R I L Manufacturing, Inc. vs. R I L Sports Corporation

[SEC-SICD * CASE NO. 3784. September 11, 1992.] R I L MANUFACTURING, INC. , petitioner , vs . R I L SPORTS CORPORATION , respondent . DECISION This is a petition for cancellation of corporate name and damages, with prayer for the issuance of a preliminary injunction to enjoin respondent from using "RIL" in the respondent's corporate name and ordering the respondent to desist from using its corporate name or the use of "RIL" in its corporate name. Petitioner also prayed for an award in its favor attorney's fees in the amount of P20,000 00. The petitioner alleges, among others, that sometime in early September 1986, the spouses Alan and Concepcion C M Backer sought to incorporate the petitioner Corporation as Ramitex International Ltd., named after a corporation duly registered in Hong Kong with its outstanding shares owned by Alan L. Backer, but the Commission disallowed the registration of said corporate name on the ground of a prior registration of a similar sounding name "Ramie Textile Inc." also known as "Ramitex" for short and engaged in the same line of business so that petitioner was compelled to choose "RIL Manufacturing, Inc." as petitioner's corporate name; that on December 15, 1986, petitioner was duly incorporated under Certificate of Registration No. 137110; that on February 10, 1987, petitioner registered its corporate name with the Bureau of Domestic Trade per its Certificate of Registration as Annex "C" of the Petition; that among the items manufactured and sold by the petitioner include sports wear; that its products have been recognized here and abroad and the letters "RIL" have gained recognition in identifying petitioner's products; that on September 12, 1988, respondent filed its articles of incorporation adopting "Reebok (Phils.) Corp." as its corporate name but changed it two (2) months later to "RIL Sports Corporation"; that respondent's intention in its belated adoption of a similar name is to confuse and/or deceive the public that respondent is affiliated with the petitioner with the aim of riding on to petitioner's clientele, market reputation and goodwill; that notwithstanding petitioner's several demands, respondent persists and continue its abuse and misuse of petitioner's corporate name and/or trade name, a copy of the demand letter dated 17 July 1989 and reply dated 3 August 1989 as Annex "E" and "F" of the petition; and that petitioner is entitled to actual, moral and exemplary damages on the basis of the monetary award in Converse Rubber Corp. vs. Jacinto Rubber and Plastic Co., Inc. G.R. Nos. L-27425 & L-30505, April 28, 1980, and Attorney's fees in the amount of P20,000.00. Respondent in its answer countered, alleging among others, that the petition has no factual and legal basis; that the petitioner has no cause of action against the respondent as the respondent is engaged in a different line of trade; that the respondent corporation has not used the trademark RIL in connection with manufacturing; that the respondent is entitled to use its corporate name until the registration of its name is revoked by this Honorable Office; that the claim of the petitioner for damages has no factual or legal basis; that respondent adopted its corporate name in good faith and with approval of this Honorable Office; that there are registered corporate names which are similar but which are engaged in different business or industries; that no damages, pecuniary or otherwise resulted to the petitioner. Respondent also claimed that "RIL" has never been established in the minds of the public as belonging to the petitioner and that no confusion could have resulted in the minds of the public as the petitioner is engaged in manufacturing and, the respondent in distributing, marketing of sorting goods; and that the respondent corporation was precisely organized to deal in sporting goods and that the word "RIL" was in fact an abbreviation of "Reebok International Limited" and could not have intended to ride on the petitioner's reputation. The hearing on the application for the issuance of a writ of preliminary injunction proceeded to consider not only the injunctive incident but the merit of the case by agreement of the parties wherein they presented both testimonial and documentary evidence. It would appear that the principal issue to be resolved in this case is whether or not the respondent's corporate name is deceptively or confusingly similar to the petitioner's corporate name pursuant to the SEC guidelines in the approval of corporate and partnership names, which says "the name should not be similar to one already used by another corporation or partnership. If the proposed name contains a word similar to a word already used as part of the corporate name or style of a registered company, the proposed name must contain two other words different from the name of the company already registered. A reading of the allegations of the contending parties will show that petitioner's corporate name, particularly the letters "RIL" thereof represent the first letters of the proposed corporate name "Ramitex International Ltd." sought to be registered with this Commission but it was disallowed by this Commission as it is similar sounding to an existing corporate name "Ramie Textile, Inc., also known a "Ramitex" for short. Ramitex International Ltd. is a Hong Kong registered Corporation. (Annex "A" of the petition). In view thereof, the petitioner registered Ril Manufacturing, Inc., as its corporate name on December 15, 1986. Petitioner claims to be manufacturing and selling wearing apparel including sports wear have gained recognition both here and abroad and accuses respondent or- riding on the petitioner clientele, market, reputation and goodwill. Based on the existing guidelines aforequoted, it would appear that there is only one word in the corporate names of the contending parties that are different. These are "manufacturing" in the petitioner's corporate name and "sports" in the respondent's corporate name and the rest are similar. Besides, the principal business of the petitioner includes selling of sports wear which is the principal line of business of the respondents. It would appear that the two corporate names are confusingly and deceptively similar in contemplation of the guidelines issued by the SEC such that the respondent corporation which was registered after the registration of the petitioner corporation should change its corporate name pursuant to its undertaking. While the petitioner has alleged certain incidents of confusion resulting from the use of "RIL" in the corporate name of the respondents, it has not been established by the petitioner that it has the right to the exclusive use of "RIL" to be able to appropriate the same for its exclusive use. However, considering that the two (2) corporate names are confusingly similar pursuant to the SEC guidelines and that the respondent corporation is engaged in the business of dealing in sports wear which is one of the principal lines of business of the petitioner, the change of the corporate name of the respondent appear to be in order. WHEREFORE, judgment is hereby rendered ordering the respondent corporation to change its corporate name in accordance with the provisions of Section 18 of the Corporation code and the SEC guidelines by amending its Articles of Incorporation within thirty (30) days from receipt hereof. No pronouncement as to cost. LLphil SO ORDERED. (SGD.) MANUEL P. PEREA Hearing Officer