G.R. No.

184850 October 20, 2010

E.Y. INDUSTRIAL SALES, INC. and ENGRACIO YAP, Petitioners,

vs.
SHEN DAR ELECTRICITY AND MACHINERY CO., LTD., Respondent.

FACTS:

EYIS is a domestic corporation engaged in the production, distribution and sale of air compressors and
other industrial tools and equipment. Respondent Shen Dar is a Taiwan-based foreign corporation
engaged in the manufacture of air compressors. Both claimed to have the right to register the
trademark "VESPA" for air compressors. From 1997-2004 EYIS imported air compressors from Shen Dar
through sales contracts, without any evidence showing that they were marked “VESPA”.

On 1997, Shen Dar filed for trademark application for the mark “VESPA”. While on 1999 EYIS filed a
trademark application for the mark “VESPA”. They were issued certificates of registration on 2004 for
EYIS, and on 2007 for Shen Dar.

Shen dar then filed a petition for cancellation of EYIS’S COR for having first filed the mark and alleging
that EYIS was a mere distributor of the compressors bearing the mark “VESPA”. It also argued that their
rights were protected by the Paris Convention. EYIS denied the claim of Shend dar since they were the
sole fabricator of air compressors since 1990s and that the air compressors provided by Shen dar only
bore the mark of “SD”.

The director of the BLA ruled in favor of EYIS and denied the petition for cancellation. Upon appeal to
the director General of the IPO, it upheld the COR issued of EYIS and subsequently cancelled the COR of
Shen dar. Further recourse was then made by Shen dar to the CA which reversed the decision of the IPO
General. The CA 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 Shen Dar should also be considered to have prior use of the mark based
on their Declarations of Actual Use. They also ruled 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.

ISSUES:

1. Whether or not EYIS is a mere importer of the air compressors?

2. Whether or not EYIS had prior use of the mark of “VESPA”
3. Whether or not EYIS is the actual owner of the mark?

Held:

1. NO. 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. The fact that EYIS described itself in its sales invoice as an importer, wholesaler
and retailer does not preclude it being a manufacturer.

2. NO. A declaration of Actual is not conclusive as to the fact of first use of a mark. The declaration
must be accompanied by proof of actual use as of the date clamed and that the applicant must
present evidence of such use. EYIS is the prior user of such mark based on the adoption and
continuous use of “VESPA” on air compressors. This bolstered by numerous documentary
evidence and sales invoices which solidified that EYIS was the first to use the mark on the
concept of an owner as early as 1991.

3. YES. EYIS is the actual owner of the mark. Under Sec. 123.1 of R.A 8293 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.
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.

The court ruled 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.

Xxxxxx

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 registrant’s 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.

The documentary evidence presented by EYIS together with the Bills of lading and
numerous sales invoices and its continued use of the mark “VESPA” throughout the Philippines
proved that it is the prior and continuous user of the mark “VESPA” and its true owner.