Mighty Corporation Vs Ej Gallo

VOL.
434, JULY 14, 2004 473

Mighty Corporation vs. E. & J. Gallo Winery
*
G.R. No. 154342. July 14, 2004.
MIGHTY CORPORATION and LA CAMPANA FABRICA

DE TABACO, INC., petitioners, vs. E. & J. GALLO
WINERY and THE ANDRESONS GROUP, INC.,
respondents.
Remedial Law; Appeals; As a general rule, a petition for

review on certiorari under Rule 45 must raise only “questions of
law.”—As a general rule, a petition for review on certiorari under
Rule 45 must raise only “questions of law” that is, the doubt
pertains to the application and interpretation of law to a certain
set of facts) and not “questions of fact” (where the doubt concerns
the truth or falsehood of alleged facts), otherwise, the petition will
be denied. We are not a trier of facts and the Court of Appeals’
factual findings are generally conclusive upon us.
Intellectual Property; Trademarks; Unfair Competition; The
law on unfair competition is broader and more inclusive than the
law on trademark infringement; Conduct constitutes unfair
competition if the effect is to pass off on the public the goods of one
man as the goods of another.—
_______________
* THIRD DIVISION.
474
474 SUPREME COURT REPORTS ANNOTATED
Although the laws on trademark infringement and unfair

competition have a common conception at their root, that is, a
person shall not be permitted to misrepresent his goods or his
business as the goods or business of another, the law on unfair
competition is broader and more inclusive than the law on
trademark infringement. The latter is more limited but it
recognizes a more exclusive right derived from the trademark
adoption and registration by the person whose goods or business
is first associated with it. The law on trademarks is thus a
specialized subject distinct from the law on unfair competition,
although the two subjects are entwined with each other and are
dealt with together in the Trademark Law (now, both are covered
by the IP Code). Hence, even if one fails to establish his exclusive
property right to a trademark, he may still obtain relief on the
ground of his competitor’s unfairness or fraud. Conduct
constitutes unfair competition if the effect is to pass off on the
public the goods of one man as the goods of another. It is not
necessary that any particular means should be used to this end.
Same; Same; Same; Distinction Between Trademark
Infringement and Unfair Competition.—In Del Monte Corporation
vs. Court of Appeals, we distinguished trademark infringement
from unfair competition: (1) Infringement of trademark is the
unauthorized use of a trademark, whereas unfair competition is
the passing off of one’s goods as those of another. (2) In
infringement of trademark fraudulent intent is unnecessary,
whereas in unfair competition fraudulent intent is essential. (3)
In infringement of trademark the prior registration of the
trademark is a prerequisite to the action, whereas in unfair
competition registration is not necessary.
Same; Same; Same; Elements of Trademark Infringement
under Article 6 of the Paris Convention.—Under Article 6 of the
Paris Convention, the following are the elements of trademark
infringement: (a) registration or use by another person of a
trademark which is a reproduction, imitation or translation liable
to create confusion, (b) of a mark considered by the competent
authority of the country of registration or use to be well-known in
that country and is already the mark of a person entitled to the
benefits of the Paris Convention, and (c) such trademark is used
for identical or similar goods.
Same; Same; Same; Section 20 of the Trademark Law
considers the trademark registration certificate as prima facie
evidence of the validity of the registration, the registrant’s
ownership and exclusive right to use the trademark in connection
with the goods, business or services as classified by the Director of
Patents and as specified in the certificate; In the adjudication of
trademark rights between contending parties, equitable principles
of laches, estoppel, and acquiescence may be considered and
applied.— Section 20 of the Trademark Law considers the
trademark registration
475
VOL. 434, JULY 14, 2004 475
certificate as prima facie evidence of the validity of the

registration, the registrant’s ownership and exclusive right to use
the trademark in connection with the goods, business or services
as classified by the Director of Patents and as specified in the
certificate, subject to the conditions and limitations stated
therein. Sections 2 and 2-A of the Trademark Law emphasize the
importance of the trademark’s actual use in commerce in the
Philippines prior to its registration. In the adjudication of
trademark rights between contending parties, equitable principles
of laches, estoppel, and acquiescence may be considered and
applied.
Same; Same; Same; Elements of Trademark Infringement
Under the Trademark Law.—Under Sections 2, 2-A, 9-A, 20 and
22 of the Trademark Law therefore, the following constitute the
elements of trademark infringement: (a) a trademark actually
used in commerce in the Philippines and registered in the
principal register of the Philippine Patent Office; (b) is used by
another person in connection with the sale, offering for sale, or
advertising of any goods, business or services or in connection
with which such use is likely to cause confusion or mistake or to
deceive purchasers or others as to the source or origin of such
goods or services, or identity of such business; or such trademark
is reproduced, counterfeited, copied or colorably imitated by
another person and such reproduction, counterfeit, copy or
colorable imitation is applied to labels, signs, prints, packages,
wrappers, receptacles or advertisements intended to be used upon
or in connection with such goods, business or services as to likely
cause confusion or mistake or to deceive purchasers; (c) the
trademark is used for identical or similar goods, and (d) such act
is done without the consent of the trademark registrant or
assignee.
Same; Same; Same; In case of domestic legal disputes on any
conflicting provisions between the Paris Convention and the
Trademark Law the latter will prevail.—In summary, the Paris
Convention protects wellknown trademarks only (to be
determined by domestic authorities), while the Trademark Law
protects all trademarks, whether well-known or not, provided that
they have been registered and are in actual commercial use in the
Philippines. Following universal acquiescence and comity, in case
of domestic legal disputes on any conflicting provisions between
the Paris Convention (which is an international agreement) and
the Trademark law (which is a municipal law) the latter will
prevail.
Same; Same; Same; Under both the Paris Convention and the
Trademark Law, the protection of a registered trademark is
limited only to goods identical or similar to those in respect of
which such trademark is registered and only when there is
likelihood of confusion; Proof of all the elements of trademark
infringement is a condition precedent to any finding of liability.—
Under both the Paris Convention and the Trademark Law, the
protection of a registered trademark is limited only to goods
identical
476
or similar to those in respect of which such trademark is

registered and only when there is likelihood of confusion. Under
both laws, the time element in commencing infringement cases is
material in ascertaining the registrant’s express or implied
consent to another’s use of its trademark or a colorable imitation
thereof. This is why acquiescence, estoppel or laches may defeat
the registrant’s otherwise valid cause of action. Hence, proof of all
the elements of trademark infringement is a condition precedent
to any finding of liability.
Same; Same; Same; Actual use in commerce in the Philippines
is an essential prerequisite for the acquisition of ownership over a
trademark.— In Emerald Garment Manufacturing Corporation
vs. Court of Appeals, we reiterated our rulings in Pagasa
Industrial Corporation vs. Court of Appeals, Converse Rubber
Corporation vs. Universal Rubber Products, Inc., Sterling
Products International, Inc. vs. Farbenfabriken Bayer
Aktiengesellschaft, Kabushi Kaisha Isetan vs. Intermediate
Appellate Court, and Philip Morris vs. Court of Appeals, giving
utmost importance to the actual commercial use of a trademark in
the Philippines prior to its registration, notwithstanding the
provisions of the Paris Convention: x x x x x x x x x In addition to
the foregoing, we are constrained to agree with petitioner’s
contention that private respondent failed to prove prior actual
commercial use of its “LEE” trademark in the Philippines before
filing its application for registration with the BPTTT and hence,
has not acquired ownership over said mark. Actual use in
commerce in the Philippines is an essential prerequisite for the
acquisition of ownership over a trademark pursuant to Sec. 2 and
2-A of the Philippine Trademark Law (R.A. No. 166) x x x
Same; Same; Same; By strict application of Section 20 of the
Trademark Law, Gallo Winery’s exclusive right to use the GALLO
trademark should be limited to wines, the only product indicated
in its registration certificates.—We also note that the GALLO
trademark registration certificates in the Philippines and in other
countries expressly state that they cover wines only, without any
evidence or indication that registrant Gallo Winery expanded or
intended to expand its business to cigarettes. Thus, by strict
application of Section 20 of the Trademark Law, Gallo Winery’s
exclusive right to use the GALLO trademark should be limited to
wines, the only product indicated in its registration certificates.
This strict statutory limitation on the exclusive right to use
trademarks was amply clarified in our ruling in Faberge, Inc. vs.
Intermediate Appellate Court.
Same; Same; Same; There are two types of confusion in
trademark infringement, confusion of goods and confusion of
business; Circumstances to Determine the Likelihood of Confusion.
—There are two types of confusion in trademark infringement.
The first is “confusion of goods” when an otherwise prudent
purchaser is induced to purchase one product in the
477
VOL. 434, JULY 14, 2004 477
belief that he is purchasing another, in which case defendant’s

goods are then bought as the plaintiff’s and its poor quality
reflects badly on the plaintiff’s reputation. The other is “confusion
of business” wherein the goods of the parties are different but the
defendant’s product can reasonably (though mistakenly) be
assumed to originate from the plaintiff, thus deceiving the public
into believing that there is some connection between the plaintiff
and defendant which, in fact, does not exist. In determining the
likelihood of confusion, the Court must consider: [a] the
resemblance between the trademarks; [b] the similarity of the
goods to which the trademarks are attached; [c] the likely effect
on the purchaser and [d] the registrant’s express or implied
consent and other fair and equitable considerations.
Same; Same; Same; Two Tests in Determining Similarity and
Likelihood of Confusion in Trademark Resemblance.—
Jurisprudence has developed two tests in determining similarity
and likelihood of confusion in trademark resemblance: (a) the
Dominancy Test applied in Asia Brewery, Inc. vs. Court of Appeals
and other cases, and (b) the Holistic or Totality Test used in Del
Monte Corporation vs. Court of Appeals and its preceding cases.
Same; Same; Same; Same; Concept of “Related Goods.”—
Thus, apart from the strict application of Section 20 of the
Trademark Law and Article 6 of the Paris Convention which
proscribe trademark infringement not only of goods specified in
the certificate of registration but also of identical or similar goods,
we have also uniformly recognized and applied the modern
concept of “related goods.” Simply stated, when goods are so
related that the public may be, or is actually, deceived and misled
that they come from the same maker or manufacturer, trademark
infringement occurs.
Same; Same; Same; Same; Factors to be Considered in
Resolving Whether Goods are Related.—In resolving whether
goods are related, several factors come into play: (a) the business
(and its location) to which the goods belong, (b) the class of
product to which the goods belong, (c) the product’s quality,
quantity, or size, including the nature of the package, wrapper or
container, (d) the nature and cost of the articles, (e) the
descriptive properties, physical attributes or essential
characteristics with reference to their form, composition, texture
or quality, (f) the purpose of the goods, (g) whether the article is
bought for immediate consumption, that is, day-to-day household
items, (h) the fields of manufacture, (i) the conditions under which
the article is usually purchased and (j) the channels of trade
through which the goods flow, how they are distributed,
marketed, displayed and sold.
Same; Same; Same; Same; The mere fact that one person has
adopted and used a particular trademark for his goods does not
prevent the adop-
478
tion and use of the same trademark by others on articles of a

different description.—We are mindful that product classification
alone cannot serve as the decisive factor in the resolution of
whether or not wines and cigarettes are related goods. Emphasis
should be on the similarity of the products involved and not on the
arbitrary classification or general description of their properties
or characteristics. But the mere fact that one person has adopted
and used a particular trademark for his goods does not prevent
the adoption and use of the same trademark by others on articles
of a different description.
PETITION for review on certiorari of the decision and

resolution of the Court of Appeals and decision of the trial
court.
The facts are stated in the opinion of the Court.

Hector L. Hofileña and Miguelito V. Ocampo for
petitioners.
Sycip, Salazar, Hernandez and Gatmaitan for
respondents.
CORONA, J.:
In this petition for review on certiorari under Rule 45,

petitioners Mighty Corporation and La Campana Fabrica
de Tabaco, Inc. (La Campana) seek to annul,1 reverse and
set aside: (a) the November 15, 2001 decision of the Court
of Appeals (CA) in CA-G.R. 2 CV No. 65175 affirming the
November 26, 3
1998 decision, as modified by the June 24,
1999 order, of the Regional Trial Court of Makati City,
Branch 57 (Makati RTC) in Civil Case No. 93-850, which
held petitioners liable for, and permanently enjoined them
from, committing trademark infringement and unfair
competition, and which ordered them to pay damages to
respondents E. & J. Gallo Winery (Gallo Winery) and The
Andresons Group, Inc. (Andresons); (b) the July 11, 20024
CA resolution denying their motion for reconsideration
and (c) the aforesaid Makati RTC decision itself.
_______________
1 Penned by Associate Justice Martin S. Villarama, Jr. and concurred

in by Associate Justices Conchita Carpio-Morales (now Associate Justice
of the Supreme Court) and Sergio L. Pestaño of the Ninth Division.
2 Penned by Acting Presiding Judge Bonifacio Sanz Maceda.
3 Penned by Judge Reinato O. Quilala.
4 Penned by Associate Justice Martin S. Villarama, Jr. and concurred
in by Associate Justices Conchita Carpio-Morales (now Associate Justice
of the Supreme Court) and Sergio L. Pestaño of the former Ninth Division.
479
VOL. 434, JULY 14, 2004 479

I. The Factual Background
Respondent Gallo Winery is a foreign corporation not doing

business in the Philippines but organized and existing
under the laws of the State of California, United States of
America (U.S.), where all its wineries are located. Gallo
Winery produces different kinds of wines and brandy
products and sells them in many countries under different
registered trademarks, including the GALLO and ERNEST
& JULIO GALLO wine trademarks.
Respondent domestic corporation, Andresons, has been
Gallo Winery’s exclusive wine importer and distributor in
the Philippines since 1991, selling
5
these products in its own
name and for its own account.
Gallo Winery’s GALLO wine trademark was registered
in the principal register of the Philippine Patent Office
(now Intellectual Property Office) on November 16, 1971
under Certificate of Registration No. 17021 which 6
was
renewed on November 16, 1991 for another 20 years. Gallo
Winery also applied for registration of its ERNEST &
JULIO GALLO wine trademark on October 11, 1990 under
Application Serial No. 901011-00073599-PN but the
records do not disclose
7
if it was ever approved by the
Director of Patents.
On the other hand, petitioners Mighty Corporation and
La Campana and their sister company, Tobacco Industries
of the Philippines (Tobacco Industries), are engaged in the
cultivation, manufacture, distribution and sale of tobacco
products for which they have8 been using the GALLO
cigarette trademark since 1973.
The Bureau of Internal Revenue (BIR) approved Tobacco
Industries’ use of GALLO 100’s cigarette mark on
September 14, 1973 and GALLO filter cigarette mark on
March 26, 1976, both for the manufacture and sale of its
cigarette products. In 1976, Tobacco
_______________
5 Complaint, Exhibits “D” to “D-1”, Records, pp. 1-2; TSN, June 9, 1997,
Records, pp. 951-956.
6 Exhibits “B” to “B-6”, Records, pp. 80-86.
7 Records, pp. 29-31.
8 Answer, Records, pp. 255 and 264-266; TSN, April 13, 1993, Records,
pp. 767, 780-796; TSN, October 27, 1997, Records, pp. 993-1000.
480
Industries filed its manufacturer’s sworn statement as

basis for 9 BIR’s collection of specific tax on GALLO
cigarettes.
On February 5, 1974, Tobacco Industries applied for, but
eventually did not pursue, the registration of the GALLO
cigarette trademark in the 10
principal register of the then
Philippine Patent Office.
In May 1984, Tobacco Industries assigned the GALLO
cigarette trademark to La Campana which, on July 16,
1985, applied 11for trademark registration in the Philippine
Patent Office. On July 17, 1985, the National Library
issued Certificate of Copyright Registration No. 5834 for La
Campana’s
12
lifetime copyright claim over GALLO cigarette
labels.
Subsequently, La Campana authorized Mighty
Corporation to manufacture
13
and sell cigarettes bearing the
GALLO trademark. BIR approved Mighty Corporation’s
use of GALLO 100’s cigarette brand, under licensing
agreement with Tobacco Industries, on May 18, 1988, and
GALLO SPECIAL 14
MENTHOL 100’s cigarette brand on
April 3, 1989.
Petitioners claim that GALLO cigarettes have been sold
in the Philippines since 1973, initially by Tobacco
Industries, then
15
by La Campana and finally by Mighty
Corporation.
On the other hand, although the GALLO wine
trademark was registered in the Philippines in 1971,
respondents claim that they first introduced and sold the
GALLO and ERNEST & JULIO GALLO wines in the
Philippines circa 1974 within the then U.S. military
facilities only. By 1979, they had expanded their Philippine
market 16through authorized distributors and independent
outlets.
Respondents claim that they first learned about the
existence of GALLO cigarettes in the latter part of 1992
when an Andresons
_______________
9 Exhibits “9” to “12”, Records, pp. 89-95, 267-268; TSN, October 27,
1997, Records, pp. 1005-1007.
10 Records, pp. 255-256, 269 and 271.
11 Records, pp. 256, 270.
12 Exhibit “15”, Records, pp. 104, 256, 272.
13 Records, p. 256.
14 Exhibits “13” and “14”, Records, pp. 96-98.
15 TSN, April 13, 1993, Records, pp. 780-796; TSN, December 14, 1993,
Records, pp. 420-422; TSN, October 27, 1997, Records, pp. 993-1000.
16 Complaint, Exhibit “D-2,” Records, pp. 3, 110 and 328.
481
VOL. 434, JULY 14, 2004 481

employee saw such cigarettes on display with GALLO 17

wines in a Davao supermarket wine cellar section.
Forthwith, respondents sent a demand letter to petitioners
asking them to stop using the GALLO trademark, to no
avail.
II. The Legal Dispute
On March 12, 1993, respondents sued petitioners in the

Makati RTC for trademark and trade name infringement
and unfair competition, with a prayer for damages and
preliminary injunction.
Respondents charged petitioners with violating Article
6bis of the Paris Convention for
18
the Protection of Industrial
Property
19
(Paris Convention) and RA 166 (Trademark
Law), specifically, Sections
_______________
17 Exhibit “A,” Complainants’ Memorandum, Records, p. 127; TSN,

December 14, 1993, Records, pp. 326, 432-433.
18 CONVENTION OF PARIS FOR THE PROTECTION OF
INDUSTRIAL PROPERTY of 20th March, 1883 revised at BRUSSELS on
14th December, 1900, at WASHINGTON on 2nd June, 1911, at THE
HAGUE on 6th November, 1925, at LONDON on 2nd June, 1934, and at
Lisbon on 31st October, 1958
x x x x x x x x x
Article 6bis
(1) The countries of the Union undertake, either administratively if their

legislation so permits, or at the request of an interested party, to refuse or
to cancel the registration and to prohibit the use of a trademark which
constitutes a reproduction, imitation or translation, liable to create
confusion, of a mark considered by the competent authority of the country
of registration or use to be wellknown in that country as being already the
mark of a person entitled to the benefits of the present Convention and
used for identical or similar goods. These provisions shall also apply when
the essential part of the mark constitutes a reproduction of any such well-
known mark or an imitation liable to create confusion therewith.
(2) A period of at least five years from the date of registration shall be allowed
for seeking the cancellation of such a mark. The countries of the Union
may provide for a period within which the prohibition of use must be
sought.
(3) No time limit shall be fixed for seeking the cancellation or the prohibition
of the use of marks registered or used in bad faith.
19 Republic Act No. 166 is entitled “An Act To Provide For The
Registration And Protection Of Trademarks, Trade Names And Service
Marks,
482

20 21
22 and 23 (for trademark infringement), 29 and 30 (for
unfair
_______________
Defining Unfair Competition And False Marking And Providing

Remedies Against The Same, And For Other Purposes”.
20 SEC. 22. Infringement, what constitutes.—Any person who shall use,
without the consent of the registrant, any reproduction, counterfeit, copy
or colorable imitation of any registered mark or trade name in connection
with the sale, offering for sale, or advertising of any goods, business or
services on or in connection with which such use is likely to cause
confusion or mistake or to deceive purchasers or others as to the source or
origin of such goods or services, or identity of such business; or reproduce,
counterfeit, copy or colorably imitate any such mark or trade name and
apply such reproduction, counterfeit, copy, or colorable imitation to labels,
signs, prints, packages, wrappers, receptacles or advertisements intended
to be used upon or in connection with such goods, business or services,
shall be liable to a civil action by the registrant for any or all of the
remedies herein provided.
SEC. 23. Actions, and damages and injunction for infringement.—Any
person entitled to the exclusive use of a registered mark or trade name
may recover damages in a civil action from any person who infringes his
rights, and the measure of the damages suffered shall be either the
reasonable profit which the complaining party would have made, had the
defendant not infringed his said rights, or the profit which the defendant
actually made out of the infringement, or in the event such measure of
damages cannot be readily ascertained with reasonable certainty, then the
court may award as damages a reasonable percentage based upon the
amount of gross sales of the defendant of the value of the services in
connection with which the mark or trade name was used in the
infringement of the rights of the complaining party. In cases where actual
intent to mislead the public or to defraud the complaining party shall be
shown, in the discretion of the court, the damages may be doubled.
The complaining party, upon proper showing, may also be granted
injunction.
21 SEC. 29. Unfair competition, rights and remedies.—A person who has
identified in the mind of the public the goods he manufactures or deals in,
his business or services from those of others, whether or not a mark or
trade name is employed, has a property right in the goodwill of the said
goods, business or services so identified, which will be protected in the
same manner as other property rights. Such a person shall have the
remedies provided in section twenty-three, Chapter V hereof.
Any person who shall employ deception or any other means contrary to
good faith by which he shall pass off the goods manufactured by him or in
which he deals, or his business, or services for those of the one having
483
VOL. 434, JULY 14, 2004 483

competition and false designation of origin) and 37 (for

trade name
_______________
established such goodwill, or who shall commit any acts calculated to

produce said result, shall be guilty of unfair competition, and shall be
subject to an action therefor.
In particular, and without in any way limiting the scope of unfair
competition, the following shall be deemed guilty of unfair competition:
(a) Any person, who in selling his goods shall give them the general
appearance of goods of another manufacturer or dealer, either as
to the goods themselves or in the wrapping of the packages in
which they are contained, or the devices or words thereon, or in
any other feature of their appearance, which would be likely to
influence purchasers to believe that the goods offered are those of
a manufacturer or dealer other than the actual manufacturer or
dealer, or who otherwise clothes the goods with such appearance
as shall deceive the public and defraud another of his legitimate
trade, or any subsequent vendor of such goods or any agent of any
vendor engaged in selling such goods with a like purpose;
(b) Any person who by any artifice, or device, or who employs any
other means calculated to induce the false belief that such person
is offering the services of another who has identified such services
in the mind of the public; or
Any person who shall make any false statement in the course of
(c)
trade or who shall commit any other act contrary to good faith of a
nature calculated to discredit the goods, business or services of
another.
Chapter VII
FALSE DESIGNATION OF ORIGIN AND
FALSE DESCRIPTION
SEC. 30. False designation of origin and false description forbidden.—

Any person who shall affix, apply, annex or use in connection with any
goods or services, or any container or containers for goods, a false
designation of origin, or any false description or representation, including
words or other symbols tending falsely to describe or represent the same,
and shall cause such goods or services to enter into commerce, and any
person who shall with knowledge of the falsity of such designation of
origin or description or representation cause or procure the same to enter
into commerce, shall be liable to a civil action for damages and injunction
provided in section twenty-three, Chapter V hereof, by any person doing
business in the locality falsely indicated as that of origin or in the region
in which said locality is situated, or by any person who believes that he is
or is likely to be damaged by the use of any such false description or
representation.
484

22
infringement). They claimed that petitioners adopted the
GALLO
_______________
22
Chapter XI
PROVISIONS IN REFERENCE TO FOREIGN
INDUSTRIAL PROPERTY
SEC. 37. Rights of foreign registrants.—Persons who are nationals of,

domiciled in, or have a bona fide or effective business or commercial
establishment in any foreign country, which is a party to any
international convention or treaty relating to marks or trade names, or
the repression of unfair competition to which the Philippines may be a
party, shall be entitled to the benefits and subject to the provisions of this
Act to the extent and under the conditions essential to give effect to any
such convention and treaties so long as the Philippines shall continue to
be a party thereto, except as provided in the following paragraphs of this
section.
No registration of a mark or trade name in the Philippines by a person
described in the preceding paragraph of this section shall be granted until
such mark or trade name has been registered in the country of origin of
the applicant, unless the applicant alleges use in commerce.
For the purposes of this section, the country of origin of the applicant is
the country in which he has bona fide and effective industrial or
commercial establishment, or if he has no such an establishment in the
country in which he is domiciled, or if he has not a domicile in any of the
countries described in the first paragraph of this section, the country of
which he is a national.
An application for registration of a mark or trade name under the
provisions of this Act filed by a person described in the first paragraph of
this section who has previously duly filed an application for registration of
the same mark or trade name in one of the countries described in said
paragraph shall be accorded the same force and effect as would be
accorded to the same application if filed in the Philippines on the same
date on which the application was first filed in such foreign country:
Provided, That—
(a) The application in the Philippines is filed within six months from
the date on which the application was first filed in the foreign
country; and within three months from the date of filing or within
such time as the Director shall in his discretion grant, the
applicant shall furnish a certified copy of the application for or
registration in the country of origin of the applicant, together with
a translation thereof into English, if not in the English language;
(b) The application conforms as nearly as practicable to the
requirements of this Act, but use in commerce need not be alleged;
485
VOL. 434, JULY 14, 2004 485

trademark to ride on Gallo Winery’s GALLO and ERNEST

& JULIO GALLO trademarks’ established reputation and
popularity, thus causing confusion, deception and mistake
on the part of the purchasing public who had always
associated GALLO and ERNEST & JULIO GALLO
trademarks with Gallo Winery’s wines. Respondents
prayed for the issuance of a writ of preliminary injunction
and ex parte restraining order, plus P2 million as actual
and compensatory damages, at least P500,000 as
exemplary and moral damages, and at 23
least P500,000 as
attorney’s fees and litigation expenses.
_______________
(c) The rights acquired by third parties before the date of the filing of
the first application in the foreign country shall in no way be
affected by a registration obtained on an application filed under
this paragraph;
(d) Nothing in this paragraph shall entitle the owner of a registration
granted under this section to sue for acts committed prior to the
date on which his mark or trade name was registered in this
country unless the registration is based on use in commerce; and
(e) A mark duly registered in the country of origin of the foreign
applicant may be registered on the principal register if eligible,
otherwise, on the supplemental register herein provided. The
application thereof shall be accompanied by a certified copy of the
application for or registration in the country of origin of the
applicant. (As added by R.A. No. 638.)
The registration of a mark under the provisions of this section shall be

independent of the registration in the country of origin and the duration,
validity or transfer in the Philippines of such registration shall be
governed by the provisions of this Act.
Trade names of persons described in the first paragraph of this section
shall be protected without the obligation of filing or registration whether
or not they form parts of marks.
Any person designated in the first paragraph of this section as entitled
to the benefits and subject to the provisions of this Act shall be entitled to
effective protection against unfair competition, and the remedies provided
herein for infringement of marks and trade names shall be available so far
as they may be appropriate in repressing acts of unfair competition.
Citizens or residents of the Philippines shall have the same benefits as
are granted by this section to persons described in the first paragraph
hereof.
23 Complaint, Exhibits “D-1” to “D-9,” Record, pp. 1-10.
486

In their answer, petitioners alleged, among other

affirmative defenses, that: petitioner’s GALLO cigarettes
and Gallo Winery’s wines were totally unrelated products;
Gallo Winery’s GALLO trademark registration certificate
covered wines only, not cigarettes; GALLO cigarettes and
GALLO wines were sold through different channels of
trade; GALLO cigarettes, sold at P4.60 for GALLO filters
and P3 for GALLO menthols, were low-cost items compared
to Gallo Winery’s high-priced luxury wines which cost
between P98 to P242.50; the target market of Gallo
Winery’s wines was the middle or high-income bracket with
at least P10,000 monthly income while GALLO cigarette
buyers were farmers, fishermen, laborers and other low-
income workers; the dominant feature of the GALLO
cigarette mark was the rooster device with the
manufacturer’s name clearly indicated as MIGHTY
CORPORATION while, in the case of Gallo Winery’s wines,
it was the full names of the founders-owners ERNEST &
JULIO GALLO or just their surname GALLO; by their
inaction and conduct, respondents were guilty of laches and
estoppel; and petitioners acted with honesty, justice and
good faith in the exercise of their right to manufacture and
sell GALLO cigarettes. 24
In an order dated April 21, 1993, the Makati RTC
denied, for lack of merit, respondent’s prayer 25
for the
issuance of a writ of preliminary injunction, holding that
respondent’s GALLO trademark registration certificate
covered wines only, that respondents’ wines and
petitioners’ cigarettes were not related goods and
respondents failed to prove material damage or great
irreparable injury
26
as required by Section 5, Rule 58 of the
Rules of Court.
_______________
24 Penned by Judge Francisco X. Velez.

25 Records, pp. 159-160.
26 Sec. 5. Preliminary injunction not granted without notice; issuance of
restraining order.—No preliminary injunction shall be granted without
notice to the defendant. If it shall appear from the facts shown by
affidavits or by the verified complaint that great or irreparable injury
would result to the applicant before the matter can be heard on notice, the
judge to whom the application for preliminary injunction was made, may
issue a restraining order to be effective only for a period of twenty days
from the date of its issuance. Within the said twenty-day period, the judge
must cause an order to be served on the defendant, requiring him to show
cause, at a specified time and place, why the injunction should not be
granted, and determine within the same period whether or not the
preliminary injunction shall be granted, and shall accordingly issue the
corre
487
VOL. 434, JULY 14, 2004 487

On August 19, 1993, the Makati RTC denied, for lack of
merit, respondents’ motion for reconsideration. The court
reiterated that respondents’ wines and petitioners’
cigarettes were not related goods since the likelihood of
deception and confusion on the part of the consuming
public was very remote. The trial court emphasized that it
could not rely on foreign rulings cited by respondents
“because the[se] cases were decided by foreign courts on the
basis of unknown facts peculiar to each case or upon
factual surroundings which may exist only within their
jurisdiction. Moreover, there [was] no showing that [these
cases had] 27been tested or found applicable in our
jurisdiction.”
On February 20, 1995, the CA likewise dismissed
respondents’ petition for review on certiorari, docketed as
CA-G.R. No. 32626, thereby affirming the Makati RTC’s
denial of the application for issuance28 of a writ of
preliminary injunction against petitioners.
After trial on the merits, however, the Makati RTC, on
November 26, 1998, held petitioners liable for, and
permanently enjoined them from, committing trademark
infringement and unfair competition with respect to the
GALLO trademark:
“WHEREFORE, judgment is rendered in favor of the plaintiff (sic)

and against the defendant (sic), to wit:
‘a. permanently restraining and enjoining defendants, their distributors,

trade outlets, and all persons acting for them or under their instructions,
from (i) using E & J’s registered trademark GALLO or any other
reproduction, counterfeit, copy or colorable imitation of said trademark,
either singly or in conjunction with other words, designs or emblems and
other acts of similar nature, and (ii) committing other acts of unfair
competition against plaintiffs by manufacturing and selling their
cigarettes in the domestic or export markets under the GALLO
trademark.
_______________
sponding order. In the event that the application for preliminary

injunction is denied, the restraining order is deemed automatically
vacated.
Nothing herein contained shall be construed to impair, affect or modify
in any way any rights granted by, or rules pertaining to injunctions
contained in, existing agrarian, labor or social legislation. (As amended by
B.P. Blg. 224, approved April 16, 1982).
27 Penned by Judge Velez; Records, pp. 302-304.
28 Penned by Associate Justice Ramon Mabutas, Jr. and concurred in
by Associate Justices Nathanael P. De Pano, Jr. and Artemon D. Luna of
the Special First Division; Records, pp. 449-465.
488

‘b. ordering defendants to pay plaintiffs—
(i) actual and compensatory damages for the injury and

prejudice and impairment of plaintiffs’ business and
goodwill as a result of the acts and conduct pleaded as
basis for this suit, in an amount equal to 10% of
FOURTEEN MILLION TWO HUNDRED THIRTY FIVE
THOUSAND PESOS (PHP14,235,000.00) from the filing
of the complaint until fully paid;
(ii) exemplary damages in the amount of PHP100,000.00;
(iii) attorney’s fees and expenses of litigation in the amount of
PHP1,130,068.91;
(iv) the cost of suit.
29
“SO ORDERED.”
On June 24, 1999, the Makati RTC granted respondent’s

motion for partial reconsideration and increased the award
of actual and compensatory 30
damages to 10% of
P199,290,000 or P19,929,000.
On appeal, the CA affirmed the Makati RTC decision
and subsequently denied petitioner’s motion for
reconsideration.
III. The Issues
Petitioners now seek relief from this Court contending that

the CA did not follow prevailing laws and jurisprudence
when it held that: [a] RA 8293 (Intellectual Property Code
of the Philippines [IP Code]) was applicable in this case; [b]
GALLO cigarettes and GALLO wines were identical,
similar or related goods for the reason alone that they were
purportedly forms of vice; [c] both goods passed through the
same channels of trade and [d] petitioners were liable for 31
trademark infringement, unfair competition and damages.
Respondents, on the other hand, assert that this petition
which invokes Rule 45 does not involve pure questions of
law, and hence, must be dismissed outright.
_______________
29 Penned by Judge Maceda; Records, pp. 651-652.
30 Penned by Judge Quilala; Records, pp. 727-728.
31 Petition; Rollo, pp. 18-19.
489
VOL. 434, JULY 14, 2004 489

IV. Discussion
THE EXCEPTIONAL CIRCUMSTANCES IN

THIS CASE OBLIGE THE COURT TO REVIEW
THE CA’S FACTUAL FINDINGS
As a general rule, a petition for review on certiorari
32
under
Rule 45 must raise only “questions of law” that is, the
doubt pertains to the application and interpretation of law
to a certain set of facts) and not “questions of fact” (where33
the doubt concerns the truth or falsehood of alleged facts),
otherwise, the petition will be denied. We are not a trier of
facts and the Court of Appeals’ 34
factual findings are
generally conclusive upon us.
This case involves questions of fact which are directly
related and intertwined with questions of law. The
resolution of the factual issues concerning the goods’
similarity, identity, relation, channels of trade, and acts of
trademark infringement and unfair competition is greatly
dependent on the interpretation of applicable laws. The
controversy here is not simply the identity or similarity of
both parties’ trademarks but whether or not infringement
or unfair competition was committed, a conclusion based on
statutory interpretation. Furthermore, one or more of the
following exceptional
35
circumstances oblige us to review the
evidence on record:
(1) the conclusion is grounded entirely on speculation,

surmises, and conjectures;
(2) the inference of the Court of Appeals from its
findings of fact is manifestly mistaken, absurd and
impossible;
(3) there is grave abuse of discretion;
(4) the judgment is based on a misapprehension of
facts;
_______________
32 Rule 45, Section 2.

33 Ramos vs. Pepsi-Cola Bottling Co. of the P.I., 19 SCRA 289, 292 (967)
Medina vs. Asistio, Jr., 191 SCRA 218, 223 (990) Caiña vs. People, 213
SCRA 309, 313 (1992).
34 Moomba Mining Exploration Company vs. Court of Appeals, 317
SCRA 338 (1999).
35 Roman Catholic Bishop of Malolos, Inc. vs. Intermediate Appellate
Court, 191 SCRA 411, 420 (1990).
490

(5) the appellate court, in making its findings, went

beyond the issues of the case, and the same are
contrary to the admissions of both the appellant
and the appellee;
(6) the findings are without citation of specific evidence
on which they are based;
(7) the facts set forth in the petition as well as in the
petitioner's main and reply briefs are not disputed
by the respondents; and
(8) the findings of fact of the Court of Appeals are
premised on the absence of evidence 36
and are
contradicted [by the evidence] on record.
In this light, after thoroughly examining the evidence on

record, weighing, analyzing and balancing all factors to
determine whether trademark infringement and/or unfair
competition has been committed, we conclude that both the
Court of Appeals and the trial court veered away from the
law and well-settled jurisprudence.
Thus, we give due course to the petition.
THE TRADEMARK LAW AND THE PARIS

CONVENTION ARE THE APPLICABLE LAWS,
NOT THE INTELLECTUAL PROPERTY CODE
We note that respondents sued petitioners on March 12,
1993 for trademark infringement and unfair competition
committed during the effectivity of the Paris Convention
and the Trademark Law.
Yet, in the Makati RTC decision of November 26, 1998,
petitioners were held liable not only under the aforesaid
governing laws
_______________
36 Asia Brewery, Inc. vs. Court of Appeals, 224 SCRA 437, 443 (1993);
Philippine Nut Industry Inc. vs. Standard Brands, Inc., 224 SCRA 437,
443 (1993); Reynolds Philippine Corporation vs. Court of Appeals, 169
SCRA 220, 223 (1989) citing Mendoza vs. Court of Appeals, 156 SCRA 597
(1987); Manlapaz vs. Court of Appeals, 147 SCRA 238 (1987); Sacay vs.
Sandiganbayan, 142 SCRA 593, 609 (1986); Guita vs. Court of Appeals,
139 SCRA 576 (1985); Casanayan vs. Court of Appeals, 198 SCRA 333, 336
(1991); also Apex Investment and Financing Corp. vs. Intermediate
Appellate Court, 166 SCRA 458 (1988) citing Tolentino vs. De Jesus, 56
SCRA 167 (1974); Carolina Industries, Inc. vs. CMS Stock Brokerage, Inc.,
97 SCRA 734 (1980); Manero vs. Court of Appeals, 102 SCRA 817 (1981);
and Moran, Jr. vs. Court of Appeals, 133 SCRA 88 (1984).
491
VOL. 434, JULY 14, 2004 491

but also under 37the IP Code which took effect only on

January 1, 1998, or about five years after the filing of the
complaint:
Defendants’ unauthorized use of the GALLO trademark

constitutes trademark infringement pursuant to Section 22 of
Republic Act No. 166, Section 155 of the IP Code, Article 6bis of
the Paris Convention, and Article 16 (1) of the TRIPS Agreement
as it causes confusion,
38
deception and mistake on the part of the
purchasing public. (Emphasis and underscoring supplied)
The CA apparently did not notice the error and affirmed

the Makati RTC decision:
In the light of its finding that appellants’ use of the GALLO

trademark on its cigarettes is likely to create confusion with the
GALLO trademark on wines previously registered and used in the
Philippines by appellee E & J Gallo Winery, the trial court thus
did not err in holding that appellants’ acts not only violated
the provisions of the our trademark laws (R.A. No. 166 and R.A.39
Nos. (sic) 8293) but also Article 6bis of the Paris Convention.
(Emphasis and italics supplied)
We therefore hold that the courts a quo erred in

retroactively applying the IP Code in this case.
It is a fundamental principle that the validity and
obligatory force of a law proceed from the fact that it has
first been promulgated. A law that is not yet effective
cannot be considered as conclusively known by the
populace. To make a law binding even before it takes effect 40
may lead to the arbitrary exercise of the legislative power.
Nova constitutio futuris formam imponere debet non
praeteritis. A new state of the law ought to affect the
future, not the past. Any doubt must generally be resolved
against the retroactive operation of laws, whether
41
these are
original enactments, amendments or repeals. There are
only a few instances when
_______________
37 Sec. 241, Intellectual Property Code of the Philippines.

38 Rollo, p. 191.
39 Rollo, p. 71.
40 Tolentino, CIVIL CODE OF THE PHILIPPINES COMMENTARIES
AND JURISPRUDENCE, Volume I, p. 19; See Articles 2 to 4 of the Civil
Code of the Philippines.
41 Ibid.
492

42
laws may be given retroactive effect, none of which is
present in this case. 43
The IP Code, repealing the Trademark Law, was
approved on June 6, 1997. Section 241 thereof expressly
decreed that it was to take effect only on January 1, 1998,
without any provision for retroactive application. Thus, the
Makati RTC and the CA should have limited the
consideration of the present case within the parameters of
the Trademark Law and the Paris Convention, the laws in
force at the time of the filing of the complaint.
_______________
42 Laws may be given retroactive effect only if they are:
(a) procedural statutes which prescribe rules and forms of procedures

of enforcing rights or obtaining redress for their invasion (Subido
vs. Sandiganbayan, 266 SCRA 379 [1997]; Primicias vs. Ocampo,
93 Phil. 446 [1953]; Bustos vs. Lucero, 81 Phil. 640 [1948]; Lopez
vs. Gloria, 40 Phil. 26 (1919); People vs. Sumilang, 77 Phil. 764
[1946])
(b) remedial or curative statutes which cure errors and irregularities
and validate judicial or administrative proceedings, acts of public
officers, or private deeds and contracts that otherwise would not
produce their intended consequences due to some statutory
disability or failure to comply with technical rules (Government vs.
Municipality of Binalonan, 32 Phil. 634 [1915]; Subido vs.
Sandiganbayan, supra; Del Castillo vs. Securities and Exchange
Commission, 96 Phil. 119 [1954]; Santos vs. Duata, 14 SCRA 1041
[1965]; Development Bank of the Philippines vs. Court of Appeals,
96 SCRA 342 [1980]; Alunan III vs. Mirasol, 276 SCRA 501 [1997])
(c) laws interpreting others
(d) laws creating new rights (Bona vs. Briones, 38 Phil. 276 [1918];
Intestate Estate of Bustamante vs. Cayas, 98 Phil. 107 [1955])
(e) penal statutes insofar as they favor the accused who is not a
habitual criminal (Article 22, Revised Penal Code) or
(f) by express provision of the law, (Art. 4, Civil Code of the
Philippines; Alba Vda. De Raz vs. Court of Appeals, 314 SCRA 36
[1999]), except in cases of ex post facto laws (U.S. vs. Diaz Conde,
42 Phil. 766 [1922]; U.S. vs. Gomez, 12 Phil. 279 [1908]) or
impairment of obligation of contract. (Asiatic Petroleum vs. Llanes,
49 Phil. 466 [1926]).
43 Sec. 239, Intellectual Property Code of the Philippines.
493
VOL. 434, JULY 14, 2004 493

DISTINCTIONS BETWEEN
TRADEMARK INFRINGEMENT
AND UNFAIR COMPETITION
Although the laws on trademark infringement and unfair
competition have a common conception at their root, that
is, a person shall not be permitted to misrepresent his
goods or his business as the goods or business of another,
the law on unfair competition is broader and more inclusive
than the law on trademark infringement. The latter is
more limited but it recognizes a more exclusive right
derived from the trademark adoption and registration by
the person whose goods or business is first associated with
it. The law on trademarks is thus a specialized subject
distinct from the law on unfair competition, although the
two subjects are entwined with each other and are dealt
with together in the Trademark Law (now, both are
covered by the IP Code). Hence, even if one fails to
establish his exclusive property right to a trademark, he
may still obtain relief on the ground of his competitor’s
unfairness or fraud. Conduct constitutes unfair competition
if the effect is to pass off on the public the goods of one man
as the goods of another. It is not necessary 44
that any
particular means should be used to this end. 45
In Del Monte Corporation vs. Court of Appeals, we
distinguished trademark infringement from unfair
competition:
(1) Infringement of trademark is the unauthorized use

of a trademark, whereas unfair competition is the
passing off of one’s goods as those of another.
(2) In infringement of trademark fraudulent intent is
unnecessary, whereas in unfair competition
fraudulent intent is essential.
(3) In infringement of trademark the prior registration
of the trademark is a prerequisite to the action,
whereas in unfair competition registration is not
necessary.
_______________
44 E. Spinner & Co. vs. Neuss Hesslein Corporation, 54 Phil. 225, 231-
232 (1930).
45 181 SCRA 410, 415 (1990).
494

PERTINENT PROVISIONS ON TRADEMARK

INFRINGEMENT UNDER THE PARIS
CONVENTION AND THE TRADEMARK LAW
46
Article 6bis of the Paris Convention, an international
agreement binding on the Philippines and the United
States (Gallo Winery’s country of domicile and origin)
prohibits “the [registration] or use of a trademark which
constitutes a reproduction, imitation or translation, liable
to create confusion, of a mark considered by the competent
authority of the country of registration or use to be
wellknown in that country as being already the mark of a
person entitled to the benefits of the [Paris] Convention
and used for identical or similar goods. [This rule also
applies] when the essential part of the mark constitutes a
reproduction of any such well-known mark or an imitation
liable to create confusion therewith.” There is no time limit
for seeking
47
the prohibition of the use of marks used in bad
faith.
Thus, under Article 6bis of the Paris Convention, the
following are the elements of trademark infringement:
(a) registration or use by another person of a

trademark which is a reproduction, imitation or
translation liable to create confusion,
(b) of a mark considered by the competent
48
authority of
the country of registration or use to be well-known
in that country and is already the mark of a person
entitled to the benefits of the Paris Convention, and
(c) such trademark is used for identical or similar
goods.
_______________
46 The Paris Convention is a compact among various member countries

to accord in their own countries to citizens of the other contracting parties’
trademarks and other rights comparable to those accorded their own
citizens by their domestic laws. The underlying principle is that foreign
nationals should be given the same treatment in each of the member
countries as that country makes available to its citizen. (Emerald Garden
Manufacturing Corp. vs. Court of Appeals, 251 SCRA 600 [1995]).
47 See footnote 18 for full text.
48 “conditions for the filing and registration of trademarks shall be
determined in each country of the Union by its domestic law.” (Art. 6[1],
Paris Convention).
495
VOL. 434, JULY 14, 2004 495

On the other hand, Section 22 of the Trademark Law holds

a person liable for infringement when, among others, he
“uses without the consent of the registrant, any
reproduction, counterfeit, copy or colorable imitation of any
registered mark or trade name in connection with the sale,
offering for sale, or advertising of any goods, business or
services or in connection with which such use is likely to
cause confusion or mistake or to deceive purchasers or
others as to the source or origin of such goods or services,
or identity of such business; or reproduce, counterfeit, copy
or colorably imitate any such mark or trade name and
apply such reproduction, counterfeit, copy or colorable
imitation to labels, signs, prints, packages, wrappers,
receptacles or advertisements intended to be used upon or 49
in connection with such goods, business or services.”
Trademark registration and actual use are material to the
complaining party’s cause of action. 50
Corollary to this, Section 20 of the Trademark Law
considers the trademark registration certificate as prima
facie evidence of the validity of the registration, the
registrant’s ownership and exclusive right to use the
trademark in connection with the goods, business 51
or
services as classified by the Director of Patents and as
specified in the certificate, subject to the conditions
52
and
limitations stated therein. Sections 2 and 2-A of the
Trademark Law empha-
_______________
49 See footnote 20 for full text.

50 SEC. 20. Certificate of registration prima facie evidence of validity.—
A certificate of registration of a mark or trade-name shall be prima facie
evidence of the validity of the registration, the registrant's ownership of
the mark or trade name, and of the registrant’s exclusive right to use the
same in connection with the goods, business or services specified in the
certificate, subject to any conditions and limitations stated therein.
51 SEC. 6. Classification of goods and services.—The Director shall
establish a classification of goods and services, for the convenience of the
Patent Office administration, but not to limit or extend the applicant’s
rights. The applicant may register his mark or trade name in one
application for any or all of the goods or services included in one class,
upon or in connection with which he is actually using the mark or trade
name. The Director may issue a single certificate for one mark or trade
name registered in a plurality of classes upon payment of a fee equaling
the sum of the fees for each registration in each class.
52 SEC. 2. What are registrable.—Trademarks, trade names, and
service marks owned by persons, corporations, partnerships or
associations domiciled in the Philippines and by persons, corporations,
partner
496

size the importance of the trademark’s actual use in

commerce in the Philippines prior to its registration. In the
adjudication of trademark rights between contending
parties, equitable principles of laches, 53estoppel, and
acquiescence may be considered and applied.
Under Sections 2, 2-A, 9-A, 20 and 22 of the Trademark
Law therefore, the following constitute the elements of
trademark infringement:
(a) a trademark actually used in commerce in the

Philippines and registered in the principal register
of the Philippine Patent Office
(b) is used by another person in connection with the
sale, offering for sale, or advertising of any goods,
business or services or in connection with which
such use is likely to cause
_______________
ships or associations domiciled in any foreign country may be

registered in accordance with the provisions of this Act; Provided, That
said trademarks, trade names, or service marks are actually in use in
commerce and services not less than two months in the Philippines before
the time the applications for registration are filed. And provided, further,
That the country of which the applicant for registration is a citizen grants
by law substantially similar privileges to citizens of the Philippines, and
such fact is officially certified, with a certified true copy of the foreign law
translated into the English language, by the government of the foreign
country to the Government of the Republic of the Philippines. (As
amended by R.A. 865).
SEC. 2-A. Ownership of trademarks, trade names and service marks;
how acquired.—Anyone who lawfully produces or deals in merchandise of
any kind or engages in any lawful business, or who renders any lawful
service in commerce, by actual use thereof in manufacture or trade, in
business, and in the service rendered, may appropriate to his exclusive
use a trademark, a trade name, or a service mark not so appropriated by
another, to distinguish his merchandise, business or service from the
merchandise, business or service of others. The ownership or possession of
a trademark, trade name, service mark heretofore or hereafter
appropriated, as in this section provided, shall be recognized and
protected in the same manner and to the same extent as are other
property rights known to the law. (As amended by R.A. 638).
53 SEC. 9-A. Equitable principles to govern proceedings.—In opposition
proceedings and in all other inter partes proceedings in the Patent Office
under this Act, equitable principles of laches, estoppel, and acquiescence
where applicable, may be considered and applied. (As added by R.A. No.
638).
497
VOL. 434, JULY 14, 2004 497

confusion or mistake or to deceive purchasers or others as to
the source or origin of such goods or services, or identity of
such business; or such trademark is reproduced,
counterfeited, copied or colorably imitated by another
person and such reproduction, counterfeit, copy or colorable
imitation is applied to labels, signs, prints, packages,
wrappers, receptacles or advertisements intended to be
used upon or in connection with such goods, business or
services as to likely cause confusion or mistake or to
deceive purchasers,
(c) the trademark is used for identical or similar goods,

and
(d) such act is done without the consent of the
trademark registrant or assignee.
In summary, the Paris Convention protects well-known

trademarks only (to be determined by domestic
authorities), while the Trademark Law protects all
trademarks, whether well-known or not, provided that they
have been registered and are in actual commercial use in
the Philippines. Following universal acquiescence and
comity, in case of domestic legal disputes on any conflicting
provisions between the Paris Convention (which is an
international agreement) and the Trademark
54
law (which is
a municipal law) the latter will prevail.
Under both the Paris Convention and the Trademark
Law, the protection of a registered trademark is limited
only to goods identical or similar to those in respect of
which such trademark is registered and only when there is
likelihood of confusion. Under both laws, the time element
in commencing infringement cases is material in
ascertaining the registrant’s express or implied consent to
another’s use of its trademark or a colorable imitation
thereof. This is why acquiescence, estoppel or laches may
defeat the registrant’s otherwise valid cause of action.
Hence, proof of all the elements of trademark
infringement is a condition precedent to any finding of
liability.
_______________
54 Philip Morris, Inc. vs. Court of Appeals, 224 SCRA 576 (1993).
498

THE ACTUAL COMMERCIAL USE IN THE
PHILIPPINES OF GALLO CIGARETTE
TRADEMARK PRECEDED THAT OF
GALLO WINE TRADEMARK.
By respondents’ own judicial admission, the GALLO wine
trademark was registered in the Philippines in November
1971 but the wine itself was first marketed and sold in the
country only in 1974 and only within the former U.S.
military facilities, and outside thereof, only in 1979. To
prove commercial use of the GALLO wine trademark in the
Philippines, respondents presented sales invoice no. 29991
dated July 9, 1981 addressed to Conrad Company Inc.,
Makati, Philippines and sales invoice no. 85926 dated
March 22, 1996 addressed to Andresons Global, Inc.,
Quezon City, Philippines. Both invoices were for the sale
and shipment 55
of GALLO wines to the Philippines during
that period. Nothing at all, however, was presented to
evidence the alleged sales of GALLO wines in the
Philippines in 1974 or, for that matter, prior to July 9,
1981.
On the other hand, by testimonial evidence supported by
the BIR authorization letters, forms and manufacturer’s
sworn statement, it appears that petitioners and its
predecessor-in-interest, Tobacco Industries, have indeed
been using and selling GALLO cigarettes
56
in the Philippines
since 1973 or before July 9, 1981.
In Emerald Garment
57
Manufacturing Corporation vs.
Court of Appeals, we reiterated our rulings 58in Pagasa
Industrial Corporation vs. Court of Appeals, Converse 59
Rubber Corporation vs. Universal Rubber Products, Inc.,
Sterling Products International,
60
Inc. vs. Farbenfabriken
Bayer Aktiengesellschaft, Kabushi
61
Kaisha Isetan vs.
Intermediate62 Appellate Court, and Philip Morris vs. Court
of Appeals, giving utmost importance to the actual
commercial use of a trademark in the Philippines prior to
its registration, notwithstanding the provisions of the Paris
Convention:
_______________
55 Exhibits “Q” to “R-2”, Records, pp. 2075-2078.

56 Exhibits “9” to “14”, Records, pp. 90-98.
57 251 SCRA 600, 619 (1995).
58 118 SCRA 526 (1982).
59 147 SCRA 154 (1987).
60 27 SCRA 1214 (1969).
61 203 SCRA 583 (1991).
62 224 SCRA 576 (1993).
499
VOL. 434, JULY 14, 2004 499

x x x x x x x x x
In addition to the foregoing, we are constrained to agree with
petitioner’s contention that private respondent failed to prove
prior actual commercial use of its “LEE” trademark in the
Philippines before filing its application for registration with the
BPTTT and hence, has not acquired ownership over said mark.
Actual use in commerce in the Philippines is an essential
prerequisite for the acquisition of ownership over a trademark
pursuant to Sec. 2 and 2A of the Philippine Trademark Law (R.A.
No. 166) x x x
x x x x x x x x x
The provisions of the 1965 Paris Convention for the Protection
of Industrial Property relied upon by private respondent and Sec.
21-A of the Trademark Law (R.A. No. 166) were sufficiently
expounded upon and qualified in the recent case of Philip Morris,
Inc. v. Court of Appeals (224 SCRA 576 [1993]):
x x x x x x x x x
Following universal acquiescence and comity, our municipal law on

trademarks regarding the requirement of actual use in the Philippines
must subordinate an international agreement inasmuch as the apparent
clash is being decided by a municipal tribunal (Mortisen vs. Peters, Great
Britain, High Court of Judiciary of Scotland, 1906, 8 Sessions, 93; Paras,
International Law and World Organization, 1971 Ed., p. 20). Withal, the
fact that international law has been made part of the law of the land does
not by any means imply the primacy of international law over national
law in the municipal sphere. Under the doctrine of incorporation as
applied in most countries, rules of international law are given a standing
equal, not superior, to national legislative enactments.
x x x x x x x x x
In other words, (a foreign corporation) may have the capacity to sue for
infringement irrespective of lack of business activity in the Philippines on
account of Section 21-A of the Trademark Law but the question of whether
they have an exclusive right over their symbol as to justify issuance of the
controversial writ will depend on actual use of their trademarks in the
Philippines in line with Sections 2 and 2-A of the same law. It is thus
incongruous for petitioners to claim that when a foreign corporation not
licensed to do business in the Philippines files a complaint for
infringement, the entity need not be actually using the trademark in
commerce in the Philippines. Such a foreign corporation may have the
personality to file a suit for infringement but it may not necessarily be
entitled to protection due to absence of actual use of the emblem in the
local market.
x x x x x x x x x
500

Undisputably, private respondent is the senior registrant, having

obtained several registration certificates for its various
trademarks “LEE,” “LEE RIDERS,” and “LEESURES” in both the
supplemental and principal registers, as early as 1969 to 1973.
However, registration alone will not suffice. In Sterling Products
International, Inc. v. Farbenfabriken Bayer Aktiengesellschaft (27
SCRA 1214 [1969]; Reiterated in Kabushi Isetan vs. Intermediate
Appellate Court (203 SCRA 583 [1991]) we declared:
x x x x x x x x x
A rule widely accepted and firmly entrenched because it has come down
through the years is that actual use in commerce or business is a
prerequisite in the acquisition of the right of ownership over a
trademark.
x x x x x x x x x
The credibility placed on a certificate of registration of one's
trademark, or its weight as evidence of validity, ownership and
exclusive use, is qualified. A registration certificate serves merely
as prima facie evidence. It is not conclusive but can and may be
rebutted by controverting evidence.
x x x x x x x x x
In the case at bench, however, we reverse the findings of the
Director of Patents and the Court of Appeals. After a meticulous
study of the records, we observe that the Director of Patents and
the Court of Appeals relied mainly on the registration certificates
as proof of use by private respondent of the trademark “LEE”
which, as we have previously discussed are not sufficient. We
cannot give credence to private respondent's claim that its “LEE”
mark first reached the Philippines in the 1960's through local
sales by the Post Exchanges of the U.S. Military Bases in the
Philippines (Rollo, p. 177) based as it was solely on the self-serving
statements of Mr. Edward Poste, General Manager of Lee (Phils.),
Inc., a wholly owned subsidiary of the H.D. Lee, Co., Inc., U.S.A.,
herein private respondent. (Original Records, p. 52) Similarly, we
give little weight to the numerous vouchers representing various
advertising expenses in the Philippines for “LEE” products. It is
well to note that these expenses were incurred only in 1981 and
1982 by LEE (Phils.), Inc. after it entered into a licensing
agreement with private respondent on 11 May 1981. (Exhibit “E”)
On the other hand, petitioner has sufficiently shown that it has
been in the business of selling jeans and other garments adopting
its “STYLISTIC MR. LEE” trademark since 1975 as evidenced by
appropriate sales invoices to various stores and retailers. (Exhibit
“1-e” to “1-o”)
Our rulings in Pagasa Industrial Corp. v. Court of Appeals (118
SCRA 526 [1982]) and Converse Rubber Corp. v. Universal Rubber
Products, Inc., (147 SCRA 154 [1987]), respectively, are
instructive:
The Trademark Law is very clear. It requires actual commercial use of

the mark prior to its registration. There is no dispute that
501
VOL. 434, JULY 14, 2004 501

respondent corporation was the first registrant, yet it failed to fully

substantiate its claim that it used in trade or business in the Philippines
the subject mark; it did not present proof to invest it with exclusive,
continuous adoption of the trademark which should consist among others,
of considerable sales since its first use. The invoices submitted by
respondent which were dated way back in 1957 show that the zippers sent
to the Philippines were to be used as “samples” and “of no commercial
value.” The evidence for respondent must be clear, definite and free from
inconsistencies. “Samples” are not for sale and therefore, the fact of
exporting them to the Philippines cannot be considered to be equivalent
to the “use” contemplated by law. Respondent did not expect income from
such “samples.” There were no receipts to establish sale, and no proof
were presented to show that they were subsequently sold in the
Philippines.
x x x x x x x x x
For lack of adequate proof of actual use of its trademark in the
Philippines prior to petitioner’s use of its own mark and for failure
to establish confusing similarity between said trademarks, private
respondent's action for infringement must necessarily fail.
(Emphasis supplied.)
In view of the foregoing jurisprudence and respondents’

judicial admission that the actual commercial use of the
GALLO wine trademark was subsequent to its registration
in 1971 and to Tobacco Industries’ commercial use of the
GALLO cigarette trademark in 1973, we rule that, on this
account, respondents never enjoyed the exclusive right to
use the GALLO wine trademark to the prejudice of Tobacco
Industries and its successors-in-interest, herein petitioners,
either under the Trademark Law or the Paris Convention.
RESPONDENTS’ GALLO TRADEMARK
REGISTRATION IS LIMITED TO
WINES ONLY
We also note that the GALLO trademark registration
certificates in the Philippines and in other countries
expressly state that they cover wines only, without any
evidence or indication that registrant Gallo Winery 63
expanded or intended to expand its business to cigarettes.
_______________
63 TSN, April 13, 1993, Records, p. 783; TSN, June 9, 1997, Records, p.
959.
502

Thus, by strict application of Section 20 of the Trademark

Law, Gallo Winery’s exclusive right to use the GALLO
trademark should be limited to wines, the only product
indicated in its registration certificates. This strict
statutory limitation on the exclusive right to use
trademarks was amply clarified in our 64
ruling in Faberge,
Inc. vs. Intermediate Appellate Court:
Having thus reviewed the laws applicable to the case before Us, it
is not difficult to discern from the foregoing statutory enactments
that private respondent may be permitted to register the
trademark “BRUTE” for briefs produced by it notwithstanding
petitioner’s vehement protestations of unfair dealings in
marketing its own set of items which are limited to: after-shave
lotion, shaving cream, deodorant, talcum powder and toilet soap.
Inasmuch as petitioner has not ventured in the production of
briefs, an item which is not listed in its certificate of registration,
petitioner cannot and should not be allowed to feign that private
respondent had invaded petitioner's exclusive domain. To be sure,
it is significant that petitioner failed to annex in its Brief the so-
called “eloquent proof that petitioner indeed intended to expand
its mark ‘BRUT’ to other goods” (Page 27, Brief for the Petitioner;
page 202, Rollo). Even then, a mere application by petitioner in
this aspect does not suffice and may not vest an exclusive right in
its favor that can ordinarily be protected by the Trademark Law.
In short, paraphrasing Section 20 of the Trademark Law as
applied to the documentary evidence adduced by petitioner, the
certificate of registration issued by the Director of Patents can
confer upon petitioner the exclusive right to use its own symbol
only to those goods specified in the certificate, subject to any
conditions and limitations stated therein. This basic point is
perhaps the unwritten rationale of Justice Escolin in Philippine
Refining Co., Inc. vs. Ng Sam (115 SCRA 472 [1982]), when he
stressed the principle enunciated by the United States Supreme
Court in American Foundries vs. Robertson (269 U.S. 372, 381, 70
L ed 317, 46 Sct. 160) that one who has adopted and used a
trademark on his goods does not prevent the adoption and use of
the same trademark by others for products which are of a different
description. Verily, this Court had the occasion to observe in the
1966 case of George W. Luft Co., Inc. vs. Ngo Guan (18 SCRA 944
[1966]) that no serious objection was posed by the petitioner
therein since the applicant utilized the emblem “Tango” for no
other product than hair pomade in which petitioner does not deal.
This brings Us back to the incidental issue raised by petitioner
which private respondent sought to belie as regards petitioner's
alleged expansion of its business. It may be recalled that
petitioner claimed that it has a pending application for
registration of the emblem “BRUT 33” for
_______________
64 215 SCRA 316, 325 (1992).
503
VOL. 434, JULY 14, 2004 503

briefs (page 25, Brief for the Petitioner; page 202, Rollo) to
impress upon Us the Solomonic wisdom imparted by Justice JBL
Reyes in Sta. Ana vs. Maliwat (24 SCRA 1018 [1968]), to the effect
that dissimilarity of goods will not preclude relief if the junior
user's goods are not remote from any other product which the first
user would be likely to make or sell (vide, at page 1025).
Commenting on the former provision of the Trademark Law now
embodied substantially under Section 4(d) of Republic Act No.
166, as amended, the erudite jurist opined that the law in point
“does not require that the articles of manufacture of the previous
user and late user of the mark should possess the same
descriptive properties or should fall into the same categories as to
bar the latter from registering his mark in the principal register.”
(supra at page 1026).
Yet, it is equally true that as aforesaid, the protective mantle of
the Trademark Law extends only to the goods used by the first user
as specified in the certificate of registration following the clear
message conveyed by Section 20.
How do We now reconcile the apparent conflict between Section
4(d) which was relied upon by Justice JBL Reyes in the Sta. Ana
case and Section 20? It would seem that Section 4(d) does not
require that the goods manufactured by the second user be related
to the goods produced by the senior user while Section 20 limits the
exclusive right of the senior user only to those goods specified in the
certificate of registration. But the rule has been laid down that the
clause which comes later shall be given paramount significance
over an anterior proviso upon the presumption that it expresses
the latest and dominant purpose. (Graham Paper Co. vs. National
Newspapers Asso. (Mo. App.) 193 S.W. 1003; Barnett vs.
Merchant’s L. Ins. Co., 87 Okl. 42; State ex nel Atty. Gen. vs.
Toledo, 26 N.E., p. 1061; cited by Martin, Statutory Construction
Sixth ed., 1980 Reprinted, p. 144). It ineluctably follows that
Section 20 is controlling and, therefore, private respondent can
appropriate its symbol for the briefs it manufactures because as
aptly remarked by Justice Sanchez in Sterling Products
International Inc. vs. Farbenfabriken Bayer (27 SCRA 1214
[1969]):
“Really, if the certificate of registration were to be deemed as including

goods not specified therein, then a situation may arise whereby an
applicant may be tempted to register a trademark on any and all goods
which his mind may conceive even if he had never intended to use the
trademark for the said goods. We believe that such omnibus registration
is not contemplated by our Trademark Law.” (1226).
504

NO LIKELIHOOD OF CONFUSION, MISTAKE

OR DECEIT AS TO THE IDENTITY OR SOURCE
OF PETITIONERS’ AND RESPONDENTS’
GOODS OR BUSINESS
A crucial issue in any trademark infringement case is the
likelihood of confusion, mistake or deceit as to the identity,
source or origin of the goods or identity of the business as a
consequence of using a certain mark. Likelihood of
confusion is admittedly a relative term, to be determined
rigidly according to the particular (and sometimes peculiar)
circumstances of each case. Thus, in trademark cases, more
than in other kinds of litigation, precedents 65
must be
studied in the light of each particular case.
There are two types of confusion in trademark
infringement. The first is “confusion of goods” when an
otherwise prudent purchaser is induced to purchase one
product in the belief that he is purchasing another, in
which case defendant’s goods are then bought as the
plaintiff’s and its poor quality reflects badly on the
plaintiff’s reputation. The other is “confusion of business”
wherein the goods of the parties are different but the
defendant’s product can reasonably (though mistakenly) be
assumed to originate from the plaintiff, thus deceiving the
public into believing that there is some connection between 66
the plaintiff and defendant which, in fact, does not exist.
In determining the likelihood of confusion, the Court
must consider: [a] the resemblance between the
trademarks; [b] the similarity of the goods to which the
trademarks are attached; [c] the likely effect on the
purchaser and [d] the registrant’s express or implied
consent and other fair and equitable considerations.
Petitioners and respondents both use “GALLO” in the
labels of their respective cigarette and wine products. But,
as held in the following cases, the use of an identical mark
does not, by itself, lead to a legal conclusion that there is
trademark infringement:
_______________
65 Esso Standard Eastern, Inc. vs. Court of Appeals, 116 SCRA 336, 341
(1982).
66 Sterling Products, International, Inc. vs. Farbenfabriken Bayer
Aktiengesellschaft, 27 SCRA 1214, 1227 (1969) citing 2 Callman, Unfair
Competition and Trademarks, 1945 ed., p. 1006.
505
VOL. 434, JULY 14, 2004 505

67
(a) in Acoje Mining Co., Inc. vs. Director of Patent, we
ordered the approval of Acoje Mining’s application
for registration of the trademark LOTUS for its soy
sauce even though Philippine Refining Company
had prior registration and use of such identical
mark for its edible oil which, like soy sauce, also
belonged to Class 47;
(b) in Philippine Refining68 Co., Inc. vs. Ng Sam and
Director of Patents, we upheld the Patent
Director’s registration of the same trademark
CAMIA for Ng Sam’s ham under Class 47, despite
Philippine Refining Company’s prior trademark
registration and actual use of such mark on its lard,
butter, cooking oil (all of which belonged to Class
47), abrasive detergents, polishing materials and
soaps;
(c) in Hickok Manufacturing Co., Inc.69 vs. Court of
Appeals and Santos Lim Bun Liong, we dismissed
Hickok’s petition to cancel private respondent’s
HICKOK trademark registration for its Marikina
shoes as against petitioner’s earlier registration of
the same trademark for handkerchiefs, briefs, belts
and wallets;
(d) in Shell 70Company of the Philippines vs. Court of
Appeals, in a minute resolution, we dismissed the
petition for review for lack of merit and affirmed
the Patent Office’s registration of the trademark
SHELL used in the cigarettes manufactured by
respondent Fortune Tobacco Corporation,
notwithstanding Shell Company’s opposition as the
prior registrant of the same trademark for its
gasoline and other petroleum products;
(e) in Esso71 Standard Eastern, Inc. vs. Court of
Appeals, we dismissed ESSO’s complaint for
trademark infringement against United Cigarette
Corporation and allowed the latter to use the
trademark ESSO for its cigarettes, the same
trademark used by ESSO for its petroleum
products, and
_______________
67 38 SCRA 480 (1971).

68 115 SCRA 472 (1982).
69 116 SCRA 388 (1982).
70 G.R. No. L-49145, May 21, 1979.
71 116 SCRA 336 (1982).
506

(f) in Canon Kabushiki Kaisha vs.72 Court of Appeals

and NSR Rubber Corporation, we affirmed the
rulings of the Patent Office and the CA that NSR
Rubber Corporation could use the trademark
CANON for its sandals (Class 25) despite Canon
Kabushiki Kaisha’s prior registration and use of the
same trademark for its paints, chemical products,
toner and dyestuff (Class 2).
Whether a trademark causes confusion and is likely 73

to
deceive the public hinges on “colorable imitation” which
has been defined as “such similarity in form, content,
words, sound, meaning, special arrangement or general
appearance of the trademark or trade name in their overall
presentation or in their essential and substantive and
distinctive parts as would likely mislead or confuse persons
74
in the ordinary course of purchasing the genuine article.”
Jurisprudence has developed two tests in determining
similarity and75
likelihood of confusion in trademark
resemblance:
(a) the Dominancy Test76 applied in Asia 77Brewery, Inc.

vs. Court of Appeals and other cases, and
(b) the Holistic or Totality Test used
78
in Del Monte
Corporation
79
vs. Court of Appeals and its preceding
cases.
The Dominancy Test focuses on the similarity of the

prevalent features of the competing trademarks which
might cause confusion or deception, and thus infringement.
If the competing trademark contains the main, essential or
dominant features of another, and
_______________
72 336 SCRA 266 (2000).

73 Emerald Garment Manufacturing Corporation vs. Court of Appeals,
251 SCRA 600 (1995).
74 Ruben Agpalo, TRADEMARK LAW AND PRACTICE IN THE
PHILIPPINES (1990), p. 41.
75 Ibid.
76 224 SCRA 437 (1993).
77 Co Tiong vs. Director of Patents, 95 Phil. 1 (1954); Lim Hoa vs.
Director of Patents, 100 Phil. 214 (1956); American Wire & Cable Co. vs.
Director of Patents, 31 SCRA 544 (1970); Phil. Nut Industry, Inc. vs.
Standard Brands, Inc., 65 SCRA 575 (1975); Converse Rubber Corp. vs.
Universal Rubber Products, Inc., 147 SCRA 154 (1987).
78 181 SCRA 410 (1990).
79 Mead Johnson & Co. vs. N.V.J. Van Dorp, Ltd., 7 SCRA 771 (1963);
Bristol Myers Co. vs. Director of Patents, 17 SCRA 128 (1966); Fruit of the
Loom, Inc. vs. Court of Appeals, 133 SCRA 405 (1984).
507
VOL. 434, JULY 14, 2004 507
confusion or deception is likely to result, infringement

takes place. Duplication or imitation is not necessary; nor
is it necessary that the infringing label should suggest an
effort to imitate. The question is whether the use of the
marks involved is likely to cause confusion80or mistake in
the mind of the public or deceive purchasers.
On the other hand, the Holistic Test requires that the
entirety of the marks in question be considered in resolving
confusing similarity. Comparison of words is not the only
determining factor. The trademarks in their entirety as
they appear in their respective labels or hang tags must
also be considered in relation to the goods to which they are
attached. The discerning eye of the observer must focus not
only on the predominant words but also on the other
features appearing in both labels in order that he may
draw his 81conclusion whether one is confusingly similar to
the other.
In comparing the resemblance or colorable imitation of
marks, various factors have been considered, such as the
dominant color, style, size, form, meaning of letters, words,
designs and emblems used, the likelihood of deception
82
of
the mark or name’s tendency to confuse and the
commercial impression likely to be conveyed by the
trademarks if 83used in conjunction with the respective goods
of the parties.
Applying the Dominancy and Holistic Tests, we find that
the dominant feature of the GALLO cigarette trademark is
the device of a large rooster facing left, outlined in black
against a gold background. The rooster’s color is either
green or red—green for GALLO menthols and red for
GALLO filters. Directly below the large rooster device is
the word GALLO. The rooster device is given prominence
in the GALLO 84
cigarette packs in terms of size and location
on the labels.
The GALLO mark appears to be a fanciful and arbitrary
mark for the cigarettes as it has no relation at all to the
product but was
_______________

251 SCRA 600 (1995).
81 Ibid.
82 Ibid.
83 Philippine Refining Co., Inc. vs. Ng Sam and the Director of Patents,
115 SCRA 472 (1982).
84 Exhibits “1” to “4”; Records 2095-2097.
508

chosen merely as a trademark due to the fondness for

fighting cocks of the son of petitioners’ president.
Furthermore, petitioners adopted GALLO, the Spanish
word for rooster, as a cigarette trademark to appeal to one
of their target
85
markets, the sabungeros (cockfight
aficionados). 86
Also, as admitted by respondents themselves, on the
side of the GALLO cigarette packs are the words “MADE
BY MIGHTY CORPORATION,” thus clearly informing the
public as to the identity of the manufacturer of the
cigarettes.
On the other hand, GALLO Winery’s wine and brandy
labels are diverse. In many of them, the labels are
embellished with sketches of buildings and trees, vineyards
or a bunch of grapes while in a few, one or two small
roosters facing right or facing each other (atop the EJG
crest, surrounded by leaves or ribbons), with additional
designs in green,87
red and yellow colors, appear as minor
features thereof. Directly below or above these sketches is
the entire printed name of the founder-owners, “ERNEST
88
& JULIO GALLO” or just their surname “GALLO,” which
appears in different fonts, sizes, styles and labels, unlike
petitioners’ uniform casque-font bold-lettered GALLO
mark.
Moreover, on the labels of Gallo Winery’s wines are
printed the words “VINTED AND BOTTLED BY 89
ERNEST
& JULIO GALLO, MODESTO, CALIFORNIA.”
The many different features like color schemes, art works
and other markings of both products drown out the
similarity between them—the use of the word “GALLO”—a
family surname for the Gallo Winery’s wines and a Spanish
word for rooster for petitioners’ cigarettes.
_______________
85 TSN, October 27, 1997, Records, pp. 995-1000.

86 Reply, Records, p. 293.
87 Exhibits “N to Q”.
88 TSN, December 14, 1993, Records, pp. 414, 421 and 442.
89 Exhibits “1” to “4.”
509
VOL. 434, JULY 14, 2004 509

WINES AND CIGARETTES ARE NOT

IDENTICAL, SIMILAR, COMPETING
OR RELATED GOODS
Confusion of goods is evident where the litigants are
actually in competition; but confusion of 90business may arise
between noncompeting interests as well.
Thus, apart from the strict application of Section 20 of
the Trademark Law and Article 6bis of the Paris
Convention which proscribe trademark infringement not
only of goods specified in the certificate of registration but
also of identical or similar goods, we have also uniformly
recognized
91
and applied the modern concept of “related
goods.” Simply stated, when goods are so related that the
public may be, or is actually, deceived and misled that they
come from the same92 maker or manufacturer, trademark
infringement occurs.
Non-competing goods may be those which, though they
are not in actual competition, are so related to each other
that it can reasonably be assumed that they originate from
one manufacturer, in which case, confusion
93
of business can
arise out of the use of similar marks. They may also be
those which, being entirely unrelated, cannot be assumed
to have a common source; hence, there is no confusion 94
of
business, even though similar marks are used. Thus,
there is no trademark infringement if the public does not
expect the plaintiff to make or sell the 95same class of goods
as those made or sold by the defendant.
_______________
90 Esso Standard Eastern, Inc. vs. Court of Appeals, 116 SCRA 336, 341
(1982).
91 Esso Standard Eastern, Inc. vs. Court of Appeals, 116 SCRA 336
(1982); Arce vs. Selecta, 1 SCRA 253 (1961); Chua Che vs. Phil. Patents
Office, 13 SCRA 67 (1965); Ang vs. Teodoro, 74 Phil. 50 (1942); Khe vs.
Lever Bros. Co., 49 O.G. 3891 (1941); Ang Si Heng & Dee vs. Wellington
Dept. Store, 92 Phil. 448 (1953); Acoje Mining Co., Inc. vs. Director of
Patents, 38 SCRA 480 (1971).
(1982).
93 Ibid.
94 Ibid.
95 I CALLMAN 1121 cited in Philippine Refining Co., Inc. vs. Ng Sam
and the Director of Patents, 115 SCRA 472 (1982).
510

96
In resolving whether goods are related, several factors
come into play:
(a) the business (and its location) to which the goods

belong
(b) the class of product to which the goods belong
(c) the product’s quality, quantity, or size, including
97
the nature of the package, wrapper or container
98
(d) the nature and cost of the articles
(e) the descriptive properties, physical attributes or
essential characteristics with reference to their
form, composition, texture or quality
99
(f) the purpose of the goods
(g) whether the100 article is bought for immediate
consumption,
101
that is, day-to-day household
items
_______________
96 It has been held that where the products are different, the prior
owner’s chance of success is a function of many variables, such as the:
(a) strength of his mark

(b) degree of similarity between the two marks
(c) reciprocal of defendant’s good faith in adopting its own mark
(d) quality of defendant’s product
(e) proximity of the products
(f) likelihood that the prior owner will bridge the gap
(g) actual confusion, and
(h) sophistication of the buyers. (Polaroid Corp. vs. Polaroid Elecs.
Corp., 287 F. 2d 492, 495 (2d Cir.), cert. denied, 368 U.S. 820, 82 s.
Ct. 36, 7 L. Ed. 2d 25 [1961]).
251 SCRA 600 (1995); Del Monte Corporation, vs. Court of Appeals, 181
SCRA 410 (1990); Asia Brewery, Inc. vs. Court of Appeals, 224 SCRA 437
(1993).
251 SCRA 600 (1995).
(1982).
251 SCRA 600 (1995).
115 SCRA 472 (1982).
511
VOL. 434, JULY 14, 2004 511

102
(h) the fields of manufacture
(i) the conditions
103
under which the article is usually
purchased and
(j) the channels
104
of trade through which the goods
flow, how they105 are distributed, marketed,
displayed and sold.
The wisdom of this approach is its recognition that each

trademark infringement case presents its own unique set of
facts. No single factor is preeminent, nor can the presence
or absence of one determine, without analysis of the others,
the outcome of an infringement suit. Rather, the court is
required to sift the evidence relevant to each of the criteria.
This requires that the entire panoply of elements
constituting the relevant
106
factual landscape be
comprehensively examined. It is a weighing and
balancing process. With reference to this ultimate question,
and from a balancing of the determinations reached on all
of the factors, a conclusion is reached
107
whether the parties
have a right to the relief sought.
A very important circumstance though is whether there
exists a likelihood that an appreciable number of ordinarily
prudent purchasers will be misled, or108simply confused, as
to the source of the goods in question. The “purchaser” is
not the “completely unwary consumer” but is the
“ordinarily intelligent
109
buyer” considering the type of
product involved. He is “accustomed to buy, and therefore
_______________
102 Ibid.
251 SCRA 600 (1995).
(1982).
115 SCRA 472 (1982).
106 Thompson Medical Co. vs. Pfizer, Inc., 753 F. 2d 208, 225 USPQ 124
(2d Cir.) 1985.
107 Kiki Undies Corp. vs. Promenade Hosiery Mills, Inc., 411 F. 2d 1097,
1099 (2d Cir. 1969), cert. denied, 396 U.S. 1094, 90 S. Ct. 707, 24 L. Ed.
698 (1970); Lever Bros. Co. vs. American Bakeries Co., 693 F. 2d 251, C.A.
N.Y., November 3, 1982.
108 Mushroom Makers, Inc. vs. R.G. Barry Corp., 580 F. 2d 44, 47 (2d
Cir. 1978), cert. denied, 439 U.S. 1116, 99 s. Ct. 1022, 59 L. Ed. 2d 75
(1979).
251 SCRA 600 (1995).
512

to some extent familiar with, the goods in question. The

test of fraudulent simulation is to be found in the likelihood
of the deception of some persons in some measure
acquainted with an established design and desirous of
purchasing the commodity with which that design has been
associated. The test is not found in the deception, or the
possibility of deception, of the person who knows nothing
about the design which has been counterfeited, and who
must be indifferent between that and the other. The
simulation, in order to be objectionable, must be such as
appears likely to mislead the ordinary intelligent buyer
who has a need to supply 110 and is familiar with the article
that he seeks to purchase.”
Hence, in the adjudication of trademark infringement,
we give due regard to the goods’ usual purchaser’s 111
character, attitude, habits, age, training and education.
Applying these legal precepts to the present case,
petitioner’s use of the GALLO cigarette trademark is not
likely to cause confusion or mistake, or to deceive the
“ordinarily intelligent buyer” of either wines or cigarettes
or both as to the identity of the goods, their source and
origin, or identity of the business of petitioners and
respondents.
Obviously, wines and cigarettes are not identical or
competing products. Neither do they belong to the same
class of goods. Respondents’ GALLO wines belong to Class
33 under Rule 84[a] Chapter III, Part II of the Rules of
Practice in Trademark Cases while petitioners’ GALLO
cigarettes fall under Class 34.
We are mindful that product classification alone cannot
serve as the decisive factor in the resolution of whether or
not wines and cigarettes are related goods. Emphasis
should be on the similarity of the products involved and not
on the arbitrary classification or general description of
their properties or characteristics. But the mere fact that
one person has adopted and used a particular trademark
for his goods does not prevent the adoption and use of
_______________
110 Dy Buncio vs. Tan Tiao Bok, 42 Phil. 190 (1921).

251 SCRA 600 (1995); Del Monte Corporation vs. Court of Appeals, 181
(1993); Philippine Refining Co., Inc. vs. Ng Sam and the Director of
Patents, 115 SCRA 472 (1982).
513
VOL. 434, JULY 14, 2004 513

the same trademark

112
by others on articles of a different
description.
Both the Makati RTC and the CA held that wines and
cigarettes are related products because: (1) “they are
related forms of vice, harmful when taken in excess, and
used for pleasure and relaxation” and (2) “they are grouped
or classified in the same section of supermarkets and
groceries.”
We find these premises patently insufficient and too
arbitrary to support the legal conclusion that wines and
cigarettes are related products within the contemplation of
the Trademark Law and the Paris Convention.
First, anything—not only wines and cigarettes—can be
used for pleasure and relaxation and can be harmful when
taken in excess. Indeed, it would be a grave abuse of
discretion to treat wines and cigarettes as similar or
related products likely to cause confusion just because they
are pleasure-giving, relaxing or potentially harmful. Such
reasoning makes no sense.
Second, it is common knowledge that supermarkets sell
an infinite variety of wholly unrelated products and the
goods here involved, wines and cigarettes, have nothing
whatsoever in common with respect to their essential
characteristics, quality, quantity, size, including
113
the nature
of their packages, wrappers or containers.
Accordingly, the U.S. patent office and courts have
consistently held that the mere fact that goods are sold in
one store under the same roof does not automatically mean
that buyers are likely to be confused as to the goods’
respective sources, connections or sponsorships. The fact
that different products are available in the same store is an
insufficient standard, in 114
and of itself, to warrant a finding
of likelihood of confusion.
_______________
112 Philippine Refining Co., Inc. vs. Ng Sam and Director of Patents,
115 SCRA 472 (1982).
251 SCRA 600 (1995); Del Monte Corporation, vs. Court of Appeals, 181
(1993).
114 California Fruit Growers Exchange vs. Sunkist Baking Co., 166 F.
2d 971, 76 U.S.P.Q. 85 (7th Cir. 1947); Hot Shot Quality Products, Inc. vs.
Sifer’s Chemicals, Inc. 452 F.2d 1080, 172 U.S.P.Q. 350 (10th Cir. 1971);
514

In this regard, we adopted the Director of Patents’ finding

in Philippine Refining
115
Co., Inc. vs. Ng Sam and the
Director of Patents:
In his decision, the Director of Patents enumerated the factors

that set respondent’s products apart from the goods of petitioner.
He opined and we quote:
“I have taken into account such factors as probable purchaser attitude

and habits, marketing activities, retail outlets, and commercial
impression likely to be conveyed by the trademarks if used in conjunction
with the respective goods of the parties, I believe that ham on one hand,
and lard, butter, oil, and soap on the other are products that would not
move in the same manner through the same channels of trade. They
pertain to unrelated fields of manufacture, might be distributed and
marketed under dissimilar conditions, and are displayed separately even
though they frequently may be sold through the same retail food
establishments. Opposer’s products are ordinary day-to-day household
items whereas ham is not necessarily so. Thus, the goods of the parties
are not of a character which purchasers would likely attribute to a
common origin.
The observations and conclusion of the Director of Patents are

correct. The particular goods of the parties are so unrelated that
consumers, would not, in any probability mistake one as the
source of origin of the product of the other. (Emphasis supplied).
The same is true in the present case. Wines and cigarettes

are non-competing and are totally unrelated products not
likely to cause confusion vis-à-vis the goods or the business
of the petitioners and respondents.
Wines are bottled and consumed by drinking while
cigarettes are packed in cartons or packages and smoked.
There is a whale of a difference between their descriptive
properties, physical attributes or essential characteristics
like form, composition, texture and quality.
_______________
Federated Foods, Inc. vs. Ft. Howard Paper Co., 544 F.2d 1098, 192
U.S.P.Q. 24; Faultless Starch Co. vs. Sales Producers Associates, Inc., 530
F. 2d 1400, 189 U.S.P.Q. (C.C.P.A. 1976); Lever Bros. Co. vs. American
Bakeries Co., 693 F. 2d 251, 216 U.S.P.Q. 177 (2d Cir. 1982); Nestle Co. vs.
Nash-Finch Co., 4 U.S.P.Q. 2d 1085 (T.T.A.B.).
115 115 SCRA 472, 478 (1982).
515
VOL. 434, JULY 14, 2004 515

GALLO cigarettes are inexpensive items while GALLO

wines are not. GALLO wines are patronized by middle-to-
high-income earners while GALLO cigarettes appeal only
to simple folks like farmers,
116
fishermen, laborers and other
low-income workers. Indeed, the big price difference of
these two products is an important factor in proving that
they are in fact unrelated and that they travel in different
channels of trade. There is a distinct price segmentation
117
based on vastly different social classes of purchasers.
GALLO cigarettes and GALLO wines are not sold
through the same channels of trade. GALLO cigarettes are
Philippine-made and petitioners neither claim nor pass off
their goods as imported or emanating from Gallo Winery.
GALLO cigarettes are distributed, marketed and sold
through ambulant and sidewalk vendors, small local sari-
sari stores and grocery stores in Philippine rural areas,
mainly 118
in Misamis Oriental, Pangasinan, Bohol, and
Cebu. On the other hand, GALLO wines are imported,
distributed and sold in the Philippines through Gallo
Winery’s exclusive contracts with a domestic entity, which
is currently Andresons. By respondents’ own testimonial
evidence, GALLO wines are sold in hotels, expensive bars
and restaurants, and high-end grocery stores and
supermarkets,
119
not through sari-sari stores or ambulant
vendors.
Furthermore, the Makati RTC and the CA erred in
relying
120
on Carling Brewing Company vs. Philip Morris,
Inc. to support its finding that GALLO wines and GALLO
cigarettes are related goods. The courts a quo should have
taken into consideration the
_______________
116 Answer, Records, p. 258; TSN, December 14, 1993, Records, p. 420;
TSN, June 9, 1997, Records, p. 958; TSN, September 8, 1997, Records, p.
965-967.
117 Emerald Manufacturing, 251 SCRA 600 (1995); Acoje Mining Co.,
Inc. vs. Director of Patents, 38 SCRA 480 (1981); Field Enterprises
Educational Corp. vs. Grosset & Dunlap, Inc., 256 F. Supp. 382, 150
U.S.P.Q. 517 (S.D.N.Y. 1966); Haviland & Co. vs. Johann Haviland China
Corp., 269 F. Supp. 928, 154 U.S.P.Q. 287 (S.D.N.Y. 1967); Estee Lauder,
Inc. vs. The Gap, Inc., 108 F. 3d. 1503, 42 U.S.P.Q. 2d 1228(2nd Cir. 1997).
118 Answer, Records, p. 257; TSN, April 13, 1993, Records, pp. 783;
TSN, December 14, 1993, Records, p. 420; TSN, September 8, 1997,
Records, pp. 966, 971-972.
119 TSN, June 9, 1997, Record, pp. 952-958; TSN, December 14, 1993,
Records, p. 432.
120 297 F. Supp. 1330, 160 USPQ 303.
516

subsequent case of IDV North America, 121 Inc. and R & A

Bailey Co. Limited vs. S & M Brands, Inc.:
IDV correctly acknowledges, however, that there is no per se rule

that the use of the same mark on alcohol and tobacco products
always will result in a likelihood of confusion. Nonetheless, IDV
relies heavily on the decision in John Walker & Sons, Ltd. vs.
Tampa Cigar Co., 124 F. Supp. 254, 256 (S.D. Fla. 1954), aff’d,
222 F. 2d 460 (5th Cir. 1955), wherein the court enjoined the use of
the mark “JOHNNIE WALKER” on cigars because the fame of the
plaintiff’s mark for scotch whiskey and because the plaintiff
advertised its scotch whiskey on, or in connection with tobacco
products. The court, in John Walker & Sons, placed great
significance on the finding that the infringers use was a deliberate
attempt to capitalize on the senior marks’ fame. Id. At 256. IDV
also relies on Carling Brewing Co. v. Philip Morris, Inc., 297 F.
Supp. 1330, 1338 (N.D. Ga. 1968), in which the court enjoined the
defendant’s use of the mark “BLACK LABEL” for cigarettes
because it was likely to cause confusion with the plaintiff’s
wellknown mark “BLACK LABEL” for beer.
x x x x x x x x x
Those decisions, however, must be considered in perspective of
the principle that tobacco products and alcohol products should be
considered related only in cases involving special circumstances.
Schenley Distillers, Inc. v. General Cigar Co., 57C.C.P.A. 1213,
427 F. 2d 783, 785 (1970). The presence of special circumstances
has been found to exist where there is a finding of unfair
competition or where a ‘famous’ or ‘well-known mark’ is involved
and there is a demonstrated intent to capitalize on that mark. For
example, in John Walker & Sons, the court was persuaded to find
a relationship between products, and hence a likelihood of
confusion, because of the plaintiff’s long use and extensive
advertising of its mark and placed great emphasis on the fact that
the defendant used the trademark ‘Johnnie Walker with full
knowledge of its fame and reputation and with the intention of
taking advantage thereof.’ John Walker & Sons, 124 F. Supp. At
256; see Mckesson & Robbins, Inc. v. P. Lorillard Co., 1959 WL
5894, 120 U.S.P.Q. 306, 307 (1959) (holding that the decision in
John Walker & Sons was ‘merely the law on the particular case
based upon its own peculiar facts’); see also Alfred Dunhill, 350 F.
Supp. At 1363 (defendant’s adoption of ‘Dunhill’ mark was not
innocent). However, in Schenley, the court noted that the relation
between tobacco and whiskey products is significant where a
widely known arbitrary mark has long been used for diversified
products emanating from a single source and a newcomer seeks to
use the same mark on unrelated goods. Schenley, 427 F.2d. at
785. Significantly, in Schenley, the court looked at the industry
practice and
_______________
121 26 F. Supp. 2d 815 (E.D. Va. 1998).
517
VOL. 434, JULY 14, 2004 517

the facts of the case in order to determine the nature and extent
of the relationship between the mark on the tobacco product and
the mark on the alcohol product.
The record here establishes conclusively that IDV has never
advertised BAILEYS liqueurs in conjunction with tobacco or
tobacco accessory products and that IDV has no intent to do so.
And, unlike the defendant in Dunhill, S & M Brands does not
market bar accessories, or liqueur related products, with its
cigarettes. The advertising and promotional materials presented a
trial in this action demonstrate a complete lack of affiliation
between the tobacco and liqueur products bearing the marks here
at issue.
x x x x x x x x x
Of equal significance, it is undisputed that S & M Brands had
no intent, by adopting the family name ‘Bailey’s’ as the mark for
its cigarettes, to capitalize upon the fame of the ‘BAILEYS’ mark
for liqueurs. See Schenley, 427 F. 2d at 785. Moreover, as will be
discussed below, and as found in Mckesson & Robbins, the survey
evidence refutes the contention that cigarettes and alcoholic
beverages are so intimately associated in the public mind that they
cannot under any circumstances be sold under the same mark
without causing confusion. See Mckesson & Robbins, 120
U.S.P.Q. at 308.
Taken as a whole, the evidence here demonstrates the absence
of the ‘special circumstances’ in which courts have found a
relationship between tobacco and alcohol products sufficient to tip
the similarity of goods analysis in favor of the protected mark and
against the allegedly infringing mark. It is true that BAILEYS
liqueur, the world’s best selling liqueur and the second best selling
in the United States, is a well-known product. That fact alone,
however, is insufficient to invoke the special circumstances
connection here where so much other evidence and so many other
factors disprove a likelihood of confusion. The similarity of
products analysis, therefore, augers against finding that there is a
likelihood of confusion. (Emphasis supplied).
In short, tobacco and alcohol products may be considered

related only in cases involving special circumstances which
exist only if a famous mark is involved and there is a
demonstrated intent to capitalize on it. Both of these are
absent in the present case.
518

THE GALLO WINE TRADEMARK IS NOT A
WELL-KNOWN MARK IN THE CONTEXT
OF THE PARIS CONVENTION IN THIS CASE
SINCE WINES AND CIGARETTES ARE NOT
IDENTICAL OR SIMILAR GOODS
First, the records bear out that most of the trademark
registrations took place in the late 1980s and the 1990s,
that is, after Tobacco Industries’ use of the GALLO
cigarette trademark in 1973 and petitioners’ use of the
same mark in 1984.
GALLO wines and GALLO cigarettes are neither the
same, identical, similar nor related goods, a requisite
element under both the Trademark Law and the Paris
Convention.
Second, the GALLO trademark cannot be considered a
strong and distinct mark in the Philippines. Respondents
do not dispute the documentary evidence that aside from
Gallo Winery’s GALLO trademark registration, the Bureau
of Patents, Trademarks and Technology Transfer also
issued on September 4, 1992 Certificate of Registration No.
53356 under the Principal Register approving Productos
Alimenticios Gallo, S.A.’s April 19, 1990 application for
GALLO trademark registration and use for its “noodles,
prepared food or canned noodles, ready or canned sauces
for noodles, semolina, wheat flour and bread crumbs,
pastry, confectionery, ice cream, honey, molasses syrup,
yeast,
122
baking powder, salt, mustard, vinegar, species and
ice.”
Third and most important, pursuant to our ruling in
Canon Kabushiki Kaisha
123
vs. Court of Appeals and NSR
Rubber Corporation, “GALLO” cannot be considered a
“well-known” mark within the contemplation and
protection of the Paris Convention in this case since wines
and cigarettes are not identical or similar goods:
We agree with public respondents that the controlling doctrine

with respect to the applicability of Article 8 of the Paris
Convention is that established in Kabushi Kaisha Isetan vs.
Intermediate Appellate Court (203 SCRA 59 [1991]). As pointed
out by the BPTTT:
“Regarding the applicability of Article 8 of the Paris Convention, this

Office believes that there is no automatic protection af-
_______________
122 Exhibit 18, Records, pp. 107-108.

123 366 SCRA 266 (2000).
519
VOL. 434, JULY 14, 2004 519

forded an entity whose trade name is alleged to have been infringed

through the use of that name as a trademark by a local entity.
In Kabushiki Kaisha Isetan vs. The Intermediate Appellate

Court, et al., G.R. No. 75420, 15 November 1991, the Honorable
Supreme Court held that:
‘The Paris Convention for the Protection of Industrial Property does not
automatically exclude all countries of the world which have signed it
from using a trade name which happens to be used in one country. To
illustrate—if a taxicab or bus company in a town in the United Kingdom
or India happens to use the trade name ‘Rapid Transportation,’ it does
not necessarily follow that ‘Rapid’ can no longer be registered in Uganda,
Fiji, or the Philippines.
This office is not unmindful that in (sic) the Treaty of Paris for
the Protection of Intellectual Property regarding well-known
marks and possible application thereof in this case. Petitioner, as
this office sees it, is trying to seek refuge under its protective
mantle, claiming that the subject mark is well known in this
country at the time the then application of NSR Rubber was filed.
However, the then Minister of Trade and Industry, the Hon.
Roberto V. Ongpin, issued a memorandum dated 25 October 1983
to the Director of Patents, a set of guidelines in the
implementation of Article 6bis of the Treaty of Paris. These
conditions are:
a) the mark must be internationally known;

b) the subject of the right must be a trademark, not a patent
or copyright or anything else;
c) the mark must be for use in the same or similar kinds of
goods; and
d) the person claiming must be the owner of the mark (The
Parties Convention Commentary on the Paris Convention.
Article by Dr. Bogsch, Director General of the World
Intellectual Property Organization, Geneva, Switzerland,
1985)’
From the set of facts found in the records, it is ruled that the
Petitioner failed to comply with the third requirement of the said
memorandum that is the mark must be for use in the same or
similar kinds of goods. The Petitioner is using the mark “CANON”
for products belonging to class 2 (paints, chemical products) while
the Respondent is using the same mark for sandals (class 25).
Hence, Petitioner’s contention that its mark is well-known at
the time the Respondent filed its application for the same mark
should fail.” (Emphasis supplied.)
520

CONSENT OF THE REGISTRANT AND

OTHER AIR, JUST AND EQUITABLE
CONSIDERATIONS
Each trademark infringement case presents a unique
problem which must be answered 124
by weighing the
conflicting interests of the litigants.
Respondents claim that GALLO wines and GALLO
cigarettes flow through the same channels of trade, that is,
retail trade. If respondents’ assertion is true, then both
goods co-existed peacefully for a considerable period of
time. It took respondents almost 20 years to know about
the existence of GALLO cigarettes and sue petitioners for
trademark infringement. Given, on one hand, the long
period of time that petitioners were engaged in the
manufacture, marketing, distribution and sale of GALLO
cigarettes and, on the other, respondents’ delay in
enforcing their rights (not to mention implied consent,
acquiescence or negligence) we hold that equity, justice and
fairness require us to rule in favor of petitioners. The scales
of conscience and reason tip far more readily in favor of
petitioners than respondents.
Moreover, there exists no evidence that petitioners
employed malice, bad faith or fraud, or that they intended
to capitalize on respondents’ goodwill in adopting the
GALLO mark for their cigarettes which are totally
unrelated to respondents’ GALLO wines. Thus, we rule out
trademark infringement on the part of petitioners.
PETITIONERS ARE ALSO NOT LIABLE

FOR UNFAIR COMPETITION
Under Section 29 of the Trademark Law, any person who
employs deception or any other means contrary to good
faith by which he passes off the goods manufactured by
him or in which he deals, or his business, or services for
those of the one having established such goodwill, or who
commits any acts calculated to produce said result, is guilty
of unfair competition. It includes the following acts:
(a) Any person, who in selling his goods shall give them
the general appearance of goods of another
manufacturer or dealer, either as to the
_______________
124 52 Am. Jur. 577.
521
VOL. 434, JULY 14, 2004 521

goods themselves or in the wrapping of the

packages in which they are contained, or the
devices or words thereon, or in any other feature of
their appearance, which would be likely to influence
purchasers to believe that the goods offered are
those of a manufacturer or dealer other than the
actual manufacturer or dealer, or who otherwise
clothes the goods with such appearance as shall
deceive the public and defraud another of his
legitimate trade, or any subsequent vendor of such
goods or any agent of any vendor engaged in selling
such goods with a like purpose;
(b) Any person who by any artifice, or device, or who
employs any other means calculated to induce the
false belief that such person is offering the services
of another who has identified such services in the
mind of the public;
(c) Any person who shall make any false statement in
the course of trade or who shall commit any other
act contrary to good faith of a nature calculated to
discredit the goods, business or services of another.
The universal test question is whether the public is likely

to be deceived. Nothing less than conduct tending to pass
off one man’s goods or business as that of another
constitutes unfair competition. Actual or probable
deception and confusion on the part of customers125by reason
of defendant’s practices must always appear. On this
score, we find that petitioners never attempted to pass off
their cigarettes as those of respondents. There is no
evidence of bad faith or fraud imputable to petitioners in
using their GALLO cigarette mark.
All told, after applying all the tests provided by the
governing laws as well as those recognized by
jurisprudence, we conclude that petitioners are not liable
for trademark infringement, unfair competition or
damages.
WHEREFORE, finding the petition for review
meritorious, the same is hereby GRANTED. The
questioned decision and resolution of the Court of Appeals
in CA-G.R. CV No. 65175 and the November 26, 1998
decision and the June 24, 1999 order of the Regional Trial
Court of Makati, Branch 57 in Civil Case No. 93-850 are
hereby REVERSED and SET ASIDE and the complaint
against petitioners DISMISSED.
Costs against respondents.
_______________
125 Shell Co. of the Philippines, Ltd. vs. Insular Petroleum Refining Co.
Ltd., 120 Phil. 434, 439; 11 SCRA 440 (1964).
522

Ngo vs. People
SO ORDERED.
Vitug (Chairman) and Sandoval-Gutierrez, JJ.,

concur.
Carpio-Morales, J., No part.
Petition granted, assailed decisions and resolution

reversed and set aside. Complaint dismissed.
Note.—The likelihood of confusion of goods or business

is a relative concept, to be determined only according to the
particular, and sometimes peculiar, circumstances of each
case. (Canon Kabushiki Kaisha vs. Court of Appeals, 336
SCRA 266 [2000])
——o0o——
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VOL.

434, JULY 14, 2004 473

MIGHTY CORPORATION and LA CAMPANA FABRICA

Remedial Law; Appeals; As a general rule, a petition for

474 SUPREME COURT REPORTS ANNOTATED

Mighty Corporation vs. E. & J. Gallo Winery

Although the laws on trademark infringement and unfair

VOL. 434, JULY 14, 2004 475

Mighty Corporation vs. E. & J. Gallo Winery

certificate as prima facie evidence of the validity of the

476 SUPREME COURT REPORTS ANNOTATED

Mighty Corporation vs. E. & J. Gallo Winery

or similar to those in respect of which such trademark is

VOL. 434, JULY 14, 2004 477

Mighty Corporation vs. E. & J. Gallo Winery

belief that he is purchasing another, in which case defendant’s

478 SUPREME COURT REPORTS ANNOTATED

Mighty Corporation vs. E. & J. Gallo Winery

tion and use of the same trademark by others on articles of a

PETITION for review on certiorari of the decision and

The facts are stated in the opinion of the Court.

In this petition for review on certiorari under Rule 45,

1 Penned by Associate Justice Martin S. Villarama, Jr. and concurred

VOL. 434, JULY 14, 2004 479

Respondent Gallo Winery is a foreign corporation not doing

Industries filed its manufacturer’s sworn statement as

VOL. 434, JULY 14, 2004 481

employee saw such cigarettes on display with GALLO 17

II. The Legal Dispute

On March 12, 1993, respondents sued petitioners in the

17 Exhibit “A,” Complainants’ Memorandum, Records, p. 127; TSN,

(1) The countries of the Union undertake, either administratively if their

482 SUPREME COURT REPORTS ANNOTATED

Defining Unfair Competition And False Marking And Providing

VOL. 434, JULY 14, 2004 483

competition and false designation of origin) and 37 (for

established such goodwill, or who shall commit any acts calculated to

SEC. 30. False designation of origin and false description forbidden.—

484 SUPREME COURT REPORTS ANNOTATED

SEC. 37. Rights of foreign registrants.—Persons who are nationals of,

VOL. 434, JULY 14, 2004 485

trademark to ride on Gallo Winery’s GALLO and ERNEST

The registration of a mark under the provisions of this section shall be

486 SUPREME COURT REPORTS ANNOTATED

In their answer, petitioners alleged, among other

24 Penned by Judge Francisco X. Velez.

VOL. 434, JULY 14, 2004 487

“WHEREFORE, judgment is rendered in favor of the plaintiff (sic)

‘a. permanently restraining and enjoining defendants, their distributors,

sponding order. In the event that the application for preliminary

488 SUPREME COURT REPORTS ANNOTATED

‘b. ordering defendants to pay plaintiffs—

(i) actual and compensatory damages for the injury and

On June 24, 1999, the Makati RTC granted respondent’s

III. The Issues

Petitioners now seek relief from this Court contending that

VOL. 434, JULY 14, 2004 489

THE EXCEPTIONAL CIRCUMSTANCES IN

(1) the conclusion is grounded entirely on speculation,