SEC En Banc Case No. 08-13-299 Puregold Construction and Development Corporations Appellant, - versus - Puregold Price Club, Inc. Appellee.

Securities and Exchange Commission Republic of the Philippines Department of Finance

PICC Secretariat Building, PICC Complex, Pasay City

DEVELOPMENT CORPORATION, PUREGOLD CONSTRUCTION Appellant. AND Change of Corporate Name SEC En Banc Case No. 08-13-299

versus :

PUREGOLD PRICE CLUB, INC., Appellee.

DECISION

CORPORATION to change its corporate name for being confusingly similar to that of COUNSEL (OGC), as well as the Reply Memorandum filed on 28 August 2013 by PUREGOLD 2013 by PUREGOLD CONSTRUCTION AND DEVELOPMENT CORPORATION,which seeks tc reverse the Order dated 19 July 2013 of the Commission's OFFICE OF THE GENERAL PRICE CLUB, INC. The OGC directed PUREGOLD CONSTRUCTION AND DEVELOPMENT PUREGOLD PRICE CLUB, INC. which has a prior right to use such name. For the consideration of the En Banc is the Memorandum on Appeal filed on 12 August

RELEVANT FACTS

corporation, registered on 11 May 2009.1 Its primary purpose is: PUREGOLD CONSTRUCTION AND DEVELOPMENT CORPORATION is a domestic

To engage in general construction business, including the

any work upon buildings, houses, and condominium[s], roads, constructing, enlarging, repairing, developing or engaging in plants, bridges, airfields, piers, waterworks, railroads and other structures.2

1998.3 Its primary purpose is: PUREGOLD PRICE CLUB, INC. is a domestic corporation, registered on 8 September

To engage in, conduct, and carry on the business of buying. may be permitted by law, all kinds of goods, commodities, wares selling, distributing, marketing at wholesale/retail, insofar as

not limited to consumer goods, including pharmaceutical and medical goods, cosmetic[s], medicines, medical formulations, and merchandise of every kind and description[,] such as but food supplements and the like; to enter into all kinds of contracts for the export, import, purchase, acquisition, sale at wholesale or retail[,] and other disposition for its own account as principal or in representative capacity and [as]

commission merchant, factors or agents, upon consignment of manufacturer's representative, merchandise broker, indentor

2 PUREGOLD CONSTRUCTION AND DEVELOPMENT CORPORATION's Articles of Incorporation Company Reg. No. CS200906682

3 Company Reg. No. A199813754

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all kinds of goods, wares, merchandise or products[] whether natural or artificial, food or non-food, except as broker/dealer of securities."4

considered as a Petition for Change of Corporate Name. It argued that On 3 April 2012, PUREGOLD PRICE CLUB,INC. filed its Complaint, which was (1) It acquired a prior right over the name PUREGOLD PRICE CLUB, where the (2) The term "PUREGOLD" is protected by registered trademarks issued by the dominant term is "PUREGOLD": Intellectual Property Office (IPO) to PUREGOLD PRICE CLUB, INC. in 2005 and 2007. suchthat PUREGOLD CONSTRUCTION ANDDEVELOPMENT

(3) The name PUREGOLD CONSTRUCTION AND DEVELOPMENT CORPORATION is (4) Even though they are engaged in different industries, the public would be led to confusingly similar to its own, since the dominant term is also "PUREGOLD"; and company, has branched out into the construction business. believe that PUREGOLD PRICE CLUB, INC., the older and more established CORPORATION needs the former's consent to use the same;

it argued that: registered earlier. It also did not contest that the two corporate names are similar. However, filed its Answer. It did not contest that the name "PUREGOLD PRICE CLUB, INC." was On 20 ApriI 2012, PUREGOLD CONSTRUCTION AND DEVELOPMENT CORPORATION (1) The use of a similar name is allowed if one or more distinctive words are added, (2) The names of the parties are not confusingly similar, because they are engaged in (3) There is no evidence of actual confusion. Such as "CONSTRUCTION AND DEVEPMENT CORPORATION"; different industries; and

(1) The addition of the terms "CONSTRUCTION AND DEVELOPMENT CORPORATION" (2) According to jurisprudence, evidence of actual confusion need not be shown. On 8 May 2012, PUREGOLD PRICE CLUB, INC. filed its Reply. It argued that: are not distinctive enough because they merely describe the business; and

declaring that: On 19 July 2013, after notice and hearing, the 0GC issued the assailed Order,

(1) PUREGOLD PRICE CLUB, INC. acquired a prior right over the name because a. PUREGOLD PRICE CLUB, INC. adopted it as early as its incorporation in 1998, whereas PUREGOLD CONSTRUCTION AND DEVELOPMENT

b. The term "PUREGOLD" is unique and may be appropriated, and it has been a registered trademark of PUREGOLD PRICE CLUB, INC. since 2005. CORPORATION only adopted the name upon its incorporation in 2009;

(2) PUREGOLD CONSTRUCTION AND DEVELOPMENT CORPORATION is confusingly similar to PUREGOLD PRICE CLUB, INC. because: a. Both corporate names contain the dominant term "PUREGOLD;" b. The additional words Moreover, the addition of one or more distinctive words shall not be words describes the business and the last word describes the entity: CORPORATION" are not sufficiently distinctive, because the first three "CONSTRUCTION AND DEVELOPMENT

allowed if the registered name is unique, unless the Board of Directors of PUREGOLD PRICE CLUB, INC. consents--and it does not consent;

4 PUREGOLD PRICE CLUB, INC.'s Articles of Incorporation

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d. Although the goods and services are different, there is a likelihood of since the public may be misled into thinking there is a connection between into the construction business, or that it has the same owners as PUREGOLD CONSTRUCTION AND DEVELOPMENT CORPORATION. "confusion of business" (as opposed to "confusion of goods/services"), the two business-i.e., that PUREGOLD PRICE CLUB, INC. has branched-out

On 12 August 2013, PUREGOLD CONSTRUCTION AND DEVELOPMENT

corporate name in compliance with the pertinent SEC Guidelines, viz. CORPORATION filed the instant Memorandum on Appeal. It argued that it registered its

Contrary to the findings of the SEC-OGC, it is respectfully

should be found valid and in order as it faithfully observed the requirements of the Honorable Commission in the adoption of the corporate name. Respondent has only followed the Names as provided under SEC Memorandum No. 14, Series of 2000.5 Expressly, the Guidelines provide that: submitted that the registration of respondent's corporate name provisions under the SEC Revised Guidelines on Corporate

(a)The "Corporation" or its abbreviation "Corp." or Incorporate or Inc corporate name shall contain the word

indicative of the primary purpose. If there are two (2) (b) Terms descriptive of a business in the name shall be

descriptive terms, the first shall refer to the primary purpose and the second shall refer to one of the secondary purposes.

partnership with the Commission or a sole proprietorship registered with the Department of Trade and Industry (DTI). (c) The name shall not be identical, misleading or confusingly similar to one already registered by another corporation or

word different from the name of the company already registered. [Emphasis supplied] If the proposed name is similar to the name of a registered firm, the proposed name must contain at least one distinctive

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(h) Name containing a term descriptive of a business different from the business of a registered company whose

be allowed. [Emphasis supplied] name also bears similar term(s) used by the former may

the name of respondent "PUREGOLD CONSTRUCTION AND Following Sections "a", "b", "c" and "h" of the SEC Guidelines,

be infringing or violating the rights of petitioner in the use of DEVELOPMENT CORPORATION" is allowable and should not

its corporate name.6

5 Superseded by SEC Memorandum Circular No. 21, Series of 2013 (MC 21-2013). 6 Page 6 of Memorandum on Appeal

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change of a corporate name even if confusingly similar to a protected trademark, viz. It also argued that the OGC is limited only to SEC Rules and thus cannot order the

Furthermore, even if Petitioner has registered its "trade name" [and/or trademark] with the [IPO], the SEC-OGC can only

not trademark infringement.7 [Emphasis supplied] apply the rules of this Honorable Commission and not that of another administrative agency, since the issue at hand is

names would not appear similar even to the general public, viz. Finally, it argued that there is no likelihood of confusion because the two corporate

Contrary to the findings of the SEC-OGC, there is no actual confusion or any high probable confusion in business with the vis the petitioner's PUREGOLD PRICE CLUB, INC. There is arguably a whale of difference in the names of the two distinguish even without mentioning the goods or services that they offer.8 [Emphasis supplied] adoption CONSTRUCTION AND DEVELOPMENT CORPORATION" vis-a- corporations that the general public can easily mark and by respondent ofthe name "PUREGOLD

there is no evidence of actual confusion. It reiterated that the two corporations are engaged in different industries and that

the most part, it reiterated its arguments in the OGC case. On 28 August 2013, PUREGOLD PRICE CLUB, INC. filed its Reply Memorandum. For

It highlighted that "PUREGOLD" is a unique name, capable of appropriation, viz.

The name "PUREGOLD" is a unique or distinctive name. It is not a generic or descriptive name.

entry of the single name or single word "PUREGOLD." blooded", "pure-bred", and finally "pure democracy." There is no Search as any one may from the dictionaries, there is no word "PUREGOLD" entered and given definition. In the attached page 1010 of the Merriam-Webster's Collegiate Dictionary, Eleventh Edition, the word entries with "pure" followed by "pure.

but as an adjective modifying a noun. There is also no entry of the single word or name "PUREGOLD" in literature. Writers use "pure" and "gold" not as a single word

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even product names.10 [Emphasis supplied] the corporate name of the appellee because the name was distinguish it from other corporations, partnerships, business or No word or name "PUREGOLD" appears anywhere except in coined by it for its own use as a unique and distinct name to

9 Page 6 of Reply Memorandum. 8 Page 9 of the Memorandum on Appeal. 10 Page 7 of Reply Memorandum. 7 Page 8 of Memorandum on Appeal

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when it registered as a corporation with the Securities and and distinct name "PUREGOLD" as early as 8 September 1998 The appellee coined and appropriated for its sole use the unique Exchange Commission.

The appellee further exercised its sole ownership of the name "PUREGOLD" when it registered the name and mark "PUREGOLD" with the Intellectual Property Office on 11 August 2005 and 10 May 2007.

DEVELOPMENT" are not sufficiently distinctive. It also agreed with the OGC ruling that the words "CONSTRUCTION AND

Hence this Appeal.

DISCUSSION

laid-down in the Supreme Court case of Philips Export B.V. v. Courts of Appeals, G.R. No. 96161 21 February 1992 (Philips case), must be satisfied, to wit: In order for a Petition for Change of Corporate Name to prosper, the two (2) requisites

Our own Corporation Code, in its Section 18, expressly provides that: No corporate name may be allowed by the Securities and Exchange Commission if the proposed name is identical or

corporation or to any other name already protected by law or is deceptively or confusingly similar to that of any existing

patently deceptive, confusing or contrary to existing law. Where a change in a corporate name is approved, the commission shall issue an amended certificate of incorporation under the amended name. (Emphasis supplied)

The statutory prohibition cannot be any clearer. To come within its scope, two requisites must be proven, namely:

(1) that the complainant corporation acquired a prior right over the use of such corporate name; and

(2) the proposed name is either:

(a) identical; or

(b) deceptively or confusingly similar to that of any existing corporation or to any other name already protected by law; or

(c) patently deceptive, confusing or contrary to existing Iaw.

(Emphasis supplied)

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Prior Right

According to the Philips case, the test of prior right is priority of adoption.

September Here, PUREGOLD PRICE CLUB, INC. adopted its name as early as its incorporation on 1998,While PUREGOLD CONSTRUCTION ANDDEVELOPMENT CORPORATION only adopted its name upon its incorporation on 11 May 2009.

appropriation. The dominant term "PUREGOLD" is a combination of the words "pure" and highest quality of goods or services. However, it is normally two separate words. "gold", which are not necessarily related to each other, but taken together connote the The name "PUREGOLD PRICE CLUB, INC." is unique, not generic, and thus capable of

PRICE CLUB, INC. in 2015 and 2017. No corporate name infringing upon a trademark may be registered, because Section 18 of the Corporate Code prevents the registration of a "name already protected by law," which includes the law on trademarks, viz. Moreover, "PUREGOLD" is protected by trademarks issued by the IPO to PUREGOLD

proposed name is identical or deceptively or confusingly similar Section 18. Corporate name. - No corporate name may be allowed by the Securities and Exchange Commission if the

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

of incorporation under the amended name.

Moreover, the SEC Guidelines expressly state that the consent of the trademark owner is required before another person can use it as part of a corporate name, viz

A tradename or trademark registered with the Intellectual partnership name of a party other than the owner, if the latter gives its consent to such use.11 Property Office may be used as part of the corporate name or

a prior right oVer PUREGOLD CONSTRUCTION AND DEVELOPMENT CORPORATION. Therefore, having earlier adopted its unique name, PUREGOLD PRICE CLUB, INC. has

Confusingly Similar

themselves." The case adds that "proof of actual confusion need not be shown. It suffices that discrimination. In so doing, the Court must look to the record as well as the names "whether the similarity is such as to mislead a person, using ordinary care and According to the Philips case, the test of whether a name is confusingly similar is

confusion is probably or likely to occur.

Here, it is evident, even to an ordinary person, that "PUREGOLD" is the dominant phrase in both of the parties' names and that the spelling is identical in both corporate names. The word "PURE" is not necessarily related to "GOLD" and thus the combination is unique, leading an ordinary person to assume that PUREGOLD PRICE CLUB, INC. and PUREGOLD CONSTRUCTION AND DEVELOPMENT CORPORATION are related.

11 Item 5 of MC 21-2013.

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that it is enough that there is likelihood of confusion, viz. The OGC correctly ruled that evidence of actual confusion need not be shown, and

Respondent further argued that public confusion is unlikely, if not totally impossible, given the nature of their businesses and

has occurred as of the present, the probability of confusion is still high considering the noticeable similarity in the dominant the products and services being offered. Although no confusion

words used by the two corporations in their corporate names.

probably or likely to occur."12 et. al. [G.R. No. 96161, 21 February 1992],"xxx proof of actual confusion need not be shown. It suffices that confusion is As was stated in Philips Export B.V. et. al. v. Court of Appeals

Moreover, even though the businesses of both corporations are different from each other, confusion of business may exist when products are non-competing but related enough to produce confusion of affiliation.13 [Emphasis supplied]

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In the instant case, petitioner's primary purpose allows it to

in its construction business. Consequently, allowing the use of engage in the business of buying and selling all kinds of goods, construction materials and supplies, which respondent uses wares, commodities and products of all kinds, including

mislead prospective purchasers of petitioner into thinking that it has extended its business [into] the field of construction, or is connected with the activities of the respondent.14 the word "PUREGOLD" in respondent's corporate name may

The OGC also correctly ruled that PUREGOLD CONSTRUCTION AND DEVELOPMENT

Words were added to differentiate it from PUREGOLD PRICE CLUB, INC., viz. CORPORATION failed to comply with the SEC Guidelines because no additional distinctive

In the instant case, respondent failed to add one or more

registered name. The addition of the words "Construction and distinctive words to remove the similarity from a previous

words since the word "Corporation" is already required for all corporations seeking to register a corporate name so as to distinguish it from partnerships, while the words "Construction and Development" are generic words used to describe a particular business or industry.15 [Emphasis supplied] Development Corporation" are not considered distinctive

Therefore, "PUREGOLD CONSTRUCTION AND DEVELOPMENT CORPORATION" is confusingly similar to the earlier registered name "PUREGOLD PRICE CLUB, INC."

12 Page 5 of assailed OGC Order 14 Page 6 of assailed OGC Order 15 Page 4 of assailed OGC Order 13 I

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SEc Guidelines on Corporate Names

the SEC Guidelines is incorrect. The requirements are cumulative. PUREGOLD CONSTRUCTION AND DEVELOPMENT CORPORATION's interpretation of

Names" (MC 21-2013), which are substantially the same as the 2008 rules cited, viz. "The Omnibus Guidelines and Procedures on the Use of Corporate and Partnership The current SEC Guidelines are SEC Memorandum Circular No. 21, Series of 2013

respectively.16 The corporate name shall contain the word "Corporation" or "Incorporated," or the abbreviations "Corp." and "Inc."

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A term that describes the business of the corporation in its name should refer to its primary purpose.17

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The name shall not be identical, misleading or confusingly

the case of sole proprietorships.18 similar to a corporate or partnership name registered with the Commission, or with the Department of Trade and Industry, in

If the name applied for is similar to that of a registered

or differentiate it from the registered name.19 distinctive words to the proposed name to remove the similarity corporation or partnership, the applicant shall add one or more

board of directors or majority of the partners of the subject name.20 corporation or partnership gives its consent to the applied However, addition of one or more distinctive words shall not be allowed if the registered name is coined and unique unless the

partnership name of a party other than the owner, if the latter Property Office may be used as part of the corporate name or gives its consent to such use.21 A tradename or trademark registered with the Intellectual

The rules require the inclusion of words describing the entity, such as "corporation'

includes a registered trademark, consent must be obtained from the mark's owner. words descriptive of the primary purpose. If the proposed name includes a unique name. such as "construction and development" or "price club." The rules further require additional distinctive words, if the proposed name is similar to a registered corporation. The consent must be obtained from the earlier registrant. Similarly, if the proposed name or "incorporated," and the rules allow the inclusion of words describing the primary purpose, "additional distinctive words" do not include the word describing the entity and the

17 Item 2 of MC 21-2013. 18 Item 3(a) of MC 21-2013 19 1st Paragraph of Item 3(b) of MC 21-2013 20 2nd Paragraph of Item 3(b) of MC 21-2013 21 Item 5 of MC 21-2013. 16 Item 1(a) of MC 21-2013

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DEVELOPMENT CORPORATION's entity and the primary purpose, the only word left is PUREGOLD PRICE CLUB, INC., viZ. "PUREGOLD", which is not only similar but identical to the unique name earlier adopted by After subtracting the words describing PUREGOLD CONSTRUCTION AND

CORPORATE NAMES SEC GUIDELINES ON REQUIREMENTS (MC 21-2013) UNDER THE PUREGOLD PRICE CLUB, INC. CONSTRUCTION DEVELOPMENT CORPORATION PUREGOLD AND

The contain the word "Corporation" abbreviations "Corp." and "Inc." or "Incorporated," corporate name shall or the INC. CORPORATION

name should refer to its primary A term that describes the business of the corporation in its respectively PRICE CLUB CONSTRUCTION DEVELOPMENT AND

The name shall not be identical, misleading purpose or confusingly PUREGOLD (IDENTICAL) PUREGOLD

proprietorships. from the registered name. However, addition of one name is coined and"unique with the Commission, or with be allowed if the registered similar to a corporate or applicant shall add one or more distinctive words to the proposed name to remove the similarity or differentiate more distinctive words shall not unless the board of directors or majority of the partners of the partnership name registered the Department of Trade and Industry, in the case of sole If the name applied" for is similar to that of a registered corporation or partnership, the or it COINED/UNIQUE "PUREGOLD" IS REGISTERED EARLIER NO ADDITIONAL DISTINCTIVE NO CONSENT WORDS

subject corporation or

the applied name. partnership gives its consent to A tradename or registered with the Intellectual Property Office may be used as trademark REGISTERED AS A "PUREGOLD" IS TRADEMARK NO CONSENT

use partnership name of a party latter gives its consent to such other than the owner, if the part of the corporate name or

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obtained the consent of PUREGOLD PRICE CLUB, INC. before using a name identical to the latter's unique name and registered trademark "PUREGOLD." Moreover, PUREGOLD CONSTRUCTION AND DEVELOPMENT neither sought nor

WHEREFORE, the 19 July 2013 Order of the OGC is hereby AFFIRMED.

SO ORDERED.

Pasay City, Philippines; 13 December 2018.

EMYLYOBAQUINO Chaifperson

ANTONIETA F. IBE Taani Commissioner AoN EPHYRO'LUIS B. AMATONG Commissioner W JAVEY PAUL D. FRANCISCO Commissioner