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Republic of the PhilippinesSUPREME COURT

Manila

EN BANC

G.R. Nos. L-24177-85 June 29, 1968

PHLPPNE N!TON!L "!N#,plaintiff-appellee,vs."TULO# S!$MLL, NC., %NG!L!N LUM"ER CO., NC., SERR! M!%RE LUM"ER CO., NC., N!SPT LUM"ERCO., NC., $OO%$OR#S, NC., GON&!LO PU'!T, TOM!S ". MOR!TO, (N%L!' MLL!R LUM"ER CO., NC., ET!L., NSUL!R LUM"ER CO., !N!#!N LUM"ER CO., !N% C!NTL!N LUM"ER CO., NC.,defendants-appellees.

(ERN!N%O, J.:

In the face of a statutory nor, !hich, as interpreted in a unifor line of decisions by this Court, spea"s une#uivocally andis free fro doubt, the lo!er court !ith full reco$nition that the case for the plaintiff creditor,Philippine National Ban", %is

eritorious strictly fro the le$al standpoint%&

but apparently unable to %close its eyes to the e#uity ofthe case% ' disissed nine ()* cases filed by it, see"in$ %to recover fro the defendant luber producers +Bitulo" a!ill,Inc. in$alan /uber Co., Inc., ierra Madre /uber Co., Inc. Nasipit /uber Co., Inc. 0ood!or"s, Inc. 1on2aloPuyat 3oas B. Morato 4indlay Millar /uber Co., Inc. Insular /uber Co., Inc. Ana"an /uber Co., Inc. and Cantilan/uber Co., Inc.5 the balance of their stoc" subscriptions to the Philippine /uber istributin$ A$ency, Inc.% 6 In essencethen, the crucial #uestion posed by this appeal fro such a decision of the lo!er court is adherence to the rule of la!.7ther!ise stated, !ould non-copliance !ith a plain statutory coand, considerin$ the persuasiveness of the plea thatdefendants-appellees !ould %not have subscribed to +the5 capital stoc"% of the Philippine /uber istributin$ A$ency%!ere it not for the assurance of the +then5 President of the Republic of the Philippines that the 1overnent !ould bac" +it5up by investin$ P).88 for every peso% 9 subscribed, a condition !hich !as not fulfilled, such coitent not havin$ beencoplied !ith, be :ustified; 3he ans!er ust be in the ne$ative.It cannot be other!ise even if an eleent of unfairness and in:ustice could be predicated, as the lo!er court, in arather sypathetic ood, did find in the plaintiff ban", as creditor, copellin$ defendant luber producers under the

above circustances to pay the balance of their subscriptions. 4or a plain and statutory coand, if applicable, ust berespected. 3he rule of la! cannot be satisfied !ith anythin$ less. 3he appeal ust be sustained.In these various suits decided :ointly, the Philippine National Ban", as creditor, and therefore the real party in interest, !asallo!ed by the lo!er court to substitute the receiver of the Philippine /uber istributin$ A$ency in these respectiveactions for the recovery fro defendant luber producers the balance of their stoc" subscriptions. 3he aount sou$ht tobe collected fro defendants-appellees Bitulo" a!ill, Inc., in$alan /uber Co., Inc., and ierra Madre /uber Co.,Inc., is P


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puttin$ an end to alien doination in the retail trade of luber products. Nor !as there any appropriation by the le$islatureof the counterpart fund to be put up by the 1overnent, naely, P).88 for every peso invested by defendant luberproducers. Accordin$ly, %the late President Ro@as instructed the on. Eilio Abello, then E@ecutive ecretary andChairan of the Board of irectors of the Philippine National Ban", for the latter to $rant said a$ency an overdraft in theori$inal su of P'


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Re)u*+ o /0e P0+))nesSUPREME COURT

Mn+EN "!NC

G.R. No. L-3646 Jnu 3, 1929

THE GOERNMENT O( THE PHLPPNE SL!N%S, )e//one,s.THE M!NL! R!LRO!% COMP!N' n JOSE P!E& s Mne o s Co:)n, es)onen/s.

'ttorney(General aranilla for petitioner.ose ')reu for respon%ents.

JOHNSON, J.:

3his is a petition in the upree Court of the e@traordinary le$al !rit of *an%a*uspresented by the 1overnent ofthe Philippine Islands, prayin$ that the !rit be issued to copel the Manila Railroad Copany and ose Pae2, as itsana$er, to provide and e#uip the tele$raph poles of said copany bet!een the unicipality of Pani#ui, Province of3arlac, and the Municipality of an 4ernando, Province of /a nion, !ith crosspieces for si@ tele$raph !ires belon$in$ tothe 1overnent, !hich, it is alle$ed, are necessary for public service bet!een said unicipalities.3he only #uestion raised by the petition is !hether the dependant copany is re#uired to provide and e#uip its tele$raphpoles !ith crosspieces to carry si@ tele$raph !ires of the 1overnent, or !hether it is only re#uired to furnish poles !ithcrosspieces sufficient to carry four !ires only.

It is aditted that the present poles and crosspieces bet!een said unicipalities are sufficient to carry four tele$raph!ires and that they do no! carry four tele$raph !ires, by virtue of an a$reeent bet!een the respondents and the Bureauof the Posts of the Philippine 1overnent. It is aditted that the poles and not sufficient to carry si@ tele$raph !ires.

3he petitioner relies upon the provisions of section =9 of act No. &9


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Inasuch as Act No. &


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('* 3here e@ist valid reasons for refusin$ to re$ister the transfer of the sub:ect of stoc", naely

(a* a pendin$ controversy over the o!nership of the certificates of stoc" !ith the Re$ional 3rial Court(b* clais that the eeds of Assi$nent coverin$ the sub:ect certificates of stoc" !ere fictitious andantedated and(c* clais on a resultant possible deprivation of inheritance share in relation !ith a conflictin$ clai over

the sub:ect certificates of stoc".

3he facts are not disputed

.7n une &8, &)?), Cleente 1. 1uerrero, President of the Rural Ban" of alinas, Inc., e@ecuted a &pecial Power of

'ttorney

in favor of his !ife, private respondent Melania 1uerrero, $ivin$ and $rantin$ the latter full po!er and authority tosell or other!ise dispose of andGor ort$a$e 9?6 shares of stoc" of the Ban" re$istered in his nae (represented by theBan"Hs stoc" certificates nos. '>, 9) and >


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'. 0ilhelina Rosales &8 shares

6. 4rancisco 1uerrero, r. < shares

9. 4rancisco 1uerrero, r. & share

and to pay to the above-naed petitioners, the dividends for said shares correspondin$ to the years&)=&, &)=', &)=6 and &)=9 !ithout interest.

No pronounceent as to costs.

7 7RERE. (p. ==, Rollo*

7n appeal, the EC En Banc affired the decision of the earin$ 7fficer. Petitioner filed a petition for revie! !iththe Court of Appeals

but said Court li"e!ise affired the decision of the EC.

0e rule in favor of the respondents.

ection < (b* of P.. No. )8'-A $rants to the EC the ori$inal and e@clusive :urisdiction to hear and decide casesinvolvin$ intracorporate controversies. An intracorporate controversy has been defined as one !hich arises bet!een astoc"holder and the corporation. 3here is no distinction, #ualification, nor any e@ception !hatsoever (Rivera vs. 4lorendo,&99 CRA >96 +&)=>5*. 3he case at bar involves shares of stoc", their re$istration, cancellation and issuances thereof bypetitioner Rural Ban" of alinas. It is therefore !ithin the po!er of respondent EC to ad:udicate.

Respondent EC correctly ruled in favor of the re$isterin$ of the shares of stoc" in #uestion in private respondentHsnaes. uch rulin$ finds support under ection >6 of the Corporation Code, to !it

ec. >6. . . . hares of stoc" so issued are personal property and ay be transferred by delivery of thecertificate or certificates indorsed by the o!ner or his attorney-in-fact or other person le$ally authori2ed toa"e the transfer. No transfer, ho!ever, shall be valid, e@cept as bet!een the parties, until the transfer is

recorded in the boo"s of the corporation . . .

In the case of leisher vs. Botica -olasco, 9? Phil. 6 in his !ise

aid ection (ec. 6< of Act &96 of the Corporation Code5* conteplates no restriction asto !ho the stoc"s ay be transferred. It does not su$$est that any discriination ay be created by thecorporation in favor of, or a$ainst a certain purchaser. 3he o!ner of shares, as o!ner of personalproperty, is at liberty, under said section to dispose the in favor of !hoever he pleases, !ithoutliitation in this respect, than the $eneral provisions of la!. . . .

3he only liitation iposed by ection >6 of the Corporation Code is !hen the corporation holds any unpaidclai a$ainst the shares intended to be transferred, !hich is absent here.

A corporation, either by its board, its by-la!s, or the act of its officers, cannot create restrictions in stoc" transfers,because

. . . Restrictions in the traffic of stoc" ust have their source in le$islative enactent, as the corporationitself cannot create such ipedient. By-la!s are intended erely for the protection of the corporation,and prescribe re$ulation, not restriction they are al!ays sub:ect to the charter of the corporation. 3hecorporation, in the absence of such po!er, cannot ordinarily in#uire into or pass upon the le$ality of thetransactions by !hich its stoc" passes fro one person to another, nor can it #uestion the considerationupon !hich a sale is based. . . . (3oson on Corporation ec. 9&6?, cite%in 4leisher vs. Nolasco,&upra*.

3he ri$ht of a transfereeGassi$nee to have stoc"s transferred to his nae is an inherent ri$ht flo!in$ fro his o!nership ofthe stoc"s. 3hus

0henever a corporation refuses to transfer and re$ister stoc" in cases li"e the present, *an%a*us!ill lieto copel the officers of the corporation to transfer said stoc" in the boo"s of the corporation% ('>, Cyc.69?, yer vs. Bryan, &) Phil. &6= 4leisher vs. Botica Nolasco, 9? Phil.


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3he duty of the corporation to transfer is a inisterial one and if it refuses to a"e such transaction!ithout $ood cause, it ay be copelled to do so by *an%a*us. (&ee.


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J. 0ill you please ans!er the #uestion !hether it is the Bachrach Motor Copany operatin$ under thetrade nae of the Rural 3ransit Copany, /iited, or !hether it is the Rural 3ransit Copany, /iited in its o!nnae this application !as filed;

A. 3he Bachrach Motor Copany is the principal stoc"holder.

J. Please ans!er the #uestion.

EPE/E3A. 7b:ecion por#ue la pre$unta ya ha sido contestada.

EK. Puede contestar.

A. I do not "no! !hat the le$al construction or relationship e@istin$ bet!een the t!o.

1E. I do not "no! !hat is in your ind by not tellin$ the real applicant in this case;

A. It is the Rural 3ransit Copany, /td.

1E. As an entity by itself and not by the Bachrach Motor Copany;

A. I do not "no!. I have not $iven that phase of the atter uch thou$ht, as in previous occassion had notnecessitated.

1E. In filin$ this application, you filed it for the operator on that line; Is it notL

A. es, sir.

1E. 0ho is that operator;

A. 3he Rural 3ransit Copany, /td.

1E. By itself, or as a coercial nae of the Bachrach Motor Copany;

A. I cannot say.

EPE/E3A. 3he Rural 3ransit Copany, /td., is a corporation duly established in accordance !ith the la!s ofthe Philippine Islands.

1E. Accordin$ to the records of this coission the Bachrach Motor Copany is the o!ner of thecertificates and the Rural 3ransit Copany, /td., is operatin$ !ithout any certificate.

1E. If you filed this application for the Rural 3ransit Copany, /td., and after!ards it is found out that the

Rural 3ransit Copany, /td., is not an operator, everythin$ !ill be turned do!n.

1E. My #uestion !as, !hen you filed this application you evidently ade it for the operator;

A. es, sir.

1E. 0ho !as that operator you had in ind;

A. Accordin$ to the status of the o!nership of the certificates of the forer Rural 3ransit Copany, theoperator !as the operator authori2ed in case No. '6'&? to !ho all of the assets of the forer Rural 3ransitCopany !ere sold.

1E. Bachrach Motor Copany;

A. All actions have been prosecuted in the nae of the Rural 3ransit Copany, /td.

1E. ou ean the Bachrach Motor Copany, Inc., doin$ business under the nae of the Rural 3ransitCopany, /td.;

A. es, sir.


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/7C077. I ove that this case be disissed, your onor, on the $round that this application !as ade inthe nae of one party but the real o!ner is another party.

EPE/E3A. 0e ob:ect to that petition.

1E. I !ill have that in ind !hen I decide the case. If I a$ree !ith you everythin$ !ould be finished.

3he Bachrach Motor Copany, Inc., entered no appearance and ostensibly too" no part in the hearin$ of the applicationof the Rural 3ransit Copany, /td. It ay be a atter of soe surprise that the coission did not on itso!n otion order the aendent of the application by substitutin$ the Bachrach Motor Copany, Inc., as the applicant.o!ever, the hearin$ proceeded on the application as filed and the decision of eceber ', &)6', !as rendered in favorof the Rural 3ransit Copany, /td., and the certificate ordered to be issued in its nae, in the face of the evidence thatthe said corporation !as not the real party in interest. In its said decision, the coission undertoo" to eet the ob:ectionby referrin$ to its resolution of Noveber '>, &)6', entered in another case. 3his resolution in case No. '6'&? concludesas follo!s

Preises considered !e hereby authori2e the Bachrach Motor Co., Inc., to continue usin$ the nae of %Rural3ransit Co., /td.,% as its trade nae in all the applications, otions or other petitions to be filed in this coission

in connection !ith said business and that this authority is $iven retroactive effect as of the date, of filin$ of theapplication in this case, to !it, April '), &)68.

0e "no! of no la! that epo!ers the Public ervice Coission or any court in this :urisdiction to authori2e onecorporation to assue the nae of another corporation as a trade nae. Both the Rural 3ransit Copany, /td., and theBachrach Motor Co., Inc., are Philippine corporations and the very la! of their creation and continued e@istence re#uireseach to adopt and certify a distinctive nae. 3he incorporators %constitute a body politic and corporate un%er the na*estate% in the certificate.% (ection &&, Act No. &9 Ne! or" uppleent, ?6& vens"a Nat. 4. i. C. vs.!edish Nat. Assn., '8< Illinois +AppellateCourts5, 9'=, 969.*3he order of the coission of Noveber '>, &)6', authori2in$ the Bachrach Motor Co., Incorporated, to assue thenae of the Rural 3ransit Co., /td. li"e!ise in corporated, as its trade nae bein$ void, and acceptin$ the order ofeceber '&, &)6', at its face as $rantin$ a certificate of public convenience to the applicant Rural 3ransit Co., /td., thesaid order last entioned is set aside and vacated on the $round that the Rural 3ransit Copany, /td., is not the realparty in interest and its application !as fictitious.In vie! of the dissolution of the Rural 3ransit Copany, /td. by :udicial decree of 4ebruary '=, &)66, !e do not see ho!

!e can assess costs a$ainst said respondent, Rural 3ransit Copany, /td.

"alcol*, Villa(Real, *perial an% Go%%ar%, .,concur.

Red /ine 3ransport vs. Rural 3ransit

Re Lne Tns)o//on Co. s. Ru+ Tns/ Co.GR No. 41573 = Se)/. 6, 194

(/s>O 3his is a

petition for revie! of an order of the Public ervice Coission $rantin$ to the Rural 3ransit Copany, /td., acertificate of public convenience to operate a transportation service bet!een Ila$an in the Province of Isabela and3u$ue$arao in the Province of Ca$ayan, and additional trips in its e@istin$ e@press service bet!een Manila 3u$ue$arao.

O 7n une 9, &)6', Rural 3ransit filed an application for certification of a ne! service bet!een 3u$ue$arao and Ila$an!ith the Public Copany ervice

Coission (PC*, since the present service is not sufficient

O Rural 3ransit further stated that it is a holder of a certificate of public convenience to operate a passen$er busservice bet!een Manila and 3u$ue$arao

O Red /ine opposed said application, ar$uin$ that they already hold a certificate of public convenience for 3u$ue$araoand Ila$an, and is renderin$ ade#uate service. 3hey also ar$ued that $rantin$ Rural 3ransits application !ould constitutea ruinous copetition over said route

O 7n ec. '&, &)6', Public ervice Coission approved Rural 3ransits application, !ith the condition that %all the otherters and conditions of the various certificates of public convenience of the hereinapplicant

and herein incorporated areade a part hereof.%

O A otion for rehearin$ and reconsideration !as filed by Red /ine since Rural 3ransit has a pendin$ application beforethe Court of 4irst Instance for voluntary dissolution of the corporation


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O A otion for postponeent !as filed by Rural 3ransit as verified by M. 7lsen !ho s!ears %that he !as the secretary ofthe Rural 3ransit Copany, /td

O urin$ the hearin$ before the Public ervice Coission, the petition for dissolution and the C4Isdecision decreein$the dissolution of Rural 3ransit !ere aditted !ithout ob:ection

O At the trial of this case before the Public ervice Coission an issue !as raised as to !ho !as the real party ininterest a"in$ the application, !hether the Rural 3ransit Copany, /td., as appeared on the face of the application, or

the Bachrach Motor Copany

, Inc., usin$ nae of the Rural 3ransit Copany, /td., as a trade naeO o!ever, PC $ranted Rural 3ransits application for certificate of public convenience and ordered that a certificate be

issued on its naeO PC relied on a Resolution in case No. '6'&?, authori2in$ Bachrach Motor to continue usin$ Rural 3ransits nae as

its tradenae in all its applications and petitions to be filed before the PC. aid resolution !as $iven a retroactive effectas of the date of filin$ of the application or April 68, &)68

ssue> Can the Public ervice Coission authori2e a corporation to assue the nae of another corporation as a tradenae;

Ru+n> NOO 3he Rural 3ransit Copany, /td., and the Bachrach Motor Co., Inc., are Philippine corporations and the very la! of

their creation and continued e@istence re#uires each to adopt and certify a distinctive nae

O 3he incorporators %constitute a body politic and corporate

un%er the na*e state% in the certificate.%O A corporation has the po!er %of succession )y its corporate na*e.% It is essential to its e@istence and cannot chan$e

itsnae e@cept in the anner provided by the statute. By that nae alone is it authori2ed to transact business.

O 3he la! $ives a corporation no e@press or iplied authority to assue another nae that is unappropriated still lessthat of another corporation, !hich is e@pressly set apart for it and protected by the la!. If any corporation could assue atpleasure as an unre$istered trade nae the nae of another corporation, this practice !ould result in confusion and openthe door to frauds and evasions and difficulties of adinistration and supervision.In this case, the order of the coission authori2in$ the Bachrach Motor Co., Incorporated, to assue the nae of theRural 3ransit Co., /td. li"e!ise incorporated, as its trade nae bein$ void. Acceptin$ the order of eceber '&, &)6', atits face as $rantin$ a certificate of public convenience to the applicant Rural 3ransit Co., /td., the said order lastentioned is set aside and vacated on the $round that the Rural 3ransit Copany, /td., is not the real party in interestand its application !as fictitious

Republic of the PhilippinesSUPREME COURT

Manila

EN BANC

G.R. No. L-2673 Ju+ 1, 1973

PHLPPNE (RST NSUR!NCE COMP!N', NC., plaintiff

-appellant,vs.

M!R! C!RMEN H!RTG!N, CGH, n O. ENG#EE, defendants-appellees.

Bausa, '*pil / &uarez for plaintiff(appellant.

-icasio E. "artin for %efen%ants(appellees.

"!RRE%O, J.:

Appeal fro the decision dated > 7ctober &)>' of the Court of 4irst Instance of Manila Q disissin$ the action in itsCivil Case No. 9=)'< Q brou$ht by the herein plaintiff-appellant Philippine

4irst Insurance Co., Inc. to theCourt of

Appeals

!hich could, upon findin$ that the said appeal raises purely #uestions of la!, declared itself !ithout :urisdiction toentertain the sae and, in its resolution dated &< uly &)>>, certified the records thereof to this Court for properdeterination.3he antecedent facts are set forth in the pertinent portions of the resolution of the Court of Appeals

referred to as follo!sAccordin$ to the coplaint, plaintiff !as ori$inally or$ani2ed as an insurance corporation under the naeof H3he e" 3on$ /in 4ire and Marine Insurance Co., /td.H 3he articles of incorporationori$inally presentedbefore the ecurity and E@chan$e Coissioner and ac"no!led$ed before Notary Public Mr. E. .I$nacio on une &, &)


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of the Board of irectors dated March =, &)>& chan$in$ the nae of the corporation to HPhilippine 4irstInsurance Co., Inc.H.3he coplaint alle$es that the plaintiff Philippine 4irst Insurance Co., Inc., doin$ business under the naeof H3he e" 3on$ /in 4ire and Marine Insurance Co., /t.H si$ned as co-a"er to$ether !ith defendantMaria Caren arti$an, C1, a proissory note for P', the Court of 4irst Instance of Manila rendered the decision appealed. It disissed theaction !ith costs a$ainst the plaintiff Philippine 4irst Insurance Co., Inc., reasonin$ as follo!s

... 0ith these undisputed facts in ind, the parties correctly concluded that the issues for resolution bythis Court are as follo!s

(a* 0hether or not the plaintiff is the real party in interest that ay validly sue on the indenitya$reeentsi$ned by the defendants and the e" 3on$ /in 4ire Marine Insurance Co., /td. (Anne@ A to plaintiffHscoplaint * and

(b* 0hether or not a suit for indenity or reiburseent ay under said indenity a$reeent prosper!ithout plaintiff havin$ yet paid the aount due under said proissory note.

In the first place, the chan$e of nae of the e" 3on$ /in 4ire Marine Insurance Co., /td. to thePhilippines 4irst Insurance Co., Inc. is of dubious validity. uch chan$e of nae in effect dissolved theori$inal corporation by a process of dissolution not authori2ed by our corporation la! (see ecs. >' and>?, inclusive, of our Corporation /a!*. Moreover, said chan$e of nae, aountin$ to a dissolution of thee" 3on$ /in 4ire Marine Insurance Co., /td., does not appear to have been effected !ith the !ritten

note or assent of stoc"holders representin$ at least t!o-thirds of the subscribed capital stoc" of thecorporation, a votin$ proportion re#uired not only for the dissolution of a corporation but also for anyaendent of its articles of incorporation (ecs. &= and >', Corporation /a!*. 4urtherore, such chan$eof corporate nae appears to be a$ainst public policy and ay be effected only by e@press authority ofla! (Red /ine 3ransportation Co. v. Rural 3ransit Co., /td., >8 Phil.


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ean that the ori$inal corporation, the e" 3on$ /in 4ire Marine Insurance Co., /td., becae dissolvedand of no further e@istence since March =, &)>&, so that on May &&, the date the indenitya$reeent, Anne@ A, !as e@ecuted, said ori$inal corporation bad no ore po!er to enter into anya$reeent !ith the defendants, and the a$reeent entered into by it !as ineffective for lac" of capacityof said dissolved corporation to enter into said a$reeent. At any rate, even if !e hold that said chan$e ofnae is valid, the fact reains that there is no evidence sho!in$ that the ne! entity, the Philippine 4irst

Insurance Co., Inc. has !ith the consent of the ori$inal parties, assued the obli$ations or !as assi$nedthe ri$hts of action in the ori$inal corporation, the e" 3on$ /in 4ire Marine Insurance Co., /td. In other

!ords, there is no evidence of conventional subro$ation of the Plaintiffs in the ri$hts of the e" 3on$ /in4ire Marine Insurance Co., /td. under said indenity a$reeent (Arts. &688, &68&, Ne! Civil Code*.

!ithout such subro$ation assi$nent of ri$hts, the herein plaintiff has no cause of action a$ainst thedefendants, and is, therefore, not the ri$ht party in interest as plaintiff.

/ast, but not least, assuin$ that the said chan$e of nae !as le$al and operated to dissolve the ori$inalcorporation, the dissolved corporation, ust pursuant to ec. ?? of our corporation la!, be deeed ascontinuin$ as a body corporate for three (6* years fro March =, &)>& for the purpose of prosecutin$ anddefendin$ suits. It is, therefore, the e" 3on$ /in 4ire Marine Insurance Co., /td. that is the proper partyto sue the defendants under said indenity a$reeent up to March =, &)>9.

avin$ arrived at the fore$oin$ conclusions, this Court need not s#uarely pass upon issue (b* forulatedabove.

0ERE47RE, plaintiffHs action is hereby disissed, !ith costs a$ainst the plaintiff.

In due tie, the Philippine 4irst Insurance Copany

, Inc. oved for reconsideration of the decision aforesaid, but saidotion !as denied on eceber 6, &)>' in an order !orded thus

3he otion for reconsideration, dated Noveber =, &)>', raises no ne! issue that !e failed to considerin renderin$ our decision of 7ctober >, &)>'. o!ever, it $ives us an opportunity to aplify our decisionas re$ards the #uestion of chan$e of nae of a corporation in this :urisdiction.

0e find nothin$ in our Corporation /a! authori2in$ a chan$e of nae of a corporation or$ani2edpursuant to its provisions. ec. &= of the Corporation /a! authori2es, in our opinion, aendent to theArticles of Incorporation of a corporation only as to atters other than its corporate nae. 7nce acorporation is or$ani2ed in this :urisdiction by the e@ecution and re$istration of its Articles of Incorporation,it shall continue to e@ist under its corporate nae for the lifetie of its corporate e@istence fi@ed in itsArticles of Incorporation, unless sooner le$ally dissolved (ec. &&, Corp. /a!*. i$nificantly, chan$e ofnae is not one of the ethods of dissolution of corporations e@pressly authori2ed by our Corporation/a!. Also si$nificant is the fact that the po!er to chan$e its corporate nae is not one of the $eneralpo!ers conferred on corporations in this :urisdiction (ec. &6, Corp. /a!*. 3he enueration of corporatepo!ers ade in our Corporation /a! iplies the e@clusion of all others (3hoas v. 0est ersey R. Co.,&8& .. ?&, '< /. ed. )


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3he ovant invo"es as persuasive precedent the action of the ecurities Coissioner in tacitlyapprovin$ the Aended, Articles of Incorporation on May '>, &)>&. 0e re$ret that !e cannot in $oodconscience lend approval to this action of the ecurities and E@chan$e Coissioner. 0e find no

:ustification, le$al, oral, or practical, for adherin$ to the vie! ta"en by the ecurities and E@chan$eCoissioner that the nae of a corporation in the Philippines ay be chan$ed by ere aendent ofits Articles of Incorporation as to its corporate nae. A chan$e of corporate nae !ould serve no useful

purpose, but on the contrary !ould ost probably cause confusion. 7nly a dubious purpose could inspirea chan$e of a corporate. nae !hich, unli"e a natural personHs nae, !as chosen by the incorporatorstheselves and our Courts should not lend their assistance to the accoplishent of dubious purposes.

0ERE47RE, !e hereby deny plaintiffHs otion for reconsideration, dated Noveber =, &)>', for lac" oferit.

In this appeal appellant contends that Q

I 3E 3RIA/ C7R3 ERRE IN 7/IN1 3A3 IN 3I RIIC3I7N, 3ERE I N73IN1 IN7R C7RP7RA3I7N /A0 A37RIKIN1 3E CAN1E 74 C7RP7RA3E NAME

II 3E 3RIA/ C7R3 ERRE IN EC/ARIN1 3A3 A CAN1E 74 C7RP7RA3E NAME APPEAR37 BE A1AIN3 PB/IC P7/IC

III 3E 3RIA/ C7R3 ERRE IN 7/IN1 3A3 A CAN1E 74 C7RP7RA3E NAME A 3E/E1A/ E44EC3 74 I7/FIN1 3E 7RI1INA/ C7RP7RA3I7N

IF 3E 3RIA/ C7R3 ERRE IN 7/IN1 3A3 3E CAN1E 74 NAME 74 3E E 37N1 /IN4IRE MARINE INRANCE C7., /3. I 74 BI7 FA/II3

F 3E 3RIA/ C7R3 ERRE IN 7/IN1 3A3 3E APPE//AN3 EREIN I N73 3E RI13PAR3 IN3ERE3 37 E E4ENAN3-APPE//EE

IF 3E 3RIA/ C7R3 4INA// ERRE IN IMIIN1 3E C7MP/AIN3.

AppellantHs Position is correct all the above assi$nents of error are !ell ta"en. 3he !hole case, ho!ever, revolvesaround only one #uestion. May a Philippine corporation chan$e its nae and still retain its ori$inal personality andindividuality as such;

3he ans!er is not difficult to find. 3rue, under ection > of the Corporation /a!, the first thin$ re#uired to be stated in theArticles of Incorporation of any corn corporation is its nae, but it is only one aon$ any atters e#ually if not oreiportant, that ust be stated therein. 3hus, it is also re#uired, for e@aple, to state the nuber and naes of andresidences of the incorporators and the residence or location of the principal office of the corporation, its ter ofe@istence, the aount of its capital stoc" and the nuber of shares into !hich it is divided, etc., etc.

7n the other hand, ection &= e@plicitly perits the articles of incorporation to be aended thus

ec. &=. Q Any corporation ay for le$itiate corporate purpose or purposes, aend its articles ofincorporation by a a:ority vote of its board of directors or trustees and the vote or !ritten assent of t!o-thirds of its ebers, if it be a nonstoc" corporation or, if it be a stoc" corporation, by the vote or !rittenassent of the stoc"holders representin$ at least t!o-thirds of the subscribed capital stoc" of thecorporation Provi%e%, however, 3hat if such aendent to the articles of incorporation should consist ine@tendin$ the corporate e@istence or in any chan$e in the ri$hts of holders of shares of any class, or

!ould authori2e shares !ith preferences in any respect superior to those of outstandin$ shares of anyclass, or !ould restrict the ri$hts of any stoc"holder, then any stoc"holder !ho did not vote for suchcorporate action ay, !ithin forty days after the date upon !hich such action !as authori2ed, ob:ectthereto in !ritin$ and deand Payent for his shares. If, after such a deand by a stoc"holder, thecorporation and the stoc"holder cannot a$ree upon the value of his share or shares at the tie suchcorporate action !as authori2ed, such values all be ascertained by three disinterested persons, one of

!ho shall be naed by the stoc"holder, another by the corporation, and the third by the t!o thuschosen. 3he findin$s of the appraisers shall be final, and if their a!ard is not paid by the corporation

!ithin thirty days after it is ade, it ay be recovered in an action by the stoc"holder a$ainst thecorporation. pon payent by the corporation to the stoc"holder of the a$reed or a!arded price of hisshare or shares, the stoc"holder shall forth!ith transfer and assi$n the share or shares held by hi asdirected by the corporation Provi%e%, however, 3hat their o!n shares of stoc" purchased or other!iseac#uired by ban"s, trust copanies, and insurance copanies, should be disposed of !ithin si@ onthsafter ac#uirin$ title thereto.


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nless and until such aendent to the articles of incorporation shall have been abandoned or the actionrescinded, the stoc"holder a"in$ such deand in !ritin$ shall cease to be a stoc"holder and shall haveno ri$hts !ith respect to such shares, e@cept the ri$ht to receive payent therefor as aforesaid.

A stoc"holder shall not be entitled to payent for his shares under the provisions of this section unlessthe value of the corporate assets !hich !ould reain after such payent !ould be at least e#ual to the

a$$re$ate aount of its debts and liabilities and the a$$re$ate par value andGor issued value of thereainin$ subscribed capital stoc".

A copy of the articles of incorporation as aended, duly certified to be correct by the president and thesecretary of the corporation and a a:ority of the board of directors or trustees, shall be filed !ith theecurities and E@chan$e Coissioner, !ho shall attach the sae to the ori$inal articles ofincorporation, on file in his office. 4ro the tie of filin$ such copy of the aended articles ofincorporation, the corporation shall have the sae po!ers and it and the ebers and stoc"holdersthereof shall thereafter be sub:ect to the sae liabilities as if such aendent had been ebraced in theori$inal articles of incorporation Provi%e%, however, 3hat should the aendent consist in e@tendin$ thecorporate life, the e@tension shall not e@ceed


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4letcher, a standard authority on Aerican an corporation la! also says

tatutes are to be found in the various :urisdictions dealin$ !ith the atter of chan$e in corporate naes.uch statutes have been sub:ected to :udicial construction and have, in the ain, been upheld asconstitutional. n %irect ter*s or )y necessary i*plication, they authorize corporations new na*es andprescribe the ode of procedure for that purpose. 3he sae steps ust be ta"en under soe statutes to

effect a chan$e in a corporate nae, as !hen any other aendent of the corporate charter is sou$ht ....0hen the $eneral la! thus deals !ith the sub:ect, a corporation can chan$e its nae only in the annerprovided. (> 4letcher, Cyclopedia of the /a! of Private Corporations, &)>= Revised Folue, pp. '&'-'&6.* (Ephasis supplied*

3he learned trial :ud$e held that the above-#uoted proposition are not supported by the !ei$ht of authority because theyare based on decisions in cases !here the statutes e@pressly authori2e chan$e of corporate nae by aendent of thearticles of incorporation. 0e have carefully e@ained these authorities and 0e are satisfied of their relevance. Even /ordenan !ho has been #uoted by is onor fro n Reg. v. Registrar of oint &toc# Cos. &8, J.B., 4letcher, Cyclopedia of the /a! of PrivateCorporations, ''9-''


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Englan%. Q !oe v. -orton, && M. 0. )&6, ? ur. ? Ala. ?8 -orth Bir*ingha* Lu*)er Co. v.&i*s, &


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ori$inal articles of incorporation.% It $oes !ithout sayin$ then that appellant ri$htly acted in its old nae !hen on May &&, it entered into the indenity a$reeent, Anne@ A, !ith the defendant-appellees for only after the filin$ of theaended articles of incorporation !ith the ecurities E@chan$e Coission on May '>, &)>&, did appellant le$allyac#uire its ne! nae and it !as perfectly ri$ht for it to file the present case In that ne! nae on eceber >, &)>&.uch is, but the lo$ical effect of the chan$e of nae of the corporation upon its actions.

Actions brou$ht by a corporation after it has chan$ed its nae should be brou$ht under the ne! naealthou$h for the enforceent of ri$hts e@istin$ at the tie the chan$e !as ade. Lo*) v. Pioneer &av.,etc., Co., &8> Ala. ?8 -ewlan v. Lo*)ar% 1niversity, >' III. &)8 Pa. t. 96> 4ilson v. Chesapea#e etc., R. Co., '& 1ratt(Fa.* >9& -orthwestern College v.&chwagler, 6? Ia.


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confusion or deception in the ordinary course of business that the only supposed confusion proved by coplainant aroseout of an e@traordinary occurrence Q a disastrous fire. (pp. &>-&?, Record.*

pon these preises, the Coission held

4ro the facts proved and the :urisprudence on the atter, it appears necessary under the circustances to en:oin the

respondent niversal Mills Corporation fro further usin$ its present corporate nae. ud$in$ fro !hat has alreadyhappened, confusion is not only apparent, but possible. It does not atter that the instance of confusion bet!een the t!ocorporate naes !as occasioned only by a fire or an e@traordinary occurrence. It is precisely the duty of this Coissionto prevent such confusion at all ties and under all circustances not only for the purpose of protectin$ the corporationsinvolved but ore so for the protection of the public.

In todays odern business life !here people $o by tradenaes and corporate ia$es, the corporate nae becoes theore iportant. 3his Coission cannot close its eyes to the fact that usually it is the sound of all the other !ordscoposin$ the naes of business corporations that stic"s to the ind of those !ho deal !ith the. 3he !ord Ste@tileT inniversal 3e@tile Mills, Inc. cannot possibly assure the e@clusion of all other entities !ith siilar naes fro the ind ofthe public especially so, if the business they are en$a$ed in are the sae, li"e in the instant case.

3his Coission further ta"es co$ni2ance of the fact that !hen respondent filed the aendent chan$in$ its nae to

niversal Mills Corporation, it correspondin$ly filed a !ritten underta"in$ dated une 6 and si$ned by its President,Mr. Mariano Co"iat, proisin$ to chan$e its nae in the event that there is another person, fir or entity !ho hasobtained a prior ri$ht to the use of such nae or one siilar to it. 3hat proise is still bindin$ upon the corporation and itsresponsible officers. (pp. &?-&=, Record.*

It is obvious that the atter at issue is !ithin the copetence of the ecurities and E@chan$e Coission to resolve inthe first instance in the e@ercise of the :urisdiction it used to possess under Coon!ealth Act '=? as aended byRepublic Act &8


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SSUE> 0hether or not the decision of the EC is correct.

HEL%> es. 3here is definitely confusion as it !as evident fro the facts !here the investors of 3MI ista"enly believedthat it !as 3MIs !arehouse that !as destroyed. Althou$h the corporate naes are not really identical, they areindisputably so siilar that it can cause, as it already did, confusion. 3he EC did not act in abuse of its discretion !hen itorder MC to drop its nae because there !as a factual evidence presented as to the confusion. 4urther, !hen MC

filed its petition for chan$e of corporate nae, it ade an underta"in$ that it shall chan$e its nae in the event that thereis another person, fir or entity !ho has obtained a prior ri$ht to the use of such nae or one siilar to it. 3hat proise isstill bindin$ upon the corporation and its responsible officers.

(RST %[email protected]. No. 17592. %ee:*e 12, 2331A

!NG MG! #!!N" S! GLES! NG %OS #!' #RSTO HESUS, H.S.#. S! "!NS!NG PLPN!S, NC.petitioner,!s.GLES! NG %OS #!' CRSTO JESUS, H!LG !T SUH!' NG #!TOTOH!N!N, respondent.

% E C S O N'N!RES-AN3IA17, J.>

3his is a petition for revie! assailin$ the ecision dated 7ctober ?, &))? +&5and the Resolution dated 4ebruary &>,&)))+'5of the Court of Appeals in CA-1.R. P No. 98)66, !hich affired the ecision of the ecurities and E@chan$e andCoission (EC* in EC-AC No. , &)?), respondent corporation filed !ith the EC a petition to copel the glesia ng !ios 3ay 3risto2esus, 2aligi at &aligan ng 3atotohanan to chan$e its corporate nae, !hich petition !as doc"eted as EC Case No.&??9. 7n May 9, &)==, the EC rendered :ud$ent in favor of respondent, orderin$ the glesia ng !ios 3ay 3risto2esus, 2aligi at &aligan ng 3atotohananto chan$e its corporate nae to another nae that is not siilar or identical toany nae already used by a corporation, partnership or association re$istered !ith the Coission. +57n March ', &))9, respondent corporation filed before the EC a petition, doc"eted as EC Case No. 86-)9-9?89,

prayin$ that petitioner be copelled to chan$e its corporate nae and be barred fro usin$ the sae or siilar nae onthe $round that the sae causes confusion aon$ their ebers as !ell as the public.

Petitioner filed a otion to disiss on the $round of lac" of cause of action. 3he otion to disiss !asdenied. 3hereafter, for failure to file an ans!er, petitioner !as declared in default and respondent !as allo!ed to presentits evidence e8 parte.

7n Noveber '8, &)), &))'.

ence, the instant petition for revie!, raisin$ the follo!in$ assi$nent of errors

3E 7N7RAB/E C7R3 74 APPEA/ ERRE IN C7NC/IN1 3A3 PE3I3I7NER A N73 BEENEPRIFE 74 I3 RI13 37 PR7CERA/ E PR7CE, 3E 7N7RAB/E C7R3 74 APPEA/IRE1ARE 3E RIPRENCE APP/ICAB/E 37 3E CAE A3 BAR AN IN3EA RE/IE 7N373A// INAPP/ICAB/E RIPRENCE.
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3E 7N7RAB/E C7R3 74 APPEA/ ERRE IN I3 IN3EPRE3A3I7N 74 3E CIFI/ C7E PR7FII7N7N E3INC3IFE PRECRIP3I7N, 3EREB RE/3IN1 IN I3 4AI/RE 37 4IN 3A3 3EREP7NEN3H RI13 74 AC3I7N 37 IN3I33E 3E EC CAE A INCE PRECRIBE PRI7R 37 I3IN3I33I7N.

3E 7N7RAB/E C7R3 74 APPEA/ 4AI/E 37 C7NIER AN PR7PER/ APP/ 3E ECEP3I7NE3AB/IE B RIPRENCE IN 3E APP/ICA3I7N 74 EC3I7N &= 74 3E C7RP7RA3I7N C7E37 3E IN3AN3 CAE.

3E 7N7RAB/E C7R3 74 APPEA/ 4AI/E 37 PR7PER/ APPRECIA3E 3E C7PE 74 3EC7N3I33I7NA/ 1ARAN3EE 7N RE/I1I7 4REE7M, 3EREB 4AI/IN1 37 APP/ 3E AME 37PR73EC3 PE3I3I7NER RI13.+)5

Invo"in$ the case of Legar%a v. Court of 'ppeals,+&85petitioner insists that the decision of the Court of Appeals andthe EC should be set aside because the ne$li$ence of its forer counsel of record, Atty. oa#uin 1aray$ay, in failin$ tofile an ans!er after its otion to disiss !as denied by the EC, deprived the of their day in court.

3he contention is !ithout erit. As a $eneral rule, the ne$li$ence of counsel binds the client. 3his is based on therule that any act perfored by a la!yer !ithin the scope of his $eneral or iplied authority is re$arded as an act of hisclient.+&&5An e@ception to the fore$oin$ is !here the rec"less or $ross ne$li$ence of the counsel deprives the client of dueprocess of la!.+&'5aid e@ception, ho!ever, does not obtain in the present case.

In Legar%a v. Court of 'ppeals, the effort of the counsel in defendin$ his clients cause consisted in filin$ a otion fore@tension of tie to file ans!er before the trial court. 0hen his client !as declared in default, the counsel did nothin$ andallo!ed the :ud$ent by default to becoe final and e@ecutory. pon the insistence of his client, the counsel filed apetition to annul the :ud$ent !ith the Court of Appeals, !hich denied the petition, and a$ain the counsel allo!ed the

denial to becoe final and e@ecutory. 3his Court found the counsel $rossly ne$li$ent and conse#uently declared as nulland void the decision adverse to his client.

3he factual antecedents of the case at bar are different. Atty. 1aray$ay filed before the EC a otion to disiss onthe $round of lac" of cause of action. 0hen his client !as declared in default for failure to file an ans!er, Atty. 1aray$ayoved for reconsideration and liftin$ of the order of default. +&65After :ud$ent by default !as rendered a$ainst petitionercorporation, Atty. 1aray$ay filed a otion for e@tension of tie to appealGotion for reconsideration, and thereafter aotion to set aside the decision. +&95

Evidently, Atty. 1aray$ay !as only $uilty of siple ne$li$ence. Althou$h he failed to file an ans!er that led to therendition of a :ud$ent by default a$ainst petitioner, his efforts !ere palpably real, albeit bereft of 2eal. +&


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3he additional !ords A'ng "ga 3aani) and A&a Bansang Pilipinas, nc.in petitioners nae are, as correctlyobserved by the EC, erely descriptive of and also referrin$ to the ebers, or #aani), of respondent !ho are li"e!iseresidin$ in the Philippines. 3hese !ords can hardly serve as an effective differentiatin$ ediu necessary to avoidconfusion or difficulty in distin$uishin$ petitioner fro respondent. 3his is especially so, since both petitioner andrespondent corporations are usin$ the sae acrony --- ...+&)5not to ention the fact that both are espousin$reli$ious beliefs and operatin$ in the sae place. Parenthetically, it is !ell to ention that the acrony ... used by

petitioner stands for A2aligi at &aligan ng 3atotohanan.+'85

3hen, too, the records reveal that in holdin$ out their corporate nae to the public, petitioner hi$hli$hts the doinant!ords AGLE&' -G !+& 3'6 3R&T+ 2E&1&, 2'LG 'T &'LG'- -G 3'T+T+2'-'-,!hich is stri"in$ly siilarto respondentHs corporate nae, thus a"in$ it even ore evident that the additional !ords A'ng "ga 3aani)and A&aBansang Pilipinas, nc.,are erely descriptive of and pertainin$ to the ebers of respondent corporation.+'&5

i$nificantly, the only difference bet!een the corporate naes of petitioner and respondent are the!ords &'LG'-and &12'6. 3hese !ords are synonyous --- both ean $round, foundation or support. ence, thiscase is on all fours !ith 1niversal "ills Corporation v. 1niversal Te8tile "ills, nc., +''5!here the Court ruled that thecorporate naes niversal Mills Corporation and niversal 3e@tile Mills, Inc., are undisputably so siilar that even underthe test of Sreasonable care and observationT confusion ay arise.

4urtherore, the !holesale appropriation by petitioner of respondentHs corporate nae cannot find :ustification under

the $eneric !ord rule. 0e a$ree !ith the Court of Appeals conclusion that a contrary rulin$ !ould encoura$e othercorporations to adopt verbati and re$ister an e@istin$ and protected corporate nae, to the detrient of the public.

3he fact that there are other non-stoc" reli$ious societies or corporations usin$ the naes Church of the /ivin$ 1od,Inc., Church of 1od esus Christ the on of 1od the ead, Church of 1od in Christ By the oly pirit, and other siilarnaes, is of no conse#uence. It does not authori2e the use by petitioner of the essential and distin$uishin$ feature ofrespondentHs re$istered and protected corporate nae. +'65

0e need not belabor the fourth issue raised by petitioner. Certainly, orderin$ petitioner to chan$e its corporate naeis not a violation of its constitutionally $uaranteed ri$ht to reli$ious freedo. In so doin$, the EC erely copelledpetitioner to abide by one of the EC $uidelines in the approval of partnership and corporate naes, naely itsunderta"in$ to anifest its !illin$ness to chan$e its corporate nae in the event another person, fir, or entity hasac#uired a prior ri$ht to the use of the said fir nae or one deceptively or confusin$ly siilar to it.

$HERE(ORE, in vie! of all the fore$oin$, the instant petition for revie! is ENIE. 3he appealed decision of the

Court of Appeals is A44IRMEin toto.

SO OR%ERE%.

!avi%e, r., C.., 9Chair*an:, 3apunan, andPar%o, ., concur.Puno, ., on official leave.
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