De La Salle Montessori v. De La Salle Brothers (Case digest. G.R. No. 205548)

CASE DIGEST: [ G.R. No. 205548, February 07, 2018 ] DE LA SALLE MONTESSORI INTERNATIONAL OF MALOLOS, INC., PETITIONER, VS. DE LA SALLE BROTHERS, INC., DE LA SALLE UNIVERSITY, INC., LA SALLE ACADEMY, INC., DE LA SALLE-SANTIAGO ZOBEL SCHOOL, INC. (FORMERLY NAMED DE LA SALLE-SOUTH INC.), DE LA SALLE CANLUBANG, INC. (FORMERLY NAMED DE LA SALLE UNIVERSITY-CANLUBANG, INC.), RESPONDENTS. JARDELEZA, J.:

FACTS: Petitioner De La Salle Montessori International of Malolos, Inc. was asked by respondents De La Salle Brothers, Inc., De La Salle University, Inc., La Salle Academy, Inc., De La Salle-Santiago Zobel School, Inc. (formerly De La Salle-South, Inc.), and De La Salle Canlubang, Inc. (formerly De La Salle University-Canlubang, Inc.) to change its corporate name. Alleged misleading or confusingly similar.SEC OGC ordered petitioner to change corporate name. Said "La Salle" is not descriptive. Said there is priority registration in favor of respondents. Said the Lyceum ruling does not apply. Said there is confusion because of the name and business model.

ISSUES:

1. What are the requisites regarding the prohibition under Section 18 re corporate name?
2. Who are the priority registrants and, therefore, those who have better right over the name "De La Salle" or "La Salle"?
3. What is the test to say if there is "confusing similarity in corporate names"?
4. Do the four additional words "Montessori International of Malolos, Inc." remove the confusion?
5. Is "De La Salle" a generic term?
6. Does the Lyceum ruling apply?

HELD: We DENY the petition and uphold the Decision of the CA.

ISSUE [1]: 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 would have occasion to deal with the entity concerned, the evasion of legal obligations and duties, and the reduction of difficulties of administration and supervision over corporations.[29]

In Philips Export B.V. v. Court of Appeals,[31] the Court held that to fall within the prohibition of Section 18, two requisites must be proven, to wit: (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 law.[32]

With respect to the first requisite, the Court has held that the right to the exclusive use of a corporate name with freedom from infringement by similarity is determined by priority of adoption.[33]

ISSUE [2]: Respondents' corporate names were registered as early as October 9, 1961 and as late as August 5, 1998.[34]

On the other hand, petitioner was issued a Certificate of Registration only on July 5, 2007 under Company Registration No. CN200710647.[35] It being clear that respondents are the prior registrants, they certainly have acquired the right to use the words "De La Salle" or "La Salle" as part of their corporate names.

The second requisite is also satisfied since there is a confusing similarity between petitioner's and respondents' corporate names. While these corporate names are not identical, it is evident that the phrase "De La Salle" is the dominant phrase used.

ISSUE [3]: 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. In so doing, the Court must look to the record as well as the names themselves.[37]

ISSUE [4]: Petitioner's assertion that the words "Montessori International of Malolos, Inc." are four distinctive words that are not found in respondents' corporate names so that their corporate name is not identical, confusingly similar, patently deceptive or contrary to existing laws,[38] does not avail. As correctly held by the SEC OGC, all these words, when used with the name "De La Salle," can reasonably mislead a person using ordinary care and discretion into thinking that petitioner is an affiliate or a branch of, or is likewise founded by, any or all of the respondents, thereby causing confusion.[39]

ISSUE [5]: Petitioner's argument that it obtained the words "De La Salle" from the French word meaning "classroom," while respondents obtained it from the French priest named Saint Jean Baptiste de La Salle,[40] similarly does not hold water.

We affirm that the phrase "De La Salle" is not merely a generic term. Respondents' use of the phrase being suggestive and may properly be regarded as fanciful, arbitrary and whimsical, it is entitled to legal protection.[42] Petitioner's use of the phrase "De La Salle" in its corporate name is patently similar to that of respondents that even with reasonable care and observation, confusion might arise. The Court notes not only the similarity in the parties' names, but also the business they are engaged in. They are all private educational institutions offering pre-elementary, elementary and secondary courses.[43] As aptly observed by the SEC En Banc, petitioner's name gives the impression that it is a branch or affiliate of respondents.[44] It is settled that proof of actual confusion need not be shown. It suffices that confusion is probable or likely to occur.[45]

ISSUE [6]: The Court's ruling in Lyceum of the Philippines[46] does not apply.

In that case, the Lyceum of the Philippines, Inc., an educational institution registered with the SEC, commenced proceedings before the SEC to compel therein private respondents who were all educational institutions, to delete the word "Lyceum" from their corporate names and permanently enjoin them from using the word as part of their respective names.

The Court there held that the word "Lyceum" today generally refers to a school or institution of learning. It is as generic in character as the word "university." Since "Lyceum" denotes a school or institution of learning, it is not unnatural to use this word to designate an entity which is organized and operating as an educational institution. Also, no evidence presented to prove confusion.[47]

There is thus no similarity between the Lyceum of the Philippines case and this case that would call for a similar ruling.

CASE DIGEST ENDS HERE.

WHEREFORE, the Petition is DENIED. The assailed Decision of the CA dated September 27, 2012 is AFFIRMED.

SO ORDERED.

Sereno, C. J., (Chairperson), Leonardo-De Castro, Del Castillo, and Tijam, JJ., concur.

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[1] Rollo, pp. 10-29.

[2] Id. at 31-47. Penned by Associate Justice Socorro B. Inting and concurred in by Associate Justices Ricardo R. Rosario and Mario V. Lopez.

[3] Id. at 49-50.

[4] Id. at 99-106.

[5] Id. at 59-63.

[6] Id. at 52.

[7] Id. at 54.

[8] Id. at 55.

[9] Id. at 56.

[10] Id. at 57.

[11] Id. at 58.

[12] Id. at 32-33.

[13] Supra note 5.

[14] Rollo, pp. 60-63.

[15] G.R. No. 101897, March 5, 1993, 219 SCRA 610.

[16] Rollo, pp. 60-61.

[17] Supra note 4.

[18] Rollo, p. 105.

[19] Supra note 2.

[20] Rollo, p. 18.

[21] Villareal v. Aliga, G.R. No. 166995, January 13, 2014, 713 SCRA 52, 67. Citation omitted.

[22] Rollo, p. 18.

[23] 51 Phil. 115 (1927).

[24] Id. at 128.

[25] Philips Export B.V. v. Court of Appeals, G.R. No. 96161, February 21, 1992, 206 SCRA 457, 462. Citation omitted.

[26] Supra.

[27] Id. at 462-463; citations omitted.

[28] Lyceum of the Philippines, Inc. v. Court of Appeals, supra note 15 at 615.

[29] Id. at 615; citation omitted.

[30] Philips Export B.V. v. Court of Appeals, supra note 25; citation omitted.

[31] Supra.

[32] Id. at 463.

[33] Id.

[34] Rollo, p. 41.

[35] Id.

[36] Rollo, pp. 20-22.

[37] Philips Export B.V. v. Court of Appeals, supra note 25 at 464; citation omitted.

[38] Rollo, p. 20

[39] Id. at 62.

[40] Id. at 20.

[41] Id. at 104-105, citing Societe Des Produits Nestle, S.A. v. Court of Appeals, G.R. No. 112012, April 4, 2001, 356 SCRA 207; and Philippine Refining Co., Inc. v. Ng Sam, G.R. No. L-26676, July 30, 1982, 115 SCRA 472. Italics in the original.

[42] Ang v. Teodoro, 74 Phil. 50 (1942); See also Societe Des Produits Nestle, S.A. v. Court of Appeals, supra note 41.

[43] Rollo, pp. 62-63.

[44] Id. at 104.

[45] Philips Export B.V. v. Court of Appeals, supra note 25 at 464.

[46] Supra note 15.

[47] Id. at 616-619.

[48] GSIS Family Bank-Thrift Bank [formerly Comsavings Bank, Inc.] v. BPI Famiy Bank, G.R. No. 175278, September 23, 2015, 771 SCRA 284, 301-302.

[49] Id. at 302-303.

[50] Id. at 298.