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RepublicofthePhilippines
SUPREMECOURT
Manila

FIRSTDIVISION

G.R.No.184850October20,2010

E.Y.INDUSTRIALSALES,INC.andENGRACIOYAP,Petitioners,
vs.
SHENDARELECTRICITYANDMACHINERYCO.,LTD.,Respondent.

DECISION

VELASCO,JR.,J.:

TheCase

ThisPetitionforReviewonCertiorariunderRule45seekstonullifyandreversetheFebruary21,2008Decision1
andtheOctober6,2008Resolution2renderedbytheCourtofAppeals(CA)inCAG.R.SPNo.99356entitledShen
DarElectricityandMachineryCo.,Ltd.v.E.Y.IndustrialSales,Inc.andEngracioYap.

TheassaileddecisionreversedtheDecisiondatedMay25,20073issuedbytheDirectorGeneraloftheIntellectual
Property Office (IPO) in Inter Partes Case No. 14200400084. The IPO Director General upheld Certificate of
Registration (COR) No. 41999005393 issued by the IPO for the trademark "VESPA" in favor of petitioner E.Y.
Industrial Sales, Inc. (EYIS), but ordered the cancellation of COR No. 41997121492, also for the trademark
"VESPA,"issuedinfavorofrespondentShenDarElectricityandMachineryCo.,Ltd.(ShenDar).TheDecisionof
theIPODirectorGeneral,ineffect,affirmedtheDecisiondatedMay29,20064issuedbytheDirectoroftheBureau
ofLegalAffairs(BLA)oftheIPO.

TheFacts

EYIS is a domestic corporation engaged in the production, distribution and sale of air compressors and other
industrialtoolsandequipment.5PetitionerEngracioYapistheChairmanoftheBoardofDirectorsofEYIS.6

RespondentShenDarisaTaiwanbasedforeigncorporationengagedinthemanufactureofaircompressors.7

Bothcompaniesclaimedtohavetherighttoregisterthetrademark"VESPA"foraircompressors.

From1997to2004,EYISimportedaircompressorsfromShenDarthroughsalescontracts.IntheSalesContract
dated April 20, 2002,8 for example, Shen Dar would supply EYIS in one (1) year with 24 to 30 units of 40ft.
containersworthofaircompressorsidentifiedinthePacking/WeightListssimplyasSD23,SD29,SD31,SD32,
SD39, SD67 and SD68. In the corresponding Bill of Ladings, the items were described merely as air
compressors.9Thereisnodocumentaryevidencetoshowthatsuchaircompressorsweremarked"VESPA."

On June 9, 1997, Shen Dar filed Trademark Application Serial No. 41997121492 with the IPO for the mark
"VESPA,ChineseCharactersandDevice"foruseonaircompressorsandweldingmachines.10

OnJuly28,1999,EYISfiledTrademarkApplicationSerialNo.41999005393,alsoforthemark"VESPA,"foruse
onaircompressors.11OnJanuary18,2004,theIPOissuedCORNo.41999005393infavorofEYIS.12Thereafter,
onFebruary8,2007,ShenDarwasalsoissuedCORNo.41997121492.13

Inthemeantime,onJune21,2004,ShenDarfiledaPetitionforCancellationofEYISCORwiththeBLA.14Inthe
Petition,ShenDarprimarilyarguedthattheissuanceoftheCORinfavorofEYISviolatedSection123.1paragraphs
(d),(e)and(f)ofRepublicActNo.(RA)8293,otherwiseknownastheIntellectualPropertyCode(IPCode),having
firstfiledanapplicationforthemark.ShenDarfurtherallegedthatEYISwasameredistributorofaircompressors
bearingthemark"VESPA"whichitimportedfromShenDar.ShenDaralsoarguedthatithadpriorandexclusive
right to the use and registration of the mark "VESPA" in the Philippines under the provisions of the Paris
Convention.15

InitsAnswer,EYISandYapdeniedtheclaimofShenDartobethetrueownersofthemark"VESPA"beingthesole
assembler and fabricator of air compressors since the early 1990s. They further alleged that the air compressors
thatShenDarallegedlysuppliedthemborethemark"SD"forShenDarandnot"VESPA."Moreover,EYISargued
that Shen Dar, not being the owner of the mark, could not seek protection from the provisions of the Paris
ConventionortheIPCode.16

Thereafter,theDirectoroftheBLAissueditsDecisiondatedMay29,2006infavorofEYISandagainstShenDar,
thedispositiveportionofwhichreads:

WHEREFORE, premises considered, the Petition for Cancellation is, as it is hereby, DENIED. Consequently,
CertificateofRegistrationNo.41999[005393]forthemark"VESPA"grantedinthenameofE.Y.IndustrialSales,
Inc.on9January2007isherebyupheld.

LetthefilewrapperofVESPAsubjectmatterofthiscasebeforwardedtotheAdministrative,FinancialandHuman
ResourceDevelopmentServicesBureauforissuanceandappropriateactioninaccordancewiththisDECISIONand
acopythereoffurnishedtotheBureauofTrademarksforinformationandupdateofitsrecords.

SOORDERED.17

Shen Dar appealed the decision of the BLA Director to the Director General of the IPO. In the appeal, Shen Dar
raisedthefollowingissues:

1.WhethertheBLADirectorerredinrulingthatShenDarfailedtopresentevidence

2.WhethertheregistrationofEYISapplicationwasproperconsideringthatShenDarwasthefirsttofilean
applicationforthemarkand

3.WhethertheBLADirectorcorrectlyruledthatEYISisthetrueownerofthemark.18

Later,theIPODirectorGeneralissuedaDecisiondatedMay25,2007upholdingtheCORissuedinfavorofEYIS
whilecancellingtheCORofShenDar,thedispositiveportionofwhichreads:

WHEREFORE,premisesconsidered,theappealisDENIED.CertificateofRegistrationNo.41999005393forthe
mark VESPA for air compressor issued in favor of Appellee is hereby upheld. Consequently, Certificate of
RegistrationNo.41997121492forthemarkVESPA,ChineseCharacters&Deviceforgoodsaircompressorand
spotweldingmachineissuedinfavorofAppellantisherebyorderedcancelled.

LetacopyofthisDecisionaswellastherecordsofthiscasebefurnishedandreturnedtotheDirectorofBureauof
LegalAffairsforappropriateaction.Further,letalsotheDirectorsoftheBureauofTrademarks,theAdministrative,
Financial and Human Resources Development Services Bureau, and the Documentation, Information and
TechnologyTransferBureaubefurnishedacopyofthisDecisionforinformation,guidance,andrecordspurposes.19

ShenDarappealedtheabovedecisionoftheIPODirectorGeneraltotheCAwhereShenDarraisedthefollowing
issues:

1.WhetherShenDarisguiltyofforumshopping

2.Whetherthefirsttofileruleappliestotheinstantcase

3.WhetherShenDarpresentedevidenceofactualuse

4.WhetherEYISisthetrueownerofthemark"VESPA"

5. Whether the IPO Director General erred in cancelling Shen Dars COR No. 41997121492 without a
petitionforcancellationand

6.WhetherShenDarsustaineddamages.20

Intheassaileddecision,theCAreversedtheIPODirectorGeneralandruledinfavorofShenDar.Thedispositive
portionstates:
WHEREFORE,premisesconsidered,thepetitionisGRANTED.Consequently,theassaileddecisionoftheDirector
General of the Intellectual Property Office dated May 25, 2007 is hereby REVERSED and SET ASIDE. In lieu
thereof,anewoneisentered:a)orderingthecancellationofCertificateofRegistrationNo.41999005393issued
onJanuary19,2004forthetrademarkVESPAinfavorofE.Y.IndustrialSales,Inc.b)orderingtherestorationofthe
validity of Certificate of Registration No. 41997121492 for the trademark VESPA in favor of Shen Dar Electricity
andMachineryCo.,Ltd.Nopronouncementastocosts.

SOORDERED.21

InrulingforShenDar,theCAruledthat,despitethefactthatShenDardidnotformallyofferitsevidencebeforethe
BLA,suchevidencewasproperlyattachedtothePetitionforCancellation.Assuch,ShenDarsevidencemaybe
properlyconsidered.TheCAalsoenunciatedthattheIPOfailedtoproperlyapplytheprovisionsofSec.123.1(d)of
RA8293,whichprohibitstheregistrationofatrademarkinfavorofapartywhenthereisanearlierfiledapplication
forthesamemark.TheCAfurtherruledthatShenDarshouldbeconsideredtohaveprioruseofthemarkbasedon
the statements made by the parties in their respective Declarations of Actual Use. The CA added that EYIS is a
mereimporteroftheaircompressorswiththemark"VESPA"asmaybegleanedfromitsreceiptswhichindicated
thatEYISisanimporter,wholesalerandretailer,andtherefore,cannotbeconsideredanownerofthemark.22

EYISfiledamotionforreconsiderationoftheassaileddecisionwhichtheCAdeniedintheassailedresolution.

Hence,theinstantappeal.

Issues

EYISandYapraisethefollowingissuesintheirpetition:

A. Whether the Director General of the IPO correctly upheld the rights of Petitioners over the trademark
VESPA.

B. Whether the Director General of the IPO can, under the circumstances, order the cancellation of
Respondents certificate of registration for VESPA, which has been fraudulently obtained and erroneously
issued.

C.WhethertheHonorableCourtofAppealswasjustifiedinreversingthefindingsoffactoftheIPO,which
affirmtherightsofPetitionerEYISoverthetrademarkVESPAandwhensuchfindingsaresupportedbythe
evidenceonrecord.

D. Whether this Honorable Court may review questions of fact considering that the findings of the Court of
Appeals and the IPO are in conflict and the conclusions of the appellee court are contradicted by the
evidenceonrecord.23

TheRulingoftheCourt

Theappealismeritorious.

FirstIssue:

WhetherthisCourtmayreviewthequestionsoffactpresented

Petitionersraisethefactualissueofwhothetrueownerofthemarkis.Asageneralrule,thisCourtisnotatrierof
facts.However,suchruleissubjecttoexceptions.

InNewCityBuilders,Inc.v.NationalLaborRelationsCommission,24theCourtruledthat:

WeareverymuchawarethattheruletotheeffectthatthisCourtisnotatrieroffactsadmitsofexceptions.Aswe
havestatedinInsularLifeAssuranceCompany,Ltd.vs.CA:

[i]tisasettledrulethatintheexerciseoftheSupremeCourtspowerofreview,theCourtisnotatrieroffactsand
doesnotnormallyundertakethereexaminationoftheevidencepresentedbythecontendingpartiesduringthetrial
ofthecaseconsideringthatthefindingsoffactsoftheCAareconclusiveandbindingontheCourt.However,the
Court had recognized several exceptions to this rule, to wit: (1) when the findings are grounded entirely on
speculation,surmisesorconjectures(2)whentheinferencemadeismanifestlymistaken,absurdorimpossible(3)
whenthereisgraveabuseofdiscretion(4)whenthejudgmentisbasedonamisapprehensionoffacts(5)when
thefindingsoffactsareconflicting(6)wheninmakingitsfindingstheCourtofAppealswentbeyondtheissuesof
the case, or its findings are contrary to the admissions of both the appellant and the appellee (7) when the
findingsarecontrarytothetrialcourt(8)whenthefindingsareconclusionswithoutcitationofspecificevidence
on which they are based (9) when the facts set forth in the petition as well as in the petitioners main and reply
briefsarenotdisputedbytherespondent(10)whenthefindingsoffactarepremisedonthesupposedabsenceof
evidence and contradicted by the evidence on record and (11) when the Court of Appeals manifestly overlooked
certainrelevantfactsnotdisputedbytheparties,which,ifproperlyconsidered,wouldjustifyadifferentconclusion.
(Emphasissupplied.)

In the instant case, 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.

SecondIssue:

WhetherevidencepresentedbeforetheBLAmustbeformallyoffered

Preliminarily, it must be noted that the BLA ruled that Shen Dar failed to adduce evidence in support of its
allegationsasrequiredunderOfficeOrderNo.79,Seriesof2005,AmendmentstotheRegulationsonInterPartes
Proceedings,havingfailedtoformallyofferitsevidenceduringtheproceedingsbeforeit.TheBLAruled:

At the outset, we note petitioners failure to adduce any evidence in support of its allegations in the Petition for
Cancellation.PetitionerdidnotfilenorsubmititsmarkedevidenceasrequiredinthisBureausOrderNo.2006157
dated25January2006incompliancewithOfficeOrderNo.79,Seriesof2005,AmendmentstotheRegulationson
InterPartesProceedings.25xxx

Inreversingsuchfinding,theCAcitedSec.2.4ofBLAMemorandumCircularNo.03,Seriesof2005,whichstates:

Section2.4.Inallcases,failuretofilethedocumentaryevidencesinaccordancewithSections7and8oftherules
on summary proceedings shall be construed as a waiver on the part of the parties. In such a case, the original
petition,opposition,answerandthesupportingdocumentsthereinshallconstitutetheentireevidencefortheparties
subjecttoapplicablerules.

TheCAconcludedthatShenDarneedednotformallyofferitsevidencebutmerelyneededtoattachitsevidenceto
itspositionpaperwiththepropermarkings,26whichitdidinthiscase.

TheIPCodeprovidesunderitsSec.10.3thattheDirectorGeneraloftheIPOshallestablishtheprocedureforthe
applicationfortheregistrationofatrademark,aswellastheoppositiontoit:

Section10.TheBureauofLegalAffairs.TheBureauofLegalAffairsshallhavethefollowingfunctions:

xxxx

10.3. The Director General may by Regulations establish the procedure to govern the implementation of this
Section.

Thus, the Director General issued Office Order No. 79, Series of 2005 amending the regulations on Inter Partes
Proceedings,Sec.12.1ofwhichprovides:

Section12.EvidencefortheParties

12.1. The verified petition or opposition, reply if any, duly marked affidavits of the witnesses, and the documents
submitted,shallconstitutetheentireevidenceforthepetitioneroropposer.Theverifiedanswer,rejoinderifany,and
the duly marked affidavits and documents submitted shall constitute the evidence for the respondent. Affidavits,
documentsandotherevidencenotsubmittedanddulymarkedinaccordancewiththeprecedingsectionsshallnot
beadmittedasevidence.

TheprecedingsectionsreferredtointheaboveprovisionrefertoSecs.7.1,8.1and9which,inturn,provide:

Section7.FilingofPetitionorOpposition

7.1. The petition or opposition, together with the affidavits of witnesses and originals of the documents and other
requirements, shall be filed with the Bureau, provided, that in case of public documents, certified copies shall be
allowedinlieuoftheoriginals.TheBureaushallcheckifthepetitionoroppositionisindueformasprovidedinthe
RegulationsparticularlyRule3,Section3Rule4,Section2Rule5,Section3Rule6,Section9Rule7,Sections
3and5Rule8,Sections3and4.Forpetitionforcancellationoflayoutdesign(topography)ofintegratedcircuits,
Rule3,Section3appliesastotheformandrequirements.Theaffidavits,documentsandotherevidenceshallbe
markedconsecutivelyas"Exhibits"beginningwiththeletter"A".

Section8.Answer
8.1.Withinthree(3)workingdaysfromreceiptofthepetitionoropposition,theBureaushallissueanorderforthe
respondenttofileananswertogetherwiththeaffidavitsofwitnessesandoriginalsofdocuments,andatthesame
timeshallnotifyallpartiesrequiredto benotifiedinthe IPCodeandtheseRegulations,provided,that incaseof
publicdocuments,certifiedtruecopiesmaybesubmittedinlieuoftheoriginals.Theaffidavitsanddocumentsshall
bemarkedconsecutivelyas"Exhibits"beginningwiththenumber"1".

Section9.PetitionorOppositionandAnswermustbeverifiedSubjecttoRules7and8oftheseregulations,the
petitionoroppositionandtheanswermustbeverified.Otherwise,thesameshallnotbeconsideredashavingbeen
filed.

In other words, 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.
Thereisnorequirementundertheabovementionedrulesthattheevidenceofthepartiesmustbeformallyofferedto
theBLA.

In any case, as a quasijudicial 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,beproperlyconsideredintheresolutionofthecase.

ThirdIssue:

WhethertheIPODirectorGeneralcan

validlycancelShenDarsCertificateofRegistration

InhisDecision,theIPODirectorGeneralstatedthat,despitethefactthattheinstantcasewasforthecancellationof
theCORissuedinfavorofEYIS,theinterestsofjusticedictate,andinviewofitsfindings,thattheCORofShenDar
mustbecancelled.TheDirectorGeneralexplained:

Accordingly,whiletheinstantcaseinvolvesapetitiontocanceltheregistrationoftheAppelleestrademarkVESPA,
the interest of justice requires that Certificate of Registration No. 41997121492 be cancelled. While the normal
courseofproceedingsshouldhavebeenthefilingofapetitionforcancellationofCertificateofRegistrationNo.4
1997121492,thatwouldinvolvecriticalfactsandissuesthathavealreadybeenresolvedinthiscase.Toallowthe
ApplicanttostillmaintainintheTrademarkRegistryCertificateofRegistrationNo.41997121492wouldnullifythe
exclusive rights of Appellee as the true and registered owner of the mark VESPA and defeat the purpose of the
trademarkregistrationsystem.27

ShenDarchallengestheproprietyofsuchcancellationonthegroundthattherewasnopetitionforcancellationas
requiredunderSec.151ofRA8293.

OfficeOrderNo.79,Seriesof2005,providesunderitsSec.5that:

Section 5. Rules of Procedure to be followed in the conduct of hearing of Inter Partes cases.The rules of
procedurehereincontainedprimarilyapplyintheconductofhearingofInterPartescases.TheRulesofCourtmay
beappliedsuppletorily.TheBureaushallnotbeboundbystricttechnicalrulesofprocedureandevidencebutmay
adopt, in the absence of any applicable rule herein, such mode of proceedings which is consistent with the
requirementsoffairplayandconducivetothejust,speedyandinexpensivedispositionofcases,andwhichwillgive
theBureauthegreatestpossibilitytofocusonthecontentiousissuesbeforeit.(Emphasissupplied.)

Theaboverulereflectstheoftrepeatedlegalprinciplethatquasijudicialandadministrativebodiesarenotboundby
technicalrulesofprocedure.Suchprinciple,however,istemperedbyfundamentalevidentiaryrules,includingdue
process.Thus,weruledinAyaay,Sr.v.ArpaphilShippingCorp.:28

That administrative quasijudicial bodies like the NLRC are not bound by technical rules of procedure in the
adjudicationofcasesdoesnotmeanthatthebasicrulesonprovingallegationsshouldbeentirelydispensedwith.A
party alleging a critical fact must still support his allegation with substantial evidence. Any decision based on
unsubstantiatedallegationcannotstandasitwilloffenddueprocess.

xxxTheliberalityofprocedureinadministrativeactionsissubjecttolimitationsimposedbybasicrequirementsof
dueprocess.AsthisCourtsaidinAngTibayv.CIR,theprovisionforflexibilityinadministrativeprocedure"doesnot
gosofarastojustifyorderswithoutabasisinevidencehavingrationalprobativevalue."Morespecifically,asheldin
Uichicov.NLRC:

It is true that administrative and quasijudicial bodies like the NLRC are not bound by the technical rules of
procedure in the adjudication of cases. However, this procedural rule should not be construed as a license to
disregardcertainfundamentalevidentiaryrules.

ThiswaslaterreiteratedinLepantoConsolidatedMiningCompanyv.Dumapis:29

While it is true that administrative or quasijudicial bodies like the NLRC are not bound by the technical rules of
procedureintheadjudicationofcases,thisproceduralruleshouldnotbeconstruedasalicensetodisregardcertain
fundamentalevidentiaryrules.Theevidencepresentedmustatleasthaveamodicumofadmissibilityforittohave
probativevalue.Notonlymusttherebesomeevidencetosupportafindingorconclusion,buttheevidencemustbe
substantial. Substantial evidence is more than a mere scintilla. It means such relevant evidence as a reasonable
mind might accept as adequate to support a conclusion. Thus, even though technical rules of evidence are not
strictlycompliedwithbeforetheLAandtheNLRC,theirdecisionmustbebasedonevidencethatmust,atthevery
least,besubstantial.

The fact that no petition for cancellation was filed against the COR issued to Shen Dar does not preclude the
cancellationofShenDarsCOR.Itmustbeemphasizedthat,duringthehearingforthecancellationofEYISCOR
beforetheBLA,ShenDartriedtoestablishthatit,notEYIS,wasthetrueownerofthemark"VESPA"and,thus,
entitled to have it registered. Shen Dar had more than sufficient opportunity to present its evidence and argue its
case,anditdid.Itwasgivenitsdayincourtanditsrighttodueprocesswasrespected.TheIPODirectorGenerals
disregardoftheprocedureforthecancellationofaregisteredmarkwasavalidexerciseofhisdiscretion.

FourthIssue:

WhetherthefactualfindingsoftheIPOarebindingontheCA

Next,petitionerschallengetheCAsreversalofthefactualfindingsoftheBLAthatShenDarandnotEYISisthe
prior user and, therefore, true owner of the mark. In arguing its position, petitioners cite numerous rulings of this
Court where it was enunciated that the factual findings of administrative bodies are given great weight if not
conclusiveuponthecourtswhensupportedbysubstantialevidence.

Weagreewithpetitionersthatthegeneralruleinthisjurisdictionisthatthefactualfindingsofadministrativebodies
deserveutmostrespectwhensupportedbyevidence.However,suchgeneralruleissubjecttoexceptions.

InFuentesv.CourtofAppeals,30theCourtestablishedtheruleofconclusivenessoffactualfindingsoftheCAas
follows:

Jurisprudence teaches us that "(a)s a rule, the jurisdiction of this Court in cases brought to it from the Court of
Appealsxxxislimitedtothereviewandrevisionoferrorsoflawallegedlycommittedbytheappellatecourt,asits
findingsoffactaredeemedconclusive.AssuchthisCourtisnotdutyboundtoanalyzeandweighalloveragainthe
evidencealreadyconsideredintheproceedingsbelow.Thisrule,however,isnotwithoutexceptions."Thefindings
offactoftheCourtofAppeals,whichareasageneralruledeemedconclusive,mayadmitofreviewbythisCourt:

(1)whenthefactualfindingsoftheCourtofAppealsandthetrialcourtarecontradictory

(2)whenthefindingsaregroundedentirelyonspeculation,surmises,orconjectures

(3)whentheinferencemadebytheCourtofAppealsfromitsfindingsoffactismanifestlymistaken,absurd,
orimpossible

(4)whenthereisgraveabuseofdiscretionintheappreciationoffacts

(5)whentheappellatecourt,inmakingitsfindings,goesbeyondtheissuesofthecase,andsuchfindingsare
contrarytotheadmissionsofbothappellantandappellee

(6)whenthejudgmentoftheCourtofAppealsispremisedonamisapprehensionoffacts

(7)whentheCourtofAppealsfailstonoticecertainrelevantfactswhich,ifproperlyconsidered,willjustifya
differentconclusion

(8)whenthefindingsoffactarethemselvesconflicting

(9)whenthefindingsoffactareconclusionswithoutcitationofthespecificevidenceonwhichtheyarebased
and

(10) when the findings of fact of the Court of Appeals are premised on the absence of evidence but such
findingsarecontradictedbytheevidenceonrecord.(Emphasissupplied.)
Thereafter,inVillaflorv.CourtofAppeals,31thisCourtappliedtheaboveprincipletofactualfindingsofquasijudicial
bodies,towit:

Proceeding by analogy, the exceptions to the rule on conclusiveness of factual findings of the Court of Appeals,
enumeratedinFuentesvs.CourtofAppeals,canalsobeappliedtothoseofquasijudicialbodiesxxx.(Emphasis
supplied.)

Here, the CA identified certain material facts that were allegedly overlooked by the BLA and the IPO Director
Generalwhichitopined,whencorrectlyappreciated,wouldaltertheresultofthecase.AnexaminationoftheIPO
Decisions,however,wouldshowthatnosuchevidencewasoverlooked.

First,astothedateoffirstuseofthemarkbytheparties,theCAstated:

Tobeginwith,whenrespondentsappelleesfileditsapplicationforregistrationoftheVESPAtrademarkonJuly28,
1999, they stated under oath, as found in their DECLARATION OF ACTUAL USE, that their first use of the mark
wasonDecember22,1998.Ontheotherhand,[ShenDar]initsapplicationdatedJune09,1997stated,likewise
underoathintheirDECLARATIONOFACTUALUSE,thatitsfirstuseofthemarkwasinJune1996.Thiscannotbe
madeanyclearer.[ShenDar]wasnotonlythefirsttofileanapplicationforregistrationbutlikewisefirsttousesaid
registrablemark.32

Evidently,theCAanchorsitsfindingthatShenDarwasthefirsttousethemarkonthestatementsofthepartiesin
theirrespectiveDeclarationsofActualUse.Suchconclusionisprematureatbest.WhileaDeclarationofActualUse
is a notarized document, hence, a public document, it is not conclusive as to the fact of first use of a mark. The
declarationmustbeaccompaniedbyproofofactualuseasofthedateclaimed.Inadeclarationofactualuse,the
applicantmust,therefore,presentevidenceofsuchactualuse.

TheBLAruledonthesameissue,asfollows:

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
E.Y. Industrial and Bill of Lading (Exhibits 4 to 375). Sales Invoice No. 12075 dated March 27, 1995 antedates
petitionersdateoffirstuseonJanuary1,1997indicatedinitstrademarkapplicationfiledonJune9,1997aswell
asthedateoffirstuseinJuneof1996asindicatedintheDeclarationofActualUsesubmittedonDecember3,2001
(Exhibit385).Theusebyrespondentregistrantintheconceptofownerisshownbycommercialdocuments,sales
invoicesunambiguouslydescribingthegoodsas"VESPA"aircompressors.Privaterespondentshavesoldtheair
compressorsbearingthe"VESPA"tovariouslocationsinthePhilippines,asfarasMindanaoandtheVisayassince
theearly1990s.Wecarefullyinspectedtheevidenceconsistingofthreehundredseventyone(371)invoicesand
shipmentdocumentswhichshowthatVESPAaircompressorsweresoldnotonlyinManila,buttolocationssuchas
IloiloCity,CebuCity,DumagueteCity,ZamboangaCity,CagayandeOroCity,DavaoCity,tonameafew.Thereis
nodoubtthatitisthroughprivaterespondentseffortsthatthemark"VESPA"usedonaircompressorshasgained
businessgoodwillandreputationinthe Philippinesforwhichithasvalidlyacquiredtrademarkrights.Respondent
E.Y.IndustrialsrighthasbeenpreserveduntilthepassageofRA8293whichentitlesittoregisterthesame.33

Comparatively,theBLAsfindingswerefoundedupontheevidencepresentedbytheparties.Anexampleofsuch
evidenceisInvoiceNo.12075datedMarch29,199534 where EYIS sold four units of VESPA air compressors to
Veteran Paint Trade Center. Shen Dar failed to rebut such evidence. The truth, as supported by the evidence on
record,isthatEYISwasfirsttousethemark.

Moreover, the discrepancy in the date provided in the Declaration of Actual Use filed by EYIS and the proof
submittedwasappropriatelyconsideredbytheBLA,rulingasfollows:

On the contrary, respondent EY Industrial was able to prove the use of the mark "VESPA" on the concept of an
owner as early as 1991. Although Respondent E.Y. indicated in its trademark application that its first use was in
December22,1998,itwasabletoprovebyclearandpositiveevidenceofusepriortosuchdate.

In Chuang Te v. Ng KianGuiab and Director of Patents, L23791, 23 November 1966, the High Court clarified:
Where an applicant for registration of a trademark states under oath the date of his earliest use, and later on he
wishestocarrybackhisfirstdateofusetoanearlierdate,hethentakesonthegreaterburdenofpresenting"clear
andconvincingevidence"ofadoptionanduseasofthatearlierdate.(B.R.BakerCo.vs.LebrowBros.,150F.2d
580.)35

The CAfurtherfoundthat EYISisnotamanufacturerofaircompressorsbutmerelyimportsandsellsthemasa

wholesalerandretailer.TheCAreasoned:
Conversely,acarefulperusalofappelleesownsubmittedreceiptsshowsthatitisnotmanufacturerbutanimporter,
wholesalerandretailer.Thisfactiscorroboratedbythetestimonyofaformeremployeeofappellees.Admittedlytoo,
appelleesareimportingaircompressorsfrom[ShenDar]from1997to2004.Thesematters,lendcredenceto[Shen
Dars] claim that the letters SD followed by a number inscribed in the air compressor is only to describe its type,
manufacturer business name and capacity. The VESPA mark is in the sticker which is attached to the air
compressors. The ruling of the Supreme Court, in the case of UNNO Commercial Enterprises, Inc. vs. General
MillingCorporationetal.,isquiteenlightening,thusWequote:

"Thetermownerdoesnotincludetheimporterofthegoodsbearingthetrademark,tradename,servicemark,or
othermarkofownership,unlesssuchimporterisactuallytheownerthereofinthecountryfromwhichthegoodsare
imported. Thus, this Court, has on several occasions ruled that where the applicants alleged ownership is not
shown in any notarial document and the applicant appears to be merely an importer or distributor of the
merchandisecoveredbysaidtrademark,itsapplicationcannotbegranted."36

This is a non sequitur. It does not follow. The fact that EYIS described itself in its sales invoice as an importer,
wholesalerandretailerdoesnotprecludeitsbeingamanufacturer.Sec.237oftheNationalInternalRevenueCode
states:

Section237.IssuanceofReceiptsorSalesorCommercialInvoices.Allpersonssubjecttoaninternalrevenuetax
shall,foreachsaleandtransferofmerchandiseorforservicesrenderedvaluedatTwentyfivepesos(P25.00)or
more,issuedulyregisteredreceiptsorsaleorcommercialinvoices,preparedatleastinduplicate,showingthedate
of transaction, quantity, unit cost and description of merchandise or nature of service: Provided, however, That
where the receipt is issued to cover payment made as rentals, commissions, compensation or fees, receipts or
invoicesshallbeissuedwhichshallshowthename,businessstyle,ifany,andaddressofthepurchaser,customer
orclient.

Theoriginalofeachreceiptorinvoiceshallbeissuedtothepurchaser,customerorclientatthetimethetransaction
iseffected,who,ifengagedinbusinessorintheexerciseofprofession,shallkeepandpreservethesameinhis
placeofbusinessforaperiodofthree(3)yearsfromthecloseofthetaxableyearinwhichsuchinvoiceorreceipt
wasissued,whiletheduplicateshallbekeptandpreservedbytheissuer,alsoinhisplaceofbusiness,foralike
period.

The Commissioner may, in meritorious cases, exempt any person subject to an internal revenue tax from
compliancewiththeprovisionsofthisSection.(Emphasissupplied.)

Correlatively,inRevenueMemorandumNo.162003datedMay20,2003,theBureauofInternalRevenuedefineda
SalesInvoiceandidentifieditsrequiredinformationasfollows:

SalesInvoices(SI)/CashInvoice(CI)iswrittenaccountofgoodssoldorservicesrenderedandthepricescharged
therefor used in the ordinary course of business evidencing sale and transfer or agreement to sell or transfer of
goodsandservices.ItcontainsthesameinformationfoundintheOfficialReceipt.

Official Receipt (OR) is a receipt issued for the payment of services rendered or goods sold. It contains the
followinginformation:

a.Businessnameandaddress

b.TaxpayerIdentificationNumber

c.Nameofprinter(BIRPermitNo.)withinclusiveserialnumberofbookletsanddateofissuanceofreceipts.

Thereisnorequirementthatasalesinvoiceshouldaccuratelystatethenatureofallthebusinessesoftheseller.
ThereisnolegalgroundtostatethatEYIS"declaration"initssalesinvoicesthatitisanimporter,wholesalerand
retailerisrestrictiveandwouldprecludeitsbeingamanufacturer.

Fromtheabovefindings,therewasnojustifiablereasonfortheCAtodisregardthefactualfindingsoftheIPO.The
rulings of the IPO Director General and the BLA Director were supported by clear and convincing evidence. The
factscitedbytheCAandShenDardonotjustifyadifferentconclusionfromthatoftheIPO.Hence,thefindingsof
theBLADirectorandtheIPODirectorGeneralmustbedeemedasconclusiveontheCA.

FifthIssue:

WhetherEYISisthetrueownerofthemark"VESPA"

Inanyevent,giventhelengthoftimealreadyinvestedbythepartiesintheinstantcase,thisCourtmustwritefinisto
theinstantcontroversybydetermining,onceandforall,thetrueownerofthemark"VESPA"basedontheevidence
presented.

RA8293espousesthe"firsttofile"ruleasstatedunderSec.123.1(d)whichstates:

Section123.Registrability.123.1.Amarkcannotberegisteredifit:

xxxx

(d) Is identical with a registered mark belonging to a different proprietor or a mark with an earlier filing or priority
date,inrespectof:

(i)Thesamegoodsorservices,or

(ii)Closelyrelatedgoodsorservices,or

(iii)Ifitnearlyresemblessuchamarkastobelikelytodeceiveorcauseconfusion.(Emphasissupplied.)

Underthisprovision,theregistrationofamarkispreventedwiththefilingofanearlierapplicationforregistration.
Thismustnot,however,beinterpretedtomeanthatownershipshouldbebaseduponanearlierfilingdate.While
RA8293removedthepreviousrequirementofproofofactualusepriortothefilingofanapplicationforregistration
of a mark, proof of prior and continuous use is necessary to establish ownership of a mark. Such ownership
constitutessufficientevidencetoopposetheregistrationofamark.

Sec.134oftheIPCodeprovidesthat"anypersonwhobelievesthathewouldbedamagedbytheregistrationofa
mark x x x" may file an opposition to the application. The term "any person" encompasses the true owner of the
markthepriorandcontinuoususer.

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 Shangrila
InternationalHotelManagement,Ltd.v.DevelopersGroupofCompanies,Inc.:37

Registration, without more, does not confer upon the registrant an absolute right to the registered mark. The
certificateofregistrationismerelyaprimafacieproofthattheregistrantistheowneroftheregisteredmarkortrade
name.Evidenceofpriorandcontinuoususeofthemarkortradenamebyanothercanovercomethepresumptive
ownershipoftheregistrantandmayverywellentitletheformertobedeclaredownerinanappropriatecase.

xxxx

Ownership of a mark or trade name may be acquired not necessarily by registration but by adoption and use in
tradeorcommerce.Asbetweenactualuseofamarkwithoutregistration,andregistrationofthemarkwithoutactual
use thereof, the former prevails over the latter. For a rule widely accepted and firmly entrenched, because it has
comedownthroughtheyears,isthatactualuseincommerceorbusinessisaprerequisitetotheacquisitionofthe
rightofownership.

xxxx

Byitself,registrationisnotamodeofacquiringownership.Whentheapplicantisnottheownerofthetrademark
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,isrebuttableandmustgivewaytoevidencetothecontrary.

Here, the incontrovertible truth, as established by the evidence submitted by the parties, is that EYIS is the prior
userofthemark.TheexhaustivediscussiononthemattermadebytheBLAsufficientlyaddressestheissue:

Basedontheevidence,RespondentE.Y.Industrialisalegitimatecorporationengagedinbuying,importing,selling,
industrialmachineriesandtools,manufacturing,amongotherssinceitsincorporationin1988.(Exhibit"1").Indeed
privaterespondentshavesubmittedphotographs(Exhibit"376","377","378","379")showinganassemblylineofits
manufacturingorassemblyprocess. 1avvphi1

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
respondentEYIndustrialandBillsofLading.(Exhibits"4"to"375").SalesInvoiceNo.12075datedMarch27,1995
antedatespetitionersdateoffirstuseinJanuary1,1997indicatedinitstrademarkapplicationfiledinJune9,1997
aswellasthedateoffirstuseinJuneof1996asindicatedintheDeclarationofActualUsesubmittedonDecember
3, 2001 (Exhibit "385"). The use by respondentregistrant in the concept of owner is shown by commercial
documents,salesinvoicesunambiguouslydescribingthegoodsas"VESPA"aircompressors.Privaterespondents
havesoldtheaircompressorsbearingthe"VESPA"tovariouslocationsinthePhilippines,asfarasMindanaoand
the Visayas since the early 1990s. We carefully inspected the evidence consisting of three hundred seventy one
(371)invoicesandshipmentdocumentswhichshowthat"VESPA"aircompressorsweresoldnotonlyinManila,but
tolocationssuchasIloiloCity,CebuCity,DumagueteCity,ZamboangaCity,CagayandeOroCity,DavaoCityto
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
trademarkrights.RespondentEYIndustrialsrighthasbeenpreserveduntilthepassageofRA8293whichentitlesit
toregisterthesame.xxx38

Ontheotherhand,ShenDarfailedtorefutetheevidencecitedbytheBLAinitsdecision.Moreimportantly,Shen
Darfailedtopresentsufficientevidencetoproveitsownprioruseofthemark"VESPA."Wecitewithapprovalthe
rulingoftheBLA:

[ShenDar]aversthatitisthetrueandrightfulownerofthetrademark"VESPA"usedonaircompressors.Thethrust
of [Shen Dars] argument is that respondent E.Y. Industrial Sales, Inc. is a mere distributor of the "VESPA" air
compressors.Wedisagree.

Thisconclusionisbeliedbytheevidence.WehavegoneovereachandeverydocumentattachedasAnnexes"A",
"A"148whichconsistofBillofLadingandPackingWeightList.Notoneofthesedocumentsreferredtoa"VESPA"
air compressor. Instead, it simply describes the goods plainly as air compressors which is type "SD" and not
"VESPA".Moreimportantly,theearliestdatereflectedontheBillofLadingwasonMay5,1997.(Annex"A"1).
[ShenDar]alsoattachedasAnnex"B"apurportedSalesContractwithrespondentEYIndustrialSalesdatedApril
20,2002.Surprisingly,nowhereinthedocumentdoesitstatethatrespondentEYIndustrialagreedtosell"VESPA"
air compressors. The document only mentions air compressors which if genuine merely bolsters respondent
EngracioYapscontentionthat[ShenDar]approachedthemifitcouldsellthe"ShenDar"or"SD"aircompressor.
(Exhibit "386") In its position paper, [Shen Dar] merely mentions of Bill of Lading constituting respondent as
consigneein1993butneversubmittedthesameforconsiderationofthisBureau.Thedocumentisalsonotsigned
by [Shen Dar]. The agreement was not even drafted in the letterhead of either [Shen Dar] nor [sic] respondent
registrant. Our only conclusion is that [Shen Dar] was not able to prove to be the owner of the VESPA mark by
appropriation.NeitherwasitabletoproveactualcommercialuseinthePhilippinesofthemarkVESPApriortoits
filingofatrademarkapplicationin9June1997.39

Assuch,EYISmustbeconsideredasthepriorandcontinuoususerofthemark"VESPA"anditstrueowner.Hence,
EYISisentitledtotheregistrationofthemarkinitsname.

WHEREFORE, the petition is hereby GRANTED. The CAs February 21, 2008 Decision and October 6, 2008
ResolutioninCAG.R.SPNo.99356areherebyREVERSEDandSETASIDE.TheDecisiondatedMay25,2007
issuedbytheIPODirectorGeneralinInterPartesCaseNo.14200400084andtheDecisiondatedMay29,2006
oftheBLADirectoroftheIPOareherebyREINSTATED.

Nocosts.

SOORDERED.

PRESBITEROJ.VELASCO,JR.
AssociateJustice

WECONCUR:

RENATOC.CORONA
ChiefJustice
Chairperson

TERESITAJ.LEONARDODECASTRO MARIANOC.DELCASTILLO
AssociateJustice AssociateJustice

JOSEPORTUGALPEREZ
AssociateJustice

CERTIFICATION

PursuanttoSection13,ArticleVIIIoftheConstitution,IcertifythattheconclusionsintheaboveDecisionhadbeen
reachedinconsultationbeforethecasewasassignedtothewriteroftheopinionoftheCourtsDivision.

RENATOC.CORONA
ChiefJustice
Footnotes
1Rollo,pp.5670.PennedbyAssociateJusticeEnricoA.LanzanasandconcurredinbyAssociateJustices
RemediosSalazarFernando(Chairperson)andRosalindaAsuncionVicente.
2Id.at7178.

3Id.at231241.

4Id.at218229.

5Id.at12.

6Id.at58.

7Id.at12.

8Id.at88.

9Id.at169173.

10Id.at57.

11Id.at234.

12Id.at57.

13Id.

14Id.

15Id.at58.

16Id.at5960.

17Id.at6061.

18Id.at61.

19Id.at5657.

20Id.at63.

21Id.at6970.

22Id.at6667.

23Id.at18.

24G.R.No.149281,June15,2005,460SCRA220,227.

25Rollo,p.225.

26Id.at68.

27Id.at241.

28G.R.No.155359,January31,2006,481SCRA282,296297.

29G.R.No.163210,August13,2008,562SCRA103,113114.
 30G.R.No.109849,February26,1997,268SCRA703,708709.

31G.R.No.95694,October9,1997,280SCRA297,330331.

32Rollo,pp.6667.

33Id.at228.

34Id.at173.

35Id.at227.

36Id.at6768.

37G.R.No.159938,March31,2006,486SCRA405,419421.

38Rollo,p.228.

39Id.at226.

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