3R.

epubhc of tbe flbilippines

supreme (!Court
:fflanila
THIRD DIVISION

SAO PAULO ALPARGATAS S.A., G.R. No. 202900

Petitioner,
Present:

LEONEN,J.,
-versus- Chairperson,
HERNANDO,
INTING,
DELOS SANTOS, and
LOPEZ, J. Y., JJ.
KENTEX MANUFACTURING
CORPORATION AND ONG KING Promulgated:
GUAN,
Respondents. February 17, 2021
w
\-l,.~ ~~c..,~....

x------------------------------------------------x
DECISION

HERNANDO, J.:

This Petition for Review on Certiorari 1 challenges the February 10,

2012 2 Decision of the Court of Appeals (CA) in CA-G.R. SP No. 119379
which reversed and set aside the December 16, 2010 3 and February 28, 2011 4
Orders of the Regional Trial Court (RTC) of Manila, Branch 7, which denied
the Motion to Quash Search Warrant Nos. 10-16378 to 81 and to Return the
Seized Goods and Effects to the Owners filed by the respondents. The
assailed July 10, 2012 Resolution 5 denied petitioner's Motion for
Reconsideration.

1
Rollo, Vol. I, pp. 63-125.
2
Id. at 20-29; penned by Associate Justice Marlene B. Gonzales-Sison and concurred in by Associate
Justices Hakim S. Abdulwahid and Leoncia R. Dimagiba.
Id. at 468-474; penned by Presiding Judge Ma. Theresa Dolores C. Gomez-Estoesta.
4
Id. at 476-477.
5
Id.at31-32.
Decision -2- G.R. No. 202900

The Antecedents:

Petitioner Sao Paulo Alpargatas S.A. (SPASA) is the owner and

manufacturer of the footwear brand "Havaianas" and distributed by Terry S.A.
Inc. in the Philippines. SPASA is also the registered owner of different marks,
devises and logos of the brand "Havaianas" in the country. 6 Meanwhile,
respondents Kentex Manufacturing Corporation (Kentex) and its president,
Ong King Guan (Ong) own and manufacture the slippers or footwear with the
brand name "Havana". Kentex's warehouses are located in the cities of
Caloocan and Valenzuela.7

On August 12, 2010, the Director of the National Bureau of Investigation

(NBI) received a letter-complaint from Hechanova Bugay & Vilchez Law
Office, SPASA's legal representative, requesting for the NBI's assistance in
the investigation and prosecution of entities which are engaged in the sale and
distribution of fake "Havaianas" products bearing the same mark and designs. 8

Pursuant to the letter-complaint, NBI Agent Terrence Agustin (Agent

Agustin), along with Intellectual Property Manila market researchers, Lea
Carmona and Winda San Andres Legaspi (investigation team), conducted an
inquiry. According to their sworn affidavits, the investigation team went to
several establishments and found footwear with markings "Havana" or
"Havaianas" which closely resembled SPASA's "Havaianas" sandals/slippers
and also bore SPASA's "Havaianas Rice Pattern Logo" and "Havaianas Greek
Pattern Logo" marks. The investigation team discovered that Kentex
manufactures the said products based on the team's observation of delivery
trucks which were loading and unloading the said "Havana" and "Havaianas"
products at Kentex's warehouse in Caloocan City. 9

On September 6, 2010, Agent Agustin filed applications for search

warrants against the respondents for violating Republic Act No. 8293 (RA
8293) on trademark infringement and unfair competition. During the ex-parte
hearing, Agent Agustin submitted various samples of: I) "Havana" slippers
manufactured and distributed by the respondents; and 2) "Havaianas" slippers
manufactured and distributed by SPASA. In addition, he presented the sworn
affidavits of the members of the investigation team. In view of this, the RTC
issued Search Warrant Nos. 10-16378 to 81 10 which covered Kentex's
premises in the cities ofValenzuela and Caloocan. 11

The implementation of the search warrants caused the seizure of

respondents' products. Thus, respondents filed a Motion to Quash Search

6
Id. at 21.
7
Id.at21-22.
8
Id. at 22.
9
Id.
10 Id. at 149-156; penned by Judge Ma. Theresa Dolores C. Gomez-Estoesta.
11 Id. at 22023.
Decision -3- G.R. No. 202900

Warrant Nos. 10-16378 to 81 and to Return the Seized Goods and Effects to
the Owners (Motion to Quash). 12 In support of their motion, the respondents
submitted a Certificate of Copyright Registration 13 dated June 16, 1995 with
the National Library for "Havana Footwear," which was registered on June 1,
1995. They also submitted their Trademark Application 14 for "Havana Sandals
(Stylized)" filed on October 9, 2009, Application for Industrial Design No. 3-
2009-00065715 (for Slippers) filed on October 9, 2009, and Application for
Industrial Design No. 3-2009-000658 16 (for Sole) filed on October 19, 2009
with the Intellectual Property Office of the Philippines (IPO).

SPASA filed its Comment 17 to the respondents' Motion to Quash and

attached the following documents: 1) Certificate ofRegistration18 of the mark
"Havaianas" filed on December 2, 2002 (for a period of 10 years from
November 20, 2005); 2) Certificate ofRegistration 19 of the mark "Havaianas"
filed on June 19, 2007 (for a period of 10 years from January 21, 2008); 3)
Certificate of Registration20 of the mark "Havaianas" filed on December 5,
2008 (for a period of 10 years from May 4, 2009); 4) Certificate of
Registration of the "Rice Pattern Logo"21 filed on April 2, 2009 (for a period
of 10 years from November 26, 2009); and 5) Certificate of Registration of the
"Greek Pattern Logo" 22 filed on April 2, 2009 (for a period of 10 years from
January 21, 2010).

SPASA also filed a Petition for Cancellation of the respondents'

Certificate of Registration No. 3-2009-000657 for the industrial design
entitled "Slipper"23 as well as Certificate of Registration No. 3-2009-000658
for the industrial design entitled "Sole" 24 before the IPO as these were
allegedly not new or original. Likewise, SPASA filed a Complaint25 for
Trademark Infringement, Unfair Competition, False Designation of
Origin/False Representation and Damages with Prayer for Preliminary
Injunction before the IPO against the respondents.

In its Order26 dated June 1, 2012, the IPO granted SPASA's prayer for the
issuance of a Writ of Preliminary Injunction. It ruled that SPASA established
its clear and unmistakable right which needs to be protected. To allow the

12 Id. at 158-180.
13
Id.at181.
14 Id. at 182-186.
15
Id. at 187-191.
16 Id. at 192-197.
17 Id. at 199-213.
18 Id. at214-216.
19
Id. at 218-219.
20 Id. at 221-222.
21 Id. at 224-225.
22 Id. at 227-228.
23 Rollo, Vol. II, pp. 679-690.
24 Id. at 692-704.
25 Id. at 706-724.
26 Id. at 726-728; penned by Adoracion U. Zare (Hearing Officer; for the Director) with the concurrence of
Atty. Nathaniel S. Arevalo (Director IV -Bureau of Legal Affairs).
 Decision -4- GR. No. 202900

respondents' continuous operation using its copyright registration as a

trademark would bestow undue benefit to the respondents and cause grave
irreparable injury to SPASA in terms of profit and goodwill, as SPASA's
"Havaianas" mark is duly registered with the IPO.

Ruling of the Regional Trial

Court (RTC):

In its December 16, 2010 Order, 27 the RTC denied the respondents'
Motion to Quash. It noted that the preliminary investigation conducted by the
city prosecutors against the respondents has no direct bearing in the
determination of the merits of the application. The trial court found probable
cause for the issuance of the search warrants, which was based on the finding
that the products manufactured by the respondents bore a confusing similarity
with SPASA's trademark registrations "Havaianas Rice Pattern Logo" and
"Havaianas Greek Pattern Logo." Likewise, the font and style used in
"Havana" bore a colorable imitation to SPASA's trademark, "Havaianas." The
trial court further ruled that the assertion about the target consumers (low-end
or high-end) strays from the point since the issue is whether the use of the
mark would likely cause confusion to the buying public. 28 The dispositive
portion of the trial court's assailed Order reads:

WHEREFORE, the Motion to Quash Search Warrants Nos. 10-16378-81

and to Return the Seized Goods and Effects to the Owners filed by respondents
Kentex Manufacturing Corporation and Ong King Guan is DENIED for lack of
merit.

SO ORDERED. 29

The respondents asked for reconsideration30 which the trial court denied
in an Order3 1 dated February 28, 2011. The respondents then filed a Petition
for Certiorari32 before the CA.

Ruling of the Court of Appeals:

In its February 10, 2012 Decision, 33 the CA clarified that the RTC's
Orders did not pertain to the orders for the issuance of the search warrants but
to the denial of the respondents' Motion to Quash. When the respondents filed
the Motion to Quash with the trial court, there was a need to reevaluate the
facts to assess whether there was probable cause to uphold the search and
sei=e order. The appellate court found that the RTC ignored the respondents'

27 Rollo, Vol. I, pp. 468-474.

28 Id. at472-473.
29 Id. at 474.
30
Not attached in the records.
31
Rollo, Vol. I, pp. 476-477.
32
Id. at 479-523.
33
Id. at 20-29
 Decision -5- G.R. No. 202900

position that they are engaged in a legitimate business and had every right to
manufacture and/or distribute the confiscated "Havana" slippers. 34

The CA held in the main that the respondents are the registered owners of
the industrial design for their "Havana" products as shown by the industrial
design registrations issued by the Director of Patents of the IP0. 35 The
registration's cover pages showed that the registered owner has the exclusive
right to make, use, sell or import the industrial design. 36 The CA ruled that to
argue that a quashal is not proper because at the time of the issuance of the
search warrants everything seemed to be in order would set a dangerous
precedent. 37 Hence, pending all the inter partes proceedings, the property
seized should not stay in a perpetual state of custodia legis and both parties
should be given the right in the meantime to lawfully exercise their businesses
until the issue of exclusive ownership has been resolved. 38 Finally, the
appellate court held that a search warrant cannot be utilized for the
confiscation of an apparent legitimate right to pursue a livelihood. 39 The
dispositive portion of the CA's assailed Decision reads:

WHEREFORE, premises considered, the instant petition for certiorari is

GRANTED such that the assailed orders dated 16 December 2010 and 28
February 2011 issued by the Regional Trial Court of the City of Manila, Branch
7 are hereby REVERSED and SET ASIDE and the same court is hereby
ORDERED to return to petitioners Kentex Manufacturing Corporation and
Ong King Guan the properties seized under Search Warrant Nos. 10-16378 to
81 all dated 07 September 2010 with immediate dispatch.

SO ORDERED. 40

Aggrieved, SPASA filed a motion for reconsideration41 which the CA

denied in a Resolution42 dated July 10, 2012. Discontented, SPASA elevated
the case before the Court via a Petition for Review on Certiorari43 and raised
the following issues:

I. The Honorable Court is respectfully called upon to review this case

given the fact that the Court of Appeals has made pronouncements not in accord
with the law, treaty obligations of which the Philippines is a signatory, and
applicable decisions of this Honorable Court, and in order to prevent a manifest
injustice.

34
Id. at 25.
3s Id.
36
Id. at 26-27.
37
Id. at 27.
38
Id. at 28.
39 Id.
40 Id.
41
Not attached in the records.
42
Rollo, Vol. I, pp. 31-32.
43
Id. at 64-130.
Decision -6- G.R. No. 202900

II. The Court of Appeals decided contrary to the evidence on record when
it refused to review and/or take into consideration the findings of fact of the
lower court (RTC Manila Branch 7) in issuing the search warrants against the
Respondents.

III. The Court of Appeals decided contrary to the IP Code and applicable
decisions of the Supreme Court when it completely disregarded Petitioner
SPASA's right as the prior user and registrant of the HAVAIANAS word
marks, HAVAIANAS GREEK PATTERN LOGO, and HAVAIANAS RICE
PATTERN LOGO, to enforce its rights to said registered trademarks issued by
the [IPO];

IV. The Court of Appeals decided contrary to the IP Code and applicable
decisions of the Supreme Court when it failed to apply the well-established
doctrines in the field of intellectual property law such as "First-to-File" Rule,
the tests of confusion which, are all incorporated in R.A. 8293, otherwise
known as "The Intellectual Property Code;"

V. The Court of Appeals erred in ruling that Respondents' industrial

design registration nos. 3-2009-000657 and 3-2009-0006 are still presumed to
be valid pending the resolution of the cancellation proceedings (IPC Nos. 14-
2010-002233 and 14-2010-002234) by the Bureau of Legal Affairs of the
[IPO];

VI. The Court of Appeals decided contrary to law and applicable cases of
the Supreme Court when it ruled that pending the resolution of the inter partes
proceedings (petition for cancellation, IPC Nos. 14-2010-002233 and 14-2010-
002234) of the industrial designs of Respondent Ong King Guan, Petitioner
SPASA's applications for search warrant are premature;

VIL The Court of Appeals decided contrary to law and jurisprudence

when it ruled that the existence of probable cause can be negated by a defense
of good faith or reliance [on] a seemingly valid certificate of design
registration. 44

The main issue 1s whether or not the issuance of the subject search
warrants is valid.

The Petition:

SPASA argues that the appellate court's pronouncements are not in

accord with the records of the case, the applicable law, and jurisprudence on
intellectual property law. 45 It avers that its Motion to Quash should have
prompted the CA to review the validity of the issuance of the search warrants,
however, the appellate court refused to rule on the undeniable similarity of the
marks of the opposing parties, and focused instead on the respondents' alleged
valid industrial design registrations. 46 It asserts that the appellate court's
decision is contrary to the Intellectual Property (IP) Code and jurisprudence

44
Id. at 72-73.
45
Id.at73.
46 Id. at 74-75.
 Decision -7- G.R. No. 202900

when it disregarded SPASA's right as the prior user and registrant of the
"Havaianas" word mark, the "Havaianas Greek Pattern Logo" and "Havaianas
Rice Pattern Logo" to enforce its rights to said registered trademarks issued by
the IPO. 47

SPASA avers that Section 147 of the IP Code gives it the exclusive right
to prevent all third parties who have not secured its consent from using signs
and containers for goods which are identical or similar to its registered
trademarks, where such use would likely result in confusion. 48 It adds that the
CA should have applied the "First-to-File" Rule and the Dominancy Test. 49
SPASA's "Havaianas" trademarks were used and registered earlier than the
respondents' industrial designs and that only SPASA is the holder of a duly
°
issued trademark registration. 5 Further, respondents cannot claim that they
have acquired "trademark rights" for their "Havana" mark pursuant to
Copyright Registration No. 0-95-571 which was registered with the National
Library.

Moreover, SPASA argues that trademarks, copyrights, and patents are

completely distinct and separate from one another and the protection afforded
for one cannot be used interchangeably to cover items or works that
exclusively pertain to others. 51 The "Havana" label which was secured by
Ong's copyright registration for shoes and not for slippers, is not the same as
the "Havana" mark which is the subject of the search warrants. 52 Also, a
Certificate of Registration is not a proof of actual use. 53

SPASA posits that Ong's industrial design registrations for the "Slipper"
and "Sole" designs have no bearing in the determination of probable cause for
the issuance of the subject search warrants. 54 Even if these industrial design
registrations could be considered as proper grounds to quash the search
warrants, SPASA's trademark registrations must still prevail because the
industrial design registrations lack novelty and originality, which are
requirements for registrability. 55 SPASA avers that its trademarks
("Havaianas" slippers) have been publicly known years prior to the
registration ofOng's industrial design patterns. 56

SPASA contends that the CA erred in ruling that the industrial design
registrations of the respondents are presumed to be valid pending the
resolution of the cancellation proceedings before the IPO. 57 The appellate
47
Id. at 77.
48
Id.at81.
49 Id. at 82-84.
50
Id. at 84-85.
51 Id. at 85-86.
52
Id. at 87.
,s Id.
54 Id. at 89-90.
55 Id. at 92.
56 Id. at 94.
57 Id. at 95.
Decision -8- G.R. No. 202900

court decided contrary to law when it held that pending the resolution of the
inter partes proceedings of the industrial designs of Ong, SPASA's
applications for search warrants are premature. 58 Moreover, an action for
infringement or unfair competition can proceed independently or
simultaneously with an action for the administrative cancellation of a
registration issued by the IPO. As such, an application for a search warrant is
only an ancillary proceeding to a full-blown criminal action. 59

On the other hand, the respondents contend that the appellate court
correctly ruled that there was no probable cause to issue the search warrants. 60
They insist that they were merely exercising their right to pursue a lawful
business, as they have been manufacturing footwear bearing the "Havana"
trademark for almost two decades as evidenced by the Certificate of Copyright
Registration. 61 They add that their target market is different from that of
SPASA's, as they are selling their footwear at a cheaper price. Hence, there
can be no confusion caused to the buying public. 62 They maintain that they
have original industrial designs which were registered with the IPO. 63 They
insist that even if the Dominancy and the Holistic Tests were applied, the
"Havana" and "Havaianas" marks are not similar. 64

Respondents assert that the testimonies of SPASA's witnesses are

unreliable, hearsay, and full of inconsistencies. 65 They aver that the CA merely
upheld their right to use and manufacture slippers based on the valid and
subsisting industrial design registrations, and did not totally disregard
SPASA's alleged prior use and registration of "Havaianas," "Havaianas Greek
Pattern Logo," and "Havaianas Rice Pattern Logo." 66 Moreover, they argue
that the appellate court correctly held that pending the resolution of the inter
partes proceedings for the cancellation of their industrial design registrations,
SPASA's applications for search warrants were premature. 67

Subsequent Incidents:

Relevantly, after the instant petition was filed, the IPO issued Decision
No. 2013-244 68 dated December 20, 2013 which cancelled the registration of
the respondents' industrial design, "Slipper." It ruled that a trademark, which
has been made available to the public anywhere in the world before the filing
date or priority date of the application for registration of industrial design,
may constitute as prior art which covers "everything" without qualification
58
Id. at 99.
59
Id.
60
Rollo, Vol. II, p. 744.
,1 Id.
62
Id. at 745.
63
Id. at 746.
64 Id. at 754-755.
65
Id. at 756-757.
66 Id. at 775-777.
67
Id. at 775.
68
Id. at 827-832.
 Decision -9- G.R. No. 202900

that such prior art should also be an industrial design, according to Section
24.1 of the IP Code. 69

Simply put, it held that the respondents' "Slipper" design is practically

identical to SPASA's "Havaianas Greek Pattern Logo" trademark, which was
registered beforehand. 70 Specifically, SPASA applied for the registration of the
"Havaianas Greek Pattern Logo" on April 2, 2009 while the respondents filed
an application for industrial design of the "Slipper" design on October 19,
2009. Additionally, SPASA's "Havaianas Greek Pattern Logo" was disclosed
to the public long before the year 2009. 71

Similarly, the IPO issued Decision No. 2013-243 72 dated December 20,
2013 which cancelled the registration of the respondents' industrial design
entitled "Sole," using the same ratio in Decision No. 2013-244 (for "Slipper").
It noted that SPASA applied for the registration of the "Havaianas Rice Pattern
Logo" on April 2, 2009, or earlier than the filing date of the respondents'
application for industrial design registration of the "Sole" design on October
19, 2009. In addition, the "Havaianas Rice Pattern Logo" was disclosed to the
public before 2009, as the said design appears prominently on SPASA's
products. Based on these findings, the IPO ruled that SPASA established the
existence of its prior art. 73

More importantly, however, SPASA filed a Manifestation74 dated

September 20, 2019 stating that on March 28, 2019, SPASA's representatives 75
and Ong, together with his associates, arrived at an amicable settlement,
rendering the assailed CA Decision and consequently, the instant petition,
moot and academic. Specifically, the relevant portions of the Settlement
Agreement7 6 dated March 28, 2019, state:

NOW THEREFORE, for and in consideration of the premises and of the

following considerations, stipulations and covenants the Parties hereunto agree
as follows:

1. The SECOND PARTY [Kentex, Ong King Guan, Mary Grace Ching,
and Beato Ang] admits that only the FIRST PARTY (SPASA], its authorized
distributor, dealers and/or retailers are entitled to sell, import, distribute or
otherwise deal in products bearing the trademark "HAVAIANAS" and its
related marks in the Philippines.

69 Section 24.1. Everything which has been made available to the public anywhere in the world, before the
filing date or priority date of the application claiming the invention.
70
Rollo, Vol. II, pp. 830-831.
71
Id. at 832.
72
Id. at 835-840.
73
Id. at 840.
74
TR unpaginated.
75 TR unpaginated; through a Special Power of Attorney in favor of the law offices of Hechanova, Bugay,

Vilchez & Andaya-Racadio and/or any of its members and lawyers.

76
TR unpaginated; signed by SPASA's representative, Atty. Editha R. Hechanova, and respondent Ong King
Guan, along with Mary Grace Ching and Beato Ang.
Decision -10- GR. No. 202900

2. Upon execution of thls Agreement, the SECOND PARTY including

hls employees, agents, representatives, assignees, successors-in-interest, and all
other persons and/or entities acting under his authority, undertake to perform
the following actions in favor of the FIRST PARTY:

a) To observe and respect all of the intellectual property rights of the

FIRST PARTY, whether arising from patents (invention, industrial design, and
utility model), trademarks, and/or copyrights;

b) Not to sell, import, barter, distribute or otherwise deal in counterfeit

"HAVAIANAS" products, nor colorable imitations thereof, nor products
bearing marks, signs, designs or logos whlch are confusingly similar to the
FIRST PARTY's trademarks, trade dress, copyrights, and industrial designs,
excluding the copyright registration no. 0 95-571 entitled "HAVANA
FOOTWEAR" covering HAVANA FOR SHOES MR. KING G. ONG
PHILIPPINES registered under Philippines Laws in favor of the SECOND
PARTY prior to any of those under the FIRST PARTY when it does not
infringe the registered HAVAIANAS, HAVAIANAS GREEK PATTERN
LOGO, and HAVAIANAS RICE PATTERN LOGO trademarks of the FIRST
PARTY;

c) Not to commit and/or engage in any act whlch may violate, whether
directly or indirectly, the intellectual property rights of the FIRST PARTY;

3. The SECOND PARTY warrants that it does not have in its

possession, counterfeit or colorable imitations of the "HAVAIANAS" products
of the FIRST PARTY;

4. The SECOND PARTY warrants that it does not produce, sell, offer to
sell, import or otherwise deal in, or has any remaining inventory of any
products that infringes upon the "HAVAIANAS" trademarks, trade dress,
copyrights, and industrial designs of the FIRST PARTY;

5. The SECOND PARTY, upon discovery, agrees to furnish the FIRST

PARTY with verifiable information as to name/s, including aliases, addresses
and other contact details of their source/s of counterfeit "HAVAIANAS"
products. The SECOND PARTY shall likewise submit and provide the FIRST
PARTY with pertinent documents such as, but not limited to shipping invoices,
purchase orders, delivery receipts, and communications by letters or emails
which show, demonstrate or otherwise confirm that the person/s disclosed is
indeed the source of fake "HAVAIANAS" products.

6. The SECOND PARTY hereby agrees and gives their express consent
to the immediate condemnation and destruction of all of the items seized from
its factory location at [Valenzuela City] and its office at [Caloocan City]
pursuant to the implementation and enforcement of Search Warrant Nos. 10-
163 78 to I 0-163 81, and further agrees to pay for the cost of said destruction,
and in thls regard tenders the amount of l"146,000.00, receipt of whlch is
acknowledged by the FIRST PARTY;

7. The SECOND PARTY shall execute a separate written undertaking in

favor of the FIRST PARTY (Annex "B" [of the Settlement
Agreement/Undertaking]) which shall embody the terms and conditions
aforementioned;
Decision -11- G.R. No. 202900

8. The FIRST PARTY, upon the SECOND PARTY's fulfillment of the

foregoing conditions, agrees to desist from pursuing any criminal, civil and/or
administrative case which may arise from the implementation of Search
Warrant Nos. 10-16380 and 10-16381. The FIRST PARTY shall execute an
Affidavit of Desistance in favor of Respondents/Accused in the following
criminal cases and preliminary investigations, and in all other cases or appeals
arising therefrom:

xxxx

9. In relation to paragraph 8, the FIRST PARTY and the SECOND

PARTY shall submit joint motions to have the cases listed in the second
Whereas clause [the instant case, among others] dismissed based on this
Compromise Agreement by the relevant courts or government agencies;

IO.However, if the SECOND PARTY, after the execution of this

agreement, violates any of the terms stated in paragraph 2, including any of the
covenants stated in the written undertaking (Annex "B" [of the Settlement
Agreement/Undertaking]), or is found to be engaging in any activity which
violates the intellectual property rights of the FIRST PARTY, such as but not
limited to manufacture, distribution, importation, reproduction, offer for sale of
copies, colorable imitations and/or counterfeit "HAVAIANAS" products, the
FIRST PARTY is not prevented from exercising all the legal remedies
available to it. Nothing in this agreement shall be construed to limit the FIRST
PARTY's right to enforce its intellectual property rights against the HAVANA
branded products that infringe upon its "HAVAIANAS" trademarks, trade dress,
copyrights, and industrial designs;

11. This Compromise Agreement shall bind not only the Parties but also
their employees, agents, successors and assigns;

12.This Settlement Agreement shall become effective and binding upon

the signing of this agreement;

13 .If any provision of this Settlement Agreement is held illegal, invalid,

or unenforceable, all other provisions of the Agreement shall remain in full
force and effect. Further, in lieu of each provision that is found to be illegal,
invalid, or unenforceable, a provision will be added as part of this Agreement
that is as similar to the illegal, invalid, or unenforceable provision as may be
possible and be legal, valid, and enforceable; and

14.Any issue, [or] dispute which may arise from the foregoing Agreement
shall be filed, heard and resolved by the Regional Trial Court ofMakati City. 77

In an Undertaking78 dated March 28, 2019, Ong King Guan, Mary Grace
Ching, and Beato Ang declared that they no longer manufacture, import, sell,
and offer to sell any products that infringe upon the "HAVAIANAS" brand of
SPASA and that they do not have any inventories of the same in their
possession or safekeeping. Moreover, they undertook to do, execute and
perform the acts required of them which were indicated in the aforementioned
Settlement Agreement.

77
Id.
78
TR, unpaginated.
 Decision -12- G.R. No. 202900

Our Ruling

In view of the execution of the Settlement Agreement between the

opposing parties and the Undertaking of Ong King Guan, along with Mary
Grace Ching and Beato Ang, the instant petition was rendered moot and
academic.

A case or issue is considered moot when "it ceases to present a justiciable

controversy by virtue of supervening events, so that an adjudication of the
case or a declaration on the issue would be of no practical value or use. In
such instance, there is no actual substantial relief which a petitioner would be
entitled to, and which would be negated by the dismissal of the petition.
Courts generally decline jurisdiction over such case or dismiss it on the
ground of mootness. This is because the judgment will not serve any useful
purpose or have any practical legal effect because, in the nature of things, it
cannot be enforced." 79

Since the parties entered into the said Settlement Agreement, the effect is
to put the litigation between them to an end, 80 as expressly stated in the said
document. In relation to this, "[t]he parol evidence rule provides that 'when
the terms of an agreement have been reduced into writing, it is considered
containing all the terms agreed upon and there can be, between the parties and
their successors in interest, no evidence of such terms other than the contents
of the written agreement. "' 81 Thus, the parties are bound to abide by and
respect the provisions of the duly signed Settlement Agreement regardless of
its execution after the instant petition was already filed.

Notably, SPASA itself, through its Manifestation dated September 20,

2019, prayed that the Court take notice of the existence of the Settlement
Agreement and posited that the CA's assailed February 10, 2012 Decision
became moot and academic pursuant thereto. In fine, "where the issues have
become moot and academic, there ceases to be any justiciable controversy and
where there is no substantial relief to which petitioner will be entitled, courts
will decline jurisdiction. 82 The Court, thus, abstains from expressing its
opinion in a case, such as this, where no substantial legal relief is necessary." 83
Stated differently, the Court will no longer render a ruling notwithstanding the
relevance of the issues raised.

WHEREFORE, the Petition 1s DISMISSED for being moot and

academic.

79 Burgundy Realty Corp. v. MAA General Assurance Phils., Inc., G.R. No. 225610, February 19, 2020 citing
Penafrancia Sugar Mill, Inc. v. Sugar Regulatory Administration, 728 Phil. 535,540 (2014).
so Cuadra v. San Miguel Corp., G.R. No. 194467, July 13, 2020.
81 Id. citing RULES OF COURT, Rule 130, § 9.
82 Gold/ink Security and Investigative Services, Inc. v. Quinones, G.R. No. 214434 {Notice), March 4, 2020

citing Korea Exchange Bank v. Gonzales, 520 Phil. 690, 70 I (2006).

ss Id.
 Decision -13- G.R. No. 202900

SO ORDERED.

Associate Justice

WE CONCUR:

Associate Justice
Chairperson

✓
HENRI EDG~O L. DELOS SANTOS
Associate Justice

JHOSE~OPEZ
Associate Justice
Decision -14- G.R. No. 202900

ATTESTATION

I attest that the conclusions in the above Decision had been reached in
consultation before the case was assigned to the writer of the opinion of the
Court's Division.

Associate Justice
Chairperson

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution, and the

Division Chairperson's Attestation, I hereby certify that the conclusions in the
above Decision had been reached in consultation before the case was assigned
to the writer of the opinion of the Court's Division.

DIOSDADO . PERALTA
Chief J stice