Francisco R. Reyes vs. Ronnie P. Enriquez, et al.

June 25, 2015 SEC CASE NO. 11-14-441 FRANCISCO R. REYES , petitioner , vs. RONNIE P. ENRIQUEZ, FRANCIS JOSEPH F. MAGBITANG, RECHELLE I. MOSERA, MINERVA G. FILAMOR, ROWENA R. SANTOS AND REYES BARBECUE, INC., SEC Reg. No. CS200716776 , respondents. FOR : Change of Corporate Name ORDER This refers to the petition of Francisco R. Reyes dated 06 November 2014, praying for the Commission's issuance of an order compelling the respondents to change their corporate name, REYES BARBECUE, INC., and to refrain from using petitioner's registered trade name REYES BARBECUE in all of its operations. ETHIDa Petitioner is the owner of a restaurant and franchising business, known as REYES BARBECUE, duly registered with the Department of Trade and Industry (DTI) on 24 June 2002 under Certificate of Registration No. 871174, with principal office address at 819-B Torres St., Mandaluyong City. Likewise, REYES BARBECUE is registered with the Intellectual Property Office (IPO) on 27 November 2006 until 27 November 2016 under Certificate of Registration No. 4-2005-006587. Individual respondents are the incorporators of respondent corporation, REYES BARBECUE, INC., duly registered with the Commission on 24 October 2007 under Company Registration No. CS200716776, with principal office address at Unit 406 Valencia Hills, N. Domingo St., San Juan, Metro Manila. Respondent corporation is primarily engaged in establishing, maintaining and operating restaurants, catering services and refreshment parlors, as stated in its Articles of Incorporation. Petitioner filed this Petition with the Commission on the following grounds: petitioner is a prior registrant of the trade and business names of REYES BARBECUE with the IPO and DTI, which was made before the Commission's approval of the respondent's corporate name; respondent Francis Joseph Magbitang, director of respondent corporation, issued and executed an Affidavit of Undertaking to Change Name declaring that in behalf of the corporation, he undertakes to change its corporate name in event another person, firm or entity has acquired a prior right to the use of the said firm name by virtue of registration with other government agencies or their 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; and respondents' use of petitioner's registered trade name REYES BARBECUE is patently deceptive and confusing to the public and is in fact illegal, for being contrary to and in violation of Philippine laws. The Commission, through the Office of the General Counsel, sent Summons to the respondents dated 19 November 2014, ordering the same to enter appearance before the Commission and to file an Answer to the subject Petition. The corporation or its representative failed to appear or to submit the required documents. cSEDTC The Company Registration and Monitoring Department sent Summons dated 06 March 2015 to the respondents, through registered mail, to give them opportunity to answer the Petition. To date, only the return slip for respondent Francis Joseph F. Magbitang has been received by SEC. Despite receipt of Mr. Magbitang, he failed to appear before the Commission or to submit the required documents. Said Summons were again sent to the other respondents, through personal delivery. The Commission was able to serve the Summons to Rowena R. Santos only because the other respondents have either moved out or unknown. Despite receipt of Ms. Santos, she failed to appear before the Commission or to submit the required documents. In support of its Petition, petitioner submitted the following documents: a. Copy of IPO Certificate of Registration of REYES BARBECUE in favor of the petitioner; b. Copy of DTI Certificate of Registration of Business Name of REYES BARBECUE in favor of the petitioner; c. Copy of respondent corporation's Certificate of Incorporation, Articles of Incorporation, By-laws and Affidavit of Undertaking to Change Name; d. Copy of Franchise Agreement between respondent corporation and Cecilia T. Arugay covering the period of five (5) years from 17 March 2008; e. Copy of IPO Notice of Decision on the case between the petitioner and respondent Ronnie P. Enriquez for cancellation of the trademark REYES BARBECUE; f. Copy of IPO Entry of Judgment/Execution of Decision. Section 18 of the Corporation Code of the Philippines provides: "Sec. 18. Corporate name . 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." To implement the above provision, the Commission issued SEC Memorandum Circular No. 21, series of 2013 Omnibus Guidelines and Procedures on the Use of Corporate and Partnership Names . Pertinent provisions are presented as follows: "3. a) The name shall not be identical, misleading or confusingly similar to a corporate or partnership name registered with the Commission, or with the Department of Trade and Industry, in the case of sole proprietorships; b) If the name applied for is similar to that of a registered corporation or partnership, the applicant shall add one or more distinctive words to the proposed name to remove the similarity or differentiate it from the registered name; However, the addition of one or more distinctive words shall not be allowed if the registered name is coined or unique unless the board of directors or majority of the partners of the subject corporation or partnership gives its consent to the applied name; xxx xxx xxx 5. A tradename or trademark registered with the Intellectual Property Office may be used as part of the corporate or partnership name of a party other than its owner if the latter gives its consent to such use. xxx xxx xxx." The Corporation Code's provision on corporate name seeks to avoid a situation wherein the corporation adopts at pleasure the name of another corporation resulting in confusion, difficulty in identifying the corporation and unfair competition, thereby opening the doors to frauds and difficulties of administration and supervision. 1 As a rule, a corporation by prior appropriation or by appropriation and use acquires a right in its name which the law will protect. 2 SDAaTC A careful scrutiny of the name in question shows that the corporate name REYES BARBECUE, INC. is identical, misleading and confusingly similar to the name REYES BARBECUE registered with the DTI. Further, no distinctive word has been added to the name of the respondent corporation to differentiate its name from that of the petitioner's registered trade name. Looking at the name itself, one would lead to believe that the owners of the trademark/trade name REYES BARBECUE and the stockholders of REYES BARBECUE, INC. are one and the same. The Commission had previously discussed the issue of ownership of the said name in its Order dated 20 May 2010 in SEC Case No. 07-09-278, filed by the petitioner against the respondents. Said Order provides: "Considering the pending cases before the regular courts and the IPO involving the ownership of the subject trademark and trade name, prudence dictates that the instant petition be dismissed without prejudice to the refilling of the same after the issue of ownership of the subject name has been finally determined. If indeed the Deed of Assignment assigning the trade name and trademark to respondent Enriquez is found to be genuine and authentic, then respondent Reyes Barbecue, Inc. can be said to have been authorized to use the same name in its corporate name. If it was found that no assignment has ever been made, then petitioner is entitled to the exclusive use of the subject name unless his prior consent to the use of the name by other person was given. At this point, we are constrained to dismiss the petition lest the Commission be accused of encroaching on the jurisdiction of co-equal bodies like the IPO and the Regional Trial Courts or of pre-empting the final disposition of the said cases involving the same parties in the instant case." As to the use of the IPO registered trademark/trade name REYES BARBECUE as part of the respondent's corporate name, IPO documents show that respondents did not acquire consent from the petitioner to such use. In its Decision dated 28 February 2011 in the case entitled Francisco R. Reyes vs. Ronnie P. Enriquez (IPC No. 14-2009-00094), the IPO ruled: "Based on the foregoing, Petitioner was able to prove by substantial evidence that the assignment of his trademark REYES BARBECUE to Ronnie P. Enriquez was made without his knowledge and consent and therefore without effect and not binding. Consequently, Certificate of Registration No. 4-2005-006587 in the name of Ronnie P. Enriquez should be canceled and the one issued in the name of the original registrant, herein petitioner Francisco R. Reyes, be reinstated." On 03 December 2013, an Entry of Judgment/Execution of Decision has been issued by IPO stating that the Decision became final and executory on 26 November 2013 and accordingly, is hereby recorded in the Bureau of Legal Affairs' Book of Entries of Judgments. acEHCD Based on the foregoing, it appears that the petitioner is the registered owner of the trademark/trade name REYES BARBECUE, which is also duly registered with DTI. However, a review of the respondent corporation's records on file with the Commission shows that it is included in the list of delinquent 2007-registered corporations whose Certificates of Incorporation are subject for revocation under SEC Order dated 23 December 2013, published on 13 January 2014 in The Philippine Star, for failure to submit the reportorial requirements for five (5) consecutive years covering the period 2008 to 2012. Said delinquent corporations are given a non-extendible period from 31 December 2013 until 31 December 2015 to show cause why their Certificates of Incorporation should not be revoked. After the lapse of the two (2)-year period and said corporations fail to appear and to update their reports, as well as, to settle the corresponding penalty, their Certificates of Incorporation shall be deemed revoked. WHEREFORE, premises considered, noting that the respondent corporation has been subject of revocation for non-compliance with the reportorial requirements, a standing order is hereby directed to respondent REYES BARBECUE, INC. to CHANGE OR MODIFY its corporate name in the event that it complies or updates its reportorial requirements with the Commission within the prescribed period. This standing order shall be a simultaneous condition with the submission of the required reports. Let a copy of this Order be furnished the Corporate Filing and Records Division and the Compliance Monitoring Division of the Company Registration and Monitoring Department for inclusion to its corporate records on file and for monitoring of compliance with the SEC Order dated 23 December 2013, respectively. SO ORDERED. June 25 2015, Mandaluyong City. (SGD.) FERDINAND B. SALES Director Footnotes 1. Red Line Transit vs. Rural Transit , 30 Phil. 549. 2. Pan American Trading Co. vs. Hinojosa , 38 Supp. 31 O. 19 Fletcher Cyc. Corp.