In the Matter of Lyceum of the Phils. vs. Lyceum of Aparri

[SEC-AC NO. 261. June 25, 1990.] IN THE MATTER OF LYCEUM OF THE PHILS., INC. , petitioner , vs . LYCEUM OF APARRI, ET AL. , respondents . WESTERN PANGASINAN LYCEUM , cross-complainant , vs . LYCEUM OF APARRI, LYCEUM OF CABAGAN, LYCEUM OF CAMALANUIGAN, INC. LYCEUM OF LALLO, INC., & LYCEUM OF TUAO, INC. , cross-defendants . O R D E R For resolution are the Motions for Reconsideration filed by petitioner Lyceum of the Philippines, Inc. and cross-claimant Western Pangasinan Lyceum, Inc. of the order of the Commission en banc dated February 13, 1990 finding the word "Lyceum" to be incapable of appropriation since no evidence was adduced to prove that the said word has been so identified with either the petitioner or the cross-claimant such that subsequent use by the respondents would cause confusion in the minds of the public. The antecedent facts are as follows: On February 24, 1984, Lyceum of the Philippines, Inc. filed a petition with the hearing officer of the Securities and Exchange Commission seeking to compel respondents to change their respective corporate names and to permanently enjoin them from using the word "Lyceum" as their corporate names. Petitioner alleged that all the parties are corporations duly organized and existing under the laws of the Philippines and are educational institutions registered with the Securities and Exchange Commission; that its Certificate of Incorporation had been issued on September 21, 1950 such that by prior appropriation and continuous use, petitioner has acquired a vested right to the name "Lyceum"; that the corporate names of the respondents are similar and identical with that of the petitioner as to cause confusion and mislead the public into believing that respondents are identical with petitioner or are in one way or another connected with the petitioner. Cross-claimant Western Pangasinan Lyceum, Inc. alleged that it was originally registered as a non-stock educational institution on April 17, 1933 with the Bureau of Commerce; that on October 27, 1950, cross-claimant was converted into a stock corporation using the same name "Western Pangasinan Lyceum" but added the word "Incorporated"; that being the first to make use of the name "Lyceum" by prior appropriation and continuous use, cross-claimant has acquired a vested right to use its corporate name to the exclusion of others. Respondents Lyceum of Aparri, Lyceum of Cabagan, Lyceum of Camalaniugan, Inc., Lyceum of Lallo, Inc. and Lyceum of Tuao, Inc. alleged that the word "Lyceum" is a generic word descriptive of an institution of learning like "university", "college", or "institute" so that neither petitioner nor cross-claimant can claim to have acquired an exclusive right to the use of said word. On November 21, 1988, the hearing officer held that the word "Lyceum" has been appropriated by the petitioner. Thereupon, an Order was issued compelling cross-claimant and respondents to amend their respective articles of incorporation by deleting the word "Lyceum" and substituting another word in lieu thereof. Cross-claimant and respondents thereafter appealed the foregoing decision of the hearing officer to the Commission en banc which reversed the same finding that the word "Lyceum" has not been so identified with either petitioner or cross-claimant such that subsequent use by the respondents would cause confusion. On March 2, 1990, petitioner filed a motion for reconsideration. On March 15, 1990, cross-claimant likewise filed a motion for reconsideration with the Commission. LLjur The sole issue in this case is whether or not the word "Lyceum" can be appropriated by a single entity to the exclusion of others. As stated in the Order of the Commission en banc dated February 13, 1990 "Lyceum" is defined in the Webster Dictionary as a grove near Athens in which Aristotle taught. It is an institution or movement providing public lectures, concerts and entertainments generally furthering education. Hence, it is a generic word for an institution of learning such as "university", "college", "school", or "institute". Section 18 of the Corporation Code of the Philippines provides: No corporate name may be allowed by the Securities and Exchange Commission if the proposed name is identical or deceptively or confusingly similar to that of any existing corporation or to any other name already protected by law or is patently deceptive, confusing or contrary to existing laws. When a change in the corporate name is approved, the Commission shall issue an amended certificate of incorporation under the amended name. The foregoing provision thereby establishes the general rule that no two identical or confusingly similar corporate names shall be allowed. Consequently, the corporation which was later incorporated must amend its articles of incorporation in order to effectuate a change in corporate name. The said provision seeks to avoid a situation wherein any corporation could adopt at pleasure the name of another corporation resulting in confusion and unfair competition thereby opening the door to frauds and difficulties of administration and supervision. (Red Line Transportation vs. Rural Transit, G.R. No. 41570, September 6, 1934, 60 Phil. 549.) An apparent exception to the above-cited provision is the rule on genetic words. Certain words, terms or names are regarded in law as incapable of exclusive appropriation. Of this class are generic terms such that corporations cannot acquire rights in such names, words or terms as to have their use by others enjoined since the preemption of such designations as generic terms of corporate names, if permitted, would unduly interfere with the necessary or proper use of them by others in the same locality or business. (Vol. 6 Fletcher Cyclopedia Corporations, p. 62). Hence, a corporation has an exclusive right to the use of its corporate name whereby injunctive relief is available however, such a rule does not apply to generic words. The above exception is subject to a further exception in what is known as the Doctrine of Secondary Meaning. Although the said doctrine is within the ambit of the Trademark Law, the same may likewise apply to corporate names since the exclusive right of a corporation to use its name is based upon a principle similar to that upon which persons are protected in the use of trademarks and trade names. (Vol. 14 Corpus Juris Secundum, pp. 326-327). The doctrine states that words, though primarily belonging to the public such as generic terms, have been associated with one's business in such a way and for such length of time that they are generally understood by the public as referring to that one's business. (Vol. 6 Fletcher Cyclopedia Corporations, pp. 63-64). Hence, generic words can be appropriated if they have acquired a secondary meaning. In the case at bar, petitioner Lyceum of the Philippines, Inc. and cross-claimant Western Pangasinan Lyceum, Inc. claim that they have acquired a vested right to use "Lyceum" as their corporate name to the exclusion of others. It was argued that such a right is based on prior appropriation and continuous use. The argument is without merit. The elements of the Doctrine of Secondary Meaning are the following to wit: 1. The corporate name is a generic word . As previously stated, "Lyceum" is defined as a generic word for an institution of learning such as "university". 2. The corporate name was subject to exclusive and continued use for a long period of time . It must be noted that after the lapse of five (5) years, a prima facie presumption of continued use for a long period of time arises. Although there exists a prima facie presumption of continued use for a long period of time in favor of the petitioner and cross-claimant, the same cannot be characterized as exclusive. There are other educational institutions throughout the Philippines which use the word "Lyceum" as their corporate names, to wit: EDUCATIONAL INSTITUTION DATE INCORPORATED Lyceum of Cabagan Isabela October 26, 1962 Lyceum of Southern Phils. October 6, 1965 Lyceum of Malacaang February 4, 1966 Lyceum of Marbel April 29, 1968 Lyceum of Batangas July 1, 1966 Lyceum of Visayas August 17, 1967 Lyceum of Camalanuingan March 22, 1972 Lyceum of Lallo March 27, 1972 Lyceum of Aparri March 27, 1972 Lyceum of the South October 13, 1972 Lyceum of Eastern Mindanao July 17, 1972 Lyceum of Tuao April, 1972 The use of the word "Lyceum" must be both exclusive and continuous for a long period of time. Since such use was not exclusive, the second element is lacking. 3. The corporate name as a generic word has lost its primary meaning . 4. The public mind has associated the generic word with the corporate name . The last two elements may be combined such that once the public mind has associated the generic word with the name of the corporation, the same loses its primary meaning. The term "public" as used in this particular element is by implication an association of the generic word with the corporate name on a national level. It may be observed that those belonging to a particular locality associate "Lyceum" with the school in their particular locality, and not Lyceum of the Philippines which is located in Manila. Hence, that last two elements are lacking in this case. Since neither Lyceum of the Philippines, Inc. nor Western Pangasinan Lyceum, Inc. has acquired a secondary meaning, then :"Lyceum" as a generic word cannot be appropriated to the exclusion of others. The above findings are supported by several doctrines and legal principles. Based on the principle of prius tempore, potior jure (first in time, stronger in right), the petitioner cannot have a superior right over the cross-claimant in using "Lyceum" as its corporate name because the latter was previously incorporated. Hence, cross-claimant has a better right to the use of "Lyceum" as its corporate name. However, such a generic word cannot be appropriated by the cross-claimant since it has not acquired a secondary meaning. Under Art. 521 of the Civil Code, the goodwill of a business is property, and may be transferred together with the right to use the name under which the business is conducted. The goodwill of a business has its foundation on its corporate name such that the latter may likewise be considered as property belonging to the corporation. Since generic words used in corporate names are generally available to the public, the same cannot be appropriated; otherwise, a single entity would have a monopoly over a particular generic term in its corporate name to the prejudice of others. This principle is enunciated in Art. 431 of the Civil Code which provides that the owner of a thing cannot make use thereof in such manner as to injure the rights of a third person. Other educational institutions such as the herein respondents may have established through the years their own reputation and goodwill. Based on equity and fairness, such institutions must be allowed to continue using "Lyceum" in their respective localities. Petitioner and cross-claimant argued that the Honorable Supreme Court has already ruled in the case of Lyceum of the Philippines vs. Lyceum of Baguio that the word "Lyceum" can be appropriated. Consequently, it was alleged that the SEC cannot make a ruling that in effect reverses or overrules the said Supreme Court ruling in accordance with the stare decisis rule. This argument is untenable. The Stare Decisis Rule does not apply to the case at bar for the following reasons. First, the case of Lyceum of the Philippines vs. Lyceum of Baguio differs from the instant case since both cases contain a different set of facts. The former case involved Lyceum of Baguio which was incorporated after the incorporation of Lyceum of the Philippines. On the other hand, this case involves Western Pangasinan Lyceum which was Incorporated before Lyceum of the Philippines. It is well settled that "stare decisis simply declares that, for the sake of certainty, a conclusion reached in one case should be applied to those which follow, if the facts are substantially the same ." (Heisler vs. Thomas Colliery Co., 260 U.S. 245, cited in Vd. 21 Corpus Juris Secundum, p. 305). Hence the said rule is inapplicable to this case due to some differences in the set of facts established therein. Second, the principle of stare decisis does not and should not apply if the doctrine is found to be contrary to law. (Tan Chong vs. Secretary of Labor, G.R. No. 47616, September 16, 1947, 79 Phil. 249). In the cited case of Lyceum of the Philippines vs. Lyceum of Baguio, the Commission held that the word "Lyceum" can be appropriated since the same has acquired a secondary meaning. It must be noted that the Commission then only considered the length of time and not the exclusiveness of the use of the word "Lyceum" to constitute an acquisition of secondary meaning. With all due respect, such an omission may be considered an error which must not be perpetuated by the stare decisis rule. Finally, it is a fact that the Honorable Supreme Court denied the petition for review filed by Lyceum of Baguio for lack of merit on September 14, 1977, as shown by the entry of judgment herein attached as Annex "A". The said denial was in effect an affirmance of the SEC Order without an opinion. According to established authorities, " an affirmance without an opinion is an approval only of the point decided or result reached by the court below, and not of the opinion and the conclusions of law of the lower court, so as to establish a precedent for future action ." (Vol. 21, Corpus Juris Secundum, pp. 299-300). Hence, the above cited case is of no moment to the merits of the case at bar. WHEREFORE, in view of the foregoing, the motions for reconsideration filed by the petitioner and cross-claimant should be DENIED accordingly. SO ORDERED. (SGD.) ROSARIO N. LOPEZ Chairman (did not participate during the deliberation of the case) (SGD.) GONZALO T. SANTOS, JR. (SGD.) RODOLFO L. SAMARISTA Associate Commissioner Associate Commissioner (SGD.) ARMANDO Z. GONZALES (SGD.) MERLE O. MANUEL Associate Commissioner Associate Commissioner