[G.R. No. 148222. August 15, 2003.] installed at SM City and in the fastfood section of SM Cubao.

003.] 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
PEARL & DEAN (PHIL.), INCORPORATED, Petitioner, v. SHOEMART, INCORPORATED, and manufactures were also installed in two (2) other SM stores. It further discovered that defendant-
NORTH EDSA MARKETING, INCORPORATED, Respondents. appellant North Edsa Marketing Inc. (NEMI), through its marketing arm, Prime Spots Marketing
Services, was set up primarily to sell advertising space in lighted display units located in SMI’s
DECISION different branches. Pearl and Dean noted that NEMI is a sister company of SMI.

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.chanrob1es virtua1 1aw
1ibrary
In the light of its discoveries, Pearl and Dean sent a letter dated December 11, 1991 to both SMI and
NEMI enjoining them to cease using the subject light boxes and to remove the same from SMI’s
establishments. It also demanded the discontinued use of the trademark "Poster Ads," and the
payment to Pearl and Dean of compensatory damages in the amount of Twenty Million Pesos
(P20,000,000.00).
Upon receipt of the demand letter, SMI suspended the leasing of two hundred twenty-four (224)
light boxes and NEMI took down its advertisements for "Poster Ads" from the lighted display units
in SMI’s stores. Claiming that both SMI and NEMI failed to meet all its demands, Pearl and Dean filed
this instant case for infringement of trademark and copyright, unfair competition and damages.

FACTUAL ANTECEDENTS
The May 22, 2001 decision of the Court of Appeals 3 contained a summary of this
dispute:jgc:chanrobles.com.ph
"Plaintiff-appellant Pearl and Dean (Phil.), Inc. is a corporation engaged in the manufacture of
advertising display units simply referred to as light boxes. These units utilize specially printed
posters sandwiched between plastic sheets and illuminated with back lights. Pearl and Dean was
able to secure a Certificate of Copyright Registration dated January 20, 1981 over these illuminated
display units. The advertising light boxes were marketed under the trademark "Poster Ads." The
application for registration of the trademark was filed with the Bureau of Patents, Trademarks and
Technology Transfer on June 20, 1983, but was approved only on September 12, 1988, per
Registration No. 41165. From 1981 to about 1988, Pearl and Dean employed the services of Metro
Industrial Services to manufacture its advertising displays.
Sometime in 1985, Pearl, and Dean negotiated with defendant-appellant Shoemart, Inc. (SMI) for the
lease and installation of the light boxes in SM City North Edsa. Since SM City North Edsa was under
construction at that time, SMI offered as an alternative, SM Makati and SM Cubao, to which Pearl and
Dean agreed. On September 11, 1985, Pearl and Dean’s General Manager, Rodolfo Vergara,
submitted for signature the contacts covering SM Cubao and SM Makati to SMI’s Advertising
Promotions and Publicity Division Manager, Ramonlito Abano. Only the contract for SM Makati,
however, was returned signed. On October 4, 1985, Vergara wrote Abano inquiring about the other
contract and reminding him that their agreement for installation of light boxes was not only for its
SM Makati branch, but also for SM Cubao. SMI did not bother to reply.
Instead, in a letter dated January 14, 1986, SMI’s house counsel informed Pearl and Dean that it was
rescinding the contract for SM Makati due to non-performance of the terms thereof. In his reply
dated February 17, 1986, Vergara protested the unilateral action of SMI, saying it was without basis.
In the same letter, he pushed for the signing of the contract for SM Cubao.
In denying the charges hurled against it, SMI maintained that it independently developed its poster
panels using commonly known techniques and available technology, without notice of or reference
to Pearl and Dean’s copyright. SMI noted that the registration of the mark "Poster Ads" was only for
stationeries such as letterheads, envelopes, and the like. Besides, according to SMI, the word "Poster
Ads" is a generic term which cannot be appropriated as a trademark, and, as such, registration of
such mark is invalid. It also stressed that Pearl and Dean is not entitled to the reliefs prayed for in its
complaint since its advertising display units contained no copyright notice, in violation of Section 27
of P.D. 49. SMI alleged that Pearl and Dean had no cause of action against it and that the suit was
purely intended to malign SMI’s good name. On this basis, SMI, aside from praying for the dismissal
of the case, also counterclaimed for moral, actual and exemplary damages and for the cancellation of
Pearl and Dean’s Certification of Copyright Registration No. PD-R-2558 dated January 20, 1981 and
Certificate of Trademark Registration No. 4165 dated September 12, 1988.
NEMI, for its part, denied having manufactured, installed or used any advertising display units, nor
having engaged in the business of advertising. It repleaded SMI’s averments, admissions and denials
and prayed for similar reliefs and counterclaims as SMI."cralaw virtua1aw library
The RTC of Makati City decided in favor of P & D:chanrob1es virtual 1aw library
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:chanrob1es
virtual 1aw library
(1) to pay plaintiff the following damages:chanrob1es virtual 1aw library
(a) actual damages — P16,600,000.00,
representing profits

Two years later, Metro Industrial Services, the company formerly contracted by Pearl and Dean to derived by defendants
fabricate its display units, offered to construct light boxes for Shoemart’s chain of stores. SMI
approved the proposal and ten (10) light boxes were subsequently fabricated by Metro Industrial as a result of infringement
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. of plaintiff’s copyright
These were delivered on a staggered basis and installed at SM Megamall and SM City.
from 1991 to 1992
Sometime in 1989, Pearl and Dean, received reports that exact copies of its light boxes were
(b) moral damages — P1,000.000.00
In two other cases, Imperial Homes Corp. v. Lamont, 458 F. 2d 895 and Scholtz Homes, Inc. v.
(c) exemplary damages — P1,000,000.00 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
(d) attorney’s fees — P1,000,000.00 copyright does not extend to the structures themselves.

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 plaintiff’s light boxes and its trademark
"Poster Ads" .
Defendants’ counterclaims are hereby ordered dismissed for lack of merit.
SO ORDERED. 4 same in connection with the goods, business or services specified in the certificate, subject to any
On appeal, however, the Court of Appeals reversed the trial court:chanrob1es virtual 1aw library
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:chanrob1es virtual 1aw
library
42. When a drawing is technical and depicts a utilitarian object, a copyright over the drawings like
plaintiff-appellant’s will not extend to the actual object. It has so been held under jurisprudence, of
which the leading case is Baker v. Selden (101 U.S. 841 (1879). In that case, Selden had obtained a
copyright protection for a book entitled "Selden’s 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 Selden’s 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 v. Selden was likewise applied in Muller v. 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 plaintiff’s 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 fine, we cannot find SMI liable for infringing Pearl and Dean’s copyright over the technical
drawings of the latter’s advertising display units.
x x x
The Supreme Court trenchantly held in Faberge, Incorporated v. 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:chanrob1es
virtual 1aw library
SEC. 20. Certification of registration prima facie evidence of validity. — A certificate of registration
of a mark or trade-name shall be prima facie evidence of the validity of the registration, the
registrant’s ownership of the mark or trade-name, and of the registrant’s exclusive right to use the
conditions and limitations stated therein." (Emphasis 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:chanrob1es virtual 1aw library
Really, if the certificate of registration were to be deemed as including goods not specified therein,
then a situation may arise whereby an applicant may be tempted to register a trademark on any and
all goods which his mind may conceive even if he had never intended to use the trademark for the
said goods. We believe that such omnibus registration is not contemplated by our Trademark Law.
While we do not discount the striking similarity between Pearl and Dean’s registered trademark and
defendants-appellants’ "Poster Ads" design, as well as the parallel use by which said words were
used in the parties’ respective advertising copies, we cannot find defendants-appellants liable for
infringement of trademark. "Poster Ads" was registered by Pearl and Dean for specific use in its
stationeries, in contrast to defendants-appellants who used the same words in their advertising
display units. Why Pearl and Dean limited the use of its trademark to stationeries is simply beyond
us. But, having already done so, it must stand by the consequence of the registration which it had
caused.
x x x
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 extended ipso facto to the light boxes depicted or illustrated in said drawings. In ruling that there
Dean’s exclusive right to the use of "Poster Ads" is limited to what is written in its certificate of was no copyright infringement, the Court of Appeals held that the copyright was limited to the
registration, namely, stationeries. drawings alone and not to the light box itself. We agree with the appellate court.

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.
x x x
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
First, petitioner’s application for a copyright certificate — as well as Copyright Certificate No. PD-
R2588 issued by the National Library on January 20, 1981 — clearly stated that it was for a class "O"
work under Section 2 (O) of PD 49 (The Intellectual Property Decree) which was the statute then
prevailing. Said Section 2 expressly enumerated the works subject to copyright:chanrob1es virtual
1aw library
SEC. 2. The rights granted by this Decree shall, from the moment of creation, subsist with respect to
any of the following works:chanrob1es virtual 1aw library
x x x

Dissatisfied with the above decision, petitioner P & D filed the instant petition assigning the (O) Prints, pictorial illustrations, advertising copies, labels, tags, and box wraps;
following errors for the Court’s consideration:chanrob1es virtual 1aw library
x x x
A. THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT NO COPYRIGHT INFRINGEMENT
WAS COMMITTED BY RESPONDENTS SM AND NEMI;
Although petitioner’s copyright certificate was entitled "Advertising Display Units" (which depicted
B. THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT NO INFRINGEMENT OF PEARL the box-type electrical devices), its claim of copyright infringement cannot be sustained.
& DEAN’S TRADEMARK "POSTER ADS" WAS COMMITTED BY RESPONDENTS SM AND NEMI;
Copyright, in the strict sense of the term, is purely a statutory right. Being a mere statutory grant,
C. THE HONORABLE COURT OF APPEALS ERRED IN DISMISSING THE AWARD OF THE TRIAL the rights are limited to what the statute confers. It may be obtained and enjoyed only with respect
COURT, DESPITE THE LATTER’S FINDING, NOT DISPUTED BY THE HONORABLE COURT OF to the subjects and by the persons, and on terms and conditions specified in the statute. 7
APPEALS, THAT SM WAS GUILTY OF BAD FAITH IN ITS NEGOTIATION OF ADVERTISING Accordingly, it can cover only the works falling within the statutory enumeration or description. 8
CONTRACTS WITH PEARL & DEAN.
P & D secured its copyright under the classification class "O" work. This being so, petitioner’s
D. THE HONORABLE COURT OF APPEALS ERRED IN NOT HOLDING RESPONDENTS SM AND NEMI copyright protection extended only to the technical drawings and not to the light box itself because
LIABLE TO PEARL & DEAN FOR ACTUAL, MORAL & EXEMPLARY DAMAGES, ATTORNEY’S FEES the latter was not at all in the category of "prints, pictorial illustrations, advertising copies, labels,
AND COSTS OF SUIT. 6 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
ISSUES illustrations." It could not have possibly stretched out to include the underlying light box. The strict
application 9 of the law’s enumeration in Section 2 prevents us from giving petitioner even a little
In resolving this very interesting case, we are challenged once again to put into proper perspective leeway, that is, even if its copyright certificate was entitled "Advertising Display Units." What the
four main concerns of intellectual property law — patents, copyrights, trademarks and unfair law does not include, it excludes, and for the good reason: the light box was not a literary or artistic
competition arising from infringement of any of the first three. We shall focus then on the following piece which could be copyrighted under the copyright law. And no less clearly, neither could the
issues:chanrob1es virtual 1aw library 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
(1) if the engineering or technical drawings of an advertising display unit (light box) are granted Units."cralaw virtua1aw library
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? In fine, if SMI and NEMI reprinted P & D’s technical drawings for sale to the public without license
from P & D, then no doubt they would have been guilty of copyright infringement. But this was not
(2) or should the light box be registered separately and protected by a patent issued by the Bureau the case. SMI’s and NEMI’s acts complained of by P & D were to have units similar or identical to the
of Patents Trademarks and Technology Transfer (now Intellectual Property Office) — in addition to light box illustrated in the technical drawings manufactured by Metro and EYD Rainbow
the copyright of the engineering drawings? Advertising, for leasing out to different advertisers. Was this an infringement of petitioner’s
copyright over the technical drawings? We do not think so.
(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? During the trial, the president of P & D himself admitted that the light box was neither a literary nor
an artistic work but an "engineering or marketing invention." 10 Obviously, there appeared to be
ON THE ISSUE OF COPYRIGHT INFRINGEMENT some confusion regarding what ought or ought not to be the proper subjects of copyrights, patents
and trademarks. In the leading case of Kho v. Court of Appeals, 11 we ruled that these three legal
Petitioner P & D’s complaint was that SMI infringed on its copyright over the light boxes when SMI rights are completely distinct and separate from one another, and the protection afforded by one
had the units manufactured by Metro and EYD Rainbow Advertising for its own account. Obviously, cannot be used interchangeably to cover items or works that exclusively pertain to the
petitioner’s position was premised on its belief that its copyright over the engineering drawings others:chanrob1es virtual 1aw library

Trademark, copyright and patents are different intellectual property rights that cannot be
interchanged with one another. A trademark is any visible sign capable of distinguishing the goods
(trademark) or services (service mark) of an enterprise and shall include a stamped or marked
container of goods. In relation thereto, a trade name means the name or designation identifying or
distinguishing an enterprise. Meanwhile, the scope of a copyright is confined to literary and artistic
works which are original intellectual creations in the literary and artistic domain protected from the
moment of their creation. Patentable inventions, on the other hand, refer to any technical solution of
a problem in any field of human activity which is new, involves an inventive step and is industrially
applicable.
ON THE ISSUE OF PATENT INFRINGEMENT
This brings us to the next point: if, despite its manufacture and commercial use of the light boxes
without license from petitioner, private respondents cannot be held legally liable for infringement
of P & D’s copyright over its technical drawings of the said light boxes, should they be liable instead
for infringement of patent? We do not think so either.
For some reason or another, petitioner never secured a patent for the light boxes. It therefore
acquired no patent rights which could have protected its invention, if in fact it really was. And
because it had no patent, petitioner could not legally prevent anyone from manufacturing or
commercially using the contraption. In Creser Precision Systems, Inc. v. 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. . . . (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 petitioner’s advertising units were patentable inventions, petitioner revealed them
fully to the public by submitting the engineering drawings thereof to the National Library.
To be able to effectively and legally preclude others from copying and profiting from the invention, a
patent is a primordial requirement. No patent, no protection, The ultimate goal of a patent system is
to bring new designs and technologies into the public domain through disclosure. 14 Ideas, once
disclosed to the public without the protection of a valid patent, are subject to appropriation without
significant restraint. 15
On one side of the coin is the public which will benefit from new ideas; on the other are the
inventors who must be protected. As held in Bauer & Cie v. O’Donnel, 16 "The act secured to the
inventor the exclusive right to make use, and vend the thing patented, and consequently to prevent
others from exercising like privileges without the consent of the patentee. It was passed for the
purpose of encouraging useful invention and promoting new and useful inventions by the
protection and stimulation given to inventive genius, and was intended to secure to the public, after
the lapse of the exclusive privileges granted the benefit of such inventions and
improvements."cralaw virtua1aw library
The law attempts to strike an ideal balance between the two interests:jgc:chanrobles.com.ph
"(The p)atent system thus embodies a carefully crafted bargain for encouraging the creation and
disclosure of new useful and non-obvious advances in technology and design, in return for the
exclusive right to practice the invention for a number of years. The inventor may keep his invention
secret and reap its fruits indefinitely. In consideration of its disclosure and the consequent benefit to
the community, the patent is granted. An exclusive enjoyment is guaranteed him for 17 years, but
upon the expiration of that period, the knowledge of the invention inures to the people, who are
thus enabled to practice it and profit by its use." 17
The patent law has a three-fold purpose: "first, patent law seeks to foster and reward invention;
second, it promotes disclosures of inventions to stimulate further innovation and to permit the
public to practice the invention once the patent expires; third, the stringent requirements for patent
protection seek to ensure that ideas in the public domain remain there for the free use of the
public." 18
It is only after an exhaustive examination by the patent office that a patent is issued. Such an in-
depth investigation is required because "in rewarding a useful invention, the rights and welfare of
the community must be fairly dealt with and effectively guarded. To that end, the prerequisites to
obtaining a patent are strictly observed and when a patent is issued, the limitations on its exercise
are equally strictly enforced. To begin with, a genuine invention or discovery must be demonstrated
lest in the constant demand for new appliances, the heavy hand of tribute be laid on each slight
technological advance in art." 19
There is no such scrutiny in the case of copyrights nor any notice published before its grant to the
effect that a person is claiming the creation of a work. The law confers the copyright from the
moment of creation 20 and the copyright certificate is issued upon registration with the National
Library of a sworn ex-parte claim of creation.
Therefore, not having gone through the arduous examination for patents, the petitioner cannot
exclude others from the manufacture, sale or commercial use of the light boxes on the sole basis of
its copyright certificate over the technical drawings.
Stated otherwise, what petitioner seeks is exclusivity without any opportunity for the patent office
(IPO) to scrutinize the light box’s eligibility as a patentable invention. The irony here is that, had
petitioner secured a patent instead, its exclusivity would have been for 17 years only. But through
the simplified procedure of copyright-registration with the National Library — without undergoing
the rigor of defending the patentability of its invention before the IPO and the public — the
petitioner would be protected for 50 years. This situation could not have been the intention of the
law.
In the oft-cited case of Baker v. 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:jgc:chanrobles.com.ph
"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. . . . . 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 If at all, the cause of action should have been for unfair competition, a situation which was possible
regular physicians generally do), he gains no exclusive right to the manufacture and sale of the even if P & D had no registration. 26 However, while the petitioner’s complaint in the RTC also cited
medicine; he gives that to the public. If he desires to acquire such exclusive right, he must obtain a unfair competition, the trial court did not find private respondents liable therefor. Petitioner did not
patent for the mixture as a new art, manufacture or composition of matter. He may copyright his appeal this particular point; hence, it cannot now revive its claim of unfair competition.
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. But even disregarding procedural issues, we nevertheless cannot hold respondents guilty of unfair
competition.
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 By the nature of things, there can be no unfair competition under the law on copyrights although it
been known or used before. By publishing the book without getting a patent for the art, the latter is is applicable to disputes over the use of trademarks. Even a name or phrase incapable of
given to the public. 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
x x x public), be entitled to protection against unfair competition. 27 In this case, there was no evidence
that P & D’s use of "Poster Ads" was distinctive or well-known. As noted by the Court of Appeals,
petitioner’s expert witnesses himself had testified that" ‘Poster Ads’ was too generic a name. So it
Now, whilst no one has a right to print or publish his book, or any material part thereof, as a book was difficult to identify it with any company, honestly speaking." 28 This crucial admission by its
intended to convey instruction in the art, any person may practice and use the art itself which he has own expert witness that "Poster Ads" could not be associated with P & D showed that, in the mind of
described and illustrated therein. The use of the art is a totally different thing from a publication of the public, the goods and services carrying the trademark "Poster Ads" could not be distinguished
the book explaining it. The copyright of a book on bookkeeping cannot secure the exclusive right to from the goods and services of other entities.
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, This fact also prevented the application of the doctrine of secondary meaning. "Poster Ads" was
and is open and free to the use of the public. And, of course, in using the art, the ruled lines and generic and incapable of being used as a trademark because it was used in the field of poster
headings of accounts must necessarily be used as incident to it. 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
The plausibility of the claim put forward by the complainant in this case arises from a confusion of (because it is geographically or otherwise descriptive) might nevertheless have been used for so
ideas produced by the peculiar nature of the art described in the books, which have been made the long and so exclusively by one producer with reference to his article that, in the trade and to that
subject of copyright. In describing the art, the illustrations and diagrams employed happened to branch of the purchasing public, the word or phrase has come to mean that the article was his
correspond more closely than usual with the actual work performed by the operator who uses the property. 29 The admission by petitioner’s own expert witness that he himself could not associate
art. . . . The description of the art in a book, though entitled to the benefit of copyright, lays no "Poster Ads" with petitioner P & D because it was "too generic" definitely precluded the application
foundation for an exclusive claim to the art itself. The object of the one is explanation; the object of of this exception.
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." (Emphasis supplied) Having discussed the most important and critical issues, we see no need to belabor the rest.

ON THE ISSUE OF TRADEMARK INFRINGEMENT All told, the Court finds no reversible error committed by the Court of Appeals when it reversed the
Regional Trial Court of Makati City.chanrob1es virtua1 1aw library
This issue concerns the use by respondents of the mark "Poster Ads" which petitioner’s president
said was a contraction of "poster advertising." P & D was able to secure a trademark certificate for it, WHEREFORE, the petition is hereby DENIED and the decision of the Court of Appeals dated May 22,
but one where the goods specified were "stationeries such as letterheads, envelopes, calling cards 2001 is AFFIRMED in toto.
and newsletters." 22 Petitioner admitted it did not commercially engage in or market these goods.
On the contrary, it dealt in electrically operated backlit advertising units and the sale of advertising SO ORDERED.
spaces thereon, which, however, were not at all specified in the trademark certificate.

Under the circumstances, the Court of Appeals correctly cited Faberge Inc. v. 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 . . . . One who has adopted and used a trademark on his goods
does not prevent the adoption and use of the same trademark by others for products which are of a
different description." 24 Faberge, Inc. was correct and was in fact recently reiterated in Canon
Kabushiki Kaisha v. Court of Appeals.25cralaw:red

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

G.R. No. 115758 March 19, 2002
ELIDAD C. KHO, doing business under the name and style of KEC COSMETICS
LABORATORY, petitioner,
vs.
HON. COURT OF APPEALS, SUMMERVILLE GENERAL MERCHANDISING and
COMPANY, and ANG TIAM CHAY, respondents.
DE LEON, JR., J.:
Before us is a petition for review on certiorari of the Decision1 dated May 24, 1993 of the
Court of Appeals setting aside and declaring as null and void the Orders 2 dated February
10, 1992 and March 19, 1992 of the Regional Trial Court, Branch 90, of Quezon City
granting the issuance of a writ of preliminary injunction.
The facts of the case are as follows:
On December 20, 1991, petitioner Elidad C. Kho filed a complaint for injunction and
damages with a prayer for the issuance of a writ of preliminary injunction, docketed as
Civil Case No. Q-91-10926, against the respondents Summerville General Merchandising
and Company (Summerville, for brevity) and Ang Tiam Chay.
The petitioner's complaint alleges that petitioner, doing business under the name and
style of KEC Cosmetics Laboratory, is the registered owner of the copyrights Chin Chun
Su and Oval Facial Cream Container/Case, as shown by Certificates of Copyright
Registration No. 0-1358 and No. 0-3678; that she also has patent rights on Chin Chun Su
& Device and Chin Chun Su for medicated cream after purchasing the same from Quintin
Cheng, the registered owner thereof in the Supplemental Register of the Philippine
Patent Office on February 7, 1980 under Registration Certificate No. 4529; that
respondent Summerville advertised and sold petitioner's cream products under the
brand name Chin Chun Su, in similar containers that petitioner uses, thereby misleading
the public, and resulting in the decline in the petitioner's business sales and income; and,
that the respondents should be enjoined from allegedly infringing on the copyrights and
patents of the petitioner.
The respondents, on the other hand, alleged as their defense that Summerville is the
exclusive and authorized importer, re-packer and distributor of Chin Chun Su products
manufactured by Shun Yi Factory of Taiwan; that the said Taiwanese manufacturing
company authorized Summerville to register its trade name Chin Chun Su Medicated
Cream with the Philippine Patent Office and other appropriate governmental agencies;
that KEC Cosmetics Laboratory of the petitioner obtained the copyrights through
misrepresentation and falsification; and, that the authority of Quintin Cheng, assignee of
the patent registration certificate, to distribute and market Chin Chun Suproducts in the
Philippines had already been terminated by the said Taiwanese Manufacturing Company.
After due hearing on the application for preliminary injunction, the trial court granted
the same in an Order dated February 10, 1992, the dispositive portion of which reads:
ACCORDINGLY, the application of plaintiff Elidad C. Kho, doing business under
the style of KEC Cosmetic Laboratory, for preliminary injunction, is hereby
granted. Consequentially, plaintiff is required to file with the Court a bond
executed to defendants in the amount of five hundred thousand pesos
(P500,000.00) to the effect that plaintiff will pay to defendants all damages
which defendants may sustain by reason of the injunction if the Court should
finally decide that plaintiff is not entitled thereto.
SO ORDERED.3
The respondents moved for reconsideration but their motion for reconsideration was
denied by the trial court in an Order dated March 19, 1992.4
On April 24, 1992, the respondents filed a petition for certiorari with the Court of
Appeals, docketed as CA-G.R. SP No. 27803, praying for the nullification of the said writ
of preliminary injunction issued by the trial court. After the respondents filed their reply
and almost a month after petitioner submitted her comment, or on August 14 1992, the
latter moved to dismiss the petition for violation of Supreme Court Circular No. 28-91, a
circular prohibiting forum shopping. According to the petitioner, the respondents did not
state the docket number of the civil case in the caption of their petition and, more
significantly, they did not include therein a certificate of non-forum shopping. The
respondents opposed the petition and submitted to the appellate court a certificate of
non-forum shopping for their petition.
On May 24, 1993, the appellate court rendered a Decision in CA-G.R. SP No. 27803 ruling
in favor of the respondents, the dispositive portion of which reads:
WHEREFORE, the petition is hereby given due course and the orders of
respondent court dated February 10, 1992 and March 19, 1992 granting the
writ of preliminary injunction and denying petitioners' motion for
reconsideration are hereby set aside and declared null and void. Respondent
court is directed to forthwith proceed with the trial of Civil Case No. Q-91-
10926 and resolve the issue raised by the parties on the merits.
SO ORDERED.5
In granting the petition, the appellate court ruled that:
The registration of the trademark or brandname "Chin Chun Su" by KEC with
the supplemental register of the Bureau of Patents, Trademarks and
Technology Transfer cannot be equated with registration in the principal
register, which is duly protected by the Trademark Law.1âwphi1.nêt
xxx xxx xxx
As ratiocinated in La Chemise Lacoste, S.S. vs. Fernandez, 129 SCRA 373, 393:
 "Registration in the Supplemental Register, therefore, serves as notice
that the registrant is using or has appropriated the trademark. By the
very fact that the trademark cannot as yet be on guard and there are
certain defects, some obstacles which the use must still overcome
before he can claim legal ownership of the mark or ask the courts to
vindicate his claims of an exclusive right to the use of the same. It
would be deceptive for a party with nothing more than a registration
in the Supplemental Register to posture before courts of justice as if
the registration is in the Principal Register.
The reliance of the private respondent on the last sentence of the
Patent office action on application Serial No. 30954 that 'registrants is
presumed to be the owner of the mark until after the registration is
declared cancelled' is, therefore, misplaced and grounded on shaky
foundation. The supposed presumption not only runs counter to the
precept embodied in Rule 124 of the Revised Rules of Practice before
the Philippine Patent Office in Trademark Cases but considering all
the facts ventilated before us in the four interrelated petitions
involving the petitioner and the respondent, it is devoid of factual
basis. As even in cases where presumption and precept may factually
be reconciled, we have held that the presumption is rebuttable, not
conclusive, (People v. Lim Hoa, G.R. No. L-10612, May 30, 1958,
Unreported). One may be declared an unfair competitor even if his
competing trademark is registered (Parke, Davis & Co. v. Kiu Foo &
Co., et al., 60 Phil 928; La Yebana Co. v. chua Seco & Co., 14 Phil 534)."6
The petitioner filed a motion for reconsideration. This she followed with several motions
to declare respondents in contempt of court for publishing advertisements notifying the
public of the promulgation of the assailed decision of the appellate court and stating that
genuine Chin Chun Su products could be obtained only from Summerville General
Merchandising and Co.
In the meantime, the trial court went on to hear petitioner's complaint for final
injunction and damages. On October 22, 1993, the trial court rendered a
Decision7 barring the petitioner from using the trademark Chin Chun Su and upholding
the right of the respondents to use the same, but recognizing the copyright of the
petitioner over the oval shaped container of her beauty cream. The trial court did not
award damages and costs to any of the parties but to their respective counsels were
awarded Seventy-Five Thousand Pesos (P75,000.00) each as attorney's fees. The
petitioner duly appealed the said decision to the Court of Appeals.
On June 3, 1994, the Court of Appeals promulgated a Resolution 8 denying the petitioner's
motions for reconsideration and for contempt of court in CA-G.R. SP No. 27803.
Hence, this petition anchored on the following assignment of errors:
I
RESPONDENT HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE
OF DISCRETION AMOUNTING TO LACK OF JURISDICTION IN FAILING TO RULE
ON PETITIONER'S MOTION TO DISMISS.
II
RESPONDENT HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE
OF DISCRETION AMOUNTING TO LACK OF JURISDICTION IN REFUSING TO
PROMPTLY RESOLVE PETITIONER'S MOTION FOR RECONSIDERATION.
III
IN DELAYING THE RESOLUTION OF PETITIONER'S MOTION FOR
RECONSIDERATION, THE HONORABLE COURT OF APPEALS DENIED
PETITIONER'S RIGHT TO SEEK TIMELY APPELLATE RELIEF AND VIOLATED
PETITIONER'S RIGHT TO DUE PROCESS.
IV
RESPONDENT HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE
OF DISCRETION AMOUNTING TO LACK OF JURISDICTION IN FAILING TO CITE
THE PRIVATE RESPONDENTS IN CONTEMPT.9
The petitioner faults the appellate court for not dismissing the petition on the ground of
violation of Supreme Court Circular No. 28-91. Also, the petitioner contends that the
appellate court violated Section 6, Rule 9 of the Revised Internal Rules of the Court of
Appeals when it failed to rule on her motion for reconsideration within ninety (90) days
from the time it is submitted for resolution. The appellate court ruled only after the lapse
of three hundred fifty-four (354) days, or on June 3, 1994. In delaying the resolution
thereof, the appellate court denied the petitioner's right to seek the timely appellate
relief. Finally, petitioner describes as arbitrary the denial of her motions for contempt of
court against the respondents.
We rule in favor of the respondents.
Pursuant to Section 1, Rule 58 of the Revised Rules of Civil Procedure, one of the grounds
for the issuance of a writ of preliminary injunction is a proof that the applicant is entitled
to the relief demanded, and the whole or part of such relief consists in restraining the
commission or continuance of the act or acts complained of, either for a limited period or
perpetually. Thus, a preliminary injunction order may be granted only when the
application for the issuance of the same shows facts entitling the applicant to the relief
demanded.10 This is the reason why we have ruled that it must be shown that the
invasion of the right sought to be protected is material and substantial, that the right of
complainant is clear and unmistakable, and, that there is an urgent and paramount
necessity for the writ to prevent serious damage.11
In the case at bar, the petitioner applied for the issuance of a preliminary injunctive
order on the ground that she is entitled to the use of the trademark on Chin Chun Su and
its container based on her copyright and patent over the same. We first find it
appropriate to rule on whether the copyright and patent over the name and container of
a beauty cream product would entitle the registrant to the use and ownership over the
same to the exclusion of 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.12 In relation thereto, a trade name
means the name or designation identifying or distinguishing an enterprise.13 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.14 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.15
Petitioner has no right to support her claim for the exclusive use of the subject trade
name and its container. The name and container of a beauty cream product are proper
subjects of a trademark inasmuch as the same falls squarely within its definition. In
order to be entitled to exclusively use the same in the sale of the beauty cream product,
the user must sufficiently prove that she registered or used it before anybody else did.
The petitioner's copyright and patent registration of the name and container would not
guarantee her the right to the exclusive use of the same for the reason that they are not
appropriate subjects of the said intellectual rights. Consequently, a preliminary
injunction order cannot be issued for the reason that the petitioner has not proven that
she has a clear right over the said name and container to the exclusion of others, not
having proven that she has registered a trademark thereto or used the same before
anyone did.
We cannot likewise overlook the decision of the trial court in the case for final injunction
and damages. The dispositive portion of said decision held that the petitioner does not
have trademark rights on the name and container of the beauty cream product. The said
decision on the merits of the trial court rendered the issuance of the writ of a
preliminary injunction moot and academic notwithstanding the fact that the same has
been appealed in the Court of Appeals. This is supported by our ruling in La Vista
Association, Inc. v. Court of Appeals16, to wit:
Considering that preliminary injunction is a provisional remedy which may be
granted at any time after the commencement of the action and before judgment
when it is established that the plaintiff is entitled to the relief demanded and only
when his complaint shows facts entitling such reliefs xxx and it appearing that the
trial court had already granted the issuance of a final injunction in favor of
petitioner in its decision rendered after trial on the merits xxx the Court resolved
to Dismiss the instant petition having been rendered moot and academic. An
injunction issued by the trial court after it has already made a clear
pronouncement as to the plaintiff's right thereto, that is, after the same issue has
been decided on the merits, the trial court having appreciated the evidence
presented, is proper, notwithstanding the fact that the decision rendered is not yet
final xxx. Being an ancillary remedy, the proceedings for preliminary injunction
cannot stand separately or proceed independently of the decision rendered on
the merit of the main case for injunction. The merit of the main case having
been already determined in favor of the applicant, the preliminary
determination of its non-existence ceases to have any force and effect. (italics
supplied)
La Vista categorically pronounced that the issuance of a final injunction renders any
question on the preliminary injunctive order moot and academic despite the fact that the
decision granting a final injunction is pending appeal. Conversely, a decision denying the
applicant-plaintiff's right to a final injunction, although appealed, renders moot and
academic any objection to the prior dissolution of a writ of preliminary injunction.
The petitioner argues that the appellate court erred in not dismissing the petition for
certiorari for non-compliance with the rule on forum shopping. We disagree. First, the
petitioner improperly raised the technical objection of non-compliance with Supreme
Court Circular No. 28-91 by filing a motion to dismiss the petition for certiorari filed in
the appellate court. This is prohibited by Section 6, Rule 66 of the Revised Rules of Civil
Procedure which provides that "(I)n petitions for certiorari before the Supreme Court
and the Court of Appeals, the provisions of Section 2, Rule 56, shall be observed. Before
giving due course thereto, the court may require the respondents to file their comment
to, and not a motion to dismiss, the petition xxx (italics supplied)". Secondly, the issue was
raised one month after petitioner had filed her answer/comment and after private
respondent had replied thereto. Under Section 1, Rule 16 of the Revised Rules of Civil
Procedure, a motion to dismiss shall be filed within the time for but before filing the
answer to the complaint or pleading asserting a claim. She therefore could no longer
submit a motion to dismiss nor raise defenses and objections not included in the
answer/comment she had earlier tendered. Thirdly, substantial justice and equity
require this Court not to revive a dissolved writ of injunction in favor of a party without
any legal right thereto merely on a technical infirmity. The granting of an injunctive writ
based on a technical ground rather than compliance with the requisites for the issuance
of the same is contrary to the primary objective of legal procedure which is to serve as a
means to dispense justice to the deserving party.
The petitioner likewise contends that the appellate court unduly delayed the resolution
of her motion for reconsideration. But we find that petitioner contributed to this delay
when she filed successive contentious motions in the same proceeding, the last of which
was on October 27, 1993, necessitating counter-manifestations from private respondents
with the last one being filed on November 9, 1993. Nonetheless, it is well-settled that
non-observance of the period for deciding cases or their incidents does not render such
judgments ineffective or void.17With respect to the purported damages she suffered due
to the alleged delay in resolving her motion for reconsideration, we find that the said
issue has likewise been rendered moot and academic by our ruling that she has no right
over the trademark and, consequently, to the issuance of a writ of preliminary
injunction.1âwphi1.nêt
Finally, we rule that the Court of Appeals correctly denied the petitioner's several
motions for contempt of court. There is nothing contemptuous about the advertisements
complained of which, as regards the proceedings in CA-G.R. SP No. 27803 merely
announced in plain and straightforward language the promulgation of the assailed
Decision of the appellate court. Moreover, pursuant to Section 4 of Rule 39 of the Revised
Rules of Civil Procedure, the said decision nullifying the injunctive writ was immediately
executory.

WHEREFORE, the petition is DENIED. The Decision and Resolution of the Court of
Appeals dated May 24, 1993 and June 3, 1994, respectively, are hereby AFFIRMED. With
costs against the petitioner.

SO ORDERED.
 [G.R. NO. 172835 : December 13, 2007]
b. Anti-Seize Compound ASC-EP 124,108.10 4763 & 02/16/99 &
(fake) 2000 5890 06/24/99
AIR PHILIPPINES CORPORATION, Petitioner, v. PENNSWELL, INC. Respondent.

DECISION
CHICO-NAZARIO, J.:
Petitioner Air Philippines Corporation seeks, via the instant Petition for Review under Rule 45 of the
Rules of Court, the nullification of the 16 February 2006 Decision1 and the 25 May 2006
Resolution2 of the Court of Appeals in CA-G.R. SP No. 86329, which affirmed the Order3 dated 30
June 2004 of the Regional Trial Court (RTC), Makati City, Branch 64, in Civil Case No. 00-561.
Petitioner Air Philippines Corporation is a domestic corporation engaged in the business of air
transportation services. On the other hand, respondent Pennswell, Inc. was organized to engage in
the business of manufacturing and selling industrial chemicals, solvents, and special lubricants.
On various dates, respondent delivered and sold to petitioner sundry goods in trade, covered by
Sales Invoices No. 8846,4 9105,5 8962,6 and 8963,7 which correspond to Purchase Orders No. 6433,
6684, 6634 and 6633, respectively. Under the contracts, petitioner's total outstanding obligation
amounted to P449,864.98 with interest at 14% per annum until the amount would be fully paid. For
failure of the petitioner to comply with its obligation under said contracts, respondent filed a
Complaint8 for a Sum of Money on 28 April 2000 with the RTC.
According to petitioner, respondent's products, namely Excellent Rust Corrosion, Connector Grease,
Electric Strength Protective Coating, and Anti-Seize Compound, are identical with its Anti-Friction
Fluid, Contact Grease, Thixohtropic Grease, and Dry Lubricant, respectively. Petitioner asseverated
that had respondent been forthright about the identical character of the products, it would not have
purchased the items complained of. Moreover, petitioner alleged that when the purported fraud was
discovered, a conference was held between petitioner and respondent on 13 January 2000, whereby
the parties agreed that respondent would return to petitioner the amount it previously paid.
However, petitioner was surprised when it received a letter from the respondent, demanding
payment of the amount of P449,864.94, which later became the subject of respondent's Complaint
for Collection of a Sum of Money against petitioner.
During the pendency of the trial, petitioner filed a Motion to Compel 10 respondent to give a detailed
list of the ingredients and chemical components of the following products, to wit: (a) Contact Grease
and Connector Grease; (b) Thixohtropic Grease and Di-Electric Strength Protective Coating; and (c)
Dry Lubricant and Anti-Seize Compound.11 It appears that petitioner had earlier requested the
Philippine Institute of Pure and Applied Chemistry (PIPAC) for the latter to conduct a comparison of
respondent's goods.
On 15 March 2004, the RTC rendered an Order granting the petitioner's motion. It disposed, thus:

In its Answer,9 petitioner contended that its refusal to pay was not without valid and justifiable The Court directs [herein respondent] Pennswell, Inc. to give [herein petitioner] Air Philippines
reasons. In particular, petitioner alleged that it was defrauded in the amount of P592,000.00 by Corporation[,] a detailed list of the ingredients or chemical components of the following chemical
respondent for its previous sale of four items, covered by Purchase Order No. 6626. Said items were products:
misrepresented by respondent as belonging to a new line, but were in truth and in fact, identical
with products petitioner had previously purchased from respondent. Petitioner asserted that it was
deceived by respondent which merely altered the names and labels of such goods. Petitioner A. Contact Grease to be compared with Connector Grease;
specifically identified the items in question, as follows:
b. Thixohtropic Grease to be compared with Di-Electric Strength Protective Coating;
andcralawlibrary
Label/Description Item No. Amount P.O. Date
c. Dry Lubricant to be compared with Anti-Seize Compound[.]
1. a. Anti-Friction Fluid MPL-800 153,941.40 5714 05/20/99
b. Excellent Rust Corrosion MPL-008 155,496.00 5888 06/20/99
(fake) [Respondent] Pennswell, Inc. is given fifteen (15) days from receipt of this Order to submit to
[petitioner] Air Philippines Corporation the chemical components of all the above-mentioned
products for chemical comparison/analysis.12

2. a. Contact Grease COG #2 115,236.00 5540 04/26/99

b. Connector Grease (fake) CG 230,519.52 6327 08/05/99 Respondent sought reconsideration of the foregoing Order, contending that it cannot be compelled
to disclose the chemical components sought because the matter is confidential. It argued that what
petitioner endeavored to inquire upon constituted a trade secret which respondent cannot be
forced to divulge. Respondent maintained that its products are specialized lubricants, and if their
3. a. Trixohtropic Grease EPC 81,876.96 4582 01/29/99 components were revealed, its business competitors may easily imitate and market the same types
b. Di-Electric Strength EPC#2 81,876.96 5446 04/21/99 of products, in violation of its proprietary rights and to its serious damage and prejudice.
Protective Coating (fake)
The RTC gave credence to respondent's reasoning, and reversed itself. It issued an Order dated 30
June 2004, finding that the chemical components are respondent's trade secrets and are privileged
4. a. Dry Lubricant ASC-EP 87,346.52 5712 05/20/99 in character. A priori, it rationalized:
The Supreme Court held in the case of Chavez v. Presidential Commission on Good Government, 299 to [respondent] Pennswell's business secrets, may use the same for their own private gain and to
SCRA 744, p. 764, that "the drafters of the Constitution also unequivocally affirmed that aside from the irreparable prejudice of the latter.
national security matters and intelligence information, trade or industrial secrets (pursuant to the
Intellectual Property Code and other related laws) as well as banking transactions (pursuant to the
xxx
Secrecy of Bank Deposit Act) are also exempted from compulsory disclosure."

Trade secrets may not be the subject of compulsory disclosure. By reason of [their] confidential and
privileged character, ingredients or chemical components of the products ordered by this Court to
be disclosed constitute trade secrets lest [herein respondent] would eventually be exposed to
unwarranted business competition with others who may imitate and market the same kinds of
products in violation of [respondent's] proprietary rights. Being privileged, the detailed list of
ingredients or chemical components may not be the subject of mode of discovery under Rule 27,
Section 1 of the Rules of Court, which expressly makes privileged information an exception from its
coverage.13
In the case before Us, the alleged trade secrets have a factual basis, i.e., it comprises of the
ingredients and formulation of [respondent] Pennswell's lubricant products which are unknown to
the public and peculiar only to Pennswell.
All told, We find no grave abuse of discretion amounting to lack or excess of jurisdiction on the part
of public respondent Judge in finding that the detailed list of ingredients or composition of the
subject lubricant products which petitioner [Air Philippines Corporation] seeks to be disclosed are
trade secrets of [respondent] Pennswell; hence, privileged against compulsory disclosure. 14

Alleging grave abuse of discretion on the part of the RTC, petitioner filed a Petition Petitioner's Motion for Reconsideration was denied.
for Certiorari under Rule 65 of the Rules of Court with the Court of Appeals, which denied the
Petition and affirmed the Order dated 30 June 2004 of the RTC.
Unyielding, petitioner brought the instant Petition before us, on the sole issue of:

The Court of Appeals ruled that to compel respondent to reveal in detail the list of ingredients of its
WHETHER THE COURT OF APPEALS RULED IN ACCORDANCE WITH PREVAILING LAWS AND
lubricants is to disregard respondent's rights over its trade secrets. It was categorical in declaring
JURISPRUDENCE WHEN IT UPHELD THE RULING OF THE TRIAL COURT THAT THE CHEMICAL
that the chemical formulation of respondent's products and their ingredients are embraced within
COMPONENTS OR INGREDIENTS OF RESPONDENT'S PRODUCTS ARE TRADE SECRETS OR
the meaning of "trade secrets." In disallowing the disclosure, the Court of Appeals expounded, thus:
INDUSTRIAL SECRETS THAT ARE NOT SUBJECT TO COMPULSORY DISCLOSURE.15

The Supreme Court in Garcia v. Board of Investments (177 SCRA 374 [1989]) held that trade secrets
Petitioner seeks to convince this Court that it has a right to obtain the chemical composition and
and confidential, commercial and financial information are exempt from public scrutiny. This is
ingredients of respondent's products to conduct a comparative analysis of its products. Petitioner
reiterated in Chavez v. Presidential Commission on Good Government (299 SCRA 744 [1998])
assails the conclusion reached by the Court of Appeals that the matters are trade secrets which are
where the Supreme Court enumerated the kinds of information and transactions that are recognized
protected by law and beyond public scrutiny. Relying on Section 1, Rule 27 of the Rules of Court,
as restrictions on or privileges against compulsory disclosure. There, the Supreme Court explicitly
petitioner argues that the use of modes of discovery operates with desirable flexibility under the
stated that:
discretionary control of the trial court. Furthermore, petitioner posits that its request is not done in
bad faith or in any manner as to annoy, embarrass, or oppress respondent.
"The drafters of the Constitution also unequivocally affirmed that, aside from national security
matters and intelligence information, trade or industrial secrets (pursuant to the Intellectual
A trade secret is defined as a plan or process, tool, mechanism or compound known only to its
Property Code and other related laws) as well as banking transactions (pursuant to the Secrecy of
owner and those of his employees to whom it is necessary to confide it.16 The definition also extends
Bank Deposits Act) re also exempt from compulsory disclosure."
to a secret formula or process not patented, but known only to certain individuals using it in
compounding some article of trade having a commercial value.17 A trade secret may consist of any
It is thus clear from the foregoing that a party cannot be compelled to produce, release or disclose formula, pattern, device, or compilation of information that: (1) is used in one's business; and (2)
documents, papers, or any object which are considered trade secrets. gives the employer an opportunity to obtain an advantage over competitors who do not possess the
information.18 Generally, a trade secret is a process or device intended for continuous use in the
operation of the business, for example, a machine or formula, but can be a price list or catalogue or
In the instant case, petitioner [Air Philippines Corporation] would have [respondent] Pennswell
specialized customer list.19 It is indubitable that trade secrets constitute proprietary rights. The
produce a detailed list of ingredients or composition of the latter's lubricant products so that a
inventor, discoverer, or possessor of a trade secret or similar innovation has rights therein which
chemical comparison and analysis thereof can be obtained. On this note, We believe and so hold that
may be treated as property, and ordinarily an injunction will be granted to prevent the disclosure of
the ingredients or composition of [respondent] Pennswell's lubricants are trade secrets which it
the trade secret by one who obtained the information "in confidence" or through a "confidential
cannot be compelled to disclose.
relationship."20 American jurisprudence has utilized the following factors21 to determine if an
information is a trade secret, to wit:
[Respondent] Pennswell has a proprietary or economic right over the ingredients or components of
its lubricant products. The formulation thereof is not known to the general public and is peculiar
(1) the extent to which the information is known outside of the employer's business;
only to [respondent] Pennswell. The legitimate and economic interests of business enterprises in
protecting their manufacturing and business secrets are well-recognized in our system.
(2) the extent to which the information is known by employees and others involved in the business;
[Respondent] Pennswell has a right to guard its trade secrets, manufacturing formulas, marketing
strategies and other confidential programs and information against the public. Otherwise, such (3) the extent of measures taken by the employer to guard the secrecy of the information;
information can be illegally and unfairly utilized by business competitors who, through their access
(4) the value of the information to the employer and to competitors; thereon. The order shall specify the time, place and manner of making the inspection and taking
copies and photographs, and may prescribe such terms and conditions as are just.
(5) the amount of effort or money expended by the company in developing the information;
andcralawlibrary A more than cursory glance at the above text would show that the production or inspection of
documents or things as a mode of discovery sanctioned by the Rules of Court may be availed of by
any party upon a showing of good cause therefor before the court in which an action is pending. The
(6) the extent to which the information could be easily or readily obtained through an independent
court may order any party: a) to produce and permit the inspection and copying or photographing
source.22
of any designated documents, papers, books, accounts, letters, photographs, objects or tangible
things, which are not privileged;25 which constitute or contain evidence material to any matter
In Cocoland Development Corporation v. National Labor Relations Commission, 23 the issue was the involved in the action; and which are in his possession, custody or control; or b) to permit entry
legality of an employee's termination on the ground of unauthorized disclosure of trade secrets. The upon designated land or other property in his possession or control for the purpose of inspecting,
Court laid down the rule that any determination by management as to the confidential nature of measuring, surveying, or photographing the property or any designated relevant object or operation
technologies, processes, formulae or other so-called trade secrets must have a substantial factual thereon.
basis which can pass judicial scrutiny. The Court rejected the employer's naked contention that its
own determination as to what constitutes a trade secret should be binding and conclusive upon the
Rule 27 sets an unequivocal proviso that the documents, papers, books, accounts, letters,
NLRC. As a caveat, the Court said that to rule otherwise would be to permit an employer to label
photographs, objects or tangible things that may be produced and inspected should not be
almost anything a trade secret, and thereby create a weapon with which he/it may arbitrarily
privileged.26 The documents must not be privileged against disclosure. 27 On the ground of public
dismiss an employee on the pretext that the latter somehow disclosed a trade secret, even if in fact
policy, the rules providing for production and inspection of books and papers do not authorize the
there be none at all to speak of.24 Hence, in Cocoland, the parameters in the determination of trade
production or inspection of privileged matter; that is, books and papers which, because of their
secrets were set to be such substantial factual basis that can withstand judicial scrutiny.
confidential and privileged character, could not be received in evidence.28 Such a condition is in
addition to the requisite that the items be specifically described, and must constitute or contain
The chemical composition, formulation, and ingredients of respondent's special lubricants are trade evidence material to any matter involved in the action and which are in the party's possession,
secrets within the contemplation of the law. Respondent was established to engage in the business custody or control.
of general manufacturing and selling of, and to deal in, distribute, sell or otherwise dispose of goods,
wares, merchandise, products, including but not limited to industrial chemicals, solvents, lubricants,
Section 2429 of Rule 130 draws the types of disqualification by reason of privileged communication,
acids, alkalies, salts, paints, oils, varnishes, colors, pigments and similar preparations, among others.
to wit: (a) communication between husband and wife; (b) communication between attorney and
It is unmistakable to our minds that the manufacture and production of respondent's products
client; (c) communication between physician and patient; (d) communication between priest and
proceed from a formulation of a secret list of ingredients. In the creation of its lubricants,
penitent; and (e) public officers and public interest. There are, however, other privileged matters
respondent expended efforts, skills, research, and resources. What it had achieved by virtue of its
that are not mentioned by Rule 130. Among them are the following: (a) editors may not be
investments may not be wrested from respondent on the mere pretext that it is necessary for
compelled to disclose the source of published news; (b) voters may not be compelled to disclose for
petitioner's defense against a collection for a sum of money. By and large, the value of the
whom they voted; (c) trade secrets; (d) information contained in tax census returns; and (d) bank
information to respondent is crystal clear. The ingredients constitute the very fabric of respondent's
deposits.30
production and business. No doubt, the information is also valuable to respondent's competitors. To
compel its disclosure is to cripple respondent's business, and to place it at an undue disadvantage. If
the chemical composition of respondent's lubricants are opened to public scrutiny, it will stand to We, thus, rule against the petitioner. We affirm the ruling of the Court of Appeals which upheld the
lose the backbone on which its business is founded. This would result in nothing less than the finding of the RTC that there is substantial basis for respondent to seek protection of the law for its
probable demise of respondent's business. Respondent's proprietary interest over the ingredients proprietary rights over the detailed chemical composition of its products.
which it had developed and expended money and effort on is incontrovertible. Our conclusion is
that the detailed ingredients sought to be revealed have a commercial value to respondent. Not only
That trade secrets are of a privileged nature is beyond quibble. The protection that this jurisdiction
do we acknowledge the fact that the information grants it a competitive advantage; we also find that
affords to trade secrets is evident in our laws. The Interim Rules of Procedure on Government
there is clearly a glaring intent on the part of respondent to keep the information confidential and
Rehabilitation, effective 15 December 2000, which applies to: (1) petitions for rehabilitation filed by
not available to the prying public.
corporations, partnerships, and associations pursuant to Presidential Decree No. 902-A,31 as
amended; and (2) cases for rehabilitation transferred from the Securities and Exchange Commission
We now take a look at Section 1, Rule 27 of the Rules of Court, which permits parties to inspect to the RTCs pursuant to Republic Act No. 8799, otherwise known as The Securities Regulation Code,
documents or things upon a showing of good cause before the court in which an action is pending. expressly provides that the court may issue an order to protect trade secrets or other confidential
Its entire provision reads: research, development, or commercial information belonging to the debtor. 32 Moreover, the
Securities Regulation Code is explicit that the Securities and Exchange Commission is not required
or authorized to require the revelation of trade secrets or processes in anyapplication, report or
SECTION 1. Motion for production or inspection order. - Upon motion of any party showing good
document filed with the Commission.33 This confidentiality is made paramount as a limitation to the
cause therefore, the court in which an action is pending may (a) order any party to produce and
right of any member of the general public, upon request, to have access to all information filed with
permit the inspection and copying or photographing, by or on behalf of the moving party, of any
the Commission.34
designated documents, papers, books, accounts, letters, photographs, objects or tangible things, not
privileged, which constitute or contain evidence material to any matter involved in the action and
which are in his possession, custody or control; or (b) order any party to permit entry upon Furthermore, the Revised Penal Code endows a cloak of protection to trade secrets under the
designated land or other property in his possession or control for the purpose of inspecting, following articles:
measuring, surveying, or photographing the property or any designated relevant object or operation
Art. 291. Revealing secrets with abuse of office. - The penalty of arresto mayor and a fine not
exceeding 500 pesos shall be imposed upon any manager, employee or servant who, in such
capacity, shall learn the secrets of his principal or master and shall reveal such secrets.
Art. 292. Revelation of industrial secrets. - The penalty of prision correccional in its minimum and
medium periods and a fine not exceeding 500 pesos shall be imposed upon the person in charge,
employee or workman of any manufacturing or industrial establishment who, to the prejudice of the
owner thereof, shall reveal the secrets of the industry of
the latter.
Similarly, Republic Act No. 8424, otherwise known as the National Internal Revenue Code of 1997,
has a restrictive provision on trade secrets, penalizing the revelation thereof by internal revenue
officers or employees, to wit:
SECTION 278. Procuring Unlawful Divulgence of Trade Secrets. - Any person who causes or
procures an officer or employee of the Bureau of Internal Revenue to divulge any confidential
information regarding the business, income or inheritance of any taxpayer, knowledge of which was
acquired by him in the discharge of his official duties, and which it is unlawful for him to reveal, and
any person who publishes or prints in any manner whatever, not provided by law, any income,
profit, loss or expenditure appearing in any income tax return, shall be punished by a fine of not
more than two thousand pesos (P2,000), or suffer imprisonment of not less than six (6) months nor
more than five (5) years, or both.
Republic Act No. 6969, or the Toxic Substances and Hazardous and Nuclear Wastes Control Act of
1990, enacted to implement the policy of the state to regulate, restrict or prohibit the importation,
manufacture, processing, sale, distribution, use and disposal of chemical substances and mixtures
that present unreasonable risk and/or injury to health or the environment, also contains a
provision that limits the right of the public to have access to records, reports or information
concerning chemical substances and mixtures including safety data submitted and data on
emission or discharge into the environment, if the matter is confidential such that it would
divulge trade secrets, production or sales figures; or methods, production or processes
unique to such manufacturer, processor or distributor; or would otherwise tend to affect
adversely the competitive position of such manufacturer, processor or distributor. 35
Clearly, in accordance with our statutory laws, this Court has declared that intellectual and
industrial property rights cases are not simple property cases. 36 Without limiting such industrial
property rights to trademarks and trade names, this Court has ruled that all agreements concerning
intellectual property are intimately connected with economic development. 37 The protection of
industrial property encourages investments in new ideas and inventions and stimulates creative
efforts for the satisfaction of human needs. It speeds up transfer of technology and industrialization,
and thereby bring about social and economic progress. 38 Verily, the protection of industrial secrets
is inextricably linked to the advancement of our economy and fosters healthy competition in trade.
Jurisprudence has consistently acknowledged the private character of trade
secrets.ςηαñrοblεš νιr†υαl lαω lιbrαrÿ
There is a privilege not to disclose one's trade secrets. 39 Foremost, this Court has declared that trade
secrets and banking transactions are among the recognized restrictions to the right of the people to
information as embodied in the Constitution.40 We said that the drafters of the Constitution also
unequivocally affirmed that, aside from national security matters and intelligence information, trade
or industrial secrets (pursuant to the Intellectual Property Code and other related laws) as well as
banking transactions (pursuant to the Secrecy of Bank Deposits Act), are also exempted from
compulsory disclosure.41
Significantly, our cases on labor are replete with examples of a protectionist stance towards the
trade secrets of employers. For instance, this Court upheld the validity of the policy of a
pharmaceutical company prohibiting its employees from marrying employees of any competitor
company, on the rationalization that the company has a right to guard its trade secrets,
manufacturing formulas, marketing strategies and other confidential programs and information
from competitors.42 Notably, it was in a labor-related case that this Court made a stark ruling on the
proper determination of trade secrets.
In the case at bar, petitioner cannot rely on Section 7743 of Republic Act 7394, or the Consumer Act
of the Philippines, in order to compel respondent to reveal the chemical components of its products.
While it is true that all consumer products domestically sold, whether manufactured locally or
imported, shall indicate their general make or active ingredients in their respective labels of
packaging, the law does not apply to respondent. Respondent's specialized lubricants - - namely,
Contact Grease, Connector Grease, Thixohtropic Grease, Di-Electric Strength Protective Coating, Dry
Lubricant and Anti-Seize Compound - - are not consumer products. "Consumer products," as it is
defined in Article 4(q),44 refers to goods, services and credits, debts or obligations which are
primarily for personal, family, household or agricultural purposes, which shall include, but not be
limited to, food, drugs, cosmetics, and devices. This is not the nature of respondent's products. Its
products are not intended for personal, family, household or agricultural purposes. Rather, they are
for industrial use, specifically for the use of aircraft propellers and engines.
Petitioner's argument that Republic Act No. 8203, or the Special Law on Counterfeit Drugs, requires
the disclosure of the active ingredients of a drug is also on faulty ground. 45 Respondent's products
are outside the scope of the cited law. They do not come within the purview of a drug 46 which, as
defined therein, refers to any chemical compound or biological substance, other than food, that is
intended for use in the treatment, prevention or diagnosis of disease in man or animals. Again, such
are not the characteristics of respondent's products.
What is clear from the factual findings of the RTC and the Court of Appeals is that the chemical
formulation of respondent's products is not known to the general public and is unique only to it.
Both courts uniformly ruled that these ingredients are not within the knowledge of the public. Since
such factual findings are generally not reviewable by this Court, it is not duty-bound to analyze and
weigh all over again the evidence already considered in the proceedings below.47 We need not delve
into the factual bases of such findings as questions of fact are beyond the pale of Rule 45 of the Rules
of Court. Factual findings of the trial court when affirmed by the Court of Appeals, are binding and
conclusive on the Supreme Court.48
We do not find merit or applicability in petitioner's invocation of Section 1249 of the Toxic
Substances and Hazardous and Nuclear Wastes Control Act of 1990, which grants the public access
to records, reports or information concerning chemical substances and mixtures, including safety
data submitted, and data on emission or discharge into the environment. To reiterate, Section
1250 of said Act deems as confidential matters, which may not be made public, those that would
divulge trade secrets, including production or sales figures or methods; production or processes
unique to such manufacturer, processor or distributor, or would otherwise tend to affect adversely
the competitive position of such manufacturer, processor or distributor. It is true that under the
same Act, the Department of Environment and Natural Resources may release information;
however, the clear import of the law is that said authority is limited by the right to confidentiality of
the manufacturer, processor or distributor, which information may be released only to a medical
research or scientific institution where the information is needed for the purpose of medical
diagnosis or treatment of a person exposed to the chemical substance or mixture. The right to
confidentiality is recognized by said Act as primordial. Petitioner has not made the slightest attempt
to show that these circumstances are availing in the case at bar.
Indeed, the privilege is not absolute; the trial court may compel disclosure where it is indispensable
for doing justice.51 We do not, however, find reason to except respondent's trade secrets from the
application of the rule on privilege. The revelation of respondent's trade secrets serves no better
purpose to the disposition of the main case pending with the RTC, which is on the collection of a
sum of money. As can be gleaned from the facts, petitioner received respondent's goods in trade in
the normal course of business. To be sure, there are defenses under the laws of contracts and sales
available to petitioner. On the other hand, the greater interest of justice ought to favor respondent
as the holder of trade secrets. If we were to weigh the conflicting interests between the parties, we
rule in favor of the greater interest of respondent. Trade secrets should receive greater protection
from discovery, because they derive economic value from being generally unknown and not readily
ascertainable by the public.52 To the mind of this Court, petitioner was not able to show a compelling
reason for us to lift the veil of confidentiality which shields respondent's trade secrets.

WHEREFORE, the Petition is DENIED. The Decision dated 16 February 2006, and the Resolution
dated 25 May 2006, of the Court of Appeals in CA-G.R. SP No. 86329 are AFFIRMED. No costs.

SO ORDERED.
G.R. No. 175769-70 January 19, 2009 On May 13, 2002, ABS-CBN filed with the IPO a complaint for “Violation of Laws Involving Property
Rights, with Prayer for the Issuance of a Temporary Restraining Order and/or Writ of Preliminary
Injunction,” which was docketed as IPV No. 10-2002-0004. It alleged that PMSI’s unauthorized
ABS-CBN BROADCASTING CORPORATION, Petitioners,
rebroadcasting of Channels 2 and 23 infringed on its broadcasting rights and copyright.
vs.
PHILIPPINE MULTI-MEDIA SYSTEM, INC., CESAR G. REYES, FRANCIS CHUA (ANG BIAO),
MANUEL F. ABELLADA, RAUL B. DE MESA, AND ALOYSIUS M. COLAYCO, Respondents. On July 2, 2002, the Bureau of Legal Affairs (BLA) of the IPO granted ABS-CBN’s application for a
temporary restraining order. On July 12, 2002, PMSI suspended its retransmission of Channels 2
and 23 and likewise filed a petition for certiorari with the Court of Appeals, which was docketed as
DECISION
CA-G.R. SP No. 71597.

YNARES-SANTIAGO, J.:
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
This petition for review on certiorari1 assails the July 12, 2006 Decision2 of the Court of Appeals in of then NTC Commissioner Armi Jane R. Borje to PMSI stating as follows:
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
This refers to your letter dated December 16, 2002 requesting for regulatory guidance from this
December 11, 2006 Resolution3 denying the motion for reconsideration.
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
Petitioner ABS-CBN Broadcasting Corporation (ABS-CBN) is licensed under the laws of the Republic direct-to-home (DTH) pay television services of Philippine Multi-Media System, Inc. (PMSI).
of the Philippines to engage in television and radio broadcasting. 4 It broadcasts television programs
by wireless means to Metro Manila and nearby provinces, and by satellite to provincial stations
Preliminarily, both DTH pay television and cable television services are broadcast services, the only
through Channel 2 on Very High Frequency (VHF) and Channel 23 on Ultra High Frequency (UHF).
difference being the medium of delivering such services (i.e. the former by satellite and the latter by
The programs aired over Channels 2 and 23 are either produced by ABS-CBN or purchased from or
cable). Both can carry broadcast signals to the remote areas, thus enriching the lives of the residents
licensed by other producers.
thereof through the dissemination of social, economic, educational information and cultural
programs.
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
The DTH pay television services of PMSI is equipped to provide nationwide DTH satellite services.
provinces are not necessarily shown in other provinces.
Concededly, PMSI’s DTH pay television services covers very much wider areas in terms of carriage
of broadcast signals, including areas not reachable by cable television services thereby providing a
Respondent Philippine Multi-Media System, Inc. (PMSI) is the operator of Dream Broadcasting better medium of dissemination of information to the public.
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.
In view of the foregoing and the spirit and intent of NTC memorandum Circular No. 4-08-88,
De Mesa, and Aloysius M. Colayco, are members of PMSI’s Board of Directors.
particularly section 6 thereof, on mandatory carriage of television broadcast signals, DTH
pay television services should be deemed covered by such NTC Memorandum Circular.
PMSI was granted a legislative franchise under Republic Act No. 86305 on May 7, 1998 and was
given a Provisional Authority by the National Telecommunications Commission (NTC) on February
For your guidance. (Emphasis added)11
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 On August 26, 2003, PMSI filed another Manifestation with the BLA that it received a letter dated
premium program channels. 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:
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 Dear Mr. Abellada:
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
Last July 22, 2003, the National Telecommunications Commission (NTC) received a letter dated July
within Grade “A” or “B” contours to carry the television signals of the authorized television
17, 2003 from President/COO Rene Q. Bello of the International Broadcasting Corporation (IBC-
broadcast stations.9
Channel 13) complaining that your company, Dream Broadcasting System, Inc., has cut-off, without
any notice or explanation whatsoever, to air the programs of IBC-13, a free-to-air television, to the
Thereafter, negotiations ensued between the parties in an effort to reach a settlement; however, the detriment of the public.
negotiations were terminated on April 4, 2002 by ABS-CBN allegedly due to PMSI’s inability to
ensure the prevention of illegal retransmission and further rebroadcast of its signals, as well as the
We were told that, until now, this has been going on.
adverse effect of the rebroadcasts on the business operations of its regional television stations. 10
Please be advised that as a direct broadcast satellite operator, operating a direct-to-home
(DTH) broadcasting system, with a provisional authority (PA) from the NTC, your company,
along with cable television operators, are mandated to strictly comply with the existing
policy of NTC on mandatory carriage of television broadcast signals as provided under
Memorandum Circular No. 04-08-88, also known as the Revised Rules and Regulations
Governing Cable Television System in the Philippines.
This mandatory coverage provision under Section 6.2 of said Memorandum Circular,
requires all cable television system operators, operating in a community within the Grade
“A” or “B” contours to “must-carry” the television signals of the authorized television
broadcast stations, one of which is IBC-13. Said directive equally applies to your company as
the circular was issued to give consumers and the public a wider access to more sources of
news, information, entertainment and other programs/contents.
This Commission, as the governing agency vested by laws with the jurisdiction, supervision and
control over all public services, which includes direct broadcast satellite operators, and taking into
consideration the paramount interest of the public in general, hereby directs you to immediately
restore the signal of IBC-13 in your network programs, pursuant to existing circulars and
regulations of the Commission.
For strict compliance. (Emphasis added)12
Meanwhile, on October 10, 2003, the NTC issued Memorandum Circular No. 10-10-2003, entitled
“Implementing Rules and Regulations Governing Community Antenna/Cable Television (CATV) and
Direct Broadcast Satellite (DBS) Services to Promote Competition in the Sector.” Article 6, Section 8
thereof states:
As a general rule, the reception, distribution and/or transmission by any CATV/DBS operator of any
television signals without any agreement with or authorization from program/content providers
are prohibited.
On whether Memorandum Circular No. 10-10-2003 amended Memorandum Circular No. 04-08-88,
the NTC explained to PMSI in a letter dated November 3, 2003 that:
To address your query on whether or not the provisions of MC 10-10-2003 would have the effect of
amending the provisions of MC 4-08-88 on mandatory carriage of television signals, the answer is in
the negative.
xxxx
The Commission maintains that, MC 4-08-88 remains valid, subsisting and enforceable.
Please be advised, therefore, that as duly licensed direct-to-home satellite television service
provider authorized by this Commission, your company continues to be bound by the
guidelines provided for under MC 04-08-88, specifically your obligation under its mandatory
carriage provisions, in addition to your obligations under MC 10-10-2003. (Emphasis added)
Please be guided accordingly.13
On December 22, 2003, the BLA rendered a decision14 finding that PMSI infringed the broadcasting
rights and copyright of ABS-CBN and ordering it to permanently cease and desist from
rebroadcasting Channels 2 and 23.
On February 6, 2004, PMSI filed an appeal with the Office of the Director-General of the IPO which
was docketed as Appeal No. 10-2004-0002. On December 23, 2004, it also filed with the Court of
Appeals a “Motion to Withdraw Petition; Alternatively, Memorandum of the Petition for Certiorari”
in CA-G.R. SP No. 71597, which was granted in a resolution dated February 17, 2005.
On December 20, 2004, the Director-General of the IPO rendered a decision15 in favor of PMSI, the
dispositive portion of which states:
WHEREFORE, premises considered, the instant appeal is hereby GRANTED. Accordingly, Decision
No. 2003-01 dated 22 December 2003 of the Director of Bureau of Legal Affairs is hereby
REVERSED and SET ASIDE.
Let a copy of this Decision be furnished the Director of the Bureau of Legal Affairs for appropriate
action, and the records be returned to her for proper disposition. The Documentation, Information
and Technology Transfer Bureau is also given a copy for library and reference purposes.
SO ORDERED.16
Thus, ABS-CBN filed a petition for review with prayer for issuance of a temporary restraining order
and writ of preliminary injunction with the Court of Appeals, which was docketed as CA-G.R. SP No.
88092.
On July 18, 2005, the Court of Appeals issued a temporary restraining order. Thereafter, ABS-CBN
filed a petition for contempt against PMSI for continuing to rebroadcast Channels 2 and 23 despite
the restraining order. The case was docketed as CA- G.R. SP No. 90762.
On November 14, 2005, the Court of Appeals ordered the consolidation of CA-G.R. SP Nos. 88092
and 90762.
In the assailed Decision dated July 12, 2006, the Court of Appeals sustained the findings of the
Director-General of the IPO and dismissed both petitions filed by ABS-CBN.17
ABS-CBN’s motion for reconsideration was denied, hence, this petition.
ABS-CBN contends that PMSI’s unauthorized rebroadcasting of Channels 2 and 23 is an
infringement of its broadcasting rights and copyright under the Intellectual Property Code (IP
Code);18that Memorandum Circular No. 04-08-88 excludes DTH satellite television operators; that
the Court of Appeals’ interpretation of the must-carry rule violates Section 9 of Article III19 of the
Constitution because it allows the taking of property for public use without payment of just
compensation; that the Court of Appeals erred in dismissing the petition for contempt docketed as
CA-G.R. SP No. 90762 without requiring respondents to file comment.
Respondents, on the other hand, argue that PMSI’s rebroadcasting of Channels 2 and 23 is
sanctioned by Memorandum Circular No. 04-08-88; that the must-carry rule under the
Memorandum Circular is a valid exercise of police power; and that the Court of Appeals correctly
dismissed CA-G.R. SP No. 90762 since it found no need to exercise its power of contempt.
After a careful review of the facts and records of this case, we affirm the findings of the Director-
General of the IPO and the Court of Appeals.
There is no merit in ABS-CBN’s contention that PMSI violated its broadcaster’s rights under Section
211 of the IP Code which provides in part:
Chapter XIV
BROADCASTING ORGANIZATIONS
Sec. 211. Scope of Right. - Subject to the provisions of Section 212, broadcasting organizations shall
enjoy the exclusive right to carry out, authorize or prevent any of the following acts:
211.1. The rebroadcasting of their broadcasts;
xxxx
Neither is PMSI guilty of infringement of ABS-CBN’s copyright under Section 177 of the IP Code
which states that copyright or economic rights shall consist of the exclusive right to carry out,
authorize or prevent the public performance of the work (Section 177.6), and other communication
to the public of the work (Section 177.7).20
Section 202.7 of the IP Code defines broadcasting as “the transmission by wireless means for the
public reception of sounds or of images or of representations thereof; such transmission by satellite
is also ‘broadcasting’ where the means for decrypting are provided to the public by the broadcasting
organization or with its consent.”
On the other hand, rebroadcasting as defined in Article 3(g) of the International Convention for the
Protection of Performers, Producers of Phonograms and Broadcasting Organizations, otherwise
known as the 1961 Rome Convention, of which the Republic of the Philippines is a signatory, 21 is
“the simultaneous broadcasting by one broadcasting organization of the broadcast of another
broadcasting organization.”
The Director-General of the IPO correctly found that PMSI is not engaged in rebroadcasting and thus
cannot be considered to have infringed ABS-CBN’s broadcasting rights and copyright, thus:
That the Appellant’s [herein respondent PMSI] subscribers are able to view Appellee’s [herein
petitioner ABS-CBN] programs (Channels 2 and 23) at the same time that the latter is broadcasting
the same is undisputed. The question however is, would the Appellant in doing so be considered
engaged in broadcasting. Section 202.7 of the IP Code states that broadcasting means
“the transmission by wireless means for the public reception of sounds or of images or of
representations thereof; such transmission by satellite is also ‘broadcasting’ where the means for
decrypting are provided to the public by the broadcasting organization or with its consent.”
Section 202.7 of the IP Code, thus, provides two instances wherein there is broadcasting, to wit:
1. The transmission by wireless means for the public reception of sounds or of
images or of representations thereof; and
2. The transmission by satellite for the public reception of sounds or of images
or of representations thereof where the means for decrypting are provided to
the public by the broadcasting organization or with its consent.
It is under the second category that Appellant’s DTH satellite television service must be examined
since it is satellite-based. The elements of such category are as follows:
1. There is transmission of sounds or images or of representations thereof;
2. The transmission is through satellite;
3. The transmission is for public reception; and
4. The means for decrypting are provided to the public by the broadcasting
organization or with its consent.
It is only the presence of all the above elements can a determination that the DTH is broadcasting
and consequently, rebroadcasting Appellee’s signals in violation of Sections 211 and 177 of the IP
Code, may be arrived at.
Accordingly, this Office is of the view that the transmission contemplated under Section 202.7 of the
IP Code presupposes that the origin of the signals is the broadcaster. Hence, a program that is
broadcasted is attributed to the broadcaster. In the same manner, the rebroadcasted program is
attributed to the rebroadcaster.
In the case at hand, Appellant is not the origin nor does it claim to be the origin of the programs
broadcasted by the Appellee. Appellant did not make and transmit on its own but merely carried the
existing signals of the Appellee. When Appellant’s subscribers view Appellee’s programs in Channels
2 and 23, they know that the origin thereof was the Appellee.
Aptly, it is imperative to discern the nature of broadcasting. When a broadcaster transmits, the
signals are scattered or dispersed in the air. Anybody may pick-up these signals. There is no
restriction as to its number, type or class of recipients. To receive the signals, one is not required to
subscribe or to pay any fee. One only has to have a receiver, and in case of television signals, a
television set, and to tune-in to the right channel/frequency. The definition of broadcasting, wherein
it is required that the transmission is wireless, all the more supports this discussion. Apparently, the
undiscriminating dispersal of signals in the air is possible only through wireless means. The use of
wire in transmitting signals, such as cable television, limits the recipients to those who are
connected. Unlike wireless transmissions, in wire-based transmissions, it is not enough that one
wants to be connected and possesses the equipment. The service provider, such as cable television
companies may choose its subscribers.
The only limitation to such dispersal of signals in the air is the technical capacity of the transmitters
and other equipment employed by the broadcaster. While the broadcaster may use a less powerful
transmitter to limit its coverage, this is merely a business strategy or decision and not an inherent
limitation when transmission is through cable.
Accordingly, the nature of broadcasting is to scatter the signals in its widest area of coverage as
possible. On this score, it may be said that making public means that accessibility is
undiscriminating as long as it [is] within the range of the transmitter and equipment of the
broadcaster. That the medium through which the Appellant carries the Appellee’s signal, that is via
satellite, does not diminish the fact that it operates and functions as a cable television. It remains
that the Appellant’s transmission of signals via its DTH satellite television service cannot be Thus, while the Rome Convention gives broadcasting organizations the right to authorize or
considered within the purview of broadcasting. x x x prohibit the rebroadcasting of its broadcast, however, this protection does not extend to cable
retransmission. The retransmission of ABS-CBN’s signals by PMSI – which functions essentially as a
cable television – does not therefore constitute rebroadcasting in violation of the former’s
xxxx
intellectual property rights under the IP Code.

This Office also finds no evidence on record showing that the Appellant has provided decrypting
It must be emphasized that the law on copyright is not absolute. The IP Code provides that:
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. Sec. 184. Limitations on Copyright. -

Accordingly, this Office finds that there is no rebroadcasting on the part of the Appellant of the 184.1. Notwithstanding the provisions of Chapter V, the following acts shall not constitute
Appellee’s programs on Channels 2 and 23, as defined under the Rome Convention. 22 infringement of copyright:

Under the Rome Convention, rebroadcasting is “the simultaneous broadcasting by one broadcasting xxxx
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
(h) The use made of a work by or under the direction or control of the Government, by the National
organizations as “entities that take the financial and editorial responsibility for the selection and
Library or by educational, scientific or professional institutions where such use is in the public
arrangement of, and investment in, the transmitted content.”24 Evidently, PMSI would not qualify as
interest and is compatible with fair use;
a broadcasting organization because it does not have the aforementioned responsibilities imposed
upon broadcasting organizations, such as ABS-CBN.
The carriage of ABS-CBN’s signals by virtue of the must-carry rule in Memorandum Circular No. 04-
08-88 is under the direction and control of the government though the NTC which is vested with
ABS-CBN creates and transmits its own signals; PMSI merely carries such signals which the viewers
exclusive jurisdiction to supervise, regulate and control telecommunications and broadcast
receive in its unaltered form. PMSI does not produce, select, or determine the programs to be shown
services/facilities in the Philippines.26 The imposition of the must-carry rule is within the NTC’s
in Channels 2 and 23. Likewise, it does not pass itself off as the origin or author of such programs.
power to promulgate rules and regulations, as public safety and interest may require, to encourage
Insofar as Channels 2 and 23 are concerned, PMSI merely retransmits the same in accordance with
a larger and more effective use of communications, radio and television broadcasting facilities, and
Memorandum Circular 04-08-88. With regard to its premium channels, it buys the channels from
to maintain effective competition among private entities in these activities whenever the
content providers and transmits on an as-is basis to its viewers. Clearly, PMSI does not perform the
Commission finds it reasonably feasible.27 As correctly observed by the Director-General of the IPO:
functions of a broadcasting organization; thus, it cannot be said that it is engaged in rebroadcasting
Channels 2 and 23.
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]
The Director-General of the IPO and the Court of Appeals also correctly found that PMSI’s services
that the “Must-Carry Rule” is in consonance with the principles and objectives underlying Executive
are similar to a cable television system because the services it renders fall under cable
Order No. 436,28 to wit:
“retransmission,” as described in the Working Paper, to wit:

The Filipino people must be given wider access to more sources of news, information, education,
(G) Cable Retransmission
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
47. When a radio or television program is being broadcast, it can be retransmitted to new audiences and enhance their socio-economic growth:
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
WHEREAS, cable television (CATV) systems could support or supplement the services provided by
building complexes. With improvements in technology, cable operators now often receive signals
television broadcast facilities, local and overseas, as the national information highway to the
from satellites before retransmitting them in an unaltered form to their subscribers through cable.
countryside.29

48. In principle, cable retransmission can be either simultaneous with the broadcast over-the-air or
The Court of Appeals likewise correctly observed that:
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 [T]he very intent and spirit of the NTC Circular will prevent a situation whereby station owners and
transmissions which are both simultaneous and unaltered. 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,
49. The Rome Convention does not grant rights against unauthorized cable retransmission. Without
private respondent and other TV station owners, shall provide at all times sound and balanced
such a right, cable operators can retransmit both domestic and foreign over the air broadcasts
programming and assist in the functions of public information and education.
simultaneously to their subscribers without permission from the broadcasting organizations or
other rightholders and without obligation to pay remuneration. 25 (Emphasis added)
This is for the first time that we have a structure that works to accomplish explicit state policy
goals.30
Indeed, intellectual property protection is merely a means towards the end of making society
benefit from the creation of its men and women of talent and genius. This is the essence of
intellectual property laws, and it explains why certain products of ingenuity that are concealed from
the public are outside the pale of protection afforded by the law. It also explains why the author or
the creator enjoys no more rights than are consistent with public welfare. 31
Further, as correctly observed by the Court of Appeals, the must-carry rule as well as the legislative
franchises granted to both ABS-CBN and PMSI are in consonance with state policies enshrined in the
Constitution, specifically Sections 9,32 17,33 and 2434 of Article II on the Declaration of Principles and
State Policies.35
ABS-CBN was granted a legislative franchise under Republic Act No. 7966, Section 1 of which
authorizes it “to construct, operate and maintain, for commercial purposes and in the public
interest, television and radio broadcasting in and throughout the Philippines x x x.” Section 4 thereof
mandates that it “shall provide adequate public service time to enable the government, through the
said broadcasting stations, to reach the population on important public issues; provide at all times
sound and balanced programming; promote public participation such as in community
programming; assist in the functions of public information and education x x x.”
PMSI was likewise granted a legislative franchise under Republic Act No. 8630, Section 4 of which
similarly states that it “shall provide adequate public service time to enable the government,
through the said broadcasting stations, to reach the population on important public issues; provide
at all times sound and balanced programming; promote public participation such as in community
programming; assist in the functions of public information and education x x x.” Section 5,
paragraph 2 of the same law provides that “the radio spectrum is a finite resource that is a part of
the national patrimony and the use thereof is a privilege conferred upon the grantee by the State
and may be withdrawn anytime, after due process.”
In Telecom. & Broadcast Attys. of the Phils., Inc. v. COMELEC,36 the Court held that a franchise is a
mere privilege which may be reasonably burdened with some form of public service. Thus:
All broadcasting, whether by radio or by television stations, is licensed by the government. Airwave
frequencies have to be allocated as there are more individuals who want to broadcast than there are
frequencies to assign. A franchise is thus a privilege subject, among other things, to amendment by
Congress in accordance with the constitutional provision that “any such franchise or right granted . .
. shall be subject to amendment, alteration or repeal by the Congress when the common good so
requires.”
xxxx
Indeed, provisions for COMELEC Time have been made by amendment of the franchises of radio and
television broadcast stations and, until the present case was brought, such provisions had not been
thought of as taking property without just compensation. Art. XII, §11 of the Constitution authorizes
the amendment of franchises for “the common good.” What better measure can be conceived for the
common good than one for free air time for the benefit not only of candidates but even more of the
public, particularly the voters, so that they will be fully informed of the issues in an election? “[I]t is
the right of the viewers and listeners, not the right of the broadcasters, which is paramount.”
Nor indeed can there be any constitutional objection to the requirement that broadcast stations give
free air time. Even in the United States, there are responsible scholars who believe that government
controls on broadcast media can constitutionally be instituted to ensure diversity of views and
attention to public affairs to further the system of free expression. For this purpose, broadcast
stations may be required to give free air time to candidates in an election. Thus, Professor Cass R.
Sunstein of the University of Chicago Law School, in urging reforms in regulations affecting the
broadcast industry, writes:
xxxx
In truth, radio and television broadcasting companies, which are given franchises, do not own the
airwaves and frequencies through which they transmit broadcast signals and images. They are
merely given the temporary privilege of using them. Since a franchise is a mere privilege, the
exercise of the privilege may reasonably be burdened with the performance by the grantee of some
form of public service. x x x37
There is likewise no merit to ABS-CBN’s claim that PMSI’s carriage of its signals is for a commercial
purpose; that its being the country’s top broadcasting company, the availability of its signals
allegedly enhances PMSI’s attractiveness to potential customers; 38 or that the unauthorized carriage
of its signals by PMSI has created competition between its Metro Manila and regional stations.
ABS-CBN presented no substantial evidence to prove that PMSI carried its signals for profit; or that
such carriage adversely affected the business operations of its regional stations. Except for the
testimonies of its witnesses,[39] no studies, statistical data or information have been submitted in
evidence.
Administrative charges cannot be based on mere speculation or conjecture. The complainant has
the burden of proving by substantial evidence the allegations in the complaint. 40 Mere allegation is
not evidence, and is not equivalent to proof.41
Anyone in the country who owns a television set and antenna can receive ABS-CBN’s signals for free.
Other broadcasting organizations with free-to-air signals such as GMA-7, RPN-9, ABC-5, and IBC-13
can likewise be accessed for free. No payment is required to view the said 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, PMSI’s carriage of Channels 2 and 23 is material in arriving at the ratings and audience
share of ABS-CBN and its programs. These ratings help commercial advertisers and producers
decide whether to buy airtime from the network. Thus, the must-carry rule is actually advantageous
to the broadcasting networks because it provides them with increased viewership which attracts
commercial advertisers and producers.
On the other hand, the carriage of free-to-air signals imposes a burden to cable and DTH television
providers such as PMSI. PMSI uses none of ABS-CBN’s resources or equipment and carries the
signals and shoulders the costs without any recourse of charging. 44 Moreover, such carriage of
signals takes up channel space which can otherwise be utilized for other premium paid channels.
There is no merit to ABS-CBN’s argument that PMSI’s carriage of Channels 2 and 23 resulted in
competition between its Metro Manila and regional stations. ABS-CBN is free to decide to pattern its
regional programming in accordance with perceived demands of the region; however, it cannot
impose this kind of programming on the regional viewers who are also entitled to the free-to-air
channels. It must be emphasized that, as a national broadcasting organization, one of ABS-CBN’s
responsibilities is to scatter its signals to the widest area of coverage as possible. That it should limit
its signal reach for the sole purpose of gaining profit for its regional stations undermines public
interest and deprives the viewers of their right to access to information.
Indeed, television is a business; however, the welfare of the people must not be sacrificed in the
pursuit of profit. The right of the viewers and listeners to the most diverse choice of programs
available is paramount.45 The Director-General correctly observed, thus:
The “Must-Carry Rule” favors both broadcasting organizations and the public. It prevents cable
television companies from excluding broadcasting organization especially in those places not
reached by signal. Also, the rule prevents cable television companies from depriving viewers in far-
flung areas the enjoyment of programs available to city viewers. In fact, this Office finds the rule
more burdensome on the part of the cable television companies. The latter carries the television
signals and shoulders the costs without any recourse of charging. On the other hand, the signals that
are carried by cable television companies are dispersed and scattered by the television stations and
anybody with a television set is free to pick them up.
With its enormous resources and vaunted technological capabilities, Appellee’s [herein petitioner
ABS-CBN] broadcast signals can reach almost every corner of the archipelago. That in spite of such
capacity, it chooses to maintain regional stations, is a business decision. That the “Must-Carry Rule”
adversely affects the profitability of maintaining such regional stations since there will be
competition between them and its Metro Manila station is speculative and an attempt to extrapolate
the effects of the rule. As discussed above, Appellant’s DTH satellite television services is of limited
subscription. There was not even a showing on part of the Appellee the number of Appellant’s
subscribers in one region as compared to non-subscribing television owners. In any event, if this
Office is to engage in conjecture, such competition between the regional stations and the Metro
Manila station will benefit the public as such competition will most likely result in the production of
better television programs.”46
areas, thereby enriching the lives of the rest of the population through the dissemination of social,
economic, educational information and cultural programs;
Whereas, the national government supports the promotes the orderly growth of the Cable
Television industry within the framework of a regulated fee enterprise, which is a hallmark of a
democratic society;
Whereas, public interest so requires that monopolies in commercial mass media shall be regulated
or prohibited, hence, to achieve the same, the cable TV industry is made part of the broadcast media;
Whereas, pursuant to Act 3846 as amended and Executive Order 205 granting the National
Telecommunications Commission the authority to set down rules and regulations in order to
protect the public and promote the general welfare, the National Telecommunications Commission
hereby promulgates the following rules and regulations on Cable Television Systems;
The policy of the Memorandum Circular is to carry improved signals in remote areas for the good of
the general public and to promote dissemination of information. In line with this policy, it is clear
that DTH television should be deemed covered by the Memorandum Circular. Notwithstanding the
different technologies employed, both DTH and cable television have the ability to carry improved
signals and promote dissemination of information because they operate and function in the same
way.
In its December 20, 2002 letter,50 the NTC explained that both DTH and cable television services are
of a similar nature, the only difference being the medium of delivering such services. They can carry
broadcast signals to the remote areas and possess the capability to enrich the lives of the residents
thereof through the dissemination of social, economic, educational information and cultural
programs. Consequently, while the Memorandum Circular refers to cable television, it should be
understood as to include DTH television which provides essentially the same services.
In Eastern Telecommunications Philippines, Inc. v. International Communication Corporation,51 we
held:

The NTC, being the government agency entrusted with the regulation of activities coming under its
All told, we find that the Court of Appeals correctly upheld the decision of the IPO Director-General
special and technical forte, and possessing the necessary rule-making power to implement its
that PMSI did not infringe on ABS-CBN’s intellectual property rights under the IP Code. The findings
objectives, is in the best position to interpret its own rules, regulations and guidelines. The Court
of facts of administrative bodies charged with their specific field of expertise, are afforded great
has consistently yielded and accorded great respect to the interpretation by administrative agencies
weight by the courts, and in the absence of substantial showing that such findings are made from an
of their own rules unless there is an error of law, abuse of power, lack of jurisdiction or grave abuse
erroneous estimation of the evidence presented, they are conclusive, and in the interest of stability
of discretion clearly conflicting with the letter and spirit of the law.52
of the governmental structure, should not be disturbed.47

With regard to the issue of the constitutionality of the must-carry rule, the Court finds that its
Moreover, the factual findings of the Court of Appeals are conclusive on the parties and are not
resolution is not necessary in the disposition of the instant case. One of the essential requisites for a
reviewable by the Supreme Court. They carry even more weight when the Court of Appeals affirms
successful judicial inquiry into constitutional questions is that the resolution of the constitutional
the factual findings of a lower fact-finding body,48 as in the instant case.
question must be necessary in deciding the case.53 In Spouses Mirasol v. Court of Appeals,54 we held:

There is likewise no merit to ABS-CBN’s contention that the Memorandum Circular excludes from
As a rule, the courts will not resolve the constitutionality of a law, if the controversy can be settled
its coverage DTH television services such as those provided by PMSI. Section 6.2 of the
on other grounds. The policy of the courts is to avoid ruling on constitutional questions and to
Memorandum Circular requires all cable television system operators operating in a community
presume that the acts of the political departments are valid, absent a clear and unmistakable
within Grade “A” or “B” contours to carry the television signals of the authorized television
showing to the contrary. To doubt is to sustain. This presumption is based on the doctrine of
broadcast stations.49 The rationale behind its issuance can be found in the whereas clauses which
separation of powers. This means that the measure had first been carefully studied by the legislative
state:
and executive departments and found to be in accord with the Constitution before it was finally
enacted and approved.55
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
The instant case was instituted for violation of the IP Code and infringement of ABS-CBN’s Property Office and dismissing the petitions filed by ABS-CBN Broadcasting Corporation, and the
broadcasting rights and copyright, which can be resolved without going into the constitutionality of December 11, 2006 Resolution denying the motion for reconsideration, are AFFIRMED.
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
SO ORDERED.
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 In Philippine Veterans Bank v. Court of Appeals,60 we
held:

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

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

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

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

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

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
G.R. No. 195956 March 11, 2015 News Network (CNN). It received a live video feed of the coverage of Angelo dela Cruz’s arrival from
Reuters.12
ABS-CBN CORPORATION, Petitioner,
vs. GMA-7 immediately carried the live news feed in its program "Flash Report," together with its live
FELIPE GOZON, GILBERTO R. DUAVIT, JR., MARISSA L. FLORES, JESSICA A. SORO, GRACE DELA broadcast.13Allegedly, GMA-7 did not receive any notice or was not aware that Reuters was airing
PENA-REYES, JOHN OLIVER T. MANALASTAS, JOHN DOES AND JANE DOES, Respondents. 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
DECISION
On August 13, 2004, ABS-CBN filed the Complaint for copyright infringement under Sections
17716 and 21117 of the Intellectual Property Code.18
LEONEN, J.:

On December 3, 2004, Assistant City Prosecutor Dindo Venturanza issued the Resolution 19 finding
The main issue in this case is whether there is probable cause to charge respondents with
probable cause to indict Dela Peña-Reyes and Manalastas.20 Consequently, the Information21 for
infringement under Republic Act No. 8293, otherwise known as the Intellectual Property Code. The
violation of the Intellectual Property Code was filed on December 17, 2004. It reads:
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 That on or about the 22nd of July 2004, in Quezon City, Philippines, the above-named accused,
good faith. 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
ABS-CBN Corporation (ABS-CBN) filed the Petition for Review on Certiorari1 to assail the November
footage of the arrival of Angelo [d]ela Cruz at the Ninoy Aquino International Airport of which ABS-
9, 2010 Decision2 and the March 3, 2011 Resolution3 of the Court of Appeals. The Court of Appeals
CBN holds the exclusive ownership and copyright by then and there using, airing, and broadcasting
reinstated the Department of Justice Resolution dated August 1, 2005 that ordered the withdrawal
the said footage in its news program "FLASH REPORT" without first obtaining the consent or
of the Information finding probable cause for respondents’ violation of Sections 177 4 and 2115 of the
authority of said copyright owner, to their damage and prejudice.
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 Contrary to law.22
(Soho), Director for News; Grace Dela Peña-Reyes (Dela Peña-Reyes), Head of News and Public
Affairs; John Oliver Manalastas (Manalastas), Program Manager; and others.
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.
The controversy arose from GMA-7’s news coverage on the homecoming of Filipino overseas Gonzalez (Secretary Gonzalez) ruled in favor of respondents and held that good faith may be raised
worker and hostage victim Angelo dela Cruz on July 22, 2004. As summarized by the Court of as a defense in the case.24 The dispositive portion of the Resolution reads:
Appeals:
WHEREFORE, THE PETITION FOR REVIEW FILED BY GMA-7 in I.S. No. 04-10458 is considered
Overseas Filipino worker Angelo dela Cruz was kidnapped by Iraqi militants and as a condition for meritorious and is hereby GRANTED. This case is hereby Dismissed, the resolution of the City
his release, a demand was made for the withdrawal of Filipino troops in Iraq. After negotiations, he Prosecutor of Quezon City is hereby reversed and the same is ordered to withdraw the information
was released by his captors and was scheduled to return to the country in the afternoon of 22 July if any and report action taken to this office within ten (10) days.25 (Emphasis in the original)
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
Both parties moved for reconsideration of the Gonzalez Resolution. 26

ABS-CBN "conducted live audio-video coverage of and broadcasted the arrival of Angelo dela Cruz at
Meanwhile, on January 19, 2005, the trial court granted the Motion to Suspend Proceedings filed
the Ninoy Aquino International Airport (NAIA) and the subsequent press conference." 8 ABS-CBN
earlier by Dela Peña-Reyes and Manalastas.27 The trial court Order reads:
allowed Reuters Television Service (Reuters) to air the footages it had taken earlier under a special
embargo agreement.9
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
ABS-CBN alleged that under the special embargo agreement, any of the footages it took would be for
the Rules of Criminal Procedure, once a petition for review is filed with the Department of Justice, a
the "use of Reuter’s international subscribers only, and shall be considered and treated by Reuters
suspension of the criminal proceedings may be allowed by the court.
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
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,
GMA-7, to which Gozon, Duavit, Jr., Flores, Soho, Dela Peña-Reyes, and Manalastas are connected,
2005, the date the petition was filed with the Department of Justice. The arraignment of the accused
"assigned and stationed news reporters and technical men at the NAIA for its live broadcast and
on February 1, 2005 is accordingly cancelled. Let the arraignment be rescheduled to March 8, 2005
non-live news coverage of the arrival of dela Cruz."11 GMA-7 subscribes to both Reuters and Cable
at 8:30 a.m. The accused through counsel are notified in open court.
SO ORDERED.28
On June 29, 2010, Department of Justice Acting Secretary Alberto C. Agra (Secretary Agra) issued the
Resolution (Agra Resolution) that reversed the Gonzalez Resolution and found probable cause to
charge Dela Peña-Reyes and Manalastas for violation of the Intellectual Property Code.29 Secretary
Agra also found probable cause to indict Gozon, Duavit, Jr., Flores, and Soho for the same
violation.30 He ruled that:
[w]hile good faith may be a defense in copyright infringement, the same is a disputable presumption
that must be proven in a full-blown trial. Disputable presumptions may be contradicted and
overcome by other evidence. Thus, a full-blown trial is the proper venue where facts, issues and
laws are evaluated and considered. The very purpose of trial is to allow a party to present evidence
to overcome the disputable presumptions involved.31
them from criminal liability under the Code. While the Intellectual Property Code is a special law,
and thus generally categorized as malum prohibitum, it bears to stress that the provisions of the
Code itself do not ipso facto penalize a person or entity for copyright infringement by the mere fact
that one had used a copyrighted work or material.
Certainly so, in the exercise of one’s moral and economic or copyrights, the very provisions of Part
IV of the Intellectual Property Code provide for the scope and limitations on copyright protection
under Section 184 and in fact permit fair use of copyrighted work under Section 185. With the
aforesaid statutory limitations on one’s economic and copyrights and the allowable instances where
the other persons can legally use a copyrighted work, criminal culpability clearly attaches only
when the infringement had been knowingly and intentionally committed.35 (Emphasis supplied)
The dispositive portion of the Decision reads:

The dispositive portion of the Agra Resolution provides:
WHEREFORE, premises considered:
(a) The Motion for Reconsideration filed by appellees ABS-CBN Broadcasting Corporation
(ABS-CBN) of our Resolution promulgated on August 1, 2005 (Resolution No. 364, Series
of 2005) and the Petition for Review filed by complainant-appellant ABS-CBN in I.S. No.
04-10458 on April10, 2006, are GRANTED and the City Prosecutor of Quezon City is
hereby ordered to file the necessary Information for violation of Section 177 and 211 of
Republic Act No. 8293 against GMA-7. Felipe L. Gozon, Gilberto R. Duavit, Jr., Marissa
L.Flores, Jessica A. Soho, Grace Dela Pena-Reyes, John Oliver T. Manalastas[.]
....
SO ORDERED.32 (Emphasis in the original)
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;

Respondents assailed the Agra Resolution through the Petition for Certiorari with prayer for Second, whether news footage is copyrightable under the law;
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
Third, whether there was fair use of the broadcast material;
granted the temporary restraining order preventing the Department of Justice from enforcing the
Agra Resolution.33
Fourth, whether lack of knowledge that a material is copyrighted is a defense against copyright
infringement;
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 Fifth, whether good faith is a defense in a criminal prosecution for violation of the Intellectual
infringement, the Court of Appeals said: Property Code; and

Surely, private respondent has a copyright of its news coverage. Seemingly, for airing said video Lastly, whether the Court of Appeals was correct in overturning Secretary Agra’s finding of probable
feed, petitioner GMA is liable under the provisions of the Intellectual Property Code, which was cause.
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
I
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 The trial court granted respondents’ Motion to Suspend Proceedings and deferred respondents Dela
Reuters and CNN. Peña-Reyes and Manalastas’ arraignment for 60 days in view of the Petition for Review filed before
the Department of Justice.
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 Rule 116, Section 11 (c) of the Rules of Criminal Procedure allows
the suspension of the accused’s arraignment in certain circumstances only:
SEC. 11. Suspension of arraignment.–Upon motion by the proper party, the arraignment shall be
suspended in the following cases:
(a) The accused appears to be suffering from an unsound mental condition which
effectively renders him unable to fully understand the charge against him and to plead
intelligently thereto. In such case, the court shall order his mental examination and, if
necessary, his confinement for such purpose;
(b) There exists a prejudicial question; and
(c) A petition for review of the resolution of the prosecutor is pending at either the
Department of Justice, or the Office of the President; provided, that the period of
suspension shall not exceed sixty (60) days counted from the filing of the petition with
the reviewing office. (12a) (Emphasis supplied)
In Samson v. Daway,39 this court acknowledged the applicability of Rule 116, Section (c) in a criminal
prosecution for infringement under the Intellectual Property Code. However, this court emphasized
the limits of the order of deferment under the Rule:
While the pendency of a petition for review is a ground for suspension of the arraignment, the . . .
provision limits the deferment of the arraignment to a period of 60 days reckoned from the filing of
the petition with the reviewing office. It follows, therefore, that after the expiration of said period,
the trial court is bound to arraign the accused or to deny the motion to defer arraignment. 40
We clarify that the suspension of the arraignment should always be within the limits allowed by law.
In Crespo v. Judge Mogul,41 this court outlined the effects of filing an information before the trial
court, which includes initiating a criminal action and giving this court "authority to hear and
determine the case":42
The preliminary investigation conducted by the fiscal for the purpose of determining whether a
prima facie case exists warranting the prosecution of the accused is terminated upon the filing of the
information in the proper court. In turn, as above stated, the filing of said information sets in motion
the criminal action against the accused in Court. Should the fiscal find it proper to conduct a
reinvestigation of the case, at such stage, the permission of the Court must be secured. After such
reinvestigation the finding and recommendations of the fiscal should be submitted to the Court for
appropriate action. While it is true that the fiscal has the quasi judicial discretion to determine
whether or not a criminal case should be filed in court or not, once the case had already been
brought to 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 Peña-Reyes and Manalastas’
arraignment after the 60-day period from the filing of the Petition for Review before the
Department of Justice on March 8, 2005. It was only on September 13, 2010 that the temporary
restraining order was issued by the Court of Appeals. The trial court erred when it did not act on the
criminal case during the interim period. It had full control and direction of the case. As Judge Mogul
reasoned in denying the motion to dismiss in Crespo, failure to proceed with the arraignment
"disregards the requirements of due process [and] erodes the Court’s independence and integrity." 46
II
According to ABS-CBN, the Court of Appeals erred in finding that: a motion for reconsideration was
not necessary before a petition for certiorari could be filed; the Department of Justice Secretary
committed errors of jurisdiction since the Agra Resolution was issued within its authority and in
accordance with settled laws and jurisprudence; and respondents were not liable for copyright
infringement.
In its assailed Decision, the Court of Appeals found that respondents committed a procedural error
when they failed to file a motion for reconsideration before filing the Petition for Certiorari.
However, the Court of Appeals held that a motion for reconsideration was unnecessary since the
Agra Resolution was a patent nullity and it would have been useless under the circumstances: Given
that a reading of the assailed Resolution and the instant records readily reveals errors of As argued by respondents, "[a] second motion for reconsideration would have been useless and
jurisdiction on the part of respondent Secretary, direct judicial recourse is warranted under the futile since the D[epartment] [of] J[ustice] had already passed upon the same issues
circumstances. Aside from the fact that said Resolution is a patent nullity having been issued in twice."57 Equally pressing under the circumstances was the need to resolve the matter, as the
grave abuse of discretion amounting to lack or excess of jurisdiction, the filing of a motion for Information’s filing would lead to respondents’ imminent arrest.58
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
Moreover, Department of Justice Department Circular No. 70 dated July 3, 2000, or the 2000 NPS
disposition of the petition a quo.47 (Emphasis in the original)
Rules on Appeal, provides that no second motion for reconsideration of the Department of Justice
Secretary’s resolution shall be entertained:
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
SECTION 13. Motion for reconsideration. The aggrieved party may file a motion for reconsideration
determination of probable cause.49However, grave abuse of discretion must be alleged.50
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
In Sanrio Company Limited v. Lim,51 this court stressed the prosecutor’s role in determining such service. No second or further motion for reconsideration shall be entertained.
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:
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
A prosecutor alone determines the sufficiency of evidence that will establish probable cause superfluous. Respondents were, therefore, correct in filing the Petition for Certiorari of the Agra
justifying the filing of a criminal information against the respondent. By way of exception, however, Resolution before the Court of Appeals.
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
III
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) The Court of Appeals ruled that Secretary Agra committed errors of jurisdiction, which then
required the grant of the writ of certiorari:
Grave abuse of discretion refers to:
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
such capricious and whimsical exercise of judgment as is equivalent to lack of jurisdiction. The
warranting the issuance of the writ of certiorari. Surely, probable cause cannot be had when the
abuse of discretion must be grave as where the power is exercised in an arbitrary or despotic
very provisions of the statute exculpates criminal liability in cases classified as fair use of
manner by reason of passion or personal hostility and must be so patent and gross as to amount to
copyrighted materials. The fact that they admittedly used the Reuters live video feed is not, as a
an evasion of positive duty or to a virtual refusal to perform the duty enjoined by or to act at all in
matter of course, tantamount to copyright infringement that would justify the filing of an
contemplation of law.53
information against the petitioners.59

Resorting to certiorari requires that there be there be "no appeal, or any plain, speedy, and adequate
Error of jurisdiction must be distinguished from error of judgment:
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- A line must be drawn between errors of judgment and errors of jurisdiction. An error of judgment is
examination of the legal and factual circumstances of the case."55 However, exceptions to the rule one which the court may commit in the exercise of its jurisdiction. An error of jurisdiction renders
exist: an order or judgment void or voidable. Errors of jurisdiction are reviewable on certiorari; errors of
judgment, only by appeal.60
(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 In People v. Hon. Sandiganbayan61:
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
An error of judgment is one which the court may commit in the exercise of its jurisdiction. An error
interests of the Government or of the petitioner or the subject matter of the action is perishable; (d)
of jurisdictionis one where the act complained of was issued by the court without or in excess of
where, under the circumstances, a motion for reconsideration would be useless; (e) where
jurisdiction, or with grave abuse of discretion, which is tantamount to lack or in excess of
petitioner was deprived of due process and there is extreme urgency for relief; (f) where, in a
jurisdiction and which error is correctible only by the extraordinary writ of certiorari. Certiorari
criminal case, relief from an order of arrest is urgent and the granting of such relief by the trial
will not be issued to cure errors of the trial court in its appreciation of the evidence of the parties, or
Court is improbable; (g) where the proceedings in the lower court are a nullity for lack of due
its conclusions anchored on the said findings and its conclusions of law.62 (Emphasis supplied)
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) This court has adopted a deferential attitude towards review of the executive’s finding of probable
cause.63 This is based "not only upon the respect for the investigatory and [prosecutorial] powers
granted by the Constitution to the executive department but upon practicality as well." 64 Review of
the Department of Justice Secretary’s decision or resolution will be allowed only when grave abuse
of discretion is alleged:
The full discretionary authority to determine probable cause in a preliminary investigation to
ascertain sufficient ground for the filing of information rests with the executive branch. Hence,
judicial review of the resolution of the Secretary of Justice is limited to a determination whether
there has been a grave abuse of discretion amounting to lack or excess of jurisdiction. Courts cannot
substitute the executive branch’s judgment.
....
It is only where the decision of the Justice Secretary is tainted with grave abuse of discretion
amounting to lack or excess of jurisdiction that the Court of Appeals may take cognizance of the case
in a petition for certiorari under Rule 65 of the Revised Rules of Civil Procedure. The Court of
Appeals decision may then be appealed to this Court by way of a petition for review on
certiorari.65 (Emphasis supplied, citations omitted)
In this case, it must be shown that Secretary Agra exceeded his authority when he reversed the
findings of Secretary Gonzalez. This court must determine whether there is probable cause to file an
information for copyright infringement under the Intellectual Property Code.
IV
Probable cause pertains to "such facts as are sufficient to engender a well-founded belief that a
crime has been committed and that respondent is probably guilty thereof." 66 Preliminary
investigation is the inquiry or proceeding to determine whether there is probable cause.67
In Webb v. De Leon,68 this court ruled that determination of probable cause during preliminary
investigation does not require trial-like evaluation of evidence since existence of probable cause
does not equate to guilt:
It ought to be emphasized that in determining probable cause, the average man weighs facts and
circumstances without resorting to the calibrations of our technical rules of evidence of which his
knowledge is nil. Rather, he relies on the calculus of common sense of which all reasonable men
have an abundance.
....
. . . A finding of probable cause merely binds over the suspect to stand trial. It is not a
pronouncement of guilt.69
In Reyes v. Pearlbank Securities, Inc.,70 finding probable cause is not equivalent to finding with
moral certainty that the accused committed the crime:
A finding of probable cause needs only to rest on evidence showing that more likely than not a crime
has been committed by the suspects. It need not be based on clear and convincing evidence of guilt,
not on evidence establishing guilt beyond reasonable doubt, and definitely not on evidence
establishing absolute certainty of guilt. In determining probable cause, the average man weighs facts
and circumstances without resorting to the calibrations of the rules of evidence of which he has no
technical knowledge. He relies on common sense.71
During preliminary investigation, a public prosecutor does not adjudicate on the parties’ rights,
obligations, or liabilities.72
In the recent case of Estrada v. Office of the Ombudsman, et al., 73 we reiterated Webb on the
determination of probable cause during preliminary investigation and traced the history of
probable cause as borrowed from American jurisprudence:
The purpose in determining probable cause is to make sure that the courts are not clogged with
weak cases that will only be dismissed, as well as to spare a person from the travails of a needless
prosecution.
....
. . . In the United States, from where we borrowed the concept of probable cause, the prevailing
definition of probable cause is this:
In dealing with probable cause, however, as the very name implies, we deal with probabilities.
These are not technical; they are the factual and practical considerations of everyday life on which
reasonable and prudent men, not legal technicians, act. The standard of proof is accordingly
correlative to what must be proved.
"The substance of all the definitions" of probable cause "is a reasonable ground for belief of guilt."
McCarthy v. De Armit, 99 Pa. St. 63, 69, quoted with approval in the Carroll opinion. 267 U. S. at 161.
And this "means less than evidence which would justify condemnation" or conviction, as Marshall, C.
J., said for the Court more than a century ago in Locke v. United States, 7 Cranch 339, 348. Since
Marshall’s time, at any rate, it has come to mean more than bare suspicion: Probable cause exists
where "the facts and circumstances within their [the officers’] knowledge and of which they had
reasonably trustworthy information [are] sufficient in themselves to warrant a man of reasonable
caution in the belief that" an offense has been or is being committed. Carroll v. United States, 267 U.
S. 132, 162.
These long-prevailing standards seek to safeguard citizens from rash and unreasonable
interferences with privacy and from unfounded charges of crime. They also seek to give fair leeway
for enforcing the law in the community’s protection. Because many situations which confront
officers in the course of executing their duties are more or less ambiguous, room must be allowed
for some mistakes on their part. But the mistakes must be those of reasonable men, acting on facts
leading sensibly to their conclusions of probability. The rule of probable cause is a practical, non
technical conception affording the best compromise that has been found for accommodating these
often opposing interests. Requiring more would unduly hamper law enforcement. To allow less
would be to leave law-abiding citizens at the mercy of the officers’ whim or caprice.
In the Philippines, there are four instances in the Revised Rules of Criminal Procedure where
probable cause is needed to be established:
(1) In Sections 1 and 3 of Rule 112: By the investigating officer, to determine whether
there is sufficient ground to engender a well-founded belief that a crime has been
committed and the respondent is probably guilty thereof, and should be held for trial. A
preliminary investigation is required before the filing of a complaint or information for an
offense where the penalty prescribed by law is at least four years, two months and one
day without regard to the fine;
 (2) In Sections 6 and 9 of Rule 112: By the judge, to determine whether a warrant of
arrest or a commitment order, if the accused has already been arrested, shall be issued
and that there is a necessity of placing the respondent under immediate custody in order
not to frustrate the ends of justice;
(3) In Section 5(b) of Rule 113:By a peace officer or a private person making a
warrantless arrest when an offense has just been committed, and he has probable cause
to believe based on personal knowledge of facts or circumstances that the person to be
arrested has committed it; and
(4) In Section 4 of Rule 126: By the judge, to determine whether a search warrant shall be
issued, and only upon probable cause in connection with one specific offense to be
determined personally by the judge after examination under oath or affirmation of the
complainant and the witnesses he may produce, and particularly describing the place to
be searched and the things to be seized which may be anywhere in the Philippines.
In all these instances, the evidence necessary to establish probable cause is based only on the
likelihood, or probability, of guilt.74
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 first was the Platonic meaning of a perfect exemplar or paradigm. The second, which probably has
ABS-CBN claims that news footage is subject to copyright and prohibited use of copyrighted
material is punishable under the Intellectual Property Code. It argues that the new footage is not a
"newsworthy event" but "merely an account of the arrival of Angelo dela Cruz in the Philippines —
the latter being the newsworthy event":76
To be clear, it is the event itself or the arrival of Angelo dela Cruz which is not copyrightable because
that is the newsworthy event. However, any footage created from the event itself, in this case the
arrival of Angelo dela Cruz, are intellectual creations which are copyrightable. Thus, the footage
created by ABS-CBN during the arrival of Angelo dela Cruz, which includes the statements of Dindo
Amparo, are copyrightable and protected by the laws on copyright.77
On the other hand, respondents argue that ABS-CBN’s news footage of Angelo dela Cruz’s arrival is
not copyrightable or subject to protection:
Certainly, the arrival of Angelo [d]ela Cruz, which aroused public attention and the consciousness of
the Filipino people with regard to their countrymen, OFWs working in foreign countries and how
the Philippine government responds to the issues concerning them, is "news". There is no ingenuity
or inventiveness added in the said news footage. The video footage of this "news" is not
copyrightable by any legal standard as facts of everyday life depicted in the news and items of press
information is part of the public domain.78 (Emphasis in the original)
The news footage is copyrightable.
The Intellectual Property Code is clear about the rights afforded to authors of various kinds of work.
Under the Code, "works are protected by the sole fact of their creation, irrespective of their mode or
form of expression, as well as of their content, quality and purpose." 79 These include "[a]udiovisual
works and cinematographic works and works produced by a process analogous to cinematography
or any process for making audiovisual recordings."80
Contrary to the old copyright law,81 the Intellectual Property Code does not require registration of
the work to fully recover in an infringement suit. Nevertheless, both copyright laws provide that
copyright for a work is acquired by an intellectual creator from the moment of creation. 82
It is true that under Section 175 of the Intellectual Property Code, "news of the day and other
miscellaneous facts having the character of mere items of press information" are considered
unprotected subject matter.83 However, the Code does not state that expression of the news of the
day, particularly when it underwent a creative process, is not entitled to protection.
An idea or event must be distinguished from the expression of that idea or event. An idea 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 God’s."
The word entered the French and English vernacular in the 1600s and possessed two meanings. The
its origin with Descartes, is of a mental concept or image or, more broadly, any object of the mind
when it is active. Objects of thought may exist independently. The sun exists (probably) before and
after you think of it. But it is also possible to think of things that have never existed, such as a
unicorn or Pegasus. John Locke defined ideas very comprehensively, to include: all objects of the
mind. Language was a way of translating the invisible, hidden ideas that make up a person’s
thoughts into the external, perceptible world of articulate sounds and visible written symbols that
others can understand.86 (Citations omitted) There is no one legal definition of "idea" in this
jurisdiction. The term "idea" is mentioned only once in the Intellectual Property Code.87 In Joaquin,
Jr. v. Drilon,88 a television format (i.e., a dating show format) is not copyrightable under Section 2 of
Presidential Decree No. 49;89 it is a mere concept:
P.D. No. 49, §2, in enumerating what are subject to copyright, refers to finished works and not to
concepts. The copyright does not extend to an idea, procedure, process, system, method of
operation, concept, principle, or discovery, regardless of the form in which it is described, explained,
illustrated, or embodied in such work. Thus, the new INTELLECTUAL PROPERTY CODE OF THE
PHILIPPINES provides:
SEC. 175. Unprotected Subject Matter.—Notwithstanding the provisions of Sections 172 and 173, no
protection shall extend, under this law, to any idea, procedure, system, method or operation,
concept, principle, discovery or mere data as such, even if they are expressed, explained, illustrated
or embodied in a work; news of the day and other miscellaneous facts having the character of mere
items of press information; or any official text of a legislative, administrative or legal nature, as well
as any official translation thereof.
What then is the subject matter of petitioners’ copyright? This Court is of the opinion that petitioner
BJPI’s copyright covers audio-visual recordings of each episode of Rhoda and Me, as falling within
the class of works mentioned in P.D. 49, §2(M),to wit:
Cinematographic works and works produced by a process analogous to cinematography or any
process for making audio-visual recordings;
The copyright does not extend to the general concept or format of its dating game show.
Accordingly, by the very nature of the subject of petitioner BJPI’s copyright, the investigating
prosecutor should have the opportunity to compare the videotapes of the two shows.
Mere description by words of the general format of the two dating game shows is insufficient; the
presentation of the master videotape in evidence was indispensable to the determination of the
existence of probable cause. As aptly observed by respondent Secretary of Justice:
A television show includes more than mere words can describe because it involves a whole
spectrum of visuals and effects, video and audio, such that no similarity or dissimilarity may be
found by merely describing the general copyright/format of both dating game shows. 90 (Emphasis
supplied, citations omitted)
Ideas can be either abstract or concrete.91 It is the concrete ideas that are generally referred to as
expression:
The words "abstract" and "concrete" arise in many cases dealing with the idea/expression
distinction. The Nichols court, for example, found that the defendant’s film did not infringe the
plaintiff’s play because it was "too generalized an abstraction from what plaintiff wrote . . . only a
part of her ideas." In Eichel v. Marcin, the court said that authors may exploit facts, experiences, field
of thought, and general ideas found in another’s work, "provided they do not substantially copy a
concrete form, in which the circumstances and ideas have been developed, arranged, and put into
shape." Judge Hand, in National Comics Publications, Inc. v. Fawcett Publications, Inc. said that "no
one infringes, unless he descends so far into what is concrete as to invade. . . ‘expression.’"
These cases seem to be distinguishing "abstract" ideas from "concrete" tangible embodiments of
these abstractions that may be termed expression. However, if the concrete form of a work means
more than the literal expression contained within it, it is difficult to determine what is meant by
"concrete." Webster's New Twentieth Century Dictionary of the English Language provides several
meanings for the word concrete. These include: "having a material, perceptible existence; of,
belonging to, or characterized by things or events that can be perceived by the senses; real; actual;"
and "referring to a particular; specific, not general or abstract."92
In Pearl & Dean (Phil.), Incorporated v. Shoemart, Incorporated, 93 this court, citing the American
case of Baker v. Selden, distinguished copyright from patents and illustrated how an idea or concept
is different from the expression of that idea:
In the oft-cited case of Baker vs. Selden, the United States Supreme Court held that only the
expression of an idea is protected by copyright, not the idea itself. In that case, the plaintiff held the
copyright of a book which expounded on a new accounting system he had developed. The
publication illustrated blank forms of ledgers utilized in such a system. The defendant reproduced
forms similar to those illustrated in the plaintiff’s copyrighted book. The US Supreme Court ruled
that:
"There is no doubt that a work on the subject of book-keeping, though only explanatory of well
known systems, may be the subject of a copyright; but, then, it is claimed only as a book. x x x But
there is a clear distinction between the books, as such, and the art, which it is, intended to illustrate.
The mere statement of the proposition is so evident that it requires hardly any argument to support
it. The same distinction may be predicated of every other art as well as that of bookkeeping.
A treatise on the composition and use of medicines, be they old or new; on the construction and use
of ploughs or watches or churns; or on the mixture and application of colors for painting or dyeing;
or on the mode of drawing lines to produce the effect of perspective, would be the subject of
copyright; but no one would contend that the copyright of the treatise would give the exclusive right
to the art or manufacture described therein. The copyright of the book, if not pirated from other
works, would be valid without regard to the novelty or want of novelty of its subject matter. The
novelty of the art or thing described or explained has nothing to do with the validity of the
copyright. To give to the author of the book an exclusive property in the art described therein, when
no examination of its novelty has ever been officially made, would be a surprise and a fraud upon
the public. That is the province of letters patent, not of copyright. The claim to an invention of
discovery of an art or manufacture must be subjected to the examination of the Patent Office before
an exclusive right therein can be obtained; and a patent from the government can only secure it.
The difference between the two things, letters patent and copyright, may be illustrated by reference
to the subjects just enumerated. Take the case of medicines. Certain mixtures are found to be of
great value in the healing art. If the discoverer writes and publishes a book on the subject (as
regular physicians generally do), he gains no exclusive right to the manufacture and sale of the
medicine; he gives that to the public. If he desires to acquire such exclusive right, he must obtain a
patent for the mixture as a new art, manufacture or composition of matter. He may copyright his
book, if he pleases; but that only secures to him the exclusive right of printing and publishing his
book. So of all other inventions or discoveries.
The copyright of a book on perspective, no matter how many drawings and illustrations it may
contain, gives no exclusive right to the modes of drawing described, though they may never have
been known or used before. By publishing the book without getting a patent for the art, the latter is
given to the public.
....
Now, whilst no one has a right to print or publish his book, or any material part thereof, as a book
intended to convey instruction in the art, any person may practice and use the art itself which he has
described and illustrated therein. The use of the art is a totally different thing from a publication of
the book explaining it. The copyright of a book on bookkeeping cannot secure the exclusive right to
make, sell and use account books prepared upon the plan set forth in such book. Whether the art
might or might not have been patented, is a question, which is not before us. It was not patented,
and is open and free to the use of the 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 177.2. Dramatization, translation, adaptation, abridgment, arrangement or other
copyrighted.97 Most of these cases focused on private individuals’ sale or resale of tapes of news transformation of the work;
broadcasts. Conflicting decisions were rendered by its courts. Noteworthy, however, is the District
Court’s pronouncement in Pacific & Southern Co. v. Duncan, 98 which involves a News Monitoring
177.3. The first public distribution of the original and each copy of the work by sale or
Service’s videotaping and sale of WXIA-TV’s news broadcasts:
other forms of transfer of ownership;

It is axiomatic that copyright protection does not extend to news "events" or the facts or ideas which
177.4. Rental of the original or a copy of an audiovisual or cinematographic work, a work
are the subject of news reports. Miller v. Universal City Studios, Inc., 650 F.2d 1365, 1368 (5th Cir.
embodied in a sound recording, a computer program, a compilation of data and other
1981); Wainwright Securities, Inc. v. Wall Street Transcript Corp., 558 F.2d 91, 95 (2d Cir. 1977),
materials or a musical work in graphic form, irrespective of the ownership of the original
cert. denied, 434 U.S. 1014, 98 S.Ct. 730, 54 L.Ed.2d 759 (1978). But it is equally well-settled that
or the copy which is the subject of the rental; (n)
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. 177.5. Public display of the original or a copy of the work;
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
177.6. Public performance of the work; and
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 177.7. Other communication to the public of the work.(Sec. 5, P. D. No. 49a) (Emphasis
Cos., 621 F.2d 57, 61 (2d Cir. 1980).99 (Emphasis supplied) supplied)

The idea/expression dichotomy has long been subject to debate in the field of copyright law.
Abolishing the dichotomy has been proposed, in that non-protectibility of ideas should be re-
examined, if not stricken, from decisions and the law:
If the underlying purpose of the copyright law is the dual one expressed by Lord Mansfield, the only
excuse for the continuance of the idea-expression test as a judicial standard for determining
protectibility would be that it was or could be a truly useful method of determining the proper
balance between the creator’s right to profit from his work and the public's right that the "progress
of the arts not be retarded."
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
. . . [A]s used in the present-day context[,] the dichotomy has little or no relationship to the policy
tape, of their broadcasts for the purpose of communication to the public of television
which it should effectuate. Indeed, all too often the sweeping language of the courts regarding the
broadcasts of the same; and
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
211.3. The use of such records for fresh transmissions or for fresh recording. (Sec. 52,
P.D. No. 49) (Emphasis supplied)
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 Section 212 of the Code provides:
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
CHAPTER XV
subject ABS-CBN’s footage to any editing of their own. The news footage did not undergo any
LIMITATIONS ON PROTECTION
transformation where there is a need to track elements of the original.

Section 212. Limitations on Rights. - Sections 203, 208 and 209 shall not apply where the acts
Having established the protectible nature of news footage, we now discuss the concomitant rights
referred to in those Sections are related to:
accorded to authors. The authors of a work are granted several rights in relation to it, including
copyright or economic rights:
212.1. The use by a natural person exclusively for his own personal purposes;
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 212.2. Using short excerpts for reporting current events;
following acts:
212.3. Use solely for the purpose of teaching or for scientific research; and
177.1. Reproduction of the work or substantial portion of the work;
 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-CBN’s copyright over the news footage:
Surely, private respondent has a copyright of its news coverage. Seemingly, for airing said video
feed, petitioner GMA is liable under the provisions of the Intellectual Property Code, which was
enacted purposely to protect copyright owners from infringement. 108
News as expressed in a video footage is entitled to copyright protection. Broadcasting organizations
have not only copyright on but also neighboring rights over their broadcasts. Copyrightability of a
work is different from fair use of a work for purposes of news reporting.
VI
ABS-CBN assails the Court of Appeals’ ruling that the footage shown by GMA-7 falls under the scope
of Section 212.2 and 212.4 of the Intellectual Property Code:
The evidence on record, as well as the discussions above, show that the footage used
by[respondents] could hardlybe characterized as a short excerpt, as it was aired over one and a half
minutes.
Furthermore, the footage used does not fall under the contemplation of Section 212.2 of the
Intellectual Property Code. A plain reading of the provision would reveal that copyrighted material
referred to in Section 212 are short portions of an artist’s performance under Section 203, or a
producer’s sound recordings under Sections 208 and 209. Section 212 does not refer to actual use of
video footage of another as its own.
The Angelo dela Cruz footage does not fall under the rule on Section 212.4 of the Intellectual ....
Property Code on fair use of the broadcast.
CHAPTER XV
.... LIMITATIONS ON PROTECTION

In determining fair use, several factors are considered, including the nature of the copyrighted Section 212. Limitations on Rights. - Sections 203, 208 and 209 shall not apply where the acts
work, and the amount and substantiality of the person used in relation to the copyrighted work as a referred to in those Sections are related to:
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 . . .
212.2. Using short excerpts for reporting current events;
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.
212.4. Fair use of the broadcast subject to the conditions under Section 185.(Sec. 44, P.D. No. 49a)
(Emphasis supplied)
Hence, [respondents] could not be considered as having used the Angelo dela Cruz [footage]
following the provisions on fair use.
The determination of what constitutes fair use depends on several factors. Section 185 of the
Intellectual Property Code states:
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 SECTION 185. Fair Use of a Copyrighted Work. —
apparent that the findings of the Honorable Court of Appeals are erroneous and based on wrong
assumptions.109 (Underscoring in the original)
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
On the other hand, respondents counter that GMA-7’s use of ABS-CBN’s news footage falls under fair infringement of copyright. . . . In determining whether the use made of a work in any particular case
use as defined in the Intellectual Property Code. Respondents, citing the Court of Appeals Decision, is fair use, the factors to be considered shall include:
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.
a. The purpose and character of the use, including whether such use is of a commercial
nature or is for non-profit educational purposes;
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
b. The nature of the copyrighted work;
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 c. The amount and substantiality of the portion used in relation to the copyrighted work
as a whole; and
Copyright protection is not absolute.112 The Intellectual Property Code provides the limitations on
copyright: 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
CHAPTER VIII
(2) minutes and 40 seconds.113 According to the Court of Appeals, the parties admitted
LIMITATIONS ON COPYRIGHT
that only five (5) seconds of the news footage was broadcasted by GMA-7.114

Section 184. Limitations on Copyright. - 184.1. Notwithstanding the provisions of Chapter V, the
following acts shall not constitute infringement of copyright:
....
This court defined fair use as "aprivilege to use the copyrighted material in a reasonable manner
without the consent of the copyright owner or as copying the theme or ideas rather than their
expression."115 Fair use is an exception to the copyright owner’s monopoly of the use of the work to
avoid stifling "the very creativity which that law is designed to foster."116

184.2. The provisions of this section shall be interpreted in such a way as to allow the work to be Determining fair use requires application of the four-factor test. Section 185 of the Intellectual
used in a manner which does not conflict with the normal exploitation of the work and does not Property Code lists four (4) factors to determine if there was fair use of a copyrighted work:
unreasonably prejudice the right holder's legitimate interests.
 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: 122 Once a news broadcast
has been transmitted, the broadcast becomes relatively worthless to the station. In the case of the
aerial broadcasters, advertising sales generate most of the profits derived from news reports.
Advertising rates are, in turn, governed by market share. Market share is determined by the number
of people watching a show at any particular time, relative to total viewers at that time. News is by
nature time-limited, and so re-broadcasts are generally of little worth because they draw few
viewers. Newscasts compete for market share by presenting their news in an appealing format that
will capture a loyal audience. Hence, the primary reason for copyrighting newscasts by broadcasters
would seem to be to prevent competing stations from rebroadcasting current news from the station
with the best coverage of a particular news item, thus misappropriating a portion of the market
share.
Of course, in the real world there are exceptions to this perfect economic view. However, there are
also many caveats with these exceptions. A common exception is that some stations rebroadcast the
news of others. The caveat is that generally, the two stations are not competing for market share.
CNN, for example, often makes news stories available to local broadcasters. First, the local
broadcaster is often not affiliated with a network (hence its need for more comprehensive
programming), confining any possible competition to a small geographical area. Second, the local
broadcaster is not in competition with CNN. Individuals who do not have cable TV (or a satellite dish
with decoder) cannot receive CNN; therefore there is no competition. . . . Third, CNN sells the right of
rebroadcast to the local stations. Ted Turner, owner of CNN, does not have First Amendment
freedom of access argument foremost on his mind. (Else he would give everyone free cable TV so
everyone could get CNN.) He is in the business for a profit. Giving away resources does not a profit
make.123 (Emphasis supplied)
The high value afforded to limited time periods is also seen in other media. In social media site
Instagram, users are allowed to post up to only 15 seconds of video. 124 In short-video sharing
website Vine,125 users are allowed a shorter period of six (6) seconds per post. The mobile
application 1 Second Everyday takes it further by capturing and stitching one (1) second of video
footage taken daily over a span of a certain period.126
Whether the alleged five-second footage may be considered fair use is a matter of defense. We
emphasize that the case involves determination of probable cause at the preliminary investigation
stage. Raising the defense of fair use does not automatically mean that no infringement was
committed. The investigating prosecutor has full discretion to evaluate the facts, allegations, and
evidence during preliminary investigation. Defenses raised during preliminary investigation are
subject to further proof and evaluation before the trial court. Given the insufficiency of available
evidence, determination of whether the Angelo dela Cruz footage is subject to fair use is better left
to the trial court where the proceedings are currently pending. GMA-7’s rebroadcast of ABS-CBN’s
news footage without the latter’s consent is not an issue. The mere act of rebroadcasting without
authority from the owner of the broadcast gives rise to the probability that a crime was committed
under the Intellectual Property Code.
VII
Respondents cannot invoke the defense of good faith to argue that no probable cause exists.
Respondents argue that copyright infringement is malum in se, in that "[c]opying alone is not what
is being prohibited, but its injurious effect which consists in the lifting from the copyright owners’
film or materials, that were the result of the latter’s creativity, work and productions and without
authority, reproduced, sold and circulated for commercial use to the detriment of the latter."127
Infringement under the Intellectual Property Code is malum prohibitum. The Intellectual Property
Code is a special law. Copyright is a statutory creation:
Copyright, in the strict sense of the term, is purely a statutory right. It is a new or independent right
granted by the statute, and not simply a pre-existing right regulated by the statute. Being a statutory
grant, the rights are only such as the statute confers, and may be obtained and enjoyed only with
respect to the subjects and by the persons, and on terms and conditions specified in the statute. 128
The general rule is that acts punished under a special law are malum prohibitum. 129 "An act which is
declared malum prohibitum, malice or criminal intent is completely immaterial." 130
In contrast, crimes mala in seconcern inherently immoral acts:
Not every criminal act, however, involves moral turpitude. It is for this reason that "as to what crime
involves moral turpitude, is for the Supreme Court to determine". In resolving the foregoing
question, the Court is guided by one of the general rules that crimes mala in se involve moral
turpitude, while crimes mala prohibita do not, the rationale of which was set forth in "Zari v. Flores,"
to wit:
It (moral turpitude) implies something immoral in itself, regardless of the fact that it is punishable
by law or not. It must not be merely mala prohibita, but the act itself must be inherently immoral.
The doing of the act itself, and not its prohibition by statute fixes the moral turpitude. Moral
turpitude does not, however, include such acts as are not of themselves immoral but whose illegality
lies in their being positively prohibited. (Emphasis supplied)
[These] guidelines nonetheless proved short of providing a clear cut solution, for in International
Rice Research Institute v. NLRC, the Court admitted that it cannot always be ascertained whether
moral turpitude does or does not exist by merely classifying a crime as malum in se or as malum
prohibitum. There are crimes which are mala in se and yet but rarely involve moral turpitude and
there are crimes which involve moral turpitude and are mala prohibita only. In the final analysis,
whether or not a crime involves moral turpitude is ultimately a question of fact and frequently
depends on all the circumstances surrounding the violation of the statue. 131 (Emphasis in the
original)
"Implicit in the concept of mala in se is that of mens rea."132 Mens reais defined as "the nonphysical
element which, combined with the act of the accused, makes up the crime charged. Most frequently
it is the criminal intent, or the guilty mind[.]"133
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 crime 137 — refers to the state of mind
beyond voluntariness. It is this intent that is being punished by crimes mala in se.
Unlike other jurisdictions that require intent for a criminal prosecution of copyright infringement,
the Philippines does not statutorily support good faith as a defense. Other jurisdictions provide in
their intellectual property codes or relevant laws that mens rea, whether express or implied, is an
element of criminal copyright infringement.138
In Canada, criminal offenses are categorized under three (3) kinds: "the full mens rea offence,
meaning the accused’s actual or subjective state of mind has to be proved; strict liability offences
where no mens rea has to be proved but the accused can avoid liability if he can prove he took all
reasonable steps to avoid the particular event; [and] absolute liability offences where Parliament
has made it clear that guilt follows proof of the prescribed act only."139 Because of the use of the
word "knowingly" in Canada’s Copyright Act, it has been held that copyright infringement is a full
mens rea offense.140
In the United States, willful intent is required for criminal copyright infringement. 141 Before the
passage of the No Electronic Theft Act, "civil copyright infringements were violations of criminal
copyright laws only if a defendant willfully infringed a copyright ‘for purposes of commercial
advantage or private financial gain.’"142 However, the No Electronic Theft Act now allows criminal
copyright infringement without the requirement of commercial gain. The infringing act may or may
not be for profit.143
There is a difference, however, between the required liability in civil copyright infringement and
that in criminal copyright infringement in the United States. Civil copyright infringement does not
require culpability and employs a strict liability regime144 where "lack of intention to infringe is not
a defense to an action for infringement."145
In the Philippines, the Intellectual Property Code, as amended, provides for the prosecution of
criminal actions for the following violations of intellectual property rights: Repetition of
Infringement of Patent (Section 84); Utility Model (Section 108); Industrial Design (Section 119);
Trademark Infringement (Section 155 in relation to Section 170); Unfair Competition (Section 168
in relation to Section 170); False Designations of Origin, False Description or Representation
(Section 169.1 in relation to Section 170); infringement of copyright, moral rights, performers’
rights, producers’ rights, and broadcasting rights (Section 177, 193, 203, 208 and 211 in relation to
Section 217); and other violations of intellectual property rights as may be defined by law.
The Intellectual Property Code requires strict liability for copyright infringement whether for a civil
action or a criminal prosecution; it does not require mens rea or culpa:146
SECTION 216. Remedies for Infringement. —
216.1. Any person infringing a right protected under this law shall be liable:
a. To an injunction restraining such infringement. The court may also order the
defendant to desist from an infringement, among others, to prevent the entry
into the channels of commerce of imported goods that involve an infringement,
immediately after customs clearance of such goods.
b. Pay to the copyright proprietor or his assigns or heirs such actual damages,
including legal costs and other expenses, as he may have incurred due to the
infringement as well as the profits the infringer may have made due to such
infringement, and in proving profits the plaintiff shall be required to prove
sales only and the defendant shall be required to prove every element of cost
which he claims, or, in lieu of actual damages and profits, such damages which
to the court shall appear to be just and shall not be regarded as penalty.
c. Deliver under oath, for impounding during the pendency of the action, upon
such terms and conditions as the court may prescribe, sales invoices and other
documents evidencing sales, all articles and their packaging alleged to infringe
a copyright and implements for making them.
d. Deliver under oath for destruction without any compensation all infringing
copies or devices, as well as all plates, molds, or other means for making such
infringing copies as the court may order.
 e. Such other terms and conditions, including the payment of moral and
exemplary damages, which the court may deem proper, wise and equitable and
the destruction of infringing copies of the work even in the event of acquittal in
a criminal case.
216.2. In an infringement action, the court shall also have the power to order the seizure
and impounding of any article which may serve as evidence in the court proceedings.
(Sec. 28, P.D. No. 49a)
SECTION 217. Criminal Penalties. — 217.1. Any person infringing any right secured by provisions of
Part IV of this Actor aiding or abetting such infringement shall be guilty of a crime punishable by:
a. Imprisonment of one (1) year to three (3) years plus a fine ranging from
Fifty thousand pesos (₱50,000) to One hundred fifty thousand pesos
(₱150,000) for the first offense.
b. Imprisonment of three (3) years and one (1) day to six (6) years plus a fine
ranging from One hundred fifty thousand pesos (₱150,000) to Five hundred
thousand pesos (₱500,000) for the second offense.
c. Imprisonment of six (6) years and one (1) day to nine (9) years plus a fine
ranging from Five hundred thousand pesos (₱500,000) to One million five
hundred thousand pesos (₱1,500,000) for the third and subsequent offenses.
d. In all cases, subsidiary imprisonment in cases of insolvency.
217.2. In determining the number of years of imprisonment and the amount of fine, the
court shall consider the value of the infringing materials that the defendant has produced
or manufactured and the damage that the copyright owner has suffered by reason of the
infringement.
217.3. Any person who at the time when copyright subsists in a work has in his
possession an article which he knows, or ought to know, to be an infringing copy of the
work for the purpose of: a. Selling, letting for hire, or by way of trade offering or exposing
for sale, or hire, the article;
b. Distributing the article for purpose of trade, or for any other purpose to an
extent that will prejudice the rights of the copyright owner in the work; or
c. Trade exhibit of the article in public, shall be guilty of an offense and shall be
liable on conviction to imprisonment and fine as above mentioned. (Sec. 29,
P.D. No. 49a) (Emphasis supplied)
The law is clear. Inasmuch as there is wisdom in prioritizing the flow and exchange of ideas as
opposed to rewarding the creator, it is the plain reading of the law in conjunction with the actions of
the legislature to which we defer. We have continuously "recognized the power of the legislature . . .
to forbid certain acts in a limited class of cases and to make their commission criminal without
regard to the intent of the doer. Such legislative enactments are based on the experience that
repressive measures which depend for their efficiency upon proof of the dealer’s knowledge or of
his intent are of little use and rarely accomplish their purposes."147
Respondents argue that live broadcast of news requires a different treatment in terms of good faith,
intent, and knowledge to commit infringement. To argue this point, they rely on the differences of
the media used in Habana et al. v. Robles, Columbia Pictures v. Court of Appeals, and this case:
Petitioner ABS-CBN argues that lack of notice that the Angelo dela Cruz was under embargo is not a
defense in copyright infringement and cites the case of Columbia Pictures vs. Court of Appeals and
Habana et al. vs. Robles(310 SCRA 511). However, these cases refer to film and literary work where
obviously there is "copying" from an existing material so that the copier knew that he is copying
from an existing material not owned by him. But, how could respondents know that what they are
"copying was not [theirs]" when they were not copying but merely receiving live video feed from
Reuters and CNN which they aired? What they knew and what they aired was the Reuters live video
feed and the CNN feed which GMA-7 is authorized to carry in its news broadcast, it being a
subscriber of these companies[.]
It is apt to stress that the subject of the alleged copyright infringement is not a film or literary work
but live broadcast of news footage. In a film or literary work, the infringer is confronted face to face
with the material he is allegedly copying and therefore knows, or is presumed to know, that what he
is copying is owned by another. Upon the other hand, in live broadcast, the alleged infringer is not
confronted with the fact that the material he airs or re-broadcasts is owned by another, and
therefore, he cannot be charged of knowledge of ownership of the material by another. This
specially obtains in the Angelo dela Cruz news footage which GMA-7 received from Reuters and
CNN. Reuters and CNN were beaming live videos from the coverage which GMA-7 received as a
subscriber and, in the exercise of its rights as a subscriber, GMA-7 picked up the live video and
simultaneously re-broadcast it. In simultaneously broadcasting the live video footage of Reuters,
GMA-7 did not copy the video footage of petitioner ABS-CBN[.]148 (Emphasis in the original)
Respondents’ arguments must fail.
Respondents are involved and experienced in the broadcasting business. They knew that there
would be consequences in carrying ABS-CBN’s footage in their broadcast. That is why GMA-7
allegedly cut the feed from Reuters upon seeing ABS-CBN’s ogo and reporter. To admit a different
treatment for broadcasts would mean abandonment of a broadcasting organization’s minimum
rights, including copyright on the broadcast material and the right against unauthorized
rebroadcast of copyrighted material. The nature of broadcast technology is precisely why related or
neighboring rights were created and developed. Carving out an exception for live broadcasts would
go against our commitments under relevant international treaties and agreements, which provide
for the same minimum rights.149
Contrary to respondents’ assertion, this court in Habana, 150 reiterating the ruling in Columbia
Pictures,151 ruled that lack of knowledge of infringement is not a valid defense. Habana and
Columbia Pictures may have different factual scenarios from this case, but their rulings on copyright
infringement are analogous. In Habana, petitioners were the authors and copyright owners of
English textbooks and workbooks. The case was anchored on the protection of literary and artistic
creations such as books. In Columbia Pictures, video tapes of copyrighted films were the subject of
the copyright infringement suit.
In Habana, knowledge of the infringement is presumed when the infringer commits the prohibited
act:
The essence of intellectual piracy should be essayed in conceptual terms in order to underscore its
gravity by an appropriate understanding thereof. Infringement of a copyright is a trespass on a
private domain owned and occupied by the owner of the copyright, and, therefore, protected by law,
and infringement of copyright, or piracy, which is a synonymous term in this connection, consists in
the doing by any person, without the consent of the owner of the copyright, of anything the sole
right to do which is conferred by statute on the owner of the copyright.
....
A copy of a piracy is an infringement of the original, and it is no defense that the pirate, in such
cases, did not know whether or not he was infringing any copyright; he at least knew that what he
was copying was not his, and he copied at his peril.
....
In cases of infringement, copying alone is not what is prohibited. The copying must produce an
"injurious effect". Here, the injury consists in that respondent Robles lifted from petitioners’ book
materials that were the result of the latter’s research work and compilation and misrepresented
them as her own. She circulated the book DEP for commercial use and did not acknowledge
petitioners as her source.152 (Emphasis supplied)
Habana and Columbia Pictures did not require knowledge of the infringement to constitute a
violation of the copyright. One does not need to know that he or she is copying a work without
consent to violate copyright law. Notice of fact of the embargo from Reuters or CNN is not material
to find probable cause that respondents committed infringement. Knowledge of infringement is only
material when the person is charged of aiding and abetting a copyright infringement under Section
217 of the Intellectual Property Code.153
We look at the purpose of copyright in relation to criminal prosecutions requiring willfulness: Most
importantly, in defining the contours of what it means to willfully infringe copyright for purposes of
criminal liability, the courts should remember the ultimate aim of copyright. Copyright is not
primarily about providing the strongest possible protection for copyright owners so that they have
the highest possible incentive to create more works. The control given to copyright owners is only a
means to an end: the promotion of knowledge and learning. Achieving that underlying goal of
copyright law also requires access to copyrighted works and it requires permitting certain kinds of
uses of copyrighted works without the permission of the copyright owner. While a particular
defendant may appear to be deserving of criminal sanctions, the standard for determining
willfulness should be set with reference to the larger goals of copyright embodied in the
Constitution and the history of copyright in this country. 154
In addition, "[t]he essence of intellectual piracy should be essayed in conceptual terms in order to
underscore its gravity by an appropriate understanding thereof. Infringement of a copyright is a
trespass on a private domain owned and occupied by the owner of the copyright, and, therefore,
protected by law, and infringement of copyright, or piracy, which is a synonymous term in this
connection, consists in the doing by any person, without the consent of the owner of the copyright,
of anything the sole right to do which is conferred by statute on the owner of the copyright." 155
Intellectual property rights, such as copyright and the neighboring right against rebroadcasting,
establish an artificial and limited monopoly to reward creativity. Without these legally enforceable
rights, creators will have extreme difficulty recovering their costs and capturing the surplus or
profit of their works as reflected in their markets. This, in turn, is based on the theory that the
possibility of gain due to creative work creates an incentive which may improve efficiency or simply
enhance consumer welfare or utility. More creativity redounds to the public good.
These, however, depend on the certainty of enforcement. Creativity, by its very nature, is vulnerable
to the free rider problem. It is easily replicated despite the costs to and efforts of the original
creator. The more useful the creation is in the market, the greater the propensity that it will be
copied. The most creative and inventive individuals are usually those who are unable to recover on
their creations.
Arguments against strict liability presuppose that the Philippines has a social, historical, and
economic climate similar to those of Western jurisdictions. As it stands, there is a current need to
strengthen intellectual property protection.
Thus, unless clearly provided in the law, offenses involving infringement of copyright protections
should be considered malum prohibitum. It is the act of infringement, not the intent, which causes
the damage. To require or assume the need to prove intent defeats the purpose of intellectual
property protection.
Nevertheless, proof beyond reasonable doubt is still the standard for criminal prosecutions under
the Intellectual Property Code.
VIII
Respondents argue that GMA-7’s officers and employees cannot be held liable for infringement
under the Intellectual Property Code since it does not expressly provide direct liability of the
corporate officers. They explain that "(i) a corporation may be charged and prosecuted for a crime
where the penalty is fine or both imprisonment and fine, and if found guilty, may be fined; or (ii) a
corporation may commit a crime but if the statute prescribes the penalty therefore to be suffered by
the corporate officers, directors or employees or other persons, the latter shall be responsible for
the offense."156
Section 217 of the Intellectual Property Code states that "any person" may be found guilty of
infringement. It also imposes the penalty of both imprisonment and fine:
Section 217. Criminal Penalties. - 217.1. Any person infringing any right secured by provisions of
Part IV of this Act or aiding or abetting such infringement shall be guilty of a crime punishable by:
(a) Imprisonment of one (1) year to three (3) years plus a fine ranging from Fifty
thousand pesos (₱50,000) to One hundred fifty thousand pesos (₱150,000) for the first
offense.
(b) Imprisonment of three (3) years and one (1) day to six (6) years plus a fine ranging
from One hundred fifty thousand pesos (₱150,000) to Five hundred thousand pesos
(₱500,000) for the second offense.
(c) Imprisonment of six (6) years and one (1) day to nine (9) years plus a fine ranging
from five hundred thousand pesos (₱500,000) to One million five hundred thousand
pesos (₱1,500,000) for the third and subsequent offenses.
(d) In all cases, subsidiary imprisonment in cases of insolvency. (Emphasis supplied)
Corporations have separate and distinct personalities from their officers or
directors.157 This court has ruled that corporate officers and/or agents may be held
individually liable for a crime committed under the Intellectual Property Code: 158
Petitioners, being corporate officers and/or directors, through whose act, default or omission the
corporation commits a crime, may themselves be individually held answerable for the crime. . . . The
existence of the corporate entity does not shield from prosecution the corporate agent who
knowingly and intentionally caused the corporation to commit a crime. Thus, petitioners cannot
hide behind the cloak of the separate corporate personality of the corporation to escape criminal
liability. A corporate officer cannot protect himself behind a corporation where he is the actual,
present and efficient actor.159
However, the criminal liability of a corporation’s officers or employees stems from their active
participation in the commission of the wrongful act:
The principle applies whether or not the crime requires the consciousness of wrongdoing. It applies
to those corporate agents who themselves commit the crime and to those, who, by virtue of their
managerial positions or other similar relation to the corporation, could be deemed responsible for
its commission, if by virtue of their relationship to the corporation, they had the power to prevent
the act. Moreover, all parties active in promoting a crime, whether agents or not, are principals.
Whether such officers or employees are benefited by their delictual acts is not a touchstone of their
criminal liability. Benefit is not an operative fact.160 (Emphasis supplied) An accused’s participation
in criminal acts involving violations of intellectual property rights is the subject of allegation and
proof. The showing that the accused did the acts or contributed in a meaningful way in the
commission of the infringements is certainly different from the argument of lack of intent or good
faith. Active participation requires a showing of overt physical acts or intention to commit such acts.
Intent or good faith, on the other hand, are inferences from acts proven to have been or not been
committed.
We find that the Department of Justice committed grave abuse of discretion when it resolved to file
the Information against respondents despite lack of proof of their actual participation in the alleged
crime.
Ordering the inclusion of respondents Gozon, GMA-7 President; Duavit, Jr., Executive Vice-
President; Flores, Vice-President for News and Public Affairs; and Soho, Director for News, as
respondents, Secretary Agra overturned the City Prosecutor’s finding that only respondents Dela
Peña-Reyes and Manalastas are responsible for the crime charged due to their duties. 161 The Agra
Resolution reads:
Thus, from the very nature of the offense and the penalty involved, it is necessary that GMA-7’s
directors, officers, employees or other officers thereof responsible for the offense shall be charged
and penalized for violation of the Sections 177 and 211 of Republic Act No. 8293. In their complaint
for libel, respondents Felipe L Gozon, Gilberto R. Duavit, Jr., Marissa L. Flores, Jessica A.Soho, Grace
Dela Pena-Reyes, John Oliver T. Manalastas felt they were aggrieved because they were "in charge of
the management, operations and production of news and public affairs programs of the network"
(GMA-7). This is clearly an admission on respondents’ part. Of course, respondents may argue they
have no intention to infringe the copyright of ABS-CBN; that they acted in good faith; and that they
did not directly cause the airing of the subject footage, but again this is preliminary investigation
and what is required is simply probable cause. Besides, these contentions can best be addressed in
the course of trial.162 (Citation omitted)
In contrast, the Office of the City Prosecutor, in the Resolution dated December 3, 2004, found that
respondents Gozon, Duavit, Jr., Flores, and Soho did not have active participation in the commission
of the crime charged:
This Office, however, does not subscribe to the view that respondents Atty. Felipe Gozon, Gilberto
Duavit, Marissa Flores and Jessica Soho should be held liable for the said offense. Complainant failed
to present clear and convincing evidence that the said respondents conspired with Reyes and
Manalastas. No evidence was adduced to prove that these respondents had an active participation in
the actual commission of the copyright infringement or they exercised their moral ascendancy over
Reyes and Manalastas in airing the said footage. It must be stressed that, conspiracy must be
established by positive and conclusive evidence. It must be shown to exist as clearly and
convincingly as the commission of the offense itself.163 (Emphasis supplied, citations omitted)
The City Prosecutor found respondents Dela Peña-Reyes and Manalastas liable due to the nature of
their work and responsibilities. He found that:
[t]his Office however finds respondents Grace Dela Peña-Reyes and John Oliver T. Manalastas liable
for copyright infringement penalized under Republic Act No. 8293. It is undisputed that
complainant ABSCBN holds the exclusive ownership and copyright over the "Angelo [d]ela Cruz
news footage". Hence, any airing and re-broadcast of the said footage without any consent and
authority from ABS-CBN will be held as an infringement and violation of the intellectual property
rights of the latter. Respondents Grace Dela Peña-Reyes as the Head of the News Operation and John
Oliver T. Manalastas as the Program Manager cannot escape liability since the news control room
was under their direct control and supervision. Clearly, they must have been aware that the said
footage coming from Reuters or CNN has a "No Access Philippines" advisory or embargo thus cannot
be re-broadcast. We find no merit to the defense of ignorance interposed by the respondents. It is
simply contrary to human experience and logic that experienced employees of an established
broadcasting network would be remiss in their duty in ascertaining if the said footage has an
embargo.164 (Emphasis supplied)
We agree with the findings as to respondents Dela Peña-Reyes and Manalastas. Both respondents
committed acts that promoted infringement of ABS-CBN’s footage. We note that embargoes are
common occurrences in and between news agencies and/or broadcast organizations. 165 Under its
Operations Guide, Reuters has two (2) types of embargoes: transmission embargo and publication
embargo.166 Under ABS-CBN’s service contract with Reuters, Reuters will embargo any content
contributed by ABS-CBN from other broadcast subscribers within the same geographical location:
4a. Contributed Content
You agree to supply us at our request with news and sports news stories broadcast on the Client
Service of up to three (3) minutes each for use in our Services on a non-exclusive basis and at a cost
of US$300.00 (Three Hundred United States Dollars) per story. In respect of such items we agree to
embargo them against use by other broadcast subscribers in the Territory and confirm we will
observe all other conditions of usage regarding Contributed Content, as specified in Section 2.5 of
the Reuters Business Principles for Television Services. For the purposes of clarification, any
geographical restriction imposed by you on your use of Contributed Content will not prevent us or
our clients from including such Contributed Content in online transmission services including the
internet. We acknowledge Contributed Content is your copyright and we will not acquire any
intellectual property rights in the Contributed Content. 167 (Emphasis supplied)
Respondents Dela Peña-Reyes and Manalastas merely denied receiving the advisory sent by Reuters
to its clients, including GMA-7. As in the records, the advisory reads:
ADVISORY - - +++LIVE COVER PLANS+++
PHILIPPINES: HOSTAGE RETURN
**ATTENTION ALL CLIENTS**
PLEASE BE ADVISED OF THE FOLLOWING LIVE COVER
PLANNED FOR THURSDAY, JULY 22:
....
SOURCE: ABS-CBN Pena-Reyes and John Oliver T. Manalastas. Branch 93 of the Regional Trial Court of Quezon City is
TV AND WEB RESTRICTIONS: NO ACCESS PHILIPPINES.168 directed to continue with the proceedings in Criminal Case No. Q-04-131533.

There is probable cause that respondents Dela Peña-Reyes and Manalastas directly committed SO ORDERED.
copyright infringement of ABS-CBN’s news footage to warrant piercing of the corporate veil. They
are responsible in airing the embargoed Angelo dela Cruz footage. They could have prevented the
act of infringement had they been diligent in their functions as Head of News Operations and
Program Manager.

Secretary Agra, however, committed grave abuse of discretion when he ordered the filing of the
Information against all respondents despite the erroneous piercing of the corporate veil.
Respondents Gozon, Duavit, Jr., Flores, and Soho cannot be held liable for the criminal liability of the
corporation.

Mere membership in the Board or being President per se does not mean knowledge, approval, and
participation in the act alleged as criminal. There must be a showing of active participation, not
simply a constructive one.

Under principles of criminal law, the principals of a crime are those "who take a direct part in the
execution of the act; [t]hose who directly force or induce others to commit it; [or] [t]hose who
cooperate in the commission of the offense by another act without which it would not have been
accomplished."169 There is conspiracy "when two or more persons come to an agreement
concerning the commission of a felony and decide to commit it":170

Conspiracy is not presumed. Like the physical acts constituting the crime itself, the elements of
conspiracy must be proven beyond reasonable doubt.1âwphi1 While conspiracy need not be
established by direct evidence, for it may be inferred from the conduct of the accused before, during
and after the commission of the crime, all taken together, however, the evidence must be strong
enough to show the community of criminal design. For conspiracy to exist, it is essential that there
must be a conscious design to commit an offense. Conspiracy is the product of intentionality on the
part of the cohorts.

It is necessary that a conspirator should have performed some overt act as a direct or indirect
contribution to the execution of the crime committed. The overt act may consist of active
participation in the actual commission of the crime itself, or it may consist of moral assistance to his
co-conspirators by being present at the commission of the crime or by exerting moral ascendancy
over the other co-conspirators[.]171 (Emphasis supplied, citations omitted)

In sum, the trial court erred in failing to resume the proceedings after the designated period. The
Court of Appeals erred when it held that Secretary Agra committed errors of jurisdiction despite its
own pronouncement that ABS-CBN is the owner of the copyright on the news footage. News should
be differentiated from expression of the news, particularly when the issue involves rebroadcast of
news footage. The Court of Appeals also erroneously held that good faith, as. well as lack of
knowledge of infringement, is a defense against criminal prosecution for copyright and neighboring
rights infringement. In its current form, the Intellectual Property Code is malum prohibitum and
prescribes a 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

[G.R. No. L-36402. March 16, 1987.]
FILIPINO SOCIETY OF COMPOSERS, AUTHORS AND PUBLISHERS, INC., Plaintiff-Appellant, v.
BENJAMIN TAN, Defendant-Appellee.
Lichauco, Picazo & Agcaoili Law Office, for Plaintiff-Appellant.
Ramon A. Nieves, for Defendant-Appellee.
DECISION
PARAS, J.:
An appeal was made to the Court of Appeals docketed as CA-G.R. No. 46373-R ** entitled Filipino
Society of Composers, Authors, Publishers, Inc., Plaintiff-Appellant v. Benjamin Tan, Defendant-
Appellee, from the decision of the Court of First Instance of Manila, Branch VII in Civil Case No.
71222 *** "Filipino Society of Composers, Authors and Publishers, Inc., Plaintiff v. Benjamin Tan,
Defendant," which had dismissed plaintiffs’ complaint without special pronouncement as to
costs.chanrobles virtual lawlibrary
The Court of Appeals, finding that the case involves pure questions of law, certified the same to the
Supreme Court for final determination (Resolution, CA-G.R. No. 46373-R, Rollo, p. 36; Resolution of
the Supreme Court of February 16, 1973 in L-36402, Rollo, p. 38).
The undisputed facts of this case are as follows:chanrob1es virtual 1aw library
Plaintiff-appellant is a non-profit association of authors, composers and publishers duly organized
under the Corporation Law of the Philippines and registered with the Securities and Exchange
Commission. Said association is the owner of certain musical compositions among which are the
songs entitled: "Dahil Sa Iyo," "Sapagkat Ikaw Ay Akin," "Sapagkat Kami Ay Tao Lamang" and "The
Nearness Of You."cralaw virtua1aw library
On the other hand, defendant-appellee is the operator of a restaurant known as "Alex Soda
Foundation and Restaurant" where a combo with professional singers, hired to play and sing
musical compositions to entertain and amuse customers therein, were playing and singing the
above-mentioned compositions without any license or permission from the appellant to play or sing
the same.
Accordingly, appellant demanded from the appellee payment of the necessary license fee for the
playing and singing of aforesaid compositions but the demand was ignored.
Hence, on November 7, 1967, appellant filed a complaint with the lower court for infringement of
copyright against defendant-appellee for allowing the playing in defendant-appellee’s restaurant of
said songs copyrighted in the name of the former.cralawnad
Defendant-appellee, in his answer, countered that the complaint states no cause of action. While not
denying the playing of said copyrighted compositions in his establishment, appellee maintains that
the mere singing and playing of songs and popular tunes even if they are copyrighted do not
constitute an infringement (Record on Appeal, p. 11; Resolution, CA-G.R. NO. 46373-R, Rollo, pp. 32-
36) under the provisions of Section 3 of the Copyright Law (Act 3134 of the Philippine Legislature).
The lower court, finding for the defendant, dismissed the complaint (Record on Appeal, p. 25).
Plaintiff appealed to the Court of Appeals which as already stated certified the case to the Supreme
Court for adjudication on the legal question involved. (Resolution, Court of Appeals, Rollo, p. 36;
Resolution of the Supreme Court of February 18, 1973, Rollo, p. 38).
In its brief in the Court of Appeals, appellant raised the following Assignment of Errors:chanrob1es
virtual 1aw library
I
THE LOWER COURT ERRED IN HOLDING THAT THE MUSICAL COMPOSITIONS OF THE APPELLANT
WERE IN THE NATURE OF PUBLIC PROPERTY WHEN THEY WERE COPYRIGHTED OR REGISTERED.
II
THE LOWER COURT ERRED IN HOLDING THAT THE MUSICAL COMPOSITIONS OF THE APPELLANT
WERE PLAYED AND SUNG IN THE SODA FOUNTAIN AND RESTAURANT OF THE APPELLEE BY
INDEPENDENT CONTRACTORS AND ONLY UPON THE REQUEST OF CUSTOMERS.
III
THE LOWER COURT ERRED IN HOLDING THAT THE PLAYING AND SINGING OF COPYRIGHTED
MUSICAL COMPOSITIONS IN THE SODA FOUNTAIN AND RESTAURANT OF THE APPELLEE ARE
NOT PUBLIC PERFORMANCES FOR PROFIT OF THE SAID COMPOSITIONS WITHIN THE MEANING
AND CONTEMPLATION OF THE COPYRIGHT LAW.
IV
THE LOWER COURT ERRED IN NOT HOLDING THAT THE APPELLEE IS LIABLE TO THE
APPELLANT FOR FOUR (4) SEPARATE INFRINGEMENTS. (Brief for Appellant, pp. A and B).
The petition is devoid of merit.chanrobles virtual lawlibrary
The principal issues in this case are whether or not the playing and signing of musical compositions
which have been copyrighted under the provisions of the Copyright Law (Act 3134) inside the
establishment of the defendant-appellee constitute a public performance for profit within the
meaning and contemplation of the Copyright Law of the Philippines; and assuming that there were
indeed public performances for profit, whether or not appellee can be held liable therefor.
Appellant anchors its claim on Section 3(c) of the Copyright Law which
provides:jgc:chanrobles.com.ph
"SEC. 3. The proprietor of a copyright or his heirs or assigns shall have the exclusive
right:chanrob1es virtual 1aw library
x x x
(c) To exhibit, perform, represent, produce, or reproduce the copyrighted work in any manner or by
any method whatever for profit or otherwise; if not reproduced in copies for sale, to sell any
manuscripts or any record whatsoever thereof;
x x x"

It maintains that playing or singing a musical composition is universally accepted as performing the
musical composition and that playing and singing of copyrighted music in the soda fountain and
restaurant of the appellee for the entertainment of the customers although the latter do not pay for
the music but only for the food and drink constitute performance for profit under the Copyright Law
(Brief for the Appellant, pp. 1925).
We concede that indeed there were "public performances for profit."cralaw virtua1aw library
The word ‘perform’ as used in the Act has been applied to "One who plays a musical composition on
a piano, thereby producing in the air sound waves which are heard as music . . . and if the
instrument he plays on is a piano plus a broadcasting apparatus, so that waves are thrown out, not
only upon the air, but upon the other, then also he is performing the musical composition." (Buck,
Et. Al. v. Duncan, Et. Al.; Same v. Jewell-La Salle Realty Co., 32F. 2d. Series 367).
allegation that the composers of the contested musical compositions waived their right in favor of
the general public when they allowed their intellectual creations to become property of the public
domain before applying for the corresponding copyrights for the same (Brief for Defendant-
Appellee, pp. 14-15) is correct.chanrobles lawlibrary : rednad
The Supreme Court has ruled that "Paragraph 33 of Patent Office Administrative Order No. 3 (as
amended, dated September 18, 1947) entitled ‘Rules of Practice in the Philippines Patent Office
relating to the Registration of Copyright Claims’ promulgated pursuant to Republic Act 165,
provides among other things that an intellectual creation should be copyrighted thirty (30) days
after its publication, if made in Manila, or within sixty (60) days if made elsewhere, failure of which
renders such creation public property." (Santos v. McCullough Printing Company, 12 SCRA 324-325
[1964]. Indeed, if the general public has made use of the object sought to be copyrighted for thirty
(30) days prior to the copyright application the law deems the object to have been donated to the
public domain and the same can no longer be copyrighted.

In relation thereto, it has been held that "The playing of music in dine and dance establishment A careful study of the records reveals that the song "Dahil Sa Iyo" which was registered on April 20,
which was paid for by the public in purchases of food and drink constituted ‘performance for profit’ 1956 (Brief for Appellant, p. 10) became popular in radios, juke boxes, etc. long before registration
within a Copyright Law," (Buck, Et. Al. v. Russon, No. 4489 25 F. Supp. 317). Thus, it has been (TSN, May 28, 1968, pp. 3-5; 25) while the song "The Nearness Of You" registered on January 14,
explained that while it is possible in such establishments for the patrons to purchase their food and 1955 (Brief for Appellant, p. 10) had become popular twenty five (25) years prior to 1968, (the year
drinks and at the same time dance to the music of the orchestra, the music is furnished and used by of the hearing) or from 1943 (TSN, May 28, 1968, p. 27) and the songs "Sapagkat Ikaw Ay Akin" and
the orchestra for the purpose of inducing the public to patronize the establishment and pay for the "Sapagkat Kami Ay Tao Lamang" both registered on July 10, 1966, appear to have been known and
entertainment in the purchase of food and drinks. The defendant conducts his place of business for sang by the witnesses as early as 1965 or three years before the hearing in 1968. The testimonies of
profit, and it is public; and the music is performed for profit (Ibid., p. 319). In a similar case, the the witnesses at the hearing of this case on this subject were unrebutted by the appellant. (Ibid., pp.
Court ruled that "The Performance in a restaurant or hotel dining room, by persons employed by 28; 29 and 30).
the proprietor, of a copyrighted musical composition, for the entertainment of patrons, without
charge for admission to hear it, infringes the exclusive right of the owner of the copyright." (Herbert Under the circumstances, it is clear that the musical compositions in question had long become
v. Shanley Co.; John Church Co. v. Hillard Hotel Co., Et Al., 242 U.S. 590-591). In delivering the public property, and are therefore beyond the protection of the Copyright Law.
opinion of the Court in said two cases, Justice Holmes elaborated thus:chanrobles.com : virtual law
library PREMISES CONSIDERED, the appealed decision of the Court of First Instance of Manila in Civil Case
No. 71222 is hereby AFFIRMED.
"If the rights under the copyright are infringed only by a performance where money is taken at the
door, they are very imperfectly protected. Performances not different in kind from those of the SO ORDERED.
defendants could be given that might compete with and even destroy the success of the monopoly
that the law intends the plaintiffs to have. It is enough to say that there is no need to construe the
statute so narrowly. The defendants’ performances are not eleemosynary. They are part of a total
for which the public pays, and the fact that the price of the whole is attributed to a particular item
which those present are expected to order is not important. It is true that the music is not the sole
object, but neither is the food, which probably could be got cheaper elsewhere. The object is a repast
in surroundings that to people having limited power of conversation or disliking the rival noise, give
a luxurious pleasure not to be had from eating a silent meal. If music did not pay, it would be given
up. If it pays, it pays out of the public’s pocket. Whether it pays or not, the purpose of employing it is
profit, and that is enough." (Ibid., p. 594).

In the case at bar, it is admitted that the patrons of the restaurant in question pay only for the food
and drinks and apparently not for listening to the music. As found by the trial court, the music
provided is for the purpose of entertaining and amusing the customers in order to make the
establishment more attractive and desirable (Record on Appeal, p. 21). It will be noted that for the
playing and singing the musical compositions involved, the combo was paid as independent
contractors by the appellant (Record on Appeal, p. 24). It is therefore obvious that the expenses
entailed thereby are added to the overhead of the restaurant which are either eventually charged in
the price of the food and drinks or to the overall total of additional income produced by the bigger
volume of business which the entertainment was programmed to attract. Consequently, it is beyond
question that the playing and singing of the combo in defendant-appellee’s restaurant constituted
performance for profit contemplated by the Copyright Law. (Act 3134 as amended by P.D. No. 49, as
amended).

Nevertheless, appellee cannot be said to have infringed upon the Copyright Law. Appellee’s
 [G.R. NO. 119280 : August 10, 2006] 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.
UNILEVER PHILIPPINES (PRC), INC., Petitioner, v. THE HONORABLE COURT OF APPEALS and
PROCTER AND GAMBLE PHILIPPINES, INC., Respondents.
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
DECISION

On August 26, 1994, Judge Gorospe issued an order granting a temporary restraining order and
CORONA, J.:
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 Unilever's
In this Petition for Review under Rule 45 of the Rules of Court, petitioner assails the February 24, answer with opposition to preliminary injunction. P&GP filed its reply to Unilever's opposition to a
1995 decision 1 of the Court of Appeals (CA) in CA-G.R. SP No. 35242 entitled "Unilever Philippines preliminary injunction on September 6, 1994.
(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
During the hearing on September 9, 1994, Judge Gorospe ordered petitioner to submit a sur-
writ enjoined petitioner from using and airing, until further orders of the court, certain television
rejoinder. P&GP received Unilever's rejoinder to reply on September 13, 1994. The following day, on
commercials for its laundry products claimed to be identical or similar to its "double tug" or "tac-
September 14, 1994, P&GP filed its sur-reply to Unilever's rejoinder.
tac" key visual.2

On September 19, 1994, P&GP received a copy of the order dated September 16, 1994 ordering the
Petitioner alleges that the writ of preliminary injunction was issued by the trial court (and affirmed
issuance of a writ of preliminary injunction and fixing a bond of P100,000. On the same date, P&GP
by the CA) without any evidence of private respondent's clear and unmistakable right to the writ.
filed the required bond issued by Prudential Guarantee and Assurance, Inc.
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.
On September 21, 1994, petitioner appealed to the CA assigning the following errors allegedly
committed by the court a quo, to wit:
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: 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,
1.5. As early as 1982, a P&G subsidiary in Italy used a key visual in the advertisement of its laundry
PARTICULARLY OF SEC. 3 (a), RULE 58 OF THE REVISED RULES OF COURT AND OF THE
detergent and bleaching products. This key visual known as the "double-tug" or "tac-tac"
PREVAILING JURISPRUDENCE.
demonstration shows the fabric being held by both hands and stretched sideways.

PUBLIC RESPONDENT IN ISSUING THE VOID ORDER DATED SEPTEMBER 16, 1994, HAD, IN
1.6. The "tac-tac" was conceptualized for P&G by the advertising agency Milano and Gray of Italy in
EFFECT, ALREADY PREJUDGED THE MERITS OF THE MAIN CASE.
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&GP's products, a liquid bleach called "Ace."
PUBLIC RESPONDENT HAD ISSUED THE VOID ORDER ACCORDING RELIEF TO A NON-PARTY IN
CIVIL CASE NO. 94-2434 WITHOUT JURISDICTION.
xxx

PUBLIC RESPONDENT IN ISSUING THE VOID ORDER HAD DEPRIVED PETITIONER OF

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.
xxx
1.10. Substantially and materially imitating the aforesaid "tac-tac" key visual of P&GP and in blatant
disregard of P&GP's 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&GP's "tac-tac" key visual.
xxx
SUBSTANTIVE AND PROCEDURAL DUE PROCESS; PUBLIC RESPONDENT HAD FORECLOSED
PETITIONER'S RIGHT AND THE OPPORTUNITY TO CROSS-EXAMINE PROCTER'S 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&GP's
"double tug" or "tac-tac" key visual. However, it submits that P&GP is not entitled to the relief
demanded, which is to enjoin petitioner from airing said TV advertisements, for the reason that
petitioner has Certificates of Copyright Registration for which advertisements while P&GP has none
with respect to its "double-tug" or "tac-tac" key visual. In other words, it is petitioner's contention illusory if by then such advertisements are no longer used or aired by petitioner. It is therefore not
that P&GP is not entitled to any protection because it has not registered with the National Library difficult to perceive the possible irreparable damage which P&GP may suffer if respondent Judge did
the very TV commercials which it claims have been infringed by petitioner. not act promptly on its application for preliminary injunction. 5

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 petitioner's contention, the intellectual creator's 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&GP's 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 court's 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'.
xxx
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).
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.

Finally, We find the procedure adopted by the court a quo to be in order'. WHEREFORE, the petition is hereby DENIED.

The record clearly shows that respondent Judge followed the (procedure provided for in Section 5, Costs against petitioner.
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
SO ORDERED.
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&GP's 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.

xxx

There was of course extreme urgency for the court a quo to act on plaintiff's 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
[G.R. NO. 165306. September 20, 2005]
MANLY SPORTWEAR MANUFACTURING, INC., Petitioners, v. DADODETTE ENTERPRISES
AND/OR HERMES SPORTS CENTER, Respondent.
DECISION
YNARES-SANTIAGO, J.:
This Petition for Review on Certiorari 1 under Rule 45 of the Revised Rules of Civil Procedure assails
the July 13, 2004 decision2 of the Court of Appeals3 in CA-G.R. SP No. 79887 and its September 15,
2004 resolution4 denying reconsideration thereof.
The facts are as follows:
On March 14, 2003, Special Investigator Eliezer P. Salcedo of the National Bureau of Investigation
(NBI) applied for a search warrant before the Regional Trial Court (RTC) of Quezon City, based on
the information that Dadodette Enterprises and/or Hermes Sports Center were in possession of
goods, the copyright of which belonged to Manly Sportswear Mfg., Inc. (MANLY). 5
After finding reasonable grounds that a violation of Sections 172 and 217 of Republic Act (RA) No.
82936has been committed, Judge Estrella T. Estrada of RTC-Quezon City, Branch 83, issued on
March 17, 2003 Search Warrant No. 4044(03).7
Respondents thereafter moved to quash and annul the search warrant contending that the same is
invalid since the requisites for its issuance have not been complied with. They insisted that the
sporting goods manufactured by and/or registered in the name of MANLY are ordinary and
common hence, not among the classes of work protected under Section 172 of RA 8293.
On June 10, 2003, the trial court granted the motion to quash and declared Search Warrant No.
4044(03) null and void based on its finding that the copyrighted products of MANLY do not appear
to be original creations and were being manufactured and distributed by different companies locally
and abroad under various brands, and therefore unqualified for protection under Section 172 of RA
8293. Moreover, MANLY's certificates of registrations were issued only in 2002, whereas there were
certificates of registrations for the same sports articles which were issued earlier than MANLY's,
thus further negating the claim that its copyrighted products were original creations.8
On August 11, 2003, the trial court denied9 MANLY's motion for reconsideration. Hence it filed a
petition for certiorari 10 before the Court of Appeals which was denied for lack of merit. The
appellate court found that the trial court correctly granted the motion to quash and that its ruling in
the ancillary proceeding did not preempt the findings of the intellectual property court as it did not
resolve with finality the status or character of the seized items.
After denial of its motion for reconsideration on September 15, 2004, MANLY filed the instant
Petition for Review on Certiorari raising the sole issue of whether or not the Court of Appeals erred
in finding that the trial court did not gravely abuse its discretion in declaring in the hearing for the
quashal of the search warrant that the copyrighted products of MANLY are not original creations
subject to the protection of RA 8293.
We deny the petition.
The power to issue search warrants is exclusively vested with the trial judges in the exercise of their
judicial function.11 As such, the power to quash the same also rests solely with them. After the judge
has issued a warrant, he is not precluded to subsequently quash the same, if he finds upon
reevaluation of the evidence that no probable cause exists.
Our ruling in Solid Triangle Sales Corp. v. Sheriff, RTC, Q.C., Br. 9312 is instructive, thus:
Inherent in the courts' power to issue search warrants is the power to quash warrants already
issued. In this connection, this Court has ruled that the motion to quash should be filed in the court
that issued the warrant unless a criminal case has already been instituted in another court, in which
case, the motion should be filed with the latter. The ruling has since been incorporated in Rule 126
of the Revised Rules of Criminal Procedure[.]
In the instant case, we find that the trial court did not abuse its discretion when it entertained the
motion to quash considering that no criminal action has yet been instituted when it was filed. The
trial court also properly quashed the search warrant it earlier issued after finding upon reevaluation
of the evidence that no probable cause exists to justify its issuance in the first place. As ruled by the
trial court, the copyrighted products do not appear to be original creations of MANLY and are not
among the classes of work enumerated under Section 172 of RA 8293. The trial court, thus, may not
be faulted for overturning its initial assessment that there was probable cause in view of its inherent
power to issue search warrants and to quash the same. No objection may be validly posed to an
order quashing a warrant already issued as the court must be provided with the opportunity to
correct itself of an error unwittingly committed, or, with like effect, to allow the aggrieved party the
chance to convince the court that its ruling is erroneous.
Moreover, the trial court was acting within bounds when it ruled, in an ancillary proceeding, that
the copyrighted products of petitioner are not original creations. This is because in the
determination of the existence of probable cause for the issuance or quashal of a warrant, it is
inevitable that the court may touch on issues properly threshed out in a regular proceeding. In so
doing, it does not usurp the power of, much less preclude, the court from making a final judicial
determination of the issues in a full-blown trial. Consequently, MANLY's assertion that the trial
court's order quashing the warrant preempted the finding of the intellectual property court has no
legal basis.
As pertinently held in Solid Triangle Sales Corp. v. Sheriff, RTC, Q.C., Br. 93:13
When the court, in determining probable cause for issuing or quashing a search warrant, finds that
no offense has been committed, it does not interfere with or encroach upon the proceedings in the
preliminary investigation. The court does not oblige the investigating officer not to file an
information for the court's ruling that no crime exists is only for purposes of issuing or quashing the
warrant. This does not, as petitioners would like to believe, constitute a usurpation of the executive
function. Indeed, to shirk from this duty would amount to an abdication of a constitutional
obligation.
...
... The finding by the court that no crime exists does not preclude the authorized officer conducting
the preliminary investigation from making his own determination that a crime has been committed
and that probable cause exists for purposes of filing the information.
As correctly observed by the Court of Appeals, the trial court's finding that the seized products are
not copyrightable was merely preliminary as it did not finally and permanently adjudicate on the
status and character of the seized items. MANLY could still file a separate copyright infringement
suit against the respondents because the order for the issuance or quashal of a warrant is not res
judicata.

Thus, in Vlasons Enterprises Corporation v. Court of Appeals14 we held that:

The proceeding for the seizure of property in virtue of a search warrant does not end with the actual
taking of the property by the proper officers and its delivery, usually constructive, to the court. The
order for the issuance of the warrant is not a final one and cannot constitute res judicata. Such an
order does not ascertain and adjudicate the permanent status or character of the seized property.
By its very nature, it is provisional, interlocutory. It is merely the first step in the process to
determine the character and title of the property. That determination is done in the criminal action
involving the crime or crimes in connection with which the search warrant was issued. Hence, such
a criminal action should be prosecuted, or commenced if not yet instituted, and prosecuted. The
outcome of the criminal action will dictate the disposition of the seized property -

We have also ruled in Ching v. Salinas, Sr., et al.15 that:

The RTC had jurisdiction to delve into and resolve the issue whether the petitioner's 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[.]

Further, the copyright certificates issued in favor of MANLY constitute merely prima facie evidence
of validity and ownership. However, no presumption of validity is created where other evidence
exist that may cast doubt on the copyright validity. Hence, where there is sufficient proof that the
copyrighted products are not original creations but are readily available in the market under
various brands, as in this case, validity and originality will not be presumed and the trial court may
properly quash the issued warrant for lack of probable cause.

Besides, no copyright accrues in favor of MANLY despite issuance of the certificates of registration
and deposit16 pursuant to Section 2, Rule 7 of the Copyrights Safeguards and Regulations17 which
states:

Sec. 2 Effects of Registration and Deposit of Work. The registration and deposit of the work is purely
for recording the date of registration and deposit of the work and shall not be conclusive as to
copyright ownership or the term of the copyrights or the rights of the copyright owner, including
neighboring rights.

At most, the certificates of registration and deposit issued by the National Library and the Supreme
Court Library serve merely as a notice of recording and registration of the work but do not confer
any right or title upon the registered copyright owner or automatically put his work under the
protective mantle of the copyright law. It is not a conclusive proof of copyright ownership. As it is,
non-registration and deposit of the work within the prescribed period only makes the copyright
owner liable to pay a fine.18

WHEREFORE, the petition is DENIED. The July 13, 2004 decision of the Court of Appeals in CA-G.R.
SP No. 79887 and resolution dated September 15, 2004, are AFFIRMED.

SO ORDERED.

METRO-GOLDWYN-MAYER STUDIOS INC. et al. v. GROKSTER, LTD., et al.
CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT
No. 04—480.Argued March 29, 2005–Decided June 27, 2005
Respondent companies distribute free software that allows
computer users to share electronic files through peer-to-peer
networks, so called because the computers communicate
directly with each other, not through central servers.
Although such networks can be used to share any type of
digital file, recipients of respondents’ software have mostly
used them to share copyrighted music and video files without
authorization. Seeking damages and an injunction, a group of
movie studios and other copyright holders (hereinafter MGM)
sued respondents for their users’ copyright infringements,
alleging that respondents knowingly and intentionally
distributed their software to enable users to infringe
copyrighted works in violation of the Copyright Act.
Discovery revealed that billions of files are shared across
peer-to-peer networks each month. Respondents are aware
that users employ their software primarily to download
copyrighted files, although the decentralized networks do not
reveal which files are copied, and when. Respondents have
sometimes learned about the infringement directly when
users have e-mailed questions regarding copyrighted works,
and respondents have replied with guidance. Respondents are
not merely passive recipients of information about
infringement. The record is replete with evidence that when
they began to distribute their free software, each of them
clearly voiced the objective that recipients use the software to
download copyrighted works and took active steps to
encourage infringement. After the notorious file-sharing
service, Napster, was sued by copyright holders for facilitating
copyright infringement, both respondents promoted and
marketed themselves as Napster alternatives. They receive no
revenue from users, but, instead, generate income by selling
advertising space, then streaming the advertising to their
users. As the number of users increases, advertising
opportunities are worth more. There is no evidence that
either respondent made an effort to filter copyrighted
material from users’ downloads or otherwise to impede the
sharing of copyrighted files.
While acknowledging that respondents’ users had directly
infringed MGM’s copyrights, the District Court nonetheless
granted respondents summary judgment as to liability arising
from distribution of their software. The Ninth Circuit affirmed.
It read Sony Corp. of America v. Universal City Studios, Inc., 464
U.S. 417, as holding that the distribution of a commercial
product capable of substantial noninfringing uses could not
give rise to contributory liability for infringement unless the
distributor had actual knowledge of specific instances of
infringement and failed to act on that knowledge. Because the
appeals court found respondents’ software to be capable of
substantial noninfringing uses and because respondents had
no actual knowledge of infringement owing to the software’s
decentralized architecture, the court held that they were not
liable. It also held that they did not materially contribute to
their users’ infringement because the users themselves
searched for, retrieved, and stored the infringing files, with no
involvement by respondents beyond providing the software
in the first place. Finally, the court held that respondents
could not be held liable under a vicarious infringement theory
because they did not monitor or control the software’s use,
had no agreed-upon right or current ability to supervise its
use, and had no independent duty to police infringement.
Held: One who distributes a device with the object of
promoting its use to infringe copyright, as shown by clear
expression or other affirmative steps taken to foster
infringement, going beyond mere distribution with knowledge
of third-party action, is liable for the resulting acts of
infringement by third parties using the device, regardless of
the device’s lawful uses. Pp. 10—24.
(a) The tension between the competing values of supporting
creativity through copyright protection and promoting
technological innovation by limiting infringement liability is
the subject of this case. Despite offsetting considerations, the
argument for imposing indirect liability here is powerful,
given the number of infringing downloads that occur daily
using respondents’ software. When a widely shared product is
used to commit infringement, it may be impossible to enforce
rights in the protected work effectively against all direct
infringers, so that the only practical alternative is to go against
the device’s distributor for secondary liability on a theory of
contributory or vicarious infringement. One infringes
contributorily by intentionally inducing or encouraging direct
infringement, and infringes vicariously by profiting from
direct infringement while declining to exercise the right to
stop or limit it. Although “[t]he Copyright Act does not
expressly render anyone liable for [another’s]
infringement,” Sony, 464 U.S., at 434, these secondary liability
doctrines emerged from common law principles and are well
established in the law, e.g., id., at 486. Pp. 10—13.
(b) Sony addressed a claim that secondary liability for
infringement can arise from the very distribution of a
commercial product. There, copyright holders sued Sony, the
manufacturer of videocassette recorders, claiming that it was
contributorily liable for the infringement that occurred when
VCR owners taped copyrighted programs. The evidence
showed that the VCR’s principal use was “time-
shifting,” i.e., taping a program for later viewing at a more
convenient time, which the Court found to be a fair,
noninfringing use. 464 U.S., at 423—424. Moreover, there was
no evidence that Sony had desired to bring about taping in
violation of copyright or taken active steps to increase its
profits from unlawful taping. Id., at 438. On those facts, the
only conceivable basis for liability was on a theory of
contributory infringement through distribution of a
product. Id., at 439. Because the VCR was “capable of
commercially significant noninfringing uses,” the Court held
that Sony was not liable. Id., at 442. This theory reflected
patent law’s traditional staple article of commerce doctrine
that distribution of a component of a patented device will not
violate the patent if it is suitable for use in other ways. 35
U.S. C §271(c). The doctrine absolves the equivocal conduct of
selling an item with lawful and unlawful uses and limits
liability to instances of more acute fault. In this case, the Ninth
Circuit misread Sony to mean that when a product is capable
of substantial lawful use, the producer cannot be held
contributorily liable for third parties’ infringing use of it, even
when an actual purpose to cause infringing use is shown,
unless the distributors had specific knowledge of
infringement at a time when they contributed to the
infringement and failed to act upon that information. Sony did
not displace other secondary liability theories. Pp. 13—17.
(c) Nothing in Sony requires courts to ignore evidence of
intent to promote infringement if such evidence exists. It was
never meant to foreclose rules of fault-based liability derived
from the common law. 464 U.S., at 439. Where evidence goes
beyond a product’s characteristics or the knowledge that it
may be put to infringing uses, and shows statements or
actions directed to promoting infringement, Sony’s staple-
article rule will not preclude liability. At common law a
copyright or patent defendant who “not only expected but
invoked [infringing use] by advertisement” was liable for
infringement. Kalem Co. v. Harper Brothers, 222 U.S. 55, 62—
63. The rule on inducement of infringement as developed in
the early cases is no different today. Evidence of active steps
taken to encourage direct infringement, such as advertising an
infringing use or instructing how to engage in an infringing
use, shows an affirmative intent that the product be used to
infringe, and overcomes the law’s reluctance to find liability
when a defendant merely sells a commercial product suitable
for some lawful use. A rule that premises liability on
purposeful, culpable expression and conduct does nothing to
compromise legitimate commerce or discourage innovation
having a lawful promise. Pp. 17—20.
principal, if not exclusive, intent to bring about infringement.
Second, neither respondent attempted to develop filtering
tools or other mechanisms to diminish the infringing activity
using their software. While the Ninth Circuit treated that
failure as irrelevant because respondents lacked an
independent duty to monitor their users’ activity, this
evidence underscores their intentional facilitation of their
users’ infringement. Third, respondents make money by
selling advertising space, then by directing ads to the screens
of computers employing their software. The more their
software is used, the more ads are sent out and the greater the
advertising revenue. Since the extent of the software’s use
determines the gain to the distributors, the commercial sense
of their enterprise turns on high-volume use, which the record
shows is infringing. This evidence alone would not justify an
inference of unlawful intent, but its import is clear in the
entire record’s context. Pp. 20—23.
(e) In addition to intent to bring about infringement and
distribution of a device suitable for infringing use, the
inducement theory requires evidence of actual infringement
by recipients of the device, the software in this case. There is
evidence of such infringement on a gigantic scale. Because
substantial evidence supports MGM on all elements, summary
judgment for respondents was error. On remand,
reconsideration of MGM’s summary judgment motion will be
in order. Pp. 23—24.
380 F.3d 1154, vacated and remanded.
Souter, J., delivered the opinion for a unanimous Court.
Ginsburg, J., filed a concurring opinion, in which Rehnquist, C. J.,
and Kennedy, J., joined. Breyer, J., filed a concurring opinion, in
which Stevens and O’Connor, JJ., joined.

(d) On the record presented, respondents’ unlawful

objective is unmistakable. The classic instance of inducement
is by advertisement or solicitation that broadcasts a message
designed to stimulate others to commit violations. MGM
argues persuasively that such a message is shown here. Three
features of the evidence of intent are particularly notable.
First, each of the respondents showed itself to be aiming to
satisfy a known source of demand for copyright infringement,
the market comprising former Napster users. Respondents’
efforts to supply services to former Napster users indicate a
 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
G.R. No. 108946 January 28, 1999
existence of probable cause to prove infringement,
despite the fact that private respondents never raised the
FRANCISCO G. JOAQUIN, JR., and BJ PRODUCTIONS, INC., petitioners, same as a controverted issue.
vs.
HONORABLE FRANKLIN DRILON, GABRIEL ZOSA, WILLIAM ESPOSO, FELIPE MEDINA, JR., and
2. The public respondent gravely abused his discretion
CASEY FRANCISCO, respondents.
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.
MENDOZA, J.:
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.
This is a petition for certiorari. Petitioners seek to annul the resolution of the Department of Justice,
They contend that petitioner BJPI's copyright covers only a specific episode of Rhoda and Me and
dated August 12, 1992, in Criminal Case No. Q-92-27854, entitled "Gabriel Zosa, et al. v. City
that the formats or concepts of dating game shows are not covered by copyright protection under
Prosecutor of Quezon City and Francisco Joaquin, Jr.," and its resolution, dated December 3, 1992,
P.D. No. 49.
denying petitioner Joaquin's motion for reconsideration.

Non-Assignment of Error.
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.
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
On June 28, 1973, petitioner BJPI submitted to the National Library an addendum to its certificate of
investigation and, therefore, it was error for the Secretary of Justice to reverse the investigating
copyright specifying the show's format and style of presentation.
prosecutor's finding of probable cause on this ground.

On July 14, 1991, while watching television, petitioner Francisco Joaquin, Jr., president of BJPI, saw
A preliminary investigation falls under the authority of the state prosecutor who is given by law the
on RPN Channel 9 an episode of It's a Date, which was produced by IXL Productions, Inc. (IXL). On
power to direct and control criminal
July 18, 1991, he wrote a letter to private respondent Gabriel M. Zosa, president and general
actions. 2 He is, however, subject to the control of the Secretary of Justice. Thus, Rule 112, §4 of the
manager of IXL, informing Zosa that BJPI had a copyright to Rhoda and Me and demanding that IXL
Revised Rules of Criminal Procedure, provides:
discontinue airing It's a Date.

Sec. 4. Duty of investigating fiscal. — If the investigating fiscal finds cause to

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 It's 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 IXL's copyright to the first episode of It's a
Date for which it was issued by the National Library a certificate of copyright August 14, 1991.
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.

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
Prosecutor's 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 denied by respondent
Secretary of Justice on December 3, 1992. Hence, this petition. Petitioners contend that:
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 ten (10) days from receipt thereof,
immediately informing the parties of said action.
No complaint or information may be filed or dismissed by an investigating
fiscal without the prior written authority or approval of the provincial or city
fiscal or chief state prosecutor.
Where the investigating assistant fiscal recommends the dismissal of the case
but his findings are reversed by the provincial or city fiscal or chief state
prosecutor on the ground that a probable cause exists, the latter may, by
 himself, file the corresponding information against the respondent or direct
any other assistant fiscal or state prosecutor to do so, without conducting
another preliminary investigation.
If upon petition by a proper party, the Secretary of Justice reverses the
resolution of the provincial or city fiscal or chief state prosecutor, he shall
direct the fiscal concerned to file the corresponding information without
conducting another preliminary investigation or to dismiss or move for
dismissal of the complaint or information.
In reviewing resolutions of prosecutors, the Secretary of Justice is not precluded from considering
errors, although unassigned, for the purpose of determining whether there is probable cause for
filing cases in court. He must make his own finding, of probable cause and is not confined to the
issues raised by the parties during preliminary investigation. Moreover, his findings are not subject
to review unless shown to have been made with grave abuse.
Opinion of the Secretary of Justice
Petitioners contend, however, that the determination of the question whether the format or
mechanics of a show is entitled to copyright protection is for the court, and not the Secretary of
Justice, to make. They assail the following portion of the resolution of the respondent Secretary of
Justice:
[T]he essence of copyright infringement is the copying, in whole or in part, of
copyrightable materials as defined and enumerated in Section 2 of PD. No.
49. Apart from the manner in which it is actually expressed, however, the idea of
a dating game show is, in the opinion of this Office, a non-copyrightable material.
Ideas, concepts, formats, or schemes in their abstract form clearly do not fall
within the class of works or materials susceptible of copyright registration as
provided in PD. No. 49. 3(Emphasis added.)
It is indeed true that the question whether the format or mechanics of petitioners television show is
entitled to copyright protection is a legal question for the court to make. This does not, however,
preclude respondent Secretary of Justice from making a preliminary determination of this question
in resolving whether there is probable cause for filing the case in court. In doing so in this case, he
did not commit any grave error.
Presentation of Master Tape
Petitioners claim that respondent Secretary of Justice gravely abused his discretion in ruling that
the master videotape should have been predented in order to determine whether there was
probable cause for copyright infringement. They contend that 20th Century Fox Film 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 "linkage between the copyright show "Rhoda
and Me" and the infringing TV show "It's a Date." 5
The case of 20th Century Fox Film Corporation involved raids conducted on various videotape
outlets allegedlly 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
petitioner's argument to the effect that the presentation of the master tapes at
the time of application may not be necessary as these would be merely
evidentiary in nature and not determinative of whether or not a probable
cause exists to justify the issuance of the search warrants is not meritorious.
The court cannot presume that duplicate or copied tapes were necessarily
reproduced from master tapes that it owns.
The application for search warrants was directed against video tape outlets
which allegedly were engaged in the unauthorized sale and renting out of
copyrighted films belonging to the petitioner pursuant to P.D. 49.
The essence of a copyright infringement is the similarity or at least substantial
similarity of the purported pirated works to the copyrighted work. Hence, the
applicant must present to the court the copyrighted films to compare them
with the purchased evidence of the video tapes allegedly pirated to determine
whether the latter is an unauthorized reproduction of the former. This linkage
of the copyrighted films to the pirated films must be established to satisfy the
requirements of probable cause. Mere allegations as to the existence of the
copyrighted films cannot serve as basis for the issuance of a search warrant.
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
printed 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 complainant's "RHODA AND ME" and Zosa's "IT'S 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 respondent's "IT'S A DATE" is practically an exact copy of
complainant's "RHODA AND ME" because of substantial similarities as follows,
to wit:
 "IT'S A DATE"
Set 1
(searcher) appears on one side of a divider, while three a. same
er gender are on the other side of the divider. This
earcher does not see the searchees.
swered by each of the searchees. The purpose is to b. same
he most compatible with the searcher.
e searchee. c. same
te (sic) methods, or by the way questions are answered, d. Selection is based on the answer of the Searchees.
Set 2
earcher and searchees interchanged. 9 same
Petitioners assert that the format of Rhoda and Me is a product of ingenuity and skill and is thus
entitled to copyright protection. It is their position that the presentation of a point-by-point
comparison of the formats of the two shows clearly demonstrates the nexus between the shows and
hence establishes the existence of probable cause for copyright infringement. Such being the case,
they did not have to produce the master tape.
To begin with the format of a show is not copyrightable. Section 2 of P.D. No. 49, 10 otherwise known
as the DECREE ON INTELLECTUAL PROPERTY, enumerates the classes of work entitled to copyright
protection, to wit:
Sec. 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;
(I) 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
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 both created 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
BJPI's copyright covers audio-visual recordings of each episode of Rhoda and Me, as falling within
the class of works mentioned in P.D. 49, §2(M), to wit:

Cinematographic works and works produced by a process analogous to

cinematography or any process for making audio-visual recordings;

The copyright does not extend to the general concept or format of its dating game show.
Accordingly, by the very nature of the subject of petitioner BJPI's copyright, the
investigating prosecutor should have the opportunity to compare the videotapes of the
two shows.

Mere description by words of the general format of the two dating game shows is insufficient; the
presentation of the master videotape in evidence was indispensable to the determination of the
existence of probable cause. As aptly observed by respondent Secretary of Justice:

A television show includes more than mere words can describe because it
involves a whole spectrum of visuals and effects, video and audio, such that no
similarity or dissimilarity may be found by merely describing the general
copyright/format of both dating game shows.

WHEREFORE, the petition is hereby DISMISSED

SO ORDERED.1âwphi1.nêt
 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:
G.R. No. 161295 June 29, 2005

Leaf Spring eye bushing

JESSIE G. CHING, petitioner,
vs.
WILLIAM M. SALINAS, SR., WILLIAM M. SALINAS, JR., JOSEPHINE L. SALINAS, JENNIFER Y. a) Plastic Polypropylene
SALINAS, ALONTO SOLAIMAN SALLE, JOHN ERIC I. SALINAS, NOEL M. YABUT (Board of
Directors and Officers of WILAWARE PRODUCT CORPORATION), respondents.
- C190 27 }

DECISION
- C240 rear 40 }

CALLEJO, SR., J.:

- C240 front 41 } BAG 1

This petition for review on certiorari assails the Decision1 and Resolution2 of the Court of Appeals
b) Polyvinyl Chloride Plastic
(CA) in CA-G.R. SP No. 70411 affirming the January 3, 2002 and February 14, 2002 Orders 3 of the
Regional Trial Court (RTC) of Manila, Branch 1, which quashed and set aside Search Warrant Nos.
01-2401 and 01-2402 granted in favor of petitioner Jessie G. Ching. - C190 13 }

Jessie G. Ching is the owner and general manager of Jeshicris Manufacturing Co., the maker and c) Vehicle bearing cushion
manufacturer of a Utility Model, described as "Leaf Spring Eye Bushing for Automobile" made up of
plastic.
- center bearing cushion 11 }

On September 4, 2001, Ching and Joseph Yu were issued by the National Library Certificates of
Budder for C190 mold 8 }
Copyright Registration and Deposit of the said work described therein as "Leaf Spring Eye Bushing
for Automobile."4
Diesel Mold
On September 20, 2001, Ching requested the National Bureau of Investigation (NBI) for
police/investigative assistance for the apprehension and prosecution of illegal manufacturers, a) Mold for spring eye bushing rear 1 set
producers and/or distributors of the works.5
b) Mold for spring eye bushing front 1 set
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
c) Mold for spring eye bushing for C190 1 set
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: d) Mold for C240 rear 1 piece of the set

a.) Undetermined quantity of Leaf spring eye bushing for automobile that are made up of e) Mold for spring eye bushing for L300 2 sets
plastic polypropylene;
f) Mold for leaf spring eye bushing C190 with metal 1 set
b.) Undetermined quantity of Leaf spring eye bushing for automobile that are made up of
polyvinyl chloride plastic;
g) Mold for vehicle bearing cushion 1 set8

c.) Undetermined quantity of Vehicle bearing cushion that is made up of polyvinyl

The respondents filed a motion to quash the search warrants on the following grounds:
chloride plastic;

2. The copyright registrations were issued in violation of the Intellectual Property Code on the
d.) Undetermined quantity of Dies and jigs, patterns and flasks used in the
ground that:
manufacture/fabrication of items a to d;

a) the subject matter of the registrations are not artistic or literary;

e.) Evidences of sale which include delivery receipts, invoices and official receipts. 6
 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 in Malaloan 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 Order 12 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 court’s 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 petitioner’s 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 petitioner’s utility designs were classified. Moreover, according to the
petitioner, what the Copyright Law protects is the author’s 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 between the two works.24 The applicant must thus demonstrate the existence and the validity of his
a technical solution to the problem of wear and tear in automobiles, the substitution of copyright because in the absence of copyright protection, even original creation may be freely
materials, i.e., from rubber to plastic matter of polyvinyl chloride, an oil resistant soft texture plastic copied.25
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
By requesting the NBI to investigate and, if feasible, file an application for a search warrant for
Section 172.1 of R.A. No. 8293. The respondents posit that a technical solution in any field of human
infringement under R.A. No. 8293 against the respondents, the petitioner thereby authorized the
activity which is novel may be the subject of a patent, and not of a copyright. They insist that the
RTC (in resolving the application), to delve into and determine the validity of the copyright which he
certificates issued by the National Library are only certifications that, at a point in time, a certain
claimed he had over the utility models. The petitioner cannot seek relief from the RTC based on his
work was deposited in the said office. Furthermore, the registration of copyrights does not provide
claim that he was the copyright owner over the utility models and, at the same time, repudiate the
for automatic protection. Citing Section 218.2(b) of R.A. No. 8293, the respondents aver that no
court’s jurisdiction to ascertain the validity of his claim without running afoul to the doctrine of
copyright is said to exist if a party categorically questions its existence and legality. Moreover, under
estoppel.
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 To discharge his burden, the applicant may present the certificate of registration covering the work
of R.A. No. 8293. 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
The petition has no merit.
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
The RTC had jurisdiction to delve into and resolve the issue whether the petitioner’s utility models validity of the copyright unless the respondent, effectively challenging them, shifts the burden of
are copyrightable and, if so, whether he is the owner of a copyright over the said models. It bears doing so to the applicant.29 Indeed, Section 218.2 of R.A. No. 8293 provides:
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
218.2. In an action under this Chapter:
Criminal Procedure:

(a) Copyright shall be presumed to subsist in the work or other subject matter to which
SEC. 4. Requisite for issuing search warrant. – A search warrant shall not issue but upon probable
the action relates if the defendant does not put in issue the question whether copyright
cause in connection with one specific offense to be determined personally by the judge after
subsists in the work or other subject matter; and
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.
(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
In Solid Triangle Sales Corporation v. The Sheriff of RTC QC, Br. 93,19 the Court held that in the
defendant does not put in issue the question of his ownership.
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 A certificate of registration creates no rebuttable presumption of copyright validity where other
lead a reasonably cautious and prudent man to believe that an offense has been committed or is evidence in the record casts doubt on the question. In such a case, validity will not be presumed. 30
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)
To discharge his burden of probable cause for the issuance of a search warrant for violation of R.A.
stolen or embezzled and other proceeds or fruits of the offense; or (c) used or intended to be used
No. 8293, the petitioner-applicant submitted to the RTC Certificate of Copyright Registration Nos.
as the means of committing an offense.
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
The RTC is mandated under the Constitution and Rules of Criminal Procedure to determine Vehicle Bearing Cushion both classified under Section 172.1(h) of R.A. No. 8293, to wit:
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
SEC. 172. Literary and Artistic Works. – 172.1. Literary and artistic works, hereinafter referred to as
nullification of the search warrant.21
"works," are original intellectual creations in the literary and artistic domain protected from the
moment of their creation and shall include in particular:
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 (h) Original ornamental designs or models for articles of manufacture, whether or not registrable as
an industrial design, and other works of applied art.
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 Related to the provision is Section 171.10, which provides that a "work of applied art" is an artistic
it was independently created by the author and that it possesses at least same minimal degree of creation with utilitarian functions or incorporated in a useful article, whether made by hand or
creativity.23 Copying is shown by proof of access to copyrighted material and substantial similarity produced on an industrial scale.
But, as gleaned from the specifications appended to the application for a copyright certificate filed Yet, an object of this utility model is to provide a leaf-spring eye bushing for automobiles that has a
by the petitioner, the said Leaf Spring Eye Bushing for Automobile is merely a utility model much longer life span than the rubber bushings.
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
Still an object of this utility model is to provide a leaf-spring eye bushing for automobiles that has a
surrounding the peripheral walls of said body, with the bushing made of plastic that is either
very simple construction and can be made using simple and ordinary molding equipment.
polyvinyl chloride or polypropylene.31 Likewise, the Vehicle Bearing Cushion is illustrated as a
bearing cushion comprising a generally semi-circular body having a central hole to secure a
conventional bearing and a plurality of ridges provided therefore, with said cushion bearing being A further object of this utility model is to provide a leaf-spring eye bushing for automobile that is
made of the same plastic materials.32 Plainly, these are not literary or artistic works. They are not supplied with a metal jacket to reinforce the plastic eye bushing when in engaged with the steel
intellectual creations in the literary and artistic domain, or works of applied art. They are certainly material of the leaf spring.
not ornamental designs or one having decorative quality or value.
These and other objects and advantages will come to view and be understood upon a reading of the
It bears stressing that the focus of copyright is the usefulness of the artistic design, and not its detailed description when taken in conjunction with the accompanying drawings.
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
Figure 1 is an exploded perspective of a leaf-spring eye bushing according to the present utility
embodied in useful article regardless of factors such as mass production, commercial exploitation,
model;
and the potential availability of design patent protection. 34

Figure 2 is a sectional view taken along line 2-2 of Fig. 1;

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 Figure 3 is a longitudinal sectional view of another embodiment of this utility model;
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
Figure 4 is a perspective view of a third embodiment; and
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.
Figure 5 is a sectional view thereof.
We agree with the contention of the petitioner (citing Section 171.10 of R.A. No. 8293), that the
author’s intellectual creation, regardless of whether it is a creation with utilitarian functions or Referring now to the several views of the drawings wherein like reference numerals designated
incorporated in a useful article produced on an industrial scale, is protected by copyright law. same parts throughout, there is shown a utility model for a leaf-spring eye bushing for automobile
However, the law refers to a "work of applied art which is an artistic creation." It bears stressing generally designated as reference numeral 10.
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
Said leaf-spring eye bushing 10 comprises a generally cylindrical body 11 having a co-axial bore 12
article.36Functional components of useful articles, no matter how artistically designed, have
centrally provided thereof.
generally been denied copyright protection unless they are separable from the useful article. 37

In this case, the petitioner’s 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
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.

Known bushings inserted to leaf-spring eye to hold leaf-springs of automobile are made of hard In Figure 2, the bushing 10 as shown is made of plastic, preferably polyvinyl chloride, an oil
rubber. These rubber bushings after a time, upon subjecting them to so much or intermittent resistant soft texture plastic or a hard polypropylene plastic, both are capable to endure the
pressure would eventually wore (sic) out that would cause the wobbling of the leaf spring. pressure applied thereto, and, in effect, would lengthen the life and replacement therefor.

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.
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
automobile’s 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 propeller’s 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, in Joaquin, 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 CA-G.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.
G.R. No. 195835, March 14, 2016
SISON OLAÑO, SERGIO T. ONG, MARILYN O. GO, AND JAP FUK HAI, Petitioners, v. LIM ENG
CO, Respondent.
DECISION
REYES, J.:
This is a petition for review on certiorari1 under Rule 45 of the Rules of Court, assailing the
Decision2dated July 9, 2010 and Resolution3 dated February 24, 2011 of the Court of Appeals (CA) in
CA-G.R. SP No. 95471, which annulled the Resolutions dated March 10, 20064 and May 25, 20065 of
the Department of Justice (DOJ) in I.S. No. 2004-925, finding no probable cause for copyright
infringement against Sison Olano, Sergio Ong, Marilyn Go and Jap Fuk Hai (petitioners) and directing
the withdrawal of the criminal information filed against them.
The Antecedents
The petitioners are the officers and/or directors of Metrotech Steel Industries, Inc.
(Metrotech).6 Lim Eng Co (respondent), on the other hand, is the Chairman of LEC Steel
Manufacturing Corporation (LEC), a company which specializes in architectural metal
manufacturing.7
Sometime in 2002, LEC was invited by the architects of the Manansala Project (Project), a high-end
residential building in Rockwell Center, Makati City, to submit design/drawings and specifications
for interior and exterior hatch doors. LEC complied by submitting on July 16, 2002, shop
plans/drawings, including the diskette therefor, embodying the designs and specifications required
for the metal hatch doors.8
After a series of consultations and revisions, the final shop plans/drawings were submitted by LEC
on January 15, 2004 and thereafter copied and transferred to the title block of Ski-First Balfour Joint
Venture (SKI-FB), the Project's contractor, and then stamped approved for construction on
February 3, 2004.9
LEC was thereafter subcontracted by SKI-FB, to manufacture and install interior and exterior hatch
doors for the 7th to 22nd floors of the Project based on the final shop plans/drawings. 10
Sometime thereafter, LEC learned that Metrotech was also subcontracted to install interior and
exterior hatch doors for the Project's 23rd to 41st floors.11
On June 24, 2004, LEC demanded Metrotech to cease from infringing its intellectual property rights.
Metrotech, however, insisted that no copyright infringement was committed because the hatch
doors it manufactured were patterned in accordance with the drawings provided by SKI-FB.12
On July 2, 2004, LEC deposited with the National Library the final shop plans/drawings of the
designs and specifications for the interior and exterior hatch doors of the Project. 13 On July 6, 2004,
LEC was issued a Certificate of Copyright Registration and Deposit showing that it is the registered
owner of plans/drawings for interior and exterior hatch doors under Registration Nos. 1-2004-13
and 1-2004-14, respectively.14 This copyright pertains to class work "I" under Section 172 of
Republic Act (R.A.) No. 8293, The Intellectual Property Code of the Philippines, which covers
"illustrations, maps, plans, sketches, charts and three-dimensional works relative to geography,
topography, architecture or science."
On December 9, 2004, LEC was issued another Certificate of Copyright Registration and Deposit
showing that it is the registered owner of plans/drawings for interior and exterior hatch doors
under Registration Nos. H-2004-566 and H-2004-56715 which is classified under Section 172(h) of
R.A. No. 8293 as "original ornamental designs or models for articles of manufacture, whether or not
registrable as an industrial design, and other works of applied art."
When Metrotech still refused to stop fabricating hatch doors based on LEC's shop plans/drawings,
the latter sought the assistance of the National Bureau of Investigation (NBI) which in turn applied
for a search warrant before the Regional Trial Court (RTC) of Quezon City, Branch 24. The
application was granted on August 13, 2004 thus resulting in the confiscation of finished and
unfinished metal hatch doors as well as machines used in fabricating and manufacturing hatch
doors from the premises of Metrotech.16
On August 13, 2004, the respondent filed a Complaint-Affidavit17 before the DOJ against the
petitioners for copyright infringement. In the meantime or on September 8, 2004, the RTC quashed
the search warrant on the ground that copyright infringement was not established. 18
Traversing the complaint, the petitioners admitted manufacturing hatch doors for the Project. They
denied, however, that they committed copyright infringement and averred that the hatch doors they
manufactured were functional inventions that are proper subjects of patents and that the records of
the Intellectual Property Office reveal that there is no patent, industrial design or utility model
registration on LEC's hatch doors. Metrotech further argued that the manufacturing of hatch
doors per se is not copyright infringement because copyright protection does not extend to the
objects depicted in the illustrations and plans. Moreover, there is no artistic or ornamental
expression embodied in the subject hatch doors that would subject them to copyright protection. 19
Resolutions of the DOJ
In a Resolution20 dated August 18, 2005, the investigating prosecutor dismissed the respondent's
complaint based on inadequate evidence showing that: (1) the petitioners committed the prohibited
acts under Section 177 of R.A. No. 8293; and (2) the interior and exterior hatch doors of the
petitioners are among the classes of copyrightable work enumerated in Sections 172 and 173 of the
same law.21
Adamant, the respondent filed a petition for review before the DOJ but it was also denied due course
in the Resolution22 dated November 16, 2005.
Upon the respondent's motion for reconsideration, however, the Resolution23 dated January 27,
2006 of the DOJ reversed and set aside the Resolution dated August 18, 2005 and directed the Chief
State Prosecutor to file the appropriate information for copyright infringement against the
petitioners.24 The DOJ reasoned that the pieces of evidence adduced show that the subject hatch
doors are artistic or ornamental with distinctive hinges, door and jamb, among others. The
petitioners were not able to sufficiently rebut these allegations and merely insisted on the non-
artistic nature of the hatch doors. The DOJ further held that probable cause was established insofar
as the artistic nature of the hatch doors and based thereon the act of the petitioners in
manufacturing or causing to manufacture hatch doors similar to those of the respondent can be
considered as unauthorized reproduction; hence, copyright infringement under Section 177.1 in
relation to Section 216 of R.A. No. 8293.25cralawred
Aggrieved, the petitioners moved for reconsideration. This time, the DOJ made a complete turn
around by granting the motion, vacating its Resolution dated January 27, 2006 and declaring that
the evidence on record did not establish probable cause because the subject hatch doors were
plainly metal doors with functional components devoid of any aesthetic or artistic features.
Accordingly, the DOJ Resolution26dated March 10, 2006 disposed as follows:
chanRoblesvirtualLawlibrary
WHEREFORE, finding cogent reason to reverse the assailed resolution, the motion for
reconsideration is GRANTED finding no probable cause against the [petitioners]. Consequently, the
City Prosecutor of Manila is hereby directed to cause the withdrawal of the information, if any has
been filed in court, and to report the action taken thereon within TEN (10) DAYS from receipt
hereof.
SO ORDERED.27ChanRoblesVirtualawlibrary
The respondent thereafter filed a motion for reconsideration of the foregoing resolution but it was
denied28 on May 25, 2006. The respondent then sought recourse before the CA via a petition
for certiorari29 ascribing grave abuse of discretion on the part of the DOJ.
In its assailed Decision30 dated July 9, 2010, the CA granted the petition. The CA held that the
vacillating findings of the DOJ on the presence or lack of probable cause manifest capricious and
arbitrary exercise of discretion especially since its opposite findings were based on the same factual
evidence and arguments.
The CA then proceeded to make its own finding of probable cause and held that:
chanRoblesvirtualLawlibrary
[F]or probable cause for copyright infringement to exist, essentially, it must be shown that the
violator reproduced the works without the consent of the owner of the copyright.
In the present case before Us, [the petitioners] do not dispute that: (1) LEG was issued copyrights
for the illustrations of the hatch doors under Section 171.i, and for the hatch doors themselves as
ornamental design or model for articles of manufacture pursuant to Section 171.h of R.A. [No.]
8293; and (2) they manufactured hatch doors based on drawings and design furnished by SKI-FB,
which consists of LEC works subject of copyrights. These two (2) circumstances, taken together, are
sufficient to excite the belief in a reasonable mind that [the petitioners] are probably guilty of
copyright infringement. First, LEC has indubitably established that it is the owner of the copyright
for both the illustrations of the hatch doors and [the] hatch doors themselves, and second, [the
petitioners] manufactured hatch doors based on LEC's works, sans EEC's consent.
x x x x
[T]he fact that LEC enjoys ownership of copyright not only on the illustrations of the hatch doors
but on the hatch doors itself and that [the petitioners] manufactured the same is sufficient to
warrant a finding of probable cause for copyright infringement. x x x. 31ChanRoblesVirtualawlibrary
The CA further ruled that any allegation on the non-existence of ornamental or artistic values on the
hatch doors are matters of evidence which are best ventilated in a full-blown trial rather than
during the preliminary investigation stage. Accordingly, the CA disposed as follows:
chanRoblesvirtualLawlibrary
WHEREFORE, considering the foregoing premises, the present Petition is GRANTED, and
accordingly, the assailed Resolutions dated 10 March 2006 and 25 May 2006 are ANNULLED and
SET ASIDE. The Resolution of the Secretory of Justice dated 27 January 2006 finding probable cause
against [the petitioners], is REINSTATED.
SO ORDERED.32ChanRoblesVirtualawlibrary
The CA reiterated the above ruling in its Resolution33 dated February 24, 2011 when it denied the
petitioners' motion for reconsideration. Hence, the present appeal, arguing that:
I. There was no evidence of actual reproduction of the hatch doors during the preliminary
investigation that would lead the investigating prosecutor to declare the existence of
probable cause;34
II. Even assuming that the petitioners manufactured hatch doors based on the illustrations
and plans covered by the respondent's Certificate of Registration Nos. 1-2004-13 and 1-
2004-14, the petitioners could not have committed copyright infringement. Certificate of
Registration Nos. 1-2004-13 and 1-2004-14 are classified under Section 172(i) which
pertains to "illustrations, maps, plans, sketches, charts and three-dimensional works
relative to geography, topography, architecture or science." Hence the original works that
are copyrighted are the illustrations and plans of interior hatch doors and exterior hatch
doors. Thus, it is the reproduction of the illustrations and plans covered by the copyright
registration that amounts to copyright infringement. The petitioners did not reproduce
the illustrations and plans covered under Certificate of Registration Nos. 1-2004-13 and
1-2004-14.
The manufacturing of hatch doors per se does not fall within the purview of copyright
infringement because copyright protection does not extend to the objects depicted in the
illustrations and plans;35 and
III. LEC's copyright registration certificates are not conclusive proofs that the items covered
thereby are copyrightable. The issuance of registration certificate and acceptance of
deposit by the National Library is ministerial in nature and does not involve a
determination of whether the item deposited is copyrightable or not. Certificates of
registration and deposit serve merely as a notice of recording and registration of the
work but do not confer any right or title upon the registered copyright owner or
automatically put his work under the protective mantle of the copyright law.36
Ruling of the Court
It is a settled judicial policy that courts do not reverse the Secretary of Justice's findings and
conclusions on the matter of probable cause. Courts are not empowered to substitute their
judgment for that of the executive branch upon which full discretionary authority has been
delegated in the determination of probable cause during a preliminary investigation. Courts may,
however, look into whether the exercise of such discretionary authority was attended with grave
abuse of discretion.37
Otherwise speaking, "judicial review of the resolution of the Secretary of Justice is limited to a
determination of whether there has been a grave abuse of discretion amounting to lack or excess of
jurisdiction."38
The CA anchored its act of reversing the DOJ Resolution dated March 10, 2006 upon the foregoing
tenets. Thus, the Court's task in the present petition is only to determine if the CA erred in
concluding that the DOJ committed grave abuse of discretion in directing the withdrawal of any
criminal information filed against the petitioners.
Grave abuse of discretion has been defined as "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."39 "'Capricious,' usually used in tandem
with the term 'arbitrary,' conveys the notion of willful and unreasoning action." 40cralawred
According to the CA, the DOJ's erratic findings on the presence or absence of probable cause
constitute grave abuse of discretion. The CA explained:
chanRoblesvirtualLawlibrary
This, to Our minds, in itself creates a nagging, persistent doubt as to whether [the DOJ Secretary]
issued the said resolutions untainted with a whimsical and arbitrary use of his discretion. For one
cannot rule that there is reason to overturn the investigating prosecutor's findings at the first
instance and then go on to rule that ample evidence exists showing that the hatch doors possess
artistic and ornamental elements at the second instance and proceed to rule that no such artistry
can be found on the purely utilitarian hatch doors at the last instance. x x
x.41ChanRoblesVirtualawlibrary
The Court disagrees. It has been held that the issuance by the DOJ of several resolutions with
varying findings of fact and conclusions of law on the existence of probable cause, by itself, is not
indicative of grave abuse of discretion.42
Inconsistent findings and conclusions on the part of the DOJ will denote grave abuse of discretion "Probable cause has been defined as the existence of such facts and circumstances as would excite
only if coupled with gross misapprehension of facts,43 which, after a circumspect review of the the belief in a reasonable mind, acting on the facts within the knowledge of the prosecutor, that the
records, is not attendant in the present case. person charged was guilty of the crime for which he was prosecuted. It is a reasonable ground of
presumption that a matter is, or may be, well-founded on such a state of facts in the mind of the
The facts upon which the resolutions issued by the investigating prosecutor and the DOJ were prosecutor as would lead a person of ordinary caution and prudence to believe, or entertain an
actually uniform, viz: honest or strong suspicion, that a thing is so."46
chanRoblesvirtualLawlibrary
"The term does not mean actual and positive cause nor does it import absolute certainty. It is
(a) LEC is the registered owner of plans/drawings for interior and exterior hatch doors under merely based on opinion and reasonable belief. Thus, a finding of probable cause does not require
Certificate of Registration Nos. 1-2004-13 and 1-2004-14 classified under Section 172(i) of an inquiry into whether there is sufficient evidence to procure a conviction. It is enough that it is
R.A. No. 8293 as pertaining to "illustrations, maps, plans, sketches, charts and three- believed that the act or omission complained of constitutes the offense charged." 47
dimensional works relative to geography, topography, architecture or science";
"In order that probable cause to file a criminal case may be arrived at, or in order to engender the
well-founded belief that a crime has been committed, the elements of the crime charged should be
present. This is based on the principle that every crime is defined by its elements, without which
(b) LEC is also the registered owner of plans/drawings for interior and exterior hatch doors there should be - at the most - no criminal offense."48
under Certificate of Registration Nos. H-2004-566 and H-2004-567 classified under Section
172(h) of R.A. No. 8293 as to "original ornamental designs or models for articles of A copyright refers to "the right granted by a statute to the proprietor of an intellectual production to
manufacture, whether or not registrable as an industrial design, and other works of applied its exclusive use and enjoyment to the extent specified in the statute." 49 Under Section 177 of R.A.
art"; No. 8293, the Copyright or Economic Rights consist of the exclusive right to carry out, authorize or
prevent the following acts:
chanRoblesvirtualLawlibrary

(c) LEC as the subcontractor of SKI-FB in the Project first manufactured and installed the 177.1 Reproduction of the work or substantial portion of the work;
interior and exterior hatch doors at the Manansala Tower in Rockwell Center, Makati City,
from the 7th to 22nd floors. The hatch doors were based on the plans/drawings submitted by
LEC to SKI-FB and subject of the above copyright registration numbers; and
177.2 Dramatization, translation, adaptation, abridgment, arrangement or other transformation
of the work;

(d) thereafter, Metrotech fabricated and installed hatch doors at the same building's 23rd to
41st floor based on the drawings and specifications provided by SKI-FB.44
177.3 The first public distribution of the original and each copy of the work by sale or other
The positions taken by the DOJ and the investigating prosecutor differed only in the issues tackled forms of transfer of ownership;
and the conclusions arrived at.

It may be observed that in the Resolution dated August 18, 2005 issued by the investigating
prosecutor, the primary issue was whether the hatch doors of LEC fall within copyrightable works. 177.4 Rental of the original or a copy of an audiovisual or cinematographic work, a work
This was resolved by ruling that hatch doors themselves are not covered by LEC's Certificate of embodied in a sound recording, a computer program, a compilation of data and other
Registration Nos. 1-2004-13 and 1-2004-14 issued on the plans/drawing depicting them. The DOJ materials or a musical work in graphic form, irrespective of the ownership of the original
reversed this ruling in its Resolution dated January 27, 2006 wherein the issue was streamlined to or the copy which is the subject of the rental;
whether the illustrations of the hatch doors under LEC's Certificate of Registration Nos. H-2004-566
and H-2004-567 bore artistic ornamental designs.

This situation does not amount to grave abuse of discretion but rather a mere manifestation of the 177.5 Public display of the original or a copy of the work;
intricate issues involved in the case which thus resulted in varying conclusions of law. Nevertheless,
the DOJ ultimately pronounced its definite construal of copyright laws and their application to the
evidence on record through its Resolution dated March 10, 2006 when it granted the petitioners'
motion for reconsideration. Such construal, no matter how erroneous to the CA's estimation, did not 177.6 Public performance of the work; and
amount to grave abuse of discretion. "[I]t is elementary that not every erroneous conclusion of law
or fact is an abuse of discretion."45

More importantly, the Court finds that no grave abuse of discretion was committed by the DOJ in
177.7 Other communication to the public of the work.
directing the withdrawal of the criminal information against the respondents because a finding of
probable cause contradicts the evidence on record, law, and jurisprudence.
Copyright infringement is thus committed by any person who shall use original literary or artistic
works, or derivative works, without the copyright owner's consent in such a manner as to violate
the foregoing copy and economic rights. For a claim of copyright infringement to prevail, the challenging them, shifts the burden of doing so to the applicant."60
evidence on record must demonstrate: (1) ownership of a validly copyrighted material by the
complainant; and (2) infringement of the copyright by the respondent. 50 Here, evidence negating originality and copyrightability as elements of copyright ownership was
satisfactorily proffered against LEC's certificate of registration.
While both elements subsist in the records, they did not simultaneously concur so as to substantiate
infringement of LEC's two sets of copyright registrations. The following averments were not successfully rebuffed by LEC:
chanRoblesvirtualLawlibrary
The respondent failed to substantiate the alleged reproduction of the drawings/sketches of hatch [T]he hinges on LEC's "hatch doors" have no ornamental or artistic value. In fact, they are just
doors copyrighted under Certificate of Registration Nos. 1-2004-13 and 1-2004-14. There is no similar to hinges found in truck doors that had been in common use since the 1960's. The gaskets on
proof that the respondents reprinted the copyrighted sketches/drawings of LEC's hatch doors. The LEC's "hatch doors", aside from not being ornamental or artistic, were merely procured from a
raid conducted by the NBI on Metrotech's premises yielded no copies or reproduction of LEC's company named Pemko and are not original creations of LEC. The locking device in LEC's "hatch
copyrighted sketches/drawings of hatch doors. What were discovered instead were finished and doors" are ordinary drawer locks commonly used in furniture and office
unfinished hatch doors. desks.61ChanRoblesVirtualawlibrary
In defending the copyrightability of its hatch doors' design, LEC merely claimed:
Certificate of Registration Nos. 1-2004-13 and 1-2004-14 pertain to class work "I" under Section chanRoblesvirtualLawlibrary
172 of R.A. No. 8293 which covers "illustrations, maps, plans, sketches, charts and three- LEC's Hatch Doors were particularly designed to blend in with the floor of the units in which they
dimensional works relative to geography, topography, architecture or science." 51 As such, LEC's are installed and, therefore, appeal to the aesthetic sense of the owner of units or any visitors
copyright protection there under covered only the hatch door sketches/drawings and not the actual thereto[;]
hatch door they depict.52
LEC's Hatch Doors have a distinct set of hinges, a distinct door a distinct jamb, all of which are both
As the Court held in Pearl and Dean (Philippines), Incorporated v. Shoemart, Incorporated:53 functional or utilitarian and artistic or ornamental at the same time[;] and
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 Moreover, the Project is a high-end residential building located in the Rockwell Center, a very prime
to the subjects and by the persons, and on terms and conditions specified in the statute. Accordingly, area in Metro Manila. As such, the owner of the Project is not expected to settle for Hatch Doors that
it can cover only the works falling within the statutory enumeration or description.54 (Citations simply live up to their function as such. The owner would require, as is the case for the Project,
omitted and italics in the original) Hatch Doors that not only fulfill their utilitarian purposes but also appeal to the artistic or
Since the hatch doors cannot be considered as either illustrations, maps, plans, sketches, charts and ornamental sense of their beholders.62ChanRoblesVirtualawlibrary
three-dimensional works relative to geography, topography, architecture or science, to be properly From the foregoing description, it is clear that the hatch doors were not artistic works within the
classified as a copyrightable class "I" work, what was copyrighted were their sketches/drawings meaning of copyright laws. A copyrightable work refers to literary and artistic works defined as
only, and not the actual hatch doors themselves. To constitute infringement, the usurper must have original intellectual creations in the literary and artistic domain. 63
copied or appropriated the original work of an author or copyright proprietor, absent copying, there
can be no infringement of copyright.55 A hatch door, by its nature is an object of utility. It is defined as a small door, small gate or an
opening that resembles a window equipped with an escape for use in case of fire or emergency. 64 It
"Unlike a patent, a copyright gives no exclusive right to the art disclosed; protection is given only to is thus by nature, functional and utilitarian serving as egress access during emergency. It is not
the expression of the idea — not the idea itself."56 primarily an artistic creation but rather an object of utility designed to have aesthetic appeal. It is
intrinsically a useful article, which, as a whole, is not eligible for copyright.
The respondent claimed that the petitioners committed copyright infringement when they
fabricated/manufactured hatch doors identical to those installed by LEC. The petitioners could not A "useful article" defined as an article "having an intrinsic utilitarian function that is not merely to
have manufactured such hatch doors in substantial quantities had they not reproduced the portray the appearance of the article or to convey information" is excluded from copyright
copyrighted plans/drawings submitted by LEC to SK1-FB. This insinuation, without more, does not eligibility.65
suffice to establish probable cause for infringement against the petitioners. "[Although the
determination of probable cause requires less than evidence which would justify conviction, it The only instance when a useful article may be the subject of copyright protection is when it
should at least be more than mere suspicion."57 incorporates a design element that is physically or conceptually separable from the underlying
product. This means that the utilitarian article can function without the design element. In such an
Anent, LEC's Certificate of Registration Nos. H-2004-566 and H-2004-567, the Court finds that the instance, the design element is eligible for copyright protection.66
ownership thereof was not established by the evidence on record because the element of
copyrightability is absent. The design of a useful article shall be considered a pictorial, graphic, or sculptural work only if, and
only to the extent that, such design incorporates pictorial, graphic, or sculptural features that can be
"Ownership of copyrighted material is shown by proof of originality and copyrightability." 58 While it identified separately from, and are capable of existing independently of, the utilitarian aspects of the
is true that where the complainant presents a copyright certificate in support of the claim of article.67
infringement, the validity and ownership of the copyright is presumed. This presumption, however,
is rebuttable and it cannot be sustained where other evidence in the record casts doubt on the A belt, being an object utility with the function of preventing one's pants from falling down, is in
question of ownership,59 as in the instant case. itself not copyrightable. However, an ornately designed belt buckle which is irrelevant to or did not
enhance the belt's function hence, conceptually separable from the belt, is eligible for copyright. It is
Moreover, "[t]he presumption of validity to a certificate of copyright registration merely orders the copyrightable as a sculptural work with independent aesthetic value, and not as an integral element
burden of proof. The applicant should not ordinarily be forced, in the first instance, to prove all the of the belt's functionality.68
multiple facts that underline the validity of the copyright unless the respondent, effectively
A table lamp is not copyrightable because it is a functional object intended for the purpose of
providing illumination in a room. The general shape of a table lamp is likewise not copyrightable
because it contributes to the lamp's ability to illuminate the reaches of a room. But, a lamp base in
the form of a statue of male and female dancing figures made of semi vitreous china is copyrightable
as a work of art because it is unrelated to the lamp's utilitarian function as a device used to combat
darkness.69

In the present case, LEC's hatch doors bore no design elements that are physically and conceptually
separable, independent and distinguishable from the hatch door itself. The allegedly distinct set of
hinges and distinct jamb, were related and necessary hence, not physically or conceptually
separable from the hatch door's utilitarian function as an apparatus for emergency egress. Without
them, the hatch door will not function.

More importantly, they are already existing articles of manufacture sourced from different
suppliers. Based on the records, it is unrebutted that: (a) the hinges are similar to those used in
truck doors; (b) the gaskets were procured from a company named Pemko and are not original
creations of LEC; and (c) the locking device are ordinary drawer locks commonly used in furniture
and office desks.

Being articles of manufacture already in existence, they cannot be deemed as original creations. As
earlier stated, valid copyright ownership denotes originality of the copyrighted material. Originality
means that the material was not copied, evidences at least minimal creativity and was
independently created by the author.70 It connotes production as a result of independent
labor.71 LEC did not produce the door jambs and hinges; it bought or acquired them from suppliers
and thereafter affixed them to the hatch doors. No independent original creation can be deduced
from such acts.

The same is true with respect to the design on the door's panel. As LEC has stated, the panels were
"designed to blend in with the floor of the units in which they [were] installed." 72 Photos of the
panels indeed show that their color and pattern design were similar to the wooden floor parquet of
the condominium units.73 This means that the design on the hatch door panel was not a product of
LEC's independent artistic judgment and discretion but rather a mere reproduction of an already
existing design.

Verily then, the CA erred in holding that a probable cause for copyright infringement is imputable
against the petitioners. Absent originality and copyrightability as elements of a valid copyright
ownership, no infringement can subsist.chanrobleslaw

WHEREFORE, premises considered, the petition is hereby GRANTED. The Decision dated July 9,
2010 and Resolution dated February 24, 2011 of the Court of Appeals in CA-G.R. SP No. 95471
are REVERSEDand SET ASIDE. The Resolutions dated March 10, 2006 and May 25, 2006 of the
Department of Justice in I.S. No. 2004-925 dismissing the complaint for copyright infringement
are REINSTATED.

SO ORDERED.cralawlawlibrary
Lenz v. Universal Music Corp.
Ninth Circuit Requires Analysis of Fair Use Before Issuing of Takedown Notices.
Recent Case : No. 13-16106, 2016 WL 1056082 (9th Cir. Mar. 17, 2016), reh'g en banc denied, id.
JUN 6, 2019
129 Harv. L. Rev. 2289
PDF
The Digital Millennium Copyright Act1×1. Pub. L. No. 105-304, 112 Stat. 2860 (1998) (codified as
amended in scattered sections of the U.S. Code).Show More (DMCA) was enacted to modernize
copyright protection for the digital age. In order to avoid liability, internet service providers (ISPs)
must expeditiously respond to “takedown” notifications issued by copyright holders and remove
content that the holders claim infringe on copyrights.2×2. See 17 U.S.C. § 512(c) (2012). The
notification must state that the copyright holder has a “good faith belief” that use of the material in
question is not permissible.3×3. Id. § 512(c)(3)(A)(v). Parties that issue such notifications without a
good faith belief of infringement are liable for misrepresentation under the DMCA.4×4. Id. § 512(f)
(“Any person who knowingly materially misrepresents . . . that material or activity is infringing . . . shall
be liable for any damages . . . incurred by the alleged infringer . . . .”).Show More When sending a
takedown notification, a copyright owner has to do very little, if anything, to show that the material
in question is actually infringing.5×5. See Rossi v. Motion Picture Ass’n of Am., 391 F.3d 1000, 1004
(9th Cir. 2004) (holding that the copyright holder need only have a subjective good faith belief that the
material is infringing).Show More As a result, many commentators argue that copyright holders
abuse this extrajudicial system to censor speech they don’t like.6×6. See, e.g., Jennifer M. Urban &
Laura Quilter, Efficient Process or “Chilling Effects”? Takedown Notices Under Section 512 of the
Digital Millennium Copyright Act, 22 SANTA CLARA COMPUTER &HIGH TECH. L.J. 621, 681–82 (2006);
Benjamin Wilson, Comment, Notice, Takedown, and the Good-Faith Standard, 29 ST. LOUIS U. PUB. L.
REV.613, 614–15 (2010).Show More In Lenz v. Universal Music Corp.,7×7. No. 13-16106, 2016 WL
1056082 (9th Cir. Mar. 17, 2016) (amending, superseding, and denying rehearing en banc to Lenz v.
Universal Music Corp., 801 F.3d 1126 (9th Cir. 2015)).Show More the Ninth Circuit attempted to
combat such abuse by ruling that copyright holders must first conduct an analysis of whether the
material constitutes fair use,8×8. Fair use is evaluated along four metrics: (1) the “purpose and
character of the use,” with consideration to whether the purpose is commercial or nonprofit; (2) the
nature of the copyrighted piece; (3) “the amount and substantiality of the portion used in relation to
the copyrighted work as a whole”; and (4) the effect of the use on the copyrighted work’s market value.
17 U.S.C. § 107.Show More and therefore does not infringe, before issuing a
takedown notification.9×9. Lenz, 2016 WL 1056082, at *6. The fair use doctrine permits limited uses
of copyrighted material without permission from copyright holders.Show More However, upon closer
examination, the court’s decision may do little to stem DMCA takedown abuse. By requiring that a
plaintiff show only a lack of subjective belief of infringement, the Ninth Circuit’s decision may in fact
incentivize copyright holders to do as little as possible to review fair use. As such, it seems to
encourage exactly the kind of abuse it was trying to stem — that of reckless and careless issuing of
DMCA takedown requests. In order to stem such abuse more effectively, the court should have
interpreted the DMCA’s “knowing” misrepresentation requirement to include representations
recklessly made without sufficient procedures to form a good faith belief about fair use.
In February 2007, Stephanie Lenz made a home video of her young children dancing in her kitchen,
in which the song “Let’s Go Crazy,” by the musical artist Prince, “can be heard for approximately
twenty seconds, albeit with . . . poor sound quality.”10×10. Lenz v. Universal Music Corp., 572 F. Supp.
2d 1150, 1152 (N.D. Cal. 2008) (citing Stephanie Lenz, “Let’s Go Crazy” #1, YOUTUBE(Feb. 7,
2007), https://www.youtube.com/watch?v=N1KfJHFWlhQ).Show More Lenz then uploaded the video
to YouTube to “shar[e] . . . with friends and family.”11×11. Id. On June 4, Universal Music
Corporation (Universal), which owns the copyright to the song, sent YouTube a DMCA takedown
notice requesting that Lenz’s video be removed due to copyright infringement.12×12. Id. “The notice
included a ‘good faith belief’ statement as required by 17
U.S.C. § 512(c)(3)(A)(v) . . . .”13×13. See Lenz, 2016 WL 1056082, at *2 (“We have a good faith belief
that the . . . activity is not authorized by the copyright owner, its agent, or the law.” (quoting Email
from Alina Moffat, Assoc. Dir., Bus. Affairs, Universal Music Publ’g Grp., to YouTube.com,
copyright@youtube.com (June 4, 2007, 5:30 PM))).Show More After YouTube removed the video,
Lenz sent a DMCA counter-notification14×14. See 17 U.S.C. § 512(g) (2012). claiming the video did
not infringe since it constituted a fair use of Prince’s song; YouTube then restored
the video.15×15. Lenz, 572 F. Supp. 2d at 1152.
Lenz filed suit in the Northern District of California, claiming Universal misrepresented, in violation
of the DMCA, that it had a good faith belief her video was infringing.16×16. See Order Granting
Defendant’s Motion to Dismiss with Leave to Amend, Lenz, 572 F. Supp. 2d 1150 (No. 07-03783), 2008
WL 962102 [herinafter Order]. Initially, Lenz also claimed tortious interference with her contract with
YouTube and sought a declaratory judgment of noninfringement. Amended Complaint at 4–5, Lenz,
572 F. Supp. 2d 1150 (No. 07-03783), 2007 WL 2888482. The court granted Universal’s initial motion
to dismiss, but granted leave to amend the misrepresentation and tortious interference claims.
Order, supra, at *5–6. The eventual amended complaint included only the misrepresentation claim.
Second Amended Complaint, Lenz, No. C 07-03783, 2008 WL 2810556 (N.D. Cal. Apr. 18, 2008).Show
More The district court denied Universal’s motion to dismiss, holding that “fair use is a lawful use of
a copyright,”17×17. Lenz, 572 F. Supp. 2d at 1154. and therefore, a “[copyright] owner must evaluate
whether the material makes fair use of the copyright” in order to properly state a good faith belief
of infringement.18×18. Id. (citing 17 U.S.C. § 512(c)(3)(A)(v)). After several years of procedural
battles over discovery, both parties moved for summary judgment, which the
court denied.19×19. Lenz v. Universal Music Corp., No. 5:07-cv-3783-JF, 2013 WL 271673, at *2, *8
(N.D. Cal. Jan. 24, 2013).Show More Explaining why a fair use inquiry was necessary, the court found
the evidence that Universal issued the takedown notice without considering fair use to be sufficient
to deny Universal’s motion. Not only did Universal’s stated video-review procedure lack explicit
consideration of fair use, but Universal’s head of business affairs also did not mention fair use when
he testified that “the general guidelines are that when a writer is upset . . . we review the video to
ensure that the [writer’s] composition was the focus of the video.”20×20. Id. at *5. However, the
court did not go so far as to grant Lenz’s motion. Instead, it held that Universal’s admitted failure to
consider fair use was not sufficient to establish liability under § 512(f).21×21. Id. at *6. It stated that
“the ‘good faith belief’ requirement . . . encompasses a subjective, rather than
objective, standard.”22×22. Id. (quoting Rossi v. Motion Picture Ass’n of Am., 391 F.3d 1000, 1004 (9th
Cir. 2004)). As such, actual knowledge of misrepresentation (and not mere error) is necessary. Lenz
needed to “demonstrate that Universal had some actual knowledge that its Takedown Notice
contained a material misrepresentation.”23×23. Id. However, the court also held that Lenz could
proceed under a willful blindness theory in showing that Universal believed “there was a high
probability that any given video might make fair use of a Prince composition” and that it
deliberately avoided learning of this fact.24×24. Id. at *7; see also id. at *8 (“Lenz is free to argue that
a reasonable actor in Universal’s position would have understood that fair use was ‘self-
evident[] . . . .’”). Under a willful blindness theory, knowledge can be imputed if a party subjectively
believes there is a high probability a fact exists and takes deliberate actions to avoid learning of that
fact.Show More
The Ninth Circuit affirmed.25×25. Lenz, 2016 WL 1056082. Writing for the majority,
Judge Tallman26×26. Judge Tallman was joined by Judge Murguia. held that § 512 “unambiguously
contemplates fair use as a use authorized by the law,”27×27. Id. at *4. and, as such, requires
copyright holders to consider fair use before issuing takedown notices.28×28. Id. at *4–6. The court
invoked the standard from Rossi v. Motion Picture Ass’n of America,29×29. 391 F.3d 1000, 1004 (9th
Cir. 2004). as the district court had, to highlight that the good faith requirement
necessitates subjective belief that the material in question infringes copyright rather than any
inquiry into the objective reasonableness or correctness of the fair
use determination.30×30. See Lenz, 2016 WL 1056082, at *6. In short, the fair use determination
does not have to be correct or reasonable; it just has to have happened. The court in Rossi held that
the jury therefore had to determine if Universal’s actions sufficiently approximated a fair use
analysis (even if not labeled as such) on which it could have formed a subjective good faith belief
regarding fair use.31×31. Id. It continued: “If . . . a copyright holder forms a subjective good
faith belief the allegedly infringing material does not constitute fair use, we are in no position to
dispute [that] belief even if we would have reached the opposite conclusion.”32×32. Id. at *7. And
while the court noted that the consideration of fair use need not be prohibitively extensive to satisfy
this subjective good faith requirement, it made clear that mere “lip service” to fair use would
not suffice.33×33. Id. Though the court maintained that a showing of willful blindness could support
a finding of “knowing” misrepresentation, it held that Lenz had failed to carry her burden of
production at summary judgment; since she did not present evidence showing that Universal
subjectively believed there was a high probability the video was a fair use, she could not proceed to
trial on the theory.34×34. Id. at *7–8. The court concluded by holding that Lenz could seek recovery
of nominal damages resulting from unquantifiable harm under § 512(f).35×35. Id. at *9–10.
Judge Smith concurred in part and dissented in part.36×36. Id. at *10–12 (Smith, J., concurring in
part and dissenting in part). He concurred in the majority opinion apart from its interpretation of
“knowing” misrepresentation under § 512(f), and would have held that Universal’s actions were
insufficient to form a good faith belief as a matter of law.37×37. Id. at *11. He concluded that “when
the misrepresentation concerns [the good faith requirement], the knowledge requirement is
satisfied when the party knows that it has not considered fair use.”38×38. Id. Further, Judge Smith
took issue with the court’s interpretation of the “knowingly” requirement. On Universal’s
view, Rossi’s actual knowledge standard requires that a party subjectively believe the fact it asserts
to be false to be liable for misrepresentation; but such a view does not capture claims that are made
without a basis for knowing their truth or falsity.39×39. Id. Rather, the court should have construed
“knowing” misrepresentation to include claims of infringement made without proper consideration
of fair use.40×40. Id. On such an interpretation, he found that Universal, by not explicitly
considering fair use, violated § 512(f) as a matter of law.41×41. Id. at *11–12.
The Ninth Circuit’s opinion has been heralded as a major advance in addressing what is seen as
rampant abuse of extrajudicial takedown powers.42×42. See, e.g., Press Release, Elec. Frontier Found.,
Important Win for Fair Use in “Dancing Baby” Lawsuit (Sept. 14,
2015), https://www.eff.org/press/releases/important-win-fair-use-dancing-baby-
lawsuit[http://perma.cc/X6P8-LVM9].Show More Many view the current takedown regime as
encouraging a “shoot first, think later” mentality that allows copyright holders to issue broad
takedown requests to censor any speech they may not like, without considering whether any
infringement actually took place.43×43. See, e.g., Jeffrey Cobia, Note, The Digital Millennium
Copyright Act Takedown Notice Procedure, 10 MINN. J.L. SCI. & TECH. 387, 391–93 (2009).Show
More The courts’ opinions in this case allude to these policy concerns.44×44. See, e.g., Lenz, 2016 WL
1056082, at *1(“[Lenz’s] claim boils down to a question of whether copyright holders have been
abusing the extrajudicial takedown procedures . . . by declining to first evaluate . . . fair use.”); Lenz v.
Universal Music Corp., 572 F. Supp. 2d 1150, 1156 (N.D. Cal. 2008) (“The purpose of Section 512(f) is to
prevent the abuse of takedown notices.”).Show More However, upon closer examination, it appears
that the holding will not do much to reduce such takedown abuse in practice. First, the Ninth
Circuit’s interpretation of the actual knowledge standard means that, to prove “knowing”
misrepresentation, a plaintiff must show (as long as the copyright holder claims to have evaluated
fair use) that the copyright holder did not actually believe the takedown target to be outside fair
use. Having to show such nonexistence of a claimed belief presents a prohibitively high evidentiary
burden, as one would have to produce evidence of another’s state
of mind.45×45. See Wilson, supranote 6, at 632.This high evidentiary burden, along with the court’s
refusal to explicitly establish what kinds of fair use analyses are necessary, creates an unsavory
incentive for copyright holders to avoid learning conclusively whether a use constitutes fair use.
Savvy copyright holders will be incentivized to implement slipshod, cursory fair use procedures to
avoid liability under § 512(f), thereby promoting the very kind of abuse the court seeks to stem. In
order to capture such abusive representations of infringement made regardless of their truth or
falsity, the court should (and could) have imposed a recklessness standard for “knowing” under
§ 512(f).
The novelty of the Lenz decision is that it requires copyright holders to incorporate fair use analysis
into their infringement determinations. As discussed, § 512(f) imposes liability on those who
“knowingly materially misrepresent[] . . . that material or activity is infringing.”46×46. 17 U.S.C.
§ 512(f) (2012). While this newly required inquiry may seem to have teeth at first, any such teeth
are dulled (or altogether removed) by the court’s interpretation of “knowing” as requiring “actual
knowledge.” Liability does not attach “simply because an unknowing mistake is made, even if the
copyright owner acted unreasonably in making the mistake; there must be a demonstration of some
actual knowledge of misrepresentation.”47×47. Rossi v. Motion Picture Ass’n of Am., 391 F.3d 1000,
1005 (9th Cir. 2004) (emphasis added).Show More Therefore, a plaintiff like Lenz can only prevail in
situations where there is evidence a copyright holder entirely or almost entirely failed to consider
fair use; oversight or carelessness is not covered.
Even though the court claimed copyright holders will be held liable for paying only “lip service” to
fair use considerations, it did not show how copyright owners could ever be held liable for subpar
or illusory fair use analysis procedures. The cases it cited to support this “lip service” contention all
fall within the narrow set of situations where there was explicit evidence the copyright holder knew
it was targeting noninfringing material, and the adequacy of infringement consideration procedures
was not called into question.48×48. See Lenz, 2016 WL 1056082, at *7 (citing Disney Enters., Inc. v.
Hotfile Corp., No. 11-20427-CIV, 2013 WL 6336286, at *48 (S.D. Fla. Sept. 20, 2013) (denying summary
judgment because sufficient evidence existed to establish subjective knowledge); Rosen v. Hosting
Servs., Inc., 771 F. Supp. 2d 1219, 1223 (C.D. Cal. 2010); Online Policy Grp. v. Diebold, Inc., 337 F. Supp.
2d 1195, 1204 (N.D. Cal. 2004)).Show More In fact, in one of the cases the Lenz court cited, the court
had construed “knowledge” to mean that “a party . . . should have known if it acted with reasonable
care . . . that it was making misrepresentations” — an objective standard, unlike the one
imposed here.49×49. Online Policy Grp., 337 F. Supp. 2d at 1204 (using definitions of actual and
constructive knowledge from BLACK’S LAW DICTIONARY (8th ed. 2004)).Show More Meanwhile, under the
framework the Ninth Circuit sets forth, a plaintiff faces a very high evidentiary burden in that she
must somehow show that the copyright holder did not subjectively believe that the material
infringed; if fair use consideration procedures of any kind exist, she cannot point to their
inadequacy to show liability. This framework creates an incentive for copyright holders to avoid
conclusively learning whether the material in question is a fair use.50×50. See Adam Eakman,
Note, The Future of the Digital Millennium Copyright Act, 48 IND. L. REV. 631, 649 (2015) (“By setting
the standard for ‘knowledge’ under section 512(f) so high, courts have essentially incentivized
copyright holders notto gain any knowledge about the DMCA request being generated.”).Show
More Even though plaintiffs can still sue for willful blindness, this is not a viable option in practice,
as they must also show that the copyright holder subjectively believed there was a high probability
the material in question did not infringe — another prohibitively high evidentiary threshold, which
Lenz also failed to meet.
The subjective “actual knowledge” standard also poses a problem in the fair use context since fair
use is such a fact-sensitive, multifactor inquiry. As Matt Williams has argued, “[i]t is impossible for a
copyright owner . . . to possess such [actual] knowledge with regard to an alleged fair use because
every fair use case presents different facts at different times, which can result in different
legal outcomes.”51×51. Matt Williams, The Truth and the “Truthiness” About Knowing Material
Misrepresentations, 9 N.C. J.L. &TECH. 1, 39 (2007); see also David Nimmer, “Fairest of Them All” and
Other Fairy Tales of Fair Use, LAW & CONTEMP. PROBS., Winter/Spring 2003, at 263, 266–84
(2003).Show More In fact, “[t]he doctrine of fair use has been called . . . ‘the most troublesome in the
whole law of copyright.’”52×52. Sony Corp. of Am. v. Universal City Studios, Inc., 464 U.S. 417, 475
(1984) (Blackmun, J., dissenting) (quoting Dellar v. Samuel Goldwyn, Inc., 104 F.2d 661, 662 (2d Cir.
1939)).Show More The Lenz decision reduces the fair use analysis requirement to a question of
whether the copyright holder had even nominal procedures for analyzing fair use. If a copyright
holder does claim to have conducted some fair use analysis — as will likely be common moving
forward — plaintiff recovery is limited to the rare instance in which: (1) there is “unequivocal
fair use”;53×53. Unequivocal fair use is an uncommon situation in which “an evaluation of the use
reveals facts that fit so squarely within the fair use test so as to yield only one reasonable conclusion —
that the use is fair use.” Jordan Koss, Note, Protecting Free Speech for Unequivocal Fair Users,
28 CARDOZO ARTS & ENT. L.J. 149, 153 (2010).Show More (2) the plaintiff shows that the copyright
holder knows of this fact; and (3) the copyright holder lies about having this knowledge.
Taken together, these concerns seem to point to recklessness as the appropriate standard for
“knowing” misrepresentation under § 512. This would be an expansion, rather than abandonment,
of the court’s “knowing” requirement. Across many areas of law, courts have long considered
knowing misrepresentation to include statements that are made recklessly — those made with a
conscious disregard for their truth.54×54. See G. Richard Shell, When Is It Legal to Lie in
Negotiations?, SLOAN MGMT. REV., Spring 1991, at 93, 94; see also, e.g., Computer Sys. Eng’g, Inc. v.
Qantel Corp., 740 F.2d 59, 67–68 (1st Cir. 1984); United States v. Coop. Grain & Supply Co., 476 F.2d 47,
60 (8th Cir. 1973); Jones v. Fenton Ford, Inc., 427 F. Supp. 1328, 1334 (D. Conn. 1977).Show
More Trademark law, for instance, has embraced such an approach.55×55. See generally Linda K.
McLeod, Knew or Should Have Known: Reckless Disregard for the Truth, and Fraud Before the
Trademark Office, 34 AIPLA Q.J. 287 (2006).Show More As the partial dissent noted, this
interpretation of “knowing” is consistent with “long-settled principles of deceit and fraudulent
misrepresentation [under which] a party need only know that it is ignorant of the truth or falsity of
its representation for its misrepresentation to be knowing.”56×56. Lenz, 2016 WL 1056082, at *11
(Smith, J., concurring in part and dissenting in part). It is also consistent with the Second Restatement
of Torts.57×57. See RESTATEMENT(SECOND) OF TORTS§ 526 (AM. LAW INST. 1979) (“A misrepresentation is
fraudulent if the maker knows that he does not have the basis for his representation.”).Show More As
most of the concern regarding DMCA takedown abuse centers on the fact that copyright holders
recklessly issue such requests without evaluating infringement rather than on the question of
whether the holders conclusively knew that there was no infringement, this standard better
captures the kinds of abuse the Lenz court was trying to prevent.
Also, as Judge Smith pointed out in his partial dissent, this construction of § 512’s “knowingly”
requirement is consistent with Rossi in that “one who knows that he has not considered fair
use knows that he lacks a basis for that belief” and therefore has actual knowledge that he’s
misrepresenting the infringement.58×58. Lenz, 2016 WL 1056082, at *11 (Smith, J., concurring in
part and dissenting in part) (citing Rossi v. Motion Picture Ass’n of Am., 391 F.3d 1000, 1005 (9th Cir.
2004)).Show More Therefore, this interpretation would focus on whether the copyright owner had
any basis upon which to properly find infringement. In practice, such an interpretation would differ
from the majority’s approach. Instead of having to point to evidence about the copyright holder’s
state of mind (whether they had formed a subjective good faith belief), the plaintiff could show
misrepresentation by pointing to the insufficiency of their fair use analysis procedures — arguably a
much lighter evidentiary burden. Such an inquiry would not necessarily ask if the fair use analysis
or the copyright holder’s good faith belief was “correct” or reasonable. Rather, it would ask whether
the copyright holder had a sufficient basis upon which to form that belief (correct or not). Under the
majority’s test, a copyright holder who purposely sets up cursory fair use analyses to avoid
conclusively learning of fair use could avoid liability simply by claiming they formed a belief that the
work was not a fair use. By contrast, under an expanded recklessness standard, the plaintiff could
point to inadequate fair use analysis procedures to show that the defendant had an insufficient basis
upon which to form this belief. While the majority did hold that a jury must determine the
sufficiency of Universal’s procedures in this case, such an analysis was only necessary here because
Universal’s procedures did not clearly consider fair use.59×59. See id. at *6 (majority opinion). Had
Universal done so by, for example, labeling its procedures as considering fair use (as savvy
copyright holders will do moving forward), such an analysis of procedure would not have been
undertaken.
Complaints about DMCA takedown abuse are often based on copyright holders’ carelessness or
recklessness when evaluating infringement. The Ninth Circuit’s solution in Lenz does little to solve
the root cause of these complaints, and in fact potentially encourages copyright holders to remain
ignorant of noninfringement when issuing takedown notices. In order to target this abuse more
directly, the Ninth Circuit should have construed “knowing” misrepresentation to include
statements recklessly made asserting infringement without a basis for the belief that the work was
not fair use. Without such a solution, internet users like Lenz are left essentially where they started.