G.R. No. L-28351 - Universal Mills Corp. vs. Universal Textile Mills, Inc.

Organized on December 29, 1953, as a textile manufacturing firm.
Issued a certificate of registration by the Securities and Exchange Commission (SEC) on January 8, 1954.

Originally registered as Universal Hosiery Mills Corporation on October 27, 1954, with its primary purpose being the manufacture and production of hosieries and wearing apparel.
Filed an amendment on May 24, 1963, changing its name to Universal Mills Corporation, with the SEC approving the change on June 10, 1963.

A fire gutted the spinning mills of Universal Textile Mills, Inc. in Pasig, Rizal, prompting significant media attention.
Petitioner (Universal Textile Mills, Inc.) alleged that the similarity in corporate names caused confusion among its bankers, friends, stockholders, and customers.

The confusion was evidenced by news items and public announcements clarifying the identity of the corporation affected by the fire.
Documentary and testimonial evidence were presented by the petitioner to support this claim.

Universal Mills Corporation contended that its corporate name was not confusingly similar to that of Universal Textile Mills, Inc.
Arguments raised by the respondent included:

The change to a new name was driven by an expansion of its business to include the manufacture of fabrics, not solely for avoiding confusion.
The dominant presence of the word “textile” in the petitioner’s name was argued to be sufficient to distinguish the two.
The alleged confusion was limited to the extraordinary circumstance of a disastrous fire and did not occur in the ordinary course of business.

The SEC, under its jurisdiction stipulated by Commonwealth Act 287 (as amended by Republic Act 1055), evaluated the matter based on its mandate to regulate and enforce laws affecting domestic corporations.
The Commission found that:

Despite the names not being identical, they were indisputably very similar in sound and presentation.
The possibility of confusion was real and persistent, not merely a consequence of an isolated incident.
The written undertaking filed by respondent’s President on June 5, 1963, promising to change the name in case of any conflict, remained binding.

Based on the evidence presented and its findings of potential public confusion, the SEC ordered Universal Mills Corporation to change its corporate name.
The order was premised on the duty of the Commission to protect not only the corporations involved but also the public, especially in a commercial environment where corporate images and name recognition are critical.

Whether the similarity between the corporate names of Universal Textile Mills, Inc. and Universal Mills Corporation was sufficient to create confusion among the public.
Whether the evidence of confusion—though highlighted by an extraordinary event (the fire)—was adequate to justify the SEC’s order for a name change.
Whether the SEC’s intervention in ordering the respondent to change its corporate name constituted an abuse of discretion or was a rational administrative decision.
Whether the binding undertaking filed by Universal Mills Corporation’s President to change its name in case of conflict reinforced the need for the corporate name change.