G.R. No. L-14761 - Arce Sons and Co. vs. Selecta Biscuit Company

Case Summary (G.R. No. L-14761)

Background and Facts of the Case

Ramon Arce, the predecessor-in-interest of petitioner, began a milk business in 1933 under the trade name and trademark "SELECTA." His products included milk, ice cream, sandwiches, cakes, and bakery goods, all prominently bearing the "SELECTA" name on packaging and delivery trucks. After World War II, his business resumed operations and expanded, eventually being taken over by his sons’ co-partnership, Arce Sons and Company, which continued to manufacture and sell dairy and bakery products under the same trademark. The respondent, Selecta Biscuit Company, Inc., was incorporated in 1955 and began operating a biscuit factory. It chose the name "SELECTA" purportedly as a translation of a Chinese term meaning "selected." Respondent filed a trademark registration for "SELECTA" with the Philippine Patent Office in 1955.

Proceedings Before the Patent Office and the Lower Courts

The Philippine Patent Office initially recommended denying respondent’s trademark application due to likely confusion with petitioner’s established use of the "SELECTA" mark. However, after publication and opposition, the Director of Patents dismissed petitioner’s opposition and allowed the registration, holding there was no likelihood of confusion because petitioner’s business was localized and restaurant-based, while respondent’s was a nationwide biscuit wholesaler. Conversely, the Court of First Instance of Manila ruled in favor of petitioner, finding that respondent’s use of "SELECTA" constituted unfair competition, enjoining respondent from using the mark, and awarding damages. The Court of Appeals case involved the same parties and issues, which were consolidated by the Supreme Court.

Trademark Use and the Concept of Secondary Meaning

The Supreme Court extensively analyzed the use of "SELECTA" by petitioner and its predecessor. The Court held that "SELECTA," although a common word, had acquired a secondary meaning through long and exclusive use in connection with petitioner’s milk, ice cream, bakery, and related products. By placing "SELECTA" on products, packaging, delivery vehicles, and store signs, petitioner had adopted the mark as a distinctive badge of authenticity that identified its goods and distinguished them from others, thus fulfilling the function of a trademark. The Court rejected the Director of Patents’ finding that petitioner used "SELECTA" solely as a trade name indicating the restaurant’s location, emphasizing that it was used rather as a trademark designating the origin of goods.

Legal Explanation of Trademark and Trade Name

The Court distinguished between a trademark and trade name:

A trademark is a distinctive sign or device affixed to goods to distinguish them from others and to indicate their source.
A trade name generally refers to the name of the business or enterprise itself and does not necessarily have to be affixed to the goods.

Given petitioner’s use of the mark on various products, the Court concluded that "SELECTA" functions as a trademark under Philippine law (Section 38, Republic Act No. 166).

On Good Faith and Motive of the Respondent

Respondent claimed innocent adoption of the mark as a translation from a Chinese term meaning "selected." The Court expressed skepticism regarding this explanation, finding it questionable that respondent chose the Spanish word "SELECTA" instead of the English equivalent "Selected," particularly since respondent’s manager admitted knowledge of petitioner’s extensive use of the mark before registration. This suggested bad faith and an intent to usurp petitioner’s goodwill.

Arguments of Respondent on Differences in Business

Respondent argued:

Its products (biscuits, crackers, cookies) are distinct from petitioner’s (milk, ice cream, cakes).
Respondent operates on a wholesale and nationwide scale, while petitioner’s business is retail-oriented and localized in Manila.
The use of "SELECTA" by each party is accompanied by different business names and signage.
Respondent’s capital and scale of business are significantly larger.
The differences would avoid confusion among consumers.

The Court rejected these arguments as insubstantial, noting the established principle that trademark protection extends against confusingly similar marks in related fields that could cause public confusion or damage to the senior user’s goodwill.

Doctrine of Secondary Meaning and Protection of Property Rights in Trademarks

The Court reaffirmed the doctrine of secondary meaning, whereby a mark that might originally be descriptive or common acquires a proprietary character through long, exclusive use and public association with a particular user. Such marks are entitled to legal protection to prevent others from unfairly appropriating the goodwill represented therein.

Case Syllabus (G.R. No. L-14761)

Case Background and Procedural History

On August 31, 1955, Selecta Biscuit Company, Inc. (hereinafter “respondent”) filed a petition for registration of the word "SELECTA" as a trademark for bakery products with the Philippine Patent Office, claiming actual use for not less than two months prior and exclusivity in the Philippines.
The Patent Office examiner recommended refusal, finding the mark resembled petitioner Arce Sons and Company’s "SELECTA" mark used on milk and ice cream, likely causing confusion among consumers.
Despite the initial recommendation, the Patent Office published the application for opposition purposes.
Petitioner Arce Sons and Company opposed based on continuous prior use from the predecessor-in-interest Ramon Arce covering various products, acquired goodwill, prior warnings to respondent, and an existing unfair competition case in court.
The Court of First Instance (CIF) of Manila ruled in favor of petitioner, enjoining respondent’s use of "SELECTA" and awarding damages and attorney’s fees.
Respondent appealed to the Court of Appeals; issues substantially identical were submitted before the Patent Office, which, on December 7, 1958, dismissed petitioner’s opposition, allowing respondent’s registration.
Petitioner filed a petition for review before the Supreme Court.
The Court consolidated the separate but related proceedings and issued the final decision resolving the conflict.

Facts Established on Petitioner’s Side

Ramon Arce began using the word “SELECTA” in 1933 for his milk business in Novaliches with distinct labeling: "SELECTA FRESH MILK" on bottles and caps.
Business expansion included a store in Manila selling milk, ice cream, sandwiches, and other food products—all bearing the “SELECTA” name visibly.
Use of special containers, exclusive bottles, carton packaging, delivery vehicles prominently displaying “SELECTA,” and signage was established to indicate origin and authenticity.
During the war and thereafter, business resumed and expanded in scale, including bakery products such as bread, cookies, pastries, cakes, and dairy products, all using “SELECTA” as a mark.
In 1950, Ramon Arce transferred rights and use of “SELECTA” to his children forming Arce Sons and Company, which continued the same line of business with new stores, delivery services, and product lines bearing the SAME mark.
Continuous and exclusive use of “SELECTA” created an established goodwill and secondary meaning among the purchasing public linking the word exclusively to petitioner’s products and services.

Facts Established on Respondent’s Side

Selecta Biscuit Company, Inc. organized on March 2, 1955; began operations June 20, 1955, producing biscuits, crackers, and cookies.
The name “Selecta” was allegedly chosen as the English translation of a Chinese term meaning "mapili" or "selected."
Respondent registered its corporate name with Securities and Exchange Commission, Bureau of Commerce, and Bureau of Internal Revenue, and filed its trademark application for "SELECTA" after commencing operations.
Operated a factory prominently displaying "Selecta Biscuit Company, Inc." with signboards and delivery trucks marked accordingly.
Used various trademarks for its products and sold them nationwide through a wholesale network servicing over 600 stores.
Respondent emphasized differences in pr