balls, i.e., the pending application for trademark registration of UNIVERSAL with
the Patent O ce, when viewed in the light of his admission that the application for
registration with the Patent O ce was led on 20 February 1981, a good nine (9) days
after the goods were con scated by the NBI. This apparently was an afterthought but
nonetheless too late a remedy. Be that as it may, what is essential for registrability is proof
of actual use in commerce for at least sixty (60) days and not the capability to
manufacture and distribute samples of the product to clients.
Arguably, respondents' act may constitute unfair competition even if the element of
selling has not been proved. To hold that the act of selling is an indispensable element of
the crime of unfair competition is illogical because if the law punishes the seller of
imitation goods, then with more reason should the law penalize the manufacturer. In U. S. v.
Manuel, 1 2 the Court ruled that the test of unfair competition is whether certain goods have
been intentionally clothed with an appearance which is likely to deceive the ordinary
purchasers exercising ordinary care. In this case, it was observed by the Minister of
Justice that the manufacture of the "Spalding" balls was obviously done to deceive would-
be buyers. The projected sale would have pushed through were it not for the timely seizure
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 of the goods made by the NBI. That there was intent to sell or distribute the product to the
public cannot also be disputed given the number of goods manufactured and the nature of
the machinery and other equipment installed in the factory.
We nonetheless a rm the dismissal of petitioners' counterclaim for damages. A
counterclaim partakes of the nature of a complaint and/or a cause of action against the
plaintiffs. 1 3 It is in itself a distinct and independent cause of action, so that when properly
stated as such, the defendant becomes, in respect to the matter stated by him, an actor,
and there are two simultaneous actions pending between the same parties, where each is
at the same time both a plaintiff and defendant. 1 4 A counterclaim stands on the same
footing and is to be tested by the same rules, as if it were an independent action. 1 5
Petitioners' counterclaim for damages based on the illegal and unauthorized
manufacture of "Spalding" balls certainly constitutes an independent cause of action which
can be the subject of a separate complaint for damages against UNIVERSAL. However,
this separate civil action cannot anymore be pursued as it is already barred by res judicata,
the judgment in the criminal case (against Sehwani) involving both the criminal and civil
aspects of the case for unfair competition. 1 6 To recall, petitioners PRO LINE and
QUESTOR, upon whose initiative the criminal action for unfair competition against
respondent UNIVERSAL was led, did not institute a separate civil action for damages nor
reserve their right to do so. Thus the civil aspect for damages was deemed instituted in
the criminal case. No better manifestation of the intent of petitioners to recover damages
in the criminal case can be expressed than their active participation in the prosecution of
the civil aspect of the criminal case through the intervention of their private prosecutor.
Obviously, such intervention could only be for the purpose of recovering damages or
indemnity because the offended party is not entitled to represent the People of the
Philippines in the prosecution of a public offense. 1 7 Section 16, Rule 110, of the Rules of
Court requires that the intervention of the offended party in the criminal action can be
made only if he has not waived the civil action nor expressly reserved his right to institute it
separately. 1 8 In an acquittal on the ground that an essential element of the crime was not
proved, it is fundamental that the accused cannot be held criminally nor civilly liable for the
offense. Although Art. 28 of the New Civil Code 1 9 authorizes the ling of a civil action
separate and distinct from the criminal proceedings, the right of petitioners to institute the
same is not unfettered. Civil liability arising from the crime is deemed instituted and
determined in the criminal proceedings where the offended party did not waive nor reserve
his right to institute it separately. 2 0 This is why we now hold that the nal judgment
rendered therein constitutes a bar to the present counterclaim for damages based upon
the same cause. 2 1 cdpr

WHEREFORE, the petition is partly GRANTED. The decision of respondent Court of

Appeals is MODIFIED by deleting the award in favor of private respondents UNIVERSAL
and Monico Sehwani of actual, moral and exemplary damages as well as attorney's fees.
The dismissal of petitioners' counterclaim is AFFIRMED. No pronouncement as to
costs.
SO ORDERED.
Davide, Jr., Vitug and Kapunan, JJ ., concur.

Footnotes

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 1. The record shows that A.G. Spalding & Bros., Inc. of Chicopee, Massachusetts, a
corporation of Delaware, U.S.A. was the owner of trademark "Spalding" by virtue of an
original Certificate of Registration issued by the Philippine Patent Office on 18 July
1923. The trademark was renewed thrice on 3 January 1949, 24 May 1955 and 12
March 1976. A.G. Spalding later merged with QUESTOR CORPORATION of Toledo, Ohio,
U.S.A. On 21 August 1981 QUESTOR applied for the issuance of a new certificate of
registration in its name covering the unexpired period of registration of the trademark
"Spalding." The application was granted on 30 September 1982. (Exhs. "W," "W-2," "W-3,"
"W4;" Records, pp. 272-277).

2. Exh. "6," Records, p. 426.

3. Id., pp. 38-48.
4. Docketed as Civil Case No. 49893, the case was originally raffled to Br. 163 presided
over by Judge Eduardo Abaya. It was later withdrawn therefrom pursuant to Memo. Cir.
No. 1-89 of the Supreme Court and assigned to Assisting Judge Ildefonso E. Gascon by
virtue of Adm. Order No 26-90 also of the Supreme Court on "inherited" cases.
5. This is the amount mentioned in the dispositive portion for exemplary damages
although what appears in the body of the decision is P200,000.00 (Decision, p. 13, Rollo,
p. 60).

6. Buchanan v. Vda. de Esteban, 32 Phil. 365 (1995).

7. Annex "B," Records, p. 317.
8. Id., p. 318.
9. People's Financing Corporation v. Court of Appeals, G.R. No. 80791, 4 December 1990,
192 SCRA 34.
10. Auyong Hian v. Court of Appeals, No. L-28782, 12 September 1974, 59 SCRA 110; Ilocos
Norte Electric Company v. Court of Appeals, G.R. No. 53401, 6 November 1989, 179
SCRA 19.
11. Dioquino v. Laureano, No. L-25906, 28 May 1970, 33 SCRA 72; citing Petroleum
Exploration v. Public Service Commission, 304 U.S. 209 (1938).
12. 7 Phil. 221 (1906).
13. Meliton v. Court of Appeals, G.R. No. 101883, 11 December 1992, 216 SCRA 496.
14. Chan v. Court of Appeals, G.R. No. 109020, 3 March 1994, 230 SCRA 696.
15. Ibid.
16. Ruiz v. Ucol, No. L-45404, 7 August 1987, 153 SCRA 16.
17. People v. Orais, 65 Phil. 744 (1938).
18. See Note 11.
19. Art. 28. Unfair competition in agricultural, commercial or industrial enterprises or in
labor through the use of force, intimidation, deceit, machination or any other unjust
oppressive or highhanded method shall give rise to a right of action by the person who
thereby suffers damage.
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 20. Sec. 1, Rule 111, Rules of Court.
21. Tan v. Standard Vacuum Oil Co., 91 Phil. 672 (1952).

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