Tampus, Mary Grace G.

LLB-2

SUPREME COURT EN BANC

[G.R. No. 110318. August 28, 1996.]
COLUMBIA PICTURES, INC., ORION PICTURES CORPORATION, PARAMOUNT
PICTURES CORPORATION, TWENTIETH CENTURY FOX FILM CORPORATION,
UNITED ARTISTS CORPORATION, UNIVERSAL CITY STUDIOS, INC., THE WALT
DISNEY COMPANY, and WARNER BROTHERS, INC., petitioners, vs. COURT OF
APPEALS, SUNSHINE HOME VIDEO, INC. and DANILO A. PELINDARIO,
respondents.
FACTS:
Columbia Pictures and co-petitioners filed a complaint with National Bureau of
Investigation (NBI) for violation of PD 49 as amended and sought its assistance in
their anti-film piracy drive. Agents of NBI and private researchers made discreet
surveillance on various video establishments, one of which is Sunshine Home Video
Inc. owned and operated by Danilo Pelindano.
Reaping positive results from surveillance, NBI Senior Agent Reyes applied for
search warrant against Sunshine Home Video Inc. seeking the seizure of pirated
video tapes of copyrighted films which were enumerated in a list attached to the
application of search warrant as well as confiscation of tv sets, video cassettes
and/or laser disc recordings equipment and other machines and paraphernalia used
or intended to be used in unlawful exhibition, showing, reproduction, sale, lease or
disposition of videogram tapes in premises above described. Search warrant was
served to Sunshine Home Video Inc. and its representatives and in the course of the
search, NBI agents found and seized various video tapes of copyrighted motion
pictures/films owned or exclusively distributed by Columbia Pictures as well as other
machines and equipment described in the warrant.
A motion to lift the order of search warrant was filed but was denied then a
motion for reconsideration was filed which RTC granted on the ground that there
was no probable cause as the master tapes of the copyrighted films which the
pirated films were allegedly copied were not presented in the proceedings applying
the previous ruling in 20th Century Fox Film Corporation
Columbia Pictures and co-petitioners appealed the order of RTC to Court of
Appeals (CA) in granting the motion for reconsideration filed by Sunshine Home
Video, Inc. lifting the search warrant. However, it was denied. Sunshine Home Video,
Inc. additionally avers that being a foreign corporation, Columbia Pictures should
have license to be able to maintain an action in Philippine Courts. They allege that
Columbia Pictures as copyright owners or owners of exclusive rights of distribution
in Philippines of the motion pictures or films as well as appointment of Atty. Rico
Domingo as the attorney-in-fact constitutes doing business in the Philippines.
Hence, present petition.
ISSUE/S:
1. Whether or not Columbia Pictures have the personality to sue being a
foreign corporation which does not have a license but is allegedly
doing business in the Philippines
2. Whether or not the Court of Appeals erred in retroactively applying the
decision in 20th Century Fox Film Corporation v. CA leading to the

quashal of the search warrant and of the consideration of the appeal

raised by Sunshine Home Video Inc.
HELD:
1. Yes, Columbia Pictures has the personality to sue despite being a foreign
corporation but does not actually do business in the Philippines.
There is no general rule or governing principle that can be laid down as to
what constitutes doing business as each case must be judged in the light of
its own circumstances. Corporation Code itself does not 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 exercise of some of the functions
normally incident to or in progressive prosecution of purpose and subject to
its organization. This definition has however evolved into a statutory
definition and has been incorporated into different statutes:
For instance, RA 5455, Sec.1 provides:
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 Philippines for a period or periods
totalling 180 or more; participating in management,
supervision or control of any domestic business firm, entity or
corporation in the Philippines; and any other act or acts that
imply continuity of commercial dealings or arrangements, and
contemplate to that extent the performance of acts or works,
or exercise of some of the functions normally incident to, and
in-progressive prosecution of, commercial gain or of purpose
and object of the business organization.
RA 7042, Sec.3 offers the same definition with RA 5455 but additionally
provides that the phrase doing business shall not be deemed to include mere
investment as 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 representative or distributor domiciled in the
Philippines which transacts business in its own name and for its own account.
From above definitions from statutes, Columbia Pictures and copetitioners are not barred from maintaining present action because
there is no showing that under our statutory or case law, Columbia
Pictures and co-petitioners are doing, transacting, engaged in
business in Philippines as would require obtention of a license
before they can seek redress from our Courts. No evidence has been
offered for show that Columbia Pictures and co-petitioners have performed
any of the enumerated acts or any specific act indicative of an intention to
conduct or transact business in the Philippines.
Sunshine Home Video, Inc.s contention that Columbia Pictures lack legal
capacity therefore cannot be credited.

Among grounds for a motion to dismiss under Rules of Court are lack of legal
capacity to sue and that complaint states no cause of action. 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. 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. 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 plaintiff's
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,
whereas the second can be used as a ground for a motion to dismiss based
on the fact that complaint, on the face thereof, evidently states no cause of
action.
Applying 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 undeniable
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.
2. Yes, Court of Appeals erred and the 20 th Century Fox Film Corporation v. CA
decision cannot be retroactively applied in this case to justify the quashal of
the warrant.
Article 4 of the Civil Code provides that laws shall have no retroactive
effect, unless the contrary is provided. Correlatively, Article 8 of the same
Code declares that judicial decisions applying the laws or the Constitution
shall form part of the legal system of the Philippines. While it is true that
judicial decisions which apply or interpret the Constitution or laws are part of
the legal system of the Philippines, still they are not laws. Judicial decisions of
the Supreme Court assume the same authority as the statute itself.
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. That the principle of prospectivity applies not only to
originator 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 echoes the rationale for this judicial declaration, vis.:
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. . . ., 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 . . . .
It is consequently clear that 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. 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.
Moreover, 20th Century Fox Film Corporation v. CA has different basis as to the
application for the search warrant than in the present case. In the 20 th
Century case, basis of the application was merely the testimony of witnesses
based on personal knowledge with a lot of misrepresentations on the part of
the witnesses. In the present case however, probable cause was firmly
established as there was no misrepresentation as to the witnesses, there is
no denial on the part of Sunshine Home Video Inc. that the tapes confiscated
were illegitimate ones and there was in fact, extensive surveillance of the
suspected area.
Supposed pronouncement therefore of requiring master tapes be presented
shall merely serve as guidepost in determining the existence of probable
cause in copyright infringement cases where there is doubt only to the true
nexus between master tape and pirated copy. Judicial dicta should always
be construed within the factual matrix of the case.

Tampus, Mary Grace G.

LLB-2
SUPREME COURT: THIRD DIVISION
[G.R. Nos. 175769-70. January 19, 2009.]
ABS-CBN BROADCASTING CORPORATION, petitioner, vs. PHILIPPINE MULTIMEDIA SYSTEM, INC., CESAR G. REYES, FRANCIS CHUA (ANG BIAO),
MANUEL F. ABELLADA, RAUL B. DE MESA, AND ALOYSIUS M. COLAYCO,
respondents.
FACTS:
ABS CBN Corporation (ABS CBN) is licensed under Philippine laws to engage
in television and radio broadcasting. On the other hand, Philippine Media System
Incorporated (PMSI) is the operator of Dream Broadcasting System delivering directto-home television via satellite to its subscribers all over Philippines. PMSI was
granted a legislative franchise under RA 8360 and was given provisional authority
by National Telecommunications Communication (NTC) to install, operate, and
maintain a nationwide direct-to-home (DTH) satellite service. When it commenced
operations it offered as part of its program line-up several local channels including
ABS CBN Channels 2 and 23.
However, ABS CBN demanded for PMSI to cease and desist from
rebroadcasting Channels 2 and 23. PMSI countered that there is no reason to cease
and desist in rebroadcasting the said channels as they were granted authority by
NTC and its obligations under NTC Memorandum Circular 4, Sec. 2 of which requires
cable tv system operators operating in a community of Grade A or B contours to
carry television signals of authorized television broadcasts. Negotiations on attempt
to reach settlement ensued but allegedly failed. ABS CBN filed a complaint with

Intellectual Property Office (IPO) for Violation of Laws involving Property Rights
with prayer for issuance of TRO and/or Writ of Preliminary Injunction alleging that
PMSIs unauthorized rebroadcasting of Channel 2 and 23 infringed on its
broadcasting rights and copyright. Complaint for TRO was granted and PMSI
suspended its retransmission of Channel 2 and 23. PMSI filed an appeal with Court
of Appeals and filed with IPO a manifestation reiterating that such retransmission is
subject to the must carry rule under Memorandum Circular 4. IPO rendered a
decision finding PMSI infringed ABS CBNs broadcasting rights and copyright and
ordering PMSI to permanently cease and desist in rebroadcasting Channel 2 and 23.
PMSI filed an appeal with Director General of IPO and with Court of Appeals a
motion to withdraw petition. Director General of IPO however rendered a decision in
favor of PMSI thus prompting ABSCBN to file a petition for review with prayer for
issuance of temporary restraining order and writ of preliminary injunction with Court
of Appeals. Court of Appeals accordingly issued the temporary restraining order.
Thereafter, ABS CBN filed petition for contempt against PMSI for continuing to
rebroadcast Channels 2 and 23 despite the restraining order.
Court of Appeals then rendered a decision sustaining finding s of Director
General of IPO and dismissed both petitions by ABSCBN. ABSCBNs motion for
reconsideration was denied, hence present petition.
ISSUE:
Whether or not PMSI infringed on ABSCBNs broadcasting rights and copyright
HELD:
No, PMSI did not infringe upon ABSCBNs copyright and broadcasting rights.
Section 202.7, of the Intellectual Property Code defines broadcasting as:
transmission by wireless means for public reception of sounds or of images
or of representations thereof; such transmission by satellite is also
'broadcasting' where the means for decrypting are provided to the public by
the broadcasting organization or with its consent".
On the other hand, rebroadcasting as defined in Article 3 (g) of the International
Convention for the Protection of Performers, Producers of Phonograms and
Broadcasting Organizations, otherwise known as the 1961 Rome Convention, of
which the Republic of the Philippines is a signatory, is "the simultaneous
broadcasting by one broadcasting organization of the broadcast of another
broadcasting organization". Accordingly, it is of the view that transmission under
Section 202.7 of Intellectual Property Code presupposes that origin of signals is
broadcaster. Hence, a program that is broadcasted is attributed to broadcaster and
a program that is rebroadcasted is attributed to rebroadcaster.
In this case, PMSI is not the origin nor does it claim to be of the origin of the
programs broadcasted by ABSCBN. PMSI did not make and transmit on its own but
merely carried existing signals of ABSCBN, When PMSIs subscribers view ABSCBNs
programs in Channels 2 and 23 they know the origin is ABSCBN.
It must also be emphasized that the law on copyright is not absolute.
Section 184, Intellectual Property Code provides: Following acts shall constitute
infringement of copyright:

(b) The use, made of work or under direction or control of Government, by

National Library or by educational, scientific, or professional institutions
where such use in the public interest and is compatible with fair use.
Carriage of ABSCBNs signals by virtue of must-carry rule in Memorandum Circular 4
is under direction and control of Government through NTC which is vested with
exclusive jurisdiction to supervise, regulate, and control telecommunications and
broadcast services/facilities in the Philippines. The imposition of must-carry rule is
within NTCs power to promulgate rules and regulations as public safety and interest
may require, to encourage larger and more effective use of communications, radio
and tv broadcasting facilities and maintain effective competition among private
entities in those activities whenever Commission finds it reasonably feasible.
As correctly observed by Director-General of the IPO:
Accordingly, the Must-Carry Rule under NTC Circular 4 falls under foregoing
category of limitations on copyrights. The Office agrees with PMSI that MustCarry Rule is in consonance with EO 436:
The Filipino people must be given wider access to more sources of news,
information, education, sports event and entertainment programs other than
those provided for by mass media and afforded television programs to attain
a well-informed, well-versed and culturally refined citizenry and enhance their
socio-economic growth:
WHEREAS, cable television (CATV) systems could support or supplement the
services provided by television broadcast facilities, local and overseas, as the
national information highway to the countryside.
Court of Appeals likewise correctly observed that the very intent of NTC Circular will
prevent a situation whereby station owners and a few networks would have
unfettered power to make time available only to highest bidders, to communicate
only their own views on public issues and people and permit on the air only those
with whom they agreed which is contrary to the State policy that franchise grantees
and other TV station owners shall provide at all times sound and balanced
programming and assist in the functions of public into and education. As the
essence of intellectual property protection is to make society benefit from
the creation of men and women of talent genius. This is the essence of
intellectual property laws, and it explains why certain products of ingenuity that are
concealed from the public are outside the pale of protection afforded by the law. It
also explains why the author or the creator enjoys no more rights than are
consistent with public welfare.

Tampus, Mary Grace G.

LLB-2
SUPREME COURT: FIRST DIVISION
[G.R. No. 131522. July 19, 1999.]
PACITA I. HABANA, ALICIA L. CINCO and JOVITA N. FERNANDO, petitioners,
vs. FELICIDAD C. ROBLES and GOODWILL TRADING CO., INC., respondents.

FACTS:
Pacita Habana and co-petitioners are authors and copyright owners of
certificates of copyright registration covering their published works, entitled
COLLEGE ENGLISH FOR TODAY (CET) Books 1 and 2, and WORKBOOK FOR COLLEGE
FRESHMEN ENGLISH 1. On the other hand, Felicidad Robles and Goodwill Trading Co.
and Inc. are author/publisher as well and distributor/seller of another published work
entitled DEVELOPING ENGLISH PROFICIENCY (DEP) Books 1 and 2 which book was as
well covered by copyrights.

Habana and co-petitioners, in the course of revising their published works,

chanced upon DEP, the book of Robles. 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 two books (CET and DEP), they found that several pages of DEP are
similar, if not all together a copy of CET, which is a case of plagiarism and copyright
infringement. Habana and co-petitioners then made demands against Robles and
Goodwill Trading Co. to cease and desist from further selling and distributing to
general public infringed copies of DEP. Robles however, ignored the demands.
Hence, Habana filed with Regional Trial Court (RTC) a complaint for
infringement and/or unfair competition with damages against Robles and Goodwill
Trading. They alleged as well in the complaint that the plagiarism, incorporation and
reproduction of particular portions of CET book in book DEP without authority and
consent of Habana and co-petitioners and misrepresentations of Robles that those
were her original work and concept adversely affected and substantially diminished
sale of CET and caused them actual damages by way of unrealized income.
Robles then filed a motion for a bill of particulars which the RTC approved.
Habana and co-petitioners complied with desired particularization and furnished
specific portions, inclusive of pages and lines, of published and copyrighted books
which were transposed, lifted, copied, and plagiarized and/or otherwise found their
way into Robles book. Of course, Robles denied the allegations of plagiarism and
copying. She stressed that DEP was a product of her independent researches,
studies and experiences, and was not a copy of any existing valid copyrighted book,
that DEP followed the scope and sequence or syllabus which are common to all
English grammar writers so any similarity between DEP and CET was due to the
orientation of authors to both works and standards and syllabus and that the
similarities may be due to authors exercise of the right to fair use of copyrighted
materials, as guides. Robles as well alleged that the allegations against her were
imbued with bad faith and malice as Habana was professionally jealous and that the
book DEP replaced CET as the official textbook of the graduate studies department
of Far Eastern University.
RTC dismissed the petition of Habana. Habana then filed a notice of appeal
arguing that RTC completely disregarded their evidence. However, Court of Appeals
upheld the judgment of RTC and ruled in favor of Robles and Goodwill Trading.
Habana and co-petitioners filed for a motion for reconsideration but was denied.
Hence, present petition.

ISSUE:
Whether or not, despite the apparent textual, thematic and sequential similarity
between DEP and CET, Robles and Goodwill Trading Co. committed copyright
infringement
HELD:
Yes, Robles committed copyright infringement.
It is to be noted first that when the complaint of copyright infringement was filed,
the ruling law was PD 49. At present, all laws dealing with intellectual property
rights are now governed under RA 8293. Notwithstanding the change in law, the
same principles are reiterated.

Now to tackle on the issue, Section 177 of RA 8293 provides for the copy or
economic rights of an owner of a copyright:
-Copyright or economic rights shall consist of the exclusive right to carry out,
authorize or prevent the following acts:
177.1 Reproduction of the work or substantial portion of the work;
The law also provides for the limitations on copyright which Section 184.1 of RA
8293 provides:
-The following acts shall not constitute an infringement of rights:
(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;
(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;
In abovementioned provisions, work has reference to literary and artistic creations
and this includes books and other literary, scholarly and scientific works. From the
evidences presented, several pages of book DEP are similar if not identical to CET.
On page 404 of Habanas Book of CET, she wrote:
Items in dates and addresses:
He died on Monday, April 15, 1975
Miss Reyes lives in 214 Taft Avenue, Manila
On page 73 of Robles book DEP, they wrote:
He died on Monday, April 25, 1975
Miss Reyes address is 214 Taft Avenue, Manila
On page 250 of CET, there is this example on parallelism or repetition of sentence
structures:
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
On page 100 of book DEP, also in the topic of parallel structure and repetition, the
same example is found in toto. The only difference is that Habana acknowledged
the author Edmund Burke, but Robles did not. In different other pages as well, the
treatment and manner of presentation of topics of DEP are similar if not a rehash of
that contained in CET.

Supreme Court believes that Robles act of lifting from the book of Habana
substantial portions of discussions and examples, and her failure to acknowledge
the same in her book is an infringement of Habanas copyrights.
Supreme Court as well provided as to when is there a substantial reproduction of a
book. Substantial reproduction 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. 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.
Robles claim that the copied portion of CET are also found in foreign books and
other grammar books, and that the similarity between her style and that of Habana
cannot be avoided since they come from same background and orientation may be
true. However, Sec.184 of RA 8293 provides:
Limitations on Copyright. Notwithstanding the provisions of Chapter V, the
following shall not constitute infringement of copyright:
(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.
In cases of infringement, copying alone is not what is prohibited. The copying must
produce an "injurious effect". Here, the injury consists in that respondent Robles
lifted from petitioners' book materials that were the result of the latter's research
work and compilation and misrepresented them as her own. She circulated the book
DEP for commercial use and did not acknowledge petitioners as her source.
Hence, there is a clear case of appropriation of copyrighted work for her benefit that
Robles committed. Habana's work as author is the product of her 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).
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.

Tampus, Mary Grace G.

LLB-2
SUPREME COURT: FIRST DIVISION
[G.R. No. 147043. June 21, 2005.]
NBI MICROSOFT CORPORATION & LOTUS DEVELOPMENT CORP.,
petitioners, vs. JUDY C. HWANG, BENITO KEH & YVONNE K. CHUA/BELTRON
COMPUTER PHILIPPINES INC., JONATHAN K. CHUA, EMILY K. CHUA, BENITO
T. SANCHEZ, NANCY I. VELASCO, ALFONSO CHUA, ALBERTO CHUA, SOPHIA
ONG, DEANNA CHUA/TAIWAN MACHINERY DISPLAY & TRADE CENTER, INC.,
and THE SECRETARY OF JUSTICE, respondents.
FACTS:
Microsoft Corporation (Microsoft) and Beltron entered into a Licensing
Agreement where Microsoft authorized Beltron, for a fee, to:
-reproduce and install no more than 1 copy of Microsoft software on each
Customer System hard disk or Read-Only-Memory;
-distribute directly or indirectly and license copies of Product in object code
form to end users
The agreement also authorized Microsoft and Beltron to terminate the contract if
the other fails to comply with any of the Agreements provisions.
Microsoft terminated the Agreement for Beltrons non-payment of royalties.
Microsoft later learned that Beltron were illegally copying and selling Microsoft
software. Consequently, Microsoft through its Philippine agent hired the services of
Pinkerton Consulting Services (PCS), a private investigative firm. Microsoft also
sought the assistance of NBI.
PCS employed Sacriz and NBI agent Samiano posed as representatives of a
computer shop, bought computer hardware (CPU) and software in Read-onlymemory from Beltron. The CPU contained pre-installed Microsoft Windows 3.1 and
MS-DOS Software. The 12 CD-ROMs encased in plastic containers with Microsoft
packaging, also contained Microsoft software. Sacriz and Samiano were not given
the Microsoft end-user license agreements, users manuals, registration cards or
certificates of authenticity for articles they purchased.
A search warrant was subsequently issued against Beltron in RTC which RTC granted
issuing two search warrants. Using the search warrants, NBI searched the premises
of Beltron and seized several computer-related hardware, software, accessories, and
paraphernalia. Among these were 2,831 pieces of CD-ROM containing software.
Based on the articles obtained, Microsoft filed a complaint against Beltron before
Department of Justice (DOJ) with copyright infringement under Section 5(a) in
relation to Section 29 of PD 49 and with unfair competition.
Beltron however denied the allegations and countered that Microsofts real intention
in filing the complaint was to pressure them to pay the unpaid royalties thus
claiming that Microsoft should have filed a collection suit instead of criminal
complaint, that co-respondent of Beltron bought the confiscated 59 boxes of MSDOS CDs from a Microsoft dealer in Singapore, that Beltron are not the source of
Microsoft Windows 3.1 software pre-installed in CPU bought by the agents but only
of the MS-DOS software.

DOJ State Prosecutor Ong then recommended for the dismissal of Microsofts
complaint for lack of merit and insufficiency of evidence which Microsoft appealed
but was dismissed. Microsoft sought reconsideration but was denied. Hence, this
present petition.
ISSUE:
Whether the DOJ acted with grave abuse of discretion in not finding probable cause
to charge Beltron and co-respondents with copyright infringement and unfair
competition
HELD:
Yes, DOJ acted with grave abuse of discretion in not finding probable cause to
charge Beltron with copyright infringement and unfair competition.
Generally, Supreme Court is loath to interfere in prosecutors discretion in
determining probable cause unless discretion is shown to have abused. This case
however, falls under the exception.
As held in Pilapil v. Sandiganbayan:
The term [probable cause] does not mean "actual and positive cause" nor
does it import absolute certainty. It is merely based on opinion and
reasonable belief. Thus, a finding of probable cause does not require
an inquiry into whether there is sufficient evidence to procure a
conviction. It is enough that it is believed that the act or omission
complained of constitutes the offense charged. Precisely, there is a trial for
the reception of evidence of the prosecution in support of the charge.
Now, onto the issue of copyright infringement.
Section 5 of PD 49 enumerated the rights vested exclusively on the copyright
owner. Contrary to the DOJs ruling, the gravamen of copyright infringement is not
merely the unauthorized manufacturing of intellectual works but rather the
unauthorized performance of any acts covered under such Section. Hence, any
person who performs any of the acts under Section 5 without obtaining copyright
owners prior consent renders himself civilly and criminally liable for copyright
infringement. As held in Columbia Pictures, Inc. v. Court of Appeals:
Infringement of a copyright is a trespass on a private domain owned and
occupied by the owner of the copyright, and, therefore, protected by law, and
infringement of copyright, or piracy, which is a synonymous term in this
connection, consists in the doing by any person, without the consent of the
owner of the copyright, of anything the sole right to do which is conferred by
statute on the owner of the copyright. (Emphasis supplied)
Significantly, under Section 5(A), a copyright owner is vested with the exclusive
right to "copy, distribute, multiply, [and] sell" his intellectual works.
Hence, being the copyright and trademark owner of Microsoft software, Microsoft
acted well within its rights in filing the complaint before DOJ on the incriminating
evidence obtained from Beltron. Therefore, it was highly irregular for the DOJ to
hold that Microsoft sought the issuance of the search warrants and the filing of the
complaint merely to pressure Beltron to pay its overdue royalties to Microsoft.

There is no basis for the DOJ to rule that Microsoft must await a prior resolution
from the proper court of whether or not the Agreement is still binding between the
parties. Beltron has not filed any suit to question Microsofts termination of the
Agreement. Microsoft can neither be expected nor compelled to wait until Beltron
decides to sue before Microsoft can seek remedies for violation of its intellectual
property rights.
Furthermore, the articles seized from Beltron are counterfeit per se because
Microsoft does not (and could not have authorized anyone to) produce such CD
installers. The copying of the genuine Microsoft software to produce these fake CDs
and their distribution are illegal even if the copier or distributor is a Microsoft
licensee. As far as these installer CD-ROMs are concerned, the Agreement (and the
alleged question on the validity of its termination) is immaterial to the
determination of Beltrons liability for copyright infringement and unfair
competition. Beltrons defense that the box of CD installers found in their
possession was only left to them for safekeeping is not tenable.
The counterfeit "non-installer" CD-ROMs Sacriz and Samiano bought from
respondents also suffice to support a finding of probable cause to indict respondents
for unfair competition under Article 189(1) of the Revised Penal Code for passing off
Microsoft products. From the pictures of the CD-ROMs' packaging, one cannot
distinguish them from the packaging of CD-ROMs containing genuine Microsoft
software. Such replication, coupled with the similarity of content of these fake CDROMs and the CD-ROMs with genuine Microsoft software, implies intent to deceive.

Tampus, Mary Grace G.

LLB-2
SUPREME COURT: FIRST DIVISON
[G.R. No. 165306. September 20, 2005.]
MANLY SPORTSWEAR MANUFACTURING, INC., petitioner, vs. DADODETTE
ENTERPRISES AND/OR HERMES SPORTS CENTER, respondents.

FACTS:
Special Investigator Salcedo of National Bureau of Investigation (NBI) applied
for a search warrant before Regional Trial Court (RTC) based on the information that
Dadodette Enterprises and/or Hermes Sports Center (DADODETTE) were in
possession of copyrighted goods belonging to Manly Sportswear Mfg. Inc. (MANLY).
After finding reasonable grounds that violation of Sections 172 and 217 of RA
8293 has been committed Judge Estrada of RTC issued such warrant.
DADODETTE thereafter moved to quash and annul the search warrant
contending that the same is invalid since the requisites for its issuance have not
been complied with. They insisted that the sporting goods manufactured by and/or
registered in the name of MANLY are ordinary and common hence, not among the
classes of work protected under Section 172 of RA 8293. RTC granted such motion
and declared the Search warrant null and void based on its findings that
copyrighted products of MANLY are allegedly not original creations and were being
manufactured and distributed by different companies locally and abroad under
various brands, therefore unqualified for protection under Section 172 of RA 8293.
MANLY filed a motion for reconsideration which RTC denied hence, it filed a
petition for certiorari before Court of Appeals (CA) which was again denied for lack
of merit. CA found that the trial court correctly granted the motion to quash and
that its ruling did not preempt the findings of Intellectual Property court as it did not
resolve with finality the status or character of the seized items.
After denial of their motion for reconsideration, MANLY filed the present
petition for review on certiorari.
ISSUE:
Whether or not Court of Appeals erred in finding that the Trial Court did not gravely
abused its discretion in declaring the hearing for the quashal of search warrant that
the copyrighted products of MANLY are not original creations subject to the
protection of RA 8293
HELD:

No, the Court of Appeals did not err in not finding the Trial Court of abusing
discretion for the quashal of the warrant.
The power to issue search warrants is exclusively vested with the trial judges in the
exercise of their judicial function. As such, the power to quash the same also rests
solely with them. After the judge has issued a warrant, he is not precluded to
subsequently quash the same, if he finds upon reevaluation of the evidence that no
probable cause exists.
Ruling in Solid Triangle Sales Corp. v. Sherif provides:
Inherent in the courts' power to issue search warrants is the power to quash
warrants already issued. In this connection, this Court has ruled that the
motion to quash should be filed in the court that issued the warrant unless a
criminal case has already been instituted in another court, in which case, the
motion should be filed with the latter. The ruling has since been incorporated
in Rule 126 of the Revised Rules of Criminal Procedure.
In the instant case, we find that the trial court did not abuse its discretion when it
entertained the motion to quash considering that no criminal action has yet been
instituted when it was filed. The trial court also properly quashed the search warrant
it earlier issued after finding upon reevaluation of the evidence that no probable
cause exists to justify its issuance in the first place. As ruled by the trial court, the
copyrighted products do not appear to be original creations of MANLY and are not
among the classes of work enumerated under Section 172 of RA 8293. The trial
court, thus, may not be faulted for overturning its initial assessment that there was
probable cause in view of its inherent power to issue search warrants and to quash
the same. No objection may be validly posed to an order quashing a warrant already
issued as the court must be provided with the opportunity to correct itself of an
error unwittingly committed, or, with like effect, to allow the aggrieved party the
chance to convince the court that its ruling is erroneous.
Moreover, the trial court was acting within bounds when it ruled, in an ancillary
proceeding, that the copyrighted products of petitioner are not original creations.
This is because in the determination of the existence of probable cause for the
issuance or quashal of a warrant, it is inevitable that the court may touch on issues
properly threshed out in a regular proceeding. In so doing, it does not usurp the
power of, much less preclude, the court from making a final judicial determination of
the issues in a full-blown trial.
Further, no copyright accrues in favor of MANLY despite issuance of
certificates of registration and deposit pursuant to Section 2, Rule 7 of
Copyrights Safeguards and Regulations which states:
Sec. 2 Effects of Registration and Deposit of Work. The registration and
deposit of the work is purely for recording the date of registration and deposit
of the work and shall not be conclusive as to copyright ownership or the term
of the copyrights or the rights of the copyright owner, including neighboring
rights.
At most, the certificates of registration and deposit issued by the National Library
and the Supreme Court Library serve merely as a notice of recording and
registration of the work but do not confer any right or title upon the registered
copyright owner or automatically put his work under the protective mantle of the
copyright law. It is not a conclusive proof of copyright ownership. As it is, non-

registration and deposit of the work within the prescribed period only makes the
copyright owner liable to pay a fine.