Red Line Transportation Co. vs. Rural Transit Co.

GR No. 41570 | Sept. 6, 1934

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 Transit’s application would constitute a ruinous
competition over said route
 On Dec. 21, 1932, Public Service Commission approved Rural Transit’s 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
 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
 During the hearing before the Public Service Commission, the petition for dissolution and the CFI’s 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 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 Transit’s 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 Transit’s 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?

Ruling: NO
 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

CASE 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 petitioner’s
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 petioner’s trade name is confusingly similar with that of

respondent’s.

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 PHILS. V. CA

219 SCRA 610
FACTS:

1. Petitioner had sometime commenced before in the SEC a complaint against Lyceum
of Baguio, to require it to change its corporate name and to adopt another name not
similar or identical with that of petitioner. SEC decided in favor of petitioner. Lyceum of
Baguio filed petition for certiorari but was denied for
lack of merit.

2. Armed with the resolution of the Court, petitioner instituted before the SEC to compel
private respondents, which are also educational institutions, to delete word “Lyceum”
from their corporate names and permanently to enjoin them from using such as part of
their respective names.

3. Hearing officer sustained the claim of petitioner and held that the word “Lyceum” was
capable of appropriation and that petitioner had acquired an enforceable right to the use
of that word.

4. In an appeal, the decision was reversed by the SEC En Banc. They held that the
word “Lyceum” to have become identified with petitioner as to render use thereof of
other institutions as productive of consfusion about the identity of the schools concerned
in the mind of the general public.

5. Petitioner went to appeal with the CA but the latter just affirmed the decision of the
SEC En Banc.

HELD:

Under the corporation code, no corporate name may be allowed by the SEC 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. The policy behind this provision is to avoid fraud
upon the public, which would have the 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 corporate names of private respondents are not identical or deceptively or

confusingly similar to that of petitioner’s. Confusion and deception has been precluded
by the appending of geographic names to the word “Lyceum”. Furthermore, the word
“Lyceum” has become associated in time with schools and other institutions providing
public lectures, concerts, and public discussions. Thus, it generally refers to a school or
an institution of learning.

Petitioner claims that the word has acquired a secondary meaning in relation to
petitioner with the result that the word, although originally generic, has become
appropriable by petitioner to the exclusion of other institutions.

The doctrine of secondary meaning is a principle used in trademark law but has been
extended to corporate names since the right to use a corporate name to the exclusion of
others is based upon the same principle, which underlies the right to use a particular
trademark or tradename. Under this doctrine, 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 for so long and so
exclusively by one producer with reference to this article that, in that trade and to that
group of purchasing public, the word or phrase has come to mean that the article was
his produce. The doctrine cannot be made to apply where the evidence didn't prove that
the business has continued for so long a time that it has become of consequence and
acquired good will of considerable value such that its articles and produce have
acquired a well known reputation, and confusion will result by the use of the disputed
name.

Petitioner didn't present evidence, which provided that the word “Lyceum” acquired
secondary meaning. The petitioner failed to adduce evidence that it had exclusive use
of the word. Even if petitioner used the word for a long period of time, it hadn’t acquired
any 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.

Lyceum Vs. CA
Socialize Us
Facts:

 Lyceum of the Philippines, Inc. is an educational institution duly registered with Securities
and Exchange Commission since 1950. (Sept)
 In 1984, it instituted proceedings before SEC to compel several education institutions to
delete the word “Lyceum” from their corporate names and to permanently enjoin them from
using the said word.
 Their action is based on a SEC Resolution wherein SEC ordered the Lyceum of Baguio to
change its corporate name as it is identical to the Lyceum of the Philippines which was
able to register first.
 SEC En Banc ruled that the attaching of the geographical names after the word “Lyceum”
sufficiently distinguishes one from the other.
 However, the CA ruled otherwise.
Issue No.1: WON the corporate names of the parties are identical with or deceptively similar to
that of the petitioner. NO

Held: The corporate names of the parties carry the word “Lyceum” but confusion and deception
are precluded by the appending of geographic names. Lyceum generally refers to a school or an
institution of learning and it is natural to use this word to designate an entity which is organized
and operating as an educational institution.

Thus, we do not believe that the "Lyceum of Aparri" can 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.

Issue No. 2: WON the use by the Lyceum of the Philippines of the word 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. (Doctrine of Secondary
meaning). NO

Held: Doctrine of Secondary meaning is a word of phrase originally incapable of exclusive

appropriation, might nevertheless have been used so long and so exclusively by one producer
with reference to his article that, in trade and to that branch of the purchasing public, the word or
phrase has come to mean that the article was his product.

Lyceum of the Philippines has not gained exclusive use of “Lyceum” by long passage of time. The
number alone of the private respondents suggests strongly that the use of Lyceum has not been
attended with the exclusivity essential for the applicability of the doctrine. It may be noted that one
of the respondents – Western Pangasinan Lyceum used such term 17 years before the petitioner
registered with the SEC. Moreover, there may be other schools using the name but not registered
with the SEC because they have not adopted the corporate form of organization.
DOCTRINE:

Doctrine of secondary meaning can be extended to corporation name but must comply with the
requirement that it has been used so long and so exclusively by one and that the said name has
come to mean that it is referred to as that corporation.
CASEDIGEST: CORPORATIONLAW

Respondent Refractories Corporation of the Philippines (Refractories Corp) isa corporation duly
organized on 1976 engaged in the businessof manufacturing,producing, selling, exporting and otherwise
dealing in any and all refractory bricks, itsby-products and derivatives.Petitioner Industrial Refractories
Corporation (Industrial Refractories) on theother hand, was incorporated in 1979 originally under the
name SynclaireManufacturing Corporation. Its amended Articles of Incorporation changed itscorporate
name. It is engaged in the business of manufacture of all kinds of ceramicsand other products.Both
companies are local suppliers of monolithic gunning mix.When respondent Refractories Corp discovered
that petitioner was usingsuch corporate name, they filed before the Securities and Exchange
Commission apetition to compelpetitioner to change its corporate name on the ground that it
isconfusingly similar with that of petitioners such that the public may be confused ordeceived into
believingthat they are one and the same corporation.On appeal, petitionerIndustrial Refractories
contend that there is noconfusing similarity between their corporate names, hence, the said complaint
must bedenied.

ISSUE:

Whether or notthere is a need for petitioner Industrial Refractories to changeits corporate name on the
ground of confusing similarity with that of the respondent’s?

COURT RULING:

Petitioner must change its corporate name.Confusing and deceptive similarity of corporate names is
prohibited underSection18 of the Corporation Code. The policy behind the prohibition is to avoid
fraudupon the public that will have the occasion to deal with the entity concerned, theevasion of legal
obligations and duties, and the reduction of difficulties ofadministration and supervision over the
corporation.Pursuant to the said law, the Revised Guidelines in the Approval ofCorporate and
Partnership Names specifically requires that: (1) corporate name shallnot be identical, misleading or
confusingly similar to one already registered by anothercorporation with the Commission, and (2) if the
proposed name is similar to the name
Industrial Refractories Corporation of the Philippines vs. CA Case Digest

Industrial Refractories Corporation of the Philippines vs. Court of Appeals

[GR 122174, 3 October 2002]

Facts: Refractories Corporation of the Philippines (RCP) is a corporation duly organized on 13 October
1976 for the purpose of engaging in the business of manufacturing, producing, selling, exporting and
otherwise dealing in any and all refractory bricks, its by-products and derivatives. On 22 June 1977, it
registered its corporate and business name with the Bureau of Domestic Trade. Industrial Refractories
Corp. of the Philippines (IRCP) on the other hand, was incorporated on 23 August 1979 originally under
the name "Synclaire Manufacturing Corporation". It amended its Articles of Incorporation on 23 August
1985 to change its corporate name to "Industrial Refractories Corp. of the Philippines". It is engaged in
the business of manufacturing all kinds of ceramics and other products, except paints and zincs. Both
companies are the only local suppliers of monolithic gunning mix. Discovering that IRCP was using such
corporate name, RCP filed on 14 April 1988 with the Securities and Exchange Commission (SEC) a
petition to compel IRCP to change its corporate name on the ground that its corporate name is
confusingly similar with that of RCP's such that the public may be confused or deceived into believing
that they are one and the same corporation. The SEC decided in favor of RCP in its judgment of 23 July
1993. IRCP appealed to the SEC En Banc, arguing that it does not have any jurisdiction over the case, and
that RCP has no right to the exclusive use of its corporate name as it is composed of generic or
common words. In its Decision dated 23 July 1993, the SEC En Banc modified the appealed decision in
that IRCP was ordered to delete or drop from its corporate name only the word "Refractories". IRCP
elevated the decision of the SEC En Banc through a petition for review on certiorari to the Court of
Appeals which then rendered the decision, denying to give due course the petition filed by IRCP by
upholding the jurisdiction of the SEC over the case, and ruling that the corporate names of IRCP and RCP
are confusingly or deceptively similar, and that RCP has established its prior right to use the word
"Refractories" as its corporate name. The appellate court also found that the petition was filed beyond
the reglementary period. IRCP filed the petition for review on certiorari.

Issue:

Whether the corporate names of IRCP and RCP are confusingly similar.

Whether the generic word rule would apply to support IRCP’s cause.

Held:

1. The jurisdiction of the SEC is not merely confined to the adjudicative functions provided in
Section 5 of PD 902-A, as amended.
It is the SEC's duty 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, and it has
authority to de-register at all times and under all circumstances corporate names which in its
estimation are likely to generate confusion.
Section 18 of the Corporation Code expressly prohibits the use of a corporate name
which 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". The policy behind the foregoing prohibition is to avoid fraud upon the public that
will 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 corporation.
Pursuant thereto, the Revised Guidelines in the Approval of Corporate and Partnership
Names 25 specifically requires that: (1) a corporate name shall not be identical, misleading or
confusingly similar to one already registered by another corporation with the Commission; and
 (2) if the proposed name is similar to the name of a registered firm, the proposed name must
contain at least one distinctive word different from the name of the company already
registered. To fall within the prohibition of the law, two requisites must be proven: (1) that the
complainant corporation acquired a prior right over the use of such corporate name; and (2) the
proposed name is either: (a) identical, or (b) deceptively or confusingly similar to that of any
existing corporation or to any other name already protected by law; or (c) patently deceptive,
confusing or contrary to existing law.
As regards the first requisite, it has been held that the right to the exclusive use of a
corporate name with freedom from infringement by similarity is determined by priority of
adoption. Herein, being the prior registrant, RCP has acquired the right to use the word
"Refractories" as part of its corporate name.
Anent the second requisite, in determining the existence of confusing similarity in
corporate names, the test is whether the similarity is such as to mislead a person using ordinary
care and discrimination and the Court must look to the record as well as the names themselves.
Herein, the only word that distinguishes IRCP from RCP is the word "Industrial" which
merely identifies a corporation's general field of activities or operations.
The two corporate names are patently similar that even with reasonable care and
observation, confusion might arise. It must be noted that both cater to the same clientele, i.e.,
the steel industry. In fact, the SEC found that there were instances when different steel
companies were actually confused between the two, especially since they also have similar
product packaging.

2. Refractories are structural materials used at high temperatures to [sic] industrial furnaces. They are
supplied mainly in the form of brick of standard sizes and of special shapes. Refractories also include
refractory cements, bonding mortars, plastic firebrick, castables, ramming mixtures, and other bulk
materials such as dead-buried grain magneside, chrome or ground ganister and special clay. While the
word "refractories" is a generic term, its usage is not widespread and is limited merely to the
industry/trade in which it is used, and its continuous use by RCP for a considerable period has made the
term so closely identified with it. Moreover, IRCP's appropriation of RCP'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.
Ang mga Kaanib sa Iglesia ng Dios Kay Kristo Hesus vs Iglesia ng Dios kay Cristo
Jesus, Haligi at Suhay ng Katotohanan Case Digest
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[IDKH-HSK]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. Whether the corporate names of AK[IDKH-HSK]BP and IDCH-HSK are confusingly
similar.
2. Whether the generic word rule would apply to support AK[IDKH-HSK]BP’s 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 c
2. ……an 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[IDKH-HSK]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.
 PHILIPPINE FIRST INSURANCE COMPANY, INC.
vs.
MARIA CARMEN HARTIGAN, CGH, and O. ENGKEE
G.R. No. L-26370
(July 31, 1970)

FACTS:
On June 1, 1953, plaintiff was originally named as 'The Yek Tong Lin Fire and Marine
Insurance Co., Ltd’ an insurance corp. duly presented with the Security and Exchange
Commissioner and before a Notary Public as provided in their articles of incorporation. Later
amended its articles of incorporation and changed its name on May 26, 1961 as ‘Philippine First
Insurance Co., Inc.’ pursuant to a certificate of the Board of Directors.
 The complaint alleges that: Philippine First Insurance Co., Inc., doing business under the
name of 'The Yek Tong Lin Fire and Marine Insurance Co., Lt.' signed as co-maker together with
defendant Maria Carmen Hartigan, CGH, to which a promissory note was made in favour of
China Banking. Said defendant failed to pay in full despite renewal of such note. The complaint
ends with a prayer for judgment against the defendants, jointly and severally, for the sum of
P4,559.50 with interest at the rate of 12% per annum from November 23, 1961 plus P911.90 by
way of attorney's fees and costs.
Defendants admitted the execution of the indemnity agreement but they claim that they
signed said agreement in favor of the Yek Tong Lin Fire and Marine Insurance Co., Ltd.' and not
in favor of the plaintiff Philippine Insurance. They likewise admit that they failed to pay the
promissory note when it fell due but they allege that since their obligation with the China Banking
Corporation based on the promissory note still subsists, the surety who co-signed the
promissory note is not entitled to collect the value thereof from the defendants otherwise they
will be liable for double amount of their obligation, there being no allegation that the surety has
paid the obligation to the creditor. In their special defense, defendants claim that there is no
privity of contract between the plaintiff and the defendants and consequently, the plaintiff has no
cause of action against them, considering that the complaint does not allege that the plaintiff and
the 'Yek Tong Lin Fire and Marine Insurance Co., Ltd.' are one and the same or that the plaintiff
has acquired the rights of the latter.

ISSUE: May a Philippine corporation change its name and still retain its original personality and
individuality as such?

RULING: YES. As can be gleaned under Sections 6 and 18 of the Corporation Law, the name of
a corporation is peculiarly important as necessary to the very existence of a corporation. The
general rule as to corporations is that each corporation shall have a name by which it is to sue
and be sued and do all legal acts. The name of a corporation in this respect designates the
corporation in the same manner as the name of an individual designates the person." Since an
individual has the right to change his name under certain conditions, there is no compelling reason
why a corporation may not enjoy the same right. There is nothing sacrosanct in a name when it
comes to artificial beings. The sentimental considerations which individuals attach to their names
are not present in corporations and partnerships. Of course, as in the case of an individual, such
change may not be made exclusively. by the corporation's own act. It has to follow the procedure
prescribed by law for the purpose; and this is what is important and indispensably prescribed —
strict adherence to such procedure.
A general power to alter or amend the charter of a corporation necessarily includes the
power to alter the name of the corporation. Hence, a mere change in the name of a corporation,
either by the legislature or by the corporators or stockholders under legislative authority, does
not, generally speaking, affect the identity of the corporation, nor in any way affect the rights,
privileges, or obligations previously acquired or incurred by it. Indeed, it has been said that a
change of name by a corporation has no more effect upon the identity of the corporation than a
change of name by a natural person has upon the identity of such person. The corporation, upon
such change in its name, is in no sense a new corporation, nor the successor of the original one,
but remains and continues to be the original corporation. It is the same corporation with a
different name, and its character is in no respect changed. ... (6 Fletcher, Cyclopedia of the Law
of Private Corporations, 224-225, citing cases.)
As correctly pointed out by appellant, the approval by the stockholders of the amendment
of its articles of incorporation changing the name "The Yek Tong Lin Fire & Marine Insurance
Co., Ltd." to "Philippine First Insurance Co., Inc." on March 8, 1961, did not automatically change
the name of said corporation on that date. To be effective, Section 18 of the Corporation Law,
earlier quoted, requires that "a copy of the articles of incorporation as amended, duly certified
to be correct by the president and the secretary of the corporation and a majority of the board
of directors or trustees, shall be filed with the Securities & Exchange Commissioner", and it is only
from the time of such filing, that "the corporation shall have the same powers and it and the
members and stockholders thereof shall thereafter be subject to the same liabilities as if such
amendment had been embraced in the original articles of incorporation." It goes without saying
then that appellant rightly acted in its old name when on May 15, 1961, it entered into the
indemnity agreement, Annex A, with the defendant-appellees; for only after the filing of the
amended articles of incorporation with the Securities & Exchange Commission on May 26, 1961,
did appellant legally acquire its new name; and it was perfectly right for it to file the present case
In that new name on December 6, 1961. Such is, but the logical effect of the change of name of
the corporation upon its actions.
Therefore, actions brought by a corporation after it has changed its name should be
brought under the new name although for the enforcement of rights existing at the time the
change was made. The change in the name of the corporation does not affect its right to bring
an action on a note given to the corporation under its former name.
Young Auto Supply vs. Court of Appeals
[GR 104175, 25 June 1993]

Facts: On 28 October 1987, Young Auto Supply Co. Inc. (YASCO) represented by Nemesio Garcia,
its president, Nelson Garcia and Vicente Sy, sold all of their shares of stock in Consolidated Marketing
& Development Corporation (CMDC) to George C. Roxas. The purchase price was P8,000,000.00
payable as follows: a down payment of P4,000,000.00 and the balance of P4,000,000.00 in four
postdated checks of P1,000,000.00 each. Immediately after the execution of the agreement, Roxas
took full control of the four markets of CMDC. However, the vendors held on to the stock certificates
of CMDC as security pending full payment of the balance of the purchase price. The first check of
P4,000,000.00, representing the down payment, was honored by the drawee bank but the four other
checks representing the balance of P4,000,000.00 were dishonored. In the meantime, Roxas sold one
of the markets to a third party. Out of the proceeds of the sale, YASCO received P600,000.00, leaving
a balance of P3,400,000.00.

Subsequently, Nelson Garcia and Vicente Sy assigned all their rights and title to the proceeds of the
sale of the CMDC shares to Nemesio Garcia. On 10 June 1988, YASCO and Garcia filed a complaint
against Roxas in the Regional Trial Court, Branch 11, Cebu City, praying that Roxas be ordered to
pay them the sum of P3,400,000.00 or that full control of the three markets be turned over to YASCO
and Garcia. The complaint also prayed for the forfeiture of the partial payment of P4,600,000.00 and
the payment of attorney's fees and costs. Failing to submit his answer, and on 19 August 1988, the
trial court declared Roxas in default. The order of default was, however, lifted upon motion of Roxas.
On 22 August 1988, Roxas filed a motion to dismiss. After a hearing, wherein testimonial and
documentary evidence were presented by both parties, the trial court in an Order dated 8 February
1991 denied Roxas' motion to dismiss. After receiving said order, Roxas filed another motion for
extension of time to submit his answer. He also filed a motion for reconsideration, which the trial court
denied in its Order dated 10 April 1991 for being pro-forma. Roxas was again declared in default, on
the ground that his motion for reconsideration did not toll the running of the period to file his answer.
On 3 May 1991, Roxas filed an unverified Motion to Lift the Order of Default which was not
accompanied with the required affidavit of merit. But without waiting for the resolution of the motion,
he filed a petition for certiorari with the Court of Appeals. The Court of Appeals dismissal of the
complaint on the ground of improper venue. A subsequent motion for reconsideration by YASCO was
to no avail. YASCO and Garcia filed the petition.

Issue: Whether the venue for the case against YASCO and Garcia in Cebu City was improperly laid.

Held: 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. The Corporation Code
precisely requires each corporation to specify in its articles of incorporation the "place where the
principal office of the corporation is to be located which must be within the Philippines." The purpose
of this requirement is to fix the residence of a corporation in a definite place, instead of allowing it to
be ambulatory. Actions cannot be filed against a corporation in any place where the corporation
maintains its branch offices. The Court ruled that to allow an action to be instituted in any place where
the corporation has branch offices, would create confusion and work untold inconvenience to said
entity. By the same token, a corporation cannot be allowed to file personal actions in a place other
than its principal place of business unless such a place is also the residence of a co-plaintiff or a
defendant. With the finding that the residence of YASCO for purposes of venue is in Cebu City, where
its principal place of business is located, it becomes unnecessary to decide whether Garcia is also a
resident of Cebu City and whether Roxas was in estoppel from questioning the choice of Cebu City as
the venue. The decision of the Court of Appeals was set aside.

HYATT ELEVATORS AND ESCALATORS CORPORATION vs.

GOLDSTAR ELEVATORS, PHILS., INC.
G.R. No. 161026; October 24, 2005

Ponente: Panganiban, J.,

FACTS:

Petitioner and Respondent are both engaged in the business of

importing, installing and maintaining elevators and escalators. Hyatt
filed an unfair competition case against LG and Goldstar alleging
that it was appointed as the sole distributor of LG elevators and
escalators.

Goldstar moved to dismiss the case alleging that venue was

improperly laid as neither the Hyatt, LG or Goldstar itself resided in
Mandaluyong city where the case was originally filed. The RTC
denied the motion. The CA dismissed the case and held that Makati
was the principal place of business of both respondent and
petitioner, as stated in the latter’s Articles of Incorporation, that
place was controlling for purposes of determining the proper venue.

ISSUE:

Whether or not the “residence” of the corporation is the same one

as stated in the AOI.

HELD:

Yes. Although the Rules of Court do not provide that when the
plaintiff is a corporation, the complaint should be filed in the
location of its principal office as indicated in its articles of
incorporation, jurisprudence has, however, settled that the place
where the principal office of a corporation is located, as stated in
the articles, indeed establishes its residence. This ruling is important
in determining the venue of an action by or against a corporation,
as in the present case.

HYATT ELEVATORS v. GOLDSTAR ELEVATORS

DECISION

DECISION

PANGANIBAN, J.:

Fact:

In this case, the petitioner is Goldstar Elevator Philippines Inc. and on the other hand
the private respondent, Hyatt Elevators and Escalators Company. Both engaged in
installing, maintaining/servicing of elavators and escalators

Hyatt (herein petitioner) filed an unfair trade practices and damages against LG
industrial systems Co. Ltd, and LG International Corporation alleging that it was
appointed as the exclusive distributor of LG elevators and escalators in the Philippines
under Distributorship Agreement

LG filed a motion to dismiss alleging that lack of jurisdiction over the persons of
defendant, improper venue and failure to state a cause of action.

Hyatt filed a motion for leave of court to amend the complaint, alleging that
LG transferred all assets to a joint venue agreement with Otis elevator
Company of the USA to LG Otis Elevator Company

Goldstar filed a Motion to dismiss the amended complaint alleging that

venue was improperly laid as neither the Hyatt, LG or Goldstar itself
resided in Mandaluyong city where the case was originally filed.

The RTC denied the motion

The CA dismissed the case and held that Makati was the principal place of
business of both respondent and petitioner, as stated in the latter’s Articles
of Incorporation, that place was controlling for purposes of determining
the proper venue.

Issue:

Whether or not the “residence” of the corporation is the same one as stated in the
Articles of Incorporation.

Held:

Yes, although the Rules of Court do not provide that when the plaintiff is a corporation,
the complaint should be filed in the location of its principal office as indicated in its
articles of incorporation. Jurisprudence has, however, settled that the place where the
principal office of a corporation is located, as stated in the articles, indeed establishes its
residence. This ruling is important in determining the venue of an action by or against a
corporation, as in the present case.
Advertisements

Gamboa vs. Teves, 652 SCRA 690 (2011)

By: G-one T. Paisones

Salient Feature:
2016 Bar Examination; Question No. 2

Facts:

On 28 February 2007, petitioner filed the instant petition for prohibition, injunction,
declaratory relief, and declaration of nullity of sale of the 111,415 PTIC shares. Petitioner claims,
among others, that the sale of the 111,415 PTIC shares would result in an increase in First Pacific's
common shareholdings in PLDT from 30.7 percent to 37 percent, and this, combined with Japanese
NTT DoCoMo's 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.
Petitioner asserts:
 If and when the sale is completed, First Pacific's equity in PLDT will go up from 30.7
percent to 37.0 percent of its common - or voting- stockholdings, x x x. Hence, the
consummation of the sale will put the two largest foreign investors in PLDT - First Pacific and
Japan's NTT DoCoMo, which is the world's largest wireless telecommunications firm, owning
51.56 percent of PLDT common equity. x x x With the completion of the sale, data culled from
the official website of the New York Stock Exchange (www.nyse.com) showed that those
foreign entities, which own at least five percent of common equity, will collectively own 81.47
percent of PLDT's common equity. x x x

x x x as the annual disclosure reports, also referred to as Form 20-K reports x x x which PLDT
submitted to the New York Stock Exchange for the period 2003-2005, revealed that First Pacific
and several other foreign entities breached the constitutional limit of 40 percent ownership as
early as 2003. x x x"

Issue:

Whether the sale of common shares to foreigners in excess of 40 percent of the entire subscribed
common capital stock violates the constitutional limit on foreign ownership of a public utility

Held:

Yes.

Ratio:

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.

Mere legal title is insufficient to meet the 60 percent Filipino-owned "capital" required in
the Constitution. Full beneficial ownership of 60 percent of the outstanding capital stock, coupled
with 60 percent of the voting rights, is required. The legal and beneficial ownership of 60 percent
of the outstanding capital stock must rest in the hands of Filipino nationals in accordance with the
constitutional mandate. Otherwise, the corporation is "considered as non-Philippine national[s]."

Filipinos hold less than 60 percent of the voting stock, and earn less than 60 percent of the
dividends, of PLDT. This directly contravenes the express command in Section 11, Article XII of
the Constitution that "[n]o franchise, certificate, or any other form of authorization for the
operation of a public utility shall be granted except to x x x corporations x x x organized under the
laws of the Philippines, at least sixty per centum of whose capital is owned by such citizens