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G.R. No. 148222 August 15, 2003
PEARL & DEAN (PHIL.), INCORPORATED, Petitioner,vs.SHOEMART, INCORPORATED, and NORTH EDSA MARKETING, INCORPORATED, Respondents.
CORONA, J.:
In the instant petition for review on certiorari under Rule 45 of the Rules of Court, petitioner Pearl & Dean(Phil.) Inc. (P & D) assails the May 22, 2001 decisio n1 of the Court of Appeals reversing the October 31, 1996decision2of the Regional Trial Court of Makati, Branch 133, in Civil Case No. 92-516 which declared privaterespondents Shoemart Inc. (SMI) and North Edsa Marketing Inc. (NEMI) liable for infringement of trademarkand copyright, and unfair competition.
FACTUAL ANTECEDENTS
The May 22, 2001 decision of the Court of Appeals3 contained a summary of this dispute:
"Plaintiff-appellant Pearl and Dean (Phil.), Inc. is a corporation engaged in the manufacture of advertisingdisplay units simply referred to as light boxes. These units utilize specially printed posters sandwichedbetween plastic sheets and illuminated with back lights. Pearl and Dean was able to secure a Certificate ofCopyright Registration dated January 20, 1981 over these illuminated display units. The advertising light boxes
were marketed under the trademark "Poster Ads". The application for registration of the trademark was filedwith the Bureau of Patents, Trademarks and Technology Transfer on June 20, 1983, but was approved onlyon September 12, 1988, per Registration No. 41165. From 1981 to about 1988, Pearl and Dean employed theservices of Metro Industrial Services to manufacture its advertising displays.
Sometime in 1985, Pearl and Dean negotiated with defendant-appellant Shoemart, Inc. (SMI) for the lease andinstallation of the light boxes in SM City North Edsa. Since SM City North Edsa was under construction at thattime, SMI offered as an alternative, SM Makati and SM Cubao, to which Pearl and Dean agreed. OnSeptember 11, 1985, Pearl and Dean’s General Manager, Rodolfo Vergara, submitted for signature thecontracts covering SM Cubao and SM Makati to SMI’s Advertising Promotions and Publicity Division Manager,Ramonlito Abano. Only the contract for SM Makati, however, was returned signed. On October 4, 1985,Vergara wrote Abano inquiring about the other contract and reminding him that their agreement for installationof light boxes was not only for its SM Makati branch, but also for SM Cubao. SMI did not bother to reply.
Instead, in a letter dated January 14, 1986, SMI’s house counsel informed Pearl and Dean that it wasrescinding the contract for SM Makati due to non-performance of the terms thereof. In his reply dated February17, 1986, Vergara protested the unilateral action of SMI, saying it was without basis. In the same letter, hepushed for the signing of the contract for SM Cubao.
Two years later, Metro Industrial Services, the company formerly contracted by Pearl and Dean to fabricate itsdisplay units, offered to construct light boxes for Shoemart’s chain of stores. SMI approved the proposal andten (10) light boxes were subsequently fabricated by Metro Industrial for SMI. After its contract with MetroIndustrial was terminated, SMI engaged the services of EYD Rainbow Advertising Corporation to make thelight boxes. Some 300 units were fabricated in 1991. These were delivered on a staggered basis and installedat SM Megamall and SM City.
Sometime in 1989, Pearl and Dean, received reports that exact copies of its light boxes were installed at SMCity and in the fastfood section of SM Cubao. Upon investigation, Pearl and Dean found out that aside from
the two (2) reported SM branches, light boxes similar to those it manufactures were also installed in two (2)other SM stores. It further discovered that defendant-appellant North Edsa Marketing Inc. (NEMI), through its
marketing arm, Prime Spots Marketing Services, was set up primarily to sell advertising space in lighteddisplay units located in SMI’s different branches. Pearl and Dean noted that NEMI is a sister company of SMI.
In the light of its discoveries, Pearl and Dean sent a letter dated December 11, 1991 to both SMI and NEMIenjoining them to cease using the subject light boxes and to remove the same from SMI’s establishments. Italso demanded the discontinued use of the trademark "Poster Ads," and the payment to Pearl and Dean ofcompensatory damages in the amount of Twenty Million Pesos (P20,000,000.00).
Upon receipt of the demand letter, SMI suspended the leasing of two hundred twenty-four (224) light boxes
and NEMI took down its advertisements for "Poster Ads" from the lighted display units in SMI’s stores.Claiming that both SMI and NEMI failed to meet all its demands, Pearl and Dean filed this instant case forinfringement of trademark and copyright, unfair competition and damages.
In denying the charges hurled against it, SMI maintained that it independently developed its poster panelsusing commonly known techniques and available technology, without notice of or reference to Pearl andDean’s copyright. SMI noted that the registration of the mark "Poster Ads" was only for stationeries such asletterheads, envelopes, and the like. Besides, according to SMI, the word "Poster Ads" is a generic term whichcannot be appropriated as a trademark, and, as such, registration of such mark is invalid. It also stressed thatPearl and Dean is not entitled to the reliefs prayed for in its complaint since its advertising display unitscontained no copyright notice, in violation of Section 27 of P.D. 49. SMI alleged that Pearl and Dean had nocause of action against it and that the suit was purely intended to malign SMI’s good name. On this basis, SMI,aside from praying for the dismissal of the case, also counterclaimed for moral, actual and exemplarydamages and for the cancellation of Pearl and Dean’s Certificat ion of Copyright Registration No. PD-R-2558dated January 20, 1981 and Certificate of Trademark Registration No. 4165 dated September 12, 1988.
NEMI, for its part, denied having manufactured, installed or used any advertising display units, nor havingengaged in the business of advertising. It repleaded SMI’s averments, admissions and denials and prayed forsimilar reliefs and counterclaims as SMI."
The RTC of Makati City decided in favor of P & D:
Wherefore, defendants SMI and NEMI are found jointly and severally liable for infringement of copyright underSection 2 of PD 49, as amended, and infringement of trademark under Section 22 of RA No. 166, asamended, and are hereby penalized under Section 28 of PD 49, as amended, and Sections 23 and 24 of RA166, as amended. Accordingly, defendants are hereby directed:
(1) to pay plaintiff the following damages:
(a) actual damages - P16,600,000.00, representing profits derived by defendants as a result of infringement ofplaintiff’s copyright from 1991 to 1992
(b) moral damages - P1,000.000.00
(c) exemplary damages - P1,000,000.00
(d) attorney’s fees - P1,000,000.00
(e) costs of suit;
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(2) to deliver, under oath, for impounding in the National Library, all light boxes of SMI which were fabricatedby Metro Industrial Services and EYD Rainbow Advertising Corporation;
(3) to deliver, under oath, to the National Library, all filler-posters using the trademark "Poster Ads", fordestruction; and
(4) to permanently refrain from infringing the copyright on plaintiff’s light bo xes and its trademark "Poster Ads".
Defendants’ counterclaims are hereby ordered dismissed for lack of merit.
SO ORDERED.4
On appeal, however, the Court of Appeals reversed the trial court:
Since the light boxes cannot, by any stretch of the imagination, be considered as either prints, pictorialillustrations, advertising copies, labels, tags or box wraps, to be properly classified as a copyrightable class"O" work, we have to agree with SMI when it posited that what was copyrighted were the technical drawingsonly, and not the light boxes themselves, thus:
42. When a drawing is technical and depicts a utilitarian object, a copyright over the drawings like plaintiff-appellant’s will not extend to the actual object. It has so been held under jurisprudence, of which the leadingcase is Baker vs. Selden (101 U.S. 841 (1879). In that case, Selden had obtained a copyright protection for abook entitled "Selden’s Condensed Ledger or Bookkeeping Simplified" which purported to explain a newsystem of bookkeeping. Included as part of the book were blank forms and illustrations consisting of ruled linesand headings, specially designed for use in connection with the system explained in the work. These formsshowed the entire operation of a day or a week or a month on a single page, or on two pages following eachother. The defendant Baker then produced forms which were similar to the forms illustrated in Selden’scopyrighted books. The Court held that exclusivity to the actual forms is not extended by a copyright. Thereason was that "to grant a monopoly in the underlying art when no examination of its novelty has ever beenmade would be a surprise and a fraud upon the public; that is the province of letters patent, not of copyright." And that is precisely the point. No doubt aware that its alleged or iginal design would never pass the rigorousexamination of a patent application, plaintiff-appellant fought to foist a fraudulent monopoly on the public byconveniently resorting to a copyright registration which merely employs a recordal system without the benefitof an in-depth examination of novelty.
The principle in Baker vs. Selden was likewise applied in Muller vs. Triborough Bridge Authority [43 F. Supp.
298 (S.D.N.Y. 1942)]. In this case, Muller had obtained a copyright over an unpublished drawing entitled"Bridge Approach – the drawing showed a novel bridge approach to unsnarl traffic congestion". The defendantconstructed a bridge approach which was alleged to be an infringement of the new design illustrated inplaintiff’s drawings. In this case it was held that protection of the drawing does not extend to the unauthorizedduplication of the object drawn because copyright extends only to the description or expression of the objectand not to the object itself. It does not prevent one from using the drawings to construct the object portrayed inthe drawing.
In two other cases, Imperial Homes Corp. v. Lamont , 458 F. 2d 895 and Scholtz Homes, Inc. v. Maddox , 379F. 2d 84, it was held that there is no copyright infringement when one who, without being authorized, uses acopyrighted architectural plan to construct a structure. This is because the copyright does not extend to thestructures themselves.
In fine, we cannot find SMI liable for infringing Pearl and Dean’s copyright over the technical drawings of the
latter’s advertising display units.
xxx xxx xxx
The Supreme Court trenchantly held in Faberge, Incorporated vs. Intermediate Appellate Court that theprotective mantle of the Trademark Law extends only to the goods used by the first user as specified in thecertificate of registration, following the clear mandate conveyed by Section 20 of Republic Act 166, asamended, otherwise known as the Trademark Law, which reads:
SEC. 20. Certification of registration prima facie evidence of validity .- A certificate of registration of a mark ortrade-name shall be prima facie evidence of the validity of the registration, the reg istrant’s ownership of the
mark or trade-name, and of the registrant’s exclusive right to use the same in connection with the goods,business or services specified in the certificate, subject to any conditions and limitations stated therein."
(underscoring supplied )
The records show that on June 20, 1983, Pearl and Dean applied for the registration of the trademark "Poster Ads" with the Bureau of Patents, Trademarks, and Technology Tran sfer. Said trademark was recorded in thePrincipal Register on September 12, 1988 under Registration No. 41165 covering the following products:stationeries such as letterheads, envelopes and calling cards and newsletters.
With this as factual backdrop, we see no legal basis to the finding of liability on the part of the defendants-appellants for their use of the words "Poster Ads", in the advertising display units in suit. Jurisprudence hasinterpreted Section 20 of the Trademark Law as "an implicit permission to a manufacturer to venture into theproduction of goods and allow that producer to appropriate the brand name of the senior registrant on goodsother than those stated in the certificate of registration." The Supreme Court further emphasized the restrictive
meaning of Section 20 when it stated, through Justice Conrado V. Sanchez, that:
Really, if the certificate of registration were to be deemed as including goods not specified therein, then asituation may arise whereby an applicant may be tempted to register a trademark on any and all goods whichhis mind may conceive even if he had never intended to use the trademark for the said goods. We believe thatsuch omnibus registration is not contemplated by our Trademark Law.
While we do not discount the striking similarity between Pearl and Dean’s registered trademark anddefendants-appellants’ "Poster Ads" design, as well as the parallel use by which said words were used in theparties’ respective advertising copies, we cannot find defendants-appellants liable for infringement oftrademark. "Poster Ads" was registered by Pearl and Dean for specific use in its stationeries, in contrast todefendants-appellants who used the same words in their advertising display units. Why Pearl and Dean limitedthe use of its trademark to stationeries is simply beyond us. But, having already done so, it must stand by theconsequence of the registration which it had caused.
xxx xxx xxx
We are constrained to adopt the view of defendants-appellants that the words "Poster Ads" are a simplecontraction of the generic term poster advertising. In the absence of any convincing proof that "Poster Ads"has acquired a secondary meaning in this jurisdiction, we find that Pearl and Dean’s exclusive right to the useof "Poster Ads" is limited to what is written in its certificate of registration, namely, stationeries.
Defendants-appellants cannot thus be held liable for infringement of the trademark "Poster Ads".
There being no finding of either copyright or trademark infringement on the part of SMI and NEMI, themonetary award granted by the lower court to Pearl and Dean has no leg to stand on.
xxx xxx xxx
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WHEREFORE, premises considered, the assailed decision is REVERSED and SET ASIDE, and another isrendered DISMISSING the complaint and counterclaims in the above-entitled case for lack of merit .5
Dissatisfied with the above decision, petitioner P & D filed the instant petition assigning the following errors forthe Court’s consideration:
A. THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT NO COPYRIGHTINFRINGEMENT WAS COMMITTED BY RESPONDENTS SM AND NEMI;
B. THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT NO INFRINGEMENTOF PEARL & DEAN’S TRADEMARK "POSTER ADS" WAS COMMITTED BY RESPONDENTSSM AND NEMI;
C. THE HONORABLE COURT OF APPEALS ERRED IN DISMISSING THE AWARD OF THETRIAL COURT, DESPITE THE LATTER’S FINDING, NOT DISPUTED BY THE HONORABLECOURT OF APPEALS, THAT SM WAS GUILTY OF BAD FAITH IN ITS NEGOTIATION OF ADVERTISING CONTRACTS WITH PEARL & DEAN.
D. THE HONORABLE COURT OF APPEALS ERRED IN NOT HOLDING RESPONDENTS SM AND NEMI LIABLE TO PEARL & DEAN FOR ACTUAL, MORAL & EXEMPLARY DAMAGES, ATTORNEY’S FEES AND COSTS OF SUIT.6
ISSUES
In resolving this very interesting case, we are challenged once again to put into proper perspective four mainconcerns of intellectual property law — patents, copyrights, trademarks and unfair competition arising frominfringement of any of the first three. We shall focus then on the following issues:
(1) if the engineering or technical drawings of an advertising display unit (light box) are grantedcopyright protection (copyright certificate of registration) by the National Library, is the light boxdepicted in such engineering drawings ipso facto also protected by such copyright?
(2) or should the light box be registered separately and protected by a patent issued by theBureau of Patents Trademarks and Technology Transfer (now Intellectual Property Office) — inaddition to the copyright of the engineering drawings?
(3) can the owner of a registered trademark legally prevent others from using such trademark if itis a mere abbreviation of a term descriptive of his goods, services or business?
ON THE ISSUE OF COPYRIGHT INFRINGEMENT
Petitioner P & D’s complaint was that SMI infringed on its copyright over the light boxes when SMI had theunits manufactured by Metro and EYD Rainbow Advertising for its own account. Obviously, petitioner’sposition was premised on its belief that its copyright over the engineering drawings extended ipso facto to thelight boxes depicted or illustrated in said drawings. In ruling that there was no copyright infringement, the Courtof Appeals held that the copyright was limited to the drawings alone and not to the light box itself. We agreewith the appellate court.
First, petitioner’s application for a copyright certificate — as well as Copyright Certificate No. PD-R2588 issuedby the National Library on January 20, 1981 — clearly stated that it was for a class "O" work under Section 2
(O) of PD 49 (The Intellectual Property Decree) which was the statute then prevailing. Said Section 2expressly enumerated the works subject to copyright:
SEC. 2. The rights granted by this Decree shall, from the moment of creation, subsist with respect to any ofthe following works:
x x x x x x x x x
(O) Prints, pictorial illustrations, advertising copies, labels, tags, and box wraps;
x x x x x x x x x
Although petitioner’s copyright certificate was entitled "Advertising Display Unit s" (which depicted the box -typeelectrical devices), its claim of copyright infringement cannot be sustained.
Copyright, in the strict sense of the term, is purely a statutory right. Being a mere statutory grant, the rights arelimited to what the statute confers. It may be obtained and enjoyed only with respect to the subjects and by thepersons, and on terms and conditions specified in the statute .7 Accordingly, it can cover only the works falli ngwithin the statutory enumeration or description.8
P & D secured its copyright under the classification class "O" work. This being so, petitioner’s copyrightprotection extended only to the technical drawings and not to the light box itself because the latter was not atall in the category of "prints, pictorial illustrations, advertising copies, labels, tags and box wraps." Statedotherwise, even as we find that P & D indeed owned a valid copyright, the same could have referred only tothe technical drawings within the category of "pictorial illustrations." It could not have possibly stretched out toinclude the underlying light box. The strict application9 of the law’s enumeration in Section 2 preven ts us fromgiving petitioner even a little leeway, that is, even if its copyright certificate was entitled "Advertising DisplayUnits." What the law does not include, it excludes, and for the good reason: the light box was not a literary orartistic piece which could be copyrighted under the copyright law. And no less clearly, neither could the lack ofstatutory authority to make the light box copyrightable be remedied by the simplistic act of entitling thecopyright certificate issued by the National Library as "Advertising Display Units."
In fine, if SMI and NEMI reprinted P & D’s technical drawings for sale to the public without license from P & D,then no doubt they would have been guilty of copyright infringement. But this was not the case. SMI’s andNEMI’s acts complained of by P & D were to have units similar or identical to the light box illustrated in thetechnical drawings manufactured by Metro and EYD Rainbow Advertising, for leasing out to different
advertisers. Was this an infringement of petitioner’s copyright over the technical drawings? We do not think so.
During the trial, the president of P & D himself admitted that the light box was neither a literary not an artisticwork but an "engineering or marketing invention."10 Obviously, there appeared to be some confusion regardingwhat ought or ought not to be the proper subjects of copyrights, patents and trademarks. In the leading caseof Kho vs. Court of Appeals ,11 we ruled that these three legal rights are completely distinct and separate from
one another, and the protection afforded by one cannot be used interchangeably to cover items or works thatexclusively pertain to the others:
Trademark, copyright and patents are different intellectual property rights that cannot be interchanged with oneanother. A trademark is any visible sign capable of distinguishing the goods (trademark) or services (servicemark) of an enterprise and shall include a stamped or marked container of goods . In relation thereto, a tradename means the name or designation identifying or distinguishing an enterprise. Meanwhile, the scope of acopyright is confined to literary and artistic works which are original intellectual creations in the literary and
artistic domain protected from the moment of their creation. Patentable inventions, on the other hand, refer to
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any technical solution of a problem in any field of human activity which is new, involves an inventive step andis industrially applicable.
ON THE ISSUE OF PATENT INFRINGEMENT
This brings us to the next point: if, despite its manufacture and commercial use of the light boxes withoutlicense from petitioner, private respondents cannot be held legally liable for infringement of P & D’s copyrightover itstechnical drawings of the said light boxes , should they be liable instead for infringement of patent? Wedo not think so either.
For some reason or another, petitioner never secured a patent for the light boxes. It therefore acquired nopatent rights which could have protected its invention, if in fact it really was. And because it had no patent,petitioner could not legally prevent anyone from manufacturing or commercially using the contraption.In Creser Precision Systems, Inc. vs. Court of Appeals,12 we held that "there can be no infringement of a
patent until a patent has been issued, since whatever right one has to the invention covered by the patentarises alone from the grant of patent. x x x (A)n inventor has no common law right to a monopoly of hisinvention. He has the right to make use of and vend his invention, but if he voluntarily discloses it, such as byoffering it for sale, the world is free to copy and use it with impunity. A patent, however, gives the inventor theright to exclude all others. As a patentee, he has the exclusive right of making, selling or using theinvention.13 On the assumption that petitioner’s advertising units were patentable inventions, petitionerrevealed them fully to the public by submitting the engineering drawings thereof to the National Library.
To be able to effectively and legally preclude others from copying and profiting from the invention, a patent is a
primordial requirement. No patent, no protection. The ultimate goal of a patent system is to bring new designsand technologies into the public domain through disclosure.14 Ideas, once disclosed to the public without theprotection of a valid patent, are subject to appropriation without significant restraint .15
On one side of the coin is the public which will benefit from new ideas; on the other are the inventors who mustbe protected. As held in Bauer & Cie vs. O’Donnel ,16 "The act secured to the inventor the exclusive right tomake use, and vend the thing patented, and consequently to prevent others from exercising like privilegeswithout the consent of the patentee. It was passed for the purpose of encouraging useful invention andpromoting new and useful inventions by the protection and stimulation given to inventive genius, and wasintended to secure to the public, after the lapse of the exclusive privileges granted the benefit of suchinventions and improvements."
The law attempts to strike an ideal balance between the two interests:
"(The p)atent system thus embodies a carefully crafted bargain for encouraging the creation and disclosure ofnew useful and non-obvious advances in technology and design, in return for the exclusive right to practice theinvention for a number of years. The inventor may keep his invention secret and reap its fruits indefinitely. Inconsideration of its disclosure and the consequent benefit to the community, the patent is granted. Anexclusive enjoyment is guaranteed him for 17 years, but upon the expiration of that period, the knowledge ofthe invention inures to the people, who are thus enabled to practice it and profit by its use."17
The patent law has a three-fold purpose: "first, patent law seeks to foster and reward invention; second, itpromotes disclosures of inventions to stimulate further innovation and to permit the public to practice theinvention once the patent expires; third, the stringent requirements for patent protection seek to ensure thatideas in the public domain remain there for the free use of the public."18
It is only after an exhaustive examination by the patent office that a patent is issued. Such an in-depthinvestigation is required because "in rewarding a useful invention, the rights and welfare of the community
must be fairly dealt with and effectively guarded. To that end, the prerequisites to obtaining a patent are strictly
observed and when a patent is issued, the limitations on its exercise are equally strictly enforced. To beginwith, a genuine invention or discovery must be demonstrated lest in the constant demand for new appliances,the heavy hand of tribute be laid on each slight technological advance in art."19
There is no such scrutiny in the case of copyrights nor any notice published before its grant to the effect that aperson is claiming the creation of a work. The law confers the copyright from the moment of creation20 and thecopyright certificate is issued upon registration with the National Library of a sworn ex-parte claim of creation.
Therefore, not having gone through the arduous examination for patents, the petitioner cannot exclude others
from the manufacture, sale or commercial use of the light boxes on the sole basis of its copyright certificateover the technical drawings.
Stated otherwise, what petitioner seeks is exclusivity without any opportunity for the patent office (IPO) toscrutinize the light box’s eligibility as a patentable invention. The irony here is that, had petitioner secured apatent instead, its exclusivity would have been for 17 years only. But through the simplified procedure ofcopyright-registration with the National Library — without undergoing the rigor of defending the patentability ofits invention before the IPO and the public — the petitioner would be protected for 50 years. This situationcould not have been the intention of the law.
In the oft-cited case of Baker vs. Selden21, the United States Supreme Court held that only the expression ofan idea is protected by copyright, not the idea itself . In that case, the plaintiff held the copyright of a bookwhich expounded on a new accounting system he had developed. The publication illustrated blank forms ofledgers utilized in such a system. The defendant reproduced forms similar to those illustrated in the plaintiff’s
copyrighted book. The US Supreme Court ruled that:
"There is no doubt that a work on the subject of book-keeping, though only explanatory of well known systems,may be the subject of a copyright; but, then, it is claimed only as a book. x x x. But there is a clear distinctionbetween the books, as such, and the art, which it is, intended to illustrate. The mere statement of theproposition is so evident that it requires hardly any argument to support it. The same distinction may bepredicated of every other art as well as that of bookkeeping. A treatise on the composition and use ofmedicines, be they old or new; on the construction and use of ploughs or watches or churns; or on the mixtureand application of colors for painting or dyeing; or on the mode of drawing lines to produce the effect ofperspective, would be the subject of copyright; but no one would contend that the copyright of the treatisewould give the exclusive right to the art or manufacture described therein. The copyright of the book, if notpirated 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. Togive to the author of the book an exclusive property in the art described therein, when no examinationof its novelty has ever been officially made, would be asurprise and a fraud upon the public. That isthe province of letters patent, not of copyright. The claim to an invention of discovery of an art ormanufacture must be subjected to the examination of the Patent Office before an exclusive righttherein 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 thesubjects just enumerated. Take the case of medicines. Certain mixtures are found to be of great value in thehealing art. If the discoverer writes and publishes a book on the subject (as regular physiciansgenerally do), he gains no exclusive right to the manufacture and sale of the medicine; he gives that tothe public. If he desires to acquire such exclusive right, he must obtain a patent for the mixture as anew art, manufacture or composition of matter. He may copyright his book, if he pleases; but that onlysecures to him the exclusive right of printing and publishing his book. So of all other inventions ordiscoveries.
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The copyright of a book on perspective, no matter how many drawings and illustrations it may contain, givesno exclusive right to the modes of drawing described, though they may never have been known or usedbefore. By publishing the book without getting a patent for the art, the latter is given to the public.
x x x
Now, whilst no one has a right to print or publish his book, or any material part thereof, as a book intended toconvey instruction in the art, any person may practice and use the art itself which he has described andillustrated therein. The use of the art is a totally different thing from a p ublication of the book explaining
it. The copyright of a book on bookkeeping cannot secure the exclusive right to make, sell and use accountbooks 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, ofcourse, 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 ideasproduced by the peculiar nature of the art described in the books, which have been made the subject ofcopyright. In describing the art, the illustrations and diagrams employed happened to correspond more closelythan usual with the actual work performed by the operator who uses the art. x x x The description of the artin a book, though entitled to the benefit of copyright, lays no foundation for an exclusive claim to theart itself. The object of the one is explanation; the object of the other is use. The former may besecured by copyright. The latter can only be secured, if it can be secured at all, by letterspatent." (underscoring supplied)
ON THE ISSUE OF TRADEMARK INFRINGEMENT
This issue concerns the use by respondents of the mark "Poster Ads" which petitioner’s president said was acontraction of "poster advertising." P & D was able to secure a trademark certificate for it, but one where thegoods specified were "stationeries such as letterheads, envelopes, calling cards and newsletters. "22 Petitioneradmitted it did not commercially engage in or market these goods. On the contrary, it dealt in electricallyoperated backlit advertising units and the sale of advertising spaces thereon, which, however, were not at allspecified in the trademark certificate.
Under the circumstances, the Court of Appeals correctly cited Faberge Inc. vs. Intermediate AppellateCourt ,23where we, invoking Section 20 of the old Trademark Law, ruled that "the certificate of registrationissued by the Director of Patents can confer (upon petitioner) the exclusive right to use its own symbol only tothose goods specified in the certificate , subject to any conditions and limitations specified in the certificate x xx. One who has adopted and used a trademark on his goods does not prevent the adoption and use of the
same trademark by others for products which are of a different description."24
Faberge, Inc. was correct andwas in fact recently reiterated in Canon Kabushiki Kaisha vs. Court of Appeals .25
Assuming arguendo that "Poster Ads" could validly qualify as a trademark, the failure of P & D to secure atrademark registration for specific use on the light boxes meant that there could not have been any trademarkinfringement since registration was an essential element thereof.1âwphi1
ON THE ISSUE OF UNFAIR COMPETITION
If at all, the cause of action should have been for unfair competition, a situation which was possible even if P &D had no registration.26 However, while the petitioner’s complaint in the RTC also cited unfair competition, thetrial court did not find private respondents liable therefor. Petitioner did not appeal this particular point; hence,it cannot now revive its claim of unfair competition.
But even disregarding procedural issues, we nevertheless cannot hold respondents guilty of unfaircompetition.
By the nature of things, there can be no unfair competition under the law on copyrights although it is applicableto disputes over the use of trademarks. Even a name or phrase incapable of appropriation as a trademark ortradename may, by long and exclusive use by a business (such that the name or phrase becomes associatedwith the business or product in the mind of the purchasing public), be entitled to protection against unfaircompetition.27 In this case, there was no evidence that P & D’s use of "Poster Ads" was distinctive or well -known. As noted by the Court of Appeals, petitioner’s expert witnesses himself had testified that " ‘Poster Ads’was too generic a name. So it was difficult to identify it with any company, honestly speaking. "28 This crucialadmission by its own expert witness that "Poster Ads" could not be associated with P & D showed that, in themind of the public, the goods and services carrying the trademark "Poster Ads" could not be distinguishedfrom the goods and services of other entities.
This fact also prevented the application of the doctrine of secondary meaning. "Poster Ads" was generic andincapable of being used as a trademark because it was used in the field of poster advertising, the verybusiness engaged in by petitioner. "Secondary meaning" means that a word or phrase originally incapable ofexclusive appropriation with reference to an article in the market (because it is geographically or otherwisedescriptive) might nevertheless have been used for so long and so exclusively by one producer with referenceto his article that, in the trade and to that branch of the purchasing public, the word or phrase has come tomean that the article was his property .29 The admission by petitioner’s own expert witness that he himselfcould not associate "Poster Ads" with petitioner P & D because it was "too generic" definitely precluded theapplication of this exception.
Having discussed the most important and critical issues, we see no need to belabor the rest.
All told, the Court finds no reversible error committed by the Court of Appeals when it reversed the RegionalTrial Court of Makati City.
WHEREFORE, the petition is hereby DENIED and the decision of the Court of Appeals dated May 22, 2001 is AFFIRMED in toto.
SO ORDERED.
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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.
The case before us is a petition for review on certiorari 1 to set aside the (a) decision or the Court of Appeals 2,and (b) the resolution denying petitioners' motion for reconsideration, 3 in which the appellate court affirmedthe trial court's dismissal of the complaint for infringement and/or unfair competition and damages but deleted
the award for attorney's fees.1âwphi1.nêt
The facts are as follows:
Petitioners are authors and copyright owners of duly issued certificates of copyright registration covering theirpublished works, produced through their combined resources and efforts, entitled COLLEGE ENGLISH FORTODAY (CET for brevity), Books 1 and 2, and WORKBOOK FOR COLLEGE FRESHMAN ENGLISH, Series1.
Respondent Felicidad Robles and Goodwill Trading Co., Inc. are the author/publisher and distributor/seller ofanother 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 tocheck on other textbooks dealing with the same subject matter. By chance they came upon the book ofrespondent Robles and upon perusal of said book they were surprised to see that the book was strikinglysimilar 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 severalpages of the respondent's book are similar, if not all together a copy of petitioners' book, which is a case ofplagiarism and copyright infringement.
Petitioners then made demands for damages against respondents and also demanded that they cease anddesist 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 TrialCourt, Makati, a complaint for "Infringement and/or unfair competition with damages" 4 against privaterespondents.5
In the complaint, petitioners alleged that in 1985, respondent Felicidad C. Robles being substantially familiarwith the contents of petitioners' works, and without securing their permission, lifted, copied, plagiarized and/ortransposed certain portions of their book CET. The textual contents and illustrations of CET were literallyreproduced in the book DEP. The plagiarism, incorporation and reproduction of particular portions of the bookCET in the book DEP, without the authority or consent of petitioners, and the misrepresentations ofrespondent Robles that the same was her original work and concept adversely affected and substantiallydiminished the sale of t he 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 infringementand for respondent to recall DEP from the market, respondents refused. Petitioners asked the court to orderthe 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 andprofits since the time of its publication and sale.
Respondent Robles was impleaded in the suit because she authored and directly committed the acts ofinfringement complained of, while respondent Goodwill Trading Co., Inc. was impleaded as the publisher and joint co-owner of the copyright certificates of registration covering the two books authored and caused to bepublished by respondent Robles with obvious connivance with one another.
On July 27, 1988, respondent Robles filed a motion for a bill of particulars 6 which the trial court approved on
August 17, 1988. Petit ioners complied with the desired particularization, and fur nished respondent Robles thespecific portions, inclusive of pages and lines, of the published and copyrighted books of the petitioners whichwere transposed, lifted, copied and plagiarized and/or otherwise found their way into respondent's book.
On August 1, 1988, respondent Goodwill Trading Co., Inc. filed its answer to the complaint 7 and alleged thatpetitioners had no cause of action against Goodwill Trading Co., Inc. since it was not privy to themisrepresentation, plagiarism, incorporation and reproduction of the portions of the book of petitioners; thatthere was an agreement between Goodwill and the respondent Robles that Robles guaranteed Goodwill thatthe materials utilized in the manuscript were her own or that she had secured the necessary permission fromcontributors and sources; that the author assumed sole responsibility and held the publisher without anyliability.
On November 28, 1988, respondent Robles filed her answer 8, and denied the allegations of plagiarism andcopying 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) DEPfollowed the scope and sequence or syllabus which are common to all English grammar writers asrecommended by the Association of Philippine Colleges of Arts and Sciences (APCAS), so any similaritybetween the respondents book and that of the petitioners was due to the orientation of the authors to bothworks and standards and syllabus; and (3) the similarities may be due to the authors' exercise of the "right tofair use of copyrigthed materials, as guides."
Respondent interposed a counterclaim for damages on the ground that bad faith and malice attended the filingof the complaint, because petitioner Habana was professionally jealous and the book DEP replaced CET asthe official textbook of the graduate studies department of the Far Eastern University. 9
During the pre-trial conference, the parties agreed to a stipulation offacts 10 and for the trial court to first resolve the issue of infringement before disposing of the claim fordamages.
After the trial on the merits, on Apr il 23, 1993, the trial court rendered its judgment finding thus:
WHEREFORE, premises considered, the court hereby orders that the complaint filed against defendantsFelicidad Robles and Goodwill Trading Co., Inc. shall be DISMISSED; that said plaintiffs solidarily reimbursedefendant Robles for P20,000.00 attorney's fees and defendant Goodwill for P5,000.00 attorney's 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
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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 courtdirected 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 subscribedto the arguments of respondent Robles that the books in issue were purely the product of her researches andstudies 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 thecomplaint. 14
On June 27, 1997, the Court of Appeals rendered judgment in favor of respondents Robles and GoodwillTrading Co., Inc. The relevant portions of the decision state:
It must be noted, however, that similarity of the allegedly infringed work to the author's or proprietor'scopyrighted work does not of itself establish copyright infringement, especially if the similarity results from thefact that both works deal with the same subject or have the same common source, as in this case.
Appellee Robles has fully explained that the portion or material of the book claimed by appellants to have beencopied 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 ormatters appearing not only in appellants and her books but also in earlier books on College English, includingforeign books, e.i . Edmund Burke's "Speech on Conciliation", Boerigs' "Competence in English" andBroughton's, "Edmund Burke's Collection."
xxx xxx xxx
Appellant's reliance on the last paragraph on Section II is misplaced. I t must be emphasized that they fai led toprove 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 badfaith 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 thesame 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 court's decision.
Petitioners raised the following issues: (1) whether or not, despite the apparent textual, thematic andsequential similarity between DEP and CET, respondents committed no copyright infringement; (2) whether ornot there wasanimus furandi on the part of respondent when they refused to withdraw the copies of CET fromthe market despite notice to withdraw the same; and (3) whether or not respondent Robles abused a writer'sright 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. Atpresent, all laws dealing with the protection of intellectual property rights have been consolidated and as thelaw now stands, the protection of copyrights is governed by Republic Act No. 8293. Notwithstanding thechange in the law, the same principles are reiterated in the new law under Section 177. It provides for the copyor 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 rightsshall consist of the exclusive right to carry out, authorize or prevent the following acts:
177.1 Reproduction of the work or substanlial 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 ofownership;
177.4 Rental of the original or a copy of an audiovisual or cinematographic work, a work embodied in a soundrecording, 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 shallnot constitute infringement of copyright:
(a) the recitation or performance of a work, once it has been lawfully made accessible to the public, if doneprivately 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 art icles and periodicals in the form of presssummaries; Provided , that the source and the name of the author, if appearing on the work are mentioned;(Sec. 11 third par. P.D. 49)
xxx xxx xxx
(e) The inclusion of a work in a publication, broadcast, or other communication to the public, sound recordingof film, if such inclusion is made by way of illustration for teaching purposes and is compatible with fairuse: 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 booksand other literary, scholarly and scientific works. 21
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A perusal o f the records yields several pages of the book DEP that are similar if not identical with the text ofCET.
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 labyrinthof intricate and endless negotiations; not peace to arise out of universal discord, fomented from principle, in allparts of the empire; not peace to depend on the juridical determination of perplexing questions, or the precisemarking of the boundary of a complex government. It is simple peace; sought in its natural course, and in itsordinary 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 isfound in toto. The only difference is that petitioners acknowledged the author Edmund Burke, and respondentsdid not.
In several other pages 26 the treatment and manner of presentation of the topics of DEP are similar if not arehash of that contained in CET.
We believe that respondent Robles' act of lifting from the book of petitioners substantial portions ofdiscussions and examples, and her failure to acknowledge the same in her book is an infringement ofpetitioners' copyrights.
When is there a substantial reproduction of a book? It does not necessarily require that the entire copyrightedwork, or even a large portion of it, be copied. If so much is taken that the value of the original work issubstantially diminished, there is an infringement of copyright and to an injurious extent, the work isappropriated. 27
In determining the question of infringement, the amount of matter copied from the copyrighted work is animportant 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 issufficient in point of law to constitute piracy. 28
The essence of intellectual piracy should be essayed in conceptual terms in order to underscore its gravity byan appropriate understanding thereof. Infringement of a copyright is a trespass on a private domain ownedand occupied by the owner of the copyright, and, therefore, protected by law, and infringement of copyright, orpiracy, which is a synonymous term in this connection, consists in the doing by any person, without theconsent of the owner of the copyright, of anything the sole right to do which is conferred by statute on theowner of the copyright.29
The respondents' claim that the copied portions of the book CET are also found in foreign books and othergrammar books, and that the similarity between her style and that of petitioners can not be avoided since theycome from the same background and orientation may be true. However, in this jurisdiction under Sec 184 ofRepublic Act 8293 it is provided that:
Limitations on Copyright. Notwithstanding the provisions of Chapter V, the following shall not constituteinfringement of copyright:
xxx xxx xxx
(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 art icles and periodicals in the form of presssummaries: Provided , That the source and the name of the author, if appearing on the work, are mentioned.
A copy of a pira cy is an infringement of the original, and it is no defense that the pi rate, in such cases, did notknow 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 thesame?
In the case at bar, there is no question that petitioners presented several pages of the books CET and DEPthat more or less had the same contents. It may be correct that the books being grammar books may containmaterials 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 becauseof technical consideration.
The respondents claim that their similarity in style can be attributed to the fact that both of them were exposedto the APCAS syllabus and their respective academic experience, teaching approach and methodology arealmost 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 ofteaching experience and orientation, it is not an excuse for them to be identical even in examples contained intheir books. The similarities in examples and material contents are so obviously present in this case. How cansimilar/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 Goodwillbookstores the book DEP upon learning of petitioners' complaint while pharisaically denying petitioners'
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demand. It was further noted that when the book DEP was re-issued as a revised version, all the pages citedby 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 "injuriouseffect". Here, the injury consists in that respondent Robles lifted from petitioners' book materials that were theresult of the latter's research work and compilation and misrepresented them as her own. She circulated thebook DEP for commercial use did not acknowledged 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 torepresent it as her own is injury enough. In copyrighting books the purpose is to give protection to theintellectual 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 thepurpose, including quotations from newspaper articles and periodicals in the form of press summaries areallowed 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 petitionersHabana et .al . as the source of the portions of DEP. The final product of an author's toil is her book. To allowanother to copy the book without appropriate acknowledgment is injury enough.
WHEREFORE, the petition is hereby GRANTED. The decision and resolution of the Court of Appeals in CA-G.R. CV No. 44053 are SET ASIDE. The case is ordered remanded to the trial court for further proceedings toreceive 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., I dissent, please see dissenting opinion.
Melo, J., no part, personal reason.
Separate Opinions
DAVIDE, JR., C.J., dissenting opinion:
I am unable to join the majority view.
From the following factual and procedural antecedents, I find no alternative but to sustain both the trial courtand the Court of Appeals.
On 12 July 1988, HABANA, et al . filed with the trial court a complaint for infringement and unfair competition,with damages against private respondent Felicidad C. Robles (hereafter ROBLES) and her publisher anddistributor, Goodwill Trading Co., Inc. (hereafter GOODWILL). The case was docketed as Civil Case No. 88-1317.
HABANA, et al . averred in their complaint that they were the co-authors and joint copyright owners of their
published works College English for Today, Books 1 and 2 (hereafter CET) and Workbook for CollegeFreshman English, Series 1 1; they discovered that ROBLES' own published works, Developing English
Proficiency, Books 1 and 2, (hereafter DEP), published and distributed in 1985, exhibited an uncannyresemblance, if not outright physical similarity, to CET as to content, scheme, sequence of topics and ideas,manner of presentation and illustrative examples; the plagiarism, incorporation and reproduction of particularportions of CET into DEP could not be gainsaid since ROBLES was substantially familiar with CET and thetextual asportation was accomplished without their authority and/or consent; ROBLES and GOODWILL jointlymisrepresented DEP (over which they shared copyright ownership) "as the former's original published worksand concept;" and "notwithstanding formal demands made . . . to cease and desist from the sale anddistribution of DEP, [ROBLES and GOODWILL] persistently failed and refused to comply therewith."HABANA et al . then prayed for the court to: (1) order the submission and thereafter the destruction of allcopies of DEP, together with the molds, plates, films and other materials used in the printing thereof; (2)
require ROBLES and GOODWILL to render an accounting of the sales of the "infringing works from the time ofits (sic ) inceptive publication up to the time of judgment, as well as the amount of sales and profits . . .derived;" and (3) to enjoin ROBLES and GOODWILL to solidarily pay actual, moral and exemplary damages,as well as attorney's fees and expenses of litigation.
In its Answer, GOODWILL denied culpability since "it had no knowledge or information sufficient to form abelief as to the allegations of plagiarism, incorporation and reproduction" and hence "could not be privy to thesame, if (there were) any;" and that in an Agreement with co-defendant ROBLES, the latter would be solelyresponsible for acts of plagiarism or violations of copyright or any other law, to the extent of answering for anyand all damages GOODWILL may suffer. GOODWILL also interposed a compulsory counterclaim againstPACITA, et al . and a crossclaim against its co-defendant anchored on the aforementioned Agreement.
In her answer, ROBLES asserted that: (1) DEP was the exclusive product of her independent research,studies and experience; (2) DEP, particularly the segments where the alleged literal similitude appeared, were
admittedly influenced or inspired by earlier treatises, mostly by foreign authors; but that "influences and/orinspirations from other writers" like the methodology and techniques as to presentation, teaching concept anddesign, research and orientation which she employed, fell within the ambit of general information, ideas,principles of general or universal knowledge which were commonly and customarily understood as incapableof private and exclusive use, appropriation or copyright; and (3) her works were the result of the legitimate andreasonable exercise of an author's "right to fair use of even copyrighted materials as [a] guide." She furtherclaimed that her various national and regional professional activities in general education, language andliterature, as well as her teaching experience in graduate and post graduate education would obviate theremotest possibility of plagiarism.
ROBLES likewise suggested that any similarity between DEP and CET as regards scope and sequence couldbe attributed to "the orientation of the authors to the scope and sequence or syllabus — which incorporatesstandards known among English grammar book writers — of the subject-matter for Basic Communication Artsrecommended by the Association of Philippine Colleges of Arts and Sciences (APCAS)." While the syllabuswas admittedly adopted in DEP, she claimed to have treated quite differently in DEP the very ideas,
techniques or principles expressed in CET such that neither textbook could be considered a copy or plagiarismof the other.
At t he pre-tri al conference, the parties agreed to a stipulati on of facts 2 and for the court to first resolve theissue of infringement before disposing of the claims for damages. After trial on the merits, the trial courtrendered its decision in favor of defendants, the dispositive portion of which reads:
WHEREFORE, premises considered, the Court hereby orders that the complaint filedagainst defendants Felicidad Robles and Goodwill Trading Co., Inc. shall beDISMISSED: that said plaintiffs solidarily reimburse defendant Robles for P20,000.00attorney's fees and defendant Goodwill for P5,000.00 attorney's fees. Plaintiffs areliable for costs of suit.
IT IS SO ORDERED.3
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Noting that the law applicable to the case was Presidential Decree No. 49, 4 the trial court found thatHABANA, et al . failed to discharge their onus of proving that ROBLES and GOODWILL committed actsconstituting copyright infringement. Moreover, the trial court found that "the cause of action or acts complainedof [were] not covered by said decree" as Section 10 thereof barred authors of works already lawfully madeaccessible to the public from prohibiting the reproductions, translations, adaptations, recitation andperformance of the same, while Section 11 allowed the utilization of reproductions, quotations and excerpts ofsuch works. The trial court thus agreed with ROBLES that "the complained acts [were] of general anduniversal knowledge and use which plaintiffs cannot claim originality or seek redress to the law for protection"and observed that DEP and CET had the same sources, consisting chiefly of earlier works, mostly foreignbooks. GOODWILL's crossclaim against ROBLES, counterclaim against HABANA, et al . as well as ROBLES'
compulsory counterclaim against GOODWILL were all dismissed for lack of factual and legal bases.
HABANA, et al . appealed to the Court of Appeals. The case was docketed as CA-G.R. CV No. 44053. Beforesaid court HABANA, et al ., in the main, argued that the trial court totally disregarded their evidence and merelysubscribed to ROBLES' arguments. The Court of Appeals, however, likewise disposed of the controversy infavor of ROBLES and GOODWILL. 5
However, the Court of Appeals modified the trial court's decision by reversing the award for attorney's fees. Itheld that the good faith and sincerity of HABANA, et al . in commencing the action negated the basis therefor.Their motion for reconsideration having been denied for want of cogent reasons, HABANA, et al ., institutedthis petition. They claim that the Court of Appeals committed reversible error in failing to appreciate: (1) theinsuperable evidence and facts admitted and proved demonstrating plagiarism or piracy and instead affordedfull weight and credit to ROBLES' matrix of general, hypothetical and sweeping statements and/or defenses;(2) ROBLES' and GOODWILL's animo furandi or intent to appropriate or copy CET with the non-removal of the
damaging copies of DEP from the bookstores despite notice to withdraw the same; and (3) the fact thatROBLES abused a writer's right to fair use, in violation of Section 11 of P.D. No. 49. 6 Theyinvoke Laktaw v . Paglinawan 7 which, they theorize is on all fours with the case at bar. ROBLES contends thatappeal by certiorari does not lie in this case for the challenged decision and the trial court's judgment wereamply supported by evidence, pertinent laws and jurisprudence. Hence, her counterclaim for moral damagesshould, therefore, be granted or for us to order the remand of the case to the trial court for reception ofevidence on damages. GOODWILL, on its part, stood pat on its disclaimer, with the assertion that no proofwas ever introduced. that it co-authored DEP or that it singly or in cabal with ROBLES committed any actconstituting copyright infringement.
The core issue then is whether or not the Court of Appeals erred in affirming the trial court's judgment thatdespite the apparent textual, thematic and sequential similarity between DEP and CET, no copyright wascommitted by ROBLES and GOODWILL.
While the complaint, in Civil Case No. 88-1317 was filed during the effectivity of P.D. No. 49, the provisions ofthe new intellectual property law, R.A. No. 8293, 8 nevertheless bears significance here. It took effect on 1January 1998, but its Section 239.3 clearly states that its provisions shall apply to works in which copyrightprotection obtained prior to the effectivity of the Act subsists, provided, however, that the application of the Actshall not result in the diminution of such protection. Also, the philosophy behind both statutes as well as theessential principles of copyright protection and copyright infringement have, to a certain extent, remained thesame.
A copyright may be accurately defined as the right granted by statute to the proprietor of an intellectualproduction to its exclusive use and enjoyment to the extent specified in the statute. 9 Under Section 177 ofR.A. No. 8293, 10 the copy or economic right (copyright and economic right are used interchangeably in thestatute) consists 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 othertransformation of the work;
177.3 The first public distribution of the original and each copy of the work by sale orother forms of transfer of ownership;
177.4 Rental of the original or a copy of an audiovisual or cinematographic work, awork embodied in a sound recording, a computer program, a compilation of data andother 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;
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.
"The work," as repeatedly mentioned, refers to the literary and artistic works defined as original intellectualcreations in the literary and artistic domain protected from the moment of their creation and enumerated inSection 172.1, which includes books and other literary, scholarly, scientific and artistic works. 11
Stripped in the meantime of its indisputable social and beneficial functions, 12 the use of intellectual propertyor creations should basically promote the creator or author's personal and economic gain. Hence, thecopyright protection extended to the creator should ensure his attainment of some form of personalsatisfaction and economic reward from the work he produced. Without conceding the suitability of Laktaw asprecedent, the Court there quoted Manresa and explained:
He who writes a book, or carves a statute, or makes an invention, has the absoluteright to reproduce or sell it, just as the owner of the land has the absolute right to sellit or its fruits. But while the owner of the land, by selling it and its fruits, perhaps fullyrealizes all its economic value, by receiving its benefits and utilities, which arerepresented for example, by the price, on the other hand the author of a book, statueor invention does not reap all the benefits and advantages of his own property bydisposing of it, for the most important form of realizing the economic advantages of abook, statue or invention, consists in the right to reproduce it in similar or like copies,everyone of which serves to give to the person reproducing them all the conditions
which the original requires in order to give the author the full enjoyment thereof. If theauthor of a book, after its publication, cannot prevent its reproduction by any personwho may want to reproduce it, then the property right granted him is reduced to avery insignificant thing and the effort made in the production of the book is in no wayrewarded. 13
The execution, therefore, of any one or more of the exclusive rights conferred by law on a copyright owner,without his consent, constitutes copyright infringement. In essence, copyright infringement, known in generalas "piracy," is a trespass on a domain owned and occupied by a copyright owner; it is violation of a privateright protected by law. 14 With the invasion of his property rights, a copyright owner is naturally entitled to seekredress, enforce and hold accountable the defrauder or usurper of said economic rights.
Now, did ROBLES and GOODWILL infringe upon the copyright of HABANA et al . by publishing DEP, whichthe latter alleged to be a reproduction, or in the least, a substantial reproduction of CET? Both the trial court
and respondent court found in the negative. I submit they were correct.
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To constitute infringement, the usurper must have copied or appropriated the "original" work of an author orcopyright proprietor; 15 absent copying, there can be no infringement of copyright. 16 In turn, a work is deemedby law an original if the author created it by his own skill, labor and judgment. 17 On its part, a copy is thatwhich comes so near to the original so as to give to every person seeing it the idea created by the original. Ithas been held that the test of copyright infringement is whether an ordinary observer comparing the works canreadily see that one has been copied from the other. 18 A visual comparison of the portions ofCET 19 juxtaposed against certain pages of DEP, 20 would inescapably lead to a conclusion that there is adiscernible similarity between the two; however, as correctly assessed by respondent court and the lowercourt, no conclusion, can be drawn that DEP, in legal contemplation, is a copy of CET.
Was DEP a substantial reproduction of CET? To constitutes a substantial reproduction, it is not necessary thatthe entire copyrighted work, or even a large portion of it, be copied, if so much is taken that the value of theoriginal is substantially diminished, or if the labors of the original author are substantially, and to an injuriousextent, appropriated. 21 But the similarity of the books here does not amount to an appropriation of asubstantial portion of CET. If the existence of substantial similarities does not of itself establishinfringement, 22 mere similarities (not substantial similarities) in some sections of th e books in questiondecisively militate against a claim for infringement where the similarities had been convincingly established asproceeding from a number of reasons and/or factors.
1. As both books are grammar books, they inevitably deal with the same subjects typically and ordinarilytreated by writers of such genre, 23 e.g ., system of book classification, the different kinds of card catalogs andtheir entries, use of punctuation marks, paragraphs, the characteristics of an effective paragraph, languagestructure, different parts of a book, etc. These standard subjects fall within the domain of ideas, concepts,universal and general knowledge that have, as admitted by the protagonists here, been in existence for quite a
long time.24
As such, HABANA, et al . cannot demand monopoly, by way of example, in the use of therecognized library classification systems (Dewey Decimal System and the Library of Congress System), orhow a book can be divided into parts (frontispiece, title page, copyright page, preface, table of contents, etc.)or to the different headings used in a card catalogue (title card, author card and subject card), since these areof common or general knowledge. Even in this jurisdiction, no protection can be extended to such an idea,procedure, system method or operation, concept, principle, discovery or mere data, even if expressed,explained, illustrated or embodied in a work. 25
2. As found by respondent court, CET and DEP had common sources and materials, 26 such that the particularportions claimed to have been lifted and literally reproduced also appeared in earlier works, mostly by foreignauthors. This is clear from the testimony of petitioner Dr. Pacita Habana:
Q Let's clarify your position Dra. Habana. When defendants test (sic ) showed 10 words similar to yours, youso concluded it was (sic ) copied from yours but when I pointed out to you same (sic ) words contained in the
earlier book of Wills then you earlier in your test in your book ( sic ) you refused to admit that it was copied fromWills.
A Yes, sir. We have never — all 35 words were copied from there.
Q But what I am asking how could you conclude that by just similarity of 10 words of defendants words thatwas copied from yours [sic ] and when I point out to you the similarity of that same words from the words earlierthan yours (sic ) you refused to admit that you copied?
A I would like to change the fi nal statement now that in t he case of d efendant Robles you pointed out hersource very clear. She copied it from that book by Wills.
Q So, she did not copy it from yours?
A Alright, maybe she did not copy it but definitely it is a pattern of plagerism [sic ]. 27
3. Similarity in orientation and style can likewise be attributed to the exposure of the authors to the APCASsyllabus and their respective academic experience, teaching approaches and methodology. It is not farfetchedthat they could have even influenced each other as textbook writers. ROBLES and Dr. Pacita Habana werefaculty members of the Institute of English of the Far Eastern University from 1964 to 1974. 28 Both wereardent students, researchers, lecturers, textbook writers and teachers of English and grammar. They evenused to be on friendly terms with each other, to the extent that Dr. Habana admitted that ROBLES assisted theformer in the preparation of her doctoral dissertation. Given their near-identical academic and professionalbackground, it is natural they would use many expressions and definitions peculiar to teaching Englishgrammar. It comes therefore with no surprise that there are similarities in some parts of the rival books.Indeed, it is difficult to conceive how writers on the same subject matter can very well avoid resorting tocommon sources of information and materials and employing similar expressions and terms peculiar to thesubject they are treating. 29
To illustrate, an excerpt from page 21 of CET reads:
Author Card
The author card is the main entry card. It contains
1. the author's complete name on the first line, surname first, which may be followed by the date of his birthand death if he is no longer living;
2. the title of the book, and the subtitle, if there is one;
3. the edition, if it is not the first;
4. the translator or illustrator, if there is any;
5. the imprint which includes the publisher, the place and date of publication;
6. the collation composed of the number of pages, volume, illustrations, and the size of the book;
7. the subjects with which the book deals [sic ];
8. the call number on the upper left-hand corner.
Names beginning with Mc, or M are filed in the card catalog as though spelled out as MAC, for example McGraw — MacGraw. The same is true of St. and Saint.
While a portion of DEP found on page 18 which discusses the author card provides:
The author card is the main entry card containing:
1. the author's complete name on the first line, surname first, which may be followed by the date of his birthand death if he is no longer living;
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2. the title of the book, and the subtitle if there is one;
3. the edition, if it is not the first;
4. the translator or illustrator, if any;
5. the imprint which includes the publisher, the place and date of publication;
6. the collation, composed of the number of pages, volume, illustrations, and the size of the book;
7. the subject with which the book deals; and
8. the call number on the upper-left hand corner.
Names beginning with MC, or M are filed in the card catalog considered spelled out as MAC, for example:Mcleod-Macleod. This is true also of St. and Saint.
The entries found in an author card, having been developed over quite sometime, are expectedly uniform.Hence, HABANA et al . and ROBLES would have no choice but to articulate the terms particular to the entriesin an identical manner.
I thus find that the ruling of the respondent court is totally supported by the evidence on record. Of doctrinalpersuasion is the principle that factual determinations of the Court of Appeals and the trial court are conclusiveand binding upon this Court, and the latter will not, as a rule, disturb these findings unless compelling andcogent reasons necessitate a reexamination, if not a reversal, of the same. 30 Tested against this jurisprudential canon, to subject the challenged decision of the Court of Appeals to further scrutiny would besuperfluous, if not, improvident.
I am not persuaded by the claim of HABANA, et al . that Laktaw is on all fours with and hence applicable to thecase at bar. There, this Court disposed that defendant, without the consent of and causing irreparable damageto Laktaw, reproduced the latter's literary work Diccionario Hisapano-Tagalog, and improperly copied thegreater part thereof in the work Diccionariong Kastila-Tagalog published by defendant, in violation of Article 7of the Law of 10 January 1879 on Intellectual Property. This Court anchored its decision on the followingobservations:
(1) [O] the 23,560 Spanish words in the defendant'sdictionary . . . only 3,108 words are the defendant's own, or, what is the same thing, the defendant has addedonly this number of words to those that are in the plaintiff's dictionary, he having reproduced or copied theremaining 20,452 words;
(2) [T]he defendant also literally reproduced and copied for the Spanish words in his dictionary, theequivalents, definitions and different meanings in Tagalog, given in plaintiffs dictionary, having reproduced, asto some words, everything that appears in the plaintiff's dictionary for similar Spanish words, although as tosome he made some additions of his own. Said copies and reproductions are numerous. . .;
(3) [T]he printer's errors in the plaintiff's dictionary as to the expression of some words in Spanish as well astheir equivalents in Tagalog are also reproduced, a fact which shows that the defendant, in preparing hisdictionary, literally copied those Spanish words and their meanings and equivalents in Tagalog from theplaintiff's dictionary. 31
Plainly, the rationale in Laktaw does not apply in this case. First, aside from an isolated accounting of thenumber of words supposedly usurped in a segment of DEP from CET, 32 the records do not disclose that allthe words allegedly copied were tallied and that the words thus tallied were numerous enough to support afinding of copying. Second, as already conceded, while there is an identity in the manner by which some of theideas and concepts were articulated, this prescinded from various factors already elucidated. Besides,ROBLES' testimony that she made an independent investigation or research of the original works or authorsshe consulted was unrebutted; 33 for germane here is the question of whether the alleged infringer could haveobtained the same information by going to the same source by her own independent research. 34 ROBLESconvinced the trial court and the Court of Appeals on this; thus, we are bound by this factual determination, aslikewise explained earlier. Third, reproduction of the printer's errors or the author's blunders and inaccuracies
in the infringing copy does not ipso facto constitute copying or plagiarism or infringement, but it is concededthat they are telltale signs that infringement might have been committed. 35 However, the records do notreveal this to be the case. Fourth, the law on intellectual property violated in Laktaw was a world and timeapart from R.A. No. 8293 or even P.D. No. 49. Thus, under Article 7 of the Law of 10 January 1879, the Courtruled that nobody could reproduce another person's work without the owner's consent, even merely toannotate or add anything to it, or improve any edition thereof. The more recent laws on intellectual property,however, recognize recent advancements in technology transfer and information dissemination. They thusallow the use of copyrighted materials if compatible with fair use and to the extent justified for the purpose. Inparticular, the new laws sanction the fair use of copyrighted work for criticism, comment, news reporting,teaching including multiple copies for classroom use, scholarship, research and similar purposes. 36 Further,the limitations of the exclusive use of copyrighted materials under Sections 10 and 11 of P.D. No. 49 inconsonance with the principle of fair use have been reproduced and incorporated in the new law. 37 All told,Laktaw is inapplicable.1âwphi1.nêt
Fair use has been defined as a privilege to use the copyrighted material in a reasonable manner without the
consent of the copyright owner or as copying the theme or ideas rather than their expression. 38 No question offair or unfair use arises however, if no copying is proved to begin with. This is in consonance with the principlethat there can be no infringement if there was no copying. 39 It is only where some form of copying has beenshown that it becomes necessary to determine whether it has been carried to an "unfair," that is, illegal,extent. 40 Consequently, there is no reason to address the issue of whether ROBLES abused a writer's right tofair use with the ascertainment that DEP was not a copy or a substantial copy of CET.
WHEREFORE, I vote to DENY the petition and to AFFIRM the challenged decision of 27 June 1997 of theCourt of Appeals.
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G.R. Nos. 76649-51 August 19, 1988
20TH CENTURY FOX FILM CORPORATION, petitioner,vs.COURT OF APPEALS, EDUARDO M. BARRETO, RAUL SAGULLO and FORTUNELEDESMA, respondents.
The petitioner questions the application of the constitutional provision against illegal searches and seizures toraids conducted in connection with the government's anti-film piracy campaign. The main issue hinges on
whether or not the judge properly lifted the search warrants he issued earlier upon the application of theNational Bureau of Investigation on the basis of the complaint filed by the petitioner.
In a letter-complaint dated August 26, 1985, petitioner 20th Century Fox Film Corporation through counselsought the National Bureau of Investigation's (NBI) assistance in the conduct of searches and seizures inconnection with the latter's anti-film piracy campaign. Specifically, the letter-complaint alleged that certainvideotape outlets all over Metro Manila are engaged in the unauthorized sale and renting out of copyrightedfilms in videotape form which constitute a flagrant violation of Presidential Decree No. 49 (otherwise known asthe Decree on the Protection of Intellectual Property).
Acting on the lette r-complaint, the NBI conducted surveillance and investigation of the outlet s pinpointed bythe petitioner and subsequently filed three (3) applications for search warrants against the video outlets ownedby the private respondents. The applications were consolidated and heard by the Regional Trial Court ofMakati, Branch 132.
On September 4, 1985, the lower court issued the desired search warrants.
Armed with the search warrants, the NBI accompanied by the petitioner's agents, raided the video outlets andseized the items described therein. An inventory of the items seized was made and left with the privaterespondents.
Acting on a motion to lift search warrants and release seized properties fi led by the private respondents, thelower court issued an order dated October 8, 1985, lifting the three (3) search warrants issued earlier againstthe private respondents by the court. The dispositive portion of the order reads:
WHEREFORE, the Court hereby orders that Search Warrants Nos. SW- 85-024; issued against Eduardo M.Barreto of the Junction Video, etc., Paranaque, Metro Manila; SW No. 85-025, issued against Raul M. Sagullo
of South Video Bug Center, Inc., etc., also of No. 5355 Pres. Avenue BF Homes, Parañaque, Metro Manila;and SW No. 85-026, issued against Fortune A. Ledesma of Sonix Video Services of San Antonio Plaza,Forbes Park, Makati, Metro Manila, be lifted.
Consequently, the articles listed in the returns of the three search warrants which could not be a basis of anycriminal prosecution, now in the possession of the National Bureau of Investigation which under the law mustbe delivered to this Court, but which the NBI failed to do, are hereby ordered to be returned to their ownersthrough their lawyer, Atty. Benito Salazar or his agents or representatives, against proper receipt, to beforwarded to this Court for record purposes, as proof that said properties have been returned to thepossession of the rightful owners." (p. 34, Rollo)
The lower court denied a motion for reconsideration filed by the petitioner in its order dated January 2, 1986.
The petitioner filed a petition for certiorari with the Court of Appeals to annul the October 8, 1985 and January
2, 1986 orders of the lower court. The petition was dismissed.
Hence, this petition.
The main issue hinges on the meaning of "probable cause" within the context of the constitutional provisionagainst illegal searches and seizures (Section 3, Article IV, 1973 Constitution, now, Section 2, Article Ill, 1987Constitution.
The petitioner maintains that the lower court issued the questioned search warrants after finding the existenceof a probable cause justifying their issuance. According to the petitioner, the lower court arrived at thisconclusion on the basis of the depositions of applicant NBI's two witnesses which were taken through
searching questions and answers by the lower court .
Section 2, Article III of the present Constitution which substantially reproduces Section 3, Article IV of the 1973Constitution on illegal searches and seizures provides:
The right of the people to be secure in their persons, houses, papers, and effects against unreasonablesearches and seizures of whatever nature and for any purpose shall be inviolable, and no search warrant orwarrant of arrest shall issue except upon probable cause to be determined personally by the judge afterexamination under oath or affirmation of the complainant and the witnesses he may produce, and particularlydescribing the place to be searched and the persons or things to be seized.
This constitutional right protects a citizen against wanton and unreasonable invasion of his privacy and libertyas to his person, papers and effects. We have explained in the case of People v. Burgos (144 SCRA 1)citingVillanueva v. Querubin (48 SCRA 345) why the right is so important:
It is deference to one's personality that lies at the core of this right, but it could be also looked upon as arecognition of a constitutionally protected area, primarily one's home, but not necessarily thereto confined. (Cf.Hoffa v. United States, 385 US 293 119661) What is sought to be guarded is a man's prerogative to choosewho is allowed entry to his residence. In that haven of refuge, his individuality can assert itself not only in thechoice of who shall be welcome but likewise in the kind of objects he wants around him. There the state,however powerful, does not as such have access except under the circumstances above noted, for in thetraditional formulation, his house, however humble, is his castle. Thus is outlawed any unwarranted intrusionby government, which is called upon to refrain from any invasion of his dwelling and to respect the privacies ofhis life. (Cf Schmerber v. California, 384 US 757 [1966], Brennan, J. and Boyd v. United States, 116 630[1886]). In the same vein, Landynski in his authoritative work (Search and Seizure and the Supreme Court[1966]), could fitly characterize constitutional right as the embodiment of a "spiritual concept: the belief that tovalue the privacy of home and person and to afford its constitutional protection against the long reach ofgovernment is no less than to value human dignity, and that his privacy must not be disturbed except in case
of overriding social need, and then only under stringent procedural safeguards."(ibid , p. 74).
The government's right to issue search warrants against a citizen's papers and effects is circumscribed by therequirements mandated in the searches and seizures provision of the Constitution.
In the case of Burgos, Sr. v. Chief of Staff, AFP (133 SCRA 800), we defined probable cause for a valid search"as such facts and circumstances which would lead a reasonably discreet and prudent man to believe that anoffense has been committed and that the objects sought in connection with the offense are in the place soughtto be searched." This constitutional provision also demands "no less than personal knowledge by thecomplainant or his witnesses of the facts upon which the issuance of a search warrant may be justified" inorder to convince the judge, not the individual making the affidavit and seeking the issuance of the warrant, ofthe existence of a probable cause. (Alvarez v. Court of First Instance, 64 Phil. 33; Burgos, Sr. v. Chief of Staff, AFP, supra).
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In the instant case, the lower court lifted the three questioned search warrants against the private respondentson the ground that it acted on the application for the issuance of the said search warrants and granted it on themisrepresentations of applicant NBI and its witnesses that infringement of copyright or a piracy of a particularfilm 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 t hree searchwarrants testified of their own personal knowledge. Yet, Atty. Albino Reyes of the NBI stated that the counselor 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 videocassettes 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 tapesallegedly 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 thecomplaint for infringement was brought to the NBI, the master tapes of the allegedly pirated tapes were shownto him and he made comparisons of the tapes with those purchased by their man Bacani. Why the mastertapes or at least the film reels of the allegedly pirated tapes were not shown to the Court during the applicationgives 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 PD 49, thecopyright 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 thatproceedings 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 inour 1973 Constitution.
So that lacking in persuasive effect, the allegation that master tapes were viewed by the NBI and werecompared to the purchased and seized video tapes from the respondents' establishments, it should bedismissed as not supported by competent evidence and for that matter the probable cause hovers in that greydebatable 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 dulyregistered or copyrighted in the Philippines. (Annex C of Opposition p. 152 record). So, that lacking in therequisite presentation to the Court of an alleged master tape for purposes of comparison with the purchasedevidence of the video tapes allegedly pirated and those seized from respondents, there was no way todetermine whether there really was piracy, or copying of the film of the complainant Twentieth Century Fox."(pp. 37-39, Rollo)
xxx xxx xxx
The lower court, therefore, lifted the three (3) questioned search warrants in the absence of probable causethat the private respondents violated P.D. 49. As found out by the court, the NBI agents who acted aswitnesses did not have personal knowledge of the subject matter of their testimony which was the allegedcommission of the offense by the private respondents. Only the petitioner's counsel who was also a witness
during the application for the issuance of the search warrants stated that he had personal knowledge that theconfiscated 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 themaster tapes of the allegedly pirated tapes were not shown to the court during the application.
All these factors were taken into consideration by the lower court when it lift ed the three questioned searchwarrants. There is no truth, therefore, to the petitioner's allegation that the lower court based its January 2,1986 order only "on the fact that the original or master copies of the copyrighted films were not presentedduring the application for search warrants, thus leading it to conclude that it had been "misled by the applicantand his witnesses." (p. 17, Rollo)
The presentation of the master tapes of the copyrighted films from which the pirated films were allegedlycopied, was necessary for the validity of search warrants against those who have in their possession thepirated films. The petitioner's argument to the effect that the presentation of the master tapes at the time ofapplication may not be necessary as these would be merely evidentiary in nature and not determinative ofwhether or not a probable cause exists to justify the issuance of the search warrants is not meritorious. Thecourt cannot presume that duplicate or copied tapes were necessarily reproduced from master tapes that itowns.
The application for search warrants was directed against video tape outlets which allegedly were engaged inthe unauthorized sale and renting out of copyrighted films belonging to the petitioner pursuant to P.D. 49.
The essence of a copyright infringement is the similarity or at least substantial similarity of the purportedpirated works to the copyrighted work. Hence, the applicant must present to the court the copyrighted films tocompare 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 beestablished to satisfy the requirements of probable cause. Mere allegations as to the existence of thecopyrighted films cannot serve as basis for the issuance of a search warrant.
Furthermore, we note that the search warrants described the articles sought to be seized as follows:
xxx xxx xxx
xxx xxx xxx
c) Television sets, Video Cassettes Recorders, rewinders, tape head cleaners, accessories, equipments andother machines used or intended to be used in the unlawful reproduction, sale, rental/lease distribution of theabove-mentioned video tapes which she is keeping and concealing in the premises above-described." (p. 26,
Rollo)
In the case of Burgos v. Chief of Staff, AFP supra , we stated:
xxx xxx xxx
Another factor which makes the search w arrants under consideration constitutionally objectionable is that theyare in the nature of general warrants. The search warrants describe the articles sought to be seized in thiswise:
l] All printing equipment, paraphernalia, paper, ink, photo equipment, typewriters, cabinets, tablescommunications/recording equipment, tape recorders, dictaphone and the like used and/or connected in theprinting of the 'WE FORUM' newspaper and any and all document/communications, letters and facsimile of
prints related to "WE FORUM" newspaper.
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2] Subversive documents, pamphlets, leaflets, books, and other publications to promote the objectives andpurposes of the subversive organizations known as Movement for Free Philippines, Light-a-Fire Movementand April 6 Movement; and
3] Motor vehicles used in the distribution/circulation of the 'WE FORUM and other subversive materials andpropaganda, more particularly,
1] Toyota-Corolla, colored yellow with Plate No. NKA 892;
2] DATSUN pick-up colored white with Plate No. NKV 969;
3] A delivery truck with Plate No. NBS 542;
4] TOYOTA-TAMARAW, colored white with Plate No. PBP 665;and,
5] TOYOTA Hi-Lux, pick-up truck with Plate No. NGV 472 with marking "Bagong Silang."
In Stanford v. State of Texas (379 U.S. 476,13 L ed 2nd 431), the search warrant which authorized the searchfor 'books, records, pamphlets, cards, receipts, lists, memoranda, pictures, recordings and other writteninstruments concerning the Communist Parties of Texas, and the operations of the Community Party inTexas," was declared void by the U.S. Supreme Court for being too general. In like manner, directions to"seize any evidence in connection with the violation of SDC 13-3703 or otherwise' have been held too general,
and that portion of a search warrant which authorized the seizure of any "paraphernalia which could be usedto violate Sec. 54-197 of the Connecticut General Statutes [the statute dealing with the crime of conspiracy]"'was held to be a general warrant, and therefore invalid (68 Am. Jur. 2d., pp. 736-737). The description of thearticles sought to be seized under the search warrants in question cannot be characterized differently. (at pp.814-815)
Undoubtedly, a similar conclusion can be deduced from the description of the articles sought to be confiscatedunder the questioned search warrants.
Television sets, video cassette recorders, reminders and tape cleaners are articles which can be found in avideo tape store engaged in the legitimate business of lending or renting out betamax tapes. In short, thesearticles and appliances are generally connected with, or related to a legitimate business not necessarilyinvolving piracy of intellectual property or infringement of copyright laws. Hence, including these articleswithout specification and/or particularity that they were really instruments in violating an Anti-Piracy law makes
The search warrant too general which could result in the confiscation of all items found in any video store. Infact, this actually happened in the instant case. Thus, the lower court, in its questioned order dated October 8,1985 said:
Although the applications and warrants themselves covered certain articles of property usually found in a videostore, the Court believes that the search party should have confined themselves to articles that are accordingto them, evidence constitutive of infringement of copyright laws or the piracy of intellectual property, but not toother articles that are usually connected with, or related to, a legitimate business, not involving piracy ofintellectual property, or infringement of copyright laws. So that a television set, a rewinder, and a whiteboardlisting Betamax tapes, video cassette cleaners video cassette recorders as reflected in the Returns of SearchWarrants, are items of legitimate business engaged in the video tape industry, and which could not be thesubject of seizure, The applicant and his agents therefore exceeded their authority in seizing perfectlylegitimate personal property usually found in a video cassette store or business establishment." (p. 33, Rollo)
All in all, we find no gr ave abuse of discretion on the part of the lower court w hen it lifted the search warrants itearlier issued against the private respondents. We agree with the appellate court's findings to the effect that:
An assiduous examination of the assailed orders reveal that the main ground u pon which the respondentCourt anchored said orders was its subsequent findings that it was misled by the applicant (NBI) and itswitnesses 'that infringement of copyright or a piracy of a particular film have been committed when it issuedthe questioned warrants.' Stated differently, the respondent Court merely corrected its erroneous findings as tothe existence of probable cause and declared the search and seizure to be unreasonable. Certainly, suchaction is within the power and authority of the respondent Court to perform, provided that it is not exercised inan oppressive or arbitrary manner. Indeed, the order of the respondent Court declaring the existence of
probable cause is not final and does not constitute res judicata.
A careful review of the record of the case shows that the respondent Court did not commit a grave abuse ofdiscretion when it issued the questioned orders. Grave abuse of discretion' implies such capricious andwhimsical exercise of judgment as is equivalent to lack of jurisdiction, or, in other words, where the power isexercised in an arbitrary or despotic manner by reason of passion or personal hostility, and it must be sopatent and gross as to amount to an evasion of positive duty or to a virtual refusal to perform the duty enjoinedor to act at all in contemplation of law.' But far from being despotic or arbitrary, the assailed orders weremotivated by a noble desire of rectifying an error, much so when the erroneous findings collided with theconstitutional rights of the private respondents. In fact, the petitioner did not even contest the righteousnessand legality of the questioned orders but instead concentrated on the alleged denial of due process of law."(pp. 44-45, Rollo)
The proliferation of pirated tapes of films not only deprives the government of much needed revenues but is
also an indication of the widespread breakdown of national order and discipline. Courts should not impose anyunnecessary roadblocks in the way of the anti-film piracy campaign. However, the campaign cannot ignore orviolate constitutional safeguards. To say that the problem of pirated films can be solved only by the use ofunconstitutional shortcuts is to denigrate the long history and experience behind the searches and seizuresclause of the Bill of Rights. The trial court did not commit reversible error.
WHEREFORE, the instant petition is DISMISSED. The questioned decision and resolution of the Court of Appeals are AFFIRMED.
SO ORDERED.
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G.R. No. 110318 August 28, 1996
COLUMBIA PICTURES, INC., ORION PICTURES CORPORATION, PARAMOUNT PICTURESCORPORATION, 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.
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 whichsustained the order 3 of the Regional Trial Court, Branch 133, Makati, Metro Manila, dated November 22, 1988for the quashal of Search Warrant No. 87-053 earlier issued per its own order 4 on September 5, 1988 forviolation of Section 56 of Presidential Decree No. 49, as amended, otherwise known as the "Decree on theProtection 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 ofPD No. 49, as amended, and sought its assistance in their anti-film piracy drive. Agents of the NBI and privateresearchers made discreet surveillance on various video establishments in Metro Manila including SunshineHome Video Inc. (Sunshine for brevity), owned and operated by Danilo A. Pelindario with address at No. 6Mayfair Center, Magallanes, Makati, Metro Manila.
On November 14, 1987, NBI Senior Agent Lauro C. Reyes applied for a search warrant with the court aquo against Sunshine seeking the seizure, among others, of pirated video tapes of copyrighted films all ofwhich were enumerated in a list attached to the application; and, television sets, video cassettes and/or laserdisc recordings equipment and other machines and paraphernalia used or intended to be used in the unlawfulexhibition, showing, reproduction, sale, lease or disposition of videograms tapes in the premises abovedescribed. In the hearing of the application, NBI Senior Agent Lauro C. Reyes, upon questions by the court aquo, reiterated in substance his averments in his affidavit. His testimony was corroborated by another witness,Mr. Rene C. Baltazar. Atty. Rico V. Domingo's deposition was also taken. On the basis of the affidavits anddepositions of NBI Senior Agent Lauro C. Reyes, Rene C. Baltazar and Atty. Rico V. Domingo, SearchWarrant 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 theirrepresentatives. 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 exclusivelydistributed by private complainants, and machines, equipment, television sets, paraphernalia, materials,accessories all of which were included in the receipt for properties accomplished by the raiding team. Copy ofthe receipt was furnished and/or tendered to Mr. Danilo A. Pelindario, registered owner-proprietor of SunshineHome Video.
On December 16, 1987, a "Return of Search Warrant" was filed with the Court.
A "Motion To Lift the Order of Search Warrant" was filed but was later denied for lack of merit (p. 280,Records).
A Motion for reconsideration of the Order of denial was filed. The court a quo granted the said motion forreconsideration and justified it in this manner:
It is undisputed that the master tapes of the copyrighted films from which the pirated films were allegedlycopies (sic ), were never presented in the proceedings for the issuance of the search warrants in question. Theorders of the Court granting the search warrants and denying the urgent motion to lift order of search warrantswere, therefore, issued in error. Consequently, they must be set aside. (p. 13, Appellant's Brief) 5
Petitioners thereafter appealed the order of the trial court granting private respondents' motion forreconsideration, thus lifting the search warrant which it had theretofore issued, to the Court of Appeals. Asstated 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 court's retroactiveapplication 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 tomaintain an action in Philippine courts. In so challenging petitioners' personality to sue, private respondentspoint to the fact that petitioners are the copyright owners or owners of exclusive rights of distribution in thePhilippines of copyrighted motion pictures or films, and also to the appointment of Atty. Rico V. Domingo astheir 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 tomaintain a suit in Philippine courts in the absence of a license to do business. Consequently, they have noright 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 privaterespondents have not adduced evidence to prove that petitioners are doing such business here, as wouldrequire them to be licensed by the Securities and Exchange Commission, other than averments in the quotedportions of petitioners' "Opposition to Urgent Motion to Lift Order of Search Warrant" dated April 28, 1988 and Atty. Rico V. Domingo's affi davit of December 14, 1987. Moreover, an exclusive right to d istribute a product orthe ownership of such exclusive right does not conclusively prove the act of doing business nor establish thepresumption of doing business. 9
The Corporation Code provides:
Sec. 133. Doing business without a license. — No foreign corporation transacting business in the Philippineswithout a license, or its successors or assigns, shall be permitted to maintain or intervene in any action, suit orproceeding in any court or administrative agency of the Philippines; but such corporation may be sued orproceeded against before Philippine courts or administrative tribunals on any valid cause of action recognizedunder Philippine laws.
The obtainment of a license prescribed by Section 125 of the Corporation Code is not a condition precedent tothe maintenance of any kind of action in Philippine courts by a foreign corporation. However, under theaforequoted provision, no foreign corporation shall be permitted to transact business in the Philippines, as thisphrase is understood under the Corporation Code, unless it shall have the license required by law, and until itcomplies with the law intransacting business here, it shall not be permitted to maintain any suit in localcourts. 10 As thus interpreted, any foreign corporation not doing business in the Philippines may maintain anaction in our courts upon any cause of action, provided that the subject matter and the defendant are withinthe jurisdiction of the court. It is not the absence of the prescribed license but "doing business" in thePhilippines without such license which debars the foreign corporation from access to our courts. In otherwords, although a foreign corporation is without license to transact business in the Philippines, it does not
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follow that it has no capacity to bring an action. Such license is not necessary if it is not engaged in business inthe 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 nosuch definition or qualification is laid down regarding acts or transactions failing within its purview, the questionrests primarily on facts and intent. It is thus held that all the combined acts of a foreign corporation in the Statemust be considered, and every circumstance is material which indicates a purpose on the part of thecorporation 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 environmentalcircumstances. 13 The true tests, however, seem to be whether the foreign corporation is continuing the bodyor substance of the business or enterprise for which it was organized or whether it has substantially retiredfrom it and turned it over to another. 14
As a general proposition upon which many authorities agree in principle, subject to such modifications as maybe necessary in view of the particular issue or of the terms of the statute involved, it is recognized that aforeign corporation is "doing," "transacting," "engaging in," or "carrying on" business in the State when, andordinarily only when, it has entered the State by its agents and is there engaged in carrying on and transactingthrough them some substantial part of its ordinary or customary business, usually continuous in the sense thatit 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 inthe Philippines. Jurisprudence has, however, held that the term implies a continuity of commercial dealingsand arrangements, and contemplates, to that extent, the performance of acts or works or the exercise of someof the functions normally incident to or in progressive prosecution of the purpose and subject of itsorganization. 16
This traditional case law definition has evolved into a statutory definition, having been adopted with somequalifications in various pieces of legislation in our jurisdiction.
For instance, Republic Act No. 5455 17 provides:
Sec. 1. Definitions and scope of this Act . — (1) . . . ; and the phrase "doing business" shall include solicitingorders, purchases, service contracts, opening offices, whether called "liaison" offices or branches; appointingrepresentatives 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 actor acts that imply a continuity of commercial dealings or arrangements, and contemplate to that extent theperformance of acts or works, or the exercise of some of the functions normally incident to, and in progressiveprosecution 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; appointingrepresentatives or distributors who are domiciled in the Philippines or who in any calendar year stay in thePhilippines 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 actor acts that imply a continuity of commercial dealings or arrangements and contemplate to that extent theperformance of acts or works, or the exercise of some of the functions normally incident to, and in progressiveprosecution 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 actsconstituting "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. Inparticular "doing business" includes:
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(10) Any other act or acts which imply a continuity of commercial dealings or arrangements, and contemplate
to that extent the performance of acts or works, or the exercise of some of the functions normally incident to,or in the progressive prosecution of, commercial gain or of the purpose and object of the businessorganization.
Finally, Republic Act No. 7042 19 embodies such concept in this wise:
Sec. 3. Definitions. — As used in this Act:
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(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 inany 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 inthe Philippines; and any other act or acts that imply a continuity of commercial dealings or arrangements, andcontemplate to that extent the performance of acts or works, or the exercise of some of the functions normallyincident to, and in progressive prosecution of, commercial gain or of the purpose and object of the businessorganization: Provided, however , That the phrase "doing business" shall not be deemed to include mereinvestment as a shareholder by a foreign entity in domestic corporations duly registered to do business, and/orthe exercise of rights as such investor; nor having a nominee director or officer to represent its interests insuch corporation; nor appointing a representative or distributor domiciled in the Philippines which transactsbusiness 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 notbarred 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 requireobtention 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 intentionto conduct or transact business in the Philippines.
Accordingly, the certification issued by the Securities and Exchange Commission 20 stating that its records donot show the registration of petitioner film companies either as corporations or partnerships or that they havebeen licensed to transact business in the Philippines, while undeniably true, is of no consequence topetitioners' right to bring action in the Philippines. Verily, no record of such registration by petitioners can beexpected to be found for, as aforestated, said foreign film corporations do not transact or do business in thePhilippines and, therefore, do not need to be licensed in order to take recourse to our courts.
Although Section 1( g) of the Implementing Ru les and Regulations of the Omnibus Investments Code l ists,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
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or fixing of the terms and conditions of sales or service contracts, regardless of where the contracts areactually reduced to writing, shall constitute doing business even if the enterprise has no office or fixed place ofbusiness in the Philippines. The arrangements agreed upon as to manner, time and terms of delivery of thegoods or the transfer of title thereto is immaterial. A foreign firm which does business through the middlemenacting in their own names, such as indentors, commercial brokers or commission merchants, shall not bedeemed doing business in the Philippines. But such indentors, commercial brokers or commission merchantsshall 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 ordistributor 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 aperson or local company which does not act in its name but in the name of the foreign firm, the latter is doingbusiness in the Philippines.
As acts constitutive o f "doing business," the fact that petitioners are admittedly copyright owners or owners ofexclusive distribution rights in the Philippines of motion pictures or films does not convert such ownership intoan indicium of doing business which would require them to obtain a license before they can sue upon a causeof action in local courts.
Neither is the appointment of Atty. Rico V. Domingo as attorney-in-fact of petitioners, with express authoritypursuant to a special power of attorney, inter alia —
To lay criminal complaints with the appropriate authorities and to provide evidence in support of both civil and
criminal proceedings against any person or persons involved in the criminal infringement of copyright orconcerning the unauthorized importation, duplication, exhibition or distribution of any cinematographic work(s)— films or video cassettes — of which . . . is the owner of copyright or the owner of exclusive rights ofdistribution in the Philippines pursuant to any agreement(s) between . . . and the respective owners ofcopyright in such cinematographic work(s), to initiate and prosecute on behalf of . . . criminal or civil actions inthe Philippines against any person or persons unlawfully distributing, exhibiting, selling or offering for sale anyfilms or video cassettes of which . . . is the owner of copyright or the owner of exclusive rights of distribution inthe Philippines pursuant to any agreement(s) between . . . and the respective owners of copyright in suchworks. 21
Tantamount to doing business in the Philippines. We fail to see how exercising one's legal and property rightsand taking steps for the vigilant protection of said rights, particularly the appointment of an attorney-in-fact, canbe deemed by and of themselves to be doing business here.
As a general rule, a fo reign corporation will not be regarded as doing business i n the State simply because itenters into contracts with residents of the State, where such contracts are consummated outside theState. 22 In fact, a view is taken that a foreign corporation is not doing business in the State merely becausesales of its product are made there or other business furthering its interests is transacted there by an allegedagent, whether a corporation or a natural person, where such activities are not under the direction and controlof 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 purchasedand obtained title from the corporation to the products sold are not a doing of business by thecorporation.24 Likewise, a foreign corporation which sells its products to persons styled "distributing agents" inthe State, for distribution by them, is not doing business in the State so as to render it subject to service ofprocess therein, where the contract with these purchasers is that they shall buy exclusively from the foreigncorporation 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 aFederal 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 legalprotection against contingent acts of intellectual piracy.
In accordance with the rule that "doing business" imports only acts in furtherance of the purposes for which aforeign 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 thedoing of business in the State. The institution of a suit or the removal thereof is neither the making of acontract nor the doing of business within a constitutional provision placing foreign corporations licensed to dobusiness in the State under the same regulations, limitations and liabilities with respect to such acts asdomestic 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 thatpetitioners are barred from maintaining suit in the Philippines. For allegedly being foreign corporations doingbusiness in the Philippines without a license, private respondents repeatedly maintain in all their pleadings thatpetitioners 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 Courtare lack of legal capacity to sue 29 and that the complaint states no cause of action. 30 Lack of legal capacityto sue means that the plaintiff is not in the exercise of his civil rights, or does not have the necessaryqualification to appear in the case, or does not have the character or representation he claims. 31 On the otherhand, a case is dismissible for lack of personality to sue upon proof that the plaintiff is not the real party ininterest, hence grounded on failure to state a cause of action. 32 The term "lack of capacity to sue" should notbe confused with the term "lack of personality to sue." While the former refers to a plaintiff's general disability
to sue, such as on account of minority, insanity, incompetence, lack of juridical personality or any othergeneral 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 legalcapacity to sue; 33 whereas the second can be used as a ground for a motion to dismiss based on the fact thatthe complaint, on the face thereof, evidently states no cause of action. 34
Applying the above discussion to the instant petition, the ground a vailable for barring recourse to our courts byan unlicensed foreign corporation doing or transacting business in the Philippines should properly be "lack ofcapacity to sue," not "lack of personality to sue." Certainly, a corporation whose legal rights have been violatedis undeniably such, if not the only, real party in interest to bring suit thereon although, for failure to comply withthe licensing requirement, it is not capacitated to maintain any suit before our courts.
Lastly, on this point, we reiterate this Court's rejection of the common procedural tactics of erring localcompanies which, when sued by unlicensed foreign corporations not engaged in business in the Philippines,
invoke the latter's supposed lack of capacity to sue. The doctrine of lack of capacity to sue based on failure tofirst acquire a local license is based on considerations of public policy. It was never intended to favor norinsulate from suit unscrupulous establishments or nationals in case of breach of valid obligations or violation oflegal rights of unsuspecting foreign firms or entities simply because they are not licensed to do business in thecountry. 35
II
We now proceed to the main issue of the retroactive application to the present controversy of the ruling in20thCentury Fox Film Corporation vs. Court of Appeals, et al ., promulgated on August 19, 1988, 36 that for thedetermination of probable cause to support the issuance of a search warrant in copyright infringement casesinvolving videograms, the production of the master tape for comparison with the allegedly pirate copies isnecessary.
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Petitioners assert that the issuance of a search warrant is addressed to the discretion of the court subject tothe determination of probable cause in accordance with the procedure prescribed therefore under Sections 3and 4 of Rule 126. As of the time of the application for the search warrant in question, the controlling criterionfor 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 areasonably discreet and prudent man to believe that an offense has been committed and that the objectssought 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 therewas probable cause for the issuance of a search warrant, and which determination in fact led to the issuanceand service on December 14, 1987 of Search Warrant No. 87-053. It is further argued that any search warrantso issued in accordance with all applicable legal requirements is valid, for the lower court could not possiblyhave been expected to apply, as the basis for a finding of probable cause for the issuance of a search warrantin copyright infringement cases involving videograms, a pronouncement which was not existent at the time ofsuch determination, on December 14, 1987, that is, the doctrine in the20th Century Fox case that waspromulgated 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 ofthe search warrant by the lower court on the strength of that 20th Century Fox ruling which, they claim, goesinto 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 andSection 3, Rule 126 of the 1985 Rules on Criminal Procedure embodied the prevailing and governing law onthe 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. Torefrain from applying the 20th Century Fox ruling, which had supervened as a doctrine promulgated at the timeof the resolution of private respondents' motion for reconsideration seeking the quashal of the search warrantfor failure of the trial court to require presentation of the master tapes prior to the issuance of the searchwarrant, would have constituted grave abuse of discretion. 38
Respondent court upheld the retroactive application of the 20th Century Fox ruling by the trial court inresolving petitioners' motion for reconsideration in favor of the quashal of the search warrant, on thisrenovated thesis:
And whether this doctrine should apply ret roactively, it must be noted that in the 20th Century Fox case, thelower court quashed the earlier search warrant it issued. On certiorari , the Supreme Court affirmed thequashal on the ground among others that the master tapes or copyrighted films were not presented forcomparison 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 Courtwould have invalidated the warrant just the same considering the very strict requirement set by the SupremeCourt for the determination of "probable cause" in copyright infringement cases as enunciated in this 20thCentury Fox case. This is so because, as was stated by the Supreme Court in the said case, the master tapesand the pirated tapes must be presented for comparison to satisfy the requirement of "probable cause ." So itgoes back to the very existence of probablecause. . . . 39
Mindful as we are of the ramifications of the doctrine of stare decisis and the rudiments of fair play, it is ourconsidered view that the 20th Century Fox ruling cannot be retroactively applied to the instant case to justifythe quashal of Search Warrant No. 87-053. Herein petitioners' consistent position that the order of the lowercourt 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 moreevidence 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 theConstitution 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 partof the legal system of the Philippines, still they are not laws. Judicial decisions, though not laws, arenonetheless evidence of what the laws mean, and it is for this reason that they are part of the legal system ofthe Philippines. 41 Judicial decisions of the S upreme Court assume the same autho rity as the statuteitself. 42
Interpreting the aforequoted correlated provisions of the Civil Code and in light of the above disquisition, thisCourt emphatically declared in Co vs. Court of Appeals, et al . 43 that the principle of prospectivity applies notonly to original or amendatory statutes and administrative rulings and circulars, but also, and properly so, to judicial decisions. O ur holding in the earlier case of People vs. Jabinal 44 echoes the rationale for this judicialdeclaration, 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 Courtconstitutes, in a way, a part of the law as of the date that the law was originally passed, since this Court'sconstruction merely establishes the contemporaneous legislative intent that the law thus construed intends toeffectuate. The settled rule supported by numerous authorities is a restatement of the legal maxim " legisinterpretatio legis vim obtinet " — the interpretation placed upon the written law by a competent court has theforce of law. . . . , but when a doctrine of this Court is overruled and a different view is adopted, the newdoctrine should be applied prospectively, and should not apply to parties who had relied on the old doctrineand acted on the faith thereof . . . . (Emphasis supplied).
This was forcefully reiterated in Spouses Benzonan vs. Court of Appeals, et al ., 45 where theCourt expounded:
. . . . But while our decisions form part of the law of the land, they are also subject to Article 4 of the Civil Codewhich provides that "laws shall have no retroactive effect unless the contrary is provided." This is expressed inthe familiar legal maxim lex prospicit , non respicit , the law looks forward not backward. The rationale againstretroactivity is easy to perceive. The retroactive application of a law usually divests rights that have alreadybecome vested or impairs the obligations of contract and hence, is unconstitutional (Francisco v. Certeza, 3SCRA 565 [1961]). The same consideration underlies our rulings giving only prospective effect to decisionsenunciating new doctrines. . . . .
The reasoning behind Senarillos vs. Hermosisima 46 that judicial interpretation of a statute constitutes part ofthe law as of the date it was originally passed, since the Court's construction merely establishes thecontemporaneous legislative intent that the interpreted law carried into effect, is all too familiar. Such judicialdoctrine does not amount to the passage of a new law but consists merely of a construction or interpretation ofa 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 wasoriginally passed, subject only to the qualification that when a doctrine of this Court is overruled and a differentview is adopted, and more so when there is a reversal thereof, the new doctrine should be appliedprospectively and should not apply to parties who relied on the old doctrine and acted in good faith. 47 To hold
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otherwise would be to deprive the law of its quality of fairness and justice then, if there is no recognition ofwhat had transpired prior to such adjudication. 48
There is merit in petitioners' impassioned and well-founded argumentation:
The case of 20th Century Fox Film Corporation vs . Court of Appeals, et al ., 164 SCRA 655 (August 19, 1988)(hereinafter 20th Century Fox) was inexistent in December of 1987 when Search Warrant 87-053 was issuedby the lower court. Hence, it boggles the imagination how the lower court could be expected to apply theformulation of 20th Century Fox in finding probable cause when the formulation was yet non-existent.
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In short, the lower court was convinced at that time after conducting searching examination questions of theapplicant and his witnesses that "an offense had been committed and that the objects sought in connectionwith the offense (were) in the place sought to be searched" (Burgos v. Chief of Staff, et al., 133 SCRA 800). Itis indisputable, therefore, that at the time of the application, or on December 14, 1987, the lower court did notcommit any error nor did it fail to comply with any legal requirement for the valid issuance of search warrant.
. . . (W)e believe that the lower court should be considered as having followed the requirements of the law inissuing Search Warrant No. 87-053. The search warrant is therefore valid and binding. It must be noted thatnowhere is it found in the allegations of the Respondents that the lower court failed to apply the law as theninterpreted in 1987 . Hence, we find it absurd that it is (sic ) should be seen otherwise, because it is simplyimpossible 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 areinexistent at the time they were supposed to have been complied with.
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. . . If the lower court's reversal will be sustained, what encouragement can be given to courts and litigants torespect 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 byresorting to the remedies provided by the law, it is most unfair that fealty to the rules and procedures thenobtaining would bear but fruits of injustice.
Withal, even the proposition that the prospectivity of judicial decisions imports application thereof not only tofuture cases but also to cases still ongoing or not yet final when the decision was promulgated, should not becountenanced in the jural sphere on account of its inevitably unsettling repercussions. More to the point, it isfelt that the reasonableness of the added requirement in 20th Century Fox calling for the production of themaster tapes of the copyrighted films for determination of probable cause in copyright infringement casesneeds revisiting and clarification.
It will be recalled that the 20th Century Fox case arose from search warrant proceedings in anticipation of thefiling of a case for the unauthorized sale or renting out of copyrighted films in videotape format in violation ofPresidential Decree No. 49. It revolved around the meaning of probable cause within the context of theconstitutional provision against illegal searches and seizures, as applied to copyright infringement casesinvolving 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 petitioner's argument to the effect that the presentation of the master tapes at the time of application maynot be necessary as these would be merely evidentiary in nature and not determinative of whether or not aprobable cause exists to justify the issuance of the search warrants is not meritorious. The court cannotpresume 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 inthe unauthorized sale and renting out of copyrighted films belonging to the petitioner pursuant to P.D. 49.
The essence of a copyright infringement is the similarity or at least substantial similarity of the purportedpirated works to the copyrighted work. Hence, the applicant must present to the court the copyrighted films tocompare them with the purchased evidence of the video tapes allegedly pirated to determine whether the latteris an unauthorized reproduction of the former. This linkage of the copyrighted films to the pirated films must beestablished to satisfy the requirements of probable cause. Mere allegations as to the existence of thecopyrighted 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 pertinentportions 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 respondentson the ground that it acted on the application for the issuance of the said search warrants and granted it on themisrepresentations 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 m ovant, all three witnesses during the proceedings in the application for the three searchwarrants testified of their own personal knowledge. Yet, Atty. Albino Reyes of the NBI stated that the counselor 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 videocassettes were pirated without stating the manner it was pirated and that it was Atty. Domingo that hasknowledge of that fact.
On the part of Atty. Domingo, he said that the re-taping of the allegedly pirated tapes was from master tapesallegedly 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 thecomplaint 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 mastertapes or at least the film reels of the allegedly pirated tapes were not shown to the Court during the applicationgives 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 PD 49, thecopyright infringement law, and although what is required for the issuance thereof is merely the presence ofprobable cause, that probable cause must be satisfactory to the Court, for it is a time-honored precept thatproceedings 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.
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This doctrine has never been overturned, and as a matter of fact it had been enshrined in the Bill of Rights inour 1973 Constitution.
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So that lacking in persuasive effect, the allegation that master tapes were viewed by the NBI and werecompared to the purchased and seized video tapes from the respondents' establishments, it should bedismissed as not supported by competent evidence and for that matter the probable cause hovers in that greydebatable 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 dulyregistered or copyrighted in the Philippines. (Annex C of Opposition p. 152 record.) So, that lacking in therequisite presentation to the Court of an alleged master tape for purposes of comparison with the purchasedevidence of the video tapes allegedly pirated and those seized from respondents, there was no way todetermine 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 causethat the private respondents violated P .D. 49. As found out by the court, the NBI agents who acted aswitnesses did not have personal knowledge of the subject matter of their testimony which was the allegedcommission of the offense by the private respondents. Only the petitioner's counsel who was also a witnessduring the application for the issuance of the search warrants stated that he had personal knowledge that theconfiscated tapes owned by the private respondents were pirated tapes taken from master tapes belonging tothe petitioner. However, the lower court did not give much credence to his testimony in view of the fact that themaster tapes of the allegedly pirated tapes were not shown to the court during the application (Emphasisours).
The italicized passages readily expose the reason why the trial court therein required the presentation of themaster tapes of the allegedly pirated films in order to convince itself of the existence of probable cause underthe 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 mastertapes, unlike the other types of personal properties which may be seized, were available for presentation tothe court at the time of the application for a search warrant to determine the existence of the linkage of thecopyrighted films with the pirated ones. Thus, there is no reason not the present them (Emphasis supplied ). 50
In fine, the supposed pronunciamento in said case regarding the necessity for the presentation of the mastertapes of the copyrighted films for the validity of search warrants should at most be understood to merely serveas a guidepost in determining the existence of probable cause in copyright infringement cases where there isdoubt as to the true nexus between the master tape and the pirated copies. An objective and careful reading ofthe decision in said case could lead to no other conclusion than that said directive was hardly intended to be asweeping and inflexible requirement in all or similar copyright infringement cases. Judicial dicta should alwaysbe construed within the factual matrix of their parturition, otherwise a careless interpretation thereof couldunfairly 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 lowercourt following a formal complaint lodged by petitioners, judging from his affidavit 51 and his deposition,52 didtestify on matters within his personal knowledge based on said complaint of petitioners as well as his owninvestigation 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 hepersonally 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 privateresearcher retained by Motion Pictures Association of America, Inc. (MPAA, Inc.), who was likewise presentedas a witness during the search warrant proceedings. 55 The records clearly reflect that the testimonies of theabovenamed 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 caseexhibited. This categorical forthrightness in their statements, among others, was what initially and correctlyconvinced 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 theirrespective testimonies and that said witnesses' claim that the video tapes were pirated, without stating themanner by which these were pirated, is a conclusion of fact without basis. 56 The difference, it must be pointedout, 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 partof private respondents that the tapes seized were illegitimate copies of the copyrighted ones not have theyshown 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 extensivesurveillance of the suspected area was undertaken by petitioners' witnesses sufficient to enable them toexecute trustworthy affidavits and depositions regarding matters discovered in the course thereof and of whichthey have personal knowledge.
It is evidently incorrect to suggest, as the ruling in 20th Century Fox may appear to do, that in copyrightinfringement cases, the presentation of master tapes of the copyrighted films is always necessary to meet therequirement of probable cause and that, in the absence thereof, there can be no finding of probable cause forthe issuance of a search warrant. It is true that such master tapes are object evidence, with the merit that inthis class of evidence the ascertainment of the controverted fact is made through demonstrations involving thedirect 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 tendingto prove the factum probandum, 58 especially where the production in court of object evidence would result indelay, 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 theirissuance except on a showing of probable cause, supported by oath or affirmation. These provisions preventthe issuance of warrants on loose, vague, or doubtful bases of fact, and emphasize the purpose to protectagainst all general searches. 60 Indeed, Article III of our Constitution mandates in Sec. 2 thereof that no searchwarrant shall issue except upon probable cause to be determined personally by the judge after examinationunder oath or affirmation of the complainant and the witnesses he may produce, and particularly describing theplace to be searched and the things to be seized; and Sec. 3 thereof provides that any evidence obtained inviolation 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 inconnection with one specific offense to be determined personally by the judge after examination under oath oraffirmation of the complainant and the witnesses he may produce, and particularly describing the place to besearched and the things to be seized.
Sec. 4. Examination of complainant ; record . — The judge must, before issuing the warrant, personallyexamine in the form of searching questions and answers, in writing and under oath the complainant and anywitnesses he may produce on facts personally known to them and attach to the record their sworn statementstogether with any affidavits submitted.
Sec. 5. Issuance and form of search warrant . — If the judge is thereupon satisfied of the existence of factsupon which the application is based, or that there is probable cause to believe that they exist, he must issuethe warrant, which must be substantially in the form prescribed by these Rules.
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The constitutional and statutory provisions of various jurisdictions requiring a showing of probable causebefore a search warrant can be issued are mandatory and must be complied with, and such a showing hasbeen held to be an unqualified condition precedent to the issuance of a warrant. A search warrant not basedon probable cause is a nullity, or is void, and the issuance thereof is, in legal contemplation, arbitrary. 61 Itbehooves 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 h ave a well-defined meaning in the law, the term isexceedingly 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 b e formulated which would cover every state of f acts which might
arise, and no formula or standard, or hard and fast rule, may be laid down which may be applied to the facts ofevery situation. 62 As to what acts constitute probable cause seem incapable of definition. 63 There is, ofnecessity, no exact test. 64
At best, the term "probable cause" has been understood to mean a reasonable ground of suspicion, supportedby circumstances sufficiently strong in themselves to warrant a cautious man in the belief that the personaccused is guilty of the offense with which he is charged; 65 or the existence of such facts and circumstancesas would excite an honest belief in a reasonable mind acting on all the facts and circumstances within theknowledge 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. Thedetermination of the existence of probable cause is not concerned with the question of whether the offensecharged has been or is being committed in fact, or whether the accused is guilty or innocent, but only whetherthe affiant has reasonable grounds for his belief. 6 7 The requirement is less than certainty or proof , butmore
than suspicion or possibility . 68
In Philippine jurisprudence, probable cause has been uniformly defined as such facts and circumstanceswhich would lead a reasonable, discreet and prudent man to believe that an offense has been committed, andthat the objects sought in connection with the offense are in the place sought to be searched. 69 It being theduty of the issuing officer to issue, or refuse to issue, the warrant as soon as practicable after the applicationtherefor is filed, 70 the facts warranting the conclusion of probable cause must be assessed at the time of such judicial determination by necessarily using legal standards then set forth in law and jurisprudence, and notthose 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, asthey continue to be, by which a finding of probable cause is tested. Since the propriety of the issuance of asearch 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 determiningthe existence of probable cause, can and should logically look to the touchstones in the laws theretoforeenacted and the decisions already promulgated at the time, and not to those which had not yet even beenconceived 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 court's discretion within the particular facts of eachcase. 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 fordetermining what shall constitute probable cause. 71 Thus, Congress, despite its broad authority to fashionstandards of reasonableness for searches and seizures, 72 does not venture to make such a definition orstandard 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, allin deference to judicial discretion and probity. 73
Accordingly, to restrict the exercise of discretion by a judge by adding a particular requirement (thepresentation of master tapes, as intimated by 20th Century Fox ) not provided nor implied in the law for afinding of probable cause is beyond the realm of judicial competence or statesmanship. It serves no purposebut to stultify and constrict the judicious exercise of a court's prerogatives and to denigrate the judicial duty ofdetermining 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 aspecific 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 asthe 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 prescribedprocedure for the issuance of a search warrant: (1) the examination under oath or affirmation of thecomplainant and his witnesses, with them particularly describing the place to be searched and the things to beseized; (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) thetaking 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 warrantnow subject of this controversy:
In the instant case, the following facts have been established: (1) copyrighted video tapes bearing titlesenumerated in Search Warrant No. 87-053 were being sold, leased, distributed or circulated, or offered forsale, lease, distribution, or transferred or caused to be transferred by defendants at their video outlets, withoutthe 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 ofthe complainant; (3) the video tapes originated from spurious or unauthorized persons; and (4) said videotapes were exact reproductions of the films listed in the search warrant whose copyrights or distribution rightswere 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 videoestablishments one of which is defendant, for violation of PD No. 49 as amended by PD No. 1988. Atty. LauroC. Reyes led a team to conduct discreet surveillance operations on said video establishments. Per informationearlier gathered by Atty. Domingo, defendants were engaged in the illegal sale, rental, distribution, circulationor public exhibition of copyrighted films of MPAA without its written authority or its members. Knowing thatdefendant Sunshine Home Video and its proprietor, Mr. Danilo Pelindario, were not authorized by MPAA toreproduce, lease, and possess for the purpose of selling any of its copyrighted motion pictures, instructed hisresearcher, 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 issuedrental slip No. 26362 dated October 21, 1987 for P10.00 with a deposit of P100.00. Again, on December 11,1987, the returned to Sunshine Home Video and rented Robocop with 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 HomeVideo 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 werecopyrighted and without the authority of MPAA.
Given these facts, a probable cause exists. . . . 74
The lower court subsequently executed a volte-face, despite its prior detailed and substantiated findings, bystating in its order of November 22, 1988 denying petitioners' motion for reconsideration and quashing thesearch warrant that —
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. . . The two (2) cases have a common factual milieu; both involve alleged pirated copyrighted films of privatecomplainants which were found in the possession or control of the defendants. Hence, the necessity of thepresentation of the master tapes from which the pirated films were allegedly copied is necessary in the instantcase, to establish the existence of probable cause. 75
Being based solely on an unjustifiable and improper retroactive application of the master tape requirementgenerated by 20th Century Fox upon a factual situation completely different from that in the case at bar, andwithout anything more, this later order clearly defies elemental fair play and is a gross reversible error. In fact,this observation of the Court in La Chemise Lacoste, S. A. vs. Fernandez , et al ., supra, may just as easily applyto the present case:
A review of the grounds invoked . . . in his motion to quash the search warrants reveals the fact that they arenot appropriate for quashing a warrant. They are matters of defense which should be ventilated during the trialon the merits of the case. . . .
As correctly pointed out by petitioners, a blind espousal of the requisite of presentation of the master tapes incopyright infringement cases, as the prime determinant of probable cause, is too exacting and impracticable arequirement to be complied with in a search warrant application which, it must not be overlooked, is only anancillary proceeding. Further, on realistic considerations, a strict application of said requirement militatesagainst the elements of secrecy and speed which underlie covert investigative and surveillance operations inpolice enforcement campaigns against all forms of criminality, considering that the master tapes of a motionpicture required to be presented before the court consists of several reels contained in circular steel casingswhich, because of their bulk, will definitely draw attention, unlike diminutive objects like video tapes which canbe 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 Court's admonition also in La Chemise Lacoste,supra, that —
. . . . Judges all over the country are well advised to remember that court processes should not be used asinstruments to, unwittingly or otherwise, aid counterfeiters and intellectual pirates, tie the hands of the law as itseeks to protect the Filipino consuming public and frustrate executive and administrative implementation ofsolemn commitments pursuant to international conventions and treaties.
III
The amendment to Section 56 of Presidential Decree No. 49 by Presidential Decree No. 1987, 77 whichshould here be publicized judicially, brought about the revision of its penalty structure and enumeratedadditional acts considered violative of said decree on intellectual property, namely, (1) directly or indirectlytransferring or causing to be transferred any sound recording or motion picture or other audio-visual works sorecorded with intent to sell, lease, publicly exhibit or cause to be sold, leased or publicly exhibited, or to use orcause to be used for profit such articles on which sounds, motion pictures, or other audio-visual works are sotransferred without the written consent of the owner or his assignee; (2) selling, leasing, distributing,circulating, publicly exhibiting, or offering for sale, lease, distribution, or possessing for the purpose of sale,lease, distribution, circulation or public exhibition any of the abovementioned articles, without the writtenconsent 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 theknowledge 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 whichsounds, motion pictures or other audio-visual recordings may be transferred, and which provide distinct basesfor 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 court's finding that private respondents committed acts in blatant transgression of Presidential DecreeNo. 49 all the more bolsters its findings of probable cause, which determination can be reached even in theabsence of master tapes by the judge in the exercise of sound discretion. The executive concern and resolveexpressed in the foregoing amendments to the decree for the protection of intellectual property rights shouldbe matched by corresponding judicial vigilance and activism, instead of the apathy of submitting totechnicalities 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 byan appropriate understanding thereof. Infringement of a copyright is a trespass on a private domain ownedand 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 theconsent of the owner of the copyright, of anything the sole right to do which is conferred by statute on theowner of the copyright. 78
A copy of a pira cy is an infringement of the original, and it is no defense that the pirate, in such cases, did notknow what works he was indirectly copying, or did not know whether or not he was infringing any copyright; heat least knew that what he was copying was not his, and he copied at his peril. In determining the question ofinfringement, the amount of matter copied from the copyrighted work is an important consideration. Toconstitute infringement, it is not necessary that the whole or even a large portion of the work shall have beencopied. If so much is taken that the value of the original is sensibly diminished, or the labors of the originalauthor are substantially and to an injurious extent appropriated by another, that is sufficient in point of law toconstitute apiracy. 79 The question of whether there has been an actionable infringement of a literary, musical, or artisticwork in motion pictures, radio or television being one of fact, 80 it should properly be determined during thetrial. That is the stage calling for conclusive or preponderating evidence, and not the summary proceeding forthe issuance of a search warrant wherein both lower courts erroneously require the master tapes.
In disregarding private respondent's argument that Search Warrant No. 87-053 is a general warrant, the lowercourt observed that "it was worded in a manner that the enumerated seizable items bear direct relation to theoffense of violation of Sec. 56 of PD 49 as amended. It authorized only the seizur(e) of articles used orintended to be used in the unlawful sale, lease and other unconcerted acts in violation of PD 49 as amended. .. . 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 asspecific as the circumstances will ordinarily allow (People vs. Rubio, 57 Phil. 384); or when the descriptionexpresses 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 thosewhich bear direct relation to the offense for which the warrant is being issued (Sec 2, Rule 126, Revised Rulesof Court). . . . If the articles desired to be seized have any direct relation to an offense committed, the applicantmust necessarily have some evidence, other than those articles, to prove the said offense; and the articlessubject of search and seizure should come in handy merely to strengthen such evidence. . . .
On private respondents' averment that the search warrant was made applicable to more than one specificoffense 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 searchwarrant must be issued only in connection with one specific offense, the lower court said:
. . . . As the face of the search warrant itself indicates, it was issued for violation of Section 56, PD 49 asamended only. The specifications therein (in Annex A) merely refer to the titles of the copyrighted motionpictures/films belonging to private complainants which defendants were in control/possession for sale, lease,
distribution or public exhibition in contravention of Sec. 56, PD 49 as amended. 83
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That there were several counts of the offense of copyright infringement and the search warrant uncoveredseveral contraband items in the form of pirated video tapes is not to be confused with the number of offensescharged. 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 requirementsunder Presidential Decree No. 49 as prerequisites for invoking the court's protective mantle in copyrightinfringement 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 suchregistration, as in this case, there was no right created, hence, no infringement under PD 49 as amended. Thisis not well-taken.
As correctly pointed out by private complainants-oppositors, the Department of Justice h as resolved this legalquestion 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 "haddone away with the registration and deposit of cinematographic works" and that "even without prior registrationand deposit of a work which may be entitled to protection under the Decree, the creator can file action forinfringement of its rights". He cannot demand, however, payment of damages arising from infringement. Thesame 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 existedwhen in fact there was none. This is wrong. As earlier discussed, PD 49 as amended, does not requireregistration and deposit for a creator to be able to file an action for infringement of his rights. These conditionsare merely pre-requisites to an action for damages. So, as long as the proscribed acts are shown to exist, anaction for infringement may be initiated. 84
Accordingly, the certifi cations 85 from the Copyright Section of the National Library, presented as evidence byprivate respondents to show non-registration of some of the films of petitioners, assume no evidentiary weightor significance whatsoever.
Furthermore, a closer review of Presidential Decree No. 49 reveals that even with respect to works which arerequired under Section 26 thereof to be registered and with copies to 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 tosue for infringement. Such non-compliance merely limits the remedies available to him and subjects him to thecorresponding sanction.
The reason for this is expressed in Section 2 of the decree which prefaces its enumeration of copyrightableworks 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 thelaw, the copyright for a work is acquired by an intellectual creator from the moment of creation even in theabsence 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 Librarywithin 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 aninfringement suit. 86
One distressing observation. This case has been fought on the basis of, and its resolution long delayed byresort to, technicalities to a virtually abusive extent by private respondents, without so much as an attempt toadduce any credible evidence showing that they conduct their business legitimately and fairly. The fact thatprivate respondents could not show proof of their authority or that there was consent from the copyrightowners for them to sell, lease, distribute or circulate petitioners' copyrighted films immeasurably bolsters thelower court's initial finding of probable cause. That private respondents are licensed by the VideogramRegulatory 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 thePhilippines with an unsavory reputation as a hub for intellectual piracy in this part of the globe, formerly in therecords of the General Agreement on Tariffs and Trade and, now, of the World Trade Organization. Such actsmust not be glossed over but should be denounced and repressed lest the Philippines become an internationalpariah in the global intellectual community.
WHEREFORE, the assailed judgment and resolution of respondent Court of Appeals, and necessarilyinclusive 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 ishereby REINSTATED, and said court is DIRECTED to take and expeditiously proceed with such appropriateproceedings as may be called for in this case. Treble costs are further assessed against private respondents.
SO ORDERED.
G.R. No. 156804. March 14, 2005
SONY MUSIC ENTERTAINMENT (PHILS.), INC. and IFPI (SOUTHEAST ASIA), LTD., Petitioners,vs.
HON. JUDGE DOLORES L. ESPAN
OL OF THE REGIONAL TRIAL COURT, BRANCH 90, DASMARIÑAS,CAVITE, ELENA S. LIM, SUSAN L. TAN, DAVID S. LIM, JAMES H. UY, WILSON ALEJANDRO, JR.,JOSEPH DE LUNA, MARIA A. VELA CRUZ, DAVID CHUNG, JAMES UY, JOHN DOES AND JANE DOES,AND SOLID LAGUNA CORPORATION, Respondents.
GARCIA, J .:
Assailed and sought to be nullified in this petition for certiorari with application for injunctive relief are theorders issued by the respondent judge on June 25, 20021 and January 6, 2003,2 the first quashing SearchWarrant No. 219-00, and the second, denying reconsideration of the first.
From the petition, the comment thereon of private respondents, their respective annexes, and other pleadingsfiled by the parties, the Court gathers the following relevant facts:
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In a criminal complaint filed with the Department of Justice (DOJ), the Videogram Regulatory Board(VRB)3charged herein private respondents James Uy, David Chung, Elena Lim and another officer ofrespondentSolid Laguna Corporation (SLC) with violation of Presidential Decree (PD) No. 1987.4 As allegedin the complaint, docketed as I.S. No. 2000-1576, the four (4) were engaged in the replication, reproductionand distribution of videograms without license and authority from VRB. On account of this and petitioners’ owncomplaints for copyright infringement, the National Bureau of Investigation (NBI), through Agent Ferdinand M.Lavin, applied on September 18, 2000, with the Regional Trial Court at Dasmariñas, Cavite, Branch 80,presided by the respondent judge, for the issuance of search warrants against private respondents DavidChung, James Uy, John and Jane Does, doing business under the name and style "Media Group" inside thefactory and production facility of SLC at Solid corner Camado Sts., Laguna International Industrial Park, Biñan,
Laguna.5
During the proceedings on the application, Agent Lavin presented, as witnesses, Rodolfo Pedralvez, adeputized agent of VRB, and Rene C. Baltazar, an investigator retained by the law firm R.V. Domingo &Associates, petitioners’ attorney-in-fact. In their sworn statements, the three stated that petitioners soughttheir assistance, complaining about the manufacture, sale and distribution of various titles of compact discs(CDs) in violation of petitioners’ right as copyright owners; that acting on the complaint, Agent Lavin and thewitnesses conducted an investigation, in the course of which unnamed persons informed them that allegedlyinfringing or pirated discs were being manufactured somewhere in an industrial park in Laguna; that in theprocess of their operation, they were able to enter, accompanied by another unnamed source, the premises ofSLC and to see various replicating equipment and stacks of CDs; and that they were told by their anonymoussource that the discs were being manufactured in the same premises. They also testified that privaterespondents were (1) engaged in the reproduction or replication of audio and video compacts discs without therequisite authorization from VRB, in violation of Section 6 of PD No. 1987, presenting a VRB certification tosuch effect; and (2) per petitioners’ certification and a listing of Sony music titles, infringing on petitioners’
copyrights in violation of Section 208 of Republic Act (RA) No. 8293, otherwise known as Intellectual PropertyCode.6
On the basis of the foregoing sworn statements, the respondent judge issued Search Warrant No. 219-007 forviolation of Section 208 of R.A. No. 8293 and Search Warrant No. 220-008 for violation of Section 6 of PD No.1987.
The following day, elements of the Philippine National Police Criminal Investigation and Detection Group, ledby PO2 Reggie Comandante, enforced both warrants and brought the seized items to a private warehouse ofCarepak Moving and Storage at 1234 Villonco Road, Sucat, Paranaque City and their custody turned over toVRB.9 An inventory of seized items,10 as well as a "Return of Search Warrant" were later filed with therespondent court.
Meanwhile, the respondents in I.S. No. 2000-1576 belabored to prove before the DOJ Prosecutorial Servicethat, since 1998 and up to the time of the search, they were licensed by VRB to operate as replicator andduplicator of videograms.
On the stated finding that "respondents can not . . . be considered an unauthorized reproducers ofvideograms" , being "licensed to engage in reproduction in videograms under SLC in which they are theofficers and/or or officials" , the DOJ, via a resolution dated January 15, 2001,11 dismissed VRB’s complaintin I.S. No. 2000-1576.
On February 6, 2001, private respondents, armed with the DOJ resolution adverted to, moved to quash thesearch warrants thus issued.12 VRB interposed an opposition for the reason that the DOJ has yet to resolvethe motion for reconsideration it filed in I.S. No. 2000-1576.
Eventually, the DOJ denied VRB’s motion for reconsideration, prompting private respondents to move anewfor the quashal of the search warrants. In its supplement to motion, private respondents attached copies ofSLC’s license as videogram duplicator and replicator.
In an order dated October 30, 2001 ,13 the respondent judge, citing the January 15, 2001 DOJ resolution in I.S.No. 2000-1576, granted private respondents’ motion to quash, as supplemented, dispositively stating:
"Nonetheless, such being the case, the aforesaid Search Warrants are QUASHED"
Petitioners forthwith sought clarification on whether or not the quashal order referred to both search warrantsor to Search Warrant No. 220-00 alone, since it was the latter that was based on the charge of violation of PDNo. 1987.14 The respondent judge, in a modificatory order dated January 29, 2002 ,15 clarified that her previousorder quashed only Search Warrant No. 220-00.
Meanwhile, or on November 22, 2001, petitioners filed with the DOJ an affidavit-complaint, docketed thereatasI.S. No. 2001-1158, charging individual private respondents with copyright infringement in violation ofSections 172 and 208 in relation to other provisions of RA No. 8293 .16 Attached to the affidavit-complaint w erecertain documents and records seized from SLC’s premises, such as production and delivery records.
Following their receipt of DOJ-issued subpoenas to file counter-affidavits, private respondents moved, in thesearch warrant case, that they be allowed to examine the seized items to enable them to intelligently preparetheir defense.17 On January 30, 2002, respondent judge issued an order allowing the desired examination,provided it is made under the supervision of the court’s sheriff and in the " presence of the applicant of Search
Warrant No. 219-00 ".18
On February 8, 2002, the parties, represented by their counsels, repaired to the Carepak warehouse. An NBIagent representing Agent Lavin appeared. The examination, however, did not push through on account ofpetitioners’ counsel insistence on Agent Lavin’s physical presence.19 Private respondents were able to makean examination on the following scheduled setting, February 15, 2002, albeit it was limited, as the minutes ofthe inspection discloses, to inspecting only one (1) box containing 35 assorted CDs, testing stampers,diskettes, a calendar, organizers and some folders and documents. The minutes also contained an entrystating - "Other items/machines were not examined because they cannot be identified as they are not properlysegregated from other items/machines in the warehouse. The parties agreed to schedule another examinationon (to be agreed by the parties) after the items/machines subject of the examination shall have beensegregated from the other items/machines by Carepak Moving and Storage , Inc ."20
During the preliminary investigation conducted on February 26, 2002 in I.S. No. 2001-1158, however,
petitioners’ counsel objected to any further examination, claiming that such exercise was a mere subterfuge todelay proceedings.21
On April 11, 2002, individual private respondents, through counsel, filed a "Motion To Quash Search Warrant(And To Release Seized Properties)" grounded on lack of probable cause to justify issuance of searchwarrant, it being inter alia alleged that the applicant and his witnesses lacked the requisite personal knowledgeto justify the valid issuance of a search warrant; that the warrant did not sufficiently describe the items to beseized; and that the warrant was improperly enforced.22 To this motion to quash, petitioners interposed anopposition dated May 7, 2002 predicated on four (4) grounds.23 On June 26, 2002, respondent SLC filed aManifestation joining its co-respondents in, and adopting, their motion to quash.24
On June 25, 2002, the respondent judge issued the herein first assailed order quashing Search Warrant No.219-00 principally on the ground that the integrity of the seized items as evidence had been compromised,commingled as they were with other articles. Wrote the respondent judge:
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Based on the report submitted, it appears that on February 15, 2002, an examination was actuallyconducted.Unfortunately, the alleged seized items were commingled with and not segregated from thousandsof other items stored in the warehouse. Only one box . . . were (sic) examined in the presence of both partieswith the sheriff, such that another date was set . . . . On February 22, 2002, during the hearing before theDepartment of Justice (DOJ), [petitioners’ counsel] Atty. Arevalo manifested their objection to the furtherexamination on the alleged ground that all of the items subject of the DOJ complaint have been examined.
Analyzing the report and the incidents relative thereto, it shows that the items subject of the questioned SearchWarrant were commingled with other items in the warehouse of Carepak resulting in the failure to identify themachines and other items subject of this Search Warrant, while the other items enumerated in the said
Inventory of Seized Items and Certification of Legality, Orderliness and Regularity in the Execution andenforcement of Search Warrants were not examined, hence, the charge imputed against the respondentscould not be established as the evidence to show such violation fails to determine the culpability of saidrespondents, thus, violating their constitutional rights.25
Excepting, petitioners moved for reconsideration, arguing on the main that the quashal order was erroneouslybased on a ground outside the purview of a motion to quash.26 To this motion, private respondents interposedan opposition, against which petitioners countered with a reply.
On January 6, 2003, respondent judge issued the second assailed order denying petitioners’ motion forreconsideration on the strength of the following premises:
Careful scrutiny of the records of the case reveals that the application of the above-entitled case stemmedfrom the application for Search Warrant alleging that the respondent was not licensed to duplicate or replicateCDs and VCDs. The Court was misled when the applicants declared that Solid Laguna Corporation (SLC) isnot licensed to engage in replicating/duplicating CDs and VCDs, when in truth and in fact, SLC was still aholder of a valid and existing VRB license. Considering the fact that respondent was duly licensed which facts(sic) was not laid bare to this Court when the application for writ was filed by the private complainant throughthe National Bureau of Investigation, this Court hereby recalls and quashes the above writ.
Lastly, taking into account that respondents were licensed to engage in replicating/duplicating CDs and VCDs,the issuance of search warrant was of no force and effect as there was absence of probable cause to justifysaid issuance. xxx27
Hence, petitioners’ present recourse.
In a Resolution dated February 19, 2003,28 the Court issued a temporary restraining order enjoining the
respondents from implementing and enforcing t he respondent judge’s questioned orders.
Petitioners ascribe on the respondent judge the commission of grave abuse of discretion amounting to lack orin excess of jurisdiction in issuing the first assailed order in that:
1. It was based on a ground that is not a basis for quashal of a search warrant, i.e., private respondents’ failureto examine the seized items, which ground is extraneous to the determination of the validity of the issuance ofthe search warrant.
2. Public respondent, in effect, conducted a "preliminary investigation" that absolved the private respondentsfrom any liability for copyright infringement.
3. Public respondent recognized the motion to quash search warrant filed by persons who did not have any
standing to question the warrant.
Petitioners also deplore the issuance of the second assailed order which they tag as predicated on a groundimmaterial to Search Warrant No. 219-00.
Private respondents filed their Comment on May 13, 2003, essentially reiterating their arguments inthe "Motion To Quash Search Warrant (And To Release Seized Properties)". Apart therefrom, they aver thatpetitioners violated the rule on hierarchy of courts by filing the petition directly with this Court. As to beexpected, petitioners’ reply to comment traversed private respondents’ position.
Owing to their inability to locate respondent David Chung, petitioners moved and the Court subsequently
approved the dropping, without prejudice, of said respondent from the case.29
On February 20, 2004, private respondents filed their Rejoinder, therein inviting attention to petitioner IFPI’sfailure to execute the certification on non-forum shopping as required by Rule 7, Section 5 of the Rules ofCourt and questioning the validity of the Special Powers of Attorney of petitioners’ attorney -in-fact to file thiscase.
In Resolution of March 31, 2004, the Court gave due course to the petition and directed the submission ofmemoranda which the parties, after each securing an extension, did submit.
The underlying issue before Us revolves on the propriety of the quashal of Search Warrant No. 219-00 which,in turn, resolves itself into question of the propriety of the warrant’s issuance in the first place.
It has repeatedly been said that one’s house, however, humble is his castle where his person, papers andeffects shall be secured and whence he shall enjoy undisturbed privacy except, to borrow from Villanueva vs.Querubin,30 "in case of overriding social need and then only under the stringent procedural safeguards." Theprotection against illegal searches and seizure has found its way into our 1935 and 1973 Constitutions and isnow embodied in Article III, Section 2 of the 1987 Constitution, thus -
The right of the people to be secure in their persons, houses, papers and effects against unreasonablesearches and seizures of whatever nature and for any purpose shall be inviolable, and no search warrant orwarrant of arrest shall issue except upon probable cause to be determined personally by the judge afterexamination under oath or affirmation of the complainant and the witnesses he may produce, and particularlydescribing the place to be searched and the persons or things to be seized,
and in Section 4, Rule 126 of the Rules of Court, viz -
Sec. 4. Requisites for issuing search warrant. – A search warrant shall not issue but upon probable cause . . .to be determined personally by the judge after examination under oath or affirmation of the complainant andthe witnesses he may produce, and particularly describing the place to be searched and the things to beseized.
Complementing the aforequoted provisions is Section 5 of the same Rule, reading:
SEC. 5. Examination of the complainant; record. The judge must, before issuing the warrant, personallyexamine in form of searching questions and answers, in writing and under oath, the complainant and anywitnesses he may produce on facts personally known to them and attach to the record their sworn statementstogether with any affidavits submitted.
To prevent stealthy encroachment upon, or gradual depreciation of the right to privacy, a liberal construction insearch and seizure cases is given in favor of the individual. Consistent with this postulate, the presumption ofregularity is unavailing in aid of the search process when an officer undertakes to justify i t.31 For, the
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presumption juris tantum of regularity cannot, by itself, prevail against the constitutionally protected rights of anindividual because zeal in the pursuit of criminals cannot ennoble the use of arbitrary methods that theConstitution itself detests.32
A core requisite before a warrant shall validly issue is the existence of a probable cause, meaning "theexistence of such facts and circumstances which would lead a reasonably discreet and prudent man to believethat an offense has been committed and that the objects sought in connection with the offense are in the placeto be searched ".33 And when the law speaks of facts, the reference is to facts, data or information personallyknown to the applicant and the witnesses he may present. Absent the element of personal knowledge by theapplicant or his witnesses of the facts upon which the issuance of a search warrant may be justified, the
warrant is deemed not based on probable cause and is a nullity, its issuance being, in legal contemplation,arbitrary, as held by us inColumbia Pictures, Inc. vs. Court of Appeals .34 Testimony based on what issupposedly told to a witness, being patent hearsay and, as rule, of no evidentiary weigh t35 or probative value,whether objected to or not,36 would, alone, not suffice under the law on the existence of probable cause.
In our view, the issuance of the search warrant in question did not meet the requirements of probable cause.The respondent judge did not accordingly err in quashing the same, let alone gravely abuse her discretion.
Petitioners argue that the instant petition is on all fours with Columbia,37 wherein the en banc Court upheld thevalidity of search warrants based on the testimonies of the applicant and his witnesses who conducted aninvestigation on the unlawful reproduction and distribution of video tapes of copyrighted films.
We are not persuaded.
In Columbia, the issuing court probed the applicant’s and his witnesses’ personal knowledge of the fact ofinfringement. It was, however, determined by this Court that during the application hearing, therein petitioner’sattorney-in-fact, a witness of the applicant, "stated in his affidavit and further expounded in his deposition thathe personally knew of the fact that private respondents had never been authorized by his clients to reproduce,lease and possess for the purposes of selling any of the copyrighted films ."38 Significantly, the Court, inupholding the validity of the writ issued upon complaint of Columbia Pictures, Inc., et al ., stated that "there isno allegation of misrepresentation, much less finding thereof by the lower court, on the part of petitioners’witnesses."39
Therein lies the difference with the instant case.
Here, applicant Agent Lavin and his witnesses, Pedralvez and Baltazar, when queried during the applicationhearing how they knew that audio and video compact discs were infringing or pirated, relied for the most part
on what alleged unnamed sources told them and/or on certifications or lists made by persons who were neverpresented as witnesses. In net effect, they testified under oath as to the truth of facts they had no personalknowledge of. The following excerpts of the depositions of applicant Lavin and his witnesses suggest as much:
A. Deposition of Agent Lavin
28. Question: What happened next?
Answer: We then went to the Laguna Industrial Park, your Honor . . . We then verified from an informant thatDavid Chung, James Uy . . . under the name and style Media Group were the ones replicating the infringingCDs.
xxx xxx xxx
36. Question: How do you know that all of these VCDs and CDs you purchased or are indeed infringing?
Answer: I have with me the VRB certification that the VCDs are unauthorized copies. I also have with me theComplaint-Affidavit of Sony Music and IFPI that certified that these are infringing copies, as well as the title listof Sony Music wherein some of the CDs purchased are indicated. (Annex "10", Comment, Rollo, p. 841)
B. Deposition of Baltazar
18. Question: What did you see in that address?
Answer: We saw that they had in stock several infringing, pirated and unauthorized CDs. They also hadvideograms without VRB labels, aside from artworks and labels. John Doe gave us a "Wholesome" CD whileJane Doe gave us "Kenny Rogers Videoke" and "Engelbert Humperdinck Videoke" which the informant told uswere being reproduced in that facility. The informant further showed us the rooms where the replicating and/orstamping machine was located.
19. Question: How did you determine that the CDs you purchased are counterfeit, pirated or unauthorized?
Answer: The Attorney-in-fact of Sony Music and IFPI certified in his Complaint-Affidavit that they areunauthorized copies. I also have with me a listing of Sony Music titles and some of the CDs I purchased are inthat list.40
C. Deposition of Pedralvez
27. Question: What proof do you have they are producing infringing materials?
Answer: We were given some samples by John Doe and Jane Doe. These are Kenny Rogers Videoke,Engelbert Humperdinck Videoke, and Andrew E. Wholesome CD. The informant told us that the said sampleswere being reproduced in the facility.
28. Question: How do you know that all of these VCDs you purchased or got are indeed unauthorized?
Answer: The VRB has certified that they are unauthorized copies. (Annex "12", Comment, Rollo, pp. 849-852).
Unlike their counterparts in Columbia who were found to be personally knowledgeable about their facts , AgentLavin and his witnesses, judging from their above quoted answers, had no personal knowledge that the discsthey saw, purchased or received were, in fact, pirated or infringing on petitioners’ copyrights. To us, it is notenough that the applicant and his witnesses testify that they saw stacks of several allegedly infringing, piratedand unauthorized discs in the subject facility. The more decisive consideration determinative of whether or nota probable cause obtains to justify the issuance of a search warrant is that they had personal knowledge thatthe discs were actually infringing, pirated or unauthorized copies.41
Moreover, unlike in Columbia, misrepresentation on the part of the applicant and his witnesses had beenestablished in this case.
This is not to say that the master tapes should have been presented in evidence during the applicationhearing, as private respondents, obviously having in mind the holding in 20th Century Fox Film Corp. vs. Courtof Appeals,42 would have this Court believe. It is true that the Court, in 20th Century Fox, underscored thenecessity, in determining the existence of probable cause in copyright infringement cases, of presenting themaster tapes of the copyrighted work. But, as emphatically clarified in Columbia "such auxiliary procedure,
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however, does not rule out the use of testimonial or documentary evidence, depositions, admissions or otherclasses of evidence xxx especially where the production in court of object evidence would result in delay,inconvenience or expenses out of proportion to its evidentiary value .43 What this Court is saying is that anyevidence presented in lieu of the master tapes, if not readily available, in similar application proceedings mustbe reliable, and, if testimonial, it must, at the very least, be based on the witness’ personal knowledge.
Petitioners argue, citing People v. Chua Uy ,44 that Agent Lavin’s informants’ testimonies are not indispensableas they would only be corroborative.45 Like Columbia, Chua Uy is not a winning card for petitioners, for, in thelatter case, there was a reliable testimony to corroborate what the applicant testified to, i.e., the testimony ofthe police poseur-buyer in a buy-bust operation involving prohibited drugs. The circumstances are different in
this case wherein the applicant and his witnesses had no personal knowledge that the discs they purchasedwere infringing or pirated copies. It cannot be overemphasized that not one of them testified seeing the pirateddiscs being manufactured at SLC’s premises. What they stated instead was that they were given copies of"Kenny Rogers Videoke", "Engelbert Humperdinck Videoke" and " Andrew E. Wholesome CD" by twoanonymous sources, while yet another informant told them that the discs were manufactured at said premises.
Initial hearsay information or tips from confidential informants could very well serve as basis for the issuance ofa search warrant, if followed up personally by the recipient and validated ,46 as what transpiredin Columbia.Unfortunately, the records show that such is not the case before us.
On the issue that the public respondent gravely abused her discretion in conducting what petitioners perceivedamounted to a " preliminary investigation", this Court has already ruled in Solid Triangle Sales Corp. vs. Sheriffof RTC Quezon City, Branch 93 ,47 that "in the determination of probable cause, the court must necessarilyresolve whether or not an offense exists to justify the issuance or quashal of the warrant". In the exercise of
this mandate - which we can allow as being akin to conducting a preliminary investigation - abuse of discretioncannot plausibly be laid at the doorstep of the issuing court on account of its prima facie holding that nooffense has been committed, even if consequent to such holding a warrant is recalled and the privatecomplainant is incidentally deprived of vital evidence to prove his case. Solid Triangle succinctly explains why:
The proceedings for the issuance/quashal of a search warrant before a court on the one hand, and thepreliminary investigation before an authorized officer on the other, are proceedings entirely independent ofeach other. One is not bound by the other’s finding as regards the existence of a crime. The first is todetermine whether a warrant should issue or be quashed, and the second, whether an information should befiled in court.
When the court, in determining probable cause for issuing or quashing a search warrant, finds that no offensehas been committed, it does not interfere with or encroach upon the proceedings in the preliminaryinvestigation. The court does not oblige the investigating officer not to file the information for the court ’s ruling
that no crime exists is only of purposes of issuing or quashing the warrant. This does not, as petitioners wouldlike to believe, constitute a usurpation of the executive function. Indeed, to shirk from this duty would amountto an abdication of a constitutional obligation.48
While the language of the first questioned Order may be viewed as encroaching on executive functions,nonetheless, it remains that the order of quashal is entirely independent of the proceedings in I.S. No. 2001-1158. And needless to stress, the DOJ is by no means concluded by the respondent judge’s findings asregards the existence, or the non-existence, of a crime.
We can, to a point, accord merit to petitioners’ lament that the basis of the first questioned order , i.e., themingling of the seized items with other items, is extraneous to the determination of the validity of the issuanceof the search warrant. It is to be pointed out, though, that public respondent corrected her error when it wasraised in petitioners’ motion for reconsideration. There can really be no serious objection to a judge correctingor altogether altering his case disposition on a motion for reconsideration, it being the purpose of such
recourse to provide the court an opportunity to cleanse itself of an error unwittingly committed, or, with like
effect, to allow the aggrieved party the chance to convince the court that its ruling is erroneous .49 A motion forreconsideration before resort tocertiorari is required precisely "to afford the public respondent an opportunity tocorrect any actual or fancied error attributed to it by way of re-examination of the legal and factual aspects ofthe case".50
Similarly, as to the matter of the respondent judge’s recognizing the April 11, 2002 motion to quash searchwarrant51 filed by the individual private respondents, instead of by SLC, as presumptive owner of the seizeditems, such error was properly addressed when respondent SLC, represented throughout the proceedingsbelow by the same counsel of its co-respondents, formally manifested that it was adopting the same motion asits own.52
It is apropos to point out at this juncture that petitioners have imputed on individual private respondentscriminal liability, utilizing as tools of indictment the very articles and papers seized from the premises of SLC.Be that as it may, petitioners should be deemed in estoppel to raise the personality of individual privaterespondents to interpose a motion to quash. To be sure, it would be unsporting for petitioners to prosecuteindividual private respondents on the basis of seized articles but on the same breath deny the latter standingto question the legality of the seizure on the postulate that only the party whose rights have been impairedthereby, meaning SLC, can raise that challenge. There can be no quibbling that individual private respondentsstand to be prejudiced or at least be inconvenient by any judgment in any case based on the seizedproperties. In a very real sense, therefore, they are real parties in interest who ought not to be prevented fromassailing the validity of Search Warrant 219-00, albeit they cannot plausibly asked for the release andappropriate as their own the seized articles.
Petitioners’ related argument that SLC could not have validly adopted individual private respondents’ motion to
quash due to laches is untenable.
The records show that the seizure in question was effected on September 19, 2000. The complaint in I.S. No.2000-1576 was filed against the officers of SLC, all of whom, except for one, are also private respondents inthe instant petition. I.S. No. 2000-1576 was only resolved on January 15, 2001 when the DOJ dismissed thecomplaint on the ground that SLC was, in fact, duly licensed by the VRB. Shortly thereafter, or on February 6,2001, less than five (5) months after the seizure, private respondents moved to quash both searchwarrants.53The motion clearly indicates private respondents’ desire for the return of the seized items, and thereis nothing in the records showing that petitioners objected to the motion on the ground that the movants hadno standing to question the warrants.
This bring Us to the second assailed order. As earlier stated, DOJ, in I.S. No. 2000-1576, found respondentSLC to be licensed by VRB to engage in the business of replicating or duplicating videograms.
Petitioners would have the Court believe that the second questioned order was based on a ground immaterialto the charge of infringement. A scrutiny of the text of the said order, however, shows that the respondent judge denied petitioners’ motion for reconsideration because she was misled by the applicant’s and hiswitnesses’ testimony. It may be that a VRB license is no defense to a charge of violating Section 208 of R.A.No. 8293. It must be stressed in this regard, however, that the core issue here is the validity of the warrantwhich applicant secured on the basis of, among others, his representation which turned out to be false.
As above discussed, the answers of Agent Lavin and his witnesses to the public respondent’s searchingquestions, particularly those relating to how they knew that the compact discs they purchased or receivedwere illegal, unauthorized or infringing, were based on certifications and not personal knowledge. The subjectwarrant, as well as Search Warrant No. 220-00, was issued nonetheless. It may well have been that theissuing judge was, in the end, convinced to issue the warrants by means of the erroneous VRB certificationpresented during the joint application hearing, overriding whatever misgivings she may have had with theapplicant’s and his witnesses’ other answers. This Court, however, cannot engage in such speculation and
sees no need to.
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Summing up, the issuance of Search Warrant No. 219-00 was, at bottom, predicated on the sworn testimoniesof persons without personal knowledge of facts they were testifying on and who relied on a false certificationissued by VRB. Based as it were on hearsay and false information, its issuance was without probable causeand, therefore, invalid.
Given the foregoing perspective, the peripheral issues of (a) whether or not petitioner IFPI (South East Asia),Ltd. failed to comply with the rules requiring the filing of a certification on non-forum shopping; and (b) whetheror not IFPI’s board of directors ratified its conditional au thorization for its attorney-in-fact to represent IFPI inthis petition, need not detain us long. In our review of the records, R.V. Domingo & Associates, whoseauthority to represent the petitioners in this petition continues, had duly executed the sworn certification on
non- forum shopping.
In the same manner, this Court, having taken cognizance of this petition, need not belabor the issue ofwhether or not petitioners have cavalierly breached the rule on hierarchy of courts. Suffice it to state that, whilethe Court looks with disfavor on utter disregard of its rules,54 it is within its power to suspend its own rules or toexcept a particular case from its operation whenever the ends of justice so requires, as here.
WHEREFORE, the instant petition is hereby DISMISSED and the temporary restraining order issued onFebruary 19, 2003 is consequently RECALLED.
Costs against petitioners.
SO ORDERED
