Facts:

In 1933, Ramon Arce, the predecessor-in-interest of Arce Sons and Company (petitioner),
began a milk business in Novaliches, Rizal, using the name "SELECTA" as both a trade-name
and a trade-mark. He expanded his business to include ice cream, sandwiches, and other food
products, establishing a store in Manila with a signboard prominently displaying the name
"SELECTA." The business flourished, with special containers, delivery trucks, and packaging
bearing the "SELECTA" name. After World War II, the business expanded further, adding bakery
products.

In 1950, Ramon Arce transferred his rights and interests in the business to Arce Sons &
Company, a partnership formed by his children. The partnership continued the business,
including the manufacture and sale of various products under the "SELECTA" name, expanding
with additional stores and delivery trucks.

Meanwhile, Selecta Biscuit Company, Inc. (respondent) was organized in 1955 and began
operations as a biscuit factory using the name "SELECTA." Respondent claimed that the name
was chosen as a translation of a Chinese word meaning "selected." However, the proximity of
respondent's factory to Arce Sons & Company's operations raised questions about the intention
behind the selection of the name.

Petitioner opposed respondent's application to register the "SELECTA" trademark, arguing that
it had prior and continuous use of the mark in connection with its products. Petitioner contended
that allowing respondent to use the mark would lead to confusion and infringe on its property
rights.

Issues:

Whether petitioner has established prior and continuous use of the "SELECTA" mark in
connection with its products.
Whether respondent's adoption of the "SELECTA" mark constitutes unfair competition.
Whether the registration of the "SELECTA" mark in favor of respondent would cause damage to
petitioner.

At the outset one cannot but note that in the two cases appealed before us which involve
the same parties and the same issues of fact and law, the Court a quo and the Director of
Patents have rendered contradictory decisions. While the former is of the opinion that
the word 'SELECTA' has been used by the petitioner, or its predecessor-in-interest, as a
trade-mark in the sale and distribution of its dairy and bakery products as early as 1933
to the extent that it has acquired a proprietary connotation so that to allow respondent to
use it now as a trade-mark in its business would be an usurpation of petitioner's goodwill
and an infringement of its property right, the Director of Patents entertained a contrary
opinion. He believes that the word as used by the petitioner functions only to point to the
place of business or location of its restaurant while the same word as used by
respondent points to the origin of the products its manufactures and sells and he
predicates this distinction upon the fact that while the goods of petitioner are only served
within its restaurant or sold only on special orders in the City of Manila, respondent's
goods are ready-made and are for sale throughout the length and breadth of the country.
He is of the opinion that the use of said trade-mark by respondent has not resulted in
confusion in trade contrary to the finding of the court a quo. Which of this opinions is
correct is the issue now for determination.

Rulings and Justifications:

The court found that petitioner had indeed used the "SELECTA" mark extensively in connection
with its business operations since 1933, establishing a proprietary association with the mark.
The court held that respondent's adoption of the mark, particularly in close proximity to
petitioner's operations, was likely to cause confusion and damage to petitioner's business.

The court rejected respondent's claim that it had chosen the name innocently, finding the
circumstances surrounding the selection of the name to be suspicious. Additionally, the court
found respondent's arguments regarding the differences in its products and business operations
insufficient to justify the use of the "SELECTA" mark.

Ultimately, the court ruled in favor of petitioner, affirming the decision of the lower court and
reversing the decision of the Director of Patents to dismiss petitioner's opposition to
respondent's trademark registration.

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Rulings and Justifications:

Establishment of Prior and Continuous Use:

The court carefully examined the evidence presented by the petitioner regarding the extensive
and continuous use of the "SELECTA" mark since 1933. The evidence included documentation
of the use of the mark on various products, such as milk, ice cream, sandwiches, and bakery
items, as well as the establishment of stores and delivery services under the "SELECTA" name.
Additionally, the court noted the significant investment made by the petitioner in branding efforts,
including special containers, delivery trucks, and packaging prominently displaying the
"SELECTA" mark. Based on this evidence, the court concluded that petitioner had indeed
established prior and continuous use of the "SELECTA" mark in connection with its business
operations.

Likelihood of Confusion and Unfair Competition:

The court examined the proximity of respondent's operations to those of the petitioner and the
similarity in the use of the "SELECTA" mark. Despite respondent's claim that the name was
chosen innocently and translated from a Chinese word meaning "selected," the court found the
circumstances surrounding the selection of the name to be suspicious, especially considering its
proximity to petitioner's established business. The court concluded that respondent's adoption of
the "SELECTA" mark was likely to cause confusion among consumers and constituted unfair
competition, as it could potentially mislead consumers into believing a connection between the
two entities where none existed.

Potential Damage to Petitioner:

In assessing the potential damage to the petitioner's business, the court considered the
reputation and goodwill associated with the "SELECTA" mark, which had been built over several
decades of continuous use. Allowing respondent to register the mark could dilute the
distinctiveness of the mark and undermine the reputation and goodwill that petitioner had
painstakingly built. Additionally, the court considered the possibility of market confusion and the
likelihood of consumers mistakenly patronizing respondent's products under the mistaken belief
that they were affiliated with or endorsed by petitioner. Based on these considerations, the court
determined that the registration of the "SELECTA" mark in favor of respondent would cause
significant damage to petitioner's business interests.

In summary, the court ruled in favor of the petitioner, affirming the decision of the lower court
and reversing the decision of the Director of Patents to dismiss petitioner's opposition to
respondent's trademark registration. The ruling was based on the established prior and
continuous use of the mark by petitioner, the likelihood of confusion and unfair competition
arising from respondent's adoption of the mark, and the potential damage to petitioner's
business interests if the mark were to be registered in favor of respondent.

Trade-mark' or trade-name', distinction being highly technical, is sign, device, or mark by

which articles produced are dealt in by particular person or organization are
distinguished or distinguishable from those produced or dealt in by other." (Church of
God v. Tomlinson Church of God, 247 SW 2d, 63,64)"

A 'trade-mark' is a distinctive mark of authenticity through which the merchandise of a

particular producer or manufacturer may be distinguished from that of others, and its
sole function is to designate distinctively the origin of the products to which it is
attached." (Reynolds & Reynolds Co. v. Nordic, et. al., 114F 2d, 278) "

The term 'trade-mark' includes any word, name, symbol, emblem, sign or device or any
combination thereof adopted and used by a manufacturer or merchant to identify his
goods and distinguish them from those manufactured, sold or dealt in by others."
(Section 38, Republic Act No. 166).

The function of a trade-mark is to point distinctively, either by its own meaning or by

association, to the origin or ownership of the wares to which it is applied. 'Ang Tibay' as
used by the respondent to designate his wares, had exactly performed that function for
twenty-two years before the petitioner adopted it as a trade-mark in her own business.
'Ang Tibay' shoes and slippers are, by association, known throughout the Philippines as
products of the 'Ang Tibay" factory owned and operated by the respondent. Even if
'AngTibay', therefore, were not capable of exclusive appropriation as a trade-mark, the
application of the doctrine of secondary meaning could nevertheless be fully sustained
because, in any event, by respondent's long and exclusive appropriation with reference
to an article on the market, because geographically or otherwise descriptive, might
nevertheless have been used so long and exclusively by one producer with reference to
his article that, in that trade and to that branch of the purchasing public, the word or
phrase has come to mean that article was his product." (Ang v. Teodoro, supra.).

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Eventually, like the plaintiff, one is tempted to ask as to why with the richness in words of
the English language and with the affluence of the Spanish vocabulary or, for that matter,
of our own dialects, should the defendant choose the controverted word "Selecta", which
has already acquired a secondary meaning by virtue of plaintiff's prior and continued use
of the same as a trade-mark or trade-name of its products? The explanation given by Sy
Hap, manager of the defendant, that the word 'Selecta' was chosen for its bakery
products by the organizers of said company from the Chinese word 'Ching Suan'
meaning 'mapili', which in English translation , is to say the least, very weak and
untenable. Sy Hap himself admitted that he had known Eulalio Arce, the person
managing plaintiff's business, since 1954; that since he began to reside at 10th Avenue,
Grace Park, he had known the Selecta Restaurant on Azcarraga Street and Dewey Blvd.
and that he even had occasion to eat in one of the restaurants of the plaintiff. All of these
circumstances tend to conspire in inducing one to doubt defendant's motive for using
the same word "Selecta" for its bakery products. To allow the defendant here to use the
word "Selecta" in spite of the fact that this word has already been adopted and exploited
by Ramon Arce and by his family thru the organization of Arce Sons and Company, for
the maintenance of its goodwill, for which said plaintiff and its predecessor have spent
time, effort and fortune, is to permit business pirates and buccaneers to appropriate for
themselves and to their profit and advantage the trade names and trade marks of well
established merchants with all their attendant good will and commercial benefit.
Certainly, this cannot be allowed, and it becomes the duty of the court to protect the
legitimate owners of said trade-names and trade-marks, for under the law, the same
constitute one kind of property right entitled to the necessary legal protection.