MIGHTY CORPORATION vs E.J.

GALLO WINERY
G.R. No. 154342
July 14, 2004
FACTS:
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 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 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 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 have 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 Industries filed its manufacturer's sworn statement as basis for 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 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 for 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 lifetime copyright claim over GALLO cigarette
labels. 
Subsequently, La Campana authorized Mighty Corporation to manufacture 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 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 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 through
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 employee saw such cigarettes
on display with GALLO 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.

ISSUE:
Whether or not R.A. 8293 has retroactive effect

RULING:
In this case, the court said that “We therefore hold that the courts a quo erred in
retroactively applying the IP code in this case. It is 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 may lead to the arbitrary
exercise of the legislative power. 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 these are original enactments, amendments or repeals. There are only a
few instances when laws may be given retroactive effect, none of which is present in
this case.
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 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.”