Jurisprudence teaches that the governing principle is primus tempore, potior jure (first in time, stronger in right) is utterly significant in the use of a corporate name.

Well-settled is the rule that a corporate name partakes of the nature of a property right and a corporate name is a necessary element of a corporation’s existence. By lawful entry to the business field under a legally adopted name and by prior appropriations and use thereof a corporation acquires right to such name which the law recognizes and protects. (Standard Oil Co. of New Mexico vs. Standard Oil Co. of California, 56 Fed. 937, 977; American Steel Foundries vs. Robertson, 269 U.S. 372; Cincinnati Cooperage Co. vs. Bote, 96 Ky 356; Federal Securities Co. v. Federal Securities Corp., 129 Or. 375.)

This is the case of two corporations —Edsa Properties Inc. and Edsa Properties Holdings Inc. the former was registered in 1992, the latter was registered under a different name (first as Shangri-La Plaza Inc., then as Mui Resources Philippines Inc.) which it amended in 2000. Both ended up with similar purposes after the amendments were made to the latter.

Upon knowledge of the existence of the latter, Edsa Properties Inc. filed a complaint before the Securities and Exchange Commission (SEC) for cancellation of the corporate name of Edsa Properties Holdings Inc. on the ground that the latter is confusingly and deceptively similar to its name. The case is anchored on the issue of whether or not the corporate name Edsa Properties Holdings Inc. is deceptive and confusingly similar to Edsa Properties Inc. when measured against applicable standards thereby necessitating the cancellation of the corporate name Edsa Property Holdings Inc.

Section 18 of the Corporation Code on corporate name clearly states that a corporate name can not be allowed by the SEC 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.

From the foregoing, it can be inferred that the statutory prohibition applies when the following requisites are proven, to wit: “[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.] deceptively 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.”

In resolving the conflicted name, the SEC ordered the latter corporation — Edsa Properties Holdings  Inc. to immediately change its name in order to protect the rights of the former corporation Edsa Properties Inc. The losing party, latter corporation, unsatisfied by the SEC decision raised the same to the Court of Appeals.

It is interesting to the unbiased observer that the latter corporation was able to get approval of its amendment of the corporate name at all when the SEC should safeguard the prior registered name. This is a situation that the SEC diligently sought to address over the recent years by seeking the advances of technology to curtail similar flaws. However, technological advances are not foolproof and still follow the old computer adage—“Garbage in, garbage out”.

Once registered and incorporated, the change of name must be the result of a petition filed before the Office of the General Counsel (OGC) of the SEC where notice and hearing will be observed and the parties will be required to prove their rights over the company name.

Applying the above-mentioned requirements to the instant case, the Court found no reversible error committed by the SEC in ordering petitioner to change its corporate name.  Records disclose that respondent was incorporated as “Edsa Properties Inc.” on October 8, 1992 while petitioner only started to use the name “Edsa Properties Holdings Inc.” after its application for amendment of corporate name was approved by the SEC on January 11, 2000. Since the right to the exclusive use of a corporate name with freedom from infringement by similarity is determined by priority of adoption then Edsa Properties Inc., as the first registrant, has acquired the right to use the words “Edsa Properties” as part of its corporate name (Edsa Property Holdings Inc. vs. Edsa Properties Inc. CA-G.R. SP No. 88017). Primus tempore, potior jure.

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Jurisprudence teaches that the governing principle is primus tempore, potior jure (first in time, stronger in right) is utterly significant in the use of a corporate name.