CASE Digests

September 12, 2014

LBC Express vs. CA
LBC Express, Inc. vs. Court of Appeals, G.R. No. 108670, 236
SCRA 602 , September 21, 1994
Private respondent Adolfo Carloto, incumbent PresidentManager of private respondent Rural Bank of Labason,
alleged that on November 12, 1984, he was in Cebu City
transacting business with the Central Bank Regional Office.
He was instructed to proceed to Manila on or before
November 21, 1984 to follow-up the Rural Bank's plan of
payment of rediscounting obligations with Central Bank's
main office in Manila. 2 He then purchased a round trip
plane ticket to Manila. He also phoned his sister Elsie
Carloto-Concha to send him ONE THOUSAND PESOS
(P1,000.00) for his pocket money in going to Manila and
some rediscounting papers thru petitioner's LBC Office at
Dipolog City. 3
On November 16, 1984, Mrs. Concha thru her clerk, Adelina
Antigo consigned thru LBC Dipolog Branch the pertinent
documents and the sum of ONE THOUSAND PESOS
(P1,000.00) to respondent Carloto at No. 2 Greyhound
Subdivision, Kinasangan, Pardo, Cebu City. This was
evidenced by LBC Air Cargo, Inc., Cashpack Delivery Receipt
No. 34805.
On November 17, 1984, the documents arrived without the
cashpack. Respondent Carloto made personal follow-ups on
that same day, and also on November 19 and 20, 1984 at

LBC's office in Cebu but petitioner failed to deliver to him

the cashpack.
Consequently, respondent Carloto said he was compelled to
go to Dipolog City on November 24, 1984 to claim the
money at LBC's office. His effort was once more in vain. On
November 27, 1984, he went back to Cebu City at LBC's
office. He was, however, advised that the money has been
returned to LBC's office in Dipolog City upon shipper's
request. Again, he demanded for the ONE THOUSAND
PESOS (P1,000.00) and refund of FORTY-NINE PESOS
(P49.00) LBC revenue charges. He received the money only
on December 15, 1984 less the revenue charges.
Respondent Carloto claimed that because of the delay in the
transmittal of the cashpack, he failed to submit the
rediscounting documents to Central Bank on time. As a
consequence, his rural bank was made to pay the Central
Bank THIRTY-TWO THOUSAND PESOS (P32,000.00) as
penalty interest. 4 He allegedly suffered embarrassment and
humiliation.
Petitioner LBC, on the other hand, alleged that the cashpack
was forwarded via PAL to LBC Cebu City branch on
November 22, 1984. 5 On the same day, it was delivered at
respondent Carloto's residence at No. 2 Greyhound
Subdivision, Kinasangan, Pardo, Cebu City. However, he was
not around to receive it. The delivery man served instead a
claim notice to insure he would personally receive the
money. This was annotated on Cashpack Delivery Receipt
No. 342805. Notwithstanding the said notice, respondent
Carloto did not claim the cashpack at LBC Cebu. On
November 23, 1984, it was returned to the shipper, Elsie
Carloto-Concha at Dipolog City.

Claiming that petitioner LBC wantonly and recklessly

disregarded its obligation, respondent Carloto instituted an
action for Damages Arising from Non-performance of
Obligation docketed as Civil Case No. 3679 before the
Regional Trial Court of Dipolog City on January 4, 1985. On
June 25, 1988, an amended complaint was filed where
respondent rural bank joined as one of the plaintiffs and
prayed for the reimbursement of THIRTY-TWO THOUSAND
PESOS (P32,000.00).
1. Whether or not respondent Rural Bank of Labason Inc.,
being an artificial person should be awarded moral
damages.
2. Whether or not the award of THIRTY-TWO THOUSAND
PESOS (P32,000.00) was made with grave abuse of
discretion.
3. Whether or not the respondent Court of Appeals gravely
abused its discretion in affirming the trial court's decision
ordering petitioner LBC to pay moral and exemplary
damages despite performance of its obligation.
The respondent court erred in awarding moral damages to
the Rural Bank of Labason, Inc., an artificial person.
Moral damages are granted in recompense for physical
suffering, mental anguish, fright, serious anxiety,
besmirched reputation, wounded feelings, moral shock,
social humiliation, and similar injury. 7 A corporation, being
an artificial person and having existence only in legal
contemplation, has no feelings, no emotions, no senses;
therefore, it cannot experience physical suffering and
mental anguish. 8 Mental suffering can be experienced only
by one having a nervous system and it flows from real ills,

sorrows, and griefs of life 9 all of which cannot be

suffered by respondent bank as an artificial person.
We can neither sustain the award of moral damages in favor
of the private respondents. The right to recover moral
damages is based on equity. Moral damages are recoverable
only if the case falls under Article 2219 of the Civil Code in
relation to Article 21. 10 Part of conventional wisdom is that
he who comes to court to demand equity, must come with
clean hands.
In the case at bench, respondent Carloto is not without fault.
He was fully aware that his rural bank's obligation would
mature on November 21, 1984 and his bank has set aside
cash for these bills payable. 11 He was all set to go to
Manila to settle this obligation. He has received the
documents necessary for the approval of their rediscounting
application with the Central Bank. He has also received the
plane ticket to go to Manila. Nevertheless, he did not
immediately proceed to Manila but instead tarried for days
allegedly claiming his ONE THOUSAND PESOS (P1,000.00)
pocket money. Due to his delayed trip, he failed to submit
the rediscounting papers to the Central Bank on time and
his bank was penalized THIRTY-TWO THOUSAND PESOS
(P32,000.00) for failure to pay its obligation on its due date.
The undue importance given by respondent Carloto to his
ONE THOUSAND PESOS (P1,000.00) pocket money is
inexplicable for it was not indispensable for him to follow up
his bank's rediscounting application with Central Bank.
According to said respondent, he needed the money to
"invite people for a snack or dinner." 12 The attitude of said
respondent speaks ill of his ways of business dealings and
cannot be countenanced by this Court. Verily, it will be
revolting to our sense of ethics to use it as basis for

awarding damages in favor of private respondent Carloto

and the Rural Bank of Labason, Inc.
We also hold that respondents failed to show that petitioner
LBC's late delivery of the cashpack was motivated by
personal malice or bad faith, whether intentional or thru
gross negligence. In fact, it was proved during the trial that
the cashpack was consigned on November 16, 1984, a
Friday. It was sent to Cebu on November 19, 1984, the next
business day. Considering this circumstance, petitioner
cannot be charged with gross neglect of duty. Bad faith
under the law can not be presumed; it must be established
by clearer and convincing evidence. 13 Again, the unbroken
jurisprudence is that in breach of contract cases where the
defendant is not shown to have acted fraudulently or in bad
faith, liability for damages is limited to the natural and
probable consequences of the branch of the obligation
which the parties had foreseen or could reasonable have
foreseen. The damages, however, will not include liability for
moral damages. Rescinding from these premises, the award
of exemplary damages made by the respondent court would
have no legal leg to support itself. Under Article 2232 of the
Civil Code, in a contractual or quasi-contractual relationship,
exemplary damages may be awarded only if the defendant
had acted in "a wanton, fraudulent, reckless, oppressive, or
malevolent manner." The established facts of not so warrant
the characterization of the action of petitioner LBC.
Filipinas Broadcasting Network Inc. vs. Ago Medical
and Educational Center-Bicol Christian College of
Medicine (AMEC-BCCM) [GR 141994, 17 January 2005]
Carpio (J): 4 concur

Facts: Expose is a radio documentary program hosted by

Carmelo Mel Rima (Rima) and Hermogenes Jun Alegre
(Alegre). Expose is aired every morning over DZRC-AM
which is owned by Filipinas Broadcasting Network, Inc.
(FBNI). Expose is heard over Legazpi City, the Albay
municipalities and
other Bicol areas. In the morning of 14 and 15 December
1989, Rima and Alegre exposed various alleged complaints
from students, teachers and parents against Ago Medical
and Educational Center-Bicol Christian College of Medicine
(AMEC) and its administrators. Claiming that the
broadcasts were defamatory, AMEC and Angelita Ago
(Ago), as Dean of AMECs College of Medicine, filed a
complaint for damages against FBNI, Rima and Alegre on 27
February 1990. The complaint further alleged that AMEC is a
reputable learning institution. With the supposed exposes,
FBNI, Rima and Alegre transmitted malicious imputations,
and as such, destroyed plaintiffs (AMEC and Ago)
reputation. AMEC and Ago included FBNI as defendant for
allegedly failing to exercise due diligence in the selection
and supervision of its employees, particularly Rima and
Alegre. On 18 June 1990, FBNI, Rima and Alegre, through
Atty. Rozil Lozares, filed an Answer alleging that the
broadcasts against AMEC were fair and true. FBNI, Rima and
Alegre claimed that they were plainly impelled by a sense of
public duty to report the goings-on in AMEC, [which is] an
institution imbued with public interest. Thereafter, trial
ensued. During the presentation of the evidence for the
defense, Atty. Edmundo Cea, collaborating counsel of Atty.
Lozares, filed a Motion to Dismiss on FBNIs behalf. The trial
court denied the motion to dismiss. Consequently, FBNI filed

a separate Answer claiming that it exercised due diligence in

the selection and supervision of Rima and Alegre. FBNI
claimed that before hiring a broadcaster, the broadcaster
should (1) file an application; (2) be interviewed; and (3)
undergo an apprenticeship and training program after
passing the interview. FBNI likewise claimed that it always
reminds its broadcasters to observe truth, fairness and
objectivity in their broadcasts and to refrain from using
libelous and indecent language. Moreover, FBNI requires all
broadcasters to pass the Kapisanan ng mga Brodkaster sa
Pilipinas (KBP) accreditation test and to secure a KBP
permit. On 14 December 1992, the trial court rendered a
Decision finding FBNI and Alegre liable for libel except Rima.
The trial court held that the broadcasts are libelous per se.
The trial court rejected the broadcasters claim that their
utterances were the result of straight reporting because it
had no factual basis. The broadcasters did not even verify
their reports before airing them to show good faith. In
holding FBNI liable for libel, the trial court found that FBNI
failed to exercise diligence in the selection and supervision
of its employees. In absolving Rima from the charge, the
trial court ruled that Rimas only participation was when he
agreed with Alegres expose. The trial court found Rimas
statement within the bounds of freedom of speech,
expression, and of the press. Both parties, namely, FBNI,
Rima and Alegre, on one hand, and AMEC and Ago, on the
other, appealed the decision to the Court of Appeals. The
Court of Appeals affirmed the trial courts judgment with
modification. The appellate court made Rima solidarily liable
with FBNI and Alegre. The appellate court denied Agos
claim for damages and attorneys fees because the
broadcasts were directed against AMEC, and not against her.

FBNI, Rima and Alegre filed a motion for reconsideration

which the Court of Appeals denied in its 26 January 2000
Resolution. Hence, FBNI filed the petition for review.
Issue: Whether AMEC is entitled to moral damages.
Held: A juridical person is generally not entitled to moral
damages because, unlike a natural person, it cannot
experience physical suffering or such sentiments as
wounded feelings, serious anxiety, mental anguish or moral
shock. The Court of Appeals cites Mambulao Lumber Co. v.
PNB, et al. to justify the award of moral damages. However,
the Courts statement in Mambulao that a corporation may
have a good reputation which, if besmirched, may also be a
ground for the award of moral damages is an obiter dictum.
Nevertheless, AMECs claim for moral damages falls under
item 7 of Article 2219 of the Civil Code. This provision
expressly authorizes the recovery of moral damages in
cases of libel, slander or any other form of defamation.
Article 2219(7) does not qualify whether the plaintiff is a
natural or juridical person. Therefore, a juridical person such
as a corporation can validly complain for libel or any other
form of defamation and claim for moral damages. Moreover,
where the broadcast is libelous per se, the law implies
damages. In such a case, evidence of an honest mistake or
the want of character or reputation of the party libeled goes
only in mitigation of damages. Neither in such a case is the
plaintiff required to introduce evidence of actual damages as
a condition precedent to the recovery of some damages. In
this case, the broadcasts are libelous per se. Thus, AMEC is
entitled to moral damages. However, the Court found the
award of P300,000 moral damages unreasonable. The

record shows that even though the broadcasts were libelous

per se, AMEC has not suffered any substantial or material
damage to its reputation. Therefore, the Court reduced the
award of moral damages from P300,000 to P150,000.
CIR vs. THE CLUB FILIPINO, INC. DE CEBU
GR No. L-12719 | May 31, 1962 | Paredes, J.
FACTS: The Club Filipino, is a civic corporation organized
under the laws of the Philippines with an original authorized
capital stock of P22,000, which was subsequently increased
to P200,000 to operate and maintain a golf course, tennis,
gymnasiums, bowling alleys, billiard tables and pools, and
all
sorts
of games not
prohibited
by general
laws
and general ordinances, and develop and nurture sports of
any kind and any denomination for recreation and healthy
training of its members and shareholders" (sec. 2, Escritura
de Incorporacion (Deed of Incorporation) del Club Filipino,
Inc.). There is no provision either in the articles or in the bylaws relative to dividends and their distribution, although it
is covenanted that upon its dissolution, the Club's remaining
assets, after paying debts, shall be donated to a charitable
Phil. Institution in Cebu (Art. 27, Estatutos del (Statutes of
the) Club).
The Club owns and operates a club house, a bowling alley, a
golf course (on a lot leased from the government), and a
bar-restaurant where it sells wines and liquors, soft
drinks, meals and short orders to its members and their
guests. The bar-restaurant was a necessary incident to the
operation of the club and its golf-course. The club is
operated mainly with funds derived from membership fees

and dues. Whatever profits it had, were used to defray its

overhead expenses and to improve its golf-course. In 1951,
as a result of a capital surplus, arising from the re-valuation
of its real properties, the value or price of which increased,
the Club declared stock dividends; but no actual cash
dividends were distributed to the stockholders.
In 1952, a BIR agent discovered that the Club has never
paid percentage tax on the gross receipts of its bar and
restaurant, although it secured licenses. In a letter, the
Collector assessed against and demanded from the Club
P12,068.841 as fixed and percentage taxes, surcharge and
compromise penalty. Also, the Collector denied the Clubs
request to cancel the assessment.
On appeal, the CTA reversed the Collector and ruled that the
Club is not liable for the assessed tax liabilities of
P12,068.84 allegedly due from it as a keeper of bar and
restaurant as it is a non-stock corporation. Hence, the
Collector filed the instant petition for review.
ISSUE: WON the Club is a stock corporation
HELD: NO. It is a non-stock corporation.
The facts that the capital stock of the Club is divided into
shares, does not detract from the finding of the trial court
that it is not engaged in the business of operator of bar and
restaurant. What is determinative of whether or not

1 P9, 599.07 as percentage tax on its gross receipts (tax years 19461951), P2,399.77 surcharge, P70 fixed tax (tax years 1946-1952, and P500
compromise penalty.

the Club is engaged in such business is its object or

purpose, as stated in its articles and by-laws. The
actual purpose is not controlled by the corporate form or by
the commercial aspect of the business prosecuted, but may
be shown by extrinsic evidence, including the by-laws and
the method of operation. From the extrinsic evidence
adduced, the CTA concluded that the Club is not engaged in
the business as a barkeeper and restaurateur.
For a stock corporation to exist, two requisites must be
complied with:
1. a capital stock divided into shares and
2. an authority to distribute to the holders of such shares,
dividends or allotments of the surplus profits on the
basis of the shares held (sec. 3, Act No. 1459).
Nowhere in its articles of incorporation or by-laws could be
found an authority for the distribution of its dividends or
surplus profits. Strictly speaking, it cannot, therefore, be
considered a stock corporation, within the contemplation of
the corpo law.
ISSUE: WON the Club is liable for the payment of
P12,068.84, as fixed and percentage taxes and surcharges

prescribed in sec. 1822, 1833 and 1914 of the Tax Code, in

connection with the operation of its bar and restaurant; and
for P500 as compromise penalty.
HELD: NO. A tax is a burden, and, as such, it should not be
deemed imposed upon fraternal, civic, non-profit, nonstock
organizations, unless the intent to the contrary is manifest
and patent" (Collector v. BPOE Elks Club, et al.), which is not
the case here.
Having found as a fact that the Club was organized to
develop and cultivate sports of all class and denomination,
for the healthful recreation and entertainment of its
stockholders and members; that upon its dissolution, its
remaining assets, after paying debts, shall be donated to a
charitable Phil. Institution in Cebu; that it is operated mainly
with funds derived from membership fees and dues; that the
Club's bar and restaurant catered only to its members and
their guests; that there was in fact no cash dividend
distribution to its stockholders and that whatever was
derived on retail from its bar and restaurant was used to
defray its overall overhead expenses and to improve its golfcourse (cost-plus-expenses-basis), it stands to reason that

2 Sec. 182, of the Tax Code states, "Unless otherwise provided, every
person engaging in a business on which the percentage tax is imposed
shall pay in full a fixed annual tax of ten pesos for each calendar year or
fraction thereof in which such person shall engage in said business."

3 Sec. 183 provides in general that "the percentage taxes on business shall
be payable at the end of each calendar quarter in the amount lawfully due
on the business transacted during each quarter; etc."

4 Sec. 191, same Tax Code, provides "Percentage tax . . . Keepers of

restaurants, refreshment parlors and other eating places shall pay a tax
three per centum, and keepers of bar and cafes where wines or liquors are
served five per centum of their gross receipts . . .".

the Club is not engaged in the business of an operator of bar

and restaurant.
PNOC v. NLRC

for having worked for more than one year in positions that
required them to perform activities necessary and desirable
in the normal business or trade of petitioner. The CA
affirmed the NLRCs decision.
ISSUES:

FACT:
PNOC-Energy Development Corporation, to augment its
need for manpower hired persons on varying dates and for
varying purposes. The earliest person who was contracted
for the purpose was Roberto Renzal, as a pipe fitter, in
January 1995, and like the others concerned, his contract
was renewed or extended every time his contract expires.

1. Whether or not Renzal, et.al.,

employees or regular employees.

were

project

2. Whether or not they were illegally dismissed from

employment.
HELD:
1. Renzal, et.al, are Regular Employees.

Later, PNOC-EDC informed DOLE, Regional Sub-branch No.

VII in Dumaguete City, that 6 of its employees will be
terminated. Subsequently, Roberto Renzal and 5 others were
furnished with letters stating that their employment will be
terminated on June 1998.

2. Yes, Renzal, et.al, being Regular Employees are

entitled to security of tenure, were unjustly dismissed
from work.
RATIO:

Renzal, et. al., filed a complaint for illegal dismissal with the
NLRC against PNOC.
The Labor Arbiter found the group of Renzals, claim to lack
merit, hence their termination legal on the ground that they
were dismissed because their contract with PNOC expired.
The NLRC, upon Renzals appeal, adjudged contrary to the
decision of the Labor Arbiter stating among others that
Renzal and the others were regular non-project employees

1. PNOCs act of repeatedly and continuously hiring

respondents to do the same kind of work belies its
contention that respondents were hired for a specific
project or undertaking. The absence of a definite
duration for the project/s has led the Court to
conclude that Renzal, et.al, are, in fact, regular
employees.

In termination cases, it is incumbent upon the employer to

prove by the quantum of evidence required by law that the
dismissal of an employee is not illegal; otherwise the
dismissal would be unjustified. In the case at bar, PNOC
failed to discharge the burden.The notices of termination
indicated that PNOC services were terminated due to the
completion of the project. However, this allegation is
contrary to the statement of petitioner in some of its
pleadings that the project was merely substantially
completed. There is likewise no proof that the project, or
the phase of work to which respondents had been assigned,
was already completed at the time of their dismissal.

powers or privileges than any other corporation which may

be organized for the same purpose under the corporation
law and certainly it was not the intention of the legislature
to give preference or right or privilege over other legitimate
private corporation in the mining of coal. NCC is required to
pay taxes pursuant to Section 1496 of the Administrative
Code. Moreover, Act 2719 is applicable only to lessee or
owner of coal bearing lands which NCC is not.
Red Line Transportation Co. vs. Rural Transit Co.
GR No. 41570 | Sept. 6, 1934

National Coal Co. v. CIR

Facts: The National Coal Co.(NCC) was created by a special
law and was enacted by virtue of Act 2705 in order to
develop a coal industry. It was engaged in coal mining on
reserved lands belonging to the government. The National
Coal Co.(NCC) filed a case against the CIR for the recovery
of sum of money it paid on protest as specific tax on 24,089
tons of coals claiming exemption to tax pursuant to Sec. 14
and 15 of Act 2719. Issue: Whether or not NCC is a private
corporation?

Held: Plaintiff is a private corporation. The mere fact that

the government is a majority stockholder of the corporation
does not make the corporation. Act 2705 as amended by Act
2822 makes it subject to all the provision of the corporation
law. As a private corporation, it has no greater rights,

Facts:

This is a petition for review of an order of the Public

Service Commission granting to the Rural Transit Company,
Ltd., a certificate of public convenience to operate a
transportation service between Ilagan in the Province of
Isabela and Tuguegarao in the Province of Cagayan, and
additional trips in its existing express service between
Manila Tuguegarao.

On June 4, 1932, Rural Transit filed an application for

certification of a new service between Tuguegarao and
Ilagan with the Public Company Service Commission (PSC),
since the present service is not sufficient


Rural Transit further stated that it is a holder of a
certificate of public convenience to operate a passenger bus
service between Manila and Tuguegarao

Red Line opposed said application, arguing that they

already hold a certificate of public convenience for
Tuguegarao and Ilagan, and is rendering adequate service.
They also argued that granting Rural Transits application
would constitute a ruinous competition over said route

On Dec. 21, 1932, Public Service Commission

approved Rural Transits application, with the condition that
"all the other terms and conditions of the various certificates
of public convenience of the herein applicant and herein
incorporated are made a part hereof."

A motion for rehearing and reconsideration was filed

by Red Line since Rural Transit has a pending application
before the Court of First Instance for voluntary dissolution of
the corporation

party in interest making the application, whether the Rural

Transit Company, Ltd., as appeared on the face of the
application, or the Bachrach Motor Company, Inc., using
name of the Rural Transit Company, Ltd., as a trade name

However, PSC granted Rural Transits application for

certificate of public convenience and ordered that a
certificate be issued on its name

PSC relied on a Resolution in case No. 23217,

authorizing Bachrach Motor to continue using Rural Transits
name as its tradename in all its applications and petitions to
be filed before the PSC. Said resolution was given a
retroactive effect as of the date of filing of the application or
April 30, 1930

Issue: Can the Public Service Commission authorize a

corporation to assume the name of another corporation as a
trade name?

A motion for postponement was filed by Rural Transit

as verified by M. Olsen who swears "that he was the
secretary of the Rural Transit Company, Ltd
Ruling: NO

During the hearing before the Public Service

Commission, the petition for dissolution and the CFIs
decision decreeing the dissolution of Rural Transit were
admitted without objection

At the trial of this case before the Public Service

Commission an issue was raised as to who was the real

The Rural Transit Company, Ltd., and the Bachrach

Motor Co., Inc., are Philippine corporations and the very law
of their creation and continued existence requires each to
adopt and certify a distinctive name


The incorporators "constitute a body politic and
corporate under the name stated in the certificate."

A corporation has the power "of succession by its

corporate name." It is essential to its existence and cannot
change its name except in the manner provided by the
statute. By that name alone is it authorized to transact
business.

The law gives a corporation no express or implied

authority to assume another name that is unappropriated:
still less that of another corporation, which is expressly set
apart for it and protected by the law. If any corporation
could assume at pleasure as an unregistered trade name
the name of another corporation, this practice would result
in confusion and open the door to frauds and evasions and
difficulties of administration and supervision.
In this case, the order of the commission authorizing the
Bachrach Motor Co., Incorporated, to assume the name of
the Rural Transit Co., Ltd. likewise incorporated, as its trade
name being void. Accepting the order of December 21,
1932, at its face as granting a certificate of public
convenience to the applicant Rural Transit Co., Ltd., the said
order last mentioned is set aside and vacated on the ground
that the Rural Transit Company, Ltd., is not the real party in
interest and its application was fictitious.
ASE DIGEST: Universal Mills Corporation vs. Universal Textile
Mills
78 SCRA 62 (1977)

FACTS:
This is an appeal from the order of the Securities and
Exchange Commission granting a petition by the respondent
to have the petitioners corporate name be changed as it is
confusingly and deceptively similar to that of the former.
On January 8, 1954, respondent Universal Textile Mills was
issued a certificate of Corporation as a textile manufacturing
firm. On the other hand, petitioner, which deals in the
production of hosieries and apparels, acquired its current
name by amending its articles of incorporation, changing its
name from Universal Hosiery mills Corporation to Universal
Mills corporation.
ISSUE:
Whether or not petioners trade name is confusingly similar
with that of respondents.
HELD:
Yes. The corporate names in question are not identical, but
they are indisputably so 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. We are apprehensive confusion will usually
arise, considering that x x x appellant included among its
primary purposes the manufacturing, dyeing, finishing and
selling of fabrics of all kinds which respondent had been
engaged for more than a decade ahead of petitioner.

Lyceum of the Philippines vs. Court of Appeals [GR

101897, 5 March 1993]
Third Division, Feliciano (J): 4 concur, 1 on terminal leave
Facts: Lyceum of the Philippines Inc. had sometime before
commenced in the SEC a proceeding (SEC-Case No. 1241)
against the Lyceum of Baguio, Inc. to require it to change its
corporate name and to adopt another name not "similar [to]
or identical" with that of petitioner. In an Order dated 20
April 1977, 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. The
SEC also noted that Lyceum of the Philippines Inc. had
registered as a corporation ahead of the Lyceum of Baguio,
Inc. in point of time, and ordered the latter to change its
name to another name "not similar or identical [with]" the
names of previously registered entities. The Lyceum of
Baguio, Inc. assailed the Order of the SEC before the
Supreme Court (GR L-46595). In a Minute Resolution dated
14 September 1977, the Court denied the Petition for
Review for lack of merit. Entry of judgment in that case was
made on 21 October 1977.
Armed with the Resolution of the Supreme Court, the
Lyceum of the Philippines then wrote all the educational
institutions it could find using the word "Lyceum" as part of
their corporate name, and advised them to discontinue such
use of "Lyceum." When, with the passage of time, it became
clear that this recourse had failed, and on 24 February 1984,
Lyceum of the Philippines instituted before the SEC SEC-

Case 2579 to enforce what Lyceum of the Philippines claims

as its proprietary right to the word "Lyceum." The SEC
hearing officer rendered a decision sustaining petitioner's
claim to an exclusive right to use the word "Lyceum." The
hearing officer relied upon the SEC ruling in the Lyceum of
Baguio, Inc. case (SEC-Case 1241) and held that the word
"Lyceum" was capable of appropriation and that petitioner
had acquired an enforceable exclusive right to the use of
that word. On appeal, however, by Lyceum Of Aparri,
Lyceum Of Cabagan, Lyceum Of Camalaniugan, Inc., Lyceum
Of Lallo, Inc., Lyceum Of Tuao, Inc., Buhi Lyceum, Central
Lyceum Of Catanduanes, Lyceum Of Southern Philippines,
Lyceum Of Eastern Mindanao, Inc. and Western Pangasinan
Lyceum, Inc.,, which are also educational institutions, to the
SEC En Banc, the decision of the hearing officer was
reversed and set aside. The SEC En Banc did not consider
the word "Lyceum" to have become so identified with
Lyceum of the Philippines as to render use thereof by other
institutions as productive of confusion about the identity of
the schools concerned in the mind of the general public.
Unlike its hearing officer, the SEC En Banc held that the
attaching of geographical names to the word "Lyceum"
served sufficiently to distinguish the schools from one
another, especially in view of the fact that the campuses of
Lyceum of the Philippines and those of the other Lyceums
were physically quite remote from each other. Lyceum of the
Philippines then went on appeal to the Court of Appeals. In
its Decision dated 28 June 1991, however, the Court of
Appeals affirmed the questioned Orders of the SEC En Banc.
Lyceum of the Philippines filed a motion for reconsideration,
without success. Lyceum of the Philippines filed the petition
for review.

Issue [1]: Whether the names of the contending Lyceum

schools are confusingly similar.
Held [1]: The Articles of Incorporation of a corporation
must, among other things, set out the name of the
corporation. Section 18 of the Corporation Code establishes
a restrictive rule insofar as corporate names are concerned.
It provides that "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. Herein, the Court does
not consider that the corporate names of the academic
institutions are "identical with, or deceptively or confusingly
similar" to that of Lyceum of the Philippines Inc.. True
enough, the corporate names of the other schools
(defendant institutions) entities all carry the word "Lyceum"
but confusion and deception are effectively precluded by the
appending of geographic names to the word "Lyceum."
Thus, the "Lyceum of Aparri" cannot be mistaken by the
general public for the Lyceum of the Philippines, or that the

"Lyceum of Camalaniugan" would be confused with the

Lyceum of the Philippines. Further, etymologically, the word
"Lyceum" is the Latin word for the Greek lykeion which in
turn referred to a locality on the river Ilissius in ancient
Athens "comprising an enclosure dedicated to Apollo and
adorned with fountains and buildings erected by Pisistratus,
Pericles and Lycurgus frequented by the youth for exercise
and by the philosopher Aristotle and his followers for
teaching." In time, 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. 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. To determine whether a given
corporate name is "identical" or "confusingly or deceptively
similar" with another entity's corporate name, it is not
enough to ascertain the presence of "Lyceum" or "Liceo" in
both names. One must evaluate corporate names in their
entirety and when the name of Lyceum of the Philippines is
juxtaposed with the names of private respondents, they are
not reasonably regarded as "identical" or "confusingly or
deceptively similar" with each other.
Issue [2]: Whether the use by the Lyceum of the Philippines
of "Lyceum" in its corporate name has been for such length
of time and with such exclusivity as to have become
associated or identified with the petitioner institution in the
mind of the general public (or at least that portion of the
general public which has to do with schools).
Held [2]: The number alone of the private respondents in
the present case suggests strongly that the Lyceum of the

Philippines' use of the word "Lyceum" has not been attended

with the exclusivity essential for applicability of the doctrine
of secondary meaning. It may be noted also that at least
one of the private respondents, i.e., the Western Pangasinan
Lyceum, Inc., used the term "Lyceum" 17 years before
Lyceum of the Philippines registered its own corporate name
with the SEC and began using the word "Lyceum." It follows
that if any institution had acquired an exclusive right to the

word "Lyceum," that institution would have been the

Western Pangasinan Lyceum, Inc. rather than Lyceum of the
Philippines. Hence, Lyceum of the Philippines is not entitled
to a legally enforceable exclusive right to use the word
"Lyceum" in its corporate name and that other institutions
may use "Lyceum" as part of their corporate names.