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

FACTS

Universal Textile Mills, Inc. was registered on January 8, 1954, as a textile manufacturing firm. Universal Mills Corporation was originally registered as Universal Hosiery Mills Corporation on October 27, 1954, with a primary purpose of manufacturing hosiery and wearing apparel. On June 10, 1963, it amended its articles to change its name to Universal Mills Corporation. The immediate catalyst for the complaint was a fire that gutted respondent’s spinning mills. News reports of this fire allegedly created confusion among the petitioner’s bankers, stockholders, and customers, as the similar corporate names led to uncertainty about which company was affected, forcing petitioner to issue clarifying announcements.
The petitioner, Universal Textile Mills, Inc., filed a petition with the Securities and Exchange Commission (SEC) to compel the respondent, Universal Mills Corporation, to change its corporate name on the ground that it was “confusingly and deceptively similar.” The respondent argued the names were distinct, primarily due to the word “Textile” in petitioner’s name, and that any proven confusion arose only from an extraordinary event (the fire), not from the ordinary course of business. The SEC granted the petition and ordered respondent to cease using its name.

ISSUE

Whether the Securities and Exchange Commission committed grave abuse of discretion in ordering Universal Mills Corporation to change its corporate name for being confusingly similar to that of Universal Textile Mills, Inc.

RULING

The Supreme Court ruled that the SEC did not commit grave abuse of discretion. The Court affirmed that the matter fell within the SEC’s administrative jurisdiction over corporate names under Commonwealth Act No. 287 . The legal logic centered on the test of whether the names were so similar that they would likely deceive or confuse the public exercising reasonable care. The Court found the names “Universal Textile Mills, Inc.” and “Universal Mills Corporation” to be indisputably similar, especially considering that by 1964, the respondent had amended its purposes to include the manufacturing and selling of fabrics—the very business the petitioner had been engaged in for over a decade. The SEC’s factual finding of actual confusion from the fire incident was supported by evidence, and the Court held that the duty to prevent public confusion exists “at all times and under all circumstances,” not solely in ordinary business operations. The respondent’s prior written undertaking to change its name if a prior right was established also supported the order. Since the order had a rational basis and was not arbitrary, the Supreme Court affirmed it, reserving other potential remedies for the petitioner.