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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 CA-G.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 double-tug
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 tactac 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 full-blown
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 Certiorari1 to
assail the November 9, 2010 Decision2 and the March 3, 2011 Resolution3 of the
Court of Appeals. The Court of Appeals reinstated the Department of Justice
Resolution dated August 1, 2005 that ordered the withdrawal of the Information
finding probable cause for respondents violation of Sections 1774 and 2115 of the
Intellectual Property Code.6 Respondents are officers and employees of GMA
Network, Inc. (GMA-7). They are: Felipe Gozon (Gozon), GMA-7 President;
Gilberto R. Duavit, Jr. (Duavit, Jr.), Executive Vice-President; Marissa L. Flores
(Flores), Vice-President for New and Public Affairs; Jessica A. Soho (Soho),
Director for News; Grace Dela 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 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:
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 fullblown 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 PenaReyes, 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 well-founded
belief that a crime has been committed and the respondent is probably
guilty thereof, and should be held for trial. A preliminary investigation is
required before the filing of a complaint or information for an offense
where the penalty prescribed by law is at least four years, two months and
one day without regard to the fine;

(2) In Sections 6 and 9 of Rule 112: By the judge, to determine whether a


warrant of arrest or a commitment order, if the accused has already been
arrested, shall be issued and that there is a necessity of placing the
respondent under immediate custody in order not to frustrate the ends of
justice;
(3) In Section 5(b) of Rule 113:By a peace officer or a private person
making a warrantless arrest when an offense has just been committed, and
he has probable cause to believe based on personal knowledge of facts or
circumstances that the person to be arrested has committed it; and
(4) In Section 4 of Rule 126: By the judge, to determine whether a search
warrant shall be issued, and only upon probable cause in connection with
one specific offense to be determined personally by the judge after
examination under oath or affirmation of the complainant and the
witnesses he may produce, and particularly describing the place to be
searched and the things to be seized which may be anywhere in the
Philippines.
In all these instances, the evidence necessary to establish probable cause is based
only on the likelihood, or probability, of guilt.74
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 ABSCBN 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 Record-Herald Co. v. Tribune Assn., 275 F.
797 (7th Cir.1921); 1 Nimmer on Copyright 2.11[B] (1983). Copyright
protects the manner of expression of news reports, "the particular form or
collocation of words in which the writer has communicated it." International
News Service, 248 U.S. at 234, 39 S.Ct. at 70. Such protection extends to
electronic news reports as well as written reports. See17 U.S.C. 102(a) (5), (6),
and (7); see also Iowa State University Research Foundations, Inc. v. American
Broadcasting Cos., 621 F.2d 57, 61 (2d Cir. 1980).99 (Emphasis supplied)

The idea/expression dichotomy has long been subject to debate in the field of
copyright law. Abolishing the dichotomy has been proposed, in that 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 GMA-7
falls under the scope of Section 212.2 and 212.4 of the Intellectual Property
Code:
The evidence on record, as well as the discussions above, show that the footage
used by[respondents] could hardlybe characterized as a short excerpt, as it was
aired over one and a half minutes.
Furthermore, the footage used does not fall under the contemplation of Section
212.2 of the Intellectual Property Code. A plain reading of the provision would
reveal that copyrighted material referred to in Section 212 are short portions of
an 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 timelimited, 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 pre-existing right
regulated by the statute. Being a statutory grant, the rights are only such as the
statute confers, and may be obtained and enjoyed only with respect to the
subjects and by the persons, and on terms and conditions specified in the
statute.128
The general rule is that acts punished under a special law are malum
prohibitum.129 "An act which is declared malum prohibitum, malice or criminal
intent is completely immaterial."130
In contrast, crimes mala in seconcern inherently immoral acts:
Not every criminal act, however, involves moral turpitude. It is for this reason
that "as to what crime involves moral turpitude, is for the Supreme Court to
determine". In resolving the foregoing question, the Court is guided by one of the
general rules that crimes mala in se involve moral turpitude, while crimes mala
prohibita do not, the rationale of which was set forth in "Zari v. Flores," to wit:
It (moral turpitude) implies something immoral in itself, regardless of the fact
that it is punishable by law or not. It must not be merely mala prohibita, but the
act itself must be inherently immoral. The doing of the act itself, and not its
prohibition by statute fixes the moral turpitude. Moral turpitude does not,
however, include such acts as are not of themselves immoral but whose illegality
lies in their being positively prohibited. (Emphasis supplied)
[These] guidelines nonetheless proved short of providing a clear cut solution, for
in International Rice Research Institute v. NLRC, the Court admitted that it
cannot always be ascertained whether moral turpitude does or does not exist by
merely classifying a crime as malum in se or as malum prohibitum. There are
crimes which are mala in se and yet but rarely involve moral turpitude and there
are crimes which involve moral turpitude and are mala prohibita only. In the
final analysis, whether or not a crime involves moral turpitude is ultimately a
question of fact and frequently depends on all the circumstances surrounding the
violation of the statue.131 (Emphasis in the original)
"Implicit in the concept of mala in se is that of mens rea."132 Mens reais defined as
"the nonphysical element which, combined with the act of the accused, makes up
the crime charged. Most frequently it is the criminal intent, or the guilty
mind[.]"133

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 ABSCBN[.]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 ABSCBN 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 re-broadcast. We find no merit to the defense of ignorance interposed
by the respondents. It is simply contrary to human experience and logic that
experienced employees of an established broadcasting network would be remiss
in their duty in ascertaining if the said footage has an embargo.164 (Emphasis
supplied)
We agree with the findings as to respondents Dela 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 in-progressive prosecution of,
commercial gain or of the purpose and object of the business organization.
Presidential Decree No. 1789,[18] in Article 65 thereof, defines doing business
to include soliciting orders, purchases, service contracts, opening offices,
whether called liaison offices or branches; appointing representatives or
distributors who are domiciled in the Philippines or who in any calendar year
stay in the Philippines for a period or periods totalling one hundred eighty days
or more; participating in the management, supervision or control of any domestic
business firm, entity or corporation in the Philippines, and any other act or acts
that imply a continuity of commercial dealings or arrangements and contemplate
to that extent the performance of acts or works, or the exercise of some of the
functions normally incident to, and in progressive prosecution of, commercial
gain or of the purpose and object of the business organization.
The implementing rules and regulations of said presidential decree conclude
the enumeration of acts constituting doing business with a catch-all definition,
thus:
Sec. 1(g). Doing Business shall be any act or combination of acts enumerated in
Article 65 of the Code. In particular doing business includes:
xxx xxx xxx
(10) Any other act or acts which imply a continuity of commercial dealings or
arrangements, and contemplate to that extent the performance of acts or works,
or the exercise of some of the functions normally incident to, or in the

progressive prosecution of, commercial gain or of the purpose and object of the
business organization.
Finally, Republic Act No. 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- ininterest. 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 Staff[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 in petitioners impassioned and well-founded argumentation:
The case of 20th Century Fox Film Corporation vs. Court of Appeals, et al., 164
SCRA 655 (August 19, 1988) (hereinafter 20th Century Fox) was inexistent in
December of 1987 when Search Warrant 87-053 was issued by the lower
court. Hence, it boggles the imagination how the lower court could be expected to
apply the formulation of 20th Century Fox in finding probable cause when the
formulation was yet non-existent.

xxx xxx xxx


In short, the lower court was convinced at that time after conducting searching
examination questions of the applicant and his witnesses that an offense had
been committed and that the objects sought in connection with the offense (were)
in the place sought to be searched (Burgos v. Chief of Staff, et al., 133 SCRA
800). It is indisputable, 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 time-honored precept
that proceedings to put a man to task as an offender under our laws should be
interpreted in strictissimi juris against the government and liberally in favor of
the alleged offender.
xxx xxx xxx
This doctrine has never been overturned, and as a matter of fact it had been
enshrined in the Bill of Rights in our 1973 Constitution.

So that lacking in persuasive effect, the allegation that master tapes


were viewed by the NBI and were compared to the purchased and seized video
tapes from the respondents establishments, it should be dismissed as not
supported by competent evidence and for that matter the probable cause hovers
in that grey debatable twilight zone between black and white resolvable in favor
of respondents herein.
But the glaring fact is that Cocoon, the first video tape mentioned in the search
warrant, was not even duly registered or copyrighted in the Philippines. (Annex
C of Opposition, p. 152, record.) So that lacking in the requisite presentation to
the Court of an alleged master tape for purposes of comparison with the
purchased evidence of the video tapes allegedly pirated and those seized from
respondents, there was no way to determine whether there really was piracy, or
copying of the film of the complainant Twentieth Century Fox.
xxx xxx xxx

The lower court, therefore, lifted the three (3) questioned search warrants in the
absence of probable cause that the private respondents violated P.D. 49. As found
by the court, the NBI agents who acted as witnesses did not have personal
knowledge of the subject matter of their testimony which was the alleged

commission of the offense by the private respondents. Only the 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 by the following provisions
of Rule 126 of the Rules of Court:
Sec. 3. Requisites for issuing search warrant. A search warrant shall not issue
but upon probable cause in connection with one specific offense to be determined
personally by the judge after examination under oath or affirmation of the
complainant and the witnesses he may produce, and particularly describing the
place to be searched and the things to be seized.
Sec. 4. Examination of complainant; record. The judge must, before issuing the
warrant, personally examine in the form of searching questions and answers, in
writing and under oath the complainant and any witnesses he may produce on
facts personally known to them and attach to the record their sworn statements
together with any affidavits submitted.
Sec. 5. Issuance and form of search warrant. If the judge is thereupon satisfied of
the existence of facts upon which the application is based, or that there is
probable cause to believe that they exist, he must issue the warrant, which must
be substantially in the form prescribed by these Rules.
The constitutional and statutory provisions of various jurisdictions requiring
a showing of probable cause before a search warrant can be issued are
mandatory and must be complied with, and such a showing has been held to be
an unqualified condition precedent to the issuance of a warrant. A search
warrant not based on probable cause is a nullity, or is void, and the issuance
thereof is, in legal contemplation, arbitrary.[61] It behooves us, then, to review the
concept of probable cause, firstly, from representative holdings in the American
jurisdiction from which we patterned our doctrines on the matter.
Although the term probable cause has been said to have a well-defined
meaning in the law, the term is exceedingly difficult to define, in this case, with
any degree of precision; indeed, no definition of it which would justify the
issuance of a search warrant can be formulated which would cover every state of
facts which might arise, and no formula or standard, or hard and fast rule, may
be laid down which may be applied to the facts of every situation.[62] As to what
acts constitute probable cause seem incapable of definition.[63] There is, of
necessity, no exact test.[64]
At best, the term probable cause has been understood to mean a reasonable
ground of suspicion, supported by circumstances sufficiently strong in
themselves to warrant a cautious man in the belief that the person accused is

guilty of the offense with which he is charged;[65] or the existence of such facts
and circumstances as would excite an honest belief in a reasonable mind acting
on all the facts and circumstances within the knowledge of the magistrate that
the charge made by the applicant for the warrant is true.[66]
Probable cause does not mean actual and positive cause, nor does it import
absolute certainty. The determination of the existence of probable cause is not
concerned with the question of whether the offense charged has been or is being
committed in fact, or whether the accused is guilty or innocent, but only whether
the affiant has reasonable grounds for his belief.[67] The requirement is less than
certainty or proof, but more than suspicion or possibility.[68]
In Philippine jurisprudence, probable cause has been uniformly defined as
such facts and circumstances which would lead a reasonable, discreet and
prudent man to believe that an offense has been committed, and that the objects
sought in connection with the offense are in the place sought to be searched.[69] It
being the duty of the issuing officer to issue, or refuse to issue, the warrant as
soon as practicable after the application therefor is filed,[70] the facts warranting
the conclusion of probable cause must be assessed at the time of such judicial
determination by necessarily using legal standards then set forth in law and
jurisprudence, and not those that have yet to be crafted thereafter.
As already stated, the definition of probable cause enunciated in Burgos, Sr.
vs. Chief of Staff, et al., supra, vis-a-vis the provisions of Sections 3 and 4 of Rule
126, were the prevailing and controlling legal standards, as they continue to be,
by which a finding of probable cause is tested. Since the 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. 87-053 were being
sold, leased, distributed or circulated, or offered for sale, lease, distribution, or
transferred or caused to be transferred by defendants at their video outlets,
without the written consent of the private complainants or their assignee; (2)
recovered or confiscated from defendants' possession were video tapes
containing copyrighted 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. 87053 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-specific-offense rule.
It is pointless for private respondents to insist on compliance with the
registration and deposit requirements under Presidential Decree No. 49 as
prerequisites for invoking the 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 non-registration
of some of the films of petitioners, assume no evidentiary weight or significance,
whatsoever.
Furthermore, a closer review of Presidential Decree No. 49 reveals that even
with respect to works which are required under Section 26 thereof to be
registered and with copies to 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 nonMicrosoft).[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 computerrelated 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 CA-G.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 MS-DOS 6.0 software are
counterfeit.
The certification issued on December 12, 1995 by Christopher Austin, Corporate
Attorney of the complainant, does not disclose this fact. For the term used by Mr.
Austin was that the items seized were unauthorized.
The question now, is whether the products were unauthorized because TMTC has
no license to sell Microsoft products, or is it unauthorized because R.R. Donnelley
has no authority to sell said products here in the Philippines.

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 forumshopping.[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 CDROMs 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. 96-193
based on the incriminating evidence obtained from respondents. Hence, it was
highly irregular for the DOJ to hold, based on the RTC Order of 19 July 1996,
that Microsoft sought the issuance of Search Warrant Nos. 95-684 and 95-685,
and by inference, the filing of the complaint under I.S. No. 96-193, merely to

pressure Beltron to pay its overdue royalties to Microsoft. Significantly, in its


Decision in CA-G.R. CV No. 54600 dated 29 November 2001, the Court of Appeals
set aside the RTC Order of 19 July 1996. Respondents no longer contested that
ruling which became final on 27 December 2001.

Second. There is no basis for the DOJ to rule that Microsoft must await a
prior resolution from the proper court of (sic) whether or not the [Agreement] is
still binding between the parties. Beltron has not filed any suit to question
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 CD-ROMs from
respondents.[56] Together, these considerations point to respondents as the
vendor of the counterfeit CD-ROMs. Respondents do not give any reason why the
Court should not give credence to 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 counter-affidavit that respondents are the source of the preinstalled 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-92-27854,
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 noncopyrightable 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.
otherwise known as the DECREE ON INTELLECTUAL PROPERTY,
enumerates the classes of work entitled to copyright protection, to wit:

49,[10]

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 pre-existing right
regulated by the statute. Being a statutory grant, the rights are only such as the
statute confers, and may be obtained and enjoyed only with respect to the
subjects and by the persons, and on terms and conditions specified in the
statute.[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 ABSCBNs application for a temporary restraining order. On July 12, 2002, PMSI
suspended its retransmission of Channels 2 and 23 and likewise filed a petition
for certiorari with the Court of Appeals, which was docketed as CA-G.R. SP No.
71597.
Subsequently, PMSI filed with the BLA a Manifestation reiterating that it is
subject to the must-carry rule under Memorandum Circular No. 04-08-88. It also
submitted a letter dated December 20, 2002 of then NTC Commissioner Armi
Jane R. Borje to PMSI stating as follows:
This refers to your letter dated December 16, 2002 requesting
for regulatory guidance from this Commission in connection with the
application and coverage of NTC Memorandum Circular No. 4-08-88,
particularly Section 6 thereof, on mandatory carriage of television
broadcast signals, to the direct-to-home (DTH) pay television
services of Philippine Multi-Media System, Inc. (PMSI).
Preliminarily, both DTH pay television and cable television
services are broadcast services, the only difference being the
medium of delivering such services (i.e. the former by satellite and
the latter by cable). Both can carry broadcast signals to the remote
areas, thus enriching the lives of the residents thereof through the
dissemination of social, economic, educational information and
cultural programs.
The DTH pay television services of PMSI is equipped to
provide nationwide DTH satellite services. Concededly, PMSIs DTH
pay television services covers very much wider areas in terms of
carriage of broadcast signals, including areas not reachable by cable
television services thereby providing a better medium of
dissemination of information to the public.
In view of the foregoing and the spirit and intent of NTC
memorandum Circular No. 4-08-88, particularly section 6

thereof, on mandatory carriage of television broadcast signals,


DTH pay television services should be deemed covered by such
NTC Memorandum Circular.
For your guidance. (Emphasis added)[11]
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-to-air television, to
the detriment of the public.
We were told that, until now, this has been going on.
Please be advised that as a direct broadcast satellite operator,
operating a direct-to-home (DTH) broadcasting system, with a
provisional authority (PA) from the NTC, your company, along
with cable television operators, are mandated to strictly comply
with the existing policy of NTC on mandatory carriage of
television broadcast signals as provided under Memorandum
Circular No. 04-08-88, also known as the Revised Rules and
Regulations Governing Cable Television System in the
Philippines.
This mandatory coverage provision under Section 6.2 of said
Memorandum Circular, requires all cable television system
operators, operating in a community within the Grade A or B
contours to must-carry the television signals of the authorized
television broadcast stations, one of which is IBC-13. Said
directive equally applies to your company as the circular was
issued to give consumers and the public a wider access to more
sources of news, information, entertainment and other
programs/contents.
This Commission, as the governing agency vested by laws with the
jurisdiction, supervision and control over all public services, which

includes direct broadcast satellite operators, and taking into


consideration the paramount interest of the public in general,
hereby directs you to immediately restore the signal of IBC-13 in
your network programs, pursuant to existing circulars and
regulations of the Commission.
For strict compliance. (Emphasis added)[12]
Meanwhile, on October 10, 2003, the NTC issued Memorandum Circular
No. 10-10-2003, entitled Implementing Rules and Regulations Governing
Community Antenna/Cable Television (CATV) and Direct Broadcast Satellite
(DBS) Services to Promote Competition in the Sector. Article 6, Section 8 thereof
states:
As a general rule, the reception, distribution and/or
transmission by any CATV/DBS operator of any television signals
without any agreement with or authorization from program/content
providers are prohibited.
On whether Memorandum Circular No. 10-10-2003 amended
Memorandum Circular No. 04-08-88, the NTC explained to PMSI in a letter dated
November 3, 2003 that:
To address your query on whether or not the provisions of MC 1010-2003 would have the effect of amending the provisions of MC 408-88 on mandatory carriage of television signals, the answer is in
the negative.
xxxx
The Commission maintains that, MC 4-08-88 remains valid,
subsisting and enforceable.
Please be advised, therefore, that as duly licensed direct-to-home
satellite television service provider authorized by this
Commission, your company continues to be bound by the
guidelines provided for under MC 04-08-88, specifically your
obligation under its mandatory carriage provisions, in addition
to your obligations under MC 10-10-2003.(Emphasis added)
Please be guided accordingly.[13]
On December 22, 2003, the BLA rendered a decision[14]finding that PMSI
infringed the broadcasting rights and copyright of ABS-CBN and ordering it to
permanently cease and desist from rebroadcasting Channels 2 and 23.

On February 6, 2004, PMSI filed an appeal with the Office of the DirectorGeneral of the IPO which was docketed as Appeal No. 10-2004-0002. On
December 23, 2004, it also filed with the Court of Appeals a Motion to Withdraw
Petition; Alternatively, Memorandum of the Petition for Certiorari in CA-G.R. SP
No. 71597, which was granted in a resolution dated February 17, 2005.
On December 20, 2004, the Director-General of the IPO rendered a
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. 04-08-88
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 satellite-based. The
elements of such category are as follows:
1.

There is transmission of sounds or images or of


representations thereof;

2.

The transmission is through satellite;

3.

The transmission is for public reception; and

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 wirebased 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
[25]
remuneration.
(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 ABSCBNs 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 socio-economic
growth:
WHEREAS, cable television (CATV) systems could
support or supplement the services provided by
television broadcast facilities, local and overseas, as the
national information highway to the countryside.[29]
The Court of Appeals likewise correctly observed that:
[T]he very intent and spirit of the NTC Circular will prevent a
situation whereby station owners and a few networks would have
unfettered power to make time available only to the highest bidders,
to communicate only their own views on public issues, people, and to
permit on the air only those with whom they agreed contrary to the
state policy that the (franchise) grantee like the petitioner, private
respondent and other TV station owners, shall provide at all times
sound and balanced programming and assist in the functions of
public information and education.
This is for the first time that we have a structure that works to
accomplish explicit state policy goals.[30]

Indeed, intellectual property protection is merely a means towards the end


of making society benefit from the creation of its men and women of talent and
genius. This is the essence of intellectual property laws, and it explains why
certain products of ingenuity that are concealed from the public are outside the
pale of protection afforded by the law. It also explains why the author or the
creator enjoys no more rights than are consistent with public welfare.[31]
Further, as correctly observed by the Court of Appeals, the must-carry rule
as well as the legislative franchises granted to both ABS-CBN and PMSI are in
consonance with state policies enshrined in the Constitution, specifically
Sections 9,[32] 17,[33]and 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 ABS-CBNs
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-toair 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 DirectorGeneral 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 factfinding 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
Communication Corporation,[51] we held:

Philippines,

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 ABSCBN 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 in-progressive prosecution of,
commercial gain or of the purpose and object of the business organization.
Presidential Decree No. 1789,[18] in Article 65 thereof, defines doing business
to include soliciting orders, purchases, service contracts, opening offices,
whether called liaison offices or branches; appointing representatives or
distributors who are domiciled in the Philippines or who in any calendar year
stay in the Philippines for a period or periods totalling one hundred eighty days
or more; participating in the management, supervision or control of any domestic
business firm, entity or corporation in the Philippines, and any other act or acts
that imply a continuity of commercial dealings or arrangements and contemplate
to that extent the performance of acts or works, or the exercise of some of the
functions normally incident to, and in progressive prosecution of, commercial
gain or of the purpose and object of the business organization.
The implementing rules and regulations of said presidential decree conclude
the enumeration of acts constituting doing business with a catch-all definition,
thus:
Sec. 1(g). Doing Business shall be any act or combination of acts enumerated in
Article 65 of the Code. In particular doing business includes:
xxx xxx xxx
(10) Any other act or acts which imply a continuity of commercial dealings or
arrangements, and contemplate to that extent the performance of acts or works,
or the exercise of some of the functions normally incident to, or in the

progressive prosecution of, commercial gain or of the purpose and object of the
business organization.
Finally, Republic Act No. 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- ininterest. 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 Staff[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 in petitioners impassioned and well-founded argumentation:
The case of 20th Century Fox Film Corporation vs. Court of Appeals, et al., 164
SCRA 655 (August 19, 1988) (hereinafter 20th Century Fox) was inexistent in
December of 1987 when Search Warrant 87-053 was issued by the lower
court. Hence, it boggles the imagination how the lower court could be expected to
apply the formulation of 20th Century Fox in finding probable cause when the
formulation was yet non-existent.

xxx xxx xxx


In short, the lower court was convinced at that time after conducting searching
examination questions of the applicant and his witnesses that an offense had
been committed and that the objects sought in connection with the offense (were)
in the place sought to be searched (Burgos v. Chief of Staff, et al., 133 SCRA
800). It is indisputable, 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 time-honored 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 effect, the allegation that master tapes


were viewed by the NBI and were compared to the purchased and seized video
tapes from the respondents establishments, it should be dismissed as not
supported by competent evidence and for that matter the probable cause hovers
in that grey debatable twilight zone between black and white resolvable in favor
of respondents herein.
But the glaring fact is that Cocoon, the first video tape mentioned in the search
warrant, was not even duly registered or copyrighted in the Philippines. (Annex
C of Opposition, p. 152, record.) So that lacking in the requisite presentation to
the Court of an alleged master tape for purposes of comparison with the
purchased evidence of the video tapes allegedly pirated and those seized from
respondents, there was no way to determine whether there really was piracy, or
copying of the film of the complainant Twentieth Century Fox.
xxx xxx xxx

The lower court, therefore, lifted the three (3) questioned search warrants in the
absence of probable cause that the private respondents violated P.D. 49. As found
by the court, the NBI agents who acted as witnesses did not have personal
knowledge of the subject matter of their testimony which was the alleged

commission of the offense by the private respondents. Only the 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 by the following provisions
of Rule 126 of the Rules of Court:
Sec. 3. Requisites for issuing search warrant. A search warrant shall not issue
but upon probable cause in connection with one specific offense to be determined
personally by the judge after examination under oath or affirmation of the
complainant and the witnesses he may produce, and particularly describing the
place to be searched and the things to be seized.
Sec. 4. Examination of complainant; record. The judge must, before issuing the
warrant, personally examine in the form of searching questions and answers, in
writing and under oath the complainant and any witnesses he may produce on
facts personally known to them and attach to the record their sworn statements
together with any affidavits submitted.
Sec. 5. Issuance and form of search warrant. If the judge is thereupon satisfied of
the existence of facts upon which the application is based, or that there is
probable cause to believe that they exist, he must issue the warrant, which must
be substantially in the form prescribed by these Rules.
The constitutional and statutory provisions of various jurisdictions requiring
a showing of probable cause before a search warrant can be issued are
mandatory and must be complied with, and such a showing has been held to be
an unqualified condition precedent to the issuance of a warrant. A search
warrant not based on probable cause is a nullity, or is void, and the issuance
thereof is, in legal contemplation, arbitrary.[61] It behooves us, then, to review the
concept of probable cause, firstly, from representative holdings in the American
jurisdiction from which we patterned our doctrines on the matter.
Although the term probable cause has been said to have a well-defined
meaning in the law, the term is exceedingly difficult to define, in this case, with
any degree of precision; indeed, no definition of it which would justify the
issuance of a search warrant can be formulated which would cover every state of
facts which might arise, and no formula or standard, or hard and fast rule, may
be laid down which may be applied to the facts of every situation.[62] As to what
acts constitute probable cause seem incapable of definition.[63] There is, of
necessity, no exact test.[64]
At best, the term probable cause has been understood to mean a reasonable
ground of suspicion, supported by circumstances sufficiently strong in
themselves to warrant a cautious man in the belief that the person accused is

guilty of the offense with which he is charged;[65] or the existence of such facts
and circumstances as would excite an honest belief in a reasonable mind acting
on all the facts and circumstances within the knowledge of the magistrate that
the charge made by the applicant for the warrant is true.[66]
Probable cause does not mean actual and positive cause, nor does it import
absolute certainty. The determination of the existence of probable cause is not
concerned with the question of whether the offense charged has been or is being
committed in fact, or whether the accused is guilty or innocent, but only whether
the affiant has reasonable grounds for his belief.[67] The requirement is less than
certainty or proof, but more than suspicion or possibility.[68]
In Philippine jurisprudence, probable cause has been uniformly defined as
such facts and circumstances which would lead a reasonable, discreet and
prudent man to believe that an offense has been committed, and that the objects
sought in connection with the offense are in the place sought to be searched.[69] It
being the duty of the issuing officer to issue, or refuse to issue, the warrant as
soon as practicable after the application therefor is filed,[70] the facts warranting
the conclusion of probable cause must be assessed at the time of such judicial
determination by necessarily using legal standards then set forth in law and
jurisprudence, and not those that have yet to be crafted thereafter.
As already stated, the definition of probable cause enunciated in Burgos, Sr.
vs. Chief of Staff, et al., supra, vis-a-vis the provisions of Sections 3 and 4 of Rule
126, were the prevailing and controlling legal standards, as they continue to be,
by which a finding of probable cause is tested. Since the 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. 87-053 were being
sold, leased, distributed or circulated, or offered for sale, lease, distribution, or
transferred or caused to be transferred by defendants at their video outlets,
without the written consent of the private complainants or their assignee; (2)
recovered or confiscated from defendants' possession were video tapes
containing copyrighted 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. 87053 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-specific-offense rule.
It is pointless for private respondents to insist on compliance with the
registration and deposit requirements under Presidential Decree No. 49 as
prerequisites for invoking the 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 non-registration
of some of the films of petitioners, assume no evidentiary weight or significance,
whatsoever.
Furthermore, a closer review of Presidential Decree No. 49 reveals that even
with respect to works which are required under Section 26 thereof to be
registered and with copies to 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,[16] however,
the Court of Appeals denied the same in a Resolution[17] dated November 25,
1997.
Hence, this petition.
In this appeal, petitioners submit that the appellate court erred in affirming
the trial 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 012402 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 Sheriff 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 semicircular 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 vehicle-bearing
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 vehicle-bearing
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 pre-existing 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 CAG.R. SP No. 70411 are AFFIRMED. Search Warrant Nos. 01-2401 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 defendant-appellant North Edsa
Marketing Inc. (NEMI), through its marketing arm, Prime Spots Marketing
Services, was set up primarily to sell advertising space in lighted display units
located in 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 tradename, 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 exparte 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
[22]
newsletters.
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 different description.[24]Faberge,
Inc. was correct and was in fact recently reiterated in Canon Kabushiki Kaisha
vs. Court of Appeals.[25]
Assuming arguendo that Poster Ads could validly qualify as a trademark, the
failure of P & D to secure a trademark registration for specific use on the light
boxes meant that there could not have been any trademark infringement since
registration was an essential element thereof.
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 time-shifting 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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information linked to from this site. Please check official sources.
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,

Promulgated:

PERALTA,
BERSAMIN,
DEL CASTILLO,
ABAD,
VILLARAMA, JR.,
PEREZ,
MENDOZA, and
SERENO, JJ.

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 Criddle-Descent)
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, Criddle-Descent,
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 above or a similar introduction
was missing from Footnote 65.
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
77
tribunals. 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] CriddleDescents 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 computer-literate 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 selfevident, 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 error-free 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 CA-G.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 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 double-tug
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 tactac 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 full-blown
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 PEAREYES, JOHN OLIVER T. MANALASTAS, JOHN DOES AND JANE
DOES, Respondents.
DECISION
LEONEN, J.:
The main issue in this case is whether there is probable cause to charge
respondents with infringement under Republic Act No. 8293, otherwise known
as the Intellectual Property Code. The resolution of this issue requires
clarification of the concept of "copyrightable material" in relation to material that
is rebroadcast live as a news story. We are also asked to rule on whether criminal
prosecution for infringement of copyrightable material, such as live rebroadcast,
can be negated by good faith.
ABS-CBN Corporation (ABS-CBN) filed the Petition for Review on Certiorari1 to
assail the November 9, 2010 Decision2 and the March 3, 2011 Resolution3 of the
Court of Appeals. The Court of Appeals reinstated the Department of Justice
Resolution dated August 1, 2005 that ordered the withdrawal of the Information
finding probable cause for respondents' violation of Sections 1774 and 2115 of the
Intellectual Property Code.6 Respondents are officers and employees of GMA
Network, Inc. (GMA-7). They are: Felipe Gozon (Gozon), GMA-7 President;
Gilberto R. Duavit, Jr. (Duavit, Jr.), Executive Vice-President; Marissa L. Flores
(Flores), Vice-President for 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 fullblown 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 well-founded belief that
a crime has been committed and the respondent is probably guilty
thereof, and should be held for trial. A preliminary investigation is
required before the filing of a complaint or information for an offense
where the penalty prescribed by law is at least four years, two months
and one day without regard to the fine;
(2) In Sections 6 and 9 of Rule 112: By the judge, to determine whether a
warrant of arrest or a commitment order, if the accused has already
been arrested, shall be issued and that there is a necessity of placing the
respondent under immediate custody in order not to frustrate the ends
of justice;
(3) In Section 5(b) of Rule 113: By a peace officer or a private person
making a warrantless arrest when an offense has just been committed,
and he has probable cause to believe based on personal knowledge of
facts or circumstances that the person to be arrested has committed it;
and
(4) In Section 4 of Rule 126: By the judge, to determine whether a search
warrant shall be issued, and only upon probable cause in connection with
one specific offense to be determined personally by the judge after
examination under oath or affirmation of the complainant and the
witnesses he may produce, and particularly describing the place to be
searched and the things to be seized which may be anywhere in the
Philippines.
In all these instances, the evidence necessary to establish probable cause is based
only on the likelihood, or probability, of guilt.74
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 ABSCBN 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 effects, 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 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. 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 Record-Herald
Co. v. Tribune Assn., 275 F. 797 (7th Cir.1921); 1 Nimmer on Copyright
2.11[B] (1983). Copyright protects the manner of expression of news reports,
"the particular form or collocation of words in which the writer has
communicated it" International News Service, 248 U.S. at 234, 39 S.Ct. at 70.
Such protection extends to electronic news reports as well as written
reports. 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 GMA-7
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 pre-existing right
regulated by the statute. Being a statutory grant, the rights are only such as the
statute confers, and may be obtained and enjoyed only with respect to the
subjects and by the persons, and on terms and conditions specified in the
statute.128
The general rule is that acts punished under a special law are malum
prohibitum.129 "An act which is declared malum prohibitum, malice or criminal
intent is completely immaterial."130
In contrast, crimes mala in 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 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[.]"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 offence, meaning the accused's actual or subjective state of mind has to be
proved; strict liability offences where no mens rea has to be proved but the
accused can avoid liability if he can prove he took all reasonable steps to avoid
the particular event; [and] absolute liability offences where Parliament has made
it clear that guilt follows proof of the prescribed act only."139 Because of the use of
the word "knowingly" in Canada's Copyright Act, it has been held that copyright
infringement is a full mens rea offense.140
In the United States, willful intent is required for criminal copyright
infringement.141 Before the passage of the No Electronic Theft Act, "civil
copyright infringements were violations of criminal copyright laws only if a
defendant willfully infringed a copyright 'for purposes of commercial advantage
or private financial gain.'"142 However, the No Electronic Theft Act now allows
criminal copyright infringement without the requirement of commercial gain.
The infringing act may or may not be for profit.143
There is a difference, however, between the required liability in civil copyright
infringement and that in criminal copyright infringement in the United States.
Civil copyright infringement does not require culpability and employs a strict
liability regime144 where "lack of intention to infringe is not a defense to an action
for infringement."145
In the Philippines, the Intellectual Property Code, as amended, provides for the
prosecution of criminal actions for the following violations of intellectual
property rights: Repetition of Infringement of Patent (Section 84); Utility Model
(Section 108); Industrial Design (Section 119); Trademark Infringement
(Section 155 in relation to Section 170); Unfair Competition (Section 168 in
relation to Section 170); False Designations of Origin, False Description or
Representation (Section 169.1 in relation to Section 170); infringement of
copyright, moral rights, performers' rights, producers' rights, and broadcasting
rights (Section 177, 193, 203, 208 and 211 in relation to Section 217); and other
violations of intellectual property rights as may be defined by law.
The Intellectual Property Code requires strict liability for copyright infringement
whether for a civil action or a criminal prosecution; it does not require mens
rea or culpa: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 ABSCBN[.]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 ABSCBN 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 re-broadcast. We find no merit to the defense of ignorance interposed
by the respondents. It is simply contrary to human experience and logic that
experienced employees of an established broadcasting network would be remiss
in their duty in ascertaining if the said footage has an embargo.164 (Emphasis
supplied)
We agree with the findings as to respondents Dela 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 nonMicrosoft).[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 computerrelated 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 CA-G.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 MS-DOS 6.0 software are
counterfeit.
The certification issued on December 12, 1995 by Christopher Austin, Corporate
Attorney of the complainant, does not disclose this fact. For the term used by Mr.
Austin was that the items seized were unauthorized.
The question now, is whether the products were unauthorized because TMTC has
no license to sell Microsoft products, or is it unauthorized because R.R. Donnelley
has no authority to sell said products here in the Philippines.

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 forumshopping.[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 CDROMs 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. 96-193
based on the incriminating evidence obtained from respondents. Hence, it was
highly irregular for the DOJ to hold, based on the RTC Order of 19 July 1996,
that Microsoft sought the issuance of Search Warrant Nos. 95-684 and 95-685,
and by inference, the filing of the complaint under I.S. No. 96-193, merely to

pressure Beltron to pay its overdue royalties to Microsoft. Significantly, in its


Decision in CA-G.R. CV No. 54600 dated 29 November 2001, the Court of Appeals
set aside the RTC Order of 19 July 1996. Respondents no longer contested that
ruling which became final on 27 December 2001.

Second. There is no basis for the DOJ to rule that Microsoft must await a
prior resolution from the proper court of (sic) whether or not the [Agreement] is
still binding between the parties. Beltron has not filed any suit to question
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 CD-ROMs from
respondents.[56] Together, these considerations point to respondents as the
vendor of the counterfeit CD-ROMs. Respondents do not give any reason why the
Court should not give credence to 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 counter-affidavit that respondents are the source of the preinstalled 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.