SEC Adm. Case No. 03-10-306 Carebest International, Inc.

Securities and Exchange Commission SEC Bidg. EDSA, Gi'eenhills, Mandaluyong City Repubic of the Philippines

In the matter of:

CAREBESt INTERNAtIONAL, INC. SEC Admin. Case No. 03-10-306

For: Revocation of Corporate

Registration

evelyn S. de leon

Petitioner.

ORDER

This refers to the Petition for Cancellation of Certificate of Registration of Carebest Interrational, Inc., filed on 31 March 2010.

On 22 May 2008, the Commission En Banc revoked the Certificate of Registration of Care Best International, Inc. under SEc Registration No. A199913047. This revocation order is now the subject of a pending petition for review, docketed as CA-GR SP 104364, with the Court of Appeals. Meanwhile, the incorporators of the revoked corporation, including Reynaldo Cuevas and Ma. Luz Sustituedo, incorporated and registered another corporation namely, Carebest International, Inc., on 16 March 2006 under SEC Registration No. CS200603870. The respective Articles of Incorporation of both corporations reveal an identical primary purpose, namely:

"To establish, own, manage, operate and carry on the business of maintaining, preserving, preparing cieaning buitdings, amusement or recreational places or centers, office premises, factories, janitorial services, gardening, landscaping, installation, repair and maintenance of office equipment, window cieaning, pest control on any kind of building electric appliances and other miscellaneous repairs and services."

Petitioner alleges that Carebest International, Inc. did not actually organize or commence its operations since it was just incorporated and registered in anticipation of the possible finality of the 22 May 2008 Revocation Order against Care Best

Petition for Revocation of the Corporate Registration of SEC Admin. Case No: 03-10-306 17 June 20 10 Order Page 2 of 5' CAREBEST INTERNATIONAL, INC!

Internationai, Inc. Thus, petitioner concludes:that Carebest Internationai, Inc. should be revoked, or at least be deemed dissoived in accordance with Section 22 of the Corporation Code, which provides:

inoperation of a corporation. - If a corporation does not formally organize and commence the transaction of its business or the construction of its powers cease and the corporation shall be deemed dissolved. However, if a subsequently becomes continuously inoperative for a period of at least five its corporate franchise or certificate of incorporation. works within two (2) years from the date of its incorporation, its corporate corporation has commenced the transaction of its business but (5) years,-the same shall be a ground for the suspension or revocation of "Sec. .22. Effects on non-use of corporate charter and continuous

the transaction of its businesses or the construction of its works, or te continuously operate is due to causes beyond the control of the corporation as may be determined by the Securities and Exchange Commission." This provision shall not apply if the failure to organize, commence

International, Inc. to change its corporate name since it is confusingly similar with the previously registered corporate name of the Care Best International, Inc. At the outset, we find that it is in the public's interest for Carebest

Section 18 of the Corporation Code, provides:

allowed by the Securities and Exchange Commission if the proposed name is identical or deceptively or confusingiy similar to "Sec. 18. Corporate name. - No corporate name may be

that of any existing corporation or to any other name already protected by law or is patently deceptive, confusing or contrary to existing laws. When a change in the corporate name is approved, the Commission shall issue an amended certificate of incorporation under the amended name.

The poiicy behind Section 18 of the Corporation Code was explained in the case of Lyceum of the Philippines v. Court of Appeals, et al.,2 in this wise:

"The policy underlying the prohibition in Section 18 against the registration of a corporate name which is "identical or deceptively or confusingly similar" to that' of any existing corporation or which is "patently deceptive" or "patently confusing' or "contrary to existing laws," is the avoidance of fraud upon the public which wouid have occasion to deal with the entity concerned, the evasion of legai obligations and duties, and the

2 G.R No. 101897, 05 March 1993. Batas Pamba sa BIg. 68 (01 May 1980).

Petition for Revocation of the Corporat: Regis tration of CAREBEST INTERNATIONAL, INC: SEC Admin. Case No. 03-10-306 i7 June 20!0 Order Page 3 of 5

reduction of difficulties of administration and supervision over corporations."

The fact that the Commission previously approved the registration of a corporate name despite the prior registration of an identical name, does not prevent the Commission from ordering the change of name. Estoppel does not operate against the state or its agents.3 It is the Commission's duty to prevent confusion in the use of corporate names not only for the protection of the corporations involved, but more so for the protection of the public, and it has authority to de-register at all times and under all circumstances corporate names, which in its estimation, are tikely to generate confusion.4

In the present case, the corporate names of Carebest International, Inc. and Care Best International, Inc. are nearly identical. The only difference between the two corporate.names is that while one makes use of two separate words CARE BEST, the other combines the two words into a single coined word CAREBEST.

the fact that the two ccrporations were incorporated by the same individuais and Obviously, the corporate names of the two entities are confusingly similar. Further,

engage in the same line of business increases the likelihood of confusion. Any person using ordinary care and discrimination wouid be misled into believing that the two corporations are but one and the same.

Thus, Carebest International, Inc., being the 'ater registrant, must change its corporate narme since allowing it to retain its present corporate name will facilitate fraud upon the public which would have occasion to deal with the corporations concerned, ease the evasion of legai obligations and duties, and increase the government's difficulties in the administration and supervision over corporations. For these reasons, the Commission is duty bound to order Carebest International, Inc. to change its corporate name.

Now regarding the main issue of whether Carebest International, Inc.'s corporate registration should be revoked for non use of charter or continuous in- operation, we deem it proper to remand this matter to the Company Monitoring and Registration Department (CRMD," for brevity) for their appropriate action.

Under SEC Resolution No. 235, series of 2002, we mandated that cases for cancellation of the corporate franchises based on continuous inoperation should be handled by the CRMD:

"RESOLVED, That the CED shall handle cases for cancellatior of the franchises or Certificates of Registration of

3 Manila Lodge No. 76 1 v. Court of App331s, No. L-41001. September 30, 1976, 73 SCRA 166 Ang Kaarrib sa Iglesia ng Dios kay Kristo Hesus, H.S.K. sa Bansang Pilipinas, Inc. vs. Iglesia ng Dios kay Cristo Jesus. Haligi at Suhay ng Kat:iohanan, G.R. No. 137592, December 12, 2001.

Petition for Revocation of the Corporate Registration of SEC Admin. Case No. 03-10-306 CAREBEST INTERNATIONAL, INC. 17 June 20 :0 Order Page 4 of 5

corporations, partnerships and associations on the following grounds: 1) Fraud in processing its Certificate of Incorporation; can do or is doing to the great prejudice of or damage to the amount to a gravs violation of its franchise." Commission restraining commission of acts which would 2 general public 3) Refusal to comply or defiance of any lawful order of.the Serious misrepresentations as to what the corporation

While the CRMD shall handle said cases based on the following grounds: 1) Continuous inoperation for a period of at least five

determined by the Commission within the prescribed 2) Failure to file by-laws within the required period 3) Failure to file the required reports in appropriate forms as (5)years

period."

The rationale for this resolution is that it is the CRMD that has the technical expertise and specialized knowledge necessary in determining the existence of facts relevant to the alleged non use of charter or continuous in-operation of Carebest International, Inc.

INTERNATIONAL, INC.; with SEC Registration No. CS200603870, is hereby WHEREFORE, premises considered, Respondent CAREBEST

ORDERED to change its corporate name by amending its articles of incorporation within thirty (30) days from the date of receipt of this Order.

Respondent is required to submit proof of its compliance within the same period. Failure to comply with this Order will automatically subject the respondent to an administrative fine of Thirty Thousard Pesos (P 30,000.00) pursuant to the Commission's authority to impose administrat:ve sanctions as provided in the Securities Regulation Code5, Section 54. This is without prejudice to any additional penalties that may be imposed for continued non-d:ompliance.

Further, this case is hereby REMANDED to the Company Registration and Monitoring Department for further proceedings in order to determine if factual basis exists for the revocation of respondent's certificate of registration on the ground of non use of charter or continuous in-operation.

Let a copy of this Order be furnished the Company Registration and Monitoring Department for proper notation and action.

SO ORDERED.

5 Republic Act no. 8799 (19 July 2000).

SEC Admin. Case No. 03-10-306 Petition for Revocation of the Corporate Registration of CAREBEST INTERNATIONAL, INC! 17 June 20 i0 Order Page 5 of 5

Mandaluyong City, 17 June 2010.

#e B. Barin .

Chairperson

MA. JUANITA E. CUEtO RAUL J. PALABRICA

Commissioner Commissioner

MANUEL HUBERTO B. GAItE Commissioner ELADIO MK JALA CommiSsioner

*OY leave