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ELIDAD C.

KHO, doing business under the name and style of KEC COSMETICS
LABORATORY, petitioner, vs. HON. COURT OF APPEALS, SUMMERVILLE GENERAL
MERCHANDISING and COMPANY, and ANG TIAM CHAY, respondents.
DECISION
DE LEON, JR., J.:
Before us is a petition for review on certiorari of the Decision[1] dated May 24, 1993 of the Court
of Appeals setting aside and declaring as null and void the Orders [2] dated February 10, 1992 and
March 19, 1992 of the Regional Trial Court, Branch 90, of Quezon City granting the issuance of a writ
of preliminary injunction.
The facts of the case are as follows:
On December 20, 1991, petitioner Elidad C. Kho filed a complaint for injunction and damages
with a prayer for the issuance of a writ of preliminary injunction, docketed as Civil Case No. Q-9110926, against the respondents Summerville General Merchandising and Company (Summerville, for
brevity) and Ang Tiam Chay.
The petitioners complaint alleges that petitioner, doing business under the name and style of
KEC Cosmetics Laboratory, is the registered owner of the copyrights Chin Chun Su and Oval Facial
Cream Container/Case, as shown by Certificates of Copyright Registration No. 0-1358 and No. 03678; that she also has patent rights on Chin Chun Su & Device and Chin Chun Su for medicated
cream after purchasing the same from Quintin Cheng, the registered owner thereof in the Supplemental
Register of the Philippine Patent Office on February 7, 1980 under Registration Certificate No. 4529;
that respondent Summerville advertised and sold petitioners cream products under the brand
name Chin Chun Su, in similar containers that petitioner uses, thereby misleading the public, and
resulting in the decline in the petitioners business sales and income; and, that the respondents should
be enjoined from allegedly infringing on the copyrights and patents of the petitioner.
The respondents, on the other hand, alleged as their defense that Summerville is the exclusive and
authorized importer, re-packer and distributor of Chin Chun Su products manufactured by Shun Yi
Factory of Taiwan; that the said Taiwanese manufacturing company authorized Summerville to register

its trade name Chin Chun Su Medicated Cream with the Philippine Patent Office and other appropriate
governmental agencies; that KEC Cosmetics Laboratory of the petitioner obtained the copyrights
through misrepresentation and falsification; and, that the authority of Quintin Cheng, assignee of the
patent registration certificate, to distribute and market Chin Chun Su products in the Philippines had
already been terminated by the said Taiwanese Manufacturing Company.
After due hearing on the application for preliminary injunction, the trial court granted the same in
an Order dated February 10, 1992, the dispositive portion of which reads:
ACCORDINGLY, the application of plaintiff Elidad C. Kho, doing business under the style of KEC
Cosmetic Laboratory, for preliminary injunction, is hereby granted. Consequentially, plaintiff is
required to file with the Court a bond executed to defendants in the amount of five hundred thousand
pesos (P500,000.00) to the effect that plaintiff will pay to defendants all damages which defendants
may sustain by reason of the injunction if the Court should finally decide that plaintiff is not entitled
thereto.
SO ORDERED.[3]
The respondents moved for reconsideration but their motion for reconsideration was denied by the trial
court in an Order dated March 19, 1992.[4]
On April 24, 1992, the respondents filed a petition for certiorari with the Court of Appeals,
docketed as CA-G.R. SP No. 27803, praying for the nullification of the said writ of preliminary
injunction issued by the trial court. After the respondents filed their reply and almost a month after
petitioner submitted her comment, or on August 14 1992, the latter moved to dismiss the petition for
violation of Supreme Court Circular No. 28-91, a circular prohibiting forum shopping. According to
the petitioner, the respondents did not state the docket number of the civil case in the caption of their
petition and, more significantly, they did not include therein a certificate of non-forum shopping. The
respondents opposed the petition and submitted to the appellate court a certificate of non-forum
shopping for their petition.
On May 24, 1993, the appellate court rendered a Decision in CA-G.R. SP No. 27803 ruling in
favor of the respondents, the dispositive portion of which reads:

WHEREFORE, the petition is hereby given due course and the orders of respondent court dated
February 10, 1992 and March 19, 1992 granting the writ of preliminary injunction and denying
petitioners motion for reconsideration are hereby set aside and declared null and void. Respondent
court is directed to forthwith proceed with the trial of Civil Case No. Q-91-10926 and resolve the issue
raised by the parties on the merits.
SO ORDERED.[5]
In granting the petition, the appellate court ruled that:
The registration of the trademark or brandname Chin Chun Su by KEC with the supplemental
register of the Bureau of Patents, Trademarks and Technology Transfer cannot be equated with
registration in the principal register, which is duly protected by the Trademark Law.
xxx

xxx

xxx

As ratiocinated in La Chemise Lacoste, S.S. vs. Fernandez, 129 SCRA 373, 393:
Registration in the Supplemental Register, therefore, serves as notice that the registrant is using or has
appropriated the trademark. By the very fact that the trademark cannot as yet be on guard and there are
certain defects, some obstacles which the use must still overcome before he can claim legal ownership
of the mark or ask the courts to vindicate his claims of an exclusive right to the use of the same. It
would be deceptive for a party with nothing more than a registration in the Supplemental Register to
posture before courts of justice as if the registration is in the Principal Register.
The reliance of the private respondent on the last sentence of the Patent office action on application
Serial No. 30954 that registrants is presumed to be the owner of the mark until after the registration is
declared cancelled is, therefore, misplaced and grounded on shaky foundation. The supposed
presumption not only runs counter to the precept embodied in Rule 124 of the Revised Rules of
Practice before the Philippine Patent Office in Trademark Cases but considering all the facts ventilated
before us in the four interrelated petitions involving the petitioner and the respondent, it is devoid of
factual basis. As even in cases where presumption and precept may factually be reconciled, we have
held that the presumption is rebuttable, not conclusive, (People v. Lim Hoa, G.R. No. L-10612, May
30, 1958, Unreported). One may be declared an unfair competitor even if his competing trademark is

registered (Parke, Davis & Co. v. Kiu Foo & Co., et al., 60 Phil 928; La Yebana Co. v. chua Seco &
Co., 14 Phil 534).[6]
The petitioner filed a motion for reconsideration. This she followed with several motions to
declare respondents in contempt of court for publishing advertisements notifying the public of the
promulgation of the assailed decision of the appellate court and stating that genuine Chin Chun
Su products could be obtained only from Summerville General Merchandising and Co.
In the meantime, the trial court went on to hear petitioners complaint for final injunction and
damages. On October 22, 1993, the trial court rendered a Decision [7] barring the petitioner from using
the trademark Chin Chun Su and upholding the right of the respondents to use the same, but
recognizing the copyright of the petitioner over the oval shaped container of her beauty cream. The
trial court did not award damages and costs to any of the parties but to their respective counsels were
awarded Seventy-Five Thousand Pesos (P75,000.00) each as attorneys fees. The petitioner duly
appealed the said decision to the Court of Appeals.
On June 3, 1994, the Court of Appeals promulgated a Resolution [8] denying the petitioners
motions for reconsideration and for contempt of court in CA-G.R. SP No. 27803.
Hence, this petition anchored on the following assignment of errors:
I
RESPONDENT HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE
OF DISCRETION AMOUNTING TO LACK OF JURISDICTION IN FAILING TO RULE
ON PETITIONERS MOTION TO DISMISS.
II
RESPONDENT HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE
OF DISCRETION AMOUNTING TO LACK OF JURISDICTION IN REFUSING TO
PROMPTLY RESOLVE PETITIONERS MOTION FOR RECONSIDERATION.
III

IN DELAYING THE RESOLUTION OF PETITIONERS MOTION FOR


RECONSIDERATION, THE HONORABLE COURT OF APPEALS DENIED
PETITIONERS RIGHT TO SEEK TIMELY APPELLATE RELIEF AND VIOLATED
PETITIONERS RIGHT TO DUE PROCESS.
IV
RESPONDENT HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE
OF DISCRETION AMOUNTING TO LACK OF JURISDICTION IN FAILING TO CITE
THE PRIVATE RESPONDENTS IN CONTEMPT.[9]
The petitioner faults the appellate court for not dismissing the petition on the ground of violation
of Supreme Court Circular No. 28-91. Also, the petitioner contends that the appellate court violated
Section 6, Rule 9 of the Revised Internal Rules of the Court of Appeals when it failed to rule on her
motion for reconsideration within ninety (90) days from the time it is submitted for resolution. The
appellate court ruled only after the lapse of three hundred fifty-four (354) days, or on June 3, 1994. In
delaying the resolution thereof, the appellate court denied the petitioners right to seek the timely
appellate relief. Finally, petitioner describes as arbitrary the denial of her motions for contempt of court
against the respondents.
We rule in favor of the respondents.
Pursuant to Section 1, Rule 58 of the Revised Rules of Civil Procedure, one of the grounds for the
issuance of a writ of preliminary injunction is a proof that the applicant is entitled to the relief
demanded, and the whole or part of such relief consists in restraining the commission or continuance
of the act or acts complained of, either for a limited period or perpetually. Thus, a preliminary
injunction order may be granted only when the application for the issuance of the same shows facts
entitling the applicant to the relief demanded.[10] This is the reason why we have ruled that it must be
shown that the invasion of the right sought to be protected is material and substantial, that the right of
complainant is clear and unmistakable, and, that there is an urgent and paramount necessity for the writ
to prevent serious damage.[11]
In the case at bar, the petitioner applied for the issuance of a preliminary injunctive order on the
ground that she is entitled to the use of the trademark on Chin Chun Su and its container based on her
copyright and patent over the same. We first find it appropriate to rule on whether the copyright and

patent over the name and container of a beauty cream product would entitle the registrant to the use
and ownership over the same to the exclusion of others.
Any A trademark is any visible sign capable of distinguishing the goods (trademark) or services
(service mark) of an enterprise and shall include a stamped or marked container of goods. [12] In relation
thereto, a trade name means the name or designation identifying or distinguishing an enterprise.
[13]
Meanwhile, the scope of a copyright is confined to literary and artistic works which are original
intellectual creations in the literary and artistic domain protected from the moment of their creation.
[14]
Patentable inventions, on the other hand, refer to any technical solution of a problem in any field of
human activity which is new, involves an inventive step and is industrially applicable. [15]
Petitioner has no right to support her claim for the exclusive use of the subject trade name and its
container. The name and container of a beauty cream product are proper subjects of a trademark
inasmuch as the same falls squarely within its definition. In order to be entitled to exclusively use the
same in the sale of the beauty cream product, the user must sufficiently prove that she registered or
used it before anybody else did. The petitioners copyright and patent registration of the name and
container would not guarantee her the right to the exclusive use of the same for the reason that they are
not appropriate subjects of the said intellectual rights. Consequently, a preliminary injunction order
cannot be issued for the reason that the petitioner has not proven that she has a clear right over the said
name and container to the exclusion of others, not having proven that she has registered a trademark
thereto or used the same before anyone did.
We cannot likewise overlook the decision of the trial court in the case for final injunction and
damages. The dispositive portion of said decision held that the petitioner does not have trademark
rights on the name and container of the beauty cream product. The said decision on the merits of the
trial court rendered the issuance of the writ of a preliminary injunction moot and academic
notwithstanding the fact that the same has been appealed in the Court of Appeals. This is supported by
our ruling in La Vista Association, Inc. v. Court of Appeals[16], to wit:
Considering that preliminary injunction is a provisional remedy which may be granted at any time
after the commencement of the action and before judgment when it is established that the plaintiff is
entitled to the relief demanded and only when his complaint shows facts entitling such reliefs xxx and it
appearing that the trial court had already granted the issuance of a final injunction in favor of
petitioner in its decision rendered after trial on the merits xxx the Court resolved to Dismiss the instant
petition having been rendered moot and academic. An injunction issued by the trial court after it has

already made a clear pronouncement as to the plaintiffs right thereto, that is, after the same issue has
been decided on the merits, the trial court having appreciated the evidence presented, is proper,
notwithstanding the fact that the decision rendered is not yet final xxx. Being an ancillary remedy, the
proceedings for preliminary injunction cannot stand separately or proceed independently of the
decision rendered on the merit of the main case for injunction. The merit of the main case having been
already determined in favor of the applicant, the preliminary determination of its non-existence ceases
to have any force and effect. (italics supplied)
La Vista categorically pronounced that the issuance of a final injunction renders any question on the
preliminary injunctive order moot and academic despite the fact that the decision granting a final
injunction is pending appeal. Conversely, a decision denying the applicant-plaintiffs right to a final
injunction, although appealed, renders moot and academic any objection to the prior dissolution of a
writ of preliminary injunction.
The petitioner argues that the appellate court erred in not dismissing the petition for certiorari for
non-compliance with the rule on forum shopping. We disagree. First, the petitioner improperly raised
the technical objection of non-compliance with Supreme Court Circular No. 28-91 by filing a motion
to dismiss the petition for certiorari filed in the appellate court. This is prohibited by Section 6, Rule 66
of the Revised Rules of Civil Procedure which provides that (I)n petitions for certiorari before the
Supreme Court and the Court of Appeals, the provisions of Section 2, Rule 56, shall be observed.
Before giving due course thereto, the court may require the respondents to file their comment to, and
not a motion to dismiss, the petition xxx (italics supplied). Secondly, the issue was raised one month
after petitioner had filed her answer/comment and after private respondent had replied thereto. Under
Section 1, Rule 16 of the Revised Rules of Civil Procedure, a motion to dismiss shall be filed within
the time for but before filing the answer to the complaint or pleading asserting a claim. She therefore
could no longer submit a motion to dismiss nor raise defenses and objections not included in the
answer/comment she had earlier tendered. Thirdly, substantial justice and equity require this Court not
to revive a dissolved writ of injunction in favor of a party without any legal right thereto merely on a
technical infirmity. The granting of an injunctive writ based on a technical ground rather than
compliance with the requisites for the issuance of the same is contrary to the primary objective of legal
procedure which is to serve as a means to dispense justice to the deserving party.
The petitioner likewise contends that the appellate court unduly delayed the resolution of her
motion for reconsideration. But we find that petitioner contributed to this delay when she filed
successive contentious motions in the same proceeding, the last of which was on October 27, 1993,

necessitating counter-manifestations from private respondents with the last one being filed on
November 9, 1993. Nonetheless, it is well-settled that non-observance of the period for deciding cases
or their incidents does not render such judgments ineffective or void. [17] With respect to the purported
damages she suffered due to the alleged delay in resolving her motion for reconsideration, we find that
the said issue has likewise been rendered moot and academic by our ruling that she has no right over
the trademark and, consequently, to the issuance of a writ of preliminary injunction.
Finally, we rule that the Court of Appeals correctly denied the petitioners several motions for
contempt of court. There is nothing contemptuous about the advertisements complained of which, as
regards the proceedings in CA-G.R. SP No. 27803 merely announced in plain and straightforward
language the promulgation of the assailed Decision of the appellate court. Moreover, pursuant to
Section 4 of Rule 39 of the Revised Rules of Civil Procedure, the said decision nullifying the
injunctive writ was immediately executory.
WHEREFORE, the petition is DENIED. The Decision and Resolution of the Court of Appeals
dated May 24, 1993 and June 3, 1994, respectively, are hereby AFFIRMED. With costs against the
petitioner.
SO ORDERED.
Bellosillo, (Chairman), Mendoza, Quisumbing, and Buena, JJ., concur.

FILIPINO SOCIETY OF COMPOSERS, AUTHORS AND PUBLISHERS, INC., plaintiffappellant, vs. BENJAMIN TAN,defendant-appellee.
PARAS, J.: chanrobles virtual law library
An appeal was made to the Court of Appeals docketed as CA-G.R. No. 46373-R * entitled Filipino
Society of Composers, Authors, Publishers, Inc., Plaintiff-Appellant v. Benjamin Tan, DefendantAppellee, from the decision of the Court of First Instance of Manila, Branch VII in Civil Case No.
71222 ** "Filipino Society of Composers, Authors and Publishers, Inc., Plaintiff v. Benjamin Tan,
Defendant," which had dismissed plaintiffs' complaint without special pronouncement as to
costs.chanroblesvirtualawlibrary chanrobles virtual law library
The Court of Appeals, finding that the case involves pure questions of law, certified the same to the
Supreme Court for final determination (Resolution, CA-G.R. No. 46373-R, Rollo, p. 36; Resolution of
the
Supreme
Court
of
February
16,
1973
in
L-36402,
Rollo,
p.
38).chanroblesvirtualawlibrary chanrobles virtual law library
The undisputed facts of this case are as follows: chanrobles virtual law library
Plaintiff-appellant is a non-profit association of authors, composers and publishers duly organized
under the Corporation Law of the Philippines and registered with the Securities and Exchange
Commission. Said association is the owner of certain musical compositions among which are the songs
entitled: "Dahil Sa Iyo", "Sapagkat Ikaw Ay Akin," "Sapagkat Kami Ay Tao Lamang" and "The
Nearness Of You." chanrobles virtual law library
On the other hand, defendant-appellee is the operator of a restaurant known as "Alex Soda Foundation
and Restaurant" where a combo with professional singers, hired to play and sing musical compositions
to entertain and amuse customers therein, were playing and singing the above-mentioned compositions
without any license or permission from the appellant to play or sing the same. Accordingly, appellant
demanded from the appellee payment of the necessary license fee for the playing and singing of
aforesaid compositions but the demand was ignored.chanroblesvirtualawlibrary chanrobles virtual law
library
G.R. No. L-36402 March 16, 1987

Hence, on November 7, 1967, appellant filed a complaint with the lower court for infringement of
copyright against defendant-appellee for allowing the playing in defendant-appellee's restaurant of said
songs copyrighted in the name of the former.chanroblesvirtualawlibrary chanrobles virtual law library
Defendant-appellee, in his answer, countered that the complaint states no cause of action. While not
denying the playing of said copyrighted compositions in his establishment, appellee maintains that the
mere singing and playing of songs and popular tunes even if they are copyrighted do not constitute an
infringement (Record on Appeal, p. 11; Resolution, CA-G.R. NO. 46373-R, Rollo, pp. 32-36) under
the provisions of Section 3 of the Copyright Law (Act 3134 of the Philippine
Legislature).chanroblesvirtualawlibrary chanrobles virtual law library
The lower court, finding for the defendant, dismissed the complaint (Record on Appeal, p.
25).chanroblesvirtualawlibrary chanrobles virtual law library
Plaintiff appealed to the Court of Appeals which as already stated certified the case to the Supreme
Court for adjudication on the legal question involved. (Resolution, Court of Appeals, Rollo, p. 36;
Resolution
of
the
Supreme
Court
of
February
18,
1973,
Rollo,
p.
38).chanroblesvirtualawlibrary chanrobles virtual law library
In its brief in the Court of Appeals, appellant raised the following Assignment of Errors: chanrobles
virtual law library

III chanrobles virtual law library


THE LOWER COURT ERRED IN HOLDING THAT THE PLAYING AND SINGING OF
COPYRIGHTED MUSICAL COMPOSITIONS IN THE SODA FOUNTAIN AND RESTAURANT
OF THE APPELLEE ARE NOT PUBLIC PERFORMANCES FOR PROFIT OF THE SAID
COMPOSITIONS WITHIN THE MEANING AND CONTEMPLATION OF THE COPYRIGHT
LAW.chanroblesvirtualawlibrary chanrobles virtual law library
IV chanrobles virtual law library
THE LOWER COURT ERRED IN NOT HOLDING THAT THE APPELLEE IS LIABLE TO THE
APPELLANT FOR FOUR (4) SEPARATE INFRINGEMENTS. (Brief for Appellant, pp. A and
B).chanroblesvirtualawlibrary chanrobles virtual law library
The petition is devoid of merit.chanroblesvirtualawlibrary chanrobles virtual law library
The principal issues in this case are whether or not the playing and signing of musical compositions
which have been copyrighted under the provisions of the Copyright Law (Act 3134) inside the
establishment of the defendant-appellee constitute a public performance for profit within the meaning
and contemplation of the Copyright Law of the Philippines; and assuming that there were indeed
public performances for profit, whether or not appellee can be held liable
therefor.chanroblesvirtualawlibrary chanrobles virtual law library

I chanrobles virtual law library


Appellant anchors its claim on Section 3(c) of the Copyright Law which provides:
THE LOWER COURT ERRED IN HOLDING THAT THE MUSICAL COMPOSITIONS OF THE
APPELLANT WERE IN THE NATURE OF PUBLIC PROPERTY WHEN THEY WERE
COPYRIGHTED OR REGISTERED.chanroblesvirtualawlibrary chanrobles virtual law library

SEC. 3. The proprietor of a copyright or his heirs or assigns shall have the exclusive right: chanrobles
virtual law library

II chanrobles virtual law library

xxx xxx xxx chanrobles virtual law library

THE LOWER COURT ERRED IN HOLDING THAT THE MUSICAL COMPOSITIONS OF THE
APPELLANT WERE PLAYED AND SUNG IN THE SODA FOUNTAIN AND RESTAURANT OF
THE APPELLEE BY INDEPENDENT CONTRACTORS AND ONLY UPON THE REQUEST OF
CUSTOMERS.chanroblesvirtualawlibrary chanrobles virtual law library

(c) To exhibit, perform, represent, produce, or reproduce the copyrighted work in any manner or by
any method whatever for profit or otherwise; if not reproduced in copies for sale, to sell any
manuscripts or any record whatsoever thereof; chanrobles virtual law library

xxx xxx xxx


It maintains that playing or singing a musical composition is universally accepted as performing the
musical composition and that playing and singing of copyrighted music in the soda fountain and
restaurant of the appellee for the entertainment of the customers although the latter do not pay for the
music but only for the food and drink constitute performance for profit under the Copyright Law (Brief
for the Appellant, pp. 19-25).chanroblesvirtualawlibrary chanrobles virtual law library

narrowly. The defendants' performances are not eleemosynary. They are part of a total for which the
public pays, and the fact that the price of the whole is attributed to a particular item which those
present are expected to order is not important. It is true that the music is not the sole object, but neither
is the food, which probably could be got cheaper elsewhere. The object is a repast in surroundings that
to people having limited power of conversation or disliking the rival noise, give a luxurious pleasure
not to be had from eating a silent meal. If music did not pay, it would be given up. If it pays, it pays out
of the public's pocket. Whether it pays or not, the purpose of employing it is profit, and that is enough.
(Ibid., p. 594).

We concede that indeed there were "public performances for profit. " chanrobles virtual law library
The word "perform" as used in the Act has been applied to "One who plays a musical composition on a
piano, thereby producing in the air sound waves which are heard as music ... and if the instrument he
plays on is a piano plus a broadcasting apparatus, so that waves are thrown out, not only upon the air,
but upon the other, then also he is performing the musical composition." (Buck, et al. v. Duncan, et al.;
Same Jewell La Salle Realty Co., 32F. 2d. Series 367).chanroblesvirtualawlibrary chanrobles virtual
law library
In relation thereto, it has been held that "The playing of music in dine and dance establishment which
was paid for by the public in purchases of food and drink constituted "performance for profit" within a
Copyright Law." (Buck, et al. v. Russon No. 4489 25 F. Supp. 317). Thus, it has been explained that
while it is possible in such establishments for the patrons to purchase their food and drinks and at the
same time dance to the music of the orchestra, the music is furnished and used by the orchestra for the
purpose of inducing the public to patronize the establishment and pay for the entertainment in the
purchase of food and drinks. The defendant conducts his place of business for profit, and it is public;
and the music is performed for profit (Ibid, p. 319). In a similar case, the Court ruled that "The
Performance in a restaurant or hotel dining room, by persons employed by the proprietor, of a
copyrighted musical composition, for the entertainment of patrons, without charge for admission to
hear it, infringes the exclusive right of the owner of the copyright." (Herbert v. Shanley Co.; John
Church Co. v. Hillard Hotel Co., et al., 242 U.S. 590-591). In delivering the opinion of the Court in
said two cases, Justice Holmes elaborated thus:
If the rights under the copyright are infringed only by a performance where money is taken at the door,
they are very imperfectly protected. Performances not different in kind from those of the defendants
could be given that might compete with and even destroy the success of the monopoly that the law
intends the plaintiffs to have. It is enough to say that there is no need to construe the statute so

In the case at bar, it is admitted that the patrons of the restaurant in question pay only for the food and
drinks and apparently not for listening to the music. As found by the trial court, the music provided is
for the purpose of entertaining and amusing the customers in order to make the establishment more
attractive and desirable (Record on Appeal, p. 21). It will be noted that for the playing and singing the
musical compositions involved, the combo was paid as independent contractors by the appellant
(Record on Appeal, p. 24). It is therefore obvious that the expenses entailed thereby are added to the
overhead of the restaurant which are either eventually charged in the price of the food and drinks or to
the overall total of additional income produced by the bigger volume of business which the
entertainment was programmed to attract. Consequently, it is beyond question that the playing and
singing of the combo in defendant-appellee's restaurant constituted performance for profit
contemplated by the Copyright Law. (Act 3134 amended by P.D. No. 49, as
amended).chanroblesvirtualawlibrary chanrobles virtual law library
Nevertheless, appellee cannot be said to have infringed upon the Copyright Law. Appellee's allegation
that the composers of the contested musical compositions waived their right in favor of the general
public when they allowed their intellectual creations to become property of the public domain before
applying for the corresponding copyrights for the same (Brief for Defendant-Appellee, pp. 14-15) is
correct.chanroblesvirtualawlibrary chanrobles virtual law library
The Supreme Court has ruled that "Paragraph 33 of Patent Office Administrative Order No. 3 (as
amended, dated September 18, 1947) entitled 'Rules of Practice in the Philippines Patent Office
relating to the Registration of Copyright Claims' promulgated pursuant to Republic Act 165, provides
among other things that an intellectual creation should be copyrighted thirty (30) days after its
publication, if made in Manila, or within the (60) days if made elsewhere, failure of which renders
such creation public property." (Santos v. McCullough Printing Company, 12 SCRA 324-325 [1964].
Indeed, if the general public has made use of the object sought to be copyrighted for thirty (30) days

prior to the copyright application the law deems the object to have been donated to the public domain
and the same can no longer be copyrighted.chanroblesvirtualawlibrary chanrobles virtual law library
A careful study of the records reveals that the song "Dahil Sa Iyo" which was registered on April 20,
1956 (Brief for Appellant, p. 10) became popular in radios, juke boxes, etc. long before registration
(TSN, May 28, 1968, pp. 3-5; 25) while the song "The Nearness Of You" registered on January 14,
1955 (Brief for Appellant, p. 10) had become popular twenty five (25) years prior to 1968, (the year of
the hearing) or from 1943 (TSN, May 28, 1968, p. 27) and the songs "Sapagkat Ikaw Ay Akin" and
"Sapagkat Kami Ay Tao Lamang" both registered on July 10, 1966, appear to have been known and
sang by the witnesses as early as 1965 or three years before the hearing in 1968. The testimonies of the
witnesses at the hearing of this case on this subject were unrebutted by the appellant. (Ibid, pp. 28; 29
and 30).chanroblesvirtualawlibrary chanrobles virtual law library
Under the circumstances, it is clear that the musical compositions in question had long become public
property,
and
are
therefore
beyond
the
protection
of
the
Copyright
Law.chanroblesvirtualawlibrary chanrobles virtual law library
PREMISES CONSIDERED, the appealed decision of the Court of First Instance of Manila in Civil
Case No. 71222 is hereby AFFIRMED.chanroblesvirtualawlibrary chanrobles virtual law library
SO ORDERED.
Fernan
(Chairman),
Gutierrez,
Jr.,
Padilla,
Bidin
concur.chanroblesvirtualawlibrary chanrobles virtual law library

and

Cortes,

JJ.,

Alampay, J., took no part.


[G.R. No. 148222. August 15, 2003]
PEARL
&
DEAN
(PHIL.), INCORPORATED, petitioner, vs. SHOEMART,
INCORPORATED, and NORTH EDSA MARKETING, INCORPORATED, respondents.
DECISION

CORONA, J.:
In the instant petition for review on certiorari under Rule 45 of the Rules of Court, petitioner
Pearl & Dean (Phil.) Inc. (P & D) assails the May 22, 2001 decision [1] of the Court of Appeals
reversing the October 31, 1996 decision [2] of the Regional Trial Court of Makati, Branch 133, in Civil
Case No. 92-516 which declared private respondents Shoemart Inc. (SMI) and North Edsa Marketing
Inc. (NEMI) liable for infringement of trademark and copyright, and unfair competition.
FACTUAL ANTECEDENTS
The May 22, 2001 decision of the Court of Appeals[3] contained a summary of this dispute:
Plaintiff-appellant Pearl and Dean (Phil.), Inc. is a corporation engaged in the manufacture of
advertising display units simply referred to as light boxes. These units utilize specially printed posters
sandwiched between plastic sheets and illuminated with back lights. Pearl and Dean was able to
secure a Certificate of Copyright Registration dated January 20, 1981 over these illuminated display
units. The advertising light boxes were marketed under the trademark Poster Ads. The application
for registration of the trademark was filed with the Bureau of Patents, Trademarks and Technology
Transfer on June 20, 1983, but was approved only on September 12, 1988, per Registration No.
41165. From 1981 to about 1988, Pearl and Dean employed the services of Metro Industrial Services
to manufacture its advertising displays.
Sometime in 1985, Pearl and Dean negotiated with defendant-appellant Shoemart, Inc. (SMI) for the
lease and installation of the light boxes in SM City North Edsa. Since SM City North Edsa was under
construction at that time, SMI offered as an alternative, SM Makati and SM Cubao, to which Pearl and
Dean agreed. On September 11, 1985, Pearl and Deans General Manager, Rodolfo Vergara, submitted
for signature the contracts covering SM Cubao and SM Makati to SMIs Advertising Promotions and
Publicity Division Manager, Ramonlito Abano. Only the contract for SM Makati, however, was
returned signed. On October 4, 1985, Vergara wrote Abano inquiring about the other contract and
reminding him that their agreement for installation of light boxes was not only for its SM Makati
branch, but also for SM Cubao. SMI did not bother to reply.
Instead, in a letter dated January 14, 1986, SMIs house counsel informed Pearl and Dean that it was
rescinding the contract for SM Makati due to non-performance of the terms thereof. In his reply dated

February 17, 1986, Vergara protested the unilateral action of SMI, saying it was without basis. In the
same letter, he pushed for the signing of the contract for SM Cubao.
Two years later, Metro Industrial Services, the company formerly contracted by Pearl and Dean to
fabricate its display units, offered to construct light boxes for Shoemarts chain of stores. SMI
approved the proposal and ten (10) light boxes were subsequently fabricated by Metro Industrial for
SMI. After its contract with Metro Industrial was terminated, SMI engaged the services of EYD
Rainbow Advertising Corporation to make the light boxes. Some 300 units were fabricated in
1991. These were delivered on a staggered basis and installed at SM Megamall and SM City.
Sometime in 1989, Pearl and Dean, received reports that exact copies of its light boxes were installed
at SM City and in the fastfood section of SM Cubao. Upon investigation, Pearl and Dean found out
that aside from the two (2) reported SM branches, light boxes similar to those it manufactures were
also installed in two (2) other SM stores. It further discovered that defendant-appellant North Edsa
Marketing Inc. (NEMI), through its marketing arm, Prime Spots Marketing Services, was set up
primarily to sell advertising space in lighted display units located in SMIs different branches. Pearl
and Dean noted that NEMI is a sister company of SMI.
In the light of its discoveries, Pearl and Dean sent a letter dated December 11, 1991 to both SMI and
NEMI enjoining them to cease using the subject light boxes and to remove the same from SMIs
establishments. It also demanded the discontinued use of the trademark Poster Ads, and the payment
to Pearl and Dean of compensatory damages in the amount of Twenty Million Pesos (P20,000,000.00).
Upon receipt of the demand letter, SMI suspended the leasing of two hundred twenty-four (224) light
boxes and NEMI took down its advertisements for Poster Ads from the lighted display units in SMIs
stores. Claiming that both SMI and NEMI failed to meet all its demands, Pearl and Dean filed this
instant case for infringement of trademark and copyright, unfair competition and damages.
In denying the charges hurled against it, SMI maintained that it independently developed its poster
panels using commonly known techniques and available technology, without notice of or reference to
Pearl and Deans copyright. SMI noted that the registration of the mark Poster Ads was only for
stationeries such as letterheads, envelopes, and the like. Besides, according to SMI, the word Poster
Ads is a generic term which cannot be appropriated as a trademark, and, as such, registration of such
mark is invalid. It also stressed that Pearl and Dean is not entitled to the reliefs prayed for in its
complaint since its advertising display units contained no copyright notice, in violation of Section 27

of P.D. 49. SMI alleged that Pearl and Dean had no cause of action against it and that the suit was
purely intended to malign SMIs good name. On this basis, SMI, aside from praying for the dismissal
of the case, also counterclaimed for moral, actual and exemplary damages and for the cancellation of
Pearl and Deans Certification of Copyright Registration No. PD-R-2558 dated January 20, 1981 and
Certificate of Trademark Registration No. 4165 dated September 12, 1988.
NEMI, for its part, denied having manufactured, installed or used any advertising display units, nor
having engaged in the business of advertising. It repleaded SMIs averments, admissions and denials
and prayed for similar reliefs and counterclaims as SMI.
The RTC of Makati City decided in favor of P & D:
Wherefore, defendants SMI and NEMI are found jointly and severally liable for infringement of
copyright under Section 2 of PD 49, as amended, and infringement of trademark under Section 22 of
RA No. 166, as amended, and are hereby penalized under Section 28 of PD 49, as amended, and
Sections 23 and 24 of RA 166, as amended. Accordingly, defendants are hereby directed:

(d)

attorneys fees

- P1,000,000.00

plus
(e)

costs of suit;
(2)

to deliver, under oath, for impounding in the National Library, all light boxes of SMI
which were fabricated by Metro Industrial Services and EYD Rainbow Advertising
Corporation;

(3)

to deliver, under oath, to the National Library, all filler-posters using the trademark
Poster Ads, for destruction; and

(4)

to permanently refrain from infringing the copyright on plaintiffs light boxes and its
trademark Poster Ads.

Defendants counterclaims are hereby ordered dismissed for lack of merit.


(1)

to pay plaintiff the following damages:


SO ORDERED.[4]

(a)

actual damages -

P16,600,000.00,
On appeal, however, the Court of Appeals reversed the trial court:
representing profits
derived by defendants
as a result of infringement of plaintiffs copyright
from 1991 to 1992

(b)

moral damages

- P1,000.000.00

(c)

exemplary damages - P1,000,000.00

Since the light boxes cannot, by any stretch of the imagination, be considered as either prints, pictorial
illustrations, advertising copies, labels, tags or box wraps, to be properly classified as a copyrightable
class O work, we have to agree with SMI when it posited that what was copyrighted were the
technical drawings only, and not the light boxes themselves, thus:
42. When a drawing is technical and depicts a utilitarian object, a copyright over the drawings like
plaintiff-appellants will not extend to the actual object. It has so been held under jurisprudence, of
which the leading case is (101 U.S. 841 (1879). In that case, Selden had obtained a copyright
protection for a book entitled Seldens Condensed Ledger or Bookkeeping Simplified which
purported to explain a new system of bookkeeping. Included as part of the book were blank forms and
illustrations consisting of ruled lines and headings, specially designed for use in connection with the
system explained in the work. These forms showed the entire operation of a day or a week or a month

on a single page, or on two pages following each other. The defendant Baker then produced forms
which were similar to the forms illustrated in Seldens copyrighted books. The Court held that
exclusivity to the actual forms is not extended by a copyright. The reason was that to grant a
monopoly in the underlying art when no examination of its novelty has ever been made would be a
surprise and a fraud upon the public; that is the province of letters patent, not of copyright. And that is
precisely the point. No doubt aware that its alleged original design would never pass the rigorous
examination of a patent application, plaintiff-appellant fought to foist a fraudulent monopoly on the
public by conveniently resorting to a copyright registration which merely employs a recordal system
without the benefit of an in-depth examination of novelty.

SEC. 20. Certification of registration prima facie evidence of validity.- A certificate of registration of
a mark or trade-name shall be prima facie evidence of the validity of the registration, the registrants
ownership of the mark or trade-name, and of the registrants exclusive right to use the same in
connection with the goods, business or services specified in the certificate, subject to any conditions
and limitations stated therein. (underscoring supplied)
The records show that on June 20, 1983, Pearl and Dean applied for the registration of the trademark
Poster Ads with the Bureau of Patents, Trademarks, and Technology Transfer. Said trademark was
recorded in the Principal Register on September 12, 1988 under Registration No. 41165 covering the
following products: stationeries such as letterheads, envelopes and calling cards and newsletters.

The principle in Baker vs. Selden was likewise applied in Muller vs. Triborough Bridge Authority [43
F. Supp. 298 (S.D.N.Y. 1942)]. In this case, Muller had obtained a copyright over an unpublished
drawing entitled Bridge Approach the drawing showed a novel bridge approach to unsnarl traffic
congestion. The defendant constructed a bridge approach which was alleged to be an infringement of
the new design illustrated in plaintiffs drawings. In this case it was held that protection of the drawing
does not extend to the unauthorized duplication of the object drawn because copyright extends only to
the description or expression of the object and not to the object itself. It does not prevent one from
using the drawings to construct the object portrayed in the drawing.

With this as factual backdrop, we see no legal basis to the finding of liability on the part of the
defendants-appellants for their use of the words Poster Ads, in the advertising display units in suit.
Jurisprudence has interpreted Section 20 of the Trademark Law as an implicit permission to a
manufacturer to venture into the production of goods and allow that producer to appropriate the brand
name of the senior registrant on goods other than those stated in the certificate of registration. The
Supreme Court further emphasized the restrictive meaning of Section 20 when it stated, through
Justice Conrado V. Sanchez, that:

In two other cases, Imperial Homes Corp. v. Lamont, 458 F. 2d 895 and Scholtz Homes, Inc. v.
Maddox, 379 F. 2d 84, it was held that there is no copyright infringement when one who, without being
authorized, uses a copyrighted architectural plan to construct a structure. This is because the copyright
does not extend to the structures themselves.

Really, if the certificate of registration were to be deemed as including goods not specified therein,
then a situation may arise whereby an applicant may be tempted to register a trademark on any and all
goods which his mind may conceive even if he had never intended to use the trademark for the said
goods. We believe that such omnibus registration is not contemplated by our Trademark Law.

In fine, we cannot find SMI liable for infringing Pearl and Deans copyright over the technical
drawings of the latters advertising display units.

While we do not discount the striking similarity between Pearl and Deans registered trademark and
defendants-appellants Poster Ads design, as well as the parallel use by which said words were used
in the parties respective advertising copies, we cannot find defendants-appellants liable for
infringement of trademark. Poster Ads was registered by Pearl and Dean for specific use in its
stationeries, in contrast to defendants-appellants who used the same words in their advertising display
units. Why Pearl and Dean limited the use of its trademark to stationeries is simply beyond us. But,
having already done so, it must stand by the consequence of the registration which it had caused.

xxx

xxx

xxx

The Supreme Court trenchantly held in Faberge, Incorporated vs. Intermediate Appellate Court that
the protective mantle of the Trademark Law extends only to the goods used by the first user as
specified in the certificate of registration, following the clear mandate conveyed by Section 20 of
Republic Act 166, as amended, otherwise known as the Trademark Law, which reads:

xxx

xxx

xxx

We are constrained to adopt the view of defendants-appellants that the words Poster Ads are a simple
contraction of the generic term poster advertising. In the absence of any convincing proof that Poster
Ads has acquired a secondary meaning in this jurisdiction, we find that Pearl and Deans exclusive
right to the use of Poster Ads is limited to what is written in its certificate of registration, namely,
stationeries.

D.

THE HONORABLE COURT OF APPEALS ERRED IN NOT HOLDING


RESPONDENTS SM AND NEMI LIABLE TO PEARL & DEAN FOR ACTUAL,
MORAL & EXEMPLARY DAMAGES, ATTORNEYS FEES AND COSTS OF
SUIT.[6]

ISSUES
Defendants-appellants cannot thus be held liable for infringement of the trademark Poster Ads.
There being no finding of either copyright or trademark infringement on the part of SMI and NEMI,
the monetary award granted by the lower court to Pearl and Dean has no leg to stand on.
xxx

xxx

xxx

WHEREFORE, premises considered, the assailed decision is REVERSED and SET ASIDE, and
another is rendered DISMISSING the complaint and counterclaims in the above-entitled case for lack
of merit.[5]
Dissatisfied with the above decision, petitioner P & D filed the instant petition assigning the
following errors for the Courts consideration:
A.

B.

C.

In resolving this very interesting case, we are challenged once again to put into proper
perspective four main concerns of intellectual property law patents, copyrights, trademarks and
unfair competition arising from infringement of any of the first three. We shall focus then on the
following issues:

THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT NO


COPYRIGHT INFRINGEMENT WAS COMMITTED BY RESPONDENTS SM
AND NEMI;
THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT NO
INFRINGEMENT OF PEARL & DEANS TRADEMARK POSTER ADS WAS
COMMITTED BY RESPONDENTS SM AND NEMI;
THE HONORABLE COURT OF APPEALS ERRED IN DISMISSING THE
AWARD OF THE TRIAL COURT, DESPITE THE LATTERS FINDING, NOT
DISPUTED BY THE HONORABLE COURT OF APPEALS, THAT SM WAS
GUILTY OF BAD FAITH IN ITS NEGOTIATION OF ADVERTISING
CONTRACTS WITH PEARL & DEAN.

(1) if the engineering or technical drawings of an advertising display unit (light box) are
granted copyright protection (copyright certificate of registration) by the National Library,
is the light box depicted in such engineering drawings ipso facto also protected by such
copyright?
(2) or should the light box be registered separately and protected by a patent issued by the
Bureau of Patents Trademarks and Technology Transfer (now Intellectual Property Office)
in addition to the copyright of the engineering drawings?
(3) can the owner of a registered trademark legally prevent others from using such
trademark if it is a mere abbreviation of a term descriptive of his goods, services or
business?
ON THE ISSUE OF COPYRIGHT INFRINGEMENT
Petitioner P & Ds complaint was that SMI infringed on its copyright over the light boxes when
SMI had the units manufactured by Metro and EYD Rainbow Advertising for its own
account. Obviously, petitioners position was premised on its belief that its copyright over the
engineering drawings extended ipso facto to the light boxes depicted or illustrated in said drawings. In
ruling that there was no copyright infringement, the Court of Appeals held that the copyright was
limited to the drawings alone and not to the light box itself. We agree with the appellate court.

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

xxx

(O) Prints, pictorial illustrations, advertising copies, labels, tags, and box wraps;
xxxxxx

xxx

Although petitioners copyright certificate was entitled Advertising Display Units (which
depicted the box-type electrical devices), its claim of copyright infringement cannot be sustained.
Copyright, in the strict sense of the term, is purely a statutory right. Being a mere statutory grant,
the rights are limited to what the statute confers. It may be obtained and enjoyed only with respect to
the subjects and by the persons, and on terms and conditions specified in the statute. [7] Accordingly, it
can cover only the works falling within the statutory enumeration or description.[8]
P & D secured its copyright under the classification class O work. This being so, petitioners
copyright protection extended only to the technical drawings and not to the light box itself because the
latter was not at all in the category of prints, pictorial illustrations, advertising copies, labels, tags and
box wraps. Stated otherwise, even as we find that P & D indeed owned a valid copyright, the same
could have referred only to the technical drawings within the category of pictorial illustrations. It
could not have possibly stretched out to include the underlying light box. The strict application[9] of
the laws enumeration in Section 2 prevents us from giving petitioner even a little leeway, that is, even
if its copyright certificate was entitled Advertising Display Units. What the law does not include, it
excludes, and for the good reason: the light box was not a literary or artistic piece which could be
copyrighted under the copyright law. And no less clearly, neither could the lack of statutory authority
to make the light box copyrightable be remedied by the simplistic act of entitling the copyright
certificate issued by the National Library as Advertising Display Units.

In fine, if SMI and NEMI reprinted P & Ds technical drawings for sale to the public without
license from P & D, then no doubt they would have been guilty of copyright infringement. But this
was not the case. SMIs and NEMIs acts complained of by P & D were to have units similar or
identical to the light box illustrated in the technical drawings manufactured by Metro and EYD
Rainbow Advertising, for leasing out to different advertisers. Was this an infringement of petitioners
copyright over the technical drawings? We do not think so.
During the trial, the president of P & D himself admitted that the light box was neither a literary
not an artistic work but an engineering or marketing invention.[10] Obviously, there appeared to be
some confusion regarding what ought or ought not to be the proper subjects of copyrights, patents and
trademarks. In the leading case of Kho vs. Court of Appeals,[11] we ruled that these three legal rights
are completely distinct and separate from one another, and the protection afforded by one cannot be
used interchangeably to cover items or works that exclusively pertain to the others:
Trademark, copyright and patents are different intellectual property rights that cannot be interchanged
with one another. A trademark is any visible sign capable of distinguishing the goods (trademark) or
services (service mark) of an enterprise and shall include a stamped or marked container of goods. In
relation thereto, a trade name means the name or designation identifying or distinguishing an
enterprise. Meanwhile, the scope of a copyright is confined to literary and artistic works which are
original intellectual creations in the literary and artistic domain protected from the moment of their
creation. Patentable inventions, on the other hand, refer to any technical solution of a problem in any
field of human activity which is new, involves an inventive step and is industrially applicable.
ON THE ISSUE OF PATENT INFRINGEMENT
This brings us to the next point: if, despite its manufacture and commercial use of the light
boxes without license from petitioner, private respondents cannot be held legally liable for
infringement of P & Ds copyright over its technical drawings of the said light boxes, should they be
liable instead for infringement of patent? We do not think so either.
For some reason or another, petitioner never secured a patent for the light boxes. It therefore
acquired no patent rights which could have protected its invention, if in fact it really was. And because
it had no patent, petitioner could not legally prevent anyone from manufacturing or commercially
using the contraption. In Creser Precision Systems, Inc. vs. Court of Appeals,[12] we held that there
can be no infringement of a patent until a patent has been issued, since whatever right one has to the

invention covered by the patent arises alone from the grant of patent. x x x (A)n inventor has no
common law right to a monopoly of his invention. He has the right to make use of and vend his
invention, but if he voluntarily discloses it, such as by offering it for sale, the world is free to copy and
use it with impunity. A patent, however, gives the inventor the right to exclude all others. As a
patentee, he has the exclusive right of making, selling or using the invention. [13] On the assumption that
petitioners advertising units were patentable inventions, petitioner revealed them fully to the public by
submitting the engineering drawings thereof to the National Library.
To be able to effectively and legally preclude others from copying and profiting from the
invention, a patent is a primordial requirement. No patent, no protection. The ultimate goal of a patent
system is to bring new designs and technologies into the public domain through disclosure. [14] Ideas,
once disclosed to the public without the protection of a valid patent, are subject to appropriation
without significant restraint.[15]
On one side of the coin is the public which will benefit from new ideas; on the other are the
inventors who must be protected. As held in Bauer & Cie vs. ODonnel,[16] The act secured to the
inventor the exclusive right to make use, and vend the thing patented, and consequently to prevent
others from exercising like privileges without the consent of the patentee. It was passed for the
purpose of encouraging useful invention and promoting new and useful inventions by the protection
and stimulation given to inventive genius, and was intended to secure to the public, after the lapse of
the exclusive privileges granted the benefit of such inventions and improvements.
The law attempts to strike an ideal balance between the two interests:
(The p)atent system thus embodies a carefully crafted bargain for encouraging the creation and
disclosure of new useful and non-obvious advances in technology and design, in return for the
exclusive right to practice the invention for a number of years. The inventor may keep his invention
secret and reap its fruits indefinitely. In consideration of its disclosure and the consequent benefit to
the community, the patent is granted. An exclusive enjoyment is guaranteed him for 17 years, but
upon the expiration of that period, the knowledge of the invention inures to the people, who are thus
enabled to practice it and profit by its use.[17]
The patent law has a three-fold purpose: first, patent law seeks to foster and reward invention;
second, it promotes disclosures of inventions to stimulate further innovation and to permit the public to

practice the invention once the patent expires; third, the stringent requirements for patent protection
seek to ensure that ideas in the public domain remain there for the free use of the public.[18]
It is only after an exhaustive examination by the patent office that a patent is issued. Such an indepth investigation is required because in rewarding a useful invention, the rights and welfare of the
community must be fairly dealt with and effectively guarded. To that end, the prerequisites to
obtaining a patent are strictly observed and when a patent is issued, the limitations on its exercise are
equally strictly enforced. To begin with, a genuine invention or discovery must be demonstrated lest in
the constant demand for new appliances, the heavy hand of tribute be laid on each slight technological
advance in art.[19]
There is no such scrutiny in the case of copyrights nor any notice published before its grant to the
effect that a person is claiming the creation of a work. The law confers the copyright from the moment
of creation[20] and the copyright certificate is issued upon registration with the National Library of a
sworn ex-parte claim of creation.
Therefore, not having gone through the arduous examination for patents, the petitioner cannot
exclude others from the manufacture, sale or commercial use of the light boxes on the sole basis of its
copyright certificate over the technical drawings.
Stated otherwise, what petitioner seeks is exclusivity without any opportunity for the patent office
(IPO) to scrutinize the light boxs eligibility as a patentable invention. The irony here is that, had
petitioner secured a patent instead, its exclusivity would have been for 17 years only. But through the
simplified procedure of copyright-registration with the National Library without undergoing the
rigor of defending the patentability of its invention before the IPO and the public the petitioner
would be protected for 50 years. This situation could not have been the intention of the law.
In the oft-cited case of Baker vs. Selden[21], the United States Supreme Court held that only the
expression of an idea is protected by copyright, not the idea itself. In that case, the plaintiff held the
copyright of a book which expounded on a new accounting system he had developed. The publication
illustrated blank forms of ledgers utilized in such a system. The defendant reproduced forms similar to
those illustrated in the plaintiffs copyrighted book. The US Supreme Court ruled that:
There is no doubt that a work on the subject of book-keeping, though only explanatory of well known
systems, may be the subject of a copyright; but, then, it is claimed only as a book. x x x. But there is a

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

the book explaining it. The copyright of a book on bookkeeping cannot secure the exclusive right to
make, sell and use account books prepared upon the plan set forth in such book. Whether the art might
or might not have been patented, is a question, which is not before us. It was not patented, and is open
and free to the use of the public. And, of course, in using the art, the ruled lines and headings of
accounts must necessarily be used as incident to it.
The plausibility of the claim put forward by the complainant in this case arises from a confusion of
ideas produced by the peculiar nature of the art described in the books, which have been made the
subject of copyright. In describing the art, the illustrations and diagrams employed happened to
correspond more closely than usual with the actual work performed by the operator who uses the
art. x x x The description of the art in a book, though entitled to the benefit of copyright, lays
no foundation for an exclusive claim to the art itself. The object of the one is explanation; the
object of the other is use. The former may be secured by copyright. The latter can only be
secured, if it can be secured at all, by letters patent. (underscoring supplied)
ON THE ISSUE OF TRADEMARK INFRINGEMENT

The difference between the two things, letters patent and copyright, may be illustrated by reference to
the subjects just enumerated. Take the case of medicines. Certain mixtures are found to be of great
value in the healing art. If the discoverer writes and publishes a book on the subject (as regular
physicians generally do), he gains no exclusive right to the manufacture and sale of the medicine;
he gives that to the public. If he desires to acquire such exclusive right, he must obtain a patent
for the mixture as a new art, manufacture or composition of matter. He may copyright his book,
if he pleases; but that only secures to him the exclusive right of printing and publishing his
book. So of all other inventions or discoveries.
The copyright of a book on perspective, no matter how many drawings and illustrations it may contain,
gives no exclusive right to the modes of drawing described, though they may never have been known
or used before. By publishing the book without getting a patent for the art, the latter is given to the
public.
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 to convey instruction in the art, any person may practice and use the art itself which he has
described and illustrated therein. The use of the art is a totally different thing from a publication of

This issue concerns the use by respondents of the mark Poster Ads which petitioners president
said was a contraction of poster advertising. P & D was able to secure a trademark certificate for it,
but one where the goods specified were stationeries such as letterheads, envelopes, calling cards and
newsletters.[22] Petitioner admitted it did not commercially engage in or market these goods. On the
contrary, it dealt in electrically operated backlit advertising units and the sale of advertising spaces
thereon, which, however, were not at all specified in the trademark certificate.
Under the circumstances, the Court of Appeals correctly cited Faberge Inc. vs. Intermediate
Appellate Court,[23] where we, invoking Section 20 of the old Trademark Law, ruled that the certificate
of registration issued by the Director of Patents can confer (upon petitioner) the exclusive right to use
its own symbol only to those goods specified in the certificate, subject to any conditions and
limitations specified in the certificate x x x. One who has adopted and used a trademark on his
goods does not prevent the adoption and use of the same trademark by others for products which are
of a differentdescription.[24] Faberge, Inc. was correct and was in fact recently reiterated in Canon
Kabushiki Kaisha vs. Court of Appeals.[25]

Assuming arguendo that Poster Ads could validly qualify as a trademark, the failure of P & D
to secure a trademark registration for specific use on the light boxes meant that there could not have
been any trademark infringement since registration was an essential element thereof.

Having discussed the most important and critical issues, we see no need to belabor the rest.
All told, the Court finds no reversible error committed by the Court of Appeals when it reversed
the Regional Trial Court of Makati City.

ON THE ISSUE OF UNFAIR COMPETITION


If at all, the cause of action should have been for unfair competition, a situation which was
possible even if P & D had no registration.[26] However, while the petitioners complaint in the RTC
also cited unfair competition, the trial court did not find private respondents liable therefor. Petitioner
did notappeal this particular point; hence, it cannot now revive its claim of unfair competition.

WHEREFORE, the petition is hereby DENIED and the decision of the Court of Appeals dated
May 22, 2001 is AFFIRMED in toto.
SO ORDERED.
Puno, (Chairman), Panganiban, Sandoval-Gutierrez, and Carpio-Morales, JJ., concur.

But even disregarding procedural issues, we nevertheless cannot hold respondents guilty of unfair
competition.
By the nature of things, there can be no unfair competition under the law on copyrights although
it is applicable to disputes over the use of trademarks. Even a name or phrase incapable of
appropriation as a trademark or tradename may, by long and exclusive use by a business (such that the
name or phrase becomes associated with the business or product in the mind of the purchasing public),
be entitled to protection against unfair competition. [27] In this case, there was no evidence that P & Ds
use of Poster Ads was distinctive or well-known. As noted by the Court of Appeals, petitioners
expert witnesses himself had testified that Poster Ads was too generic a name. So it was difficult to
identify it with any company, honestly speaking. [28] This crucial admission by its own expert witness
that Poster Ads could not be associated with P & D showed that, in the mind of the public, the goods
and services carrying the trademark Poster Ads could not be distinguished from the goods and
services of other entities.
This fact also prevented the application of the doctrine of secondary meaning. Poster Ads was
generic and incapable of being used as a trademark because it was used in the field of poster
advertising, the very business engaged in by petitioner. Secondary meaning means that a word or
phrase originally incapable of exclusive appropriation with reference to an article in the market
(because it is geographically or otherwise descriptive) might nevertheless have been used for so long
and so exclusively by one producer with reference to his article that, in the trade and to that branch of
the purchasing public, the word or phrase has come to mean that the article was his property. [29] The
admission by petitioners own expert witness that he himself could not associate Poster Ads with
petitioner P & D because it was too generic definitely precluded the application of this exception.

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.

PARDO, J.:
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 affirmed the trial court's dismissal of the complaint for infringement and/or unfair
competition and damages but deleted the award for attorney's fees.1wphi1.nt

The facts are as follows:


Petitioners are authors and copyright owners of duly issued certificates of copyright registration
covering their published works, produced through their combined resources and efforts, entitled
COLLEGE ENGLISH FOR TODAY (CET for brevity), Books 1 and 2, and WORKBOOK FOR
COLLEGE FRESHMAN ENGLISH, Series 1.
Respondent Felicidad Robles and Goodwill Trading Co., Inc. are the author/publisher and
distributor/seller of another published work entitled "DEVELOPING ENGLISH PROFICIENCY"
(DEP for brevity), Books 1 and 2 (1985 edition) which book was covered by copyrights issued to them.
In the course of revising their published works, petitioners scouted and looked around various
bookstores to check on other textbooks dealing with the same subject matter. By chance they came
upon the book of respondent Robles and upon perusal of said book they were surprised to see that the
book was strikingly similar to the contents, scheme of presentation, illustrations and illustrative
examples in their own book, CET.
After an itemized examination and comparison of the two books (CET and DEP), petitioners found
that several pages of the respondent's book are similar, if not all together a copy of petitioners' book,
which is a case of plagiarism and copyright infringement.
Petitioners then made demands for damages against respondents and also demanded that they cease
and desist from further selling and distributing to the general public the infringed copies of respondent
Robles' works.
However, respondents ignored the demands, hence, on July 7, 1988; petitioners filed with the Regional
Trial Court, Makati, a complaint for "Infringement and/or unfair competition with damages" 4 against
private respondents. 5
In the complaint, petitioners alleged that in 1985, respondent Felicidad C. Robles being substantially
familiar with the contents of petitioners' works, and without securing their permission, lifted, copied,
plagiarized and/or transposed certain portions of their book CET. The textual contents and illustrations
of CET were literally reproduced in the book DEP. The plagiarism, incorporation and reproduction of
particular portions of the book CET in the book DEP, without the authority or consent of petitioners,
and the misrepresentations of respondent Robles that the same was her original work and concept

adversely affected and substantially diminished the sale of the petitioners' book and caused them actual
damages by way of unrealized income.
Despite the demands of the petitioners for respondents to desist from committing further acts of
infringement and for respondent to recall DEP from the market, respondents refused. Petitioners asked
the court to order the submission of all copies of the book DEP, together with the molds, plates and
films and other materials used in its printing destroyed, and for respondents to render an accounting of
the proceeds of all sales and profits since the time of its publication and sale.
Respondent Robles was impleaded in the suit because she authored and directly committed the acts of
infringement complained of, while respondent Goodwill Trading Co., Inc. was impleaded as the
publisher and joint co-owner of the copyright certificates of registration covering the two books
authored and caused to be published by respondent Robles with obvious connivance with one another.
On July 27, 1988, respondent Robles filed a motion for a bill of particulars 6 which the trial court
approved on August 17, 1988. Petitioners complied with the desired particularization, and furnished
respondent Robles the specific portions, inclusive of pages and lines, of the published and copyrighted
books of the petitioners which were transposed, lifted, copied and plagiarized and/or otherwise found
their way into respondent's book.
On August 1, 1988, respondent Goodwill Trading Co., Inc. filed its answer to the complaint 7 and
alleged that petitioners had no cause of action against Goodwill Trading Co., Inc. since it was not privy
to the misrepresentation, plagiarism, incorporation and reproduction of the portions of the book of
petitioners; that there was an agreement between Goodwill and the respondent Robles that Robles
guaranteed Goodwill that the materials utilized in the manuscript were her own or that she had secured
the necessary permission from contributors and sources; that the author assumed sole responsibility
and held the publisher without any liability.
On November 28, 1988, respondent Robles filed her answer 8, and denied the allegations of plagiarism
and copying that petitioners claimed. Respondent stressed that (1) the book DEP is the product of her
independent researches, studies and experiences, and was not a copy of any existing valid copyrighted
book; (2) DEP followed the scope and sequence or syllabus which are common to all English grammar
writers as recommended by the Association of Philippine Colleges of Arts and Sciences (APCAS), so
any similarity between the respondents book and that of the petitioners was due to the orientation of

the authors to both works and standards and syllabus; and (3) the similarities may be due to the authors'
exercise of the "right to fair use of copyrigthed materials, as guides."
Respondent interposed a counterclaim for damages on the ground that bad faith and malice attended
the filing of the complaint, because petitioner Habana was professionally jealous and the book DEP
replaced CET as the official textbook of the graduate studies department of the Far Eastern
University. 9
During
the
pre-trial
conference,
the
parties
agreed
to
a
stipulation
of
facts 10 and for the trial court to first resolve the issue of infringement before disposing of the claim for
damages.
After the trial on the merits, on April 23, 1993, the trial court rendered its judgment finding thus:

In the appeal, petitioners argued that the trial court completely disregarded their evidence and fully
subscribed to the arguments of respondent Robles that the books in issue were purely the product of
her researches and studies and that the copied portions were inspired by foreign authors and as such
not subject to copyright. Petitioners also assailed the findings of the trial court that they were animated
by bad faith in instituting the complaint. 14
On June 27, 1997, the Court of Appeals rendered judgment in favor of respondents Robles and
Goodwill Trading Co., Inc. The relevant portions of the decision state:
It must be noted, however, that similarity of the allegedly infringed work to the
author's or proprietor's copyrighted work does not of itself establish copyright
infringement, especially if the similarity results from the fact that both works deal
with the same subject or have the same common source, as in this case.

IT IS SO ORDERED.

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

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

xxx xxx xxx

(s/t) MARVIE R. ABRAHAM SINGSON

Appellant's reliance on the last paragraph on Section II is misplaced. It must be


emphasized that they failed to prove that their books were made sources by
appellee. 15

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

Assisting Judge
S. C. Adm. Order No. 124-92 11
On May 14, 1993, petitioners filed their notice of appeal with the trial court 12, and on July 19, 1993,
the court directed its branch clerk of court to forward all the records of the case to the Court of
Appeals. 13

The Court of Appeals was of the view that the award of attorneys' fees was not proper, since there was
no bad faith on the part of petitioners Habana et al. in instituting the action against respondents.
On July 12, 1997, petitioners filed a motion for reconsideration,
denied the same in a Resolution 17 dated November 25, 1997.
Hence, this petition.

16

however, the Court of Appeals

In this appeal, petitioners submit that the appellate court erred in affirming the trial court's decision.

177.6 Public performance of the work; and

Petitioners raised the following issues: (1) whether or not, despite the apparent textual, thematic and
sequential similarity between DEP and CET, respondents committed no copyright infringement; (2)
whether or not there wasanimus furandi on the part of respondent when they refused to withdraw the
copies of CET from the market despite notice to withdraw the same; and (3) whether or not respondent
Robles abused a writer's right to fair use, in violation of Section 11 of Presidential Decree No. 49. 18

177.7 Other communication to the public of the work 19


The law also provided for the limitations on copyright, thus:
Sec. 184.1 Limitations on copyright. Notwithstanding the provisions of Chapter
V, the following acts shall not constitute infringement of copyright:

We find the petition impressed with merit.


(a) the recitation or performance of a work, once it has been
lawfully made accessible to the public, if done privately and free of
charge or if made strictly for a charitable or religious institution or
society; [Sec. 10(1), P.D. No. 49]

The complaint for copyright infringement was filed at the time that Presidential Decree No. 49 was in
force. At present, all laws dealing with the protection of intellectual property rights have been
consolidated and as the law now stands, the protection of copyrights is governed by Republic Act No.
8293. Notwithstanding the change in the law, the same principles are reiterated in the new law under
Section 177. It provides for the copy or economic rights of an owner of a copyright as follows:

(b) The making of quotations from a published work if they are


compatible with fair use and only to the extent justified for the
purpose, including quotations from newspaper articles and
periodicals in the form of press summaries; Provided, that the
source and the name of the author, if appearing on the work are
mentioned; (Sec. 11 third par. P.D. 49)

Sec. 177. Copy or Economic rights. Subject to the provisions of chapter VIII,
copyright or economic rights shall consist of the exclusive right to carry out,
authorize or prevent the following acts:
177.1 Reproduction of the work or substanlial portion of the work;
xxx xxx xxx
177.2 Dramatization, translation, adaptation, abridgement, arrangement or other
transformation of the work;
177.3 The first public distribution of the original and each copy of the work by sale
or other forms of transfer of ownership;
177.4 Rental of the original or a copy of an audiovisual or cinematographic work, a
work embodied in a sound recording, a computer program, a compilation of data and
other materials or a musical work in graphic form, irrespective of the ownership of
the original or the copy which is the subject of the rental; (n)
177.5 Public display of the original or copy of the work;

(e) The inclusion of a work in a publication, broadcast, or other communication to


the public, sound recording of film, if such inclusion is made by way of illustration
for teaching purposes and is compatible with fair use:Provided, That the source and
the name of the author, if appearing in the work is mentioned; 20
In the above quoted provisions, "work" has reference to literary and artistic creations and this includes
books and other literary, scholarly and scientific works. 21
A perusal of the records yields several pages of the book DEP that are similar if not identical with the
text of CET.

On page 404 of petitioners' Book 1 of College English for Today, the authors wrote:
Items in dates and addresses:
He died on Monday, April 15, 1975.
Miss Reyes lives in 214 Taft Avenue,

We believe that respondent Robles' act of lifting from the book of petitioners substantial portions of
discussions and examples, and her failure to acknowledge the same in her book is an infringement of
petitioners' copyrights.
When is there a substantial reproduction of a book? It does not necessarily require that the entire
copyrighted work, or even a large portion of it, be copied. If so much is taken that the value of the
original work is substantially diminished, there is an infringement of copyright and to an injurious
extent, the work is appropriated. 27

Manila 22
On page 73 of respondents Book 1 Developing English Today, they wrote:
He died on Monday, April 25, 1975.
Miss Reyes address is 214 Taft Avenue Manila 23
On Page 250 of CET, there is this example on parallelism or repetition of sentence structures, thus:
The proposition is peace. Not peace through the medium of war; not peace to be
hunted through the labyrinth of intricate and endless negotiations; not peace to arise
out of universal discord, fomented from principle, in all parts of the empire; not
peace to depend on the juridical determination of perplexing questions, or the precise
marking of the boundary of a complex government. It is simple peace; sought in its
natural course, and in its ordinary haunts. It is peace sought in the spirit of peace, and
laid in principles purely pacific.
Edmund Burke, "Speech on Criticism." 24
25

On page 100 of the book DEP , also in the topic of parallel structure and repetition, the same example
is foundin toto. The only difference is that petitioners acknowledged the author Edmund Burke, and
respondents did not.
In several other pages 26 the treatment and manner of presentation of the topics of DEP are similar if
not a rehash of that contained in CET.

In determining the question of infringement, the amount of matter copied from the copyrighted work is
an important consideration. To constitute infringement, it is not necessary that the whole or even a
large portion of the work shall have been copied. If so much is taken that the value of the original is
sensibly diminished, or the labors of the original author are substantially and to an injurious extent
appropriated by another, that is sufficient in point of law to constitute piracy. 28
The essence of intellectual piracy should be essayed in conceptual terms in order to underscore its
gravity by an appropriate understanding thereof. Infringement of a copyright is a trespass on a private
domain owned and occupied by the owner of the copyright, and, therefore, protected by law, and
infringement of copyright, or piracy, which is a synonymous term in this connection, consists in the
doing by any person, without the consent of the owner of the copyright, of anything the sole right to do
which is conferred by statute on the owner of the copyright.29
The respondents' claim that the copied portions of the book CET are also found in foreign books and
other grammar books, and that the similarity between her style and that of petitioners can not be
avoided since they come from the same background and orientation may be true. However, in this
jurisdiction under Sec 184 of Republic Act 8293 it is provided that:
Limitations on Copyright. Notwithstanding the provisions of Chapter V, the
following shall not constitute infringement of copyright:
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 articles and

periodicals in the form of press summaries: Provided, That the


source and the name of the author, if appearing on the work, are
mentioned.
A copy of a piracy is an infringement of the original, and it is no defense that the pirate, in such cases,
did not know whether or not he was infringing any copyright; he at least knew that what he was
copying was not his, and he copied at his peril. 30
The next question to resolve is to what extent can copying be injurious to the author of the book being
copied. Is it enough that there are similarities in some sections of the books or large segments of the
books are the same?
In the case at bar, there is no question that petitioners presented several pages of the books CET and
DEP that more or less had the same contents. It may be correct that the books being grammar books
may contain materials similar as to some technical contents with other grammar books, such as the
segment about the "Author Card". However, the numerous pages that the petitioners presented showing
similarity in the style and the manner the books were presented and the identical examples can not pass
as similarities merely because of technical consideration.
The respondents claim that their similarity in style can be attributed to the fact that both of them were
exposed to the APCAS syllabus and their respective academic experience, teaching approach and
methodology are almost identical because they were of the same background.
However, we believe that even if petitioners and respondent Robles were of the same background in
terms of teaching experience and orientation, it is not an excuse for them to be identical even in
examples contained in their books. The similarities in examples and material contents are so obviously
present in this case. How can similar/identical examples not be considered as a mark of copying?
We consider as an indicia of guilt or wrongdoing the act of respondent Robles of pulling out from
Goodwill bookstores the book DEP upon learning of petitioners' complaint while pharisaically denying
petitioners' demand. It was further noted that when the book DEP was re-issued as a revised version,
all the pages cited by petitioners to contain portion of their book College English for Today were
eliminated.

In cases of infringement, copying alone is not what is prohibited. The copying must produce an
"injurious effect". Here, the injury consists in that respondent Robles lifted from petitioners' book
materials that were the result of the latter's research work and compilation and misrepresented them as
her own. She circulated the book 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 to represent it as her own is injury enough. In copyrighting books the purpose is to give
protection to the intellectual product of an author. This is precisely what the law on copyright
protected, under Section 184.1 (b). Quotations from a published work if they are compatible with fair
use and only to the extent justified by the purpose, including quotations from newspaper articles and
periodicals in the form of press summaries are allowed provided that the source and the name of the
author, if appearing on the work, are mentioned.
In the case at bar, the least that respondent Robles could have done was to acknowledge petitioners
Habana et.al. as the source of the portions of DEP. The final product of an author's toil is her book. To
allow another to copy the book without appropriate acknowledgment is injury enough.
WHEREFORE, the petition is hereby GRANTED. The decision and resolution of the Court of Appeals
in CA-G. R. CV No. 44053 are SET ASIDE. The case is ordered remanded to the trial court for further
proceedings to receive evidence of the parties to ascertain the damages caused and sustained by
petitioners and to render decision in accordance with the evidence submitted to it.
SO ORDERED.
Kapunan and Ynares-Santiago, JJ., concur.
Davide, Jr., C.J., I dissent, please see dissenting opinion.
Melo, J., no part, personal reason.

In a letter-complaint dated August 26, 1985, petitioner 20th Century Fox Film Corporation through
counsel sought the National Bureau of Investigation's (NBI) assistance in the conduct of searches and
seizures in connection with the latter's anti-film piracy campaign. Specifically, the letter-complaint
alleged that certain videotape outlets all over Metro Manila are engaged in the unauthorized sale and
renting out of copyrighted films in videotape form which constitute a flagrant violation of Presidential
Decree No. 49 (otherwise known as the Decree on the Protection of Intellectual Property).
Acting on the letter-complaint, the NBI conducted surveillance and investigation of the outlets
pinpointed by the petitioner and subsequently filed three (3) applications for search warrants against
the video outlets owned by the private respondents. The applications were consolidated and heard by
the Regional Trial Court of Makati, Branch 132.
On September 4, 1985, the lower court issued the desired search warrants.

G.R. Nos. 76649-51 August 19, 1988


20TH CENTURY FOX FILM CORPORATION, petitioner,
vs.
COURT OF APPEALS, EDUARDO M. BARRETO, RAUL SAGULLO and FORTUNE
LEDESMA, respondents.
Siguion Reyna, Montecillo & Ongsiako Law Office for petitioner.
B.C. Salazar & Associates for respondents.

Armed with the search warrants, the NBI accompanied by the petitioner's agents, raided the video
outlets and seized the items described therein. An inventory of the items seized was made and left with
the private respondents.
Acting on a motion to lift search warrants and release seized properties filed by the private
respondents, the lower court issued an order dated October 8, 1985, lifting the three (3) search warrants
issued earlier against the 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, Paraaque, 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.

GUTIERREZ, JR., J.:


The petitioner questions the application of the constitutional provision against illegal searches and
seizures to raids 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 the National Bureau of Investigation on the basis of the complaint filed by the petitioner.

Consequently, the articles listed in the returns of the three search warrants which
could not be a basis of any criminal prosecution, now in the possession of the
National Bureau of Investigation which under the law must be delivered to this
Court, but which the NBI failed to do, are hereby ordered to be returned to their
owners through their lawyer, Atty. Benito Salazar or his agents or representatives,
against proper receipt, to be forwarded to this Court for record purposes, as proof

that said properties have been returned to the possession of the rightful owners." (p.
34, Rollo)

The petitioner maintains that the lower court issued the questioned search warrants after finding the
existence of a probable cause justifying their issuance. According to the petitioner, the lower court
arrived at this conclusion on the basis of the depositions of applicant NBI's two witnesses which were
taken through searching questions and answers by the lower court.

It is deference to one's personality that lies at the core of this right, but it could be
also looked upon as a recognition 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 choose who is
allowed entry to his residence. In that haven of refuge, his individuality can assert
itself not only in the choice 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 the traditional
formulation, his house, however humble, is his castle. Thus is outlawed any
unwarranted intrusion by government, which is called upon to refrain from any
invasion of his dwelling and to respect the privacies of his 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 to value the privacy of home and
person and to afford its constitutional protection against the long reach of
government 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).

Section 2, Article III of the present Constitution which substantially reproduces Section 3, Article IV of
the 1973 Constitution on illegal searches and seizures provides:

The government's right to issue search warrants against a citizen's papers and effects is circumscribed
by the requirements mandated in the searches and seizures provision of the Constitution.

The right of the people to be secure in their persons, houses, papers, and effects
against unreasonable searches and seizures of whatever nature and for any purpose
shall be inviolable, and no search warrant or warrant of arrest shall issue except upon
probable cause to be determined personally by the judge after examination under
oath or affirmation of the complainant and the witnesses he may produce, and
particularly describing the place to be searched and the persons or things to be
seized.

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 an offense has been committed and that the objects sought in connection with the offense
are in the place sought to be searched." This constitutional provision also demands "no less than
personal knowledge by the complainant or his witnesses of the facts upon which the issuance of a
search warrant may be justified" in order to convince the judge, not the individual making the affidavit
and seeking the issuance of the warrant, of the existence of a probable cause. (Alvarez v. Court of First
Instance, 64 Phil. 33; Burgos, Sr. v. Chief of Staff, AFP, supra).

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
provision against illegal searches and seizures (Section 3, Article IV, 1973 Constitution, now, Section
2, Article Ill, 1987 Constitution.

This constitutional right protects a citizen against wanton and unreasonable invasion of his privacy and
liberty as 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:

In the instant case, the lower court lifted the three questioned search warrants against the private
respondents on the ground that it acted on the application for the issuance of the said search warrants
and granted it on the misrepresentations of applicant NBI and its witnesses that infringement of

copyright or a piracy of a particular film have been committed. Thus the lower court stated in its
questioned order dated January 2,1986:
According to the movant, all three witnesses during the proceedings in the
application for the three search warrants testified of their own personal knowledge.
Yet, Atty. Albino Reyes of the NBI stated that the counsel or representative of the
Twentieth Century Fox Corporation will testify on the video cassettes that were
pirated, so that he did not have personal knowledge of the alleged piracy. The
witness Bacani also said that the video cassettes were pirated without stating the
manner it was pirated and that it was Atty. Domingo that has knowledge of that fact.
On the part of Atty. Domingo, he said that the re-taping of the allegedly pirated tapes
was from master tapes allegedly belonging to the Twentieth Century Fox, because,
according to him, it is of his personal knowledge.

So that lacking in persuasive effect, the allegation that master tapes were viewed by
the NBI and were compared to the purchased and seized video tapes from the
respondents' establishments, it should be dismissed as not supported by competent
evidence and for that matter the probable cause hovers in that grey debatable twilight
zone between black and white resolvable in favor of respondents herein.
But the glaring fact is that 'Cocoon,' the first video tape mentioned in the search
warrant, was not even duly registered or copyrighted in the Philippines. (Annex C of
Opposition p. 152 record). So, that lacking in the requisite presentation to the Court
of an alleged master tape for purposes of comparison with the purchased evidence of
the video tapes allegedly pirated and those seized from respondents, there was no
way to determine whether there really was piracy, or copying of the film of the
complainant Twentieth Century Fox." (pp. 37-39, Rollo)
xxx xxx xxx

At the hearing of the Motion for Reconsideration, Senior NBI Agent Atty. Albino
Reyes testified that when the complaint for infringement was brought to the NBI, the
master tapes of the allegedly pirated tapes were shown to him and he made
comparisons of the tapes with those purchased by their man Bacani. Why the master
tapes or at least the film reels of the allegedly pirated tapes were not shown to the
Court during the application gives some misgivings as to the truth of that bare
statement of the NBI agent on the witness stand. "
Again as the application and search proceedings is a prelude to the filing of criminal
cases under PD 49, the copyright infringement law, and although what is required for
the issuance thereof is merely the presence of probable cause, that probable cause
must be satisfactory to the Court, for it is a time- honored precept that proceedings to
put a man to task as an offender under our laws should be interpreted in strictissimi
juris against the government and liberally in favor of the alleged offender.
xxx xxx xxx
This doctrine has never been overturned, and as a matter of fact it had been
enshrined in the Bill of Rights in our 1973 Constitution.

The lower court, therefore, lifted the three (3) questioned search warrants in the absence of probable
cause that the private respondents violated P.D. 49. As found out by the court, the NBI agents who
acted as witnesses did not have personal knowledge of the subject matter of their testimony which was
the alleged commission of the offense by the private respondents. Only the 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 the confiscated tapes owned by the private respondents were pirated tapes
taken from master tapes belonging to the petitioner. However, the lower court did not give much
credence to his testimony in view of the fact that the master tapes of the allegedly pirated tapes were
not shown to the court during the application.
All these factors were taken into consideration by the lower court when it lifted the three questioned
search warrants. 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 presented during the application for search warrants, thus leading it to conclude that it had been
"misled by the applicant and his witnesses." (p. 17, Rollo)
The presentation of the master tapes of the copyrighted films from which the pirated films were
allegedly copied, was necessary for the validity of search warrants against those who have in their
possession the pirated films. The petitioner's argument to the effect that the presentation of the master

tapes at the time of application may not be necessary as these would be merely evidentiary in nature
and not determinative of whether or not a probable cause exists to justify the issuance of the search
warrants is not meritorious. The court cannot presume that duplicate or copied tapes were necessarily
reproduced from master tapes that it owns.
The application for search warrants was directed against video tape outlets which allegedly were
engaged in the unauthorized sale and renting out of copyrighted films belonging to the petitioner
pursuant to P.D. 49.
The essence of a copyright infringement is the similarity or at least substantial similarity of the
purported pirated works to the copyrighted work. Hence, the applicant must present to the court the
copyrighted films to compare them with the purchased evidence of the video tapes allegedly pirated to
determine whether the latter is an unauthorized reproduction of the former. This linkage of the
copyrighted films to the pirated films must be established to satisfy the requirements of probable cause.
Mere allegations as to the existence of the copyrighted films cannot serve as basis for the issuance of a
search warrant.
Furthermore, we note that the search warrants described the articles sought to be seized as follows:

Another factor which makes the search warrants under consideration constitutionally
objectionable is that they are in the nature of general warrants. The search warrants
describe the articles sought to be seized in this wise:
l] All printing equipment, paraphernalia, paper, ink, photo equipment, typewriters,
cabinets, tables communications/recording equipment, tape recorders, dictaphone
and the like used and/or connected in the printing of the 'WE FORUM' newspaper
and any and all document/communications, letters and facsimile of prints related to
"WE FORUM" newspaper.
2] Subversive documents, pamphlets, leaflets, books, and other publications to
promote the objectives and purposes of the subversive organizations known as
Movement for Free Philippines, Light-a-Fire Movement and April 6 Movement; and
3] Motor vehicles used in the distribution/circulation of the 'WE FORUM and other
subversive materials and propaganda, more particularly,
1] Toyota-Corolla, colored yellow with Plate No. NKA 892;

xxx xxx xxx

2] DATSUN pick-up colored white with Plate No. NKV 969;

xxx xxx xxx

3] A delivery truck with Plate No. NBS 542;


c) Television sets, Video Cassettes Recorders, rewinders, tape head
cleaners, accessories, equipments and other machines used or
intended to be used in the unlawful reproduction, sale, rental/lease
distribution of the above-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

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 search for 'books, records, pamphlets, cards, receipts, lists,
memoranda, pictures, recordings and other written instruments concerning the
Communist Parties of Texas, and the operations of the Community Party in Texas,"
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 used to violate Sec. 54197 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 the articles 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
confiscated under the questioned search warrants.
Television sets, video cassette recorders, reminders and tape cleaners are articles which can be found in
a video tape store engaged in the legitimate business of lending or renting out betamax tapes. In short,
these articles and appliances are generally connected with, or related to a legitimate business not
necessarily involving piracy of intellectual property or infringement of copyright laws. Hence,
including these articles without 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. In fact, 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 video store, the Court believes that the search party
should have confined themselves to articles that are according to them, evidence
constitutive of infringement of copyright laws or the piracy of intellectual property,
but not to other articles that are usually connected with, or related to, a legitimate
business, not involving piracy of intellectual property, or infringement of copyright
laws. So that a television set, a rewinder, and a whiteboard listing Betamax tapes,
video cassette cleaners video cassette recorders as reflected in the Returns of Search
Warrants, are items of legitimate business engaged in the video tape industry, and
which could not be the subject of seizure, The applicant and his agents therefore
exceeded their authority in seizing perfectly legitimate personal property usually
found in a video cassette store or business establishment." (p. 33, Rollo)
All in all, we find no grave abuse of discretion on the part of the lower court when it lifted the search
warrants it earlier 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 upon
which the respondent Court anchored said orders was its subsequent findings that it
was misled by the applicant (NBI) and its witnesses 'that infringement of copyright
or a piracy of a particular film have been committed when it issued the questioned
warrants.' Stated differently, the respondent Court merely corrected its erroneous
findings as to the existence of probable cause and declared the search and seizure to
be unreasonable. Certainly, such action is within the power and authority of the
respondent Court to perform, provided that it is not exercised in an 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 of discretion when it issued the questioned orders. Grave
abuse of discretion' implies such capricious and whimsical exercise of judgment as is
equivalent to lack of jurisdiction, or, in other words, where the power is exercised in
an arbitrary or despotic manner by reason of passion or personal hostility, and it must
be so patent and gross as to amount to an evasion of positive duty or to a virtual
refusal to perform the duty enjoined or to act at all in contemplation of law.' But far
from being despotic or arbitrary, the assailed orders were motivated by a noble desire
of rectifying an error, much so when the erroneous findings collided with the
constitutional rights of the private respondents. In fact, the petitioner did not even
contest the righteousness and 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 any unnecessary roadblocks in the way of the anti-film piracy campaign. However, the
campaign cannot ignore or violate constitutional safeguards. To say that the problem of pirated films
can be solved only by the use of unconstitutional shortcuts is to denigrate the long history and
experience behind the searches and seizures clause 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.
Fernan, C.J., Feliciano, Bidin and Cortes, JJ., concur

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

COLUMBIA PICTURES, INC., ORION PICTURES CORPORATION, PARAMOUNT


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

DECISION
REGALADO, J.:
Before us is a petition for review on certiorari of the decision of the Court of
Appeals[1] promulgated on July 22, 1992 and its resolution[2] of May 10, 1993 denying petitioners
motion for reconsideration, both of which sustained the order [3] of the Regional Trial Court, Branch
133, Makati, Metro Manila, dated November 22, 1988 for the quashal of Search Warrant No. 87-053
earlier issued per its own order[4] on September 5, 1988 for violation of Section 56 of Presidential
Decree No. 49, as amended, otherwise known as the Decree on the Protection of Intellectual
Property.
The material facts found by respondent appellate court are as follows:
Complainants thru counsel lodged a formal complaint with the National Bureau of Investigation
for violation of PD No. 49, as amended, and sought its assistance in their anti-film piracy
drive. Agents of the NBI and private researchers made discreet surveillance on various video
establishments in Metro Manila including Sunshine Home Video Inc. (Sunshine for brevity), owned

and operated by Danilo A. Pelindario with address at No. 6 Mayfair Center, Magallanes, Makati, Metro
Manila.

Court of Appeals, et al.,[6] in dismissing petitioners appeal and upholding the quashal of the search
warrant by the trial court.

On November 14, 1987, NBI Senior Agent Lauro C. Reyes applied for a search warrant with the
court a quo against Sunshine seeking the seizure, among others, of pirated video tapes of copyrighted
films all of which were enumerated in a list attached to the application; and, television sets, video
cassettes and/or laser disc recordings equipment and other machines and paraphernalia used or
intended to be used in the unlawful exhibition, showing, reproduction, sale, lease or disposition of
videograms tapes in the premises above described. In the hearing of the application, NBI Senior Agent
Lauro C. Reyes, upon questions by the court a quo, reiterated in substance his averments in his
affidavit. His testimony was corroborated by another witness, Mr. Rene C. Baltazar. Atty. Rico V.
Domingos deposition was also taken. On the basis of the affidavits and depositions of NBI Senior
Agent Lauro C. Reyes, Rene C. Baltazar and Atty. Rico V. Domingo, Search Warrant No 87-053 for
violation of Section 56 of PD No. 49, as amended, was issued by the court a quo.

The search warrant was served at about 1:45 p.m. on December 14, 1987 to Sunshine and/or their
representatives. In the course of the search of the premises indicated in the search warrant, the NBI
Agents found and seized various video tapes of duly copyrighted motion pictures/films owned or
exclusively distributed by private complainants, and machines, equipment, television sets,
paraphernalia, materials, accessories all of which were included in the receipt for properties
accomplished by the raiding team. Copy of the receipt was furnished and/or tendered to Mr. Danilo A.
Pelindario, registered owner-proprietor of Sunshine Home Video.
On December 16, 1987, a Return of Search Warrant was filed with the Court.
A Motion To Lift the Order of Search Warrant was filed but was later denied for lack of merit
(p. 280, Records).

Inceptively, we shall settle the procedural considerations on the matter of and the challenge to
petitioners legal standing in our courts, they being foreign corporations not licensed to do business in
the Philippines.
Private respondents aver that being foreign corporations, petitioners should have such license to
be able to maintain an action in Philippine courts. In so challenging petitioners personality to sue,
private respondents point to the fact that petitioners are the copyright owners or owners of exclusive
rights of distribution in the Philippines of copyrighted motion pictures or films, and also to the
appointment of Atty. Rico V. Domingo as their attorney-in-fact, as being constitutive of doing
business in the Philippines under Section 1(f) (1) and (2), Rule 1 of the Rules of the Board of
Investments. As foreign corporations doing business in the Philippines, Section 133 of Batas
Pambansa Blg. 68, or the Corporation Code of the Philippines, denies them the right to maintain a suit
in Philippine courts in the absence of a license to do business. Consequently, they have no right to ask
for the issuance of a search warrant.[7]
In refutation, petitioners flatly deny that they are doing business in the Philippines, [8] and contend
that private respondents have not adduced evidence to prove that petitioners are doing such business
here, as would require them to be licensed by the Securities and Exchange Commission, other than
averments in the quoted portions of petitioners Opposition to Urgent Motion to Lift Order of Search
Warrant dated April 28, 1988 and Atty. Rico V. Domingos affidavit of December 14,
1987. Moreover, an exclusive right to distribute a product or the ownership of such exclusive right
does not conclusively prove the act of doing business nor establish the presumption of doing business.
[9]

A Motion for reconsideration of the Order of denial was filed. The court a quo granted the said
motion for reconsideration and justified it in this manner:

The Corporation Code provides:

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

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

Petitioners thereafter appealed the order of the trial court granting private respondents motion for
reconsideration, thus lifting the search warrant which it had therefore issued, to the Court of
Appeals. As stated at the outset, said appeal was dismissed and the motion for reconsideration thereof
was denied. Hence, this petition was brought to this Court particularly challenging the validity of
respondent courts retroactive application of the ruling in 20th Century Fox Film Corporation vs.

The obtainment of a license prescribed by Section 125 of the Corporation Code is not a condition
precedent to the maintenance of any kind of action in Philippine courts by a foreign
corporation. However, under the aforequoted provision, no foreign corporation shall be permitted to
transact business in the Philippines, as this phrase is understood under the Corporation Code, unless it
shall have the license required by law, and until it complies with the law in transacting business here, it

shall not be permitted to maintain any suit in local courts. [10] As thus interpreted, any foreign
corporation not doing business in the Philippines may maintain an action in our courts upon any cause
of action, provided that the subject matter and the defendant are within the jurisdiction of the court. It
is not the absence of the prescribed license but doing business in the Philippines without such license
which debars the foreign corporation from access to our courts. In other words, although a foreign
corporation is without license to transact business in the Philippines, it does not follow that it has no
capacity to bring an action. Such license is not necessary if it is not engaged in business in the
Philippines.[11]
Statutory provisions in many jurisdictions are determinative of what constitutes doing business
or transacting business within that forum, in which case said provisions are controlling there. In
others where no such definition or qualification is laid down regarding acts or transactions falling
within its purview, the question rests primarily on facts and intent. It is thus held that all the combined
acts of a foreign corporation in the State must be considered, and every circumstance is material which
indicates a purpose on the part of the corporation to engage in some part of its regular business in the
State.[12]
No general rule or governing principles can be laid down as to what constitutes doing or
engaging in or transacting business. Each case must be judged in the light of its own peculiar
environmental circumstances.[13] The true tests, however, seem to be whether the foreign corporation is
continuing the body or substance of the business or enterprise for which it was organized or whether it
has substantially retired from it and turned it over to another.[14]
As a general proposition upon which many authorities agree in principle, subject to such
modifications as may be necessary in view of the particular issue or of the terms of the statute
involved, it is recognized that a foreign corporation is doing, transacting, engaging in, or
carrying on business in the State when, and ordinarily only when, it has entered the State by its
agents and is there engaged in carrying on and transacting through them some substantial part of its
ordinary or customary business, usually continuous in the sense that it may be distinguished from
merely casual, sporadic, or occasional transactions and isolated acts.[15]
The Corporation Code does not itself define or categorize what acts constitute doing or
transacting business in the Philippines. Jurisprudence has, however, held that the term implies a
continuity of commercial dealings and arrangements, and contemplates, to that extent, the performance
of acts or works or the exercise of some of the functions normally incident to or in progressive
prosecution of the purpose and subject of its organization.[16]
This traditional case law definition has evolved into a statutory definition, having been adopted
with some qualifications in various pieces of legislation in our jurisdiction.
For instance, Republic Act No. 5455[17] provides:

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

xxx

xxx

(10) Any other act or acts which imply a continuity of commercial dealings or arrangements, and
contemplate to that extent the performance of acts or works, or the exercise of some of the functions
normally incident to, or in the progressive prosecution of, commercial gain or of the purpose and
object of the business organization.
Finally, Republic Act No. 7042[19] embodies such concept in this wise:
SEC. 3. Definitions. As used in this Act:
xxx

xxx

xxx

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

business in the Philippines. But such indentors, commercial brokers or commission merchants shall be
the ones deemed to be doing business in the Philippines.

Based on Article 133 of the Corporation Code and gauged by such statutory standards, petitioners
are not barred from maintaining the present action. There is no showing that, under our statutory or
case law, petitioners are doing, transacting, engaging in or carrying on business in the Philippines as
would require obtention of a license before they can seek redress from our courts. No evidence has
been offered to show that petitioners have performed any of the enumerated acts or any other specific
act indicative of an intention to conduct or transact business in the Philippines.

Neither is the appointment of Atty. Rico V. Domingo as attorney-in-fact of petitioners, with


express authority pursuant to a special power of attorney, inter alia

Accordingly, the certification issued by the Securities and Exchange Commission [20] stating that
its records do not show the registration of petitioner film companies either as corporations or
partnerships or that they have been licensed to transact business in the Philippines, while undeniably
true, is of no consequence to petitioners right to bring action in the Philippines. Verily, no record of
such registration by petitioners can be expected to be found for, as aforestated, said foreign film
corporations do not transact or do business in the Philippines and, therefore, do not need to be licensed
in order to take recourse to our courts.

(2)
Appointing a representative or distributor who is domiciled in the Philippines, unless
said representative or distributor has an independent status, i.e., it transacts business in its name and for
its own account, and not in the name or for the account of a principal. Thus, where a foreign firm is
represented in the Philippines by a person or local company which does not act in its name but in the
name of the foreign firm, the latter is doing business in the Philippines.
as acts constitutive of doing business, the fact that petitioners are admittedly copyright owners or
owners of exclusive distribution rights in the Philippines of motion pictures or films does not convert
such ownership into an indicium of doing business which would require them to obtain a license before
they can sue upon a cause of action in local courts.

To lay criminal complaints with the appropriate authorities and to provide evidence in support of both
civil and criminal proceedings against any person or persons involved in the criminal infringement of
copyright, or concerning the unauthorized importation, duplication, exhibition or distribution of any
cinematographic work(s) films or video cassettes of which x x x is the owner of copyright or the
owner of exclusive rights of distribution in the Philippines pursuant to any agreement(s) between x x x
and the respective owners of copyright in such cinematographic work(s), to initiate and prosecute on
behalf of x x x criminal or civil actions in the Philippines against any person or persons unlawfully
distributing, exhibiting, selling or offering for sale any films or video cassettes of which x x x is the
owner of copyright or the owner of exclusive rights of distribution in the Philippines pursuant to any
agreement(s) between x x x and the respective owners of copyright in such works. [21]

Although Section 1(g) of the Implementing Rules and Regulations of the Omnibus Investments
Code lists, among others

tantamount to doing business in the Philippines. We fail to see how exercising ones legal and property
rights and taking steps for the vigilant protection of said rights, particularly the appointment of an
attorney-in-fact, can be deemed by and of themselves to be doing business here.

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

As a general rule, a foreign corporation will not be regarded as doing business in the State simply
because it enters into contracts with residents of the State, where such contracts are consummated
outside the State.[22] In fact, a view is taken that a foreign corporation is not doing business in the state
merely because sales of its product are made there or other business furthering its interests is transacted
there by an alleged agent, whether a corporation or a natural person, where such activities are not
under the direction and control of the foreign corporation but are engaged in by the alleged agent as an
independent business.[23]

It is generally held that sales made to customers in the State by an independent dealer who has
purchased and obtained title from the corporation to the products sold are not a doing of business by
the corporation.[24] Likewise, a foreign corporation which sells its products to persons styled
distributing agents in the State, for distribution by them, is not doing business in the State so as to
render it subject to service of process therein, where the contract with these purchasers is that they
shall buy exclusively from the foreign corporation such goods as it manufactures and shall sell them at
trade prices established by it.[25]
It has moreover been held that the act of a foreign corporation in engaging an attorney to
represent it in a Federal court sitting in a particular State is not doing business within the scope of the
minimum contact test.[26] With much more reason should this doctrine apply to the mere retainer of
Atty. Domingo for legal protection against contingent acts of intellectual piracy.
In accordance with the rule that doing business imports only acts in furtherance of the purposes
for which a foreign corporation was organized, it is held that the mere institution and prosecution or
defense of a suit, particularly if the transaction which is the basis of the suit took place out of the State,
do not amount to the doing of business in the State. The institution of a suit or the removal thereof is
neither the making of a contract nor the doing of business within a constitutional provision placing
foreign corporations licensed to do business in the State under the same regulations, limitations and
liabilities with respect to such acts as domestic corporations. Merely engaging in litigation has been
considered as not a sufficient minimum contact to warrant the exercise of jurisdiction over a foreign
corporation.[27]

Applying the above discussion to the instant petition, the ground available for barring recourse to
our courts by an unlicensed foreign corporation doing or transacting business in the Philippines should
properly be lack of capacity to sue, not lack of personality to sue. Certainly, a corporation whose
legal rights have been violated is undeniably such, if not the only, real party-in-interest to bring suit
thereon although, for failure to comply with the licensing requirement, it is not capacitated to maintain
any suit before our courts.
Lastly, on this point, we reiterate this Courts rejection of the common procedural tactics of erring
local companies which, when sued by unlicensed foreign corporations not engaged in business in the
Philippines, invoke the latters supposed lack of capacity to sue. The doctrine of lack of capacity to
sue based on failure to first acquire a local license is based on considerations of public policy. It was
never intended to favor nor insulate from suit unscrupulous establishments or nationals in case of
breach of valid obligations or violations of legal rights of unsuspecting foreign firms or entities simply
because they are not licensed to do business in the country.[35]
II
We now proceed to the main issue of the retroactive application to the present controversy of the
ruling in 20th Century Fox Film Corporation vs. Court of Appeals, et al., promulgated on August 19,
1988,[36] that for the determination of probable cause to support the issuance of a search warrant in
copyright infringement cases involving videograms, the production of the master tape for comparison
with the allegedly pirated copies is necessary.

As a consideration aside, we have perforce to comment on private respondents basis for arguing
that petitioners are barred from maintaining suit in the Philippines. For allegedly being foreign
corporations doing business in the Philippines without a license, private respondents repeatedly
maintain in all their pleadings that petitioners have thereby no legal personality to bring an action
before Philippine courts.[28]

Petitioners assert that the issuance of a search warrant is addressed to the discretion of the court
subject to the determination of probable cause in accordance with the procedure prescribed therefor
under Sections 3 and 4 of Rule 126. As of the time of the application for the search warrant in
question, the controlling criterion for the finding of probable cause was that enunciated in Burgos vs.
Chief of Staff[37] stating that:

Among the grounds for a motion to dismiss under the Rules of Court are lack of legal capacity to
sue and that the complaint states no cause of action. [30] Lack of legal capacity to sue means that the
plaintiff is not in the exercise of his civil rights, or does not have the necessary qualification to appear
in the case, or does not have the character or representation he claims. [31] On the other hand, a case is
dismissible for lack of personality to sue upon proof that the plaintiff is not the real party-in-interest,
hence grounded on failure to state a cause of action. [32] The term lack of capacity to sue should not be
confused with the term lack of personality to sue. While the former refers to a plaintiffs general
disability to sue, such as on account of minority, insanity, incompetence, lack of juridical personality or
any other general disqualifications of a party, the latter refers to the fact that the plaintiff is not the real
party- in-interest. Correspondingly, the first can be a ground for a motion to dismiss based on the
ground of lack of legal capacity to sue; [33] whereas the second can be used as a ground for a motion to
dismiss based on the fact that the complaint, on the face thereof, evidently states no cause of action. [34]

Probable cause for a search warrant is defined as such facts and circumstances which would lead
a reasonably discrete and prudent man to believe that an offense has been committed and that the
objects sought in connection with the offense are in the place sought to be searched.

[29]

According to petitioners, after complying with what the law then required, the lower court
determined that there was probable cause for the issuance of a search warrant, and which determination
in fact led to the issuance and service on December 14, 1987 of Search Warrant No. 87-053. It is
further argued that any search warrant so issued in accordance with all applicable legal requirements is
valid, for the lower court could not possibly have been expected to apply, as the basis for a finding of
probable cause for the issuance of a search warrant in copyright infringement cases involving
videograms, a pronouncement which was not existent at the time of such determination, on December
14, 1987, that is, the doctrine in the 20th Century Fox case that was promulgated only on August 19,
1988, or over eight months later.

Private respondents predictably argue in support of the ruling of the Court of Appeals sustaining
the quashal of the search warrant by the lower court on the strength of that 20th Century Fox ruling
which, they claim, goes into the very essence of probable cause. At the time of the issuance of the
search warrant involved here, although the 20th Century Fox case had not yet been decided, Section 2,
Article III of the Constitution and Section 3, Rule 126 of the 1985 Rules on Criminal Procedure
embodied the prevailing and governing law on the matter. The ruling in 20th Century Fox was merely
an application of the law on probable cause. Hence, they posit that there was no law that was
retrospectively applied, since the law had been there all along. To refrain from applying the 20th
Century Fox ruling, which had supervened as a doctrine promulgated at the time of the resolution of
private respondents motion for reconsideration seeking the quashal of the search warrant for failure of
the trial court to require presentation of the master tapes prior to the issuance of the search warrant,
would have constituted grave abuse of discretion.[38]
Respondent court upheld the retroactive application of the 20th Century Fox ruling by the trial
court in resolving petitioners motion for reconsideration in favor of the quashal of the search warrant,
on this renovated thesis:
And whether this doctrine should apply retroactively, it must be noted that in the 20th Century Fox
case, the lower court quashed the earlier search warrant it issued. On certiorari, the Supreme Court
affirmed the quashal on the ground among others that the master tapes or copyrighted films were not
presented for comparison with the purchased evidence of the video tapes to determine whether the
latter is an unauthorized reproduction of the former.
If the lower court in the Century Fox case did not quash the warrant, it is Our view that the Supreme
Court would have invalidated the warrant just the same considering the very strict requirement set by
the Supreme Court for the determination of probable cause in copyright infringement cases as
enunciated in this 20th Century Fox case. This is so because, as was stated by the Supreme Court in
the said case, the master tapes and the pirated tapes must be presented for comparison to satisfy the
requirement of probable cause. So it goes back to the very existence of probable cause. x x x[39]
Mindful as we are of the ramifications of the doctrine of stare decisis and the rudiments of fair
play, it is our considered view that the 20th Century Fox ruling cannot be retroactively applied to the
instant case to justify the quashal of Search Warrant No. 87-053. Herein petitioners consistent
position that the order of the lower court of September 5, 1988 denying therein defendants motion to
lift the order of search warrant was properly issued, there having been satisfactory compliance with the
then prevailing standards under the law for determination of probable cause, is indeed well taken. The
lower court could not possibly have expected more evidence from petitioners in their application for a
search warrant other than what the law and jurisprudence, then existing and judicially accepted,
required with respect to the finding of probable cause.

Article 4 of the Civil Code provides that (l)aws shall have no retroactive effect, unless the
contrary is provided. Correlatively, Article 8 of the same Code declares that (j)udicial decisions
applying the laws or the Constitution shall form part of the legal system of the Philippines.
Jurisprudence, in our system of government, cannot be considered as an independent source of
law; it cannot create law.[40] While it is true that judicial decisions which apply or interpret the
Constitution or the laws are part of the legal system of the Philippines, still they are not laws. Judicial
decisions, though not laws, are nonetheless evidence of what the laws mean, and it is for this reason
that they are part of the legal system of the Philippines. [41] Judicial decisions of the Supreme Court
assume the same authority as the statute itself.[42]
Interpreting the aforequoted correlated provisions of the Civil Code and in light of the above
disquisition, this Court emphatically declared in Co vs. Court of Appeals, et al.[43] that the principle of
prospectivity applies not only to original amendatory statutes and administrative rulings and circulars,
but also, and properly so, to judicial decisions. Our holding in the earlier case of People vs.
Jubinal[44] echoes the rationale for this judicial declaration, viz.:
Decisions of this Court, although in themselves not laws, are nevertheless evidence of what the laws
mean, and this is the reason why under Article 8 of the New Civil Code, Judicial decisions applying
or interpreting the laws or the Constitution shall form part of the legal system. The interpretation upon
a law by this Court constitutes, in a way, a part of the law as of the date that the law was originally
passed, since this Courts construction merely establishes the contemporaneous legislative intent that
the law thus construed intends to effectuate. The settled rule supported by numerous authorities is a
restatement of the legal maxim legis interpretation legis vim obtinet the interpretation placed
upon the written law by a competent court has the force of law. x x x, but when a doctrine of this
Court is overruled and a different view is adopted, the new doctrine should be applied prospectively,
and should not apply to parties who had relied on the old doctrine and acted on the faith thereof. x x x.
(Stress supplied).
This was forcefully reiterated in Spouses Benzonan vs. Court of Appeals, et al.,[45] where the
Court expounded:
x x x. But while our decisions form part of the law of the land, they are also subject to Article 4 of the
Civil Code which provides that laws shall have no retroactive effect unless the contrary is provided.
This is expressed in the familiar legal maximum lex prospicit, non respicit, the law looks forward not
backward. The rationale against retroactivity is easy to perceive. The retroactive application of a law
usually divests rights that have already become vested or impairs the obligations of contract and hence,
is unconstitutional (Francisco v. Certeza, 3 SCRA 565 [1961]). The same consideration underlies our
rulings giving only prospective effect to decisions enunciating new doctrines. x x x.

The reasoning behind Senarillos vs. Hermosisima[46] that judicial interpretation of a statute
constitutes part of the law as of the date it was originally passed, since the Courts construction merely
establishes the contemporaneous legislative intent that the interpreted law carried into effect, is all too
familiar. Such judicial doctrine does not amount to the passage of a new law but consists merely of a
construction or interpretation of a pre-existing one, and that is precisely the situation obtaining in this
case.
It is consequently clear that a judicial interpretation becomes a part of the law as of the date that
law was originally passed, subject only to the qualification that when a doctrine of this Court is
overruled and a different view is adopted, and more so when there is a reversal thereof, the new
doctrine should be applied prospectively and should not apply to parties who relied on the old doctrine
and acted in good faith.[47] To hold otherwise would be to deprive the law of its quality of fairness and
justice then, if there is no recognition of what had transpired prior to such adjudication.[48]
There is merit in petitioners impassioned and well-founded argumentation:
The case of 20th Century Fox Film Corporation vs. Court of Appeals, et al., 164 SCRA 655 (August
19, 1988) (hereinafter 20th Century Fox) was inexistent in December of 1987 when Search Warrant
87-053 was issued by the lower court. Hence, it boggles the imagination how the lower court could be
expected to apply the formulation of 20th Century Fox in finding probable cause when the formulation
was yet non-existent.
xxx

xxx

xxx

In short, the lower court was convinced at that time after conducting searching examination questions
of the applicant and his witnesses that an offense had been committed and that the objects sought in
connection with the offense (were) in the place sought to be searched (Burgos v. Chief of Staff, et al.,
133 SCRA 800). It is indisputable, therefore, that at the time of the application, or on December 14,
1987, the lower court did not commit any error nor did it fail to comply with any legal requirement for
the valid issuance of search warrant.
x x x. (W)e believe that the lower court should be considered as having followed the requirements of
the law in issuing Search Warrant No. 87-053. The search warrant is therefore valid and binding. It
must be noted that nowhere is it found in the allegations of the Respondents that the lower court failed
to apply the law as then interpreted in 1987. Hence, we find it absurd that it is (sic) should be seen
otherwise, because it is simply impossible to have required the lower court to apply a formulation
which will only be defined six months later.
Furthermore, it is unjust and unfair to require compliance with legal and/or doctrinal requirements
which are inexistent at the time they were supposed to have been complied with.

xxx

xxx

xxx

x x x. If the lower courts reversal will be sustained, what encouragement can be given to courts and
litigants to respect the law and rules if they can expect with reasonable certainty that upon the passage
of a new rule, their conduct can still be open to question? This certainly breeds instability in our system
of dispensing justice. For Petitioners who took special effort to redress their grievances and to protect
their property rights by resorting to the remedies provided by the law, it is most unfair that fealty to the
rules and procedures then obtaining would bear but fruits of injustice.[49]
Withal, even the proposition that the prospectivity of judicial decisions imports application
thereof not only to future cases but also to cases still ongoing or not yet final when the decision was
promulgated, should not be countenanced in the jural sphere on account of its inevitably unsettling
repercussions. More to the point, it is felt that the reasonableness of the added requirement in 20th
Century Fox calling for the production of the master tapes of the copyrighted films for determination
of probable cause in copyright infringement cases needs revisiting and clarification.
It will be recalled that the 20th Century Fox case arose from search warrant proceedings in
anticipation of the filing of a case for the unauthorized sale or renting out of copyrighted films in
videotape format in violation of Presidential Decree No. 49. It revolved around the meaning of
probable cause within the context of the constitutional provision against illegal searches and seizures,
as applied to copyright infringement cases involving videotapes.
Therein it was ruled that
The presentation of master tapes of the copyrighted films from which the pirated films were allegedly
copied, was necessary for the validity of search warrants against those who have in their possession the
pirated films. The petitioners argument to the effect that the presentation of the master tapes at the
time of application may not be necessary as these would be merely evidentiary in nature and not
determinative of whether or not a probable cause exists to justify the issuance of the search warrants is
not meritorious. The court cannot presume that duplicate or copied tapes were necessarily reproduced
from master tapes that it owns.
The application for search warrants was directed against video tape outlets which allegedly were
engaged in the unauthorized sale and renting out of copyrighted films belonging to the petitioner
pursuant to P.D. 49.
The essence of a copyright infringement is the similarity or at least substantial similarity of the
purported pirated works to the copyrighted work. Hence, the applicant must present to the court the
copyrighted films to compare them with the purchased evidence of the video tapes allegedly pirated to
determine whether the latter is an unauthorized reproduction of the former. This linkage of the

copyrighted films to the pirated films must be established to satisfy the requirements of probable cause.
Mere allegations as to the existence of the copyrighted films cannot serve as basis for the issuance of a
search warrant.
For a closer and more perspicuous appreciation of the factual antecedents of 20th Century Fox,
the pertinent portions of the decision therein are quoted hereunder, to wit:
In the instant case, the lower court lifted the three questioned search warrants against the private
respondents on the ground that it acted on the application for the issuance of the said search warrants
and granted it on the misrepresentations of applicant NBI and its witnesses that infringement of
copyright or a piracy of a particular film have been committed. Thus the lower court stated in its
questioned order dated January 2, 1986:
According to the movant, all three witnesses during the proceedings in the application for the three
search warrants testified of their own personal knowledge. Yet, Atty. Albino Reyes of the NBI stated
that the counsel or representative of the Twentieth Century Fox Corporation will testify on the video
cassettes that were pirated, so that he did not have personal knowledge of the alleged piracy. The
witness Bacani also said that the video cassettes were pirated without stating the manner it was
pirated and that it was Atty. Domingo that has knowledge of that fact.
On the part of Atty. Domingo, he said that the re-taping of the allegedly pirated tapes was from master
tapes allegedly belonging to the Twentieth Century Fox, because, according to him it is of his personal
knowledge.
At the hearing of the Motion for Reconsideration, Senior NBI Agent Atty. Albino Reyes testified
that when the complaint for infringement was brought to the NBI, the master tapes of the allegedly
pirated tapes were shown to him and he made comparisons of the tapes with those purchased by their
man Bacani. Why the master tapes or at least the film reels of the allegedly pirated tapes were not
shown to the Court during the application gives some misgivings as to the truth of that bare statement
of the NBI agent on the witness stand.
Again as the application and search proceedings is a prelude to the filing of criminal cases under P.D.
49, the copyright infringement law, and although what is required for the issuance thereof is merely the
presence of probable cause, that probable cause must be satisfactory to the Court, for it is a timehonored precept that proceedings to put a man to task as an offender under our laws should be
interpreted in strictissimi juris against the government and liberally in favor of the alleged offender.
xxx

xxx

xxx

This doctrine has never been overturned, and as a matter of fact it had been enshrined in the Bill of
Rights in our 1973 Constitution.
So that lacking in persuasive effect, the allegation that master tapes were viewed by the NBI and
were compared to the purchased and seized video tapes from the respondents establishments, it
should be dismissed as not supported by competent evidence and for that matter the probable cause
hovers in that grey debatable twilight zone between black and white resolvable in favor of respondents
herein.
But the glaring fact is that Cocoon, the first video tape mentioned in the search warrant, was not
even duly registered or copyrighted in the Philippines. (Annex C of Opposition, p. 152, record.) So
that lacking in the requisite presentation to the Court of an alleged master tape for purposes of
comparison with the purchased evidence of the video tapes allegedly pirated and those seized from
respondents, there was no way to determine whether there really was piracy, or copying of the film of
the complainant Twentieth Century Fox.
xxx

xxx

xxx

The lower court, therefore, lifted the three (3) questioned search warrants in the absence of probable
cause that the private respondents violated P.D. 49. As found by the court, the NBI agents who acted
as witnesses did not have personal knowledge of the subject matter of their testimony which was the
alleged commission of the offense by the private respondents. Only the petitioners counsel who was
also a witness during the application for the issuance of the search warrants stated that he had personal
knowledge that the confiscated tapes owned by the private respondents were pirated tapes taken from
master tapes belonging to the petitioner. However, the lower court did not give much credence to his
testimony in view of the fact that the master tapes of the allegedly pirated tapes were not shown to the
court during the application (Italics ours).
The italicized passages readily expose the reason why the trial court therein required the
presentation of the master tapes of the allegedly pirated films in order to convince itself of the
existence of probable cause under the factual milieu peculiar to that case. In the case at bar, respondent
appellate court itself observed:
We feel that the rationale behind the aforequoted doctrine is that the pirated copies as well as the
master tapes, unlike the other types of personal properties which may be seized, were available for
presentation to the court at the time of the application for a search warrant to determine the existence
of the linkage of the copyrighted films with the pirated ones. Thus, there is no reason not to present
them (Italics supplied for emphasis).[50]

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

trustworthy affidavits and depositions regarding matters discovered in the course thereof and of which
they have personal knowledge.
It is evidently incorrect to suggest, as the ruling in 20th Century Fox may appear to do, that in
copyright infringement cases, the presentation of master tapes of the copyrighted films is always
necessary to meet the requirement of probable cause and that, in the absence thereof, there can be no
finding of probable cause for the issuance of a search warrant. It is true that such master tapes are
object evidence, with the merit that in this class of evidence the ascertainment of the controverted fact
is made through demonstrations involving the direct use of the senses of the presiding magistrate.
[57]
Such auxiliary procedure, however, does not rule out the use of testimonial or documentary
evidence, depositions, admissions or other classes of evidence tending to prove the factum probandum,
[58]
especially where the production in court of object evidence would result in delay, inconvenience or
expenses out of proportion to its evidentiary value.[59]
Of course, as a general rule, constitutional and statutory provisions relating to search warrants
prohibit their issuance except on a showing of probable cause, supported by oath or affirmation. These
provisions prevent the issuance of warrants on loose, vague, or doubtful bases of fact, and emphasize
the purpose to protect against all general searches. [60] Indeed, Article III of our Constitution mandates
in Sec. 2 thereof that no search warrant shall issue except upon probable cause to be determined
personally by the judge after examination under oath or affirmation of the complainant and the
witnesses he may produce, and particularly describing the place to be searched and the things to be
seized; and Sec. 3 thereof provides that any evidence obtained in violation of the preceding section
shall be inadmissible for any purpose in any proceeding.
These constitutional strictures are implemented by the following provisions of Rule 126 of the
Rules of Court:
Sec. 3. Requisites for issuing search warrant. A search warrant shall not issue but upon probable
cause in connection with one specific offense to be determined personally by the judge after
examination under oath or affirmation of the complainant and the witnesses he may produce, and
particularly describing the place to be searched and the things to be seized.
Sec. 4. Examination of complainant; record. The judge must, before issuing the warrant, personally
examine in the form of searching questions and answers, in writing and under oath the complainant
and any witnesses he may produce on facts personally known to them and attach to the record their
sworn statements together with any affidavits submitted.
Sec. 5. Issuance and form of search warrant. If the judge is thereupon satisfied of the existence of
facts upon which the application is based, or that there is probable cause to believe that they exist, he
must issue the warrant, which must be substantially in the form prescribed by these Rules.

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


probable cause before a search warrant can be issued are mandatory and must be complied with, and
such a showing has been held to be an unqualified condition precedent to the issuance of a warrant. A
search warrant not based on probable cause is a nullity, or is void, and the issuance thereof is, in legal
contemplation, arbitrary.[61] It behooves us, then, to review the concept of probable cause, firstly, from
representative holdings in the American jurisdiction from which we patterned our doctrines on the
matter.
Although the term probable cause has been said to have a well-defined meaning in the law, the
term is exceedingly difficult to define, in this case, with any degree of precision; indeed, no definition
of it which would justify the issuance of a search warrant can be formulated which would cover every
state of facts which might arise, and no formula or standard, or hard and fast rule, may be laid down
which may be applied to the facts of every situation. [62] As to what acts constitute probable cause seem
incapable of definition.[63] There is, of necessity, no exact test.[64]
At best, the term probable cause has been understood to mean a reasonable ground of
suspicion, supported by circumstances sufficiently strong in themselves to warrant a cautious man in
the belief that the person accused is guilty of the offense with which he is charged; [65] or the existence
of such facts and circumstances as would excite an honest belief in a reasonable mind acting on all the
facts and circumstances within the knowledge of the magistrate that the charge made by the applicant
for the warrant is true.[66]
Probable cause does not mean actual and positive cause, nor does it import absolute
certainty. The determination of the existence of probable cause is not concerned with the question of
whether the offense charged has been or is being committed in fact, or whether the accused is guilty or
innocent, but only whether the affiant has reasonable grounds for his belief. [67] The requirement is less
than certainty or proof, but more than suspicion or possibility.[68]
In Philippine jurisprudence, probable cause has been uniformly defined as such facts and
circumstances which would lead a reasonable, discreet and prudent man to believe that an offense has
been committed, and that the objects sought in connection with the offense are in the place sought to be
searched.[69] It being the duty of the issuing officer to issue, or refuse to issue, the warrant as soon as
practicable after the application therefor is filed, [70] the facts warranting the conclusion of probable
cause must be assessed at the time of such judicial determination by necessarily using legal
standards then set forth in law and jurisprudence, and not those that have yet to be crafted thereafter.
As already stated, the definition of probable cause enunciated in Burgos, Sr. vs. Chief of Staff, et
al., supra, vis-a-vis the provisions of Sections 3 and 4 of Rule 126, were the prevailing and controlling
legal standards, as they continue to be, by which a finding of probable cause is tested. Since the
proprietary of the issuance of a search warrant is to be determined at the time of the application
therefor, which in turn must not be too remote in time from the occurrence of the offense alleged to
have been committed, the issuing judge, in determining the existence of probable cause, can and

should logically look to the touchstones in the laws therefore enacted and the decisions already
promulgated at the time, and not to those which had not yet even been conceived or formulated.
It is worth noting that neither the Constitution nor the Rules of Court attempt to define probable
cause, obviously for the purpose of leaving such matter to the courts discretion within the particular
facts of each case. Although the Constitution prohibits the issuance of a search warrant in the absence
of probable cause, such constitutional inhibition does not command the legislature to establish a
definition or formula for determining what shall constitute probable cause. [71] Thus, Congress, despite
its broad authority to fashion standards of reasonableness for searches and seizures, [72] does not venture
to make such a definition or standard formulation of probable cause, nor categorize what facts and
circumstances make up the same, much less limit the determination thereof to and within the
circumscription of a particular class of evidence, all in deference to judicial discretion and probity.[73]
Accordingly, to restrict the exercise of discretion by a judge by adding a particular requirement
(the presentation of master tapes, as intimated by 20th Century Fox) not provided nor implied in the
law for a finding of probable cause is beyond the realm of judicial competence or statemanship. It
serves no purpose but to stultify and constrict the judicious exercise of a court's prerogatives and to
denigrate the judicial duty of determining the existence of probable cause to a mere ministerial or
mechanical function. There is, to repeat, no law or rule which requires that the existence of probable
cause is or should be determined solely by a specific kind of evidence. Surely, this could not have
been contemplated by the framers of the Constitution, and we do not believe that the Court intended
the statement in 20th Century Fox regarding master tapes as the dictum for all seasons and reasons in
infringement cases.
Turning now to the case at bar, it can be gleaned from the records that the lower court followed
the prescribed procedure for the issuances of a search warrant: (1) the examination under oath or
affirmation of the complainant and his witnesses, with them particularly describing the place to be
searched and the things to be seized; (2) an examination personally conducted by the judge in the form
of searching questions and answers, in writing and under oath of the complainant and witnesses on
facts personally known to them; and, (3) the taking of sworn statements, together with the affidavits
submitted, which were duly attached to the records.
Thereafter, the court a quo made the following factual findings leading to the issuance of the
search warrant now subject to this controversy:
In the instant case, the following facts have been established: (1) copyrighted video tapes bearing titles
enumerated in Search Warrant No. 87-053 were being sold, leased, distributed or circulated, or offered
for sale, lease, distribution, or transferred or caused to be transferred by defendants at their video
outlets, without the written consent of the private complainants or their assignee; (2) recovered or
confiscated from defendants' possession were video tapes containing copyrighted motion picture films
without the authority of the complainant; (3) the video tapes originated from spurious or unauthorized

persons; and (4) said video tapes were exact reproductions of the films listed in the search warrant
whose copyrights or distribution rights were owned by complainants.
The basis of these facts are the affidavits and depositions of NBI Senior Agent Lauro C. Reyes, Atty.
Rico V. Domingo, and Rene C. Baltazar. Motion Pictures Association of America, Inc. (MPAA) thru
their counsel, Atty. Rico V. Domingo, filed a complaint with the National Bureau of Investigation
against certain video establishments one of which is defendant, for violation of PD No. 49 as amended
by PD No, 1988. Atty. Lauro C. Reyes led a team to conduct discreet surveillance operations on said
video establishments. Per information earlier gathered by Atty. Domingo, defendants were engaged in
the illegal sale, rental, distribution, circulation or public exhibition of copyrighted films of MPAA
without its written authority or its members. Knowing that defendant Sunshine Home Video and its
proprietor, Mr. Danilo Pelindario, were not authorized by MPAA to reproduce, lease, and possess for
the purpose of selling any of its copyrighted motion pictures, he instructed his researcher, Mr. Rene
Baltazar to rent two video cassettes from said defendants on October 21, 1987. Rene C. Baltazar
proceeded to Sunshine Home Video and rented tapes containing Little Shop of Horror. He was issued
rental slip No. 26362 dated October 21, 1987 for P10.00 with a deposit of P100.00. Again, on
December 11, 1987, he returned to Sunshine Home Video and rented Robocop with a rental slip No.
25271 also for P10.00. On the basis of the complaint of MPAA thru counsel, Atty. Lauro C. Reyes
personally went to Sunshine Home Video at No. 6 Mayfair Center, Magallanes Commercial Center,
Makati. His last visit was on December 7, 1987. There, he found the video outlet renting, leasing,
distributing video cassette tapes whose titles were copyrighted and without the authority of MPAA.
Given these facts, a probable cause exists. x x x.[74]
The lower court subsequently executed a volte-face, despite its prior detailed and substantiated
findings, by stating in its order of November 22, 1988 denying petitioners motion for reconsideration
and quashing the search warrant that

A review of the grounds invoked x x x in his motion to quash the search warrants reveals the fact that
they are not appropriate for quashing a warrant. They are matters of defense which should be
ventilated during the trial on the merits of the case. x x x
As correctly pointed out by petitioners, a blind espousal of the requisite of presentation of the
master tapes in copyright infringement cases, as the prime determinant of probable cause, is too
exacting and impracticable a requirement to be complied with in a search warrant application which, it
must not be overlooked, is only an ancillary proceeding. Further, on realistic considerations, a strict
application of said requirement militates against the elements of secrecy and speed which underlie
covert investigative and surveillance operations in police enforcement campaigns against all forms of
criminality, considering that the master tapes of a motion picture required to be presented before the
court consists of several reels contained in circular steel casings which, because of their bulk, will
definitely draw attention, unlike diminutive objects like video tapes which can be easily concealed.
[76]
With hundreds of titles being pirated, this onerous and tedious imposition would be multiplied a
hundredfold by judicial fiat, discouraging and preventing legal recourses in foreign jurisdictions.
Given the present international awareness and furor over violations in large scale of intellectual
property rights, calling for transnational sanctions, it bears calling to mind the Courts admonition also
in La Chemise Lacoste, supra, that
x x x. Judges all over the country are well advised to remember that court processes should not be used
as instruments to, unwittingly or otherwise, aid counterfeiters and intellectual pirates, tie the hands of
the law as it seeks to protect the Filipino consuming public and frustrate executive and administrative
implementation of solemn commitments pursuant to international conventions and treaties.
III
The amendment of Section 56 of Presidential Decree No. 49 by Presidential Decree No. 1987,
which should here be publicized judicially, brought about the revision of its penalty structure and
enumerated additional acts considered violative of said decree on intellectual property, namely, (1)
directly or indirectly transferring or causing to be transferred any sound recording or motion picture or
other audio-visual works so recorded with intent to sell, lease, publicly exhibit or cause to be sold,
leased or publicly exhibited, or to use or cause to be used for profit such articles on which sounds,
motion pictures, or other audio-visual works are so transferred without the written consent of the
owner or his assignee; (2) selling, leasing, distributing, circulating, publicly exhibiting, or offering for
sale, lease, distribution, or possessing for the purpose of sale, lease, distribution, circulation or public
exhibition any of the abovementioned articles, without the written consent of the owner or his
assignee; and, (3) directly or indirectly offering or making available for a fee, rental, or any other form
of compensation any equipment, machinery, paraphernalia or any material with the knowledge that
such equipment, machinery, paraphernalia or material will be used by another to reproduce, without the
[77]

x x x. The two (2) cases have a common factual milieu; both involve alleged pirated copyrighted films
of private complainants which were found in the possession or control of the defendants. Hence, the
necessity of the presentation of the master tapes from which the pirated films were allegedly copied is
necessary in the instant case, to establish the existence of probable cause.[75]
Being based solely on an unjustifiable and improper retroactive application of the master tape
requirement generated by 20th Century Fox upon a factual situation completely different from that in
the case at bar, and without anything more, this later order clearly defies elemental fair play and is a
gross reversible error. In fact, this observation of the Court in La Chemise Lacoste, S.A. vs.
Fernandez, et al., supra, may just as easily apply to the present case:

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

A search warrant may be said to particularly describe the things to be seized when the description
therein is as specific as the circumstances will ordinarily allow (People vs. Rubio, 57 Phil. 384); or
when the description expresses a conclusion of fact not of law by which the warrant officer may
be guided in making the search and seizure (idem., dissent of Abad Santos, J.,); or when the things
described are limited to those which bear direct relation to the offense for which the warrant is being
issued (Sec. 2, Rule 126, Revised Rules of Court). x x x. If the articles desired to be seized have any
direct relation to an offense committed, the applicant must necessarily have some evidence, other than
those articles, to prove the said offense; and the articles subject of search and seizure should come in
handy merely to strengthen such evidence. x x x.
On private respondents averment that the search warrant was made applicable to more than one
specific offense on the ground that there are as many offenses of infringement as there are rights
protected and, therefore, to issue one search warrant for all the movie titles allegedly pirated violates
the rule that a search warrant must be issued only in connection with one specific offense, the lower
court said:
x x x. As the face of the search warrant itself indicates, it was issued for violation of Section 56, PD
49 as amended only. The specifications therein (in Annex A) merely refer to the titles of the
copyrighted motion pictures/films belonging to private complainants which defendants were in
control/possession for sale, lease, distribution or public exhibition in contravention of Sec. 56, PD 49
as amended.[83]
That there were several counts of the offense of copyright infringement and the search warrant
uncovered several contraband items in the form of pirated video tapes is not to be confused with the
number of offenses charged. The search warrant herein issued does not violate the one-specificoffense rule.
It is pointless for private respondents to insist on compliance with the registration and deposit
requirements under Presidential Decree No. 49 as prerequisites for invoking the courts protective
mantle in copyright infringement cases. As explained by the court below:
Defendants-movants contend that PD 49 as amended covers only producers who have complied with
the requirements of deposit and notice (in other words registration) under Sections 49 and 50
thereof. Absent such registration, as in this case, there was no right created, hence, no infringement
under PD 49 as amended. This is not well-taken.
As correctly pointed out by private complainants-oppositors, the Department of Justice has resolved
this legal question as far back as December 12, 1978 in its Opinion No. 191 of the then Secretary of
Justice Vicente Abad Santos which stated that Sections 26 and 50 do not apply to cinematographic

works and PD No. 49 had done away with the registration and deposit of cinematographic works and
that even without prior registration and deposit of a work which may be entitled to protection under
the Decree, the creator can file action for infringement of its rights. He cannot demand, however,
payment of damages arising from infringement. The same opinion stressed that the requirements of
registration and deposit are thus retained under the Decree, not as conditions for the acquisition of
copyright and other rights, but as prerequisites to a suit for damages. The statutory interpretation of
the Executive Branch being correct, is entitled (to) weight and respect.
xxx

xxx

xxx

Defendants-movants maintain that complainant and his witnesses led the Court to believe that a crime
existed when in fact there was none. This is wrong. As earlier discussed, PD 49 as amended, does not
require registration and deposit for a creator to be able to file an action for infringement of his
rights. These conditions are merely pre-requisites to an action for damages. So, as long as the
proscribed acts are shown to exist, an action for infringement may be initiated.[84]
Accordingly, the certifications[85] from the Copyright Section of the National Library, presented as
evidence by private respondents to show non-registration of some of the films of petitioners, assume
no evidentiary weight or significance, whatsoever.
Furthermore, a closer review of Presidential Decree No. 49 reveals that even with respect to
works which are required under Section 26 thereof to be registered and with copies to be deposited
with the National Library, such as books, including composite and cyclopedic works, manuscripts,
directories and gazetteers; and periodicals, including pamphlets and newspapers; lectures, sermons,
addresses, dissertations prepared for oral delivery; and letters, the failure to comply with said
requirements does not deprive the copyright owner of the right to sue for infringement. Such noncompliance merely limits the remedies available to him and subjects him to the corresponding
sanction.
The reason for this is expressed in Section 2 of the decree which prefaces its enumeration of
copyrightable works with the explicit statement that the rights granted under this Decree shall, from
the moment of creation, subsist with respect to any of the following classes of works. This means that
under the present state of the law, the copyright for a work is acquired by an intellectual creator from
the moment of creation even in the absence of registration and deposit. As has been authoritatively
clarified:
The registration and deposit of two complete copies or reproductions of the work with the National
Library within three weeks after the first public dissemination or performance of the work, as provided
for in Section 26 (P.D. No. 49, as amended), is not for the purpose of securing a copyright of the work,

but rather to avoid the penalty for non-compliance of the deposit of said two copies and in order to
recover damages in an infringement suit.[86]
One distressing observation. This case has been fought on the basis of, and its resolution long
delayed by resort to, technicalities to a virtually abusive extent by private respondents, without so
much as an attempt to adduce any credible evidence showing that they conduct their business
legitimately and fairly. The fact that private respondents could not show proof of their authority or that
there was consent from the copyright owners for them to sell, lease, distribute or circulate petitioners
copyrighted films immeasurably bolsters the lower courts initial finding of probable cause. That
private respondents are licensed by the Videogram Regulatory Board does not insulate them from
criminal and civil liability for their unlawful business practices. What is more deplorable is that the
reprehensible acts of some unscrupulous characters have stigmatized the Philippines with an unsavory
reputation as a hub for intellectual piracy in this part of the globe, formerly in the records of the
General Agreement on Tariffs and Trade and, now, of the World Trade Organization. Such acts must
not be glossed over but should be denounced and repressed lest the Philippines become an
international pariah in the global intellectual community.
WHEREFORE, the assailed judgment and resolution of respondent Court of Appeals, and
necessarily inclusive of the order of the lower court dated November 22, 1988, are hereby REVERSED
and SET ASIDE. The order of the court a quo of September 5, 1988 upholding the validity of Search
Warrant No. 87-053 is hereby REINSTATED, and said court is DIRECTED to take and expeditiously
proceed with such appropriate proceedings as may be called for in this case. Treble costs are further
assessed against private respondents.
SO ORDERED.
Narvasa, C.J., Padilla, Davide, Jr., Romero, Melo, Puno, Vitug, Kapunan, Mendoza, Francisco,
Hermosisima, Jr., Panganiban, and Torres, Jr., JJ., concur.
Bellosillo, J., no part in deliberations.

[G.R. No. 156804. March 14, 2005]


SONY MUSIC ENTERTAINMENT (PHILS.), INC. and IFPI (SOUTHEAST ASIA),
LTD., petitioners, vs. OL OF THE REGIONAL TRIAL COURT, BRANCH 90, DASMARIAS,
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,HON. JUDGE
DOLORES L. ESPANrespondents.
DECISION
GARCIA, J.:
Assailed and sought to be nullified in this petition for certiorari with application for injunctive
relief are the orders issued by the respondent judge on June 25, 2002[1] and January 6, 2003,[2] the first
quashing Search Warrant 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 pleadings filed by the parties, the Court gathers the following relevant facts:
In a criminal complaint filed with the Department of Justice (DOJ), the Videogram Regulatory
Board (VRB)[3] charged herein private respondents James Uy, David Chung, Elena Lim and another
officer of respondent Solid Laguna Corporation (SLC) with violation of Presidential Decree (PD)
No. 1987.[4] As alleged in the complaint, docketed as I.S. No. 2000-1576, the four (4) were engaged in
the replication, reproduction and distribution of videograms without license and authority from VRB.
On account of this and petitioners own complaints 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 Dasmarias, Cavite, Branch 80, presided by the respondent judge, for the

issuance of search warrants against private respondents David Chung, James Uy, John andJane
Does, doing business under the name and style Media Group inside the factory and production
facility of SLC at Solid corner Camado Sts., Laguna International Industrial Park, Bian, Laguna. [5]
During the proceedings on the application, Agent Lavin presented, as witnesses, Rodolfo
Pedralvez, a deputized 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 sought their 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 the witnesses conducted an investigation, in the course of
which unnamed persons informed them that allegedly infringing or pirated discs were being
manufactured somewhere in an industrial park in Laguna; that in the process of their operation, they
were able to enter, accompanied by another unnamed source, the premises of SLC and to see various
replicating equipment and stacks of CDs; and that they were told by their anonymous source that the
discs were being manufactured in the same premises. They also testified that private respondents were
(1) engaged in the reproduction or replication of audio and video compacts discs without the requisite
authorization from VRB, in violation of Section 6 of PD No. 1987, presenting a VRB certification to
such 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 Property Code.[6]
On the basis of the foregoing sworn statements, the respondent judge issued Search Warrant No.
219-00[7] for violation of Section 208 of R.A. No. 8293 and Search Warrant No. 220-00[8] for
violation of Section 6 of PD No. 1987.
The following day, elements of the Philippine National Police Criminal Investigation and
Detection Group, led by PO2 Reggie Comandante, enforced both warrants and brought the seized
items to a private warehouse of Carepak Moving and Storage at 1234 Villonco Road, Sucat, Paranaque
City and their custody turned over to VRB. [9] An inventory of seized items,[10] as well as a Return of
Search Warrant were later filed with the respondent court.
Meanwhile, the respondents in I.S. No. 2000-1576 belabored to prove before the DOJ
Prosecutorial Service that, since 1998 and up to the time of the search, they were licensed by VRB to
operate as replicator and duplicator of videograms.

On the stated finding that respondents can not . . . be considered an unauthorized reproducers of
videograms, being licensed to engage in reproduction in videograms under SLC in which they are
the officers and/or or officials, the DOJ, via a resolution dated January 15, 2001,[11] dismissed
VRBs complaint in I.S. No. 2000-1576.
On February 6, 2001, private respondents, armed with the DOJ resolution adverted to, moved to
quash the search warrants thus issued. [12] VRB interposed an opposition for the reason that the DOJ has
yet to resolve the motion for reconsideration it filed in I.S. No. 2000-1576.
Eventually, the DOJ denied VRBs motion for reconsideration, prompting private respondents to
move anew for the quashal of the search warrants. In its supplement to motion, private respondents
attached copies of SLCs 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 warrants or to Search Warrant No. 220-00 alone, since it was the latter that was based on the
charge of violation of PD No. 1987. [14] The respondent judge, in a modificatory order dated January 29,
2002,[15] clarified that her previous order quashed only Search Warrant No. 220-00.
Meanwhile, or on November 22, 2001, petitioners filed with the DOJ an affidavit-complaint,
docketed thereat as I.S. No. 2001-1158, charging individual private respondents with copyright
infringement in violation of Sections 172 and 208 in relation to other provisions of RA No. 8293.
[16]
Attached to the affidavit-complaint were certain documents and records seized from SLCs
premises, such as production and delivery records.
Following their receipt of DOJ-issued subpoenas to file counter-affidavits, private respondents
moved, in the search warrant case, that they be allowed to examine the seized items to enable them to
intelligently prepare their defense.[17] On January 30, 2002, respondent judge issued an order allowing
the desired examination, provided it is made under the supervision of the courts 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 NBI agent representing Agent Lavin appeared. The examination, however, did not
push through on account of petitioners counsel insistence on Agent Lavins physical presence.
[19]
Private respondents were able to make an examination on the following scheduled setting, February
15, 2002, albeit it was limited, as the minutes of the 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 entry stating - Other items/machines were not
examined because they cannot be identified as they are not properly segregated from other
items/machines in the warehouse. The parties agreed to schedule another examination on (to be
agreed by the parties) after the items/machines subject of the examination shall have been segregated
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 to delay 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 search warrant, it being inter alia alleged that the applicant and his witnesses lacked the
requisite personal knowledge to justify the valid issuance of a search warrant; that the warrant did not
sufficiently describe the items to be seized; and that the warrant was improperly enforced. [22] To this
motion to quash, petitioners interposed an opposition dated May 7, 2002 predicated on four (4)
grounds.[23] On June 26, 2002, respondent SLC filed a Manifestation 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:

Based on the report submitted, it appears that on February 15, 2002, an examination was actually
conducted. Unfortunately, the alleged seized items were commingled with and not segregated from
thousands of other items stored in the warehouse. Only one box . . . were (sic) examined in the
presence of both parties with the sheriff, such that another date was set . . . . On February 22, 2002,
during the hearing before the Department of Justice (DOJ), [petitioners counsel] Atty. Arevalo
manifested their objection to the further examination 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
Search Warrant were commingled with other items in the warehouse of Carepak resulting in the failure
to identify the machines 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 and enforcement of Search Warrants were not examined, hence, the charge
imputed against the respondents could not be established as the evidence to show such violation fails to
determine the culpability of said respondents, thus, violating their constitutional rights. [25]
Excepting, petitioners moved for reconsideration, arguing on the main that the quashal order was
erroneously based on a ground outside the purview of a motion to quash. [26] To this motion, private
respondents interposed an opposition, against which petitioners countered with a reply.
On January 6, 2003, respondent judge issued the second assailed order denying petitioners
motion for reconsideration on the strength of the following premises:
Careful scrutiny of the records of the case reveals that the application of the above-entitled case
stemmed from the application for Search Warrant alleging that the respondent was not licensed to
duplicate or replicate CDs and VCDs. The Court was misled when the applicants declared that Solid
Laguna Corporation (SLC) is not licensed to engage in replicating/duplicating CDs and VCDs, when in
truth and in fact, SLC was still a holder 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 through the 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 justify said issuance. xxx[27]

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 the respondent judges questioned orders.
Petitioners ascribe on the respondent judge the commission of grave abuse of discretion
amounting to lack or in 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 failure to examine the seized items, which ground is extraneous to the
determination of the validity of the issuance of the search warrant.
2. Public respondent, in effect, conducted a preliminary investigation that absolved the
private respondents from 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 ground immaterial to Search Warrant No. 219-00.

In Resolution of March 31, 2004, the Court gave due course to the petition and directed the
submission of memoranda 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 warrants issuance in the first
place.
It has repeatedly been said that ones house, however, humble is his castle where his person,
papers and effects 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. The protection against illegal searches and seizure has found its way into our
1935 and 1973 Constitutions and is now 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 unreasonable
searches and seizures of whatever nature and for any purpose shall be inviolable, and no search
warrant or warrant of arrest shall issue except upon probable cause to be determined personally by the
judge after examination under oath or affirmation of the complainant and the witnesses he may
produce, and particularly describing the place to be searched and the persons or things to be seized,
and in Section 4, Rule 126 of the Rules of Court, viz -

Private respondents filed their Comment on May 13, 2003, essentially reiterating their arguments
in the Motion To Quash Search Warrant (And To Release Seized Properties). Apart therefrom, they
aver that petitioners violated the rule on hierarchy of courts by filing the petition directly with this
Court. As to be expected, 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 IFPIs failure to execute the certification on non-forum shopping as required by Rule 7,
Section 5 of the Rules of Court and questioning the validity of the Special Powers of Attorney of
petitioners attorney-in-fact to file this case.

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 and the witnesses he may produce, and particularly describing the place to be searched
and the things to be seized.
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,
personally examine in form of searching questions and answers, in writing and under oath, the
complainant and any witnesses he may produce on facts personally known to them and attach to the
record their sworn statements together with any affidavits submitted.

To prevent stealthy encroachment upon, or gradual depreciation of the right to privacy, a liberal
construction in search and seizure cases is given in favor of the individual. Consistent with this
postulate, the presumption of regularity is unavailing in aid of the search process when an officer
undertakes to justify it.[31] For, the presumption juris tantum of regularity cannot, by itself, prevail
against the constitutionally protected rights of an individual because zeal in the pursuit of criminals
cannot ennoble the use of arbitrary methods that the Constitution itself detests.[32]
A core requisite before a warrant shall validly issue is the existence of a probable cause, meaning
the existence of such facts and circumstances which would lead a reasonably discreet and prudent
man to believe that an offense has been committed and that the objects sought in connection with the
offense are in the place to be searched.[33] And when the law speaks of facts, the reference is to facts,
data or information personally known to the applicant and the witnesses he may present. Absent the
element of personal knowledge by the applicant 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 in Columbia Pictures, Inc. vs.
Court of Appeals.[34] Testimony based on what is supposedly told to a witness, being patent hearsay
and, as rule, of no evidentiary weight[35] 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 the validity of search warrants based on the testimonies of the applicant and his
witnesses who conducted an investigation on the unlawful reproduction and distribution of video tapes
of copyrighted films.
We are not persuaded.
In Columbia, the issuing court probed the applicants and his witnesses personal knowledge of
the fact of infringement. It was, however, determined by this Court that during the application hearing,
therein petitioners attorney-in-fact, a witness of the applicant, stated in his affidavit and further
expounded in his deposition that he 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, in upholding the validity of the writ issued upon
complaint of Columbia Pictures, Inc., et al., stated that there is no 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
application hearing 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 never presented as witnesses. In net effect, they testified under oath as to
the truth of facts they had no personal knowledge 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 that David Chung, James Uy . . . under the name and style Media
Group were the ones replicating the infringing CDs.
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 the Complaint-Affidavit of Sony Music and IFPI that certified that
these are infringing copies, as well as the title list of 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 had videograms without VRB labels, aside from artworks and labels. John
Doe gave us a Wholesome CD while Jane Doe gave us Kenny Rogers Videoke
and Engelbert Humperdinck Videoke which the informant told us were being
reproduced in that facility. The informant further showed us the rooms where the
replicating and/or stamping 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 are unauthorized copies. I also have with me a listing of Sony Music titles
and some of the CDs I purchased are in that 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 samples were 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, Agent Lavin and his witnesses, judging from their above quoted answers, had no personal
knowledge that the discs they saw, purchased or received were, in fact, pirated or infringing on
petitioners copyrights. To us, it is not enough that the applicant and his witnesses testify that they saw
stacks of several allegedly infringing, pirated and unauthorized discs in the subject facility. The more
decisive consideration determinative of whether or not a probable cause obtains to justify the issuance
of a search warrant is that they had personal knowledge that the discs were actually infringing, pirated
or unauthorized copies.[41]
Moreover, unlike in Columbia, misrepresentation on the part of the applicant and his witnesses
had been established in this case.
This is not to say that the master tapes should have been presented in evidence during the
application hearing, as private respondents, obviously having in mind the holding in 20th Century Fox
Film Corp. vs. Court of Appeals,[42] would have this Court believe. It is true that the Court,
in 20th Century Fox, underscored the necessity, in determining the existence of probable cause in
copyright infringement cases, of presenting the master tapes of the copyrighted work. But, as
emphatically clarified in Columbia such auxiliary procedure, however, does not rule out the use of
testimonial or documentary evidence, depositions, admissions or other classes 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 any evidence
presented in lieu of the master tapes, if not readily available, in similar application proceedings must be
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 Lavins informants testimonies are not
indispensable as they would only be corroborative. [45] Like Columbia, Chua Uy is not a winning card
for petitioners, for, in the latter case, there was a reliable testimony to corroborate what the applicant
testified to, i.e., the testimony of the 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 purchased were infringing or pirated copies. It cannot be
overemphasized that not one of them testified seeing the pirated discs being manufactured at SLCs
premises. What they stated instead was that they were given copies of Kenny Rogers Videoke,
Engelbert Humperdinck Videoke and Andrew E. Wholesome CD by two anonymous 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 of a search warrant, if followed up personally by the recipient and validated, [46] as what
transpired in 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 perceived amounted to a preliminary investigation, this Court has already ruled in Solid
Triangle Sales Corp. vs. Sheriff of RTC Quezon City, Branch 93,[47] that in the determination of
probable cause, the court must necessarily resolve whether or not an offense exists to justify the
issuance or quashal of the warrant. In the exercise of this mandate - which we can allow as being
akin to conducting a preliminary investigation - abuse of discretion cannot plausibly be laid at the
doorstep of the issuing court on account of its prima facie holding that no offense has been committed,
even if consequent to such holding a warrant is recalled and the private complainant 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 the
preliminary investigation before an authorized officer on the other, are proceedings entirely
independent of each other. One is not bound by the others finding as regards the existence of a crime.
The first is to determine whether a warrant should issue or be quashed, and the second, whether an
information should be filed in court.
When the court, in determining probable cause for issuing or quashing a search warrant, finds that no
offense has been committed, it does not interfere with or encroach upon the proceedings in the
preliminary investigation. The court does not oblige the investigating officer not to file the information
for the courts ruling that no crime exists is only of purposes of issuing or quashing the warrant. This
does not, as petitioners would like to believe, constitute a usurpation of the executive function. Indeed,
to shirk from this duty would amount to an abdication of a constitutional obligation.[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
judges findings as regards 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., the mingling of the seized items with other items, is extraneous to the determination of the validity
of the issuance of the search warrant. It is to be pointed out, though, that public respondent corrected

her error when it was raised in petitioners motion for reconsideration. There can really be no serious
objection to a judge correcting or 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 for reconsideration before resort
to certiorari is required precisely to afford the public respondent an opportunity to correct any actual
or fancied error attributed to it by way of re-examination of the legal and factual aspects of the case.
[50]

Similarly, as to the matter of the respondent judges recognizing the April 11, 2002 motion to
quash search warrant[51] filed by the individual private respondents, instead of by SLC, as presumptive
owner of the seized items, such error was properly addressed when respondent SLC, represented
throughout the proceedings below by the same counsel of its co-respondents, formally manifested that
it was adopting the same motion as its own.[52]
It is apropos to point out at this juncture that petitioners have imputed on individual private
respondents criminal 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 private respondents to interpose a motion to quash. To be sure, it would be
unsporting for petitioners to prosecute individual private respondents on the basis of seized articles but
on the same breath deny the latter standing to question the legality of the seizure on the postulate that
only the party whose rights have been impaired thereby, meaning SLC, can raise that challenge. There
can be no quibbling that individual private respondents stand to be prejudiced or at least be
inconvenient by any judgment in any case based on the seized properties. In a very real sense,
therefore, they are real parties in interest who ought not to be prevented from assailing the validity of
Search Warrant 219-00, albeit they cannot plausibly asked for the release and appropriate 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 in the instant petition. I.S. No. 2000-1576 was only resolved on January 15, 2001
when the DOJ dismissed the complaint 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 search warrants. [53] The motion clearly indicates private respondents
desire for the return of the seized items, and there is nothing in the records showing that petitioners
objected to the motion on the ground that the movants had no standing to question the warrants.

forum shopping; and (b) whether or not IFPIs board of directors ratified its conditional authorization
for its attorney-in-fact to represent IFPI in this petition, need not detain us long. In our review of the
records, R.V. Domingo & Associates, whose authority to represent the petitioners in this petition
continues, had duly executed the sworn certification on non- forum shopping.

This bring Us to the second assailed order. As earlier stated, DOJ, in I.S. No. 2000-1576, found
respondent SLC to be licensed by VRB to engage in the business of replicating or duplicating
videograms.

In the same manner, this Court, having taken cognizance of this petition, need not belabor the
issue of whether or not petitioners have cavalierly breached the rule on hierarchy of courts. Suffice it to
state that, while the Court looks with disfavor on utter disregard of its rules, [54] it is within its power to
suspend its own rules or to except a particular case from its operation whenever the ends of justice so
requires, as here.

Petitioners would have the Court believe that the second questioned order was based on a ground
immaterial to 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
applicants and his witnesses 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 warrant which applicant secured on the basis of, among others, his
representation which turned out to be false.

WHEREFORE, the instant petition is hereby DISMISSED and the temporary restraining order
issued on February 19, 2003 is consequently RECALLED.
Costs against petitioners.
SO ORDERED.

As above discussed, the answers of Agent Lavin and his witnesses to the public respondents
searching questions, particularly those relating to how they knew that the compact discs they
purchased or received were illegal, unauthorized or infringing, were based on certifications and not
personal knowledge. The subject warrant, as well as Search Warrant No. 220-00, was issued
nonetheless. It may well have been that the issuing judge was, in the end, convinced to issue the
warrants by means of the erroneous VRB certification presented during the joint application hearing,
overriding whatever misgivings she may have had with the applicants and his witnesses other
answers. This Court, however, cannot engage in such speculation and sees no need to.
Summing up, the issuance of Search Warrant No. 219-00 was, at bottom, predicated on the sworn
testimonies of persons without personal knowledge of facts they were testifying on and who relied on a
false certification issued by VRB. Based as it were on hearsay and false information, its issuance was
without probable cause and, 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-

Panganiban, (Chairman), Sandoval-Gutierrez, and Corona, JJ., concur.


Carpio-Morales, J., on leave.