Metal Cane International, Inc. v. Metal Cane International, Inc.

[SEC-SICDCASE NO. 11-93-4602. January 29, 1996.] METAL CANE INTERNATIONAL, INC., (UNDER SEC. REG. ASO-93-94069) , petitioner , vs . METAL CANE INTERNATIONAL, INC., (UNDER SEC. REG. NO. ASO-93-004 321) and MARIANO Q. RUBIO , respondents . D E C I S I O N This has reference to the petition filed by Metal Cane International, Inc. against Metal Cane International, Inc. and Mariano Q. Rubio praying, among others, that the latter change their corporate name to one which is not identical to or deceptively or confusingly similar to the corporate name of the former. prLL At the initial stage of the proceedings, respondents were declared in default for their failure to file any responsive pleading and the petitioner was allowed to present its evidence ex-parte. The Order of default was, however subsequently lifted in the interest of substantial justice upon motion by the respondents who, thereafter, filed their answer. Respondents thereafter filed a motion to admit their amended answer which was granted. After their amended answer was admitted, the case was set for hearing for the cross-examination of the petitioner's witness. Accordingly, after petitioner has rested its case, the hearing for the presentation of the respondents' evidence was set. For failure to present their evidence at the scheduled hearing on January 13, 1995 and upon motion of the petitioner, respondents were considered to have waived their right to present evidence. A motion for reconsideration of the aforesaid Order was filed, and which motion was DENIED, and the case was thereafter deemed submitted for decision. Respondents' failure to present their evidence left this Commission with no other recourse but to decide the instant case based on the evidence adduced by the petitioner. dctai From the evidence adduced, both testimonial and documentary, the following facts were duly established: that on May 10, 1993, petitioner submitted three (3) corporate names to this Commission for verification for the corporation intended to be organized, "Metal Cane Design, Inc. (Exhs. "A" and "A-1"); "Metal cane Products, (Exhs. "B" and "B-1"); and "Metal Cane International, Inc." (TSN, February 3, 1994, pages 7 to 10); that subsequently, on May 10, 1993, the corporate name "Metal Cane International, Inc." was allowed to be reserved upon payment of the required reservation and Official Receipt No. 9709795 was issued thereat; that petitioner thereafter filed its articles of incorporation (Exhs. "D" to "D-10) and by-laws (Exhs. "E" to "E-12) on May 26, 1993 and was issued its Certificate of Registration No. ASO-93-04069 (Exh. "F") by the Commission on May 27, 1993 (TSN, February 3, 1994, pages 14 to 15); that the formal organization of the petitioner corporation followed, together with the production and operation; that sometime later, the President and the General Manager of the petitioner learned from their subcontractors of another Metal Cane International, represented by one Mariano Rubio; that necessary verification was hereafter made at the Securities and Exchange Commission which in turn issued a Certification dated August 5, 1993 (Exh. "G") certifying among others that there is no other corporate entity with the corporate name "Metal Cane International, Inc." (TSN, February 3, 1994, pages 16 to 18); that sometime in September, 1993, while the petitioner's President and General Manager, Mr. Dionisio Alimoren, was at the Rizal Commercial Banking Corporation at Buendia, Makati, he was handed an Export Declaration with Foreign Exchange Proceeds (Exh. "I") by the bank's Export Department, which document bore the name of Metal Cane International and signed by one Mr. Mariano Rubio (TSN, February 3, 1993 , pages 18 to 19); that sometime later on, in October 1993, the petitioner received a faxed letter (Exh. "K") from one of its buyers, G & G Furniture of Sydney, Australia with the information that a certain Mariano Rubio representing Metal Cane International wrote them a letter with the result that the letter credit for a shipment intended for the supplier had to be cancelled (Exh. "L") (TSN, February 3, 1993, pages 24 to 28); that between the period from October 1, 1994 to October 12, 1994, petitioner received a letter (Exh. "M") from the Commission's Legal Department requesting that it answers the letter complaint (Exh. "N") of one Mariano Rubio from Metal Cane International thereto attached; that letter in brief stated that respondent corporation registered with and was issued Certificate of Registration No. ASO-93-4321 by this Commission on June 7, 1993 and that a reservation of the name Metal Cane International was made on April 26, 1993; that petitioner filed its answer thereto and pointed to the fact that it was issued its Certificate of Registration ten (10) days ahead of the respondent corporation, among other things (TSN, February 3, 1994, pages 29 to 33); and that petitioner likewise presented a copy of the Certificate of Registration ASO-93-4321 (Exh. "P") issued to respondent corporation, as well as a copy of the written undertaking executed by the incorporators and organizers of the respondent corporation to the effect that in the event there exists another corporation of the same name they undertake to change the name (Exh. "Q"). Hence, the instant petition. From the foregoing established facts, it was clear that the petitioner was registered with and was issued by this Commission its Certificate of Registration No. ASO-93-04069 (Exh. "F") on May 27, 1993 under its corporate name "Metal Cane International, Inc." and which corporate name it was allowed to reserve on May 12, 1993 by this Commission and was required to pay the corresponding reservation fee therefore under O.R. 97097958 (Exh. "C"), pursuant to the policy guidelines issued by this Commission on September 7, 1977. Petitioner having been registered and issued its Certificate of Registration by this Commission under its Corporate Name "Metal Cane International, Inc.", it had, thereby, acquired a prior and vested right thereto as against the respondent corporation which was issued its Certificate of Registration No. ASO-93-04321 (Exh. "P") only on June 7, 1993, or ten (10) days after the registration of petitioner's corporate name. Section 18 of the Corporation Code of the Philippines provides thus. "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. . . ." (emphasis supplied). llcd The subsequent registration of respondent corporation under the corporate name "Metal Cane International, Inc.," therefore, is definitely in violation of the aforestated provisions of law. Anent the issue of the earlier reservation made by the respondent corporation of the corporate name "Metal Cane International, Inc." on April 26, 1993, suffice it to say that the aforesaid reservation, even granting the same to be factually true, expired on May 26, 1993 without the respondents having filed the articles of incorporation of the corporation using the said corporate name. In other words, it was rendered inefficacious on May 26, 1993 for non-use. The subsequent registration of the respondent corporation under the corporate name "Metal Cane International, Inc." on June 7, 1993 could not have been lawfully done, pursuant to Section 18 of the Corporation Code of the Philippines, considering the earlier registration on May 27, 1993 of the petitioner corporation under its corporate name "Metal Cane International, Inc." which as herein before stated, made a reservation of the name and was allowed by this Commission to do so. The respondent had no cause to complain because it did not avail of its reservation within the period allowed such that on May 27, 1993 there was legally speaking, no more valid reservation which the respondent can claim. Besides, respondents failed to present its case before this Commission without any justifiable reason or legal excuse when they were given the chance to do so. The corporate name is vital factor to the existence of a corporation, it is thru said corporate name that it can perform all its legal acts, in the same manner that the corporate name "Metal Cane International, Inc." is essential to petitioner corporation's existence, as it thru the said corporate name that it is identifiable from all other entities and corporations. Confusion would certainly arise considering that petitioner and respondent corporations are engaged in a similar business. It is precisely the duty of this Commission to obviate such a confusion under any and all circumstances not only for the protection of both the petitioner and respondent corporations but more importantly for the protection of the public in general. Thus, in Universal Mills Corporation vs. Universal Textile Mills, Inc., G.R. No. L-28351, July 28, 1977, it was held "It is obvious that the matter at issue is within the competence of the Securities and Exchange Commission to resolve in the first instance in the exercise of its jurisdiction it used to possess under Commonwealth Act 287 as amended by Republic Act 1055 to administer the application and enforcement of all laws affecting domestic corporation and associations, . . . . We are called upon to determine whether or not the order of the Commission enjoining the petitioner to change its corporate name constitutes, in the light of the circumstances found by the Commission, a grave abuse of discretion. prcd We believe it is not. Indeed, it cannot be said that the impugned order is arbitrary and capricious. Clearly, it has rational basis. The corporate names in question are not identical but they are indisputably similar that even under the test of "reasonable care and observation as the public generally are capable of using and may be expected to exercise" invoked by Appellant." Moreover, the provisions of Secs. 3 and 6 (a) and (m) of P.D. 902-A, as amended, taken in consonance with the provisions of Section 18 of the Corporation Code as earlier cited, leave no room for doubt that this Commission has the power to direct and enjoin respondent to change their corporate name. Furthermore, this Commission under the guidelines it issued on September 7, 1977 has likewise reserved the right to require a corporation to change its name in case there will later on appear a person or company with a prior right to the use of said name. In the same manner, this Commission further takes cognizance of the written undertaking filed by the respondent corporation, signed by its Treasurer (Exh. "Q") promising to change its name in the event another person, firm or entity has acquired a prior right to the use of the corporate name "Metal Cane International, Inc." or one deceptively or confusingly similar to it. Considering that the petitioner corporation was forced to litigate to protect its right over its corporate name and thereby obtain the services of a counsel and incur litigation expenses, this Commission finds it justifiable to require the respondent to pay the petitioner reasonable attorney's fees. WHEREFORE, judgment is hereby rendered in favor of the petitioner and against the respondents, directing and enjoining the latter to change their corporate name "Metal Cane International, Inc." into another one which is not identical to nor deceptively or confusingly similar to that of the petitioner's corporate name. The respondents are likewise ordered to pay the petitioner reasonable attorney's fees in the amount of FIFTY THOUSAND (P50,000.00) PESOS. Let copy of this decision be furnished the Corporate and Legal Department for its information and appropriate action. SO ORDERED. (SGD.) ALBERTO P. ATAS Hearing Officer