Mr. Cesar P. Macuja

August 19, 1982 Mr. Cesar P. Macuja Philippine International Trading Corporation Tordesillas St., Salcedo Village Makati, Metro Manila Sir : This refers to your letter dated July 7, 1982 requesting the Securities and Exchange Commission to impose strict regulation in the use of the word "International" as part of a corporate name of existing and proposed corporations that do not have powers and functions of international context to avoid confusion in the highly competitive global market which would be detrimental to our overall Philippine International trade. cdll In connection therewith, please be informed that the word "international" in a corporate name is a generic or descriptive term which is incapable of exclusive appropriation. It is an established rule that a corporation cannot acquire an exclusive right over generic or descriptive words or terms as to have their use by others enjoined. (Fletcher Cyclopedia Corporations, Vol. 6, 1968 Edition p. 03) Considering that none of our statutes expressly prohibits the use of the word "International" or any combination thereof as part of a corporate name, the SEC can not restrict the use of the word "International" as part of a corporate name regardless of whether or not it is actually in international business unless it is required to do so by an appropriate government agency, as it is always presumed and expected that a corporation engaged in domestic trading/business at the time of registration may, at any time or eventually, expand its business by establishing branch offices in foreign countries. "The power to act outside the state may be expressed in the corporation's charter, but need not be thus expressly conferred, since it may be implied ." (Fletcher Cyclopedia Corporations, Vol. 6, pp. 348-349, 1968 Edition, emphasis supplied). Thus, it is always an implied power of a corporation to establish a branch office, even outside the Philippines provided it complies with the applicable laws and regulations of such foreign country. It is for this reason that the SEC allows the word "international" as part of the corporate name even if the corporation is not actually engaged in international business at the time of incorporation. It cannot be denied that the use of the word "international" involves two or more countries and as such there is the likelihood of the public being led to think that the corporation is engaged in international trading/business. However, mere conjecture that some confusion will result is not sufficient ground to prevent the adoption of corporate names bearing the word "International". It is worth mentioning that the object of a corporate name is only to serve the purpose of identification and does not necessarily reflect the purpose of the corporation for which it was formed as a corporation may have several purposes different and distinct from that of its primary purpose . "Grants of power to corporations are contained in laws, charters and incorporation paper which are accessible to the public. Persons dealing with a corporation are bound to take notice of its charter, articles of incorporation and the laws of the state affecting its powers and are, therefore, presumed to have notice to the extent of those powers and are chargeable with knowledge of the limitations and restrictions thereon contained in its charter or governing statutes". (Fletcher Cyclopedia Corporations, Vol. 6, 1968 Edition, pp. 352-354). llcd Thus, a person of ordinary caution and prudence, when he deals with a corporation, does not merely rely on its corporate name but exercises reasonable and careful scrutiny in finding the identity of the corporation with which he is dealing or intends to deal with. Deceit or confusion, therefore, is quite remote. Moreover, requiring the change of corporate name of existing corporation would tend to destroy their actual identities and thus create more confusion to the public dealing with them. On the basis of the foregoing, it is believed that the use of and adoption of the word "international" as part of the corporate name even if the corporation is not yet actually engaged in any function or international context, is still legitimate and may not be prohibited. However, in order to avoid confusion with the Philippines International Trading Corporation, we are disposed to restrict the use of the words "Philippine International" or Pil-International" as part of the corporate name of domestic trading corporations. Very truly yours, (SGD.) MANUEL G. ABELLO Chairman