G.R. No.

L-12719

May 31, 1962

THE COLLECTOR OF INTERNAL REVENUE, petitioner, vs. THE CLUB FILIPINO, INC. DE CEBU, respondent. Office of the Solicitor General for petitioner. V. Jaime and L. E. Petilla for respondent. PAREDE , J.: This is a petition to review the decision of the Court of Tax Appeals, reversing the decision of the Collector of Internal Revenue, assessing against and demanding from the "Club Filipino, Inc. de Cebu", the sum of !",#$%.%& as fixed and percentage taxes, surcharge and compromise penalt', allegedl' due from it as a (eeper of bar and restaurant. As found b' the Court of Tax Appeals, the "Club Filipino, Inc. de Cebu," )Club, for short*, is a civic corporation organi+ed under the laws of the hilippines with an original authori+ed capital stoc( of "",###.##, which was subse,uentl' increased to "##,###.##, among others, to it "proporcionar, operar, ' mantener un campo de golf, tenis, gimnesio )g'mnasiums*, -uego de bolos )bowling alle's*, mesas de billar ' pool, ' toda clase de -uegos no prohibidos por le'es generales ' ordenan+as generales. ' desarollar ' cultivar deportes de toda clase ' denominacion cual,uiera para el recreo ' entrenamiento saludable de sus miembros ' accionistas" )sec. ", /scritura de Incorporacion del Club Filipino, Inc. /xh. A*. 0either in the articles or b'1laws is there a provision relative to dividends and their distribution, although it is covenanted that upon its dissolution, the Club2s remaining assets, after pa'ing debts, shall be donated to a charitable hilippine Institution in Cebu )Art. "3, /statutos del Club, /xh. A1a.*. The Club owns and operates a club house, a bowling alle', a golf course )on a lot leased from the government*, and a bar1restaurant where it sells wines and li,uors, soft drin(s, meals and short orders to its members and their guests. The bar-restaurant was a necessar' incident to the operation of the club and its golf1course. The club is operated mainl' with funds derived from membership fees and dues. 4hatever profits it had, were used to defra' its overhead expenses and to improve its golf1course. In !56!. as a result of a capital surplus, arising from the re1valuation of its real properties, the value or price of which increased, the Club declared stoc( dividends. but no actual cash dividends were distributed to the stoc(holders. In !56", a 7IR agent discovered that the Club has never paid percentage tax on the gross receipts of its bar and restaurant, although it secured 71&, 715)a* and 713 licenses. In a letter dated 8ecember "", !%6", the Collector of Internal Revenue assessed against and demanded from the Club, the following sums9 : As percentage tax on its gross receipts during the tax 'ears !5&$ to !56!

5,655.#3

;urcharge therein As fixed tax for the 'ears !5&$ to !56" Compromise penalt'

",<55.33 3#.## 6##.##

The Club wrote the Collector, re,uesting for the cancellation of the assessment. The re,uest having been denied, the Club filed the instant petition for review. The dominant issues involved in this case are twofold9 !. 4hether the respondent Club is liable for the pa'ment of the sum of !",#$%.%&, as fixed and percentage taxes and surcharges prescribed in sections !%", !%< and !5! of the Tax Code, under which the assessment was made, in connection with the operation of its bar and restaurant, during the periods mentioned above. and ". 4hether it is liable for the pa'ment of the sum of 6##.## as compromise penalt'. ;ection !%", of the Tax Code states, "=nless otherwise provided, ever' person engaging in a business on which the percentage tax is imposed shall pa' in full a fixed annual tax of ten pesos for each calendar 'ear or fraction thereof in which such person shall engage in said business." ;ection !%< provides in general that "the percentage taxes on business shall be pa'able at the end of each calendar ,uarter in the amount lawfull' due on the business transacted during each ,uarter. etc." And section !5!, same Tax Code, provides " ercentage tax . . . >eepers of restaurants, refreshment parlors and other eating places shall pa' a tax three per centum, and (eepers of bar and cafes where wines or li,uors are served five per centum of their gross receipts . . .". It has been held that the liabilit' for fixed and percentage taxes, as provided b' these sections, does not ipso facto attach b' mere reason of the operation of a bar and restaurant. For the liabilit' to attach, the operator thereof must be engaged in the business as a bar(eeper and restaurateur. The plain and ordinar' meaning of business is restricted to activities or affairs where profit is the purpose or livelihood is the motive, and the term business when used without ,ualification, should be construed in its plain and ordinar' meaning, restricted to activities for profit or livelihood )The Coll. of Int. Rev. v. ?anila @odge 0o. 3$! of the 7 A/ B?anila /l(s ClubC D Court of Tax Appeals, E.R. 0o. @1!!!3$, Fune "5, !565, giving full definitions of the word "business". Coll. of Int. Rev. v. ;weene', et al. BInternational Club of Iloilo, Inc.C, E.R. 0o. @1!"!3%, Aug. "!, !565, the facts of which are similar to the ones at bar. ?anila olo Club v. 7. @. ?eer, etc., 0o. @1!#%6&, Fan. "3, !5$#*. Gaving found as a fact that the Club was organi+ed to develop and cultivate sports of all class and denomination, for the healthful recreation and entertainment of its stoc(holders and members. that upon its dissolution, its remaining assets, after pa'ing debts, shall be donated to a charitable hilippine Institution in Cebu. that it is operated mainl' with funds derived from membership fees and dues. that the Club2s bar and restaurant catered onl' to its members and their guests. that there was in fact no cash dividend distribution to its stoc(holders and that whatever was derived on retail from its

bar and restaurant was used to defra' its overall overhead expenses and to improve its golf1course )cost1plus1expenses1basis*, it stands to reason that the Club is not engaged in the business of an operator of bar and restaurant )same authorities, cited above*. It is conceded that the Club derived profit from the operation of its bar and restaurant, but such fact does not necessaril' convert it into a profit1ma(ing enterprise. The bar and restaurant are necessar' ad-uncts of the Club to foster its purposes and the profits derived therefrom are necessaril' incidental to the primar' ob-ect of developing and cultivating sports for the healthful recreation and entertainment of the stoc(holders and members. That a Club ma(es some profit, does not ma(e it a profit1ma(ing Club. As has been remar(ed a club should alwa's strive, whenever possible, to have surplus )Fesus ;acred Geart College v. Collector of Int. Rev., E.R. 0o. @1$%#3, ?a' "&, !56&. Collector of Int. Rev. v. ;inco /ducational Corp., E.R. 0o. @15"3$, Act. "<, !56$*.1wph 1.!"t It is claimed that unli(e the two cases -ust cited )supra*, which are non1stoc(, the appellee Club is a stoc( corporation. This is unmeritorious. The facts that the capital stoc( of the respondent Club is divided into shares, does not detract from the finding of the trial court that it is not engaged in the business of operator of bar and restaurant. 4hat is determinative of whether or not the Club is engaged in such business is its ob-ect or purpose, as stated in its articles and b'1laws. It is a familiar rule that the actual purpose is not controlled b' the corporate form or b' the commercial aspect of the business prosecuted, but ma' be shown b' extrinsic evidence, including the b'1laws and the method of operation. From the extrinsic evidence adduced, the Tax Court concluded that the Club is not engaged in the business as a bar(eeper and restaurateur. ?oreover, for a stoc( corporation to exist, two re,uisites must be complied with, to wit9 )!* a capital stoc( divided into shares and )"* an authorit' to distribute to the holders of such shares, dividends or allotments of the surplus profits on the basis of the shares held )sec. <, Act 0o. !&65*. In the case at bar, nowhere in its articles of incorporation or b'1laws could be found an authorit' for the distribution of its dividends or surplus profits. ;trictl' spea(ing, it cannot, therefore, be considered a stoc( corporation, within the contemplation of the corporation law. A tax is a burden, and, as such, it should not be deemed imposed upon fraternal, civic, non1profit, nonstoc( organi+ations, unless the intent to the contrar' is manifest and patent" )Collector v. 7 A/ /l(s Club, et al., supra*, which is not the case in the present appeal. Gaving arrived at the conclusion that respondent Club is not engaged in the business as an operator of a bar and restaurant, and therefore, not liable for fixed and percentage taxes, it follows that it is not liable for an' penalt', much less of a compromise penalt'. 4G/R/FAR/, the decision appealed from is affirmed without costs.

Padilla# $autista %n&elo# Labrador# 'oncepcion# (e)es# J.$.L.# $arrera and *i+on# JJ.# concur. $en&+on# '.J.# is on lea,e.

G.R. No. L-2!3"1 #$%y 2!, 1977 UNIVER AL MILL CORPORATION, petitioner, vs. UNIVER AL TE&TILE MILL , INC., respondent. Emi&dio G. -an.uatco for petitioner. Pica+o# Santa)ana# (e)es# -a)ao / %lfonso for respondent.

BARREDO, J.: Appeal from the order of the ;ecurities and /xchange Commission in ;./.C. Case 0o. !#35, entitled In the ?atter of the 0ni,ersal -e1tile 2ills# 3nc. ,s. 0ni,ersal 2ills 'orporation, a petition to have appellant change its corporate name on the ground that such name is "confusingl' and deceptivel' similar" to that of appellee, which petition the Commission granted. According to the order, "the =niversal Textile ?ills, Inc. was organ on 8ecember "5, !56<, as a textile manufacturing firm for which it was issued a certificate of registration on Fanuar' %, !56&. The =niversal ?ills Corporation, on the other hand, was registered in this Commission on Actober "3, !56&, under its original name, =niversal Gosier' ?ills Corporation, having as its primar' purpose the "manufacture and production of hosieries and wearing apparel of all (inds." An ?a' "&, !5$<, it filed an amendment to its articles of incorporation changing its name to =niversal ?ills Corporation, its present name, for which this Commission issued the certificate of approval on Fune !#, !5$<. The immediate cause of this present complaint, however, was the occurrence of a fire which gutted respondent2s spinning mills in asig, Ri+al. etitioner alleged that as a result of this fire and because of the similarit' of respondent2s name to that of herein complainant, the news items appearing in the various metropolitan newspapers carr'ing reports on the fire created uncertaint' and confusion among its ban(ers, friends, stoc(holders and customers prompting petitioner to ma(e announcements, clarif'ing the real Identit' of the corporation whose propert' was burned. etitioner presented documentar' and testimonial evidence in support of this allegation. An the other hand, respondent2s position is that the names of the two corporations are not similar and even if there be some similarit', it is not

confusing or deceptive. that the onl' reason that respondent changed its name was because it expanded its business to include the manufacture of fabrics of all (inds. and that the word 2textile2 in petitioner2s name is dominant and prominent enough to distinguish the two. It further argues that petitioner failed to present evidence of confusion or deception in the ordinar' course of business. that the onl' supposed confusion proved b' complainant arose out of an extraordinar' occurrence : a disastrous fire. )pp. !$1D!3, Record.* =pon these premises, the Commission held9 From the facts proved and the -urisprudence on the matter, it appears necessar' under the circumstances to en-oin the respondent =niversal ?ills Corporation from further using its present corporate name. Fudging from what has alread' happened, confusion is not onl' apparent, but possible. It does not matter that the instance of confusion between the two corporate names was occasioned onl' b' a fire or an extraordinar' occurrence. It is precisel' the dut' of this Commission to prevent such confusion at all times and under all circumstances not onl' for the purpose of protecting the corporations involved but more so for the protection of the public. In toda'2s modern business life where people go b' tradenames and corporate images, the corporate name becomes the more important. This Commission cannot close its e'es to the fact that usuall' it is the sound of all the other words composing the names of business corporations that stic(s to the mind of those who deal with them. The word "textile" in =niversal Textile ?ills, Inc.2 can not possibl' assure the exclusion of all other entities with similar names from the mind of the public especiall' so, if the business the' are engaged in are the same, li(e in the instant case. This Commission further ta(es cogni+ance of the fact that when respondent filed the amendment changing its name to =niversal ?ills Corporation, it correspondingl' filed a written underta(ing dated Fune 6, !5$< and signed b' its resident, ?r. ?ariano Co(iat, promising to change its name in the event that there is another person, firm or entit' who has obtained a prior right to the use of such name or one similar to it. That promise is still binding upon the corporation and its responsible officers. )pp. !31!%, Record.* It is obvious that the matter at issue is within the competence of the ;ecurities and /xchange Commission to resolve in the first instance in the exercise of the -urisdiction it used to possess under Commonwealth Act "%3 as amended b' Republic Act !#66 to administer the application and enforcement of all laws affecting domestic corporations and associations, reserving to the courts onl' conflicts of -udicial nature, and, of course, the ;upreme Court2s authorit' to review the Commissions actuations in appropriate instances involving possible denial of due process and grave abuse of discretion. Thus,

in the case at bar, there being no claim of denial of an' constitutional right, all that 4e are called upon to determine is whether or not the order of the Commission en-oining petitioner to its corporate name constitutes, in the light of the circumstances found b' the Commission, a grave abuse of discretion. 4e believe it is not. Indeed, it cannot be said that the impugned order is arbitrar' and capricious. Clearl', it has rational basis. The corporate names in ,uestion are not Identical, but the' are indisputabl' so similar that even under the test of "reasonable care and observation as the public generall' are capable of using and ma' be expected to exercise" invo(ed b' appellant, 4e are apprehensive confusion will usuall' arise, considering that under the second amendment of its articles of incorporation on August !&, !5$&, appellant included among its primar' purposes the "manufacturing, d'eing, finishing and selling of fabrics of all (inds" in which respondent had been engaged for more than a decade ahead of petitioner. Factuall', the Commission found existence of such confusion, and there is evidence to support its conclusion. ;ince respondent is not claiming damages in this proceeding, it is, of course, immaterial whether or not appellant has acted in good faith, but 4e cannot perceive wh' of all names, it had to choose a name alread' being used b' another firm engaged in practicall' the same business for more than a decade en-o'ing well earned patronage and goodwill, when there are so man' other appropriate names it could possibl' adopt without arousing an' suspicion as to its motive and, more importantl', an' degree of confusion in the mind of the public which could mislead even its own customers, existing or prospective. remises considered, there is no warrant for our interference. As this is purel' a case of in-unction, and considering the time that has elapsed since the facts complained of too( place, this decision should not be deemed as foreclosing an' further remed' which appellee ma' have for the protection of its interests. 4G/R/FAR/, with the reservation alread' mentioned, the appealed decision is affirmed. Costs against petitioners.

G.R. No. L-2637' #$%y 31, 197'

PHILIPPINE FIR T IN URANCE COMPAN(, INC., plaintiff1appellant, vs. MARIA CARMEN HARTIGAN, CGH, a)* O. ENG+EE, defendants1appellees. $ausa# %mpil / Suare+ for plaintiff-appellant. 4icasio E. 2artin for defendants-appellees.

BARREDO, J.: Appeal from the decision dated $ Actober !5$" of the Court of First Instance of ?anila : dismissing the action in its Civil Case 0o. &%5"6 : brought b' the herein plaintiff1 appellant hilippine First Insurance Co., Inc. to the Court of Appeals which could, upon finding that the said appeal raises purel' ,uestions of law, declared itself without -urisdiction to entertain the same and, in its resolution dated !6 Ful' !5$$, certified the records thereof to this Court for proper determination. The antecedent facts are set forth in the pertinent portions of the resolution of the Court of Appeals referred to as follows9 According to the complaint, plaintiff was originall' organi+ed as an insurance corporation under the name of 2The He( Tong @in Fire and ?arine Insurance Co., @td.2 The articles of incorporationoriginall' presented before the ;ecurit' and /xchange Commissioner and ac(nowledged before 0otar' ublic ?r. /. 8. Ignacio on Fune !, !56< state that the name of the corporation was 2The He( Tong @in Fire and ?arine Insurance Co., @td.2 An ?a' "$, !5$! the articles of incorporation were amended pursuant to a certificate of the 7oard of 8irectors dated ?arch %, !5$! changing the name of the corporation to 2 hilippine First Insurance Co., Inc.2. The complaint alleges that the plaintiff hilippine First Insurance Co., Inc., doing business under the name of 2The He( Tong @in Fire and ?arine Insurance Co., @t.2 signed as co1ma(er together with defendant ?aria Carmen Gartigan, CEG, a promissor' note for 6,###.## in favor of the China 7an(ing Corporation pa'able within <# da's after the date of the promissor' note with the usual ban(ing interest. that the plaintiff agreed to act as such co1ma(er of the promissor' note upon the application of the defendant ?aria Carmen Gartigan, CEG, who together with Antonio F. Chua and Chang >a Fu, signed an indemnit' agreement in favor of the plaintiff, underta(ing -ointl' and severall', to pa' the plaintiff damages, losses or expenses of whatever (ind or nature, including attorne'2s fees and legal costs, which the plaintiff ma' sustain as a result of the execution b' the plaintiff and co1ma(er of ?aria Carmen Gartigan, CEG, of the promissor' note above1referred to. that as a result of the execution of the

promissor' note b' the plaintiff and ?aria Carmen Gartigan, CEG, the China 7an(ing Corporation delivered to the defendant ?aria Carmen Gartigan, CEG, the sum of 6,###.## which said defendant failed to pa' in full, such that on August <!, !5$! the same was. renewed and as of 0ovember "3, !5$! there was due on account of the promissor' note the sum of &,665.6# including interest. The complaint ends with a pra'er for -udgment against the defendants, -ointl' and severall', for the sum of &,665.6# with interest at the rate of !"I per annum from 0ovember "<, !5$! plus 5!!.5# b' wa' of attorne'2s fees and costs. Although A. /ng(ee was made as part' defendant in the caption of the complaint, his name is not mentioned in the bod' of said complaint. Gowever, his name Appears in the Annex A attached to the complaint which is the counter indemnit' agreement supposed to have been signed according to the complaint b' ?aria Carmen Gartigan, CEG, Antonio F. Chua and Chang >a Fu. In their answer the defendants den' the allegation that the plaintiff formerl' conducted business under the name and st'le of 2The He( Tong @in Fire and ?arine Insurance Co., @td.2 The' admit the execution of the indemnit' agreement but the' claim that the' signed said agreement in favor of the He( Tong @in Fire and ?arine Insurance Co., @td.2 and not in favor of the plaintiff. The' li(ewise admit that the' failed to pa' the promissor' note when it fell due but the' allege that since their obligation with the China 7an(ing Corporation based on the promissor' note still subsists, the suret' who co1signed the promissor' note is not entitled to collect the value thereof from the defendants otherwise the' will be liable for double amount of their obligation, there being no allegation that the suret' has paid the obligation to the creditor. 7' wa' of special defense, defendants claim that there is no privit' of contract between the plaintiff and the defendants and conse,uentl', the plaintiff has no cause of action against them, considering that the complaint does not allege that the plaintiff and the 2He( Tong @in Fire and ?arine Insurance Co., @td.2 are one and the same or that the plaintiff has ac,uired the rights of the latter. The parties after the admission of /xhibit A which is the amended articles of incorporation and /xhibit ! which is a demand letter dated August !$, !5$" signed b' the manager of the loans and discount department of the China 7an(ing Corporation showing that the promissor' note up to said date in the sum of &,6##.## was still unpaid, submitted the case for decision based on the pleadings. =nder date of $ Actober !5$", the Court of First Instance of ?anila rendered the decision appealed. It dismissed the action with costs against the plaintiff hilippine First Insurance Co., Inc., reasoning as follows9

... 4ith these undisputed facts in mind, the parties correctl' concluded that the issues for resolution b' this Court are as follows9 )a* 4hether or not the plaintiff is the real part' in interest that ma' validl' sue on the indemnit' agreement signed b' the defendants and the He( Tong @in Fire D ?arine Insurance Co., @td. )Annex A to plaintiff2s complaint *. and )b* 4hether or not a suit for indemnit' or reimbursement ma' under said indemnit' agreement prosper without plaintiff having 'et paid the amount due under said promissor' note. In the first place, the change of name of the He( Tong @in Fire D ?arine Insurance Co., @td. to the hilippines First Insurance Co., Inc. is of dubious validit'. ;uch change of name in effect dissolved the original corporation b' a process of dissolution not authori+ed b' our corporation law )see ;ecs. $" and $3, inclusive, of our Corporation @aw*. ?oreover, said change of name, amounting to a dissolution of the He( Tong @in Fire D ?arine Insurance Co., @td., does not appear to have been effected with the written note or assent of stoc(holders representing at least two1thirds of the subscribed capital stoc( of the corporation, a voting proportion re,uired not onl' for the dissolution of a corporation but also for an' amendment of its articles of incorporation );ecs. !% and $", Corporation @aw*. Furthermore, such change of corporate name appears to be against public polic' and ma' be effected onl' b' express authorit' of law )Red @ine Transportation Co. v. Rural Transit Co., @td., $# hil. 6&5, 666. Cincinnati Cooperage Co., @td. vs. Jate, "$ ;4 6<%, 6<5. ilsen 7rewing Co. vs. 4allace, !"6 0/ 3!&*, but there is nothing in our corporation law authori+ing the change of corporate name in this -urisdiction. In the second place, assuming that the change of name of the He( Tong @in Fire D ?arine Insurance Co. @td., to hilippines pine First Insurance Co., Inc., as accomplished on ?arch %, !5$!, is valid, that would mean that the original corporation, the He( Tong @in Fire D ?arine Insurance Co., @td., became dissolved and of no further existence since ?arch %, !5$!, so that on ?a' !6, !5$!, the date the indemnit' agreement, Annex A, was executed, said original corporation bad no more power to enter into an' agreement with the defendants, and the agreement entered into b' it was ineffective for lac( of capacit' of said dissolved corporation to enter into said agreement. At an' rate, even if we hold that said change of name is valid, the fact remains that there is no evidence showing that the new entit', the hilippine First Insurance Co., Inc. has with the consent of the original parties, assumed the obligations or was assigned the rights of action in the original corporation, the He( Tong @in Fire D ?arine Insurance Co., @td. In other words, there is no evidence of conventional subrogation of the laintiffs in the rights of the He( Tong @in Fire D ?arine

Insurance Co., @td. under said indemnit' agreement )Arts. !<##, !<#!, 0ew Civil Code*. without such subrogation assignment of rights, the herein plaintiff has no cause of action against the defendants, and is, therefore, not the right part' in interest as plaintiff. @ast, but not least, assuming that the said change of name was legal and operated to dissolve the original corporation, the dissolved corporation, must pursuant to ;ec. 33 of our corporation law, be deemed as continuing as a bod' corporate for three )<* 'ears from ?arch %, !5$! for the purpose of prosecuting and defending suits. It is, therefore, the He( Tong @in Fire D ?arine Insurance Co., @td. that is the proper part' to sue the defendants under said indemnit' agreement up to ?arch %, !5$&. Gaving arrived at the foregoing conclusions, this Court need not s,uarel' pass upon issue )b* formulated above. 4G/R/FAR/, plaintiff2s action is hereb' dismissed, with costs against the plaintiff. In due time, the hilippine First Insurance Compan', Inc. moved for reconsideration of the decision aforesaid, but said motion was denied on 8ecember <, !5$" in an order worded thus9 The motion for reconsideration, dated 0ovember %, !5$", raises no new issue that we failed to consider in rendering our decision of Actober $, !5$". Gowever, it gives us an opportunit' to amplif' our decision as regards the ,uestion of change of name of a corporation in this -urisdiction. 4e find nothing in our Corporation @aw authori+ing a change of name of a corporation organi+ed pursuant to its provisions. ;ec. !% of the Corporation @aw authori+es, in our opinion, amendment to the Articles of Incorporation of a corporation onl' as to matters other than its corporate name. Ance a corporation is organi+ed in this -urisdiction b' the execution and registration of its Articles of Incorporation, it shall continue to exist under its corporate name for the lifetime of its corporate existence fixed in its Articles of Incorporation, unless sooner legall' dissolved );ec. !!, Corp. @aw*. ;ignificantl', change of name is not one of the methods of dissolution of corporations expressl' authori+ed b' our Corporation @aw. Also significant is the fact that the power to change its corporate name is not one of the general powers conferred on corporations in this -urisdiction );ec. !<, Corp. @aw*. The enumeration of corporate powers made in our Corporation @aw implies the exclusion of all others )Thomas v. 4est Ferse' R. Co., !#! =.;. 3!, "6 @. ed. 56#*. It is obvious, in this connection, that change of name is not one of the powers necessar' to

the exercise of the powers conferred on corporations b' said ;ec. !< )see ;ec. !&, Corp. @aw*. To rule that ;ec. !% of our Corporation @aw authori+es the change of name of a corporation b' amendment of its Articles of Incorporation is to indulge in -udicial legislation. 4e have examined the cases cited in Jolume !< of American Furisprudence in support of the proposition that the general power to alter or amend the charter of a corporation necessaril' includes the power to alter the name of a corporation, and find no -ustification for said conclusion arrived at b' the editors of American Furisprudence. An the contrar', the annotations in favor of plaintiff2s view appear to have been based on decisions in cases where the statute itself expressl' authori+es change of corporate name b' amendment of its Articles of Incorporation. The correct rule in harmon' with the provisions of our Corporation @aw is well expressed in an /nglish case as follows9 After a compan' has been completel' register without defect or omission, so as to be incorporated b' the name set forth in the deed of settlement, such incorporated compan' has not the power to change its name ... Although the >ing b' his prerogative might incorporate b' a new name, and the newl' named corporation might retain former rights, and sometimes its former name also, ... it never appears to be such an act as the corporation could do b' itself, but re,uired the same power as created the corporation. )Reg. v. Registrar of Foint ;toc( Cos !# K.7. %<5, 65 /.C.@. %<5*. The contrar' view appears to represent the minorit' doctrine, -udging from the annotations on decided cases on the matter. The movant invo(es as persuasive precedent the action of the ;ecurities Commissioner in tacitl' approving the Amended, Articles of Incorporation on ?a' "$, !5$!. 4e regret that we cannot in good conscience lend approval to this action of the ;ecurities and /xchange Commissioner. 4e find no -ustification, legal, moral, or practical, for adhering to the view ta(en b' the ;ecurities and /xchange Commissioner that the name of a corporation in the hilippines ma' be changed b' mere amendment of its Articles of Incorporation as to its corporate name. A change of corporate name would serve no useful purpose, but on the contrar' would most probabl' cause confusion. Anl' a dubious purpose could inspire a change of a corporate. name which, unli(e a natural person2s name, was chosen b' the incorporators themselves. and our Courts should not lend their assistance to the accomplishment of dubious purposes. 4G/R/FAR/, we hereb' den' plaintiff2s motion for reconsideration, dated 0ovember %, !5$", for lac( of merit.

In this appeal appellant contends that : I TG/ TRIA@ CA=RT /RR/8 I0 GA@8I0E TGAT I0 TGI; F=RI;8ICTIA0, TG/R/ I; 0ATGI0E I0 A=R CAR ARATIA0 @A4 A=TGARILI0E TG/ CGA0E/ AF CAR ARAT/ 0A?/. II TG/ TRIA@ CA=RT /RR/8 I0 8/C@ARI0E TGAT A CGA0E/ AF CAR ARAT/ 0A?/ A /AR; TA 7/ AEAI0;T =7@IC A@ICH. III TG/ TRIA@ CA=RT /RR/8 I0 GA@8I0E TGAT A CGA0E/ AF CAR ARAT/ 0A?/ GA; TG/ @/EA@ /FF/CT AF 8I;;A@JI0E TG/ ARIEI0A@ CAR ARATIA09 IJ TG/ TRIA@ CA=RT /RR/8 I0 GA@8I0E TGAT TG/ CGA0E/ AF 0A?/ AF TG/ H/> TA0E @I0 FIR/ D ?ARI0/ I0;=RA0C/ CA., @T8. I; AF 8=7IA=; JA@I8ITH. J TG/ TRIA@ CA=RT /RR/8 I0 GA@8I0E TGAT TG/ A /@@A0T G/R/I0 I; 0AT TG/ RIEGT ARTH I0T/R/;T TA ;=/ 8/F/08A0T;1A /@@//;. IJ TG/ TRIA@ CA=RT FI0A@@H /RR/8 I0 8I;?I;;I0E TG/ CA? @AI0T. Appellant2s osition is correct. all the above assignments of error are well ta(en. The whole case, however, revolves around onl' one ,uestion. ?a' a hilippine corporation change its name and still retain its original personalit' and individualit' as suchM The answer is not difficult to find. True, under ;ection $ of the Corporation @aw, the first thing re,uired to be stated in the Articles of Incorporation of an' corn corporation is its name, but it is onl' one among man' matters e,uall' if not more important, that must be stated therein. Thus, it is also re,uired, for example, to state the number and names of and residences of the incorporators and the residence or location of the principal office

of the corporation, its term of existence, the amount of its capital stoc( and the number of shares into which it is divided, etc., etc. An the other hand, ;ection !% explicitl' permits the articles of incorporation to be amended thus9 ;ec. !%. : An' corporation ma' for legitimate corporate purpose or purposes, amend its articles of incorporation b' a ma-orit' vote of its board of directors or trustees and the vote or written assent of two1thirds of its members, if it be a nonstoc( corporation or, if it be a stoc( corporation, b' the vote or written assent of the stoc(holders representing at least two1 thirds of the subscribed capital stoc( of the corporation Pro,ided, howe,er, That if such amendment to the articles of incorporation should consist in extending the corporate existence or in an' change in the rights of holders of shares of an' class, or would authori+e shares with preferences in an' respect superior to those of outstanding shares of an' class, or would restrict the rights of an' stoc(holder, then an' stoc(holder who did not vote for such corporate action ma', within fort' da's after the date upon which such action was authori+ed, ob-ect thereto in writing and demand a'ment for his shares. If, after such a demand b' a stoc(holder, the corporation and the stoc(holder cannot agree upon the value of his share or shares at the time such corporate action was authori+ed, such values all be ascertained b' three disinterested persons, one of whom shall be named b' the stoc(holder, another b' the corporation, and the third b' the two thus chosen. The findings of the appraisers shall be final, and if their award is not paid b' the corporation within thirt' da's after it is made, it ma' be recovered in an action b' the stoc(holder against the corporation. =pon pa'ment b' the corporation to the stoc(holder of the agreed or awarded price of his share or shares, the stoc(holder shall forthwith transfer and assign the share or shares held b' him as directed b' the corporation9 Pro,ided, howe,er, That their own shares of stoc( purchased or otherwise ac,uired b' ban(s, trust companies, and insurance companies, should be disposed of within six months after ac,uiring title thereto. =nless and until such amendment to the articles of incorporation shall have been abandoned or the action rescinded, the stoc(holder ma(ing such demand in writing shall cease to be a stoc(holder and shall have no rights with respect to such shares, except the right to receive pa'ment therefor as aforesaid. A stoc(holder shall not be entitled to pa'ment for his shares under the provisions of this section unless the value of the corporate assets which would remain after such pa'ment would be at least e,ual to the aggregate amount of its debts and liabilities and the aggregate par value andNor issued value of the remaining subscribed capital stoc(.

A cop' of the articles of incorporation as amended, dul' certified to be correct b' the president and the secretar' of the corporation and a ma-orit' of the board of directors or trustees, shall be filed with the ;ecurities and /xchange Commissioner, who shall attach the same to the original articles of incorporation, on file in his office. From the time of filing such cop' of the amended articles of incorporation, the corporation shall have the same powers and it and the members and stoc(holders thereof shall thereafter be sub-ect to the same liabilities as if such amendment had been embraced in the original articles of incorporation9 Pro,ided# howe,er, That should the amendment consist in extending the corporate life, the extension shall not exceed 6# 'ears in an' one instance. Pro,ided# further, That the original articles and amended articles together shall contain all provisions re,uired b' law to be set out in the articles of incorporation9 %nd pro,ided# further, That nothing in this section shall be construed to authori+e an' corporation to increase or diminish its capital stoc( or so as to effect an' rights or actions which accrued to others between the time of filing the original articles of incorporation and the filing of the amended articles. The ;ecurities and, /xchange Commissioner shall be entitled to collect and receive the sum of ten pesos for filing said cop' of the amended articles of incorporation. Pro,ided# howe,er, That when the amendment consists in extending the term of corporate existence, the ;ecurities and /xchange Commissioner shall be entitled to collect and receive for the filing of its amended articles of incorporation the same fees collectible under existing law for the filing of articles of incorporation. The ;ecurities D /xchange Commissioner shall not hereafter file an' amendment to the articles of incorporation of an' ban(, ban(ing institution, or building and loan association unless accompanied b' a certificate of the ?onetar' 7oard )of the Central 7an(* to the effect that such amendment is in accordance with law. )As further amended b' Act 0o. <$!#, ;ec. " and ;ec. 5. R.A. 0o. <<3 and R.A. 0o. <6<!.* It can be gleaned at once that this section does not onl' authori+e corporations to amend their charter. it also la's down the procedure for such amendment. and, what is more relevant to the present discussion, it contains provisos restricting the power to amend when it comes to the term of their existence and the increase or decrease of the capital stoc(. There is no prohibition therein against the change of name. The inference is clear that such a change is allowed, for if the legislature had intended to en-oin corporations from changing names, it would have expressl' stated so in this section or in an' other provision of the law. 0o doubt, ")the* name )of a corporation* is peculiarl' important as necessar' to the ver' existence of a corporation. The general rule as to corporations is that each corporation shall have a name b' which it is to sue and be sued and do all legal acts. The name of a corporation in this respect designates the corporation in the same manner as the name of an individual designates the person." 1 ;ince an individual has the right to change his name under certain conditions, there is no compelling reason wh' a corporation ma'

not en-o' the same right. There is nothing sacrosanct in a name when it comes to artificial beings. The sentimental considerations which individuals attach to their names are not present in corporations and partnerships. Af course, as in the case of an individual, such change ma' not be made exclusivel'. b' the corporation2s own act. It has to follow the procedure prescribed b' law for the purpose. and this is what is important and indispensabl' prescribed : strict adherence to such procedure. @ocal well (nown corporation law commentators are unanimous in the view that a corporation ma' change its name b' merel' amending its charter in the manner prescribed b' law. 2 American authorities which have persuasive force here in this regard because our corporation law is of American origin, the same being a sort of codification of American corporate law, 3 are of the same opinion. A general power to alter or amend the charter of a corporation necessaril' includes the power to alter the name of the corporation. 5t. Pitt $ld&.# etc.# %ssoc. ,. 2odel Plan $ld&.# etc.# %ssoc.# !65 a. ;t. <#%, "% Atl. "!6. 3n re Fidelit' ?ut. Aid Assoc., !" 4.0.C. ) a.* "3!. /xcelsior Ail Co., < a. Co. Ct. !%&. 4etherill ;teel Casting Co., 6 a. Co. Ct. <<3. xxx xxx xxx =nder the Eeneral @aws of Rhode Island, c !3$, sec. 3, relating to an increase of the capital stoc( of a corporation, it is provided that 2such agreement ma' be amended in an' other particular, excepting as provided in the following section2, which relates to a decrease of the capital stoc( This section has been held to authori+e a change in the name of a corporation. %rmin&ton ,. Palmer, "! R.I. !#5, &" Atl. <#%, &<, @.R.A. 56, 35 Am. ;t. Rep. 3%$. )Jol. !5, American and /nglish Annotated Cases, p. !"<5.* Fletcher, a standard authorit' on American an corporation law also sa's9 ;tatutes are to be found in the various -urisdictions dealing with the matter of change in corporate names. ;uch statutes have been sub-ected to -udicial construction and have, in the main, been upheld as constitutional. 3n direct terms or b) necessar) implication# the) authori+e corporations new names and prescribe the mode of procedure for that purpose. The same steps must be ta(en under some statutes to effect a change in a corporate name, as when an' other amendment of the corporate charter is sought .... 4hen the general law thus deals with the sub-ect, a corporation can change its name onl' in the manner provided. )$ Fletcher, C'clopedia of the @aw of rivate Corporations, !5$% Revised Jolume, pp. "!"1"!<.* )/mphasis supplied* The learned trial -udge held that the above1,uoted proposition are not supported b' the weight of authorit' because the' are based on decisions in cases where the statutes

expressl' authori+e change of corporate name b' amendment of the articles of incorporation. 4e have carefull' examined these authorities and 4e are satisfied of their relevance. /ven @ord 8enman who has been ,uoted b' Gis Gonor from 3n (e&. ,. (e&istrar of Joint Stoc6 'os. !#, K.7., 65 /.C.@. maintains merel' that the change of its name never appears to be such an act as the corporation could do for itself, but re,uired .the same ower as created a corporation." 4hat seems to have been overloo(ed, therefore, is that the procedure prescribes b' ;ection !% of our Corporation @aw for the amendment of corporate charters is practicall' identical with that for the incorporation itself of a corporation. In the appealed order of dismissal, the trial court, made the observation that, according to this Court in (ed Line -ransportation 'o. ,. (ural -ransit 'o.# Ltd ., $# hil, 6&5, 666, change of name of a corporation is against public polic'. 4e must clarif' that such is not the import of Aur said decision. 4hat this Court held in that case is simpl' that9 4e (now of no law that empowers the ublic ;ervice Commission or an' court in this -urisdiction to authori+e one corporation to assume the name of another corporation as a trade name. 7oth the Rural Transit Compan', @td., and the 7achrach ?otor Co., Inc., are hilippine corporations and the ver' law of their creation and continued existence re,uires each to adopt and certif' a distinctive name. The incorporators 2constitute a bod' politic and corporate under the name stated in the certificate.2 );ection !!, Act 0o. !&65, as amended.* A corporation has the power 7of succession b) its corporate name.7 );ection !<, ibid.* The name of a corporation is therefore essential to its existence. It cannot change its name except in the manner provided b' the statute. 7' that name alone is it authori+ed to transact business. The law gives a corporation no express or implied authorit' to assume another name that is unappropriated. still less that of another corporation, which is expressl' set apart for it and protected b' the law. If an' corporation could assume at pleasure as an unregistered trade name the name of another corporation, this practice would result in confusion and open the door to frauds and evasions and difficulties of administration and supervision. The polic' of the law as expressed our corporation statute and the Code of Commerce is clearl' against such a practice. )Cf. ;carsdale ub. Co. : Colonial ress vs. Carter, !!$ 0ew Hor( ;upplement, 3<!. ;vens(a 0at. F. i. C. vs. ;wedish 0at. Assn., "#6 Illinois BAppellate CourtsC, &"%, &<&.* In other words, what 4e have held to be contrar' to public polic' is the use b' one corporation of the name of another corporation as its trade name. 4e are certain no one will disagree that such an act can onl' "result in confusion and open the door to frauds and evasions and difficulties of administration and supervision." ;urel', the Red @ine case was not one of change of name. 0either can 4e share the posture of Gis Gonor that the change of name of a corporation results in its dissolution. There is unanimit' of authorities to the contrar'.

An authori+ed change in the name of a corporation has no more effect upon its identit' as a corporation than a change of name of a natural person has upon his identit'. It does not affect the rights of the corporation or lessen or add to its obligations. After a corporation has effected a change in its name it should sue and be sued in its new name .... )!< Am. Fur. "3$1"33, citing cases.* A mere change in the name of a corporation, either b' the legislature or b' the corporators or stoc(holders under legislative authorit', does not, generall' spea(ing, affect the identit' of the corporation, nor in an' wa' affect the rights, privileges, or obligations previousl' ac,uired or incurred b' it. Indeed, it has been said that a change of name b' a corporation has no more effect upon the identit' of the corporation than a change of name b' a natural person has upon the identit' of such person. The corporation, upon such change in its name, is in no sense a new corporation, nor the successor of the original one, but remains and continues to be the original corporation. It is the same corporation with a different name, and its character is in no respect changed. ... )$ Fletcher, C'clopedia of the @aw of rivate Corporations, ""&1""6, citing cases.* The change in the name of a corporation has no more effect upon its identit' as a corporation than a change of name of a natural person has upon his identit'. It does not affect the rights of the corporation, or lessen or add to its obligations. En&land. : *oe ,. 4orton# !! ?. D 4. 5!<, 3 Fur. 36!, !" @. F. /xch. &!%. 0nited States. : 2etropolitan 4at. $an6 ,. 'la&&ett# !&! =.;. 6"#, !" ;. Ct. $#, <6 =.;. )@. ed.* %&!. %labama. : Lomb ,. Pioneer Sa,.# etc.# 'o.# !#$ Ala. 65!, !3 ;o. $3#. 4orth $irmin&ham Lumber 'o. ,. Sims , !63 Ala. 656, &% ;o. %&. 'onnecticut. : -rinit) 'hurch ,. 8all, "" Com. !"6. 3llinois. : 2t. Palatine %cadem) ,. 9leinschnit+ "% III, !<<. St. Louis etc. (. 'o. ,. 2iller, &< Ill. !55.(eadin& ,. :edder# $$ III. %#. 3ndiana. : (osenthal ,. 2adison etc.# Plan6 (oad 'o., !# Ind. <6%. 9entuc6). : 'ahill ,. $i&&er# % 7. ?on. "!!. :ilhite ,. 'on,ent of Good Shepherd, !33 >'. "6!, 3% ;. 4. !<%. 2ar)land. ; Phinne) ,. Sheppard / Enoch Pratt 8ospital , %% ?d. $<<, &" Atl. 6%, writ of error dismissed, !33 =.;. !3#, "# ;. Ct. 63<, && =.;. )@. ed.* 3"#.

2issouri. : *ean ,. La 2otte Lead 'o., 65 ?o. 6"<. 4ebras6a. ; 'arlon ,. 'it) Sa,. $an6, %" 0eb. 6%", !%% 0. 4. <<&. 4ew <or6 5irst Soc of 2.E. 'hurch ,. $rownell, 6 Gun &$&. Penns)l,ania. ; 'om. ,. Pittsbur&h, &! a. ;t. "3%. South 'arolina. : South 'arolina 2ut 3ns. 'o. ,. Price $3 ;.C. "#3, &6 ;./. !3<. Vir&inia. : :ilson ,. 'hesapea6e etc., R. Co., "! Eratt $6&. :ri&ht'aesar -obacco 'o. ,. 8oen#!#6 Ja. <"3, 6& ;./. <#5. :ashin&ton. : 9in& ,. 3lwaco R. etc., Co., ! 4ash. !"3. "< ac. 5"&. :isconsin. ; (acine 'ountr) $an6 ,. %)ers# !" 4is. 6!". The fact that the corporation b' its old name ma(es a format transfer of its propert' to the corporation b' its new name does not of itself show that the change in name has affected a change in the identit' of the corporation. Palfre) ,. %ssociation for Relief, etc., !!# @a. &6", <& ;o. $##. The fact that a corporation organi+ed as a state ban( afterwards becomes a national ban( b' compl'ing with the provisions of the 0ational 7an(ing Act, and changes its name accordingl', has no effect on its right to sue upon obligations or liabilities incurred to it b' its former name. ?ichigan Ins. 7an( v. /ldred !&< =.;. "5<, !" ;. Ct. &6#, <$ =.;. )@. ed.* !$". A deed of land to a church b' a particular name has been held not to be affected b' the fact that the church afterwards too( a different name. Cahill v. 7igger, % 7. ?on )('* "!!. A change in the name of a corporation is not a divestiture of title or such a change as re,uires a regular transfer of title to propert', whether real or personal, from the corporation under one name to the same corporation under another name. 2c'los6e) ,. *ohert)# 53 >'. <##, <# ;. 4. $&5. )!5 American and /nglish Annotated Cases !"&"1!"&<.* As was ver' aptl' said in Pacific $an6 ,. *e (o <3 Cal. 6<%, "The changing of the name of a corporation is no more the creation of a corporation than the changing of the name of a natural person is the begetting of a natural person. The act, in both cases, would seem to be what the language which we use to designate it imports : a change of name, and not a change of being.

Gaving arrived at the above conclusion, 4e have agree with appellant2s pose that the lower court also erred in holding that it is not the right part' in interest to sue defendants1appellees. , As correctl' pointed out b' appellant, the approval b' the stoc(holders of the amendment of its articles of incorporation changing the name "The He( Tong @in Fire D ?arine Insurance Co., @td." to " hilippine First Insurance Co., Inc." on ?arch %, !5$!, did not automaticall' change the name of said corporation on that date. To be effective, ;ection !% of the Corporation @aw, earlier ,uoted, re,uires that "a cop' of the articles of incorporation as amended, dul' certified to be correct b' the president and the secretar' of the corporation and a ma-orit' of the board of directors or trustees, shall be filed with the ;ecurities D /xchange Commissioner", and it is onl) from the time of such filin&, that "the corporation shall have the same powers and it and the members and stoc(holders thereof shall thereafter be sub-ect to the same liabilities as if such amendment had been embraced in the original articles of incorporation." It goes without sa'ing then that appellant rightl' acted in its old name when on ?a' !6, !5$!, it entered into the indemnit' agreement, Annex A, with the defendant1appellees. for onl' after the filing of the amended articles of incorporation with the ;ecurities D /xchange Commission on ?a' "$, !5$!, did appellant legall' ac,uire its new name. and it was perfectl' right for it to file the present case In that new name on 8ecember $, !5$!. ;uch is, but the logical effect of the change of name of the corporation upon its actions. Actions brought b' a corporation after it has changed its name should be brought under the new name although for the enforcement of rights existing at the time the change was made. Lomb ,. Pioneer Sa,.# etc.# 'o.# !#$ Ala. 65!, !3 ;o. $3#9 4ewlan ,. Lombard 0ni,ersit), $" III. !56. -homas ,. Visitor of 5rederic6 'ount) School , 3 Eill D F )?d.* <%%. *elaware# etc.# (. 'o. ,. -ric6, "< 0. F. @. <"!. 4orthumberland 'ountr) $an6 ,. E)er, $# a. ;t. &<$. :ilson ,. 'hesapea6e etc., R. Co., "! Eratt )Ja.* $6&. The change in the name of the corporation does not affect its right to bring an action on a note given to the corporation under its former name. 'umberland 'olle&e ,. 3sh, "". Cal. $&!. 4orthwestern 'olle&e ,. Schwa&ler# <3 Ia. 633. )!5 American and /nglish Annotated Cases !"&<.* In conse,uence, 4e hold that the lower court erred in dismissing appellant2s complaint. 4e ta(e this opportunit', however, to express the Court2s feeling that it is apparent that appellee2s position is more technical than otherwise. 0owhere in the record is it seriousl' pretended that the indebtedness sued upon has alread' been paid. If appellees entertained an' fear that the' might again be made liable to He( Tong @in Fire D ?arine Insurance Co. @td., or to someone else in its behalf, a cursor' examination of the records of the ;ecurities D /xchange Commission would have sufficed to clear up the fact that He( Tong @in had -ust changed its name but it had not ceased to be their creditor. /ver'one should reali+e that when the time of the courts is utili+ed for cases which do not involve substantial ,uestions and the claim of one of the parties, therein is based on pure technicalit' that can at most dela' onl' the ultimate

outcome necessaril' adverse to such part' because it has no real cause on the merits, grave in-ustice is committed to numberless litigants whose meritorious cases cannot be given all the needed time b' the courts. 4e address this appeal once more to all members of the bar, in particular, since it is their bounden dut' to the profession and to our countr' and people at large to help ease as fast as possible the clogged doc(ets of the courts. @et us not wait until the people resort to other means to secure speed', -ust and inexpensive determination of their cases. 4G/R/FAR/, -udgment of the lower court is reversed, and this case is remanded to the trial court for further proceedings consistent herewith 4ith costs against appellees. 'oncepcion# '.J.# (e)es# J.$.L.# *i+on# 2a6alintal# =aldi,ar# 'astro# 5ernando# -eehan6ee and Villamor# JJ.# concur.