Universal Mills Corporation vs Universal Textile Mills, Inc.

written by Howard

G.R. No. L-28351 – 168 Phil. 223 – 78 SCRA 62 – Mercantile Law – Corporation Law – Tradenames

78 SCRA 62 – Mercantile Law – Intellectual Property Law – Trademarks – Use of Tradenames – When is there confusion

In 1953, Universal Textile Mills, Inc. (UTMI) was organized. In 1954, Universal Hosiery Mills Corporation (UHMC) was also organized. Both are actually distinct corporations but they engage in the same business (fabrics). In 1963, UHMC petitioned to change its name to Universal Mills Corporation (UMC). The Securities and Exchange Commission (SEC) granted the petition.

Subsequently, a warehouse owned by UMC was gutted by fire. News about the fire spread and investors of UTMI thought that it was UTMI’s warehouse that was destroyed. UTMI had to make clarifications that it was UMC’s warehouse that got burned. Eventually, UTMI petitioned that UMC should be enjoined from using its name because of the confusion it brought. The SEC granted UTMI’s petition. UMC however assailed the order of the SEC as it averred that their tradename is not deceptive; that UTMI’s tradename is qualified by the word “Textile”, hence, there can be no confusion.

ISSUE: Whether or not the decision of the SEC is correct.

HELD: Yes. There is definitely confusion as it was evident from the facts where the investors of UTMI mistakenly believed that it was UTMI’s warehouse that was destroyed. Although the corporate names are not really identical, they are indisputably so similar that it can cause, as it already did, confusion. The SEC did not act in abuse of its discretion when it order UMC to drop its name because there was a factual evidence presented as to the confusion. Further, when UMC filed its petition for change of corporate name, it made an undertaking that it shall 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.

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