GSIS vs.

BPI
G.R. NO. 175278, September 23, 2015
JARDELEZA, J.:

FACTS:

Petitioner was originally organized as Royal Savings Bank and started operations in 1971.
Beginning 1983 and 1984, petitioner encountered liquidity problems. On 1984, it was placed
under receivership and later temporarily closed by the Central Bank of the Philippines. Two
(2) months after its closure, petitioner reopened and was renamed Comsavings Bank, Inc.
under the management of the Commercial Bank of Manila.

In 1987, the Government Service Insurance System (GSIS) acquired petitioner from the
Commercial Bank of Manila. Petitioner's management and control was thus transferred to
GSIS. To improve its marketability to the public, especially to the members, petitioner sought
Securities and Exchange Commission (SEC) approval to change its corporate name to "GSIS
Family Bank, a Thrift Bank." Petitioner likewise applied with the Department of Trade and
Industry (DTI) and Bangko Sentral ng Pilpinas (BSP) for authority to use "GSIS Family Bank,
a Thrift Bank" as its business name. The DTI and the BSP approved the applications. Thus,
petitioner operates under the corporate name "GSIS Family Bank – a Thrift Bank," pursuant
to the DTI Certificate of Registration No. 741375 and the Monetary Board Circular approval.

Respondent BPI Family Bank was a product of the merger between the Family Bank and
Trust Company (FBTC) and the Bank of the Philippine Islands (BPI). On 1969, the Gotianum
family registered with the SEC the corporate name "Family First Savings Bank," which was
amended to "Family Savings Bank," and then later to "Family Bank and Trust Company."
Since its incorporation, the bank has been commonly known as "Family Bank." In 1985,
Family Bank merged with BPI, and the latter acquired all the rights, privileges, properties,
and interests of Family Bank, including the right to use names, such as "Family First Savings
Bank,"

BPI Family Savings Bank was registered with the SEC as a wholly-owned subsidiary of BPI.
BPI Family Savings Bank then registered with the Bureau of Domestic Trade the trade or
business name "BPI Family Bank," and acquired a reputation and goodwill under the name.

Eventually, it reached respondent’s attention that petitioner is using or attempting to use the
name "Family Bank." Thus, on March 8, 2002, respondent petitioned the SEC Company
Registration and Monitoring Department (SEC CRMD) to disallow or prevent the registration
of the name "GSIS Family Bank" or any other corporate name with the words "Family Bank"
in it. Respondent claimed exclusive ownership to the name "Family Bank," having acquired
the name since its purchase and merger with Family Bank and Trust Company way back
1985. Respondent also alleged that through the years, it has been known as "BPI Family
Bank" or simply "Family Bank" both locally and internationally. As such, it has acquired a
reputation and goodwill under the name, not only with clients here and abroad, but also with
correspondent and competitor banks, and the public in general.

Respondent prayed the SEC CRMD to disallow or prevent the registration of the name "GSIS
Family Bank" or any other corporate name with the words "Family Bank" should the same be
presented for registration. Respondent likewise prayed the SEC CRMD to issue an order
directing petitioner or any other corporation to change its corporate name if the names have
already been registered with the SEC.16

The SEC CRMD was thus confronted with the issue of whether the names BPI Family Bank
and GSIS Family Bank are confusingly similar as to require the amendment of the name of
the latter corporation. The SEC CRMD declared that upon the merger of FBTC with the BPI
in 1985, the latter acquired the right to the use of the name of the absorbed corporation.
Thus, BPI Family Bank has a prior right to the use of the name

The SEC CRMD held that there exists a confusing similarity between the corporate names
BPI Family Bank and GSIS Family Bank, although not identical, the corporate names are
indisputably similar, since both are engaged in the banking business.

In a decision19 dated May 19, 2003, the SEC CRMD said, PREMISES CONSIDERED
respondent GSIS FAMILY BANK is hereby directed to refrain from using the word "Family" as
part of its name and make good its commitment to change its name by deleting or dropping
the subject word from its corporate name within [thirty (30) days] from the date of actual
receipt hereof.

ISSUES:

Petitioner appealed the decision to the SEC En Banc, which denied the appeal, and upheld
the SEC CRMD in the SEC En Banc Decision. Petitioner elevated the SEC En Banc Decision
to the Court of Appeals, raising the following issues:

1. Whether the use by GSIS Family Bank of the words "Family Bank" is deceptively and
confusingly similar to the name BPI Family Bank;
2. Whether the use by Comsavings Bank of "GSIS Family Bank" as its business constitutes
unfair competition;

3. Whether BPI Family Bank is guilty of forum shopping;

4. Whether the approval of the DTI and the BSP of petitioner's application to use the name
GSIS Family Bank constitutes its authority to the lawful and valid use of such trade name or
trade mark;

5. Whether the application of respondent BPI Family Bank for the exclusive use of the name
"Family Bank," a generic name, though not yet approved by IPO of the Bureau of Patents,
has barred the GSIS Family Bank from using such trade mark or name.

Issues in the Petition

Petitioner raised the following issues in its petition:

I. The Court of Appeals gravely erred in affirming the SEC Resolution finding the word
"Family" not generic despite its unregistered status with the IPO of the Bureau of Patents and
the use by GSIS-Family Bank in its corporate name of the words "Family Bank" as deceptive
and [confusingly similar] to the name BPI Family Bank;

II. The Court of Appeals gravely erred when it ruled that the respondent is not guilty of forum
shopping despite the filing of three (3) similar complaints before the DTI and BSP and with
the SEC without the requisite certification of non-forum shopping attached thereto;

III. The Court of Appeals gravely erred when it completely disregarded the opinion of the
Banko Sentral ng Pilipinas that the use by the herein petitioner of the trade name GSIS
Family Bank – Thrift Bank is not similar or does not deceive or likely cause any deception to
the public.

RULING:

Court of Appeals Ruling

The Court of Appeals ruled that the approvals by the BSP and by the DTI of petitioner’s
application to use the name "GSIS Family Bank" do not constitute authority for its lawful and
valid use. It said that the SEC has absolute jurisdiction, supervision and control over all
corporations. The Court of Appeals held that respondent was entitled to the exclusive use of the
corporate name because of its prior adoption of the name "Family Bank" since 1969. There is
confusing similarity in the corporate names because "confusion as to the possible association
with GSIS might arise if we were to allow Comsavings Bank to add its parent company’s
acronym, ‘GSIS’ to ‘Family Bank.’ This is true especially considering both companies belong to
the banking industry. Proof of actual confusion need not be shown. It suffices that confusion is
probably or likely to occur." The Court of Appeals also ruled out forum shopping because not all
the requirements of litis pendentia are present.

The dispositive portion of the decision read,

WHEREFORE, the instant petition for review is hereby DISMISSED for lack of merit.

After its Motion for Reconsideration was denied, petitioner brought the decision to this Court via
a Petition for Review on Certiorari.

Court's Ruling

We uphold the decision of the Court of Appeals.

Section 18 of the Corporation Code provides,

Section 18. Corporate name. – No corporate name may be allowed by the Securities and
Exchange Commission if the proposed name is identical or deceptively or confusingly similar to
that of any existing corporation or to any other name already protected by law or is patently
deceptive, confusing or contrary to existing laws. When a change in the corporate name is
approved, the Commission shall issue an amended certificate of incorporation under the
amended name.

In Philips Export B.V. v. Court of Appeals, this Court ruled that to fall within the prohibition of the
law on the right to the exclusive use of a corporate name, two requisites must be proven,
namely:

(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) deceptive 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.

The second requisite in the Philips Export case likewise obtains on two points: the proposed
name is (a) identical or (b) deceptive or confusingly similar to that of any existing corporation or
to any other name already protected by law.

On the first point (a), the words "Family Bank" present in both petitioner and respondent's
corporate name satisfy the requirement that there be identical names in the existing corporate
name and the proposed one.

On the second point (b), there is a deceptive and confusing similarity between petitioner's
proposed name and respondent's corporate name, as found by the SEC. 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. And even without such proof of
actual confusion between the two corporate names, it suffices that confusion is probable or
likely to occur.

Finally, we uphold the Court of Appeals' finding that the issue of forum shopping was belatedly
raised by petitioner and, thus, cannot anymore be considered at the appellate stage of the
proceedings. Petitioner raised the issue of forum shopping for the first time only on appeal.
Petitioner argued that the complaints filed by respondent did not contain certifications against
non-forum shopping, in violation of Section 5, Rule 7 of the Rules of Court.

In this case, the fact that respondent filed a case before the DTI was made known to petitioner
long before the SEC rendered its decision. Yet, despite its knowledge, petitioner failed to
question the alleged forum shopping before the SEC. The exceptions to the general rule that
forum shopping should be raised in the earliest opportunity, as explained in the cited case of
Young v. Keng Seng, do not obtain in this case.

WHEREFORE, the petition is DENIED. The decision of the Court of Appeals dated March 29,
2006 is hereby AFFIRMED.

SO ORDERED.
Sources:

G.R. No. 175278. (2015, September 23). The LAWPHiL Project.