Case Summary (G.R. No. 154342)
Petitioners
– Mighty Corporation: current manufacturer and distributor of GALLO cigarettes under license from La Campana.
– La Campana Fabrica de Tabaco, Inc.: assignee of the GALLO cigarette trademark.
Respondents
– E. & J. Gallo Winery: foreign registrant of the GALLO wine trademark.
– The Andresons Group, Inc.: exclusive Philippine importer and distributor of Gallo wines since 1991.
Key Dates
– 1971: GALLO wine trademark registered in the Philippine Patent Office.
– 1973–1989: BIR authorizations and marketing of GALLO cigarettes by Tobacco Industries, then La Campana, then Mighty.
– 1985: La Campana files for GALLO cigarette trademark registration.
– March 12, 1993: Respondents file suit for trademark infringement and unfair competition.
– November 26, 1998: Makati RTC rules in favor of respondents.
– November 15, 2001: Court of Appeals (CA) affirms.
– July 14, 2004: Supreme Court issues final decision.
Applicable Law
– 1987 Philippine Constitution (Article XII, Section 12): State policy on intellectual property and industrial priorities.
– Republic Act No. 166 (1958) – Trademark Law, in force at filing.
– Paris Convention (Article 6 bis) – protection of well-known marks.
– Intellectual Property Code (RA 8293, effective January 1, 1998) – held inapplicable retroactively.
Factual Background
Respondents’ GALLO wine mark was registered in 1971, but the first documented sales in the Philippines date to 1981. Petitioners’ predecessor used GALLO cigarettes domestically since 1973, with continuous BIR authorizations and sales invoices. Petitioners adopted GALLO—Spanish for “rooster”—as a fanciful, arbitrary mark accompanied by a prominent rooster device and “MADE BY MIGHTY CORPORATION” legend. Respondents discovered GALLO cigarettes alongside their wines only in late 1992 and demanded cessation of the mark’s use.
Procedural History
The Makati RTC denied respondents’ motion for preliminary injunction in 1993, finding no proof of irreparable damage or similarity of goods. After trial on merits, the RTC in 1998 permanently enjoined petitioners and awarded damages. The CA affirmed in 2001 and denied reconsideration. Petitioners filed a Rule 45 petition before the Supreme Court.
Issues
- Whether the CA and RTC erred by applying the IP Code retroactively.
- Whether GALLO cigarettes and GALLO wines constitute identical, similar or related goods.
- Whether use of GALLO on cigarettes infringed respondents’ trademark or amounted to unfair competition.
Discussion
Retroactive Application of the IP Code
The Supreme Court held that petition was filed in 1993, when RA 166 and the Paris Convention governed. The IP Code became effective January 1, 1998, with no retroactivity clause. Applying it to pre-1998 acts violated the principle against retroactivity of substantive laws.
Trademark Infringement vs. Unfair Competition
– Infringement under Article 6 bis (Paris Convention) and Section 22 (RA 166) requires unauthorized use of a confusingly similar mark on identical or similar goods.
– Unfair competition under Sections 29–30 (RA 166) requires bad-faith passing-off or deception, regardless of registration.
Priority of Use and Actual Commercial Use
Under Sections 2 & 2-A (RA 166), actual use in Philippine commerce prior to registration is essential. Petitioners and their predecessor used GALLO cigarettes in 1973, long before respondents’ documented Philippine sales of GALLO wines in 1981. Respondents thus lacked exclusive rights to prevent petitioners’ senior local use.
Scope of Trademark Registration
Respondents’ GALLO registration certificates explicitly cover wines only. Section 20 (RA 166) limits exclusive rights to the goods specified. A registrant cannot bar use of the same mark on dissimilar goods not listed in its certificate.
Likelihood of Confusion and Related Goods
– Dominancy and Holistic Tests: The dominant feature of petitioners’ pack is a large rooster device and a uniform bold “GALLO,” with manufa
Case Syllabus (G.R. No. 154342)
Factual Background
- Gallo Winery (California corporation) produces wines and brandies under the GALLO and ERNEST & JULIO GALLO trademarks.
- Andresons (Philippine corporation) has been Gallo Winery’s exclusive importer/distributor in the Philippines since 1991.
- Gallo’s GALLO trademark registered in the Philippine Patent Office on November 16, 1971 (Cert. No. 17021), renewed November 16, 1991; ERNEST & JULIO GALLO applied October 11, 1990.
- Tobacco Industries began using GALLO for cigarettes in 1973; obtained BIR approvals for GALLO 100 (1973) and GALLO filter (1976).
- Trademark rights assigned to La Campana in May 1984; La Campana applied for registration July 16, 1985 and secured copyright on cigarette labels July 17, 1985.
- La Campana licensed Mighty Corporation to manufacture and sell GALLO cigarettes; BIR approved Mighty’s GALLO brands in 1988 and 1989.
- GALLO cigarettes have been sold since 1973 by Tobacco Industries, La Campana, then Mighty.
- Gallo wines first sold within U.S. military facilities circa 1974; expanded to civilian outlets by 1979.
- Respondents discovered GALLO cigarettes in late 1992 at a Davao supermarket and sent a cease‐and‐desist demand.
Procedural History
- March 12, 1993: respondents sued in Makati RTC (Civil Case No. 93-850) for trademark infringement and unfair competition under Article 6bis (Paris Convention) and RA 166 (Sections 22, 23, 29, 30, 37), seeking injunction and damages (actual ₱2 M; exemplary ₱500,000; attorneys’ fees ₱500,000).
- Petitioners’ defenses: unrelated goods; trademark registration limited to wines; different trade channels; price/market segmentation; no irreparable injury; laches and estoppel; honest exercise of rights.
- April 21, 1993: RTC denied preliminary injunction (Section 5, Rule 58, Rules of Court).
- August 19, 1993: RTC denied reconsideration of injunction denial.
- February 20, 1995: CA dismissed respondents’ petition for certiorari (CA-G.R. No. 32626), affirming injunction denial.
- November 26, 1998: RTC held petitioners liable for trademark infringement and unfair competition; issued permanent injunction; awarded actual damages (10% of ₱14,235,000), exemplary damages (₱100,000), attorneys’ fees (₱1,130,068.91), costs.
- June 24, 1999: RTC granted partial reconsideration, increasing actual damages to 10% of ₱199,290,000 (₱19,929,000).
- Novemb