Unfair Competition: False Designation of Origin

11. Uyco vs.
Lo
January 28, 2013| Brion, J.

Unfair Competition: False Designation of Origin
Doctrine: The law on trademarks and trade names precisely precludes a person from profiting from the
business reputation built by another and from deceiving the public as to the origins of products
Case Summary: Lo and PBMC conducted a test buy of kerosene burners. They conducted the test buy
at National Hardware and found that there are kerosene burners bearing the mark of HIPOLITO & SEA
HORSE & TRIANGULAR DEVICE," "FAMA," and other related marks and trade names of Casa Hipolito S.A.
Portugal. Lo filed a complaint against the Wintrade, the said manufacturers of the kerosene burners
they bought at National Hardware. Lo contends that they are the owner of the disputed marks being an
exclusive assignee in interest of Gasirel. Lo further contended that the use of the marks "Made in
Portugal" and "Original Portugal in the wrappers caused confusion among the purchasers of the origin of
the kerosene burners. DOJ and CA ruled that the petitioners are indeed liable for violation of IP Code. SC
upheld this decision and found, through evidence and testimony that (1) Lo has exclusive right to use
the marks since he is the assignee-in-interest and (2) the use of the terms Made in Portugal" and
"Original Portugal when in fact Wintrade manufactures kerosene burners in the Philippines is in violation
of the law on trademarks as it deceives the public as to the real origin of the product.
Facts:
 The disputed marks in this case are the "HIPOLITO & SEA HORSE & TRIANGULAR DEVICE,"
"FAMA," and other related marks, service marks and trade names of Casa Hipolito S.A. Portugal
appearing in kerosene burners. Respondent Vicente Lo and Philippine Burners Manufacturing
Corporation (PBMC) filed a complaint against the officers of Wintrade Industrial Sales
Corporation (Wintrade), including petitioners Chester Uyco, Winston Uychiyong and Cherry
Uyco-Ong, and of National Hardware, including Mario Sy Chua, for violation of Section 169.1, in
relation to Section 170, of RA 8293.
 Lo claimed in his complaint that Gasirel-Industria de Comercio e Componentes para Gass, Lda.
(Gasirel), the owner of the disputed marks, executed a deed of assignment transferring these
marks in his favor, to be used in all countries except for those in Europe and America. In a test
buy, Lo purchased from National Hardware kerosene burners with the subject marks and the
designations "Made in Portugal" and "Original Portugal" in the wrappers. These products were
manufactured by Wintrade. Lo claimed that as the assignee for the trademarks, he had not
authorized Wintrade to use these marks, nor had Casa Hipolito S.A. Portugal. While a prior
authority was given to Wintrade's predecessor in-interest, Wonder Project & Development
Corporation (Wonder), Casa Hipolito S.A. Portugal had already revoked this authority through a
letter of cancellation dated May 31, 1993. The kerosene burners manufactured by Wintrade
have caused confusion, mistake and deception on the part of the buying public. Lo stated that
the real and genuine burners are those manufactured by its agent, PBMC.
 In their Answer, the petitioners stated that they are the officers of Wintrade which owns the
subject trademarks and their variants. To prove this assertion, they submitted as evidence the
certificates of registration with the Intellectual Property Office. They alleged that Gasirel, not Lo,
was the real party-in-interest. They allegedly derived their authority to use the marks from Casa
Hipolito S.A. Portugal through Wonder, their predecessor-ininterest. Moreover, PBMC had
already ceased to be a corporation and, thus, the licensing agreement between PBMC and Lo
could not be given effect, particularly because the agreement was not notarized and did not
contain the provisions required by Section 87 of RA 8293. The petitioners pointed out that Lo
failed to sufficiently prove that the burners bought from National Hardware were those that
they manufactured. But at the same time, they also argued that the marks "Made in Portugal"
and "Original Portugal" are merely descriptive and refer to the source of the design and the
history of manufacture.
 In a separate Answer, Chua (owner of National Hardware were the test buy was conducted)
admitted that he had dealt with Wintrade for several years and had sold its products. He had
not been aware that Wintrade had lost the authority to manufacture, distribute, and deal with
products containing the subject marks, and he was never informed of Wintrade's loss of
authority. Thus, he could have not been part of any conspiracy.
 After the preliminary investigation, the Chief State Prosecutor found probable cause to indict
the petitioners for violation of Section 169.1, in relation with Section 170, of RA 8293. This law
punishes any person who uses in commerce any false designation of origin which is likely to
cause confusion or mistake as to the origin of the product. The law seeks to protect the public;
thus, even if Lo does not have the legal capacity to sue, the State can still prosecute the
petitioners to prevent damage and prejudice to the public.
 On appeal, the DOJ issued a resolution affirming the finding of probable case. It gave credence
to Lo's assertion that he is the proper assignee of the subject marks. More importantly, it took
note of the petitioners' admission that they used the words "Made in Portugal" when in fact,
these products were made in the Philippines. Had they intended to refer to the source of the
design or the history of the manufacture, they should have explicitly said so in their packaging. It
then concluded that the petitioners' defenses would be better ventilated during the trial and
that the admissions of the petitioners make up a sufficient basis for probable cause. CA affirmed
the ruling of the DOJ.
Issue: W/N the petitioner is liable for violation of Section 169.1, in relation with Section 170, of the IP
Code? YES
Ruling:
 As earlier mentioned, the predecessor-in-interest of Wintrade (Wonder) was the former

exclusive licensee of Casa Hipolito SA of Portugal since the 1970's, and that Wintrade purchased
all the rights on the said trademarks prior to the closure of said company. Indeed, the burners
sold by Wintrade used to be imported from Portugal, but Wintrade later on discovered the
possibility of obtaining these burners from other sources or of manufacturing the same in the
Philippines. Wintrade's decision to procure these burners from sources other than Portugal is
certainly its management prerogative. The presence of the words "made in Portugal" and
"original Portugal" on the wrappings of the burners and on the burners themselves which are
manufactured by Wintrade is an allusion to the fact that the origin of the design of said burners
can be traced back to Casa Hipolito SA of Portugal, and that the history of the manufacture of
said burners are rooted in Portugal. These words were intended to deceive or cause mistake and
confusion in the minds of the buying public.
 Chua, the owner of National Hardware — the place where the test buy was conducted — admits
that Wintrade has been furnishing it with kerosene burners with the markings "Made in
Portugal" for the past 20 years. Thus, the evidence shows that petitioners, who are officers of
Wintrade, placed the words "Made in Portugal" and "Original Portugal" with the disputed marks
knowing fully well — because of their previous dealings with the Portuguese company — that
these were the marks used in the products of Casa Hipolito S.A. Portugal. More importantly, the
products that Wintrade sold were admittedly produced in the Philippines, with no authority
from Casa Hipolito S.A. Portugal. The law on trademarks and trade names precisely precludes a
person from profiting from the business reputation built by another and from deceiving the
public as to the origins of products. These facts support the consistent findings of the State
Prosecutor, the DOJ and the CA that probable cause exists to charge the petitioners with false
designation of origin. The fact that the evidence did not come from Lo, but had been given by
the petitioners, is of no significance.
 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.
Disposition: DOJ and CA decision affirmed. Petition is denied.

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11. Uyco vs.

January 28, 2013| Brion, J.

 As earlier mentioned, the predecessor-in-interest of Wintrade (Wonder) was the former

Disposition: DOJ and CA decision affirmed. Petition is denied.

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