05 EY Industrial Sales, Inc., and E. Yap v.

Shen Dar Electricity AUTHOR: Kylie Dado

and Machinery Co., Ltd. Notes:
G.R. No. 184850 20 October 2010
TOPIC: Trademark PONENTE: Velasco
CASE LAW/ DOCTRINE: Under Sec. 123.1(d) of the IP Code, the registration of a mark is prevented with the filing of an earlier application
for registration. This must not, however, be interpreted to mean that ownership should be based upon an earlier filing date.
Emergency Recit: EYIS imported air compressors from Shen Dar through sales contracts. They both filed filed Trademark Application with
the IPO for the mark VESPA. In 2004, IPO issued COR in favor of EYIS, and in 2007, Shen Dar was also issued COR. Shen Dar filed a Petition
for Cancellation of EYIS COR with the BLA arguing that the issuance of COR in favor of EYIS violated Section 123.1 of RA 8293 (IP Code),
having first filed an application for the mark. SC ruled that while RA 8293 removed the previous requirement of proof of actual use prior to
the filing of an application for registration of a mark, proof of prior and continuous use is necessary to establish ownership of a mark. Such
ownership constitutes sufficient evidence to oppose the registration of a mark. Here, as established by the evidence submitted by the parties,
is that EYIS is the prior user of the mark, which was bolstered by numerous documentary evidence consisting of sales invoices issued in its
name and B/Ls. One of them is Sales Invoice No. 12075 dated March 27, 1995 antedates Shen Dar’s date of first use in January 1, 1997
indicated in its trademark application filed in June 9, 1997 as well as the date of first use in June of 1996 as indicated in the Declaration of
Actual Use.
FACTS:
E.Y. Industrial Sales, Inc. (EYIS) - a domestic corporation engaged in the production, distribution and sale of air compressors and other
industrial tools and equipment. Engracio Yap is the Chairman of the Board.

Shen Dar - a Taiwan-based foreign corporation engaged in the manufacture of air compressors.

Both companies claimed to have the right to register the trademark VESPA for air compressors.

From 1997 to 2004, EYIS imported air compressors from Shen Dar through sales contracts. In the Bill of Ladings (B/L) the items were
described merely as air compressors. There is no documentary evidence to show that such air compressors were marked VESPA.

On June 9, 1997, Shen Dar filed Trademark Application with the IPO for the mark VESPA, Chinese Characters and Device for use on air
compressors and welding machines. On July 28, 1999, EYIS filed Trademark Application also for the mark VESPA, for use on air compressors.

Jan. 18, 2004 - IPO issued Certificate of Registration (COR) in favor of EYIS.
Feb. 8, 2007 - Shen Dar was also issued COR.

But before the issuance of COR to Shen Dar, on June 21, 2004, Shen Dar filed a Petition for Cancellation of EYIS COR with the BLA, arguing
that:
1. Issuance of COR in favor of EYIS violated Section 123.1 of RA 8293 (IP Code), having first filed an application for the mark.
2. EYIS was a mere distributor of air compressors bearing the mark VESPA which it imported from Shen Dar.
3. It had prior and exclusive right to the use and registration of the mark VESPA in the Philippines under the provisions of the Paris
Convention.

EYIS’ ANSWER:
1. Shen Dar is not the true owners of the mark VESPA being the sole assembler and fabricator of air compressors since the early
1990s.
2. The air compressors that Shen Dar allegedly supplied them bore the mark SD for Shen Dar and not VESPA.
3. Shen Dar, not being the owner of the mark, could not seek protection from the provisions of the Paris Convention or the IP Code.

BLA: In favor EYIS.

Shen Dar appealed to the Director General (DG) of the IPO.
DG-IPO: In favor of EYIS, cancelled Shen Dar’s COR.
Shen Dar appealed to the CA
CA: Reversed BLA and DG-IPO’s resolutions, ruling:
 Despite the fact that Shen Dar did not formally offer its evidence before the BLA, such evidence was properly attached to the
Petition for Cancellation. As such, Shen Dars evidence may be properly considered.
 IPO failed to properly apply the provisions of Sec. 123.1(d) of RA 8293, which prohibits the registration of a trademark in favor of a
party when there is an earlier filed application for the same mark.
 Shen Dar should be considered to have prior use of the mark based on the statements made by the parties in their respective
Declarations of Actual Use.
 EYIS is a mere importer therefore, cannot be considered an owner of the mark.
ISSUES & HELD:
1. Whether evidence presented before the BLA must be formally offered = NO
2. Whether the DG-IPO can validly cancel Shen Dars Certificate of Registration = YES
3. Whether the factual findings of the IPO are binding on the CA = YES
4. Whether EYIS is the true owner of the mark VESPA = YES (most important issue)
RATIO:
1. Sec. 10.3 of the IP Code provides that the Director General of the IPO shall establish the procedure for the application for the
registration of a trademark, as well as the opposition to it Thus, the Director General issued Office Order No. 79, Series of 2005
amending the regulations on Inter Partes Proceedings, which provides that as long as the petition is verified and the pieces of evidence
 consisting of the affidavits of the witnesses and the original of other documentary evidence are attached to the petition and properly
marked in accordance with Secs. 7.1 and 8.1, these shall be considered as the evidence of the petitioner. There is no requirement under
the rules that the evidence of the parties must be formally offered to the BLA. In any case, as a quasi-judicial agency and as stated in
Rule 2, Sec. 5 of the Regulations on Inter Partes Proceedings, the BLA is not bound by technical rules of procedure.

2. Shen Dar challenges that there was no petition for cancellation. Office Order No. 79 provides that Bureau shall not be bound by strict
technical rules of procedure and evidence but may adopt, in the absence of any applicable rule herein, such mode of proceedings which
is consistent with the requirements of fair play and conducive to the just, speedy and inexpensive disposition of cases, and which will
give the Bureau the greatest possibility to focus on the contentious issues before it. This rule was even tempered by fundamental
evidentiary rules, including due process (eg. decision must be based on evidence that must, at the very least, be substantial) as ruled in
the cases of Aya-ay, Sr. v. Arpaphil Shipping Corp and Lepanto Consolidated Mining Company v. Dumapis.

The fact that no petition for cancellation was filed against the COR issued to Shen Dar does not preclude the cancellation of Shen Dar’s
COR. It must be emphasized that, during the hearing for the cancellation of EYIS COR before the BLA, Shen Dar tried to establish that it,
not EYIS, was the true owner of the mark VESPA and, thus, entitled to have it registered. Shen Dar had more than sufficient opportunity
to present its evidence and argue its case, and it did. It was given its day in court and its right to due process was respected. The IPO
Director General’s disregard of the procedure for the cancellation of a registered mark was a valid exercise of his discretion.

3. EYIS challenge the CAs reversal of the factual findings of the BLA that Shen Dar and not EYIS is the prior user and, therefore, true owner
of the mark. SC agrees with EYIS that the general rule in this jurisdiction is that the factual findings of administrative bodies deserve
utmost respect when supported by evidence. However, such general rule is subject to exceptions. In Fuentes v. CA, one of the
exceptions enumerated was: “(7) when CA fails to notice certain relevant facts which, if properly considered, will justify a different
conclusion”, and such can also be applied “to those of quasi-judicial bodies” (Villaflor v. CA).

Here, CA identified certain material facts that were allegedly overlooked by the BLA and the DG-IPO which it opined, when correctly
appreciated, would alter the result of the case. An examination of the IPO Decisions, however, would show that no such evidence was
overlooked.
 Date of first use of the mark of the parties
 EYIS was the first to use the mark evidenced by Invoice No. 12075 dated March 29, 1995. Shen Dar failed to rebut such
evidence.
 CA further found that EYIS is not a manufacturer of air compressors but merely imports and sells them as a wholesaler and
retailer based on the submitted receipts
 This is a non sequitur. It does not follow. The fact that EYIS described itself in its sales invoice as an importer, wholesaler
and retailer does not preclude its being a manufacturer. There is no requirement that a sales invoice should accurately
state the nature of all the businesses of the seller. There is no legal ground to state that EYIS declaration in its sales
invoices that it is an importer, wholesaler and retailer is restrictive and would preclude its being a manufacturer.

Therefore, there was no justifiable reason for the CA to disregard the factual findings of the IPO. The rulings of the DG-IPO and the BLA
Director were supported by clear and convincing evidence. The facts cited by the CA and Shen Dar do not justify a different conclusion
from that of the IPO. Hence, the findings of the BLA Director and the IPO Director General must be deemed as conclusive on the CA.

4. Under Sec. 123.1(d) of the IP Code, the registration of a mark is prevented with the filing of an earlier application for
registration. This must not, however, be interpreted to mean that ownership should be based upon an earlier filing date. While
RA 8293 removed the previous requirement of proof of actual use prior to the filing of an application for registration of a mark, proof of
prior and continuous use is necessary to establish ownership of a mark. Such ownership constitutes sufficient evidence to oppose the
registration of a mark. Sec. 134 of the IP Code provides that any person who believes that he would be damaged by the registration of a
mark x x x may file an opposition to the application. The term any person encompasses the true owner of the mark the prior and
continuous user. Notably, the Court has ruled that the prior and continuous use of a mark may even overcome the presumptive
ownership of the registrant and be held as the owner of the mark. (Shangrila v. Developers Group of Companies)

Here, the incontrovertible truth, as established by the evidence submitted by the parties, is that EYIS is the prior user of the mark,
which was bolstered by numerous documentary evidence consisting of sales invoices issued in its name and B/Ls:
 Sales Invoice No. 12075 dated March 27, 1995 antedates Shen Dar’s date of first use in January 1, 1997 indicated in its
trademark application filed in June 9, 1997 as well as the date of first use in June of 1996 as indicated in the Declaration of
Actual Use.
 EYIS sold the air compressors bearing the VESPA to various locations in the Philippines, as far as Mindanao and the Visayas
since the early 1990s.
Shen Dar failed to refute the evidence cited by the BLA in its decision. More importantly, Shen Dar failed to present sufficient evidence
to prove its own prior use of the mark VESPA.
 B/Ls and Packing Weight List did not refer to VESPA air compressor. Instead, it simply describes the goods plainly as air
compressors which is type SD and not VESPA.
 The earliest date reflected on the B/L was on May 5, 1997.
 In the Sales Contract with EYIS, nowhere in the document does it state that EYIS agreed to sell VESPA air compressors.
 Shen Dar was not able to prove to be the owner of the VESPA mark by appropriation. Neither was it able to prove actual
commercial use in the Philippines of the mark VESPA prior to its filing of a trademark application in June 1997.

CA ruling is reversed and set aside. Ruling of BLA Director of the IPO are hereby REINSTATED.