Republic of the Philippines

SUPREME COURT
Manila
EN BANC

G.R. No. 110318 August 28, 1996
COLUMBIA PICTURES, INC., ORION PICTURES CORPORATION, PARAMOUNT
PICTURES CORPORATION, TWENTIET CENTUR! "O# "ILM CORPORATION,
UNITE$ ARTISTS CORPORATION, UNI%ERSAL CIT! STU$IOS, INC., TE WALT
$ISNE! COMPAN!, &'( WARNER BROTERS, INC., petitioners,
vs.
COURT O" APPEALS, SUNSINE OME %I$EO, INC. &'( $ANILO A.
PELIN$ARIO, respondents.

REGALA$O, J.:p
Before us is a petition for review on certiorari of the decision of the Court of Appeals
1

promulgated on ul! "", #$$" and its resolution
2
of Ma! #%, #$$& den!ing petitioners'
motion for reconsideration, both of which sustained the order
3
of the Regional (rial
Court, Branch #&&, Ma)ati, Metro Manila, dated November "", #$** for the +uashal of
,earch -arrant No. *./%0& earlier issued per its own order
)
on ,eptember 0, #$** for
violation of ,ection 01 of Presidential 2ecree No. 3$, as amended, otherwise )nown
as the 42ecree on the Protection of 5ntellectual Propert!.4
(he material facts found b! respondent appellate court are as follows6
Complainants thru counsel lodged a formal complaint with the National Bureau of
5nvestigation for violation of P2 No. 3$, as amended, and sought its assistance in their
anti/film pirac! drive. Agents of the NB5 and private researchers made discreet
surveillance on various video establishments in Metro Manila including ,unshine
7ome 8ideo 5nc. 9,unshine for brevit!:, owned and operated b! 2anilo A. Pelindario
with address at No. 1 Ma!fair Center, Magallanes, Ma)ati, Metro Manila.
;n November #3, #$*., NB5 ,enior Agent <auro C. Re!es applied for a search
warrant with the court a quo against ,unshine see)ing the sei=ure, among others, of
pirated video tapes of cop!righted films all of which were enumerated in a list attached
to the application> and, television sets, video cassettes and?or laser disc recordings
e+uipment and other machines and paraphernalia used or intended to be used in the
unlawful e@hibition, showing, reproduction, sale, lease or disposition of videograms
tapes in the premises above described. 5n the hearing of the application, NB5 ,enior
Agent <auro C. Re!es, upon +uestions b! the court a quo, reiterated in substance his
averments in his affidavit. 7is testimon! was corroborated b! another witness, Mr.
Rene C. Balta=ar. Att!. Rico 8. 2omingo's deposition was also ta)en. ;n the basis of
the affidavits and depositions of NB5 ,enior Agent <auro C. Re!es, Rene C. Balta=ar
and Att!. Rico 8. 2omingo, ,earch -arrant No. *./%0& for violation of ,ection 01 of
P2 No. 3$, as amended, was issued b! the court a quo.
(he search warrant was served at about #630 p.m. on 2ecember #3, #$*. to ,unshine
and?or their representatives. 5n the course of the search of the premises indicated in
the search warrant, the NB5 Agents found and sei=ed various video tapes of dul!
cop!righted motion pictures?films owned or e@clusivel! distributed b! private
complainants, and machines, e+uipment, television sets, paraphernalia, materials,
accessories all of which were included in the receipt for properties accomplished b!
the raiding team. Cop! of the receipt was furnished and?or tendered to Mr. 2anilo A.
Pelindario, registered owner/proprietor of ,unshine 7ome 8ideo.
;n 2ecember #1, #$*., a 4Return of ,earch -arrant4 was filed with the Court.
A 4Motion (o <ift the ;rder of ,earch -arrant4 was filed but was later denied for lac) of
merit 9p. "*%, Records:.
A Motion for reconsideration of the ;rder of denial was filed. (he court a quo granted
the said motion for reconsideration and Austified it in this manner6
5t is undisputed that the master tapes of the cop!righted films from which the pirated
films were allegedl! copies 9sic:, were never presented in the proceedings for the
issuance of the search warrants in +uestion. (he orders of the Court granting the
search warrants and den!ing the urgent motion to lift order of search warrants were,
therefore, issued in error. Conse+uentl!, the! must be set aside. 9p. #&, Appellant's
Brief:
*
Petitioners thereafter appealed the order of the trial court granting private respondents'
motion for reconsideration, thus lifting the search warrant which it had theretofore
issued, to the Court of Appeals. As stated at the outset, said appeal was dismissed and
the motion for reconsideration thereof was denied. 7ence, this petition was brought to
this Court particularl! challenging the validit! of respondent court's retroactive
application of the ruling in 20th Century Fox Film Corporation vs. Court of Appeals, et
al.,
6
in dismissing petitioners' appeal and upholding the +uashal of the search warrant
b! the trial court.
5
5nceptivel!, we shall settle the procedural considerations on the matter of and the
challenge to petitioners' legal standing in our courts, the! being foreign corporations
not licensed to do business in the Philippines.
1
Private respondents aver that being foreign corporations, petitioners should have such
license to be able to maintain an action in Philippine courts. 5n so challenging
petitioners' personalit! to sue, private respondents point to the fact that petitioners are
the cop!right owners or owners of e@clusive rights of distribution in the Philippines of
cop!righted motion pictures or films, and also to the appointment of Att!. Rico 8.
2omingo as their attorne!/in/fact, as being constitutive of 4doing business in the
Philippines4 under ,ection # 9f:9#: and 9":, Rule # of the Rules of the Board of
5nvestments. As foreign corporations doing business in the Philippines, ,ection #&& of
Batas Pambansa Blg. 1*, or the Corporation Code of the Philippines, denies them the
right to maintain a suit in Philippine courts in the absence of a license to do business.
Conse+uentl!, the! have no right to as) for the issuance of a search warrant.
+
5n refutation, petitioners flatl! den! that the! are doing business in the Philippines,
8

and contend that private respondents have not adduced evidence to prove that
petitioners are doing such business here, as would re+uire them to be licensed b! the
,ecurities and E@change Commission, other than averments in the +uoted portions of
petitioners' 4;pposition to Brgent Motion to <ift ;rder of ,earch -arrant4 dated April
"*, #$** and Att!. Rico 8. 2omingo's affidavit of 2ecember #3, #$*.. Moreover, an
e@clusive right to distribute a product or the ownership of such e@clusive right does not
conclusivel! prove the act of doing business nor establish the presumption of doing
business.
9
(he Corporation Code provides6
,ec. #&&. Doing business without a license. C No foreign corporation transacting
business in the Philippines without a license, or its successors or assigns, shall be
permitted to maintain or intervene in an! action, suit or proceeding in an! court or
administrative agenc! of the Philippines> but such corporation ma! be sued or
proceeded against before Philippine courts or administrative tribunals on an! valid
cause of action recogni=ed under Philippine laws.
(he obtainment of a license prescribed b! ,ection #"0 of the Corporation Code is not
a condition precedent to the maintenance of an! )ind of action in Philippine courts b! a
foreign corporation. 7owever, under the afore+uoted provision, no foreign corporation
shall be permitted to transact business in the Philippines, as this phrase is understood
under the Corporation Code, unless it shall have the license re+uired b! law, and until
it complies with the law intransacting business here, it shall not be permitted to
maintain an! suit in local courts.
10
As thus interpreted, an! foreign corporation not
doing business in the Philippines ma! maintain an action in our courts upon an! cause
of action, provided that the subAect matter and the defendant are within the Aurisdiction
of the court. 5t is not the absence of the prescribed license but 4doing business4 in the
Philippines without such license which debars the foreign corporation from access to
our courts. 5n other words, although a foreign corporation is without license to transact
business in the Philippines, it does not follow that it has no capacit! to bring an action.
,uch license is not necessar! if it is not engaged in business in the Philippines.
11
,tatutor! provisions in man! Aurisdictions are determinative of what constitutes 4doing
business4 or 4transacting business4 within that forum, in which case said provisions are
controlling there. 5n others where no such definition or +ualification is laid down
regarding acts or transactions failing within its purview, the +uestion rests primaril! on
facts and intent. 5t is thus held that all the combined acts of a foreign corporation in the
,tate must be considered, and ever! circumstance is material which indicates a
purpose on the part of the corporation to engage in some part of its regular business in
the ,tate.
12
No general rule or governing principles can be laid down as to what constitutes 4doing4
or 4engaging in4 or 4transacting4 business. Each case must be Audged in the light of its
own peculiar environmental circumstances.
13
(he true tests, however, seem to be
whether the foreign corporation is continuing the bod! or substance of the business or
enterprise for which it was organi=ed or whether it has substantiall! retired from it and
turned it over to another.
1)
As a general proposition upon which man! authorities agree in principle, subAect to
such modifications as ma! be necessar! in view of the particular issue or of the terms
of the statute involved, it is recogni=ed that a foreign corporation is 4doing,4
4transacting,4 4engaging in,4 or 4carr!ing on4 business in the ,tate when, and ordinaril!
onl! when, it has entered the ,tate b! its agents and is there engaged in carr!ing on
and transacting through them some substantial part of its ordinar! or customar!
business, usuall! continuous in the sense that it ma! be distinguished from merel!
casual, sporadic, or occasional transactions and isolated acts.
1*
(he Corporation Code does not itself define or categori=e what acts constitute doing or
transacting business in the Philippines. urisprudence has, however, held that the term
implies a continuit! of commercial dealings and arrangements, and contemplates, to
that e@tent, the performance of acts or wor)s or the e@ercise of some of the functions
normall! incident to or in progressive prosecution of the purpose and subAect of its
organi=ation.
16
(his traditional case law definition has evolved into a statutor! definition, having been
adopted with some +ualifications in various pieces of legislation in our Aurisdiction.
Dor instance, Republic Act No. 0300
1
+ provides6
,ec. #. Definitions and scope of this Act. C 9#: . . . > and the phrase 4doing business4
shall include soliciting orders, purchases, service contracts, opening offices, whether
called 4liaison4 offices or branches> appointing representatives or distributors who are
domiciled in the Philippines or who in an! calendar !ear sta! in the Philippines for a
period or periods totalling one hundred eight! da!s or more> participating in the
management, supervision or control of an! domestic business firm, entit! or
corporation in the Philippines> and an! other act or acts that impl! a continuit! of
commercial dealings or arrangements, and contemplate to that e@tent the performance
of acts or wor)s, or the e@ercise of some of the functions normall! incident to, and in
progressive prosecution of, commercial gain or of the purpose and obAect of the
business organi=ation.
2
Presidential 2ecree No. #.*$,
18
in Article 10 thereof, defines 4doing business4 to
include soliciting orders, purchases, service contracts, opening offices, whether called
4liaison4 offices or branches> appointing representatives or distributors who are
domiciled in the Philippines or who in an! calendar !ear sta! in the Philippines for a
period or periods totalling one hundred eight! da!s or more> participating in the
management, supervision or control of an! domestic business firm, entit! or
corporation in the Philippines, and an! other act or acts that impl! a continuit! of
commercial dealings or arrangements and contemplate to that e@tent the performance
of acts or wor)s, or the e@ercise of some of the functions normall! incident to, and in
progressive prosecution of, commercial gain or of the purpose and obAect of the
business organi=ation.
(he implementing rules and regulations of said presidential decree conclude the
enumeration of acts constituting 4doing business4 with a catch/all definition, thus6
,ec. #9g:. 42oing Business4 shall be an! act or combination of acts enumerated in
Article 10 of the Code. 5n particular 4doing business4 includes6
@@@ @@@ @@@
9#%: An! other act or acts which impl! a continuit! of commercial dealings or
arrangements, and contemplate to that e@tent the performance of acts or wor)s, or the
e@ercise of some of the functions normall! incident to, or in the progressive
prosecution of, commercial gain or of the purpose and obAect of the business
organi=ation.
Dinall!, Republic Act No. .%3"
19
embodies such concept in this wise6
,ec. &. Definitions. C As used in this Act6
@@@ @@@ @@@
9d: the phrase 4doing business shall include soliciting orders, service contracts,
opening offices, whether called 4liaison4 offices or branches> appointing
representatives or distributors domiciled in the Philippines or who in an! calendar !ear
sta! in the countr! for a period or periods totalling one hundred eight9!: 9#*%: da!s or
more> participating in the management, supervision or control of an! domestic
business, firm, entit! or corporation in the Philippines> and an! other act or acts that
impl! a continuit! of commercial dealings or arrangements, and contemplate to that
e@tent the performance of acts or wor)s, or the e@ercise of some of the functions
normall! incident to, and in progressive prosecution of, commercial gain or of the
purpose and obAect of the business organi=ation6 rovided, however, (hat the phrase
4doing business4 shall not be deemed to include mere investment as a shareholder b!
a foreign entit! in domestic corporations dul! registered to do business, and?or the
e@ercise of rights as such investor> nor having a nominee director or officer to
represent its interests in such corporation> nor appointing a representative or distributor
domiciled in the Philippines which transacts business in its own name and for its own
account.
Based on Article #&& of the Corporation Code and gauged b! such statutor! standards,
petitioners are not barred from maintaining the present action. (here is no showing
that, under our statutor! or case law, petitioners are doing, transacting, engaging in or
carr!ing on business in the Philippines as would re+uire obtention of a license before
the! can see) redress from our courts. No evidence has been offered to show that
petitioners have performed an! of the enumerated acts or an! other specific act
indicative of an intention to conduct or transact business in the Philippines.
Accordingl!, the certification issued b! the ,ecurities and E@change Commission
20

stating that its records do not show the registration of petitioner film companies either
as corporations or partnerships or that the! have been licensed to transact business in
the Philippines, while undeniabl! true, is of no conse+uence to petitioners' right to
bring action in the Philippines. 8eril!, no record of such registration b! petitioners can
be e@pected to be found for, as aforestated, said foreign film corporations do not
transact or do business in the Philippines and, therefore, do not need to be licensed in
order to ta)e recourse to our courts.
Although ,ection #9g: of the 5mplementing Rules and Regulations of the ;mnibus
5nvestments Code lists, among others C
9#: ,oliciting orders, purchases 9sales: or service contracts. Concrete and specific
solicitations b! a foreign firm, or b! an agent of such foreign firm, not acting
independentl! of the foreign firm amounting to negotiations or fi@ing of the terms and
conditions of sales or service contracts, regardless of where the contracts are actuall!
reduced to writing, shall constitute doing business even if the enterprise has no office
or fi@ed place of business in the Philippines. (he arrangements agreed upon as to
manner, time and terms of deliver! of the goods or the transfer of title thereto is
immaterial. A foreign firm which does business through the middlemen acting in their
own names, such as indentors, commercial bro)ers or commission merchants, shall
not be deemed doing business in the Philippines. But such indentors, commercial
bro)ers or commission merchants shall be the ones deemed to be doing business in
the Philippines.
9": Appointing a representative or distributor who is domiciled in the Philippines, unless
said representative or distributor has an independent status, i.e., it transacts business
in its name and for its own account, and not in the name or for the account of a
principal. (hus, where a foreign firm is represented in the Philippines b! a person or
local compan! which does not act in its name but in the name of the foreign firm, the
latter is doing business in the Philippines.
as acts constitutive of 4doing business,4 the fact that petitioners are admittedl!
cop!right owners or owners of e@clusive distribution rights in the Philippines of motion
pictures or films does not convert such ownership into an indicium of doing business
which would re+uire them to obtain a license before the! can sue upon a cause of
action in local courts.
3
Neither is the appointment of Att!. Rico 8. 2omingo as attorne!/in/fact of petitioners,
with e@press authorit! pursuant to a special power of attorne!, inter alia C
(o la! criminal complaints with the appropriate authorities and to provide evidence in
support of both civil and criminal proceedings against an! person or persons involved
in the criminal infringement of cop!right or concerning the unauthori=ed importation,
duplication, e@hibition or distribution of an! cinematographic wor)9s: C films or video
cassettes C of which . . . is the owner of cop!right or the owner of e@clusive rights of
distribution in the Philippines pursuant to an! agreement9s: between . . . and the
respective owners of cop!right in such cinematographic wor)9s:, to initiate and
prosecute on behalf of . . . criminal or civil actions in the Philippines against an! person
or persons unlawfull! distributing, e@hibiting, selling or offering for sale an! films or
video cassettes of which . . . is the owner of cop!right or the owner of e@clusive rights
of distribution in the Philippines pursuant to an! agreement9s: between . . . and the
respective owners of cop!right in such wor)s.
21
tantamount to doing business in the Philippines. -e fail to see how e@ercising one's
legal and propert! rights and ta)ing steps for the vigilant protection of said rights,
particularl! the appointment of an attorne!/in/fact, can be deemed b! and of
themselves to be doing business here.
As a general rule, a foreign corporation will not be regarded as doing business in the
,tate simpl! because it enters into contracts with residents of the ,tate, where such
contracts are consummated outside the ,tate.
22
5n fact, a view is ta)en that a foreign
corporation is not doing business in the ,tate merel! because sales of its product are
made there or other business furthering its interests is transacted there b! an alleged
agent, whether a corporation or a natural person, where such activities are not under
the direction and control of the foreign corporation but are engaged in b! the alleged
agent as an independent business.
23
5t is generall! held that sales made to customers in the ,tate b! an independent dealer
who has purchased and obtained title from the corporation to the products sold are not
a doing of business b! the corporation.
2)
<i)ewise, a foreign corporation which sells its
products to persons st!led 4distributing agents4 in the ,tate, for distribution b! them, is
not doing business in the ,tate so as to render it subAect to service of process therein,
where the contract with these purchasers is that the! shall bu! e@clusivel! from the
foreign corporation such goods as it manufactures and shall sell them at trade prices
established b! it.
2*
5t has moreover been held that the act of a foreign corporation in engaging an attorne!
to represent it in a Dederal court sitting in a particular ,tate is not doing business within
the scope of the minimum contact test.
26
-ith much more reason should this doctrine
appl! to the mere retainer of Att!. 2omingo for legal protection against contingent acts
of intellectual pirac!.
5n accordance with the rule that 4doing business4 imports onl! acts in furtherance of
the purposes for which a foreign corporation was organi=ed, it is held that the mere
institution and prosecution or defense of a suit, particularl! if the transaction which is
the basis of the suit too) place out of the ,tate, do not amount to the doing of business
in the ,tate. (he institution of a suit or the removal thereof is neither the ma)ing of a
contract nor the doing of business within a constitutional provision placing foreign
corporations licensed to do business in the ,tate under the same regulations,
limitations and liabilities with respect to such acts as domestic corporations. Merel!
engaging in litigation has been considered as not a sufficient minimum contact to
warrant the e@ercise of Aurisdiction over a foreign corporation.
2
+
As a consideration aside, we have perforce to comment on private respondents' basis
for arguing that petitioners are barred from maintaining suit in the Philippines. Dor
allegedl! being foreign corporations doing business in the Philippines without a
license, private respondents repeatedl! maintain in all their pleadings that petitioners
have thereb! no legal personality to bring an action before Philippine Courts.
28
Among the grounds for a motion to dismiss under the Rules of Court
are lac) of legal capacit! to sue
29
and that the complaint states no cause of action.
30

<ac) of legal capacit! to sue means that the plaintiff is not in the e@ercise of his civil
rights, or does not have the necessar! +ualification to appear in the case, or does not
have the character or representation he claims.
31
;n the other hand, a case is
dismissible for lac) of personalit! to sue upon proof that the plaintiff is not the real
part! in interest, hence grounded on failure to state a cause of action.
32
(he term 4lac)
of capacit! to sue4 should not be confused with the term 4lac) of personalit! to sue.4
-hile the former refers to a plaintiff's general disabilit! to sue, such as on account of
minorit!, insanit!, incompetence, lac) of Auridical personalit! or an! other general
dis+ualifications of a part!, the latter refers to the fact that the plaintiff is not the real
part! in interest. Correspondingl!, the first can be a ground for a motion to dismiss
based on the ground of lac) of legal capacit! to sue>
33
whereas the second can be
used as a ground for a motion to dismiss based on the fact that the complaint, on the
face thereof, evidentl! states no cause of action.
3)
Appl!ing the above discussion to the instant petition, the ground available for barring
recourse to our courts b! an unlicensed foreign corporation doing or transacting
business in the Philippines should properl! be 4lac) of capacit! to sue,4 not 4lac) of
personalit! to sue.4 Certainl!, a corporation whose legal rights have been violated is
undeniabl! such, if not the onl!, real part! in interest to bring suit thereon although, for
failure to compl! with the licensing re+uirement, it is not capacitated to maintain an!
suit before our courts.
<astl!, on this point, we reiterate this Court's reAection of the common procedural
tactics of erring local companies which, when sued b! unlicensed foreign corporations
not engaged in business in the Philippines, invo)e the latter's supposed lac) of
capacit! to sue. (he doctrine of lac) of capacit! to sue based on failure to first ac+uire
a local license is based on considerations of public polic!. 5t was never intended to
favor nor insulate from suit unscrupulous establishments or nationals in case of breach
of valid obligations or violation of legal rights of unsuspecting foreign firms or entities
simpl! because the! are not licensed to do business in the countr!.
3*
55
4
-e now proceed to the main issue of the retroactive application to the present
controvers! of the ruling in 20th Century Fox Film Corporation vs. Court of Appeals, et
al., promulgated on August #$, #$**,
36
that for the determination of probable cause to
support the issuance of a search warrant in cop!right infringement cases involving
videograms, the production of the master tape for comparison with the allegedl! pirate
copies is necessar!.
Petitioners assert that the issuance of a search warrant is addressed to the discretion
of the court subAect to the determination of probable cause in accordance with the
procedure prescribed therefore under ,ections & and 3 of Rule #"1. As of the time of
the application for the search warrant in +uestion, the controlling criterion for the
finding of probable cause was that enunciated in !urgos vs. Chief of "taff
3
+ stating
that6
Probable cause for a search warrant is defined as such facts and circumstances which
would lead a reasonabl! discreet and prudent man to believe that an offense has been
committed and that the obAects sought in connection with the offense are in the place
sought to be searched.
According to petitioners, after compl!ing with what the law then re+uired, the lower
court determined that there was probable cause for the issuance of a search warrant,
and which determination in fact led to the issuance and service on 2ecember #3, #$*.
of ,earch -arrant No. *./%0&. 5t is further argued that an! search warrant so issued in
accordance with all applicable legal re+uirements is valid, for the lower court could not
possibl! have been e@pected to appl!, as the basis for a finding of probable cause for
the issuance of a search warrant in cop!right infringement cases involving videograms,
a pronouncement which was not e@istent at the time of such determination, on
2ecember #3, #$*., that is, the doctrine in the 20th Century Fox case that was
promulgated onl! on August #$, #$**, or over eight months later.
Private respondents predictabl! argue in support of the ruling of the Court of Appeals
sustaining the +uashal of the search warrant b! the lower court on the strength of that
20th Century Fox ruling which, the! claim, goes into the ver! essence of probable
cause. At the time of the issuance of the search warrant involved here, although the
20th Century Fox case had not !et been decided, ,ection ", Article 555 of the
Constitution and ,ection &, Rule #"1 of the #$*0 Rules on Criminal Procedure
embodied the prevailing and governing law on the matter. (he ruling in 20th Century
Fox was merel! an application of the law on probable cause. 7ence, the! posit that
there was no law that was retrospectivel! applied, since the law had been there all
along. (o refrain from appl!ing the 20th Century Fox ruling, which had supervened as
a doctrine promulgated at the time of the resolution of private respondents' motion for
reconsideration see)ing the +uashal of the search warrant for failure of the trial court to
re+uire presentation of the master tapes prior to the issuance of the search warrant,
would have constituted grave abuse of discretion.
38
Respondent court upheld the retroactive application of the 20th Century Fox ruling b!
the trial court in resolving petitioners' motion for reconsideration in favor of the +uashal
of the search warrant, on this renovated thesis6
And whether this doctrine should appl! retroactivel!, it must be noted that in the "%th
Centur! Do@ case, the lower court +uashed the earlier search warrant it issued. ;n
certiorari, the ,upreme Court affirmed the +uashal on the ground among others that
the master tapes or cop!righted films were not presented for comparison with the
purchased evidence of the video tapes to determine whether the latter is an
unauthori=ed reproduction of the former.
5f the lower court in the Centur! Do@ case did not +uash the warrant, it is ;ur view that
the ,upreme Court would have invalidated the warrant Aust the same considering the
ver! strict re+uirement set b! the ,upreme Court for the determination of 4probable
cause4 in cop!right infringement cases as enunciated in this "%th Centur! Do@ case.
(his is so because, as was stated b! the ,upreme Court in the said case, the master
tapes and the pirated tapes must be presented for comparison to satisfy the
requirement of #probable cause.# ,o it goes bac) to the ver! e@istence of probable
cause. . . .
39
Mindful as we are of the ramifications of the doctrine of stare decisis and the rudiments
of fair pla!, it is our considered view that the 20th Century Fox ruling cannot be
retroactivel! applied to the instant case to Austif! the +uashal of ,earch -arrant No.
*./%0&. 7erein petitioners' consistent position that the order of the lower court of
,eptember 0, #$** den!ing therein defendants' motion to lift the order of search
warrant was properl! issued, there having been satisfactor! compliance with the then
prevailing standards under the law for determination of probable cause, is indeed well
ta)en. (he lower court could not possibl! have e@pected more evidence from
petitioners in their application for a search warrant other than what the law and
Aurisprudence, then existing and $udicially accepted, re+uired with respect to the finding
of probable cause.
Article 3 of the Civil Code provides that 49l:aws shall have no retroactive effect, unless
the contrar! is provided. Correlativel!, Article * of the same Code declares that
49A:udicial decisions appl!ing the laws or the Constitution shall form part of the legal
s!stem of the Philippines.4
urisprudence, in our s!stem of government, cannot be considered as an independent
source of law> it cannot create law.
)0
-hile it is true that Audicial decisions which appl!
or interpret the Constitution or the laws are part of the legal s!stem of the Philippines,
still the! are not laws. udicial decisions, though not laws, are nonetheless evidence of
what the laws mean, and it is for this reason that the! are part of the legal s!stem of
the Philippines.
)1
udicial decisions of the ,upreme Court assume the same authorit!
as the statute
itself.
)2
5nterpreting the afore+uoted correlated provisions of the Civil Code and in light of the
above dis+uisition, this Court emphaticall! declared in Co vs. Court of Appeals, et al.
)3

that the principle of prospectivit! applies not onl! to original or amendator! statutes
and administrative rulings and circulars, but also, and properl! so, to Audicial decisions.
;ur holding in the earlier case of eople vs. %abinal
))
echoes the rationale for this
Audicial declaration, vi&.6
5
2ecisions of this Court, although in themselves not laws, are nevertheless evidence of
what the laws mean, and this is the reason wh! under Article * of the New Civil Code,
4udicial decisions appl!ing or interpreting the laws or the Constitution shall form part
of the legal s!stem.4 (he interpretation upon a law b! this Court constitutes, in a wa!, a
part of the law as of the date that the law was originall! passed, since this Court's
construction merel! establishes the contemporaneous legislative intent that the law
thus construed intends to effectuate. (he settled rule supported b! numerous
authorities is a restatement of the legal ma@im 4legis interpretatio legis vim obtinet4 C
the interpretation placed upon the written law b! a competent court has the force of
law. . . . , but when a doctrine of this Court is overruled and a different view is adopted,
the new doctrine should be applied prospectively, and should not apply to parties who
had relied on the old doctrine and acted on the faith thereof . . . . 9Emphasis supplied:.
(his was forcefull! reiterated in "pouses !en&onan vs. Court of Appeals, et al.,
)*

where the Court e@pounded6
. . . . But while our decisions form part of the law of the land, the! are also subAect to
Article 3 of the Civil Code which provides that 4laws shall have no retroactive effect
unless the contrar! is provided.4 (his is e@pressed in the familiar legal ma@im lex
prospicit, non respicit, the law loo)s forward not bac)ward. (he rationale against
retroactivit! is eas! to perceive. (he retroactive application of a law usuall! divests
rights that have alread! become vested or impairs the obligations of contract and
hence, is unconstitutional 9Drancisco v. Certe=a, & ,CRA 010 E#$1#F:. (he same
consideration underlies our rulings giving onl! prospective effect to decisions
enunciating new doctrines. . . . .
(he reasoning behind "enarillos vs. 'ermosisima
)6
that Audicial interpretation of a
statute constitutes part of the law as of the date it was originall! passed, since the
Court's construction merel! establishes the contemporaneous legislative intent that the
interpreted law carried into effect, is all too familiar. ,uch Audicial doctrine does not
amount to the passage of a new law but consists merel! of a construction or
interpretation of a pre/e@isting one, and that is precisel! the situation obtaining in this
case.
5t is conse+uentl! clear that a Audicial interpretation becomes a part of the law as of the
date that law was originall! passed, subAect onl! to the +ualification that when a
doctrine of this Court is overruled and a different view is adopted, and more so when
there is a reversal thereof, the new doctrine should be applied prospectivel! and
should not appl! to parties who relied on the old doctrine and acted in good faith.
)
+ (o
hold otherwise would be to deprive the law of its +ualit! of fairness and Austice then, if
there is no recognition of what had transpired prior to such adAudication.
)8
(here is merit in petitioners' impassioned and well/founded argumentation6
(he case of 20th Century Fox Film Corporation vs. Court of Appeals, et al., #13 ,CRA
100 9August #$, #$**: 9hereinafter "%th Centur! Do@: was ine@istent in 2ecember of
#$*. when ,earch -arrant *./%0& was issued b! the lower court. 7ence, it boggles
the imagination how the lower court could be e@pected to appl! the formulation of "%th
Centur! Do@ in finding probable cause when the formulation was !et non/e@istent.
@@@ @@@ @@@
5n short, the lower court was convinced at that time after conducting searching
e@amination +uestions of the applicant and his witnesses that 4an offense had been
committed and that the obAects sought in connection with the offense 9were: in the
place sought to be searched4 9Burgos v. Chief of ,taff, et al., #&& ,CRA *%%:. 5t is
indisputable, therefore, that at the time of the application, or on 2ecember #3, #$*.,
the lower court did not commit an! error nor did it fail to compl! with an! legal
re+uirement for the valid issuance of search warrant.
. . . 9-:e believe that the lower court should be considered as having followed the
re+uirements of the law in issuing ,earch -arrant No. *./%0&. (he search warrant is
therefore valid and binding. 5t must be noted that nowhere is it found in the allegations
of the Respondents that the lower court failed to appl! the law as then interpreted in
()*+. 7ence, we find it absurd that it is 9sic: should be seen otherwise, because it is
simpl! impossible to have re+uired the lower court to appl! a formulation which will
onl! be defined si@ months later.
Durthermore, it is unAust and unfair to re+uire compliance with legal and?or doctrinal
re+uirements which are ine@istent at the time the! were supposed to have been
complied with.
@@@ @@@ @@@
. . . 5f the lower court's reversal will be sustained, what encouragement can be given to
courts and litigants to respect the law and rules if the! can e@pect with reasonable
certaint! that upon the passage of a new rule, their conduct can still be open to
+uestionG (his certainl! breeds instabilit! in our s!stem of dispensing Austice. Dor
Petitioners who too) special effort to redress their grievances and to protect their
propert! rights b! resorting to the remedies provided b! the law, it is most unfair that
fealt! to the rules and procedures then obtaining would bear but fruits of
inAustice.
)9
-ithal, even the proposition that the prospectivit! of Audicial decisions imports
application thereof not onl! to future cases but also to cases still ongoing or not !et
final when the decision was promulgated, should not be countenanced in the Aural
sphere on account of its inevitabl! unsettling repercussions. More to the point, it is felt
that the reasonableness of the added re+uirement in 20th Century Fox calling for the
production of the master tapes of the cop!righted films for determination of probable
cause in cop!right infringement cases needs revisiting and clarification.
5t will be recalled that the 20th Century Fox case arose from search warrant
proceedings in anticipation of the filing of a case for the unauthori=ed sale or renting
out of cop!righted films in videotape format in violation of Presidential 2ecree No. 3$.
6
5t revolved around the meaning of probable cause within the conte@t of the
constitutional provision against illegal searches and sei=ures, as applied to cop!right
infringement cases involving videotapes.
(herein it was ruled that C
(he presentation of master tapes of the cop!righted films from which the pirated films
were allegedl! copied, was necessar! for the validit! of search warrants against those
who have in their possession the pirated films. (he petitioner's argument to the effect
that the presentation of the master tapes at the time of application ma! not be
necessar! as these would be merel! evidentiar! in nature and not determinative of
whether or not a probable cause e@ists to Austif! the issuance of the search warrants is
not meritorious. (he court cannot presume that duplicate or copied tapes were
necessaril! reproduced from master tapes that it owns.
(he application for search warrants was directed against video tape outlets which
allegedl! were engaged in the unauthori=ed sale and renting out of cop!righted films
belonging to the petitioner pursuant to P.2. 3$.
(he essence of a cop!right infringement is the similarit! or at least substantial
similarit! of the purported pirated wor)s to the cop!righted wor). 7ence, the applicant
must present to the court the cop!righted films to compare them with the purchased
evidence of the video tapes allegedl! pirated to determine whether the latter is an
unauthori=ed reproduction of the former. (his lin)age of the cop!righted films to the
pirated films must be established to satisf! the re+uirements of probable cause. Mere
allegations as to the e@istence of the cop!righted films cannot serve as basis for the
issuance of a search warrant.
Dor a closer and more perspicuous appreciation of the factual antecedents of 20th
Century Fox, the pertinent portions of the decision therein are +uoted hereunder, to wit6
5n the instant case, the lower court lifted the three +uestioned search warrants against
the private respondents on the ground that it acted on the application for the issuance
of the said search warrants and granted it on the misrepresentations of applicant NB5
and its witnesses that infringement of cop!right or a pirac! of a particular film have
been committed. (hus the lower court stated in its +uestioned order dated anuar! ",
#$*16
According to the movant, all three witnesses during the proceedings in the application
for the three search warrants testified of their own personal )nowledge. Het, Att!.
Albino Re!es of the NB5 stated that the counsel or representative of the (wentieth
Centur! Do@ Corporation will testif! on the video cassettes that were pirated, so that he
did not have personal )nowledge of the alleged pirac!. (he witness Bacani also said
that the video cassettes were pirated without stating the manner it was pirated and that
it was Att!. 2omingo that has )nowledge of that fact.
;n the part of Att!. 2omingo, he said that the re/taping of the allegedl! pirated tapes
was from master tapes allegedl! belonging to the (wentieth Centur! Do@, because,
according to him it is of his personal )nowledge.
At the hearing of the Motion for Reconsideration, ,enior NB5 Agent Att!. Albino Re!es
testified that when the complaint for infringement was brought to the NB5, the master
tapes of the allegedl! pirated tapes were shown to him and he made comparisons of
the tapes with those purchased b! their man Bacani. -h! the master tapes or at least
the film reels of the allegedl! pirated tapes were not shown to the Court during the
application gives some misgivings as to the truth of that bare statement of the NB5
agent on the witness stand.
Again as the application and search proceedings is a prelude to the filing of criminal
cases under P2 3$, the cop!right infringement law, and although what is re+uired for
the issuance thereof is merel! the presence of probable cause, that probable cause
must be satisfactor! to the Court, for it is a time/honored precept that proceedings to
put a man to tas) as an offender under our laws should be interpreted in strictissimi
$uris against the government and liberall! in favor of the alleged offender.
@@@ @@@ @@@
(his doctrine has never been overturned, and as a matter of fact it had been enshrined
in the Bill of Rights in our #$.& Constitution.
,o that lac)ing in persuasive effect, the allegation that master tapes were viewed b!
the NB5 and were compared to the purchased and sei=ed video tapes from the
respondents' establishments, it should be dismissed as not supported b! competent
evidence and for that matter the probable cause hovers in that gre! debatable twilight
=one between blac) and white resolvable in favor of respondents herein.
But the glaring fact is that 4Cocoon,4 the first video tape mentioned in the search
warrant, was not even dul! registered or cop!righted in the Philippines. 9Anne@ C of
;pposition p. #0" record.: ,o, that lac)ing in the re+uisite presentation to the Court of
an alleged master tape for purposes of comparison with the purchased evidence of the
video tapes allegedl! pirated and those sei=ed from respondents, there was no wa! to
determine whether there reall! was pirac!, or cop!ing of the film of the complainant
(wentieth Centur! Do@.
@@@ @@@ @@@
,he lower court, therefore, lifted the three -./ questioned search warrants in the
absence of probable cause that the private respondents violated .D. 0). As found out
by the court, the 1!2 agents who acted as witnesses did not have personal 3nowledge
of the sub$ect matter of their testimony which was the alleged commission of the
offense by the private respondents. ;nl! the petitioner's counsel who was also a
witness during the application for the issuance of the search warrants stated that he
had personal )nowledge that the confiscated tapes owned b! the private respondents
7
were pirated tapes ta)en from master tapes belonging to the petitioner. 7owever, the
lower court did not give much credence to his testimon! in view of the fact that the
master tapes of the allegedl! pirated tapes were not shown to the court during the
application 9Emphasis ours:.
(he italici=ed passages readil! e@pose the reason wh! the trial court therein re+uired
the presentation of the master tapes of the allegedl! pirated films in order to convince
itself of the e@istence of probable cause under the factual milieu peculiar to that case.
5n the case at bar, respondent appellate court itself observed6
-e feel that the rationale behind the afore+uoted doctrine is that the pirated copies as
well as the master tapes, unli)e the other t!pes of personal properties which ma! be
sei=ed, were available for presentation to the court at the time of the application for a
search warrant to determine the e@istence of the lin)age of the cop!righted films with
the pirated ones. (hus, there is no reason not the present them 9Emphasis supplied :.

*0
5n fine, the supposed pronunciamento in said case regarding the necessit! for the
presentation of the master tapes of the cop!righted films for the validit! of search
warrants should at most be understood to merel! serve as a guidepost in determining
the e@istence of probable cause in cop!right infringement cases where there is doubt
as to the true nexus between the master tape and the pirated copies. An obAective and
careful reading of the decision in said case could lead to no other conclusion than that
said directive was hardl! intended to be a sweeping and infle@ible re+uirement in all or
similar cop!right infringement cases. udicial dicta should alwa!s be construed within
the factual matri@ of their parturition, otherwise a careless interpretation thereof could
unfairl! fault the writer with the vice of overstatement and the reader with the fallac! of
undue generali=ation.
5n the case at bar, NB5 ,enior Agent <auro C. Re!es who filed the application for
search warrant with the lower court following a formal complaint lodged b! petitioners,
Audging from his affidavit
*1
and his deposition,
*2
did testif! on matters within his
personal )nowledge based on said complaint of petitioners as well as his own
investigation and surveillance of the private respondents' video rental shop. <i)ewise,
Att!. Rico 8. 2omingo, in his capacit! as attorne!/in/fact, stated in his affidavit
*3
and
further e@pounded in his deposition
*)
that he personall! )new of the fact that private
respondents had never been authori=ed b! his clients to reproduce, lease and possess
for the purpose of selling an! of the cop!righted films.
Both testimonies of Agent Re!es and Att!. 2omingo were corroborated b! Rene C.
Balta=ar, a private researcher retained b! Motion Pictures Association of America, 5nc.
9MPAA, 5nc.:, who was li)ewise presented as a witness during the search warrant
proceedings.
**
(he records clearl! reflect that the testimonies of the abovenamed
witnesses were straightforward and stemmed from matters within their personal
)nowledge. (he! displa!ed none of the ambivalence and uncertaint! that the
witnesses in the 20th Century Fox case e@hibited. (his categorical forthrightness in
their statements, among others, was what initiall! and correctl! convinced the trial
court to ma)e a finding of the e@istence of probable cause.
(here is no originalit! in the argument of private respondents against the validit! of the
search warrant, obviousl! borrowed from 20th Century Fox, that petitioners' witnesses
C NB5 Agent <auro C. Re!es, Att!. Rico 8. 2omingo and Rene C. Balta=ar C did not
have personal )nowledge of the subAect matter of their respective testimonies and that
said witnesses' claim that the video tapes were pirated, without stating the manner b!
which these were pirated, is a conclusion of fact without basis.
*6
(he difference, it must
be pointed out, is that the records in the present case reveal that 9#: there is no
allegation of misrepresentation, much less a finding thereof b! the lower court, on the
part of petitioners' witnesses> 9": there is no denial on the part of private respondents
that the tapes sei=ed were illegitimate copies of the cop!righted ones not have the!
shown that the! were given an! authorit! b! petitioners to cop!, sell, lease, distribute
or circulate, or at least, to offer for sale, lease, distribution or circulation the said video
tapes> and 9&: a discreet but e@tensive surveillance of the suspected area was
underta)en b! petitioners' witnesses sufficient to enable them to e@ecute trustworth!
affidavits and depositions regarding matters discovered in the course thereof and of
which the! have personal )nowledge.
5t is evidentl! incorrect to suggest, as the ruling in 20th Century Fox ma! appear to do,
that in cop!right infringement cases, the presentation of master tapes of the
cop!righted films is alwa!s necessar! to meet the re+uirement of probable cause and
that, in the absence thereof, there can be no finding of probable cause for the issuance
of a search warrant. 5t is true that such master tapes are obAect evidence, with the
merit that in this class of evidence the ascertainment of the controverted fact is made
through demonstrations involving the direct use of the senses of the presiding
magistrate.
*
+ ,uch au@iliar! procedure, however, does not rule out the use of
testimonial or documentar! evidence, depositions, admissions or other classes of
evidence tending to prove the factum probandum,
*8
especiall! where the production in
court of obAect evidence would result in dela!, inconvenience or e@penses out of
proportion to its evidentiar! value.
*9
;f course, as a general rule, constitutional and statutor! provisions relating to search
warrants prohibit their issuance e@cept on a showing of probable cause, supported b!
oath or affirmation. (hese provisions prevent the issuance of warrants on loose,
vague, or doubtful bases of fact, and emphasi=e the purpose to protect against all
general searches.
60
5ndeed, Article 555 of our Constitution mandates in ,ec. " thereof
that no search warrant shall issue e@cept upon probable cause to be determined
personall! b! the Audge after e@amination under oath or affirmation of the complainant
and the witnesses he ma! produce, and particularl! describing the place to be
searched and the things to be sei=ed> and ,ec. & thereof provides that an! evidence
obtained in violation of the preceding section shall be inadmissible for an! purpose in
an! proceeding.
(hese constitutional strictures are implemented b! the following provisions of Rule #"1
of the Rules of Court6
,ec. &. 4equisites for issuing search warrant. C A search warrant shall not issue but
upon probable cause in connection with one specific offense to be determined
personall! b! the Audge after e@amination under oath or affirmation of the complainant
8
and the witnesses he ma! produce, and particularl! describing the place to be
searched and the things to be sei=ed.
,ec. 3. 5xamination of complainant> record. C (he Audge must, before issuing the
warrant, personall! e@amine in the form of searching +uestions and answers, in writing
and under oath the complainant and an! witnesses he ma! produce on facts
personall! )nown to them and attach to the record their sworn statements together
with an! affidavits submitted.
,ec. 0. 2ssuance and form of search warrant. C 5f the Audge is thereupon satisfied of
the e@istence of facts upon which the application is based, or that there is probable
cause to believe that the! e@ist, he must issue the warrant, which must be substantiall!
in the form prescribed b! these Rules.
(he constitutional and statutor! provisions of various Aurisdictions re+uiring a showing
of probable cause before a search warrant can be issued are mandator! and must be
complied with, and such a showing has been held to be an un+ualified condition
precedent to the issuance of a warrant. A search warrant not based on probable cause
is a nullit!, or is void, and the issuance thereof is, in legal contemplation, arbitrar!.
61
5t
behooves us, then, to review the concept of probable cause, firstl!, from representative
holdings in the American Aurisdiction from which we patterned our doctrines on the
matter.
Although the term 4probable cause4 has been said to have a well/defined meaning in
the law, the term is e@ceedingl! difficult to define, in this case, with an! degree of
precision> indeed, no definition of it which would Austif! the issuance of a search
warrant can be formulated which would cover ever! state of facts which might arise,
and no formula or standard, or hard and fast rule, ma! be laid down which ma! be
applied to the facts of ever! situation.
62
As to what acts constitute probable cause
seem incapable of definition.
63
(here is, of necessit!, no e@act test.
6)
At best, the term 4probable cause4 has been understood to mean a reasonable ground
of suspicion, supported b! circumstances sufficientl! strong in themselves to warrant a
cautious man in the belief that the person accused is guilt! of the offense with which
he is charged>
6*
or the e@istence of such facts and circumstances as would e@cite an
honest belief in a reasonable mind acting on all the facts and circumstances within the
)nowledge of the magistrate that the charge made b! the applicant for the warrant is
true.
66
Probable cause does not mean actual and positive cause, nor does it import absolute
certaint!. (he determination of the e@istence of probable cause is not concerned with
the +uestion of whether the offense charged has been or is being committed in fact, or
whether the accused is guilt! or innocent, but onl! whether the affiant has reasonable
grounds for his belief.
6
+ (he re+uirement is less than certainty or proof , but more than
suspicion or possibility.
68
5n Philippine Aurisprudence, probable cause has been uniforml! defined as such facts
and circumstances which would lead a reasonable, discreet and prudent man to
believe that an offense has been committed, and that the obAects sought in connection
with the offense are in the place sought to be searched.
69
5t being the dut! of the
issuing officer to issue, or refuse to issue, the warrant as soon as practicable after the
application therefor is filed,
+0
the facts warranting the conclusion of probable cause
must be assessed at the time of such Audicial determination b! necessaril! using legal
standards then set forth in law and $urisprudence, and not those that have yet to be
crafted thereafter.
As alread! stated, the definition of probable cause enunciated in !urgos, "r. vs. Chief
of "taff, et al., supra, vis6a6vis the provisions of ,ections & and 3 of Rule #"1, were the
prevailing and controlling legal standards, as the! continue to be, b! which a finding of
probable cause is tested. ,ince the propriet! of the issuance of a search warrant is to
be determined at the time of the application therefor, which in turn must not be too
remote in time from the occurrence of the offense alleged to have been committed, the
issuing Audge, in determining the e@istence of probable cause, can and should logicall!
loo) to the touchstones in the laws theretofore enacted and the decisions alread!
promulgated at the time, and not to those which had not !et even been conceived or
formulated.
5t is worth noting that neither the Constitution nor the Rules of Court attempt to define
probable cause, obviousl! for the purpose of leaving such matter to the court's
discretion within the particular facts of each case. Although the Constitution prohibits
the issuance of a search warrant in the absence of probable cause, such constitutional
inhibition does not command the legislature to establish a definition or formula for
determining what shall constitute probable cause.
+1
(hus, Congress, despite its broad
authorit! to fashion standards of reasonableness for searches and sei=ures,
+2
does
not venture to ma)e such a definition or standard formulation of probable cause, nor
categori=e what facts and circumstances ma)e up the same, much less limit the
determination thereof to and within the circumscription of a particular class of
evidence, all in deference to Audicial discretion and probit!.
+3
Accordingl!, to restrict the e@ercise of discretion b! a Audge b! adding a particular
re+uirement 9the presentation of master tapes, as intimated b! 20th Century Fox: not
provided nor implied in the law for a finding of probable cause is be!ond the realm of
Audicial competence or statesmanship. 5t serves no purpose but to stultif! and constrict
the Audicious e@ercise of a court's prerogatives and to denigrate the Audicial dut! of
determining the e@istence of probable cause to a mere ministerial or mechanical
function. (here is, to repeat, no law or rule which re+uires that the e@istence of
probable cause is or should be determined solel! b! a specific )ind of evidence.
,urel!, this could not have been contemplated b! the framers of the Constitution, and
we do not believe that the Court intended the statement in 20th Century Fox regarding
master tapes as the dictum for all seasons and reasons in infringement cases.
(urning now to the case at bar, it can be gleaned from the records that the lower court
followed the prescribed procedure for the issuance of a search warrant6 9#: the
e@amination under oath or affirmation of the complainant and his witnesses, with them
9
particularl! describing the place to be searched and the things to be sei=ed> 9": an
e@amination personall! conducted b! the Audge in the form of searching +uestions and
answers, in writing and under oath of the complainant and witnesses on facts
personall! )nown to them> and, 9&: the ta)ing of sworn statements, together with the
affidavits submitted, which were dul! attached to the records.
(hereafter, the court a quo made the following factual findings leading to the issuance
of the search warrant now subAect of this controvers!6
5n the instant case, the following facts have been established6 9#: cop!righted video
tapes bearing titles enumerated in ,earch -arrant No. *./%0& were being sold,
leased, distributed or circulated, or offered for sale, lease, distribution, or transferred or
caused to be transferred b! defendants at their video outlets, without the written
consent of the private complainants or their assignee> 9": recovered or confiscated
from defendants' possession were video tapes containing cop!righted motion picture
films without the authorit! of the complainant> 9&: the video tapes originated from
spurious or unauthori=ed persons> and 93: said video tapes were e@act reproductions
of the films listed in the search warrant whose cop!rights or distribution rights were
owned b! complainants.
(he basis of these facts are the affidavits and depositions of NB5 ,enior Agent <auro
C. Re!es, Att!. Rico 8. 2omingo, and Rene C. Balta=ar. Motion Pictures Association of
America, 5nc. 9MPAA: thru their counsel, Att!. Rico 8. 2omingo, filed a complaint with
the National Bureau of 5nvestigation against certain video establishments one of which
is defendant, for violation of P2 No. 3$ as amended b! P2 No. #$**. Att!. <auro C.
Re!es led a team to conduct discreet surveillance operations on said video
establishments. Per information earlier gathered b! Att!. 2omingo, defendants were
engaged in the illegal sale, rental, distribution, circulation or public e@hibition of
cop!righted films of MPAA without its written authorit! or its members. Inowing that
defendant ,unshine 7ome 8ideo and its proprietor, Mr. 2anilo Pelindario, were not
authori=ed b! MPAA to reproduce, lease, and possess for the purpose of selling an! of
its cop!righted motion pictures, instructed his researcher, Mr. Rene Balta=ar to rent two
video cassettes from said defendants on ;ctober "#, #$*.. Rene C. Balta=ar
proceeded to ,unshine 7ome 8ideo and rented tapes containing <ittle ,hop of 7orror.
7e was issued rental slip No. "1&1" dated ;ctober "#, #$*. for P#%.%% with a deposit
of P#%%.%%. Again, on 2ecember ##, #$*., the returned to ,unshine 7ome 8ideo and
rented Robocop with rental slip No. "0".# also for P#%.%%6 ;n the basis of the
complaint of MPAA thru counsel, Att!. <auro C. Re!es personall! went to ,unshine
7ome 8ideo at No. 1 Ma!fair Center, Magallanes Commercial Center, Ma)ati. 7is last
visit was on 2ecember ., #$*.. (here, he found the video outlet renting, leasing,
distributing video cassette tapes whose titles were cop!righted and without the
authorit! of MPAA.
Jiven these facts, a probable cause e@ists. . . .
+)
(he lower court subse+uentl! e@ecuted a volte6face, despite its prior detailed and
substantiated findings, b! stating in its order of November "", #$** den!ing
petitioners' motion for reconsideration and +uashing the search warrant that C
. . . (he two 9": cases have a common factual milieu> both involve alleged pirated
cop!righted films of private complainants which were found in the possession or
control of the defendants. 7ence, the necessit! of the presentation of the master tapes
from which the pirated films were allegedl! copied is necessar! in the instant case, to
establish the e@istence of probable cause.
+*
Being based solel! on an unAustifiable and improper retroactive application of the
master tape re+uirement generated b! 20th Century Fox upon a factual situation
completel! different from that in the case at bar, and without an!thing more, this later
order clearl! defies elemental fair pla! and is a gross reversible error. 5n fact, this
observation of the Court in 7a Chemise 7acoste, ".A. vs. Fernande&, et al., supra, ma!
Aust as easil! appl! to the present case6
A review of the grounds invo)ed . . . in his motion to +uash the search warrants reveals
the fact that the! are not appropriate for +uashing a warrant. (he! are matters of
defense which should be ventilated during the trial on the merits of the case. . . .
As correctl! pointed out b! petitioners, a blind espousal of the re+uisite of presentation
of the master tapes in cop!right infringement cases, as the prime determinant of
probable cause, is too e@acting and impracticable a re+uirement to be complied with in
a search warrant application which, it must not be overloo)ed, is onl! an ancillar!
proceeding. Durther, on realistic considerations, a strict application of said re+uirement
militates against the elements of secrec! and speed which underlie covert investigative
and surveillance operations in police enforcement campaigns against all forms of
criminalit!, considering that the master tapes of a motion picture re+uired to be
presented before the court consists of several reels contained in circular steel casings
which, because of their bul), will definitel! draw attention, unli)e diminutive obAects li)e
video tapes which can be easil! concealed.
+6
-ith hundreds of titles being pirated, this
onerous and tedious imposition would be multiplied a hundredfold b! Audicial fiat,
discouraging and preventing legal recourses in foreign Aurisdictions.
Jiven the present international awareness and furor over violations in large scale of
intellectual propert! rights, calling for transnational sanctions, it bears calling to mind
the Court's admonition also in 7a Chemise 7acoste, supra, that C
. . . . udges all over the countr! are well advised to remember that court processes
should not be used as instruments to, unwittingl! or otherwise, aid counterfeiters and
intellectual pirates, tie the hands of the law as it see)s to protect the Dilipino
consuming public and frustrate e@ecutive and administrative implementation of solemn
commitments pursuant to international conventions and treaties.
555
(he amendment to ,ection 01 of Presidential 2ecree No. 3$ b! Presidential 2ecree
No. #$*.,
+
+ which should here be publici=ed Audiciall!, brought about the revision of its
penalt! structure and enumerated additional acts considered violative of said decree
on intellectual propert!, namel!, 9#: directl! or indirectl! transferring or causing to be
10
transferred an! sound recording or motion picture or other audio/visual wor)s so
recorded with intent to sell, lease, publicl! e@hibit or cause to be sold, leased or
publicl! e@hibited, or to use or cause to be used for profit such articles on which
sounds, motion pictures, or other audio/visual wor)s are so transferred without the
written consent of the owner or his assignee> 9": selling, leasing, distributing,
circulating, publicl! e@hibiting, or offering for sale, lease, distribution, or possessing for
the purpose of sale, lease, distribution, circulation or public e@hibition an! of the
abovementioned articles, without the written consent of the owner or his assignee>
and, 9&: directl! or indirectl! offering or ma)ing available for a fee, rental, or an! other
form of compensation an! e+uipment, machiner!, paraphernalia or an! material with
the )nowledge that such e+uipment, machiner!, paraphernalia or material will be used
b! another to reproduce, without the consent of the owner, an! phonograph record,
disc, wire, tape, film or other article on which sounds, motion pictures or other audio/
visual recordings ma! be transferred, and which provide distinct bases for criminal
prosecution, being crimes independentl! punishable under Presidential 2ecree No. 3$,
as amended, aside from the act of infringing or aiding or abetting such infringement
under ,ection "$.
(he trial court's finding that private respondents committed acts in blatant
transgression of Presidential 2ecree No. 3$ all the more bolsters its findings of
probable cause, which determination can be reached even in the absence of master
tapes b! the Audge in the e@ercise of sound discretion. (he e@ecutive concern and
resolve e@pressed in the foregoing amendments to the decree for the protection of
intellectual propert! rights should be matched b! corresponding Audicial vigilance and
activism, instead of the apath! of submitting to technicalities in the face of ample
evidence of guilt.
(he essence of intellectual pirac! should be essa!ed in conceptual terms in order to
underscore its gravit! b! an appropriate understanding thereof. 5nfringement of a
cop!right is a trespass on a private domain owned and occupied b! the owner of the
cop!right, and, therefore, protected b! law, and infringement of cop!right, or pirac!,
which is a s!non!mous term in this connection, consists in the doing b! an! person,
without the consent of the owner of the cop!right, of an!thing the sole right to do which
is conferred b! statute on the owner of the cop!right.
+8
A cop! of a pirac! is an infringement of the original, and it is no defense that the pirate,
in such cases, did not )now what wor)s he was indirectl! cop!ing, or did not )now
whether or not he was infringing an! cop!right> he at least )new that what he was
cop!ing was not his, and he copied at his peril. 5n determining the +uestion of
infringement, the amount of matter copied from the cop!righted wor) is an important
consideration. (o constitute infringement, it is not necessar! that the whole or even a
large portion of the wor) shall have been copied. 5f so much is ta)en that the value of
the original is sensibl! diminished, or the labors of the original author are substantiall!
and to an inAurious e@tent appropriated b! another, that is sufficient in point of law to
constitute a
pirac!.
+9
(he +uestion of whether there has been an actionable infringement of a
literar!, musical, or artistic wor) in motion pictures, radio or television being one of fact,
80
it should properl! be determined during the trial. (hat is the stage calling for
conclusive or preponderating evidence, and not the summar! proceeding for the
issuance of a search warrant wherein both lower courts erroneousl! re+uire the master
tapes.
5n disregarding private respondent's argument that ,earch -arrant No. *./%0& is a
general warrant, the lower court observed that 4it was worded in a manner that the
enumerated sei=able items bear direct relation to the offense of violation of ,ec. 01 of
P2 3$ as amended. 5t authori=ed onl! the sei=ur9e: of articles used or intended to be
used in the unlawful sale, lease and other unconcerted acts in violation of P2 3$ as
amended. . . .
81
;n this point, !ache and Co., -hil./, 2nc., et al. vs. 4ui&, et al.,
82
instructs and
enlightens6
A search warrant ma! be said to particularl! describe the things to be sei=ed when the
description therein is as specific as the circumstances will ordinaril! allow 9People vs.
Rubio, 0. Phil. &*3:> or when the description e@presses a conclusion of fact C not of
law C b! which the warrant officer ma! be guided in ma)ing the search and sei=ure
9idem., dissent of Abad ,antos, %.,:> or when the things described are limited to those
which bear direct relation to the offense for which the warrant is being issued 9,ec ",
Rule #"1, Revised Rules of Court:. . . . 5f the articles desired to be sei=ed have an!
direct relation to an offense committed, the applicant must necessaril! have some
evidence, other than those articles, to prove the said offense> and the articles subAect
of search and sei=ure should come in hand! merel! to strengthen such evidence. . . .
;n private respondents' averment that the search warrant was made applicable to
more than one specific offense on the ground that there are as man! offenses of
infringement as there are rights protected and, therefore, to issue one search warrant
for all the movie titles allegedl! pirated violates the rule that a search warrant must be
issued onl! in connection with one specific offense, the lower court said6
. . . . As the face of the search warrant itself indicates, it was issued for violation of
,ection 01, P2 3$ as amended onl!. (he specifications therein 9in Anne@ A: merel!
refer to the titles of the cop!righted motion pictures?films belonging to private
complainants which defendants were in control?possession for sale, lease, distribution
or public e@hibition in contravention of ,ec. 01, P2 3$ as amended.
83
(hat there were several counts of the offense of cop!right infringement and the search
warrant uncovered several contraband items in the form of pirated video tapes is not to
be confused with the number of offenses charged. (he search warrant herein issued
does not violate the one/specific/offense rule.
5t is pointless for private respondents to insist on compliance with the registration and
deposit re+uirements under Presidential 2ecree No. 3$ as prere+uisites for invo)ing
the court's protective mantle in cop!right infringement cases. As e@plained b! the court
below6
11
2efendants/movants contend that P2 3$ as amended covers onl! producers who have
complied with the re+uirements of deposit and notice 9in other words registration:
under ,ections 3$ and 0% thereof. Absent such registration, as in this case, there was
no right created, hence, no infringement under P2 3$ as amended. (his is not well/
ta)en.
As correctl! pointed out b! private complainants/oppositors, the 2epartment of ustice
has resolved this legal +uestion as far bac) as 2ecember #", #$.* in its ;pinion No.
#$# of the then ,ecretar! of ustice 8icente Abad ,antos which stated that ,ections
"1 and 0% do not appl! to cinematographic wor)s and P2 No. 3$ 4had done awa! with
the registration and deposit of cinematographic wor)s4 and that 4even without prior
registration and deposit of a wor) which ma! be entitled to protection under the
2ecree, the creator can file action for infringement of its rights4. 7e cannot demand,
however, pa!ment of damages arising from infringement. (he same opinion stressed
that 4the re+uirements of registration and deposit are thus retained under the 2ecree,
not as conditions for the ac+uisition of cop!right and other rights, but as prere+uisites
to a suit for damages4. (he statutor! interpretation of the E@ecutive Branch being
correct, is entitled 9to: weight and respect.
@@@ @@@ @@@
2efendants/movants maintain that complainant and his witnesses led the Court to
believe that a crime e@isted when in fact there was none. (his is wrong. As earlier
discussed, P2 3$ as amended, does not re+uire registration and deposit for a creator
to be able to file an action for infringement of his rights. (hese conditions are merel!
pre/re+uisites to an action for damages. ,o, as long as the proscribed acts are shown
to e@ist, an action for infringement ma! be initiated.
8)
Accordingl!, the certifications
8*
from the Cop!right ,ection of the National <ibrar!,
presented as evidence b! private respondents to show non/registration of some of the
films of petitioners, assume no evidentiar! weight or significance whatsoever.
Durthermore, a closer review of Presidential 2ecree No. 3$ reveals that even with
respect to wor)s which are re+uired under ,ection "1 thereof to be registered and with
copies to deposited with the National <ibrar!, such as boo)s, including composite and
c!clopedic wor)s, manuscripts, directories and ga=etteers> and periodicals, including
pamphlets and newspapers> lectures, sermons, addresses, dissertations prepared for
oral deliver!> and letters, the failure to compl! with said re+uirements does not deprive
the cop!right owner of the right to sue for infringement. ,uch non/compliance merel!
limits the remedies available to him and subAects him to the corresponding sanction.
(he reason for this is e@pressed in ,ection " of the decree which prefaces its
enumeration of cop!rightable wor)s with the e@plicit statement that 4the rights granted
under this 2ecree shall, from the moment of creation, subsist with respect to an! of the
following classes of wor)s.4 (his means that under the present state of the law, the
cop!right for a wor) is ac+uired b! an intellectual creator from the moment of creation
even in the absence of registration and deposit. As has been authoritativel! clarified6
(he registration and deposit of two complete copies or reproductions of the wor) with
the National <ibrar! within three wee)s after the first public dissemination or
performance of the wor), as provided for in ,ection "1 9P.2. No. 3$, as amended:, is
not for the purpose of securing a cop!right of the wor), but rather to avoid the penalt!
for non/compliance of the deposit of said two copies and in order to recover damages
in an infringement suit.
86
;ne distressing observation. (his case has been fought on the basis of, and its
resolution long dela!ed b! resort to, technicalities to a virtuall! abusive e@tent b!
private respondents, without so much as an attempt to adduce an! credible evidence
showing that the! conduct their business legitimatel! and fairl!. (he fact that private
respondents could not show proof of their authorit! or that there was consent from the
cop!right owners for them to sell, lease, distribute or circulate petitioners' cop!righted
films immeasurabl! bolsters the lower court's initial finding of probable cause. (hat
private respondents are licensed b! the 8ideogram Regulator! Board does not insulate
them from criminal and civil liabilit! for their unlawful business practices. -hat is more
deplorable is that the reprehensible acts of some unscrupulous characters have
stigmati=ed the Philippines with an unsavor! reputation as a hub for intellectual pirac!
in this part of the globe, formerl! in the records of the Jeneral Agreement on (ariffs
and (rade and, now, of the -orld (rade ;rgani=ation. ,uch acts must not be glossed
over but should be denounced and repressed lest the Philippines become an
international pariah in the global intellectual communit!.
-7ERED;RE, the assailed Audgment and resolution of respondent Court of Appeals,
and necessaril! inclusive of the order of the lower court dated November "", #$**, are
hereb! RE8ER,E2 and ,E( A,52E. (he order of the court a quo of ,eptember 0,
#$** upholding the validit! of ,earch -arrant No. *./%0& is hereb! RE5N,(A(E2, and
said court is 25REC(E2 to ta)e and e@peditiousl! proceed with such appropriate
proceedings as ma! be called for in this case. (reble costs are further assessed
against private respondents.
,; ;R2ERE2.
12