E.Y. INDUSTRIAL SALES, INC. G.R. No.

184850
and ENGRACIO YAP,
- versus -
SHEN DAR ELECTRICITY AND
MACHINERY CO., LTD.,
x-----------------------------------------------------------------------------------------x

FACTS:
E.Y. Industrial Sales, Inc. (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 its Chairman of the Board of Directors.
Respondent Shen Dar Electricity and Machinery Co., Ltd., (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 1997-2004, EYIS imported air compressors from Shen Dar through sales contracts.
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 with the IPO for the mark
VESPA. On July 28, 1999, EYIS filed Trademark Application also for the mark VESPA. The
IPO issued Certificate of Registration (COR) to both companies.
Shen Dar filed a Petition for Cancellation of EYIS COR with the Bureau of Legal
Affairs (BLA) of IPO. Shen Dar argued that the issuance of the COR in favor of EYIS violated
Sec 123.1 par (d), (e) and (f) of Intellectual Property Code, having first filed an application for
the mark. EYIS 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.
EYIS and Yap denied the claim of Shen Dar. They alleged that Shen Dar supplied them
with air compressors which 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 IP
Code.
Director of BLA decided in favor of EYIS declaring the same as the true owner of the mark
and holding that Shen Dae failed to present evidence. On appeal, IPO Director General upheld the
COR issued in favor of EYIS while cancelling the COR of Shen Dar.
When elevated to Court of Appeals, the decision was reversed. CA ruled that IPO failed
to properly apply the provisions of Secs 123.1(d) of IPO, 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. 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.

ISSUE:
Whether or not EYIS has rights over the trademark VESPA.

RULING:
 Yes, EYIS has rights over the trademark VESPA. There was no justifiable reason for the
CA to disregard the factual findings of the IPO being supported by clear and convincing
evidence.
While the IPC espouses the first-to-file rule under Sec 123.1 (d), this must not, however,
be interpreted to mean that ownership should be based upon an earlier filing date. Although 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.
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.
It was shown in an Invoice issued by EYIS dated March 29, 1995 that EYIS sold four
units of VESPA air compressors to Veteran Paint Trade Center. The truth, as supported by the
evidence on record, is that EYIS was first to use the mark. Although EYIS indicated in its
trademark application that its first use was in December 22, 1998, it was able to prove by clear
and positive evidence of use prior to such date. 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 as evidenced by 371 invoices. 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.
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 under the NIRC that
a sales invoice should accurately state the nature of all the businesses of the seller.
Here, the incontrovertible truth, as established by the evidence submitted by the parties, is
that EYIS is the prior user of the mark. Shen Dar failed to refute the evidence presented by
EYIS and also failed to prove its own prior use of the mark VESPA.
As such, EYIS must be considered as the prior and continuous user of the mark VESPA
and its true owner. Hence, EYIS is entitled to the registration of the mark in its name.
Petition was granted. Decision of CA was reversed.