National Mother's Day & Father's Day Council, Inc. v. National Mother's Day & Father's Day Foundation, Inc.

[SEC-SICD * CASE NO. 07-94-4832. February 23, 1995.] NATIONAL MOTHER'S DAY & FATHER'S DAY COUNCIL, INC. , petitioner , vs . NATIONAL MOTHER'S DAY & FATHER'S DAY FOUNDATION, INC. , respondent . D E C I S I O N The instant petition seeks to (1) enjoin respondent to cease and desist using petitioner's corporate name (2) for this Commission to order respondent to change its present corporate name, and (3) for this Commission to order respondent to pay the petitioner actual damages consisting of P50,000.00 as acceptance fee and P1,000.00 as appearance fee for every hearing and moral damages of at least P150,000.00. cdll In its petition, petitioner alleges that it is a corporation organized and established, and is still existing for liquidation and winding up purposes under and by virtue of the laws of the Philippines and that respondent is also a corporation organized, established and existing under and by virtue of the laws of the Philippines; that the registration of respondent's corporate name violated the provisions of Section 18 of the Corporation Code (BP Blg. 68) which provides that "NO CORPORATE NAME 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, . . ." On about February 23, 1988, petitioner corporation National Mother's Day and Father's Day Council, Inc. came into existence when it was conferred with corporate legal personality by the state thru SEC Registration No. 148725; that, however, on August 21, 1992, an Order was issued by the Prosecution and Enforcement Department of this Commission revoking petitioner corporation's certificate of registration; that it (petitioner) submits that the result of dissolution "is not death of the corporation, but its retirement from active business" (Ballantine, 731 cited in De Leon, Corporation C od e of the Philippines, 1993 ed., p. 632); that petitioner is now in the process of liquidation and winding up of its corporate affairs pursuant to the provisions of Section 122, Corporation Code of the Philippines, viz: "Every corporation whose charter expires by its own limitations or is annulled by forfeiture or otherwise, or whose corporate existence for other purposes is terminated in any other matter, shall nevertheless be continued as a body corporate for three (3)-years after the time when it would have been so dissolved, for the purpose of prosecuting and defending suits by or against it and enabling it to settle and close its affairs, to dispose of and convey its property and to distribute its assets, but not for the purpose of continuing the business for which it was established. xxx xxx xxx that one of the indispensable attributes of being considered a body corporate is the exclusive right, to continue appropriate and using one's corporate name within the three-year winding up and liquidation period, thus, petitioner still has the exclusive right to the exclusion of all others, to appropriate and use its corporate name, National Mother's Day and Father's Day Council, Inc., within the three-year period reckoned from the date this Commission's Order dated August 21, 1994, dissolving the corporation became final; that it has therefor, at the very earliest, up to August 20, 1995 to continue using and appropriating its name, National Mother's Day and Father's Day Council, Inc.; that on May 26, 1994 respondent was registered as corporation under the name and style of National Mother's Day and Father's Day Foundation, Inc. per this Commission's Certificate of Registration No. ANO94-2029; that the use by respondent of the corporate name National Mother's and Father's Day Foundation, Inc. within the three-year liquidation and winding up period of petitioner National Mother's Day and Father's Day Council, Inc. is a gross violation of the aforequoted provisions of the Corporation Code and SEC Guidelines in the Approval of Corporate and Partnership Names and has been working to the detriment and prejudice of the petitioner corporation and is, therefore, improper, invalid and illegal; that the donors to the Mother's Day and Father's Day celebration organized by the petitioner corporation in the past have given donations to the activities of the respondent corporation believing that the respondent corporation is the petitioner corporation; that since the petitioner corporation has been so closely identical with the National Mother's and Father's Day celebration and since the respondent corporation has as one of its purpose also the celebration of Mother's Day and Father's Day, a considerable number of the present and future patrons and donors to the respondent corporation's activities will surely be giving donations in the mistaken belief that it is the petitioner corporation which is organizing the activity; that the general public will also think that the activities of the respondent corporation have been organized by the petitioner corporation; that this confusion has caused injury to the petitioner corporation and will continue to injure the petitioner corporation unless the registration of the corporate name of the respondent corporation is immediately nullified; that the respondent corporation has succeeded in registering a corporate name which is deceptively or confusingly similar to that of the petitioner corporation's corporate name which is still protected by law; that due to this unlawful act of the respondent corporation, the petitioner corporation has incurred the following damages a) actual damages because petitioner has engaged the services of counsel for an agreed fee of P50,000.00 as acceptance fee to institute this suit in order to protect its rights and for redress of a wrong committed against it and P1,000.00 appearance fee for every hearing and moral damages of at least P150,000.00 because the good reputation generated and nurtured by the petitioner corporation through the years has been besmirched. dctai In refutation to the aforestated petition, respondent, in its answer, made specific and general denials on the petitioner's material allegations and alleges further that the petition states no cause of action on ground of non-intra-corporate matter and there is a pending action before this Commission involving several alleged registered corporations of petitioner; that this instant complaint is a counter-charge in retaliation against a pending complaint recently filed before this Commission involving several fictitious and falsified registration certificates of the same petitioner's corporate name which are the subject of confusion, insertion and misrepresentation constituting falsification of public documents and gross violation of the Corporation Code; that it is a public knowledge that a valid and meritorious Registration Certificate was issued to the respondent corporation on account of its propriety with a different name and a noble purpose; that since the respondent corporation carries a permanently accrued juridical personality with the approval of this Commission of its (respondent) registration, then the respondent can not be made answerable for any discrepancy or just identical name with others, otherwise, it should have been rejected or disapproved by this Commission; that the registration of the respondent corporation has passed the basic verification process for its applied corporate name, and nothing has been found to be patently deceptive or confusingly the same with any other existing corporation's name; that this is not a derivative suit or a complaint arising from intra-corporate affairs, hence, the authority and the law cited by the petitioner have no semblance of applicability in this case; that the revocation of the corporate franchise and Certificate of Registration of the petitioner was due to the irregularities perpetuated by the petitioner, and not the desire to dissolve or terminate the corporate life of the corporation by its stockholders and/or non-compliance or filing of the required documents of this Commission; that the petitioner, through its founder/Chairman and President, Jonathan Jesus N. Navia, notwithstanding the revocation of its corporate franchise and Certificate of Registration on August 21, 1992, in wanton disregard, defiance and disrespect of this Commission, continuously fool the public, solicit funds, secure sponsorships and hold affairs and other unauthorized activities and giving unauthorized awards to the unknowing and innocent parents, who received their Gintong Ina/Ama Award unaware of its infirmities; that petitioner is not entitled to a provisional remedy of injunction and/or restraining order for it has nothing to be protected and safeguard and it is not entitled for award of damages for the law does not impose an award for the right to litigate and persons have free access to courts or to any quasi-judicial tribunals to redress wrongs and vindicate rights without fear of being sued for damages should the action lose ground. During the hearing of this case on August 11, 1994 for the injunction issue, parties have agreed to file their respective position papers instead of presenting witnesses and during the preliminary conference of this case on October 24, 1994 the parties agreed that the sole issue to be resolved in this case is: dctai Whether or not a dissolved corporation has the right to appropriate its corporate name during the three-year liquidation and winding up period. This Hearing Officer resolves the aforestated issue in the affirmative. Batas Pambansa Blg. 68, otherwise known as the Corporation Code of the Philippines is based principally on the old Corporation Law (Act 1459) which is in turn sort of a codification of American Corporate Law. Hence, in the absence of any local definite jurisprudence in any particular provision of the said law, reference is to be made on the American jurisprudence on the subject provision of law. Jurisprudence is replete with rulings to the effect that: "A corporation even though in the process of liquidation, is entitled to enjoin one of its stockholders from using its trade name in a new corporation organized by the stockholder" Glenn-Dale Inc. v. Abet, 284, App. Div. 901,133 NYS 2d. 353; and "A corporation, formally dissolved but which still exists, under a statute so providing, for the payment of outstanding bonds, has sufficient interest to sue to enjoin the use of its name by a corporation organized after the formal dissolution." Metropolitan Tel. & Tel. Co. v. Metropolitan Tel. & Tel. Co., 156 App. Div. 577, 141 NYS 598. From the foregoing, it can be clearly inferred that herein petitioner has the right to enjoin others (like respondent herein) from using or appropriating its (petitioner) corporate name even though it is already in the process of liquidation or in winding up stage. Considering that there is no dispute here that respondent's corporate name is deceptively or confusingly similar to that of the petitioner's corporate name, petitioner has, of course, in accordance with the aforementioned rulings, the right to enjoin respondent from using and/or appropriating its (petitioner) corporate name National Mother's Day and Father's Day. Wherefore, premises considered, judgment is hereby rendered as follows: 1. Declaring the petitioner corporation to have the right to appropriate its corporate name during its three (3)-year liquidation and winding up period; 2. Ordering respondent to immediately change corporate name to another name not similar to the name already used by a corporation, partnership for association registered with this Commission by amending its articles of incorporation in accordance with Corporation Code of the Philippines, upon payment of the corresponding filing fees. No costs. SO ORDERED. (SGD.) ROGELIO C. SESCON Hearing Officer