G.R. No. 108946 January 28, 1999 1.

1. The public respondent gravely abused his discretion amounting to lack of jurisdiction — when
FRANCISCO G. JOAQUIN, JR., and BJ PRODUCTIONS, INC., petitioners,
vs.
HONORABLE FRANKLIN DRILON, GABRIEL ZOSA, WILLIAM ESPOSO, FELIPE MEDINA,
JR., and CASEY FRANCISCO, respondents.
MENDOZA, J.:
he invoked non-presentation of the master tape as being fatal to the existence of probable cause
to prove infringement, despite the fact that private respondents never raised the same as a
controverted issue.
2. The public respondent gravely abused his discretion amounting to lack of jurisdiction when he
arrogated unto himself the determination of what is copyrightable — an issue which is exclusively
within the jurisdiction of the regional trial court to assess in a proper proceeding.

Both public and private respondents maintain that petitioners failed to establish the existence of
This is a petition for certiorari. Petitioners seek to annul the resolution of the Department of
probable cause due to their failure to present the copyrighted master videotape of Rhoda and Me.
Justice, dated August 12, 1992, in Criminal Case No. Q-92-27854, entitled "Gabriel Zosa, et al. v.
They contend that petitioner BJPI's copyright covers only a specific episode of Rhoda and
City Prosecutor of Quezon City and Francisco Joaquin, Jr.," and its resolution, dated December 3,
Me and that the formats or concepts of dating game shows are not covered by copyright
1992, denying petitioner Joaquin's motion for reconsideration.
protection under P.D. No. 49.

Petitioner BJ Productions, Inc. (BJPI) is the holder/grantee of Certificate of Copyright No. M922,
Non-Assignment of Error.
dated January 28, 1971, of Rhoda and Me, a dating game show aired from 1970 to 1977.

Petitioners claim that their failure to submit the copyrighted master videotape of the television
On June 28, 1973, petitioner BJPI submitted to the National Library an addendum to its certificate
show Rhoda and Me was not raised in issue by private respondents during the preliminary
of copyright specifying the show's format and style of presentation.
investigation and, therefore, it was error for the Secretary of Justice to reverse the investigating
prosecutor's finding of probable cause on this ground.
On July 14, 1991, while watching television, petitioner Francisco Joaquin, Jr., president of BJPI,
saw on RPN Channel 9 an episode of It's a Date, which was produced by IXL Productions, Inc.
A preliminary investigation falls under the authority of the state prosecutor who is given by law the
(IXL). On July 18, 1991, he wrote a letter to private respondent Gabriel M. Zosa, president and
power to direct and control criminal
general manager of IXL, informing Zosa that BJPI had a copyright to Rhoda and Me and
actions. 2 He is, however, subject to the control of the Secretary of Justice. Thus, Rule 112, §4 of
demanding that IXL discontinue airing It's a Date.
the Revised Rules of Criminal Procedure, provides:

In a letter, dated July 19, 1991, private respondent Zosa apologized to petitioner Joaquin and
Sec. 4. Duty of investigating fiscal. — If the investigating fiscal finds cause to hold the respondent
requested a meeting to discuss a possible settlement. IXL, however, continued airing It's a Date,
for trial, he shall prepare the resolution and corresponding information. He shall certify under oath
prompting petitioner Joaquin to send a second letter on July 25, 1991 in which he reiterated his
that he, or as shown by the record, an authorized officer, has personally examined the
demand and warned that, if IXL did not comply, he would endorse the matter to his attorneys for
complainant and his witnesses, that there is reasonable ground to believe that a crime has been
proper legal action.
committed and that the accused is probably guilty thereof, that the accused was informed of the
complaint and of the evidence submitted against him and that he was given an opportunity to
Meanwhile, private respondent Zosa sought to register IXL's copyright to the first episode of It's a submit controverting evidence. Otherwise, he shall recommend dismissal of the complaint.
Date for which it was issued by the National Library a certificate of copyright August 14, 1991.
In either case, he shall forward the records of the case to the provincial or city fiscal or chief state
Upon complaint of petitioners, an information for violation of P.D. No. 49 was filed against private prosecutor within five (5) days from his resolution. The latter shall take appropriate action thereon
respondent Zosa together with certain officers of RPN Channel 9, namely, William Esposo, ten (10) days from receipt thereof, immediately informing the parties of said action.
Felipe Medina, and Casey Francisco, in the Regional Trial Court of Quezon City where it was
docketed as Criminal Case No. 92-27854 and assigned to Branch 104 thereof. However, private
No complaint or information may be filed or dismissed by an investigating fiscal without the prior
respondent Zosa sought a review of the resolution of the Assistant City Prosecutor before the
written authority or approval of the provincial or city fiscal or chief state prosecutor.
Department of Justice.

On August 12, 1992, respondent Secretary of Justice Franklin M. Drilon reversed the Assistant
City Prosecutor's findings and directed him to move for the dismissal of the case against private
respondents. 1
Petitioner Joaquin filed a motion for reconsideration, but his motion denied by respondent
Secretary of Justice on December 3, 1992. Hence, this petition. Petitioners contend that:
Where the investigating assistant fiscal recommends the dismissal of the case but his findings
are reversed by the provincial or city fiscal or chief state prosecutor on the ground that a probable
cause exists, the latter may, by himself, file the corresponding information against the respondent
or direct any other assistant fiscal or state prosecutor to do so, without conducting another
preliminary investigation.
If upon petition by a proper party, the Secretary of Justice reverses the resolution of the provincial
or city fiscal or chief state prosecutor, he shall direct the fiscal concerned to file the corresponding
information without conducting another preliminary investigation or to dismiss or move for
dismissal of the complaint or information.
In reviewing resolutions of prosecutors, the Secretary of Justice is not precluded from
considering errors, although unassigned, for the purpose of determining whether there is
probable cause for filing cases in court. He must make his own finding, of probable cause and is
not confined to the issues raised by the parties during preliminary investigation. Moreover, his
findings are not subject to review unless shown to have been made with grave abuse.
Opinion of the Secretary of Justice
Petitioners contend, however, that the determination of the question whether the format or
mechanics of a show is entitled to copyright protection is for the court, and not the Secretary of
Justice, to make. They assail the following portion of the resolution of the respondent Secretary
of Justice:
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.

[T]he essence of copyright infringement is the copying, in whole or in part, of copyrightable
materials as defined and enumerated in Section 2 of PD. No. 49. Apart from the manner in which
it is actually expressed, however, the idea of a dating game show is, in the opinion of this Office,
a non-copyrightable material. Ideas, concepts, formats, or schemes in their abstract form clearly
do not fall within the class of works or materials susceptible of copyright registration as provided
in PD. No. 49. 3(Emphasis added.)
It is indeed true that the question whether the format or mechanics of petitioners television show
is entitled to copyright protection is a legal question for the court to make. This does not, however,
preclude respondent Secretary of Justice from making a preliminary determination of this
question in resolving whether there is probable cause for filing the case in court. In doing so in
this case, he did not commit any grave error.
Presentation of Master Tape
This ruling was qualified in the later case of Columbia Pictures, Inc. v. Court of Appeals 7 in which
it was held:
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 printed 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. . . 8
In the case at bar during the preliminary investigation, petitioners and private respondents
presented written descriptions of the formats of their respective televisions shows, on the basis of
which the investigating prosecutor ruled:

As may [be] gleaned from the evidence on record, the substance of the television productions
Petitioners claim that respondent Secretary of Justice gravely abused his discretion in ruling that
complainant's "RHODA AND ME" and Zosa's "IT'S A DATE" is that two matches are made
the master videotape should have been predented in order to determine whether there was
between a male and a female, both single, and the two couples are treated to a night or two of
probable cause for copyright infringement. They contend that 20th Century Fox Film Corporation
v. Court of Appeals, 4 on which respondent Secretary of Justice relied in reversing the resolution dining and/or dancing at the expense of the show. The major concepts of both shows is the same.
Any difference appear mere variations of the major concepts.
of the investigating prosecutor, is inapplicable to the case at bar because in the present case, the
parties presented sufficient evidence which clearly establish "linkage between the copyright show
"Rhoda and Me" and the infringing TV show "It's a Date." 5 That there is an infringement on the copyright of the show "RHODA AND ME" both in content and
in the execution of the video presentation are established because respondent's "IT'S A DATE" is
practically an exact copy of complainant's "RHODA AND ME" because of substantial similarities
The case of 20th Century Fox Film Corporation involved raids conducted on various videotape
as follows, to wit:
outlets allegedlly selling or renting out "pirated" videotapes. The trial court found that the
affidavits of NBI agents, given in support of the application for the search warrant, were
insufficient without the master tape. Accordingly, the trial court lifted the search warrants it had
previously issued against the defendants. On petition for review, this Court sustained the action
of the trial court and ruled: 6

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
 (H) Reproductions of a work of art;
RHODA AND ME "IT'S A DATE"
Set 1 Set 1
(I) Original ornamental designs or models for articles of manufacture, whether or not patentable,
a. Unmarried participant of one gender (searcher) appears on one side of a. same and other works of applied art;
a divider, while three (3) unmarried participants of the other gender are
on the other side of the divider. This arrangement is done to ensure that (J) Maps, plans, sketches, and charts;
the searcher does not see the searchees.
b. Searcher asks a question to be answered by each of the searchees. b. same
(K) Drawings or plastic works of a scientific or technical character;
The purpose is to determine who among the searchees is the most
compatible with the searcher.
(I) Photographic works and works produced by a process analogous to photography lantern
c. Searcher speculates on the match to the searchee. c. same
slides;
d. Selection is made by the use of compute (sic) methods, or by the way d. Selection is based
questions are answered, or similar methods. on the answer of the
(M) Cinematographic works and works produced by a process analogous to cinematography or
Searchees.
any process for making audio-visual recordings;
Set 2 Set 2
Same as above with the genders of the searcher and searchees same (N) Computer programs;
interchanged. 9
(O) Prints, pictorial illustrations advertising copies, labels tags, and box wraps;

Petitioners assert that the format of Rhoda and Me is a product of ingenuity and skill and is thus (P) Dramatizations, translations, adaptations, abridgements, arrangements and other alterations
entitled to copyright protection. It is their position that the presentation of a point-by-point of literary, musical or artistic works or of works of the Philippine government as herein defined,
comparison of the formats of the two shows clearly demonstrates the nexus between the shows which shall be protected as provided in Section 8 of this Decree.
and hence establishes the existence of probable cause for copyright infringement. Such being
the case, they did not have to produce the master tape.
(Q) Collections of literary, scholarly, or artistic works or of works referred to in Section 9 of this
10
Decree which by reason of the selection and arrangement of their contents constitute intellectual
To begin with the format of a show is not copyrightable. Section 2 of P.D. No. 49, otherwise creations, the same to be protected as such in accordance with Section 8 of this Decree.
known as the DECREE ON INTELLECTUAL PROPERTY, enumerates the classes of work
entitled to copyright protection, to wit:
(R) Other literary, scholarly, scientific and artistic works.

Sec. 2. The rights granted by this Decree shall, from the moment of creation, subsist with respect
to any of the following classes of works:
(A) Books, including composite and cyclopedic works, manuscripts, directories, and gazetteers:
This provision is substantially the same as §172 of the INTELLECTUAL PROPERTY CODE OF
PHILIPPINES (R.A. No. 8293). 11 The format or mechanics of a television show is not included in
the list of protected works in §2 of P.D. No. 49. For this reason, the protection afforded by the law
cannot be extended to cover them.

(B) Periodicals, including pamphlets and newspapers;
(C) Lectures, sermons, addresses, dissertations prepared for oral delivery;
(D) Letters;
Copyright, in the strict sense of the term, is purely a statutory right. It is a new or independent
right granted by the statute, and not simply a pre-existing right regulated by the statute. Being a
statutory grant, the rights are only such as the statute confers, and may be obtained and enjoyed
only with respect to the subjects and by the persons and on terms and conditions specified in the
statute. 12

Since . . . copyright in published works is purely a statutory creation, a copyright may be obtained
(E) Dramatic or dramatico-musical compositions; choreographic works and entertainments in
only for a work falling within the statutory enumeration or description. 13
dumb shows, the acting form of which is fixed in writing or otherwise;

Regardless of the historical viewpoint, it is authoritatively settled in the United States that there is
(F) Musical compositions, with or without words;
no copyright except that which is both created and secured by act of Congress . . . . . 14

(G) Works of drawing, painting, architecture, sculpture, engraving, lithography, and other works
P.D. No. 49, §2, in enumerating what are subject to copyright, refers to finished works and not to
of art; models or designs for works of art;
concepts. The copyright does not extend to an idea, procedure, process, system, method of
operation, concept, principle, or discovery, regardless of the form in which it is described,
explained, illustrated, or embodied in such work. 15 Thus, the new INTELLECTUAL PROPERTY
CODE OF THE PHILIPPINES provides:

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

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

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

process for making audio-visual recordings;

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

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

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

WHEREFORE, the petition is hereby DISMISSED

SO ORDERED.1âwphi1.nêt
 G.R. No. 175769-70 January 19, 2009 the adverse effect of the rebroadcasts on the business operations of its regional television
stations.10
ABS-CBN BROADCASTING CORPORATION, Petitioners,
vs. On May 13, 2002, ABS-CBN filed with the IPO a complaint for “Violation of Laws Involving
PHILIPPINE MULTI-MEDIA SYSTEM, INC., CESAR G. REYES, FRANCIS CHUA (ANG BIAO), Property Rights, with Prayer for the Issuance of a Temporary Restraining Order and/or Writ of
MANUEL F. ABELLADA, RAUL B. DE MESA, AND ALOYSIUS M. COLAYCO, Respondents. Preliminary Injunction,” which was docketed as IPV No. 10-2002-0004. It alleged that PMSI’s
unauthorized rebroadcasting of Channels 2 and 23 infringed on its broadcasting rights and
copyright.
DECISION

YNARES-SANTIAGO, J.: On July 2, 2002, the Bureau of Legal Affairs (BLA) of the IPO granted ABS-CBN’s application for
a temporary restraining order. On July 12, 2002, PMSI suspended its retransmission of Channels
2 and 23 and likewise filed a petition for certiorari with the Court of Appeals, which was docketed
This petition for review on certiorari1 assails the July 12, 2006 Decision2 of the Court of Appeals as CA-G.R. SP No. 71597.
in CA-G.R. SP Nos. 88092 and 90762, which affirmed the December 20, 2004 Decision of the
Director-General of the Intellectual Property Office (IPO) in Appeal No. 10-2004-0002. Also
Subsequently, PMSI filed with the BLA a Manifestation reiterating that it is subject to the
assailed is the December 11, 2006 Resolution3 denying the motion for reconsideration.
must-carry rule under Memorandum Circular No. 04-08-88. It also submitted a letter dated
December 20, 2002 of then NTC Commissioner Armi Jane R. Borje to PMSI stating as follows:
Petitioner ABS-CBN Broadcasting Corporation (ABS-CBN) is licensed under the laws of the
Republic of the Philippines to engage in television and radio broadcasting. 4 It broadcasts
This refers to your letter dated December 16, 2002 requesting for regulatory
television programs by wireless means to Metro Manila and nearby provinces, and by satellite to
guidance from this Commission in connection with the application and
provincial stations through Channel 2 on Very High Frequency (VHF) and Channel 23 on Ultra
coverage of NTC Memorandum Circular No. 4-08-88, particularly Section 6
High Frequency (UHF). The programs aired over Channels 2 and 23 are either produced by
thereof, on mandatory carriage of television broadcast signals, to the
ABS-CBN or purchased from or licensed by other producers.
direct-to-home (DTH) pay television services of Philippine Multi-Media
System, Inc. (PMSI).
ABS-CBN also owns regional television stations which pattern their programming in accordance
with perceived demands of the region. Thus, television programs shown in Metro Manila and
Preliminarily, both DTH pay television and cable television services are
nearby provinces are not necessarily shown in other provinces.
broadcast services, the only difference being the medium of delivering such
services (i.e. the former by satellite and the latter by cable). Both can carry
Respondent Philippine Multi-Media System, Inc. (PMSI) is the operator of Dream Broadcasting broadcast signals to the remote areas, thus enriching the lives of the
System. It delivers digital direct-to-home (DTH) television via satellite to its subscribers all over residents thereof through the dissemination of social, economic, educational
the Philippines. Herein individual respondents, Cesar G. Reyes, Francis Chua, Manuel F. information and cultural programs.
Abellada, Raul B. De Mesa, and Aloysius M. Colayco, are members of PMSI’s Board of
Directors.
The DTH pay television services of PMSI is equipped to provide nationwide
DTH satellite services. Concededly, PMSI’s DTH pay television services
PMSI was granted a legislative franchise under Republic Act No. 86305 on May 7, 1998 and was covers very much wider areas in terms of carriage of broadcast signals,
given a Provisional Authority by the National Telecommunications Commission (NTC) on including areas not reachable by cable television services thereby providing
February 1, 2000 to install, operate and maintain a nationwide DTH satellite service. When it a better medium of dissemination of information to the public.
commenced operations, it offered as part of its program line-up ABS-CBN Channels 2 and 23,
NBN, Channel 4, ABC Channel 5, GMA Channel 7, RPN Channel 9, and IBC Channel 13,
In view of the foregoing and the spirit and intent of NTC memorandum
together with other paid premium program channels.
Circular No. 4-08-88, particularly section 6 thereof, on mandatory
carriage of television broadcast signals, DTH pay television services
However, on April 25, 2001,6 ABS-CBN demanded for PMSI to cease and desist from should be deemed covered by such NTC Memorandum Circular.
rebroadcasting Channels 2 and 23. On April 27, 2001,7 PMSI replied that the rebroadcasting was
in accordance with the authority granted it by NTC and its obligation under NTC Memorandum
For your guidance. (Emphasis added)11
Circular No. 4-08-88,8 Section 6.2 of which requires all cable television system operators
operating in a community within Grade “A” or “B” contours to carry the television signals of the
authorized television broadcast stations.9 On August 26, 2003, PMSI filed another Manifestation with the BLA that it received a letter dated
July 24, 2003 from the NTC enjoining strict and immediate compliance with the must-carry rule
under Memorandum Circular No. 04-08-88, to wit:
Thereafter, negotiations ensued between the parties in an effort to reach a settlement; however,
the negotiations were terminated on April 4, 2002 by ABS-CBN allegedly due to PMSI’s inability
to ensure the prevention of illegal retransmission and further rebroadcast of its signals, as well as Dear Mr. Abellada:
 Last July 22, 2003, the National Telecommunications Commission (NTC)
received a letter dated July 17, 2003 from President/COO Rene Q. Bello of
the International Broadcasting Corporation (IBC-Channel 13) complaining
that your company, Dream Broadcasting System, Inc., has cut-off, without
any notice or explanation whatsoever, to air the programs of IBC-13, a
free-to-air television, to the detriment of the public.
We were told that, until now, this has been going on.
Please be advised that as a direct broadcast satellite operator,
operating a direct-to-home (DTH) broadcasting system, with a
provisional authority (PA) from the NTC, your company, along with
cable television operators, are mandated to strictly comply with the
existing policy of NTC on mandatory carriage of television broadcast
signals as provided under Memorandum Circular No. 04-08-88, also
known as the Revised Rules and Regulations Governing Cable
Television System in the Philippines.
This mandatory coverage provision under Section 6.2 of said
Memorandum Circular, requires all cable television system operators,
operating in a community within the Grade “A” or “B” contours to
“must-carry” the television signals of the authorized television
broadcast stations, one of which is IBC-13. Said directive equally
applies to your company as the circular was issued to give consumers
and the public a wider access to more sources of news, information,
entertainment and other programs/contents.
This Commission, as the governing agency vested by laws with the
jurisdiction, supervision and control over all public services, which includes
direct broadcast satellite operators, and taking into consideration the
paramount interest of the public in general, hereby directs you to
immediately restore the signal of IBC-13 in your network programs, pursuant
to existing circulars and regulations of the Commission.
For strict compliance. (Emphasis added)12
Meanwhile, on October 10, 2003, the NTC issued Memorandum Circular No. 10-10-2003,
entitled “Implementing Rules and Regulations Governing Community Antenna/Cable Television
(CATV) and Direct Broadcast Satellite (DBS) Services to Promote Competition in the Sector.”
Article 6, Section 8 thereof states:
As a general rule, the reception, distribution and/or transmission by any
CATV/DBS operator of any television signals without any agreement with or
authorization from program/content providers are prohibited.
On whether Memorandum Circular No. 10-10-2003 amended Memorandum Circular No.
04-08-88, the NTC explained to PMSI in a letter dated November 3, 2003 that:
To address your query on whether or not the provisions of MC 10-10-2003
would have the effect of amending the provisions of MC 4-08-88 on
mandatory carriage of television signals, the answer is in the negative.
xxxx
The Commission maintains that, MC 4-08-88 remains valid, subsisting and
enforceable.
Please be advised, therefore, that as duly licensed direct-to-home
satellite television service provider authorized by this Commission,
your company continues to be bound by the guidelines provided for
under MC 04-08-88, specifically your obligation under its mandatory
carriage provisions, in addition to your obligations under MC
10-10-2003. (Emphasis added)
Please be guided accordingly.13
On December 22, 2003, the BLA rendered a decision14 finding that PMSI infringed the
broadcasting rights and copyright of ABS-CBN and ordering it to permanently cease and desist
from rebroadcasting Channels 2 and 23.
On February 6, 2004, PMSI filed an appeal with the Office of the Director-General of the IPO
which was docketed as Appeal No. 10-2004-0002. On December 23, 2004, it also filed with the
Court of Appeals a “Motion to Withdraw Petition; Alternatively, Memorandum of the Petition for
Certiorari” in CA-G.R. SP No. 71597, which was granted in a resolution dated February 17, 2005.
On December 20, 2004, the Director-General of the IPO rendered a decision15 in favor of PMSI,
the dispositive portion of which states:
WHEREFORE, premises considered, the instant appeal is hereby
GRANTED. Accordingly, Decision No. 2003-01 dated 22 December 2003 of
the Director of Bureau of Legal Affairs is hereby REVERSED and SET
ASIDE.
Let a copy of this Decision be furnished the Director of the Bureau of Legal
Affairs for appropriate action, and the records be returned to her for proper
disposition. The Documentation, Information and Technology Transfer
Bureau is also given a copy for library and reference purposes.
SO ORDERED.16
Thus, ABS-CBN filed a petition for review with prayer for issuance of a temporary restraining
order and writ of preliminary injunction with the Court of Appeals, which was docketed as CA-G.R.
SP No. 88092.
On July 18, 2005, the Court of Appeals issued a temporary restraining order. Thereafter,
ABS-CBN filed a petition for contempt against PMSI for continuing to rebroadcast Channels 2
and 23 despite the restraining order. The case was docketed as CA- G.R. SP No. 90762.
On November 14, 2005, the Court of Appeals ordered the consolidation of CA-G.R. SP Nos.
88092 and 90762.
In the assailed Decision dated July 12, 2006, the Court of Appeals sustained the findings of the
Director-General of the IPO and dismissed both petitions filed by ABS-CBN.17
On the other hand, rebroadcasting as defined in Article 3(g) of the International Convention for
the Protection of Performers, Producers of Phonograms and Broadcasting Organizations,
otherwise known as the 1961 Rome Convention, of which the Republic of the Philippines is a
signatory, 21 is “the simultaneous broadcasting by one broadcasting organization of the broadcast
of another broadcasting organization.”

The Director-General of the IPO correctly found that PMSI is not engaged in rebroadcasting and
ABS-CBN’s motion for reconsideration was denied, hence, this petition.
thus cannot be considered to have infringed ABS-CBN’s broadcasting rights and copyright, thus:

ABS-CBN contends that PMSI’s unauthorized rebroadcasting of Channels 2 and 23 is an

That the Appellant’s [herein respondent PMSI] subscribers are able to view
infringement of its broadcasting rights and copyright under the Intellectual Property Code (IP
Appellee’s [herein petitioner ABS-CBN] programs (Channels 2 and 23) at the
Code);18that Memorandum Circular No. 04-08-88 excludes DTH satellite television operators;
same time that the latter is broadcasting the same is undisputed. The
that the Court of Appeals’ interpretation of the must-carry rule violates Section 9 of Article III19 of
question however is, would the Appellant in doing so be considered engaged
the Constitution because it allows the taking of property for public use without payment of just
in broadcasting. Section 202.7 of the IP Code states that broadcasting
compensation; that the Court of Appeals erred in dismissing the petition for contempt docketed
means
as CA-G.R. SP No. 90762 without requiring respondents to file comment.

“the transmission by wireless means for the public reception of sounds or of

Respondents, on the other hand, argue that PMSI’s rebroadcasting of Channels 2 and 23 is
images or of representations thereof; such transmission by satellite is also
sanctioned by Memorandum Circular No. 04-08-88; that the must-carry rule under the
‘broadcasting’ where the means for decrypting are provided to the public by
Memorandum Circular is a valid exercise of police power; and that the Court of Appeals correctly
the broadcasting organization or with its consent.”
dismissed CA-G.R. SP No. 90762 since it found no need to exercise its power of contempt.

Section 202.7 of the IP Code, thus, provides two instances wherein there is
After a careful review of the facts and records of this case, we affirm the findings of the
broadcasting, to wit:
Director-General of the IPO and the Court of Appeals.

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

There is no merit in ABS-CBN’s contention that PMSI violated its broadcaster’s rights under
of images or of representations thereof; and
Section 211 of the IP Code which provides in part:

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

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

Sec. 211. Scope of Right. - Subject to the provisions of Section 212,

It is under the second category that Appellant’s DTH satellite television
broadcasting organizations shall enjoy the exclusive right to carry out,
service must be examined since it is satellite-based. The elements of such
authorize or prevent any of the following acts:
category are as follows:

211.1. The rebroadcasting of their broadcasts;

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

xxxx
2. The transmission is through satellite;

Neither is PMSI guilty of infringement of ABS-CBN’s copyright under Section 177 of the IP Code
which states that copyright or economic rights shall consist of the exclusive right to carry out,
authorize or prevent the public performance of the work (Section 177.6), and other
communication to the public of the work (Section 177.7).20
Section 202.7 of the IP Code defines broadcasting as “the transmission by wireless means for
the public reception of sounds or of images or of representations thereof; such transmission by
satellite is also ‘broadcasting’ where the means for decrypting are provided to the public by the
broadcasting organization or with its consent.”
3. The transmission is for public reception; and
4. The means for decrypting are provided to the public by the broadcasting
organization or with its consent.
It is only the presence of all the above elements can a determination that the
DTH is broadcasting and consequently, rebroadcasting Appellee’s signals in
violation of Sections 211 and 177 of the IP Code, may be arrived at.
Accordingly, this Office is of the view that the transmission contemplated
under Section 202.7 of the IP Code presupposes that the origin of the
signals is the broadcaster. Hence, a program that is broadcasted is
attributed to the broadcaster. In the same manner, the rebroadcasted
program is attributed to the rebroadcaster.
In the case at hand, Appellant is not the origin nor does it claim to be the
origin of the programs broadcasted by the Appellee. Appellant did not make
and transmit on its own but merely carried the existing signals of the
Appellee. When Appellant’s subscribers view Appellee’s programs in
Channels 2 and 23, they know that the origin thereof was the Appellee.
Aptly, it is imperative to discern the nature of broadcasting. When a
broadcaster transmits, the signals are scattered or dispersed in the air.
Anybody may pick-up these signals. There is no restriction as to its number,
type or class of recipients. To receive the signals, one is not required to
subscribe or to pay any fee. One only has to have a receiver, and in case of
television signals, a television set, and to tune-in to the right
channel/frequency. The definition of broadcasting, wherein it is required that
the transmission is wireless, all the more supports this discussion.
Apparently, the undiscriminating dispersal of signals in the air is possible
only through wireless means. The use of wire in transmitting signals, such as
cable television, limits the recipients to those who are connected. Unlike
wireless transmissions, in wire-based transmissions, it is not enough that
one wants to be connected and possesses the equipment. The service
provider, such as cable television companies may choose its subscribers.
The only limitation to such dispersal of signals in the air is the technical
capacity of the transmitters and other equipment employed by the
broadcaster. While the broadcaster may use a less powerful transmitter to
limit its coverage, this is merely a business strategy or decision and not an
inherent limitation when transmission is through cable.
Accordingly, the nature of broadcasting is to scatter the signals in its widest
area of coverage as possible. On this score, it may be said that making
public means that accessibility is undiscriminating as long as it [is] within the
range of the transmitter and equipment of the broadcaster. That the medium
through which the Appellant carries the Appellee’s signal, that is via satellite,
does not diminish the fact that it operates and functions as a cable television.
It remains that the Appellant’s transmission of signals via its DTH satellite
television service cannot be considered within the purview of broadcasting. x
xx
xxxx
This Office also finds no evidence on record showing that the Appellant has
provided decrypting means to the public indiscriminately. Considering the
nature of this case, which is punitive in fact, the burden of proving the
existence of the elements constituting the acts punishable rests on the
shoulder of the complainant.
Accordingly, this Office finds that there is no rebroadcasting on the part of
the Appellant of the Appellee’s programs on Channels 2 and 23, as defined
under the Rome Convention.22
Under the Rome Convention, rebroadcasting is “the simultaneous broadcasting by one
broadcasting organization of the broadcast of another broadcasting organization.” The Working
Paper23 prepared by the Secretariat of the Standing Committee on Copyright and Related Rights
defines broadcasting organizations as “entities that take the financial and editorial responsibility
for the selection and arrangement of, and investment in, the transmitted content.”24 Evidently,
PMSI would not qualify as a broadcasting organization because it does not have the
aforementioned responsibilities imposed upon broadcasting organizations, such as ABS-CBN.
ABS-CBN creates and transmits its own signals; PMSI merely carries such signals which the
viewers receive in its unaltered form. PMSI does not produce, select, or determine the programs
to be shown in Channels 2 and 23. Likewise, it does not pass itself off as the origin or author of
such programs. Insofar as Channels 2 and 23 are concerned, PMSI merely retransmits the same
in accordance with Memorandum Circular 04-08-88. With regard to its premium channels, it buys
the channels from content providers and transmits on an as-is basis to its viewers. Clearly, PMSI
does not perform the functions of a broadcasting organization; thus, it cannot be said that it is
engaged in rebroadcasting Channels 2 and 23.
The Director-General of the IPO and the Court of Appeals also correctly found that PMSI’s
services are similar to a cable television system because the services it renders fall under cable
“retransmission,” as described in the Working Paper, to wit:
(G) Cable Retransmission
47. When a radio or television program is being broadcast, it can be
retransmitted to new audiences by means of cable or wire. In the early days
of cable television, it was mainly used to improve signal reception,
particularly in so-called “shadow zones,” or to distribute the signals in large
buildings or building complexes. With improvements in technology, cable
operators now often receive signals from satellites before retransmitting
them in an unaltered form to their subscribers through cable.
48. In principle, cable retransmission can be either simultaneous with the
broadcast over-the-air or delayed (deferred transmission) on the basis of a
fixation or a reproduction of a fixation. Furthermore, they might be unaltered
or altered, for example through replacement of commercials, etc. In general,
however, the term “retransmission” seems to be reserved for such
transmissions which are both simultaneous and unaltered.
49. The Rome Convention does not grant rights against unauthorized cable
retransmission. Without such a right, cable operators can retransmit both
domestic and foreign over the air broadcasts simultaneously to their
subscribers without permission from the broadcasting organizations or other
rightholders and without obligation to pay remuneration.25 (Emphasis added)
Thus, while the Rome Convention gives broadcasting organizations the right to authorize or
prohibit the rebroadcasting of its broadcast, however, this protection does not extend to cable
retransmission. The retransmission of ABS-CBN’s signals by PMSI – which functions essentially
as a cable television – does not therefore constitute rebroadcasting in violation of the former’s
intellectual property rights under the IP Code.
It must be emphasized that the law on copyright is not absolute. The IP Code provides that:
Sec. 184. Limitations on Copyright. -
184.1. Notwithstanding the provisions of Chapter V, the following acts shall
not constitute infringement of copyright:
xxxx
(h) The use made of a work by or under the direction or control of the
Government, by the National Library or by educational, scientific or
professional institutions where such use is in the public interest and is
compatible with fair use;
The carriage of ABS-CBN’s signals by virtue of the must-carry rule in Memorandum Circular No.
04-08-88 is under the direction and control of the government though the NTC which is vested
with exclusive jurisdiction to supervise, regulate and control telecommunications and broadcast
services/facilities in the Philippines.26 The imposition of the must-carry rule is within the NTC’s
power to promulgate rules and regulations, as public safety and interest may require, to
encourage a larger and more effective use of communications, radio and television broadcasting
facilities, and to maintain effective competition among private entities in these activities whenever
the Commission finds it reasonably feasible.27 As correctly observed by the Director-General of
the IPO:
Accordingly, the “Must-Carry Rule” under NTC Circular No. 4-08-88 falls
under the foregoing category of limitations on copyright. This Office agrees
with the Appellant [herein respondent PMSI] that the “Must-Carry Rule” is in
consonance with the principles and objectives underlying Executive Order
No. 436,28 to wit:
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.29
The Court of Appeals likewise correctly observed that:
[T]he very intent and spirit of the NTC Circular will prevent a situation
whereby station owners and a few networks would have unfettered power to
make time available only to the highest bidders, to communicate only their
own views on public issues, people, and to permit on the air only those with
whom they agreed – contrary to the state policy that the (franchise) grantee
like the petitioner, private respondent and other TV station owners, shall
provide at all times sound and balanced programming and assist in the
functions of public information and education.
This is for the first time that we have a structure that
works to accomplish explicit state policy goals.30
Indeed, intellectual property protection is merely a means towards the end of making society
benefit from the creation of its men and women of talent and genius. This is the essence of
intellectual property laws, and it explains why certain products of ingenuity that are concealed
from the public are outside the pale of protection afforded by the law. It also explains why the
author or the creator enjoys no more rights than are consistent with public welfare. 31
Further, as correctly observed by the Court of Appeals, the must-carry rule as well as the
legislative franchises granted to both ABS-CBN and PMSI are in consonance with state policies
enshrined in the Constitution, specifically Sections 9, 32 17,33 and 2434 of Article II on the
Declaration of Principles and State Policies.35
ABS-CBN was granted a legislative franchise under Republic Act No. 7966, Section 1 of which
authorizes it “to construct, operate and maintain, for commercial purposes and in the public
interest, television and radio broadcasting in and throughout the Philippines x x x.” Section 4
thereof mandates that it “shall provide adequate public service time to enable the government,
through the said broadcasting stations, to reach the population on important public issues;
provide at all times sound and balanced programming; promote public participation such as in
community programming; assist in the functions of public information and education x x x.”
PMSI was likewise granted a legislative franchise under Republic Act No. 8630, Section 4 of
which similarly states that it “shall provide adequate public service time to enable the government,
through the said broadcasting stations, to reach the population on important public issues;
provide at all times sound and balanced programming; promote public participation such as in
community programming; assist in the functions of public information and education x x x.”
Section 5, paragraph 2 of the same law provides that “the radio spectrum is a finite resource that
is a part of the national patrimony and the use thereof is a privilege conferred upon the grantee by
the State and may be withdrawn anytime, after due process.”
In Telecom. & Broadcast Attys. of the Phils., Inc. v. COMELEC,36 the Court held that a franchise
is a mere privilege which may be reasonably burdened with some form of public service. Thus:
All broadcasting, whether by radio or by television stations, is licensed by the
government. Airwave frequencies have to be allocated as there are more
individuals who want to broadcast than there are frequencies to assign. A
franchise is thus a privilege subject, among other things, to amendment by
 Congress in accordance with the constitutional provision that “any such
franchise or right granted . . . shall be subject to amendment, alteration or
repeal by the Congress when the common good so requires.”
xxxx
Indeed, provisions for COMELEC Time have been made by amendment of
the franchises of radio and television broadcast stations and, until the
present case was brought, such provisions had not been thought of as taking
property without just compensation. Art. XII, §11 of the Constitution
authorizes the amendment of franchises for “the common good.” What better
measure can be conceived for the common good than one for free air time
for the benefit not only of candidates but even more of the public, particularly
the voters, so that they will be fully informed of the issues in an election? “[I]t
is the right of the viewers and listeners, not the right of the broadcasters,
which is paramount.”
Nor indeed can there be any constitutional objection to the requirement that
broadcast stations give free air time. Even in the United States, there are
responsible scholars who believe that government controls on broadcast
media can constitutionally be instituted to ensure diversity of views and
attention to public affairs to further the system of free expression. For this
purpose, broadcast stations may be required to give free air time to
candidates in an election. Thus, Professor Cass R. Sunstein of the
University of Chicago Law School, in urging reforms in regulations affecting
the broadcast industry, writes:
xxxx
In truth, radio and television broadcasting companies, which are given
franchises, do not own the airwaves and frequencies through which they
transmit broadcast signals and images. They are merely given the temporary
privilege of using them. Since a franchise is a mere privilege, the exercise of
the privilege may reasonably be burdened with the performance by the
grantee of some form of public service. x x x37
There is likewise no merit to ABS-CBN’s claim that PMSI’s carriage of its signals is for a
commercial purpose; that its being the country’s top broadcasting company, the availability of its
signals allegedly enhances PMSI’s attractiveness to potential customers; 38 or that the
unauthorized carriage of its signals by PMSI has created competition between its Metro Manila
and regional stations.
ABS-CBN presented no substantial evidence to prove that PMSI carried its signals for profit; or
that such carriage adversely affected the business operations of its regional stations. Except for
the testimonies of its witnesses,[39] no studies, statistical data or information have been
submitted in evidence.
Administrative charges cannot be based on mere speculation or conjecture. The complainant has
the burden of proving by substantial evidence the allegations in the complaint.40 Mere allegation
is not evidence, and is not equivalent to proof.41
Anyone in the country who owns a television set and antenna can receive ABS-CBN’s signals for
free. Other broadcasting organizations with free-to-air signals such as GMA-7, RPN-9, ABC-5,
and IBC-13 can likewise be accessed for free. No payment is required to view the said
channels42 because these broadcasting networks do not generate revenue from subscription
from their viewers but from airtime revenue from contracts with commercial advertisers and
producers, as well as from direct sales.
In contrast, cable and DTH television earn revenues from viewer subscription. In the case of
PMSI, it offers its customers premium paid channels from content providers like Star Movies, Star
World, Jack TV, and AXN, among others, thus allowing its customers to go beyond the limits of
“Free TV and Cable TV.”43 It does not advertise itself as a local channel carrier because these
local channels can be viewed with or without DTH television.
Relevantly, PMSI’s carriage of Channels 2 and 23 is material in arriving at the ratings and
audience share of ABS-CBN and its programs. These ratings help commercial advertisers and
producers decide whether to buy airtime from the network. Thus, the must-carry rule is actually
advantageous to the broadcasting networks because it provides them with increased viewership
which attracts commercial advertisers and producers.
On the other hand, the carriage of free-to-air signals imposes a burden to cable and DTH
television providers such as PMSI. PMSI uses none of ABS-CBN’s resources or equipment and
carries the signals and shoulders the costs without any recourse of charging. 44 Moreover, such
carriage of signals takes up channel space which can otherwise be utilized for other premium
paid channels.
There is no merit to ABS-CBN’s argument that PMSI’s carriage of Channels 2 and 23 resulted in
competition between its Metro Manila and regional stations. ABS-CBN is free to decide to pattern
its regional programming in accordance with perceived demands of the region; however, it
cannot impose this kind of programming on the regional viewers who are also entitled to the
free-to-air channels. It must be emphasized that, as a national broadcasting organization, one of
ABS-CBN’s responsibilities is to scatter its signals to the widest area of coverage as possible.
That it should limit its signal reach for the sole purpose of gaining profit for its regional stations
undermines public interest and deprives the viewers of their right to access to information.
Indeed, television is a business; however, the welfare of the people must not be sacrificed in the
pursuit of profit. The right of the viewers and listeners to the most diverse choice of programs
available is paramount.45 The Director-General correctly observed, thus:
The “Must-Carry Rule” favors both broadcasting organizations and the public.
It prevents cable television companies from excluding broadcasting
organization especially in those places not reached by signal. Also, the rule
prevents cable television companies from depriving viewers in far-flung
areas the enjoyment of programs available to city viewers. In fact, this Office
finds the rule more burdensome on the part of the cable television
companies. The latter carries the television signals and shoulders the costs
without any recourse of charging. On the other hand, the signals that are
carried by cable television companies are dispersed and scattered by the
television stations and anybody with a television set is free to pick them up.
With its enormous resources and vaunted technological capabilities,
Appellee’s [herein petitioner ABS-CBN] broadcast signals can reach almost
 every corner of the archipelago. That in spite of such capacity, it chooses to
maintain regional stations, is a business decision. That the “Must-Carry
Rule” adversely affects the profitability of maintaining such regional stations
since there will be competition between them and its Metro Manila station is
speculative and an attempt to extrapolate the effects of the rule. As
discussed above, Appellant’s DTH satellite television services is of limited
subscription. There was not even a showing on part of the Appellee the
number of Appellant’s subscribers in one region as compared to
non-subscribing television owners. In any event, if this Office is to engage in
conjecture, such competition between the regional stations and the Metro
Manila station will benefit the public as such competition will most likely
result in the production of better television programs.”46
All told, we find that the Court of Appeals correctly upheld the decision of the IPO
Director-General that PMSI did not infringe on ABS-CBN’s intellectual property rights under the
IP Code. The findings of facts of administrative bodies charged with their specific field of
expertise, are afforded great weight by the courts, and in the absence of substantial showing that
such findings are made from an erroneous estimation of the evidence presented, they are
conclusive, and in the interest of stability of the governmental structure, should not be
disturbed.47
Moreover, the factual findings of the Court of Appeals are conclusive on the parties and are not
reviewable by the Supreme Court. They carry even more weight when the Court of Appeals
affirms the factual findings of a lower fact-finding body,48 as in the instant case.
There is likewise no merit to ABS-CBN’s contention that the Memorandum Circular excludes from
its coverage DTH television services such as those provided by PMSI. Section 6.2 of the
Memorandum Circular requires all cable television system operators operating in a community
within Grade “A” or “B” contours to carry the television signals of the authorized television
broadcast stations.49 The rationale behind its issuance can be found in the whereas clauses
which state:
Whereas, Cable Television Systems or Community Antenna Television
(CATV) have shown their ability to offer additional programming and to carry
much improved broadcast signals in the remote areas, thereby enriching the
lives of the rest of the population through the dissemination of social,
economic, educational information and cultural programs;
Whereas, the national government supports the promotes the orderly growth
of the Cable Television industry within the framework of a regulated fee
enterprise, which is a hallmark of a democratic society;
Whereas, public interest so requires that monopolies in commercial mass
media shall be regulated or prohibited, hence, to achieve the same, the
cable TV industry is made part of the broadcast media;
Whereas, pursuant to Act 3846 as amended and Executive Order 205
granting the National Telecommunications Commission the authority to set
down rules and regulations in order to protect the public and promote the
general welfare, the National Telecommunications Commission hereby
promulgates the following rules and regulations on Cable Television
Systems;
The policy of the Memorandum Circular is to carry improved signals in remote areas for the good
of the general public and to promote dissemination of information. In line with this policy, it is
clear that DTH television should be deemed covered by the Memorandum Circular.
Notwithstanding the different technologies employed, both DTH and cable television have the
ability to carry improved signals and promote dissemination of information because they operate
and function in the same way.
In its December 20, 2002 letter,50 the NTC explained that both DTH and cable television services
are of a similar nature, the only difference being the medium of delivering such services. They
can carry broadcast signals to the remote areas and possess the capability to enrich the lives of
the residents thereof through the dissemination of social, economic, educational information and
cultural programs. Consequently, while the Memorandum Circular refers to cable television, it
should be understood as to include DTH television which provides essentially the same services.
In Eastern Telecommunications Philippines, Inc. v. International Communication
Corporation,51 we held:
The NTC, being the government agency entrusted with the regulation of
activities coming under its special and technical forte, and possessing the
necessary rule-making power to implement its objectives, is in the best
position to interpret its own rules, regulations and guidelines. The Court has
consistently yielded and accorded great respect to the interpretation by
administrative agencies of their own rules unless there is an error of law,
abuse of power, lack of jurisdiction or grave abuse of discretion clearly
conflicting with the letter and spirit of the law.52
With regard to the issue of the constitutionality of the must-carry rule, the Court finds that its
resolution is not necessary in the disposition of the instant case. One of the essential requisites
for a successful judicial inquiry into constitutional questions is that the resolution of the
constitutional question must be necessary in deciding the case. 53 In Spouses Mirasol v. Court of
Appeals,54 we held:
As a rule, the courts will not resolve the constitutionality of a law, if the
controversy can be settled on other grounds. The policy of the courts is to
avoid ruling on constitutional questions and to presume that the acts of the
political departments are valid, absent a clear and unmistakable showing to
the contrary. To doubt is to sustain. This presumption is based on the
doctrine of separation of powers. This means that the measure had first
been carefully studied by the legislative and executive departments and
found to be in accord with the Constitution before it was finally enacted and
approved.55
The instant case was instituted for violation of the IP Code and infringement of ABS-CBN’s
broadcasting rights and copyright, which can be resolved without going into the constitutionality
of Memorandum Circular No. 04-08-88. As held by the Court of Appeals, the only relevance of
the circular in this case is whether or not compliance therewith should be considered
manifestation of lack of intent to commit infringement, and if it is, whether such lack of intent is a
valid defense against the complaint of petitioner.56
The records show that petitioner assailed the constitutionality of Memorandum Circular No. Corporation, and the December 11, 2006 Resolution denying the motion for reconsideration,
04-08-88 by way of a collateral attack before the Court of Appeals. In Philippine National Bank v. are AFFIRMED.
Palma,57 we ruled that for reasons of public policy, the constitutionality of a law cannot be
collaterally attacked. A law is deemed valid unless declared null and void by a competent court; SO ORDERED.
more so when the issue has not been duly pleaded in the trial court.58

As a general rule, the question of constitutionality must be raised at the earliest opportunity so
that if not raised in the pleadings, ordinarily it may not be raised in the trial, and if not raised in the
trial court, it will not be considered on appeal.59 In Philippine Veterans Bank v. Court of
Appeals,60 we held:

We decline to rule on the issue of constitutionality as all the requisites for the
exercise of judicial review are not present herein. Specifically, the
question of constitutionality will not be passed upon by the Court
unless, at the first opportunity, it is properly raised and presented in an
appropriate case, adequately argued, and is necessary to a
determination of the case, particularly where the issue of
constitutionality is the very lis mota presented.x x x61

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

Indirect contempt may either be initiated (1) motu proprio by the court by issuing an order or any
other formal charge requiring the respondent to show cause why he should not be punished for
contempt or (2) by the filing of a verified petition, complying with the requirements for filing
initiatory pleadings.62

ABS-CBN filed a verified petition before the Court of Appeals, which was docketed CA G.R. SP
No. 90762, for PMSI’s alleged disobedience to the Resolution and Temporary Restraining Order,
both dated July 18, 2005, issued in CA-G.R. SP No. 88092. However, after the cases were
consolidated, the Court of Appeals did not require PMSI to comment on the petition for contempt.
It ruled on the merits of CA-G.R. SP No. 88092 and ordered the dismissal of both petitions.

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

It bears stressing that the proceedings for punishment of indirect contempt are criminal in nature.
The modes of procedure and rules of evidence adopted in contempt proceedings are similar in
nature to those used in criminal prosecutions. 63 While it may be argued that the Court of Appeals
should have ordered respondents to comment, the issue has been rendered moot in light of our
ruling on the merits. To order respondents to comment and have the Court of Appeals conduct a
hearing on the contempt charge when the main case has already been disposed of in favor of
PMSI would be circuitous. Where the issues have become moot, there is no justiciable
controversy, thereby rendering the resolution of the same of no practical use or value. 64

WHEREFORE, the petition is DENIED. The July 12, 2006 Decision of the Court of Appeals in
CA-G.R. SP Nos. 88092 and 90762, sustaining the findings of the Director-General of the
Intellectual Property Office and dismissing the petitions filed by ABS-CBN Broadcasting
 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 certiorari1 to set aside the (a) decision or the Court
of Appeals2, 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.1âwphi1.nêt
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 answer8, and denied the allegations of
plagiarism and copying that petitioners claimed. Respondent stressed that (1) the book DEP is
the product of her independent researches, studies and experiences, and was not a copy of any
existing valid copyrighted book; (2) DEP followed the scope and sequence or syllabus which are
common to all English grammar writers as recommended by the Association of Philippine
Colleges of Arts and Sciences (APCAS), so any similarity between the respondents book and
that of the petitioners was due to the orientation of the authors to both works and standards and
syllabus; and (3) the similarities may be due to the authors' exercise of the "right to fair use of
copyrigthed materials, as guides."
Respondent interposed a counterclaim for damages on the ground that bad faith and malice
attended the filing of the complaint, because petitioner Habana was professionally jealous and
the book DEP replaced CET as the official textbook of the graduate studies department of the Far
Eastern University.9
During the pre-trial conference, the parties agreed to a stipulation of
facts 10 and for the trial court to first resolve the issue of infringement before disposing of the
claim for damages.
After the trial on the merits, on April 23, 1993, the trial court rendered its judgment finding thus:
WHEREFORE, premises considered, the court hereby orders that the complaint filed against
defendants Felicidad Robles and Goodwill Trading Co., Inc. shall be DISMISSED; that said
plaintiffs solidarily reimburse defendant Robles for P20,000.00 attorney's fees and defendant
Goodwill for P5,000.00 attorney's fees. Plaintiffs are liable for cost of suit.
IT IS SO ORDERED.
Done in the City of Manila this 23rd day of April, 1993.
(s/t) MARVIE R. ABRAHAM SINGSON
Assisting Judge
11
S. C. Adm. Order No. 124-92
On May 14, 1993, petitioners filed their notice of appeal with the trial court 12, and on July 19,
1993, the court directed its branch clerk of court to forward all the records of the case to the Court
of Appeals. 13
In the appeal, petitioners argued that the trial court completely disregarded their evidence and
fully subscribed to the arguments of respondent Robles that the books in issue were purely the
product of her researches and studies and that the copied portions were inspired by foreign
authors and as such not subject to copyright. Petitioners also assailed the findings of the trial
court that they were animated by bad faith in instituting the complaint. 14
On June 27, 1997, the Court of Appeals rendered judgment in favor of respondents Robles and
Goodwill Trading Co., Inc. The relevant portions of the decision state:
It must be noted, however, that similarity of the allegedly infringed work to the 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.
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."
xxx xxx xxx
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
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.
16
On July 12, 1997, petitioners filed a motion for reconsideration, however, the Court of Appeals
denied the same in a Resolution 17 dated November 25, 1997.
Hence, this petition.
In this appeal, petitioners submit that the appellate court erred in affirming the trial court's
decision.
Petitioners raised the following issues: (1) whether or not, despite the apparent textual, thematic
and sequential similarity between DEP and CET, respondents committed no copyright
infringement; (2) whether or not there was animus furandi on the part of respondent when they
refused to withdraw the copies of CET from the market despite notice to withdraw the same; and
(3) whether or not respondent Robles abused a writer's right to fair use, in violation of Section 11
of Presidential Decree No. 49. 18
We find the petition impressed with merit.
The complaint for copyright infringement was filed at the time that Presidential Decree No. 49
was in force. At present, all laws dealing with the protection of intellectual property rights have
been consolidated and as the law now stands, the protection of copyrights is governed by
Republic Act No. 8293. Notwithstanding the change in the law, the same principles are reiterated
in the new law under Section 177. It provides for the copy or economic rights of an owner of a
copyright as follows:
Sec. 177. Copy or Economic rights. — Subject to the provisions of chapter VIII, copyright or
economic rights shall consist of the exclusive right to carry out, authorize or prevent the following
acts:
177.1 Reproduction of the work or substanlial portion of the work;
177.2 Dramatization, translation, adaptation, abridgement, arrangement or other transformation
of the work;
177.3 The first public distribution of the original and each copy of the work by sale or other forms
of transfer of ownership;
177.4 Rental of the original or a copy of an audiovisual or cinematographic work, a work
embodied in a sound recording, a computer program, a compilation of data and other materials or
a musical work in graphic form, irrespective of the ownership of the original or the copy which is
the subject of the rental; (n)
177.5 Public display of the original or copy of the work;
177.6 Public performance of the work; and
 19
177.7 Other communication to the public of the work
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:
(a) the recitation or performance of a work, once it has been lawfully made accessible to the
public, if done privately and free of charge or if made strictly for a charitable or religious institution
or society; [Sec. 10(1), P.D. No. 49]
(b) The making of quotations from a published work if they are compatible with fair use and only
to the extent justified for the purpose, including quotations from newspaper articles and
periodicals in the form of press summaries; Provided, that the source and the name of the author,
if appearing on the work are mentioned; (Sec. 11 third par. P.D. 49)
xxx xxx xxx
(e) The inclusion of a work in a publication, broadcast, or other communication to the public,
sound recording of film, if such inclusion is made by way of illustration for teaching purposes and
is compatible with fair use: Provided, That the source and the name of the author, if appearing in
the work is mentioned; 20
In the above quoted provisions, "work" has reference to literary and artistic creations and this
includes books and other literary, scholarly and scientific works. 21
A perusal of the records yields several pages of the book DEP that are similar if not identical with
the text of CET.
On page 404 of petitioners' Book 1 of College English for Today, the authors wrote:
Items in dates and addresses:
He died on Monday, April 15, 1975.
Miss Reyes lives in 214 Taft Avenue,
Manila 22
On page 73 of respondents Book 1 Developing English Today, they wrote:
He died on Monday, April 25, 1975.
Miss Reyes address is 214 Taft Avenue Manila 23
On Page 250 of CET, there is this example on parallelism or repetition of sentence structures,
thus:
The proposition is peace. Not peace through the medium of war; not peace to be hunted through
the labyrinth of intricate and endless negotiations; not peace to arise out of universal discord,
fomented from principle, in all parts of the empire; not peace to depend on the juridical
determination of perplexing questions, or the precise marking of the boundary of a complex
government. It is simple peace; sought in its natural course, and in its ordinary haunts. It is peace
sought in the spirit of peace, and laid in principles purely pacific.
— Edmund Burke, "Speech on Criticism." 24
On page 100 of the book DEP 25, also in the topic of parallel structure and repetition, the same
example is found in toto. The only difference is that petitioners acknowledged the author Edmund
Burke, and respondents did not.
In several other pages 26 the treatment and manner of presentation of the topics of DEP are
similar if not a rehash of that contained in CET.
We believe that respondent Robles' act of lifting from the book of petitioners substantial portions
of discussions and examples, and her failure to acknowledge the same in her book is an
infringement of petitioners' copyrights.
When is there a substantial reproduction of a book? It does not necessarily require that the entire
copyrighted work, or even a large portion of it, be copied. If so much is taken that the value of the
original work is substantially diminished, there is an infringement of copyright and to an injurious
extent, the work is appropriated. 27
In determining the question of infringement, the amount of matter copied from the copyrighted
work is an important consideration. To constitute infringement, it is not necessary that the whole
or even a large portion of the work shall have been copied. If so much is taken that the value of
the original is sensibly diminished, or the labors of the original author are substantially and to an
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.
Separate Opinions
DAVIDE, JR., C.J., dissenting opinion:
I am unable to join the majority view.
From the following factual and procedural antecedents, I find no alternative but to sustain both
the trial court and the Court of Appeals.
On 12 July 1988, HABANA, et al. filed with the trial court a complaint for infringement and unfair
competition, with damages against private respondent Felicidad C. Robles (hereafter ROBLES)
and her publisher and distributor, Goodwill Trading Co., Inc. (hereafter GOODWILL). The case
was docketed as Civil Case No. 88-1317.
HABANA, et al. averred in their complaint that they were the co-authors and joint copyright
owners of their published works College English for Today, Books 1 and 2 (hereafter CET) and
Workbook for College Freshman English, Series 1 1; they discovered that ROBLES' own
published works, Developing English Proficiency, Books 1 and 2, (hereafter DEP), published and
distributed in 1985, exhibited an uncanny resemblance, if not outright physical similarity, to CET
as to content, scheme, sequence of topics and ideas, manner of presentation and illustrative
examples; the plagiarism, incorporation and reproduction of particular portions of CET into DEP
could not be gainsaid since ROBLES was substantially familiar with CET and the textual
asportation was accomplished without their authority and/or consent; ROBLES and GOODWILL
jointly misrepresented DEP (over which they shared copyright ownership) "as the former's
original published works and concept;" and "notwithstanding formal demands made . . . to cease
and desist from the sale and distribution of DEP, [ROBLES and GOODWILL] persistently failed
and refused to comply therewith." HABANA et al. then prayed for the court to: (1) order the
submission and thereafter the destruction of all copies of DEP, together with the molds, plates,
films and other materials used in the printing thereof; (2) require ROBLES and GOODWILL to
render an accounting of the sales of the "infringing works from the time of its (sic) inceptive
publication up to the time of judgment, as well as the amount of sales and profits . . . derived;"
and (3) to enjoin ROBLES and GOODWILL to solidarily pay actual, moral and exemplary
damages, as well as attorney's fees and expenses of litigation.
In its Answer, GOODWILL denied culpability since "it had no knowledge or information sufficient
to form a belief as to the allegations of plagiarism, incorporation and reproduction" and hence
"could not be privy to the same, if (there were) any;" and that in an Agreement with co-defendant
ROBLES, the latter would be solely responsible for acts of plagiarism or violations of copyright or
any other law, to the extent of answering for any and all damages GOODWILL may suffer.
GOODWILL also interposed a compulsory counterclaim against PACITA, et al. and a crossclaim
against its co-defendant anchored on the aforementioned Agreement.
In her answer, ROBLES asserted that: (1) DEP was the exclusive product of her independent
research, studies and experience; (2) DEP, particularly the segments where the alleged literal
similitude appeared, were admittedly influenced or inspired by earlier treatises, mostly by foreign
authors; but that "influences and/or inspirations from other writers" like the methodology and
techniques as to presentation, teaching concept and design, research and orientation which she
employed, fell within the ambit of general information, ideas, principles of general or universal
knowledge which were commonly and customarily understood as incapable of private and
exclusive use, appropriation or copyright; and (3) her works were the result of the legitimate and
reasonable exercise of an author's "right to fair use of even copyrighted materials as [a] guide."
She further claimed that her various national and regional professional activities in general
education, language and literature, as well as her teaching experience in graduate and post
graduate education would obviate the remotest possibility of plagiarism.
ROBLES likewise suggested that any similarity between DEP and CET as regards scope and
sequence could be attributed to "the orientation of the authors to the scope and sequence or
syllabus — which incorporates standards known among English grammar book writers — of the
subject-matter for Basic Communication Arts recommended by the Association of Philippine
Colleges of Arts and Sciences (APCAS)." While the syllabus was admittedly adopted in DEP, she
claimed to have treated quite differently in DEP the very ideas, techniques or principles
expressed in CET such that neither textbook could be considered a copy or plagiarism of the
other.
At the pre-trial conference, the parties agreed to a stipulation of facts 2 and for the court to first
resolve the issue of infringement before disposing of the claims for damages. After trial on the
merits, the trial court rendered its decision in favor of defendants, the dispositive portion of which
reads:
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 costs of suit.
IT IS SO ORDERED. 3
4
Noting that the law applicable to the case was Presidential Decree No. 49, the trial court found
that HABANA, et al. failed to discharge their onus of proving that ROBLES and GOODWILL
committed acts constituting copyright infringement. Moreover, the trial court found that "the cause
of action or acts complained of [were] not covered by said decree" as Section 10 thereof barred
authors of works already lawfully made accessible to the public from prohibiting the reproductions,
translations, adaptations, recitation and performance of the same, while Section 11 allowed the
utilization of reproductions, quotations and excerpts of such works. The trial court thus agreed
with ROBLES that "the complained acts [were] of general and universal knowledge and use
which plaintiffs cannot claim originality or seek redress to the law for protection" and observed
that DEP and CET had the same sources, consisting chiefly of earlier works, mostly foreign
books. GOODWILL's crossclaim against ROBLES, counterclaim against HABANA, et al. as well
as ROBLES' compulsory counterclaim against GOODWILL were all dismissed for lack of factual
and legal bases.
HABANA, et al. appealed to the Court of Appeals. The case was docketed as CA-G.R. CV No.
44053. Before said court HABANA, et al., in the main, argued that the trial court totally
disregarded their evidence and merely subscribed to ROBLES' arguments. The Court of Appeals,
however, likewise disposed of the controversy in favor of ROBLES and GOODWILL. 5
However, the Court of Appeals modified the trial court's decision by reversing the award for
attorney's fees. It held that the good faith and sincerity of HABANA, et al. in commencing the
action negated the basis therefor. Their motion for reconsideration having been denied for want
of cogent reasons, HABANA, et al., instituted this petition. They claim that the Court of Appeals
committed reversible error in failing to appreciate: (1) the insuperable evidence and facts
admitted and proved demonstrating plagiarism or piracy and instead afforded full weight and
credit to ROBLES' matrix of general, hypothetical and sweeping statements and/or defenses; (2)
ROBLES' and GOODWILL's animo furandi or intent to appropriate or copy CET with the
non-removal of the damaging copies of DEP from the bookstores despite notice to withdraw the
same; and (3) the fact that ROBLES abused a writer's right to fair use, in violation of Section 11 of
P.D. No. 49. 6 They invoke Laktaw v. Paglinawan 7 which, they theorize is on all fours with the
case at bar. ROBLES contends that appeal by certiorari does not lie in this case for the
challenged decision and the trial court's judgment were amply supported by evidence, pertinent
laws and jurisprudence. Hence, her counterclaim for moral damages should, therefore, be
granted or for us to order the remand of the case to the trial court for reception of evidence on
damages. GOODWILL, on its part, stood pat on its disclaimer, with the assertion that no proof
was ever introduced. that it co-authored DEP or that it singly or in cabal with ROBLES committed
any act constituting copyright infringement.
The core issue then is whether or not the Court of Appeals erred in affirming the trial court's
judgment that despite the apparent textual, thematic and sequential similarity between DEP and
CET, no copyright was committed by ROBLES and GOODWILL.
While the complaint, in Civil Case No. 88-1317 was filed during the effectivity of P.D. No. 49, the
provisions of the new intellectual property law, R.A. No. 8293, 8 nevertheless bears significance
here. It took effect on 1 January 1998, but its Section 239.3 clearly states that its provisions shall
apply to works in which copyright protection obtained prior to the effectivity of the Act subsists,
provided, however, that the application of the Act shall not result in the diminution of such
protection. Also, the philosophy behind both statutes as well as the essential principles of
copyright protection and copyright infringement have, to a certain extent, remained the same.
A copyright may be accurately defined as the right granted by statute to the proprietor of an
intellectual production to its exclusive use and enjoyment to the extent specified in the
statute.9 Under Section 177 of R.A. No. 8293, 10 the copy or economic right (copyright and
economic right are used interchangeably in the statute) consists of the exclusive right to carry out,
authorize or prevent the following acts:
177.1 Reproduction of the work or substantial portion of the work;
177.2 Dramatization, translation, adaptation, abridgment, arrangement or 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;
177.5 Public display of the original or a copy of the work;
177.6 Public performance of the work; and
177.7 Other communication to the public of the work.
"The work," as repeatedly mentioned, refers to the literary and artistic works defined as original
intellectual creations in the literary and artistic domain protected from the moment of their
creation and enumerated in Section 172.1, which includes books and other literary, scholarly,
scientific and artistic works. 11
Stripped in the meantime of its indisputable social and beneficial functions, 12 the use of
intellectual property or creations should basically promote the creator or author's personal and
economic gain. Hence, the copyright protection extended to the creator should ensure his
attainment of some form of personal satisfaction and economic reward from the work he
produced. Without conceding the suitability of Laktaw as precedent, the Court there quoted
Manresa and explained:
He who writes a book, or carves a statute, or makes an invention, has the absolute right to
reproduce or sell it, just as the owner of the land has the absolute right to sell it or its fruits. But
while the owner of the land, by selling it and its fruits, perhaps fully realizes all its economic value,
by receiving its benefits and utilities, which are represented for example, by the price, on the
other hand the author of a book, statue or invention does not reap all the benefits and
advantages of his own property by disposing of it, for the most important form of realizing the
economic advantages of a book, statue or invention, consists in the right to reproduce it in similar
or like copies, everyone of which serves to give to the person reproducing them all the conditions
which the original requires in order to give the author the full enjoyment thereof. If the author of a
book, after its publication, cannot prevent its reproduction by any person who may want to
reproduce it, then the property right granted him is reduced to a very insignificant thing and the
effort made in the production of the book is in no way rewarded. 13
The execution, therefore, of any one or more of the exclusive rights conferred by law on a
copyright owner, without his consent, constitutes copyright infringement. In essence, copyright
infringement, known in general as "piracy," is a trespass on a domain owned and occupied by a
copyright owner; it is violation of a private right protected by law. 14 With the invasion of his
property rights, a copyright owner is naturally entitled to seek redress, enforce and hold
accountable the defrauder or usurper of said economic rights.
Now, did ROBLES and GOODWILL infringe upon the copyright of HABANA et al. by publishing
DEP, which the latter alleged to be a reproduction, or in the least, a substantial reproduction of
CET? Both the trial court and respondent court found in the negative. I submit they were correct.
To constitute infringement, the usurper must have copied or appropriated the "original" work of an
author or copyright proprietor; 15 absent copying, there can be no infringement of copyright. 16 In
turn, a work is deemed by law an original if the author created it by his own skill, labor and
judgment. 17 On its part, a copy is that which comes so near to the original so as to give to every
person seeing it the idea created by the original. It has been held that the test of copyright
infringement is whether an ordinary observer comparing the works can readily see that one has
been copied from the other. 18 A visual comparison of the portions of CET 19 juxtaposed against
certain pages of DEP, 20 would inescapably lead to a conclusion that there is a discernible
similarity between the two; however, as correctly assessed by respondent court and the lower
court, no conclusion, can be drawn that DEP, in legal contemplation, is a copy of CET.
Was DEP a substantial reproduction of CET? To constitutes a substantial reproduction, it is not
necessary 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 is substantially diminished, or if the labors of the original author
are substantially, and to an injurious extent, appropriated. 21 But the similarity of the books here
does not amount to an appropriation of a substantial portion of CET. If the existence of
substantial similarities does not of itself establish infringement, 22 mere similarities (not
substantial similarities) in some sections of the books in question decisively militate against a
claim for infringement where the similarities had been convincingly established as proceeding
from a number of reasons and/or factors.
1. As both books are grammar books, they inevitably deal with the same subjects typically and
ordinarily treated by writers of such genre, 23 e.g., system of book classification, the different
kinds of card catalogs and their entries, use of punctuation marks, paragraphs, the
characteristics of an effective paragraph, language structure, different parts of a book, etc. These
standard subjects fall within the domain of ideas, concepts, universal and general knowledge that
have, as admitted by the protagonists here, been in existence for quite a long time. 24 As such,
HABANA, et al. cannot demand monopoly, by way of example, in the use of the recognized
library classification systems (Dewey Decimal System and the Library of Congress System), or
how a book can be divided into parts (frontispiece, title page, copyright page, preface, table of
contents, etc.) or to the different headings used in a card catalogue (title card, author card and
subject card), since these are of common or general knowledge. Even in this jurisdiction, no
protection can be extended to such an idea, procedure, system method or operation, concept,
principle, discovery or mere data, even if expressed, explained, illustrated or embodied in a
work. 25
2. As found by respondent court, CET and DEP had common sources and materials, 26 such that
the particular portions claimed to have been lifted and literally reproduced also appeared in
earlier works, mostly by foreign authors. This is clear from the testimony of petitioner Dr. Pacita
Habana:
Q Let's clarify your position Dra. Habana. When defendants test (sic) showed 10 words similar to 6. the collation composed of the number of pages, volume, illustrations, and the size of the book;
yours, you so concluded it was (sic) copied from yours but when I pointed out to you same (sic)
words contained in the earlier book of Wills then you earlier in your test in your book (sic) you
7. the subjects with which the book deals [sic];
refused to admit that it was copied from Wills.

8. the call number on the upper left-hand corner.

A Yes, sir. We have never — all 35 words were copied from there.

Names beginning with Mc, or M are filed in the card catalog as though spelled out as MAC, for
Q But what I am asking how could you conclude that by just similarity of 10 words of defendants
example Mc Graw — MacGraw. The same is true of St. and Saint.
words that was copied from yours [sic] and when I point out to you the similarity of that same
words from the words earlier than yours (sic) you refused to admit that you copied?
While a portion of DEP found on page 18 which discusses the author card provides:
A I would like to change the final statement now that in the case of defendant Robles you pointed
out her source very clear. She copied it from that book by Wills. The author card is the main entry card containing:

Q So, she did not copy it from yours? 1. the author's complete name on the first line, surname first, which may be followed by the date
of his birth and death if he is no longer living;
A Alright, maybe she did not copy it but definitely it is a pattern of plagerism [sic]. 27
2. the title of the book, and the subtitle if there is one;
3. Similarity in orientation and style can likewise be attributed to the exposure of the authors to
the APCAS syllabus and their respective academic experience, teaching approaches and 3. the edition, if it is not the first;
methodology. It is not farfetched that they could have even influenced each other as textbook
writers. ROBLES and Dr. Pacita Habana were faculty members of the Institute of English of the 4. the translator or illustrator, if any;
Far Eastern University from 1964 to 1974. 28 Both were ardent students, researchers, lecturers,
textbook writers and teachers of English and grammar. They even used to be on friendly terms
with each other, to the extent that Dr. Habana admitted that ROBLES assisted the former in the 5. the imprint which includes the publisher, the place and date of publication;
preparation of her doctoral dissertation. Given their near-identical academic and professional
background, it is natural they would use many expressions and definitions peculiar to teaching 6. the collation, composed of the number of pages, volume, illustrations, and the size of the book;
English grammar. It comes therefore with no surprise that there are similarities in some parts of
the rival books. Indeed, it is difficult to conceive how writers on the same subject matter can very
7. the subject with which the book deals; and
well avoid resorting to common sources of information and materials and employing similar
expressions and terms peculiar to the subject they are treating. 29
8. the call number on the upper-left hand corner.
To illustrate, an excerpt from page 21 of CET reads:
Names beginning with MC, or M are filed in the card catalog considered spelled out as MAC, for
example: Mcleod-Macleod. This is true also of St. and Saint.
Author Card

The entries found in an author card, having been developed over quite sometime, are expectedly
The author card is the main entry card. It contains
uniform. Hence, HABANA et al. and ROBLES would have no choice but to articulate the terms
particular to the entries in an identical manner.
1. the author's complete name on the first line, surname first, which may be followed by the date
of his birth and death if he is no longer living;
I thus find that the ruling of the respondent court is totally supported by the evidence on record.
Of doctrinal persuasion is the principle that factual determinations of the Court of Appeals and the
2. the title of the book, and the subtitle, if there is one; trial court are conclusive and binding upon this Court, and the latter will not, as a rule, disturb
these findings unless compelling and cogent reasons necessitate a reexamination, if not a
3. the edition, if it is not the first; reversal, of the same. 30 Tested against this jurisprudential canon, to subject the challenged
decision of the Court of Appeals to further scrutiny would be superfluous, if not, improvident.

4. the translator or illustrator, if there is any;

I am not persuaded by the claim of HABANA, et al. that Laktaw is on all fours with and hence
applicable to the case at bar. There, this Court disposed that defendant, without the consent of
5. the imprint which includes the publisher, the place and date of publication; and causing irreparable damage to Laktaw, reproduced the latter's literary work Diccionario
Hisapano-Tagalog, and improperly copied the greater part thereof in the work Diccionariong determine whether it has been carried to an "unfair," that is, illegal, extent. 40 Consequently, there
Kastila-Tagalog published by defendant, in violation of Article 7 of the Law of 10 January 1879 on is no reason to address the issue of whether ROBLES abused a writer's right to fair use with the
Intellectual Property. This Court anchored its decision on the following observations: ascertainment that DEP was not a copy or a substantial copy of CET.

(1) [O] the 23,560 Spanish words in the defendant's WHEREFORE, I vote to DENY the petition and to AFFIRM the challenged decision of 27 June
dictionary . . . only 3,108 words are the defendant's own, or, what is the same thing, the 1997 of the Court of Appeals.
defendant has added only this number of words to those that are in the plaintiff's dictionary, he
having reproduced or copied the remaining 20,452 words;

(2) [T]he defendant also literally reproduced and copied for the Spanish words in his dictionary,
the equivalents, definitions and different meanings in Tagalog, given in plaintiffs dictionary,
having reproduced, as to some words, everything that appears in the plaintiff's dictionary for
similar Spanish words, although as to some he made some additions of his own. Said copies and
reproductions are numerous. . .;

(3) [T]he printer's errors in the plaintiff's dictionary as to the expression of some words in Spanish
as well as their equivalents in Tagalog are also reproduced, a fact which shows that the
defendant, in preparing his dictionary, literally copied those Spanish words and their meanings
and equivalents in Tagalog from the plaintiff's dictionary. 31

Plainly, the rationale in Laktaw does not apply in this case. First, aside from an isolated
accounting of the number of words supposedly usurped in a segment of DEP from CET, 32 the
records do not disclose that all the words allegedly copied were tallied and that the words thus
tallied were numerous enough to support a finding of copying. Second, as already conceded,
while there is an identity in the manner by which some of the ideas and concepts were articulated,
this prescinded from various factors already elucidated. Besides, ROBLES' testimony that she
made an independent investigation or research of the original works or authors she consulted
was unrebutted; 33 for germane here is the question of whether the alleged infringer could have
obtained the same information by going to the same source by her own independent
research. 34 ROBLES convinced the trial court and the Court of Appeals on this; thus, we are
bound by this factual determination, as likewise explained earlier. Third, reproduction of the
printer's errors or the author's blunders and inaccuracies in the infringing copy does not ipso
facto constitute copying or plagiarism or infringement, but it is conceded that they are telltale
signs that infringement might have been committed. 35 However, the records do not reveal this to
be the case. Fourth, the law on intellectual property violated in Laktaw was a world and time apart
from R.A. No. 8293 or even P.D. No. 49. Thus, under Article 7 of the Law of 10 January 1879, the
Court ruled that nobody could reproduce another person's work without the owner's consent,
even merely to annotate or add anything to it, or improve any edition thereof. The more recent
laws on intellectual property, however, recognize recent advancements in technology transfer
and information dissemination. They thus allow the use of copyrighted materials if compatible
with fair use and to the extent justified for the purpose. In particular, the new laws sanction the fair
use of copyrighted work for criticism, comment, news reporting, teaching including multiple
copies for classroom use, scholarship, research and similar purposes. 36 Further, the limitations
of the exclusive use of copyrighted materials under Sections 10 and 11 of P.D. No. 49 in
consonance with the principle of fair use have been reproduced and incorporated in the new
law. 37 All told, Laktaw is inapplicable.1âwphi1.nêt

Fair use has been defined as a privilege to use the copyrighted material in a reasonable manner
without the consent of the copyright owner or as copying the theme or ideas rather than their
expression. 38 No question of fair or unfair use arises however, if no copying is proved to begin
with. This is in consonance with the principle that there can be no infringement if there was no
copying. 39 It is only where some form of copying has been shown that it becomes necessary to
 G.R. No. 147043 June 21, 2005
NBI - MICROSOFT CORPORATION & LOTUS DEVELOPMENT CORP., petitioners,
vs.
JUDY C. HWANG, BENITO KEH & YVONNE K. CHUA/BELTRON COMPUTER PHILIPPINES
INC., JONATHAN K. CHUA, EMILY K. CHUA, BENITO T. SANCHEZ, NANCY I. VELASCO,
ALFONSO CHUA, ALBERTO CHUA, SOPHIA ONG, DEANNA CHUA/TAIWAN MACHINERY
DISPLAY & TRADE CENTER, INC., and THE SECRETARY OF JUSTICE, respondents.
DECISION
CARPIO, J.:
The Case
This is a petition for certiorari1 of the Resolutions2 of the Department of Justice dismissing for
"lack of merit and insufficiency of evidence" petitioner Microsoft Corporation’s complaint against
respondents for copyright infringement and unfair competition.
The Facts
Petitioner Microsoft Corporation ("Microsoft"), a Delaware, United States corporation, owns the
copyright and trademark to several computer software. 3 Respondents Benito Keh and Yvonne
Keh are the President/Managing Director and General Manager, respectively, of respondent
Beltron Computer Philippines, Inc. ("Beltron"), a domestic corporation. Respondents Jonathan K.
Chua, Emily K. Chua, Benito T. Sanchez, and Nancy I. Velasco are Beltron’s Directors. On the
other hand, respondents Alfonso Chua, Alberto Chua, Judy K. Chua Hwang, Sophia Ong, and
Deanna Chua are the Directors of respondent Taiwan Machinery Display & Trade Center, Inc.
("TMTC"), also a domestic corporation.4
In May 1993, Microsoft and Beltron entered into a Licensing Agreement ("Agreement"). Under
Section 2(a) of the Agreement, as amended in January 1994, Microsoft authorized Beltron, for a
fee, to:
(i) xxx reproduce and install no more than one (1) copy of [Microsoft] software on each Customer
System hard disk or Read Only Memory ("ROM"); [and]
(ii) xxx distribute directly or indirectly and license copies of the Product (reproduced as per
Section 2(a)(i) and/or acquired from Authorized Replicator or Authorized Distributor) in object
code form to end users[.] xxxx5
The Agreement also authorized Microsoft and Beltron to terminate the contract if the other fails to
comply with any of the Agreement’s provisions. Microsoft terminated the Agreement effective 22
June 1995 for Beltron’s non-payment of royalties.6
Afterwards, Microsoft learned that respondents were illegally copying and selling Microsoft
software. Consequently, Microsoft, through its Philippine agent, 7 hired the services of Pinkerton
Consulting Services ("PCS"), a private investigative firm. Microsoft also sought the assistance of
the National Bureau of Investigation ("NBI"). On 10 November 1995, PCS employee John
Benedic8 Sacriz ("Sacriz") and NBI agent Dominador Samiano, Jr. ("Samiano"), posing as
representatives of a computer shop,9 bought computer hardware (central processing unit ("CPU")
and computer monitor) and software (12 computer disks ("CDs") in read-only memory ("ROM")
format) from respondents. The CPU contained pre-installed10 Microsoft Windows 3.1 and
MS-DOS software. The 12 CD-ROMs, encased in plastic containers with Microsoft packaging,
also contained Microsoft software.11 At least two of the CD-ROMs were "installers," so-called
because they contain several software (Microsoft only or both Microsoft and
non-Microsoft).12 Sacriz and Samiano were not given the Microsoft end-user license agreements,
user’s manuals, registration cards or certificates of authenticity for the articles they purchased.
The receipt issued to Sacriz and Samiano for the CPU and monitor bore the heading "T.M.T.C.
(PHILS.) INC. BELTRON COMPUTER."13 The receipt for the 12 CD-ROMs did not indicate its
source although the name "Gerlie" appears below the entry "delivered by." 14
On 17 November 1995, Microsoft applied for search warrants against respondents in the
Regional Trial Court, Branch 23, Manila ("RTC").15 The RTC granted Microsoft’s application and
issued two search warrants ("Search Warrant Nos. 95-684 and 95-685").16 Using Search Warrant
Nos. 95-684 and 95-685, the NBI searched the premises of Beltron and TMTC and seized
several computer-related hardware, software, accessories, and paraphernalia. Among these
were 2,831 pieces of CD-ROMs containing Microsoft software.17
Based on the articles obtained from respondents, Microsoft and a certain Lotus Development
Corporation ("Lotus Corporation") charged respondents before the Department of Justice ("DOJ")
with copyright infringement under Section 5(A) in relation to Section 29 of Presidential Decree No.
49, as amended, ("PD 49")18 and with unfair competition under Article 189(1)19 of the Revised
Penal Code. In its Complaint ("I.S. No. 96-193"), which the NBI indorsed, Microsoft alleged that
respondents illegally copied and sold Microsoft software. 20
In their joint counter-affidavit, respondents Yvonne Keh ("respondent Keh") and Emily K. Chua
("respondent Chua") denied the charges against respondents. Respondents Keh and Chua
alleged that: (1) Microsoft’s real intention in filing the complaint under I.S. No. 96-193 was to
pressure Beltron to pay its alleged unpaid royalties, thus Microsoft should have filed a collection
suit instead of a criminal complaint; (2) TMTC bought the confiscated 59 boxes of MS-DOS CDs
from a Microsoft dealer in Singapore (R.R. Donnelly); (3) respondents are not the "source" of the
Microsoft Windows 3.1 software pre-installed in the CPU bought by Sacriz and Samiano, but only
of the MS-DOS software; (4) Microsoft’s alleged proof of purchase (receipt) for the 12 CD-ROMs
is inconclusive because the receipt does not indicate its source; and (5) respondents Benito Keh,
Jonathan K. Chua, Alfonso Chua, Alberto Chua, Judy K. Chua Hwang, Sophia Ong, and Deanna
Chua are stockholders of Beltron and TMTC in name only and thus cannot be held criminally
liable.21
The other respondents did not file counter-affidavits.
Meanwhile, respondents moved to quash Search Warrant Nos. 95-684 and 95-685. The RTC
partially granted their motion in its Order of 16 April 1996. Microsoft sought reconsideration but
the RTC denied Microsoft’s motion in its Order of 19 July 1996. Microsoft appealed to the Court
of Appeals in CA-G.R. CV No. 54600. In its Decision of 29 November 2001, the Court of Appeals
granted Microsoft’s appeal and set aside the RTC Orders of 16 April 1996 and 19 July 1996. The
Court of Appeals’ Decision became final on 27 December 2001.
The DOJ Resolutions
In the Resolution of 26 October 1999, DOJ State Prosecutor Jocelyn A. Ong ("State Prosecutor
Ong") recommended the dismissal of Microsoft’s complaint for lack of merit and insufficiency of
evidence. State Prosecutor Ong also recommended the dismissal of Lotus Corporation’s
complaint for lack of interest to prosecute and for insufficiency of evidence. Assistant Chief State
Prosecutor Lualhati R. Buenafe ("Assistant Chief State Prosecutor Buenafe") approved State
Prosecutor Ong’s recommendations.22 The 26 October 1999 Resolution reads in part:
[T]wo (2) issues have to be resolved in this case, namely:
a) Whether or not Beltron Computer and/or its stockholders should be held liable for the offenses
charged.
b) Whether or not prima facie case exist[s] against Taiwan Machinery Display and Trade Center,
Inc. (TMTC) for violation of the offense charged.
Complainant had alleged that from the time the license agreement was terminated, respondent/s
is/are no longer authorized to copy/distribute/sell Microsoft products. However, respondent/s
averred that the case is civil in nature, not criminal, considering that the case stemmed only out of
the desire of complainant to collect from them the amount of US$135,121.32 and that the
contract entered into by the parties cannot be unilaterally terminated.
In the order of Honorable William Bayhon dated July 19, 1996 [denying reconsideration to the
Order partially quashing the search warrants], he observed the following:
"It is further argued by counsel for respondent that the act taken by private complainant is to spite
revenge against the respondent Beltron for the latter failed to pay the alleged monetary obligation
in the amount of US$135,121.32. That respondent has some monetary obligation to complainant
which is not denied by the complainant."
["]It appears therefore that prior to the issuance of the subject search warrants, complainant had
some business transactions with the respondent [Beltron] along the same line of products.
Complainant failed to reveal the true circumstances existing between the two of them as it now
appears, indeed the search warrant[s] xxx [are] being used as a leverage to secure collection of
the money obligation which the Court cannot allow."
From said order, it can be gleaned that the [RTC] xxx, had admitted that the search warrants
applied for by complainant were merely used as a leverage for the collection of the alleged
monetary obligation of the respondent/s.
From said order, it can be surmise (sic) that the obligations between the parties is civil in nature
not criminal.
Moreover, complainant had time and again harped that respondent/s is/are not authorized to
sell/copy/distribute Microsoft products at the time of the execution of the search warrants. Still,
this office has no power to pass upon said issue for one has then to interpret the provisions of the
contract entered into by the parties, which question, should be raised in a proper civil proceeding.
Accordingly, absen[t] a resolution from the proper court of (sic) whether or not the contract is still
binding between the parties at the time of the execution of the search warrants, this office cannot
pass upon the issue of whether respondent/s is or are liable for the offense charged.
As to the second issue, we find for the respondent/s. TMTC had provided sufficient evidence
such as pro-forma invoice from R.R. Donnelley; Debt Advice of the Bank of Commerce; Official
Receipts from the Bureau of Customs; and Import Entry Declaration of the Bureau of Customs to
prove that indeed the Microsoft software in their possession were bought from Singapore.
Thus, respondent/s in this case has/have no intent to defraud the public, as provided under
Article 189 of the Revised Penal Code, for they bought said Microsoft MS-DOS 6.0 from an
alleged licensee of Microsoft in Singapore, with all the necessary papers. In their opinion, what
they have are genuine Microsoft software, therefore no unfair competition exist.
Moreover, violation of P.D. 49 does not exist, for respondent/s was/were not the manufacturers of
the Microsoft software seized and were selling their products as genuine Microsoft software,
considering that they bought it from a Microsoft licensee.
Complainant, on the other hand, considering that it has the burden of proving that the
respondent/s is/are liable for the offense charged, has not presented any evidence that the items
seized namely the 59 boxes of MS-DOS 6.0 software are counterfeit.
The certification issued on December 12, 1995 by Christopher Austin, Corporate Attorney of the
complainant, does not disclose this fact. For the term used by Mr. Austin was that the items
seized were unauthorized.
The question now, is whether the products were unauthorized because TMTC has no license to
sell Microsoft products, or is it unauthorized because R.R. Donnelley has no authority to sell said
products here in the Philippines.
Still, to determine the culpability of the respondents, complainant should present evidence that
what is in the possession of the respondent/s is/are counterfeit Microsoft products.
This it failed to do.23
Microsoft sought reconsideration and prayed for an ocular inspection of the articles seized from
respondents. However, in the Resolution of 3 December 1999, Assistant Chief State Prosecutor
Buenafe, upon State Prosecutor Ong’s recommendation, denied Microsoft’s motion. 24
Microsoft appealed to the Office of the DOJ Secretary. In the Resolution of 3 August 2000, DOJ
Undersecretary Regis V. Puno dismissed Microsoft’s appeal. 25 Microsoft sought reconsideration
but its motion was denied in the Resolution of 22 December 2000. 26
Hence, this petition. Microsoft contends that:
I. THE DOJ ERRED IN RULING THAT THE LIABILITY OF RESPONDENTS
WAS ONLY CIVIL IN NATURE BY VIRTUE OF THE LICENSE
AGREEMENT.
 II. THE DOJ MISAPPRECIATED THE FACT THAT RESPONDENTS WERE
ENGAGED IN THE ILLEGAL IMPORTATION, SALE AND DISTRIBUTION
OF COUNTERFEIT SOFTWARE AS EVIDENCED BY THE ITEMS
PURCHASED DURING THE TEST-BUY AND THE ITEMS SEIZED FROM
RESPONDENTS’ PREMISES.
III. THE DOJ MISAPPRECIATED THE LAW ON COPYRIGHT
INFRINGEMENT AND UNFAIR COMPETITION.
IV. ONLY TWO OUT OF THE NINE RESPONDENTS BOTHERED TO FILE
COUNTER-AFFIDAVITS; HENCE, THE CHARGES AGAINST SEVEN
[RESPONDENTS] REMAIN UNCONTROVERTED.27
In its Comment, filed by the Solicitor General, the DOJ maintains that it did not commit grave
abuse of discretion in dismissing Microsoft’s complaint.28
For their part, respondents allege in their Comment that Microsoft is guilty of forum-shopping
because its petition in CA-G.R. CV No. 54600 was filed ahead of, and has a "common interest"
with, this petition. On the merits, respondents reiterate their claims in their motion to quash
Search Warrant Nos. 95-684 and 95-685 that the articles seized from them were either owned by
others, purchased from legitimate sources, or not produced by Microsoft. Respondents also insist
that the Agreement entitled Beltron to "copy and replicate or reproduce" Microsoft products. On
the confiscated 2,831 CD-ROMs, respondents allege that a certain corporation29 left the
CD-ROMs with them for safekeeping. Lastly, respondents claim that there is no proof that the
CPU Sacriz and Samiano bought from them contained pre-installed Microsoft software because
the receipt for the CPU does not indicate "[s]oftware hard disk." 30
In its Reply, Microsoft counters that it is not liable for forum-shopping because its petition in
CA-G.R. CV No. 54600 involved the Orders of the RTC partially quashing Search Warrant Nos.
95-684 and 95-685 while this petition concerns the DOJ Resolutions dismissing its complaint
against respondents for copyright infringement and unfair competition. On the merits, Microsoft
maintains that respondents should be indicted for copyright infringement and unfair competition. 31
The Issues
The petition raises the following issues:
(1) Whether Microsoft engaged in forum-shopping; and
(2) Whether the DOJ acted with grave abuse of discretion in not finding probable cause to charge
respondents with copyright infringement and unfair competition.
The Ruling of the Court
The petition has merit.
Microsoft did not Engage in Forum-Shopping
Forum-shopping takes place when a litigant files multiple suits involving the same parties, either
simultaneously or successively, to secure a favorable judgment. 32 Thus, it exists where the
elements of litis pendentia are present, namely: (a) identity of parties, or at least such parties who
represent the same interests in both actions; (b) identity of rights asserted and relief prayed for,
the relief being founded on the same facts; and (c) the identity with respect to the two preceding
particulars in the two cases is such that any judgment that may be rendered in the pending case,
regardless of which party is successful, would amount to res judicata in the other
case.33 Forum-shopping is an act of malpractice because it abuses court processes.34 To check
this pernicious practice, Section 5, Rule 7 of the 1997 Rules of Civil Procedure requires the
principal party in an initiatory pleading to submit a certification against forum-shopping.35 Failure
to comply with this requirement is a cause for the dismissal of the case and, in case of willful
forum-shopping, for the imposition of administrative sanctions.
Here, Microsoft correctly contends that it is not liable for forum-shopping. What Microsoft
appealed in CA-G.R. CV No. 54600 were the RTC Orders partially quashing Search Warrant Nos.
95-684 and 95-685. In the present case, Microsoft is appealing from the DOJ Resolutions
dismissing its complaint against respondents for copyright infringement and unfair competition.
Thus, although the parties in CA-G.R. CV No. 54600 and this petition are identical, the rights
asserted and the reliefs prayed for are not such that the judgment in CA-G.R. CV No. 54600 does
not amount to res judicata in the present case. This renders forum-shopping impossible here.
The DOJ Acted with Grave Abuse of Discretion
in not Finding Probable Cause to Charge Respondents with
Copyright Infringement and Unfair Competition
Generally, this Court is loath to interfere in the prosecutor’s discretion in determining probable
cause36 — unless such discretion is shown to have been abused.37 This case falls under the
exception.
Unlike the higher quantum of proof beyond reasonable doubt required to secure a conviction, it is
the lower standard of probable cause which is applied during the preliminary investigation to
determine whether the accused should be held for trial. This standard is met if the facts and
circumstances incite a reasonable belief that the act or omission complained of constitutes the
offense charged. As we explained in Pilapil v. Sandiganbayan:38
The term [probable cause] does not mean "actual and positive cause" nor does it import absolute
certainty. It is merely based on opinion and reasonable belief. Thus, a finding of probable cause
does not require an inquiry into whether there is sufficient evidence to procure a conviction. It is
enough that it is believed that the act or omission complained of constitutes the offense charged.
Precisely, there is a trial for the reception of evidence of the prosecution in support of the charge.
PD 49 and Article 189(1)
Section 539 of PD 49 ("Section 5") enumerates the rights vested exclusively on the copyright
owner. Contrary to the DOJ’s ruling, the gravamen of copyright infringement is not merely the
unauthorized "manufacturing" of intellectual works but rather the unauthorized performance of
any of the acts covered by Section 5. Hence, any person who performs any of the acts under
Section 5 without obtaining the copyright owner’s prior consent renders himself civilly 40 and
criminally41 liable for copyright infringement. We held in Columbia Pictures, Inc. v. Court of
Appeals:42
Infringement of a copyright is a trespass on a private domain owned and occupied by the owner
of the copyright, and, therefore, protected by law, and infringement of copyright, or piracy, which
is a synonymous term in this connection, consists in the doing by any person, without the consent
of the owner of the copyright, of anything the sole right to do which is conferred by statute on the
owner of the copyright. (Emphasis supplied)
Significantly, under Section 5(A), a copyright owner is vested with the exclusive right to "copy,
distribute, multiply, [and] sell" his intellectual works.
On the other hand, the elements of unfair competition under Article 189(1)43 of the Revised Penal
Code are:
(a) That the offender gives his goods the general appearance of the goods of another
manufacturer or dealer;
(b) That the general appearance is shown in the (1) goods themselves, or in the (2) wrapping of
their packages, or in the (3) device or words therein, or in (4) any other feature of their
appearance[;]
(c) That the offender offers to sell or sells those goods or gives other persons a chance or
opportunity to do the same with a like purpose[; and]
(d) That there is actual intent to deceive the public or defraud a competitor.44
The element of intent to deceive may be inferred from the similarity of the goods or their
appearance.45
On the Sufficiency of Evidence to
Support a Finding of Probable Cause
Against Respondents
In its pleadings filed with the DOJ, Microsoft invoked three clusters of evidence to support its
complaint against respondents, namely: (1) the 12 CD-ROMs containing Microsoft software
Sacriz and Samiano bought from respondents; (2) the CPU with pre-installed Microsoft software
Sacriz and Samiano also purchased from respondents; and (3) the 2,831 CD-ROMs containing
Microsoft software seized from respondents.46 The DOJ, on the one hand, refused to pass upon
the relevance of these pieces of evidence because: (1) the "obligations between the parties is
civil and not criminal" considering that Microsoft merely sought the issuance of Search Warrant
Nos. 95-684 and 95-685 to pressure Beltron to pay its obligation under the Agreement, and (2)
the validity of Microsoft’s termination of the Agreement must first be resolved by the "proper
court." On the other hand, the DOJ ruled that Microsoft failed to present evidence proving that
what were obtained from respondents were counterfeit Microsoft products.
This is grave abuse of discretion.47
First. Being the copyright and trademark owner of Microsoft software, Microsoft acted well within
its rights in filing the complaint under I.S. No. 96-193 based on the incriminating evidence
obtained from respondents. Hence, it was highly irregular for the DOJ to hold, based on the RTC
Order of 19 July 1996, that Microsoft sought the issuance of Search Warrant Nos. 95-684 and
95-685, and by inference, the filing of the complaint under I.S. No. 96-193, merely to pressure
Beltron to pay its overdue royalties to Microsoft. Significantly, in its Decision in CA-G.R. CV No.
54600 dated 29 November 2001, the Court of Appeals set aside the RTC Order of 19 July 1996.
Respondents no longer contested that ruling which became final on 27 December 2001.
Second. There is no basis for the DOJ to rule that Microsoft must await a prior "resolution from
the proper court of (sic) whether or not the [Agreement] is still binding between the parties."
Beltron has not filed any suit to question Microsoft’s termination of the Agreement. Microsoft can
neither be expected nor compelled to wait until Beltron decides to sue before Microsoft can seek
remedies for violation of its intellectual property rights.
Furthermore, some of the counterfeit CD-ROMs bought from respondents were "installer"
CD-ROMs containing Microsoft software only or both Microsoft and non-Microsoft software.
These articles are counterfeit per se because Microsoft does not (and could not have authorized
anyone to) produce such CD-ROMs. The copying of the genuine Microsoft software to produce
these fake CD-ROMs and their distribution are illegal even if the copier or distributor is a
Microsoft licensee. As far as these installer CD-ROMs are concerned, the Agreement (and the
alleged question on the validity of its termination) is immaterial to the determination of
respondents’ liability for copyright infringement and unfair competition.
Lastly, Section 10(b)48 of the Agreement provides that Microsoft’s "rights and remedies" under
the contract are "not xxx exclusive and are in addition to any other rights and remedies provided
by law or [the] Agreement." Thus, even if the Agreement still subsists, Microsoft is not precluded
from seeking remedies under PD 49 and Article 189(1) of the Revised Penal Code to vindicate its
rights.
Third. The Court finds that the 12 CD-ROMs ("installer" and "non-installer") and the CPU with
pre-installed Microsoft software Sacriz and Samiano bought from respondents and the 2,831
Microsoft CD-ROMs seized from respondents suffice to support a finding of probable cause to
indict respondents for copyright infringement under Section 5(A) in relation to Section 29 of PD
49 for unauthorized copying and selling of protected intellectual works. The installer CD-ROMs
with Microsoft software, to repeat, are counterfeit per se.On the other hand, the illegality of the
"non-installer" CD-ROMs purchased from respondents and of the Microsoft software pre-installed
in the CPU is shown by the absence of the standard features accompanying authentic Microsoft
products, namely, the Microsoft end-user license agreements, user’s manuals, registration cards
or certificates of authenticity.
On the 2,831 Microsoft CD-ROMs49 seized from respondents, respondent Beltron, the only
respondent who was party to the Agreement, could not have reproduced them under the
Agreement as the Solicitor General50 and respondents contend. Beltron’s rights 51 under the
Agreement were limited to:
(1) the "reproduc[tion] and install[ation of] no more than one copy of [Microsoft] software on each
Customer System hard disk or Read Only Memory ("ROM")"; and
(2) the "distribut[ion] xxx and licens[ing of] copies of the [Microsoft] Product [as reproduced
above] and/or acquired from Authorized Replicator or Authorized Distributor) in object
code form to end users."
The Agreement defines an authorized replicator as "a third party approved by [Microsoft] which
may reproduce and manufacture [Microsoft] Product[s] for [Beltron] xxx." 52 An authorized
distributor, on the other hand, is a "third party approved by [Microsoft] from which [Beltron] may
purchase MED53 Product."54 Being a mere reproducer/installer of one Microsoft software copy on
each customer’s hard disk or ROM, Beltron could only have acquired the hundreds of Microsoft
CD-ROMs found in respondents’ possession from Microsoft distributors or replicators.

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

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

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

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

SO ORDERED.
 G.R. No. 165306 September 20, 2005
MANLY SPORTWEAR MANUFACTURING, INC., Petitioners,
vs.
DADODETTE ENTERPRISES AND/OR HERMES SPORTS CENTER, Respondent.
DECISION
YNARES-SANTIAGO, J.:
This petition for review on certiorari1 under Rule 45 of the Revised Rules of Civil Procedure
assails the July 13, 2004 decision2 of the Court of Appeals3 in CA-G.R. SP No. 79887 and its
September 15, 2004 resolution4 denying reconsideration thereof.
The facts are as follows:
On March 14, 2003, Special Investigator Eliezer P. Salcedo of the National Bureau of
Investigation (NBI) applied for a search warrant before the Regional Trial Court (RTC) of Quezon
City, based on the information that Dadodette Enterprises and/or Hermes Sports Center were in
possession of goods, the copyright of which belonged to Manly Sportswear Mfg., Inc. (MANLY).5
After finding reasonable grounds that a violation of Sections 172 and 217 of Republic Act (RA) No.
82936 has been committed, Judge Estrella T. Estrada of RTC-Quezon City, Branch 83, issued on
March 17, 2003 Search Warrant No. 4044(03).7
Respondents 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.
On June 10, 2003, the trial court granted the motion to quash and declared Search Warrant No.
4044(03) null and void based on its finding that the copyrighted products of MANLY do not
appear to be original creations and were being manufactured and distributed by different
companies locally and abroad under various brands, and therefore unqualified for protection
under Section 172 of RA 8293. Moreover, MANLY’s certificates of registrations were issued only
in 2002, whereas there were certificates of registrations for the same sports articles which were
issued earlier than MANLY’s, thus further negating the claim that its copyrighted products were
original creations.8
On August 11, 2003, the trial court denied9 MANLY’s motion for reconsideration. Hence it filed a
petition for certiorari10 before the Court of Appeals which was denied for lack of merit. The
appellate court found that the trial court correctly granted the motion to quash and that its ruling in
the ancillary proceeding did not preempt the findings of the intellectual property court as it did not
resolve with finality the status or character of the seized items.
After denial of its motion for reconsideration on September 15, 2004, MANLY filed the instant
petition for review on certiorari raising the sole issue of whether or not the Court of Appeals erred
in finding that the trial court did not gravely abuse its discretion in declaring in the hearing for the
quashal of the search warrant that the copyrighted products of MANLY are not original creations
subject to the protection of RA 8293.
We deny the petition.
The power to issue search warrants is exclusively vested with the trial judges in the exercise of
their judicial function.11 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.
Our ruling in Solid Triangle Sales Corp. v. Sheriff, RTC, Q.C., Br. 9312 is instructive, thus:
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. Consequently, MANLY’s assertion that the trial
court’s order quashing the warrant preempted the finding of the intellectual property court has no
legal basis.
As pertinently held in Solid Triangle Sales Corp. v. Sheriff, RTC, Q.C., Br. 93:13
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 an
information for the court’s ruling that no crime exists is only for 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. ...
... The finding by the court that no crime exists does not preclude the authorized officer under the protective mantle of the copyright law. It is not a conclusive proof of copyright
conducting the preliminary investigation from making his own determination that a crime has ownership. As it is, non-registration and deposit of the work within the prescribed period only
been committed and that probable cause exists for purposes of filing the information. makes the copyright owner liable to pay a fine.18

As correctly observed by the Court of Appeals, the trial court’s finding that the seized products
are not copyrightable was merely preliminary as it did not finally and permanently adjudicate on
the status and character of the seized items. MANLY could still file a separate copyright
infringement suit against the respondents because the order for the issuance or quashal of a
warrant is not res judicata.
WHEREFORE, the petition is DENIED. The July 13, 2004 decision of the Court of Appeals in
CA-G.R. SP No. 79887 and resolution dated September 15, 2004, are AFFIRMED.
SO ORDERED.

Thus, in Vlasons Enterprises Corporation v. Court of Appeals14 we held that:

The proceeding for the seizure of property in virtue of a search warrant does not end with the
actual taking of the property by the proper officers and its delivery, usually constructive, to the
court. The order for the issuance of the warrant is not a final one and cannot constitute res
judicata. Such an order does not ascertain and adjudicate the permanent status or character of
the seized property. By its very nature, it is provisional, interlocutory. It is merely the first step in
the process to determine the character and title of the property. That determination is done in the
criminal action involving the crime or crimes in connection with which the search warrant was
issued. Hence, such a criminal action should be prosecuted, or commenced if not yet instituted,
and prosecuted. The outcome of the criminal action will dictate the disposition of the seized
property…

We have also ruled in Ching v. Salinas, Sr., et al.15 that:

The RTC had jurisdiction to delve into and resolve the issue whether the petitioner’s utility models
are copyrightable and, if so, whether he is the owner of a copyright over the said models. It bears
stressing that upon the filing of the application for search warrant, the RTC was duty-bound to
determine whether probable cause existed, in accordance with Section 4, Rule 126 of the Rules
of Criminal Procedure[.]

Further, the copyright certificates issued in favor of MANLY constitute merely prima
facie evidence of validity and ownership. However, no presumption of validity is created where
other evidence exist that may cast doubt on the copyright validity. Hence, where there is
sufficient proof that the copyrighted products are not original creations but are readily available in
the market under various brands, as in this case, validity and originality will not be presumed and
the trial court may properly quash the issued warrant for lack of probable cause.

Besides, no copyright accrues in favor of MANLY despite issuance of the certificates of

registration and deposit16pursuant to Section 2, Rule 7 of the Copyrights Safeguards and
Regulations17 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