UNIVERSAL MILLS CORPORATION, PETITIONER, VS. UNIVERSAL TEXTILE MILLS, INC., RESPONDENT.

Appeal from the order of the Securities and Exchange Commission in
S. E. C. Case No. 1079, entitled In the Matter of the Universal Textile mills,
Inc. vs. Universal Mills Corporation, a petition to have appellant change its
corporate name on the ground that such name is “confusingly and deceptively
similar” to that of appellee, which petition the
Commission granted.

According to the appealed order, “the Universal Textile
Mills, Inc. was organized on December
29, 1953, as a textile manufacturing firm for which it was issued a
certificate of registration on January
8, 1954.  The Universal Mills
Corporation, on the other hand, was registered in this Commission on October 27, 1954, under its original
name, Universal Hosiery Mills Corporation, having as its
primary purpose the ‘manufacture and production of hosieries and wearing
apparel of all kinds.’ On May 24, 1963,
it filed an amendment to its articles of incorporation changing its name to
Universal Mills Corporation, its present name, for which this Commission issued
the certificate of approval on June
10, 1963.

“The immediate cause of this present complaint, however, was
the occurrence of a fire which gutted respondent’s spinning mills in Pasig, Rizal.  Petitioner alleged that as a result of this
fire and because of the similarity of respondent’s name to that of herein
complainant, the news items appearing in the various metropolitan newspapers
carrying reports on the fire created uncertainty and confusion among its
bankers, friends, stockholders and customers prompting petitioner to make
announcements, clarifying the real identity of the corporation whose property
was burned.  Petitioner presented
documentary and testimonial evidence in support of this allegation.

“On the other hand, respondent’s position is that the names
of the two corporations are not similar and even if there be some similarity,
it is not confusing or deceptive; that the only reason that respondent changed
its name was because it expanded its business to include the manufacture of
fabrics of all kinds; and that the word ‘textile’ in petitioner’s name is
dominant and prominent enough to distinguish the two.  It further argues that petitioner failed to
present evidence of confusion or deception in the ordinary course of business;
that the only supposed confusion proved by complainant arose out of an extraordinary
occurrence – a disastrous fire.” (pp. 16-17, Record. )

Upon these premises, the Commission held:

“From the facts proved and the jurisprudence on the matter, it
appears necessary under the circumstances to enjoin the respondent Universal Mills Corporation from further using its
present corporate name.  Judging from
what has already happened, confusion is not only
apparent, but possible.  It does not
matter that the instance of confusion between the two corporate names was
occasioned only by a fire or an extraordinary occurrence.  It is precisely the duty of this Commission
to prevent such confusion at all times and under all circumstances not
only for the purpose of protecting the
corporations involved but more so for the protection of the public.

“In today’s modern business life where people go by tradenames and corporate images, the corporate name becomes
the more important.  This Commission
cannot close its eyes to the fact that usually it is the sound of all the other
words composing the names of business corporations that sticks to the mind of
those who deal with them.  The word
‘textile’ in ‘Universal Textile Mills, Inc.’ can not possibly assure the
exclusion of all other entities with similar names from the mind of the public
especially so, if the business they are engaged in are the same, like in the
instant case.

“This Commission further takes cognizance of the fact that
when respondent filed the amendment changing its name to Universal Mills
Corporation, it correspondingly
filed a written undertaking dated June 5, 1963 and signed by its President, Mr.
Mariano Cokiat, promising to change its name in the
event that there is another person, firm or entity who has obtained a prior
right to the use of such name or one similar to it.  That promise is
still binding upon the corporation and its responsible officers.” (pp.
17-18, Record. )

It is obvious that the matter at issue is within the competence
of the Securities and Exchange Commission
to resolve in the first instance in the exercise of the jurisdiction it
used to possess under Commonwealth Act 287 as amended by Republic Act 1055 to
administer the application and enforcement of all laws affecting domestic
corporations and associations, reserving to the courts only conflicts of
judicial nature, and, of course, the Supreme Court’s authority to review the
Commission’s actuations in appropriate instances involving possible denial of
due process and grave abuse of discretion. 
Thus, in the case at bar, there being no claim of denial of any constitutional
right, all that We are called upon to determine is whether or not the order of
the Commission enjoining petitioner to change its corporate name constitutes,
in the light of the circumstances found by the Commission, a grave abuse of
discretion.

We believe it is not. 
Indeed, it cannot be said that the impugned order is arbitrary and
capricious.  Clearly, it has rational
basis.  The corporate names in question
are not identical, but they are indisputably so similar that even under the
test of “reasonable care and observation as the public generally are
capable of using and may be expected to exercise” invoked by appellant, We
are apprehensive confusion will usually arise, considering that under the
second amendment of its articles of incorporation on August 14, 1964, appellant included among its primary purposes the “manufacturing, dyeing, finishing and
selling of fabrics of all kinds” in which respondent had been engaged for
more than a decade ahead of petitioner. 
Factually, the Commission found existence of such confusion, and there
is evidence to support its conclusion. 
Since respondent is not claiming damages in this proceeding, it
is, of course, immaterial whether or not appellant has acted in good faith, but
We cannot perceive why of all names, it had to choose a name already being used
by another firm engaged in practically the same business for more than a decade
enjoying well earned patronage and goodwill, when there are so many other appropriate
names it could possibly adopt without arousing any suspicion as to its motive
and, more importantly, any degree of confusion in the mind of the public which
could mislead even its own customers, existing or prospective.  Premises considered,
there is no warrant for our interference.

As this is purely a case of injunction, and considering the time
that has elapsed since the acts complained of took place, this decision should
not be deemed as foreclosing any further remedy which appellee
may have for the protection of its interests.

WHEREFORE, with the reservation already mentioned, the
appealed decision is affirmed.  Costs against petitioners.

Fernando, (Chairman), Antonio, Aquino,
Concepcion, Jr., and
Santos, JJ.,
concur.