FACTS: EYIS is a domestic corporation engaged in the production, distribution and sale of air compressors and other industrial tools and equipment. Petitioner Engracio Yap is the Chairman of the Board of Directors of EYIS. Respondent Shen Dar is 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 Sales Contract dated April 20, 2002, for example, Shen Dar would supply EYIS in one (1) year with 24 to 30 units of 40-ft. containers worth of air compressors identified in the Packing/Weight Lists simply as SD-23, SD-29, SD-31, SD-32, SD-39, SD-67 and SD-68. In the corresponding Bill of Ladings, 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 Serial No. 4-1997-121492 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 Serial No. 4-1999-005393, also for the mark “VESPA,” for use on air compressors. On January 18, 2004, the IPO issued COR No. 4-1999-005393 in favor of EYIS. Thereafter, on February 8, 2007, Shen Dar was also issued COR No. 4-1997-121492.

In the meantime, on June 21, 2004, Shen Dar filed a Petition for Cancellation of EYIS’ COR with the BLA. In the Petition, Shen Dar primarily argued that the issuance of the COR in favor of EYIS violated Section 123.1 paragraphs (d), (e) and (f) of Republic Act No. (RA) 8293, otherwise known as the Intellectual Property Code(IP Code), having first filed an application for the mark. Shen Dar further alleged that EYIS was a mere distributor of air compressors bearing the mark “VESPA” which it imported from Shen Dar. Shen Dar also argued that 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.

In its Answer, EYIS and Yap denied the claim of Shen Dar to be the true owners of the mark “VESPA” being the sole assembler and fabricator of air compressors since the early 1990s. They further alleged that the air compressors that Shen Dar allegedly supplied them bore the mark “SD” for Shen Dar and not “VESPA.” Moreover, EYIS argued that 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: Issued its Decision dated May 29, 2006 in favor of EYIS and against Shen Dar.

IPO DIRECTOR GENERAL: Issued a Decision dated May 25, 2007 upholding the COR issued in favor of EYIS while cancelling the COR of Shen Dar. 

CA: Ruled that, 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 Dar’s evidence may be properly considered. The CA also enunciated that the 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. The CA further ruled that 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. The CA added that EYIS is a mere importer of the air compressors with the mark “VESPA” as may be gleaned from its receipts which indicated that EYIS is an importer, wholesaler and retailer, and therefore, cannot be considered an owner of the mark.

EYIS filed a motion for reconsideration of the assailed decision which the CA denied in the assailed resolution.

ISSUE: 

A. Whether this Court may review the questions of fact presented

B. Whether evidence presented before the BLA must be formally offered

C. Whether the IPO Director General can validly cancel Shen Dars Certificate of Registration

D. Whether the factual findings of the IPO are binding on the CA

E. Whether EYIS is the true owner of the mark VESPA

HELD: 

A. YES. the records will show that the IPO and the CA made differing conclusions on the issue of ownership based on the evidence presented by the parties. Hence, this issue may be the subject of this Courts review.

B. NO. 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 abovementioned, these shall be considered as the evidence of the petitioner. There is no requirement under the abovementioned 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. The evidence attached to the petition may, therefore, be properly considered in the resolution of the case.

C. YES. The fact that no petition for cancellation was filed against the COR issued to Shen Dar does not preclude the cancellation of Shen Dars 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 Generals disregard of the procedure for the cancellation of a registered mark was a valid exercise of his discretion.

D. YES. From the above findings, there was no justifiable reason for the CA to disregard the factual findings of the IPO. The rulings of the IPO Director General 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.

E. YES. 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 markthe 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. As aptly stated by the Court in Shangri-la International Hotel Management, Ltd. v. Developers Group of Companies, Inc.:

Registration, without more, does not confer upon the registrant an absolute right to the registered mark. The certificate of registration is merely a prima facie proof that the registrant is the owner of the registered mark or trade name. Evidence of prior and continuous use of the mark or trade name by another can overcome the presumptive ownership of the registrant and may very well entitle the former to be declared owner in an appropriate case.

Ownership of a mark or trade name may be acquired not necessarily by registration but by adoption and use in trade or commerce. As between actual use of a mark without registration, and registration of the mark without actual use thereof, the former prevails over the latter. For 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 pre-requisite to the acquisition of the right of ownership. 

By itself, registration is not a mode of acquiring ownership. When the applicant is not the owner of the trademark being applied for, he has no right to apply for registration of the same. Registration merely creates a prima facie presumption of the validity of the registration, of the registrants ownership of the trademark and of the exclusive right to the use thereof. Such presumption, just like the presumptive regularity in the performance of official functions, is rebuttable and must give way to evidence to the contrary.

Here, the incontrovertible truth, as established by the evidence submitted by the parties, is that EYIS is the prior user of the mark. The exhaustive discussion on the matter made by the BLA sufficiently addresses the issue:

Based on the evidence, Respondent E.Y. Industrial is a legitimate corporation engaged in buying, importing, selling, industrial machineries and tools, manufacturing, among others since its incorporation in 1988. (Exhibit 1). Indeed private respondents have submitted photographs (Exhibit 376, 377, 378, 379) showing an assembly line of its manufacturing or assembly process.

More importantly, the private respondents prior adoption and continuous use of the mark VESPA on air compressors is bolstered by numerous documentary evidence consisting of sales invoices issued in the name of respondent EY Industrial and Bills of Lading. (Exhibits 4 to 375). Sales Invoice No. 12075 dated March 27, 1995 antedates petitioners 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 submitted on December 3, 2001 (Exhibit 385). The use by respondent-registrant in the concept of owner is shown by commercial documents, sales invoices unambiguously describing the goods as VESPA air compressors. Private respondents have sold the air compressors bearing the VESPA to various locations in the Philippines, as far as Mindanao and the Visayas since the early 1990s. We carefully inspected the evidence consisting of three hundred seventy one (371) invoices and shipment documents which show that VESPA air compressors were sold not only in Manila, but to locations such as Iloilo City, Cebu City, Dumaguete City, Zamboanga City, Cagayan de Oro City, Davao City to name a few. There is no doubt that it is through private respondents efforts that the mark VESPA used on air compressors has gained business goodwill and reputation in the Philippines for which it has validly acquired trademark rights. Respondent EY Industrials right has been preserved until the passage of RA 8293 which entitles it to register the same.

On the other hand, 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.

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