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Terry GILLIAM et al.

, Plaintiffs-Appellants-Appellees,
v.
AMERICAN BROADCASTING COMPANIES, INC., Defendant-Appellee-Appellant.

Nos. 913, 1058, Dockets 75-7693, 76-7023.


United States Court of Appeals,
Second Circuit.
Argued April 13, 1976.
Decided June 30, 1976.

to dissenting opinion

LUMBARD, Circuit Judge:


Plaintiffs, a group of British writers and performers known as "Monty Python," [FN1] appeal from a
denial by Judge Lasker in the Southern District of a preliminary injunction to restrain the American
Broadcasting Company (ABC) from broadcasting edited versions of three separate programs
originally written and performed by Monty Python for broadcast by the British Broadcasting
Corporation (BBC). We agree with Judge Lasker that the appellants have demonstrated that the
excising done for ABC impairs the integrity of the original work. We further find that the
countervailing injuries that Judge Lasker found might have accrued to ABC as a result of an
injunction at a prior date no longer exist. We therefore direct the issuance of a preliminary injunction
by the district court.

Since its formation in 1969, the Monty Python group has gained popularity primarily through its thirty-
minute television programs created for BBC as part of a comedy series entitled "Monty Python's
Flying Circus." In accordance with an agreement between Monty Python and BBC, the group writes
and delivers to BBC scripts for use in the television series. This scriptwriters' agreement recites in
great detail the procedure to be followed when any alterations are to be made in the script prior to
recording of the program.[FN2] The essence of this section of the agreement is that, while BBC
retains final authority to make changes, appellants or their representatives exercise optimum control
over the scripts consistent with BBC's authority and only minor changes may be made without prior
consultation with the writers. Nothing in the scriptwriters' agreement entitles BBC to alter a program
once it has been recorded. The agreement further provides that, subject to the terms therein, the
group retains all rights in the script.

Under the agreement, BBC may license the transmission of recordings of the television programs in
any overseas territory. The series has been broadcast in this country primarily on non-commercial
public broadcasting television stations, although several of the programs have been broadcast on
commercial stations in Texas and Nevada. In each instance, the thirty-minute programs have been
broadcast as originally recorded and broadcast in England in their entirety and without commercial
interruption.
In October 1973, Time-Life Films acquired the right to distribute in the United States certain BBC
television programs, including the Monty Python series. Time- Life was permitted to edit the
programs only "for insertion of commercials, applicable censorship or governmental . . . rules and
regulations, and National Association of Broadcasters and time segment requirements." No similar
clause was included in the scriptwriters' agreement between appellants and BBC. Prior to this time,
ABC had sought to acquire the right to broadcast excerpts from various Monty Python programs in
the spring of 1975, but the group rejected the proposal for such a disjoined format. Thereafter, in
July 1975, ABC agreed with Time-Life to broadcast two ninety- minute specials each comprising
three thirty-minute Monty Python programs that had not previously been shown in this country.

Correspondence between representatives of BBC and Monty Python reveals that these parties
assumed that ABC would broadcast each of the Monty Python programs "in its entirety." On
September 5, 1975, however, the group's British representative inquired of BBC how ABC planned
to show the programs in their entirety if approximately 24 minutes of each 90 minute program were
to be devoted to commercials. BBC replied on September 12, "we can only reassure you that ABC
have decided to run the programmes 'back to back,' and that there is a firm undertaking not to
segment them."
ABC broadcast the first of the specials on October 3, 1975. Appellants did not see a tape of the
program until late November and were allegedly "appalled" at the discontinuity and "mutilation" that
had resulted from the editing done by Time-Life for ABC. Twenty-four minutes of the original 90
minutes of recording had been omitted. Some of the editing had been done in order to make time for
commercials; other material had been edited, according to ABC, because the original programs
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contained offensive or obscene matter.


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In early December, Monty Python learned that ABC planned to broadcast the second special on
December 26, 1975. The parties began negotiations concerning editing of that program and a delay
of the broadcast until Monty Python could view it. These negotiations were futile, however, and on
December 15 the group filed this action to enjoin the broadcast and for damages. Following an
evidentiary hearing, Judge Lasker found that "the plaintiffs have established an impairment of the
integrity of their work" which "caused the film or program . . . to lose its iconoclastic verve."
According to Judge Lasker, "the damage that has been caused to the plaintiffs is irreparable by its
nature." Nevertheless, the judge denied the motion for the preliminary injunction on the grounds that
it was unclear who owned the copyright in the programs produced by BBC from the scripts written by
Monty Python; that there was a question of whether Time-Life and BBC were indispensable parties
to the litigation; that ABC would suffer significant financial loss if it were enjoined a week before the
scheduled broadcast; and that Monty Python had displayed a "somewhat disturbing casualness" in
their pursuance of the matter.

Judge Lasker granted Monty Python's request for more limited relief by requiring ABC to broadcast a
disclaimer during the December 26 special to the effect that the group dissociated itself from the
program because of the editing. A panel of this court, however, granted a stay of that order until this
appeal could be heard and permitted ABC to broadcast, at the beginning of the special, only the
legend that the program had been edited by ABC. We heard argument on April 13 and, at that time,
enjoined ABC from any further broadcast of edited Monty Python programs pending the decision of
the court.

In determining the availability of injunctive relief at this early stage of the proceedings, Judge Lasker
properly considered the harm that would inure to the plaintiffs if the injunction were denied, the harm
that defendant would suffer if the injunction were granted, and the likelihood that plaintiffs would
ultimately succeed on the merits. See Hamilton Watch Co. v. Benrus Watch Co., 206 F.2d 738 (2d
Cir. 1953). We direct the issuance of a preliminary injunction because we find that all these factors
weigh in favor of appellants.

There is nothing clearly erroneous in Judge Lasker's conclusion that any injury suffered by
appellants as a result of the broadcast of edited versions of their programs was irreparable by its
nature. ABC presented the appellants with their first opportunity for broadcast to a nationwide
network audience in this country. If ABC adversely misrepresented the quality of Monty Python's
work, it is likely that many members of the audience, many of whom, by defendant's admission, were
previously unfamiliar with appellants, would not become loyal followers of Monty Python productions.
The subsequent injury to appellants' theatrical reputation would imperil their ability to attract the large
audience necessary to the success of their venture. Such an injury to professional reputation cannot
be measured in monetary terms or recompensed by other relief. See Coca-Cola Co. v. Gemini
Rising, Inc., 346 F.Supp. 1183, 1189 (E.D.N.Y.1972); Estee Lauder, Inc. v. Watsky, 323 F.Supp.
1064, 1067 (S.D.N.Y.1970).

In contrast to the harm that Monty Python would suffer by a denial of the preliminary injunction,
Judge Lasker found that ABC's relationship with its affiliates would be impaired by a grant of an
injunction within a week of the scheduled December 26 broadcast. The court also found that ABC
and its affiliates had advertised the program and had included it in listings of forthcoming television
programs that were distributed to the public. Thus a last minute cancellation of the December 26
program, Judge Lasker concluded, would injure defendant financially and in its reputation with the
public and its advertisers.

However valid these considerations may have been when the issue before the court was whether a
preliminary injunction should immediately precede the broadcast, any injury to ABC is presently
more speculative. No rebroadcast of the edited specials has been scheduled and no advertising
costs have been incurred for the immediate future. Thus there is no danger that defendant's relations
with affiliates or the public will suffer irreparably if subsequent broadcasts of the programs are
enjoined pending a disposition of the issues.

We then reach the question whether there is a likelihood that appellants will succeed on the merits.
In concluding that there is a likelihood of infringement here, we rely especially on the fact that the
editing was substantial, i. e., approximately 27 per cent of the original program was omitted, and the
editing contravened contractual provisions that limited the right to edit Monty Python material. It
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should be emphasized that our discussion of these matters refers only to such facts as have been
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developed upon the hearing for a preliminary injunction. Modified or contrary findings may become
appropriate after a plenary trial.
Judge Lasker denied the preliminary injunction in part because he was unsure of the ownership of
the copyright in the recorded program. Appellants first contend that the question of ownership is
irrelevant because the recorded program was merely a derivative work taken from the script in which
they hold the uncontested copyright. Thus, even if BBC owned the copyright in the recorded
program, its use of that work would be limited by the license granted to BBC by Monty Python for
use of the underlying script. We agree.

Section 7 of the Copyright Law, 17 U.S.C. s 7, provides in part that "adaptations, arrangements,
dramatizations . . . or other versions of . . . copyrighted works when produced with the consent of the
proprietor of the copyright in such works . . . shall be regarded as new works subject to copyright . . .
." Manifestly, the recorded program falls into this category as a dramatization of the script,[FN3] and
thus the program was itself entitled to copyright protection. However, section 7 limits the copyright
protection of the derivative work, as works adapted from previously existing scripts have become
known, to the novel additions made to the underlying work, Reyher v. Children's Television
Workshop, 533 F.2d 87 (2d Cir. 1976), and the derivative work does not affect the "force or validity"
of the copyright in the matter from which it is derived. See Grove Press, Inc. v. Greenleaf Publishing
Co., 247 F.Supp. 518 (S.D.N.Y.1965). Thus, any ownership by BBC of the copyright in the recorded
program would not affect the scope or ownership of the copyright in the underlying script.

Since the copyright in the underlying script survives intact despite the incorporation of that work into
a derivative work, one who uses the script, even with the permission of the proprietor of the
derivative work, may infringe the underlying copyright. See Davis v. E. I. DuPont deNemours & Co.,
240 F.Supp. 612 (S.D.N.Y.1965) (defendants held to have infringed when they obtained permission
to use a screenplay in preparing a television script but did not obtain permission of the author of the
play upon which the screenplay was based).

If the proprietor of the derivative work is licensed by the proprietor of the copyright in the underlying
work to vend or distribute the derivative work to third parties, those parties will, of course, suffer no
liability for their use of the underlying work consistent with the license to the proprietor of the
derivative work. Obviously, it was just this type of arrangement that was contemplated in this
instance. The scriptwriters' agreement between Monty Python and BBC specifically permitted the
latter to license the transmission of the recordings made by BBC to distributors such as Time-Life for
broadcast in overseas territories.

One who obtains permission to use a copyrighted script in the production of a derivative work,
however, may not exceed the specific purpose for which permission was granted. Most of the
decisions that have reached this conclusion have dealt with the improper extension of the underlying
work into media or time, i. e., duration of the license, not covered by the grant of permission to the
derivative work proprietor.[FN4] See Bartsch v. Metro- Goldwyn-Mayer, Inc., 391 F.2d 150 (2d Cir.),
cert. denied, 393 U.S. 826, 89 S.Ct. 86, 21 L.Ed.2d 96 (1968); G. Ricordi & Co. v. Paramount
Pictures Inc., 189 F.2d 469 (2d Cir.), cert. denied, 342 U.S. 849, 72 S.Ct. 77, 96 L.Ed. 641 (1951).
Cf. Rice v. American Program Bureau, 446 F.2d 685 (2d Cir. 1971). Appellants herein do not claim
that the broadcast by ABC violated media or time restrictions contained in the license of the script to
BBC. Rather, they claim that revisions in the script, and ultimately in the program, could be made
only after consultation with Monty Python, and that ABC's broadcast of a program edited after
recording and without consultation with Monty Python exceeded the scope of any license that BBC
was entitled to grant.

The rationale for finding infringement when a licensee exceeds time or media restrictions on his
license the need to allow the proprietor of the underlying copyright to control the method in which his
work is presented to the public applies equally to the situation in which a licensee makes an
unauthorized use of the underlying work by publishing it in a truncated version. Whether intended to
allow greater economic exploitation of the work, as in the media and time cases, or to ensure that
the copyright proprietor retains a veto power over revisions desired for the derivative work, the ability
of the copyright holder to control his work remains paramount in our copyright law. We find,
therefore, that unauthorized editing of the underlying work, if proven, would constitute an
infringement of the copyright in that work similar to any other use of a work that exceeded the
license granted by the proprietor of the copyright.

If the broadcast of an edited version of the Monty Python program infringed the group's copyright in
the script, ABC may obtain no solace from the fact that editing was permitted in the agreements
between BBC and Time-Life or Time-Life and ABC. BBC was not entitled to make unilateral changes
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in the script and was not specifically empowered to alter the recordings once made; Monty Python,
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moreover, had reserved to itself any rights not granted to BBC. Since a grantor may not convey
greater rights than it owns, BBC's permission to allow Time-Life, and hence ABC, to edit appears to
have been a nullity. See Hampton v. Paramount Pictures Corp., 279 F.2d 100 (9th Cir.), cert. denied,
364 U.S. 882, 81 S.Ct. 170, 5 L.Ed.2d 103 (1970); Ilyin v. Avon Publications, 144 F.Supp. 368, 372
(S.D.N.Y.1956).

ABC answers appellants' infringement argument with a series of contentions, none of which seems
meritorious at this stage of the litigation. The network asserts that Monty Python's British
representative, Jill Foster, knew that ABC planned to exclude much of the original BBC program in
the October 3 broadcast. ABC thus contends that by not previously objecting to this procedure,
Monty Python ratified BBC's authority to license others to edit the underlying script.

Although the case of Ilyin v. Avon Publications, Inc., 144 F.Supp. 368, 373 (S.D.N.Y.1956), may be
broadly read for the proposition that a holder of a derivative copyright may obtain rights in the
underlying work through ratification, the conduct necessary to that conclusion has yet to be
demonstrated in this case.[FN5] It is undisputed that appellants did not have actual notice of the cuts
in the October 3 broadcast until late November. Even if they are chargeable with the knowledge of
their British representative, it is not clear that she had prior notice of the cuts or ratified the
omissions, nor did Judge Lasker make any finding on the question. While Foster, on September 5,
did question how ABC was to broadcast the entire program if it was going to interpose 24 minutes of
commercials, she received assurances from BBC that the programs would not be "segmented." The
fact that she knew precisely the length of material that would have to be omitted to allow for
commercials does not prove that she ratified the deletions. This is especially true in light of previous
assurances that the program would contain the original shows in their entirety. On the present
record, it cannot be said that there was any ratification of BBC's grant of editing rights. ABC, of
course, is entitled to attempt to prove otherwise during the trial on the merits.

ABC next argues that under the "joint work" theory adopted in Shapiro, Bernstein & Co. v. Jerry
Vogel Music, Inc., 221 F.2d 569 (2d Cir. 1955), the script produced by Monty Python and the
program recorded by BBC are symbiotic elements of a single production. Therefore, according to
ABC, each contributor possesses an undivided ownership of all copyrightable elements in the final
work and BBC could thus have licensed use of the script, including editing, written by appellants.

The joint work theory as extended in Shapiro has been criticized as inequitable unless "at the time of
creation by the first author, the second author's contribution (is envisaged) as an integrated part of a
single work," and the first author intends that the final product be a joint work. See 1 M. Nimmer,
Copyright ss 67-73. Furthermore, this court appears to have receded from a broad application of the
joint work doctrine where the contract which leads to collaboration between authors indicates that
one will retain a superior interest. See Szekely v. Eagle Lion Films, Inc., 242 F.2d 266 (2d Cir.), cert.
denied, 354 U.S. 922, 77 S.Ct. 1382, 1 L.Ed.2d 1437 (1957). In the present case, the screenwriters'
agreement between Monty Python and BBC provides that the group is to retain all rights in the script
not granted in the agreement and that at some future point the group may license the scripts for use
on television to parties other than BBC. These provisions suggest that the parties did not consider
themselves joint authors of a single work. This matter is subject to further exploration at the trial, but
in the present state of the record, it presents no bar to issuance of a preliminary injunction.

Aside from the question of who owns the relevant copyrights, ABC asserts that the contracts
between appellants and BBC permit editing of the programs for commercial television in the United
States. ABC argues that the scriptwriters' agreement allows appellants the right to participate in
revisions of the script only prior to the recording of the programs, and thus infers that BBC had
unrestricted authority to revise after that point. This argument, however, proves too much. A reading
of the contract seems to indicate that Monty Python obtained control over editing the script only to
ensure control over the program recorded from that script.[FN6] Since the scriptwriters' agreement
explicitly retains for the group all rights not granted by the contract, omission of any terms
concerning alterations in the program after recording must be read as reserving to appellants
exclusive authority for such revisions. [FN7]

Finally, ABC contends that appellants must have expected that deletions would be made in the
recordings to conform them for use on commercial television in the United States. ABC argues that
licensing in the United States implicitly grants a license to insert commercials in a program and to
remove offensive or obscene material prior to broadcast. According to the network, appellants
should have anticipated that most of the excised material contained scatological references
inappropriate for American television and that these scenes would be replaced with commercials,
which presumably are more palatable to the American public.
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The proof adduced up to this point, however, provides no basis for finding any implied consent to
edit. Prior to the ABC broadcasts, Monty Python programs had been broadcast on a regular basis by
both commercial and public television stations in this country without interruption or deletion. Indeed,
there is no evidence of any prior broadcast of edited Monty Python material in the United States.
These facts, combined with the persistent requests for assurances by the group and its
representatives that the programs would be shown intact belie the argument that the group knew or
should have known that deletions and commercial interruptions were inevitable.
Several of the deletions made for ABC, such as elimination of the words "hell" and "damn," seem
inexplicable given today's standard television fare.[FN8] If, however, ABC honestly determined that
the programs were obscene in substantial part, it could have decided not to broadcast the specials
at all, or it could have attempted to reconcile its differences with appellants. The network could not,
however, free from a claim of infringement, broadcast in a substantially altered form a program
incorporating the script over which the group had retained control.

Our resolution of these technical arguments serves to reinforce our initial inclination that the
copyright law should be used to recognize the important role of the artist in our society and the need
to encourage production and dissemination of artistic works by providing adequate legal protection
for one who submits his work to the public. See Mazer v. Stein, 347 U.S. 201, 74 S.Ct. 460, 98 L.Ed.
630 (1954). We therefore conclude that there is a substantial likelihood that, after a full trial,
appellants will succeed in proving infringement of their copyright by ABC's broadcast of edited
versions of Monty Python programs. In reaching this conclusion, however, we need not accept
appellants' assertion that any editing whatsoever would constitute infringement. Courts have
recognized that licensees are entitled to some small degree of latitude in arranging the licensed work
for presentation to the public in a manner consistent with the licensee's style or standards. [FN9] See
Stratchborneo v. Arc. Music Corp., 357 F.Supp. 1393, 1405 (S.D.N.Y.1973); Preminger v. Columbia
Pictures Corp., 49 Misc.2d 363, 267 N.Y.S.2d 594 (Sup.Ct.), aff'd 25 App.Div.2d 830, 269 N.Y.S.2d
913 (1st Dept.), aff'd 18 N.Y.2d 659, 273 N.Y.S.2d 80, 219 N.E.2d 431 (1966). That privilege,
however, does not extend to the degree of editing that occurred here especially in light of contractual
provisions that limited the right to edit Monty Python material.

II

It also seems likely that appellants will succeed on the theory that, regardless of the right ABC had to
broadcast an edited program, the cuts made constituted an actionable mutilation of Monty Python's
work. This cause of action, which seeks redress for deformation of an artist's work, finds its roots in
the continental concept of droit moral, or moral right, which may generally be summarized as
including the right of the artist to have his work attributed to him in the form in which he created it.
See 1 M. Nimmer, supra, at s 110.1.

American copyright law, as presently written, does not recognize moral rights or provide a cause of
action for their violation, since the law seeks to vindicate the economic, rather than the personal,
rights of authors. Nevertheless, the economic incentive for artistic and intellectual creation that
serves as the foundation for American copyright law, Goldstein v. California, 412 U.S. 546, 93 S.Ct.
2303, 37 L.Ed.2d 163 (1973); Mazer v. Stein, 347 U.S. 201, 74 S.Ct. 460, 98 L.Ed. 630 (1954),
cannot be reconciled with the inability of artists to obtain relief for mutilation or misrepresentation of
their work to the public on which the artists are financially dependent. Thus courts have long granted
relief for misrepresentation of an artist's work by relying on theories outside the statutory law of
copyright, such as contract law, Granz v. Harris, 198 F.2d 585 (2d Cir. 1952) (substantial cutting of
original work constitutes misrepresentation), or the tort of unfair competition, Prouty v. National
Broadcasting Co., 26 F.Supp. 265 (D.Mass.1939). See Strauss, The Moral Right of the Author 128-
138, in Studies on Copyright (1963). Although such decisions are clothed in terms of proprietary right
in one's creation, they also properly vindicate the author's personal right to prevent the presentation
of his work to the public in a distorted form. See Gardella v. Log Cabin Products Co., 89 F.2d 891,
895-96 (2d Cir. 1937); Roeder, The Doctrine of Moral Right, 53 Harv.L.Rev. 554, 568 (1940).

Here, the appellants claim that the editing done for ABC mutilated the original work and that
consequently the broadcast of those programs as the creation of Monty Python violated the Lanham
Act s 43(a), 15 U.S.C. s 1125(a). [FN10] This statute, the federal counterpart to state unfair
competition laws, has been invoked to prevent misrepresentations that may injure plaintiff's business
or personal reputation, even where no registered trademark is concerned. See Mortellito v. Nina of
California, 335 F.Supp. 1288, 1294 (S.D.N.Y.1972). It is sufficient to violate the Act that a
representation of a product, although technically true, creates a false impression of the product's
origin. See Rich v. RCA Corp., 390 F.Supp. 530 (S.D.N.Y.1975) (recent picture of plaintiff on cover
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of album containing songs recorded in distant past held to be a false representation that the songs
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were new); Geisel v. Poynter Products, Inc., 283 F.Supp. 261, 267 (S.D.N.Y.1968).
These cases cannot be distinguished from the situation in which a television network broadcasts a
program properly designated as having been written and performed by a group, but which has been
edited, without the writer's consent, into a form that departs substantially from the original work. "To
deform his work is to present him to the public as the creator of a work not his own, and thus makes
him subject to criticism for work he has not done." Roeder, supra, at 569. In such a case, it is the
writer or performer, rather than the network, who suffers the consequences of the mutilation, for the
public will have only the final product by which to evaluate the work.[FN11] Thus, an allegation that a
defendant has presented to the public a " garbled," Granz v. Harris, supra (Frank, J., concurring),
distorted version of plaintiff's work seeks to redress the very rights sought to be protected by the
Lanham Act, 15 U.S.C. s 1125(a), and should be recognized as stating a cause of action under that
statute. See Autry v. Republic Productions, Inc., 213 F.2d 667 (9th Cir. 1954); Jaeger v. American
Intn'l Pictures, Inc., 330 F.Supp. 274 (S.D.N.Y.1971), which suggest the violation of such a right if
mutilation could be proven.

During the hearing on the preliminary injunction, Judge Lasker viewed the edited version of the
Monty Python program broadcast on December 26 and the original, unedited version. After hearing
argument of this appeal, this panel also viewed and compared the two versions. We find that the
truncated version at times omitted the climax of the skits to which appellants' rare brand of humor
was leading and at other times deleted essential elements in the schematic development of a story
line.[FN12] We therefore agree with Judge Lasker's conclusion that the edited version broadcast by
ABC impaired the integrity of appellants' work and represented to the public as the product of
appellants what was actually a mere caricature of their talents. We believe that a valid cause of
action for such distortion exists and that therefore a preliminary injunction may issue to prevent
repetition of the broadcast prior to final determination of the issues.[FN13]

III

We do not share Judge Lasker's concern about the procedures by which the appellants have
pursued this action. The district court indicated agreement with ABC that appellants were guilty of
laches in not requesting a preliminary injunction until 11 days prior to the broadcast. Our discussion
above, however, suggests that the group did not know and had no reason to believe until late
November that editing would take place. Several letters between BBC and Monty Python's
representative indicate that appellants believed that the programs would be shown in their entirety.
Furthermore, the group did act to prevent offensive editing of the second program immediately after
viewing the tape of the first edited program. Thus we find no undue delay in the group's failure to
institute this action until they were sufficiently advised regarding the facts necessary to support the
action. In any event, ABC has not demonstrated how it was prejudiced by any delay. See Emle
Industries, Inc. v. Patentex, Inc., 478 F.2d 562, 574 (2d Cir. 1973).

Finally, Judge Lasker denied a preliminary injunction because Monty Python had failed to join BBC
and Time-Life as indispensable parties. We do not believe that either is an indispensable party. ABC
argues that joinder of both was required because it acted in good faith pursuant to its contractual
rights with Time-Life in broadcasting edited versions of the programs, and Time-Life, in turn, relied
upon its contract with BBC. Furthermore, ABC argues, BBC must be joined since it owns the
copyright in the recorded programs.

Even if BBC owns a copyright relevant to determination of the issues in this case, the formalistic rule
that once required all owners of a copyright to be parties to an action for its infringement has given
way to equitable considerations. See Jaeger v. American International Pictures, supra, 330 F.Supp.
at 279; 7 C. Wright & A. Miller, Federal Practice and Procedure, s 1614. In this case, the equities to
be considered under Fed.R.Civ.P. 19(a) strongly favor appellants. Monty Python is relying solely on
its copyright in the script and on its rights as an author. No claim is being made that Monty Python
has rights derived from the copyright held by another. Compare First Financial Marketing Services
Group, Inc. v. Field Promotions, Inc., 286 F.Supp. 295 (S.D.N.Y.1968). One of the parties is an
English corporation, and any action that appellants, a group of English writers and performers, might
have against that potential defendant would be better considered under English law in an English
court.
Complete relief for the alleged infringement and mutilation complained of may be accorded between
Monty Python and ABC, which alone broadcast the programs in dispute. If ABC is ultimately found
liable to appellants, a permanent injunction against future broadcasts and a damage award would
satisfy all of appellants' claims. ABC's assertion that failure to join BBC and Time-Life may leave it
subject to inconsistent verdicts in a later action against its licensors may be resolved through the
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process of impleader, which ABC has thus far avoided despite a suggestion from the district court to
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use that procedure. Finally, neither of the parties considered by ABC to be indispensable has
claimed any interest in the subject matter of this litigation. See Fed.R.Civ.P. 19(a)(2).
For these reasons we direct that the district court issue the preliminary injunction sought by the
appellants.

GURFEIN, Circuit Judge (concurring):


I concur in my brother Lumbard's scholarly opinion, but I wish to comment on the application of
Section 43(a) of the Lanham Act, 15 U.S.C. s 1125(a).

I believe that this is the first case in which a federal appellate court has held that there may be a
violation of Section 43(a) of the Lanham Act with respect to a common-law copyright. The Lanham
Act is a trademark statute, not a copyright statute. Nevertheless, we must recognize that the
language of Section 43(a) is broad. It speaks of the affixation or use of false designations of origin or
false descriptions or representations, but proscribes such use "in connection with any goods or
services." It is easy enough to incorporate trade names as well as trademarks into Section 43(a) and
the statute specifically applies to common law trademarks, as well as registered trademarks.
Lanham Act s 45, 15 U.S.C. s 1127.

In the present case, we are holding that the deletion of portions of the recorded tape constitutes a
breach of contract, as well as an infringement of a common-law copyright of the original work. There
is literally no need to discuss whether plaintiffs also have a claim for relief under the Lanham Act or
for unfair competition under New York law. I agree with Judge Lumbard, however, that it may be an
exercise of judicial economy to express our view on the Lanham Act claim, and I do not dissent
therefrom. I simply wish to leave it open for the District Court to fashion the remedy.

The Copyright Act provides no recognition of the so-called droit moral, or moral right of authors. Nor
are such rights recognized in the field of copyright law in the United States. See 1 Nimmer on
Copyright, s 110.2 (1975 ed.). If a distortion or truncation in connection with a use constitutes an
infringement of copyright, there is no need for an additional cause of action beyond copyright
infringement. Id. at s 110.3. An obligation to mention the name of the author carries the implied duty,
however, as a matter of contract, not to make such changes in the work as would render the credit
line a false attribution of authorship, Granz v. Harris, 198 F.2d 585 (2 Cir. 1952).

So far as the Lanham Act is concerned, it is not a substitute for droit moral which authors in Europe
enjoy. If the licensee may, by contract, distort the recorded work, the Lanham Act does not come
into play. If the licensee has no such right by contract, there will be a violation in breach of contract.
The Lanham Act can hardly apply literally when the credit line correctly states the work to be that of
the plaintiffs which, indeed it is, so far as it goes. The vice complained of is that the truncated version
is not what the plaintiffs wrote. But the Lanham Act does not deal with artistic integrity. It only goes to
misdescription of origin and the like. See Societe Comptoir De L'Industrie Cotonniere Etablissements
Boussac v. Alexander's Dept. Stores, Inc., 299 F.2d 33, 36 (2 Cir. 1962).

The misdescription of origin can be dealt with, as Judge Lasker did below, by devising an
appropriate legend to indicate that the plaintiffs had not approved the editing of the ABC
version.[FN1] With such a legend, there is no conceivable violation of the Lanham Act. If plaintiffs
complain that their artistic integrity is still compromised by the distorted version, their claim does not
lie under the Lanham Act, which does not protect the copyrighted work itself but protects only
against the misdescription or mislabelling.

So long as it is made clear that the ABC version is not approved by the Monty Python group, there is
no misdescription of origin. So far as the content of the broadcast itself is concerned, that is not
within the proscription of the Lanham Act when there is no misdescription of the authorship.

I add this brief explanation because I do not believe that the Lanham Act claim necessarily requires
the drastic remedy of permanent injunction. That form of ultimate relief must be found in some other
fountainhead of equity jurisprudence.

to majority opinion

FN1. Appellant Gilliam is an American citizen residing in England.

FN2. The Agreement provides:


V. When script alterations are necessary it is the intention of the BBC to make every effort to inform
7

and to reach agreement with the Writer. Whenever practicable any necessary alterations (other than
Page

minor alterations) shall be made by the Writer. Nevertheless the BBC shall at all times have the right
to make
(a) minor alterations and
(b) such other alterations as in its opinion are necessary in order to avoid involving the BBC in legal
action or bringing the BBC into disrepute. Any decision under (b) shall be made at a level not below
that of Head of Department. It is however agreed that after a script has been accepted by the BBC
alterations will not be made by the BBC under (b) above unless
(i) the Writer, if available when the BBC requires the alterations to be made, has been asked to
agree to them but is not willing to do so and (ii) the Writer has had, if he so requests and if the BBC
agrees that time permits if rehearsals and recording are to proceed as planned, an opportunity to be
represented by the Writers' Guild of Great Britain (or if he is not a member of the Guild by his agent)
at a meeting with the BBC to be held within at most 48 hours of the request (excluding weekends). If
in such circumstances there is no agreement about the alterations then the final decision shall rest
with the BBC. Apart from the right to make alterations under (a) and (b) above the BBC shall not
without the consent of the Writer or his agent (which consent shall not be unreasonably withheld)
make any structural alterations as opposed to minor alterations to the script, provided that such
consent shall not be necessary in any case where the Writer is for any reason not immediately
available for consultation at the time which in the BBC's opinion is the deadline from the production
point of view for such alterations to be made if rehearsals and recording are to proceed as planned.

FN3. ABC has not argued that the principles of section 7 do not apply because Monty Python's
copyright in its unpublished script is a common law copyright rather than a statutory copyright, which
can exist only after publication. In any event, we find that the same principles discussed below with
respect to derivative works adapted from material in which there is a statutory copyright also apply to
material in which there is a common law copyright. See RCA Mfg. Co. v. Whiteman, 114 F.2d 86, 88
(2d Cir.), cert. denied, 311 U.S. 712, 61 S.Ct. 393, 85 L.Ed. 463 (1940); 17 U.S.C. s 2. The law is
apparently unsettled with respect to whether a broadcast of a recorded program constitutes
publication of that program and the underlying script so as to divest the proprietor of the script of his
common law copyright. See 1 M. Nimmer, Copyright ss 56.3, 57. Arguably, once the scriptwriter
obtains the economic benefit of the recording and the broadcast, he has obtained all that his
common law copyright was intended to secure for him; thus it would not be unfair to find that
publication of the derivative work divested the script of its common law protection. On the other
hand, several types of performances from scripts have been held not to constitute divestive
publication, see, e.g., Uproar Co. v. NBC, 81 F.2d 373 (1st Cir. 1936), and it is unclear whether a
broadcast of the recording in itself constitutes publication. See M. Nimmer, supra, s 56.3. Since ABC
has not objected to Monty Python's assertion of common law copyright in an unpublished script, we
need not entertain the question on this appeal from denial of a preliminary injunction. We leave initial
determination of this perplexing question to the district court in its determination of all the issues on
the merits. This disposition is especially proper in view of the fact that, apart from the copyright
claims, there will be a trial of the unfair competition claim.

FN4. Thus, a leading commentator on the subject concludes: If the copyright owner of an underlying
work limits his consent for its use in a derivative work to a given medium (e. g. opera), the copyright
owner of the derivative work may not exploit such derivative work in a different medium (e. g. motion
pictures) to the extent the derivative work incorporates protectible material from the underlying work.
1 M. Nimmer, Copyright s 45.3.

FN5. Furthermore, the court in Ilyin specifically limited the theory to the situation in which ratification
was used against a third-party infringer who claimed the proprietor of the derivative work had no
copyright in the underlying work. In this case, however, the proprietor of the underlying work, rather
than the alleged infringer, contests the ratification.

FN6. The scriptwriters' agreement, of course, concerns the recorded program as well as the script.
BBC's rights under the agreement involve primarily the licensing of the recorded program, not the
script itself. Thus, the scriptwriters' agreement would have been the proper and expected place to
find any intended authorization for editing of the recorded program.

FN7. McGuire v. United Artists Television Productions, Inc., 254 F.Supp. 270 (S.D.Cal.1966), cited
by appellee for the proposition that failure of a writer explicitly to reserve control over a recording of
his script automatically forfeits that control, is inapposite. That case involved the question of whether
a writer who had been granted an undetermined measure of "creative control" over the script could
prevent editing of the film for insertion of commercials. The court found only that the parties had
reached no agreement on the scope of the writer's "creative control." Here, however, that scope is
clearly delineated by the agreement that retains for appellants those rights not granted to BBC, and
8

hence, to BBC's licensees. In a performer's agreement between Monty Python and BBC, the group
Page

warranted that any manuscript that it provided to BBC for performance would be either "original
material of (its) own which (it) is fully at liberty to use for all purposes of this Agreement . . . or
original material which (it) is fully at liberty to use for all purposes of this Agreement by reason of (its)
holding all necessary licenses or permissions." ABC contends that somehow this clause provides an
implicit right to edit for commercial television because that act would be consistent with the warranty
that the parties are "fully at liberty" to use the scripts for any purpose. Judge Lasker found that the
performer's agreement was wholly irrelevant to the issue of a preliminary injunction. While we need
not express any opinion on that ruling at this time, it is obvious from a reading of the contract that the
sole purpose of the clause relied upon by ABC is to hold BBC harmless from a claim by any party
that the Monty Python scripts infringe upon another work.

FN8. We also note that broadcast of the Monty Python specials was scheduled by ABC for an 11:30
p. m. to 1:00 a. m. time slot.

FN9. Indeed, the scriptwriters' agreement permitted BBC to make "minor" changes without
consulting Monty Python. See note 2, supra.

FN10. That statute provides in part:

Any person who shall affix, apply, or annex, or use in connection with any goods or services, . . . a
false designation of origin, or any false description or representation . . . and shall cause such goods
or services to enter into commerce . . . shall be liable to a civil action by any person . . . who believes
that he is or is likely to be damaged by the use of any such false description or representation.

FN11. This result is not changed by the fact that the network, as here, takes public responsibility for
editing. See Rich v. RCA Corp., supra.

FN12. A single example will illustrate the extent of distortion engendered by the editing. In one skit,
an upper class English family is engaged in a discussion of the tonal quality of certain words as
"woody" or "tinny." The father soon begins to suggest certain words with sexual connotations as
either "woody" or "tinny," whereupon the mother fetches a bucket of water and pours it over his
head. The skit continues from this point. The ABC edit eliminates this middle sequence so that the
father is comfortably dressed at one moment and, in the next moment, is shown in a soaked
condition without any explanation for the change in his appearance.

FN13. Judge Gurfein's concurring opinion suggests that since the gravamen of a complaint under
the Lanham Act is that the origin of goods has been falsely described, a legend disclaiming Monty
Python's approval of the edited version would preclude violation of that Act. We are doubtful that a
few words could erase the indelible impression that is made by a television broadcast, especially
since the viewer has no means of comparing the truncated version with the complete work in order
to determine for himself the talents of plaintiffs. Furthermore, a disclaimer such as the one originally
suggested by Judge Lasker in the exigencies of an impending broadcast last December would go
unnoticed by viewers who tuned into the broadcast a few minutes after it began. We therefore
conclude that Judge Gurfein's proposal that the district court could find some form of disclaimer
would be sufficient might not provide appropriate relief.

FN1. I do not imply that the appropriate legend be shown only at the beginning of the broadcast.
That is a matter for the District Court.
9
Page
THIRD DIVISION

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


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

x ---------------------------------------------------------------------------------------- x

DECISION

YNARES-SANTIAGO, J.:

This petition for review on certiorari[1] assails the July 12, 2006 Decision[2] of the Court of Appeals in
CA-G.R. SP Nos. 88092 and 90762, which affirmed the December 20, 2004 Decision of the Director-
General of the Intellectual Property Office (IPO) in Appeal No. 10-2004-0002. Also assailed is the
December 11, 2006 Resolution[3] denying the motion for reconsideration.
Petitioner ABS-CBN Broadcasting Corporation (ABS-CBN) is licensed under the laws of the
Republic of the Philippines to engage in television and radio broadcasting.[4]It broadcasts television
programs by wireless means to Metro Manila and nearby provinces, and by satellite to provincial
stations through Channel 2 on Very High Frequency (VHF) and Channel 23 on Ultra High Frequency
(UHF). The programs aired over Channels 2 and 23 are either produced by ABS-CBN or purchased
from or licensed by other producers.
ABS-CBN also owns regional television stations which pattern their programming in
accordance with perceived demands of the region. Thus, television programs shown in Metro Manila
and nearby provinces are not necessarily shown in other provinces.

Respondent Philippine Multi-Media System, Inc. (PMSI) is the operator of Dream


Broadcasting System. It delivers digital direct-to-home (DTH) television via satellite to its subscribers
all over the Philippines. Herein individual respondents, Cesar G. Reyes, Francis Chua, Manuel F.
Abellada, Raul B. De Mesa, and Aloysius M. Colayco, are members of PMSIs Board of Directors.

PMSI was granted a legislative franchise under Republic Act No. 8630[5] on May 7, 1998 and
was given a Provisional Authority by the National Telecommunications Commission (NTC) on
February 1, 2000 to install, operate and maintain a nationwide DTH satellite service. When it
commenced operations, it offered as part of its program line-up ABS-CBN Channels 2 and 23, NBN,
Channel 4, ABC Channel 5, GMA Channel 7, RPN Channel 9, and IBC Channel 13, together with
10

other paid premium program channels.


Page
However, on April 25, 2001,[6] ABS-CBN demanded for PMSI to cease and desist from
rebroadcasting Channels 2 and 23. On April 27, 2001,[7] PMSI replied that the rebroadcasting was in
accordance with the authority granted it by NTC and its obligation under NTC Memorandum Circular
No. 4-08-88,[8] Section 6.2 of which requires all cable television system operators operating in a
community within Grade A or B contours to carry the television signals of the authorized television
broadcast stations.[9]

Thereafter, negotiations ensued between the parties in an effort to reach a settlement;


however, the negotiations were terminated on April 4, 2002 by ABS-CBN allegedly due to PMSIs
inability to ensure the prevention of illegal retransmission and further rebroadcast of its signals, as
well as the adverse effect of the rebroadcasts on the business operations of its regional television
stations.[10]

On May 13, 2002, ABS-CBN filed with the IPO a complaint for Violation of Laws Involving
Property Rights, with Prayer for the Issuance of a Temporary Restraining Order and/or Writ of
Preliminary Injunction, which was docketed as IPV No. 10-2002-0004. It alleged that PMSIs
unauthorized rebroadcasting of Channels 2 and 23 infringed on its broadcasting rights and copyright.

On July 2, 2002, the Bureau of Legal Affairs (BLA) of the IPO granted ABS-CBNs application
for a temporary restraining order. On July 12, 2002, PMSI suspended its retransmission of Channels
2 and 23 and likewise filed a petition for certiorari with the Court of Appeals, which was docketed as
CA-G.R. SP No. 71597.

Subsequently, PMSI filed with the BLA a Manifestation reiterating that it is subject to the
must-carry rule under Memorandum Circular No. 04-08-88. It also submitted a letter dated
December 20, 2002 of then NTC Commissioner Armi Jane R. Borje to PMSI stating as follows:

This refers to your letter dated December 16, 2002 requesting for regulatory
guidance from this Commission in connection with the application and coverage of
NTC Memorandum Circular No. 4-08-88, particularly Section 6 thereof, on mandatory
carriage of television broadcast signals, to the direct-to-home (DTH) pay television
services of Philippine Multi-Media System, Inc. (PMSI).

Preliminarily, both DTH pay television and cable television services are
broadcast services, the only difference being the medium of delivering such services
(i.e. the former by satellite and the latter by cable). Both can carry broadcast signals
to the remote areas, thus enriching the lives of the residents thereof through the
dissemination of social, economic, educational information and cultural programs.

The DTH pay television services of PMSI is equipped to provide nationwide


DTH satellite services. Concededly, PMSIs DTH pay television services covers very
much wider areas in terms of carriage of broadcast signals, including areas not
reachable by cable television services thereby providing a better medium of
dissemination of information to the public.

In view of the foregoing and the spirit and intent of NTC memorandum
Circular No. 4-08-88, particularly section 6 thereof, on mandatory carriage of
television broadcast signals, DTH pay television services should be deemed
covered by such NTC Memorandum Circular.
11

For your guidance. (Emphasis added)[11]


Page
On August 26, 2003, PMSI filed another Manifestation with the BLA that it received a letter
dated July 24, 2003 from the NTC enjoining strict and immediate compliance with the must-carry rule
under Memorandum Circular No. 04-08-88, to wit:

Dear Mr. Abellada:

Last July 22, 2003, the National Telecommunications Commission (NTC) received a
letter dated July 17, 2003 from President/COO Rene Q. Bello of the International
Broadcasting Corporation (IBC-Channel 13) complaining that your company, Dream
Broadcasting System, Inc., has cut-off, without any notice or explanation whatsoever,
to air the programs of IBC-13, a free-to-air television, to the detriment of the public.

We were told that, until now, this has been going on.

Please be advised that as a direct broadcast satellite operator, operating a


direct-to-home (DTH) broadcasting system, with a provisional authority (PA)
from the NTC, your company, along with cable television operators, are
mandated to strictly comply with the existing policy of NTC on mandatory
carriage of television broadcast signals as provided under Memorandum
Circular No. 04-08-88, also known as the Revised Rules and Regulations
Governing Cable Television System in the Philippines.

This mandatory coverage provision under Section 6.2 of said Memorandum


Circular, requires all cable television system operators, operating in a
community within the Grade A or B contours to must-carry the television
signals of the authorized television broadcast stations, one of which is IBC-
13. Said directive equally applies to your company as the circular was issued
to give consumers and the public a wider access to more sources of news,
information, entertainment and other programs/contents.

This Commission, as the governing agency vested by laws with the jurisdiction,
supervision and control over all public services, which includes direct broadcast
satellite operators, and taking into consideration the paramount interest of the public
in general, hereby directs you to immediately restore the signal of IBC-13 in your
network programs, pursuant to existing circulars and regulations of the Commission.

For strict compliance. (Emphasis added)[12]

Meanwhile, on October 10, 2003, the NTC issued Memorandum Circular No. 10-10-2003,
entitled Implementing Rules and Regulations Governing Community Antenna/Cable Television
(CATV) and Direct Broadcast Satellite (DBS) Services to Promote Competition in the Sector. Article
6, Section 8 thereof states:

As a general rule, the reception, distribution and/or transmission by any


CATV/DBS operator of any television signals without any agreement with or
authorization from program/content providers are prohibited.

On whether Memorandum Circular No. 10-10-2003 amended Memorandum Circular No. 04-
08-88, the NTC explained to PMSI in a letter dated November 3, 2003 that:

To address your query on whether or not the provisions of MC 10-10-2003 would


have the effect of amending the provisions of MC 4-08-88 on mandatory carriage of
television signals, the answer is in the negative.
12

xxxx
Page
The Commission maintains that, MC 4-08-88 remains valid, subsisting and
enforceable.

Please be advised, therefore, that as duly licensed direct-to-home satellite


television service provider authorized by this Commission, your company
continues to be bound by the guidelines provided for under MC 04-08-88,
specifically your obligation under its mandatory carriage provisions, in
addition to your obligations under MC 10-10-2003. (Emphasis added)

Please be guided accordingly.[13]

On December 22, 2003, the BLA rendered a decision[14] finding that PMSI infringed the
broadcasting rights and copyright of ABS-CBN and ordering it to permanently cease and desist from
rebroadcasting Channels 2 and 23.

On February 6, 2004, PMSI filed an appeal with the Office of the Director-General of the IPO
which was docketed as Appeal No. 10-2004-0002. On December 23, 2004, it also filed with the
Court of Appeals a Motion to Withdraw Petition; Alternatively, Memorandum of the Petition for
Certiorari in CA-G.R. SP No. 71597, which was granted in a resolution dated February 17, 2005.

On December 20, 2004, the Director-General of the IPO rendered a decision[15] in favor of
PMSI, the dispositive portion of which states:

WHEREFORE, premises considered, the instant appeal is hereby


GRANTED. Accordingly, Decision No. 2003-01 dated 22 December 2003 of the
Director of Bureau of Legal Affairs is hereby REVERSED and SET ASIDE.

Let a copy of this Decision be furnished the Director of the Bureau of Legal
Affairs for appropriate action, and the records be returned to her for proper
disposition. The Documentation, Information and Technology Transfer Bureau is also
given a copy for library and reference purposes.

SO ORDERED.[16]

Thus, ABS-CBN filed a petition for review with prayer for issuance of a temporary restraining
order and writ of preliminary injunction with the Court of Appeals, which was docketed as CA-G.R.
SP No. 88092.

On July 18, 2005, the Court of Appeals issued a temporary restraining order. Thereafter,
ABS-CBN filed a petition for contempt against PMSI for continuing to rebroadcast Channels 2 and
23 despite the restraining order. The case was docketed as CA- G.R. SP No. 90762.

On November 14, 2005, the Court of Appeals ordered the consolidation of CA-G.R. SP Nos.
88092 and 90762.

In the assailed Decision dated July 12, 2006, the Court of Appeals sustained the findings of
the Director-General of the IPO and dismissed both petitions filed by ABS-CBN.[17]
13

ABS-CBNs motion for reconsideration was denied, hence, this petition.


Page
ABS-CBN contends that PMSIs unauthorized rebroadcasting of Channels 2 and 23 is an
infringement of its broadcasting rights and copyright under the Intellectual Property Code (IP
Code);[18]that Memorandum Circular No. 04-08-88 excludes DTH satellite television operators; that
the Court of Appeals interpretation of the must-carry rule violates Section 9 of Article III[19] of the
Constitution because it allows the taking of property for public use without payment of just
compensation; that the Court of Appeals erred in dismissing the petition for contempt docketed as
CA-G.R. SP No. 90762 without requiring respondents to file comment.

Respondents, on the other hand, argue that PMSIs rebroadcasting of Channels 2 and 23 is
sanctioned by Memorandum Circular No. 04-08-88; that the must-carry rule under the Memorandum
Circular is a valid exercise of police power; and that the Court of Appeals correctly dismissed CA-
G.R. SP No. 90762 since it found no need to exercise its power of contempt.

After a careful review of the facts and records of this case, we affirm the findings of the
Director-General of the IPO and the Court of Appeals.

There is no merit in ABS-CBNs contention that PMSI violated its broadcasters rights under
Section 211 of the IP Code which provides in part:

Chapter XIV
BROADCASTING ORGANIZATIONS

Sec. 211. Scope of Right. - Subject to the provisions of Section 212, broadcasting
organizations shall enjoy the exclusive right to carry out, authorize or prevent any of
the following acts:

211.1. The rebroadcasting of their broadcasts;

xxxx

Neither is PMSI guilty of infringement of ABS-CBNs copyright under Section 177 of the IP
Code which states that copyright or economic rights shall consist of the exclusive right to carry out,
authorize or prevent the public performance of the work (Section 177.6), and other communication to
the public of the work (Section 177.7).[20]

Section 202.7 of the IP Code defines broadcasting as the transmission by wireless means
for the public reception of sounds or of images or of representations thereof; such transmission by
satellite is also broadcasting where the means for decrypting are provided to the public by the
broadcasting organization or with its consent.

On the other hand, rebroadcasting as defined in Article 3(g) of the International Convention
for the Protection of Performers, Producers of Phonograms and Broadcasting Organizations,
otherwise known as the 1961 Rome Convention, of which the Republic of the Philippines is a
signatory, [21] is the simultaneous broadcasting by one broadcasting organization of the broadcast of
another broadcasting organization.
14
Page
The Director-General of the IPO correctly found that PMSI is not engaged in rebroadcasting
and thus cannot be considered to have infringed ABS-CBNs broadcasting rights and copyright, thus:

That the Appellants [herein respondent PMSI] subscribers are able to view
Appellees [herein petitioner ABS-CBN] programs (Channels 2 and 23) at the same
time that the latter is broadcasting the same is undisputed. The question however is,
would the Appellant in doing so be considered engaged in broadcasting. Section
202.7 of the IP Code states that broadcasting means

the transmission by wireless means for the public reception of


sounds or of images or of representations thereof; such transmission
by satellite is also broadcasting where the means for decrypting are
provided to the public by the broadcasting organization or with its
consent.

Section 202.7 of the IP Code, thus, provides two instances wherein there is
broadcasting, to wit:

1. The transmission by wireless means for the public reception of sounds


or of images or of representations thereof; and

2. The transmission by satellite for the public reception of sounds or of


images or of representations thereof where the means for decrypting are
provided to the public by the broadcasting organization or with its consent.

It is under the second category that Appellants DTH satellite television


service must be examined since it is satellite-based. The elements of such category
are as follows:

1. There is transmission of sounds or images or of representations


thereof;

2. The transmission is through satellite;

3. The transmission is for public reception; and

4. The means for decrypting are provided to the public by the broadcasting
organization or with its consent.

It is only the presence of all the above elements can a determination that the
DTH is broadcasting and consequently, rebroadcasting Appellees signals in violation
of Sections 211 and 177 of the IP Code, may be arrived at.

Accordingly, this Office is of the view that the transmission contemplated


under Section 202.7 of the IP Code presupposes that the origin of the signals is the
broadcaster. Hence, a program that is broadcasted is attributed to the
broadcaster. In the same manner, the rebroadcasted program is attributed to the
rebroadcaster.

In the case at hand, Appellant is not the origin nor does it claim to be the
origin of the programs broadcasted by the Appellee. Appellant did not make and
transmit on its own but merely carried the existing signals of the Appellee. When
Appellants subscribers view Appellees programs in Channels 2 and 23, they know
that the origin thereof was the Appellee.

Aptly, it is imperative to discern the nature of broadcasting. When a


broadcaster transmits, the signals are scattered or dispersed in the air. Anybody may
pick-up these signals. There is no restriction as to its number, type or class of
recipients. To receive the signals, one is not required to subscribe or to pay any
fee. One only has to have a receiver, and in case of television signals, a television
set, and to tune-in to the right channel/frequency. The definition of broadcasting,
15

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
Page

only through wireless means. The use of wire in transmitting signals, such as cable
television, limits the recipients to those who are connected. Unlike wireless
transmissions, in wire-based transmissions, it is not enough that one wants to be
connected and possesses the equipment. The service provider, such as cable
television companies may choose its subscribers.

The only limitation to such dispersal of signals in the air is the technical
capacity of the transmitters and other equipment employed by the broadcaster. While
the broadcaster may use a less powerful transmitter to limit its coverage, this is
merely a business strategy or decision and not an inherent limitation when
transmission is through cable.

Accordingly, the nature of broadcasting is to scatter the signals in its widest


area of coverage as possible. On this score, it may be said that making public means
that accessibility is undiscriminating as long as it [is] within the range of the
transmitter and equipment of the broadcaster. That the medium through which the
Appellant carries the Appellees signal, that is via satellite, does not diminish the fact
that it operates and functions as a cable television. It remains that the Appellants
transmission of signals via its DTH satellite television service cannot be considered
within the purview of broadcasting. x x x

xxxx

This Office also finds no evidence on record showing that the Appellant has
provided decrypting means to the public indiscriminately. Considering the nature of
this case, which is punitive in fact, the burden of proving the existence of the
elements constituting the acts punishable rests on the shoulder of the complainant.

Accordingly, this Office finds that there is no rebroadcasting on the part of the
Appellant of the Appellees programs on Channels 2 and 23, as defined under the
Rome Convention.[22]

Under the Rome Convention, rebroadcasting is the simultaneous broadcasting by one


broadcasting organization of the broadcast of another broadcasting organization. The Working
Paper[23] prepared by the Secretariat of the Standing Committee on Copyright and Related Rights
defines broadcasting organizations as entities that take the financial and editorial responsibility for
the selection and arrangement of, and investment in, the transmitted content.[24] Evidently, PMSI
would not qualify as a broadcasting organization because it does not have the aforementioned
responsibilities imposed upon broadcasting organizations, such as ABS-CBN.

ABS-CBN creates and transmits its own signals; PMSI merely carries such signals which the
viewers receive in its unaltered form. PMSI does not produce, select, or determine the programs to
be shown in Channels 2 and 23. Likewise, it does not pass itself off as the origin or author of such
programs. Insofar as Channels 2 and 23 are concerned, PMSI merely retransmits the same in
accordance with Memorandum Circular 04-08-88. With regard to its premium channels, it buys the
channels from content providers and transmits on an as-is basis to its viewers. Clearly, PMSI does
not perform the functions of a broadcasting organization; thus, it cannot be said that it is engaged in
rebroadcasting Channels 2 and 23.

The Director-General of the IPO and the Court of Appeals also correctly found that PMSIs
services are similar to a cable television system because the services it renders fall under cable
retransmission, as described in the Working Paper, to wit:
16

(G) Cable Retransmission


Page
47. When a radio or television program is being broadcast, it can be retransmitted to
new audiences by means of cable or wire. In the early days of cable television, it was
mainly used to improve signal reception, particularly in so-called shadow zones, or to
distribute the signals in large buildings or building complexes. With improvements in
technology, cable operators now often receive signals from satellites before
retransmitting them in an unaltered form to their subscribers through cable.

48. In principle, cable retransmission can be either simultaneous with the broadcast
over-the-air or delayed (deferred transmission) on the basis of a fixation or a
reproduction of a fixation.Furthermore, they might be unaltered or altered, for
example through replacement of commercials, etc. In general, however, the term
retransmission seems to be reserved for such transmissions which are both
simultaneous and unaltered.

49. The Rome Convention does not grant rights against unauthorized cable
retransmission. Without such a right, cable operators can retransmit both
domestic and foreign over the air broadcasts simultaneously to their
subscribers without permission from the broadcasting organizations or other
rightholders and without obligation to pay remuneration.[25](Emphasis added)

Thus, while the Rome Convention gives broadcasting organizations the right to authorize or
prohibit the rebroadcasting of its broadcast, however, this protection does not extend to cable
retransmission. The retransmission of ABS-CBNs signals by PMSI which functions essentially as a
cable television does not therefore constitute rebroadcasting in violation of the formers intellectual
property rights under the IP Code.

It must be emphasized that the law on copyright is not absolute. The IP Code provides that:

Sec. 184. Limitations on Copyright. -

184.1. Notwithstanding the provisions of Chapter V, the following acts shall


not constitute infringement of copyright:

xxxx
(h) The use made of a work by or under the direction or control of the
Government, by the National Library or by educational, scientific or professional
institutions where such use is in the public interest and is compatible with fair use;

The carriage of ABS-CBNs signals by virtue of the must-carry rule in Memorandum Circular
No. 04-08-88 is under the direction and control of the government though the NTC which is vested
with exclusive jurisdiction to supervise, regulate and control telecommunications and broadcast
services/facilities in the Philippines.[26] The imposition of the must-carry rule is within the NTCs
power to promulgate rules and regulations, as public safety and interest may require, to encourage a
larger and more effective use of communications, radio and television broadcasting facilities, and to
maintain effective competition among private entities in these activities whenever the Commission
finds it reasonably feasible.[27] As correctly observed by the Director-General of the IPO:

Accordingly, the Must-Carry Rule under NTC Circular No. 4-08-88 falls under the
foregoing category of limitations on copyright. This Office agrees with the Appellant
[herein respondent PMSI] that the Must-Carry Rule is in consonance with the
principles and objectives underlying Executive Order No. 436,[28] to wit:
17

The Filipino people must be given wider access to more sources of


news, information, education, sports event and entertainment
Page

programs other than those provided for by mass media and afforded
television programs to attain a well informed, well-versed and
culturally refined citizenry and enhance their socio-economic growth:

WHEREAS, cable television (CATV) systems could support


or supplement the services provided by television broadcast facilities,
local and overseas, as the national information highway to the
countryside.[29]

The Court of Appeals likewise correctly observed that:

[T]he very intent and spirit of the NTC Circular will prevent a situation whereby
station owners and a few networks would have unfettered power to make time
available only to the highest bidders, to communicate only their own views on public
issues, people, and to permit on the air only those with whom they agreed contrary to
the state policy that the (franchise) grantee like the petitioner, private respondent and
other TV station owners, shall provide at all times sound and balanced programming
and assist in the functions of public information and education.

This is for the first time that we have a structure that works to accomplish explicit
state policy goals.[30]

Indeed, intellectual property protection is merely a means towards the end of making society
benefit from the creation of its men and women of talent and genius. This is the essence of
intellectual property laws, and it explains why certain products of ingenuity that are concealed from
the public are outside the pale of protection afforded by the law. It also explains why the author or
the creator enjoys no more rights than are consistent with public welfare.[31]

Further, as correctly observed by the Court of Appeals, the must-carry rule as well as the
legislative franchises granted to both ABS-CBN and PMSI are in consonance with state policies
enshrined in the Constitution, specifically Sections 9,[32] 17,[33] and 24[34] of Article II on the
Declaration of Principles and State Policies.[35]

ABS-CBN was granted a legislative franchise under Republic Act No. 7966, Section 1 of
which authorizes it to construct, operate and maintain, for commercial purposes and in the public
interest, television and radio broadcasting in and throughout the Philippines x x x. Section 4 thereof
mandates that it shall provide adequate public service time to enable the government, through the
said broadcasting stations, to reach the population on important public issues; provide at all times
sound and balanced programming; promote public participation such as in community
programming; assist in the functions of 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
18

withdrawn anytime, after due process.


Page
In Telecom. & Broadcast Attys. of the Phils., Inc. v. COMELEC,[36] the Court held that a
franchise is a mere privilege which may be reasonably burdened with some form of public
service. Thus:

All broadcasting, whether by radio or by television stations, is licensed by the


government. Airwave frequencies have to be allocated as there are more individuals
who want to broadcast than there are frequencies to assign. A franchise is thus a
privilege subject, among other things, to amendment by Congress in accordance with
the constitutional provision that any such franchise or right granted . . . shall be
subject to amendment, alteration or repeal by the Congress when the common good
so requires.

xxxx

Indeed, provisions for COMELEC Time have been made by amendment of


the franchises of radio and television broadcast stations and, until the present case
was brought, such provisions had not been thought of as taking property without just
compensation. Art. XII, 11 of the Constitution authorizes the amendment of
franchises for the common good. What better measure can be conceived for the
common good than one for free air time for the benefit not only of candidates but
even more of the public, particularly the voters, so that they will be fully informed of
the issues in an election? [I]t is the right of the viewers and listeners, not the right of
the broadcasters, which is paramount.

Nor indeed can there be any constitutional objection to the requirement that
broadcast stations give free air time. Even in the United States, there are responsible
scholars who believe that government controls on broadcast media can
constitutionally be instituted to ensure diversity of views and attention to public affairs
to further the system of free expression. For this purpose, broadcast stations may be
required to give free air time to candidates in an election. Thus, Professor Cass R.
Sunstein of the University of Chicago Law School, in urging reforms in regulations
affecting the broadcast industry, writes:

xxxx

In truth, radio and television broadcasting companies, which are given


franchises, do not own the airwaves and frequencies through which they transmit
broadcast signals and images.They are merely given the temporary privilege of using
them. Since a franchise is a mere privilege, the exercise of the privilege may
reasonably be burdened with the performance by the grantee of some form of public
service. x x x[37]

There is likewise no merit to ABS-CBNs claim that PMSIs carriage of its signals is for a
commercial purpose; that its being the countrys top broadcasting company, the availability of its
signals allegedly enhances PMSIs attractiveness to potential customers;[38] or that the unauthorized
carriage of its signals by PMSI has created competition between its Metro Manila and regional
stations.

ABS-CBN presented no substantial evidence to prove that PMSI carried its signals for profit;
or that such carriage adversely affected the business operations of its regional stations. Except for
the testimonies of its witnesses,[39] no studies, statistical data or information have been submitted in
evidence.
19

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
Page

is not evidence, and is not equivalent to proof.[41]


Anyone in the country who owns a television set and antenna can receive ABS-CBNs signals
for free. Other broadcasting organizations with free-to-air signals such as GMA-7, RPN-9, ABC-5,
and IBC-13 can likewise be accessed for free. No payment is required to view the said
channels[42] because these broadcasting networks do not generate revenue from subscription from
their viewers but from airtime revenue from contracts with commercial advertisers and producers, as
well as from direct sales.

In contrast, cable and DTH television earn revenues from viewer subscription. In the case of
PMSI, it offers its customers premium paid channels from content providers like Star Movies, Star
World, Jack TV, and AXN, among others, thus allowing its customers to go beyond the limits of Free
TV and Cable TV.[43] It does not advertise itself as a local channel carrier because these local
channels can be viewed with or without DTH television.

Relevantly, PMSIs carriage of Channels 2 and 23 is material in arriving at the ratings and
audience share of ABS-CBN and its programs. These ratings help commercial advertisers and
producers decide whether to buy airtime from the network. Thus, the must-carry rule is actually
advantageous to the broadcasting networks because it provides them with increased viewership
which attracts commercial advertisers and producers.

On the other hand, the carriage of free-to-air signals imposes a burden to cable and DTH
television providers such as PMSI. PMSI uses none of ABS-CBNs resources or equipment and
carries the signals and shoulders the costs without any recourse of charging.[44] Moreover, such
carriage of signals takes up channel space which can otherwise be utilized for other premium paid
channels.

There is no merit to ABS-CBNs argument that PMSIs carriage of Channels 2 and 23 resulted
in competition between its Metro Manila and regional stations. ABS-CBN is free to decide to pattern
its regional programming in accordance with perceived demands of the region; however, it cannot
impose this kind of programming on the regional viewers who are also entitled to the free-to-air
channels. It must be emphasized that, as a national broadcasting organization, one of ABS-CBNs
responsibilities is to scatter its signals to the widest area of coverage as possible. That it should limit
its signal reach for the sole purpose of gaining profit for its regional stations undermines public
interest and deprives the viewers of their right to access to information.

Indeed, television is a business; however, the welfare of the people must not be sacrificed in
the pursuit of profit. The right of the viewers and listeners to the most diverse choice of programs
available is paramount.[45] The Director-General correctly observed, thus:

The Must-Carry Rule favors both broadcasting organizations and the


public. It prevents cable television companies from excluding broadcasting
organization especially in those places not reached by signal. Also, the rule prevents
cable television companies from depriving viewers in far-flung areas the enjoyment of
20

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
Page

and shoulders the costs without any recourse of charging. On the other hand, the
signals that are carried by cable television companies are dispersed and scattered by
the television stations and anybody with a television set is free to pick them up.

With its enormous resources and vaunted technological capabilities, Appellees


[herein petitioner ABS-CBN] broadcast signals can reach almost every corner of the
archipelago. That in spite of such capacity, it chooses to maintain regional stations, is
a business decision. That the Must-Carry Rule adversely affects the profitability of
maintaining such regional stations since there will be competition between them and
its Metro Manila station is speculative and an attempt to extrapolate the effects of the
rule. As discussed above, Appellants DTH satellite television services is of limited
subscription. There was not even a showing on part of the Appellee the number of
Appellants subscribers in one region as compared to non-subscribing television
owners. In any event, if this Office is to engage in conjecture, such competition
between the regional stations and the Metro Manila station will benefit the public as
such competition will most likely result in the production of better television
programs.[46]

All told, we find that the Court of Appeals correctly upheld the decision of the IPO Director-
General that PMSI did not infringe on ABS-CBNs intellectual property rights under the IP Code. The
findings of facts of administrative bodies charged with their specific field of expertise, are afforded
great weight by the courts, and in the absence of substantial showing that such findings are made
from an erroneous estimation of the evidence presented, they are conclusive, and in the interest of
stability of the governmental structure, should not be disturbed.[47]

Moreover, the factual findings of the Court of Appeals are conclusive on the parties and are
not reviewable by the Supreme Court. They carry even more weight when the Court of Appeals
affirms the factual findings of a lower fact-finding body,[48] as in the instant case.

There is likewise no merit to ABS-CBNs contention that the Memorandum Circular excludes
from its coverage DTH television services such as those provided by PMSI.Section 6.2 of the
Memorandum Circular requires all cable television system operators operating in a community within
Grade A or B contours to carry the television signals of the authorized television broadcast
stations.[49] The rationale behind its issuance can be found in the whereas clauses which state:

Whereas, Cable Television Systems or Community Antenna Television


(CATV) have shown their ability to offer additional programming and to carry much
improved broadcast signals in the remote areas, thereby enriching the lives of the
rest of the population through the dissemination of social, economic, educational
information and cultural programs;

Whereas, the national government supports the promotes the orderly growth
of the Cable Television industry within the framework of a regulated fee enterprise,
which is a hallmark of a democratic society;

Whereas, public interest so requires that monopolies in commercial mass


media shall be regulated or prohibited, hence, to achieve the same, the cable TV
industry is made part of the broadcast media;

Whereas, pursuant to Act 3846 as amended and Executive Order 205


granting the National Telecommunications Commission the authority to set down
rules and regulations in order to protect the public and promote the general welfare,
the National Telecommunications Commission hereby promulgates the following
rules and regulations on Cable Television Systems;
21
Page
The policy of the Memorandum Circular is to carry improved signals in remote areas for the
good of the general public and to promote dissemination of information. In line with this policy, it is
clear that DTH television should be deemed covered by the Memorandum Circular. Notwithstanding
the different technologies employed, both DTH and cable television have the ability to carry
improved signals and promote dissemination of information because they operate and function in the
same way.

In its December 20, 2002 letter,[50] the NTC explained that both DTH and cable television
services are of a similar nature, the only difference being the medium of delivering such
services. They can carry broadcast signals to the remote areas and possess the capability to enrich
the lives of the residents thereof through the dissemination of social, economic, educational
information and cultural programs. Consequently, while the Memorandum Circular refers to cable
television, it should be understood as to include DTH television which provides essentially the same
services.

In Eastern Telecommunications Philippines, Inc. v. International Communication


Corporation,[51] we held:

The NTC, being the government agency entrusted with the regulation of
activities coming under its special and technical forte, and possessing the necessary
rule-making power to implement its objectives, is in the best position to interpret its
own rules, regulations and guidelines. The Court has consistently yielded and
accorded great respect to the interpretation by administrative agencies of their own
rules unless there is an error of law, abuse of power, lack of jurisdiction or grave
abuse of discretion clearly conflicting with the letter and spirit of the law.[52]

With regard to the issue of the constitutionality of the must-carry rule, the Court finds that its
resolution is not necessary in the disposition of the instant case. One of the essential requisites for a
successful judicial inquiry into constitutional questions is that the resolution of the constitutional
question must be necessary in deciding the case.[53] In Spouses Mirasol v. Court of Appeals,[54] we
held:

As a rule, the courts will not resolve the constitutionality of a law, if the
controversy can be settled on other grounds. The policy of the courts is to avoid
ruling on constitutional questions and to presume that the acts of the political
departments are valid, absent a clear and unmistakable showing to the contrary. To
doubt is to sustain. This presumption is based on the doctrine of separation of
powers. This means that the measure had first been carefully studied by the
legislative and executive departments and found to be in accord with the Constitution
before it was finally enacted and approved.[55]

The instant case was instituted for violation of the IP Code and infringement of ABS-CBNs
broadcasting rights and copyright, which can be resolved without going into the constitutionality of
Memorandum Circular No. 04-08-88. As held by the Court of Appeals, the only relevance of the
circular in this case is whether or not compliance therewith should be considered manifestation of
lack of intent to commit infringement, and if it is, whether such lack of intent is a valid defense
22

against the complaint of petitioner.[56]


Page
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 x[61]

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

Indirect contempt may either be initiated (1) motu 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 PMSIs alleged disobedience to the Resolution and Temporary Restraining Order,
both dated July 18, 2005, issued in CA-G.R. SP No. 88092. However, after the cases were
consolidated, the Court of Appeals did not require PMSI to comment on the petition for contempt. It
ruled on the merits of CA-G.R. SP No. 88092 and ordered the dismissal of both petitions.

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

It bears stressing that the proceedings for punishment of indirect contempt are criminal in
nature. The modes of procedure and rules of evidence adopted in contempt proceedings are similar
in nature to those used in criminal prosecutions. [63] While it may be argued that the Court of Appeals
should have ordered respondents to comment, the issue has been rendered moot in light of our
ruling on the merits. To order respondents to comment and have the Court of Appeals conduct a
hearing on the contempt charge when the main case has already been disposed of in favor of PMSI
would be circuitous. Where the issues have become moot, there is no justiciable controversy,
23

thereby rendering the resolution of the same of no practical use or value.[64]


Page
WHEREFORE, the petition is DENIED. The July 12, 2006 Decision of the Court of Appeals
in CA-G.R. SP Nos. 88092 and 90762, sustaining the findings of the Director-General of the
Intellectual Property Office and dismissing the petitions filed by ABS-CBN Broadcasting Corporation,
and the December 11, 2006 Resolution denying the motion for reconsideration, are AFFIRMED.

SO ORDERED.

Republic of the Philippines


SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 195956 March 11, 2015

ABS-CBN CORPORATION, Petitioner,


vs.
FELIPE GOZON, GILBERTO R. DUAVIT, JR., MARISSA L. FLORES, JESSICA A. SORO,
GRACE DELA PENA-REYES, JOHN OLIVER T. MANALASTAS, JOHN DOES AND JANE
DOES, Respondents.

DECISION

LEONEN, J.:

The main issue in this case is whether there is probable cause to charge respondents with
infringement under Republic Act No. 8293, otherwise known as the Intellectual Property Code. The
resolution of this issue requires clarification of the concept of "copyrightable material" in relation to
material that is rebroadcast live as a news story. We are also asked to rule on whether criminal
prosecution for infringement of copyrightable material, such as live rebroadcast, can be negated by
good faith.

ABS-CBN Corporation (ABS-CBN) filed the Petition for Review on Certiorari1 to assail the November
9, 2010 Decision2 and the March 3, 2011 Resolution3 of the Court of Appeals. The Court of Appeals
reinstated the Department of Justice Resolution dated August 1, 2005 that ordered the withdrawal of
the Information finding probable cause for respondents violation of Sections 1774 and 2115 of the
Intellectual Property Code.6 Respondents are officers and employees of GMA Network, Inc. (GMA-
7). They are: Felipe Gozon (Gozon), GMA-7 President; Gilberto R. Duavit, Jr. (Duavit, Jr.), Executive
Vice-President; Marissa L. Flores (Flores), Vice-President for New and Public Affairs; Jessica A.
Soho (Soho), Director for News; Grace Dela Pea-Reyes (Dela Pea-Reyes), Head of News and
Public Affairs; John Oliver Manalastas (Manalastas), Program Manager; and others.

The controversy arose from GMA-7s news coverage on the homecoming of Filipino overseas
worker and hostage victim Angelo dela Cruz on July 22, 2004. As summarized by the Court of
Appeals:

Overseas Filipino worker Angelo dela Cruz was kidnapped by Iraqi militants and as a condition for
his release, a demand was made for the withdrawal of Filipino troops in Iraq. After negotiations, he
was released by his captors and was scheduled to return to the country in the afternoon of 22 July
2004. Occasioned by said homecoming and the public interest it generated, both . . . GMA Network,
Inc. . . . and [petitioner] made their respective broadcasts and coverage of the live event.7

ABS-CBN "conducted live audio-video coverage of and broadcasted the arrival of Angelo dela Cruz
at the Ninoy Aquino International Airport (NAIA) and the subsequent press conference."8 ABS-CBN
allowed Reuters Television Service (Reuters) to air the footages it had taken earlier under a special
embargo agreement.9
24

ABS-CBN alleged that under the special embargo agreement, any of the footages it took would be
for the "use of Reuters international subscribers only, and shall be considered and treated by
Page

Reuters under embargo against use by other subscribers in the Philippines. . . . [N]o other
Philippine subscriber of Reuters would be allowed to use ABS-CBN footage without the latters
consent."10

GMA-7, to which Gozon, Duavit, Jr., Flores, Soho, Dela Pea-Reyes, and Manalastas are
connected, "assigned and stationed news reporters and technical men at the NAIA for its live
broadcast and non-live news coverage of the arrival of dela Cruz."11 GMA-7 subscribes to both
Reuters and Cable News Network (CNN). It received a live video feed of the coverage of Angelo
dela Cruzs arrival from Reuters.12

GMA-7 immediately carried the live news feed in its program "Flash Report," together with its live
broadcast.13Allegedly, GMA-7 did not receive any notice or was not aware that Reuters was airing
footages of ABS-CBN.14 GMA-7s news control room staff saw neither the "No Access Philippines"
notice nor a notice that the video feed was under embargo in favor of ABS-CBN.15

On August 13, 2004, ABS-CBN filed the Complaint for copyright infringement under Sections
17716 and 21117 of the Intellectual Property Code.18

On December 3, 2004, Assistant City Prosecutor Dindo Venturanza issued the Resolution19 finding
probable cause to indict Dela Pea-Reyes and Manalastas.20 Consequently, the Information21 for
violation of the Intellectual Property Code was filed on December 17, 2004. It reads:

That on or about the 22nd of July 2004, in Quezon City, Philippines, the above-named accused,
conspiring together, confederating with and mutually helping each other, being the Head of News
Operations and the Program Manager, respectively, for the News and Public Affairs Department of
GMA Network, Inc., did then and there, willfully, unlawfully and feloniously use and broadcast the
footage of the arrival of Angelo [d]ela Cruz at the Ninoy Aquino International Airport of which ABS-
CBN holds the exclusive ownership and copyright by then and there using, airing, and broadcasting
the said footage in its news program "FLASH REPORT" without first obtaining the consent or
authority of said copyright owner, to their damage and prejudice.

Contrary to law.22

On January 4, 2005, respondents filed the Petition for Review before the Department of Justice.23 In
the Resolution (Gonzalez Resolution) dated August 1, 2005, Department of Justice Secretary Raul
M. Gonzalez (Secretary Gonzalez) ruled in favor of respondents and held that good faith may be
raised as a defense in the case.24 The dispositive portion of the Resolution reads:

WHEREFORE, THE PETITION FOR REVIEW FILED BY GMA-7 in I.S. No. 04-10458 is considered
meritorious and is hereby GRANTED. This case is hereby Dismissed, the resolution of the City
Prosecutor of Quezon City is hereby reversed and the same is ordered to withdraw the information if
any and report action taken to this office within ten (10) days.25 (Emphasis in the original)

Both parties moved for reconsideration of the Gonzalez Resolution.26

Meanwhile, on January 19, 2005, the trial court granted the Motion to Suspend Proceedings filed
earlier by Dela Pea-Reyes and Manalastas.27 The trial court Order reads:

Perusing the motion, the court finds that a petition for review was filed with the Department of Justice
on January 5, 2005 as confirmed by the public prosecutor. Under Section 11 (c), Rule 116 of the
Rules of Criminal Procedure, once a petition for review is filed with the Department of Justice, a
suspension of the criminal proceedings may be allowed by the court.

Accordingly, to allow the Department of Justice the opportunity to act on said petition for review, let
the proceedings on this case be suspended for a period of sixty (60) days counted from January 5,
2005, the date the petition was filed with the Department of Justice. The arraignment of the accused
on February 1, 2005 is accordingly cancelled. Let the arraignment be rescheduled to March 8, 2005
at 8:30 a.m. The accused through counsel are notified in open court.

SO ORDERED.28
25

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
Page

to charge Dela Pea-Reyes and Manalastas for violation of the Intellectual Property
Code.29 Secretary Agra also found probable cause to indict Gozon, Duavit, Jr., Flores, and Soho for
the same violation.30 He ruled that:

[w]hile good faith may be a defense in copyright infringement, the same is a disputable presumption
that must be proven in a full-blown trial. Disputable presumptions may be contradicted and
overcome by other evidence. Thus, a full-blown trial is the proper venue where facts, issues and
laws are evaluated and considered. The very purpose of trial is to allow a party to present evidence
to overcome the disputable presumptions involved.31

The dispositive portion of the Agra Resolution provides:

WHEREFORE, premises considered:

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

....

SO ORDERED.32 (Emphasis in the original)

Respondents assailed the Agra Resolution through the Petition for Certiorari with prayer for issuance
of a temporary restraining order and/or Writ of Preliminary Injunction on September 2, 2010 before
the Court of Appeals. In the Resolution dated September 13, 2010, the Court of Appeals granted the
temporary restraining order preventing the Department of Justice from enforcing the Agra
Resolution.33

On November 9, 2010, the Court of Appeals rendered the Decision granting the Petition and
reversing and setting aside the Agra Resolution.34 The Court of Appeals held that Secretary Agra
committed errors of jurisdiction in issuing the assailed Resolution. Resolving the issue of copyright
infringement, the Court of Appeals said:

Surely, private respondent has a copyright of its news coverage. Seemingly, for airing said video
feed, petitioner GMA is liable under the provisions of the Intellectual Property Code, which was
enacted purposely to protect copyright owners from infringement. However, it is an admitted fact that
petitioner GMA had only aired a five (5) second footage of the disputed live video feed that it had
received from Reuters and CNN as a subscriber. Indeed, petitioners had no notice of the right of
ownership of private respondent over the same. Without notice of the "No Access Philippines"
restriction of the live video feed, petitioner cannot be faulted for airing a live video feed from Reuters
and CNN.

Verily, as aptly opined by Secretary Gonzalez in his earlier Resolution, the act of petitioners in airing
the five (5) second footage was undeniably attended by good faith and it thus serves to exculpate
them from criminal liability under the Code. While the Intellectual Property Code is a special law, and
thus generally categorized as malum prohibitum, it bears to stress that the provisions of the Code
itself do not ipso facto penalize a person or entity for copyright infringement by the mere fact that
one had used a copyrighted work or material.

Certainly so, in the exercise of ones moral and economic or copyrights, the very provisions of Part
IV of the Intellectual Property Code provide for the scope and limitations on copyright protection
under Section 184 and in fact permit fair use of copyrighted work under Section 185. With the
aforesaid statutory limitations on ones economic and copyrights and the allowable instances where
the other persons can legally use a copyrighted work, criminal culpability clearly attaches only when
the infringement had been knowingly and intentionally committed.35 (Emphasis supplied)

The dispositive portion of the Decision reads:


26

WHEREFORE, the foregoing considered, the instant petition is hereby GRANTED and the assailed
Page

Resolution dated 29 June 2010 REVERSED and SET ASIDE. Accordingly, the earlier Resolution
dated 1 August 2005, which ordered the withdrawal of the Information filed, if any, against the
petitioners for violation of Sections 177 and 211 of the Intellectual Property Code, is hereby
REINSTATED. No costs.

SO ORDERED.36 (Emphasis in the original)

ABS-CBNs Motion for Reconsideration was denied.37 It then filed its Petition for Review before this
court assailing the Decision and Resolution of the Court of Appeals.38

The issues for this courts consideration are:

First, whether Secretary Agra committed errors of jurisdiction in the Resolution dated June 29, 2010
and, therefore, whether a petition for certiorari was the proper remedy in assailing that Resolution;

Second, whether news footage is copyrightable under the law;

Third, whether there was fair use of the broadcast material;

Fourth, whether lack of knowledge that a material is copyrighted is a defense against copyright
infringement;

Fifth, whether good faith is a defense in a criminal prosecution for violation of the Intellectual
Property Code; and

Lastly, whether the Court of Appeals was correct in overturning Secretary Agras finding of probable
cause.

The trial court granted respondents Motion to Suspend Proceedings and deferred respondents Dela
Pea-Reyes and Manalastas arraignment for 60 days in view of the Petition for Review filed before
the Department of Justice.

Rule 116, Section 11 (c) of the Rules of Criminal Procedure allows

the suspension of the accuseds arraignment in certain circumstances only:

SEC. 11. Suspension of arraignment.Upon motion by the proper party, the arraignment shall be
suspended in the following cases:

(a) The accused appears to be suffering from an unsound mental condition which effectively
renders him unable to fully understand the charge against him and to plead intelligently
thereto. In such case, the court shall order his mental examination and, if necessary, his
confinement for such purpose;

(b) There exists a prejudicial question; and

(c) A petition for review of the resolution of the prosecutor is pending at either the
Department of Justice, or the Office of the President; provided, that the period of suspension
shall not exceed sixty (60) days counted from the filing of the petition with the reviewing
office. (12a) (Emphasis supplied)

In Samson v. Daway,39 this court acknowledged the applicability of Rule 116, Section (c) in a
criminal prosecution for infringement under the Intellectual Property Code. However, this court
emphasized the limits of the order of deferment under the Rule:

While the pendency of a petition for review is a ground for suspension of the arraignment, the . . .
provision limits the deferment of the arraignment to a period of 60 days reckoned from the filing of
the petition with the reviewing office. It follows, therefore, that after the expiration of said period, the
27

trial court is bound to arraign the accused or to deny the motion to defer arraignment.40
Page
We clarify that the suspension of the arraignment should always be within the limits allowed by law.
In Crespo v. Judge Mogul,41 this court outlined the effects of filing an information before the trial
court, which includes initiating a criminal action and giving this court "authority to hear and determine
the case":42

The preliminary investigation conducted by the fiscal for the purpose of determining whether a prima
facie case exists warranting the prosecution of the accused is terminated upon the filing of the
information in the proper court. In turn, as above stated, the filing of said information sets in motion
the criminal action against the accused in Court. Should the fiscal find it proper to conduct a
reinvestigation of the case, at such stage, the permission of the Court must be secured. After such
reinvestigation the finding and recommendations of the fiscal should be submitted to the Court for
appropriate action. While it is true that the fiscal has the quasi judicial discretion to determine
whether or not a criminal case should be filed in court or not, once the case had already been
brought to Court whatever disposition the fiscal may feel should be proper in the case thereafter
should be addressed for the consideration of the Court, the only qualification is that the action of the
Court must not impair the substantial rights of the accused or the right of the People to due process
of law.

Whether the accused had been arraigned or not and whether it was due to a reinvestigation by the
fiscal or a review by the Secretary of Justice whereby a motion to dismiss was submitted to the
Court, the Court in the exercise of its discretion may grant the motion or deny it and require that the
trial on the merits proceed for the proper determination of the case.

However, one may ask, if the trial court refuses to grant the motion to dismiss filed by the fiscal upon
the directive of the Secretary of Justice will there not be a vacuum in the prosecution? A state
prosecutor to handle the case cannot possibly be designated by the Secretary of Justice who does
not believe that there is a basis for prosecution nor can the fiscal be expected to handle the
prosecution of the case thereby defying the superior order of the Secretary of Justice. The answer is
simple. The role of the fiscal or prosecutor as We all know is to see that justice is done and not
necessarily to secure the conviction of the person accused before the Courts. Thus, in spite of his
opinion to the contrary, it is the duty of the fiscal to proceed with the presentation of evidence of the
prosecution to the Court to enable the Court to arrive at its own independent judgment as to whether
the accused should be convicted or acquitted. The fiscal should not shirk from the responsibility of
appearing for the People of the Philippines even under such circumstances much less should he
abandon the prosecution of the case leaving it to the hands of a private prosecutor for then the entire
proceedings will be null and void. The least that the fiscal should do is to continue to appear for the
prosecution although he may turn over the presentation of the evidence to the private prosecutor but
still under his direction and control.

The rule therefore in this jurisdiction is that once a complaint or information is filed in Court any
disposition of the case as to its dismissal or the conviction or acquittal of the accused rests in the
sound discretion of the Court. Although the fiscal retains the direction and control of the prosecution
of criminal cases even while the case is already in Court he cannot impose his opinion on the trial
court. The Court is the best and sole judge on what to do with the case before it. The determination
of the case is within its exclusive jurisdiction and competence. A motion to dismiss the case filed by
the fiscal should be addressed to the Court who has the option to grant or deny the same. It does
not matter if this is done before or after the arraignment of the accused or that the motion was filed
after a reinvestigation or upon instructions of the Secretary of Justice who reviewed the records of
the investigation.43 (Emphasis supplied, citations omitted)

The doctrine in Crespo was reiterated in Mayor Balindong v. Court of Appeals,44 where this court
reminded the Department of Justice Secretary to refrain from entertaining petitions for review when
the case is already pending with this court:

[I]n order to avoid a situation where the opinion of the Secretary of Justice who reviewed the action
of the fiscal may be disregarded by the trial court, the Secretary of Justice should, as far as
practicable, refrain from entertaining a petition for review or appeal from the action of the fiscal,
when the complaint or information has already been filed in the Court. The matter should be left
entirely for the determination of the Court.45

The trial court should have proceeded with respondents Dela Pea-Reyes and Manalastas
28

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
Page

was issued by the Court of Appeals. The trial court erred when it did not act on the criminal case
during the interim period. It had full control and direction of the case. As Judge Mogul reasoned in
denying the motion to dismiss in Crespo, failure to proceed with the arraignment "disregards the
requirements of due process [and] erodes the Courts independence and integrity."46

II

According to ABS-CBN, the Court of Appeals erred in finding that: a motion for reconsideration was
not necessary before a petition for certiorari could be filed; the Department of Justice Secretary
committed errors of jurisdiction since the Agra Resolution was issued within its authority and in
accordance with settled laws and jurisprudence; and respondents were not liable for copyright
infringement.

In its assailed Decision, the Court of Appeals found that respondents committed a procedural error
when they failed to file a motion for reconsideration before filing the Petition for Certiorari. However,
the Court of Appeals held that a motion for reconsideration was unnecessary since the Agra
Resolution was a patent nullity and it would have been useless under the circumstances: Given that
a reading of the assailed Resolution and the instant records readily reveals errors of jurisdiction on
the part of respondent Secretary, direct judicial recourse is warranted under the circumstances.
Aside from the fact that said Resolution is a patent nullity having been issued in grave abuse of
discretion amounting to lack or excess of jurisdiction, the filing of a motion for reconsideration is
evidently useless on account of the fact that the issues and arguments before this Court have
already been duly raised and accordingly delved into by respondent Secretary in his disposition of
the petition a quo.47 (Emphasis in the original)

In Elma v. Jacobi,48 this court ruled that a petition for certiorari under Rule 65 of the Rules of Court is
proper when assailing adverse resolutions of the Department of Justice stemming from the
determination of probable cause.49However, grave abuse of discretion must be alleged.50

In Sanrio Company Limited v. Lim,51 this court stressed the prosecutors role in determining probable
cause. Judicial review will only lie when it is shown that the prosecutor acted with grave abuse of
discretion amounting to lack or excess of jurisdiction:

A prosecutor alone determines the sufficiency of evidence that will establish probable cause
justifying the filing of a criminal information against the respondent. By way of exception, however,
judicial review is allowed where respondent has clearly established that the prosecutor committed
grave abuse of discretion. Otherwise stated, such review is appropriate only when the prosecutor
has exercised his discretion in an arbitrary, capricious, whimsical or despotic manner by reason of
passion or personal hostility, patent and gross enough to amount to an evasion of a positive duty or
virtual refusal to perform a duty enjoined by law.52 (Citations omitted)

Grave abuse of discretion refers to:

such capricious and whimsical exercise of judgment as is equivalent to lack of jurisdiction. The
abuse of discretion must be grave as where the power is exercised in an arbitrary or despotic
manner by reason of passion or personal hostility and must be so patent and gross as to amount to
an evasion of positive duty or to a virtual refusal to perform the duty enjoined by or to act at all in
contemplation of law.53

Resorting to certiorari requires that there be there be "no appeal, or any plain, speedy, and adequate
remedy in the ordinary course of law[,]"54 such as a motion for reconsideration. Generally, "a motion
for reconsideration is a condition sine qua non before a petition for certiorari may lie, its purpose
being to grant an opportunity for the [tribunal or officer] to correct any error attributed to it by a re-
examination of the legal and factual circumstances of the case."55 However, exceptions to the rule
exist:

(a) where the order is a patent nullity, as where the Court a quo had no jurisdiction; (b) where the
questions raised in the certiorari proceeding have been duly raised and passed upon by the lower
court, or are the same as those raised and passed upon in the lower court; (c) where there is an
urgent necessity for the resolution of the question and any further delay would prejudice the interests
of the Government or of the petitioner or the subject matter of the action is perishable; (d) where,
29

under the circumstances, a motion for reconsideration would be useless; (e) where petitioner was
deprived of due process and there is extreme urgency for relief; (f) where, in a criminal case, relief
Page

from an order of arrest is urgent and the granting of such relief by the trial Court is improbable; (g)
where the proceedings in the lower court are a nullity for lack of due process; (h) where the
proceedings was ex parte or in which the petitioner had no opportunity to object; and (i) where the
issue raised is one purely of law or where public interest is involved.56(Emphasis in the original,
citations omitted)

As argued by respondents, "[a] second motion for reconsideration would have been useless and
futile since the D[epartment] [of] J[ustice] had already passed upon the same issues twice."57 Equally
pressing under the circumstances was the need to resolve the matter, as the Informations filing
would lead to respondents imminent arrest.58

Moreover, Department of Justice Department Circular No. 70 dated July 3, 2000, or the 2000 NPS
Rules on Appeal, provides that no second motion for reconsideration of the Department of Justice
Secretarys resolution shall be entertained:

SECTION 13. Motion for reconsideration. The aggrieved party may file a motion for reconsideration
within a non-extendible period of ten (10) days from receipt of the resolution on appeal, furnishing
the adverse party and the Prosecution Office concerned with copies thereof and submitting proof of
such service. No second or further motion for reconsideration shall be entertained.

The Agra Resolution was the result of respondents Motion for Reconsideration assailing the
Gonzalez Resolution. To file a motion for reconsideration of the Agra Resolution would be
superfluous. Respondents were, therefore, correct in filing the Petition for Certiorari of the Agra
Resolution before the Court of Appeals.

III

The Court of Appeals ruled that Secretary Agra committed errors of jurisdiction, which then required
the grant of the writ of certiorari:

So viewed, by ordering the filing of information without proof that probable cause exists to charge
petitioners with a crime, respondent Secretary clearly committed an error of jurisdiction thus
warranting the issuance of the writ of certiorari. Surely, probable cause cannot be had when the very
provisions of the statute exculpates criminal liability in cases classified as fair use of copyrighted
materials. The fact that they admittedly used the Reuters live video feed is not, as a matter of
course, tantamount to copyright infringement that would justify the filing of an information against the
petitioners.59

Error of jurisdiction must be distinguished from error of judgment:

A line must be drawn between errors of judgment and errors of jurisdiction. An error of judgment is
one which the court may commit in the exercise of its jurisdiction. An error of jurisdiction renders an
order or judgment void or voidable. Errors of jurisdiction are reviewable on certiorari; errors of
judgment, only by appeal.60

In People v. Hon. Sandiganbayan61:

An error of judgment is one which the court may commit in the exercise of its jurisdiction. An error of
jurisdictionis one where the act complained of was issued by the court without or in excess of
jurisdiction, or with grave abuse of discretion, which is tantamount to lack or in excess of jurisdiction
and which error is correctible only by the extraordinary writ of certiorari. Certiorari will not be issued
to cure errors of the trial court in its appreciation of the evidence of the parties, or its conclusions
anchored on the said findings and its conclusions of law.62 (Emphasis supplied)

This court has adopted a deferential attitude towards review of the executives finding of probable
cause.63 This is based "not only upon the respect for the investigatory and [prosecutorial] powers
granted by the Constitution to the executive department but upon practicality as well."64 Review of
the Department of Justice Secretarys decision or resolution will be allowed only when grave abuse
of discretion is alleged:

The full discretionary authority to determine probable cause in a preliminary investigation to


ascertain sufficient ground for the filing of information rests with the executive branch. Hence, judicial
30

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
Page

substitute the executive branchs judgment.


....

It is only where the decision of the Justice Secretary is tainted with grave abuse of discretion
amounting to lack or excess of jurisdiction that the Court of Appeals may take cognizance of the
case in a petition for certiorari under Rule 65 of the Revised Rules of Civil Procedure. The Court of
Appeals decision may then be appealed to this Court by way of a petition for review on
certiorari.65 (Emphasis supplied, citations omitted)

In this case, it must be shown that Secretary Agra exceeded his authority when he reversed the
findings of Secretary Gonzalez. This court must determine whether there is probable cause to file an
information for copyright infringement under the Intellectual Property Code.

IV

Probable cause pertains to "such facts as are sufficient to engender a 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
31

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
Page

correlative to what must be proved.


"The substance of all the definitions" of probable cause "is a reasonable ground for belief of guilt."
McCarthy v. De Armit, 99 Pa. St. 63, 69, quoted with approval in the Carroll opinion. 267 U. S. at
161. And this "means less than evidence which would justify condemnation" or conviction, as
Marshall, C. J., said for the Court more than a century ago in Locke v. United States, 7 Cranch 339,
348. Since Marshalls time, at any rate, it has come to mean more than bare suspicion: Probable
cause exists where "the facts and circumstances within their [the officers] knowledge and of which
they had reasonably trustworthy information [are] sufficient in themselves to warrant a man of
reasonable caution in the belief that" an offense has been or is being committed. Carroll v. United
States, 267 U. S. 132, 162.

These long-prevailing standards seek to safeguard citizens from rash and unreasonable
interferences with privacy and from unfounded charges of crime. They also seek to give fair leeway
for enforcing the law in the communitys protection. Because many situations which confront officers
in the course of executing their duties are more or less ambiguous, room must be allowed for some
mistakes on their part. But the mistakes must be those of reasonable men, acting on facts leading
sensibly to their conclusions of probability. The rule of probable cause is a practical, non technical
conception affording the best compromise that has been found for accommodating these often
opposing interests. Requiring more would unduly hamper law enforcement. To allow less would be
to leave law-abiding citizens at the mercy of the officers whim or caprice.

In the Philippines, there are four instances in the Revised Rules of Criminal Procedure where
probable cause is needed to be established:

(1) In Sections 1 and 3 of Rule 112: By the investigating officer, to determine whether there
is sufficient ground to engender a well-founded belief that a crime has been committed and
the respondent is probably guilty thereof, and should be held for trial. A preliminary
investigation is required before the filing of a complaint or information for an offense where
the penalty prescribed by law is at least four years, two months and one day without regard
to the fine;

(2) In Sections 6 and 9 of Rule 112: By the judge, to determine whether a warrant of arrest or
a commitment order, if the accused has already been arrested, shall be issued and that there
is a necessity of placing the respondent under immediate custody in order not to frustrate the
ends of justice;

(3) In Section 5(b) of Rule 113:By a peace officer or a private person making a warrantless
arrest when an offense has just been committed, and he has probable cause to believe
based on personal knowledge of facts or circumstances that the person to be arrested has
committed it; and

(4) In Section 4 of Rule 126: By the judge, to determine whether a search warrant shall be
issued, and only upon probable cause in connection with one specific offense to be
determined personally by the judge after examination under oath or affirmation of the
complainant and the witnesses he may produce, and particularly describing the place to be
searched and the things to be seized which may be anywhere in the Philippines.

In all these instances, the evidence necessary to establish probable cause is based only on the
likelihood, or probability, of guilt.74

Estrada also highlighted that a "[p]reliminary investigation is not part of the criminal action. It is
merely preparatory and may even be disposed of in certain situations."75

To determine whether there is probable cause that respondents committed copyright infringement, a
review of the elements of the crime, including the existing facts, is required.

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
32

the latter being the newsworthy event":76


Page
To be clear, it is the event itself or the arrival of Angelo dela Cruz which is not copyrightable because
that is the newsworthy event. However, any footage created from the event itself, in this case the
arrival of Angelo dela Cruz, are intellectual creations which are copyrightable. Thus, the footage
created by ABS-CBN during the arrival of Angelo dela Cruz, which includes the statements of Dindo
Amparo, are copyrightable and protected by the laws on copyright.77

On the other hand, respondents argue that ABS-CBNs news footage of Angelo dela Cruzs arrival is
not copyrightable or subject to protection:

Certainly, the arrival of Angelo [d]ela Cruz, which aroused public attention and the consciousness of
the Filipino people with regard to their countrymen, OFWs working in foreign countries and how the
Philippine government responds to the issues concerning them, is "news". There is no ingenuity or
inventiveness added in the said news footage. The video footage of this "news" is not copyrightable
by any legal standard as facts of everyday life depicted in the news and items of press information is
part of the public domain.78 (Emphasis in the original)

The news footage is copyrightable.

The Intellectual Property Code is clear about the rights afforded to authors of various kinds of work.
Under the Code, "works are protected by the sole fact of their creation, irrespective of their mode or
form of expression, as well as of their content, quality and purpose."79 These include "[a]udiovisual
works and cinematographic works and works produced by a process analogous to cinematography
or any process for making audiovisual recordings."80

Contrary to the old copyright law,81 the Intellectual Property Code does not require registration of the
work to fully recover in an infringement suit. Nevertheless, both copyright laws provide that copyright
for a work is acquired by an intellectual creator from the moment of creation.82

It is true that under Section 175 of the Intellectual Property Code, "news of the day and other
miscellaneous facts having the character of mere items of press information" are considered
unprotected subject matter.83 However, the Code does not state that expression of the news of the
day, particularly when it underwent a creative process, is not entitled to protection.

An idea or event must be distinguished from the expression of that idea or event. An idea has been
likened to a ghost in that it "must be spoken to a little before it will explain itself."84 It is a concept that
has eluded exact legal definition.85To get a better grasp of the idea/expression dichotomy, the
etymology of the term "idea" is traced:

The word "idea" is derived from a Greek term, meaning "a form, the look or appearance of a thing as
opposed to its reality, from idein, to see." In the Timaeus, Plato saw ideas as eternal paradigms,
independent objects to which the divine demiurge looks as patterns in forming the world. This was
later modified to the religious conception of ideas as the thoughts of God. "It is not a very long step
to extend the term idea to cover patterns, blueprints, or plans in anyone's mind, not only in Gods."
The word entered the French and English vernacular in the 1600s and possessed two meanings.
The first was the Platonic meaning of a perfect exemplar or paradigm. The second, which probably
has its origin with Descartes, is of a mental concept or image or, more broadly, any object of the
mind when it is active. Objects of thought may exist independently. The sun exists (probably) before
and after you think of it. But it is also possible to think of things that have never existed, such as a
unicorn or Pegasus. John Locke defined ideas very comprehensively, to include: all objects of the
mind. Language was a way of translating the invisible, hidden ideas that make up a persons
thoughts into the external, perceptible world of articulate sounds and visible written symbols that
others can understand.86 (Citations omitted) There is no one legal definition of "idea" in this
jurisdiction. The term "idea" is mentioned only once in the Intellectual Property Code.87 In Joaquin,
Jr. v. Drilon,88 a television format (i.e., a dating show format) is not copyrightable under Section 2 of
Presidential Decree No. 49;89 it is a mere concept:

P.D. No. 49, 2, in enumerating what are subject to copyright, refers to finished works and not to
concepts. The copyright does not extend to an idea, procedure, process, system, method of
operation, concept, principle, or discovery, regardless of the form in which it is described, explained,
illustrated, or embodied in such work. Thus, the new INTELLECTUAL PROPERTY CODE OF THE
33

PHILIPPINES provides:
Page

SEC. 175. Unprotected Subject Matter.Notwithstanding the provisions of Sections 172 and 173,
no protection shall extend, under this law, to any idea, procedure, system, method or operation,
concept, principle, discovery or mere data as such, even if they are expressed, explained, illustrated
or embodied in a work; news of the day and other miscellaneous facts having the character of mere
items of press information; or any official text of a legislative, administrative or legal nature, as well
as any official translation thereof.

What then is the subject matter of petitioners copyright? This Court is of the opinion that petitioner
BJPIs copyright covers audio-visual recordings of each episode of Rhoda and Me, as falling within
the class of works mentioned in P.D. 49, 2(M),to wit:

Cinematographic works and works produced by a process analogous to cinematography or any


process for making audio-visual recordings;

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

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

A television show includes more than mere words can describe because it involves a whole
spectrum of visuals and effects, video and audio, such that no similarity or dissimilarity may be found
by merely describing the general copyright/format of both dating game shows.90 (Emphasis supplied,
citations omitted)

Ideas can be either abstract or concrete.91 It is the concrete ideas that are generally referred to as
expression:

The words "abstract" and "concrete" arise in many cases dealing with the idea/expression
distinction. The Nichols court, for example, found that the defendants film did not infringe the
plaintiffs play because it was "too generalized an abstraction from what plaintiff wrote . . . only a part
of her ideas." In Eichel v. Marcin, the court said that authors may exploit facts, experiences, field of
thought, and general ideas found in anothers work, "provided they do not substantially copy a
concrete form, in which the circumstances and ideas have been developed, arranged, and put into
shape." Judge Hand, in National Comics Publications, Inc. v. Fawcett Publications, Inc. said that "no
one infringes, unless he descends so far into what is concrete as to invade. . . expression."

These cases seem to be distinguishing "abstract" ideas from "concrete" tangible embodiments of
these abstractions that may be termed expression. However, if the concrete form of a work means
more than the literal expression contained within it, it is difficult to determine what is meant by
"concrete." Webster's New Twentieth Century Dictionary of the English Language provides several
meanings for the word concrete. These include: "having a material, perceptible existence; of,
belonging to, or characterized by things or events that can be perceived by the senses; real; actual;"
and "referring to a particular; specific, not general or abstract."92

In Pearl & Dean (Phil.), Incorporated v. Shoemart, Incorporated,93 this court, citing the American
case of Baker v. Selden, distinguished copyright from patents and illustrated how an idea or concept
is different from the expression of that idea:

In the oft-cited case of Baker vs. Selden, the United States Supreme Court held that only the
expression of an idea is protected by copyright, not the idea itself. In that case, the plaintiff held the
copyright of a book which expounded on a new accounting system he had developed. The
publication illustrated blank forms of ledgers utilized in such a system. The defendant reproduced
forms similar to those illustrated in the plaintiffs copyrighted book. The US Supreme Court ruled
that:

"There is no doubt that a work on the subject of book-keeping, though only explanatory of well
known systems, may be the subject of a copyright; but, then, it is claimed only as a book. x x x But
there is a clear distinction between the books, as such, and the art, which it is, intended to illustrate.
The mere statement of the proposition is so evident that it requires hardly any argument to support it.
34

The same distinction may be predicated of every other art as well as that of bookkeeping.
Page
A treatise on the composition and use of medicines, be they old or new; on the construction and use
of ploughs or watches or churns; or on the mixture and application of colors for painting or dyeing; or
on the mode of drawing lines to produce the effect of perspective, would be the subject of copyright;
but no one would contend that the copyright of the treatise would give the exclusive right to the art or
manufacture described therein. The copyright of the book, if not pirated from other works, would be
valid without regard to the novelty or want of novelty of its subject matter. The novelty of the art or
thing described or explained has nothing to do with the validity of the copyright. To give to the author
of the book an exclusive property in the art described therein, when no examination of its novelty has
ever been officially made, would be a surprise and a fraud upon the public. That is the province of
letters patent, not of copyright. The claim to an invention of discovery of an art or manufacture must
be subjected to the examination of the Patent Office before an exclusive right therein can be
obtained; and a patent from the government can only secure it.

The difference between the two things, letters patent and copyright, may be illustrated by reference
to the subjects just enumerated. Take the case of medicines. Certain mixtures are found to be of
great value in the healing art. If the discoverer writes and publishes a book on the subject (as regular
physicians generally do), he gains no exclusive right to the manufacture and sale of the medicine; he
gives that to the public. If he desires to acquire such exclusive right, he must obtain a patent for the
mixture as a new art, manufacture or composition of matter. He may copyright his book, if he
pleases; but that only secures to him the exclusive right of printing and publishing his book. So of all
other inventions or discoveries.

The copyright of a book on perspective, no matter how many drawings and illustrations it may
contain, gives no exclusive right to the modes of drawing described, though they may never have
been known or used before. By publishing the book without getting a patent for the art, the latter is
given to the public.

....

Now, whilst no one has a right to print or publish his book, or any material part thereof, as a book
intended to convey instruction in the art, any person may practice and use the art itself which he has
described and illustrated therein. The use of the art is a totally different thing from a publication of
the book explaining it. The copyright of a book on bookkeeping cannot secure the exclusive right to
make, sell and use account books prepared upon the plan set forth in such book. Whether the art
might or might not have been patented, is a question, which is not before us. It was not patented,
and is open and free to the use of the public. And, of course, in using the art, the ruled lines and
headings of accounts must necessarily be used as incident to it.

The plausibility of the claim put forward by the complainant in this case arises from a confusion of
ideas produced by the peculiar nature of the art described in the books, which have been made the
subject of copyright. In describing the art, the illustrations and diagrams employed happened to
correspond more closely than usual with the actual work performed by the operator who uses the
art. x x x The description of the art in a book, though entitled to the benefit of copyright, lays no
foundation for an exclusive claim to the art itself. The object of the one is explanation; the object of
the other is use. The former may be secured by copyright. The latter can only be secured, if it can be
secured at all, by letters patent."94 (Emphasis supplied)

News or the event itself is not copyrightable. However, an event can be captured and presented in a
specific medium. As recognized by this court in Joaquin, television "involves a whole spectrum of
visuals and effects, video and audio."95 News coverage in television involves framing shots, using
images, graphics, and sound effects.96 It involves creative process and originality. Television news
footage is an expression of the news.

In the United States, a line of cases dwelt on the possibility of television newscasts to be
copyrighted.97 Most of these cases focused on private individuals sale or resale of tapes of news
broadcasts. Conflicting decisions were rendered by its courts. Noteworthy, however, is the District
Courts pronouncement in Pacific & Southern Co. v. Duncan,98 which involves a News Monitoring
Services videotaping and sale of WXIA-TVs news broadcasts:

It is axiomatic that copyright protection does not extend to news "events" or the facts or ideas which
35

are the subject of news reports. Miller v. Universal City Studios, Inc., 650 F.2d 1365, 1368 (5th Cir.
1981); Wainwright Securities, Inc. v. Wall Street Transcript Corp., 558 F.2d 91, 95 (2d Cir. 1977),
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cert. denied, 434 U.S. 1014, 98 S.Ct. 730, 54 L.Ed.2d 759 (1978). But it is equally well-settled that
copyright protection does extend to the reports themselves, as distinguished from the substance of
the information contained in the reports. Wainwright, 558 F.2d at 95; International News Service v.
Associated Press, 248 U.S. 215, 39 S.Ct. 68, 63 L.Ed. 211 (1918); see Chicago Record-Herald Co.
v. Tribune Assn., 275 F. 797 (7th Cir.1921); 1 Nimmer on Copyright 2.11[B] (1983). Copyright
protects the manner of expression of news reports, "the particular form or collocation of words in
which the writer has communicated it." International News Service, 248 U.S. at 234, 39 S.Ct. at 70.
Such protection extends to electronic news reports as well as written reports. See17 U.S.C. 102(a)
(5), (6), and (7); see also Iowa State University Research Foundations, Inc. v. American
Broadcasting Cos., 621 F.2d 57, 61 (2d Cir. 1980).99 (Emphasis supplied)

The idea/expression dichotomy has long been subject to debate in the field of copyright law.
Abolishing the dichotomy has been proposed, in that non-protectibility of ideas should be re-
examined, if not stricken, from decisions and the law:

If the underlying purpose of the copyright law is the dual one expressed by Lord Mansfield, the only
excuse for the continuance of the idea-expression test as a judicial standard for determining
protectibility would be that it was or could be a truly useful method of determining the proper balance
between the creators right to profit from his work and the public's right that the "progress of the arts
not be retarded."

. . . [A]s used in the present-day context[,] the dichotomy has little or no relationship to the policy
which it should effectuate. Indeed, all too often the sweeping language of the courts regarding the
non-protectibility of ideas gives the impression that this is of itself a policy of the law, instead of
merely a clumsy and outdated tool to achieve a much more basic end.100

The idea/expression dichotomy is a complex matter if one is trying to determine whether a certain
material is a copy of another.101 This dichotomy would be more relevant in determining, for instance,
whether a stage play was an infringement of an authors book involving the same characters and
setting. In this case, however, respondents admitted that the material under review which is the
subject of the controversy is an exact copy of the original. Respondents did not subject ABS-
CBNs footage to any editing of their own. The news footage did not undergo any transformation
where there is a need to track elements of the original.

Having established the protectible nature of news footage, we now discuss the concomitant rights
accorded to authors. The authors of a work are granted several rights in relation to it, including
copyright or economic rights:

SECTION 177. Copyright or Economic Rights. Subject to the provisions of Chapter VIII, copyright
or economic rights shall consist of the exclusive right to carry out, authorize or prevent the following
acts:

177.1. Reproduction of the work or substantial portion of the work;

177.2. Dramatization, translation, adaptation, abridgment, arrangement or other


transformation of the work;

177.3. The first public distribution of the original and each copy of the work by sale or other
forms of transfer of ownership;

177.4. Rental of the original or a copy of an audiovisual or cinematographic work, a work


embodied in a sound recording, a computer program, a compilation of data and other
materials or a musical work in graphic form, irrespective of the ownership of the original or
the copy which is the subject of the rental; (n)

177.5. Public display of the original or a copy of the work;

177.6. Public performance of the work; and

177.7. Other communication to the public of the work.(Sec. 5, P. D. No. 49a) (Emphasis
supplied)
36

Under Section 211 of the Intellectual Property Code, broadcasting organizations are granted a more
specific set of rights called related or neighboring rights:
Page
SECTION 211. Scope of Right. Subject to the provisions of Section 212, broadcasting
organizations shall enjoy the exclusive right to carry out, authorize or prevent any of the following
acts:

211.1. The rebroadcasting of their broadcasts;

211.2. The recording in any manner, including the making of films or the use of video tape, of
their broadcasts for the purpose of communication to the public of television broadcasts of
the same; and

211.3. The use of such records for fresh transmissions or for fresh recording. (Sec. 52, P.D.
No. 49) (Emphasis supplied)

Section 212 of the Code provides:

CHAPTER XV
LIMITATIONS ON PROTECTION

Section 212. Limitations on Rights. - Sections 203, 208 and 209 shall not apply where the acts
referred to in those Sections are related to:

212.1. The use by a natural person exclusively for his own personal purposes;

212.2. Using short excerpts for reporting current events;

212.3. Use solely for the purpose of teaching or for scientific research; and

212.4. Fair use of the broadcast subject to the conditions under Section 185. (Sec. 44, P.D.
No. 49a)

The Code defines what broadcasting is and who broadcasting organizations include:

202.7. "Broadcasting" means the transmission by wireless means for the public reception of
sounds or of images or of representations thereof; such transmission by satellite is also
"broadcasting" where the means for decrypting are provided to the public by the
broadcasting organization or with its consent;

202.8. "Broadcasting organization" shall include a natural person or a juridical entity duly
authorized to engage in broadcasting[.]

Developments in technology, including the process of preserving once ephemeral works and
disseminating them, resulted in the need to provide a new kind of protection as distinguished from
copyright.102 The designation "neighboring rights" was abbreviated from the phrase "rights
neighboring to copyright."103 Neighboring or related rights are of equal importance with copyright as
established in the different conventions covering both kinds of rights.104

Several treaties deal with neighboring or related rights of copyright.105 The most prominent of these
is the "International Convention for the Protection of Performers, Producers of Phonograms and
Broadcasting Organizations" (Rome Convention).106

The Rome Convention protects the rights of broadcasting organizations in relation to their
broadcasts. Article XIII of the Rome Convention enumerates the minimum rights accorded to
broadcasting organizations:

Article 13

Minimum Rights for Broadcasting Organizations

Broadcasting organisations shall enjoy the right to authorize or prohibit:


37

(a) the rebroadcasting of their broadcasts;


Page
(b) the fixation of their broadcasts;

(c) the reproduction:

(i) of fixations, made without their consent, of their broadcasts;

(ii) of fixations, made in accordance with the provisions of Article 15, of their
broadcasts, if the reproduction is made for purposes different from those referred to
in those provisions;

(d) the communication to the public of their television broadcasts if such communication is
made in places accessible to the public against payment of an entrance fee; it shall be a
matter for the domestic law of the State where protection of this right is claimed to determine
the conditions under which it may be exercised.

With regard to the neighboring rights of a broadcasting organization in this jurisdiction, this court has
discussed the difference between broadcasting and rebroadcasting:

Section 202.7 of the IP Code defines broadcasting as "the transmission by wireless means for the
public reception of sounds or of images or of representations thereof; such transmission by satellite
is also broadcasting where the means for decrypting are provided to the public by the broadcasting
organization or with its consent."

On the other hand, rebroadcasting as defined in Article 3(g) of the International Convention for the
Protection of Performers, Producers of Phonograms and Broadcasting Organizations, otherwise
known as the 1961 Rome Convention, of which the Republic of the Philippines is a signatory, is "the
simultaneous broadcasting by one broadcasting organization of the broadcast of another
broadcasting organization."

....

Under the Rome Convention, rebroadcasting is "the simultaneous broadcasting by one broadcasting
organization of the broadcast of another broadcasting organization." The Working Paper prepared by
the Secretariat of the Standing Committee on Copyright and Related Rights defines broadcasting
organizations as "entities that take the financial and editorial responsibility for the selection and
arrangement of, and investment in, the transmitted content."107 (Emphasis in the original, citations
omitted)

Broadcasting organizations are entitled to several rights and to the protection of these rights under
the Intellectual Property Code. Respondents argument that the subject news footage is not
copyrightable is erroneous. The Court of Appeals, in its assailed Decision, correctly recognized the
existence of ABS-CBNs copyright over the news footage:

Surely, private respondent has a copyright of its news coverage. Seemingly, for airing said video
feed, petitioner GMA is liable under the provisions of the Intellectual Property Code, which was
enacted purposely to protect copyright owners from infringement.108

News as expressed in a video footage is entitled to copyright protection. Broadcasting organizations


have not only copyright on but also neighboring rights over their broadcasts. Copyrightability of a
work is different from fair use of a work for purposes of news reporting.

VI

ABS-CBN assails the Court of Appeals ruling that the footage shown by GMA-7 falls under the
scope of Section 212.2 and 212.4 of the Intellectual Property Code:

The evidence on record, as well as the discussions above, show that the footage used
by[respondents] could hardlybe characterized as a short excerpt, as it was aired over one and a half
minutes.
38

Furthermore, the footage used does not fall under the contemplation of Section 212.2 of the
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Intellectual Property Code. A plain reading of the provision would reveal that copyrighted material
referred to in Section 212 are short portions of an artists performance under Section 203, or a
producers sound recordings under Sections 208 and 209. Section 212 does not refer to actual use
of video footage of another as its own.

The Angelo dela Cruz footage does not fall under the rule on Section 212.4 of the Intellectual
Property Code on fair use of the broadcast.

....

In determining fair use, several factors are considered, including the nature of the copyrighted work,
and the amount and substantiality of the person used in relation to the copyrighted work as a whole.

In the business of television news reporting, the nature of the copyrighted work or the video
footages, are such that, footage created, must be a novelty to be a good report. Thus, when the . . .
Angelo dela Cruz footage was used by [respondents], the novelty of the footage was clearly
affected.

Moreover, given that a substantial portion of the Angelo dela Cruz footage was utilized by GMA-7 for
its own, its use can hardly be classified as fair use.

Hence, [respondents] could not be considered as having used the Angelo dela Cruz [footage]
following the provisions on fair use.

It is also worthy to note that the Honorable Court of Appeals seem to contradict itself when it relied
on the provisions of fair use in its assailed rulings considering that it found that the Angelo dela Cruz
footage is not copyrightable, given that the fair use presupposes an existing copyright. Thus, it is
apparent that the findings of the Honorable Court of Appeals are erroneous and based on wrong
assumptions.109 (Underscoring in the original)

On the other hand, respondents counter that GMA-7s use of ABS-CBNs news footage falls under
fair use as defined in the Intellectual Property Code. Respondents, citing the Court of Appeals
Decision, argue that a strong statutory defense negates any finding of probable cause under the
same statute.110 The Intellectual Property Code provides that fair use negates infringement.

Respondents point out that upon seeing ABS-CBNs reporter Dindo Amparo on the footage, GMA-7
immediately shut off the broadcast. Only five (5) seconds passed before the footage was cut. They
argue that this shows that GMA-7 had no prior knowledge of ABS-CBNs ownership of the footage or
was notified of it. They claim that the Angelo dela Cruz footage is considered a short excerpt of an
events "news" footage and is covered by fair use.111

Copyright protection is not absolute.112 The Intellectual Property Code provides the limitations on
copyright:

CHAPTER VIII
LIMITATIONS ON COPYRIGHT

Section 184. Limitations on Copyright. - 184.1. Notwithstanding the provisions of Chapter V, the
following acts shall not constitute infringement of copyright:

....

184.2. The provisions of this section shall be interpreted in such a way as to allow the work to be
used in a manner which does not conflict with the normal exploitation of the work and does not
unreasonably prejudice the right holder's legitimate interests.

....

CHAPTER XV
LIMITATIONS ON PROTECTION
39

Section 212. Limitations on Rights. - Sections 203, 208 and 209 shall not apply where the acts
referred to in those Sections are related to:
Page
....

212.2. Using short excerpts for reporting current events;

....

212.4. Fair use of the broadcast subject to the conditions under Section 185.(Sec. 44, P.D. No. 49a)
(Emphasis supplied)

The determination of what constitutes fair use depends on several factors. Section 185 of the
Intellectual Property Code states:

SECTION 185. Fair Use of a Copyrighted Work.

185.1. The fair use of a copyrighted work for criticism, comment, news reporting, teaching including
multiple copies for classroom use, scholarship, research, and similar purposes is not an infringement
of copyright. . . . In determining whether the use made of a work in any particular case is fair use, the
factors to be considered shall include:

a. The purpose and character of the use, including whether such use is of a commercial
nature or is for non-profit educational purposes;

b. The nature of the copyrighted work;

c. The amount and substantiality of the portion used in relation to the copyrighted work as a
whole; and

d. The effect of the use upon the potential market for or value of the copyrighted work.
Respondents allege that the news footage was only five (5) seconds long, thus falling under
fair use. ABS-CBN belies this contention and argues that the footage aired for two (2)
minutes and 40 seconds.113 According to the Court of Appeals, the parties admitted that only
five (5) seconds of the news footage was broadcasted by GMA-7.114

This court defined fair use as "aprivilege to use the copyrighted material in a reasonable manner
without the consent of the copyright owner or as copying the theme or ideas rather than their
expression."115 Fair use is an exception to the copyright owners monopoly of the use of the work to
avoid stifling "the very creativity which that law is designed to foster."116

Determining fair use requires application of the four-factor test. Section 185 of the Intellectual
Property Code lists four (4) factors to determine if there was fair use of a copyrighted work:

a. The purpose and character of the use, including whether such use is of a commercial
nature or is for non-profit educational purposes;

b. The nature of the copyrighted work;

c. The amount and substantiality of the portion used in relation to the copyrighted work as a
whole; and

d. The effect of the use upon the potential market for or value of the copyrighted work.

First, the purpose and character of the use of the copyrighted material must fall under those listed in
Section 185, thus: "criticism, comment, news reporting, teaching including multiple copies for
classroom use, scholarship, research, and similar purposes."117 The purpose and character
requirement is important in view of copyrights goal to promote creativity and encourage creation of
works. Hence, commercial use of the copyrighted work can be weighed against fair use.

The "transformative test" is generally used in reviewing the purpose and character of the usage of
the copyrighted work.118 This court must look into whether the copy of the work adds "new
40

expression, meaning or message" to transform it into something else.119 "Meta-use" can also occur
without necessarily transforming the copyrighted work used.120
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Second, the nature of the copyrighted work is significant in deciding whether its use was fair. If the
nature of the work is more factual than creative, then fair use will be weighed in favor of the user.

Third, the amount and substantiality of the portion used is important to determine whether usage
falls under fair use. An exact reproduction of a copyrighted work, compared to a small portion of it,
can result in the conclusion that its use is not fair. There may also be cases where, though the
entirety of the copyrighted work is used without consent, its purpose determines that the usage is
still fair.121 For example, a parody using a substantial amount of copyrighted work may be
permissible as fair use as opposed to a copy of a work produced purely for economic gain. Lastly,
the effect of the use on the copyrighted works market is also weighed for or against the user. If this
court finds that the use had or will have a negative impact on the copyrighted works market, then
the use is deemed unfair.

The structure and nature of broadcasting as a business requires assigned values for each second of
broadcast or airtime. In most cases, broadcasting organizations generate revenue through sale of
time or timeslots to advertisers, which, in turn, is based on market share:122 Once a news broadcast
has been transmitted, the broadcast becomes relatively worthless to the station. In the case of the
aerial broadcasters, advertising sales generate most of the profits derived from news reports.
Advertising rates are, in turn, governed by market share. Market share is determined by the number
of people watching a show at any particular time, relative to total viewers at that time. News is by
nature time-limited, and so re-broadcasts are generally of little worth because they draw few
viewers. Newscasts compete for market share by presenting their news in an appealing format that
will capture a loyal audience. Hence, the primary reason for copyrighting newscasts by broadcasters
would seem to be to prevent competing stations from rebroadcasting current news from the station
with the best coverage of a particular news item, thus misappropriating a portion of the market
share.

Of course, in the real world there are exceptions to this perfect economic view. However, there are
also many caveats with these exceptions. A common exception is that some stations rebroadcast
the news of others. The caveat is that generally, the two stations are not competing for market
share. CNN, for example, often makes news stories available to local broadcasters. First, the local
broadcaster is often not affiliated with a network (hence its need for more comprehensive
programming), confining any possible competition to a small geographical area. Second, the local
broadcaster is not in competition with CNN. Individuals who do not have cable TV (or a satellite dish
with decoder) cannot receive CNN; therefore there is no competition. . . . Third, CNN sells the right
of rebroadcast to the local stations. Ted Turner, owner of CNN, does not have First Amendment
freedom of access argument foremost on his mind. (Else he would give everyone free cable TV so
everyone could get CNN.) He is in the business for a profit. Giving away resources does not a profit
make.123 (Emphasis supplied)

The high value afforded to limited time periods is also seen in other media. In social media site
Instagram, users are allowed to post up to only 15 seconds of video.124 In short-video sharing
website Vine,125 users are allowed a shorter period of six (6) seconds per post. The mobile
application 1 Second Everyday takes it further by capturing and stitching one (1) second of video
footage taken daily over a span of a certain period.126

Whether the alleged five-second footage may be considered fair use is a matter of defense. We
emphasize that the case involves determination of probable cause at the preliminary investigation
stage. Raising the defense of fair use does not automatically mean that no infringement was
committed. The investigating prosecutor has full discretion to evaluate the facts, allegations, and
evidence during preliminary investigation. Defenses raised during preliminary investigation are
subject to further proof and evaluation before the trial court. Given the insufficiency of available
evidence, determination of whether the Angelo dela Cruz footage is subject to fair use is better left to
the trial court where the proceedings are currently pending. GMA-7s rebroadcast of ABS-CBNs
news footage without the latters consent is not an issue. The mere act of rebroadcasting without
authority from the owner of the broadcast gives rise to the probability that a crime was committed
under the Intellectual Property Code.

VII

Respondents cannot invoke the defense of good faith to argue that no probable cause exists.
41
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Respondents argue that copyright infringement is malum in se, in that "[c]opying alone is not what is
being prohibited, but its injurious effect which consists in the lifting from the copyright owners film or
materials, that were the result of the latters creativity, work and productions and without authority,
reproduced, sold and circulated for commercial use to the detriment of the latter."127

Infringement under the Intellectual Property Code is malum prohibitum. The Intellectual Property
Code is a special law. Copyright is a statutory creation:

Copyright, in the strict sense of the term, is purely a statutory right. It is a new or independent right
granted by the statute, and not simply a pre-existing right regulated by the statute. Being a statutory
grant, the rights are only such as the statute confers, and may be obtained and enjoyed only with
respect to the subjects and by the persons, and on terms and conditions specified in the statute.128

The general rule is that acts punished under a special law are malum prohibitum.129 "An act which is
declared malum prohibitum, malice or criminal intent is completely immaterial."130

In contrast, crimes mala in seconcern inherently immoral acts:

Not every criminal act, however, involves moral turpitude. It is for this reason that "as to what crime
involves moral turpitude, is for the Supreme Court to determine". In resolving the foregoing question,
the Court is guided by one of the general rules that crimes mala in se involve moral turpitude, while
crimes mala prohibita do not, the rationale of which was set forth in "Zari v. Flores," to wit:

It (moral turpitude) implies something immoral in itself, regardless of the fact that it is punishable by
law or not. It must not be merely mala prohibita, but the act itself must be inherently immoral. The
doing of the act itself, and not its prohibition by statute fixes the moral turpitude. Moral turpitude does
not, however, include such acts as are not of themselves immoral but whose illegality lies in their
being positively prohibited. (Emphasis supplied)

[These] guidelines nonetheless proved short of providing a clear cut solution, for in International Rice
Research Institute v. NLRC, the Court admitted that it cannot always be ascertained whether moral
turpitude does or does not exist by merely classifying a crime as malum in se or as malum
prohibitum. There are crimes which are mala in se and yet but rarely involve moral turpitude and
there are crimes which involve moral turpitude and are mala prohibita only. In the final analysis,
whether or not a crime involves moral turpitude is ultimately a question of fact and frequently
depends on all the circumstances surrounding the violation of the statue.131 (Emphasis in the
original)

"Implicit in the concept of mala in se is that of mens rea."132 Mens reais defined as "the nonphysical
element which, combined with the act of the accused, makes up the crime charged. Most frequently
it is the criminal intent, or the guilty mind[.]"133

Crimes mala in sepre suppose that the person who did the felonious act had criminal intent to do so,
while crimes mala prohibita do not require knowledge or criminal intent:

In the case of mala in se it is necessary, to constitute a punishable offense, for the person doing the
act to have knowledge of the nature of his act and to have a criminal intent; in the case of mala
prohibita, unless such words as "knowingly" and "willfully" are contained in the statute, neither
knowledge nor criminal intent is necessary. In other words, a person morally quite innocent and with
every intention of being a law abiding citizen becomes a criminal, and liable to criminal penaltes, if
he does an act prohibited by these statutes.134 (Emphasis supplied) Hence, "[i]ntent to commit the
crime and intent to perpetrate the act must be distinguished. A person may not have consciously
intended to commit a crime; but he did intend to commit an act, and that act is, by the very nature of
things, the crime itself[.]"135When an act is prohibited by a special law, it is considered injurious to
public welfare, and the performance of the prohibited act is the crime itself.136

Volition, or intent to commit the act, is different from criminal intent. Volition or voluntariness refers to
knowledge of the act being done. On the other hand, criminal intent which is different from motive,
or the moving power for the commission of the crime137 refers to the state of mind beyond
voluntariness. It is this intent that is being punished by crimes mala in se.

Unlike other jurisdictions that require intent for a criminal prosecution of copyright infringement, the
42

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
Page

of criminal copyright infringement.138


In Canada, criminal offenses are categorized under three (3) kinds: "the full mens rea offence,
meaning the accuseds actual or subjective state of mind has to be proved; strict liability offences
where no mens rea has to be proved but the accused can avoid liability if he can prove he took all
reasonable steps to avoid the particular event; [and] absolute liability offences where Parliament has
made it clear that guilt follows proof of the prescribed act only."139 Because of the use of the word
"knowingly" in Canadas Copyright Act, it has been held that copyright infringement is a full mens rea
offense.140

In the United States, willful intent is required for criminal copyright infringement.141 Before the
passage of the No Electronic Theft Act, "civil copyright infringements were violations of criminal
copyright laws only if a defendant willfully infringed a copyright for purposes of commercial
advantage or private financial gain."142 However, the No Electronic Theft Act now allows criminal
copyright infringement without the requirement of commercial gain. The infringing act may or may
not be for profit.143

There is a difference, however, between the required liability in civil copyright infringement and that
in criminal copyright infringement in the United States. Civil copyright infringement does not require
culpability and employs a strict liability regime144 where "lack of intention to infringe is not a defense
to an action for infringement."145

In the Philippines, the Intellectual Property Code, as amended, provides for the prosecution of
criminal actions for the following violations of intellectual property rights: Repetition of Infringement of
Patent (Section 84); Utility Model (Section 108); Industrial Design (Section 119); Trademark
Infringement (Section 155 in relation to Section 170); Unfair Competition (Section 168 in relation to
Section 170); False Designations of Origin, False Description or Representation (Section 169.1 in
relation to Section 170); infringement of copyright, moral rights, performers rights, producers rights,
and broadcasting rights (Section 177, 193, 203, 208 and 211 in relation to Section 217); and other
violations of intellectual property rights as may be defined by law.

The Intellectual Property Code requires strict liability for copyright infringement whether for a civil
action or a criminal prosecution; it does not require mens rea or culpa:146

SECTION 216. Remedies for Infringement.

216.1. Any person infringing a right protected under this law shall be liable:

a. To an injunction restraining such infringement. The court may also order the
defendant to desist from an infringement, among others, to prevent the entry into the
channels of commerce of imported goods that involve an infringement, immediately
after customs clearance of such goods.

b. Pay to the copyright proprietor or his assigns or heirs such actual damages,
including legal costs and other expenses, as he may have incurred due to the
infringement as well as the profits the infringer may have made due to such
infringement, and in proving profits the plaintiff shall be required to prove sales only
and the defendant shall be required to prove every element of cost which he claims,
or, in lieu of actual damages and profits, such damages which to the court shall
appear to be just and shall not be regarded as penalty.

c. Deliver under oath, for impounding during the pendency of the action, upon such
terms and conditions as the court may prescribe, sales invoices and other
documents evidencing sales, all articles and their packaging alleged to infringe a
copyright and implements for making them.

d. Deliver under oath for destruction without any compensation all infringing copies or
devices, as well as all plates, molds, or other means for making such infringing
copies as the court may order.

e. Such other terms and conditions, including the payment of moral and exemplary
damages, which the court may deem proper, wise and equitable and the destruction
43

of infringing copies of the work even in the event of acquittal in a criminal case.
Page
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 dealers knowledge or of his intent are
of little use and rarely accomplish their purposes."147

Respondents argue that live broadcast of news requires a different treatment in terms of good faith,
intent, and knowledge to commit infringement. To argue this point, they rely on the differences of the
media used in Habana et al. v. Robles, Columbia Pictures v. Court of Appeals, and this case:

Petitioner ABS-CBN argues that lack of notice that the Angelo dela Cruz was under embargo is not a
defense in copyright infringement and cites the case of Columbia Pictures vs. Court of Appeals and
Habana et al. vs. Robles(310 SCRA 511). However, these cases refer to film and literary work where
obviously there is "copying" from an existing material so that the copier knew that he is copying from
an existing material not owned by him. But, how could respondents know that what they are "copying
was not [theirs]" when they were not copying but merely receiving live video feed from Reuters and
CNN which they aired? What they knew and what they aired was the Reuters live video feed and the
CNN feed which GMA-7 is authorized to carry in its news broadcast, it being a subscriber of these
companies[.]
44

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
Page

with the material he is allegedly copying and therefore knows, or is presumed to know, that what he
is copying is owned by another. Upon the other hand, in live broadcast, the alleged infringer is not
confronted with the fact that the material he airs or re-broadcasts is owned by another, and
therefore, he cannot be charged of knowledge of ownership of the material by another. This specially
obtains in the Angelo dela Cruz news footage which GMA-7 received from Reuters and CNN.
Reuters and CNN were beaming live videos from the coverage which GMA-7 received as a
subscriber and, in the exercise of its rights as a subscriber, GMA-7 picked up the live video and
simultaneously re-broadcast it. In simultaneously broadcasting the live video footage of Reuters,
GMA-7 did not copy the video footage of petitioner ABS-CBN[.]148 (Emphasis in the original)

Respondents arguments must fail.

Respondents are involved and experienced in the broadcasting business. They knew that there
would be consequences in carrying ABS-CBNs footage in their broadcast. That is why GMA-7
allegedly cut the feed from Reuters upon seeing ABS-CBNs ogo and reporter. To admit a different
treatment for broadcasts would mean abandonment of a broadcasting organizations minimum
rights, including copyright on the broadcast material and the right against unauthorized rebroadcast
of copyrighted material. The nature of broadcast technology is precisely why related or neighboring
rights were created and developed. Carving out an exception for live broadcasts would go against
our commitments under relevant international treaties and agreements, which provide for the same
minimum rights.149

Contrary to respondents assertion, this court in Habana,150 reiterating the ruling in Columbia
Pictures,151 ruled that lack of knowledge of infringement is not a valid defense. Habana and
Columbia Pictures may have different factual scenarios from this case, but their rulings on copyright
infringement are analogous. In Habana, petitioners were the authors and copyright owners of
English textbooks and workbooks. The case was anchored on the protection of literary and artistic
creations such as books. In Columbia Pictures, video tapes of copyrighted films were the subject of
the copyright infringement suit.

In Habana, knowledge of the infringement is presumed when the infringer commits the prohibited
act:

The essence of intellectual piracy should be essayed in conceptual terms in order to underscore its
gravity by an appropriate understanding thereof. Infringement of a copyright is a trespass on a
private domain owned and occupied by the owner of the copyright, and, therefore, protected by law,
and infringement of copyright, or piracy, which is a synonymous term in this connection, consists in
the doing by any person, without the consent of the owner of the copyright, of anything the sole right
to do which is conferred by statute on the owner of the copyright.

....

A copy of a piracy is an infringement of the original, and it is no defense that the pirate, in such
cases, did not know whether or not he was infringing any copyright; he at least knew that what he
was copying was not his, and he copied at his peril.

....

In cases of infringement, copying alone is not what is prohibited. The copying must produce an
"injurious effect". Here, the injury consists in that respondent Robles lifted from petitioners book
materials that were the result of the latters research work and compilation and misrepresented them
as her own. She circulated the book DEP for commercial use and did not acknowledge petitioners as
her source.152 (Emphasis supplied)

Habana and Columbia Pictures did not require knowledge of the infringement to constitute a
violation of the copyright. One does not need to know that he or she is copying a work without
consent to violate copyright law. Notice of fact of the embargo from Reuters or CNN is not material
to find probable cause that respondents committed infringement. Knowledge of infringement is only
material when the person is charged of aiding and abetting a copyright infringement under Section
217 of the Intellectual Property Code.153
45

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
Page

criminal liability, the courts should remember the ultimate aim of copyright. Copyright is not primarily
about providing the strongest possible protection for copyright owners so that they have the highest
possible incentive to create more works. The control given to copyright owners is only a means to an
end: the promotion of knowledge and learning. Achieving that underlying goal of copyright law also
requires access to copyrighted works and it requires permitting certain kinds of uses of copyrighted
works without the permission of the copyright owner. While a particular defendant may appear to be
deserving of criminal sanctions, the standard for determining willfulness should be set with reference
to the larger goals of copyright embodied in the Constitution and the history of copyright in this
country.154

In addition, "[t]he essence of intellectual piracy should be essayed in conceptual terms in order to
underscore its gravity by an appropriate understanding thereof. Infringement of a copyright is a
trespass on a private domain owned and occupied by the owner of the copyright, and, therefore,
protected by law, and infringement of copyright, or piracy, which is a synonymous term in this
connection, consists in the doing by any person, without the consent of the owner of the copyright, of
anything the sole right to do which is conferred by statute on the owner of the copyright."155

Intellectual property rights, such as copyright and the neighboring right against rebroadcasting,
establish an artificial and limited monopoly to reward creativity. Without these legally enforceable
rights, creators will have extreme difficulty recovering their costs and capturing the surplus or profit
of their works as reflected in their markets. This, in turn, is based on the theory that the possibility of
gain due to creative work creates an incentive which may improve efficiency or simply enhance
consumer welfare or utility. More creativity redounds to the public good.

These, however, depend on the certainty of enforcement. Creativity, by its very nature, is vulnerable
to the free rider problem. It is easily replicated despite the costs to and efforts of the original creator.
The more useful the creation is in the market, the greater the propensity that it will be copied. The
most creative and inventive individuals are usually those who are unable to recover on their
creations.

Arguments against strict liability presuppose that the Philippines has a social, historical, and
economic climate similar to those of Western jurisdictions. As it stands, there is a current need to
strengthen intellectual property protection.

Thus, unless clearly provided in the law, offenses involving infringement of copyright protections
should be considered malum prohibitum. It is the act of infringement, not the intent, which causes
the damage. To require or assume the need to prove intent defeats the purpose of intellectual
property protection.

Nevertheless, proof beyond reasonable doubt is still the standard for criminal prosecutions under the
Intellectual Property Code.

VIII

Respondents argue that GMA-7s officers and employees cannot be held liable for infringement
under the Intellectual Property Code since it does not expressly provide direct liability of the
corporate officers. They explain that "(i) a corporation may be charged and prosecuted for a crime
where the penalty is fine or both imprisonment and fine, and if found guilty, may be fined; or (ii) a
corporation may commit a crime but if the statute prescribes the penalty therefore to be suffered by
the corporate officers, directors or employees or other persons, the latter shall be responsible for the
offense."156

Section 217 of the Intellectual Property Code states that "any person" may be found guilty of
infringement. It also imposes the penalty of both imprisonment and fine:

Section 217. Criminal Penalties. - 217.1. Any person infringing any right secured by provisions of
Part IV of this Act or aiding or abetting such infringement shall be guilty of a crime punishable by:

(a) Imprisonment of one (1) year to three (3) years plus a fine ranging from Fifty thousand
pesos (50,000) to One hundred fifty thousand pesos (150,000) for the first offense.
46

(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)
Page

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 corporations officers or employees stems from their active
participation in the commission of the wrongful act:

The principle applies whether or not the crime requires the consciousness of wrongdoing. It applies
to those corporate agents who themselves commit the crime and to those, who, by virtue of their
managerial positions or other similar relation to the corporation, could be deemed responsible for its
commission, if by virtue of their relationship to the corporation, they had the power to prevent the act.
Moreover, all parties active in promoting a crime, whether agents or not, are principals. Whether
such officers or employees are benefited by their delictual acts is not a touchstone of their criminal
liability. Benefit is not an operative fact.160 (Emphasis supplied) An accuseds participation in criminal
acts involving violations of intellectual property rights is the subject of allegation and proof. The
showing that the accused did the acts or contributed in a meaningful way in the commission of the
infringements is certainly different from the argument of lack of intent or good faith. Active
participation requires a showing of overt physical acts or intention to commit such acts. Intent or
good faith, on the other hand, are inferences from acts proven to have been or not been committed.

We find that the Department of Justice committed grave abuse of discretion when it resolved to file
the Information against respondents despite lack of proof of their actual participation in the alleged
crime.

Ordering the inclusion of respondents Gozon, GMA-7 President; Duavit, Jr., Executive Vice-
President; Flores, Vice-President for News and Public Affairs; and Soho, Director for News, as
respondents, Secretary Agra overturned the City Prosecutors finding that only respondents Dela
Pea-Reyes and Manalastas are responsible for the crime charged due to their duties.161 The Agra
Resolution reads:

Thus, from the very nature of the offense and the penalty involved, it is necessary that GMA-7s
directors, officers, employees or other officers thereof responsible for the offense shall be charged
and penalized for violation of the Sections 177 and 211 of Republic Act No. 8293. In their complaint
for libel, respondents Felipe L Gozon, Gilberto R. Duavit, Jr., Marissa L. Flores, Jessica A.Soho,
Grace Dela Pena-Reyes, John Oliver T. Manalastas felt they were aggrieved because they were "in
charge of the management, operations and production of news and public affairs programs of the
network" (GMA-7). This is clearly an admission on respondents part. Of course, respondents may
argue they have no intention to infringe the copyright of ABS-CBN; that they acted in good faith; and
that they did not directly cause the airing of the subject footage, but again this is preliminary
investigation and what is required is simply probable cause. Besides, these contentions can best be
addressed in the course of trial.162 (Citation omitted)

In contrast, the Office of the City Prosecutor, in the Resolution dated December 3, 2004, found that
respondents Gozon, Duavit, Jr., Flores, and Soho did not have active participation in the commission
of the crime charged:

This Office, however, does not subscribe to the view that respondents Atty. Felipe Gozon, Gilberto
47

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
Page

Manalastas. No evidence was adduced to prove that these respondents had an active participation
in the actual commission of the copyright infringement or they exercised their moral ascendancy
over Reyes and Manalastas in airing the said footage. It must be stressed that, conspiracy must be
established by positive and conclusive evidence. It must be shown to exist as clearly and
convincingly as the commission of the offense itself.163 (Emphasis supplied, citations omitted)

The City Prosecutor found respondents Dela Pea-Reyes and Manalastas liable due to the nature of
their work and responsibilities. He found that:

[t]his Office however finds respondents Grace Dela Pea-Reyes and John Oliver T. Manalastas
liable for copyright infringement penalized under Republic Act No. 8293. It is undisputed that
complainant ABSCBN holds the exclusive ownership and copyright over the "Angelo [d]ela Cruz
news footage". Hence, any airing and re-broadcast of the said footage without any consent and
authority from ABS-CBN will be held as an infringement and violation of the intellectual property
rights of the latter. Respondents Grace Dela Pea-Reyes as the Head of the News Operation and
John Oliver T. Manalastas as the Program Manager cannot escape liability since the news control
room was under their direct control and supervision. Clearly, they must have been aware that the
said footage coming from Reuters or CNN has a "No Access Philippines" advisory or embargo thus
cannot be re-broadcast. We find no merit to the defense of ignorance interposed by the respondents.
It is simply contrary to human experience and logic that experienced employees of an established
broadcasting network would be remiss in their duty in ascertaining if the said footage has an
embargo.164 (Emphasis supplied)

We agree with the findings as to respondents Dela Pea-Reyes and Manalastas. Both respondents
committed acts that promoted infringement of ABS-CBNs footage. We note that embargoes are
common occurrences in and between news agencies and/or broadcast organizations.165 Under its
Operations Guide, Reuters has two (2) types of embargoes: transmission embargo and publication
embargo.166 Under ABS-CBNs service contract with Reuters, Reuters will embargo any content
contributed by ABS-CBN from other broadcast subscribers within the same geographical location:

4a. Contributed Content

You agree to supply us at our request with news and sports news stories broadcast on the Client
Service of up to three (3) minutes each for use in our Services on a non-exclusive basis and at a
cost of US$300.00 (Three Hundred United States Dollars) per story. In respect of such items we
agree to embargo them against use by other broadcast subscribers in the Territory and confirm we
will observe all other conditions of usage regarding Contributed Content, as specified in Section 2.5
of the Reuters Business Principles for Television Services. For the purposes of clarification, any
geographical restriction imposed by you on your use of Contributed Content will not prevent us or
our clients from including such Contributed Content in online transmission services including the
internet. We acknowledge Contributed Content is your copyright and we will not acquire any
intellectual property rights in the Contributed Content.167 (Emphasis supplied)

Respondents Dela Pea-Reyes and Manalastas merely denied receiving the advisory sent by
Reuters to its clients, including GMA-7. As in the records, the advisory reads:

ADVISORY - - +++LIVE COVER PLANS+++


PHILIPPINES: HOSTAGE RETURN

**ATTENTION ALL CLIENTS**

PLEASE BE ADVISED OF THE FOLLOWING LIVE COVER


PLANNED FOR THURSDAY, JULY 22:

....

SOURCE: ABS-CBN
TV AND WEB RESTRICTIONS: NO ACCESS PHILIPPINES.168

There is probable cause that respondents Dela Pea-Reyes and Manalastas directly committed
copyright infringement of ABS-CBNs news footage to warrant piercing of the corporate veil. They
are responsible in airing the embargoed Angelo dela Cruz footage. They could have prevented the
48

act of infringement had they been diligent in their functions as Head of News Operations and
Program Manager.
Page
Secretary Agra, however, committed grave abuse of discretion when he ordered the filing of the
Information against all respondents despite the erroneous piercing of the corporate veil.
Respondents Gozon, Duavit, Jr., Flores, and Soho cannot be held liable for the criminal liability of
the corporation.

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

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

Conspiracy is not presumed. Like the physical acts constituting the crime itself, the elements of
conspiracy must be proven beyond reasonable doubt.1wphi1 While conspiracy need not be
established by direct evidence, for it may be inferred from the conduct of the accused before, during
and after the commission of the crime, all taken together, however, the evidence must be strong
enough to show the community of criminal design. For conspiracy to exist, it is essential that there
must be a conscious design to commit an offense. Conspiracy is the product of intentionality on the
part of the cohorts.

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

In sum, the trial court erred in failing to resume the proceedings after the designated period. The
Court of Appeals erred when it held that Secretary Agra committed errors of jurisdiction despite its
own pronouncement that ABS-CBN is the owner of the copyright on the news footage. News should
be differentiated from expression of the news, particularly when the issue involves rebroadcast of
news footage. The Court of Appeals also erroneously held that good faith, as. well as lack of
knowledge of infringement, is a defense against criminal prosecution for copyright and neighboring
rights infringement. In its current form, the Intellectual Property Code is malum prohibitum and
prescribes a strict liability for copyright infringement. Good faith, lack of knowledge of the copyright,
or lack of intent to infringe is not a defense against copyright infringement. Copyright, however, is
subject to the rules of fair. use and will be judged on a case-to-case basis. Finding probable cause
includes a determination of the defendant's active participation, particularly when the corporate veil
is pierced in cases involving a corporation's criminal liability.

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

SO ORDERED.
49
Page
G.R. No. 147043 June 21, 2005

NBI - MICROSOFT CORPORATION & LOTUS DEVELOPMENT CORP., petitioners,


vs.
JUDY C. HWANG, BENITO KEH & YVONNE K. CHUA/BELTRON COMPUTER PHILIPPINES
INC., JONATHAN K. CHUA, EMILY K. CHUA, BENITO T. SANCHEZ, NANCY I. VELASCO,
ALFONSO CHUA, ALBERTO CHUA, SOPHIA ONG, DEANNA CHUA/TAIWAN MACHINERY
DISPLAY & TRADE CENTER, INC., and THE SECRETARY OF JUSTICE, respondents.

DECISION

CARPIO, J.:

The Case

This is a petition for certiorari1 of the Resolutions2 of the Department of Justice dismissing for "lack of
merit and insufficiency of evidence" petitioner Microsoft Corporations complaint against respondents
for copyright infringement and unfair competition.

The Facts

Petitioner Microsoft Corporation ("Microsoft"), a Delaware, United States corporation, owns the
copyright and trademark to several computer software.3 Respondents Benito Keh and Yvonne Keh
are the President/Managing Director and General Manager, respectively, of respondent Beltron
Computer Philippines, Inc. ("Beltron"), a domestic corporation. Respondents Jonathan K. Chua,
Emily K. Chua, Benito T. Sanchez, and Nancy I. Velasco are Beltrons Directors. On the other hand,
respondents Alfonso Chua, Alberto Chua, Judy K. Chua Hwang, Sophia Ong, and Deanna Chua are
the Directors of respondent Taiwan Machinery Display & Trade Center, Inc. ("TMTC"), also a
domestic corporation.4

In May 1993, Microsoft and Beltron entered into a Licensing Agreement ("Agreement"). Under
Section 2(a) of the Agreement, as amended in January 1994, Microsoft authorized Beltron, for a fee,
to:

(i) xxx reproduce and install no more than one (1) copy of [Microsoft] software on each
Customer System hard disk or Read Only Memory ("ROM"); [and]

(ii) xxx distribute directly or indirectly and license copies of the Product (reproduced as per
Section 2(a)(i) and/or acquired from Authorized Replicator or Authorized Distributor) in object
code form to end users[.] xxxx5

The Agreement also authorized Microsoft and Beltron to terminate the contract if the other fails to
comply with any of the Agreements provisions. Microsoft terminated the Agreement effective 22
June 1995 for Beltrons non-payment of royalties.6

Afterwards, Microsoft learned that respondents were illegally copying and selling Microsoft software.
Consequently, Microsoft, through its Philippine agent,7 hired the services of Pinkerton Consulting
Services ("PCS"), a private investigative firm. Microsoft also sought the assistance of the National
Bureau of Investigation ("NBI"). On 10 November 1995, PCS employee John Benedic8 Sacriz
("Sacriz") and NBI agent Dominador Samiano, Jr. ("Samiano"), posing as representatives of a
computer shop,9 bought computer hardware (central processing unit ("CPU") and computer monitor)
and software (12 computer disks ("CDs") in read-only memory ("ROM") format) from respondents.
The CPU contained pre-installed10 Microsoft Windows 3.1 and MS-DOS software. The 12 CD-
ROMs, encased in plastic containers with Microsoft packaging, also contained Microsoft
software.11 At least two of the CD-ROMs were "installers," so-called because they contain several
software (Microsoft only or both Microsoft and non-Microsoft).12 Sacriz and Samiano were not given
the Microsoft end-user license agreements, users manuals, registration cards or certificates of
authenticity for the articles they purchased. The receipt issued to Sacriz and Samiano for the CPU
and monitor bore the heading "T.M.T.C. (PHILS.) INC. BELTRON COMPUTER."13 The receipt for
the 12 CD-ROMs did not indicate its source although the name "Gerlie" appears below the entry
50

"delivered by."14
Page
On 17 November 1995, Microsoft applied for search warrants against respondents in the Regional
Trial Court, Branch 23, Manila ("RTC").15 The RTC granted Microsofts application and issued two
search warrants ("Search Warrant Nos. 95-684 and 95-685").16 Using Search Warrant Nos. 95-684
and 95-685, the NBI searched the premises of Beltron and TMTC and seized several computer-
related hardware, software, accessories, and paraphernalia. Among these were 2,831 pieces of
CD-ROMs containing Microsoft software.17

Based on the articles obtained from respondents, Microsoft and a certain Lotus Development
Corporation ("Lotus Corporation") charged respondents before the Department of Justice ("DOJ")
with copyright infringement under Section 5(A) in relation to Section 29 of Presidential Decree No.
49, as amended, ("PD 49")18 and with unfair competition under Article 189(1)19 of the Revised Penal
Code. In its Complaint ("I.S. No. 96-193"), which the NBI indorsed, Microsoft alleged that
respondents illegally copied and sold Microsoft software.20

In their joint counter-affidavit, respondents Yvonne Keh ("respondent Keh") and Emily K. Chua
("respondent Chua") denied the charges against respondents. Respondents Keh and Chua alleged
that: (1) Microsofts real intention in filing the complaint under I.S. No. 96-193 was to pressure
Beltron to pay its alleged unpaid royalties, thus Microsoft should have filed a collection suit instead of
a criminal complaint; (2) TMTC bought the confiscated 59 boxes of MS-DOS CDs from a Microsoft
dealer in Singapore (R.R. Donnelly); (3) respondents are not the "source" of the Microsoft Windows
3.1 software pre-installed in the CPU bought by Sacriz and Samiano, but only of the MS-DOS
software; (4) Microsofts alleged proof of purchase (receipt) for the 12 CD-ROMs is inconclusive
because the receipt does not indicate its source; and (5) respondents Benito Keh, Jonathan K.
Chua, Alfonso Chua, Alberto Chua, Judy K. Chua Hwang, Sophia Ong, and Deanna Chua are
stockholders of Beltron and TMTC in name only and thus cannot be held criminally liable.21

The other respondents did not file counter-affidavits.

Meanwhile, respondents moved to quash Search Warrant Nos. 95-684 and 95-685. The RTC
partially granted their motion in its Order of 16 April 1996. Microsoft sought reconsideration but the
RTC denied Microsofts motion in its Order of 19 July 1996. Microsoft appealed to the Court of
Appeals in CA-G.R. CV No. 54600. In its Decision of 29 November 2001, the Court of Appeals
granted Microsofts appeal and set aside the RTC Orders of 16 April 1996 and 19 July 1996. The
Court of Appeals Decision became final on 27 December 2001.

The DOJ Resolutions

In the Resolution of 26 October 1999, DOJ State Prosecutor Jocelyn A. Ong ("State Prosecutor
Ong") recommended the dismissal of Microsofts complaint for lack of merit and insufficiency of
evidence. State Prosecutor Ong also recommended the dismissal of Lotus Corporations complaint
for lack of interest to prosecute and for insufficiency of evidence. Assistant Chief State Prosecutor
Lualhati R. Buenafe ("Assistant Chief State Prosecutor Buenafe") approved State Prosecutor Ongs
recommendations.22 The 26 October 1999 Resolution reads in part:

[T]wo (2) issues have to be resolved in this case, namely:

a) Whether or not Beltron Computer and/or its stockholders should be held liable for the
offenses charged.

b) Whether or not prima facie case exist[s] against Taiwan Machinery Display and Trade
Center, Inc. (TMTC) for violation of the offense charged.

Complainant had alleged that from the time the license agreement was terminated, respondent/s
is/are no longer authorized to copy/distribute/sell Microsoft products. However, respondent/s averred
that the case is civil in nature, not criminal, considering that the case stemmed only out of the desire
of complainant to collect from them the amount of US$135,121.32 and that the contract entered into
by the parties cannot be unilaterally terminated.

In the order of Honorable William Bayhon dated July 19, 1996 [denying reconsideration to the Order
partially quashing the search warrants], he observed the following:
51

"It is further argued by counsel for respondent that the act taken by private complainant is to spite
Page

revenge against the respondent Beltron for the latter failed to pay the alleged monetary obligation in
the amount of US$135,121.32. That respondent has some monetary obligation to complainant which
is not denied by the complainant."

["]It appears therefore that prior to the issuance of the subject search warrants, complainant had
some business transactions with the respondent [Beltron] along the same line of products.
Complainant failed to reveal the true circumstances existing between the two of them as it now
appears, indeed the search warrant[s] xxx [are] being used as a leverage to secure collection of the
money obligation which the Court cannot allow."

From said order, it can be gleaned that the [RTC] xxx, had admitted that the search warrants applied
for by complainant were merely used as a leverage for the collection of the alleged monetary
obligation of the respondent/s.

From said order, it can be surmise (sic) that the obligations between the parties is civil in nature not
criminal.

Moreover, complainant had time and again harped that respondent/s is/are not authorized to
sell/copy/distribute Microsoft products at the time of the execution of the search warrants. Still, this
office has no power to pass upon said issue for one has then to interpret the provisions of the
contract entered into by the parties, which question, should be raised in a proper civil proceeding.

Accordingly, absen[t] a resolution from the proper court of (sic) whether or not the contract is still
binding between the parties at the time of the execution of the search warrants, this office cannot
pass upon the issue of whether respondent/s is or are liable for the offense charged.

As to the second issue, we find for the respondent/s. TMTC had provided sufficient evidence such
as pro-forma invoice from R.R. Donnelley; Debt Advice of the Bank of Commerce; Official Receipts
from the Bureau of Customs; and Import Entry Declaration of the Bureau of Customs to prove that
indeed the Microsoft software in their possession were bought from Singapore.

Thus, respondent/s in this case has/have no intent to defraud the public, as provided under Article
189 of the Revised Penal Code, for they bought said Microsoft MS-DOS 6.0 from an alleged
licensee of Microsoft in Singapore, with all the necessary papers. In their opinion, what they have
are genuine Microsoft software, therefore no unfair competition exist.

Moreover, violation of P.D. 49 does not exist, for respondent/s was/were not the manufacturers of
the Microsoft software seized and were selling their products as genuine Microsoft software,
considering that they bought it from a Microsoft licensee.

Complainant, on the other hand, considering that it has the burden of proving that the respondent/s
is/are liable for the offense charged, has not presented any evidence that the items seized namely
the 59 boxes of MS-DOS 6.0 software are counterfeit.

The certification issued on December 12, 1995 by Christopher Austin, Corporate Attorney of the
complainant, does not disclose this fact. For the term used by Mr. Austin was that the items seized
were unauthorized.

The question now, is whether the products were unauthorized because TMTC has no license to sell
Microsoft products, or is it unauthorized because R.R. Donnelley has no authority to sell said
products here in the Philippines.

Still, to determine the culpability of the respondents, complainant should present evidence that what
is in the possession of the respondent/s is/are counterfeit Microsoft products.

This it failed to do.23

Microsoft sought reconsideration and prayed for an ocular inspection of the articles seized from
respondents. However, in the Resolution of 3 December 1999, Assistant Chief State Prosecutor
Buenafe, upon State Prosecutor Ongs recommendation, denied Microsofts motion.24
52

Microsoft appealed to the Office of the DOJ Secretary. In the Resolution of 3 August 2000, DOJ
Undersecretary Regis V. Puno dismissed Microsofts appeal.25 Microsoft sought reconsideration but
Page

its motion was denied in the Resolution of 22 December 2000.26


Hence, this petition. Microsoft contends that:

I. THE DOJ ERRED IN RULING THAT THE LIABILITY OF RESPONDENTS WAS ONLY CIVIL IN
NATURE BY VIRTUE OF THE LICENSE AGREEMENT.

II. THE DOJ MISAPPRECIATED THE FACT THAT RESPONDENTS WERE ENGAGED IN THE
ILLEGAL IMPORTATION, SALE AND DISTRIBUTION OF COUNTERFEIT SOFTWARE AS
EVIDENCED BY THE ITEMS PURCHASED DURING THE TEST-BUY AND THE ITEMS SEIZED
FROM RESPONDENTS PREMISES.

III. THE DOJ MISAPPRECIATED THE LAW ON COPYRIGHT INFRINGEMENT AND UNFAIR
COMPETITION.

IV. ONLY TWO OUT OF THE NINE RESPONDENTS BOTHERED TO FILE COUNTER-
AFFIDAVITS; HENCE, THE CHARGES AGAINST SEVEN [RESPONDENTS] REMAIN
UNCONTROVERTED.27

In its Comment, filed by the Solicitor General, the DOJ maintains that it did not commit grave abuse
of discretion in dismissing Microsofts complaint.28

For their part, respondents allege in their Comment that Microsoft is guilty of forum-shopping
because its petition in CA-G.R. CV No. 54600 was filed ahead of, and has a "common interest" with,
this petition. On the merits, respondents reiterate their claims in their motion to quash Search
Warrant Nos. 95-684 and 95-685 that the articles seized from them were either owned by others,
purchased from legitimate sources, or not produced by Microsoft. Respondents also insist that the
Agreement entitled Beltron to "copy and replicate or reproduce" Microsoft products. On the
confiscated 2,831 CD-ROMs, respondents allege that a certain corporation29 left the CD-ROMs with
them for safekeeping. Lastly, respondents claim that there is no proof that the CPU Sacriz and
Samiano bought from them contained pre-installed Microsoft software because the receipt for the
CPU does not indicate "[s]oftware hard disk." 30

In its Reply, Microsoft counters that it is not liable for forum-shopping because its petition in CA-G.R.
CV No. 54600 involved the Orders of the RTC partially quashing Search Warrant Nos. 95-684 and
95-685 while this petition concerns the DOJ Resolutions dismissing its complaint against
respondents for copyright infringement and unfair competition. On the merits, Microsoft maintains
that respondents should be indicted for copyright infringement and unfair competition.31

The Issues

The petition raises the following issues:

(1) Whether Microsoft engaged in forum-shopping; and

(2) Whether the DOJ acted with grave abuse of discretion in not finding probable cause to
charge respondents with copyright infringement and unfair competition.

The Ruling of the Court

The petition has merit.

Microsoft did not Engage in Forum-Shopping

Forum-shopping takes place when a litigant files multiple suits involving the same parties, either
simultaneously or successively, to secure a favorable judgment.32 Thus, it exists where the elements
of litis pendentia are present, namely: (a) identity of parties, or at least such parties who represent
the same interests in both actions; (b) identity of rights asserted and relief prayed for, the relief being
founded on the same facts; and (c) the identity with respect to the two preceding particulars in the
two cases is such that any judgment that may be rendered in the pending case, regardless of which
party is successful, would amount to res judicata in the other case.33 Forum-shopping is an act of
53

malpractice because it abuses court processes.34 To check this pernicious practice, Section 5, Rule
7 of the 1997 Rules of Civil Procedure requires the principal party in an initiatory pleading to submit
Page

a certification against forum-shopping.35 Failure to comply with this requirement is a cause for the
dismissal of the case and, in case of willful forum-shopping, for the imposition of administrative
sanctions.

Here, Microsoft correctly contends that it is not liable for forum-shopping. What Microsoft appealed in
CA-G.R. CV No. 54600 were the RTC Orders partially quashing Search Warrant Nos. 95-684 and
95-685. In the present case, Microsoft is appealing from the DOJ Resolutions dismissing its
complaint against respondents for copyright infringement and unfair competition. Thus, although the
parties in CA-G.R. CV No. 54600 and this petition are identical, the rights asserted and the reliefs
prayed for are not such that the judgment in CA-G.R. CV No. 54600 does not amount to res
judicata in the present case. This renders forum-shopping impossible here.

The DOJ Acted with Grave Abuse of Discretion


in not Finding Probable Cause to Charge Respondents with
Copyright Infringement and Unfair Competition

Generally, this Court is loath to interfere in the prosecutors discretion in determining probable
cause36 unless such discretion is shown to have been abused.37 This case falls under the
exception.

Unlike the higher quantum of proof beyond reasonable doubt required to secure a conviction, it is the
lower standard of probable cause which is applied during the preliminary investigation to determine
whether the accused should be held for trial. This standard is met if the facts and circumstances
incite a reasonable belief that the act or omission complained of constitutes the offense charged. As
we explained in Pilapil v. Sandiganbayan:38

The term [probable cause] does not mean "actual and positive cause" nor does it import absolute
certainty. It is merely based on opinion and reasonable belief. Thus, a finding of probable cause
does not require an inquiry into whether there is sufficient evidence to procure a conviction. It is
enough that it is believed that the act or omission complained of constitutes the offense charged.
Precisely, there is a trial for the reception of evidence of the prosecution in support of the charge.

PD 49 and Article 189(1)

Section 539 of PD 49 ("Section 5") enumerates the rights vested exclusively on the copyright owner.
Contrary to the DOJs ruling, the gravamen of copyright infringement is not merely the unauthorized
"manufacturing" of intellectual works but rather the unauthorized performance of any of the acts
covered by Section 5. Hence, any person who performs any of the acts under Section 5 without
obtaining the copyright owners prior consent renders himself civilly40 and criminally41 liable for
copyright infringement. We held in Columbia Pictures, Inc. v. Court of Appeals:42

Infringement of a copyright is a trespass on a private domain owned and occupied by the owner of
the copyright, and, therefore, protected by law, and infringement of copyright, or piracy, which is a
synonymous term in this connection, consists in the doing by any person, without the consent of the
owner of the copyright, of anything the sole right to do which is conferred by statute on the owner of
the copyright. (Emphasis supplied)

Significantly, under Section 5(A), a copyright owner is vested with the exclusive right to "copy,
distribute, multiply, [and] sell" his intellectual works.

On the other hand, the elements of unfair competition under Article 189(1)43 of the Revised Penal
Code are:

(a) That the offender gives his goods the general appearance of the goods of another
manufacturer or dealer;

(b) That the general appearance is shown in the (1) goods themselves, or in the (2)
wrapping of their packages, or in the (3) device or words therein, or in (4) any other
feature of their appearance[;]

(c) That the offender offers to sell or sells those goods or gives other persons a chance or
54

opportunity to do the same with a like purpose[; and]


Page

(d) That there is actual intent to deceive the public or defraud a competitor.44
The element of intent to deceive may be inferred from the similarity of the goods or their
appearance.45

On the Sufficiency of Evidence to


Support a Finding of Probable Cause
Against Respondents

In its pleadings filed with the DOJ, Microsoft invoked three clusters of evidence to support its
complaint against respondents, namely: (1) the 12 CD-ROMs containing Microsoft software Sacriz
and Samiano bought from respondents; (2) the CPU with pre-installed Microsoft software Sacriz and
Samiano also purchased from respondents; and (3) the 2,831 CD-ROMs containing Microsoft
software seized from respondents.46 The DOJ, on the one hand, refused to pass upon the relevance
of these pieces of evidence because: (1) the "obligations between the parties is civil and not
criminal" considering that Microsoft merely sought the issuance of Search Warrant Nos. 95-684 and
95-685 to pressure Beltron to pay its obligation under the Agreement, and (2) the validity of
Microsofts termination of the Agreement must first be resolved by the "proper court." On the other
hand, the DOJ ruled that Microsoft failed to present evidence proving that what were obtained from
respondents were counterfeit Microsoft products.

This is grave abuse of discretion.47

First. Being the copyright and trademark owner of Microsoft software, Microsoft acted well
within its rights in filing the complaint under I.S. No. 96-193 based on the incriminating
evidence obtained from respondents. Hence, it was highly irregular for the DOJ to hold,
based on the RTC Order of 19 July 1996, that Microsoft sought the issuance of Search
Warrant Nos. 95-684 and 95-685, and by inference, the filing of the complaint under I.S. No.
96-193, merely to pressure Beltron to pay its overdue royalties to Microsoft. Significantly, in
its Decision in CA-G.R. CV No. 54600 dated 29 November 2001, the Court of Appeals set
aside the RTC Order of 19 July 1996. Respondents no longer contested that ruling which
became final on 27 December 2001.

Second. There is no basis for the DOJ to rule that Microsoft must await a prior "resolution
from the proper court of (sic) whether or not the [Agreement] is still binding between the
parties." Beltron has not filed any suit to question Microsofts termination of the Agreement.
Microsoft can neither be expected nor compelled to wait until Beltron decides to sue before
Microsoft can seek remedies for violation of its intellectual property rights.

Furthermore, some of the counterfeit CD-ROMs bought from respondents were "installer"
CD-ROMs containing Microsoft software only or both Microsoft and non-Microsoft software.
These articles are counterfeit per se because Microsoft does not (and could not have
authorized anyone to) produce such CD-ROMs. The copying of the genuine Microsoft
software to produce these fake CD-ROMs and their distribution are illegal even if the copier
or distributor is a Microsoft licensee. As far as these installer CD-ROMs are concerned, the
Agreement (and the alleged question on the validity of its termination) is immaterial to the
determination of respondents liability for copyright infringement and unfair competition.

Lastly, Section 10(b)48 of the Agreement provides that Microsofts "rights and remedies"
under the contract are "not xxx exclusive and are in addition to any other rights and remedies
provided by law or [the] Agreement." Thus, even if the Agreement still subsists, Microsoft is
not precluded from seeking remedies under PD 49 and Article 189(1) of the Revised Penal
Code to vindicate its rights.

Third. The Court finds that the 12 CD-ROMs ("installer" and "non-installer") and the CPU with
pre-installed Microsoft software Sacriz and Samiano bought from respondents and the 2,831
Microsoft CD-ROMs seized from respondents suffice to support a finding of probable cause
to indict respondents for copyright infringement under Section 5(A) in relation to Section 29
of PD 49 for unauthorized copying and selling of protected intellectual works. The installer
CD-ROMs with Microsoft software, to repeat, are counterfeit per se.On the other hand, the
illegality of the "non-installer" CD-ROMs purchased from respondents and of the Microsoft
software pre-installed in the CPU is shown by the absence of the standard features
55

accompanying authentic Microsoft products, namely, the Microsoft end-user license


agreements, users manuals, registration cards or certificates of authenticity.
Page
On the 2,831 Microsoft CD-ROMs49 seized from respondents, respondent Beltron, the only
respondent who was party to the Agreement, could not have reproduced them under the Agreement
as the Solicitor General50 and respondents contend. Beltrons rights51 under the Agreement were
limited to:

(1) the "reproduc[tion] and install[ation of] no more than one copy of [Microsoft] software on
each Customer System hard disk or Read Only Memory ("ROM")"; and

(2) the "distribut[ion] xxx and licens[ing of] copies of the [Microsoft] Product [as reproduced
above] and/or acquired from Authorized Replicator or Authorized Distributor) in object
code form to end users."

The Agreement defines an authorized replicator as "a third party approved by [Microsoft] which may
reproduce and manufacture [Microsoft] Product[s] for [Beltron] xxx."52 An authorized distributor, on
the other hand, is a "third party approved by [Microsoft] from which [Beltron] may purchase
MED53 Product."54 Being a mere reproducer/installer of one Microsoft software copy on each
customers hard disk or ROM, Beltron could only have acquired the hundreds of Microsoft CD-ROMs
found in respondents possession from Microsoft distributors or replicators.

However, respondents makes no such claim. What respondents contend is that these CD-ROMs
were left to them for safekeeping. But neither is this claim tenable for lack of substantiation. Indeed,
respondents Keh and Chua, the only respondents who filed counter-affidavits, did not make this
claim in the DOJ. These circumstances give rise to the reasonable inference that respondents mass-
produced the CD-ROMs in question without securing Microsofts prior authorization.

The counterfeit "non-installer" CD-ROMs Sacriz and Samiano bought from respondents also suffice
to support a finding of probable cause to indict respondents for unfair competition under Article
189(1) of the Revised Penal Code for passing off Microsoft products. From the pictures of the CD-
ROMs packaging,55 one cannot distinguish them from the packaging of CD-ROMs containing
genuine Microsoft software. Such replication, coupled with the similarity of content of these fake CD-
ROMs and the CD-ROMs with genuine Microsoft software, implies intent to deceive.

Respondents contention that the 12 CD-ROMs Sacriz and Samiano purchased cannot be traced to
them because the receipt for these articles does not indicate its source is unavailing. The receipt in
question should be taken together with Microsofts claim that Sacriz and Samiano bought the CD-
ROMs from respondents.56 Together, these considerations point to respondents as the vendor of the
counterfeit CD-ROMs. Respondents do not give any reason why the Court should not give credence
to Microsofts claim. For the same reason, the fact that the receipt for the CPU does not indicate
"[s]oftware hard disk" does not mean that the CPU had no pre-installed Microsoft software.
Respondents Keh and Chua admit in their counter-affidavit that respondents are the "source" of the
pre-installed MS-DOS software.

WHEREFORE, we GRANT the petition. We SET ASIDE the Resolutions dated 26 October 1999, 3
December 1999, 3 August 2000, and 22 December 2000 of the Department of Justice.

SO ORDERED.

Davide, Jr., C.J., (Chairman), Quisumbing, Ynares-Santiago, and Azcuna, JJ., concur.
56
Page
FIRST DIVISION

[G.R. No. 140946. September 13, 2004]

MICROSOFT CORPORATION and LOTUS DEVELOPMENT CORPORATION, petitioners, vs.


MAXICORP, INC., respondent.

DECISION
CARPIO, J.:

The Case

This petition for review on certiorari[1] seeks to reverse the Court of Appeals Decision[2] dated 23
December 1998 and its Resolution dated 29 November 1999 in CA-G.R. SP No. 44777. The Court
of Appeals reversed the Order[3] of the Regional Trial Court, Branch 23, Manila (RTC), denying
respondent Maxicorp, Inc.s (Maxicorp) motion to quash the search warrant that the RTC issued
against Maxicorp. Petitioners are the private complainants against Maxicorp for copyright
infringement under Section 29 of Presidential Decree No. 49 (Section 29 of PD 49) [4]and for unfair
competition under Article 189 of the Revised Penal Code (RPC).[5]

Antecedent Facts

On 25 July 1996, National Bureau of Investigation (NBI) Agent Dominador Samiano, Jr. (NBI
Agent Samiano) filed several applications for search warrants in the RTC against Maxicorp for
alleged violation of Section 29 of PD 49 and Article 189 of the RPC. After conducting a preliminary
examination of the applicant and his witnesses, Judge William M. Bayhon issued Search Warrants
Nos. 96-451, 96-452, 96-453 and 96-454, all dated 25 July 1996, against Maxicorp.
Armed with the search warrants, NBI agents conducted on 25 July 1996 a search of Maxicorps
premises and seized property fitting the description stated in the search warrants.
On 2 September 1996, Maxicorp filed a motion to quash the search warrants alleging that there
was no probable cause for their issuance and that the warrants are in the form of general warrants.
The RTC denied Maxicorps motion on 22 January 1997. The RTC also denied Maxicorps motion for
reconsideration.
The RTC found probable cause to issue the search warrants after examining NBI Agent
Samiano, John Benedict Sacriz (Sacriz), and computer technician Felixberto Pante (Pante). The
three testified on what they discovered during their respective visits to Maxicorp. NBI Agent Samiano
also presented certifications from petitioners that they have not authorized Maxicorp to perform the
witnessed activities using petitioners products.
On 24 July 1997, Maxicorp filed a petition for certiorari with the Court of Appeals seeking to set
aside the RTCs order. On 23 December 1998, the Court of Appeals reversed the RTCs order
denying Maxicorps motion to quash the search warrants. Petitioners moved for reconsideration. The
Court of Appeals denied petitioners motion on 29 November 1999.
The Court of Appeals held that NBI Agent Samiano failed to present during the preliminary
examination conclusive evidence that Maxicorp produced or sold the counterfeit products. The Court
of Appeals pointed out that the sales receipt NBI Agent Samiano presented as evidence that he
bought the products from Maxicorp was in the name of a certain Joel Diaz.
Hence, this petition.
57

The Issues
Page
Petitioners seek a reversal and raise the following issues for resolution:

1. WHETHER THE PETITION RAISES QUESTIONS OF LAW;

2. WHETHER PETITIONERS HAVE LEGAL PERSONALITY TO FILE THE PETITION;

3. WHETHER THERE WAS PROBABLE CAUSE TO ISSUE THE SEARCH WARRANTS;

4. WHETHER THE SEARCH WARRANTS ARE GENERAL WARRANTS.

The Ruling of the Court

The petition has merit.


On Whether the Petition Raises Questions of Law
Maxicorp assails this petition as defective since it failed to raise questions of law. Maxicorp
insists that the arguments petitioners presented are questions of fact, which this Court should not
consider in a Rule 45 petition for review. Petitioners counter that all the issues they presented in this
petition involve questions of law. Petitioners point out that the facts are not in dispute.
A petition for review under Rule 45 of the Rules of Court should cover questions of
law.[6] Questions of fact are not reviewable. As a rule, the findings of fact of the Court of Appeals are
final and conclusive and this Court will not review them on appeal,[7] subject to exceptions as when
the findings of the appellate court conflict with the findings of the trial court.[8]
The distinction between questions of law and questions of fact is settled. A question of law
exists when the doubt or difference centers on what the law is on a certain state of facts. A question
of fact exists if the doubt centers on the truth or falsity of the alleged facts. Though this delineation
seems simple, determining the true nature and extent of the distinction is sometimes problematic.
For example, it is incorrect to presume that all cases where the facts are not in dispute automatically
involve purely questions of law.
There is a question of law if the issue raised is capable of being resolved without need of
reviewing the probative value of the evidence.[9] The resolution of the issue must rest solely on what
the law provides on the given set of circumstances. Once it is clear that the issue invites a review of
the evidence presented, the question posed is one of fact.[10] If the query requires a re-evaluation of
the credibility of witnesses, or the existence or relevance of surrounding circumstances and their
relation to each other, the issue in that query is factual.[11] Our ruling in Paterno v. Paterno[12] is
illustrative on this point:

Such questions as whether certain items of evidence should be accorded probative value or weight,
or rejected as feeble or spurious, or whether or not the proofs on one side or the other are clear and
convincing and adequate to establish a proposition in issue, are without doubt questions of fact.
Whether or not the body of proofs presented by a party, weighed and analyzed in relation to contrary
evidence submitted by adverse party, may be said to be strong, clear and convincing; whether or not
certain documents presented by one side should be accorded full faith and credit in the face of
protests as to their spurious character by the other side; whether or not inconsistencies in the body
of proofs of a party are of such gravity as to justify refusing to give said proofs weight all these are
issues of fact.

It is true that Maxicorp did not contest the facts alleged by petitioners. But this situation does not
automatically transform all issues raised in the petition into questions of law. The issues must meet
the tests outlined in Paterno.
Of the three main issues raised in this petition the legal personality of the petitioners, the nature
of the warrants issued and the presence of probable cause only the first two qualify as questions of
law. The pivotal issue of whether there was probable cause to issue the search warrants is a
question of fact. At first glance, this issue appears to involve a question of law since it does not
concern itself with the truth or falsity of certain facts. Still, the resolution of this issue would require
this Court to inquire into the probative value of the evidence presented before the RTC. For a
58

question to be one of law, it must not involve an examination of the probative value of the evidence
presented by the litigants or any of them.[13]
Page
Yet, this is precisely what the petitioners ask us to do by raising arguments requiring an
examination of the TSNs and the documentary evidence presented during the search warrant
proceedings. In short, petitioners would have us substitute our own judgment to that of the RTC and
the Court of Appeals by conducting our own evaluation of the evidence. This is exactly the situation
which Section 1, Rule 45 of the Rules of Court prohibits by requiring the petition to raise only
questions of law. This Court is not a trier of facts. It is not the function of this court to analyze or
weigh evidence.[14] When we give due course to such situations, it is solely by way of exception.
Such exceptions apply only in the presence of extremely meritorious circumstances.[15]
Indeed, this case falls under one of the exceptions because the findings of the Court of Appeals
conflict with the findings of the RTC.[16] Since petitioners properly raised the conflicting findings of the
lower courts, it is proper for this Court to resolve such contradiction.
On Whether Petitioners have the Legal Personality to File this Petition
Maxicorp argues that petitioners have no legal personality to file this petition since the proper
party to do so in a criminal case is the Office of the Solicitor General as representative of the People
of the Philippines. Maxicorp states the general rule but the exception governs this case.[17] We ruled
in Columbia Pictures Entertainment, Inc. v. Court of Appeals[18] that the petitioner-complainant in
a petition for review under Rule 45 could argue its case before this Court in lieu of the Solicitor
General if there is grave error committed by the lower court or lack of due process. This avoids a
situation where a complainant who actively participated in the prosecution of a case would suddenly
find itself powerless to pursue a remedy due to circumstances beyond its control. The circumstances
in Columbia Pictures Entertainment are sufficiently similar to the present case to warrant the
application of this doctrine.
On Whether there was Probable Cause to Issue the Search Warrants
Petitioners argue that the Court of Appeals erred in reversing the RTC based on the fact that
the sales receipt was not in the name of NBI Agent Samiano. Petitioners point out that the Court of
Appeals disregarded the overwhelming evidence that the RTC considered in determining the
existence of probable cause. Maxicorp counters that the Court of Appeals did not err in reversing the
RTC. Maxicorp maintains that the entire preliminary examination that the RTC conducted was
defective.
The Court of Appeals based its reversal on two factual findings of the RTC. First, the fact that
the sales receipt presented by NBI Agent Samiano as proof that he bought counterfeit goods from
Maxicorp was in the name of a certain Joel Diaz. Second, the fact that petitioners other witness,
John Benedict Sacriz, admitted that he did not buy counterfeit goods from Maxicorp.
We rule that the Court of Appeals erred in reversing the RTCs findings.
Probable cause means such reasons, supported by facts and circumstances as will warrant a
cautious man in the belief that his action and the means taken in prosecuting it are legally just and
proper.[19] Thus, probable cause for a search warrant requires such facts and circumstances that
would lead a reasonably prudent man to believe that an offense has been committed and the objects
sought in connection with that offense are in the place to be searched.[20]
The judge determining probable cause must do so only after personally examining under oath
the complainant and his witnesses. The oath required must refer to the truth of the facts within
the personal knowledge of the petitioner or his witnesses, because the purpose thereof is to
convince the committing magistrate, not the individual making the affidavit and seeking the issuance
of the warrant, of the existence of probable cause.[21] The applicant must have personal knowledge
of the circumstances. Reliable information is insufficient.[22] Mere affidavits are not enough, and the
judge must depose in writing the complainant and his witnesses.[23]
The Court of Appeals reversal of the findings of the RTC centers on the fact that the two
witnesses for petitioners during the preliminary examination failed to prove conclusively that they
bought counterfeit software from Maxicorp. The Court of Appeals ruled that this amounted to a
failure to prove the existence of a connection between the offense charged and the place searched.
The offense charged against Maxicorp is copyright infringement under Section 29 of PD 49 and
unfair competition under Article 189 of the RPC. To support these charges, petitioners presented the
testimonies of NBI Agent Samiano, computer technician Pante, and Sacriz, a civilian. The offenses
that petitioners charged Maxicorp contemplate several overt acts. The sale of counterfeit products is
but one of these acts. Both NBI Agent Samiano and Sacriz related to the RTC how they personally
59

saw Maxicorp commit acts of infringement and unfair competition.


During the preliminary examination, the RTC subjected the testimonies of the witnesses to the
Page

requisite examination. NBI Agent Samiano testified that he saw Maxicorp display and offer for sale
counterfeit software in its premises. He also saw how the counterfeit software were produced and
packaged within Maxicorps premises. NBI Agent Samiano categorically stated that he was certain
the products were counterfeit because Maxicorp sold them to its customers without giving the
accompanying ownership manuals, license agreements and certificates of authenticity.
Sacriz testified that during his visits to Maxicorp, he witnessed several instances when Maxicorp
installed petitioners software into computers it had assembled. Sacriz also testified that he saw the
sale of petitioners software within Maxicorps premises. Petitioners never authorized Maxicorp to
install or sell their software.
The testimonies of these two witnesses, coupled with the object and documentary evidence
they presented, are sufficient to establish the existence of probable cause. From what they have
witnessed, there is reason to believe that Maxicorp engaged in copyright infringement and unfair
competition to the prejudice of petitioners. Both NBI Agent Samiano and Sacriz were clear and
insistent that the counterfeit software were not only displayed and sold within Maxicorps premises,
they were also produced, packaged and in some cases, installed there.
The determination of probable cause does not call for the application of rules and standards of
proof that a judgment of conviction requires after trial on the merits. As implied by the words
themselves, probable cause is concerned with probability, not absolute or even moral certainty. The
prosecution need not present at this stage proof beyond reasonable doubt. The standards of
judgment are those of a reasonably prudent man,[24] not the exacting calibrations of a judge after a
full-blown trial.
No law or rule states that probable cause requires a specific kind of evidence. No formula or
fixed rule for its determination exists.[25] Probable cause is determined in the light of conditions
obtaining in a given situation.[26] Thus, it was improper for the Court of Appeals to reverse the RTCs
findings simply because the sales receipt evidencing NBI Agent Samianos purchase of counterfeit
goods is not in his name.
For purposes of determining probable cause, the sales receipt is not the only proof that the sale
of petitioners software occurred. During the search warrant application proceedings, NBI Agent
Samiano presented to the judge the computer unit that he purchased from Maxicorp, in which
computer unit Maxicorp had pre-installed petitioners software.[27] Sacriz, who was present when NBI
Agent Samiano purchased the computer unit, affirmed that NBI Agent Samiano purchased the
computer unit.[28] Pante, the computer technician, demonstrated to the judge the presence of
petitioners software on the same computer unit.[29] There was a comparison between petitioners
genuine software and Maxicorps software pre-installed in the computer unit that NBI Agent
Sambiano purchased.[30] Even if we disregard the sales receipt issued in the name of Joel Diaz,
which petitioners explained was the alias NBI Agent Samiano used in the operation, there still
remains more than sufficient evidence to establish probable cause for the issuance of the search
warrants.
This also applies to the Court of Appeals ruling on Sacrizs testimony. The fact that Sacriz did
not actually purchase counterfeit software from Maxicorp does not eliminate the existence of
probable cause. Copyright infringement and unfair competition are not limited to the act of selling
counterfeit goods. They cover a whole range of acts, from copying, assembling, packaging to
marketing, including the mere offering for sale of the counterfeit goods. The clear and firm
testimonies of petitioners witnesses on such other acts stand untarnished. The Constitution and the
Rules of Court only require that the judge examine personally and thoroughly the applicant for the
warrant and his witnesses to determine probable cause. The RTC complied adequately with the
requirement of the Constitution and the Rules of Court.
Probable cause is dependent largely on the opinion and findings of the judge who conducted
the examination and who had the opportunity to question the applicant and his witnesses.[31] For this
reason, the findings of the judge deserve great weight. The reviewing court should overturn such
findings only upon proof that the judge disregarded the facts before him or ignored the clear dictates
of reason.[32] Nothing in the records of the preliminary examination proceedings reveal any
impropriety on the part of the judge in this case. As one can readily see, here the judge examined
thoroughly the applicant and his witnesses. To demand a higher degree of proof is unnecessary and
untimely. The prosecution would be placed in a compromising situation if it were required to present
all its evidence at such preliminary stage. Proof beyond reasonable doubt is best left for trial.
On Whether the Search Warrants are in the Nature of General Warrants
60

A search warrant must state particularly the place to be searched and the objects to be seized.
The evident purpose for this requirement is to limit the articles to be seized only to those particularly
Page

described in the search warrant. This is a protection against potential abuse. It is necessary to leave
the officers of the law with no discretion regarding what articles they shall seize, to the end that no
unreasonable searches and seizures be committed.[33]
In addition, under Section 4, Rule 126 of the Rules of Criminal Procedure, a search warrant
shall issue in connection with one specific offense. The articles described must bear a direct relation
to the offense for which the warrant is issued.[34] Thus, this rule requires that the warrant must state
that the articles subject of the search and seizure are used or intended for use in the commission of
a specific offense.
Maxicorp argues that the warrants issued against it are too broad in scope and lack the
specificity required with respect to the objects to be seized. After examining the wording of the
warrants issued, the Court of Appeals ruled in favor of Maxicorp and reversed the RTCs Order thus:

Under the foregoing language, almost any item in the petitioners store can be seized on the ground
that it is used or intended to be used in the illegal or unauthorized copying or reproduction of the
private respondents software and their manuals.[35]

The Court of Appeals based its reversal on its perceived infirmity of paragraph (e) of the search
warrants the RTC issued. The appellate court found that similarly worded warrants, all of which
noticeably employ the phrase used or intended to be used, were previously held void by this
Court.[36] The disputed text of the search warrants in this case states:

a) Complete or partially complete reproductions or copies of Microsoft software bearing the


Microsoft copyrights and/or trademarks owned by MICROSOFT CORPORATION
contained in CD-ROMs, diskettes and hard disks;

b) Complete or partially complete reproductions or copies of Microsoft instruction manuals


and/or literature bearing the Microsoft copyrights and/or trademarks owned by
MICROSOFT CORPORATION;

c) Sundry items such as labels, boxes, prints, packages, wrappers, receptacles, advertisements
and other paraphernalia bearing the copyrights and/or trademarks owned by
MICROSOFT CORPORATION;

d) Sales invoices, delivery receipts, official receipts, ledgers, journals, purchase orders and all
other books of accounts and documents used in the recording of the reproduction and/or
assembly, distribution and sales, and other transactions in connection with fake or
counterfeit products bearing the Microsoft copyrights and/or trademarks owned by
MICROSOFT CORPORATION;

e) Computer hardware, including central processing units including hard disks, CD-ROM
drives, keyboards, monitor screens and diskettes, photocopying machines and
other equipment or paraphernalia used or intended to be used in the illegal and
unauthorized copying or reproduction of Microsoft software and their manuals, or
which contain, display or otherwise exhibit, without the authority of MICROSOFT
CORPORATION, any and all Microsoft trademarks and copyrights; and

f) Documents relating to any passwords or protocols in order to access all computer hard
drives, data bases and other information storage devices containing unauthorized
Microsoft software.[37](Emphasis supplied)

It is only required that a search warrant be specific as far as the circumstances will ordinarily
allow.[38] The description of the property to be seized need not be technically accurate or precise.
The nature of the description should vary according to whether the identity of the property or its
character is a matter of concern.[39] Measured against this standard we find that paragraph (e) is not
a general warrant. The articles to be seized were not only sufficiently identified physically, they were
also specifically identified by stating their relation to the offense charged. Paragraph (e) specifically
refers to those articles used or intended for use in the illegal and unauthorized copying of petitioners
software. This language meets the test of specificity.[40]
The cases cited by the Court of Appeals are inapplicable. In those cases, the Court found the
warrants too broad because of particular circumstances, not because of the mere use of the phrase
61

used or intended to be used. In Columbia Pictures, Inc. v. Flores, the warrants ordering the
seizure of television sets, video cassette recorders, rewinders and tape cleaners x x x were found
Page

too broad since the defendant there was a licensed distributor of video tapes.[41] The mere presence
of counterfeit video tapes in the defendants store does not mean that the machines were used to
produce the counterfeit tapes. The situation in this case is different. Maxicorp is not a licensed
distributor of petitioners. In Bache & Co. (Phil.), Inc., et al. v. Judge Ruiz, et al., the Court voided
the warrants because they authorized the seizure of records pertaining to all business transactions
of the defendant.[42] And in 20th Century Fox Film Corp. v. Court of Appeals, the Court quashed
the warrant because it merely gave a list of articles to be seized, aggravated by the fact that such
appliances are generally connected with the legitimate business of renting out betamax tapes.[43]
However, we find paragraph (c) of the search warrants lacking in particularity. Paragraph (c)
states:

c) Sundry items such as labels, boxes, prints, packages, wrappers, receptacles, advertisements
and other paraphernalia bearing the copyrights and/or trademarks owned by MICROSOFT
CORPORATION;

The scope of this description is all-embracing since it covers property used for personal or other
purposes not related to copyright infringement or unfair competition. Moreover, the description
covers property that Maxicorp may have bought legitimately from Microsoft or its licensed
distributors. Paragraph (c) simply calls for the seizure of all items bearing the Microsoft logo, whether
legitimately possessed or not. Neither does it limit the seizure to products used in copyright
infringement or unfair competition.
Still, no provision of law exists which requires that a warrant, partially defective in specifying
some items sought to be seized yet particular with respect to the other items, should be nullified as a
whole. A partially defective warrant remains valid as to the items specifically described in the
warrant.[44] A search warrant is severable, the items not sufficiently described may be cut off without
destroying the whole warrant.[45] The exclusionary rule found in Section 3(2) of Article III of the
Constitution renders inadmissible in any proceeding all evidence obtained through unreasonable
searches and seizure. Thus, all items seized under paragraph (c) of the search warrants, not falling
under paragraphs a, b, d, e or f, should be returned to Maxicorp.
WHEREFORE, we PARTIALLY GRANT the instant petition. The Decision of the Court of
Appeals dated 23 December 1998 and its Resolution dated 29 November 1999 in CA-G.R. SP No.
44777 are REVERSED and SET ASIDE except with respect to articles seized under paragraph (c) of
Search Warrants Nos. 96-451, 96-452, 96-453 and 96-454. All articles seized under paragraph (c) of
the search warrants, not falling under paragraphs a, b, d, e or f, are ordered returned to Maxicorp,
Inc. immediately.
SO ORDERED.
Davide, Jr., C.J., (Chairman), Ynares-Santiago, and Azcuna, JJ., concur.
Quisumbing, J., no part, close relation to counsel.

62
Page
FIRST DIVISION

[G.R. No. 131522. July 19, 1999]

PACITA I. HABANA, ALICIA L. CINCO and JOVITA N. FERNANDO, petitioners, vs. FELICIDAD
C. ROBLES and GOODWILL TRADING CO., INC., respondents.

DECISION
PARDO, J.:

The case before us is a petition for review on certiorari[1] to set aside the (a) decision of the
Court of Appeals[2], and (b) the resolution denying petitioners motion for reconsideration,[3] in which
the appellate court affirmed the trial courts dismissal of the complaint for infringement and/or unfair
competition and damages but deleted the award for attorneys fees.
The facts are as follows:
Petitioners are authors and copyright owners of duly issued certificates of copyright registration
covering their published works, produced through their combined resources and efforts, entitled
COLLEGE ENGLISH FOR TODAY (CET for brevity), Books 1 and 2, and WORKBOOK FOR
COLLEGE FRESHMAN ENGLISH, Series 1.
Respondent Felicidad Robles and Goodwill Trading Co., Inc. are the author/publisher and
distributor/seller of another published work entitled DEVELOPING ENGLISH PROFICIENCY (DEP
for brevity), Books 1 and 2 (1985 edition) which book was covered by copyrights issued to them.
In the course of revising their published works, petitioners scouted and looked around various
bookstores to check on other textbooks dealing with the same subject matter. By chance they came
upon the book of respondent Robles and upon perusal of said book they were surprised to see that
the book was strikingly similar to the contents, scheme of presentation, illustrations and illustrative
examples in their own book, CET.
After an itemized examination and comparison of the two books (CET and DEP), petitioners
found that several pages of the respondents book are similar, if not all together a copy of petitioners
book, which is a case of plagiarism and copyright infringement.
Petitioners then made demands for damages against respondents and also demanded that they
cease and desist from further selling and distributing to the general public the infringed copies of
respondent Robles works.
However, respondents ignored the demands, hence, on July 7, 1988, petitioners filed with the
Regional Trial Court, Makati, a complaint for Infringement and/or unfair competition with
damages[4]against private respondents.[5]
In the complaint, petitioners alleged that in 1985, respondent Felicidad C. Robles being
substantially familiar with the contents of petitioners works, and without securing their permission,
lifted, copied, plagiarized and/or transposed certain portions of their book CET. The textual contents
and illustrations of CET were literally reproduced in the book DEP. The plagiarism, incorporation and
reproduction of particular portions of the book CET in the book DEP, without the authority or consent
of petitioners, and the misrepresentations of respondent Robles that the same was her original work
and concept adversely affected and substantially diminished the sale of the petitioners book and
caused them actual damages by way of unrealized income.
Despite the demands of the petitioners for respondents to desist from committing further acts of
infringement and for respondent to recall DEP from the market, respondents refused. Petitioners
asked the court to order the submission of all copies of the book DEP, together with the molds,
plates and films and other materials used in its printing destroyed, and for respondents to render an
accounting of the proceeds of all sales and profits since the time of its publication and sale.
Respondent Robles was impleaded in the suit because she authored and directly committed the
acts of infringement complained of, while respondent Goodwill Trading Co., Inc. was impleaded as
63

the publisher and joint co-owner of the copyright certificates of registration covering the two books
authored and caused to be published by respondent Robles with obvious connivance with one
Page

another.
On July 27, 1988, respondent Robles filed a motion for a bill of particulars [6] which the trial court
approved on August 17, 1988. Petitioners complied with the desired particularization, and furnished
respondent Robles the specific portions, inclusive of pages and lines, of the published and
copyrighted books of the petitioners which were transposed, lifted, copied and plagiarized and/or
otherwise found their way into respondents book.
On August 1, 1988, respondent Goodwill Trading Co., Inc. filed its answer to the
complaint[7] and alleged that petitioners had no cause of action against Goodwill Trading Co., Inc.
since it was not privy to the misrepresentation, plagiarism, incorporation and reproduction of
the portions of the book of petitioners; that there was an agreement between Goodwill and the
respondent Robles that Robles guaranteed Goodwill that the materials utilized in the manuscript
were her own or that she had secured the necessary permission from contributors and sources; that
the author assumed sole responsibility and held the publisher without any liability.
On November 28, 1988, respondent Robles filed her answer[8], and denied the allegations of
plagiarism and copying that petitioners claimed. Respondent stressed that (1) the book DEP is the
product of her independent researches, studies and experiences, and was not a copy of any existing
valid copyrighted book; (2) DEP followed the scope and sequence or syllabus which are common to
all English grammar writers as recommended by the Association of Philippine Colleges of Arts and
Sciences (APCAS), so any similarity between the respondents book and that of the petitioners was
due to the orientation of the authors to both works and standards and syllabus; and (3) the
similarities may be due to the authors exercise of the right to fair use of copyrigthed materials, as
guides.
Respondent interposed a counterclaim for damages on the ground that bad faith and malice
attended the filing of the complaint, because petitioner Habana was professionally jealous and the
book DEP replaced CET as the official textbook of the graduate studies department of the Far
Eastern University.[9]
During the pre-trial conference, the parties agreed to a stipulation of facts[10] and for the trial
court to first resolve the issue of infringement before disposing of the claim for damages.
After the trial on the merits, on April 23, 1993, the trial court rendered its judgment finding thus:

WHEREFORE, premises considered, the court hereby orders that the complaint filed against
defendants Felicidad Robles and Goodwill Trading Co., Inc. shall be DISMISSED; that said plaintiffs
solidarily reimburse defendant Robles for P20,000.00 attorneys fees and defendant Goodwill for
P5,000.00 attorneys fees. Plaintiffs are liable for cost of suit.

IT IS SO ORDERED.

Done in the City of Manila this 23rd day of April, 1993.

(s/t) MARVIE R. ABRAHAM SINGSON


Assisting Judge
S. C. Adm. Order No. 124-92[11]

On May 14, 1993, petitioners filed their notice of appeal with the trial court[12], and on July 19,
1993, the court directed its branch clerk of court to forward all the records of the case to the Court of
Appeals.[13]
In the appeal, petitioners argued that the trial court completely disregarded their evidence and
fully subscribed to the arguments of respondent Robles that the books in issue were purely the
product of her researches and studies and that the copied portions were inspired by foreign authors
and as such not subject to copyright. Petitioners also assailed the findings of the trial court that they
were animated by bad faith in instituting the complaint.[14]
On June 27, 1997, the Court of Appeals rendered judgment in favor of respondents Robles and
Goodwill Trading Co., Inc. The relevant portions of the decision state:

It must be noted, however, that similarity of the allegedly infringed work to the authors or proprietors
copyrighted work does not of itself establish copyright infringement, especially if the similarity results
from the fact that both works deal with the same subject or have the same common source, as in
this case.
64
Page

Appellee Robles has fully explained that the portion or material of the book claimed by appellants to
have been copied or lifted from foreign books. She has duly proven that most of the topics or
materials contained in her book, with particular reference to those matters claimed by appellants to
have been plagiarized were topics or matters appearing not only in appellants and her books but
also in earlier books on College English, including foreign books, e.i. Edmund Burkes Speech on
Conciliation, Boerigs Competence in English and Broughtons, Edmund Burkes Collection.

xxx

Appellants reliance on the last paragraph on Section 11 is misplaced. It must be emphasized that
they failed to prove that their books were made sources by appellee.[15]

The Court of Appeals was of the view that the award of attorneys fees was not proper, since
there was no bad faith on the part of petitioners Habana et al. in instituting the action against
respondents.
On July 12, 1997, petitioners filed a motion for reconsideration,[16] however, the Court of
Appeals denied the same in a Resolution[17] dated November 25, 1997.
Hence, this petition.
In this appeal, petitioners submit that the appellate court erred in affirming the trial courts
decision.
Petitioners raised the following issues: (1) whether or not, despite the apparent textual, thematic
and sequential similarity between DEP and CET, respondents committed no copyright infringement;
(2) whether or not there was animus furandi on the part of respondent when they refused to
withdraw the copies of CET from the market despite notice to withdraw the same; and (3) whether or
not respondent Robles abused a writers right to fair use, in violation of Section 11 of Presidential
Decree No. 49.[18]
We find the petition impressed with merit.
The complaint for copyright infringement was filed at the time that Presidential Decree No. 49
was in force. At present, all laws dealing with the protection of intellectual property rights have been
consolidated and as the law now stands, the protection of copyrights is governed by Republic Act
No. 8293. Notwithstanding the change in the law, the same principles are reiterated in the new law
under Section 177. It provides for the copy or economic rights of an owner of a copyright as follows:

Sec.177. Copy or Economic rights.Subject to the provisions of chapter VIII, copyright or economic
rights shall consist of the exclusive right to carry out, authorize or prevent the following acts:

177.1 Reproduction of the work or substantial portion of the work;

177.2 Dramatization, translation, adaptation, abridgement, arrangement or other transformation of


the work;

177.3 The first public distribution of the original and each copy of the work by sale or other forms of
transfer of ownership;

177.4 Rental of the original or a copy of an audiovisual or cinematographic work, a work embodied in
a sound recording, a computer program, a compilation of data and other materials or a musical work
in graphic form, irrespective of the ownership of the original or the copy which is the subject of the
rental; (n)

177.5 Public display of the original or copy of the work;

177.6 Public performance of the work; and

177.7 Other communication to the public of the work[19]

The law also provided for the limitations on copyright, thus:

Sec. 184.1 Limitations on copyright.-- Notwithstanding the provisions of Chapter V, the following acts
65

shall not constitute infringement of copyright:


Page
(a) the recitation or performance of a work, once it has been lawfully made accessible to
the public, if done privately and free of charge or if made strictly for a charitable or
religious institution or society; [Sec. 10(1), P.D. No. 49]
(b) The making of quotations from a published work if they are compatible with fair use and
only to the extent justified for the purpose, including quotations from newspaper articles
and periodicals in the form of press summaries; Provided, that the source and the name
of the author, if appearing on the work are mentioned; (Sec. 11 third par. P.D.49)
xxxxxxxxxxxx
(e) The inclusion of a work in a publication, broadcast, or other communication to the
public, sound recording of film, if such inclusion is made by way of illustration for
teaching purposes and is compatible with fair use: Provided, That the source and the
name of the author, if appearing in the work is mentioned;[20]
In the above quoted provisions, work has reference to literary and artistic creations and this
includes books and other literary, scholarly and scientific works.[21]
A perusal of the records yields several pages of the book DEP that are similar if not identical
with the text of CET.
On page 404 of petitioners Book 1 of College English for Today, the authors wrote:
Items in dates and addresses:
He died on Monday, April 15, 1975.
Miss Reyes lives in 214 Taft Avenue,
Manila[22]
On page 73 of respondents Book 1 Developing English Today, they wrote:
He died on Monday, April 25, 1975.
Miss Reyes address is 214 Taft Avenue Manila[23]
On Page 250 of CET, there is this example on parallelism or repetition of sentence structures,
thus:

The proposition is peace. Not peace through the medium of war; not peace to be hunted
through the labyrinth of intricate and endless negotiations; not peace to arise out of universal
discord, fomented from principle, in all parts of the empire; not peace to depend on the juridical
determination of perplexing questions, or the precise marking of the boundary of a complex
government. It is simple peace; sought in its natural course, and in its ordinary haunts. It is
peace sought in the spirit of peace, and laid in principles purely pacific.

--- Edmund Burke, Speech on Criticism.[24]

On page 100 of the book DEP[25], also in the topic of parallel structure and repetition, the same
example is found in toto. The only difference is that petitioners acknowledged the author Edmund
Burke, and respondents did not.
In several other pages[26] the treatment and manner of presentation of the topics of DEP are
similar if not a rehash of that contained in CET.
We believe that respondent Robles act of lifting from the book of petitioners substantial portions
of discussions and examples, and her failure to acknowledge the same in her book is an
infringement of petitioners copyrights.
When is there a substantial reproduction of a book? It does not necessarily require that the
entire copyrighted work, or even a large portion of it, be copied. If so much is taken that the value of
the original work is substantially diminished, there is an infringement of copyright and to an injurious
extent, the work is appropriated.[27]
In determining the question of infringement, the amount of matter copied from the copyrighted
work is an important consideration. To constitute infringement, it is not necessary that the whole or
even a large portion of the work shall have been copied. If so much is taken that the value of the
original is sensibly diminished, or the labors of the original author are substantially and to an
66

injurious extent appropriated by another, that is sufficient in point of law to constitute piracy.[28]
The essence of intellectual piracy should be essayed in conceptual terms in order to underscore
Page

its gravity by an appropriate understanding thereof. Infringement of a copyright is a trespass on a


private domain owned and occupied by the owner of the copyright, and, therefore, protected by law,
and infringement of copyright, or piracy, which is a synonymous term in this connection, consists in
the doing by any person, without the consent of the owner of the copyright, of anything the sole right
to do which is conferred by statute on the owner of the copyright.[29]
The respondents claim that the copied portions of the book CET are also found in foreign books
and other grammar books, and that the similarity between her style and that of petitioners can not be
avoided since they come from the same background and orientation may be true. However, in this
jurisdiction under Sec 184 of Republic Act 8293 it is provided that:
Limitations on Copyright. Notwithstanding the provisions of Chapter V, the following shall not
constitute infringement of copyright:
xxxxxxxxxxxx
(c) The making of quotations from a published work if they are compatible with fair use and
only to the extent justified for the purpose, including quotations from newspaper articles
and periodicals in the form of press summaries: Provided, That the source and the
name of the author, if appearing on the work, are mentioned.
A copy of a piracy is an infringement of the original, and it is no defense that the pirate, in such
cases, did not know whether or not he was infringing any copyright; he at least knew that what he
was copying was not his, and he copied at his peril.[30]
The next question to resolve is to what extent can copying be injurious to the author of the book
being copied. Is it enough that there are similarities in some sections of the books or large segments
of the books are the same?
In the case at bar, there is no question that petitioners presented several pages of the books
CET and DEP that more or less had the same contents. It may be correct that the books being
grammar books may contain materials similar as to some technical contents with other grammar
books, such as the segment about the Author Card. However, the numerous pages that the
petitioners presented showing similarity in the style and the manner the books were presented and
the identical examples can not pass as similarities merely because of technical consideration.
The respondents claim that their similarity in style can be attributed to the fact that both of them
were exposed to the APCAS syllabus and their respective academic experience, teaching approach
and methodology are almost identical because they were of the same background.
However, we believe that even if petitioners and respondent Robles were of the same
background in terms of teaching experience and orientation, it is not an excuse for them to be
identical even in examples contained in their books. The similarities in examples and material
contents are so obviously present in this case. How can similar/identical examples not be considered
as a mark of copying?
We consider as an indicia of guilt or wrongdoing the act of respondent Robles of pulling out
from Goodwill bookstores the book DEP upon learning of petitioners complaint while pharisaically
denying petitioners demand. It was further noted that when the book DEP was re-issued as a
revised version, all the pages cited by petitioners to contain portion of their book College English for
Today were eliminated.
In cases of infringement, copying alone is not what is prohibited. The copying must produce
an injurious effect. Here, the injury consists in that respondent Robles lifted from petitioners book
materials that were the result of the latters research work and compilation and misrepresented them
as her own. She circulated the book DEP for commercial use and did not acknowledge petitioners as
her source.
Hence, there is a clear case of appropriation of copyrighted work for her benefit that respondent
Robles committed. Petitioners work as authors is the product of their long and assiduous research
and for another to represent it as her own is injury enough. In copyrighting books the purpose is to
give protection to the intellectual product of an author. This is precisely what the law on copyright
protected, under Section 184.1 (b). Quotations from a published work if they are compatible with fair
use and only to the extent justified by the purpose, including quotations from newspaper articles and
periodicals in the form of press summaries are allowed provided that the source and the name of the
author, if appearing on the work, are mentioned.
In the case at bar, the least that respondent Robles could have done was to acknowledge
67

petitioners Habana et. al. as the source of the portions of DEP. The final product of an authors toil is
her book. To allow another to copy the book without appropriate acknowledgment is injury enough.
Page
WHEREFORE, the petition is hereby GRANTED. The decision and resolution of the Court of
Appeals in CA-G. R. CV No. 44053 are SET ASIDE. The case is ordered remanded to the trial court
for further proceedings to receive evidence of the parties to ascertain the damages caused and
sustained by petitioners and to render decision in accordance with the evidence submitted to it.
SO ORDERED.
Kapunan, and Ynares-Santiago, JJ., concur.
Davide, Jr., C.J., (Chairman), pls. see dissenting opinion.
Melo, J., no part. Personal reasons.

EN BANC

[G.R. No. 110318. August 28, 1996]

COLUMBIA PICTURES, INC., ORION PICTURES CORPORATION, PARAMOUNT PICTURES


CORPORATION, TWENTIETH CENTURY FOX FILM CORPORATION, UNITED ARTISTS
CORPORATION, UNIVERSAL CITY STUDIOS, INC., THE WALT DISNEY COMPANY, and
WARNER BROTHERS, INC., petitioners, vs. COURT OF APPEALS, SUNSHINE HOME
VIDEO, INC. and DANILO A. PELINDARIO, respondents.

DECISION

REGALADO, J.:

Before us is a petition for review on certiorari of the decision of the Court of


Appeals[1] promulgated on July 22, 1992 and its resolution[2] of May 10, 1993 denying petitioners
motion for reconsideration, both of which sustained the order[3] of the Regional Trial Court, Branch
133, Makati, Metro Manila, dated November 22, 1988 for the quashal of Search Warrant No. 87-053
earlier issued per its own order[4] on September 5, 1988 for violation of Section 56 of Presidential
Decree No. 49, as amended, otherwise known as the Decree on the Protection of Intellectual
Property.
The material facts found by respondent appellate court are as follows:
Complainants thru counsel lodged a formal complaint with the National Bureau of Investigation
for violation of PD No. 49, as amended, and sought its assistance in their anti-film piracy
drive. Agents of the NBI and private researchers made discreet surveillance on various video
establishments in Metro Manila including Sunshine Home Video Inc. (Sunshine for brevity), owned
and operated by Danilo A. Pelindario with address at No. 6 Mayfair Center, Magallanes, Makati,
Metro Manila.
On November 14, 1987, NBI Senior Agent Lauro C. Reyes applied for a search warrant with the
court a quo against Sunshine seeking the seizure, among others, of pirated video tapes of
copyrighted films all of which were enumerated in a list attached to the application; and, television
sets, video cassettes and/or laser disc recordings equipment and other machines and paraphernalia
used or intended to be used in the unlawful exhibition, showing, reproduction, sale, lease or
disposition of videograms tapes in the premises above described. In the hearing of the application,
NBI Senior Agent Lauro C. Reyes, upon questions by the court a quo, reiterated in substance his
averments in his affidavit. His testimony was corroborated by another witness, Mr. Rene C.
Baltazar. Atty. Rico V. Domingos deposition was also taken. On the basis of the affidavits and
depositions of NBI Senior Agent Lauro C. Reyes, Rene C. Baltazar and Atty. Rico V. Domingo,
Search Warrant No 87-053 for violation of Section 56 of PD No. 49, as amended, was issued by the
court a quo.
The search warrant was served at about 1:45 p.m. on December 14, 1987 to Sunshine and/or
their representatives. In the course of the search of the premises indicated in the search warrant, the
NBI Agents found and seized various video tapes of duly copyrighted motion pictures/films owned or
exclusively distributed by private complainants, and machines, equipment, television sets,
paraphernalia, materials, accessories all of which were included in the receipt for properties
68

accomplished by the raiding team. Copy of the receipt was furnished and/or tendered to Mr. Danilo
A. Pelindario, registered owner-proprietor of Sunshine Home Video.
Page

On December 16, 1987, a Return of Search Warrant was filed with the Court.
A Motion To Lift the Order of Search Warrant was filed but was later denied for lack of merit (p.
280, Records).
A Motion for reconsideration of the Order of denial was filed. The court a quo granted the said
motion for reconsideration and justified it in this manner:

It is undisputed that the master tapes of the copyrighted films from which the pirated films were
allegedly copies (sic), were never presented in the proceedings for the issuance of the search
warrants in question. The orders of the Court granting the search warrants and denying the urgent
motion to lift order of search warrants were, therefore, issued in error. Consequently, they must be
set aside. (p. 13, Appellants Brief)[5]

Petitioners thereafter appealed the order of the trial court granting private respondents motion
for reconsideration, thus lifting the search warrant which it had therefore issued, to the Court of
Appeals. As stated at the outset, said appeal was dismissed and the motion for reconsideration
thereof was denied. Hence, this petition was brought to this Court particularly challenging the validity
of respondent courts retroactive application of the ruling in 20th Century Fox Film Corporation vs.
Court of Appeals, et al.,[6] in dismissing petitioners appeal and upholding the quashal of the search
warrant by the trial court.
I
Inceptively, we shall settle the procedural considerations on the matter of and the challenge to
petitioners legal standing in our courts, they being foreign corporations not licensed to do business in
the Philippines.
Private respondents aver that being foreign corporations, petitioners should have such license
to be able to maintain an action in Philippine courts. In so challenging petitioners personality to sue,
private respondents point to the fact that petitioners are the copyright owners or owners of exclusive
rights of distribution in the Philippines of copyrighted motion pictures or films, and also to the
appointment of Atty. Rico V. Domingo as their attorney-in-fact, as being constitutive of doing
business in the Philippines under Section 1(f) (1) and (2), Rule 1 of the Rules of the Board of
Investments. As foreign corporations doing business in the Philippines, Section 133 of Batas
Pambansa Blg. 68, or the Corporation Code of the Philippines, denies them the right to maintain a
suit in Philippine courts in the absence of a license to do business. Consequently, they have no right
to ask for the issuance of a search warrant.[7]
In refutation, petitioners flatly deny that they are doing business in the Philippines,[8] and
contend that private respondents have not adduced evidence to prove that petitioners are doing
such business here, as would require them to be licensed by the Securities and Exchange
Commission, other than averments in the quoted portions of petitioners Opposition to Urgent Motion
to Lift Order of Search Warrant dated April 28, 1988 and Atty. Rico V. Domingos affidavit of
December 14, 1987. Moreover, an exclusive right to distribute a product or the ownership of such
exclusive right does not conclusively prove the act of doing business nor establish the presumption
of doing business.[9]
The Corporation Code provides:

Sec. 133. Doing business without a license. No foreign corporation transacting business in the
Philippines without a license, or its successors or assigns, shall be permitted to maintain or intervene
in any action, suit or proceeding in any court or administrative agency of the Philippines; but such
corporation may be sued or proceeded against before Philippine courts or administrative tribunals on
any valid cause of action recognized under Philippine laws.

The obtainment of a license prescribed by Section 125 of the Corporation Code is not a
condition precedent to the maintenance of any kind of action in Philippine courts by a foreign
corporation. However, under the aforequoted provision, no foreign corporation shall be permitted to
transact business in the Philippines, as this phrase is understood under the Corporation Code,
unless it shall have the license required by law, and until it complies with the law in transacting
business here, it shall not be permitted to maintain any suit in local courts.[10] As thus interpreted,
any foreign corporation not doing business in the Philippines may maintain an action in our courts
upon any cause of action, provided that the subject matter and the defendant are within the
jurisdiction of the court. It is not the absence of the prescribed license but doing business in the
Philippines without such license which debars the foreign corporation from access to our courts. In
69

other words, although a foreign corporation is without license to transact business in the Philippines,
it does not follow that it has no capacity to bring an action. Such license is not necessary if it is not
Page

engaged in business in the Philippines.[11]


Statutory provisions in many jurisdictions are determinative of what constitutes doing business
or transacting business within that forum, in which case said provisions are controlling there. In
others where no such definition or qualification is laid down regarding acts or transactions falling
within its purview, the question rests primarily on facts and intent. It is thus held that all the combined
acts of a foreign corporation in the State must be considered, and every circumstance is material
which indicates a purpose on the part of the corporation to engage in some part of its regular
business in the State.[12]
No general rule or governing principles can be laid down as to what constitutes doing or
engaging in or transacting business. Each case must be judged in the light of its own peculiar
environmental circumstances.[13] The true tests, however, seem to be whether the foreign
corporation is continuing the body or substance of the business or enterprise for which it was
organized or whether it has substantially retired from it and turned it over to another.[14]
As a general proposition upon which many authorities agree in principle, subject to such
modifications as may be necessary in view of the particular issue or of the terms of the statute
involved, it is recognized that a foreign corporation is doing, transacting, engaging in, or carrying on
business in the State when, and ordinarily only when, it has entered the State by its agents and is
there engaged in carrying on and transacting through them some substantial part of its ordinary or
customary business, usually continuous in the sense that it may be distinguished from merely
casual, sporadic, or occasional transactions and isolated acts.[15]
The Corporation Code does not itself define or categorize what acts constitute doing or
transacting business in the Philippines. Jurisprudence has, however, held that the term implies a
continuity of commercial dealings and arrangements, and contemplates, to that extent, the
performance of acts or works or the exercise of some of the functions normally incident to or in
progressive prosecution of the purpose and subject of its organization.[16]
This traditional case law definition has evolved into a statutory definition, having been adopted
with some qualifications in various pieces of legislation in our jurisdiction.
For instance, Republic Act No. 5455[17] provides:

SECTION 1. Definitions and scope of this Act. (1) x x x; and the phrase doing business shall include
soliciting orders, purchases, service contracts, opening offices, whether called liaison offices or
branches; appointing representatives or distributors who are domiciled in the Philippines or who in
any calendar year stay in the Philippines for a period or periods totalling one hundred eighty days or
more; participating in the management, supervision or control of any domestic business firm, entity
or corporation in the Philippines; and any other act or acts that imply a continuity of commercial
dealings or arrangements, and contemplate to that extent the performance of acts or works, or the
exercise of some of the functions normally incident to, and in-progressive prosecution of, commercial
gain or of the purpose and object of the business organization.

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

Sec. 1(g). Doing Business shall be any act or combination of acts enumerated in Article 65 of the
Code. In particular doing business includes:

xxx xxx xxx

(10) Any other act or acts which imply a continuity of commercial dealings or arrangements, and
contemplate to that extent the performance of acts or works, or the exercise of some of the functions
70

normally incident to, or in the progressive prosecution of, commercial gain or of the purpose and
object of the business organization.
Page

Finally, Republic Act No. 7042[19] embodies such concept in this wise:
SEC. 3. Definitions. As used in this Act:

xxx xxx xxx

(d) the phrase doing business shall include soliciting orders, service contracts, opening offices,
whether called liaison offices or branches; appointing representatives or distributors domiciled in the
Philippines or who in any calendar year stay in the country for a period or periods totalling one
hundred eight(y) (180) days or more; participating in the management, supervision or control of any
domestic business, firm, entity or corporation in the Philippines; and any other act or acts that imply
a continuity of commercial dealings or arrangements, and contemplate to that extent the
performance of acts or works, or the exercise of some of the functions normally incident to, and in
progressive prosecution of, commercial gain or of the purpose and object of the business
organization: Provided, however, That the phrase doing business shall not be deemed to include
mere investment as a shareholder by a foreign entity in domestic corporations duly registered to do
business, and/or the exercise of rights as such investors; nor having a nominee director or officer to
represent its interests in such corporation; nor appointing a representative or distributor domiciled in
the Philippines which transacts business in its own name and for its own account.

Based on Article 133 of the Corporation Code and gauged by such statutory standards,
petitioners are not barred from maintaining the present action. There is no showing that, under our
statutory or case law, petitioners are doing, transacting, engaging in or carrying on business in the
Philippines as would require obtention of a license before they can seek redress from our courts. No
evidence has been offered to show that petitioners have performed any of the enumerated acts or
any other specific act indicative of an intention to conduct or transact business in the Philippines.
Accordingly, the certification issued by the Securities and Exchange Commission[20] stating that
its records do not show the registration of petitioner film companies either as corporations or
partnerships or that they have been licensed to transact business in the Philippines, while
undeniably true, is of no consequence to petitioners right to bring action in the Philippines. Verily, no
record of such registration by petitioners can be expected to be found for, as aforestated, said
foreign film corporations do not transact or do business in the Philippines and, therefore, do not need
to be licensed in order to take recourse to our courts.
Although Section 1(g) of the Implementing Rules and Regulations of the Omnibus Investments
Code lists, among others

(1) Soliciting orders, purchases (sales) or service contracts. Concrete and specific solicitations by a
foreign firm, or by an agent of such foreign firm, not acting independently of the foreign firm
amounting to negotiations or fixing of the terms and conditions of sales or service contracts,
regardless of where the contracts are actually reduced to writing, shall constitute doing business
even if the enterprise has no office or fixed place of business in the Philippines. The arrangements
agreed upon as to manner, time and terms of delivery of the goods or the transfer of title thereto is
immaterial. A foreign firm which does business through the middlemen acting in their own names,
such as indentors, commercial brokers or commission merchants, shall not be deemed doing
business in the Philippines. But such indentors, commercial brokers or commission merchants shall
be the ones deemed to be doing business in the Philippines.

(2) Appointing a representative or distributor who is domiciled in the Philippines, unless said
representative or distributor has an independent status, i.e., it transacts business in its name and for
its own account, and not in the name or for the account of a principal. Thus, where a foreign firm is
represented in the Philippines by a person or local company which does not act in its name but in
the name of the foreign firm, the latter is doing business in the Philippines.

as acts constitutive of doing business, the fact that petitioners are admittedly copyright owners or
owners of exclusive distribution rights in the Philippines of motion pictures or films does not convert
such ownership into an indicium of doing business which would require them to obtain a license
before they can sue upon a cause of action in local courts.
Neither is the appointment of Atty. Rico V. Domingo as attorney-in-fact of petitioners, with
express authority pursuant to a special power of attorney, inter alia

To lay criminal complaints with the appropriate authorities and to provide evidence in support of both
71

civil and criminal proceedings against any person or persons involved in the criminal infringement of
copyright, or concerning the unauthorized importation, duplication, exhibition or distribution of any
Page

cinematographic work(s) films or video cassettes of which x x x is the owner of copyright or the
owner of exclusive rights of distribution in the Philippines pursuant to any agreement(s) between x x
x and the respective owners of copyright in such cinematographic work(s), to initiate and prosecute
on behalf of x x x criminal or civil actions in the Philippines against any person or persons unlawfully
distributing, exhibiting, selling or offering for sale any films or video cassettes of which x x x is the
owner of copyright or the owner of exclusive rights of distribution in the Philippines pursuant to any
agreement(s) between x x x and the respective owners of copyright in such works.[21]

tantamount to doing business in the Philippines. We fail to see how exercising ones legal and
property rights and taking steps for the vigilant protection of said rights, particularly the appointment
of an attorney-in-fact, can be deemed by and of themselves to be doing business here.
As a general rule, a foreign corporation will not be regarded as doing business in the State
simply because it enters into contracts with residents of the State, where such contracts are
consummated outside the State.[22] In fact, a view is taken that a foreign corporation is not doing
business in the state merely because sales of its product are made there or other business
furthering its interests is transacted there by an alleged agent, whether a corporation or a natural
person, where such activities are not under the direction and control of the foreign corporation but
are engaged in by the alleged agent as an independent business.[23]
It is generally held that sales made to customers in the State by an independent dealer who has
purchased and obtained title from the corporation to the products sold are not a doing of business by
the corporation.[24] Likewise, a foreign corporation which sells its products to persons styled
distributing agents in the State, for distribution by them, is not doing business in the State so as to
render it subject to service of process therein, where the contract with these purchasers is that they
shall buy exclusively from the foreign corporation such goods as it manufactures and shall sell them
at trade prices established by it.[25]
It has moreover been held that the act of a foreign corporation in engaging an attorney to
represent it in a Federal court sitting in a particular State is not doing business within the scope of
the minimum contact test.[26] With much more reason should this doctrine apply to the mere retainer
of Atty. Domingo for legal protection against contingent acts of intellectual piracy.
In accordance with the rule that doing business imports only acts in furtherance of the purposes
for which a foreign corporation was organized, it is held that the mere institution and prosecution or
defense of a suit, particularly if the transaction which is the basis of the suit took place out of the
State, do not amount to the doing of business in the State. The institution of a suit or the removal
thereof is neither the making of a contract nor the doing of business within a constitutional provision
placing foreign corporations licensed to do business in the State under the same regulations,
limitations and liabilities with respect to such acts as domestic corporations. Merely engaging in
litigation has been considered as not a sufficient minimum contact to warrant the exercise of
jurisdiction over a foreign corporation.[27]
As a consideration aside, we have perforce to comment on private respondents basis for
arguing that petitioners are barred from maintaining suit in the Philippines. For allegedly being
foreign corporations doing business in the Philippines without a license, private respondents
repeatedly maintain in all their pleadings that petitioners have thereby no legal personality to bring
an action before Philippine courts.[28]
Among the grounds for a motion to dismiss under the Rules of Court are lack of legal capacity
to sue[29] and that the complaint states no cause of action.[30] Lack of legal capacity to sue means
that the plaintiff is not in the exercise of his civil rights, or does not have the necessary qualification
to appear in the case, or does not have the character or representation he claims.[31] On the other
hand, a case is dismissible for lack of personality to sue upon proof that the plaintiff is not the real
party-in-interest, hence grounded on failure to state a cause of action.[32]The term lack of capacity to
sue should not be confused with the term lack of personality to sue. While the former refers to a
plaintiffs general disability to sue, such as on account of minority, insanity, incompetence, lack of
juridical personality or any other general disqualifications of a party, the latter refers to the fact that
the plaintiff is not the real party- in-interest.Correspondingly, the first can be a ground for a motion to
dismiss based on the ground of lack of legal capacity to sue;[33] whereas the second can be used as
a ground for a motion to dismiss based on the fact that the complaint, on the face thereof, evidently
states no cause of action.[34]
Applying the above discussion to the instant petition, the ground available for barring recourse
to our courts by an unlicensed foreign corporation doing or transacting business in the Philippines
72

should properly be lack of capacity to sue, not lack of personality to sue. Certainly, a corporation
whose legal rights have been violated is undeniably such, if not the only, real party-in-interest to
Page

bring suit thereon although, for failure to comply with the licensing requirement, it is not capacitated
to maintain any suit before our courts.
Lastly, on this point, we reiterate this Courts rejection of the common procedural tactics of erring
local companies which, when sued by unlicensed foreign corporations not engaged in business in
the Philippines, invoke the latters supposed lack of capacity to sue. The doctrine of lack of capacity
to sue based on failure to first acquire a local license is based on considerations of public policy. It
was never intended to favor nor insulate from suit unscrupulous establishments or nationals in case
of breach of valid obligations or violations of legal rights of unsuspecting foreign firms or entities
simply because they are not licensed to do business in the country.[35]
II
We now proceed to the main issue of the retroactive application to the present controversy of
the ruling in 20th Century Fox Film Corporation vs. Court of Appeals, et al., promulgated on August
19, 1988,[36] that for the determination of probable cause to support the issuance of a search warrant
in copyright infringement cases involving videograms, the production of the master tape for
comparison with the allegedly pirated copies is necessary.
Petitioners assert that the issuance of a search warrant is addressed to the discretion of the
court subject to the determination of probable cause in accordance with the procedure prescribed
therefor under Sections 3 and 4 of Rule 126. As of the time of the application for the search warrant
in question, the controlling criterion for the finding of probable cause was that enunciated in Burgos
vs. Chief of Staff[37] stating that:
Probable cause for a search warrant is defined as such facts and circumstances which would
lead a reasonably discrete and prudent man to believe that an offense has been committed and that
the objects sought in connection with the offense are in the place sought to be searched.
According to petitioners, after complying with what the law then required, the lower court
determined that there was probable cause for the issuance of a search warrant, and which
determination in fact led to the issuance and service on December 14, 1987 of Search Warrant No.
87-053. It is further argued that any search warrant so issued in accordance with all applicable legal
requirements is valid, for the lower court could not possibly have been expected to apply, as the
basis for a finding of probable cause for the issuance of a search warrant in copyright infringement
cases involving videograms, a pronouncement which was not existent at the time of such
determination, on December 14, 1987, that is, the doctrine in the 20th Century Fox case that was
promulgated only on August 19, 1988, or over eight months later.
Private respondents predictably argue in support of the ruling of the Court of Appeals sustaining
the quashal of the search warrant by the lower court on the strength of that 20th Century Fox ruling
which, they claim, goes into the very essence of probable cause. At the time of the issuance of the
search warrant involved here, although the 20th Century Fox case had not yet been decided,
Section 2, Article III of the Constitution and Section 3, Rule 126 of the 1985 Rules on Criminal
Procedure embodied the prevailing and governing law on the matter. The ruling in 20th Century
Fox was merely an application of the law on probable cause. Hence, they posit that there was no law
that was retrospectively applied, since the law had been there all along. To refrain from applying
the 20th Century Fox ruling, which had supervened as a doctrine promulgated at the time of the
resolution of private respondents motion for reconsideration seeking the quashal of the search
warrant for failure of the trial court to require presentation of the master tapes prior to the issuance of
the search warrant, would have constituted grave abuse of discretion.[38]
Respondent court upheld the retroactive application of the 20th Century Fox ruling by the trial
court in resolving petitioners motion for reconsideration in favor of the quashal of the search warrant,
on this renovated thesis:

And whether this doctrine should apply retroactively, it must be noted that in the 20th Century Fox
case, the lower court quashed the earlier search warrant it issued. On certiorari, the Supreme Court
affirmed the quashal on the ground among others that the master tapes or copyrighted films were
not presented for comparison with the purchased evidence of the video tapes to determine whether
the latter is an unauthorized reproduction of the former.

If the lower court in the Century Fox case did not quash the warrant, it is Our view that the Supreme
Court would have invalidated the warrant just the same considering the very strict requirement set by
the Supreme Court for the determination of probable cause in copyright infringement cases as
enunciated in this 20th Century Fox case. This is so because, as was stated by the Supreme Court
in the said case, the master tapes and the pirated tapes must be presented for comparison to satisfy
73

the requirement of probable cause. So it goes back to the very existence of probable cause. x x x[39]
Page
Mindful as we are of the ramifications of the doctrine of stare decisis and the rudiments of fair
play, it is our considered view that the 20th Century Fox ruling cannot be retroactively applied to the
instant case to justify the quashal of Search Warrant No. 87-053. Herein petitioners consistent
position that the order of the lower court of September 5, 1988 denying therein defendants motion to
lift the order of search warrant was properly issued, there having been satisfactory compliance with
the then prevailing standards under the law for determination of probable cause, is indeed well
taken. The lower court could not possibly have expected more evidence from petitioners in their
application for a search warrant other than what the law and jurisprudence, then existing and
judicially accepted, required with respect to the finding of probable cause.
Article 4 of the Civil Code provides that (l)aws shall have no retroactive effect, unless the
contrary is provided. Correlatively, Article 8 of the same Code declares that (j)udicial decisions
applying the laws or the Constitution shall form part of the legal system of the Philippines.
Jurisprudence, in our system of government, cannot be considered as an independent source of
law; it cannot create law.[40] While it is true that judicial decisions which apply or interpret the
Constitution or the laws are part of the legal system of the Philippines, still they are not laws. Judicial
decisions, though not laws, are nonetheless evidence of what the laws mean, and it is for this reason
that they are part of the legal system of the Philippines.[41] Judicial decisions of the Supreme Court
assume the same authority as the statute itself.[42]
Interpreting the aforequoted correlated provisions of the Civil Code and in light of the above
disquisition, this Court emphatically declared in Co vs. Court of Appeals, et al.[43] that the principle of
prospectivity applies not only to original amendatory statutes and administrative rulings and
circulars, but also, and properly so, to judicial decisions. Our holding in the earlier case of People vs.
Jubinal[44] echoes the rationale for this judicial declaration, viz.:

Decisions of this Court, although in themselves not laws, are nevertheless evidence of what the laws
mean, and this is the reason why under Article 8 of the New Civil Code, Judicial decisions applying
or interpreting the laws or the Constitution shall form part of the legal system. The interpretation
upon a law by this Court constitutes, in a way, a part of the law as of the date that the law was
originally passed, since this Courts construction merely establishes the contemporaneous legislative
intent that the law thus construed intends to effectuate. The settled rule supported by numerous
authorities is a restatement of the legal maxim legis interpretation legis vim obtinet the interpretation
placed upon the written law by a competent court has the force of law. x x x, but when a doctrine of
this Court is overruled and a different view is adopted, the new doctrine should be applied
prospectively, and should not apply to parties who had relied on the old doctrine and acted on the
faith thereof. x x x. (Stress supplied).

This was forcefully reiterated in Spouses Benzonan vs. Court of Appeals, et al.,[45] where the
Court expounded:

x x x. But while our decisions form part of the law of the land, they are also subject to Article 4 of the
Civil Code which provides that laws shall have no retroactive effect unless the contrary is provided.
This is expressed in the familiar legal maximum lex prospicit, non respicit, the law looks forward not
backward. The rationale against retroactivity is easy to perceive. The retroactive application of a law
usually divests rights that have already become vested or impairs the obligations of contract and
hence, is unconstitutional (Francisco v. Certeza, 3 SCRA 565 [1961]). The same consideration
underlies our rulings giving only prospective effect to decisions enunciating new doctrines. x x x.

The reasoning behind Senarillos vs. Hermosisima[46] that judicial interpretation of a statute
constitutes part of the law as of the date it was originally passed, since the Courts construction
merely establishes the contemporaneous legislative intent that the interpreted law carried into effect,
is all too familiar. Such judicial doctrine does not amount to the passage of a new law but consists
merely of a construction or interpretation of a pre-existing one, and that is precisely the situation
obtaining in this case.
It is consequently clear that a judicial interpretation becomes a part of the law as of the date that
law was originally passed, subject only to the qualification that when a doctrine of this Court is
overruled and a different view is adopted, and more so when there is a reversal thereof, the new
doctrine should be applied prospectively and should not apply to parties who relied on the old
doctrine and acted in good faith.[47] To hold otherwise would be to deprive the law of its quality of
fairness and justice then, if there is no recognition of what had transpired prior to such
74

adjudication.[48]
Page

There is merit in petitioners impassioned and well-founded argumentation:


The case of 20th Century Fox Film Corporation vs. Court of Appeals, et al., 164 SCRA 655 (August
19, 1988) (hereinafter 20th Century Fox) was inexistent in December of 1987 when Search Warrant
87-053 was issued by the lower court. Hence, it boggles the imagination how the lower court could
be expected to apply the formulation of 20th Century Fox in finding probable cause when the
formulation was yet non-existent.

xxx xxx xxx

In short, the lower court was convinced at that time after conducting searching examination
questions of the applicant and his witnesses that an offense had been committed and that the
objects sought in connection with the offense (were) in the place sought to be searched (Burgos v.
Chief of Staff, et al., 133 SCRA 800). It is indisputable, therefore, that at the time of the application,
or on December 14, 1987, the lower court did not commit any error nor did it fail to comply with any
legal requirement for the valid issuance of search warrant.

x x x. (W)e believe that the lower court should be considered as having followed the requirements of
the law in issuing Search Warrant No. 87-053. The search warrant is therefore valid and binding. It
must be noted that nowhere is it found in the allegations of the Respondents that the lower court
failed to apply the law as then interpreted in 1987. Hence, we find it absurd that it is (sic) should be
seen otherwise, because it is simply impossible to have required the lower court to apply a
formulation which will only be defined six months later.

Furthermore, it is unjust and unfair to require compliance with legal and/or doctrinal requirements
which are inexistent at the time they were supposed to have been complied with.

xxx xxx xxx

x x x. If the lower courts reversal will be sustained, what encouragement can be given to courts and
litigants to respect the law and rules if they can expect with reasonable certainty that upon the
passage of a new rule, their conduct can still be open to question? This certainly breeds instability in
our system of dispensing justice. For Petitioners who took special effort to redress their grievances
and to protect their property rights by resorting to the remedies provided by the law, it is most unfair
that fealty to the rules and procedures then obtaining would bear but fruits of injustice.[49]

Withal, even the proposition that the prospectivity of judicial decisions imports application
thereof not only to future cases but also to cases still ongoing or not yet final when the decision was
promulgated, should not be countenanced in the jural sphere on account of its inevitably unsettling
repercussions. More to the point, it is felt that the reasonableness of the added requirement in 20th
Century Fox calling for the production of the master tapes of the copyrighted films for determination
of probable cause in copyright infringement cases needs revisiting and clarification.
It will be recalled that the 20th Century Fox case arose from search warrant proceedings in
anticipation of the filing of a case for the unauthorized sale or renting out of copyrighted films in
videotape format in violation of Presidential Decree No. 49. It revolved around the meaning of
probable cause within the context of the constitutional provision against illegal searches and
seizures, as applied to copyright infringement cases involving videotapes.
Therein it was ruled that

The presentation of master tapes of the copyrighted films from which the pirated films were allegedly
copied, was necessary for the validity of search warrants against those who have in their possession
the pirated films. The petitioners argument to the effect that the presentation of the master tapes at
the time of application may not be necessary as these would be merely evidentiary in nature and not
determinative of whether or not a probable cause exists to justify the issuance of the search
warrants is not meritorious. The court cannot presume that duplicate or copied tapes were
necessarily reproduced from master tapes that it owns.

The application for search warrants was directed against video tape outlets which allegedly were
engaged in the unauthorized sale and renting out of copyrighted films belonging to the petitioner
pursuant to P.D. 49.
75

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
Page

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

For a closer and more perspicuous appreciation of the factual antecedents of 20th Century Fox,
the pertinent portions of the decision therein are quoted hereunder, to wit:

In the instant case, the lower court lifted the three questioned search warrants against the private
respondents on the ground that it acted on the application for the issuance of the said search
warrants and granted it on the misrepresentations of applicant NBI and its witnesses that
infringement of copyright or a piracy of a particular film have been committed. Thus the lower court
stated in its questioned order dated January 2, 1986:

According to the movant, all three witnesses during the proceedings in the application for the three
search warrants testified of their own personal knowledge. Yet, Atty. Albino Reyes of the NBI stated
that the counsel or representative of the Twentieth Century Fox Corporation will testify on the video
cassettes that were pirated, so that he did not have personal knowledge of the alleged piracy. The
witness Bacani also said that the video cassettes were pirated without stating the manner it was
pirated and that it was Atty. Domingo that has knowledge of that fact.

On the part of Atty. Domingo, he said that the re-taping of the allegedly pirated tapes was from
master tapes allegedly belonging to the Twentieth Century Fox, because, according to him it is of his
personal knowledge.

At the hearing of the Motion for Reconsideration, Senior NBI Agent Atty. Albino Reyes testified
that when the complaint for infringement was brought to the NBI, the master tapes of the allegedly
pirated tapes were shown to him and he made comparisons of the tapes with those purchased by
their man Bacani. Why the master tapes or at least the film reels of the allegedly pirated tapes were
not shown to the Court during the application gives some misgivings as to the truth of that bare
statement of the NBI agent on the witness stand.

Again as the application and search proceedings is a prelude to the filing of criminal cases under
P.D. 49, the copyright infringement law, and although what is required for the issuance thereof is
merely the presence of probable cause, that probable cause must be satisfactory to the Court, for it
is a time-honored precept that proceedings to put a man to task as an offender under our laws
should be interpreted in strictissimi juris against the government and liberally in favor of the alleged
offender.

xxx xxx xxx

This doctrine has never been overturned, and as a matter of fact it had been enshrined in the Bill of
Rights in our 1973 Constitution.

So that lacking in persuasive effect, the allegation that master tapes were viewed by the NBI and
were compared to the purchased and seized video tapes from the respondents establishments, it
should be dismissed as not supported by competent evidence and for that matter the probable
cause hovers in that grey debatable twilight zone between black and white resolvable in favor of
respondents herein.

But the glaring fact is that Cocoon, the first video tape mentioned in the search warrant, was not
even duly registered or copyrighted in the Philippines. (Annex C of Opposition, p. 152, record.) So
that lacking in the requisite presentation to the Court of an alleged master tape for purposes of
comparison with the purchased evidence of the video tapes allegedly pirated and those seized from
respondents, there was no way to determine whether there really was piracy, or copying of the film
of the complainant Twentieth Century Fox.

xxx xxx xxx

The lower court, therefore, lifted the three (3) questioned search warrants in the absence of probable
76

cause that the private respondents violated P.D. 49. As found by the court, the NBI agents who
acted as witnesses did not have personal knowledge of the subject matter of their testimony which
Page

was the alleged commission of the offense by the private respondents. Only the petitioners counsel
who was also a witness during the application for the issuance of the search warrants stated that he
had personal knowledge that the confiscated tapes owned by the private respondents were pirated
tapes taken from master tapes belonging to the petitioner. However, the lower court did not give
much credence to his testimony in view of the fact that the master tapes of the allegedly pirated
tapes were not shown to the court during the application (Italics ours).

The italicized passages readily expose the reason why the trial court therein required the
presentation of the master tapes of the allegedly pirated films in order to convince itself of the
existence of probable cause under the factual milieu peculiar to that case. In the case at bar,
respondent appellate court itself observed:

We feel that the rationale behind the aforequoted doctrine is that the pirated copies as well as the
master tapes, unlike the other types of personal properties which may be seized, were available for
presentation to the court at the time of the application for a search warrant to determine the
existence of the linkage of the copyrighted films with the pirated ones. Thus, there is no reason not
to present them (Italics supplied for emphasis).[50]

In fine, the supposed pronunciamento in said case regarding the necessity for the presentation
of the master tapes of the copyrighted films for the validity of search warrants should at most be
understood to merely serve as a guidepost in determining the existence of probable cause in
copyright infringement cases where there is doubt as to the true nexus between the master tape and
the pirated copies. An objective and careful reading of the decision in said case could lead to no
other conclusion than that said directive was hardly intended to be a sweeping and inflexible
requirement in all or similar copyright infringement cases. Judicial dicta should always be construed
within the factual matrix of their parturition, otherwise a careless interpretation thereof could unfairly
fault the writer with the vice of overstatement and the reader with the fallacy of undue generalization.
In the case at bar, NBI Senior Agent Lauro C. Reyes who filed the application for search
warrant with the lower court following a formal complaint lodged by petitioners, judging from his
affidavit[51] and his deposition,[52] did testify on matters within his personal knowledge based on said
complaint of petitioners as well as his own investigation and surveillance of the private respondents
video rental shop. Likewise, Atty. Rico V. Domingo, in his capacity as attorney-in-fact, stated in his
affidavit[53] and further expounded in his deposition[54] that he personally knew of the fact that private
respondents had never been authorized by his clients to reproduce, lease and possess for the
purpose of selling any of the copyrighted films.
Both testimonies of Agent Reyes and Atty. Domingo were corroborated by Rene C. Baltazar, a
private researcher retained by Motion Pictures Association of America, Inc. (MPAA, Inc.), who was
likewise presented as a witness during the search warrant proceedings.[55] The records clearly reflect
that the testimonies of the abovenamed witnesses were straightforward and stemmed from matters
within their personal knowledge. They displayed none of the ambivalence and uncertainty that the
witnesses in the 20th Century Fox case exhibited. This categorical forthrightness in their statements,
among others, was what initially and correctly convinced the trial court to make a finding of the
existence of probable cause.
There is no originality in the argument of private respondents against the validity of the search
warrant, obviously borrowed from 20th Century Fox, that petitioners witnesses NBI Agent Lauro C.
Reyes, Atty. Rico V. Domingo and Rene C. Baltazar did not have personal knowledge of the subject
matter of their respective testimonies and that said witnesses claim that the video tapes were
pirated, without stating the manner by which these were pirated, is a conclusion of fact without
basis.[56] The difference, it must be pointed out, is that the records in the present case reveal that (1)
there is no allegation of misrepresentation, much less a finding thereof by the lower court, on the
part of petitioners witnesses; (2) there is no denial on the part of private respondents that the tapes
seized were illegitimate copies of the copyrighted ones nor have they shown that they were given
any authority by petitioners to copy, sell, lease, distribute or circulate, or at least, to offer for sale,
lease, distribution or circulation the said video tapes; and (3) a discreet but extensive surveillance of
the suspected area was undertaken by petitioners witnesses sufficient to enable them to execute
trustworthy affidavits and depositions regarding matters discovered in the course thereof and of
which they have personal knowledge.
It is evidently incorrect to suggest, as the ruling in 20th Century Fox may appear to do, that in
copyright infringement cases, the presentation of master tapes of the copyrighted films is always
necessary to meet the requirement of probable cause and that, in the absence thereof, there can be
77

no finding of probable cause for the issuance of a search warrant. It is true that such master tapes
are object evidence, with the merit that in this class of evidence the ascertainment of the
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controverted fact is made through demonstrations involving the direct use of the senses of the
presiding magistrate.[57] Such auxiliary procedure, however, does not rule out the use of testimonial
or documentary evidence, depositions, admissions or other classes of evidence tending to prove
the factum probandum,[58] especially where the production in court of object evidence would result in
delay, inconvenience or expenses out of proportion to its evidentiary value.[59]
Of course, as a general rule, constitutional and statutory provisions relating to search warrants
prohibit their issuance except on a showing of probable cause, supported by oath or
affirmation. These provisions prevent the issuance of warrants on loose, vague, or doubtful bases of
fact, and emphasize the purpose to protect against all general searches.[60] Indeed, Article III of our
Constitution mandates in Sec. 2 thereof that no search warrant shall issue except upon probable
cause to be determined personally by the judge after examination under oath or affirmation of the
complainant and the witnesses he may produce, and particularly describing the place to be searched
and the things to be seized; and Sec. 3 thereof provides that any evidence obtained in violation of
the preceding section shall be inadmissible for any purpose in any proceeding.
These constitutional strictures are implemented by the following provisions of Rule 126 of the
Rules of Court:

Sec. 3. Requisites for issuing search warrant. A search warrant shall not issue but upon probable
cause in connection with one specific offense to be determined personally by the judge after
examination under oath or affirmation of the complainant and the witnesses he may produce, and
particularly describing the place to be searched and the things to be seized.

Sec. 4. Examination of complainant; record. The judge must, before issuing the warrant, personally
examine in the form of searching questions and answers, in writing and under oath the complainant
and any witnesses he may produce on facts personally known to them and attach to the record their
sworn statements together with any affidavits submitted.

Sec. 5. Issuance and form of search warrant. If the judge is thereupon satisfied of the existence of
facts upon which the application is based, or that there is probable cause to believe that they exist,
he must issue the warrant, which must be substantially in the form prescribed by these Rules.

The constitutional and statutory provisions of various jurisdictions requiring a showing of


probable cause before a search warrant can be issued are mandatory and must be complied with,
and such a showing has been held to be an unqualified condition precedent to the issuance of a
warrant. A search warrant not based on probable cause is a nullity, or is void, and the issuance
thereof is, in legal contemplation, arbitrary.[61] It behooves us, then, to review the concept of probable
cause, firstly, from representative holdings in the American jurisdiction from which we patterned our
doctrines on the matter.
Although the term probable cause has been said to have a well-defined meaning in the law, the
term is exceedingly difficult to define, in this case, with any degree of precision; indeed, no definition
of it which would justify the issuance of a search warrant can be formulated which would cover every
state of facts which might arise, and no formula or standard, or hard and fast rule, may be laid down
which may be applied to the facts of every situation.[62] As to what acts constitute probable cause
seem incapable of definition.[63] There is, of necessity, no exact test.[64]
At best, the term probable cause has been understood to mean a reasonable ground of
suspicion, supported by circumstances sufficiently strong in themselves to warrant a cautious man in
the belief that the person accused is guilty of the offense with which he is charged;[65] or the
existence of such facts and circumstances as would excite an honest belief in a reasonable mind
acting on all the facts and circumstances within the knowledge of the magistrate that the charge
made by the applicant for the warrant is true.[66]
Probable cause does not mean actual and positive cause, nor does it import absolute
certainty. The determination of the existence of probable cause is not concerned with the question of
whether the offense charged has been or is being committed in fact, or whether the accused is guilty
or innocent, but only whether the affiant has reasonable grounds for his belief.[67] The requirement
is less than certainty or proof, but more than suspicion or possibility.[68]
In Philippine jurisprudence, probable cause has been uniformly defined as such facts and
circumstances which would lead a reasonable, discreet and prudent man to believe that an offense
has been committed, and that the objects sought in connection with the offense are in the place
sought to be searched.[69] It being the duty of the issuing officer to issue, or refuse to issue, the
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warrant as soon as practicable after the application therefor is filed,[70] the facts warranting the
conclusion of probable cause must be assessed at the time of such judicial determination by
Page
necessarily using legal standards then set forth in law and jurisprudence, and not those that have yet
to be crafted thereafter.
As already stated, the definition of probable cause enunciated in Burgos, Sr. vs. Chief of Staff,
et al., supra, vis-a-vis the provisions of Sections 3 and 4 of Rule 126, were the prevailing and
controlling legal standards, as they continue to be, by which a finding of probable cause is
tested. Since the proprietary of the issuance of a search warrant is to be determined at the time of
the application therefor, which in turn must not be too remote in time from the occurrence of the
offense alleged to have been committed, the issuing judge, in determining the existence of probable
cause, can and should logically look to the touchstones in the laws therefore enacted and the
decisions already promulgated at the time, and not to those which had not yet even been conceived
or formulated.
It is worth noting that neither the Constitution nor the Rules of Court attempt to define probable
cause, obviously for the purpose of leaving such matter to the courts discretion within the particular
facts of each case. Although the Constitution prohibits the issuance of a search warrant in the
absence of probable cause, such constitutional inhibition does not command the legislature to
establish a definition or formula for determining what shall constitute probable cause.[71] Thus,
Congress, despite its broad authority to fashion standards of reasonableness for searches and
seizures,[72] does not venture to make such a definition or standard formulation of probable cause,
nor categorize what facts and circumstances make up the same, much less limit the determination
thereof to and within the circumscription of a particular class of evidence, all in deference to judicial
discretion and probity.[73]
Accordingly, to restrict the exercise of discretion by a judge by adding a particular requirement
(the presentation of master tapes, as intimated by 20th Century Fox) not provided nor implied in the
law for a finding of probable cause is beyond the realm of judicial competence or statemanship. It
serves no purpose but to stultify and constrict the judicious exercise of a court's prerogatives and to
denigrate the judicial duty of determining the existence of probable cause to a mere ministerial or
mechanical function. There is, to repeat, no law or rule which requires that the existence of probable
cause is or should be determined solely by a specific kind of evidence. Surely, this could not have
been contemplated by the framers of the Constitution, and we do not believe that the Court intended
the statement in 20th Century Fox regarding master tapes as the dictum for all seasons and reasons
in infringement cases.
Turning now to the case at bar, it can be gleaned from the records that the lower court followed
the prescribed procedure for the issuances of a search warrant: (1) the examination under oath or
affirmation of the complainant and his witnesses, with them particularly describing the place to be
searched and the things to be seized; (2) an examination personally conducted by the judge in the
form of searching questions and answers, in writing and under oath of the complainant and
witnesses on facts personally known to them; and, (3) the taking of sworn statements, together with
the affidavits submitted, which were duly attached to the records.
Thereafter, the court a quo made the following factual findings leading to the issuance of the
search warrant now subject to this controversy:

In the instant case, the following facts have been established: (1) copyrighted video tapes bearing
titles enumerated in Search Warrant No. 87-053 were being sold, leased, distributed or circulated, or
offered for sale, lease, distribution, or transferred or caused to be transferred by defendants at their
video outlets, without the written consent of the private complainants or their assignee; (2) recovered
or confiscated from defendants' possession were video tapes containing copyrighted motion picture
films without the authority of the complainant; (3) the video tapes originated from spurious or
unauthorized persons; and (4) said video tapes were exact reproductions of the films listed in the
search warrant whose copyrights or distribution rights were owned by complainants.

The basis of these facts are the affidavits and depositions of NBI Senior Agent Lauro C. Reyes, Atty.
Rico V. Domingo, and Rene C. Baltazar. Motion Pictures Association of America, Inc. (MPAA) thru
their counsel, Atty. Rico V. Domingo, filed a complaint with the National Bureau of Investigation
against certain video establishments one of which is defendant, for violation of PD No. 49 as
amended by PD No, 1988. Atty. Lauro C. Reyes led a team to conduct discreet surveillance
operations on said video establishments. Per information earlier gathered by Atty. Domingo,
defendants were engaged in the illegal sale, rental, distribution, circulation or public exhibition of
copyrighted films of MPAA without its written authority or its members. Knowing that defendant
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Sunshine Home Video and its proprietor, Mr. Danilo Pelindario, were not authorized by MPAA to
reproduce, lease, and possess for the purpose of selling any of its copyrighted motion pictures, he
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instructed his researcher, Mr. Rene Baltazar to rent two video cassettes from said defendants on
October 21, 1987. Rene C. Baltazar proceeded to Sunshine Home Video and rented tapes
containing Little Shop of Horror. He was issued rental slip No. 26362 dated October 21, 1987
for P10.00 with a deposit of P100.00. Again, on December 11, 1987, he returned to Sunshine Home
Video and rented Robocop with a rental slip No. 25271 also for P10.00. On the basis of the
complaint of MPAA thru counsel, Atty. Lauro C. Reyes personally went to Sunshine Home Video at
No. 6 Mayfair Center, Magallanes Commercial Center, Makati. His last visit was on December 7,
1987.There, he found the video outlet renting, leasing, distributing video cassette tapes whose titles
were copyrighted and without the authority of MPAA.

Given these facts, a probable cause exists. x x x.[74]

The lower court subsequently executed a volte-face, despite its prior detailed and substantiated
findings, by stating in its order of November 22, 1988 denying petitioners motion for reconsideration
and quashing the search warrant that

x x x. The two (2) cases have a common factual milieu; both involve alleged pirated copyrighted
films of private complainants which were found in the possession or control of the
defendants. Hence, the necessity of the presentation of the master tapes from which the pirated
films were allegedly copied is necessary in the instant case, to establish the existence of probable
cause.[75]

Being based solely on an unjustifiable and improper retroactive application of the master tape
requirement generated by 20th Century Fox upon a factual situation completely different from that in
the case at bar, and without anything more, this later order clearly defies elemental fair play and is a
gross reversible error. In fact, this observation of the Court in La ChemiseLacoste, S.A. vs.
Fernandez, et al., supra, may just as easily apply to the present case:

A review of the grounds invoked x x x in his motion to quash the search warrants reveals the fact
that they are not appropriate for quashing a warrant. They are matters of defense which should be
ventilated during the trial on the merits of the case. x x x

As correctly pointed out by petitioners, a blind espousal of the requisite of presentation of the
master tapes in copyright infringement cases, as the prime determinant of probable cause, is too
exacting and impracticable a requirement to be complied with in a search warrant application which,
it must not be overlooked, is only an ancillary proceeding. Further, on realistic considerations, a strict
application of said requirement militates against the elements of secrecy and speed which underlie
covert investigative and surveillance operations in police enforcement campaigns against all forms of
criminality, considering that the master tapes of a motion picture required to be presented before the
court consists of several reels contained in circular steel casings which, because of their bulk, will
definitely draw attention, unlike diminutive objects like video tapes which can be easily
concealed.[76] With hundreds of titles being pirated, this onerous and tedious imposition would be
multiplied a hundredfold by judicial fiat, discouraging and preventing legal recourses in foreign
jurisdictions.
Given the present international awareness and furor over violations in large scale of intellectual
property rights, calling for transnational sanctions, it bears calling to mind the Courts admonition also
in La Chemise Lacoste, supra, that

x x x. Judges all over the country are well advised to remember that court processes should not be
used as instruments to, unwittingly or otherwise, aid counterfeiters and intellectual pirates, tie the
hands of the law as it seeks to protect the Filipino consuming public and frustrate executive and
administrative implementation of solemn commitments pursuant to international conventions and
treaties.

III
The amendment of Section 56 of Presidential Decree No. 49 by Presidential Decree No.
1987,[77] which should here be publicized judicially, brought about the revision of its penalty structure
and enumerated additional acts considered violative of said decree on intellectual property, namely,
(1) directly or indirectly transferring or causing to be transferred any sound recording or motion
picture or other audio-visual works so recorded with intent to sell, lease, publicly exhibit or cause to
be sold, leased or publicly exhibited, or to use or cause to be used for profit such articles on which
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sounds, motion pictures, or other audio-visual works are so transferred without the written consent of
the owner or his assignee; (2) selling, leasing, distributing, circulating, publicly exhibiting, or offering
Page

for sale, lease, distribution, or possessing for the purpose of sale, lease, distribution, circulation or
public exhibition any of the abovementioned articles, without the written consent of the owner or his
assignee; and, (3) directly or indirectly offering or making available for a fee, rental, or any other form
of compensation any equipment, machinery, paraphernalia or any material with the knowledge that
such equipment, machinery, paraphernalia or material will be used by another to reproduce, without
the consent of the owner, any phonograph record, disc, wire, tape, film or other article on which
sounds, motion pictures or other audio-visual recordings may be transferred, and which provide
distinct bases for criminal prosecution, being crimes independently punishable under Presidential
Decree No. 49, as amended, aside from the act of infringing or aiding or abetting such infringement
under Section 29.
The trial courts finding that private respondents committed acts in blatant transgression of
Presidential Decree No. 49 all the more bolsters its findings of probable cause, which determination
can be reached even in the absence of master tapes by the judge in the exercise of sound
discretion. The executive concern and resolve expressed in the foregoing amendments to the
decree for the protection of intellectual property rights should be matched by corresponding judicial
vigilance and activism, instead of the apathy of submitting to technicalities in the face of ample
evidence of guilt.
The essence of intellectual piracy should be essayed in conceptual terms in order to underscore
its gravity by an appropriate understanding thereof. Infringement of a copyright is a trespass on a
private domain owned and occupied by the owner of the copyright, and, therefore, protected by law,
and infringement of copyright, or piracy, which is a synonymous term in this connection, consists in
the doing by any person, without the consent of the owner of the copyright, of anything the sole right
to do which is conferred by statute on the owner of the copyright.[78]
A copy of a piracy is an infringement of the original, and it is no defense that the pirate, in such
cases, did not know what works he was indirectly copying, or did not know whether or not he was
infringing any copyright; he at least knew that what he was copying was not his, and he copied at his
peril. In determining the question of infringement, the amount of matter copied from the copyrighted
work is an important consideration. To constitute infringement, it is not necessary that the whole or
even a large portion of the work shall have been copied. If so much is taken that the value of the
original is sensibly diminished, or the labors of the original author are substantially and to an
injurious extent appropriated by another, that is sufficient in point of law to constitute a piracy. [79] The
question of whether there has been an actionable infringement of a literary, musical, or artistic work
in motion pictures, radio or television being one of fact,[80] it should properly be determined during
the trial. That is the stage calling for conclusive or preponderating evidence, and not the summary
proceeding for the issuance of a search warrant wherein both lower courts erroneously require the
master tapes.
In disregarding private respondents argument that Search Warrant No. 87-053 is a general
warrant, the lower court observed that it was worded in a manner that the enumerated seizable
items bear direct relation to the offense of violation of Sec. 56 of PD 49 as amended. It authorized
only the seizur(e) of articles used or intended to be used in the unlawful sale, lease and other
unconcerted acts in violation of PD 49 as amended. x x x.[81]
On this point, Bache and Co., (Phil.), Inc., et al. vs. Ruiz, et al.,[82] instructs and enlightens:

A search warrant may be said to particularly describe the things to be seized when the description
therein is as specific as the circumstances will ordinarily allow (People vs. Rubio, 57 Phil. 384); or
when the description expresses a conclusion of fact not of law by which the warrant officer may be
guided in making the search and seizure (idem., dissent of Abad Santos, J.,); or when the things
described are limited to those which bear direct relation to the offense for which the warrant is being
issued (Sec. 2, Rule 126, Revised Rules of Court). x x x. If the articles desired to be seized have any
direct relation to an offense committed, the applicant must necessarily have some evidence, other
than those articles, to prove the said offense; and the articles subject of search and seizure should
come in handy merely to strengthensuch evidence. x x x.

On private respondents averment that the search warrant was made applicable to more than
one specific offense on the ground that there are as many offenses of infringement as there are
rights protected and, therefore, to issue one search warrant for all the movie titles allegedly pirated
violates the rule that a search warrant must be issued only in connection with one specific offense,
the lower court said:

x x x. As the face of the search warrant itself indicates, it was issued for violation of Section 56, PD
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49 as amended only. The specifications therein (in Annex A) merely refer to the titles of the
copyrighted motion pictures/films belonging to private complainants which defendants were in
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control/possession for sale, lease, distribution or public exhibition in contravention of Sec. 56, PD 49
as amended.[83]
That there were several counts of the offense of copyright infringement and the search warrant
uncovered several contraband items in the form of pirated video tapes is not to be confused with the
number of offenses charged. The search warrant herein issued does not violate the one-specific-
offense rule.
It is pointless for private respondents to insist on compliance with the registration and deposit
requirements under Presidential Decree No. 49 as prerequisites for invoking the courts protective
mantle in copyright infringement cases. As explained by the court below:

Defendants-movants contend that PD 49 as amended covers only producers who have complied
with the requirements of deposit and notice (in other words registration) under Sections 49 and 50
thereof.Absent such registration, as in this case, there was no right created, hence, no infringement
under PD 49 as amended. This is not well-taken.

As correctly pointed out by private complainants-oppositors, the Department of Justice has resolved
this legal question as far back as December 12, 1978 in its Opinion No. 191 of the then Secretary of
Justice Vicente Abad Santos which stated that Sections 26 and 50 do not apply to cinematographic
works and PD No. 49 had done away with the registration and deposit of cinematographic works and
that even without prior registration and deposit of a work which may be entitled to protection under
the Decree, the creator can file action for infringement of its rights. He cannot demand, however,
payment of damages arising from infringement. The same opinion stressed that the requirements of
registration and deposit are thus retained under the Decree, not as conditions for the acquisition of
copyright and other rights, but as prerequisites to a suit for damages. The statutory interpretation of
the Executive Branch being correct, is entitled (to) weight and respect.

xxx xxx xxx

Defendants-movants maintain that complainant and his witnesses led the Court to believe that a
crime existed when in fact there was none. This is wrong. As earlier discussed, PD 49 as amended,
does not require registration and deposit for a creator to be able to file an action for infringement of
his rights. These conditions are merely pre-requisites to an action for damages. So, as long as the
proscribed acts are shown to exist, an action for infringement may be initiated.[84]

Accordingly, the certifications[85] from the Copyright Section of the National Library, presented as
evidence by private respondents to show non-registration of some of the films of petitioners, assume
no evidentiary weight or significance, whatsoever.
Furthermore, a closer review of Presidential Decree No. 49 reveals that even with respect to
works which are required under Section 26 thereof to be registered and with copies to be deposited
with the National Library, such as books, including composite and cyclopedic works, manuscripts,
directories and gazetteers; and periodicals, including pamphlets and newspapers; lectures, sermons,
addresses, dissertations prepared for oral delivery; and letters, the failure to comply with said
requirements does not deprive the copyright owner of the right to sue for infringement. Such non-
compliance merely limits the remedies available to him and subjects him to the corresponding
sanction.
The reason for this is expressed in Section 2 of the decree which prefaces its enumeration of
copyrightable works with the explicit statement that the rights granted under this Decree shall, from
the moment of creation, subsist with respect to any of the following classes of works. This means
that under the present state of the law, the copyright for a work is acquired by an intellectual creator
from the moment of creation even in the absence of registration and deposit. As has been
authoritatively clarified:

The registration and deposit of two complete copies or reproductions of the work with the National
Library within three weeks after the first public dissemination or performance of the work, as
provided for in Section 26 (P.D. No. 49, as amended), is not for the purpose of securing a copyright
of the work, but rather to avoid the penalty for non-compliance of the deposit of said two copies and
in order to recover damages in an infringement suit.[86]

One distressing observation. This case has been fought on the basis of, and its resolution long
delayed by resort to, technicalities to a virtually abusive extent by private respondents, without so
much as an attempt to adduce any credible evidence showing that they conduct their business
82

legitimately and fairly. The fact that private respondents could not show proof of their authority or
that there was consent from the copyright owners for them to sell, lease, distribute or circulate
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petitioners copyrighted films immeasurably bolsters the lower courts initial finding of probable
cause. That private respondents are licensed by the Videogram Regulatory Board does not insulate
them from criminal and civil liability for their unlawful business practices. What is more deplorable is
that the reprehensible acts of some unscrupulous characters have stigmatized the Philippines with
an unsavory reputation as a hub for intellectual piracy in this part of the globe, formerly in the
records of the General Agreement on Tariffs and Trade and, now, of the World Trade
Organization. Such acts must not be glossed over but should be denounced and repressed lest the
Philippines become an international pariah in the global intellectual community.
WHEREFORE, the assailed judgment and resolution of respondent Court of Appeals, and
necessarily inclusive of the order of the lower court dated November 22, 1988, are hereby
REVERSED and SET ASIDE. The order of the court a quo of September 5, 1988 upholding the
validity of Search Warrant No. 87-053 is hereby REINSTATED, and said court is DIRECTED to take
and expeditiously proceed with such appropriate proceedings as may be called for in this
case. Treble costs are further assessed against private respondents.
SO ORDERED.

G.R. No. 166337. March 7, 2005]

BAYANIHAN MUSIC vs. BMG

THIRD DIVISION

Gentlemen:

Quoted hereunder, for your information, is a resolution of this Court dated MAR 7 2005.

G.R. No. 166337 (Bayanihan Music Philippines, Inc. vs. BMG Records (Pilipinas) and Jose Mari
Chan, et al.)

Subject of this petition for review on certiorari is the Decision dated December 14, 2004[1] of the
Court of Appeals in CA-G.R. SP No. 69626, upholding the Order dated August 24, 2001 of the
Regional Trial Court at Quezon City, Branch 90, which found no merit in petitioner's application for
the issuance of a writ of preliminary injunction, along with the Order dated January 10, 2002, which
denied petitioner's motion for reconsideration.

On July 16, 1973, private respondent Jose Mari Chan (Chan) entered into a contract with petitioner
Bayanihan Music Philippines, Inc. (Bayanihan), whereunder the former assigned to the latter all his
rights, interests and participation over his musical composition "Can We Just Stop and Talk A
While". On March 11, 1976, the parties entered into a similar contract over Chan's other musical
composition entitled "Afraid For Love To Fade".

On the strength of the abovementioned contracts, Bayanihan applied for and was granted by the
National Library a Certificate of Copyright Registration for each of the two musical compositions,
thus: November 19, 1973, for the song "Can We Just Stop and Talk A While" and on May 21, 1980,
for the song "Afraid for Love To Fade."

Apparently, without the knowledge and consent of petitioner Bayanihan, Chan authorized his co-
respondent BMG Records (Pilipinas) [BMG] to record and distribute the aforementioned musical
compositions in a then recently released album of singer Lea Salonga.

In separate letters both dated December 7, 1999, petitioner Bayanihan informed respondents Chan
and BMG of its existing copyrights over the subject musical compositions and the alleged violation of
such right by the two. Demands were made on both to settle the matter with Bayanihan. However no
settlement was reached by the parties.

Hence, on August 8, 2000, Bayanihan filed with the Regional Trial Court at Quezon City a complaint
against Chan and BMG for violation of Section 216 of Republic Act No. 8293, otherwise known as
the Intellectual Property Code of the Philippines, with a prayer for the issuance of Temporary
Restraining Order (TRO) and/or writ of preliminary injunction, enjoining respondent BMG from further
recording and distributing the subject musical compositions in whatever form of musical products,
83

and Chan from further granting any authority to record and distribute the same musical
compositions.
Page
In its answer, BMG contended, among others, that: (1) the acts of recording and publication sought
to be enjoined had already been consummated, thereby rendering moot Bayanihan's prayer for TRO
and/or preliminary injunction; and (2) there is no clear showing that petitioner Bayanihan would be
greatly damaged by the refusal of the prayed for TRO and/or preliminary injunction. BMG also
pleaded a cross-claim against its co-respondent Chan for violation of his warranty that his musical
compositions are free from claims of third persons, and a counterclaim for damages against
petitioner Bayanihan.

Chan, for his part, filed his own answer to the complaint, thereunder alleging that: (1) it was never
his intention to divest himself of all his rights and interest over the musical compositions in question;
(2) the contracts he entered into with Bayanihan are mere music publication agreements giving
Bayanihan, as assignee, the power to administer his copyright over his two songs and to act as the
exclusive publisher thereof; (3) he was not cognizant of the application made by and the subsequent
grant of copyrights to Bayanihan; and (4) Bayanihan was remissed in its obligations under the
contracts because it failed to effectively advertise his musical compositions for almost twenty (20)
years, hence, he caused the rescission of said contracts in 1997. Chan also included in his answer a
counterclaim for damages against Bayanihan.

After hearing the parties, the lower court came out with an order denying Bayanihan's prayer for
TRO, saying, thus:

After carefully considering the arguments and evaluating the evidence presented by counsels, this
Court finds that the plaintiff has not been able to show its entitlement to the relief of TRO as prayed
for in its verified complaint (see Section 4, Rule 58 of the 1997 Rules of Civil Procedure, as
amended), hence, this Court is of the considered and humble view that the ends of justice shall be
served better if the aforecited application is denied.

IN VIEW OF THE FOREGOING, the aforecited application or prayer for the issuance of a TRO is
denied.

SO ORDERED.

Thereafter, the same court, in its subsequent Order dated August 24, 2001,[2]cralaw likewise
denied Bayanihan's prayer for a writ of preliminary injunction, to wit:

After carefully going over the pleadings and the pertinent portions of the records insofar as they are
pertinent to the issue under consideration, this Court finds that the plaintiff has not been able to
show its entitlement to the relief of preliminary injunction as prayed for in its verified complaint
(see Section 4, Rule 58 of the 1997 Rules of Civil Procedure, as amended), hence, this Court is of
the considered and humble view that the ends of justice shall be served better if the aforecited
application is denied, (see also Order dated July 16, 2001).

IN VIEW OF THE FOREGOING, the application or prayer for the issuance of a writ of preliminary
injunction is denied.

SO ORDERED.

Its motion for a reconsideration of the same order having been likewise denied by the trial court in its
next Order of January 10, 2002,[3]cralaw petitioner Bayanihan then went to the Court of Appeals on
a petition for certiorari, thereat docketed as CA-G.R. SP No. 69626, imputing grave abuse of
discretion on the part of the trial court in issuing the Orders of August 24, 2001 and January 10,
2001, denying its prayers for a writ of preliminary injunction and motion for reconsideration,
respectively.

In the herein assailed Decision dated December 14, 2004, the Court of Appeals upheld the
challenged orders of the trial court and accordingly dismissed Bayanihan petition, thus:

WHEREFORE, finding neither flaw of jurisdiction nor taint of grave abuse of discretion in the
issuance of the assailed Orders of the respondent court dated August 24, 2001 and January 10,
2002, the instant petition is DISMISSED. No costs.
84

SO ORDERED.[4]cralaw
Page
Hence, Bayanihan's present recourse.

It is petitioner's submission that the appellate court committed reversible error when it dismissed its
petition for certiorari and upheld the trial court's denial of its application for a writ of preliminary
injunction. Petitioner insists that as assignee of the copyrights over the musical compositions in
question, it has a clear legal right to a writ of preliminary injunction; that respondents BMG and Chan
violated its copyrights over the same musical compositions; that despite knowledge by respondent
BMG of petitioner's copyrights over the said musical compositions, BMG continues to record and
distribute the same, to petitioner's great and irreparable injury.

We DENY.

We have constantly reminded courts that there is no power, the exercise of which is more delicate
and requires greater caution, deliberation and sound discretion, or which is more dangerous in a
doubtful case, than the issuance of an injunction. A court should, as much as possible, avoid issuing
the writ which would effectively dispose of the main case without trial.

Here, nothing is more evident than the trial court's abiding awareness of the extremely difficult
balancing act it had to perform in dealing with petitioner's prayer for injunctive reliefs. Conscious, as
evidently it is, of the fact that there is manifest abuse of discretion in the issuance of an injunctive
writ if the following requisites provided for by law are not present: (1) there must be a right in esse or
the existence of a right to be protected; and (2) the act against which the injunction is to be directed
is a violation of such right,[5]cralaw the trial court threaded the correct path in denying petitioner's
prayer therefor. For, such a writ should only be granted if a party is clearly entitled thereto.[6]cralaw

Of course, while a clear showing of the right to an injunctive writ is necessary albeit its existence
need not be conclusively established,[7]cralaw as the evidence required therefor need not be
conclusive or complete, still, for an applicant, like petitioner Bayanihan, to be entitled to the writ, he
is required to show that he has the ostensible right to the final relief prayed for in its
complaint.[8]cralaw Here, the trial court did not find ample justifications for the issuance of the writ
prayed for by petitioner.

Unquestionably, respondent Chan, being undeniably the composer and author of the lyrics of the
two (2) songs, is protected by the mere fact alone that he is the creator thereof, conformably with
Republic Act No. 8293, otherwise known as the Intellectual Property Code, Section 172.2 of which
reads:

172.2. Works are protected by the sole fact of their creation, irrespective of their mode or form of
expression, as well as of their content, quality and purpose.

An examination of petitioner's verified complaint in light of the two (2) contracts sued upon and the
evidence it adduced during the hearing on the application for preliminary injunction, yields not the
existence of the requisite right protectable by the provisional relief but rather a lingering doubt on
whether there is or there is no such right. The two contracts between petitioner and Chan relative to
the musical compositions subject of the suit contain the following identical stipulations:

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

xxx xxx xxx

9. This contract may be renewed for a period of two-and-one-half (2 1/2) years at the option of
the PUBLISHER. Renewal may be made by the PUBLISHER by advising the WRITER of such
renewal in writing at least five (5) days before the expiration of this contract.[9]cralaw

It would thus appear that the two (2) contracts expired on October 1, 1975 and March 11, 1978,
respectively, there being neither an allegation, much less proof, that petitioner Bayanihan ever made
85

use of the compositions within the two-year period agreed upon by the parties.
Page
Anent the copyrights obtained by petitioner on the basis of the selfsame two (2) contracts, suffice it
to say 'that such purported copyrights are not presumed to subsist in accordance with Section 218[a]
and [b], of the Intellectual Property Code,[10]cralaw because respondent Chan had put in issue the
existence thereof.

It is noted that Chan revoked and terminated said contracts, along with others, on July 30, 1997, or
almost two years before petitioner Bayanihan wrote its sort of complaint/demand letter dated
December 7, 1999 regarding the recent "use/recording of the songs 'Can We Just Stop and Talk A
While' and 'Afraid for Love to Fade,'" or almost three (3) years before petitioner filed its complaint on
August 8, 2000, therein praying, inter alia, for injunctive relief. By then, it would appear that petitioner
had no more right that is protectable by injunction.

Lastly, petitioner's insinuation that the trial court indulged in generalizations and was rather skimpy in
dishing out its reasons for denying its prayer for provisional injunctive relief, the same deserves
scant consideration. For sure, the manner by which the trial court crafted its challenged orders is
quite understandable, lest it be subjected to a plausible suspicion of having prejudged the merits of
the main case.

WHEREFORE, petition is hereby DENIED.

SO ORDERED.

EN BANC

IN THE MATTER OF THE CHARGES A.M. No. 10-7-17-SC


OF PLAGIARISM, ETC., AGAINST
ASSOCIATE JUSTICE MARIANO C.
DEL CASTILLO. Present:
CORONA, C.J.,
CARPIO,
CARPIO MORALES,
VELASCO, JR.,
NACHURA,
LEONARDO-DE CASTRO,
BRION,
PERALTA,
BERSAMIN,
DEL CASTILLO,
ABAD,
VILLARAMA, JR.,
PEREZ,
MENDOZA, and
SERENO, JJ.
Promulgated:

October 12, 2010


x --------------------------------------------------------------------------------------- x

DECISION

PER CURIAM:

This case is concerned with charges that, in preparing a decision for the Court, a designated
member plagiarized the works of certain authors and twisted their meanings to support the decision.
The Background Facts
86

Petitioners Isabelita C. Vinuya and about 70 other elderly women, all members of the Malaya Lolas
Organization, filed with the Court in G.R. No. 162230 a special civil action of certiorari with
Page
application for preliminary mandatory injunction against the Executive Secretary, the Secretary of
Foreign Affairs, the Secretary of Justice, and the Office of the Solicitor General.

Petitioners claimed that in destroying villages in the Philippines during World War II, the Japanese
army systematically raped them and a number of other women, seizing them and holding them in
houses or cells where soldiers repeatedly ravished and abused them.

Petitioners alleged that they have since 1998 been approaching the Executive Department,
represented by the respondent public officials, requesting assistance in filing claims against the
Japanese military officers who established the comfort women stations. But that Department
declined, saying that petitioners individual claims had already been fully satisfied under the Peace
Treaty between the Philippines and Japan.

Petitioners wanted the Court to render judgment, compelling the Executive Department to
espouse their claims for official apology and other forms of reparations against Japan before the
International Court of Justice and other international tribunals.

On April 28, 2010, the Court rendered judgment dismissing petitioners action. Justice Mariano C. del
Castillo wrote the decision for the Court. The Court essentially gave two reasons for its decision: it
cannot grant the petition because, first, the Executive Department has the exclusive prerogative
under the Constitution and the law to determine whether to espouse petitioners claim against Japan;
and, second, the Philippines is not under any obligation in international law to espouse their claims.

On June 9, 2010, petitioners filed a motion for reconsideration of the Courts decision. More
than a month later on July 18, 2010, counsel for petitioners, Atty. Herminio Harry Roque, Jr.,
announced in his online blog that his clients would file a supplemental petition detailing plagiarism
committed by the court under the second reason it gave for dismissing the petition and that these
stolen passages were also twisted to support the courts erroneous conclusions that the Filipino
comfort women of World War Two have no further legal remedies. The media gave publicity to Atty.
Roques announcement.

On July 19, 2010, petitioners filed the supplemental motion for reconsideration that Atty.
Roque announced. It accused Justice Del Castillo of manifest intellectual theft and outright
plagiarism[1] when he wrote the decision for the Court and of twisting the true intents of the
plagiarized sources to suit the arguments of the assailed Judgment.[2] They charged Justice Del
Castillo of copying without acknowledgement certain passages from three foreign articles:

a. A Fiduciary Theory of Jus Cogens by Evan J. Criddle and Evan Fox-


Descent, Yale Journal of International Law (2009);
b. Breaking the Silence: Rape as an International Crime by Mark Ellis, Case
Western Reserve Journal of International Law (2006); and
c. Enforcing Erga Omnes Obligations by Christian J. Tams, Cambridge
University Press (2005).
87
Page
Petitioners claim that the integrity of the Courts deliberations in the case has been put into
question by Justice Del Castillos fraud. The Court should thus address and disclose to the public the
truth about the manifest intellectual theft and outright plagiarism[3] that resulted in gross prejudice to
the petitioners.

Because of the publicity that the supplemental motion for reconsideration generated, Justice
Del Castillo circulated a letter to his colleagues, subsequently verified, stating that when he wrote the
decision for the Court he had the intent to attribute all sources used in it. He said in the pertinent
part:

It must be emphasized that there was every intention to attribute all


sources, whenever due. At no point was there ever any malicious intent to
appropriate anothers work as our own. We recall that this ponencia was thrice
included in the Agenda of the Court en banc. It was deliberated upon during
the Baguio session on April 13, 2010, April 20, 2010 and in Manila on April 27,
2010. Each time, suggestions were made which necessitated major revisions in
the draft. Sources were re-studied, discussions modified, passages added or
deleted. The resulting decision comprises 34 pages with 78 footnotes.

xxxx

As regards the claim of the petitioners that the concepts as contained


in the above foreign materials were twisted, the same remains their opinion
which we do not necessarily share.[4]

On July 27, 2010, the Court En Banc referred the charges against Justice Del Castillo to its
Committee on Ethics and Ethical Standards, chaired by the Chief Justice, for investigation and
recommendation. The Chief Justice designated retired Justice Jose C. Vitug to serve as consultant
of the Committee. He graciously accepted.

On August 2, 2010, the Committee directed petitioners to comment on Justice Del Castillos
verified letter. When this was done, it set the matter for hearing.

In the meantime, on July 19, 2010, Evan Criddle wrote on his blog that he and his co-author
Evan Fox-Descent (referred to jointly as Criddle-Descent) learned of alleged plagiarism involving
their work but Criddles concern, after reading the supplemental motion for reconsideration, was the
Courts conclusion that prohibitions against sexual slavery are not jus cogens or internationally
binding norms that treaties cannot diminish.

On July 23, 2010, Dr. Mark Ellis wrote the Court expressing concern that in mentioning his
work, the Court may have misread the argument [he] made in the article and employed them for
cross purposes. Dr. Ellis said that he wrote the article precisely to argue for appropriate legal remedy
for victims of war crimes.

On August 8, 2010, after the referral of the matter to the Committee for investigation, the
Dean of the University of the Philippines (U.P.) College of Law publicized a Statement from his
88

faculty, claiming that the Vinuya decision was an extraordinary act of injustice and a singularly
Page

reprehensible act of dishonesty and misrepresentation by the Highest Court of the land. The
statement said that Justice Del Castillo had a deliberate intention to appropriate the original authors
work, and that the Courts decision amounted to an act of intellectual fraud by copying works in order
to mislead and deceive.[5]

On August 18, 2010 Mr. Christian J. Tams wrote Chief Justice Renato C. Corona that, although
relevant sentences in the Courts decision were taken from his work, he was given generic reference
only in the footnote and in connection with a citation from another author (Bruno Simma) rather than
with respect to the passages taken from his work. He thought that the form of referencing was
inappropriate. Mr. Tams was also concerned that the decision may have used his work to support an
approach to erga omnes concept (obligations owed by individual States to the community of nations)
that is not consistent with what he advocated.

On August 26, 2010, the Committee heard the parties submissions in the summary manner of
administrative investigations. Counsels from both sides were given ample time to address the
Committee and submit their evidence. The Committee queried them on these.

Counsels for Justice Del Castillo later asked to be heard with the other parties not in
attendance so they could make submissions that their client regarded as sensitive and confidential,
involving the drafting process that went into the making of the Courts decision in
the Vinuya case. Petitioners counsels vigorously objected and the Committee sustained the
objection. After consulting Justice Del Castillo, his counsels requested the Committee to hear the
Justices court researcher, whose name need not be mentioned here, explain the research work that
went into the making of the decision in the Vinuya case. The Committee granted the request.

The researcher demonstrated by Power Point presentation how the attribution of the lifted
passages to the writings of Criddle-Descent and Ellis, found in the beginning drafts of her report to
Justice Del Castillo, were unintentionally deleted. She tearfully expressed remorse at her grievous
mistake and grief for having caused an enormous amount of suffering for Justice Del Castillo and his
family.[6]

On the other hand, addressing the Committee in reaction to the researchers explanation,
counsel for petitioners insisted that lack of intent is not a defense in plagiarism since all that is
required is for a writer to acknowledge that certain words or language in his work were taken from
anothers work. Counsel invoked the Courts ruling in University of the Philippines Board of Regents
v. Court of Appeals and Arokiaswamy William Margaret Celine,[7] arguing that standards on
plagiarism in the academe should apply with more force to the judiciary.

After the hearing, the Committee gave the parties ten days to file their respective
memoranda. They filed their memoranda in due course. Subsequently after deliberation, the
Committee submitted its unanimous findings and recommendations to the Court.
89

The Issues
Page

This case presents two issues:


1. Whether or not, in writing the opinion for the Court in the Vinuya case, Justice Del Castillo
plagiarized the published works of authors Tams, Criddle-Descent, and Ellis.

2. Whether or not Justice Del Castillo twisted the works of these authors to make it appear that such
works supported the Courts position in the Vinuya decision.

The Courts Rulings

Because of the pending motion for reconsideration in the Vinuya case, the Court like its Committee
on Ethics and Ethical Standards will purposely avoid touching the merits of the Courts decision in
that case or the soundness or lack of soundness of the position it has so far taken in the same. The
Court will deal, not with the essential merit or persuasiveness of the foreign authors works, but how
the decision that Justice Del Castillo wrote for the Court appropriated parts of those works and for
what purpose the decision employed the same.

At its most basic, plagiarism means the theft of another persons language, thoughts, or
ideas. To plagiarize, as it is commonly understood according to Webster, is to take (ideas, writings,
etc.) from (another) and pass them off as ones own.[8] The passing off of the work of another as ones
own is thus an indispensable element of plagiarism.

The Passages from Tams

Petitioners point out that the Vinuya decision lifted passages from Tams book, Enforcing
Erga Omnes Obligations in International Law (2006) and used them in Footnote 69 with what the
author thought was a mere generic reference. But, although Tams himself may have believed that
the footnoting in this case was not an appropriate form of referencing,[9] he and petitioners cannot
deny that the decision did attribute the source or sources of such passages. Justice Del Castillo did
not pass off Tams work as his own.The Justice primarily attributed the ideas embodied in the
passages to Bruno Simma, whom Tams himself credited for them. Still, Footnote 69 mentioned,
apart from Simma, Tams article as another source of those ideas.

The Court believes that whether or not the footnote is sufficiently detailed, so as to satisfy the
footnoting standards of counsel for petitioners is not an ethical matter but one concerning clarity of
writing. The statement See Tams, Enforcing Obligations Erga Omnes in International Law (2005) in
the Vinuya decision is an attribution no matter if Tams thought that it gave him somewhat less credit
than he deserved. Such attribution altogether negates the idea that Justice Del Castillo passed off
the challenged passages as his own.

That it would have been better had Justice Del Castillo used the introductory phrase cited
in rather than the phrase See would make a case of mere inadvertent slip in attribution rather than a
90

case of manifest intellectual theft and outright plagiarism. If the Justices citations were imprecise, it
would just be a case of bad footnoting rather than one of theft or deceit. If it were otherwise, many
Page
would be target of abuse for every editorial error, for every mistake in citing pagination, and for every
technical detail of form.

The Passages from Ellis


and Criddle-Descent

Petitioners also attack the Courts decision for lifting and using as footnotes, without
attribution to the author, passages from the published work of Ellis. The Court made the following
statement on page 27 of its decision, marked with Footnote 65 at the end:

We fully agree that rape, sexual slavery, torture, and sexual violence are
morally reprehensible as well as legally prohibited under contemporary international
law. 65 xxx

Footnote 65 appears down the bottom of the page. Since the lengthy passages in that
footnote came almost verbatim from Ellis article,[10] such passages ought to have been introduced by
an acknowledgement that they are from that article. The footnote could very well have read:

65 In an article, Breaking the Silence: Rape as an International Crime, Case


Western Reserve Journal of International Law (2006), Mark Ellis said: The
concept of rape as an international crime is relatively new. This is not to say that rape
has never been historically prohibited, particularly in war. But modern-day sensitivity
to the crime of rape did not emerge until after World War II. In the Nuremberg
Charter, the word rape was not mentioned. The article on crimes against humanity
explicitly set forth prohibited acts, but rape was not mentioned by name. (For
example, the Treaty of Amity and Commerce between Prussia and the United States
provides that in time of war all women and children shall not be molested in their
persons. The Treaty of Amity and Commerce, Between his Majesty the King of
Prussia and the United States of America, art. 23, Sept. 10, 1785, U.S.-Pruss.,
8 TREATIES & OTHER INT'L AGREEMENTS OF THE U.S. 78, 85. The 1863 Lieber
Instructions classified rape as a crime of troop discipline. (Mitchell, The Prohibition of
Rape in International Humanitarian Law as a Norm of Jus cogens: Clarifying the
Doctrine, 15 DUKE J. COMP. INTL. L. 219, 224). It specified rape as a capital crime
punishable by the death penalty (Id. at 236). The 1907 Hague Convention protected
women by requiring the protection of their honour. (Family honour and rights, the
lives of persons, and private property, as well as religious convictions and practice,
must be respected. Convention (IV) Respecting the Laws & Customs of War on
Land, art. 46, Oct. 18, 1907.General Assembly resolution 95 (I) of December 11,
1946 entitled, Affirmation of the Principles of International Law recognized by the
Charter of the Nrnberg Tribunal; General Assembly document A/64/Add.1 of
1946; SeeAgreement for the Prosecution and Punishment of the Major War
Criminals of the European Axis, Aug. 8, 1945, 59 Stat. 1544, 82 U.N.T.S. 279. Article
6(c) of the Charter established crimes against humanity as the following:
CRIMES AGAINST HUMANITY: namely, murder, extermination,
enslavement, deportation, and other inhumane acts committed against any
civilian population, before or during the war, or persecutions on political,
racial or religious grounds in execution of or in connection with any crime
within the Jurisdiction of the Tribunal, whether or not in violation of the
domestic law of the country where perpetrated.
The Nuremberg Judgment did not make any reference to rape and rape was not
prosecuted. (Judge Gabrielle Kirk McDonald, The International Criminal
Tribunals Crime and Punishment in the International Arena,7 ILSA J. INTL.
COMP. L. 667, 676.) However, International Military Tribunal for the Far
East prosecuted rape crimes, even though its Statute did not explicitly criminalize
rape. The Far East Tribunal held General Iwane Matsui, Commander Shunroku
Hata and Foreign Minister Hirota criminally responsible for a series of crimes,
91

including rape, committed by persons under their authority. (THE TOKYO


JUDGMENT: JUDGMENT OF THE INTERNATIONAL MILITARY TRIBUNAL
Page

FOR THE FAR EAST 445-54 (1977).


The first mention of rape as a specific crime came in December 1945 when
Control Council Law No. 10 included the term rape in the definition of crimes
against humanity. Law No. 10, adopted by the four occupying powers in
Germany, was devised to establish a uniform basis for prosecuting war criminals
in German courts. (Control Council for Germany, Law No. 10: Punishment of
Persons Guilty of War Crimes, Crimes Against Peace and Against Humanity,
Dec. 20, 1945, 3 Official Gazette Control Council for Germany 50, 53 (1946))
The 1949 Geneva Convention Relative to the Treatment of Prisoners of War
was the first modern-day international instrument to establish protections against
rape for women. Geneva Convention Relative to the Protection of Civilian
Persons in Time of War, Aug. 12, 1949, art. 27, 6 U.S.T. 3316, 75 U.N.T.S. 287
(entry into force Oct. 20, 1950) [hereinafter Fourth Geneva
Convention].Furthermore, the ICC, the ICTY, and the International Criminal
Tribunal for Rwanda (ICTR) have significantly advanced the crime of rape by
enabling it to be prosecuted as genocide, a war crime, and a crime against
humanity.

But, as it happened, the acknowledgment above or a similar introduction was missing


from Footnote 65.

Next, petitioners also point out that the following eight sentences and their accompanying
footnotes appear in text on pages 30-32 of the Vinuya decision:
xxx In international law, the term jus cogens (literally, compelling law)
refers to norms that command peremptory authority, superseding conflicting
treaties and custom. Jus cogens norms are considered peremptory in the
sense that they are mandatory, do not admit derogation, and can be modified
only by general international norms of equivalent authority.71

Early strains of the jus cogens doctrine have existed since the 1700s,72 but
peremptory norms began to attract greater scholarly attention with the publication of
Alfred von Verdross's influential 1937 article, Forbidden Treaties in International
Law.73 The recognition of jus cogens gained even more force in the 1950s and 1960s
with the ILCs preparation of the Vienna Convention on the Law of Treaties
(VCLT).74 Though there was a consensus that certain international norms had
attained the status of jus cogens,75 the ILC was unable to reach a consensus on the
proper criteria for identifying peremptory norms.

After an extended debate over these and other theories of jus cogens, the ILC
concluded ruefully in 1963 that there is not as yet any generally accepted
criterion by which to identify a general rule of international law as having the
character of jus cogens.76 In a commentary accompanying the draft
convention, the ILC indicated that the prudent course seems to be to x x x
leave the full content of this rule to be worked out in State practice and in the
jurisprudence of international tribunals.77 Thus, while the existence of jus
cogens in international law is undisputed, no consensus exists on its
substance,77 beyond a tiny core of principles and rules.78

Admittedly, the Vinuya decision lifted the above, including their footnotes, from Criddle-
Descents article, A Fiduciary Theory of Jus Cogens.[11] Criddle-Descents footnotes were carried into
the Vinuya decisions own footnotes but no attributions were made to the two authors in those
footnotes.

The Explanation
92

Unless amply explained, the above lifting from the works of Ellis and Criddle-Descent could
be construed as plagiarism. But one of Justice Del Castillos researchers, a court-employed attorney,
Page

explained how she accidentally deleted the attributions, originally planted in the beginning drafts of
her report to him, which report eventually became the working draft of the decision. She said that, for
most parts, she did her research electronically. For international materials, she sourced these mainly
from Westlaw, an online research service for legal and law-related materials to which the Court
subscribes.

In the old days, the common practice was that after a Justice would have assigned a case for
study and report, the researcher would source his materials mostly from available law books and
published articles on print. When he found a relevant item in a book, whether for one side of the
issue or for the other, he would place a strip of paper marker on the appropriate page, pencil mark
the item, and place the book on his desk where other relevant books would have piled up. He would
later paraphrase or copy the marked out passages from some of these books as he typed his
manuscript on a manual typewriter. This occasion would give him a clear opportunity to attribute the
materials used to their authors or sources.

With the advent of computers, however, as Justice Del Castillos researcher also explained,
most legal references, including the collection of decisions of the Court, are found in electronic
diskettes or in internet websites that offer virtual libraries of books and articles. Here, as the
researcher found items that were relevant to her assignment, she downloaded or copied them into
her main manuscript, a smorgasbord plate of materials that she thought she might need. The
researchers technique in this case is not too far different from that employed by a carpenter. The
carpenter first gets the pieces of lumber he would need, choosing the kinds and sizes suitable to the
object he has in mind, say a table. When ready, he would measure out the portions he needs, cut
them out of the pieces of lumber he had collected, and construct his table. He would get rid of the
scraps.

Here, Justice Del Castillos researcher did just that. She electronically cut relevant materials
from books and journals in the Westlaw website and pasted these to a main manuscript in her
computer that contained the issues for discussion in her proposed report to the Justice. She used
the Microsoft Word program.[12] Later, after she decided on the general shape that her report would
take, she began pruning from that manuscript those materials that did not fit, changing the positions
in the general scheme of those that remained, and adding and deleting paragraphs, sentences, and
words as her continuing discussions with Justice Del Castillo, her chief editor,
demanded. Parenthetically, this is the standard scheme that computer-literate court researchers use
everyday in their work.

Justice Del Castillos researcher showed the Committee the early drafts of her report in
the Vinuya case and these included the passages lifted from the separate articles of Criddle-Descent
and of Ellis with proper attributions to these authors. But, as it happened, in the course of editing and
cleaning up her draft, the researcher accidentally deleted the attributions.

First Finding
93

The Court adopts the Committees finding that the researchers explanation regarding the
Page

accidental removal of proper attributions to the three authors is credible. Given the operational
properties of the Microsoft program in use by the Court, the accidental decapitation of attributions to
sources of research materials is not remote.

For most senior lawyers and judges who are not computer literate, a familiar example similar
to the circumstances of the present case would probably help illustrate the likelihood of such an
accident happening. If researcher X, for example, happens to be interested in the inalienable
character of juridical personality in connection with an assignment and if the book of the learned
Civilist, Arturo M. Tolentino, happens to have been published in a website, researcher X would
probably show interest in the following passage from that book:

xxx Both juridical capacity and capacity to act are not rights, but
qualities of persons; hence, they cannot be alienated or renounced.15
xxx
_____________________________
15 3 Von Tuhr 296; 1 Valverde 291.

Because the sentence has a footnote mark (#15) that attributes the idea to other sources, it is
evident that Tolentino did not originate it. The idea is not a product of his intellect. He merely lifted it
from Von Tuhr and Valverde, two reputable foreign authors.

When researcher X copies and pastes the above passage and its footnote into a manuscript-in-the-
making in his computer, the footnote number would, given the computer program in use,
automatically change and adjust to the footnoting sequence of researcher Xs manuscript. Thus, if
the preceding footnote in the manuscript when the passage from Tolentino was pasted on it is 23,
Tolentinos footnote would automatically change from the original Footnote 15 to Footnote 24.

But then, to be of use in his materials-gathering scheme, researcher X would have to tag the
Tolentino passage with a short description of its subject for easy reference. A suitable subject
description would be: The inalienable character of juridical personality.23 The footnote mark, 23
From Tolentino, which researcher X attaches to the subject tag, serves as reminder to him to
attribute the passage in its final form to Tolentino. After the passage has been tagged, it would now
appear like this:

The inalienable character of juridical personality.23

xxx Both juridical capacity and capacity to act are not rights, but
qualities of persons; hence, they cannot be alienated or renounced.24
xxx
_____________________________
23 From Tolentino.
24 3 Von Tuhr 296; 1 Valverde 291.

The tag is of course temporary and would later have to go. It serves but a marker to help
researcher X maneuver the passage into the right spot in his final manuscript.
The mistake of Justice Del Castillos researcher is that, after the Justice had decided what
94

texts, passages, and citations were to be retained including those from Criddle-Descent and Ellis,
Page
and when she was already cleaning up her work and deleting all subject tags, she unintentionally
deleted the footnotes that went with such tagswith disastrous effect.

To understand this, in Tolentinos example, the equivalent would be researcher Xs removal


during cleanup of the tag, The inalienable character of juridical personality.23,by a simple delete
operation, and the unintended removal as well of the accompanying footnote (#23). The erasure of
the footnote eliminates the link between the lifted passage and its source, Tolentinos book. Only the
following would remain in the manuscript:

xxx Both juridical capacity and capacity to act are not rights, but
qualities of persons; hence, they cannot be alienated or renounced.43
_____________________________
43 3 Von Tuhr 296; 1 Valverde 291.

As it happened, the Microsoft word program does not have a function that raises an alarm
when original materials are cut up or pruned. The portions that remain simply blend in with the rest
of the manuscript, adjusting the footnote number and removing any clue that what should stick
together had just been severed.

This was what happened in the attributions to Ellis and Criddle-Descent. The researcher
deleted the subject tags and, accidentally, their accompanying footnotes that served as reminder of
the sources of the lifted passages. With 119 sources cited in the decision, the loss of the 2 of them
was not easily detectable.

Petitioners point out, however, that Justice Del Castillos verified letter of July 22, 2010 is
inconsistent with his researchers claim that the omissions were mere errors in attribution. They cite
the fact that the Justice did not disclose his researchers error in that letter despite the latters
confession regarding her mistake even before the Justice sent his letter to the Chief Justice. By
denying plagiarism in his letter, Justice Del Castillo allegedly perjured himself and sought to
whitewash the case.[13]

But nothing in the July 22 letter supports the charge of false testimony. Justice Del
Castillo merely explained that there was every intention to attribute all sources whenever due and
that there was never any malicious intent to appropriate anothers work as our own, which as it turns
out is a true statement. He recalled how the Court deliberated upon the case more than once,
prompting major revisions in the draft of the decision. In the process, (s)ources were re-studied,
discussions modified, passages added or deleted.Nothing in the letter suggests a cover-up. Indeed,
it did not preclude a researchers inadvertent error.

And it is understandable that Justice Del Castillo did not initially disclose his researchers
error. He wrote the decision for the Court and was expected to take full responsibility for any lapse
arising from its preparation. What is more, the process of drafting a particular decision for the Court
is confidential, which explained his initial request to be heard on the matter without the attendance of
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the other parties.


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Notably, neither Justice Del Castillo nor his researcher had a motive or reason for omitting
attribution for the lifted passages to Criddle-Descent or to Ellis. The latter authors are highly
respected professors of international law. The law journals that published their works have
exceptional reputations. It did not make sense to intentionally omit attribution to these authors when
the decision cites an abundance of other sources. Citing these authors as the sources of the lifted
passages would enhance rather than diminish their informative value. Both Justice Del Castillo and
his researcher gain nothing from the omission. Thus, the failure to mention the works of Criddle-
Decent and Ellis was unquestionably due to inadvertence or pure oversight.

Petitioners of course insist that intent is not material in committing plagiarism since all that a
writer has to do, to avoid the charge, is to enclose lifted portions with quotation marks and
acknowledge the sources from which these were taken.[14] Petitioners point out that the Court should
apply to this case the ruling in University of the Philippines Board of Regents v. Court of Appeals and
Arokiaswamy William Margaret Celine.[15] They argue that standards on plagiarism in the academe
should apply with more force to the judiciary.

But petitioners theory ignores the fact that plagiarism is essentially a form of fraud where
intent to deceive is inherent. Their theory provides no room for errors in research, an unrealistic
position considering that there is hardly any substantial written work in any field of discipline that is
free of any mistake. The theory places an automatic universal curse even on errors that, as in this
case, have reasonable and logical explanations.

Indeed, the 8th edition of Blacks Law Dictionary defines plagiarism as the deliberate and
knowing presentation of another person's original ideas or creative expressions as one's
own.[16] Thus, plagiarism presupposes intent and a deliberate, conscious effort to steal anothers
work and pass it off as ones own.

Besides, the Court said nothing in U.P. Board of Regents that would indicate that an intent to
pass off anothers work as ones own is not required in plagiarism. The Court merely affirmed the
academic freedom of a university to withdraw a masters degree that a student obtained based on
evidence that she misappropriated the work of others, passing them off as her own. This is not the
case here since, as already stated, Justice Del Castillo actually imputed the borrowed passages to
others.

Second Finding

The Court also adopts the Committees finding that the omission of attributions to Criddle-
Descent and Ellis did not bring about an impression that Justice Del Castillo himself created the
passages that he lifted from their published articles. That he merely got those passages from others
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remains self-evident, despite the accidental deletion. The fact is that he still imputed the passages to
the sources from which Criddle-Descent and Ellis borrowed them in the first place.
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This is best illustrated in the familiar example above. After the deletion of the subject tag and,
accidentally, its footnote which connects to the source, the lifted passage would appear like this:
xxx Both juridical capacity and capacity to act are not rights, but
qualities of persons; hence, they cannot be alienated or renounced.43
_____________________________
43 3 Von Tuhr 296; 1 Valverde 291.

Although the unintended deletion severed the passages link to Tolentino, the passage
remains to be attributed to Von Tuhr and Valverde, the original sources that Tolentino himself
cites. The text and its footnote reference cancel out any impression that the passage is a creation of
researcher X. It is the same with the passages from Criddle-Descent and Ellis. Because such
passages remained attributed by the footnotes to the authors original sources, the omission of
attributions to Criddle-Descent and Ellis gave no impression that the passages were the creations of
Justice Del Castillo. This wholly negates the idea that he was passing them off as his own thoughts.

True the subject passages in this case were reproduced in the Vinuya decision without
placing them in quotation marks. But such passages are much unlike the creative line from Robert
Frost,[17] The woods are lovely, dark, and deep, but I have promises to keep, and miles to go before I
sleep, and miles to go before I sleep. The passages here consisted of common definitions and
terms, abridged history of certain principles of law, and similar frequently repeated phrases that, in
the world of legal literature, already belong to the public realm.

To paraphrase Bast and Samuels,[18] while the academic publishing model is based on the
originality of the writers thesis, the judicial system is based on the doctrine of stare decisis, which
encourages courts to cite historical legal data, precedents, and related studies in their decisions. The
judge is not expected to produce original scholarship in every respect. The strength of a decision lies
in the soundness and general acceptance of the precedents and long held legal opinions it draws
from.

Third Finding

Petitioners allege that the decision twisted the passages from Tams, Criddle-Descent, and
Ellis. The Court adopts the Committees finding that this is not so. Indeed, this allegation of twisting
or misrepresentation remains a mystery to the Court. To twist means to distort or pervert the
meaning of.[19] For example, if one lifts the lyrics of the National Anthem, uses it in his work, and
declares that Jose Palma who wrote it did not love his country, then there is twisting or
misrepresentation of what the anthems lyrics said. Here, nothing in the Vinuya decision said or
implied that, based on the lifted passages, authors Tams, Criddle-Descent, and Ellis supported the
Courts conclusion that the Philippines is not under any obligation in international law to espouse
Vinuya et al.s claims.

The fact is that, first, since the attributions to Criddle-Descent and Ellis were accidentally
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deleted, it is impossible for any person reading the decision to connect the same to the works of
those authors as to conclude that in writing the decision Justice Del Castillo twisted their intended
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messages. And, second, the lifted passages provided mere background facts that established the
state of international law at various stages of its development. These are neutral data that could
support conflicting theories regarding whether or not the judiciary has the power today to order the
Executive Department to sue another country or whether the duty to prosecute violators of
international crimes has attained the status of jus cogens.

Considering how it was impossible for Justice Del Castillo to have twisted the meaning of the
passages he lifted from the works of Tams, Criddle-Descent, and Ellis, the charge of twisting or
misrepresentation against him is to say the least, unkind. To be more accurate, however, the charge
is reckless and obtuse.

No Misconduct

On occasions judges and justices have mistakenly cited the wrong sources, failed to use
quotation marks, inadvertently omitted necessary information from footnotes or endnotes. But these
do not, in every case, amount to misconduct. Only errors that are tainted with fraud, corruption, or
malice are subject of disciplinary action.[20] This is not the case here. Justice Del Castillos acts or
omissions were not shown to have been impelled by any of such disreputable motives.[21] If the rule
were otherwise, no judge or justice, however competent, honest, or dedicated he may be, can ever
hope to retire from the judiciary with an unblemished record.[22]

No Inexcusable Negligence

Finally, petitioners assert that, even if they were to concede that the omission was the result
of plain error, Justice Del Castillo is nonetheless guilty of gross inexcusable negligence. They point
out that he has full control and supervision over his researcher and should not have surrendered the
writing of the decision to the latter.[23]

But this assumes that Justice Del Castillo abdicated the writing of the Vinuya decision to his
researcher, which is contrary to the evidence adduced during the hearing. As his researcher
testified, the Justice set the direction that the research and study were to take by discussing the
issues with her, setting forth his position on those issues, and reviewing and commenting on the
study that she was putting together until he was completely satisfied with it.[24] In every sense,
Justice Del Castillo was in control of the writing of the report to the Court, which report eventually
became the basis for the decision, and determined its final outcome.

Assigning cases for study and research to a court attorney, the equivalent of a law clerk in
the United States Supreme Court, is standard practice in the high courts of all nations. This is
dictated by necessity. With about 80 to 100 cases assigned to a Justice in our Court each month, it
would be truly senseless for him to do all the studies and research, going to the library, searching
the internet, checking footnotes, and watching the punctuations. If he does all these by himself, he
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would have to allocate at least one to two weeks of work for each case that has been submitted for
decision. The wheels of justice in the Supreme Court will grind to a halt under such a proposition.
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What is important is that, in this case, Justice Del Castillo retained control over the writing of
the decision in the Vinuya case without, however, having to look over his researchers shoulder as
she cleaned up her draft report to ensure that she hit the right computer keys. The Justices
researcher was after all competent in the field of assignment given her. She finished law from a
leading law school, graduated third in her class, served as Editor-in Chief of her schools Law
Journal, and placed fourth in the bar examinations when she took it. She earned a masters degree in
International Law and Human Rights from a prestigious university in the United States under the
Global-Hauser program, which counsel for petitioners concedes to be one of the top post graduate
programs on International Law in the world. Justice Del Castillo did not exercise bad judgment in
assigning the research work in the Vinuya case to her.

Can errors in preparing decisions be prevented? Not until computers cease to be operated
by human beings who are vulnerable to human errors. They are hypocrites who believe that the
courts should be as error-free as they themselves are.

Incidentally, in the course of the submission of petitioners exhibits, the Committee noted that
petitioners Exhibit J, the accusing statement of the Faculty of the U.P. College of Law on the
allegations of plagiarism and misinterpretation, was a mere dummy. The whole of the statement was
reproduced but the signatures portion below merely listed the names of 38 faculty members, in solid
rows, with the letters Sgd or signed printed beside the names without exception. These included the
name of retired Supreme Court Justice Vicente V. Mendoza, a U.P. professor.

Because the Committee declined to admit a mere dummy of Exhibit J, it directed Atty. Roque
to present the signed copy within three days of the August 26 hearing.[25] He complied. As it turned
out, the original statement was signed by only a minority of the faculty members on the list. The set
of signatories that appeared like solid teeth in the dummy turned out to be broken teeth in the
original. Since only 37 out of the 81 on the list signed the document, it does not appear to be a
statement of the Faculty but of just some of its members. And retired Justice V. V. Mendoza did not
sign the statement, contrary to what the dummy represented. The Committee wondered why the
Dean submitted a dummy of the signed document when U.P. has an abundance of copying
machines.
Since the above circumstances appear to be related to separate en banc matter concerning
the supposed Faculty statement, there is a need for the Committee to turn over the signed copy of
the same to the en banc for its consideration in relation to that matter.

WHEREFORE, in view of all of the above, the Court:

1. DISMISSES for lack of merit petitioner Vinuya, et al.s charges of plagiarism, twisting of
cited materials, and gross neglect against Justice Mariano C. del Castillo;

2. DIRECTS the Public Information Office to send copies of this decision to Professors Evan
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J. Criddle and Evan Fox-Descent, Dr. Mark Ellis, and Professor Christian J. Tams at their known
addresses;
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3. DIRECTS the Clerk of Court to provide all court attorneys involved in legal research and
reporting with copies of this decision and to enjoin them to avoid editing errors committed in
the Vinuya case while using the existing computer program especially when the volume of citations
and footnoting is substantial; and

4. Finally, DIRECTS the Clerk of Court to acquire the necessary software for use by the
Court that can prevent future lapses in citations and attributions.

Further, the Court DIRECTS the Committee on Ethics and Ethical Standards to turn over to
the en banc the dummy as well as the signed copy of petitioners Exhibit J, entitled Restoring
Integrity, a statement by the Faculty of the University of the Philippines College of Law for the en
bancs consideration in relation to the separate pending matter concerning that supposed Faculty
statement.

SO ORDERED.

Republic of the Philippines


SUPREME COURT
Manila

EN BANC

A.M. No. 10-7-17-SC February 8, 2011

IN THE MATTER OF THE CHARGES OF PLAGIARISM, ETC., AGAINST ASSOCIATE JUSTICE


MARIANO C. DEL CASTILLO.

RESOLUTION

PER CURIAM:

Petitioners Isabelita C. Vinuya, et al., all members of the Malaya Lolas Organization, seek
reconsideration of the decision of the Court dated October 12, 2010 that dismissed their charges of
plagiarism, twisting of cited materials, and gross neglect against Justice Mariano Del Castillo in
connection with the decision he wrote for the Court in G.R. No. 162230, entitled Vinuya v. Romulo.1

Mainly, petitioners claim that the Court has by its decision legalized or approved of the commission
of plagiarism in the Philippines. This claim is absurd. The Court, like everyone else, condemns
plagiarism as the world in general understands and uses the term.

Plagiarism, a term not defined by statute, has a popular or common definition. To plagiarize, says
Webster, is "to steal and pass off as ones own" the ideas or words of another. Stealing implies
malicious taking. Blacks Law Dictionary, the worlds leading English law dictionary quoted by the
Court in its decision, defines plagiarism as the "deliberate and knowing presentation of another
person's original ideas or creative expressions as ones own."2 The presentation of another persons
ideas as ones own must be deliberate or premeditateda taking with ill intent.

There is no commonly-used dictionary in the world that embraces in the meaning of plagiarism
errors in attribution by mere accident or in good faith.
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Certain educational institutions of course assume different norms in its application. For instance, the
Loyola Schools Code of Academic Integrity ordains that "plagiarism is identified not through intent
but through the act itself. The objective act of falsely attributing to ones self what is not ones work,
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whether intentional or out of neglect, is sufficient to conclude that plagiarism has occurred. Students
who plead ignorance or appeal to lack of malice are not excused."3

But the Courts decision in the present case does not set aside such norm. The decision makes this
clear, thus:

To paraphrase Bast and Samuels, while the academic publishing model is based on the originality of
the writers thesis, the judicial system is based on the doctrine of stare decisis, which encourages
courts to cite historical legal data, precedents, and related studies in their decisions. The judge is not
expected to produce original scholarship in every respect. The strength of a decision lies in the
soundness and general acceptance of the precedents and long held legal opinions it draws from.4

Original scholarship is highly valued in the academe and rightly so. A college thesis, for instance,
should contain dissertations embodying results of original research, substantiating a specific
view.5 This must be so since the writing is intended to earn for the student an academic degree,
honor, or distinction. He earns no credit nor deserves it who takes the research of others, copies
their dissertations, and proclaims these as his own. There should be no question that a cheat
deserves neither reward nor sympathy.

But the policy adopted by schools of disregarding the element of malicious intent found in
dictionaries is evidently more in the nature of establishing what evidence is sufficient to prove the
commission of such dishonest conduct than in rewriting the meaning of plagiarism. Since it would be
easy enough for a student to plead ignorance or lack of malice even as he has copied the work of
others, certain schools have adopted the policy of treating the mere presence of such copied work in
his paper sufficient objective evidence of plagiarism. Surely, however, if on its face the students
work shows as a whole that he has but committed an obvious mistake or a clerical error in one of
hundreds of citations in his thesis, the school will not be so unreasonable as to cancel his diploma.

In contrast, decisions of courts are not written to earn merit, accolade, or prize as an original piece of
work or art. Deciding disputes is a service rendered by the government for the public good. Judges
issue decisions to resolve everyday conflicts involving people of flesh and blood who ache for
speedy justice or juridical beings which have rights and obligations in law that need to be protected.
The interest of society in written decisions is not that they are originally crafted but that they are fair
and correct in the context of the particular disputes involved. Justice, not originality, form, and style,
is the object of every decision of a court of law.

There is a basic reason for individual judges of whatever level of courts, including the Supreme
Court, not to use original or unique language when reinstating the laws involved in the cases they
decide. Their duty is to apply the laws as these are written. But laws include, under the doctrine of
stare decisis, judicial interpretations of such laws as are applied to specific situations. Under this
doctrine, Courts are "to stand by precedent and not to disturb settled point." Once the Court has "laid
down a principle of law as applicable to a certain state of facts, it will adhere to that principle, and
apply it to all future cases, where facts are substantially the same; regardless of whether the parties
or property are the same."6

And because judicial precedents are not always clearly delineated, they are quite often entangled in
apparent inconsistencies or even in contradictions, prompting experts in the law to build up
regarding such matters a large body of commentaries or annotations that, in themselves, often
become part of legal writings upon which lawyers and judges draw materials for their theories or
solutions in particular cases. And, because of the need to be precise and correct, judges and
practitioners alike, by practice and tradition, usually lift passages from such precedents and writings,
at times omitting, without malicious intent, attributions to the originators.

Is this dishonest? No. Duncan Webb, writing for the International Bar Association puts it succinctly.
When practicing lawyers (which include judges) write about the law, they effectively place their
ideas, their language, and their work in the public domain, to be affirmed, adopted, criticized, or
rejected. Being in the public domain, other lawyers can thus freely use these without fear of
committing some wrong or incurring some liability. Thus:
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The tendency to copy in law is readily explicable. In law accuracy of words is everything. Legal
disputes often centre round the way in which obligations have been expressed in legal documents
and how the facts of the real world fit the meaning of the words in which the obligation is contained.
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This, in conjunction with the risk-aversion of lawyers means that refuge will often be sought in
articulations that have been tried and tested. In a sense therefore the community of lawyers have
together contributed to this body of knowledge, language, and expression which is common property
and may be utilized, developed and bettered by anyone.7

The implicit right of judges to use legal materials regarded as belonging to the public domain is not
unique to the Philippines. As Joyce C. George, whom Justice Maria Lourdes Sereno cites in her
dissenting opinion, observed in her Judicial Opinion Writing Handbook:

A judge writing to resolve a dispute, whether trial or appellate, is exempted from a charge of
plagiarism even if ideas, words or phrases from a law review article, novel thoughts published in a
legal periodical or language from a partys brief are used without giving attribution. Thus judges are
free to use whatever sources they deem appropriate to resolve the matter before them, without fear
of reprisal. This exemption applies to judicial writings intended to decide cases for two reasons: the
judge is not writing a literary work and, more importantly, the purpose of the writing is to resolve a
dispute. As a result, judges adjudicating cases are not subject to a claim of legal plagiarism.8

If the Court were to inquire into the issue of plagiarism respecting its past decisions from the time of
Chief Justice Cayetano S. Arellano to the present, it is likely to discover that it has not on occasion
acknowledged the originators of passages and views found in its decisions. These omissions are
true for many of the decisions that have been penned and are being penned daily by magistrates
from the Court of Appeals, the Sandiganbayan, the Court of Tax Appeals, the Regional Trial Courts
nationwide and with them, the municipal trial courts and other first level courts. Never in the
judiciarys more than 100 years of history has the lack of attribution been regarded and demeaned
as plagiarism.

This is not to say that the magistrates of our courts are mere copycats. They are not. Their decisions
analyze the often conflicting facts of each case and sort out the relevant from the irrelevant. They
identify and formulate the issue or issues that need to be resolved and evaluate each of the laws,
rulings, principles, or authorities that the parties to the case invoke. The decisions then draw their
apt conclusions regarding whether or not such laws, rulings, principles, or authorities apply to the
particular cases before the Court. These efforts, reduced in writing, are the product of the judges
creativity. It is hereactually the substance of their decisionsthat their genius, originality, and
honest labor can be found, of which they should be proud.

In Vinuya, Justice Del Castillo examined and summarized the facts as seen by the opposing sides in
a way that no one has ever done. He identified and formulated the core of the issues that the parties
raised. And when he had done this, he discussed the state of the law relevant to their resolution. It
was here that he drew materials from various sources, including the three foreign authors cited in the
charges against him. He compared the divergent views these present as they developed in history.
He then explained why the Court must reject some views in light of the peculiar facts of the case and
applied those that suit such facts. Finally, he drew from his discussions of the facts and the law the
right solution to the dispute in the case. On the whole, his work was original. He had but done an
honest work.

The Court will not, therefore, consistent with established practice in the Philippines and elsewhere,
dare permit the filing of actions to annul the decisions promulgated by its judges or expose them to
charges of plagiarism for honest work done.

This rule should apply to practicing lawyers as well. Counsels for the petitioners, like all lawyers
handling cases before courts and administrative tribunals, cannot object to this. Although as a rule
they receive compensation for every pleading or paper they file in court or for every opinion they
render to clients, lawyers also need to strive for technical accuracy in their writings. They should not
be exposed to charges of plagiarism in what they write so long as they do not depart, as officers of
the court, from the objective of assisting the Court in the administration of justice.

As Duncan Webb said:

In presenting legal argument most lawyers will have recourse to either previous decisions of the
courts, frequently lifting whole sections of a judges words to lend weight to a particular point either
with or without attribution. The words of scholars are also sometimes given weight, depending on
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reputation. Some encyclopaedic works are given particular authority. In England this place is given
to Halsburys Laws of England which is widely considered authoritative. A lawyer can do little better
than to frame an argument or claim to fit with the articulation of the law in Halsburys. While in many
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cases the very purpose of the citation is to claim the authority of the author, this is not always the
case. Frequently commentary or dicta of lesser standing will be adopted by legal authors, largely
without attribution.

xxxx

The converse point is that originality in the law is viewed with skepticism. It is only the arrogant fool
or the truly gifted who will depart entirely from the established template and reformulate an existing
idea in the belief that in doing so they will improve it. While over time incremental changes occur, the
wholesale abandonment of established expression is generally considered foolhardy.9

The Court probably should not have entertained at all the charges of plagiarism against Justice Del
Castillo, coming from the losing party. But it is a case of first impression and petitioners, joined by
some faculty members of the University of the Philippines school of law, have unfairly maligned him
with the charges of plagiarism, twisting of cited materials, and gross neglect for failing to attribute
lifted passages from three foreign authors. These charges as already stated are false, applying the
meaning of plagiarism as the world in general knows it.

True, Justice Del Castillo failed to attribute to the foreign authors materials that he lifted from their
works and used in writing the decision for the Court in the Vinuya case. But, as the Court said, the
evidence as found by its Ethics Committee shows that the attribution to these authors appeared in
the beginning drafts of the decision. Unfortunately, as testified to by a highly qualified and
experienced court-employed researcher, she accidentally deleted the same at the time she was
cleaning up the final draft. The Court believed her since, among other reasons, she had no motive
for omitting the attribution. The foreign authors concerned, like the dozens of other sources she cited
in her research, had high reputations in international law.1awphi1

Notably, those foreign authors expressly attributed the controversial passages found in their works to
earlier writings by others. The authors concerned were not themselves the originators. As it
happened, although the ponencia of Justice Del Castillo accidentally deleted the attribution to them,
there remained in the final draft of the decision attributions of the same passages to the earlier
writings from which those authors borrowed their ideas in the first place. In short, with the remaining
attributions after the erroneous clean-up, the passages as it finally appeared in the Vinuya decision
still showed on their face that the lifted ideas did not belong to Justice Del Castillo but to others. He
did not pass them off as his own.

With our ruling, the Court need not dwell long on petitioners allegations that Justice Del Castillo had
also committed plagiarism in writing for the Court his decision in another case, Ang Ladlad v.
Commission on Elections.10 Petitioners are nit-picking. Upon close examination and as Justice Del
Castillo amply demonstrated in his comment to the motion for reconsideration, he in fact made
attributions to passages in such decision that he borrowed from his sources although they at times
suffered in formatting lapses.

Considering its above ruling, the Court sees no point in further passing upon the motion of the
Integrated Bar of the Philippines for leave to file and admit motion for reconsideration-in-intervention
dated January 5, 2011 and Dr. Peter Payoyos claim of other instances of alleged plagiarism in the
Vinuya decision.

ACCORDINGLY, the Court DENIES petitioners motion for reconsideration for lack of merit.

SO ORDERED.
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