002 Universal Mills Corp. v. Universal Textile Mills Inc.

Universal Mills Corporation vs. Universal Textile Mills, Inc. G.R. No. L-28351  July 28, 1977

Topic: Corporate Name Facts: 

Universal Textile filed a petition with SEC to have Universal Mills change its company name as it is deceptively similar to its name.

Universal Textile Mills Inc.: 

It was organized on 29 Dec. 1953 as a textile manufacturing firm. A certificate of registration was issued on 8 January 1954.

Universal Mills Corp.: 

It was registered under SEC under its original name on 27 Oct . 1954 with the primary purpose of manufacturing and producing hosieries and wearing apparel of all kinds.

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24 May 1963- it filed an amendment on its articles of incorporation to change its name to Universal Mills Corporation.

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10 June 1963- A cer tificate of approval was issued by the Commission (SEC).

The cause of this complaint: 

A fire occurred which gutted Universal Mills’ spinning mil ls in Pasig. Because of the similarity of

the names of both companies, Universal Textile alleged that it caused confusion among its bankers, friends, stockholders and clients when reports about the fire appeared in various newspapers. 

This prompted Universal Textile to make announcements regarding the clarification of the real company owner of the property that was burned.

Universal Mills arguments were: 

The name of the two corporations is neither confusing nor deceptive. The reason for the change of name was the expansion of the business to include the manufacture of all kinds of fabrics.

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The word “textile” in Universal Textile Mills is dominant to distinguish both companies.

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That the only supposed confusion arose out of an extraordinary occurrence - a disastrous fire

Commission’s decision: 

Universal Mills is prevented from further using its company name.

Universal Mills filed an appeal in the SC reg arding the decision above. Issue: W/N the Order of t he Commission enjoining petitioner to change its corporate name constitutes, in the light of the circumstances found by the Commission, a grave abuse of discretion? Held: Appealed decision is affirmed. 

No. According to the Commission, both names are so similar that there is no assurance that the word “textile” can exclude all other entities with similar names from the mind of the public

especially that both are engaged in the same business. 

Moreover, Universal Mills signed a written undertaking by its Pr esident Mariano Cokiat on 5 June 1963 promising that it would change its name in the event that there is another person,

firm or entity who has a prior right to the use of such name or similar to it . That promise is still

binding upon the corporation and its officers. 

The corporate names are so similar that under the test of “reasonable care and observation as the public generally are capable of using and may be expected to exercise”, the Court believes

that confusion would still arise especially that the amendment of Universal Mills included as its primary purpose the manufacturing, dyeing, finishing and selling of fabric of all kinds in which Universal Textile has been engaged for more than a decade ahead of the petitioner.