G.R. No. 205548 - De La Salle Montessori International of Malolos, Inc. vs. De La Salle Brothers, Inc.

Case Summary (G.R. No. 205548)

Factual Background

Petitioner reserved the corporate name De La Salle Montessori International Malolos, Inc., completed registration and received its Certificate of Registration in July 2007, and secured DepEd recognitions for its elementary and secondary programs in 2008 and 2010 respectively. Respondents, which had long used the phrases “La Salle” and “De La Salle” in their corporate names, filed a petition with the SEC in January 2010 seeking to compel petitioner to change its corporate name on the ground that petitioner’s name was misleading or confusingly similar to respondents’ prior corporate names.

SEC Office of the General Counsel Order

The SEC Office of the General Counsel issued an Order dated May 12, 2010 directing petitioner to change or modify its corporate name. The OGC held that respondents had acquired the right to the exclusive use of the name “La Salle” by priority of adoption and that the phrase “La Salle” was not generic or descriptive of educational services but rather suggestive, arbitrary and distinctive, and therefore legally protectable. The OGC further found that confusion was likely given the similarity of names and the parties’ common business of providing pre-elementary, elementary and secondary education.

SEC En Banc Decision

The SEC En Banc affirmed the OGC Order in its Decision of September 30, 2010. It rejected petitioner’s attempt to analogize to Lyceum of the Philippines, Inc. v. Court of Appeals, reasoning that “lyceum” is a generic term for a school while “De La Salle” is not generic and had not been shown to have been exclusively appropriated by petitioner. The En Banc sustained the view that the phrase “De La Salle” is suggestive and capable of secondary meaning and protection.

Court of Appeals Proceedings

Petitioner appealed to the Court of Appeals in CA-G.R. SP No. 116439. The CA rendered its Decision on September 27, 2012 affirming the SEC OGC Order and the SEC En Banc Decision in toto. Petitioner’s motion for reconsideration was denied by CA Resolution dated January 21, 2013.

Present Petition and Procedural Posture

Petitioner filed a petition for review on certiorari under Rule 45 of the Rules of Court before the Supreme Court, contending that the CA erred in not applying the doctrine in Lyceum of the Philippines. The Court noted that petitioner misphrased its issue by alleging “grave abuse of discretion” but proceeded to excuse the terminological error and considered the petition as raising errors of judgment reviewable under Rule 45.

Issue Presented

The lone issue the petition presented was whether the Court of Appeals erred in failing to apply the Lyceum doctrine that the word “Lyceum” is not attended with exclusivity and, by analogy, that the word or phrase “De La Salle” likewise could not be exclusively appropriated.

Parties’ Contentions

Petitioner argued that its full corporate name contained distinctive words—“Montessori International of Malolos, Inc.”—that differentiate it from respondents; that the words “De La Salle” derived from the French word for “classroom” and therefore lacked proprietary character; that its logo, fee structure, clientele awareness and absence of misrepresentation showed no likelihood of confusion; and that it had acquired goodwill and trust separate from respondents. Respondents maintained that they were prior registrants whose long prior use conferred an exclusive right to the phrase “De La Salle” and that petitioner’s adoption of the same dominant phrase was likely to mislead the public into believing affiliation.

Legal Framework

The Court reiterated that a corporation’s corporate name is a property right and that Section 18 of the Corporation Code prohibits registration of a corporate name that is identical, deceptively or confusingly similar to an existing corporate name or otherwise patently deceptive or confusing. The Court recalled the two requisites derived from Philips Export B.V. v. Court of Appeals for relief under Section 18: (1) the complainant must have acquired a prior right over the name; and (2) the proposed name must be identical, deceptively or confusingly similar, or patently deceptive or contrary to law.

Analysis on Priority of Adoption

The Court examined registration dates and found respondents to be prior registrants: La Salle Academy, Inc. registered January 26, 1960; De La Salle Brothers, Inc. registered October 9, 1961; De La Salle University, Inc. registered December 19, 1975; De La Salle-Santiago Zobel School, Inc. registered October 7, 1976; and De La Salle Canlubang, Inc. registered August 5, 1998. Petitioner’s registration in 2007 was clearly later. The Court concluded that respondents acquired the right to the use of the words “De La Salle” or “La Salle” as part of their corporate names by priority of adoption.

Analysis on Confusing Similarity

Applying the test of whether similarity is such as to mislead a person using ordinary care and discrimination, the Court found confusing similarity. The Court gave little weight to petitioner’s reliance on the additional words in its corporate name. The Court agreed with the SEC that the dominant phrase “De La Salle” could reasonably lead a person of ordinary care to believe petitioner was an affiliate, branch or otherwise connected to respondents, particularly because the parties operate in the same sector of private education offering pre-elementary, elementary and secondary courses.

Rejection of Etymology and Logo Arguments

The Court rejected petitioner’s etymological claim that “salle” merely means “room” in French and that “la salle” therefore is generic for classroom. The Court endorsed the SEC En Banc’s reasoning that the appropriation of the phrase for educational services is suggestive, fanciful and arbitrary and thus registrable and protectable. The Court likewise found no compelling effect in petitioner’s asserted differences in logo, fee structure, or clientele awareness to dispel the likelihood of confusion.

Distinction from Lyceum of the Philippines

The Court explained that Lyceum of the Philippines was inapposite because “lyceum” is a generic word denoting a school or institution of learning and was widely used by many institutions, whereas “De La Salle” is not generic or descriptive of education and had been used by respondents for

Case Syllabus (G.R. No. 205548)

Parties and Procedural Posture

De La Salle Montessori International of Malolos, Inc. was the Petitioner before the Supreme Court seeking review under Rule 45, Rules of Court.
De La Salle Brothers, Inc., De La Salle University, Inc., La Salle Academy, Inc., De La Salle-Santiago Zobel School, Inc., and De La Salle Canlubang, Inc. were the Respondents who petitioned the SEC to compel a change of petitioner's corporate name.
The SEC Office of the General Counsel issued an Order dated May 12, 2010 directing Petitioner to change or modify its corporate name.
The SEC En Banc rendered a Decision dated September 30, 2010 affirming the SEC OGC Order.
The Court of Appeals, in CA-G.R. SP No. 116439, issued a Decision dated September 27, 2012 affirming the SEC En Banc, and denied Petitioner's motion for reconsideration by Resolution dated January 21, 2013.
Petitioner filed the present petition for review on certiorari under Rule 45 to challenge the CA Decision and Resolution.

Key Factual Allegations

Petitioner reserved the corporate name De La Salle Montessori International Malolos, Inc. from June 4 to August 3, 2007 and was issued a Certificate of Registration on July 5, 2007 under Company Registration No. CN200710647.
The SEC indorsed petitioner's articles of incorporation and by-laws to the Department of Education, which returned the indorsement without objections.
DepEd Region III granted petitioner government recognition for pre-elementary and elementary courses on June 30, 2008 and for secondary courses on February 15, 2010.
Respondents registered their corporate names earlier as follows with SEC registration dates and numbers reflected in the records.
Respondents alleged that petitioner's use of the dominant phrases "La Salle" and "De La Salle" is misleading and confusingly similar to respondents' prior rights and that no consent was given for such use.

Issues Presented

The petition framed the issue as whether the CA acted with grave abuse of discretion for failing to apply the doctrine in Lyceum of the Philippines.
The Court observed that the petition actually raised alleged errors of judgment reviewable under Rule 45 rather than allegations of grave abuse of discretion.
The principal legal question was whether the Lyceum of the Philippines doctrine that a generic institutional term is not exclusive applies to the phrase "De La Salle."

Contentions of Parties

Petitioner contended that Lyceum of the Philippines controlled because the dominant phrase was not subject to exclusivity, and that petitioner's use of additional words, distinct logo, differing fees, and established goodwill eliminated any likelihood of confusion.
Petitioner further argued that "De La Salle" derived from a French word meaning "classroom" and hence was generic or descriptive.
Respondents contended that they acquired exclusive rights to the phrase by priority of adoption, that the phrase is suggestive and distinctive, and that petitioner's use was likely to cause public confusion about affiliation.
Respondents sought SEC intervention to prevent the a