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ARELLANO UNIVERSITY SCHOOL OF LAW

CASES IN COPYRIGHT
Compilation of Cases in IPL Copyright

Compiled by: Anne Meagen DC. Maningas





AUSL| SUMMER 2014 | COPY000 | Atty. Josephine Santiago
1

Topic - Functions/Role of IPO/Bureaus
Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. NO. 156041 February 21, 2007
PEST MANAGEMENT ASSOCIATION OF THE PHILIPPINES (PMAP), represented by its
President, MANUEL J. CHAVEZ, Petitioner,
vs.
FERTILIZER AND PESTICIDE AUTHORITY (FPA), SECRETARY OF THE DEPARTMENT
OF AGRICULTURE, FPA OFFICER- IN-CHARGE CESAR M. DRILON, AND FPA DEPUTY
DIRECTOR DARIO C. SALUBARSE, Respondents.
D E C I S I O N
AUSTRIA-MARTINEZ, J.:
This resolves the Petition for Review on Certiorari seeking to set aside the Decision
1
of the
Regional Trial Court of Quezon City, Branch 90 (RTC) dated November 5, 2002.
The case commenced upon petitioners filing of a Petition For Declaratory Relief With
Prayer For Issuance Of A Writ Of Preliminary Injunction And/Or Temporary Restraining
Order with the RTC on January 4, 2002. Petitioner, a non-stock corporation duly organized
and existing under the laws of the Philippines, is an association of pesticide handlers duly
licensed by respondent Fertilizer and Pesticide Authority (FPA). It questioned the validity
of Section 3.12 of the 1987 Pesticide Regulatory Policies and Implementing Guidelines,
which provides thus:
3.12 Protection of Proprietary Data
Data submitted to support the first full or conditional registration of a pesticide
active ingredient in the Philippines will be granted proprietary protection for a
period of seven years from the date of such registration. During this period
subsequent registrants may rely on these data only with third party authorization or
otherwise must submit their own data. After this period, all data may be freely cited in
support of registration by any applicant, provided convincing proof is submitted that the
product being registered is identical or substantially similar to any current registered
pesticide, or differs only in ways that would not significantly increase the risk of
unreasonable adverse effects.
Pesticides granted provisional registration under P.D. 1144 will be considered first
registered in 1977, the date of the Decree.
Pesticide products in which data is still under protection shall be referred to as proprietary
pesticides, and all others as commodity pesticides. (Emphasis supplied)
2

Petitioner argued that the specific provision on the protection of the proprietary data in
FPAs Pesticide Regulatory Policies and Implementing Guidelines is unlawful for going
counter to the objectives of Presidential Decree No. 1144 (P.D. No. 1144); for exceeding the
limits of delegated authority; and for encroaching on the exclusive jurisdiction of the
Intellectual Property Office.
On November 5, 2002, the RTC dismissed the petition for declaratory relief for lack of
merit. The RTC held that "the FPA did not exceed the limits of its delegated authority in
issuing the aforecited Section 3.12 of the Guidelines granting protection to proprietary data
x x x because the issuance of the aforecited Section was a valid exercise of its power to
regulate, control and develop the pesticide industry under P.D. 1144"
2
and the assailed
provision does "not encroach on one of the functions of the Intellectual Properly Office
(IPO)."
3

Dissatisfied with the RTC Decision, petitioner resorted to filing this petition for review
on certiorari where the following issues are raised:
I
WHETHER OR NOT RESPONDENT FPA HAS ACTED BEYOND THE SCOPE OF ITS
DELEGATED POWER WHEN IT GRANTED A SEVEN-YEAR PROPRIETARY PROTECTION TO
DATA SUBMITTED TO SUPPORT THE FIRST FULL OR CONDITIONAL REGISTRATION OF A
PESTICIDE INGREDIENT IN THE PHILIPPINES;
II
WHETHER OR NOT RESPONDENT FPA IS ENCROACHING ON THE EXCLUSIVE
JURISDICTION OF THE INTELLECTUAL PROPERTY OFFICE (IPO) WHEN IT INCLUDED IN
ITS PESTICIDE REGULATORY POLICIES AND IMPLEMENTING GUIDELINES THE SUBJECT
SEVEN-YEAR PROPRIETARY DATA PROTECTION;
III
WHETHER OR NOT SAID PROPRIETARY DATA PROTECTION IS AN UNLAWFUL
RESTRAINT OF FREE TRADE;
IV
WHETHER OR NOT SAID PROPRIETARY DATA PROTECTION RUNS COUNTER TO THE
OBJECTIVES OF P.D. NO. 1144;
V
WHETHER OR NOT THE REGIONAL TRIAL COURT OF QUEZON CITY, BRANCH 90,
COMMITTED A REVERSIBLE ERROR WHEN IT UPHELD THE VALIDITY OF SECTION 3.12
OF THE PESTICIDE REGULATORY POLICIES AND IMPLEMENTING GUIDELINES ISSUED BY
RESPONDENT FPA.
3

Respondents, on the other hand, maintain that the provision on the protection of
proprietary data in the FPA's Pesticide Regulatory Policies and Implementing Guidelines is
valid and legal as it does not violate the objectives of P.D. No. 1144; the proprietary data are
a substantial asset which must be protected; the protection for a limited number of years
does not constitute unlawful restraint of free trade; and such provision does not encroach
upon the jurisdiction of the Intellectual Property Office.
Respondents expound that since under P.D. No. 1144, the FPA is mandated to regulate,
control and develop the pesticide industry, it was necessary to provide for such protection
of proprietary data, otherwise, pesticide handlers will proliferate to the the detriment of
the industry and the public since the inherent toxicity of pesticides are hazardous and are
potential environmental contaminants.
They also pointed out that the protection under the assailed Pesticide Regulatory Policies
and Implementing Guidelines is warranted, considering that the development of
proprietary data involves an investment of many years and large sums of money, thus, the
data generated by an applicant in support of his application for registration are owned and
proprietary to him. Moreover, since the protection accorded to the proprietary data is
limited in time, then such protection is reasonable and does not constitute unlawful
restraint of trade.
Lastly, respondents emphasize that the provision on protection of proprietary data does
not usurp the functions of the Intellectual Property Office (IPO) since a patent and data
protection are two different matters. A patent prohibits all unlicensed making, using and
selling of a particular product, while data protection accorded by the FPA merely prevents
copying or unauthorized use of an applicant's data, but any other party may independently
generate and use his own data. It is further argued that under Republic Act No. 8293 (R.A.
No. 8293), the grant of power to the IPO to administer and implement State policies on
intellectual property is not exclusionary as the IPO is even allowed to coordinate with other
government agencies to formulate and implement plans and policies to strengthen the
protection of intellectual property rights.
The petition is devoid of merit.
The law being implemented by the assailed Pesticide Regulatory Policies and Implementing
Guidelines is P.D. No. 1144, entitled Creating the Fertilizer and Pesticide Authority and
Abolishing the Fertilizer Industry Authority. As stated in the Preamble of said decree, "there
is an urgent need to create a technically-oriented government authority equipped with the
required expertise to regulate, control and develop both the fertilizer and the pesticide
industries." (Underscoring supplied) The decree further provided as follows:
Section 6. Powers and Functions. The FPA shall have jurisdiction, over all existing handlers
of pesticides, fertilizers and other agricultural chemical inputs. The FPA shall have the
following powers and functions:
I. Common to Fertilizers, Pesticides and other Agricultural Chemicals
x x x
4

4. To promulgate rules and regulations for the registration and licensing of handlers of
these products, collect fees pertaining thereto, as well as the renewal, suspension,
revocation, or cancellation of such registration or licenses and such other rules and
regulations as may be necessary to implement this Decree;
x x x
Section 7. Power to Issue Rules and Regulations to Implement Decree. The FPA is hereby
authorized to issue or promulgate rules and regulations to implement, and carry out the
purposes and provisions of this Decree.
Did the FPA go beyond its delegated power and undermine the objectives of P.D. No. 1144
by issuing regulations that provide for protection of proprietary data? The answer is in the
negative.
Under P.D. No. 1144, the FPA is given the broad power to issue rules and regulations to
implement and carry out the purposes and provisions of said decree, i.e., to regulate,
control and develop the pesticide industry. In furtherance of such ends, the FPA sees the
protection of proprietary data as one way of fulfilling its mandate. In Republic v.
Sandiganbayan,
4
the Court emphasized that:
x x x [t]he interpretation of an administrative government agency, which is tasked to
implement a statute is generally accorded great respect and ordinarily controls the
construction of the courts. The reason behind this rule was explained in Nestle
Philippines, Inc. vs. Court of Appeals in this wise:
The rationale for this rule relates not only to the emergence of the multifarious needs of a
modern or modernizing society and the establishment of diverse administrative agencies
for addressing and satisfying those needs; it also relates to the accumulation of experience
and growth of specialized capabilities by the administrative agency charged with
implementing a particular statute. In Asturias Sugar Central, Inc. vs. Commissioner of
Customs, the Court stressed thatexecutive officials are presumed to have familiarized
themselves with all the considerations pertinent to the meaning and purpose of the
law, and to have formed an independent, conscientious and competent expert
opinion thereon. The courts give much weight to the government agency officials
charged with the implementation of the law, their competence, expertness,
experience and informed judgment, and the fact that they frequently are the drafters
of the law they interpret."
x x x.
5
[Emphasis supplied]
Verily, in this case, the Court acknowledges the experience and expertise of FPA officials
who are best qualified to formulate ways and means of ensuring the quality and quantity of
pesticides and handlers thereof that should enter the Philippine market, such as giving
limited protection to proprietary data submitted by applicants for registration. The Court
ascribes great value and will not disturb the FPA's determination that one way of attaining
the purposes of its charter is by granting such protection, specially where there is nothing
on record which shows that said administrative agency went beyond its delegated powers.
5

Moreover, petitioner has not succeeded in convincing the Court that the provision in
question has legal infirmities.1awphi1.net
There is no encroachment upon the powers of the IPO granted under R.A. No. 8293,
otherwise known as theIntellectual Property Code of the Philippines. Section 5 thereof
enumerates the functions of the IPO. Nowhere in said provision does it state nor can it be
inferred that the law intended the IPO to have the exclusive authority to protect or promote
intellectual property rights in the Philippines. On the contrary, paragraph (g) of said
Section even provides that the IPO shall "[c]oordinate with other government agencies and
the private sector efforts to formulate and implement plans and policies to strengthen the
protection of intellectual property rights in the country." Clearly, R.A. No. 8293 recognizes
that efforts to fully protect intellectual property rights cannot be undertaken by the IPO
alone. Other agencies dealing with intellectual property rights are, therefore, not precluded
from issuing policies, guidelines and regulations to give protection to such rights.
There is also no evidence whatsoever to support petitioner's allegation that the grant of
protection to proprietary data would result in restraining free trade. Petitioner did not
adduce any reliable data to prove its bare allegation that the protection of proprietary data
would unduly restrict trade on pesticides. Furthermore, as held in Association of Philippine
Coconut Desiccators v. Philippine Coconut Authority,
6
despite the fact that "our present
Constitution enshrines free enterprise as a policy, it nonetheless reserves to the
government the power to intervene whenever necessary to promote the general welfare."
There can be no question that the unregulated use or proliferation of pesticides would be
hazardous to our environment. Thus, in the aforecited case, the Court declared that "free
enterprise does not call for removal of protective regulations."
7
More recently, in Coconut
Oil Refiners Association, Inc. v. Torres,
8
the Court held that "[t]he mere fact that incentives
and privileges are granted to certain enterprises to the exclusion of others does not render
the issuance unconstitutional for espousing unfair competition." It must be clearly
explained and proven by competent evidence just exactly how such protective regulation
would result in the restraint of trade.
In sum, the assailed provision in the 1987 Pesticide Regulatory Policies and Implementing
Guidelines granting protection to proprietary data is well within the authority of the FPA to
issue so as to carry out its purpose of controlling, regulating and developing the pesticide
industry.
WHEREFORE, the petition is DENIED. The Decision of the Regional Trial Court of Quezon
City, Branch 90, in SP. Civil Case No. Q-01-42790 is AFFIRMED.
SO ORDERED.

6

Topic: Differences of forms of IP
Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 172835 December 13, 2007
AIR PHILIPPINES CORPORATION, Petitioner,
vs.
PENNSWELL, INC. Respondent.
D E C I S I O N
CHICO-NAZARIO, J.:
Petitioner Air Philippines Corporation seeks, via the instant Petition for Review under Rule
45 of the Rules of Court, the nullification of the 16 February 2006 Decision
1
and the 25 May
2006 Resolution
2
of the Court of Appeals in CA-G.R. SP No. 86329, which affirmed the
Order
3
dated 30 June 2004 of the Regional Trial Court (RTC), Makati City, Branch 64, in
Civil Case No. 00-561.
Petitioner Air Philippines Corporation is a domestic corporation engaged in the business of
air transportation services. On the other hand, respondent Pennswell, Inc. was organized to
engage in the business of manufacturing and selling industrial chemicals, solvents, and
special lubricants.
On various dates, respondent delivered and sold to petitioner sundry goods in trade,
covered by Sales Invoices No. 8846,
4
9105,
5
8962,
6
and 8963,
7
which correspond to
Purchase Orders No. 6433, 6684, 6634 and 6633, respectively. Under the contracts,
petitioners total outstanding obligation amounted to P449,864.98 with interest at 14% per
annum until the amount would be fully paid. For failure of the petitioner to comply with its
obligation under said contracts, respondent filed a Complaint
8
for a Sum of Money on 28
April 2000 with the RTC.
In its Answer,
9
petitioner contended that its refusal to pay was not without valid and
justifiable reasons. In particular, petitioner alleged that it was defrauded in the amount
of P592,000.00 by respondent for its previous sale of four items, covered by Purchase
Order No. 6626. Said items were misrepresented by respondent as belonging to a new line,
but were in truth and in fact, identical with products petitioner had previously purchased
from respondent. Petitioner asserted that it was deceived by respondent which merely
altered the names and labels of such goods. Petitioner specifically identified the items in
question, as follows:

7

Label/Description Item No. Amount P.O. Date
1. a. Anti-Friction Fluid
b. Excellent Rust
Corrosion (fake)
MPL-800
MPL-008
153,941.40
155,496.00
5714
5888
05/20/99
06/20/99
2. a. Contact Grease
b. Connector Grease (fake)
COG #2
CG
115,236.00
230,519.52
5540
6327
04/26/99
08/05/99
3. a. Trixohtropic Grease
b. Di-Electric Strength
Protective Coating (fake)
EPC
EPC#2
81,876.96
81,876.96
4582
5446
01/29/99
04/21/99
4. a. Dry Lubricant
b. Anti-Seize Compound
(fake)
ASC-EP
ASC-EP
2000
87,346.52
124,108.10
5712
4763 &
5890
05/20/99
02/16/99 &
06/24/99

According to petitioner, respondents products, namely Excellent Rust Corrosion,
Connector Grease, Electric Strength Protective Coating, and Anti-Seize Compound, are
identical with its Anti-Friction Fluid, Contact Grease, Thixohtropic Grease, and Dry
Lubricant, respectively. Petitioner asseverated that had respondent been forthright about
the identical character of the products, it would not have purchased the items complained
of. Moreover, petitioner alleged that when the purported fraud was discovered, a
conference was held between petitioner and respondent on 13 January 2000, whereby the
parties agreed that respondent would return to petitioner the amount it previously paid.
However, petitioner was surprised when it received a letter from the respondent,
demanding payment of the amount of P449,864.94, which later became the subject of
respondents Complaint for Collection of a Sum of Money against petitioner.
During the pendency of the trial, petitioner filed a Motion to Compel
10
respondent to give a
detailed list of the ingredients and chemical components of the following products, to wit:
(a) Contact Grease and Connector Grease; (b) Thixohtropic Grease and Di-Electric Strength
Protective Coating; and (c) Dry Lubricant and Anti-Seize Compound.
11
It appears that
petitioner had earlier requested the Philippine Institute of Pure and Applied Chemistry
(PIPAC) for the latter to conduct a comparison of respondents goods.
On 15 March 2004, the RTC rendered an Order granting the petitioners motion. It
disposed, thus:
The Court directs [herein respondent] Pennswell, Inc. to give [herein petitioner] Air
Philippines Corporation[,] a detailed list of the ingredients or chemical components of the
following chemical products:
8

a. Contact Grease to be compared with Connector Grease;
b. Thixohtropic Grease to be compared with Di-Electric Strength Protective Coating; and
c. Dry Lubricant to be compared with Anti-Seize Compound[.]
[Respondent] Pennswell, Inc. is given fifteen (15) days from receipt of this Order to submit
to [petitioner] Air Philippines Corporation the chemical components of all the above-
mentioned products for chemical comparison/analysis.
12

Respondent sought reconsideration of the foregoing Order, contending that it cannot be
compelled to disclose the chemical components sought because the matter is confidential.
It argued that what petitioner endeavored to inquire upon constituted a trade secret which
respondent cannot be forced to divulge. Respondent maintained that its products are
specialized lubricants, and if their components were revealed, its business competitors
may easily imitate and market the same types of products, in violation of its proprietary
rights and to its serious damage and prejudice.
The RTC gave credence to respondents reasoning, and reversed itself. It issued an Order
dated 30 June 2004, finding that the chemical components are respondents trade secrets
and are privileged in character. A priori, it rationalized:
The Supreme Court held in the case of Chavez vs. Presidential Commission on Good
Government, 299 SCRA 744, p. 764, that "the drafters of the Constitution also unequivocally
affirmed that aside from national security matters and intelligence information, trade or
industrial secrets (pursuant to the Intellectual Property Code and other related laws) as
well as banking transactions (pursuant to the Secrecy of Bank Deposit Act) are also
exempted from compulsory disclosure."
Trade secrets may not be the subject of compulsory disclosure. By reason of [their]
confidential and privileged character, ingredients or chemical components of the products
ordered by this Court to be disclosed constitute trade secrets lest [herein respondent]
would eventually be exposed to unwarranted business competition with others who may
imitate and market the same kinds of products in violation of [respondents] proprietary
rights. Being privileged, the detailed list of ingredients or chemical components may not be
the subject of mode of discovery under Rule 27, Section 1 of the Rules of Court, which
expressly makes privileged information an exception from its coverage.
13

Alleging grave abuse of discretion on the part of the RTC, petitioner filed a Petition for
Certiorari under Rule 65 of the Rules of Court with the Court of Appeals, which denied the
Petition and affirmed the Order dated 30 June 2004 of the RTC.
The Court of Appeals ruled that to compel respondent to reveal in detail the list of
ingredients of its lubricants is to disregard respondents rights over its trade secrets. It was
categorical in declaring that the chemical formulation of respondents products and their
ingredients are embraced within the meaning of "trade secrets." In disallowing the
disclosure, the Court of Appeals expounded, thus:
9

The Supreme Court in Garcia v. Board of Investments (177 SCRA 374 [1989]) held that
trade secrets and confidential, commercial and financial information are exempt from
public scrutiny. This is reiterated in Chavez v. Presidential Commission on Good
Government (299 SCRA 744 [1998]) where the Supreme Court enumerated the kinds of
information and transactions that are recognized as restrictions on or privileges against
compulsory disclosure. There, the Supreme Court explicitly stated that:
"The drafters of the Constitution also unequivocally affirmed that, aside from national
security matters and intelligence information, trade or industrial secrets (pursuant to the
Intellectual Property Code and other related laws) as well as banking transactions
(pursuant to the Secrecy of Bank Deposits Act) re also exempt from compulsory
disclosure."
It is thus clear from the foregoing that a party cannot be compelled to produce, release or
disclose documents, papers, or any object which are considered trade secrets.
In the instant case, petitioner [Air Philippines Corporation] would have [respondent]
Pennswell produce a detailed list of ingredients or composition of the latters lubricant
products so that a chemical comparison and analysis thereof can be obtained. On this note,
We believe and so hold that the ingredients or composition of [respondent] Pennswells
lubricants are trade secrets which it cannot be compelled to disclose.
[Respondent] Pennswell has a proprietary or economic right over the ingredients or
components of its lubricant products. The formulation thereof is not known to the general
public and is peculiar only to [respondent] Pennswell. The legitimate and economic
interests of business enterprises in protecting their manufacturing and business secrets are
well-recognized in our system.
[Respondent] Pennswell has a right to guard its trade secrets, manufacturing formulas,
marketing strategies and other confidential programs and information against the public.
Otherwise, such information can be illegally and unfairly utilized by business competitors
who, through their access to [respondent] Pennswells business secrets, may use the same
for their own private gain and to the irreparable prejudice of the latter.
x x x x
In the case before Us, the alleged trade secrets have a factual basis, i.e., it comprises of the
ingredients and formulation of [respondent] Pennswells lubricant products which are
unknown to the public and peculiar only to Pennswell.
All told, We find no grave abuse of discretion amounting to lack or excess of jurisdiction on
the part of public respondent Judge in finding that the detailed list of ingredients or
composition of the subject lubricant products which petitioner [Air Philippines
Corporation] seeks to be disclosed are trade secrets of [respondent] Pennswell; hence,
privileged against compulsory disclosure.
14

Petitioners Motion for Reconsideration was denied.
10

Unyielding, petitioner brought the instant Petition before us, on the sole issue of:
WHETHER THE COURT OF APPEALS RULED IN ACCORDANCE WITH PREVAILING LAWS
AND JURISPRUDENCE WHEN IT UPHELD THE RULING OF THE TRIAL COURT THAT THE
CHEMICAL COMPONENTS OR INGREDIENTS OF RESPONDENTS PRODUCTS ARE TRADE
SECRETS OR INDUSTRIAL SECRETS THAT ARE NOT SUBJECT TO COMPULSORY
DISCLOSURE.
15

Petitioner seeks to convince this Court that it has a right to obtain the chemical
composition and ingredients of respondents products to conduct a comparative analysis of
its products. Petitioner assails the conclusion reached by the Court of Appeals that the
matters are trade secrets which are protected by law and beyond public scrutiny. Relying
on Section 1, Rule 27 of the Rules of Court, petitioner argues that the use of modes of
discovery operates with desirable flexibility under the discretionary control of the trial
court. Furthermore, petitioner posits that its request is not done in bad faith or in any
manner as to annoy, embarrass, or oppress respondent.
A trade secret is defined as a plan or process, tool, mechanism or compound known only to
its owner and those of his employees to whom it is necessary to confide it.
16
The definition
also extends to a secret formula or process not patented, but known only to certain
individuals using it in compounding some article of trade having a commercial value.
17
A
trade secret may consist of any formula, pattern, device, or compilation of information that:
(1) is used in one's business; and (2) gives the employer an opportunity to obtain an
advantage over competitors who do not possess the information.
18
Generally, a trade secret
is a process or device intended for continuous use in the operation of the business, for
example, a machine or formula, but can be a price list or catalogue or specialized customer
list.
19
It is indubitable that trade secrets constitute proprietary rights. The inventor,
discoverer, or possessor of a trade secret or similar innovation has rights therein which
may be treated as property, and ordinarily an injunction will be granted to prevent the
disclosure of the trade secret by one who obtained the information "in confidence" or
through a "confidential relationship."
20
American jurisprudence has utilized the following
factors
21
to determine if an information is a trade secret, to wit:
(1) the extent to which the information is known outside of the employer's business;
(2) the extent to which the information is known by employees and others involved in the
business;
(3) the extent of measures taken by the employer to guard the secrecy of the information;
(4) the value of the information to the employer and to competitors;
(5) the amount of effort or money expended by the company in developing the information;
and
(6) the extent to which the information could be easily or readily obtained through an
independent source.
22

11

In Cocoland Development Corporation v. National Labor Relations Commission,
23
the issue
was the legality of an employees termination on the ground of unauthorized disclosure of
trade secrets. The Court laid down the rule that any determination by management as to
the confidential nature of technologies, processes, formulae or other so-called trade secrets
must have a substantial factual basis which can pass judicial scrutiny. The Court rejected
the employers naked contention that its own determination as to what constitutes a trade
secret should be binding and conclusive upon the NLRC. As a caveat, the Court said that to
rule otherwise would be to permit an employer to label almost anything a trade secret, and
thereby create a weapon with which he/it may arbitrarily dismiss an employee on the
pretext that the latter somehow disclosed a trade secret, even if in fact there be none at all
to speak of.
24
Hence, in Cocoland, the parameters in the determination of trade secrets
were set to be such substantial factual basis that can withstand judicial scrutiny.
The chemical composition, formulation, and ingredients of respondents special lubricants
are trade secrets within the contemplation of the law. Respondent was established to
engage in the business of general manufacturing and selling of, and to deal in, distribute,
sell or otherwise dispose of goods, wares, merchandise, products, including but not limited
to industrial chemicals, solvents, lubricants, acids, alkalies, salts, paints, oils, varnishes,
colors, pigments and similar preparations, among others. It is unmistakable to our minds
that the manufacture and production of respondents products proceed from a formulation
of a secret list of ingredients. In the creation of its lubricants, respondent expended efforts,
skills, research, and resources. What it had achieved by virtue of its investments may not be
wrested from respondent on the mere pretext that it is necessary for petitioners defense
against a collection for a sum of money. By and large, the value of the information to
respondent is crystal clear. The ingredients constitute the very fabric of respondents
production and business. No doubt, the information is also valuable to respondents
competitors. To compel its disclosure is to cripple respondents business, and to place it at
an undue disadvantage. If the chemical composition of respondents lubricants are opened
to public scrutiny, it will stand to lose the backbone on which its business is founded. This
would result in nothing less than the probable demise of respondents business.
Respondents proprietary interest over the ingredients which it had developed and
expended money and effort on is incontrovertible. Our conclusion is that the detailed
ingredients sought to be revealed have a commercial value to respondent. Not only do we
acknowledge the fact that the information grants it a competitive advantage; we also find
that there is clearly a glaring intent on the part of respondent to keep the information
confidential and not available to the prying public.
We now take a look at Section 1, Rule 27 of the Rules of Court, which permits parties to
inspect documents or things upon a showing of good cause before the court in which an
action is pending. Its entire provision reads:
SECTION 1. Motion for production or inspection order. Upon motion of any party showing
good cause therefore, the court in which an action is pending may (a) order any party to
produce and permit the inspection and copying or photographing, by or on behalf of the
moving party, of any designated documents, papers, books, accounts, letters, photographs,
objects or tangible things, not privileged, which constitute or contain evidence material to
12

any matter involved in the action and which are in his possession, custody or control; or (b)
order any party to permit entry upon designated land or other property in his possession
or control for the purpose of inspecting, measuring, surveying, or photographing the
property or any designated relevant object or operation thereon. The order shall specify
the time, place and manner of making the inspection and taking copies and photographs,
and may prescribe such terms and conditions as are just.
A more than cursory glance at the above text would show that the production or inspection
of documents or things as a mode of discovery sanctioned by the Rules of Court may be
availed of by any party upon a showing of good cause therefor before the court in which an
action is pending. The court may order any party: a) to produce and permit the inspection
and copying or photographing of any designated documents, papers, books, accounts,
letters, photographs, objects or tangible things, which are not privileged;
25
which constitute
or contain evidence material to any matter involved in the action; and which are in his
possession, custody or control; or b) to permit entry upon designated land or other
property in his possession or control for the purpose of inspecting, measuring, surveying,
or photographing the property or any designated relevant object or operation thereon.
Rule 27 sets an unequivocal proviso that the documents, papers, books, accounts, letters,
photographs, objects or tangible things that may be produced and inspected should not be
privileged.
26
The documents must not be privileged against disclosure.
27
On the ground of
public policy, the rules providing for production and inspection of books and papers do not
authorize the production or inspection of privileged matter; that is, books and papers
which, because of their confidential and privileged character, could not be received in
evidence.
28
Such a condition is in addition to the requisite that the items be specifically
described, and must constitute or contain evidence material to any matter involved in the
action and which are in the partys possession, custody or control.
Section 24
29
of Rule 130 draws the types of disqualification by reason of privileged
communication, to wit: (a) communication between husband and wife; (b) communication
between attorney and client; (c) communication between physician and patient; (d)
communication between priest and penitent; and (e) public officers and public interest.
There are, however, other privileged matters that are not mentioned by Rule 130. Among
them are the following: (a) editors may not be compelled to disclose the source of
published news; (b) voters may not be compelled to disclose for whom they voted; (c)
trade secrets; (d) information contained in tax census returns; and (d) bank deposits.
30

We, thus, rule against the petitioner. We affirm the ruling of the Court of Appeals which
upheld the finding of the RTC that there is substantial basis for respondent to seek
protection of the law for its proprietary rights over the detailed chemical composition of its
products.
That trade secrets are of a privileged nature is beyond quibble. The protection that this
jurisdiction affords to trade secrets is evident in our laws. The Interim Rules of Procedure
on Government Rehabilitation, effective 15 December 2000, which applies to: (1) petitions
for rehabilitation filed by corporations, partnerships, and associations pursuant to
Presidential Decree No. 902-A,
31
as amended; and (2) cases for rehabilitation transferred
13

from the Securities and Exchange Commission to the RTCs pursuant to Republic Act No.
8799, otherwise known as The Securities Regulation Code, expressly provides that the
court may issue an order to protect trade secrets or other confidential research,
development, or commercial information belonging to the debtor.
32
Moreover, the
Securities Regulation Code is explicit that the Securities and Exchange Commission is not
required or authorized to require the revelation of trade secrets or processes in
any application, report or document filed with the Commission.
33
This confidentiality is
made paramount as a limitation to the right of any member of the general public, upon
request, to have access to all information filed with the Commission.
34

Furthermore, the Revised Penal Code endows a cloak of protection to trade secrets under
the following articles:
Art. 291. Revealing secrets with abuse of office. The penalty of arresto mayor and a fine
not exceeding 500 pesos shall be imposed upon any manager, employee or servant who, in
such capacity, shall learn the secrets of his principal or master and shall reveal such secrets.
Art. 292. Revelation of industrial secrets. The penalty of prision correccional in its
minimum and medium periods and a fine not exceeding 500 pesos shall be imposed upon
the person in charge, employee or workman of any manufacturing or industrial
establishment who, to the prejudice of the owner thereof, shall reveal the secrets of the
industry of the latter.
Similarly, Republic Act No. 8424, otherwise known as the National Internal Revenue Code
of 1997, has a restrictive provision on trade secrets, penalizing the revelation thereof by
internal revenue officers or employees, to wit:
SECTION 278. Procuring Unlawful Divulgence of Trade Secrets. - Any person who causes or
procures an officer or employee of the Bureau of Internal Revenue to divulge any
confidential information regarding the business, income or inheritance of any taxpayer,
knowledge of which was acquired by him in the discharge of his official duties, and which it
is unlawful for him to reveal, and any person who publishes or prints in any manner
whatever, not provided by law, any income, profit, loss or expenditure appearing in any
income tax return, shall be punished by a fine of not more than two thousand pesos
(P2,000), or suffer imprisonment of not less than six (6) months nor more than five (5)
years, or both.
Republic Act No. 6969, or the Toxic Substances and Hazardous and Nuclear Wastes Control
Act of 1990, enacted to implement the policy of the state to regulate, restrict or prohibit the
importation, manufacture, processing, sale, distribution, use and disposal of chemical
substances and mixtures that present unreasonable risk and/or injury to health or the
environment, also contains a provision that limits the right of the public to have access
to records, reports or information concerning chemical substances and mixtures
including safety data submitted and data on emission or discharge into the
environment, if the matter is confidential such that it would divulge trade secrets,
production or sales figures; or methods, production or processes unique to such
14

manufacturer, processor or distributor; or would otherwise tend to affect adversely
the competitive position of such manufacturer, processor or distributor.
35

Clearly, in accordance with our statutory laws, this Court has declared that intellectual and
industrial property rights cases are not simple property cases.
36
Without limiting such
industrial property rights to trademarks and trade names, this Court has ruled that all
agreements concerning intellectual property are intimately connected with economic
development.
37
The protection of industrial property encourages investments in new ideas
and inventions and stimulates creative efforts for the satisfaction of human needs. It speeds
up transfer of technology and industrialization, and thereby bring about social and
economic progress.
38
Verily, the protection of industrial secrets is inextricably linked to the
advancement of our economy and fosters healthy competition in trade.
Jurisprudence has consistently acknowledged the private character of trade
secrets.1wphi1 There is a privilege not to disclose ones trade secrets.
39
Foremost, this
Court has declared that trade secrets and banking transactions are among the recognized
restrictions to the right of the people to information as embodied in the Constitution.
40
We
said that the drafters of the Constitution also unequivocally affirmed that, aside from
national security matters and intelligence information, trade or industrial secrets
(pursuant to the Intellectual Property Code and other related laws) as well as banking
transactions (pursuant to the Secrecy of Bank Deposits Act), are also exempted from
compulsory disclosure.
41

Significantly, our cases on labor are replete with examples of a protectionist stance towards
the trade secrets of employers. For instance, this Court upheld the validity of the policy of a
pharmaceutical company prohibiting its employees from marrying employees of any
competitor company, on the rationalization that the company has a right to guard its trade
secrets, manufacturing formulas, marketing strategies and other confidential programs and
information from competitors.
42
Notably, it was in a labor-related case that this Court made
a stark ruling on the proper determination of trade secrets.
In the case at bar, petitioner cannot rely on Section 77
43
of Republic Act 7394, or the
Consumer Act of the Philippines, in order to compel respondent to reveal the chemical
components of its products. While it is true that all consumer products domestically sold,
whether manufactured locally or imported, shall indicate their general make or active
ingredients in their respective labels of packaging, the law does not apply to respondent.
Respondents specialized lubricants -- namely, Contact Grease, Connector Grease,
Thixohtropic Grease, Di-Electric Strength Protective Coating, Dry Lubricant and Anti-Seize
Compound -- are not consumer products. "Consumer products," as it is defined in Article
4(q),
44
refers to goods, services and credits, debts or obligations which are primarily for
personal, family, household or agricultural purposes, which shall include, but not be limited
to, food, drugs, cosmetics, and devices. This is not the nature of respondents products. Its
products are not intended for personal, family, household or agricultural purposes. Rather,
they are for industrial use, specifically for the use of aircraft propellers and engines.
Petitioners argument that Republic Act No. 8203, or the Special Law on Counterfeit Drugs,
requires the disclosure of the active ingredients of a drug is also on faulty
15

ground.
45
Respondents products are outside the scope of the cited law. They do not come
within the purview of a drug
46
which, as defined therein, refers to any chemical compound
or biological substance, other than food, that is intended for use in the treatment,
prevention or diagnosis of disease in man or animals. Again, such are not the
characteristics of respondents products.
What is clear from the factual findings of the RTC and the Court of Appeals is that the
chemical formulation of respondents products is not known to the general public and is
unique only to it. Both courts uniformly ruled that these ingredients are not within the
knowledge of the public. Since such factual findings are generally not reviewable by this
Court, it is not duty-bound to analyze and weigh all over again the evidence already
considered in the proceedings below.
47
We need not delve into the factual bases of such
findings as questions of fact are beyond the pale of Rule 45 of the Rules of Court. Factual
findings of the trial court when affirmed by the Court of Appeals, are binding and
conclusive on the Supreme Court.
48

We do not find merit or applicability in petitioners invocation of Section 12
49
of the Toxic
Substances and Hazardous and Nuclear Wastes Control Act of 1990, which grants the
public access to records, reports or information concerning chemical substances and
mixtures, including safety data submitted, and data on emission or discharge into the
environment. To reiterate, Section 12
50
of said Act deems as confidential matters, which
may not be made public, those that would divulge trade secrets, including production or
sales figures or methods; production or processes unique to such manufacturer, processor
or distributor, or would otherwise tend to affect adversely the competitive position of such
manufacturer, processor or distributor. It is true that under the same Act, the Department
of Environment and Natural Resources may release information; however, the clear import
of the law is that said authority is limited by the right to confidentiality of the
manufacturer, processor or distributor, which information may be released only to a
medical research or scientific institution where the information is needed for the purpose
of medical diagnosis or treatment of a person exposed to the chemical substance or
mixture. The right to confidentiality is recognized by said Act as primordial. Petitioner has
not made the slightest attempt to show that these circumstances are availing in the case at
bar.
Indeed, the privilege is not absolute; the trial court may compel disclosure where it is
indispensable for doing justice.
51
We do not, however, find reason to except respondents
trade secrets from the application of the rule on privilege. The revelation of respondents
trade secrets serves no better purpose to the disposition of the main case pending with the
RTC, which is on the collection of a sum of money. As can be gleaned from the facts,
petitioner received respondents goods in trade in the normal course of business. To be
sure, there are defenses under the laws of contracts and sales available to petitioner. On the
other hand, the greater interest of justice ought to favor respondent as the holder of trade
secrets. If we were to weigh the conflicting interests between the parties, we rule in favor
of the greater interest of respondent. Trade secrets should receive greater protection from
discovery, because they derive economic value from being generally unknown and not
readily ascertainable by the public.
52
To the mind of this Court, petitioner was not able to
16

show a compelling reason for us to lift the veil of confidentiality which shields respondents
trade secrets.
WHEREFORE, the Petition is DENIED. The Decision dated 16 February 2006, and the
Resolution dated 25 May 2006, of the Court of Appeals in CA-G.R. SP No. 86329 are
AFFIRMED. No costs.
SO ORDERED.
Footnotes

1
Penned by Associate Justice Jose C. Reyes, Jr. with Associate Justice Eliezer R. de los Santos
and Associate Justice Arturo G. Tayag, concurring. CA rollo, pp. 166-176.
2
Id. at 206.
3
Penned by Judge Delia H. Panganiban. Records, p. 313-314.
4
Corresponding to the sale of Penns-Lube Graphite Grease. Id. at 7.
5
Corresponding to the sale of Rectified Insulation and Carbon Remover. Id. at 9.
6
Corresponding to the sale of Anti-Contaminant. Id. at 11.
7
Corresponding to the sale of Non-Toxic Ease Off with Product Code Penns-Chem CIR. Id. at
13.
8
Id. at 1-6.
9
Id. at 33-48.
10
Id. at 291-294.
11
Id. at 291-292.
12
Id. at 300.
13
Id. at 313-314.
14
CA rollo, pp. 172-175.
15
Rollo, p. 26
16
BLACKS LAW DICTIONARY 1494 (1991), 6th ed.
17
Id., citing Palin Mfg. Co., Inc. v. Water Technology, Inc., 103 Ill.App.3d 926, 59 Ill.Dec. 553,
431
18
AMJUR EMPLOYMENT 178, citing Saunders v. Florence Enameling Co., Inc., 540 So. 2d
651 (Ala. 1988); Air Products and Chemicals, Inc. v. Johnson, 296 Pa. Super. 405, 442 A.2d
1114 (1982). The foregoing citation also expounded that trade secrets need not be
technical in nature. Market-related information such as information on current and future
projects, as well as potential future opportunities for a firm, may constitute a trade secret.,
citing Air Products and Chemicals, Inc. v. Johnson, 296 Pa. Super. 405, 442 A.2d 1114
(1982).
19
Id., citing Saunders v. Florence Enameling Co., Inc., 540 So. 2d 651 (Ala. 1988); Air
Products and Chemicals, Inc. v. Johnson, 296 Pa. Super. 405, 442 A.2d 1114 (1982).
A former employee of an insurance company, who routinely received information
regarding the company's customer list and policy termination dates while serving as vice-
president, was barred from disclosing that information, even though the company had
partially disclosed the customer list in attempts to secure new clients. Alexander &
Alexander, Inc. v. Drayton, 378 F. Supp. 824 (E.D. Pa. 1974), aff'd, 505 F.2d 729 (3d Cir.
1974).
17

20
9 A.L.R.3d 665, citing Am Jur, Injunctions (Rev ed 72). The Restatement of the Law of
Torts 757, emphasizes that liability for the disclosure of a trade secret learned under
conditions giving no privilege of disclosure or use is not based on the mere copying or use
but on the improper means by which the information was procured.
21
Id., as adopted from the Uniform Trade Secrets Act which is intended to provide states
with a legal framework for improved trade-secret protection.
22
Id.
23
328 Phil. 351 (1996).
24
Id.
25
"Privileged communications" are communications which occur in a context of legal or
other recognized professional confidentiality. The fact that a certain communication is
termed privileged allows the speakers to resist legal pressure to disclose its contents. (See
Barrons Law Dictionary, 3rd ed., p. 373.) The term "privileged" in Section 2, Rule 24, Rules
of Court, on depositions and discovery, refers to privileged confidential communications
under Sec. 21, Rule 130, Rules of Court. (See Philippine Law Dictionary, 1982 ed., p. 484.)
26
Feria and Noche, Civil Procedure Annotated (2001 ed.), p. 553.
27
Agpalo, Handbook on Civil Procedure (2001 ed.), p. 288.
28
Id. at 289.
29
Sec. 24. Disqualification by reason of privileged communication. The following persons
cannot testify as to matters learned in confidence in the following cases:
(a) The husband or the wife, during or after the marriage cannot be examined without the
consent of the other as to any communication received in confidence by one from the other
during the marriage except in a civil case by one against the other, or in a criminal case for
a crime committed by one against the other or the latter's direct descendants or
ascendants;
(b) An attorney cannot, without the consent of his client, be examined as to any
communication made by the client to him, or his advice given thereon in the course of, or
with a view to, professional employment, nor can an attorney's secretary, stenographer, or
clerk be examined, without the consent of the client and his employer, concerning any fact
the knowledge of which has been acquired in such capacity;
(c) A person authorized to practice medicine, surgery or obstetrics cannot in a civil case,
without the consent of the patient, be examined as to any advice or treatment given by him
or any information which he may have acquired in attending such patient in a professional
capacity, which information was necessary to enable him to act in capacity, and which
would blacken the reputation of the patient;
(d) A minister or priest cannot, without the consent of the person making the confession,
be examined as to any confession made to or any advice given by him in his professional
character in the course of discipline enjoined by the church to which the minister or priest
belongs;
(e) A public officer cannot be examined during his term of office or afterwards, as to
communications made to him in official confidence, when the court finds that the public
interest would suffer by the disclosure.
30
Francisco, Evidence (3rd ed., 1996), pp. 171-173.
31
SEC Reorganization Act.
32
Section 4, Rule 3 of the Interim Rules of Procedure on Government Rehabilitation.
18

33
Section 66.2 of the Securities Regulation Code of 2000 provides that, "66.2. Nothing in
this Code shall be construed to require, or to authorize the Commission to require, the
revealing of trade secrets or processes in any application, report, or document filed with
the Commission.
34
SEC. 66. Revelation of Information Filed with the Commission. 66.1. All information filed
with the Commission in compliance with the requirements of this Code shall be made
available to any member of the general public, upon request, in the premises and during
regular office hours of the Commission, except as set forth in this Section.
35
Section 12. - Public Access to Records, Reports or Notification. The public shall have
access to records, reports, or information concerning chemical substances and mixtures
including safety data submitted, data on emission or discharge into the environment, and
such documents shall be available for inspection or reproduction during normal business
hours except that the Department of Environment and Natural Resources may consider a
record, report or information or particular portions thereof confidential and may not be
made public when such would divulge trade secrets, production or sales figures or
methods, production or processes unique to such manufacturer, processor or distributor,
or would otherwise tend to affect adversely the competitive position of such manufacturer,
processor or distributor. The Department of Environment and Natural Resources, however,
may release information subject to claim of confidentiality to a medical research or
scientific institution where the information is needed for the purpose of medical diagnosis
or treatment of a person exposed to the chemical substance or mixture.
36
Mirpuri v. Court of Appeals, 376 Phil. 628 (1999).
37
Id.
38
Id. In Mirpuri (id. at 666), the Court acknowledges the Philippines respect for
intellectual and industrial property, and held:
The Intellectual Property Code of the Philippines declares that "an effective intellectual and
industrial property system is vital to the development of domestic and creative activity,
facilitates transfer of technology, it attracts foreign investments, and ensures market access
for our products." The Intellectual Property Code took effect on January 1, 1998 and by its
express provision, repealed the Trademark Law, the Patent Law, Articles 188 and 189 of
the Revised Penal Code, the Decree on Intellectual Property, and the Decree on Compulsory
Reprinting of Foreign Textbooks. The Code was enacted to strengthen the intellectual and
industrial property system in the Philippines as mandated by the country's accession to the
Agreement Establishing the World Trade Organization (WTO).
39
Id.
40
The pertinent Constitutional provisions on the right of the people to information are, to
wit:
Sec. 7 [Article III]. The right of the people to information on matters of public concern shall
be recognized. Access to official records, and to documents, and papers pertaining to
official acts, transactions, or decisions, as well as to government research data used as basis
for policy development, shall be afforded the citizen, subject to such limitations as may be
provided by law.
Sec. 28 [Article II]. Subject to reasonable conditions prescribed by law, the State adopts and
implements a policy of full public disclosure of all its transactions involving public interest.
41
Chavez v. Presidential Commission on Good Government and Magtanggol Gunigundo,
360 Phil. 133, 161 (1998).
19

42
Duncan Association of Detailman-PTGWO v. Glaxo Wellcome Philippines, Inc., G.R. No.
162994, 17 September 2004, 438 SCRA 343, 352; See also Star Paper Corporation v.
Simbol, G.R. No. 164774, 12 April 2006, 487 SCRA 228, 242.
43
ARTICLE 77. Minimum Labeling Requirements for Consumer Products. All consumer
products domestically sold whether manufactured locally or imported shall indicate the
following in their respective labels of packaging:
a) its correct and registered trade name or brand name;
b) its duly registered trademark;
c) its duly registered business name;
d) the address of the manufacturer, importer, repacker of the consumer product in the
Philippines;
e) its general make or active ingredients;
f) the net quantity of contents, in terms of weight, measure or numerical count rounded off
to at least the nearest tenths in the metric system;
g) country of manufacture, if imported; and
h) if a consumer product is manufactured, refilled or repacked under license from a
principal, the label shall so state the fact.
The following may be required by the concerned department in accordance with the rules
and regulations they will promulgate under authority of this Act:
a) whether it is flammable or inflammable;
b) directions for use, if necessary;
c) warning of toxicity;
d) wattage, voltage or amperage; or
e) process of manufacture used, if necessary.
Any word, statement or other information required by or under authority of the preceding
paragraph shall appear on the label or labeling with such conspicuousness as compared
with other words, statements, designs, or devices therein, and in such terms as to render it
likely to be read and understood by the ordinary individual under customary conditions of
purchase or use.
The above requirements shall form an integral part of the label without danger of being
erased or detached under ordinary handling of the product.
44
ARTICLE 4. Definition of Terms. For purposes of this Act, the term:
x x x x
q) "Consumer products and services" means goods, services and credits, debts or
obligations which are primarily for personal, family, household or agricultural purposes,
which shall include but not limited to, food, drugs, cosmetics, and devices.
45
Petitioner cites the definition of a counterfeit drug/medicine in Republic Act 8203 or the
Special Law on Counterfeit Drugs to buttress its argument, specifically Section 3(b)(4)
thereof, to wit:
a drug which contains no amount of, or a different active ingredient, or less than eighty
percent (80%) of the active ingredient it purports to possess, as distinguished from an
adulterated drug including reduction or loss or efficacy due to expiration.
46
SECTION 3. Definition of Terms For purposes of this Act, the terms:
(a) Drugs shall refer to any chemical compound or biological substance, other than food,
intended for use in the treatment, prevention or diagnosis of disease in man or animals,
including but not limited to:
20

(1) any article recognized in the official United States Pharmacopoeia National Formulary
(USP-NF), official Homeopathic Pharmacopoeia of the United States, Philippines National
Drug Formulary, British Pharmacopoeia, any National Compendium or any supplement to
any of them;
(2) any article intended for use in the diagnosis, cure mitigation, treatment, or prevention
of disease in man or animals;
(3) any article other than food intended to affect the structure or any function of the body
of man or animals;
(4) any article intended for use as a component of any articles specified in clauses (1), (2),
(3) not including devices or their components, parts, or accessories; and
(5) herbal and/or traditional drugs which are articles of plant or animal origin used in folk
medicine which are:
(a) recognized in the Philippine National Drug Formulary; (b) intended for use in the
treatment or cure or mitigation of disease symptoms, injury or body defect in man; (c)
other than food, intended to affect the structure or any function of the body of man; (d) in
finished or ready-to-use dosage form; and (e) intended for use as a component of any of the
articles specified in clauses (a), (b), (c) and (d).
47
Ceballos v. Intestate Estate of the Late Emigdio Mercado, G.R. No. 155856, 28 May 2004,
430 SCRA 323, 331.
48
Filinvest Land, Inc. v. Court of Appeals, G.R. No. 138980, 20 September 2005, 470 SCRA
260, 267-268.
49
Section 12. - Public Access to Records, Reports or Notification. The public shall have
access to records, reports or information concerning chemical substances and mixtures
including safety data submitted, data on emission or discharge into the environment, and
such documents shall be available for inspection or reproduction during normal business
hours except that the Department of Environment and Natural Resources may consider a
record, report or information or particular portions thereof confidential and may not be
made public when such would divulge trade secrets, production or sales figures or
methods, production or processes unique to such manufacturer, processor or distributor,
or would otherwise tend to affect adversely the competitive position of such manufacturer,
processor or distributor. The Department of Environment and Natural Resources, however,
may release information subject to claim of confidentiality to a medical research or
scientific institution where the information is needed for the purpose of medical diagnosis
or treatment of a person exposed to the chemical substance or mixture. (Republic Act No.
6969.)
50
Republic Act No. 6969.
51
Francisco, Evidence (3rd ed., 1996), pp. 171-173.
52
AMJUR DEPOSITION 42 , citing Ex parte Miltope Corp., 823 So. 2d 640 (Ala. 2001).


21

Topic: Differences of forms of IP; Statutory right; No unfair competition in copyright
Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 148222 August 15, 2003
PEARL & DEAN (PHIL.), INCORPORATED, Petitioner,
vs.
SHOEMART, INCORPORATED, and NORTH EDSA MARKETING,
INCORPORATED, Respondents.
D E C I S I O N
CORONA, J.:
In the instant petition for review on certiorari under Rule 45 of the Rules of Court,
petitioner Pearl & Dean (Phil.) Inc. (P & D) assails the May 22, 2001 decision
1
of the Court
of Appeals reversing the October 31, 1996 decision
2
of the Regional Trial Court of Makati,
Branch 133, in Civil Case No. 92-516 which declared private respondents Shoemart Inc.
(SMI) and North Edsa Marketing Inc. (NEMI) liable for infringement of trademark and
copyright, and unfair competition.
FACTUAL ANTECEDENTS
The May 22, 2001 decision of the Court of Appeals
3
contained a summary of this dispute:
"Plaintiff-appellant Pearl and Dean (Phil.), Inc. is a corporation engaged in the manufacture
of advertising display units simply referred to as light boxes. These units utilize specially
printed posters sandwiched between plastic sheets and illuminated with back lights. Pearl
and Dean was able to secure a Certificate of Copyright Registration dated January 20, 1981
over these illuminated display units. The advertising light boxes were marketed under the
trademark "Poster Ads". The application for registration of the trademark was filed with
the Bureau of Patents, Trademarks and Technology Transfer on June 20, 1983, but was
approved only on September 12, 1988, per Registration No. 41165. From 1981 to about
1988, Pearl and Dean employed the services of Metro Industrial Services to manufacture its
advertising displays.
Sometime in 1985, Pearl and Dean negotiated with defendant-appellant Shoemart, Inc.
(SMI) for the lease and installation of the light boxes in SM City North Edsa. Since SM City
North Edsa was under construction at that time, SMI offered as an alternative, SM Makati
and SM Cubao, to which Pearl and Dean agreed. On September 11, 1985, Pearl and Deans
General Manager, Rodolfo Vergara, submitted for signature the contracts covering SM
Cubao and SM Makati to SMIs Advertising Promotions and Publicity Division Manager,
Ramonlito Abano. Only the contract for SM Makati, however, was returned signed. On
October 4, 1985, Vergara wrote Abano inquiring about the other contract and reminding
22

him that their agreement for installation of light boxes was not only for its SM Makati
branch, but also for SM Cubao. SMI did not bother to reply.
Instead, in a letter dated January 14, 1986, SMIs house counsel informed Pearl and Dean
that it was rescinding the contract for SM Makati due to non-performance of the terms
thereof. In his reply dated February 17, 1986, Vergara protested the unilateral action of
SMI, saying it was without basis. In the same letter, he pushed for the signing of the
contract for SM Cubao.
Two years later, Metro Industrial Services, the company formerly contracted by Pearl and
Dean to fabricate its display units, offered to construct light boxes for Shoemarts chain of
stores. SMI approved the proposal and ten (10) light boxes were subsequently fabricated
by Metro Industrial for SMI. After its contract with Metro Industrial was terminated, SMI
engaged the services of EYD Rainbow Advertising Corporation to make the light boxes.
Some 300 units were fabricated in 1991. These were delivered on a staggered basis and
installed at SM Megamall and SM City.
Sometime in 1989, Pearl and Dean, received reports that exact copies of its light boxes
were installed at SM City and in the fastfood section of SM Cubao. Upon investigation, Pearl
and Dean found out that aside from the two (2) reported SM branches, light boxes similar
to those it manufactures were also installed in two (2) other SM stores. It further
discovered that defendant-appellant North Edsa Marketing Inc. (NEMI), through its
marketing arm, Prime Spots Marketing Services, was set up primarily to sell advertising
space in lighted display units located in SMIs different branches. Pearl and Dean noted that
NEMI is a sister company of SMI.
In the light of its discoveries, Pearl and Dean sent a letter dated December 11, 1991 to both
SMI and NEMI enjoining them to cease using the subject light boxes and to remove the
same from SMIs establishments. It also demanded the discontinued use of the trademark
"Poster Ads," and the payment to Pearl and Dean of compensatory damages in the amount
of Twenty Million Pesos (P20,000,000.00).
Upon receipt of the demand letter, SMI suspended the leasing of two hundred twenty-four
(224) light boxes and NEMI took down its advertisements for "Poster Ads" from the lighted
display units in SMIs stores. Claiming that both SMI and NEMI failed to meet all its
demands, Pearl and Dean filed this instant case for infringement of trademark and
copyright, unfair competition and damages.
In denying the charges hurled against it, SMI maintained that it independently developed
its poster panels using commonly known techniques and available technology, without
notice of or reference to Pearl and Deans copyright. SMI noted that the registration of the
mark "Poster Ads" was only for stationeries such as letterheads, envelopes, and the like.
Besides, according to SMI, the word "Poster Ads" is a generic term which cannot be
appropriated as a trademark, and, as such, registration of such mark is invalid. It also
stressed that Pearl and Dean is not entitled to the reliefs prayed for in its complaint since
its advertising display units contained no copyright notice, in violation of Section 27 of P.D.
49. SMI alleged that Pearl and Dean had no cause of action against it and that the suit was
23

purely intended to malign SMIs good name. On this basis, SMI, aside from praying for the
dismissal of the case, also counterclaimed for moral, actual and exemplary damages and for
the cancellation of Pearl and Deans Certification of Copyright Registration No. PD-R-2558
dated January 20, 1981 and Certificate of Trademark Registration No. 4165 dated
September 12, 1988.
NEMI, for its part, denied having manufactured, installed or used any advertising display
units, nor having engaged in the business of advertising. It repleaded SMIs averments,
admissions and denials and prayed for similar reliefs and counterclaims as SMI."
The RTC of Makati City decided in favor of P & D:
Wherefore, defendants SMI and NEMI are found jointly and severally liable for
infringement of copyright under Section 2 of PD 49, as amended, and infringement of
trademark under Section 22 of RA No. 166, as amended, and are hereby penalized under
Section 28 of PD 49, as amended, and Sections 23 and 24 of RA 166, as amended.
Accordingly, defendants are hereby directed:
(1) to pay plaintiff the following damages:
(a) actual damages - P16,600,000.00,
representing profits
derived by defendants
as a result of infringe-
ment of plaintiffs copyright
from 1991 to 1992
(b) moral damages - P1,000.000.00
(c) exemplary damages - P1,000,000.00
(d) attorneys fees - P1,000,000.00
plus
(e) costs of suit;
(2) to deliver, under oath, for impounding in the National Library, all light boxes of SMI
which were fabricated by Metro Industrial Services and EYD Rainbow Advertising
Corporation;
(3) to deliver, under oath, to the National Library, all filler-posters using the trademark
"Poster Ads", for destruction; and
(4) to permanently refrain from infringing the copyright on plaintiffs light boxes and its
trademark "Poster Ads".
Defendants counterclaims are hereby ordered dismissed for lack of merit.
SO ORDERED.
4

24

On appeal, however, the Court of Appeals reversed the trial court:
Since the light boxes cannot, by any stretch of the imagination, be considered as either
prints, pictorial illustrations, advertising copies, labels, tags or box wraps, to be properly
classified as a copyrightable class "O" work, we have to agree with SMI when it posited that
what was copyrighted were the technical drawings only, and not the light boxes
themselves, thus:
42. When a drawing is technical and depicts a utilitarian object, a copyright over the
drawings like plaintiff-appellants will not extend to the actual object. It has so been held
under jurisprudence, of which the leading case is Baker vs. Selden (101 U.S. 841 (1879). In
that case, Selden had obtained a copyright protection for a book entitled "Seldens
Condensed Ledger or Bookkeeping Simplified" which purported to explain a new system of
bookkeeping. Included as part of the book were blank forms and illustrations consisting of
ruled lines and headings, specially designed for use in connection with the system
explained in the work. These forms showed the entire operation of a day or a week or a
month on a single page, or on two pages following each other. The defendant Baker then
produced forms which were similar to the forms illustrated in Seldens copyrighted books.
The Court held that exclusivity to the actual forms is not extended by a copyright. The
reason was that "to grant a monopoly in the underlying art when no examination of its
novelty has ever been made would be a surprise and a fraud upon the public; that is the
province of letters patent, not of copyright." And that is precisely the point. No doubt aware
that its alleged original design would never pass the rigorous examination of a patent
application, plaintiff-appellant fought to foist a fraudulent monopoly on the public by
conveniently resorting to a copyright registration which merely employs a recordal system
without the benefit of an in-depth examination of novelty.
The principle in Baker vs. Selden was likewise applied in Muller vs. Triborough Bridge
Authority [43 F. Supp. 298 (S.D.N.Y. 1942)]. In this case, Muller had obtained a copyright
over an unpublished drawing entitled "Bridge Approach the drawing showed a novel
bridge approach to unsnarl traffic congestion". The defendant constructed a bridge
approach which was alleged to be an infringement of the new design illustrated in
plaintiffs drawings. In this case it was held that protection of the drawing does not extend
to the unauthorized duplication of the object drawn because copyright extends only to the
description or expression of the object and not to the object itself. It does not prevent one
from using the drawings to construct the object portrayed in the drawing.
In two other cases, Imperial Homes Corp. v. Lamont, 458 F. 2d 895 and Scholtz Homes, Inc. v.
Maddox, 379 F. 2d 84, it was held that there is no copyright infringement when one who,
without being authorized, uses a copyrighted architectural plan to construct a structure.
This is because the copyright does not extend to the structures themselves.
In fine, we cannot find SMI liable for infringing Pearl and Deans copyright over the
technical drawings of the latters advertising display units.
xxx xxx xxx
25

The Supreme Court trenchantly held in Faberge, Incorporated vs. Intermediate Appellate
Court that the protective mantle of the Trademark Law extends only to the goods used by
the first user as specified in the certificate of registration, following the clear mandate
conveyed by Section 20 of Republic Act 166, as amended, otherwise known as the
Trademark Law, which reads:
SEC. 20. Certification of registration prima facie evidence of validity.- A certificate of
registration of a mark or trade-name shall be prima facie evidence of the validity of the
registration, the registrants ownership of the mark or trade-name, and of the registrants
exclusive right to use the same in connection with the goods, business or servicesspecified
in the certificate, subject to any conditions and limitations stated therein." (underscoring
supplied)
The records show that on June 20, 1983, Pearl and Dean applied for the registration of the
trademark "Poster Ads" with the Bureau of Patents, Trademarks, and Technology Transfer.
Said trademark was recorded in the Principal Register on September 12, 1988 under
Registration No. 41165 covering the following products: stationeries such as letterheads,
envelopes and calling cards and newsletters.
With this as factual backdrop, we see no legal basis to the finding of liability on the part of
the defendants-appellants for their use of the words "Poster Ads", in the advertising display
units in suit. Jurisprudence has interpreted Section 20 of the Trademark Law as "an implicit
permission to a manufacturer to venture into the production of goods and allow that
producer to appropriate the brand name of the senior registrant on goods other than those
stated in the certificate of registration." The Supreme Court further emphasized the
restrictive meaning of Section 20 when it stated, through Justice Conrado V. Sanchez, that:
Really, if the certificate of registration were to be deemed as including goods not specified
therein, then a situation may arise whereby an applicant may be tempted to register a
trademark on any and all goods which his mind may conceive even if he had never
intended to use the trademark for the said goods. We believe that such omnibus
registration is not contemplated by our Trademark Law.
While we do not discount the striking similarity between Pearl and Deans registered
trademark and defendants-appellants "Poster Ads" design, as well as the parallel use by
which said words were used in the parties respective advertising copies, we cannot find
defendants-appellants liable for infringement of trademark. "Poster Ads" was registered by
Pearl and Dean for specific use in its stationeries, in contrast to defendants-appellants who
used the same words in their advertising display units. Why Pearl and Dean limited the use
of its trademark to stationeries is simply beyond us. But, having already done so, it must
stand by the consequence of the registration which it had caused.
xxx xxx xxx
We are constrained to adopt the view of defendants-appellants that the words "Poster Ads"
are a simple contraction of the generic term poster advertising. In the absence of any
convincing proof that "Poster Ads" has acquired a secondary meaning in this jurisdiction,
26

we find that Pearl and Deans exclusive right to the use of "Poster Ads" is limited to what is
written in its certificate of registration, namely, stationeries.
Defendants-appellants cannot thus be held liable for infringement of the trademark "Poster
Ads".
There being no finding of either copyright or trademark infringement on the part of SMI
and NEMI, the monetary award granted by the lower court to Pearl and Dean has no leg to
stand on.
xxx xxx xxx
WHEREFORE, premises considered, the assailed decision is REVERSED and SET ASIDE, and
another is rendered DISMISSING the complaint and counterclaims in the above-entitled
case for lack of merit.
5

Dissatisfied with the above decision, petitioner P & D filed the instant petition assigning the
following errors for the Courts consideration:
A. THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT NO COPYRIGHT
INFRINGEMENT WAS COMMITTED BY RESPONDENTS SM AND NEMI;
B. THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT NO INFRINGEMENT OF
PEARL & DEANS TRADEMARK "POSTER ADS" WAS COMMITTED BY RESPONDENTS SM
AND NEMI;
C. THE HONORABLE COURT OF APPEALS ERRED IN DISMISSING THE AWARD OF THE
TRIAL COURT, DESPITE THE LATTERS FINDING, NOT DISPUTED BY THE HONORABLE
COURT OF APPEALS, THAT SM WAS GUILTY OF BAD FAITH IN ITS NEGOTIATION OF
ADVERTISING CONTRACTS WITH PEARL & DEAN.
D. THE HONORABLE COURT OF APPEALS ERRED IN NOT HOLDING RESPONDENTS SM
AND NEMI LIABLE TO PEARL & DEAN FOR ACTUAL, MORAL & EXEMPLARY DAMAGES,
ATTORNEYS FEES AND COSTS OF SUIT.
6

ISSUES
In resolving this very interesting case, we are challenged once again to put into proper
perspective four main concerns of intellectual property law patents, copyrights,
trademarks and unfair competition arising from infringement of any of the first three. We
shall focus then on the following issues:
(1) if the engineering or technical drawings of an advertising display unit (light box) are
granted copyright protection (copyright certificate of registration) by the National Library,
is the light box depicted in such engineering drawings ipso facto also protected by such
copyright?
27

(2) or should the light box be registered separately and protected by a patent issued by the
Bureau of Patents Trademarks and Technology Transfer (now Intellectual Property Office)
in addition to the copyright of the engineering drawings?
(3) can the owner of a registered trademark legally prevent others from using such
trademark if it is a mere abbreviation of a term descriptive of his goods, services or
business?
ON THE ISSUE OF COPYRIGHT INFRINGEMENT
Petitioner P & Ds complaint was that SMI infringed on its copyright over the light boxes
when SMI had the units manufactured by Metro and EYD Rainbow Advertising for its own
account. Obviously, petitioners position was premised on its belief that its copyright over
the engineering drawings extended ipso facto to the light boxes depicted or illustrated in
said drawings. In ruling that there was no copyright infringement, the Court of Appeals
held that the copyright was limited to the drawings alone and not to the light box itself. We
agree with the appellate court.
First, petitioners application for a copyright certificate as well as Copyright Certificate
No. PD-R2588 issued by the National Library on January 20, 1981 clearly stated that it
was for a class "O" work under Section 2 (O) of PD 49 (The Intellectual Property Decree)
which was the statute then prevailing. Said Section 2 expressly enumerated the works
subject to copyright:
SEC. 2. The rights granted by this Decree shall, from the moment of creation, subsist with
respect to any of the following works:
x x x x x x x x x
(O) Prints, pictorial illustrations, advertising copies, labels, tags, and box wraps;
x x x x x x x x x
Although petitioners copyright certificate was entitled "Advertising Display Units" (which
depicted the box-type electrical devices), its claim of copyright infringement cannot be
sustained.
Copyright, in the strict sense of the term, is purely a statutory right. Being a mere statutory
grant, the rights are limited to what the statute confers. It may be obtained and enjoyed
only with respect to the subjects and by the persons, and on terms and conditions specified
in the statute.
7
Accordingly, it can cover only the works falling within the statutory
enumeration or description.
8

P & D secured its copyright under the classification class "O" work. This being so,
petitioners copyright protection extended only to the technical drawings and not to the
light box itself because the latter was not at all in the category of "prints, pictorial
illustrations, advertising copies, labels, tags and box wraps." Stated otherwise, even as we
find that P & D indeed owned a valid copyright, the same could have referred only to the
technical drawings within the category of "pictorial illustrations." It could not have possibly
28

stretched out to include the underlying light box. The strict application
9
of the laws
enumeration in Section 2 prevents us from giving petitioner even a little leeway, that is,
even if its copyright certificate was entitled "Advertising Display Units." What the law does
not include, it excludes, and for the good reason: the light box was not a literary or artistic
piece which could be copyrighted under the copyright law. And no less clearly, neither
could the lack of statutory authority to make the light box copyrightable be remedied by
the simplistic act of entitling the copyright certificate issued by the National Library as
"Advertising Display Units."
In fine, if SMI and NEMI reprinted P & Ds technical drawings for sale to the public without
license from P & D, then no doubt they would have been guilty of copyright infringement.
But this was not the case. SMIs and NEMIs acts complained of by P & D were to have units
similar or identical to the light box illustrated in the technical drawings manufactured by
Metro and EYD Rainbow Advertising, for leasing out to different advertisers. Was this an
infringement of petitioners copyright over the technical drawings? We do not think so.
During the trial, the president of P & D himself admitted that the light box was neither a
literary not an artistic work but an "engineering or marketing invention."
10
Obviously,
there appeared to be some confusion regarding what ought or ought not to be the proper
subjects of copyrights, patents and trademarks. In the leading case of Kho vs. Court of
Appeals,
11
we ruled that these three legal rights are completely distinct and separate from
one another, and the protection afforded by one cannot be used interchangeably to cover
items or works that exclusively pertain to the others:
Trademark, copyright and patents are different intellectual property rights that cannot be
interchanged with one another.A trademark is any visible sign capable of distinguishing the
goods (trademark) or services (service mark) of an enterprise and shall include a stamped or
marked container of goods. In relation thereto, a trade name means the name or designation
identifying or distinguishing an enterprise. Meanwhile, the scope of a copyright is confined
to literary and artistic works which are original intellectual creations in the literary and
artistic domain protected from the moment of their creation. Patentable inventions, on the
other hand, refer to any technical solution of a problem in any field of human activity which is
new, involves an inventive step and is industrially applicable.
ON THE ISSUE OF PATENT INFRINGEMENT
This brings us to the next point: if, despite its manufacture and commercial use of the light
boxes without license from petitioner, private respondents cannot be held legally liable for
infringement of P & Ds copyright over its technical drawings of the said light boxes, should
they be liable instead for infringement of patent? We do not think so either.
For some reason or another, petitioner never secured a patent for the light boxes. It
therefore acquired no patent rights which could have protected its invention, if in fact it
really was. And because it had no patent, petitioner could not legally prevent anyone from
manufacturing or commercially using the contraption. In Creser Precision Systems, Inc. vs.
Court of Appeals,
12
we held that "there can be no infringement of a patent until a patent has
been issued, since whatever right one has to the invention covered by the patent arises
29

alone from the grant of patent. x x x (A)n inventor has no common law right to a monopoly
of his invention. He has the right to make use of and vend his invention, but if he voluntarily
discloses it, such as by offering it for sale, the world is free to copy and use it with impunity.
A patent, however, gives the inventor the right to exclude all others. As a patentee, he has
the exclusive right of making, selling or using the invention.
13
On the assumption that
petitioners advertising units were patentable inventions, petitioner revealed them fully to
the public by submitting the engineering drawings thereof to the National Library.
To be able to effectively and legally preclude others from copying and profiting from the
invention, a patent is a primordial requirement. No patent, no protection. The ultimate goal
of a patent system is to bring new designs and technologies into the public domain through
disclosure.
14
Ideas, once disclosed to the public without the protection of a valid patent, are
subject to appropriation without significant restraint.
15

On one side of the coin is the public which will benefit from new ideas; on the other are the
inventors who must be protected. As held in Bauer & Cie vs. ODonnel,
16
"The act secured to
the inventor the exclusive right to make use, and vend the thing patented, and
consequently to prevent others from exercising like privileges without the consent of the
patentee. It was passed for the purpose of encouraging useful invention and promoting
new and useful inventions by the protection and stimulation given to inventive genius, and
was intended to secure to the public, after the lapse of the exclusive privileges granted the
benefit of such inventions and improvements."
The law attempts to strike an ideal balance between the two interests:
"(The p)atent system thus embodies a carefully crafted bargain for encouraging the
creation and disclosure of new useful and non-obvious advances in technology and design,
in return for the exclusive right to practice the invention for a number of years. The
inventor may keep his invention secret and reap its fruits indefinitely. In consideration of
its disclosure and the consequent benefit to the community, the patent is granted. An
exclusive enjoyment is guaranteed him for 17 years, but upon the expiration of that period,
the knowledge of the invention inures to the people, who are thus enabled to practice it and
profit by its use."
17

The patent law has a three-fold purpose: "first, patent law seeks to foster and reward
invention; second, it promotes disclosures of inventions to stimulate further innovation
and to permit the public to practice the invention once the patent expires; third, the
stringent requirements for patent protection seek to ensure that ideas in the public domain
remain there for the free use of the public."
18

It is only after an exhaustive examination by the patent office that a patent is issued. Such
an in-depth investigation is required because "in rewarding a useful invention, the rights
and welfare of the community must be fairly dealt with and effectively guarded. To that
end, the prerequisites to obtaining a patent are strictly observed and when a patent is
issued, the limitations on its exercise are equally strictly enforced. To begin with, a genuine
invention or discovery must be demonstrated lest in the constant demand for new
appliances, the heavy hand of tribute be laid on each slight technological advance in art."
19

30

There is no such scrutiny in the case of copyrights nor any notice published before its grant
to the effect that a person is claiming the creation of a work. The law confers the copyright
from the moment of creation
20
and the copyright certificate is issued upon registration
with the National Library of a sworn ex-parte claim of creation.
Therefore, not having gone through the arduous examination for patents, the petitioner
cannot exclude others from the manufacture, sale or commercial use of the light boxes on
the sole basis of its copyright certificate over the technical drawings.
Stated otherwise, what petitioner seeks is exclusivity without any opportunity for the
patent office (IPO) to scrutinize the light boxs eligibility as a patentable invention. The
irony here is that, had petitioner secured a patent instead, its exclusivity would have been
for 17 years only. But through the simplified procedure of copyright-registration with the
National Library without undergoing the rigor of defending the patentability of its
invention before the IPO and the public the petitioner would be protected for 50 years.
This situation could not have been the intention of the law.
In the oft-cited case of Baker vs. Selden
21
, the United States Supreme Court held that only
the expression of an idea is protected by copyright, not the idea itself. In that case, the
plaintiff held the copyright of a book which expounded on a new accounting system he had
developed. The publication illustrated blank forms of ledgers utilized in such a system. The
defendant reproduced forms similar to those illustrated in the plaintiffs copyrighted book.
The US Supreme Court ruled that:
"There is no doubt that a work on the subject of book-keeping, though only explanatory of
well known systems, may be the subject of a copyright; but, then, it is claimed only as a
book. x x x. But there is a clear distinction between the books, as such, and the art, which it
is, intended to illustrate. The mere statement of the proposition is so evident that it
requires hardly any argument to support it. The same distinction may be predicated of
every other art as well as that of bookkeeping. A treatise on the composition and use of
medicines, be they old or new; on the construction and use of ploughs or watches or
churns; or on the mixture and application of colors for painting or dyeing; or on the mode
of drawing lines to produce the effect of perspective, would be the subject of copyright; but
no one would contend that the copyright of the treatise would give the exclusive right to
the art or manufacture described therein. The copyright of the book, if not pirated from
other works, would be valid without regard to the novelty or want of novelty of its subject
matter. The novelty of the art or thing described or explained has nothing to do with the
validity of the copyright. To give to the author of the book an exclusive property in the
art described therein, when no examination of its novelty has ever been officially
made, would be a surprise and a fraud upon the public. That is the province of letters
patent, not of copyright. The claim to an invention of discovery of an art or
manufacture must be subjected to the examination of the Patent Office before an
exclusive right therein can be obtained; and a patent from the government can only
secure it.
The difference between the two things, letters patent and copyright, may be illustrated by
reference to the subjects just enumerated. Take the case of medicines. Certain mixtures are
31

found to be of great value in the healing art. If the discoverer writes and publishes a
book on the subject (as regular physicians generally do), he gains no exclusive right
to the manufacture and sale of the medicine; he gives that to the public. If he desires
to acquire such exclusive right, he must obtain a patent for the mixture as a new art,
manufacture or composition of matter. He may copyright his book, if he pleases; but
that only secures to him the exclusive right of printing and publishing his book. So of
all other inventions or discoveries.
The copyright of a book on perspective, no matter how many drawings and illustrations it
may contain, gives no exclusive right to the modes of drawing described, though they may
never have been known or used before. By publishing the book without getting a patent for
the art, the latter is given to the public.
x x x
Now, whilst no one has a right to print or publish his book, or any material part thereof, as
a book intended to convey instruction in the art, any person may practice and use the art
itself which he has described and illustrated therein. The use of the art is a totally
different thing from a publication of the book explaining it. The copyright of a book on
bookkeeping cannot secure the exclusive right to make, sell and use account books
prepared upon the plan set forth in such book. Whether the art might or might not have
been patented, is a question, which is not before us. It was not patented, and is open and
free to the use of the public. And, of course, in using the art, the ruled lines and headings of
accounts must necessarily be used as incident to it.
The plausibility of the claim put forward by the complainant in this case arises from a
confusion of ideas produced by the peculiar nature of the art described in the books, which
have been made the subject of copyright. In describing the art, the illustrations and
diagrams employed happened to correspond more closely than usual with the actual work
performed by the operator who uses the art. x x x The description of the art in a book,
though entitled to the benefit of copyright, lays no foundation for an exclusive claim
to the art itself. The object of the one is explanation; the object of the other is use.
The former may be secured by copyright. The latter can only be secured, if it can be
secured at all, by letters patent." (underscoring supplied)
ON THE ISSUE OF TRADEMARK INFRINGEMENT
This issue concerns the use by respondents of the mark "Poster Ads" which petitioners
president said was a contraction of "poster advertising." P & D was able to secure a
trademark certificate for it, but one where the goods specified were "stationeries such as
letterheads, envelopes, calling cards and newsletters."
22
Petitioner admitted it did not
commercially engage in or market these goods. On the contrary, it dealt in electrically
operated backlit advertising units and the sale of advertising spaces thereon, which,
however, were not at all specified in the trademark certificate.
Under the circumstances, the Court of Appeals correctly cited Faberge Inc. vs. Intermediate
Appellate Court,
23
where we, invoking Section 20 of the old Trademark Law, ruled that "the
certificate of registration issued by the Director of Patents can confer (upon petitioner) the
32

exclusive right to use its own symbol only to those goods specified in the certificate, subject
to any conditions and limitations specified in the certificate x x x. One who has adopted and
used a trademark on his goods does not prevent the adoption and use of the same trademark
by others for products which are of a different description."
24
Faberge, Inc. was correct and
was in fact recently reiterated inCanon Kabushiki Kaisha vs. Court of Appeals.
25

Assuming arguendo that "Poster Ads" could validly qualify as a trademark, the failure of P &
D to secure a trademark registration for specific use on the light boxes meant that there
could not have been any trademark infringement since registration was an essential
element thereof.1wphi1
ON THE ISSUE OF UNFAIR COMPETITION
If at all, the cause of action should have been for unfair competition, a situation which was
possible even if P & D had no registration.
26
However, while the petitioners complaint in
the RTC also cited unfair competition, the trial court did not find private respondents liable
therefor. Petitioner did not appeal this particular point; hence, it cannot now revive its
claim of unfair competition.
But even disregarding procedural issues, we nevertheless cannot hold respondents guilty
of unfair competition.
By the nature of things, there can be no unfair competition under the law on copyrights
although it is applicable to disputes over the use of trademarks. Even a name or phrase
incapable of appropriation as a trademark or tradename may, by long and exclusive use by
a business (such that the name or phrase becomes associated with the business or product
in the mind of the purchasing public), be entitled to protection against unfair
competition.
27
In this case, there was no evidence that P & Ds use of "Poster Ads" was
distinctive or well-known. As noted by the Court of Appeals, petitioners expert witnesses
himself had testified that " Poster Ads was too generic a name. So it was difficult to
identify it with any company, honestly speaking."
28
This crucial admission by its own
expert witness that "Poster Ads" could not be associated with P & D showed that, in the
mind of the public, the goods and services carrying the trademark "Poster Ads" could not
be distinguished from the goods and services of other entities.
This fact also prevented the application of the doctrine of secondary meaning. "Poster Ads"
was generic and incapable of being used as a trademark because it was used in the field of
poster advertising, the very business engaged in by petitioner. "Secondary meaning" means
that a word or phrase originally incapable of exclusive appropriation with reference to an
article in the market (because it is geographically or otherwise descriptive) might
nevertheless have been used for so long and so exclusively by one producer with reference
to his article that, in the trade and to that branch of the purchasing public, the word or
phrase has come to mean that the article was his property.
29
The admission by petitioners
own expert witness that he himself could not associate "Poster Ads" with petitioner P & D
because it was "too generic" definitely precluded the application of this exception.
Having discussed the most important and critical issues, we see no need to belabor the rest.
33

All told, the Court finds no reversible error committed by the Court of Appeals when it
reversed the Regional Trial Court of Makati City.
WHEREFORE, the petition is hereby DENIED and the decision of the Court of Appeals
dated May 22, 2001 is AFFIRMED in toto.
SO ORDERED.
Footnotes
1
Penned by Associate Justice Salvador J. Valdez, Jr. and concurred in by Associate Justices
Wenceslao L. Agnir and Juan Q. Enriquez Jr.
2
Penned by Judge Napoleon E. Inoturan.
3
Seventeenth Division; CA G.R. 55303.
4
Records, pp. 620-621.
5
Rollo, pp. 17-19, 21-22, 23-24, 26.
6
Rollo, p. 34.
7
18 C.J.S. 161.
8
Joaquin vs. Drilon, 302 SCRA 225 [1999].
9
Ibid.
10
Pp. 11-13, TSN, February 3, 1993.
11
G.R. No. 115758, March 19, 2002.
12
286 SCRA 13 [1998].
13
Id., at p. 21, citing Anchor Hocking Glass Corp. vs. White Cap Co., 47 F. Supp. A 451, and
Bauer & Cie vs. ODonnel, 229 US 1.
14
Bonito Boats, Inc. vs. Thunder Craft Boats, Inc., 489 US 141 [1989].
15
Id., at p. 156.
16
Ibid., at p. 10.
17
Bonito Boats, Inc. vs. Thunder Craft Boats, Inc., ibid., p. 150, citing U.S. vs. Dubilier
Condenser Corp., 289 U.S. 178.
18
Aronson vs. Quick Point Pencil Co., 440 U.S. 257, 262 [1979], citing Kewanee Oil Co. vs.
Bicron Corp., 416 U.S. 470 [1994], cited Amador, patents, p. 496.
19
Sears Roebuck vs. Stiffel, 376 US 225, 229 [1964].
20
Section 2, PD 49 (The Intellectual Property Decree).
21
101 US 102-105 [1879].
22
Exhibit "B," Original Records, p. 63.
23
215 SCRA 316 [1992].
24
Id., at p. 326.
25
336 SCRA 266 [2000].
26
Ogura vs. Chua, 59 Phil. 471.
27
Sapalo, The Law on Trademark Infringement and Unfair Competition, 2000 ed., p. 185.
28
Decision, p. 16, citing TSN, December 3, 1992, pp. 19-20.
29
Sapalo, at p. 92.



34

Topic: Differences of forms of IP; Statutory right
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 161295 June 29, 2005
JESSIE G. CHING, petitioner,
vs.
WILLIAM M. SALINAS, SR., WILLIAM M. SALINAS, JR., JOSEPHINE L. SALINAS, JENNIFER
Y. SALINAS, ALONTO SOLAIMAN SALLE, JOHN ERIC I. SALINAS, NOEL M. YABUT (Board
of Directors and Officers of WILAWARE PRODUCT CORPORATION), respondents.
D E C I S I O N
CALLEJO, SR., J.:
This petition for review on certiorari assails the Decision
1
and Resolution
2
of the Court of
Appeals (CA) in CA-G.R. SP No. 70411 affirming the January 3, 2002 and February 14, 2002
Orders
3
of the Regional Trial Court (RTC) of Manila, Branch 1, which quashed and set aside
Search Warrant Nos. 01-2401 and 01-2402 granted in favor of petitioner Jessie G. Ching.
Jessie G. Ching is the owner and general manager of Jeshicris Manufacturing Co., the maker
and manufacturer of a Utility Model, described as "Leaf Spring Eye Bushing for Automobile"
made up of plastic.
On September 4, 2001, Ching and Joseph Yu were issued by the National Library
Certificates of Copyright Registration and Deposit of the said work described therein as
"Leaf Spring Eye Bushing for Automobile."
4

On September 20, 2001, Ching requested the National Bureau of Investigation (NBI) for
police/investigative assistance for the apprehension and prosecution of illegal
manufacturers, producers and/or distributors of the works.
5

After due investigation, the NBI filed applications for search warrants in the RTC of Manila
against William Salinas, Sr. and the officers and members of the Board of Directors of
Wilaware Product Corporation. It was alleged that the respondents therein reproduced and
distributed the said models penalized under Sections 177.1 and 177.3 of Republic Act (R.A.)
No. 8293. The applications sought the seizure of the following:
a.) Undetermined quantity of Leaf spring eye bushing for automobile that are made up of
plastic polypropylene;
b.) Undetermined quantity of Leaf spring eye bushing for automobile that are made up of
polyvinyl chloride plastic;
35

c.) Undetermined quantity of Vehicle bearing cushion that is made up of polyvinyl chloride
plastic;
d.) Undetermined quantity of Dies and jigs, patterns and flasks used in the
manufacture/fabrication of items a to d;
e.) Evidences of sale which include delivery receipts, invoices and official receipts.
6

The RTC granted the application and issued Search Warrant Nos. 01-2401 and 01-2402 for
the seizure of the aforecited articles.
7
In the inventory submitted by the NBI agent, it
appears that the following articles/items were seized based on the search warrants:
Leaf Spring eye bushing
a) Plastic Polypropylene
- C190 27 }
- C240 rear 40 }
- C240 front 41 } BAG 1
b) Polyvinyl Chloride Plastic
- C190 13 }
c) Vehicle bearing cushion
- center bearing cushion 11 }
Budder for C190 mold 8 }
Diesel Mold
a) Mold for spring eye bushing rear 1 set
b) Mold for spring eye bushing front 1 set
c) Mold for spring eye bushing for C190 1 set
d) Mold for C240 rear 1 piece of the set
e) Mold for spring eye bushing for L300 2 sets
f) Mold for leaf spring eye bushing C190 with metal 1 set
g) Mold for vehicle bearing cushion 1 set
8

The respondents filed a motion to quash the search warrants on the following grounds:
2. The copyright registrations were issued in violation of the Intellectual Property Code on
the ground that:
36

a) the subject matter of the registrations are not artistic or literary;
b) the subject matter of the registrations are spare parts of automobiles meaning there
(sic) are original parts that they are designed to replace. Hence, they are not original.
9

The respondents averred that the works covered by the certificates issued by the National
Library are not artistic in nature; they are considered automotive spare parts and pertain
to technology. They aver that the models are not original, and as such are the proper
subject of a patent, not copyright.
10

In opposing the motion, the petitioner averred that the court which issued the search
warrants was not the proper forum in which to articulate the issue of the validity of the
copyrights issued to him. Citing the ruling of the Court in Malaloan v. Court of Appeals,
11
the
petitioner stated that a search warrant is merely a judicial process designed by the Rules of
Court in anticipation of a criminal case. Until his copyright was nullified in a proper
proceeding, he enjoys rights of a registered owner/holder thereof.
On January 3, 2002, the trial court issued an Order
12
granting the motion, and quashed the
search warrant on its finding that there was no probable cause for its issuance. The court
ruled that the work covered by the certificates issued to the petitioner pertained to
solutions to technical problems, not literary and artistic as provided in Article 172 of the
Intellectual Property Code.
His motion for reconsideration of the order having been denied by the trial courts Order of
February 14, 2002, the petitioner filed a petition for certiorari in the CA, contending that
the RTC had no jurisdiction to delve into and resolve the validity of the copyright
certificates issued to him by the National Library. He insisted that his works are covered by
Sections 172.1 and 172.2 of the Intellectual Property Code. The petitioner averred that the
copyright certificates areprima facie evidence of its validity, citing the ruling of the United
States Court of Appeals in Wildlife Express Corporation v. Carol Wright Sales, Inc.
13
The
petitioner asserted that the respondents failed to adduce evidence to support their motion
to quash the search warrants. The petitioner noted that respondent William Salinas, Jr. was
not being honest, as he was able to secure a similar copyright registration of a similar
product from the National Library on January 14, 2002.
On September 26, 2003, the CA rendered judgment dismissing the petition on its finding
that the RTC did not commit any grave abuse of its discretion in issuing the assailed order,
to wit:
It is settled that preliminarily, there must be a finding that a specific offense must have
been committed to justify the issuance of a search warrant. In a number of cases decided by
the Supreme Court, the same is explicitly provided, thus:
"The probable cause must be in connection with one specific offense, and the judge must,
before issuing the warrant, personally examine in the form of searching questions and
answers, in writing and under oath, the complainant and any witness he may produce, on
facts personally known to them and attach to the record their sworn statements together
with any affidavit submitted.
37

"In the determination of probable cause, the court must necessarily resolve whether or not
an offense exists to justify the issuance or quashal of the search warrant."
In the instant case, the petitioner is praying for the reinstatement of the search warrants
issued, but subsequently quashed, for the offense of Violation of Class Designation of
Copyrightable Works under Section 177.1 in relation to Section 177.3 of Republic Act 8293,
when the objects subject of the same, are patently not copyrightable.
It is worthy to state that the works protected under the Law on Copyright are: literary or
artistic works (Sec. 172) and derivative works (Sec. 173). The Leaf Spring Eye Bushing and
Vehicle Bearing Cushion fall on neither classification. Accordingly, if, in the first place, the
item subject of the petition is not entitled to be protected by the law on copyright, how can
there be any violation?
14

The petitioners motion for reconsideration of the said decision suffered the same fate. The
petitioner forthwith filed the present petition for review on certiorari, contending that the
revocation of his copyright certificates should be raised in a direct action and not in a
search warrant proceeding.
The petitioner posits that even assuming ex argumenti that the trial court may resolve the
validity of his copyright in a proceeding to quash a search warrant for allegedly infringing
items, the RTC committed a grave abuse of its discretion when it declared that his works
are not copyrightable in the first place. He claims that R.A. No. 8293, otherwise known as
the Intellectual Property Code of the Philippines, which took effect on January 1, 1998,
provides in no uncertain terms that copyright protection automatically attaches to a work
by the sole fact of its creation, irrespective of its mode or form of expression, as well as of
its content, quality or purpose.
15
The law gives a non-inclusive definition of "work" as
referring to original intellectual creations in the literary and artistic domain protected from
the moment of their creation; and includes original ornamental designs or models for
articles of manufacture, whether or not registrable as an industrial design and other works
of applied art under Section 172.1(h) of R.A. No. 8293.lawphil.net
As such, the petitioner insists, notwithstanding the classification of the works as either
literary and/or artistic, the said law, likewise, encompasses works which may have a
bearing on the utility aspect to which the petitioners utility designs were classified.
Moreover, according to the petitioner, what the Copyright Law protects is the authors
intellectual creation, regardless of whether it is one with utilitarian functions or
incorporated in a useful article produced on an industrial scale.
The petitioner also maintains that the law does not provide that the intended use or use in
industry of an article eligible for patent bars or invalidates its registration under the Law
on Copyright. The test of protection for the aesthetic is not beauty and utility, but art for the
copyright and invention of original and ornamental design for design patents.
16
In like
manner, the fact that his utility designs or models for articles of manufacture have been
expressed in the field of automotive parts, or based on something already in the public
domain does not automatically remove them from the protection of the Law on
Copyright.
17

38

The petitioner faults the CA for ignoring Section 218 of R.A. No. 8293 which gives the same
presumption to an affidavit executed by an author who claims copyright ownership of his
work.
The petitioner adds that a finding of probable cause to justify the issuance of a search
warrant means merely a reasonable suspicion of the commission of the offense. It is not
equivalent to absolute certainty or a finding of actual and positive cause.
18
He assists that
the determination of probable cause does not concern the issue of whether or not the
alleged work is copyrightable. He maintains that to justify a finding of probable cause in the
issuance of a search warrant, it is enough that there exists a reasonable suspicion of the
commission of the offense.
The petitioner contends that he has in his favor the benefit of the presumption that his
copyright is valid; hence, the burden of overturning this presumption is on the alleged
infringers, the respondents herein. But this burden cannot be carried in a hearing on a
proceeding to quash the search warrants, as the issue therein is whether there was
probable cause for the issuance of the search warrant. The petitioner concludes that the
issue of probable cause should be resolved without invalidating his copyright.
In their comment on the petition, the respondents aver that the work of the petitioner is
essentially a technical solution to the problem of wear and tear in automobiles, the
substitution of materials, i.e., from rubber to plastic matter of polyvinyl chloride, an oil
resistant soft texture plastic material strong enough to endure pressure brought about by
the vibration of the counter bearing and thus brings bushings. Such work, the respondents
assert, is the subject of copyright under Section 172.1 of R.A. No. 8293. The respondents
posit that a technical solution in any field of human activity which is novel may be the
subject of a patent, and not of a copyright. They insist that the certificates issued by the
National Library are only certifications that, at a point in time, a certain work was
deposited in the said office. Furthermore, the registration of copyrights does not provide
for automatic protection. Citing Section 218.2(b) of R.A. No. 8293, the respondents aver
that no copyright is said to exist if a party categorically questions its existence and legality.
Moreover, under Section 2, Rule 7 of the Implementing Rules of R.A. No. 8293, the
registration and deposit of work is not conclusive as to copyright outlay or the time of
copyright or the right of the copyright owner. The respondents maintain that a copyright
exists only when the work is covered by the protection of R.A. No. 8293.
The petition has no merit.
The RTC had jurisdiction to delve into and resolve the issue whether the petitioners 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:
SEC. 4. Requisite for issuing search warrant. A search warrant shall not issue but upon
probable cause in connection with one specific offense to be determined personally by the
judge after examination under oath or affirmation of the complainant and the witnesses he
39

may produce, and, particularly, describing the place to be searched and the things to be
seized.
In Solid Triangle Sales Corporation v. The Sheriff of RTC QC, Br. 93,
19
the Court held that in
the determination of probable cause, the court must necessarily resolve whether or not an
offense exists to justify the issuance of a search warrant or the quashal of one already
issued by the court. Indeed, probable cause is deemed to exist only where facts and
circumstances exist which could lead a reasonably cautious and prudent man to believe
that an offense has been committed or is being committed. Besides, in Section 3, Rule 126
of the Rules of Criminal Procedure, a search warrant may be issued for the search and
seizure of personal property (a) subject of the offense; (b) stolen or embezzled and other
proceeds or fruits of the offense; or (c) used or intended to be used as the means of
committing an offense.
The RTC is mandated under the Constitution and Rules of Criminal Procedure to determine
probable cause. The court cannot abdicate its constitutional obligation by refusing to
determine whether an offense has been committed.
20
The absence of probable cause will
cause the outright nullification of the search warrant.
21

For the RTC to determine whether the crime for infringement under R.A. No. 8293 as
alleged in an application is committed, the petitioner-applicant was burdened to prove that
(a) respondents Jessie Ching and Joseph Yu were the owners of copyrighted material; and
(b) the copyrighted material was being copied and distributed by the respondents. Thus,
the ownership of a valid copyright is essential.
22

Ownership of copyrighted material is shown by proof of originality and copyrightability. By
originality is meant that the material was not copied, and evidences at least minimal
creativity; that it was independently created by the author and that it possesses at least
same minimal degree of creativity.
23
Copying is shown by proof of access to copyrighted
material and substantial similarity between the two works.
24
The applicant must thus
demonstrate the existence and the validity of his copyright because in the absence of
copyright protection, even original creation may be freely copied.
25

By requesting the NBI to investigate and, if feasible, file an application for a search warrant
for infringement under R.A. No. 8293 against the respondents, the petitioner thereby
authorized the RTC (in resolving the application), to delve into and determine the validity
of the copyright which he claimed he had over the utility models. The petitioner cannot
seek relief from the RTC based on his claim that he was the copyright owner over the utility
models and, at the same time, repudiate the courts jurisdiction to ascertain the validity of
his claim without running afoul to the doctrine of estoppel.
To discharge his burden, the applicant may present the certificate of registration covering
the work or, in its absence, other evidence.
26
A copyright certificate provides prima
facie evidence of originality which is one element of copyright validity. It constitutes prima
facie evidence of both validity and ownership
27
and the validity of the facts stated in the
certificate.
28
The presumption of validity to a certificate of copyright registration merely
orders the burden of proof. The applicant should not ordinarily be forced, in the first
40

instance, to prove all the multiple facts that underline the validity of the copyright unless
the respondent, effectively challenging them, shifts the burden of doing so to the
applicant.
29
Indeed, Section 218.2 of R.A. No. 8293 provides:
218.2. In an action under this Chapter:
(a) Copyright shall be presumed to subsist in the work or other subject matter to which the
action relates if the defendant does not put in issue the question whether copyright
subsists in the work or other subject matter; and
(b) Where the subsistence of the copyright is established, the plaintiff shall be presumed to
be the owner of the copyright if he claims to be the owner of the copyright and the
defendant does not put in issue the question of his ownership.
A certificate of registration creates no rebuttable presumption of copyright validity where
other evidence in the record casts doubt on the question. In such a case, validity will not be
presumed.
30

To discharge his burden of probable cause for the issuance of a search warrant for violation
of R.A. No. 8293, the petitioner-applicant submitted to the RTC Certificate of Copyright
Registration Nos. 2001-197 and 2001-204 dated September 3, 2001 and September 4,
2001, respectively, issued by the National Library covering work identified as Leaf Spring
Eye Bushing for Automobile and Vehicle Bearing Cushion both classified under Section
172.1(h) of R.A. No. 8293, to wit:
SEC. 172. Literary and Artistic Works. 172.1. Literary and artistic works, hereinafter
referred to as "works," are original intellectual creations in the literary and artistic domain
protected from the moment of their creation and shall include in particular:
...
(h) Original ornamental designs or models for articles of manufacture, whether or not
registrable as an industrial design, and other works of applied art.
Related to the provision is Section 171.10, which provides that a "work of applied art" is an
artistic creation with utilitarian functions or incorporated in a useful article, whether made
by hand or produced on an industrial scale.
But, as gleaned from the specifications appended to the application for a copyright
certificate filed by the petitioner, the said Leaf Spring Eye Bushing for Automobile is merely
a utility model described as comprising a generally cylindrical body having a co-axial bore
that is centrally located and provided with a perpendicular flange on one of its ends and a
cylindrical metal jacket surrounding the peripheral walls of said body, with the bushing
made of plastic that is either polyvinyl chloride or polypropylene.
31
Likewise, the Vehicle
Bearing Cushion is illustrated as a bearing cushion comprising a generally semi-circular
body having a central hole to secure a conventional bearing and a plurality of ridges
provided therefore, with said cushion bearing being made of the same plastic
materials.
32
Plainly, these are not literary or artistic works. They are not intellectual
41

creations in the literary and artistic domain, or works of applied art. They are certainly not
ornamental designs or one having decorative quality or value.
It bears stressing that the focus of copyright is the usefulness of the artistic design, and not
its marketability. The central inquiry is whether the article is a work of art.
33
Works for
applied art include all original pictorials, graphics, and sculptural works that are intended
to be or have been embodied in useful article regardless of factors such as mass production,
commercial exploitation, and the potential availability of design patent protection.
34

As gleaned from the description of the models and their objectives, these articles are useful
articles which are defined as one having an intrinsic utilitarian function that is not merely
to portray the appearance of the article or to convey information. Indeed, while works of
applied art, original intellectual, literary and artistic works are copyrightable, useful
articles and works of industrial design are not.
35
A useful article may be copyrightable only
if and only to the extent that such design incorporates pictorial, graphic, or sculptural
features that can be identified separately from, and are capable of existing independently of
the utilitarian aspects of the article.
We agree with the contention of the petitioner (citing Section 171.10 of R.A. No. 8293), that
the authors intellectual creation, regardless of whether it is a creation with utilitarian
functions or incorporated in a useful article produced on an industrial scale, is protected by
copyright law. However, the law refers to a "work of applied art which is an artistic
creation." It bears stressing that there is no copyright protection for works of applied art or
industrial design which have aesthetic or artistic features that cannot be identified
separately from the utilitarian aspects of the article.
36
Functional components of useful
articles, no matter how artistically designed, have generally been denied copyright
protection unless they are separable from the useful article.
37

In this case, the petitioners models are not works of applied art, nor artistic works. They
are utility models, useful articles, albeit with no artistic design or value. Thus, the petitioner
described the utility model as follows:
LEAF SPRING EYE BUSHING FOR AUTOMOBILE
Known bushings inserted to leaf-spring eye to hold leaf-springs of automobile are made of
hard rubber. These rubber bushings after a time, upon subjecting them to so much or
intermittent pressure would eventually wore (sic) out that would cause the wobbling of the
leaf spring.
The primary object of this utility model, therefore, is to provide a leaf-spring eye bushing
for automobile that is made up of plastic.
Another object of this utility model is to provide a leaf-spring eye bushing for automobiles
made of polyvinyl chloride, an oil resistant soft texture plastic or polypropylene, a hard
plastic, yet both causes cushion to the leaf spring, yet strong enough to endure pressure
brought about by the up and down movement of said leaf spring.
42

Yet, an object of this utility model is to provide a leaf-spring eye bushing for automobiles
that has a much longer life span than the rubber bushings.
Still an object of this utility model is to provide a leaf-spring eye bushing for automobiles
that has a very simple construction and can be made using simple and ordinary molding
equipment.
A further object of this utility model is to provide a leaf-spring eye bushing for automobile
that is supplied with a metal jacket to reinforce the plastic eye bushing when in engaged
with the steel material of the leaf spring.
These and other objects and advantages will come to view and be understood upon a
reading of the detailed description when taken in conjunction with the accompanying
drawings.
Figure 1 is an exploded perspective of a leaf-spring eye bushing according to the present
utility model;
Figure 2 is a sectional view taken along line 2-2 of Fig. 1;
Figure 3 is a longitudinal sectional view of another embodiment of this utility model;
Figure 4 is a perspective view of a third embodiment; and
Figure 5 is a sectional view thereof.
Referring now to the several views of the drawings wherein like reference numerals
designated same parts throughout, there is shown a utility model for a leaf-spring eye
bushing for automobile generally designated as reference numeral 10.
Said leaf-spring eye bushing 10 comprises a generally cylindrical body 11 having a co-axial
bore 12 centrally provided thereof.
As shown in Figs. 1 and 2, said leaf-spring eye bushing 10 is provided with a perpendicular
flange 13 on one of its ends and a cylindrical metal jacket 14 surrounding the peripheral
walls 15 of said body 11. When said leaf-spring bushing 10 is installed, the metal jacket 14
acts with the leaf-spring eye (not shown), which is also made of steel or cast steel. In effect,
the bushing 10 will not be directly in contact with steel, but rather the metal jacket, making
the life of the bushing 10 longer than those without the metal jacket.
In Figure 2, the bushing 10 as shown is made of plastic, preferably polyvinyl chloride, an oil
resistant soft texture plastic or a hard polypropylene plastic, both are capable to endure the
pressure applied thereto, and, in effect, would lengthen the life and replacement therefor.
Figure 3, on the other hand, shows the walls 16 of the co-axial bore 12 of said bushing 10 is
insertably provided with a steel tube 17 to reinforce the inner portion thereof. This steel
tube 17 accommodates or engages with the leaf-spring bolt (not shown) connecting the leaf
spring and the automobiles chassis.
43

Figures 4 and 5 show another embodiment wherein the leaf eye bushing 10 is elongated
and cylindrical as to its construction. Said another embodiment is also made of
polypropylene or polyvinyl chloride plastic material. The steel tube 17 and metal jacket 14
may also be applied to this embodiment as an option thereof.
38

VEHICLE BEARING CUSHION
Known bearing cushions inserted to bearing housings for vehicle propeller shafts are made
of hard rubber. These rubber bushings after a time, upon subjecting them to so much or
intermittent pressure would eventually be worn out that would cause the wobbling of the
center bearing.
The primary object of this utility model therefore is to provide a vehicle-bearing cushion
that is made up of plastic.
Another object of this utility model is to provide a vehicle bearing cushion made of
polyvinyl chloride, an oil resistant soft texture plastic material which causes cushion to the
propellers center bearing, yet strong enough to endure pressure brought about by the
vibration of the center bearing.
Yet, an object of this utility model is to provide a vehicle-bearing cushion that has a much
longer life span than rubber bushings.
Still an object of this utility model is to provide a vehicle bearing cushion that has a very
simple construction and can be made using simple and ordinary molding equipment.
These and other objects and advantages will come to view and be understood upon a
reading of the detailed description when taken in conjunction with the accompanying
drawings.
Figure 1 is a perspective view of the present utility model for a vehicle-bearing cushion;
and
Figure 2 is a sectional view thereof.
Referring now to the several views of the drawing, wherein like reference numeral
designate same parts throughout, there is shown a utility model for a vehicle-bearing
cushion generally designated as reference numeral 10.
Said bearing cushion 10 comprises of a generally semi-circular body 11, having central hole
12 to house a conventional bearing (not shown). As shown in Figure 1, said body 11 is
provided with a plurality of ridges 13 which serves reinforcing means thereof.
The subject bearing cushion 10 is made of polyvinyl chloride, a soft texture oil and chemical
resistant plastic material which is strong, durable and capable of enduring severe pressure
from the center bearing brought about by the rotating movement of the propeller shaft of
the vehicle.
39

44

A utility model is a technical solution to a problem in any field of human activity which is
new and industrially applicable. It may be, or may relate to, a product, or process, or an
improvement of any of the aforesaid.
40
Essentially, a utility model refers to an invention in
the mechanical field. This is the reason why its object is sometimes described as a device or
useful object.
41
A utility model varies from an invention, for which a patent for invention is,
likewise, available, on at least three aspects: first, the requisite of "inventive step"
42
in a
patent for invention is not required; second, the maximum term of protection is only seven
years
43
compared to a patent which is twenty years,
44
both reckoned from the date of the
application; and third, the provisions on utility model dispense with its substantive
examination
45
and prefer for a less complicated system.
Being plain automotive spare parts that must conform to the original structural design of
the components they seek to replace, the Leaf Spring Eye Bushing and Vehicle Bearing
Cushion are not ornamental. They lack the decorative quality or value that must
characterize authentic works of applied art. They are not even artistic creations with
incidental utilitarian functions or works incorporated in a useful article. In actuality, the
personal properties described in the search warrants are mechanical works, the principal
function of which is utility sans any aesthetic embellishment.
Neither are we to regard the Leaf Spring Eye Bushing and Vehicle Bearing Cushion as
included in the catch-all phrase "other literary, scholarly, scientific and artistic works" in
Section 172.1(a) of R.A. No. 8293. Applying the principle ofejusdem generis which states
that "where a statute describes things of a particular class or kind accompanied by words
of a generic character, the generic word will usually be limited to things of a similar nature
with those particularly enumerated, unless there be something in the context of the state
which would repel such inference,"
46
the Leaf Spring Eye Bushing and Vehicle Bearing
Cushion are not copyrightable, being not of the same kind and nature as the works
enumerated in Section 172 of R.A. No. 8293.
No copyright granted by law can be said to arise in favor of the petitioner despite the
issuance of the certificates of copyright registration and the deposit of the Leaf Spring Eye
Bushing and Vehicle Bearing Cushion. Indeed, in Joaquin, Jr. v. Drilon
47
and Pearl & Dean
(Phil.), Incorporated v. Shoemart, Incorporated,
48
the Court ruled that:
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
it. 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. Accordingly, it can cover only the works falling
within the statutory enumeration or description.
That the works of the petitioner may be the proper subject of a patent does not entitle him
to the issuance of a search warrant for violation of copyright laws. In Kho v. Court of
Appeals
49
and Pearl & Dean (Phil.), Incorporated v. Shoemart, Incorporated,
50
the Court ruled
that "these copyright and patent rights are completely distinct and separate from one
another, and the protection afforded by one cannot be used interchangeably to cover items
or works thatexclusively pertain to the others." The Court expounded further, thus:
45

Trademark, copyright and patents are different intellectual property rights that cannot be
interchanged with one another. A trademark is any visible sign capable of distinguishing
the goods (trademark) or services (service mark) of an enterprise and shall include a
stamped or marked container of goods. In relation thereto, a trade name means the name
or designation identifying or distinguishing an enterprise. Meanwhile, the scope of a
copyright is confined to literary and artistic works which are original intellectual creations
in the literary and artistic domain protected from the moment of their creation. Patentable
inventions, on the other hand, refer to any technical solution of a problem in any field of
human activity which is new, involves an inventive step and is industrially applicable.
The petitioner cannot find solace in the ruling of the United States Supreme Court in Mazer
v. Stein
51
to buttress his petition. In that case, the artifacts involved in that case were
statuettes of dancing male and female figures made of semi-vitreous china. The controversy
therein centered on the fact that although copyrighted as "works of art," the statuettes
were intended for use and used as bases for table lamps, with electric wiring, sockets and
lampshades attached. The issue raised was whether the statuettes were copyright
protected in the United States, considering that the copyright applicant intended primarily
to use them as lamp bases to be made and sold in quantity, and carried such intentions into
effect. At that time, the Copyright Office interpreted the 1909 Copyright Act to cover works
of artistic craftsmanship insofar as their form, but not the utilitarian aspects, were
concerned. After reviewing the history and intent of the US Congress on its copyright
legislation and the interpretation of the copyright office, the US Supreme Court declared
that the statuettes were held copyrightable works of art or models or designs for works of
art. The High Court ruled that:
"Works of art (Class G) (a) In General. This class includes works of artistic
craftsmanship, in so far as their form but not their mechanical or utilitarian aspects are
concerned, such as artistic jewelry, enamels, glassware, and tapestries, as well as all works
belonging to the fine arts, such as paintings, drawings and sculpture. "
So we have a contemporaneous and long-continued construction of the statutes by the
agency charged to administer them that would allow the registration of such a statuette as
is in question here.
52

The High Court went on to state that "[t]he dichotomy of protection for the aesthetic is not
beauty and utility but art for the copyright and the invention of original and ornamental
design for design patents." Significantly, the copyright office promulgated a rule to
implement Mazer to wit:
[I]f "the sole intrinsic function of an article is its utility, the fact that the work is unique
and attractively shaped will not qualify it as a work of art."
In this case, the bushing and cushion are not works of art. They are, as the petitioner
himself admitted, utility models which may be the subject of a patent.
IN LIGHT OF ALL THE FOREGOING, the instant petition is hereby DENIED for lack of
merit. The assailed Decision and Resolution of the Court of Appeals in CA-G.R. SP No. 70411
46

are AFFIRMED. Search Warrant Nos. 01-2401 and 01-2402 issued on October 15, 2001 are
ANNULLED AND SET ASIDE. Costs against the petitioner.
SO ORDERED.
Puno, (Chairman), Austria-Martinez, Tinga, and Chico-Nazario, JJ., concur.
Footnotes

1
Penned by Associate Justice Amelita G. Tolentino, with Associate Justices Eloy R. Bello, Jr.
(retired) and Arturo D. Brion, concurring; Rollo, pp. 17-24.
2
Rollo, pp. 31-32.
3
Penned by Acting Presiding Judge Antonio M. Eugenio, Jr.
4
CA Rollo, pp. 28-34.
5
Id. at 47.
6
CA Rollo, p. 54.
7
Id. at 54-61.
8
Id. at 68.
9
CA Rollo, p. 70.
10
Id. at 73-75.
11
G.R. No. 104879, 6 May 1994, 232 SCRA 249.
12
Rollo, pp. 22-23.
13
18 F.3d 502.
14
Rollo, p. 23.
15
Section 172.2, Republic Act No. 8293.
16
Citing Amador, Vicente B., Copyright Under the Intellectual Property Code, 1998 ed., p.
128, citing Mazerv. Stein, 347 U.S. 201 (1954).
17
Norma Ribbon & Trimming v. Little, United States Court of Appeals, Fifth Circuit, No. 94-
60389, 27 April 1995.
18
Columbia Pictures, Inc. v. Court of Appeals, G.R. No. 110318, 28 August 1996, 261 SCRA
144.
19
G.R. No. 144309, 23 November 2001, 370 SCRA 491.
20
Ibid.
21
Republic of the Philippines v. Sandiganbayan, G.R. Nos. 112708-09, 29 March 1996, 255
SCRA 438.
22
Feist Publications, Inc. v. Rural Telephone Service Company, 499 U.S. 340; 111 S.Ct. 1282
(1991).
23
Donald Bruce Company v. B.G. Multi-Comm. Corporation, 964 F.Supp. 265 (1997).
24
Apple Barrel Productions, Inc. v. R.D. Beard, 730 F.2d 384 (1984).
25
Durnham Industries, Inc. v. Tomy Corporation, 630 F.2d 905 (1980).
26
Apple Barrel Productions, Inc. v. R.D. Beard, supra.
27
Midway Manufacturing Corporation v. Bandai-America, Inc., 546 F.Supp. 125
(1982); Lakedreams v. Steve Taylor, 932 F.2d 1103 (1991).
28
Durnham Industries, Inc. v. Tomy Corporation, supra.
29
Barnhart, Inc. v. Economy Cover Corporation, 773 F.2d 411 (1985).
30
Ibid; Midway Manufacturing Corporation v. Bandai-America, Inc., supra.
47

31
Rollo, p. 86.
32
Id. at 94.
33
Pivot Port International, Inc. v. Charlene Products, Inc., 372 F.2d 913 (2004).
34
Gay Toys, Inc. v. Buddy L. Corporation, 703 F.2d 970 (1983).
35
Pivot Port International, Inc. v. Charlene Products, Inc., supra.
36
Ibid; DBC of New York v. Merit Diamond Corporation, 768 F.Supp. 414 (1991).
37
Norris Industries, Inc. v. ITT Corporation, 696 F.2d 918 (1983).
38
Rollo, pp. 84-87.
39
Rollo, pp. 93-94.
40
Section 109.1(a) and (b) in relation to Section 21 of Republic Act No. 8293.
41
Amador, Vicente B., Patents Under The Intellectual Property Code, 2001 ed., p. 751.
42
An invention involves an inventive step if, having regard to prior art, it is not obvious to a
person skilled in the art at the time of the filing date or priority date of the application
claiming the invention. (Section 26, Republic Act No. 8293).
43
Section 109.3, supra.
44
Section 54, supra.
45
Sections 108 to 111 of Republic Act No. 8293 state the rule on utility models and grant of
a patent therefor:
SEC. 108. Applicability of Provisions Relating to Patents.
108.1 Subject to Section 109, the provisions governing patents shall apply, mutatis
mutandis, to the registration of utility models.
108.2. Where the right to a patent conflicts with the right to a utility model registration in
the case referred to in Section 29, the said provisions shall apply as if the word "patent"
were replaced by the words "patent or utility model registration." (Sec. 55, R.A. No. 165a)
SEC. 109. Special Provisions Relating to Utility Models.
109.1. (a) An invention qualifies for registration as a utility model if it is new and
industrially applicable.
(b) Section 21, "Patentable Inventions," shall apply except the reference to inventive step as
a condition of protection.
109.2. Sections 43 to 49 shall not apply in the case of applications for registration of a
utility model.
109.3. A utility model registration shall expire, without any possibility of renewal, at the
end of the seventh year after the date of the filing of the application.
109.4. In proceedings under Sections 61 to 64, the utility model registration shall be
canceled on the following grounds:
(a) That the claimed invention does not qualify for registration as a utility model and does
not meet the requirements of registrability, in particular having regard to Subsection 109.1
and Sections 22, 23, 24 and 27;
(b) That the description and the claims do not comply with the prescribed requirements;
(c) That any drawing which is necessary for the understanding of the invention has not
been furnished;
(d) That the owner of the utility model registration is not the inventor or his successor in
title. (Secs. 55, 56 and 57, R.A. No. 165a)
SEC. 110. Conversion of Patent Applications or Applications for Utility Model Registration.
110.1 At any time before the grant or refusal of a patent, an applicant for a patent may,
upon payment of the prescribed fee, convert his application into an application for
48

registration of a utility model, which shall be accorded the filing date of the initial
application. An application may be converted only once.
110.2 At any time before the grant or refusal of a utility model registration, an applicant for
a utility model registration may, upon payment of the prescribed fee, convert his
application into a patent application, which shall be accorded the filing date of the initial
application. (Sec. 58, R.A. No. 165a)
SEC. 111. Prohibition against Filing of Parallel Applications. An applicant may not file two
(2) applications for the same subject, one for utility model registration and the other for the
grant of a patent whether simultaneously or consecutively. (Sec. 59, R.A. No. 165a)
46
See Kapisanan ng mga Manggagawa sa Government Service Insurance System (KMG) v.
Commission on Audit, G.R. No. 150769, 31 August 2004, 437 SCRA 371, citing Philippine
Basketball Association v. Court of Appeals, 337 SCRA 358 (2000); National Power
Corporation v. Angas, G.R. Nos. 60225-26, 8 May 1992, 208 SCRA 542; Cebu Institute of
Technology v. Ople, G.R. No. L-58870, 18 December 1987, 156 SCRA 629; Ollada v. Court of
Tax Appeals, 99 Phil. 604 (1956); Murphy, Morris & Co. v. Collector of Customs, 11 Phil. 456
(1908).
47
G.R. No. 108946, 28 January 1999, 302 SCRA 225.
48
G.R. No. 148222, 15 August 2003, 409 SCRA 231.
49
G.R. No. 115758, 19 March 2002, 379 SCRA 410.
50
Supra.
51
74 S.Ct. 460; 347 U.S. 201.
52
Great Northern Ry. Co. v. United States, 315 U.S. 262, 275, 62 S.Ct. 529, 534, 86 L.Ed. 836.

49

Topic: Repeal of repugnant provisions of Republic Act No. 166; Statutory right
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 115758 March 19, 2002
ELIDAD C. KHO, doing business under the name and style of KEC COSMETICS
LABORATORY, petitioner,
vs.
HON. COURT OF APPEALS, SUMMERVILLE GENERAL MERCHANDISING and
COMPANY, andANG TIAM CHAY, respondents.
DE LEON, JR., J.:
Before us is a petition for review on certiorari of the Decision
1
dated May 24, 1993 of the
Court of Appeals setting aside and declaring as null and void the Orders
2
dated February
10, 1992 and March 19, 1992 of the Regional Trial Court, Branch 90, of Quezon City
granting the issuance of a writ of preliminary injunction.
The facts of the case are as follows:
On December 20, 1991, petitioner Elidad C. Kho filed a complaint for injunction and
damages with a prayer for the issuance of a writ of preliminary injunction, docketed as Civil
Case No. Q-91-10926, against the respondents Summerville General Merchandising and
Company (Summerville, for brevity) and Ang Tiam Chay.
The petitioner's complaint alleges that petitioner, doing business under the name and style
of KEC Cosmetics Laboratory, is the registered owner of the copyrights Chin Chun
Su and Oval Facial Cream Container/Case, as shown by Certificates of Copyright
Registration No. 0-1358 and No. 0-3678; that she also has patent rights on Chin Chun Su &
Device and Chin Chun Su for medicated cream after purchasing the same from Quintin
Cheng, the registered owner thereof in the Supplemental Register of the Philippine Patent
Office on February 7, 1980 under Registration Certificate No. 4529; that respondent
Summerville advertised and sold petitioner's cream products under the brand name Chin
Chun Su, in similar containers that petitioner uses, thereby misleading the public, and
resulting in the decline in the petitioner's business sales and income; and, that the
respondents should be enjoined from allegedly infringing on the copyrights and patents of
the petitioner.
The respondents, on the other hand, alleged as their defense that Summerville is the
exclusive and authorized importer, re-packer and distributor of Chin Chun Su products
manufactured by Shun Yi Factory of Taiwan; that the said Taiwanese manufacturing
company authorized Summerville to register its trade name Chin Chun Su Medicated
Creamwith the Philippine Patent Office and other appropriate governmental agencies; that
50

KEC Cosmetics Laboratory of the petitioner obtained the copyrights through
misrepresentation and falsification; and, that the authority of Quintin Cheng, assignee of
the patent registration certificate, to distribute and market Chin Chun Su products in the
Philippines had already been terminated by the said Taiwanese Manufacturing Company.
After due hearing on the application for preliminary injunction, the trial court granted the
same in an Order dated February 10, 1992, the dispositive portion of which reads:
ACCORDINGLY, the application of plaintiff Elidad C. Kho, doing business under the style of
KEC Cosmetic Laboratory, for preliminary injunction, is hereby granted. Consequentially,
plaintiff is required to file with the Court a bond executed to defendants in the amount of
five hundred thousand pesos (P500,000.00) to the effect that plaintiff will pay to
defendants all damages which defendants may sustain by reason of the injunction if the
Court should finally decide that plaintiff is not entitled thereto.
SO ORDERED.
3

The respondents moved for reconsideration but their motion for reconsideration was
denied by the trial court in an Order dated March 19, 1992.
4

On April 24, 1992, the respondents filed a petition for certiorari with the Court of Appeals,
docketed as CA-G.R. SP No. 27803, praying for the nullification of the said writ of
preliminary injunction issued by the trial court. After the respondents filed their reply and
almost a month after petitioner submitted her comment, or on August 14 1992, the latter
moved to dismiss the petition for violation of Supreme Court Circular No. 28-91, a circular
prohibiting forum shopping. According to the petitioner, the respondents did not state the
docket number of the civil case in the caption of their petition and, more significantly, they
did not include therein a certificate of non-forum shopping. The respondents opposed the
petition and submitted to the appellate court a certificate of non-forum shopping for their
petition.
On May 24, 1993, the appellate court rendered a Decision in CA-G.R. SP No. 27803 ruling in
favor of the respondents, the dispositive portion of which reads:
WHEREFORE, the petition is hereby given due course and the orders of respondent court
dated February 10, 1992 and March 19, 1992 granting the writ of preliminary injunction
and denying petitioners' motion for reconsideration are hereby set aside and declared null
and void. Respondent court is directed to forthwith proceed with the trial of Civil Case No.
Q-91-10926 and resolve the issue raised by the parties on the merits.
SO ORDERED.
5

In granting the petition, the appellate court ruled that:
The registration of the trademark or brandname "Chin Chun Su" by KEC with the
supplemental register of the Bureau of Patents, Trademarks and Technology Transfer
cannot be equated with registration in the principal register, which is duly protected by the
Trademark Law.1wphi1.nt
51

xxx xxx xxx
As ratiocinated in La Chemise Lacoste, S.S. vs. Fernandez, 129 SCRA 373, 393:
"Registration in the Supplemental Register, therefore, serves as notice that the registrant is
using or has appropriated the trademark. By the very fact that the trademark cannot as yet
be on guard and there are certain defects, some obstacles which the use must still
overcome before he can claim legal ownership of the mark or ask the courts to vindicate his
claims of an exclusive right to the use of the same. It would be deceptive for a party with
nothing more than a registration in the Supplemental Register to posture before courts of
justice as if the registration is in the Principal Register.
The reliance of the private respondent on the last sentence of the Patent office action on
application Serial No. 30954 that 'registrants is presumed to be the owner of the mark until
after the registration is declared cancelled' is, therefore, misplaced and grounded on shaky
foundation. The supposed presumption not only runs counter to the precept embodied in
Rule 124 of the Revised Rules of Practice before the Philippine Patent Office in Trademark
Cases but considering all the facts ventilated before us in the four interrelated petitions
involving the petitioner and the respondent, it is devoid of factual basis. As even in cases
where presumption and precept may factually be reconciled, we have held that the
presumption is rebuttable, not conclusive, (People v. Lim Hoa, G.R. No. L-10612, May 30,
1958, Unreported). One may be declared an unfair competitor even if his competing
trademark is registered (Parke, Davis & Co. v. Kiu Foo & Co., et al., 60 Phil 928; La Yebana
Co. v. chua Seco & Co., 14 Phil 534)."
6

The petitioner filed a motion for reconsideration. This she followed with several motions to
declare respondents in contempt of court for publishing advertisements notifying the
public of the promulgation of the assailed decision of the appellate court and stating that
genuine Chin Chun Su products could be obtained only from Summerville General
Merchandising and Co.
In the meantime, the trial court went on to hear petitioner's complaint for final injunction
and damages. On October 22, 1993, the trial court rendered a Decision
7
barring the
petitioner from using the trademark Chin Chun Su and upholding the right of the
respondents to use the same, but recognizing the copyright of the petitioner over the oval
shaped container of her beauty cream. The trial court did not award damages and costs to
any of the parties but to their respective counsels were awarded Seventy-Five Thousand
Pesos (P75,000.00) each as attorney's fees. The petitioner duly appealed the said decision
to the Court of Appeals.
On June 3, 1994, the Court of Appeals promulgated a Resolution
8
denying the petitioner's
motions for reconsideration and for contempt of court in CA-G.R. SP No. 27803.
Hence, this petition anchored on the following assignment of errors:


52

I
RESPONDENT HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE OF
DISCRETION AMOUNTING TO LACK OF JURISDICTION IN FAILING TO RULE ON
PETITIONER'S MOTION TO DISMISS.
II
RESPONDENT HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE OF
DISCRETION AMOUNTING TO LACK OF JURISDICTION IN REFUSING TO PROMPTLY
RESOLVE PETITIONER'S MOTION FOR RECONSIDERATION.
III
IN DELAYING THE RESOLUTION OF PETITIONER'S MOTION FOR RECONSIDERATION, THE
HONORABLE COURT OF APPEALS DENIED PETITIONER'S RIGHT TO SEEK TIMELY
APPELLATE RELIEF AND VIOLATED PETITIONER'S RIGHT TO DUE PROCESS.
IV
RESPONDENT HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE OF
DISCRETION AMOUNTING TO LACK OF JURISDICTION IN FAILING TO CITE THE PRIVATE
RESPONDENTS IN CONTEMPT.
9

The petitioner faults the appellate court for not dismissing the petition on the ground of
violation of Supreme Court Circular No. 28-91. Also, the petitioner contends that the
appellate court violated Section 6, Rule 9 of the Revised Internal Rules of the Court of
Appeals when it failed to rule on her motion for reconsideration within ninety (90) days
from the time it is submitted for resolution. The appellate court ruled only after the lapse of
three hundred fifty-four (354) days, or on June 3, 1994. In delaying the resolution thereof,
the appellate court denied the petitioner's right to seek the timely appellate relief. Finally,
petitioner describes as arbitrary the denial of her motions for contempt of court against the
respondents.
We rule in favor of the respondents.
Pursuant to Section 1, Rule 58 of the Revised Rules of Civil Procedure, one of the grounds
for the issuance of a writ of preliminary injunction is a proof that the applicant is entitled to
the relief demanded, and the whole or part of such relief consists in restraining the
commission or continuance of the act or acts complained of, either for a limited period or
perpetually. Thus, a preliminary injunction order may be granted only when the
application for the issuance of the same shows facts entitling the applicant to the relief
demanded.
10
This is the reason why we have ruled that it must be shown that the invasion
of the right sought to be protected is material and substantial, that the right of complainant
is clear and unmistakable, and, that there is an urgent and paramount necessity for the writ
to prevent serious damage.
11

In the case at bar, the petitioner applied for the issuance of a preliminary injunctive order
on the ground that she is entitled to the use of the trademark on Chin Chun Su and its
53

container based on her copyright and patent over the same. We first find it appropriate to
rule on whether the copyright and patent over the name and container of a beauty cream
product would entitle the registrant to the use and ownership over the same to the
exclusion of others.
Trademark, copyright and patents are different intellectual property rights that cannot be
interchanged with one another. A trademark is any visible sign capable of distinguishing
the goods (trademark) or services (service mark) of an enterprise and shall include a
stamped or marked container of goods.
12
In relation thereto, a trade name means the name
or designation identifying or distinguishing an enterprise.
13
Meanwhile, the scope of a
copyright is confined to literary and artistic works which are original intellectual creations
in the literary and artistic domain protected from the moment of their
creation.
14
Patentable inventions, on the other hand, refer to any technical solution of a
problem in any field of human activity which is new, involves an inventive step and is
industrially applicable.
15

Petitioner has no right to support her claim for the exclusive use of the subject trade name
and its container. The name and container of a beauty cream product are proper subjects of
a trademark inasmuch as the same falls squarely within its definition. In order to be
entitled to exclusively use the same in the sale of the beauty cream product, the user must
sufficiently prove that she registered or used it before anybody else did. The petitioner's
copyright and patent registration of the name and container would not guarantee her the
right to the exclusive use of the same for the reason that they are not appropriate subjects
of the said intellectual rights. Consequently, a preliminary injunction order cannot be
issued for the reason that the petitioner has not proven that she has a clear right over the
said name and container to the exclusion of others, not having proven that she has
registered a trademark thereto or used the same before anyone did.
We cannot likewise overlook the decision of the trial court in the case for final injunction
and damages. The dispositive portion of said decision held that the petitioner does not have
trademark rights on the name and container of the beauty cream product. The said decision
on the merits of the trial court rendered the issuance of the writ of a preliminary injunction
moot and academic notwithstanding the fact that the same has been appealed in the Court
of Appeals. This is supported by our ruling in La Vista Association, Inc. v. Court of
Appeals
16
, to wit:
Considering that preliminary injunction is a provisional remedy which may be granted at any
time after the commencement of the action and before judgment when it is established that
the plaintiff is entitled to the relief demanded and only when his complaint shows facts
entitling such reliefs xxx and it appearing that the trial court had already granted the
issuance of a final injunction in favor of petitioner in its decision rendered after trial on the
merits xxx the Court resolved to Dismiss the instant petition having been rendered moot and
academic. An injunction issued by the trial court after it has already made a clear
pronouncement as to the plaintiff's right thereto, that is, after the same issue has been decided
on the merits, the trial court having appreciated the evidence presented, is proper,
notwithstanding the fact that the decision rendered is not yet final xxx. Being an ancillary
remedy, the proceedings for preliminary injunction cannot stand separately or proceed
54

independently of the decision rendered on the merit of the main case for injunction. The
merit of the main case having been already determined in favor of the applicant, the
preliminary determination of its non-existence ceases to have any force and effect. (italics
supplied)
La Vista categorically pronounced that the issuance of a final injunction renders any
question on the preliminary injunctive order moot and academic despite the fact that the
decision granting a final injunction is pending appeal. Conversely, a decision denying the
applicant-plaintiff's right to a final injunction, although appealed, renders moot and
academic any objection to the prior dissolution of a writ of preliminary injunction.
The petitioner argues that the appellate court erred in not dismissing the petition for
certiorari for non-compliance with the rule on forum shopping. We disagree. First, the
petitioner improperly raised the technical objection of non-compliance with Supreme
Court Circular No. 28-91 by filing a motion to dismiss the petition for certiorari filed in the
appellate court. This is prohibited by Section 6, Rule 66 of the Revised Rules of Civil
Procedure which provides that "(I)n petitions for certiorari before the Supreme Court and
the Court of Appeals, the provisions of Section 2, Rule 56, shall be observed. Before giving
due course thereto, the court may require the respondents to file their comment to, and not
a motion to dismiss, the petition xxx (italics supplied)". Secondly, the issue was raised one
month after petitioner had filed her answer/comment and after private respondent had
replied thereto. Under Section 1, Rule 16 of the Revised Rules of Civil Procedure, a motion
to dismiss shall be filed within the time for but before filing the answer to the complaint or
pleading asserting a claim. She therefore could no longer submit a motion to dismiss nor
raise defenses and objections not included in the answer/comment she had earlier
tendered. Thirdly, substantial justice and equity require this Court not to revive a dissolved
writ of injunction in favor of a party without any legal right thereto merely on a technical
infirmity. The granting of an injunctive writ based on a technical ground rather than
compliance with the requisites for the issuance of the same is contrary to the primary
objective of legal procedure which is to serve as a means to dispense justice to the
deserving party.
The petitioner likewise contends that the appellate court unduly delayed the resolution of
her motion for reconsideration. But we find that petitioner contributed to this delay when
she filed successive contentious motions in the same proceeding, the last of which was on
October 27, 1993, necessitating counter-manifestations from private respondents with the
last one being filed on November 9, 1993. Nonetheless, it is well-settled that non-
observance of the period for deciding cases or their incidents does not render such
judgments ineffective or void.
17
With respect to the purported damages she suffered due to
the alleged delay in resolving her motion for reconsideration, we find that the said issue
has likewise been rendered moot and academic by our ruling that she has no right over the
trademark and, consequently, to the issuance of a writ of preliminary
injunction.1wphi1.nt
Finally, we rule that the Court of Appeals correctly denied the petitioner's several motions
for contempt of court. There is nothing contemptuous about the advertisements
complained of which, as regards the proceedings in CA-G.R. SP No. 27803 merely
55

announced in plain and straightforward language the promulgation of the assailed Decision
of the appellate court. Moreover, pursuant to Section 4 of Rule 39 of the Revised Rules of
Civil Procedure, the said decision nullifying the injunctive writ was immediately executory.
WHEREFORE, the petition is DENIED. The Decision and Resolution of the Court of Appeals
dated May 24, 1993 and June 3, 1994, respectively, are hereby AFFIRMED. With costs
against the petitioner.
SO ORDERED.
Footnote

1
Penned by Associate Justice Ricardo P. Galvez, and concurred in by Associate Justices
Manuel M. Herrera and Asaali S. Isnani, Ninth Division; Rollo, pp. 36-40.
2
Penned by Judge Abraham P. Vera; CA Rollo, pp. 12-18.
3
CA Rollo, pp. 12-17.
4
CA Rollo, p. 18.
5
Rollo, p. 39.
6
Rollo, pp. 38-39.
7
Rollo, pp. 19, 241.
8
Rollo, pp. 42-43.
9
Rollo, p. 21.
10
Section 4, Rule 58, Revised Rules of Civil Procedure.
11
Sy v. Court of Appeals, 313 SCRA 328 (1999).
12
Section 121.1, Republic Act No. 8293.
13
Section 121.3, Republic Act. No. 8293.
14
Section 172, Republic Act No. 8293.
15
Section 21, Republic Act No. 8293.
16
278 SCRA 498, 506 quoting Solid Homes, Inc. v. LA Vista, G.R. No. 71150 dated April 20,
1988 (unpublished).
17
De Roma v. Court of Appeals, 152 SCRA 205, 209 (1987).


56

Topic: Repeal of repugnant provisions of Republic Act No. 166
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. Nos. 160054-55 July 21, 2004
MANOLO P. SAMSON, petitioner,
vs.
HON. REYNALDO B. DAWAY, in his capacity as Presiding Judge, Regional Trial Court
of Quezon City, Branch 90, PEOPLE OF THE PHILIPPINES and CATERPILLAR,
INC., respondents.
D E C I S I O N
YNARES-SANTIAGO, J.:
Assailed in this petition for certiorari is the March 26, 2003 Order
1
of the Regional Trial
Court of Quezon City, Branch 90, which denied petitioners (1) motion to quash the
information; and (2) motion for reconsideration of the August 9, 2002 Order denying his
motion to suspend the arraignment and other proceedings in Criminal Case Nos. Q-02-
108043-44. Petitioner also questioned its August 5, 2003 Order
2
which denied his motion
for reconsideration.
The undisputed facts show that on March 7, 2002, two informations for unfair competition
under Section 168.3 (a), in relation to Section 170, of the Intellectual Property Code
(Republic Act No. 8293), similarly worded save for the dates and places of commission,
were filed against petitioner Manolo P. Samson, the registered owner of ITTI Shoes. The
accusatory portion of said informations read:
That on or about the first week of November 1999 and sometime prior or
subsequent thereto, in Quezon City, Philippines, and within the jurisdiction of this
Honorable Court, above-named accused, owner/proprietor of ITTI Shoes/Mano
Shoes Manufactuirng Corporation located at Robinsons Galleria, EDSA corner
Ortigas Avenue, Quezon City, did then and there willfully, unlawfully and feloniously
distribute, sell and/or offer for sale CATERPILLAR products such as footwear,
garments, clothing, bags, accessories and paraphernalia which are closely identical
to and/or colorable imitations of the authentic Caterpillar products and likewise
using trademarks, symbols and/or designs as would cause confusion, mistake or
deception on the part of the buying public to the damage and prejudice of
CATERPILLAR, INC., the prior adopter, user and owner of the following
internationally: "CATERPILLAR", "CAT", "CATERPILLAR & DESIGN", "CAT AND
DESIGN", "WALKING MACHINES" and "TRACK-TYPE TRACTOR & DESIGN."
CONTRARY TO LAW.
3

57

On April 19, 2002, petitioner filed a motion to suspend arraignment and other proceedings
in view of the existence of an alleged prejudicial question involved in Civil Case No. Q-00-
41446 for unfair competition pending with the same branch; and also in view of the
pendency of a petition for review filed with the Secretary of Justice assailing the Chief State
Prosecutors resolution finding probable cause to charge petitioner with unfair
competition. In an Order dated August 9, 2002, the trial court denied the motion to suspend
arraignment and other proceedings.
On August 20, 2002, petitioner filed a twin motion to quash the informations and motion
for reconsideration of the order denying motion to suspend, this time challenging the
jurisdiction of the trial court over the offense charged. He contended that since under
Section 170 of R.A. No. 8293, the penalty4 of imprisonment for unfair competition does not
exceed six years, the offense is cognizable by the Municipal Trial Courts and not by the
Regional Trial Court, per R.A. No. 7691.
In its assailed March 26, 2003 Order, the trial court denied petitioners twin motions.6 A
motion for reconsideration thereof was likewise denied on August 5, 2003.
Hence, the instant petition alleging that respondent Judge gravely abused its discretion in
issuing the assailed orders.
The issues posed for resolution are (1) Which court has jurisdiction over criminal and
civil cases for violation of intellectual property rights? (2) Did the respondent Judge gravely
abuse his discretion in refusing to suspend the arraignment and other proceedings in
Criminal Case Nos. Q-02-108043-44 on the ground of (a) the existence of a prejudicial
question; and (b) the pendency of a petition for review with the Secretary of Justice on the
finding of probable cause for unfair competition?
Under Section 170 of R.A. No. 8293, which took effect on January 1, 1998, the criminal
penalty for infringement of registered marks, unfair competition, false designation of origin
and false description or representation, is imprisonment from 2 to 5 years and a fine
ranging from Fifty Thousand Pesos to Two Hundred Thousand Pesos, to wit:
SEC. 170. Penalties. Independent of the civil and administrative sanctions imposed
by law, a criminal penalty of imprisonment from two (2) years to five (5) years and
a fine ranging from Fifty thousand pesos (P50,000.00) to Two hundred thousand
pesos (P200,000.00), shall be imposed on any person who is found guilty of
committing any of the acts mentioned in Section 155 [Infringement], Section 168
[Unfair Competition] and Section 169.1 [False Designation of Origin and False
Description or Representation].
Corollarily, Section 163 of the same Code states that actions (including criminal and civil)
under Sections 150, 155, 164, 166, 167, 168 and 169 shall be brought before the proper
courts with appropriate jurisdiction under existing laws, thus
SEC. 163. Jurisdiction of Court. All actions under Sections 150, 155, 164 and 166 to
169 shall be brought before the proper courts with appropriate jurisdiction
under existing laws. (Emphasis supplied)
58

The existing law referred to in the foregoing provision is Section 27 of R.A. No. 166 (The
Trademark Law) which provides that jurisdiction over cases for infringement of registered
marks, unfair competition, false designation of origin and false description or
representation, is lodged with the Court of First Instance (now Regional Trial Court)
SEC. 27. Jurisdiction of Court of First Instance. All actions under this Chapter [V
Infringement] and Chapters VI [Unfair Competition] and VII [False Designation of
Origin and False Description or Representation], hereof shall be brought before the
Court of First Instance.
We find no merit in the claim of petitioner that R.A. No. 166 was expressly repealed by R.A.
No. 8293. The repealing clause of R.A. No. 8293, reads
SEC. 239. Repeals. 239.1. All Acts and parts of Acts inconsistent herewith, more
particularly Republic Act No. 165, as amended; Republic Act No. 166, as amended;
and Articles 188 and 189 of the Revised Penal Code; Presidential Decree No. 49,
including Presidential Decree No. 285, as amended, are hereby repealed. (Emphasis
added)
Notably, the aforequoted clause did not expressly repeal R.A. No. 166 in its entirety,
otherwise, it would not have used the phrases "parts of Acts" and "inconsistent herewith;"
and it would have simply stated "Republic Act No. 165, as amended; Republic Act No. 166,
as amended; and Articles 188 and 189 of the Revised Penal Code; Presidential Decree No.
49, including Presidential Decree No. 285, as amended are hereby repealed." It would have
removed all doubts that said specific laws had been rendered without force and effect. The
use of the phrases "parts of Acts" and "inconsistent herewith" only means that the repeal
pertains only to provisions which are repugnant or not susceptible of harmonization with
R.A. No. 8293.6 Section 27 of R.A. No. 166, however, is consistent and in harmony with
Section 163 of R.A. No. 8293. Had R.A. No. 8293 intended to vest jurisdiction over violations
of intellectual property rights with the Metropolitan Trial Courts, it would have expressly
stated so under Section 163 thereof.
Moreover, the settled rule in statutory construction is that in case of conflict between a
general law and a special law, the latter must prevail. Jurisdiction conferred by a special
law to Regional Trial Courts must prevail over that granted by a general law to Municipal
Trial Courts.7
In the case at bar, R.A. No. 8293 and R.A. No. 166 are special laws8 conferring jurisdiction
over violations of intellectual property rights to the Regional Trial Court. They should
therefore prevail over R.A. No. 7691, which is a general law.9 Hence, jurisdiction over the
instant criminal case for unfair competition is properly lodged with the Regional Trial
Court even if the penalty therefor is imprisonment of less than 6 years, or from 2 to 5 years
and a fine ranging from P50,000.00 to P200,000.00.
In fact, to implement and ensure the speedy disposition of cases involving violations of
intellectual property rights under R.A. No. 8293, the Court issued A.M. No. 02-1-11-SC
dated February 19, 2002 designating certain Regional Trial Courts as Intellectual Property
Courts. On June 17, 2003, the Court further issued a Resolution consolidating jurisdiction to
59

hear and decide Intellectual Property Code and Securities and Exchange Commission cases
in specific Regional Trial Courts designated as Special Commercial Courts.
The case of Mirpuri v. Court of Appeals,10 invoked by petitioner finds no application in the
present case. Nowhere inMirpuri did we state that Section 27 of R.A. No. 166 was repealed
by R.A. No. 8293. Neither did we make a categorical ruling therein that jurisdiction over
cases for violation of intellectual property rights is lodged with the Municipal Trial Courts.
The passing remark in Mirpuri on the repeal of R.A. No. 166 by R.A. No. 8293 was merely a
backgrounder to the enactment of the present Intellectual Property Code and cannot thus
be construed as a jurisdictional pronouncement in cases for violation of intellectual
property rights.
Anent the second issue, petitioner failed to substantiate his claim that there was a
prejudicial question. In his petition, he prayed for the reversal of the March 26, 2003 order
which sustained the denial of his motion to suspend arraignment and other proceedings in
Criminal Case Nos. Q-02-108043-44. For unknown reasons, however, he made no
discussion in support of said prayer in his petition and reply to comment. Neither did he
attach a copy of the complaint in Civil Case No. Q-00-41446 nor quote the pertinent portion
thereof to prove the existence of a prejudicial question.
At any rate, there is no prejudicial question if the civil and the criminal action can,
according to law, proceed independently of each other.11 Under Rule 111, Section 3 of the
Revised Rules on Criminal Procedure, in the cases provided in Articles 32, 33, 34 and 2176
of the Civil Code, the independent civil action may be brought by the offended party. It shall
proceed independently of the criminal action and shall require only a preponderance of
evidence.
In the case at bar, the common element in the acts constituting unfair competition under
Section 168 of R.A. No. 8293 is fraud.12 Pursuant to Article 33 of the Civil Code, in cases of
defamation, fraud, and physical injuries, a civil action for damages, entirely separate and
distinct from the criminal action, may be brought by the injured party. Hence, Civil Case No.
Q-00-41446, which as admitted13 by private respondent also relate to unfair competition,
is an independent civil action under Article 33 of the Civil Code. As such, it will not operate
as a prejudicial question that will justify the suspension of the criminal cases at bar.
Section 11 (c), Rule 116 of the Revised Rules on Criminal Procedure provides
SEC. 11. Suspension of arraignment. Upon motion by the proper party, the
arraignment shall be suspended in the following cases
x x x x x x x x x
(c) A petition for review of the resolution of the prosecutor is pending at either the
Department of Justice, or the Office of the President; Provided, that the period of
suspension shall not exceed sixty (60) days counted from the filing of the petition
with the reviewing office.
60

While the pendency of a petition for review is a ground for suspension of the arraignment,
the aforecited provision limits the deferment of the arraignment to a period of 60 days
reckoned from the filing of the petition with the reviewing office. It follows, therefore, that
after the expiration of said period, the trial court is bound to arraign the accused or to deny
the motion to defer arraignment.
In the instant case, petitioner failed to establish that respondent Judge abused his
discretion in denying his motion to suspend. His pleadings and annexes submitted before
the Court do not show the date of filing of the petition for review with the Secretary of
Justice.14 Moreover, the Order dated August 9, 2002 denying his motion to suspend was
not appended to the petition. He thus failed to discharge the burden of proving that he was
entitled to a suspension of his arraignment and that the questioned orders are contrary to
Section 11 (c), Rule 116 of the Revised Rules on Criminal Procedure. Indeed, the age-old
but familiar rule is that he who alleges must prove his allegations.
In sum, the dismissal of the petition is proper considering that petitioner has not
established that the trial court committed grave abuse of discretion. So also, his failure to
attach documents relevant to his allegations warrants the dismissal of the petition,
pursuant to Section 3, Rule 46 of the Rules of Civil Procedure, which states:
SEC. 3. Contents and filing of petition; effect of non-compliance with
requirements. The petition shall contain the full names and actual addresses of
all the petitioners and respondents, a concise statement of the matters involved, the
factual background of the case, and the grounds relied upon for the relief prayed for.
It shall be filed in seven (7) clearly legible copies together with proof of service
thereof on the respondent with the original copy intended for the court indicated as
such by the petitioner, and shall be accompanied by a clearly legible duplicate
original or certified true copy of the judgment, order, resolution, or ruling
subject thereof, such material portions of the record as are referred to
therein, and other documents relevant or pertinent thereto.
x x x x x x x x x
The failure of the petitioner to comply with any of the foregoing requirements
shall be sufficient ground for the dismissal of the petition. (Emphasis added)
WHEREFORE, in view of all the foregoing, the petition is dismissed.
SO ORDERED.
Davide, Jr., C.J., (Chairman), Quisumbing, Carpio, and Azcuna, JJ., concur.
Footnotes
1
Rollo, p. 25. Issued by Judge Reynaldo B. Daway.
2
Rollo, p. 26.
3
Id., pp. 27-28.
61

4
Imprisonment from two (2) years to five (5) years and a fine ranging from Fifty
Thousand Pesos (P50,000.00) to Two Hundred Thousand Pesos (P200,000.00).
5
The dispositive portion thereof states: "IN VIEW OF THE FOREGOING, the
accuseds aforecited Motion To Quash Information and Motion For Reconsideration
Of Order Denying Motion To Suspend is denied for lack of merit." (Rollo, p. 25)
6
Agpalo, The Law on Trademark, Infringement and Unfair Competition, 2000
Edition, pp. 1-2.
7
Manzano v. Valera, G.R. No. 122068, 8 July 1998, 292 SCRA 66, 74.
8
Faberge Incorporated v. Intermediate Appellate Court, G.R. No. 71189, 4 November
1992, 215 SCRA 316, 323.
9
Manzano v. Valera, supra, p. 73.
10
376 Phil. 628 (1999).
11
People v. Consing, Jr., G.R. No. 148193, 16 January 2003, 395 SCRA 366, 371.
12
Agpalo, supra, p. 234.
13
Rollo, p. 47.
14
The petition and reply to comment do not disclose whether the issue of probable
cause has already been resolved with finality.


62

Republic of the Philippines
SUPREME COURT
THIRD DIVISION
G.R. No.148420 December 15, 2005
ANDREA TAN, CLARITA LLAMAS, VICTOR ESPINA and LUISA ESPINA, Petitioners,
vs.
BAUSCH & LOMB, INC., Respondent.
D E C I S I O N
CORONA, J.:
Assailed in this petition for review
1
are the decision
2
and resolution
3
of the Court of
Appeals which set aside the December 22, 1998 order
4
of Judge Genis Balbuena of Branch
21, Regional Trial Court (RTC), Cebu City and ordered the transfer of Criminal Case No.
CBU-45890 to Branch 9, RTC, Cebu City.
The antecedents follow.
On April 8, 1997, an information
5
for violation of paragraph 1, Article 189
6
of the Revised
Penal Code (RPC) was filed before Branch 21, RTC, Cebu City against petitioners Andrea
Tan, Clarita Llamas, Victor Espina and Luisa Espina of Best Buy Mart, Inc. The information
read:
That on or about June 27, 1996 and sometime prior or subsequent thereto, in the City of
Cebu, Philippines, and within the jurisdiction of this Honorable Court, abovementioned
accused, conspiring and mutually helping each other, did then and there willfully,
unlawfully and feloniously distribute and sell counterfeit RAY BAN sunglasses bearing the
appearance and trademark of RAY BAN in the aforesaid store wherein they have direct
control, supervision and management thereby inducing the public to believe that these
goods offered by them are those of RAY BAN to the damage and prejudice of BAUSCH AND
LOMB, INC., the exclusive owner and user of trademark RAY BAN on sunglasses.
7

On January 21, 1998, respondent filed a motion to transfer the case to Branch 9, RTC, Cebu
City. Administrative Order No. 113-95
8
(A.O. No. 113-95) designated the said branch as the
special court in Region VII to handle violations of intellectual property rights.
On March 2, 1998, petitioners filed a motion to quash
9
the information on the ground that
the RTC had no jurisdiction over the offense charged against them. The penalty
10
provided
by the RPC for the crime was within the jurisdiction of the Municipal Trial Court in Cities
(MTCC).
On March 6, 1998, respondent filed an opposition to the motion to quash,
11
explaining that
BP 129 had already transferred the exclusive jurisdiction to try and decide violations of
intellectual property rights from the MTC and MTCC to the RTC and that the Supreme Court
had also issued Administrative Order No. 104-96 (A.O. No. 104-96)
12
deleting and
63

withdrawing the designation of several branches of the MTC and MTCC as special
intellectual property courts.
On December 22, 1998, the court a quo denied respondents motion to transfer the case
and granted petitioners motion to quash. It ruled:
Accused [wa]s charged for violation of Art. 189 of Revised Penal Code the penalty for which
is prision correccional in its minimum period or a fine ranging from P500.00 to P2,000.00,
or both. Hence, within the jurisdiction of the metropolitan and municipal trial courts (Sec.
32(2), B.P. Blg. 129, as amended).
Administrative Orders Nos. 113-95 and 104-96, cited by plaintiff, cannot prevail over the
express provisions of Batas Pambansa Blg. 129, as amended, jurisdiction of courts being a
matter of substantive law.
If this Court has no jurisdiction over the case, the same is true with Branch 9 of the same
court, Therefore, the motion to transfer the case to the latter should fail.
WHEREFORE, premises considered, the motion to transfer is denied, while the motion to
quash is granted. The case is thus dismissed.
SO ORDERED.
13

Respondent received the order on January 21, 1999 but filed neither an appeal nor a
motion for reconsideration. Rather, it filed a petition for certiorari
14
in the Court of Appeals
on March 23, 1999 or one (1) day beyond the period allowed in Section 4, Rule 65
15
of the
Rules of Court.
Respondents procedural lapses notwithstanding, the appellate court gave due course to
the petition and set aside the trial court order:
WHEREFORE, the petition is GIVEN DUE COURSE and GRANTED. The assailed Order of
December 22, 1998 is VACATED and another is entered ordering the transfer of Crim. Case
No. CBU-45890 to Branch 9 of the Regional Trial Court of Cebu City, and directing the
public respondent to accordingly transmit the records thereof.
SO ORDERED.
16

Hence, the present petition for review, centered on the following issues:
I. THE COURT OF APPEALS SERIOUSLY ERRED IN NOT DISMISSING THE PETITION OF
RESPONDENT THAT IS FRAUGHT WITH FATAL INFIRMITIES.
II. THE COURT OF APPEALS SERIOUSLY ERRED IN REVERSING THE CORRECT RULING OF
THE TRIAL COURT THAT THE REGIONAL TRIAL COURT HAS NO JURISDICTION OVER THE
OFFENSE OF UNFAIR COMPETITION UNDER ARTICLE 189 OF THE REVISED PENAL
CODE.
17

There is no merit in the petition.
64

As to the first assigned error, petitioners contend that the Court of Appeals erred in giving
due course to the petition for certiorari because respondent failed to appeal or file a motion
for reconsideration of the trial courts order granting the motion to quash. Worse,
respondent filed the petition in the appellate court one day after the reglementary period
expired.
Needless to state, the acceptance of a petition for certiorari as well as the grant of due
course thereto is, in
general, addressed to the sound discretion of the court.
18

Besides, the provisions of the Rules of Court, which are technical rules, may be relaxed in
certain exceptional situations.
19
Where a rigid application of the rule that certiorari cannot
be a substitute for appeal will result in a manifest failure or miscarriage of justice, it is
within our power to suspend the rules or exempt a particular case from its operation.
20

Under certain special circumstances,
21
a petition for certiorari may be given due course
notwithstanding that no motion for reconsideration was filed in the lower court. The
exception applies in this case since the order of the trial court was, as will be discussed
later, a patent nullity.
Likewise, the one-day delay in the filing of the petition may be excused on the basis of
equity to afford respondent the chance to prove the merits of the complaint.
In Yao v. Court of Appeals,
22
we held:
In the interest of substantial justice, procedural rules of the most mandatory character in
terms of compliance may be relaxed. In other words, if strict adherence to the letter of the
law would result in absurdity and manifest injustice or where the merit of a partys cause is
apparent and outweighs consideration of non-compliance with certain formal
requirements, procedural rules should definitely be liberally construed. A party-litigant is
to be given the fullest opportunity to establish the merits of his complaint or defense rather
than for him to lose life, liberty, honor or property on mere technicalities.
Hence, the only relevant issue left for our resolution is whether or not the jurisdiction over
the crime allegedly committed by petitioners is vested on the RTC.
Section 5 (5) of the 1987 Constitution empowers the Supreme Court to promulgate rules
concerning pleading, practice and procedure in all courts. The limitations to this rule-
making power are the following: the rules must (a) provide a simplified and inexpensive
procedure for the speedy disposition of cases; (b) be uniform for all courts of the same
grade and (c) not diminish, increase or modify substantive rights.
23
As long as these limits
are met, the argument used by petitioners that the Supreme Court, through A.O. Nos. 113-
95 and 104-96, transgressed on Congress sole power to legislate, cannot be sustained.
A.O. No. 113-95 designated special intellectual property courts to promote the efficient
administration of justice and to ensure the speedy disposition of intellectual property
cases.
65

A.O. No. 104-96,
24
on the other hand, was issued pursuant to Section 23 of BP 129
25
which
transferred the jurisdiction over such crimes from the MTC and MTCC to the RTC and
which furthermore gave the Supreme Court the authority to designate certain branches of
the RTC to exclusively handle special cases in the interest of the speedy and efficient
administration of justice. Accordingly, the RTC was vested with the exclusive and original
jurisdiction to try and decide intellectual property cases.
The transfer of jurisdiction from the MTC and MTCC to the RTC did not in any way affect
the substantive rights of petitioners. The administrative orders did not change the
definition or scope of the crime of unfair competition with which petitioners were charged.
Both administrative orders therefore have the force and effect of law, having been validly
issued by the Supreme Court in the exercise of its constitutional rule-making power. The
trial court, being a subordinate court, should have followed the mandate of the later A.O.
104-96 which vested jurisdiction over the instant case on the RTC. Thus, the appellate
court correctly found that the court a quo committed grave abuse of discretion.
Furthermore, the order of the trial court was a patent nullity. In resolving the pending
incidents of the motion to transfer and motion to quash, the trial court should not have
allowed petitioners to collaterally attack the validity of A.O. Nos. 113-95 and 104-96. We
have ruled time and again that the constitutionality or validity of laws, orders, or such
other rules with the force of law cannot be attacked collaterally. There is a legal
presumption of validity of these laws and rules. Unless a law or rule is annulled in a direct
proceeding, the legal presumption of its validity stands.
26
The trial courts order was
consequently null and void.
The transfer of this case to Branch 9, RTC, Cebu City, however, is no longer possible. A.M.
No. 03-03-03-SC
27
consolidated the intellectual property courts and commercial SEC courts
in one RTC branch in a particular locality to streamline the court structure and to promote
expediency. The RTC branch so designated will try and decide cases involving violations of
intellectual property rights, and cases formerly cognizable by the Securities and Exchange
Commission. It is now called a special commercial court. In Region VII, the designated
special commercial court is Branch 11, RTC, Cebu City. The transfer of this case to that
court is therefore warranted.
WHEREFORE, the Court of Appeals decision dated October 20, 2000 is
hereby AFFIRMED with theMODIFICATION that Criminal Case No. CBU-45890 shall be
transferred to Branch 11, RTC, Cebu City. Let the records of the case be transmitted thereto
and the case tried and decided with dispatch.
Costs against petitioners.
SO ORDERED.
Footnotes
1
Under Rule 45 of the Revised Rules of Court.
66

2
Penned by Associate Justice Roberto A. Barrios and concurred in by Associate
Justices Ramon Mabutas, Jr. and Eriberto U. Rosario, Jr. of the Eighth Division of the
Court of Appeals; dated October 20, 2000; Rollo, pp. 51-56.
3
The resolution denied the motion for reconsideration; dated May 21, 2001; Id., pp.
70-71.
4
Id., pp. 32-33.
5
Filed by State Prosecutor Zenaida M. Lim; docketed as Criminal Case No. CBU-
45890; Id., pp. 22-23.
6
Unfair competition.
7
Id., pp. 22-23.
8
Re: Designation of Special Courts for Intellectual Property Rights; issued on
October 2, 1995.
9
Dated February 17, 1998; Id., pp. 24-26.
10
Penalty for violation of Article 189, RPC: prision correccional in its minimum
period or fine ranging fromP500 to P2,000, or both.
11
Id., pp. 27-30.
12
Re: Designation of Special Courts for Kidnapping, Robbery, Carnapping,
Dangerous Drugs Cases
and other Heinous Crimes, Intellectual Property Rights Violations and Jurisdiction in
Libel Cases;
Issued on October 21, 1996.
13
See note 4.
14
Under Rule 65 of the Rules of Court.
15
Sec. 4, Rule 65. When and where petition filed. The petition shall be filed not later
than sixty (60) days from notice of the judgment, order or resolution. x x x
16
See note 2.
17
Id., p. 10.
18
Serrano v. Galant Maritime Services, Inc, et al., G.R. No. 151833, 7 August 2003; 408
SCRA 523.
19
Mercado-Fehr v. Fehr, G.R. No. 152716, 23 October 2003, 414 SCRA 288.
20
Nala v. Barroso, Jr., G.R. No. 153087, 7 August 2003, 408 SCRA 529.
21
The following are the instances when a special civil action for certiorari may be
given due course even if no motion for reconsideration has been filed: (1) the issue
raised is purely one of law; (2) public interest is involved; (3) the matter is one of
urgency; (4) the question of jurisdiction was squarely raised, submitted to, met and
decided by the lower court; and (5) the order is a patent nullity. (Far East Bank and
Trust Co., v. Toh, Sr., G.R. No. 144018, 23 June 2003, 404 SCRA 590).
22
G.R. No. 132428, 24 October 2000, 344 SCRA 202.
23
Nachura, Outline Reviewer in Political Law, 2002 Edition, p. 242.
24
A.O. No. 104-96 (B) Violations of intellectual property rights such as, but not
limited to, violations of Art. 188 of the RPC (substituting and altering trademarks,
trade names, or service marks), Art. 189 of the RPC (unfair competition, fraudulent
registration of trademarks, trade names, or service marks, fraudulent designation of
origin, and false description) P.D. No. 49 (protection of intellectual property rights),
P.D. No. 87 (an act creating the videogram regulatory board), R.A. No. 165 as
amended (the trademark law) shall be tried exclusively by the RTC in accordance
67

with the established raffle scheme except those covered by AO No. 113-95 dated
October 2, 1995, in which case, the designated RTC shall continue to observe the
provisions therein.
Considering that jurisdiction for violations of intellectual property rights
hereinbefore mentioned is now confined exclusively to the RTC, the designation of
MTC and MTCC under AO No. 113-95 is deleted and withdrawn.(emphasis ours)
25
SEC. 23. Special Jurisdiction to try special cases. The Supreme Court may
designate certain branches of the Regional Trial Courts to handle exclusively
criminal cases, juvenile and domestic relations cases, agrarian cases, urban land
reform cases which do not fall under the jurisdiction of quasi-judicial bodies and
agencies, and /or such other special cases as the Supreme Court may determine in
the interest of a speedy and efficient administration of justice.
26
Olsen and Co. v. Aldanese, 43 Phil 259 (1922); San Miguel Brewery v. Magno, 128
Phil. 328 (1967).
27
Issued on June 23, 2003.


68

Topic: Statutory right
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 76193 November 9, 1989
UNITED FEATURE SYNDICATE, INC., petitioner,
vs.
MUNSINGWEAR CREATION MANUFACTURING COMPANY, respondent.
Quasha, Asperilla, Ancheta, Pena and Nolasco for petitioner.
Jaime G. Manzano for private respondent.

PARAS, J.:
This is a petition for review on certiorari filed by United Feature Syndicate Inc., seeking to
set aside the Resolution of the Seventh Division of the Court of Appeals * dated September
16, 1986 dismissing the appeal of petitioner-appellant for having been filed out of time and
denying its Motion for Reconsideration for lack of merit in its Resolution dated October 14,
1986.
The Resolution dismissing the appeal, reads as follows:
We agree with the Philippine Patent Office and respondent appellee that the
decision of the aforementioned office dated October 2, 1984 had already
become final and executory at the time the Notice of Appeal was filed.
Our reasons for this conclusions are borne out by the following facts:
a) On October 2, 1984, the decision sought to be appealed was
rendered by the Philippine Patent Office and a copy thereof
was received by counsel for petitioner-appellant on October 3,
1984 not October 9, 1984 as stated in the Notice of Appeal.
There can be no doubt about the decision having been received
by petitioner-appellant's counsel onOctober 3, 1984 for this is
clearly written in the Notice of Decision (p. 61, Original
Record), and in point of fact the date of receipt cannot be
October 9, 1984, as declared in the Notice of Appeal (p. 1,
Rollo), because in the motion for reconsideration subsequently
filed by petitioner-appellant it was stated that a copy of the
decision was received onOctober 4, 1984 (p. 80, Original
Record).
69

b) On October 18, 1984 as shown in the stamp mark of the
Philippine Patent Office (p. 80, Original Record) or on the 15th
and last day either for appealing or for moving for
reconsideration, petitioner-appellant filed a motion for
reconsideration.
Sadly and unexplainably for a veteran law office, said motion did not contain
or incorporate a notice of hearing.
c) Possibly realizing the fatal defect in its motion for
reconsideration, petitioner-appellant subsequently filed a
motion to set for hearing its motion for reconsideration. This
was done, however, only on October 31, 1984 (p. 162, Original
Record).
The motion for reconsideration filed on the last day, fatally failing as it did to
contain a notice of hearing, said pleading did not interrupt the period for
appealing, for the motion was nothing but a piece of scrap
paper (Agricultural and Industrial Marketing, Inc. v. Court of Appeals, 118
SCRA [1982] 492; Republic Planters Bank v. Intermediate Appellate Court, 13
SCRA [1984] 631).
This deadly and moral deficiency in the motion for reconsideration,
therefore, resulted in the decision of the Philippine Patent Office being final
and executory on October 19, 1984, the day after the motion for
reconsideration was filed, said motion having been filed on the 15th and last
day for appealing.
WHEREFORE, the motion of respondent appellee is hereby granted and the
appeal dismissed.
SO ORDERED. (Rollo 42-43)
This case arose from petition filed by petitioner for the cancellation of the registration of
trademark CHARLIE BROWN (Registration No. SR. 4224) in the name of respondent
MUNSINGWEAR in Inter Partes Case No. 1350 entitled "United Feature Syndicate, Inc. v.
Munsingwear Creation Mfg. Co.", with the Philippine Patent Office alleging that petitioner is
damaged by the registration of the trademark CHARLIE BROWN of T-Shirts under Class 25
with the Registration No. SR-4224 dated September 12, 1979 in the name of Munsingwear
Creation Manufacturing Co., Inc., on the following grounds: (1) that respondent was not
entitled to the registration of the mark CHARLIE BROWN, & DEVICE at the time of
application for registration; (2) that CHARLIE BROWN is a character creation or a pictorial
illustration, the copyright to which is exclusively owned worldwide by the petitioner; (3)
that as the owner of the pictorial illustration CHARLIE BROWN, petitioner has since 1950
and continuously up to the present, used and reproduced the same to the exclusion of
others; (4) that the respondent-registrant has no bona fide use of the trademark in
commerce in the Philippines prior to its application for registration. (Petition, p. 2, Rollo, p.
8)
70

On October 2, 1984 the Director of the Philippine Patent Office rendered a decision in this
case holding that a copyright registration like that of the name and likeness of CHARLIE
BROWN may not provide a cause of action for the cancellation of a trademark registration,
(Petition, p. 4; Rollo, p. 10 )
Petitioner filed a motion for reconsideration of the decision rendered by the Philippine
Patent Office which was denied by the Director of said office on the ground that the
Decision No. 84-83 was already final and executory (Petition, Rollo, pp. 11-12).
From this decision, petitioner-appellant appealed to the Court of Appeals and respondent
court in its resolution dated September 16, 1986 denied the appeal. While the Motion for
Reconsideration was filed on time, that is, on the last day within which to appeal, still it is a
mere scrap of paper because there was no, date, of hearing stated therein.
Subsequently, petitioner-appellant filed a motion for reconsideration which public
respondent denied for lack of merit( Annex "B", Rollo p. 45)..
Hence this petition for review on certiorari.
In the resolution of April 6, 1987, the petition was given due course.
In its petition (Rollo, p. 10) and in its memorandum (Rollo, p. 97), petitioner-appellant
raised the following legal issues:
I
WHETHER THE RESPONDENT COURT OF APPEALS ACTED IN EXCESS OF
JURISDICTION AND/OR COMMITTED GRAVE ABUSE OF DISCRETION WHEN
IT BASED ITS RESOLUTION IN DISMISSING ITS APPEAL ON STRICT
TECHNICAL RULES OF PROCEDURE AS ENUNCIATED IN RULE 15 OF THE
RULES OF COURT INSTEAD OF RELYING ON THE POLICY OF THE
PHILIPPINE PATENT OFFICE AS STRESSED IN RULE 169, AS AMENDED, OF
THE RULES OF PRACTICE IN TRADEMARK CASES.
II
WHETHER THE RESPONDENT COURT OF APPEALS COMMITTED GRAVE
ABUSE OF DISCRETION AMOUNTING TO EXCESS OF JURISDICTION WHEN
BY DISMISSING THE APPEAL TO IT FROM THE DECISION OF THE DIRECTOR
OF PATENTS, IT KNOWINGLY DISREGARDED ITS OWN DECISION IN AC-GR.
SP. NO. 0342, WHICH WAS AFFIRMED BY THIS HONORABLE SUPREME
COURT TO THE EFFECT THAT A COPYRIGHTED CHARACTER MAY NOT BE
APPROPRIATED AS A TRADEMARK BY ANOTHER UNDER PRESIDENTIAL
DECREE NO. 49.
III
WHETHER, ASSUMING ARGUENDO, BUT ONLY ASSUMING, THAT THE
DECISION OF THE DIRECTOR OF PATENTS IN THE CASE AT BAR HAD
71

ALREADY BECOME FINAL WHEN IT WAS APPEALED TO THE COURT OF
APPEALS, THE LATTER, BY REASON OF THE SUPERVENING FACTS AFTER
THE DECISION APPEALED FROM WAS RENDERED, SHOULD HAVE
HARMONIZED THE DECISION WITH LAW, THE DEMANDS OF JUSTICE AND
EQUITY.
The petitioner is impressed with merit.
Petitioner's contention that the purpose of a notice of hearing to the adverse party is to
afford him an opportunity to resist the motion, more particularly the motion for
reconsideration filed by its company is well taken. Said purpose was served when
Munsingwear filed its opposition thereto on November 20, 1984 and cured the technical
defect of lack of notice of hearing complained of (Rollo, p. 52). Otherwise stated such
shortcomings of petitioner as to compliance with procedural requirements in taking its
appeal cannot be deemed sufficient to deprive it of a chance to secure a review by this
court in order to obtain substantial justice; more so where liverality accorded to the
petitioner becomes compelling because of the ostensible merit of petitioner's case (Olango
v. Court of First Instance of Misamis Oriental, 121 SCRA 338 [1983]).
Moreover, in Siguenza v. Court of Appeals, (137 SCRA 570 [1985]) the Court stressed that
the right to appeal should not be lightly disregarded by a stringent application of rules of
procedure especially where the appeal is on its face meritorious and the interest of
substantial justice would be served by permitting the appeal.
As enunciated in the case of Castro v. Court of Appeals (123 SCRA 782, [1983]) the
importance and real purpose of the remedy of appeal was stressed as follows:
An appeal is an essential part of oar judicial system. We have advised the
courts to proceed with caution so as not to deprive a party of the right to
appeal. (National Waterworks and Sewerage Authority v. Municipality of
Libmanan, 97 SCRA 138) and instructed that every party-litigant should
be afforded the amplest opportunity for the proper and just disposition of his
cause, freed from the constraints of technicalities. (A-One Feeds, Inc. v. Court
of Appeals, 100 SCRA 590).
The rules of procedure are not to be applied in a very rigid and technical
sense. The rules of procedure are used only to help secure not override
substantial justice. (Gregorio v. Court of Appeals, 72 SCRA 120), therefore, we
ruled in Republic v. Court of Appeals (83 SCRA 453) that a six day delay in the
perfection of the appeal does not warrant its dismissal. And again in Ramos v.
Bagaso, 96 SCRA 395, this Court held that the delay of four (4) days in filing a
notice of appeal and a motion for extension of time to file a record on appeal
can be excused on the basis of equity.
It was further emphasized that we allowed the filing of an appeal in some cases where a
stringent application of the rules would have denied it, or when to do so would serve the
demands of substantial justice and in the exercise of our equity jurisdiction (Serrano v. Court
of Appeals, 139 SCRA 179 [1085].)
72

In the case at bar, the petitioner's delay in filing their record on appeal should not be strictly
construed as to deprive them of the right to appeal especially since on its face the appeal
appears to be impressed with merit. (Emphasis supplied). All aforementioned cases are cited
in G.R. No. 76595,Pacific Asia Overseas Shipping Corporation v. NLRC, et al., May 6, 1988.
Procedural technicality should not prevail over substantive rights of a party to appeal (NEA
v. CA, 126 SCRA 394).
Moreover, a judgment of the Court of Appeals that become final by reason of the mistake of
the herein petitioner's lawyer may still be reviewed on appeal by the Supreme Court
particularly where the Supreme Court already gave due course to the petition for review
(Ernesto v. Court of Appeals, 116 SCRA 755 [1982]).
Where strong considerations of substantial justice are manifest in the petition, this Court
may relax the stringent application of technical rules in the exercise of equity jurisdiction.
In addition to the basic merits of the main case, such petition usually embodies justifying
circumstances which warrant our heeding the petitioner's cry for justice, inspite of the
earlier negligence of counsel (Serrano v. Court of Appeals et al., 139 SCRA 179 [1985]).
In a number of cases, this Court in the exercise of equity jurisdiction decided to disregard
technicalities in order to resolve the case on its merits based on the evidence (St. Peter
Memorial Park, Inc. et al. v. Cleofas, 121 SCRA 287, [1983]; Helmuth, Jr. v. People of the
Philippines, 112 SCRA 573 [1983]).
This case was brought before this Court for the resolution of the dismissal of the appeal
filed by petitioner-appellant from the decision of the Director of the Philippines Patent
Office for being filed out of time. The normal action to take thereafter, would be to remand
this case to the Court of Appeals for further proceedings. However, in line with
jurisprudence, such time consuming procedure may be properly dispensed with to resolve
the issue (Quisumbing v. Court of Appeals, 122 SCRA 709 [1983]) where there is enough
basis to end the basic controversy between the parties here and now. In the case at bar
dispensing with such procedural steps would not anyway affect substantially the merits of
their respective claims as held in Velasco v. Court of Appeals, (95 SCRA 621 [1980] cited in
Ortigas & Co. Ltd. v. Ruiz, 148 SCRA [1987] hence the need for this Court to broaden its
inquiry in this case land decide the same on the merits rather than merely resolve the
procedural question raised (Dorado v. Court of Appeals, 153 SCRA 420 [1987]; De Lima v.
Laguna Tayabas Co., 160 SCRA 70 [1988]).
Petitioner contends that it will be damaged by the registration of the trademark CHARLIE
BROWN & DEVICE in favor of private respondent and that it has a better right to CHARLIE
BROWN & DEVICE since the likeness of CHARLIE BROWN appeared in periodicals having
worldwide distribution and covered by copyright registration in its name which antedates
the certificate of registration of respondent issued only on September 12, 1979. (Petition,
Rollo, p. 21).
Petitioner further stresses that Decision No. 84-83 (TM) promulgated by the Philippine
Patent Office on October 2, 1984 which held that "the name likeness of CHARLIE BROWN
may not provide a cause of action for the cancellation of a trademark registration," was
73

based in the conclusion made in the case of "Children's Television Workshop v. touch of
Class" earlier decided by the Director of Patent Office on May 10, 1984. However, when the
latter case was appealed to the then Intermediate Appellate Court, docketed as A.C. G.R. SP
No. 03432, the appellate court reversed the decision of the Director holding said appealed
decision as illegal and contrary to law. this reversal was affirmed by this Court on August 7,
1985 in G.R. No. 71210 by denying the petition of respondent Touch of Class.
The Court of Appeals in reversing the Director of Patent's decision in Touch of Class, Inc.
succintly said:
The Patents Office ruled that a trademark, unlike a label, cannot be
copyrighted. The "Cookie Monster" is not, however, a trademark. It is a
character in a TV series entitled "Sesame Street." It was respondent which
appropriated the "Cookie Monster" as a trademark, after it has been
copyrighted. We hold that the exclusive right secured by PD 49 to the
petitioner precludes the appropriation of the "Cookie Monster" by the
respondent.
Pertinently, Section 2 of Presidential Decree No. 49, otherwise known as the "Decree on
Intellectual Property", provides:
Section 2. The rights granted by this Decree shall, from the moment of
creation, subsist with respect to any of the following classes of works:
xxx xxx xxx
(O) Prints, pictorial illustrations, advertising copies, labels, tags and box
wraps. ...
Therefore, since the name "CHARLIE BROWN" and its pictorial representation were
covered by a copyright registration way back in 1950 the same are entitled to protection
under PD No. 49.
Aside from its copyright registration, petitioner is also the owner of several trademark
registrations and application for the name and likeness of "CHARLIE BROWN" which is the
duly registered trademark and copyright of petitioner United Feature Syndicate Inc. as
early as 1957 and additionally also as TV SPECIALS featuring the "PEANUTS" characters
"CHARLIE BROWN" (Memorandum, Rollo p. 97 [211]).
An examination of the records show that the only appreciable defense of respondent-
registrant is embodied in its answer, which reads:
It uses, the trademark "CHARLIE BROWN" & "DEVICE" on children's wear
such as T-shirts, undershirts, sweaters, brief and sandos, in class 25; whereas
"CHARLIE BROWN" is used only by petitioner as character, in a pictorial
illustration used in a comic strip appearing in newspapers and magazines. It
has no trademark significance and therefore respondent-registrant's use of
74

"CHARLIE BROWN" & "DEVICE" is not in conflict with the petitioner's use of
"CHARLIE BROWN" (Rollo, p. 97 [21]).
It is undeniable from the records that petitioner is the actual owner of said trademark due
to its prior registration with the Patent's Office.
Finally, in La Chemise Lacoste S.A. v. Hon. Oscar Fernandez & Gobindram Hemandas Sujanani
v. Hon. Roberto V. Ongpin, et al. 129 SCRA 373 [1984]), the Court declared.
In upholding the right of the petitioner to maintain the present suit before
our courts for unfair competition or infringement of trademarks of a foreign
corporation, we are moreover recognizing our duties and the rights of
foregoing states under the Paris Convention for the Protection of Industrial
Property to which the Philippines and (France) U.S. are parties. We are
simply interpreting a solemn international commitment of the Philippines
embodied in a multilateral treaty to which we are a party and which we
entered into because it is in our national interest to do so.
PREMISES CONSIDERED, the Resolutions of the Court of Appeals dated September 16, 1985
and October 14, 1986 dismissing petitioner's appeal are hereby SET ASIDE and Certificate
of Registration no. SR-424 issued to private respondent dated September 12, 1979 is
hereby CANCELLED.
SO ORDERED.
Padilla, Sarmiento and Regalado, JJ., concur.
Melencio-Herrera (Chairperson), J., is on leave.

Footnotes
* Penned by Justice Jose A.R. Melo and concurred in by Justices Nathanael P.
de Pano, Jr. and Segundino G. Chua.

75

Topic: Originality: independent creation; no direct copying or evasive imitation
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 132604 March 6, 2002
VENANCIO SAMBAR, doing business under the name and style of CVS Garment
Enterprises, petitioner,
vs.
LEVI STRAUSS & CO., and LEVI STRAUSS (PHIL.), INC., respondents.
D E C I S I O N
QUISUMBING, J.:
This petition for review on certiorari prays for the reversal of the decision dated January
30, 1998, of the Court of Appeals in CA-G.R. CV No. 51553. That decision affirmed the
decision in Civil Case No. 88-2220 of the Regional Trial Court, Branch 66, Makati City,
making permanent the writ of preliminary injunction, ordering CVS Garment and Industrial
Company (CVSGIC) and petitioner Venancio Sambar to pay private respondents jointly and
solidarily the sum of P50,000 as temperate and nominal damages, P10,000 as exemplary
damages, and P25,000 as attorneys fees and litigation costs, and ordering the Director of
the National Library to cancel Copyright Registration No. 1-1998 in the name of Venancio
Sambar.
The facts are as follows:
On September 28, 1987, private respondents, through a letter from their legal officer,
demanded that CVS Garment Enterprises (CVSGE) desist from using their stitched arcuate
design on the Europress jeans which CVSGE advertised in the Manila Bulletin.
Atty. Benjamin Gruba, counsel of CVSGE, replied that the arcuate design on the back
pockets of Europress jeans was different from the design on the back pockets of Levis
jeans. He further asserted that his client had a copyright on the design it was using.
Thereafter, private respondents filed a complaint against Sambar, doing business under the
name and style of CVSGE. Private respondents also impleaded the Director of the National
Library. Summons was sent to Sambar in his business address at 161-B Iriga corner Retiro,
La Loma, Quezon City.
Atty. Gruba claimed that he erroneously received the original summons as he mistook it as
addressed to his client, CVSGIC. He returned the summons and the pleadings and
76

manifested in court that CVSGE, which was formerly doing business in the premises,
already stopped operation and CVSGIC took over CVSGEs occupation of the premises. He
also claimed he did not know the whereabouts of Sambar, the alleged owner of CVSGE.
Thereafter, private respondents amended their complaint to include CVSGIC. When private
respondents learned the whereabouts of Sambar and CVSGE, the case was revived.
Private respondents alleged in their complaint that Levi Strauss and Co. (LS&Co.), an
internationally known clothing manufacturer, owns the arcuate design trademark which
was registered under U.S. Trademark Registration No. 404, 248 on November 16, 1943, and
in the Principal Register of trademarks with the Philippine Patent Office under Certificate
of Registration No. 20240 issued on October 8, 1973; that through a Trademark Technical
Data and Technical Assistance Agreement with Levi Strauss (Phil.) Inc. (LSPI) in 1972,
LS&Co. granted LSPI a non-exclusive license to use the arcuate trademark in its
manufacture and sale of Levis pants, jackets and shirts in the Philippines; that in 1983,
LS&Co. also appointed LSPI as its agent and attorney-in-fact to protect its trademark in the
Philippines; and that sometime in 1987, CVSGIC and Venancio Sambar, without the consent
and authority of private respondents and in infringement and unfair competition, sold and
advertised, and despite demands to cease and desist, continued to manufacture, sell and
advertise denim pants under the brand name "Europress" with back pockets bearing a
design similar to the arcuate trademark of private respondents, thereby causing confusion
on the buying public, prejudicial to private respondents goodwill and property right.
In its answer, CVSGIC admitted it manufactured, sold and advertised and was still
manufacturing and selling denim pants under the brand name of "Europress", bearing a
back pocket design of two double arcs meeting in the middle. However, it denied that there
was infringement or unfair competition because the display rooms of department stores
where Levis and Europress jeans were sold, were distinctively segregated by billboards
and other modes of advertisement. CVSGIC avers that the public would not be confused on
the ownership of such known trademark as Levis, Jag, Europress, etc.. Also, CVSGIC
claimed that it had its own original arcuate design, as evidenced by Copyright Registration
No. 1-1998, which was very different and distinct from Levis design. CVSGIC prayed for
actual, moral and exemplary damages by way of counterclaim.
Petitioner Venancio Sambar filed a separate answer. He denied he was connected with
CVSGIC. He admitted that Copyright Registration No. 1-1998 was issued to him, but he
denied using it. He also said he did not authorize anyone to use the copyrighted design. He
counterclaimed for moral and exemplary damages and payment of attorneys fees.
After hearing, the trial court issued a writ of preliminary injunction enjoining CVSGIC and
petitioner from manufacturing, advertising and selling pants with the arcuate design on
their back pockets. CVSGIC and petitioner did not appear during the October 13 and 27,
1993 hearings, when they were to present evidence. Consequently, the trial court ruled
that they waived their right to present evidence.
On May 3, 1995, the trial court rendered its decision. The dispositive portion reads:
77

IN VIEW OF THE FOREGOING, judgment is hereby rendered:
a) making the writ of preliminary injunction permanent;
b) ordering the defendants CVS Garment and Industrial Company and Venancio
Sambar to pay the plaintiffs jointly and solidarily the sum of P50,000.00 as
temperate and nominal damages, the sum of P10,000.00 as exemplary damages, and
the sum of P25,000.00 as attorneys fees and litigation expenses and to pay the
costs.
SO ORDERED.
1

Private respondents moved for a reconsideration praying for the cancellation of
petitioners copyright registration. The trial court granted reconsideration in its July 14,
1995 order, thus:
IN VIEW OF THE FOREGOING, judgment is hereby rendered:
a) making the writ of preliminary injunction permanent;
b) ordering the defendants CVS Garment and Industrial Company and Venancio
Sambar to pay the plaintiffs jointly and solidarily the sum of P50,000.00 as
temperate and nominal damages, the sum of P10,000.00 as exemplary damages, and
the sum of P25,000.00 as attorneys fees and litigation expenses and to pay the
costs;
c) ordering the Director of the National Library to cancel the Copyright Registration
No. 1-1998 issued in the name of Venancio Sambar.
2

Petitioner appealed to the Court of Appeals which on January 30, 1998 decided in favor of
private respondents as follows:
WHEREFORE, the judgment appealed from is AFFIRMED in toto.
SO ORDERED.
3

In this instant petition, petitioner avers that the Court of Appeals erred in:
I. ...RULING THAT THERE WAS AN INFRINGEMENT OF RESPONDENTS ARCUATE
MARK.
II. ...RULING THAT PETITIONER IS JOINTLY AND SOLIDARILY LIABLE WITH CVS
GARMENTS INDUSTRIAL CORPORATION FOR INFRINGEMENT OF RESPONDENTS
ARCUATE MARK.
78

III. ...IN ORDERING, THERE BEING NO INFRINGEMENT OR UNFAIR COMPETITION,
THE AWARD OF DAMAGES AND CANCELLATION OF COPYRIGHT REGISTRATION
NO. 1-1998 ISSUED IN THE NAME OF PETITIONER.
4

Briefly, we are asked to resolve the following issues:
1. Did petitioner infringe on private respondents arcuate design?
2. Must we hold petitioner solidarily liable with CVS Garments Industrial
Corporation?
3. Are private respondents entitled to nominal, temperate and exemplary damages
and cancellation of petitioners copyright?
On the first issue, petitioner claims that he did not infringe on private respondents arcuate
design because there was no colorable imitation which deceived or confused the public. He
cites Emerald Garment Manufacturing Corporation vs. Court of Appeals, G.R. No. 100098,
251 SCRA 600 (1995), as authority. He disagreed with the Court of Appeals that there were
confusing similarities between Levis and Europress arcuate designs, despite the trial
courts observation of differences in them. Petitioner maintains that although the
backpocket designs had similarities, the public was not confused because Levis jeans had
other marks not found in Europress jeans. Further, he says Levis long history and
popularity made its trademark easily identifiable by the public.
In its comment, private respondents aver that the Court of Appeals did not err in ruling that
there was infringement in this case. The backpocket design of Europress jeans, a double arc
intersecting in the middle was the same as Levis mark, also a double arc intersecting at the
center. Although the trial court found differences in the two designs, these differences were
not noticeable. Further, private respondents said, infringement of trademark did not
require exact similarity. Colorable imitation enough to cause confusion among the public,
was sufficient for a trademark to be infringed. Private respondents explained that in a
market research they conducted with 600 respondents, the result showed that the public
was confused by Europress trademark vis the Levis trademark.
We find that the first issue raised by petitioner is factual. The basic rule is that factual
questions are beyond the province of this Court in a petition for review. Although there are
exceptions to this rule, this case is not one of them.
5
Hence, we find no reason to disturb the
findings of the Court of Appeals that Europress use of the arcuate design was an
infringement of the Levis design.
On the second issue, petitioner claims that private respondents did not show that he was
connected with CVSGIC, nor did they prove his specific acts of infringement to make him
liable for damages. Again, this is a factual matter and factual findings of the trial court,
concurred in by the Court of Appeals, are final and binding on this Court.
6
Both the courts
below found that petitioner had a copyright over Europress arcuate design and that he
consented to the use of said design by CVSGIC. We are bound by this finding, especially in
79

the absence of a showing that it was tainted with arbitrariness or palpable error.
7
It must
be stressed that it was immaterial whether or not petitioner was connected with CVSGIC.
What is relevant is that petitioner had a copyright over the design and that he allowed the
use of the same by CVSGIC.
Petitioner also contends that the Court of Appeals erred when it said that he had the
burden to prove that he was not connected with CVSGIC and that he did not authorize
anyone to use his copyrighted design. According to petitioner, these are important
elements of private respondents cause of action against him, hence, private respondents
had the ultimate burden of proof.
Pertinent is Section 1, Rule 131 of the Rules of Court
8
which provides that the burden of
proof is the duty of a party to prove the truth of his claim or defense, or any fact in issue by
the amount of evidence required by law. In civil cases, the burden of proof may be on either
the plaintiff or the defendant. It is on the latter, if in his answer he alleges an affirmative
defense, which is not a denial of an essential ingredient in the plaintiffs cause of action, but
is one which, if established, will be a good defense i.e., an "avoidance" of the claim, which
prima facie, the plaintiff already has because of the defendants own admissions in the
pleadings.
9

Petitioners defense in this case was an affirmative defense.1wphi1 He did not deny that
private respondents owned the arcuate trademark nor that CVSGIC used on its products a
similar arcuate design. What he averred was that although he owned the copyright on the
Europress arcuate design, he did not allow CVSGIC to use it. He also said he was not
connected with CVSGIC. These were not alleged by private respondents in their pleadings,
and petitioner therefore had the burden to prove these.
Lastly, are private respondents entitled to nominal, temperate and exemplary damages and
cancellation of petitioners copyright?
Petitioner insists that he had not infringed on the arcuate trademark, hence, there was no
basis for nominal and temperate damages. Also, an award of nominal damages precludes
an award of temperate damages. He citesVentanilla vs. Centeno, G.R. No. L-14333, 1 SCRA
215 (1961) on this. Thus, he contends, assuming arguendo that there was infringement, the
Court of Appeals still erred in awarding both nominal and temperate damages.
Petitioner likewise said that the grant of exemplary damages was inconsistent with the trial
courts finding that the design of Europress jeans was not similar to Levis design and that
no pecuniary loss was suffered by respondents to entitle them to such damages.
Lastly, petitioner maintains that as Europress arcuate design is not a copy of that of Levis,
citing the trial courts findings that although there are similarities, there are also
differences in the two designs, cancellation of his copyright was not justified.
On this matter, private respondents assert that the lower courts found that there was
infringement and Levis was entitled to damages based on Sections 22 and 23 of RA No. 166
80

otherwise known as the Trade Mark Law,
10
as amended, which was the law then governing.
Said sections define infringement and prescribe the remedies therefor. Further, private
respondents aver it was misleading for petitioner to claim that the trial court ruled that
private respondents did not suffer pecuniary loss, suggesting that the award of damages
was improper. According to the private respondents, the trial court did not make any such
ruling. It simply stated that there was no evidence that Levis had suffered decline in its
sales because of the use of the arcuate design by Europress jeans. They offer that while
there may be no direct proof that they suffered a decline in sales, damages may still be
measured based on a reasonable percentage of the gross sales of the respondents, pursuant
to Section 23 of the Trademark law.
11

Finally, regarding the cancellation of petitioners copyright, private respondents deny that
the trial court ruled that the arcuate design of Europress jeans was not the same as Levis
arcuate design jeans. On the contrary, the trial court expressly ruled that there was
similarity. The cancellation of petitioners copyright was justified because petitioners
copyright can not prevail over respondents registration in the Principal Register of Bureau
of Patents, Trademarks, and Technology Transfer. According to private respondents, the
essence of copyright registration is originality and a copied design is inherently non-
copyrightable. They insist that registration does not confer originality upon a copycat
version of a prior design.
From the foregoing discussion, it is clear that the matters raised by petitioner in relation to
the last issue are purely factual, except the matter of nominal and temperate damages.
Petitioner claims that damages are not due private respondents and his copyright should
not be cancelled because he had not infringed on Levis trademark. Both the trial court and
the Court of Appeals found there was infringement. Thus, the award of damages and
cancellation of petitioners copyright are appropriate.
12
Award of damages is clearly
provided in Section 23,
13
while cancellation of petitioners copyright finds basis on the fact
that the design was a mere copy of that of private respondents trademark.1wphi1 To be
entitled to copyright, the thing being copyrighted must be original, created by the author
through his own skill, labor and judgment, without directly copying or evasively imitating
the work of another.
14

However, we agree with petitioner that it was error for the Court of Appeals to affirm the
award of nominal damages combined with temperate damages
15
by the Regional Trial
Court of Makati. What respondents are entitled to is an award for temperate damages, not
nominal damages. For although the exact amount of damage or loss can not be determined
with reasonable certainty, the fact that there was infringement means they suffered losses
for which they are entitled to moderate damages.
16
We find that the award of P50,000.00 as
temperate damages fair and reasonable, considering the circumstances herein as well as
the global coverage and reputation of private respondents Levi Strauss & Company and
Levi Strauss (Phil.), Inc.
WHEREFORE, the decision dated January 30, 1998, of the Court of Appeals, in CA-G.R. CV
No. 51553 AFFIRMING the judgment of the Regional Trial Court of Makati, Branch 66, dated
July 14, 1995, is hereby MODIFIED so that nominal damages are deleted but the amount of
81

P50,000 is hereby awarded only as TEMPERATE DAMAGES. In all other respects, said
judgment is hereby AFFIRMED, to wit:
a) the writ of preliminary injunction is made permanent;
b) the defendants CVS Garment and Industrial Company and Venancio Sambar are
ordered also to pay the plaintiffs jointly and solidarily the sum of P10,000.00 as
exemplary damages, and the sum of P25,000.00 as attorneys fees and litigation
expenses, and to pay the costs; and
c) the Director of the National Library is ordered to cancel the Copyright
Registration No. 1-1998 issued in the name of Venancio Sambar.
SO ORDERED.
Bellosillo, (Chairman), Mendoza, Buena, and De Leon, Jr., JJ., concur.


Footnotes
1
RTC Records, p. 260.
2
Id. at 274-275.
3
Rollo, p. 20.
4
Id. at 34.
5
Salcedo vs. People, G.R. No. 137143, 347 SCRA 499, 504-505 (2000).
6
Id. at 1.
7
David vs. Manila Bulletin Publishing Company, Inc., G.R. No. 139272, 347 SCRA 68,
69 (2000).
8
Section 1, Rule 131: Burden of Proof. - Burden of proof is the duty of a party to
present evidence on the facts in issue necessary to establish his claim or defense by
the amount of evidence required by law.
9
Paras. Rules of Court 448 (Third Edition, 2000).
10
Section 22. Infringement, what constitutes. Any person who shall use, without the
consent of the registrant, any reproduction, counterfeit, copy or colorable imitation
82

of any registered mark or trade-name in connection with the sale, offering for sale,
or advertising of any goods, business or services on or in connection with which
such use is likely to cause confusion or mistake or to deceive purchasers or others as
to the source of such business; or reproduce, counterfeit, copy or colorably imitate
any such mark or trade-name and apply such reproduction, counterfeit, copy, or
colorable imitation to labels, signs, prints, packages, wrappers, receptacles or
advertisements intended to be used upon or in connection with such goods,
business or services, shall be liable to a civil action by the registrant for any or all
the remedies herein provided.
Section 23. Actions, and damages and injunction for infringement. - Any
person entitled to the exclusive use of a registered mark or trade-name may
recover damages in a civil action from any person who infringes his rights,
and the measure of the damages suffered shall be either the reasonable profit
which the complaining party would have made, had the defendant not
infringed his said rights, or the profit which the defendant actually made out
of the infringement, or in the event such measure of damages cannot be
readily ascertained with reasonable certainty, then the court may award as
damages a reasonable percentage based upon the amount of gross sales of
the defendant of the value of the services in connection with which the mark
or trade-name was used in the infringement of the rights of the complaining
party. In cases where actual intent to mislead the public or to defraud the
complaining party shall be shown, in the discretion of the court, the damages
may be doubled.
The complaining party, upon proper showing, may also be granted
injunction.
11
Ibid.
12
Heirs of Crisanta Y. Gabriel-Almoradie vs. Court of Appeals, G.R. No. 91385, 229
SCRA 15, 30 & 34 (1994).
13
See note 10.
14
Hoffman vs. Le Traunik, 209 Federal Reporter 375, 379 (1913).
15
Ventanilla vs. Centeno, No. L-14333, 1 SCRA 215, 216 (1961).
16
Art. 2224, Civil Code: Temperate or moderate damages, which are more than
nominal but less than compensatory damages, may be recovered where the court
finds that some pecuniary loss has been suffered but its amount cannot, from the
nature of the case, be proved with certainty.

83

Topic: Originality: independent creation; no direct copying or evasive imitation
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 130360 August 15, 2001
WILSON ONG CHING KlAN CHUAN, petitioner,
vs.
HON. COURT OF APPEALS and LORENZO TAN, respondents.
QUISUMBING, J.:
This petition for review
1
seeks to annul the decision
2
dated August 27, 1997 of the Court of
Appeals which set aside the resolutions
3
dated October 13 and December 15, 1993 as well
as the order dated March 1, 1994 of the Regional Trial Court of Quezon City, Branch 94.
4

Petitioner Wilson Ong Ching Kian Chuan ("Ong"), imports vermicelli from China National
Cereals Oils and Foodstuffs Import and Export Corporation, based in Beijing, China, under
the firm name C.K.C. Trading. He repacks it in cellophane wrappers with a design of two-
dragons and the TOWER trademark on the uppermost portion. Ong acquired a Certificate of
Copyright Registration from the National Library on June 9, 1993 on the said design.
Ong discovered that private respondent Lorenzo Tan repacked his vermicelli he imports
from the same company but based in Qingdao, China in a "nearly" identical wrapper. On
September 16, 1993, Ong filed against Tan a verified complaint for infringement of
copyright with damages and prayer for temporary restraining order or writ of preliminary
injunction with the Regional Trial Court in Quezon City. Ong alleged that he was the holder
of a Certificate of Copyright Registration over the cellophane wrapper with the two-dragon
design, and that Tan used an identical wrapper in his business. In his prayer for a
preliminary injunction in addition to damages, he asked that Tan be restrained from using
the wrapper. He said he would post a bond to guarantee the payment of damages resulting
from the issuance of the writ of preliminary injunction.1wphi1.nt
The trial court issued a temporary restraining order on the same date the complaint was
filed. Tan filed an opposition to Ong's application for a writ of preliminary injunction with
counter-application for the issuance of a similar writ against Ong. Tan alleged that Ong was
not entitled to an injunction. According to Tan, Ong did not have a clear right over the use
of the trademark Pagoda and Lungkow vermicelli as these were registered in the name of
CHINA NATIONAL CEREALS OIL AND FOODSTUFFS IMPORT AND EXPORT CORPORATION,
SHANDONG CEREALS AND OILS BRANCH (hereafter Ceroilfood Shandong), based in
Qingdao, China. Further, Tan averred that he was the exclusive distributor in the
Philippines of the Pagoda and Lungkow vermicelli and was solely authorized to use said
84

trademark. He added that Ong merely copied the two-dragon design from Ceroilfood
Shandong which had the Certificates of Registration issued by different countries. He
concluded that Ong's Certificate of Copyright Registration was not valid for lack of
originality.
On September 30, 1993, Ong countered Tan's opposition to the issuance of the writ of
preliminary injunction.
On October 13, 1993, the could issued the writ in Ong's favor upon his filing of a
P100,000.00 bond.
5

Tan filed a motion to dissolve the writ of preliminary injunction, but the trial court denied
it on December 15, 1993.
6
The motion for reconsideration was also denied on March 1,
1994.
Tan elevated the case to the Court of Appeals via a special civil action for certiorari with a
prayer for the issuance of a TRO and/or writ of preliminary injunction. Ong filed an
opposition to Tan's prayer for an issuance of TRO and/or writ of preliminary injunction on
the ground that the trial court did not commit a grave abuse of discretion in issuing
the writ in his favor.
After oral argument, the Court of Appeals rendered a decision on August 8, 1994, setting
aside the trial court's order. It decreed:
WHEREFORE, in the petition is GIVEN, DUE COURSE, and, GRANTED. The order
dated October 13, 1993 and related orders, as well as the writ of preliminary
injunction issued by the respondent court, are SET ASIDE as issued with grave abuse
of discretion. No costs.
SO ORDERED.
7

Ong filed a motion for reconsideration and on January 3, 1995, the Court of Appeals
modified its August 8, 1994 order as follows:
WHEREFORE the phrase "the order dated October 13, 1993 and related orders, as
well as the writ of preliminary injunction issued by the respondent court, are SET
ASIDE as issued with grave abuse of discretion" is hereby deleted in our resolution
dated 08 August 1994. In all other respects, said resolution must be maintained.
However, let a writ of preliminary injunction be issued enjoining the herein
respondents and any and all persons acting for and in their behalf from enforcing
and/or implementing the Writ of Preliminary Injunction issued on October 15, 1993
pursuant to the Resolution dated October 13, 1993 of the PUBLIC RESPONDENT in
Civil Case No. Q-93-17628 entitled "WILSON ONG CHING KIAN CHUAN, ETC. vs.
LORENZO TAN, ETC." upon petitioner's filing of a bond of P200,000.00.
85

The Branch Clerk of Court of the RTC, Branch 94, Quezon City is directed to elevate
the records of Civil Case No. 293-17128 within TEN (10) DAYS from notice.
The parties are given THIRTY (30) DAYS from notice to file their memorandum or
any pertinent manifestation on the matter, after which the case shall be considered
submitted for decision.
SO ORDERED.
8

Pursuant to the Court of Appeals' resolution on January 16, 1996, the parties submitted
their memoranda. On August 27, 1997, the appellate court promulgated its decision,
decreeing as follows:
WHEREFORE, the resolutions dated October 13, 1993 and December 15, 1993 as
well as the order dated March 1, 1994 - all in Civil Case No. Q-93-17628 are hereby
SET ASIDE and our injunction heretofore issued made permanent.
IT IS SO ORDERED.
9

On October 17, 1997, Ong filed the instant petition for review, claiming that the Court of
Appeals committed grave and serious errors tantamount to acting with grave abuse of
discretion and/or acting without or in excess of its jurisdiction:
I. ...WHEN IT ISSUED A PERMANENT PRELIMINARY INJUNCTION IN FAVOR OF THE
PRIVATE RESPONDENT WHEN THE LATTER'S RIGHT TO SUCH A RELIEF IS NOT
CLEAR, DOUBTFUL AND HAS NO LEGAL OR FACTUAL BASIS.
A. CERTIFICATE OF COPYRIGHT REGISTRATION JUSTIFY ISSUANCE OF
WRIT OF PRELIMINARY INJUNCTION UNDER P.D. NO. 49.
B. ISSUANCE OF PRELIMINARY INJUNCTION MUST BE BASED ON CLEAR
AND UNMISTAKABLE RIGHT WHICH PETITIONER HAD AND WHICH RIGHT
WAS INVADED BY THE PRIVATE RESPONDENT.
C. COURT OF APPEALS' DECISION OF AUGUST 8, 1994 AND ITS RESOLUTION
OF JANUARY 3, 1995 RESULTS IN CONFUSION.
II. ...BY 'INTERFERING' WITH THE JUDICIAL DISCRETION OF THE TRIAL COURT.
A. RESPONDENT COURT OF APPEALS' INTERFERENCE WITH THE
DISCRETION OF TRIAL COURT CONSTITUTES GRAVE ABUSE OF
DISCRETION.
III. ...BY ISSUING A WRIT OF PRELIMINARY INJUNCTION IN FAVOR OF THE
PRIVATE RESPONDENT AND DISREGARDING THE WRIT OF PRELIMINARY
INJUNCTION ISSUED BY THE TRIAL COURT WHOM (SIC), UNDER THE JANUARY 13,
86

1995 RESOLUTION OF RESPONDENT COURT OF APPEALS, WAS JUDICIALLY HELD
NOT TO HAVE COMMITTED ANY GRAVE ABUSE OF DISCRETION IN THE ISSUANCE
OF THE OCTOBER 13, 1993 AND 'RELATED ORDERS'.
A. ISSUANCE OF WRIT OF PRELIMINARY INJUNCTION ADDRESSED TO THE
SOUND DISCRETION OF THE TRIAL COURT.
IV. ...WHEN IT MADE ITS OWN FINDINGS AND CONCLUSIONS, PRE-EMPTING THE
TRIAL COURT AND PRE-JUDGING THE CASE, THUS LEAVING THE TRIAL COURT
WITH NOTHING TO RULE UPON.
"A. COURT OF APPEALS PREJUDGED THE CASE REMANDED TO THE TRIAL
COURT
The issues for our determination are: Was the issuance of the writ of preliminary
injunction proper? Was there grave abuse of discretion committed by the Court of Appeals
when it set aside the order of the trial court, then issued a judgment touching on the
merits?
Petitioner avers that the CA erred in issuing a preliminary injunction in private
respondent's favor. He says, firstly, that he is more entitled to it. He states that as holder of
the Certificate of Copyright Registration of the twin-dragon design, he has the protection of
P.D. No. 49.
10
Said law allows an injunction in case of infringement. Petitioner asserts that
private respondent has no registered copyright and merely relies on the trademark of his
principal abroad, which insofar as Philippine laws is concerned, cannot prevail over
petitioner's copyright.
Private respondent, for his part, avers that petitioner has no "clear right" over the use of
the copyrighted wrapper since the PAGODA trademark and label were first adopted and
used and have been duly registered by Ceroilfood Shandong not only in China but in nearly
20 countries and regions worldwide. Petitioner was not the original creator of the label, but
merely copied the design of Ceroilfood Shandong. Private respondent presented copies of
the certificates of copyright registration in the name of Ceroilfood Shandong issued by at
least twenty countries and regions worldwide which although unauthenticated are,
according to him, sufficient to provide a sampling of the evidence needed in the
determination of the grant of preliminary injunction.
11
Private respondent alleges, that the
trademark PAGODA BRAND was registered in China on October 31, 1979
12
while the
trademark LUNGKOW VERMICELLI WITH TWO-DRAGON DEVICE was registered on
August 15, 1985.
13

To resolve this controversy, we have to return to basics. A person to be entitled to a
copyright must be the original creator of the work. He must have created it by his own skill,
labor and judgment without directly copying or evasively imitating the work of
another.
14
The grant of preliminary injunction in a case rests on the sound discretion of the
court with the caveat that it should be made with extreme caution.
15
Its grant depends
chiefly on the extent of doubt on the validity of the copyright, existence of infringement,
87

and the damages sustained by such infringement.
16
In our view, the copies of the
certificates of copyright registered in the name of Ceroilfood Shandong sufficiently raise
reasonable doubt. With such a doubt preliminary injunction is unavailing.
17
In Medina vs.
City Sheriff, Manila, 276 SCRA 133, 139 (1997), where the complainant's title was disputed,
we held that injunction was not proper.
Petitioner Ong argues that the Court of Appeals erred and contradicted itself in its January
3, 1995 Resolution, where it deleted the phrase "the order dated October 13, 1993 and
related orders, as well as the writ of preliminary injunction issued by the respondent court,
are SET ASIDE as issued with grave abuse of discretion" in its August 8, 1994 decision, and at
the same time issued a writ of preliminary injunction in Tan's favor.
Ong's claim (that the Court of Appeals In deleting the aforequoted phrase in the August 8,
1994 decision abandoned its earlier finding of grave abuse of discretion on the part of the
trial court), however, is without logical basis. The appellate court merely restated In its
own words the issue raised in the petition: from a) whether the RTC committed grave
abuse of discretion, to b) whether Tan was entitled to an injunctive relief. Then it clarified
that the relief sought is a prohibition against Ong and his agents from enforcing the writ of
preliminary injunction. Properly understood, an order enjoining the enforcement of a writ
of preliminary injunction issued by the RTC in a certiorari proceeding under Rule 65 of the
Rules of Court effectively, sets aside the RTC order for being issued with grave abuse of
discretion.
To be entitled to an injunctive writ, petitioner must show, inter alia, the existence of a clear
and unmistakable right and an urgent and paramount necessity for the writ to prevent
serious damage.
18
From the above discussion, we find that petitioner's right has not been
clearly and unmistakably demonstrated. That right is what is in dispute and has yet to be
determined. In Developers Group of Companies, Inc. vs. Court of Appeals, 219 SCRA 715, 722-
723 (1993), we held that in the absence of proof of a legal right and the injury sustained by
the plaintiff, an order of the trial court granting the issuance of an injunctive writ will be set
aside, for having been issued with grave abuse of discretion. Conformably, there was no
abuse of discretion by the Court of Appeals when it issued its own order to restrain the
enforcement of the preliminary injunction issued by the trial court.
Finally, we note that the complaint initially filed with the RTC was for infringement of
copyright. The trial court's resolution subject of Tan's petition under Rule 65 before the CA
concerns the correctness of the grant of the writ of preliminary injunction. The only issue
brought before the CA involved the grave abuse of discretion allegedly committed by the
trial court in granting the writ of preliminary injunction. The Court of Appeals in declaring
that the wrapper of petitioner is a copy of Ceroilfood Shandong's wrapper went beyond
that issue touched on the merits of the infringement case, which remains to be decided by
the trial court.
19
In our view, it was premature for the Court of Appeals to declare that the
design of petitioner's wrapper is a copy of the wrapper allegedly registered by Ceroilfood
Shandong. That matter remains for decision after appropriate proceedings at the trial
court.
88

WHEREFORE, the instant petition is PARTIALLY GRANTED. The prayer for a writ of
preliminary injunction to prohibit Tan from using the cellophane wrapper with two-dragon
device is denied, but the finding of the respondent appellate court that Ong's copyrighted
wrapper is a copy of that of Ceroilfood Shandong is SET ASIDE for being premature. The
Regional Trial Court of Quezon City, Branch 94, is directed to proceed with the trial to
determine the merits of Civil Case No. 33779 expeditiously. Let the records of this case
be REMANDED to said trial court promptly.
No pronouncement as to costs.1wphi1.nt
SO ORDERED
Bellosillo, Mendoza, Buena, De Leon, JJ. concur.


Footnotes
1
Rollo, pp. 11-20.
2
Id. at 34-38.
3
Id. at 50-55.
4
Id. at 34-49.
5
Id. at 50-53.
6
Id. at 54-55.
7
Id. at 23.
8
Id. at 72-73.
9
Id. at 48.
10
PD 49, Chapter 1, 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:
xxx
(0) Prints, pictorial, illustrations, advertising copies, labels, tags, and box
wraps.
89

Chapter II, Article VI. Sec. 28. Any person infringing a copyright shall be liable:
(a) To an injunction restraining such infringement.
11
Syndicated Media Access Corporation. et al. vs. CA, et al., 219 SCRA 794, 798 (1993).
12
CA Rollo, p. 51.
13
Ibid.
14
Hoffman vs. Le Traunik, 209 Federal Reporter 375, 379.
15
Bataclan vs. CA. et al., 175 SCRA 764, 770 (1989).
16
18 CJS 241, citing Boosey vs. Empire Music Co., 224 F 646 and Sweet vs.
Bromley. 154 F 754.
17
18 CJS 242.
18
Arcega vs. CA. et al., 275 SCRA 176, 180 (1997).
19
See Developers Group of Companies Inc. vs. CA. 219 SCRA 715, 722 (1993).

90

Topic: Denicola test: Conceptual separability (aesthetics v. functionality)
Brandir International, Inc.
v.
Cascade Pacific Lumber Co.
834 F.2d 1142
United States Court of Appeals,
Second Circuit
Dec. 2, 1987

OAKES, J.: In passing the Copyright Act of 1976 Congress attempted to distinguish between
protectable "works of applied art" and "industrial designs not subject to copyright
protection." See H.R. Rep. No.1476, 94th Cong., 2d Sess. 54 . . . . The courts, however, have
had difficulty framing tests by which the fine line establishing what is and what is not
copyrightable can be drawn. Once again we are called upon to draw such a line, this time in
a case involving the "RIBBON Rack," a bicycle rack made of bent tubing that is said to have
originated from a wire sculpture. . . . We are also called upon to determine whether there
is any trademark protection available to the manufacturer of the bicycle rack, appellant
Brandir International, Inc. The Register of Copyright, named as a third-party defendant
under the statute, 17 U.S.C. ' 411, but electing not to appear, denied copyrightability. In the
subsequent suit brought in the United States District Court for the Southern District of New
York, Charles S. Haight, Jr., Judge, the district court granted summary judgment on both the
copyright and trademark claims to defendant Cascade Pacific Lumber Co., d/b/ a Columbia
Cascade Co., manufacturer of a similar bicycle rack. We affirm as to the copyright claim, but
reverse and remand as to the trademark claim.
Against the history of copyright protection well set out in the majority opinion in Carol
Barnhart Inc. v. Economy Cover Corp., . . . and in Denicola, Applied Art and Industrial Design:
A Suggested Approach to Copyright in Useful Articles, 67 Minn. L. Rev. 707,709-17 (1983),
Congress adopted the Copyright Act of 1976. The "works of art" classification of the
Copyright Act of 1909 was omitted and replaced by reference to "pictorial, graphic, and
sculptural works," 17 U .S.C. ' 102(a)(5). According to the House Report, the new category
was intended to supply ''as clear a line as possible between copyrightable works of applied
art and uncopyrightable works of industrial design." . . .
As courts and commentators have come to realize, however, the line Congress attempted to
draw between copyrightable art and noncopyrightable design "was neither clear nor new
." Denicola, supra, 67 Minn. L. Rev. at 720. One aspect of the distinction that has drawn
considerable attention is the reference in the House Report to "physically or conceptually "
(emphasis added) separable elements. . . .
91

In Carol Barnhart . . . a divided panel of this circuit affirmed a district court grant of
summary judgment of noncopyrightability of four life-sized, anatomically correct human
torso forms. Carol Barnhart distinguished Kieselstein-Cord, but it surely did not overrule
it. The distinction made was that the ornamented surfaces of the Kieselstein-Cord belt
buckles "were not in any respect required by their utilitarian functions," but the features
claimed to be aesthetic or artistic in the Carol Bamhart forms were "inextricably
intertwined with the utilitarian feature, the display of clothes." . . .
"Conceptual separability" is thus alive and well, at least in this circuit. The problem,
however, is determining exactly what it is and how it is to be applied. . . .
Perhaps the differences between the majority and the dissent in Carol Barnhart might have
been resolved had they had before them the Denicola article on Applied Art and Industrial
Design: A Suggested Approach to Copyright in Useful Articles, supra. There, Professor
Denicola points out that although the Copyright Act of 1976 was an effort "'to draw as clear
a line as possible,'" in truth "there is no line, but merely a spectrum of forms and shapes
responsive in varying degrees to utilitarian concerns." 67 Minn. L. Rev. at 741. Denicola
argues that "the statutory directive requires a distinction between works of industrial
design and works whose origins lie outside the design process, despite the utilitarian
environment in which they appear ." He views the statutory limitation of copyrightability
as "an attempt to identify elements whose form and appearance reflect the unconstrained
perspective of the artist," such features not being the product of industrial design. Id. at
742. "Copyrightability, therefore, should turn on the relationship between the proffered
work and the process of industrial design." Id. at 741. He suggests that "the dominant
characteristic of industrial design is the influence of non-aesthetic, utilitarian concerns"
and hence concludes that copyrightability "ultimately should depend on the extent to
which the work reflects artistic expression uninhibited by functional
considerations." Id. To state the Denicola test in the language of conceptual separability, if
design elements reflect a merger of aesthetic and functional considerations, the artistic
aspects of a work cannot be said to be conceptually separable from the utilitarian
elements. Conversely, where design elements can be identified as reflecting the designer's
artistic judgment exercised independently of functional influences, conceptual separability
exists.
We believe that Professor Denicola's approach provides the best test for conceptual
separability and, accordingly, adopt it here for several reasons. First, the approach is
consistent with the holdings of our previous cases. . . . Second, the test's emphasis on the
influence of utilitarian concerns in the design process may help, as Denicola notes, to
"alleviate the de facto discrimination against nonrepresentational art that has regrettably
accompanied much of the current analysis." Id. at 745. Finally, and perhaps most
importantly, we think Denicola's test will not be too difficult to administer in practice. The
work itself will continue to give "mute testimony" of its origins. In addition, the parties will
be required to present evidence relating to the design process and the nature of the work
with the trier of fact making the determination whether the aesthetic design elements are
significantly influenced by functional considerations.
92

Turning now to the facts of this case, we note first that Brandir contends, and its chief
owner David Levine testified, that the original design of the RIBBON Rack stemmed from
wire sculptures that Levine had created, each formed from one continuous undulating
piece of wire. These sculptures were, he said, created and displayed in his home as a
means of personal expression, but apparently were never sold or displayed elsewhere. He
also created a wire sculpture in the shape of a bicycle and states that he did not give any
thought to the utilitarian application of any of his sculptures until he accidentally
juxtaposed the bicycle sculpture with one of the selfstanding wire sculptures. It was not
until November 1978 that Levine seriously began pursuing the utilitarian application of his
sculptures, when a friend, G. Duff Bailey, a bicycle buff and author of numerous articles
about urban cycling, was at Levine's home and informed him that the sculptures would
make excellent bicycle racks, permitting bicycles to be parked under the overloops as well
as on top of the underloops. Following this meeting, Levine met several times with Bailey
and others, completing the designs for the RIBBON Rack by the use of a vacuum cleaner
hose, and submitting his drawings to a fabricator complete with dimensions. The Brandir
RIBBON Rack began being nationally advertised and promoted for sale in September 1979.
In November 1982 Levine discovered that another company, Cascade Pacific Lumber Co.,
was selling a similar product. Thereafter -- beginning in December 1982, a copyright notice
was placed on all RIBBON Racks before shipment and on December 10, 1982, five copyright
applications for registration were submitted to the Copyright Office. The Copyright Office
refused registration by letter, stating that the RIBBON Rack did not contain any element
that was "capable of independent existence as a copyrightable pictorial, graphic or
sculptural work apart from the shape of the useful article." . . .
. . .
Applying Professor Denicola's test to the RIBBON Rack, we find that the rack is not
copyrightable. It seems clear that the form of the rack is influenced in significant measure
by utilitarian concerns and thus any aesthetic elements cannot be said to be conceptually
separable from the utilitarian elements. This is true even though the sculptures which
inspired the RIBBON Rack may well have been--the issue of originality aside--
copyrightable.
. . .
Had Brandir merely adopted one of the existing sculptures as a bicycle rack, neither the
application to a utilitarian end nor commercialization of that use would have caused the
object to forfeit its copyrighted status. Comparison of the RIBBON Rack with the earlier
sculptures, however, reveals that while the rack may have been derived in part from one of
more "works of art," it is in its final form essentially a product of industrial design. In
creating the RIBBON Rack, the designer has clearly adapted the original aesthetic elements
to accommodate and further a utilitarian purpose. These altered design features of the
RIBBON Rack, including the spacesaving, open design achieved by widening the upper
loops to permit parking under as well as over the rack's curves, the straightened vertical
elements that allow in and above-ground installation of the rack, the ability to fit all types
93

of bicycles and mopeds, and the heavy-gauged tubular construction of rustproof galvanized
steel, are all features that combine to make for a safe, secure, and maintenance-free system
of parking bicycles and mopeds. Its undulating shape is said in Progressive
Architecture, January 1982, to permit double the storage of conventional bicycle
racks. Moreover, the rack is manufactured from 2 3/8-inch standard steam pipe that is
bent into form, the six-inch radius of the bends evidently resulting from bending the pipe
according to a standard formula that yields bends having a radius equal to three times the
nominal internal diameter of the pipe.
Brandir argues that its RIBBON Rack can and should be characterized as a sculptural work
of art within the minimalist art movement. Minimalist sculpture's most outstanding
feature is said to be its clarity and simplicity, in that it often takes the form of geometric
shapes, lines, and forms that are pure and free of ornamentation and void of association. . .
.
It is unnecessary to determine whether to the art world the RIBBON Rack properly would
be considered an example of minimalist sculpture. The result under the copyright statute
is not changed. Using the test we have adopted, it is not enough that, to paraphrase Judge
Newman, the rack may stimulate in the mind of the reasonable observer a concept separate
from the bicycle rack concept. While the RIBBON Rack may be worthy of admiration for its
aesthetic qualities alone, it remains nonetheless the product of industrial design. Form and
function are inextricably intertwined in the rack, its ultimate design being as much the
result of utilitarian pressures as aesthetic choices. Indeed, the visually pleasing proportions
and symetricality of the rack represent design changes made in response to functional
concerns. Judging from the awards the rack has received, it would seem in fact that Brandir
has achieved with the RIBBON Rack the highest goal of modern industrial design, that is,
the harmonious fusion of function and aesthetics. Thus there remains no artistic element
of the RIBBON Rack that can be identified as separate and "capable of existing
independently of, the utilitarian aspects of the article." Accordingly, we must affirm on the
copyright claim.
. . .

WINTER. J., concurring in part and dissenting in part: Although I concur in the reversal of
the district court's grant of summary judgment on the trademark and unfair competition
claims, I respectfully dissent from the majority's discussion and disposition of the copyright
claim.
. . . The grounds of my disagreement are that: (1) my colleagues' adaptation of Professor
Denicola's test diminishes the statutory concept of "conceptual separability" to the
vanishing point; and (2) their focus on the process or sequence followed by the particular
designer makes copyright protection depend upon largely fortuitous circumstances
concerning the creation of the design in issue.
94

With regard to "conceptual separability," my colleagues deserve considerable credit for
their efforts to reconcile Carol Barnhart, Inc. v. Economy Cover Corp. . . . with Kieselstein-
Cord v. Accessories by Pearl, Inc. . . . . In my view, these cases are not reconcilable. Carol
Bamhart paid only lip service to the fact that the "conceptual separability" of an article's
aesthetic utilitarian aspects may render the design of a "useful article" a copyrightable
"sculptural work." 17 U.S.C. ' 101 (1982). Actually, the Carol Barnhart majority applied a
test of physical separability. . . .
My colleagues' adaptation of the Denicola test tracks the Carol Barnhart approach, whereas
I would adopt that taken in Kieselstein-Cord, which allows for the copyrightability of the
aesthetic elements of useful articles even if those elements simultaneously perform
utilitarian functions. The latter approach received its fullest elaboration in Judge Newman's
dissent in Carol Barnhart . . . .
In other words, the relevant question is whether the design of a useful article, however
intertwined with the article's utilitarian aspects, causes an ordinary reasonable observer to
perceive an aesthetic concept not related to the article's use. The answer to this question is
clear in the instant case because any reasonable observer would easily view the Ribbon
Rack as an ornamental sculpture. Indeed, there is evidence of actual confusion over
whether it is strictly ornamental in the refusal of a building manager to accept delivery
until assured by the buyer that the Ribbon Rack was in fact a bicycle rack. Moreover,
Brandir has received a request to use the Ribbon Rack as environmental sculpture, and has
offered testimony of art experts who claim that the Ribbon Rack may be valued solely for
its artistic features. As one of those experts observed: "If one were to place a Ribbon Rack
on an island without access, or in a park and surround the work with a barrier, . . . its status
as a work of art would be beyond dispute."
My colleagues also allow too much to turn upon the process or sequence of design followed
by the designer of the Ribbon Rack. . . . I cannot agree that copyright protection for the
Ribbon Rack turns on whether Levine serendipitously chose the final design of the Ribbon
Rack during his initial sculptural musings or whether the original design had to be slightly
modified to accommodate bicycles. Copyright protection, which is intended to generate
incentives for designers by according property rights in their creations, should not turn on
purely fortuitous events. For that reason, the Copyright Act expressly states that the legal
test is how the final article is perceived, not how it was developed through various stages. .
. .


95

Topic: Non-copyrightable (Article 175)
FEIST PUBLICATIONS, INC. v. RURAL TELEPHONE SERVICE CO., 499 U.S. 340 (1991)
O'CONNOR, J., delivered the opinion of the Court, in which REHNQUIST, C. J., and WHITE,
MARSHALL, STEVENS, SCALIA, KENNEDY, and SOUTER, JJ., joined. BLACKMUN, J.,
concurred in the judgment.
[p*342] JUSTICE O'CONNOR delivered the opinion of the Court.
[1] This case requires us to clarify the extent of copyright protection available to telephone
directory white pages.
I
[2] Rural Telephone Service Company is a certified public utility that provides telephone
service to several communities in northwest Kansas. It is subject to a state regulation that
requires all telephone companies operating in Kansas to issue annually an updated
telephone directory. Accordingly, as a condition of its monopoly franchise, Rural publishes
a typical telephone directory, consisting of white pages and yellow pages. The white pages
list in alphabetical order the names of Rural's subscribers, together with their towns and
telephone numbers. The yellow pages list Rural's business subscribers alphabetically by
category and feature classified advertisements of various sizes. Rural distributes its
directory free of charge to its subscribers, but earns revenue by selling yellow pages
advertisements.
[3] Feist Publications, Inc., is a publishing company that specializes in area-wide telephone
directories. Unlike a typical [p*343] directory, which covers only a particular calling area,
Feist's area-wide directories cover a much larger geographical range, reducing the need to
call directory assistance or consult multiple directories. The Feist directory that is the
subject of this litigation covers 11 different telephone service areas in 15 counties and
contains 46,878 white pages listings -- compared to Rural's approximately 7,700 listings.
Like Rural's directory, Feist's is distributed free of charge and includes both white pages
and yellow pages. Feist and Rural compete vigorously for yellow pages advertising.
[4] As the sole provider of telephone service in its service area, Rural obtains subscriber
information quite easily. Persons desiring telephone service must apply to Rural and
provide their names and addresses; Rural then assigns them a telephone number. Feist is
not a telephone company, let alone one with monopoly status, and therefore lacks
independent access to any subscriber information. To obtain white pages listings for its
area-wide directory, Feist approached each of the 11 telephone companies operating in
northwest Kansas and offered to pay for the right to use its white pages listings.
[5] Of the 11 telephone companies, only Rural refused to license its listings to Feist. Rural's
refusal created a problem for Feist, as omitting these listings would have left a gaping hole
in its area-wide directory, rendering it less attractive to potential yellow pages advertisers.
96

In a decision subsequent to that which we review here, the District Court determined that
this was precisely the reason Rural refused to license its listings. The refusal was motivated
by an unlawful purpose "to extend its monopoly in telephone service to a monopoly in
yellow pages advertising." Rural Telephone Service Co. v. Feist Publications, Inc., 737 F. Supp.
610, 622 (Kan. 1990).
[6] Unable to license Rural's white pages listings, Feist used them without Rural's consent.
Feist began by removing several thousand listings that fell outside the geographic range of
its area-wide directory, then hired personnel to investigate the 4,935 that remained. These
employees verified [p*344] the data reported by Rural and sought to obtain additional
information. As a result, a typical Feist listing includes the individual's street address; most
of Rural's listings do not. Notwithstanding these additions, however, 1,309 of the 46,878
listings in Feist's 1983 directory were identical to listings in Rural's 1982-1983 white
pages. App. 54 (para. 15-16), 57. Four of these were fictitious listings that Rural had
inserted into its directory to detect copying.
[7] Rural sued for copyright infringement in the District Court for the District of Kansas
taking the position that Feist, in compiling its own directory, could not use the information
contained in Rural's white pages. Rural asserted that Feist's employees were obliged to
travel door-to-door or conduct a telephone survey to discover the same information for
themselves. Feist responded that such efforts were economically impractical and, in any
event, unnecessary because the information copied was beyond the scope of copyright
protection. The District Court granted summary judgment to Rural, explaining that "courts
have consistently held that telephone directories are copyrightable" and citing a string of
lower court decisions. 663 F. Supp. 214, 218 (1987). In an unpublished opinion, the Court
of Appeals for the Tenth Circuit affirmed "for substantially the reasons given by the district
court." App. to Pet. for Cert. 4a, judgt. order reported at 916 F. 2d 718 (1990). We granted
certiorari, 498 U.S. 808 (1990), to determine whether the copyright in Rural's directory
protects the names, towns, and telephone numbers copied by Feist.
II
A
[8] This case concerns the interaction of two well-established propositions. The first is that
facts are not copyrightable; the other, that compilations of facts generally are. Each of these
propositions possesses an impeccable pedigree. That there can be no valid copyright in
facts is universally understood. The most fundamental axiom of copyright law is that
[p*345] "no author may copyright his ideas or the facts he narrates." Harper &
Row, Publishers, Inc. v. Nation Enterprises, 471 U.S. 539, 556 (1985). Rural wisely concedes
this point, noting in its brief that "facts and discoveries, of course, are not themselves
subject to copyright protection." Brief for Respondent 24. At the same time, however, it is
beyond dispute that compilations of facts are within the subject matter of copyright.
Compilations were expressly mentioned in the Copyright Act of 1909, and again in the
Copyright Act of 1976.
97

[9] There is an undeniable tension between these two propositions. Many compilations
consist of nothing but raw data -- i. e., wholly factual information not accompanied by any
original written expression. On what basis may one claim a copyright in such a work?
Common sense tells us that 100 uncopyrightable facts do not magically change their status
when gathered together in one place. Yet copyright law seems to contemplate that
compilations that consist exclusively of facts are potentially within its scope.
[10] The key to resolving the tension lies in understanding why facts are not copyrightable.
The sine qua non of copyright is originality. To qualify for copyright protection, a work
must be original to the author. See Harper & Row, supra, at 547-549. Original, as the term is
used in copyright, means only that the work was independently created by the author (as
opposed to copied from other works), and that it possesses at least some minimal degree of
creativity. 1 M. Nimmer & D. Nimmer, Copyright 2.01[A], [B] (1990) (hereinafter
Nimmer). To be sure, the requisite level of creativity is extremely low; even a slight amount
will suffice. The vast majority of works make the grade quite easily, as they possess some
creative spark, "no matter how crude, humble or obvious" it might be. Id., 1.08[C][1].
Originality does not signify novelty; a work may be original even though it closely
resembles other works so long as the similarity is fortuitous, not the result of copying. To
illustrate, [p*346] assume that two poets, each ignorant of the other, compose identical
poems. Neither work is novel, yet both are original and, hence, copyrightable.
See Sheldon v. Metro-Goldwyn Pictures Corp., 81 F. 2d 49, 54 (CA2 1936).
[11] Originality is a constitutional requirement. The source of Congress' power to enact
copyright laws is Article I, 8, cl. 8, of the Constitution, which authorizes Congress to
"secure for limited Times to Authors . . . the exclusive Right to their respective Writings." In
two decisions from the late 19th Century -- The Trade-Mark Cases, 100 U.S. 82 (1879);
and Burrow-Giles Lithographic Co. v. Sarony, 111 U.S. 53 (1884) -- this Court defined the
crucial terms "authors" and "writings." In so doing, the Court made it unmistakably clear
that these terms presuppose a degree of originality.
[12] In The Trade-Mark Cases, the Court addressed the constitutional scope of "writings."
For a particular work to be classified "under the head of writings of authors," the Court
determined, "originality is required." 100 U.S., at 94. The Court explained that originality
requires independent creation plus a modicum of creativity: "While the word writings may
be liberally construed, as it has been, to include original designs for engraving, prints, &c., it
is only such as are original, and are founded in the creative powers of the mind. The
writings which are to be protected are the fruits of intellectual labor, embodied in the form
of books, prints, engravings, and the like." Ibid. (emphasis in original).
[13] In Burrow-Giles, the Court distilled the same requirement from the Constitution's use
of the word "authors." The Court defined "author," in a constitutional sense, to mean "he to
whom anything owes its origin; originator; maker." 111 U.S., at 58 (internal quotations
omitted). As in The Trade-Mark Cases, the Court emphasized the creative component of
originality. It described copyright as being limited to "original intellectual conceptions of
the author," ibid., and stressed the importance of requiring an author who accuses another
98

of infringement to prove "the existence [p*347] of those facts of originality, of intellectual
production, of thought, and conception." Id., at 59-60.
[14] The originality requirement articulated in The Trade-Mark Cases and Burrow-
Giles remains the touchstone of copyright protection today. See Goldstein v. California, 412
U.S. 546, 561-562 (1973). It is the very "premise of copyright law." Miller v.Universal City
Studios, Inc., 650 F. 2d 1365, 1368 (CA5 1981). Leading scholars agree on this point. As one
pair of commentators succinctly puts it: "The originality requirement is constitutionally
mandated for all works." Patterson & Joyce, Monopolizing the Law: The Scope of Copyright
Protection for Law Reports and Statutory Compilations, 36 UCLA L. Rev. 719, 763, n. 155
(1989) (emphasis in original) (hereinafter Patterson & Joyce). Accord id., at 759-760, and n.
140; Nimmer 1.06[A] ("originality is a statutory as well as a constitutional
requirement"); id., 1.08[C][1] ("a modicum of intellectual labor . . . clearly constitutes an
essential constitutional element").
[15] It is this bedrock principle of copyright that mandates the law's seemingly disparate
treatment of facts and factual compilations. "No one may claim originality as to facts." Id.,
2.11[A], p. 2-157. This is because facts do not owe their origin to an act of authorship. The
distinction is one between creation and discovery: the first person to find and report a
particular fact has not created the fact; he or she has merely discovered its existence. To
borrow from Burrow-Giles, one who discovers a fact is not its "maker" or "originator." 111
U.S., at 58. "The discoverer merely finds and records." Nimmer 2.03[E]. Census-takers, for
example, do not "create" the population figures that emerge from their efforts; in a sense,
they copy these figures from the world around them. Denicola, Copyright in Collections of
Facts: A Theory for the Protection of Nonfiction Literary Works, 81 Colum. L. Rev. 516, 525
(1981) (hereinafter Denicola). Census data therefore do not trigger copyright because
these data are not "original" in the constitutional sense. Nimmer [p*348] 2.03[E]. The
same is true of all facts -- scientific, historical, biographical, and news of the day. "They may
not be copyrighted and are part of the public domain available to every
person." Miller, supra, at 1369.
[16] Factual compilations, on the other hand, may possess the requisite originality. The
compilation author typically chooses which facts to include, in what order to place them,
and how to arrange the collected data so that they may be used effectively by readers.
These choices as to selection and arrangement, so long as they are made independently by
the compiler and entail a minimal degree of creativity, are sufficiently original that
Congress may protect such compilations through the copyright laws. Nimmer 2.11[D],
3.03; Denicola 523, n. 38. Thus, even a directory that contains absolutely no protectible
written expression, only facts, meets the constitutional minimum for copyright protection if
it features an original selection or arrangement. See Harper & Row, 471 U.S., at 547. Accord
Nimmer 3.03.
[17] This protection is subject to an important limitation. The mere fact that a work is
copyrighted does not mean that every element of the work may be protected. Originality
remains the sine qua non of copyright; accordingly, copyright protection may extend only to
those components of a work that are original to the author. Patterson & Joyce 800-802;
99

Ginsburg, Creation and Commercial Value: Copyright Protection of Works of Information,
90 Colum. L. Rev. 1865, 1868, and n. 12 (1990) (hereinafter Ginsburg). Thus, if the
compilation author clothes facts with an original collocation of words, he or she may be
able to claim a copyright in this written expression. Others may copy the underlying facts
from the publication, but not the precise words used to present them. InHarper & Row, for
example, we explained that President Ford could not prevent others from copying bare
historical facts from his autobiography, see 471 U.S., at 556-557, but that he could prevent
others from copying his "subjective descriptions and portraits of public figures."
[p*349] Id., at 563. Where the compilation author adds no written expression but rather
lets the facts speak for themselves, the expressive element is more elusive. The only
conceivable expression is the manner in which the compiler has selected and arranged the
facts. Thus, if the selection and arrangement are original, these elements of the work are
eligible for copyright protection. See Patry, Copyright in Compilations of Facts (or Why the
"White Pages" Are Not Copyrightable), 12 Com. & Law 37, 64 (Dec. 1990) (hereinafter
Patry). No matter how original the format, however, the facts themselves do not become
original through association. See Patterson & Joyce 776.
[18] This inevitably means that the copyright in a factual compilation is thin.
Notwithstanding a valid copyright, a subsequent compiler remains free to use the facts
contained in an another's publication to aid in preparing a competing work, so long as the
competing work does not feature the same selection and arrangement. As one
commentator explains it: "No matter how much original authorship the work displays, the
facts and ideas it exposes are free for the taking . . . . The very same facts and ideas may be
divorced from the context imposed by the author, and restated or reshuffled by second
comers, even if the author was the first to discover the facts or to propose the ideas."
Ginsburg 1868.
[19] It may seem unfair that much of the fruit of the compiler's labor may be used by others
without compensation. As Justice Brennan has correctly observed, however, this is not
"some unforeseen byproduct of a statutory scheme." Harper & Row, 471 U.S., at 589
(dissenting opinion). It is, rather, "the essence of copyright," ibid., and a constitutional
requirement. The primary objective of copyright is not to reward the labor of authors, but
"to promote the Progress of Science and useful Arts." Art. I, 8, cl. 8. AccordTwentieth
Century Music Corp. v. Aiken, 422 U.S. 151, 156 (1975). To this end, copyright assures
authors the right to their original [p*350] expression, but encourages others to build freely
upon the ideas and information conveyed by a work. Harper & Row, supra, at 556-557. This
principle, known as the idea-expression or fact-expression dichotomy, applies to all works
of authorship. As applied to a factual compilation, assuming the absence of original written
expression, only the compiler's selection and arrangement may be protected; the raw facts
may be copied at will. This result is neither unfair nor unfortunate. It is the means by which
copyright advances the progress of science and art.
[20] This Court has long recognized that the fact-expression dichotomy limits severely the
scope of protection in fact-based works. More than a century ago, the Court observed: "The
very object of publishing a book on science or the useful arts is to communicate to the
world the useful knowledge which it contains. But this object would be frustrated if the
100

knowledge could not be used without incurring the guilt of piracy of the
book." Baker v. Selden, 101 U.S. 99, 103 (1880). We reiterated this point inHarper & Row:
"No author may copyright facts or ideas. The copyright is limited to those aspects of the
work -- termed 'expression' -- that display the stamp of the author's originality.
Copyright does not prevent subsequent users from copying from a prior author's work
those constituent elements that are not original -- for example . . . facts, or materials in the
public domain -- as long as such use does not unfairly appropriate the author's original
contributions. 471 U.S., at 547-548 (citation omitted).
[21] This, then, resolves the doctrinal tension: Copyright treats facts and factual
compilations in a wholly consistent manner. Facts, whether alone or as part of a
compilation, are not original and therefore may not be copyrighted. A factual compilation is
eligible for copyright if it features an original selection or arrangement of facts, but the
copyright is limited to [p*351] the particular selection or arrangement. In no event may
copyright extend to the facts themselves.
B
[22] As we have explained, originality is a constitutionally mandated prerequisite for
copyright protection. The Court's decisions announcing this rule predate the Copyright Act
of 1909, but ambiguous language in the 1909 Act caused some lower courts temporarily to
lose sight of this requirement.
[23] The 1909 Act embodied the originality requirement, but not as clearly as it might have.
See Nimmer 2.01. The subject matter of copyright was set out in 3 and 4 of the Act.
Section 4 stated that copyright was available to all the writings of an author. 35 Stat.
1076. By using the words writings and author -- the same words used in Article I, 8 of
the Constitution and defined by the Court in The Trade-Mark Cases and Burrow-Giles -- the
statute necessarily incorporated the originality requirement articulated in the Court's
decisions. It did so implicitly, however, thereby leaving room for error.
[24] Section 3 was similarly ambiguous. It stated that the copyright in a work protected
only the copyrightable component parts of the work. It thus stated an important
copyright principle, but failed to identify the specific characteristic -- originality -- that
determined which component parts of a work were copyrightable and which were not.
[25] Most courts construed the 1909 Act correctly, notwithstanding the less-than-perfect
statutory language. They understood from this Court's decisions that there could be no
copyright without originality. See Patterson & Joyce 760-761. As explained in the Nimmer
treatise: The 1909 Act neither defined originality, nor even expressly required that a work
be 'original' in order to command protection. However, the courts uniformly inferred the
requirement from the fact that copyright protection may only be claimed by 'authors' . . . . It
was reasoned that since an author is 'the . . . [p*352] creator, originator' it follows that a
101

work is not the product of an author unless the work is original. Nimmer 2.01 (footnotes
omitted) (citing cases).
[26] But some courts misunderstood the statute. See, e. g., Leon v. Pacific Telephone &
Telegraph Co., 91 F. 2d 484 (CA9 1937); Jeweler's Circular Publishing Co. v. Keystone
Publishing Co., 281 F. 83 (CA2 1922). These courts ignored 3 and 4, focusing their
attention instead on 5 of the Act. Section 5, however, was purely technical in nature: it
provided that a person seeking to register a work should indicate on the application the
type of work, and it listed 14 categories under which the work might fall. One of these
categories was books, including composite and cyclopedic works, directories, gazetteers,
and other compilations. 5(a). Section 5 did not purport to say that all compilations were
automatically copyrightable. Indeed, it expressly disclaimed any such function, pointing out
that the subject-matter of copyright is defined in section four. Nevertheless, the fact that
factual compilations were mentioned specifically in 5 led some courts to infer
erroneously that directories and the like were copyrightableper se, without any further or
precise showing of original -- personal -- authorship. Ginsburg 1895.
[27] Making matters worse, these courts developed a new theory to justify the protection
of factual compilations. Known alternatively as sweat of the brow or industrious
collection, the underlying notion was that copyright was a reward for the hard work that
went into compiling facts. The classic formulation of the doctrine appeared in Jeweler's
Circular Publishing Co., 281 F., at 88:
The right to copyright a book upon which one has expended labor in its preparation does
not depend upon whether the materials which he has collected consist or not of matters
which are publici juris, or whether such materials show literary skill or originality, either in
thought or in language, or anything more than industrious [p*353] collection. The man who
goes through the streets of a town and puts down the names of each of the inhabitants,
with their occupations and their street number, acquires material of which he is the
author (emphasis added).
[28] The sweat of the brow doctrine had numerous flaws, the most glaring being that it
extended copyright protection in a compilation beyond selection and arrangement -- the
compiler's original contributions -- to the facts themselves. Under the doctrine, the only
defense to infringement was independent creation. A subsequent compiler was not
entitled to take one word of information previously published, but rather had to
independently work out the matter for himself, so as to arrive at the same result from the
same common sources of information. Id., at 88-89 (internal quotations omitted). Sweat
of the brow courts thereby eschewed the most fundamental axiom of copyright law -- that
no one may copyright facts or ideas. See Miller v. Universal City Studios, Inc., 650 F. 2d, at
1372 (criticizing sweat of the brow courts because ensuring that later writers obtain the
facts independently . . . is precisely the scope of protection given . . . copyrighted matter,
and the law is clear that facts are not entitled to such protection).
[29] Decisions of this Court applying the 1909 Act make clear that the statute did not
permit the sweat of the brow approach. The best example is International News
102

Service v. Associated Press, 248 U.S. 215 (1918). In that decision, the Court stated
unambiguously that the 1909 Act conferred copyright protection only on those elements of
a work that were original to the author. Associated Press had conceded taking news
reported by International News Service and publishing it in its own newspapers.
Recognizing that 5 of the Act specifically mentioned periodicals, including newspapers,
5(b), the Court acknowledged that news articles were copyrightable. Id., at 234. It flatly
rejected, however, the notion that the copyright in an article extended to [p*354] the
factual information it contained: The news element -- the information respecting current
events contained in the literary production -- is not the creation of the writer, but is a
report of matters that ordinarily are publici juris; it is the history of the day. Ibid. [n1]
[30] Without a doubt, the sweat of the brow doctrine flouted basic copyright principles.
Throughout history, copyright law has recognized a greater need to disseminate factual
works than works of fiction or fantasy. Harper & Row, 471 U.S., at 563. Accord Gorman,
Fact or Fancy: The Implications for Copyright, 29 J. Copyright Soc. 560, 563 (1982). But
sweat of the brow courts took a contrary view; they handed out proprietary interests in
facts and declared that authors are absolutely precluded from saving time and effort by
relying upon the facts contained in prior works. In truth, it is just such wasted effort that
the proscription against the copyright of ideas and facts . . . [is] designed to
prevent. Rosemont Enterprises, Inc. v. Random House, Inc., 366 F. 2d 303, 310 (CA2 1966),
cert. denied, 385 U.S. 1009 (1967). Protection for the fruits of such research . . . may in
certain circumstances be available under a theory of unfair competition. But to accord
copyright protection on this basis alone distorts basic copyright principles in that it creates
a monopoly in public domain materials without the necessary justification of protecting
and encouraging the creation of 'writings' by 'authors.' Nimmer 3.04, p. 3-23 (footnote
omitted).
C
[31] Sweat of the brow decisions did not escape the attention of the Copyright Office.
When Congress decided to overhaul the copyright statute and asked the Copyright Office to
study existing problems, see Mills Music, Inc. v. Snyder, 469 U.S. 153, 159 (1985), the
Copyright Office promptly recommended that Congress clear up the confusion in the lower
courts as to the basic standards of copyrightability. The Register of Copyrights explained in
his first report to Congress that originality was a basic requisite of copyright under the
1909 Act, but that the absence of any reference to [originality] in the statute seems to have
led to misconceptions as to what is copyrightable matter. Report of the Register of
Copyrights on the General Revision of the U.S. Copyright Law, 87th Cong., 1st Sess., p. 9 (H.
Judiciary Comm. Print 1961). The Register suggested making the originality requirement
explicit. Ibid.
[32] Congress took the Register's advice. In enacting the Copyright Act of 1976, Congress
dropped the reference to all the writings of an author and replaced it with the phrase
original works of authorship. 17 U.S.C. 102(a). In making explicit the originality
requirement, Congress announced that it was merely clarifying existing law: The two
fundamental criteria of copyright protection [are] originality and fixation in tangible form .
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. . . The phrase 'original works of authorship,' which is purposely left undefined, is intended
to incorporate without change the standard of originality established by the courts under the
present [1909] copyright statute. H. R. Rep. No. 94-1476, p. 51 (1976) (emphasis added)
(hereinafter H. R. Rep.); S. Rep. No. 94-473, p. 50 (1975) (emphasis added) (hereinafter S.
Rep.). This sentiment was echoed by the Copyright Office: Our intention here is to
maintain the established standards of originality . . . . Supplementary Report of the Register
of Copyrights on the General Revision of U.S. Copyright Law, 89th Cong., 1st Sess., Part 6, p.
3 (H. Judiciary Comm. Print 1965) (emphasis added).
[33] To ensure that the mistakes of the sweat of the brow courts would not be repeated,
Congress took additional measures. For example, 3 of the 1909 Act had stated that
copyright protected only the copyrightable component parts of a work, but had not
identified originality as the basis for distinguishing those component parts that were
copyrightable from those that were not. The 1976 Act deleted this section and replaced it
with 102(b), which identifies specifically those elements of a work for which copyright is
not available: In no case does copyright protection for an original work of authorship
extend to any 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. 102(b) is universally understood to prohibit any copyright in
facts. Harper & Row, supra, at 547, 556. Accord Nimmer 2.03[E] (equating facts with
discoveries). As with 102(a), Congress emphasized that 102(b) did not change the
law, but merely clarified it: Section 102(b) in no way enlarges or contracts the scope of
copyright protection under the present law. Its purpose is to restate . . . that the basic
dichotomy between expression and idea remains unchanged. H. R. Rep., at 57; S. Rep., at
54.
[34] Congress took another step to minimize confusion by deleting the specific mention of
directories . . . and other compilations in 5 of the 1909 Act. As mentioned, this section
had led some courts to conclude that directories were copyrightable per se and that every
element of a directory was protected. In its place, Congress enacted two new provisions.
First, to make clear that compilations were not copyrightable per se, Congress provided a
definition of the term compilation. Second, to make clear that the copyright in a
compilation did not extend to the facts themselves, Congress enacted 17 U.S.C. 103.
[35] The definition of compilation is found in 101 of the 1976 Act. It defines a
compilation in the copyright sense as a work formed by the collection and assembly of
preexisting materials or of data that are selected, coordinated, or arranged in such a way
that the resulting work as a whole constitutes an original work of authorship (emphasis
added).
[36] The purpose of the statutory definition is to emphasize that collections of facts are not
copyrightable per se. It conveys this message through its tripartite structure, as emphasized
above by the italics. The statute identifies three distinct elements and requires each to be
met for a work to qualify as a copyrightable compilation: (1) the collection and assembly of
pre-existing material, facts, or data; (2) the selection, coordination, or arrangement of those
materials; and (3) the creation, by virtue of the particular selection, coordination, or
104

arrangement, of an original work of authorship. This tripartite conjunctive structure is
self-evident, and should be assumed to 'accurately express the legislative purpose.' Patry
51, quoting Mills Music, 469 U.S., at 164.
[37] At first glance, the first requirement does not seem to tell us much. It merely describes
what one normally thinks of as a compilation -- a collection of pre-existing material, facts,
or data. What makes it significant is that it is not the sole requirement. It is not enough for
copyright purposes that an author collects and assembles facts. To satisfy the statutory
definition, the work must get over two additional hurdles. In this way, the plain language
indicates that not every collection of facts receives copyright protection. Otherwise, there
would be a period after data.
[38] The third requirement is also illuminating. It emphasizes that a compilation, like any
other work, is copyrightable only if it satisfies the originality requirement
(an original work of authorship). Although 102 states plainly that the originality
requirement applies to all works, the point was emphasized with regard to compilations to
ensure that courts would not repeat the mistake of the sweat of the brow courts by
concluding that fact-based works are treated differently and measured by some other
standard. As Congress explained it, the goal was to make plain that the criteria of
copyrightable subject matter stated in section 102 apply with full force to works . . .
containing preexisting material. H. R. Rep., at 57; S. Rep., at 55.
[39] The key to the statutory definition is the second requirement. It instructs courts that,
in determining whether a fact-based work is an original work of authorship, they should
focus on the manner in which the collected facts have been selected, coordinated, and
arranged. This is a straightforward application of the originality requirement. Facts are
never original, so the compilation author can claim originality, if at all, only in the way the
facts are presented. To that end, the statute dictates that the principal focus should be on
whether the selection, coordination, and arrangement are sufficiently original to merit
protection.
[40] Not every selection, coordination, or arrangement will pass muster. This is plain from
the statute. It states that, to merit protection, the facts must be selected, coordinated, or
arranged in such a way as to render the work as a whole original. This implies that some
ways will trigger copyright, but that others will not. See Patry 57, and n. 76. Otherwise,
the phrase in such a way is meaningless and Congress should have defined compilation
simply as a work formed by the collection and assembly of preexisting materials or data
that are selected, coordinated, or arranged. That Congress did not do so is dispositive. In
accordance with the established principle that a court should give effect, if possible, to
every clause and word of a statute, Moskal v.United States, 498 U.S. 103, 109-110 (1990)
(internal quotations omitted), we conclude that the statute envisions that there will be
some fact-based works in which the selection, coordination, and arrangement are not
sufficiently original to trigger copyright protection.
[41] As discussed earlier, however, the originality requirement is not particularly stringent.
A compiler may settle upon a selection or arrangement that others have used; novelty is
105

not required. Originality requires only that the author make the selection or arrangement
independently (i. e., without copying that selection or arrangement from another work),
and that it display some minimal level of creativity. Presumably, [p*359] the vast majority
of compilations will pass this test, but not all will. There remains a narrow category of
works in which the creative spark is utterly lacking or so trivial as to be virtually
nonexistent. See generally Bleistein v. Donaldson Lithographing Co., 188 U.S. 239, 251
(1903) (referring to the narrowest and most obvious limits). Such works are incapable of
sustaining a valid copyright. Nimmer 2.01[B].
[42] Even if a work qualifies as a copyrightable compilation, it receives only limited
protection. This is the point of 103 of the Act. Section 103 explains that the subject
matter of copyright . . . includes compilations, 103(a), but that copyright protects only
the author's original contributions -- not the facts or information conveyed:
The copyright in a compilation . . . extends only to the material contributed by the author
of such work, as distinguished from the preexisting material employed in the work, and
does not imply any exclusive right in the preexisting material. 103(b).
[43] As 103 makes clear, copyright is not a tool by which a compilation author may keep
others from using the facts or data he or she has collected. The most important point here
is one that is commonly misunderstood today: copyright . . . has no effect one way or the
other on the copyright or public domain status of the preexisting material. H. R. Rep., at
57; S. Rep., at 55. The 1909 Act did not require, as sweat of the brow courts mistakenly
assumed, that each subsequent compiler must start from scratch and is precluded from
relying on research undertaken by another. See, e. g., Jeweler's Circular Publishing Co., 281
F., at 88-89. Rather, the facts contained in existing works may be freely copied because
copyright protects only the elements that owe their origin to the compiler -- the selection,
coordination, and arrangement of facts.
[44] In summary, the 1976 revisions to the Copyright Act leave no doubt that originality,
not sweat of the brow, is the [p*360] touchstone of copyright protection in directories
and other fact-based works. Nor is there any doubt that the same was true under the 1909
Act. The 1976 revisions were a direct response to the Copyright Office's concern that many
lower courts had misconstrued this basic principle, and Congress emphasized repeatedly
that the purpose of the revisions was to clarify, not change, existing law. The revisions
explain with painstaking clarity that copyright requires originality, 102(a); that facts are
never original, 102(b); that the copyright in a compilation does not extend to the facts it
contains, 103(b); and that a compilation is copyrightable only to the extent that it
features an original selection, coordination, or arrangement, 101.
[45] The 1976 revisions have proven largely successful in steering courts in the right
direction. A good example is Miller v. Universal City Studios, Inc., 650 F. 2d, at 1369-1370: A
copyright in a directory . . . is properly viewed as resting on the originality of the selection
and arrangement of the factual material, rather than on the industriousness of the efforts to
develop the information. Copyright protection does not extend to the facts themselves, and
the mere use of information contained in a directory without a substantial copying of the
106

format does not constitute infringement (citation omitted). Additionally, the Second
Circuit, which almost 70 years ago issued the classic formulation of the sweat of the brow
doctrine in Jeweler's Circular Publishing Co., has now fully repudiated the reasoning of that
decision. See, e. g., Financial Information, Inc. v. Moody's Investors Service, Inc., 808 F. 2d
204, 207 (CA2 1986), cert. denied, 484 U.S. 820 (1987); Financial Information,
Inc. v. Moody's Investors Service, Inc.,751 F. 2d 501, 510 (CA2 1984) (Newman, J.,
concurring); Hoehling v. Universal City Studios, Inc., 618 F. 2d 972, 979 (CA2 1980). Even
those scholars who believe that industrious collection should be rewarded seem to
recognize that this is beyond the scope of existing copyright law. See Denicola 516 (the
very vocabulary of copyright [p*361] is ill suited to analyzing property rights in works of
nonfiction); id., at 520-521, 525; Ginsburg 1867, 1870.
III
[46] There is no doubt that Feist took from the white pages of Rural's directory a
substantial amount of factual information. At a minimum, Feist copied the names, towns,
and telephone numbers of 1,309 of Rural's subscribers. Not all copying, however, is
copyright infringement. To establish infringement, two elements must be proven: (1)
ownership of a valid copyright, and (2) copying of constituent elements of the work that
are original. See Harper & Row, 471 U.S., at 548. The first element is not at issue here; Feist
appears to concede that Rural's directory, considered as a whole, is subject to a valid
copyright because it contains some foreword text, as well as original material in its yellow
pages advertisements. See Brief for Petitioner 18; Pet. for Cert. 9.
[47] The question is whether Rural has proved the second element. In other words, did
Feist, by taking 1,309 names, towns, and telephone numbers from Rural's white pages,
copy anything that was original to Rural? Certainly, the raw data does not satisfy the
originality requirement. Rural may have been the first to discover and report the names,
towns, and telephone numbers of its subscribers, but this data does not 'owe its origin' to
Rural. Burrow-Giles, 111 U.S., at 58. Rather, these bits of information are uncopyrightable
facts; they existed before Rural reported them and would have continued to exist if Rural
had never published a telephone directory. The originality requirement rules out
protecting . . . names, addresses, and telephone numbers of which the plaintiff by no stretch
of the imagination could be called the author. Patterson & Joyce 776.
[48] Rural essentially concedes the point by referring to the names, towns, and telephone
numbers as preexisting material. Brief for Respondent 17. Section 103(b) states explicitly
[p*362] that the copyright in a compilation does not extend to the preexisting material
employed in the work.
[49] The question that remains is whether Rural selected, coordinated, or arranged these
uncopyrightable facts in an original way. As mentioned, originality is not a stringent
standard; it does not require that facts be presented in an innovative or surprising way. It
is equally true, however, that the selection and arrangement of facts cannot be so
mechanical or routine as to require no creativity whatsoever. The standard of originality is
low, but it does exist. See Patterson & Joyce 760, n. 144 (While this requirement is
107

sometimes characterized as modest, or a low threshold, it is not without effect) (internal
quotations omitted; citations omitted). As this Court has explained, the Constitution
mandates some minimal degree of creativity, see The Trade-Mark Cases, 100 U.S., at 94; and
an author who claims infringement must prove the existence of . . . intellectual production,
of thought, and conception. Burrow-Giles, supra, at 59-60.
[50] The selection, coordination, and arrangement of Rural's white pages do not satisfy the
minimum constitutional standards for copyright protection. As mentioned at the outset,
Rural's white pages are entirely typical. Persons desiring telephone service in Rural's
service area fill out an application and Rural issues them a telephone number. In preparing
its white pages, Rural simply takes the data provided by its subscribers and lists it
alphabetically by surname. The end product is a garden-variety white pages directory,
devoid of even the slightest trace of creativity.
[51] Rural's selection of listings could not be more obvious: it publishes the most basic
information -- name, town, and telephone number -- about each person who applies to it
for telephone service. This is selection of a sort, but it lacks the modicum of creativity
necessary to transform mere selection into copyrightable expression. Rural expended
sufficient effort [p*363] to make the white pages directory useful, but insufficient creativity
to make it original.
[52] We note in passing that the selection featured in Rural's white pages may also fail the
originality requirement for another reason. Feist points out that Rural did not truly select
to publish the names and telephone numbers of its subscribers; rather, it was required to
do so by the Kansas Corporation Commission as part of its monopoly franchise. See 737 F.
Supp., at 612. Accordingly, one could plausibly conclude that this selection was dictated by
state law, not by Rural.
[53] Nor can Rural claim originality in its coordination and arrangement of facts. The white
pages do nothing more than list Rural's subscribers in alphabetical order. This
arrangement may, technically speaking, owe its origin to Rural; no one disputes that Rural
undertook the task of alphabetizing the names itself. But there is nothing remotely creative
about arranging names alphabetically in a white pages directory. It is an age-old practice,
firmly rooted in tradition and so commonplace that it has come to be expected as a matter
of course. See Brief for Information Industry Association et al. as Amici Curiae 10
(alphabetical arrangement is universally observed in directories published by local
exchange telephone companies). It is not only unoriginal, it is practically inevitable. This
time-honored tradition does not possess the minimal creative spark required by the
Copyright Act and the Constitution.
[54] We conclude that the names, towns, and telephone numbers copied by Feist were not
original to Rural and therefore were not protected by the copyright in Rural's combined
white and yellow pages directory. As a constitutional matter, copyright protects only those
constituent elements of a work that possess more than a de minimis quantum of creativity.
Rural's white pages, limited to basic subscriber information and arranged alphabetically,
fall short of the mark. As a statutory matter, 17 U.S.C. 101 does not afford protection
108

[p*364] from copying to a collection of facts that are selected, coordinated, and arranged in
a way that utterly lacks originality. Given that some works must fail, we cannot imagine a
more likely candidate. Indeed, were we to hold that Rural's white pages pass muster, it is
hard to believe that any collection of facts could fail.
[55] Because Rural's white pages lack the requisite originality, Feist's use of the listings
cannot constitute infringement. This decision should not be construed as demeaning
Rural's efforts in compiling its directory, but rather as making clear that copyright rewards
originality, not effort. As this Court noted more than a century ago, 'great praise may be
due to the plaintiffs for their industry and enterprise in publishing this paper, yet the law
does not contemplate their being rewarded in this way.' Baker v. Selden, 101 U.S., at 105.
The judgment of the Court of Appeals is
[56] Reversed.
JUSTICE BLACKMUN concurs in the judgment.
* Briefs of amici curiae urging reversal were filed for the Association of North American
Directory Publishers et al. by Theodore Case Whitehouse; for the International Association
of Cross Reference Directory Publishers by Richard D. Grauer and Kathleen McCree
Lewis; and for the Third-Class Mail Association by Ian D. Volner.
Briefs of amici curiae urging affirmance were filed for Ameritech et al. by Michael K.
Kellogg, Charles Rothfeld, Douglas J. Kirk, Thomas P. Hester, and Harlan Sherwat for
Association of American Publishers, Inc., by Robert G. Sugarman and R. Bruce Rich for GTE
Corp. by Kirk K. Van Tine, Richard M. Cahill, and Edward R. Sublett; for the National
Telephone Cooperative Association by L. Marie Guillory and David Cosson for the United
States Telephone Association by Richard J. Rappaport and Keith P. Schoeneberger and for
West Publishing Co. by Vance K. Opperman and James E. Schatz.
Briefs of amici curiae were filed for Bellsouth Corp. by Anthony B. Askew, Robert E.
Richards, Walter H. Alford, and Vincent L. Sgrosso for Direct Marketing Association, Inc., by
Robert L. Sherman for Haines and Co., Inc., by Jeremiah D. McAuliffe, Bernard A. Barken,
and Eugene Gressman; and for the Information Industry Association et al. by Steven J.
Metalitz and Angela Burnett.
1. The Court ultimately rendered judgment for International News Service on noncopyright
grounds that are not relevant here. See 248 U.S., at 235, 241-242.

109

Topic: Non-copyrightable (Article 175)
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION

G.R. No. 108946 January 28, 1999
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.:
This is a petition for certiorari. Petitioners seek to annul the resolution of the Department
of Justice, dated August 12, 1992, in Criminal Case No. Q-92-27854, entitled "Gabriel
Zosa, et al. v. City Prosecutor of Quezon City and Francisco Joaquin, Jr.," and its resolution,
dated December 3, 1992, denying petitioner Joaquin's motion for reconsideration.
Petitioner BJ Productions, Inc. (BJPI) is the holder/grantee of Certificate of Copyright No.
M922, dated January 28, 1971, of Rhoda and Me, a dating game show aired from 1970 to
1977.
On June 28, 1973, petitioner BJPI submitted to the National Library an addendum to its
certificate of copyright specifying the show's format and style of presentation.
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. (IXL). On July 18, 1991, he wrote a letter to private respondent Gabriel M.
Zosa, president and general manager of IXL, informing Zosa that BJPI had a copyright
to Rhoda and Me and demanding that IXL discontinue airingIt's a Date.
In a letter, dated July 19, 1991, private respondent Zosa apologized to petitioner Joaquin
and requested a meeting to discuss a possible settlement. IXL, however, continued airing
It's a Date, prompting petitioner Joaquin to send a second letter on July 25, 1991 in which
he reiterated his demand and warned that, if IXL did not comply, he would endorse the
matter to his attorneys for proper legal action.
110

Meanwhile, private respondent Zosa sought to register IXL's copyright to the first episode
of It's a Date for which it was issued by the National Library a certificate of copyright
August 14, 1991.
Upon complaint of petitioners, an information for violation of P.D. No. 49 was filed against
private respondent Zosa together with certain officers of RPN Channel 9, namely, William
Esposo, 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 respondent Zosa sought a review of the resolution of the Assistant City
Prosecutor before the 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:
1. The public respondent gravely abused his discretion amounting to lack of
jurisdiction when 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 probable cause due to their failure to present the copyrighted master
videotape of Rhoda and Me. They contend that petitioner BJPI's copyright covers only a
specific episode of Rhoda and Me and that the formats or concepts of dating game shows
are not covered by copyright protection under P.D. No. 49.
Non-Assignment of Error.
Petitioners claim that their failure to submit the copyrighted master videotape of the
television show Rhoda and Me was not raised in issue by private respondents during the
preliminary investigation and, therefore, it was error for the Secretary of Justice to reverse
the investigating prosecutor's finding of probable cause on this ground.
A preliminary investigation falls under the authority of the state prosecutor who is given by
law the power to direct and control criminal actions.
2
He is, however, subject to the control
of the Secretary of Justice. Thus, Rule 112, 4 of the Revised Rules of Criminal Procedure,
provides:
111

Sec. 4. Duty of investigating fiscal. If the investigating fiscal finds cause to
hold the respondent for trial, he shall prepare the resolution and
corresponding information. He shall certify under oath that he, or as shown
by the record, an authorized officer, has personally examined the
complainant and his witnesses, that there is reasonable ground to believe
that a crime has been 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 submit
controverting evidence. Otherwise, he shall recommend dismissal of the
complaint.
In either case, he shall forward the records of the case to the provincial or
city fiscal or chief state prosecutor within five (5) days from his resolution.
The latter shall take appropriate action thereon ten (10) days from receipt
thereof, immediately informing the parties of said action.
No complaint or information may be filed or dismissed by an investigating
fiscal without the prior written authority or approval of the provincial or city
fiscal or chief state prosecutor.
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:
112

[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
Petitioners claim that respondent Secretary of Justice gravely abused his discretion in
ruling that the master videotape should have been predented in order to determine
whether there was 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 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

The case of 20th Century Fox Film Corporation involved raids conducted on various
videotape 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
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.
113

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.
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 complainant's "RHODA AND ME" and Zosa's "IT'S A
DATE" is that two matches are made between a male and a female, both
single, and the two couples are treated to a night or two of 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.
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 as
follows, to wit:
RHODA AND ME "IT'S A DATE"
Set 1 Set 1
a. Unmarried participant of one gender
(searcher) appears on one side of a divider,
while three (3) unmarried participants of
a. same
114

the other gender are on the other side of
the divider. This arrangement is done to
ensure that the searcher does not see the
searchees.
b. Searcher asks a question to be answered
by each of the searchees. The purpose is to
determine who among the searchees is the
most compatible with the searcher.
b. same
c. Searcher speculates on the match to the
searchee.
c. same
d. Selection is made by the use of compute
(sic) methods, or by the way questions are
answered, or similar methods.
d. Selection is based on the answer of the
Searchees.
Set 2 Set 2
Same as above with the genders of the
searcher and searchees interchanged.
9

same
Petitioners assert that the format of Rhoda and Me is a product of ingenuity and skill and is
thus entitled to copyright protection. It is their position that the presentation of a point-by-
point comparison of the formats of the two shows clearly demonstrates the nexus between
the shows and hence establishes the existence of probable cause for copyright
infringement. Such being the case, they did not have to produce the master tape.
To begin with the format of a show is not copyrightable. Section 2 of P.D. No.
49,
10
otherwise known as the DECREE ON INTELLECTUAL PROPERTY, enumerates the
classes of work entitled to copyright protection, to wit:
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:
(B) Periodicals, including pamphlets and newspapers;
(C) Lectures, sermons, addresses, dissertations prepared for oral delivery;
(D) Letters;
(E) Dramatic or dramatico-musical compositions; choreographic works and
entertainments in dumb shows, the acting form of which is fixed in writing or
otherwise;
(F) Musical compositions, with or without words;
115

(G) Works of drawing, painting, architecture, sculpture, engraving,
lithography, and other works of art; models or designs for works of art;
(H) Reproductions of a work of art;
(I) Original ornamental designs or models for articles of manufacture,
whether or not patentable, and other works of applied art;
(J) Maps, plans, sketches, and charts;
(K) Drawings or plastic works of a scientific or technical character;
(I) Photographic works and works produced by a process analogous to
photography lantern slides;
(M) Cinematographic works and works produced by a process analogous to
cinematography or any process for making audio-visual recordings;
(N) Computer programs;
(O) Prints, pictorial illustrations advertising copies, labels tags, and box
wraps;
(P) Dramatizations, translations, adaptations, abridgements, arrangements
and other alterations of literary, musical or artistic works or of works of the
Philippine government as herein defined, which shall be protected as
provided in Section 8 of this Decree.
(Q) Collections of literary, scholarly, or artistic works or of works referred to
in Section 9 of this Decree which by reason of the selection and arrangement
of their contents constitute intellectual creations, the same to be protected as
such in accordance with Section 8 of this Decree.
(R) Other literary, scholarly, scientific and artistic works.
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.
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

116

Since . . . copyright in published works is purely a statutory creation, a
copyright may be obtained only for a work falling within the statutory
enumeration or description.
13

Regardless of the historical viewpoint, it is authoritatively settled in the
United States that there is no copyright except that which is both created and
secured by act of Congress . . . . .
14

P.D. No. 49, 2, in enumerating what are subject to copyright, refers to finished works and
not to concepts. The copyright does not extend to an idea, procedure, process, system,
method of operation, concept, principle, or discovery, regardless of the form in which it is
described, explained, illustrated, or embodied in such work.
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
117

SO ORDERED.1wphi1.nt
Puno, Quisumbing and Buena, JJ., concur.
Bellosillo, J., took no part.
Footnotes
1 Petition, Annex A, p. 4; Rollo, p. 27..
2 Sangguniang Bayan of Batac, Ilocos Norte v. Albano, 260 SCRA 561 (1996)
3 Petition, Annex B, pp. 1-2; Rollo, pp. 28-29.
4 164 SCRA 655 (1988).
5 Petition, p. 17; Rollo, p. 18.
6 Id., at 663-664.
7 261 SCRA 144 (1996).
8 Id., 173.
9 Petition Annex "G"; Rollo, pp. 44-45.
10 Promulgated on November 14, 1972.
11 Effective on January 1, 1998.
Sec. 172. Literary and Artistic Works. 172.1. Literary and artistic works,
hereinafter referred to as "works", are original intellectual creations in the
literary and artistic domain protected from the moment of their creation and
shall include in particular:
(a) Books, pamphlets, articles and other writings;
(b) Periodicals and newspapers;
(c) Lectures, sermons, addresses, dissertations prepared for oral delivery
whether or not reduced in writing or other material form;
(d) Letters;
(e) Dramatic or dramatico-musical compositions; choreographic works or
entertainment in dumb shows;
118

(f) Musical compositions, with or without words;
(g) Works of drawing, painting, architecture, sculpture, engraving,
lithography or other works of art; models or designs for works of art;
(h) Original ornamental designs or models for articles of manufacture,
whether or not registrable as an industrial design and other works of applied
art;
(i) Illustrations, maps, plans, sketches, charts and three-dimensional works
relative to geography, topography, architecture or science;
(j) Drawings or plastic works of a scientific or technical character;
(k) Photographic works including works produced by a process analogous to
photography; lantern slides;
(l) Audiovisual works and cinematographic works and works produced by a
process analogous to cinematography or any process for making audio-visual
recording;
(m) Pictorial illustrations and advertisements;
(n) Computer programs; and
(o) Other literary, scholarly, scientific and artistic works.
12 18 C.J.S. 161.
13 Id., at 165.
14 HORACE G. BALL, LAW OF COPYRIGHT AND LITERARY PROPERTY 45
(1944).
15 NEIL BOORSTYN, COPYRIGHT LAW 25 (1981).
16 Comment of Public Respondent, p. 9; Rollo, p. 152.


119

Topic: Exclusive rights
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-19439 October 31, 1964
MAURO MALANG SANTOS, plaintiff-appellant,
vs.
MCCULLOUGH PRINTING COMPANY, defendant-appellee.
Taada Teehankee & Carreon for plaintiff-appellant.
Esposo & Usison for defendant-appellee.
PAREDES, J.:
This is an action for damages based on the provisions of Articles 721 and 722 of the Civil
Code of the Philippines, allegedly on the unauthorized use, adoption and appropriation by
the defendant company of plaintiff's intellectual creation or artistic design for a Christmas
Card. The design depicts "a Philippine rural Christmas time scene consisting of a woman
and a child in a nipa hut adorned with a star-shaped lantern and a man astride a carabao,
beside a tree, underneath which appears the plaintiff's pen name, Malang."
The complaint alleges that plaintiff Mauro Malang Santos designed for former Ambassador
Felino Neri, for his personal Christmas Card greetings for the year 1959, the artistic motif
in question. The following year the defendant McCullough Printing Company, without the
knowledge and authority of plaintiff, displayed the very design in its album of Christmas
cards and offered it for sale, for a price. For such unauthorized act of defendant, plaintiff
suffered moral damages to the tune of P16,000.00, because it has placed plaintiff's
professional integrity and ethics under serious question and caused him grave
embarrassment before Ambassador Neri. He further prayed for the additional sum of
P3,000.00 by way of attorney's fee.
Defendant in answer to the complaint, after some denials and admissions, moved for a
dismissal of the action claiming that
(1) The design claimed does not contain a clear notice that it belonged to him and
that he prohibited its use by others;
(2) The design in question has been published but does not contain a notice of
copyright, as in fact it had never been copyrighted by the plaintiff, for which reason
this action is barred by the Copyright Law;
(3) The complaint does not state a cause of action.
120

The documentary evidence submitted were the Christmas cards, as originally designed by
plaintiff, the design as printed for Ambassador Neri, and the subsequent reprints ordered
by other parties. The case was submitted an a "Stipulation of Fact" the pertinent portions of
which are hereunder reproduced:
1. That the plaintiff was the artist who created the design shown in Exhibit A, ...
2. That the design carries the pen name of plaintiff, MALANG, on its face ... and
indicated in Exhibit A, ...
3. That said design was created by plaintiff in the latter part of 1959 for the personal
use of former Ambassador Felino Neri; ...
4. That former Ambassador Neri had 800 such cards ... printed by the defendant
company in 1959, ... which he distributed to his friends in December, 1959;
5. That defendant company utilized plaintiff's design in the year 1960 in its album of
Christmas card samples displayed to its customers ... .
6. That the Sampaguita Pictures, Inc., placed an order with defendant company for
700 of said cards ... while Raul Urra & Co. ordered 200 ..., which cards were sent out
by them to their respective correspondent, clients and friends during the Christmas
season of 1960;
7. That defendant company's use of plaintiff's design was without knowledge,
authority or consent of plaintiff;
8. That said design has not been copyrighted;
9. That plaintiff is an artist of established name, good-will and reputation. ... .
Upon the basis of the facts stipulated, the lower court rendered judgment on December 1,
1961, the pertinent portions of which are recited below:
As a general proposition, there can be no dispute that the artist acquires ownership
of the product of his art. At the time of its creation, he has the absolute dominion
over it. To help the author protect his rights the copyright law was enacted.
In intellectual creations, a distinction must be made between two classes of
property rights; the fact of authorship and the right to publish and/or distribute
copies of the creation. With regard to the first, i.e. the fact of authorship, the artist
cannot be divested of the same. In other words, he may sell the right to print
hundred of his work yet the purchaser of said right can never be the author of the
creation.
It is the second right, i.e., the right to publish, republish, multiply and/or distribute
copies of the intellectual creation which the state, through the enactment of the
copyright law, seeks to protect. The author or his assigns or heirs may have the
121

work copyrighted and once this is legally accomplished any infringement of the
copyright will render the infringer liable to the owner of the copyright.
xxx xxx xxx
The plaintiff in this case did not choose to protect his intellectual creation by a
copyright. The fact that the design was used in the Christmas card of Ambassador
Neri who distributed eight hundred copies thereof among his friends during the
Christmas season of 1959, shows that the, same was published.
Unless satisfactorily explained a delay in applying for a copyright, of more than
thirty days from the date of its publication, converts the property to one of public
domain.
Since the name of the author appears in each of the alleged infringing copies of the
intellectual creation, the defendant may not be said to have pirated the work nor
guilty of plagiarism Consequently, the complaint does not state a cause of action
against the defendant.
xxx xxx ;xxx
WHEREFORE, the Court dismisses the complaint without pronouncement as to
costs.
In his appeal to this Court, plaintiff-appellant pointed five (5) errors allegedly committed
by the trial court, all of which bring to the fore, the following propositions: (1) whether
plaintiff is entitled to protection, notwithstanding the, fact that he has not copyrighted his
design; (2) whether the publication is limited, so as to prohibit its use by others, or it is
general publication, and (3) whether the provisions of the Civil Code or the Copyright Law
should apply in the case. We will undertake a collective discussion of these propositions.
Under the established facts, We find that plaintiff is not entitled to a protection, the
provision of the Civil Code, notwithstanding. Paragraph 33 of Patent Office Administrative
Order No. 3 (as amended dated September 18, 1947) entitled "Rules of Practice in the
Philippines Patent Office relating to the Registration of Copyright Claims" promulgated
pursuant to Republic Act 165, provides, among others, that an intellectual creation should
be copyrighted thirty (30) days after its publication, if made in Manila, or within sixty (60)
day's if made elsewhere, failure of which renders such creation public property. In the case
at bar, even as of this moment, there is no copyright for the design in question. We are not
also prepared to accept the contention of appellant that the publication of the design was a
limited one, or that there was an understanding that only Ambassador Neri should, have
absolute right to use the same. In the first place, if such were the condition then
Ambassador Neri would be the aggrieved party, and not the appellant. In the second place,
if there was such a limited publication or prohibition, the same was not shown on the face
of the design. When the purpose is a limited publication, but the effect is general
publication, irrevocable rights thereupon become vested in the public, in consequence of
which enforcement of the restriction becomes impossible (Nutt vs. National Institute, 31 F
[2d] 236). It has been held that the effect of offering for sale a dress, for example
122

manufactured in accordance with an original design which is not protected by either a
copyright or a patent, is to divest the owner of his common law rights therein by virtue of
the publication of a 'copy' and thereafter anyone is free to copy the design or the dress
(Fashion Originators Guild of America v. Federal Trade Commission, 114 F [2d] 80). When
Ambassador Neri distributed 800 copies of the design in controversy, the plaintiff lost
control of his design and the necessary implication was that there had been a general
publication, there having been no showing of a clear indication that a limited publication
was intended. The author of a literary composition has a light to the first publication
thereof. He has a right to determine whether it shall be published at all, and if published,
when, where, by whom, and in what form. This exclusive right is confined to the first
publication. When once published, it is dedicated to the public, and the author loses the
exclusive right to control subsequent publication by others, unless the work is placed
under the protection of the copyright law. (See II Tolentino's Comments on the Civil Code,
p. 433, citing Wright v. Eisle 83 N.Y. Supp. 887.)
CONFORMABLY WITH ALL THE FOREGOING, We find that the errors assigned have not
been committed by the lower court. The decision appealed from, therefore, should be, as it
is hereby affirmed. Costs taxed against plaintiff-appellant.
Bengzon, C.J., Bautista Angelo, Concepcion, Reyes, J.B.L., Barrera, Dizon, Makalintal, Bengzon,
J. P., and Zaldivar JJ., concur.
Regala, J., took no part.


123

Topic: Infringement
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 147043 June 21, 2005
NBI - MICROSOFT CORPORATION & LOTUS DEVELOPMENT CORP., petitioners,
vs.
JUDY C. HWANG, BENITO KEH & YVONNE K. CHUA/BELTRON COMPUTER
PHILIPPINES INC., JONATHAN K. CHUA, EMILY K. CHUA, BENITO T. SANCHEZ, NANCY I.
VELASCO, ALFONSO CHUA, ALBERTO CHUA, SOPHIA ONG, DEANNA CHUA/TAIWAN
MACHINERY DISPLAY & TRADE CENTER, INC., and THE SECRETARY OF
JUSTICE, respondents.
D E C I S I O N
CARPIO, J.:
The Case
This is a petition for certiorari
1
of the Resolutions
2
of the Department of Justice dismissing
for "lack of merit and insufficiency of evidence" petitioner Microsoft Corporations
complaint against respondents for copyright infringement and unfair competition.
The Facts
Petitioner Microsoft Corporation ("Microsoft"), a Delaware, United States corporation,
owns the copyright and trademark to several computer software.
3
Respondents Benito Keh
and Yvonne Keh are the President/Managing Director and General Manager, respectively,
of respondent Beltron Computer Philippines, Inc. ("Beltron"), a domestic corporation.
Respondents Jonathan K. Chua, Emily K. Chua, Benito T. Sanchez, and Nancy I. Velasco are
Beltrons Directors. On the other hand, respondents Alfonso Chua, Alberto Chua, Judy K.
Chua Hwang, Sophia Ong, and Deanna Chua are the Directors of respondent Taiwan
Machinery Display & Trade Center, Inc. ("TMTC"), also a domestic corporation.
4

In May 1993, Microsoft and Beltron entered into a Licensing Agreement ("Agreement").
Under Section 2(a) of the Agreement, as amended in January 1994, Microsoft authorized
Beltron, for a fee, to:
(i) xxx reproduce and install no more than one (1) copy of [Microsoft] software on
each Customer System hard disk or Read Only Memory ("ROM"); [and]
124

(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[.] xxxx
5

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

Afterwards, Microsoft learned that respondents were illegally copying and selling Microsoft
software. Consequently, Microsoft, through its Philippine agent,
7
hired the services of
Pinkerton Consulting Services ("PCS"), a private investigative firm. Microsoft also sought
the assistance of the National Bureau of Investigation ("NBI"). On 10 November 1995, PCS
employee John Benedic
8
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-
installed
10
Microsoft Windows 3.1 and MS-DOS software. The 12 CD-ROMs, encased in
plastic containers with Microsoft packaging, also contained Microsoft software.
11
At least
two of the CD-ROMs were "installers," so-called because they contain several software
(Microsoft only or both Microsoft and non-Microsoft).
12
Sacriz and Samiano were not given
the Microsoft end-user license agreements, users manuals, registration cards or
certificates of authenticity for the articles they purchased. The receipt issued to Sacriz and
Samiano for the CPU and monitor bore the heading "T.M.T.C. (PHILS.) INC. BELTRON
COMPUTER."
13
The receipt for the 12 CD-ROMs did not indicate its source although the
name "Gerlie" appears below the entry "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 Microsofts application
and issued two search warrants ("Search Warrant Nos. 95-684 and 95-685").
16
Using
Search Warrant Nos. 95-684 and 95-685, the NBI searched the premises of Beltron and
TMTC and seized several computer-related hardware, software, accessories, and
paraphernalia. Among these were 2,831 pieces of CD-ROMs containing Microsoft
software.
17

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

In their joint counter-affidavit, respondents Yvonne Keh ("respondent Keh") and Emily K.
Chua ("respondent Chua") denied the charges against respondents. Respondents Keh and
Chua alleged that: (1) Microsofts real intention in filing the complaint under I.S. No. 96-193
was to pressure Beltron to pay its alleged unpaid royalties, thus Microsoft should have filed
125

a collection suit instead of a criminal complaint; (2) TMTC bought the confiscated 59 boxes
of MS-DOS CDs from a Microsoft dealer in Singapore (R.R. Donnelly); (3) respondents are
not the "source" of the Microsoft Windows 3.1 software pre-installed in the CPU bought by
Sacriz and Samiano, but only of the MS-DOS software; (4) Microsofts alleged proof of
purchase (receipt) for the 12 CD-ROMs is inconclusive because the receipt does not
indicate its source; and (5) respondents Benito Keh, Jonathan K. Chua, Alfonso Chua,
Alberto Chua, Judy K. Chua Hwang, Sophia Ong, and Deanna Chua are stockholders of
Beltron and TMTC in name only and thus cannot be held criminally liable.
21

The other respondents did not file counter-affidavits.
Meanwhile, respondents moved to quash Search Warrant Nos. 95-684 and 95-685. The
RTC partially granted their motion in its Order of 16 April 1996. Microsoft sought
reconsideration but the RTC denied Microsofts motion in its Order of 19 July 1996.
Microsoft appealed to the Court of Appeals in CA-G.R. CV No. 54600. In its Decision of 29
November 2001, the Court of Appeals granted Microsofts appeal and set aside the RTC
Orders of 16 April 1996 and 19 July 1996. The Court of Appeals Decision became final on
27 December 2001.
The DOJ Resolutions
In the Resolution of 26 October 1999, DOJ State Prosecutor Jocelyn A. Ong ("State
Prosecutor Ong") recommended the dismissal of Microsofts complaint for lack of merit and
insufficiency of evidence. State Prosecutor Ong also recommended the dismissal of Lotus
Corporations complaint for lack of interest to prosecute and for insufficiency of evidence.
Assistant Chief State Prosecutor Lualhati R. Buenafe ("Assistant Chief State Prosecutor
Buenafe") approved State Prosecutor Ongs recommendations.
22
The 26 October 1999
Resolution reads in part:
[T]wo (2) issues have to be resolved in this case, namely:
a) Whether or not Beltron Computer and/or its stockholders should be held liable
for the offenses charged.
b) Whether or not prima facie case exist[s] against Taiwan Machinery Display and
Trade Center, Inc. (TMTC) for violation of the offense charged.
Complainant had alleged that from the time the license agreement was terminated,
respondent/s is/are no longer authorized to copy/distribute/sell Microsoft products.
However, respondent/s averred that the case is civil in nature, not criminal, considering
that the case stemmed only out of the desire of complainant to collect from them the
amount of US$135,121.32 and that the contract entered into by the parties cannot be
unilaterally terminated.
In the order of Honorable William Bayhon dated July 19, 1996 [denying reconsideration to
the Order partially quashing the search warrants], he observed the following:
126

"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.
127

Complainant, on the other hand, considering that it has the burden of proving that the
respondent/s is/are liable for the offense charged, has not presented any evidence that the
items seized namely the 59 boxes of MS-DOS 6.0 software are counterfeit.
The certification issued on December 12, 1995 by Christopher Austin, Corporate Attorney
of the complainant, does not disclose this fact. For the term used by Mr. Austin was that the
items seized were unauthorized.
The question now, is whether the products were unauthorized because TMTC has no
license to sell Microsoft products, or is it unauthorized because R.R. Donnelley has no
authority to sell said products here in the Philippines.
Still, to determine the culpability of the respondents, complainant should present evidence
that what is in the possession of the respondent/s is/are counterfeit Microsoft products.
This it failed to do.
23

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

Microsoft appealed to the Office of the DOJ Secretary. In the Resolution of 3 August 2000,
DOJ Undersecretary Regis V. Puno dismissed Microsofts appeal.
25
Microsoft sought
reconsideration but its motion was denied in the Resolution of 22 December 2000.
26

Hence, this petition. Microsoft contends that:
I. THE DOJ ERRED IN RULING THAT THE LIABILITY OF RESPONDENTS WAS ONLY CIVIL IN
NATURE BY VIRTUE OF THE LICENSE AGREEMENT.
II. THE DOJ MISAPPRECIATED THE FACT THAT RESPONDENTS WERE ENGAGED IN THE
ILLEGAL IMPORTATION, SALE AND DISTRIBUTION OF COUNTERFEIT SOFTWARE AS
EVIDENCED BY THE ITEMS PURCHASED DURING THE TEST-BUY AND THE ITEMS SEIZED
FROM RESPONDENTS PREMISES.
III. THE DOJ MISAPPRECIATED THE LAW ON COPYRIGHT INFRINGEMENT AND UNFAIR
COMPETITION.
IV. ONLY TWO OUT OF THE NINE RESPONDENTS BOTHERED TO FILE COUNTER-
AFFIDAVITS; HENCE, THE CHARGES AGAINST SEVEN [RESPONDENTS] REMAIN
UNCONTROVERTED.
27

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

128

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 corporation
29
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
129

a cause for the dismissal of the case and, in case of willful forum-shopping, for the
imposition of administrative sanctions.
Here, Microsoft correctly contends that it is not liable for forum-shopping. What Microsoft
appealed in CA-G.R. CV No. 54600 were the RTC Orders partially quashing Search Warrant
Nos. 95-684 and 95-685. In the present case, Microsoft is appealing from the DOJ
Resolutions dismissing its complaint against respondents for copyright infringement and
unfair competition. Thus, although the parties in CA-G.R. CV No. 54600 and this petition are
identical, the rights asserted and the reliefs prayed for are not such that the judgment in
CA-G.R. CV No. 54600 does not amount to res judicata in the present case. This renders
forum-shopping impossible here.
The DOJ Acted with Grave Abuse of Discretion
in not Finding Probable Cause to Charge Respondents with
Copyright Infringement and Unfair Competition
Generally, this Court is loath to interfere in the prosecutors discretion in determining
probable cause
36
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 5
39
of PD 49 ("Section 5") enumerates the rights vested exclusively on the copyright
owner. Contrary to the DOJs ruling, the gravamen of copyright infringement is not merely
the unauthorized "manufacturing" of intellectual works but rather the unauthorized
performance of any of the acts covered by Section 5. Hence, any person who performs any
of the acts under Section 5 without obtaining the copyright owners prior consent renders
himself civilly
40
and criminally
41
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
130

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 Microsofts termination of
the Agreement must first be resolved by the "proper court." On the other hand, the DOJ
ruled that Microsoft failed to present evidence proving that what were obtained from
respondents were counterfeit Microsoft products.
This is grave abuse of discretion.
47

First. Being the copyright and trademark owner of Microsoft software, Microsoft
acted well within its rights in filing the complaint under I.S. No. 96-193 based on the
131

incriminating evidence obtained from respondents. Hence, it was highly irregular
for the DOJ to hold, based on the RTC Order of 19 July 1996, that Microsoft sought
the issuance of Search Warrant Nos. 95-684 and 95-685, and by inference, the filing
of the complaint under I.S. No. 96-193, merely to pressure Beltron to pay its overdue
royalties to Microsoft. Significantly, in its Decision in CA-G.R. CV No. 54600 dated 29
November 2001, the Court of Appeals set aside the RTC Order of 19 July 1996.
Respondents no longer contested that ruling which became final on 27 December
2001.
Second. There is no basis for the DOJ to rule that Microsoft must await a prior
"resolution from the proper court of (sic) whether or not the [Agreement] is still
binding between the parties." Beltron has not filed any suit to question Microsofts
termination of the Agreement. Microsoft can neither be expected nor compelled to
wait until Beltron decides to sue before Microsoft can seek remedies for violation of
its intellectual property rights.
Furthermore, some of the counterfeit CD-ROMs bought from respondents were
"installer" CD-ROMs containing Microsoft software only or both Microsoft and non-
Microsoft software. These articles are counterfeit per sebecause Microsoft does not
(and could not have authorized anyone to) produce such CD-ROMs. The copying of
the genuine Microsoft software to produce these fake CD-ROMs and their
distribution are illegal even if the copier or distributor is a Microsoft licensee. As far
as these installer CD-ROMs are concerned, the Agreement (and the alleged question
on the validity of its termination) is immaterial to the determination of respondents
liability for copyright infringement and unfair competition.
Lastly, Section 10(b)
48
of the Agreement provides that Microsofts "rights and
remedies" under the contract are "not xxx exclusive and are in addition to any other
rights and remedies provided by law or [the] Agreement." Thus, even if the
Agreement still subsists, Microsoft is not precluded from seeking remedies under
PD 49 and Article 189(1) of the Revised Penal Code to vindicate its rights.
Third. The Court finds that the 12 CD-ROMs ("installer" and "non-installer") and the
CPU with pre-installed Microsoft software Sacriz and Samiano bought from
respondents and the 2,831 Microsoft CD-ROMs seized from respondents suffice to
support a finding of probable cause to indict respondents for copyright infringement
under Section 5(A) in relation to Section 29 of PD 49 for unauthorized copying and
selling of protected intellectual works. The installer CD-ROMs with Microsoft
software, to repeat, are counterfeit per se. On the other hand, the illegality of the
"non-installer" CD-ROMs purchased from respondents and of the Microsoft software
pre-installed in the CPU is shown by the absence of the standard features
accompanying authentic Microsoft products, namely, the Microsoft end-user license
agreements, users manuals, registration cards or certificates of authenticity.
On the 2,831 Microsoft CD-ROMs
49
seized from respondents, respondent Beltron, the only
respondent who was party to the Agreement, could not have reproduced them under the
132

Agreement as the Solicitor General
50
and respondents contend. Beltrons 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 MED
53
Product."
54
Being a mere reproducer/installer of one
Microsoft software copy on each customers hard disk or ROM, Beltron could only have
acquired the hundreds of Microsoft CD-ROMs found in respondents possession from
Microsoft distributors or replicators.
However, respondents makes no such claim. What respondents contend is that these CD-
ROMs were left to them for safekeeping. But neither is this claim tenable for lack of
substantiation. Indeed, respondents Keh and Chua, the only respondents who filed counter-
affidavits, did not make this claim in the DOJ. These circumstances give rise to the
reasonable inference that respondents mass-produced the CD-ROMs in question without
securing Microsofts prior authorization.
The counterfeit "non-installer" CD-ROMs Sacriz and Samiano bought from respondents also
suffice to support a finding of probable cause to indict respondents for unfair competition
under Article 189(1) of the Revised Penal Code for passing off Microsoft products. From the
pictures of the CD-ROMs packaging,
55
one cannot distinguish them from the packaging of
CD-ROMs containing genuine Microsoft software. Such replication, coupled with the
similarity of content of these fake CD-ROMs and the CD-ROMs with genuine Microsoft
software, implies intent to deceive.
Respondents contention that the 12 CD-ROMs Sacriz and Samiano purchased cannot be
traced to them because the receipt for these articles does not indicate its source is
unavailing. The receipt in question should be taken together with Microsofts claim that
Sacriz and Samiano bought the CD-ROMs from respondents.
56
Together, these
considerations point to respondents as the vendor of the counterfeit CD-ROMs.
Respondents do not give any reason why the Court should not give credence to Microsofts
claim. For the same reason, the fact that the receipt for the CPU does not indicate
"[s]oftware hard disk" does not mean that the CPU had no pre-installed Microsoft software.
Respondents Keh and Chua admit in their counter-affidavit that respondents are the
"source" of the pre-installed MS-DOS software.
133

WHEREFORE, we GRANT the petition. We SET ASIDE the Resolutions dated 26 October
1999, 3 December 1999, 3 August 2000, and 22 December 2000 of the Department of
Justice.
SO ORDERED.
Davide, Jr., C.J., (Chairman), Quisumbing, Ynares-Santiago, and Azcuna, JJ., concur.


Footnotes
1
Under Rule 65 of the 1997 Rules of Civil Procedure.
2
Dated 26 October 1999, 3 December 1999, 3 August 2000, and 22 December 2000.
3
Microsoft owns the copyright to, among others, the following software: Microsoft
Windows, Windows 95, Microsoft Excel, Microsoft Word, Microsoft Access,
Microsoft Works, Microsoft Powerpoint, Microsoft Office, Microsoft Flight Simulator,
and Microsoft FoxPro (Rollo, p. 20).
4
Individual respondents and respondent corporations are referred to as
"respondents."
5
Rollo, p. 81.
6
The Agreement provided the following obligations upon its termination (Ibid., pp.
72-73):
"11. OBLIGATIONS UPON TERMINATION
(a) Within ten (10) days after termination or expiration of this Agreement,
[BELTRON] shall return to [MICROSOFT] (i) all full or partial copies of each
Product including OEM Adaptation Kit(s) and OEM Distribution Kit(s) in
[BELTRONs] possession or under its control for which a royalty has not been
paid and (ii) all copies of the Product in source code form. [BELTRON] and
each [BELTRON] Subsidiary may, however, retain one copy of each Product
in object code form and one copy of the Product documentation to be used
solely for support purposes.
(b) From and after termination or expiration, [BELTRON] shall not use
internally nor employ any Product as part or portion of any product that
[BELTRON] may use, sell, assign, lease, license, or transfer to third parties.
[BELTRON] shall cease and desist from all use of any Product name(s) and
associated trademark(s) and, upon request, deliver to [MICROSOFT] or its
134

authorized representatives or destroy all material upon which the Product
name(s) and the associated trademarks appear.
(c) Termination of this Agreement as a result of [BELTRONs] default shall
result in acceleration of [BELTRONs] obligation to pay all sums [BELTRON]
contracted to pay under this Agreement, including all minimum commitment
payments as described in Exhibit B.
(d) End user licenses properly granted pursuant to this Agreement and prior
to termination of this Agreement shall not be diminished or abridged by
termination or expiration of this Agreement.
(e) Sections 5, 12, 13, 14, 15(a), 16, 17, 18(a), and 18(b) shall survive
termination or expiration of this Agreement." (Underlining in the original)
7
The law firm Quisumbing Torres.
8
Also spelled as "Benedict" (Rollo, p. 142).
9
Phardette Computer Shop.
10
The process of pre-installing software into the CPUs resident hard disk is also
called "hard-loading."
11
E.g. Microsoft Windows 95, Microsoft Publisher, Microsoft Encarta 95, MS-DOS
6.22, Microsoft Money, Microsoft Windows for Workgroups, and Microsoft Word
(Rollo, pp. 126, 128-129).
12
A CD-ROM containing Microsoft, Adobe Systems, Inc., and Corel Corporation
software and a four-in-one CD-ROM containing the Microsoft software MS-DOS 6.22,
Microsoft Money, and Microsoft Windows for Workgroups (Ibid., pp. 127, 129).
13
Ibid., p. 125.
14
Ibid., p. 131.
15
Presided by Judge William M. Bayhon.
16
Rollo, pp. 135-140.
17
The following were seized from respondents (Ibid., pp. 141, 243):
1. MS-DOS 6.2 (Manual) @ 20 pcs. per box - - - - - - 59 boxes
2. Compact Disc - - - - - - 2,831 pcs.
135

3. Tray - - - - - - 251 pcs.
4. J Case - - - - - - 700 pcs.
5. Label - - - - - - 188 pcs.
6. CD File - - - - - - 1 folder
7. Credit Memo File - - - - - - 1 folder
8. Delivery Receipt - - - - - 11 booklets
9. Monitor SN # IV1502733 - - - - - - 1 unit
10. Keyboard - - - - - - 1 unit
11. Central Processing Unit (CPU) - - - - - - 1 unit
12. Monitor (Dynamic, Leslie G. & Robert-Small - - - - - - 3 units
13. Central Processing Units (MGB, SM, EWC, STI, J. Estrella[,]
System & Data, Leslie G., Benjamin SY, Octagon, Mega) - - - - - 20 units
14. Printer KX P1540 SN# 9KMANEO2931 - - - - - - 1 pc.
15. Monitor 14" SVGA, 15" UVGA (Beltron) - - - - - 2 units
16. CPU 386 DX40 Desk Top, 386DX40-4MB (Slim case) - - - - - 2 units
17. Mouse - - - - - 1 pc.
18. Computer Notebook - - - - - 7 pcs.
19. Central Processing Unit w/ Multi Media - - - - - 12 pcs.
20. Compaq Notebook - - - - - 1 pc.
Microsoft also alleges that a "credit memo" (Ibid., p. 132) and a delivery
receipt (Ibid., p. 133) of a Microsoft software (Windows 95) for third persons
were also seized from respondents (Ibid., p. 28).
18
The Decree on Intellectual Property. PD 49 was repealed by Republic Act No. 8293
("RA 8293") or the Intellectual Property Code of the Philippines which took effect on
1 January 1998.
136

19
Repealed by RA 8293.
20
Rollo, pp. 48-60.
21
Ibid., pp. 201-203. Lotus Corporation later desisted from pursuing its complaint
against respondents (Ibid., p. 143).
22
Ibid., pp. 142-152.
23
Ibid., pp. 149-151.
24
Ibid., pp. 160-161.
25
Ibid., pp. 180-181.
26
Ibid., pp. 199-200.
27
Ibid., pp. 30-31.
28
Ibid., pp. 292-305.
29
FUS Plastic Machinery Works Co., Ltd.
30
Rollo, pp. 223-237.
31
Ibid., pp. 310-325.
32
Casupanan v. Laroya, 436 Phil. 582 (2002).
33
Spouses Melo v. Court of Appeals, 376 Phil. 204 (1999).
34
Buan v. Lopez, Jr., G.R. No. L-75349, 13 October 1986, 145 SCRA 34 citing E. Razon,
Inc. et al. v.Philippine Port Authority, et al., Minute Resolution, G.R. No. 75197, 31
July 1986.
35
Rule 7, Section 5 provides: "Certification against forum shopping. The plaintiff
or principal party shall certify under oath in the complaint or other initiatory
pleading asserting a claim for relief, or in a sworn certification annexed thereto and
simultaneously filed therewith: (a) that he has not theretofore commenced any
action or filed any claim involving the same issues in any court, tribunal or quasi-
judicial agency and, to the best of his knowledge, no such other action or claim is
pending therein; (b) if there is such other pending action or claim, a complete
statement of the present status thereof; and (c) if he should thereafter learn that the
same or similar action or claim has been filed or is pending, he shall report that fact
within five (5) days therefrom to the court wherein his aforesaid complaint or
initiatory pleading has been filed.
137

Failure to comply with the foregoing requirements shall not be curable by
mere amendment of the complaint or other initiatory pleading but shall be
cause for the dismissal of the case without prejudice, unless otherwise
provided, upon motion and after hearing. The submission of a false
certification or non-compliance with any of the undertakings therein shall
constitute indirect contempt of court, without prejudice to the corresponding
administrative and criminal actions. If the acts of the party or his counsel
clearly constitute willful and deliberate forum shopping, the same shall be
ground for summary dismissal with prejudice and shall constitute direct
contempt, as well as a cause for administrative sanctions."
36
See Acua v. Deputy Ombudsman for Luzon, G.R. No. 144692, 31 January
2005; Camanag v. Guerrero, G.R. No. 121017, 17 February 1997, 268 SCRA 473.
37
See Filadams Pharma, Inc. v. Court of Appeals, G.R. No. 132422, 30 March 2004,
426 SCRA 460. See also Dr. Baylon v. Ombudsman, 423 Phil. 705 (2001).
38
G.R. No. 101978, 7 April 1993, 221 SCRA 349 (internal citations omitted).
39
This provision states: "Copyright shall consist in the exclusive right[:]
(A) To print, reprint, publish, copy, distribute, multiply, sell, and make
photographs, photo-engravings, and pictorial illustrations of the works;
(B) To make any translation or other version or extracts or arrangements or
adaptations thereof; to dramatize it if it be a non-dramatic work; to convert it
into a non-dramatic work if it be a drama; to complete or execute it if it be a
model or design;
(C) To exhibit, perform, represent, produce, or reproduce the work in any
manner or by any method whatever for profit or otherwise; if not
reproduced in copies for sale, to sell any manuscripts or any records
whatsoever thereof;
(D) To make any other use or disposition of the work consistent with the
laws of the land." This has been superseded by Section 177 of RA 8293.
(Emphasis supplied)
40
Under Section 28, PD 49, now superseded by Section 216 of RA 8293.
41
Section 29, PD 49 provides: "Any person infringing any copyright secured by this
Decree or aiding or abetting such infringement shall be deemed guilty of a crime
punishable by imprisonment not exceeding one year or by fine not less than Two
Hundred Pesos nor more than Two Thousand Pesos or both, in the discretion of the
court." This has been superseded by Section 217 of RA 8293.
138

42
329 Phil. 875 (1996). Reported as Columbia Pictures, Inc. v. CA.
43
This provision states: "Unfair competition, fraudulent registration of trade-name,
trade-mark, or service mark, fraudulent designation of origin, and false description.
The penalty provided in the next preceding article shall be imposed upon:
1. Any person who, in unfair competition and for the purpose of deceiving or
defrauding another of his legitimate trade or the public in general, shall sell
his goods giving them the general appearance of the goods of another
manufacturer or dealer, either as to the goods themselves, or in the wrapping
of the packages in which they are contained, or the device or words thereon,
or in any other feature of their appearance which would be likely to induce
the public to believe that the goods offered are those of a manufacturer or
dealer other than the actual manufacturer or dealer, or shall give other
persons a chance or opportunity to do the same with a like purpose. xxxx"
44
L. Reyes, The Revised Penal Code, vol. II, p. 282 (15th ed.).
45
See Rueda Hermanos & Co. v. Feliz Paglinawan & Co., 33 Phil. 196 (1916); L.
Reyes, supra note 44, p. 283.
46
Regarding the confiscated 59 boxes of MS-DOS CDs, Microsoft, in this petition, no
longer contests the DOJs findings that TMTC bought these MS-DOS CDs from a
Microsoft dealer in Singapore.
47
Grave abuse of discretion is committed "where power is exercised in an arbitrary
or despotic manner xxx as to amount to evasion of positive duty or virtual refusal to
perform a duty xxxx" (Garcia-Rueda v. Pascasio, 344 Phil. 323 [1997] citing Comm.
of Internal Revenue v. CA, 327 Phil. 1 [1996]).
48
"10. DEFAULT AND TERMINATION
xxxx
(b) Termination due to a breach of Sections 6, 13, 14(b) or (if applicable) S1
shall be effective upon notice. In all other cases termination shall be effective
thirty (30) days after notice of termination to the defaulting party if the
defaults have not been cured within such thirty (30) day period. The rights
and remedies of the parties provided herein shall not be exclusive and are in
addition to any other rights and remedies provided by law or this Agreement."
(Underlining in the original; italicization supplied) (Rollo, p. 72).
49
Microsoft contends that these CD-ROMs are all "installers" (Rollo, p. 26). For lack
of corroborative evidence on record, the Court refrains from passing upon this
question without prejudice to Microsofts presentation of relevant evidence during
the trial.
139

50
Ibid., pp. 299-300.
51
Microsoft contends, for the first time in this appeal, that the Agreement
authorized Beltron to copy only one Microsoft software, i.e., "Microsoft MS-DOS 6.0"
(Ibid., p. 33). However, the terms of the Agreement do not bear out this contention.
52
Agreement, Section 1(i) (Rollo, p. 66).
53
A MED is a Microsoft product in "Easy Distribution Package" form available for
purchase from an authorized distributor (Agreement, Section 1(e), ibid.).
54
Agreement, Section 1(j) (Ibid.).
55
Rollo, pp. 126, 128, 130.
56
Ibid., pp. 25-26.


140

Topic: Infringement
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION

G.R. No. 131522 July 19, 1999
PACITA I. HABANA, ALICIA L. CINCO and JOVITA N. FERNANDO, petitioners,
vs.
FELICIDAD C. ROBLES and GOODWILL TRADING CO., INC., respondents.

PARDO, J.:
The case before us is a petition for review on certiorari
1
to set aside the (a) decision or the
Court of Appeals
2
, and (b) the resolution denying petitioners' motion for
reconsideration,
3
in which the appellate court affirmed the trial court's dismissal of the
complaint for infringement and/or unfair competition and damages but deleted the award
for attorney's fees.1wphi1.nt
The facts are as follows:
Petitioners are authors and copyright owners of duly issued certificates of copyright
registration covering their published works, produced through their combined resources
and efforts, entitled COLLEGE ENGLISH FOR TODAY (CET for brevity), Books 1 and 2, and
WORKBOOK FOR COLLEGE FRESHMAN ENGLISH, Series 1.
Respondent Felicidad Robles and Goodwill Trading Co., Inc. are the author/publisher and
distributor/seller of another published work entitled "DEVELOPING ENGLISH
PROFICIENCY" (DEP for brevity), Books 1 and 2 (1985 edition) which book was covered by
copyrights issued to them.
In the course of revising their published works, petitioners scouted and looked around
various bookstores to check on other textbooks dealing with the same subject matter. By
chance they came upon the book of respondent Robles and upon perusal of said book they
were surprised to see that the book was strikingly similar to the contents, scheme of
presentation, illustrations and illustrative examples in their own book, CET.
141

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
142

between Goodwill and the respondent Robles that Robles guaranteed Goodwill that the
materials utilized in the manuscript were her own or that she had secured the necessary
permission from contributors and sources; that the author assumed sole responsibility and
held the publisher without any liability.
On November 28, 1988, respondent Robles filed her answer
8
, and denied the allegations of
plagiarism and copying that petitioners claimed. Respondent stressed that (1) the book
DEP is the product of her independent researches, studies and experiences, and was not a
copy of any existing valid copyrighted book; (2) DEP followed the scope and sequence or
syllabus which are common to all English grammar writers as recommended by the
Association of Philippine Colleges of Arts and Sciences (APCAS), so any similarity between
the respondents book and that of the petitioners was due to the orientation of the authors
to both works and standards and syllabus; and (3) the similarities may be due to the
authors' exercise of the "right to fair use of copyrigthed materials, as guides."
Respondent interposed a counterclaim for damages on the ground that bad faith and malice
attended the filing of the complaint, because petitioner Habana was professionally jealous
and the book DEP replaced CET as the official textbook of the graduate studies department
of the Far Eastern University.
9

During the pre-trial conference, the parties agreed to a stipulation of
facts
10
and for the trial court to first resolve the issue of infringement before disposing of
the claim for damages.
After the trial on the merits, on April 23, 1993, the trial court rendered its judgment finding
thus:
WHEREFORE, premises considered, the court hereby orders that the
complaint filed against defendants Felicidad Robles and Goodwill Trading
Co., Inc. shall be DISMISSED; that said plaintiffs solidarily reimburse
defendant Robles for P20,000.00 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
S. C. Adm. Order No. 124-92
11

On May 14, 1993, petitioners filed their notice of appeal with the trial court
12
, and on July
19, 1993, the court directed its branch clerk of court to forward all the records of the case
to the Court of Appeals.
13

143

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.
On July 12, 1997, petitioners filed a motion for reconsideration,
16
however, the Court of
Appeals denied the same in a Resolution
17
dated November 25, 1997.
Hence, this petition.
In this appeal, petitioners submit that the appellate court erred in affirming the trial 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
144

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
177.7 Other communication to the public of the work
19

The law also provided for the limitations on copyright, thus:
Sec. 184.1 Limitations on copyright. Notwithstanding the provisions of
Chapter V, the following acts shall not constitute infringement of copyright:
(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]
145

(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
146

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
147

(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.
148

Hence, there is a clear case of appropriation of copyrighted work for her benefit that
respondent Robles committed. Petitioners' work as authors is the product of their long and
assiduous research and for another to represent it as her own is injury enough. In
copyrighting books the purpose is to give protection to the intellectual product of an
author. This is precisely what the law on copyright protected, under Section 184.1 (b).
Quotations from a published work if they are compatible with fair use and only to the
extent justified by the purpose, including quotations from newspaper articles and
periodicals in the form of press summaries are allowed provided that the source and the
name of the author, if appearing on the work, are mentioned.
In the case at bar, the least that respondent Robles could have done was to acknowledge
petitioners Habana et. al. as the source of the portions of DEP. The final product of an
author's toil is her book. To allow another to copy the book without appropriate
acknowledgment is injury enough.
WHEREFORE, the petition is hereby GRANTED. The decision and resolution of the Court of
Appeals in CA-G. R. CV No. 44053 are SET ASIDE. The case is ordered remanded to the trial
court for further proceedings to receive evidence of the parties to ascertain the damages
caused and sustained by petitioners and to render decision in accordance with the
evidence submitted to it.
SO ORDERED.
Kapunan and Ynares-Santiago, JJ., concur.
Davide, Jr., C.J., I dissent, please see dissenting opinion.
Melo, J., no part, personal reason.



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.
149

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
150

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

Noting that the law applicable to the case was Presidential Decree No. 49,
4
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

151

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 bycertiorari 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;
152

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.
153

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:
154

Q Let's clarify your position Dra. Habana. When defendants test
(sic) showed 10 words similar to 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 refused to admit
that it was copied from Wills.
A Yes, sir. We have never all 35 words were copied from
there.
Q But what I am asking how could you conclude that by just
similarity of 10 words of defendants words 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?
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.
Q So, she did not copy it from yours?
A Alright, maybe she did not copy it but definitely it is a pattern
of plagerism [sic].
27

3. Similarity in orientation and style can likewise be attributed to the exposure of the
authors to the APCAS syllabus and their respective academic experience, teaching
approaches and 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 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 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 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 well
avoid resorting to common sources of information and materials and employing similar
expressions and terms peculiar to the subject they are treating.
29

To illustrate, an excerpt from page 21 of CET reads:
Author Card
The author card is the main entry card. It contains
155

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;
2. the title of the book, and the subtitle, if there is one;
3. the edition, if it is not the first;
4. the translator or illustrator, if there is any;
5. the imprint which includes the publisher, the place and date
of publication;
6. the collation composed of the number of pages, volume,
illustrations, and the size of the book;
7. the subjects with which the book deals [sic];
8. the call number on the upper left-hand corner.
Names beginning with Mc, or M are filed in the card catalog as though spelled
out as MAC, for example Mc Graw MacGraw. The same is true of St. and
Saint.
While a portion of DEP found on page 18 which discusses the author card provides:
The author card is the main entry card containing:
1. the author's complete name on the first line, surname first,
which may be followed by the date of his birth and death if he
is no longer living;
2. the title of the book, and the subtitle if there is one;
3. the edition, if it is not the first;
4. the translator or illustrator, if any;
5. the imprint which includes the publisher, the place and date
of publication;
6. the collation, composed of the number of pages, volume,
illustrations, and the size of the book;
7. the subject with which the book deals; and
156

8. the call number on the upper-left hand corner.
Names beginning with MC, or M are filed in the card catalog considered
spelled out as MAC, for example: Mcleod-Macleod. This is true also of St. and
Saint.
The entries found in an author card, having been developed over quite sometime, are
expectedly uniform. Hence, HABANA et al. and ROBLES would have no choice but to
articulate the terms particular to the entries in an identical manner.
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 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 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.
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 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 Kastila-Tagalog published by defendant, in violation of Article 7 of the Law of
10 January 1879 on Intellectual Property. This Court anchored its decision on the following
observations:
(1) [O] the 23,560 Spanish words in the defendant's
dictionary . . . only 3,108 words are the defendant's own, or, what is the same
thing, the 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

157

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.1wphi1.nt
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 determine whether it has been carried to an "unfair,"
that is, illegal, extent.
40
Consequently, there is no reason to address the issue of whether
ROBLES abused a writer's right to fair use with the ascertainment that DEP was not a copy
or a substantial copy of CET.
WHEREFORE, I vote to DENY the petition and to AFFIRM the challenged decision of 27 June
1997 of the Court of Appeals.
Separate Opinions
DAVIDE, JR., C.J., dissenting opinion:
I am unable to join the majority view.
158

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
159

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

Noting that the law applicable to the case was Presidential Decree No. 49,
4
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
160

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 bycertiorari 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;
161

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
162

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

163

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 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 refused to admit
that it was copied from Wills.
A Yes, sir. We have never all 35 words were copied from
there.
Q But what I am asking how could you conclude that by just
similarity of 10 words of defendants words 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?
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.
Q So, she did not copy it from yours?
A Alright, maybe she did not copy it but definitely it is a pattern
of plagerism [sic].
27

3. Similarity in orientation and style can likewise be attributed to the exposure of the
authors to the APCAS syllabus and their respective academic experience, teaching
approaches and 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 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 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 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 well
avoid resorting to common sources of information and materials and employing similar
expressions and terms peculiar to the subject they are treating.
29

To illustrate, an excerpt from page 21 of CET reads:
164

Author Card
The author card is the main entry card. It contains
1. the author's complete name on the first line, surname first,
which may be followed by the date of his birth and death if he
is no longer living;
2. the title of the book, and the subtitle, if there is one;
3. the edition, if it is not the first;
4. the translator or illustrator, if there is any;
5. the imprint which includes the publisher, the place and date
of publication;
6. the collation composed of the number of pages, volume,
illustrations, and the size of the book;
7. the subjects with which the book deals [sic];
8. the call number on the upper left-hand corner.
Names beginning with Mc, or M are filed in the card catalog as though spelled
out as MAC, for example Mc Graw MacGraw. The same is true of St. and
Saint.
While a portion of DEP found on page 18 which discusses the author card provides:
The author card is the main entry card containing:
1. the author's complete name on the first line, surname first,
which may be followed by the date of his birth and death if he
is no longer living;
2. the title of the book, and the subtitle if there is one;
3. the edition, if it is not the first;
4. the translator or illustrator, if any;
5. the imprint which includes the publisher, the place and date
of publication;
165

6. the collation, composed of the number of pages, volume,
illustrations, and the size of the book;
7. the subject with which the book deals; and
8. the call number on the upper-left hand corner.
Names beginning with MC, or M are filed in the card catalog considered
spelled out as MAC, for example: Mcleod-Macleod. This is true also of St. and
Saint.
The entries found in an author card, having been developed over quite sometime, are
expectedly uniform. Hence, HABANA et al. and ROBLES would have no choice but to
articulate the terms particular to the entries in an identical manner.
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 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 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.
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 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 Kastila-Tagalog published by defendant, in violation of Article 7 of the Law of
10 January 1879 on Intellectual Property. This Court anchored its decision on the following
observations:
(1) [O] the 23,560 Spanish words in the defendant's
dictionary . . . only 3,108 words are the defendant's own, or, what is the same
thing, the 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
166

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.
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 determine whether it has been carried to an "unfair,"
that is, illegal, extent.
40
Consequently, there is no reason to address the issue of whether
ROBLES abused a writer's right to fair use with the ascertainment that DEP was not a copy
or a substantial copy of CET.1wphi1.nt
WHEREFORE, I vote to DENY the petition and to AFFIRM the challenged decision of 27 June
1997 of the Court of Appeals.
Footnotes
167

1 Rule 45, 1997 Rules of Civil Procedure.
2 In CA-G. R. CV No. 44053, promulgated on June 27, 1997, J. Tuquero, ponente, JJ.
Luna and Hofilena, concurring,Rollo, pp. 28-35.
3 Rollo, p. 43.
4 Original Record Vol. I, Complaint, pp. 1-7.
5 Docketed as Civil Case No. 88-1317 and assigned to Branch 36.
6 Original Record Vol. I, Motion for Bill of Particulars, pp. 30-31.
7 Ibid, Answer, pp. 33-39.
8 Original Record, Vol. I, Answer, pp. 134-139.
9 Ibid., pp. 137-138.
10 Ibid., pp. 205-206.
11 Original Record, Vol. I, Judgment, pp. 415-435.
12 Ibid., Notice of Appeal, p. 436.
13 Docketed as CA-G.R. CV No. 44053.
14 CA Rollo, Brief for Plaintiffs-Appellants Pacita I. Habana, Alicia L. Cinco and Pacita
N. Fernando, pp. 41-90, 47, 48, 49.
15 Decision, by Justice Artemio G. Tuquero, ponente, concurred in by J. Artemon D.
Luna and J. Hector L. Hofilena, CA Rollo, p. 6.
16 CA Rollo, pp. 198-203.
17 Ibid., p. 236.
18 Rollo, Petition, p. 10.
19 Intellectual Property Code of the Philippines (Republic Act No. 8293), p. 51.
20 Intellectual Property Code of the Philippines, Republic Act No. 8293, pp. 55-56.
21 Sec. 172, Intellectual Property Code of the Philippines.
22 Volume I, Original Record, Exh. S-1, p. 211.
168

23 Ibid., Exh. S-2, p. 215.
24 Volume 1, Original Record, Annex "Z", p. 89.
25 Ibid, Annex "V" p. 111.
26 Page 24 of CET as to examples 2, 9, 11, and 14 also found on p. 33 of DEP;
similarity in technique and presentation on page 15 of CET and page 27 of DEP; on
page 18, 20 and 21 of CET and page 29 of DEP; on page 74 of CET and page 86 of
DEP, Original Record, Volume 1, Exhibits pp. 73, 91, 93, 96 and 97.
27 18 Am Jur 2D 104 citing Mazer v. Stein, 347 US 218, 98 L ed 630, 74 S Ct 460, reh
den 347 US 949, 98 L ed 1096, 74 S Ct 637 [1953].
28 Columbia Pictures Inc. vs. Court of Appeals, 261 SCRA 144, 184, citing 18 CJS,
Copyright and Literary Property, Sec 94, 217, 218.
29 18 CJS, Copyright and Literary Property, Sec. 90, 212; 18 Am Jur 2D, Copyright
and Literary Property, Sec. 106, 391-392.
30 Ibid.
DAVIDE, JR., C.J., dissenting opinion;
1 Original Record (OR), 10-12. The certificates of copyright registration for the three
books were dated 3 August 1976, 13 October 1977 and 17 July 1973, respectively.
2 OR, 205-206.
3 OR, 415-435. The decision was rendered by Marvie R. Abraham Singson, Assisting
Judge per S.C. Adm. Order No. 124-92.
4 Entitled Decree on the Protection of Intellectual Property, promulgated on 14
November 1972.
5 Per Associate Justice Artemio Tuquero, J.; with Artemon D. Luna and Hector L.
Hofilena, JJ., concurring.
6 Sec. 11. To an extend (sic) compatible with fair practice and justified by the
scientific, critical, informatory or educational purpose, it shall be permissible to
make quotations or excerpts from a work already lawfully made accessible to the
public. Such quotations may be utilized in their original form or in translation.
News items, editorials, and articles on current political, social, economic, scientific
or religious topic may be reproduced by the press or broadcast, unless they contain
169

or are accompanied by a notice that their reproduction or publication is reserved. In
case of musical works, parts of little extent may also be reproduced.
Quotations and excerpts as well as reproductions shall always be accompanied by
an acknowledgment of the source and name of author, if his name appears thereon.
7 44 Phil 855 [1918].
8 Entitled An Act Prescribing the Intellectual Property Code and Establishing the
Intellectual Property Office, Providing for its Powers and Functions, and For Other
Purposes.
9 18 C.J.S. Copyright and Literary Property 1 (hereafter 18 C.J.S.).
10 Similar rights were granted under P.D. No. 49, thus:
Sec. 5. Copyright shall consist in the exclusive right:
(A) To print, reprint, publish, copy, distribute, multiply, sell and make
photographs, photo-engravings, and pictorial illustrations of the
works;
(B) To make any translation or other version or extracts or
arrangements or adaptations thereof; to dramatize it if it be a non-
dramatic work; to convert it into a non-dramatic work if it be a drama;
to complete or execute it if it be a model or design;
(C) To exhibit, perform, represent, produce, or reproduce the work in
any manner or by any method whatever for profit or otherwise; if not
reproduced in copies for sale, to sell any manuscript or any record
whatsoever thereof;
(D) To make any other use or disposition of the work consistent with
the laws of the land.
11 Sec. 172. Literary and Artistic Works. 172.1 Literary and artistic works,
hereinafter referred to as "works," are original intellectual creations in the literary
and artistic domain protected from the moment of their creation and shall include in
particular:
(a) Books, pamphlets, articles and other writings;
(b) Periodicals and newspapers;
(c) Lectures, sermons, addresses, dissertations prepared for oral
delivery, whether or not reduced in writing or other material form;
170

(d) Letters;
(e) Dramatic or dramatico-musical compositions; choreographic
works or entertainment in dumb shows;
(d) Musical compositions, with or without words;
(g) Works of drawing, painting, architecture, sculpture, engraving,
lithography or other works of art; models or designs for works of art;
(h) Original ornamental designs or models for articles of manufacture,
whether or not registrable as an industrial design, and other works of
applied art;
(i) Illustrations, maps, plans, sketches, charts and three-dimensional
works relative to geography, topography, architecture or science;
(j) Drawings or plastic works of a scientific or technical character;
(k) Photographic works including works produced by a process
analogous to photography; lantern slides;
(l) Audiovisual works and cinematographic works and works
produced by a process analogous to cinematography or any process
for making audio-visual recordings;
(m) Pictorial illustrations and advertisements;
(n) Computer programs; and
(o) Other literary, scholarly, scientific and artistic works.
12 The use of intellectual property bears a social function. To this end, the State
shall promote the diffusion of knowledge and information for the promotion of
national development and progress and the common good. (Section 2 of RA 8293)
Further, the social interest in copyright lies in the adjustment of two objectives: the
encouraging of individuals to intellectual labor by assuring them of just rewards,
and by securing to society of the largest benefits of their products. The history of the
concept reflects our progress in the mechanical communications, our ideas of
property and the functions of the state, and our changing social ethics. 2 ARTURO M.
TOLENTINO, THE CIVIL CODE OF THE PHILIPPINES 517 [1992].
13 Supra note 7 at 864-865.
171

14 See Columbia Pictures, Inc. v. Court of Appeals, 261 SCRA 144, 183-184
[1996] citing 18 C.J.S. 90; 18 AM JUR 2D, Copyright and Literary Property, 106
(hereinafter 18 AM JUR 2D).
15 See 18 AM JUR 2D 101 citing Weitzenkorn v. Lesser, 40 Cal 2d 778, 256 P2d 947
[1953]. The test of originality is not whether the work was entirely new, but
whether it was the result of independent effort or copying. 18 AM JUR 2D
101 citing Sheldon v. Metro-Goldwyn Pictures Corp., (CA2 NY) 81 F2d 49, cert den
298 US 669, 80 L ed 1392, 56 S Ct 835 [1936]; Golding v. R.K.O. Pictures, Inc., 35 Cal
2d 690, 221 P2d 95 [1950].
16 18 AM JUR 2D, 104 citing Mazer v. Stein, 347 US 218, 98 L ed 630, 74 S Ct 460,
reh den 347 US 949, 98 L ed 1096, 74 S Ct 637 [1953].
17 See Dorsey v. Old Surety L. Ins. Co., (CAIO) 98 F2d 872 [1938].
18 Abiva v. Weinberger (C.A.), 62 OG 3784, 3787 [1964] citing 34 CJ.S. 34 and 17
U.S.C.A. 101; Lewis v. Kroger Co., 109 F. Supp. 484 [1952].
19 Exhibits "I" to "I-25" or Annexes "A" to "AA" of the Bill of Particulars.
20 Exhibits "J" to "J-21" or Annexes "BB to WW" of the Bill of Particulars.
21 See 18 AM JUR 2D 108 citing Universal Pictures Co. v. Harold Lloyd Corp., (CA9
Cal) 162 F2d 354 [1947]; Toksvig v. Bruce Pub. Co., (CA7 Wis) 181 F2d 664 [1950];
Sheldon v. Metro-Goldwyn Pictures Corp., supra note 18.
22 Id., citing Twentieth Century-Fox Film Corp. v. Stonesifer, (CA9 Cal) 140 F2d 579
[1944].
23 Similarity of the alleged infringing work to the author's or proprietor's
copyrighted work does not of itself establish copyright infringement, if the similarity
results from the fact that both works deal with the same subject or have the same
common source. 18 AM JUR 2D 107 citing Dorsey v. Old Surety L. Ins.
Co., supra note 20.
24 Per testimony of Dr. Pacita Habana on the system of library classification, TSN,
11 July 1989, 44-45; on the kinds of card catalogue and their entries, TSN, 11 July
1989, 56-58; on different parts of books and their definitions, 59; uses of paragraph;
uses of punctuations 75-76; use of phonemes, graphemes and morphemes, 78. Per
testimony of Felicidad Robles TSN, 31 August 1989, 10-22.
25 Sec. 175 of RA 8293.
26 See note 26; See Court of Appeals' decision, 6.
172

27 TSN, 1 August 1989, 24-26.
28 TSN, 29 June 1989, 26 Dr. Pacita Habana entered FEU as faculty member in
1957 and left the same in 1974; TSN, 28 August 1989, 3 FELICIDAD became a
faculty member of FEU in 1964 up to time the testimony was taken.
29 See Simms v. Stanton, C.C. Cal 75 F. 6 [1896].
30 See Gobonseng, Jr. v. Court of Appeals, 246 SCRA 457, 468 [1996].
31 Supra note 10 at 860.
32 TSN, 1 August 1989, 29.
33 Rollo, 159; TSN, 28 August 1989, 23-24.
34 See 18 AM JUR 2D 104 citing Orgel v. Clark Boardman Co., (CA 2 NY) 301 F2d
119, cert den 371 US 817, 9 L ed 2d 58, 83 S Ct 31 [1962]; Eisenschiml v. Fawcett
Publications, Inc., (CA7 III) 246 F2d 598, cert den 355 US 907, 2 L ed 262, 78 S Ct
334 [1957]; Toksvig v. Bruce Publishing Co., supra note 24.
35 One of the most significant evidences of infringement exists in the presence, in an
alleged infringing work, of the same errors and peculiarities that are to be found in
the work said to be infringed. See 18 AM JUR 2D 107 citingCallaghan v. Myers, 128
US 617, 32 L ed 547, 9 S Ct 177 [1888]; W.H. Anderson Co. v. Baldwin Law Pub. Co.,
(CA6 Ohio) 27 F2d 82 [1928]; Jeweler's Circular Pub. Co. v. Keystone Pub. Co., (CA2)
281 F 83, 26 ALR 571, cert den 259 US 581, 66 L ed 1074, 42 S Ct 464 [1922].
36 See Section 185 of RA 8293.
37 See Sections 184 & 184.1 of RA 8293.
38 See 18 AM JUR 2D 109 citing Toksvig v. Bruce Pub. Co., supra note 24; Bradbury
v. Columbia Broadcasting System, Inc., (CA9 Cal) 287 F2d 478, cert den 368 US 801,
7 L ed 2d 15, 82 S Ct 19 [1961]; Shipman v. R.K.O. Radio Pictures, Inc., (CA2 NY) 100
F2d 533 [1938].
39 Supra note 19.
40 18 C.J.S. 94-94b.

173

Topic: Infringement
Republic of the Philippines
SUPREME COURT
Manila
EN BANC

G.R. No. 110318 August 28, 1996
COLUMBIA PICTURES, INC., ORION PICTURES CORPORATION, PARAMOUNT PICTURES
CORPORATION, TWENTIETH CENTURY FOX FILM CORPORATION, UNITED ARTISTS
CORPORATION, UNIVERSAL CITY STUDIOS, INC., THE WALT DISNEY COMPANY, and
WARNER BROTHERS, INC.,petitioners,
vs.
COURT OF APPEALS, SUNSHINE HOME VIDEO, INC. and DANILO A.
PELINDARIO, respondents.

REGALADO, J.:p
Before us is a petition for review on certiorari of the decision of the Court of
Appeals
1
promulgated on July 22, 1992 and its resolution
2
of May 10, 1993 denying
petitioners' motion for reconsideration, both of which sustained the order
3
of the
Regional Trial Court, Branch 133, Makati, Metro Manila, dated November 22, 1988
for the quashal of Search Warrant No. 87-053 earlier issued per its own order
4
on
September 5, 1988 for violation of Section 56 of Presidential Decree No. 49, as
amended, otherwise known as the "Decree on the Protection of Intellectual
Property."
The material facts found by respondent appellate court are as follows:
Complainants thru counsel lodged a formal complaint with the National
Bureau of Investigation for violation of PD No. 49, as amended, and sought its
assistance in their anti-film piracy drive. Agents of the NBI and private
researchers made discreet surveillance on various video establishments in
Metro Manila including Sunshine Home Video Inc. (Sunshine for brevity),
owned and operated by Danilo A. Pelindario with address at No. 6 Mayfair
Center, Magallanes, Makati, Metro Manila.
On November 14, 1987, NBI Senior Agent Lauro C. Reyes applied for a search
warrant with the court a quoagainst Sunshine seeking the seizure, among
others, of pirated video tapes of copyrighted films all of which were
174

enumerated in a list attached to the application; and, television sets, video
cassettes and/or laser disc recordings equipment and other machines and
paraphernalia used or intended to be used in the unlawful exhibition,
showing, reproduction, sale, lease or disposition of videograms tapes in the
premises above described. In the hearing of the application, NBI Senior Agent
Lauro C. Reyes, upon questions by the court a quo, reiterated in substance his
averments in his affidavit. His testimony was corroborated by another
witness, Mr. Rene C. Baltazar. Atty. Rico V. Domingo's deposition was also
taken. On the basis of the affidavits and depositions of NBI Senior Agent
Lauro C. Reyes, Rene C. Baltazar and Atty. Rico V. Domingo, Search Warrant
No. 87-053 for violation of Section 56 of PD No. 49, as amended, was issued
by the court a quo.
The search warrant was served at about 1:45 p.m. on December 14, 1987 to
Sunshine and/or their representatives. In the course of the search of the
premises indicated in the search warrant, the NBI Agents found and seized
various video tapes of duly copyrighted motion pictures/films owned or
exclusively distributed by private complainants, and machines, equipment,
television sets, paraphernalia, materials, accessories all of which were
included in the receipt for properties accomplished by the raiding team. Copy
of the receipt was furnished and/or tendered to Mr. Danilo A. Pelindario,
registered owner-proprietor of Sunshine Home Video.
On December 16, 1987, a "Return of Search Warrant" was filed with the
Court.
A "Motion To Lift the Order of Search Warrant" was filed but was later denied
for lack of merit (p. 280, Records).
A Motion for reconsideration of the Order of denial was filed. The court a
quo granted the said motion for reconsideration and justified it in this
manner:
It is undisputed that the master tapes of the copyrighted films
from which the pirated films were allegedly copies (sic), were
never presented in the proceedings for the issuance of the
search warrants in question. The orders of the Court granting
the search warrants and denying the urgent motion to lift
order of search warrants were, therefore, issued in error.
Consequently, they must be set aside. (p. 13, Appellant's
Brief)
5

Petitioners thereafter appealed the order of the trial court granting private
respondents' motion for reconsideration, thus lifting the search warrant which it
had theretofore issued, to the Court of Appeals. As stated at the outset, said appeal
was dismissed and the motion for reconsideration thereof was denied. Hence, this
175

petition was brought to this Court particularly challenging the validity of
respondent court's retroactive application of the ruling in 20th Century Fox Film
Corporation vs. Court of Appeals, et al.,
6
in dismissing petitioners' appeal and
upholding the quashal of the search warrant by the trial court.
I
Inceptively, we shall settle the procedural considerations on the matter of and the
challenge to petitioners' legal standing in our courts, they being foreign
corporations not licensed to do business in the Philippines.
Private respondents aver that being foreign corporations, petitioners should have
such license to be able to maintain an action in Philippine courts. In so challenging
petitioners' personality to sue, private respondents point to the fact that petitioners
are the copyright owners or owners of exclusive rights of distribution in the
Philippines of copyrighted motion pictures or films, and also to the appointment of
Atty. Rico V. Domingo as their attorney-in-fact, as being constitutive of "doing
business in the Philippines" under Section 1 (f)(1) and (2), Rule 1 of the Rules of the
Board of Investments. As foreign corporations doing business in the Philippines,
Section 133 of Batas Pambansa Blg. 68, or the Corporation Code of the Philippines,
denies them the right to maintain a suit in Philippine courts in the absence of a
license to do business. Consequently, they have no right to ask for the issuance of a
search warrant.
7

In refutation, petitioners flatly deny that they are doing business in the
Philippines,
8
and contend that private respondents have not adduced evidence to
prove that petitioners are doing such business here, as would require them to be
licensed by the Securities and Exchange Commission, other than averments in the
quoted portions of petitioners' "Opposition to Urgent Motion to Lift Order of Search
Warrant" dated April 28, 1988 and Atty. Rico V. Domingo's affidavit of December 14,
1987. Moreover, an exclusive right to distribute a product or the ownership of such
exclusive right does not conclusively prove the act of doing business nor establish
the presumption of doing business.
9

The Corporation Code provides:
Sec. 133. Doing business without a license. No foreign corporation
transacting business in the Philippines without a license, or its successors or
assigns, shall be permitted to maintain or intervene in any action, suit or
proceeding in any court or administrative agency of the Philippines; but such
corporation may be sued or proceeded against before Philippine courts or
administrative tribunals on any valid cause of action recognized under
Philippine laws.
The obtainment of a license prescribed by Section 125 of the Corporation Code is
not a condition precedent to the maintenance of any kind of action in Philippine
176

courts by a foreign corporation. However, under the aforequoted provision, no
foreign corporation shall be permitted to transact business in the Philippines, as this
phrase is understood under the Corporation Code, unless it shall have the license
required by law, and until it complies with the law intransacting business here, it
shall not be permitted to maintain any suit in local courts.
10
As thus interpreted, any
foreign corporation not doing business in the Philippines may maintain an action in
our courts upon any cause of action, provided that the subject matter and the
defendant are within the jurisdiction of the court. It is not the absence of the
prescribed license but "doing business" in the Philippines without such license
which debars the foreign corporation from access to our courts. In other words,
although a foreign corporation is without license to transact business in the
Philippines, it does not follow that it has no capacity to bring an action. Such license
is not necessary if it is not engaged in business in the Philippines.
11

Statutory provisions in many jurisdictions are determinative of what constitutes
"doing business" or "transacting business" within that forum, in which case said
provisions are controlling there. In others where no such definition or qualification
is laid down regarding acts or transactions failing within its purview, the question
rests primarily on facts and intent. It is thus held that all the combined acts of a
foreign corporation in the State must be considered, and every circumstance is
material which indicates a purpose on the part of the corporation to engage in some
part of its regular business in the State.
12

No general rule or governing principles can be laid down as to what constitutes
"doing" or "engaging in" or "transacting" business. Each case must be judged in the
light of its own peculiar environmental circumstances.
13
The true tests, however,
seem to be whether the foreign corporation is continuing the body or substance of
the business or enterprise for which it was organized or whether it has substantially
retired from it and turned it over to another.
14

As a general proposition upon which many authorities agree in principle, subject to
such modifications as may be necessary in view of the particular issue or of the
terms of the statute involved, it is recognized that a foreign corporation is "doing,"
"transacting," "engaging in," or "carrying on" business in the State when, and
ordinarily only when, it has entered the State by its agents and is there engaged in
carrying on and transacting through them some substantial part of its ordinary or
customary business, usually continuous in the sense that it may be distinguished
from merely casual, sporadic, or occasional transactions and isolated acts.
15

The Corporation Code does not itself define or categorize what acts constitute doing
or transacting business in the Philippines. Jurisprudence has, however, held that the
term implies a continuity of commercial dealings and arrangements, and
contemplates, to that extent, the performance of acts or works or the exercise of
some of the functions normally incident to or in progressive prosecution of the
purpose and subject of its organization.
16

177

This traditional case law definition has evolved into a statutory definition, having
been adopted with some qualifications in various pieces of legislation in our
jurisdiction.
For instance, Republic Act No. 5455
1
7 provides:
Sec. 1. Definitions and scope of this Act. (1) . . . ; and the phrase "doing
business" shall include soliciting orders, purchases, service contracts,
opening offices, whether called "liaison" offices or branches; appointing
representatives or distributors who are domiciled in the Philippines or who
in any calendar year stay in the Philippines for a period or periods totalling
one hundred eighty days or more; participating in the management,
supervision or control of any domestic business firm, entity or corporation in
the Philippines; and any other act or acts that imply a continuity of
commercial dealings or arrangements, and contemplate to that extent the
performance of acts or works, or the exercise of some of the functions
normally incident to, and in progressive prosecution of, commercial gain or
of the purpose and object of the business organization.
Presidential Decree No. 1789,
18
in Article 65 thereof, defines "doing business" to
include soliciting orders, purchases, service contracts, opening offices, whether
called "liaison" offices or branches; appointing representatives or distributors who
are domiciled in the Philippines or who in any calendar year stay in the Philippines
for a period or periods totalling one hundred eighty days or more; participating in
the management, supervision or control of any domestic business firm, entity or
corporation in the Philippines, and any other act or acts that imply a continuity of
commercial dealings or arrangements and contemplate to that extent the
performance of acts or works, or the exercise of some of the functions normally
incident to, and in progressive prosecution of, commercial gain or of the purpose
and object of the business organization.
The implementing rules and regulations of said presidential decree conclude the
enumeration of acts constituting "doing business" with a catch-all definition, thus:
Sec. 1(g). "Doing Business" shall be any act or combination of acts
enumerated in Article 65 of the Code. In particular "doing business" includes:
xxx xxx xxx
(10) Any other act or acts which imply a continuity of commercial dealings or
arrangements, and contemplate to that extent the performance of acts or
works, or the exercise of some of the functions normally incident to, or in the
progressive prosecution of, commercial gain or of the purpose and object of
the business organization.
Finally, Republic Act No. 7042
19
embodies such concept in this wise:
178

Sec. 3. Definitions. As used in this Act:
xxx xxx xxx
(d) the phrase "doing business shall include soliciting orders, service
contracts, opening offices, whether called "liaison" offices or branches;
appointing representatives or distributors domiciled in the Philippines or
who in any calendar year stay in the country for a period or periods totalling
one hundred eight(y) (180) days or more; participating in the management,
supervision or control of any domestic business, firm, entity or corporation
in the Philippines; and any other act or acts that imply a continuity of
commercial dealings or arrangements, and contemplate to that extent the
performance of acts or works, or the exercise of some of the functions
normally incident to, and in progressive prosecution of, commercial gain or
of the purpose and object of the business organization: Provided, however,
That the phrase "doing business" shall not be deemed to include mere
investment as a shareholder by a foreign entity in domestic corporations
duly registered to do business, and/or the exercise of rights as such investor;
nor having a nominee director or officer to represent its interests in such
corporation; nor appointing a representative or distributor domiciled in the
Philippines which transacts business in its own name and for its own
account.
Based on Article 133 of the Corporation Code and gauged by such statutory
standards, petitioners are not barred from maintaining the present action. There is
no showing that, under our statutory or case law, petitioners are doing, transacting,
engaging in or carrying on business in the Philippines as would require obtention of
a license before they can seek redress from our courts. No evidence has been offered
to show that petitioners have performed any of the enumerated acts or any other
specific act indicative of an intention to conduct or transact business in the
Philippines.
Accordingly, the certification issued by the Securities and Exchange
Commission
20
stating that its records do not show the registration of petitioner film
companies either as corporations or partnerships or that they have been licensed to
transact business in the Philippines, while undeniably true, is of no consequence to
petitioners' right to bring action in the Philippines. Verily, no record of such
registration by petitioners can be expected to be found for, as aforestated, said
foreign film corporations do not transact or do business in the Philippines and,
therefore, do not need to be licensed in order to take recourse to our courts.
Although Section 1(g) of the Implementing Rules and Regulations of the Omnibus
Investments Code lists, among others
(1) Soliciting orders, purchases (sales) or service contracts. Concrete and
specific solicitations by a foreign firm, or by an agent of such foreign firm, not
179

acting independently of the foreign firm amounting to negotiations or fixing
of the terms and conditions of sales or service contracts, regardless of where
the contracts are actually reduced to writing, shall constitute doing business
even if the enterprise has no office or fixed place of business in the
Philippines. The arrangements agreed upon as to manner, time and terms of
delivery of the goods or the transfer of title thereto is immaterial. A foreign
firm which does business through the middlemen acting in their own names,
such as indentors, commercial brokers or commission merchants, shall not
be deemed doing business in the Philippines. But such indentors, commercial
brokers or commission merchants shall be the ones deemed to be doing
business in the Philippines.
(2) Appointing a representative or distributor who is domiciled in the
Philippines, unless said representative or distributor has an independent
status, i.e., it transacts business in its name and for its own account, and not
in the name or for the account of a principal. Thus, where a foreign firm is
represented in the Philippines by a person or local company which does not
act in its name but in the name of the foreign firm, the latter is doing business
in the Philippines.
as acts constitutive of "doing business," the fact that petitioners are admittedly
copyright owners or owners of exclusive distribution rights in the Philippines of
motion pictures or films does not convert such ownership into an indicium of doing
business which would require them to obtain a license before they can sue upon a
cause of action in local courts.
Neither is the appointment of Atty. Rico V. Domingo as attorney-in-fact of
petitioners, with express authority pursuant to a special power of attorney, inter
alia
To lay criminal complaints with the appropriate authorities and to provide
evidence in support of both civil and criminal proceedings against any
person or persons involved in the criminal infringement of copyright or
concerning the unauthorized importation, duplication, exhibition or
distribution of any cinematographic work(s) films or video cassettes of
which . . . is the owner of copyright or the owner of exclusive rights of
distribution in the Philippines pursuant to any agreement(s) between . . . and
the respective owners of copyright in such cinematographic work(s), to
initiate and prosecute on behalf of . . . criminal or civil actions in the
Philippines against any person or persons unlawfully distributing, exhibiting,
selling or offering for sale any films or video cassettes of which . . . is the
owner of copyright or the owner of exclusive rights of distribution in the
Philippines pursuant to any agreement(s) between . . . and the respective
owners of copyright in such works.
21

180

tantamount to doing business in the Philippines. We fail to see how exercising one's
legal and property rights and taking steps for the vigilant protection of said rights,
particularly the appointment of an attorney-in-fact, can be deemed by and of
themselves to be doing business here.
As a general rule, a foreign corporation will not be regarded as doing business in the
State simply because it enters into contracts with residents of the State, where such
contracts are consummated outside the State.
22
In fact, a view is taken that a foreign
corporation is not doing business in the State merely because sales of its product are
made there or other business furthering its interests is transacted there by an
alleged agent, whether a corporation or a natural person, where such activities are
not under the direction and control of the foreign corporation but are engaged in by
the alleged agent as an independent business.
23

It is generally held that sales made to customers in the State by an independent
dealer who has purchased and obtained title from the corporation to the products
sold are not a doing of business by the corporation.
24
Likewise, a foreign
corporation which sells its products to persons styled "distributing agents" in the
State, for distribution by them, is not doing business in the State so as to render it
subject to service of process therein, where the contract with these purchasers is
that they shall buy exclusively from the foreign corporation such goods as it
manufactures and shall sell them at trade prices established by it.
25

It has moreover been held that the act of a foreign corporation in engaging an
attorney to represent it in a Federal court sitting in a particular State is not doing
business within the scope of the minimum contact test.
26
With much more reason
should this doctrine apply to the mere retainer of Atty. Domingo for legal protection
against contingent acts of intellectual piracy.
In accordance with the rule that "doing business" imports only acts in furtherance of
the purposes for which a foreign corporation was organized, it is held that the mere
institution and prosecution or defense of a suit, particularly if the transaction which
is the basis of the suit took place out of the State, do not amount to the doing of
business in the State. The institution of a suit or the removal thereof is neither the
making of a contract nor the doing of business within a constitutional provision
placing foreign corporations licensed to do business in the State under the same
regulations, limitations and liabilities with respect to such acts as domestic
corporations. Merely engaging in litigation has been considered as not a sufficient
minimum contact to warrant the exercise of jurisdiction over a foreign
corporation.
2
7
As a consideration aside, we have perforce to comment on private respondents'
basis for arguing that petitioners are barred from maintaining suit in the
Philippines. For allegedly being foreign corporations doing business in the
Philippines without a license, private respondents repeatedly maintain in all their
181

pleadings that petitioners have thereby no legal personality to bring an action before
Philippine Courts.
28

Among the grounds for a motion to dismiss under the Rules of Court
are lack of legal capacity to sue
29
and that the complaint states no cause of
action.
30
Lack of legal capacity to sue means that the plaintiff is not in the exercise
of his civil rights, or does not have the necessary qualification to appear in the case,
or does not have the character or representation he claims.
31
On the other hand, a
case is dismissible for lack of personality to sue upon proof that the plaintiff is not
the real party in interest, hence grounded on failure to state a cause of action.
32
The
term "lack of capacity to sue" should not be confused with the term "lack of
personality to sue." While the former refers to a plaintiff's general disability to sue,
such as on account of minority, insanity, incompetence, lack of juridical personality
or any other general disqualifications of a party, the latter refers to the fact that the
plaintiff is not the real party in interest. Correspondingly, the first can be a ground
for a motion to dismiss based on the ground of lack of legal capacity to
sue;
33
whereas the second can be used as a ground for a motion to dismiss based on
the fact that the complaint, on the face thereof, evidently states no cause of action.
34

Applying the above discussion to the instant petition, the ground available for
barring recourse to our courts by an unlicensed foreign corporation doing or
transacting business in the Philippines should properly be "lack of capacity to sue,"
not "lack of personality to sue." Certainly, a corporation whose legal rights have
been violated is undeniably such, if not the only, real party in interest to bring suit
thereon although, for failure to comply with the licensing requirement, it is not
capacitated to maintain any suit before our courts.
Lastly, on this point, we reiterate this Court's rejection of the common procedural
tactics of erring local companies which, when sued by unlicensed foreign
corporations not engaged in business in the Philippines, invoke the latter's
supposed lack of capacity to sue. The doctrine of lack of capacity to sue based on
failure to first acquire a local license is based on considerations of public policy. It
was never intended to favor nor insulate from suit unscrupulous establishments or
nationals in case of breach of valid obligations or violation of legal rights of
unsuspecting foreign firms or entities simply because they are not licensed to do
business in the country.
35

II
We now proceed to the main issue of the retroactive application to the present
controversy of the ruling in 20th Century Fox Film Corporation vs. Court of Appeals, et
al., promulgated on August 19, 1988,
36
that for the determination of probable cause
to support the issuance of a search warrant in copyright infringement cases
involving videograms, the production of the master tape for comparison with the
allegedly pirate copies is necessary.
182

Petitioners assert that the issuance of a search warrant is addressed to the
discretion of the court subject to the determination of probable cause in accordance
with the procedure prescribed therefore under Sections 3 and 4 of Rule 126. As of
the time of the application for the search warrant in question, the controlling
criterion for the finding of probable cause was that enunciated in Burgos vs. Chief of
Staff
3
7 stating that:
Probable cause for a search warrant is defined as such facts and
circumstances which would lead a reasonably discreet and prudent man to
believe that an offense has been committed and that the objects sought in
connection with the offense are in the place sought to be searched.
According to petitioners, after complying with what the law then required, the lower
court determined that there was probable cause for the issuance of a search
warrant, and which determination in fact led to the issuance and service on
December 14, 1987 of Search Warrant No. 87-053. It is further argued that any
search warrant so issued in accordance with all applicable legal requirements is
valid, for the lower court could not possibly have been expected to apply, as the
basis for a finding of probable cause for the issuance of a search warrant in
copyright infringement cases involving videograms, a pronouncement which was
not existent at the time of such determination, on December 14, 1987, that is, the
doctrine in the 20th Century Fox case that was promulgated only on August 19,
1988, or over eight months later.
Private respondents predictably argue in support of the ruling of the Court of
Appeals sustaining the quashal of the search warrant by the lower court on the
strength of that 20th Century Fox ruling which, they claim, goes into the very essence
of probable cause. At the time of the issuance of the search warrant involved here,
although the 20th Century Fox case had not yet been decided, Section 2, Article III of
the Constitution and Section 3, Rule 126 of the 1985 Rules on Criminal Procedure
embodied the prevailing and governing law on the matter. The ruling in 20th
Century Foxwas merely an application of the law on probable cause. Hence, they
posit that there was no law that was retrospectively applied, since the law had been
there all along. To refrain from applying the 20th Century Fox ruling, which had
supervened as a doctrine promulgated at the time of the resolution of private
respondents' motion for reconsideration seeking the quashal of the search warrant
for failure of the trial court to require presentation of the master tapes prior to the
issuance of the search warrant, would have constituted grave abuse of discretion.
38

Respondent court upheld the retroactive application of the 20th Century Fox ruling
by the trial court in resolving petitioners' motion for reconsideration in favor of the
quashal of the search warrant, on this renovated thesis:
And whether this doctrine should apply retroactively, it must be noted that in
the 20th Century Fox case, the lower court quashed the earlier search
warrant it issued. On certiorari, the Supreme Court affirmed the quashal on
183

the ground among others that the master tapes or copyrighted films were not
presented for comparison with the purchased evidence of the video tapes to
determine whether the latter is an unauthorized reproduction of the former.
If the lower court in the Century Fox case did not quash the warrant, it is Our
view that the Supreme Court would have invalidated the warrant just the
same considering the very strict requirement set by the Supreme Court for
the determination of "probable cause" in copyright infringement cases as
enunciated in this 20th Century Fox case. This is so because, as was stated by
the Supreme Court in the said case, the master tapes and the pirated
tapes must be presented for comparison to satisfy the requirement of "probable
cause."So it goes back to the very existence of probable
cause. . . .
39

Mindful as we are of the ramifications of the doctrine of stare decisis and the
rudiments of fair play, it is our considered view that the 20th Century Fox ruling
cannot be retroactively applied to the instant case to justify the quashal of Search
Warrant No. 87-053. Herein petitioners' consistent position that the order of the
lower court of September 5, 1988 denying therein defendants' motion to lift the
order of search warrant was properly issued, there having been satisfactory
compliance with the then prevailing standards under the law for determination of
probable cause, is indeed well taken. The lower court could not possibly have
expected more evidence from petitioners in their application for a search warrant
other than what the law and jurisprudence, then existing and judicially accepted,
required with respect to the finding of probable cause.
Article 4 of the Civil Code provides that "(l)aws shall have no retroactive effect,
unless the contrary is provided. Correlatively, Article 8 of the same Code declares
that "(j)udicial decisions applying the laws or the Constitution shall form part of the
legal system of the Philippines."
Jurisprudence, in our system of government, cannot be considered as an
independent source of law; it cannot create law.
40
While it is true that judicial
decisions which apply or interpret the Constitution or the laws are part of the legal
system of the Philippines, still they are not laws. Judicial decisions, though not laws,
are nonetheless evidence of what the laws mean, and it is for this reason that they
are part of the legal system of the Philippines.
41
Judicial decisions of the Supreme
Court assume the same authority as the statute
itself.
42

Interpreting the aforequoted correlated provisions of the Civil Code and in light of
the above disquisition, this Court emphatically declared in Co vs. Court of Appeals, et
al.
43
that the principle of prospectivity applies not only to original or amendatory
statutes and administrative rulings and circulars, but also, and properly so, to
judicial decisions. Our holding in the earlier case of People vs. Jabinal
44
echoes the
rationale for this judicial declaration, viz.:
184

Decisions of this Court, although in themselves not laws, are nevertheless
evidence of what the laws mean, and this is the reason why under Article 8 of
the New Civil Code, "Judicial decisions applying or interpreting the laws or
the Constitution shall form part of the legal system." The interpretation upon
a law by this Court constitutes, in a way, a part of the law as of the date that
the law was originally passed, since this Court's construction merely
establishes the contemporaneous legislative intent that the law thus
construed intends to effectuate. The settled rule supported by numerous
authorities is a restatement of the legal maxim "legis interpretatio legis vim
obtinet" the interpretation placed upon the written law by a competent
court has the force of law. . . . , but when a doctrine of this Court is overruled
and a different view is adopted, the new doctrine should be applied
prospectively, and should not apply to parties who had relied on the old
doctrine and acted on the faith thereof . . . . (Emphasis supplied).
This was forcefully reiterated in Spouses Benzonan vs. Court of Appeals, et
al.,
45
where the Court expounded:
. . . . But while our decisions form part of the law of the land, they are also
subject to Article 4 of the Civil Code which provides that "laws shall have no
retroactive effect unless the contrary is provided." This is expressed in the
familiar legal maxim lex prospicit, non respicit, the law looks forward not
backward. The rationale against retroactivity is easy to perceive. The
retroactive application of a law usually divests rights that have already
become vested or impairs the obligations of contract and hence, is
unconstitutional (Francisco v. Certeza, 3 SCRA 565 [1961]). The same
consideration underlies our rulings giving only prospective effect to
decisions enunciating new doctrines. . . . .
The reasoning behind Senarillos vs. Hermosisima
46
that judicial interpretation of a
statute constitutes part of the law as of the date it was originally passed, since the
Court's construction merely establishes the contemporaneous legislative intent that
the interpreted law carried into effect, is all too familiar. Such judicial doctrine does
not amount to the passage of a new law but consists merely of a construction or
interpretation of a pre-existing one, and that is precisely the situation obtaining in
this case.
It is consequently clear that a judicial interpretation becomes a part of the law as of
the date that law was originally passed, subject only to the qualification that when a
doctrine of this Court is overruled and a different view is adopted, and more so
when there is a reversal thereof, the new doctrine should be applied prospectively
and should not apply to parties who relied on the old doctrine and acted in good
faith.
4
7 To hold otherwise would be to deprive the law of its quality of fairness and
justice then, if there is no recognition of what had transpired prior to such
adjudication.
48

185

There is merit in petitioners' impassioned and well-founded argumentation:
The case of 20th Century Fox Film Corporation vs. Court of Appeals, et al., 164
SCRA 655 (August 19, 1988) (hereinafter 20th Century Fox) was inexistent in
December of 1987 when Search Warrant 87-053 was issued by the lower
court. Hence, it boggles the imagination how the lower court could be
expected to apply the formulation of 20th Century Fox in finding probable
cause when the formulation was yet non-existent.
xxx xxx xxx
In short, the lower court was convinced at that time after conducting
searching examination questions of the applicant and his witnesses that "an
offense had been committed and that the objects sought in connection with
the offense (were) in the place sought to be searched" (Burgos v. Chief of
Staff, et al., 133 SCRA 800). It is indisputable, therefore, that at the time of the
application, or on December 14, 1987, the lower court did not commit any
error nor did it fail to comply with any legal requirement for the valid
issuance of search warrant.
. . . (W)e believe that the lower court should be considered as having followed
the requirements of the law in issuing Search Warrant No. 87-053. The
search warrant is therefore valid and binding. It must be noted that nowhere
is it found in the allegations of the Respondents that the lower court failed to
apply the law as then interpreted in 1987. Hence, we find it absurd that it is
(sic) should be seen otherwise, because it is simply impossible to have
required the lower court to apply a formulation which will only be defined
six months later.
Furthermore, it is unjust and unfair to require compliance with legal and/or
doctrinal requirements which are inexistent at the time they were supposed
to have been complied with.
xxx xxx xxx
. . . If the lower court's reversal will be sustained, what encouragement can be
given to courts and litigants to respect the law and rules if they can expect
with reasonable certainty that upon the passage of a new rule, their conduct
can still be open to question? This certainly breeds instability in our system
of dispensing justice. For Petitioners who took special effort to redress their
grievances and to protect their property rights by resorting to the remedies
provided by the law, it is most unfair that fealty to the rules and procedures
then obtaining would bear but fruits of
injustice.
49

186

Withal, even the proposition that the prospectivity of judicial decisions imports
application thereof not only to future cases but also to cases still ongoing or not yet
final when the decision was promulgated, should not be countenanced in the jural
sphere on account of its inevitably unsettling repercussions. More to the point, it is
felt that the reasonableness of the added requirement in 20th Century Fox calling for
the production of the master tapes of the copyrighted films for determination of
probable cause in copyright infringement cases needs revisiting and clarification.
It will be recalled that the 20th Century Fox case arose from search warrant
proceedings in anticipation of the filing of a case for the unauthorized sale or renting
out of copyrighted films in videotape format in violation of Presidential Decree No.
49. It revolved around the meaning of probable cause within the context of the
constitutional provision against illegal searches and seizures, as applied to
copyright infringement cases involving videotapes.
Therein it was ruled that
The presentation of master tapes of the copyrighted films from which the
pirated films were allegedly copied, was necessary for the validity of search
warrants against those who have in their possession the pirated films. The
petitioner's argument to the effect that the presentation of the master tapes
at the time of application may not be necessary as these would be merely
evidentiary in nature and not determinative of whether or not a probable
cause exists to justify the issuance of the search warrants is not meritorious.
The court cannot presume that duplicate or copied tapes were necessarily
reproduced from master tapes that it owns.
The application for search warrants was directed against video tape outlets
which allegedly were engaged in the unauthorized sale and renting out of
copyrighted films belonging to the petitioner pursuant to P.D. 49.
The essence of a copyright infringement is the similarity or at least
substantial similarity of the purported pirated works to the copyrighted
work. Hence, the applicant must present to the court the copyrighted films to
compare them with the purchased evidence of the video tapes allegedly
pirated to determine whether the latter is an unauthorized reproduction of
the former. This linkage of the copyrighted films to the pirated films must be
established to satisfy the requirements of probable cause. Mere allegations as
to the existence of the copyrighted films cannot serve as basis for the
issuance of a search warrant.
For a closer and more perspicuous appreciation of the factual antecedents of 20th
Century Fox, the pertinent portions of the decision therein are quoted hereunder, to
wit:
187

In the instant case, the lower court lifted the three questioned search
warrants against the private respondents on the ground that it acted on the
application for the issuance of the said search warrants and granted it on the
misrepresentations of applicant NBI and its witnesses that infringement of
copyright or a piracy of a particular film have been committed. Thus the
lower court stated in its questioned order dated January 2, 1986:
According to the movant, all three witnesses during the
proceedings in the application for the three search warrants
testified of their own personal knowledge. Yet, Atty. Albino
Reyes of the NBI stated that the counsel or representative of
the Twentieth Century Fox Corporation will testify on the
video cassettes that were pirated, so that he did not have
personal knowledge of the alleged piracy. The witness Bacani
also said that the video cassettes were pirated without stating
the manner it was pirated and that it was Atty. Domingo that
has knowledge of that fact.
On the part of Atty. Domingo, he said that the re-taping of the
allegedly pirated tapes was from master tapes allegedly
belonging to the Twentieth Century Fox, because, according to
him it is of his personal knowledge.
At the hearing of the Motion for Reconsideration, Senior NBI
Agent Atty. Albino Reyes testified that when the complaint for
infringement was brought to the NBI, the master tapes of the
allegedly pirated tapes were shown to him and he made
comparisons of the tapes with those purchased by their man
Bacani. Why the master tapes or at least the film reels of the
allegedly pirated tapes were not shown to the Court during the
application gives some misgivings as to the truth of that bare
statement of the NBI agent on the witness stand.
Again as the application and search proceedings is a prelude to
the filing of criminal cases under PD 49, the copyright
infringement law, and although what is required for the
issuance thereof is merely the presence of probable cause, that
probable cause must be satisfactory to the Court, for it is a
time-honored precept that proceedings to put a man to task as
an offender under our laws should be interpreted in strictissimi
juris against the government and liberally in favor of the
alleged offender.
xxx xxx xxx
188

This doctrine has never been overturned, and as a matter of
fact it had been enshrined in the Bill of Rights in our 1973
Constitution.
So that lacking in persuasive effect, the allegation that master
tapes were viewed by the NBI and were compared to the
purchased and seized video tapes from the respondents'
establishments, it should be dismissed as not supported by
competent evidence and for that matter the probable cause
hovers in that grey debatable twilight zone between black and
white resolvable in favor of respondents herein.
But the glaring fact is that "Cocoon," the first video tape
mentioned in the search warrant, was not even duly registered
or copyrighted in the Philippines. (Annex C of Opposition p.
152 record.) So, that lacking in the requisite presentation to
the Court of an alleged master tape for purposes of comparison
with the purchased evidence of the video tapes allegedly
pirated and those seized from respondents, there was no way
to determine whether there really was piracy, or copying of the
film of the complainant Twentieth Century Fox.
xxx xxx xxx
The lower court, therefore, lifted the three (3) questioned search warrants in
the absence of probable cause that the private respondents violated P.D. 49. As
found out by the court, the NBI agents who acted as witnesses did not have
personal knowledge of the subject matter of their testimony which was the
alleged commission of the offense by the private respondents. Only the
petitioner's counsel who was also a witness during the application for the
issuance of the search warrants stated that he had personal knowledge that
the confiscated tapes owned by the private respondents were pirated tapes
taken from master tapes belonging to the petitioner. However, the lower
court did not give much credence to his testimony in view of the fact that the
master tapes of the allegedly pirated tapes were not shown to the court
during the application (Emphasis ours).
The italicized passages readily expose the reason why the trial court therein
required the presentation of the master tapes of the allegedly pirated films in order
to convince itself of the existence of probable cause under the factual milieu peculiar
to that case. In the case at bar, respondent appellate court itself observed:
We feel that the rationale behind the aforequoted doctrine is that the pirated
copies as well as the master tapes, unlike the other types of personal
properties which may be seized, were available for presentation to the court
at the time of the application for a search warrant to determine the existence
189

of the linkage of the copyrighted films with the pirated ones. Thus, there is no
reason not the present them (Emphasis supplied ).
50

In fine, the supposed pronunciamento in said case regarding the necessity for the
presentation of the master tapes of the copyrighted films for the validity of search
warrants should at most be understood to merely serve as a guidepost in
determining the existence of probable cause in copyright infringement cases where
there is doubt as to the true nexus between the master tape and the pirated copies. An
objective and careful reading of the decision in said case could lead to no other
conclusion than that said directive was hardly intended to be a sweeping and
inflexible requirement in all or similar copyright infringement cases. Judicial dicta
should always be construed within the factual matrix of their parturition, otherwise
a careless interpretation thereof could unfairly fault the writer with the vice of
overstatement and the reader with the fallacy of undue generalization.
In the case at bar, NBI Senior Agent Lauro C. Reyes who filed the application for
search warrant with the lower court following a formal complaint lodged by
petitioners, judging from his affidavit
51
and his deposition,
52
did testify on matters
within his personal knowledge based on said complaint of petitioners as well as his
own investigation and surveillance of the private respondents' video rental shop.
Likewise, Atty. Rico V. Domingo, in his capacity as attorney-in-fact, stated in his
affidavit
53
and further expounded in his deposition
54
that he personally knew of the
fact that private respondents had never been authorized by his clients to reproduce,
lease and possess for the purpose of selling any of the copyrighted films.
Both testimonies of Agent Reyes and Atty. Domingo were corroborated by Rene C.
Baltazar, a private researcher retained by Motion Pictures Association of America,
Inc. (MPAA, Inc.), who was likewise presented as a witness during the search
warrant proceedings.
55
The records clearly reflect that the testimonies of the
abovenamed witnesses were straightforward and stemmed from matters within
their personal knowledge. They displayed none of the ambivalence and uncertainty
that the witnesses in the 20th Century Fox case exhibited. This categorical
forthrightness in their statements, among others, was what initially and correctly
convinced the trial court to make a finding of the existence of probable cause.
There is no originality in the argument of private respondents against the validity of
the search warrant, obviously borrowed from 20th Century Fox, that petitioners'
witnesses NBI Agent Lauro C. Reyes, Atty. Rico V. Domingo and Rene C. Baltazar
did not have personal knowledge of the subject matter of their respective
testimonies and that said witnesses' claim that the video tapes were pirated,
without stating the manner by which these were pirated, is a conclusion of fact
without basis.
56
The difference, it must be pointed out, is that the records in the
present case reveal that (1) there is no allegation of misrepresentation, much less a
finding thereof by the lower court, on the part of petitioners' witnesses; (2) there is
no denial on the part of private respondents that the tapes seized were illegitimate
copies of the copyrighted ones not have they shown that they were given any
190

authority by petitioners to copy, sell, lease, distribute or circulate, or at least, to offer
for sale, lease, distribution or circulation the said video tapes; and (3) a discreet but
extensive surveillance of the suspected area was undertaken by petitioners'
witnesses sufficient to enable them to execute trustworthy affidavits and
depositions regarding matters discovered in the course thereof and of which they
have personal knowledge.
It is evidently incorrect to suggest, as the ruling in 20th Century Fox may appear to
do, that in copyright infringement cases, the presentation of master tapes of the
copyrighted films is always necessary to meet the requirement of probable cause
and that, in the absence thereof, there can be no finding of probable cause for the
issuance of a search warrant. It is true that such master tapes are object evidence,
with the merit that in this class of evidence the ascertainment of the controverted
fact is made through demonstrations involving the direct use of the senses of the
presiding magistrate.
5
7 Such auxiliary procedure, however, does not rule out the
use of testimonial or documentary evidence, depositions, admissions or other
classes of evidence tending to prove the factum probandum,
58
especially where the
production in court of object evidence would result in delay, inconvenience or
expenses out of proportion to its evidentiary value.
59

Of course, as a general rule, constitutional and statutory provisions relating to
search warrants prohibit their issuance except on a showing of probable cause,
supported by oath or affirmation. These provisions prevent the issuance of warrants
on loose, vague, or doubtful bases of fact, and emphasize the purpose to protect
against all general searches.
60
Indeed, Article III of our Constitution mandates in
Sec. 2 thereof that no search warrant shall issue except upon probable cause to be
determined personally by the judge after examination under oath or affirmation of
the complainant and the witnesses he may produce, and particularly describing the
place to be searched and the things to be seized; and Sec. 3 thereof provides that any
evidence obtained in violation of the preceding section shall be inadmissible for any
purpose in any proceeding.
These constitutional strictures are implemented by the following provisions of Rule
126 of the Rules of Court:
Sec. 3. Requisites for issuing search warrant. A search warrant shall not
issue but upon probable cause in connection with one specific offense to be
determined personally by the judge after examination under oath or
affirmation of the complainant and the witnesses he may produce, and
particularly describing the place to be searched and the things to be seized.
Sec. 4. Examination of complainant; record. The judge must, before issuing
the warrant, personally examine in the form of searching questions and
answers, in writing and under oath the complainant and any witnesses he
may produce on facts personally known to them and attach to the record
their sworn statements together with any affidavits submitted.
191

Sec. 5. Issuance and form of search warrant. If the judge is thereupon
satisfied of the existence of facts upon which the application is based, or that
there is probable cause to believe that they exist, he must issue the warrant,
which must be substantially in the form prescribed by these Rules.
The constitutional and statutory provisions of various jurisdictions requiring a
showing of probable cause before a search warrant can be issued are mandatory
and must be complied with, and such a showing has been held to be an unqualified
condition precedent to the issuance of a warrant. A search warrant not based on
probable cause is a nullity, or is void, and the issuance thereof is, in legal
contemplation, arbitrary.
61
It behooves us, then, to review the concept of probable
cause, firstly, from representative holdings in the American jurisdiction from which
we patterned our doctrines on the matter.
Although the term "probable cause" has been said to have a well-defined meaning in
the law, the term is exceedingly difficult to define, in this case, with any degree of
precision; indeed, no definition of it which would justify the issuance of a search
warrant can be formulated which would cover every state of facts which might arise,
and no formula or standard, or hard and fast rule, may be laid down which may be
applied to the facts of every situation.
62
As to what acts constitute probable cause
seem incapable of definition.
63
There is, of necessity, no exact test.
64

At best, the term "probable cause" has been understood to mean a reasonable
ground of suspicion, supported by circumstances sufficiently strong in themselves
to warrant a cautious man in the belief that the person accused is guilty of the
offense with which he is charged;
65
or the existence of such facts and circumstances
as would excite an honest belief in a reasonable mind acting on all the facts and
circumstances within the knowledge of the magistrate that the charge made by the
applicant for the warrant is true.
66

Probable cause does not mean actual and positive cause, nor does it import absolute
certainty. The determination of the existence of probable cause is not concerned
with the question of whether the offense charged has been or is being committed in
fact, or whether the accused is guilty or innocent, but only whether the affiant has
reasonable grounds for his belief.
6
7 The requirement is less than certainty or proof ,
but more than suspicion or possibility.
68

In Philippine jurisprudence, probable cause has been uniformly defined as such
facts and circumstances which would lead a reasonable, discreet and prudent man
to believe that an offense has been committed, and that the objects sought in
connection with the offense are in the place sought to be searched.
69
It being the
duty of the issuing officer to issue, or refuse to issue, the warrant as soon as
practicable after the application therefor is filed,
70
the facts warranting the
conclusion of probable cause must be assessed at the time of such judicial
determination by necessarily using legal standards then set forth in law and
jurisprudence, and not those that have yet to be crafted thereafter.
192

As already stated, the definition of probable cause enunciated in Burgos, Sr. vs. Chief
of Staff, et al., supra, vis-a-visthe provisions of Sections 3 and 4 of Rule 126, were the
prevailing and controlling legal standards, as they continue to be, by which a finding
of probable cause is tested. Since the propriety of the issuance of a search warrant is
to be determined at the time of the application therefor, which in turn must not be
too remote in time from the occurrence of the offense alleged to have been
committed, the issuing judge, in determining the existence of probable cause, can
and should logically look to the touchstones in the laws theretofore enacted and the
decisions already promulgated at the time, and not to those which had not yet even
been conceived or formulated.
It is worth noting that neither the Constitution nor the Rules of Court attempt to
define probable cause, obviously for the purpose of leaving such matter to the
court's discretion within the particular facts of each case. Although the Constitution
prohibits the issuance of a search warrant in the absence of probable cause, such
constitutional inhibition does not command the legislature to establish a definition
or formula for determining what shall constitute probable cause.
71
Thus, Congress,
despite its broad authority to fashion standards of reasonableness for searches and
seizures,
72
does not venture to make such a definition or standard formulation of
probable cause, nor categorize what facts and circumstances make up the same,
much less limit the determination thereof to and within the circumscription of a
particular class of evidence, all in deference to judicial discretion and probity.
73

Accordingly, to restrict the exercise of discretion by a judge by adding a particular
requirement (the presentation of master tapes, as intimated by 20th Century Fox)
not provided nor implied in the law for a finding of probable cause is beyond the
realm of judicial competence or statesmanship. It serves no purpose but to stultify
and constrict the judicious exercise of a court's prerogatives and to denigrate the
judicial duty of determining the existence of probable cause to a mere ministerial or
mechanical function. There is, to repeat, no law or rule which requires that the
existence of probable cause is or should be determined solely by a specific kind of
evidence. Surely, this could not have been contemplated by the framers of the
Constitution, and we do not believe that the Court intended the statement in 20th
Century Fox regarding master tapes as the dictum for all seasons and reasons in
infringement cases.
Turning now to the case at bar, it can be gleaned from the records that the lower
court followed the prescribed procedure for the issuance of a search warrant: (1)
the examination under oath or affirmation of the complainant and his witnesses,
with them particularly describing the place to be searched and the things to be
seized; (2) an examination personally conducted by the judge in the form of
searching questions and answers, in writing and under oath of the complainant and
witnesses on facts personally known to them; and, (3) the taking of sworn
statements, together with the affidavits submitted, which were duly attached to the
records.
193

Thereafter, the court a quo made the following factual findings leading to the
issuance of the search warrant now subject of this controversy:
In the instant case, the following facts have been established: (1) copyrighted
video tapes bearing titles enumerated in Search Warrant No. 87-053 were
being sold, leased, distributed or circulated, or offered for sale, lease,
distribution, or transferred or caused to be transferred by defendants at their
video outlets, without the written consent of the private complainants or
their assignee; (2) recovered or confiscated from defendants' possession
were video tapes containing copyrighted motion picture films without the
authority of the complainant; (3) the video tapes originated from spurious or
unauthorized persons; and (4) said video tapes were exact reproductions of
the films listed in the search warrant whose copyrights or distribution rights
were owned by complainants.
The basis of these facts are the affidavits and depositions of NBI Senior Agent
Lauro C. Reyes, Atty. Rico V. Domingo, and Rene C. Baltazar. Motion Pictures
Association of America, Inc. (MPAA) thru their counsel, Atty. Rico V.
Domingo, filed a complaint with the National Bureau of Investigation against
certain video establishments one of which is defendant, for violation of PD
No. 49 as amended by PD No. 1988. Atty. Lauro C. Reyes led a team to
conduct discreet surveillance operations on said video establishments. Per
information earlier gathered by Atty. Domingo, defendants were engaged in
the illegal sale, rental, distribution, circulation or public exhibition of
copyrighted films of MPAA without its written authority or its members.
Knowing that defendant Sunshine Home Video and its proprietor, Mr. Danilo
Pelindario, were not authorized by MPAA to reproduce, lease, and possess
for the purpose of selling any of its copyrighted motion pictures, instructed
his researcher, Mr. Rene Baltazar to rent two video cassettes from said
defendants on October 21, 1987. Rene C. Baltazar proceeded to Sunshine
Home Video and rented tapes containing Little Shop of Horror. He was issued
rental slip No. 26362 dated October 21, 1987 for P10.00 with a deposit of
P100.00. Again, on December 11, 1987, the returned to Sunshine Home Video
and rented Robocop with rental slip No. 25271 also for P10.00: On the basis
of the complaint of MPAA thru counsel, Atty. Lauro C. Reyes personally went
to Sunshine Home Video at No. 6 Mayfair Center, Magallanes Commercial
Center, Makati. His last visit was on December 7, 1987. There, he found the
video outlet renting, leasing, distributing video cassette tapes whose titles
were copyrighted and without the authority of MPAA.
Given these facts, a probable cause exists. . . .
74

The lower court subsequently executed a volte-face, despite its prior detailed and
substantiated findings, by stating in its order of November 22, 1988 denying
petitioners' motion for reconsideration and quashing the search warrant that
194

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

Being based solely on an unjustifiable and improper retroactive application of the
master tape requirement generated by 20th Century Fox upon a factual situation
completely different from that in the case at bar, and without anything more, this
later order clearly defies elemental fair play and is a gross reversible error. In fact,
this observation of the Court in La Chemise Lacoste, S.A. vs. Fernandez, et al., supra,
may just as easily apply to the present case:
A review of the grounds invoked . . . in his motion to quash the search
warrants reveals the fact that they are not appropriate for quashing a
warrant. They are matters of defense which should be ventilated during the
trial on the merits of the case. . . .
As correctly pointed out by petitioners, a blind espousal of the requisite of
presentation of the master tapes in copyright infringement cases, as the prime
determinant of probable cause, is too exacting and impracticable a requirement to
be complied with in a search warrant application which, it must not be overlooked,
is only an ancillary proceeding. Further, on realistic considerations, a strict
application of said requirement militates against the elements of secrecy and speed
which underlie covert investigative and surveillance operations in police
enforcement campaigns against all forms of criminality, considering that the master
tapes of a motion picture required to be presented before the court consists of
several reels contained in circular steel casings which, because of their bulk, will
definitely draw attention, unlike diminutive objects like video tapes which can be
easily concealed.
76
With hundreds of titles being pirated, this onerous and tedious
imposition would be multiplied a hundredfold by judicial fiat, discouraging and
preventing legal recourses in foreign jurisdictions.
Given the present international awareness and furor over violations in large scale of
intellectual property rights, calling for transnational sanctions, it bears calling to
mind the Court's admonition also in La Chemise Lacoste, supra, that
. . . . Judges all over the country are well advised to remember that court
processes should not be used as instruments to, unwittingly or otherwise, aid
counterfeiters and intellectual pirates, tie the hands of the law as it seeks to
protect the Filipino consuming public and frustrate executive and
administrative implementation of solemn commitments pursuant to
international conventions and treaties.
III
195

The amendment to Section 56 of Presidential Decree No. 49 by Presidential Decree
No. 1987,
7
7 which should here be publicized judicially, brought about the revision
of its penalty structure and enumerated additional acts considered violative of said
decree on intellectual property, namely, (1) directly or indirectly transferring or
causing to be transferred any sound recording or motion picture or other audio-
visual works so recorded with intent to sell, lease, publicly exhibit or cause to be
sold, leased or publicly exhibited, or to use or cause to be used for profit such
articles on which sounds, motion pictures, or other audio-visual works are so
transferred without the written consent of the owner or his assignee; (2) selling,
leasing, distributing, circulating, publicly exhibiting, or offering for sale, lease,
distribution, or possessing for the purpose of sale, lease, distribution, circulation or
public exhibition any of the abovementioned articles, without the written consent of
the owner or his assignee; and, (3) directly or indirectly offering or making available
for a fee, rental, or any other form of compensation any equipment, machinery,
paraphernalia or any material with the knowledge that such equipment, machinery,
paraphernalia or material will be used by another to reproduce, without the consent
of the owner, any phonograph record, disc, wire, tape, film or other article on which
sounds, motion pictures or other audio-visual recordings may be transferred, and
which provide distinct bases for criminal prosecution, being crimes independently
punishable under Presidential Decree No. 49, as amended, aside from the act of
infringing or aiding or abetting such infringement under Section 29.
The trial court's finding that private respondents committed acts in blatant
transgression of Presidential Decree No. 49 all the more bolsters its findings of
probable cause, which determination can be reached even in the absence of master
tapes by the judge in the exercise of sound discretion. The executive concern and
resolve expressed in the foregoing amendments to the decree for the protection of
intellectual property rights should be matched by corresponding judicial vigilance
and activism, instead of the apathy of submitting to technicalities in the face of
ample evidence of guilt.
The essence of intellectual piracy should be essayed in conceptual terms in order to
underscore its gravity by an appropriate understanding thereof. Infringement of a
copyright is a trespass on a private domain owned and occupied by the owner of the
copyright, and, therefore, protected by law, and infringement of copyright, or piracy,
which is a synonymous term in this connection, consists in the doing by any person,
without the consent of the owner of the copyright, of anything the sole right to do
which is conferred by statute on the owner of the copyright.
78

A copy of a piracy is an infringement of the original, and it is no defense that the
pirate, in such cases, did not know what works he was indirectly copying, or did not
know whether or not he was infringing any copyright; he at least knew that what he
was copying was not his, and he copied at his peril. In determining the question of
infringement, the amount of matter copied from the copyrighted work is an
important consideration. To constitute infringement, it is not necessary that the
whole or even a large portion of the work shall have been copied. If so much is taken
196

that the value of the original is sensibly diminished, or the labors of the original
author are substantially and to an injurious extent appropriated by another, that is
sufficient in point of law to constitute a
piracy.
79
The question of whether there has been an actionable infringement of a
literary, musical, or artistic work in motion pictures, radio or television being one of
fact,
80
it should properly be determined during the trial. That is the stage calling for
conclusive or preponderating evidence, and not the summary proceeding for the
issuance of a search warrant wherein both lower courts erroneously require the
master tapes.
In disregarding private respondent's argument that Search Warrant No. 87-053 is a
general warrant, the lower court observed that "it was worded in a manner that the
enumerated seizable items bear direct relation to the offense of violation of Sec. 56
of PD 49 as amended. It authorized only the seizur(e) of articles used or intended to
be used in the unlawful sale, lease and other unconcerted acts in violation of PD 49
as amended. . . .
81

On this point, Bache and Co., (Phil.), Inc., et al. vs. Ruiz, et al.,
82
instructs and
enlightens:
A search warrant may be said to particularly describe the things to be seized
when the description therein is as specific as the circumstances will
ordinarily allow (People vs. Rubio, 57 Phil. 384); or when the description
expresses a conclusion of fact not of law by which the warrant officer
may be guided in making the search and seizure (idem., dissent of Abad
Santos, J.,); or when the things described are limited to those which bear
direct relation to the offense for which the warrant is being issued (Sec 2,
Rule 126, Revised Rules of Court). . . . If the articles desired to be seized have
any direct relation to an offense committed, the applicant must necessarily
have some evidence, other than those articles, to prove the said offense; and
the articles subject of search and seizure should come in handy merely to
strengthen such evidence. . . .
On private respondents' averment that the search warrant was made applicable to
more than one specific offense on the ground that there are as many offenses of
infringement as there are rights protected and, therefore, to issue one search
warrant for all the movie titles allegedly pirated violates the rule that a search
warrant must be issued only in connection with one specific offense, the lower court
said:
. . . . As the face of the search warrant itself indicates, it was issued for
violation of Section 56, PD 49 as amended only. The specifications therein (in
Annex A) merely refer to the titles of the copyrighted motion pictures/films
belonging to private complainants which defendants were in
control/possession for sale, lease, distribution or public exhibition in
contravention of Sec. 56, PD 49 as amended.
83

197

That there were several counts of the offense of copyright infringement and the
search warrant uncovered several contraband items in the form of pirated video
tapes is not to be confused with the number of offenses charged. The search warrant
herein issued does not violate the one-specific-offense rule.
It is pointless for private respondents to insist on compliance with the registration
and deposit requirements under Presidential Decree No. 49 as prerequisites for
invoking the court's protective mantle in copyright infringement cases. As explained
by the court below:
Defendants-movants contend that PD 49 as amended covers only producers
who have complied with the requirements of deposit and notice (in other
words registration) under Sections 49 and 50 thereof. Absent such
registration, as in this case, there was no right created, hence, no
infringement under PD 49 as amended. This is not well-taken.
As correctly pointed out by private complainants-oppositors, the Department
of Justice has resolved this legal question as far back as December 12, 1978 in
its Opinion No. 191 of the then Secretary of Justice Vicente Abad Santos
which stated that Sections 26 and 50 do not apply to cinematographic works
and PD No. 49 "had done away with the registration and deposit of
cinematographic works" and that "even without prior registration and
deposit of a work which may be entitled to protection under the Decree, the
creator can file action for infringement of its rights". He cannot demand,
however, payment of damages arising from infringement. The same opinion
stressed that "the requirements of registration and deposit are thus retained
under the Decree, not as conditions for the acquisition of copyright and other
rights, but as prerequisites to a suit for damages". The statutory
interpretation of the Executive Branch being correct, is entitled (to) weight
and respect.
xxx xxx xxx
Defendants-movants maintain that complainant and his witnesses led the
Court to believe that a crime existed when in fact there was none. This is
wrong. As earlier discussed, PD 49 as amended, does not require registration
and deposit for a creator to be able to file an action for infringement of his
rights. These conditions are merely pre-requisites to an action for damages.
So, as long as the proscribed acts are shown to exist, an action for
infringement may be initiated.
84

Accordingly, the certifications
85
from the Copyright Section of the National Library,
presented as evidence by private respondents to show non-registration of some of
the films of petitioners, assume no evidentiary weight or significance whatsoever.
198

Furthermore, a closer review of Presidential Decree No. 49 reveals that even with
respect to works which are required under Section 26 thereof to be registered and
with copies to deposited with the National Library, such as books, including
composite and cyclopedic works, manuscripts, directories and gazetteers; and
periodicals, including pamphlets and newspapers; lectures, sermons, addresses,
dissertations prepared for oral delivery; and letters, the failure to comply with said
requirements does not deprive the copyright owner of the right to sue for
infringement. Such non-compliance merely limits the remedies available to him and
subjects him to the corresponding sanction.
The reason for this is expressed in Section 2 of the decree which prefaces its
enumeration of copyrightable works with the explicit statement that "the rights
granted under this Decree shall, from the moment of creation, subsist with respect
to any of the following classes of works." This means that under the present state of
the law, the copyright for a work is acquired by an intellectual creator from the
moment of creation even in the absence of registration and deposit. As has been
authoritatively clarified:
The registration and deposit of two complete copies or reproductions of the
work with the National Library within three weeks after the first public
dissemination or performance of the work, as provided for in Section 26 (P.D.
No. 49, as amended), is not for the purpose of securing a copyright of the
work, but rather to avoid the penalty for non-compliance of the deposit of
said two copies and in order to recover damages in an infringement suit.
86

One distressing observation. This case has been fought on the basis of, and its
resolution long delayed by resort to, technicalities to a virtually abusive extent by
private respondents, without so much as an attempt to adduce any credible
evidence showing that they conduct their business legitimately and fairly. The fact
that private respondents could not show proof of their authority or that there was
consent from the copyright owners for them to sell, lease, distribute or circulate
petitioners' copyrighted films immeasurably bolsters the lower court's initial
finding of probable cause. That private respondents are licensed by the Videogram
Regulatory Board does not insulate them from criminal and civil liability for their
unlawful business practices. What is more deplorable is that the reprehensible acts
of some unscrupulous characters have stigmatized the Philippines with an unsavory
reputation as a hub for intellectual piracy in this part of the globe, formerly in the
records of the General Agreement on Tariffs and Trade and, now, of the World Trade
Organization. Such acts must not be glossed over but should be denounced and
repressed lest the Philippines become an international pariah in the global
intellectual community.
WHEREFORE, the assailed judgment and resolution of respondent Court of Appeals,
and necessarily inclusive of the order of the lower court dated November 22, 1988,
are hereby REVERSED and SET ASIDE. The order of the court a quo of September 5,
1988 upholding the validity of Search Warrant No. 87-053 is hereby REINSTATED,
199

and said court is DIRECTED to take and expeditiously proceed with such
appropriate proceedings as may be called for in this case. Treble costs are further
assessed against private respondents.
SO ORDERED.
Narvasa, C.J., Padilla, Davide, Jr., Romero, Melo, Puno, Vitug, Kapunan, Mendoza, Francisco,
Hermosisima, Jr., Panganiban and Torres, Jr., JJ., concur.
Bellosillo, J., took no part.
Footnotes
1 Rollo, CA-G.R. CV No. 20622, 155-158; Justice Quirino D. Abad-Santos, Jr., ponente,
with Justices Luis A. Javellana and Eduardo R. Bengson concurring; Rollo, 36-40.
2 Ibid., 184; ibid., 42.
3 Rollo, 50-51; Original Record, 327-328.
4 Ibid., 43-49; ibid., 274-280; per Judge Buenaventura J. Guerrero.
5 Ibid., 36-37; Rollo, CA-G.R. CV No. 20622, 155-156.
6 G.R. Nos. 76649-51, August 19, 1988, 164 SCRA 655.
7 Original Record, 236-239; Rollo, 83-85, 188-190.
8 Ibid., 267-268; ibid., 124; ibid., 114-115, 169-170.
9 Rollo, 114-115, 169-170.
10 Marshall-Wells Co. vs. Henry W. Elser & Co., 46 Phil. 71 (1924).
11 Martin, T.C., Commentaries and Jurisprudence on Philippine Commercial Laws,
Vol. 4, 1986 rev. ed., 371-372,citing Pacific Vegetable Oil Corporation vs. Singzon, L-
7917, April 29, 1955, 96 Phil. 986 (unrep.) and Eastbound Navigation, Ltd. vs. Juan
Ysmael and Co., Inc., 102 Phil. 1 (1957); La Chemise Lacoste, S.A. vs. Fernandez, etc.,
et al., G.R. Nos. 63795-97, May 21, 1984, 129 SCRA 373; Antam Consolidated, Inc., et
al. vs. Court of Appeals, et al., G.R. No. 61523, July 31, 1986, 143 SCRA 288; Converse
Rubber Corporation vs. Universal Rubber Products, Inc., et al., L-27906, January 8,
1987, 147 SCRA 154; Puma Sportschuhfabriken Rudolf Dassler, K.G. vs.
Intermediate Appellate Court, et al., G.R. No. 75067, February 26, 1988, 158 SCRA
233; Merill Lynch Futures, Inc. vs. Court of Appeals, et al., G.R. No. 97816, July 24,
1992, 211 SCRA 824; Philip Morris, Inc., et al. vs. Court of Appeals, et al., G.R. No.
91332, July 16, 1993, 224 SCRA 576; Signetics Corporation vs. Court of Appeals, et
200

al., G.R. No. 105141, August 31, 1993, 225 SCRA 737, Georg Grotjahn GMBH & Co. vs.
Isnani, et al., G.R. No. 109272, August 10, 1994, 235 SCRA 216.
12 Lopez, R.N., Corporation Code of the Philippines Annonated, Vol. 3, 1994 ed.,
1152-1153, citing Com. v. Wilkesbarre & H.R. Co., 251 Pa 6, 95 Atl. 915.
13 36 Am. Jur. 2d, Foreign Corporations, Sec. 317, 312-313; National Sugar Trading
Corporation, et al. vs. Court of Appeals, et al., G.R. No. 110910, July 17, 1995, 246
SCRA 465.
14 Martin, T.C., op. cit., 373, citing Tracton Co. v. Collector of Internal Revenue, 223
F. 984.
15 Ibid., id., id., 314-315.
16 Mentholatum Co., Inc. vs. Mangaliman, 92 Phil. 524 (1941).
17 An Act to Require that the Making of Investments and the Doing of Business
Within the Philippines by Foreigners or Business Organizations Owned in Whole or
in Part by Foreigners Should Contribute to the Sound and Balanced Development of
the National Economy on a Self-Sustaining Basis, and for Other Purposes; Enacted
without executive approval, September 30, 1968.
18 A Decree to Revise, Amend and Codify the Investment, Agricultural and Export
Incentives Acts to be Known as the Omnibus Investments Code, effective January 16,
1981. See also Art. 44 of the Omnibus Investments Code of 1987 (Executive Order
No. 226, effective July 16, 1987).
19 An Act to Promote Foreign Investments, Prescribe the Procedures for Registering
Enterprises Doing Business in the Philippines, and for Other Purposes; Approved,
June 13, 1991.
20 Exhibit I; Original Record, 257.
21 Original Record, 268.
22 36 Am. Jur. 2d, Foreign Corporations, Sec. 335, 336.
23 Ibid., id., Sec. 362, 375-376.
24 Cannon Mfg. Co. v. Cudahy Packing Co., 267 US 333, 69 L ed 634, 45 S Ct 250;
Hessig-Ellis Drug Co. v. Sly, 83 Kan 60, 109 P 770; Barnes v. Maxwell Motor Sales
Corporation, 172 Ky 409, 89 SW 444; Harrell v. Peters Cartridge Co., 36 Okla 684,
129 P 872.
25 Gottschalk Co. v. Distilling & Cattle Feeding Co. (CC Md.), 50 F 681.
201

26 O'Brien v. Lanpar Co. (Tex Civ App) 391 SW 2d 483.
27 36 Am. Jur. 2d., Foreign Corporation, Sec. 337, 339.
28 Original Record, 236-237, 281-284; Rollo, CA-G.R. CV No. 20622, 100-102; Rollo,
83-85, 188-190.
29 Sec. 1(d), Rule 16.
30 Sec. 1(g), id.
31 Lunsod vs. Ortega, 46 Phil. 664 (1921); Recreation and Amusement Association
of the Philippines vs. City of Manila, et al., 100 Phil. 950 (1957).
32 Casimiro vs. Roque, et al., 98 Phil. 880 (1956); Gonzales, et al. vs. Alegarbes, 99
Phil. 213 (1956).
33 Calano vs. Cruz, 91 Phil. 247 (1952). See also Arguelles vs. Syyap, 22 Phil. 442
(1912); Leviton Industries, et al. vs. Salvador, etc., et al., L-40163, June 19, 1982, 114
SCRA 420; Bulakhidas vs. Navarro, etc., et al., L-49695, April 7, 1986, 142 SCRA 1;
Acain vs. Intermediate Appellate Court, et al., G.R. No. 72706, October 27, 1987, 155
SCRA 100; Pilipinas Shell Petroleum Corporation vs. Dumlao, etc., et al., L-44888,
February 7, 1992, 206 SCRA 40.
34 Sustiguer, et al. vs. Tamayo, et al., L-29341, August 21, 1989, 176 SCRA
579. See Annotations on Legal Capacity to Sue by Severino S. Tabios, following the
published decision in La Chemise Lacoste, S.A. vs. Fernandez, etc., et al., supra, fn. 11.
35 Facilities Management Corporation vs. De la Osa, et al., L-38649, March 26, 1979,
89 SCRA 131; Antam Consolidated, Inc., et al. vs. Court of Appeals, et al., and cases
cited therein supra, fn. 11; Signetics Corporation vs. Court of Appeals, et al., supra, fn.
11; National Sugar Trading Corporation, et al. vs. Court of Appeals, et al., supra, fn.
13.
36 164 SCRA 655, fn. 6.
37 G.R. No. 64261, December 26, 1984, 133 SCRA 800.
38 Rollo, 80-81.
39 Ibid., 39-40.
40 Tolentino, A.M., Commentaries and Jurisprudence on The Civil Code of the
Philippines, Vol. I, 1990 ed., 36.
41 Paras, E.L., Civil Code of the Philippines Annotated, 12th ed., 57.
202

42 Caltex (Philippines), Inc. vs. Palomar, etc., L-19650, September 29, 1966, 18 SCRA
247; Floresca, et al., vs. Philex Mining Corporation, et al., L-30642, April 30, 1985,
136 SCRA 141.
43 G.R. No. 100716, October 28, 1993, 227 SCRA 444, and cases cited therein.
44 L-30061, February 27, 1974, 55 SCRA 607.
45 G.R. No. 97998, January 27, 1992, 205 SCRA 515.
46 100 Phil. 501 (1956). See also People vs. Licera, L-39990, July 22, 1975, 65 SCRA
270.
47 People vs. Jabinal, supra, fn. 44; Unciano Paramedical College, Inc., et al. vs. Court
of Appeals, et al., G.R. No. 100335, April 7, 1993, 221 SCRA 285; Taada, et al. vs.
Guingona, Jr., etc., et al., G.R. No. 113888, August 19, 1994, 235 SCRA 507.
48 De Agbayani vs. Philippine National Bank, et al., L-23127, April 29, 1971, 38 SCRA
429.
49 Rollo, 21-24, 159-163.
50 Rollo, 35.
51 Original Record, 4-7.
52 Ibid., 155-156.
53 Ibid., 12-15.
54 Ibid., 157-158.
55 Ibid., 9-10, 159-160.
56 Rollo, 85-86.
57 City of Manila vs. Cabangis, 10 Phil. 151 (1908); Kabase v. State, 31 Ala. App. 77,
12 So. 2nd, 758, 764.
58 See Phil. Movie Workers Association vs. Premiere Productions, Inc., 92 Phil. 843
(1953).
59 See 3 Jones on Evidence, Sec. 1400.
60 47 Am. Jur. 2d, Searches and Seizures, Sec. 21, 576.
203

61 79 CJS, Searches and Seizures, Sec. 74, 862.
62 Ibid., id., id., 863.
63 Lucich v. State, Md., 71 A. 2d 432; Smith v. State, 62 A. 2d 287, 191 Md. 329, 5
A.L.R. 2d, 386.
64 U.S. v. Nichols, D.C. Ark., 89 F. Supp. 953, 955.
65 Silver v. State, 110 Tex Crim. Rep. 512, 8 SW (2d) 144, 9 SW (2d) 358, 60 A.L.R.
290.
66 Goodman v. State, 11 A. 2d 635, 639, 178 Md. I.
67 47 Am. Jur. 2d, Searches and Seizures, Sec. 22, 516; Brinegar v. United States, 338
U.S. 160 (1949).
68 79 CJS, Search and Seizures, Sec. 74, 865.
69 Burgos, Sr., et al. vs. Chief of Staff, et al., supra, fn. 37; Quintero vs. National
Bureau of Investigation, et al., L-35149, June 23, 1988, 162 SCRA 467; MHP
Garments, Inc., et al. vs. Court of Appeals, et al., G.R. No. 86720, September 2, 1994,
236 SCRA 227.
70 State v. Perkins, 285 S.W. 1021, 220 Mo. App. 349.
71 State v. Norris, 109 So. 787, 161 La 988.
72 G.M. Leasing Corp. v. United States, 429 U.S. 338, 97 S Ct. 619, 50 L. Ed. 2d 530.
73 See Central Bank of the Philippines vs. Morfe, et al., L-20119, June 30, 1967, 20
SCRA 507; Luna vs. Plaza, etc., et al., L-27511, November 29, 1968, 26 SCRA 310.
74 Original Record, 277-278; Rollo, 46-47.
75 Ibid., 328; ibid., 51.
76 Rollo, CA-G.R. CV No. 20622, 177-178.
77 Promulgated on October 5, 1985.
78 18 CJS, Copyright and Literary Property, Sec. 90, 212; 18 Am Jur 2d, Copyright
and Literary Property, Sec. 106, 391-392.
79 Ibid., id., Sec. 94, 217, 218.
204

80 Universal Pictures Co. v. Harold Lloyd Corp. (CA9 Cal), 162 F2d 354; Arnstein v.
Porter (CA2 Ny), 154 F2d 464.
81 Original Record, 278; Rollo 47.
82 L-32409, February 27, 1971, 37 SCRA 823.
83 Original Record, 279; Rollo, 47.
84 Ibid., 275, 278; ibid., 44, 45.
85 Exhbit Nos. 1, 2, 3 and 4; Original Record, 174-178.
86 Martin, T.C., op cit., Vol. 2, 366.

205

Topic: Infringement
Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION

G.R. No. 96597-99 October 6, 1994
COLUMBIA PICTURES, INC., ORION PICTURES CORP., PARAMOUNT PICTURES CORP.,
TWENTIETH CENTURY FOX FILM CORP., UNITED ARTISTS CORP., UNIVERSAL CITY
STUDIOS, INC., WALT DISNEY COMPANY and WARNER BROS., INC., petitioners,
vs.
HON. COURT OF APPEALS, TUBE VIDEO ENTERPRISES and EDWARD CHAM,
BLOOMING ROSE TAPE CENTER and MA. JAJORIE T. UY, and VIDEO CHANNEL and
LYDIA NABONG, respondents.
G.R. No. 97156 October 6, 1994
COLUMBIA PICTURES INDUSTRIES, INC., ORION PICTURES CORPORATION,
PARAMOUNT PICTURES CORP., TWENTIETH CENTURY FOX FILM CORP., MGM/UA
COMMUNICATIONS COMPANY, UNIVERSAL CITY STUDIOS, INC., THE WALT DISNEY
COMPANY, and WARNER BROS., INC.,petitioners,
vs.
HON. COURT OF APPEALS, FOX'S VIDEO, INC. and ALFREDO
ONGYANGCO., respondents.
Castillo, Laman, Tan & Pantaleon for petitioners.
Herminio T. Banico, Jr. & Associates for private respondent Lydia Nabong.
Molo, Padua, Salazar, Roldan & Associates for Blooming Rose Tape Center/Ma. J.T. Uy.
R E S O L U T I O N

VITUG, J.:
On 07 April 1988, the National Bureau of Investigation ("NBI"), through its Agent Lauro C.
Reyes, filed with the Regional Trial Court of Pasig
(Branch 159) three applications for search warrant against private respondents Tube
Video Enterprises and Edward C. Cham (ASW No. 95), the Blooming Rose Tape Center and
206

Ma. Jajorie T. Uy (ASW No. 96), and the Video
Channel and Lydia Nabong (ASW No. 97), charging said respondents with violation of
Section 56 of Presidential Decree ("P.D.") No. 49, otherwise known as the Decree on the
Protection of Intellectual Property, as amended by P.D. No. 1988.
In the three applications for search warrant, NBI Agent Reyes stated under oath that the
respondents had in their possession and control
1. (p)irated video tapes of the copyrighted motion pictures/films the titles of
which are mentioned in the attached list;
2. (p)osters, advertising leaflets, flyers, brochures, invoices, journals, ledgers,
job order slips, delivery slips, stickers and books of account bearing and/or
mentioned the pirated films with titles . . ., or otherwise used in the
videogram business or activities of the defendants; sold, leased, distributed
or possessed for the purpose of sale, lease, distribution, circulation or public
exhibition, journals, ledgers, job order slips, delivery slips, stickers and books
of accounts used in the unlawful videogram business or activities of the
defendants; (and)
3. (t)elevision sets, video cassette and/or laser disc recorders, dubbing
machines, rewinders, film projectors, U-matic machines, image enhancers,
dubbing machines, tape head cleaners, converters, accessories, equipment
and other machines and paraphernalia, materials or empty/erasable video
tapes and master copies used or intended to be used in the unlawful
exhibition, showing, reproduction, sale lease or disposition of videograms
they are keeping and concealing in the premises abovedescribed.
1

Acting on the applications, then Regional Trial Court Judge Maria
Alicia M. Austria conducted a joint hearing during which she made a personal examination
of the applicant and his witnesses. Finding just and probable cause for granting the
application at the time, Judge Austria issued the corresponding Search Warrants ("SW")
numbered 95, 96, and 97.
Private respondents filed their respective motions to quash the three search warrants,
citing as grounds therefor the following:
In SW No. 95
1. There is no probable cause nor the existence of a satisfactory fact upon
which the search warrant is based;
2. The National Bureau of Investigation has no authority nor the jurisdiction
to initiate the filing of suit against the defendants;
207

3. The confiscation of defendants' seized articles based on the questioned
search warrant violated the latter's constitutional right against deprivation
of properties without due process.
4. The films in question are not protected by Pres. Decree
No. 1988 in that they were never registered in the National Library as a
condition precedent to the availment of the protection secured by that
decree. The complaint has acquired no right under the same.
5. The mere publication by complainant of its alleged ownership over the
films in question does not ipso factovest in the right to proceed under P.D. No.
49 as that law requires official registration. Moreover, the said publication
took place only after the application for the questioned search warrant.
2

In SW No. 96
1. The complainants, one Rico V. Domingo and one Rene C. Baltazar, in
representation of the Motion Picture Association of America, Inc., have not
proven nor established their ownership over the films listed in Annex "A" of
the search warrant issued by this Honorable Court against the defendants
herein.
2. The information provided by the National Bureau of Investigation agents
and the representatives of the MPAA, Inc. are replete with generalities
insofar as the description of the items to be concerned in violation of the
provisions of Sec. 3 of Rule 126 of the Rules of Court. Their allegations as to
the offense are presumptuous and speculative in violation of the same
section of the Rules of Court.
3

Private respondents in SW No. 97 adopted the motions filed for the quashal of both SW No.
95 and SW No. 96.
Herein petitioners (the private complainants in the three cases), namely, Columbia Pictures
Entertainment, Inc., Orion Pictures Corporation, Twentieth Century Fox Film Corporation,
MGM/UA Communications Company, Universal City Studios, Inc., Walt Disney Company
and Warner Bros., Inc., submitted their oppositions to the motions to quash. The movants,
herein private respondents, filed their replies to the oppositions and sought,
simultaneously, the release of the items seized. After a rejoinder was filed, the court a
quo considered all the incidents submitted for resolution.
In a Joint Order, issued on 09 December 1988, Judge Austria defined the issues raised in the
motions to quash thusly:
1. Whether or not the NBI had authority to file the application for search
warrant; whether or not it is the Videogram Regulatory Board under P.D. No.
208

1987 which has exclusive jurisdiction to file suits against violators of said
law.
2. Whether or not this Court observed due process of law before issuing the
search warrants in question.
3. Whether or not search warrants Nos. 95, 96 and 97 are general warrants
and therefore void.
4. Whether or not there was probable cause in the issuance of the search
warrants pursuant to Section 3, Rule 126 of the 1985 Rules on Criminal
Procedure and Section 2, Article III of the 1987 Constitution of the Republic
of the Philippines.
5. Whether or not private complainants who are members of the Motion
Picture Association of America, Inc. (MPAA for brevity) through their
counsel, Atty. Rico Domingo, have sufficiently proven their ownership over
the alleged pirated video tapes of the copyrighted motion pictures/films.
6. Whether or not the items seized by the NBI agents by virtue of SW Nos. 95,
96 and 97 may be ordered released to defendants.
4

Anent the first three issues, Judge Austria ruled that the NBI had the authority to apply for
the search warrants; that in the issuance of the search warrants, due process of law was
duly observed; and that the questioned search warrants were not general in character
since the provision of law violated, i.e., Sec. 56 of P.D. No. 49, as amended by P.D. No. 1988,
was clearly specified. Judge Austria, nonetheless, reversed her former stand initially finding
probable cause for the issuance of the search warrants and ordered the quashal of the
search warrants giving the following reasons:
1. Private complainants were uncertain of their ownership of the titles
subject of the seized video tapes;
2. Complainants did not comply with the requirement that the master tapes
should be presented during the application for search warrants; and
3. Private complainants cannot seek the protection of Philippine laws as they
failed to comply with the deposit and registration requirements of P.D. No. 49
as amended by P.D. No. 1988.
5

Judge Austria thus ordered the return of all the items seized by virtue of the warrants.
Petitioners appealed the order of Judge Austria to the Court of Appeals, docketed CA-G.R.
CV No. 22133-22135, assigning the following alleged errors:
209

1. The Court a quo erred in ruling that private complainants were uncertain
of their ownership of the titles subject of the pirated video tapes.
2. The Court a quo erred in ordering the quashal of the search warrants on
the ground that the requirement of producing the "master tapes" during the
application for a search warrant, as enunciated in the 20th Century Foxcase,
promulgated on 19 August 1988, was applicable to the facts of the instant
case which transpired on 07 April 1988, and that the same was not complied
with.
3. The Court a quo erred in ruling that appellants do not have a protectable
copyright under Philippine laws for their failure to comply with the deposit
and registration requirements of Presidential Decree No. 49, as amended by
Presidential Decree No. 1988.
6

On 31 October 1990, the Court of Appeals, through Justice Salome A. Montoya, rendered its
decision sustaining petitioners' first and third assignment of errors but rejecting
petitioners' second assignment of error. It, therefore, still affirmed the quashal of the
search warrants.
Hence, this petition (G.R. No. 96597-99). Another decision rendered by the Court of
Appeals in another case (CA-G.R. No. 20617), involving the same petitioners on
substantially identical facts and issues, was also brought before this Court (G.R. No. 97156).
In a Resolution, dated 06 March 1991, this Court consolidated the two petitions.
We affirm the decisions of the Court of Appeals.
This Court, in 20th Century Fox Film Corp. vs. Court of Appeals (164 SCRA 655) has already
laid down the rule that a basic requirement for the validity of search warrants, in cases of
this nature, is the presentation of the master tapes of the copyrighted films from which
pirated films are supposed to have been copied. We quote:
The presentation of the master tapes of the copyrighted films from which the
pirated films were allegedly copied, was necessary for the validity of search
warrants against those who have in their possession the pirated films. The
petitioner's argument to the effect that the presentation of the master tapes
at the time of application may not be necessary as these would be merely
evidentiary in nature and not determinative of whether or not a probable
cause exists to justify the issuance of the search warrants is not meritorious.
The court cannot presume that duplicate or copied tapes were necessarily
reproduced from master tapes that it owns.
The application for search warrants was directed against video tape outlets
which allegedly were engaged in the unauthorized sale and renting out of
copyrighted films belonging to the petitioner pursuant to P.D. 49.
210

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.
We also fully concur with the Court of Appeals when, in resolving petitioners' motion for
reconsideration in CA-G.R. CV No. 22133-35, it ratiocinated thusly:
It is not correct to say that "the basic fact" to be proven to establish probable
cause in the instant cases is not the "unauthorized transfer" of a motion
picture that has been recorded but the "sale, lease, or distribution of pirated
video tapes of copyrighted films."
In applying for the search warrants the NBI charged violation of the entire
provisions of Section 56 of P.D. No. 49 as amended by P.D.
No. 1988. This included not only the sale, lease or distribution of pirated
tapes but also the transfer or causing to be transferred of any sound
recording or motion picture or other audio visual work.
But even assuming, as appellants argue, that only the sale, lease, or
distribution of pirated video tapes is involved, the fact remains that there is
need to establish probable cause that the tapes being sold, leased or
distributed are pirated tapes, hence the issue reverts back to the question of
whether there was unauthorized transfer, directly or indirectly, of a sound
recording or motion picture or other audio visual work that has been
recorded.
7

With due respect to petitioners, the Court does not see a compelling reason to reexamine
its previous position on the issue.
WHEREFORE, in view of the foregoing, the instant petitions are hereby DENIED for lack of
merit.
SO ORDERED.

#Footnotes
1 Rollo of G.R. No. 97156, p. 110.
211

2 Rollo of G.R. No. 96597-99, pp. 126-127.
3 Rollo of G.R. No. 96597-99, p. 126.
4 Rollo of G.R. No. 96597-99, pp. 127-128.
5 Rollo of G.R. No. 96597-99, p. 128.
6 Rollo of G.R. No. 96597-99, pp. 128-129.
7 Rollo of G.R. No. 96597-99, pp. 160-161.


212

Topic: Infringement
Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. Nos. 76649-51 August 19, 1988
20TH CENTURY FOX FILM CORPORATION, petitioner,
vs.
COURT OF APPEALS, EDUARDO M. BARRETO, RAUL SAGULLO and FORTUNE
LEDESMA,respondents.
Siguion Reyna, Montecillo & Ongsiako Law Office for petitioner.
B.C. Salazar & Associates for respondents.

GUTIERREZ, JR., J.:
The petitioner questions the application of the constitutional provision against illegal
searches and seizures to raids conducted in connection with the government's anti-film
piracy campaign. The main issue hinges on whether or not the judge properly lifted the
search warrants he issued earlier upon the application of the National Bureau of
Investigation on the basis of the complaint filed by the petitioner.
In a letter-complaint dated August 26, 1985, petitioner 20th Century Fox Film Corporation
through counsel sought the National Bureau of Investigation's (NBI) assistance in the
conduct of searches and seizures in connection with the latter's anti-film piracy campaign.
Specifically, the letter-complaint alleged that certain videotape outlets all over Metro
Manila are engaged in the unauthorized sale and renting out of copyrighted films in
videotape form which constitute a flagrant violation of Presidential Decree No. 49
(otherwise known as the Decree on the Protection of Intellectual Property).
Acting on the letter-complaint, the NBI conducted surveillance and investigation of the
outlets pinpointed by the petitioner and subsequently filed three (3) applications for
search warrants against the video outlets owned by the private respondents. The
applications were consolidated and heard by the Regional Trial Court of Makati, Branch
132.
On September 4, 1985, the lower court issued the desired search warrants.
213

Armed with the search warrants, the NBI accompanied by the petitioner's agents, raided
the video outlets and seized the items described therein. An inventory of the items seized
was made and left with the private respondents.
Acting on a motion to lift search warrants and release seized properties filed by the private
respondents, the lower court issued an order dated October 8, 1985, lifting the three (3)
search warrants issued earlier against the private respondents by the court. The
dispositive portion of the order reads:
WHEREFORE, the Court hereby orders that Search Warrants Nos. SW- 85-
024; issued against Eduardo M. Barreto of the Junction Video, etc.,
Paranaque, Metro Manila; SW No. 85-025, issued against Raul M. Sagullo of
South Video Bug Center, Inc., etc., also of No. 5355 Pres. Avenue BF Homes,
Paraaque, Metro Manila; and SW No. 85-026, issued against Fortune A.
Ledesma of Sonix Video Services of San Antonio Plaza, Forbes Park, Makati,
Metro Manila, be lifted.
Consequently, the articles listed in the returns of the three search warrants
which could not be a basis of any criminal prosecution, now in the possession
of the National Bureau of Investigation which under the law must be
delivered to this Court, but which the NBI failed to do, are hereby ordered to
be returned to their owners through their lawyer, Atty. Benito Salazar or his
agents or representatives, against proper receipt, to be forwarded to this
Court for record purposes, as proof that said properties have been returned
to the possession of the rightful owners." (p. 34, Rollo)
The lower court denied a motion for reconsideration filed by the petitioner in its order
dated January 2, 1986.
The petitioner filed a petition for certiorari with the Court of Appeals to annul the October
8, 1985 and January 2, 1986 orders of the lower court. The petition was dismissed.
Hence, this petition.
The main issue hinges on the meaning of "probable cause" within the context of the
constitutional provision against illegal searches and seizures (Section 3, Article IV, 1973
Constitution, now, Section 2, Article Ill, 1987 Constitution.
The petitioner maintains that the lower court issued the questioned search warrants after
finding the existence of a probable cause justifying their issuance. According to the
petitioner, the lower court arrived at this conclusion on the basis of the depositions of
applicant NBI's two witnesses which were taken through searching questions and answers
by the lower court.
Section 2, Article III of the present Constitution which substantially reproduces Section 3,
Article IV of the 1973 Constitution on illegal searches and seizures provides:
214

The right of the people to be secure in their persons, houses, papers, and
effects against unreasonable searches and seizures of whatever nature and
for any purpose shall be inviolable, and no search warrant or warrant of
arrest shall issue except upon probable cause to be determined personally by
the judge after examination under oath or affirmation of the complainant and
the witnesses he may produce, and particularly describing the place to be
searched and the persons or things to be seized.
This constitutional right protects a citizen against wanton and unreasonable invasion of his
privacy and liberty as to his person, papers and effects. We have explained in the case
of People v. Burgos (144 SCRA 1) citing Villanueva v. Querubin (48 SCRA 345) why the right
is so important:
It is deference to one's personality that lies at the core of this right, but it
could be also looked upon as a recognition of a constitutionally protected
area, primarily one's home, but not necessarily thereto confined. (Cf. Hoffa v.
United States, 385 US 293 119661) What is sought to be guarded is a man's
prerogative to choose who is allowed entry to his residence. In that haven of
refuge, his individuality can assert itself not only in the choice of who shall be
welcome but likewise in the kind of objects he wants around him. There the
state, however powerful, does not as such have access except under the
circumstances above noted, for in the traditional formulation, his house,
however humble, is his castle. Thus is outlawed any unwarranted intrusion
by government, which is called upon to refrain from any invasion of his
dwelling and to respect the privacies of his life. (Cf Schmerber v. California,
384 US 757 [1966], Brennan, J. and Boyd v. United States, 116 630 [1886]). In
the same vein, Landynski in his authoritative work (Search and Seizure and
the Supreme Court [1966]), could fitly characterize constitutional right as the
embodiment of a "spiritual concept: the belief that to value the privacy of
home and person and to afford its constitutional protection against the long
reach of government is no less than to value human dignity, and that his
privacy must not be disturbed except in case of overriding social need, and
then only under stringent procedural safeguards."(ibid, p. 74).
The government's right to issue search warrants against a citizen's papers and effects is
circumscribed by the requirements mandated in the searches and seizures provision of the
Constitution.
In the case of Burgos, Sr. v. Chief of Staff, AFP (133 SCRA 800), we defined probable cause
for a valid search "as such facts and circumstances which would lead a reasonably discreet
and prudent man to believe that an offense has been committed and that the objects sought
in connection with the offense are in the place sought to be searched." This constitutional
provision also demands "no less than personal knowledge by the complainant or his
witnesses of the facts upon which the issuance of a search warrant may be justified" in
order to convince the judge, not the individual making the affidavit and seeking the
215

issuance of the warrant, of the existence of a probable cause. (Alvarez v. Court of First
Instance, 64 Phil. 33; Burgos, Sr. v. Chief of Staff, AFP, supra).
In the instant case, the lower court lifted the three questioned search warrants against the
private respondents on the ground that it acted on the application for the issuance of the
said search warrants and granted it on the misrepresentations of applicant NBI and its
witnesses that infringement of copyright or a piracy of a particular film have been
committed. Thus the lower court stated in its questioned order dated January 2,1986:
According to the movant, all three witnesses during the proceedings in the
application for the three search warrants testified of their own personal
knowledge. Yet, Atty. Albino Reyes of the NBI stated that the counsel or
representative of the Twentieth Century Fox Corporation will testify on the
video cassettes that were pirated, so that he did not have personal
knowledge of the alleged piracy. The witness Bacani also said that the video
cassettes were pirated without stating the manner it was pirated and that it
was Atty. Domingo that has knowledge of that fact.
On the part of Atty. Domingo, he said that the re-taping of the allegedly
pirated tapes was from master tapes allegedly belonging to the Twentieth
Century Fox, because, according to him, it is of his personal knowledge.
At the hearing of the Motion for Reconsideration, Senior NBI Agent Atty.
Albino Reyes testified that when the complaint for infringement was brought
to the NBI, the master tapes of the allegedly pirated tapes were shown to him
and he made comparisons of the tapes with those purchased by their man
Bacani. Why the master tapes or at least the film reels of the allegedly pirated
tapes were not shown to the Court during the application gives some
misgivings as to the truth of that bare statement of the NBI agent on the
witness stand. "
Again as the application and search proceedings is a prelude to the filing of
criminal cases under PD 49, the copyright infringement law, and although
what is required for the issuance thereof is merely the presence of probable
cause, that probable cause must be satisfactory to the Court, for it is a time-
honored precept that proceedings to put a man to task as an offender under
our laws should be interpreted instrictissimi juris against the government
and liberally in favor of the alleged offender.
xxx xxx xxx
This doctrine has never been overturned, and as a matter of fact it had been
enshrined in the Bill of Rights in our 1973 Constitution.
So that lacking in persuasive effect, the allegation that master tapes were
viewed by the NBI and were compared to the purchased and seized video
216

tapes from the respondents' establishments, it should be dismissed as not
supported by competent evidence and for that matter the probable cause
hovers in that grey debatable twilight zone between black and white
resolvable in favor of respondents herein.
But the glaring fact is that 'Cocoon,' the first video tape mentioned in the
search warrant, was not even duly registered or copyrighted in the
Philippines. (Annex C of Opposition p. 152 record). So, that lacking in the
requisite presentation to the Court of an alleged master tape for purposes of
comparison with the purchased evidence of the video tapes allegedly pirated
and those seized from respondents, there was no way to determine whether
there really was piracy, or copying of the film of the complainant Twentieth
Century Fox." (pp. 37-39, Rollo)
xxx xxx xxx
The lower court, therefore, lifted the three (3) questioned search warrants in the absence
of probable cause that the private respondents violated P.D. 49. As found out by the court,
the NBI agents who acted as witnesses did not have personal knowledge of the subject
matter of their testimony which was the alleged commission of the offense by the private
respondents. Only the petitioner's counsel who was also a witness during the application
for the issuance of the search warrants stated that he had personal knowledge that the
confiscated tapes owned by the private respondents were pirated tapes taken from master
tapes belonging to the petitioner. However, the lower court did not give much credence to
his testimony in view of the fact that the master tapes of the allegedly pirated tapes were
not shown to the court during the application.
All these factors were taken into consideration by the lower court when it lifted the three
questioned search warrants. There is no truth, therefore, to the petitioner's allegation that
the lower court based its January 2, 1986 order only "on the fact that the original or master
copies of the copyrighted films were not presented during the application for search
warrants, thus leading it to conclude that it had been "misled by the applicant and his
witnesses." (p. 17, Rollo)
The presentation of the master tapes of the copyrighted films from which the pirated films
were allegedly copied, was necessary for the validity of search warrants against those who
have in their possession the pirated films. The petitioner's argument to the effect that the
presentation of the master tapes at the time of application may not be necessary as these
would be merely evidentiary in nature and not determinative of whether or not a probable
cause exists to justify the issuance of the search warrants is not meritorious. The court
cannot presume that duplicate or copied tapes were necessarily reproduced from master
tapes that it owns.
The application for search warrants was directed against video tape outlets which allegedly
were engaged in the unauthorized sale and renting out of copyrighted films belonging to
the petitioner pursuant to P.D. 49.
217

The essence of a copyright infringement is the similarity or at least substantial similarity of
the purported pirated works to the copyrighted work. Hence, the applicant must present to
the court the copyrighted films to compare them with the purchased evidence of the video
tapes allegedly pirated to determine whether the latter is an unauthorized reproduction of
the former. This linkage of the copyrighted films to the pirated films must be established to
satisfy the requirements of probable cause. Mere allegations as to the existence of the
copyrighted films cannot serve as basis for the issuance of a search warrant.
Furthermore, we note that the search warrants described the articles sought to be seized as
follows:
xxx xxx xxx
xxx xxx xxx
c) Television sets, Video Cassettes Recorders, rewinders, tape
head cleaners, accessories, equipments and other machines
used or intended to be used in the unlawful reproduction, sale,
rental/lease distribution of the above-mentioned video tapes
which she is keeping and concealing in the premises above-
described." (p. 26, Rollo)
In the case of Burgos v. Chief of Staff, AFP supra, we stated:
xxx xxx xxx
Another factor which makes the search warrants under consideration
constitutionally objectionable is that they are in the nature of general
warrants. The search warrants describe the articles sought to be seized in
this wise:
l] All printing equipment, paraphernalia, paper, ink, photo equipment,
typewriters, cabinets, tables communications/recording equipment, tape
recorders, dictaphone and the like used and/or connected in the printing of
the 'WE FORUM' newspaper and any and all document/communications,
letters and facsimile of prints related to "WE FORUM" newspaper.
2] Subversive documents, pamphlets, leaflets, books, and other publications
to promote the objectives and purposes of the subversive organizations
known as Movement for Free Philippines, Light-a-Fire Movement and April 6
Movement; and
3] Motor vehicles used in the distribution/circulation of the 'WE FORUM and
other subversive materials and propaganda, more particularly,
1] Toyota-Corolla, colored yellow with Plate No. NKA 892;
218

2] DATSUN pick-up colored white with Plate No. NKV 969;
3] A delivery truck with Plate No. NBS 542;
4] TOYOTA-TAMARAW, colored white with Plate No. PBP
665;and,
5] TOYOTA Hi-Lux, pick-up truck with Plate No. NGV 472 with
marking "Bagong Silang."
In Stanford v. State of Texas (379 U.S. 476,13 L ed 2nd 431), the search
warrant which authorized the search for 'books, records, pamphlets, cards,
receipts, lists, memoranda, pictures, recordings and other written
instruments concerning the Communist Parties of Texas, and the operations
of the Community Party in Texas," was declared void by the U.S. Supreme
Court for being too general. In like manner, directions to "seize any evidence
in connection with the violation of SDC 13-3703 or otherwise' have been held
too general, and that portion of a search warrant which authorized the
seizure of any "paraphernalia which could be used to violate Sec. 54-197 of
the Connecticut General Statutes [the statute dealing with the crime of
conspiracy]"' was held to be a general warrant, and therefore invalid (68 Am.
Jur. 2d., pp. 736-737). The description of the articles sought to be seized
under the search warrants in question cannot be characterized differently.
(at pp. 814-815)
Undoubtedly, a similar conclusion can be deduced from the description of the articles
sought to be confiscated under the questioned search warrants.
Television sets, video cassette recorders, reminders and tape cleaners are articles which
can be found in a video tape store engaged in the legitimate business of lending or renting
out betamax tapes. In short, these articles and appliances are generally connected with, or
related to a legitimate business not necessarily involving piracy of intellectual property or
infringement of copyright laws. Hence, including these articles without specification and/or
particularity that they were really instruments in violating an Anti-Piracy law makes The
search warrant too general which could result in the confiscation of all items found in any
video store. In fact, this actually happened in the instant case. Thus, the lower court, in its
questioned order dated October 8, 1985 said:
Although the applications and warrants themselves covered certain articles
of property usually found in a video store, the Court believes that the search
party should have confined themselves to articles that are according to them,
evidence constitutive of infringement of copyright laws or the piracy of
intellectual property, but not to other articles that are usually connected
with, or related to, a legitimate business, not involving piracy of intellectual
property, or infringement of copyright laws. So that a television set, a
rewinder, and a whiteboard listing Betamax tapes, video cassette cleaners
219

video cassette recorders as reflected in the Returns of Search Warrants, are
items of legitimate business engaged in the video tape industry, and which
could not be the subject of seizure, The applicant and his agents therefore
exceeded their authority in seizing perfectly legitimate personal property
usually found in a video cassette store or business establishment." (p. 33,
Rollo)
All in all, we find no grave abuse of discretion on the part of the lower court when it lifted
the search warrants it earlier issued against the private respondents. We agree with the
appellate court's findings to the effect that:
An assiduous examination of the assailed orders reveal that the main ground
upon which the respondent Court anchored said orders was its subsequent
findings that it was misled by the applicant (NBI) and its witnesses 'that
infringement of copyright or a piracy of a particular film have been
committed when it issued the questioned warrants.' Stated differently, the
respondent Court merely corrected its erroneous findings as to the existence
of probable cause and declared the search and seizure to be unreasonable.
Certainly, such action is within the power and authority of the respondent
Court to perform, provided that it is not exercised in an oppressive or
arbitrary manner. Indeed, the order of the respondent Court declaring the
existence of probable cause is not final and does not constitute res judicata.
A careful review of the record of the case shows that the respondent Court
did not commit a grave abuse of discretion when it issued the questioned
orders. Grave abuse of discretion' implies such capricious and whimsical
exercise of judgment as is equivalent to lack of jurisdiction, or, in other
words, where the power is exercised in an arbitrary or despotic manner by
reason of passion or personal hostility, and it must be so patent and gross as
to amount to an evasion of positive duty or to a virtual refusal to perform the
duty enjoined or to act at all in contemplation of law.' But far from being
despotic or arbitrary, the assailed orders were motivated by a noble desire of
rectifying an error, much so when the erroneous findings collided with the
constitutional rights of the private respondents. In fact, the petitioner did not
even contest the righteousness and legality of the questioned orders but
instead concentrated on the alleged denial of due process of law." (pp. 44-45,
Rollo)
The proliferation of pirated tapes of films not only deprives the government of much
needed revenues but is also an indication of the widespread breakdown of national order
and discipline. Courts should not impose any unnecessary roadblocks in the way of the
anti-film piracy campaign. However, the campaign cannot ignore or violate constitutional
safeguards. To say that the problem of pirated films can be solved only by the use of
unconstitutional shortcuts is to denigrate the long history and experience behind the
searches and seizures clause of the Bill of Rights. The trial court did not commit reversible
error.
220

WHEREFORE, the instant petition is DISMISSED. The questioned decision and resolution of
the Court of Appeals are AFFIRMED.
SO ORDERED.
Fernan, C.J., Feliciano, Bidin and Cortes, JJ., concur


221

Topic: Infringement
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-11937 April 1, 1918
PEDRO SERRANO LAKTAW, plaintiff-appellant,
vs.
MAMERTO PAGLINAWAN, defendant-appellee.
Perfecto Gabriel for appellant.
Felix Ferrer and Crossfield and O'Brien for appellee.
ARAULLO, J.:
In the complaint presented in the Court of First Instance of the City of Manila on February
20, 1915, it was alleged: (1) That the plaintiff was, according to the laws regulating literary
properties, the registered owner and author of a literary work entitled Diccionario Hispano-
Tagalog (Spanish-Tagalog Dictionary) published in the City of Manila in 1889 by the
printing establishment La Opinion, and a copy of which was attached to the complaint, as
Exhibit A; (2) that the defendant, without the consent of the plaintiff, reproduced said
literary work, improperly copied the greater part thereof in the work published by him and
entitled Diccionariong Kastila-Tagalog (Spanish-Tagalog Dictionary), a copy of which was
also attached to the complaint as Exhibit B; (3) that said act of the defendant, which is a
violation of article 7 of the Law of January 10, 1879, on Intellectual Property, caused
irreparable injuries to the plaintiff, who was surprised when, on publishing his new work
entitled Diccionario Tagalog-Hispano (Tagalog-Spanish Dictionary) he learned of the fact,
and (4) that the damages occasioned to the plaintiff by the publication of defendant's work
amounted to $10,000. The plaintiff therefore prayed the court to order the defendant to
withdraw from sale all stock of the work herein identified as Exhibit B and to pay the
plaintiff the sum of $10,000, with costs.
The defendant in his answer denied generally each and every allegation of the complaint
and prayed the court to absolve him from the complaint. After trial and the introduction of
evidence by both parties, the court on August 20, 1915, rendered judgment, absolving the
defendant from the complaint, but without making any special pronouncement as to costs.
The plaintiff moved for a new trial on the ground that the judgment was against the law
and the weight of the evidence. Said motion having been overruled, plaintiff excepted to the
order overruling it, and appealed the case to the Supreme Court upon a bill of exceptions.
The ground of the decision appealed from is that a comparison of the plaintiff's dictionary
with that of the defendant does not show that the latter is an improper copy of the former,
which has been published and offered for sale by the plaintiff for about twenty-five years or
222

more. For this reason the court held that the plaintiff had no right of action and that the
remedy sought by him could not be granted.
The appellant contends that court below erred in not declaring that the defendant had
reproduced the plaintiff's work and that the defendant had violated article 7 of the Law of
January 10, 1879, on Intellectual Property.
Said article provides:
Nobody may reproduce another person's work without the owner's consent, even
merely to annotate or add anything to it, or improve any edition thereof.
Therefore, in order that said article may be violated, it is not necessary, as the court below
seems to have understood, that a work should be an improper copy of another work
previously published. It is enough that another's work has been reproduced without the
consent of the owner, even though it be only to annotate, add something to it, or improve
any edition thereof.
Upon making a careful and minute comparison of Exhibit A, the dictionary written and
published by the plaintiff, and Exhibit B, written and published by the defendant, and,
taking into account the memorandum (fols. 55 to 59) presented by the defendant, in which
he enumerates the words and terms which, according to him, are in his dictionary but not
in that of that of the plaintiff, and viceversa, and the equivalents or definitions given by the
plaintiff, as well as the new Tagalog words which are in the dictionary of the defendant but
not in that of the plaintiff; and considering the notes, Exhibit C, first series, presented by the
plaintiff, in which the terms copied by the defendant from the plaintiff's dictionary are
enumerated in detail and in relation to each letter of the alphabet and which the plaintiff's
own words and terms are set forth, with a summary, at the foot of each group of letters,
which shows the number of initial Spanish words contained in the defendant's dictionary,
the words that are his own and the fact that the remaining ones are truly copied from the
plaintiff's dictionary considering all of these facts, we come to a conclusion completely
different and contrary to that of the trial court, for said evidence clearly shows:
1. That, of the Spanish words in the defendant's dictionary, Exhibit B, which correspond to
each letter of the alphabet, those that are enumerated below have been copied and
reproduced from the plaintiff's dictionary, with the exception of those that are stated to be
defendant's own.
Letter Words Defendant's
own
"A" 1,184 231
"B" 364 28
"C" 660 261
"CH" 76 10
"D" 874 231
"E" 880 301
"F" 383 152
"G" 302 111
"H" 57 64
223

"I" 814 328
"J" 113 25
"K" 11 11
"L" 502 94
"LL" 36 2
"M" 994 225
"N" 259 53
"" 6 2
"O" 317 67
"P" 803 358
"Q" 84 11
"R" 847 140
"S" 746 118
"T" 591 147
"U" 107 15
"V" 342 96
"X" 6 6
"Y" 24 4
"Z" 73 17
______ _____
23,560 3,108

Therefore, of the 23,560 Spanish words in the defendant's dictionary, after deducting 17
words corresponding to the letters K and X (for the plaintiff has no words corresponding to
them), only 3,108 words are the defendant's own, or, what is the same thing, the 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. That the defendant also literally reproduced and copied for the Spanish words in his
dictionary, the equivalents, definitions and different meanings in Tagalog, given in
plaintiff's 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 as may be seen, by
comparing both dictionaries and using as a guide or index the defendant's memorandum
and notes, first series, Exhibit C, in which, as to each word, the similarities and differences
between them are set forth in detail.
3. That the 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.
The trial court has chosen at random, as is stated in the judgment appealed from, some
words from said dictionaries in making the comparison on which its conclusion is based,
and consequently the conclusion reached by it must be inaccurate and not well founded,
because said comparison was not complete.
224

In said judgment some words of the defendant's dictionary are transcribed, the equivalents
and meanings of which in Tagalog are exactly the same as those that are given in the
plaintiff's dictionary, with the exception, as to some of them, of only one acceptation, which
is the defendant's own production. And with respect to the examples used by the defendant
in his dictionary, which, according to the judgment, are not copied from the plaintiff's
the judgment referring to the preposition a (to), in Tagalog sa it must be noted that the
defendant, in giving in his dictionary an example of said preposition, uses the expression
"voy a Tayabas" (I am going to Tayabas) instead of "voy a Bulacan" (I am going to Bulacan),
as the plaintiff does in his dictionary, or what is the same thing, that one speaks of Bulacan
while the other speaks of Tayabas. This does not show that there was no reproduction or
copying by the defendant of the plaintiffs work, but just the opposite, for he who intends to
imitate the work of another, tries to make it appear in some manner that there is some
difference between the original and the imitation; and in the example referred to, with
respect to the preposition a (to), that dissimilarity as to the province designated seems to
effect the same purpose.
In the judgment appealed from, the court gives one to understand that the reproduction of
another's dictionary without the owner's consent does not constitute a violation of the Law
of Intellectual Property for the court's idea of a dictionary is stated in the decision itself, as
follows:
Dictionaries have to be made with the aid of others, and they are improved by the
increase of words. What may be said of a pasture ground may be said also of a
dictionary, i. e., that it should be common property for all who may desire to write a
new dictionary, and the defendant has come to this pasture ground and taken
whatever he needed from it in the exercise of a perfect right.
Such idea is very erroneous, especially in relation to the Law of Intellectual Property.
Danvilla y Collado the author of the Law of January 10, 1879, on Intellectual Property,
which was discussed and approved in the Spanish Cortes, in his work entitled La Propiedad
Intelectual (page 362, 1st ed.) states with respect to dictionaries and in relation to article 7
of said law:
The protection of the law cannot be denied to the author of a dictionary, for
although words are not the property of anybody, their definitions, the example that
explain their sense, and the manner of expressing their different meanings, may
constitute a special work. On this point, the correctional court of the Seine held, on
August 16, 1864, that a dictionary constitutes property, although some of the words
therein are explained by mere definitions expressed in a few lines and sanctioned by
usage, provided that the greater part of the other words contain new meanings; new
meanings which evidently may only belonged to the first person who published
them.
Therefore, the plaintiff, Pedro Serrano, cannot be denied the legal protection which he
seeks, and which is based on the fact that the dictionary published by him in 1889 is his
property said property right being recognized and having been granted by article 7, in
225

connection with article 2, of said law and on the further fact that said work was
reproduced by the defendant without his permission.
This law was published in the Gaceta de Madrid on January 12, 1879. It took effect in these
Islands six months after its promulgation or publication, as provided in article 56 thereof.
The body of rules for the execution of said law having been approved by royal decree of
September 3, 1880, and published in the Gaceta de Madrid on September 6, 1880 and
extended to the Philippine Islands by royal decree of May 5, 1887, it was in turn published
in the Gaceta de Manila, with the approval of the Governor-General of the Islands, on June
15, 1887. Said law of January 10, 1879, and the rules for its application, were therefore in
force in these Islands when the plaintiff's dictionary was edited and published in 1889.
It appears from the evidence that although the plaintiff did not introduce at the trial the
certificate of registration of his property rights to said work which, according to said rules,
was kept in the Central Government of these Islands, and was issued to him in 1890, the
same having been lost during the revolution against Spain, and no trace relative to the
issuance of said certificate being obtainable in the Division of Archives of the Executive
Bureau on account of the loss of the corresponding records, yet as in the first page of said
dictionary the property right of the plaintiff was reserved by means of the words "Es
propiedad del autor" (All rights reserved), taken in connection with the permission granted
him by the Governor-General on November 24, 1889, to print and publish said dictionary,
after an examination thereof by the permanent committee of censors, which examination
was made, and the necessary license granted to him, these facts constitute sufficient proof,
under the circumstances of the case, as they have not been overcome by any evidence on
the part of the defendant, showing that said plaintiff did not comply with the requirements
of article 36 of said law, which was the prerequisite to the enjoyment of the benefits
thereof according to the preceding articles, among which is article 7, which is alleged in the
complaint to have been violated by the defendant.
Even considering that said Law of January 10, 1879, ceased to operate in these Islands,
upon the termination of Spanish sovereignty and the substitution thereof by that of the
United States of America, the right of the plaintiff to invoke said law in support of the action
instituted by him in the present case cannot be disputed. His property right to the
work Diccionario Hispano-Tagalog (Spanish-Tagalog Dictionary), published by him and
edited in 1889, is recognized and sanctioned by said law, and by virtue thereof, he had
acquired a right of which he cannot be deprived merely because the law is not in force now
or is of no actual application. This conclusion is necessary to protect intellectual property
rights vested after the sovereignty of Spain was superseded by that of the United States. It
was so held superseded by that of the United States. It was so held in the Treaty of Paris of
December 10, 1898, between Spain and the United States, when it declared in article 13
thereof that the rights to literary, artistic, and industrial properties acquired by the subject
of Spain in the Island of Cuba and in Puerto Rico and the Philippines and other ceded
territories, at the time of the exchange of the ratification of said Treaty, shall continue to be
respect.
In addition to what has been said, according to article 428 of the Civil Code, the author of a
literary, scientific, or artistic work, has the right to exploit it and dispose thereof at will. In
226

relation to this right, there exists the exclusive right of the author, who is the absolute
owner of his own work, to produce it, according to article 2 of the Law of January 10, 1879,
and consequently, nobody may reproduce it, without his permission, not even to annotate
or add something to it, or to improve any edition thereof, according to article 7 of said law.
Manresa, in his commentaries on article 429 of the Civil Code (vol. 3, p. 633, 3d ed.) says
that the concrete statement of the right to literary properties is found in the legal doctrine
according to which nobody may reproduce another person's work, without the consent of
his owner, or even to annotate or add something to it or to improve any edition thereof.
And on page 616 of said volume, Manresa says the following:
He who writes a book, or carves a statue, or makes an invention, has the absolute
right to reproduce or sell it, just as the owner of land has the absolute right to sell it
or its fruits. But while the owner of land, by selling it and its fruits, perhaps fully
realizes all its economic value, by receiving its benefits and utilities, which are
presented, 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 no way rewarded.
Indeed the property right recognized and protected by the Law of January 10, 1879, on
Intellectual Property, would be illusory if, by reason of the fact that said law is no longer in
force as a consequence of the change of sovereignty in these Islands, the author of a work,
who has the exclusive right to reproduce it, could not prevent another person from so
doing without his consent, and could not enforce this right through the courts of justice in
order to prosecute the violator of this legal provision and the defrauder or usurper of his
right, for he could not obtain the full enjoyment of the book or other work, and his property
right thereto, which is recognized by law, would be reduced, as Manresa says, to an
insignificant thing, if he should have no more right than that of selling his work.
The reproduction by the defendant without the plaintiff's consent of the Diccionario
Hispano-Tagalog (Spanish-Tagalog Dictionary), published and edited in the City of Manila
in 1889, by the publication of the Diccionariong Kastila-Tagalog (Spanish-Tagalog
Dictionary), published in the same city and edited in the press El Progreso in 1913, as
appears from Exhibit B, which is attached to the complaint, has caused the plaintiff,
according to the latter, damages in the sum of $10,000. It is true that it cannot be denied
that the reproduction of the plaintiff's book by the defendant has caused damages to the
former, but the amount thereof has not been determined at the trial, for the statement of
the plaintiff as to the proceeds he would have realized if he had printed in 1913 the number
of copies of his work which he stated in his declaration a fact which he did not do
because the defendant had reproduced it was not corroborated in any way at the trial
227

and is based upon mere calculations made by the plaintiff himself; for which reason no
pronouncement can be made in this decision as to the indemnification for damages which
the plaintiff seeks to recover.
The plaintiff having prayed, not for a permanent injunction against the defendant, as the
plaintiff himself in his brief erroneously states, but for a judgment ordering the defendant
to withdraw from sale all stock of his workDiccionariong Kastila-Tagalog (Spanish-Tagalog
Dictionary), of which Exhibit B is a copy, and the suit instituted by said plaintiff being
proper, we reverse the judgment appealed from and order the defendant to withdraw from
sale, as prayed for in the complaint, all stock of his work above-mentioned, and to pay the
costs of first instance. We make no special pronouncement as to the costs of this instance.
So ordered.
Arellano, C. J., Torres, and Street, JJ., concur.
Carson, and Malcolm, JJ., concur in the result.

228

Topic: Neighboring Rights (or Related Rights) Sec. 202 212.4
Republic of the Philippines
SUPREME COURT
Manila
G.R. No. L-36402 March 16, 1987
FILIPINO SOCIETY OF COMPOSERS, AUTHORS AND PUBLISHERS, INC., plaintiff-
appellant,
vs.
BENJAMIN TAN, defendant-appellee.
Lichauco, Picazo & Agcaoili Law Office for plaintiff-appellant.
Ramon A. Nieves for defendant-appellee.

PARAS, J.:
An appeal was made to the Court of Appeals docketed as CA-G.R. No. 46373-
R * entitled Filipino Society of Composers, Authors, Publishers, Inc., Plaintiff-Appellant v.
Benjamin Tan, Defendant-Appellee, from the decision of the Court of First Instance of
Manila, Branch VII in Civil Case No. 71222 ** "Filipino Society of Composers, Authors and
Publishers, Inc., Plaintiff v. Benjamin Tan, Defendant," which had dismissed plaintiffs'
complaint without special pronouncement as to costs.
The Court of Appeals, finding that the case involves pure questions of law, certified the
same to the Supreme Court for final determination (Resolution, CA-G.R. No. 46373-R, Rollo,
p. 36; Resolution of the Supreme Court of February 16, 1973 in L-36402, Rollo, p. 38).
The undisputed facts of this case are as follows:
Plaintiff-appellant is a non-profit association of authors, composers and publishers duly
organized under the Corporation Law of the Philippines and registered with the Securities
and Exchange Commission. Said association is the owner of certain musical compositions
among which are the songs entitled: "Dahil Sa Iyo", "Sapagkat Ikaw Ay Akin," "Sapagkat
Kami Ay Tao Lamang" and "The Nearness Of You."
On the other hand, defendant-appellee is the operator of a restaurant known as "Alex Soda
Foundation and Restaurant" where a combo with professional singers, hired to play and
sing musical compositions to entertain and amuse customers therein, were playing and
singing the above-mentioned compositions without any license or permission from the
appellant to play or sing the same. Accordingly, appellant demanded from the appellee
payment of the necessary license fee for the playing and singing of aforesaid compositions
but the demand was ignored.
229

Hence, on November 7, 1967, appellant filed a complaint with the lower court for
infringement of copyright against defendant-appellee for allowing the playing in
defendant-appellee's restaurant of said songs copyrighted in the name of the former.
Defendant-appellee, in his answer, countered that the complaint states no cause of action.
While not denying the playing of said copyrighted compositions in his establishment,
appellee maintains that the mere singing and playing of songs and popular tunes even if
they are copyrighted do not constitute an infringement (Record on Appeal, p. 11;
Resolution, CA-G.R. NO. 46373-R, Rollo, pp. 32-36) under the provisions of Section 3 of the
Copyright Law (Act 3134 of the Philippine Legislature).
The lower court, finding for the defendant, dismissed the complaint (Record on Appeal, p.
25).
Plaintiff appealed to the Court of Appeals which as already stated certified the case to the
Supreme Court for adjudication on the legal question involved. (Resolution, Court of
Appeals, Rollo, p. 36; Resolution of the Supreme Court of February 18, 1973, Rollo, p. 38).
In its brief in the Court of Appeals, appellant raised the following Assignment of Errors:
I
THE LOWER COURT ERRED IN HOLDING THAT THE MUSICAL COMPOSITIONS OF THE
APPELLANT WERE IN THE NATURE OF PUBLIC PROPERTY WHEN THEY WERE
COPYRIGHTED OR REGISTERED.
II
THE LOWER COURT ERRED IN HOLDING THAT THE MUSICAL COMPOSITIONS OF THE
APPELLANT WERE PLAYED AND SUNG IN THE SODA FOUNTAIN AND RESTAURANT OF
THE APPELLEE BY INDEPENDENT CONTRACTORS AND ONLY UPON THE REQUEST OF
CUSTOMERS.
III
THE LOWER COURT ERRED IN HOLDING THAT THE PLAYING AND SINGING OF
COPYRIGHTED MUSICAL COMPOSITIONS IN THE SODA FOUNTAIN AND RESTAURANT OF
THE APPELLEE ARE NOT PUBLIC PERFORMANCES FOR PROFIT OF THE SAID
COMPOSITIONS WITHIN THE MEANING AND CONTEMPLATION OF THE COPYRIGHT LAW.
IV
THE LOWER COURT ERRED IN NOT HOLDING THAT THE APPELLEE IS LIABLE TO THE
APPELLANT FOR FOUR (4) SEPARATE INFRINGEMENTS. (Brief for Appellant, pp. A and B).
The petition is devoid of merit.
The principal issues in this case are whether or not the playing and signing of musical
compositions which have been copyrighted under the provisions of the Copyright Law (Act
3134) inside the establishment of the defendant-appellee constitute a public performance
230

for profit within the meaning and contemplation of the Copyright Law of the Philippines;
and assuming that there were indeed public performances for profit, whether or not
appellee can be held liable therefor.
Appellant anchors its claim on Section 3(c) of the Copyright Law which provides:
SEC. 3. The proprietor of a copyright or his heirs or assigns shall have the
exclusive right:
xxx xxx xxx
(c) To exhibit, perform, represent, produce, or reproduce the copyrighted
work in any manner or by any method whatever for profit or otherwise; if
not reproduced in copies for sale, to sell any manuscripts or any record
whatsoever thereof;
xxx xxx xxx
It maintains that playing or singing a musical composition is universally accepted as
performing the musical composition and that playing and singing of copyrighted music in
the soda fountain and restaurant of the appellee for the entertainment of the customers
although the latter do not pay for the music but only for the food and drink constitute
performance for profit under the Copyright Law (Brief for the Appellant, pp. 19-25).
We concede that indeed there were "public performances for profit. "
The word "perform" as used in the Act has been applied to "One who plays a musical
composition on a piano, thereby producing in the air sound waves which are heard as
music ... and if the instrument he plays on is a piano plus a broadcasting apparatus, so that
waves are thrown out, not only upon the air, but upon the other, then also he is performing
the musical composition." (Buck, et al. v. Duncan, et al.; Same Jewell La Salle Realty Co., 32F.
2d. Series 367).
In relation thereto, it has been held that "The playing of music in dine and dance
establishment which was paid for by the public in purchases of food and drink constituted
"performance for profit" within a Copyright Law." (Buck, et al. v. Russon No. 4489 25 F.
Supp. 317). Thus, it has been explained that while it is possible in such establishments for
the patrons to purchase their food and drinks and at the same time dance to the music of
the orchestra, the music is furnished and used by the orchestra for the purpose of inducing
the public to patronize the establishment and pay for the entertainment in the purchase of
food and drinks. The defendant conducts his place of business for profit, and it is public;
and the music is performed for profit (Ibid, p. 319). In a similar case, the Court ruled that
"The Performance in a restaurant or hotel dining room, by persons employed by the
proprietor, of a copyrighted musical composition, for the entertainment of patrons, without
charge for admission to hear it, infringes the exclusive right of the owner of the copyright."
(Herbert v. Shanley Co.; John Church Co. v. Hillard Hotel Co., et al., 242 U.S. 590-591). In
delivering the opinion of the Court in said two cases, Justice Holmes elaborated thus:
231

If the rights under the copyright are infringed only by a performance where
money is taken at the door, they are very imperfectly protected.
Performances not different in kind from those of the defendants could be
given that might compete with and even destroy the success of the monopoly
that the law intends the plaintiffs to have. It is enough to say that there is no
need to construe the statute so narrowly. The defendants' performances are
not eleemosynary. They are part of a total for which the public pays, and the
fact that the price of the whole is attributed to a particular item which those
present are expected to order is not important. It is true that the music is not
the sole object, but neither is the food, which probably could be got cheaper
elsewhere. The object is a repast in surroundings that to people having
limited power of conversation or disliking the rival noise, give a luxurious
pleasure not to be had from eating a silent meal. If music did not pay, it
would be given up. If it pays, it pays out of the public's pocket. Whether it
pays or not, the purpose of employing it is profit, and that is enough. (Ibid., p.
594).
In the case at bar, it is admitted that the patrons of the restaurant in question pay only for
the food and drinks and apparently not for listening to the music. As found by the trial
court, the music provided is for the purpose of entertaining and amusing the customers in
order to make the establishment more attractive and desirable (Record on Appeal, p. 21). It
will be noted that for the playing and singing the musical compositions involved, the combo
was paid as independent contractors by the appellant (Record on Appeal, p. 24). It is
therefore obvious that the expenses entailed thereby are added to the overhead of the
restaurant which are either eventually charged in the price of the food and drinks or to the
overall total of additional income produced by the bigger volume of business which the
entertainment was programmed to attract. Consequently, it is beyond question that the
playing and singing of the combo in defendant-appellee's restaurant constituted
performance for profit contemplated by the Copyright Law. (Act 3134 amended by P.D. No.
49, as amended).
Nevertheless, appellee cannot be said to have infringed upon the Copyright Law. Appellee's
allegation that the composers of the contested musical compositions waived their right in
favor of the general public when they allowed their intellectual creations to become
property of the public domain before applying for the corresponding copyrights for the
same (Brief for Defendant-Appellee, pp. 14-15) is correct.
The Supreme Court has ruled that "Paragraph 33 of Patent Office Administrative Order No.
3 (as amended, dated September 18, 1947) entitled 'Rules of Practice in the Philippines
Patent Office relating to the Registration of Copyright Claims' promulgated pursuant to
Republic Act 165, provides among other things that an intellectual creation should be
copyrighted thirty (30) days after its publication, if made in Manila, or within the (60) days
if made elsewhere, failure of which renders such creation public property." (Santos v.
McCullough Printing Company, 12 SCRA 324-325 [1964]. Indeed, if the general public has
made use of the object sought to be copyrighted for thirty (30) days prior to the copyright
232

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

Footnotes
* Penned by Justice Ruperto G. Martin concurred in by Justices Andres Reyes
and Mateo Canonoy.
** Penned by Judge Gregorio T. Lantin.



233

Topic: Neighboring Rights (or Related Rights) Sec. 202 212.4
Republic of the Philippines
SUPREME COURT
Manila
First Division
EN BANC
G.R. No. 175769-70 January 19, 2009
ABS-CBN BROADCASTING CORPORATION, Petitioners,
vs.
PHILIPPINE MULTI-MEDIA SYSTEM, INC., CESAR G. REYES, FRANCIS CHUA (ANG
BIAO), MANUEL F. ABELLADA, RAUL B. DE MESA, AND ALOYSIUS M.
COLAYCO, Respondents.
D E C I S I O N
YNARES-SANTIAGO, J.:
This petition for review on certiorari
1
assails the July 12, 2006 Decision
2
of the Court of
Appeals in CA-G.R. SP Nos. 88092 and 90762, which affirmed the December 20, 2004
Decision of the Director-General of the Intellectual Property Office (IPO) in Appeal No. 10-
2004-0002. Also assailed is the December 11, 2006 Resolution
3
denying the motion for
reconsideration.
Petitioner ABS-CBN Broadcasting Corporation (ABS-CBN) is licensed under the laws of the
Republic of the Philippines to engage in television and radio broadcasting.
4
It broadcasts
television programs by wireless means to Metro Manila and nearby provinces, and by
satellite to provincial stations through Channel 2 on Very High Frequency (VHF) and
Channel 23 on Ultra High Frequency (UHF). The programs aired over Channels 2 and 23
are either produced by ABS-CBN or purchased from or licensed by other producers.
ABS-CBN also owns regional television stations which pattern their programming in
accordance with perceived demands of the region. Thus, television programs shown in
Metro Manila and nearby provinces are not necessarily shown in other provinces.
Respondent Philippine Multi-Media System, Inc. (PMSI) is the operator of Dream
Broadcasting System. It delivers digital direct-to-home (DTH) television via satellite to its
subscribers all over the Philippines. Herein individual respondents, Cesar G. Reyes, Francis
Chua, Manuel F. Abellada, Raul B. De Mesa, and Aloysius M. Colayco, are members of PMSIs
Board of Directors.
PMSI was granted a legislative franchise under Republic Act No. 8630
5
on May 7, 1998 and
was given a Provisional Authority by the National Telecommunications Commission (NTC)
on February 1, 2000 to install, operate and maintain a nationwide DTH satellite service.
234

When it commenced operations, it offered as part of its program line-up ABS-CBN Channels
2 and 23, NBN, Channel 4, ABC Channel 5, GMA Channel 7, RPN Channel 9, and IBC Channel
13, together with other paid premium program channels.
However, on April 25, 2001,
6
ABS-CBN demanded for PMSI to cease and desist from
rebroadcasting Channels 2 and 23. On April 27, 2001,
7
PMSI replied that the rebroadcasting
was in accordance with the authority granted it by NTC and its obligation under NTC
Memorandum Circular No. 4-08-88,
8
Section 6.2 of which requires all cable television
system operators operating in a community within Grade A or B contours to carry the
television signals of the authorized television broadcast stations.
9

Thereafter, negotiations ensued between the parties in an effort to reach a settlement;
however, the negotiations were terminated on April 4, 2002 by ABS-CBN allegedly due to
PMSIs inability to ensure the prevention of illegal retransmission and further rebroadcast
of its signals, as well as the adverse effect of the rebroadcasts on the business operations of
its regional television stations.
10

On May 13, 2002, ABS-CBN filed with the IPO a complaint for Violation of Laws Involving
Property Rights, with Prayer for the Issuance of a Temporary Restraining Order and/or
Writ of Preliminary Injunction, which was docketed as IPV No. 10-2002-0004. It alleged
that PMSIs unauthorized rebroadcasting of Channels 2 and 23 infringed on its
broadcasting rights and copyright.
On July 2, 2002, the Bureau of Legal Affairs (BLA) of the IPO granted ABS-CBNs application
for a temporary restraining order. On July 12, 2002, PMSI suspended its retransmission of
Channels 2 and 23 and likewise filed a petition for certiorari with the Court of Appeals,
which was docketed as CA-G.R. SP No. 71597.
Subsequently, PMSI filed with the BLA a Manifestation reiterating that it is subject to the
must-carry rule under Memorandum Circular No. 04-08-88. It also submitted a letter dated
December 20, 2002 of then NTC Commissioner Armi Jane R. Borje to PMSI stating as
follows:
This refers to your letter dated December 16, 2002 requesting for regulatory guidance
from this Commission in connection with the application and coverage of NTC
Memorandum Circular No. 4-08-88, particularly Section 6 thereof, on mandatory carriage
of television broadcast signals, to the direct-to-home (DTH) pay television services of
Philippine Multi-Media System, Inc. (PMSI).
Preliminarily, both DTH pay television and cable television services are broadcast services,
the only difference being the medium of delivering such services (i.e. the former by satellite
and the latter by cable). Both can carry broadcast signals to the remote areas, thus
enriching the lives of the residents thereof through the dissemination of social, economic,
educational information and cultural programs.
The DTH pay television services of PMSI is equipped to provide nationwide DTH satellite
services. Concededly, PMSIs DTH pay television services covers very much wider areas in
235

terms of carriage of broadcast signals, including areas not reachable by cable television
services thereby providing a better medium of dissemination of information to the public.
In view of the foregoing and the spirit and intent of NTC memorandum Circular No. 4-
08-88, particularly section 6 thereof, on mandatory carriage of television broadcast
signals, DTH pay television services should be deemed covered by such NTC
Memorandum Circular.
For your guidance. (Emphasis added)
11

On August 26, 2003, PMSI filed another Manifestation with the BLA that it received a letter
dated July 24, 2003 from the NTC enjoining strict and immediate compliance with the
must-carry rule under Memorandum Circular No. 04-08-88, to wit:
Dear Mr. Abellada:
Last July 22, 2003, the National Telecommunications Commission (NTC) received a letter
dated July 17, 2003 from President/COO Rene Q. Bello of the International Broadcasting
Corporation (IBC-Channel 13) complaining that your company, Dream Broadcasting
System, Inc., has cut-off, without any notice or explanation whatsoever, to air the programs
of IBC-13, a free-to-air television, to the detriment of the public.
We were told that, until now, this has been going on.
Please be advised that as a direct broadcast satellite operator, operating a direct-to-
home (DTH) broadcasting system, with a provisional authority (PA) from the NTC,
your company, along with cable television operators, are mandated to strictly
comply with the existing policy of NTC on mandatory carriage of television broadcast
signals as provided under Memorandum Circular No. 04-08-88, also known as the
Revised Rules and Regulations Governing Cable Television System in the Philippines.
This mandatory coverage provision under Section 6.2 of said Memorandum Circular,
requires all cable television system operators, operating in a community within the
Grade A or B contours to must-carry the television signals of the authorized
television broadcast stations, one of which is IBC-13. Said directive equally applies to
your company as the circular was issued to give consumers and the public a wider
access to more sources of news, information, entertainment and other
programs/contents.
This Commission, as the governing agency vested by laws with the jurisdiction, supervision
and control over all public services, which includes direct broadcast satellite operators, and
taking into consideration the paramount interest of the public in general, hereby directs
you to immediately restore the signal of IBC-13 in your network programs, pursuant to
existing circulars and regulations of the Commission.
For strict compliance. (Emphasis added)
12

236

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.
x x x x
The Commission maintains that, MC 4-08-88 remains valid, subsisting and enforceable.
Please be advised, therefore, that as duly licensed direct-to-home satellite television
service provider authorized by this Commission, your company continues to be
bound by the guidelines provided for under MC 04-08-88, specifically your
obligation under its mandatory carriage provisions, in addition to your obligations
under MC 10-10-2003. (Emphasis added)
Please be guided accordingly.
13

On December 22, 2003, the BLA rendered a decision
14
finding that PMSI infringed the
broadcasting rights and copyright of ABS-CBN and ordering it to permanently cease and
desist from rebroadcasting Channels 2 and 23.
On February 6, 2004, PMSI filed an appeal with the Office of the Director-General of the IPO
which was docketed as Appeal No. 10-2004-0002. On December 23, 2004, it also filed with
the Court of Appeals a Motion to Withdraw Petition; Alternatively, Memorandum of the
Petition for Certiorari in CA-G.R. SP No. 71597, which was granted in a resolution dated
February 17, 2005.
On December 20, 2004, the Director-General of the IPO rendered a decision
15
in favor of
PMSI, the dispositive portion of which states:
WHEREFORE, premises considered, the instant appeal is hereby GRANTED. Accordingly,
Decision No. 2003-01 dated 22 December 2003 of the Director of Bureau of Legal Affairs is
hereby REVERSED and SET ASIDE.
Let a copy of this Decision be furnished the Director of the Bureau of Legal Affairs for
appropriate action, and the records be returned to her for proper disposition. The
237

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

ABS-CBNs motion for reconsideration was denied, hence, this petition.
ABS-CBN contends that PMSIs unauthorized rebroadcasting of Channels 2 and 23 is an
infringement of its broadcasting rights and copyright under the Intellectual Property Code
(IP Code);
18
that Memorandum Circular No. 04-08-88 excludes DTH satellite television
operators; that the Court of Appeals interpretation of the must-carry rule violates Section
9 of Article III
19
of the Constitution because it allows the taking of property for public use
without payment of just compensation; that the Court of Appeals erred in dismissing the
petition for contempt docketed as CA-G.R. SP No. 90762 without requiring respondents to
file comment.
Respondents, on the other hand, argue that PMSIs rebroadcasting of Channels 2 and 23 is
sanctioned by Memorandum Circular No. 04-08-88; that the must-carry rule under the
Memorandum Circular is a valid exercise of police power; and that the Court of Appeals
correctly dismissed CA-G.R. SP No. 90762 since it found no need to exercise its power of
contempt.
After a careful review of the facts and records of this case, we affirm the findings of the
Director-General of the IPO and the Court of Appeals.
There is no merit in ABS-CBNs contention that PMSI violated its broadcasters rights under
Section 211 of the IP Code which provides in part:
Chapter XIV
BROADCASTING ORGANIZATIONS
238

Sec. 211. Scope of Right. - Subject to the provisions of Section 212, broadcasting
organizations shall enjoy the exclusive right to carry out, authorize or prevent any of the
following acts:
211.1. The rebroadcasting of their broadcasts;
x x x x
Neither is PMSI guilty of infringement of ABS-CBNs copyright under Section 177 of the IP
Code which states that copyright or economic rights shall consist of the exclusive right to
carry out, authorize or prevent the public performance of the work (Section 177.6), and
other communication to the public of the work (Section 177.7).
20

Section 202.7 of the IP Code defines broadcasting as the transmission by wireless means
for the public reception of sounds or of images or of representations thereof; such
transmission by satellite is also broadcasting where the means for decrypting are
provided to the public by the broadcasting organization or with its consent.
On the other hand, rebroadcasting as defined in Article 3(g) of the International
Convention for the Protection of Performers, Producers of Phonograms and Broadcasting
Organizations, otherwise known as the 1961 Rome Convention, of which the Republic of
the Philippines is a signatory,
21
is the simultaneous broadcasting by one broadcasting
organization of the broadcast of another broadcasting organization.
The Director-General of the IPO correctly found that PMSI is not engaged in rebroadcasting
and thus cannot be considered to have infringed ABS-CBNs broadcasting rights and
copyright, thus:
That the Appellants [herein respondent PMSI] subscribers are able to view Appellees
[herein petitioner ABS-CBN] programs (Channels 2 and 23) at the same time that the latter
is broadcasting the same is undisputed. The question however is, would the Appellant in
doing so be considered engaged in broadcasting. Section 202.7 of the IP Code states that
broadcasting means
the transmission by wireless means for the public reception of sounds or of images or of
representations thereof; such transmission by satellite is also broadcasting where the
means for decrypting are provided to the public by the broadcasting organization or with
its consent.
Section 202.7 of the IP Code, thus, provides two instances wherein there is broadcasting, to
wit:
1. The transmission by wireless means for the public reception of sounds or of
images or of representations thereof; and
239

2. The transmission by satellite for the public reception of sounds or of images or of
representations thereof where the means for decrypting are provided to the public
by the broadcasting organization or with its consent.
It is under the second category that Appellants DTH satellite television service must be
examined since it is satellite-based. The elements of such category are as follows:
1. There is transmission of sounds or images or of representations thereof;
2. The transmission is through satellite;
3. The transmission is for public reception; and
4. The means for decrypting are provided to the public by the broadcasting
organization or with its consent.
It is only the presence of all the above elements can a determination that the DTH is
broadcasting and consequently, rebroadcasting Appellees signals in violation of Sections
211 and 177 of the IP Code, may be arrived at.
Accordingly, this Office is of the view that the transmission contemplated under Section
202.7 of the IP Code presupposes that the origin of the signals is the broadcaster. Hence, a
program that is broadcasted is attributed to the broadcaster. In the same manner, the
rebroadcasted program is attributed to the rebroadcaster.
In the case at hand, Appellant is not the origin nor does it claim to be the origin of the
programs broadcasted by the Appellee. Appellant did not make and transmit on its own but
merely carried the existing signals of the Appellee. When Appellants subscribers view
Appellees programs in Channels 2 and 23, they know that the origin thereof was the
Appellee.
Aptly, it is imperative to discern the nature of broadcasting. When a broadcaster transmits,
the signals are scattered or dispersed in the air. Anybody may pick-up these signals. There
is no restriction as to its number, type or class of recipients. To receive the signals, one is
not required to subscribe or to pay any fee. One only has to have a receiver, and in case of
television signals, a television set, and to tune-in to the right channel/frequency. The
definition of broadcasting, 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
240

may use a less powerful transmitter to limit its coverage, this is merely a business strategy
or decision and not an inherent limitation when transmission is through cable.
Accordingly, the nature of broadcasting is to scatter the signals in its widest area of
coverage as possible. On this score, it may be said that making public means that
accessibility is undiscriminating as long as it [is] within the range of the transmitter and
equipment of the broadcaster. That the medium through which the Appellant carries the
Appellees signal, that is via satellite, does not diminish the fact that it operates and
functions as a cable television. It remains that the Appellants transmission of signals via its
DTH satellite television service cannot be considered within the purview of broadcasting. x
x x
x x x x
This Office also finds no evidence on record showing that the Appellant has provided
decrypting means to the public indiscriminately. Considering the nature of this case, which
is punitive in fact, the burden of proving the existence of the elements constituting the acts
punishable rests on the shoulder of the complainant.
Accordingly, this Office finds that there is no rebroadcasting on the part of the Appellant of
the Appellees programs on Channels 2 and 23, as defined under the Rome Convention.
22

Under the Rome Convention, rebroadcasting is the simultaneous broadcasting by one
broadcasting organization of the broadcast of another broadcasting organization. The
Working Paper
23
prepared by the Secretariat of the Standing Committee on Copyright and
Related Rights defines broadcasting organizations as entities that take the financial and
editorial responsibility for the selection and arrangement of, and investment in, the
transmitted content.
24
Evidently, PMSI would not qualify as a broadcasting organization
because it does not have the aforementioned responsibilities imposed upon broadcasting
organizations, such as ABS-CBN.
ABS-CBN creates and transmits its own signals; PMSI merely carries such signals which the
viewers receive in its unaltered form. PMSI does not produce, select, or determine the
programs to be shown in Channels 2 and 23. Likewise, it does not pass itself off as the
origin or author of such programs. Insofar as Channels 2 and 23 are concerned, PMSI
merely retransmits the same in accordance with Memorandum Circular 04-08-88. With
regard to its premium channels, it buys the channels from content providers and transmits
on an as-is basis to its viewers. Clearly, PMSI does not perform the functions of a
broadcasting organization; thus, it cannot be said that it is engaged in rebroadcasting
Channels 2 and 23.
The Director-General of the IPO and the Court of Appeals also correctly found that PMSIs
services are similar to a cable television system because the services it renders fall under
cable retransmission, as described in the Working Paper, to wit:
(G) Cable Retransmission
241

47. When a radio or television program is being broadcast, it can be retransmitted to new
audiences by means of cable or wire. In the early days of cable television, it was mainly
used to improve signal reception, particularly in so-called shadow zones, or to distribute
the signals in large buildings or building complexes. With improvements in technology,
cable operators now often receive signals from satellites before retransmitting them in an
unaltered form to their subscribers through cable.
48. In principle, cable retransmission can be either simultaneous with the broadcast over-
the-air or delayed (deferred transmission) on the basis of a fixation or a reproduction of a
fixation. Furthermore, they might be unaltered or altered, for example through
replacement of commercials, etc. In general, however, the term retransmission seems
to be reserved for such transmissions which are both simultaneous and unaltered.
49. The Rome Convention does not grant rights against unauthorized cable retransmission.
Without such a right, cable operators can retransmit both domestic and foreign over the air
broadcasts simultaneously to their subscribers without permission from the broadcasting
organizations or other rightholders and without obligation to pay
remuneration.
25
(Emphasis added)
Thus, while the Rome Convention gives broadcasting organizations the right to authorize
or prohibit the rebroadcasting of its broadcast, however, this protection does not extend to
cable retransmission. The retransmission of ABS-CBNs signals by PMSI which functions
essentially as a cable television does not therefore constitute rebroadcasting in violation
of the formers intellectual property rights under the IP Code.
It must be emphasized that the law on copyright is not absolute. The IP Code provides that:
Sec. 184. Limitations on Copyright. -
184.1. Notwithstanding the provisions of Chapter V, the following acts shall not constitute
infringement of copyright:
x x x x
(h) The use made of a work by or under the direction or control of the Government, by the
National Library or by educational, scientific or professional institutions where such use is
in the public interest and is compatible with fair use;
The carriage of ABS-CBNs signals by virtue of the must-carry rule in Memorandum Circular
No. 04-08-88 is under the direction and control of the government though the NTC which is
vested with exclusive jurisdiction to supervise, regulate and control telecommunications
and broadcast services/facilities in the Philippines.
26
The imposition of the must-carry rule
is within the NTCs power to promulgate rules and regulations, as public safety and interest
may require, to encourage a larger and more effective use of communications, radio and
television broadcasting facilities, and to maintain effective competition among private
entities in these activities whenever the Commission finds it reasonably feasible.
27
As
correctly observed by the Director-General of the IPO:
242

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 24
34
of Article II
on the Declaration of Principles and State Policies.
35

ABS-CBN was granted a legislative franchise under Republic Act No. 7966, Section 1 of
which authorizes it to construct, operate and maintain, for commercial purposes and in
the public interest, television and radio broadcasting in and throughout the Philippines x x
x. Section 4 thereof mandates that it shall provide adequate public service time to enable
the government, through the said broadcasting stations, to reach the population on
important public issues; provide at all times sound and balanced programming; promote
public participation such as in community programming; assist in the functions of public
information and education x x x.
243

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

244

There is likewise no merit to ABS-CBNs claim that PMSIs carriage of its signals is for a
commercial purpose; that its being the countrys top broadcasting company, the availability
of its signals allegedly enhances PMSIs attractiveness to potential customers;
38
or that the
unauthorized carriage of its signals by PMSI has created competition between its Metro
Manila and regional stations.
ABS-CBN presented no substantial evidence to prove that PMSI carried its signals for profit;
or that such carriage adversely affected the business operations of its regional stations.
Except for the testimonies of its witnesses,[39] no studies, statistical data or information
have been submitted in evidence.
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-CBNs
signals for free. Other broadcasting organizations with free-to-air signals such as GMA-7,
RPN-9, ABC-5, and IBC-13 can likewise be accessed for free. No payment is required to view
the said channels
42
because these broadcasting networks do not generate revenue from
subscription from their viewers but from airtime revenue from contracts with commercial
advertisers and producers, as well as from direct sales.
In contrast, cable and DTH television earn revenues from viewer subscription. In the case
of PMSI, it offers its customers premium paid channels from content providers like Star
Movies, Star World, Jack TV, and AXN, among others, thus allowing its customers to go
beyond the limits of Free TV and Cable TV.
43
It does not advertise itself as a local channel
carrier because these local channels can be viewed with or without DTH television.
Relevantly, PMSIs carriage of Channels 2 and 23 is material in arriving at the ratings and
audience share of ABS-CBN and its programs. These ratings help commercial advertisers
and producers decide whether to buy airtime from the network. Thus, the must-carry rule
is actually advantageous to the broadcasting networks because it provides them with
increased viewership which attracts commercial advertisers and producers.
On the other hand, the carriage of free-to-air signals imposes a burden to cable and DTH
television providers such as PMSI. PMSI uses none of ABS-CBNs resources or equipment
and carries the signals and shoulders the costs without any recourse of
charging.
44
Moreover, such carriage of signals takes up channel space which can otherwise
be utilized for other premium paid channels.
There is no merit to ABS-CBNs argument that PMSIs carriage of Channels 2 and 23
resulted in competition between its Metro Manila and regional stations. ABS-CBN is free to
decide to pattern its regional programming in accordance with perceived demands of the
region; however, it cannot impose this kind of programming on the regional viewers who
are also entitled to the free-to-air channels. It must be emphasized that, as a national
broadcasting organization, one of ABS-CBNs responsibilities is to scatter its signals to the
widest area of coverage as possible. That it should limit its signal reach for the sole purpose
245

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

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

Moreover, the factual findings of the Court of Appeals are conclusive on the parties and are
not reviewable by the Supreme Court. They carry even more weight when the Court of
Appeals affirms the factual findings of a lower fact-finding body,
48
as in the instant case.
There is likewise no merit to ABS-CBNs contention that the Memorandum Circular
excludes from its coverage DTH television services such as those provided by PMSI. Section
6.2 of the Memorandum Circular requires all cable television system operators operating in
a community within Grade A or B contours to carry the television signals of the
246

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

247

With regard to the issue of the constitutionality of the must-carry rule, the Court finds that
its resolution is not necessary in the disposition of the instant case. One of the essential
requisites for a successful judicial inquiry into constitutional questions is that the
resolution of the constitutional question must be necessary in deciding the
case.
53
In Spouses Mirasol v. Court of Appeals,
54
we held:
As a rule, the courts will not resolve the constitutionality of a law, if the controversy can be
settled on other grounds. The policy of the courts is to avoid ruling on constitutional
questions and to presume that the acts of the political departments are valid, absent a clear
and unmistakable showing to the contrary. To doubt is to sustain. This presumption is
based on the doctrine of separation of powers. This means that the measure had first been
carefully studied by the legislative and executive departments and found to be in accord
with the Constitution before it was finally enacted and approved.
55

The instant case was instituted for violation of the IP Code and infringement of ABS-CBNs
broadcasting rights and copyright, which can be resolved without going into the
constitutionality of Memorandum Circular No. 04-08-88. As held by the Court of Appeals,
the only relevance of the circular in this case is whether or not compliance therewith
should be considered manifestation of lack of intent to commit infringement, and if it is,
whether such lack of intent is a valid defense against the complaint of petitioner.
56

The records show that petitioner assailed the constitutionality of Memorandum Circular
No. 04-08-88 by way of a collateral attack before the Court of Appeals. In Philippine
National Bank v. Palma,
57
we ruled that for reasons of public policy, the constitutionality of
a law cannot be collaterally attacked. A law is deemed valid unless declared null and void
by a competent court; more so when the issue has not been duly pleaded in the trial
court.
58

As a general rule, the question of constitutionality must be raised at the earliest
opportunity so that if not raised in the pleadings, ordinarily it may not be raised in the trial,
and if not raised in the trial court, it will not be considered on appeal.
59
In Philippine
Veterans Bank v. Court of Appeals,
60
we held:
We decline to rule on the issue of constitutionality as all the requisites for the exercise of
judicial review are not present herein. Specifically, the question of constitutionality will
not be passed upon by the Court unless, at the first opportunity, it is properly raised
and presented in an appropriate case, adequately argued, and is necessary to a
determination of the case, particularly where the issue of constitutionality is the
very lis mota presented.x x x
61

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

248

ABS-CBN filed a verified petition before the Court of Appeals, which was docketed CA G.R.
SP No. 90762, for PMSIs alleged disobedience to the Resolution and Temporary
Restraining Order, both dated July 18, 2005, issued in CA-G.R. SP No. 88092. However, after
the cases were consolidated, the Court of Appeals did not require PMSI to comment on the
petition for contempt. It ruled on the merits of CA-G.R. SP No. 88092 and ordered the
dismissal of both petitions.
ABS-CBN argues that the Court of Appeals erred in dismissing the petition for contempt
without having ordered respondents to comment on the same. Consequently, it would have
us reinstate CA-G.R. No. 90762 and order respondents to show cause why they should not
be held in contempt.
It bears stressing that the proceedings for punishment of indirect contempt are criminal in
nature. The modes of procedure and rules of evidence adopted in contempt proceedings
are similar in nature to those used in criminal prosecutions.
63
While it may be argued that
the Court of Appeals should have ordered respondents to comment, the issue has been
rendered moot in light of our ruling on the merits. To order respondents to comment and
have the Court of Appeals conduct a hearing on the contempt charge when the main case
has already been disposed of in favor of PMSI would be circuitous. Where the issues have
become moot, there is no justiciable controversy, 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
Corporation, and the December 11, 2006 Resolution denying the motion for
reconsideration, are AFFIRMED.
SO ORDERED.
Footnotes
1
Rollo, pp. 65-178.
2
Id. at 8-43.
3
Id. at 54-57.
4
ABS-CBN was granted a franchise under Republic Act No. 7966, entitled AN ACT
GRANTING THE ABS-CBN BROADCASTING CORPORATION A FRANCHISE TO
CONSTRUCT, INSTALL, OPERATE AND MAINTAIN TELEVISION AND RADIO
BROADCASTING STATIONS IN THE PHILIPPINES, AND FOR OTHER PURPOSES.
5
AN ACT GRANTING THE PHILIPPINE MULTI-MEDIA SYSTEM, INC., A FRANCHISE
TO CONSTRUCT, INSTALL, ESTABLISH, OPERATE AND MAINTAIN RADIO AND
TELEVISION STATIONS IN THE PHILIPPINES.
249

6
Rollo, p. 316.
7
Id. at 317.
8
Revised Rules and Regulations Governing Cable Television Systems in the
Philippines.
9
6.2. Mandatory Coverage
6.2.1. A cable TV system operating in a community which is within the Grade
A or Grade B contours of an authorized TV broadcast station or stations must
carry the TV signals of these stations.
10
Rollo, p. 322.
11
Id. at 852.
12
Id. at 853-854.
13
Id. at 857.
14
Id. at 567-590. Penned by Estrellita Beltran-Abelardo, Director, Bureau of Legal
Affairs.
15
Id at 793-811. Penned by Director-General Emma C. Francisco.
16
Id. at 811.
17
Id. at 43.
18
Republic Act No. 8923, effective January 1, 1998.
19
Article III, Section 9 provides: Private property shall not be taken for public use
without just compensation.
20
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:
x x x x
177.6. Public performance of the work; and
177.7. Other communication to the public of the work (Sec. 5, P. D. No. 49a)
21
Entered into force on September 25, 1984. source:
http://www.wipo.int/treaties/en/ShowResults.jsp?lang=en&treaty_id=17.
22
Rollo, pp. 805-809.
250

23
Eighth Session, Geneva, November 4-8, 2002.
24
Id.at paragraph 58, page 12.
25
Id. at paragraphs 47-49, page 10.
26
E.O. No. 546, Sec. 15. Functions of the Commission. The Commission shall exercise
the following functions:
a. Issue Certificate of Public Convenience for the operation of
communications utilities and services, radio communications systems, wire
or wireless telephone or telegraph systems, radio and television
broadcasting system and other similar public utilities;
b. Establish, prescribe and regulate areas of operation of particular operators
of public service communications; and determine and prescribe charges or
rates pertinent to the operation of such public utility facilities and services
except in cases where charges or rates are established by international
bodies or associations of which the Philippines is a participating member or
by bodies recognized by the Philippine Government as the proper arbiter of
such charges or rates;
c. Grant permits for the use of radio frequencies for wireless telephone and
telegraph systems and radio communication systems including amateur
radio stations and radio and television broadcasting systems;
d. Sub-allocate series of frequencies of bands allocated by the International
Telecommunications Union to the specific services;
e. Establish and prescribe rules, regulations, standards, specifications in all
cases related to the issued Certificate of Public Convenience and administer
and enforce the same;
f. Coordinate and cooperate with government agencies and other entities
concerned with any aspect involving communications with a view to
continuously improve the communications service in the country;
g. Promulgate such 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;
h. Supervise and inspect the operation of radio stations and
telecommunications facilities;
i. Undertake the examination and licensing of radio operators;
251

j. Undertake, whenever necessary, the registration of radio transmitters and
transceivers; and
k. Perform such other functions as may be prescribed by law.
27
Id. Section 15 (g).
28
PRESCRIBING POLICY GUIDELINES TO GOVERN THE OPERATIONS OF CABLE
TELEVISION IN THE PHILIPPINES.
29
Rollo, p. 810.
30
Id. at 42.
31
Fr. Ranhillo Callangan Aquino, Intellectual Property Law: Comments and
Annotations, 2003, p. 5.
32
SEC. 9. The State shall promote a just and dynamic social order that will ensure
the prosperity and independence of the nation and free the people from poverty
through policies that provide adequate social services, promote full employment, a
rising standard of living, and an improved quality of life for all.
33
SEC. 17. The State shall give priority to education, science and technology, arts,
culture, and sports to foster patriotism and nationalism, accelerate social progress,
and promote total human liberation and development.
34
SEC. 24. The State recognizes the vital role of communication and information in
nation-building.
35
Rollo, p. 40.
36
352 Phil. 153 (1998).
37
Id. at 171-174.
38
Rollo, pp. 129-130.
39
Id. at 134.
40
Artuz v. Court of Appeals, 417 Phil. 588, 597 (2001).
41
Navarro v. Clerk of Court, A.M. No. P-05-1962, February 17, 2005, 451 SCRA 626,
629.
42
Rollo, Comment, p. 1249.
43
http://www.dreamsatellite.com/about.htm
252

44
Rollo, p. 810.
45
Telecom. & Broadcast Attys. of the Phils., Inc v. COMELEC, 352 Phil. 153, 173
(1998).
46
Rollo, pp. 810-811.
47
Ocampo v. Salalila, 382 Phil. 522, 532 (2000).
48
Gala v. Ellice Agro-Industrial Corporation, G.R. No. 156819, December 11, 2003,
418 SCRA 431, 444.
49
Supra note 9.
50
Supra note 11.
51
G.R. No. 135992, January 31, 2006, 481 SCRA 163.
52
Id. at 166-167.
53
Meralco v. Secretary of Labor, 361 Phil. 845, 867 (1999).
54
403 Phil. 760 (2001).
55
Id. at 774.
56
Rollo, p. 41; citing the Decision of the Director-General of the IPO.
57
G.R. No. 157279, August 9, 2005, 466 SCRA 307.
58
Id. at 322-323.
59
Joaquin G. Bernas, The 1987 Constitution of the Republic of the Philippines: A
Commentary, p. 858 (1996), citing People v. Vera, 65 Phil. 56 (1937).
60
G.R. No. 132561, June 30, 2005, 462 SCRA 336.
61
Id. at 349.
62
Montenegro v. Montenegro, G.R. No. 156829, June 8, 2004.
63
Soriano v. Court of Appeals, G.R. No. 128938, June 4, 2004, 431 SCRA 1, 7-8
64
Delgado v. Court of Appeals, G.R. No. 137881, August 19, 2005, 467 SCRA 418, 428.