IPL

October 20, 2010

On January 18, 2004, the IPO issued COR No. 4-1999-005393 in favor of EYIS. 12Thereafter,

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

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

on February 8, 2007, Shen Dar was also issued COR No. 4-1997-121492.13

In the meantime, on June 21, 2004, Shen Dar filed a Petition for Cancellation of EYIS COR with the
BLA.14 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.15

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.16

Thereafter, the Director of the BLA issued its Decision dated May 29, 2006 in favor of EYIS and against
Shen Dar, the dispositive portion of which reads:

G.R. No. 184850

DECISION
VELASCO, JR., J.:
The Case
This Petition for Review on Certiorari under Rule 45 seeks to nullify and reverse the February 21, 2008
Decision1and the October 6, 2008 Resolution2 rendered by the Court of Appeals (CA) in CA-G.R. SP No. 99356
entitled Shen Dar Electricity and Machinery Co., Ltd. v. E.Y. Industrial Sales, Inc. and Engracio Yap.
The assailed decision reversed the Decision dated May 25, 20073 issued by the Director General of the Intellectual
Property Office (IPO) in Inter Partes Case No. 14-2004-00084. The IPO Director General upheld Certificate of
Registration (COR) No. 4-1999-005393 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. 4-1997-121492, also for the trademark
"VESPA," issued in favor of respondent Shen Dar Electricity and Machinery Co., Ltd. (Shen Dar). The Decision of
the IPO Director General, in effect, affirmed the Decision dated May 29, 20064 issued by the Director of the Bureau
of Legal Affairs (BLA) of the IPO.

WHEREFORE, premises considered, the Petition for Cancellation is, as it is hereby, DENIED. Consequently,
Certificate of Registration No. 4-1999-[005393] for the mark "VESPA" granted in the name of E.Y. Industrial Sales,
Inc. on 9 January 2007 is hereby upheld.

The Facts

EYIS is a domestic corporation engaged in the production, distribution and sale of air compressors and
other industrial tools and equipment.5 Petitioner Engracio Yap is the Chairman of the Board of Directors
of EYIS.6

Let the filewrapper of VESPA subject matter of this case be forwarded to the Administrative, Financial and Human
Resource Development Services Bureau for issuance and appropriate action in accordance with this DECISION
and a copy thereof furnished to the Bureau of Trademarks for information and update of its records.
SO ORDERED.17

Respondent Shen Dar is a Taiwan-based foreign corporation engaged in the manufacture of air
compressors.7

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

1. Whether the BLA Director erred in ruling that Shen Dar failed to present evidence;

From 1997 to 2004, EYIS imported air compressors from Shen Dar through sales contracts. In the Sales Contract
dated April 20, 2002,8 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.9 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.10

On July 28, 1999, EYIS filed Trademark Application Serial No. 4-1999-005393, also for the mark
"VESPA," for use on air compressors.11

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

2. Whether the registration of EYIS application was proper considering that Shen Dar was the first to file
an application for the mark; and
3. Whether the BLA Director correctly ruled that EYIS is the true owner of the mark.18

Later, the 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, the dispositive portion of which reads:

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WHEREFORE, premises considered, the appeal is DENIED. Certificate of Registration No. 4-1999-005393 for the
mark VESPA for air compressor issued in favor of Appellee is hereby upheld. Consequently, Certificate of
Registration No. 4-1997-121492 for the mark VESPA, Chinese Characters & Device for goods air compressor and
spot welding machine issued in favor of Appellant is hereby ordered cancelled.
Let a copy of this Decision as well as the records of this case be furnished and returned to the Director of Bureau
of Legal Affairs for appropriate action. Further, let also the Directors of the Bureau of Trademarks, the
Administrative, Financial and Human Resources Development Services Bureau, and the Documentation,
Information and Technology Transfer Bureau be furnished a copy of this Decision for information, guidance, and
records purposes.19

Shen Dar appealed the above decision of the IPO Director General to the CA where Shen Dar raised the
following issues:
1. Whether Shen Dar is guilty of forum shopping;
2. Whether the first-to-file rule applies to the instant case;

the mark.22

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

Hence, the instant appeal.

Issues
EYIS and Yap raise the following issues in their petition:
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.

3. Whether Shen Dar presented evidence of actual use;

4. Whether EYIS is the true owner of the mark "VESPA";
5. Whether the IPO Director General erred in cancelling Shen Dars COR No. 4-1997-121492 without a
petition for cancellation; and
6. Whether Shen Dar sustained damages.20

In the assailed decision, the CA reversed the IPO Director General and ruled in favor of Shen Dar. The
dispositive portion states:

WHEREFORE, premises considered, the petition is GRANTED. Consequently, the assailed decision of the
Director General of the Intellectual Property Office dated May 25, 2007 is hereby REVERSED and SET ASIDE. In
lieu thereof, a new one is entered: a) ordering the cancellation of Certificate of Registration No. 4-1999-005393
issued on January 19, 2004 for the trademark VESPA in favor of E.Y. Industrial Sales, Inc.; b) ordering the
restoration of the validity of Certificate of Registration No. 4-1997-121492 for the trademark VESPA in favor of
Shen Dar Electricity and Machinery Co., Ltd. No pronouncement as to costs.
SO ORDERED.

21

In ruling for Shen Dar, the 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 Dars 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

C. Whether the Honorable Court of Appeals was justified in reversing the findings of fact of the IPO,
which affirm the rights of Petitioner EYIS over the trademark VESPA and when such findings are
supported by the evidence on record.
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
evidence on record.23
The Ruling of the Court
The appeal is meritorious.
First Issue:
Whether this Court may review the questions of fact presented
Petitioners raise the factual issue of who the true owner of the mark is. As a general rule, this Court is not a trier of
facts. However, such rule is subject to exceptions.
In New City Builders, Inc. v. National Labor Relations Commission, 24 the Court ruled that:
We are very much aware that the rule to the effect that this Court is not a trier of facts admits of exceptions. As we
have stated in Insular Life Assurance Company, Ltd. vs. CA:
[i]t is a settled rule that in the exercise of the Supreme Courts power of review, the Court is not a trier of facts and
does not normally undertake the re-examination of the evidence presented by the contending parties during the
trial of the case considering that the findings of facts of the CA are conclusive and binding on the Court. However,

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the Court had recognized several exceptions to this rule, to wit: (1) when the findings are grounded entirely on
speculation, surmises or conjectures; (2) when the inference made is manifestly mistaken, absurd or impossible;
(3) when there is grave abuse of discretion; (4) when the judgment is based on a misapprehension of facts; (5)
when the findings of facts are conflicting; (6) when in making its findings the Court of Appeals went beyond the
issues of the case, or its findings are contrary to the admissions of both the appellant and the appellee; (7) when
the findings are contrary to the trial court; (8) when the findings are conclusions without citation of specific
evidence on which they are based; (9) when the facts set forth in the petition as well as in the petitioners main and
reply briefs are not disputed by the respondent; (10) when the findings of fact are premised on the supposed
absence of evidence and contradicted by the evidence on record; and (11) when the Court of Appeals manifestly
overlooked certain relevant facts not disputed by the parties, which, if properly considered, would justify a different
conclusion. (Emphasis supplied.)

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

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.

The preceding sections referred to in the above provision refer to Secs. 7.1, 8.1 and 9 which, in turn, provide:

Second Issue:
Whether evidence presented before the BLA must be formally offered
Preliminarily, it must be noted that the BLA ruled that Shen Dar failed to adduce evidence in support of its
allegations as required under Office Order No. 79, Series of 2005, Amendments to the Regulations on Inter Partes
Proceedings, having failed to formally offer its evidence during the proceedings before it. The BLA ruled:
At the outset, we note petitioners failure to adduce any evidence in support of its allegations in the Petition for
Cancellation. Petitioner did not file nor submit its marked evidence as required in this Bureaus Order No. 2006-157
dated 25 January 2006 in compliance with Office Order No. 79, Series of 2005, Amendments to the Regulations on
Inter Partes Proceedings.25 x x x
In reversing such finding, the CA cited Sec. 2.4 of BLA Memorandum Circular No. 03, Series of 2005, which states:
Section 2.4. In all cases, failure to file the documentary evidences in accordance with Sections 7 and 8 of the rules
on summary proceedings shall be construed as a waiver on the part of the parties. In such a case, the original
petition, opposition, answer and the supporting documents therein shall constitute the entire evidence for the
parties subject to applicable rules.
The CA concluded that Shen Dar needed not formally offer its evidence but merely needed to attach its evidence
to its position paper with the proper markings,26 which it did in this case.
The IP Code provides under its Sec. 10.3 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:
Section 10. The Bureau of Legal Affairs.The Bureau of Legal Affairs shall have the following functions:

Section 12. Evidence for the Parties

12.1. The verified petition or opposition, reply if any, duly marked affidavits of the witnesses, and the documents
submitted, shall constitute the entire evidence for the petitioner or opposer. The verified answer, rejoinder if any,
and the duly marked affidavits and documents submitted shall constitute the evidence for the respondent.
Affidavits, documents and other evidence not submitted and duly marked in accordance with the preceding
sections shall not be admitted as evidence.

Section 7. Filing of Petition or Opposition

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
allowed in lieu of the originals. The Bureau shall check if the petition or opposition is in due form as provided in the
Regulations particularly Rule 3, Section 3; Rule 4, Section 2; Rule 5, Section 3; Rule 6, Section 9; Rule 7, Sections
3 and 5; Rule 8, Sections 3 and 4. For petition for cancellation of layout design (topography) of integrated circuits,
Rule 3, Section 3 applies as to the form and requirements. The affidavits, documents and other evidence shall be
marked consecutively as "Exhibits" beginning with the letter "A".
Section 8. Answer
8.1. Within three (3) working days from receipt of the petition or opposition, the Bureau shall issue an order for the
respondent to file an answer together with the affidavits of witnesses and originals of documents, and at the same
time shall notify all parties required to be notified in the IP Code and these Regulations, provided, that in case of
public documents, certified true copies may be submitted in lieu of the originals. The affidavits and documents shall
be marked consecutively as "Exhibits" beginning with the number "1".
Section 9. Petition or Opposition and Answer must be verified Subject to Rules 7 and 8 of these regulations, the
petition or opposition and the answer must be verified. Otherwise, the same shall not be considered as having
been 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.
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.

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

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

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In his Decision, the IPO Director General stated that, despite the fact that the instant case was for the cancellation
of the COR issued in favor of EYIS, the interests of justice dictate, and in view of its findings, that the COR of Shen
Dar must be cancelled. The Director General explained:

reasonable mind might accept as adequate to support a conclusion. Thus, even though technical rules of evidence
are not strictly complied with before the LA and the NLRC, their decision must be based on evidence that must, at
the very least, be substantial.

Accordingly, while the instant case involves a petition to cancel the registration of the Appellees trademark VESPA,
the interest of justice requires that Certificate of Registration No. 4-1997-121492 be cancelled. While the normal
course of proceedings should have been the filing of a petition for cancellation of Certificate of Registration No. 41997-121492, that would involve critical facts and issues that have already been resolved in this case. To allow the
Applicant to still maintain in the Trademark Registry Certificate of Registration No. 4-1997-121492 would nullify the
exclusive rights of Appellee as the true and registered owner of the mark VESPA and defeat the purpose of the
trademark registration system.27

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.

Shen Dar challenges the propriety of such cancellation on the ground that there was no petition for cancellation as
required under Sec. 151 of RA 8293.

Fourth Issue:
Whether the factual findings of the IPO are binding on the CA

Office Order No. 79, Series of 2005, provides under its Sec. 5 that:
Section 5. Rules of Procedure to be followed in the conduct of hearing of Inter Partes cases.The rules of
procedure herein contained primarily apply in the conduct of hearing of Inter Partes cases. The Rules of Court may
be applied suppletorily. The 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. (Emphasis supplied.)
The above rule reflects the oft-repeated legal principle that quasi-judicial and administrative bodies are not bound
by technical rules of procedure. Such principle, however, is tempered by fundamental evidentiary rules, including
due process. Thus, we ruled in Aya-ay, Sr. v. Arpaphil Shipping Corp.: 28
That administrative quasi-judicial bodies like the NLRC are not bound by technical rules of procedure in the
adjudication of cases does not mean that the basic rules on proving allegations should be entirely dispensed with.
A party alleging a critical fact must still support his allegation with substantial evidence. Any decision based on
unsubstantiated allegation cannot stand as it will offend due process.
x x x The liberality of procedure in administrative actions is subject to limitations imposed by basic requirements of
due process. As this Court said in Ang Tibay v. CIR, the provision for flexibility in administrative procedure "does
not go so far as to justify orders without a basis in evidence having rational probative value." More specifically, as
held in Uichico v. NLRC:

Next, petitioners 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. 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
conclusive upon the courts when supported by substantial evidence.
We agree with petitioners 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. Court of Appeals,30 the Court established the rule of conclusiveness of factual findings of the CA as
follows:
Jurisprudence teaches us that "(a)s a rule, the jurisdiction of this Court in cases brought to it from the Court of
Appeals x x x is limited to the review and revision of errors of law allegedly committed by the appellate court, as its
findings of fact are deemed conclusive. As such this Court is not duty-bound to analyze and weigh all over again
the evidence already considered in the proceedings below. This rule, however, is not without exceptions." The
findings of fact of the Court of Appeals, which are as a general rule deemed conclusive, may admit of review by
this Court:
(1) when the factual findings of the Court of Appeals and the trial court are contradictory;
(2) when the findings are grounded entirely on speculation, surmises, or conjectures;

It is true that administrative and quasi-judicial 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
disregard certain fundamental evidentiary rules.

(3) when the inference made by the Court of Appeals from its findings of fact is manifestly mistaken,
absurd, or impossible;

This was later reiterated in Lepanto Consolidated Mining Company v. Dumapis:29

(4) when there is grave abuse of discretion in the appreciation of facts;

While it is true that administrative or quasi-judicial bodies like the NLRC are not bound by the technical rules of
procedure in the adjudication of cases, this procedural rule should not be construed as a license to disregard
certain fundamental evidentiary rules. The evidence presented must at least have a modicum of admissibility for it
to have probative value. Not only must there be some evidence to support a finding or conclusion, but the evidence
must be substantial. Substantial evidence is more than a mere scintilla. It means such relevant evidence as a

(5) when the appellate court, in making its findings, goes beyond the issues of the case, and such
findings are contrary to the admissions of both appellant and appellee;
(6) when the judgment of the Court of Appeals is premised on a misapprehension of facts;

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(7) when the Court of Appeals fails to notice certain relevant facts which, if properly considered, will
justify a different conclusion;
(8) when the findings of fact are themselves conflicting;
(9) when the findings of fact are conclusions without citation of the specific evidence on which they are
based; and
(10) when the findings of fact of the Court of Appeals are premised on the absence of evidence but such
findings are contradicted by the evidence on record. (Emphasis supplied.)

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 E.Y. Industrials right has been preserved until the passage of RA 8293 which
entitles it to register the same.33
Comparatively, the BLAs findings were founded upon the evidence presented by the parties. An example of such
evidence is Invoice No. 12075 dated March 29, 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, is that EYIS was first to use the mark.

Thereafter, in Villaflor v. Court of Appeals,31 this Court applied the above principle to factual findings of quasijudicial bodies, to wit:

Moreover, the discrepancy in the date provided in the Declaration of Actual Use filed by EYIS and the proof
submitted was appropriately considered by the BLA, ruling as follows:

Proceeding by analogy, the exceptions to the rule on conclusiveness of factual findings of the Court of Appeals,
enumerated in Fuentes vs. Court of Appeals, can also be applied to those of quasi-judicial bodies x x x. (Emphasis
supplied.)

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
December 22, 1998, it was able to prove by clear and positive evidence of use prior to such date.

Here, the CA identified certain material facts that were allegedly overlooked by the BLA and the IPO Director
General 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.

In Chuang Te v. Ng Kian-Guiab and Director of Patents, L-23791, 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
wishes to carry back his first date of use to an earlier date, he then takes on the greater burden of presenting "clear
and convincing evidence" of adoption and use as of that earlier date. (B.R. Baker Co. vs. Lebrow Bros., 150 F. 2d
580.)35

First, as to the date of first use of the mark by the parties, the CA stated:
To begin with, when respondents-appellees filed its application for registration of the VESPA trademark on July 28,
1999, they stated under oath, as found in their DECLARATION OF ACTUAL USE, that their first use of the mark
was on December 22, 1998. On the other hand, [Shen Dar] in its application dated June 09, 1997 stated, likewise
under oath in their DECLARATION OF ACTUAL USE, that its first use of the mark was in June 1996. This cannot
be made any clearer. [Shen Dar] was not only the first to file an application for registration but likewise first to use
said registrable mark.32
Evidently, the CA anchors its finding that Shen Dar was the first to use the mark on the statements of the parties in
their respective Declarations of Actual Use. Such conclusion is premature at best. While a Declaration of Actual
Use is a notarized document, hence, a public document, it 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 claimed. In a declaration of actual use,
the applicant must, therefore, present evidence of such actual use.
The BLA ruled on the same issue, as follows:
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
petitioners date of first use on January 1, 1997 indicated in its trademark application filed on 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)

The CA further found that EYIS is not a manufacturer of air compressors but merely imports and sells them as a
wholesaler and retailer. The CA reasoned:
Conversely, a careful perusal of appellees own submitted receipts shows that it is not manufacturer but an
importer, wholesaler and retailer. This fact is corroborated by the testimony of a former employee of appellees.
Admittedly too, appellees are importing air compressors from [Shen Dar] from 1997 to 2004. These matters, lend
credence to [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 Milling Corporation et al., is quite enlightening, thus We quote:
"The term owner does not include the importer of the goods bearing the trademark, trade name, service mark, or
other mark of ownership, unless such importer is actually the owner thereof in the country from which the goods
are 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
merchandise covered by said trademark, its application cannot be granted."36
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. Sec. 237 of the National Internal Revenue
Code states:
Section 237. Issuance of Receipts or Sales or Commercial Invoices.All persons subject to an internal revenue
tax shall, for each sale and transfer of merchandise or for services rendered valued at Twenty-five pesos (P25.00)
or more, issue duly registered receipts or sale or commercial invoices, prepared at least in duplicate, showing the

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date 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
invoices shall be issued which shall show the name, business style, if any, and address of the purchaser, customer
or client.
The original of each receipt or invoice shall be issued to the purchaser, customer or client at the time the
transaction is effected, who, if engaged in business or in the exercise of profession, shall keep and preserve the
same in his place of business for a period of three (3) years from the close of the taxable year in which such
invoice or receipt was issued, while the duplicate shall be kept and preserved by the issuer, also in his place of
business, for a like period.

RA 8293 espouses the "first-to-file" rule as stated under Sec. 123.1(d) which states:
Section 123. Registrability. - 123.1. A mark cannot be registered if it:
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(d) Is identical with a registered mark belonging to a different proprietor or a mark with an earlier filing or priority
date, in respect of:
(i) The same goods or services, or

The Commissioner may, in meritorious cases, exempt any person subject to an internal revenue tax from
compliance with the provisions of this Section. (Emphasis supplied.)

(ii) Closely related goods or services, or

Correlatively, in Revenue Memorandum No. 16-2003 dated May 20, 2003, the Bureau of Internal Revenue defined
a Sales Invoice and identified its required information as follows:
Sales Invoices (SI)/Cash Invoice (CI) is written account of goods sold or services rendered and the prices
charged therefor used in the ordinary course of business evidencing sale and transfer or agreement to sell or
transfer of goods and services. It contains the same information found in the Official Receipt.
Official Receipt (OR) is a receipt issued for the payment of services rendered or goods sold. It contains the
following information:
a. Business name and address;
b. Taxpayer Identification Number;
c. Name of printer (BIR Permit No.) with inclusive serial number of booklets and date of issuance of
receipts.
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.
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.
Fifth Issue:

(iii) If it nearly resembles such a mark as to be likely to deceive or cause confusion. (Emphasis supplied.)
Under this provision, 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.: 37
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.
xxxx
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.

Whether EYIS is the true owner of the mark "VESPA"

xxxx
In any event, given the length of time already invested by the parties in the instant case, this Court must write finis
to the instant controversy by determining, once and for all, the true owner of the mark "VESPA" based on the
evidence presented.

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

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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.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
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. x x x38
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." We cite with approval the
ruling of the BLA:
[Shen Dar] avers that it is the true and rightful owner of the trademark "VESPA" used on air compressors. The
thrust of [Shen Dars] argument is that respondent E.Y. Industrial Sales, Inc. is a mere distributor of the "VESPA"
air compressors. We disagree.
This conclusion is belied by the evidence. We have gone over each and every document attached as Annexes "A",
"A" 1-48 which consist of Bill of Lading and Packing Weight List. Not one of these documents referred to a
"VESPA" air compressor. Instead, it simply describes the goods plainly as air compressors which is type "SD" and
not "VESPA". More importantly, the earliest date reflected on the Bill of Lading was on May 5, 1997. (Annex "A"1). [Shen Dar] also attached as Annex "B" a purported Sales Contract with respondent EY Industrial Sales dated
April 20, 2002. Surprisingly, nowhere in the document does it state that respondent EY Industrial agreed to sell
"VESPA" air compressors. The document only mentions air compressors which if genuine merely bolsters
respondent Engracio Yaps contention that [Shen Dar] approached them if it could sell the "Shen Dar" or "SD" air
compressor. (Exhibit "386") In its position paper, [Shen Dar] merely mentions of Bill of Lading constituting
respondent as consignee in 1993 but never submitted the same for consideration of this Bureau. The document is
also not signed 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. 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 9 June 1997.39

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.
WHEREFORE, the petition is hereby GRANTED. The CAs February 21, 2008 Decision and October 6, 2008
Resolution in CA-G.R. SP No. 99356 are hereby REVERSED and SET ASIDE. The Decision dated May 25, 2007
issued by the IPO Director General in Inter Partes Case No. 14-2004-00084 and the Decision dated May 29, 2006
of the BLA Director of the IPO are hereby REINSTATED.
No costs.
SO ORDERED.
Facts:

EY Industrial Sales is a domestic corporation engaged in the production, distribution and sale of air
compressors.

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

From 1997-2004, EY Industrial imported air compressors from Shen Dar.

In 1997, Shen Dar filed a Trademark Application with the Intellectual Property Office (IPO) for the mark
Vespa for the use of air compressors. It was approved in 2007.

In 1999, EY Industrial filed a Trademark Application also for the mark VESPA for the use of air
compressors. It was approved in 2004.

Shen Dar filed a Petition for Cancellation of the Industrials EYES COR with the Bureau of Legal Affairs
contending that: a. there was a violation of Section 123.1 (D) of the Intellectual Property Code which
provides that: A mark cannot be registered if it is identical to a mark with an earlier filing or priority date.
b. EY Industrial is only a distributor of the air compressors

On the other hand, EY Industrial alleged that it is the sole assembler and fabricator of VESPA air
compressors since the early 1990s and that Shen Dar supplied them air compressors with the mark SD
and not VESPA

Issues:
1. Who between EY Industrial and Shen Dar is entitled to the trademark VESPA. EY INDUSTRIAL SALES
2. WON the Bureau of Legal Affairs has the power to cancel the application of Shen Dar even if it is Shen Dar who
filed the case? YES

IPL
Held:
2nd: BLA has the power to cancel the application.
1st: EY INDUSTRIAL has the right to the trademark.
Shen Dar challenges the propriety of such cancellation on the ground that there was no petition for cancellation as
required under Sec. 151 of RA 8293.
Based on the evidence, EYIS owns the VESPA trademark; it has prior use, as shown by various sales invoices.

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. It is non sequitur to hold that
porque EYIS is a distributor, it is no longer the owner.

FIRST-TO-FILE RULE

Under Section 123.1 of IPO provision, 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 (IPC) 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.

The IPO Director General stated that, despite the fact that the instant case was for the cancellation of the COR
issued in favor of EYIS, the interests of justice dictate, and in view of its findings, that the COR of Shen Dar must
be cancelled.

The above rule reflects the oft-repeated legal principle that quasi-judicial and administrative bodies are not bound
by technical rules of procedure. Such principle, however, is tempered by fundamental evidentiary rules, including
due process.

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.

Remember, EYs application was the one granted, and it is Shen Dars application that was cancelled. It does not
mean that even you were the one who filed, it your application cannot be cancelled. The BLA, who has jurisdiction
over the case, were able to determine that it is Shen Dars trademark that should not have been issued with
registration, even it is the plaintiff.

When we talk about trademark, we are just talking about the mark. It does not include the product. Shen Dar is the
manufacturer of the product, but they did not name the product as VESPA. It was EY that named the VESPA, and
used the VESPA, even though they were only the distributors. It was EY that actually used the trademark through
the use of receipts, and other documents.

The first to file rule According to the SC that Shen Dar filed under the old IPC where prior use is the one applied.

IPL
G.R. No. 194307

2007-2051 consolidating the aforesaid inter partes cases (Consolidated Opposition Cases). 14

November 20, 2013

BIRKENSTOCK ORTHOPAEDIE GMBH AND CO. KG (formerly BIRKENSTOCK ORTHOPAEDIE

GMBH),Petitioner,
vs.
PHILIPPINE SHOE EXPO MARKETING CORPORATION, Respondent.
DECISION
PERLAS-BERNABE, J.:
Assailed in this Petition for Review on Certiorari1 are the Court of Appeals (CA) Decision2 dated June 25, 2010 and
Resolution3 dated October 27, 2010 in CA-G.R. SP No. 112278 which reversed and set aside the Intellectual
Property Office (IPO) Director Generals Decision4 dated December 22, 2009 that allowed the registration of
various trademarks in favor of petitioner Birkenstock Orthopaedie GmbH & Co. KG.

The Ruling of the BLA

In its Decision15 dated May 28, 2008, the BLA of the IPO sustained respondents opposition, thus, ordering the
rejection of the subject applications. It ruled that the competing marks of the parties are confusingly similar since
they contained the word "BIRKENSTOCK" and are used on the same and related goods. It found respondent and
its predecessor-in-interest as the prior user and adopter of "BIRKENSTOCK" in the Philippines, while on the other
hand, petitioner failed to present evidence of actual use in the trade and business in this country. It opined that
while Registration No. 56334 was cancelled, it does not follow that prior right over the mark was lost, as proof of
continuous and uninterrupted use in trade and business in the Philippines was presented. The BLA likewise opined
that petitioners marks are not well -known in the Philippines and internationally and that the various certificates of
registration submitted by petitioners were all photocopies and, therefore, not admissible as evidence. 16
Aggrieved, petitioner appealed to the IPO Director General.
The Ruling of the IPO Director General

The Facts
Petitioner, a corporation duly organized and existing under the laws of Germany, applied for various trademark
registrations before the IPO, namely: (a) "BIRKENSTOCK" under Trademark Application Serial No. (TASN) 41994-091508 for goods falling under Class 25 of the International Classification of Goods and Services (Nice
Classification) with filing date of March 11, 1994; (b) "BIRKENSTOCK BAD HONNEF -RHEIN & DEVICE
COMPRISING OF ROUND COMPANY SEAL AND REPRESENTATION OF A FOOT, CROSS AND SUNBEA M"
under TASN 4-1994-091509 for goods falling under Class 25 of the Nice Classification with filing date of March 11,
1994; and (c) "BIRKENSTOCK BAD HONNEF-RHEIN & DEVICE COMPRISING OF ROUND COMPANY SEAL
AND REPRESENTATION OF A FOOT, CROSS AND SUNBEAM" under TASN 4-1994-095043 for goods falling
under Class 10 of the Nice Classification with filing date of September 5, 1994 (subject applications). 5
However, registration proceedings of the subject applications were suspended in view of an existing registration of
the mark "BIRKENSTOCK AND DEVICE" under Registration No. 56334 dated October 21, 1993 (Registration No.
56334) in the name of Shoe Town International and Industrial Corporation, the predecessor-in-interest of
respondent Philippine Shoe Expo Marketing Corporation.6 In this regard, on May 27, 1997 petitioner filed a petition
for cancellation of Registration No. 56334 on the ground that it is the lawful and rightful owner of the Birkenstock
marks (Cancellation Case).7 During its pendency, however, respondent and/or its predecessor-in-interest failed to
file the required 10th Year Declaration of Actual Use (10th Year DAU) for Registration No. 56334 on or before
October 21, 2004,8 thereby resulting in the cancellation of such mark.9 Accordingly, the cancellation case was
dismissed for being moot and academic.10
The aforesaid cancellation of Registration No. 56334 paved the way for the publication of the subject applications
in the IPO e-Gazette on February 2, 2007.11 In response, respondent filed three (3) separate verified notices of
oppositions to the subject applications docketed as Inter Partes Case Nos. 14-2007-00108, 14-2007-00115, and
14-2007-00116,12 claiming, inter alia, that: (a) it, together with its predecessor-in-interest, has been using
Birkenstock marks in the Philippines for more than 16 years through the mark "BIRKENSTOCK AND DEVICE"; (b)
the marks covered by the subject applications are identical to the one covered by Registration No. 56334 and thus,
petitioner has no right to the registration of such marks; (c) on November 15, 1991, respondents predecessor-ininterest likewise obtained a Certificate of Copyright Registration No. 0-11193 for the word "BIRKENSTOCK" ; (d)
while respondent and its predecessor-in-interest failed to file the 10th Yea r DAU, it continued the use of
"BIRKENSTOCK AND DEVICE" in lawful commerce; and (e) to record its continued ownership and exclusive right
to use the "BIRKENSTOCK" marks, it has filed TASN 4-2006-010273 as a " re-application " of its old registration,
Registration No. 56334.13 On November 13, 2007, the Bureau of Legal Affairs (BLA) of the IPO issued Order No.

In his Decision17 dated December 22, 2009, the IPO Director General reversed and set aside the ruling of the BLA,
thus allowing the registration of the subject applications. He held that with the cancellation of Registration No.
56334 for respondents failure to file the 10th Year DAU, there is no more reason to reject the subject applications
on the ground of prior registration by another proprietor.18 More importantly, he found that the evidence presented
proved that petitioner is the true and lawful owner and prior user of "BIRKENSTOCK" marks and thus, entitled to
the registration of the marks covered by the subject applications.19 The IPO Director General further held that
respondents copyright for the word "BIRKENSTOCK" is of no moment since copyright and trademark are different
forms of intellectual property that cannot be interchanged.20
Finding the IPO Director Generals reversal of the BLA unacceptable, respondent filed a petition for review with the
CA.
Ruling of the CA
In its Decision21 dated June 25, 2010, the CA reversed and set aside the ruling of the IPO Director General and
reinstated that of the BLA. It disallowed the registration of the subject applications on the ground that the marks
covered by such applications "are confusingly similar, if not outright identical" with respondents mark. 22 It equally
held that respondents failure to file the 10th Year DAU for Registration No. 56334 "did not deprive petitioner of its
ownership of the BIRKENSTOCK mark since it has submitted substantial evidence showing its continued use,
promotion and advertisement thereof up to the present."23 It opined that when respondents predecessor-in-interest
adopted and started its actual use of "BIRKENSTOCK," there is neither an existing registration nor a pending
application for the same and thus, it cannot be said that it acted in bad faith in adopting and starting the use of
such mark.24 Finally, the CA agreed with respondent that petitioners documentary evidence, being mere
photocopies, were submitted in violation of Section 8.1 of Office Order No. 79, Series of 2005 (Rules on Inter
Partes Proceedings).
Dissatisfied, petitioner filed a Motion for Reconsideration25 dated July 20, 2010, which was, however, denied in a
Resolution26 dated October 27, 2010. Hence, this petition.27
Issues Before the Court

IPL
The primordial issue raised for the Courts resolution is whether or not the subject marks should be allowed
registration in the name of petitioner.
The Courts Ruling
The petition is meritorious.

registrations under the provisions of this Act shall be cancelled by the Director, unless within one year following the
fifth, tenth and fifteenth anniversaries of the date of issue of the certificate of registration, the registrant shall file in
the Patent Office an affidavit showing that the mark or trade-name is still in use or showing that its non-use is due
to special circumstance which excuse such non-use and is not due to any intention to abandon the same, and pay
the required fee.
The Director shall notify the registrant who files the above- prescribed affidavits of his acceptance or refusal
thereof and, if a refusal, the reasons therefor. (Emphasis and underscoring supplied)

A. Admissibility of Petitioners Documentary Evidence.

In its Comment28 dated April 29, 2011, respondent asserts that the documentary evidence submitted by petitioner
in the Consolidated Opposition Cases, which are mere photocopies, are violative of Section 8.1 of the Rules on
Inter Partes Proceedings, which requires certified true copies of documents and evidence presented by parties in
lieu of originals.29 As such, they should be deemed inadmissible.
The Court is not convinced.
It is well-settled that "the rules of procedure are mere tools aimed at facilitating the attainment of justice, rather
than its frustration. A strict and rigid application of the rules must always be eschewed when it would subvert the
primary objective of the rules, that is, to enhance fair trials and expedite justice. Technicalities should never be
used to defeat the substantive rights of the other party. Every party-litigant must be afforded the amplest
opportunity for the proper and just determination of his cause, free from the constraints of technicalities."30"Indeed,
the primordial policy is a faithful observance of [procedural rules], and their relaxation or suspension should only be
for persuasive reasons and only in meritorious cases, to relieve a litigant of an injustice not commensurate with the
degree of his thoughtlessness in not complying with the procedure prescribed." 31 This is especially true with quasijudicial and administrative bodies, such as the IPO, which are not bound by technical rules of procedure. 32 On this
score, Section 5 of the Rules on Inter Partes Proceedings provides:
Sec. 5. Rules of Procedure to be followed in the conduct of hearing of Inter Partes cases. The rules of procedure
herein contained primarily apply in the conduct of hearing of Inter Partes cases. The Rules of Court may be applied
suppletorily. The 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. (Emphasis and underscoring supplied)
In the case at bar, while petitioner submitted mere photocopies as documentary evidence in the Consolidated
Opposition Cases, it should be noted that the IPO had already obtained the originals of such documentary
evidence in the related Cancellation Case earlier filed before it. Under this circumstance and the merits of the
instant case as will be subsequently discussed, the Court holds that the IPO Director Generals relaxation of
procedure was a valid exercise of his discretion in the interest of substantial justice.33

The aforementioned provision clearly reveals that failure to file the DAU within the requisite period results in the
automatic cancellation of registration of a trademark. In turn, such failure is tantamount to the abandonment or
withdrawal of any right or interest the registrant has over his trademark.36
In this case, respondent admitted that it failed to file the 10th Year DAU for Registration No. 56334 within the
requisite period, or on or before October 21, 2004. As a consequence, it was deemed to have abandoned or
withdrawn any right or interest over the mark "BIRKENSTOCK." Neither can it invoke Section 23637 of the IP Code
which pertains to intellectual property rights obtained under previous intellectual property laws, e.g., RA 166,
precisely because it already lost any right or interest over the said mark.
Besides, petitioner has duly established its true and lawful ownership of the mark "BIRKENSTOCK."
Under Section 238 of RA 166, which is also the law governing the subject applications, in order to register a
trademark, one must be the owner thereof and must have actually used the mark in commerce in the Philippines
for two (2) months prior to the application for registration. Section 2-A 39 of the same law sets out to define how one
goes about acquiring ownership thereof. Under the same section, it is clear that actual use in commerce is also the
test of ownership but the provision went further by saying that the mark must not have been so appropriated by
another. Significantly, to be an owner, Section 2-A does not require that the actual use of a trademark must be
within the Philippines. Thus, under RA 166, one may be an owner of a mark due to its actual use but may not yet
have the right to register such ownership here due to the owners failure to use the same in the Philippines for two
(2) months prior to registration.40
It must be emphasized that registration of a trademark, by itself, is not a mode of acquiring ownership.1wphi1 If
the applicant is not the owner of the trademark, he has no right to apply for its registration. 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.41

Having settled the foregoing procedural matter, the Court now proceeds to resolve the substantive issues.

Clearly, it is not the application or registration of a trademark that vests ownership thereof, but it is the ownership of
a trademark that confers the right to register the same. A trademark is an industrial property over which its owner is
entitled to property rights which cannot be appropriated by unscrupulous entities that, in one way or another,
happen to register such trademark ahead of its true and lawful owner. The presumption of ownership accorded to a
registrant must then necessarily yield to superior evidence of actual and real ownership of a trademark.

B. Registration and ownership of "BIRKENSTOCK."

The Courts pronouncement in Berris Agricultural Co., Inc. v. Abyadang42 is instructive on this point:

Republic Act No. (RA) 166,34 the governing law for Registration No. 56334, requires the filing of a DAU on specified
periods,35 to wit:

The ownership of a trademark is acquired by its registration and its actual use by the manufacturer or distributor of
the goods made available to the purchasing public. x x x A certificate of registration of a mark, once issued,
constitutes prima facie evidence of the validity of the registration, of the registrants ownership of the mark, and of
the registrants exclusive right to use the same in connection with the goods or services and those that are related

Section 12. Duration. Each certificate of registration shall remain in force for twenty years: Provided, That

10

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thereto specified in the certificate. x x x In other words, the prima facie presumption brought about by the
registration of a mark may be challenged and overcome in an appropriate action, x x x by evidence of prior use by
another person, i.e. , it will controvert a claim of legal appropriation or of ownership based on registration by a
subsequent user. This is because a trademark is a creation of use and belongs to one who first used it in trade or
commerce.43 (Emphasis and underscoring supplied)
In the instant case, petitioner was able to establish that it is the owner of the mark "BIRKENSTOCK." It submitted
evidence relating to the origin and history of "BIRKENSTOCK" and its use in commerce long before respondent
was able to register the same here in the Philippines. It has sufficiently proven that "BIRKENSTOCK" was first
adopted in Europe in 1774 by its inventor, Johann Birkenstock, a shoemaker, on his line of quality footwear and
thereafter, numerous generations of his kin continuously engaged in the manufacture and sale of shoes and
sandals bearing the mark "BIRKENSTOCK" until it became the entity now known as the petitioner. Petitioner also
submitted various certificates of registration of the mark "BIRKENSTOCK" in various countries and that it has used
such mark in different countries worldwide, including the Philippines.44
On the other hand, aside from Registration No. 56334 which had been cancelled, respondent only presented
copies of sales invoices and advertisements, which are not conclusive evidence of its claim of ownership of the
mark "BIRKENSTOCK" as these merely show the transactions made by respondent involving the same.45
In view of the foregoing circumstances, the Court finds the petitioner to be the true and lawful owner of the mark
"BIRKENSTOCK" and entitled to its registration, and that respondent was in bad faith in having it registered in its
name. In this regard, the Court quotes with approval the words of the IPO Director General, viz.:
The facts and evidence fail to show that [respondent] was in good faith in using and in registering the mark
BIRKENSTOCK. BIRKENSTOCK, obviously of German origin, is a highly distinct and arbitrary mark. It is very
remote that two persons did coin the same or identical marks. To come up with a highly distinct and uncommon
mark previously appropriated by another, for use in the same line of business, and without any plausible
explanation, is incredible. The field from which a person may select a trademark is practically unlimited. As in all
other cases of colorable imitations, the unanswered riddle is why, of the millions of terms and combinations of
letters and designs available, [respondent] had to come up with a mark identical or so closely similar to the
[petitioners] if there was no intent to take advantage of the goodwill generated by the [petitioners] mark. Being on
the same line of business, it is highly probable that the [respondent] knew of the existence of BIRKENSTOCK and
its use by the [petitioner], before [respondent] appropriated the same mark and had it registered in its name. 46
WHEREFORE, the petition is GRANTED. The Decision dated June 25, 2010 and Resolution dated October 27,
2010 of the Court of Appeals in CA-G.R. SP No. 112278 are REVERSED and SET ASIDE. Accordingly, the
Decision dated December 22, 2009 of the IPO Director General is hereby REINSTATED.
SO ORDERED.

11