Case Digest: Indian Chamber of Commerce Phils., Inc. v. Filipino-Indian Chamber of Commerce of the Philippines, Inc., G.R. No. 184008, August 3, 2016

 Corporation Law | Corporation Name

 A corporation that is incorporated and adopts a corporate name earlier acquires a prior right over the use of the corporate name. Under the Priority of Adoption Rule, the corporation that first adopts a corporation name has the right thereto and a subsequent corporation cannot use the same name.

Under the present rules, "the name of a corporation or  partnership that has been dissolved or whose registration has been revoked shall not be used by another corporation, within  five years from the approval of dissolution or five years from the date of revocation. 

• In 1951, Filipino-Indian Chamber of Commerce of the Philippines, Inc. (defunct FICCPI) was originally registered with the SEC as Indian Chamber of Commerce of Manila, Inc. In 1959, its name changed to Indian Chamber of Commerce of the Philippines, Inc., and further to Filipino-Indian Chamber of Commerce of the Philippines, Inc. in 1977. The defunct FICCPI's term of existence expired on November 24, 2001, without extending its corporate term.
• SEC Case No. 05-008
• In January 2005, Mr. Naresh Mansukhani reserved the name "Filipino Indian Chamber of Commerce in the Philippines, Inc." with the SEC.
• Ram Sitaldas, who claimed to be the representative of the defunct FICCPI, opposed this and argued that such unauthorized reservation was illegal.
• SEC: Considering the defunct FICCPI's expired term, ruled in favor of Mansukhani's reservation, stating the defunct FICCPI lost its legal personality after its term ended.
• SEC En Banc & Court of Appeals: Upheld Mansukhani's right to the corporate name due to the defunct FICCPI's expiration and lack of legal capacity to oppose the reservation.
• On March 14, 2006, the SEC issued the Certificate of Incorporation of FICCPI.
• SEC Case No. 06-014
• In December 2005, Mr. Pracash Dayacanl, who represented the defunct FICCPI, applied for the reservation of the corporate name "Indian Chamber of Commerce Phils., Inc." (ICCPI). 
• Mansukhani filed an opposition to this.
• SEC: Denied the opposition and issued a Certificate of Incorporation to ICCPI. 
• SEC En Banc: Reversed the decision and found the existence of a similarity between the names that could lead to confusion.
• CA: Affirmed the SEC En Banc decision.

WoN the CA committed serious error when it held that there is similarity between the petitioner and the respondent corporate name that would inevitably lead to confusion. NO

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:

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.

In Philips Export B. V. v. Court of Appeals, this Court ruled that to fall within the prohibition, two requisites must be proven, to wit:
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.

These two requisites are present in this case.

FICCPI acquired a prior right over the use of the corporate name

In Industrial Refractories Corporation of the Philippines v. Court of Appeals, the Court applied the priority of adoption rule to determine prior right, taking into consideration the dates when the parties used their respective corporate names. It ruled that "Refractories Corporation of the Philippines" (RCP), as opposed to "Industrial Refractories Corporation of the Philippines" (IRCP), has acquired the right to use the word "Refractories" as part of its corporate name, being its prior registrant on October 13, 1976. The Court noted that IRCP only started using its corporate name when it amended its Articles of Incorporation on August 23, 1985.48

In this case, FICCPI was incorporated on March 14, 2006. On the other hand, ICCPI was incorporated only on April 5, 2006, or a month after FICCPI registered its corporate name. Thus, applying the principle in the Refractories case, we hold that FICCPI, which was incorporated earlier, acquired a prior right over the use of the corporate name.

ICCPI cannot argue that it first incorporated and held the "Filipino Indian Chamber of Commerce," in 1977; and that it established the name's goodwill until it failed to renew its name due to oversight. It is settled that a corporation is ipso facto dissolved as soon as its term of existence expires. SEC Memorandum Circular No. 14-2000 likewise provides for the use of corporate names of dissolved corporations:

14. The name of a dissolved firm shall not be allowed to be used by other firms within three (3) years after the approval of the dissolution of the corporation by the Commission, unless allowed by the last stockholders representing at least majority of the outstanding capital stock of the dissolved firm.

When the term of existence of the defunct FICCPI expired on November 24, 2001, its corporate name cannot be used by other corporations within three years from that date, until November 24, 2004. FICCPI reserved the name "Filipino Indian Chamber of Commerce in the Philippines, Inc." on January 20, 2005, or beyond the three-year period. Thus, the SEC was correct when it allowed FICCPI to use the reserved corporate name.

ICCPI's name is identical and deceptively or confusingly similar to that of FICCPI

The second requisite in the Philips Export case likewise obtains in two respects: the proposed name is (a) identical or (b) deceptively or confusingly similar to that of any existing corporation or to any other name already protected by law.

On the first point, ICCPI's name is identical to that of FICCPI. ICCPFs and FICCPFs corporate names both contain the same words "Indian Chamber of Commerce." ICCPI argues that the word "Filipino" in FICCPFs corporate name makes it easily distinguishable from ICCPI. It adds that confusion and deception are effectively precluded by appending the word "Filipino" to the phrase "Indian Chamber of Commerce." Further, ICCPI claims that the corporate name of FICCPI uses the words "in the Philippines" while ICCPI uses only "Phils, Inc."

ICCPFs arguments are without merit. These words do not effectively distinguish the corporate names. On the one hand, the word "Filipino" is merely a description, referring to a Filipino citizen or one living in the Philippines, to describe the corporation's members. On the other, the words "in the Philippines" and "Phils., Inc." are simply geographical locations of the corporations which, even if appended to both the corporate names, will not make one distinct from the other. Under the facts of this case, these words cannot be separated from each other such that each word can be considered to add distinction to the corporate names. Taken together, the words in the phrase "in the Philippines" and in the phrase "Phils. Inc." are synonymous—they both mean the location of the corporation.

The same principle was adopted by this Court 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:

Significantly, the only difference between the corporate names of petitioner and respondent 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., 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.

Thus, the CA is correct when it ruled, "as correctly found by the SEC en banc, the word 'Filipino' in the corporate name of the respondent [FICCPI] is merely descriptive and can hardly serve as an effective differentiating medium necessary to avoid confusion. The other two words alluded to by petitioner [ICCPI] that allegedly distinguishes its corporate name from that of the respondent are the words  'in'  and 'the'  in the respondent's corporate name. To our mind, the presence of the words 'in' and 'the' in respondent's corporate name does not, in any way, make an effective distinction to that of petitioner."

Petitioner cannot argue that the combination of words in respondent's corporate name is merely descriptive and generic, and consequently cannot be appropriated as a corporate name to the exclusion of the others. Save for the words "Filipino," "in the," and "Inc.," the corporate names of petitioner and respondent are identical in all other respects. 

This issue was also discussed in the Iglesia case where this Court held,

Furthermore, the wholesale appropriation by petitioner of respondent's corporate name cannot find justification under the generic word rule. We agree with the Court of Appeals' conclusion that a contrary ruling would encourage other corporations to adopt verbatim and register an existing and protected corporate name, to the detriment of the public.

On the second point, ICCPI's corporate name is deceptively or confusingly similar to that of FICCPI. It is settled that to determine 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. In so doing, the court must examine the record as well as the names themselves. Proof of actual confusion need not be shown. It suffices that confusion is probably or likely to occur.

In this case, the overriding consideration in determining wheiher a person, using ordinary care and discrimination, might be misled is the circumstance that both ICCPI and FICCPI have a common primary purpose, that is, the promotion of Filipino-Indian business in the Philippines.

The primary purposes of ICCPI as provided in its Articles of Incorporation are:
a. Develop a stronger sense of brotherhood;
b. Enhance the prestige of the Filipino-Indian business community in the Philippines;
c. Promote cordial business relations with Filipinos and other business  communities  in the  Philippines,  and other overseas Indian business organizations;
d. Respond fully to the needs of a progressive economy and the Filipino-Indian Business community;
e. Promote and foster relations between the people and Governments of the Republics of the Philippines and India in areas of Industry, Trade, and Culture.

Likewise, the primary purpose of FICCPI is "to actively promote and enhance the Filipino-Indian business relationship especially in view of current local and global business trends."

Considering these corporate purposes, the  SEC En Banc made a finding that "it is apparent that both from the standpoint of their corporate names and the purposes for which they were established, there exist a similarity that could inevitably lead to confusion." This finding of the SEC En Banc was fully concurred with and adopted by the CA.

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, and more so if the same has been upheld by the appellate court, as in this case.

Petitioner cannot argue that the CA erred when it upheld the SEC En Banc's decision to cancel ICCPFs corporate name. By express mandate of law, 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 corporation involved, but more so for the protection of the public. It has the authority to de-register at all times, and under all circumstances corporate names which in its estimation are likely to generate confusion.

Pursuant to its mandate, the SEC En Banc correctly applied Section 18 of the Corporation Code, and Section 15 of SEC Memorandum Circular No. 14-2000:

In implementing Section 18 of the Corporation Code of the Philippines (BP 68), the following revised guidelines in the approval of corporate and partnership names are hereby adopted for the information and guidelines of all concerned:

x x x

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 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.

Finding merit in respondent's claims, the SEC En Banc merely compelled petitioner to comply with its undertaking.

WHEREFORE, the petition is DENIED. The Decision of the CA dated May 15, 2008 in CA-G.R. SP No. 97320 is hereby AFFIRMED.