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[G.R. No. 166337.

March 7, 2005]
BAYANIHAN MUSIC vs. BMG
THIRD DIVISION
Gentlemen:
Quoted hereunder, for your information, is a resolution of this Court
dated MAR 7 2005.
G.R. No. 166337 (Bayanihan Music Philippines, Inc. vs. BMG Records
(Pilipinas) and Jose Mari Chan, et al.)
Subject of this petition for review on certiorari is the Decision dated
December 14, 2004[1] of the Court of Appeals in CA-G.R. SP No. 69626,
upholding the Order dated August 24, 2001 of the Regional Trial Court at
Quezon City, Branch 90, which found no merit in petitioner's application for
the issuance of a writ of preliminary injunction, along with the Order dated
January 10, 2002, which denied petitioner's motion for reconsideration.
On July 16, 1973, private respondent Jose Mari Chan (Chan) entered into a
contract with petitioner Bayanihan Music Philippines, Inc. (Bayanihan),
whereunder the former assigned to the latter all his rights, interests and
participation over his musical composition "Can We Just Stop and Talk A
While". On March 11, 1976, the parties entered into a similar contract over
Chan's other musical composition entitled "Afraid For Love To Fade".
On the strength of the abovementioned contracts, Bayanihan applied for and
was granted by the National Library a Certificate of Copyright Registration for
each of the two musical compositions, thus: November 19, 1973, for the
song "Can We Just Stop and Talk A While" and on May 21, 1980, for the song
"Afraid for Love To Fade."
Apparently, without the knowledge and consent of petitioner Bayanihan,
Chan authorized his co-respondent BMG Records (Pilipinas) [BMG] to record
and distribute the aforementioned musical compositions in a then recently
released album of singer Lea Salonga.
In separate letters both dated December 7, 1999, petitioner Bayanihan
informed respondents Chan and BMG of its existing copyrights over the
subject musical compositions and the alleged violation of such right by the
two. Demands were made on both to settle the matter with Bayanihan.
However no settlement was reached by the parties.

Hence, on August 8, 2000, Bayanihan filed with the Regional Trial Court at
Quezon City a complaint against Chan and BMG for violation of Section 216
of Republic Act No. 8293, otherwise known as theIntellectual Property Code
of the Philippines, with a prayer for the issuance of Temporary Restraining
Order (TRO) and/or writ of preliminary injunction, enjoining respondent BMG
from further recording and distributing the subject musical compositions in
whatever form of musical products, and Chan from further granting any
authority to record and distribute the same musical compositions.
In its answer, BMG contended, among others, that: (1) the acts of recording
and publication sought to be enjoined had already been consummated,
thereby rendering moot Bayanihan's prayer for TRO and/or preliminary
injunction; and (2) there is no clear showing that petitioner Bayanihan would
be greatly damaged by the refusal of the prayed for TRO and/or preliminary
injunction. BMG also pleaded a cross-claim against its co-respondent Chan
for violation of his warranty that his musical compositions are free from
claims of third persons, and a counterclaim for damages against petitioner
Bayanihan.
Chan, for his part, filed his own answer to the complaint, thereunder alleging
that: (1) it was never his intention to divest himself of all his rights and
interest over the musical compositions in question; (2) the contracts he
entered into with Bayanihan are mere music publication agreements giving
Bayanihan, as assignee, the power to administer his copyright over his two
songs and to act as the exclusive publisher thereof; (3) he was not cognizant
of the application made by and the subsequent grant of copyrights to
Bayanihan; and (4) Bayanihan was remissed in its obligations under the
contracts because it failed to effectively advertise his musical compositions
for almost twenty (20) years, hence, he caused therescission of said
contracts in 1997. Chan also included in his answer a counterclaim for
damages against Bayanihan.
After hearing the parties, the lower court came out with an order denying
Bayanihan's prayer for TRO, saying, thus:
After carefully considering the arguments and evaluating the evidence
presented by counsels, this Court finds that the plaintiff has not been able to
show its entitlement to the relief of TRO as prayed for in its verified
complaint (see Section 4, Rule 58 of the 1997 Rules of Civil Procedure, as
amended), hence, this Court is of the considered and humble view that the
ends of justice shall be served better if the aforecited application is denied.
IN VIEW OF THE FOREGOING, the aforecited application or prayer for the
issuance of a TRO is denied.
SO ORDERED.

Thereafter, the same court, in its subsequent Order dated August


24, 2001,[2]cralaw likewise denied Bayanihan's prayer for a writ of
preliminary injunction, to wit:
After carefully going over the pleadings and the pertinent portions of the
records insofar as they are pertinent to the issue under consideration, this
Court finds that the plaintiff has not been able to show its entitlement to the
relief of preliminary injunction as prayed for in its verified complaint
(see Section 4, Rule 58 of the 1997 Rules of Civil Procedure, as amended),
hence, this Court is of the considered and humble view that the ends of
justice shall be served better if the aforecited application is denied, (see
also Order dated July 16, 2001).
IN VIEW OF THE FOREGOING, the application or prayer for the issuance of a
writ of preliminary injunction is denied.
SO ORDERED.
Its motion for a reconsideration of the same order having been likewise
denied by the trial court in its next Order of January 10, 2002,
[3]
cralaw petitioner Bayanihan then went to the Court of Appeals on a petition
for certiorari, thereat docketed as CA-G.R. SP No. 69626, imputing grave
abuse of discretion on the part of the trial court in issuing the Orders of
August 24, 2001 and January 10, 2001, denying its prayers for a writ of
preliminary injunction and motion for reconsideration, respectively.
In the herein assailed Decision dated December 14, 2004, the Court of
Appeals upheld the challenged orders of the trial court and accordingly
dismissed Bayanihan petition, thus:
WHEREFORE, finding neither flaw of jurisdiction nor taint of grave abuse of
discretion in the issuance of the assailed Orders of the respondent court
dated August 24, 2001 and January 10, 2002, the instant petition is
DISMISSED. No costs.
SO ORDERED.[4]cralaw
Hence, Bayanihan's present recourse.
It is petitioner's submission that the appellate court committed reversible
error when it dismissed its petition for certiorari and upheld the trial court's
denial of its application for a writ of preliminary injunction. Petitioner insists
that as assignee of the copyrights over the musical compositions in question,
it has a clear legal right to a writ of preliminary injunction; that respondents
BMG and Chan violated its copyrights over the same musical compositions;
that despite knowledge by respondent BMG of petitioner's copyrights over

the said musical compositions, BMG continues to record and distribute the
same, to petitioner's great and irreparable injury.
We DENY.
We have constantly reminded courts that there is no power, the exercise of
which is more delicate and requires greater caution, deliberation and sound
discretion, or which is more dangerous in a doubtful case, than the issuance
of an injunction. A court should, as much as possible, avoid issuing the writ
which would effectively dispose of the main case without trial.
Here, nothing is more evident than the trial court's abiding awareness of the
extremely difficult balancing act it had to perform in dealing with petitioner's
prayer for injunctive reliefs. Conscious, as evidently it is, of the fact that
there is manifest abuse of discretion in the issuance of an injunctive writ if
the following requisites provided for by law are not present: (1) there must
be a right in esse or the existence of a right to be protected; and (2) the act
against which the injunction is to be directed is a violation of such right,
[5]
cralaw the trial court threaded the correct path in denying petitioner's
prayer therefor. For, such a writ should only be granted if a party is clearly
entitled thereto.[6]cralaw
Of course, while a clear showing of the right to an injunctive writ is necessary
albeit its existence need not be conclusively established,[7]cralaw as the
evidence required therefor need not be conclusive or complete, still, for an
applicant, like petitioner Bayanihan, to be entitled to the writ, he is required
to show that he has the ostensible right to the final relief prayed for in its
complaint.[8]cralaw Here, the trial court did not find ample justifications for
the issuance of the writ prayed for by petitioner.
Unquestionably, respondent Chan, being undeniably the composer and
author of the lyrics of the two (2) songs, is protected by the mere fact alone
that he is the creator thereof, conformably with Republic Act No. 8293,
otherwise known as the Intellectual Property Code, Section 172.2 of which
reads:
172.2. 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.
An examination of petitioner's verified complaint in light of the two (2)
contracts sued upon and the evidence it adduced during the hearing on the
application for preliminary injunction, yields not the existence of the requisite
right protectable by the provisional relief but rather a lingering doubt on
whether there is or there is no such right. The two contracts between

petitioner and Chan relative to the musical compositions subject of the suit
contain the following identical stipulations:
7.
It is also hereby agreed to by the parties herein that in the event the
PUBLISHER [petitioner herein] fails to use in any manner whatsoever within
two (2) years any of the compositions covered by this contract, then such
composition may be released in favor of the WRITER and excluded from this
contract and the PUBLISHER shall execute the necessary release in writing in
favor of the WRITER upon request of the WRITER;
xxx

xxx

xxx

9.
This contract may be renewed for a period of two-and-one-half (2 1/2)
years at the option of the PUBLISHER. Renewal may be made by the
PUBLISHER by advising the WRITER of such renewal in writing at least five (5)
days before the expiration of this contract.[9]cralaw
It would thus appear that the two (2) contracts expired on October 1,
1975 and March 11, 1978, respectively, there being neither an allegation,
much less proof, that petitioner Bayanihan ever made use of the
compositions within the two-year period agreed upon by the parties.
Anent the copyrights obtained by petitioner on the basis of the selfsame two
(2) contracts, suffice it to say 'that such purported copyrights are not
presumed to subsist in accordance with Section 218[a] and [b], of
the Intellectual Property Code,[10]cralaw because respondent Chan had
put in issue the existence thereof.
It is noted that Chan revoked and terminated said contracts, along with
others, on July 30, 1997, or almost two years before petitioner Bayanihan
wrote its sort of complaint/demand letter dated December 7, 1999 regarding
the recent "use/recording of the songs 'Can We Just Stop and Talk A While'
and 'Afraid for Love to Fade,'" or almost three (3) years before petitioner filed
its complaint on August 8, 2000, therein praying, inter alia, for injunctive
relief. By then, it would appear that petitioner had no more right that is
protectable by injunction.
Lastly, petitioner's insinuation that the trial court indulged in generalizations
and was rather skimpy in dishing out its reasons for denying its prayer for
provisional injunctive relief, the same deserves scant consideration. For sure,
the manner by which the trial court crafted its challenged orders is quite
understandable, lest it be subjected to a plausible suspicion of having
prejudged the merits of the main case.
WHEREFORE, petition is hereby DENIED.

SO ORDERED.
Very truly yours,
(Sgd.) LUCITA ABJELINA-SORIANO
Clerk of Court
UNILEVER PHILIPPINES G.R. No. 119280
(PRC), INC.,
Petitioner, Present:
PUNO, J., Chairperson,
SANDOVAL-GUTIERREZ,
- v e r s u s - CORONA,
AZCUNA and GARCIA,* JJ.
THE HONORABLE COURT
OF APPEALS and PROCTER
AND GAMBLE PHILIPPINES,
INC.,
Respondents. Promulgated:
August 10, 2006
x-----------------------------------------x
DECISION
CORONA, J.:

In this petition for review under Rule 45 of the Rules of Court, petitioner
assails the February 24, 1995 decision [1] of the Court of Appeals (CA) in CAG.R. SP No. 35242 entitled Unilever Philippines (PRC), Inc. v. Honorable
Fernando

V. Gorospe,

Jr.

and

Procter

and

Gamble

Philippines,

Inc.

(P&GP) which affirmed the issuance by the courta quo of a writ of preliminary
injunction against it. The writ enjoined petitioner from using and airing, until
further orders of the court, certain television commercials for its laundry

products claimed to be identical or similar to its double tug or tac-tac key


visual.[2]
Petitioner alleges that the writ of preliminary injunction was issued by
the trial court (and affirmed by the CA) without any evidence of private
respondents clear and unmistakable right to the writ. Petitioner further
contends that the preliminary injunction issued against it already disposed of
the main case without trial, thus denying petitioner of any opportunity to
present evidence on its behalf.
The antecedents show that on August 24, 1994, private respondent Procter
and Gamble Phils., Inc. filed a complaint for injunction with damages and a
prayer for temporary restraining order and/or writ of preliminary injunction
against petitioner Unilever, alleging that:
1.5.

As early as 1982, a P&G subsidiary in Italy used a key


visual in the advertisement of its laundry detergent and
bleaching products. This key visual known as the doubletug or tac-tac demonstration shows the fabric being held
by both hands and stretched sideways.

1.6.

The tac-tac was conceptualized for P&G by the


advertising
agency Milano and
Gray
of
Italy
in
1982. The tac-tac was used in the same year in an
advertisement entitled All aperto to demonstrate the effect
on fabrics of one of P&GPs products, a liquid bleach called
Ace.
xxxxxxxxx

1.7.

Since then, P&G has used the tac-tac key visual in the
advertisement of its products. In fact, in 1986, in Italy,
the tac-tac key visual was used in the television
commercial for Ace entitled Kite.

1.8.

P&G has used the same distinctive tac-tac key visual


to local consumers in the Philippines.

xxxxxxxxx
1.10.

Substantially and materially imitating the aforesaid tactac key visual of P&GP and in blatant disregard
of P&GPs intellectual property rights, Unilever on 24 July
1993 started airing a 60 second television commercial TVC
of its Breeze Powerwhite laundry product called Porky. The
said TVC included a stretching visual presentation and
sound effects almost [identical] or substantially similar
to P&GPs tac-tac key visual.
xxxxxxxxx

1.14.

On July 15, 1994, P&GP aired in the Philippines, the


same Kite television advertisement it used in Italy in 1986,
merely dubbing the Italian language with Filipino for the
same produce Ace bleaching liquid which P&GP now
markets in the Philippines.

1.15.

On August 1, 1994, Unilever filed a Complaint with the


Advertising Board of the Philippines to prevent P&GP from
airing the Kite television advertisement.[3]

On August 26, 1994, Judge Gorospe issued an order granting a


temporary restraining order and setting it for hearing on September 2, 1994
for Unilever to show cause why the writ of preliminary injunction should not
issue. During the hearing on September 2, 1994, P&GP received Unilevers
answer with opposition to preliminary injunction. P&GP filed its reply to
Unilevers opposition to a preliminary injunction on September 6, 1994.
During the hearing on September 9, 1994, Judge Gorospe ordered
petitioner to submit a sur-rejoinder. P&GP received Unilevers rejoinder to
reply on September 13, 1994. The following day, on September 14, 1994,
P&GP filed its sur-reply to Unilevers rejoinder.

On September 19, 1994, P&GP received a copy of the order dated


September 16, 1994 ordering the issuance of a writ of preliminary injunction
and fixing a bond ofP100,000. On the same date, P&GP filed the required
bond issued by Prudential Guarantee and Assurance, Inc.
On September 21, 1994, petitioner appealed to the CA assigning the
following errors allegedly committed by the court a quo, to wit:
PUBLIC RESPONDENT HAD ACTED WITHOUT OR IN EXCESS
OF JURISDICTION AND WITH GRAVE ABUSE OF DISCRETION
AMOUNTING TO LACK OF JURISDICTION IN ISSUING THE WRIT OF
PRELIMINARY INJUNCTION IN VIOLATION OF THE RULES ON
EVIDENCE AND PROCEDURE, PARTICULARLY OF SEC. 3 (a), RULE
58 OF THE REVISED RULES OF COURT AND OF THE PREVAILING
JURISPRUDENCE.
PUBLIC RESPONDENT IN ISSUING THE VOID ORDER DATED
SEPTEMBER 16, 1994, HAD, IN EFFECT, ALREADY PREJUDGED
THE MERITS OF THE MAIN CASE.
PUBLIC RESPONDENT HAD ISSUED THE VOID ORDER
ACCORDING RELIEF TO A NON-PARTY IN CIVIL CASE NO. 94-2434
WITHOUT JURISDICTION.
PUBLIC RESPONDENT IN ISSUING THE VOID ORDER HAD
DEPRIVED PETITIONER OF SUBSTANTIVE AND PROCEDURAL DUE
PROCESS; PUBLIC RESPONDENT HAD FORECLOSED PETITIONERS
RIGHT AND THE OPPORTUNITY TO CROSS-EXAMINE PROCTERS
WITNESSES ABAD AND HERBOSA.[4]

On February 24, 1995, the CA rendered its decision finding that


Judge Gorospe did not act with grave abuse of discretion in issuing the
disputed order. The petition for certiorari was thus dismissed for lack of
merit.

After a careful perusal of the records, we agree with the CA and affirm
its decision in toto:
Petitioner does not deny that the questioned TV
advertisements are substantially similar to P&GPs double tug
or tac-tac key visual. However, it submits that P&GP is not
entitled to the relief demanded, which is to enjoin petitioner from
airing said TV advertisements, for the reason that petitioner has
Certificates of Copyright Registration for which advertisements
while P&GP has none with respect to its double-tug or tac-tac key
visual. In other words, it is petitioners contention that P&GP is
not entitled to any protection because it has not registered with
the National Library the very TV commercials which it claims
have been infringed by petitioner.
We disagree. Section 2 of PD 49 stipulates that the
copyright for a work or intellectual creation subsists from the
moment of its creation. Accordingly, the creator acquires
copyright for his work right upon its creation. Contrary to
petitioners contention, the intellectual creators exercise and
enjoyment of copyright for his work and the protection given by
law to him is not contingent or dependent on any formality or
registration. Therefore, taking the material allegations of
paragraphs 1.3 to 1.5 of P&GPsverified Complaint in the context
of PD 49, it cannot be seriously doubted that at least, for
purposes of determining whether preliminary injunction should
issue during thependency of the case, P&GP is entitled to the
injunctive relief prayed for in its Complaint.
The second ground is likewise not well-taken. As adverted
to earlier, the provisional remedy of preliminary injunction will
not issue unless it is shown in the verified complaint that plaintiff
is probably entitled to the relief demanded, which consists in
whole or in part in restraining the commission or continuance of
the acts complained of. In view of such requirement, the court
has to make a tentative determination if the right sought to be
protected exists and whether the act against which the writ is to
be directed is violative of such right. Certainly, the courts
determination as to the propriety of issuing the writ cannot be
taken as a prejudgment of the merits of the case because it is
tentative in nature and the writ may be dissolved during or after
the trial if the court finds that plaintiff was not entitled to it.
xxxxxxxxx

Obviously, the determination made by the court a quo was


only for purposes of preliminary injunction, without passing upon
the merits of the case, which cannot be done until after a fullblown hearing is conducted.
The third ground is patently unmeritorious. As alleged in
the Complaint P&GP is a subsidiary of Procter and Gamble
Company (P&G) for which the double tug ortac-tac key visual was
conceptualized or created. In that capacity, P&GP used the said
TV advertisement in the Philippines to promote its products. As
such subsidiary, P&GP is definitely within the protective mantle
of the statute (Sec. 6, PD 49).
Finally, We find the procedure adopted by the court a
quo to be in order.
The record clearly shows that respondent Judge followed
the (procedure provided for in Section 5, Rule 58, as amended by
BP 224, and Paragraph A(8) of the Interim Rules). In fact, the
court a quo set the incident for hearing on September 2, 1994, at
which date petitioner was ordered to show cause why the writ
should not be issued. Petitioner filed an Opposition to the
application for preliminary injunction. The same incident was
again set for hearing on September 9, 1994, during which the
parties made some manifestations in support of their respective
positions. Subsequent to such hearing petitioner filed a Reply
to P&GPs Rejoinder to its Opposition. Under the foregoing
circumstances, it is absurd to even suggest that petitioner was
not given its day in court in the matter of the issuance of the
preliminary injunctive relief.
xxxxxxxxx
There was of course extreme urgency for the court a quo to
act on plaintiffs application for preliminary injunction. The airing
of TV commercials is necessarily of limited duration only. Without
such temporary relief, any permanent injunction against the
infringing TV advertisements of which P&GP may possibly
succeed in getting after the main case is finally adjudicated
could be illusory if by then such advertisements are no longer
used or aired by petitioner. It is therefore not difficult to perceive
the possible irreparable damage which P&GP may suffer if
respondent Judge did not act promptly on its application for
preliminary injunction.[5]

Preliminary injunction is a provisional remedy intended to provide


protection to parties for the preservation of their rights or interests during
the pendency of the principal action.[6] Thus, Section1, Rule 58 of the Rules of
Court provides:
Section 1. Preliminary injunction defined; classes. A
preliminary injunction is an order granted at any stage of an
action or proceeding prior to the judgment or final order,
requiring a party or a court, agency or a person to refrain from a
particular act or acts. It may also require the performance of a
particular act or acts, in which case it shall be known as a
preliminary mandatory injunction.
Injunction is resorted to only when there is a pressing necessity to
avoid injurious consequences which cannot be remedied under any standard
compensation.[7] As correctly ruled by the CA, there was an extreme urgency
to grant the preliminary injunction prayed for by P&GP considering that TV
commercials are aired for a limited period of time only. In fact, this Court
takes note of the fact that the TV commercial in issue the Kite TV
advertisement is no longer aired today, more than 10 years after the
injunction was granted on September 16, 1994.
The sole objective of a writ of preliminary injunction is to preserve the
status quo until the merits of the case can be heard fully. [8] A writ of
preliminary injunction is generally based solely on initial and incomplete
evidence.[9] Thus, it was impossible for the court a quo to fully dispose of the
case, as claimed by petitioner, without all the evidence needed for the full
resolution of the same. To date, the main case still has to be resolved by the
trial court.

The issuance of a preliminary injunction rests entirely on the discretion


of the court and is generally not interfered with except in cases of manifest
abuse.[10] There was no such abuse in the case at bar, especially because
petitioner was given all the opportunity to oppose the application for
injunction. The fact was, it failed to convince the court why the injunction
should not be issued. Thus, in Santos v. Court of Appeals,[11] we held that no
grave abuse of discretion can be attributed to a judge or body issuing a writ
of preliminary injunction where a party has not been deprived of its day in
court as it was heard and it exhaustively presented all its arguments and
defenses.
WHEREFORE, the petition is hereby DENIED.
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 Certiorari 1 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 VicePresident; Marissa L. Flores (Flores), Vice-President for New and Public
Affairs; Jessica A. Soho (Soho), Director for News; Grace Dela Pea-Reyes
(Dela Pea-Reyes), Head of News and Public Affairs; John Oliver Manalastas
(Manalastas), Program Manager; and others.
The controversy arose from GMA-7s 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 Reuters 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
latters consent."10
GMA-7, to which Gozon, Duavit, Jr., Flores, Soho, Dela Pea-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 Cruzs 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-7s
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 Pea-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. 0410458 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)
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 Pea-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 Pea-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 ones 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 ones 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)


ABS-CBNs 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 courts 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
Agras finding of probable cause.
I
The trial court granted respondents Motion to Suspend Proceedings and
deferred respondents Dela Pea-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 accuseds 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 Court whatever
disposition the fiscal may feel should be proper in the case thereafter 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 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 Pea-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 Courts 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 prosecutors 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 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 Informations 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 Secretarys 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
executives 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 Secretarys 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 branchs 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 wellfounded 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:

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 Marshalls 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
communitys 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 wellfounded 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
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
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-CBNs news footage of
Angelo dela Cruzs 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 has been likened to a ghost in that it "must be spoken to a
little before it will explain 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 Gods." 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 persons 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 BJPIs 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:
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 BJPIs
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
defendants film did not infringe the plaintiffs 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 anothers 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 plaintiffs 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 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 Courts
pronouncement in Pacific & Southern Co. v. Duncan,98 which involves a News
Monitoring Services videotaping and sale of WXIA-TVs 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 RecordHerald 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 nonprotectibility 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 creators 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 authors 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-CBNs 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)
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 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-CBNs 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 GMA7 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 artists performance under Section 203, or a
producers 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-7s use of ABS-CBNs 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-CBNs 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-CBNs ownership of the footage or was
notified of it. They claim that the Angelo dela Cruz footage is considered a
short excerpt of an events "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.
....
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 owners 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 copyrights 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 works 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 works 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 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-7s rebroadcast of ABS-CBNs news footage without the latters 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 latters 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 preexisting 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
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 accuseds 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 Canadas 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.
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 (P50,000) to One hundred fifty
thousand pesos (P150,000) 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

(P150,000) to Five hundred thousand pesos (P500,000) 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 (P500,000)
to One million five hundred thousand pesos (P1,500,000) 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 dealers 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-CBNs footage
in their broadcast. That is why GMA-7 allegedly cut the feed from Reuters
upon seeing ABS-CBNs ogo and reporter. To admit a different treatment for
broadcasts would mean abandonment of a broadcasting organizations
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 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 latters 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-7s 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
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 (P50,000) to One hundred fifty thousand
pesos (P150,000) 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 (P150,000)
to Five hundred thousand pesos (P500,000) 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 (P500,000) to One
million five hundred thousand pesos (P1,500,000) 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 corporations 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 accuseds
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 Prosecutors finding that only respondents Dela Pea-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-7s 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 Pea-Reyes and Manalastas
liable due to the nature of their work and responsibilities. He found that:
[t]his Office however finds respondents Grace Dela Pea-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 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 Pea-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 rebroadcast. 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 Pea-Reyes and
Manalastas. Both respondents committed acts that promoted infringement of
ABS-CBNs 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-CBNs 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 Pea-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 Pea-Reyes and Manalastas


directly committed copyright infringement of ABS-CBNs 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.1wphi1 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 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.
MARVIC M.V.F. LEONEN
Associate Justice

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.
DECISION
REGALADO, J.:
Before us is a petition for review on certiorari of the decision of the Court
of Appeals[1] promulgated on July 22, 1992 and its resolution [2] of May 10,
1993 denying petitioners motion for reconsideration, both of which sustained
the order[3] 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 order [4] 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. Domingos 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, Appellants 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 therefore 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 courts 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
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. Domingos 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 in transacting 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 falling
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:
SECTION 1. Definitions and scope of this Act. (1) x x x; 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 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 inprogressive 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. 7042[19] 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 investors; 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
Commission[20] 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 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 x x x is the owner
of copyright or the owner of exclusive rights of distribution in the Philippines
pursuant to any agreement(s) between x x x and the respective owners of
copyright in such cinematographic work(s), to initiate and prosecute on
behalf of x x x 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 x x x is the owner of copyright or the owner
of exclusive rights of distribution in the Philippines pursuant to any
agreement(s) between x x x and the respective owners of copyright in such
works.[21]
tantamount to doing business in the Philippines. We fail to see how
exercising ones 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. [22] In
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.[24] Likewise, 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.
[26]
With 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 sue[29] 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 plaintiffs 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 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 Courts 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
latters 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 violations 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 pirated 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 therefor 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 Staf[37] stating that:
Probable cause for a search warrant is defined as such facts and
circumstances which would lead a reasonably discrete 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 Foxcase 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. x x
x[39]
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 amendatory statutes and administrative rulings and circulars, but
also, and properly so, to judicial decisions. Our holding in the earlier case
of People vs. Jubinal[44] 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 Courts 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 interpretation legis vim
obtinet the interpretation placed upon the written law by a competent court
has the force of law. x x x, 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. x x x. (Stress supplied).
This was forcefully reiterated in Spouses Benzonan vs. Court of Appeals,
et al.,[45] where the Court expounded:
x x x. 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 maximum 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. x x x.
The reasoning behind Senarillos vs. Hermosisima[46] that judicial
interpretation of a statute constitutes part of the law as of the date it was
originally passed, since the Courts 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. [47] 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
argumentation:

in

petitioners

impassioned

and

well-founded

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, 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.
x x x. (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
x x x. If the lower courts 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
petitioners 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 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 P.D. 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 timehonored 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 efect, 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 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 ofense by the private respondents. Only the
petitioners 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 (Italics 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 to present them (Italics supplied for emphasis).[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 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 affidavit [51] and his
deposition,[52] did 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 affidavit [53] and further
expounded in his deposition[54] 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 nor 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
provisions of Rule 126 of the Rules of Court:

by

the

following

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 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 Staf, 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
proprietary 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 therefore 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 courts 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
statemanship. 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 issuances 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 to this controversy:
In the instant case, the following facts have been established: (1)
copyrighted video tapes bearing titles enumerated in Search Warrant No. 87053 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 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, he
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, he returned to Sunshine
Home Video and rented Robocop with a 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. x x x.[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
x x x. 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 inLa
Chemise Lacoste, S.A. vs. Fernandez, et al., supra, may just as easily apply
to the present case:
A review of the grounds invoked x x x 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. x x x
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 Courts admonition also in La Chemise Lacoste,
supra, that
x x x. 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 of 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, 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 courts 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 respondents 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. x x x.[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). x x x. 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
merelyto strengthen such evidence. x x x.
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:
x x x. 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-specificoffense 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 courts 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.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 certifications[85] from the Copyright Section of the National
Library, presented as evidence by private respondents to show nonregistration 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 be 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 courts 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.

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 certiorari[1] of the Resolutions[2] of the Department of
Justice dismissing for lack of merit and insufficiency of evidence petitioner
Microsoft Corporations 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 Beltrons 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[.] xxxx[5]

The Agreement also authorized Microsoft and Beltron to terminate the


contract if the other fails to comply with any of the Agreements provisions.
Microsoft terminated the Agreement effective 22 June 1995 for Beltrons nonpayment 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
Benedic[8] 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-installed [10]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, users 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 Microsofts 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) Microsofts 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) Microsofts 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.
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 Microsofts motion
in its Order of 19 July 1996. Microsoft appealed to the Court of Appeals in CAG.R. CV No. 54600. In its Decision of 29 November 2001, the Court of
Appeals granted Microsofts 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 Microsofts complaint
for lack of merit and insufficiency of evidence. State Prosecutor Ong also
recommended the dismissal of Lotus Corporations 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 Ongs 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 MSDOS 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.
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 Ongs recommendation, denied Microsofts motion. [24]
Microsoft appealed to the Office of the DOJ Secretary. In the Resolution of
3 August 2000, DOJ Undersecretary Regis V. Puno dismissed Microsofts
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


INFRINGEMENT AND UNFAIR COMPETITION.

ON

COPYRIGHT

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 Microsofts 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 corporation [29] 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.
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 prosecutors discretion in
determining probable cause[36] 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 5[39] of PD 49 (Section 5) enumerates the rights vested exclusively
on the copyright owner. Contrary to the DOJs 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 owners prior consent renders
himself civilly[40] and criminally[41] 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 Microsofts 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. 96193 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
Microsofts 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.

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 Microsofts 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, users
manuals, registration cards or certificates of authenticity.
On the 2,831 Microsoft CD-ROMs[49] 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 General [50] and
respondents contend. Beltrons rights[51] 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

MED[53] Product.[54] Being a mere reproducer/installer of one Microsoft


software copy on each customers 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
Microsofts 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 Microsofts claim that Sacriz and Samiano bought the CDROMs 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 Microsofts 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 counteraffidavit 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.
Davide, Jr., C.J., (Chairman), Quisumbing, Ynares-Santiago, and Azcuna,
JJ., concur

[G.R. No. 108946. January 28, 1999]

FRANCISCO G. JOAQUIN, JR., and BJ PRODUCTIONS, INC., petitioners,


vs. FRANKLIN DRILON GABRIEL ZOSA, WILLIAM ESPOSO, FELIPE
MEDINA, JR., and CASEY FRANCISCO,respondents.
DECISION
MENDOZA, J.:
This is a petition for certiorari. Petitioners seek to annul the resolution of
the Department of Justice, dated August 12, 1992, in Criminal Case No. Q-9227854, entitled Gabriel Zosa, et al. v. City Prosecutor of Quezon City and
Francisco Joaquin, Jr., and its resolution, dated December 3, 1992, denying
petitioner Joaquins motion for reconsideration.
Petitioner BJ Productions, Inc. (BJPI) is the holder/grantee of Certificate of
Copyright No. M922, dated January 28, 1971, of Rhoda and Me, a dating
game show aired from 1970 to 1977.
On June 28, 1973, petitioner BJPI submitted to the National Library an
addendum to its certificate of copyright specifying the shows format and
style of presentation.
On July 14, 1991, while watching television, petitioner Francisco Joaquin,
Jr., president of BJPI, saw on RPN Channel 9 an episode of Its a Date, which
was produced by IXL Productions, Inc. (IXL). On July 18, 1991, he wrote a
letter to private respondent Gabriel M. Zosa, president and general manager
of IXL, informing Zosa that BJPI had a copyright to Rhoda and Me and
demanding that IXL discontinue airing Its a Date.
In a letter, dated July 19, 1991, private respondent Zosa apologized to
petitioner Joaquin and requested a meeting to discuss a possible
settlement. IXL, however, continued airing Its a Date, prompting petitioner
Joaquin to send a second letter on July 25, 1991 in which he reiterated his
demand and warned that, if IXL did not comply, he would endorse the matter
to his attorneys for proper legal action.
Meanwhile, private respondent Zosa sought to register IXLs copyright to
the first episode of Its a Date for which it was issued by the National Library
a certificate of copyright on August 14, 1991.
Upon complaint of petitioners, an information for violation of P.D. No. 49
was filed against private respondent Zosa together with certain officers of
RPN Channel 9, namely, William Esposo, Felipe Medina, and Casey Francisco,
in the Regional Trial Court of Quezon City where it was docketed as Criminal
Case No. 92-27854 and assigned to Branch 104 thereof. However, private
respondent Zosa sought a review of the resolution of the Assistant City
Prosecutor before the Department of Justice.

On August 12, 1992, respondent Secretary of Justice Franklin M. Drilon


reversed the Assistant City Prosecutors findings and directed him to move for
the dismissal of the case against private respondents. [1]
Petitioner Joaquin filed a motion for reconsideration, but his motion was
denied by respondent Secretary of Justice on December 3, 1992. Hence, this
petition. Petitioners contend that:
1. The public respondent gravely abused his discretion amounting to
lack of jurisdiction when he invoked non-presentation of the master
tape as being fatal to the existence of probable cause to prove
infringement, despite the fact that private respondents never
raised the same as a controverted issue.
2. The public respondent gravely abused his discretion amounting to
lack of jurisdiction when he arrogated unto himself the
determination of what is copyrightable - an issue which is
exclusively within the jurisdiction of the regional trial court to
assess in a proper proceeding.
Both public and private respondents maintain that petitioners failed to
establish the existence of probable cause due to their failure to present the
copyrighted master videotape of Rhoda and Me. They contend that petitioner
BJPIs copyright covers only a specific episode of Rhoda and Me and that the
formats or concepts of dating game shows are not covered by copyright
protection under P. D. No. 49.
Non-Assignment of Error

Petitioners claim that their failure to submit the copyrighted master


videotape of the television show Rhoda and Me was not raised in issue by
private respondents during the preliminary investigation and, therefore, it
was error for the Secretary of Justice to reverse the investigating prosecutors
finding of probable cause on this ground.
A preliminary investigation falls under the authority of the state
prosecutor who is given by law the power to direct and control criminal
actions.[2] He is, however, subject to the control of the Secretary of
Justice. Thus, Rule 112, 4 of the Revised Rules of Criminal Procedure,
provides:
SEC. 4. Duty of investigating fiscal. - If the investigating fiscal finds
cause to hold the respondent for trial, he shall prepare the resolution
and corresponding information. He shall certify under oath that he, or
as shown by the record, an authorized officer, has personally examined
the complainant and his witnesses, that there is reasonable ground to
believe that a crime has been committed and that the accused is

probably guilty thereof, that the accused was informed of the


complaint and of the evidence submitted against him and that he was
given an opportunity to submit controverting evidence. Otherwise, he
shall recommend dismissal of the complaint.
In either case, he shall forward the records of the case to the
provincial or city fiscal or chief state prosecutor within five (5) days
from his resolution. The latter shall take appropriate action thereon
within ten (10) days from receipt thereof, immediately informing the
parties of said action.
No complaint or information may be filed or dismissed by an
investigating fiscal without the prior written authority or approval of
the provincial or city fiscal or chief state prosecutor.
Where the investigating assistant fiscal recommends the dismissal
of the case but his findings are reversed by the provincial or city fiscal
or chief state prosecutor on the ground that a probable cause exists,
the latter may, by himself, file the corresponding information against
the respondent or direct any other assistant fiscal or state prosecutor
to do so, without conducting another preliminary investigation.
If upon petition by a proper party, the Secretary of Justice reverses
the resolution of the provincial or city fiscal or chief state prosecutor,
he shall direct the fiscal concerned to file the corresponding
information without conducting another preliminary investigation or to
dismiss or move for dismissal of the complaint or information.
In reviewing resolutions of prosecutors, the Secretary of Justice is not
precluded from considering errors, although unassigned, for the purpose of
determining whether there is probable cause for filing cases in court. He
must make his own finding of probable cause and is not confined to the
issues raised by the parties during preliminary investigation. Moreover, his
findings are not subject to review unless shown to have been made with
grave abuse.
Opinion of the Secretary of Justice

Petitioners contend, however, that the determination of the question


whether the format or mechanics of a show is entitled to copyright protection
is for the court, and not the Secretary of Justice, to make. They assail the
following portion of the resolution of the respondent Secretary of Justice:

[T]he essence of copyright infringement is the copying, in whole or in


part, of copyrightable materials as defined and enumerated in Section 2
of PD. No. 49. Apart from the manner in which it is actually expressed,
however, the idea of a dating game show is, in the opinion of this Office,
a non-copyrightable material. Ideas, concepts, formats, or schemes in
their abstract form clearly do not fall within the class of works or
materials susceptible of copyright registration as provided in PD. No. 49.
[3]
(Emphasis added.)
It is indeed true that the question whether the format or mechanics of
petitioners television show is entitled to copyright protection is a legal
question for the court to make. This does not, however, preclude respondent
Secretary of Justice from making a preliminary determination of this question
in resolving whether there is probable cause for filing the case in court. In
doing so in this case, he did not commit any grave error.
Presentation of Master Tape

Petitioners claim that respondent Secretary of Justice gravely abused his


discretion in ruling that the master videotape should have been presented in
order to determine whether there was probable cause for copyright
infringement. They contend that 20th Century FoxFilm Corporation v. Court of
Appeals,[4] on which respondent Secretary of Justice relied in reversing the
resolution of the investigating prosecutor, is inapplicable to the case at bar
because in the present case, the parties presented sufficient evidence which
clearly establish linkages between the copyrighted show Rhoda and Me and
the infringing TV show Its a Date.[5]
The case of 20th Century Fox Film Corporation involved raids conducted
on various videotape outlets allegedly selling or renting out pirated
videotapes. The trial court found that the affidavits of NBI agents, given in
support of the application for the search warrant, were insufficient without
the master tape. Accordingly, the trial court lifted the search warrants it had
previously issued against the defendants. On petition for review, this Court
sustained the action of the trial court and ruled:[6]
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
petitioners 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.
This ruling was qualified in the later case of Columbia Pictures, Inc. v. Court
of Appeals[7] in which it was held:
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 sweeping and inflexible requirement in
all or similar copyright infringement cases. . . .[8]
In the case at bar, during the preliminary investigation, petitioners and
private respondents presented written descriptions of the formats of their
respective televisions shows, on the basis of which the investigating
prosecutor ruled:
As may [be] gleaned from the evidence on record, the substance of the
television productions complainants RHODA AND ME and Zosas ITS A DATE is
that two matches are made between a male and a female, both single, and
the two couples are treated to a night or two of dining and/or dancing at the
expense of the show. The major concepts of both shows is the same. Any
difference appear mere variations of the major concepts.
That there is an infringement on the copyright of the show RHODA AND ME
both in content and in the execution of the video presentation are
established because respondents ITS A DATE is practically an exact copy of
complainants RHODA AND ME because of substantial similarities as follows,
to wit:
RHODA AND ME ITS A DATE

Set I Set I
a. Unmarried participant a. same
of one gender (searcher) appears on one side of a divider, while three (3)
unmarried participants of the other gender are on the other side of
the divider. This arrangement is done to ensure that the searcher
does not see the searchees.
b. Searcher asks a question b. same
to be answered by each of the
searchees. The purpose is
to determine who
amongthe searchees is the
most compatible with the
searcher.
c. Searcher speculates on the c. same
match to the searchee.
d. Selection is made by the d. Selection is
use of compute (sic) methods, based on the
or by the way questions are answer of the
answered, or similar methods. Searchees.
Set 2 Set 2
Same as above with the genders same
of the searcher and
searchees interchanged.
[9]

Petitioners assert that the format of Rhoda and Me is a product of


ingenuity and skill and is thus entitled to copyright protection. It is their
position that the presentation of a point-by-point comparison of the formats
of the two shows clearly demonstrates the nexus between the shows and
hence establishes the existence of probable cause for copyright
infringement. Such being the case, they did not have to produce the master
tape.
To begin with, the format of a show is not copyrightable. Section 2 of P.D.
No. 49,[10] otherwise known as the DECREE ON INTELLECTUAL PROPERTY,
enumerates the classes of work entitled to copyright protection, to wit:

Section 2. The rights granted by this Decree shall, from the moment of
creation, subsist with respect to any of the following classes of works:
(A) Books, including composite and cyclopedic works, manuscripts,
directories, and gazetteers;
(B) Periodicals, including pamphlets and newspapers;
(C) Lectures, sermons, addresses, dissertations prepared for oral delivery;
(D) Letters;
(E) Dramatic or dramatico-musical compositions; choreographic works and
entertainments in dumb shows, the acting form of which is fixed in writing or
otherwise;
(F) Musical compositions, with or without words;
(G) Works of drawing, painting, architecture, sculpture, engraving,
lithography, and other works of art; models or designs for works of art;
(H) Reproductions of a work of art;
(I) Original ornamental designs or models for articles of manufacture,
whether or not patentable, and other works of applied art;
(J) Maps, plans, sketches, and charts;
(K) Drawings or plastic works of a scientific or technical character;
(L) Photographic works and works produced by a process analogous to
photography; lantern slides;
(M) Cinematographic works and works produced by a process analogous to
cinematography or any process for making audio-visual recordings;
(N) Computer programs;
(O) Prints, pictorial illustrations advertising copies, labels, tags, and box
wraps;
(P) Dramatizations, translations, adaptations, abridgements, arrangements
and other alterations of literary, musical or artistic works or of works of the
Philippine government as herein defined, which shall be protected as
provided in Section 8 of this Decree.

(Q) Collections of literary, scholarly, or artistic works or of works referred to


in Section 9 of this Decree which by reason of the selection and arrangement
of their contents constitute intellectual creations, the same to be protected
as such in accordance with Section 8 of this Decree.
(R) Other literary, scholarly, scientific and artistic works.
This provision is substantially the same as 172 of the INTELLECTUAL
PROPERTY CODE OF THE PHILIPPINES (R.A. No. 8293). [11] The format or
mechanics of a television show is not included in the list of protected works
in 2 of P.D. No. 49. For this reason, the protection afforded by the law cannot
be extended to cover them.
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 preexisting 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.[12]
Since . . . copyright in published works is purely a statutory creation, a
copyright may be obtained only for a work falling within the statutory
enumeration or description.[13]
Regardless of the historical viewpoint, it is authoritatively settled in the
United States that there is no copyright except that which is bothcreated and
secured by act of Congress . . . .[14]
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.[15] 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 BJPIs 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:
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 BJPIs
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.[16]
WHEREFORE, the petition is hereby DISMISSED.
SO ORDERED.
Puno, Quisumbing, and Buena, JJ., concur.
Bellosillo, J., (Chairman), no part due to relation to one of the parties.

ABS-CBN BROADCASTING G.R. Nos. 175769-70


CORPORATION,
Petitioner, Present:
Ynares-Santiago, J. (Chairperson),
- versus - Austria-Martinez,
Chico-Nazario,
Nachura, and
Leonardo-De Castro,* JJ.
PHILIPPINE MULTI-MEDIA SYSTEM,
INC., CESAR G. REYES, FRANCIS
CHUA (ANG BIAO), MANUEL F.
ABELLADA, RAUL B. DE MESA, Promulgated:
AND ALOYSIUS M. COLAYCO,
Respondents. January 19, 2009
x ---------------------------------------------------------------------------------------- x

DECISION
YNARES-SANTIAGO, J.:
This petition for review on certiorari [1] assails the July 12, 2006 Decision [2] 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 Resolution[3] denying the motion for reconsideration.
Petitioner ABS-CBN Broadcasting Corporation (ABS-CBN) is licensed
under the laws of the Republic of the Philippinesto 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 PMSIs Board of
Directors.
PMSI was granted a legislative franchise under Republic Act No.
8630[5] 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 PMSIs 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 PMSIs 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-CBNs 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 CAG.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 MultiMedia 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
provide nationwide
DTH pay television
terms of carriage

television services of PMSI is equipped to


DTH satellite services. Concededly, PMSIs
services covers very much wider areas in
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]
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 (IBCChannel 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-toair 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. 0408-88, 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 1010-2003 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-tohome 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 1010-2003.(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. 10-20040002. 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
decision[15] 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.
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-CBNs motion for reconsideration was denied, hence, this petition.


ABS-CBN contends that PMSIs unauthorized rebroadcasting of Channels
2 and 23 is an infringement of its broadcasting rights and copyright under
the Intellectual Property Code (IP Code);[18]that Memorandum Circular No. 0408-88 excludes DTH satellite television operators; that the Court of Appeals
interpretation of the must-carry rule violates Section 9 of Article III [19] 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 PMSIs 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-CBNs contention that PMSI violated its
broadcasters 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-CBNs 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-CBNs broadcasting rights and copyright, thus:
That the Appellants [herein respondent PMSI] subscribers
are able to view Appellees [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 Appellants DTH


satellite television service must be examined since it is satellitebased. 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

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 Appellees 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
Appellants subscribers view Appellees 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 Appellees signal, that is
via satellite, does not diminish the fact that it operates and
functions as a cable television. It remains that the Appellants
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 Appellees
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 Paper[23] 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 PMSIs 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.
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-CBNs signals by PMSI which functions essentially as a cable television
does not therefore constitute rebroadcasting in violation of the formers
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-CBNs 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 thePhilippines.[26] The imposition of the must-carry rule is
within the NTCs 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 socioeconomic 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 24[34] 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 publicinformation 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.
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 x[37]
There is likewise no merit to ABS-CBNs claim that PMSIs carriage of its
signals is for a commercial purpose; that its being the countrys top
broadcasting company, the availability of its signals allegedly enhances
PMSIs 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-CBNs 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
channels[42] 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, PMSIs 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 ABSCBNs 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-CBNs argument that PMSIs 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-CBNs 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 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, Appellees [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, Appellants DTH satellite television
services is of limited subscription. There was not even a showing
on part of the Appellee the number of Appellants 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-CBNs
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-CBNs 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,
Communication Corporation,[51] we held:

Inc.

v.

International

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 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-CBNs 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]
The records show that petitioner assailed the constitutionality of
Memorandum Circular No. 04-08-88 by way of a collateral attack before the
Court of Appeals. In Philippine National Bank v. Palma,[57] we ruled that for
reasons of public policy, the constitutionality of a law cannot be collaterally
attacked. A law is deemed valid unless declared null and void by a
competent court; more so when the issue has not been duly pleaded in the
trial court.[58]
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] InPhilippine 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 x[61]
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 proprioby 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 PMSIs 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.
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]
WHEREFORE, the petition is DENIED. The July 12, 2006 Decision of
the Court of Appeals in CA-G.R. SP Nos. 88092 and 90762, sustaining the
findings of the Director-General of the Intellectual Property Office and
dismissing the petitions filed by ABS-CBN Broadcasting Corporation, and the
December 11, 2006 Resolution denying the motion for reconsideration,
areAFFIRMED.

SO ORDERED.

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.
DECISION
REGALADO, J.:
Before us is a petition for review on certiorari of the decision of the Court
of Appeals[1] promulgated on July 22, 1992 and its resolution [2] of May 10,
1993 denying petitioners motion for reconsideration, both of which sustained
the order[3] 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 order [4] 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. Domingos 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, Appellants 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 therefore 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 courts 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
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. Domingos 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 in transacting 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 falling
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:


SECTION 1. Definitions and scope of this Act. (1) x x x; 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 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 inprogressive 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. 7042[19] 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 investors; 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
Commission[20] 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 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 x x x is the owner
of copyright or the owner of exclusive rights of distribution in the Philippines
pursuant to any agreement(s) between x x x and the respective owners of
copyright in such cinematographic work(s), to initiate and prosecute on
behalf of x x x 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 x x x is the owner of copyright or the owner
of exclusive rights of distribution in the Philippines pursuant to any
agreement(s) between x x x and the respective owners of copyright in such
works.[21]
tantamount to doing business in the Philippines. We fail to see how
exercising ones 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. [22] In
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.[24] Likewise, 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.
[26]
With 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 sue[29] 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 plaintiffs 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 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 Courts 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
latters 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 violations 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 pirated 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 therefor 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 Staf[37] stating that:
Probable cause for a search warrant is defined as such facts and
circumstances which would lead a reasonably discrete 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 the20th
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 Foxcase 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. x x
x[39]
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 amendatory statutes and administrative rulings and circulars, but

also, and properly so, to judicial decisions. Our holding in the earlier case
of People vs. Jubinal[44] 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 Courts 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 interpretation legis vim
obtinetthe interpretation placed upon the written law by a competent court
has the force of law. x x x, 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. x x x. (Stress supplied).
This was forcefully reiterated in Spouses Benzonan vs. Court of Appeals,
et al.,[45] where the Court expounded:
x x x. 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 maximum 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 newdoctrines. x x x.
The reasoning behind Senarillos vs. Hermosisima[46] that judicial
interpretation of a statute constitutes part of the law as of the date it was
originally passed, since the Courts 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. [47] 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
argumentation:

in

petitioners

impassioned

and

well-founded

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, 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.
x x x. (W)e believe that the lower court should be considered as having
followed the requirements of the law in issuing Search Warrant No. 87053. 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
x x x. If the lower courts 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
petitioners 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 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 P.D. 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 timehonored precept that proceedings to put a man to task as an offender under
our laws should be interpreted instrictissimi 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 efect, 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 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 ofense by the private respondents. Only the
petitioners 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 (Italics 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 warrantto determine the existence
of the linkage of the copyrighted films with the pirated ones. Thus, there is
no reason not to present them (Italics supplied for emphasis).[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 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 affidavit [51] and his
deposition,[52] did 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 affidavit [53] and further
expounded in his deposition[54] 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 nor 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
provisions of Rule 126 of the Rules of Court:

by

the

following

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 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 Staf, 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
proprietary 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 therefore 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 courts 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
statemanship. 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 issuances 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 to this controversy:
In the instant case, the following facts have been established: (1)
copyrighted video tapes bearing titles enumerated in Search Warrant No. 87053 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 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, he
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, he returned to Sunshine
Home Video and rented Robocop with a 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. x x x.[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
x x x. 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 by20th 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 x x x 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. x x x
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 Courts admonition also in La Chemise Lacoste,


supra, that
x x x. 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 of 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, 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 courts 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 respondents 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. x x x.[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). x x x. 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. x x x.
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:
x x x. 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-specificoffense 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 courts 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. 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 certifications[85] from the Copyright Section of the National
Library, presented as evidence by private respondents to show nonregistration 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 be 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 courts 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.
Narvasa, C.J., Padilla, Davide, Jr., Romero, Melo, Puno, Vitug, Kapunan,
Mendoza, Francisco, Hermosisima, Jr., Panganiban, and Torres, Jr., JJ., concur.
Bellosillo, J., no part in deliberations.

[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.
DECISION
PARDO, J.:
The case before us is a petition for review on certiorari[1] to set aside the
(a) decision of the Court of Appeals[2], and (b) the resolution denying

petitioners motion for reconsideration,[3] in which the appellate court affirmed


the trial courts dismissal of the complaint for infringement and/or unfair
competition and damages but deleted the award for attorneys fees.
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 respondents 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
particulars[6] 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 respondents book.
On August 1, 1988, respondent Goodwill Trading Co., Inc. filed its answer
to the complaint[7] 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 answer [8], 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.
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 attorneys fees and defendant Goodwill for P5,000.00
attorneys 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[12], and on July 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 authors or proprietors 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 Burkes Speech on Conciliation, Boerigs Competence in
English and Broughtons, Edmund Burkes Collection.
xxx
Appellants reliance on the last paragraph on Section 11 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,
however, the Court of Appeals denied the same in a Resolution [17] dated
November 25, 1997.
[16]

Hence, this petition.


In this appeal, petitioners submit that the appellate court erred in
affirming the trial courts 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 writers 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:
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 substantial 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)
xxxxxxxxxxxx
(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.
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:
xxxxxxxxxxxx
(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 latters 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.
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.
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 authors 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., (Chairman), pls. see dissenting opinion.
Melo, J., no part. Personal reasons.

G.R. No. 161295

June 29, 2005

JESSIE G. CHING, petitioner,


vs.
WILLIAM M. SALINAS, SR., WILLIAM M. SALINAS, JR., JOSEPHINE L.
SALINAS, JENNIFER Y. SALINAS, ALONTO SOLAIMAN SALLE, JOHN
ERIC I. SALINAS, NOEL M. YABUT (Board of Directors and Officers of
WILAWARE PRODUCT CORPORATION), respondents.
DECISION
CALLEJO, SR., J.:
This petition for review on certiorari assails the Decision1 and Resolution2 of
the Court of Appeals (CA) in CA-G.R. SP No. 70411 affirming the January 3,
2002 and February 14, 2002 Orders3 of the Regional Trial Court (RTC) of
Manila, Branch 1, which quashed and set aside Search Warrant Nos. 01-2401
and 01-2402 granted in favor of petitioner Jessie G. Ching.
Jessie G. Ching is the owner and general manager of Jeshicris Manufacturing
Co., the maker and manufacturer of a Utility Model, described as "Leaf Spring
Eye Bushing for Automobile" made up of plastic.
On September 4, 2001, Ching and Joseph Yu were issued by the National
Library Certificates of Copyright Registration and Deposit of the said work
described therein as "Leaf Spring Eye Bushing for Automobile." 4
On September 20, 2001, Ching requested the National Bureau of
Investigation (NBI) for police/investigative assistance for the apprehension
and prosecution of illegal manufacturers, producers and/or distributors of the
works.5
After due investigation, the NBI filed applications for search warrants in the
RTC of Manila against William Salinas, Sr. and the officers and members of
the Board of Directors of Wilaware Product Corporation. It was alleged that

the respondents therein reproduced and distributed the said models


penalized under Sections 177.1 and 177.3 of Republic Act (R.A.) No. 8293.
The applications sought the seizure of the following:
a.) Undetermined quantity of Leaf spring eye bushing for automobile
that are made up of plastic polypropylene;
b.) Undetermined quantity of Leaf spring eye bushing for automobile
that are made up of polyvinyl chloride plastic;
c.) Undetermined quantity of Vehicle bearing cushion that is made up
of polyvinyl chloride plastic;
d.) Undetermined quantity of Dies and jigs, patterns and flasks used in
the manufacture/fabrication of items a to d;
e.) Evidences of sale which include delivery receipts, invoices and
official receipts.6
The RTC granted the application and issued Search Warrant Nos. 01-2401
and 01-2402 for the seizure of the aforecited articles.7 In the inventory
submitted by the NBI agent, it appears that the following articles/items were
seized based on the search warrants:
Leaf Spring eye bushing
a) Plastic Polypropylene
- C190 27 }
- C240 rear 40 }
- C240 front 41 } BAG 1
b) Polyvinyl Chloride Plastic
- C190 13 }
c) Vehicle bearing cushion
- center bearing cushion 11 }
Budder for C190 mold 8 }
Diesel Mold

a) Mold for spring eye bushing rear 1 set


b) Mold for spring eye bushing front 1 set
c) Mold for spring eye bushing for C190 1 set
d) Mold for C240 rear 1 piece of the set
e) Mold for spring eye bushing for L300 2 sets
f) Mold for leaf spring eye bushing C190 with metal 1 set
g) Mold for vehicle bearing cushion 1 set8
The respondents filed a motion to quash the search warrants on the following
grounds:
2. The copyright registrations were issued in violation of the Intellectual
Property Code on the ground that:
a) the subject matter of the registrations are not artistic or literary;
b) the subject matter of the registrations are spare parts of
automobiles meaning there (sic) are original parts that they are
designed to replace. Hence, they are not original. 9
The respondents averred that the works covered by the certificates issued by
the National Library are not artistic in nature; they are considered
automotive spare parts and pertain to technology. They aver that the models
are not original, and as such are the proper subject of a patent, not
copyright.10
In opposing the motion, the petitioner averred that the court which issued
the search warrants was not the proper forum in which to articulate the issue
of the validity of the copyrights issued to him. Citing the ruling of the Court
inMalaloan v. Court of Appeals,11 the petitioner stated that a search warrant
is merely a judicial process designed by the Rules of Court in anticipation of a
criminal case. Until his copyright was nullified in a proper proceeding, he
enjoys rights of a registered owner/holder thereof.
On January 3, 2002, the trial court issued an Order12 granting the motion, and
quashed the search warrant on its finding that there was no probable cause
for its issuance. The court ruled that the work covered by the certificates
issued to the petitioner pertained to solutions to technical problems, not
literary and artistic as provided in Article 172 of the Intellectual Property
Code.

His motion for reconsideration of the order having been denied by the trial
courts Order of February 14, 2002, the petitioner filed a petition
for certiorari in the CA, contending that the RTC had no jurisdiction to delve
into and resolve the validity of the copyright certificates issued to him by the
National Library. He insisted that his works are covered by Sections 172.1
and 172.2 of the Intellectual Property Code. The petitioner averred that the
copyright certificates are prima facie evidence of its validity, citing the ruling
of the United States Court of Appeals in Wildlife Express Corporation v. Carol
Wright Sales, Inc.13 The petitioner asserted that the respondents failed to
adduce evidence to support their motion to quash the search warrants. The
petitioner noted that respondent William Salinas, Jr. was not being honest, as
he was able to secure a similar copyright registration of a similar product
from the National Library on January 14, 2002.
On September 26, 2003, the CA rendered judgment dismissing the petition
on its finding that the RTC did not commit any grave abuse of its discretion in
issuing the assailed order, to wit:
It is settled that preliminarily, there must be a finding that a specific offense
must have been committed to justify the issuance of a search warrant. In a
number of cases decided by the Supreme Court, the same is explicitly
provided, thus:
"The probable cause must be in connection with one specific offense, and 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 witness he may produce, on facts personally known to them and
attach to the record their sworn statements together with any affidavit
submitted.
"In the determination of probable cause, the court must necessarily resolve
whether or not an offense exists to justify the issuance or quashal of the
search warrant."
In the instant case, the petitioner is praying for the reinstatement of the
search warrants issued, but subsequently quashed, for the offense
of Violation of Class Designation of Copyrightable Works under Section 177.1
in relation to Section 177.3 of Republic Act 8293, when the objects subject of
the same, are patently not copyrightable.
It is worthy to state that the works protected under the Law on Copyright
are: literary or artistic works (Sec. 172) and derivative works (Sec. 173). The
Leaf Spring Eye Bushing and Vehicle Bearing Cushion fall on neither
classification. Accordingly, if, in the first place, the item subject of the
petition is not entitled to be protected by the law on copyright, how can
there be any violation?14

The petitioners motion for reconsideration of the said decision suffered the
same fate. The petitioner forthwith filed the present petition for review
on certiorari, contending that the revocation of his copyright certificates
should be raised in a direct action and not in a search warrant proceeding.
The petitioner posits that even assuming ex argumenti that the trial court
may resolve the validity of his copyright in a proceeding to quash a search
warrant for allegedly infringing items, the RTC committed a grave abuse of
its discretion when it declared that his works are not copyrightable in the first
place. He claims that R.A. No. 8293, otherwise known as the Intellectual
Property Code of the Philippines, which took effect on January 1, 1998,
provides in no uncertain terms that copyright protection automatically
attaches to a work by the sole fact of its creation, irrespective of its mode or
form of expression, as well as of its content, quality or purpose. 15 The law
gives a non-inclusive definition of "work" as referring to original intellectual
creations in the literary and artistic domain protected from the moment of
their creation; and includes original ornamental designs or models for
articles of manufacture, whether or not registrable as an industrial design
and other works of applied art under Section 172.1(h) of R.A. No.
8293.lawphil.net
As such, the petitioner insists, notwithstanding the classification of the works
as either literary and/or artistic, the said law, likewise, encompasses works
which may have a bearing on the utility aspect to which the petitioners
utility designs were classified. Moreover, according to the petitioner, what
the Copyright Law protects is the authors intellectual creation, regardless of
whether it is one with utilitarian functions or incorporated in a useful article
produced on an industrial scale.
The petitioner also maintains that the law does not provide that the intended
use or use in industry of an article eligible for patent bars or invalidates its
registration under the Law on Copyright. The test of protection for the
aesthetic is not beauty and utility, but art for the copyright and invention of
original and ornamental design for design patents.16 In like manner, the fact
that his utility designs or models for articles of manufacture have been
expressed in the field of automotive parts, or based on something already in
the public domain does not automatically remove them from the protection
of the Law on Copyright.17
The petitioner faults the CA for ignoring Section 218 of R.A. No. 8293 which
gives the same presumption to an affidavit executed by an author who
claims copyright ownership of his work.
The petitioner adds that a finding of probable cause to justify the issuance of
a search warrant means merely a reasonable suspicion of the commission of
the offense. It is not equivalent to absolute certainty or a finding of actual

and positive cause.18 He assists that the determination of probable cause


does not concern the issue of whether or not the alleged work is
copyrightable. He maintains that to justify a finding of probable cause in the
issuance of a search warrant, it is enough that there exists a reasonable
suspicion of the commission of the offense.
The petitioner contends that he has in his favor the benefit of the
presumption that his copyright is valid; hence, the burden of overturning this
presumption is on the alleged infringers, the respondents herein. But this
burden cannot be carried in a hearing on a proceeding to quash the search
warrants, as the issue therein is whether there was probable cause for the
issuance of the search warrant. The petitioner concludes that the issue of
probable cause should be resolved without invalidating his copyright.
In their comment on the petition, the respondents aver that the work of the
petitioner is essentially a technical solution to the problem of wear and tear
in automobiles, the substitution of materials, i.e., from rubber to plastic
matter of polyvinyl chloride, an oil resistant soft texture plastic material
strong enough to endure pressure brought about by the vibration of the
counter bearing and thus brings bushings. Such work, the respondents
assert, is the subject of copyright under Section 172.1 of R.A. No. 8293. The
respondents posit that a technical solution in any field of human activity
which is novel may be the subject of a patent, and not of a copyright. They
insist that the certificates issued by the National Library are only
certifications that, at a point in time, a certain work was deposited in the said
office. Furthermore, the registration of copyrights does not provide for
automatic protection. Citing Section 218.2(b) of R.A. No. 8293, the
respondents aver that no copyright is said to exist if a party categorically
questions its existence and legality. Moreover, under Section 2, Rule 7 of the
Implementing Rules of R.A. No. 8293, the registration and deposit of work is
not conclusive as to copyright outlay or the time of copyright or the right of
the copyright owner. The respondents maintain that a copyright exists only
when the work is covered by the protection of R.A. No. 8293.
The petition has no merit.
The RTC had jurisdiction to delve into and resolve the issue whether the
petitioners utility models are copyrightable and, if so, whether he is the
owner of a copyright over the said models. It bears stressing that upon the
filing of the application for search warrant, the RTC was duty-bound to
determine whether probable cause existed, in accordance with Section 4,
Rule 126 of the Rules of Criminal Procedure:
SEC. 4. Requisite 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.
In Solid Triangle Sales Corporation v. The Sherif of RTC QC, Br. 93,19 the
Court held that in the determination of probable cause, the court must
necessarily resolve whether or not an offense exists to justify the issuance of
a search warrant or the quashal of one already issued by the court. Indeed,
probable cause is deemed to exist only where facts and circumstances exist
which could lead a reasonably cautious and prudent man to believe that an
offense has been committed or is being committed. Besides, in Section 3,
Rule 126 of the Rules of Criminal Procedure, a search warrant may be issued
for the search and seizure of personal property (a) subject of the offense; (b)
stolen or embezzled and other proceeds or fruits of the offense; or (c) used
or intended to be used as the means of committing an offense.
The RTC is mandated under the Constitution and Rules of Criminal Procedure
to determine probable cause. The court cannot abdicate its constitutional
obligation by refusing to determine whether an offense has been
committed.20 The absence of probable cause will cause the outright
nullification of the search warrant.21
For the RTC to determine whether the crime for infringement under R.A. No.
8293 as alleged in an application is committed, the petitioner-applicant was
burdened to prove that (a) respondents Jessie Ching and Joseph Yu were the
owners of copyrighted material; and (b) the copyrighted material was being
copied and distributed by the respondents. Thus, the ownership of a valid
copyright is essential.22
Ownership of copyrighted material is shown by proof of originality and
copyrightability. By originality is meant that the material was not copied, and
evidences at least minimal creativity; that it was independently created by
the author and that it possesses at least same minimal degree of
creativity.23 Copying is shown by proof of access to copyrighted material and
substantial similarity between the two works.24 The applicant must thus
demonstrate the existence and the validity of his copyright because in the
absence of copyright protection, even original creation may be freely
copied.25
By requesting the NBI to investigate and, if feasible, file an application for a
search warrant for infringement under R.A. No. 8293 against the
respondents, the petitioner thereby authorized the RTC (in resolving the
application), to delve into and determine the validity of the copyright which
he claimed he had over the utility models. The petitioner cannot seek relief
from the RTC based on his claim that he was the copyright owner over the
utility models and, at the same time, repudiate the courts jurisdiction to

ascertain the validity of his claim without running afoul to the doctrine of
estoppel.
To discharge his burden, the applicant may present the certificate of
registration covering the work or, in its absence, other evidence.26 A
copyright certificate provides prima facie evidence of originality which is one
element of copyright validity. It constitutes prima facie evidence of both
validity and ownership27 and the validity of the facts stated in the
certificate.28 The presumption of validity to a certificate of copyright
registration merely orders the burden of proof. The applicant should not
ordinarily be forced, in the first instance, to prove all the multiple facts that
underline the validity of the copyright unless the respondent, effectively
challenging them, shifts the burden of doing so to the applicant.29 Indeed,
Section 218.2 of R.A. No. 8293 provides:
218.2. In an action under this Chapter:
(a) Copyright shall be presumed to subsist in the work or other subject
matter to which the action relates if the defendant does not put in
issue the question whether copyright subsists in the work or other
subject matter; and
(b) Where the subsistence of the copyright is established, the plaintiff
shall be presumed to be the owner of the copyright if he claims to be
the owner of the copyright and the defendant does not put in issue the
question of his ownership.
A certificate of registration creates no rebuttable presumption of copyright
validity where other evidence in the record casts doubt on the question. In
such a case, validity will not be presumed.30
To discharge his burden of probable cause for the issuance of a search
warrant for violation of R.A. No. 8293, the petitioner-applicant submitted to
the RTC Certificate of Copyright Registration Nos. 2001-197 and 2001-204
dated September 3, 2001 and September 4, 2001, respectively, issued by
the National Library covering work identified as Leaf Spring Eye Bushing for
Automobile and Vehicle Bearing Cushion both classified under Section
172.1(h) of R.A. No. 8293, to wit:
SEC. 172. Literary and Artistic Works. 172.1. Literary and artistic works,
hereinafter referred to as "works," are original intellectual creations in the
literary and artistic domain protected from the moment of their creation and
shall include in particular:
...

(h) Original ornamental designs or models for articles of manufacture,


whether or not registrable as an industrial design, and other works of applied
art.
Related to the provision is Section 171.10, which provides that a "work of
applied art" is an artistic creation with utilitarian functions or incorporated in
a useful article, whether made by hand or produced on an industrial scale.
But, as gleaned from the specifications appended to the application for a
copyright certificate filed by the petitioner, the said Leaf Spring Eye Bushing
for Automobile is merely a utility model described as comprising a generally
cylindrical body having a co-axial bore that is centrally located and provided
with a perpendicular flange on one of its ends and a cylindrical metal jacket
surrounding the peripheral walls of said body, with the bushing made of
plastic that is either polyvinyl chloride or polypropylene.31 Likewise, the
Vehicle Bearing Cushion is illustrated as a bearing cushion comprising a
generally semi-circular body having a central hole to secure a conventional
bearing and a plurality of ridges provided therefore, with said cushion
bearing being made of the same plastic materials.32 Plainly, these are not
literary or artistic works. They are not intellectual creations in the literary
and artistic domain, or works of applied art. They are certainly not
ornamental designs or one having decorative quality or value.
It bears stressing that the focus of copyright is the usefulness of the artistic
design, and not its marketability. The central inquiry is whether the article is
a work of art.33 Works for applied art include all original pictorials, graphics,
and sculptural works that are intended to be or have been embodied in
useful article regardless of factors such as mass production, commercial
exploitation, and the potential availability of design patent protection. 34
As gleaned from the description of the models and their objectives, these
articles are useful articles which are defined as one having an intrinsic
utilitarian function that is not merely to portray the appearance of the article
or to convey information. Indeed, while works of applied art, original
intellectual, literary and artistic works are copyrightable, useful articles and
works of industrial design are not.35 A useful article may be copyrightable
only if and only to the extent that such design incorporates pictorial, graphic,
or sculptural features that can be identified separately from, and are capable
of existing independently of the utilitarian aspects of the article.
We agree with the contention of the petitioner (citing Section 171.10 of R.A.
No. 8293), that the authors intellectual creation, regardless of whether it is a
creation with utilitarian functions or incorporated in a useful article produced
on an industrial scale, is protected by copyright law. However, the law refers
to a "work of applied art which is an artistic creation." It bears stressing that
there is no copyright protection for works of applied art or industrial design

which have aesthetic or artistic features that cannot be identified separately


from the utilitarian aspects of the article.36Functional components of useful
articles, no matter how artistically designed, have generally been denied
copyright protection unless they are separable from the useful article. 37
In this case, the petitioners models are not works of applied art, nor artistic
works. They are utility models, useful articles, albeit with no artistic design or
value. Thus, the petitioner described the utility model as follows:
LEAF SPRING EYE BUSHING FOR AUTOMOBILE
Known bushings inserted to leaf-spring eye to hold leaf-springs of automobile
are made of hard rubber. These rubber bushings after a time, upon
subjecting them to so much or intermittent pressure would eventually wore
(sic) out that would cause the wobbling of the leaf spring.
The primary object of this utility model, therefore, is to provide a leaf-spring
eye bushing for automobile that is made up of plastic.
Another object of this utility model is to provide a leaf-spring eye bushing for
automobiles made of polyvinyl chloride, an oil resistant soft texture plastic or
polypropylene, a hard plastic, yet both causes cushion to the leaf spring, yet
strong enough to endure pressure brought about by the up and down
movement of said leaf spring.
Yet, an object of this utility model is to provide a leaf-spring eye bushing for
automobiles that has a much longer life span than the rubber bushings.
Still an object of this utility model is to provide a leaf-spring eye bushing for
automobiles that has a very simple construction and can be made using
simple and ordinary molding equipment.
A further object of this utility model is to provide a leaf-spring eye bushing
for automobile that is supplied with a metal jacket to reinforce the plastic eye
bushing when in engaged with the steel material of the leaf spring.
These and other objects and advantages will come to view and be
understood upon a reading of the detailed description when taken in
conjunction with the accompanying drawings.
Figure 1 is an exploded perspective of a leaf-spring eye bushing according to
the present utility model;
Figure 2 is a sectional view taken along line 2-2 of Fig. 1;

Figure 3 is a longitudinal sectional view of another embodiment of this utility


model;
Figure 4 is a perspective view of a third embodiment; and
Figure 5 is a sectional view thereof.
Referring now to the several views of the drawings wherein like reference
numerals designated same parts throughout, there is shown a utility model
for a leaf-spring eye bushing for automobile generally designated as
reference numeral 10.
Said leaf-spring eye bushing 10 comprises a generally cylindrical body 11
having a co-axial bore 12 centrally provided thereof.
As shown in Figs. 1 and 2, said leaf-spring eye bushing 10 is provided with a
perpendicular flange 13 on one of its ends and a cylindrical metal jacket 14
surrounding the peripheral walls 15 of said body 11. When said leaf-spring
bushing 10 is installed, the metal jacket 14 acts with the leaf-spring eye (not
shown), which is also made of steel or cast steel. In effect, the bushing 10
will not be directly in contact with steel, but rather the metal jacket, making
the life of the bushing 10 longer than those without the metal jacket.
In Figure 2, the bushing 10 as shown is made of plastic, preferably polyvinyl
chloride, an oil resistant soft texture plastic or a hard polypropylene plastic,
both are capable to endure the pressure applied thereto, and, in effect,
would lengthen the life and replacement therefor.
Figure 3, on the other hand, shows the walls 16 of the co-axial bore 12 of
said bushing 10 is insertably provided with a steel tube 17 to reinforce the
inner portion thereof. This steel tube 17 accommodates or engages with the
leaf-spring bolt (not shown) connecting the leaf spring and the automobiles
chassis.
Figures 4 and 5 show another embodiment wherein the leaf eye bushing 10
is elongated and cylindrical as to its construction. Said another embodiment
is also made of polypropylene or polyvinyl chloride plastic material. The steel
tube 17 and metal jacket 14 may also be applied to this embodiment as an
option thereof.38
VEHICLE BEARING CUSHION
Known bearing cushions inserted to bearing housings for vehicle propeller
shafts are made of hard rubber. These rubber bushings after a time, upon
subjecting them to so much or intermittent pressure would eventually be
worn out that would cause the wobbling of the center bearing.

The primary object of this utility model therefore is to provide a vehiclebearing cushion that is made up of plastic.
Another object of this utility model is to provide a vehicle bearing cushion
made of polyvinyl chloride, an oil resistant soft texture plastic material which
causes cushion to the propellers center bearing, yet strong enough to
endure pressure brought about by the vibration of the center bearing.
Yet, an object of this utility model is to provide a vehicle-bearing cushion that
has a much longer life span than rubber bushings.
Still an object of this utility model is to provide a vehicle bearing cushion that
has a very simple construction and can be made using simple and ordinary
molding equipment.
These and other objects and advantages will come to view and be
understood upon a reading of the detailed description when taken in
conjunction with the accompanying drawings.
Figure 1 is a perspective view of the present utility model for a vehiclebearing cushion; and
Figure 2 is a sectional view thereof.
Referring now to the several views of the drawing, wherein like reference
numeral designate same parts throughout, there is shown a utility model for
a vehicle-bearing cushion generally designated as reference numeral 10.
Said bearing cushion 10 comprises of a generally semi-circular body 11,
having central hole 12 to house a conventional bearing (not shown). As
shown in Figure 1, said body 11 is provided with a plurality of ridges 13 which
serves reinforcing means thereof.
The subject bearing cushion 10 is made of polyvinyl chloride, a soft texture
oil and chemical resistant plastic material which is strong, durable and
capable of enduring severe pressure from the center bearing brought about
by the rotating movement of the propeller shaft of the vehicle.39
A utility model is a technical solution to a problem in any field of human
activity which is new and industrially applicable. It may be, or may relate to,
a product, or process, or an improvement of any of the
aforesaid.40Essentially, a utility model refers to an invention in the
mechanical field. This is the reason why its object is sometimes described as
a device or useful object.41 A utility model varies from an invention, for which
a patent for invention is, likewise, available, on at least three aspects: first,
the requisite of "inventive step"42 in a patent for invention is not required;

second, the maximum term of protection is only seven years43 compared to a


patent which is twenty years,44 both reckoned from the date of the
application; and third, the provisions on utility model dispense with its
substantive examination45 and prefer for a less complicated system.
Being plain automotive spare parts that must conform to the original
structural design of the components they seek to replace, the Leaf Spring
Eye Bushing and Vehicle Bearing Cushion are not ornamental. They lack the
decorative quality or value that must characterize authentic works of applied
art. They are not even artistic creations with incidental utilitarian functions or
works incorporated in a useful article. In actuality, the personal properties
described in the search warrants are mechanical works, the principal function
of which is utility sans any aesthetic embellishment.
Neither are we to regard the Leaf Spring Eye Bushing and Vehicle Bearing
Cushion as included in the catch-all phrase "other literary, scholarly,
scientific and artistic works" in Section 172.1(a) of R.A. No. 8293. Applying
the principle of ejusdem generis which states that "where a statute describes
things of a particular class or kind accompanied by words of a generic
character, the generic word will usually be limited to things of a similar
nature with those particularly enumerated, unless there be something in the
context of the state which would repel such inference,"46 the Leaf Spring Eye
Bushing and Vehicle Bearing Cushion are not copyrightable, being not of the
same kind and nature as the works enumerated in Section 172 of R.A. No.
8293.
No copyright granted by law can be said to arise in favor of the petitioner
despite the issuance of the certificates of copyright registration and the
deposit of the Leaf Spring Eye Bushing and Vehicle Bearing Cushion. Indeed,
inJoaquin, Jr. v. Drilon47 and Pearl & Dean (Phil.), Incorporated v. Shoemart,
Incorporated,48 the Court ruled that:
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 preexisting right regulated by it. 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. Accordingly, it can cover only the works falling within
the statutory enumeration or description.
That the works of the petitioner may be the proper subject of a patent does
not entitle him to the issuance of a search warrant for violation of copyright
laws. In Kho v. Court of Appeals49 and Pearl & Dean (Phil.), Incorporated v.
Shoemart, Incorporated,50 the Court ruled that "these copyright and patent
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." The Court expounded further,
thus:
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.
The petitioner cannot find solace in the ruling of the United States Supreme
Court in Mazer v. Stein51 to buttress his petition. In that case, the artifacts
involved in that case were statuettes of dancing male and female figures
made of semi-vitreous china. The controversy therein centered on the fact
that although copyrighted as "works of art," the statuettes were intended for
use and used as bases for table lamps, with electric wiring, sockets and
lampshades attached. The issue raised was whether the statuettes were
copyright protected in the United States, considering that the copyright
applicant intended primarily to use them as lamp bases to be made and sold
in quantity, and carried such intentions into effect. At that time, the
Copyright Office interpreted the 1909 Copyright Act to cover works of artistic
craftsmanship insofar as their form, but not the utilitarian aspects, were
concerned. After reviewing the history and intent of the US Congress on its
copyright legislation and the interpretation of the copyright office, the US
Supreme Court declared that the statuettes were held copyrightable works of
art or models or designs for works of art. The High Court ruled that:
"Works of art (Class G) (a) In General. This class includes works of artistic
craftsmanship, in so far as their form but not their mechanical or utilitarian
aspects are concerned, such as artistic jewelry, enamels, glassware, and
tapestries, as well as all works belonging to the fine arts, such as paintings,
drawings and sculpture. "
So we have a contemporaneous and long-continued construction of the
statutes by the agency charged to administer them that would allow the
registration of such a statuette as is in question here.52
The High Court went on to state that "[t]he dichotomy of protection for the
aesthetic is not beauty and utility but art for the copyright and the invention
of original and ornamental design for design patents." Significantly, the
copyright office promulgated a rule to implement Mazer to wit:

[I]f "the sole intrinsic function of an article is its utility, the fact that the
work is unique and attractively shaped will not qualify it as a work of art."
In this case, the bushing and cushion are not works of art. They are, as the
petitioner himself admitted, utility models which may be the subject of a
patent.
IN LIGHT OF ALL THE FOREGOING, the instant petition is hereby DENIED
for lack of merit. The assailed Decision and Resolution of the Court of
Appeals in CA-G.R. SP No. 70411 are AFFIRMED. Search Warrant Nos. 012401 and 01-2402 issued on October 15, 2001 are ANNULLED AND SET
ASIDE. Costs against the petitioner.
SO ORDERED.
Puno, (Chairman), Austria-Martinez, Tinga, and Chico-Nazario, JJ., concur.
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
decision[2] 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 Appeals [3] 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 Deans General
Manager, Rodolfo Vergara, submitted for signature the contracts covering SM
Cubao and SM Makati to SMIs 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, SMIs house counsel informed
Pearl and Dean that it was rescinding the contract for SM Makati due to nonperformance 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 Shoemarts 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 defendantappellant 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 SMIs 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 SMIs 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 SMIs
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 Deans 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 SMIs 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 Deans Certification
of Copyright Registration No. PD-R-2558 dated January 20, 1981 and
Certificate of Trademark Registration No. 4165 dated September 12, 1988.
NEMI, for its part, denied having manufactured, installed or used any
advertising display units, nor having engaged in the business of
advertising. It repleaded SMIs averments, admissions and denials and prayed
for similar reliefs and counterclaims as SMI.
The RTC of Makati City decided in favor of P & D:
Wherefore, defendants SMI and NEMI are found jointly and severally liable for
infringement of copyright under Section 2 of PD 49, as amended, and
infringement of trademark under Section 22 of RA No. 166, as amended, and
are hereby penalized under Section 28 of PD 49, as amended, and Sections
23 and 24 of RA 166, as amended. Accordingly, defendants are hereby
directed:
(1) to pay plaintiff the following damages:
(a) actual damages - P16,600,000.00,

representing profits
derived by defendants
as a result of infringement of plaintiffs copyright
from 1991 to 1992
(b) moral damages - P1,000.000.00
(c) exemplary damages - P1,000,000.00
(d) attorneys fees - P1,000,000.00
plus
(e) costs of suit;
(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;
(3) to deliver, under oath, to the National Library, all filler-posters
using the trademark Poster Ads, for destruction; and
(4) to permanently refrain from infringing the copyright on plaintiffs
light boxes and its trademark Poster Ads.
Defendants counterclaims are hereby ordered dismissed for lack of
merit.
SO ORDERED.[4]
On appeal, however, the Court of Appeals reversed the trial court:
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:
42. When a drawing is technical and depicts a utilitarian object, a copyright
over the drawings like plaintiff-appellants will not extend to the actual
object. It has so been held under jurisprudence, of which the leading case
is Baker vs. Selden (101 U.S. 841 (1879). In that case, Selden had obtained a
copyright protection for a book entitled Seldens 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 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 produced forms which
were similar to the forms illustrated in Seldens copyrighted books. The Court
held that exclusivity to the actual forms is not extended by a copyright. The
reason was that to grant a monopoly in the underlying art when no
examination of its novelty has ever been made would be a surprise and a
fraud upon the public; that is the province of letters patent, not of copyright.
And that is precisely the point. No doubt 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 by
conveniently resorting to a copyright registration which merely employs a
recordal system without the benefit of an in-depth examination of novelty.
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 over an unpublished drawing entitled Bridge
Approach the drawing showed a novel bridge approach to unsnarl traffic
congestion. The defendant constructed a bridge approach which was alleged
to be an infringement of the new design illustrated in plaintiffs drawings. In
this case it was held that protection of the drawing does not extend 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.
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.This is because the
copyright does not extend to the structures themselves.
In fine, we cannot find SMI liable for infringing Pearl and Deans copyright
over the technical drawings of the latters advertising display units.
xxx xxx xxx
The Supreme Court trenchantly held in Faberge, Incorporated vs.
Intermediate Appellate 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 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 beprima

facie evidence of the validity of the registration, the registrants ownership of


the mark or trade-name, and of the registrants 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 Deans
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


Deans 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 Courts 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 & DEANS 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 LATTERS 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, ATTORNEYS 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 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 & Ds 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, petitioners 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, petitioners 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:
xxxxxxxxx
(O) Prints, pictorial illustrations, advertising copies, labels, tags, and box
wraps;
xxxxxxxxx

Although petitioners 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, petitioners 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 laws 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 & Ds 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. SMIs and NEMIs 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 petitioners 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 & Ds
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 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 petitioners 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. ODonnel,[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 creation [20] 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 boxs 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. Selden[21], 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 plaintiffs 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 asurprise 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.
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
petitioners 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,[23] where 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 goodsdoes not prevent the adoption
and use of the same trademark by others for products which are of a
diferent 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.
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 petitioners 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 & Ds use of Poster
Ads was distinctive or well-known. As noted by the Court of Appeals,
petitioners 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 petitioners 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.
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.
Puno, (Chairman), Panganiban, Sandoval-Gutierrez, and Carpio-Morales,
JJ., concur.

Metro-Goldwyn-Mayer Studios Inc. (MGM) v. Grokster, LTD


Citation. 545 U.S. 913, 125 S. Ct. 2764, 162 L. Ed. 2d 781, 75 U.S.P.Q.2d
1001, 18 ILRD 79, 2005 ILRC 2031, 33 Med. L. Rptr. 1865 (2005)
Brief Fact Summary. The defendants distributed free software that
allowed private individuals to share copyrighted electronic files without
authorization. Some of those files shared are movies and songs that MGM
hold copyrights to.
Synopsis of Rule of Law. When a distributor takes affirmative steps to
foster infringement through the use of its product, the distributor will be
liable for that infringement conducted by 3rd parties.
Facts.

Grokster, LTD and StreamCast Network distributed fee software that allowed
the sharing of files in a peer to peer network. This avoided the need for
central servers and costly server storage and works faster. Since files can go
from computer to computer and not through the server it is safer and cost
efficient. This program was used by universities, government agencies,
corporations, libraries and then private users. Private users began sharing
copyrighted music and video files without authorization. Grokster used
technology called FastTrack and Stream Cast used Gnutella. The files shared
do not go to a central location so Grokster and StreamCast did not know
when the files were being copied but if they had searched there software
they would see the type of files being shared. It was shown that StreamCast
gave software called OpenNap labeled the best alternative to Napster in the
hopes to take all the Napster users that had to stop using that software after
Napster was sued. Grokster had a program called OpenNap that allowed
users to search for Napster files. Grokster and StreamCast received revenues
from posting advertising all over its program software. MGM was able to
show that some 90 percent of the files being shared where copyrighted files.
Also there is no evidence that either company tried to filter or stop copyright
infringement. The district court granted summary judgment in favor of
Grokster and Stream Case because although users of the software did
infringe MGMs property there was no proof there the distributors had actual
knowledge of specific acts of infringement. MGM appealed.
Issue. Whether a distributor of a product that is capable of lawful and
unlawful use is liable for copyright infringement by a 3rd party using that
product.
Held. Yes. The appeals court stated that since these distributors did not
have actual knowledge, did not partake in, or monitor the file sharing they
are not directly liable for the infringement. However the court erred in finding
they were not secondarily liable for the actions of the users of its products.
There is a balance between growing technologies and copyright protection,
but to not make distributors liable will make copyright protections
meaningless. The lower court looked to the commerce doctrine now codified
which states that a product must be capable of commercially significant
noninfridging uses and if so, no secondary liability would follow. This court
finds that interpretation too narrow. Here this court considers the doctrine of
inducement to also be relevant. When a distributor promotes using its device
to infringe copyright material, shown by affirmative steps to foster
infringement this is inducement and the distributor will be liable for 3rd party
infringement. All the actions of the companies is enough to show a genuine
issue of material fact, thus the court reversed the summary judgment ruling
and remanded the case upon those findings.

Dissent. Justice Breyer states this case is no different from Sony where timeshifting was the main purpose of users copying shows by VCRS (so they
could watch later). The court did not find Sony responsible there. Also there
is such a major market for non-infringement uses for this software that they
shouldnt be stopped from distributing the software. The standard in Sony
should not be adapted as we did it here to add inducement.
Discussion. When a distributor takes affirmative steps to foster
infringement through the use of its product, the distributor will be liable for
that infringement.
Sony Corp. v. Universal City Studios, 464 U.S. 417 (1984)
Sony Corporation of America v. Universal City Studios, Inc.
No. 81-1687
Argued January 18, 1983
Reargued October 3, 1983
Decided January 17, 1984
464 U.S. 417
Syllabus
Petitioner Sony Corp. manufactures home videotape recorders (VTR's), and
markets them through retail establishments, some of which are also
petitioners. Respondents own the copyrights on some of the television
programs that are broadcast on the public airwaves. Respondents brought an
action against petitioners in Federal District Court, alleging that VTR
consumers had been recording some of respondents' copyrighted works that
had been exhibited on commercially sponsored television, and thereby
infringed respondents' copyrights, and further that petitioners were liable for
such copyright infringement because of their marketing of the VTR's.
Respondents sought money damages, an equitable accounting of profits, and
an injunction against the manufacture and marketing of the VTR's. The
District Court denied respondents all relief, holding that noncommercial
home use recording of material broadcast over the public airwaves was a fair
use of copyrighted works, and did not constitute copyright infringement, and
that petitioners could not be held liable as contributory infringers even if the
home use of a VTR was considered an infringing use. The Court of Appeals
reversed, holding petitioners liable for contributory infringement and
ordering the District Court to fashion appropriate relief

Held: The sale of the VTR's to the general public does not constitute
contributory infringement of respondents' copyrights. Pp. 464 U. S. 428-456.
(a) The protection given to copyrights is wholly statutory, and, in a case like
this, in which Congress has not plainly marked the course to be followed by
the judiciary, this Court must be circumspect in construing the scope of
rights created by a statute that never contemplated such a calculus of
interests. Any individual may reproduce a copyrighted work for a "fair use";
the copyright owner does not possess the exclusive right to such a use.
Pp. 464 U. S. 428-434.
(b) Kalem Co. v. Harper Brothers, 222 U. S. 55, does not support respondents'
novel theory that supplying the "means" to accomplish an infringing activity
and encouraging that activity through advertisement are sufficient to
establish liability for copyright infringement. This case does not fall in the
category of those in which it is manifestly just to
Page 464 U. S. 418
impose vicarious liability because the "contributory" infringer was in a
position to control the use of copyrighted works by others and had
authorized the use without permission from the copyright owner. Here, the
only contact between petitioners and the users of the VTR's occurred at the
moment of sale. And there is no precedent for imposing vicarious liability on
the theory that petitioners sold the VTR's with constructive knowledge that
their customers might use the equipment to make unauthorized copies of
copyrighted material. The sale of copying equipment, like the sale of other
articles of commerce, does not constitute contributory infringement if the
product is widely used for legitimate, unobjectionable purposes, or, indeed, is
merely capable of substantial noninfringing uses. Pp. 464 U. S. 434-442.
(c) The record and the District Court's findings show (1) that there is a
significant likelihood that substantial numbers of copyright holders who
license their works for broadcast on free television would not object to
having their broadcast time-shifted by private viewers (i.e., recorded at a
time when the VTR owner cannot view the broadcast so that it can be
watched at a later time); and (2) that there is no likelihood that time-shifting
would cause nonminimal harm to the potential market for, or the value of,
respondents' copyrighted works. The VTR's are therefore capable of
substantial noninfringing uses. Private, noncommercial time-shifting in the
home satisfies this standard of noninfringing uses both because respondents
have no right to prevent other copyright holders from authorizing such timeshifting for their programs and because the District Court's findings reveal
that even the unauthorized home time-shifting of respondents' programs is
legitimate fair use. Pp. 442-456.
659 F.2d 963, reversed.

STEVENS, J., delivered the opinion of the Court in which BURGER, C.J., and
BRENNAN, WHITE, and O'CONNOR, JJ., joined. BLACKMUN, J., filed a
dissenting opinion in which MARSHALL, POWELL, and REHNQUIST, JJ.,
joined, post, p. 464 U. S. 457.
Page 464 U. S. 419
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IN THE MATTER OF THE CHARGES A.M. No. 10-7-17-SC
OF PLAGIARISM, ETC., AGAINST
ASSOCIATE JUSTICE MARIANO C.
DEL CASTILLO. Present:
CORONA, C.J.,
CARPIO,
CARPIO MORALES,
VELASCO, JR.,
NACHURA,
LEONARDO-DE CASTRO,
BRION,
PERALTA,
BERSAMIN,
DEL CASTILLO,
ABAD,
VILLARAMA, JR.,
PEREZ,
MENDOZA, and
SERENO, JJ.
Promulgated:
October 12, 2010
x --------------------------------------------------------------------------------------- x
DECISION
PER CURIAM:
This case is concerned with charges that, in preparing a decision for the
Court, a designated member plagiarized the works of certain authors and
twisted their meanings to support the decision.

The Background Facts


Petitioners Isabelita C. Vinuya and about 70 other elderly women, all
members of the Malaya Lolas Organization, filed with the Court in G.R. No.
162230 a special civil action of certiorari with application for preliminary
mandatory injunction against the Executive Secretary, the Secretary of
Foreign Affairs, the Secretary of Justice, and the Office of the Solicitor
General.
Petitioners claimed that in destroying villages in the Philippines during World
War II, the Japanese army systematically raped them and a number of other
women, seizing them and holding them in houses or cells where soldiers
repeatedly ravished and abused them.
Petitioners alleged that they have since 1998 been approaching the
Executive Department, represented by the respondent public officials,
requesting assistance in filing claims against the Japanese military officers
who established the comfort women stations. But that Department declined,
saying that petitioners individual claims had already been fully satisfied
under the Peace Treaty between the Philippines and Japan.
Petitioners wanted the Court to render judgment, compelling the
Executive Department to espouse their claims for official apology and other
forms of reparations against Japan before the International Court of Justice
and other international tribunals.
On April 28, 2010, the Court rendered judgment dismissing petitioners
action. Justice Mariano C. del Castillo wrote the decision for the Court. The
Court essentially gave two reasons for its decision: it cannot grant the
petition because, first, the Executive Department has the exclusive
prerogative under the Constitution and the law to determine whether to
espouse petitioners claim against Japan; and, second, the Philippines is not
under any obligation in international law to espouse their claims.
On June 9, 2010, petitioners filed a motion for reconsideration of the
Courts decision. More than a month later on July 18, 2010, counsel for
petitioners, Atty. Herminio Harry Roque, Jr., announced in his online blog that
his clients would file a supplemental petition detailing plagiarism committed
by the court under the second reason it gave for dismissing the petition and
that these stolen passages were also twisted to support the courts erroneous
conclusions that the Filipino comfort women of World War Two have no
further legal remedies. The media gave publicity to Atty. Roques
announcement.
On July 19, 2010, petitioners filed the supplemental motion for
reconsideration that Atty. Roque announced. It accused Justice Del Castillo of

manifest intellectual theft and outright plagiarism [1] when he wrote the
decision for the Court and of twisting the true intents of the plagiarized
sources to suit the arguments of the assailed Judgment. [2]They charged
Justice Del Castillo of copying without acknowledgement certain passages
from three foreign articles:
a. A Fiduciary Theory of Jus Cogens by Evan J. Criddle and
Evan Fox-Descent, Yale Journal of International Law (2009);
b. Breaking the Silence: Rape as an International Crime by
Mark Ellis, Case Western Reserve Journal of International Law
(2006); and
c. Enforcing Erga Omnes Obligations by Christian J. Tams,
Cambridge University Press (2005).
Petitioners claim that the integrity of the Courts deliberations in the
case has been put into question by Justice Del Castillos fraud. The Court
should thus address and disclose to the public the truth about the manifest
intellectual theft and outright plagiarism[3] that resulted in gross prejudice to
the petitioners.
Because of the publicity that the supplemental motion for
reconsideration generated, Justice Del Castillo circulated a letter to his
colleagues, subsequently verified, stating that when he wrote the decision
for the Court he had the intent to attribute all sources used in it. He said in
the pertinent part:
It must be emphasized that there was every
intention to attribute all sources, whenever due. At no
point was there ever any malicious intent to appropriate
anothers
work
as
our
own.
We
recall
that
this ponencia was thrice included in the Agenda of the
Court en banc. It was deliberated upon during the Baguio
session on April 13, 2010, April 20, 2010 and in Manila on
April 27, 2010. Each time, suggestions were made which
necessitated major revisions in the draft. Sources were
re-studied, discussions modified, passages added or
deleted. The resulting decision comprises 34 pages with
78 footnotes.
xxxx
As regards the claim of the petitioners that the
concepts as contained in the above foreign materials
were twisted, the same remains their opinion which we
do not necessarily share.[4]

On July 27, 2010, the Court En Banc referred the charges against
Justice Del Castillo to its Committee on Ethics and Ethical Standards, chaired
by the Chief Justice, for investigation and recommendation. The Chief Justice
designated retired Justice Jose C. Vitug to serve as consultant of the
Committee. He graciously accepted.
On August 2, 2010, the Committee directed petitioners to comment on
Justice Del Castillos verified letter.When this was done, it set the matter for
hearing.
In the meantime, on July 19, 2010, Evan Criddle wrote on his blog that
he and his co-author Evan Fox-Descent (referred to jointly as CriddleDescent) learned of alleged plagiarism involving their work but Criddles
concern, after reading the supplemental motion for reconsideration, was the
Courts conclusion that prohibitions against sexual slavery are not jus
cogens or internationally binding norms that treaties cannot diminish.
On July 23, 2010, Dr. Mark Ellis wrote the Court expressing concern that
in mentioning his work, the Court may have misread the argument [he]
made in the article and employed them for cross purposes. Dr. Ellis said that
he wrote the article precisely to argue for appropriate legal remedy for
victims of war crimes.
On August 8, 2010, after the referral of the matter to the Committee
for investigation, the Dean of the University of the Philippines (U.P.) College
of Law publicized a Statement from his faculty, claiming that
the Vinuyadecision was an extraordinary act of injustice and a singularly
reprehensible act of dishonesty and misrepresentation by the Highest Court
of the land. The statement said that Justice Del Castillo had a deliberate
intention to appropriate the original authors work, and that the Courts
decision amounted to an act of intellectual fraud by copying works in order
to mislead and deceive.[5]
On August 18, 2010 Mr. Christian J. Tams wrote Chief Justice Renato C.
Corona that, although relevant sentences in the Courts decision were taken
from his work, he was given generic reference only in the footnote and in
connection with a citation from another author (Bruno Simma) rather than
with respect to the passages taken from his work. He thought that the form
of referencing was inappropriate. Mr. Tams was also concerned that the
decision may have used his work to support an approach to erga
omnes concept (obligations owed by individual States to the community of
nations) that is not consistent with what he advocated.

On August 26, 2010, the Committee heard the parties submissions in the
summary manner of administrative investigations. Counsels from both sides
were given ample time to address the Committee and submit their
evidence.The Committee queried them on these.
Counsels for Justice Del Castillo later asked to be heard with the other
parties not in attendance so they could make submissions that their client
regarded as sensitive and confidential, involving the drafting process that
went into the making of the Courts decision in the Vinuya case. Petitioners
counsels vigorously objected and the Committee sustained the
objection. After consulting Justice Del Castillo, his counsels requested the
Committee to hear the Justices court researcher, whose name need not be
mentioned here, explain the research work that went into the making of the
decision in the Vinuya case. The Committee granted the request.
The researcher demonstrated by Power Point presentation how the
attribution of the lifted passages to the writings of Criddle-Descent and Ellis,
found in the beginning drafts of her report to Justice Del Castillo, were
unintentionally deleted. She tearfully expressed remorse at her grievous
mistake and grief for having caused an enormous amount of suffering for
Justice Del Castillo and his family.[6]
On the other hand, addressing the Committee in reaction to the
researchers explanation, counsel for petitioners insisted that lack of intent is
not a defense in plagiarism since all that is required is for a writer to
acknowledge that certain words or language in his work were taken from
anothers work. Counsel invoked the Courts ruling inUniversity of the
Philippines Board of Regents v. Court of Appeals and Arokiaswamy William
Margaret Celine,[7]arguing that standards on plagiarism in the academe
should apply with more force to the judiciary.
After the hearing, the Committee gave the parties ten days to file their
respective
memoranda. They
filed
their
memoranda
in
due
course. Subsequently after deliberation, the Committee submitted its
unanimous findings and recommendations to the Court.
The Issues
This case presents two issues:
1. Whether or not, in writing the opinion for the Court in the Vinuya case,
Justice Del Castillo plagiarized the published works of authors Tams, CriddleDescent, and Ellis.

2. Whether or not Justice Del Castillo twisted the works of these authors to
make it appear that such works supported the Courts position in
the Vinuya decision.
The Courts Rulings
Because of the pending motion for reconsideration in the Vinuya case, the
Court like its Committee on Ethics and Ethical Standards will purposely avoid
touching the merits of the Courts decision in that case or the soundness or
lack of soundness of the position it has so far taken in the same. The Court
will deal, not with the essential merit or persuasiveness of the foreign
authors works, but how the decision that Justice Del Castillo wrote for the
Court appropriated parts of those works and for what purpose the decision
employed the same.
At its most basic, plagiarism means the theft of another persons
language, thoughts, or ideas. To plagiarize, as it is commonly understood
according to Webster, is to take (ideas, writings, etc.) from (another) and
pass them off as ones own. [8] The passing off of the work of another as ones
own is thus an indispensable element of plagiarism.
The Passages from Tams
Petitioners point out that the Vinuya decision lifted passages from Tams
book, Enforcing Erga Omnes Obligations in International Law (2006) and
used them in Footnote 69 with what the author thought was a mere generic
reference. But, although Tams himself may have believed that the footnoting
in this case was not an appropriate form of referencing, [9] he and petitioners
cannot deny that the decision did attribute the source or sources of such
passages. Justice Del Castillo did not pass off Tams work as his own. The
Justice primarily attributed the ideas embodied in the passages to Bruno
Simma, whom Tams himself credited for them. Still, Footnote 69 mentioned,
apart from Simma, Tams article as another source of those ideas.
The Court believes that whether or not the footnote is sufficiently
detailed, so as to satisfy the footnoting standards of counsel for petitioners is
not an ethical matter but one concerning clarity of writing. The
statement SeeTams, Enforcing Obligations Erga Omnes in International Law
(2005) in the Vinuya decision is an attribution no matter if Tams thought that
it gave him somewhat less credit than he deserved. Such attribution
altogether negates the idea that Justice Del Castillo passed off the
challenged passages as his own.
That it would have been better had Justice Del Castillo used the
introductory phrase cited in rather than the phrase See would make a case of
mere inadvertent slip in attribution rather than a case of manifest intellectual

theft and outright plagiarism. If the Justices citations were imprecise, it would
just be a case of bad footnoting rather than one of theft or deceit. If it were
otherwise, many would be target of abuse for every editorial error, for every
mistake in citing pagination, and for every technical detail of form.
The Passages from Ellis
and Criddle-Descent
Petitioners also attack the Courts decision for lifting and using as
footnotes, without attribution to the author, passages from the published
work of Ellis. The Court made the following statement on page 27 of its
decision, marked with Footnote 65 at the end:
We fully agree that rape, sexual slavery, torture, and
sexual violence are morally reprehensible as well as legally
prohibited under contemporary international law. 65 xxx
Footnote 65 appears down the bottom of the page. Since the lengthy
passages in that footnote came almost verbatim from Ellis article, [10] such
passages ought to have been introduced by an acknowledgement that they
are from that article. The footnote could very well have read:
65 In an article, Breaking the Silence: Rape as an
International Crime, Case Western Reserve Journal of
International Law (2006), Mark Ellis said: The concept of
rape as an international crime is relatively new. This is not to say
that rape has never been historically prohibited, particularly in
war. But modern-day sensitivity to the crime of rape did not
emerge until after World War II. In the Nuremberg Charter, the
word rape was not mentioned. The article on crimes against
humanity explicitly set forth prohibited acts, but rape was not
mentioned by name. (For example, the Treaty of Amity and
Commerce between Prussia and the United States provides that
in time of war all women and children shall not be molested in
their persons. The Treaty of Amity and Commerce, Between his
Majesty the King of Prussia and the United States of America, art.
23, Sept. 10, 1785, U.S.-Pruss., 8 TREATIES & OTHER INT'L
AGREEMENTS OF THE U.S. 78, 85. The 1863 Lieber Instructions
classified
rape
as
a
crime
of
troop
discipline.
(Mitchell, The Prohibition of Rape in International Humanitarian
Law as a Norm of Jus cogens: Clarifying the Doctrine , 15 DUKE J.
COMP. INTL. L. 219, 224). It specified rape as a capital crime
punishable by the death penalty (Id. at 236). The 1907 Hague
Convention protected women by requiring the protection of their
honour. (Family honour and rights, the lives of persons, and

private property, as well as religious convictions and practice,


must be respected. Convention (IV) Respecting the Laws &
Customs of War on Land, art. 46, Oct. 18, 1907. General
Assembly resolution 95 (I) of December 11, 1946 entitled,
Affirmation of the Principles of International Law recognized by
the Charter of the Nrnberg Tribunal; General Assembly document
A/64/Add.1 of 1946; See Agreement for the Prosecution and
Punishment of the Major War Criminals of the European Axis,
Aug. 8, 1945, 59 Stat. 1544, 82 U.N.T.S. 279. Article 6(c) of the
Charter established crimes against humanity as the following:
CRIMES
AGAINST
HUMANITY:
namely,
murder,
extermination, enslavement, deportation, and other
inhumane acts committed against any civilian population,
before or during the war, or persecutions on political, racial
or religious grounds in execution of or in connection with
any crime within the Jurisdiction of the Tribunal, whether or
not in violation of the domestic law of the country where
perpetrated.
The Nuremberg Judgment did not make any reference to rape
and rape was not prosecuted. (Judge Gabrielle Kirk
McDonald, TheInternational Criminal Tribunals Crime and
Punishment in the International Arena,7 ILSA J. INTL. COMP. L.
667, 676.) However, International Military Tribunal for the Far
East prosecuted rape crimes, even though its Statute did not
explicitly criminalize rape. The Far East Tribunal held General
Iwane Matsui, Commander Shunroku Hata and Foreign
Minister Hirota criminally responsible for a series of crimes,
including rape, committed by persons under their authority.
(THE TOKYO JUDGMENT: JUDGMENT OF THE INTERNATIONAL
MILITARY TRIBUNAL FOR THE FAR EAST 445-54 (1977).
The first mention of rape as a specific crime came in
December 1945 when Control Council Law No. 10 included the
term rape in the definition of crimes against humanity. Law
No. 10, adopted by the four occupying powers in Germany,
was devised to establish a uniform basis for prosecuting war
criminals in German courts. (Control Council for Germany, Law
No. 10: Punishment of Persons Guilty of War Crimes, Crimes
Against Peace and Against Humanity, Dec. 20, 1945, 3 Official
Gazette Control Council for Germany 50, 53 (1946))
The 1949 Geneva Convention Relative to the Treatment of
Prisoners of War was the first modern-day international
instrument to establish protections against rape for women.
Geneva Convention Relative to the Protection of Civilian
Persons in Time of War, Aug. 12, 1949, art. 27,6 U.S.T. 3316,
75 U.N.T.S. 287 (entry into force Oct. 20, 1950) [hereinafter
Fourth Geneva Convention].Furthermore, the ICC, the ICTY,

and the International Criminal Tribunal for Rwanda (ICTR) have


significantly advanced the crime of rape by enabling it to be
prosecuted as genocide, a war crime, and a crime against
humanity.
But, as it happened, the acknowledgment
introduction was missing from Footnote 65.

above or

similar

Next, petitioners also point out that the following eight sentences and
their accompanying footnotes appear in text on pages 30-32 of
the Vinuya decision:
xxx
In
international
law,
the
term jus
cogens (literally, compelling law) refers to norms that
command peremptory authority, superseding conflicting
treaties and custom. Jus cogens norms are considered
peremptory in the sense that they are mandatory, do not
admit derogation, and can be modified only by general
international norms of equivalent authority. 71
Early strains of the jus cogens doctrine have existed since
the 1700s,72 but peremptory norms began to attract greater
scholarly attention with the publication of Alfred von
Verdross's influential 1937 article, Forbidden Treaties in
International Law.73 The recognition of jus cogens gained
even more force in the 1950s and 1960s with the ILCs
preparation of the Vienna Convention on the Law of Treaties
(VCLT).74 Though there was a consensus that certain
international norms had attained the status of jus
cogens,75 the ILC was unable to reach a consensus on the
proper criteria for identifying peremptory norms.
After an extended debate over these and other theories
of jus cogens, the ILC concluded ruefully in 1963 that
there is not as yet any generally accepted criterion by
which to identify a general rule of international law as
having the character of jus cogens.76 In a commentary
accompanying the draft convention, the ILC indicated
that the prudent course seems to be to x x x leave the full
content of this rule to be worked out in State practice and
in the jurisprudence of international tribunals. 77 Thus,
while the existence of jus cogens in international law is
undisputed,
no
consensus
exists
on
its
substance,77 beyond a tiny core of principles and rules.78

Admittedly, the Vinuya decision lifted the above, including their


footnotes, from Criddle-Descents article, A Fiduciary Theory of Jus Cogens.
[11]
Criddle-Descents footnotes were carried into the Vinuya decisions own
footnotes but no attributions were made to the two authors in those
footnotes.
The Explanation
Unless amply explained, the above lifting from the works of Ellis and
Criddle-Descent could be construed as plagiarism. But one of Justice Del
Castillos researchers, a court-employed attorney, explained how she
accidentally deleted the attributions, originally planted in the beginning
drafts of her report to him, which report eventually became the working draft
of the decision. She said that, for most parts, she did her research
electronically. For international materials, she sourced these mainly from
Westlaw, an online research service for legal and law-related materials to
which the Court subscribes.
In the old days, the common practice was that after a Justice would
have assigned a case for study and report, the researcher would source his
materials mostly from available law books and published articles on
print. When he found a relevant item in a book, whether for one side of the
issue or for the other, he would place a strip of paper marker on the
appropriate page, pencil mark the item, and place the book on his desk
where other relevant books would have piled up. He would later paraphrase
or copy the marked out passages from some of these books as he typed his
manuscript on a manual typewriter. This occasion would give him a clear
opportunity to attribute the materials used to their authors or sources.
With the advent of computers, however, as Justice Del Castillos
researcher also explained, most legal references, including the collection of
decisions of the Court, are found in electronic diskettes or in internet
websites that offer virtual libraries of books and articles. Here, as the
researcher found items that were relevant to her assignment, she
downloaded or copied them into her main manuscript, a smorgasbord plate
of materials that she thought she might need. The researchers technique in
this case is not too far different from that employed by a carpenter. The
carpenter first gets the pieces of lumber he would need, choosing the kinds
and sizes suitable to the object he has in mind, say a table. When ready, he
would measure out the portions he needs, cut them out of the pieces of
lumber he had collected, and construct his table. He would get rid of the
scraps.
Here, Justice Del Castillos researcher did just that. She electronically
cut relevant materials from books and journals in the Westlaw website and
pasted these to a main manuscript in her computer that contained the issues

for discussion in her proposed report to the Justice. She used the Microsoft
Word program.[12] Later, after she decided on the general shape that her
report would take, she began pruning from that manuscript those materials
that did not fit, changing the positions in the general scheme of those that
remained, and adding and deleting paragraphs, sentences, and words as her
continuing discussions with Justice Del Castillo, her chief editor,
demanded.Parenthetically, this is the standard scheme that computerliterate court researchers use everyday in their work.
Justice Del Castillos researcher showed the Committee the early drafts
of her report in the Vinuya case and these included the passages lifted from
the separate articles of Criddle-Descent and of Ellis with proper attributions
to these authors. But, as it happened, in the course of editing and cleaning
up her draft, the researcher accidentally deleted the attributions.
First Finding
The Court adopts the Committees finding that the researchers
explanation regarding the accidental removal of proper attributions to the
three authors is credible. Given the operational properties of the Microsoft
program in use by the Court, the accidental decapitation of attributions to
sources of research materials is not remote.
For most senior lawyers and judges who are not computer literate, a
familiar example similar to the circumstances of the present case would
probably help illustrate the likelihood of such an accident happening. If
researcher X, for example, happens to be interested in the inalienable
character of juridical personality in connection with an assignment and if the
book of the learned Civilist, Arturo M. Tolentino, happens to have been
published in a website, researcher X would probably show interest in the
following passage from that book:
xxx Both juridical capacity and capacity to act are
not rights, but qualities of persons; hence, they cannot
be alienated or renounced.15
xxx
_____________________________
15 3 Von Tuhr 296; 1 Valverde 291.
Because the sentence has a footnote mark (#15) that attributes the idea to
other sources, it is evident that Tolentino did not originate it. The idea is not
a product of his intellect. He merely lifted it from Von Tuhr and Valverde, two
reputable foreign authors.

When researcher X copies and pastes the above passage and its footnote
into a manuscript-in-the-making in his computer, the footnote number would,
given the computer program in use, automatically change and adjust to the
footnoting sequence of researcher Xs manuscript. Thus, if the preceding
footnote in the manuscript when the passage from Tolentino was pasted on it
is 23, Tolentinos footnote would automatically change from the original
Footnote 15 to Footnote 24.
But then, to be of use in his materials-gathering scheme, researcher X
would have to tag the Tolentino passage with a short description of its
subject for easy reference. A suitable subject description would be: The
inalienable character of juridical personality.23 The footnote mark, 23 From
Tolentino, which researcher X attaches to the subject tag, serves as
reminder to him to attribute the passage in its final form to Tolentino. After
the passage has been tagged, it would now appear like this:
The inalienable character of juridical personality.23
xxx Both juridical capacity and capacity to act are
not rights, but qualities of persons; hence, they cannot
be alienated or renounced.24
xxx
_____________________________
23 From Tolentino.
24 3 Von Tuhr 296; 1 Valverde 291.
The tag is of course temporary and would later have to go. It serves
but a marker to help researcher X maneuver the passage into the right spot
in his final manuscript.
The mistake of Justice Del Castillos researcher is that, after the Justice
had decided what texts, passages, and citations were to be retained
including those from Criddle-Descent and Ellis, and when she was already
cleaning up her work and deleting all subject tags, she unintentionally
deleted the footnotes that went with such tagswith disastrous effect.
To understand this, in Tolentinos example, the equivalent would be
researcher Xs removal during cleanup of the tag, The inalienable character
of juridical personality.23, by a simple delete operation, and the unintended
removal as well of the accompanying footnote (#23). The erasure of the
footnote eliminates the link between the lifted passage and its source,
Tolentinos book. Only the following would remain in the manuscript:
xxx Both juridical capacity and capacity to act are
not rights, but qualities of persons; hence, they cannot
be alienated or renounced.43

_____________________________
43 3 Von Tuhr 296; 1 Valverde 291.
As it happened, the Microsoft word program does not have a function
that raises an alarm when original materials are cut up or pruned. The
portions that remain simply blend in with the rest of the manuscript,
adjusting the footnote number and removing any clue that what should stick
together had just been severed.
This was what happened in the attributions to Ellis and CriddleDescent. The researcher deleted the subject tags and, accidentally, their
accompanying footnotes that served as reminder of the sources of the lifted
passages. With 119 sources cited in the decision, the loss of the 2 of them
was not easily detectable.
Petitioners point out, however, that Justice Del Castillos verified letter
of July 22, 2010 is inconsistent with his researchers claim that the omissions
were mere errors in attribution. They cite the fact that the Justice did not
disclose his researchers error in that letter despite the latters confession
regarding her mistake even before the Justice sent his letter to the Chief
Justice. By denying plagiarism in his letter, Justice Del Castillo allegedly
perjured himself and sought to whitewash the case.[13]
But nothing in the July 22 letter supports the charge of false testimony.
Justice Del Castillo merely explained that there was every intention to
attribute all sources whenever due and that there was never any malicious
intent to appropriate anothers work as our own, which as it turns out is a true
statement. He recalled how the Court deliberated upon the case more than
once, prompting major revisions in the draft of the decision. In the process,
(s)ources were re-studied, discussions modified, passages added or
deleted. Nothing in the letter suggests a cover-up. Indeed, it did not preclude
a researchers inadvertent error.
And it is understandable that Justice Del Castillo did not initially
disclose his researchers error. He wrote the decision for the Court and was
expected to take full responsibility for any lapse arising from its
preparation. What is more, the process of drafting a particular decision for
the Court is confidential, which explained his initial request to be heard on
the matter without the attendance of the other parties.
Notably, neither Justice Del Castillo nor his researcher had a motive or
reason for omitting attribution for the lifted passages to Criddle-Descent or to
Ellis. The latter authors are highly respected professors of international
law.The law journals that published their works have exceptional
reputations. It did not make sense to intentionally omit attribution to these

authors when the decision cites an abundance of other sources. Citing these
authors as the sources of the lifted passages would enhance rather than
diminish their informative value. Both Justice Del Castillo and his researcher
gain nothing from the omission. Thus, the failure to mention the works of
Criddle-Decent and Ellis was unquestionably due to inadvertence or pure
oversight.
Petitioners of course insist that intent is not material in committing
plagiarism since all that a writer has to do, to avoid the charge, is to enclose
lifted portions with quotation marks and acknowledge the sources from
which these were taken.[14] Petitioners point out that the Court should apply
to this case the ruling in University of the Philippines Board of Regents v.
Court of Appeals and Arokiaswamy William Margaret Celine.[15] They argue
that standards on plagiarism in the academe should apply with more force to
the judiciary.
But petitioners theory ignores the fact that plagiarism is essentially a
form of fraud where intent to deceive is inherent. Their theory provides no
room for errors in research, an unrealistic position considering that there is
hardly any substantial written work in any field of discipline that is free of
any mistake. The theory places an automatic universal curse even on errors
that, as in this case, have reasonable and logical explanations.
Indeed, the 8th edition of Blacks Law Dictionary defines plagiarism as
the deliberate and knowing presentation of another person's original ideas or
creative expressions as one's own. [16] Thus, plagiarism presupposes intent
and a deliberate, conscious effort to steal anothers work and pass it off as
ones own.
Besides, the Court said nothing in U.P. Board of Regents that would
indicate that an intent to pass off anothers work as ones own is not required
in plagiarism. The Court merely affirmed the academic freedom of a
university to withdraw a masters degree that a student obtained based on
evidence that she misappropriated the work of others, passing them off as
her own. This is not the case here since, as already stated, Justice Del
Castillo actually imputed the borrowed passages to others.

Second Finding
The Court also adopts the Committees finding that the omission of
attributions to Criddle-Descent and Ellis did not bring about an impression
that Justice Del Castillo himself created the passages that he lifted from their
published articles. That he merely got those passages from others remains
self-evident, despite the accidental deletion. The fact is that he still imputed

the passages to the sources from which Criddle-Descent and Ellis borrowed
them in the first place.
This is best illustrated in the familiar example above. After the deletion
of the subject tag and, accidentally, its footnote which connects to the
source, the lifted passage would appear like this:
xxx Both juridical capacity and capacity to act are
not rights, but qualities of persons; hence, they cannot
be alienated or renounced.43
_____________________________
43 3 Von Tuhr 296; 1 Valverde 291.
Although the unintended deletion severed the passages link to
Tolentino, the passage remains to be attributed to Von Tuhr and Valverde, the
original sources that Tolentino himself cites. The text and its footnote
reference cancel out any impression that the passage is a creation of
researcher X. It is the same with the passages from Criddle-Descent and
Ellis. Because such passages remained attributed by the footnotes to the
authors original sources, the omission of attributions to Criddle-Descent and
Ellis gave no impression that the passages were the creations of Justice Del
Castillo. This wholly negates the idea that he was passing them off as his
own thoughts.
True the subject passages in this case were reproduced in
the Vinuya decision without placing them in quotation marks. But such
passages are much unlike the creative line from Robert Frost, [17] The woods
are lovely, dark, and deep, but I have promises to keep, and miles to go
before I sleep, and miles to go before I sleep. The passages here consisted of
common definitions and terms, abridged history of certain principles of law,
and similar frequently repeated phrases that, in the world of legal literature,
already belong to the public realm.
To paraphrase Bast and Samuels,[18] while the academic publishing
model is based on the originality of the writers thesis, the judicial system is
based on the doctrine of stare decisis, which encourages courts to cite
historical legal data, precedents, and related studies in their decisions. The
judge is not expected to produce original scholarship in every respect. The
strength of a decision lies in the soundness and general acceptance of the
precedents and long held legal opinions it draws from.
Third Finding
Petitioners allege that the decision twisted the passages from Tams,
Criddle-Descent, and Ellis. The Court adopts the Committees finding that this
is not so. Indeed, this allegation of twisting or misrepresentation remains a

mystery to the Court. To twist means to distort or pervert the meaning of.
[19]
For example, if one lifts the lyrics of the National Anthem, uses it in his
work, and declares that Jose Palma who wrote it did not love his country,
then there is twisting or misrepresentation of what the anthems lyrics
said. Here, nothing in the Vinuya decision said or implied that, based on the
lifted passages, authors Tams, Criddle-Descent, and Ellis supported the
Courts conclusion that the Philippines is not under any obligation in
international law to espouse Vinuya et al.s claims.
The fact is that, first, since the attributions to Criddle-Descent and Ellis
were accidentally deleted, it is impossible for any person reading the
decision to connect the same to the works of those authors as to conclude
that in writing the decision Justice Del Castillo twisted their intended
messages. And, second, the lifted passages provided mere background facts
that established the state of international law at various stages of its
development. These are neutral data that could support conflicting theories
regarding whether or not the judiciary has the power today to order the
Executive Department to sue another country or whether the duty to
prosecute violators of international crimes has attained the status of jus
cogens.
Considering how it was impossible for Justice Del Castillo to have
twisted the meaning of the passages he lifted from the works of Tams,
Criddle-Descent, and Ellis, the charge of twisting or misrepresentation
against him is to say the least, unkind. To be more accurate, however, the
charge is reckless and obtuse.
No Misconduct
On occasions judges and justices have mistakenly cited the wrong
sources, failed to use quotation marks, inadvertently omitted necessary
information from footnotes or endnotes. But these do not, in every case,
amount to misconduct. Only errors that are tainted with fraud, corruption, or
malice are subject of disciplinary action. [20] This is not the case here. Justice
Del Castillos acts or omissions were not shown to have been impelled by any
of such disreputable motives.[21] If the rule were otherwise, no judge or
justice, however competent, honest, or dedicated he may be, can ever hope
to retire from the judiciary with an unblemished record. [22]
No Inexcusable Negligence
Finally, petitioners assert that, even if they were to concede that the
omission was the result of plain error, Justice Del Castillo is nonetheless
guilty of gross inexcusable negligence. They point out that he has full control
and supervision over his researcher and should not have surrendered the
writing of the decision to the latter.[23]

But this assumes that Justice Del Castillo abdicated the writing of
the Vinuya decision to his researcher, which is contrary to the evidence
adduced during the hearing. As his researcher testified, the Justice set the
direction that the research and study were to take by discussing the issues
with her, setting forth his position on those issues, and reviewing and
commenting on the study that she was putting together until he was
completely satisfied with it.[24] In every sense, Justice Del Castillo was in
control of the writing of the report to the Court, which report eventually
became the basis for the decision, and determined its final outcome.
Assigning cases for study and research to a court attorney, the
equivalent of a law clerk in the United States Supreme Court, is standard
practice in the high courts of all nations. This is dictated by necessity. With
about 80 to 100 cases assigned to a Justice in our Court each month, it would
be truly senseless for him to do all the studies and research, going to the
library, searching the internet, checking footnotes, and watching the
punctuations. If he does all these by himself, he would have to allocate at
least one to two weeks of work for each case that has been submitted for
decision. The wheels of justice in the Supreme Court will grind to a halt under
such a proposition.
What is important is that, in this case, Justice Del Castillo retained
control over the writing of the decision in the Vinuya case without, however,
having to look over his researchers shoulder as she cleaned up her draft
report to ensure that she hit the right computer keys. The Justices researcher
was after all competent in the field of assignment given her. She finished law
from a leading law school, graduated third in her class, served as Editor-in
Chief of her schools Law Journal, and placed fourth in the bar examinations
when she took it. She earned a masters degree in International Law and
Human Rights from a prestigious university in the United States under the
Global-Hauser program, which counsel for petitioners concedes to be one of
the top post graduate programs on International Law in the world. Justice Del
Castillo did not exercise bad judgment in assigning the research work in
the Vinuya case to her.
Can errors in preparing decisions be prevented? Not until computers
cease to be operated by human beings who are vulnerable to human
errors. They are hypocrites who believe that the courts should be as errorfree as they themselves are.
Incidentally, in the course of the submission of petitioners exhibits, the
Committee noted that petitioners Exhibit J, the accusing statement of the
Faculty of the U.P. College of Law on the allegations of plagiarism and
misinterpretation, was a mere dummy. The whole of the statement was
reproduced but the signatures portion below merely listed the names of 38

faculty members, in solid rows, with the letters Sgd or signed printed beside
the names without exception. These included the name of retired Supreme
Court Justice Vicente V. Mendoza, a U.P. professor.
Because the Committee declined to admit a mere dummy of Exhibit J,
it directed Atty. Roque to present the signed copy within three days of the
August 26 hearing.[25] He complied. As it turned out, the original statement
was signed by only a minority of the faculty members on the list. The set of
signatories that appeared like solid teeth in the dummy turned out to be
broken teeth in the original. Since only 37 out of the 81 on the list signed the
document, it does not appear to be a statement of the Faculty but of just
some of its members. And retired Justice V. V. Mendoza did not sign the
statement, contrary to what the dummy represented. The Committee
wondered why the Dean submitted a dummy of the signed document when
U.P. has an abundance of copying machines.
Since the above circumstances appear to be related to separate en
banc matter concerning the supposed Faculty statement, there is a need for
the Committee to turn over the signed copy of the same to the en banc for
its consideration in relation to that matter.
WHEREFORE, in view of all of the above, the Court:
1. DISMISSES for lack of merit petitioner Vinuya, et al.s charges of
plagiarism, twisting of cited materials, and gross neglect against Justice
Mariano C. del Castillo;
2. DIRECTS the Public Information Office to send copies of this
decision to Professors Evan J. Criddle and Evan Fox-Descent, Dr. Mark Ellis,
and Professor Christian J. Tams at their known addresses;
3. DIRECTS the Clerk of Court to provide all court attorneys involved in
legal research and reporting with copies of this decision and to enjoin them
to avoid editing errors committed in the Vinuya case while using the existing
computer program especially when the volume of citations and footnoting is
substantial; and
4. Finally, DIRECTS the Clerk of Court to acquire the necessary
software for use by the Court that can prevent future lapses in citations and
attributions.
Further, the Court DIRECTS the Committee on Ethics and Ethical
Standards to turn over to the en banc the dummy as well as the signed copy
of petitioners Exhibit J, entitled Restoring Integrity, a statement by the
Faculty of the University of the Philippines College of Law for the en bancs
consideration in relation to the separate pending matter concerning that
supposed Faculty statement.

SO ORDERED.
[G.R. No. 166337. March 7, 2005]
BAYANIHAN MUSIC vs. BMG
THIRD DIVISION
Gentlemen:
Quoted hereunder, for your information, is a resolution of this Court
dated MAR 7 2005.
G.R. No. 166337 (Bayanihan Music Philippines, Inc. vs. BMG Records
(Pilipinas) and Jose Mari Chan, et al.)
Subject of this petition for review on certiorari is the Decision dated
December 14, 2004[1] of the Court of Appeals in CA-G.R. SP No. 69626,
upholding the Order dated August 24, 2001 of the Regional Trial Court at
Quezon City, Branch 90, which found no merit in petitioner's application for
the issuance of a writ of preliminary injunction, along with the Order dated
January 10, 2002, which denied petitioner's motion for reconsideration.
On July 16, 1973, private respondent Jose Mari Chan (Chan) entered into a
contract with petitioner Bayanihan Music Philippines, Inc. (Bayanihan),
whereunder the former assigned to the latter all his rights, interests and
participation over his musical composition "Can We Just Stop and Talk A
While". On March 11, 1976, the parties entered into a similar contract over
Chan's other musical composition entitled "Afraid For Love To Fade".
On the strength of the abovementioned contracts, Bayanihan applied for and
was granted by the National Library a Certificate of Copyright Registration for
each of the two musical compositions, thus: November 19, 1973, for the
song "Can We Just Stop and Talk A While" and on May 21, 1980, for the song
"Afraid for Love To Fade."
Apparently, without the knowledge and consent of petitioner Bayanihan,
Chan authorized his co-respondent BMG Records (Pilipinas) [BMG] to record
and distribute the aforementioned musical compositions in a then recently
released album of singer Lea Salonga.
In separate letters both dated December 7, 1999, petitioner Bayanihan
informed respondents Chan and BMG of its existing copyrights over the
subject musical compositions and the alleged violation of such right by the

two. Demands were made on both to settle the matter with Bayanihan.
However no settlement was reached by the parties.
Hence, on August 8, 2000, Bayanihan filed with the Regional Trial Court at
Quezon City a complaint against Chan and BMG for violation of Section 216
of Republic Act No. 8293, otherwise known as theIntellectual Property Code
of the Philippines, with a prayer for the issuance of Temporary Restraining
Order (TRO) and/or writ of preliminary injunction, enjoining respondent BMG
from further recording and distributing the subject musical compositions in
whatever form of musical products, and Chan from further granting any
authority to record and distribute the same musical compositions.
In its answer, BMG contended, among others, that: (1) the acts of recording
and publication sought to be enjoined had already been consummated,
thereby rendering moot Bayanihan's prayer for TRO and/or preliminary
injunction; and (2) there is no clear showing that petitioner Bayanihan would
be greatly damaged by the refusal of the prayed for TRO and/or preliminary
injunction. BMG also pleaded a cross-claim against its co-respondent Chan
for violation of his warranty that his musical compositions are free from
claims of third persons, and a counterclaim for damages against petitioner
Bayanihan.
Chan, for his part, filed his own answer to the complaint, thereunder alleging
that: (1) it was never his intention to divest himself of all his rights and
interest over the musical compositions in question; (2) the contracts he
entered into with Bayanihan are mere music publication agreements giving
Bayanihan, as assignee, the power to administer his copyright over his two
songs and to act as the exclusive publisher thereof; (3) he was not cognizant
of the application made by and the subsequent grant of copyrights to
Bayanihan; and (4) Bayanihan was remissed in its obligations under the
contracts because it failed to effectively advertise his musical compositions
for almost twenty (20) years, hence, he caused therescission of said
contracts in 1997. Chan also included in his answer a counterclaim for
damages against Bayanihan.
After hearing the parties, the lower court came out with an order denying
Bayanihan's prayer for TRO, saying, thus:
After carefully considering the arguments and evaluating the evidence
presented by counsels, this Court finds that the plaintiff has not been able to
show its entitlement to the relief of TRO as prayed for in its verified
complaint (see Section 4, Rule 58 of the 1997 Rules of Civil Procedure, as
amended), hence, this Court is of the considered and humble view that the
ends of justice shall be served better if the aforecited application is denied.

IN VIEW OF THE FOREGOING, the aforecited application or prayer for the


issuance of a TRO is denied.
SO ORDERED.
Thereafter, the same court, in its subsequent Order dated August
24, 2001,[2]cralaw likewise denied Bayanihan's prayer for a writ of
preliminary injunction, to wit:
After carefully going over the pleadings and the pertinent portions of the
records insofar as they are pertinent to the issue under consideration, this
Court finds that the plaintiff has not been able to show its entitlement to the
relief of preliminary injunction as prayed for in its verified complaint
(see Section 4, Rule 58 of the 1997 Rules of Civil Procedure, as amended),
hence, this Court is of the considered and humble view that the ends of
justice shall be served better if the aforecited application is denied, (see
also Order dated July 16, 2001).
IN VIEW OF THE FOREGOING, the application or prayer for the issuance of a
writ of preliminary injunction is denied.
SO ORDERED.
Its motion for a reconsideration of the same order having been likewise
denied by the trial court in its next Order of January 10, 2002,
[3]
cralaw petitioner Bayanihan then went to the Court of Appeals on a petition
for certiorari, thereat docketed as CA-G.R. SP No. 69626, imputing grave
abuse of discretion on the part of the trial court in issuing the Orders of
August 24, 2001 and January 10, 2001, denying its prayers for a writ of
preliminary injunction and motion for reconsideration, respectively.
In the herein assailed Decision dated December 14, 2004, the Court of
Appeals upheld the challenged orders of the trial court and accordingly
dismissed Bayanihan petition, thus:
WHEREFORE, finding neither flaw of jurisdiction nor taint of grave abuse of
discretion in the issuance of the assailed Orders of the respondent court
dated August 24, 2001 and January 10, 2002, the instant petition is
DISMISSED. No costs.
SO ORDERED.[4]cralaw
Hence, Bayanihan's present recourse.
It is petitioner's submission that the appellate court committed reversible
error when it dismissed its petition for certiorari and upheld the trial court's

denial of its application for a writ of preliminary injunction. Petitioner insists


that as assignee of the copyrights over the musical compositions in question,
it has a clear legal right to a writ of preliminary injunction; that respondents
BMG and Chan violated its copyrights over the same musical compositions;
that despite knowledge by respondent BMG of petitioner's copyrights over
the said musical compositions, BMG continues to record and distribute the
same, to petitioner's great and irreparable injury.
We DENY.
We have constantly reminded courts that there is no power, the exercise of
which is more delicate and requires greater caution, deliberation and sound
discretion, or which is more dangerous in a doubtful case, than the issuance
of an injunction. A court should, as much as possible, avoid issuing the writ
which would effectively dispose of the main case without trial.
Here, nothing is more evident than the trial court's abiding awareness of the
extremely difficult balancing act it had to perform in dealing with petitioner's
prayer for injunctive reliefs. Conscious, as evidently it is, of the fact that
there is manifest abuse of discretion in the issuance of an injunctive writ if
the following requisites provided for by law are not present: (1) there must
be a right in esse or the existence of a right to be protected; and (2) the act
against which the injunction is to be directed is a violation of such right,
[5]
cralaw the trial court threaded the correct path in denying petitioner's
prayer therefor. For, such a writ should only be granted if a party is clearly
entitled thereto.[6]cralaw
Of course, while a clear showing of the right to an injunctive writ is necessary
albeit its existence need not be conclusively established, [7]cralaw as the
evidence required therefor need not be conclusive or complete, still, for an
applicant, like petitioner Bayanihan, to be entitled to the writ, he is required
to show that he has the ostensible right to the final relief prayed for in its
complaint.[8]cralaw Here, the trial court did not find ample justifications for
the issuance of the writ prayed for by petitioner.
Unquestionably, respondent Chan, being undeniably the composer and
author of the lyrics of the two (2) songs, is protected by the mere fact alone
that he is the creator thereof, conformably with Republic Act No. 8293,
otherwise known as the Intellectual Property Code, Section 172.2 of which
reads:
172.2. 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.

An examination of petitioner's verified complaint in light of the two (2)


contracts sued upon and the evidence it adduced during the hearing on the
application for preliminary injunction, yields not the existence of the requisite
right protectable by the provisional relief but rather a lingering doubt on
whether there is or there is no such right. The two contracts between
petitioner and Chan relative to the musical compositions subject of the suit
contain the following identical stipulations:
7.
It is also hereby agreed to by the parties herein that in the event the
PUBLISHER [petitioner herein] fails to use in any manner whatsoever within
two (2) years any of the compositions covered by this contract, then such
composition may be released in favor of the WRITER and excluded from this
contract and the PUBLISHER shall execute the necessary release in writing in
favor of the WRITER upon request of the WRITER;
xxx

xxx

xxx

9.
This contract may be renewed for a period of two-and-one-half (2 1/2)
years at the option of the PUBLISHER. Renewal may be made by the
PUBLISHER by advising the WRITER of such renewal in writing at least five (5)
days before the expiration of this contract.[9]cralaw
It would thus appear that the two (2) contracts expired on October 1,
1975 and March 11, 1978, respectively, there being neither an allegation,
much less proof, that petitioner Bayanihan ever made use of the
compositions within the two-year period agreed upon by the parties.
Anent the copyrights obtained by petitioner on the basis of the selfsame two
(2) contracts, suffice it to say 'that such purported copyrights are not
presumed to subsist in accordance with Section 218[a] and [b], of
the Intellectual Property Code,[10]cralaw because respondent Chan had
put in issue the existence thereof.
It is noted that Chan revoked and terminated said contracts, along with
others, on July 30, 1997, or almost two years before petitioner Bayanihan
wrote its sort of complaint/demand letter dated December 7, 1999 regarding
the recent "use/recording of the songs 'Can We Just Stop and Talk A While'
and 'Afraid for Love to Fade,'" or almost three (3) years before petitioner filed
its complaint on August 8, 2000, therein praying, inter alia, for injunctive
relief. By then, it would appear that petitioner had no more right that is
protectable by injunction.
Lastly, petitioner's insinuation that the trial court indulged in generalizations
and was rather skimpy in dishing out its reasons for denying its prayer for
provisional injunctive relief, the same deserves scant consideration. For sure,
the manner by which the trial court crafted its challenged orders is quite

understandable, lest it be subjected to a plausible suspicion of having


prejudged the merits of the main case.
WHEREFORE, petition is hereby DENIED.
SO ORDERED.
Very truly yours,
UNILEVER PHILIPPINES G.R. No. 119280
(PRC), INC.,
Petitioner, Present:
PUNO, J., Chairperson,
SANDOVAL-GUTIERREZ,
- v e r s u s - CORONA,
AZCUNA and GARCIA,* JJ.
THE HONORABLE COURT
OF APPEALS and PROCTER
AND GAMBLE PHILIPPINES,
INC.,
Respondents. Promulgated:
August 10, 2006
x-----------------------------------------x
DECISION
CORONA, J.:
In this petition for review under Rule 45 of the Rules of Court, petitioner
assails the February 24, 1995 decision [1] of the Court of Appeals (CA) in CAG.R. SP No. 35242 entitled Unilever Philippines (PRC), Inc. v. Honorable
Fernando V. Gorospe, Jr. and Procter and Gamble Philippines, Inc.
(P&GP) which affirmed the issuance by the court a quo of a writ of
preliminary injunction against it. The writ enjoined petitioner from using and
airing, until further orders of the court, certain television commercials for its
laundry products claimed to be identical or similar to its double tug or tactac key visual.[2]

Petitioner alleges that the writ of preliminary injunction was issued by


the trial court (and affirmed by the CA) without any evidence of private
respondents clear and unmistakable right to the writ. Petitioner further
contends that the preliminary injunction issued against it already disposed of
the main case without trial, thus denying petitioner of any opportunity to
present evidence on its behalf.
The antecedents show that on August 24, 1994, private respondent Procter
and Gamble Phils., Inc. filed a complaint for injunction with damages and a
prayer for temporary restraining order and/or writ of preliminary injunction
against petitioner Unilever, alleging that:
1.5.

As early as 1982, a P&G subsidiary in Italy used a key


visual in the advertisement of its laundry detergent and
bleaching products. This key visual known as the doubletug or tac-tac demonstration shows the fabric being held
by both hands and stretched sideways.

1.6.

The tac-tac was conceptualized for P&G by the


advertising
agency Milano and
Gray
of
Italy
in
1982.The tac-tac was used in the same year in an
advertisement entitled All aperto to demonstrate the effect
on fabrics of one of P&GPs products, a liquid bleach called
Ace.
xxxxxxxxx

1.7.

Since then, P&G has used the tac-tac key visual in the
advertisement of its products. In fact, in 1986, in Italy,
the tac-tac key visual was used in the television
commercial for Ace entitled Kite.

1.8.

P&G has used the same distinctive tac-tac key visual


to local consumers in the Philippines.
xxxxxxxxx

1.10.

Substantially and materially imitating the aforesaid tactac key visual of P&GP and in blatant disregard
of P&GPs intellectual property rights, Unilever on 24 July
1993 started airing a 60 second television commercial TVC
of its Breeze Powerwhite laundry product called Porky. The
said TVC included a stretching visual presentation and
sound effects almost [identical] or substantially similar
to P&GPs tac-tac key visual.

xxxxxxxxx
1.14.

On July 15, 1994, P&GP aired in the Philippines, the


same Kite television advertisement it used in Italy in 1986,
merely dubbing the Italian language with Filipino for the
same produce Ace bleaching liquid which P&GP now
markets in the Philippines.

1.15.

On August 1, 1994, Unilever filed a Complaint with the


Advertising Board of the Philippines to prevent P&GP from
airing the Kite television advertisement.[3]

On August 26, 1994, Judge Gorospe issued an order granting a


temporary restraining order and setting it for hearing on September 2, 1994
for Unilever to show cause why the writ of preliminary injunction should not
issue. During the hearing on September 2, 1994, P&GP received Unilevers
answer with opposition to preliminary injunction. P&GP filed its reply to
Unilevers opposition to a preliminary injunction on September 6, 1994.
During the hearing on September 9, 1994, Judge Gorospe ordered
petitioner to submit asur-rejoinder. P&GP received Unilevers rejoinder to
reply on September 13, 1994. The following day, on September 14, 1994,
P&GP filed its sur-reply to Unilevers rejoinder.
On September 19, 1994, P&GP received a copy of the order dated
September 16, 1994 ordering the issuance of a writ of preliminary injunction
and fixing a bond of P100,000. On the same date, P&GP filed the required
bond issued by Prudential Guarantee and Assurance, Inc.
On September 21, 1994, petitioner appealed to the CA assigning the
following errors allegedly committed by the court a quo, to wit:
PUBLIC RESPONDENT HAD ACTED WITHOUT OR IN EXCESS
OF JURISDICTION AND WITH GRAVE ABUSE OF DISCRETION
AMOUNTING TO LACK OF JURISDICTION IN ISSUING THE WRIT OF
PRELIMINARY INJUNCTION IN VIOLATION OF THE RULES ON
EVIDENCE AND PROCEDURE, PARTICULARLY OF SEC. 3 (a), RULE
58 OF THE REVISED RULES OF COURT AND OF THE PREVAILING
JURISPRUDENCE.
PUBLIC RESPONDENT IN ISSUING THE VOID ORDER DATED
SEPTEMBER 16, 1994, HAD, IN EFFECT, ALREADY PREJUDGED
THE MERITS OF THE MAIN CASE.

PUBLIC RESPONDENT HAD ISSUED THE VOID ORDER


ACCORDING RELIEF TO A NON-PARTY IN CIVIL CASE NO. 94-2434
WITHOUT JURISDICTION.
PUBLIC RESPONDENT IN ISSUING THE VOID ORDER HAD
DEPRIVED PETITIONER OF SUBSTANTIVE AND PROCEDURAL DUE
PROCESS; PUBLIC RESPONDENT HAD FORECLOSED PETITIONERS
RIGHT AND THE OPPORTUNITY TO CROSS-EXAMINE PROCTERS
WITNESSES ABAD AND HERBOSA.[4]
On February 24, 1995, the CA rendered its decision finding that
Judge Gorospe did not act with grave abuse of discretion in issuing the
disputed order. The petition for certiorari was thus dismissed for lack of
merit.
After a careful perusal of the records, we agree with the CA and affirm
its decision in toto:
Petitioner does not deny that the questioned TV
advertisements are substantially similar to P&GPsdouble tug
or tac-tac key visual. However, it submits that P&GP is not
entitled to the relief demanded, which is to enjoin petitioner from
airing said TV advertisements, for the reason that petitioner has
Certificates of Copyright Registration for which advertisements
while P&GP has none with respect to its double-tug or tac-tackey
visual. In other words, it is petitioners contention that P&GP is
not entitled to any protection because it has not registered with
the National Library the very TV commercials which it claims
have been infringed by petitioner.
We disagree. Section 2 of PD 49 stipulates that the
copyright for a work or intellectual creation subsists from the
moment of its creation. Accordingly, the creator acquires
copyright for his work right upon its creation. Contrary to
petitioners contention, the intellectual creators exercise and
enjoyment of copyright for his work and the protection given by
law to him is not contingent or dependent on any formality or
registration. Therefore, taking the material allegations of
paragraphs 1.3 to 1.5 of P&GPs verified Complaint in the context
of PD 49, it cannot be seriously doubted that at least, for
purposes of determining whether preliminary injunction should
issue during the pendency of the case, P&GP is entitled to the
injunctive relief prayed for in its Complaint.

The second ground is likewise not well-taken. As adverted


to earlier, the provisional remedy of preliminary injunction will
not issue unless it is shown in the verified complaint that plaintiff
is probably entitled to the relief demanded, which consists in
whole or in part in restraining the commission or continuance of
the acts complained of. In view of such requirement, the court
has to make a tentative determination if the right sought to be
protected exists and whether the act against which the writ is to
be directed is violative of such right. Certainly, the courts
determination as to the propriety of issuing the writ cannot be
taken as a prejudgment of the merits of the case because it is
tentative in nature and the writ may be dissolved during or after
the trial if the court finds that plaintiff was not entitled to it.
xxxxxxxxx
Obviously, the determination made by the court a quo was
only for purposes of preliminary injunction, without passing upon
the merits of the case, which cannot be done until after a fullblown hearing is conducted.
The third ground is patently unmeritorious. As alleged in
the Complaint P&GP is a subsidiary of Procter and Gamble
Company (P&G) for which the double tug or tac-tac key visual
was conceptualized or created. In that capacity, P&GP used the
said TV advertisement in the Philippines to promote its
products. As such subsidiary, P&GP is definitely within the
protective mantle of the statute (Sec. 6, PD 49).
Finally, We find the procedure adopted by the court a
quo to be in order.
The record clearly shows that respondent Judge followed
the (procedure provided for in Section 5, Rule 58, as amended by
BP 224, and Paragraph A(8) of the Interim Rules). In fact, the
court a quo set the incident for hearing on September 2, 1994, at
which date petitioner was ordered to show cause why the writ
should not be issued. Petitioner filed an Opposition to the
application for preliminary injunction. The same incident was
again set for hearing on September 9, 1994, during which the
parties made some manifestations in support of their respective
positions. Subsequent to such hearing petitioner filed a Reply
to P&GPs Rejoinder to its Opposition. Under the foregoing
circumstances, it is absurd to even suggest that petitioner was
not given its day in court in the matter of the issuance of the
preliminary injunctive relief.

xxxxxxxxx
There was of course extreme urgency for the court a quo to
act on plaintiffs application for preliminary injunction. The airing
of TV commercials is necessarily of limited duration only. Without
such temporary relief, any permanent injunction against the
infringing TV advertisements of which P&GP may possibly
succeed in getting after the main case is finally adjudicated
could be illusory if by then such advertisements are no longer
used or aired by petitioner. It is therefore not difficult to perceive
the possible irreparable damage which P&GP may suffer if
respondent Judge did not act promptly on its application for
preliminary injunction.[5]

Preliminary injunction is a provisional remedy intended to provide


protection to parties for the preservation of their rights or interests during
the pendency of the principal action.[6] Thus, Section1, Rule 58 of the Rules of
Court provides:
Section 1. Preliminary injunction defined; classes. A
preliminary injunction is an order granted at any stage of an
action or proceeding prior to the judgment or final order,
requiring a party or a court, agency or a person to refrain from a
particular act or acts. It may also require the performance of a
particular act or acts, in which case it shall be known as a
preliminary mandatory injunction.
Injunction is resorted to only when there is a pressing necessity to
avoid injurious consequences which cannot be remedied under any standard
compensation.[7] As correctly ruled by the CA, there was an extreme urgency
to grant the preliminary injunction prayed for by P&GP considering that TV
commercials are aired for a limited period of time only. In fact, this Court
takes note of the fact that the TV commercial in issue the Kite TV
advertisement is no longer aired today, more than 10 years after the
injunction was granted on September 16, 1994.
The sole objective of a writ of preliminary injunction is to preserve the
status quo until the merits of the case can be heard fully. [8] A writ of
preliminary injunction is generally based solely on initial and incomplete
evidence.[9] Thus, it was impossible for the court a quo to fully dispose of the
case, as claimed by petitioner, without all the evidence needed for the full
resolution of the same. To date, the main case still has to be resolved by the
trial court.

The issuance of a preliminary injunction rests entirely on the discretion


of the court and is generally not interfered with except in cases of manifest
abuse.[10] There was no such abuse in the case at bar, especially because
petitioner was given all the opportunity to oppose the application for
injunction. The fact was, it failed to convince the court why the injunction
should not be issued. Thus, in Santos v. Court of Appeals,[11] we held that no
grave abuse of discretion can be attributed to a judge or body issuing a writ
of preliminary injunction where a party has not been deprived of its day in
court as it was heard and it exhaustively presented all its arguments and
defenses.
WHEREFORE, the petition is hereby DENIED.
Costs against petitioner.
G.R. No. 195956, March 11, 2015
ABS-CBN CORPORATION, Petitioner, v. FELIPE GOZON, GILBERTO R.
DUAVIT, JR., MARISSA L. FLORES, JESSICA A. SOHO, GRACE DELA
PEA-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 Certiorari 1 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 VicePresident; Marissa L. Flores (Flores), Vice-President for News and Public
Affairs; Jessica A. Soho (Soho), Director for News; Grace Dla Pea-Reyes
(Dela Pea-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:chanroblesvirtuallawlibrary
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 Renter'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 Pea-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 newsfeed in its program "Flash Report,"
together with its live broadcast.13 Allegedly, 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 Pea-Reyes and
Manalastas.20 Consequently, the Information21 for violation of the Intellectual
Property Code was filed on December 17, 2004. It
reads:chanroblesvirtuallawlibrary

That on or about the 22nd of July 2004, in Quezon City, Philippines, the abovenamed 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:chanroblesvirtuallawlibrary
WHEREFORE, THE PETITION FOR REVIEW FILED BY GMA-7 in I.S. No. 0410458 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)
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 Pea-Reyes and Manalastas.27 The
trial court Order reads:chanroblesvirtuallawlibrary
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 Pea-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:chanroblesvirtuallawlibrary
[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:chanroblesvirtuallawlibrary
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 April
10, 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:chanroblesvirtuallawlibrary
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 he 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 Properly 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:chanroblesvirtuallawlibrary
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)
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.cralawlawlibrary
I
The trial court granted respondents' Motion to Suspend Proceedings and
deferred respondents Dela Pea-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:chanroblesvirtuallawlibrary
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. InCrespo 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":42ChanRoblesVirtualawlibrary

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 Court whatever
disposition the fiscal may feel should be proper in the case thereafter 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 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:chanroblesvirtuallawlibrary
[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 Pea-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:chanroblesvirtuallawlibrary

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.49
However, 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:chanroblesvirtuallawlibrary
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:chanroblesvirtuallawlibrary
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:chanroblesvirtuallawlibrary
(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 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 Department] [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:chanroblesvirtuallawlibrary
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.cralawlawlibrary
III
The Court of Appeals ruled that Secretary Agra committed errors of
jurisdiction, which then required the grant of the writ of
certiorari:chanroblesvirtuallawlibrary
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:chanroblesvirtuallawlibrary
An error of judgment is one which the court may commit in the exercise of its
jurisdiction. An error of jurisdiction is 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:chanroblesvirtuallawlibrary
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.cralawlawlibrary

IV
Probable cause pertains to "such facts as are sufficient to engender a wellfounded 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:chanroblesvirtuallawlibrary
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:chanroblesvirtuallawlibrary
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:chanroblesvirtuallawlibrary
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, nontechnical 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 wellfounded 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
Estrada also highlighted that a "[preliminary 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.cralawlawlibrary
V
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":76ChanRoblesVirtualawlibrary
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:chanroblesvirtuallawlibrary
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 "[audio-visual 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 has been likened to a ghost in that it "must be spoken to a
little before it will explain itself."84 It is a concept that has eluded exact legal
definition.85 To get a better grasp of the idea/expression dichotomy, the
etymology of the term "idea" is traced:chanroblesvirtuallawlibrary
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:chanroblesvirtuallawlibrary
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:chanroblesvirtuallawlibrary
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 BJPFs 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:chanroblesvirtuallawlibrary
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 efects, video and audio, such that
no similarity or dissimilarity may be found by merely describing the general

copyright/format of both dating game shows90 (Emphasis supplied, citations


omitted)
Ideas can be either abstract or concrete.91 It is the concrete ideas that are
generally referred to as expression:chanroblesvirtuallawlibrary
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 plaintiffs 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 ofBaker v. Selden, distinguished copyright from
patents and illustrated how an idea or concept is different from the
expression of that idea:chanroblesvirtuallawlibrary
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 plaintiffs copyrighted
book. The US Supreme Court ruled that:chanroblesvirtuallawlibrary
"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 ii. 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 hook 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 diferent 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."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. 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.97Most 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 inPacific & Southern Co. v. Duncan,98 which involves a News
Monitoring Service's videotaping and sale of WXIA-TVs news
broadcasts:chanroblesvirtuallawlibrary
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); seeChicago RecordHerald 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. See 17 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)." (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 nonprotectibility of ideas should be re-examined, if not stricken, from decisions
and the law:chanroblesvirtuallawlibrary

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 nonprotectibility 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:chanroblesvirtuallawlibrary
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:chanroblesvirtuallawlibrary
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)
Under Section 211 of the Intellectual Property Code, broadcasting
organizations are granted a more specific set of rights called related or
neighboring rights:chanroblesvirtuallawlibrary
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:chanroblesvirtuallawlibrary
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:chanroblesvirtuallawlibrary
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:chanroblesvirtuallawlibrary
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:chanroblesvirtuallawlibrary
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, 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:chanroblesvirtuallawlibrary
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.cralawlawlibrary
VI
ABS-CBN assails the Court of Appeals' ruling that the footage shown by GMA7 falls under the scope of Section 212.2 and 212.4 of the Intellectual
Property Code:chanroblesvirtuallawlibrary
The evidence on record, as well as the discussions above, show that the
footage used by [respondents] could hardly be 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. 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.
.

.cralawlawlibrary
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:chanroblesvirtuallawlibrary
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.113According 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 "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."115Fair 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
share: 122ChanRoblesVirtualawlibrary
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 siteInstagram, users are allowed to post up to only 15 seconds
of video.124 In short-video sharing websiteVine,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.cralawlawlibrary
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:chanroblesvirtuallawlibrary
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 preexisting 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 se concern inherently immoral
acts:chanroblesvirtuallawlibrary
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:chanroblesvirtuallawlibrary
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 inInternational 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 aremala
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."132Mens rea is
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
Crimes mala in se presuppose 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:chanroblesvirtuallawlibrary
In the case of mala in se it is necessary, to constitute a punishable ofense,
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[.]"135 When 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 ofence, meaning the accused's actual or subjective state of mind
has to be proved; strict liability ofences 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 ofences 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:146ChanRoblesVirtualawlibrary
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.
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
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 (P50,000) to One hundred fifty thousand
pesos (P150,000) 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 (P150,000) to Five
hundred thousand pesos (P500,000) 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 (P500,000) to One
million five hundred thousand pesos (P1,500,000) 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:chanroblesvirtuallawlibrary
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]"
whenthey 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, inlive 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 A.BS-CBN's footage
in their broadcast. That is why GMA-7 allegedly cut the feed from Reuters
upon seeing ABS-CBN's logo 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 re broadcast 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 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. InColumbia
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:chanroblesvirtuallawlibrary
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:chanroblesvirtuallawlibrary
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.cralawlawlibrary
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
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:chanroblesvirtuallawlibrary
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 (P50,000) to One hundred fifty thousand pesos
(P150,000) 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 (P150,000) to Five
hundred thousand pesos (P500,000) 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 (P500,000) to One million
five hundred thousand pesos (P1,500,000) 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:158ChanRoblesVirtualawlibrary
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:chanroblesvirtuallawlibrary
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 Pea-Reyes and
Manalastas are responsible for the crime charged due to their duties. 161 The
Agra Resolution reads:chanroblesvirtuallawlibrary
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:chanroblesvirtuallawlibrary
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 Pea-Reyes and Manalastas
liable due to the nature of their work and responsibilities. He found
that:chanroblesvirtuallawlibrary
[t]his Office however finds respondents Grace Dla Pea-Reyes and John
Oliver T. Manalastas liable for copyright infringement penalized under
Republic Act No. 8293. It is undisputed that complainant ABS-CBN holds the
exclusive ownership and copyright over the "Angelo [d]ela Cruz news
footage". Hence, any airing and re-broadcast of the said 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 Pea-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 rebroadcast. 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 Pea-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.166Under 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:chanroblesvirtuallawlibrary
4a. Contributed Content
You agree to supply us at our request with news and sports news stones
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 Pea-Reyes and Manalastas merely denied receiving the
advisory sent by Reuters to its clients, including GMA-7. As in the records, the
advisory reads:chanroblesvirtuallawlibrary
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 Pea-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."169There is conspiracy "when two or more persons come to an
agreement concerning the commission of a felony and decide to commit
it":170ChanRoblesVirtualawlibrary
Conspiracy is not presumed. Like the physical acts constituting the crime
itself, the elements of conspiracy must be proven beyond reasonable doubt.
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 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.cralawred
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 Pea-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.chanroblesvirtuallawlibrary
Carpio, Chairperson, Brion, Del Castillo, and Mendoza, JJ., concur.

[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 certiorari[1] of the Resolutions[2] of the Department of
Justice dismissing for lack of merit and insufficiency of evidence petitioner
Microsoft Corporations 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 Beltrons 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[.] xxxx[5]
The Agreement also authorized Microsoft and Beltron to terminate the
contract if the other fails to comply with any of the Agreements provisions.
Microsoft terminated the Agreement effective 22 June 1995 for Beltrons nonpayment 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
Benedic[8] 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-installed [10] 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, users 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 Microsofts 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) Microsofts 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) Microsofts 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.
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 Microsofts motion
in its Order of 19 July 1996. Microsoft appealed to the Court of Appeals in CAG.R. CV No. 54600. In its Decision of 29 November 2001, the Court of
Appeals granted Microsofts 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 Microsofts complaint
for lack of merit and insufficiency of evidence. State Prosecutor Ong also
recommended the dismissal of Lotus Corporations 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 Ongs 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 MSDOS 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.
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 Ongs recommendation, denied Microsofts motion. [24]
Microsoft appealed to the Office of the DOJ Secretary. In the Resolution of
3 August 2000, DOJ Undersecretary Regis V. Puno dismissed Microsofts
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


INFRINGEMENT AND UNFAIR COMPETITION.

ON

COPYRIGHT

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 Microsofts 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 corporation [29] 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.
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 prosecutors discretion in
determining probable cause[36] 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 5[39] of PD 49 (Section 5) enumerates the rights vested exclusively
on the copyright owner. Contrary to the DOJs 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 owners prior consent renders
himself civilly[40] and criminally[41] 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 Microsofts 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. 96193 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
Microsofts 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.
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 Microsofts 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, users
manuals, registration cards or certificates of authenticity.
On the 2,831 Microsoft CD-ROMs[49] 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 General [50] and
respondents contend. Beltrons rights[51] 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
MED[53] Product.[54] Being a mere reproducer/installer of one Microsoft
software copy on each customers 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
Microsofts 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 Microsofts claim that Sacriz and Samiano bought the CDROMs 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 Microsofts 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 counteraffidavit 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.
Davide, Jr., C.J., (Chairman), Quisumbing, Ynares-Santiago, and Azcuna,
JJ., concur.