Case Summary (G.R. No. 212111)
Petitioner
Ang Mga Kaanib sa Iglesia ng Dios Kay Kristo Hesus, H.S.K. sa Bansang Pilipinas, Inc.
Respondent
Iglesia ng Dios Kay Cristo Jesus, Haligi at Suhay ng Katotohanan (Church of God in Christ Jesus, the Pillar and Ground of Truth)
Key Dates
- 1936: Original respondent corporation registered.
- March 30, 1977: First breakaway group registers under a similar name.
- April 25, 1980: Petitioner corporation registered.
- May 4, 1988: SEC orders the 1977 corporation to change its name (no appeal).
- March 2, 1994: Respondent files petition to compel petitioner to change its name.
- November 20, 1995: SEC renders default judgment ordering name change.
- March 4, 1996: SEC En Banc affirms.
- October 7, 1997: Court of Appeals affirms.
- December 12, 2001: Supreme Court decision.
Applicable Law
- 1987 Philippine Constitution, Article III, Section 5 (religious freedom).
- Section 18, Corporation Code (Batas Pambansa Blg. 68) on corporate name uniqueness.
- SEC Guidelines on Corporate Names.
- Civil Code prescription rules.
- Principles of procedural due process and attorney negligence.
Factual Background
Respondent, a non-stock religious corporation registered in 1936, faced a schism in 1976 when Eliseo Soriano and others formed a new religious society in 1977 with a similar name. Petitioner later registered in 1980 incorporating the acronym “H.S.K.” Both groups operate religious ministries in the Philippines under virtually identical corporate names and acronyms.
Procedural History
- 1988 SEC Decision (No appeal): Ordered the 1977 group to change its name.
- 1994 SEC Case No. 03-94-4704: Respondent seeks to compel petitioner’s name change; petitioner’s motion to dismiss denied; petitioner declared in default for failing to answer; SEC orders name change (November 20, 1995).
- SEC En Banc (March 4, 1996): Affirms default decision.
- Court of Appeals (October 7, 1997; denial of reconsideration February 16, 1999): Affirms SEC En Banc.
- Supreme Court Review (December 12, 2001): Petition for review filed.
Issues
- Whether petitioner was deprived of procedural due process by counsel’s negligence.
- Whether respondent’s petition was barred by prescription.
- Whether exceptions to Section 18 of the Corporation Code apply.
- Whether ordering a name change violated petitioner’s constitutional right to religious freedom.
Analysis
Procedural Due Process and Counsel’s Negligence
- General rule: negligence of counsel binds the client.
- Only gross or reckless negligence that completely strips opportunity to be heard voids default judgments.
- Atty. Garaygay filed motions to dismiss, for reconsideration, extension of time, and to set aside default judgment—demonstrating effort, not gross negligence.
Prescription
- Petitioner failed to assert prescription before the SEC, waiving the defense.
- Respondent’s right to petition for name correction under Section 18 remains at all times.
Section 18 of the Corporation Code and SEC Guidelines
- No corporate name may be identical or confusingly similar to any existing one.
- Petitioner’s addition of descriptive phrases (“Ang Mga Kaanib,” “sa Bansang Pilipinas”) did not sufficiently differentiate the dominant elements: “Iglesia ng Dios Kay Kristo Hesus, Haligi at Saligan/Suhay ng Katotohanan” and the shared acronym “H.S.K.”
- “Saligan” and “Suhay” are synonyms,
Case Syllabus (G.R. No. 212111)
Facts of the Case
- Respondent Iglesia ng Dios Kay Cristo Jesus, Haligi at Suhay ng Katotohanan is a non-stock religious society incorporated in 1936 and registered with the SEC.
- In 1976, Eliseo Soriano and others left respondent and in 1977 registered a new society called Iglesia ng Dios Kay Kristo Hesus, Haligi at Saligan ng Katotohanan.
- During the pendency of respondent’s petition (SEC Case No. 1774) contesting the new name, petitioner Ang Mga Kaanib sa Iglesia ng Dios Kay Kristo Hesus, H.S.K., sa Bansang Pilipinas was registered on April 25, 1980.
- Both organizations share the acronym “H.S.K.” (Haligi at Saligan ng Katotohanan) and espouse similar religious beliefs in the same locale.
Procedural History
- July 16, 1979: Respondent filed SEC Case No. 1774 to compel the 1977 corporation to change its name.
- May 4, 1988: SEC ordered the 1977 corporation to adopt a dissimilar name; no appeal was taken.
- March 2, 1994: Respondent filed SEC Case No. 03-94-4704 against petitioner to change its corporate name for causing public confusion.
- Petitioner’s motion to dismiss was denied; for failure to answer, petitioner was declared in default, and SEC rendered judgment on November 20, 1995 mandating a name change.
- March 4, 1996: SEC En Banc (SEC-AC No. 539) affirmed the default judgment.
- October 7, 1997: Court of Appeals in CA-G.R. SP No. 40933 affirmed SEC En Banc; motion for reconsideration denied February 16, 1999.
- December 12, 2001: Supreme Court, First Division, resolves G.R. No. 137592.
Issues Presented
- Whether petitioner was deprived of procedural due process due to counsel’s negligence.
- Whether respondent’s action was barred by extinctive prescription.
- Whether exceptions to Section 18 of the Corporation Code were applicable.
- Whether the name-ch