Case Digest: GSIS Family Bank-Thrift Bank [Formerly Comsavings Bank, Inc.] v. BPI Family Bank, 771 SCRA 284, September 23, 2015
Corporation Law | Corporation Name
By express mandate, the SEC has absolute jurisdiction, supervision and control over all corporations. 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. It has authority to de-register at all times, and under all circumstances corporate names which in its estimation are not distinguishable from existing corporate name.
Even under the Corporation Code, the SEC already had the power to compel a corporation to change its corporate name in the event that the name already belonged to another corporation. The corporation is compelled to change the name especially because of its undertaking to change its corporate name which was attached to the Articles of Incorporation.
- Petitioner, initially organized as Royal Savings Bank, faced liquidity problems in the 1980s. In 1984, it was temporarily closed by the Central Bank of the Philippines After two months, it reopened as Comsavings Bank, Inc. under the management of the Commercial Bank of Manila.
- In 1987, the Government Service Insurance System (GSIS) acquired petitioner's management. Petitioner sought approval from SEC, DTI, and BSP to change its name to "GSIS Family Bank, a Thrift Bank," which was granted.
- Respondent BPI Family Bank, a product of a merger between Family Bank and Trust Company (FBTC) and Bank of the Philippine Islands (BPI), asserted exclusive ownership of the name "Family Bank."
- In 1969, the Gotianum family registered the name "Family First Savings Bank, " amending it to "Family Savings Bank" and later to "Family Bank and Trust Company." Since its incorporation, the bank has been commonly known as "Family Bank."
- In 1985, Family Bank merged with BPI, acquiring all the rights including the right to use names.
- Respondent petitioned SEC Company Registration and Monitoring Department (SEC CRMD) to disallow such registration or use of any name with "Family Bank."
- SEC CRMD: Ruled in favor of BPI Family Bank, citing priority in registration and confusing similarity between the names.
- SEC En Banc: Upheld the SEC CRMD decision.
- Court of Appeals: Ruled in favor of BPI Family Bank, stating that approvals from BSP and DTI did not constitute valid use of the name.
- CA cited prior adoption of the name by BPI Family Bank since 1969 and noted confusing similarity in the names.
WoN the CA erred in affirming the SEC Resolution finding the word "Family" not generic despite its unregistered status with the IPO of the Bureau of Patents and the use by GSIS-Family Bank in its corporate name of the words "Family Bank" as deceptive and confusingly similar to the name BPI Family Bank. NO
We uphold the decision of the Court of Appeals.
Section 18 of the Corporation Code provides,
Section 18. Corporate name. – No corporate name may be allowed by the Securities and Exchange Commission if the proposed name is identical or deceptively or confusingly similar to that of any existing corporation or to any other name already protected by law or is patently deceptive, confusing or contrary to existing laws. When a change in the corporate name is approved, the Commission shall issue an amended certificate of incorporation under the amended name.
(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) deceptive 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.
These two requisites are present in this case.
On the first requisite of a prior right, Industrial Refractories Corporation of the Philippines v. Court of Appeals (IRCP case) is instructive. In that case, Refractories Corporation of the Philippines (RCP) filed before the SEC a petition to compel Industrial Refractories Corporation of the Philippines (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 into believing that they are one and the same corporation. The SEC and the Court of Appeals found for petitioner, and ordered IRCP to delete or drop from its corporate name the word "Refractories." Upon appeal of IRCP, this Court upheld the decision of the CA.
Applying the priority of adoption rule to determine prior right, this Court said that RCP has acquired the right to use the word "Refractories" as part of its corporate name, being its prior registrant. In arriving at this conclusion, the Court considered that RCP was incorporated on October 13, 1976 and since then continuously used the corporate name "Refractories Corp. of the Philippines." Meanwhile, IRCP only started using its corporate name "Industrial Refractories Corp. of the Philippines" when it amended its Articles of Incorporation on August 23, 1985.
In this case, respondent was incorporated in 1969 as Family Savings Bank and in 1985 as BPI Family Bank. Petitioner, on the other hand, was incorporated as GSIS Family – Thrift Bank only in 2002, or at least seventeen (17) years after respondent started using its name. Following the precedent in the IRCP case, we rule that respondent has the prior right over the use of the corporate name.
The second requisite in the Philips Export case likewise obtains on two points: the proposed name is (a) identical or (b) deceptive or confusingly similar to that of any existing corporation or to any other name already protected by law.
On the first point (a), the words "Family Bank" present in both petitioner and respondent's corporate name satisfy the requirement that there be identical names in the existing corporate name and the proposed one.
Respondent cannot justify its claim under Section 3 of the Revised Guidelines in the Approval of Corporate and Partnership Names, to wit:
3. The name shall not be identical, misleading or confusingly similar to one already registered by another corporation or partnership with the Commission or a sole proprietorship registered with the Department of Trade and Industry.
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.
Section 3 states that if there be identical, misleading or confusingly similar name to one already registered by another corporation or partnership with the SEC, the proposed name must contain at least one distinctive word different from the name of the company already registered. To show contrast with respondent's corporate name, petitioner used the words "GSIS" and "thrift." But these are not sufficiently distinct words that differentiate petitioner's corporate name from respondent's. While "GSIS" is merely an acronym of the proper name by which petitioner is identified, the word "thrift" is simply a classification of the type of bank that petitioner is. Even if the classification of the bank as "thrift" is appended to petitioner's proposed corporate name, it will not make the said corporate name distinct from respondent's because the latter is likewise engaged in the banking business.
This Court used the same analysis in Ang mga Kaanib sa Iglesia ng Dios Kay Kristo Hesus, H.S.K. sa Bansang Pilipinas, Inc. v. Iglesia ng Dios Kay Cristo Jesus, Haligi at Suhay ng Katotohanan. In that case, Iglesia ng Dios Kay Cristo Jesus filed a case before the SEC to compel Ang mga Kaanib sa Iglesia ng Dios Kay Kristo Hesus to change its corporate name, and to prevent it from using the same or similar name on the ground that the same causes confusion among their members as well as the public. Ang mga Kaanib sa Iglesia ng Dios Kay Kristo Hesus claimed that it complied with SEC Memorandum Circular No. 14-2000 by adding not only two, but eight words to their registered name, to wit: "Ang Mga Kaanib" and "Sa Bansang Pilipinas, Inc.," which effectively distinguished it from Iglesia ng Dios Kay Cristo Jesus. This Court rejected the argument, thus:
The additional words "Ang Mga Kaanib" and "Sa Bansang Pilipinas, Inc." in petitioner's name are, as correctly observed by the SEC, merely descriptive of and also referring to the members, or kaanib, of respondent 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 petitioner from respondent. This is especially so, since both petitioner and respondent corporations 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. Xxx
On the second point (b), there is a deceptive and confusing similarity between petitioner's proposed name and respondent's corporate name, as found by the SEC. 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 even without such proof of actual confusion between the two corporate names, it suffices that confusion is probable or likely to occur.
Petitioner's corporate name is "GSIS Family Bank—A Thrift Bank" and respondent's corporate name is "BPI Family Bank." The only words that distinguish the two are "BPI," "GSIS," and "Thrift." The first two words are merely the acronyms of the proper names by which the two corporations identify themselves; and the third word simply describes the classification of the bank. The overriding consideration in determining whether a person, using ordinary care and discrimination, might be misled is the circumstance that both petitioner and respondent are engaged in the same business of banking. "The likelihood of confusion is accentuated in cases where the goods or business of one corporation are the same or substantially the same to that of another corporation."
Respondent alleged that upon seeing a Comsavings Bank branch with the signage "GSIS Family Bank" displayed at its premises, some of the respondent’s officers and their clients began asking questions. These include whether GSIS has acquired Family Bank; whether there is a joint arrangement between GSIS and Family Bank; whether there is a joint arrangement between BPI and GSIS regarding Family Bank; whether Comsavings Bank has acquired Family Bank; and whether there is there an arrangement among Comsavings Bank, GSIS, BPI, and Family Bank regarding BPI Family Bank and GSIS Family Bank. The SEC made a finding that "it is not a remote possibility that the public may entertain the idea that a relationship or arrangement indeed exists between BPI and GSIS due to the use of the term ‘Family Bank’ in their corporate names.
Findings of fact of quasi-judicial agencies, like the SEC, are generally accorded respect and even finality by this Court, if supported by substantial evidence, in recognition of their expertise on the specific matters under their consideration, more so if the same has been upheld by the appellate court, as in this case.
Petitioner cannot argue that the word "family" is a generic or descriptive name, which cannot be appropriated exclusively by respondent. "Family," as used in respondent's corporate name, is not generic. Generic marks are commonly used as the name or description of a kind of goods, such as "Lite" for beer or "Chocolate Fudge" for chocolate soda drink. Descriptive marks, on the other hand, convey the characteristics, function, qualities or ingredients of a product to one who has never seen it or does not know it exists, such as "Arthriticare" for arthritis medication.
Under the facts of this case, the word "family" cannot be separated from the word "bank." In asserting their claims before the SEC up to the Court of Appeals, both petitioner and respondent refer to the phrase "Family Bank" in their submissions. This coined phrase, neither being generic nor descriptive, is merely suggestive and may properly be regarded as arbitrary. Arbitrary marks are "words or phrases used as a mark that appear to be random in the context of its use. They are generally considered to be easily remembered because of their arbitrariness. They are original and unexpected in relation to the products they endorse, thus, becoming themselves distinctive." Suggestive marks, on the other hand, "are marks which merely suggest some quality or ingredient of goods. xxx The strength of the suggestive marks lies on how the public perceives the word in relation to the product or service."
In Ang v. Teodoro, this Court ruled that the words "Ang Tibay" is not a descriptive term within the meaning of the Trademark Law but rather a fanciful or coined phrase. In so ruling, this Court considered the etymology and meaning of the Tagalog words, "Ang Tibay" to determine whether they relate to the quality or description of the merchandise to which respondent therein applied them as trademark, thus:
We find it necessary to go into the etymology and meaning of the Tagalog words "Ang Tibay" to determine whether they are a descriptive term, i.e., whether they relate to the quality or description of the merchandise to which respondent has applied them as a trade-mark. The word "ang" is a definite article meaning "the" in English. It is also used as an adverb, a contraction of the word "anong" (what or how). For instance, instead of saying, "Anong ganda!" ("How beautiful!"), we ordinarily say, "Ang ganda!" Tibay is a root word from which are derived the verb magpatibay (to strengthen); the nouns pagkamatibay (strength, durability), katibayan (proof, support, strength), katibaytibayan (superior strength); and the adjectives matibay (strong, durable, lasting), napakatibay (very strong), kasintibay or magkasintibay (as strong as, or of equal strength). The phrase "Ang Tibay" is an exclamation denoting admiration of strength or durability. For instance, one who tries hard but fails to break an object exclaims, "Ang tibay!" ("How strong!") It may also be used in a sentence thus, "Ang tibay ng sapatos mo!" ("How durable your shoes are!") The phrase "ang tibay" is never used adjectively to define or describe an object. One does not say, "ang tibay sapatos" or "sapatos ang tibay" to mean "durable shoes," but "matibay na sapatos" or "sapatos na matibay."
From all of this we deduce that "Ang Tibay" is not a descriptive term within the meaning of the Trade-Mark Law but rather a fanciful or coined phrase which may properly and legally be appropriated as a trade-mark or trade-name. xxx
The word "family" is defined as "a group consisting of parents and children living together in a household" or "a group of people related to one another by blood or marriage." Bank, on the other hand, is defined as "a financial establishment that invests money deposited by customers, pays it out when requested, makes loans at interest, and exchanges currency." By definition, there can be no expected relation between the word "family" and the banking business of respondent. Rather, the words suggest that respondent’s bank is where family savings should be deposited. More, as in the Ang case, the phrase "family bank" cannot be used to define an object.
Petitioner’s argument that the opinion of the BSP and the certificate of registration granted to it by the DTI constitute authority for it to use "GSIS Family Bank" as corporate name is also untenable.
The enforcement of the protection accorded by Section 18 of the Corporation Code to corporate names is lodged exclusively in the SEC. The jurisdiction of the SEC is not merely confined to the adjudicative functions provided in Section 5 of the SEC Reorganization Act, as amended. By express mandate, the SEC has absolute jurisdiction, supervision and control over all corporations. 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. It has authority to de-register at all times, and under all circumstances corporate names which in its estimation are likely to generate confusion.
The SEC correctly applied Section 18 of the Corporation Code, and Section 15 of SEC Memorandum Circular No. 14-2000, pertinent portions of which provide:
In implementing Section 18 of the Corporation Code of the Philippines (BP 69), the following revised guidelines in the approval of corporate and partnership names are hereby adopted for the information and guidance of all concerned:
xxx
15. Registrant corporations or partnership shall submit a letter undertaking to change their corporate or partnership name in case another person or firm has acquired a prior right to the use of the said firm name or the same is deceptively or confusingly similar to one already registered unless this undertaking is already included as one of the provisions of the articles of incorporation or partnership of the registrant.
The SEC, after finding merit in respondent's claims, can compel petitioner to abide by its commitment "to change its corporate name in the event that another person, firm or entity has acquired a prior right to use of said name or one similar to it."
Clearly, the only determination relevant to this case is that one made by the SEC in the exercise of its express mandate under the law. The BSP opinion invoked by petitioner even acknowledges that "the issue on whether a proposed name is identical or deceptively similar to that of any of existing corporation is matter within the official jurisdiction and competence of the SEC."
Judicial notice may also be taken of the action of the IPO in approving respondent’s registration of the trademark "BPI Family Bank" and its logo on October 17, 2008. The certificate of registration of a mark shall be prima facie evidence of the validity of the registration, the registrant’s ownership of the mark, and of the registrant’s exclusive right to use the same in connection with the goods or services and those that are related thereto specified in the certificate.
Finally, we uphold the Court of Appeals' finding that the issue of forum shopping was belatedly raised by petitioner and, thus, cannot anymore be considered at the appellate stage of the proceedings. Petitioner raised the issue of forum shopping for the first time only on appeal. Petitioner argued that the complaints filed by respondent did not contain certifications against non-forum shopping, in violation of Section 5, Rule 7 of the Rules of Court.
In S.C. Megaworld Construction and Development Corporation vs. Parada, this Court said that objections relating to non-compliance with the verification and certification of non-forum shopping should be raised in the proceedings below, and not for the first time on appeal. In that case, S.C. Megaworld argued that the complaint for collection of sum of money should have been dismissed outright by the trial court on account of an invalid nonforum shopping certification. It alleged that the Special Power of Attorney granted to Parada did not specifically include an authority for the latter to sign the verification and certification of non-forum shopping, thus rendering the complaint defective for violation of Sections 4 and 5 of Rule 7 of the Rules of Court. On motion for reconsideration of the decision of the Court of Appeals, petitioner raised for the first time, the issue of forum shopping. The Court ruled against S.C. Megaworld, thus:
It is well-settled that no question will be entertained on appeal unless it has been raised in the proceedings below. Points of law, theories, issues and arguments not brought to the attention of the lower court, administrative agency or quasi-judicial body, need not be considered by a reviewing court, as they cannot be raised for the first time at that late stage. Basic considerations of fairness and due process impel this rule. Any issue raised for the first time on appeal is barred by estoppel.
In this case, the fact that respondent filed a case before the DTI was made known to petitioner long before the SEC rendered its decision. Yet, despite its knowledge, petitioner failed to question the alleged forum shopping before the SEC. The exceptions to the general rule that forum shopping should be raised in the earliest opportunity, as explained in the cited case of Young v. Keng Seng, do not obtain in this case.
WHEREFORE, the petition is DENIED. The decision of the Court of Appeals dated March 29, 2006 is hereby AFFIRMED.
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