Title
Arce Sons and Co. vs. Selecta Biscuit Company
Case
G.R. No. L-14761
Decision Date
Jan 28, 1961
Arce Sons, using "SELECTA" since 1933, claimed unfair competition against Selecta Biscuit for using the same mark. Supreme Court ruled in favor of Arce Sons, citing secondary meaning, likelihood of confusion, and trademark protection.
unfair competition
registration
secondary meaning

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

Factual Background

Petitioner’s predecessor, Ramon Arce, commenced a milk business in 1933 using the name SELECTA as both trade-name and trade-mark. He sold milk in bottles with caps inscribed “SELECTA FRESH MILK”, employed special containers and bottles embossed or printed with the word SELECTA, placed a prominent signboard over his Lepanto Street store, wrapped sandwiches and bakery products in cartons bearing SELECTA, and used delivery vehicles painted with the word. After World War II, the business expanded to include ice cream, cakes, bread, cookies, pastries and other bakery products distributed from several locations and delivered to customers in Manila, suburbs and provinces. In 1950 Ramon Arce transferred and leased his business to his sons who organized Arce Sons and Company, continuing the same trade and use of the name SELECTA on products, boxes, and delivery trucks.

Respondent’s Business and Adoption of the Mark

Selecta Biscuit Company, Inc. organized in 1955 began operation as a biscuit factory on June 20, 1955. The incorporators testified that they selected the name SELECTA as a translation of a Chinese word meaning “selected.” The corporation registered its articles with the SEC and the business name with the Bureau of Commerce and the Bureau of Internal Revenue, displayed the name on its factory wall and on signboards, employed delivery trucks and national advertising, sold biscuits, cookies and crackers in cellophane pouches inside tin cans, and distributed through agents to more than 600 retail stores nationwide.

Procedural History — Civil Unfair Competition Action

Petitioner filed an action for unfair competition in the Court of First Instance of Manila alleging prior continuous use of SELECTA, acquisition of goodwill, warnings given to respondent, and confusion caused by respondent’s use. On September 28, 1958, the court rendered judgment permanently enjoining respondent from using the name SELECTA as a trade-mark on goods manufactured or sold by it, ordering respondent to account for profits realized by the use of the name and to pay P15,000.00 as attorney’s fees and costs. Respondent appealed to the Court of Appeals, docketed as CA-G.R. No. 24017-R.

Proceedings Before the Patent Office

Respondent’s petition to register SELECTA as a trade-mark was submitted to the Philippine Patent Office. The examiner initially recommended refusal on the ground of resemblance to petitioner’s mark. The application was nevertheless published for opposition. Petitioner opposed on grounds including prior use, acquired identification and goodwill, warnings to respondent, unfair competition, likelihood of public confusion, and the pendency of the civil complaint. The parties agreed to submit the evidence from the trial court to the Patent Office. On December 7, 1958, the Director of Patents dismissed petitioner’s opposition, concluding that registration of SELECTA in favor of respondent would not cause confusion, and holding that petitioner used the word merely as a trade-name pointing to place of business while respondent used it as a trade-mark pointing to origin of goods.

Issues Presented

The consolidated controversy required determination of whether petitioner had established prior use of SELECTA as a trade-mark entitled to protection; whether the word had acquired a proprietary or secondary meaning associating it with petitioner’s products; whether respondent’s adoption and registration of SELECTA would cause confusion or constitute unfair competition; and whether the Director of Patents erred in dismissing petitioner’s opposition.

Parties’ Contentions

Petitioner asserted long and continuous use of SELECTA, beginning in 1933 by Ramon Arce and continued by Arce Sons and Company, in connection with milk, ice cream, bakery products and catering; that the mark had thereby acquired proprietary connotation and goodwill; that respondent’s use of the same word constituted unfair competition and caused confusion; and that petitioner had warned respondent to desist. Respondent maintained it adopted the name in good faith as a translation of a Chinese word, that its products (biscuits, crackers, cookies) differed in nature and durability from petitioner’s perishable dairy and bakery items, that it operated on a wholesale and nationwide basis distinct from petitioner’s localized retail service, and that differences in corporate names, packaging, labels, and channels of trade precluded confusion. Respondent further relied on registrations with governmental agencies and the Patent Office inquiry it had made prior to filing its trade-mark application.

Trial Court and Patent Office Findings Compared

The Court of First Instance found that petitioner’s predecessor and petitioner had used SELECTA as a trade-mark to indicate origin and authenticity of their products since 1933 and that respondent’s adoption amounted to usurpation of goodwill and unfair competition. By contrast, the Director of Patents concluded petitioner used SELECTA only as a trade-name indicating place of business while respondent’s use identified origin of ready-made goods sold nationwide; the Director found registration in respondent’s favor would not cause confusion. The Supreme Court observed this direct conflict and consolidated the cases for joint decision.

Supreme Court’s Legal Analysis

The Court examined statutory and doctrinal definitions of trade-mark and trade-name and the role of a mark as a distinctive emblem that points to the origin of goods. It held that petitioner’s use of SELECTA throughout its product line and on containers, bottles, cartons, and delivery trucks demonstrated that the word functioned as a trade-mark and not merely as a trade-name. The Court applied the doctrine of secondary meaning, stating that even an ordinarily common or descriptive word may, by long and exclusive use, acquire a proprietary connotation associating it with a particular producer’s goods. The Court cited Sections 2-A and 23 of Republic Act No. 166, recognizing ownership of a trade-mark as a property right entitled to legal protection and to recovery of damages from infringers. The Court analogized petitioner’s claim to the facts in Ang vs . Teodono, where a descriptive phrase acquired exclusive association with a manufacturer’s products through long use. The Court rejected respondent’s contention of good faith and independent origin, remarking that respondent’s choice of the Spanish word SELECTA rather than the English “Selected” or other alternatives, toget

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