GR 137592; (December, 2001) (Digest)
G.R. No. 137592; December 12, 2001
ANG MGA KAANIB SA IGLESIA NG DIOS KAY KRISTO HESUS, H.S.K. SA BANSANG PILIPINAS, INC., petitioner, vs. IGLESIA NG DIOS KAY CRISTO JESUS, HALIGI AT SUHAY NG KATOTOHANAN, respondent.
FACTS
Respondent Iglesia ng Dios Kay Cristo Jesus, Haligi at Suhay ng Katotohanan is a religious corporation registered in 1936. In 1976, Eliseo Soriano and others disassociated from the respondent and registered a new entity named “Iglesia ng Dios Kay Kristo Hesus, Haligi at Saligan ng Katotohanan” in 1977. The SEC, in a 1988 decision, ordered this new entity to change its name for being deceptively similar to the respondent’s. No appeal was taken. During the pendency of that case, Soriano’s group registered another corporation, the petitioner “Ang Mga Kaanib sa Iglesia ng Dios Kay Kristo Hesus, H.S.K. sa Bansang Pilipinas, Inc.” in 1980, where “H.S.K.” stands for “Haligi at Saligan ng Katotohanan.” In 1994, respondent filed a new SEC petition to compel petitioner to change its corporate name. Petitioner was declared in default for failure to file an answer, and the SEC ruled against it, an order affirmed by the SEC En Banc and the Court of Appeals.
ISSUE
The primary issues were whether petitioner was denied due process due to counsel’s negligence; whether respondent’s action had prescribed; whether petitioner’s name violated Section 18 of the Corporation Code; and whether ordering a name change infringed on religious freedom.
RULING
The Supreme Court denied the petition and affirmed the Court of Appeals. On due process, the Court ruled that the negligence of petitioner’s counsel, Atty. Garaygay, was only simple, not gross or reckless. Counsel actively filed motions for reconsideration and to set aside the default judgment, unlike in the cited Legarda case where counsel was utterly inactive. Thus, the general rule that a client is bound by counsel’s negligence applied. On prescription, the Court held that an action for infringement of a corporate name is imprescriptible, as it is a continuing violation of law and public policy under the Corporation Code. Regarding the corporate name, the Court found petitioner’s name identical or confusingly similar to respondent’s. The test is whether the similarity is likely to deceive or confuse the public. The core phrases “Iglesia ng Dios Kay Kristo Hesus” and “Haligi at Saligan ng Katotohanan” were essentially appropriated, making confusion inevitable. The “generic word rule” did not justify this wholesale appropriation. Finally, the order to change the name did not violate religious freedom; it merely enforced petitioner’s undertaking to comply with SEC regulations on corporate names, which is a valid exercise of state power to prevent deception.