G.R. No. 27897 , December 2, 1927
Western Equipment and Supply Co., et al. vs. Fidel A. Reyes, et al.

FACTS

The plaintiffs are the Western Equipment and Supply Company (a Nevada corporation), the Western Electric Company, Inc. (a New York corporation), and their representatives. The Western Electric Company, Inc. is a well-known manufacturer of electrical and telephone equipment with a global reputation spanning over fifty years. Its products, bearing its corporate name, are widely used in the Philippines. The defendants are Fidel A. Reyes, the Director of the Bureau of Commerce and Industry, and Henry Herman and his associates. Herman and his associates filed articles of incorporation with the Bureau to organize a domestic corporation under the identical name “Western Electric Company, Inc.,” for the purpose of dealing in the same line of electrical and telephone apparatus. The plaintiffs protested this incorporation, arguing it would deceive the public and unfairly trade upon the goodwill and reputation of the foreign Western Electric Company. Despite the protest, the Director announced his intention to issue the certificate of incorporation. The plaintiffs filed a complaint seeking an injunction to restrain the Director from issuing the certificate.

ISSUE

Whether the Director of the Bureau of Commerce and Industry committed a grave abuse of discretion in deciding to issue a certificate of incorporation to the defendants under a name identical to that of a pre-existing, well-known foreign corporation engaged in the same business.

RULING

YES. The Supreme Court affirmed the lower court’s decision granting the injunction. The Director’s act of allowing the incorporation under the name “Western Electric Company, Inc.” constituted a gross abuse of the discretionary power granted to him by Act No. 666 (the Corporation Law). The purpose and intent of Herman and his associates were clearly to unfairly compete and profit from the established reputation and goodwill of the foreign Western Electric Company. This intent to deceive the public and engage in unfair competition was evident from their choice of an identical name for an identical business. The law does not permit the government’s power of incorporation to be used to authorize a fraud upon the public or an infringement upon the rights and reputation of an existing entity. The Court held that the plaintiffs had a clear right to protection, and the issuance of the certificate would cause them irreparable injury for which there was no plain, speedy, and adequate remedy at law.