Title
De La Salle Montessori International of Malolos, Inc. vs. De La Salle Brothers, Inc.
Case
G.R. No. 205548
Decision Date
Feb 7, 2018
Petitioner's use of "De La Salle" in its corporate name was ruled confusingly similar to respondents' prior-registered names, violating Section 18 of the Corporation Code, as both operate in education.
corporate name change
misleading name
confusingly similar name
A

Case Summary (G.R. No. 205548)

Procedural History

Petitioner registered its corporate name and obtained government recognition for its courses at the DepEd. Respondents, earlier registrants of corporate names containing the phrases “La Salle” or “De La Salle,” petitioned the SEC to compel petitioner to change its corporate name on the ground of confusing similarity and prior right. The SEC OGC ordered petitioner to change its name; the SEC En Banc affirmed. The Court of Appeals then affirmed the SEC En Banc decision. Petitioner sought relief by way of a petition for review under Rule 45 of the Rules of Court, challenging the CA’s alleged failure to apply the Lyceum of the Philippines doctrine. The Supreme Court treated the petition as raising errors of judgment and reviewed the CA’s disposition.

Facts Presented

Petitioner’s corporate name is De La Salle Montessori International of Malolos, Inc., and it operates as a private educational institution offering pre‑elementary, elementary, and secondary courses. Respondents are established educational corporations that have used “La Salle” or “De La Salle” in their corporate names for decades and had prior SEC registrations (dates of registration for respondents range from 1960 to 1998). The parties therefore operate in the same industry and the principal factual dispute concerns whether petitioner’s corporate name is confusingly similar to respondents’ names and whether respondents have an exclusive right by priority of adoption.

Legal Issue Framed

The operative legal question was whether the Court of Appeals (and the SEC) erred in failing to apply the doctrine from Lyceum of the Philippines that a generic or descriptive word (like “Lyceum”) is not subject to exclusive appropriation, thereby permitting petitioner to use “De La Salle” in its corporate name. More broadly, the issue was whether respondents had acquired a prior right to exclusive use of the dominant phrase “De La Salle” or “La Salle” and whether petitioner’s corporate name was deceptively or confusingly similar under Section 18 of the Corporation Code.

Governing Statute and Legal Tests

Section 18 of the Corporation Code prohibits SEC approval of a corporate name that is identical or deceptively or confusingly similar to an existing corporation’s name or otherwise patently deceptive or confusing. Jurisprudence establishes two requisites for relief under Section 18: (1) the complainant must have acquired a prior right over the corporate name (determined by priority of adoption/registration); and (2) the proposed corporate name must be identical, deceptively or confusingly similar, or patently deceptive or confusing. The standard for confusing similarity asks whether the similarity is such as to mislead a person exercising ordinary care and discrimination; actual confusion need not be proven—probable or likely confusion suffices.

SEC Office of the General Counsel Reasoning

The SEC OGC found respondents to be prior registrants and therefore holders of rights in the phrases “La Salle” and “De La Salle” by priority of adoption. The OGC held that “La Salle” is not generic or descriptive in the manner of “lyceum”; rather, “La Salle” is suggestive and, through long and consistent use by respondents, has become distinctive and legally protectable. The OGC concluded that petitioner’s use of “De La Salle” in conjunction with other words could nevertheless mislead the public into believing petitioner was an affiliate, branch, or otherwise connected to respondents, given the identical dominant phrase and the parties’ operation in the same educational field. Accordingly, the OGC ordered petitioner to change or modify its corporate name.

SEC En Banc Analysis and Rejection of Petitioner’s Arguments

The SEC En Banc affirmed the OGC, specifically rejecting petitioner’s analogy to Lyceum of the Philippines. The En Banc held that “lyceum” is generic because it denotes a category of educational institution widely used as a descriptive term; by contrast, “De La Salle” does not inherently denote an educational institution and is therefore not generic. The En Banc also addressed petitioner’s etymological contention—i.e., that “la salle” means “room” or “classroom” in French—concluding that such literal meaning does not make the phrase descriptive of educational services in the Philippine context; rather, respondents’ long usage had rendered the phrase suggestive/fanciful and associated with respondents’ educational services, thereby making it protectable.

Court of Appeals and Supreme Court’s Deference to SEC Findings

The Court of Appeals affirmed the SEC’s findings in toto. On review, the Supreme Court emphasized established principles: a corporate name is a property right (right in rem) protectable against subsequent appropriation; the right to use a corporate name is determined by priority of adoption; and the SEC has exclusive original jurisdiction over corporate names. The Supreme Court found that respondents were clearly prior registrants and that petitioner’s name contained the dominant phrase “De La Salle,” creating a likely source of confusion to ordinary observers given the overlap in the educational services offered. The Court agreed with the SEC that “De La Salle” is not merely a generic or descriptive term as in Lyceum, but is suggestive and thus entitled to protection. The Court also reiterated that actual confusion need not be shown—probable confusion suffices.

Distinction from Lyceum of the Philippines

The Court carefully distinguished Lyceum of the Philippines: there the term “lyceum” was generic and commonly used to denote a school or institution of learning, and the petitioner in that case failed to show exclusive appropriation or secondary meaning. Here, by contrast, respondents had longstanding, widespread use and registration of the “La Salle”/“De La Salle” phrase; petitioner registered decades later. The record indicated that other institutions had not monopolized the term “lyceum,” whereas the record in the present case supported respondents’ prior and distinctive use. Thus the Lyceum doctrine did not

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