Cagayan De Oro Filipino-Chinese Chamber of Commerce and Industry, Inc. vs. Stephen S. Gaisano, et al.

[SEC CASE NO. 3105. August 20, 1987.] CAGAYAN DE ORO FILIPINO-CHINESE CHAMBER OF COMMERCE AND INDUSTRY, INC.,AND TIRSO S. LIMBONHAI , petitioners , vs .STEPHEN S. GAISANO, ET AL. , respondents . O R D E R Submitted for resolution is respondents' Motion For Reconsideration, as well as petitioners' Opposition thereto. In their Motion For Reconsideration dated May 28, 1987, of the Order of April 13, 1987, respondents theorize that: A) The subject matter of the instant petition not being an intra-corporate dispute, the Honorable Commission has no jurisdiction of the same; B) Being prior both in use and appropriation, the respondents are legally entitled to use the corporate name in question, although respondents association is still unincorporated; C) Being a descriptive, generic, geographical and common term, the corporate name in question is common property and cannot be solely and exclusively appropriated by a single corporate entity; and D) That there being no probable irreparable injury to be sustained by petitioners due to respondents continued use of their corporate name, petitioners are not entitled to the Writ of Preliminary Injunction. In the opposition, to the aforesaid Motion For Reconsideration, petitioners countered that: a) The Honorable Commission has jurisdiction over the subject matter of the petition under Presidential Decree No. 902-A, which granted this Honorable Commission original and exclusive jurisdiction to hear and decide cases involving: xxx xxx xxx "Section 5. (b) Controversies arising out of intra-corporate or partnership relation, between and among stockholders, members or association; between and among stockholders, members or association; between any and/or all of them and the corporation, partnership or association of which they are stockholders, members or associates, respectively; and between such corporation, partnership or association and the state insofar as it concerns their individual franchise or right to exist as such entity." and under Sec. 6 paragraph (j) it provides: "To exercise such other powers as implied necessary or incident to the carrying out of the express powers granted to the Commission or to achieve the objectives of this Decree." The State/Government has as much interest in the prevention of identical or deceptively or confusingly similar names being used by more than one entity and more so when it is duly registered under the law: "Section 18. of the Corporation Code of the Philippines provides: "SECTION 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".(Emphasis Supplied) b. It is an untenable position that respondents allege prior use of and/or right to use the duly registered corporate name of the petitioner-organization by merely adding the word "Industry" in violation of Section 18 of the Corporation Code of the Philippines and SEC Guidelines in approval of corporate and partnership names. After a careful and thorough perusal of the arguments of the parties, petitioners have it. The present motion is barren of merit. With respect to the jurisdiction of the Securities and Exchange Commission, We cannot help but reiterate the provision of Section 5, (b) Presidential Decree No. 902-A, as amended, giving the Securities and Exchange Commission, the original and exclusive jurisdiction to hear and decide cases involving, particularly: a) ... "b) Controversies arising out of intra-corporate or partnership relations, between and among stockholders, members, or associates; between any and/or all of them and the corporation, partnership or association of which they are stockholders, members or associates, respectively; and between such corporation, partnership or association and the state insofar as it concerns their individual franchise or right to exist as such entity." c) ... Respondents, during the hearing of the preliminary injunction, admitted that some of them, particularly their officers are members of the petitioning corporation. Their subsequent formation of another association, identically, deceptively or confusingly similar with petitioning corporation's corporate name, which is being questioned by petitioner corporation in this petition is clearly an intra-corporate issue which is within the ambit of the jurisdiction of this Commission. Petitioning corporation has every right to come to this Commission to seek redress that concerns its individual franchise or right to exist as such entity. As regards respondents' claim that being prior both in use and appropriation, the respondents are legally entitled to use the corporate name in question, although respondents' association is still unincorporated, such assertion is untenable. Even granting for the sake of argument, that respondents were the first one to use the corporate name "Cagayan de Oro Filipino-Chinese Chamber of Commerce and Industry" on May 2, 1986, ahead of petitioning corporation amendment changing its corporate name from "Cagayan de Oro Filipino-Chinese Chamber of Commerce and Industry, Inc." to "Cagayan de Oro Filipino-Chinese Chamber of Commerce and Industry, Inc." which was only approved by the Commission on August 6, 1986, still, respondents cannot use and appropriate the said corporate name on May 2, 1986, because the difference is only the word "Industry",which is patently identical, deceptively and confusingly similar, at that time, to the existing corporate name of petitioning corporation, "Cagayan de Oro Filipino-Chinese Chamber of Commerce, Inc." which was registered with the Commission on June 8, 1978. 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" (Emphasis Supplied) The prohibition in the above afore-quoted provision covers not only against an improperly registered corporation, proposed corporation to be later or about to be registered with the Commission, but also against an Association not registered with the Commission, like respondents' association, otherwise, the protection given to a properly registered corporation will just be a fiction. Anent respondents' claim that being descriptive, generic, geographical and common term, the corporate name in question is common property and cannot be solely and exclusively appropriated by a single corporate entity, such averment has found no applicability in the case at bar. What is to be considered is the prohibition of using a corporate name identically, deceptively or confusingly similar to that of any existing corporation or to any other name already protected by law, as provided for under Section 18 of the Corporation Code and the SEC Guidelines on approval of corporate and partnership names dated September, 1977. This Commission has already ruled in SEC Case No. 1041, entitled, "In the matter of the Refrigeration Industries, Incorporated." "As a necessary consequence, a corporation cannot on organization lawfully adopt the same name so similar to that of an existing corporation or association on that its use is reasonably calculated to deceive the public and result in confusion or unfair and fraudulent competition." "Moreover, the addition of a single word in the corporate name composition will not be sufficient to distinguish it from another where a greater portion or the dominant words are identical as to deceive and misled the public. "There is no distinction between taking entire name of prior corporation, and taking so much of it as will misled into belief that the two companies are the same" (The Grand Temple and Tabernacle in State of Texas of Knights and Daughters of Tabor of the International Twelve vs. Independent Order of the Knights and Daughters of Tabor or America (Tex. Com. App.) 48 S.W. (2d) 873, 6 Fletcher Cy.,p. 72). Re: respondents' claim that there being no probable irreparable injury to be sustained by petitioners due to respondents' continued use of their corporate name, petitioners are not entitled to the Writ of Preliminary Injunction, the evidence so far presented points to the fact that it is they (petitioners' corporation) who will be prejudiced or jeopardized by the continued use of its corporate name coupled with the fact that the brewing controversy created chaos and confusion that fragmented the business community of Cagayan de Oro City. WHEREFORE, there being no cogent reason to disturb the Order of April 13, 1987, the Motion For Reconsideration dated May 28, 1987, is hereby DENIED for lack of merit. SO ORDERED. (SGD.) JUANITO B. ALMOSA, JR. Hearing Officer