SEC En Banc Case No. 08-07-112 The Manila Southwoods Golf and Country, Inc. Petitioner-Appellee - versus - Manila Southwoods Ladies Chapter, Inc.Respondent-Appelant.

Securities and Exchange Commission Republic of the Philippines Department of Finance

AND COUNTRY CLUB, INC. THE MANILA SOUTHWOODS GOLF Petitioner-Appellee

versus. SEC En Banc Case No.08-07-112

MANILA SOUTHWOODS LADIES CHAPTER, INC., Respondent-Appellant.

X

DECISION

Manila Southwoods Ladies Chapter, Inc. (Appellant), seeking to reverse and set aside the Order dated 16 July 2007 (Assailed Order) of the Office of the General Counsel (OGC), the dispositive portion reads: Before the Commission En Banc is an Appeall filed on 15 August 2007 by

the words "Manila Southwoods" within thirty (30) days from date of hereby directed to change or modify its corporate name by deleting "WHEREFORE, premises considered, Respondent [Appellant] is receipt of this Order.

The Facts

maintenance of a golf field course and tennis courts, and other similar facilities." domestic corporation registered with the Commission on 05 September 1990 under Company Registration No. 181069 with principal office address at Southwoods Boulevard, Bo. Cabilang Baybay, Carmona, Cavite2. Its primary purpose is: "[promoting] the social, recreational and athletic activities on a non- profit basis among its stockholders, the core of which will be the acquisition and The Manila Southwoods Golf and Country Club, Inc. (Appellee) is a

24 November 2005 under Company Registration No. CN200519615 with a membership association of lady golfers who are primary members of the Manila business community for the benefit of the young and deserving players who may in Avenue, Makati City3. Its primary purpose is: "[t]o organize, establish and register Southwoods Golf and Country Club, Inc. with the end in view to enhance, promote, diversify the golf game all throughout the country and in foreign lands by way of promoting the game through organized tournaments to be subscribed by the principal office address at 23-B Makati Tuscany Condominium, 6751, Ayala Appellant is a domestic corporation registered with the Commission on

3 Paragraph 1, Appellant's Memorandum of Appeal. I Notice of Appeal and Memorandum of Appeal dated 14 August 2007. 2 Paragraph 1, Appellee's Reply Memorandum .

The Manila Southwoods Golf and Country Club, Inc. vs. Manila Southwoods Ladies Chapter, Inc SEC En Banc Case No.08-07-112

Page 2 of 8

the future become our pride and heroes, likewise, to promote charitable committments (sic) to the under priviledged (sic) children through scholarships."

2007, OGC issued the Assailed Order granting Appellee's Petition. The OGC ruled that Appellant's corporate name is confusingly similar to its name. On 16 July that: On 15 September 2006, Appellee filed a Petition with the 0GC alleging

"Likewise, it does not follow that as "Manila" and "Southwoods" Southwoods" can no longer be appropriated. Taken together, these differentiate Petitioner [Appellee] from other corporations. words form a distinctive name which serve to identify and pertain to geographical names or addresses, then the words "Manila

Petitioner [Appellee] is doing business) is an original or We presumed that it is no coincidence that Petitioner [Appellee] included the word "Southwoods" in its name because the golf and country club is located along Southwoods Avenue in Carmona, Cavite. It appears, therefore, that the word "Southwoods" is descriptive of the geographic location in Manila. Thus, the word "Manila" is not indicative of the geographic location of Petitioner [Appellee]. In sum, we find that the appellation of the word creative idea conceived by and for the benefit of Petitioner [Appellee] which,under the law is entitled to protection. "Manila" in "The Manila Southwoods" (the name under which

Respondent should secured the consent of the Petitioner [Appellee] Further, it bears emphasis that the incorporators of Respondent corporate name. Following the rules of the Commission, the when it used the words "Manila Southwoods" in its corporate name. [Appellant] are members of Petitioner. Hence, they are well aware that Petitioner uses "Manila Southwoods" as part of its

On the issue of confusingly similar between the two corporate names, we find that the use by the Respondent [Appellant] of the words "Manila Southwoods" in its corporate name may indeed cause confusion to the public.

due process was violated when the OGC did not conduct a preliminary its exclusive use the words "Manila" and "Southwoods"5. conference pursuant to Section 5-1, Rule V of the 2006 SEC Rules of Procedure (2006 Rules)4. Appellant also argues that Appellee has no right to appropriate for Aggrieved, Appellant filed that instant Appeal. It argues that its right to

instant Appeal on the ground that: 1.) Appellant's right to due process was not the arguments in Appellant's Appeal. Appellee prays for the dismissal of the Appellee, on 27 September 2007, filed its Reply Memorandum6 refuting all

5 Pages 10-19 of Appellant's Memorandum of Appeal. 6 Dated 26 September 2007. Pages 8-10 of Appellant's Memorandum of Appeal.

The Manila Southwoods Golf and Country Club, Inc. vs. Manila Southwoods Ladies Chapter, Inc SEC En Banc Case No. 08-07-112 Page 3 of 8

violated because the 2006 Rules are not yet effective at the time the case was submitted for decision7; 2.) the General Counsel was correct in ruling that Appellee has a prior right over the words "Manila Southwoods"8; 3.) the General Counsel was correct in ruling that the use of the words "Manila Southwoods" by Appellant will create confusion to the public9.

Sec. 11-7 of the 2006 Rules, to give the parties the opportunity to clarify their respective positions. Appellee filed its Oppositioni1 arguing that the said motion is only intended to delay the resolution of the case. Oral Argumentio praying that its Appeal be set for oral arguments, pursuant to Thereafter, Appellant, on 17 October 2007, filed a Motion to Set Case for

Appellant's motion since there is already ample basis found on the parties pleadings to decide the instant Appeal. Thereafter, the case was submitted for resolution12. The Commission En Banc, on 21 October 2010, resolved to deny

The Issues

process was violated when the OGC did not conduct a preliminary conference as provided in Sec. 5-1, Rule V of the 2006 SEC Rules; and whether or not OGC is correct in ruling that Appellee has acquired a priority right over the name "Manila Southwoods" and Appellant's corporate name is confusingly similar to Appellee's corporate name. The issues to be resolved are whether or not Appellant's right to due

The Ruling

We find the instant Appeal bereft of merit.

Appellant's right to due process

its right to due process. On the other hand, Appellee contends that the 2006 Rules was not yet in effect during the pendency of the proceedings and that the OGC could resolve the case below by a mere verification of the records and conference provided under the Section 5-1, Rule V, 2006 Rules13, which violates applying the relevant laws. Appellant argues that the OGC did not conduct the required preliminary

dispute resolution, set the case for conference within ten (10) days after the last pleading allowed under Section 3-13 is filed or upon expiration of the period within which to file the reply or rejoinder mentioned therein. x x x. 8 Paragraphs 16-28 of Appellee's Reply Memorandum. 9 Paragraphs 29-33 of Appellee's Reply Memorandum. 12 Order dated 21 October 2010. 7 Paragraphs 12-15 of Appellee's Reply Memorandum. 10 Dated 17 October 2007. Dated 09 November 2007. 13 Sec. 5-1, Rule V,2006 Rules. Preliminary Conference. In any action and upon assignment by the Director of the Operating Department con ncerned, the Hearing Panel or Officer shall, in compliance with the existing rules on alternative

The Manila Southwoods Golf and Country Club, Inc. vs. Manila Southwoods Ladies Chapter, Inc. SEC En Banc Case No.08-07-112

Page 4 of 8

Company Registration and Monitoring Department (CRMD) filed its Comment on 26 October 2006. Stated otherwise, Appellee's Petition was deemed submitted submitted for decision by the 0GC prior to the effectivity of the 2006 Rules. Based on record, Appellee filed its Petition with 0GC on 15 September 2006. Thereafter, Appellant filed its Answer on 25 October 2006 and the Commission's for resolution before the 2006 Rules took effect on 31 January 2007. We agree with Appellee's contention. Appellee's Petition was deemed

5-4, Rule V of the Revised Rules of Procedure 2000 of the Securities and Exchange Commission (2000 Rules) that: Moreover,it is expressly stated in the old rules,more particularly, Section

consideration of the pleadings, the affidavits and other evidences may be rendered thereon without the need of a formal hearing, he "Section 5-4. Hearings - Should the Hearing Officer find upon and position statements submitted by the parties that a judgment may proceed to render judgment."

conduct a preliminary conference if in its judgment the pleadings and evidence are allowed under the 2000 Rules to amicably settle the case at any stage of the proceedings. In this case, the 0GC's discretion is within the ambit of the 2000 presented by the parties are sufficient to render a judgment. Besides the parties Rules. As above-stated, the OGC, as hearing officer, has the discretion not to

In Orbase vs. Ombusdman, et al.14, the Supreme Court ruled that: As to Appellant's argument on violation of due process, we do not agree.

notified of the charge against him and given an opportunity to too is devoid of merit. The CA correctly concluded that petitioner's right to due process was not violated. Due process, as a constitutional precept, does not always, and in all situations, require a trial-type proceeding. Litigants may be heard through pleadings, written explanations, position papers, memoranda or oral arguments. Due process is satisfied when a person is explain or defend himself. In administrative proceedings, filing charges against the person and giving reasonable opportunity to the the minimum requirements of due process.The essence of due process is simply to be heard; or as applied to administrative proceedings, an opportunity to explain one's side, or an opportunity to seek a reconsideration of the action or ruling] complained of." "Anent petitioner's contention that she was denied due process, this person so charged to answer the accusations against him constitute

OGC. In the instant case, Appellant actively participated in the proceedings of the case below can be quite easily verified from the records available with the The foregoing doctrine takes even more meaning when the alleged facts

|+G.R. No. 175115, 23 December 2009.

The Manila Southwoods Golf and Country Club, Inc. vs. Manila Southwoods Ladies Chapter, Inc SEC En Banc Case No.08-07-1 12 Page 5 of 8

resolving Appellee's Petition. before the OGC. Appellant was given the opportunity to present its side, through the pleading it submitted to OGC. Clearly, OGC properly observed due process in

name "Manila Southwoods" and if it Appellee's right of priority over the corporate name confusinglysimilar to Appellee's

Section 18 of the Corporation Code provides:

issue an amended certificate of incorporation under the amended by the Securities and Exchange Commission if the proposed name "Section 18. Corporate name. - No corporate name may be allowed is identical or deceptively or confusingly similar to that of any existing corporation or to any other name already protected by law or is patently deceptive,confusing or contrary to existing laws.When a change in the corporate name is approved, the Commission shall name."

interpreted the above-stated provision as: In Lyceum of the Philippines vs. Court of Appealsis, the Supreme Court

"Section 18 of the Corporation Code expressly prohibits the use of a contrary to existing laws". The policy behind the foregoing corporate name which is "identical or deceptively or confusingly similar" to that of any existing corporation or to any other name already protected by law or is patently deceptive, confusing or prohibition is to avoid fraud upon the public that will have administration and supervision over corporation." occasion to deal with the entity concerned, the evasion of legal obligations and duties, and the reduction of difficulties of

the protection of the public, and it has authority to de-register at all times and names not only for the protection of the corporations involved but more so for under all circumstances corporate names which in its estimation are likely to generate confusion.16 It is the Commission's duty to prevent confusion in the use of corporate

Wit: To fall within the prohibition of the law, two requisites must be proven, to

(1) that the complainant corporation acquired a prior right over the use of such corporate name; and (2) the proposed name is either: a) identical,or

Haligi at Suhay ng Katotohanan, G.R. No. 137592, December 12, 2001 16 Ang Kaanib sa Iglesia ng Dios kay Kristo Hesus, H.S.K. sa Bansang Pilipinas, Inc. vs. Iglesia ng Dios kay Cristo Jesus, 15 219 SCRA 610,615 [1993].

The Manila Southwoods Golf and Country Club, Inc. vs. Manila Southwoods Ladies Chapter, Inc SEC En Banc Case No.08-07-1 12

Page 6 of 8

Iaw. 17 existing corporation or to any other name already (b) deceptively or confusingly similar to that of any (c) patently deceptive, confusing or contrary to existing protected by law; or

terms which are incapable of exclusive appropriation. It also argues that its corporate name "Manila Southwoods Ladies Chapter, Inc." is not confusingly said name over the years does not vest a priority right. Furthermore, Appellant claims that the words "Manila" and "Southwoods" are generic and geographical similar to Appellee's corporate name "The Manila Southwoods Golf and Country Club, Inc." because the former is a ladies association while the latter is a golf club. over the name "Manila Southwoods". It claims that Appellee's mere use of the Appellant argues that OGC erred in ruling that Appellee has prior right

the principle of prius tempore potior jure (first in time, stronger in right) to the instant case. It claims that since it registered with the Commission for at least asserts that OGC was correct in ruling that Appellant's corporate name is fifteen (15) years prior to Appellant's registration, it has a superior right to use confusingly similar to Appellee's corporate name. the words "Manila Southwoods" as part of its corporate name. Moreover, it On the other hand, Appellee contends that OGC was correct in applying

must look to the record as well as the names themselves18. It is settled that proof Corporation Code expressly prohibits the use of a corporate name which is confusingly similar to an existing corporation. In determining the existence of confusing similarity in corporate names, the test is whether the similarity is such as to mislead a person using ordinary care and discrimination and the Court of actual confusion need not be shown. It suffices that confusion is probably or likely to occur19. We rule in favor of the Appellee. As above-discussed, Section 18 of the

(registered in 2005), it is beyond debate that Appellee has a prior right over the name "Manila Southwoods". Since Appellee (registered in 1990) was incorporated prior to Appellant

location because Appellee's golf club is located in Southwoods, Cavite. Thus, it is should be taken together and not separately. As correctly ruled by the OGC, this forms a distinctive name which serve to identify and differentiate Appellee from other registered entities. These words are not used in its geographical sense but are coined phrase to distinguish it from other corporations. It is obvious that in Appellee's corporate name, the word "Manila", does not describe or indicate a Likewise, the words "Manila Southwoods" in Appellee's corporate name

19 Philips Export B.V.et. al. vs. Court of Appeals, et. al., GR No. 96161, February 21, 1992 citing 6 Fletcher [Perm Ed], pp. citing Philips Export B.V.vs. Court of Appeals 206 SCRA 457, 463 [1992] 18 Industrial Refractories Corporation of the Philippines vs. Court of Appeals,et. al, GR No. 122174, October 3, 2002. 17 Industrial Refractories Corporation of the Philippines vs. Court of Appeals, et. al, GR No. 122174, October 3, 2002 107-108.

The Manila Southwoods Golf and Country Club, Inc. vs. Manila Southwoods Ladies Chapter, Inc SEC En Banc Case No.08-07-112

Page 7 of 8

evident that Appellee's corporate name "Manila Southwoods Golf and Country Club, Inc." is an original name crafted by the Appellee.

facts, the Supreme Court ruled that: In the case of GSIS Family Bank vs. BPI Family Bank20 which has similar

respondent. "Family," as used in respondent's corporate name, is not hand, convey the characteristics, function, qualities or ingredients of "Petitioner cannot argue that the word "family" is a generic or descriptive name, which cannot be appropriated exclusively by Fudge" for chocolate soda drink. Descriptive marks, on the other a product to one who has never seen it or does not know it exists, such as "Arthriticare" for arthritis medication. generic. Generic marks are commonly used as the name or description of a kind of goods, such as "Lite" for beer or "Chocolate

separated from the word "bank." In asserting their claims before Under the facts of this case, the word "family" cannot be the SEC up to the Court of Appeals, both petitioner and respondent phrase, neither being generic nor descriptive, is merely suggestive and may properly be regarded as arbitrary. Arbitrary marks are "words or phrases used as a mark that appear to be random in the context of its use.They are generally considered to be easily remembered because of their arbitrariness. They are original and unexpected in relation to relation to the product or service." refer to the phrase "Family Bank" in their submissions. This coined the products they endorse, thus, becoming themselves merely suggest some quality or ingredient of goods.xxx The strength of the suggestive marks lies on how the public perceives the word in distinctive." Suggestive marks, on the other hand, "are marks which

the stockholders of partners of the entity to be registered." Based on the facts and evidence presented, Appellee did not consent to Appellant's usage of the words "Manila Southwoods". that "The name which contains a word identical to a word in a registered name shall not be allowed if such word is coined or already appropriated by a registered firm, regardless of the number of the different words in the proposed name, unless there is consent from the registered firm of this firm is one of Additionally, SEC Memorandum Circular No. 14, series of 2000 provides

Hence, if the Appellant has not obtained Appellee's permission/consent to from Appellee's name because of the presence of distinct words such as "Ladies" and "Chapter". However, the concept of distinguishability has not yet been "identical or deceptively or confusingly similar" to an existing corporate name. adopted in the Philippines.The prevailing doctrine is found on Section 18 of the Corporation Code which prohibits the use of a corporate name which is Furthermore, Appellant argues that its name can be easily distinguished

20 G.R. No. 175278, 23 September 2015.

The Manila Southwoods Golf and Country Club. Inc.vs. Manila Southwoods Ladies Chapter,Inc SEC En Banc Case No. 08-07-112 Page 8 of 8

use/adopt the name "Manila Southwoods" as a portion of its own name, it is prohibited from using the same.

the OGC was correct in granting Appellee's Petition and ordering Appellant to corporate names will likely cause confusion to the public because of present similarities and lack of other effective differentiating mediums or terms. Hence, change its name by deleting the words "Manila Southwoods". Finally, the presence of the phrase "Manila Southwoods" in both

for lack of merit and the Order of the General Counsel dated 16 July 2007 is hereby AFFIRMED WHEREFORE, premises considered, the instant Appeal is hereby DENIED

SOORDERED

P as ay City, Philippines; 11 August 2016

TERESITA J. HERBOSA Chairperson

MANUEL HUBERTO B.GAITE Commissioner ANTONIETA F.IBE Commissioner 0

1WevX EPHYRO LUIS B.AMATONG Commissioner BLASIAMES / Conmissioner

*On Official Business