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Republic of the Philippines SUPREME COURT Manila EN BANC G.R. Nos. L-24177-85 June 29, 1968

PH L PP NE N!T ON!L "!N#, plaintiff-appellee, vs. " TULO# S!$M LL, NC., % NG!L!N LUM"ER CO., NC., S ERR! M!%RE LUM"ER CO., NC., N!S P T LUM"ER CO., NC., $OO%$OR#S, NC., GON&!LO PU'!T, TOM!S ". MOR!TO, ( N%L!' M LL!R LUM"ER CO., NC., ET !L., NSUL!R LUM"ER CO., !N!#!N LUM"ER CO., !N% C!NT L!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 and is 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 of the case% ' dis issed nine ()* cases filed by it, see"in$ %to recover fro the defendant lu ber producers +Bitulo" ,a! ill, Inc.- .in$alan /u ber Co., Inc., ,ierra Madre /u ber Co., Inc.- Nasipit /u ber Co., Inc.- 0ood!or"s, Inc.- 1on2alo Puyat- 3o as B. Morato- 4indlay Millar /u ber Co., Inc.- Insular /u ber Co., Inc.- Ana"an /u ber Co., Inc.- and Cantilan /u ber Co., Inc.5 the balance of their stoc" subscriptions to the Philippine /u ber .istributin$ A$ency, Inc.% 6 In essence then, the crucial #uestion posed by this appeal fro such a decision of the lo!er court is adherence to the rule of la!. 7ther!ise stated, !ould non-co pliance !ith a plain statutory co and, considerin$ the persuasiveness of the plea that defendants-appellees !ould %not have subscribed to +the5 capital stoc"% of the Philippine /u ber .istributin$ A$ency %!ere it not for the assurance of the +then5 President of the Republic of the Philippines that the 1overn ent !ould bac" +it5 up by investin$ P).88 for every peso% 9 subscribed, a condition !hich !as not fulfilled, such co it ent not havin$ been co plied !ith, be :ustified; 3he ans!er ust be in the ne$ative. It cannot be other!ise even if an ele ent of unfairness and in:ustice could be predicated, as the lo!er court, in a rather sy pathetic ood, did find in the plaintiff ban", as creditor, co pellin$ defendant lu ber producers under the above circu stances to pay the balance of their subscriptions. 4or a plain and statutory co and, if applicable, ust be respected. 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, !as allo!ed by the lo!er court to substitute the receiver of the Philippine /u ber .istributin$ A$ency in these respective actions for the recovery fro defendant lu ber producers the balance of their stoc" subscriptions. 3he a ount sou$ht to be collected fro defendants-appellees Bitulo" ,a! ill, Inc., .in$alan /u ber Co., Inc., and ,ierra Madre /u ber Co., Inc., is P<,888.88, defendants-appellees havin$ ade a partial pay ent of P&<,888.88 of their total subscription !orth P'8,888.88- fro defendant-appellee Nasipit /u ber Co., Inc., the su of P&8,888.88, defendant-appellee havin$ ade a partial pay ent of P&8,888.88 of its total subscription !orth P'8,888.88- fro defendant-appellee 0ood!or"s, Inc., the su of P&8,==>.88, defendant-appellee havin$ ade a partial pay ent of P),&&9.88 of its total subscription !orth P'8,888.88- fro defendant-appellee 1on2alo Puyat the su of P&8,888.88, defendant-appellee havin$ ade a partial pay ent of P&8,888.88 of his total subscription !orth P'8,888.88- fro defendant-appellee 3o as Morato the su of P&8,888.88, defendant-appellee havin$ ade a partial pay ent of P&8,888.88 of his total subscription !orth P'8,888.88fro defendant-appellee 4indlay Millar /u ber Co., Inc., the su of P&8,888.88, defendant-appellee havin$ ade a partial pay ent of P&8,888.88 of its total subscription !orth P'8,888.88- fro defendant-appellee Insular /u ber Co., Inc., the su of P<,888.88, defendant-appellee havin$ ade a partial pay ent of P&<,888.88 of its total subscription !orth P'8,888.88- fro defendant-appellee Ana"an /u ber Co., Inc., the su of P&<,888.88, defendant-appellee havin$ ade a partial pay ent of P<,888.88 of its total subscription !orth P'8,888.88- and fro defendant-appellee Cantilan /u ber Co., Inc., the su of P?,<88.88, defendant-appellee havin$ ade a partial pay ent of P',<88.88 of its total subscription !orth P&8,888.88, plus interest at the le$al rate fro the filin$ of the suits and the costs of the suits in all the nine ()* cases. 3he Philippine /u ber .istributin$ A$ency, Inc., accordin$ to the lo!er court, %!as or$ani2ed so eti e in the early part of &)9? upon the initiative and insistence of the late President Manuel Ro@as of the Republic of the Philippines !ho for the purpose, had called several conferences bet!een hi and the subscribers and or$ani2ers of the Philippine /u ber .istributin$ A$ency, Inc.% < 3he purpose !as praise!orthy, to insure a steady supply of lu ber, !hich could be sold at reasonable prices to enable the !ar sufferers to rehabilitate their devastated ho es. 3he decision continuesA %Be convinced the lu ber producers to for a lu ber cooperative and to pool their sources to$ether in order to !rest, particularly, the retail trade fro aliens !ho !ere actin$ as iddle en in the distribution of lu ber. At the be$innin$, the lu ber producers !ere reluctant to or$ani2e the cooperative a$ency as they believed that it !ould not be easy to eli inate fro the retail trade the alien iddle en !ho had been in this business fro ti e i e orial, but because the late President Ro@as ade it clear that such a cooperative a$ency !ould not be successful !ithout a substantial !or"in$ capital !hich the lu ber producers could not entirely shoulder, and as an induce ent he pro ised and a$reed to finance the a$ency by a"in$ the 1overn ent invest P).88 by !ay of counterpart for every peso that the e bers !ould invest therein,....% > 3his !as the assurance relied upon accordin$ to the decision, !hich stated that the a ount thus contributed by such lu ber producers !as not enou$h for the operation of its business especially havin$ in ind the pri ary purpose of

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puttin$ an end to alien do ination in the retail trade of lu ber products. Nor !as there any appropriation by the le$islature of the counterpart fund to be put up by the 1overn ent, na ely, P).88 for every peso invested by defendant lu ber producers. Accordin$ly, %the late President Ro@as instructed the Bon. E ilio Abello, then E@ecutive ,ecretary and Chair an of the Board of .irectors of the Philippine National Ban", for the latter to $rant said a$ency an overdraft in the ori$inal su of P'<8,888.88 !hich !as later increased to P6<8,888.88, !hich !as approved by said Board of .irectors of the Philippine National Ban" on Culy '=, &)9?, payable on or before April 68, &)<=, !ith interest at the rate of >D per annu , and secured by the chattel ort$a$es on the stoc" of lu ber of said a$ency.% ? 3he Philippine 1overn ent did not invest the P).88 for every peso co in$ fro defendant lu ber producers. 3he loan e@tended to the Philippine /u ber .istributin$ A$ency by the Philippine National Ban" !as not paid. Bence, these suits. 4or the lo!er court, the above facts sufficed for their dis issal. 3o its ind %it is $rossly unfair and un:ust for the plaintiff ban" no! to co pel the lu ber producers to pay the balance of their subscriptions .... Indeed, !hen the late President Ro@as ade representations to the plaintiff ban", thru the Bon. E ilio Abello, !ho !as then the E@ecutive ,ecretary and Chair an of its Board of .irectors, to $rant said overdraft to the a$ency, it !as the only !ay by !hich President Ro@as could a"e $ood his co it ent that the 1overn ent !ould invest in said a$ency to the e@tent already entioned because, accordin$ to said late President Ro@as, the le$islature had not appropriated any a ount for such counterpart. Conse#uently, vie!in$ fro all considerations of e#uity in the case, the Court finds that plaintiff ban" should not collect any ore fro the defendants the balance of their subscriptions to the capital stoc" of the Philippine /u ber .istributin$ A$ency, Inc.% = Even !ith the case for defendant lu ber producers bein$ put forth in its stron$est possible li$ht in the appealed decision, the plaintiff creditor, the Philippine National Ban", should have been the prevailin$ party. 7n the la! as it stands, the :ud$ ent reached by the lo!er court cannot be sustained. 3he appeal, as earlier ade clear, possesses erit. In Philippine Trust Co. v. Rivera, ) citin$ the leadin$ case of Velasco v. Poizat, &8 this Court heldA %It is established doctrine that subscriptions to the capital of a corporation constitute a fund to !hich creditors have a ri$ht to loo" for satisfaction of their clai s and that the assi$nee in insolvency can aintain an action upon any unpaid stoc" subscription in order to reali2e assets for the pay ent of its debt.... A corporation has no po!er to release an ori$inal subscriber to its capital stoc" fro the obli$ation of payin$ for his shares, !ithout a valuable consideration for such release- and as a$ainst creditors a reduction of the capital stoc" can ta"e place only in the anner and under the conditions prescribed by the statute or the charter or the articles of incorporation. Moreover, strict co pliance !ith the statutory re$ulations is necessary....% 3he Poi2at doctrine found acceptance in later cases. &&7ne of the latest cases, Lingayen Gulf Electric Power v. Baltazar, &' ,pea"s to this effectA %In the case of Velasco v. Poizat, &6 the corporation involved !as insolvent, in !hich case all unpaid stoc" subscriptions beco e payable on de and and are i ediately recoverable in an action instituted by the assi$nee.% It !ould be un!arranted to ascribe to the late President Ro@as the vie! that the pay ent of the stoc" subscriptions, as thus re#uired by la!, could be condoned in the event that the counterpart fund to be invested by the 1overn ent !ould not be available. Even if such !ere the case, ho!ever, and such a pro ise !ere in fact ade, to further the laudable purpose to !hich the proposed corporation !ould be devoted and the possibility that the lu ber producers !ould lose oney in the process, still the plain and specific !ordin$ of the applicable le$alprovision as interpreted by this Court ust be controllin$. It is a !ell-settled principle that !ith all the vast po!ers lod$ed in the E@ecutive, he is still devoid of the prero$ative of suspendin$ the operation of any statute or any of its ter s. 3he e phatic and cate$orical lan$ua$e of an A erican decision cited by the late Custice /aurel, in People v. Vera,&9 co es to indA %By the t!entieth article of the declaration of ri$hts in the constitution of this co on!ealth, it is declared that the po!er of suspendin$ the la!s, or the e@ecution of the la!s, ou$ht never to be e@ercised but by the le$islature, or by authority derived fro it, to be e@ercised in such particular cases only as the le$islature shall e@pressly provide for....% Nor could it be other!ise considerin$ that the Constitution specifically en:oins the President to see to it that all la!s be faithfully e@ecuted. &< 3here ay be a discretion as to !hat a particular le$al provision re#uires- there can be none !hatsoever as to the enforce ent and application thereof once its eanin$ has been ascertained. 0hat it decrees ust be follo!ed- !hat it co ands ust be obeyed. It ust be respected, the !ishes of the President, to the contrary not!ithstandin$, even if i pelled by the ost !orthy of otives and the ost persuasive e#uitable considerations. 3o repeat, such is not the case here. 4or at no ti e did President Ro@as ever $ive defendant lu ber producers to understand that the failure of the 1overn ent for any reason to put up the counterpart fund could ter inate their statutory liability. ,uch is not the la!. Enfortunately, the lo!er court !as of a different ind. 3hat is not to pay ho a$e to the rule of la!. Its decision then, one it is to be repeated influenced by !hat it considered to be the %e#uity of the case%, is not le$ally i peccable. 0BERE47RE, the decision of the lo!er court is reversed and the cases re anded to the lo!er court for :ud$ ent accordin$ to la!, !ith full consideration of the le$al defenses raised by defendants-appellees, Bitulo" ,a! ill, Inc..in$alan /u ber Co., Inc.- ,ierra Madre /u ber Co., Inc.- Nasipit /u ber Co., Inc.- 0ood!or"s, Inc.- 1on2alo Puyat3o as B. Morato- 4indlay Millar /u ber Co., Inc.- Ana"an /u ber Co., Inc.- and Cantilan /u ber Co., Inc. No pronounce ent as to costs. Concepcion, C. ., Reyes, .B.L., !izon, "a#alintal, $al%ivar, &anchez an% 'ngeles, Castro, ., too# no part. ., concur.

Re)u*+,- o. /0e P0,+,)),nes SUPREME COURT M1n,+1 EN "!NC G.R. No. L-23646 J1nu145 23, 1929

THE GO6ERNMENT O( THE PH L PP NE SL!N%S, )e/,/,one4, 7s. THE M!N L! R! LRO!% COMP!N' 1n8 JOSE P!E& 1s M1n19e4 o. s1,8 Co:)1n5, 4es)on8en/s. 'ttorney(General aranilla for petitioner. ose ')reu for respon%ents. JOHNSON, J.: 3his is a petition in the ,upre e Court of the e@traordinary le$al !rit of *an%a*us presented by the 1overn ent of the Philippine Islands, prayin$ that the !rit be issued to co pel the Manila Railroad Co pany and Cose Pae2, as its ana$er, to provide and e#uip the tele$raph poles of said co pany bet!een the unicipality of Pani#ui, Province of 3arlac, and the Municipality of ,an 4ernando, Province of /a Enion, !ith crosspieces for si@ tele$raph !ires belon$in$ to the 1overn ent, !hich, it is alle$ed, are necessary for public service bet!een said unicipalities. 3he only #uestion raised by the petition is !hether the dependant co pany is re#uired to provide and e#uip its tele$raph poles !ith crosspieces to carry si@ tele$raph !ires of the 1overn ent, or !hether it is only re#uired to furnish poles !ith crosspieces sufficient to carry four !ires only. It is ad itted that the present poles and crosspieces bet!een said unicipalities are sufficient to carry four tele$raph !ires and that they do no! carry four tele$raph !ires, by virtue of an a$ree ent bet!een the respondents and the Bureau of the Posts of the Philippine 1overn ent. It is ad itted that the poles and not sufficient to carry si@ tele$raph !ires. 3he petitioner relies upon the provisions of section =9 of act No. &9<). Act No. &9<) is the 1eneral Corporation /a! and !as adopted by the Enited ,tates Philippine Co ission on March &, &)8>. (Fol. <, Pub. /a!s, pp. ''9-'>=.* ,ection =9 of the said Act providesA 3he railroad corporation shall establish alon$ the !hole len$th of the road a tele$raph line for the use of the railroad. 3he posts of this line ay be used for 1overn ent !ires and shall be of sufficient len$th and stren$th and e#uipped !ith sufficient crosspiece to carry the nu ber of !ires !hich the 1overn ent ay consider necessary for the public service. 3he establish ent, protection, and aintenance of the !ires and stations necessary for the public service shall be at the cost of the 1overn ent. (Fol. <, P. /., p. '9?.* 3he plaintiff contends that under said section =9 the defendant co pany is re#uired to erect and aintain posts for its tele$raph !ires, of sufficient len$th and stren$th, and e#uipped !ith sufficient crosspieces to carry the nu ber of !ires !hich the 1overn ent ay consider necessary for the public service, and that si@ !ires are no! necessary for the public service. 3he respondents ans!ered by a $eneral and special defense. In their special defense they contend that section =9 of Act No. &9<) has been repealed by section &, para$raph = of Act No. &<&8 of the Enited ,tates Philippine Co ission (vol. <, P. /., pp. 6<8-6<=*, and that under the provisions of said Act No. &<&8 the 1overn ent is entitled to place on the poles of the co pany four !ires only. Act No. &<&8 is the charter of the Manila Railroad Co pany. It !as adopted by the Enited ,tates Philippine Co ission on Culy ?, &)8>. ,ection &, para$raph =, of said Act No. &<&8 providesA =. 3he $rantee (the Manila Railroad Co pany* shall have the ri$ht to construct and operate tele$raph,telephone, and electrical trans ission lines over said rail!ays for the use of the rail!ays and their business, and also, !ith the approval of the ,ecretary of 0ar, for public service and co ercial purposes but these latter privile$es shall be sub:ect to the follo!in$ provisionsA In the construction of tele$raph or telephone lines alon$ the ri$ht of !ay the $rantee (the Manila Railroad Co pany* shall erect and aintain poles !ith sufficient space thereon to per it the Philippine 1overn ent, at the e@pense of said 1overn ent, to place, operate, and aintain four !ires for tele$raph, telephone, andelectrical trans ission for any 1overn ent purposes bet!een the ter ini of the lines of rail!ays ain or branch- and the Philippine 1overn ent reserves to itself the ri$ht to construct, aintain, and operate tele$raph, telephone, or electrical trans ission lines over the ri$ht of !ay of said rail!ays for co ercial ilitary, or $overn ent purposes, !ithout unreasonably interferin$ !ith the construction, aintenance, and operation by the $rantee of its rail!ays, tele$raph, telephone, and electrical trans ission lines. 3o ans!er the #uestion above stated, it beco es necessary to deter ine !hether section =9 of Act No. &9<) is applicable to the Manila Railroad Co pany, or !hether the anila Railroad Co pany is $overned by section &, para$raph =, of Act No. &<&8. As has been said, Act No. &9<) is a $eneral la! applicable to corporations $enerally, !hile Act No. &<&8 is the charter of the Manila Railroad Co pany and constitute a contract bet!een it and the 1overn ent.

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Inas uch as Act No. &<&8 is the charter of Manila Railroad Co pany and constitute a contract bet!een it and the 1overn e nt, it !ould see that the co pany is $overnd by its contract and not by the provisions of any $eneral la! upon #uestions covered by said contract. 4ro a readin$ of the said charter or contract it !ould be seen that there is no indication that the 1overn ent intended to i pose upon said co pany any other conditions as obli$ations not e@pressly found in said charter or contract. If that is true, then certainly the 1overn ent cannot i pose upon said co pany any conditions or obli$ations found in any $eneral la!, !hich does not e@pressly odify said contract. ,ection =9 of the Corporation /a! (Act No. &9<)* !as intended to apply to all rail!ays in the Philippine Islands!hich did not have a special charter contract. Act No. &<&8 applies only to the Manila Railroad Co pany, one of the respondents, and bein$ a special charter of said co pany, its adoption had the effect of supersedin$ the provisions of the $eneral Corporation /a! !hich are applicable to railraods in $eneral. 3he special charter (Act No. &<&8* had the effect of supersedin$ the $eneral Corporation /a! upon all atters covered by said special charter. ,aid Act, inas uch as it contained a special provision relatin$ to the erection of tele$raph and telephone poles, and the nu ber of !ires !hich the 1overn ent i$ht place thereon, superseded the $eneral la! upon that #uestion. Act No. &<&8 is a special charter of the respondent co pany. It constitutes a contract bet!een the respondent co pany and the state- and the state and the $rantee of a charter are e#ually bound by its provisions. 4or the state to i pose an obli$ation or a duty upon the respondent co pany, !hich is not e@pressly provided for in the charter (Act No. &<&8*, !ould a ount to a violation of said contract bet!een the state and the respondent co pany. 3he provisions of Act No. &9<) relatin$ to the nu ber of !ires !hich the 1overn ent ay place upon the poles of the co pany are different and ore enerous than the provisions of the charter upon the sa e #uestion. 3herefore, to allo! the plaintiff to re#uire of the respondent co pany a co pliance !ith said section =9 of Act No. &9<), !ould be to re#uire of the respondent co pany and the perfor ance of an obli$ation !hich is not i posed upon it by its charter. 3he charter of a corporation is a contract bet!een three partiesA (a* it is a contract bet!een the state and the corporation to !hich the charter is $ranted- (b* it is a contact bet!een the stoc"holders and the state and (c* it is also a contract bet!een the corporation and its stoc"holders. (Coo" on Corporations, vol. ', sec. 9)9 and cases cited.* 3he #uestion is not !hether Act No. &<&8 repealed Act No. &9<)- but !hether, after the adoption of Act No. &<&8, the respondents are obli$ed to co ply !ith the special provision above entioned, contained in Act No. &9<). 0e ust ans!er that #uestion in the native. Both la!s are still in force, unless other!ise repealed. Act No. &<&8 is applicable to respondents upon the #uestion before us, !hile Act No. &9<) is not applicable. 3he petitioner, in vie! of all the fore$oin$ facts and the la! applicable thereto, has not sho!n itself entitled to the re edy prayed for. 3he prayer of the petition ust, therefore, be denied. And !ithout any findin$ as to costs, it is so ordered. &treet, "alcol*, Villa*or, +stran%, ohns, Ro*ual%ez an% Villa(Real, ., concur

Re)u*+,- o. /0e P0,+,)),nes SUPREME COURT M1n,+1 SECON% % 6 S ON

G.R. No. 96674 June 26, 1992 RUR!L "!N# O( S!L N!S, NC., M!NUEL S!LU%, LU&6 M N%! TR !S 1n8 (R!NC SCO TR !S, )e/,/,one4s, 7s. COURT O( !PPE!LS;, SECUR T ES !N% E<CH!NGE COMM SS ON, MEL!N ! !. GUERRERO, LU& !N% CO, $ LHEM N! G. ROS!LES, (R!NC SCO M. GUERRERO, JR., 1n8 (R!NC SCO GUERRERO , SR.,4es)on8en/s.

P!R!S, J.: 3he basic controversy in this case is !hether or not the respondent court erred in sustainin$ the ,ecurities and E@chan$e Co ission !hen it co pelled by "an%a*us the Rural Ban" of ,alinas to re$ister in its stoc" and transfer boo" the transfer of 9?6 shares of stoc" to private respondents. Petitioners aintain that the Petition for "an%a*us should have been denied upon the follo!in$ $rounds. (&* "an%a*us cannot be a re edy co$ni2able by the ,ecurities and E@chan$e Co ission !hen the purpose is to re$ister certificates of stoc" in the na es of clai ants !ho are not yet stoc"holders of a corporationA

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('* 3here e@ist valid reasons for refusin$ to re$ister the transfer of the sub:ect of stoc", na elyA (a* a pendin$ controversy over the o!nership of the certificates of stoc" !ith the Re$ional 3rial Court(b* clai s that the .eeds of Assi$n ent coverin$ the sub:ect certificates of stoc" !ere fictitious and antedated- and (c* clai s 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 Cune &8, &)?), Cle ente 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 to sell or other!ise dispose of andGor ort$a$e 9?6 shares of stoc" of the Ban" re$istered in his na e (represented by the Ban"Hs stoc" certificates nos. '>, 9) and ><*, to e@ecute the proper docu ents therefor, and to receive and si$n receipts for the dispositions. 7n 4ebruary '?, &)=8, and pursuant to said ,pecial Po!er of Attorney, private respondent Melania 1uerrero, as Attorney-in-4act, e@ecuted a !ee% of 'ssign*ent for 9?' shares out of the 9?6 shares, in favor of private respondents /u2 Andico (9<? shares*, 0ilhel ina Rosales (&8 shares* and 4rancisco 1uerrero, Cr. (< shares*. Al ost four onths later, or t!o ('* days before the death of Cle ente 1uerrero on Cune '9, &)=8, private respondent Melania 1uerrero, pursuant to the sa e ,pecial Po!er of Attorney, e@ecuted a !ee% of 'ssign*entfor the re ainin$ one (&* share of stoc" in favor of private respondent 4rancisco 1uerrero, ,r. ,ubse#uently, private respondent Melania 1uerrero presented to petitioner Rural Ban" of ,alinas the t!o ('* .eeds of Assi$n ent for re$istration !ith a re#uest for the transfer in the Ban"Hs stoc" and transfer boo" of the 9?6 shares of stoc" so assi$ned, the cancellation of stoc" certificates in the na e of Cle ente 1. 1uerrero, and the issuance of ne! stoc" certificates coverin$ the transferred shares of stoc"s in the na e of the ne! o!ners thereof. Bo!ever, petitioner Ban" denied the re#uest of respondent Melania 1uerrero. 7n .ece ber <, &)=8, private respondent Melania 1uerrero filed !ith the ,ecurities and E@chan$e Co ission% (,EC* an action for *an%a*us a$ainst petitioners Rural Ban" of ,alinas, its President and Corporate ,ecretary. 3he case !as doc"eted as ,EC Case No. &)?). Petitioners filed their Ans!er !ith counterclai on .ece ber &), &)=8 alle$in$ the upon the death of Cle ente 1. 1uerrero, his 9?6 shares of stoc" beca e the property of his estate, and his property and that of his !ido! should first be settled and li#uidated in accordance !ith la! before any distribution can be effected so that petitioners ay not be a party to any sche e to evade pay ent of estate or inheritance ta@ and in order to avoid liability to any third persons or creditors of the late Cle ente 1. 1uerrero. 7n Canuary '), &)=&, a otion for intervention !as filed by Maripol 1uerrero, a le$ally adopted dau$hter of the late Cle ente 1. 1uerrero and private respondent Melania 1uerrero, !ho stated therein that on Nove ber '>, &)=8 (al ost t!o !ee"s before the filin$ of the petition for "an%a*us* a Petition for the ad inistration of the estate of the late Cle ente 1. 1uerrero had been filed !ith the Re$ional 3rial Court, Pasi$, Branch II, doc"eted as ,pecial Proceedin$s No. )988. Maripol 1uerrero further clai ed that the .eeds of Assi$n ent for the sub:ect shares of stoc" are fictitious and antedated- that said conveyances are donations since the considerations therefor are belo! the boo" value of the shares, the assi$neesGprivate respondents bein$ close relatives of private respondent Melania 1uerrero- and that the transfer of the shares in #uestion to assi$neesGprivate respondents, other than private respondent Melania 1uerrero, !ould deprive her (Maripol 1uerrero* of her ri$htful share in the inheritance. 3he ,EC hearin$ officer denied the Motion for Intervention for lac" of erit. 7n appeal, the ,EC En Banc affir ed the decision of the hearin$ officer. Intervenor 1uerrero filed a co plaint before the then Court of 4irst Instance of Ri2al, Jue2on City Branch, a$ainst private respondents for the annul ent of the .eeds of Assi$n ent, doc"eted as Civil Case No. J-6'8<8. Petitioners, on the other hand, filed a Motion to .is iss andGor to ,uspend Bearin$ of ,EC Case No. &)?) until after the #uestion of !hether the sub:ect .eeds of Assi$n ent are fictitious, void or si ulated is resolved in Civil Case No. J-6'8<8. 3he ,EC Bearin$ 7fficer denied said otion. 7n .ece ber &8, &)=9, the ,EC Bearin$ 7fficer rendered a .ecision $rantin$ the !rit of "an%a*us prayed for by the private respondents and directin$ petitioners to cancel stoc" certificates nos. '>, 9) and >< of the Ban", all in the na e of Cle ente 1. 1uerrero, and to issue ne! certificates in the na es of private respondents, e@cept Melania 1uerrero. 3he dispositive, portion of the decision readsA 0BERE47RE, :ud$ ent is hereby rendered in favor of the petitioners and a$ainst the respondents, directin$ the latter, particularly the corporate secretary of respondent Rural Ban" of ,alinas, Inc., to re$ister in the latterHs ,toc" and 3ransfer Boo" the transfer of 9?6 shares of stoc" of respondent Ban" and to cancel ,toc" Certificates Nos. '>, 9< and >< and issue ne! ,toc" Certificates coverin$ the transferred shares in favor of petitioners, as follo!sA &. /u2 Andico 9<? shares

6
'. 0ilhel ina Rosales &8 shares 6. 4rancisco 1uerrero, Cr. < shares 9. 4rancisco 1uerrero, ,r. & share and to pay to the above-na ed petitioners, the dividends for said shares correspondin$ to the years &)=&, &)=', &)=6 and &)=9 !ithout interest. No pronounce ent as to costs. ,7 7R.ERE.. (p. ==, Rollo* 7n appeal, the ,EC En Banc affir ed the decision of the Bearin$ 7fficer. Petitioner filed a petition for revie! !ith the Court of Appeals but said Court li"e!ise affir ed 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 cases involvin$ intracorporate controversies. An intracorporate controversy has been defined as one !hich arises bet!een a stoc"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$istration, cancellation and issuances thereof by petitioner Rural Ban" of ,alinas. It is therefore !ithin the po!er of respondent ,EC to ad:udicate. Respondent ,EC correctly ruled in favor of the re$isterin$ of the shares of stoc" in #uestion in private respondentHs na es. ,uch rulin$ finds support under ,ection >6 of the Corporation Code, to !itA ,ec. >6. . . . ,hares of stoc" so issued are personal property and ay be transferred by delivery of the certificate or certificates indorsed by the o!ner or his attorney-in-fact or other person le$ally authori2ed to a"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, the Court interpreted ,ec. >6 in his !iseA ,aid ,ection (,ec. 6< of Act &9<) +no! ,ec. >6 of the Corporation Code5* conte plates no restriction as to !ho the stoc"s ay be transferred. It does not su$$est that any discri ination ay be created by the corporation in favor of, or a$ainst a certain purchaser. 3he o!ner of shares, as o!ner of personal property, is at liberty, under said section to dispose the in favor of !ho ever he pleases, !ithout li itation in this respect, than the $eneral provisions of la!. . . . 3he only li itation i posed by ,ection >6 of the Corporation Code is !hen the corporation holds any unpaid clai a$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, becauseA . . . Restrictions in the traffic of stoc" ust have their source in le$islative enact ent, as the corporation itself cannot create such i pedi ent. By-la!s are intended erely for the protection of the corporation, and prescribe re$ulation, not restriction- they are al!ays sub:ect to the charter of the corporation. 3he corporation, in the absence of such po!er, cannot ordinarily in#uire into or pass upon the le$ality of the transactions by !hich its stoc" passes fro one person to another, nor can it #uestion the consideration upon !hich a sale is based. . . . (3o son on Corporation ,ec. 9&6?, cite%in 4leisher vs. Nolasco, &upra*. 3he ri$ht of a transfereeGassi$nee to have stoc"s transferred to his na e is an inherent ri$ht flo!in$ fro the stoc"s. 3husA his o!nership of

0henever a corporation refuses to transfer and re$ister stoc" in cases li"e the present, *an%a*us!ill lie to co pel the officers of the corporation to transfer said stoc" in the boo"s of the corporation% ('>, Cyc. 69?, Byer vs. Bryan, &) Phil. &6=- 4leisher vs. Botica Nolasco, 9? Phil. <=6, <)9*. 3he corporationHs obli$ation to re$ister is inisterial.

In transferrin$ stoc", the secretary of a corporation acts in purely inisterial capacity, and does not try to decide the #uestion of o!nership. (4letcher, ,ec. <<'=, pa$e 969*.

7
3he duty of the corporation to transfer is a inisterial one and if it refuses to a"e such transaction !ithout $ood cause, it ay be co pelled to do so by *an%a*us. (&ee. <<&=, &' 4letcher 6)9* 4or the petitioner Rural Ban" of ,alinas to refuse re$istration of the transferred shares in its stoc" and transfer boo", !hich duty is inisterial on its part, is to render nu$atory and ineffectual the spirit and intent of ,ection >6 of the Corporation Code. 3hus, respondent Court of Appeals did not err in upholdin$ the .ecision of respondent ,EC affir in$ the .ecision of its Bearin$ 7fficer directin$ the re$istration of the 9?6 shares in the stoc" and transfer boo" in the na es of private respondents. At all events, the re$istration is !ithout pre:udice to the proceedin$s in court to deter ine the validity of the .eeds of Assi$n ent of the shares of stoc" in #uestion. 0BERE47RE, the petition is .I,MI,,E. for lac" of ,7 7R.ERE.. -arvasa, C. ., Pa%illa an% Regala%o, -ocon, ., is on leave. Re)u*+,- o. /0e P0,+,)),nes SUPREME COURT M1n,+1 EN "!NC G.R. No. 41573 Se)/e:*e4 6, 1924 ., concur. erit.

RE% L NE TR!NSPORT!T ON CO., )e/,/,one4-1))e++1n/, 7s. RUR!L TR!NS T CO., LT%., 4es)on8en/-1))e++ee. L. !. Loc#woo% for appellant. +hnic# an% +pisso for appellee. "UTTE, J.: 3his case is before us on a petition for revie! of an order of the Public ,ervice Co ission entered .ece ber '&, &)6', $rantin$ to the Rural 3ransit Co pany, /td., a certificate of public convenience to operate a transportation service bet!een Ila$an in the Province of Isabela and 3u$ue$arao in the Province of Ca$ayan, and additional trips in its e@istin$ e@press service bet!een Manila 3u$ue$arao. 7n Cune 9, &)6', the Rural 3ransit Co pany, /td., a Philippine corporation, filed !ith the Public Co pany ,erviceCo ission an application in !hich it is stated in substance that it is the holder of a certificate or public convenience to operate a passen$er bus service bet!een Manila and 3u$ue$arao- that it is the only operator of direct service bet!een said points and the present authori2ed schedule of only one trip daily is not sufficient- that it !ill be also to the public convenience to $rant the applicant a certificate for a ne! service bet!een 3u$ue$arao and Ila$an. 7n Culy '', &)6', the appellant, Red /ine 3ransportation Co pany, filed an opposition to the said application alle$in$ in substance that as to the service bet!een 3u$ue$arao and Ila$an, the oppositor already holds a certificate of public convenience and is renderin$ ade#uate and satisfactory service- that the $rantin$ of the application of the Rural 3ransit Co pany, /td., !ould not serve public convenience but !ould constitute a ruinous co petition for the oppositor over said route. After testi ony !as ta"en, the co ission, on .ece ber '&, &)6', approved the application of the Rural 3ransit Co pany, /td., and ordered that the certificate of public convenience applied for be %issued to the applicant Rural 3ransit Co pany, /td.,% !ith the condition, a on$ others, that %all the other ter s and conditions of the various certificates of public convenience of the herein applicant and herein incorporated are ade a part hereof.% 7n Canuary &9, &)66, the oppositor Red /ine 3ransportation Co pany filed a otion for rehearin$ and reconsideration in !hich it called the co issionHs attention to the fact that there !as pendin$ in the Court of 4irst Instance of Manila case N. 9'696, an application for the voluntary dissolution of the corporation, Rural 3ransit Co pany, /td. ,aid otion for reconsideration !as set do!n for hearin$ on March '9, &)66. 7n March '6, &)66, the Rural 3ransit Co pany, /td., the applicant, filed a otion for postpone ent. 3his otion !as verified by M. 7lsen !ho s!ears %that he !as the secretary of the Rural 3ransit Co pany, /td., in the above entitled case.% Epon the hearin$ of the otion for reconsideration, the co ission ad itted !ithout ob:ection the follo!in$ docu ents filed in said case No. 9'696 in the Court of 4irst Instance of Manila for the dissolution of the Rural 3ransit Co pany, /td. the petition for dissolution dated Culy >, &)6', the decision of the said Court of 4irst Instance of Manila, dated 4ebruary '=, &)66, decreein$ the dissolution of the Rural 3ransit Co pany, /td. At the trial of this case before the Public ,ervice Co ission an issue !as raised as to !ho !as the real party in interest a"in$ the application, !hether the Rural 3ransit Co pany, /td., as appeared on the face of the application, or the Bachrach Motor Co pany, Inc., usin$ na e of the Rural 3ransit Co pany, /td., as a trade na e. 3he evidence $iven by the applicantHs secretary, 7lsen, is certainly very dubious and confusin$, as ay be seen fro the follo!in$A

8
J. 0ill you please ans!er the #uestion !hether it is the Bachrach Motor Co pany operatin$ under the trade na e of the Rural 3ransit Co pany, /i ited, or !hether it is the Rural 3ransit Co pany, /i ited in its o!n na e this application !as filed; A. J. 3he Bachrach Motor Co pany is the principal stoc"holder. Please ans!er the #uestion.

E,PE/E3A. 7b:ecion por#ue la pre$unta ya ha sido contestada. CEEK. Puede contestar. A. I do not "no! !hat the le$al construction or relationship e@istin$ bet!een the t!o. ind by not tellin$ the real applicant in this case;

CE.1E. I do not "no! !hat is in your A.

It is the Rural 3ransit Co pany, /td.

CE.1E. As an entity by itself and not by the Bachrach Motor Co pany; A. I do not "no!. I have not $iven that phase of the necessitated. atter uch thou$ht, as in previous occassion had not

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

CE.1E. 0ho is that operator; A. 3he Rural 3ransit Co pany, /td. ercial na e of the Bachrach Motor Co pany;

CE.1E. By itself, or as a co A. I cannot say.

E,PE/E3A. 3he Rural 3ransit Co pany, /td., is a corporation duly established in accordance !ith the la!s of the Philippine Islands. CE.1E. Accordin$ to the records of this co ission the Bachrach Motor Co pany is the o!ner of the certificates and the Rural 3ransit Co pany, /td., is operatin$ !ithout any certificate. CE.1E. If you filed this application for the Rural 3ransit Co pany, /td., and after!ards it is found out that the Rural 3ransit Co pany, /td., is not an operator, everythin$ !ill be turned do!n. CE.1E. My #uestion !as, !hen you filed this application you evidently A. Mes, sir. ind; ade it for the operator;

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

A. Accordin$ to the status of the o!nership of the certificates of the for er Rural 3ransit Co pany, the operator !as the operator authori2ed in case No. '6'&? to !ho all of the assets of the for er Rural 3ransit Co pany !ere sold. CE.1E. Bachrach Motor Co pany; A. All actions have been prosecuted in the na e of the Rural 3ransit Co pany, /td.

CE.1E. Mou ean the Bachrach Motor Co pany, Inc., doin$ business under the na e of the Rural 3ransit Co pany, /td.; A. Mes, sir.

9
/7CN077.. I ove that this case be dis issed, your Bonor, on the $round that this application !as the na e of one party but the real o!ner is another party. E,PE/E3A. 0e ob:ect to that petition. CE.1E. I !ill have that in ind !hen I decide the case. If I a$ree !ith you everythin$ !ould be finished. ade in

3he Bachrach Motor Co pany, Inc., entered no appearance and ostensibly too" no part in the hearin$ of the application of the Rural 3ransit Co pany, /td. It ay be a atter of so e surprise that the co ission did not on its o!n otion order the a end ent of the application by substitutin$ the Bachrach Motor Co pany, Inc., as the applicant. Bo!ever, the hearin$ proceeded on the application as filed and the decision of .ece ber ', &)6', !as rendered in favor of the Rural 3ransit Co pany, /td., and the certificate ordered to be issued in its na e, in the face of the evidence that the said corporation !as not the real party in interest. In its said decision, the co ission undertoo" to eet the ob:ection by referrin$ to its resolution of Nove ber '>, &)6', entered in another case. 3his resolution in case No. '6'&? concludes as follo!sA Pre ises considered !e hereby authori2e the Bachrach Motor Co., Inc., to continue usin$ the na e of %Rural 3ransit Co., /td.,% as its trade na e in all the applications, otions or other petitions to be filed in this co ission in connection !ith said business and that this authority is $iven retroactive effect as of the date, of filin$ of the application in this case, to !it, April '), &)68. 0e "no! of no la! that e po!ers the Public ,ervice Co ission or any court in this :urisdiction to authori2e one corporation to assu e the na e of another corporation as a trade na e. Both the Rural 3ransit Co pany, /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 na e. 3he incorporators %constitute a body politic and corporate un%er the na*e state% in the certificate.% (,ection &&, Act No. &9<), as a ended.* A corporation has the po!er % of succession )y its corporate na*e.% (,ection &6, i)i%.* 3he na e of a corporation is therefore essential to its e@istence. It cannot chan$e its na e e@cept in the anner provided by the statute. By that na e alone is it authori2ed to transact business. 3he la! $ives a corporation no e@press or i plied authority to assu e another na e that is unappropriatedA still less that of another corporation, !hich is e@pressly set apart for it and protected by the la!. If any corporation could assu e at pleasure as an unre$istered trade na e the na e of another corporation, this practice !ould result in confusion and open the door to frauds and evasions and difficulties of ad inistration and supervision. 3he policy of the la! e@pressed in our corporation statute and the Code of Co erce is clearly a$ainst such a practice. (Cf. ,carsdale Pub. Co. Colonial Press vs. Carter, &&> Ne! Mor" ,upple ent, ?6&- ,vens"a Nat. 4. i. C. vs. ,!edish Nat. Assn., '8< Illinois +Appellate Courts5, 9'=, 969.* 3he order of the co ission of Nove ber '>, &)6', authori2in$ the Bachrach Motor Co., Incorporated, to assu e the na e of the Rural 3ransit Co., /td. li"e!ise in corporated, as its trade na e bein$ void, and acceptin$ the order of .ece ber '&, &)6', at its face as $rantin$ a certificate of public convenience to the applicant Rural 3ransit Co., /td., the said order last entioned is set aside and vacated on the $round that the Rural 3ransit Co pany, /td., is not the real party in interest and its application !as fictitious. In vie! of the dissolution of the Rural 3ransit Co pany, /td. by :udicial decree of 4ebruary '=, &)66, !e do not see ho! !e can assess costs a$ainst said respondent, Rural 3ransit Co pany, /td. "alcol*, Villa(Real, .*perial an% Go%%ar%, ., concur.

Red /ine 3ransport vs. Rural 3ransit Re8 L,ne T41ns)o4/1/,on Co. 7s. Ru41+ T41ns,/ Co. GR No. 41573 = Se)/. 6, 1924 O O O O O O (1-/s> 3his is a petition for revie! of an order of the Public ,ervice Co ission $rantin$ to the Rural 3ransit Co pany, /td., a certificate of public convenience to operate a transportation service bet!een Ila$an in the Province of Isabela and 3u$ue$arao in the Province of Ca$ayan, and additional trips in its e@istin$ e@press service bet!een Manila 3u$ue$arao. 7n Cune 9, &)6', Rural 3ransit filed an application for certification of a ne! service bet!een 3u$ue$arao and Ila$an !ith the Public Co pany ,ervice Co ission (P,C*, since the present service is not sufficient Rural 3ransit further stated that it is a holder of a certificate of public convenience to operate a passen$er bus service bet!een Manila and 3u$ue$arao Red /ine opposed said application, ar$uin$ that they already hold a certificate of public convenience for 3u$ue$arao and Ila$an, and is renderin$ ade#uate service. 3hey also ar$ued that $rantin$ Rural 3ransitPs application !ould constitute a ruinous co petition over said route 7n .ec. '&, &)6', Public ,ervice Co ission approved Rural 3ransitPs application, !ith the condition that %all the other ter s and conditions of the various certificates of public convenience of the hereinapplicant and herein incorporated are ade a part hereof.% A otion for rehearin$ and reconsideration !as filed by Red /ine since Rural 3ransit has a pendin$ application before the Court of 4irst Instance for voluntary dissolution of the corporation

10
O O O O O A otion for postpone ent !as filed by Rural 3ransit as verified by M. 7lsen !ho s!ears %that he !as the secretary of the Rural 3ransit Co pany, /td .urin$ the hearin$ before the Public ,ervice Co ission, the petition for dissolution and the C4IPsdecision decreein$ the dissolution of Rural 3ransit !ere ad itted !ithout ob:ection At the trial of this case before the Public ,ervice Co ission an issue !as raised as to !ho !as the real party in interest a"in$ the application, !hether the Rural 3ransit Co pany, /td., as appeared on the face of the application, or the Bachrach Motor Co pany, Inc., usin$ na e of the Rural 3ransit Co pany, /td., as a trade na e Bo!ever, P,C $ranted Rural 3ransitPs application for certificate of public convenience and ordered that a certificate be issued on its na e P,C relied on a Resolution in case No. '6'&?, authori2in$ Bachrach Motor to continue usin$ Rural 3ransitPs na e as its tradena e in all its applications and petitions to be filed before the P,C. ,aid resolution !as $iven a retroactive effect as of the date of filin$ of the application or April 68, &)68 ssue> Can the Public ,ervice Co na e; O O O O ission authori2e a corporation to assu e the na e of another corporation as a trade

Ru+,n9> NO 3he Rural 3ransit Co pany, /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 na e 3he incorporators %constitute a body politic and corporate un%er the na*e state% in the certificate.% A corporation has the po!er %of succession )y its corporate na*e .% It is essential to its e@istence and cannot chan$e its na e e@cept in the anner provided by the statute. By that na e alone is it authori2ed to transact business. 3he la! $ives a corporation no e@press or i plied authority to assu e another na e that is unappropriatedA still less that of another corporation, !hich is e@pressly set apart for it and protected by the la!. If any corporation could assu e at pleasure as an unre$istered trade na e the na e of another corporation, this practice !ould result in confusion and open the door to frauds and evasions and difficulties of ad inistration and supervision. In this case, the order of the co ission authori2in$ the Bachrach Motor Co., Incorporated, to assu e the na e of the Rural 3ransit Co., /td. li"e!ise incorporated, as its trade na e bein$ void. Acceptin$ the order of .ece ber '&, &)6', at its face as $rantin$ a certificate of public convenience to the applicant Rural 3ransit Co., /td., the said order last entioned is set aside and vacated on the $round that the Rural 3ransit Co pany, /td., is not the real party in interest and its application !as fictitious

Republic of the Philippines SUPREME COURT Manila EN BANC

G.R. No. L-26273 Ju+5 21, 1973 PH L PP NE ( RST NSUR!NCE COMP!N', NC., plaintiff-appellant, vs. M!R ! C!RMEN H!RT G!N, CGH, 1n8 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 dis issin$ the action in its Civil 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 to entertain the sa e and, in its resolution dated &< Culy &)>>, certified the records thereof to this Court for proper deter ination. 3he antecedent facts are set forth in the pertinent portions of the resolution of the Court of Appeals referred to as follo!sA Accordin$ to the co plaint, plaintiff !as ori$inally or$ani2ed as an insurance corporation under the na e of H3he Me" 3on$ /in 4ire and Marine Insurance Co., /td.H 3he articles of incorporationori$inally presented before the ,ecurity and E@chan$e Co issioner and ac"no!led$ed before Notary Public Mr. E. .. I$nacio on Cune &, &)<6 state that the na e of the corporation !as H3he Me" 3on$ /in 4ire and Marine Insurance Co., /td.H 7n May '>, &)>& the articles of incorporation !ere a ended pursuant to a certificate

11
of the Board of .irectors dated March =, &)>& chan$in$ the na e of the corporation to HPhilippine 4irst Insurance Co., Inc.H. 3he co plaint alle$es that the plaintiff Philippine 4irst Insurance Co., Inc., doin$ business under the na e of H3he Me" 3on$ /in 4ire and Marine Insurance Co., /t.H si$ned as co- a"er to$ether !ith defendant Maria Car en Barti$an, C1B, a pro issory note for P<,888.88 in favor of the China Ban"in$ Corporation payable !ithin 68 days after the date of the pro issory note !ith the usual ban"in$ interest- that the plaintiff a$reed to act as such co- a"er of the pro issory note upon the application of the defendant Maria Car en Barti$an, C1B, !ho to$ether !ith Antonio 4. Chua and Chan$ Na 4u, si$ned an inde nity a$ree ent in favor of the plaintiff, underta"in$ :ointly and severally, to pay the plaintiff da a$es, losses or e@penses of !hatever "ind or nature, includin$ attorneyHs fees and le$al costs, !hich the plaintiff ay sustain as a result of the e@ecution by the plaintiff and co- a"er of Maria Car en Barti$an, C1B, of the pro issory note above-referred to- that as a result of the e@ecution of the pro issory note by the plaintiff and Maria Car en Barti$an, C1B, the China Ban"in$ Corporation delivered to the defendant Maria Car en Barti$an, C1B, the su of P<,888.88 !hich said defendant failed to pay in full, such that on Au$ust 6&, &)>& the sa e !as. rene!ed and as of Nove ber '?, &)>& there !as due on account of the pro issory note the su of P9,<<).<8 includin$ interest. 3he co plaint ends !ith a prayer for :ud$ ent a$ainst the defendants, :ointly and severally, for the su of P9,<<).<8 !ith interest at the rate of &'D per annu fro Nove ber '6, &)>& plus P)&&.)8 by !ay of attorneyHs fees and costs. Althou$h 7. En$"ee !as ade as party defendant in the caption of the co plaint, his na e is not entioned in the body of said co plaint. Bo!ever, his na e Appears in the Anne@ A attached to the co plaint !hich is the counter inde nity a$ree ent supposed to have been si$ned accordin$ to the co plaint by Maria Car en Barti$an, C1B, Antonio 4. Chua and Chan$ Na 4u. In their ans!er the defendants deny the alle$ation that the plaintiff for erly conducted businessunder the na e and style of H3he Me" 3on$ /in 4ire and Marine Insurance Co., /td.H 3hey ad it the e@ecution of the inde nity a$ree ent but they clai that they si$ned said a$ree ent in favor of the Me" 3on$ /in 4ire and Marine Insurance Co., /td.H and not in favor of the plaintiff. 3hey li"e!ise ad it that they failed to pay the pro issory note !hen it fell due but they alle$e that since their obli$ation !ith the China Ban"in$ Corporation based on the pro issory note still subsists, the surety !ho co-si$ned the pro issory note is not entitled to collect the value thereof fro the defendants other!ise they !ill be liable for double a ount of their obli$ation, there bein$ no alle$ation that the surety has paid the obli$ation to the creditor. By !ay of special defense, defendants clai that there is no privity of contract bet!een the plaintiff and the defendants and conse#uently, the plaintiff has no cause of action a$ainst the , considerin$ that the co plaint does not alle$e that the plaintiff and the HMe" 3on$ /in 4ire and Marine Insurance Co., /td.H are one and the sa e or that the plaintiff has ac#uired the ri$hts of the latter. 3he parties after the ad ission of E@hibit A !hich is the a ended articles of incorporation and E@hibit & !hich is a de and letter dated Au$ust &>, &)>' si$ned by the ana$er of the loans and discount depart ent of the China Ban"in$ Corporation sho!in$ that the pro issory note up to said date in the su of P9,<88.88 !as still unpaid, sub itted the case for decision based on the pleadin$s. Ender date of > 7ctober &)>', the Court of 4irst Instance of Manila rendered the decision appealed. It dis issed the action !ith costs a$ainst the plaintiff Philippine 4irst Insurance Co., Inc., reasonin$ as follo!sA ... 0ith these undisputed facts in this Court are as follo!sA ind, the parties correctly concluded that the issues for resolution by

(a* 0hether or not the plaintiff is the real party in interest that ay validly sue on the inde nitya$ree ent si$ned by the defendants and the Me" 3on$ /in 4ire R Marine Insurance Co., /td. (Anne@ A to plaintiffHs co plaint *- and (b* 0hether or not a suit for inde nity or rei burse ent ay under said inde nity a$ree ent prosper !ithout plaintiff havin$ yet paid the a ount due under said pro issory note. In the first place, the chan$e of na e of the Me" 3on$ /in 4ire R Marine Insurance Co., /td. to the Philippines 4irst Insurance Co., Inc. is of dubious validity. ,uch chan$e of na e in effect dissolved the ori$inal corporation by a process of dissolution not authori2ed by our corporation la! (see ,ecs. >' and >?, inclusive, of our Corporation /a!*. Moreover, said chan$e of na e, a ountin$ to a dissolution of the Me" 3on$ /in 4ire R 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 the corporation, a votin$ proportion re#uired not only for the dissolution of a corporation but also for any a end ent of its articles of incorporation (,ecs. &= and >', Corporation /a!*. 4urther ore, such chan$e of corporate na e appears to be a$ainst public policy and ay be effected only by e@press authority of la! (Red /ine 3ransportation Co. v. Rural 3ransit Co., /td., >8 Phil. <9), <<<- Cincinnati Coopera$e Co., /td. vs. Fate, '> ,0 <6=, <6)- Pilsen Bre!in$ Co. vs. 0allace, &'< NE ?&9*, but there is nothin$ in our corporation la! authori2in$ the chan$e of corporate na e in this :urisdiction. In the second place, assu in$ that the chan$e of na e of the Me" 3on$ /in 4ire R Marine Insurance Co. /td., to Philippines pine 4irst Insurance Co., Inc., as acco plished on March =, &)>&, is valid, that !ould

12
ean that the ori$inal corporation, the Me" 3on$ /in 4ire R Marine Insurance Co., /td., beca e dissolved and of no further e@istence since March =, &)>&, so that on May &<, &)>&, the date the inde nity a$ree ent, Anne@ A, !as e@ecuted, said ori$inal corporation bad no ore po!er to enter into any a$ree ent !ith the defendants, and the a$ree ent entered into by it !as ineffective for lac" of capacity of said dissolved corporation to enter into said a$ree ent. At any rate, even if !e hold that said chan$e of na e is valid, the fact re ains that there is no evidence sho!in$ that the ne! entity, the Philippine 4irst Insurance Co., Inc. has !ith the consent of the ori$inal parties, assu ed the obli$ations or !as assi$ned the ri$hts of action in the ori$inal corporation, the Me" 3on$ /in 4ire R Marine Insurance Co., /td. In other !ords, there is no evidence of conventional subro$ation of the Plaintiffs in the ri$hts of the Me" 3on$ /in 4ire R Marine Insurance Co., /td. under said inde nity a$ree ent (Arts. &688, &68&, Ne! Civil Code*. !ithout such subro$ation assi$n ent of ri$hts, the herein plaintiff has no cause of action a$ainst the defendants, and is, therefore, not the ri$ht party in interest as plaintiff. /ast, but not least, assu in$ that the said chan$e of na e !as le$al and operated to dissolve the ori$inal corporation, the dissolved corporation, ust pursuant to ,ec. ?? of our corporation la!, be dee ed as continuin$ as a body corporate for three (6* years fro March =, &)>& for the purpose of prosecutin$ and defendin$ suits. It is, therefore, the Me" 3on$ /in 4ire R Marine Insurance Co., /td. that is the proper party to sue the defendants under said inde nity a$ree ent up to March =, &)>9. Bavin$ arrived at the fore$oin$ conclusions, this Court need not s#uarely pass upon issue (b* for ulated above. 0BERE47RE, plaintiffHs action is hereby dis issed, !ith costs a$ainst the plaintiff. In due ti e, the Philippine 4irst Insurance Co pany, Inc. oved for reconsideration of the decision aforesaid, but said otion !as denied on .ece ber 6, &)>' in an order !orded thusA 3he otion for reconsideration, dated Nove ber =, &)>', raises no ne! issue that !e failed to consider in renderin$ our decision of 7ctober >, &)>'. Bo!ever, it $ives us an opportunity to a plify our decision as re$ards the #uestion of chan$e of na e of a corporation in this :urisdiction. 0e find nothin$ in our Corporation /a! authori2in$ a chan$e of na e of a corporation or$ani2ed pursuant to its provisions. ,ec. &= of the Corporation /a! authori2es, in our opinion, a end ent to the Articles of Incorporation of a corporation only as to atters other than its corporate na e. 7nce a corporation 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 na e for the lifeti e of its corporate e@istence fi@ed in its Articles of Incorporation, unless sooner le$ally dissolved (,ec. &&, Corp. /a!*. ,i$nificantly, chan$e of na e is not one of the ethods of dissolution of corporations e@pressly authori2ed by our Corporation /a!. Also si$nificant is the fact that the po!er to chan$e its corporate na e is not one of the $eneral po!ers conferred on corporations in this :urisdiction (,ec. &6, Corp. /a!*. 3he enu eration of corporate po!ers ade in our Corporation /a! i plies the e@clusion of all others (3ho as v. 0est Cersey R. Co., &8& E.,. ?&, '< /. ed. )<8*. It is obvious, in this connection, that chan$e of na e is not one of the po!ers necessary to the e@ercise of the po!ers conferred on corporations by said ,ec. &6 (see ,ec. &9, Corp. /a!*. 3o rule that ,ec. &= of our Corporation /a! authori2es the chan$e of na e of a corporation by a end ent of its Articles of Incorporation is to indul$e in :udicial le$islation. 0e have e@a ined the cases cited in Folu e &6 of A erican Curisprudence in support of the proposition that the $eneral po!er to alter or a end the charter of a corporation necessarily includes the po!er to alter the na e of a corporation, and find no :ustification for said conclusion arrived at by the editors of A erican Curisprudence. 7n the contrary, the annotations in favor of plaintiffHs vie! appear to have been based on decisions in cases !here the statute itself e@pressly authori2es chan$e of corporate na e by a end ent of its Articles of Incorporation. 3he correct rule in har ony !ith the provisions of our Corporation /a! is !ell e@pressed in an En$lish case as follo!sA After a co pany has been co pletely re$ister !ithout defect or o ission, so as to be incorporated by the na e set forth in the deed of settle ent, such incorporated co pany has not the po!er to chan$e its na e ... Althou$h the Nin$ by his prero$ative i$ht incorporate by a ne! na e, and the ne!ly na ed corporation i$ht retain for er ri$hts, and so eti es its for er na e also, ... it never appears to be such an act as the corporation could do by itself, but re#uired the sa e po!er as created the corporation. (Re$. v. Re$istrar of Coint ,toc" Cos &8 J.B. =6), <) E.C./. =6)*. 3he contrary vie! appears to represent the cases on the atter. inority doctrine, :ud$in$ fro the annotations on decided

13
3he ovant invo"es as persuasive precedent the action of the ,ecurities Co issioner in tacitly approvin$ the A ended, Articles of Incorporation on May '>, &)>&. 0e re$ret that !e cannot in $ood conscience lend approval to this action of the ,ecurities and E@chan$e Co issioner. 0e find no :ustification, le$al, oral, or practical, for adherin$ to the vie! ta"en by the ,ecurities and E@chan$e Co issioner that the na e of a corporation in the Philippines ay be chan$ed by ere a end ent of its Articles of Incorporation as to its corporate na e. A chan$e of corporate na e !ould serve no useful purpose, but on the contrary !ould ost probably cause confusion. 7nly a dubious purpose could inspire a chan$e of a corporate. na e !hich, unli"e a natural personHs na e, !as chosen by the incorporators the selves- and our Courts should not lend their assistance to the acco plish ent of dubious purposes. 0BERE47RE, !e hereby deny plaintiffHs erit. In this appeal appellant contends that Q I 3BE 3RIA/ C7ER3 ERRE. IN B7/.IN1 3BA3 IN 3BI, CERI,.IC3I7N, 3BERE I, N73BIN1 IN 7ER C7RP7RA3I7N /A0 AE3B7RIKIN1 3BE CBAN1E 74 C7RP7RA3E NAMEII 3BE 3RIA/ C7ER3 ERRE. IN .EC/ARIN1 3BA3 A CBAN1E 74 C7RP7RA3E NAME APPEAR, 37 BE A1AIN,3 PEB/IC P7/ICMIII 3BE 3RIA/ C7ER3 ERRE. IN B7/.IN1 3BA3 A CBAN1E 74 C7RP7RA3E NAME BA, 3BE /E1A/ E44EC3 74 .I,,7/FIN1 3BE 7RI1INA/ C7RP7RA3I7NA IF 3BE 3RIA/ C7ER3 ERRE. IN B7/.IN1 3BA3 3BE CBAN1E 74 NAME 74 3BE MEN 37N1 /IN 4IRE R MARINE IN,ERANCE C7., /3.. I, 74 .EBI7E, FA/I.I3MF 3BE 3RIA/ C7ER3 ERRE. IN B7/.IN1 3BA3 3BE APPE//AN3 BEREIN I, N73 3BE RI1B3 PAR3M IN3ERE,3 37 ,EE .E4EN.AN3,-APPE//EE,IF 3BE 3RIA/ C7ER3 4INA//M ERRE. IN .I,MI,,IN1 3BE C7MP/AIN3. AppellantHs Position is correct- all the above assi$n ents of error are !ell ta"en. 3he !hole case, ho!ever, revolves around only one #uestion. May a Philippine corporation chan$e its na e and still retain its ori$inal personality and individuality as such; 3he ans!er is not difficult to find. 3rue, under ,ection > of the Corporation /a!, the first thin$ re#uired to be stated in the Articles of Incorporation of any corn corporation is its na e, but it is only one a on$ any atters e#ually if not ore i portant, that ust be stated therein. 3hus, it is also re#uired, for e@a ple, to state the nu ber and na es of and residences of the incorporators and the residence or location of the principal office of the corporation, its ter of e@istence, the a ount of its capital stoc" and the nu ber of shares into !hich it is divided, etc., etc. 7n the other hand, ,ection &= e@plicitly per its the articles of incorporation to be a ended thusA ,ec. &=. Q Any corporation ay for le$iti ate corporate purpose or purposes, a end its articles of incorporation by a a:ority vote of its board of directors or trustees and the vote or !ritten assent of t!othirds of its e bers, if it be a nonstoc" corporation or, if it be a stoc" corporation, by the vote or !ritten assent of the stoc"holders representin$ at least t!o-thirds of the subscribed capital stoc" of the corporation Provi%e%, however, 3hat if such a end ent to the articles of incorporation should consist in e@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 any class, or !ould restrict the ri$hts of any stoc"holder, then any stoc"holder !ho did not vote for such corporate action ay, !ithin forty days after the date upon !hich such action !as authori2ed, ob:ect thereto in !ritin$ and de and Pay ent for his shares. If, after such a de and by a stoc"holder, the corporation and the stoc"holder cannot a$ree upon the value of his share or shares at the ti e such corporate action !as authori2ed, such values all be ascertained by three disinterested persons, one of !ho shall be na ed by the stoc"holder, another by the corporation, and the third by the t!o thus chosen. 3he findin$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$ainst the corporation. Epon pay ent by the corporation to the stoc"holder of the a$reed or a!arded price of his share or shares, the stoc"holder shall forth!ith transfer and assi$n the share or shares held by hi as directed by the corporationA Provi%e%, however, 3hat their o!n shares of stoc" purchased or other!ise ac#uired by ban"s, trust co panies, and insurance co panies, should be disposed of !ithin si@ onths after ac#uirin$ title thereto. otion for reconsideration, dated Nove ber =, &)>', for lac" of

14
Enless and until such a end ent to the articles of incorporation shall have been abandoned or the action rescinded, the stoc"holder a"in$ such de and in !ritin$ shall cease to be a stoc"holder and shall have no ri$hts !ith respect to such shares, e@cept the ri$ht to receive pay ent therefor as aforesaid. A stoc"holder shall not be entitled to pay ent for his shares under the provisions of this section unless the value of the corporate assets !hich !ould re ain after such pay ent !ould be at least e#ual to the a$$re$ate a ount of its debts and liabilities and the a$$re$ate par value andGor issued value of the re ainin$ subscribed capital stoc". A copy of the articles of incorporation as a ended, duly certified to be correct by the president and the secretary of the corporation and a a:ority of the board of directors or trustees, shall be filed !ith the ,ecurities and E@chan$e Co issioner, !ho shall attach the sa e to the ori$inal articles of incorporation, on file in his office. 4ro the ti e of filin$ such copy of the a ended articles of incorporation, the corporation shall have the sa e po!ers and it and the e bers and stoc"holders thereof shall thereafter be sub:ect to the sa e liabilities as if such a end ent had been e braced in the ori$inal articles of incorporationA Provi%e%, however, 3hat should the a end ent consist in e@tendin$ the corporate life, the e@tension shall not e@ceed <8 years in any one instance. Provi%e%, further, 3hat the ori$inal articles and a ended articles to$ether shall contain all provisions re#uired by la! to be set out in the articles of incorporationA 'n% provi%e%, further, 3hat nothin$ in this section shall be construed to authori2e any corporation to increase or di inish its capital stoc" or so as to effect any ri$hts or actions !hich accrued to others bet!een the ti e of filin$ the ori$inal articles of incorporation and the filin$ of the a ended articles. 3he ,ecurities and, E@chan$e Co issioner shall be entitled to collect and receive the su of ten pesos for filin$ said copy of the a ended articles of incorporation. Provi%e%, however, 3hat !hen the a end ent consists in e@tendin$ the ter of corporate e@istence, the ,ecurities and E@chan$e Co issioner shall be entitled to collect and receive for the filin$ of its a ended articles of incorporation the sa e fees collectible under e@istin$ la! for the filin$ of articles of incorporation. 3he ,ecurities R E@chan$e Co issioner shall not hereafter file any a end ent to the articles of incorporation of any ban", ban"in$ institution, or buildin$ and loan association unless acco panied by a certificate of the Monetary Board (of the Central Ban"* to the effect that such a end ent is in accordance !ith la!. (As further a ended by Act No. 6>&8, ,ec. ' and ,ec. ). R.A. No. 66? and R.A. No. 6<6&.* It can be $leaned at once that this section does not only authori2e corporations to a end their charter- it also lays do!n the procedure for such a end ent- and, !hat is ore relevant to the present discussion, it contains provisos restrictin$ the po!er to a end !hen it co es to the ter of their e@istence and the increase or decrease of the capital stoc". 3here is no prohibition therein a$ainst the chan$e of na e. 3he inference is clear that such a chan$e is allo!ed, for if the le$islature had intended to en:oin corporations fro chan$in$ na es, it !ould have e@pressly stated so in this section or in any other provision of the la!. No doubt, %(the* na e (of a corporation* is peculiarly i portant as necessary to the very e@istence of a corporation. 3he $eneral rule as to corporations is that each corporation shall have a na e by !hich it is to sue and be sued and do all le$al acts. 3he na e of a corporation in this respect desi$nates the corporation in the sa e anner as the na e of an individual desi$nates the person.% 1 ,ince an individual has the ri$ht to chan$e his na e under certain conditions, there is no co pellin$ reason !hy a corporation ay not en:oy the sa e ri$ht. 3here is nothin$ sacrosanct in a na e !hen it co es to artificial bein$s. 3he senti ental considerations !hich individuals attach to their na es are not present in corporations and partnerships. 7f course, as in the case of an individual, such chan$e ay not be ade e@clusively. by the corporationHs o!n act. It has to follo! the procedure prescribed by la! for the purpose- and this is !hat is i portant and indispensably prescribed Q strict adherence to such procedure. /ocal !ell "no!n corporation la! co entators are unani ous in the vie! that a corporation ay chan$e its na e by erely a endin$ its charter in the anner prescribed by la!. 2 A erican authorities !hich have persuasive force here in this re$ard because our corporation la! is of A erican ori$in, the sa e bein$ a sort of codification of A erican corporate la!, 2 are of the sa e opinion. A $eneral po!er to alter or a end the charter of a corporation necessarily includes the po!er to alter the na e of the corporation. ,t. Pitt Bl%g., etc., 'ssoc. v. "o%el Plan Bl%g., etc., 'ssoc., &<) Pa. ,t. 68=, '= Atl. '&<- .n re 4idelity Mut. Aid Assoc., &' 0.N.C. (Pa.* '?&- E@celsior 7il Co., 6 Pa. Co. Ct. &=9- 0etherill ,teel Castin$ Co., < Pa. Co. Ct. 66?. @@@ @@@ @@@ Ender the 1eneral /a!s of Rhode Island, c &?>, sec. ?, relatin$ to an increase of the capital stoc" of a corporation, it is provided that Hsuch a$ree ent ay be a ended in any other particular, e@ceptin$ as provided in the follo!in$ sectionH, !hich relates to a decrease of the capital stoc" 3his section has been held to authori2e a chan$e in the na e of a corporation. 'r*ington v. Pal*er, '& R.I. &8), 9' Atl. 68=, 96, /.R.A. )<, ?) A . ,t. Rep. ?=>. (Fol. &), A erican and En$lish Annotated Cases, p. &'6).*

15
4letcher, a standard authority on A erican an corporation la! also saysA ,tatutes are to be found in the various :urisdictions dealin$ !ith the atter of chan$e in corporate na es. ,uch statutes have been sub:ected to :udicial construction and have, in the ain, been upheld as constitutional. .n %irect ter*s or )y necessary i*plication, they authorize corporations new na*es and prescribe the ode of procedure for that purpose. 3he sa e steps ust be ta"en under so e statutes to effect a chan$e in a corporate na e, as !hen any other a end ent of the corporate charter is sou$ht .... 0hen the $eneral la! thus deals !ith the sub:ect, a corporation can chan$e its na e only in the anner provided. (> 4letcher, Cyclopedia of the /a! of Private Corporations, &)>= Revised Folu e, pp. '&''&6.* (E phasis supplied* 3he learned trial :ud$e held that the above-#uoted proposition are not supported by the !ei$ht of authority because they are based on decisions in cases !here the statutes e@pressly authori2e chan$e of corporate na e by a end ent of the articles of incorporation. 0e have carefully e@a ined these authorities and 0e are satisfied of their relevance. Even /ord .en an !ho has been #uoted by Bis Bonor fro .n Reg. v. Registrar of oint &toc# Cos. &8, J.B., <) E.C./. aintains erely that the chan$e of its na e never appears to be such an act as the corporation could do for itself, but re#uired -the sa e Po!er as created a corporation.% 0hat see s to have been overloo"ed, therefore, is that the procedure prescribes by ,ection &= of our Corporation /a! for the a end ent of corporate charters is practically identical !ith that for the incorporation itself of a corporation. In the appealed order of dis issal, the trial court, ade the observation that, accordin$ to this Court in Re% Line Transportation Co. v. Rural Transit Co., Lt%., >8 Phil, <9), <<<, chan$e of na e of a corporation is a$ainst public policy. 0e ust clarify that such is not the i port of 7ur said decision. 0hat this Court held in that case is si ply thatA 0e "no! of no la! that e po!ers the Public ,ervice Co ission or any court in this :urisdiction to authori2e one corporation to assu e the na e of another corporation as a trade na e. Both the Rural 3ransit Co pany, /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 na e. 3he incorporators Hconstitute a body politic and corporate un%er the na*e state% in the certificate.H (,ection &&, Act No. &9<), as a ended.* A corporation has the po!er 0of succession )y its corporate na*e.0 (,ection &6, i)i%.* 3he na e of a corporation is therefore essential to its e@istence. It cannot chan$e its na e e@cept in the anner provided by the statute. By that na e alone is it authori2ed to transact business. 3he la! $ives a corporation no e@press or i plied authority to assu e another na e that is unappropriated- still less that of another corporation, !hich is e@pressly set apart for it and protected by the la!. If any corporation could assu e at pleasure as an unre$istered trade na e the na e of another corporation, this practice !ould result in confusion and open the door to frauds and evasions and difficulties of ad inistration and supervision. 3he policy of the la! as e@pressed our corporation statute and the Code of Co erce is clearly a$ainst such a practice. (Cf. ,carsdale Pub. Co. Q Colonial Press vs. Carter, &&> Ne! Mor" ,upple ent, ?6&- ,vens"a Nat. 4. i. C. vs. ,!edish Nat. Assn., '8< Illinois +Appellate Courts5, 9'=, 969.* In other !ords, !hat 0e have held to be contrary to public policy is the use by one corporation of the na e of another corporation as its trade na e. 0e are certain no one !ill disa$ree that such an act can only %result in confusion and open the door to frauds and evasions and difficulties of ad inistration and supervision.% ,urely, the Red /ine case !as not one of chan$e of na e. Neither can 0e share the posture of Bis Bonor that the chan$e of na e of a corporation results in its dissolution. 3here is unani ity of authorities to the contrary. An authori2ed chan$e in the na e of a corporation has no ore effect upon its identity as a corporation than a chan$e of na e of a natural person has upon his identity. It does not affect the ri$hts of the corporation or lessen or add to its obli$ations. After a corporation has effected a chan$e in its na e it should sue and be sued in its ne! na e .... (&6 A . Cur. '?>-'??, citin$ cases.* A ere chan$e in the na e of a corporation, either by the le$islature or by the corporators or stoc"holders under le$islative authority, does not, $enerally spea"in$, affect the identity of the corporation, nor in any !ay affect the ri$hts, privile$es, or obli$ations previously ac#uired or incurred by it. Indeed, it has been said that a chan$e of na e by a corporation has no ore effect upon the identity of the corporation than a chan$e of na e by a natural person has upon the identity of such person. 3he corporation, upon such chan$e in its na e, is in no sense a ne! corporation, nor the successor of the ori$inal one, but re ains and continues to be the ori$inal corporation. It is the sa e corporation !ith a different na e, and its character is in no respect chan$ed. ... (> 4letcher, Cyclopedia of the /a! of Private Corporations, ''9-''<, citin$ cases.* 3he chan$e in the na e of a corporation has no ore effect upon its identity as a corporation than a chan$e of na e of a natural person has upon his identity. It does not affect the ri$hts of the corporation, or lessen or add to its obli$ations.

16
Englan%. Q !oe v. -orton, && M. R 0. )&6, ? Cur. ?<&, &' /. C. E@ch. 9&=. 1nite% &tates. Q "etropolitan -at. Ban# v. Claggett, &9& E.,. <'8, &' ,. Ct. >8, 6< E.,. (/. ed.* =9&. 'la)a*a. Q Lo*) v. Pioneer &av., etc., Co., &8> Ala. <)&, &? ,o. >?8- -orth Bir*ingha* Lu*)er Co. v. &i*s, &<? Ala. <)<, 9= ,o. =9. Connecticut. Q Trinity Church v. 2all, '' Co . &'<. .llinois. Q "t. Palatine 'ca%e*y v. 3leinschnitz '= III, &66- &t. Louis etc. R. Co. v. "iller, 96 Ill. &))-Rea%ing v. 4e%%er, >> III. =8. .n%iana. Q Rosenthal v. "a%ison etc., Plan# Roa% Co., &8 Ind. 6<=. 3entuc#y. Q Cahill v. Bigger, = B. Mon. '&&- 4ilhite v. Convent of Goo% &hepher%, &?? Ny. '<&, ?= ,. 0. &6=. "arylan%. 5 Phinney v. &heppar% / Enoch Pratt 2ospital , == Md. >66, 9' Atl. <=, !rit of error dis issed, &?? E.,. &?8, '8 ,. Ct. <?6, 99 E.,. (/. ed.* ?'8. "issouri. Q !ean v. La "otte Lea% Co., <) Mo. <'6. -e)ras#a. 5 Carlon v. City &av. Ban#, =' Neb. <=', &== N. 0. 669. -ew 6or# ,irst &oc of ".E. Church v. Brownell, < Bun 9>9. Pennsylvania. 5 Co*. v. Pitts)urgh, 9& Pa. ,t. '?=. &outh Carolina. Q &outh Carolina "ut .ns. Co. v. Price >? ,.C. '8?, 9< ,.E. &?6. Virginia. Q 4ilson v. Chesapea#e etc., R. Co., '& 1ratt ><9- 4right(Caesar To)acco Co. v. 2oen,&8< Fa. 6'?, <9 ,.E. 68). 4ashington. Q 3ing v. .lwaco R. etc., Co., & 0ash. &'?. '6 Pac. )'9. 4isconsin. 5 Racine Country Ban# v. 'yers, &' 0is. <&'. 3he fact that the corporation by its old na e a"es a for at transfer of its property to the corporation by its ne! na e does not of itself sho! that the chan$e in na e has affected a chan$e in the identity of the corporation. Palfrey v. 'ssociation for Relief, etc., &&8 /a. 9<', 69 ,o. >88. 3he fact that a corporation or$ani2ed as a state ban" after!ards beco es a national ban" by co plyin$ !ith the provisions of the National Ban"in$ Act, and chan$es its na e accordin$ly, has no effect on its ri$ht to sue upon obli$ations or liabilities incurred to it by its for er na e. Michi$an Ins. Ban" v. Eldred &96 E.,. ')6, &' ,. Ct. 9<8, 6> E.,. (/. ed.* &>'. A deed of land to a church by a particular na e has been held not to be affected by the fact that the church after!ards too" a different na e. Cahill v. Bi$$er, = B. Mon ("y* '&&. A chan$e in the na e of a corporation is not a divestiture of title or such a chan$e as re#uires a re$ular transfer of title to property, !hether real or personal, fro the corporation under one na e to the sa e corporation under another na e. "cClos#ey v. !oherty, )? Ny. 688, 68 ,. 0. >9). (&) A erican and En$lish Annotated Cases &'9'-&'96.* As !as very aptly said in Pacific Ban# v. !e Ro 6? Cal. <6=, %3he chan$in$ of the na e of a corporation is no ore the creation of a corporation than the chan$in$ of the na e of a natural person is the be$ettin$ of a natural person. 3he act, in both cases, !ould see to be !hat the lan$ua$e !hich !e use to desi$nate it i ports Q a chan$e of na*e, and not a chan$e of bein$. Bavin$ arrived at the above conclusion, 0e have a$ree !ith appellantHs pose that the lo!er court also erred in holdin$ that it is not the ri$ht party in interest to sue defendants-appellees. 4 As correctly pointed out by appellant, the approval by the stoc"holders of the a end ent of its articles of incorporation chan$in$ the na e %3he Me" 3on$ /in 4ire R Marine Insurance Co., /td.% to %Philippine 4irst Insurance Co., Inc.% on March =, &)>&, did not auto atically chan$e the na e of said corporation on that date. 3o be effective, ,ection &= of the Corporation /a!, earlier #uoted, re#uires that %a copy of the articles of incorporation as a ended, duly certified to be correct by the president and the secretary of the corporation and a a:ority of the board of directors or trustees, shall be filed !ith the ,ecurities R E@chan$e Co issioner%, and it is only fro* the ti*e of such filing, that %the corporation shall have the sa e po!ers and it and the e bers and stoc"holders thereof shall thereafter be sub:ect to the sa e liabilities as if such a end ent had been e braced in the

17
ori$inal articles of incorporation.% It $oes !ithout sayin$ then that appellant ri$htly acted in its old na e !hen on May &<, &)>&, it entered into the inde nity a$ree ent, Anne@ A, !ith the defendant-appellees- for only after the filin$ of the a ended articles of incorporation !ith the ,ecurities R E@chan$e Co ission on May '>, &)>&, did appellant le$ally ac#uire its ne! na e- and it !as perfectly ri$ht for it to file the present case In that ne! na e on .ece ber >, &)>&. ,uch is, but the lo$ical effect of the chan$e of na e of the corporation upon its actions. Actions brou$ht by a corporation after it has chan$ed its na e should be brou$ht under the ne! na e althou$h for the enforce ent of ri$hts e@istin$ at the ti e the chan$e !as ade. Lo*) v. Pioneer &av., etc., Co., &8> Ala. <)&, &? ,o. >?8A -ewlan v. Lo*)ar% 1niversity, >' III. &)<- Tho*as v. Visitor of ,re%eric# County &chool, ? 1ill R C (Md.* 6==- !elaware, etc., R. Co. v. Tric#, '6 N. C. /. 6'&- -orthu*)erlan% Country Ban# v. Eyer, >8 Pa. ,t. 96>- 4ilson v. Chesapea#e etc., R. Co., '& 1ratt (Fa.* ><9. 3he chan$e in the na e of the corporation does not affect its ri$ht to brin$ an action on a note $iven to the corporation under its for er na e. Cu*)erlan% College v. .sh, ''. Cal. >9&- -orthwestern College v. &chwagler, 6? Ia. <??. (&) A erican and En$lish Annotated Cases &'96.* In conse#uence, 0e hold that the lo!er court erred in dis issin$ appellantHs co plaint. 0e ta"e this opportunity, ho!ever, to e@press the CourtHs feelin$ that it is apparent that appelleeHs position is ore technical than other!ise. No!here in the record is it seriously pretended that the indebtedness sued upon has already been paid. If appellees entertained any fear that they i$ht a$ain be ade liable to Me" 3on$ /in 4ire R Marine Insurance Co. /td., or to so eone else in its behalf, a cursory e@a ination of the records of the ,ecurities R E@chan$e Co ission !ould have sufficed to clear up the fact that Me" 3on$ /in had :ust chan$ed its na e but it had not ceased to be their creditor. Everyone should reali2e that !hen the ti e of the courts is utili2ed for cases !hich do not involve substantial #uestions and the clai of one of the parties, therein is based on pure technicality that can at ost delay only the ulti ate outco e necessarily adverse to such party because it has no real cause on the erits, $rave in:ustice is co itted to nu berless liti$ants !hose eritorious cases cannot be $iven all the needed ti e by the courts. 0e address this appeal once ore to all e bers of the bar, in particular, since it is their bounden duty to the profession and to our country and people at lar$e to help ease as fast as possible the clo$$ed doc"ets of the courts. /et us not !ait until the people resort to other eans to secure speedy, :ust and ine@pensive deter ination of their cases. 0BERE47RE, :ud$ ent of the lo!er court is reversed, and this case is re anded to the trial court for further proceedin$s consistent here!ith 0ith costs a$ainst appellees. Concepcion, C. ., Reyes, .B.L., !izon, "a#alintal, $al%ivar, Castro, ,ernan%o, Teehan#ee an% Villa*or, SECON% % 6 S ON G.R. No. L-28251 Ju+5 28, 1977 UN 6ERS!L M LLS CORPOR!T ON, petitioner, 7s. UN 6ERS!L TE<T LE M LLS, NC., respondent. Emigdio G. Tanjuatco for petitioner. Picazo, Santayana, Reyes, Tayao & A fonso for respondent. %EC S ON B'RRE!+, .7 Appeal fro the order of the ,ecurities and E@chan$e Co ission in ,.E.C. Case No. &8?), entitled In the Matter of the 1niversal Te8tile "ills, .nc. vs. 1niversal "ills Corporation , a petition to have appellant chan$e its corporate na e on the $round that such na e is Sconfusin$ly and deceptively si ilarT to that of appellee, !hich petition the Co ission $ranted. Accordin$ to the order, Sthe Eniversal 3e@tile Mills, Inc. !as or$ani2ed on .ece ber '), &)<6, as a te@tile anufacturin$ fir for !hich it !as issued a certificate of re$istration on Canuary =, &)<9. 3he Eniversal Mills Corporation, on the other hand, !as re$istered in this Co ission on 7ctober '?, &)<9, under its ori$inal na e, Eniversal Bosiery Mills Corporation, havin$ as its pri ary purpose the S anufacture and production of hosieries and !earin$ apparel of all "inds.T 7n May '9, &)>6, it filed an a end ent to its articles of incorporation chan$in$ its na e to Eniversal Mills Corporation, its present na e, for !hich this Co ission issued the certificate of approval on Cune &8, &)>6. 3he i ediate cause of this present co plaint, ho!ever, !as the occurrence of a fire !hich $utted respondentPs spinnin$ ills in Pasi$, Ri2al. Petitioner alle$ed that as a result of this fire and because of the si ilarity of respondentPs na e to that of herein co plainant, the ne!s ite s appearin$ in the various etropolitan ne!spapers carryin$ reports on the fire created uncertainty and confusion a on$ its ban"ers, friends, stoc"holders and custo ers pro ptin$ petitioner to a"e announce ents, clarifyin$ the real Identity of the corporation !hose property !as burned. Petitioner presented docu entary and testi onial evidence in support of this alle$ation. 7n the other hand, respondentPs position is that the na es of the t!o corporations are not si ilar and even if there be so e si ilarity, it is not confusin$ or deceptive- that the only reason that respondent chan$ed its na e !as because it e@panded its business to include the anufacture of fabrics of all "inds- and that the !ord Ute@tileP in petitionerPs na e is do inant and pro inent enou$h to distin$uish the t!o. It further ar$ues that petitioner failed to present evidence of ., concur.

18
confusion or deception in the ordinary course of business- that the only supposed confusion proved by co plainant arose out of an e@traordinary occurrence Q a disastrous fire. (pp. &>-R&?, Record.* Epon these pre ises, the Co ission heldA

4ro the facts proved and the :urisprudence on the atter, it appears necessary under the circu stances to en:oin the respondent Eniversal Mills Corporation fro further usin$ its present corporate na e. Cud$in$ fro !hat has already happened, confusion is not only apparent, but possible. It does not atter that the instance of confusion bet!een the t!o corporate na es !as occasioned only by a fire or an e@traordinary occurrence. It is precisely the duty of this Co ission to prevent such confusion at all ti es and under all circu stances not only for the purpose of protectin$ the corporations involved but ore so for the protection of the public. In todayPs odern business life !here people $o by tradena es and corporate i a$es, the corporate na e beco es the ore i portant. 3his Co ission cannot close its eyes to the fact that usually it is the sound of all the other !ords co posin$ the na es of business corporations that stic"s to the ind of those !ho deal !ith the . 3he !ord Ste@tileT in Eniversal 3e@tile Mills, Inc.P cannot possibly assure the e@clusion of all other entities !ith si ilar na es fro the ind of the public especially so, if the business they are en$a$ed in are the sa e, li"e in the instant case. 3his Co ission further ta"es co$ni2ance of the fact that !hen respondent filed the a end ent chan$in$ its na e to Eniversal Mills Corporation, it correspondin$ly filed a !ritten underta"in$ dated Cune <, &)>6 and si$ned by its President, Mr. Mariano Co"iat, pro isin$ to chan$e its na e in the event that there is another person, fir or entity !ho has obtained a prior ri$ht to the use of such na e or one si ilar to it. 3hat pro ise is still bindin$ upon the corporation and its responsible officers. (pp. &?-&=, Record.* It is obvious that the atter at issue is !ithin the co petence of the ,ecurities and E@chan$e Co ission to resolve in the first instance in the e@ercise of the :urisdiction it used to possess under Co on!ealth Act '=? as a ended by Republic Act &8<< to ad inister the application and enforce ent of all la!s affectin$ do estic corporations and associations, reservin$ to the courts only conflicts of :udicial nature, and, of course, the ,upre e CourtPs authority to revie! the Co issions actuations in appropriate instances involvin$ possible denial of due process and $rave abuse of discretion. 3hus, in the case at bar, there bein$ no clai of denial of any constitutional ri$ht, all that 0e are called upon to deter ine is !hether or not the order of the Co ission en:oinin$ petitioner to its corporate na e constitutes, in the li$ht of the circu stances found by the Co ission, a $rave abuse of discretion. 0e believe it is not. Indeed, it cannot be said that the i pu$ned order is arbitrary and capricious. Clearly, it has rational basis. 3he corporate na es in #uestion are not Identical, but they are indisputably so si ilar that even under the test of Sreasonable care and observation as the public $enerally are capable of usin$ and ay be e@pected to e@erciseT invo"ed by appellant, 0e are apprehensive confusion !ill usually arise, considerin$ that under the second a end ent of its articles of incorporation on Au$ust &9, &)>9, appellant included a on$ its pri ary purposes the S anufacturin$, dyein$, finishin$ and sellin$ of fabrics of all "indsT in !hich respondent had been en$a$ed for ore than a decade ahead of petitioner. 4actually, the Co ission found e@istence of such confusion, and there is evidence to support its conclusion. ,ince respondent is not clai in$ da a$es in this proceedin$, it is, of course, i aterial !hether or not appellant has acted in $ood faith, but 0e cannot perceive !hy of all na es, it had to choose a na e already bein$ used by another fir en$a$ed in practically the sa e business for ore than a decade en:oyin$ !ell earned patrona$e and $ood!ill, !hen there are so any other appropriate na es it could possibly adopt !ithout arousin$ any suspicion as to its otive and, ore i portantly, any de$ree of confusion in the ind of the public !hich could islead even its o!n custo ers, e@istin$ or prospective. Pre ises considered, there is no !arrant for our interference. As this is purely a case of in:unction, and considerin$ the ti e that has elapsed since the facts co plained of too" place, this decision should not be dee ed as foreclosin$ any further re edy !hich appellee ay have for the protection of its interests. $HERE(ORE, !ith the reservation already entioned, the appealed decision is affir ed. Costs a$ainst petitioners. ,ernan%o 9Chair*an:, 'ntonio, ';uino, Concepcion r. an% &antos, ., concur Un,7e4s1+ M,++s Co4)o41/,on 7s Un,7e4s1+ Te?/,+e M,++s, n-. on (e*4u145 2, 2312 <= &CR' >? @ Business +rganization @ Corporation Law @ Tra%ena*es In &)<6, Eniversal 3e@tile Mills, Inc. (E3MI* !as or$ani2ed. In &)<9, Eniversal Bosiery Mills Corporation (EBMC* !as also or$ani2ed. Both are actually distinct corporations but they en$a$e in the sa e business (fabrics*. In &)>6, EBMC petitioned to chan$e its na e to Eniversal Mills Corporation (EMC*. 3he ,ecurities and E@chan$e Co ission (,EC* $ranted the petition. ,ubse#uently, a !arehouse o!ned by EMC !as $utted by fire. Ne!s about the fire spread and investors of E3MI thou$ht that it !as E3MIPs !arehouse that !as destroyed. E3MI had to a"e clarifications that it !as EMCPs !arehouse that $ot burned. Eventually, E3MI petitioned that EMC should be en:oined fro usin$ its na e because of the confusion it brou$ht. 3he ,EC $ranted E3MIPs petition. EMC ho!ever assailed the order of the ,EC as it averred that their tradena e is not deceptive- that E3MIPs tradena e is #ualified by the !ord S3e@tileT, hence, there can be no confusion.

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SSUE> 0hether or not the decision of the ,EC is correct. HEL%> Mes. 3here is definitely confusion as it !as evident fro the facts !here the investors of E3MI ista"enly believed that it !as E3MIPs !arehouse that !as destroyed. Althou$h the corporate na es are not really identical, they are indisputably so si ilar that it can cause, as it already did, confusion. 3he ,EC did not act in abuse of its discretion !hen it order EMC to drop its na e because there !as a factual evidence presented as to the confusion. 4urther, !hen EMC filed its petition for chan$e of corporate na e, it ade an underta"in$ that it shall chan$e its na e in the event that there is another person, fir or entity !ho has obtained a prior ri$ht to the use of such na e or one si ilar to it. 3hat pro ise is still bindin$ upon the corporation and its responsible officers. ( RST % 6 S ON@G.R. No. 127592. %e-e:*e4 12, 2331A !NG MG! #!!N " S! GLES ! NG % OS #!' #R STO HESUS, H.S.#. S! "!NS!NG P L P N!S, NC. petitioner, !s. GLES ! NG % OS #!' CR STO JESUS, H!L G !T SUH!' NG #!TOTOH!N!N, respondent. %EC S ON 'N!RES-,AN3IA17, J.> 3his is a petition for revie! assailin$ the .ecision dated 7ctober ?, &))?+&5 and the Resolution dated 4ebruary &>, &)))+'5 of the Court of Appeals in CA-1.R. ,P No. 98)66, !hich affir ed the .ecision of the ,ecurities and E@chan$e and Co ission (,EC* in ,EC-AC No. <6).+65 Respondent .glesia ng !ios 3ay Cristo esus, 2aligi at &uhay ng 3atotohanan (Church of 1od in Christ Cesus, the Pillar and 1round of 3ruth*,+95 is a non-stoc" reli$ious society or corporation re$istered in &)6>. ,o eti e in &)?>, one Eliseo ,oriano and several other e bers of respondent corporation disassociated the selves fro the latter and succeeded in re$isterin$ on March 68, &)?? a ne! non-stoc" reli$ious society or corporation, na ed .glesia ng !ios 3ay 3risto 2esus, 2aligi at &aligan ng 3atotohanan. 7n Culy &>, &)?), respondent corporation filed !ith the ,EC a petition to co pel the .glesia ng !ios 3ay 3risto 2esus, 2aligi at &aligan ng 3atotohanan to chan$e its corporate na e, !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 3risto 2esus, 2aligi at &aligan ng 3atotohanan to chan$e its corporate na e to another na e that is not si ilar or identical to any na e already used by a corporation, partnership or association re$istered !ith the Co ission. +<5 No appeal !as ta"en fro said decision. It appears that durin$ the pendency of ,EC Case No. &??9, ,oriano, et al., caused the re$istration on April '<, &)=8 of petitioner corporation, 'ng "ga 3aani) sa .glesia ng !ios 3ay 3risto 2esus, 2.&.3., sa Bansang Pilipinas. 3he acrony SB.,.N.T stands for 2aligi at &aligan ng 3atotohanan.+>5 7n March ', &))9, respondent corporation filed before the ,EC a petition, doc"eted as ,EC Case No. 86-)9-9?89, prayin$ that petitioner be co pelled to chan$e its corporate na e and be barred fro usin$ the sa e or si ilar na e on the $round that the sa e causes confusion a on$ their e bers as !ell as the public. Petitioner filed a otion to dis iss on the $round of lac" of cause of action. 3he otion to dis iss !as denied. 3hereafter, for failure to file an ans!er, petitioner !as declared in default and respondent !as allo!ed to present its evidence e8 parte. 7n Nove ber '8, &))<, the ,EC rendered a decision orderin$ petitioner to chan$e its corporate na e. 3he dispositive portion thereof readsA PREM SES CONS %ERE%, :ud$ ent is hereby rendered in favor of the petitioner (respondent herein*. Respondent M$a Naanib sa I$lesia n$ .ios Nay Nristo Cesus (sic*, B.,.N. sa Bansan$ Pilipinas (petitioner herein* is hereby M!N%!TE% to chan$e its corporate na e to another no/ 8e-e)/,7e+5 s,:,+14 o4 ,8en/,-1+ /o /0e s1:e 1+4e185 use8 *5 /0e Pe/,/,one4, any corporation, association, andGor partnership presently re$istered !ith the Co ission. /et a copy of this %e-,s,on be furnished the Re-o48s %,7,s,on and the Co4)o41/e 1n8 Le91+ %e)14/:en/ @CL%A of this Co ission for their records, reference andGor for !hatever re#uisite action, if any, to be underta"en at their end. SO OR%ERE%.+?5 Petitioner appealed to the ,EC En Banc, !here its appeal !as doc"eted as ,EC-AC No. <6). In a decision dated March 9, &))>, the ,EC En Bancaffir ed the above decision, upon a findin$ that petitionerHs corporate na e !as identical or confusin$ly or deceptively si ilar to that of respondentPs corporate na e. +=5 Petitioner filed a petition for revie! !ith the Court of Appeals. 7n 7ctober ?, &))?, the Court of Appeals rendered the assailed decision affir in$ the decision of the ,EC En Banc. PetitionerPs otion for reconsideration !as denied by the Court of Appeals on 4ebruary &>, &))'. Bence, the instant petition for revie!, raisin$ the follo!in$ assi$n ent of errorsA

3BE B7N7RAB/E C7ER3 74 APPEA/, ERRE. IN C7NC/E.IN1 3BA3 PE3I3I7NER BA, N73 BEEN .EPRIFE. 74 I3, RI1B3 37 PR7CE.ERA/ .EE PR7CE,,, 3BE B7N7RAB/E C7ER3 74 APPEA/, .I,RE1AR.E. 3BE CERI,PRE.ENCE APP/ICAB/E 37 3BE CA,E A3 BAR AN. IN,3EA. RE/IE. 7N 373A//M INAPP/ICAB/E CERI,PRE.ENCE.

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3BE B7N7RAB/E C7ER3 74 APPEA/, ERRE. IN I3, IN3EPRE3A3I7N 74 3BE CIFI/ C7.E PR7FI,I7N, 7N EI3INC3IFE PRE,CRIP3I7N, 3BEREBM RE,E/3IN1 IN I3, 4AI/ERE 37 4IN. 3BA3 3BE RE,P7N.EN3H, RI1B3 74 AC3I7N 37 IN,3I3E3E 3BE ,EC CA,E BA, ,INCE PRE,CRIBE. PRI7R 37 I3, IN,3I3E3I7N.

3BE B7N7RAB/E C7ER3 74 APPEA/, 4AI/E. 37 C7N,I.ER AN. PR7PER/M APP/M 3BE EICEP3I7N, E,3AB/I,BE. BM CERI,PRE.ENCE IN 3BE APP/ICA3I7N 74 ,EC3I7N &= 74 3BE C7RP7RA3I7N C7.E 37 3BE IN,3AN3 CA,E. 6 3BE B7N7RAB/E C7ER3 74 APPEA/, 4AI/E. 37 PR7PER/M APPRECIA3E 3BE ,C7PE 74 3BE C7N,3I3E3I7NA/ 1EARAN3EE 7N RE/I1I7E, 4REE.7M, 3BEREBM 4AI/IN1 37 APP/M 3BE ,AME 37 PR73EC3 PE3I3I7NERP, RI1B3,.+)5 Invo"in$ the case of Legar%a v. Court of 'ppeals,+&85 petitioner insists that the decision of the Court of Appeals and the ,EC should be set aside because the ne$li$ence of its for er counsel of record, Atty. Coa#uin 1aray$ay, in failin$ to file an ans!er after its otion to dis iss !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 the rule that any act perfor ed by a la!yer !ithin the scope of his $eneral or i plied authority is re$arded as an act of his client.+&&5 An e@ception to the fore$oin$ is !here the rec"less or $ross ne$li$ence of the counsel deprives the client of due process of la!.+&'5 ,aid e@ception, ho!ever, does not obtain in the present case. In Legar%a v. Court of 'ppeals, the effort of the counsel in defendin$ his clientPs cause consisted in filin$ a otion for e@tension of ti e to file ans!er before the trial court. 0hen his client !as declared in default, the counsel did nothin$ and allo!ed the :ud$ ent by default to beco e final and e@ecutory. Epon the insistence of his client, the counsel filed a petition to annul the :ud$ ent !ith the Court of Appeals, !hich denied the petition, and a$ain the counsel allo!ed the denial to beco e final and e@ecutory. 3his Court found the counsel $rossly ne$li$ent and conse#uently declared as null and void the decision adverse to his client. 3he factual antecedents of the case at bar are different. Atty. 1aray$ay filed before the ,EC a otion to dis iss on the $round of lac" of cause of action. 0hen his client !as declared in default for failure to file an ans!er, Atty. 1aray$ay oved for reconsideration and liftin$ of the order of default. +&65 After :ud$ ent by default !as rendered a$ainst petitioner corporation, Atty. 1aray$ay filed a otion for e@tension of ti e to appealG otion for reconsideration, and thereafter a otion to set aside the decision.+&95 Evidently, Atty. 1aray$ay !as only $uilty of si ple ne$li$ence. Althou$h he failed to file an ans!er that led to the rendition of a :ud$ ent by default a$ainst petitioner, his efforts !ere palpably real, albeit bereft of 2eal. +&<5 /i"e!ise, the issue of prescription, !hich petitioner raised for the first ti e on appeal to the Court of Appeals, is untenable. Its failure to raise prescription before the ,EC can only be construed as a !aiver of that defense. +&>5 At any rate, the ,EC has the authority to de-re$ister at all ti es and under all circu stances corporate na es !hich in its esti ation are li"ely to spa!n confusion. It is the duty of the ,EC to prevent confusion in the use of corporate na es not only for the protection of the corporations involved but ore so for the protection of the public. +&?5 ,ection &= of the Corporation Code providesA Corporate -a*e. --- No corporate na e ay be allo!ed by the ,ecurities and E@chan$e Co ission if the proposed na e is identical or deceptively or confusin$ly si ilar to that of any e@istin$ corporation or to any other na e already protected by la! or is patently deceptive, confusin$ or is contrary to e@istin$ la!s. 0hen a chan$e in the corporate na e is approved, the Co ission shall issue an a ended certificate of incorporation under the a ended na e. Corollary thereto, the pertinent portion of the ,EC 1uidelines on Corporate Na es statesA (d* If the proposed na e contains a !ord si ilar to a !ord already used as part of the fir na e or style of a re$istered co pany, the proposed na e ust contain t!o other !ords different fro the na e of the co pany already re$isteredParties or$ani2in$ a corporation ust choose a na e at their peril- and the use of a na e si ilar to one adopted by another corporation, !hether a business or a nonprofit or$ani2ation, if isleadin$ or li"ely to in:ure in the e@ercise of its corporate functions, re$ardless of intent, ay be prevented by the corporation havin$ a prior ri$ht, by a suit for in:unction a$ainst the ne! corporation to prevent the use of the na e. +&=5 Petitioner clai s that it co plied !ith the aforecited ,EC $uideline by addin$ not only t!o but ei$ht !ords to their re$istered na e, to !itA A'ng "ga 3aani)Band B&a Bansang Pilipinas, .nc.,C !hich, petitioner ar$ues, effectively distin$uished it fro respondent corporation.

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3he additional !ords A'ng "ga 3aani)C and A&a Bansang Pilipinas, .nc.C in petitionerPs na e are, as correctly observed by the ,EC, erely descriptive of and also referrin$ to the e bers, or #aani), of respondent !ho are li"e!ise residin$ in the Philippines. 3hese !ords can hardly serve as an effective differentiatin$ ediu necessary to avoid confusion or difficulty in distin$uishin$ petitioner fro respondent. 3his is especially so, since both petitioner and respondent corporations are usin$ the sa e acrony --- B.,.N.- +&)5 not to ention the fact that both are espousin$ reli$ious beliefs and operatin$ in the sa e place. Parenthetically, it is !ell to ention that the acrony B.,.N. used by petitioner stands for A2aligi at &aligan ng 3atotohanan.C+'85 3hen, too, the records reveal that in holdin$ out their corporate na e to the public, petitioner hi$hli$hts the do inant !ords A.GLE&.' -G !.+& 3'6 3R.&T+ 2E&1&, 2'L.G. 'T &'L.G'- -G 3'T+T+2'-'-,C !hich is stri"in$ly si ilar to respondentHs corporate na e, thus a"in$ it even ore evident that the additional !ords A'ng "ga 3aani)C and A&a Bansang Pilipinas, .nc.C, are erely descriptive of and pertainin$ to the e bers of respondent corporation. +'&5 ,i$nificantly, the only difference bet!een the corporate na es of petitioner and respondent are the !ords &'L.G'- and &12'6. 3hese !ords are synony ous --- both ean $round, foundation or support. Bence, this case is on all fours !ith 1niversal "ills Corporation v. 1niversal Te8tile "ills, .nc., +''5!here the Court ruled that the corporate na es Eniversal Mills Corporation and Eniversal 3e@tile Mills, Inc., are undisputably so si ilar that even under the test of Sreasonable care and observationT confusion ay arise. 4urther ore, the !holesale appropriation by petitioner of respondentHs corporate na e cannot find :ustification under the $eneric !ord rule. 0e a$ree !ith the Court of AppealsP conclusion that a contrary rulin$ !ould encoura$e other corporations to adopt verbati and re$ister an e@istin$ and protected corporate na e, to the detri ent of the public. 3he fact that there are other non-stoc" reli$ious societies or corporations usin$ the na es Church of the /ivin$ 1od, Inc., Church of 1od Cesus Christ the ,on of 1od the Bead, Church of 1od in Christ R By the Boly ,pirit, and other si ilar na es, is of no conse#uence. It does not authori2e the use by petitioner of the essential and distin$uishin$ feature of respondentHs re$istered and protected corporate na e. +'65 0e need not belabor the fourth issue raised by petitioner. Certainly, orderin$ petitioner to chan$e its corporate na e is not a violation of its constitutionally $uaranteed ri$ht to reli$ious freedo . In so doin$, the ,EC erely co pelled petitioner to abide by one of the ,EC $uidelines in the approval of partnership and corporate na es, na ely its underta"in$ to anifest its !illin$ness to chan$e its corporate na e in the event another person, fir , or entity has ac#uired a prior ri$ht to the use of the said fir na e or one deceptively or confusin$ly si ilar 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 A44IRME. in toto. SO OR%ERE%. !avi%e, r., C. ., 9Chair*an:, 3apunan, and Par%o, Puno, ., on official leave. ., concur.