Uyco vs. Lo

A finding of probable cause for false designation of origin under Section 169.1 of the Intellectual Property Code is adequately supported when the accused’s own admissions establish that they affixed a mark indicating a foreign geographical origin to goods manufactured locally, without authority from the foreign trademark owner, and that such designation was likely to cause confusion or mistake as to the goods’ origin. The question whether the words refer only to the origin of the design, rather than the origin of the goods, is a matter of defense to be ventilated at trial and does not defeat a prima facie showing of probable cause.

Vicente Lo claimed to be the assignee of the trademarks “HIPOLITO & SEA HORSE & TRIANGULAR DEVICE,” “FAMA,” and related marks originally owned by Gasirel-Industria de Comercio e Componentes para Gass, Lda., the successor of Casa Hipolito S.A. Portugal. The assignment excluded territories in Europe and America. Wintrade Industrial Sales Corporation’s predecessor-in-interest, Wonder Project & Development Corporation, had previously been authorized to use the marks, but Casa Hipolito S.A. Portugal revoked that authority by a letter dated May 31, 1993. Lo, together with Philippine Burners Manufacturing Corporation (PBMC), filed a criminal complaint against the officers of Wintrade and National Hardware after a test buy revealed that Wintrade-manufactured kerosene burners bore the protected marks and the words “Made in Portugal” and “Original Portugal,” though the burners were produced in the Philippines. The genuine products, according to the complaint, were those manufactured by PBMC under Lo’s authority.

• The Complaint: Respondent Vicente Lo and Philippine Burners Manufacturing Corporation alleged that Gasirel-Industria de Comercio e Componentes para Gass, Lda., the owner of the trademarks “HIPOLITO & SEA HORSE & TRIANGULAR DEVICE” and “FAMA,” executed a deed of assignment in Lo’s favor covering all countries except Europe and America. Wintrade’s predecessor, Wonder Project & Development Corporation, had been an exclusive licensee, but Casa Hipolito S.A. Portugal (Gasirel’s predecessor) revoked that authority on May 31, 1993. A test buy at National Hardware yielded kerosene burners bearing the marks and the phrases “Made in Portugal” and “Original Portugal” on their wrappers; these burners were manufactured by Wintrade. Lo maintained that the genuine products were those manufactured by his agent, PBMC.

• Petitioners’ Defenses: Petitioners, officers of Wintrade, claimed ownership of the subject marks by virtue of Intellectual Property Office registrations and argued that Gasirel, not Lo, was the real party-in-interest. They asserted that their authority to use the marks flowed from Casa Hipolito S.A. Portugal through Wonder, their predecessor. They further contended that PBMC’s licensing agreement with Lo was void for lack of notarization and non-compliance with Section 87 of the Intellectual Property Code. They denied that the burners purchased during the test buy were manufactured by them, while simultaneously arguing that the words “Made in Portugal” and “Original Portugal” were merely descriptive of the design origin and history of manufacture, not the geographic origin of the goods.

• Admissions of Petitioners and Co-Accused: In their Joint Affidavit, petitioners stated that Wintrade used to import burners from Portugal but later decided to produce them in the Philippines; they characterized the use of “made in Portugal” and “original Portugal” as an allusion to the Portuguese origin of the design and manufacturing history, not an assertion of actual geographic origin. Co-accused Mario Sy Chua, owner of National Hardware, admitted he had been buying and selling Wintrade’s kerosene burners bearing the “Made in Portugal” markings for around 20 years and was never informed of any revocation of authority.

• Denial of Manufacture: Petitioners argued that the products seized during the test buy and bearing the disputed marks were not manufactured by, or in any way connected with, them or Wintrade.

• Descriptive Purpose: Petitioners maintained that the words “Made in Portugal” and “Original Portugal” referred exclusively to the origin of the product design and the history of manufacture, not to the geographic origin of the finished goods, and thus could not constitute a false designation of origin.

• False Designation of Origin: Lo contended that Wintrade’s unauthorized use of the subject marks and the geographical labeling “Made in Portugal” and “Original Portugal” on kerosene burners manufactured in the Philippines was likely to cause confusion, mistake, or deception regarding the products’ true origin, in direct violation of Section 169.1 of the Intellectual Property Code.

• Lack of Authority: Lo argued that any prior license to use the marks had been revoked and that he, as lawful assignee, neither authorized Wintrade to use the marks nor consented to the affixing of Portuguese geographical indications on locally produced goods.

• Existence of Probable Cause: Whether the DOJ and the Court of Appeals gravely abused their discretion in finding probable cause to charge petitioners with false designation of origin, given petitioners’ denial that they manufactured the test-bought products.

• Significance of the “Design Origin” Characterization: Whether the petitioners’ claim that the phrases “Made in Portugal” and “Original Portugal” referred only to the origin of the design defeats the finding of probable cause.

• Existence of Probable Cause: The finding of probable cause was sustained. Petitioners’ own Joint Affidavit, together with Chua’s statement, established that Wintrade manufactured the burners in the Philippines and deliberately affixed the disputed marks and the phrases “Made in Portugal” and “Original Portugal.” The narration documented their former importation from Portugal, the subsequent decision to manufacture domestically, and their justification for continuing to use the Portuguese marks—amounting to an admission that the goods sold were indeed produced by them with those designations. The fact that this inculpatory evidence came from the petitioners themselves, rather than from Lo, did not diminish its probative value for purposes of establishing probable cause. Probable cause requires only such evidence as engenders a well-founded belief that a crime has been committed; it does not demand proof beyond reasonable doubt.

• Significance of the “Design Origin” Characterization: The “design origin” argument did not negate probable cause. Whether the words constituted a false designation of origin or were merely descriptive of the design was a matter of defense properly triable in court. The preliminary investigation is not the venue for a full adjudication of defenses on the merits. Petitioners were expressly not barred by the Resolution from raising that defense at trial.

• Probable Cause in False Designation of Origin Cases — To establish probable cause for a violation of Section 169.1 of the Intellectual Property Code, it is sufficient that the evidence shows the accused used a false geographical designation on goods in a manner likely to cause confusion, mistake, or deception as to their origin. Where the accused’s own admissions confirm the domestic manufacture of the goods and the deliberate use of foreign-origin indicia without the trademark owner’s authority, a well-founded belief that the crime was committed arises.

• Premature Adjudication of Defenses — The preliminary investigation stage is not an occasion for the full ventilation of defenses that go to the merits of the criminal charge. Arguments that seek to characterize the allegedly false marking as merely descriptive of design, rather than origin, are properly raised during trial and cannot defeat a prima facie showing of probable cause.

• “The admission in the petitioners’ Joint Affidavit is not in any way hypothetical, as they would have us believe. They narrate incidents that have happened. They refer to Wintrade’s former association with Casa Hipolito S.A. Portugal; to their decision to produce the burners in the Philippines; to their use of the disputed marks; and to their justification for their use.”

• “The argument that the words ‘Made in Portugal’ and ‘Original Portugal’ refer to the origin of the design and not to the origin of the goods does not negate the finding of probable cause; at the same time, it is an argument that the petitioners are not barred by this Resolution from raising as a defense during the hearing of the case.”

• Section 169.1, Republic Act No. 8293 (Intellectual Property Code of the Philippines) — Prohibits the use in commerce of any false designation of origin, or any false or misleading representation of fact, that is likely to cause confusion, mistake, or deception as to the origin of goods. The Court applied this provision to petitioners’ admitted use of “Made in Portugal” and “Original Portugal” on domestically manufactured kerosene burners, finding that such conduct, if proven, fell within the prohibited act.

• Section 170, Republic Act No. 8293 — Prescribes the criminal penalty of imprisonment from two to five years and a fine of ₱50,000 to ₱200,000 for violations of, among others, Section 169.1. The resolution of probable cause authorized the State to proceed with the criminal prosecution under this penal section.

Associate Justices Antonio T. Carpio (Chairperson), Mariano C. Del Castillo, Jose Portugal Perez, and Estela M. Perlas-Bernabe concurred. Chief Justice Maria Lourdes P. A. Sereno certified the resolution.