G.R. No.

96597-99 October 6, 1994 materials or empty/erasable video tapes and master copies used or
intended to be used in the unlawful exhibition, showing, reproduction,
COLUMBIA PICTURES, INC., ORION PICTURES CORP., PARAMOUNT PICTURES CORP., sale lease or disposition of videograms they are keeping and concealing
TWENTIETH CENTURY FOX FILM CORP., UNITED ARTISTS CORP., UNIVERSAL CITY in the premises abovedescribed. 1
STUDIOS, INC., WALT DISNEY COMPANY and WARNER BROS., INC., petitioners,
vs. Acting on the applications, then Regional Trial Court Judge Maria
HON. COURT OF APPEALS, TUBE VIDEO ENTERPRISES and EDWARD CHAM, Alicia M. Austria conducted a joint hearing during which she made a personal examination
BLOOMING ROSE TAPE CENTER and MA. JAJORIE T. UY, and VIDEO CHANNEL and of the applicant and his witnesses. Finding just and probable cause for granting the
LYDIA NABONG, respondents. application at the time, Judge Austria issued the corresponding Search Warrants ("SW")
numbered 95, 96, and 97.
G.R. No. 97156 October 6, 1994
Private respondents filed their respective motions to quash the three search warrants,
COLUMBIA PICTURES INDUSTRIES, INC., ORION PICTURES CORPORATION, citing as grounds therefor the following:
PARAMOUNT PICTURES CORP., TWENTIETH CENTURY FOX FILM CORP., MGM/UA
COMMUNICATIONS COMPANY, UNIVERSAL CITY STUDIOS, INC., THE WALT DISNEY In SW No. 95
COMPANY, and WARNER BROS., INC., petitioners,
vs. 1. There is no probable cause nor the existence of a satisfactory fact
HON. COURT OF APPEALS, FOX'S VIDEO, INC. and ALFREDO upon which the search warrant is based;
ONGYANGCO., respondents.
2. The National Bureau of Investigation has no authority nor the
On 07 April 1988, the National Bureau of Investigation ("NBI"), through its Agent Lauro C. jurisdiction to initiate the filing of suit against the defendants;
Reyes, filed with the Regional Trial Court of Pasig
(Branch 159) three applications for search warrant against private respondents Tube
Video Enterprises and Edward C. Cham (ASW No. 95), the Blooming Rose Tape Center and 3. The confiscation of defendants' seized articles based on the
Ma. Jajorie T. Uy (ASW No. 96), and the Video questioned search warrant violated the latter's constitutional right
Channel and Lydia Nabong (ASW No. 97), charging said respondents with violation of against deprivation of properties without due process.
Section 56 of Presidential Decree ("P.D.") No. 49, otherwise known as the Decree on the
Protection of Intellectual Property, as amended by P.D. No. 1988. 4. The films in question are not protected by Pres. Decree
No. 1988 in that they were never registered in the National Library as
In the three applications for search warrant, NBI Agent Reyes stated under oath that the a condition precedent to the availment of the protection secured by
respondents had in their possession and control — that decree. The complaint has acquired no right under the same.

1. (p)irated video tapes of the copyrighted motion pictures/films the
titles of which are mentioned in the attached list;
2. (p)osters, advertising leaflets, flyers, brochures, invoices, journals,
ledgers, job order slips, delivery slips, stickers and books of account
bearing and/or mentioned the pirated films with titles . . ., or otherwise
used in the videogram business or activities of the defendants; sold,
leased, distributed or possessed for the purpose of sale, lease,
distribution, circulation or public exhibition, journals, ledgers, job
order slips, delivery slips, stickers and books of accounts used in the
unlawful videogram business or activities of the defendants; (and)
3. (t)elevision sets, video cassette and/or laser disc recorders, dubbing
machines, rewinders, film projectors, U-matic machines, image
enhancers, dubbing machines, tape head cleaners, converters,
accessories, equipment and other machines and paraphernalia,
5. The mere publication by complainant of its alleged ownership over
the films in question does not ipso facto vest in the right to proceed
under P.D. No. 49 as that law requires official registration. Moreover,
the said publication took place only after the application for the
questioned search warrant.2
In SW No. 96
1. The complainants, one Rico V. Domingo and one Rene C. Baltazar, in
representation of the Motion Picture Association of America, Inc., have
not proven nor established their ownership over the films listed in
Annex "A" of the search warrant issued by this Honorable Court against
the defendants herein.
2. The information provided by the National Bureau of Investigation
agents and the representatives of the MPAA, Inc. are replete with

1
 generalities insofar as the description of the items to be concerned in
violation of the provisions of Sec. 3 of Rule 126 of the Rules of Court.
Their allegations as to the offense are presumptuous and speculative in
violation of the same section of the Rules of Court.3
Private respondents in SW No. 97 adopted the motions filed for the quashal of both SW
No. 95 and SW No. 96.
Herein petitioners (the private complainants in the three cases), namely, Columbia
Pictures Entertainment, Inc., Orion Pictures Corporation, Twentieth Century Fox Film
Corporation, MGM/UA Communications Company, Universal City Studios, Inc., Walt
Disney Company and Warner Bros., Inc., submitted their oppositions to the motions to
quash. The movants, herein private respondents, filed their replies to the oppositions and
sought, simultaneously, the release of the items seized. After a rejoinder was filed, the
court a quo considered all the incidents submitted for resolution.
In a Joint Order, issued on 09 December 1988, Judge Austria defined the issues raised in
the motions to quash thusly:
1. Whether or not the NBI had authority to file the application for
search warrant; whether or not it is the Videogram Regulatory Board
under P.D. No. 1987 which has exclusive jurisdiction to file suits against
violators of said law.
2. Whether or not this Court observed due process of law before issuing
the search warrants in question.
3. Whether or not search warrants Nos. 95, 96 and 97 are general
warrants and therefore void.
4. Whether or not there was probable cause in the issuance of the
search warrants pursuant to Section 3, Rule 126 of the 1985 Rules on
Criminal Procedure and Section 2, Article III of the 1987 Constitution
of the Republic of the Philippines.
5. Whether or not private complainants who are members of the
Motion Picture Association of America, Inc. (MPAA for brevity) through
their counsel, Atty. Rico Domingo, have sufficiently proven their
ownership over the alleged pirated video tapes of the copyrighted
motion pictures/films.
6. Whether or not the items seized by the NBI agents by virtue of SW
Nos. 95, 96 and 97 may be ordered released to defendants. 4
Anent the first three issues, Judge Austria ruled that the NBI had the authority to apply for
the search warrants; that in the issuance of the search warrants, due process of law was
duly observed; and that the questioned search warrants were not general in character
since the provision of law violated, i.e., Sec. 56 of P.D. No. 49, as amended by P.D. No. 1988,
was clearly specified. Judge Austria, nonetheless, reversed her former stand initially
finding probable cause for the issuance of the search warrants and ordered the quashal of
the search warrants giving the following reasons:
1. Private complainants were uncertain of their ownership of the titles
subject of the seized video tapes;
2. Complainants did not comply with the requirement that the master
tapes should be presented during the application for search warrants;
and
3. Private complainants cannot seek the protection of Philippine laws
as they failed to comply with the deposit and registration requirements
of P.D. No. 49 as amended by P.D. No. 1988.5
Judge Austria thus ordered the return of all the items seized by virtue of the warrants.
Petitioners appealed the order of Judge Austria to the Court of Appeals, docketed CA-G.R.
CV No. 22133-22135, assigning the following alleged errors:
1. The Court a quo erred in ruling that private complainants were
uncertain of their ownership of the titles subject of the pirated video
tapes.
2. The Court a quo erred in ordering the quashal of the search warrants
on the ground that the requirement of producing the "master tapes"
during the application for a search warrant, as enunciated in the 20th
Century Fox case, promulgated on 19 August 1988, was applicable to the
facts of the instant case which transpired on 07 April 1988, and that the
same was not complied with.
3. The Court a quo erred in ruling that appellants do not have a
protectable copyright under Philippine laws for their failure to comply
with the deposit and registration requirements of Presidential Decree
No. 49, as amended by Presidential Decree No. 1988.6
On 31 October 1990, the Court of Appeals, through Justice Salome A. Montoya, rendered
its decision sustaining petitioners' first and third assignment of errors but rejecting
petitioners' second assignment of error. It, therefore, still affirmed the quashal of the
search warrants.
Hence, this petition (G.R. No. 96597-99). Another decision rendered by the Court of
Appeals in another case (CA-G.R. No. 20617), involving the same petitioners on
substantially identical facts and issues, was also brought before this Court (G.R. No.
97156). In a Resolution, dated 06 March 1991, this Court consolidated the two petitions.
2
We affirm the decisions of the Court of Appeals.
This Court, in 20th Century Fox Film Corp. vs. Court of Appeals (164 SCRA 655) has already
laid down the rule that a basic requirement for the validity of search warrants, in cases of
this nature, is the presentation of the master tapes of the copyrighted films from which
pirated films are supposed to have been copied. We quote:
The presentation of the master tapes of the copyrighted films from
which the pirated films were allegedly copied, was necessary for the
validity of search warrants against those who have in their possession
the pirated films. The petitioner's argument to the effect that the
presentation of the master tapes at the time of application may not be
necessary as these would be merely evidentiary in nature and not
determinative of whether or not a probable cause exists to justify the
issuance of the search warrants is not meritorious. The court cannot
presume that duplicate or copied tapes were necessarily reproduced
from master tapes that it owns.
But even assuming, as appellants argue, that only the sale, lease, or
distribution of pirated video tapes is involved, the fact remains that
there is need to establish probable cause that the tapes being sold,
leased or distributed are pirated tapes, hence the issue reverts back to
the question of whether there was unauthorized transfer, directly or
indirectly, of a sound recording or motion picture or other audio visual
work that has been recorded. 7
With due respect to petitioners, the Court does not see a compelling reason to reexamine
its previous position on the issue.
WHEREFORE, in view of the foregoing, the instant petitions are hereby DENIED for lack of
merit.
SO ORDERED.

The application for search warrants was directed against video tape
outlets which allegedly were engaged in the unauthorized sale and
renting out of copyrighted films belonging to the petitioner pursuant to
P.D. 49.

The essence of a copyright infringement is the similarity or at least

substantial similarity of the purported pirated works to the
copyrighted work. Hence, the applicant must present to the court the
copyrighted films to compare them with the purchased evidence of the
video tapes allegedly pirated to determine whether the latter is an
unauthorized reproduction of the former. This linkage of the
copyrighted films to the pirated films must be established to satisfy the
requirements of probable cause. Mere allegations as to the existence of
the copyrighted films cannot serve as basis for the issuance of a search
warrant.

We also fully concur with the Court of Appeals when, in resolving petitioners' motion for
reconsideration in CA-G.R. CV No. 22133-35, it ratiocinated thusly:

It is not correct to say that "the basic fact" to be proven to establish

probable cause in the instant cases is not the "unauthorized transfer"
of a motion picture that has been recorded but the "sale, lease, or
distribution of pirated video tapes of copyrighted films."

In applying for the search warrants the NBI charged violation of the
entire provisions of Section 56 of P.D. No. 49 as amended by P.D.
No. 1988. This included not only the sale, lease or distribution of
pirated tapes but also the transfer or causing to be transferred of any
sound recording or motion picture or other audio visual work.

3
G.R. No. 110318 August 28, 1996
COLUMBIA PICTURES, INC., ORION PICTURES CORPORATION, PARAMOUNT
PICTURES CORPORATION, TWENTIETH CENTURY FOX FILM CORPORATION,
UNITED ARTISTS CORPORATION, UNIVERSAL CITY STUDIOS, INC., THE WALT
DISNEY COMPANY, and WARNER BROTHERS, INC., petitioners,
vs.
COURT OF APPEALS, SUNSHINE HOME VIDEO, INC. and DANILO A.
PELINDARIO, respondents.
REGALADO, J.:p
Before us is a petition for review on certiorari of the decision of the Court of
Appeals1 promulgated on July 22, 1992 and its resolution2 of May 10, 1993
denying petitioners' motion for reconsideration, both of which sustained the
order3 of the Regional Trial Court, Branch 133, Makati, Metro Manila, dated
November 22, 1988 for the quashal of Search Warrant No. 87-053 earlier issued
per its own order4 on September 5, 1988 for violation of Section 56 of
Presidential Decree No. 49, as amended, otherwise known as the "Decree on the
Protection of Intellectual Property."
The material facts found by respondent appellate court are as follows:
Complainants thru counsel lodged a formal complaint with the National
Bureau of Investigation for violation of PD No. 49, as amended, and
sought its assistance in their anti-film piracy drive. Agents of the NBI
and private researchers made discreet surveillance on various video
establishments in Metro Manila including Sunshine Home Video Inc.
(Sunshine for brevity), owned and operated by Danilo A. Pelindario
with address at No. 6 Mayfair Center, Magallanes, Makati, Metro Manila.
On November 14, 1987, NBI Senior Agent Lauro C. Reyes applied for a
search warrant with the court a quo against Sunshine seeking the
seizure, among others, of pirated video tapes of copyrighted films all of
which were enumerated in a list attached to the application; and,
television sets, video cassettes and/or laser disc recordings equipment
and other machines and paraphernalia used or intended to be used in
the unlawful exhibition, showing, reproduction, sale, lease or
disposition of videograms tapes in the premises above described. In the
hearing of the application, NBI Senior Agent Lauro C. Reyes, upon
questions by the court a quo, reiterated in substance his averments in
his affidavit. His testimony was corroborated by another witness, Mr.
Rene C. Baltazar. Atty. Rico V. Domingo's deposition was also taken. On
the basis of the affidavits and depositions of NBI Senior Agent Lauro C.
Reyes, Rene C. Baltazar and Atty. Rico V. Domingo, Search Warrant No.
87-053 for violation of Section 56 of PD No. 49, as amended, was issued
by the court a quo.
The search warrant was served at about 1:45 p.m. on December 14,
1987 to Sunshine and/or their representatives. In the course of the
search of the premises indicated in the search warrant, the NBI Agents
found and seized various video tapes of duly copyrighted motion
pictures/films owned or exclusively distributed by private
complainants, and machines, equipment, television sets, paraphernalia,
materials, accessories all of which were included in the receipt for
properties accomplished by the raiding team. Copy of the receipt was
furnished and/or tendered to Mr. Danilo A. Pelindario, registered
owner-proprietor of Sunshine Home Video.
On December 16, 1987, a "Return of Search Warrant" was filed with the
Court.
A "Motion To Lift the Order of Search Warrant" was filed but was later
denied for lack of merit (p. 280, Records).
A Motion for reconsideration of the Order of denial was filed. The
court a quo granted the said motion for reconsideration and justified it
in this manner:
It is undisputed that the master tapes of the
copyrighted films from which the pirated films were
allegedly copies (sic), were never presented in the
proceedings for the issuance of the search warrants
in question. The orders of the Court granting the
search warrants and denying the urgent motion to
lift order of search warrants were, therefore, issued
in error. Consequently, they must be set aside. (p.
13, Appellant's Brief)5
Petitioners thereafter appealed the order of the trial court granting private
respondents' motion for reconsideration, thus lifting the search warrant which
it had theretofore issued, to the Court of Appeals. As stated at the outset, said
appeal was dismissed and the motion for reconsideration thereof was denied.
Hence, this petition was brought to this Court particularly challenging the
validity of respondent court's retroactive application of the ruling in 20th
Century Fox Film Corporation vs. Court of Appeals, et al.,6 in dismissing
petitioners' appeal and upholding the quashal of the search warrant by the trial
court.
I
4
Inceptively, we shall settle the procedural considerations on the matter of and
the challenge to petitioners' legal standing in our courts, they being foreign
corporations not licensed to do business in the Philippines.
Private respondents aver that being foreign corporations, petitioners should
have such license to be able to maintain an action in Philippine courts. In so
challenging petitioners' personality to sue, private respondents point to the fact
that petitioners are the copyright owners or owners of exclusive rights of
distribution in the Philippines of copyrighted motion pictures or films, and also
to the appointment of Atty. Rico V. Domingo as their attorney-in-fact, as being
constitutive of "doing business in the Philippines" under Section 1 (f)(1) and (2),
Rule 1 of the Rules of the Board of Investments. As foreign corporations doing
business in the Philippines, Section 133 of Batas Pambansa Blg. 68, or the
Corporation Code of the Philippines, denies them the right to maintain a suit in
Philippine courts in the absence of a license to do business. Consequently, they
have no right to ask for the issuance of a search warrant.7
In refutation, petitioners flatly deny that they are doing business in the
Philippines,8 and contend that private respondents have not adduced evidence
to prove that petitioners are doing such business here, as would require them to
be licensed by the Securities and Exchange Commission, other than averments
in the quoted portions of petitioners' "Opposition to Urgent Motion to Lift Order
of Search Warrant" dated April 28, 1988 and Atty. Rico V. Domingo's affidavit of
December 14, 1987. Moreover, an exclusive right to distribute a product or the
ownership of such exclusive right does not conclusively prove the act of doing
business nor establish the presumption of doing business.9
The Corporation Code provides:
Sec. 133. Doing business without a license. — No foreign corporation
transacting business in the Philippines without a license, or its
successors or assigns, shall be permitted to maintain or intervene in
any action, suit or proceeding in any court or administrative agency of
the Philippines; but such corporation may be sued or proceeded
against before Philippine courts or administrative tribunals on any
valid cause of action recognized under Philippine laws.
The obtainment of a license prescribed by Section 125 of the Corporation Code
is not a condition precedent to the maintenance of any kind of action in
Philippine courts by a foreign corporation. However, under the aforequoted
provision, no foreign corporation shall be permitted to transact business in the
Philippines, as this phrase is understood under the Corporation Code, unless it
shall have the license required by law, and until it complies with the law
intransacting business here, it shall not be permitted to maintain any suit in local
courts.10 As thus interpreted, any foreign corporation not doing business in the
Philippines may maintain an action in our courts upon any cause of action,
provided that the subject matter and the defendant are within the jurisdiction of
the court. It is not the absence of the prescribed license but "doing business" in
the Philippines without such license which debars the foreign corporation from
access to our courts. In other words, although a foreign corporation is without
license to transact business in the Philippines, it does not follow that it has no
capacity to bring an action. Such license is not necessary if it is not engaged in
business in the Philippines.11
Statutory provisions in many jurisdictions are determinative of what constitutes
"doing business" or "transacting business" within that forum, in which case said
provisions are controlling there. In others where no such definition or
qualification is laid down regarding acts or transactions failing within its
purview, the question rests primarily on facts and intent. It is thus held that all
the combined acts of a foreign corporation in the State must be considered, and
every circumstance is material which indicates a purpose on the part of the
corporation to engage in some part of its regular business in the State.12
No general rule or governing principles can be laid down as to what constitutes
"doing" or "engaging in" or "transacting" business. Each case must be judged in
the light of its own peculiar environmental circumstances.13 The true tests,
however, seem to be whether the foreign corporation is continuing the body or
substance of the business or enterprise for which it was organized or whether it
has substantially retired from it and turned it over to another.14
As a general proposition upon which many authorities agree in principle, subject
to such modifications as may be necessary in view of the particular issue or of
the terms of the statute involved, it is recognized that a foreign corporation is
"doing," "transacting," "engaging in," or "carrying on" business in the State when,
and ordinarily only when, it has entered the State by its agents and is there
engaged in carrying on and transacting through them some substantial part of
its ordinary or customary business, usually continuous in the sense that it may
be distinguished from merely casual, sporadic, or occasional transactions and
isolated acts.15
The Corporation Code does not itself define or categorize what acts constitute
doing or transacting business in the Philippines. Jurisprudence has, however,
held that the term implies a continuity of commercial dealings and
arrangements, and contemplates, to that extent, the performance of acts or
works or the exercise of some of the functions normally incident to or in
progressive prosecution of the purpose and subject of its organization.16
This traditional case law definition has evolved into a statutory definition, having
been adopted with some qualifications in various pieces of legislation in our
jurisdiction.
For instance, Republic Act No. 5455 17 provides:
Sec. 1. Definitions and scope of this Act. — (1) . . . ; and the phrase "doing
business" shall include soliciting orders, purchases, service contracts,
opening offices, whether called "liaison" offices or branches;
appointing representatives or distributors who are domiciled in the
5
 Philippines or who in any calendar year stay in the Philippines for a
period or periods totalling one hundred eighty days or more;
participating in the management, supervision or control of any
domestic business firm, entity or corporation in the Philippines; and
any other act or acts that imply a continuity of commercial dealings or
arrangements, and contemplate to that extent the performance of acts
or works, or the exercise of some of the functions normally incident to,
and in progressive prosecution of, commercial gain or of the purpose
and object of the business organization.
Presidential Decree No. 1789,18 in Article 65 thereof, defines "doing business" to
include soliciting orders, purchases, service contracts, opening offices, whether
called "liaison" offices or branches; appointing representatives or distributors
who are domiciled in the Philippines or who in any calendar year stay in the
Philippines for a period or periods totalling one hundred eighty days or more;
participating in the management, supervision or control of any domestic
business firm, entity or corporation in the Philippines, and any other act or acts
that imply a continuity of commercial dealings or arrangements and contemplate
to that extent the performance of acts or works, or the exercise of some of the
functions normally incident to, and in progressive prosecution of, commercial
gain or of the purpose and object of the business organization.
The implementing rules and regulations of said presidential decree conclude the
enumeration of acts constituting "doing business" with a catch-all definition,
thus:
Sec. 1(g). "Doing Business" shall be any act or combination of acts
enumerated in Article 65 of the Code. In particular "doing business"
includes:
xxx xxx xxx
(10) Any other act or acts which imply a continuity of commercial
dealings or arrangements, and contemplate to that extent the
performance of acts or works, or the exercise of some of the functions
normally incident to, or in the progressive prosecution of, commercial
gain or of the purpose and object of the business organization.
Finally, Republic Act No. 704219 embodies such concept in this wise:
Sec. 3. Definitions. — As used in this Act:
xxx xxx xxx
(d) the phrase "doing business shall include soliciting orders, service
contracts, opening offices, whether called "liaison" offices or branches;
appointing representatives or distributors domiciled in the Philippines
or who in any calendar year stay in the country for a period or periods
totalling one hundred eight(y) (180) days or more; participating in the
management, supervision or control of any domestic business, firm,
entity or corporation in the Philippines; and any other act or acts that
imply a continuity of commercial dealings or arrangements, and
contemplate to that extent the performance of acts or works, or the
exercise of some of the functions normally incident to, and in
progressive prosecution of, commercial gain or of the purpose and
object of the business organization: Provided, however, That the phrase
"doing business" shall not be deemed to include mere investment as a
shareholder by a foreign entity in domestic corporations duly
registered to do business, and/or the exercise of rights as such
investor; nor having a nominee director or officer to represent its
interests in such corporation; nor appointing a representative or
distributor domiciled in the Philippines which transacts business in its
own name and for its own account.
Based on Article 133 of the Corporation Code and gauged by such statutory
standards, petitioners are not barred from maintaining the present action. There
is no showing that, under our statutory or case law, petitioners are doing,
transacting, engaging in or carrying on business in the Philippines as would
require obtention of a license before they can seek redress from our courts. No
evidence has been offered to show that petitioners have performed any of the
enumerated acts or any other specific act indicative of an intention to conduct or
transact business in the Philippines.
Accordingly, the certification issued by the Securities and Exchange
Commission20 stating that its records do not show the registration of petitioner
film companies either as corporations or partnerships or that they have been
licensed to transact business in the Philippines, while undeniably true, is of no
consequence to petitioners' right to bring action in the Philippines. Verily, no
record of such registration by petitioners can be expected to be found for, as
aforestated, said foreign film corporations do not transact or do business in the
Philippines and, therefore, do not need to be licensed in order to take recourse
to our courts.
Although Section 1(g) of the Implementing Rules and Regulations of the Omnibus
Investments Code lists, among others —
(1) Soliciting orders, purchases (sales) or service contracts. Concrete
and specific solicitations by a foreign firm, or by an agent of such
foreign firm, not acting independently of the foreign firm amounting to
negotiations or fixing of the terms and conditions of sales or service
contracts, regardless of where the contracts are actually reduced to
writing, shall constitute doing business even if the enterprise has no
office or fixed place of business in the Philippines. The arrangements
agreed upon as to manner, time and terms of delivery of the goods or
the transfer of title thereto is immaterial. A foreign firm which does
business through the middlemen acting in their own names, such as
indentors, commercial brokers or commission merchants, shall not be
6
 deemed doing business in the Philippines. But such indentors,
commercial brokers or commission merchants shall be the ones
deemed to be doing business in the Philippines.
(2) Appointing a representative or distributor who is domiciled in the
Philippines, unless said representative or distributor has an
independent status, i.e., it transacts business in its name and for its own
account, and not in the name or for the account of a principal. Thus,
where a foreign firm is represented in the Philippines by a person or
local company which does not act in its name but in the name of the
foreign firm, the latter is doing business in the Philippines.
as acts constitutive of "doing business," the fact that petitioners are admittedly
copyright owners or owners of exclusive distribution rights in the Philippines of
motion pictures or films does not convert such ownership into an indicium of
doing business which would require them to obtain a license before they can sue
upon a cause of action in local courts.
Neither is the appointment of Atty. Rico V. Domingo as attorney-in-fact of
petitioners, with express authority pursuant to a special power of attorney, inter
alia —
To lay criminal complaints with the appropriate authorities and to
provide evidence in support of both civil and criminal proceedings
against any person or persons involved in the criminal infringement of
copyright or concerning the unauthorized importation, duplication,
exhibition or distribution of any cinematographic work(s) — films or
video cassettes — of which . . . is the owner of copyright or the owner
of exclusive rights of distribution in the Philippines pursuant to any
agreement(s) between . . . and the respective owners of copyright in
such cinematographic work(s), to initiate and prosecute on behalf of . .
. criminal or civil actions in the Philippines against any person or
persons unlawfully distributing, exhibiting, selling or offering for sale
any films or video cassettes of which . . . is the owner of copyright or the
owner of exclusive rights of distribution in the Philippines pursuant to
any agreement(s) between . . . and the respective owners of copyright
in such works.21
tantamount to doing business in the Philippines. We fail to see how exercising
one's legal and property rights and taking steps for the vigilant protection of said
rights, particularly the appointment of an attorney-in-fact, can be deemed by and
of themselves to be doing business here.
As a general rule, a foreign corporation will not be regarded as doing business in
the State simply because it enters into contracts with residents of the State,
where such contracts are consummated outside the State.22In fact, a view is
taken that a foreign corporation is not doing business in the State merely because
sales of its product are made there or other business furthering its interests is
transacted there by an alleged agent, whether a corporation or a natural person,
where such activities are not under the direction and control of the foreign
corporation but are engaged in by the alleged agent as an independent
business.23
It is generally held that sales made to customers in the State by an independent
dealer who has purchased and obtained title from the corporation to the
products sold are not a doing of business by the corporation.24Likewise, a foreign
corporation which sells its products to persons styled "distributing agents" in
the State, for distribution by them, is not doing business in the State so as to
render it subject to service of process therein, where the contract with these
purchasers is that they shall buy exclusively from the foreign corporation such
goods as it manufactures and shall sell them at trade prices established by it.25
It has moreover been held that the act of a foreign corporation in engaging an
attorney to represent it in a Federal court sitting in a particular State is not doing
business within the scope of the minimum contact test. 26With much more
reason should this doctrine apply to the mere retainer of Atty. Domingo for legal
protection against contingent acts of intellectual piracy.
In accordance with the rule that "doing business" imports only acts in
furtherance of the purposes for which a foreign corporation was organized, it is
held that the mere institution and prosecution or defense of a suit, particularly if
the transaction which is the basis of the suit took place out of the State, do not
amount to the doing of business in the State. The institution of a suit or the
removal thereof is neither the making of a contract nor the doing of business
within a constitutional provision placing foreign corporations licensed to do
business in the State under the same regulations, limitations and liabilities with
respect to such acts as domestic corporations. Merely engaging in litigation has
been considered as not a sufficient minimum contact to warrant the exercise of
jurisdiction over a foreign corporation.27
As a consideration aside, we have perforce to comment on private respondents'
basis for arguing that petitioners are barred from maintaining suit in the
Philippines. For allegedly being foreign corporations doing business in the
Philippines without a license, private respondents repeatedly maintain in all
their pleadings that petitioners have thereby no legal personality to bring an
action before Philippine Courts.28
Among the grounds for a motion to dismiss under the Rules of Court
are lack of legal capacity to sue29 and that the complaint states no cause of
action. 30 Lack of legal capacity to sue means that the plaintiff is not in the
exercise of his civil rights, or does not have the necessary qualification to appear
in the case, or does not have the character or representation he claims.31 On the
other hand, a case is dismissible for lack of personality to sue upon proof that the
plaintiff is not the real party in interest, hence grounded on failure to state a
cause of action.32 The term "lack of capacity to sue" should not be confused with
the term "lack of personality to sue." While the former refers to a plaintiff's
general disability to sue, such as on account of minority, insanity, incompetence,
lack of juridical personality or any other general disqualifications of a party, the
7
latter refers to the fact that the plaintiff is not the real party in interest.
Correspondingly, the first can be a ground for a motion to dismiss based on the
ground of lack of legal capacity to sue;33 whereas the second can be used as a
ground for a motion to dismiss based on the fact that the complaint, on the face
thereof, evidently states no cause of action.34
Applying the above discussion to the instant petition, the ground available for
barring recourse to our courts by an unlicensed foreign corporation doing or
transacting business in the Philippines should properly be "lack of capacity to
sue," not "lack of personality to sue." Certainly, a corporation whose legal rights
have been violated is undeniably such, if not the only, real party in interest to
bring suit thereon although, for failure to comply with the licensing requirement,
it is not capacitated to maintain any suit before our courts.
Lastly, on this point, we reiterate this Court's rejection of the common
procedural tactics of erring local companies which, when sued by unlicensed
foreign corporations not engaged in business in the Philippines, invoke the
latter's supposed lack of capacity to sue. The doctrine of lack of capacity to sue
based on failure to first acquire a local license is based on considerations of
public policy. It was never intended to favor nor insulate from suit unscrupulous
establishments or nationals in case of breach of valid obligations or violation of
legal rights of unsuspecting foreign firms or entities simply because they are not
licensed to do business in the country.35
II
We now proceed to the main issue of the retroactive application to the present
controversy of the ruling in 20th Century Fox Film Corporation vs. Court of
Appeals, et al., promulgated on August 19, 1988,36 that for the determination of
probable cause to support the issuance of a search warrant in copyright
infringement cases involving videograms, the production of the master tape for
comparison with the allegedly pirate copies is necessary.
Petitioners assert that the issuance of a search warrant is addressed to the
discretion of the court subject to the determination of probable cause in
accordance with the procedure prescribed therefore under Sections 3 and 4 of
Rule 126. As of the time of the application for the search warrant in question, the
controlling criterion for the finding of probable cause was that enunciated
in Burgos vs. Chief of Staff 3 7 stating that:
Probable cause for a search warrant is defined as such facts and
circumstances which would lead a reasonably discreet and prudent
man to believe that an offense has been committed and that the objects
sought in connection with the offense are in the place sought to be
searched.
According to petitioners, after complying with what the law then required, the
lower court determined that there was probable cause for the issuance of a
search warrant, and which determination in fact led to the issuance and service
on December 14, 1987 of Search Warrant No. 87-053. It is further argued that
any search warrant so issued in accordance with all applicable legal
requirements is valid, for the lower court could not possibly have been expected
to apply, as the basis for a finding of probable cause for the issuance of a search
warrant in copyright infringement cases involving videograms, a
pronouncement which was not existent at the time of such determination, on
December 14, 1987, that is, the doctrine in the 20th Century Fox case that was
promulgated only on August 19, 1988, or over eight months later.
Private respondents predictably argue in support of the ruling of the Court of
Appeals sustaining the quashal of the search warrant by the lower court on the
strength of that 20th Century Fox ruling which, they claim, goes into the very
essence of probable cause. At the time of the issuance of the search warrant
involved here, although the 20th Century Fox case had not yet been decided,
Section 2, Article III of the Constitution and Section 3, Rule 126 of the 1985 Rules
on Criminal Procedure embodied the prevailing and governing law on the
matter. The ruling in 20th Century Fox was merely an application of the law on
probable cause. Hence, they posit that there was no law that was retrospectively
applied, since the law had been there all along. To refrain from applying the 20th
Century Fox ruling, which had supervened as a doctrine promulgated at the time
of the resolution of private respondents' motion for reconsideration seeking the
quashal of the search warrant for failure of the trial court to require presentation
of the master tapes prior to the issuance of the search warrant, would have
constituted grave abuse of discretion.38
Respondent court upheld the retroactive application of the 20th Century
Fox ruling by the trial court in resolving petitioners' motion for reconsideration
in favor of the quashal of the search warrant, on this renovated thesis:
And whether this doctrine should apply retroactively, it must be noted
that in the 20th Century Fox case, the lower court quashed the earlier
search warrant it issued. On certiorari, the Supreme Court affirmed the
quashal on the ground among others that the master tapes or
copyrighted films were not presented for comparison with the
purchased evidence of the video tapes to determine whether the latter
is an unauthorized reproduction of the former.
If the lower court in the Century Fox case did not quash the warrant, it
is Our view that the Supreme Court would have invalidated the warrant
just the same considering the very strict requirement set by the
Supreme Court for the determination of "probable cause" in copyright
infringement cases as enunciated in this 20th Century Fox case. This is
so because, as was stated by the Supreme Court in the said case, the
master tapes and the pirated tapes must be presented for comparison to
satisfy the requirement of "probable cause." So it goes back to the very
existence of probable
cause. . . .39
8
Mindful as we are of the ramifications of the doctrine of stare decisis and the
rudiments of fair play, it is our considered view that the 20th Century Fox ruling
cannot be retroactively applied to the instant case to justify the quashal of Search
Warrant No. 87-053. Herein petitioners' consistent position that the order of the
lower court of September 5, 1988 denying therein defendants' motion to lift the
order of search warrant was properly issued, there having been satisfactory
compliance with the then prevailing standards under the law for determination
of probable cause, is indeed well taken. The lower court could not possibly have
expected more evidence from petitioners in their application for a search
warrant other than what the law and jurisprudence, then existing and judicially
accepted, required with respect to the finding of probable cause.
Article 4 of the Civil Code provides that "(l)aws shall have no retroactive effect,
unless the contrary is provided. Correlatively, Article 8 of the same Code declares
that "(j)udicial decisions applying the laws or the Constitution shall form part of
the legal system of the Philippines."
Jurisprudence, in our system of government, cannot be considered as an
independent source of law; it cannot create law.40 While it is true that judicial
decisions which apply or interpret the Constitution or the laws are part of the
legal system of the Philippines, still they are not laws. Judicial decisions, though
not laws, are nonetheless evidence of what the laws mean, and it is for this reason
that they are part of the legal system of the Philippines.41 Judicial decisions of the
Supreme Court assume the same authority as the statute
itself.42
Interpreting the aforequoted correlated provisions of the Civil Code and in light
of the above disquisition, this Court emphatically declared in Co vs. Court of
Appeals, et al.43 that the principle of prospectivity applies not only to original or
amendatory statutes and administrative rulings and circulars, but also, and
properly so, to judicial decisions. Our holding in the earlier case of People
vs. Jabinal44 echoes the rationale for this judicial declaration, viz.:
Decisions of this Court, although in themselves not laws, are
nevertheless evidence of what the laws mean, and this is the reason
why under Article 8 of the New Civil Code, "Judicial decisions applying
or interpreting the laws or the Constitution shall form part of the legal
system." The interpretation upon a law by this Court constitutes, in a
way, a part of the law as of the date that the law was originally passed,
since this Court's construction merely establishes the
contemporaneous legislative intent that the law thus construed intends
to effectuate. The settled rule supported by numerous authorities is a
restatement of the legal maxim "legis interpretatio legis vim obtinet" —
the interpretation placed upon the written law by a competent court
has the force of law. . . . , but when a doctrine of this Court is overruled
and a different view is adopted, the new doctrine should be applied
prospectively, and should not apply to parties who had relied on the old
doctrine and acted on the faith thereof . . . . (Emphasis supplied).
This was forcefully reiterated in Spouses Benzonan vs. Court of Appeals, et
al.,45 where the Court expounded:
. . . . But while our decisions form part of the law of the land, they are
also subject to Article 4 of the Civil Code which provides that "laws shall
have no retroactive effect unless the contrary is provided." This is
expressed in the familiar legal maxim lex prospicit, non respicit, the law
looks forward not backward. The rationale against retroactivity is easy
to perceive. The retroactive application of a law usually divests rights
that have already become vested or impairs the obligations of contract
and hence, is unconstitutional (Francisco v. Certeza, 3 SCRA 565
[1961]). The same consideration underlies our rulings giving only
prospective effect to decisions enunciating new doctrines. . . . .
The reasoning behind Senarillos vs. Hermosisima46 that judicial interpretation of
a statute constitutes part of the law as of the date it was originally passed, since
the Court's construction merely establishes the contemporaneous legislative
intent that the interpreted law carried into effect, is all too familiar. Such judicial
doctrine does not amount to the passage of a new law but consists merely of a
construction or interpretation of a pre-existing one, and that is precisely the
situation obtaining in this case.
It is consequently clear that a judicial interpretation becomes a part of the law as
of the date that law was originally passed, subject only to the qualification that
when a doctrine of this Court is overruled and a different view is adopted, and
more so when there is a reversal thereof, the new doctrine should be applied
prospectively and should not apply to parties who relied on the old doctrine and
acted in good faith.4 7 To hold otherwise would be to deprive the law of its
quality of fairness and justice then, if there is no recognition of what had
transpired prior to such adjudication.48
There is merit in petitioners' impassioned and well-founded argumentation:
The case of 20th Century Fox Film Corporation vs. Court of Appeals, et al.,
164 SCRA 655 (August 19, 1988) (hereinafter 20th Century Fox) was
inexistent in December of 1987 when Search Warrant 87-053 was
issued by the lower court. Hence, it boggles the imagination how the
lower court could be expected to apply the formulation of 20th Century
Fox in finding probable cause when the formulation was yet non-
existent.
xxx xxx xxx
In short, the lower court was convinced at that time after conducting
searching examination questions of the applicant and his witnesses
that "an offense had been committed and that the objects sought in
connection with the offense (were) in the place sought to be searched"
(Burgos v. Chief of Staff, et al., 133 SCRA 800). It is indisputable,
9
 therefore, that at the time of the application, or on December 14, 1987,
the lower court did not commit any error nor did it fail to comply with
any legal requirement for the valid issuance of search warrant.
. . . (W)e believe that the lower court should be considered as having
followed the requirements of the law in issuing Search Warrant No. 87-
053. The search warrant is therefore valid and binding. It must be noted
that nowhere is it found in the allegations of the Respondents that the
lower court failed to apply the law as then interpreted in 1987. Hence,
we find it absurd that it is (sic) should be seen otherwise, because it is
simply impossible to have required the lower court to apply a
formulation which will only be defined six months later.
Furthermore, it is unjust and unfair to require compliance with legal
and/or doctrinal requirements which are inexistent at the time they
were supposed to have been complied with.
xxx xxx xxx
. . . If the lower court's reversal will be sustained, what encouragement
can be given to courts and litigants to respect the law and rules if they
can expect with reasonable certainty that upon the passage of a new
rule, their conduct can still be open to question? This certainly breeds
instability in our system of dispensing justice. For Petitioners who took
special effort to redress their grievances and to protect their property
rights by resorting to the remedies provided by the law, it is most unfair
that fealty to the rules and procedures then obtaining would bear but
fruits of
injustice.49
Withal, even the proposition that the prospectivity of judicial decisions imports
application thereof not only to future cases but also to cases still ongoing or not
yet final when the decision was promulgated, should not be countenanced in the
jural sphere on account of its inevitably unsettling repercussions. More to the
point, it is felt that the reasonableness of the added requirement in 20th Century
Fox calling for the production of the master tapes of the copyrighted films for
determination of probable cause in copyright infringement cases needs
revisiting and clarification.
It will be recalled that the 20th Century Fox case arose from search warrant
proceedings in anticipation of the filing of a case for the unauthorized sale or
renting out of copyrighted films in videotape format in violation of Presidential
Decree No. 49. It revolved around the meaning of probable cause within the
context of the constitutional provision against illegal searches and seizures, as
applied to copyright infringement cases involving videotapes.
Therein it was ruled that —
The presentation of master tapes of the copyrighted films from which
the pirated films were allegedly copied, was necessary for the validity
of search warrants against those who have in their possession the
pirated films. The petitioner's argument to the effect that the
presentation of the master tapes at the time of application may not be
necessary as these would be merely evidentiary in nature and not
determinative of whether or not a probable cause exists to justify the
issuance of the search warrants is not meritorious. The court cannot
presume that duplicate or copied tapes were necessarily reproduced
from master tapes that it owns.
The application for search warrants was directed against video tape
outlets which allegedly were engaged in the unauthorized sale and
renting out of copyrighted films belonging to the petitioner pursuant to
P.D. 49.
The essence of a copyright infringement is the similarity or at least
substantial similarity of the purported pirated works to the
copyrighted work. Hence, the applicant must present to the court the
copyrighted films to compare them with the purchased evidence of the
video tapes allegedly pirated to determine whether the latter is an
unauthorized reproduction of the former. This linkage of the
copyrighted films to the pirated films must be established to satisfy the
requirements of probable cause. Mere allegations as to the existence of
the copyrighted films cannot serve as basis for the issuance of a search
warrant.
For a closer and more perspicuous appreciation of the factual antecedents
of 20th Century Fox, the pertinent portions of the decision therein are quoted
hereunder, to wit:
In the instant case, the lower court lifted the three questioned search
warrants against the private respondents on the ground that it acted
on the application for the issuance of the said search warrants and
granted it on the misrepresentations of applicant NBI and its witnesses
that infringement of copyright or a piracy of a particular film have been
committed. Thus the lower court stated in its questioned order dated
January 2, 1986:
According to the movant, all three witnesses during
the proceedings in the application for the three
search warrants testified of their own personal
knowledge. Yet, Atty. Albino Reyes of the NBI stated
that the counsel or representative of the Twentieth
Century Fox Corporation will testify on the video
cassettes that were pirated, so that he did not have
personal knowledge of the alleged piracy. The
witness Bacani also said that the video cassettes
were pirated without stating the manner it was
10
 pirated and that it was Atty. Domingo that has
knowledge of that fact.
On the part of Atty. Domingo, he said that the re-
taping of the allegedly pirated tapes was from
master tapes allegedly belonging to the Twentieth
Century Fox, because, according to him it is of his
personal knowledge.
At the hearing of the Motion for Reconsideration,
Senior NBI Agent Atty. Albino Reyes testified that
when the complaint for infringement was brought
to the NBI, the master tapes of the allegedly pirated
tapes were shown to him and he made comparisons
of the tapes with those purchased by their man
Bacani. Why the master tapes or at least the film
reels of the allegedly pirated tapes were not shown
to the Court during the application gives some
misgivings as to the truth of that bare statement of
the NBI agent on the witness stand.
Again as the application and search proceedings is a
prelude to the filing of criminal cases under PD 49,
the copyright infringement law, and although what
is required for the issuance thereof is merely the
presence of probable cause, that probable cause
must be satisfactory to the Court, for it is a time-
honored precept that proceedings to put a man to
task as an offender under our laws should be
interpreted in strictissimi juris against the
government and liberally in favor of the alleged
offender.
xxx xxx xxx
This doctrine has never been overturned, and as a
matter of fact it had been enshrined in the Bill of
Rights in our 1973 Constitution.
So that lacking in persuasive effect, the allegation
that master tapes were viewed by the NBI and were
compared to the purchased and seized video tapes
from the respondents' establishments, it should be
dismissed as not supported by competent evidence
and for that matter the probable cause hovers in
that grey debatable twilight zone between black and
white resolvable in favor of respondents herein.
But the glaring fact is that "Cocoon," the first video
tape mentioned in the search warrant, was not even
duly registered or copyrighted in the Philippines.
(Annex C of Opposition p. 152 record.) So, that
lacking in the requisite presentation to the Court of
an alleged master tape for purposes of comparison
with the purchased evidence of the video tapes
allegedly pirated and those seized from
respondents, there was no way to determine
whether there really was piracy, or copying of the
film of the complainant Twentieth Century Fox.
xxx xxx xxx
The lower court, therefore, lifted the three (3) questioned search
warrants in the absence of probable cause that the private respondents
violated P.D. 49. As found out by the court, the NBI agents who acted as
witnesses did not have personal knowledge of the subject matter of their
testimony which was the alleged commission of the offense by the private
respondents. Only the petitioner's counsel who was also a witness
during the application for the issuance of the search warrants stated
that he had personal knowledge that the confiscated tapes owned by
the private respondents were pirated tapes taken from master tapes
belonging to the petitioner. However, the lower court did not give much
credence to his testimony in view of the fact that the master tapes of
the allegedly pirated tapes were not shown to the court during the
application (Emphasis ours).
The italicized passages readily expose the reason why the trial court therein
required the presentation of the master tapes of the allegedly pirated films in
order to convince itself of the existence of probable cause under the factual
milieu peculiar to that case. In the case at bar, respondent appellate court itself
observed:
We feel that the rationale behind the aforequoted doctrine is that the
pirated copies as well as the master tapes, unlike the other types of
personal properties which may be seized, were available for
presentation to the court at the time of the application for a search
warrant to determine the existence of the linkage of the copyrighted
films with the pirated ones. Thus, there is no reason not the present
them (Emphasis supplied ).50
In fine, the supposed pronunciamento in said case regarding the necessity for the
presentation of the master tapes of the copyrighted films for the validity of
search warrants should at most be understood to merely serve as a guidepost in
determining the existence of probable cause in copyright infringement
cases where there is doubt as to the true nexus between the master tape and the
pirated copies. An objective and careful reading of the decision in said case could
lead to no other conclusion than that said directive was hardly intended to be a
11
sweeping and inflexible requirement in all or similar copyright infringement
cases. Judicial dicta should always be construed within the factual matrix of their
parturition, otherwise a careless interpretation thereof could unfairly fault the
writer with the vice of overstatement and the reader with the fallacy of undue
generalization.
In the case at bar, NBI Senior Agent Lauro C. Reyes who filed the application for
search warrant with the lower court following a formal complaint lodged by
petitioners, judging from his affidavit51 and his deposition,52did testify on
matters within his personal knowledge based on said complaint of petitioners as
well as his own investigation and surveillance of the private respondents' video
rental shop. Likewise, Atty. Rico V. Domingo, in his capacity as attorney-in-fact,
stated in his affidavit53 and further expounded in his deposition54 that he
personally knew of the fact that private respondents had never been authorized
by his clients to reproduce, lease and possess for the purpose of selling any of the
copyrighted films.
Both testimonies of Agent Reyes and Atty. Domingo were corroborated by Rene
C. Baltazar, a private researcher retained by Motion Pictures Association of
America, Inc. (MPAA, Inc.), who was likewise presented as a witness during the
search warrant proceedings.55 The records clearly reflect that the testimonies of
the abovenamed witnesses were straightforward and stemmed from matters
within their personal knowledge. They displayed none of the ambivalence and
uncertainty that the witnesses in the 20th Century Fox case exhibited. This
categorical forthrightness in their statements, among others, was what initially
and correctly convinced the trial court to make a finding of the existence of
probable cause.
There is no originality in the argument of private respondents against the
validity of the search warrant, obviously borrowed from 20th Century Fox, that
petitioners' witnesses — NBI Agent Lauro C. Reyes, Atty. Rico V. Domingo and
Rene C. Baltazar — did not have personal knowledge of the subject matter of
their respective testimonies and that said witnesses' claim that the video tapes
were pirated, without stating the manner by which these were pirated, is a
conclusion of fact without basis.56 The difference, it must be pointed out, is that
the records in the present case reveal that (1) there is no allegation of
misrepresentation, much less a finding thereof by the lower court, on the part of
petitioners' witnesses; (2) there is no denial on the part of private respondents
that the tapes seized were illegitimate copies of the copyrighted ones not have
they shown that they were given any authority by petitioners to copy, sell, lease,
distribute or circulate, or at least, to offer for sale, lease, distribution or
circulation the said video tapes; and (3) a discreet but extensive surveillance of
the suspected area was undertaken by petitioners' witnesses sufficient to enable
them to execute trustworthy affidavits and depositions regarding matters
discovered in the course thereof and of which they have personal knowledge.
It is evidently incorrect to suggest, as the ruling in 20th Century Fox may appear
to do, that in copyright infringement cases, the presentation of master tapes of
the copyrighted films is always necessary to meet the requirement of probable
cause and that, in the absence thereof, there can be no finding of probable cause
for the issuance of a search warrant. It is true that such master tapes are object
evidence, with the merit that in this class of evidence the ascertainment of the
controverted fact is made through demonstrations involving the direct use of the
senses of the presiding magistrate.57 Such auxiliary procedure, however, does
not rule out the use of testimonial or documentary evidence, depositions,
admissions or other classes of evidence tending to prove the factum
probandum,58 especially where the production in court of object evidence would
result in delay, inconvenience or expenses out of proportion to its evidentiary
value.59
Of course, as a general rule, constitutional and statutory provisions relating to
search warrants prohibit their issuance except on a showing of probable cause,
supported by oath or affirmation. These provisions prevent the issuance of
warrants on loose, vague, or doubtful bases of fact, and emphasize the purpose
to protect against all general searches.60 Indeed, Article III of our Constitution
mandates in Sec. 2 thereof that no search warrant shall issue except upon
probable cause to be determined personally by the judge after examination
under oath or affirmation of the complainant and the witnesses he may produce,
and particularly describing the place to be searched and the things to be seized;
and Sec. 3 thereof provides that any evidence obtained in violation of the
preceding section shall be inadmissible for any purpose in any proceeding.
These constitutional strictures are implemented by the following provisions of
Rule 126 of the Rules of Court:
Sec. 3. Requisites for issuing search warrant. — A search warrant shall
not issue but upon probable cause in connection with one specific
offense to be determined personally by the judge after examination
under oath or affirmation of the complainant and the witnesses he may
produce, and particularly describing the place to be searched and the
things to be seized.
Sec. 4. Examination of complainant; record. — The judge must, before
issuing the warrant, personally examine in the form of searching
questions and answers, in writing and under oath the complainant and
any witnesses he may produce on facts personally known to them and
attach to the record their sworn statements together with any affidavits
submitted.
Sec. 5. Issuance and form of search warrant. — If the judge is thereupon
satisfied of the existence of facts upon which the application is based,
or that there is probable cause to believe that they exist, he must issue
the warrant, which must be substantially in the form prescribed by
these Rules.
The constitutional and statutory provisions of various jurisdictions requiring a
showing of probable cause before a search warrant can be issued are mandatory
and must be complied with, and such a showing has been held to be an
12
unqualified condition precedent to the issuance of a warrant. A search warrant
not based on probable cause is a nullity, or is void, and the issuance thereof is, in
legal contemplation, arbitrary.61 It behooves us, then, to review the concept of
probable cause, firstly, from representative holdings in the American jurisdiction
from which we patterned our doctrines on the matter.
Although the term "probable cause" has been said to have a well-defined
meaning in the law, the term is exceedingly difficult to define, in this case, with
any degree of precision; indeed, no definition of it which would justify the
issuance of a search warrant can be formulated which would cover every state
of facts which might arise, and no formula or standard, or hard and fast rule, may
be laid down which may be applied to the facts of every situation.62 As to what
acts constitute probable cause seem incapable of definition.63 There is, of
necessity, no exact test.64
At best, the term "probable cause" has been understood to mean a reasonable
ground of suspicion, supported by circumstances sufficiently strong in
themselves to warrant a cautious man in the belief that the person accused is
guilty of the offense with which he is charged;65 or the existence of such facts and
circumstances as would excite an honest belief in a reasonable mind acting on all
the facts and circumstances within the knowledge of the magistrate that the
charge made by the applicant for the warrant is true.66
Probable cause does not mean actual and positive cause, nor does it import
absolute certainty. The determination of the existence of probable cause is not
concerned with the question of whether the offense charged has been or is being
committed in fact, or whether the accused is guilty or innocent, but only whether
the affiant has reasonable grounds for his belief.67 The requirement is less than
certainty or proof , but more than suspicion or possibility.68
In Philippine jurisprudence, probable cause has been uniformly defined as such
facts and circumstances which would lead a reasonable, discreet and prudent
man to believe that an offense has been committed, and that the objects sought
in connection with the offense are in the place sought to be searched.69 It being
the duty of the issuing officer to issue, or refuse to issue, the warrant as soon as
practicable after the application therefor is filed,70 the facts warranting the
conclusion of probable cause must be assessed at the time of such judicial
determination by necessarily using legal standards then set forth in law and
jurisprudence, and not those that have yet to be crafted thereafter.
As already stated, the definition of probable cause enunciated
in Burgos, Sr. vs. Chief of Staff, et al., supra, vis-a-vis the provisions of Sections 3
and 4 of Rule 126, were the prevailing and controlling legal standards, as they
continue to be, by which a finding of probable cause is tested. Since the propriety
of the issuance of a search warrant is to be determined at the time of the
application therefor, which in turn must not be too remote in time from the
occurrence of the offense alleged to have been committed, the issuing judge, in
determining the existence of probable cause, can and should logically look to the
touchstones in the laws theretofore enacted and the decisions already
promulgated at the time, and not to those which had not yet even been conceived
or formulated.
It is worth noting that neither the Constitution nor the Rules of Court attempt to
define probable cause, obviously for the purpose of leaving such matter to the
court's discretion within the particular facts of each case. Although the
Constitution prohibits the issuance of a search warrant in the absence of
probable cause, such constitutional inhibition does not command the legislature
to establish a definition or formula for determining what shall constitute
probable cause.71 Thus, Congress, despite its broad authority to fashion
standards of reasonableness for searches and seizures,72 does not venture to
make such a definition or standard formulation of probable cause, nor categorize
what facts and circumstances make up the same, much less limit the
determination thereof to and within the circumscription of a particular class of
evidence, all in deference to judicial discretion and probity.73
Accordingly, to restrict the exercise of discretion by a judge by adding a
particular requirement (the presentation of master tapes, as intimated by 20th
Century Fox) not provided nor implied in the law for a finding of probable cause
is beyond the realm of judicial competence or statesmanship. It serves no
purpose but to stultify and constrict the judicious exercise of a court's
prerogatives and to denigrate the judicial duty of determining the existence of
probable cause to a mere ministerial or mechanical function. There is, to repeat,
no law or rule which requires that the existence of probable cause is or should
be determined solely by a specific kind of evidence. Surely, this could not have
been contemplated by the framers of the Constitution, and we do not believe that
the Court intended the statement in 20th Century Fox regarding master tapes as
the dictum for all seasons and reasons in infringement cases.
Turning now to the case at bar, it can be gleaned from the records that the lower
court followed the prescribed procedure for the issuance of a search warrant:
(1) the examination under oath or affirmation of the complainant and his
witnesses, with them particularly describing the place to be searched and the
things to be seized; (2) an examination personally conducted by the judge in the
form of searching questions and answers, in writing and under oath of the
complainant and witnesses on facts personally known to them; and, (3) the
taking of sworn statements, together with the affidavits submitted, which were
duly attached to the records.
Thereafter, the court a quo made the following factual findings leading to the
issuance of the search warrant now subject of this controversy:
In the instant case, the following facts have been established: (1)
copyrighted video tapes bearing titles enumerated in Search Warrant
No. 87-053 were being sold, leased, distributed or circulated, or offered
for sale, lease, distribution, or transferred or caused to be transferred
by defendants at their video outlets, without the written consent of the
private complainants or their assignee; (2) recovered or confiscated
from defendants' possession were video tapes containing copyrighted
13
 motion picture films without the authority of the complainant; (3) the
video tapes originated from spurious or unauthorized persons; and (4)
said video tapes were exact reproductions of the films listed in the
search warrant whose copyrights or distribution rights were owned by
complainants.
The basis of these facts are the affidavits and depositions of NBI Senior
Agent Lauro C. Reyes, Atty. Rico V. Domingo, and Rene C. Baltazar.
Motion Pictures Association of America, Inc. (MPAA) thru their counsel,
Atty. Rico V. Domingo, filed a complaint with the National Bureau of
Investigation against certain video establishments one of which is
defendant, for violation of PD No. 49 as amended by PD No. 1988. Atty.
Lauro C. Reyes led a team to conduct discreet surveillance operations
on said video establishments. Per information earlier gathered by Atty.
Domingo, defendants were engaged in the illegal sale, rental,
distribution, circulation or public exhibition of copyrighted films of
MPAA without its written authority or its members. Knowing that
defendant Sunshine Home Video and its proprietor, Mr. Danilo
Pelindario, were not authorized by MPAA to reproduce, lease, and
possess for the purpose of selling any of its copyrighted motion
pictures, instructed his researcher, Mr. Rene Baltazar to rent two video
cassettes from said defendants on October 21, 1987. Rene C. Baltazar
proceeded to Sunshine Home Video and rented tapes containing Little
Shop of Horror. He was issued rental slip No. 26362 dated October 21,
1987 for P10.00 with a deposit of P100.00. Again, on December 11,
1987, the returned to Sunshine Home Video and rented Robocop with
rental slip No. 25271 also for P10.00: On the basis of the complaint of
MPAA thru counsel, Atty. Lauro C. Reyes personally went to Sunshine
Home Video at No. 6 Mayfair Center, Magallanes Commercial Center,
Makati. His last visit was on December 7, 1987. There, he found the
video outlet renting, leasing, distributing video cassette tapes whose
titles were copyrighted and without the authority of MPAA.
Given these facts, a probable cause exists. . . .74
The lower court subsequently executed a volte-face, despite its prior detailed and
substantiated findings, by stating in its order of November 22, 1988 denying
petitioners' motion for reconsideration and quashing the search warrant that —
. . . The two (2) cases have a common factual milieu; both involve
alleged pirated copyrighted films of private complainants which were
found in the possession or control of the defendants. Hence, the
necessity of the presentation of the master tapes from which the
pirated films were allegedly copied is necessary in the instant case, to
establish the existence of probable cause.75
Being based solely on an unjustifiable and improper retroactive application of
the master tape requirement generated by 20th Century Fox upon a factual
situation completely different from that in the case at bar, and without anything
more, this later order clearly defies elemental fair play and is a gross reversible
error. In fact, this observation of the Court in La Chemise Lacoste,
S.A. vs. Fernandez, et al., supra, may just as easily apply to the present case:
A review of the grounds invoked . . . in his motion to quash the search
warrants reveals the fact that they are not appropriate for quashing a
warrant. They are matters of defense which should be ventilated
during the trial on the merits of the case. . . .
As correctly pointed out by petitioners, a blind espousal of the requisite of
presentation of the master tapes in copyright infringement cases, as the prime
determinant of probable cause, is too exacting and impracticable a requirement
to be complied with in a search warrant application which, it must not be
overlooked, is only an ancillary proceeding. Further, on realistic considerations,
a strict application of said requirement militates against the elements of secrecy
and speed which underlie covert investigative and surveillance operations in
police enforcement campaigns against all forms of criminality, considering that
the master tapes of a motion picture required to be presented before the court
consists of several reels contained in circular steel casings which, because of
their bulk, will definitely draw attention, unlike diminutive objects like video
tapes which can be easily concealed.76 With hundreds of titles being pirated, this
onerous and tedious imposition would be multiplied a hundredfold by judicial
fiat, discouraging and preventing legal recourses in foreign jurisdictions.
Given the present international awareness and furor over violations in large
scale of intellectual property rights, calling for transnational sanctions, it bears
calling to mind the Court's admonition also in La Chemise Lacoste, supra, that —
. . . . Judges all over the country are well advised to remember that court
processes should not be used as instruments to, unwittingly or
otherwise, aid counterfeiters and intellectual pirates, tie the hands of
the law as it seeks to protect the Filipino consuming public and
frustrate executive and administrative implementation of solemn
commitments pursuant to international conventions and treaties.
III
The amendment to Section 56 of Presidential Decree No. 49 by Presidential
Decree No. 1987,77 which should here be publicized judicially, brought about the
revision of its penalty structure and enumerated additional acts considered
violative of said decree on intellectual property, namely, (1) directly or indirectly
transferring or causing to be transferred any sound recording or motion picture
or other audio-visual works so recorded with intent to sell, lease, publicly exhibit
or cause to be sold, leased or publicly exhibited, or to use or cause to be used for
profit such articles on which sounds, motion pictures, or other audio-visual
works are so transferred without the written consent of the owner or his
assignee; (2) selling, leasing, distributing, circulating, publicly exhibiting, or
offering for sale, lease, distribution, or possessing for the purpose of sale, lease,
distribution, circulation or public exhibition any of the abovementioned articles,
14
without the written consent of the owner or his assignee; and, (3) directly or
indirectly offering or making available for a fee, rental, or any other form of
compensation any equipment, machinery, paraphernalia or any material with
the knowledge that such equipment, machinery, paraphernalia or material will
be used by another to reproduce, without the consent of the owner, any
phonograph record, disc, wire, tape, film or other article on which sounds,
motion pictures or other audio-visual recordings may be transferred, and which
provide distinct bases for criminal prosecution, being crimes independently
punishable under Presidential Decree No. 49, as amended, aside from the act of
infringing or aiding or abetting such infringement under Section 29.
The trial court's finding that private respondents committed acts in blatant
transgression of Presidential Decree No. 49 all the more bolsters its findings of
probable cause, which determination can be reached even in the absence of
master tapes by the judge in the exercise of sound discretion. The executive
concern and resolve expressed in the foregoing amendments to the decree for
the protection of intellectual property rights should be matched by
corresponding judicial vigilance and activism, instead of the apathy of submitting
to technicalities in the face of ample evidence of guilt.
The essence of intellectual piracy should be essayed in conceptual terms in order
to underscore its gravity by an appropriate understanding thereof. Infringement
of a copyright is a trespass on a private domain owned and occupied by the
owner of the copyright, and, therefore, protected by law, and infringement of
copyright, or piracy, which is a synonymous term in this connection, consists in
the doing by any person, without the consent of the owner of the copyright, of
anything the sole right to do which is conferred by statute on the owner of the
copyright.78
A copy of a piracy is an infringement of the original, and it is no defense that the
pirate, in such cases, did not know what works he was indirectly copying, or did
not know whether or not he was infringing any copyright; he at least knew that
what he was copying was not his, and he copied at his peril. In determining the
question of infringement, the amount of matter copied from the copyrighted
work is an important consideration. To constitute infringement, it is not
necessary that the whole or even a large portion of the work shall have been
copied. If so much is taken that the value of the original is sensibly diminished,
or the labors of the original author are substantially and to an injurious extent
appropriated by another, that is sufficient in point of law to constitute a
piracy.79 The question of whether there has been an actionable infringement of
a literary, musical, or artistic work in motion pictures, radio or television being
one of fact,80 it should properly be determined during the trial. That is the stage
calling for conclusive or preponderating evidence, and not the summary
proceeding for the issuance of a search warrant wherein both lower courts
erroneously require the master tapes.
In disregarding private respondent's argument that Search Warrant No. 87-053
is a general warrant, the lower court observed that "it was worded in a manner
that the enumerated seizable items bear direct relation to the offense of violation
of Sec. 56 of PD 49 as amended. It authorized only the seizur(e) of articles used
or intended to be used in the unlawful sale, lease and other unconcerted acts in
violation of PD 49 as amended. . . .81
On this point, Bache and Co., (Phil.), Inc., et al. vs. Ruiz, et al.,82 instructs and
enlightens:
A search warrant may be said to particularly describe the things to be
seized when the description therein is as specific as the circumstances
will ordinarily allow (People vs. Rubio, 57 Phil. 384); or when the
description expresses a conclusion of fact — not of law — by which the
warrant officer may be guided in making the search and seizure (idem.,
dissent of Abad Santos, J.,); or when the things described are limited to
those which bear direct relation to the offense for which the warrant is
being issued (Sec 2, Rule 126, Revised Rules of Court). . . . If the articles
desired to be seized have any direct relation to an offense committed,
the applicant must necessarily have some evidence, other than those
articles, to prove the said offense; and the articles subject of search and
seizure should come in handy merely to strengthen such evidence. . . .
On private respondents' averment that the search warrant was made applicable
to more than one specific offense on the ground that there are as many offenses
of infringement as there are rights protected and, therefore, to issue one search
warrant for all the movie titles allegedly pirated violates the rule that a search
warrant must be issued only in connection with one specific offense, the lower
court said:
. . . . As the face of the search warrant itself indicates, it was issued for
violation of Section 56, PD 49 as amended only. The specifications
therein (in Annex A) merely refer to the titles of the copyrighted motion
pictures/films belonging to private complainants which defendants
were in control/possession for sale, lease, distribution or public
exhibition in contravention of Sec. 56, PD 49 as amended.83
That there were several counts of the offense of copyright infringement and the
search warrant uncovered several contraband items in the form of pirated video
tapes is not to be confused with the number of offenses charged. The search
warrant herein issued does not violate the one-specific-offense rule.
It is pointless for private respondents to insist on compliance with the
registration and deposit requirements under Presidential Decree No. 49 as
prerequisites for invoking the court's protective mantle in copyright
infringement cases. As explained by the court below:
Defendants-movants contend that PD 49 as amended covers only
producers who have complied with the requirements of deposit and
notice (in other words registration) under Sections 49 and 50 thereof.
15
 Absent such registration, as in this case, there was no right created,
hence, no infringement under PD 49 as amended. This is not well-taken.
As correctly pointed out by private complainants-oppositors, the
Department of Justice has resolved this legal question as far back as
December 12, 1978 in its Opinion No. 191 of the then Secretary of
Justice Vicente Abad Santos which stated that Sections 26 and 50 do not
apply to cinematographic works and PD No. 49 "had done away with
the registration and deposit of cinematographic works" and that "even
without prior registration and deposit of a work which may be entitled
to protection under the Decree, the creator can file action for
infringement of its rights". He cannot demand, however, payment of
damages arising from infringement. The same opinion stressed that
"the requirements of registration and deposit are thus retained under
the Decree, not as conditions for the acquisition of copyright and other
rights, but as prerequisites to a suit for damages". The statutory
interpretation of the Executive Branch being correct, is entitled (to)
weight and respect.
xxx xxx xxx
Defendants-movants maintain that complainant and his witnesses led
the Court to believe that a crime existed when in fact there was none.
This is wrong. As earlier discussed, PD 49 as amended, does not require
registration and deposit for a creator to be able to file an action for
infringement of his rights. These conditions are merely pre-requisites
to an action for damages. So, as long as the proscribed acts are shown
to exist, an action for infringement may be initiated.84
Accordingly, the certifications85 from the Copyright Section of the National
Library, presented as evidence by private respondents to show non-registration
of some of the films of petitioners, assume no evidentiary weight or significance
whatsoever.
Furthermore, a closer review of Presidential Decree No. 49 reveals that even
with respect to works which are required under Section 26 thereof to be
registered and with copies to deposited with the National Library, such as books,
including composite and cyclopedic works, manuscripts, directories and
gazetteers; and periodicals, including pamphlets and newspapers; lectures,
sermons, addresses, dissertations prepared for oral delivery; and letters, the
failure to comply with said requirements does not deprive the copyright owner
of the right to sue for infringement. Such non-compliance merely limits the
remedies available to him and subjects him to the corresponding sanction.
The reason for this is expressed in Section 2 of the decree which prefaces its
enumeration of copyrightable works with the explicit statement that "the rights
granted under this Decree shall, from the moment of creation, subsist with
respect to any of the following classes of works." This means that under the
present state of the law, the copyright for a work is acquired by an intellectual
creator from the moment of creation even in the absence of registration and
deposit. As has been authoritatively clarified:
The registration and deposit of two complete copies or reproductions
of the work with the National Library within three weeks after the first
public dissemination or performance of the work, as provided for in
Section 26 (P.D. No. 49, as amended), is not for the purpose of securing
a copyright of the work, but rather to avoid the penalty for non-
compliance of the deposit of said two copies and in order to recover
damages in an infringement suit.86
One distressing observation. This case has been fought on the basis of, and its
resolution long delayed by resort to, technicalities to a virtually abusive extent
by private respondents, without so much as an attempt to adduce any credible
evidence showing that they conduct their business legitimately and fairly. The
fact that private respondents could not show proof of their authority or that
there was consent from the copyright owners for them to sell, lease, distribute
or circulate petitioners' copyrighted films immeasurably bolsters the lower
court's initial finding of probable cause. That private respondents are licensed
by the Videogram Regulatory Board does not insulate them from criminal and
civil liability for their unlawful business practices. What is more deplorable is
that the reprehensible acts of some unscrupulous characters have stigmatized
the Philippines with an unsavory reputation as a hub for intellectual piracy in
this part of the globe, formerly in the records of the General Agreement on Tariffs
and Trade and, now, of the World Trade Organization. Such acts must not be
glossed over but should be denounced and repressed lest the Philippines become
an international pariah in the global intellectual community.
WHEREFORE, the assailed judgment and resolution of respondent Court of
Appeals, and necessarily inclusive of the order of the lower court dated
November 22, 1988, are hereby REVERSED and SET ASIDE. The order of the
court a quo of September 5, 1988 upholding the validity of Search Warrant No.
87-053 is hereby REINSTATED, and said court is DIRECTED to take and
expeditiously proceed with such appropriate proceedings as may be called for in
this case. Treble costs are further assessed against private respondents.
SO ORDERED.
16
G.R. No. 131522 July 19, 1999
PACITA I. HABANA, ALICIA L. CINCO and JOVITA N. FERNANDO, petitioners,
vs.
FELICIDAD C. ROBLES and GOODWILL TRADING CO., INC., respondents.
PARDO, J.:
The case before us is a petition for review on certiorari1 to set aside the (a) decision or the
Court of Appeals2, and (b) the resolution denying petitioners' motion for
reconsideration,3 in which the appellate court affirmed the trial court's dismissal of the
complaint for infringement and/or unfair competition and damages but deleted the award
for attorney's fees.1âwphi1.nêt
The facts are as follows:
Petitioners are authors and copyright owners of duly issued certificates of copyright
registration covering their published works, produced through their combined resources
and efforts, entitled COLLEGE ENGLISH FOR TODAY (CET for brevity), Books 1 and 2, and
WORKBOOK FOR COLLEGE FRESHMAN ENGLISH, Series 1.
Respondent Felicidad Robles and Goodwill Trading Co., Inc. are the author/publisher and
distributor/seller of another published work entitled "DEVELOPING ENGLISH
PROFICIENCY" (DEP for brevity), Books 1 and 2 (1985 edition) which book was covered
by copyrights issued to them.
In the course of revising their published works, petitioners scouted and looked around
various bookstores to check on other textbooks dealing with the same subject matter. By
chance they came upon the book of respondent Robles and upon perusal of said book they
were surprised to see that the book was strikingly similar to the contents, scheme of
presentation, illustrations and illustrative examples in their own book, CET.
After an itemized examination and comparison of the two books (CET and DEP),
petitioners found that several pages of the respondent's book are similar, if not all together
a copy of petitioners' book, which is a case of plagiarism and copyright infringement.
Petitioners then made demands for damages against respondents and also demanded that
they cease and desist from further selling and distributing to the general public the
infringed copies of respondent Robles' works.
However, respondents ignored the demands, hence, on July 7, 1988; petitioners filed with
the Regional Trial Court, Makati, a complaint for "Infringement and/or unfair competition
with damages" 4 against private respondents.5
In the complaint, petitioners alleged that in 1985, respondent Felicidad C. Robles being
substantially familiar with the contents of petitioners' works, and without securing their
permission, lifted, copied, plagiarized and/or transposed certain portions of their book
CET. The textual contents and illustrations of CET were literally reproduced in the book
DEP. The plagiarism, incorporation and reproduction of particular portions of the book
CET in the book DEP, without the authority or consent of petitioners, and the
misrepresentations of respondent Robles that the same was her original work and concept
adversely affected and substantially diminished the sale of the petitioners' book and
caused them actual damages by way of unrealized income.
Despite the demands of the petitioners for respondents to desist from committing further
acts of infringement and for respondent to recall DEP from the market, respondents
refused. Petitioners asked the court to order the submission of all copies of the book DEP,
together with the molds, plates and films and other materials used in its printing
destroyed, and for respondents to render an accounting of the proceeds of all sales and
profits since the time of its publication and sale.
Respondent Robles was impleaded in the suit because she authored and directly
committed the acts of infringement complained of, while respondent Goodwill Trading Co.,
Inc. was impleaded as the publisher and joint co-owner of the copyright certificates of
registration covering the two books authored and caused to be published by respondent
Robles with obvious connivance with one another.
On July 27, 1988, respondent Robles filed a motion for a bill of particulars6 which the trial
court approved on August 17, 1988. Petitioners complied with the desired
particularization, and furnished respondent Robles the specific portions, inclusive of
pages and lines, of the published and copyrighted books of the petitioners which were
transposed, lifted, copied and plagiarized and/or otherwise found their way into
respondent's book.
On August 1, 1988, respondent Goodwill Trading Co., Inc. filed its answer to the
complaint7 and alleged that petitioners had no cause of action against Goodwill Trading
Co., Inc. since it was not privy to the misrepresentation, plagiarism, incorporation and
reproduction of the portions of the book of petitioners; that there was an agreement
between Goodwill and the respondent Robles that Robles guaranteed Goodwill that the
materials utilized in the manuscript were her own or that she had secured the necessary
permission from contributors and sources; that the author assumed sole responsibility
and held the publisher without any liability.
On November 28, 1988, respondent Robles filed her answer8, and denied the allegations
of plagiarism and copying that petitioners claimed. Respondent stressed that (1) the book
DEP is the product of her independent researches, studies and experiences, and was not a
copy of any existing valid copyrighted book; (2) DEP followed the scope and sequence or
syllabus which are common to all English grammar writers as recommended by the
Association of Philippine Colleges of Arts and Sciences (APCAS), so any similarity between
the respondents book and that of the petitioners was due to the orientation of the authors
to both works and standards and syllabus; and (3) the similarities may be due to the
authors' exercise of the "right to fair use of copyrigthed materials, as guides."
17
Respondent interposed a counterclaim for damages on the ground that bad faith and
malice attended the filing of the complaint, because petitioner Habana was professionally
jealous and the book DEP replaced CET as the official textbook of the graduate studies
department of the Far Eastern University.9
During the pre-trial conference, the parties agreed to a stipulation of
facts 10 and for the trial court to first resolve the issue of infringement before disposing of
the claim for damages.
After the trial on the merits, on April 23, 1993, the trial court rendered its judgment finding
thus:
WHEREFORE, premises considered, the court hereby orders that the
complaint filed against defendants Felicidad Robles and Goodwill
Trading Co., Inc. shall be DISMISSED; that said plaintiffs solidarily
reimburse defendant Robles for P20,000.00 attorney's fees and
defendant Goodwill for P5,000.00 attorney's fees. Plaintiffs are liable
for cost of suit.
IT IS SO ORDERED.
Done in the City of Manila this 23rd day of April, 1993.
(s/t) MARVIE R. ABRAHAM SINGSON
Assisting Judge
S. C. Adm. Order No. 124-92 11
On May 14, 1993, petitioners filed their notice of appeal with the trial court and on July
12,
19, 1993, the court directed its branch clerk of court to forward all the records of the case
to the Court of Appeals. 13
In the appeal, petitioners argued that the trial court completely disregarded their evidence
and fully subscribed to the arguments of respondent Robles that the books in issue were
purely the product of her researches and studies and that the copied portions were
inspired by foreign authors and as such not subject to copyright. Petitioners also assailed
the findings of the trial court that they were animated by bad faith in instituting the
complaint. 14
On June 27, 1997, the Court of Appeals rendered judgment in favor of respondents Robles
and Goodwill Trading Co., Inc. The relevant portions of the decision state:
It must be noted, however, that similarity of the allegedly infringed
work to the author's or proprietor's copyrighted work does not of itself
establish copyright infringement, especially if the similarity results
from the fact that both works deal with the same subject or have the
same common source, as in this case.
Appellee Robles has fully explained that the portion or material of the
book claimed by appellants to have been copied or lifted from foreign
books. She has duly proven that most of the topics or materials
contained in her book, with particular reference to those matters
claimed by appellants to have been plagiarized were topics or matters
appearing not only in appellants and her books but also in earlier books
on College English, including foreign books, e.i. Edmund Burke's
"Speech on Conciliation", Boerigs' "Competence in English" and
Broughton's, "Edmund Burke's Collection."
xxx xxx xxx
Appellant's reliance on the last paragraph on Section II is misplaced. It
must be emphasized that they failed to prove that their books were
made sources by appellee. 15
The Court of Appeals was of the view that the award of attorneys' fees was not proper,
since there was no bad faith on the part of petitioners Habana et al. in instituting the action
against respondents.
On July 12, 1997, petitioners filed a motion for reconsideration, 16 however, the Court of
Appeals denied the same in a Resolution 17 dated November 25, 1997.
Hence, this petition.
In this appeal, petitioners submit that the appellate court erred in affirming the trial
court's decision.
Petitioners raised the following issues: (1) whether or not, despite the apparent textual,
thematic and sequential similarity between DEP and CET, respondents committed no
copyright infringement; (2) whether or not there was animus furandi on the part of
respondent when they refused to withdraw the copies of CET from the market despite
notice to withdraw the same; and (3) whether or not respondent Robles abused a writer's
right to fair use, in violation of Section 11 of Presidential Decree No. 49. 18
We find the petition impressed with merit.
The complaint for copyright infringement was filed at the time that Presidential Decree
No. 49 was in force. At present, all laws dealing with the protection of intellectual property
rights have been consolidated and as the law now stands, the protection of copyrights is
governed by Republic Act No. 8293. Notwithstanding the change in the law, the same
principles are reiterated in the new law under Section 177. It provides for the copy or
economic rights of an owner of a copyright as follows:
18
 Sec. 177. Copy or Economic rights. — Subject to the provisions of
chapter VIII, copyright or economic rights shall consist of the exclusive
right to carry out, authorize or prevent the following acts:
177.1 Reproduction of the work or substanlial portion of the work;
177.2 Dramatization, translation, adaptation, abridgement,
arrangement or other transformation of the work;
177.3 The first public distribution of the original and each copy of the
work by sale or other forms of transfer of ownership;
177.4 Rental of the original or a copy of an audiovisual or
cinematographic work, a work embodied in a sound recording, a
computer program, a compilation of data and other materials or a
musical work in graphic form, irrespective of the ownership of the
original or the copy which is the subject of the rental; (n)
177.5 Public display of the original or copy of the work;
177.6 Public performance of the work; and
177.7 Other communication to the public of the work 19
The law also provided for the limitations on copyright, thus:
Sec. 184.1 Limitations on copyright. — Notwithstanding the provisions
of Chapter V, the following acts shall not constitute infringement of
copyright:
(a) the recitation or performance of a work, once it
has been lawfully made accessible to the public, if
done privately and free of charge or if made strictly
for a charitable or religious institution or society;
[Sec. 10(1), P.D. No. 49]
(b) The making of quotations from a published work
if they are compatible with fair use and only to the
extent justified for the purpose, including
quotations from newspaper articles and periodicals
in the form of press summaries; Provided, that the
source and the name of the author, if appearing on
the work are mentioned; (Sec. 11 third par. P.D. 49)
xxx xxx xxx
(e) The inclusion of a work in a publication, broadcast, or other
communication to the public, sound recording of film, if such inclusion
is made by way of illustration for teaching purposes and is compatible
with fair use: Provided, That the source and the name of the author, if
appearing in the work is mentioned; 20
In the above quoted provisions, "work" has reference to literary and artistic creations and
this includes books and other literary, scholarly and scientific works. 21
A perusal of the records yields several pages of the book DEP that are similar if not
identical with the text of CET.
On page 404 of petitioners' Book 1 of College English for Today, the authors wrote:
Items in dates and addresses:
He died on Monday, April 15, 1975.
Miss Reyes lives in 214 Taft Avenue,
Manila 22
On page 73 of respondents Book 1 Developing English Today, they wrote:
He died on Monday, April 25, 1975.
Miss Reyes address is 214 Taft Avenue Manila 23
On Page 250 of CET, there is this example on parallelism or repetition of sentence
structures, thus:
The proposition is peace. Not peace through the medium of war; not
peace to be hunted through the labyrinth of intricate and endless
negotiations; not peace to arise out of universal discord, fomented from
principle, in all parts of the empire; not peace to depend on the juridical
determination of perplexing questions, or the precise marking of the
boundary of a complex government. It is simple peace; sought in its
natural course, and in its ordinary haunts. It is peace sought in the spirit
of peace, and laid in principles purely pacific.
— Edmund Burke, "Speech on Criticism." 24
On page 100 of the book DEP 25, also in the topic of parallel structure and repetition, the
same example is found in toto. The only difference is that petitioners acknowledged the
author Edmund Burke, and respondents did not.
19
In several other pages 26 the treatment and manner of presentation of the topics of DEP
are similar if not a rehash of that contained in CET.
We believe that respondent Robles' act of lifting from the book of petitioners substantial
portions of discussions and examples, and her failure to acknowledge the same in her book
is an infringement of petitioners' copyrights.
When is there a substantial reproduction of a book? It does not necessarily require that
the entire copyrighted work, or even a large portion of it, be copied. If so much is taken
that the value of the original work is substantially diminished, there is an infringement of
copyright and to an injurious extent, the work is appropriated. 27
In determining the question of infringement, the amount of matter copied from the
copyrighted work is an important consideration. To constitute infringement, it is not
necessary that the whole or even a large portion of the work shall have been copied. If so
much is taken that the value of the original is sensibly diminished, or the labors of the
original author are substantially and to an injurious extent appropriated by another, that
is sufficient in point of law to constitute piracy. 28
The essence of intellectual piracy should be essayed in conceptual terms in order to
underscore its gravity by an appropriate understanding thereof. Infringement of a
copyright is a trespass on a private domain owned and occupied by the owner of the
copyright, and, therefore, protected by law, and infringement of copyright, or piracy,
which is a synonymous term in this connection, consists in the doing by any person,
without the consent of the owner of the copyright, of anything the sole right to do which
is conferred by statute on the owner of the copyright. 29
The respondents' claim that the copied portions of the book CET are also found in foreign
books and other grammar books, and that the similarity between her style and that of
petitioners can not be avoided since they come from the same background and orientation
may be true. However, in this jurisdiction under Sec 184 of Republic Act 8293 it is
provided that:
Limitations on Copyright. Notwithstanding the provisions of Chapter V,
the following shall not constitute infringement of copyright:
xxx xxx xxx
(c) The making of quotations from a published work
if they are compatible with fair use and only to the
extent justified for the purpose, including
quotations from newspaper articles and periodicals
in the form of press summaries: Provided, That the
source and the name of the author, if appearing on
the work, are mentioned.
A copy of a piracy is an infringement of the original, and it is no defense that the pirate, in
such cases, did not know whether or not he was infringing any copyright; he at least knew
that what he was copying was not his, and he copied at his peril. 30
The next question to resolve is to what extent can copying be injurious to the author of the
book being copied. Is it enough that there are similarities in some sections of the books or
large segments of the books are the same?
In the case at bar, there is no question that petitioners presented several pages of the
books CET and DEP that more or less had the same contents. It may be correct that the
books being grammar books may contain materials similar as to some technical contents
with other grammar books, such as the segment about the "Author Card". However, the
numerous pages that the petitioners presented showing similarity in the style and the
manner the books were presented and the identical examples can not pass as similarities
merely because of technical consideration.
The respondents claim that their similarity in style can be attributed to the fact that both
of them were exposed to the APCAS syllabus and their respective academic experience,
teaching approach and methodology are almost identical because they were of the same
background.
However, we believe that even if petitioners and respondent Robles were of the same
background in terms of teaching experience and orientation, it is not an excuse for them
to be identical even in examples contained in their books. The similarities in examples and
material contents are so obviously present in this case. How can similar/identical
examples not be considered as a mark of copying?
We consider as an indicia of guilt or wrongdoing the act of respondent Robles of pulling
out from Goodwill bookstores the book DEP upon learning of petitioners' complaint while
pharisaically denying petitioners' demand. It was further noted that when the book DEP
was re-issued as a revised version, all the pages cited by petitioners to contain portion of
their book College English for Today were eliminated.
In cases of infringement, copying alone is not what is prohibited. The copying must
produce an "injurious effect". Here, the injury consists in that respondent Robles lifted
from petitioners' book materials that were the result of the latter's research work and
compilation and misrepresented them as her own. She circulated the book DEP for
commercial use did not acknowledged petitioners as her source.
Hence, there is a clear case of appropriation of copyrighted work for her benefit that
respondent Robles committed. Petitioners' work as authors is the product of their long
and assiduous research and for another to represent it as her own is injury enough. In
copyrighting books the purpose is to give protection to the intellectual product of an
author. This is precisely what the law on copyright protected, under Section 184.1 (b).
Quotations from a published work if they are compatible with fair use and only to the
extent justified by the purpose, including quotations from newspaper articles and
periodicals in the form of press summaries are allowed provided that the source and the
name of the author, if appearing on the work, are mentioned.
20
In the case at bar, the least that respondent Robles could have done was to acknowledge
petitioners Habana et. al. as the source of the portions of DEP. The final product of an
author's toil is her book. To allow another to copy the book without appropriate
acknowledgment is injury enough.
WHEREFORE, the petition is hereby GRANTED. The decision and resolution of the Court
of Appeals in CA-G. R. CV No. 44053 are SET ASIDE. The case is ordered remanded to the
trial court for further proceedings to receive evidence of the parties to ascertain the
damages caused and sustained by petitioners and to render decision in accordance with
the evidence submitted to it.
SO ORDERED.
Kapunan and Ynares-Santiago, JJ., concur.
Davide, Jr., C.J., I dissent, please see dissenting opinion.
Melo, J., no part, personal reason.
Separate Opinions
DAVIDE, JR., C.J., dissenting opinion:
I am unable to join the majority view.
From the following factual and procedural antecedents, I find no alternative but to sustain
both the trial court and the Court of Appeals.
On 12 July 1988, HABANA, et al. filed with the trial court a complaint for infringement and
unfair competition, with damages against private respondent Felicidad C. Robles
(hereafter ROBLES) and her publisher and distributor, Goodwill Trading Co., Inc.
(hereafter GOODWILL). The case was docketed as Civil Case No. 88-1317.
HABANA, et al. averred in their complaint that they were the co-authors and joint
copyright owners of their published works College English for Today, Books 1 and 2
(hereafter CET) and Workbook for College Freshman English, Series 1 1; they discovered
that ROBLES' own published works, Developing English Proficiency, Books 1 and 2,
(hereafter DEP), published and distributed in 1985, exhibited an uncanny resemblance, if
not outright physical similarity, to CET as to content, scheme, sequence of topics and ideas,
manner of presentation and illustrative examples; the plagiarism, incorporation and
reproduction of particular portions of CET into DEP could not be gainsaid since ROBLES
was substantially familiar with CET and the textual asportation was accomplished without
their authority and/or consent; ROBLES and GOODWILL jointly misrepresented DEP (over
which they shared copyright ownership) "as the former's original published works and
concept;" and "notwithstanding formal demands made . . . to cease and desist from the sale
and distribution of DEP, [ROBLES and GOODWILL] persistently failed and refused to
comply therewith." HABANA et al. then prayed for the court to: (1) order the submission
and thereafter the destruction of all copies of DEP, together with the molds, plates, films
and other materials used in the printing thereof; (2) require ROBLES and GOODWILL to
render an accounting of the sales of the "infringing works from the time of its (sic)
inceptive publication up to the time of judgment, as well as the amount of sales and profits
. . . derived;" and (3) to enjoin ROBLES and GOODWILL to solidarily pay actual, moral and
exemplary damages, as well as attorney's fees and expenses of litigation.
In its Answer, GOODWILL denied culpability since "it had no knowledge or information
sufficient to form a belief as to the allegations of plagiarism, incorporation and
reproduction" and hence "could not be privy to the same, if (there were) any;" and that in
an Agreement with co-defendant ROBLES, the latter would be solely responsible for acts
of plagiarism or violations of copyright or any other law, to the extent of answering for any
and all damages GOODWILL may suffer. GOODWILL also interposed a compulsory
counterclaim against PACITA, et al. and a crossclaim against its co-defendant anchored on
the aforementioned Agreement.
In her answer, ROBLES asserted that: (1) DEP was the exclusive product of her
independent research, studies and experience; (2) DEP, particularly the segments where
the alleged literal similitude appeared, were admittedly influenced or inspired by earlier
treatises, mostly by foreign authors; but that "influences and/or inspirations from other
writers" like the methodology and techniques as to presentation, teaching concept and
design, research and orientation which she employed, fell within the ambit of general
information, ideas, principles of general or universal knowledge which were commonly
and customarily understood as incapable of private and exclusive use, appropriation or
copyright; and (3) her works were the result of the legitimate and reasonable exercise of
an author's "right to fair use of even copyrighted materials as [a] guide." She further
claimed that her various national and regional professional activities in general education,
language and literature, as well as her teaching experience in graduate and post graduate
education would obviate the remotest possibility of plagiarism.
ROBLES likewise suggested that any similarity between DEP and CET as regards scope and
sequence could be attributed to "the orientation of the authors to the scope and sequence
or syllabus — which incorporates standards known among English grammar book writers
— of the subject-matter for Basic Communication Arts recommended by the Association
of Philippine Colleges of Arts and Sciences (APCAS)." While the syllabus was admittedly
adopted in DEP, she claimed to have treated quite differently in DEP the very ideas,
techniques or principles expressed in CET such that neither textbook could be considered
a copy or plagiarism of the other.
21
At the pre-trial conference, the parties agreed to a stipulation of facts2 and for the court to
first resolve the issue of infringement before disposing of the claims for damages. After
trial on the merits, the trial court rendered its decision in favor of defendants, the
dispositive portion of which reads:
WHEREFORE, premises considered, the Court hereby orders that the
complaint filed against defendants Felicidad Robles and Goodwill
Trading Co., Inc. shall be DISMISSED: that said plaintiffs solidarily
reimburse defendant Robles for P20,000.00 attorney's fees and
defendant Goodwill for P5,000.00 attorney's fees. Plaintiffs are liable
for costs of suit.
IT IS SO ORDERED. 3
Noting that the law applicable to the case was Presidential Decree No. 49, 4 the trial court
found that HABANA, et al. failed to discharge their onus of proving that ROBLES and
GOODWILL committed acts constituting copyright infringement. Moreover, the trial court
found that "the cause of action or acts complained of [were] not covered by said decree"
as Section 10 thereof barred authors of works already lawfully made accessible to the
public from prohibiting the reproductions, translations, adaptations, recitation and
performance of the same, while Section 11 allowed the utilization of reproductions,
quotations and excerpts of such works. The trial court thus agreed with ROBLES that "the
complained acts [were] of general and universal knowledge and use which plaintiffs
cannot claim originality or seek redress to the law for protection" and observed that DEP
and CET had the same sources, consisting chiefly of earlier works, mostly foreign books.
GOODWILL's crossclaim against ROBLES, counterclaim against HABANA, et al. as well as
ROBLES' compulsory counterclaim against GOODWILL were all dismissed for lack of
factual and legal bases.
HABANA, et al. appealed to the Court of Appeals. The case was docketed as CA-G.R. CV No.
44053. Before said court HABANA, et al., in the main, argued that the trial court totally
disregarded their evidence and merely subscribed to ROBLES' arguments. The Court of
Appeals, however, likewise disposed of the controversy in favor of ROBLES and
GOODWILL.5
However, the Court of Appeals modified the trial court's decision by reversing the award
for attorney's fees. It held that the good faith and sincerity of HABANA, et al. in
commencing the action negated the basis therefor. Their motion for reconsideration
having been denied for want of cogent reasons, HABANA, et al., instituted this petition.
They claim that the Court of Appeals committed reversible error in failing to appreciate:
(1) the insuperable evidence and facts admitted and proved demonstrating plagiarism or
piracy and instead afforded full weight and credit to ROBLES' matrix of general,
hypothetical and sweeping statements and/or defenses; (2) ROBLES' and
GOODWILL's animo furandi or intent to appropriate or copy CET with the non-removal of
the damaging copies of DEP from the bookstores despite notice to withdraw the same; and
(3) the fact that ROBLES abused a writer's right to fair use, in violation of Section 11 of P.D.
No. 49. 6 They invoke Laktaw v. Paglinawan 7 which, they theorize is on all fours with the
case at bar. ROBLES contends that appeal by certiorari does not lie in this case for the
challenged decision and the trial court's judgment were amply supported by evidence,
pertinent laws and jurisprudence. Hence, her counterclaim for moral damages should,
therefore, be granted or for us to order the remand of the case to the trial court for
reception of evidence on damages. GOODWILL, on its part, stood pat on its disclaimer, with
the assertion that no proof was ever introduced. that it co-authored DEP or that it singly
or in cabal with ROBLES committed any act constituting copyright infringement.
The core issue then is whether or not the Court of Appeals erred in affirming the trial
court's judgment that despite the apparent textual, thematic and sequential similarity
between DEP and CET, no copyright was committed by ROBLES and GOODWILL.
While the complaint, in Civil Case No. 88-1317 was filed during the effectivity of P.D. No.
49, the provisions of the new intellectual property law, R.A. No. 8293, 8 nevertheless bears
significance here. It took effect on 1 January 1998, but its Section 239.3 clearly states that
its provisions shall apply to works in which copyright protection obtained prior to the
effectivity of the Act subsists, provided, however, that the application of the Act shall not
result in the diminution of such protection. Also, the philosophy behind both statutes as
well as the essential principles of copyright protection and copyright infringement have,
to a certain extent, remained the same.
A copyright may be accurately defined as the right granted by statute to the proprietor of
an intellectual production to its exclusive use and enjoyment to the extent specified in the
statute.9 Under Section 177 of R.A. No. 8293, 10 the copy or economic right (copyright and
economic right are used interchangeably in the statute) consists of the exclusive right to
carry out, authorize or prevent the following acts:
177.1 Reproduction of the work or substantial portion of the work;
177.2 Dramatization, translation, adaptation, abridgment,
arrangement or other transformation of the work;
177.3 The first public distribution of the original and each copy of the
work by sale or other forms of transfer of ownership;
177.4 Rental of the original or a copy of an audiovisual or
cinematographic work, a work embodied in a sound recording, a
computer program, a compilation of data and other materials or a
musical work in graphic form, irrespective of the ownership of the
original or the copy which is the subject of the rental;
177.5 Public display of the original or a copy of the work;
177.6 Public performance of the work; and
177.7 Other communication to the public of the work.
"The work," as repeatedly mentioned, refers to the literary and artistic works defined as
original intellectual creations in the literary and artistic domain protected from the
22
moment of their creation and enumerated in Section 172.1, which includes books and
other literary, scholarly, scientific and artistic works. 11
Stripped in the meantime of its indisputable social and beneficial functions, 12 the use of
intellectual property or creations should basically promote the creator or author's
personal and economic gain. Hence, the copyright protection extended to the creator
should ensure his attainment of some form of personal satisfaction and economic reward
from the work he produced. Without conceding the suitability of Laktaw as precedent, the
Court there quoted Manresa and explained:
He who writes a book, or carves a statute, or makes an invention, has
the absolute right to reproduce or sell it, just as the owner of the land
has the absolute right to sell it or its fruits. But while the owner of the
land, by selling it and its fruits, perhaps fully realizes all its economic
value, by receiving its benefits and utilities, which are represented for
example, by the price, on the other hand the author of a book, statue or
invention does not reap all the benefits and advantages of his own
property by disposing of it, for the most important form of realizing the
economic advantages of a book, statue or invention, consists in the
right to reproduce it in similar or like copies, everyone of which serves
to give to the person reproducing them all the conditions which the
original requires in order to give the author the full enjoyment thereof.
If the author of a book, after its publication, cannot prevent its
reproduction by any person who may want to reproduce it, then the
property right granted him is reduced to a very insignificant thing and
the effort made in the production of the book is in no way rewarded. 13
The execution, therefore, of any one or more of the exclusive rights conferred by law on a
copyright owner, without his consent, constitutes copyright infringement. In essence,
copyright infringement, known in general as "piracy," is a trespass on a domain owned
and occupied by a copyright owner; it is violation of a private right protected by
law. 14 With the invasion of his property rights, a copyright owner is naturally entitled to
seek redress, enforce and hold accountable the defrauder or usurper of said economic
rights.
Now, did ROBLES and GOODWILL infringe upon the copyright of HABANA et al. by
publishing DEP, which the latter alleged to be a reproduction, or in the least, a substantial
reproduction of CET? Both the trial court and respondent court found in the negative. I
submit they were correct.
To constitute infringement, the usurper must have copied or appropriated the "original"
work of an author or copyright proprietor; 15 absent copying, there can be no infringement
of copyright. 16 In turn, a work is deemed by law an original if the author created it by his
own skill, labor and judgment. 17 On its part, a copy is that which comes so near to the
original so as to give to every person seeing it the idea created by the original. It has been
held that the test of copyright infringement is whether an ordinary observer comparing
the works can readily see that one has been copied from the other. 18 A visual comparison
of the portions of CET 19 juxtaposed against certain pages of DEP, 20 would inescapably
lead to a conclusion that there is a discernible similarity between the two; however, as
correctly assessed by respondent court and the lower court, no conclusion, can be drawn
that DEP, in legal contemplation, is a copy of CET.
Was DEP a substantial reproduction of CET? To constitutes a substantial reproduction, it
is not necessary that the entire copyrighted work, or even a large portion of it, be copied,
if so much is taken that the value of the original is substantially diminished, or if the labors
of the original author are substantially, and to an injurious extent, appropriated. 21 But the
similarity of the books here does not amount to an appropriation of a substantial portion
of CET. If the existence of substantial similarities does not of itself establish
infringement, 22 mere similarities (not substantial similarities) in some sections of the
books in question decisively militate against a claim for infringement where the
similarities had been convincingly established as proceeding from a number of reasons
and/or factors.
1. As both books are grammar books, they inevitably deal with the same subjects typically
and ordinarily treated by writers of such genre, 23 e.g., system of book classification, the
different kinds of card catalogs and their entries, use of punctuation marks, paragraphs,
the characteristics of an effective paragraph, language structure, different parts of a book,
etc. These standard subjects fall within the domain of ideas, concepts, universal and
general knowledge that have, as admitted by the protagonists here, been in existence for
quite a long time. 24 As such, HABANA, et al. cannot demand monopoly, by way of example,
in the use of the recognized library classification systems (Dewey Decimal System and the
Library of Congress System), or how a book can be divided into parts (frontispiece, title
page, copyright page, preface, table of contents, etc.) or to the different headings used in a
card catalogue (title card, author card and subject card), since these are of common or
general knowledge. Even in this jurisdiction, no protection can be extended to such an
idea, procedure, system method or operation, concept, principle, discovery or mere data,
even if expressed, explained, illustrated or embodied in a work. 25
2. As found by respondent court, CET and DEP had common sources and materials, 26 such
that the particular portions claimed to have been lifted and literally reproduced also
appeared in earlier works, mostly by foreign authors. This is clear from the testimony of
petitioner Dr. Pacita Habana:
Q Let's clarify your position Dra. Habana. When
defendants test (sic) showed 10 words similar to
yours, you so concluded it was (sic) copied from
yours but when I pointed out to you same (sic)
words contained in the earlier book of Wills then
you earlier in your test in your book (sic) you
refused to admit that it was copied from Wills.
A Yes, sir. We have never — all 35 words were
copied from there.
Q But what I am asking how could you conclude that
by just similarity of 10 words of defendants words
that was copied from yours [sic] and when I point
out to you the similarity of that same words from the
23
 words earlier than yours (sic) you refused to admit
that you copied?
A I would like to change the final statement now that
in the case of defendant Robles you pointed out her
source very clear. She copied it from that book by
Wills.
Q So, she did not copy it from yours?
A Alright, maybe she did not copy it but definitely it
is a pattern of plagerism [sic]. 27
3. Similarity in orientation and style can likewise be attributed to the exposure of the
authors to the APCAS syllabus and their respective academic experience, teaching
approaches and methodology. It is not farfetched that they could have even influenced
each other as textbook writers. ROBLES and Dr. Pacita Habana were faculty members of
the Institute of English of the Far Eastern University from 1964 to 1974. 28 Both were
ardent students, researchers, lecturers, textbook writers and teachers of English and
grammar. They even used to be on friendly terms with each other, to the extent that Dr.
Habana admitted that ROBLES assisted the former in the preparation of her doctoral
dissertation. Given their near-identical academic and professional background, it is
natural they would use many expressions and definitions peculiar to teaching English
grammar. It comes therefore with no surprise that there are similarities in some parts of
the rival books. Indeed, it is difficult to conceive how writers on the same subject matter
can very well avoid resorting to common sources of information and materials and
employing similar expressions and terms peculiar to the subject they are treating. 29
To illustrate, an excerpt from page 21 of CET reads:
Author Card
The author card is the main entry card. It contains
1. the author's complete name on the first line,
surname first, which may be followed by the date of
his birth and death if he is no longer living;
2. the title of the book, and the subtitle, if there is
one;
3. the edition, if it is not the first;
4. the translator or illustrator, if there is any;
5. the imprint which includes the publisher, the
place and date of publication;
6. the collation composed of the number of pages,
volume, illustrations, and the size of the book;
7. the subjects with which the book deals [sic];
8. the call number on the upper left-hand corner.
Names beginning with Mc, or M are filed in the card catalog as though
spelled out as MAC, for example Mc Graw — MacGraw. The same is true
of St. and Saint.
While a portion of DEP found on page 18 which discusses the author card
provides:
The author card is the main entry card containing:
1. the author's complete name on the first line,
surname first, which may be followed by the date of
his birth and death if he is no longer living;
2. the title of the book, and the subtitle if there is
one;
3. the edition, if it is not the first;
4. the translator or illustrator, if any;
5. the imprint which includes the publisher, the
place and date of publication;
6. the collation, composed of the number of pages,
volume, illustrations, and the size of the book;
7. the subject with which the book deals; and
8. the call number on the upper-left hand corner.
Names beginning with MC, or M are filed in the card catalog considered
spelled out as MAC, for example: Mcleod-Macleod. This is true also of
St. and Saint.
The entries found in an author card, having been developed over quite sometime, are
expectedly uniform. Hence, HABANA et al. and ROBLES would have no choice but to
articulate the terms particular to the entries in an identical manner.
24
I thus find that the ruling of the respondent court is totally supported by the evidence on
record. Of doctrinal persuasion is the principle that factual determinations of the Court of
Appeals and the trial court are conclusive and binding upon this Court, and the latter will
not, as a rule, disturb these findings unless compelling and cogent reasons necessitate a
reexamination, if not a reversal, of the same. 30 Tested against this jurisprudential canon,
to subject the challenged decision of the Court of Appeals to further scrutiny would be
superfluous, if not, improvident.
I am not persuaded by the claim of HABANA, et al. that Laktaw is on all fours with and
hence applicable to the case at bar. There, this Court disposed that defendant, without the
consent of and causing irreparable damage to Laktaw, reproduced the latter's literary
work Diccionario Hisapano-Tagalog, and improperly copied the greater part thereof in the
work Diccionariong Kastila-Tagalog published by defendant, in violation of Article 7 of the
Law of 10 January 1879 on Intellectual Property. This Court anchored its decision on the
following observations:
(1) [O] the 23,560 Spanish words in the defendant's
dictionary . . . only 3,108 words are the defendant's own, or, what is the
same thing, the defendant has added only this number of words to
those that are in the plaintiff's dictionary, he having reproduced or
copied the remaining 20,452 words;
(2) [T]he defendant also literally reproduced and copied for the
Spanish words in his dictionary, the equivalents, definitions and
different meanings in Tagalog, given in plaintiffs dictionary, having
reproduced, as to some words, everything that appears in the plaintiff's
dictionary for similar Spanish words, although as to some he made
some additions of his own. Said copies and reproductions are
numerous. . .;
(3) [T]he printer's errors in the plaintiff's dictionary as to the
expression of some words in Spanish as well as their equivalents in
Tagalog are also reproduced, a fact which shows that the defendant, in
preparing his dictionary, literally copied those Spanish words and their
meanings and equivalents in Tagalog from the plaintiff's dictionary. 31
Plainly, the rationale in Laktaw does not apply in this case. First, aside from an isolated
accounting of the number of words supposedly usurped in a segment of DEP from
CET, 32 the records do not disclose that all the words allegedly copied were tallied and that
the words thus tallied were numerous enough to support a finding of copying. Second, as
already conceded, while there is an identity in the manner by which some of the ideas and
concepts were articulated, this prescinded from various factors already elucidated.
Besides, ROBLES' testimony that she made an independent investigation or research of
the original works or authors she consulted was unrebutted; 33 for germane here is the
question of whether the alleged infringer could have obtained the same information by
going to the same source by her own independent research. 34 ROBLES convinced the trial
court and the Court of Appeals on this; thus, we are bound by this factual determination,
as likewise explained earlier. Third, reproduction of the printer's errors or the author's
blunders and inaccuracies in the infringing copy does not ipso facto constitute copying or
plagiarism or infringement, but it is conceded that they are telltale signs that infringement
might have been committed. 35 However, the records do not reveal this to be the case.
Fourth, the law on intellectual property violated in Laktaw was a world and time apart
from R.A. No. 8293 or even P.D. No. 49. Thus, under Article 7 of the Law of 10 January 1879,
the Court ruled that nobody could reproduce another person's work without the owner's
consent, even merely to annotate or add anything to it, or improve any edition thereof. The
more recent laws on intellectual property, however, recognize recent advancements in
technology transfer and information dissemination. They thus allow the use of
copyrighted materials if compatible with fair use and to the extent justified for the
purpose. In particular, the new laws sanction the fair use of copyrighted work for criticism,
comment, news reporting, teaching including multiple copies for classroom use,
scholarship, research and similar purposes. 36 Further, the limitations of the exclusive use
of copyrighted materials under Sections 10 and 11 of P.D. No. 49 in consonance with the
principle of fair use have been reproduced and incorporated in the new law. 37 All told,
Laktaw is inapplicable.1âwphi1.nêt
Fair use has been defined as a privilege to use the copyrighted material in a reasonable
manner without the consent of the copyright owner or as copying the theme or ideas
rather than their expression. 38 No question of fair or unfair use arises however, if no
copying is proved to begin with. This is in consonance with the principle that there can be
no infringement if there was no copying. 39 It is only where some form of copying has been
shown that it becomes necessary to determine whether it has been carried to an "unfair,"
that is, illegal, extent. 40 Consequently, there is no reason to address the issue of whether
ROBLES abused a writer's right to fair use with the ascertainment that DEP was not a copy
or a substantial copy of CET.
WHEREFORE, I vote to DENY the petition and to AFFIRM the challenged decision of 27
June 1997 of the Court of Appeals.
Separate Opinions
DAVIDE, JR., C.J., dissenting opinion:
I am unable to join the majority view.
From the following factual and procedural antecedents, I find no alternative but to sustain
both the trial court and the Court of Appeals.
On 12 July 1988, HABANA, et al. filed with the trial court a complaint for infringement and
unfair competition, with damages against private respondent Felicidad C. Robles
(hereafter ROBLES) and her publisher and distributor, Goodwill Trading Co., Inc.
(hereafter GOODWILL). The case was docketed as Civil Case No. 88-1317.
HABANA, et al. averred in their complaint that they were the co-authors and joint
copyright owners of their published works College English for Today, Books 1 and 2
(hereafter CET) and Workbook for College Freshman English, Series 1 1; they discovered
that ROBLES' own published works, Developing English Proficiency, Books 1 and 2,
(hereafter DEP), published and distributed in 1985, exhibited an uncanny resemblance, if
25
not outright physical similarity, to CET as to content, scheme, sequence of topics and ideas,
manner of presentation and illustrative examples; the plagiarism, incorporation and
reproduction of particular portions of CET into DEP could not be gainsaid since ROBLES
was substantially familiar with CET and the textual asportation was accomplished without
their authority and/or consent; ROBLES and GOODWILL jointly misrepresented DEP (over
which they shared copyright ownership) "as the former's original published works and
concept;" and "notwithstanding formal demands made . . . to cease and desist from the sale
and distribution of DEP, [ROBLES and GOODWILL] persistently failed and refused to
comply therewith." HABANA et al. then prayed for the court to: (1) order the submission
and thereafter the destruction of all copies of DEP, together with the molds, plates, films
and other materials used in the printing thereof; (2) require ROBLES and GOODWILL to
render an accounting of the sales of the "infringing works from the time of its (sic)
inceptive publication up to the time of judgment, as well as the amount of sales and profits
. . . derived;" and (3) to enjoin ROBLES and GOODWILL to solidarily pay actual, moral and
exemplary damages, as well as attorney's fees and expenses of litigation.
In its Answer, GOODWILL denied culpability since "it had no knowledge or information
sufficient to form a belief as to the allegations of plagiarism, incorporation and
reproduction" and hence "could not be privy to the same, if (there were) any;" and that in
an Agreement with co-defendant ROBLES, the latter would be solely responsible for acts
of plagiarism or violations of copyright or any other law, to the extent of answering for any
and all damages GOODWILL may suffer. GOODWILL also interposed a compulsory
counterclaim against PACITA, et al. and a crossclaim against its co-defendant anchored on
the aforementioned Agreement.
In her answer, ROBLES asserted that: (1) DEP was the exclusive product of her
independent research, studies and experience; (2) DEP, particularly the segments where
the alleged literal similitude appeared, were admittedly influenced or inspired by earlier
treatises, mostly by foreign authors; but that "influences and/or inspirations from other
writers" like the methodology and techniques as to presentation, teaching concept and
design, research and orientation which she employed, fell within the ambit of general
information, ideas, principles of general or universal knowledge which were commonly
and customarily understood as incapable of private and exclusive use, appropriation or
copyright; and (3) her works were the result of the legitimate and reasonable exercise of
an author's "right to fair use of even copyrighted materials as [a] guide." She further
claimed that her various national and regional professional activities in general education,
language and literature, as well as her teaching experience in graduate and post graduate
education would obviate the remotest possibility of plagiarism.
ROBLES likewise suggested that any similarity between DEP and CET as regards scope and
sequence could be attributed to "the orientation of the authors to the scope and sequence
or syllabus — which incorporates standards known among English grammar book writers
— of the subject-matter for Basic Communication Arts recommended by the Association
of Philippine Colleges of Arts and Sciences (APCAS)." While the syllabus was admittedly
adopted in DEP, she claimed to have treated quite differently in DEP the very ideas,
techniques or principles expressed in CET such that neither textbook could be considered
a copy or plagiarism of the other.
At the pre-trial conference, the parties agreed to a stipulation of facts2 and for the court to
first resolve the issue of infringement before disposing of the claims for damages. After
trial on the merits, the trial court rendered its decision in favor of defendants, the
dispositive portion of which reads:
WHEREFORE, premises considered, the Court hereby orders that the
complaint filed against defendants Felicidad Robles and Goodwill
Trading Co., Inc. shall be DISMISSED: that said plaintiffs solidarily
reimburse defendant Robles for P20,000.00 attorney's fees and
defendant Goodwill for P5,000.00 attorney's fees. Plaintiffs are liable
for costs of suit.
IT IS SO ORDERED. 3
Noting that the law applicable to the case was Presidential Decree No. 49, 4 the trial court
found that HABANA, et al. failed to discharge their onus of proving that ROBLES and
GOODWILL committed acts constituting copyright infringement. Moreover, the trial court
found that "the cause of action or acts complained of [were] not covered by said decree"
as Section 10 thereof barred authors of works already lawfully made accessible to the
public from prohibiting the reproductions, translations, adaptations, recitation and
performance of the same, while Section 11 allowed the utilization of reproductions,
quotations and excerpts of such works. The trial court thus agreed with ROBLES that "the
complained acts [were] of general and universal knowledge and use which plaintiffs
cannot claim originality or seek redress to the law for protection" and observed that DEP
and CET had the same sources, consisting chiefly of earlier works, mostly foreign books.
GOODWILL's crossclaim against ROBLES, counterclaim against HABANA, et al. as well as
ROBLES' compulsory counterclaim against GOODWILL were all dismissed for lack of
factual and legal bases.
HABANA, et al. appealed to the Court of Appeals. The case was docketed as CA-G.R. CV No.
44053. Before said court HABANA, et al., in the main, argued that the trial court totally
disregarded their evidence and merely subscribed to ROBLES' arguments. The Court of
Appeals, however, likewise disposed of the controversy in favor of ROBLES and
GOODWILL.5
However, the Court of Appeals modified the trial court's decision by reversing the award
for attorney's fees. It held that the good faith and sincerity of HABANA, et al. in
commencing the action negated the basis therefor. Their motion for reconsideration
having been denied for want of cogent reasons, HABANA, et al., instituted this petition.
They claim that the Court of Appeals committed reversible error in failing to appreciate:
(1) the insuperable evidence and facts admitted and proved demonstrating plagiarism or
piracy and instead afforded full weight and credit to ROBLES' matrix of general,
hypothetical and sweeping statements and/or defenses; (2) ROBLES' and
GOODWILL's animo furandi or intent to appropriate or copy CET with the non-removal of
the damaging copies of DEP from the bookstores despite notice to withdraw the same; and
(3) the fact that ROBLES abused a writer's right to fair use, in violation of Section 11 of P.D.
No. 49. 6 They invoke Laktaw v. Paglinawan 7 which, they theorize is on all fours with the
case at bar. ROBLES contends that appeal by certiorari does not lie in this case for the
challenged decision and the trial court's judgment were amply supported by evidence,
26
pertinent laws and jurisprudence. Hence, her counterclaim for moral damages should,
therefore, be granted or for us to order the remand of the case to the trial court for
reception of evidence on damages. GOODWILL, on its part, stood pat on its disclaimer, with
the assertion that no proof was ever introduced. that it co-authored DEP or that it singly
or in cabal with ROBLES committed any act constituting copyright infringement.
The core issue then is whether or not the Court of Appeals erred in affirming the trial
court's judgment that despite the apparent textual, thematic and sequential similarity
between DEP and CET, no copyright was committed by ROBLES and GOODWILL.
While the complaint, in Civil Case No. 88-1317 was filed during the effectivity of P.D. No.
49, the provisions of the new intellectual property law, R.A. No. 8293, 8 nevertheless bears
significance here. It took effect on 1 January 1998, but its Section 239.3 clearly states that
its provisions shall apply to works in which copyright protection obtained prior to the
effectivity of the Act subsists, provided, however, that the application of the Act shall not
result in the diminution of such protection. Also, the philosophy behind both statutes as
well as the essential principles of copyright protection and copyright infringement have,
to a certain extent, remained the same.
A copyright may be accurately defined as the right granted by statute to the proprietor of
an intellectual production to its exclusive use and enjoyment to the extent specified in the
statute.9 Under Section 177 of R.A. No. 8293, 10 the copy or economic right (copyright and
economic right are used interchangeably in the statute) consists of the exclusive right to
carry out, authorize or prevent the following acts:
177.1 Reproduction of the work or substantial portion of the work;
177.2 Dramatization, translation, adaptation, abridgment,
arrangement or other transformation of the work;
177.3 The first public distribution of the original and each copy of the
work by sale or other forms of transfer of ownership;
177.4 Rental of the original or a copy of an audiovisual or
cinematographic work, a work embodied in a sound recording, a
computer program, a compilation of data and other materials or a
musical work in graphic form, irrespective of the ownership of the
original or the copy which is the subject of the rental;
177.5 Public display of the original or a copy of the work;
177.6 Public performance of the work; and
177.7 Other communication to the public of the work.
"The work," as repeatedly mentioned, refers to the literary and artistic works defined as
original intellectual creations in the literary and artistic domain protected from the
moment of their creation and enumerated in Section 172.1, which includes books and
other literary, scholarly, scientific and artistic works. 11
Stripped in the meantime of its indisputable social and beneficial functions, 12 the use of
intellectual property or creations should basically promote the creator or author's
personal and economic gain. Hence, the copyright protection extended to the creator
should ensure his attainment of some form of personal satisfaction and economic reward
from the work he produced. Without conceding the suitability of Laktaw as precedent, the
Court there quoted Manresa and explained:
He who writes a book, or carves a statute, or makes an invention, has
the absolute right to reproduce or sell it, just as the owner of the land
has the absolute right to sell it or its fruits. But while the owner of the
land, by selling it and its fruits, perhaps fully realizes all its economic
value, by receiving its benefits and utilities, which are represented for
example, by the price, on the other hand the author of a book, statue or
invention does not reap all the benefits and advantages of his own
property by disposing of it, for the most important form of realizing the
economic advantages of a book, statue or invention, consists in the
right to reproduce it in similar or like copies, everyone of which serves
to give to the person reproducing them all the conditions which the
original requires in order to give the author the full enjoyment thereof.
If the author of a book, after its publication, cannot prevent its
reproduction by any person who may want to reproduce it, then the
property right granted him is reduced to a very insignificant thing and
the effort made in the production of the book is in no way rewarded. 13
The execution, therefore, of any one or more of the exclusive rights conferred by law on a
copyright owner, without his consent, constitutes copyright infringement. In essence,
copyright infringement, known in general as "piracy," is a trespass on a domain owned
and occupied by a copyright owner; it is violation of a private right protected by
law. 14 With the invasion of his property rights, a copyright owner is naturally entitled to
seek redress, enforce and hold accountable the defrauder or usurper of said economic
rights.
Now, did ROBLES and GOODWILL infringe upon the copyright of HABANA et al. by
publishing DEP, which the latter alleged to be a reproduction, or in the least, a substantial
reproduction of CET? Both the trial court and respondent court found in the negative. I
submit they were correct.
To constitute infringement, the usurper must have copied or appropriated the "original"
work of an author or copyright proprietor; 15 absent copying, there can be no infringement
of copyright. 16 In turn, a work is deemed by law an original if the author created it by his
own skill, labor and judgment. 17 On its part, a copy is that which comes so near to the
original so as to give to every person seeing it the idea created by the original. It has been
held that the test of copyright infringement is whether an ordinary observer comparing
the works can readily see that one has been copied from the other. 18 A visual comparison
of the portions of CET 19 juxtaposed against certain pages of DEP, 20 would inescapably
lead to a conclusion that there is a discernible similarity between the two; however, as
27
correctly assessed by respondent court and the lower court, no conclusion, can be drawn
that DEP, in legal contemplation, is a copy of CET.
Was DEP a substantial reproduction of CET? To constitutes a substantial reproduction, it
is not necessary that the entire copyrighted work, or even a large portion of it, be copied,
if so much is taken that the value of the original is substantially diminished, or if the labors
of the original author are substantially, and to an injurious extent, appropriated. 21 But the
similarity of the books here does not amount to an appropriation of a substantial portion
of CET. If the existence of substantial similarities does not of itself establish
infringement, 22 mere similarities (not substantial similarities) in some sections of the
books in question decisively militate against a claim for infringement where the
similarities had been convincingly established as proceeding from a number of reasons
and/or factors.
1. As both books are grammar books, they inevitably deal with the same subjects typically
and ordinarily treated by writers of such genre, 23 e.g., system of book classification, the
different kinds of card catalogs and their entries, use of punctuation marks, paragraphs,
the characteristics of an effective paragraph, language structure, different parts of a book,
etc. These standard subjects fall within the domain of ideas, concepts, universal and
general knowledge that have, as admitted by the protagonists here, been in existence for
quite a long time. 24 As such, HABANA, et al. cannot demand monopoly, by way of example,
in the use of the recognized library classification systems (Dewey Decimal System and the
Library of Congress System), or how a book can be divided into parts (frontispiece, title
page, copyright page, preface, table of contents, etc.) or to the different headings used in a
card catalogue (title card, author card and subject card), since these are of common or
general knowledge. Even in this jurisdiction, no protection can be extended to such an
idea, procedure, system method or operation, concept, principle, discovery or mere data,
even if expressed, explained, illustrated or embodied in a work. 25
2. As found by respondent court, CET and DEP had common sources and materials, 26 such
that the particular portions claimed to have been lifted and literally reproduced also
appeared in earlier works, mostly by foreign authors. This is clear from the testimony of
petitioner Dr. Pacita Habana:
Q Let's clarify your position Dra. Habana. When
defendants test (sic) showed 10 words similar to
yours, you so concluded it was (sic) copied from
yours but when I pointed out to you same (sic)
words contained in the earlier book of Wills then
you earlier in your test in your book (sic) you
refused to admit that it was copied from Wills.
A Yes, sir. We have never — all 35 words were
copied from there.
Q But what I am asking how could you conclude that
by just similarity of 10 words of defendants words
that was copied from yours [sic] and when I point
out to you the similarity of that same words from the
words earlier than yours (sic) you refused to admit
that you copied?
A I would like to change the final statement now that
in the case of defendant Robles you pointed out her
source very clear. She copied it from that book by
Wills.
Q So, she did not copy it from yours?
A Alright, maybe she did not copy it but definitely it
is a pattern of plagerism [sic]. 27
3. Similarity in orientation and style can likewise be attributed to the exposure of the
authors to the APCAS syllabus and their respective academic experience, teaching
approaches and methodology. It is not farfetched that they could have even influenced
each other as textbook writers. ROBLES and Dr. Pacita Habana were faculty members of
the Institute of English of the Far Eastern University from 1964 to 1974. 28 Both were
ardent students, researchers, lecturers, textbook writers and teachers of English and
grammar. They even used to be on friendly terms with each other, to the extent that Dr.
Habana admitted that ROBLES assisted the former in the preparation of her doctoral
dissertation. Given their near-identical academic and professional background, it is
natural they would use many expressions and definitions peculiar to teaching English
grammar. It comes therefore with no surprise that there are similarities in some parts of
the rival books. Indeed, it is difficult to conceive how writers on the same subject matter
can very well avoid resorting to common sources of information and materials and
employing similar expressions and terms peculiar to the subject they are treating. 29
To illustrate, an excerpt from page 21 of CET reads:
Author Card
The author card is the main entry card. It contains
1. the author's complete name on the first line,
surname first, which may be followed by the date of
his birth and death if he is no longer living;
2. the title of the book, and the subtitle, if there is
one;
3. the edition, if it is not the first;
4. the translator or illustrator, if there is any;
5. the imprint which includes the publisher, the
place and date of publication;
28
 6. the collation composed of the number of pages,
volume, illustrations, and the size of the book;
7. the subjects with which the book deals [sic];
8. the call number on the upper left-hand corner.
Names beginning with Mc, or M are filed in the card catalog as though
spelled out as MAC, for example Mc Graw — MacGraw. The same is true
of St. and Saint.
While a portion of DEP found on page 18 which discusses the author card provides:
The author card is the main entry card containing:
1. the author's complete name on the first line,
surname first, which may be followed by the date of
his birth and death if he is no longer living;
2. the title of the book, and the subtitle if there is
one;
3. the edition, if it is not the first;
4. the translator or illustrator, if any;
5. the imprint which includes the publisher, the
place and date of publication;
6. the collation, composed of the number of pages,
volume, illustrations, and the size of the book;
7. the subject with which the book deals; and
8. the call number on the upper-left hand corner.
Names beginning with MC, or M are filed in the card catalog considered
spelled out as MAC, for example: Mcleod-Macleod. This is true also of
St. and Saint.
The entries found in an author card, having been developed over quite sometime, are
expectedly uniform. Hence, HABANA et al. and ROBLES would have no choice but to
articulate the terms particular to the entries in an identical manner.
I thus find that the ruling of the respondent court is totally supported by the evidence on
record. Of doctrinal persuasion is the principle that factual determinations of the Court of
Appeals and the trial court are conclusive and binding upon this Court, and the latter will
not, as a rule, disturb these findings unless compelling and cogent reasons necessitate a
reexamination, if not a reversal, of the same. 30 Tested against this jurisprudential canon,
to subject the challenged decision of the Court of Appeals to further scrutiny would be
superfluous, if not, improvident.
I am not persuaded by the claim of HABANA, et al. that Laktaw is on all fours with and
hence applicable to the case at bar. There, this Court disposed that defendant, without the
consent of and causing irreparable damage to Laktaw, reproduced the latter's literary
work Diccionario Hisapano-Tagalog, and improperly copied the greater part thereof in the
work Diccionariong Kastila-Tagalog published by defendant, in violation of Article 7 of the
Law of 10 January 1879 on Intellectual Property. This Court anchored its decision on the
following observations:
(1) [O] the 23,560 Spanish words in the defendant's
dictionary . . . only 3,108 words are the defendant's own, or, what is the
same thing, the defendant has added only this number of words to
those that are in the plaintiff's dictionary, he having reproduced or
copied the remaining 20,452 words;
(2) [T]he defendant also literally reproduced and copied for the
Spanish words in his dictionary, the equivalents, definitions and
different meanings in Tagalog, given in plaintiffs dictionary, having
reproduced, as to some words, everything that appears in the plaintiff's
dictionary for similar Spanish words, although as to some he made
some additions of his own. Said copies and reproductions are
numerous. . .;
(3) [T]he printer's errors in the plaintiff's dictionary as to the
expression of some words in Spanish as well as their equivalents in
Tagalog are also reproduced, a fact which shows that the defendant, in
preparing his dictionary, literally copied those Spanish words and their
meanings and equivalents in Tagalog from the plaintiff's dictionary. 31
Plainly, the rationale in Laktaw does not apply in this case. First, aside from an isolated
accounting of the number of words supposedly usurped in a segment of DEP from
CET, 32 the records do not disclose that all the words allegedly copied were tallied and that
the words thus tallied were numerous enough to support a finding of copying. Second, as
already conceded, while there is an identity in the manner by which some of the ideas and
concepts were articulated, this prescinded from various factors already elucidated.
Besides, ROBLES' testimony that she made an independent investigation or research of
the original works or authors she consulted was unrebutted; 33 for germane here is the
question of whether the alleged infringer could have obtained the same information by
going to the same source by her own independent research. 34 ROBLES convinced the trial
court and the Court of Appeals on this; thus, we are bound by this factual determination,
as likewise explained earlier. Third, reproduction of the printer's errors or the author's
blunders and inaccuracies in the infringing copy does not ipso facto constitute copying or
29
plagiarism or infringement, but it is conceded that they are telltale signs that infringement
might have been committed. 35 However, the records do not reveal this to be the case.
Fourth, the law on intellectual property violated in Laktaw was a world and time apart
from R.A. No. 8293 or even P.D. No. 49. Thus, under Article 7 of the Law of 10 January 1879,
the Court ruled that nobody could reproduce another person's work without the owner's
consent, even merely to annotate or add anything to it, or improve any edition thereof. The
more recent laws on intellectual property, however, recognize recent advancements in
technology transfer and information dissemination. They thus allow the use of
copyrighted materials if compatible with fair use and to the extent justified for the
purpose. In particular, the new laws sanction the fair use of copyrighted work for criticism,
comment, news reporting, teaching including multiple copies for classroom use,
scholarship, research and similar purposes. 36 Further, the limitations of the exclusive use
of copyrighted materials under Sections 10 and 11 of P.D. No. 49 in consonance with the
principle of fair use have been reproduced and incorporated in the new law. 37 All told,
Laktaw is inapplicable.

Fair use has been defined as a privilege to use the copyrighted material in a reasonable
manner without the consent of the copyright owner or as copying the theme or ideas
rather than their expression. 38 No question of fair or unfair use arises however, if no
copying is proved to begin with. This is in consonance with the principle that there can be
no infringement if there was no copying. 39 It is only where some form of copying has been
shown that it becomes necessary to determine whether it has been carried to an "unfair,"
that is, illegal, extent. 40 Consequently, there is no reason to address the issue of whether
ROBLES abused a writer's right to fair use with the ascertainment that DEP was not a copy
or a substantial copy of CET.1âwphi1.nêt

WHEREFORE, I vote to DENY the petition and to AFFIRM the challenged decision of 27
June 1997 of the Court of Appeals.

30
G.R. No. 148222 August 15, 2003
PEARL & DEAN (PHIL.), INCORPORATED, Petitioner,
vs.
SHOEMART, INCORPORATED, and NORTH EDSA MARKETING,
INCORPORATED, Respondents.
DECISION
CORONA, J.:
In the instant petition for review on certiorari under Rule 45 of the Rules of Court,
petitioner Pearl & Dean (Phil.) Inc. (P & D) assails the May 22, 2001 decision 1 of the Court
of Appeals reversing the October 31, 1996 decision2 of the Regional Trial Court of Makati,
Branch 133, in Civil Case No. 92-516 which declared private respondents Shoemart Inc.
(SMI) and North Edsa Marketing Inc. (NEMI) liable for infringement of trademark and
copyright, and unfair competition.
FACTUAL ANTECEDENTS
The May 22, 2001 decision of the Court of Appeals3 contained a summary of this dispute:
"Plaintiff-appellant Pearl and Dean (Phil.), Inc. is a corporation engaged in the
manufacture of advertising display units simply referred to as light boxes. These units
utilize specially printed posters sandwiched between plastic sheets and illuminated with
back lights. Pearl and Dean was able to secure a Certificate of Copyright Registration dated
January 20, 1981 over these illuminated display units. The advertising light boxes were
marketed under the trademark "Poster Ads". The application for registration of the
trademark was filed with the Bureau of Patents, Trademarks and Technology Transfer on
June 20, 1983, but was approved only on September 12, 1988, per Registration No. 41165.
From 1981 to about 1988, Pearl and Dean employed the services of Metro Industrial
Services to manufacture its advertising displays.
Sometime in 1985, Pearl and Dean negotiated with defendant-appellant Shoemart, Inc.
(SMI) for the lease and installation of the light boxes in SM City North Edsa. Since SM City
North Edsa was under construction at that time, SMI offered as an alternative, SM Makati
and SM Cubao, to which Pearl and Dean agreed. On September 11, 1985, Pearl and Dean’s
General Manager, Rodolfo Vergara, submitted for signature the contracts covering SM
Cubao and SM Makati to SMI’s Advertising Promotions and Publicity Division Manager,
Ramonlito Abano. Only the contract for SM Makati, however, was returned signed. On
October 4, 1985, Vergara wrote Abano inquiring about the other contract and reminding
him that their agreement for installation of light boxes was not only for its SM Makati
branch, but also for SM Cubao. SMI did not bother to reply.
Instead, in a letter dated January 14, 1986, SMI’s house counsel informed Pearl and Dean
that it was rescinding the contract for SM Makati due to non-performance of the terms
thereof. In his reply dated February 17, 1986, Vergara protested the unilateral action of
SMI, saying it was without basis. In the same letter, he pushed for the signing of the
contract for SM Cubao.
Two years later, Metro Industrial Services, the company formerly contracted by Pearl and
Dean to fabricate its display units, offered to construct light boxes for Shoemart’s chain of
stores. SMI approved the proposal and ten (10) light boxes were subsequently fabricated
by Metro Industrial for SMI. After its contract with Metro Industrial was terminated, SMI
engaged the services of EYD Rainbow Advertising Corporation to make the light boxes.
Some 300 units were fabricated in 1991. These were delivered on a staggered basis and
installed at SM Megamall and SM City.
Sometime in 1989, Pearl and Dean, received reports that exact copies of its light boxes
were installed at SM City and in the fastfood section of SM Cubao. Upon investigation, Pearl
and Dean found out that aside from the two (2) reported SM branches, light boxes similar
to those it manufactures were also installed in two (2) other SM stores. It further
discovered that defendant-appellant North Edsa Marketing Inc. (NEMI), through its
marketing arm, Prime Spots Marketing Services, was set up primarily to sell advertising
space in lighted display units located in SMI’s different branches. Pearl and Dean noted
that NEMI is a sister company of SMI.
In the light of its discoveries, Pearl and Dean sent a letter dated December 11, 1991 to both
SMI and NEMI enjoining them to cease using the subject light boxes and to remove the
same from SMI’s establishments. It also demanded the discontinued use of the trademark
"Poster Ads," and the payment to Pearl and Dean of compensatory damages in the amount
of Twenty Million Pesos (P20,000,000.00).
Upon receipt of the demand letter, SMI suspended the leasing of two hundred twenty-four
(224) light boxes and NEMI took down its advertisements for "Poster Ads" from the
lighted display units in SMI’s stores. Claiming that both SMI and NEMI failed to meet all its
demands, Pearl and Dean filed this instant case for infringement of trademark and
copyright, unfair competition and damages.
In denying the charges hurled against it, SMI maintained that it independently developed
its poster panels using commonly known techniques and available technology, without
notice of or reference to Pearl and Dean’s copyright. SMI noted that the registration of the
mark "Poster Ads" was only for stationeries such as letterheads, envelopes, and the like.
Besides, according to SMI, the word "Poster Ads" is a generic term which cannot be
appropriated as a trademark, and, as such, registration of such mark is invalid. It also
stressed that Pearl and Dean is not entitled to the reliefs prayed for in its complaint since
its advertising display units contained no copyright notice, in violation of Section 27 of P.D.
49. SMI alleged that Pearl and Dean had no cause of action against it and that the suit was
purely intended to malign SMI’s good name. On this basis, SMI, aside from praying for the
dismissal of the case, also counterclaimed for moral, actual and exemplary damages and
for the cancellation of Pearl and Dean’s Certification of Copyright Registration No. PD-R-
2558 dated January 20, 1981 and Certificate of Trademark Registration No. 4165 dated
September 12, 1988.
31
NEMI, for its part, denied having manufactured, installed or used any advertising display
units, nor having engaged in the business of advertising. It repleaded SMI’s averments,
admissions and denials and prayed for similar reliefs and counterclaims as SMI."
The RTC of Makati City decided in favor of P & D:
Since the light boxes cannot, by any stretch of the imagination, be considered as either
prints, pictorial illustrations, advertising copies, labels, tags or box wraps, to be properly
classified as a copyrightable class "O" work, we have to agree with SMI when it posited
that what was copyrighted were the technical drawings only, and not the light boxes
themselves, thus:

Wherefore, defendants SMI and NEMI are found jointly and severally liable for 42. When a drawing is technical and depicts a utilitarian object, a copyright over the
infringement of copyright under Section 2 of PD 49, as amended, and infringement of drawings like plaintiff-appellant’s will not extend to the actual object. It has so been held
trademark under Section 22 of RA No. 166, as amended, and are hereby penalized under under jurisprudence, of which the leading case is Baker vs. Selden (101 U.S. 841 (1879).
Section 28 of PD 49, as amended, and Sections 23 and 24 of RA 166, as amended. In that case, Selden had obtained a copyright protection for a book entitled "Selden’s
Accordingly, defendants are hereby directed: Condensed Ledger or Bookkeeping Simplified" which purported to explain a new system
of bookkeeping. Included as part of the book were blank forms and illustrations consisting
of ruled lines and headings, specially designed for use in connection with the system
(1) to pay plaintiff the following damages: explained in the work. These forms showed the entire operation of a day or a week or a
month on a single page, or on two pages following each other. The defendant Baker then
(a) actual damages - ₱16,600,000.00, produced forms which were similar to the forms illustrated in Selden’s copyrighted books.
representing profits The Court held that exclusivity to the actual forms is not extended by a copyright. The
derived by defendants reason was that "to grant a monopoly in the underlying art when no examination of its
as a result of infringe- novelty has ever been made would be a surprise and a fraud upon the public; that is the
ment of plaintiff’s copyright province of letters patent, not of copyright." And that is precisely the point. No doubt
from 1991 to 1992 aware that its alleged original design would never pass the rigorous examination of a
patent application, plaintiff-appellant fought to foist a fraudulent monopoly on the public
(b) moral damages - ₱1,000.000.00 by conveniently resorting to a copyright registration which merely employs a recordal
system without the benefit of an in-depth examination of novelty.
(c) exemplary damages - ₱1,000,000.00
The principle in Baker vs. Selden was likewise applied in Muller vs. Triborough Bridge
Authority [43 F. Supp. 298 (S.D.N.Y. 1942)]. In this case, Muller had obtained a copyright
(d) attorney’s fees - ₱1,000,000.00 over an unpublished drawing entitled "Bridge Approach – the drawing showed a novel
bridge approach to unsnarl traffic congestion". The defendant constructed a bridge
plus approach which was alleged to be an infringement of the new design illustrated in
plaintiff’s drawings. In this case it was held that protection of the drawing does not extend
(e) costs of suit; to the unauthorized duplication of the object drawn because copyright extends only to the
description or expression of the object and not to the object itself. It does not prevent one
from using the drawings to construct the object portrayed in the drawing.
(2) to deliver, under oath, for impounding in the National Library, all light boxes
of SMI which were fabricated by Metro Industrial Services and EYD Rainbow
Advertising Corporation; In two other cases, Imperial Homes Corp. v. Lamont, 458 F. 2d 895 and Scholtz Homes, Inc.
v. Maddox, 379 F. 2d 84, it was held that there is no copyright infringement when one who,
without being authorized, uses a copyrighted architectural plan to construct a structure.
(3) to deliver, under oath, to the National Library, all filler-posters using the This is because the copyright does not extend to the structures themselves.
trademark "Poster Ads", for destruction; and

In fine, we cannot find SMI liable for infringing Pearl and Dean’s copyright over the
(4) to permanently refrain from infringing the copyright on plaintiff’s light boxes technical drawings of the latter’s advertising display units.
and its trademark "Poster Ads".

xxx xxx xxx

Defendants’ counterclaims are hereby ordered dismissed for lack of merit.

The Supreme Court trenchantly held in Faberge, Incorporated vs. Intermediate Appellate
SO ORDERED.4 Court that the protective mantle of the Trademark Law extends only to the goods used by
the first user as specified in the certificate of registration, following the clear mandate
On appeal, however, the Court of Appeals reversed the trial court:
32
conveyed by Section 20 of Republic Act 166, as amended, otherwise known as the
Trademark Law, which reads:
SEC. 20. Certification of registration prima facie evidence of validity.- A certificate of
registration of a mark or trade-name shall be prima facie evidence of the validity of the
registration, the registrant’s ownership of the mark or trade-name, and of the registrant’s
exclusive right to use the same in connection with the goods, business or services specified
in the certificate, subject to any conditions and limitations stated therein." (underscoring
supplied)
The records show that on June 20, 1983, Pearl and Dean applied for the registration of the
trademark "Poster Ads" with the Bureau of Patents, Trademarks, and Technology
Transfer. Said trademark was recorded in the Principal Register on September 12, 1988
under Registration No. 41165 covering the following products: stationeries such as
letterheads, envelopes and calling cards and newsletters.
With this as factual backdrop, we see no legal basis to the finding of liability on the part of
the defendants-appellants for their use of the words "Poster Ads", in the advertising
display units in suit. Jurisprudence has interpreted Section 20 of the Trademark Law as
"an implicit permission to a manufacturer to venture into the production of goods and
allow that producer to appropriate the brand name of the senior registrant on goods other
than those stated in the certificate of registration." The Supreme Court further emphasized
the restrictive meaning of Section 20 when it stated, through Justice Conrado V. Sanchez,
that:
Really, if the certificate of registration were to be deemed as including goods not specified
therein, then a situation may arise whereby an applicant may be tempted to register a
trademark on any and all goods which his mind may conceive even if he had never
intended to use the trademark for the said goods. We believe that such omnibus
registration is not contemplated by our Trademark Law.
While we do not discount the striking similarity between Pearl and Dean’s registered
trademark and defendants-appellants’ "Poster Ads" design, as well as the parallel use by
which said words were used in the parties’ respective advertising copies, we cannot find
defendants-appellants liable for infringement of trademark. "Poster Ads" was registered
by Pearl and Dean for specific use in its stationeries, in contrast to defendants-appellants
who used the same words in their advertising display units. Why Pearl and Dean limited
the use of its trademark to stationeries is simply beyond us. But, having already done so,
it must stand by the consequence of the registration which it had caused.
xxx xxx xxx
We are constrained to adopt the view of defendants-appellants that the words "Poster
Ads" are a simple contraction of the generic term poster advertising. In the absence of any
convincing proof that "Poster Ads" has acquired a secondary meaning in this jurisdiction,
we find that Pearl and Dean’s exclusive right to the use of "Poster Ads" is limited to what
is written in its certificate of registration, namely, stationeries.
Defendants-appellants cannot thus be held liable for infringement of the trademark
"Poster Ads".
There being no finding of either copyright or trademark infringement on the part of SMI
and NEMI, the monetary award granted by the lower court to Pearl and Dean has no leg to
stand on.
xxx xxx xxx
WHEREFORE, premises considered, the assailed decision is REVERSED and SET ASIDE,
and another is rendered DISMISSING the complaint and counterclaims in the above-
entitled case for lack of merit.5
Dissatisfied with the above decision, petitioner P & D filed the instant petition assigning
the following errors for the Court’s consideration:
A. THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT NO
COPYRIGHT INFRINGEMENT WAS COMMITTED BY RESPONDENTS SM AND
NEMI;
B. THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT NO
INFRINGEMENT OF PEARL & DEAN’S TRADEMARK "POSTER ADS" WAS
COMMITTED BY RESPONDENTS SM AND NEMI;
C. THE HONORABLE COURT OF APPEALS ERRED IN DISMISSING THE AWARD
OF THE TRIAL COURT, DESPITE THE LATTER’S FINDING, NOT DISPUTED BY
THE HONORABLE COURT OF APPEALS, THAT SM WAS GUILTY OF BAD FAITH
IN ITS NEGOTIATION OF ADVERTISING CONTRACTS WITH PEARL & DEAN.
D. THE HONORABLE COURT OF APPEALS ERRED IN NOT HOLDING
RESPONDENTS SM AND NEMI LIABLE TO PEARL & DEAN FOR ACTUAL, MORAL
& EXEMPLARY DAMAGES, ATTORNEY’S FEES AND COSTS OF SUIT.6
ISSUES
In resolving this very interesting case, we are challenged once again to put into proper
perspective four main concerns of intellectual property law — patents, copyrights,
trademarks and unfair competition arising from infringement of any of the first three. We
shall focus then on the following issues:
(1) if the engineering or technical drawings of an advertising display unit (light
box) are granted copyright protection (copyright certificate of registration) by
the National Library, is the light box depicted in such engineering drawings ipso
facto also protected by such copyright?
(2) or should the light box be registered separately and protected by a patent
issued by the Bureau of Patents Trademarks and Technology Transfer (now
33
 Intellectual Property Office) — in addition to the copyright of the engineering
drawings?
(3) can the owner of a registered trademark legally prevent others from using
such trademark if it is a mere abbreviation of a term descriptive of his goods,
services or business?
ON THE ISSUE OF COPYRIGHT INFRINGEMENT
Petitioner P & D’s complaint was that SMI infringed on its copyright over the light boxes
when SMI had the units manufactured by Metro and EYD Rainbow Advertising for its own
account. Obviously, petitioner’s position was premised on its belief that its copyright over
the engineering drawings extended ipso facto to the light boxes depicted or illustrated in
said drawings. In ruling that there was no copyright infringement, the Court of Appeals
held that the copyright was limited to the drawings alone and not to the light box itself.
We agree with the appellate court.
First, petitioner’s application for a copyright certificate — as well as Copyright Certificate
No. PD-R2588 issued by the National Library on January 20, 1981 — clearly stated that it
was for a class "O" work under Section 2 (O) of PD 49 (The Intellectual Property Decree)
which was the statute then prevailing. Said Section 2 expressly enumerated the works
subject to copyright:
SEC. 2. The rights granted by this Decree shall, from the moment of creation, subsist with
respect to any of the following works:
xxx xxx xxx
(O) Prints, pictorial illustrations, advertising copies, labels, tags, and box wraps;
xxx xxx xxx
Although petitioner’s copyright certificate was entitled "Advertising Display Units" (which
depicted the box-type electrical devices), its claim of copyright infringement cannot be
sustained.
Copyright, in the strict sense of the term, is purely a statutory right. Being a mere statutory
grant, the rights are limited to what the statute confers. It may be obtained and enjoyed
only with respect to the subjects and by the persons, and on terms and conditions specified
in the statute.7 Accordingly, it can cover only the works falling within the statutory
enumeration or description.8
P & D secured its copyright under the classification class "O" work. This being so,
petitioner’s copyright protection extended only to the technical drawings and not to the
light box itself because the latter was not at all in the category of "prints, pictorial
illustrations, advertising copies, labels, tags and box wraps." Stated otherwise, even as we
find that P & D indeed owned a valid copyright, the same could have referred only to the
technical drawings within the category of "pictorial illustrations." It could not have
possibly stretched out to include the underlying light box. The strict application 9 of the
law’s enumeration in Section 2 prevents us from giving petitioner even a little leeway, that
is, even if its copyright certificate was entitled "Advertising Display Units." What the law
does not include, it excludes, and for the good reason: the light box was not a literary or
artistic piece which could be copyrighted under the copyright law. And no less clearly,
neither could the lack of statutory authority to make the light box copyrightable be
remedied by the simplistic act of entitling the copyright certificate issued by the National
Library as "Advertising Display Units."
In fine, if SMI and NEMI reprinted P & D’s technical drawings for sale to the public without
license from P & D, then no doubt they would have been guilty of copyright infringement.
But this was not the case. SMI’s and NEMI’s acts complained of by P & D were to have units
similar or identical to the light box illustrated in the technical drawings manufactured by
Metro and EYD Rainbow Advertising, for leasing out to different advertisers. Was this an
infringement of petitioner’s copyright over the technical drawings? We do not think so.
During the trial, the president of P & D himself admitted that the light box was neither a
literary not an artistic work but an "engineering or marketing invention."10 Obviously,
there appeared to be some confusion regarding what ought or ought not to be the proper
subjects of copyrights, patents and trademarks. In the leading case of Kho vs. Court of
Appeals,11 we ruled that these three legal rights are completely distinct and separate from
one another, and the protection afforded by one cannot be used interchangeably to cover
items or works that exclusively pertain to the others:
Trademark, copyright and patents are different intellectual property rights that cannot be
interchanged with one another. A trademark is any visible sign capable of distinguishing the
goods (trademark) or services (service mark) of an enterprise and shall include a stamped
or marked container of goods. In relation thereto, a trade name means the name or
designation identifying or distinguishing an enterprise. Meanwhile, the scope of a
copyright is confined to literary and artistic works which are original intellectual creations
in the literary and artistic domain protected from the moment of their creation. Patentable
inventions, on the other hand, refer to any technical solution of a problem in any field of
human activity which is new, involves an inventive step and is industrially applicable.
ON THE ISSUE OF PATENT INFRINGEMENT
This brings us to the next point: if, despite its manufacture and commercial use of the light
boxes without license from petitioner, private respondents cannot be held legally liable for
infringement of P & D’s copyright over its technical drawings of the said light boxes, should
they be liable instead for infringement of patent? We do not think so either.
For some reason or another, petitioner never secured a patent for the light boxes. It
therefore acquired no patent rights which could have protected its invention, if in fact it
really was. And because it had no patent, petitioner could not legally prevent anyone from
manufacturing or commercially using the contraption. In Creser Precision Systems, Inc. vs.
Court of Appeals,12 we held that "there can be no infringement of a patent until a patent
has been issued, since whatever right one has to the invention covered by the patent arises
alone from the grant of patent. x x x (A)n inventor has no common law right to a monopoly
34
of his invention. He has the right to make use of and vend his invention, but if he voluntarily
discloses it, such as by offering it for sale, the world is free to copy and use it with impunity.
A patent, however, gives the inventor the right to exclude all others. As a patentee, he has
the exclusive right of making, selling or using the invention.13 On the assumption that
petitioner’s advertising units were patentable inventions, petitioner revealed them fully
to the public by submitting the engineering drawings thereof to the National Library.
To be able to effectively and legally preclude others from copying and profiting from the
invention, a patent is a primordial requirement. No patent, no protection. The ultimate
goal of a patent system is to bring new designs and technologies into the public domain
through disclosure.14 Ideas, once disclosed to the public without the protection of a valid
patent, are subject to appropriation without significant restraint.15
On one side of the coin is the public which will benefit from new ideas; on the other are
the inventors who must be protected. As held in Bauer & Cie vs. O’Donnel,16 "The act
secured to the inventor the exclusive right to make use, and vend the thing patented, and
consequently to prevent others from exercising like privileges without the consent of the
patentee. It was passed for the purpose of encouraging useful invention and promoting
new and useful inventions by the protection and stimulation given to inventive genius, and
was intended to secure to the public, after the lapse of the exclusive privileges granted the
benefit of such inventions and improvements."
The law attempts to strike an ideal balance between the two interests:
"(The p)atent system thus embodies a carefully crafted bargain for encouraging the
creation and disclosure of new useful and non-obvious advances in technology and design,
in return for the exclusive right to practice the invention for a number of years. The
inventor may keep his invention secret and reap its fruits indefinitely. In consideration of
its disclosure and the consequent benefit to the community, the patent is granted. An
exclusive enjoyment is guaranteed him for 17 years, but upon the expiration of that period,
the knowledge of the invention inures to the people, who are thus enabled to practice it
and profit by its use."17
The patent law has a three-fold purpose: "first, patent law seeks to foster and reward
invention; second, it promotes disclosures of inventions to stimulate further innovation
and to permit the public to practice the invention once the patent expires; third, the
stringent requirements for patent protection seek to ensure that ideas in the public
domain remain there for the free use of the public."18
It is only after an exhaustive examination by the patent office that a patent is issued. Such
an in-depth investigation is required because "in rewarding a useful invention, the rights
and welfare of the community must be fairly dealt with and effectively guarded. To that
end, the prerequisites to obtaining a patent are strictly observed and when a patent is
issued, the limitations on its exercise are equally strictly enforced. To begin with, a genuine
invention or discovery must be demonstrated lest in the constant demand for new
appliances, the heavy hand of tribute be laid on each slight technological advance in art."19
There is no such scrutiny in the case of copyrights nor any notice published before its grant
to the effect that a person is claiming the creation of a work. The law confers the copyright
from the moment of creation20 and the copyright certificate is issued upon registration
with the National Library of a sworn ex-parte claim of creation.
Therefore, not having gone through the arduous examination for patents, the petitioner
cannot exclude others from the manufacture, sale or commercial use of the light boxes on
the sole basis of its copyright certificate over the technical drawings.
Stated otherwise, what petitioner seeks is exclusivity without any opportunity for the
patent office (IPO) to scrutinize the light box’s eligibility as a patentable invention. The
irony here is that, had petitioner secured a patent instead, its exclusivity would have been
for 17 years only. But through the simplified procedure of copyright-registration with the
National Library — without undergoing the rigor of defending the patentability of its
invention before the IPO and the public — the petitioner would be protected for 50 years.
This situation could not have been the intention of the law.
In the oft-cited case of Baker vs. Selden21 , the United States Supreme Court held that only
the expression of an idea is protected by copyright, not the idea itself. In that case, the
plaintiff held the copyright of a book which expounded on a new accounting system he had
developed. The publication illustrated blank forms of ledgers utilized in such a system. The
defendant reproduced forms similar to those illustrated in the plaintiff’s copyrighted book.
The US Supreme Court ruled that:
"There is no doubt that a work on the subject of book-keeping, though only explanatory of
well known systems, may be the subject of a copyright; but, then, it is claimed only as a
book. x x x. But there is a clear distinction between the books, as such, and the art, which
it is, intended to illustrate. The mere statement of the proposition is so evident that it
requires hardly any argument to support it. The same distinction may be predicated of
every other art as well as that of bookkeeping. A treatise on the composition and use of
medicines, be they old or new; on the construction and use of ploughs or watches or
churns; or on the mixture and application of colors for painting or dyeing; or on the mode
of drawing lines to produce the effect of perspective, would be the subject of copyright;
but no one would contend that the copyright of the treatise would give the exclusive right
to the art or manufacture described therein. The copyright of the book, if not pirated from
other works, would be valid without regard to the novelty or want of novelty of its subject
matter. The novelty of the art or thing described or explained has nothing to do with the
validity of the copyright. To give to the author of the book an exclusive property in the
art described therein, when no examination of its novelty has ever been officially
made, would be a surprise and a fraud upon the public. That is the province of
letters patent, not of copyright. The claim to an invention of discovery of an art or
manufacture must be subjected to the examination of the Patent Office before an
exclusive right therein can be obtained; and a patent from the government can only
secure it.
The difference between the two things, letters patent and copyright, may be illustrated by
reference to the subjects just enumerated. Take the case of medicines. Certain mixtures
are found to be of great value in the healing art. If the discoverer writes and publishes
a book on the subject (as regular physicians generally do), he gains no exclusive
35
right to the manufacture and sale of the medicine; he gives that to the public. If he
desires to acquire such exclusive right, he must obtain a patent for the mixture as a
new art, manufacture or composition of matter. He may copyright his book, if he
pleases; but that only secures to him the exclusive right of printing and publishing
his book. So of all other inventions or discoveries.
The copyright of a book on perspective, no matter how many drawings and illustrations it
may contain, gives no exclusive right to the modes of drawing described, though they may
never have been known or used before. By publishing the book without getting a patent
for the art, the latter is given to the public.
xxx
Now, whilst no one has a right to print or publish his book, or any material part thereof, as
a book intended to convey instruction in the art, any person may practice and use the art
itself which he has described and illustrated therein. The use of the art is a totally
different thing from a publication of the book explaining it. The copyright of a book
on bookkeeping cannot secure the exclusive right to make, sell and use account books
prepared upon the plan set forth in such book. Whether the art might or might not have
been patented, is a question, which is not before us. It was not patented, and is open and
free to the use of the public. And, of course, in using the art, the ruled lines and headings
of accounts must necessarily be used as incident to it.
The plausibility of the claim put forward by the complainant in this case arises from a
confusion of ideas produced by the peculiar nature of the art described in the books, which
have been made the subject of copyright. In describing the art, the illustrations and
diagrams employed happened to correspond more closely than usual with the actual work
performed by the operator who uses the art. x x x The description of the art in a book,
though entitled to the benefit of copyright, lays no foundation for an exclusive claim
to the art itself. The object of the one is explanation; the object of the other is use.
The former may be secured by copyright. The latter can only be secured, if it can be
secured at all, by letters patent." (underscoring supplied)
ON THE ISSUE OF TRADEMARK INFRINGEMENT
This issue concerns the use by respondents of the mark "Poster Ads" which petitioner’s
president said was a contraction of "poster advertising." P & D was able to secure a
trademark certificate for it, but one where the goods specified were "stationeries such as
letterheads, envelopes, calling cards and newsletters."22 Petitioner admitted it did not
commercially engage in or market these goods. On the contrary, it dealt in electrically
operated backlit advertising units and the sale of advertising spaces thereon, which,
however, were not at all specified in the trademark certificate.
Under the circumstances, the Court of Appeals correctly cited Faberge Inc. vs. Intermediate
Appellate Court,23where we, invoking Section 20 of the old Trademark Law, ruled that "the
certificate of registration issued by the Director of Patents can confer (upon petitioner)
the exclusive right to use its own symbol only to those goods specified in the certificate,
subject to any conditions and limitations specified in the certificate x x x. One who has
adopted and used a trademark on his goods does not prevent the adoption and use of the
same trademark by others for products which are of a different description."24 Faberge,
Inc. was correct and was in fact recently reiterated in Canon Kabushiki Kaisha vs. Court of
Appeals.25
Assuming arguendo that "Poster Ads" could validly qualify as a trademark, the failure of P
& D to secure a trademark registration for specific use on the light boxes meant that there
could not have been any trademark infringement since registration was an essential
element thereof.1âwphi1
ON THE ISSUE OF UNFAIR COMPETITION
If at all, the cause of action should have been for unfair competition, a situation which was
possible even if P & D had no registration.26 However, while the petitioner’s complaint in
the RTC also cited unfair competition, the trial court did not find private respondents liable
therefor. Petitioner did not appeal this particular point; hence, it cannot now revive its
claim of unfair competition.
But even disregarding procedural issues, we nevertheless cannot hold respondents guilty
of unfair competition.
By the nature of things, there can be no unfair competition under the law on copyrights
although it is applicable to disputes over the use of trademarks. Even a name or phrase
incapable of appropriation as a trademark or tradename may, by long and exclusive use
by a business (such that the name or phrase becomes associated with the business or
product in the mind of the purchasing public), be entitled to protection against unfair
competition.27 In this case, there was no evidence that P & D’s use of "Poster Ads" was
distinctive or well-known. As noted by the Court of Appeals, petitioner’s expert witnesses
himself had testified that " ‘Poster Ads’ was too generic a name. So it was difficult to
identify it with any company, honestly speaking."28 This crucial admission by its own
expert witness that "Poster Ads" could not be associated with P & D showed that, in the
mind of the public, the goods and services carrying the trademark "Poster Ads" could not
be distinguished from the goods and services of other entities.
This fact also prevented the application of the doctrine of secondary meaning. "Poster Ads"
was generic and incapable of being used as a trademark because it was used in the field of
poster advertising, the very business engaged in by petitioner. "Secondary meaning"
means that a word or phrase originally incapable of exclusive appropriation with
reference to an article in the market (because it is geographically or otherwise descriptive)
might nevertheless have been used for so long and so exclusively by one producer with
reference to his article that, in the trade and to that branch of the purchasing public, the
word or phrase has come to mean that the article was his property.29 The admission by
petitioner’s own expert witness that he himself could not associate "Poster Ads" with
petitioner P & D because it was "too generic" definitely precluded the application of this
exception.
Having discussed the most important and critical issues, we see no need to belabor the
rest.
36
All told, the Court finds no reversible error committed by the Court of Appeals when it
reversed the Regional Trial Court of Makati City.

WHEREFORE, the petition is hereby DENIED and the decision of the Court of Appeals
dated May 22, 2001 is AFFIRMED in toto.

SO ORDERED.

37
G.R. No. 140946 September 13, 2004
MICROSOFT CORPORATION and LOTUS DEVELOPMENT CORPORATION, petitioners,
vs.
MAXICORP, INC., respondent.
DECISION
CARPIO, J.:
The Case
This petition for review on certiorari1 seeks to reverse the Court of Appeals’
Decision2 dated 23 December 1998 and its Resolution dated 29 November 1999 in CA-G.R.
SP No. 44777. The Court of Appeals reversed the Order3 of the Regional Trial Court, Branch
23, Manila ("RTC"), denying respondent Maxicorp, Inc.’s ("Maxicorp") motion to quash the
search warrant that the RTC issued against Maxicorp. Petitioners are the private
complainants against Maxicorp for copyright infringement under Section 29 of
Presidential Decree No. 49 ("Section 29 of PD 49") 4 and for unfair competition under
Article 189 of the Revised Penal Code ("RPC").5
Antecedent Facts
On 25 July 1996, National Bureau of Investigation ("NBI") Agent Dominador Samiano, Jr.
("NBI Agent Samiano") filed several applications for search warrants in the RTC against
Maxicorp for alleged violation of Section 29 of PD 49 and Article 189 of the RPC. After
conducting a preliminary examination of the applicant and his witnesses, Judge William
M. Bayhon issued Search Warrants Nos. 96-451, 96-452, 96-453 and 96-454, all dated 25
July 1996, against Maxicorp.
Armed with the search warrants, NBI agents conducted on 25 July 1996 a search of
Maxicorp’s premises and seized property fitting the description stated in the search
warrants.
On 2 September 1996, Maxicorp filed a motion to quash the search warrants alleging that
there was no probable cause for their issuance and that the warrants are in the form of
"general warrants." The RTC denied Maxicorp’s motion on 22 January 1997. The RTC also
denied Maxicorp’s motion for reconsideration.
The RTC found probable cause to issue the search warrants after examining NBI Agent
Samiano, John Benedict Sacriz ("Sacriz"), and computer technician Felixberto Pante
("Pante"). The three testified on what they discovered during their respective visits to
Maxicorp. NBI Agent Samiano also presented certifications from petitioners that they have
not authorized Maxicorp to perform the witnessed activities using petitioners’ products.
On 24 July 1997, Maxicorp filed a petition for certiorari with the Court of Appeals seeking
to set aside the RTC’s order. On 23 December 1998, the Court of Appeals reversed the
RTC’s order denying Maxicorp’s motion to quash the search warrants. Petitioners moved
for reconsideration. The Court of Appeals denied petitioners’ motion on 29 November
1999.
The Court of Appeals held that NBI Agent Samiano failed to present during the preliminary
examination conclusive evidence that Maxicorp produced or sold the counterfeit products.
The Court of Appeals pointed out that the sales receipt NBI Agent Samiano presented as
evidence that he bought the products from Maxicorp was in the name of a certain "Joel
Diaz."
Hence, this petition.
The Issues
Petitioners seek a reversal and raise the following issues for resolution:
1. WHETHER THE PETITION RAISES QUESTIONS OF LAW;
2. WHETHER PETITIONERS HAVE LEGAL PERSONALITY TO FILE THE
PETITION;
3. WHETHER THERE WAS PROBABLE CAUSE TO ISSUE THE SEARCH
WARRANTS;
4. WHETHER THE SEARCH WARRANTS ARE "GENERAL WARRANTS."
The Ruling of the Court
The petition has merit.
On Whether the Petition Raises Questions of Law
Maxicorp assails this petition as defective since it failed to raise questions of law. Maxicorp
insists that the arguments petitioners presented are questions of fact, which this Court
should not consider in a Rule 45 petition for review. Petitioners counter that all the issues
they presented in this petition involve questions of law. Petitioners point out that the facts
are not in dispute.
A petition for review under Rule 45 of the Rules of Court should cover questions of
law.6 Questions of fact are not reviewable. As a rule, the findings of fact of the Court of
Appeals are final and conclusive and this Court will not review them on appeal,7 subject to
exceptions as when the findings of the appellate court conflict with the findings of the trial
court.8
The distinction between questions of law and questions of fact is settled. A question of law
exists when the doubt or difference centers on what the law is on a certain state of facts. A
38
question of fact exists if the doubt centers on the truth or falsity of the alleged facts. Though
this delineation seems simple, determining the true nature and extent of the distinction is
sometimes problematic. For example, it is incorrect to presume that all cases where the
facts are not in dispute automatically involve purely questions of law.
There is a question of law if the issue raised is capable of being resolved without need of
reviewing the probative value of the evidence.9 The resolution of the issue must rest solely
on what the law provides on the given set of circumstances. Once it is clear that the issue
invites a review of the evidence presented, the question posed is one of fact. 10 If the query
requires a re-evaluation of the credibility of witnesses, or the existence or relevance of
surrounding circumstances and their relation to each other, the issue in that query is
factual.11 Our ruling in Paterno v. Paterno12 is illustrative on this point:
Such questions as whether certain items of evidence should be accorded
probative value or weight, or rejected as feeble or spurious, or whether or not
the proofs on one side or the other are clear and convincing and adequate to
establish a proposition in issue, are without doubt questions of fact. Whether or
not the body of proofs presented by a party, weighed and analyzed in relation to
contrary evidence submitted by adverse party, may be said to be strong, clear
and convincing; whether or not certain documents presented by one side should
be accorded full faith and credit in the face of protests as to their spurious
character by the other side; whether or not inconsistencies in the body of proofs
of a party are of such gravity as to justify refusing to give said proofs weight – all
these are issues of fact.
It is true that Maxicorp did not contest the facts alleged by petitioners. But this
situation does not automatically transform all issues raised in the petition into
questions of law. The issues must meet the tests outlined in Paterno.
Of the three main issues raised in this petition – the legal personality of the
petitioners, the nature of the warrants issued and the presence of probable cause
– only the first two qualify as questions of law. The pivotal issue of whether there
was probable cause to issue the search warrants is a question of fact. At first
glance, this issue appears to involve a question of law since it does not concern
itself with the truth or falsity of certain facts. Still, the resolution of this issue
would require this Court to inquire into the probative value of the evidence
presented before the RTC. For a question to be one of law, it must not involve an
examination of the probative value of the evidence presented by the litigants or
any of them.13
Yet, this is precisely what the petitioners ask us to do by raising arguments requiring an
examination of the TSNs and the documentary evidence presented during the search
warrant proceedings. In short, petitioners would have us substitute our own judgment to
that of the RTC and the Court of Appeals by conducting our own evaluation of the evidence.
This is exactly the situation which Section 1, Rule 45 of the Rules of Court prohibits by
requiring the petition to raise only questions of law. This Court is not a trier of facts. It is
not the function of this court to analyze or weigh evidence.14 When we give due course to
such situations, it is solely by way of exception. Such exceptions apply only in the presence
of extremely meritorious circumstances.15
Indeed, this case falls under one of the exceptions because the findings of the Court of
Appeals conflict with the findings of the RTC.16 Since petitioners properly raised the
conflicting findings of the lower courts, it is proper for this Court to resolve such
contradiction.
On Whether Petitioners have the Legal Personality to File this Petition
Maxicorp argues that petitioners have no legal personality to file this petition since the
proper party to do so in a criminal case is the Office of the Solicitor General as
representative of the People of the Philippines. Maxicorp states the general rule but the
exception governs this case.17 We ruled in Columbia Pictures Entertainment, Inc. v.
Court of Appeals18 that the petitioner-complainant in a petition for review under Rule 45
could argue its case before this Court in lieu of the Solicitor General if there is grave error
committed by the lower court or lack of due process. This avoids a situation where a
complainant who actively participated in the prosecution of a case would suddenly find
itself powerless to pursue a remedy due to circumstances beyond its control. The
circumstances in Columbia Pictures Entertainment are sufficiently similar to the present
case to warrant the application of this doctrine.
On Whether there was Probable Cause to Issue the Search Warrants
Petitioners argue that the Court of Appeals erred in reversing the RTC based on the fact
that the sales receipt was not in the name of NBI Agent Samiano. Petitioners point out that
the Court of Appeals disregarded the overwhelming evidence that the RTC considered in
determining the existence of probable cause. Maxicorp counters that the Court of Appeals
did not err in reversing the RTC. Maxicorp maintains that the entire preliminary
examination that the RTC conducted was defective.
The Court of Appeals based its reversal on two factual findings of the RTC. First, the fact
that the sales receipt presented by NBI Agent Samiano as proof that he bought counterfeit
goods from Maxicorp was in the name of a certain "Joel Diaz." Second, the fact that
petitioners’ other witness, John Benedict Sacriz, admitted that he did not buy counterfeit
goods from Maxicorp.
We rule that the Court of Appeals erred in reversing the RTC’s findings.
Probable cause means "such reasons, supported by facts and circumstances as will
warrant a cautious man in the belief that his action and the means taken in prosecuting it
are legally just and proper."19 Thus, probable cause for a search warrant requires such
facts and circumstances that would lead a reasonably prudent man to believe that an
offense has been committed and the objects sought in connection with that offense are in
the place to be searched.20
The judge determining probable cause must do so only after personally examining under
oath the complainant and his witnesses. The oath required must refer to "the truth of the
facts within the personal knowledge of the petitioner or his witnesses, because the
purpose thereof is to convince the committing magistrate, not the individual making the
affidavit and seeking the issuance of the warrant, of the existence of probable cause."21 The
39
applicant must have personal knowledge of the circumstances. "Reliable information" is
insufficient.22 Mere affidavits are not enough, and the judge must depose in writing the
complainant and his witnesses.23
The Court of Appeals’ reversal of the findings of the RTC centers on the fact that the two
witnesses for petitioners during the preliminary examination failed to prove conclusively
that they bought counterfeit software from Maxicorp. The Court of Appeals ruled that this
amounted to a failure to prove the existence of a connection between the offense charged
and the place searched.
The offense charged against Maxicorp is copyright infringement under Section 29 of PD
49 and unfair competition under Article 189 of the RPC. To support these charges,
petitioners presented the testimonies of NBI Agent Samiano, computer technician Pante,
and Sacriz, a civilian. The offenses that petitioners charged Maxicorp contemplate several
overt acts. The sale of counterfeit products is but one of these acts. Both NBI Agent
Samiano and Sacriz related to the RTC how they personally saw Maxicorp commit acts of
infringement and unfair competition.
During the preliminary examination, the RTC subjected the testimonies of the witnesses
to the requisite examination. NBI Agent Samiano testified that he saw Maxicorp display
and offer for sale counterfeit software in its premises. He also saw how the counterfeit
software were produced and packaged within Maxicorp’s premises. NBI Agent Samiano
categorically stated that he was certain the products were counterfeit because Maxicorp
sold them to its customers without giving the accompanying ownership manuals, license
agreements and certificates of authenticity.
Sacriz testified that during his visits to Maxicorp, he witnessed several instances when
Maxicorp installed petitioners’ software into computers it had assembled. Sacriz also
testified that he saw the sale of petitioners’ software within Maxicorp’s premises.
Petitioners never authorized Maxicorp to install or sell their software.
The testimonies of these two witnesses, coupled with the object and documentary
evidence they presented, are sufficient to establish the existence of probable cause. From
what they have witnessed, there is reason to believe that Maxicorp engaged in copyright
infringement and unfair competition to the prejudice of petitioners. Both NBI Agent
Samiano and Sacriz were clear and insistent that the counterfeit software were not only
displayed and sold within Maxicorp’s premises, they were also produced, packaged and in
some cases, installed there.
The determination of probable cause does not call for the application of rules and
standards of proof that a judgment of conviction requires after trial on the merits. As
implied by the words themselves, "probable cause" is concerned with probability, not
absolute or even moral certainty. The prosecution need not present at this stage proof
beyond reasonable doubt. The standards of judgment are those of a reasonably prudent
man,24 not the exacting calibrations of a judge after a full-blown trial.
No law or rule states that probable cause requires a specific kind of evidence. No formula
or fixed rule for its determination exists.25 Probable cause is determined in the light of
conditions obtaining in a given situation.26 Thus, it was improper for the Court of Appeals
to reverse the RTC’s findings simply because the sales receipt evidencing NBI Agent
Samiano’s purchase of counterfeit goods is not in his name.
For purposes of determining probable cause, the sales receipt is not the only proof that
the sale of petitioners’ software occurred. During the search warrant application
proceedings, NBI Agent Samiano presented to the judge the computer unit that he
purchased from Maxicorp, in which computer unit Maxicorp had pre-installed petitioners’
software.27 Sacriz, who was present when NBI Agent Samiano purchased the computer
unit, affirmed that NBI Agent Samiano purchased the computer unit.28 Pante, the computer
technician, demonstrated to the judge the presence of petitioners’ software on the same
computer unit.29 There was a comparison between petitioners’ genuine software and
Maxicorp’s software pre-installed in the computer unit that NBI Agent Sambiano
purchased.30Even if we disregard the sales receipt issued in the name of "Joel Diaz," which
petitioners explained was the alias NBI Agent Samiano used in the operation, there still
remains more than sufficient evidence to establish probable cause for the issuance of the
search warrants.
This also applies to the Court of Appeals’ ruling on Sacriz’s testimony. The fact that Sacriz
did not actually purchase counterfeit software from Maxicorp does not eliminate the
existence of probable cause. Copyright infringement and unfair competition are not
limited to the act of selling counterfeit goods. They cover a whole range of acts, from
copying, assembling, packaging to marketing, including the mere offering for sale of the
counterfeit goods. The clear and firm testimonies of petitioners’ witnesses on such other
acts stand untarnished. The Constitution and the Rules of Court only require that the judge
examine personally and thoroughly the applicant for the warrant and his witnesses to
determine probable cause. The RTC complied adequately with the requirement of the
Constitution and the Rules of Court.
Probable cause is dependent largely on the opinion and findings of the judge who
conducted the examination and who had the opportunity to question the applicant and his
witnesses.31 For this reason, the findings of the judge deserve great weight. The reviewing
court should overturn such findings only upon proof that the judge disregarded the facts
before him or ignored the clear dictates of reason.32 Nothing in the records of the
preliminary examination proceedings reveal any impropriety on the part of the judge in
this case. As one can readily see, here the judge examined thoroughly the applicant and his
witnesses. To demand a higher degree of proof is unnecessary and untimely. The
prosecution would be placed in a compromising situation if it were required to present all
its evidence at such preliminary stage. Proof beyond reasonable doubt is best left for trial.
On Whether the Search Warrants are in the Nature of General Warrants
A search warrant must state particularly the place to be searched and the objects to be
seized. The evident purpose for this requirement is to limit the articles to be seized only
to those particularly described in the search warrant. This is a protection against potential
abuse. It is necessary to leave the officers of the law with no discretion regarding what
articles they shall seize, to the end that no unreasonable searches and seizures be
committed.33
40
In addition, under Section 4, Rule 126 of the Rules of Criminal Procedure, a search warrant
shall issue "in connection with one specific offense." The articles described must bear a
direct relation to the offense for which the warrant is issued.34 Thus, this rule requires that
the warrant must state that the articles subject of the search and seizure are used or
intended for use in the commission of a specific offense.
Maxicorp argues that the warrants issued against it are too broad in scope and lack the
specificity required with respect to the objects to be seized. After examining the wording
of the warrants issued, the Court of Appeals ruled in favor of Maxicorp and reversed the
RTC’s Order thus:
Under the foregoing language, almost any item in the petitioner’s store can be
seized on the ground that it is "used or intended to be used" in the illegal or
unauthorized copying or reproduction of the private respondents’ software and
their manuals.35
The Court of Appeals based its reversal on its perceived infirmity of paragraph (e) of the
search warrants the RTC issued. The appellate court found that similarly worded
warrants, all of which noticeably employ the phrase "used or intended to be used," were
previously held void by this Court.36 The disputed text of the search warrants in this case
states:
a) Complete or partially complete reproductions or copies of Microsoft software
bearing the Microsoft copyrights and/or trademarks owned by MICROSOFT
CORPORATION contained in CD-ROMs, diskettes and hard disks;
b) Complete or partially complete reproductions or copies of Microsoft
instruction manuals and/or literature bearing the Microsoft copyrights and/or
trademarks owned by MICROSOFT CORPORATION;
c) Sundry items such as labels, boxes, prints, packages, wrappers, receptacles,
advertisements and other paraphernalia bearing the copyrights and/or
trademarks owned by MICROSOFT CORPORATION;
d) Sales invoices, delivery receipts, official receipts, ledgers, journals, purchase
orders and all other books of accounts and documents used in the recording of
the reproduction and/or assembly, distribution and sales, and other transactions
in connection with fake or counterfeit products bearing the Microsoft copyrights
and/or trademarks owned by MICROSOFT CORPORATION;
e) Computer hardware, including central processing units including hard
disks, CD-ROM drives, keyboards, monitor screens and diskettes,
photocopying machines and other equipment or paraphernalia used or
intended to be used in the illegal and unauthorized copying or
reproduction of Microsoft software and their manuals, or which contain,
display or otherwise exhibit, without the authority of MICROSOFT
CORPORATION, any and all Microsoft trademarks and copyrights; and
f) Documents relating to any passwords or protocols in order to access all
computer hard drives, data bases and other information storage devices
containing unauthorized Microsoft software.37 (Emphasis supplied)
It is only required that a search warrant be specific as far as the circumstances will
ordinarily allow.38 The description of the property to be seized need not be technically
accurate or precise. The nature of the description should vary according to whether the
identity of the property or its character is a matter of concern.39 Measured against this
standard we find that paragraph (e) is not a general warrant. The articles to be seized were
not only sufficiently identified physically, they were also specifically identified by stating
their relation to the offense charged. Paragraph (e) specifically refers to those articles used
or intended for use in the illegal and unauthorized copying of petitioners’ software. This
language meets the test of specificity.40
The cases cited by the Court of Appeals are inapplicable. In those cases, the Court found
the warrants too broad because of particular circumstances, not because of the mere use
of the phrase "used or intended to be used." In Columbia Pictures, Inc. v. Flores, the
warrants ordering the seizure of "television sets, video cassette recorders, rewinders and
tape cleaners x x x" were found too broad since the defendant there was a licensed
distributor of video tapes.41 The mere presence of counterfeit video tapes in the
defendant’s store does not mean that the machines were used to produce the counterfeit
tapes. The situation in this case is different. Maxicorp is not a licensed distributor of
petitioners. In Bache & Co. (Phil.), Inc., et al. v. Judge Ruiz, et al., the Court voided the
warrants because they authorized the seizure of records pertaining to "all business
transactions" of the defendant.42And in 20th Century Fox Film Corp. v. Court of Appeals,
the Court quashed the warrant because it merely gave a list of articles to be seized,
aggravated by the fact that such appliances are "generally connected with the legitimate
business of renting out betamax tapes."43
However, we find paragraph (c) of the search warrants lacking in particularity. Paragraph
(c) states:
c) Sundry items such as labels, boxes, prints, packages, wrappers, receptacles,
advertisements and other paraphernalia bearing the copyrights and/or
trademarks owned by MICROSOFT CORPORATION;
The scope of this description is all-embracing since it covers property used for personal
or other purposes not related to copyright infringement or unfair competition. Moreover,
the description covers property that Maxicorp may have bought legitimately from
Microsoft or its licensed distributors. Paragraph (c) simply calls for the seizure of all items
bearing the Microsoft logo, whether legitimately possessed or not. Neither does it limit the
seizure to products used in copyright infringement or unfair competition.
Still, no provision of law exists which requires that a warrant, partially defective in
specifying some items sought to be seized yet particular with respect to the other items,
should be nullified as a whole. A partially defective warrant remains valid as to the items
specifically described in the warrant.44 A search warrant is severable, the items not
sufficiently described may be cut off without destroying the whole warrant.45 The
exclusionary rule found in Section 3(2) of Article III of the Constitution renders
41
inadmissible in any proceeding all evidence obtained through unreasonable searches and
seizure. Thus, all items seized under paragraph (c) of the search warrants, not falling
under paragraphs a, b, d, e or f, should be returned to Maxicorp.

WHEREFORE, we PARTIALLY GRANT the instant petition. The Decision of the Court of
Appeals dated 23 December 1998 and its Resolution dated 29 November 1999 in CA-G.R.
SP No. 44777 are REVERSED and SET ASIDE except with respect to articles seized under
paragraph (c) of Search Warrants Nos. 96-451, 96-452, 96-453 and 96-454. All articles
seized under paragraph (c) of the search warrants, not falling under paragraphs a, b, d, e
or f, are ordered returned to Maxicorp, Inc. immediately.

SO ORDERED.

42
G.R. No. 147043 June 21, 2005
NBI - MICROSOFT CORPORATION & LOTUS DEVELOPMENT CORP., petitioners,
vs.
JUDY C. HWANG, BENITO KEH & YVONNE K. CHUA/BELTRON COMPUTER
PHILIPPINES INC., JONATHAN K. CHUA, EMILY K. CHUA, BENITO T. SANCHEZ, NANCY
I. VELASCO, ALFONSO CHUA, ALBERTO CHUA, SOPHIA ONG, DEANNA CHUA/TAIWAN
MACHINERY DISPLAY & TRADE CENTER, INC., and THE SECRETARY OF
JUSTICE, respondents.
DECISION
CARPIO, J.:
The Case
This is a petition for certiorari1 of the Resolutions2 of the Department of Justice dismissing
for "lack of merit and insufficiency of evidence" petitioner Microsoft Corporation’s
complaint against respondents for copyright infringement and unfair competition.
The Facts
Petitioner Microsoft Corporation ("Microsoft"), a Delaware, United States corporation,
owns the copyright and trademark to several computer software.3 Respondents Benito
Keh and Yvonne Keh are the President/Managing Director and General Manager,
respectively, of respondent Beltron Computer Philippines, Inc. ("Beltron"), a domestic
corporation. Respondents Jonathan K. Chua, Emily K. Chua, Benito T. Sanchez, and Nancy
I. Velasco are Beltron’s Directors. On the other hand, respondents Alfonso Chua, Alberto
Chua, Judy K. Chua Hwang, Sophia Ong, and Deanna Chua are the Directors of respondent
Taiwan Machinery Display & Trade Center, Inc. ("TMTC"), also a domestic corporation.4
In May 1993, Microsoft and Beltron entered into a Licensing Agreement ("Agreement").
Under Section 2(a) of the Agreement, as amended in January 1994, Microsoft authorized
Beltron, for a fee, to:
(i) xxx reproduce and install no more than one (1) copy of [Microsoft] software
on each Customer System hard disk or Read Only Memory ("ROM"); [and]
(ii) xxx distribute directly or indirectly and license copies of the Product
(reproduced as per Section 2(a)(i) and/or acquired from Authorized Replicator
or Authorized Distributor) in object code form to end users[.] xxxx5
The Agreement also authorized Microsoft and Beltron to terminate the contract if the
other fails to comply with any of the Agreement’s provisions. Microsoft terminated the
Agreement effective 22 June 1995 for Beltron’s non-payment of royalties.6
Afterwards, Microsoft learned that respondents were illegally copying and selling
Microsoft software. Consequently, Microsoft, through its Philippine agent,7 hired the
services of Pinkerton Consulting Services ("PCS"), a private investigative firm. Microsoft
also sought the assistance of the National Bureau of Investigation ("NBI"). On 10
November 1995, PCS employee John Benedic8 Sacriz ("Sacriz") and NBI agent Dominador
Samiano, Jr. ("Samiano"), posing as representatives of a computer shop,9 bought computer
hardware (central processing unit ("CPU") and computer monitor) and software (12
computer disks ("CDs") in read-only memory ("ROM") format) from respondents. The CPU
contained pre-installed10 Microsoft Windows 3.1 and MS-DOS software. The 12 CD-ROMs,
encased in plastic containers with Microsoft packaging, also contained Microsoft
software.11 At least two of the CD-ROMs were "installers," so-called because they contain
several software (Microsoft only or both Microsoft and non-Microsoft).12 Sacriz and
Samiano were not given the Microsoft end-user license agreements, user’s manuals,
registration cards or certificates of authenticity for the articles they purchased. The receipt
issued to Sacriz and Samiano for the CPU and monitor bore the heading "T.M.T.C. (PHILS.)
INC. BELTRON COMPUTER."13 The receipt for the 12 CD-ROMs did not indicate its source
although the name "Gerlie" appears below the entry "delivered by."14
On 17 November 1995, Microsoft applied for search warrants against respondents in the
Regional Trial Court, Branch 23, Manila ("RTC").15 The RTC granted Microsoft’s
application and issued two search warrants ("Search Warrant Nos. 95-684 and 95-
685").16 Using Search Warrant Nos. 95-684 and 95-685, the NBI searched the premises of
Beltron and TMTC and seized several computer-related hardware, software, accessories,
and paraphernalia. Among these were 2,831 pieces of CD-ROMs containing Microsoft
software.17
Based on the articles obtained from respondents, Microsoft and a certain Lotus
Development Corporation ("Lotus Corporation") charged respondents before the
Department of Justice ("DOJ") with copyright infringement under Section 5(A) in relation
to Section 29 of Presidential Decree No. 49, as amended, ("PD 49")18 and with unfair
competition under Article 189(1)19 of the Revised Penal Code. In its Complaint ("I.S. No.
96-193"), which the NBI indorsed, Microsoft alleged that respondents illegally copied and
sold Microsoft software.20
In their joint counter-affidavit, respondents Yvonne Keh ("respondent Keh") and Emily K.
Chua ("respondent Chua") denied the charges against respondents. Respondents Keh and
Chua alleged that: (1) Microsoft’s real intention in filing the complaint under I.S. No. 96-
193 was to pressure Beltron to pay its alleged unpaid royalties, thus Microsoft should have
filed a collection suit instead of a criminal complaint; (2) TMTC bought the confiscated 59
boxes of MS-DOS CDs from a Microsoft dealer in Singapore (R.R. Donnelly); (3)
respondents are not the "source" of the Microsoft Windows 3.1 software pre-installed in
the CPU bought by Sacriz and Samiano, but only of the MS-DOS software; (4) Microsoft’s
alleged proof of purchase (receipt) for the 12 CD-ROMs is inconclusive because the receipt
does not indicate its source; and (5) respondents Benito Keh, Jonathan K. Chua, Alfonso
Chua, Alberto Chua, Judy K. Chua Hwang, Sophia Ong, and Deanna Chua are stockholders
of Beltron and TMTC in name only and thus cannot be held criminally liable.21
The other respondents did not file counter-affidavits.
43
Meanwhile, respondents moved to quash Search Warrant Nos. 95-684 and 95-685. The
RTC partially granted their motion in its Order of 16 April 1996. Microsoft sought
reconsideration but the RTC denied Microsoft’s motion in its Order of 19 July 1996.
Microsoft appealed to the Court of Appeals in CA-G.R. CV No. 54600. In its Decision of 29
November 2001, the Court of Appeals granted Microsoft’s appeal and set aside the RTC
Orders of 16 April 1996 and 19 July 1996. The Court of Appeals’ Decision became final on
27 December 2001.
The DOJ Resolutions
In the Resolution of 26 October 1999, DOJ State Prosecutor Jocelyn A. Ong ("State
Prosecutor Ong") recommended the dismissal of Microsoft’s complaint for lack of merit
and insufficiency of evidence. State Prosecutor Ong also recommended the dismissal of
Lotus Corporation’s complaint for lack of interest to prosecute and for insufficiency of
evidence. Assistant Chief State Prosecutor Lualhati R. Buenafe ("Assistant Chief State
Prosecutor Buenafe") approved State Prosecutor Ong’s recommendations.22 The 26
October 1999 Resolution reads in part:
[T]wo (2) issues have to be resolved in this case, namely:
a) Whether or not Beltron Computer and/or its stockholders should be held
liable for the offenses charged.
b) Whether or not prima facie case exist[s] against Taiwan Machinery Display
and Trade Center, Inc. (TMTC) for violation of the offense charged.
Complainant had alleged that from the time the license agreement was terminated,
respondent/s is/are no longer authorized to copy/distribute/sell Microsoft products.
However, respondent/s averred that the case is civil in nature, not criminal, considering
that the case stemmed only out of the desire of complainant to collect from them the
amount of US$135,121.32 and that the contract entered into by the parties cannot be
unilaterally terminated.
In the order of Honorable William Bayhon dated July 19, 1996 [denying reconsideration
to the Order partially quashing the search warrants], he observed the following:
"It is further argued by counsel for respondent that the act taken by private complainant
is to spite revenge against the respondent Beltron for the latter failed to pay the alleged
monetary obligation in the amount of US$135,121.32. That respondent has some
monetary obligation to complainant which is not denied by the complainant."
["]It appears therefore that prior to the issuance of the subject search warrants,
complainant had some business transactions with the respondent [Beltron] along the
same line of products. Complainant failed to reveal the true circumstances existing
between the two of them as it now appears, indeed the search warrant[s] xxx [are] being
used as a leverage to secure collection of the money obligation which the Court cannot
allow."
From said order, it can be gleaned that the [RTC] xxx, had admitted that the search
warrants applied for by complainant were merely used as a leverage for the collection of
the alleged monetary obligation of the respondent/s.
From said order, it can be surmise (sic) that the obligations between the parties is civil in
nature not criminal.
Moreover, complainant had time and again harped that respondent/s is/are not
authorized to sell/copy/distribute Microsoft products at the time of the execution of the
search warrants. Still, this office has no power to pass upon said issue for one has then to
interpret the provisions of the contract entered into by the parties, which question, should
be raised in a proper civil proceeding.
Accordingly, absen[t] a resolution from the proper court of (sic) whether or not the
contract is still binding between the parties at the time of the execution of the search
warrants, this office cannot pass upon the issue of whether respondent/s is or are liable
for the offense charged.
As to the second issue, we find for the respondent/s. TMTC had provided sufficient
evidence such as pro-forma invoice from R.R. Donnelley; Debt Advice of the Bank of
Commerce; Official Receipts from the Bureau of Customs; and Import Entry Declaration of
the Bureau of Customs to prove that indeed the Microsoft software in their possession
were bought from Singapore.
Thus, respondent/s in this case has/have no intent to defraud the public, as provided
under Article 189 of the Revised Penal Code, for they bought said Microsoft MS-DOS 6.0
from an alleged licensee of Microsoft in Singapore, with all the necessary papers. In their
opinion, what they have are genuine Microsoft software, therefore no unfair competition
exist.
Moreover, violation of P.D. 49 does not exist, for respondent/s was/were not the
manufacturers of the Microsoft software seized and were selling their products as genuine
Microsoft software, considering that they bought it from a Microsoft licensee.
Complainant, on the other hand, considering that it has the burden of proving that the
respondent/s is/are liable for the offense charged, has not presented any evidence that
the items seized namely the 59 boxes of MS-DOS 6.0 software are counterfeit.
The certification issued on December 12, 1995 by Christopher Austin, Corporate Attorney
of the complainant, does not disclose this fact. For the term used by Mr. Austin was that
the items seized were unauthorized.
The question now, is whether the products were unauthorized because TMTC has no
license to sell Microsoft products, or is it unauthorized because R.R. Donnelley has no
authority to sell said products here in the Philippines.
44
Still, to determine the culpability of the respondents, complainant should present evidence
that what is in the possession of the respondent/s is/are counterfeit Microsoft products.
This it failed to do.23
Microsoft sought reconsideration and prayed for an ocular inspection of the articles seized
from respondents. However, in the Resolution of 3 December 1999, Assistant Chief State
Prosecutor Buenafe, upon State Prosecutor Ong’s recommendation, denied Microsoft’s
motion.24
Microsoft appealed to the Office of the DOJ Secretary. In the Resolution of 3 August 2000,
DOJ Undersecretary Regis V. Puno dismissed Microsoft’s appeal.25 Microsoft sought
reconsideration but its motion was denied in the Resolution of 22 December 2000. 26
Hence, this petition. Microsoft contends that:
I. THE DOJ ERRED IN RULING THAT THE LIABILITY OF RESPONDENTS WAS ONLY CIVIL
IN NATURE BY VIRTUE OF THE LICENSE AGREEMENT.
II. THE DOJ MISAPPRECIATED THE FACT THAT RESPONDENTS WERE ENGAGED IN THE
ILLEGAL IMPORTATION, SALE AND DISTRIBUTION OF COUNTERFEIT SOFTWARE AS
EVIDENCED BY THE ITEMS PURCHASED DURING THE TEST-BUY AND THE ITEMS SEIZED
FROM RESPONDENTS’ PREMISES.
III. THE DOJ MISAPPRECIATED THE LAW ON COPYRIGHT INFRINGEMENT AND UNFAIR
COMPETITION.
IV. ONLY TWO OUT OF THE NINE RESPONDENTS BOTHERED TO FILE COUNTER-
AFFIDAVITS; HENCE, THE CHARGES AGAINST SEVEN [RESPONDENTS] REMAIN
UNCONTROVERTED.27
In its Comment, filed by the Solicitor General, the DOJ maintains that it did not commit
grave abuse of discretion in dismissing Microsoft’s complaint.28
For their part, respondents allege in their Comment that Microsoft is guilty of forum-
shopping because its petition in CA-G.R. CV No. 54600 was filed ahead of, and has a
"common interest" with, this petition. On the merits, respondents reiterate their claims in
their motion to quash Search Warrant Nos. 95-684 and 95-685 that the articles seized
from them were either owned by others, purchased from legitimate sources, or not
produced by Microsoft. Respondents also insist that the Agreement entitled Beltron to
"copy and replicate or reproduce" Microsoft products. On the confiscated 2,831 CD-ROMs,
respondents allege that a certain corporation29 left the CD-ROMs with them for
safekeeping. Lastly, respondents claim that there is no proof that the CPU Sacriz and
Samiano bought from them contained pre-installed Microsoft software because the receipt
for the CPU does not indicate "[s]oftware hard disk." 30
In its Reply, Microsoft counters that it is not liable for forum-shopping because its petition
in CA-G.R. CV No. 54600 involved the Orders of the RTC partially quashing Search Warrant
Nos. 95-684 and 95-685 while this petition concerns the DOJ Resolutions dismissing its
complaint against respondents for copyright infringement and unfair competition. On the
merits, Microsoft maintains that respondents should be indicted for copyright
infringement and unfair competition.31
The Issues
The petition raises the following issues:
(1) Whether Microsoft engaged in forum-shopping; and
(2) Whether the DOJ acted with grave abuse of discretion in not finding probable
cause to charge respondents with copyright infringement and unfair
competition.
The Ruling of the Court
The petition has merit.
Microsoft did not Engage in Forum-Shopping
Forum-shopping takes place when a litigant files multiple suits involving the same parties,
either simultaneously or successively, to secure a favorable judgment.32 Thus, it exists
where the elements of litis pendentia are present, namely: (a) identity of parties, or at least
such parties who represent the same interests in both actions; (b) identity of rights
asserted and relief prayed for, the relief being founded on the same facts; and (c) the
identity with respect to the two preceding particulars in the two cases is such that any
judgment that may be rendered in the pending case, regardless of which party is
successful, would amount to res judicata in the other case.33 Forum-shopping is an act of
malpractice because it abuses court processes.34 To check this pernicious practice, Section
5, Rule 7 of the 1997 Rules of Civil Procedure requires the principal party in an initiatory
pleading to submit a certification against forum-shopping.35 Failure to comply with this
requirement is a cause for the dismissal of the case and, in case of willful forum-shopping,
for the imposition of administrative sanctions.
Here, Microsoft correctly contends that it is not liable for forum-shopping. What Microsoft
appealed in CA-G.R. CV No. 54600 were the RTC Orders partially quashing Search Warrant
Nos. 95-684 and 95-685. In the present case, Microsoft is appealing from the DOJ
Resolutions dismissing its complaint against respondents for copyright infringement and
unfair competition. Thus, although the parties in CA-G.R. CV No. 54600 and this petition
are identical, the rights asserted and the reliefs prayed for are not such that the judgment
in CA-G.R. CV No. 54600 does not amount to res judicata in the present case. This renders
forum-shopping impossible here.
45
The DOJ Acted with Grave Abuse of Discretion
in not Finding Probable Cause to Charge Respondents with
Copyright Infringement and Unfair Competition
Generally, this Court is loath to interfere in the prosecutor’s discretion in determining
probable cause36 — unless such discretion is shown to have been abused.37 This case falls
under the exception.
Unlike the higher quantum of proof beyond reasonable doubt required to secure a
conviction, it is the lower standard of probable cause which is applied during the
preliminary investigation to determine whether the accused should be held for trial. This
standard is met if the facts and circumstances incite a reasonable belief that the act or
omission complained of constitutes the offense charged. As we explained in Pilapil v.
Sandiganbayan:38
The term [probable cause] does not mean "actual and positive cause" nor does it import
absolute certainty. It is merely based on opinion and reasonable belief. Thus, a finding of
probable cause does not require an inquiry into whether there is sufficient evidence to
procure a conviction. It is enough that it is believed that the act or omission complained of
constitutes the offense charged. Precisely, there is a trial for the reception of evidence of
the prosecution in support of the charge.
PD 49 and Article 189(1)
Section 539 of PD 49 ("Section 5") enumerates the rights vested exclusively on the
copyright owner. Contrary to the DOJ’s ruling, the gravamen of copyright infringement is
not merely the unauthorized "manufacturing" of intellectual works but rather the
unauthorized performance of any of the acts covered by Section 5. Hence, any person who
performs any of the acts under Section 5 without obtaining the copyright owner’s prior
consent renders himself civilly40 and criminally41 liable for copyright infringement. We
held in Columbia Pictures, Inc. v. Court of Appeals:42
Infringement of a copyright is a trespass on a private domain owned and occupied by the
owner of the copyright, and, therefore, protected by law, and infringement of copyright, or
piracy, which is a synonymous term in this connection, consists in the doing by any person,
without the consent of the owner of the copyright, of anything the sole right to do which
is conferred by statute on the owner of the copyright. (Emphasis supplied)
Significantly, under Section 5(A), a copyright owner is vested with the exclusive right to
"copy, distribute, multiply, [and] sell" his intellectual works.
On the other hand, the elements of unfair competition under Article 189(1)43 of the
Revised Penal Code are:
(a) That the offender gives his goods the general appearance of the goods of
another manufacturer or dealer;
(b) That the general appearance is shown in the (1) goods themselves, or in the
(2) wrapping of their packages, or in the (3) device or words therein, or in (4)
any other feature of their appearance[;]
(c) That the offender offers to sell or sells those goods or gives other persons a
chance or opportunity to do the same with a like purpose[; and]
(d) That there is actual intent to deceive the public or defraud a competitor.44
The element of intent to deceive may be inferred from the similarity of the goods or their
appearance.45
On the Sufficiency of Evidence to
Support a Finding of Probable Cause
Against Respondents
In its pleadings filed with the DOJ, Microsoft invoked three clusters of evidence to support
its complaint against respondents, namely: (1) the 12 CD-ROMs containing Microsoft
software Sacriz and Samiano bought from respondents; (2) the CPU with pre-installed
Microsoft software Sacriz and Samiano also purchased from respondents; and (3) the
2,831 CD-ROMs containing Microsoft software seized from respondents.46 The DOJ, on the
one hand, refused to pass upon the relevance of these pieces of evidence because: (1) the
"obligations between the parties is civil and not criminal" considering that Microsoft
merely sought the issuance of Search Warrant Nos. 95-684 and 95-685 to pressure Beltron
to pay its obligation under the Agreement, and (2) the validity of Microsoft’s termination
of the Agreement must first be resolved by the "proper court." On the other hand, the DOJ
ruled that Microsoft failed to present evidence proving that what were obtained from
respondents were counterfeit Microsoft products.
This is grave abuse of discretion.47
First. Being the copyright and trademark owner of Microsoft software, Microsoft
acted well within its rights in filing the complaint under I.S. No. 96-193 based on
the incriminating evidence obtained from respondents. Hence, it was highly
irregular for the DOJ to hold, based on the RTC Order of 19 July 1996, that
Microsoft sought the issuance of Search Warrant Nos. 95-684 and 95-685, and
by inference, the filing of the complaint under I.S. No. 96-193, merely to pressure
Beltron to pay its overdue royalties to Microsoft. Significantly, in its Decision in
CA-G.R. CV No. 54600 dated 29 November 2001, the Court of Appeals set aside
the RTC Order of 19 July 1996. Respondents no longer contested that ruling
which became final on 27 December 2001.
Second. There is no basis for the DOJ to rule that Microsoft must await a prior
"resolution from the proper court of (sic) whether or not the [Agreement] is still
binding between the parties." Beltron has not filed any suit to question
Microsoft’s termination of the Agreement. Microsoft can neither be expected nor
compelled to wait until Beltron decides to sue before Microsoft can seek
remedies for violation of its intellectual property rights.
46
 Furthermore, some of the counterfeit CD-ROMs bought from respondents were
"installer" CD-ROMs containing Microsoft software only or both Microsoft and
non-Microsoft software. These articles are counterfeit per se because Microsoft
does not (and could not have authorized anyone to) produce such CD-ROMs. The
copying of the genuine Microsoft software to produce these fake CD-ROMs and
their distribution are illegal even if the copier or distributor is a Microsoft
licensee. As far as these installer CD-ROMs are concerned, the Agreement (and
the alleged question on the validity of its termination) is immaterial to the
determination of respondents’ liability for copyright infringement and unfair
competition.
Lastly, Section 10(b)48 of the Agreement provides that Microsoft’s "rights and
remedies" under the contract are "not xxx exclusive and are in addition to any
other rights and remedies provided by law or [the] Agreement." Thus, even if the
Agreement still subsists, Microsoft is not precluded from seeking remedies
under PD 49 and Article 189(1) of the Revised Penal Code to vindicate its rights.
Third. The Court finds that the 12 CD-ROMs ("installer" and "non-installer") and
the CPU with pre-installed Microsoft software Sacriz and Samiano bought from
respondents and the 2,831 Microsoft CD-ROMs seized from respondents suffice
to support a finding of probable cause to indict respondents for copyright
infringement under Section 5(A) in relation to Section 29 of PD 49 for
unauthorized copying and selling of protected intellectual works. The installer
CD-ROMs with Microsoft software, to repeat, are counterfeit per se.On the other
hand, the illegality of the "non-installer" CD-ROMs purchased from respondents
and of the Microsoft software pre-installed in the CPU is shown by the absence
of the standard features accompanying authentic Microsoft products, namely,
the Microsoft end-user license agreements, user’s manuals, registration cards or
certificates of authenticity.
On the 2,831 Microsoft CD-ROMs49 seized from respondents, respondent Beltron, the only
respondent who was party to the Agreement, could not have reproduced them under the
Agreement as the Solicitor General50 and respondents contend. Beltron’s rights51 under
the Agreement were limited to:
(1) the "reproduc[tion] and install[ation of] no more than one copy of
[Microsoft] software on each Customer System hard disk or Read Only Memory
("ROM")"; and
(2) the "distribut[ion] xxx and licens[ing of] copies of the [Microsoft] Product [as
reproduced above] and/or acquired from Authorized Replicator or
Authorized Distributor) in object code form to end users."
The Agreement defines an authorized replicator as "a third party approved by [Microsoft]
which may reproduce and manufacture [Microsoft] Product[s] for [Beltron] xxx."52 An
authorized distributor, on the other hand, is a "third party approved by [Microsoft] from
which [Beltron] may purchase MED53 Product."54 Being a mere reproducer/installer of
one Microsoft software copy on each customer’s hard disk or ROM, Beltron could only have
acquired the hundreds of Microsoft CD-ROMs found in respondents’ possession from
Microsoft distributors or replicators.
However, respondents makes no such claim. What respondents contend is that these CD-
ROMs were left to them for safekeeping. But neither is this claim tenable for lack of
substantiation. Indeed, respondents Keh and Chua, the only respondents who filed
counter-affidavits, did not make this claim in the DOJ. These circumstances give rise to the
reasonable inference that respondents mass-produced the CD-ROMs in question without
securing Microsoft’s prior authorization.
The counterfeit "non-installer" CD-ROMs Sacriz and Samiano bought from respondents
also suffice to support a finding of probable cause to indict respondents for unfair
competition under Article 189(1) of the Revised Penal Code for passing off Microsoft
products. From the pictures of the CD-ROMs’ packaging,55 one cannot distinguish them
from the packaging of CD-ROMs containing genuine Microsoft software. Such replication,
coupled with the similarity of content of these fake CD-ROMs and the CD-ROMs with
genuine Microsoft software, implies intent to deceive.
Respondents’ contention that the 12 CD-ROMs Sacriz and Samiano purchased cannot be
traced to them because the receipt for these articles does not indicate its source is
unavailing. The receipt in question should be taken together with Microsoft’s claim that
Sacriz and Samiano bought the CD-ROMs from respondents.56 Together, these
considerations point to respondents as the vendor of the counterfeit CD-ROMs.
Respondents do not give any reason why the Court should not give credence to Microsoft’s
claim. For the same reason, the fact that the receipt for the CPU does not indicate
"[s]oftware hard disk" does not mean that the CPU had no pre-installed Microsoft
software. Respondents Keh and Chua admit in their counter-affidavit that respondents are
the "source" of the pre-installed MS-DOS software.
WHEREFORE, we GRANT the petition. We SET ASIDE the Resolutions dated 26 October
1999, 3 December 1999, 3 August 2000, and 22 December 2000 of the Department of
Justice.
SO ORDERED.
47
G.R. No. 175769-70 January 19, 2009
ABS-CBN BROADCASTING CORPORATION, Petitioners,
vs.
PHILIPPINE MULTI-MEDIA SYSTEM, INC., CESAR G. REYES, FRANCIS CHUA (ANG
BIAO), MANUEL F. ABELLADA, RAUL B. DE MESA, AND ALOYSIUS M.
COLAYCO, Respondents.
DECISION
YNARES-SANTIAGO, J.:
This petition for review on certiorari1 assails the July 12, 2006 Decision2 of the Court of
Appeals in CA-G.R. SP Nos. 88092 and 90762, which affirmed the December 20, 2004
Decision of the Director-General of the Intellectual Property Office (IPO) in Appeal No. 10-
2004-0002. Also assailed is the December 11, 2006 Resolution3 denying the motion for
reconsideration.
Petitioner ABS-CBN Broadcasting Corporation (ABS-CBN) is licensed under the laws of the
Republic of the Philippines to engage in television and radio broadcasting.4 It broadcasts
television programs by wireless means to Metro Manila and nearby provinces, and by
satellite to provincial stations through Channel 2 on Very High Frequency (VHF) and
Channel 23 on Ultra High Frequency (UHF). The programs aired over Channels 2 and 23
are either produced by ABS-CBN or purchased from or licensed by other producers.
ABS-CBN also owns regional television stations which pattern their programming in
accordance with perceived demands of the region. Thus, television programs shown in
Metro Manila and nearby provinces are not necessarily shown in other provinces.
Respondent Philippine Multi-Media System, Inc. (PMSI) is the operator of Dream
Broadcasting System. It delivers digital direct-to-home (DTH) television via satellite to its
subscribers all over the Philippines. Herein individual respondents, Cesar G. Reyes,
Francis Chua, Manuel F. Abellada, Raul B. De Mesa, and Aloysius M. Colayco, are members
of PMSI’s Board of Directors.
PMSI was granted a legislative franchise under Republic Act No. 86305 on May 7, 1998 and
was given a Provisional Authority by the National Telecommunications Commission (NTC)
on February 1, 2000 to install, operate and maintain a nationwide DTH satellite service.
When it commenced operations, it offered as part of its program line-up ABS-CBN
Channels 2 and 23, NBN, Channel 4, ABC Channel 5, GMA Channel 7, RPN Channel 9, and
IBC Channel 13, together with other paid premium program channels.
However, on April 25, 2001,6 ABS-CBN demanded for PMSI to cease and desist from
rebroadcasting Channels 2 and 23. On April 27, 2001,7 PMSI replied that the
rebroadcasting was in accordance with the authority granted it by NTC and its obligation
under NTC Memorandum Circular No. 4-08-88,8 Section 6.2 of which requires all cable
television system operators operating in a community within Grade “A” or “B” contours to
carry the television signals of the authorized television broadcast stations.9
Thereafter, negotiations ensued between the parties in an effort to reach a settlement;
however, the negotiations were terminated on April 4, 2002 by ABS-CBN allegedly due to
PMSI’s inability to ensure the prevention of illegal retransmission and further rebroadcast
of its signals, as well as the adverse effect of the rebroadcasts on the business operations
of its regional television stations.10
On May 13, 2002, ABS-CBN filed with the IPO a complaint for “Violation of Laws Involving
Property Rights, with Prayer for the Issuance of a Temporary Restraining Order and/or
Writ of Preliminary Injunction,” which was docketed as IPV No. 10-2002-0004. It alleged
that PMSI’s unauthorized rebroadcasting of Channels 2 and 23 infringed on its
broadcasting rights and copyright.
On July 2, 2002, the Bureau of Legal Affairs (BLA) of the IPO granted ABS-CBN’s application
for a temporary restraining order. On July 12, 2002, PMSI suspended its retransmission of
Channels 2 and 23 and likewise filed a petition for certiorari with the Court of Appeals,
which was docketed as CA-G.R. SP No. 71597.
Subsequently, PMSI filed with the BLA a Manifestation reiterating that it is subject to the
must-carry rule under Memorandum Circular No. 04-08-88. It also submitted a letter
dated December 20, 2002 of then NTC Commissioner Armi Jane R. Borje to PMSI stating
as follows:
This refers to your letter dated December 16, 2002 requesting for regulatory guidance
from this Commission in connection with the application and coverage of NTC
Memorandum Circular No. 4-08-88, particularly Section 6 thereof, on mandatory carriage
of television broadcast signals, to the direct-to-home (DTH) pay television services of
Philippine Multi-Media System, Inc. (PMSI).
Preliminarily, both DTH pay television and cable television services are broadcast
services, the only difference being the medium of delivering such services (i.e. the former
by satellite and the latter by cable). Both can carry broadcast signals to the remote areas,
thus enriching the lives of the residents thereof through the dissemination of social,
economic, educational information and cultural programs.
The DTH pay television services of PMSI is equipped to provide nationwide DTH satellite
services. Concededly, PMSI’s DTH pay television services covers very much wider areas in
terms of carriage of broadcast signals, including areas not reachable by cable television
services thereby providing a better medium of dissemination of information to the public.
In view of the foregoing and the spirit and intent of NTC memorandum Circular No.
4-08-88, particularly section 6 thereof, on mandatory carriage of television
broadcast signals, DTH pay television services should be deemed covered by such
NTC Memorandum Circular.
For your guidance. (Emphasis added)11
48
On August 26, 2003, PMSI filed another Manifestation with the BLA that it received a letter
dated July 24, 2003 from the NTC enjoining strict and immediate compliance with the
must-carry rule under Memorandum Circular No. 04-08-88, to wit:
Dear Mr. Abellada:
Last July 22, 2003, the National Telecommunications Commission (NTC) received a letter
dated July 17, 2003 from President/COO Rene Q. Bello of the International Broadcasting
Corporation (IBC-Channel 13) complaining that your company, Dream Broadcasting
System, Inc., has cut-off, without any notice or explanation whatsoever, to air the programs
of IBC-13, a free-to-air television, to the detriment of the public.
We were told that, until now, this has been going on.
Please be advised that as a direct broadcast satellite operator, operating a direct-
to-home (DTH) broadcasting system, with a provisional authority (PA) from the
NTC, your company, along with cable television operators, are mandated to strictly
comply with the existing policy of NTC on mandatory carriage of television
broadcast signals as provided under Memorandum Circular No. 04-08-88, also
known as the Revised Rules and Regulations Governing Cable Television System in
the Philippines.
This mandatory coverage provision under Section 6.2 of said Memorandum
Circular, requires all cable television system operators, operating in a community
within the Grade “A” or “B” contours to “must-carry” the television signals of the
authorized television broadcast stations, one of which is IBC-13. Said directive
equally applies to your company as the circular was issued to give consumers and
the public a wider access to more sources of news, information, entertainment and
other programs/contents.
This Commission, as the governing agency vested by laws with the jurisdiction,
supervision and control over all public services, which includes direct broadcast satellite
operators, and taking into consideration the paramount interest of the public in general,
hereby directs you to immediately restore the signal of IBC-13 in your network programs,
pursuant to existing circulars and regulations of the Commission.
For strict compliance. (Emphasis added)12
Meanwhile, on October 10, 2003, the NTC issued Memorandum Circular No. 10-10-2003,
entitled “Implementing Rules and Regulations Governing Community Antenna/Cable
Television (CATV) and Direct Broadcast Satellite (DBS) Services to Promote Competition
in the Sector.” Article 6, Section 8 thereof states:
As a general rule, the reception, distribution and/or transmission by any CATV/DBS
operator of any television signals without any agreement with or authorization from
program/content providers are prohibited.
On whether Memorandum Circular No. 10-10-2003 amended Memorandum Circular No.
04-08-88, the NTC explained to PMSI in a letter dated November 3, 2003 that:
To address your query on whether or not the provisions of MC 10-10-2003 would have
the effect of amending the provisions of MC 4-08-88 on mandatory carriage of television
signals, the answer is in the negative.
xxxx
The Commission maintains that, MC 4-08-88 remains valid, subsisting and enforceable.
Please be advised, therefore, that as duly licensed direct-to-home satellite television
service provider authorized by this Commission, your company continues to be
bound by the guidelines provided for under MC 04-08-88, specifically your
obligation under its mandatory carriage provisions, in addition to your obligations
under MC 10-10-2003. (Emphasis added)
Please be guided accordingly.13
On December 22, 2003, the BLA rendered a decision 14 finding that PMSI infringed the
broadcasting rights and copyright of ABS-CBN and ordering it to permanently cease and
desist from rebroadcasting Channels 2 and 23.
On February 6, 2004, PMSI filed an appeal with the Office of the Director-General of the
IPO which was docketed as Appeal No. 10-2004-0002. On December 23, 2004, it also filed
with the Court of Appeals a “Motion to Withdraw Petition; Alternatively, Memorandum of
the Petition for Certiorari” in CA-G.R. SP No. 71597, which was granted in a resolution
dated February 17, 2005.
On December 20, 2004, the Director-General of the IPO rendered a decision15 in favor of
PMSI, the dispositive portion of which states:
WHEREFORE, premises considered, the instant appeal is hereby GRANTED. Accordingly,
Decision No. 2003-01 dated 22 December 2003 of the Director of Bureau of Legal Affairs
is hereby REVERSED and SET ASIDE.
Let a copy of this Decision be furnished the Director of the Bureau of Legal Affairs for
appropriate action, and the records be returned to her for proper disposition. The
Documentation, Information and Technology Transfer Bureau is also given a copy for
library and reference purposes.
SO ORDERED.16
Thus, ABS-CBN filed a petition for review with prayer for issuance of a temporary
restraining order and writ of preliminary injunction with the Court of Appeals, which was
docketed as CA-G.R. SP No. 88092.
49
On July 18, 2005, the Court of Appeals issued a temporary restraining order. Thereafter,
ABS-CBN filed a petition for contempt against PMSI for continuing to rebroadcast Channels
2 and 23 despite the restraining order. The case was docketed as CA- G.R. SP No. 90762.
On November 14, 2005, the Court of Appeals ordered the consolidation of CA-G.R. SP Nos.
88092 and 90762.
In the assailed Decision dated July 12, 2006, the Court of Appeals sustained the findings of
the Director-General of the IPO and dismissed both petitions filed by ABS-CBN.17
ABS-CBN’s motion for reconsideration was denied, hence, this petition.
ABS-CBN contends that PMSI’s unauthorized rebroadcasting of Channels 2 and 23 is an
infringement of its broadcasting rights and copyright under the Intellectual Property Code
(IP Code);18that Memorandum Circular No. 04-08-88 excludes DTH satellite television
operators; that the Court of Appeals’ interpretation of the must-carry rule violates Section
9 of Article III19 of the Constitution because it allows the taking of property for public use
without payment of just compensation; that the Court of Appeals erred in dismissing the
petition for contempt docketed as CA-G.R. SP No. 90762 without requiring respondents to
file comment.
Respondents, on the other hand, argue that PMSI’s rebroadcasting of Channels 2 and 23 is
sanctioned by Memorandum Circular No. 04-08-88; that the must-carry rule under the
Memorandum Circular is a valid exercise of police power; and that the Court of Appeals
correctly dismissed CA-G.R. SP No. 90762 since it found no need to exercise its power of
contempt.
After a careful review of the facts and records of this case, we affirm the findings of the
Director-General of the IPO and the Court of Appeals.
There is no merit in ABS-CBN’s contention that PMSI violated its broadcaster’s rights
under Section 211 of the IP Code which provides in part:
Chapter XIV
BROADCASTING ORGANIZATIONS
Sec. 211. Scope of Right. - Subject to the provisions of Section 212, broadcasting
organizations shall enjoy the exclusive right to carry out, authorize or prevent any of the
following acts:
211.1. The rebroadcasting of their broadcasts;
xxxx
Neither is PMSI guilty of infringement of ABS-CBN’s copyright under Section 177 of the IP
Code which states that copyright or economic rights shall consist of the exclusive right to
carry out, authorize or prevent the public performance of the work (Section 177.6), and
other communication to the public of the work (Section 177.7).20
Section 202.7 of the IP Code defines broadcasting as “the transmission by wireless means
for the public reception of sounds or of images or of representations thereof; such
transmission by satellite is also ‘broadcasting’ where the means for decrypting are
provided to the public by the broadcasting organization or with its consent.”
On the other hand, rebroadcasting as defined in Article 3(g) of the International
Convention for the Protection of Performers, Producers of Phonograms and Broadcasting
Organizations, otherwise known as the 1961 Rome Convention, of which the Republic of
the Philippines is a signatory, 21 is “the simultaneous broadcasting by one broadcasting
organization of the broadcast of another broadcasting organization.”
The Director-General of the IPO correctly found that PMSI is not engaged in
rebroadcasting and thus cannot be considered to have infringed ABS-CBN’s broadcasting
rights and copyright, thus:
That the Appellant’s [herein respondent PMSI] subscribers are able to view Appellee’s
[herein petitioner ABS-CBN] programs (Channels 2 and 23) at the same time that the latter
is broadcasting the same is undisputed. The question however is, would the Appellant in
doing so be considered engaged in broadcasting. Section 202.7 of the IP Code states that
broadcasting means
“the transmission by wireless means for the public reception of sounds or of images or of
representations thereof; such transmission by satellite is also ‘broadcasting’ where the
means for decrypting are provided to the public by the broadcasting organization or with
its consent.”
Section 202.7 of the IP Code, thus, provides two instances wherein there is broadcasting,
to wit:
1. The transmission by wireless means for the public reception of sounds or of
images or of representations thereof; and
2. The transmission by satellite for the public reception of sounds or of images
or of representations thereof where the means for decrypting are provided to
the public by the broadcasting organization or with its consent.
It is under the second category that Appellant’s DTH satellite television service must be
examined since it is satellite-based. The elements of such category are as follows:
1. There is transmission of sounds or images or of representations thereof;
2. The transmission is through satellite;
3. The transmission is for public reception; and
50
 4. The means for decrypting are provided to the public by the broadcasting
organization or with its consent.
It is only the presence of all the above elements can a determination that the DTH is
broadcasting and consequently, rebroadcasting Appellee’s signals in violation of Sections
211 and 177 of the IP Code, may be arrived at.
Accordingly, this Office is of the view that the transmission contemplated under Section
202.7 of the IP Code presupposes that the origin of the signals is the broadcaster. Hence, a
program that is broadcasted is attributed to the broadcaster. In the same manner, the
rebroadcasted program is attributed to the rebroadcaster.
In the case at hand, Appellant is not the origin nor does it claim to be the origin of the
programs broadcasted by the Appellee. Appellant did not make and transmit on its own
but merely carried the existing signals of the Appellee. When Appellant’s subscribers view
Appellee’s programs in Channels 2 and 23, they know that the origin thereof was the
Appellee.
Aptly, it is imperative to discern the nature of broadcasting. When a broadcaster transmits,
the signals are scattered or dispersed in the air. Anybody may pick-up these signals. There
is no restriction as to its number, type or class of recipients. To receive the signals, one is
not required to subscribe or to pay any fee. One only has to have a receiver, and in case of
television signals, a television set, and to tune-in to the right channel/frequency. The
definition of broadcasting, wherein it is required that the transmission is wireless, all the
more supports this discussion. Apparently, the undiscriminating dispersal of signals in the
air is possible only through wireless means. The use of wire in transmitting signals, such
as cable television, limits the recipients to those who are connected. Unlike wireless
transmissions, in wire-based transmissions, it is not enough that one wants to be
connected and possesses the equipment. The service provider, such as cable television
companies may choose its subscribers.
The only limitation to such dispersal of signals in the air is the technical capacity of the
transmitters and other equipment employed by the broadcaster. While the broadcaster
may use a less powerful transmitter to limit its coverage, this is merely a business strategy
or decision and not an inherent limitation when transmission is through cable.
Accordingly, the nature of broadcasting is to scatter the signals in its widest area of
coverage as possible. On this score, it may be said that making public means that
accessibility is undiscriminating as long as it [is] within the range of the transmitter and
equipment of the broadcaster. That the medium through which the Appellant carries the
Appellee’s signal, that is via satellite, does not diminish the fact that it operates and
functions as a cable television. It remains that the Appellant’s transmission of signals via
its DTH satellite television service cannot be considered within the purview of
broadcasting. x x x
xxxx
This Office also finds no evidence on record showing that the Appellant has provided
decrypting means to the public indiscriminately. Considering the nature of this case, which
is punitive in fact, the burden of proving the existence of the elements constituting the acts
punishable rests on the shoulder of the complainant.
Accordingly, this Office finds that there is no rebroadcasting on the part of the Appellant
of the Appellee’s programs on Channels 2 and 23, as defined under the Rome Convention.22
Under the Rome Convention, rebroadcasting is “the simultaneous broadcasting by one
broadcasting organization of the broadcast of another broadcasting organization.” The
Working Paper23 prepared by the Secretariat of the Standing Committee on Copyright and
Related Rights defines broadcasting organizations as “entities that take the financial and
editorial responsibility for the selection and arrangement of, and investment in, the
transmitted content.”24 Evidently, PMSI would not qualify as a broadcasting organization
because it does not have the aforementioned responsibilities imposed upon broadcasting
organizations, such as ABS-CBN.
ABS-CBN creates and transmits its own signals; PMSI merely carries such signals which
the viewers receive in its unaltered form. PMSI does not produce, select, or determine the
programs to be shown in Channels 2 and 23. Likewise, it does not pass itself off as the
origin or author of such programs. Insofar as Channels 2 and 23 are concerned, PMSI
merely retransmits the same in accordance with Memorandum Circular 04-08-88. With
regard to its premium channels, it buys the channels from content providers and transmits
on an as-is basis to its viewers. Clearly, PMSI does not perform the functions of a
broadcasting organization; thus, it cannot be said that it is engaged in rebroadcasting
Channels 2 and 23.
The Director-General of the IPO and the Court of Appeals also correctly found that PMSI’s
services are similar to a cable television system because the services it renders fall under
cable “retransmission,” as described in the Working Paper, to wit:
(G) Cable Retransmission
47. When a radio or television program is being broadcast, it can be retransmitted to new
audiences by means of cable or wire. In the early days of cable television, it was mainly
used to improve signal reception, particularly in so-called “shadow zones,” or to distribute
the signals in large buildings or building complexes. With improvements in technology,
cable operators now often receive signals from satellites before retransmitting them in an
unaltered form to their subscribers through cable.
48. In principle, cable retransmission can be either simultaneous with the broadcast over-
the-air or delayed (deferred transmission) on the basis of a fixation or a reproduction of a
fixation. Furthermore, they might be unaltered or altered, for example through
replacement of commercials, etc. In general, however, the term “retransmission”
seems to be reserved for such transmissions which are both simultaneous and
unaltered.
51
49. The Rome Convention does not grant rights against unauthorized cable
retransmission. Without such a right, cable operators can retransmit both domestic and
foreign over the air broadcasts simultaneously to their subscribers without permission
from the broadcasting organizations or other rightholders and without obligation to pay
remuneration.25 (Emphasis added)
Thus, while the Rome Convention gives broadcasting organizations the right to authorize
or prohibit the rebroadcasting of its broadcast, however, this protection does not extend
to cable retransmission. The retransmission of ABS-CBN’s signals by PMSI – which
functions essentially as a cable television – does not therefore constitute rebroadcasting
in violation of the former’s intellectual property rights under the IP Code.
It must be emphasized that the law on copyright is not absolute. The IP Code provides that:
Sec. 184. Limitations on Copyright. -
184.1. Notwithstanding the provisions of Chapter V, the following acts shall not constitute
infringement of copyright:
xxxx
(h) The use made of a work by or under the direction or control of the Government, by the
National Library or by educational, scientific or professional institutions where such use
is in the public interest and is compatible with fair use;
The carriage of ABS-CBN’s signals by virtue of the must-carry rule in Memorandum
Circular No. 04-08-88 is under the direction and control of the government though the
NTC which is vested with exclusive jurisdiction to supervise, regulate and control
telecommunications and broadcast services/facilities in the Philippines.26 The imposition
of the must-carry rule is within the NTC’s power to promulgate rules and regulations, as
public safety and interest may require, to encourage a larger and more effective use of
communications, radio and television broadcasting facilities, and to maintain effective
competition among private entities in these activities whenever the Commission finds it
reasonably feasible.27 As correctly observed by the Director-General of the IPO:
Accordingly, the “Must-Carry Rule” under NTC Circular No. 4-08-88 falls under the
foregoing category of limitations on copyright. This Office agrees with the Appellant
[herein respondent PMSI] that the “Must-Carry Rule” is in consonance with the principles
and objectives underlying Executive Order No. 436,28 to wit:
The Filipino people must be given wider access to more sources of news, information,
education, sports event and entertainment programs other than those provided for by
mass media and afforded television programs to attain a well informed, well-versed and
culturally refined citizenry and enhance their socio-economic growth:
WHEREAS, cable television (CATV) systems could support or supplement the services
provided by television broadcast facilities, local and overseas, as the national information
highway to the countryside.29
The Court of Appeals likewise correctly observed that:
[T]he very intent and spirit of the NTC Circular will prevent a situation whereby station
owners and a few networks would have unfettered power to make time available only to
the highest bidders, to communicate only their own views on public issues, people, and to
permit on the air only those with whom they agreed – contrary to the state policy that the
(franchise) grantee like the petitioner, private respondent and other TV station owners,
shall provide at all times sound and balanced programming and assist in the functions of
public information and education.
This is for the first time that we have a structure that works to accomplish explicit state
policy goals.30
Indeed, intellectual property protection is merely a means towards the end of making
society benefit from the creation of its men and women of talent and genius. This is the
essence of intellectual property laws, and it explains why certain products of ingenuity
that are concealed from the public are outside the pale of protection afforded by the law.
It also explains why the author or the creator enjoys no more rights than are consistent
with public welfare.31
Further, as correctly observed by the Court of Appeals, the must-carry rule as well as the
legislative franchises granted to both ABS-CBN and PMSI are in consonance with state
policies enshrined in the Constitution, specifically Sections 9,32 17,33 and 2434 of Article II
on the Declaration of Principles and State Policies.35
ABS-CBN was granted a legislative franchise under Republic Act No. 7966, Section 1 of
which authorizes it “to construct, operate and maintain, for commercial purposes and in
the public interest, television and radio broadcasting in and throughout the Philippines x
x x.” Section 4 thereof mandates that it “shall provide adequate public service time to
enable the government, through the said broadcasting stations, to reach the population on
important public issues; provide at all times sound and balanced programming; promote
public participation such as in community programming; assist in the functions of public
information and education x x x.”
PMSI was likewise granted a legislative franchise under Republic Act No. 8630, Section 4
of which similarly states that it “shall provide adequate public service time to enable the
government, through the said broadcasting stations, to reach the population on important
public issues; provide at all times sound and balanced programming; promote public
participation such as in community programming; assist in the functions of public
information and education x x x.” Section 5, paragraph 2 of the same law provides that “the
radio spectrum is a finite resource that is a part of the national patrimony and the use
thereof is a privilege conferred upon the grantee by the State and may be withdrawn
anytime, after due process.”
52
In Telecom. & Broadcast Attys. of the Phils., Inc. v. COMELEC,36 the Court held that a
franchise is a mere privilege which may be reasonably burdened with some form of public
service. Thus:
All broadcasting, whether by radio or by television stations, is licensed by the government.
Airwave frequencies have to be allocated as there are more individuals who want to
broadcast than there are frequencies to assign. A franchise is thus a privilege subject,
among other things, to amendment by Congress in accordance with the constitutional
provision that “any such franchise or right granted . . . shall be subject to amendment,
alteration or repeal by the Congress when the common good so requires.”
xxxx
Indeed, provisions for COMELEC Time have been made by amendment of the franchises of
radio and television broadcast stations and, until the present case was brought, such
provisions had not been thought of as taking property without just compensation. Art. XII,
§11 of the Constitution authorizes the amendment of franchises for “the common good.”
What better measure can be conceived for the common good than one for free air time for
the benefit not only of candidates but even more of the public, particularly the voters, so
that they will be fully informed of the issues in an election? “[I]t is the right of the viewers
and listeners, not the right of the broadcasters, which is paramount.”
Nor indeed can there be any constitutional objection to the requirement that broadcast
stations give free air time. Even in the United States, there are responsible scholars who
believe that government controls on broadcast media can constitutionally be instituted to
ensure diversity of views and attention to public affairs to further the system of free
expression. For this purpose, broadcast stations may be required to give free air time to
candidates in an election. Thus, Professor Cass R. Sunstein of the University of Chicago Law
School, in urging reforms in regulations affecting the broadcast industry, writes:
xxxx
In truth, radio and television broadcasting companies, which are given franchises, do not
own the airwaves and frequencies through which they transmit broadcast signals and
images. They are merely given the temporary privilege of using them. Since a franchise is
a mere privilege, the exercise of the privilege may reasonably be burdened with the
performance by the grantee of some form of public service. x x x37
There is likewise no merit to ABS-CBN’s claim that PMSI’s carriage of its signals is for a
commercial purpose; that its being the country’s top broadcasting company, the
availability of its signals allegedly enhances PMSI’s attractiveness to potential
customers;38 or that the unauthorized carriage of its signals by PMSI has created
competition between its Metro Manila and regional stations.
ABS-CBN presented no substantial evidence to prove that PMSI carried its signals for
profit; or that such carriage adversely affected the business operations of its regional
stations. Except for the testimonies of its witnesses,[39] no studies, statistical data or
information have been submitted in evidence.
Administrative charges cannot be based on mere speculation or conjecture. The
complainant has the burden of proving by substantial evidence the allegations in the
complaint.40 Mere allegation is not evidence, and is not equivalent to proof.41
Anyone in the country who owns a television set and antenna can receive ABS-CBN’s
signals for free. Other broadcasting organizations with free-to-air signals such as GMA-7,
RPN-9, ABC-5, and IBC-13 can likewise be accessed for free. No payment is required to
view the said channels42 because these broadcasting networks do not generate revenue
from subscription from their viewers but from airtime revenue from contracts with
commercial advertisers and producers, as well as from direct sales.
In contrast, cable and DTH television earn revenues from viewer subscription. In the case
of PMSI, it offers its customers premium paid channels from content providers like Star
Movies, Star World, Jack TV, and AXN, among others, thus allowing its customers to go
beyond the limits of “Free TV and Cable TV.”43 It does not advertise itself as a local channel
carrier because these local channels can be viewed with or without DTH television.
Relevantly, PMSI’s carriage of Channels 2 and 23 is material in arriving at the ratings and
audience share of ABS-CBN and its programs. These ratings help commercial advertisers
and producers decide whether to buy airtime from the network. Thus, the must-carry rule
is actually advantageous to the broadcasting networks because it provides them with
increased viewership which attracts commercial advertisers and producers.
On the other hand, the carriage of free-to-air signals imposes a burden to cable and DTH
television providers such as PMSI. PMSI uses none of ABS-CBN’s resources or equipment
and carries the signals and shoulders the costs without any recourse of
charging.44 Moreover, such carriage of signals takes up channel space which can otherwise
be utilized for other premium paid channels.
There is no merit to ABS-CBN’s argument that PMSI’s carriage of Channels 2 and 23
resulted in competition between its Metro Manila and regional stations. ABS-CBN is free
to decide to pattern its regional programming in accordance with perceived demands of
the region; however, it cannot impose this kind of programming on the regional viewers
who are also entitled to the free-to-air channels. It must be emphasized that, as a national
broadcasting organization, one of ABS-CBN’s responsibilities is to scatter its signals to the
widest area of coverage as possible. That it should limit its signal reach for the sole
purpose of gaining profit for its regional stations undermines public interest and deprives
the viewers of their right to access to information.
Indeed, television is a business; however, the welfare of the people must not be sacrificed
in the pursuit of profit. The right of the viewers and listeners to the most diverse choice of
programs available is paramount.45 The Director-General correctly observed, thus:
The “Must-Carry Rule” favors both broadcasting organizations and the public. It prevents
cable television companies from excluding broadcasting organization especially in those
places not reached by signal. Also, the rule prevents cable television companies from
depriving viewers in far-flung areas the enjoyment of programs available to city viewers.
In fact, this Office finds the rule more burdensome on the part of the cable television
53
companies. The latter carries the television signals and shoulders the costs without any
recourse of charging. On the other hand, the signals that are carried by cable television
companies are dispersed and scattered by the television stations and anybody with a
television set is free to pick them up.
With its enormous resources and vaunted technological capabilities, Appellee’s [herein
petitioner ABS-CBN] broadcast signals can reach almost every corner of the archipelago.
That in spite of such capacity, it chooses to maintain regional stations, is a business
decision. That the “Must-Carry Rule” adversely affects the profitability of maintaining such
regional stations since there will be competition between them and its Metro Manila
station is speculative and an attempt to extrapolate the effects of the rule. As discussed
above, Appellant’s DTH satellite television services is of limited subscription. There was
not even a showing on part of the Appellee the number of Appellant’s subscribers in one
region as compared to non-subscribing television owners. In any event, if this Office is to
engage in conjecture, such competition between the regional stations and the Metro
Manila station will benefit the public as such competition will most likely result in the
production of better television programs.”46
All told, we find that the Court of Appeals correctly upheld the decision of the IPO Director-
General that PMSI did not infringe on ABS-CBN’s intellectual property rights under the IP
Code. The findings of facts of administrative bodies charged with their specific field of
expertise, are afforded great weight by the courts, and in the absence of substantial
showing that such findings are made from an erroneous estimation of the evidence
presented, they are conclusive, and in the interest of stability of the governmental
structure, should not be disturbed.47
Moreover, the factual findings of the Court of Appeals are conclusive on the parties and
are not reviewable by the Supreme Court. They carry even more weight when the Court of
Appeals affirms the factual findings of a lower fact-finding body,48 as in the instant case.
There is likewise no merit to ABS-CBN’s contention that the Memorandum Circular
excludes from its coverage DTH television services such as those provided by PMSI.
Section 6.2 of the Memorandum Circular requires all cable television system operators
operating in a community within Grade “A” or “B” contours to carry the television signals
of the authorized television broadcast stations.49 The rationale behind its issuance can be
found in the whereas clauses which state:
Whereas, Cable Television Systems or Community Antenna Television (CATV) have shown
their ability to offer additional programming and to carry much improved broadcast
signals in the remote areas, thereby enriching the lives of the rest of the population
through the dissemination of social, economic, educational information and cultural
programs;
Whereas, the national government supports the promotes the orderly growth of the Cable
Television industry within the framework of a regulated fee enterprise, which is a
hallmark of a democratic society;
Whereas, public interest so requires that monopolies in commercial mass media shall be
regulated or prohibited, hence, to achieve the same, the cable TV industry is made part of
the broadcast media;
Whereas, pursuant to Act 3846 as amended and Executive Order 205 granting the National
Telecommunications Commission the authority to set down rules and regulations in order
to protect the public and promote the general welfare, the National Telecommunications
Commission hereby promulgates the following rules and regulations on Cable Television
Systems;
The policy of the Memorandum Circular is to carry improved signals in remote areas for
the good of the general public and to promote dissemination of information. In line with
this policy, it is clear that DTH television should be deemed covered by the Memorandum
Circular. Notwithstanding the different technologies employed, both DTH and cable
television have the ability to carry improved signals and promote dissemination of
information because they operate and function in the same way.
In its December 20, 2002 letter,50 the NTC explained that both DTH and cable television
services are of a similar nature, the only difference being the medium of delivering such
services. They can carry broadcast signals to the remote areas and possess the capability
to enrich the lives of the residents thereof through the dissemination of social, economic,
educational information and cultural programs. Consequently, while the Memorandum
Circular refers to cable television, it should be understood as to include DTH television
which provides essentially the same services.
In Eastern Telecommunications Philippines, Inc. v. International Communication
Corporation,51 we held:
The NTC, being the government agency entrusted with the regulation of activities coming
under its special and technical forte, and possessing the necessary rule-making power to
implement its objectives, is in the best position to interpret its own rules, regulations and
guidelines. The Court has consistently yielded and accorded great respect to the
interpretation by administrative agencies of their own rules unless there is an error of law,
abuse of power, lack of jurisdiction or grave abuse of discretion clearly conflicting with the
letter and spirit of the law.52
With regard to the issue of the constitutionality of the must-carry rule, the Court finds that
its resolution is not necessary in the disposition of the instant case. One of the essential
requisites for a successful judicial inquiry into constitutional questions is that the
resolution of the constitutional question must be necessary in deciding the
case.53 In Spouses Mirasol v. Court of Appeals,54 we held:
As a rule, the courts will not resolve the constitutionality of a law, if the controversy can
be settled on other grounds. The policy of the courts is to avoid ruling on constitutional
questions and to presume that the acts of the political departments are valid, absent a clear
and unmistakable showing to the contrary. To doubt is to sustain. This presumption is
based on the doctrine of separation of powers. This means that the measure had first been
54
carefully studied by the legislative and executive departments and found to be in accord
with the Constitution before it was finally enacted and approved.55
The instant case was instituted for violation of the IP Code and infringement of ABS-CBN’s
broadcasting rights and copyright, which can be resolved without going into the
constitutionality of Memorandum Circular No. 04-08-88. As held by the Court of Appeals,
the only relevance of the circular in this case is whether or not compliance therewith
should be considered manifestation of lack of intent to commit infringement, and if it is,
whether such lack of intent is a valid defense against the complaint of petitioner. 56
It bears stressing that the proceedings for punishment of indirect contempt are criminal
in nature. The modes of procedure and rules of evidence adopted in contempt proceedings
are similar in nature to those used in criminal prosecutions. 63 While it may be argued that
the Court of Appeals should have ordered respondents to comment, the issue has been
rendered moot in light of our ruling on the merits. To order respondents to comment and
have the Court of Appeals conduct a hearing on the contempt charge when the main case
has already been disposed of in favor of PMSI would be circuitous. Where the issues have
become moot, there is no justiciable controversy, thereby rendering the resolution of the
same of no practical use or value.64

The records show that petitioner assailed the constitutionality of Memorandum Circular WHEREFORE, the petition is DENIED. The July 12, 2006 Decision of the Court of Appeals
No. 04-08-88 by way of a collateral attack before the Court of Appeals. In Philippine in CA-G.R. SP Nos. 88092 and 90762, sustaining the findings of the Director-General of the
National Bank v. Palma,57 we ruled that for reasons of public policy, the constitutionality Intellectual Property Office and dismissing the petitions filed by ABS-CBN Broadcasting
of a law cannot be collaterally attacked. A law is deemed valid unless declared null and Corporation, and the December 11, 2006 Resolution denying the motion for
void by a competent court; more so when the issue has not been duly pleaded in the trial reconsideration, are AFFIRMED.
court.58
SO ORDERED.
As a general rule, the question of constitutionality must be raised at the earliest
opportunity so that if not raised in the pleadings, ordinarily it may not be raised in the
trial, and if not raised in the trial court, it will not be considered on appeal.59 In Philippine
Veterans Bank v. Court of Appeals,60 we held:

We decline to rule on the issue of constitutionality as all the requisites for the exercise of
judicial review are not present herein. Specifically, the question of constitutionality
will not be passed upon by the Court unless, at the first opportunity, it is properly
raised and presented in an appropriate case, adequately argued, and is necessary
to a determination of the case, particularly where the issue of constitutionality is
the very lis mota presented.x x x61

Finally, we find that the dismissal of the petition for contempt filed by ABS-CBN is in order.

Indirect contempt may either be initiated (1) motu proprio by the court by issuing an order
or any other formal charge requiring the respondent to show cause why he should not be
punished for contempt or (2) by the filing of a verified petition, complying with the
requirements for filing initiatory pleadings.62

ABS-CBN filed a verified petition before the Court of Appeals, which was docketed CA G.R.
SP No. 90762, for PMSI’s alleged disobedience to the Resolution and Temporary
Restraining Order, both dated July 18, 2005, issued in CA-G.R. SP No. 88092. However,
after the cases were consolidated, the Court of Appeals did not require PMSI to comment
on the petition for contempt. It ruled on the merits of CA-G.R. SP No. 88092 and ordered
the dismissal of both petitions.

ABS-CBN argues that the Court of Appeals erred in dismissing the petition for contempt
without having ordered respondents to comment on the same. Consequently, it would
have us reinstate CA-G.R. No. 90762 and order respondents to show cause why they should
not be held in contempt.

55
G.R. No. 195956 March 11, 2015
ABS-CBN CORPORATION, Petitioner,
vs.
FELIPE GOZON, GILBERTO R. DUAVIT, JR., MARISSA L. FLORES, JESSICA A. SORO,
GRACE DELA PENA-REYES, JOHN OLIVER T. MANALASTAS, JOHN DOES AND JANE
DOES, Respondents.
DECISION
LEONEN, J.:
The main issue in this case is whether there is probable cause to charge respondents with
infringement under Republic Act No. 8293, otherwise known as the Intellectual Property
Code. The resolution of this issue requires clarification of the concept of "copyrightable
material" in relation to material that is rebroadcast live as a news story. We are also asked
to rule on whether criminal prosecution for infringement of copyrightable material, such
as live rebroadcast, can be negated by good faith.
ABS-CBN Corporation (ABS-CBN) filed the Petition for Review on Certiorari1 to assail the
November 9, 2010 Decision2 and the March 3, 2011 Resolution3 of the Court of Appeals.
The Court of Appeals reinstated the Department of Justice Resolution dated August 1, 2005
that ordered the withdrawal of the Information finding probable cause for respondents’
violation of Sections 1774 and 2115 of the Intellectual Property Code.6 Respondents are
officers and employees of GMA Network, Inc. (GMA-7). They are: Felipe Gozon (Gozon),
GMA-7 President; Gilberto R. Duavit, Jr. (Duavit, Jr.), Executive Vice-President; Marissa L.
Flores (Flores), Vice-President for New and Public Affairs; Jessica A. Soho (Soho), Director
for News; Grace Dela Peña-Reyes (Dela Peña-Reyes), Head of News and Public Affairs; John
Oliver Manalastas (Manalastas), Program Manager; and others.
The controversy arose from GMA-7’s news coverage on the homecoming of Filipino
overseas worker and hostage victim Angelo dela Cruz on July 22, 2004. As summarized by
the Court of Appeals:
Overseas Filipino worker Angelo dela Cruz was kidnapped by Iraqi militants and as a
condition for his release, a demand was made for the withdrawal of Filipino troops in Iraq.
After negotiations, he was released by his captors and was scheduled to return to the
country in the afternoon of 22 July 2004. Occasioned by said homecoming and the public
interest it generated, both . . . GMA Network, Inc. . . . and [petitioner] made their respective
broadcasts and coverage of the live event.7
ABS-CBN "conducted live audio-video coverage of and broadcasted the arrival of Angelo
dela Cruz at the Ninoy Aquino International Airport (NAIA) and the subsequent press
conference."8 ABS-CBN allowed Reuters Television Service (Reuters) to air the footages it
had taken earlier under a special embargo agreement.9
ABS-CBN alleged that under the special embargo agreement, any of the footages it took
would be for the "use of Reuter’s international subscribers only, and shall be considered
and treated by Reuters under ‘embargo’ against use by other subscribers in the
Philippines. . . . [N]o other Philippine subscriber of Reuters would be allowed to use ABS-
CBN footage without the latter’s consent."10
GMA-7, to which Gozon, Duavit, Jr., Flores, Soho, Dela Peña-Reyes, and Manalastas are
connected, "assigned and stationed news reporters and technical men at the NAIA for its
live broadcast and non-live news coverage of the arrival of dela Cruz."11 GMA-7 subscribes
to both Reuters and Cable News Network (CNN). It received a live video feed of the
coverage of Angelo dela Cruz’s arrival from Reuters.12
GMA-7 immediately carried the live news feed in its program "Flash Report," together with
its live broadcast.13Allegedly, GMA-7 did not receive any notice or was not aware that
Reuters was airing footages of ABS-CBN.14 GMA-7’s news control room staff saw neither
the "No Access Philippines" notice nor a notice that the video feed was under embargo in
favor of ABS-CBN.15
On August 13, 2004, ABS-CBN filed the Complaint for copyright infringement under
Sections 17716 and 21117 of the Intellectual Property Code.18
On December 3, 2004, Assistant City Prosecutor Dindo Venturanza issued the
Resolution19 finding probable cause to indict Dela Peña-Reyes and
Manalastas.20 Consequently, the Information21 for violation of the Intellectual Property
Code was filed on December 17, 2004. It reads:
That on or about the 22nd of July 2004, in Quezon City, Philippines, the above-named
accused, conspiring together, confederating with and mutually helping each other, being
the Head of News Operations and the Program Manager, respectively, for the News and
Public Affairs Department of GMA Network, Inc., did then and there, willfully, unlawfully
and feloniously use and broadcast the footage of the arrival of Angelo [d]ela Cruz at the
Ninoy Aquino International Airport of which ABS-CBN holds the exclusive ownership and
copyright by then and there using, airing, and broadcasting the said footage in its news
program "FLASH REPORT" without first obtaining the consent or authority of said
copyright owner, to their damage and prejudice.
Contrary to law.22
On January 4, 2005, respondents filed the Petition for Review before the Department of
Justice.23 In the Resolution (Gonzalez Resolution) dated August 1, 2005, Department of
Justice Secretary Raul M. Gonzalez (Secretary Gonzalez) ruled in favor of respondents and
held that good faith may be raised as a defense in the case.24 The dispositive portion of the
Resolution reads:
WHEREFORE, THE PETITION FOR REVIEW FILED BY GMA-7 in I.S. No. 04-10458 is
considered meritorious and is hereby GRANTED. This case is hereby Dismissed, the
resolution of the City Prosecutor of Quezon City is hereby reversed and the same is
ordered to withdraw the information if any and report action taken to this office within
ten (10) days.25 (Emphasis in the original)
56
Both parties moved for reconsideration of the Gonzalez Resolution.26
Meanwhile, on January 19, 2005, the trial court granted the Motion to Suspend
Proceedings filed earlier by Dela Peña-Reyes and Manalastas.27 The trial court Order
reads:
Perusing the motion, the court finds that a petition for review was filed with the
Department of Justice on January 5, 2005 as confirmed by the public prosecutor. Under
Section 11 (c), Rule 116 of the Rules of Criminal Procedure, once a petition for review is
filed with the Department of Justice, a suspension of the criminal proceedings may be
allowed by the court.
Accordingly, to allow the Department of Justice the opportunity to act on said petition for
review, let the proceedings on this case be suspended for a period of sixty (60) days
counted from January 5, 2005, the date the petition was filed with the Department of
Justice. The arraignment of the accused on February 1, 2005 is accordingly cancelled. Let
the arraignment be rescheduled to March 8, 2005 at 8:30 a.m. The accused through
counsel are notified in open court.
SO ORDERED.28
On June 29, 2010, Department of Justice Acting Secretary Alberto C. Agra (Secretary Agra)
issued the Resolution (Agra Resolution) that reversed the Gonzalez Resolution and found
probable cause to charge Dela Peña-Reyes and Manalastas for violation of the Intellectual
Property Code.29 Secretary Agra also found probable cause to indict Gozon, Duavit, Jr.,
Flores, and Soho for the same violation.30 He ruled that:
[w]hile good faith may be a defense in copyright infringement, the same is a disputable
presumption that must be proven in a full-blown trial. Disputable presumptions may be
contradicted and overcome by other evidence. Thus, a full-blown trial is the proper venue
where facts, issues and laws are evaluated and considered. The very purpose of trial is to
allow a party to present evidence to overcome the disputable presumptions involved. 31
The dispositive portion of the Agra Resolution provides:
WHEREFORE, premises considered:
(a) The Motion for Reconsideration filed by appellees ABS-CBN Broadcasting
Corporation (ABS-CBN) of our Resolution promulgated on August 1, 2005
(Resolution No. 364, Series of 2005) and the Petition for Review filed by
complainant-appellant ABS-CBN in I.S. No. 04-10458 on April10, 2006, are
GRANTED and the City Prosecutor of Quezon City is hereby ordered to file the
necessary Information for violation of Section 177 and 211 of Republic Act No.
8293 against GMA-7. Felipe L. Gozon, Gilberto R. Duavit, Jr., Marissa L.Flores,
Jessica A. Soho, Grace Dela Pena-Reyes, John Oliver T. Manalastas[.]
....
SO ORDERED.32 (Emphasis in the original)
Respondents assailed the Agra Resolution through the Petition for Certiorari with prayer
for issuance of a temporary restraining order and/or Writ of Preliminary Injunction on
September 2, 2010 before the Court of Appeals. In the Resolution dated September 13,
2010, the Court of Appeals granted the temporary restraining order preventing the
Department of Justice from enforcing the Agra Resolution.33
On November 9, 2010, the Court of Appeals rendered the Decision granting the Petition
and reversing and setting aside the Agra Resolution.34 The Court of Appeals held that
Secretary Agra committed errors of jurisdiction in issuing the assailed Resolution.
Resolving the issue of copyright infringement, the Court of Appeals said:
Surely, private respondent has a copyright of its news coverage. Seemingly, for airing said
video feed, petitioner GMA is liable under the provisions of the Intellectual Property Code,
which was enacted purposely to protect copyright owners from infringement. However, it
is an admitted fact that petitioner GMA had only aired a five (5) second footage of the
disputed live video feed that it had received from Reuters and CNN as a subscriber. Indeed,
petitioners had no notice of the right of ownership of private respondent over the same.
Without notice of the "No Access Philippines" restriction of the live video feed, petitioner
cannot be faulted for airing a live video feed from Reuters and CNN.
Verily, as aptly opined by Secretary Gonzalez in his earlier Resolution, the act of
petitioners in airing the five (5) second footage was undeniably attended by good faith and
it thus serves to exculpate them from criminal liability under the Code. While the
Intellectual Property Code is a special law, and thus generally categorized as malum
prohibitum, it bears to stress that the provisions of the Code itself do not ipso facto
penalize a person or entity for copyright infringement by the mere fact that one had used
a copyrighted work or material.
Certainly so, in the exercise of one’s moral and economic or copyrights, the very provisions
of Part IV of the Intellectual Property Code provide for the scope and limitations on
copyright protection under Section 184 and in fact permit fair use of copyrighted work
under Section 185. With the aforesaid statutory limitations on one’s economic and
copyrights and the allowable instances where the other persons can legally use a
copyrighted work, criminal culpability clearly attaches only when the infringement had
been knowingly and intentionally committed.35 (Emphasis supplied)
The dispositive portion of the Decision reads:
WHEREFORE, the foregoing considered, the instant petition is hereby GRANTED and the
assailed Resolution dated 29 June 2010 REVERSED and SET ASIDE. Accordingly, the
earlier Resolution dated 1 August 2005, which ordered the withdrawal of the Information
filed, if any, against the petitioners for violation of Sections 177 and 211 of the Intellectual
Property Code, is hereby REINSTATED. No costs.
SO ORDERED.36 (Emphasis in the original)
57
ABS-CBN’s Motion for Reconsideration was denied.37 It then filed its Petition for Review
before this court assailing the Decision and Resolution of the Court of Appeals.38
The issues for this court’s consideration are:
First, whether Secretary Agra committed errors of jurisdiction in the Resolution dated
June 29, 2010 and, therefore, whether a petition for certiorari was the proper remedy in
assailing that Resolution;
Second, whether news footage is copyrightable under the law;
Third, whether there was fair use of the broadcast material;
Fourth, whether lack of knowledge that a material is copyrighted is a defense against
copyright infringement;
Fifth, whether good faith is a defense in a criminal prosecution for violation of the
Intellectual Property Code; and
Lastly, whether the Court of Appeals was correct in overturning Secretary Agra’s finding
of probable cause.
I Court whatever disposition the fiscal may feel should be proper in the case thereafter
The trial court granted respondents’ Motion to Suspend Proceedings and deferred
respondents Dela Peña-Reyes and Manalastas’ arraignment for 60 days in view of the
Petition for Review filed before the Department of Justice.
Rule 116, Section 11 (c) of the Rules of Criminal Procedure allows
the suspension of the accused’s arraignment in certain circumstances only:
SEC. 11. Suspension of arraignment.–Upon motion by the proper party, the arraignment
shall be suspended in the following cases:
(a) The accused appears to be suffering from an unsound mental condition which
effectively renders him unable to fully understand the charge against him and to
plead intelligently thereto. In such case, the court shall order his mental
examination and, if necessary, his confinement for such purpose;
(b) There exists a prejudicial question; and
(c) A petition for review of the resolution of the prosecutor is pending at either
the Department of Justice, or the Office of the President; provided, that the period
of suspension shall not exceed sixty (60) days counted from the filing of the
petition with the reviewing office. (12a) (Emphasis supplied)
In Samson v. Daway,39 this court acknowledged the applicability of Rule 116, Section (c) in
a criminal prosecution for infringement under the Intellectual Property Code. However,
this court emphasized the limits of the order of deferment under the Rule:
While the pendency of a petition for review is a ground for suspension of the arraignment,
the . . . provision limits the deferment of the arraignment to a period of 60 days reckoned
from the filing of the petition with the reviewing office. It follows, therefore, that after the
expiration of said period, the trial court is bound to arraign the accused or to deny the
motion to defer arraignment.40
We clarify that the suspension of the arraignment should always be within the limits
allowed by law. In Crespo v. Judge Mogul,41 this court outlined the effects of filing an
information before the trial court, which includes initiating a criminal action and giving
this court "authority to hear and determine the case":42
The preliminary investigation conducted by the fiscal for the purpose of determining
whether a prima facie case exists warranting the prosecution of the accused is terminated
upon the filing of the information in the proper court. In turn, as above stated, the filing of
said information sets in motion the criminal action against the accused in Court. Should
the fiscal find it proper to conduct a reinvestigation of the case, at such stage, the
permission of the Court must be secured. After such reinvestigation the finding and
recommendations of the fiscal should be submitted to the Court for appropriate action.
While it is true that the fiscal has the quasi judicial discretion to determine whether or not
a criminal case should be filed in court or not, once the case had already been brought to
should be addressed for the consideration of the Court, the only qualification is that the
action of the Court must not impair the substantial rights of the accused or the right of the
People to due process of law.
Whether the accused had been arraigned or not and whether it was due to a
reinvestigation by the fiscal or a review by the Secretary of Justice whereby a motion to
dismiss was submitted to the Court, the Court in the exercise of its discretion may grant
the motion or deny it and require that the trial on the merits proceed for the proper
determination of the case.
However, one may ask, if the trial court refuses to grant the motion to dismiss filed by the
fiscal upon the directive of the Secretary of Justice will there not be a vacuum in the
prosecution? A state prosecutor to handle the case cannot possibly be designated by the
Secretary of Justice who does not believe that there is a basis for prosecution nor can the
fiscal be expected to handle the prosecution of the case thereby defying the superior order
of the Secretary of Justice. The answer is simple. The role of the fiscal or prosecutor as We
all know is to see that justice is done and not necessarily to secure the conviction of the
person accused before the Courts. Thus, in spite of his opinion to the contrary, it is the duty
of the fiscal to proceed with the presentation of evidence of the prosecution to the Court
to enable the Court to arrive at its own independent judgment as to whether the accused
should be convicted or acquitted. The fiscal should not shirk from the responsibility of
appearing for the People of the Philippines even under such circumstances much less
should he abandon the prosecution of the case leaving it to the hands of a private
prosecutor for then the entire proceedings will be null and void. The least that the fiscal
58
should do is to continue to appear for the prosecution although he may turn over the
presentation of the evidence to the private prosecutor but still under his direction and
control.
The rule therefore in this jurisdiction is that once a complaint or information is filed in
Court any disposition of the case as to its dismissal or the conviction or acquittal of the
accused rests in the sound discretion of the Court. Although the fiscal retains the direction
and control of the prosecution of criminal cases even while the case is already in Court he
cannot impose his opinion on the trial court. The Court is the best and sole judge on what
to do with the case before it. The determination of the case is within its exclusive
jurisdiction and competence. A motion to dismiss the case filed by the fiscal should be
addressed to the Court who has the option to grant or deny the same. It does not matter if
this is done before or after the arraignment of the accused or that the motion was filed
after a reinvestigation or upon instructions of the Secretary of Justice who reviewed the
records of the investigation.43 (Emphasis supplied, citations omitted)
The doctrine in Crespo was reiterated in Mayor Balindong v. Court of Appeals, 44 where
this court reminded the Department of Justice Secretary to refrain from entertaining
petitions for review when the case is already pending with this court:
[I]n order to avoid a situation where the opinion of the Secretary of Justice who reviewed
the action of the fiscal may be disregarded by the trial court, the Secretary of Justice
should, as far as practicable, refrain from entertaining a petition for review or appeal from
the action of the fiscal, when the complaint or information has already been filed in the
Court. The matter should be left entirely for the determination of the Court. 45
The trial court should have proceeded with respondents Dela Peña-Reyes and Manalastas’
arraignment after the 60-day period from the filing of the Petition for Review before the
Department of Justice on March 8, 2005. It was only on September 13, 2010 that the
temporary restraining order was issued by the Court of Appeals. The trial court erred
when it did not act on the criminal case during the interim period. It had full control and
direction of the case. As Judge Mogul reasoned in denying the motion to dismiss in Crespo,
failure to proceed with the arraignment "disregards the requirements of due process [and]
erodes the Court’s independence and integrity."46
II
According to ABS-CBN, the Court of Appeals erred in finding that: a motion for
reconsideration was not necessary before a petition for certiorari could be filed; the
Department of Justice Secretary committed errors of jurisdiction since the Agra Resolution
was issued within its authority and in accordance with settled laws and jurisprudence;
and respondents were not liable for copyright infringement.
In its assailed Decision, the Court of Appeals found that respondents committed a
procedural error when they failed to file a motion for reconsideration before filing the
Petition for Certiorari. However, the Court of Appeals held that a motion for
reconsideration was unnecessary since the Agra Resolution was a patent nullity and it
would have been useless under the circumstances: Given that a reading of the assailed
Resolution and the instant records readily reveals errors of jurisdiction on the part of
respondent Secretary, direct judicial recourse is warranted under the circumstances.
Aside from the fact that said Resolution is a patent nullity having been issued in grave
abuse of discretion amounting to lack or excess of jurisdiction, the filing of a motion for
reconsideration is evidently useless on account of the fact that the issues and arguments
before this Court have already been duly raised and accordingly delved into by respondent
Secretary in his disposition of the petition a quo.47 (Emphasis in the original)
In Elma v. Jacobi,48 this court ruled that a petition for certiorari under Rule 65 of the Rules
of Court is proper when assailing adverse resolutions of the Department of Justice
stemming from the determination of probable cause.49However, grave abuse of discretion
must be alleged.50
In Sanrio Company Limited v. Lim,51 this court stressed the prosecutor’s role in
determining probable cause. Judicial review will only lie when it is shown that the
prosecutor acted with grave abuse of discretion amounting to lack or excess of
jurisdiction:
A prosecutor alone determines the sufficiency of evidence that will establish probable
cause justifying the filing of a criminal information against the respondent. By way of
exception, however, judicial review is allowed where respondent has clearly established
that the prosecutor committed grave abuse of discretion. Otherwise stated, such review is
appropriate only when the prosecutor has exercised his discretion in an arbitrary,
capricious, whimsical or despotic manner by reason of passion or personal hostility,
patent and gross enough to amount to an evasion of a positive duty or virtual refusal to
perform a duty enjoined by law.52 (Citations omitted)
Grave abuse of discretion refers to:
such capricious and whimsical exercise of judgment as is equivalent to lack of jurisdiction.
The abuse of discretion must be grave as where the power is exercised in an arbitrary or
despotic manner by reason of passion or personal hostility and must be so patent and
gross as to amount to an evasion of positive duty or to a virtual refusal to perform the duty
enjoined by or to act at all in contemplation of law.53
Resorting to certiorari requires that there be there be "no appeal, or any plain, speedy, and
adequate remedy in the ordinary course of law[,]"54 such as a motion for reconsideration.
Generally, "a motion for reconsideration is a condition sine qua non before a petition for
certiorari may lie, its purpose being to grant an opportunity for the [tribunal or officer] to
correct any error attributed to it by a re-examination of the legal and factual circumstances
of the case."55 However, exceptions to the rule exist:
(a) where the order is a patent nullity, as where the Court a quo had no jurisdiction; (b)
where the questions raised in the certiorari proceeding have been duly raised and passed
upon by the lower court, or are the same as those raised and passed upon in the lower
court; (c) where there is an urgent necessity for the resolution of the question and any
further delay would prejudice the interests of the Government or of the petitioner or the
subject matter of the action is perishable; (d) where, under the circumstances, a motion
59
for reconsideration would be useless; (e) where petitioner was deprived of due process
and there is extreme urgency for relief; (f) where, in a criminal case, relief from an order
of arrest is urgent and the granting of such relief by the trial Court is improbable; (g) where
the proceedings in the lower court are a nullity for lack of due process; (h) where the
proceedings was ex parte or in which the petitioner had no opportunity to object; and (i)
where the issue raised is one purely of law or where public interest is
involved.56(Emphasis in the original, citations omitted)
As argued by respondents, "[a] second motion for reconsideration would have been
useless and futile since the D[epartment] [of] J[ustice] had already passed upon the same
issues twice."57 Equally pressing under the circumstances was the need to resolve the
matter, as the Information’s filing would lead to respondents’ imminent arrest.58
Moreover, Department of Justice Department Circular No. 70 dated July 3, 2000, or the
2000 NPS Rules on Appeal, provides that no second motion for reconsideration of the
Department of Justice Secretary’s resolution shall be entertained:
SECTION 13. Motion for reconsideration. The aggrieved party may file a motion for
reconsideration within a non-extendible period of ten (10) days from receipt of the
resolution on appeal, furnishing the adverse party and the Prosecution Office concerned
with copies thereof and submitting proof of such service. No second or further motion for
reconsideration shall be entertained.
The Agra Resolution was the result of respondents’ Motion for Reconsideration assailing
the Gonzalez Resolution. To file a motion for reconsideration of the Agra Resolution would
be superfluous. Respondents were, therefore, correct in filing the Petition for Certiorari of
the Agra Resolution before the Court of Appeals.
III
The Court of Appeals ruled that Secretary Agra committed errors of jurisdiction, which
then required the grant of the writ of certiorari:
So viewed, by ordering the filing of information without proof that probable cause exists
to charge petitioners with a crime, respondent Secretary clearly committed an error of
jurisdiction thus warranting the issuance of the writ of certiorari. Surely, probable cause
cannot be had when the very provisions of the statute exculpates criminal liability in cases
classified as fair use of copyrighted materials. The fact that they admittedly used the
Reuters live video feed is not, as a matter of course, tantamount to copyright infringement
that would justify the filing of an information against the petitioners.59
Error of jurisdiction must be distinguished from error of judgment:
A line must be drawn between errors of judgment and errors of jurisdiction. An error of
judgment is one which the court may commit in the exercise of its jurisdiction. An error of
jurisdiction renders an order or judgment void or voidable. Errors of jurisdiction are
reviewable on certiorari; errors of judgment, only by appeal.60
In People v. Hon. Sandiganbayan61:
An error of judgment is one which the court may commit in the exercise of its jurisdiction.
An error of jurisdictionis one where the act complained of was issued by the court without
or in excess of jurisdiction, or with grave abuse of discretion, which is tantamount to lack
or in excess of jurisdiction and which error is correctible only by the extraordinary writ of
certiorari. Certiorari will not be issued to cure errors of the trial court in its appreciation
of the evidence of the parties, or its conclusions anchored on the said findings and its
conclusions of law.62 (Emphasis supplied)
This court has adopted a deferential attitude towards review of the executive’s finding of
probable cause.63 This is based "not only upon the respect for the investigatory and
[prosecutorial] powers granted by the Constitution to the executive department but upon
practicality as well."64 Review of the Department of Justice Secretary’s decision or
resolution will be allowed only when grave abuse of discretion is alleged:
The full discretionary authority to determine probable cause in a preliminary
investigation to ascertain sufficient ground for the filing of information rests with the
executive branch. Hence, judicial review of the resolution of the Secretary of Justice is
limited to a determination whether there has been a grave abuse of discretion amounting
to lack or excess of jurisdiction. Courts cannot substitute the executive branch’s judgment.
....
It is only where the decision of the Justice Secretary is tainted with grave abuse of
discretion amounting to lack or excess of jurisdiction that the Court of Appeals may take
cognizance of the case in a petition for certiorari under Rule 65 of the Revised Rules of
Civil Procedure. The Court of Appeals decision may then be appealed to this Court by way
of a petition for review on certiorari.65 (Emphasis supplied, citations omitted)
In this case, it must be shown that Secretary Agra exceeded his authority when he reversed
the findings of Secretary Gonzalez. This court must determine whether there is probable
cause to file an information for copyright infringement under the Intellectual Property
Code.
IV
Probable cause pertains to "such facts as are sufficient to engender a well-founded belief
that a crime has been committed and that respondent is probably guilty
thereof."66 Preliminary investigation is the inquiry or proceeding to determine whether
there is probable cause.67
In Webb v. De Leon,68 this court ruled that determination of probable cause during
preliminary investigation does not require trial-like evaluation of evidence since existence
of probable cause does not equate to guilt:
60
It ought to be emphasized that in determining probable cause, the average man weighs
facts and circumstances without resorting to the calibrations of our technical rules of
evidence of which his knowledge is nil. Rather, he relies on the calculus of common sense
of which all reasonable men have an abundance.
....
. . . A finding of probable cause merely binds over the suspect to stand trial. It is not a
pronouncement of guilt.69
In Reyes v. Pearlbank Securities, Inc.,70 finding probable cause is not equivalent to finding
with moral certainty that the accused committed the crime:
A finding of probable cause needs only to rest on evidence showing that more likely than
not a crime has been committed by the suspects. It need not be based on clear and
convincing evidence of guilt, not on evidence establishing guilt beyond reasonable doubt,
and definitely not on evidence establishing absolute certainty of guilt. In determining
probable cause, the average man weighs facts and circumstances without resorting to the
calibrations of the rules of evidence of which he has no technical knowledge. He relies on
common sense.71
During preliminary investigation, a public prosecutor does not adjudicate on the parties’
rights, obligations, or liabilities.72
In the recent case of Estrada v. Office of the Ombudsman, et al.,73 we reiterated Webb on
the determination of probable cause during preliminary investigation and traced the
history of probable cause as borrowed from American jurisprudence:
The purpose in determining probable cause is to make sure that the courts are not clogged
with weak cases that will only be dismissed, as well as to spare a person from the travails
of a needless prosecution.
....
. . . In the United States, from where we borrowed the concept of probable cause, the
prevailing definition of probable cause is this:
In dealing with probable cause, however, as the very name implies, we deal with
probabilities. These are not technical; they are the factual and practical considerations of
everyday life on which reasonable and prudent men, not legal technicians, act. The
standard of proof is accordingly correlative to what must be proved.
"The substance of all the definitions" of probable cause "is a reasonable ground for belief
of guilt." McCarthy v. De Armit, 99 Pa. St. 63, 69, quoted with approval in the Carroll
opinion. 267 U. S. at 161. And this "means less than evidence which would justify
condemnation" or conviction, as Marshall, C. J., said for the Court more than a century ago
in Locke v. United States, 7 Cranch 339, 348. Since Marshall’s time, at any rate, it has come
to mean more than bare suspicion: Probable cause exists where "the facts and
circumstances within their [the officers’] knowledge and of which they had reasonably
trustworthy information [are] sufficient in themselves to warrant a man of reasonable
caution in the belief that" an offense has been or is being committed. Carroll v. United
States, 267 U. S. 132, 162.
These long-prevailing standards seek to safeguard citizens from rash and unreasonable
interferences with privacy and from unfounded charges of crime. They also seek to give
fair leeway for enforcing the law in the community’s protection. Because many situations
which confront officers in the course of executing their duties are more or less ambiguous,
room must be allowed for some mistakes on their part. But the mistakes must be those of
reasonable men, acting on facts leading sensibly to their conclusions of probability. The
rule of probable cause is a practical, non technical conception affording the best
compromise that has been found for accommodating these often opposing interests.
Requiring more would unduly hamper law enforcement. To allow less would be to leave
law-abiding citizens at the mercy of the officers’ whim or caprice.
In the Philippines, there are four instances in the Revised Rules of Criminal Procedure
where probable cause is needed to be established:
(1) In Sections 1 and 3 of Rule 112: By the investigating officer, to determine
whether there is sufficient ground to engender a well-founded belief that a crime
has been committed and the respondent is probably guilty thereof, and should
be held for trial. A preliminary investigation is required before the filing of a
complaint or information for an offense where the penalty prescribed by law is
at least four years, two months and one day without regard to the fine;
(2) In Sections 6 and 9 of Rule 112: By the judge, to determine whether a warrant
of arrest or a commitment order, if the accused has already been arrested, shall
be issued and that there is a necessity of placing the respondent under
immediate custody in order not to frustrate the ends of justice;
(3) In Section 5(b) of Rule 113:By a peace officer or a private person making a
warrantless arrest when an offense has just been committed, and he has
probable cause to believe based on personal knowledge of facts or circumstances
that the person to be arrested has committed it; and
(4) In Section 4 of Rule 126: By the judge, to determine whether a search warrant
shall be issued, and only upon probable cause in connection with one specific
offense to be determined personally by the judge after examination under oath
or affirmation of the complainant and the witnesses he may produce, and
particularly describing the place to be searched and the things to be seized which
may be anywhere in the Philippines.
In all these instances, the evidence necessary to establish probable cause is based only on
the likelihood, or probability, of guilt.74
61
Estrada also highlighted that a "[p]reliminary investigation is not part of the criminal
action. It is merely preparatory and may even be disposed of in certain situations."75
To determine whether there is probable cause that respondents committed copyright
infringement, a review of the elements of the crime, including the existing facts, is
required.
V has been likened to a ghost in that it "must be spoken to a little before it will explain
ABS-CBN claims that news footage is subject to copyright and prohibited use of
copyrighted material is punishable under the Intellectual Property Code. It argues that the
new footage is not a "newsworthy event" but "merely an account of the arrival of Angelo
dela Cruz in the Philippines — the latter being the newsworthy event":76
To be clear, it is the event itself or the arrival of Angelo dela Cruz which is not
copyrightable because that is the newsworthy event. However, any footage created from
the event itself, in this case the arrival of Angelo dela Cruz, are intellectual creations which
are copyrightable. Thus, the footage created by ABS-CBN during the arrival of Angelo dela
Cruz, which includes the statements of Dindo Amparo, are copyrightable and protected by
the laws on copyright.77
On the other hand, respondents argue that ABS-CBN’s news footage of Angelo dela Cruz’s
arrival is not copyrightable or subject to protection:
Certainly, the arrival of Angelo [d]ela Cruz, which aroused public attention and the
consciousness of the Filipino people with regard to their countrymen, OFWs working in
foreign countries and how the Philippine government responds to the issues concerning
them, is "news". There is no ingenuity or inventiveness added in the said news footage.
The video footage of this "news" is not copyrightable by any legal standard as facts of
everyday life depicted in the news and items of press information is part of the public
domain.78 (Emphasis in the original)
The news footage is copyrightable.
The Intellectual Property Code is clear about the rights afforded to authors of various
kinds of work. Under the Code, "works are protected by the sole fact of their creation,
irrespective of their mode or form of expression, as well as of their content, quality and
purpose."79 These include "[a]udiovisual works and cinematographic works and works
produced by a process analogous to cinematography or any process for making
audiovisual recordings."80
Contrary to the old copyright law,81 the Intellectual Property Code does not require
registration of the work to fully recover in an infringement suit. Nevertheless, both
copyright laws provide that copyright for a work is acquired by an intellectual creator
from the moment of creation.82
It is true that under Section 175 of the Intellectual Property Code, "news of the day and
other miscellaneous facts having the character of mere items of press information" are
considered unprotected subject matter.83 However, the Code does not state that
expression of the news of the day, particularly when it underwent a creative process, is
not entitled to protection.
An idea or event must be distinguished from the expression of that idea or event. An idea
itself."84 It is a concept that has eluded exact legal definition.85To get a better grasp of the
idea/expression dichotomy, the etymology of the term "idea" is traced:
The word "idea" is derived from a Greek term, meaning "a form, the look or appearance of
a thing as opposed to its reality, from idein, to see." In the Timaeus, Plato saw ideas as
eternal paradigms, independent objects to which the divine demiurge looks as patterns in
forming the world. This was later modified to the religious conception of ideas as the
thoughts of God. "It is not a very long step to extend the term ‘idea’ to cover patterns,
blueprints, or plans in anyone's mind, not only in God’s." The word entered the French and
English vernacular in the 1600s and possessed two meanings. The first was the Platonic
meaning of a perfect exemplar or paradigm. The second, which probably has its origin with
Descartes, is of a mental concept or image or, more broadly, any object of the mind when
it is active. Objects of thought may exist independently. The sun exists (probably) before
and after you think of it. But it is also possible to think of things that have never existed,
such as a unicorn or Pegasus. John Locke defined ideas very comprehensively, to include:
all objects of the mind. Language was a way of translating the invisible, hidden ideas that
make up a person’s thoughts into the external, perceptible world of articulate sounds and
visible written symbols that others can understand.86 (Citations omitted) There is no one
legal definition of "idea" in this jurisdiction. The term "idea" is mentioned only once in the
Intellectual Property Code.87 In Joaquin, Jr. v. Drilon,88 a television format (i.e., a dating
show format) is not copyrightable under Section 2 of Presidential Decree No. 49; 89 it is a
mere concept:
P.D. No. 49, §2, in enumerating what are subject to copyright, refers to finished works and
not to concepts. The copyright does not extend to an idea, procedure, process, system,
method of operation, concept, principle, or discovery, regardless of the form in which it is
described, explained, illustrated, or embodied in such work. Thus, the new
INTELLECTUAL PROPERTY CODE OF THE PHILIPPINES provides:
SEC. 175. Unprotected Subject Matter.—Notwithstanding the provisions of Sections 172
and 173, no protection shall extend, under this law, to any idea, procedure, system, method
or operation, concept, principle, discovery or mere data as such, even if they are expressed,
explained, illustrated or embodied in a work; news of the day and other miscellaneous
facts having the character of mere items of press information; or any official text of a
legislative, administrative or legal nature, as well as any official translation thereof.
What then is the subject matter of petitioners’ copyright? This Court is of the opinion that
petitioner BJPI’s copyright covers audio-visual recordings of each episode of Rhoda and
Me, as falling within the class of works mentioned in P.D. 49, §2(M),to wit:
62
Cinematographic works and works produced by a process analogous to cinematography
or any process for making audio-visual recordings;
The copyright does not extend to the general concept or format of its dating game show.
Accordingly, by the very nature of the subject of petitioner BJPI’s copyright, the
investigating prosecutor should have the opportunity to compare the videotapes of the
two shows.
Mere description by words of the general format of the two dating game shows is
insufficient; the presentation of the master videotape in evidence was indispensable to the
determination of the existence of probable cause. As aptly observed by respondent
Secretary of Justice:
A television show includes more than mere words can describe because it involves a whole
spectrum of visuals and effects, video and audio, such that no similarity or dissimilarity
may be found by merely describing the general copyright/format of both dating game
shows.90 (Emphasis supplied, citations omitted)
Ideas can be either abstract or concrete.91 It is the concrete ideas that are generally
referred to as expression:
The words "abstract" and "concrete" arise in many cases dealing with the idea/expression
distinction. The Nichols court, for example, found that the defendant’s film did not infringe
the plaintiff’s play because it was "too generalized an abstraction from what plaintiff wrote
. . . only a part of her ideas." In Eichel v. Marcin, the court said that authors may exploit
facts, experiences, field of thought, and general ideas found in another’s work, "provided
they do not substantially copy a concrete form, in which the circumstances and ideas have
been developed, arranged, and put into shape." Judge Hand, in National Comics
Publications, Inc. v. Fawcett Publications, Inc. said that "no one infringes, unless he
descends so far into what is concrete as to invade. . . ‘expression.’"
These cases seem to be distinguishing "abstract" ideas from "concrete" tangible
embodiments of these abstractions that may be termed expression. However, if the
concrete form of a work means more than the literal expression contained within it, it is
difficult to determine what is meant by "concrete." Webster's New Twentieth Century
Dictionary of the English Language provides several meanings for the word concrete.
These include: "having a material, perceptible existence; of, belonging to, or characterized
by things or events that can be perceived by the senses; real; actual;" and "referring to a
particular; specific, not general or abstract."92
In Pearl & Dean (Phil.), Incorporated v. Shoemart, Incorporated,93 this court, citing the
American case of Baker v. Selden, distinguished copyright from patents and illustrated
how an idea or concept is different from the expression of that idea:
In the oft-cited case of Baker vs. Selden, the United States Supreme Court held that only
the expression of an idea is protected by copyright, not the idea itself. In that case, the
plaintiff held the copyright of a book which expounded on a new accounting system he had
developed. The publication illustrated blank forms of ledgers utilized in such a system. The
defendant reproduced forms similar to those illustrated in the plaintiff’s copyrighted book.
The US Supreme Court ruled that:
"There is no doubt that a work on the subject of book-keeping, though only explanatory of
well known systems, may be the subject of a copyright; but, then, it is claimed only as a
book. x x x But there is a clear distinction between the books, as such, and the art, which it
is, intended to illustrate. The mere statement of the proposition is so evident that it
requires hardly any argument to support it. The same distinction may be predicated of
every other art as well as that of bookkeeping.
A treatise on the composition and use of medicines, be they old or new; on the construction
and use of ploughs or watches or churns; or on the mixture and application of colors for
painting or dyeing; or on the mode of drawing lines to produce the effect of perspective,
would be the subject of copyright; but no one would contend that the copyright of the
treatise would give the exclusive right to the art or manufacture described therein. The
copyright of the book, if not pirated from other works, would be valid without regard to
the novelty or want of novelty of its subject matter. The novelty of the art or thing
described or explained has nothing to do with the validity of the copyright. To give to the
author of the book an exclusive property in the art described therein, when no
examination of its novelty has ever been officially made, would be a surprise and a fraud
upon the public. That is the province of letters patent, not of copyright. The claim to an
invention of discovery of an art or manufacture must be subjected to the examination of
the Patent Office before an exclusive right therein can be obtained; and a patent from the
government can only secure it.
The difference between the two things, letters patent and copyright, may be illustrated by
reference to the subjects just enumerated. Take the case of medicines. Certain mixtures
are found to be of great value in the healing art. If the discoverer writes and publishes a
book on the subject (as regular physicians generally do), he gains no exclusive right to the
manufacture and sale of the medicine; he gives that to the public. If he desires to acquire
such exclusive right, he must obtain a patent for the mixture as a new art, manufacture or
composition of matter. He may copyright his book, if he pleases; but that only secures to
him the exclusive right of printing and publishing his book. So of all other inventions or
discoveries.
The copyright of a book on perspective, no matter how many drawings and illustrations it
may contain, gives no exclusive right to the modes of drawing described, though they may
never have been known or used before. By publishing the book without getting a patent
for the art, the latter is given to the public.
....
Now, whilst no one has a right to print or publish his book, or any material part thereof, as
a book intended to convey instruction in the art, any person may practice and use the art
itself which he has described and illustrated therein. The use of the art is a totally different
thing from a publication of the book explaining it. The copyright of a book on bookkeeping
cannot secure the exclusive right to make, sell and use account books prepared upon the
plan set forth in such book. Whether the art might or might not have been patented, is a
question, which is not before us. It was not patented, and is open and free to the use of the
63
public. And, of course, in using the art, the ruled lines and headings of accounts must
necessarily be used as incident to it.
The plausibility of the claim put forward by the complainant in this case arises from a
confusion of ideas produced by the peculiar nature of the art described in the books, which
have been made the subject of copyright. In describing the art, the illustrations and
diagrams employed happened to correspond more closely than usual with the actual work
performed by the operator who uses the art. x x x The description of the art in a book,
though entitled to the benefit of copyright, lays no foundation for an exclusive claim to the
art itself. The object of the one is explanation; the object of the other is use. The former
may be secured by copyright. The latter can only be secured, if it can be secured at all, by
letters patent."94 (Emphasis supplied)
News or the event itself is not copyrightable. However, an event can be captured and
presented in a specific medium. As recognized by this court in Joaquin, television "involves
a whole spectrum of visuals and effects, video and audio."95 News coverage in television
involves framing shots, using images, graphics, and sound effects.96 It involves creative
process and originality. Television news footage is an expression of the news.
In the United States, a line of cases dwelt on the possibility of television newscasts to be
copyrighted.97 Most of these cases focused on private individuals’ sale or resale of tapes of
news broadcasts. Conflicting decisions were rendered by its courts. Noteworthy, however,
is the District Court’s pronouncement in Pacific & Southern Co. v. Duncan,98 which involves
a News Monitoring Service’s videotaping and sale of WXIA-TV’s news broadcasts:
It is axiomatic that copyright protection does not extend to news "events" or the facts or
ideas which are the subject of news reports. Miller v. Universal City Studios, Inc., 650 F.2d
1365, 1368 (5th Cir. 1981); Wainwright Securities, Inc. v. Wall Street Transcript Corp., 558
F.2d 91, 95 (2d Cir. 1977), cert. denied, 434 U.S. 1014, 98 S.Ct. 730, 54 L.Ed.2d 759 (1978).
But it is equally well-settled that copyright protection does extend to the reports
themselves, as distinguished from the substance of the information contained in the
reports. Wainwright, 558 F.2d at 95; International News Service v. Associated Press, 248
U.S. 215, 39 S.Ct. 68, 63 L.Ed. 211 (1918); see Chicago Record-Herald Co. v. Tribune Assn.,
275 F. 797 (7th Cir.1921); 1 Nimmer on Copyright § 2.11[B] (1983). Copyright protects
the manner of expression of news reports, "the particular form or collocation of words in
which the writer has communicated it." International News Service, 248 U.S. at 234, 39
S.Ct. at 70. Such protection extends to electronic news reports as well as written reports.
See17 U.S.C. § 102(a) (5), (6), and (7); see also Iowa State University Research
Foundations, Inc. v. American Broadcasting Cos., 621 F.2d 57, 61 (2d Cir.
1980).99 (Emphasis supplied)
The idea/expression dichotomy has long been subject to debate in the field of copyright
law. Abolishing the dichotomy has been proposed, in that non-protectibility of ideas
should be re-examined, if not stricken, from decisions and the law:
If the underlying purpose of the copyright law is the dual one expressed by Lord Mansfield,
the only excuse for the continuance of the idea-expression test as a judicial standard for
determining protectibility would be that it was or could be a truly useful method of
determining the proper balance between the creator’s right to profit from his work and
the public's right that the "progress of the arts not be retarded."
. . . [A]s used in the present-day context[,] the dichotomy has little or no relationship to the
policy which it should effectuate. Indeed, all too often the sweeping language of the courts
regarding the non-protectibility of ideas gives the impression that this is of itself a policy
of the law, instead of merely a clumsy and outdated tool to achieve a much more basic
end.100
The idea/expression dichotomy is a complex matter if one is trying to determine whether
a certain material is a copy of another.101 This dichotomy would be more relevant in
determining, for instance, whether a stage play was an infringement of an author’s book
involving the same characters and setting. In this case, however, respondents admitted
that the material under review — which is the subject of the controversy — is an exact
copy of the original. Respondents did not subject ABS-CBN’s footage to any editing of their
own. The news footage did not undergo any transformation where there is a need to track
elements of the original.
Having established the protectible nature of news footage, we now discuss the
concomitant rights accorded to authors. The authors of a work are granted several rights
in relation to it, including copyright or economic rights:
SECTION 177. Copyright or Economic Rights. — Subject to the provisions of Chapter VIII,
copyright or economic rights shall consist of the exclusive right to carry out, authorize or
prevent the following acts:
177.1. Reproduction of the work or substantial portion of the work;
177.2. Dramatization, translation, adaptation, abridgment, arrangement or other
transformation of the work;
177.3. The first public distribution of the original and each copy of the work by
sale or other forms of transfer of ownership;
177.4. Rental of the original or a copy of an audiovisual or cinematographic work,
a work embodied in a sound recording, a computer program, a compilation of
data and other materials or a musical work in graphic form, irrespective of the
ownership of the original or the copy which is the subject of the rental; (n)
177.5. Public display of the original or a copy of the work;
177.6. Public performance of the work; and
177.7. Other communication to the public of the work.(Sec. 5, P. D. No. 49a)
(Emphasis supplied)
64
Under Section 211 of the Intellectual Property Code, broadcasting organizations are
granted a more specific set of rights called related or neighboring rights:
SECTION 211. Scope of Right. — Subject to the provisions of Section 212, broadcasting
organizations shall enjoy the exclusive right to carry out, authorize or prevent any of the
following acts:
211.1. The rebroadcasting of their broadcasts;
211.2. The recording in any manner, including the making of films or the use of
video tape, of their broadcasts for the purpose of communication to the public of
television broadcasts of the same; and
211.3. The use of such records for fresh transmissions or for fresh recording.
(Sec. 52, P.D. No. 49) (Emphasis supplied)
Section 212 of the Code provides:
CHAPTER XV
LIMITATIONS ON PROTECTION
Section 212. Limitations on Rights. - Sections 203, 208 and 209 shall not apply where the
acts referred to in those Sections are related to:
212.1. The use by a natural person exclusively for his own personal purposes;
212.2. Using short excerpts for reporting current events;
212.3. Use solely for the purpose of teaching or for scientific research; and
212.4. Fair use of the broadcast subject to the conditions under Section 185. (Sec.
44, P.D. No. 49a)
The Code defines what broadcasting is and who broadcasting organizations include:
202.7. "Broadcasting" means the transmission by wireless means for the public
reception of sounds or of images or of representations thereof; such
transmission by satellite is also "broadcasting" where the means for decrypting
are provided to the public by the broadcasting organization or with its consent;
202.8. "Broadcasting organization" shall include a natural person or a juridical
entity duly authorized to engage in broadcasting[.]
Developments in technology, including the process of preserving once ephemeral works
and disseminating them, resulted in the need to provide a new kind of protection as
distinguished from copyright.102 The designation "neighboring rights" was abbreviated
from the phrase "rights neighboring to copyright."103 Neighboring or related rights are of
equal importance with copyright as established in the different conventions covering both
kinds of rights.104
Several treaties deal with neighboring or related rights of copyright.105 The most
prominent of these is the "International Convention for the Protection of Performers,
Producers of Phonograms and Broadcasting Organizations" (Rome Convention).106
The Rome Convention protects the rights of broadcasting organizations in relation to their
broadcasts. Article XIII of the Rome Convention enumerates the minimum rights accorded
to broadcasting organizations:
Article 13
Minimum Rights for Broadcasting Organizations
Broadcasting organisations shall enjoy the right to authorize or prohibit:
(a) the rebroadcasting of their broadcasts;
(b) the fixation of their broadcasts;
(c) the reproduction:
(i) of fixations, made without their consent, of their broadcasts;
(ii) of fixations, made in accordance with the provisions of Article 15,
of their broadcasts, if the reproduction is made for purposes different
from those referred to in those provisions;
(d) the communication to the public of their television broadcasts if such
communication is made in places accessible to the public against payment of an
entrance fee; it shall be a matter for the domestic law of the State where
protection of this right is claimed to determine the conditions under which it may
be exercised.
With regard to the neighboring rights of a broadcasting organization in this jurisdiction,
this court has discussed the difference between broadcasting and rebroadcasting:
Section 202.7 of the IP Code defines broadcasting as "the transmission by wireless means
for the public reception of sounds or of images or of representations thereof; such
transmission by satellite is also ‘broadcasting’ where the means for decrypting are
provided to the public by the broadcasting organization or with its consent."
On the other hand, rebroadcasting as defined in Article 3(g) of the International
Convention for the Protection of Performers, Producers of Phonograms and Broadcasting
65
Organizations, otherwise known as the 1961 Rome Convention, of which the Republic of
the Philippines is a signatory, is "the simultaneous broadcasting by one broadcasting
organization of the broadcast of another broadcasting organization."
....
Under the Rome Convention, rebroadcasting is "the simultaneous broadcasting by one
broadcasting organization of the broadcast of another broadcasting organization." The
Working Paper prepared by the Secretariat of the Standing Committee on Copyright and
Related Rights defines broadcasting organizations as "entities that take the financial and
editorial responsibility for the selection and arrangement of, and investment in, the
transmitted content."107 (Emphasis in the original, citations omitted)
Broadcasting organizations are entitled to several rights and to the protection of these
rights under the Intellectual Property Code. Respondents’ argument that the subject news
footage is not copyrightable is erroneous. The Court of Appeals, in its assailed Decision,
correctly recognized the existence of ABS-CBN’s copyright over the news footage:
Surely, private respondent has a copyright of its news coverage. Seemingly, for airing said
video feed, petitioner GMA is liable under the provisions of the Intellectual Property Code,
which was enacted purposely to protect copyright owners from infringement.108
News as expressed in a video footage is entitled to copyright protection. Broadcasting
organizations have not only copyright on but also neighboring rights over their
broadcasts. Copyrightability of a work is different from fair use of a work for purposes of
news reporting.
VI
ABS-CBN assails the Court of Appeals’ ruling that the footage shown by GMA-7 falls under
the scope of Section 212.2 and 212.4 of the Intellectual Property Code:
The evidence on record, as well as the discussions above, show that the footage used
by[respondents] could hardlybe characterized as a short excerpt, as it was aired over one
and a half minutes.
Furthermore, the footage used does not fall under the contemplation of Section 212.2 of
the Intellectual Property Code. A plain reading of the provision would reveal that
copyrighted material referred to in Section 212 are short portions of an artist’s
performance under Section 203, or a producer’s sound recordings under Sections 208 and
209. Section 212 does not refer to actual use of video footage of another as its own.
The Angelo dela Cruz footage does not fall under the rule on Section 212.4 of the
Intellectual Property Code on fair use of the broadcast.
....
In determining fair use, several factors are considered, including the nature of the
copyrighted work, and the amount and substantiality of the person used in relation to the
copyrighted work as a whole.
In the business of television news reporting, the nature of the copyrighted work or the
video footages, are such that, footage created, must be a novelty to be a good report. Thus,
when the . . . Angelo dela Cruz footage was used by [respondents], the novelty of the
footage was clearly affected.
Moreover, given that a substantial portion of the Angelo dela Cruz footage was utilized by
GMA-7 for its own, its use can hardly be classified as fair use.
Hence, [respondents] could not be considered as having used the Angelo dela Cruz
[footage] following the provisions on fair use.
It is also worthy to note that the Honorable Court of Appeals seem to contradict itself when
it relied on the provisions of fair use in its assailed rulings considering that it found that
the Angelo dela Cruz footage is not copyrightable, given that the fair use presupposes an
existing copyright. Thus, it is apparent that the findings of the Honorable Court of Appeals
are erroneous and based on wrong assumptions.109 (Underscoring in the original)
On the other hand, respondents counter that GMA-7’s use of ABS-CBN’s news footage falls
under fair use as defined in the Intellectual Property Code. Respondents, citing the Court
of Appeals Decision, argue that a strong statutory defense negates any finding of probable
cause under the same statute.110 The Intellectual Property Code provides that fair use
negates infringement.
Respondents point out that upon seeing ABS-CBN’s reporter Dindo Amparo on the footage,
GMA-7 immediately shut off the broadcast. Only five (5) seconds passed before the footage
was cut. They argue that this shows that GMA-7 had no prior knowledge of ABS-CBN’s
ownership of the footage or was notified of it. They claim that the Angelo dela Cruz footage
is considered a short excerpt of an event’s "news" footage and is covered by fair use. 111
Copyright protection is not absolute.112 The Intellectual Property Code provides the
limitations on copyright:
CHAPTER VIII
LIMITATIONS ON COPYRIGHT
Section 184. Limitations on Copyright. - 184.1. Notwithstanding the provisions of Chapter
V, the following acts shall not constitute infringement of copyright:
....
184.2. The provisions of this section shall be interpreted in such a way as to allow the work
to be used in a manner which does not conflict with the normal exploitation of the work
and does not unreasonably prejudice the right holder's legitimate interests.
66
....
CHAPTER XV
LIMITATIONS ON PROTECTION
Section 212. Limitations on Rights. - Sections 203, 208 and 209 shall not apply where the
acts referred to in those Sections are related to:
....
212.2. Using short excerpts for reporting current events;
....
212.4. Fair use of the broadcast subject to the conditions under Section 185.(Sec. 44, P.D.
No. 49a) (Emphasis supplied)
The determination of what constitutes fair use depends on several factors. Section 185 of
the Intellectual Property Code states:
SECTION 185. Fair Use of a Copyrighted Work. —
185.1. The fair use of a copyrighted work for criticism, comment, news reporting, teaching
including multiple copies for classroom use, scholarship, research, and similar purposes is
not an infringement of copyright. . . . In determining whether the use made of a work in
any particular case is fair use, the factors to be considered shall include:
a. The purpose and character of the use, including whether such use is of a
commercial nature or is for non-profit educational purposes;
b. The nature of the copyrighted work;
c. The amount and substantiality of the portion used in relation to the
copyrighted work as a whole; and
d. The effect of the use upon the potential market for or value of the copyrighted
work. Respondents allege that the news footage was only five (5) seconds long,
thus falling under fair use. ABS-CBN belies this contention and argues that the
footage aired for two (2) minutes and 40 seconds.113 According to the Court of
Appeals, the parties admitted that only five (5) seconds of the news footage was
broadcasted by GMA-7.114
This court defined fair use as "aprivilege to use the copyrighted material in a reasonable
manner without the consent of the copyright owner or as copying the theme or ideas
rather than their expression."115 Fair use is an exception to the copyright owner’s
monopoly of the use of the work to avoid stifling "the very creativity which that law is
designed to foster."116
Determining fair use requires application of the four-factor test. Section 185 of the
Intellectual Property Code lists four (4) factors to determine if there was fair use of a
copyrighted work:
a. The purpose and character of the use, including whether such use is of a
commercial nature or is for non-profit educational purposes;
b. The nature of the copyrighted work;
c. The amount and substantiality of the portion used in relation to the
copyrighted work as a whole; and
d. The effect of the use upon the potential market for or value of the copyrighted
work.
First, the purpose and character of the use of the copyrighted material must fall under
those listed in Section 185, thus: "criticism, comment, news reporting, teaching including
multiple copies for classroom use, scholarship, research, and similar purposes."117 The
purpose and character requirement is important in view of copyright’s goal to promote
creativity and encourage creation of works. Hence, commercial use of the copyrighted
work can be weighed against fair use.
The "transformative test" is generally used in reviewing the purpose and character of the
usage of the copyrighted work.118 This court must look into whether the copy of the work
adds "new expression, meaning or message" to transform it into something else.119 "Meta-
use" can also occur without necessarily transforming the copyrighted work used.120
Second, the nature of the copyrighted work is significant in deciding whether its use was
fair. If the nature of the work is more factual than creative, then fair use will be weighed
in favor of the user.
Third, the amount and substantiality of the portion used is important to determine
whether usage falls under fair use. An exact reproduction of a copyrighted work, compared
to a small portion of it, can result in the conclusion that its use is not fair. There may also
be cases where, though the entirety of the copyrighted work is used without consent, its
purpose determines that the usage is still fair.121 For example, a parody using a substantial
amount of copyrighted work may be permissible as fair use as opposed to a copy of a work
produced purely for economic gain. Lastly, the effect of the use on the copyrighted work’s
market is also weighed for or against the user. If this court finds that the use had or will
have a negative impact on the copyrighted work’s market, then the use is deemed unfair.
The structure and nature of broadcasting as a business requires assigned values for each
second of broadcast or airtime. In most cases, broadcasting organizations generate
revenue through sale of time or timeslots to advertisers, which, in turn, is based on market
67
share:122 Once a news broadcast has been transmitted, the broadcast becomes relatively
worthless to the station. In the case of the aerial broadcasters, advertising sales generate
most of the profits derived from news reports. Advertising rates are, in turn, governed by
market share. Market share is determined by the number of people watching a show at
any particular time, relative to total viewers at that time. News is by nature time-limited,
and so re-broadcasts are generally of little worth because they draw few viewers.
Newscasts compete for market share by presenting their news in an appealing format that
will capture a loyal audience. Hence, the primary reason for copyrighting newscasts by
broadcasters would seem to be to prevent competing stations from rebroadcasting
current news from the station with the best coverage of a particular news item, thus
misappropriating a portion of the market share.
Of course, in the real world there are exceptions to this perfect economic view. However,
there are also many caveats with these exceptions. A common exception is that some
stations rebroadcast the news of others. The caveat is that generally, the two stations are
not competing for market share. CNN, for example, often makes news stories available to
local broadcasters. First, the local broadcaster is often not affiliated with a network (hence
its need for more comprehensive programming), confining any possible competition to a
small geographical area. Second, the local broadcaster is not in competition with CNN.
Individuals who do not have cable TV (or a satellite dish with decoder) cannot receive
CNN; therefore there is no competition. . . . Third, CNN sells the right of rebroadcast to the
local stations. Ted Turner, owner of CNN, does not have First Amendment freedom of
access argument foremost on his mind. (Else he would give everyone free cable TV so
everyone could get CNN.) He is in the business for a profit. Giving away resources does not
a profit make.123 (Emphasis supplied)
The high value afforded to limited time periods is also seen in other media. In social media
site Instagram, users are allowed to post up to only 15 seconds of video.124 In short-video
sharing website Vine,125 users are allowed a shorter period of six (6) seconds per post. The
mobile application 1 Second Everyday takes it further by capturing and stitching one (1)
second of video footage taken daily over a span of a certain period.126
Whether the alleged five-second footage may be considered fair use is a matter of defense.
We emphasize that the case involves determination of probable cause at the preliminary
investigation stage. Raising the defense of fair use does not automatically mean that no
infringement was committed. The investigating prosecutor has full discretion to evaluate
the facts, allegations, and evidence during preliminary investigation. Defenses raised
during preliminary investigation are subject to further proof and evaluation before the
trial court. Given the insufficiency of available evidence, determination of whether the
Angelo dela Cruz footage is subject to fair use is better left to the trial court where the
proceedings are currently pending. GMA-7’s rebroadcast of ABS-CBN’s news footage
without the latter’s consent is not an issue. The mere act of rebroadcasting without
authority from the owner of the broadcast gives rise to the probability that a crime was
committed under the Intellectual Property Code.
VII
Respondents cannot invoke the defense of good faith to argue that no probable cause
exists.
Respondents argue that copyright infringement is malum in se, in that "[c]opying alone is
not what is being prohibited, but its injurious effect which consists in the lifting from the
copyright owners’ film or materials, that were the result of the latter’s creativity, work and
productions and without authority, reproduced, sold and circulated for commercial use to
the detriment of the latter."127
Infringement under the Intellectual Property Code is malum prohibitum. The Intellectual
Property Code is a special law. Copyright is a statutory creation:
Copyright, in the strict sense of the term, is purely a statutory right. It is a new or
independent right granted by the statute, and not simply a pre-existing right regulated by
the statute. Being a statutory grant, the rights are only such as the statute confers, and may
be obtained and enjoyed only with respect to the subjects and by the persons, and on terms
and conditions specified in the statute.128
The general rule is that acts punished under a special law are malum prohibitum. 129 "An
act which is declared malum prohibitum, malice or criminal intent is completely
immaterial."130
In contrast, crimes mala in seconcern inherently immoral acts:
Not every criminal act, however, involves moral turpitude. It is for this reason that "as to
what crime involves moral turpitude, is for the Supreme Court to determine". In resolving
the foregoing question, the Court is guided by one of the general rules that crimes mala in
se involve moral turpitude, while crimes mala prohibita do not, the rationale of which was
set forth in "Zari v. Flores," to wit:
It (moral turpitude) implies something immoral in itself, regardless of the fact that it is
punishable by law or not. It must not be merely mala prohibita, but the act itself must be
inherently immoral. The doing of the act itself, and not its prohibition by statute fixes the
moral turpitude. Moral turpitude does not, however, include such acts as are not of
themselves immoral but whose illegality lies in their being positively prohibited.
(Emphasis supplied)
[These] guidelines nonetheless proved short of providing a clear cut solution, for in
International Rice Research Institute v. NLRC, the Court admitted that it cannot always be
ascertained whether moral turpitude does or does not exist by merely classifying a crime
as malum in se or as malum prohibitum. There are crimes which are mala in se and yet but
rarely involve moral turpitude and there are crimes which involve moral turpitude and
are mala prohibita only. In the final analysis, whether or not a crime involves moral
turpitude is ultimately a question of fact and frequently depends on all the circumstances
surrounding the violation of the statue.131 (Emphasis in the original)
"Implicit in the concept of mala in se is that of mens rea."132 Mens reais defined as "the
nonphysical element which, combined with the act of the accused, makes up the crime
charged. Most frequently it is the criminal intent, or the guilty mind[.]"133
68
Crimes mala in sepre suppose that the person who did the felonious act had criminal intent
to do so, while crimes mala prohibita do not require knowledge or criminal intent:
In the case of mala in se it is necessary, to constitute a punishable offense, for the person
doing the act to have knowledge of the nature of his act and to have a criminal intent; in
the case of mala prohibita, unless such words as "knowingly" and "willfully" are contained
in the statute, neither knowledge nor criminal intent is necessary. In other words, a person
morally quite innocent and with every intention of being a law abiding citizen becomes a
criminal, and liable to criminal penaltes, if he does an act prohibited by these
statutes.134 (Emphasis supplied) Hence, "[i]ntent to commit the crime and intent to
perpetrate the act must be distinguished. A person may not have consciously intended to
commit a crime; but he did intend to commit an act, and that act is, by the very nature of
things, the crime itself[.]"135When an act is prohibited by a special law, it is considered
injurious to public welfare, and the performance of the prohibited act is the crime itself.136
Volition, or intent to commit the act, is different from criminal intent. Volition or
voluntariness refers to knowledge of the act being done. On the other hand, criminal intent
— which is different from motive, or the moving power for the commission of the
crime137 — refers to the state of mind beyond voluntariness. It is this intent that is being
punished by crimes mala in se.
Unlike other jurisdictions that require intent for a criminal prosecution of copyright
infringement, the Philippines does not statutorily support good faith as a defense. Other
jurisdictions provide in their intellectual property codes or relevant laws that mens rea,
whether express or implied, is an element of criminal copyright infringement.138
In Canada, criminal offenses are categorized under three (3) kinds: "the full mens rea
offence, meaning the accused’s actual or subjective state of mind has to be proved; strict
liability offences where no mens rea has to be proved but the accused can avoid liability if
he can prove he took all reasonable steps to avoid the particular event; [and] absolute
liability offences where Parliament has made it clear that guilt follows proof of the
prescribed act only."139 Because of the use of the word "knowingly" in Canada’s Copyright
Act, it has been held that copyright infringement is a full mens rea offense.140
In the United States, willful intent is required for criminal copyright
infringement.141 Before the passage of the No Electronic Theft Act, "civil copyright
infringements were violations of criminal copyright laws only if a defendant willfully
infringed a copyright ‘for purposes of commercial advantage or private financial
gain.’"142 However, the No Electronic Theft Act now allows criminal copyright
infringement without the requirement of commercial gain. The infringing act may or may
not be for profit.143
There is a difference, however, between the required liability in civil copyright
infringement and that in criminal copyright infringement in the United States. Civil
copyright infringement does not require culpability and employs a strict liability
regime144 where "lack of intention to infringe is not a defense to an action for
infringement."145
In the Philippines, the Intellectual Property Code, as amended, provides for the
prosecution of criminal actions for the following violations of intellectual property rights:
Repetition of Infringement of Patent (Section 84); Utility Model (Section 108); Industrial
Design (Section 119); Trademark Infringement (Section 155 in relation to Section 170);
Unfair Competition (Section 168 in relation to Section 170); False Designations of Origin,
False Description or Representation (Section 169.1 in relation to Section 170);
infringement of copyright, moral rights, performers’ rights, producers’ rights, and
broadcasting rights (Section 177, 193, 203, 208 and 211 in relation to Section 217); and
other violations of intellectual property rights as may be defined by law.
The Intellectual Property Code requires strict liability for copyright infringement whether
for a civil action or a criminal prosecution; it does not require mens rea or culpa: 146
SECTION 216. Remedies for Infringement. —
216.1. Any person infringing a right protected under this law shall be liable:
a. To an injunction restraining such infringement. The court may also
order the defendant to desist from an infringement, among others, to
prevent the entry into the channels of commerce of imported goods
that involve an infringement, immediately after customs clearance of
such goods.
b. Pay to the copyright proprietor or his assigns or heirs such actual
damages, including legal costs and other expenses, as he may have
incurred due to the infringement as well as the profits the infringer may
have made due to such infringement, and in proving profits the plaintiff
shall be required to prove sales only and the defendant shall be
required to prove every element of cost which he claims, or, in lieu of
actual damages and profits, such damages which to the court shall
appear to be just and shall not be regarded as penalty.
c. Deliver under oath, for impounding during the pendency of the
action, upon such terms and conditions as the court may prescribe,
sales invoices and other documents evidencing sales, all articles and
their packaging alleged to infringe a copyright and implements for
making them.
d. Deliver under oath for destruction without any compensation all
infringing copies or devices, as well as all plates, molds, or other means
for making such infringing copies as the court may order.
e. Such other terms and conditions, including the payment of moral and
exemplary damages, which the court may deem proper, wise and
equitable and the destruction of infringing copies of the work even in
the event of acquittal in a criminal case.
69
 216.2. In an infringement action, the court shall also have the power to order the
seizure and impounding of any article which may serve as evidence in the court
proceedings. (Sec. 28, P.D. No. 49a)
SECTION 217. Criminal Penalties. — 217.1. Any person infringing any right secured by
provisions of Part IV of this Actor aiding or abetting such infringement shall be guilty of a
crime punishable by:
a. Imprisonment of one (1) year to three (3) years plus a fine ranging
from Fifty thousand pesos (₱50,000) to One hundred fifty thousand
pesos (₱150,000) for the first offense.
b. Imprisonment of three (3) years and one (1) day to six (6) years plus
a fine ranging from One hundred fifty thousand pesos (₱150,000) to
Five hundred thousand pesos (₱500,000) for the second offense.
c. Imprisonment of six (6) years and one (1) day to nine (9) years plus
a fine ranging from Five hundred thousand pesos (₱500,000) to One
million five hundred thousand pesos (₱1,500,000) for the third and
subsequent offenses.
d. In all cases, subsidiary imprisonment in cases of insolvency.
217.2. In determining the number of years of imprisonment and the amount of
fine, the court shall consider the value of the infringing materials that the
defendant has produced or manufactured and the damage that the copyright
owner has suffered by reason of the infringement.
217.3. Any person who at the time when copyright subsists in a work has in his
possession an article which he knows, or ought to know, to be an infringing copy
of the work for the purpose of: a. Selling, letting for hire, or by way of trade
offering or exposing for sale, or hire, the article;
b. Distributing the article for purpose of trade, or for any other purpose
to an extent that will prejudice the rights of the copyright owner in the
work; or
c. Trade exhibit of the article in public, shall be guilty of an offense and
shall be liable on conviction to imprisonment and fine as above
mentioned. (Sec. 29, P.D. No. 49a) (Emphasis supplied)
The law is clear. Inasmuch as there is wisdom in prioritizing the flow and exchange of ideas
as opposed to rewarding the creator, it is the plain reading of the law in conjunction with
the actions of the legislature to which we defer. We have continuously "recognized the
power of the legislature . . . to forbid certain acts in a limited class of cases and to make
their commission criminal without regard to the intent of the doer. Such legislative
enactments are based on the experience that repressive measures which depend for their
efficiency upon proof of the dealer’s knowledge or of his intent are of little use and rarely
accomplish their purposes."147
Respondents argue that live broadcast of news requires a different treatment in terms of
good faith, intent, and knowledge to commit infringement. To argue this point, they rely
on the differences of the media used in Habana et al. v. Robles, Columbia Pictures v. Court
of Appeals, and this case:
Petitioner ABS-CBN argues that lack of notice that the Angelo dela Cruz was under
embargo is not a defense in copyright infringement and cites the case of Columbia Pictures
vs. Court of Appeals and Habana et al. vs. Robles(310 SCRA 511). However, these cases
refer to film and literary work where obviously there is "copying" from an existing
material so that the copier knew that he is copying from an existing material not owned
by him. But, how could respondents know that what they are "copying was not [theirs]"
when they were not copying but merely receiving live video feed from Reuters and CNN
which they aired? What they knew and what they aired was the Reuters live video feed
and the CNN feed which GMA-7 is authorized to carry in its news broadcast, it being a
subscriber of these companies[.]
It is apt to stress that the subject of the alleged copyright infringement is not a film or
literary work but live broadcast of news footage. In a film or literary work, the infringer is
confronted face to face with the material he is allegedly copying and therefore knows, or
is presumed to know, that what he is copying is owned by another. Upon the other hand,
in live broadcast, the alleged infringer is not confronted with the fact that the material he
airs or re-broadcasts is owned by another, and therefore, he cannot be charged of
knowledge of ownership of the material by another. This specially obtains in the Angelo
dela Cruz news footage which GMA-7 received from Reuters and CNN. Reuters and CNN
were beaming live videos from the coverage which GMA-7 received as a subscriber and, in
the exercise of its rights as a subscriber, GMA-7 picked up the live video and
simultaneously re-broadcast it. In simultaneously broadcasting the live video footage of
Reuters, GMA-7 did not copy the video footage of petitioner ABS-CBN[.]148 (Emphasis in
the original)
Respondents’ arguments must fail.
Respondents are involved and experienced in the broadcasting business. They knew that
there would be consequences in carrying ABS-CBN’s footage in their broadcast. That is
why GMA-7 allegedly cut the feed from Reuters upon seeing ABS-CBN’s ogo and reporter.
To admit a different treatment for broadcasts would mean abandonment of a broadcasting
organization’s minimum rights, including copyright on the broadcast material and the
right against unauthorized rebroadcast of copyrighted material. The nature of broadcast
technology is precisely why related or neighboring rights were created and developed.
Carving out an exception for live broadcasts would go against our commitments under
relevant international treaties and agreements, which provide for the same minimum
rights.149
Contrary to respondents’ assertion, this court in Habana,150 reiterating the ruling in
Columbia Pictures,151 ruled that lack of knowledge of infringement is not a valid defense.
Habana and Columbia Pictures may have different factual scenarios from this case, but
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their rulings on copyright infringement are analogous. In Habana, petitioners were the
authors and copyright owners of English textbooks and workbooks. The case was
anchored on the protection of literary and artistic creations such as books. In Columbia
Pictures, video tapes of copyrighted films were the subject of the copyright infringement
suit.
In Habana, knowledge of the infringement is presumed when the infringer commits the
prohibited act:
The essence of intellectual piracy should be essayed in conceptual terms in order to
underscore its gravity by an appropriate understanding thereof. Infringement of a
copyright is a trespass on a private domain owned and occupied by the owner of the
copyright, and, therefore, protected by law, and infringement of copyright, or piracy,
which is a synonymous term in this connection, consists in the doing by any person,
without the consent of the owner of the copyright, of anything the sole right to do which
is conferred by statute on the owner of the copyright.
....
A copy of a piracy is an infringement of the original, and it is no defense that the pirate, in
such cases, did not know whether or not he was infringing any copyright; he at least knew
that what he was copying was not his, and he copied at his peril.
....
In cases of infringement, copying alone is not what is prohibited. The copying must
produce an "injurious effect". Here, the injury consists in that respondent Robles lifted
from petitioners’ book materials that were the result of the latter’s research work and
compilation and misrepresented them as her own. She circulated the book DEP for
commercial use and did not acknowledge petitioners as her source.152 (Emphasis
supplied)
Habana and Columbia Pictures did not require knowledge of the infringement to
constitute a violation of the copyright. One does not need to know that he or she is copying
a work without consent to violate copyright law. Notice of fact of the embargo from
Reuters or CNN is not material to find probable cause that respondents committed
infringement. Knowledge of infringement is only material when the person is charged of
aiding and abetting a copyright infringement under Section 217 of the Intellectual
Property Code.153
We look at the purpose of copyright in relation to criminal prosecutions requiring
willfulness: Most importantly, in defining the contours of what it means to willfully
infringe copyright for purposes of criminal liability, the courts should remember the
ultimate aim of copyright. Copyright is not primarily about providing the strongest
possible protection for copyright owners so that they have the highest possible incentive
to create more works. The control given to copyright owners is only a means to an end:
the promotion of knowledge and learning. Achieving that underlying goal of copyright law
also requires access to copyrighted works and it requires permitting certain kinds of uses
of copyrighted works without the permission of the copyright owner. While a particular
defendant may appear to be deserving of criminal sanctions, the standard for determining
willfulness should be set with reference to the larger goals of copyright embodied in the
Constitution and the history of copyright in this country.154
In addition, "[t]he essence of intellectual piracy should be essayed in conceptual terms in
order to underscore its gravity by an appropriate understanding thereof. Infringement of
a copyright is a trespass on a private domain owned and occupied by the owner of the
copyright, and, therefore, protected by law, and infringement of copyright, or piracy,
which is a synonymous term in this connection, consists in the doing by any person,
without the consent of the owner of the copyright, of anything the sole right to do which
is conferred by statute on the owner of the copyright."155
Intellectual property rights, such as copyright and the neighboring right against
rebroadcasting, establish an artificial and limited monopoly to reward creativity. Without
these legally enforceable rights, creators will have extreme difficulty recovering their costs
and capturing the surplus or profit of their works as reflected in their markets. This, in
turn, is based on the theory that the possibility of gain due to creative work creates an
incentive which may improve efficiency or simply enhance consumer welfare or utility.
More creativity redounds to the public good.
These, however, depend on the certainty of enforcement. Creativity, by its very nature, is
vulnerable to the free rider problem. It is easily replicated despite the costs to and efforts
of the original creator. The more useful the creation is in the market, the greater the
propensity that it will be copied. The most creative and inventive individuals are usually
those who are unable to recover on their creations.
Arguments against strict liability presuppose that the Philippines has a social, historical,
and economic climate similar to those of Western jurisdictions. As it stands, there is a
current need to strengthen intellectual property protection.
Thus, unless clearly provided in the law, offenses involving infringement of copyright
protections should be considered malum prohibitum. It is the act of infringement, not the
intent, which causes the damage. To require or assume the need to prove intent defeats
the purpose of intellectual property protection.
Nevertheless, proof beyond reasonable doubt is still the standard for criminal
prosecutions under the Intellectual Property Code.
VIII
Respondents argue that GMA-7’s officers and employees cannot be held liable for
infringement under the Intellectual Property Code since it does not expressly provide
direct liability of the corporate officers. They explain that "(i) a corporation may be
charged and prosecuted for a crime where the penalty is fine or both imprisonment and
fine, and if found guilty, may be fined; or (ii) a corporation may commit a crime but if the
statute prescribes the penalty therefore to be suffered by the corporate officers, directors
or employees or other persons, the latter shall be responsible for the offense."156
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Section 217 of the Intellectual Property Code states that "any person" may be found guilty
of infringement. It also imposes the penalty of both imprisonment and fine:
Section 217. Criminal Penalties. - 217.1. Any person infringing any right secured by
provisions of Part IV of this Act or aiding or abetting such infringement shall be guilty of a
crime punishable by:
(a) Imprisonment of one (1) year to three (3) years plus a fine ranging from Fifty
thousand pesos (₱50,000) to One hundred fifty thousand pesos (₱150,000) for
the first offense.
(b) Imprisonment of three (3) years and one (1) day to six (6) years plus a fine
ranging from One hundred fifty thousand pesos (₱150,000) to Five hundred
thousand pesos (₱500,000) for the second offense.
(c) Imprisonment of six (6) years and one (1) day to nine (9) years plus a fine
ranging from five hundred thousand pesos (₱500,000) to One million five
hundred thousand pesos (₱1,500,000) for the third and subsequent offenses.
(d) In all cases, subsidiary imprisonment in cases of insolvency. (Emphasis
supplied) Corporations have separate and distinct personalities from their
officers or directors.157 This court has ruled that corporate officers and/or
agents may be held individually liable for a crime committed under the
Intellectual Property Code:158
Petitioners, being corporate officers and/or directors, through whose act, default or
omission the corporation commits a crime, may themselves be individually held
answerable for the crime. . . . The existence of the corporate entity does not shield from
prosecution the corporate agent who knowingly and intentionally caused the corporation
to commit a crime. Thus, petitioners cannot hide behind the cloak of the separate
corporate personality of the corporation to escape criminal liability. A corporate officer
cannot protect himself behind a corporation where he is the actual, present and efficient
actor.159
However, the criminal liability of a corporation’s officers or employees stems from their
active participation in the commission of the wrongful act:
The principle applies whether or not the crime requires the consciousness of wrongdoing.
It applies to those corporate agents who themselves commit the crime and to those, who,
by virtue of their managerial positions or other similar relation to the corporation, could
be deemed responsible for its commission, if by virtue of their relationship to the
corporation, they had the power to prevent the act. Moreover, all parties active in
promoting a crime, whether agents or not, are principals. Whether such officers or
employees are benefited by their delictual acts is not a touchstone of their criminal
liability. Benefit is not an operative fact.160 (Emphasis supplied) An accused’s participation
in criminal acts involving violations of intellectual property rights is the subject of
allegation and proof. The showing that the accused did the acts or contributed in a
meaningful way in the commission of the infringements is certainly different from the
argument of lack of intent or good faith. Active participation requires a showing of overt
physical acts or intention to commit such acts. Intent or good faith, on the other hand, are
inferences from acts proven to have been or not been committed.
We find that the Department of Justice committed grave abuse of discretion when it
resolved to file the Information against respondents despite lack of proof of their actual
participation in the alleged crime.
Ordering the inclusion of respondents Gozon, GMA-7 President; Duavit, Jr., Executive Vice-
President; Flores, Vice-President for News and Public Affairs; and Soho, Director for News,
as respondents, Secretary Agra overturned the City Prosecutor’s finding that only
respondents Dela Peña-Reyes and Manalastas are responsible for the crime charged due
to their duties.161 The Agra Resolution reads:
Thus, from the very nature of the offense and the penalty involved, it is necessary that
GMA-7’s directors, officers, employees or other officers thereof responsible for the offense
shall be charged and penalized for violation of the Sections 177 and 211 of Republic Act
No. 8293. In their complaint for libel, respondents Felipe L Gozon, Gilberto R. Duavit, Jr.,
Marissa L. Flores, Jessica A.Soho, Grace Dela Pena-Reyes, John Oliver T. Manalastas felt
they were aggrieved because they were "in charge of the management, operations and
production of news and public affairs programs of the network" (GMA-7). This is clearly
an admission on respondents’ part. Of course, respondents may argue they have no
intention to infringe the copyright of ABS-CBN; that they acted in good faith; and that they
did not directly cause the airing of the subject footage, but again this is preliminary
investigation and what is required is simply probable cause. Besides, these contentions
can best be addressed in the course of trial.162 (Citation omitted)
In contrast, the Office of the City Prosecutor, in the Resolution dated December 3, 2004,
found that respondents Gozon, Duavit, Jr., Flores, and Soho did not have active
participation in the commission of the crime charged:
This Office, however, does not subscribe to the view that respondents Atty. Felipe Gozon,
Gilberto Duavit, Marissa Flores and Jessica Soho should be held liable for the said offense.
Complainant failed to present clear and convincing evidence that the said respondents
conspired with Reyes and Manalastas. No evidence was adduced to prove that these
respondents had an active participation in the actual commission of the copyright
infringement or they exercised their moral ascendancy over Reyes and Manalastas in
airing the said footage. It must be stressed that, conspiracy must be established by positive
and conclusive evidence. It must be shown to exist as clearly and convincingly as the
commission of the offense itself.163 (Emphasis supplied, citations omitted)
The City Prosecutor found respondents Dela Peña-Reyes and Manalastas liable due to the
nature of their work and responsibilities. He found that:
[t]his Office however finds respondents Grace Dela Peña-Reyes and John Oliver T.
Manalastas liable for copyright infringement penalized under Republic Act No. 8293. It is
undisputed that complainant ABSCBN holds the exclusive ownership and copyright over
the "Angelo [d]ela Cruz news footage". Hence, any airing and re-broadcast of the said
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footage without any consent and authority from ABS-CBN will be held as an infringement
and violation of the intellectual property rights of the latter. Respondents Grace Dela Peña-
Reyes as the Head of the News Operation and John Oliver T. Manalastas as the Program
Manager cannot escape liability since the news control room was under their direct
control and supervision. Clearly, they must have been aware that the said footage coming
from Reuters or CNN has a "No Access Philippines" advisory or embargo thus cannot be
re-broadcast. We find no merit to the defense of ignorance interposed by the respondents.
It is simply contrary to human experience and logic that experienced employees of an
established broadcasting network would be remiss in their duty in ascertaining if the said
footage has an embargo.164 (Emphasis supplied)
We agree with the findings as to respondents Dela Peña-Reyes and Manalastas. Both
respondents committed acts that promoted infringement of ABS-CBN’s footage. We note
that embargoes are common occurrences in and between news agencies and/or broadcast
organizations.165 Under its Operations Guide, Reuters has two (2) types of embargoes:
transmission embargo and publication embargo.166 Under ABS-CBN’s service contract
with Reuters, Reuters will embargo any content contributed by ABS-CBN from other
broadcast subscribers within the same geographical location:
4a. Contributed Content
You agree to supply us at our request with news and sports news stories broadcast on the
Client Service of up to three (3) minutes each for use in our Services on a non-exclusive
basis and at a cost of US$300.00 (Three Hundred United States Dollars) per story. In
respect of such items we agree to embargo them against use by other broadcast
subscribers in the Territory and confirm we will observe all other conditions of usage
regarding Contributed Content, as specified in Section 2.5 of the Reuters Business
Principles for Television Services. For the purposes of clarification, any geographical
restriction imposed by you on your use of Contributed Content will not prevent us or our
clients from including such Contributed Content in online transmission services including
the internet. We acknowledge Contributed Content is your copyright and we will not
acquire any intellectual property rights in the Contributed Content.167 (Emphasis
supplied)
Respondents Dela Peña-Reyes and Manalastas merely denied receiving the advisory sent
by Reuters to its clients, including GMA-7. As in the records, the advisory reads:
ADVISORY - - +++LIVE COVER PLANS+++
PHILIPPINES: HOSTAGE RETURN
**ATTENTION ALL CLIENTS**
PLEASE BE ADVISED OF THE FOLLOWING LIVE COVER
PLANNED FOR THURSDAY, JULY 22:
....
SOURCE: ABS-CBN
TV AND WEB RESTRICTIONS: NO ACCESS PHILIPPINES.168
There is probable cause that respondents Dela Peña-Reyes and Manalastas directly
committed copyright infringement of ABS-CBN’s news footage to warrant piercing of the
corporate veil. They are responsible in airing the embargoed Angelo dela Cruz footage.
They could have prevented the act of infringement had they been diligent in their functions
as Head of News Operations and Program Manager.
Secretary Agra, however, committed grave abuse of discretion when he ordered the filing
of the Information against all respondents despite the erroneous piercing of the corporate
veil. Respondents Gozon, Duavit, Jr., Flores, and Soho cannot be held liable for the criminal
liability of the corporation.
Mere membership in the Board or being President per se does not mean knowledge,
approval, and participation in the act alleged as criminal. There must be a showing of
active participation, not simply a constructive one.
Under principles of criminal law, the principals of a crime are those "who take a direct part
in the execution of the act; [t]hose who directly force or induce others to commit it; [or]
[t]hose who cooperate in the commission of the offense by another act without which it
would not have been accomplished."169 There is conspiracy "when two or more persons
come to an agreement concerning the commission of a felony and decide to commit it": 170
Conspiracy is not presumed. Like the physical acts constituting the crime itself, the
elements of conspiracy must be proven beyond reasonable doubt.1âwphi1 While
conspiracy need not be established by direct evidence, for it may be inferred from the
conduct of the accused before, during and after the commission of the crime, all taken
together, however, the evidence must be strong enough to show the community of
criminal design. For conspiracy to exist, it is essential that there must be a conscious
design to commit an offense. Conspiracy is the product of intentionality on the part of the
cohorts.
It is necessary that a conspirator should have performed some overt act as a direct or
indirect contribution to the execution of the crime committed. The overt act may consist
of active participation in the actual commission of the crime itself, or it may consist of
moral assistance to his co-conspirators by being present at the commission of the crime
or by exerting moral ascendancy over the other co-conspirators[.]171 (Emphasis supplied,
citations omitted)
In sum, the trial court erred in failing to resume the proceedings after the designated
period. The Court of Appeals erred when it held that Secretary Agra committed errors of
jurisdiction despite its own pronouncement that ABS-CBN is the owner of the copyright
on the news footage. News should be differentiated from expression of the news,
particularly when the issue involves rebroadcast of news footage. The Court of Appeals
also erroneously held that good faith, as. well as lack of knowledge of infringement, is a
defense against criminal prosecution for copyright and neighboring rights infringement.
In its current form, the Intellectual Property Code is malum prohibitum and prescribes a
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strict liability for copyright infringement. Good faith, lack of knowledge of the copyright,
or lack of intent to infringe is not a defense against copyright infringement. Copyright,
however, is subject to the rules of fair. use and will be judged on a case-to-case basis.
Finding probable cause includes a determination of the defendant's active participation,
particularly when the corporate veil is pierced in cases involving a corporation's criminal
liability.

WHEREFORE, the Petition is partially GRANTED. The Department of Justice Resolution

dated June 29, 2010 ordering the filing of the Information is hereby REINSTATED as to
respondents Grace Dela Pena-Reyes and John Oliver T. Manalastas. Branch 93 of the
Regional Trial Court of Quezon City is directed to continue with the proceedings in
Criminal Case No. Q-04-131533.

SO ORDERED.

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