G.R. No. 101897. March 5, 1993.

LYCEUM OF THE PHILIPPINES, INC v COURT OF APPEALS

FACTS: Petitioner is an educational institution. It used the corporate name Lyceum of the Philippines, Inc. since 1950 when it
registered with SEC. In 1984, it instituted proceedings before the SEC to compel the private respondents, which are also
educational institutions, to delete the word "Lyceum" from their corporate names. Before this controversy, the petitioner had
already instituted a proceeding against the Lyceum of Baguio, Inc. to require it to change its corporate name. Associate
Commissioner Julio Sulit held that the corporate name of petitioner and that of the Lyceum of Baguio, Inc. were substantially
identical because of the presence of a "dominant" word, i.e., "Lyceum," the name of the geographical location of the campus being
the only word which distinguished one from the other corporate name.
Lyceum of Baguio assailed the order before the Supreme Court which was denied. Armed with the Court's Resolution, petitioner
then wrote all the educational institutions who uses the word "Lyceum" as part of their corporate name and advised them to delete
such. However, its effort failed. The SEC hearing officer sustained petitioner's claim. However, SEC En Banc reversed the
hearing officer. Petitioner then went on appeal to CA and it affirmed SEC En Banc.
ISSUE: WON the Court of Appeals erred in holding that the word Lyceum has not acquired a secondary meaning in favor of
petitioner.
RULING: The Court held that the corporate names of private respondent institutions are NOT identical with, or deceptively or
confusingly similar" to that of the petitioner institution.
The Articles of Incorporation of a corporation must set out the name of the corporation. Section 18 of the Corporation Code
establishes a restrictive rule insofar as corporate names are concerned:
"SECTION 18. Corporate name. No corporate name may be allowed by the Securities an 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."
The policy underlying the prohibition in Section 18 against the registration of a corporate name which is "identical or deceptively
or confusingly similar" to that of any existing corporation or which is "patently deceptive" or "patently confusing" or "contrary to
existing laws," is the avoidance of fraud upon the public which would have occasion to deal with the entity concerned, the evasion
of legal obligations and duties, and the reduction of difficulties of administration and supervision over corporations.
The word "Lyceum" became associated with schools and other institutions providing public lectures and concerts and public
discussions. Thus today, the word "Lyceum" generally refers to a school or an institution of learning.
"Lyceum" is in fact as generic in character as the word "university." Since "Lyceum" or "Liceo" denotes a school or institution of
learning, it is not unnatural to use this word to designate an entity which is organized and operating as an educational institution.
SECONDARY ISSUE: WON Lyceum has acquired a secondary meaning in relation to petitioner.
The Court held that appellant failed to satisfy the applicability of the doctrine of secondary meaning.
Under the doctrine of secondary meaning, a word or phrase originally incapable of exclusive appropriation with reference to an
article in the market, because geographical or otherwise descriptive might nevertheless have been used so long and so exclusively
by one producer with reference to this article that, in that trade and to that group of the purchasing public, the word or phrase has
come to mean that the article was his produce. This circumstance has been referred to as the distinctiveness into which the name
or phrase has evolved through the substantial and exclusive use of the same for a considerable period of time.
While the appellant may have proved that it had been using the word 'Lyceum' for a long period of time, this fact alone did not
amount to mean that the said word had acquired secondary meaning in its favor because the appellant failed to prove that it had
been using the same word all by itself to the exclusion of others. More so, there was no evidence presented to prove that confusion
will surely arise if the same word were to be used by other educational institutions.

Ang mga Kaanib sa Iglesia ng Dios Kay Kristo Hesus, HSK sa Bansang Pilipinas Inc. vs. Iglesia ng Dios kay Cristo Jesus,
Haligi at Suhay ng Katotohanan
[GR 137592, 12 December 2001]
Facts: The Iglesia ng Dios Kay Cristo Jesus, Haligi at Suhay ng Katotohanan (IDCJ-HSK; Church of God in Christ Jesus, the
Pillar and Ground of Truth), is a non-stock religious society or corporation registered in 1936. Sometime in 1976, one Eliseo
Soriano and several other members of said corporation disassociated themselves from the latter and succeeded in registering on 30
March 1977 a new non-stock religious society or corporation, named Iglesia ng Dios Kay Kristo Hesus, Haligi at Saligan ng
Katotohanan (IDKJ-HSK). On 16 July 1979, IDCJ-HSK filed with the SEC a petition to compel IDKJ-HSK to change its
corporate name (SEC Case 1774). On 4 May 1988, the SEC rendered judgment in favor of IDCJ-HSK, ordering IDKJ-HSK to
change its corporate name to another name that is not similar or identical to any name already used by a corporation, partnership
or association registered with the Commission. No appeal was taken from said decision.
During the pendency of SEC Case 1774, Soriano, et al., caused the registration on 25 April 1980 of Ang Mga Kaanib sa Iglesia ng
Dios Kay Kristo Hesus, H.S.K, sa Bansang Pilipinas (AK[IDKH-HSK]BP). The acronym "H.S.K." stands for Haligi at Saligan ng
Katotohanan. On 2 March 1994, IDCJ-HSK filed before the SEC a petition (SEC Case 03-94-4704), praying that AK[IDKHHSK]BP be compelled to change its corporate name and be barred from using the same or similar name on the ground that the
same causes confusion among their members as well as the public. KIDKH-HSK-BP filed a motion to dismiss on the ground of
lack of cause of action. The motion to dismiss was denied. Thereafter, for failure to file an answer, AK[IDKH-HSK]BP was
declared in default and IDCJ-HSK was allowed to present its evidence ex parte. On 20 November 1995, the SEC rendered a
decision ordering AK[IDKH-HSK]BP to change its corporate name. AK[IDKH-HSK]BP appealed to the SEC En Banc (SEC-AC
539). In a decision dated 4 March 1996, the SEC En Banc affirmed the above decision, upon a finding that AK[IDKH-HSK]BP's
corporate name was identical or confusingly or deceptively similar to that of IDCJ-HSK's corporate name. AK[IDKH-HSK]BP
filed a petition for review with the Court of Appeals. On 7 October 1997, the Court of Appeals rendered the decision affirming the
decision of the SEC En Banc. AK[IDKH-HSK]BP's motion for reconsideration was denied by the Court of Appeals on 16
February 1992. AK[IDKH-HSK]BP filed the petition for review.
Issue:
1.
2.

Whether the corporate names of AK[IDKH-HSK]BP and IDCH-HSK are confusingly similar.
Whether the generic word rule would apply to support AK[IDKH-HSK]BPs cause.

Held:
1. The SEC has the authority to de-register at all times and under all circumstances corporate names which in its estimation are
likely to spawn confusion. It is the duty of the SEC to prevent confusion in the use of corporate names not only for the protection
of the corporations involved but more so for the protection of the public. Section 18 of the Corporation Code provides that "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 is 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." Corollary thereto, the pertinent portion of the SEC Guidelines on
Corporate Names states that "(d) If the proposed name contains a word similar to a word already used as part of the firm name or
style of a registered company, the proposed name must contain two other words different from the name of the company already
registered; Parties organizing a corporation must choose a name at their peril; and the use of a name similar to one adopted by
another corporation, whether a business or a nonprofit organization, if misleading or likely to injure in the exercise of its corporate
functions, regardless of intent, may be prevented by the corporation having a prior right, by a suit for injunction against the new
corporation to prevent the use of the name. Herein, the additional words "Ang Mga Kaanib " and "Sa Bansang Pilipinas, Inc." in
AK[IDKH-HSK]BP's name are merely descriptive of and also referring to the members, or kaanib, of IDCH-HSK who are
likewise residing in the Philippines. These words can hardly serve as an effective differentiating medium necessary to avoid
confusion or difficulty in distinguishing AK[IDKH-HSK]BP from IDCH-HSK. This is especially so, since both AK[IDKHHSK]BP and IDCH-HSK are using the same acronym H.S.K.; not to mention the fact that both are espousing religious beliefs
and operating in the same place. Parenthetically, it is well to mention that the acronym H.S.K. used by AK[IDKH-HSK]BP stands
for "Haligi at Saligan ng Katotohanan." Then, too, the records reveal that in holding out their corporate name to the public,
AK[IDKH-HSK]BP highlights the dominant words "IGLESIA NG DIOS KAY KRISTO HESUS, HALIGI AT SALIGAN NG
KATOTOHANAN," which is strikingly similar to IDCH-HSK's corporate name, thus making it even more evident that the
additional words "Ang Mga Kaanib" and "Sa Bansang Pilipinas, Inc.", are merely descriptive of and pertaining to the members of
IDCH-HSK. Significantly, the only difference between the corporate names of AK[IDKH-HSK]BP and IDCH-HSK are the words
SALIGAN and SUHAY. These words are synonymous both mean ground, foundation or support. Hence, this case is on all
fours with Universal Mills Corporation v. Universal Textile Mills, Inc., 22 where the Court ruled that the corporate names
Universal Mills Corporation and Universal Textile Mills, Inc., are undisputably so similar that even under the test of "reasonable
care and observation" confusion may arise.

2. The wholesale appropriation by AK[IDKH-HSK]BP of IDCH-HSK's corporate name cannot find justification under the generic
word rule. A contrary ruling would encourage other corporations to adopt verbatim and register an existing and protected
corporate name, to the detriment of the public. The fact that there are other non-stock religious societies or corporations using the
names Church of the Living God, Inc., Church of God Jesus Christ the Son of God the Head, Church of God in Christ & By the
Holy Spirit, and other similar names, is of no consequence. It does not authorize the use by AK[IDKH-HSK]BP of the essential
and distinguishing feature of IDCH-HSK's registered and protected corporate name.

Young Auto Supply co v. CA

facts:
petitioner sold all its shares of stock in Consolidated Marketing and Development Corp. to Roxas. a downpayment of 4M was
made. the other 4M is covered by four postdated checks. petitioner held on to the stock certificates as security pending full
payment of the balance of the purchase price. the checks representing the balance were subsequently dishonored. petitioner then
filed a complaint against Roxas before Cebu City RTC Branch 11 praying that Roxas be ordered to pay the sum of 3,400,000.00
or that full control of the markets be turned over to petitioner. CA ordered the dismissal of the complaint on the ground of
improper venue. in so holding, the CA relied on the address of petitioner stated in the deed of sale i.e., Dominga street, Pasay
City.
issue:
Was the CA correct in ruling that Cebu City is not the proper venue?
held:
No. The articles of incorporation of petitioner states that its principal office is located at cebu city. a corporation has no residence
in the same sense in which this term is applied to a natural person. but for practical purposes, a corporation is in a metaphysical
sense a resident of the place where its principal office is located as stated in the articles of incorporation.

Republic Planters Bank v. Agana

Gr.no. 51765
Ponente: Hermosisima, J.
Facts:
On September 18, 1961, private respondent Corporation secured a loan from petitioner in the amount of P120,000.00. As part of
the proceeds of the loan, preferred shares of stocks were issued to private respondent Corporation, through its officers then,
private respondent Adalia F. Robes and one Carlos F. Robes. In other words, instead of giving the legal tender totaling to the full
amount of the loan, which is P120,000.00.
On January 31, 1979, private respondents proceeded against petitioner and filed a Complaint anchored on private respondents'
alleged rights to collect dividends under the preferred shares in question and to have petitioner redeem the same under the terms
and conditions of the stock certificates. Private respondents attached to their complaint, a letter-demand dated January 5, 1979
which, significantly, was not formally offered in evidence.
The trial court rendered the herein assailed decision in favor of private respondents. In ordering petitioner to pay private
respondents the face value of the stock certificates as redemption price, plus 1% quarterly interest thereon until full payment. The
petitioner now claims that it is not compelled to issue dividend in favor of the respondent for it is merely "optional".
Issue: whether the bank must declare dividends in favor if the respondent.
Held:
What respondent judge failed to recognize was that while the stock certificate does allow redemption, the option to do so was
clearly vested in the petitioner bank. The redemption therefore is clearly the type known as "optional". Thus, except as otherwise
provided in the stock certificate, the redemption rests entirely with the corporation and the stockholder is without right to either
compel or refuse the redemption of its stock. Furthermore, the terms and conditions set forth therein use the word "may". It is a
settled doctrine in statutory construction that the word "may" denotes discretion, and cannot be construed as having a mandatory
effect. We fail to see how respondent judge can ignore what, in his words, are the "very wordings of the terms and conditions in
said stock certificates" and construe what is clearly a mere option to be his legal basis for compelling the petitioner to redeem the
shares in question.
The redemption of said shares cannot be allowed. As pointed out by the petitioner, the Central Bank made a finding that said
petitioner has been suffering from chronic reserve deficiency.

Batch 2
Castillo et. al., Petitioners vs. Balinghasay, et. al., RespondentsG.R. No. 150976 October 18, 2004
Facts:
Petitioners and the respondents are stockholders of Medical Center Paranaque, Inc. (MCPI), with the former holding Class "B"
shares and the latter owning Class "A" shares. It has been existing under the Old Corporation Law. The articles of incorporation
stated an initial authorized capital stock of 2M divided into 2000 shares at a par value of 100 per share. The shares were classified
as Class A and Class B, however, onlyClass A shares can have the right to vote and the right to be elected as directors or as
corporate officers. It was amended to increase the authorized capital stock to 5M and eventually increased to 32M, the amendment
stating, thus:Except when otherwise provided by law, only holders of Class "A" shares have the right to vote and the right to be
elected as directors or as corporate officers.During the annual stockholders meeting and election for directors, respondent
Rustico Jimenez, citing ArticleVII, as amended, declared over the objections of herein petitioners, that no Class "B" shareholder
wasqualified to run or be voted upon as a director. In the past, MCPI had seen holders of Class "B" shares votedfor and serve as
members of the corporate board and some Class "B" share owners were in fact nominated forelection as board members. The
petitioners protested, claiming that Article VII was null and void for deprivingthem, as Class "B" shareholders, of their right to
vote and be voted upon, in violation of the Corporation Code.Respondents denied that the exclusivity was intended only as a
privilege granted to founders shares, as nosuch proviso is found in the Articles of Incorporation. The respondents further claimed
that the exclusivity ofthe right granted to Class "A" holders cannot be defeated or impaired by any subsequent
legislativeenactment,e.g.the New Corporation Code, as the Articles of Incorporation is an intra-corporate contractbetween the
corporation and its members; between the corporation and its stockholders; and among thestockholders. They submit that to allow
Class "B" shareholders to vote and be elected as directors wouldconstitute a violation of MCPIs franchise or charter as granted by
the State.Petitioners assert that Article VII of the Articles of Incorporation of MCPI, which denied them voting rights, is null and
void for being contrary to Section 6 of the Corporation Code. They point out that Section 6 prohibits the deprivation of voting
rights except as to preferred and redeemable shares only.
Issue: WON Class "B" shares may be deprived of the right to vote and be voted for as directors.
Held:
NO. When Article VII of the Articles of Incorporation of MCPI was amended in 1992, the phrase "except when otherwise
provided by law" was inserted in the provision governing the grant of voting powers to Class "A" shareholders. This particular
amendment is relevant for it speaks of a law providing for exceptions to the exclusive grant of voting rights to Class "A"
stockholders. Which law was the amendment referring to? The law in force at the time of the 1992 amendment was the
Corporation Code (B.P. Blg. 68), not the Corporation Law (Act No. 1459), which had been repealed by then.RTC found in favor
of respondents holding that it is clear in the Articles of Incorporation that ONLYSHAREHOLDERS OF Class A can vote.We find
and so hold that the law referred to in the amendment to Article VII refers to the Corporation Codeand no other law. At the time of
the incorporation of MCPI in 1977, the right of a corporation to classify its shares of stock was sanctioned by Section 5 of Act No.
1459. The law repealing Act No. 1459, B.P. Blg. 68, retained the same grant of right of classification of stock shares to
corporations, but with a significant change.Under Section 6 of B.P. Blg. 68, the requirements and restrictions on voting rights
were explicitly provided for, such that "no share may be deprived of voting rights except those classified and issued as "preferred"
or "redeemable" shares, unless otherwise provided in this Code" and that "there shall always be a class or series of shares which
have complete voting rights." Section 6 of the Corporation Code being deemed written into Article VII of the Articles of
Incorporation of MCPI, it necessarily follows that unless Class "B" shares of MCPI stocks are clearly categorized to be
"preferred" or "redeemable" shares, the holders of said Class "B" shares may not be deprived of their voting rights. Note that there
is nothing in the Articles of Incorporation nor an iota of evidence on record to show that Class "B" shares were categorized as
either "preferred" or "redeemable" shares. The only possible conclusion is that Class "B" shares fall under neither category and
thus, under the law, are allowed to exercise voting rights.One of the rights of a stockholder is the right to participate in the control
and management of the corporation that is exercised through his vote. The right to vote is a right inherent in and incidental to the
ownership ofcorporate stock, and as such is a property right. The stockholder cannot be deprived of the right to vote his stock nor
may the right be essentially impaired, either by the legislature or by the corporation, without his consent, through amending the
charter, or the by-laws.

WILSON P. GAMBOA vs. FINANCE SECRETARY MARGARITO B. TEVES

G.R. No. 176579, June 28, 2011
Facts:
In 1969, General Telephone and Electronics Corporation (GTE), an American company and a major PLDT stockholder, sold 26
percent of the outstanding common shares of PLDT to PTIC. In 1977, Prime Holdings, Inc. (PHI) became the owner of 111,415
shares of stock of PTIC by virtue of three Deeds of Assignment executed by two of the PTIC stockholders. In 1986, the 111,415
shares of stock of PTIC held by PHI were sequestered by the Presidential Commission on Good Government (PCGG). The
111,415 PTIC shares, which represent about 46.125 percent of the outstanding capital stock of PTIC, were later declared by this
Court to be owned by the Republic of the Philippines. In 1999, First Pacific, a Bermuda-registered, Hong Kong-based investment
firm, acquired the remaining 54 percent of the outstanding capital stock of PTIC. The Inter-Agency Privatization Council (IPC) of
the Philippine Government sold the 111,415 PTIC shares, or 46.125 percent of the outstanding capital stock of PTIC, through a
public bidding where Parallax Venture Fund XXVII (Parallax) won. Thereafter, First Pacific, exercising its right of first refusal as
a PTIC stockholder, bought the 111,415 PTIC shares by matching the bid price of Parallax.
Petitioner filed the instant petition for prohibition, injunction, declaratory relief, and declaration of nullity of sale of the 111,415
PTIC shares, claiming among others, that the sale of the 111,415 PTIC shares would result in an increase in First Pacifics
common shareholdings in PLDT from 30.7 percent to 37 percent, and this, combined with Japanese NTT DoCoMos common
shareholdings in PLDT, would result to a total foreign common shareholdings in PLDT of 51.56 percent which is over the 40
percent constitutional limit of 40 percent ownership.
Issue:
Whether the sale of 111,415 PTIC shares to First Pacific violates the constitutional limit on foreign ownership of a public utility.
Held:
Section 11, Article XII (National Economy and Patrimony) of the 1987 Constitution holds that No franchise, certificate, or any
other form of authorization for the operation of a public utility shall be granted except to citizens of the Philippines or to
corporations or associations organized under the laws of the Philippines, at least sixty per centum of whose capital is
owned by such citizens xxx.
The crux of the controversy is the definition of the term capital. Does the term capital in Section 11, Article XII of the
Constitution refer to common shares or to the total outstanding capital stock (combined total of common and non-voting preferred
shares)?
Considering that common shares have voting rights which translate to control, as opposed to preferred shares which usually have
no voting rights, the term capital in Section 11, Article XII of the Constitution refers only to common shares. However, if the
preferred shares also have the right to vote in the election of directors, then the term capital shall include such preferred shares
because the right to participate in the control or management of the corporation is exercised through the right to vote in the
election of directors. In short, the term capital in the said provision refers only to shares of stock that can vote in the
election of directors.
In the present case, only holders of common shares can vote in the election of directors, meaning only common shareholders
exercise control over PLDT. Conversely, holders of preferred shares, who have no voting rights in the election of directors, do not
have any control over PLDT. In fact, under PLDTs Articles of Incorporation, holders of common shares have voting rights for all
purposes, while holders of preferred shares have no voting right for any purpose whatsoever. Foreigners hold 64.27% of the total
number of PLDTs common shares, while Filipinos hold only 35.73%. Since holding a majority of the common shares equates to
control, it is clear that foreigners exercise control over PLDT. Such amount of control unmistakably exceeds the allowable 40
percent limit on foreign ownership of public utilities expressly mandated in Section 11, Article XII of the Constitution.
[Thus, the Respondent Chairperson of the Securities and Exchange Commission was DIRECTED by the Court to apply the
foregoing definition of the term capital in determining the extent of allowable foreign ownership in respondent Philippine Long
Distance Telephone Company, and if there is a violation of Section 11, Article XII of the Constitution, to impose the appropriate
sanctions under the law.]

DECISION
Heirs of Gamboa vs Margarito Teves
CARPIO, J.:
I.

THE FACTS
This is a petition to nullify the sale of shares of stock of Philippine Telecommunications Investment Corporation (PTIC)
by the government of the Republic of the Philippines, acting through the Inter-Agency Privatization Council (IPC), to Metro
Pacific Assets Holdings, Inc. (MPAH), an affiliate of First Pacific Company Limited (First Pacific), a Hong Kong-based
investment management and holding company and a shareholder of the Philippine Long Distance Telephone Company (PLDT).
The petitioner questioned the sale on the ground that it also involved an indirect sale of 12 million shares (or about 6.3
percent of the outstanding common shares) of PLDT owned by PTIC to First Pacific. With this sale, First Pacifics common
shareholdings in PLDT increased from 30.7 percent to 37 percent, thereby increasing the total common shareholdings of
foreigners in PLDT to about 81.47%. This, according to the petitioner, violates Section 11, Article XII of the 1987 Philippine
Constitution which limits foreign ownership of the capital of a public utility to not more than 40%.

II.

THE ISSUE
Does the term capital in Section 11, Article XII of the Constitution refer to the total common shares only, or to the total
outstanding capital stock (combined total of common and non-voting preferred shares) of PLDT, a public utility?

III. THE RULING

Section 11, Article XII (National Economy and Patrimony) of the 1987 Constitution mandates the Filipinization of public
utilities, to wit:
Section 11. No franchise, certificate, or any other form of authorization for the operation of a public utility shall be
granted except to citizens of the Philippines or to corporations or associations organized under the laws of the Philippines,
at least sixty per centum of whose capital is owned by such citizens xxx.
The term capital in Section 11, Article XII of the Constitution refers only to shares of stock entitled to vote in the
election of directors, and thus in the present case only to common shares, and not to the total outstanding capital stock comprising
both common and non-voting preferred shares [of PLDT].
Considering that common shares have voting rights which translate to control, as opposed to preferred shares which
usually have no voting rights, the term capital refers only to common shares. However, if the preferred shares also have the right
to vote in the election of directors, then the term capital shall include such preferred shares because the right to participate in the
control or management of the corporation is exercised through the right to vote in the election of directors. In short, the term
capital in Section 11, Article XII of the Constitution refers only to shares of stock that can vote in the election of directors.
To construe broadly the term capital as the total outstanding capital stock, including both common and nonvoting preferred shares, grossly contravenes the intent and letter of the Constitution that the State shall develop a self-reliant and
independent national economy effectively controlled by Filipinos. A broad definition unjustifiably disregards who owns the allimportant voting stock, which necessarily equates to control of the public utility.
[O]nly holders of common shares can vote in the election of directors [of PLDT], meaning only common shareholders
exercise control over PLDT. Conversely, holders of preferred shares, who have no voting rights in the election of directors, do not

have any control over PLDT. In fact, under PLDTs Articles of Incorporation, holders of common shares have voting rights for all
purposes, while holders of preferred shares have no voting right for any purpose whatsoever.
WHEREFORE, we PARTLY GRANT the petition and rule that the term capital in Section 11, Article XII of the
1987 Constitution refers only to shares of stock entitled to vote in the election of directors, and thus in the present case only to
common shares, and not to the total outstanding capital stock (common and non-voting preferred shares). Respondent Chairperson
of the Securities and Exchange Commission is DIRECTED to apply this definition of the term capital in determining the extent
of allowable foreign ownership in respondent Philippine Long Distance Telephone Company, and if there is a violation of Section
11, Article XII of the Constitution, to impose the appropriate sanctions under the law.