ARTICLE XIV

SECTION 13. The State shall protect and secure the exclusive rights of scientists, inventors, artists, and
other gifted citizens to their intellectual property and creations, particularly when beneficial to the people, for such
period as may be provided by law.

SECTION 15. Arts and letters shall enjoy the patronage of the State. The State shall conserve, promote,
and popularize the nation’s historical and cultural heritage and resources, as well as artistic creations.

SECTION 16. All the country’s artistic and historic wealth constitutes the cultural treasure of the nation
and shall be under the protection of the State which may regulate its disposition.

ARTICLE XII

SECTION 6. The use of property bears a social function, and all economic agents shall contribute to the
common good. Individuals and private groups, including corporations, cooperatives, and similar collective
organizations, shall have the right to own, establish, and operate economic enterprises, subject to the duty of the
State to promote distributive justice and to intervene when the common good so demands.

SECTION 14. The sustained development of a reservoir of national talents consisting of Filipino scientists,
entrepreneurs, professionals, managers, high-level technical manpower and skilled workers and craftsmen in all
fields shall be promoted by the State. The State shall encourage appropriate technology and regulate its transfer for
the national benefit.

The practice of all professions in the Philippines shall be limited to Filipino citizens, save in cases
prescribed by law.

SECTION 19. The State shall regulate or prohibit monopolies when the public interest so requires. No
combinations in restraint of trade or unfair competition shall be allowed.

[G.R. Nos. 175769-70. January 19, 2009.]

ABS-CBN BROADCASTING CORPORATION, petitioner, 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.

DECISION
YNARES-SANTIAGO, J p:
This petition for review on certiorari assails the July 12, 2006 Decision 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 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. 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. cDIHES
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

1
Philippines. Herein individual respondents, Cesar G. Reyes, Francis Chua, Manuel F. Abellada, Raul B. De
Mesa, and Aloysius M. Colayco, are members of PMSI's Board of Directors.
PMSI was granted a legislative franchise under Republic Act No. 8630 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. 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, ABS-CBN demanded for PMSI to cease and desist from rebroadcasting
Channels 2 and 23. On April 27, 2001, 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 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.
Thereafter, negotiations ensued between the parties in an effort to reach a settlement; however, the
negotiations were terminated on April 4, 2002 by ABS-CBN allegedly due to PMSI's inability to ensure the
prevention of illegal retransmission and further rebroadcast of its signals, as well as the adverse effect of the
rebroadcasts on the business operations of its regional television stations.
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 PMSI's 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-CBN's application for a
temporary restraining order. On July 12, 2002, PMSI suspended its retransmission of Channels 2 and 23 and
likewise filed a petition for certiorari with the Court of Appeals, which was docketed 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). IcESaA
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, PMSI's DTH pay television services covers very much wider
areas in 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. ACaTIc
For your guidance. (Emphasis added)
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:

2
 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. CcSTHI
For strict compliance. (Emphasis added)
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. ATEHDc
xxx xxx xxx
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.
On December 22, 2003, the BLA rendered a decision 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.CITaSA
3
 On December 20, 2004, the Director-General of the IPO rendered a decision in favor of PMSI, the
dispositive portion of which states:
WHEREFORE, premises considered, the instant appeal is hereby GRANTED.
Accordingly, Decision No. 2003-01 dated 22 December 2003 of the Director of Bureau of Legal
Affairs is hereby REVERSED and SET ASIDE.
Let a copy of this Decision be furnished the Director of the Bureau of Legal Affairs for
appropriate action, and the records be returned to her for proper disposition. The Documentation,
Information and Technology Transfer Bureau is also given a copy for library and reference
purposes.
SO ORDERED.
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.
ABS-CBN's motion for reconsideration was denied, hence, this petition.
ABS-CBN contends that PMSI's unauthorized rebroadcasting of Channels 2 and 23 is an infringement
of its broadcasting rights and copyright under the Intellectual Property Code (IP Code); 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 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 PMSI's 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-CBN's contention that PMSI violated its broadcaster's rights under Section
211 of the IP Code which provides in part:
Chapter XIV BROADCASTING ORGANIZATIONS
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: AcIaST
211.1. The rebroadcasting of their broadcasts;
xxx xxx xxx
Neither is PMSI guilty of infringement of ABS-CBN's copyright under Section 177 of the IP
Code which states that copyright or economic rights shall consist of the exclusive right to carry out, authorize
or prevent the public performance of the work (Section 177.6), and other communication to the public of the
work (Section 177.7).
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".

4
 On the other hand, rebroadcasting as defined in Article 3 (g) of the International Convention for the
Protection of Performers, Producers of Phonograms and Broadcasting Organizations, otherwise known as the
1961 Rome Convention, of which the Republic of the Philippines is a signatory, is "the simultaneous
broadcasting by one broadcasting organization of the broadcast of another broadcasting organization".
The Director-General of the IPO correctly found that PMSI is not engaged in rebroadcasting and thus
cannot be considered to have infringed ABS-CBN's broadcasting rights and copyright, thus:
That the Appellant's [herein respondent PMSI] subscribers are able to view Appellee's
[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." ETDAaC
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
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 Appellant's DTH satellite television service must be
examined since it is satellite-based. The elements of such category are as follows: HIETAc
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 Appellee's signals in violation of Sections 211
and 177 of the IP Code, may be arrived at.
Accordingly, this Office is of the view that the transmission contemplated under Section
202.7 of the IP Code presupposes that the origin of the signals is the broadcaster. Hence, a
program that is broadcasted is attributed to the broadcaster. In the same manner, the
rebroadcasted program is attributed to the rebroadcaster.
In the case at hand, Appellant is not the origin nor does it claim to be the origin of the
programs broadcasted by the Appellee. Appellant did not make and transmit on its own but
merely carried the existing signals of the Appellee. When Appellant's subscribers view
Appellee's programs in Channels 2 and 23, they know that the origin thereof was the Appellee.
Aptly, it is imperative to discern the nature of broadcasting. When a broadcaster
transmits, the signals are scattered or dispersed in the air. Anybody may pick-up these signals.
There is no restriction as to its number, type or class of recipients. To receive the signals, one is
not required to subscribe or to pay any fee. One only has to have a receiver, and in case of
television signals, a television set, and to tune-in to the right channel/frequency. The definition
of broadcasting, wherein it is required that the transmission is wireless, all the more supports this
discussion. Apparently, the undiscriminating dispersal of signals in the air is possible only
through wireless means. The use of wire in transmitting signals, such as cable television, limits
the recipients to those who are connected. Unlike wireless transmissions, in wire-based

5
 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. TcDIaA
The only limitation to such dispersal of signals in the air is the technical capacity of the
transmitters and other equipment employed by the broadcaster. While the broadcaster may use a
less powerful transmitter to limit its coverage, this is merely a business strategy or decision and
not an inherent limitation when transmission is through cable.
Accordingly, the nature of broadcasting is to scatter the signals in its widest area of
coverage as possible. On this score, it may be said that making public means that accessibility is
undiscriminating as long as it [is] within the range of the transmitter and equipment of the
broadcaster. That the medium through which the Appellant carries the Appellee's signal, that is
via satellite, does not diminish the fact that it operates and functions as a cable television. It
remains that the Appellant's transmission of signals via its DTH satellite television service cannot
be considered within the purview of broadcasting. . . .
xxx xxx xxx
This Office also finds no evidence on record showing that the Appellant has provided
decrypting means to the public indiscriminately. Considering the nature of this case, which is
punitive in fact, the burden of proving the existence of the elements constituting the acts
punishable rests on the shoulder of the complainant.
Accordingly, this Office finds that there is no rebroadcasting on the part of the Appellant
of the Appellee's programs on Channels 2 and 23, as defined under the Rome Convention.
Under the Rome Convention, rebroadcasting is "the simultaneous broadcasting by one broadcasting
organization of the broadcast of another broadcasting organization." The Working Paper 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". Evidently, PMSI would not qualify as a broadcasting organization because it does
not have the aforementioned responsibilities imposed upon broadcasting organizations, such as ABS-CBN.
ABS-CBN creates and transmits its own signals; PMSI merely carries such signals which the viewers
receive in its unaltered form. PMSI does not produce, select, or determine the programs to be shown in
Channels 2 and 23. Likewise, it does not pass itself off as the origin or author of such programs. Insofar as
Channels 2 and 23 are concerned, PMSI merely retransmits the same in accordance with Memorandum Circular
04-08-88. With regard to its premium channels, it buys the channels from content providers and transmits on
an as-is basis to its viewers. Clearly, PMSI does not perform the functions of a broadcasting organization; thus,
it cannot be said that it is engaged in rebroadcasting Channels 2 and 23.
The Director-General of the IPO and the Court of Appeals also correctly found that PMSI's services
are similar to a cable television system because the services it renders fall under cable "retransmission", as
described in the Working Paper, to wit: cDIHES
(G) Cable Retransmission
47. When a radio or television program is being broadcast, it can be retransmitted to new
audiences by means of cable or wire. In the early days of cable television, it was mainly used to
improve signal reception, particularly in so-called "shadow zones", or to distribute the signals in
large buildings or building complexes. With improvements in technology, cable operators now
often receive signals from satellites before retransmitting them in an unaltered form to their
subscribers through cable.
48. In principle, cable retransmission can be either simultaneous with the broadcast over-
the-air or delayed (deferred transmission) on the basis of a fixation or a reproduction of a fixation.
Furthermore, they might be unaltered or altered, for example through replacement of
commercials, etc. In general, however, the term "retransmission" seems to be reserved for
such transmissions which are both simultaneous and unaltered.
49. The Rome Convention does not grant rights against unauthorized cable
retransmission. Without such a right, cable operators can retransmit both domestic and
foreign over the air broadcasts simultaneously to their subscribers without permission

6
 from the broadcasting organizations or other rightholders and without obligation to pay
remuneration. (Emphasis added)
Thus, while the Rome Convention gives broadcasting organizations the right to authorize or prohibit the
rebroadcasting of its broadcast, however, this protection does not extend to cable retransmission. The
retransmission of ABS-CBN's signals by PMSI — which functions essentially as a cable television — does not
therefore constitute rebroadcasting in violation of the former's intellectual property rights under the IP
Code. ISAcHD
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:
xxx xxx xxx
(h) The use made of a work by or under the direction or control of the Government, by
the National Library or by educational, scientific or professional institutions where such use is
in the public interest and is compatible with fair use;
The carriage of ABS-CBN's signals by virtue of the must-carry rule in Memorandum Circular No. 04-
08-88 is under the direction and control of the government through the NTC which is vested with exclusive
jurisdiction to supervise, regulate and control telecommunications and broadcast services/facilities in the
Philippines. The imposition of the must-carry rule is within the NTC's power to promulgate rules and
regulations, as public safety and interest may require, to encourage a larger and more effective use of
communications, radio and television broadcasting facilities, and to maintain effective competition among
private entities in these activities whenever the Commission finds it reasonably feasible. As correctly observed
by the Director-General of the IPO:
Accordingly, the "Must-Carry Rule" under NTC Circular No. 4-08-88 falls under the
foregoing category of limitations on copyright. This Office agrees with the Appellant [herein
respondent PMSI] that the "Must-Carry Rule" is in consonance with the principles and objectives
underlying Executive Order No. 436, 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.
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. AEHTIC
This is for the first time that we have a structure that works to accomplish explicit state
policy goals.
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.

7
 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, 17, and 24 of Article II on the Declaration of Principles and State
Policies.
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 . . . ." 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 .
. . ."
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 . . . ." 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". TDcAIH
In Telecom. & Broadcast Attys. of the Phils., Inc. v. COMELEC, 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".
xxx xxx xxx
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: TAHcCI
xxx xxx xxx
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. . . .
There is likewise no merit to ABS-CBN's claim that PMSI's carriage of its signals is for a commercial
purpose; that its being the country's top broadcasting company, the availability of its signals allegedly enhances
PMSI's attractiveness to potential customers; or that the unauthorized carriage of its signals by PMSI has
created competition between its Metro Manila and regional stations.

8
 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, 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. Mere allegation is not evidence,
and is not equivalent to proof.
Anyone in the country who owns a television set and antenna can receive ABS-CBN's signals for free.
Other broadcasting organizations with free-to-air signals such as GMA-7, RPN-9, ABC-5, and IBC-13 can
likewise be accessed for free. No payment is required to view the said channels 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". It does
not advertise itself as a local channel carrier because these local channels can be viewed with or without DTH
television. CDTHSI
Relevantly, PMSI's carriage of Channels 2 and 23 is material in arriving at the ratings and audience
share of ABS-CBN and its programs. These ratings help commercial advertisers and producers decide whether
to buy airtime from the network. Thus, the must-carry rule is actually advantageous to the broadcasting
networks because it provides them with increased viewership which attracts commercial advertisers and
producers.
On the other hand, the carriage of free-to-air signals imposes a burden to cable and DTH television
providers such as PMSI. PMSI uses none of ABS-CBN's resources or equipment and carries the signals and
shoulders the costs without any recourse of charging. Moreover, such carriage of signals takes up channel
space which can otherwise be utilized for other premium paid channels.
There is no merit to ABS-CBN's argument that PMSI's carriage of Channels 2 and 23 resulted in
competition between its Metro Manila and regional stations. ABS-CBN is free to decide to pattern its regional
programming in accordance with perceived demands of the region; however, it cannot impose this kind of
programming on the regional viewers who are also entitled to the free-to-air channels. It must be emphasized
that, as a national broadcasting organization, one of ABS-CBN's responsibilities is to scatter its signals to the
widest area of coverage as possible. That it should limit its signal reach for the sole purpose of gaining profit
for its regional stations undermines public interest and deprives the viewers of their right to access to
information.
Indeed, television is a business; however, the welfare of the people must not be sacrificed in the pursuit
of profit. The right of the viewers and listeners to the most diverse choice of programs available is
paramount. 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. HCDAac
With its enormous resources and vaunted technological capabilities, Appellee's [herein
petitioner ABS-CBN] broadcast signals can reach almost every corner of the archipelago. That
in spite of such capacity, it chooses to maintain regional stations, is a business decision. That the
"Must-Carry Rule" adversely affects the profitability of maintaining such regional stations since
there will be competition between them and its Metro Manila station is speculative and an
attempt to extrapolate the effects of the rule. As discussed above, Appellant's DTH satellite
television services is of limited subscription. There was not even a showing on part of the
Appellee the number of Appellant's subscribers in one region as compared to non-subscribing
television owners. In any event, if this Office is to engage in conjecture, such competition
9
 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."
All told, we find that the Court of Appeals correctly upheld the decision of the IPO Director-General
that PMSI did not infringe on ABS-CBN's intellectual property rights under the IP Code. The findings of facts
of administrative bodies charged with their specific field of expertise, are afforded great weight by the courts,
and in the absence of substantial showing that such findings are made from an erroneous estimation of the
evidence presented, they are conclusive, and in the interest of stability of the governmental structure, should
not be disturbed. 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, as in the instant case.
There is likewise no merit to ABS-CBN's contention that the Memorandum Circular excludes from its
coverage DTH television services such as those provided by PMSI. Section 6.2 of the Memorandum Circular
requires all cable television system operators operating in a community within Grade "A" or "B" contours to
carry the television signals of the authorized television broadcast stations. The rationale behind its issuance
can be found in the whereas clauses which state: EaCSTc
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; SaIEcA
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, 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, 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.
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

10
 inquiry into constitutional questions is that the resolution of the constitutional question must be necessary in
deciding the case. In Spouses Mirasol v. Court of Appeals, 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.
The instant case was instituted for violation of the IP Code and infringement of ABS-CBN's
broadcasting rights and copyright, which can be resolved without going into the constitutionality
of Memorandum Circular No. 04-08-88. As held by the Court of Appeals, the only relevance of the circular in
this case is whether or not compliance therewith should be considered manifestation of lack of intent to commit
infringement, and if it is, whether such lack of intent is a valid defense against the complaint of petitioner.
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, 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.
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. In Philippine Veterans Bank v. Court of Appeals, 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. .
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.
ABS-CBN filed a verified petition before the Court of Appeals, which was docketed CA G.R. SP No.
90762, for PMSI's alleged disobedience to the Resolution and Temporary Restraining Order, both dated July
18, 2005, issued in CA-G.R. SP No. 88092. However, after the cases were consolidated, the Court of Appeals
did not require PMSI to comment on the petition for contempt. It ruled on the merits of CA-G.R. SP No. 88092
and ordered the dismissal of both petitions.
ABS-CBN argues that the Court of Appeals erred in dismissing the petition for contempt without
having ordered respondents to comment on the same. Consequently, it would have us reinstate CA-G.R. No.
90762 and order respondents to show cause why they should not be held in contempt.
It bears stressing that the proceedings for punishment of indirect contempt are criminal in nature. The
modes of procedure and rules of evidence adopted in contempt proceedings are similar in nature to those used
in criminal prosecutions. 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. D
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. (ABS-CBN Broadcasting Corp. v. Philippine Multi-Media System, Inc., G.R. Nos. 175769-
70, [January 19, 2009], 596 PHIL 283-314)

11
Universal Declaration of Human Rights
The Universal Declaration of Human Rights (UDHR) is a milestone document in the history of human
rights. Drafted by representatives with different legal and cultural backgrounds from all regions of the world, the
Declaration was proclaimed by the United Nations General Assembly in Paris on 10 December 1948 (General
Assembly resolution 217 A) as a common standard of achievements for all peoples and all nations. It sets out, for
the first time, fundamental human rights to be universally protected and it has been translated into over 500
languages. The UDHR is widely recognized as having inspired, and paved the way for, the adoption of more than
seventy human rights treaties, applied today on a permanent basis at global and regional levels (all containing
references to it in their preambles).
Preamble
Whereas recognition of the inherent dignity and of the equal and inalienable rights of all members of the
human family is the foundation of freedom, justice and peace in the world,
Whereas disregard and contempt for human rights have resulted in barbarous acts which have outraged the
conscience of mankind, and the advent of a world in which human beings shall enjoy freedom of speech and belief
and freedom from fear and want has been proclaimed as the highest aspiration of the common people,
Whereas it is essential, if man is not to be compelled to have recourse, as a last resort, to rebellion against
tyranny and oppression, that human rights should be protected by the rule of law,
Whereas it is essential to promote the development of friendly relations between nations,
Whereas the peoples of the United Nations have in the Charter reaffirmed their faith in fundamental human
rights, in the dignity and worth of the human person and in the equal rights of men and women and have determined
to promote social progress and better standards of life in larger freedom,
Whereas Member States have pledged themselves to achieve, in co-operation with the United Nations, the
promotion of universal respect for and observance of human rights and fundamental freedoms,
Whereas a common understanding of these rights and freedoms is of the greatest importance for the full
realization of this pledge,
Now, therefore,
The General Assembly,
Proclaims this Universal Declaration of Human Rights as a common standard of achievement for all peoples and
all nations, to the end that every individual and every organ of society, keeping this Declaration constantly in mind,
shall strive by teaching and education to promote respect for these rights and freedoms and by progressive
measures, national and international, to secure their universal and effective recognition and observance, both among
the peoples of Member States themselves and among the peoples of territories under their jurisdiction.
Article 1
All human beings are born free and equal in dignity and rights. They are endowed with reason and conscience and
should act towards one another in a spirit of brotherhood.
Article 2
Everyone is entitled to all the rights and freedoms set forth in this Declaration, without distinction of any kind, such
as race, colour, sex, language, religion, political or other opinion, national or social origin, property, birth or other
status. Furthermore, no distinction shall be made on the basis of the political, jurisdictional or international status
of the country or territory to which a person belongs, whether it be independent, trust, non-self-governing or under
any other limitation of sovereignty.
Article 3
Everyone has the right to life, liberty and security of person.

12
Article 4
No one shall be held in slavery or servitude; slavery and the slave trade shall be prohibited in all their forms.
Article 5
No one shall be subjected to torture or to cruel, inhuman or degrading treatment or punishment.
Article 6
Everyone has the right to recognition everywhere as a person before the law.
Article 7
All are equal before the law and are entitled without any discrimination to equal protection of the law. All are
entitled to equal protection against any discrimination in violation of this Declaration and against any incitement
to such discrimination.
Article 8
Everyone has the right to an effective remedy by the competent national tribunals for acts violating the fundamental
rights granted him by the constitution or by law.
Article 9
No one shall be subjected to arbitrary arrest, detention or exile.
Article 10
Everyone is entitled in full equality to a fair and public hearing by an independent and impartial tribunal, in the
determination of his rights and obligations and of any criminal charge against him.
Article 11
Everyone charged with a penal offence has the right to be presumed innocent until proved guilty according to law
in a public trial at which he has had all the guarantees necessary for his defence.
No one shall be held guilty of any penal offence on account of any act or omission which did not constitute a penal
offence, under national or international law, at the time when it was committed. Nor shall a heavier penalty be
imposed than the one that was applicable at the time the penal offence was committed.
Article 12
No one shall be subjected to arbitrary interference with his privacy, family, home or correspondence, nor to attacks
upon his honour and reputation. Everyone has the right to the protection of the law against such interference or
attacks.
Article 13
Everyone has the right to freedom of movement and residence within the borders of each state.
Everyone has the right to leave any country, including his own, and to return to his country.
Article 14
Everyone has the right to seek and to enjoy in other countries asylum from persecution.
This right may not be invoked in the case of prosecutions genuinely arising from non-political crimes or from acts
contrary to the purposes and principles of the United Nations.
Article 15
Everyone has the right to a nationality.
No one shall be arbitrarily deprived of his nationality nor denied the right to change his nationality.

13
Article 16
Men and women of full age, without any limitation due to race, nationality or religion, have the right to marry and
to found a family. They are entitled to equal rights as to marriage, during marriage and at its dissolution.
Marriage shall be entered into only with the free and full consent of the intending spouses.
The family is the natural and fundamental group unit of society and is entitled to protection by society and the
State.
Article 17
Everyone has the right to own property alone as well as in association with others.
No one shall be arbitrarily deprived of his property.
Article 18
Everyone has the right to freedom of thought, conscience and religion; this right includes freedom to change his
religion or belief, and freedom, either alone or in community with others and in public or private, to manifest his
religion or belief in teaching, practice, worship and observance.
Article 19
Everyone has the right to freedom of opinion and expression; this right includes freedom to hold opinions without
interference and to seek, receive and impart information and ideas through any media and regardless of frontiers.
Article 20
Everyone has the right to freedom of peaceful assembly and association.
No one may be compelled to belong to an association.
Article 21
Everyone has the right to take part in the government of his country, directly or through freely chosen
representatives.
Everyone has the right of equal access to public service in his country.
The will of the people shall be the basis of the authority of government; this will shall be expressed in periodic and
genuine elections which shall be by universal and equal suffrage and shall be held by secret vote or by equivalent
free voting procedures.
Article 22
Everyone, as a member of society, has the right to social security and is entitled to realization, through national
effort and international co-operation and in accordance with the organization and resources of each State, of the
economic, social and cultural rights indispensable for his dignity and the free development of his personality.
Article 23
Everyone has the right to work, to free choice of employment, to just and favourable conditions of work and to
protection against unemployment.
Everyone, without any discrimination, has the right to equal pay for equal work.
Everyone who works has the right to just and favourable remuneration ensuring for himself and his family an
existence worthy of human dignity, and supplemented, if necessary, by other means of social protection.
Everyone has the right to form and to join trade unions for the protection of his interests.

14
Article 24
Everyone has the right to rest and leisure, including reasonable limitation of working hours and periodic holidays
with pay.
Article 25
Everyone has the right to a standard of living adequate for the health and well-being of himself and of his family,
including food, clothing, housing and medical care and necessary social services, and the right to security in the
event of unemployment, sickness, disability, widowhood, old age or other lack of livelihood in circumstances
beyond his control.
Motherhood and childhood are entitled to special care and assistance. All children, whether born in or out of
wedlock, shall enjoy the same social protection.
Article 26
Everyone has the right to education. Education shall be free, at least in the elementary and fundamental stages.
Elementary education shall be compulsory. Technical and professional education shall be made generally available
and higher education shall be equally accessible to all on the basis of merit.
Education shall be directed to the full development of the human personality and to the strengthening of respect for
human rights and fundamental freedoms. It shall promote understanding, tolerance and friendship among all
nations, racial or religious groups, and shall further the activities of the United Nations for the maintenance of
peace.
Parents have a prior right to choose the kind of education that shall be given to their children.
Article 27
Everyone has the right freely to participate in the cultural life of the community, to enjoy the arts and to share in
scientific advancement and its benefits.
Everyone has the right to the protection of the moral and material interests resulting from any scientific, literary or
artistic production of which he is the author.
Article 28
Everyone is entitled to a social and international order in which the rights and freedoms set forth in this Declaration
can be fully realized.
Article 29
Everyone has duties to the community in which alone the free and full development of his personality is possible.
In the exercise of his rights and freedoms, everyone shall be subject only to such limitations as are determined by
law solely for the purpose of securing due recognition and respect for the rights and freedoms of others and of
meeting the just requirements of morality, public order and the general welfare in a democratic society.
These rights and freedoms may in no case be exercised contrary to the purposes and principles of the United
Nations.
Article 30
Nothing in this Declaration may be interpreted as implying for any State, group or person any right to engage in
any activity or to perform any act aimed at the destruction of any of the rights and freedoms set forth herein.

15
[G.R. No. 114508. November 19, 1999.]
PRIBHDAS J. MIRPURI, petitioner,vs.COURT OF APPEALS, DIRECTOR OF
PATENTS and the BARBIZON CORPORATION, respondents.

Teresita Gandionco Oledan for petitioner.

Castillo Laman Tan Pantaleon & San Jose for respondents.

SYNOPSIS
On June 15, 1970, Lolita Escobar filed an application with the Bureau of Patents for the registration of the
trademark "Barbizon" docketed as Inter Partes No. 686. Private respondent Barbizon Corporation, a corporation
organized and doing business under the laws of New York, U.S.A. filed an opposition thereto based on Sections 4
(d) and 8 of the Trademark law by claiming that the mark BARBIZON of the applicant is confusingly similar to
the trademark BARBIZON which opposer owns and has not abandoned. On June 18, 1978, the Director of Patents
rendered judgment dismissing the opposition and giving due course to Escobar's application. The decision became
final, and Escobar was issued a certificate of registration. Later, Escobar assigned all her rights and interests over
the trademark to petitioner Pribhdas J. Mirpuri. In 1979, the Bureau of Patents cancelled Escobar's certificate of
registration for failure to file with the Bureau of Patents the Affidavit of Use of the Trademark as required under
Section 12 of the Philippine Trademark Law. Mirpuri reapplied for the registration of the cancelled trademark of
Barbizon docketed as Inter Partes No. 2049. Again, private respondent filed an opposition by citing mainly the
protection of trademark under Article 6BIS is of the Convention of Paris and stating that opposer's goods bearing
the trademark BARBIZON have been used in many countries including the Philippines for at least 40 years and
has enjoyed international reputation and good will for their quality and to allow such registration will also violate
Article 189 of the Revised Penal Code. Subsequently, the Director of Patents rendered a decision declaring private
respondent's opposition barred by res judicata and giving due course to petitioner's reapplication for registration.
On appeal, the Court of Appeals reversed the decision of the Director of Patents. HSCATc
In this petition, it is noted that the oppositions in the first and second cases are based on different laws. The
opposition in IPC No. 686 was based on specific provisions of the Trademark Law, i.e., Section 4 (d) on confusing
similarity of trademarks and Section 8 on the requisite damage to file an opposition to a petition for registration.
The opposition in IPC No. 2049 invoked the Paris Convention, particularly Article 6bis thereof, E.O. No. 913 and
the two Memoranda of the Minister of Trade and Industry. This opposition also invoked Article 189 of the Revised
Penal Code which is a statute totally different from the Trademark Law. Causes of action which are distinct and
independent from each other, although arising out of the same contract, transaction, or state of facts, may be sued
on separately, recovery on one being no bar to subsequent actions on others. The mere fact that the same relief is
sought in the subsequent action will not render the judgment in the prior action operative as res judicata,such as
where the two actions are based on different statutes. Res judicata,therefore, does not apply to the instant case and
respondent Court of Appeals did not err in so ruling.
Petition was DENIED.

SYLLABUS

1. MERCANTILE LAW; TRADEMARK LAW; TRADEMARK; DEFINED. — A "trademark" is defined

under R.A. 166, the Trademark Law, as including "any word, name, symbol, emblem, sign or device or any
combination thereof adopted and used by a manufacturer or merchant to identify his goods and distinguish them
from those manufactured, sold or dealt in by others." This definition has been simplified in R.A. No. 8293,
the Intellectual Property Code of the Philippines, which defines a "trademark", as "any visible sign capable of
distinguishing goods."
2. ID.; ID.; ID.; FUNCTIONS. — In Philippine jurisprudence, the function of a trademark is to point out
distinctly the origin or ownership of the goods to which it is affixed; to secure to him, who has been instrumental
in bringing into the market a superior article of merchandise, the fruit of his industry and skill; to assure the public
that they are procuring the genuine article; to prevent fraud and imposition; and to protect the manufacturer against
substitution and sale of an inferior and different article of his product. Modern authorities on trademark law view
trademarks as performing three distinct functions: (1) they indicate origin or ownership of the articles to which they
are attached; (2) they guarantee that those articles come up to a certain standard of quality; and (3) they advertise
the articles they symbolize.

16
 3. ID.;ID.;SYMBOLS; USED TO IDENTIFY OWNERSHIP OR ORIGIN OF ARTICLES. — Symbols
have been used to identify the ownership or origin of articles for several centuries. As early as 5,000 B.C.,markings
on pottery have been found by archaeologists. Cave drawings in southwestern Europe show bison with symbols on
their flanks. Archaeological discoveries of ancient Greek and Roman inscriptions on sculptural works, paintings,
vases, precious stones, glass works, bricks, etc. reveal some features which are thought to be marks or symbols.
These marks were affixed by the creator or marker of the article, or by public authorities as indicators for the
payment of tax, for disclosing state monopoly, or devices for the settlement of accounts, between an entrepreneur
and his workmen.
4. ID.;ID.;COMPULSORY USE OF IDENTIFYING MARKS IN TRADES; PURPOSE. — In the Middle
Ages, the use of many kinds of marks on a variety of goods was commonplace. Fifteenth century England saw the
compulsory use of identifying marks in certain trades. There were the baker's mark on bread, bottlemaker's marks,
smith's marks, tanner's marks, watermarks on paper, etc.Every guild had its own mark and every master belonging
to it had a special mark of his own. The marks were not trademarks but police marks compulsorily imposed by the
sovereign to let the public know that the goods were not "foreign" goods smuggled into an area where the guild
had a monopoly, as well as to aid in tracing defective work or poor craftsmanship to the artisan. For a similar
reason, merchants also used merchants' marks. Merchants dealt in goods acquired from many sources and the marks
enabled them to identify and reclaim their goods upon recovery after shipwreck or piracy.
5. ID.;ID.;TRADEMARK; GIVES THE CUSTOMER AN INDEX OR GUARANTEE OF QUALITY. —
With constant use, the mark acquired popularity and became voluntarily adopted. It was not intended to create or
continue monopoly but to give the customer an index or guarantee of quality. It was in the late 18th century when
the industrial revolution gave rise to mass production and distribution of consumer goods that the mark became an
important instrumentality of trade and commerce. By this time, trademarks did not merely identify the goods; they
also indicated the goods to be of satisfactory quality, and thereby stimulated further purchases by the consuming
public.
6. ID.; ID.; ID.; SYMBOLIZES GOODWILL AND BUSINESS REPUTATION OF THE OWNER OF
THE PRODUCT. — Eventually, they came to symbolize the goodwill and business reputation of the owner of the
product and became a property right protected by law. The common law developed the doctrine of trademarks and
tradenames "to prevent a person from palming off his goods as another's, from getting another's business or injuring
his reputation by unfair means, and, from defrauding the public." Subsequently, England and the United States
enacted national legislation on trademarks as part of the law regulating unfair trade. It became the right of the
trademark owner to exclude others from the use of his mark, or of a confusingly similar mark where confusion
resulted in diversion of trade or financial injury. At the same time, the trademark served as a warning against the
imitation or faking of products to prevent the imposition of fraud upon the public. HESCcA
7. ID.;ID.;ID.;MOST EFFECTIVE AGENT FOR THE ACTUAL CREATION AND PROTECTION OF
GOODWILL. — Today, the trademark is not merely a symbol of origin and goodwill; it is often the most effective
agent for the actual creation and protection of goodwill. It imprints upon the public mind an anonymous and
impersonal guaranty of satisfaction, creating a desire for further satisfaction. In other words, the mark actually sells
the goods. The mark has become the "silent salesman," the conduit through which direct contact between the
trademark owner and the consumer is assured. It has invaded popular culture in ways never anticipated that it has
become a more convincing selling point than even the quality of the article to which it refers. In the last half century,
the unparalleled growth of industry and the rapid development of communications technology have enabled
trademarks, tradenames and other distinctive signs of a product to penetrate regions where the owner does not
actually manufacture or sell the product itself. Goodwill is no longer confined to the territory of actual market
penetration; it extends to zones where the marked article has been fixed in the public mind through advertising.
8. REMEDIAL LAW; EFFECT OF FINAL JUDGMENT; RES, JUDICATA;ELUCIDATED. —
Literally, res judicata,means, a matter adjudged, a thing judicially acted upon or decided; a thing or matter settled
by judgment. In res judicata,the judgment in the first action is considered conclusive as to every matter, offered
and received therein, as to any other admissible matter which might have been offered for that purpose, and all
other matters that could have been adjudged therein. Res judicata is an absolute bar to a subsequent action for the
same cause; and its requisites are: (a) the former judgment or order must be final; (b) the judgment or order must
be one on the merits; (c) it must have been rendered by a court having jurisdiction over the subject matter and
parties; (d) there must be between the first and second actions, identity of parties, of subject matter and of causes
of action.
9. ID.;JUDGMENT ON THE MERITS; TRIAL WAS NOT NECESSARILY CONDUCTED. — A
judgment is on the merits when it determines the rights and liabilities of the parties based on the disclosed facts,
17
irrespective of formal, technical or dilatory objections. It is not necessary that a trial should have been conducted.
If the court's judgment is general, and not based on any technical defect or objection, and the parties had a full legal
opportunity to be heard on their respective claims and contentions, it is on the merits although there was no actual
hearing or arguments on the facts of the case.
10. ID.;ID.;PRESENT IN CASE AT BAR. — In the case at bar, the Director of Patents did not dismiss
private respondent's opposition on a sheer technicality. Although no hearing was conducted, both parties filed their
respective pleadings and were given opportunity to present evidence. They, however, waived their right to do so
and submitted the case for decision based on their pleadings. The lack of evidence did not deter the Director of
Patents from ruling on the case, particularly on the issue of prior use, which goes into the very substance of the
relief sought by the parties. Since private respondent failed to prove prior use of its trademark, Escobar's claim of
first use was upheld.
11. MERCANTILE LAW; PARIS CONVENTION; ELUCIDATED. — The Convention of Paris for the
Protection of Industrial Property, otherwise known as the Paris Convention, is multilateral treaty that seeks to
protect industrial property consisting of patents, utility models, industrial designs, trademarks, service marks, trade
names and indications of source or appellations of origin; and at the same time aims to repress unfair competition.
The Convention is essentially a compact among various countries which, as members of the Union, have pledged
to accord to citizens of the other member countries trademark and other rights comparable to those accorded their
own citizens by their domestic laws for an effective protection against unfair competition. In short, foreign nationals
are to be given the same treatment in each of the member countries as that country makes available to its own
citizens. Nationals of the various member nations are thus assured of a certain minimum of international protection
of their industrial property.
12. ID.; ID.; PHILIPPINES IS A SIGNATORY. — The Convention was first signed by eleven countries
in Paris on March 20, 1883. It underwent several revisions — at Brussels in 1900, at Washington in 1911, at The
Hague in 1925, at London in 1934, at Lisbon in 1958, and at Stockholm in 1967. Both the Philippines and the
United States of America, herein private respondent's country, are signatories to the Convention. The United States
acceded on May 30, 1887 while the Philippines, through its Senate, concurred on May 10, 1965. The Philippines'
adhesion became effective on September 27, 1965, and from this date, the country obligated itself to honor and
enforce the provisions of the Convention.
13. ID.;ID.;ARTICLE 6BIS;GOVERNS PROTECTION OF WELL-KNOWN TRADEMARKS. — This
Article governs protection of well-known trademarks. Under the first paragraph, each country of the Union bound
itself to undertake to refuse or cancel the registration, and prohibit the use of a trademark which is a reproduction,
imitation or translation, or any essential part of which trademark constitutes a reproduction, liable to create
confusion, of a mark considered by the competent authority of the country where protection is sought, to be well-
known in the country as being already the mark of a person entitled to the benefits of the Convention, and used for
identical or similar goods. TIEHSA
14. ID.; ID.; ID.; DOES NOT REQUIRE LEGISLATIVE ENACTMENT TO GIVE EFFECT IN
MEMBER COUNTRY. — It is a self-executing provision and does not require legislative enactment to give it
effect in the member country. It may be applied directly by the tribunals and officials of each member country by
the mere publication or proclamation of the Convention, after its ratification according to the public law of each
state and the order for its execution.
15. ID.;ID.;ID.;POWER TO DETERMINE WHETHER A TRADEMARK IS WELL-KNOWN LIES IN
COMPETENT AUTHORITY OF COUNTRY OF REGISTRATION OR USE. — The essential requirement under
Article 6bis,is that the trademark to be protected must be "well-known" in the country where protection is sought.
The power to determine whether a trademark is well-known lies in the "competent authority of the country of
registration or use." This competent authority would be either the registering authority if it has the power to decide
this, or the courts of the country in question if the issue comes before a court.
16. ID.;ID.;VILLAFUERTE MEMORANDUM; ELUCIDATED. — In the Villafuerte Memorandum, the
Minister of Trade instructed the Director of Patents to reject all pending applications for Philippine registration of
signature and other world-famous trademarks by applicants other than their original owners or users. The Minister
enumerated several internationally-known trademarks and ordered the Director of Patents to require Philippine
registrants of such marks to surrender their certificates of registration.
17. ID.;ID.;ONGPIN MEMORANDUM; LAID DOWN GUIDELINES FOR DIRECTOR OF PATENTS
TO OBSERVE IN DETERMINING WHETHER A TRADEMARK IS ENTITLED TO PROTECTION. — In the
Ongpin Memorandum, the Minister of Trade and Industry did not enumerate well-known trademarks but laid down
18
guidelines for the Director of Patents to observe in determining whether a trademark is entitled to protection as a
well-known mark in the Philippines under Article 6bis of the Paris Convention. This was to be established through
Philippine Patent Office procedures in inter partes and ex parte cases pursuant to the criteria enumerated therein.
The Philippine Patent Office was ordered to refuse application for, or cancel the registration of, trademarks which
constitute a reproduction, translation or imitation of a trademark owned by a person who is a citizen of a member
of the Union. All pending applications for registration of world-famous trademarks by persons other than their
original owners were to be rejected forthwith. The Ongpin Memorandum was issued pursuant to Executive Order
No. 913 dated October 7, 1983 of then President Marcos which strengthened the rule-making and adjudicatory
powers of the Minister of Trade and Industry for the effective protection of consumers and the application of swift
solutions to problems in trade and industry.
18. ID.;ID.;MINISTER OF TRADE AND INDUSTRY IS THE COMPETENT AUTHORITY TO
DETERMINE WHETHER A TRADEMARK IS WELL-KNOWN IN THIS COUNTRY. — Both the Villafuerte
and Ongpin Memoranda were sustained by the Supreme Court in the 1984 landmark case of La Chemise Lacoste,
S.A.v. Fernandez. This court ruled therein that under the provisions of Article 6bis of the Paris Convention, the
Minister of Trade and Industry was the "competent authority" to determine whether a trademark is well-known in
this country.
19. REMEDIAL LAW; EFFECT OF FINAL JUDGMENT; RES JUDICATA;DOES NOT APPLY TO
RIGHTS, CLAIMS OR DEMANDS WHICH CONSTITUTE SEPARATE OR DISTINCT CAUSES OF ACTION
AND WERE NOT PUT IN ISSUE IN THE FORMER ACTION ALTHOUGH IT INVOLVES THE SAME
SUBJECT MATTER. — IPC No. 2049 raised the issue of ownership of the trademark, the first registration and
use of the trademark in the United States and other countries, and the international recognition and reputation of
the trademark established by extensive use and advertisement of private respondent's products for over forty years
here and abroad. These are different from the issues of confusing similarity and damage in IPC No. 686. The issue
of prior use may have been raised in IPC No. 686 but this claim was limited to prior use in the Philippines only.
Prior use in IPC No. 2049 stems from private respondent's claim as originator of the word and symbol "Barbizon,"
as the first and registered user of the mark attached to its products which have been sold and advertised worldwide
for a considerable number of years prior to petitioner's first application for registration of her trademark in the
Philippines. Indeed, these are substantial allegations that raised new issues and necessarily gave private respondent
a new cause of action. Res judicata does not apply to rights, claims or demands, although growing out of the same
subject matter, which constitute separate or distinct causes of action and were not put in issue in the former action.
20. ID.;ID.;ID.;EXTENDS ONLY TO FACTS, AND CONDITIONS AS THEY EXISTED AT THE
TIME JUDGMENT WAS RENDERED. — Res judicata extends only to facts and conditions as they existed at the
time judgment was rendered and to the legal rights and relations of the parties fixed by the facts so determined.
When new facts or conditions intervene before the second suit, furnishing a new basis for the claims and defenses
of the parties, the issues are no longer the same, and the former judgment cannot be pleaded as a bar to the
subsequent action.
21. ID.;ID.;ID.;DOES NOT COVER ACTIONS BASED ON DIFFERENT STATUTES. — Causes of
action which are distinct and independent from each other, although arising out of the same contract, transaction,
or state of facts, may be sued on separately, recovery on one being no bar to subsequent actions on others. The
mere fact that the same relief is sought in the subsequent action will not render the judgment in the prior action
operative as res judicata,such as where the two actions are based on different statutes. HSIDTE
22. MERCANTILE LAW; TRADEMARK LAW; TRADEMARK; DEALS WITH PSYCHOLOGICAL
FUNCTION OF SYMBOLS. — Trademarks deal with the psychological function of symbols and the effect of
these symbols on the public at large. Trademarks play a significant role in communication, commerce and trade,
and serve valuable and interrelated business functions, both nationally and internationally. For this reason, all
agreements concerning industrial property, like those on trademarks and tradenames, are intimately connected with
economic development.
23. ID.; INTELLECTUAL PROPERTY CODE OF THE PHILIPPINES; INDUSTRIAL PROPERTY;
ENCOURAGES INVESTMENTS IN NEW IDEAS AND INVENTIONS. — Industrial property encourages
investments in new ideas and inventions and stimulates creative efforts for the satisfaction of human needs. They
speed up transfer of technology and industrialization, and thereby bring about social and economic progress. These
advantages have been acknowledged by the Philippine government itself.
24. ID.; ID.; STRENGTHENS THE INTELLECTUAL AND INDUSTRIAL PROPERTY SYSTEM IN
THE COUNTRY. — The Intellectual Property Code of the Philippines declares that "an effective intellectual and
19
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).
25. ID.; WORLD TRADE ORGANIZATION; ELUCIDATED. — The WTO is a common institutional
framework for the conduct of trade relations among its members in matters related to the multilateral and
plurilateral trade agreements annexed to the WTO Agreement. The WTO framework ensures a "single undertaking
approach" to the administration and operation of all agreements and arrangements attached to the WTO Agreement.
Among those annexed is the Agreement on Trade-Related Aspects of Intellectual Property Rights or TRIPS.
Members to this Agreement "desire to reduce distortions and impediments to international trade, taking into account
the need to promote effective and adequate protection of intellectual property rights, and to ensure that measures
and procedures to enforce intellectual property rights do not themselves become barriers to legitimate trade." To
fulfill these objectives, the members have agreed to adhere to minimum standards of protection set by several
Conventions. These Conventions are: the Berne Convention for the Protection of Literary and Artistic Works
(1971), the Rome Convention or the International Convention for the Protection of Performers, Procedures of
Phonograms and Broadcasting Organizations, the Treaty on Intellectual Property in Respect of Integrated
Circuits, and the Paris Convention (1967), as revised in Stockholm on July 14, 1967.
26. ID.; ID.; TRADE-RELATED ASPECTS OF INTELLECTUAL PROPERTY
RIGHTS AGREEMENT; ELUCIDATED. — A major proportion of international trade depends on the protection
of intellectual property rights. Since the late 1970's, the unauthorized counterfeiting of industrial property and
trademarked products has had a considerable adverse impact on domestic and international trade revenues.
The TRIPs Agreement seeks to grant adequate protection of intellectual property rights by creating a favorable
economic environment to encourage the inflow of foreign investments, and strengthening the multi-lateral trading
system to bring about economic, cultural and technological independence.
27. ID.;ID.;PROPELLED THE WORLD TOWARDS TRADE LIBERALIZATION AND ECONOMIC
GLOBALIZATION. — The Philippines and the United States of America have acceded to the WTO Agreement.
This Agreement has revolutionized international business and economic relations among states, and has propelled
the world towards trade liberalization and economic globalization. Protectionism and isolationism belong to the
past. Trade is no longer confined to a bilateral system. There is now "a new era of global economic cooperation,
reflecting the widespread desire to operate in a fairer and mote open multilateral trading system." Conformably,
the State must reaffirm its commitment to the global community and take part in evolving a new international
economic order at the dawn of the new millennium. AaCTcI

DECISION
PUNO, J p:
The Convention of Paris for the Protection of Industrial Property is a multi-lateral treaty which the
Philippines bound itself to honor and enforce in this country. As to whether or not the treaty affords protection to
a foreign corporation against a Philippine applicant for the registration of a similar trademark is the principal issue
in this case. cdphil
On June 15, 1970, one Lolita Escobar, the predecessor-in-interest of petitioner Pribhdas J. Mirpuri, filed
an application with the Bureau of Patents for the registration of the trademark "Barbizon" for use in brassieres and
ladies undergarments. Escobar alleged that she had been manufacturing and selling these products under the firm
name "L & BM Commercial" since March 3, 1970.
Private respondent Barbizon Corporation, a corporation organized and doing business under the laws of
New York, U.S.A.,opposed the application. It claimed that:
"The mark BARBIZON of respondent-applicant is confusingly similar to the trademark
BARBIZON which opposer owns and has not abandoned.
That opposer will be damaged by the registration of the mark BARBIZON and its
business reputation and goodwill will suffer great and irreparable injury.

20
 That the respondent-applicant's use of the said mark BARBIZON which resembles the
trademark used and owned by opposer, constitutes an unlawful appropriation of a mark
previously used in the Philippines and not abandoned and therefore a statutory violation of
Section 4 (d) of Republic Act No. 166, as amended."
This was docketed as Inter Partes Case No. 686 (IPC No. 686).After filing of the pleadings, the parties
submitted the case for decision. LexLib
On June 18, 1974, the Director of Patents rendered judgment dismissing the opposition and giving due
course to Escobar's application, thus:
"WHEREFORE, the opposition should be, as it is hereby, DISMISSED. Accordingly,
Application Serial No. 19010 for the registration of the trademark BARBIZON, of respondent
Lolita R. Escobar, is given due course.
IT IS SO ORDERED."
This decision became final and on September 11, 1974, Lolita Escobar was issued a certificate of registration
for the trademark "Barbizon." The trademark was "for use in "brassieres and lady's underwear garments like
panties."
Escobar later assigned all her rights and interest over the trademark to petitioner Pribhdas J. Mirpuri who,
under his firm name then, the "Bonito Enterprises," was the sole and exclusive distributor of Escobar's "Barbizon"
products.
In 1979, however, Escobar failed to file with the Bureau of Patents the Affidavit of Use of the trademark
required under Section 12 of Republic Act (R.A.) No. 166, the Philippine Trademark Law. Due to this failure, the
Bureau of Patents cancelled Escobar's certificate of registration.
On May 27, 1981, Escobar reapplied for registration of the cancelled trademark. Mirpuri filed his own
application for registration of Escobar's trademark. Escobar later assigned her application to herein petitioner and
this application was opposed by private respondent. The case was docketed as Inter Partes Case No.2049 (IPC
No. 2049).
In its opposition, private respondent alleged that:
"(a) The Opposer has adopted the trademark BARBIZON (word),sometime in June 1933
and has then used it on various kinds of wearing apparel. On August 14, 1934, Opposer obtained
from the United States Patent Office a more recent registration of the said mark under Certificate
of Registration No. 316, 161. On March 1, 1949, Opposer obtained from the United States Patent
Office a more recent registration for the said trademark under Certificate of Registration No.
507, 214, a copy of which is herewith attached as Annex 'A.' Said Certificate of Registration
covers the following goods — wearing apparel: robes, pajamas, lingerie, nightgowns and slips;
(b) Sometime in March 1976, Opposer further adopted the trademark BARBIZON and
Bee design and used the said mark in various kinds of wearing apparel. On March 15, 1977,
Opposer secured from the United States Patent Office a registration of the said mark under
Certificate of Registration No. 1,061,277, a copy of which is herein enclosed as Annex 'B.' The
said Certificate of Registration covers the following goods: robes, pajamas, lingerie, nightgowns
and slips;
(c) Still further, sometime in 1961, Opposer adopted the trademark BARBIZON and a
Representation of a Woman and thereafter used the said trademark on various kinds of wearing
apparel. Opposer obtained from the United States Patent Office registration of the said mark on
April 5, 1983 under Certificate of Registration No. 1,233,666 for the following goods: wearing
apparel: robes, pajamas, nightgowns and lingerie. A copy of the said certificate of registration is
herewith enclosed as Annex 'C.'
(d) All the above registrations are subsisting and in force and Opposer has not abandoned
the use of the said trademarks. In fact, Opposer, through a wholly-owned Philippine subsidiary,
the Philippine Lingerie Corporation, has been manufacturing the goods covered by said
registrations and selling them to various countries, thereby earning valuable foreign exchange
for the country. As a result of respondent-applicant's misappropriation of Opposer's BARBIZON

21
 trademark, Philippine Lingerie Corporation is prevented from selling its goods in the local
market, to the damage and prejudice of Opposer and its wholly-owned subsidiary. LLpr
(e) The Opposer's goods bearing the trademark BARBIZON have been used in many
countries, including the Philippines, for at least 40 years and has enjoyed international reputation
and good will for their quality. To protect its registrations in countries where the goods covered
by the registrations are being sold, Opposer has procured the registration of the trademark
BARBIZON in the following countries: Australia, Austria, Abu Dhabi, Argentina, Belgium,
Bolivia, Bahrain, Canada, Chile, Colombia, Denmark, Ecuador, France, West Germany, Greece,
Guatemala, Hongkong, Honduras, Italy, Japan, Jordan, Lebanon, Mexico, Morocco, Panama,
New Zealand, Norway, Sweden, Switzerland, Syria, El Salvador, South Africa, Zambia, Egypt,
and Iran, among others;
(f) To enhance its international reputation for quality goods and to further promote
goodwill over its name, marks and products, Opposer has extensively advertised its products,
trademarks and name in various publications which are circulated in the United States and many
countries around the world, including the Philippines;
(g) The trademark BARBIZON was fraudulently registered in the Philippines by one
Lolita R. Escobar under Registration No. 21920, issued on September 11, 1974, in violation of
Article 189 (3) of the Revised Penal Code and Section 4 (d) of the Trademark Law. Herein
respondent applicant acquired by assignment the 'rights' to the said mark previously registered
by Lolita Escobar, hence respondent-applicant's title is vitiated by the same fraud and criminal
act. Besides, Certificate of Registration No. 21920 has been cancelled for failure of either Lolita
Escobar or herein respondent-applicant, to seasonably file the statutory affidavit of use. By
applying for a re-registration of the mark BARBIZON subject of this opposition, respondent-
applicant seeks to perpetuate the fraud and criminal act committed by Lolita Escobar.
(h) Opposer's BARBIZON as well as its BARBIZON and Bee Design and BARBIZON
and Representation of a Woman trademarks qualify as well-known trademarks entitled to
protection under Article 6bis of the Convention of Paris for the Protection of Industrial
Property and further amplified by the Memorandum of the Minister of Trade to the Honorable
Director of Patents dated October 25, 1983 [sic], Executive Order No. 913 dated October 7,
1963 and the Memorandum of the Minister of Trade and Industry to the Honorable Director of
Patents dated October 25, 1983.
(i) The trademark applied for by respondent applicant is identical to Opposer's
BARBIZON trademark and constitutes the dominant part of Opposer's two other marks namely,
BARBIZON and Bee design and BARBIZON and a Representation of a Woman. The continued
use by respondent-applicant of Opposer's trademark BARBIZON on goods belonging to Class
25 constitutes a clear case of commercial and criminal piracy and if allowed registration will
violate not only the Trademark Law but also Article 189 of the Revised Penal Code and the
commitment of the Philippines to an international treaty."
Replying to private respondent's opposition, petitioner raised the defense of res judicata.
On March 2, 1982, Escobar assigned to petitioner the use of the business name "Barbizon International."
Petitioner registered the name with the Department of Trade and Industry (DTI) for which a certificate of
registration was issued in 1987.
Forthwith, private respondent filed before the Office of Legal Affairs of the DTI a petition for cancellation
of petitioner's business name.
On November 26, 1991, the DTI, Office of Legal Affairs, cancelled petitioner's certificate of registration,
and declared private respondent the owner and prior user of the business name "Barbizon International." Thus:
"WHEREFORE, the petition is hereby GRANTED and petitioner is declared the owner
and prior user of the business name "BARBIZON INTERNATIONAL" under Certificate of
Registration No. 87-09000 dated March 10, 1987 and issued in the name of respondent, is [sic]
hereby ordered revoked and cancelled. ...."

22
 Meanwhile, in IPC No. 2049, the evidence of both parties were received by the Director of Patents. On
June 18, 1992, the Director rendered a decision declaring private respondent's opposition barred by res judicata and
giving due course to petitioner's application for registration, to wit:
"WHEREFORE, the present Opposition in Inter Partes Case No. 2049 is hereby
DECLARED BARRED by res judicata and is hereby DISMISSED. Accordingly, Application
Serial No. 45011 for trademark BARBIZON filed by Pribhdas J. Mirpuri is GIVEN DUE
COURSE.
SO ORDERED."
Private respondent questioned this decision before the Court of Appeals in CA-G.R. SP No. 28415. On
April 30, 1993, the Court of Appeals reversed the Director of Patents finding that IPC No. 686 was not barred by
judgment in IPC No. 2049 and ordered that the case be remanded to the Bureau of Patents for further
proceedings, viz: cdrep
"WHEREFORE, the appealed Decision No. 92-13 dated June 18, 1992 of the Director
of Patents in Inter Partes Case No. 2049 is hereby SET ASIDE; and the case is hereby remanded
to the Bureau of Patents for further proceedings, in accordance with this pronouncement. No
costs."
In a Resolution dated March 16, 1994, the Court of Appeals denied reconsideration of its decision Hence, this
recourse.
Before us, petitioner raises the following issues:
"1. WHETHER OR NOT THE DECISION OF THE DIRECTOR OF PATENTS IN INTER
PARTES CASE NO. 686 RENDERED ON JUNE 18, 1974, ANNEX C HEREOF,
CONSTITUTED RES JUDICATA IN SO FAR AS THE CASE BEFORE THE
DIRECTOR OF PATENTS IS CONCERNED;
2. WHETHER OR NOT THE DIRECTOR OF PATENTS CORRECTLY APPLIED THE
PRINCIPLE OF RES JUDICATA IN DISMISSING PRIVATE RESPONDENT
BARBIZON'S OPPOSITION TO PETITIONER'S APPLICATION FOR
REGISTRATION FOR THE TRADEMARK BARBIZON, WHICH HAS SINCE
RIPENED TO CERTIFICATE OF REGISTRATION NO. 53920 ON NOVEMBER 16,
1992;
3. WHETHER OR NOT THE REQUISITE THAT A 'JUDGMENT ON THE MERITS'
REQUIRED A 'HEARING WHERE BOTH PARTIES ARE SUPPOSED TO
ADDUCE EVIDENCE' AND WHETHER THE JOINT SUBMISSION OF THE
PARTIES TO A CASE ON THE BASIS OF THEIR RESPECTIVE PLEADINGS
WITHOUT PRESENTING TESTIMONIAL OR DOCUMENTARY EVIDENCE
FALLS WITHIN THE MEANING OF 'JUDGMENT ON THE MERITS' AS ONE OF
THE REQUISITES TO CONSTITUTE RES JUDICATA;
4. WHETHER A DECISION OF THE DEPARTMENT OF TRADE AND INDUSTRY
CANCELLING PETITIONER'S FIRM NAME 'BARBIZON INTERNATIONAL'
AND WHICH DECISION IS STILL PENDING RECONSIDERATION NEVER
OFFERED IN EVIDENCE BEFORE THE DIRECTOR OF PATENTS IN INTER
PARTES CASE NO. 2049 HAS THE RIGHT TO DECIDE SUCH CANCELLATION
NOT ON THE BASIS OF THE BUSINESS NAME LAW (AS IMPLEMENTED BY
THE BUREAU OF DOMESTIC TRADE) BUT ON THE BASIS OF THE PARIS
CONVENTION AND THE TRADEMARK LAW (R.A. 166) WHICH IS WITHIN
THE ORIGINAL AND EXCLUSIVE JURISDICTION OF THE DIRECTOR OF
PATENTS."
Before ruling on the issues of the case, there is need for a brief background on the function and historical
development of trademarks and trademark law.
A "trademark" is defined under R.A. 166, the Trademark Law, as including "any word, name, symbol,
emblem, sign or device or any combination thereof adopted and used by a manufacturer or merchant to identify his
goods and distinguish them from those manufactured, sold or dealt in by others." This definition has been

23
simplified in R.A. No. 8293, the Intellectual Property Code of the Philippines, which defines a "trademark" as "any
visible sign capable of distinguishing goods." In Philippine jurisprudence, the function of a trademark is to point
out distinctly the origin or ownership of the goods to which it is affixed; to secure to him, who has been instrumental
in bringing into the market a superior article of merchandise, the fruit of his industry and skill; to assure the public
that they are procuring the genuine article; to prevent fraud and imposition; and to protect the manufacturer against
substitution and sale of an inferior and different article as his product
Modern authorities on trademark law view trademarks as performing three distinct functions: (1) they
indicate origin or ownership of the articles to which they are attached; (2) they guarantee that those articles come
up to a certain standard of quality; and (3) they advertise the articles they symbolize.
Symbols have been used to identify the ownership or origin of articles for several centuries. As early as
5,000 B.C., markings on pottery have been found by archaeologists. Cave drawings in southwestern Europe show
bison with symbols on their flanks. Archaeological discoveries of ancient Greek and Roman inscriptions on
sculptural works, paintings, vases, precious stones, glassworks, bricks, etc. reveal some features which are thought
to be marks or symbols. These marks were affixed by the creator or maker of the article, or by public authorities as
indicators for the payment of tax, for disclosing state monopoly, or devices for the settlement of accounts between
an entrepreneur and his workmen.
In the Middle Ages, the use of many kinds of marks on a variety of goods was commonplace. Fifteenth
century England saw the compulsory use of identifying marks in certain trades. There were the baker's mark on
bread, bottlemaker's marks, smith's marks, tanner's marks, watermarks on paper, etc. Every guild had its own mark
and every master belonging to it had a special mark of his own. The marks were not trademarks but police marks
compulsorily imposed by the sovereign to let the public know that the goods were not "foreign" goods smuggled
into an area where the guild had a monopoly, as well as to aid in tracing defective work or poor craftsmanship to
the artisan. For a similar reason, merchants also used merchants' marks. Merchants dealt in goods acquired from
many sources and the marks enabled them to identify and reclaim their goods upon recovery after shipwreck or
piracy.
With constant use, the mark acquired popularity and became voluntarily adopted. It was not intended to
create or continue monopoly but to give the customer an index or guarantee of quality. It was in the late 18th
century when the industrial revolution gave rise to mass production and distribution of consumer goods that the
mark became an important instrumentality of trade and commerce. By this time, trademarks did not merely identify
the goods; they also indicated the goods to be of satisfactory quality, and thereby stimulated further purchases by
the consuming public. Eventually, they came to symbolize the goodwill and business reputation of the owner of
the product and became a property right protected by law. The common law developed the doctrine of trademarks
and tradenames "to prevent a person from palming off his goods as another's, from getting another's business or
injuring his reputation by unfair means, and, from defrauding the public." Subsequently, England and the United
States enacted national legislation on trademarks as part of the law regulating unfair trade. It became the right of
the trademark owner to exclude others from the use of his mark, or of a confusingly similar mark where confusion
resulted in diversion of trade or financial injury. At the same time, the trademark served as a warning against the
imitation or faking of products to prevent the imposition of fraud upon the public.
Today, the trademark is not merely a symbol of origin and goodwill; it is often the most effective agent for
the actual creation and protection of goodwill. It imprints upon the public mind an anonymous and impersonal
guaranty of satisfaction, creating a desire for further satisfaction. In other words, the mark actually sells the
goods. The mark has become the "silent salesman," the conduit through which direct contact between the trademark
owner and the consumer is assured. It has invaded popular culture in ways never anticipated that it has become a
more convincing selling point than even the quality of the article to which it refers. In the last half century, the
unparalleled growth of industry and the rapid development of communications technology have enabled
trademarks, tradenames and other distinctive signs of a product to penetrate regions where the owner does not
actually manufacture or sell the product itself. Goodwill is no longer confined to the territory of actual market
penetration; it extends to zones where the marked article has been fixed in the public mind through
advertising. 30Whether in the print, broadcast or electronic communications medium, particularly on the
Internet, advertising has paved the way for growth and expansion of the product by creating and earning a
reputation that crosses over borders, virtually turning the whole world into one vast marketplace. prcd
This is the mise-en-scene of the present controversy. Petitioner brings this action claiming that "Barbizon"
products have been sold in the Philippines since 1970. Petitioner developed this market by working long hours and
spending considerable sums of money on advertisements and promotion of the trademark and its products. Now,
almost thirty years later, private respondent, a foreign corporation, "swaggers into the country like a conquering
24
hero," usurps the trademark and invades petitioner's market. Justice and fairness dictate that private respondent be
prevented from appropriating what is not its own. Legally, at the same time, private respondent is barred from
questioning petitioner's ownership of the trademark because of res judicata.
Literally, res judicata means a matter adjudged, a thing judicially acted upon or decided; a thing or matter
settled by judgment. In res judicata, the judgment in the first action is considered conclusive as to every matter
offered and received therein, as to any other admissible matter which might have been offered for that purpose, and
all other matters that could have been adjudged therein. Res judicata is an absolute bar to a subsequent action for
the same cause; and its requisites are: (a) the former judgment or order must be final; (b) the judgment or order
must be one on the merits; (c) it must have been rendered by a court having jurisdiction over the subject matter and
parties; (d) there must be between the first and second actions, identity of parties, of subject matter and of causes
of action.
The Solicitor General, on behalf of respondent Director of Patents, has joined cause with petitioner. Both
claim that all the four elements of res judicata have been complied with: that the judgment in IPC No. 686 was
final and was rendered by the Director of Patents who had jurisdiction over the subject matter and parties; that the
judgment in IPC No. 686 was on the merits; and that the lack of a hearing was immaterial because substantial issues
were raised by the parties and passed upon by the Director of Patents.
The decision in IPC No. 686 reads as follows:
"xxx xxx xxx.
Neither party took testimony nor adduced documentary evidence. They submitted the
case for decision based on the pleadings which, together with the pertinent records, have all been
carefully considered.
Accordingly, the only issue for my disposition is whether or not the herein opposer
would probably be damaged by the registration of the trademark BARBIZON sought by the
respondent-applicant on the ground that it so resembles the trademark BARBIZON allegedly
used and owned by the former to be 'likely to cause confusion, mistake or to deceive purchasers.'
On record, there can be no doubt that respondent-applicant's sought-to-be-registered
trademark BARBIZON is similar, in fact obviously identical, to opposer's alleged trademark
BARBIZON, in spelling and pronunciation. The only appreciable but very negligible difference
lies in their respective appearances or manner of presentation. Respondent-applicant's trademark
is in bold letters (set against a black background),while that of the opposer is offered in stylish
script letters.
It is opposer's assertion that its trademark BARBIZON has been used in trade or
commerce in the Philippines prior to the date of application for the registration of the identical
mark BARBIZON by the respondent-applicant. However, the allegation of facts in opposer's
verified notice of opposition is devoid of such material information. In fact, a reading of the text
of said verified opposition reveals an apparent, if not deliberate, omission of the date (or year)
when opposer's alleged trademark BARBIZON was first used in trade in the Philippines (see par.
No. 1, p. 2, Verified Notice of Opposition, Rec.).Thus, it cannot here and now be ascertained
whether opposer's alleged use of the trademark BARBIZON could be prior to the use of the
identical mark by the herein respondent-applicant, since the opposer attempted neither to
substantiate its claim of use in local commerce with any proof or evidence. Instead, the opposer
submitted the case for decision based merely on the pleadings.
On the other hand, respondent-applicant asserted in her amended application for
registration that she first used the trademark BARBIZON for brassiere (or 'brasseire') and ladies
underwear garments and panties as early as March 3, 1970. Be that as it may, there being no
testimony taken as to said date of first use, respondent-applicant will be limited to the filing date,
June 15, 1970, of her application as the date of first use (Rule 173, Rules of Practice in
Trademark Cases).
From the foregoing, I conclude that the opposer has not made out a case of probable
damage by the registration of the respondent-applicant's mark BARBIZON.

25
 WHEREFORE, the opposition should be, as it is hereby, DISMISSED. Accordingly,
Application Serial No. 19010, for the registration of the trademark BARBIZON of respondent
Lolita R. Escobar, is given due course."
The decision in IPC No. 686 was a judgment on the merits and it was error for the Court of Appeals
to rule that it was not. A judgment is on the merits when it determines the rights and liabilities of the parties based
on the disclosed facts, irrespective of formal, technical or dilatory objections. It is not necessary that a trial should
have been conducted. If the court's judgment is general, and not based on any technical defect or objection, and the
parties had a full legal opportunity to be heard on their respective claims and contentions, it is on the merits although
there was no actual hearing or arguments on the facts of the case. In the case at bar, the Director of Patents did not
dismiss private respondent's opposition on a sheer technicality. Although no hearing was conducted, both parties
filed their respective pleadings and were given opportunity to present evidence. They, however, waived their right
to do so and submitted the case for decision based on their pleadings. The lack of evidence did not deter the Director
of Patents from ruling on the case, particularly on the issue of prior use, which goes into the very substance of the
relief sought by the parties. Since private respondent failed to prove prior use of its trademark, Escobar's claim of
first use was upheld.
The judgment in IPC No. 686 being on the merits, petitioner and the Solicitor General allege that IPC No.
686 and IPC No. 2049 also comply with the fourth requisite of res judicata,i.e.,they involve the same parties and
the same subject matter, and have identical causes of action.
Undisputedly, IPC No. 686 and IPC No. 2049 involve the same parties and the same subject matter.
Petitioner herein is the assignee of Escobar while private respondent is the same American corporation in the first
case. The subject matter of both cases is the trademark "Barbizon." Private respondent counter-argues, however,
that the two cases do not have identical causes of action. New causes of action were allegedly introduced in IPC
No. 2049, such as the prior use and registration of the trademark in the United States and other countries worldwide,
prior use in the Philippines, and the fraudulent registration of the mark in violation of Article 189 of the Revised
Penal Code. Private respondent also cited protection of the trademark under the Convention of Paris for the
Protection of Industrial Property, specifically Article 6bis thereof, and the implementation of Article 6bis by two
Memoranda dated November 20, 1980 and October 25, 1983 of the Minister of Trade and Industry to the Director
of Patents, as well as Executive Order (E.O.) No. 913.
The Convention of Paris for the Protection of Industrial Property, otherwise known as the Paris
Convention, is a multilateral treaty that seeks to protect industrial property consisting of patents, utility models,
industrial designs, trademarks, service marks, trade names and indications of source or appellations of origin, and
at the same time aims to repress unfair competition. The Convention is essentially a compact among various
countries which, as members of the Union, have pledged to accord to citizens of the other member countries
trademark and other rights comparable to those accorded their own citizens by their domestic laws for an effective
protection against unfair competition. In short, foreign nationals are to be given the same treatment in each of the
member countries as that country makes available to its own citizens. Nationals of the various member nations are
thus assured of a certain minimum of international protection of their industrial property.
The Convention was first signed by eleven countries in Paris on March 20, 1883. It underwent several
revisions — at Brussels in 1900, at Washington in 1911, at The Hague in 1925, at London in 1934, at Lisbon in
1958, and at Stockholm in 1967. Both the Philippines and the United States of America, herein private respondent's
country, are signatories to the Convention. The United States acceded on May 30, 1887 while the Philippines,
through its Senate, concurred on May 10, 1965. The Philippines' adhesion became effective on September 27,
1965, and from this date, the country obligated itself to honor and enforce the provisions of the Convention.
In the case at bar, private respondent anchors its cause of action on the first paragraph of Article 6bis of
the Paris Convention which reads as follows:
"Article 6bis
(1) The countries of the Union undertake, either administratively if their legislation
so permits, or at the request of an interested party, to refuse or to cancel the registration
and to prohibit the use, of a trademark which constitutes a reproduction, an imitation, or
a translation, liable to create confusion, of a mark considered by the competent authority
of the country of registration or use to be well-known in that country as being already the
mark of a person entitled to the benefits of this Convention and used for identical or similar
goods. These provisions shall also apply when the essential part of the mark constitutes a

26
 reproduction of any such well-known mark or an imitation liable to create confusion
therewith.
(2) A period of at least five years from the date of registration shall be allowed for
seeking the cancellation of such a mark. The countries of the Union may provide for a period
within which the prohibition of use must be sought.
(3) No time limit shall be fixed for seeking the cancellation or the prohibition of the use
of marks registered or used in bad faith."
This Article governs protection of well-known trademarks. Under the first paragraph, each country of the
Union bound itself to undertake to refuse or cancel the registration, and prohibit the use of a trademark which
is a reproduction, imitation or translation, or any essential part of which trademark constitutes a reproduction,
liable to create confusion, of a mark considered by the competent authority of the country where protection is
sought, to be well-known in the country as being already the mark of a person entitled to the benefits of
the Convention, and used for identical or similar goods.
Article 6bis was first introduced at The Hague in 1925 and amended in Lisbon in 1952. It is a self-
executing provision and does not require legislative enactment to give it effect in the member country. It may be
applied directly by the tribunals and officials of each member country by the mere publication or proclamation of
the Convention, after its ratification according to the public law of each state and the order for its execution.
The essential requirement under Article 6bis is that the trademark to be protected must be "well-known" in
the country where protection is sought. The power to determine whether a trademark is well-known lies in the
"competent authority of the country of registration or use." This competent authority would be either the registering
authority if it has the power to decide this, or the courts of the country in question if the issue comes before a court.
Pursuant to Article 6bis, on November 20, 1980, then Minister Luis Villafuerte of the Ministry of Trade
issued a Memorandum to the Director of Patents. The Minister ordered the Director that:
"Pursuant to the Paris Convention for the Protection of Industrial Property to which the
Philippines is a signatory, you are hereby directed to reject all pending applications for Philippine
registration of signature and other world-famous trademarks by applicants other than its original
owners or users.
The conflicting claims over internationally known trademarks involve such name brands
as Lacoste, Jordache, Vanderbilt, Sasson, Fila, Pierre Cardin, Gucci, Christian Dior, Oscar de la
Renta, Calvin Klein, Givenchy, Ralph Lauren, Geoffrey Beene, Lanvin and Ted Lapidus.
It is further directed that, in cases where warranted, Philippine registrants of such
trademarks should be asked to surrender their certificates of registration, if any, to avoid suits
for damages and other legal action by the trademarks' foreign or local owners or original users.
You are also required to submit to the undersigned a progress report on the matter.
For immediate compliance."
Three years later, on October 25, 1983, then Minister Roberto Ongpin issued another Memorandum to the
Director of Patents, viz: LLjur
"Pursuant to Executive Order No. 913 dated 7 October 1983 which strengthens the rule-
making and adjudicatory powers of the Minister of Trade and Industry and provides inter alia,
that 'such rule-making and adjudicatory powers should be revitalized in order that the Minister
of Trade and Industry can . . . apply more swift and effective solutions and remedies to old and
new problems . . . such as infringement of internationally-known tradenames and trademarks . .
.' and in view of the decision of the Intermediate Appellate Court in the case of LA CHEMISE
LACOSTE, S.A., versus RAM SADWHANI [AC-G.R. SP NO. 13359 (17) June 1983] which
affirms the validity of the MEMORANDUM of then Minister Luis R. Villafuerte dated 20
November 1980 confirming our obligations under the PARIS CONVENTION FOR THE
PROTECTION OF INDUSTRIAL PROPERTY to which the Republic of the Philippines is a
signatory, you are hereby directed to implement measures necessary to effect compliance with
our obligations under said Convention in general, and, more specifically, to honor our
commitment under Section 6bis thereof,as follows:

27
 1. Whether the trademark under consideration is well-known in the Philippines or is a mark
already belonging to a person entitled to the benefits of the CONVENTION, this should
be established, pursuant to Philippine Patent Office procedures in inter partes and ex
parte cases, according to any of the following criteria or any combination thereof:
(a) a declaration by the Minister of Trade and Industry that the trademark being
considered is already well-known in the Philippines such that permission for its
use by other than its original owner will constitute a reproduction, imitation,
translation or other infringement;
(b) that the trademark is used in commerce internationally, supported by proof that goods
bearing the trademark are sold on an international scale, advertisements, the
establishment of factories, sales offices, distributorships, and the like, in
different countries, including volume or other measure of international trade and
commerce;
(c) that the trademark is duly registered in the industrial property office(s) of another
country or countries, taking into consideration the date of such registration;
(d) that the trademark has long been established and obtained goodwill and international
consumer recognition as belonging to one owner or source;
(e) that the trademark actually belongs to a party claiming ownership and has the right
to registration under the provisions of the aforestated PARIS CONVENTION.
2. The word trademark, as used in this MEMORANDUM, shall include tradenames, service
marks, logos, signs, emblems, insignia or other similar devices used for identification
and recognition by consumers.
3. The Philippine Patent Office shall refuse all applications for, or cancel the registration of,
trademarks which constitute a reproduction, translation or imitation of a trademark
owned by a person, natural or corporate, who is a citizen of a country signatory to
the PARIS CONVENTION FOR THE PROTECTION OF INDUSTRIAL PROPERTY.
4. The Philippine Patent Office shall give due course to the Opposition in cases already or
hereafter filed against the registration of trademarks entitled to protection of Section 6bis
of said PARIS CONVENTION as outlined above, by remanding applications filed by
one not entitled to such protection for final disallowance by the Examination Division.
5. All pending applications for Philippine registration of signature and other world-famous
trademarks filed by applicants other than their original owners or users shall be rejected
forthwith. Where such applicants have already obtained registration contrary to the
abovementioned PARIS CONVENTION and/or Philippine Law, they shall be directed
to surrender their Certificates of Registration to the Philippine Patent Office for
immediate cancellation proceedings.
xxx xxx xxx."
In the Villafuerte Memorandum, the Minister of Trade instructed the Director of Patents to reject all
pending applications for Philippine registration of signature and other world-famous trademarks by applicants other
than their original owners or users. The Minister enumerated several internationally-known trademarks and ordered
the Director of Patents to require Philippine registrants of such marks to surrender their certificates of
registration. cdrep
In the Ongpin Memorandum, the Minister of Trade and Industry did not enumerate well-known trademarks
but laid down guidelines for the Director of Patents to observe in determining whether a trademark is entitled to
protection as a well-known mark in the Philippines under Article 6bis of the Paris Convention. This was to be
established through Philippine Patent Office procedures in inter partes and ex parte cases pursuant to the criteria
enumerated therein. The Philippine Patent Office was ordered to refuse applications for, or cancel the registration
of, trademarks which constitute a reproduction, translation or imitation of a trademark owned by a person who is a
citizen of a member of the Union. All pending applications for registration of world-famous trademarks by persons
other than their original owners were to be rejected forthwith. The Ongpin Memorandum was issued pursuant
to Executive Order No. 913 dated October 7, 1983 of then President Marcos which strengthened the rule-making

28
and adjudicatory powers of the Minister of Trade and Industry for the effective protection of consumers and the
application of swift solutions to problems in trade and industry.
Both the Villafuerte and Ongpin Memoranda were sustained by the Supreme Court in the 1984 landmark
case of La Chemise Lacoste, S.A.v.Fernandez. This court ruled therein that under the provisions of Article 6bis of
the Paris Convention, the Minister of Trade and Industry was the "competent authority" to determine whether a
trademark is well-known in this country.
The Villafuerte Memorandum was issued in 1980, i.e., fifteen (15) years after the adoption of the Paris
Convention in 1965. In the case at bar, the first inter partes case, IPC No. 686, was filed in 1970, before the
Villafuerte Memorandum but five (5) years after the effectivity of the Paris Convention. Article 6bis was already
in effect five years before the first case was instituted. Private respondent, however, did not cite the protection of
Article 6bis, neither did it mention the Paris Convention at all. It was only in 1981 when IPC No. 2049 was instituted
that the Paris Convention and the Villafuerte Memorandum, and, during the pendency of the case, the 1983 Ongpin
Memorandum were invoked by private respondent.
The Solicitor General argues that the issue of whether the protection of Article 6bis of the Convention and
the two Memoranda is barred by res judicata has already been answered in Wolverine Worldwide, Inc.v.Court of
Appeals. In this case, petitioner Wolverine, a foreign corporation, filed with the Philippine Patent Office a petition
for cancellation of the registration certificate of private respondent, a Filipino citizen, for the trademark "Hush
Puppies" and "Dog Device." Petitioner alleged that it was the registrant of the internationally-known trademark in
the United States and other countries, and cited protection under the Paris Convention and the Ongpin
Memorandum. The petition was dismissed by the Patent Office on the ground of res judicata.It was found that in
1973 petitioner's predecessor-in-interest filed two petitions for cancellation of the same trademark against
respondent's predecessor-in-interest. The Patent Office dismissed the petitions, ordered the cancellation of
registration of petitioner's trademark, and gave due course to respondent's application for registration. This decision
was sustained by the Court of Appeals, which decision was not elevated to us and became final and executory.
Wolverine claimed that while its previous petitions were filed under R.A. No. 166, the Trademark Law, its
subsequent petition was based on a new cause of action, i.e., the Ongpin Memorandum and E.O. No. 913 issued in
1983, after finality of the previous decision. We held that the said Memorandum and E.O. did not grant a new cause
of action because it did "not amend the Trademark Law," . . . "nor did it indicate a new policy with respect to the
registration in the Philippines of world-famous trademarks." This conclusion was based on the finding that
Wolverine's two previous petitions and subsequent petition dealt with the same issue of ownership of the
trademark. In other words, since the first and second cases involved the same issue of ownership, then the first
case was a bar to the second case. cdrep
In the instant case, the issue of ownership of the trademark "Barbizon" was not raised in IPC No. 686.
Private respondent's opposition therein was merely anchored on:
(a) "confusing similarity" of its trademark with that of Escobar's;
(b) that the registration of Escobar's similar trademark will cause damage to private respondent's
business reputation and goodwill; and
(c) that Escobar's use of the trademark amounts to an unlawful appropriation of a mark
previously used in the Philippines which act is penalized under Section 4 (d) of
the Trademark Law.
In IPC No. 2049, private respondent's opposition set forth several issues summarized as follows:
(a) as early as 1933, it adopted the word "BARBIZON" as trademark on its products such as
robes, pajamas, lingerie, nightgowns and slips;
(b) that the trademark "BARBIZON" was registered with the United States Patent Office in 1934
and 1949; and that variations of the same trademark, i.e.,"BARBIZON" with Bee design
and "BARBIZON" with the representation of a woman were also registered with the
U.S. Patent Office in 1961 and 1976; cdll
(c) that these marks have been in use in the Philippines and in many countries all over the world
for over forty years. "Barbizon" products have been advertised in international
publications and the marks registered in 36 countries worldwide;

29
 (d) Escobar's registration of the similar trademark "BARBIZON" in 1974 was based on fraud;
and this fraudulent registration was cancelled in 1979, stripping Escobar of whatsoever
right she had to the said mark;
(e) Private respondent's trademark is entitled to protection as a well-known mark under Article
6bis of the Paris Convention, Executive Order No. 913, and the two Memoranda dated
November 20, 1980 and October 25, 1983 of the Minister of Trade and Industry to the
Director of Patents;
(f) Escobar's trademark is identical to private respondent's and its use on the same class of goods
as the latter's amounts to a violation of the Trademark Law and Article 189 of
the Revised Penal Code. Cdpr
IPC No. 2049 raised the issue of ownership of the trademark, the first registration and use of the trademark in the
United States and other countries, and the international recognition and reputation of the trademark established by
extensive use and advertisement of private respondent's products for over forty years here and abroad. These are
different from the issues of confusing similarity and damage in IPC No. 686. The issue of prior use may have been
raised in IPC No. 686 but this claim was limited to prior use in the Philippines only. Prior use in IPC No. 2049
stems from private respondent's claim as originator of the word and symbol "Barbizon," as the first and registered
user of the mark attached to its products which have been sold and advertised worldwide for a considerable number
of years prior to petitioner's first application for registration of her trademark in the Philippines. Indeed, these are
substantial allegations that raised new issues and necessarily gave private respondent a new cause of action. Res
judicata does not apply to rights, claims or demands, although growing out of the same subject matter, which
constitute separate or distinct causes of action and were not put in issue in the former action.
Respondent corporation also introduced in the second case a fact that did not exist at the time the first case
was filed and terminated. The cancellation of petitioner's certificate of registration for failure to file the affidavit of
use arose only after IPC No. 686. It did not and could not have occurred in the first case, and this gave respondent
another cause to oppose the second application. Res judicata extends only to facts and conditions as they existed
at the time judgment was rendered and to the legal rights and relations of the parties fixed by the facts so
determined. When new facts or conditions intervene before the second suit, furnishing a new basis for the claims
and defenses of the parties, the issues are no longer the same, and the former judgment cannot be pleaded as a bar
to the subsequent action.
It is also noted that the oppositions in the first and second cases are based on different laws. The opposition
in IPC No. 686 was based on specific provisions of the Trademark Law, i.e., Section 4 (d) on confusing similarity
of trademarks and Section 8 on the requisite damage to file an opposition to a petition for registration. The
opposition in IPC No. 2049 invoked the Paris Convention, particularly Article 6bis thereof, E.O. No. 913 and the
two Memoranda of the Minister of Trade and Industry. This opposition also invoked Article 189 of the Revised
Penal Code which is a statute totally different from the Trademark Law. Causes of action which are distinct and
independent from each other, although arising out of the same contract, transaction, or state of facts, may be sued
on separately, recovery on one being no bar to subsequent actions on others. The mere fact that the same relief is
sought in the subsequent action will not render the judgment in the prior action operative as res judicata, such as
where the two actions are based on different statutes. Res judicata therefore does not apply to the instant case and
respondent Court of Appeals did not err in so ruling. LLphil
Intellectual and industrial property rights cases are not simple property cases. Trademarks deal with the
psychological function of symbols and the effect of these symbols on the public at large. Trademarks play a
significant role in communication, commerce and trade, and serve valuable and interrelated business functions,
both nationally and internationally. For this reason, all agreements concerning industrial property, like those on
trademarks and tradenames, are intimately connected with economic development. Industrial property encourages
investments in new ideas and inventions and stimulates creative efforts for the satisfaction of human needs. They
speed up transfer of technology and industrialization, and thereby bring about social and economic progress. These
advantages have been acknowledged by the Philippine government itself. 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).
30
 The WTO is a common institutional framework for the conduct of trade relations among its members in
matters related to the multilateral and plurilateral trade agreements annexed to the WTO Agreement. The WTO
framework ensures a "single undertaking approach" to the administration and operation of all agreements and
arrangements attached to the WTO Agreement. Among those annexed is the Agreement on Trade-Related Aspects
of Intellectual Property Rights or TRIPs. Members to this Agreement "desire to reduce distortions and
impediments to international trade, taking into account the need to promote effective and adequate protection of
intellectual property rights, and to ensure that measures and procedures to enforce intellectual property rights do
not themselves become barriers to legitimate trade." To fulfill these objectives, the members have agreed to adhere
to minimum standards of protection set by several Conventions. These Conventions are: the Berne Convention for
the Protection of Literary and Artistic Works (1971), the Rome Convention or the International Convention for the
Protection of Performers, Producers of Phonograms and Broadcasting Organisations, the Treaty on Intellectual
Property in Respect of Integrated Circuits, and the Paris Convention (1967), as revised in Stockholm on July 14,
1967.
A major proportion of international trade depends on the protection of intellectual property rights. Since
the late 1970's, the unauthorized counterfeiting of industrial property and trademarked products has had a
considerable adverse impact on domestic and international trade revenues. The TRIPs Agreement seeks to grant
adequate protection of intellectual property rights by creating a favorable economic environment to encourage the
inflow of foreign investments, and strengthening the multi-lateral trading system to bring about economic, cultural
and technological independence.
The Philippines and the United States of America have acceded to the WTO Agreement. This Agreement
has revolutionized international business and economic relations among states, and has propelled the world towards
trade liberalization and economic globalization. Protectionism and isolationism belong to the past. Trade is no
longer confined to a bilateral system. There is now "a new era of global economic cooperation, reflecting the
widespread desire to operate in a fairer and more open multilateral trading system." Conformably, the State must
reaffirm its commitment to the global community and take part in evolving a new international economic order at
the dawn of the new millennium. cdrep
IN VIEW WHEREOF, the petition is denied and the Decision and Resolution of the Court of Appeals in
CA-G.R. SP No. 28415 are affirmed.
SO ORDERED.
||| (Mirpuri v. Court of Appeals, G.R. No. 114508, [November 19, 1999], 376 PHIL 628-669)

31
 [G.R. No. 195956. March 11, 2015.]

ABS-CBN CORPORATION, petitioner, vs. FELIPE GOZON, GILBERTO R. DUAVIT,

JR., MARISSA L. FLORES, JESSICA A. SOHO, GRACE DELA PEÑA-REYES, JOHN
OLIVER T. MANALASTAS, JOHN DOES AND JANE DOES, respondents.

DECISION
LEONEN, J p:
The main issue in this case is whether there is probable cause to charge respondents with infringement
under Republic Act No. 8293, otherwise known as the Intellectual Property Code. The resolution of this issue
requires clarification of the concept of "copyrightable material" in relation to material that is rebroadcast live
as a news story. We are also asked to rule on whether criminal prosecution for infringement of copyrightable
material, such as live rebroadcast, can be negated by good faith.
ABS-CBN Corporation (ABS-CBN) filed the Petition for Review on Certiorari to assail the November
9, 2010 Decision and the March 3, 2011 Resolution of the Court of Appeals. The Court of Appeals reinstated
the Department of Justice Resolution dated August 1, 2005 that ordered the withdrawal of the Information
finding probable cause for respondents' violation of Sections 177 and 211 of the Intellectual Property
Code. Respondents are officers and employees of GMA Network, Inc. (GMA-7). They are: Felipe Gozon
(Gozon), GMA-7 President; Gilberto R. Duavit, Jr. (Duavit, Jr.), Executive Vice-President; Marissa L. Flores
(Flores), Vice-President for News and Public Affairs; Jessica A. Soho (Soho), Director for News; Grace Dela
Peña-Reyes (Dela Peña-Reyes), Head of News and Public Affairs; John Oliver Manalastas (Manalastas),
Program Manager; and others.
The controversy arose from GMA-7's news coverage on the homecoming of Filipino overseas worker
and hostage victim Angelo dela Cruz on July 22, 2004. As summarized by the Court of Appeals:
Overseas Filipino worker Angelo dela Cruz was kidnapped by Iraqi militants and as a
condition for his release, a demand was made for the withdrawal of Filipino troops in Iraq.
After negotiations, he was released by his captors and was scheduled to return to the country
in the afternoon of 22 July 2004. Occasioned by said homecoming and the public interest it
generated, both . . . GMA Network, Inc. . . . and [petitioner] made their respective broadcasts
and coverage of the live event.
ABS-CBN "conducted live audio-video coverage of and broadcasted the arrival of Angelo dela Cruz
at the Ninoy Aquino International Airport (NAIA) and the subsequent press conference." ABS-CBN allowed
Reuters Television Service (Reuters) to air the footages it had taken earlier under a special embargo agreement.
ABS-CBN alleged that under the special embargo agreement, any of the footages it took would be for
the "use of Reuter's international subscribers only, and shall be considered and treated by Reuters under
'embargo' against use by other subscribers in the Philippines. . . . [N]o other Philippine subscriber of Reuters
would be allowed to use ABS-CBN footage without the latter's consent."
GMA-7, to which Gozon, Duavit, Jr., Flores, Soho, Dela Peña-Reyes, and Manalastas are connected,
"assigned and stationed news reporters and technical men at the NAIA for its live broadcast and non-live news
coverage of the arrival of dela Cruz." GMA-7 subscribes to both Reuters and Cable News Network (CNN). It
received a live video feed of the coverage of Angelo dela Cruz's arrival from Reuters.
GMA-7 immediately carried the live newsfeed in its program "Flash Report," together with its live
broadcast. Allegedly, GMA-7 did not receive any notice or was not aware that Reuters was airing footages of
ABS-CBN. GMA-7's news control room staff saw neither the "No Access Philippines" notice nor a notice that
the video feed was under embargo in favor of ABS-CBN.
On August 13, 2004, ABS-CBN filed the Complaint for copyright infringement under Sections
177 and 211 of the Intellectual Property Code.
On December 3, 2004, Assistant City Prosecutor Dindo Venturanza issued the Resolution finding
probable cause to indict Dela Peña-Reyes and Manalastas. Consequently, the Information for violation of
the Intellectual Property Code was filed on December 17, 2004. It reads:
That on or about the 22nd of July 2004, in Quezon City, Philippines, the above-named
accused, conspiring together, confederating with and mutually helping each other, being the
32
 Head of News Operations and the Program Manager, respectively, for the News and Public
Affairs Department of GMA Network, Inc., did then and there, willfully, unlawfully and
feloniously use and broadcast the footage of the arrival of Angelo [d]ela Cruz at the Ninoy
Aquino International Airport of which ABS-CBN holds the exclusive ownership and copyright
by then and there using, airing, and broadcasting the said footage in its news program "FLASH
REPORT" without first obtaining the consent or authority of said copyright owner, to their
damage and prejudice.
Contrary to law.
On January 4, 2005, respondents filed the Petition for Review before the Department of Justice. In the
Resolution (Gonzalez Resolution) dated August 1, 2005, Department of Justice Secretary Raul M. Gonzalez
(Secretary Gonzalez) ruled in favor of respondents and held that good faith may be raised as a defense in the
case. The dispositive portion of the Resolution reads: aDSIHc
WHEREFORE, THE PETITION FOR REVIEW FILED BY GMA-7 in I.S. No. 04-
10458 is considered meritorious and is hereby GRANTED. This case is hereby Dismissed,
the resolution of the City Prosecutor of Quezon City is hereby reversed and the same is ordered
to withdraw the information if any and report action taken to this office within ten (10)
days. (Emphasis in the original)
Both parties moved for reconsideration of the Gonzalez Resolution.
Meanwhile, on January 19, 2005, the trial court granted the Motion to Suspend Proceedings filed earlier
by Dela Peña-Reyes and Manalastas. The trial court Order reads:
Perusing the motion, the court finds that a petition for review was filed with the
Department of Justice on January 5, 2005 as confirmed by the public prosecutor. Under Section
11 (c), Rule 116 of the Rules of Criminal Procedure, once a petition for review is filed with
the Department of Justice, a suspension of the criminal proceedings may be allowed by the
court.
Accordingly, to allow the Department of Justice the opportunity to act on said petition
for review, let the proceedings on this case be suspended for a period of sixty (60) days counted
from January 5, 2005, the date the petition was filed with the Department of Justice. The
arraignment of the accused on February 1, 2005 is accordingly cancelled. Let the arraignment
be rescheduled to March 8, 2005 at 8:30 a.m. The accused through counsel are notified in open
court.
SO ORDERED.
On June 29, 2010, Department of Justice Acting Secretary Alberto C. Agra (Secretary Agra) issued the
Resolution (Agra Resolution) that reversed the Gonzalez Resolution and found probable cause to charge Dela
Peña-Reyes and Manalastas for violation of the Intellectual Property Code. Secretary Agra also found probable
cause to indict Gozon, Duavit, Jr., Flores, and Soho for the same violation. He ruled that:
[w]hile good faith may be a defense in copyright infringement, the same is a disputable
presumption that must be proven in a full-blown trial. Disputable presumptions may be
contradicted and overcome by other evidence. Thus, a full-blown trial is the proper venue
where facts, issues and laws are evaluated and considered. The very purpose of trial is to allow
a party to present evidence to overcome the disputable presumptions involved.
The dispositive portion of the Agra Resolution provides:
WHEREFORE, premises considered:
(a) The Motion for Reconsideration filed by appellees ABS-CBN Broadcasting
Corporation (ABS-CBN) of our Resolution promulgated on August 1, 2005 (Resolution No.
364, Series of 2005) and the Petition for Review filed by complainant-appellant ABS-CBN
in I.S. No. 04-10458 on April 10, 2006, are GRANTED and the City Prosecutor of Quezon
City is hereby ordered to file the necessary Information for violation of Sections 177 and 211
of Republic Act No. 8293 against GMA-7. Felipe L. Gozon, Gilberto R. Duavit, Jr., Marisa L.
Flores, Jessica A. Soho, Grace Dela Peña-Reyes, John Oliver T. Manalastas[.]
xxx xxx xxx

33
 SO ORDERED. (Emphasis in the original)
Respondents assailed the Agra Resolution through the Petition for Certiorari with prayer for issuance
of a temporary restraining order and/or Writ of Preliminary Injunction on September 2, 2010 before the Court
of Appeals. In the Resolution dated September 13, 2010, the Court of Appeals granted the temporary restraining
order preventing the Department of Justice from enforcing the Agra Resolution.
On November 9, 2010, the Court of Appeals rendered the Decision granting the Petition and reversing
and setting aside the Agra Resolution. The Court of Appeals held that Secretary Agra committed errors of
jurisdiction in issuing the assailed Resolution. Resolving the issue of copyright infringement, the Court of
Appeals said:
Surely, private respondent has a copyright of its news coverage. Seemingly, for airing said
video feed, petitioner GMA is liable under the provisions of the Intellectual Property Code,
which was enacted purposely to protect copyright owners from infringement. However, it is
an admitted fact that petitioner GMA had only aired a five (5) second footage of the disputed
live video feed that it had received from Reuters and CNN as a subscriber. Indeed, petitioners
had no notice of the right of ownership of private respondent over the same. Without notice of
the "No Access Philippines" restriction of the live video feed, petitioner cannot be faulted for
airing a live video feed from Reuters and CNN.
Verily, as aptly opined by Secretary Gonzalez in his earlier Resolution, the act of
petitioners in airing the five (5) second footage was undeniably attended by good faith and it
thus serves to exculpate them from criminal liability under the Code. While the
Intellectual Property Code is a special law, and thus generally categorized as malum
prohibitum, it bears to stress that the provisions of the Code itself do not ipso facto penalize
a person or entity for copyright infringement by the mere fact that one had used a copyrighted
work or material.
Certainly so, in the exercise of one's moral and economic or copyrights, the very
provisions of Part IV of the Intellectual Property Code provide for the scope and limitations
on copyright protection under Section 184 and in fact permit fair use of copyrighted work
under Section 185. With the aforesaid statutory limitations on one's economic and copyrights
and the allowable instances where the other persons can legally use a copyrighted work,
criminal culpability clearly attaches only when the infringement had been knowingly and
intentionally committed. (Emphasis supplied)
The dispositive portion of the Decision reads:
WHEREFORE, the foregoing considered, the instant petition is
hereby GRANTED and the assailed Resolution dated 29 June 2010 REVERSED and SET
ASIDE. Accordingly, the earlier Resolution dated 1 August 2005, which ordered the
withdrawal of the Information filed, if any, against the petitioners for violation of Sections 177
and 211 of the Intellectual Property Code, is hereby REINSTATED. No costs.
SO ORDERED. (Emphasis in the original) ETHIDa
ABS-CBN's Motion for Reconsideration was denied. It then filed its Petition for Review before this
court assailing the Decision and Resolution of the Court of Appeals.
The issues for this court's consideration are:
First, whether Secretary Agra committed errors of jurisdiction in the Resolution dated June 29, 2010
and, therefore, whether a petition for certiorari was the proper remedy in assailing that Resolution;
Second, whether news footage is copyrightable under the law;
Third, whether there was fair use of the broadcast material;
Fourth, whether lack of knowledge that a material is copyrighted is a defense against copyright
infringement;
Fifth, whether good faith is a defense in a criminal prosecution for violation of the Intellectual Property
Code; and
Lastly, whether the Court of Appeals was correct in overturning Secretary Agra's finding of probable
cause.
34
I
The trial court granted respondents' Motion to Suspend Proceedings and deferred respondents Dela
Peña-Reyes and Manalastas' arraignment for 60 days in view of the Petition for Review filed before the
Department of Justice.
Rule 116, Section 11 (c) of the Rules of Criminal Procedure allows the suspension of the accused's
arraignment in certain circumstances only:
SEC. 11. Suspension of arraignment. — Upon motion by the proper party, the arraignment
shall be suspended in the following cases: (a) The accused appears to be suffering from an
unsound mental condition which effectively renders him unable to fully understand the charge
against him and to plead intelligently thereto. In such case, the court shall order his mental
examination and, if necessary, his confinement for such purpose;
(b) There exists a prejudicial question; and
(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. (12a) (Emphasis supplied)
In Samson v. Daway, this court acknowledged the applicability of Rule 116, Section (c) in a criminal
prosecution for infringement under the Intellectual Property Code. However, this court emphasized the limits
of the order of deferment under the Rule:
While the pendency of a petition for review is a ground for suspension of the
arraignment, the . . . 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.
We clarify that the suspension of the arraignment should always be within the limits allowed by law.
In Crespo v. Judge Mogul, this court outlined the effects of filing an information before the trial court, which
includes initiating a criminal action and giving this court "authority to hear and determine the case":
The preliminary investigation conducted by the fiscal for the purpose of determining
whether a prima facie case exists warranting the prosecution of the accused is terminated upon
the filing of the information in the proper court. In turn, as above stated, the filing of said
information sets in motion the criminal action against the accused in Court. Should the fiscal
find it proper to conduct a reinvestigation of the case, at such stage, the permission of the
Court must be secured. After such reinvestigation the finding and recommendations of the
fiscal should be submitted to the Court for appropriate action. While it is true that the fiscal
has the quasi judicial discretion to determine whether or not a criminal case should be filed in
court or not, once the case had already been brought to Court whatever disposition the fiscal
may feel should be proper in the case thereafter should be addressed for the consideration of
the Court, the only qualification is that the action of the Court must not impair the substantial
rights of the accused or the right of the People to due process of law.
Whether the accused had been arraigned or not and whether it was due to a
reinvestigation by the fiscal or a review by the Secretary of Justice whereby a motion to dismiss
was submitted to the Court, the Court in the exercise of its discretion may grant the motion or
deny it and require that the trial on the merits proceed for the proper determination of the
case.
However, one may ask, if the trial court refuses to grant the motion to dismiss filed by
the fiscal upon the directive of the Secretary of Justice will there not be a vacuum in the
prosecution? A state prosecutor to handle the case cannot possibly be designated by the
Secretary of Justice who does not believe that there is a basis for prosecution nor can the fiscal
be expected to handle the prosecution of the case thereby defying the superior order of the
Secretary of Justice.
The answer is simple. The role of the fiscal or prosecutor as We all know is to see that
justice is done and not necessarily to secure the conviction of the person accused before the
Courts. Thus, in spite of his opinion to the contrary, it is the duty of the fiscal to proceed with
35
 the presentation of evidence of the prosecution to the Court to enable the Court to arrive at its
own independent judgment as to whether the accused should be convicted or acquitted. The
fiscal should not shirk from the responsibility of appearing for the People of the Philippines
even under such circumstances much less should he abandon the prosecution of the case
leaving it to the hands of a private prosecutor for then the entire proceedings will be null and
void. The least that the fiscal should do is to continue to appear for the prosecution although
he may turn over the presentation of the evidence to the private prosecutor but still under his
direction and control.
The rule therefore in this jurisdiction is that once a complaint or information is filed
in Court any disposition of the case as to its dismissal or the conviction or acquittal of the
accused rests in the sound discretion of the Court. Although the fiscal retains the direction and
control of the prosecution of criminal cases even while the case is already in Court he cannot
impose his opinion on the trial court. The Court is the best and sole judge on what to do with
the case before it. The determination of the case is within its exclusive jurisdiction and
competence. A motion to dismiss the case filed by the fiscal should be addressed to the Court
who has the option to grant or deny the same. It does not matter if this is done before or after
the arraignment of the accused or that the motion was filed after a reinvestigation or upon
instructions of the Secretary of Justice who reviewed the records of the
investigation (Emphasis supplied, citations omitted)
The doctrine in Crespo was reiterated in Mayor Balindong v. Court of Appeals where this court
reminded the Department of Justice Secretary to refrain from entertaining petitions for review when the case
is already pending with this court:
[I]n order to avoid a situation where the opinion of the Secretary of Justice who reviewed the
action of the fiscal may be disregarded by the trial court, the Secretary of Justice should, as far
as practicable, refrain from entertaining a petition for review or appeal from the action of the
fiscal, when the complaint or information has already been filed in the Court. The matter
should be left entirely for the determination of the Court.
The trial court should have proceeded with respondents Dela Peña-Reyes and Manalastas' arraignment
after the 60-day period from the filing of the Petition for Review before the Department of Justice on March 8,
2005. It was only on September 13, 2010 that the temporary restraining order was issued by the Court of
Appeals. The trial court erred when it did not act on the criminal case during the interim period. It had full
control and direction of the case. As Judge Mogul reasoned in denying the motion to dismiss in Crespo, failure
to proceed with the arraignment "disregards the requirements of due process [and] erodes the Court's
independence and integrity."
II
According to ABS-CBN, the Court of Appeals erred in finding that: a motion for reconsideration was
not necessary before a petition for certiorari could be filed; the Department of Justice Secretary committed
errors of jurisdiction since the Agra Resolution was issued within its authority and in accordance with settled
laws and jurisprudence; and respondents were not liable for copyright infringement.
In its assailed Decision, the Court of Appeals found that respondents committed a procedural error
when they failed to file a motion for reconsideration before filing the Petition for Certiorari. However, the
Court of Appeals held that a motion for reconsideration was unnecessary since the Agra Resolution was a
patent nullity and it would have been useless under the circumstances:
Given that a reading of the assailed Resolution and the instant records readily reveals
errors of jurisdiction on the part of respondent Secretary, direct judicial recourse is warranted
under the circumstances. Aside from the fact that said Resolution is a patent nullity having
been issued in grave abuse of discretion amounting to lack or excess of jurisdiction, the filing
of a motion for reconsideration is evidently useless on account of the fact that the issues and
arguments before this Court have already been duly raised and accordingly delved into by
respondent Secretary in his disposition of the petition a quo. (Emphasis in the original)
In Elma v. Jacobi, this court ruled that a petition for certiorari under Rule 65 of the Rules of Court is
proper when assailing adverse resolutions of the Department of Justice stemming from the determination of
probable cause. However, grave abuse of discretion must be alleged.

36
 In Sanrio Company Limited v. Lim, this court stressed the prosecutor's role in determining probable
cause. Judicial review will only lie when it is shown that the prosecutor acted with grave abuse of discretion
amounting to lack or excess of jurisdiction:
A prosecutor alone determines the sufficiency of evidence that will establish probable cause
justifying the filing of a criminal information against the respondent. By way of exception,
however, judicial review is allowed where respondent has clearly established that the
prosecutor committed grave abuse of discretion. Otherwise stated, such review is appropriate
only when the prosecutor has exercised his discretion in an arbitrary, capricious, whimsical or
despotic manner by reason of passion or personal hostility, patent and gross enough to amount
to an evasion of a positive duty or virtual refusal to perform a duty enjoined by law. (Citations
omitted) AIDSTE
Grave abuse of discretion refers to:
such capricious and whimsical exercise of judgment as is equivalent to lack of jurisdiction.
The abuse of discretion must be grave as where the power is exercised in an arbitrary or
despotic manner by reason of passion or personal hostility and 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 by
or to act at all in contemplation of law.
Resorting to certiorari requires that there be there be "no appeal, or any plain, speedy, and adequate
remedy in the ordinary course of law[,]" such as a motion for reconsideration. Generally, "a motion for
reconsideration is a condition sine qua non before a petition for certiorari may lie, its purpose being to grant
an opportunity for the [tribunal or officer] to correct any error attributed to it by a re-examination of the legal
and factual circumstances of the case."
However, exceptions to the rule exist:
(a) where the order is a patent nullity, as where the Court a quo had no jurisdiction; (b) where
the questions raised in the certiorari proceeding have been duly raised and passed upon
by the lower court, or are the same as those raised and passed upon in the lower court;
(c) where there is an urgent necessity for the resolution of the question and any further
delay would prejudice the interests of the Government or of the petitioner or the subject
matter of the action is perishable; (d) where, under the circumstances, a motion for
reconsideration would be useless; (e) where petitioner was deprived of due process and
there is extreme urgency for relief; (f) where, in a criminal case, relief from an order of
arrest is urgent and the granting of such relief by the trial Court is improbable; (g) where
the proceedings in the lower court are a nullity for lack of due process; (h) where the
proceedings was ex parte or in which the petitioner had no opportunity to object; and (i)
where the issue raised is one purely of law or where public interest is
involved. (Emphasis in the original, citations omitted)
As argued by respondents, "[a] second motion for reconsideration would have been useless and futile
since the D[epartment] [of] J[ustice] had already passed upon the same issues twice." Equally pressing under
the circumstances was the need to resolve the matter, as the Information's filing would lead to respondents'
imminent arrest.
Moreover, Department of Justice Department Circular No. 70 dated July 3, 2000, or the 2000 NPS
Rules on Appeal, provides that no second motion for reconsideration of the Department of Justice Secretary's
resolution shall be entertained:
SECTION 13. Motion for reconsideration. — The aggrieved party may file a motion
for reconsideration within a non-extendible period of ten (10) days from receipt of the
resolution on appeal, furnishing the adverse party and the Prosecution Office concerned with
copies thereof and submitting proof of such service. No second or further motion for
reconsideration shall be entertained.
The Agra Resolution was the result of respondents' Motion for Reconsideration assailing the Gonzalez
Resolution. To file a motion for reconsideration of the Agra Resolution would be superfluous. Respondents
were, therefore, correct in filing the Petition for Certiorari of the Agra Resolution before the Court of Appeals.

37
III
The Court of Appeals ruled that Secretary Agra committed errors of jurisdiction, which then required
the grant of the writ of certiorari:
So viewed, by ordering the filing of information without proof that probable cause
exists to charge petitioners with a crime, respondent Secretary clearly committed an error of
jurisdiction thus warranting the issuance of the writ of certiorari. Surely, probable cause
cannot be had when the very provisions of the statute exculpates criminal liability in cases
classified as fair use of copyrighted materials. The fact that they admittedly used the Reuters
live video feed is not, as a matter of course, tantamount to copyright infringement that would
justify the filing of an information against the petitioners.
Error of jurisdiction must be distinguished from error of judgment:
A line must be drawn between errors of judgment and errors of jurisdiction. An error
of judgment is one which the court may commit in the exercise of its jurisdiction. An error of
jurisdiction renders an order or judgment void or voidable. Errors of jurisdiction are reviewable
on certiorari; errors of judgment, only by appeal.
In People v. Hon. Sandiganbayan:
An error of judgment is one which the court may commit in the exercise of its jurisdiction.
An error of jurisdiction is one where the act complained of was issued by the court without or
in excess of jurisdiction, or with grave abuse of discretion, which is tantamount to lack or in
excess of jurisdiction and which error is correctible only by the extraordinary writ
of certiorari. Certiorari will not be issued to cure errors of the trial court in its appreciation of
the evidence of the parties, or its conclusions anchored on the said findings and its conclusions
of law. (Emphasis supplied)
This court has adopted a deferential attitude towards review of the executive's finding of probable
cause. This is based "not only upon the respect for the investigatory and [prosecutorial] powers granted by
the Constitution to the executive department but upon practicality as well." Review of the Department of
Justice Secretary's decision or resolution will be allowed only when grave abuse of discretion is alleged:
The full discretionary authority to determine probable cause in a preliminary
investigation to ascertain sufficient ground for the filing of information rests with the executive
branch. Hence, judicial review of the resolution of the Secretary of Justice is limited to a
determination whether there has been a grave abuse of discretion amounting to lack or excess
of jurisdiction. Courts cannot substitute the executive branch's judgment.
xxx xxx xxx
It is only where the decision of the Justice Secretary is tainted with grave abuse of
discretion amounting to lack or excess of jurisdiction that the Court of Appeals may take
cognizance of the case in a petition for certiorari under Rule 65 of the Revised Rules of Civil
Procedure. The Court of Appeals decision may then be appealed to this Court by way of a
petition for review on certiorari. (Emphasis supplied, citations omitted) AaCTcI
In this case, it must be shown that Secretary Agra exceeded his authority when he reversed the findings
of Secretary Gonzalez. This court must determine whether there is probable cause to file an information for
copyright infringement under the Intellectual Property Code.
IV
Probable cause pertains to "such facts as are sufficient to engender a well-founded belief that a crime
has been committed and that respondent is probably guilty thereof." Preliminary investigation is the inquiry or
proceeding to determine whether there is probable cause.
In Webb v. De Leon, this court ruled that determination of probable cause during preliminary
investigation does not require trial-like evaluation of evidence since existence of probable cause does not equate
to guilt:
It ought to be emphasized that in determining probable cause, the average man weighs
facts and circumstances without resorting to the calibrations of our technical rules of evidence

38
 of which his knowledge is nil. Rather, he relies on the calculus of common sense of which all
reasonable men have an abundance.
xxx xxx xxx
. . . A finding of probable cause merely binds over the suspect to stand trial. It is not a
pronouncement of guilt.
In Reyes v. Pearlbank Securities, Inc., finding probable cause is not equivalent to finding with moral
certainty that the accused committed the crime:
A finding of probable cause needs only to rest on evidence showing that more likely than not
a crime has been committed by the suspects. It need not be based on clear and convincing
evidence of guilt, not on evidence establishing guilt beyond reasonable doubt, and definitely
not on evidence establishing absolute certainty of guilt. In determining probable cause, the
average man weighs facts and circumstances without resorting to the calibrations of the rules
of evidence of which he has no technical knowledge. He relies on common sense.
During preliminary investigation, a public prosecutor does not adjudicate on the parties' rights,
obligations, or liabilities.
In the recent case of Estrada v. Office of the Ombudsman, et al. we reiterated Webb on the
determination of probable cause during preliminary investigation and traced the history of probable cause as
borrowed from American jurisprudence:
The purpose in determining probable cause is to make sure that the courts are not
clogged with weak cases that will only be dismissed, as well as to spare a person from the
travails of a needless prosecution.
xxx xxx xxx
. . . In the United States, from where we borrowed the concept of probable cause, the
prevailing definition of probable cause is this:
In dealing with probable cause, however, as the very name implies,
we deal with probabilities. These are not technical; they are the factual and
practical considerations of everyday life on which reasonable and prudent
men, not legal technicians, act. The standard of proof is accordingly
correlative to what must be proved.
"The substance of all the definitions" of probable cause "is a
reasonable ground for belief of guilt." McCarthy v. De Armit, 99 Pa. St. 63,
69, quoted with approval in the Carroll opinion. 267 U. S. at 161. And this
"means less than evidence which would justify condemnation" or conviction,
as Marshall, C. J., said for the Court more than a century ago in Locke v.
United States, 7 Cranch 339, 348. Since Marshall's time, at any rate, it has
come to mean more than bare suspicion: Probable cause exists where "the
facts and circumstances within their [the officers'] knowledge and of which
they had reasonably trustworthy information [are] sufficient in themselves to
warrant a man of reasonable caution in the belief that" an offense has been or
is being committed. Carroll v. United States, 267 U. S. 132, 162.
These long-prevailing standards seek to safeguard citizens from rash
and unreasonable interferences with privacy and from unfounded charges of
crime. They also seek to give fair leeway for enforcing the law in the
community's protection. Because many situations which confront officers in
the course of executing their duties are more or less ambiguous, room must be
allowed for some mistakes on their part. But the mistakes must be those of
reasonable men, acting on facts leading sensibly to their conclusions of
probability. The rule of probable cause is a practical, nontechnical conception
affording the best compromise that has been found for accommodating these
often opposing interests. Requiring more would unduly hamper law
enforcement. To allow less would be to leave law-abiding citizens at the
mercy of the officers' whim or caprice.

39
 In the Philippines, there are four instances in the Revised Rules of Criminal Procedure
where probable cause is needed to be established:
(1) In Sections 1 and 3 of Rule 112: By the investigating officer, to determine whether
there is sufficient ground to engender a well-founded belief that a crime has
been committed and the respondent is probably guilty thereof, and should be
held for trial. A preliminary investigation is required before the filing of a
complaint or information for an offense where the penalty prescribed by law is
at least four years, two months and one day without regard to the fine;
(2) In Sections 6 and 9 of Rule 112: By the judge, to determine whether a warrant of
arrest or a commitment order, if the accused has already been arrested, shall be
issued and that there is a necessity of placing the respondent under immediate
custody in order not to frustrate the ends of justice; EcTCAD
(3) In Section 5(b) of Rule 113: By a peace officer or a private person making a
warrantless arrest when an offense has just been committed, and he has probable
cause to believe based on personal knowledge of facts or circumstances that the
person to be arrested has committed it; and
(4) In Section 4 of Rule 126: By the judge, to determine whether a search warrant shall
be issued, and only 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 which
may be anywhere in the Philippines.
In all these instances, the evidence necessary to establish probable cause is based only
on the likelihood, or probability, of guilt.
Estrada also highlighted that a "[p]reliminary investigation is not part of the criminal action. It is
merely preparatory and may even be disposed of in certain situations."
To determine whether there is probable cause that respondents committed copyright infringement, a
review of the elements of the crime, including the existing facts, is required.
V
ABS-CBN claims that news footage is subject to copyright and prohibited use of copyrighted material
is punishable under the Intellectual Property Code. It argues that the new footage is not a "newsworthy event"
but "merely an account of the arrival of Angelo dela Cruz in the Philippines — the latter being the newsworthy
event":
To be clear, it is the event itself or the arrival of Angelo dela Cruz which is not
copyrightable because that is the newsworthy event. However, any footage created from the
event itself, in this case the arrival of Angelo dela Cruz, are intellectual creations which are
copyrightable. Thus, the footage created by ABS-CBN during the arrival of Angelo dela Cruz,
which includes the statements of Dindo Amparo, are copyrightable and protected by the laws
on copyright.
On the other hand, respondents argue that ABS-CBN's news footage of Angelo dela Cruz's arrival is
not copyrightable or subject to protection:
Certainly, the arrival of Angelo [d]ela Cruz, which aroused public attention and the
consciousness of the Filipino people with regard to their countrymen, OFWs working in
foreign countries and how the Philippine government responds to the issues concerning
them, is "news". There is no ingenuity or inventiveness added in the said news footage. The
video footage of this "news" is not copyrightable by any legal standard as facts of everyday
life depicted in the news and items of press information is part of the public
domain. (Emphasis in the origina
The news footage is copyrightable.
The Intellectual Property Code is clear about the rights afforded to authors of various kinds of work.
Under the Code, "works are protected by the sole fact of their creation, irrespective of their mode or form of
expression, as well as of their content, quality and purpose." These include "[a]udiovisual works and
40
cinematographic works and works produced by a process analogous to cinematography or any process for
making audio-visual recordings."
Contrary to the old copyright law, the Intellectual Property Code does not require registration of the
work to fully recover in an infringement suit. Nevertheless, both copyright laws provide that copyright for a
work is acquired by an intellectual creator from the moment of creation.
It is true that under Section 175 of the Intellectual Property Code, "news of the day and other
miscellaneous facts having the character of mere items of press information" are considered unprotected subject
matter However, the Code does not state that expression of the news of the day, particularly when it underwent
a creative process, is not entitled to protection.
An idea or event must be distinguished from the expression of that idea or event. An idea has been
likened to a ghost in that it "must be spoken to a little before it will explain itself." It is a concept that has eluded
exact legal definition To get a better grasp of the idea/expression dichotomy, the etymology of the term "idea"
is traced:
The word "idea" is derived from a Greek term, meaning "a form, the look or
appearance of a thing as opposed to its reality, from idein, to see." In the Timaeus, Plato saw
ideas as eternal paradigms, independent objects to which the divine demiurge looks as patterns
in forming the world. This was later modified to the religious conception of ideas as the
thoughts of God. "It is not a very long step to extend the term 'idea' to cover patterns, blueprints,
or plans in anyone's mind, not only in God's." The word entered the French and English
vernacular in the 1600s and possessed two meanings. The first was the Platonic meaning of a
perfect exemplar or paradigm. The second, which probably has its origin with Descartes, is of
a mental concept or image or, more broadly, any object of the mind when it is active. Objects
of thought may exist independently. The sun exists (probably) before and after you think of it.
But it is also possible to think of things that have never existed, such as a unicorn or Pegasus.
John Locke defined ideas very comprehensively, to include: all objects of the mind. Language
was a way of translating the invisible, hidden ideas that make up a person's thoughts into the
external, perceptible world of articulate sounds and visible written symbols that others can
understand. (Citations omitted)
There is no one legal definition of "idea" in this jurisdiction. The term "idea" is mentioned only once
in the Intellectual Property Code. In Joaquin, Jr. v. Drilon, a television format (i.e., a dating show format) is
not copyrightable under Section 2 of Presidential Decree No. 49; it is a mere concept: HSAcaE
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. 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.

41
 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. (Emphasis supplied,
citations omitted)
Ideas can be either abstract or concrete. It is the concrete ideas that are generally referred to as
expression:
The words "abstract" and "concrete" arise in many cases dealing with the idea/expression
distinction. The Nichols court, for example, found that the defendant's film did not infringe the
plaintiff's play because it was "too generalized an abstraction from what plaintiff wrote . . .
only a part of her ideas." In Eichel v. Marcin, the court said that authors may exploit facts,
experiences, field of thought, and general ideas found in another's work, "provided they do not
substantially copy a concrete form, in which the circumstances and ideas have been developed,
arranged, and put into shape." Judge Hand, in National Comics Publications, Inc. v. Fawcett
Publications, Inc. said that "no one infringes, unless he descends so far into what is concrete
as to invade. . . 'expression.'"
These cases seem to be distinguishing "abstract" ideas from "concrete" tangible
embodiments of these abstractions that may be termed expression. However, if the concrete
form of a work means more than the literal expression contained within it, it is difficult to
determine what is meant by "concrete." Webster's New Twentieth Century Dictionary of the
English Language provides several meanings for the word concrete. These include: "having a
material, perceptible existence; of, belonging to, or characterized by things or events that can
be perceived by the senses; real; actual;" and "referring to a particular; specific, not general or
abstract."
In Pearl & Dean (Phil.), Incorporated v. Shoemart, Incorporated, this court, citing the American case
of Baker v. Selden, distinguished copyright from patents and illustrated how an idea or concept is different
from the expression of that idea:
In the oft-cited case of Baker vs. Selden, 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 plaintiff's copyrighted book. The
US Supreme Court ruled that:
"There is no doubt that a work on the subject of book-keeping, though
only explanatory of well known systems, may be the subject of a copyright;
but, then, it is claimed only as a book. . . . 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

42
 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. HESIcT
The difference between the two things, letters patent and copyright,
may be illustrated by reference to the subjects just enumerated. Take the case
of medicines. Certain mixtures are found to be of great value in the healing
art. If the discoverer writes and publishes a book on the subject (as regular
physicians generally do), he gains no exclusive right to the manufacture and
sale of the medicine; he gives that to the public. If he desires to acquire such
exclusive right, he must obtain a patent for the mixture as a new art,
manufacture or composition of matter. He may copyright his book, if he
pleases; but that only secures to him the exclusive right of printing and
publishing his book. So of all other inventions or discoveries.
The copyright of a book on perspective, no matter how many
drawings and illustrations it may contain, gives no exclusive right to the
modes of drawing described, though they may never have been known or used
before. By publishing the book without getting a patent for the art, the latter
is given to the public.
xxx xxx xxx
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. . . . 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." (Emphasis supplied)
News or the event itself is not copyrightable. However, an event can be captured and presented in a
specific medium. As recognized by this court in Joaquin, television "involves a whole spectrum of visuals and
effects, video and audio." News coverage in television involves framing shots, using images, graphics, and
sound effects. It involves creative process and originality. Television news footage is an expression of the news.
In the United States, a line of cases dwelt on the possibility of television newscasts to be
copyrighted. Most of these cases focused on private individuals' sale or resale of tapes of news broadcasts.
Conflicting decisions were rendered by its courts. Noteworthy, however, is the District Court's pronouncement
in Pacific & Southern Co. v. Duncan, which involves a News Monitoring Service's videotaping and sale of
WXIA-TV's news broadcasts:
It is axiomatic that copyright protection does not extend to news "events" or the
facts or ideas which are the subject of news reports. Miller v. Universal City Studios, Inc.,

43
 650 F.2d 1365, 1368 (5th Cir. 1981); Wainwright Securities, Inc. v. Wall Street Transcript
Corp., 558 F.2d 91, 95 (2d Cir. 1977), cert. denied, 434 U.S. 1014, 98 S.Ct. 730, 54 L.Ed.2d
759 (1978). But it is equally well-settled that copyright protection does extend to the reports
themselves, as distinguished from the substance of the information contained in the
reports. Wainwright, 558 F.2d at 95; International News Service v. Associated Press, 248 U.S.
215, 39 S.Ct. 68, 63 L.Ed. 211 (1918); see Chicago Record-Herald Co. v. Tribune Assn., 275
F. 797 (7th Cir. 1921); 1 Nimmer on Copyright § 2.11[B] (1983). Copyright protects the
manner of expression of news reports, "the particular form or collocation of words in which
the writer has communicated it." International News Service, 248 U.S. at 234, 39 S.Ct. at 70.
Such protection extends to electronic news reports as well as written reports. See 17 U.S.C. §
102(a) (5), (6), and (7); see also Iowa State University Research Foundations, Inc. v. American
Broadcasting Cos., 621 F.2d 57, 61 (2d Cir. 1980). (Emphasis supplied)
The idea/expression dichotomy has long been subject to debate in the field of copyright law.
Abolishing the dichotomy has been proposed, in that non-protectibility of ideas should be re-examined, if not
stricken, from decisions and the law:
If the underlying purpose of the copyright law is the dual one expressed by Lord
Mansfield, the only excuse for the continuance of the idea-expression test as a judicial standard
for determining protectibility would be that it was or could be a truly useful method of
determining the proper balance between the creator's right to profit from his work and the
public's right that the "progress of the arts not be retarded."
. . . [A]s used in the present-day context[,] the dichotomy has little or no relationship
to the policy which it should effectuate. Indeed, all too often the sweeping language of the
courts regarding the nonprotectibility of ideas gives the impression that this is of itself a policy
of the law, instead of merely a clumsy and outdated tool to achieve a much more basic end.
The idea/expression dichotomy is a complex matter if one is trying to determine whether a certain
material is a copy of another. This dichotomy would be more relevant in determining, for instance, whether a
stage play was an infringement of an author's book involving the same characters and setting. In this case,
however, respondents admitted that the material under review — which is the subject of the controversy — is
an exact copy of the original. Respondents did not subject ABS-CBN's footage to any editing of their own. The
news footage did not undergo any transformation where there is a need to track elements of the original.
Having established the protectible nature of news footage, we now discuss the concomitant rights
accorded to authors. The authors of a work are granted several rights in relation to it, including copyright or
economic rights: caITAC
SECTION 177. Copyright 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 substantial portion of the work;
177.2. Dramatization, translation, adaptation, abridgment, arrangement or other
transformation of the work;
177.3. The first public distribution of the original and each copy of the work by sale or
other forms of transfer of ownership;
177.4. Rental of the original or a copy of an audiovisual or cinematographic work, a
work embodied in a sound recording, a computer program, a compilation of data
and other materials or a musical work in graphic form, irrespective of the
ownership of the original or the copy which is the subject of the rental; (n)
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. (Sec. 5, P. D. No. 49a) (Emphasis
supplied)
Under Section 211 of the Intellectual Property Code, broadcasting organizations are granted a more
specific set of rights called related or neighboring rights:

44
 SECTION 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;
211.2. The recording in any manner, including the making of films or the use of video
tape, of their broadcasts for the purpose of communication to the public of
television broadcasts of the same; and
211.3. The use of such records for fresh transmissions or for fresh recording. (Sec. 52,
P.D. No. 49) (Emphasis supplied)
Section 212 of the Code provides:
CHAPTER XV
LIMITATIONS ON PROTECTION
Section 212. Limitations on Rights. — Sections 203, 208 and 209 shall not apply where the
acts referred to in those Sections are related to:
212.1. The use by a natural person exclusively for his own personal purposes;
212.2. Using short excerpts for reporting current events;
212.3. Use solely for the purpose of teaching or for scientific research; and
212.4. Fair use of the broadcast subject to the conditions under Section 185. (Sec. 44,
P.D. No. 49a)
The Code defines what broadcasting is and who broadcasting organizations include:
202.7. "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;
202.8. "Broadcasting organization" shall include a natural person or a juridical entity duly
authorized to engage in broadcasting[.]
Developments in technology, including the process of preserving once ephemeral works and
disseminating them, resulted in the need to provide a new kind of protection as distinguished from
copyright The designation "neighboring rights" was abbreviated from the phrase "rights neighboring to
copyright." Neighboring or related rights are of equal importance with copyright as established in the different
conventions covering both kinds of rights.
Several treaties deal with neighboring or related rights of copyright. The most prominent of these is
the "International Convention for the Protection of Performers, Producers of Phonograms and Broadcasting
Organizations" (Rome Convention).
The Rome Convention protects the rights of broadcasting organizations in relation to their broadcasts.
Article XIII of the Rome Convention enumerates the minimum rights accorded to broadcasting organizations:
Article 13
Minimum Rights for Broadcasting Organizations
Broadcasting organizations shall enjoy the right to authorize or prohibit:
(a) the rebroadcasting of their broadcasts;
(b) the fixation of their broadcasts;
(c) the reproduction:
(i) of fixations, made without their consent, of their broadcasts;
(ii) of fixations, made in accordance with the provisions of Article 15, of their
broadcasts, if the reproduction is made for purposes different from those
referred to in those provisions;
(d) the communication to the public of their television broadcasts if such communication
is made in places accessible to the public against payment of an entrance fee; it
45
 shall be a matter for the domestic law of the State where protection of this right
is claimed to determine the conditions under which it may be exercised.
With regard to the neighboring rights of a broadcasting organization in this jurisdiction, this court has
discussed the difference between broadcasting and rebroadcasting:
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." ICHDca
On the other hand, rebroadcasting as defined in Article 3(g) of the International
Convention for the Protection of Performers, Producers of Phonograms and Broadcasting
Organizations, otherwise known as the 1961 Rome Convention, of which the Republic of the
Philippines is a signatory, is "the simultaneous broadcasting by one broadcasting organization
of the broadcast of another broadcasting organization."
xxx xxx xxx
Under the Rome Convention, rebroadcasting is "the simultaneous broadcasting by one
broadcasting organization of the broadcast of another broadcasting organization." The
Working Paper 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." (Emphasis in the original, citations omitted)
Broadcasting organizations are entitled to several rights and to the protection of these rights under
the Intellectual Property Code. Respondents' argument that the subject news footage is not copyrightable is
erroneous. The Court of Appeals, in its assailed Decision, correctly recognized the existence of ABS-CBN's
copyright over the news footage:
Surely, private respondent has a copyright of its news coverage. Seemingly, for airing said
video feed, petitioner GMA is liable under the provisions of the Intellectual Property Code,
which was enacted purposely to protect copyright owners from infringement.
News as expressed in a video footage is entitled to copyright protection. Broadcasting organizations
have not only copyright on but also neighboring rights over their broadcasts. Copyrightability of a work is
different from fair use of a work for purposes of news reporting.
VI
ABS-CBN assails the Court of Appeals' ruling that the footage shown by GMA-7 falls under the scope
of Section 212.2 and 212.4 of the Intellectual Property Code:
The evidence on record, as well as the discussions above, show that the footage used
by [respondents] could hardly be characterized as a short excerpt, as it was aired over one and
a half minutes.
Furthermore, the footage used does not fall under the contemplation of Section 212.2
of the Intellectual Property Code. A plain reading of the provision would reveal that
copyrighted material referred to in Section 212 are short portions of an artist's performance
under Section 203, or a producer's sound recordings under Sections 208 and 209. Section 212
does not refer to actual use of video footage of another as its own.
The Angelo dela Cruz footage does not fall under the rule on Section 212.4 of the
Intellectual Property Code on fair use of the broadcast.
xxx xxx xxx
In determining fair use, several factors are considered, including the nature of the
copyrighted work, and the amount and substantiality of the person used in relation to the
copyrighted work as a whole.
In the business of television news reporting, the nature of the copyrighted work or the
video footages, are such that, footage created, must be a novelty to be a good report. Thus,
when the . . . Angelo dela Cruz footage was used by [respondents], the novelty of the footage
was clearly affected.
46
 Moreover, given that a substantial portion of the Angelo dela Cruz footage was utilized
by GMA-7 for its own, its use can hardly be classified as fair use.
Hence, [respondents] could not be considered as having used the Angelo dela Cruz
[footage] following the provisions on fair use.
It is also worthy to note that the Honorable Court of Appeals seem to contradict itself
when it relied on the provisions of fair use in its assailed rulings considering that it found that
the Angelo dela Cruz footage is not copyrightable, given that the fair use presupposes an
existing copyright. Thus, it is apparent that the findings of the Honorable Court of Appeals are
erroneous and based on wrong assumptions. (Underscoring in the original)
On the other hand, respondents counter that GMA-7's use of ABS-CBN's news footage falls under fair
use as defined in the Intellectual Property Code. Respondents, citing the Court of Appeals Decision, argue that
a strong statutory defense negates any finding of probable cause under the same statute. The Intellectual
Property Code provides that fair use negates infringement.
Respondents point out that upon seeing ABS-CBN's reporter Dindo Amparo on the footage, GMA-7
immediately shut off the broadcast. Only five (5) seconds passed before the footage was cut. They argue that
this shows that GMA-7 had no prior knowledge of ABS-CBN's ownership of the footage or was notified of it.
They claim that the Angelo dela Cruz footage is considered a short excerpt of an event's "news" footage and is
covered by fair use.
Copyright protection is not absolute. The Intellectual Property Code provides the limitations on
copyright:
CHAPTER VIII LIMITATIONS ON COPYRIGHT
Section 184. Limitations on Copyright. — 184.1. Notwithstanding the provisions of Chapter
V, the following acts shall not constitute infringement of copyright:
xxx xxx xxx
184.2. The provisions of this section shall be interpreted in such a way as to allow the work to
be used in a manner which does not conflict with the normal exploitation of the work and does
not unreasonably prejudice the right holder's legitimate interests.
xxx xxx xxx
CHAPTER XV LIMITATIONS ON PROTECTION
Section 212. Limitations on Rights. — Sections 203, 208 and 209 shall not apply where the
acts referred to in those Sections are related to:
xxx xxx xxx
212.2. Using short excerpts for reporting current events;
xxx xxx xxx
212.4. Fair use of the broadcast subject to the conditions under Section 185. (Sec. 44, P.D. No.
49a) (Emphasis supplied)
The determination of what constitutes fair use depends on several factors. Section 185 of
the Intellectual Property Code states: TCAScE
SECTION 185. Fair Use of a Copyrighted Work. —
185.1. The fair use of a copyrighted work for criticism, comment, news reporting, teaching
including multiple copies for classroom use, scholarship, research, and similar purposes is not
an infringement of copyright. . . . In determining whether the use made of a work in any
particular case is fair use, the factors to be considered shall include:
a. The purpose and character of the use, including whether such use is of a commercial
nature or is for non-profit educational purposes;
b. The nature of the copyrighted work;
c. The amount and substantiality of the portion used in relation to the copyrighted work
as a whole; and
47
 d. The effect of the use upon the potential market for or value of the copyrighted work.
Respondents allege that the news footage was only five (5) seconds long, thus falling under fair use.
ABS-CBN belies this contention and argues that the footage aired for two (2) minutes and 40
seconds. According to the Court of Appeals, the parties admitted that only five (5) seconds of the news footage
was broadcasted by GMA-7.
This court defined fair use 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." Fair
use is an exception to the copyright owner's monopoly of the use of the work to avoid stifling "the very
creativity which that law is designed to foster."
Determining fair use requires application of the four-factor test. Section 185 of the Intellectual Property
Code lists four (4) factors to determine if there was fair use of a copyrighted work:
a. The purpose and character of the use, including whether such use is of a commercial nature or
is for non-profit educational purposes;
b. The nature of the copyrighted work;
c. The amount and substantiality of the portion used in relation to the copyrighted work as a
whole; and
d. The effect of the use upon the potential market for or value of the copyrighted work.
First, the purpose and character of the use of the copyrighted material must fall under those listed in
Section 185, thus: "criticism, comment, news reporting, teaching including multiple copies for classroom use,
scholarship, research, and similar purposes." The purpose and character requirement is important in view of
copyright's goal to promote creativity and encourage creation of works. Hence, commercial use of the
copyrighted work can be weighed against fair use.
The "transformative test" is generally used in reviewing the purpose and character of the usage of the
copyrighted work. This court must look into whether the copy of the work adds "new expression, meaning or
message" to transform it into something else. "Meta-use" can also occur without necessarily transforming the
copyrighted work used.
Second, the nature of the copyrighted work is significant in deciding whether its use was fair. If the
nature of the work is more factual than creative, then fair use will be weighed in favor of the user.
Third, the amount and substantiality of the portion used is important to determine whether usage falls
under fair use. An exact reproduction of a copyrighted work, compared to a small portion of it, can result in
the conclusion that its use is not fair. There may also be cases where, though the entirety of the copyrighted
work is used without consent, its purpose determines that the usage is still fair. For example, a parody using a
substantial amount of copyrighted work may be permissible as fair use as opposed to a copy of a work produced
purely for economic gain.
Lastly, the effect of the use on the copyrighted work's market is also weighed for or against the user.
If this court finds that the use had or will have a negative impact on the copyrighted work's market, then the
use is deemed unfair.
The structure and nature of broadcasting as a business requires assigned values for each second of
broadcast or airtime. In most cases, broadcasting organizations generate revenue through sale of time or
timeslots to advertisers, which, in turn, is based on market share:
Once a news broadcast has been transmitted, the broadcast becomes relatively
worthless to the station. In the case of the aerial broadcasters, advertising sales generate most
of the profits derived from news reports. Advertising rates are, in turn, governed by market
share. Market share is determined by the number of people watching a show at any particular
time, relative to total viewers at that time. News is by nature time-limited, and so re-broadcasts
are generally of little worth because they draw few viewers. Newscasts compete for market
share by presenting their news in an appealing format that will capture a loyal audience. Hence,
the primary reason for copyrighting newscasts by broadcasters would seem to be to prevent
competing stations from rebroadcasting current news from the station with the best coverage
of a particular news item, thus misappropriating a portion of the market share.

48
 Of course, in the real world there are exceptions to this perfect economic view.
However, there are also many caveats with these exceptions. A common exception is that some
stations rebroadcast the news of others. The caveat is that generally, the two stations are not
competing for market share. CNN, for example, often makes news stories available to local
broadcasters. First, the local broadcaster is often not affiliated with a network (hence its need
for more comprehensive programming), confining any possible competition to a small
geographical area. Second, the local broadcaster is not in competition with CNN. Individuals
who do not have cable TV (or a satellite dish with decoder) cannot receive CNN; therefore
there is no competition. . . . Third, CNN sells the right of rebroadcast to the local stations. Ted
Turner, owner of CNN, does not have First Amendment freedom of access argument foremost
on his mind. (Else he would give everyone free cable TV so everyone could get CNN.) He is
in the business for a profit. Giving away resources does not a profit make. (Emphasis supplied)
The high value afforded to limited time periods is also seen in other media. In social media
site Instagram, users are allowed to post up to only 15 seconds of video. In short-video sharing
website Vine, users are allowed a shorter period of six (6) seconds per post. The mobile application 1 Second
Everyday takes it further by capturing and stitching one (1) second of video footage taken daily over a span of
a certain period.
Whether the alleged five-second footage may be considered fair use is a matter of defense. We
emphasize that the case involves determination of probable cause at the preliminary investigation stage. Raising
the defense of fair use does not automatically mean that no infringement was committed. The investigating
prosecutor has full discretion to evaluate the facts, allegations, and evidence during preliminary investigation.
Defenses raised during preliminary investigation are subject to further proof and evaluation before the trial
court. Given the insufficiency of available evidence, determination of whether the Angelo dela Cruz footage is
subject to fair use is better left to the trial court where the proceedings are currently pending.
GMA-7's rebroadcast of ABS-CBN's news footage without the latter's consent is not an issue. The
mere act of rebroadcasting without authority from the owner of the broadcast gives rise to the probability that
a crime was committed under the Intellectual Property Code. cTDaEH
VII
Respondents cannot invoke the defense of good faith to argue that no probable cause exists.
Respondents argue that copyright infringement is malum in se, in that "[c]opying alone is not what is
being prohibited, but its injurious effect which consists in the lifting from the copyright owners' film or
materials, that were the result of the latter's creativity, work and productions and without authority, reproduced,
sold and circulated for commercial use to the detriment of the latter."
Infringement under the Intellectual Property Code is malum prohibitum. The Intellectual Property
Code is a special law. Copyright is a statutory creation:
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.
The general rule is that acts punished under a special law are malum prohibitum. "An act which is
declared malum prohibitum, malice or criminal intent is completely immaterial."
In contrast, crimes mala in se concern inherently immoral acts:
Not every criminal act, however, involves moral turpitude. It is for this reason that "as
to what crime involves moral turpitude, is for the Supreme Court to determine". In resolving
the foregoing question, the Court is guided by one of the general rules that crimes mala in
se involve moral turpitude, while crimes mala prohibita do not, the rationale of which was set
forth in "Zari v. Flores," to wit:
It (moral turpitude) implies something immoral in itself, regardless of
the fact that it is punishable by law or not. It must not be merely mala
prohibita, but the act itself must be inherently immoral. The doing of the act
itself, and not its prohibition by statute fixes the moral turpitude. Moral
turpitude does not, however, include such acts as are not of themselves
49
 immoral but whose illegality lies in their being positively prohibited.
(Emphasis supplied)
[These] guidelines nonetheless proved short of providing a clear-cut solution, for
in International Rice Research Institute v. NLRC, the Court admitted that it cannot always be
ascertained whether moral turpitude does or does not exist by merely classifying a crime
as malum in se or as malum prohibitum. There are crimes which are mala in se and yet but
rarely involve moral turpitude and there are crimes which involve moral turpitude and are mala
prohibita only. In the final analysis, whether or not a crime involves moral turpitude is
ultimately a question of fact and frequently depends on all the circumstances surrounding the
violation of the statue. (Emphasis in the original)
"Implicit in the concept of mala in se is that of mens rea." Mens rea is defined as "the nonphysical
element which, combined with the act of the accused, makes up the crime charged. Most frequently it is the
criminal intent, or the guilty mind[.]"
Crimes mala in se presuppose that the person who did the felonious act had criminal intent to do so,
while crimes mala prohibita do not require knowledge or criminal intent:
In the case of mala in se it is necessary, to constitute a punishable offense, for the
person doing the act to have knowledge of the nature of his act and to have a criminal intent;
in the case of mala prohibita, unless such words as "knowingly" and "willfully" are contained
in the statute, neither knowledge nor criminal intent is necessary. In other words, a person
morally quite innocent and with every intention of being a law-abiding citizen becomes a
criminal, and liable to criminal penalties, if he does an act prohibited by these
statutes. (Emphasis supplied)
Hence, "[i]ntent to commit the crime and intent to perpetrate the act must be distinguished. A person
may not have consciously intended to commit a crime; but he did intend to commit an act, and that act is, by
the very nature of things, the crime itself[.]" When an act is prohibited by a special law, it is considered
injurious to public welfare, and the performance of the prohibited act is the crime itself.
Volition, or intent to commit the act, is different from criminal intent. Volition or voluntariness refers
to knowledge of the act being done. On the other hand, criminal intent — which is different from motive, or
the moving power for the commission of the crime — refers to the state of mind beyond voluntariness. It is
this intent that is being punished by crimes mala in se.
Unlike other jurisdictions that require intent for a criminal prosecution of copyright infringement, the
Philippines does not statutorily support good faith as a defense. Other jurisdictions provide in their intellectual
property codes or relevant laws that mens rea, whether express or implied, is an element of criminal copyright
infringement.
In Canada, criminal offenses are categorized under three (3) kinds: "the full mens rea offence, meaning
the accused's actual or subjective state of mind has to be proved; strict liability offences where no mens rea has
to be proved but the accused can avoid liability if he can prove he took all reasonable steps to avoid the
particular event; [and] absolute liability offences where Parliament has made it clear that guilt follows proof of
the prescribed act only." Because of the use of the word "knowingly" in Canada's Copyright Act, it has been
held that copyright infringement is a full mens rea offense.
In the United States, willful intent is required for criminal copyright infringement. Before the passage
of the No Electronic Theft Act, "civil copyright infringements were violations of criminal copyright laws only
if a defendant willfully infringed a copyright 'for purposes of commercial advantage or private financial
gain.'" However, the No Electronic Theft Act now allows criminal copyright infringement without the
requirement of commercial gain. The infringing act may or may not be for profit.
There is a difference, however, between the required liability in civil copyright infringement and that
in criminal copyright infringement in the United States. Civil copyright infringement does not require
culpability and employs a strict liability regime where "lack of intention to infringe is not a defense to an action
for infringement."
In the Philippines, the Intellectual Property Code, as amended, provides for the prosecution of criminal
actions for the following violations of intellectual property rights: Repetition of Infringement of Patent (Section
84); Utility Model (Section 108); Industrial Design (Section 119); Trademark Infringement (Section 155 in
relation to Section 170); Unfair Competition (Section 168 in relation to Section 170); False Designations of
50
Origin, False Description or Representation (Section 169.1 in relation to Section 170); infringement of
copyright, moral rights, performers' rights, producers' rights, and broadcasting rights (Section 177, 193, 203,
208 and 211 in relation to Section 217); and other violations of intellectual property rights as may be defined
by law.
The Intellectual Property Code requires strict liability for copyright infringement whether for a civil
action or a criminal prosecution; it does not require mens rea or culpa:
SECTION 216. Remedies for Infringement. —
216.1. Any person infringing a right protected under this law shall be liable:
a. To an injunction restraining such infringement. The court may also order the
defendant to desist from an infringement, among others, to prevent the entry into
the channels of commerce of imported goods that involve an infringement,
immediately after customs clearance of such goods.
b. Pay to the copyright proprietor or his assigns or heirs such actual damages, including
legal costs and other expenses, as he may have incurred due to the infringement
as well as the profits the infringer may have made due to such infringement, and
in proving profits the plaintiff shall be required to prove sales only and the
defendant shall be required to prove every element of cost which he claims, or,
in lieu of actual damages and profits, such damages which to the court shall
appear to be just and shall not be regarded as penalty. cSaATC
c. Deliver under oath, for impounding during the pendency of the action, upon such
terms and conditions as the court may prescribe, sales invoices and other
documents evidencing sales, all articles and their packaging alleged to infringe
a copyright and implements for making them.
d. Deliver under oath for destruction without any compensation all infringing copies or
devices, as well as all plates, molds, or other means for making such infringing
copies as the court may order.
e. Such other terms and conditions, including the payment of moral and exemplary
damages, which the court may deem proper, wise and equitable and the
destruction of infringing copies of the work even in the event of acquittal in a
criminal case.
216.2. In an infringement action, the court shall also have the power to order the seizure and
impounding of any article which may serve as evidence in the court proceedings. (Sec. 28,
P.D. No. 49a)
SECTION 217. Criminal Penalties. —
217.1. Any person infringing any right secured by provisions of Part IV of this Act or aiding
or abetting such infringement shall be guilty of a crime punishable by:
a. Imprisonment of one (1) year to three (3) years plus a fine ranging from Fifty thousand
pesos (P50,000) to One hundred fifty thousand pesos (P150,000) for the first
offense.
b. Imprisonment of three (3) years and one (1) day to six (6) years plus a fine ranging
from One hundred fifty thousand pesos (P150,000) to Five hundred thousand
pesos (P500,000) for the second offense.
c. Imprisonment of six (6) years and one (1) day to nine (9) years plus a fine ranging
from Five hundred thousand pesos (P500,000) to One million five hundred
thousand pesos (P1,500,000) for the third and subsequent offenses.
d. In all cases, subsidiary imprisonment in cases of insolvency.
217.2. In determining the number of years of imprisonment and the amount of fine, the court
shall consider the value of the infringing materials that the defendant has produced or
manufactured and the damage that the copyright owner has suffered by reason of the
infringement.

51
 217.3. Any person who at the time when copyright subsists in a work has in his possession an
article which he knows, or ought to know, to be an infringing copy of the work for the purpose
of:
a. Selling, letting for hire, or by way of trade offering or exposing for sale, or hire, the
article;
b. Distributing the article for purpose of trade, or for any other purpose to an extent that
will prejudice the rights of the copyright owner in the work; or
c. Trade exhibit of the article in public, shall be guilty of an offense and shall be liable
on conviction to imprisonment and fine as above mentioned. (Sec. 29, P.D. No.
49a) (Emphasis supplied)
The law is clear. Inasmuch as there is wisdom in prioritizing the flow and exchange of ideas as opposed
to rewarding the creator, it is the plain reading of the law in conjunction with the actions of the legislature to
which we defer. We have continuously "recognized the power of the legislature . . . to forbid certain acts in a
limited class of cases and to make their commission criminal without regard to the intent of the doer. Such
legislative enactments are based on the experience that repressive measures which depend for their efficiency
upon proof of the dealer's knowledge or of his intent are of little use and rarely accomplish their purposes."
Respondents argue that live broadcast of news requires a different treatment in terms of good faith,
intent, and knowledge to commit infringement. To argue this point, they rely on the differences of the media
used in Habana, et al. v. Robles, Columbia Pictures v. Court of Appeals, and this case:
Petitioner ABS-CBN argues that lack of notice that the Angelo dela Cruz was under
embargo is not a defense in copyright infringement and cites the case of Columbia Pictures vs.
Court of Appeals and Habana, et al. vs. Robles (310 SCRA 511). However, these cases refer
to film and literary work where obviously there is "copying" from an existing material so
that the copier knew that he is copying from an existing material not owned by him. But, how
could respondents know that what they are "copying was not [theirs]" when they were not
copying but merely receiving live video feed from Reuters and CNN which they aired? What
they knew and what they aired was the Reuters live video feed and the CNN feed which
GMA-7 is authorized to carry in its news broadcast, it being a subscriber of these companies[.]
It is apt to stress that the subject of the alleged copyright infringement is not a film or
literary work but live broadcast of news footage. In a film or literary work, the infringer is
confronted face to face with the material he is allegedly copying and therefore knows, or is
presumed to know, that what he is copying is owned by another. Upon the other hand, in live
broadcast, the alleged infringer is not confronted with the fact that the material he airs or re-
broadcasts is owned by another, and therefore, he cannot be charged of knowledge of
ownership of the material by another. This specially obtains in the Angelo dela Cruz news
footage which GMA-7 received from Reuters and CNN. Reuters and CNN were beaming live
videos from the coverage which GMA-7 received as a subscriber and, in the exercise of its
rights as a subscriber, GMA-7 picked up the live video and simultaneously re-broadcast it. In
simultaneously broadcasting the live video footage of Reuters, GMA-7 did not copy the video
footage of petitioner ABS-CBN[.] (Emphasis in the original)
Respondents' arguments must fail.
Respondents are involved and experienced in the broadcasting business. They knew that there would
be consequences in carrying ABS-CBN's footage in their broadcast. That is why GMA-7 allegedly cut the feed
from Reuters upon seeing ABS-CBN's logo and reporter. To admit a different treatment for broadcasts would
mean abandonment of a broadcasting organization's minimum rights, including copyright on the broadcast
material and the right against unauthorized rebroadcast of copyrighted material. The nature of broadcast
technology is precisely why related or neighboring rights were created and developed. Carving out an exception
for live broadcasts would go against our commitments under relevant international treaties and agreements,
which provide for the same minimum rights.
Contrary to respondents' assertion, this court in Habana, reiterating the ruling in Columbia
Pictures, ruled that lack of knowledge of infringement is not a valid defense. Habana and Columbia
Pictures may have different factual scenarios from this case, but their rulings on copyright infringement are
analogous. In Habana, petitioners were the authors and copyright owners of English textbooks and workbooks.

52
The case was anchored on the protection of literary and artistic creations such as books. In Columbia Pictures,
video tapes of copyrighted films were the subject of the copyright infringement suit.
In Habana, knowledge of the infringement is presumed when the infringer commits the prohibited act:
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.
xxx xxx xxx
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.
xxx xxx xxx
In cases of infringement, copying alone is not what is prohibited. The copying must
produce an "injurious effect". Here, the injury consists in that respondent Robles lifted from
petitioners' book materials that were the result of the latter's research work and compilation
and misrepresented them as her own. She circulated the book DEP for commercial use and did
not acknowledge petitioners as her source. (Emphasis supplied)
Habana and Columbia Pictures did not require knowledge of the infringement to constitute a violation
of the copyright. One does not need to know that he or she is copying a work without consent to violate
copyright law. Notice of fact of the embargo from Reuters or CNN is not material to find probable cause that
respondents committed infringement. Knowledge of infringement is only material when the person is charged
of aiding and abetting a copyright infringement under Section 217 of the Intellectual Property Code.
We look at the purpose of copyright in relation to criminal prosecutions requiring willfulness:
Most importantly, in defining the contours of what it means to willfully infringe
copyright for purposes of criminal liability, the courts should remember the ultimate aim of
copyright. Copyright is not primarily about providing the strongest possible protection for
copyright owners so that they have the highest possible incentive to create more works. The
control given to copyright owners is only a means to an end: the promotion of knowledge and
learning. Achieving that underlying goal of copyright law also requires access to copyrighted
works and it requires permitting certain kinds of uses of copyrighted works without the
permission of the copyright owner. While a particular defendant may appear to be deserving
of criminal sanctions, the standard for determining willfulness should be set with reference to
the larger goals of copyright embodied in the Constitution and the history of copyright in this
country.
In addition, "[t]he 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." Intellectual property rights, such as copyright and the neighboring
right against rebroadcasting, establish an artificial and limited monopoly to reward creativity. Without these
legally enforceable rights, creators will have extreme difficulty recovering their costs and capturing the surplus
or profit of their works as reflected in their markets. This, in turn, is based on the theory that the possibility of
gain due to creative work creates an incentive which may improve efficiency or simply enhance consumer
welfare or utility. More creativity redounds to the public good.
These, however, depend on the certainty of enforcement. Creativity, by its very nature, is vulnerable
to the free rider problem. It is easily replicated despite the costs to and efforts of the original creator. The more
useful the creation is in the market, the greater the propensity that it will be copied. The most creative and
inventive individuals are usually those who are unable to recover on their creations.

53
 Arguments against strict liability presuppose that the Philippines has a social, historical, and economic
climate similar to those of Western jurisdictions. As it stands, there is a current need to strengthen intellectual
property protection.
Thus, unless clearly provided in the law, offenses involving infringement of copyright protections
should be considered malum prohibitum. It is the act of infringement, not the intent, which causes the damage.
To require or assume the need to prove intent defeats the purpose of intellectual property protection.
Nevertheless, proof beyond reasonable doubt is still the standard for criminal prosecutions under
the Intellectual Property Code.
VIII
Respondents argue that GMA-7's officers and employees cannot be held liable for infringement under
the Intellectual Property Code since it does not expressly provide direct liability of the corporate officers. They
explain that "(i) a corporation may be charged and prosecuted for a crime where the penalty is fine or both
imprisonment and fine, and if found guilty, may be fined; or (ii) a corporation may commit a crime but if the
statute prescribes the penalty therefore to be suffered by the corporate officers, directors or employees or other
persons, the latter shall be responsible for the offense."
Section 217 of the Intellectual Property Code states that "any person" may be found guilty of
infringement. It also imposes the penalty of both imprisonment and fine:
Section 217. Criminal Penalties. — 217.1. Any person infringing any right secured by
provisions of Part IV of this Act or aiding or abetting such infringement shall be guilty of a
crime punishable by:
(a) Imprisonment of one (1) year to three (3) years plus a fine ranging from Fifty
thousand pesos (P50,000) to One hundred fifty thousand pesos (P150,000) for
the first offense.
(b) Imprisonment of three (3) years and one (1) day to six (6) years plus a fine ranging
from One hundred fifty thousand pesos (P150,000) to Five hundred thousand
pesos (P500,000) for the second offense.
(c) Imprisonment of six (6) years and one (1) day to nine (9) years plus a fine ranging
from five hundred thousand pesos (P500,000) to One million five hundred
thousand pesos (P1,500,000) for the third and subsequent offenses.
(d) In all cases, subsidiary imprisonment in cases of insolvency. (Emphasis supplied)
Corporations have separate and distinct personalities from their officers or directors. This court has
ruled that corporate officers and/or agents may be held individually liable for a crime committed under
the Intellectual Property Code:
Petitioners, being corporate officers and/or directors, through whose act, default or omission
the corporation commits a crime, may themselves be individually held answerable for the
crime. . . . The existence of the corporate entity does not shield from prosecution the corporate
agent who knowingly and intentionally caused the corporation to commit a crime. Thus,
petitioners cannot hide behind the cloak of the separate corporate personality of the corporation
to escape criminal liability. A corporate officer cannot protect himself behind a corporation
where he is the actual, present and efficient actor.
However, the criminal liability of a corporation's officers or employees stems from their active
participation in the commission of the wrongful act:
The principle applies whether or not the crime requires the consciousness of
wrongdoing. It applies to those corporate agents who themselves commit the crime and to
those, who, by virtue of their managerial positions or other similar relation to the corporation,
could be deemed responsible for its commission, if by virtue of their relationship to the
corporation, they had the power to prevent the act. Moreover, all parties active in promoting
a crime, whether agents or not, are principals. Whether such officers or employees are
benefited by their delictual acts is not a touchstone of their criminal liability. Benefit is not an
operative fact. (Emphasis supplied)

54
 An accused's participation in criminal acts involving violations of intellectual property rights is the
subject of allegation and proof. The showing that the accused did the acts or contributed in a meaningful way
in the commission of the infringements is certainly different from the argument of lack of intent or good faith.
Active participation requires a showing of overt physical acts or intention to commit such acts. Intent or good
faith, on the other hand, are inferences from acts proven to have been or not been committed.
We find that the Department of Justice committed grave abuse of discretion when it resolved to file
the Information against respondents despite lack of proof of their actual participation in the alleged crime.
Ordering the inclusion of respondents Gozon, GMA-7 President; Duavit, Jr., Executive Vice-President;
Flores, Vice-President for News and Public Affairs; and Soho, Director for News, as respondents, Secretary
Agra overturned the City Prosecutor's finding that only respondents Dela Peña-Reyes and Manalastas are
responsible for the crime charged due to their duties. The Agra Resolution reads:
Thus, from the very nature of the offense and the penalty involved, it is necessary that
GMA-7's directors, officers, employees or other officers thereof responsible for the offense
shall be charged and penalized for violation of the Sections 177 and 211 of Republic Act No.
8293. In their complaint for libel, respondents Felipe L. Gozon, Gilberto R. Duavit, Jr., Marissa
L. Flores, Jessica A. Soho, Grace Dela Peña-Reyes, John Oliver T. Manalastas felt they were
aggrieved because they were "in charge of the management, operations and production of news
and public affairs programs of the network" (GMA-7). This is clearly an admission on
respondents' part. Of course, respondents may argue they have no intention to infringe the
copyright of ABS-CBN; that they acted in good faith; and that they did not directly cause the
airing of the subject footage, but again this is preliminary investigation and what is required is
simply probable cause. Besides, these contentions can best be addressed in the course of
trial. (Citation omitted)
In contrast, the Office of the City Prosecutor, in the Resolution dated December 3, 2004, found that
respondents Gozon, Duavit, Jr., Flores, and Soho did not have active participation in the commission of the
crime charged:
This Office, however, does not subscribe to the view that respondents Atty. Felipe
Gozon, Gilberto Duavit, Marissa Flores and Jessica Soho should be held liable for the said
offense. Complainant failed to present clear and convincing evidence that the said
respondents conspired with Reyes and Manalastas. No evidence was adduced to prove that
these respondents had an active participation in the actual commission of the copyright
infringement or they exercised their moral ascendancy over Reyes and Manalastas in airing
the said footage. It must be stressed that, conspiracy must be established by positive and
conclusive evidence. It must be shown to exist as clearly and convincingly as the commission
of the offense itself. (Emphasis supplied, citations omitted)
The City Prosecutor found respondents Dela Peña-Reyes and Manalastas liable due to the nature of
their work and responsibilities. He found that:
[t]his Office however finds respondents Grace Dela Peña-Reyes and John Oliver T.
Manalastas liable for copyright infringement penalized under Republic Act No. 8293. It is
undisputed that complainant ABS-CBN holds the exclusive ownership and copyright over the
"Angelo [d]ela Cruz news footage". Hence, any airing and re-broadcast of the said footage
without any consent and authority from ABS-CBN will be held as an infringement and
violation of the intellectual property rights of the latter. Respondents Grace Dela Peña-Reyes
as the Head of the News Operation and John Oliver T. Manalastas as the Program Manager
cannot escape liability since the news control room was under their direct control and
supervision. Clearly, they must have been aware that the said footage coming from Reuters or
CNN has a "No Access Philippines" advisory or embargo thus cannot be re-broadcast. We
find no merit to the defense of ignorance interposed by the respondents. It is simply contrary
to human experience and logic that experienced employees of an established broadcasting
network would be remiss in their duty in ascertaining if the said footage has an
embargo. (Emphasis supplied)
We agree with the findings as to respondents Dela Peña-Reyes and Manalastas. Both respondents
committed acts that promoted infringement of ABS-CBN's footage. We note that embargoes are common
occurrences in and between news agencies and/or broadcast organizations. Under its Operations Guide,

55
Reuters has two (2) types of embargoes: transmission embargo and publication embargo. Under ABS-CBN's
service contract with Reuters, Reuters will embargo any content contributed by ABS-CBN from other
broadcast subscribers within the same geographical location:
4a. Contributed Content
You agree to supply us at our request with news and sports news stories broadcast on the Client
Service of up to three (3) minutes each for use in our Services on a non-exclusive basis and at
a cost of US$300.00 (Three Hundred United States Dollars) per story. In respect of such items
we agree to embargo them against use by other broadcast subscribers in the Territory and
confirm we will observe all other conditions of usage regarding Contributed Content, as
specified in Section 2.5 of the Reuters Business Principles for Television Services. For the
purposes of clarification, any geographical restriction imposed by you on your use of
Contributed Content will not prevent us or our clients from including such Contributed Content
in online transmission services including the Internet. We acknowledge Contributed Content
is your copyright and we will not acquire any intellectual property rights in the Contributed
Content. (Emphasis supplied) DHITCc
Respondents Dela Peña-Reyes and Manalastas merely denied receiving the advisory sent by Reuters
to its clients, including GMA-7. As in the records, the advisory reads:
ADVISORY - - +++ LIVE COVER PLANS +++
PHILIPPINES: HOSTAGE RETURN
** ATTENTION ALL CLIENTS **
PLEASE BE ADVISED OF THE FOLLOWING LIVE COVER PLANNED FOR
THURSDAY, JULY 22:
xxx xxx xxx
SOURCE: ABS-CBN
TV AND WEB RESTRICTIONS: NO ACCESS PHILIPPINES.
There is probable cause that respondents Dela Peña-Reyes and Manalastas directly committed
copyright infringement of ABS-CBN's news footage to warrant piercing of the corporate veil. They are
responsible in airing the embargoed Angelo dela Cruz footage. They could have prevented the act of
infringement had they been diligent in their functions as Head of News Operations and Program Manager.
Secretary Agra, however, committed grave abuse of discretion when he ordered the filing of the
Information against all respondents despite the erroneous piercing of the corporate veil. Respondents Gozon,
Duavit, Jr., Flores, and Soho cannot be held liable for the criminal liability of the corporation.
Mere membership in the Board or being President per se does not mean knowledge, approval, and
participation in the act alleged as criminal. There must be a showing of active participation, not simply a
constructive one.
Under principles of criminal law, the principals of a crime are those "who take a direct part in the
execution of the act; [t]hose who directly force or induce others to commit it; [or] [t]hose who cooperate in the
commission of the offense by another act without which it would not have been accomplished." There is
conspiracy "when two or more persons come to an agreement concerning the commission of a felony and
decide to commit it":
Conspiracy is not presumed. Like the physical acts constituting the crime itself, the elements
of conspiracy must be proven beyond reasonable doubt. While conspiracy need not be
established by direct evidence, for it may be inferred from the conduct of the accused before,
during and after the commission of the crime, all taken together, however, the evidence must
be strong enough to show the community of criminal design. For conspiracy to exist, it is
essential that there must be a conscious design to commit an offense. Conspiracy is the product
of intentionality on the part of the cohorts.
It is necessary that a conspirator should have performed some overt act as a direct or
indirect contribution to the execution of the crime committed. The overt act may consist of
active participation in the actual commission of the crime itself, or it may consist of moral

56
 assistance to his co-conspirators by being present at the commission of the crime or by exerting
moral ascendancy over the other co-conspirators[.] (Emphasis supplied, citations omitted)
In sum, the trial court erred in failing to resume the proceedings after the designated period. The Court
of Appeals erred when it held that Secretary Agra committed errors of jurisdiction despite its own
pronouncement that ABS-CBN is the owner of the copyright on the news footage. News should be
differentiated from expression of the news, particularly when the issue involves rebroadcast of news footage.
The Court of Appeals also erroneously held that good faith, as well as lack of knowledge of infringement, is a
defense against criminal prosecution for copyright and neighboring rights infringement. In its current form,
the Intellectual Property Code is malum prohibitum and prescribes a strict liability for copyright infringement.
Good faith, lack of knowledge of the copyright, or lack of intent to infringe is not a defense against copyright
infringement. Copyright, however, is subject to the rules of fair use and will be judged on a case-to-case basis.
Finding probable cause includes a determination of the defendant's active participation, particularly when the
corporate veil is pierced in cases involving a corporation's criminal liability.
WHEREFORE, the Petition is partially GRANTED. The Department of Justice Resolution dated
June 29, 2010 ordering the filing of the Information is hereby REINSTATED as to respondents Grace Dela
Peña-Reyes and John Oliver T. Manalastas. Branch 93 of the Regional Trial Court of Quezon City is directed
to continue with the proceedings in Criminal Case No. Q-04-131533.
SO ORDERED.
||| (ABS-CBN Corp. v. Gozon, G.R. No. 195956 , [March 11, 2015], 755 PHIL 709-782)

[G.R. No. 204605. July 19, 2016.]

INTELLECTUAL PROPERTY ASSOCIATION OF THE

PHILIPPINES, petitioner, vs. HON. PAQUITO OCHOA, IN HIS CAPACITY AS
EXECUTIVE SECRETARY, HON. ALBERT DEL ROSARIO, IN HIS CAPACITY AS
SECRETARY OF THE DEPARTMENT OF FOREIGN AFFAIRS, AND HON.
RICARDO BLANCAFLOR, IN HIS CAPACITY AS THE DIRECTOR GENERAL OF
THE INTELLECTUAL PROPERTY OFFICE OF THE PHILIPPINES, respondents.

DECISION
BERSAMIN, J p:
In this special civil action for certiorari and prohibition, the Intellectual Property Association of the
Philippines (IPAP) seeks to declare the accession of the Philippines to the Protocol Relating to the Madrid
Agreement Concerning the International Registration of Marks (Madrid Protocol) unconstitutional on the
ground of the lack of concurrence by the Senate, and in the alternative, to declare the implementation thereof
as unconstitutional because it conflicts with Republic Act No. 8293, otherwise known as the Intellectual
Property Code of the Philippines (IP Code).
We find and declare that the President's ratification is valid and constitutional because the Madrid
Protocol, being an executive agreement as determined by the Department of Foreign Affairs, does not require
the concurrence of the Senate.
Antecedents
The Madrid System for the International Registration of Marks (Madrid System), which is the
centralized system providing a one-stop solution for registering and managing marks worldwide, allows the
trademark owner to file one application in one language, and to pay one set of fees to protect his mark in the
territories of up to 97 member-states. The Madrid System is governed by the Madrid Agreement, concluded in
1891, and the Madrid Protocol, concluded in 1989.
The Madrid Protocol, which was adopted in order to remove the challenges deterring some countries
from acceding to the Madrid Agreement, has two objectives, namely: (1) to facilitate securing protection for
marks; and (2) to make the management of the registered marks easier in different countries.
In 2004, the Intellectual Property Office of the Philippines (IPOPHL), the government agency
mandated to administer the intellectual property system of the country and to implement the state policies on
57
intellectual property, began considering the country's accession to the Madrid Protocol. However, based on its
assessment in 2005, the IPOPHL needed to first improve its own operations before making the recommendation
in favor of accession. The IPOPHL thus implemented reforms to eliminate trademark backlogs and to reduce
the turnaround time for the registration of marks.
In the meanwhile, the IPOPHL mounted a campaign for information dissemination to raise awareness
of the Madrid Protocol. It launched a series of consultations with stakeholders and various business groups
regarding the Philippines' accession to the Madrid Protocol. It ultimately arrived at the conclusion that
accession would benefit the country and help raise the level of competitiveness for Filipino brands. Hence, it
recommended in September 2011 to the Department of Foreign Affairs (DFA) that the Philippines should
accede to the Madrid Protocol.
After its own review, the DFA endorsed to the President the country's accession to the Madrid
Protocol. Conformably with its express authority under Section 9 of Executive Order No. 459 (Providing for
the Guidelines in the Negotiation of International Agreements and its Ratification) dated November 25, 1997,
the DFA determined that the Madrid Protocol was an executive agreement, The IPOPHL, the Department of
Science and Technology, and the Department of Trade and Industry concurred in the recommendation of the
DFA.
On March 27, 2012, President Benigno C. Aquino III ratified the Madrid Protocol through an
instrument of accession. The instrument of accession was deposited with the Director General of the World
Intellectual Property Organization (WIPO) on April 25, 2012. The Madrid Protocol entered into force in the
Philippines on July 25, 2012.
Petitioner IPAP, an association of more than 100 law firms and individual practitioners in Intellectual
Property Law whose main objective is to promote and protect intellectual property rights in the Philippines
through constant assistance and involvement in the legislation of intellectual property law, has commenced this
special civil action for certiorari and prohibition to challenge the validity of the President's accession to
the Madrid Protocol without the concurrence of the Senate. Citing Pimentel, Jr. v. Office of the Executive
Secretary, the IPAP has averred:
Nonetheless, while the President has the sole authority to negotiate and enter into
treaties, the Constitution provides a limitation to his power by requiring the concurrence of 2/3
of all the members of the Senate for the validity of the treaty entered into by him. Section 21,
Article VII of the 1987 Constitution provides that "no treaty or international agreement shall
be valid and effective unless concurred in by at least two-thirds of all the Members of the
Senate." The 1935 and the 1973 Constitution also required the concurrence by the legislature
to the treaties entered into by the executive.
According to the IPAP, the Madrid Protocol is a treaty, not an executive agreement; hence, respondent
DFA Secretary Albert Del Rosario acted with grave abuse of discretion in determining the Madrid Protocol as
an executive agreement.
The IPAP has argued that the implementation of the Madrid Protocol in the Philippines, specifically
the processing of foreign trademark applications, conflicts with the IP Code, whose Section 125 states:
Sec. 125. Representation; Address for Service. — If the applicant is not domiciled or
has no real and effective commercial establishment in the Philippines, he shall designate by a
written document filed in the office, the name and address of a Philippine resident who may
be served notices or process in proceedings affecting the mark. Such notices or services may
be served upon the person so designated by leaving a copy thereof at the address specified in
the last designation filed. If the person so designated cannot be found at the address given in
the last designation, such notice or process may be served upon the Director. (Sec. 3, R.A. No.
166 a)
It has posited that Article 2 of the Madrid Protocol provides in contrast:
Article 2
Securing Protection through International Registration
(1) Where an application for the registration of a mark has been filed with the Office
of a Contracting Party, or where a mark has been registered in the register of the Office of a
Contracting Party, the person in whose name that application (hereinafter referred to as "the
basic application") or that registration (hereinafter referred to as "the basic registration") stands
58
 may, subject to the provisions of this Protocol secure protection for his mark in the territory of
the Contracting Parties, by obtaining the registration of that mark in the register of the
International Bureau of the World Intellectual Property Organization (hereinafter referred to
as "the international registration," "the International Register," "the International Bureau" and
"the Organization", respectively), provided that,
(i) where the basic application has been filed with the Office of a
Contracting State or where the basic registration has been made by such an
Office, the person in whose name that application or registration stands is a
national of that Contracting State, or is domiciled, or has a real and effective
industrial or commercial establishment, in the said Contracting State,
(ii) where the basic application has been filed with the Office of a
Contracting Organization or where the basic registration has been made by
such an Office, the person in whose name that application or registration
stands is a national of a State member of that Contracting Organization, or is
domiciled, or has a real and effective industrial or commercial establishment,
in the territory of the said Contracting Organization. acEHCD
(2) The application for international registration (hereinafter referred to as "the
international application") shall be filed with the International Bureau through the intermediary
of the Office with which the basic application was filed or by which the basic registration was
made (hereinafter referred to as "the Office of origin"), as the case may be.
(3) Any reference in this Protocol to an "Office" or an "Office of a Contracting Party"
shall be construed as a reference to the office that is in charge, on behalf of a Contracting Party,
of the registration of marks, and any reference in this Protocol to "marks" shall be construed
as a reference to trademarks and service marks.
(4) For the purposes of this Protocol, "territory of a Contracting Party" means, where
the Contracting Party is a State, the territory of that State and, where the Contracting Party is
an intergovernmental organization, the territory in which the constituting treaty of that
intergovernmental organization applied.
The IPAP has insisted that Article 2 of the Madrid Protocol means that foreign trademark applicants
may file their applications through the International Bureau or the WIPO, and their applications will be
automatically granted trademark protection without the need for designating their resident agents in the
country.
Moreover, the IPAP has submitted that the procedure outlined in the Guide to the International
Registration of Marks relating to representation before the International Bureau is the following, to wit:
Rule 3(1)(a) 09.02 References in the Regulations, Administrative Instructions or in this Guide
to representation relate only to representation before the International Bureau. The questions
of the need for a representative before the Office of origin or the Office of a designated
Contracting Party (for example, in the event of a refusal of protection issued by such an
Office), who may act as a representative in such cases and the method of appointment, are
outside the scope of the Agreement, Protocol and Regulations and are governed by the law and
practice of the Contracting Party concerned.
which procedure is in conflict with that under Section 125 of the IP Code, and constitutes in effect an
amendment of the local law by the Executive Department.
The IPAP has prayed that the implementation of the Madrid Protocol in the Philippines be restrained
in order to prevent future wrongs considering that the IPAP and its constituency have a clear and unmistakable
right not to be deprived of the rights granted them by the IP Code and existing local laws.
In its comment in behalf of the respondents, the Office of the Solicitor General (OSG) has stated that
the IPAP does not have the locus standi to challenge the accession to the Madrid Protocol; that the IPAP cannot
invoke the Court's original jurisdiction absent a showing of any grave abuse of discretion on the part of the
respondents; that the President's ratification of the Madrid Protocol as an executive agreement is valid because
the Madrid Protocol is only procedural, does not create substantive rights, and does not require the amendment
of the IP Code; that the IPAP is not entitled to the restraining order or injunction because it suffers no damage

59
from the ratification by the President, and there is also no urgency for such relief; and the IPAP has no clear
unmistakable right to the relief sought.
Issues
The following issues are to be resolved, namely:
I. Whether or not the IPAP has locus standi to challenge the President's ratification of the Madrid
Protocol;
II. Whether or not the President's ratification of the Madrid Protocol is valid and constitutional; and
III. Whether or not the Madrid Protocol is in conflict with the IP Code.
Ruling of the Court
The petition for certiorari and prohibition is without merit.
A.
The issue of legal standing to sue, or locus standi
The IPAP argues in its reply that it has the locus standi to file the present case by virtue of its being an
association whose members stand to be injured as a result of the enforcement of the Madrid Protocol in the
Philippines; that the injury pertains to the acceptance and approval of applications submitted through
the Madrid Protocol without local representation as required by Section 125 of the IP Code; and that such will
diminish the rights granted by the IP Code to Intellectual Property Law practitioners like the members of the
IPAP.
The argument of the IPAP is untenable.
Legal standing refers to "a right of appearance in a court of justice on a given question." According
to Agan, Jr. v. Philippine International Air Terminals Co., Inc., standing is "a peculiar concept in constitutional
law because in some cases, suits are not brought by parties who have been personally injured by the operation
of a law or any other government act but by concerned citizens, taxpayers or voters who actually sue in the
public interest." SDHTEC
The Court has frequently felt the need to dwell on the issue of standing in public or constitutional
litigations to sift the worthy from the unworthy public law litigants seeking redress or relief. The following
elucidation in De Castro v. Judicial and Bar Council offers the general understanding of the context of legal
standing, or locus standi for that purpose, viz.:
In public or constitutional litigations, the Court is often burdened with the determination of
the locus standi of the petitioners due to the ever-present need to regulate the invocation of the
intervention of the Court to correct any official action or policy in order to avoid obstructing
the efficient functioning of public officials and offices involved in public service. It is required,
therefore, that the petitioner must have a personal stake in the outcome of the controversy, for,
as indicated in Agan, Jr. v. Philippine International Air Terminals Co., Inc.:
The question on legal standing is whether such parties have
"alleged such a personal stake in the outcome of the controversy as to
assure that concrete adverseness which sharpens the presentation of
issues upon which the court so largely depends for illumination of
difficult constitutional questions." Accordingly, it has been held that the
interest of a person assailing the constitutionality of a statute must be
direct and personal. He must be able to show, not only that the law or any
government act is invalid, but also that he sustained or is in imminent
danger of sustaining some direct injury as a result of its enforcement, and
not merely that he suffers thereby in some indefinite way. It must appear
that the person complaining has been or is about to be denied some right
or privilege to which he is lawfully entitled or that he is about to be
subjected to some burdens or penalties by reason of the statute or act
complained of.
It is true that as early as in 1937, in People v. Vera, the Court adopted the direct injury
test for determining whether a petitioner in a public action had locus standi. There, the Court
held that the person who would assail the validity of a statute must have "a personal and
60
 substantial interest in the case such that he has sustained, or will sustain direct injury as a
result." Vera was followed in Custodio v. President of the Senate, Manila Race Horse
Trainers' Association v. De la Fuente, Anti-Chinese League of the Philippines v.
Felix, and Pascual v. Secretary of Public Works.
Yet, the Court has also held that the requirement of locus standi, being a mere
procedural technicality, can be waived by the Court in the exercise of its discretion. For
instance, in 1949, in Araneta v. Dinglasan, the Court liberalized the approach when the cases
had "transcendental importance." Some notable controversies whose petitioners did not pass
the direct injury test were allowed to be treated in the same way as in Araneta v. Dinglasan.
In the 1975 decision in Aquino v. Commission on Elections, this Court decided to
resolve the issues raised by the petition due to their "far-reaching implications," even if the
petitioner had no personality to file the suit. The liberal approach of Aquino v. Commission on
Elections has been adopted in several notable cases, permitting ordinary citizens, legislators,
and civic organizations to bring their suits involving the constitutionality or validity of laws,
regulations, and rulings.
However, the assertion of a public right as a predicate for challenging a supposedly
illegal or unconstitutional executive or legislative action rests on the theory that the petitioner
represents the public in general. Although such petitioner may not be as adversely affected by
the action complained against as are others, it is enough that he sufficiently demonstrates in
his petition that he is entitled to protection or relief from the Court in the vindication of a public
right.
The injury that the IPAP will allegedly suffer from the implementation of the Madrid Protocol is
imaginary, incidental and speculative as opposed to a direct and material injury required by the foregoing tenets
on locus standi. Additionally, as the OSG points out in the comment, the IPAP has misinterpreted Section 125
of the IP Code on the issue of representation. The provision only states that a foreign trademark applicant "shall
designate by a written document filed in the office, the name and address of a Philippine resident who may be
served notices or process in proceedings affecting the mark;" it does not grant anyone in particular the right to
represent the foreign trademark applicant. Hence, the IPAP cannot justly claim that it will suffer irreparable
injury or diminution of rights granted to it by Section 125 of the IP Code from the implementation of
the Madrid Protocol.
Nonetheless, the IPAP also emphasizes that the paramount public interest involved has transcendental
importance because its petition asserts that the Executive Department has overstepped the bounds of its
authority by thereby cutting into another branch's functions and responsibilities. The assertion of the IPAP
may be valid on this score. There is little question that the issues raised herein against the implementation of
the Madrid Protocol are of transcendental importance. Accordingly, we recognize IPAP's locus standi to bring
the present challenge. Indeed, the Court has adopted a liberal attitude towards locus standi whenever the issue
presented for consideration has transcendental significance to the people, or whenever the issues raised are of
paramount importance to the public.
B.
Accession to the Madrid Protocol was constitutional
The IPAP submits that respondents Executive Secretary and DFA Secretary Del Rosario gravely
abused their discretion in determining that there was no need for the Philippine Senate's concurrence with
the Madrid Protocol; that the Madrid Protocol involves changes of national policy, and its being of a
permanent character requires the Senate's concurrence, pursuant to Section 21, Article VII of the Constitution,
which states that "no treaty or international agreement shall be valid and effective unless concurred in by at
least two-thirds of all the Members of the Senate." AScHCD
Before going further, we have to distinguish between treaties and international agreements, which
require the Senate's concurrence, on one hand, and executive agreements, which may be validly entered into
without the Senate's concurrence. Executive Order No. 459, Series of 1997, notes the following definitions, to
wit:
Sec. 2. Definition of Terms. —
a. International agreement — shall refer to a contract or understanding, regardless of
nomenclature, entered into between the Philippines and another government in written
61
 form and governed by international law, whether embodied in a single instrument or in
two or more related instruments.
b. Treaties — international agreements entered into by the Philippines which require legislative
concurrence after executive ratification. This term may include compacts like
conventions, declarations, covenants and acts.
c. Executive Agreements — similar to treaties except that they do not require legislative
concurrence.
The Court has highlighted the difference between treaties and executive agreements in Commissioner
of Customs v. Eastern Sea Trading, thusly:
International agreements involving political issues or changes of national policy and
those involving international arrangements of a permanent character usually take the form of
treaties. But international agreements embodying adjustments of detail carrying out well-
established national policies and traditions and those involving arrangements of a more or
less temporary nature usually take the form of executive agreements.
In the Philippines, the DFA, by virtue of Section 9, Executive Order No. 459, is initially given the
power to determine whether an agreement is to be treated as a treaty or as an executive agreement. To determine
the issue of whether DFA Secretary Del Rosario gravely abused his discretion in making his determination
relative to the Madrid Protocol, we review the jurisprudence on the nature of executive agreements, as well as
the subject matters to be covered by executive agreements.
The pronouncement in Commissioner of Customs v. Eastern Sea Trading is instructive, to wit:
. . . The concurrence of said House of Congress is required by our fundamental law in the
making of "treaties" (Constitution of the Philippines, Article VII, Section 10[7]), which are,
however, distinct and different from "executive agreements," which may be validly entered
into without such concurrence.
"Treaties are formal documents which require ratification with the
approval of two thirds of the Senate. Executive agreements become binding
through executive action without the need of a vote by the Senate or by
Congress.
xxx xxx xxx
". . . the right of the Executive to enter into binding
agreements without the necessity of subsequent Congressional approval has
been confirmed by long usage. From the earliest days of our history we have
entered into executive agreements covering such subjects as commercial and
consular relations, most-favored-nation rights, patent rights, trademark and
copyright protection, postal and navigation arrangements and the settlement
of claims. The validity of these has never been seriously questioned by our
courts.
xxx xxx xxx
Agreements with respect to the registration of trademarks have
been concluded by the Executive with various countries under the Act of
Congress of March 3, 1881 (21 Stat. 502). . . .
xxx xxx xxx
In this connection, Francis B. Sayre, former U.S. High Commissioner to the
Philippines, said in his work on "The Constitutionality of Trade Agreement Acts":
Agreements concluded by the President which fall short of treaties are
commonly referred to as executive agreements and are no less common in our
scheme of government than are the more formal instruments — treaties and
conventions. They sometimes take the form of exchanges of notes and at other
times that or more formal documents denominated 'agreements' or 'protocols'.
The point where ordinary correspondence between this and other governments
ends and agreements — whether denominated executive agreements or

62
 exchanges of notes or otherwise — begin, may sometimes be difficult of ready
ascertainment. It would be useless to undertake to discuss here the large
variety of executive agreements as such, concluded from time to time.
Hundreds of executive agreements, other than those entered into under the
trade-agreements act, have been negotiated with foreign governments. . . . It
would seem to be sufficient, in order to show that the trade agreements under
the act of 1934 are not anomalous in character, that they are not treaties, and
that they have abundant precedent in our history, to refer to certain classes of
agreements heretofore entered into by the Executive without the approval of
the Senate. They cover such subjects as the inspection of vessels,
navigation dues, income tax on shipping profits, the admission of civil
aircraft, customs matters, and commercial relations generally,
international claims, postal matters, the registration of trademarks and
copyrights, etcetera. Some of them were concluded not by specific
congressional authorization but in conformity with policies declared in
acts of Congress with respect to the general subject matter, such as tariff
acts; while still others, particularly those with respect of the settlement of
claims against foreign governments, were concluded independently of any
legislation. (Emphasis ours) AcICHD
As the foregoing pronouncement indicates, the registration of trademarks and copyrights have been the
subject of executive agreements entered into without the concurrence of the Senate. Some executive agreements
have been concluded in conformity with the policies declared in the acts of Congress with respect to the general
subject matter.
It then becomes relevant to examine our state policy on intellectual property in general, as reflected in
Section 2 of our IP Code, to wit:
Section 2. Declaration of State Policy. — The State recognizes that an effective
intellectual and industrial property system is vital to the development of domestic and
creative activity, facilitates transfer of technology, attracts foreign investments, and
ensures market access for our products. It shall protect and secure the exclusive rights
of scientists, inventors, artists and other gifted citizens to their intellectual property and
creations, particularly when beneficial to the people, for such periods as provided in this
Act.
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.
It is also the policy of the State to streamline administrative procedures of
registering patents, trademarks and copyright, to liberalize the registration on the transfer
of technology, and to enhance the enforcement of intellectual property rights in the Philippines.
In view of the expression of state policy having been made by the Congress itself, the IPAP is plainly
mistaken in asserting that "there was no Congressional act that authorized the accession of the Philippines to
the Madrid Protocol
Accordingly, DFA Secretary Del Rosario's determination and treatment of the Madrid Protocol as an
executive agreement, being in apparent contemplation of the express state policies on intellectual property as
well as within his power under Executive Order No. 459, are upheld. We observe at this point that there are no
hard and fast rules on the propriety of entering into a treaty or an executive agreement on a given subject as an
instrument of international relations. The primary consideration in the choice of the form of agreement is the
parties' intent and desire to craft their international agreement in the form they so wish to further their respective
interests. The matter of form takes a back seat when it comes to effectiveness and binding effect of the
enforcement of a treaty or an executive agreement, inasmuch as all the parties, regardless of the form, become
obliged to comply conformably with the time-honored principle of pacta sunt servanda. The principle binds
the parties to perform in good faith their parts in the agreements.
C.
There is no conflict between the Madrid Protocol and the IP Code.

63
 The IPAP also rests its challenge on the supposed conflict between the Madrid Protocol and the IP
Code, contending that the Madrid Protocol does away with the requirement of a resident agent under Section
125 of the IP Code; and that the Madrid Protocol is unconstitutional for being in conflict with the local law,
which it cannot modify.
The IPAP's contentions stand on a faulty premise. The method of registration through the IPOPHL, as
laid down by the IP Code, is distinct and separate from the method of registration through the WIPO, as set in
the Madrid Protocol. Comparing the two methods of registration despite their being governed by two separate
systems of registration is thus misplaced.
In arguing that the Madrid Protocol conflicts with Section 125 of the IP Code, the IPAP highlights the
importance of the requirement for the designation of a resident agent. It underscores that the requirement is
intended to ensure that non-resident entities seeking protection or privileges under Philippine Intellectual
Property Laws will be subjected to the country's jurisdiction. It submits that without such resident agent, there
will be a need to resort to costly, time consuming and cumbersome extra-territorial service of writs and
processes.
The IPAP misapprehends the procedure for examination under the Madrid Protocol. The difficulty,
which the IPAP illustrates, is minimal, if not altogether inexistent. The IPOPHL actually requires the
designation of the resident agent when it refuses the registration of a mark. Local representation is further
required in the submission of the Declaration of Actual Use, as well as in the submission of the license
contract. The Madrid Protocol accords with the intent and spirit of the IP Code, particularly on the subject of
the registration of trademarks. The Madrid Protocol does not amend or modify the IP Code on the acquisition
of trademark rights considering that the applications under the Madrid Protocol are still examined according
to the relevant national law. In that regard, the IPOPHL will only grant protection to a mark that meets the
local registration requirements. TAIaHE
WHEREFORE, this Court DISMISSES the petition for certiorari and prohibition for lack of merit;
and ORDERS the petitioner to pay the costs of suit.
SO ORDERED.
||| (Intellectual Property Association of the Philippines v. Ochoa, G.R. No. 204605, [July 19, 2016], 790 PHIL 276-
347)

Intellectual Creations under the New Civil Code of the Philippines

BOOK III
DIFFERENT MODES OF ACQUIRING OWNERSHIP

Preliminary Provision

Article 712. Ownership is acquired by occupation and by intellectual creation.

Ownership and other real rights over property are acquired and transmitted by law, by donation, by testate
and intestate succession, and in consequence of certain contracts, by tradition.

They may also be acquired by means of prescription. (609a)

TITLE II
Intellectual Creation

Article 721. By intellectual creation, the following persons acquire ownership:

(1) The author with regard to his literary, dramatic, historical, legal, philosophical, scientific or other work;
64
 (2) The composer; as to his musical composition;

(3) The painter, sculptor, or other artist, with respect to the product of his art;

(4) The scientist or technologist or any other person with regard to his discovery or invention. (n)

Article 722. The author and the composer, mentioned in Nos. 1 and 2 of the preceding article, shall have
the ownership of their creations even before the publication of the same. Once their works are published, their
rights are governed by the Copyright laws.

The painter, sculptor or other artist shall have dominion over the product of his art even before it is copyrighted.

The scientist or technologist has the ownership of his discovery or invention even before it is patented. (n)

Article 723. Letters and other private communications in writing are owned by the person to whom they
are addressed and delivered, but they cannot be published or disseminated without the consent of the writer or his
heirs. However, the court may authorize their publication or dissemination if the public good or the interest of
justice so requires. (n)

Article 724. Special laws govern copyright and patent. (429a)

CHAPTER 3

Trade-marks and Trade-names

Article 520. A trade-mark or trade-name duly registered in the proper government bureau or office is
owned by and pertains to the person, corporation, or firm registering the same, subject to the provisions of special
laws. (n)

Article 521. The goodwill of a business is property, and may be transferred together with the right to use
the name under which the business is conducted. (n)

Article 522. Trade-marks and trade-names are governed by special laws. (n)

65
[G.R. No. 197335. September 7, 2020.]

REPUBLIC OF THE PHILIPPINES, through the PHILIPPINE NATIONAL POLICE

(PNP), petitioner, vs. Heirs of JOSE C. TUPAZ IV, namely: MA. CORAZON J. TUPAZ,
MA. JEANETTE T. CALING, MA. JUNELLA T. AVJEAN, MARIE JOSELYN T.
DEXHEIMER, JOSE NIÑO T. TUPAZ V, and JON FERDINAND T. TUPAZ, and/or EL
ORO INDUSTRIES, INC., and the NATIONAL LIBRARY, represented by
ADORACION MENDOZA-BOLOS, Director, and the Chief of the Publication and
Special Services Division of the Library, respondents.

DECISION

LEONEN, J p:
The copyright of a derivative work solely belongs to the person who fixes an idea into a tangible
medium of expression. The law on copyright only protects the expression of an idea, not the idea itself. Thus,
one who merely contributes concepts or ideas is not deemed an author.
For this Court's resolution is a Petition for Review on Certiorari assailing the Court of Appeals'
Decision and Resolution. The challenged judgments reversed the Regional Trial Court's Decision, which
ordered the cancellation of respondents' certificates of copyright registration over the designs of the Philippine
National Police (PNP) cap device and badge.
In 1996, the PNP Directorate for Logistics Support Service authorized the procurement of new
uniforms and equipment for the PNP, including brand new cap devices and badges. The PNP Directorate on
Research and Development, Clothing, and Criminalistics Equipment Division assumed the responsibility of
updating the designs of the PNP cap device and badge.
The present PNP cap device and badge have the following distinctive features: (1) a native shield,
depicted as a vertically elongated hexagon; (2) a sword-and-shield wielding warrior purporting to be Lapu-
Lapu; (3) eight (8) rays of the sun representing the first eight (8) provinces to revolt against Spain; (4) three (3)
pentagram stars representing Luzon, Visayas, and Mindanao; (5) laurel leaves; and (6) the words "service,
honor, and justice."
The designs of the present PNP cap device and badge were previously used by the Philippine
Constabulary in its coat of arms.
The PNP Directorate on Research and Development, Clothing, and Criminalistics Equipment Division
collaborated with Jose C. Tupaz IV (Tupaz) to create the new designs of the PNP cap device and badge. Tupaz
volunteered and rendered his services for free. Under their agreement, Tupaz will sketch the new designs and
produce samples or prototypes. The samples will then be presented before the PNP's Uniform and Equipment
Standardization Board for approval.
Tupaz drew the new designs based on the PNP's specifications and instructions. He then submitted the
finished sketches to the PNP for evaluation. Thereafter, the designs were transmitted to and approved by the
National Police Commission.
Upon approval of the new designs, the PNP conducted a public bidding for the procurement of the new
PNP cap devices and badges. Among those who participated was El Oro Industries, Inc. (El Oro). Tupaz was
El Oro's then-president and chair of the board of directors.
El Oro submitted the second highest bid price. After the tabulation of the bids, El Oro presented before
the PNP's Bids and Awards Committee certificates of copyright registration over the PNP cap device and badge
issued in favor of Tupaz. Hence, the contract was not awarded to the winning bidder, but to El Oro.
No other manufacturer attempted to produce the PNP cap device and badge bearing the new designs
for fear of copyright infringement.
Police Director Jose S. Andaya, head of the PNP Directorate on Research and Development, Clothing,
and Criminalistics Equipment Division, wrote the National Library requesting the cancellation of the

66
certificates of copyright registration of the PNP cap device and badge. However, the National Library did not
act on the request.
Subsequently, the Republic of the Philippines, through the PNP, filed a Complaint before the Quezon
City Regional Trial Court for the cancellation of Tupaz's certificates of copyright registration, with a prayer
for the issuance of a writ of preliminary injunction.
In their Answer, El Oro and Tupaz alleged that El Oro is the exclusive and official engraver of
Philippine heraldry items since 1953. They claimed that Tupaz's ancestor, Jose T. Tupaz, Jr., developed the
original designs on which the present designs of the PNP cap device and badge were based. Hence, El Oro
owned the copyright over the new designs and was allegedly the only qualified bidder. In its Decision, the
Regional Trial Court ruled in favor of the Republic of the Philippines. The dispositive portion states:
WHEREFORE, judgment is rendered in favor of the plaintiff and against the
defendants as follows:
(a) [O]rdering the defendant National Library to cancel Certificate of Copyright
Registration No. 96-589 over the PNP Cap Device and Certificate of Copyright
Registration No. 96-721 over the PNP badge issued in favor of defendant/s Jose
C. Tupaz IV and/or El Oro Industries, Inc., and to issue two new certificates of
copyright registration in the name of the Philippine National Police in lieu of
these two aforecited certificates of copyright registration; and
(b) [O]rdering the issuance of a writ of prohibitory injunction, permanently prohibiting
defendant/s Jose C. Tupaz IV and/or El Oro Industries, Inc., and other
persons/parties deriving interest from said defendant/s from manufacturing,
using[,] and selling the PNP cap devices and badges bearing the designs created
and developed by the Philippine National Police which are the subject matters
of Certificates of Copyright Registration Nos. 96-589 and 96-721, which had
now been ordered cancelled as provided herein. DETACa
All other claim/s including the counterclaim are dismissed for lack of legal and/or
factual basis.
SO ORDERED.
The Regional Trial Court declared that the new designs of the PNP cap device and badge were created
by the PNP Directorate for Research and Development, Clothing, and Criminalistics Equipment Division.
Under Section 176.1 of Republic Act No. 8293, the new designs are works of the Philippine government, the
copyright of which may not be registered in favor of private entities.
El Oro and Tupaz moved for reconsideration, but their motion was denied.
Pending appeal before the Court of Appeals, Tupaz passed away. He was substituted in the case by
his heirs.
In its Decision, the Court of Appeals reversed the Regional Trial Court's ruling and lifted the writ of
prohibitory injunction issued against El Oro, Tupaz, and their successors-in-interest.
The Court of Appeals classified the new designs of the PNP cap device and badge as derivative works
under Section 2 (P) of Presidential Decree No. 49. According to the Court of Appeals, a derivative work is
entitled to copyright protection, if produced with the consent of the original work's author, and if it has a
"distinguishable non-trivial variation" from the original. The Court of Appeals ruled that both requirements
were present.
Although both parties claim authorship over the pre-existing designs, the Court of Appeals nevertheless
held that the consent requirement was met because both parties agreed to use the pre-existing designs as basis
for the new designs. Moreover, the new designs are substantially distinct from the pre-existing designs. In its
Decision, the Court of Appeals stated:
Comparing Exhibits A-1 (the cap device designed earlier used by the PNP) and A-2 (the design
for which Tupaz obtained a copyright registration certificate), substantial changes in the
appearance are present. Some of these distinctions are: the native shield in Exhibit A-1 is
checkered cream and red in color while the one in Exhibit A-2 is silver; eight short sun rays
appear on top of Exhibit A-2 while there is none in the other earlier design; and the flowers in
Exhibit A-2 are mere buds while the ones in Exhibit A-1 have open petals. Notable changes
67
 are also present if Exhibits B-1 (the badge design earlier used by the PNP) and B-2 (another
design for which Tupaz obtained a certificate [of copyright registration]) are compared. For
instance, among other differences, colors (black, red, white and blue) and eight short sun rays
on top of the design are incorporated in Exhibit B-2 while Exhibit B-1 does not contain these
details.
The Court of Appeals declared Tupaz as the author of the new designs. The PNP only contributed
ideas, but it was Tupaz who actually made the new designs. The Court of Appeals emphasized that the law on
copyright protects the expression of an idea, but not the idea itself.
The Republic of the Philippines then filed a Petition for Review on Certiorari this Court. In a
September 14, 2011 Resolution, this Court required respondents to comment on the petition. However, they
failed to file their comment on the petition. Subsequently, this Court issued a show cause order requiring
respondent Tupaz to explain why he should not be held in contempt, and to submit the required comment on
the petition.
The Resolution, and other subsequent Resolutions of this Court, were returned unserved to
respondents. In another Resolution, this Court required the Office of the Solicitor General to submit the
current addresses of respondents so that they may be served with court processes.
The Office of the Solicitor General manifested that respondent Tupaz received a copy of the petition
based on the postmaster's certification. Meanwhile, respondent Ma. Corazon Tupaz passed away on August
30, 2010. On the other hand, the whereabouts of respondents Ma. Jeanette T. Caling, Ma. Junella T. Avjean,
Marie Jocelyn T. Dexheimer, and Jon Ferdinand T. Tupaz could not be ascertained.
Extraordinary efforts to serve copies of the resolutions ordering respondents to file their comment
failed. This Court later resolved to dispense with the filing of respondents' comment on the petition.
Petitioner concedes that only questions of law may be raised in a Petition for Review
on Certiorari brought under Rule 45 of the Rules of Court. However, it claims that the present case is exempted
from the application of the general rule for two (2) reasons. First, the factual findings of the Court of Appeals
are contrary to the findings of the trial court. Second, the conclusion of the Court of Appeals is "grounded
entirely on speculation, surmise[s,] and conjectures
Petitioner argues that derivative works are entitled to protection under Section 8 of Presidential Decree
No. 49 only if they were "produced with the consent of the creator or proprietor of the original
works[.]" However, the Court of Appeals failed to establish the true author of the pre-existing designs. This is
relevant to determine who can give consent.
Moreover, petitioner maintains that there is no substantial distinction between the new designs and the
pre-existing designs. The distinctive features of the pre-existing designs were exactly adopted in the new
designs. The differences pointed out by the Court of Appeals are only trivial distinctions. Due to the absence
of distinguishable non-trivial variations, the new designs cannot be copyrighted as derivative or new works
under Section 8 of Presidential Decree No. 49.
This case presents the following issues for this Court's resolution:
First, whether or not this Court may undertake a factual review.
Second, whether or not the new designs of the PNP cap device and badge are entitled to protection as
derivative works under Section 8 of Presidential Decree No. 49.
Lastly, whether or not the PNP, as contributor of ideas, should be deemed as the author of the new
designs.
The petition is unmeritorious.
I
The scope of this Court's jurisdiction over petitions brought under Rule 45 of the Revised Rules of
Court is limited to reviewing questions of law. This Court will not entertain questions of fact because it is not
duty-bound to weigh and analyze evidence anew. The factual findings of the appellate courts are generally
final and conclusive on this Court when supported by substantial evidence.
The question pertaining to the authorship of a copyrightable work is a factual matter that generally
goes beyond the scope of review in a Rule 45 Petition. However, this Court may undertake a factual review
when the findings of the Court of Appeals are "contrary to those of the trial court[.]"
68
 In this case, the Regional Trial Court and Court of Appeals differed as to who created the new designs
of the PNP cap device and badge. Also, both tribunals applied different laws. The Regional Trial Court rendered
its Decision based on the present intellectual property code or Republic Act No. 8293. The Court of Appeals,
on the other hand, relied on the provisions of Presidential Decree No. 49.
This case shall be resolved using the provisions of Presidential Decree No. 49, not Republic Act No.
8293. Presidential Decree No. 49 was the law in force at the time the new designs of the PNP cap device and
badge were made. It was also the law in force when the certificates of copyright registration were issued to
respondents in 1996. Republic Act No. 8293, which amended Presidential Decree No. 49, only took effect on
January 1, 1998.
II (A)
Copyright is "the right granted by statute to the proprietor of an intellectual production to its exclusive
use and enjoyment[.]" 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." Copyright is a purely statutory right. Only classes of
works falling under the statutory enumeration are entitled to protection.
Copyright has two rationales: the economic benefit and social benefit. The economic benefit is reaped
by the author from his work while the social benefit manifests when it creates impetus for individuals to be
creative. Copyright, like other intellectual property rights, grants legal protection by prohibiting the
unauthorized reproduction of the author's work. It "create[s] a temporary monopoly on varying types of
knowledge, allowing their owners to restrict and even prevent, other from using that knowledge." By
eliminating fear of other's appropriation and exploitation of an author's work, intellectual creation is
incentivized.
When the concept of copyright emerged, it was primarily concerned with the advancement of a
common social good and not so much about the author's rights. Copyright statutes were initially crafted for the
reading public and to encourage education through the production of books.
Copyright traces its beginnings in 1476 when printing was first introduced in England. The English
Crown then had two (2) main reasons in regulating printing through licensing: (1) to suppress dissent, which
was rapidly growing due to easier reproduction of materials; and (2) to profit from those who are willing to
pay for the exclusive right to print particular books. Subsequently, the control of publishing was ceded to a
group of printers, bookbinders, and booksellers called Stationer's Company through a printing patent which
grants monopoly over the English publishing trade. Through the Stationer's Company, the English Crown
maintained its political and economic interest in the publishing trade.
The Stationer's Company eventually lost its power when the Licensing Act expired in 1694. Failing to
convince the Parliament to extend its powers, the Stationer's Company lobbied for the interests of authors over
publishers. In 1710, the Statute of Anne, the first copyright act, was enacted. The Statute of Anne granted the
Stationer's Company the remedies they needed to maintain their existing publication rights. However, it
removed the Stationer's Company's monopoly by allowing anyone, whether an author or a publisher, to obtain
copyright by mere registration. The law further provided a limited term of copyright instead of the former
perpetual monopoly. It granted 14 years for the work's publication which is renewable for another 14 years, if
the author was still alive.
While the Statute of Anne was seen as an anti-monopoly trade regulation, it mainly focused on the
author's social contribution and the advancement of education through the production of books. It is not mainly
after the "recognition of any pre-existing authorial right, nor . . . the regulation of the booksellers' market[,]"
but the promotion of "the free market of ideas[.]"
The Statute of Anne only covered books, but succeeding laws added other subjects as new technology
emerged, such as engravings, sculptures, paintings, drawings, photographs, sound recordings, and motion
pictures. The first copyright law of the United States, the Act of 1790, was modeled after the Statute of Anne.
It initially covered books, maps, and charts and similarly required a formal registration and granted a 14-year
copyright renewable for another 14-year term. In its subsequent amendments, the period was extended to 28
years and it expanded copyright to other works such as historical and other prints, dramatic works and its
public performance, photographs, visual art, and musical compositions. It later included the right to create
derivative works and the prohibition on copyright protection in government publications. Intellectual property
law in our jurisdiction dates back during the Spanish occupation. the United States took over the Philippines
through the Treaty of Paris in 1898, "patents, trademarks, and copyrights that were granted by the Spanish
government continued to have legal effect in the [Philippines.]"
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 While under the United States occupation, Act No. 3134, otherwise known as the Copyright Law of
the Philippine Island, was passed. Act No. 3134 was based on the United States Copyright Law of 1909. After
the Philippines gained its independence in 1946, Act No. 3134 provided the legal framework for intellectual
property law in our jurisdiction. Years later, laws on patent and trademark were enacted, creating a patent
office for the registration of trademarks, trade names, and service marks.
In 1972, Presidential Decree No. 49, otherwise known as the Decree on the Protection of Intellectual
Property, was passed, superseding Act No. 3134. Nevertheless, Presidential Decree No. 49 was heavily
modeled after Act No. 3134.
Section 2 of Presidential Decree No. 49 enumerates different classes of copyrightable works, which
are protected from the moment of creation:
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:
(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; SDAaTC
(F) Musical compositions, with or without words;
(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;
(L) 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.
The enumeration under Section 2 of Presidential Decree No. 49 is substantially similar to that which
can be found in Section 172.1 of the subsequent law, Republic Act No. 8293.
Under both laws, the copyright vests upon the sole fact of creation. Presidential Decree No. 49 requires
the registration and deposit of some works with the National Library. Noncompliance with this rule "does not

70
deprive the copyright owner of the right to sue for infringement." However, it limits the remedies of copyright
owners, denies them of the right to recover damages, and subjects them to certain sanctions. Republic Act No.
8293 retains the registration and deposit requirement but only for the purpose of "completing the records of the
National Library and the Supreme Court Library[.]" The present law "does not require registration of the work
to fully recover in an infringement suit."
II (B)
Broadly defined, a derivative work refers to a work that is "based on . . . one or more already existing
works." The author of a derivative work borrows expressive content from an existing work and transforms it
into another work. Through this process, the author of a derivative work does not simply copy the existing
work but creates an original work entitled to a separate copyright. Although the expression in the derivative
work is "intermingled with the expression from the underlying work," the derivative author contributes original
expression to the new work making it distinct from the underlying work.
Derivative works right is inseparable from the adaptation right of the original work's
author. Adaptation right is included in the bundle of rights granted to a recognized author or owner of an
intellectual property. Under Section 5 (B) of Presidential Decree No. 49:
SECTION 5. Copyright shall consist in the exclusive right;
xxx xxx xxx
(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[.]
Under earlier laws, authors are not granted adaptation rights. The original author's right was narrow as
it only covered the literal copying of the material. For instance, an author cannot claim an injunction against
the unauthorized translation of his or her work to another language, because the rights granted under the
copyright only extends to "printing, reprinting, publishing or vending."
Adaptation right was later introduced as copyright expanded beyond literal copying. Similar to existing
laws in United Kingdom, Canada, and Australia, the United States' 1909 Copyright Act then allowed
"abridgements, adaptations, arrangements, dramatizations, translations, or other version of works . . . of
copyrighted works" only when produced with the author's consent. This statutory text was adopted in Act No.
3134, and later in Presidential Decree No. 49.
Borne out of copyright's expansion, the notion of derivative works was introduced in the legal scheme.
When the adaptation of an original work was authorized by the owner, and when distinct from the underlying
work, the resulting derivative work is copyrightable.
No exact definition of derivative works is found in Presidential Decree No. 49 and Republic Act No.
8293. However, both laws provide examples consistent with the Berne Convention.
Under Article 2 (3) of the Berne Convention for the Protection of Literary and Artistic Works (Berne
Convention) to which the Philippines is a contracting party, derivative works pertain to "[t]ranslations,
adaptations, arrangements of music and other alterations of a literary or artistic work[.]"
Section 2 (P) of Presidential Decree No. 49 grants copyright protection to "[d]ramatizations,
translations, adaptations, abridgements, arrangements and other alterations of literary, musical or artistic works
or of works of the Philippine Government[.]" Republic Act No. 8293 devotes a separate chapter to derivative
works. The enumeration is substantially similar to that found in Presidential Decree No. 49. However, it
excludes from copyright protection derivative works based on existing works of the government.
Presidential Decree No. 49 gives special attention to derivative works and how it may be granted
copyright as a new work. Under Section 8 of the law:
SECTION 8. The works referred to in subsections (P) and (O) of Section 2 of
this Decree shall, when produced with the consent of the creator or proprietor of the original
works on which they are based, be protected as new works; however, such new works shall
not affect the force of any subsisting copyright upon the original works employed or any part
thereof, or be construed to imply an exclusive right to such use of the original works, or to
secure or extend copyright in such original works. (Emphasis supplied)

71
 Presidential Decree No. 49 is consistent with prevailing conventions when it was enacted. Under
the Berne Convention and the Universal Copyright Convention, authors of original works retain the exclusive
right of control over their works. Pertinent articles of the conventions provide: SDHTEC
Berne Convention
Article 8.
Right of Translation.
Authors of literary and artistic works protected by this Convention shall enjoy the exclusive
right of making and of authorizing the translation of their works throughout the term of
protection of their rights in the original works.
xxx xxx xxx
Article 12.
Right of Adaptation, Arrangement and Other Alteration.
Authors of literary or artistic works shall enjoy the exclusive right of authorizing adaptations,
arrangements and other alterations of their works.
Universal Copyright Convention
Article V
1. Copyright shall include the exclusive right of the author to make, publish, and authorize the
making and publication of translations of works protected under this Convention.
The Court of Appeals correctly classified the new designs of the PNP cap device and badge as
derivative works. Respondents, in collaboration with the PNP and upon its instruction, borrowed expressive
content from the pre-existing designs of the PNP cap device and badge to create the new. The new designs are
considered alterations of artistic works under Section 2 (P) of Presidential Decree No. 49. However, they can
only be copyrighted if they were produced with the consent of the creator of the pre-existing designs and if
there is distinction between the new designs and the pre-existing designs.
Both requisites are present in this case.
The Regional Trial Court and the Court of Appeals failed to determine who authored the pre-existing
designs. Respondents assert that they owned both designs because their ancestor, Jose T. Tupaz, Jr., is the
author of the original designs of the PNP cap device and badge. On the other hand, petitioner claims that it
owned the designs. However, this would be of little or of no consequence considering that the parties asserting
ownership over the pre-existing designs are the very same ones who collaborated to create the new designs. It
would have been a different matter if a third party also claimed ownership over the pre-existing designs. What
is clear is that both parties agreed to create the new designs from the pre-existing designs.
Since the creator of the new designs must borrow expressive content from the pre-existing designs, the
new designs would obviously incorporate elements of the original material. In this case, the borrowed elements
of the original material are the native shield, the eight (8) rays of the sun, three (3) stars laurel leaves and the
words "service," "honor," and "justice."
The test of whether the new designs are copyrightable independently from the pre-existing works is
the presence of originality in the derivative work. The new work, although similar to the pre-existing work in
some of its expressive elements, must be substantially distinct from the pre-existing work. A careful
comparison of the pre-existing designs and the new designs shows that there are substantial distinctions
between the two: cHCD
Figure 1.1
Pre-existing PNP Cap Device
Figure 1.2
Redesigned PNP Cap Device

The most prominent feature of the pre-existing PNP cap device is the native shield. In the new design
of the PNP cap device, the native shield has been reduced in size and the laurel leaves are made more noticeable.
The Court of Appeals observed that the native shield in the pre-existing design is "checkered cream and red in
color." On the other hand, the native shield in the new design is silver. 104
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 The pre-existing PNP cap device contains the words "PHILIPPINE NATIONAL POLICE" located
inside the native shield, which was eliminated in the new design. Instead, the words "PHILIPPINES" and
"POLICE" were placed at the top and bottom of the cap device, respectively. Furthermore, the word "POLICE"
is more prominent in the new design. There are also 8 short sun rays on top of the cap device:
Figure 2.1

Pre-existing PNP Badge

Figure 2.2
Redesigned PNP Badge

With regard to the PNP badge, the most prominent feature of the pre-existing design is the native
shield, which has been reduced in size in the new design. Another prominent feature of the pre-existing design
is the badge number. The badge number in the new design was reduced and placed at the bottom
portion. AcICHD
The words "PHILIPPINE NATIONAL POLICE" were transposed from the native shield in the pre-
existing design and were placed on top in the new design. The shapes of the two designs are also different. The
new design takes the general shape of an oval compared to the pre-existing design. Aside from these, the Court
of Appeals observed that the new design contains the colors black, red, white, and blue.
III
Under Section 2 of Presidential Decree No. 49, the copyright belongs to the creator of the work or the
creator's heirs or assigns. If the work is created by two (2) or more persons, they shall own the copyright
jointly. The same principles are embodied in Sections 178.1 and 178.2 of Republic Act No.
8293. Unlike Republic Act No. 8293, which defines an author as the "natural person who has created the
work[,]" Presidential Decree No. 49 does not provide a definition of an author or a creator. Despite the law's
silence, an author, for purposes of copyright ownership, should be deemed as one who fixes an abstract idea
into something tangible.
The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement), which
took effect in the Philippines on January 1, 1995, states that "copyright protection shall extend to expressions
and not to ideas, procedures, methods of operation[,] or mathematical concepts as such."
More commonly referred to as the "idea/expression dichotomy," the principle in copyright protection
is that "ideas are not protectable" and only expressions of those ideas may be subject to copyright protection.
In ABS-CBN Corp. v. Gozon, this Court distinguished ideas and expression of ideas in relation to what
may be the subject of copyright:
An idea or event must be distinguished from the expression of that idea or event. An
idea has been likened to a ghost in that it "must be spoken to a little before it will explain
itself." . . .
xxx xxx xxx
Ideas can be either abstract or concrete. It is the concrete ideas that are generally
referred to as expression:
The words "abstract" and "concrete" arise in many cases dealing with the
idea/expression distinction. The Nichols court, for example, found that the
defendant's film did not infringe the plaintiff's play because it was "too
generalized an abstraction from what plaintiff wrote . . . only a part of her
ideas." In Eichel v. Marcin, the court said that authors may exploit facts,
experiences, field of thought, and general ideas found in another's work,
"provided they do not substantially copy a concrete form, in which the
circumstances and ideas have been developed, arranged, and put into shape."
Judge Hand, in National Comics Publications, Inc. v. Fawcett Publications,
Inc. said that "no one infringes, unless he descends so far into what is concrete
as to invade . . . 'expression.'"
73
 These cases seem to be distinguishing "abstract" ideas from
"concrete" tangible embodiments of these abstractions that may be termed
expression. However, if the concrete form of a work means more than the
literal expression contained within it, it is difficult to determine what is meant
by "concrete." Webster's New Twentieth Century Dictionary of the English
Language provides several meanings for the word concrete. These include:
"having a material, perceptible existence; of, belonging to, or characterized by
things or events that can be perceived by the senses; real; actual"; and
"referring to a particular; specific, not general or abstract." (Citations
omitted) TAIaHE
Joaquin v. Drilon also illustrates the distinction between ideas and expression of ideas regarding
copyrightable subject matter. The petitioner in Joaquin claimed that the format of its dating game show called
'Rhoda and Me' is entitled to copyright protection. In ruling against the petitioner, this Court underscored the
principle that the law on copyright is purely statutory. Only classes of work enumerated in Pres. Decree No.
49 are subject to copyright. Thus, the format of a television show, not falling within the enumeration, is not
copyrightable. Furthermore, this Court stated:
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. (Citation omitted, emphasis
supplied)
Although a creator or author is not expressly defined under Pres. Decree No. 49, it may be logically
inferred — based on the scope of copyrightable works — that a creator or an author pertains to someone who
transforms an abstract idea into a tangible form of expression through the application of skill or labor.
To create a thing that may be entitled to a copyright requires something more than the giving of ideas
and concepts. Ideas should translate to or transition into something that is tangible or physical. In other words,
something capable of being perceived must be produced. To illustrate, an image that remains in a person's mind
would not be entitled to copyright protection unless he or she draws it on a piece of paper or paints the image
on canvass.
In this case, it is undisputed that petitioner and respondent Tupaz collaborated to develop the new
designs of the PNP cap device and badge. However, the extent of petitioner's participation in developing the
new designs of the PNP cap device and badge was limited to instructing respondent Tupaz on how the designs
should appear in general and what specific elements should be incorporated. Petitioner merely supplied ideas
and concepts. It was respondent Tupaz who used his skill and labor to concretize what petitioner had
envisioned. Therefore, petitioner cannot be considered as an author of the new designs either in whole or in
part.
Petitioner is also not entitled to own the copyright under any of the exceptions in Section 6
of Presidential Decree No. 49. The first exception refers to works created in the course of the employment of
the creator. Section 6 of Presidential Decree No. 49 states:
If the work in which copyright subsists was made during and in the course of the
employment of the creator, the copyright shall belong to:
(a) The employee, if the creation of the object of copyright is not a part of his regular
duties even if the employee uses the time, facilities and materials of the
employer.
(b) The employer, if the work is the result of the performance of his regularly assigned
duties, unless there is an agreement, express or implied to the contrary.
Section 178.3 of Republic Act No. 8293, retains the rule regarding works created in the course of the
employment.
The second exception refers to commissioned works. The creator of the work should be paid valuable
consideration for the work made. Section 6 of Presidential Decree No. 49 states that the copyright of a
commissioned work belongs in joint ownership to the creator and the person who commissioned the work. The
parties, however, can agree that the ownership of the copyright shall pertain to either of them.

74
 The rule regarding commissioned works is modified under Republic Act No. 8293. Parties no longer
have joint ownership over the copyright. Under Section 178.4 of Republic Act No. 8293, the copyright of a
commissioned work generally belongs to the creator. However, the parties may agree in writing to transfer the
copyright to the person who commissioned the work.
In the present case, petitioner is not entitled to own the copyright because the designs were neither
commissioned works nor works created in the course of respondent Tupaz's employment. First, although the
parties verbally agreed to work together, petitioner did not hire respondent Tupaz's services for a fee or a
commission. Respondent Tupaz rendered his services voluntarily. In other words, the new designs do not
qualify as commissioned works. Second, there was no employer-employee relationship between the parties at
the time the designs were made.
Petitioner could have avoided this dispute had it entered into a contract that clearly and expressly
spelled out the extent of each party's rights over the new designs, as Presidential Decree No. 49 allows the
transfer or assignment of the work and its copyright to other persons by gift, inheritance, or otherwise.
WHEREFORE, the Petition for Review is DENIED. The Court of Appeals Decision dated August
12, 2010 and Resolution dated June 27, 2011 in CA-G.R. CV No. 82018 are AFFIRMED.

[G.R. No. 154342. July 14, 2004.]

MIGHTY CORPORATION and LA CAMPANA FABRICA DE TABACO,

INC., petitioners, vs.E. & J. GALLO WINERY and THE ANDRESONS GROUP,
INC., respondents.

DECISION
CORONA, J p:
In this petition for review on certiorari under Rule 45, petitioners Mighty Corporation and La Campana
Fabrica de Tabaco, Inc. (La Campana) seek to annul, reverse and set aside: (a) the November 15, 2001 decision of
the Court of Appeals (CA) in CA-G.R. CV No. 65175 affirming the November 26, 1998 decision, as modified by
the June 24, 1999 order, of the Regional Trial Court of Makati City, Branch 57 (Makati RTC) in Civil Case No.
93-850, which held petitioners liable for, and permanently enjoined them from, committing trademark infringement
and unfair competition, and which ordered them to pay damages to respondents E. & J. Gallo Winery (Gallo
Winery) and The Andresons Group, Inc. (Andresons); (b) the July 11, 2002 CA resolution denying their motion
for reconsideration and (c) the aforesaid Makati RTC decision itself.
I.
The Factual Background
Respondent Gallo Winery is a foreign corporation not doing business in the Philippines but organized and
existing under the laws of the State of California, United States of America (U.S.),where all its wineries are located.
Gallo Winery produces different kinds of wines and brandy products and sells them in many countries under
different registered trademarks, including the GALLO and ERNEST & JULIO GALLO wine trademarks.
Respondent domestic corporation, Andresons, has been Gallo Winery's exclusive wine importer and
distributor in the Philippines since 1991, selling these products in its own name and for its own account.
Gallo Winery's GALLO wine trademark was registered in the principal register of the Philippine Patent
Office (now Intellectual Property Office) on November 16, 1971 under Certificate of Registration No. 17021 which
was renewed on November 16, 1991 for another 20 years. 6 Winery also applied for registration of its ERNEST &
JULIO GALLO wine trademark on October 11, 1990 under Application Serial No. 901011-00073599-PN but the
records do not disclose if it was ever approved by the Director of Patents.
On the other hand, petitioners Mighty Corporation and La Campana and their sister company, Tobacco
Industries of the Philippines (Tobacco Industries), are engaged in the cultivation, manufacture, distribution and sale
of tobacco products for which they have been using the GALLO cigarette trademark since 1973.

75
 The Bureau of Internal Revenue (BIR) approved Tobacco Industries' use of GALLO 100's cigarette mark
on September 14, 1973 and GALLO filter cigarette mark on March 26, 1976, both for the manufacture and sale of
its cigarette products. In 1976, Tobacco Industries filed its manufacturer's sworn statement as basis for BIR's
collection of specific tax on GALLO cigarettes.
On February 5, 1974, Tobacco Industries applied for, but eventually did not pursue, the registration of the
GALLO cigarette trademark in the principal register of the then Philippine Patent Office.
In May 1984, Tobacco Industries assigned the GALLO cigarette trademark to La Campana which, on July
16, 1985, applied for trademark registration in the Philippine Patent Office. On July 17, 1985, the National Library
issued Certificate of Copyright Registration No. 5834 for La Campana's lifetime copyright claim over GALLO
cigarette labels.
Subsequently, La Campana authorized Mighty Corporation to manufacture and sell cigarettes bearing the
GALLO trademark. 13 BIR approved Mighty Corporation's use of GALLO 100's cigarette brand, under licensing
agreement with Tobacco Industries, on May 18, 1988, and GALLO SPECIAL MENTHOL 100's cigarette brand
on April 3, 1989.
Petitioners claim that GALLO cigarettes have been sold in the Philippines since 1973, initially by Tobacco
Industries, then by La Campana and finally by Mighty Corporation.
On the other hand, although the GALLO wine trademark was registered in the Philippines in 1971,
respondents claim that they first introduced and sold the GALLO and ERNEST & JULIO GALLO wines in the
Philippines circa 1974 within the then U.S. military facilities only. By 1979, they had expanded their Philippine
market through authorized distributors and independent outlets.
Respondents claim that they first learned about the existence of GALLO cigarettes in the latter part of 1992
when an Andresons employee saw such cigarettes on display with GALLO wines in a Davao supermarket wine
cellar section. Forthwith, respondents sent a demand letter to petitioners asking them to stop using the GALLO
trademark, to no avail.
II.
The Legal Dispute
On March 12, 1993, respondents sued petitioners in the Makati RTC for trademark and tradename
infringement and unfair competition, with a prayer for damages and preliminary injunction.
Respondents charged petitioners with violating Article 6 They claimed that petitioners adopted the GALLO
trademark to ride on Gallo Winery's GALLO and ERNEST & JULIO GALLO trademarks' established reputation
and popularity, thus causing confusion, deception and mistake on the part of the purchasing public who had always
associated GALLO and ERNEST & JULIO GALLO trademarks with Gallo Winery's wines. Respondents prayed
for the issuance of a writ of preliminary injunction and ex parte restraining order, plus P2 million as actual and
compensatory damages, at least P500,000 as exemplary and moral damages, and at least P500,000 as attorney's
fees and litigation expenses.
In their answer, petitioners alleged, among other affirmative defenses, that: petitioner's GALLO cigarettes
and Gallo Winery's wines were totally unrelated products; Gallo Winery's GALLO trademark registration
certificate covered wines only, not cigarettes; GALLO cigarettes and GALLO wines were sold through different
channels of trade; GALLO cigarettes, sold at P4.60 for GALLO filters and P3 for GALLO menthols, were low-
cost items compared to Gallo Winery's high-priced luxury wines which cost between P98 to P242.50; the target
market of Gallo Winery's wines was the middle or high-income bracket with at least P10,000 monthly income
while GALLO cigarette buyers were farmers, fishermen, laborers and other low-income workers; the dominant
feature of the GALLO cigarette mark was the rooster device with the manufacturer's name clearly indicated as
MIGHTY CORPORATION while, in the case of Gallo Winery's wines, it was the full names of the founders-
owners ERNEST & JULIO GALLO or just their surname GALLO; by their inaction and conduct, respondents
were guilty of laches and estoppel; and petitioners acted with honesty, justice and good faith in the exercise of their
right to manufacture and sell GALLO cigarettes.
In an order dated April 21, 1993, the Makati RTC denied, for lack of merit, respondent's prayer for the
issuance of a writ of preliminary injunction, holding that respondent's GALLO trademark registration certificate
covered wines only, that respondents' wines and petitioners' cigarettes were not related goods and respondents
failed to prove material damage or great irreparable injury as required by Section 5, Rule 58 of the Rules of Court.

76
 On August 19, 1993, the Makati RTC denied, for lack of merit, respondents' motion for reconsideration.
The court reiterated that respondents' wines and petitioners' cigarettes were not related goods since the likelihood
of deception and confusion on the part of the consuming public was very remote. The trial court emphasized that
it could not rely on foreign rulings cited by respondents "because the[se] cases were decided by foreign courts on
the basis of unknown facts peculiar to each case or upon factual surroundings which may exist only within their
jurisdiction. Moreover, there [was] no showing that [these cases had] been tested or found applicable in our
jurisdiction."
On February 20, 1995, the CA likewise dismissed respondents' petition for review on certiorari, docketed
as CA-G.R. No. 32626, thereby affirming the Makati RTC's denial of the application for issuance of a writ of
preliminary injunction against petitioners.
After trial on the merits, however, the Makati RTC, on November 26, 1998, held petitioners liable for, and
permanently enjoined them from, committing trademark infringement and unfair competition with respect to the
GALLO trademark:
WHEREFORE, judgment is rendered in favor of the plaintiff (sic) and against the
defendant (sic),to wit:
a. permanently restraining and enjoining defendants, their distributors, trade
outlets, and all persons acting for them or under their instructions, from (i) using E & J's
registered trademark GALLO or any other reproduction, counterfeit, copy or colorable
imitation of said trademark, either singly or in conjunction with other words, designs or
emblems and other acts of similar nature, and (ii) committing other acts of unfair
competition against plaintiffs by manufacturing and selling their cigarettes in the
domestic or export markets under the GALLO trademark.
b. ordering defendants to pay plaintiffs —
(i) actual and compensatory damages for the injury and prejudice and
impairment of plaintiffs' business and goodwill as a result of the acts and
conduct pleaded as basis for this suit, in an amount equal to 10% of FOURTEEN
MILLION TWO HUNDRED THIRTY FIVE THOUSAND PESOS
(PHP14,235,000.00) from the filing of the complaint until fully paid;

(ii) exemplary damages in the amount of PHP100,000.00;

(iii) attorney's fees and expenses of litigation in the amount of
PHP1,130,068.91;
(iv) the cost of suit.
SO ORDERED."
On June 24, 1999, the Makati RTC granted respondent's motion for partial
reconsideration and increased the award of actual and compensatory damages to 10% of
P199,290,000 or P19,929,000.
On appeal, the CA affirmed the Makati RTC decision and subsequently denied petitioner's motion for
reconsideration.
III.
The Issues
Petitioners now seek relief from this Court contending that the CA did not follow prevailing laws and
jurisprudence when it held that: [a] RA 8293 (Intellectual Property Code of the Philippines [IP Code]) was
applicable in this case; [b] GALLO cigarettes and GALLO wines were identical, similar or related goods for the
reason alone that they were purportedly forms of vice; [c] both goods passed through the same channels of trade
and [d] petitioners were liable for trademark infringement, unfair competition and damages.
Respondents, on the other hand, assert that this petition which invokes Rule 45 does not involve pure
questions of law, and hence, must be dismissed outright.

77
 IV.
Discussion
THE EXCEPTIONAL CIRCUMSTANCES IN THIS CASE OBLIGE THE COURT TO REVIEW THE CA'S
FACTUAL FINDINGS
As a general rule, a petition for review on certiorari under Rule 45 must raise only "questions of law" (that
is, the doubt pertains to the application and interpretation of law to a certain set of facts) and not "questions of fact"
(where the doubt concerns the truth or falsehood of alleged facts), OTHERWISE, the petition will be denied. We
are not a trier of facts and the Court of Appeals' factual findings are generally conclusive upon us.
This case involves questions of fact which are directly related and intertwined with questions of law. The
resolution of the factual issues concerning the goods' similarity, identity, relation, channels of trade, and acts of
trademark infringement and unfair competition is greatly dependent on the interpretation of applicable laws. The
controversy here is not simply the identity or similarity of both parties' trademarks but whether or not infringement
or unfair competition was committed, a conclusion based on statutory interpretation. Furthermore, one or more of
the following exceptional circumstances oblige us to review the evidence on record:
(1) the conclusion is grounded entirely on speculation, surmises, and conjectures;
(2) the inference of the Court of Appeals from its findings of fact is manifestly mistaken, absurd
and impossible;
(3) there is grave abuse of discretion;
(4) the judgment is based on a misapprehension of facts;
(5) the appellate court, in making its findings, went beyond the issues of the case, and the same
are contrary to the admissions of both the appellant and the appellee;
(6) the findings are without citation of specific evidence on which they are based;
(7) the facts set forth in the petition as well as in the petitioner's main and reply briefs are not
disputed by the respondents; and
(8) the findings of fact of the Court of Appeals are premised on the absence of evidence and are
contradicted [by the evidence] on record.
In this light, after thoroughly examining the evidence on record, weighing, analyzing and balancing all
factors to determine whether trademark infringement and/or unfair competition has been committed, we conclude
that both the Court of Appeals and the trial court veered away from the law and well-settled jurisprudence.
Thus, we give due course to the petition.
THE TRADEMARK LAW AND THE PARIS CONVENTION ARE THE APPLICABLE LAWS,
NOT THE INTELLECTUAL PROPERTY CODE
We note that respondents sued petitioners on March 12, 1993 for trademark infringement and unfair
competition committed during the effectivity of the Paris Convention and the Trademark Law.
Yet, in the Makati RTC decision of November 26, 1998, petitioners were held liable not only under the
aforesaid governing laws but also under the IP Code which took effect only on January 1, 1998, or about five years
after the filing of the complaint:
Defendants' unauthorized use of the GALLO trademark constitutes trademark
infringement pursuant to Section 22 of Republic Act No. 166, Section 155 of the IP Code,Article
6bis of the Paris Convention, and Article 16(1) of the TRIPS Agreement as it causes confusion,
deception and mistake on the part of the purchasing public. (Emphasis and italics supplied
The CA apparently did not notice the error and affirmed the Makati RTC decision:
In the light of its finding that appellants' use of the GALLO trademark on its cigarettes
is likely to create confusion with the GALLO trademark on wines previously registered and used
in the Philippines by appellee E & J Gallo Winery, the trial court thus did not err in holding that
appellants' acts not only violated the provisions of the our trademark laws (R.A. No.

78
 166 and R.A. Nos. (sic) 8293) but also Article 6bis of the Paris Convention. (Emphasis and italics
supplied)
We therefore hold that the courts a quo erred in retroactively applying the IP Code in this case.
It is a fundamental principle that the validity and obligatory force of a law proceed from the fact that it has
first been promulgated. A law that is not yet effective cannot be considered as conclusively known by the populace.
To make a law binding even before it takes effect may lead to the arbitrary exercise of the legislative power. Nova
constitutio futuris formam imponere debet non praeteritis. A new state of the law ought to affect the future, not the
past. Any doubt must generally be resolved against the retroactive operation of laws, whether these are original
enactments, amendments or repeals. There are only a few instances when laws may be given retroactive
effect, NONE of which is present in this case.
The IP Code, repealing the Trademark Law, was approved on June 6, 1997. Section 241 thereof expressly
decreed that it was to take effect only on January 1, 1998, without any provision for retroactive application. Thus,
the Makati RTC and the CA should have limited the consideration of the present case within the parameters of the
Trademark Law and the Paris Convention, the laws in force at the time of the filing of the complaint.
DISTINCTIONS BETWEEN TRADEMARK INFRINGEMENT AND UNFAIR COMPETITION
Although the laws on trademark infringement and unfair competition have a common conception at their
root, that is, a person shall not be permitted to misrepresent his goods or his business as the goods or business of
another, the law on unfair competition is broader and more inclusive than the law on trademark infringement. The
latter is more limited but it recognizes a more exclusive right derived from the trademark adoption and registration
by the person whose goods or business is first associated with it. The law on trademarks is thus a specialized subject
distinct from the law on unfair competition, although the two subjects are entwined with each other and are dealt
with together in the Trademark Law (now, both are covered by the IP Code). Hence, even if one fails to establish
his exclusive property right to a trademark, he may still obtain relief on the ground of his competitor's unfairness
or fraud. Conduct constitutes unfair competition if the effect is to pass off on the public the goods of one man as
the goods of another. It is not necessary that any particular means should be used to this end.
In Del Monte Corporation vs. Court of Appeals, we distinguished trademark infringement from unfair
competition:
(1) Infringement of trademark is the unauthorized use of a trademark, whereas unfair competition
is the passing off of one's goods as those of another.
(2) In infringement of trademark fraudulent intent is unnecessary, whereas in unfair competition
fraudulent intent is essential.
(3) In infringement of trademark the prior registration of the trademark is a prerequisite to the
action, whereas in unfair competition registration is not necessary.
PERTINENT PROVISIONS ON TRADEMARK INFRINGEMENT UNDER THE PARIS CONVENTION
AND THE TRADEMARK LAW
Article 6bis of the Paris Convention, an international agreement binding on the Philippines and the United
States (Gallo Winery's country of domicile and origin) prohibits "the [registration] or use of a trademark which
constitutes a reproduction, imitation or translation, liable to create confusion, of a mark considered by the
competent authority of the country of registration or use to be well-known in that country as being already the mark
of a person entitled to the benefits of the [Paris] Convention and used for identical or similar goods. [This rule also
applies] when the essential part of the mark constitutes a reproduction of any such well-known mark or an
imitation liable to create confusion therewith." There is no time limit for seeking the prohibition of the use of marks
used in bad faith.
Thus, under Article 6bis of the Paris Convention, the following are the elements of trademark infringement:
(a) registration or use by another person of a trademark which is a reproduction, imitation or
translation liable to create confusion,
(b) of a mark considered by the competent authority of the country of registration or use to
be well-known in that country and is already the mark of a person entitled to the benefits
of the Paris Convention, and
(c) such trademark is used for identical or similar goods.
79
 On the other hand, Section 22 of the Trademark Law holds a person liable for infringement when, among
others, he "uses without the consent of the registrant, any reproduction, counterfeit, copy or colorable imitation of
any registered mark or tradename in connection with the sale, offering for sale, or advertising of any goods, business
or services or in connection with which such use is likely to cause confusion or mistake or to deceive purchasers
or others as to the source or origin of such goods or services, or identity of such business; or reproduce, counterfeit,
copy or colorably imitate any such mark or tradename 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. Trademark registration and actual use are material to the
complaining party's cause of action.
Corollary to this, Section 20 of the Trademark Law considers the trademark registration certificate
as prima facie evidence of the validity of the registration, the registrant's ownership and exclusive right to use the
trademark in connection with the goods, business or services as classified by the Director of Patents and as specified
in the certificate, subject to the conditions and limitations stated therein. Sections 2 and 2-A of the Trademark
Law emphasize the importance of the trademark's actual use in commerce in the Philippines prior to its registration.
In the adjudication of trademark rights between contending parties, equitable principles of laches, estoppel, and
acquiescence may be considered and applied.
Under Sections 2, 2-A, 9-A, 20 and 22 of the Trademark Law therefore, the following constitute the
elements of trademark infringement:
(a) a trademark actually used in commerce in the Philippines and registered in the principal
register of the Philippine Patent Office
(b) is used by another person in connection with the sale, offering for sale, or advertising of any
goods, business or services or in connection with which such use is likely to cause
confusion or mistake or to deceive purchasers or others as to the source or origin of
such goods or services, or identity of such business; or such trademark is reproduced,
counterfeited, copied or colorably imitated by another person and such reproduction,
counterfeit, copy or colorable imitation is applied to labels, signs, prints, packages,
wrappers, receptacles or advertisements intended to be used upon or in connection with
such goods, business or services as to likely cause confusion or mistake or to deceive
purchasers,
(c) the trademark is used for identical or similar goods, and
(d) such act is done without the consent of the trademark registrant or assignee.
In summary, the Paris Convention protects well-known trademarks only (to be determined by domestic
authorities), while the Trademark Law protects all trademarks, whether well-known or not, provided that they have
been registered and are in actual commercial use in the Philippines. Following universal acquiescence and comity,
in case of domestic legal disputes on any conflicting provisions between the Paris Convention (which is an
international agreement) and the Trademark law (which is a municipal law) the latter will prevail.
Under both the Paris Convention and the Trademark Law, the protection of a registered trademark is
limited only to goods identical or similar to those in respect of which such trademark is registered and only when
there is likelihood of confusion. Under both laws, the time element in commencing infringement cases is material
in ascertaining the registrant's express or implied consent to another's use of its trademark or a colorable imitation
thereof. This is why acquiescence, estoppel or laches may defeat the registrant's otherwise valid cause of action.
Hence, proof of all the elements of trademark infringement is a condition precedent to any finding of
liability.

THE ACTUAL COMMERCIAL USE IN THE PHILIPPINES OF GALLO CIGARETTE TRADEMARK

PRECEDED THAT OF GALLO WINE TRADEMARK.
By respondents' own judicial admission, the GALLO wine trademark was registered in the Philippines in
November 1971 but the wine itself was first marketed and sold in the country only in 1974 and only within the
former U.S. military facilities, and outside thereof, only in 1979. To prove commercial use of the GALLO wine
trademark in the Philippines, respondents presented sales invoice no. 29991 dated July 9, 1981 addressed to Conrad
Company Inc., Makati, Philippines and sales invoice no. 85926 dated March 22, 1996 addressed to Andresons

80
Global, Inc., Quezon City, Philippines. Both invoices were for the sale and shipment of GALLO wines to the
Philippines during that period. Nothing at all, however, was presented to evidence the alleged sales of GALLO
wines in the Philippines in 1974 or, for that matter, prior to July 9, 1981.
On the other hand, by testimonial evidence supported by the BIR authorization letters, forms and
manufacturer's sworn statement, it appears that petitioners and its predecessor-in-interest, Tobacco Industries, have
indeed been using and selling GALLO cigarettes in the Philippines since 1973 or before July 9, 1981.
In Emerald Garment Manufacturing Corporation vs. Court of Appeals, we reiterated our rulings
in Pagasa Industrial Corporation vs. Court of Appeals, Converse Rubber Corporation vs. Universal Rubber
Products, Inc., Sterling Products International, Inc. vs. Farbenfabriken Bayer Aktiengesellschaft, Kabushi Kaisha
Isetan vs. Intermediate Appellate Court, and Philip Morris vs. Court of Appeals, giving utmost importance to
the actual commercial use of a trademark in the Philippines prior to its registration, notwithstanding the provisions
of the Paris Convention:
xxx xxx xxx
In addition to the foregoing, we are constrained to agree with petitioner's contention
that private respondent failed to prove prior actual commercial use of its "LEE" trademark in
the Philippines before filing its application for registration with the BPTTT and hence, has not
acquired ownership over said mark.
Actual use in commerce in the Philippines is an essential prerequisite for the acquisition
of ownership over a trademark pursuant to Sec. 2 and 2-A of the Philippine Trademark
Law (R.A. No. 166) . . .
xxx xxx xxx
The provisions of the 1965 Paris Convention for the Protection of Industrial Property
relied upon by private respondent and Sec. 21-A of the Trademark Law (R.A. No. 166) were
sufficiently expounded upon and qualified in the recent case of Philip Morris, Inc. v. Court of
Appeals (224 SCRA 576 [1993]):
xxx xxx xxx
Following universal acquiescence and comity, our municipal law on
trademarks regarding the requirement of actual use in the Philippines must subordinate
an international agreement inasmuch as the apparent clash is being decided by a
municipal tribunal (Mortisen vs. Peters,Great Britain, High Court of Judiciary of
Scotland, 1906, 8 Sessions, 93; Paras, International Law and World Organization, 1971
Ed.,p. 20).Withal, the fact that international law has been made part of the law of the
land does not by any means imply the primacy of international law over national law in
the municipal sphere. Under the doctrine of incorporation as applied in most countries,
rules of international law are given a standing equal, not superior, to national legislative
enactments.
xxx xxx xxx
In other words, (a foreign corporation) may have the capacity to sue for
infringement irrespective of lack of business activity in the Philippines on account of
Section 21-A of the Trademark Law but the question of whether they have an exclusive
right over their symbol as to justify issuance of the controversial writ will depend on
actual use of their trademarks in the Philippines in line with Sections 2 and 2-A of the
same law.It is thus incongruous for petitioners to claim that when a foreign corporation
not licensed to do business in the Philippines files a complaint for infringement, the
entity need not be actually using the trademark in commerce in the Philippines. Such a
foreign corporation may have the personality to file a suit for infringement but it may
not necessarily be entitled to protection due to absence of actual use of the emblem in
the local market.
xxx xxx xxx
Undisputably, private respondent is the senior registrant,having obtained several
registration certificates for its various trademarks "LEE," "LEE RIDERS," and "LEESURES" in
81
 both the supplemental and principal registers, as early as 1969 to 1973. However, registration
alone will not suffice.In Sterling Products International, Inc. v. Farbenfabriken Bayer
Aktiengesellschaft (27 SCRA 1214 [1969];Reiterated in Kabushi Isetan vs. Intermediate
Appellate Court (203 SCRA 583 [1991]) we declared:
xxx xxx xxx
A rule widely accepted and firmly entrenched because it has come down through
the years is that actual use in commerce or business is a prerequisite in the acquisition
of the right of ownership over a trademark.
xxx xxx xxx
The credibility placed on a certificate of registration of one's trademark, or its weight as
evidence of validity, ownership and exclusive use, is qualified. A registration certificate serves
merely as prima facie evidence. It is not conclusive but can and may be rebutted by controverting
evidence.
xxx xxx xxx
In the case at bench, however, we reverse the findings of the Director of Patents and the
Court of Appeals. After a meticulous study of the records, we observe that the Director of Patents
and the Court of Appeals relied mainly on the registration certificates as proof of use by private
respondent of the trademark "LEE" which, as we have previously discussed are not sufficient.
We cannot give credence to private respondent's claim that its "LEE" mark first reached the
Philippines in the 1960's through local sales by the Post Exchanges of the U.S. Military Bases
in the Philippines (Rollo, p. 177) based as it was solely on the self-serving statements of Mr.
Edward Poste, General Manager of Lee (Phils.),Inc.,a wholly owned subsidiary of the H.D. Lee,
Co.,Inc.,U.S.A.,herein private respondent. (Original Records, p. 52) Similarly, we give little
weight to the numerous vouchers representing various advertising expenses in the Philippines
for "LEE" products. It is well to note that these expenses were incurred only in 1981 and 1982
by LEE (Phils.),Inc. after it entered into a licensing agreement with private respondent on 11
May 1981.(Exhibit E)

On the other hand, petitioner has sufficiently shown that it has been in the business of
selling jeans and other garments adopting its "STYLISTIC MR. LEE" trademark since 1975 as
evidenced by appropriate sales invoices to various stores and retailers. (Exhibit 1-e to 1-o)
Our rulings in Pagasa Industrial Corp. v. Court of Appeals (118 SCRA 526 [1982])
and Converse Rubber Corp. v. Universal Rubber Products, Inc.,(147 SCRA 154
[1987]),respectively, are instructive:
The Trademark Law is very clear. It requires actual commercial use of the mark
prior to its registration. There is no dispute that respondent corporation was the first
registrant, yet it failed to fully substantiate its claim that it used in trade or business in
the Philippines the subject mark; it did not present proof to invest it with exclusive,
continuous adoption of the trademark which should consist among others, of
considerable sales since its first use. The invoices submitted by respondent which were
dated way back in 1957 show that the zippers sent to the Philippines were to be used as
"samples" and "of no commercial value." The evidence for respondent must be clear,
definite and free from inconsistencies. "Samples" are not for sale and therefore, the fact
of exporting them to the Philippines cannot be considered to be equivalent to the "use"
contemplated by law. Respondent did not expect income from such "samples." There
were no receipts to establish sale, and no proof were presented to show that they were
subsequently sold in the Philippines. SDTIHA
xxx xxx xxx
For lack of adequate proof of actual use of its trademark in the Philippines prior to
petitioner's use of its own mark and for failure to establish confusing similarity between said
trademarks, private respondent's action for infringement must necessarily fail.(Emphasis
supplied.)
82
 In view of the foregoing jurisprudence and respondents' judicial admission that the actual commercial
use of the GALLO wine trademark was subsequent to its registration in 1971 and to Tobacco Industries'
commercial use of the GALLO cigarette trademark in 1973, we rule that, on this account, respondents never
enjoyed the exclusive right to use the GALLO wine trademark to the prejudice of Tobacco Industries and its
successors-in-interest, herein petitioners, either under the Trademark Law or the Paris Convention.
RESPONDENTS' GALLO TRADEMARK REGISTRATION IS LIMITED TO WINES ONLY
We also note that the GALLO trademark registration certificates in the Philippines and in other countries
expressly state that they cover wines only, without any evidence or indication that registrant Gallo Winery expanded
or intended to expand its business to cigarettes.
Thus, by strict application of Section 20 of the Trademark Law, Gallo Winery's exclusive right to use the
GALLO trademark should be limited to wines, the only product indicated in its registration certificates. This strict
statutory limitation on the exclusive right to use trademarks was amply clarified in our ruling in Faberge, Inc. vs.
Intermediate Appellate Court:
Having thus reviewed the laws applicable to the case before Us, it is not difficult to
discern from the foregoing statutory enactments that private respondent may be permitted to
register the trademark "BRUTE" for briefs produced by it notwithstanding petitioner's vehement
protestations of unfair dealings in marketing its own set of items which are limited to: after-
shave lotion, shaving cream, deodorant, talcum powder and toilet soap. Inasmuch as petitioner
has not ventured in the production of briefs, an item which is not listed in its certificate of
registration, petitioner cannot and should not be allowed to feign that private respondent had
invaded petitioner's exclusive domain.To be sure, it is significant that petitioner failed to annex
in its Brief the so-called "eloquent proof that petitioner indeed intended to expand its mark
'BRUT' to other goods" (Page 27, Brief for the Petitioner; page 202, Rollo). Even then, a mere
application by petitioner in this aspect does not suffice and may not vest an exclusive right in its
favor that can ordinarily be protected by the Trademark Law. In short, paraphrasing Section 20
of the Trademark Law as applied to the documentary evidence adduced by petitioner, the
certificate of registration issued by the Director of Patents can confer upon petitioner the
exclusive right to use its own symbol only to those goods specified in the certificate,subject to
any conditions and limitations stated therein. This basic point is perhaps the unwritten rationale
of Justice Escolin in Philippine Refining Co., Inc. vs. Ng Sam (115 SCRA 472 [1982]),when he
stressed the principle enunciated by the United States Supreme Court in American Foundries vs.
Robertson (269 U.S. 372, 381, 70 L ed 317, 46 Sct. 160) that 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.Verily, this Court had the occasion to observe
in the 1966 case of George W. Luft Co.,Inc. vs. Ngo Guan (18 SCRA 944 [1966]) that no serious
objection was posed by the petitioner therein since the applicant utilized the emblem "Tango"
for no other product than hair pomade in which petitioner does not deal.
This brings Us back to the incidental issue raised by petitioner which private respondent
sought to belie as regards petitioner's alleged expansion of its business. It may be recalled that
petitioner claimed that it has a pending application for registration of the emblem "BRUT 33"
for briefs (page 25, Brief for the Petitioner; page 202, Rollo) to impress upon Us the Solomonic
wisdom imparted by Justice JBL Reyes in Sta. Ana vs. Maliwat (24 SCRA 1018 [1968]),to the
effect that dissimilarity of goods will not preclude relief if the junior user's goods are not remote
from any other product which the first user would be likely to make or sell (vide, at page 1025).
Commenting on the former provision of the Trademark Law now embodied substantially under
Section 4(d) of Republic Act No. 166, as amended, the erudite jurist opined that the law in point
"does not require that the articles of manufacture of the previous user and late user of the mark
should possess the same descriptive properties or should fall into the same categories as to bar
the latter from registering his mark in the principal register." (supra at page 1026).
Yet, it is equally true that as aforesaid, 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 message conveyed by Section 20.
How do We now reconcile the apparent conflict between Section 4(d) which was relied
upon by Justice JBL Reyes in the Sta. Ana case and Section 20? It would seem that Section 4(d)

83
 does not require that the goods manufactured by the second user be related to the goods
produced by the senior user while Section 20 limits the exclusive right of the senior user only to
those goods specified in the certificate of registration.But the rule has been laid down that the
clause which comes later shall be given paramount significance over an anterior proviso upon
the presumption that it expresses the latest and dominant purpose. (Graham Paper Co. vs.
National Newspapers Asso.(Mo. App.) 193 S.W. 1003; Barnett vs. Merchant's L. Ins. Co.,87
Okl. 42; State ex nel Atty. Gen. vs. Toledo,26 N.E.,p. 1061; cited by Martin,Statutory
Construction Sixth ed.,1980 Reprinted, p. 144).It ineluctably follows that Section 20 is
controlling and, therefore, private respondent can appropriate its symbol for the briefs it
manufactures because as aptly remarked by Justice Sanchez in Sterling Products International
Inc. vs. Farbenfabriken Bayer (27 SCRA 1214 [1969]):
"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." (1226).
NO LIKELIHOOD OF CONFUSION, MISTAKE OR DECEIT AS TO THE IDENTITY OR SOURCE OF
PETITIONERS' AND RESPONDENTS' GOODS OR BUSINESS
A crucial issue in any trademark infringement case is the likelihood of confusion, mistake or deceit as to
the identity, source or origin of the goods or identity of the business as a consequence of using a certain mark.
Likelihood of confusion is admittedly a relative term, to be determined rigidly according to the particular (and
sometimes peculiar) circumstances of each case. Thus, in trademark cases, more than in other kinds of litigation,
precedents must be studied in the light of each particular case.
There are two types of confusion in trademark infringement. The first is "confusion of goods" when an
otherwise prudent purchaser is induced to purchase one product in the belief that he is purchasing another, in which
case defendant's goods are then bought as the plaintiff's and its poor quality reflects badly on the plaintiff's
reputation. The other is "confusion of business" wherein the goods of the parties are different but the defendant's
product can reasonably (though mistakenly) be assumed to originate from the plaintiff, thus deceiving the public
into believing that there is some connection between the plaintiff and defendant which, in fact, does not exist.
In determining the likelihood of confusion, the Court must consider: [a] the resemblance between the
trademarks; [b] the similarity of the goods to which the trademarks are attached; [c] the likely effect on the
purchaser and [d] the registrant's express or implied consent and other fair and equitable considerations.
Petitioners and respondents both use "GALLO" in the labels of their respective cigarette and wine products.
But, as held in the following cases, the use of an identical mark does not, by itself, lead to a legal conclusion that
there is trademark infringement:

(a) in Acoje Mining Co., Inc. vs. Director of Patent, we ordered the approval of Acoje Mining's
application for registration of the trademark LOTUS for its soy sauce even though
Philippine Refining Company had prior registration and use of such identical mark for
its edible oil which, like soy sauce, also belonged to Class 47;
(b) in Philippine Refining Co., Inc. vs. Ng Sam and Director of Patents, we upheld the Patent
Director's registration of the same trademark CAMIA for Ng Sam's ham under Class 47,
despite Philippine Refining Company's prior trademark registration and actual use of
such mark on its lard, butter, cooking oil (all of which belonged to Class 47), abrasive
detergents, polishing materials and soaps;
(c) in Hickok Manufacturing Co., Inc. vs. Court of Appeals and Santos Lim Bun Liong, we
dismissed Hickok's petition to cancel private respondent's HICKOK trademark
registration for its Marikina shoes as against petitioner's earlier registration of the same
trademark for handkerchiefs, briefs, belts and wallets;
(d) in Shell Company of the Philippines vs. Court of Appeals, in a minute resolution, we
dismissed the petition for review for lack of merit and affirmed the Patent Office's
registration of the trademark SHELL used in the cigarettes manufactured by respondent
84
 Fortune Tobacco Corporation, notwithstanding Shell Company's opposition as the prior
registrant of the same trademark for its gasoline and other petroleum products;
(e) in Esso Standard Eastern, Inc. vs. Court of Appeals, we dismissed ESSO's complaint for
trademark infringement against United Cigarette Corporation and allowed the latter to
use the trademark ESSO for its cigarettes, the same trademark used by ESSO for its
petroleum products, and
(f) in Canon Kabushiki Kaisha vs. Court of Appeals and NSR Rubber Corporation, we affirmed
the rulings of the Patent Office and the CA that NSR Rubber Corporation could use the
trademark CANON for its sandals (Class 25) despite Canon Kabushiki Kaisha's prior
registration and use of the same trademark for its paints, chemical products, toner and
dyestuff (Class 2).
Whether a trademark causes confusion and is likely to deceive the public hinges on "colorable
imitation"which has been defined as "such similarity in form, content, words, sound, meaning, special arrangement
or general appearance of the trademark or tradename in their overall presentation or in their essential and
substantive and distinctive parts as would likely mislead or confuse persons in the ordinary course of purchasing
the genuine article."
Jurisprudence has developed two tests in determining similarity and likelihood of confusion in trademark
resemblance:
(a) the Dominancy Test applied in Asia Brewery, Inc. vs. Court of Appeals AND other
cases, and
(b) the Holistic or Totality Test used in Del Monte Corporation vs. Court of Appeals and its
preceding cases.
The Dominancy Test focuses on the similarity of the prevalent features of the competing trademarks which
might cause confusion or deception, and thus infringement. If the competing trademark contains the main, essential
or dominant features of another, and confusion or deception is likely to result, infringement takes place. Duplication
or imitation is not necessary; nor is it necessary that the infringing label should suggest an effort to imitate. The
question is whether the use of the marks involved is likely to cause confusion or mistake in the mind of the public
or deceive purchasers.
On the other hand, the Holistic Test requires that the entirety of the marks in question be considered in
resolving confusing similarity. Comparison of words is not the only determining factor. The trademarks in their
entirety as they appear in their respective labels or hang tags must also be considered in relation to the goods to
which they are attached. The discerning eye of the observer must focus not only on the predominant words but also
on the other features appearing in both labels in order that he may draw his conclusion whether one is confusingly
similar to the other.
In comparing the resemblance or colorable imitation of marks, various factors have been considered, such
as the dominant color, style, size, form, meaning of letters, words, designs and emblems used, the likelihood of
deception of the mark or name's tendency to confuse and the commercial impression likely to be conveyed by the
trademarks if used in conjunction with the respective goods of the parties.
Applying the Dominancy and Holistic Tests, we find that the dominant feature of the GALLO cigarette
trademark is the device of a large rooster facing left, outlined in black against a gold background. The rooster's
color is either green or red — green for GALLO menthols and red for GALLO filters. Directly below the large
rooster device is the word GALLO. The rooster device is given prominence in the GALLO cigarette packs in terms
of size and location on the labels.
The GALLO mark appears to be a fanciful and arbitrary mark for the cigarettes as it has no relation at all
to the product but was chosen merely as a trademark due to the fondness for fighting cocks of the son of petitioners'
president. Furthermore, petitioners adopted GALLO, the Spanish word for rooster, as a cigarette trademark to
appeal to one of their target markets, the sabungeros (cockfight aficionados).
Also, as admitted by respondents themselves, on the side of the GALLO cigarette packs are the words
"MADE BY MIGHTY CORPORATION," thus clearly informing the public as to the identity of the manufacturer
of the cigarettes.

85
 On the other hand, GALLO Winery's wine and brandy labels are diverse. In many of them, the labels are
embellished with sketches of buildings and trees, vineyards or a bunch of grapes while in a few, one or two small
roosters facing right or facing each other (atop the EJG crest, surrounded by leaves or ribbons), with additional
designs in green, red and yellow colors, appear as minor features thereof. Directly below or above these sketches
is the entire printed name of the founder-owners, "ERNEST & JULIO GALLO" or just their surname
"GALLO," which appears in different fonts, sizes, styles and labels, unlike petitioners' uniform casque-font bold-
lettered GALLO mark.
Moreover, on the labels of Gallo Winery's wines are printed the words "VINTED AND BOTTLED BY
ERNEST & JULIO GALLO, MODESTO, CALIFORNIA."
The many different features like color schemes, art works and other markings of both products drown out
the similarity between them — the use of the word "GALLO" — a family surname for the Gallo Winery's wines and
a Spanish word for rooster for petitioners' cigarettes.
WINES AND CIGARETTES ARE NOT IDENTICAL, SIMILAR, COMPETING OR RELATED GOODS
Confusion of goods is evident where the litigants are actually in competition; but confusion of business
may arise between non-competing interests as well.
Thus, apart from the strict application of Section 20 of the Trademark Law and Article 6bis of the Paris
Convention which proscribe trademark infringement not only of goods specified in the certificate of registration
but also of identical or similar goods, we have also uniformly recognized and applied the modern concept of "related
goods." Simply stated, when goods are so related that the public may be, or is actually, deceived and misled that
they come from the same maker or manufacturer, trademark infringement occurs.
Non-competing goods may be those which, though they are not in actual competition, are so related to each
other that it can reasonably be assumed that they originate from one manufacturer, in which case, confusion of
business can arise out of the use of similar marks. They may also be those which, being entirely unrelated, cannot
be assumed to have a common source; hence, there is no confusion of business, even though similar marks are
used. Thus, there is no trademark infringement if the public does not expect the plaintiff to make or sell the same
class of goods as those made or sold by the defendant.
In resolving whether goods are related, several factors come into play:
(a) the business (and its location) to which the goods belong
(b) the class of product to which the goods belong
(c) the product's quality, quantity, or size, including the nature of the package, wrapper or
container
(d) the nature and cost of the articles
(e) the descriptive properties, physical attributes or essential characteristics with reference to
their form, composition, texture or quality
(f) the purpose of the goods
(g) whether the article is bought for immediate consumption, that is, day-to-day household items
(h) the fields of manufacture
(i) the conditions under which the article is usually purchased and
(j) the channels of trade through which the goods flow, how they are distributed, marketed,
displayed and sold.
The wisdom of this approach is its recognition that each trademark infringement case presents its own
unique set of facts. No single factor is preeminent, nor can the presence or absence of one determine, without
analysis of the others, the outcome of an infringement suit. Rather, the court is required to sift the evidence relevant
to each of the criteria. This requires that the entire panoply of elements constituting the relevant factual landscape
be comprehensively examined. It is a weighing and balancing process. With reference to this ultimate question,
and from a balancing of the determinations reached on all of the factors, a conclusion is reached whether the parties
have a right to the relief sought.

86
 A very important circumstance though is whether there exists a likelihood that an appreciable number of
ordinarily prudent purchasers will be misled, or simply confused, as to the source of the goods in question. The
"purchaser" is not the "completely unwary consumer" but is the "ordinarily intelligent buyer" considering the type
of product involved. He is "accustomed to buy, and therefore to some extent familiar with, the goods in question.
The test of fraudulent simulation is to be found in the likelihood of the deception of some persons in some measure
acquainted with an established design and desirous of purchasing the commodity with which that design has been
associated. The test is not found in the deception, or the possibility of deception, of the person who knows nothing
about the design which has been counterfeited, and who must be indifferent between that and the other. The
simulation, in order to be objectionable, must be such as appears likely to mislead the ordinary intelligent buyer
who has a need to supply and is familiar with the article that he seeks to purchase."
Hence, in the adjudication of trademark infringement, we give due regard to the goods' usual purchaser's
character, attitude, habits, age, training and education.
Applying these legal precepts to the present case, petitioner's use of the GALLO cigarette trademark is not
likely to cause confusion or mistake, or to deceive the "ordinarily intelligent buyer" of either wines or cigarettes or
both as to the identity of the goods, their source and origin, or identity of the business of petitioners and respondents.
Obviously, wines and cigarettes are not identical or competing products. Neither do they belong to the
same class of goods. Respondents' GALLO wines belong to Class 33 under Rule 84[a] Chapter III, Part II of
the Rules of Practice in Trademark Cases while petitioners' GALLO cigarettes fall under Class 34.
We are mindful that product classification alone cannot serve as the decisive factor in the resolution of
whether or not wines and cigarettes are related goods. Emphasis should be on the similarity of the products involved
and not on the arbitrary classification or general description of their properties or characteristics. But the mere fact
that one person has adopted and used a particular trademark for his goods does not prevent the adoption and use of
the same trademark by others on articles of a different description.
Both the Makati RTC and the CA held that wines and cigarettes are related products because: (1) "they are
related forms of vice, harmful when taken in excess, and used for pleasure and relaxation" and (2) "they are grouped
or classified in the same section of supermarkets and groceries."
We find these premises patently insufficient and too arbitrary to support the legal conclusion that wines
and cigarettes are related products within the contemplation of the Trademark Law and the Paris Convention.
First, anything — not only wines and cigarettes — can be used for pleasure and relaxation and can be
harmful when taken in excess. Indeed, it would be a grave abuse of discretion to treat wines and cigarettes as similar
or related products likely to cause confusion just because they are pleasure-giving, relaxing or potentially harmful.
Such reasoning makes no sense.
Second, it is common knowledge that supermarkets sell an infinite variety of wholly unrelated products
and the goods here involved, wines and cigarettes, have nothing whatsoever in common with respect to their
essential characteristics, quality, quantity, size, including the nature of their packages, wrappers or containers.
Accordingly, the U.S. patent office and courts have consistently held that the mere fact that goods are sold
in one store under the same roof does not automatically mean that buyers are likely to be confused as to the goods'
respective sources, connections or sponsorships. The fact that different products are available in the same store is
an insufficient standard, in and of itself, to warrant a finding of likelihood of confusion.
In this regard, we adopted the Director of Patents' finding in Philippine Refining Co., Inc. vs. Ng Sam and
the Director of Patents:
In his decision, the Director of Patents enumerated the factors that set respondent's
products apart from the goods of petitioner. He opined and we quote:
"I have taken into account such factors as probable purchaser attitude and habits,
marketing activities, retail outlets, and commercial impression likely to be conveyed by
the trademarks if used in conjunction with the respective goods of the parties, I believe
that ham on one hand, and lard, butter, oil, and soap on the other are products that
would not move in the same manner through the same channels of trade. They pertain
to unrelated fields of manufacture, might be distributed and marketed under dissimilar
conditions, and are displayed separately even though they frequently may be sold
through the same retail food establishments.Opposer's products are ordinary day-to-day
87
 household items whereas ham is not necessarily so. Thus, the goods of the parties are
not of a character which purchasers would likely attribute to a common origin.
The observations and conclusion of the Director of Patents are correct. The particular
goods of the parties are so unrelated that consumers, would not, in any probability mistake one
as the source of origin of the product of the other. (Emphasis supplied).
The same is true in the present case. Wines and cigarettes are non-competing and are totally unrelated
products not likely to cause confusion vis-à-vis the goods or the business of the petitioners and respondents.
Wines are bottled and consumed by drinking while cigarettes are packed in cartons or packages and
smoked. There is a whale of a difference between their descriptive properties, physical attributes or essential
characteristics like form, composition, texture and quality.
GALLO cigarettes are inexpensive items while GALLO wines are not. GALLO wines are patronized by
middle-to-high-income earners while GALLO cigarettes appeal only to simple folks like farmers, fishermen,
laborers and other low-income workers. Indeed, the big price difference of these two products is an important
factor in proving that they are in fact unrelated and that they travel in different channels of trade. There is a distinct
price segmentation based on vastly different social classes of purchasers.
GALLO cigarettes and GALLO wines are not sold through the same channels of trade. GALLO cigarettes
are Philippine-made and petitioners neither claim nor pass off their goods as imported or emanating from Gallo
Winery. GALLO cigarettes are distributed, marketed and sold through ambulant and sidewalk vendors, small
local sari-sari stores and grocery stores in Philippine rural areas, mainly in Misamis Oriental, Pangasinan, Bohol,
and Cebu. On the other hand, GALLO wines are imported, distributed and sold in the Philippines through Gallo
Winery's exclusive contracts with a domestic entity, which is currently Andresons. By respondents' own testimonial
evidence, GALLO wines are sold in hotels, expensive bars and restaurants, and high-end grocery stores and
supermarkets, not through sari-sari stores or ambulant vendors.
Furthermore, the Makati RTC and the CA erred in relying on Carling Brewing Company vs. Philip Morris,
Inc. to support its finding that GALLO wines and GALLO cigarettes are related goods. The courts a quo should
have taken into consideration the subsequent case of IDV North America, Inc. and R & A Bailey Co. Limited vs. S
& M Brands, Inc.:
IDV correctly acknowledges, however, that there is no per se rule that the use of the
same mark on alcohol and tobacco products always will result in a likelihood of confusion.
Nonetheless, IDV relies heavily on the decision in John Walker & Sons, Ltd. vs. Tampa Cigar
Co.,124 F. Supp. 254, 256 (S.D. Fla. 1954),aff'd,222 F. 2d 460 (5th Cir. 1955),wherein the court
enjoined the use of the mark "JOHNNIE WALKER" on cigars because the fame of the plaintiff's
mark for scotch whiskey and because the plaintiff advertised its scotch whiskey on, or in
connection with tobacco products. The court, in John Walker & Sons, placed great significance
on the finding that the infringers use was a deliberate attempt to capitalize on the senior marks'
fame. Id. At 256. IDV also relies on Carling Brewing Co. v. Philip Morris, Inc.,297 F. Supp.
1330, 1338 (N.D. Ga. 1968),in which the court enjoined the defendant's use of the mark "BLACK
LABEL" for cigarettes because it was likely to cause confusion with the plaintiff's well-known
mark "BLACK LABEL" for beer.
xxx xxx xxx
Those decisions, however, must be considered in perspective of the principle that
tobacco products and alcohol products should be considered related only in cases involving
special circumstances. Schenley Distillers, Inc. v. General Cigar Co.,57 C.C.P.A. 1213, 427 F.
2d 783, 785 (1970).The presence of special circumstances has been found to exist where there
is a finding of unfair competition or where a 'famous' or 'well-known mark' is involved and there
is a demonstrated intent to capitalize on that mark.For example, in John Walker & Sons,the court
was persuaded to find a relationship between products, and hence a likelihood of confusion,
because of the plaintiff's long use and extensive advertising of its mark and placed great emphasis
on the fact that the defendant used the trademark 'Johnnie Walker with full knowledge of its
fame and reputation and with the intention of taking advantage thereof.' John Walker & Sons,124
F. Supp. At 256; see Mckesson & Robbins, Inc. v. P. Lorillard Co.,1959 WL 5894, 120 U.S.P.Q.
306, 307 (1959) (holding that the decision in John Walker & Sons was 'merely the law on the
particular case based upon its own peculiar facts');see also Alfred Dunhill,350 F. Supp. At 1363
88
 (defendant's adoption of 'Dunhill' mark was not innocent).However, in Schenley,the court noted
that the relation between tobacco and whiskey products is significant where a widely known
arbitrary mark has long been used for diversified products emanating from a single source and a
newcomer seeks to use the same mark on unrelated goods. Schenley,427 F.2d. at 785.
Significantly, in Schenley,the court looked at the industry practice and the facts of the case in
order to determine the nature and extent of the relationship between the mark on the tobacco
product and the mark on the alcohol product.

The record here establishes conclusively that IDV has never advertised BAILEYS
liqueurs in conjunction with tobacco or tobacco accessory products and that IDV has no intent
to do so. And, unlike the defendant in Dunhill,S & M Brands does not market bar accessories,
or liqueur related products, with its cigarettes. The advertising and promotional materials
presented a trial in this action demonstrate a complete lack of affiliation between the tobacco
and liqueur products bearing the marks here at issue.
xxx xxx xxx
Of equal significance, it is undisputed that S & M Brands had no intent, by adopting the
family name 'Bailey's' as the mark for its cigarettes, to capitalize upon the fame of the 'BAILEYS'
mark for liqueurs. See Schenley, 427 F. 2d at 785.Moreover, as will be discussed below, and as
found in Mckesson & Robbins, the survey evidence refutes the contention that cigarettes and
alcoholic beverages are so intimately associated in the public mind that they cannot under any
circumstances be sold under the same mark without causing confusion. See Mckesson &
Robbins, 120 U.S.P.Q. at 308.
Taken as a whole, the evidence here demonstrates the absence of the 'special
circumstances' in which courts have found a relationship between tobacco and alcohol products
sufficient to tip the similarity of goods analysis in favor of the protected mark and against the
allegedly infringing mark. It is true that BAILEYS liqueur, the world's best selling liqueur and
the second best selling in the United States, is a well-known product. That fact alone, however,
is insufficient to invoke the special circumstances connection here where so much other evidence
and so many other factors disprove a likelihood of confusion. The similarity of products analysis,
therefore, augers against finding that there is a likelihood of confusion.(Emphasis supplied).
In short, tobacco and alcohol products may be considered related only in cases involving special
circumstances which exist only if a famous mark is involved and there is a demonstrated intent to capitalize on
it.Both of these are absent in the present case.
THE GALLO WINE TRADEMARK IS NOT A WELL-KNOWN MARK IN THE CONTEXT OF
THE PARIS CONVENTION IN THIS CASE SINCE WINES AND CIGARETTES ARE NOT IDENTICAL
OR SIMILAR GOODS
First, the records bear out that most of the trademark registrations took place in the late 1980s and the
1990s, that is, after Tobacco Industries' use of the GALLO cigarette trademark in 1973 and petitioners' use of the
same mark in 1984.
GALLO wines and GALLO cigarettes are neither the same, identical, similar nor related goods, a requisite
element under both the Trademark Law and the Paris Convention.
Second, the GALLO trademark cannot be considered a strong and distinct mark in the Philippines.
Respondents do not dispute the documentary evidence that aside from Gallo Winery's GALLO trademark
registration, the Bureau of Patents, Trademarks and Technology Transfer also issued on September 4, 1992
Certificate of Registration No. 53356 under the Principal Register approving Productos Alimenticios
Gallo,S.A's April 19, 1990 application for GALLO trademark registration and use for its "noodles, prepared food
or canned noodles, ready or canned sauces for noodles, semolina, wheat flour and bread crumbs, pastry,
confectionery, ice cream, honey, molasses syrup, yeast, baking powder, salt, mustard, vinegar, species and ice."
Third and most important, pursuant to our ruling in Canon Kabushiki Kaisha vs. Court of Appeals and NSR
Rubber Corporation, "GALLO" cannot be considered a "well-known" mark within the contemplation and
protection of the Paris Convention in this case since wines and cigarettes are not identical or similar goods:

89
 We agree with public respondents that the controlling doctrine with respect to the
applicability of Article 8 of the Paris Convention is that established in Kabushi Kaisha Isetan vs.
Intermediate Appellate Court (203 SCRA 59 [1991]).As pointed out by the BPTTT:
"Regarding the applicability of Article 8 of the Paris Convention, this Office
believes that there is no automatic protection afforded an entity whose tradename is
alleged to have been infringed through the use of that name as a trademark by a local
entity.
In Kabushiki Kaisha Isetan vs. The Intermediate Appellate Court, et. al.,G.R.
No. 75420, 15 November 1991, the Honorable Supreme Court held that:
'The Paris Convention for the Protection of Industrial Property does
not automatically exclude all countries of the world which have signed it from
using a tradename which happens to be used in one country. To illustrate — if
a taxicab or bus company in a town in the United Kingdom or India happens to
use the tradename 'Rapid Transportation,' it does not necessarily follow that
'Rapid' can no longer be registered in Uganda, Fiji, or the Philippines.
This office is not unmindful that in (sic) the Treaty of Paris for the Protection of
Intellectual Property regarding well-known marks and possible application thereof in
this case. Petitioner, as this office sees it, is trying to seek refuge under its protective
mantle, claiming that the subject mark is well known in this country at the time the then
application of NSR Rubber was filed.
However, the then Minister of Trade and Industry, the Hon. Roberto V. Ongpin,
issued a memorandum dated 25 October 1983 to the Director of Patents, a set of
guidelines in the implementation of Article 6bis of the Treaty of Paris. These conditions
are:
a) the mark must be internationally known;
b) the subject of the right must be a trademark, not a patent or copyright or
anything else;
c) the mark must be for use in the same or similar kinds of goods;and
d) the person claiming must be the owner of the mark (The Parties Convention
Commentary on the Paris Convention. Article by Dr. Bogsch, Director
General of the World Intellectual Property Organization, Geneva,
Switzerland, 1985)'
From the set of facts found in the records, it is ruled that the Petitioner failed to
comply with the third requirement of the said memorandum that is the mark must be for
use in the same or similar kinds of goods. The Petitioner is using the mark "CANON"
for products belonging to class 2 (paints, chemical products) while the Respondent is
using the same mark for sandals (class 25).
Hence, Petitioner's contention that its mark is well-known at the time the
Respondent filed its application for the same mark should fail." (Emphasis supplied.)
CONSENT OF THE REGISTRANT AND OTHER AIR, JUST AND EQUITABLE CONSIDERATIONS
Each trademark infringement case presents a unique problem which must be answered by weighing the
conflicting interests of the litigants.
Respondents claim that GALLO wines and GALLO cigarettes flow through the same channels of trade,
that is, retail trade. If respondents' assertion is true, then both goods co-existed peacefully for a considerable period
of time. It took respondents almost 20 years to know about the existence of GALLO cigarettes and sue petitioners
for trademark infringement. Given, on one hand, the long period of time that petitioners were engaged in the
manufacture, marketing, distribution and sale of GALLO cigarettes and, on the other, respondents' delay in
enforcing their rights (not to mention implied consent, acquiescence or negligence) we hold that equity, justice and
fairness require us to rule in favor of petitioners. The scales of conscience and reason tip far more readily in favor
of petitioners than respondents.
90
 Moreover, there exists no evidence that petitioners employed malice, bad faith or fraud, or that they
intended to capitalize on respondents' goodwill in adopting the GALLO mark for their cigarettes which are totally
unrelated to respondents' GALLO wines. Thus, we rule out trademark infringement on the part of petitioners.
PETITIONERS ARE ALSO NOT LIABLE FOR UNFAIR COMPETITION
Under Section 29 of the Trademark Law, any person who employs deception or any other means contrary
to good faith by which he passes off the goods manufactured by him or in which he deals, or his business, or
services for those of the one having established such goodwill, or who commits any acts calculated to produce said
result, is guilty of unfair competition. It includes the following acts:
(a) Any person, who in selling his goods shall give them the general appearance of 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 devices or words thereon, or in any other feature of
their appearance, which would be likely to influence purchasers to believe that the goods offered
are those of a manufacturer or dealer other than the actual manufacturer or dealer, or who
otherwise clothes the goods with such appearance as shall deceive the public and defraud another
of his legitimate trade, or any subsequent vendor of such goods or any agent of any vendor
engaged in selling such goods with a like purpose;
(b) Any person who by any artifice, or device, or who employs any other means
calculated to induce the false belief that such person is offering the services of another who has
identified such services in the mind of the public;
(c) Any person who shall make any false statement in the course of trade or who shall
commit any other act contrary to good faith of a nature calculated to discredit the goods, business
or services of another.
The universal test question is whether the public is likely to be deceived. Nothing less than conduct tending
to pass off one man's goods or business as that of another constitutes unfair competition. Actual or probable
deception and confusion on the part of customers by reason of defendant's practices must always appear. On this
score, we find that petitioners never attempted to pass off their cigarettes as those of respondents. There is no
evidence of bad faith or fraud imputable to petitioners in using their GALLO cigarette mark.

All told, after applying all the tests provided by the governing laws as well as those recognized by
jurisprudence, we conclude that petitioners are not liable for trademark infringement, unfair competition or
damages.
WHEREFORE, finding the petition for review meritorious, the same is hereby GRANTED. The questioned
decision and resolution of the Court of Appeals in CA-G.R. CV No. 65175 and the November 26, 1998 decision
and the June 24, 1999 order of the Regional Trial Court of Makati, Branch 57 in Civil Case No. 93-850 are hereby
REVERSED and SET ASIDE and the complaint against petitioners DISMISSED.
Costs against respondents.
SO ORDERED. DSHTaC
||| (Mighty Corp. v. E. & J. Gallo Winery, G.R. No. 154342, [July 14, 2004], 478 PHIL 615-675)

91
THIRD DIVISION

[G.R. No. 148222. August 15, 2003.]

PEARL & DEAN (PHIL.), INCORPORATED, petitioner, vs. SHOEMART,
INCORPORATED, and NORTH EDSA MARKETING, INCORPORATED, respondents.

Rilloraza Africa De Ocampo & Africa for petitioner.

Poblador Bautista & Reyes for ShoeMart.
Gonzales Batiller Bilog & Associates for North Edsa Mktg., Inc.

DECISION
CORONA, J p:
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 of the Court of Appeals reversing the October 31,
1996 decision 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 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 Dean's General
Manager, Rodolfo Vergara, submitted for signature the contacts covering SM Cubao and SM
Makati to SMI's Advertising Promotions and Publicity Division Manager, Ramonlito Abano.
Only the contract for SM Makati, however, was returned signed. On October 4, 1985, Vergara
wrote Abano inquiring about the other contract and reminding him that their agreement for
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, SMI's 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 Shoemart's 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
92
 Marketing Services, was set up primarily to sell advertising space in lighted display units located
in SMI's different branches. Pearl and Dean noted that NEMI is a sister company of SMI.
In the light of its discoveries, Pearl and Dean sent a letter dated December 11, 1991 to
both SMI and NEMI enjoining them to cease using the subject light boxes and to remove the
same from SMI's 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 SMI's 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 Dean's copyright. SMI noted that the registration of the mark "Poster
Ads" was only for stationeries such as letterheads, envelopes, and the like. Besides, according to
SMI, the word "Poster Ads" is a generic term which cannot be appropriated as a trademark, and,
as such, registration of such mark is invalid. It also stressed that Pearl and Dean is not entitled
to the reliefs prayed for in its complaint since its advertising display units contained no copyright
notice, in violation of Section 27 of P.D. 49. SMI alleged that Pearl and Dean had no cause of
action against it and that the suit was purely intended to malign SMI's 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 Dean's 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 SMI's 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 infringement
of plaintiff's copyright
from 1991 to 1992

(b) moral damages — P1,000,000.00

(c) exemplary damages — P1,000,000.00

(d) attorney's fees — P1,000,000.00
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;

93
 (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 plaintiff's light boxes and its
trademark "Poster Ads."
Defendants' counterclaims are hereby ordered dismissed for lack of merit.
SO ORDERED.
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-appellant's 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
"Selden's 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 Selden's 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 plaintiff's 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 Dean's copyright over the
technical drawings of the latter's advertising display units.
xxx xxx xxx
The Supreme Court trenchantly held in Faberge, Incorporated vs. Intermediate
Appellate Court that 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:

94
 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 registrant's ownership of the mark or trade-name, and of
the registrant's exclusive right to use the same in connection with the goods, business or
services specified in the certificate, subject to any conditions and limitations stated
therein." (italics 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 Dean's 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, we
find that Pearl and Dean's 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.
Dissatisfied with the above decision, petitioner P & D filed the instant petition assigning the following
errors for the Court's consideration:
A. THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT NO COPYRIGHT
INFRINGEMENT WAS COMMITTED BY RESPONDENTS SM AND NEMI;

95
 B. THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT NO
INFRINGEMENT OF PEARL & DEAN'S 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 LATTER'S 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, ATTORNEY'S FEES AND COSTS OF SUIT.
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?
(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 & D's 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,
petitioner's 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, petitioner's 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:
xxx xxx xxx
(O) Prints, pictorial illustrations, advertising copies, labels, tags, and box wraps;
xxx xxx xxx
Although petitioner's 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. Accordingly, it can cover only the
works falling within the statutory enumeration or description.
P & D secured its copyright under the classification class "O" work. This being so, petitioner's
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
96
only to the technical drawings within the category of "pictorial illustrations." It could not have possibly
stretched out to include the underlying light box. The strict application of the law's 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 & D's technical drawings for sale to the public without license
from P & D, then no doubt they would have been guilty of copyright infringement. But this was not the case.
SMI's and NEMI's 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 petitioner's copyright over the technical drawings? We do not think
so.
During the trial, the president of P & D himself admitted that the light box was neither a literary nor
an artistic work but an "engineering or marketing invention." 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, 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
& D's 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, we held that "there can be no infringement of a patent
until a patent has been issued, since whatever right one has to the invention covered by the patent arises alone
from the grant of patent. . . . (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. On the assumption
that petitioner's 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.
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. O'Donnell, "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 new and useful inventions by the

97
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."
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."
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."
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 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 box's 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.
. . . 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
98
 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
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.
xxx xxx xxx
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. . . . 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." (italics supplied)
ON THE ISSUE OF TRADEMARK INFRINGEMENT
This issue concerns the use by respondents of the mark "Poster Ads" which petitioner's president said
was 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." 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, where we, invoking Section 20 of the old Trademark Law, ruled that "the certificate of registration
issued by the Director of Patents can confer (upon petitioner) the exclusive right to use its own symbol only to
those goods specified in the certificate, subject to any conditions and limitations specified in the certificate. . .
. . 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." Faberge, Inc. was correct and was in
fact recently reiterated in Canon Kabushiki Kaisha vs. Court of Appeals.
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.
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. However, while the petitioner's complaint in the RTC also cited unfair

99
 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. In this case, there was no evidence that P & D's use of "Poster Ads" was distinctive or
well-known. As noted by the Court of Appeals, petitioner's expert witnesses himself had testified that "'Poster
Ads' was too generic a name. So it was difficult to identify it with any company, honestly speaking." 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. The admission by petitioner's 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.
All told, the Court finds no reversible error committed by the Court of Appeals when it reversed the
Regional Trial Court of Makati City. ITSaHC
WHEREFORE, the petition is hereby DENIED and the decision of the Court of Appeals dated May
22, 2001 is AFFIRMED in toto.
SO ORDERED.
||| (Pearl & Dean (Phil.) v. Shoemart, G.R. No. 148222, [August 15, 2003], 456 PHIL 474-497)

100
PART 2: The Law on Copyright and Related Rights

• Definitions of Copyright
SECTION 177. Copyright 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 substantial portion of the work;
177.2. Dramatization, translation, adaptation, abridgment, arrangement or other transformation of the work;
177.3. The first public distribution of the original and each copy of the work by sale or other forms of transfer of
ownership;
177.4. Rental of the original or a copy of an audiovisual or cinematographic work, a work embodied in a sound
recording, a computer program, a compilation of data and other materials or a musical work in graphic form,
irrespective of the ownership of the original or the copy which is the subject of the rental; (n)
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. (Sec. 5, P.D. No. 49a)

• Elements of Copyrightability

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 review1 seeks to annul the decision2 dated August 27, 1997 of the Court of Appeals which set aside
the resolutions3 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.1âwphi1.nêt

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 trademark. He added that Ong merely copied the two-dragon design from Ceroilfood
101
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.

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

102
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, 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, 197912 while the trademark LUNGKOW
VERMICELLI WITH TWO-DRAGON DEVICE was registered on August 15, 1985.13

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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, 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.

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.1âwphi1.nêt

SO ORDERED

104
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.

DECISION

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 ₱50,000 as temperate and nominal damages, ₱10,000 as exemplary damages, and ₱25,000 as
attorney’s 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 Levi’s 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 manifested in court that CVSGE, which was formerly
doing business in the premises, already stopped operation and CVSGIC took over CVSGE’s 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 Levi’s 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 Levi’s 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
105
as Levi’s, 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 Levi’s 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
attorney’s 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:

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 attorney’s fees and litigation expenses
and to pay the costs.

SO ORDERED.1

Private respondents moved for a reconsideration praying for the cancellation of petitioner’s 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 attorney’s 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 RESPONDENT’S ARCUATE MARK.

II. ...RULING THAT PETITIONER IS JOINTLY AND SOLIDARILY LIABLE WITH CVS
GARMENTS INDUSTRIAL CORPORATION FOR INFRINGEMENT OF RESPONDENT’S
ARCUATE MARK.

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 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
petitioner’s 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 Levi’s and Europress’ arcuate designs, despite the
trial court’s observation of differences in them. Petitioner maintains that although the backpocket designs had
similarities, the public was not confused because Levi’s jeans had other marks not found in Europress jeans.
Further, he says Levi’s 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
Levi’s’ 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 Levi’s 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 Levi’s 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 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 Court8 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 plaintiff’s 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 defendant’s own admissions in the pleadings. 9

Petitioner’s defense in this case was an affirmative defense.1âwphi1 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
107
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
petitioner’s 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
cites Ventanilla 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 court’s finding that the
design of Europress jeans was not similar to Levi’s 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 Levi’s, citing the trial court’s
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 Levi’s was
entitled to damages based on Sections 22 and 23 of RA No. 166 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
Levi’s 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 petitioner’s copyright, private respondents deny that the trial court ruled that
the arcuate design of Europress jeans was not the same as Levi’s arcuate design jeans. On the contrary, the trial
court expressly ruled that there was similarity. The cancellation of petitioner’s copyright was justified because
petitioner’s 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 Levi’s trademark. Both the
trial court and the Court of Appeals found there was infringement. Thus, the award of damages and cancellation of
petitioner’s copyright are appropriate.12 Award of damages is clearly provided in Section 23,13 while cancellation
of petitioner’s copyright finds basis on the fact that the design was a mere copy of that of private respondents’
trademark.1âwphi1 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 damages15 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 ₱50,000.00 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.

108
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 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 ₱10,000.00 as exemplary damages, and the sum of ₱25,000.00
as attorney’s 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.

• When Copyright vests

SECTION 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;

(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 recordings;

(m) Pictorial illustrations and advertisements;

(n) Computer programs; and

(o) Other literary, scholarly, scientific and artistic works.

109
172.2. Works are protected by the sole fact of their creation, irrespective of their mode or form of expression, as
well as of their content, quality and purpose. (Sec. 2, P.D. No. 49a)

o No Formality Rule: Berne Convention

ABS-CBN vs. Gozon, G.R. No. 195956 (please refer to page 32)

G.R. No. 119280 August 10, 2006

UNILEVER PHILIPPINES (PRC), INC., Petitioner, vs. THE HONORABLE COURT OF APPEALS and
PROCTER AND GAMBLE PHILIPPINES, INC., Respondents.

DECISION

CORONA, J.:

In this petition for review under Rule 45 of the Rules of Court, petitioner assails the February 24, 1995 decision 1 of
the Court of Appeals (CA) in CA-G.R. SP No. 35242 entitled "Unilever Philippines (PRC), Inc. v. Honorable
Fernando V. Gorospe, Jr. and Procter and Gamble Philippines, Inc. (P&GP)" which affirmed the issuance by the
court a quo of a writ of preliminary injunction against it. The writ enjoined petitioner from using and airing, until
further orders of the court, certain television commercials for its laundry products claimed to be identical or similar
to its "double tug" or "tac-tac" key visual. 2

Petitioner alleges that the writ of preliminary injunction was issued by the trial court (and affirmed by the CA)
without any evidence of private respondent’s clear and unmistakable right to the writ. Petitioner further contends
that the preliminary injunction issued against it already disposed of the main case without trial, thus denying
petitioner of any opportunity to present evidence on its behalf.

The antecedents show that on August 24, 1994, private respondent Procter and Gamble Phils., Inc. filed a complaint
for injunction with damages and a prayer for temporary restraining order and/or writ of preliminary injunction
against petitioner Unilever, alleging that:

1.5. As early as 1982, a P&G subsidiary in Italy used a key visual in the advertisement of its laundry detergent and
bleaching products. This key visual known as the "double-tug" or "tac-tac" demonstration shows the fabric being
held by both hands and stretched sideways.

1.6. The "tac-tac" was conceptualized for P&G by the advertising agency Milano and Gray of Italy in 1982. The
"tac-tac" was used in the same year in an advertisement entitled "All aperto" to demonstrate the effect on fabrics
of one of P&GP’s products, a liquid bleach called "Ace."

xxxxxxxxx

1.7. Since then, P&G has used the "tac-tac" key visual in the advertisement of its products. In fact, in 1986, in Italy,
the "tac-tac" key visual was used in the television commercial for "Ace" entitled "Kite."

1.8. P&G has used the same distinctive "tac-tac" key visual to local consumers in the Philippines.

xxxxxxxxx

1.10. Substantially and materially imitating the aforesaid "tac-tac" key visual of P&GP and in blatant disregard of
P&GP’s intellectual property rights, Unilever on 24 July 1993 started airing a 60 second television commercial
"TVC" of its "Breeze Powerwhite" laundry product called "Porky." The said TVC included a stretching visual
presentation and sound effects almost [identical] or substantially similar to P&GP’s "tac-tac" key visual.

xxxxxxxxx

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1.14. On July 15, 1994, P&GP aired in the Philippines, the same "Kite" television advertisement it used in Italy in
1986, merely dubbing the Italian language with Filipino for the same produce "Ace" bleaching liquid
which P&GP now markets in the Philippines.

1.15. On August 1, 1994, Unilever filed a Complaint with the Advertising Board of the Philippines to prevent
P&GP from airing the "Kite" television advertisement. 3

On August 26, 1994, Judge Gorospe issued an order granting a temporary restraining order and setting it for hearing
on September 2, 1994 for Unilever to show cause why the writ of preliminary injunction should not issue. During
the hearing on September 2, 1994, P&GP received Unilever’s answer with opposition to preliminary injunction.
P&GP filed its reply to Unilever’s opposition to a preliminary injunction on September 6, 1994.

During the hearing on September 9, 1994, Judge Gorospe ordered petitioner to submit a sur-rejoinder. P&GP
received Unilever’s rejoinder to reply on September 13, 1994. The following day, on September 14, 1994, P&GP
filed its sur-reply to Unilever’s rejoinder.

On September 19, 1994, P&GP received a copy of the order dated September 16, 1994 ordering the issuance of a
writ of preliminary injunction and fixing a bond of P100,000. On the same date, P&GP filed the required bond
issued by Prudential Guarantee and Assurance, Inc.

On September 21, 1994, petitioner appealed to the CA assigning the following errors allegedly committed by the
court a quo, to wit:

PUBLIC RESPONDENT HAD ACTED WITHOUT OR IN EXCESS OF JURISDICTION AND WITH GRAVE
ABUSE OF DISCRETION AMOUNTING TO LACK OF JURISDICTION IN ISSUING THE WRIT OF
PRELIMINARY INJUNCTION IN VIOLATION OF THE RULES ON EVIDENCE AND PROCEDURE,
PARTICULARLY OF SEC. 3 (a), RULE 58 OF THE REVISED RULES OF COURT AND OF THE
PREVAILING JURISPRUDENCE.

PUBLIC RESPONDENT IN ISSUING THE VOID ORDER DATED SEPTEMBER 16, 1994, HAD, IN EFFECT,
ALREADY PREJUDGED THE MERITS OF THE MAIN CASE.

PUBLIC RESPONDENT HAD ISSUED THE VOID ORDER ACCORDING RELIEF TO A NON-PARTY IN
CIVIL CASE NO. 94-2434 WITHOUT JURISDICTION.

PUBLIC RESPONDENT IN ISSUING THE VOID ORDER HAD DEPRIVED PETITIONER OF

SUBSTANTIVE AND PROCEDURAL DUE PROCESS; PUBLIC RESPONDENT HAD FORECLOSED
PETITIONER’S RIGHT AND THE OPPORTUNITY TO CROSS-EXAMINE PROCTER’S WITNESSES
ABAD AND HERBOSA. 4

On February 24, 1995, the CA rendered its decision finding that Judge Gorospe did not act with grave abuse of
discretion in issuing the disputed order. The petition for certiorari was thus dismissed for lack of merit.

After a careful perusal of the records, we agree with the CA and affirm its decision in toto:

Petitioner does not deny that the questioned TV advertisements are substantially similar to P&GP’s "double tug"
or "tac-tac" key visual. However, it submits that P&GP is not entitled to the relief demanded, which is to enjoin
petitioner from airing said TV advertisements, for the reason that petitioner has Certificates of Copyright
Registration for which advertisements while P&GP has none with respect to its "double-tug" or "tac-tac" key visual.
In other words, it is petitioner’s contention that P&GP is not entitled to any protection because it has not registered
with the National Library the very TV commercials which it claims have been infringed by petitioner.

We disagree. Section 2 of PD 49 stipulates that the copyright for a work or intellectual creation subsists from the
moment of its creation. Accordingly, the creator acquires copyright for his work right upon its creation.… Contrary
to petitioner’s contention, the intellectual creator’s exercise and enjoyment of copyright for his work and the
protection given by law to him is not contingent or dependent on any formality or registration. Therefore, taking
the material allegations of paragraphs 1.3 to 1.5 of P&GP’s verified Complaint in the context of PD 49, it cannot
111
be seriously doubted that at least, for purposes of determining whether preliminary injunction should issue during
the pendency of the case, P&GP is entitled to the injunctive relief prayed for in its Complaint.

The second ground is likewise not well-taken. As adverted to earlier, the provisional remedy of preliminary
injunction will not issue unless it is shown in the verified complaint that plaintiff is probably entitled to the relief
demanded, which consists in whole or in part in restraining the commission or continuance of the acts complained
of. In view of such requirement, the court has to make a tentative determination if the right sought to be protected
exists and whether the act against which the writ is to be directed is violative of such right. Certainly, the court’s
determination as to the propriety of issuing the writ cannot be taken as a prejudgment of the merits of the case
because it is tentative in nature and the writ may be dissolved during or after the trial if the court finds that plaintiff
was not entitled to it….

xxxxxxxxx

Obviously, the determination made by the court a quo was only for purposes of preliminary injunction, without
passing upon the merits of the case, which cannot be done until after a full-blown hearing is conducted.

The third ground is patently unmeritorious. As alleged in the Complaint P&GP is a subsidiary of Procter and
Gamble Company (P&G) for which the "double tug" or "tac-tac" key visual was conceptualized or created. In that
capacity, P&GP used the said TV advertisement in the Philippines to promote its products. As such subsidiary,
P&GP is definitely within the protective mantle of the statute (Sec. 6, PD 49).

Finally, We find the procedure adopted by the court a quo to be in order….

The record clearly shows that respondent Judge followed the (procedure provided for in Section 5, Rule 58, as
amended by BP 224, and Paragraph A(8) of the Interim Rules). In fact, the court a quo set the incident for hearing
on September 2, 1994, at which date petitioner was ordered to show cause why the writ should not be issued.
Petitioner filed an Opposition to the application for preliminary injunction. The same incident was again set for
hearing on September 9, 1994, during which the parties made some manifestations in support of their respective
positions. Subsequent to such hearing petitioner filed a Reply to P&GP’s Rejoinder to its Opposition. Under the
foregoing circumstances, it is absurd to even suggest that petitioner was not given its day in court in the matter of
the issuance of the preliminary injunctive relief.

xxxxxxxxx

There was of course extreme urgency for the court a quo to act on plaintiff’s application for preliminary injunction.
The airing of TV commercials is necessarily of limited duration only. Without such temporary relief, any permanent
injunction against the infringing TV advertisements of which P&GP may possibly succeed in getting after the main
case is finally adjudicated could be illusory if by then such advertisements are no longer used or aired by petitioner.
It is therefore not difficult to perceive the possible irreparable damage which P&GP may suffer if respondent Judge
did not act promptly on its application for preliminary injunction. 5

Preliminary injunction is a provisional remedy intended to provide protection to parties for the preservation of their
rights or interests during the pendency of the principal action. 6 Thus, Section1, Rule 58 of the Rules of Court
provides:

Section 1. Preliminary injunction defined; classes. — A preliminary injunction is an order granted at any stage of
an action or proceeding prior to the judgment or final order, requiring a party or a court, agency or a person to
refrain from a particular act or acts. It may also require the performance of a particular act or acts, in which case it
shall be known as a preliminary mandatory injunction.

Injunction is resorted to only when there is a pressing necessity to avoid injurious consequences which cannot be
remedied under any standard compensation. 7 As correctly ruled by the CA, there was an extreme urgency to grant
the preliminary injunction prayed for by P&GP considering that TV commercials are aired for a limited period of
time only. In fact, this Court takes note of the fact that the TV commercial in issue ― the Kite TV advertisement
― is no longer aired today, more than 10 years after the injunction was granted on September 16, 1994.

112
The sole objective of a writ of preliminary injunction is to preserve the status quo until the merits of the case can
be heard fully. 8 A writ of preliminary injunction is generally based solely on initial and incomplete
evidence. 9 Thus, it was impossible for the court a quo to fully dispose of the case, as claimed by petitioner, without
all the evidence needed for the full resolution of the same. To date, the main case still has to be resolved by the trial
court.

The issuance of a preliminary injunction rests entirely on the discretion of the court and is generally not interfered
with except in cases of manifest abuse. 10 There was no such abuse in the case at bar, especially because petitioner
was given all the opportunity to oppose the application for injunction. The fact was, it failed to convince the court
why the injunction should not be issued. Thus, in Santos v. Court of Appeals, 11 we held that no grave abuse of
discretion can be attributed to a judge or body issuing a writ of preliminary injunction where a party has not been
deprived of its day in court as it was heard and it exhaustively presented all its arguments and defenses.

WHEREFORE, the petition is hereby DENIED.

Costs against petitioner.

SO ORDERED.

• Scope of Copyright
o Original Works
▪ Article 2 Berne Convention
Article 2

(1) The expression "literary and artistic works" shall include every production in the literary, scientific and
artistic domain, whatever may be the mode or form of its expression, such as books, pamphlets and other writings;
lectures, addresses, sermons and other works of the same nature; dramatic or dramatico-musical works;
choreographic works and entertainments in dumb show; musical compositions with or without words;
cinematographic works to which are assimilated works expressed by a process analogous to cinematography; works
of drawing, painting, architecture, sculpture, engraving and lithography; photographic works to which are
assimilated works expressed by a process analogous to photography; works of applied art; illustrations, maps, plans,
sketches and three-dimensional works relative to geography, topography, architecture or science.

(2) It shall, however, be a matter for legislation in the countries of the Union to prescribe that works in general or
any specified categories of works shall not be protected unless they have been fixed in some material form.

(3) Translations, adaptations, arrangements of music and other alterations of a literary or artistic work shall be
protected as original works without prejudice to the copyright in the original work.

(4) It shall be a matter for legislation in the countries of the Union to determine the protection to be granted to
official texts of a legislative, administrative and legal nature, and to official translations of such texts.

(5) Collections of literary or artistic works such as encyclopaedias and anthologies which, by reason of the selection
and arrangement of their contents, constitute intellectual creations shall be protected as such, without prejudice to
the copyright in each of the works forming part of such collections.

(6) The works mentioned in this article shall enjoy protection in all countries of the Union. This protection shall
operate for the benefit of the author and his successors in title.

(7) Subject to the provisions of Article 7(4) of this Convention, it shall be a matter for legislation in the countries
of the Union to determine the extent of the application of their laws to works of applied art and industrial designs
and models, as well as the conditions under which such works, designs and models shall be protected. Works
protected in the country of origin solely as designs and models shall be entitled in another country of the Union
only to such special protection as is granted in that country to designs and models; however, if no such special
protection is granted in that country, such works shall be protected as artistic works.

113
(8) The protection of this Convention shall not apply to news of the day or to miscellaneous facts having the
character of mere items of press information.

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 airing It'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.

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.

114
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:

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:

[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

115
 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.

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:
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 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 a. same
three (3) unmarried participants of 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 b. same
determine who among the searchees is the most compatible with the searcher.
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 d. Selection is based on
answered, or similar methods. the answer of the
Searchees.
Set 2 Set 2
9
Same as above with the genders of the searcher and searchees interchanged. 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;

(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;

117
 (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

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:

118
 Cinematographic works and works produced by a process analogous to cinematography or any
process for making audio-visual recordings;

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

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

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

WHEREFORE, the petition is hereby DISMISSED

SO ORDERED.1âwphi1.nêt

G.R. No. 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 on October 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 on October 4,
1984 (p. 80, Original Record).

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
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 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)

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.
120
In its petition (Rollo, p. 10) and in its memorandum (Rollo, p. 97), petitioner-appellant raised the following legal
issues:

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 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).

121
 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].)

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 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.

122
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
"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.

123
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.

DECISION

CALLEJO, SR., J.:

This petition for review on certiorari assails the Decision1 and Resolution2 of the Court of Appeals (CA) in CA-
G.R. SP No. 70411 affirming the January 3, 2002 and February 14, 2002 Orders3 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;

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 }

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 - 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 set8

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:

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 Order12 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 court’s 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
125
certificates are prima 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.

"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 petitioner’s 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 petitioner’s
utility designs were classified. Moreover, according to the petitioner, what the Copyright Law protects is the
author’s 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
126
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 petitioner’s utility models are
copyrightable and, if so, whether he is the owner of a copyright over the said models. It bears stressing that upon
the filing of the application for search warrant, the RTC was duty-bound to determine whether probable cause
existed, in accordance with Section 4, Rule 126 of the Rules of Criminal Procedure:

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 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

127
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 court’s 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 ownership27 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 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.

128
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 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 author’s
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 petitioner’s 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.

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.

129
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 automobile’s chassis.

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 propeller’s 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.

130
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

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 examination45 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 of ejusdem 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. Drilon47 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 Appeals49 and Pearl & Dean (Phil.), Incorporated v.
Shoemart, Incorporated,50 the Court ruled that "these copyright and patent rights are completely distinct and

131
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." The Court expounded further, thus:

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. Stein51 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 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.

o Derivative Works
SECTION 173. Derivative Works. - 173.1. The following derivative works shall also be protected by copyright:
(a) Dramatizations, translations, adaptations, abridgments, arrangements, and other alterations of literary or artistic
works; and
(b) Collections of literary, scholarly or artistic works, and compilations of data and other materials which are
original by reason of the selection or coordination or arrangement of their contents. (Sec. 2, (P) and (Q), P.D. No.
49)
173.2. The works referred to in paragraphs (a) and (b) of Subsection 173.1 shall be protected as new works:
Provided, however, That such new work shall not affect the force of any subsisting copyright upon the original
works employed or any part thereof, or be construed to imply any right to such use of the original works, or to
secure or extend copyright in such original works. (Sec. 8, P.D. 49; Art. 10, TRIPS)
132
Republic vs. Heirs of Tupaz, G.R. 197335 (please see page 66)

• Authorship
o Elements of Ownership
G.R. No. 195835, March 14, 2016
SISON OLAÑO, SERGIO T. ONG, MARILYN O. GO, AND JAP FUK HAI, Petitioners, v. LIM ENG
CO, Respondent.

DECISION
REYES, J.:
This is a petition for review on certiorari1 under Rule 45 of the Rules of Court, assailing the Decision2 dated July
9, 2010 and Resolution3 dated February 24, 2011 of the Court of Appeals (CA) in CA-G.R. SP No. 95471, which
annulled the Resolutions dated March 10, 20064 and May 25, 20065 of the Department of Justice (DOJ) in I.S. No.
2004-925, finding no probable cause for copyright infringement against Sison Olano, Sergio Ong, Marilyn Go and
Jap Fuk Hai (petitioners) and directing the withdrawal of the criminal information filed against them.

The Antecedents

The petitioners are the officers and/or directors of Metrotech Steel Industries, Inc. (Metrotech).6 Lim Eng Co
(respondent), on the other hand, is the Chairman of LEC Steel Manufacturing Corporation (LEC), a company which
specializes in architectural metal manufacturing.7

Sometime in 2002, LEC was invited by the architects of the Manansala Project (Project), a high-end residential
building in Rockwell Center, Makati City, to submit design/drawings and specifications for interior and exterior
hatch doors. LEC complied by submitting on July 16, 2002, shop plans/drawings, including the diskette therefor,
embodying the designs and specifications required for the metal hatch doors. 8

After a series of consultations and revisions, the final shop plans/drawings were submitted by LEC on January 15,
2004 and thereafter copied and transferred to the title block of Ski-First Balfour Joint Venture (SKI-FB), the
Project's contractor, and then stamped approved for construction on February 3, 2004. 9

LEC was thereafter subcontracted by SKI-FB, to manufacture and install interior and exterior hatch doors for the
7th to 22nd floors of the Project based on the final shop plans/drawings.10

Sometime thereafter, LEC learned that Metrotech was also subcontracted to install interior and exterior hatch doors
for the Project's 23rd to 41st floors.11

On June 24, 2004, LEC demanded Metrotech to cease from infringing its intellectual property rights. Metrotech,
however, insisted that no copyright infringement was committed because the hatch doors it manufactured were
patterned in accordance with the drawings provided by SKI-FB.1

On July 2, 2004, LEC deposited with the National Library the final shop plans/drawings of the designs and
specifications for the interior and exterior hatch doors of the Project. 13 On July 6, 2004, LEC was issued a
Certificate of Copyright Registration and Deposit showing that it is the registered owner of plans/drawings for
interior and exterior hatch doors under Registration Nos. 1-2004-13 and 1-2004-14, respectively.14 This copyright
pertains to class work "I" under Section 172 of Republic Act (R.A.) No. 8293, The Intellectual Property Code of
the Philippines, which covers "illustrations, maps, plans, sketches, charts and three-dimensional works relative to
geography, topography, architecture or science."

On December 9, 2004, LEC was issued another Certificate of Copyright Registration and Deposit showing that it
is the registered owner of plans/drawings for interior and exterior hatch doors under Registration Nos. H-2004-566
and H-2004-56715 which is classified under Section 172(h) of R.A. No. 8293 as "original ornamental designs or
models for articles of manufacture, whether or not registrable as an industrial design, and other works of applied
art."

When Metrotech still refused to stop fabricating hatch doors based on LEC's shop plans/drawings, the latter sought
the assistance of the National Bureau of Investigation (NBI) which in turn applied for a search warrant before the
133
Regional Trial Court (RTC) of Quezon City, Branch 24. The application was granted on August 13, 2004 thus
resulting in the confiscation of finished and unfinished metal hatch doors as well as machines used in fabricating
and manufacturing hatch doors from the premises of Metrotech. 16

On August 13, 2004, the respondent filed a Complaint-Affidavit17 before the DOJ against the petitioners for
copyright infringement. In the meantime or on September 8, 2004, the RTC quashed the search warrant on the
ground that copyright infringement was not established.18

Traversing the complaint, the petitioners admitted manufacturing hatch doors for the Project. They denied,
however, that they committed copyright infringement and averred that the hatch doors they manufactured were
functional inventions that are proper subjects of patents and that the records of the Intellectual Property Office
reveal that there is no patent, industrial design or utility model registration on LEC's hatch doors. Metrotech further
argued that the manufacturing of hatch doors per se is not copyright infringement because copyright protection
does not extend to the objects depicted in the illustrations and plans. Moreover, there is no artistic or ornamental
expression embodied in the subject hatch doors that would subject them to copyright protection. 19

Resolutions of the DOJ

In a Resolution20 dated August 18, 2005, the investigating prosecutor dismissed the respondent's complaint based
on inadequate evidence showing that: (1) the petitioners committed the prohibited acts under Section 177 of R.A.
No. 8293; and (2) the interior and exterior hatch doors of the petitioners are among the classes of copyrightable
work enumerated in Sections 172 and 173 of the same law.21

Adamant, the respondent filed a petition for review before the DOJ but it was also denied due course in the
Resolution22 dated November 16, 2005.

Upon the respondent's motion for reconsideration, however, the Resolution 23 dated January 27, 2006 of the DOJ
reversed and set aside the Resolution dated August 18, 2005 and directed the Chief State Prosecutor to file the
appropriate information for copyright infringement against the petitioners.24 The DOJ reasoned that the pieces of
evidence adduced show that the subject hatch doors are artistic or ornamental with distinctive hinges, door and
jamb, among others. The petitioners were not able to sufficiently rebut these allegations and merely insisted on the
non-artistic nature of the hatch doors. The DOJ further held that probable cause was established insofar as the
artistic nature of the hatch doors and based thereon the act of the petitioners in manufacturing or causing to
manufacture hatch doors similar to those of the respondent can be considered as unauthorized reproduction; hence,
copyright infringement under Section 177.1 in relation to Section 216 of R.A. No. 8293. 25cralawred

Aggrieved, the petitioners moved for reconsideration. This time, the DOJ made a complete turn around by granting
the motion, vacating its Resolution dated January 27, 2006 and declaring that the evidence on record did not
establish probable cause because the subject hatch doors were plainly metal doors with functional components
devoid of any aesthetic or artistic features. Accordingly, the DOJ Resolution 26 dated March 10, 2006 disposed as
follows:
chanRoblesvirtualLawlibrary
WHEREFORE, finding cogent reason to reverse the assailed resolution, the motion for reconsideration is
GRANTED finding no probable cause against the [petitioners]. Consequently, the City Prosecutor of Manila is
hereby directed to cause the withdrawal of the information, if any has been filed in court, and to report the action
taken thereon within TEN (10) DAYS from receipt hereof.

SO ORDERED.27ChanRoblesVirtualawlibrary

The respondent thereafter filed a motion for reconsideration of the foregoing resolution but it was denied 28 on May
25, 2006. The respondent then sought recourse before the CA via a petition for certiorari29 ascribing grave abuse
of discretion on the part of the DOJ.

In its assailed Decision30 dated July 9, 2010, the CA granted the petition. The CA held that the vacillating findings
of the DOJ on the presence or lack of probable cause manifest capricious and arbitrary exercise of discretion
especially since its opposite findings were based on the same factual evidence and arguments.

134
The CA then proceeded to make its own finding of probable cause and held that:

[F]or probable cause for copyright infringement to exist, essentially, it must be shown that the violator reproduced
the works without the consent of the owner of the copyright.

In the present case before Us, [the petitioners] do not dispute that: (1) LEG was issued copyrights for the
illustrations of the hatch doors under Section 171.i, and for the hatch doors themselves as ornamental design or
model for articles of manufacture pursuant to Section 171.h of R.A. [No.] 8293; and (2) they manufactured hatch
doors based on drawings and design furnished by SKI-FB, which consists of LEC works subject of copyrights.
These two (2) circumstances, taken together, are sufficient to excite the belief in a reasonable mind that [the
petitioners] are probably guilty of copyright infringement. First, LEC has indubitably established that it is the owner
of the copyright for both the illustrations of the hatch doors and [the] hatch doors themselves, and second, [the
petitioners] manufactured hatch doors based on LEC's works, sans EEC's consent.

x x x x

[T]he fact that LEC enjoys ownership of copyright not only on the illustrations of the hatch doors but on the hatch
doors itself and that [the petitioners] manufactured the same is sufficient to warrant a finding of probable cause for
copyright infringement. x x x.31ChanRoblesVirtualawlibrary

The CA further ruled that any allegation on the non-existence of ornamental or artistic values on the hatch doors
are matters of evidence which are best ventilated in a full-blown trial rather than during the preliminary
investigation stage. Accordingly, the CA disposed as follows:

WHEREFORE, considering the foregoing premises, the present Petition is GRANTED, and accordingly, the
assailed Resolutions dated 10 March 2006 and 25 May 2006 are ANNULLED and SET ASIDE. The Resolution
of the Secretory of Justice dated 27 January 2006 finding probable cause against [the petitioners],
is REINSTATED.

SO ORDERED.32ChanRoblesVirtualawlibrary

The CA reiterated the above ruling in its Resolution33 dated February 24, 2011 when it denied the petitioners'
motion for reconsideration. Hence, the present appeal, arguing that:
I. There was no evidence of actual reproduction of the hatch doors during the preliminary investigation that
would lead the investigating prosecutor to declare the existence of probable cause; 34
II. Even assuming that the petitioners manufactured hatch doors based on the illustrations and plans covered
by the respondent's Certificate of Registration Nos. 1-2004-13 and 1-2004-14, the petitioners could not
have committed copyright infringement. Certificate of Registration Nos. 1-2004-13 and 1-2004-14 are
classified under Section 172(i) which pertains to "illustrations, maps, plans, sketches, charts and three-
dimensional works relative to geography, topography, architecture or science." Hence the original works
that are copyrighted are the illustrations and plans of interior hatch doors and exterior hatch doors. Thus,
it is the reproduction of the illustrations and plans covered by the copyright registration that amounts to
copyright infringement. The petitioners did not reproduce the illustrations and plans covered under
Certificate of Registration Nos. 1-2004-13 and 1-2004-14.

The manufacturing of hatch doors per se does not fall within the purview of copyright infringement
because copyright protection does not extend to the objects depicted in the illustrations and plans; 35 and
III. LEC's copyright registration certificates are not conclusive proofs that the items covered thereby are
copyrightable. The issuance of registration certificate and acceptance of deposit by the National Library is
ministerial in nature and does not involve a determination of whether the item deposited is copyrightable
or not. Certificates of registration and deposit serve merely as a notice of recording and registration of the
work but do not confer any right or title upon the registered copyright owner or automatically put his work
under the protective mantle of the copyright law.36

Ruling of the Court

It is a settled judicial policy that courts do not reverse the Secretary of Justice's findings and conclusions on the
matter of probable cause. Courts are not empowered to substitute their judgment for that of the executive branch

135
upon which full discretionary authority has been delegated in the determination of probable cause during a
preliminary investigation. Courts may, however, look into whether the exercise of such discretionary authority was
attended with grave abuse of discretion.37

Otherwise speaking, "judicial review of the resolution of the Secretary of Justice is limited to a determination of
whether there has been a grave abuse of discretion amounting to lack or excess of jurisdiction."38

The CA anchored its act of reversing the DOJ Resolution dated March 10, 2006 upon the foregoing tenets. Thus,
the Court's task in the present petition is only to determine if the CA erred in concluding that the DOJ committed
grave abuse of discretion in directing the withdrawal of any criminal information filed against the petitioners.

Grave abuse of discretion has been defined as "such capricious and whimsical exercise of judgment as is equivalent
to lack of jurisdiction. The abuse of discretion must be grave as where the power is exercised in an arbitrary or
despotic manner by reason of passion or personal hostility and 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 by or to act at all in contemplation of
law."39 "'Capricious,' usually used in tandem with the term 'arbitrary,' conveys the notion of willful and unreasoning
action."40cralawred

According to the CA, the DOJ's erratic findings on the presence or absence of probable cause constitute grave abuse
of discretion. The CA explained:

This, to Our minds, in itself creates a nagging, persistent doubt as to whether [the DOJ Secretary] issued the said
resolutions untainted with a whimsical and arbitrary use of his discretion. For one cannot rule that there is reason
to overturn the investigating prosecutor's findings at the first instance and then go on to rule that ample evidence
exists showing that the hatch doors possess artistic and ornamental elements at the second instance and proceed to
rule that no such artistry can be found on the purely utilitarian hatch doors at the last instance. x x
x.41ChanRoblesVirtualawlibrary
The Court disagrees. It has been held that the issuance by the DOJ of several resolutions with varying findings of
fact and conclusions of law on the existence of probable cause, by itself, is not indicative of grave abuse of
discretion.42

Inconsistent findings and conclusions on the part of the DOJ will denote grave abuse of discretion only if coupled
with gross misapprehension of facts,43 which, after a circumspect review of the records, is not attendant in the
present case.

The facts upon which the resolutions issued by the investigating prosecutor and the DOJ were actually uniform, viz:

(a) LEC is the registered owner of plans/drawings for interior and exterior hatch doors under Certificate of
Registration Nos. 1-2004-13 and 1-2004-14 classified under Section 172(i) of R.A. No. 8293 as pertaining
to "illustrations, maps, plans, sketches, charts and three-dimensional works relative to geography,
topography, architecture or science";

(b) LEC is also the registered owner of plans/drawings for interior and exterior hatch doors under Certificate
of Registration Nos. H-2004-566 and H-2004-567 classified under Section 172(h) of R.A. No. 8293 as to
"original ornamental designs or models for articles of manufacture, whether or not registrable as an
industrial design, and other works of applied art";

(c) LEC as the subcontractor of SKI-FB in the Project first manufactured and installed the interior and exterior
hatch doors at the Manansala Tower in Rockwell Center, Makati City, from the 7th to 22nd floors. The
hatch doors were based on the plans/drawings submitted by LEC to SKI-FB and subject of the above
copyright registration numbers; and

(d) thereafter, Metrotech fabricated and installed hatch doors at the same building's 23rd to 41st floor based on
the drawings and specifications provided by SKI-FB.44

136
The positions taken by the DOJ and the investigating prosecutor differed only in the issues tackled and the
conclusions arrived at.

It may be observed that in the Resolution dated August 18, 2005 issued by the investigating prosecutor, the primary
issue was whether the hatch doors of LEC fall within copyrightable works. This was resolved by ruling that hatch
doors themselves are not covered by LEC's Certificate of Registration Nos. 1-2004-13 and 1-2004-14 issued on the
plans/drawing depicting them. The DOJ reversed this ruling in its Resolution dated January 27, 2006 wherein the
issue was streamlined to whether the illustrations of the hatch doors under LEC's Certificate of Registration Nos.
H-2004-566 and H-2004-567 bore artistic ornamental designs.

This situation does not amount to grave abuse of discretion but rather a mere manifestation of the intricate issues
involved in the case which thus resulted in varying conclusions of law. Nevertheless, the DOJ ultimately
pronounced its definite construal of copyright laws and their application to the evidence on record through its
Resolution dated March 10, 2006 when it granted the petitioners' motion for reconsideration. Such construal, no
matter how erroneous to the CA's estimation, did not amount to grave abuse of discretion. "[I]t is elementary that
not every erroneous conclusion of law or fact is an abuse of discretion." 45

More importantly, the Court finds that no grave abuse of discretion was committed by the DOJ in directing the
withdrawal of the criminal information against the respondents because a finding of probable cause contradicts the
evidence on record, law, and jurisprudence.

"Probable cause has been defined as the existence of such facts and circumstances as would excite the belief in a
reasonable mind, acting on the facts within the knowledge of the prosecutor, that the person charged was guilty of
the crime for which he was prosecuted. It is a reasonable ground of presumption that a matter is, or may be, well-
founded on such a state of facts in the mind of the prosecutor as would lead a person of ordinary caution and
prudence to believe, or entertain an honest or strong suspicion, that a thing is so." 46

"The term 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."47

"In order that probable cause to file a criminal case may be arrived at, or in order to engender the well-founded
belief that a crime has been committed, the elements of the crime charged should be present. This is based on the
principle that every crime is defined by its elements, without which there should be - at the most - no criminal
offense."48

A copyright refers to "the right granted by a statute to the proprietor of an intellectual production to its exclusive
use and enjoyment to the extent specified in the statute."49 Under Section 177 of R.A. No. 8293, the Copyright or
Economic Rights consist of the exclusive right to carry out, authorize or prevent the following acts:
177.1 Reproduction of the work or substantial portion of the work;

177.2 Dramatization, translation, adaptation, abridgment, arrangement or other transformation of the work;

177.3 The first public distribution of the original and each copy of the work by sale or other forms of transfer
of ownership;

177.4 Rental of the original or a copy of an audiovisual or cinematographic work, a work embodied in a sound
recording, a computer program, a compilation of data and other materials or a musical work in graphic
form, irrespective of the ownership of the original or the copy which is the subject of the rental;

177.5 Public display of the original or a copy of the work;

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 177.6 Public performance of the work; and

177.7 Other communication to the public of the work.

Copyright infringement is thus committed by any person who shall use original literary or artistic works, or
derivative works, without the copyright owner's consent in such a manner as to violate the foregoing copy and
economic rights. For a claim of copyright infringement to prevail, the evidence on record must demonstrate: (1)
ownership of a validly copyrighted material by the complainant; and (2) infringement of the copyright by the
respondent.50

While both elements subsist in the records, they did not simultaneously concur so as to substantiate infringement
of LEC's two sets of copyright registrations.

The respondent failed to substantiate the alleged reproduction of the drawings/sketches of hatch doors copyrighted
under Certificate of Registration Nos. 1-2004-13 and 1-2004-14. There is no proof that the respondents reprinted
the copyrighted sketches/drawings of LEC's hatch doors. The raid conducted by the NBI on Metrotech's premises
yielded no copies or reproduction of LEC's copyrighted sketches/drawings of hatch doors. What were discovered
instead were finished and unfinished hatch doors.

Certificate of Registration Nos. 1-2004-13 and 1-2004-14 pertain to class work "I" under Section 172 of R.A. No.
8293 which covers "illustrations, maps, plans, sketches, charts and three-dimensional works relative to geography,
topography, architecture or science."51 As such, LEC's copyright protection there under covered only the hatch door
sketches/drawings and not the actual hatch door they depict.52

As the Court held in Pearl and Dean (Philippines), Incorporated v. Shoemart, Incorporated:53

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. Accordingly, it can cover only the works falling within
the statutory enumeration or description.54 (Citations omitted and italics in the original)
Since the hatch doors cannot be considered as either illustrations, maps, plans, sketches, charts and three-
dimensional works relative to geography, topography, architecture or science, to be properly classified as a
copyrightable class "I" work, what was copyrighted were their sketches/drawings only, and not the actual hatch
doors themselves. To constitute infringement, the usurper must have copied or appropriated the original work of
an author or copyright proprietor, absent copying, there can be no infringement of copyright.55

"Unlike a patent, a copyright gives no exclusive right to the art disclosed; protection is given only to the expression
of the idea — not the idea itself."56

The respondent claimed that the petitioners committed copyright infringement when they fabricated/manufactured
hatch doors identical to those installed by LEC. The petitioners could not have manufactured such hatch doors in
substantial quantities had they not reproduced the copyrighted plans/drawings submitted by LEC to SK1-FB. This
insinuation, without more, does not suffice to establish probable cause for infringement against the petitioners.
"[Although the determination of probable cause requires less than evidence which would justify conviction, it
should at least be more than mere suspicion."57

Anent, LEC's Certificate of Registration Nos. H-2004-566 and H-2004-567, the Court finds that the ownership
thereof was not established by the evidence on record because the element of copyrightability is absent.

"Ownership of copyrighted material is shown by proof of originality and copyrightability." 58 While it is true that
where the complainant presents a copyright certificate in support of the claim of infringement, the validity and
ownership of the copyright is presumed. This presumption, however, is rebuttable and it cannot be sustained where
other evidence in the record casts doubt on the question of ownership,59 as in the instant case.

Moreover, "[t]he 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 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

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applicant."60

Here, evidence negating originality and copyrightability as elements of copyright ownership was satisfactorily
proffered against LEC's certificate of registration.

The following averments were not successfully rebuffed by LEC:

[T]he hinges on LEC's "hatch doors" have no ornamental or artistic value. In fact, they are just similar to hinges
found in truck doors that had been in common use since the 1960's. The gaskets on LEC's "hatch doors", aside from
not being ornamental or artistic, were merely procured from a company named Pemko and are not original creations
of LEC. The locking device in LEC's "hatch doors" are ordinary drawer locks commonly used in furniture and
office desks.61ChanRoblesVirtualawlibrary

In defending the copyrightability of its hatch doors' design, LEC merely claimed:
LEC's Hatch Doors were particularly designed to blend in with the floor of the units in which they are installed
and, therefore, appeal to the aesthetic sense of the owner of units or any visitors thereto[;]

LEC's Hatch Doors have a distinct set of hinges, a distinct door a distinct jamb, all of which are both functional or
utilitarian and artistic or ornamental at the same time[;] and

Moreover, the Project is a high-end residential building located in the Rockwell Center, a very prime area in Metro
Manila. As such, the owner of the Project is not expected to settle for Hatch Doors that simply live up to their
function as such. The owner would require, as is the case for the Project, Hatch Doors that not only fulfill their
utilitarian purposes but also appeal to the artistic or ornamental sense of their beholders. 62

From the foregoing description, it is clear that the hatch doors were not artistic works within the meaning of
copyright laws. A copyrightable work refers to literary and artistic works defined as original intellectual creations
in the literary and artistic domain.63

A hatch door, by its nature is an object of utility. It is defined as a small door, small gate or an opening that
resembles a window equipped with an escape for use in case of fire or emergency. 64 It is thus by nature, functional
and utilitarian serving as egress access during emergency. It is not primarily an artistic creation but rather an object
of utility designed to have aesthetic appeal. It is intrinsically a useful article, which, as a whole, is not eligible for
copyright.

A "useful article" defined as an article "having an intrinsic utilitarian function that is not merely to portray the
appearance of the article or to convey information" is excluded from copyright eligibility.65

The only instance when a useful article may be the subject of copyright protection is when it incorporates a design
element that is physically or conceptually separable from the underlying product. This means that the utilitarian
article can function without the design element. In such an instance, the design element is eligible for copyright
protection.66

The design of a useful article shall be considered a pictorial, graphic, or sculptural work 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. 67

A belt, being an object utility with the function of preventing one's pants from falling down, is in itself not
copyrightable. However, an ornately designed belt buckle which is irrelevant to or did not enhance the belt's
function hence, conceptually separable from the belt, is eligible for copyright. It is copyrightable as a sculptural
work with independent aesthetic value, and not as an integral element of the belt's functionality. 68

A table lamp is not copyrightable because it is a functional object intended for the purpose of providing illumination
in a room. The general shape of a table lamp is likewise not copyrightable because it contributes to the lamp's
ability to illuminate the reaches of a room. But, a lamp base in the form of a statue of male and female dancing
figures made of semi vitreous china is copyrightable as a work of art because it is unrelated to the lamp's utilitarian
function as a device used to combat darkness.69

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In the present case, LEC's hatch doors bore no design elements that are physically and conceptually separable,
independent and distinguishable from the hatch door itself. The allegedly distinct set of hinges and distinct jamb,
were related and necessary hence, not physically or conceptually separable from the hatch door's utilitarian function
as an apparatus for emergency egress. Without them, the hatch door will not function.

More importantly, they are already existing articles of manufacture sourced from different suppliers. Based on the
records, it is unrebutted that: (a) the hinges are similar to those used in truck doors; (b) the gaskets were procured
from a company named Pemko and are not original creations of LEC; and (c) the locking device are ordinary
drawer locks commonly used in furniture and office desks.

Being articles of manufacture already in existence, they cannot be deemed as original creations. As earlier stated,
valid copyright ownership denotes originality of the copyrighted material. Originality means that the material was
not copied, evidences at least minimal creativity and was independently created by the author. 70 It connotes
production as a result of independent labor.71 LEC did not produce the door jambs and hinges; it bought or acquired
them from suppliers and thereafter affixed them to the hatch doors. No independent original creation can be deduced
from such acts.

The same is true with respect to the design on the door's panel. As LEC has stated, the panels were "designed to
blend in with the floor of the units in which they [were] installed." 72 Photos of the panels indeed show that their
color and pattern design were similar to the wooden floor parquet of the condominium units.73 This means that the
design on the hatch door panel was not a product of LEC's independent artistic judgment and discretion but rather
a mere reproduction of an already existing design.

Verily then, the CA erred in holding that a probable cause for copyright infringement is imputable against the
petitioners. Absent originality and copyrightability as elements of a valid copyright ownership, no infringement
can subsist WHEREFORE, premises considered, the petition is hereby GRANTED. The Decision dated July 9,
2010 and Resolution dated February 24, 2011 of the Court of Appeals in CA-G.R. SP No. 95471
are REVERSED and SET ASIDE. The Resolutions dated March 10, 2006 and May 25, 2006 of the Department
of Justice in I.S. No. 2004-925 dismissing the complaint for copyright infringement are REINSTATED.

SO ORDERED.

o Ownership of Copyright

SECTION 178. Rules on Copyright Ownership. - Copyright ownership shall be governed by the following rules:

178.1. Subject to the provisions of this section, in the case of original literary and artistic works, copyright shall
belong to the author of the work;

178.2. In the case of works of joint authorship, the co-authors shall be the original owners of the copyright and in
the absence of agreement, their rights shall be governed by the rules on co-ownership. If, however, a work of joint
authorship consists of parts that can be used separately and the author of each part can be identified, the author of
each part shall be the original owner of the copyright in the part that he has created;

178.3. In the case of work created by an author during and in the course of his employment, the copyright shall
belong to:

(a) The employee, if the creation of the object of copyright is not a part of his regular duties even if the employee
uses the time, facilities and materials of the employer.

(b) The employer, if the work is the result of the performance of his regularly-assigned duties, unless there is an
agreement, express or implied, to the contrary.

178.4. In the case of a work commissioned by a person other than an employer of the author and who pays for it
and the work is made in pursuance of the commission, the person who so commissioned the work shall have
ownership of the work, but the copyright thereto shall remain with the creator, unless there is a written stipulation
to the contrary;
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178.5. In the case of audiovisual work, the copyright shall belong to the producer, the author of the scenario, the
composer of the music, the film director, and the author of the work so adapted. However, subject to contrary or
other stipulations among the creators, the producer shall exercise the copyright to an extent required for the
exhibition of the work in any manner, except for the right to collect performing license fees for the performance of
musical compositions, with or without words, which are incorporated into the work; and

178.6. In respect of letters, the copyright shall belong to the writer subject to the provisions of Article 723 of the
Civil Code. (Sec. 6, P.D. No. 49a)

Article 7
(1) The term of protection granted by this Convention shall be the life of the author and fifty years after his death.
(2) However, in the case of cinematographic works, the countries of the Union may provide that the term of
protection shall expire fifty years after the work has been made available to the public with the consent of the
author, or, failing such an event within fifty years from the making of such a work, fifty years after the making.
(3) In the case of anonymous or pseudonymous works, the term of protection granted by this Convention shall
expire fifty years after the work has been lawfully made available to the public. However, when the pseudonym
adopted by the author leaves no doubt as to his identity, the term of protection shall be that provided in paragraph
(1). If the author of an anonymous or pseudonymous work discloses his identity during the above-mentioned period,
the term of protection applicable shall be that provided in paragraph (1). The countries of the Union shall not be
required to protect anonymous or pseudonymous works in respect of which it is reasonable to presume that their
author has been dead for fifty years.
(4) It shall be a matter for legislation in the countries of the Union to determine the term of protection of
photographic works and that of works of applied art in so far as they are protected as artistic works; however, this
term shall last at least until the end of a period of twenty-five years from the making of such a work.
(5) The term of protection subsequent to the death of the author and the terms provided by paragraphs (2), (3) and
(4), shall run from the date of death or of the event referred to in those paragraphs, but such terms shall always be
deemed to begin on the 1 st of January of the year following the death or such event.
(6) The countries of the Union may grant a term of protection in excess of those provided by the preceding
paragraphs.
(7) Those countries of the Union bound by the Rome Act of this Convention, which grant, in their national
legislation in force at the time of signature of the present Act, shorter terms of protection than those provided for
in the preceding paragraphs, shall have the right to maintain such terms when ratifying or acceding to the present
Act.
(8) In any case, the term shall be governed by the legislation of the country where protection is claimed; however,
unless the legislation of that country otherwise provides, the term shall not exceed the term fixed in the country of
origin of the work.
• Duration of Copyright

SECTION 213. Term of Protection. - 213.1. Subject to the provisions of Subsections 213.2 to 213.5, the copyright
in works under Sections 172 and 173 shall be protected during the life of the author and for fifty (50) years after
his death. This rule also applies to posthumous works. (Sec. 21, first sentence, P.D. No. 49a)

213.2. In case of works of joint authorship, the economic rights shall be protected during the life of the last surviving
author and for fifty (50) years after his death. (Sec. 21, second sentence, P.D. No. 49)

213.3. In case of anonymous or pseudonymous works, the copyright shall be protected for fifty (50) years from the
date on which the work was first lawfully published: Provided, That where, before the expiration of the said period,
the author’s identity is revealed or is no longer in doubt, the provisions of Subsections 213.1. and 213.2 shall apply,
as the case may be: Provided, further, That such works if not published before shall be protected for fifty (50) years
counted from the making of the work. (Sec. 23, P.D. No. 49)

213.4. In case of works of applied art the protection shall be for a period of twenty-five (25) years from the date of
making. (Sec. 24(B), P.D. No. 49a)

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213.5. In case of photographic works, the protection shall be for fifty (50) years from publication of the work and,
if unpublished, fifty (50) years from the making. (Sec. 24(C), P.D. 49a)

213.6. In case of audio-visual works including those produced by process analogous to photography or any process
for making audio-visual recordings, the term shall be fifty (50) years from date of publication and, if unpublished,
from the date of making. (Sec. 24(C), P.D. No. 49a)

SECTION 214. Calculation of Term. - The term of protection subsequent to the death of the author provided in the
preceding Section shall run from the date of his death or of publication, but such terms shall always be deemed to
begin on the first day of January of the year following the event which gave rise to them. (Sec. 25, P.D. No. 49)

SECTION 215. Term of Protection for Performers, Producers and Broadcasting Organizations. - 215.1. The rights
granted to performers and producers of sound recordings under this law shall expire:

(a) For performances not incorporated in recordings, fifty (50) years from the end of the year in which the
performance took place; and

(b) For sound or image and sound recordings and for performances incorporated therein, fifty (50) years from the
end of the year in which the recording took place.

215.2. In case of broadcasts, the term shall be twenty (20) years from the date the broadcast took place. The
extended term shall be applied only to old works with subsisting protection under the prior law. (Sec. 55, P.D. No.
49a)

• Limitations of Copyright

SECTION 176. Works of the Government. - 176.1. No copyright shall subsist in any work of the Government of
the Philippines. However, prior approval of the government agency or office wherein the work is created shall be
necessary for exploitation of such work for profit. Such agency or office may, among other things, impose as a
condition the payment of royalties. No prior approval or conditions shall be required for the use for any purpose of
statutes, rules and regulations, and speeches, lectures, sermons, addresses, and dissertations, pronounced, read or
rendered in courts of justice, before administrative agencies, in deliberative assemblies and in meetings of public
character. (Sec. 9, first par., P.D. No. 49)

176.2. The author of speeches, lectures, sermons, addresses, and dissertations mentioned in the preceding
paragraphs shall have the exclusive right of making a collection of his works. (n)

176.3. Notwithstanding the foregoing provisions, the Government is not precluded from receiving and holding
copyrights transferred to it by assignment, bequest or otherwise; nor shall publication or republication by the
Government in a public document of any work in which copyright is subsisting be taken to cause any abridgment
or annulment of the copyright or to authorize any use or appropriation of such work without the consent of the
copyright owner. (Sec. 9, third par., P.D. No. 49)
171.11. A “work of the Government of the Philippines” is a work created by an officer or employee of the Philippine
Government or any of its subdivisions and instrumentalities, including government-owned or controlled
corporations as a part of his regularly prescribed official duties.

SECTION 184. Limitations on Copyright. - 184.1. Notwithstanding the provisions of Chapter V, the following acts
shall not constitute infringement of copyright:

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

The 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. No. 49)
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The reproduction or communication to the public by mass media of articles on current political, social, economic,
scientific or religious topic, lectures, addresses and other works of the same nature, which are delivered in public
if such use is for information purposes and has not been expressly reserved: Provided, That the source is clearly
indicated; (Sec. 11, P.D. No. 49)

The reproduction and communication to the public of literary, scientific or artistic works as part of reports of current
events by means of photography, cinematography or broadcasting to the extent necessary for the purpose; (Sec. 12,
P.D. No. 49)

The inclusion of a work in a publication, broadcast, or other communication to the public, sound recording or 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, are mentioned;

The recording made in schools, universities, or educational institutions of a work included in a broadcast for the
use of such schools, universities or educational institutions: Provided, That such recording must be deleted within
a reasonable period after they were first broadcast: Provided, further, That such recording may not be made from
audiovisual works which are part of the general cinema repertoire of feature films except for brief excerpts of the
work;

The making of ephemeral recordings by a broadcasting organization by means of its own facilities and for use in
its own broadcast;

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 public performance or the communication to the public of a work, in a place where no admission fee is charged
in respect of such public performance or communication, by a club or institution for charitable or educational
purpose only, whose aim is not profit making, subject to such other limitations as may be provided in the
Regulations; (n)

Public display of the original or a copy of the work not made by means of a film, slide, television image or otherwise
on screen or by means of any other device or process: Provided, That either the work has been published, or, that
the original or the copy displayed has been sold, given away or otherwise transferred to another person by the
author or his successor in title; and

Any use made of a work for the purpose of any judicial proceedings or for the giving of professional advice by a
legal practitioner.

184.2. The provisions of this section shall be interpreted in such a way as to allow the work to be used in a manner
which does not conflict with the normal exploitation of the work and does not unreasonably prejudice the right
holder’s legitimate interests.

SECTION 185. Fair Use of a Copyrighted Work. - 185.1. The fair use of a copyrighted work for criticism, comment,
news reporting, teaching including multiple copies for classroom use, scholarship, research, and similar purposes
is not an infringement of copyright. Decompilation, which is understood here to be the reproduction of the code
and translation of the forms of the computer program to achieve the inter-operability of an independently created
computer program with other programs may also constitute fair use. In determining whether the use made of a work
in any particular case is fair use, the factors to be considered shall include:

The purpose and character of the use, including whether such use is of a commercial nature or is for non-profit
educational purposes;

The nature of the copyrighted work;

The amount and substantiality of the portion used in relation to the copyrighted work as a whole; and

143
The effect of the use upon the potential market for or value of the copyrighted work.

185.2. The fact that a work is unpublished shall not by itself bar a finding of fair use if such finding is made upon
consideration of all the above factors.

SECTION 186. Work of Architecture. - Copyright in a work of architecture shall include the right to control the
erection of any building which reproduces the whole or a substantial part of the work either in its original form or
in any form recognizably derived from the original: Provided, That the copyright in any such work shall not include
the right to control the reconstruction or rehabilitation in the same style as the original of a building to which that
copyright relates. (n)

SECTION 187. Reproduction of Published Work. - 187.1. Notwithstanding the provision of Section 177, and
subject to the provisions of Subsection 187.2, the private reproduction of a published work in a single copy, where
the reproduction is made by a natural person exclusively for research and private study, shall be permitted, without
the authorization of the owner of copyright in the work.

187.2. The permission granted under Subsection 187.1 shall not extend to the reproduction of:

A work of architecture in the form of building or other construction;

An entire book, or a substantial part thereof, or of a musical work in graphic form by reprographic means;

A compilation of data and other materials;

A computer program except as provided in Section 189; and

Any work in cases where reproduction would unreasonably conflict with a normal exploitation of the work or
would otherwise unreasonably prejudice the legitimate interests of the author. (n)

SECTION 188. Reprographic Reproduction by Libraries. - 188.1. Notwithstanding the provisions of Subsection
177.6, any library or archive whose activities are not for profit may, without the authorization of the author of
copyright owner, make a single copy of the work by reprographic reproduction:

Where the work by reason of its fragile character or rarity cannot be lent to user in its original form;

Where the works are isolated articles contained in composite works or brief portions of other published works and
the reproduction is necessary to supply them, when this is considered expedient, to persons requesting their loan
for purposes of research or study instead of lending the volumes or booklets which contain them; and

Where the making of such a copy is in order to preserve and, if necessary in the event that it is lost, destroyed or
rendered unusable, replace a copy, or to replace, in the permanent collection of another similar library or archive,
a copy which has been lost, destroyed or rendered unusable and copies are not available with the publisher.

188.2. Notwithstanding the above provisions, it shall not be permissible to produce a volume of a work published
in several volumes or to produce missing tomes or pages of magazines or similar works, unless the volume, tome
or part is out of stock: Provided, That every library which, by law, is entitled to receive copies of a printed work,
shall be entitled, when special reasons so require, to reproduce a copy of a published work which is considered
necessary for the collection of the library but which is out of stock. (Sec. 13, P.D. 49a)

SECTION 189. Reproduction of Computer Program. - 189.1. Notwithstanding the provisions of Section 177, the
reproduction in one (1) back-up copy or adaptation of a computer program shall be permitted, without the
authorization of the author of, or other owner of copyright in, a computer program, by the lawful owner of that
computer program: Provided, That the copy or adaptation is necessary for:

The use of the computer program in conjunction with a computer for the purpose, and to the extent, for which the
computer program has been obtained; and

144
Archival purposes, and, for the replacement of the lawfully owned copy of the computer program in the event that
the lawfully obtained copy of the computer program is lost, destroyed or rendered unusable.

189.2. No copy or adaptation mentioned in this Section shall be used for any purpose other than the ones determined
in this Section, and any such copy or adaptation shall be destroyed in the event that continued possession of the
copy of the computer program ceases to be lawful.

189.3. This provision shall be without prejudice to the application of Section 185 whenever appropriate. (n)

SECTION 190. Importation for Personal Purposes. - 190.1. Notwithstanding the provision of Subsection 177.6,
but subject to the limitation under the Subsection 185.2, the importation of a copy of a work by an individual for
his personal purposes shall be permitted without the authorization of the author of, or other owner of copyright in,
the work under the following circumstances:

When copies of the work are not available in the Philippines and:

Not more than one (1) copy at one time is imported for strictly individual use only; or

The importation is by authority of and for the use of the Philippine Government; or

The importation, consisting of not more than three (3) such copies or likenesses in any one invoice, is not for sale
but for the use only of any religious, charitable, or educational society or institution duly incorporated or registered,
or is for the encouragement of the fine arts, or for any state school, college, university, or free public library in the
Philippines.

When such copies form parts of libraries and personal baggage belonging to persons or families arriving from
foreign countries and are not intended for sale: Provided, That such copies do not exceed three (3).

190.2. Copies imported as allowed by this Section may not lawfully be used in any way to violate the rights of
owner the copyright or annul or limit the protection secured by this Act, and such unlawful use shall be deemed an
infringement and shall be punishable as such without prejudice to the proprietor’s right of action.

190.3. Subject to the approval of the Secretary of Finance, the Commissioner of Customs is hereby empowered to
make rules and regulations for preventing the importation of articles the importation of which is prohibited under
this Section and under treaties and conventions to which the Philippines may be a party and for seizing and
condemning and disposing of the same in case they are discovered after they have been imported. (Sec. 30, P.D.
No. 49)

• Transfer of Copyright

SECTION 180. Rights of Assignee. - 180.1. The copyright may be assigned in whole or in part. Within the scope
of the assignment, the assignee is entitled to all the rights and remedies which the assignor had with respect to the
copyright.

180.2. The copyright is not deemed assigned inter vivos in whole or in part unless there is a written indication of
such intention.

180.3. The submission of a literary, photographic or artistic work to a newspaper, magazine or periodical for
publication shall constitute only a license to make a single publication unless a greater right is expressly granted.
If two (2) or more persons jointly own a copyright or any part thereof, neither of the owners shall be entitled to
grant licenses without the prior written consent of the other owner or owners. (Sec. 15, P.D. No. 49a)

SECTION 181. Copyright and Material Object. - The copyright is distinct from the property in the material object
subject to it. Consequently, the transfer or assignment of the copyright shall not itself constitute a transfer of the
material object. Nor shall a transfer or assignment of the sole copy or of one or several copies of the work imply
transfer or assignment of the copyright. (Sec. 16, P.D. No. 49)
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SECTION 182. Filing of Assignment or License. - An assignment or exclusive license may be filed in duplicate
with the National Library upon payment of the prescribed fee for registration in books and records kept for the
purpose. Upon recording, a copy of the instrument shall be returned to the sender with a notation of the fact of
record. Notice of the record shall be published in the IPO Gazette. (Sec. 19, P.D. No. 49a)

SECTION 183. Designation of Society. - The copyright owners or their heirs may designate a society of artists,
writers or composers to enforce their economic rights and moral rights on their behalf. (Sec. 32, P.D. No. 49a)

4.2. The term “technology transfer arrangements” refers to contracts or agreements involving the transfer of
systematic knowledge for the manufacture of a product, the application of a process, or rendering of a service
including management contracts; and the transfer, assignment or licensing of all forms of intellectual property
rights, including licensing of computer software except computer software developed for mass market.

SECTION 87. Prohibited Clauses. - Except in cases under Section 91, the following provisions shall be deemed
prima facie to have an adverse effect on competition and trade:

87.1. Those which impose upon the licensee the obligation to acquire from a specific source capital goods,
intermediate products, raw materials, and other technologies, or of permanently employing personnel indicated by
the licensor;

87.2. Those pursuant to which the licensor reserves the right to fix the sale or resale prices of the products
manufactured on the basis of the license;

87.3. Those that contain restrictions regarding the volume and structure of production;

87.4. Those that prohibit the use of competitive technologies in a non-exclusive technology transfer agreement;

87.5. Those that establish a full or partial purchase option in favor of the licensor;

87.6. Those that obligate the licensee to transfer for free to the licensor the inventions or improvements that may
be obtained through the use of the licensed technology;

87.7. Those that require payment of royalties to the owners of patents for patents which are not used;

87.8. Those that prohibit the licensee to export the licensed product unless justified for the protection of the
legitimate interest of the licensor such as exports to countries where exclusive licenses to manufacture and/or
distribute the licensed product(s) have already been granted;

87.9. Those which restrict the use of the technology supplied after the expiration of the technology transfer
arrangement, except in cases of early termination of the technology transfer arrangement due to reason(s)
attributable to the licensee;

87.10. Those which require payments for patents and other industrial property rights after their expiration,
termination arrangement;

87.11. Those which require that the technology recipient shall not contest the validity of any of the patents of the
technology supplier;

87.12. Those which restrict the research and development activities of the licensee designed to absorb and adapt
the transferred technology to local conditions or to initiate research and development programs in connection with
new products, processes or equipment;

87.13. Those which prevent the licensee from adapting the imported technology to local conditions, or introducing
innovation to it, as long as it does not impair the quality standards prescribed by the licensor;

146
87.14. Those which exempt the licensor for liability for non-fulfilment of his responsibilities under the technology
transfer arrangement and/or liability arising from third party suits brought about by the use of the licensed product
or the licensed technology; and

87.15. Other clauses with equivalent effects. (Sec. 33-C (2), RA 165a)

SECTION 88. Mandatory Provisions. - The following provisions shall be included in voluntary license contracts:

88.1. That the laws of the Philippines shall govern the interpretation of the same and in the event of litigation, the
venue shall be the proper court in the place where the licensee has its principal office;

88.2. Continued access to improvements in techniques and processes related to the technology shall be made
available during the period of the technology transfer arrangement;

88.3. In the event the technology transfer arrangement shall provide for arbitration, the Procedure of Arbitration of
the Arbitration Law of the Philippines or the Arbitration Rules of the United Nations Commission on International
Trade Law (UNCITRAL) or the Rules of Conciliation and Arbitration of the International Chamber of Commerce
(ICC) shall apply and the venue of arbitration shall be the Philippines or any neutral country; and

88.4. The Philippine taxes on all payments relating to the technology transfer arrangement shall be borne by the
licensor. (n)

SECTION 92. Non-Registration with the Documentation, Information and Technology Transfer
Bureau. - Technology transfer arrangements that conform with the provisions of Sections 86 and 87 need not be
registered with the Documentation, Information and Technology Transfer Bureau. Non-conformance with any of
the provisions of Sections 87 and 88, however, shall automatically render the technology transfer arrangement
unenforceable, unless said technology transfer arrangement is approved and registered with the Documentation,
Information and Technology Transfer Bureau under the provisions of Section 91 on exceptional cases. (n)
SECTION 237. Notification on Berne Appendix. - The Philippines shall by proper compliance with the
requirements set forth under the Appendix of the Berne Convention (Paris Act, 1971) avail itself of the special
provisions regarding developing countries, including provisions for licenses grantable by competent authority
under the Appendix. (n)

147
 3aepublic of tbe ~btlipptne~
~upreme Qtourt
;Manila

EN BANC

FILIPINO sod IETY OF G.R. No. 233918

COMPOSERS, AU HORS AND
PUBLISHERS, INC.,
Present:

Petitioner, GESMUNDO, CJ,

LEONEN,
CAGUIOA,
- versus - HERNANDO,
LAZARO-JAVIER,
INTING,*
ZALAlVIBDA,
LOPEZ, M.,**
ANREY, INC., GAERLAN,
ROSARIO,
LOPEZ, J.,
Respondent. DIMAAMPAO,
MARQUEZ,
KHO, JR., and
SINGH, JJ

Promulgated:
August 9, 2022
X - - - - - - - - - - - - - - - - - - - - - - - - - - - -T-1"-i_ ~ --X
DECISION

ZALAMEDA, J.:

Music impacts liViles; it provides entertainment; it serves as a medium

to communicate; to vent and to express. Everyone listens to music. Each has
their own cup of tea; the music they play and listen to. But not everyone is
willing to pay for it. Th· s debases the value due to the composers who have

• No part due to prior participati , n in the C~urt of Appeals.

•• On Official Leave.
 Decision 2 G.R. No. 233918

worked so hard to create music that ~parks joy, moves or heals our hearts,
accompanies us in solitude or sorrow, uplifts our spirits, and unites entire
nations. In fact music is there to accompany us in almost every aspect of our
daily lives. There is music to pump us up before a game; music to help us go
to bed; music to calm us down; music that inspires; music that helps us vent
and express how we feel. Even history and other strong messages are passed
down through music.

With today's technology, music is just a click away. You hear music
everywhere. From your home, during your commute, and in this particular
instance, in the store or restaurant you dine. This underscores the importance
of music whose benefit ranges from reeling in customers or to as little as
letting someone enjoy the meal with the music on, rather than having that
meal in silence.

The challenge presented by the .case at bar is that it attempts to stretch

even further the already thin line between what constitutes as a public
performance of a copyrighted music and what does not.

The Case

In this Petition 1 for Review on Certiorari (petition) under Rule 45 of

the Rules of Court, Petitioner Filipino Society of Composers, Authors and
Publishers, Inc. (FILSCAP) seeks to reverse and set aside the Decision2
dated April 19, 2017 and Resolution3 dated August 3, 2017 promulgated by
the Court of Appeals (CA) in CA-G.R. CV No. 105430. The CA affirmed
the Decision dated April 15, 2015 and Order4 dated June 30, 2015 rendered
by Branch 6, Regional Trial Court (RTC) of Baguio City dismissing the
. Amended Complaint filed by FILSCAP.

Antecedents

The very center of controversy is the supposed right of FILSCAP to

collect license fees over public performa.nce of copyrighted works of its
member artists.

1 Rollo, pp. 3-75.

2
Id. at 86-97; penned by Associate Justice Ramon R. Garcia and concurred in by Associate Justices
Leoncia R. Dimagiba and Henri Jean Paul B. lnting (now a Member of this Court).
3
Id. at 100-101.
4
Id. at 457-458.
 Decision 3 G.R. No. 233918

FILSCAP is a non-profit society of composers, authors, and

publishers that owns p blic performance rights over the copyrighted musical
works of its members. 51 It also ·owns the right to license public performances
in the Philippines of c9pyrighted foreign musical works of its members and
affiliate performing rights societies abroad. 6 Such rights proceed from the
contracts it has entere1 into with various composers, authors and publishers,
and _record _la~els, as 'i~l~ as the reciproca~ agreements it _has with affilia~e
foreign societies authonzmg FILSCAP to license the public performance m
1
the Philippines of musi al works under their repertoire. 7

These agreeme , s deputized FILSCAP to enforce and protect the

copyrighted works of its members or affiliates by issuing licenses and
collecting royalties anaror license fees from anyone who publicly exhibits or
performs music bel~~ging to FILSCAP's worldwide repertoire. 8 In
exchange, FILS CAP s~all pay a portion of the fees it collects to its members
and affiliates. These rtghts however, are being challenged by respondent
Anrey, Inc. (Anrey) wfen they were assessed by FILSCAP to pay annual
license fees for the p blic performance of the copyrighted works of its
members. The assessm nt came after a representative of FILSCAP, Ms. Ivy
Labayne, conducted feveral . days (between the months of July and
September 2008) of ~onitoring over the chain of restaurants owned by
Anrey in Baguio Cify, which were identified to be the following
establishments (the est blishments):

1) Sizzling Plate # 116 Session Road, Baguio City

2) Sizzling Plate #134 Abanao Extension, Baguio City
3) Sizzling Plate SM Baguio, Luneta Hill, Baguio City. 9

The following a e some of the copyrighted music that were played

during the monitoring sbssions conducted by the FILSCAP representative:
I
DATE PLAYIED TITLE OF MUSICAL WORK

Sizzling Plate Session Road

1. July 20, 2008 Gitara

Don't Stop the Music
Wherever You Will Go

5
Jd.at2!2.
6 Id.
7
Id. at 2 13.
s ld.
9
Id. at 140.
Decision 4 G.R. No. 233918

2. September 3, 2008 Impossible

MahalPaRin
Check Onlt

Sizzling Plate Abanao Extension

1. July 8, 2008 Silver Wings

2. September 17, 2008
What Do I Do With My Heart
Cross My Heart
l Drive Myself Crazy
Let the Pain Remain In my Heart
Reachin' Out 10

FILSCAP wrote several letters to the establishments involved,

informing them that an unauthorized public performance of. copyrighted
music amounts to infringement and urged them to secure licenses from
FILSCAP to avoid prosecution. 11 These demands fell on deaf ears, thus,
FILSCAP filed a Complaint (later on Amended) for Copyright
Infringement against Anrey before the RTC, asking the court to award the
12

following: (a) Pl8,900.00 as compensatory damages; (b) ?300,000 as

nominal damages; (c) PI00,000 as exemplary damages; and (d) PS0,000 as
attorney's fees and litigation expenses. 13

In their Answer, 14 Anrey denied playing any copyrighted music within

its establishments. It claims that the establishments it operates play whatever
is being broadcasted on the radio they are tuned in. Even if the broadcast
plays copyrighted music, the radio stations have already paid the
corresponding royalties, thus, FILSCAP would be recovering twice: from
the station that broadcasted the copyrighted music, and from it, simply
because it tuned in on a broadcast intended to be heard by the public.
Finally, assuming that the reception is a performance, it was not done
publicly since the broadcast was played for the benefit of its staff, and not
for its customers. 15

10 Id. at 142.
11 Id. at 162-166.
12 Id. at 140-144.
13 Id. at 144
14 Id. at 184-188
15 Id. at 185.
Decision 5 G.R. No. 233918

Ruling of the RTC

After both parti s were able to present and formally offer their
respective evidence, the RTC dismissed FILSCAP's amended complaint for
lack of merit. The dispd>sitive portion of the Decision dated April 15, 2015,
reads: I
WHEREFO , in view of the foregoing, the complaint is hereby
dismissed for lack of merit. Defendant's counterclaims are likewise
dismissed. No costs.

The RTC cited Sec. 184 (i) of R.A. 8293 17 in absolving Anrey from
copyright infringemenf The provision exempts public performances by a
club or institution for a aritable or educational purposes provided, they are
not profit making and t ey do not charge admission fees. 18

FILSCAP file a Motion for Reconsideration 19 and a

1
Manifestation/Supplem nt to the Motion for Reconsideration, 20 but these
were denied by the RT I in its Order21 dated June 30, 2015.

Ruling of the CA

On appeal,22 FI~ SCAP -insisted on its right to collect license fees

and/or royalties. It ar~ued that regardless of whether the establishments
concerned charge adm· ssion fees or if the public performance is done by
simply tuning in on a rf dio broadcast, it can collect the fees and/or royalties
due for the copyrightetl music played. The CA, however, disagreed with
FILSCAP and affirme the Decision of the RTC, the dispositive portion of
which provides:

, the. appeal is hereby DENIED. The assailed

Decision dated Apr\1 15, 2015 of the Regional Trial Court (RTC), Branch
6, Baguio City is Aj FIRMED.
23
_____s_o_o_RDEID.
16 Id. at 443-444.
17 An Act Prescribing the lnte lectual Property Code and Establishing the Intellectual Property Office,
Providing for its Powers antl Functions, and for other Purposes, otherwise known as the "Intellectual
Property Code of the Philippi' es." Approved: June 6, 1997.
18 Rollo, p. 443.
19 Id at 445-448.
20 Id. at 449-456.
21 fd. at 457-458.
22 Id. at 459-460.
23 Id. at 97.
Decision 6 G.R. No. 233918

In denying the appeal, the CA applied what was known as the

homestyle and business exemptions prevailing in the United States of
America (US). These exemptions allow small business establishments to use
television or radio sets within its premises, subject to the following
conditions:
As such the rules of BMI and ASCAP provide that any food
service and drinking establishment that is 3,750 square feet or larger must
secure a license for the public performance of musical works via radio and
television. [For establishments using television]: (a) it has more than four
(4) television sets; (b) it has more than one (1) television set in any room;
(c) if any _of the television sets used has a diagonal screen with size that is
greater than fifty-five (55) inches; (d) if any audio portion of the
audiovisual performance is communicated by means of more than six (6)
loudspeakers or four (4) loudspeakers in any one room or adjoining
outdoor space; or (e) if there is any cover charge. As to the use of radio
sets, it must secure a license if the following conditions apply: (a) ifit has
more than six (6) loudspeakers; (b) it has more than four (4) loudspeakers
in any one room or adjoining outdoor space; (c) if there is any cover
charge; or (d) if there is music on hold. 24

FILSCAP filed a motion for reeonsideration, but the same was denied
by the CA in its Resolution25 dated August 3, 2017. Hence, the instant
petition.

Issue

The sole issue in this case is whether the unlicensed playing of radio
broadcasts as background music in dining areas of a restaurant amount to
copyright infringement.

Ruling of the Court

After a thorough review of the case, the Court finds merit to the
petition.

Elements of copyright infringement

Our copyTight law affords protection to original and intellectual

creations in the literary and artistic domain from the moment of their
creation. 26 This includes "musical compositions, with or without words,"
while the rights afforded to copyright owners may be classified into either
economic rights or moral rights.

24 Id. at 95.
25 Id. at 100-101.
26 INTELLECTUAL PROPERTY CODE OF THE PHILIPPINES, Sec. 172.1.
Decision 7 G.R. No. 233918

Economic rights efer to the right of the owner to derive some sort of
financial benefit from t e use of his work, while moral rights refer to the
non-economic interests f the owner of copyright.

Part of the econo I ic rights of an owner is the exclusive right to carry

out, authorize or preve t the following acts enumerated under Sec. 177 of
the Intellectual Property Code of the Philippines (IPC):

177 .1. Repro uction of the work or substantial portion of the work;

177.2 Drarpatization, translation, adaptation, abridgment,

arrangement or otheli transfonnation of the work;

177.3. The fi st public distribution of the original and each copy of

the work by sale or ol her fom1s of transfer of ownership;

177.4. Rentai of the . original or a copy of an audiovisual or

cinematographic woJk,I
a work• embodied in a sound recording, a computer
program, a compilatton of data and other materials or a musical work in
graphic form, irrespbctive of the ownership of the original or the copy
which is the subject f the rental; (n)

177.5. Public display of the original or a copy of the work;

177.6. Public erformance of the work; and

177. 7. Other ,ommunication to the public of the work (Sec. 5, P. D.

No. 49a)

These acts, whe unauthorized by the copyright owner, amount to

copyright infringement But before copyright holders may claim for
infringement, two elem ,nts must be proven: (1) they must show ownership
of a valid copyright; and (2) they must demonstrate that the alleged
infringers violate at lea t one economic right granted to copyright holders 27
under Sec. 177 of the I C. A third element may be added and that is the act
complained of must not fal) under any of the limitations on copyright under
Section 184 of the IPC or amounts to fair use of a copyrighted work.28

The role of FILS IAP in the

administration and en orcement of
copyrights; right to sue or copyright
infringement

27
Simpleville Music v. Mizell, 45 F. Supp. 2d 1293 (M.D. A la. 2006).
28
INTELLECTUAL PROPERT CODE OF THE PHILIPPINES, Sec. 185 .
Decision 8 G.R. No. 233918

FILSCAP is a non-stock, non-profit assoc1at10n of composers,

lyricists, and music publishers. 29 It actually breathes life to the provision
under Sec. 183 of the IPC allowing copyright owners or their heirs to
"designate a society of artists, writers or composers to enforce their
economic rights and moral rights on their behalf." It is accredited by the
Intellectual Property of the Philippines (IPOPHIL) to perform the role of a
Collective Management Organization (CMO) and a member of the Paris-
based International· Confederation of Societies of Authors and Composers
(CISAC), the umbrella organization of all composer societies worldwide.

Being the government-accredited CMO for music creators/copyright

owners, FILSCAP assists music users in getting the necessary authorization
to publicly play, broadcast and stream copyrighted local and foreign songs in
the Philippines.30 It is created exactly for the purpose of protecting the
intellectual property rights of its members by licensing performances of their
copyright music. Without FILSCAP, the individual composer would have a
difficult time enforcing their rights against an infringer, not to mention the
expenses and time involved in pursuing such cases. But FILSCAP eases this
burden away by handling these concerns. In addition, FILSCAP, acts as an
agency for the composers who deal with any third party who desires to
obtain public performance rights and privileges.

The mechanics behind FILSCAP's role is plain and simple. Copyright

holders assign their rights to FILSCAP. FILSCAP enters into reciprocal
agreements with foreign societies such as the American Society of
Composers, Authors and Publishers (ASCAP), BMI, Australian Performing
Right Association (APRA), Performing Right Society Limited (PRS) of the
United Kingdom and Foreningen Svenska Tonsattares Internationella
Musikbyra (STIM) of Sweden, whose roles are similar to that of FILS CAP. 31
Being the assignee of the copyright, it then collects royalties through the
form of license fees from anyone who intends to publicly play, broadcast,
stream, and to a certain extent (reproduce) any copyrighted local and
international music of its members and the members of its affiliate foreign
societies. In return, FILSCAP does an accounting of all license fees
collected and then distributes them to its members and the members of its
affiliate foreign societies.

There really is no question to this as FILSCAP's authority to sue on

behalf of its members remain unchallenged. But just to make sure We are not
misinterpreting the extent of FILSCAP's authority, quoted below are
excerpts of the pertinent provisions appearing in all deeds of assigriment

29 Rollo, p. 140.
30
<https://filscap.org/about-us/> (visited June 5, 2022).
31
Rollo, p. 481
Decision 9 G.R. No. 233918

entered into by FILSCA with its members:

1

I. DEFINITIONS

a) "copyright ork" shall mean and include -

XXX

b) "right of pu lie perf~rmance" shall, as provided in Section 171.6

of [the IP Code], ean the right in relation to the recitation playing,
dancing, acting or otherwise performing of a copyright work, either
directly or by means of any device or process, at a place or at places where
persons outside the annal circle of a family or that family's closest social
acquaintances are or I an be present, irrespective of whether they are or can
be present at the s4"1e place _and at the same time, or at different places
and/or at differenttiifes;

c) "right of co~munication to the public" shall mean the right in

relation to the making of the work available to the public by wire or
1
wireless means in su h a way that members of the public may access these
works from a place and time individually chosen by them, per Section
171.3 of [the IP Cod ];

2. ASSIGNMENT O • PUBLIC PERFORMING RIGHTS

a. ASSIGNOR assigns to FILSCAP, the PUBLIC PERFORMING

RIGHTS in ALL c9pyright works which have been composed or written
by the ASSIGNOR at any time, whether before the date of this
Assignment or duridg the continuance of the ASSIGNOR's membership
in FILSCAP, togethbr with all interests and shares of the ASSIGNOR in
the public performipg rights in all copyright works which have been
composed or written by the ASSIGNOR jointly or in collaboration with
any other person or !persons at any such times and all public performing
rights in all copyriglit works which are now vested in or shall hereafter be
acquired by or beet ! e vested in the ASSIGNOR during the continuance
of the ASSIGNOR' membership in FILSCAP, and all parts or shares of,
and interests in, sue public performing rights.

b. FILSCAP s all own, hold, control, administer and enforce said

1

public perfo1ming ri~hts on an exclusive basis for as long as ASSIGNOR

remains a member df FILSCAP. These rights of FILSCAP shall subsist
and will only expire six (6) months from and after the date the
ASSIGNOR ceases o be a member of FILSCAP or until this Assignment
is otherwise lawfully terminated.

c. ASSIGNO~ shall for as long as he/she is a member of FILSCAP,

make, constitute and appoint FILSCAP as his/her true and lawful attorney,
with full power an authority to execute all documents and do all acts,
including licensing f the rights herein assigned, that may be necessary,
proper or expedient to effectively administer/enforce the public
performing rights of 1 SSIGNOR in all his/her copyright works.
 Decision 10 G.R. No. 233918

XX x 32

5. DISTRIBUTION OF ROYALTIES

a. FILSCAP shall from time to time pay ASSIGNOR such sums of

money out of the royalties FILSCAP has collected from the exercise or
licensing of tlie rights herein assigned in accordance with the distribution
guidelines set by the FILSCAP Board of Trustees.

XX x33

On the other hand, the reciprocal agreements entered into by

FILSCAP with other societies contain similarly worded provisions:

ARTICLE 1. By the present contract [foreign society] confers on

FILSCAP the exclusive right in the territories administered by the latter
Society x x x to authorize all public performances x x x of musical works,
with or without lyrics, which are protected according to the national laws,
bilateral agreements and multilateral international conventions relating to
the author's right (copyright, intellectual property, etc.), which at present
exist or which may come into existence and into force during the period
when the present contract is in force.

XX x34

ARTICLE 2. (I) The exclusive right to authorize performances x x x,

entitles each of the contracting Societies x x x:

a) to permit or prohibit x-x-x public performance of works in the repertoire

of the other Society and to grant the necessary authorisations for such
performances;

b) to collect all fees stipulated by virtu_e of these authorizations x x x;

to receive all sums due as indemnification or damages for unauthorized

performances of the works concerned;.

XXX

c) to sue, either in its own name or that of the interested author, all persons
or corporate bodies and all authorities, administrative or otherwise,
responsible for illegal performances of the works concerned;

to transact, compromise, refer to arbitration and take any necessary legal

proceedings;

d) to take any other action necessary to ensure the protection of the

performing right in the works covered by the present contract.

32
Id at 230-231.
33 Id at 231.
34 Id at 271.
Decision 11 G.R. No. 233918

XX x 35

From the foregoi g, it is evident that the first element of copyright

infringement has been atisfied: that FILSCAP has the authority to collect
royalties and/or licens9 fees and sue for copyright infringement. As an
assignee of copyright, it is entitled to all the rights and remedies which the
assignor had with respedt to the copyright. 36

The ''social function" of intellectual

property under the Cons itution

Property in gene al, has been recognized to have a social function.

This can be gleaned fro I Section 6 of Article XII of the Constitution which
provides:

SECTION 6. The us of property bears a social fw1ction, and all economic

agents shall contribute to the common good. Individuals and private
groups, including ! orporations, cooperatives, and similar collective
organi~ations, s~all tjave the right to own, establish, and ~pe~ate _eco!1on:1ic
enterpnses, subJect tb the duty of the State to promote d1stnbutive Justice
and to intervene wheh the common good so demands.

It should be not) , however, that the social function of property has

been interpreted in relal on to the powers of the State to regulate property
rights as in the exercis of police power, eminent domain, and taxation.
Moreover, this should beI balanced out with individual property rights which
likewise deserve protect'on under the Constitution and statutes.

The concept of so ial function of property simply means that the use,
enjoyment, occupation 9r dispo~ition of private property is not absolute. It is
restricted in a sense so ~s to bring about maximum benefits to all and not to
a few chosen individuals. 37 This notion has been applied to real property. In
Ferrer v. Carganillo, 38 he Court stated that the social function of private
property is presented as one of the possible justifications for urban and land
reform.

Likewise, in Soc al Justice Society v. Atienza, Jr., 39 the Court has

1
recognized the individu · l and social function of property in relation to the

35
Id. at 272.
36
INTELLECTUAL PROPER'f CODE OF THE PHILIPPINES, Sec. 180. 1.
37
Ferrer v. Carganillo, 634 Phil. 557,563 (2010).
38
Id.
39 568 Phil. 658 (2008).
 ,

Decision 12 G.R. No. 233918

exercise of the State of its police powers, thus:

Property has not only an individual function, insofar as it has to provide

for the needs of the owner, but also a social function insofar as it has to
provide for the needs of the other members of society. The principle is
this:

Police power proceeds from the principle that every holder

of property, however absolute and unqualified may be his
title, holds it under the implied liability that his use of it
shall not be injurious to the equal enjoyment of others
having an equal right to the enjoyment of their property,
nor injurious to the right of the community. Rights of
property, like all other social and conventional rights, are
subject to reasonable limitations in their enjoyment as shall
prevent them from being injurious, and to such reasonable
restraints and regulations established by law as the
legislature, under the governing and controlling power
vested in them by the constitution, may think necessary and
expedient. 40

Real property has been used as an example, but this also applies to
intellectual property. Section 13, Article XIV of the Constitution also
recognizes the ·protection of intellectual properties, particularly when
beneficial to the people, thus:

SECTION 13. The State shall protect and secure the exclusive rights of
scientists, inventors, artists, and other gifted citizens to their intellectual
property and creations, particularly when beneficial to the people, for such
period as may be provided by law.

The social function of the use of intellectual property 1s also

articulated in Section 2 of the IPC, thus:

SECTION 2. Declaration of State Policy. - The State recognizes that an

effective intellectual and industrial property system is vital to the
development of domestic and creative activity, facilitates transfer of
technology, attracts foreign investments, and ensures market access for our
products. It shall protect and secure the exclusive rights of scientists,
inventors, artists and other gifted citizens to their intellectual property
and creations, particularly when beneficial to the people, for such
periods as provided in this Act.

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.

40
Id. at 707.
Decision 13 G.R. No. 2339 18

It is also the policy of the State to streamline administrative procedures of

registering patents, tJ,a demarks and copyright, to liberalize the registration
on the transfer of technology, and to enhance the enforcement of
intellectual prope11y ,ights in the Philippines. (Emphasis supplied)

Under Section 2 of the IPC, the social function of intellectual

property, including copyright, r~quires "the State to promote the diffusion of
knowledge and information for .the promotion· of national development and
progress and the com0on good." But at the same time, the very same
section requires the State "to promote the diffusion of knowledge and
information for the pro0otion of national development and progress and the
common good." Thus, the social interest in copyright lies in the adjustment
of two objectives: the f ncouraging of individuals to intellectual labor by
assuring them of just rtwards, and by securing to society of the largest
benefits of their produots. 41 Inasmuch as the social function of copyright
restricts the benefits due to the copyright owner, it does not necessarily mean
that they should be d prived of such benefits. The social function of
copyright also affords Pfotection to entice creatives to produce works with
the promise that such wi~_I be protected under the regime of the IPC. In other
words, a simplistic diitinction between the rights of creators and the
common good would otperwise be misleading since these are not mutually
exclusive. The State mpst therefore exercise the necessary balancing act
between these two socia interests.

The social functio, concept is not exclusive to this jurisdiction. In the

US, intellectual prope y has been regarded to possess a social utility
function·. This proceeds from their Constitution which grants the Congress
the power "[t]o -promote the progress of science and useful arts, by securing
limited times to authors and inventors the right to their respective writings
and discoveries."42 The lause has been applied by the Supreme Court of the
United States (SCOTU:+) in several of its decisions. As early as 1932, the
SCOTUS in Fox Film 'iorp. v. Doyal43 stated that the "sole interest of the
United States and the primary object in, conferring the monopoly lie in the
general benefits derive1 by the public from the labour of authors." 44 This
statement has been the cornerstone of the necessary balancing of interests
between the author or c~eator on the one hand, and the society on the other.
According to this concept, intellectual property rights are justified because
they encourage creativitf- Society has a need for intellectual productions in
order to ensure its deve~opment and cultural, economic, technological and
social progress and thel fore gmnts the creator a reward in the form of an

41
Arturo M. Tolentino, The Civll!Code of the Philippines 517 [1 992].
42
U.S. CONSTITUTION, Article I, Sec.~. Clause 8.
43
44
286 U.S. 123, 127 (1932). I
See Christophe Geiger, "'fhr. Social Function of lntelleutual Property Rights or How Ethi cs Can
Influence tht: Shape and Ust: oJ IP Law,'' Max Planck Institute for Intellectual Prope11y and Competition
Law Research Paper No. 13-06, p. 11.: citing Fox Film Corp. v. Doyal, Id.
Decision 14 G.R. No. 233918

intellectual property right, which enables him to exploit his work and to
draw benefits from it. In return the creator, by rendering his creation
accessible to the public, enriches the community. 45

What this means is that the social function of intellectual property is

not one~dimensional as to simply justify the free exploitation of the work. In
fact, the nature of each_intellectual property renders complex the application
of the social fµnction concept. Perhaps, this may be attributed to the varying
roles and functions of the different types of intellectual property. To
illustrate, inventions, - trademarks, utility models, industrial designs,
tradenames and trade secrets require registration to be afforded protection,
while copyright are protected from the moment of their creation, without
need of such formalities. 46

The term of protection for each intellectual property right is also a

clear testament to this. Patents have a term of twenty (20) years; 47 utility
models for a term of seven (7) years; 48 industrial design for a period of five
(5) years. 49 Copyrights are treated differently. In copyright, the work is
protected during the lifetime of the author and for fifty (50) years after his or
°
her death. 5 Copyright protection extends to the expression of particular
ideas rather than the ideas themselves. Patents, on the other hand, give a
right in the exploitation of an idea, which explains a shorter duration (20
years) of legal protection co_mpared to copyright (50 years). 51

The simple nuances between the different kinds of intellectual

creations show the inclination to afford protection to copyright, more than
the other forms. This also created a divide between industrial property (i.e.,
patents, utility models, trade marks) from copyright and neighboring rights
(artistic and literary property). 52 Thus, the notion that intellectual property
should redound to the common good is easier to comprehend in patents, like
drugs and other inventions, since they are basically new solutions to
technical problems. 53 Literary/artistic works or those subject to copyright do
not operate the same way as inventions or those covered by patents.
Copyright protects the form of expression of ideas; the creativity in the
choice and arrangement of words, musical notes, colors, shapes, etc. 54 Thus,

45
ld.atll-J.2.
46
Supra note 26, citing INTELLECTUAL PROPERTY CODE OF THE PHILIPPINES, Sec. 172.1.
47
INTELLECTUAL PROPERTY CODE OF THE PHILIPPINES, Sec. 54.
48 Id. at Sec. 109.3
49 Id. at Sec. 118.
50 Id. at Sec. 200.
51 Supra, note 43
52
See Shahid Alikhan, Socio-Economic Benefits of Intellectual Property Protection in Developing
Countries, World lnt~\lectual Property Organ_izat1on, p. l O. (2009).
53
INTELLECTUAL PROPERTY CODE OF THE PHILIPPINES, Sec. 21.
54 Supra note 43 at 12.
 Decision 15 G.R. No. 233918

it can be said that cop right does not impact people's lives as much as
patented inventions do.

At any rate, ·the present IPC already carries out the objective of
balancing the interests ble tween .the rights of creators and the common go_?d.
An example would be patents. Although patents protect new inventions, :, 5 a
1
patented invention ma)'I be exploited even without the agreement of the
patent owner, under spe ified circumstances. 56

When it comes to copyright, the economic rights of the author is

balanced out by the tf ir use doctrine. 57 The Fair Use Doctrine is an
"equitable doctrine [whiph] permits other people to use copyrighted material
without the owner's consent in 3: reasonable manner for certain purposes. 58

The issue in this 9ase properly relates to the determination of whether

the act of playing radip broadcasts which include copyrighted music in
restaurants can he ~onr ·dered . as public performance, and consequently,
copyright infringement. Guided by the foregoing principles, the Court, in
this case, is called upon o interpret the provisions of the law which provides
the scope and limitation fthe rights of intellectual property owners.

Radio reception is a pe1:formance

I

The very core of the controversy is whether radio reception or by

simply tuning in on the adio as background music in the restaurants owned
by Anrey amounts to a ~iolation of Section 177 .6 of the IPC, or the right to
public performance
.
by F[LSCAP.
I
Anrey believes that radio reception cannot
be categorized as a publfc performance while FILS CAP insists the contrary
claiming that the provisipn of the law defining public performance is broad
enough to cover this kin of situation.

A s'public· perform nee" means:

171 .. 6: "·Publiu .performance,'' in the case of a work other than an

audiovisual work,· i's ~lie recitation, playing, dancing, acting or otherwise
perforrning. the work, either directly or by means of any device or process;
in the case of an aud·ovisual work, the showing of its images in sequence

55 Supra note 53.

56
INTELLECTUAL. PROPERn CODE OF THE PHILIPPINES, Sec. 93,
57
Id. at Sec. 185.
58
Lateef Miima, Coµyri gltt So<.:ii:l C,tiliry and Social fost1ce lmerdependence: A Paradigm for Intellectual
Property Empowem1c:nt and D'igital Entrepreneurship, Volume 112, Issue I, Article 7, p. 106; Campbell
v. Acuff- Rose Music, Inc. 510 .S. 569. 574-77 (1994).
 ,

Decision 16 G.R. No. 233918

and the making ~f the sounds accompanying it audible, and, in the case of
a sound recording, making the recorded sounds audible at a place or at
places where -persons outside the normal circie of a family and that
family's closest social acquaintance are or can be present, irrespective of
whether they are or can be present at the same place and at the same time,
or at different places and/or at different times, and where the performance
can be perceived without the need for communication within the meaning
of Subsection i 71.3. 59 (Emphasis ours)

A "sound recordin.g" means the fixation of sounds of a performance or

of other sounds, or fepresentation of sound, other than in the form of a
fixation incorporated in a cinematographic or other audiovisual work; 60
while a "fixation" is defined as the embodiment of sounds, or of the
representations thereof, from which they can be perceived, reproduced or
communicated through a device. 61

Following a run-down of the above definitions, a sound recording is

publicly performed if it is made audible enough at a place or at places where
persons outside the normal circle of a family, and that family's closest social
acquaintance, are or can be present. The sound recording in this case, is the
copyrighted music broadcasted over the radio which Anrey played through
speakers loud enough for most of its patrons to hear. But the big question is
whether radio reception is, to begin with, a performance.

We believe that the act of playing radio broadcasts contammg

copyrighted music through the use of loudspeakers (radio-over-
loudspeakers) is in itself, a performance.

In tbe AJ.11erican case of Buck, et. al. v. Jewell-LaSalle Realty Co. 62

(Jewell), the respondent, a hotel proprietor, played copyrighted musical
compositions received from a radio br0adcast throughout the hotel by using
public speakers for the entertainment of its guests. AS CAP notified the hotel
of its copyrights and advised that unless a license was obtained, performance
of any of its copyrighted musical composition of its members is forbidden.
Suits for injunction and damages were brought against the hotel. The hotel
argued that radio receiving cannot be held to be performing. The federal
court denied relief
.
against ASCAP, but on appeal,.
the SCOTUS ruled that
the act of respondent in playing copyrighted musical compositions received
from a radio broadcast throughout tbe hotel by means of a public speaker
system was a "performance" within the meaning of the US Copyright Act of
1909. Tbe coun reasoned that a reception of radio broadcast and its

59 INTELLECTUAL- PROPEJUY CODE OF THE PHlLIPPfNES, Sec. 171.6.

60 Id. at Sec. 202.2.
61 Id. at Sec. 202.4.
62 283 U.S. 191, 75 L Ed. 971, :5; '>. Ct. 410.
Decision 17 G.R. No. 233918

translation inlo audible sound was not a mere playing of the original
program, -but - was- reproduction, since complicated electrical
instrumentalities were ne essary. for its reception and distribution.

Then came the c se of Twentieth Century Music Corp. v. Aiken63

(Aiken) , which· temporari ly abandoned the concept that radio reception is a
performance. In Aiken, restaurant received songs broadcasted in the radio
and this was heard all_ t . oughout the area using four speakers. The station
that broadcasted the son{? . is licensed by ASCAP but the restaurant did not
hold such a license, thu_s lit was sued for copyright infringement. On the sole
question on whether radio reception constituted copyright infringement, the
SCOTllS rnled in the !negative. It stated that those who listen do not
perform, therefore do nor infringe. The said court used the analogy that if a
radio station "performs" lamusical composition when it broadcasts it, then it
would require the conch1sion that those who listen to the broadcast through
the use of radio receivers! do not perform the composition.

Finally, the.case of Broadcast.Music_, Inc. v. Claire's Boutiques, Inc. 64

(Claire's) reverted back!to the same rationale laid down in Jewell. As it
stands now, an _establisl ment that plays radio-over-loudspeakers is said to
have publicly performed them. I,n rejecting the conclusions reached in Aiken,
the SCOTUS ruled in thi wise: .

Most relevant to the present case, the Suprerne Court in Twentieth

Century .Music Corp. v. Aiken, dealt with a restaurant owner who played a
radio with four spe · ,ers in his restaurant. Defendant Aiken owned a fast-
food restaurant wherl,customers usually stayed no more than ten or fifteen
minutes. Following Lortnightly, the Court considered that the only
performance in this situation is initiated by the radio station, and Aiken's
I
largely passive act of turning on a radio was held not to be a
performance. Since 11:iken did not perform, he did not infringe anyone's
copyright by playingJ11is· radio in his restaurant. The Court reasoned that a
contrary ruling woul~ result in practical problems because of the large
number of small bulsiness establishments in the United States. As an
economic matter, thd Court felt that a copyright ov,.,ner was adequately
cornpemat~d for his Jvork through his license fee with the radio station.

If Aiken's rati ,nale were to a,pply in our case, the radio playing by
C1a)re's store managers would not be performances and BMI would have
no case. Congress, h~wever, tejected Aiken's rationale, if not its result, in
the Copyright Act o~ 1976. The drafrers defined "perform and "perform
publicly" ·bro,tdly in D 7u_s.c. § 101 :
To "perform" o. -i;voi-k: means to recite, render, play, dance, or act it,
either directly or by eans of.any device or process x xx.

63
422 U.S. : 5 I. 95 S. Ct. 2040.
64
949 F.2d 1482.
 '

Decision 18 G.R. No. 233918

XXX

To perform or display a work "publicly" means -

(l) to perform or display it at a place open to the public or at any place

where a substantial number of persons outside of a normal circle of a
family and its social acquaintances is gathered; or

(2) to transmit or otherwise communicate a performance or display of the

work to a place specified by clause (I) or to the public, by means of any
device or process, whether the members of the public capable of receiving
the performance or display receive it in the same place or in separate
places and at the same time or at different times.

Under these particular definitions, the restaurant owner

in Aiken "performed" the works in question by "playing" them on a
"device" --- the radio receiver. Furthermore, the performances were
"public" because they took place at a restaurant "open to the public." For
the same reasons, Claire's, through th(: actions of its employees, engages in
public performances of copyrighted works when it plays the radio during
normal business hours. (Citations omitted)

It should be noted that Claire :S was decided based on how the present
US copyright law defines the term public performance, which is similarly
worded to our own definition of the said term. Thus, the intention really is to
treat a reception of a radio broadcast containing copyrighted music as a
performance.

Radio reception ·· creates a

copyrightable performance separate
from the broadcast; _the doctrine of
multiple performances

Anrey ad_".'anced the theory, albeit erroneous, that it is exempt from

securing a license since the radio station that broadcasted the copyrighted
music already secured one from FILSCAP.

We are not persuaded.

A radio reception creates a performance separate from the broadcast.

This is otherwise known as the doctrine of multiple performances which
provides that .a radio ( or televtsion) transmission or broadcast can create
multiple performances at once. The doctrine was first conceived in Jewel! 65
wherein the SCOTUS noted that the playing of a record is "a performance

65
Buck er. al v Je»:ell:La Sa//2 Realiy ,-·,,., 283 U.S. 191, 75 L. Ed. 971, 5 l S. Ct. 410.
Decision 19. G.R. No. 233918

under the Copyright Act of I909," and that "the reproduction of the radio
waves into audible sou I d waves is also a performance." 66 Ultimately, the
SCOTUS in Jewell co eluded . that the radio station owner and the hotel
operator simultaneously performed the works in question:

The defendant next rges that it did not perform, because there can be but
one actual perfonnance e_ach time a copyrighted selection is rendered; and
that if .the broacica ter is held to be a performer, one who, without
connivance, receives and distributes the transmitted selection cannot also
be held to have performed it. But nothing in the Act circumscribes the
meaning to be attribhted to the term "performance," or prevents a single
rendition of a copyri! hted s~lecti?n from resulting in more t~an on~ public
performance for prof t. While this may not have been possible before the
development of radio broadcasting, the novelty of the means used does not
lessen the duty of tl-ie courts to give full protection to the monopoly of
I
public performance for profit which Congress has secured to the
composer. 67 (CitatioJ omitted)

Thus, on whether the reception of a broadcast may be publicly

performed, it is immate ial :if the broadcasting station has been licensed by
the copyright owner because the reception becomes a new public
performance requiring s parate protection.

Radio reception and th concept of a

"new public "

We also believe hat the act of playing radio broadcasts contammg

sound rec0rdings through the use of loudspeakers amounts to an
unauthorized communicktion ·of such copyrighted music to the public, thus,
violates the public. perf6rmance rights of FILSCAP. This conclusion is in
harmony with the guidance released by the World Intellectual Property
Organization (WJPO) to the Berne Convention for the Protection of Literary
and Artistic Works, to hich the Philippines is a signatory since 1951. The
Philippines is aiso a sighatory to the Convention establishing the WIPO as
well as the Trade-Relat~d Aspeds of Intellectual Property Rights (TRIPS)
Agreement which incorjporated by reference the provisions on copyright
from the Berne Convenf,on. .

;f
The WIPO is a spl cializ,ed agen(:y the United Nations which has as
one of its primary funcdon~, the assembly and dissemination of information
1
on the protectl<m .of int llectual prnperty.68 As one of the signatories to the

66 Id. at 283 U.S. l % .

67
Id. at 283 IJ S. 198:
68
Convention ~::,tabli~J1ing ·,:·w Vlpdd l11tell~ct11al Pm perry Organization, Article 4.
Decision 20 G.R. No. 233918

convention establishing the WIPO, the WIPQ.guidance has a persuasive or

moral effect in the interpretation of our intellectual property laws. 69 The
WIPO gave the following remarks on the situation when a broadcast is
publicly commwticated by loudspeaker to the public:

11 bis.11. Finally, the thi~d case dealt with in this paragraph is that which
the work which. has been broadcast is publicly communicated e.g., by
loudspeaker or otherwise, to the public. This case is becoming more
common. In places where people gather (cafes, restaurants, tea-rooms,
hotels, large. shops, trains, aircraft, etc.) the practice is growing of
providing broadcast programmes. There is also an increasing use of
copyright works for advertising purposes in public places. The question is
whether the licence given 1:>y the author to the broadcasting station covers,
in addition, all the use made of the broadcast, which may or may not be for
commercial ends.

llbis.12. The Convention's answer is '.'no". Just as, in the case of relay of a
broadcast by wire, an additional audience is created (paragraph (I) (ii)), so,
in this case too, the work is made perceptible to listeners (and perhaps
viewers) other than those contemplated by the author when his permission
was given. Although, by definitiou, the .number of people receiving a
broadcast-cannot be ascertained with any certainty, the author thinks of his
licence to broadcast as covering only the direct audience receiving the
signal "within the family eircle. Once this reception is done in order to
entertain a wider circle, often for profit, an additional section of the public
is enabled to enjoy the work and it ceases merely a matter of broadcasting.
The author is given control over this new public performance of his work.

llbis.13. Music has already been used as an example, but the right clearly
covers all other works as well -- plays, operattas, lectures and other oral
works. Nor is it confined to entertainment; instruction is no less important.
What matters is whether the work which has been broadcast is then
publicly" coi:iimunicated by loudspeaker or by some analogous instrument
e.g. a television screen. 70

The foregoing introduces the concept of a "new public." Typically,

radio stations already secured from the.copyright owner (or his/her assignee)
the license to broadcm,t the so1md recording. And by the nature of
broadcasting, it is necessarily implied that its reception by the public has
been consented to by the copyright owners. But the author normally thinks
of the license to broadcast asto "cover only the direct audience receiving the
signal within th<' family circle." Any further communication of the reception
creates, by legal. fiction, a "nev,; public" which the author never
contemplated when they authorized its use in the initial communication to
the public.

69
Intergovernmental Committee and Intellt..-(lll(.t.1 Prnpc:11.y aud Genetic Re$ources, Traditional Knowledge
and Folklore, 14th Session, Geneva, .June 29 to July 3, 2009.
70
WIPO •·· Guide to the Berne Convention, pp. li8-69.
Decision 21 G.R. No. 233918

This concept was emphasized by the Court of Justice of the European

Union (CJEU) in the c se of Ochranny svaz autorsky pro prava k dilum
hudebnim o.s. ·v. · Lecebnf lazne Marianske Lazne a.s. (OSA)7 1 There, OSA, a
collecting agerrc y for ar thors of musical works, was claiming fees from
Lecebne lazne; a cornprny with spa establishments. Purportedly, the spa
establishments have rad~'o and television sets installed through which works
managed by OS A wei made available to the patients of Lecebne lazne,
without e_ntering into a l' censing agreement with OSA.

The CJEU state · that the concept of "communication" must be

construed as referririgl to any transmission of the protected works,
irrespective of the mean$ used. For purposes of determining whether there is
a "communication to the public," the CJEU explained that it would be
necessary to establish that the protected work was transmitted to a "new
public", or a public whibh was not taken into account by the authors of the
protected works when !hey authorized use through communication to the
"original public." The CJEU confirmed that the patients of the spa
establishment constitute a "new public." This is because the establishment
intervenes, in full kno ledge of the consequences of its actions, to give
access to the protected Jrorks tq its patients. Without the intervention of the
spa establishment, the atients -would not be able to enjoy the protected
works.

Public perfmmance v. other

communication to the ublic of the
work.

The dis4uisitiom; above show that Anrey infringed on the public

performance right of FIi SCAP when it played music by means of radio-
over-loudspeakers. it is suggested that Anrey equally violated FILSCAP's
right to communic:ate to he public the songs from its repertoire.

The. Berne Cuove~tion-provides that authors of musical works shall

enjoy the exclusive rigpt of authorizing the public performance of their
works including the "pul:plic pertormance by any means or process" and "any
communication to the pJ blic of the performance of the works," thus:

ARTICLE 11
Right i?f Public f'erfrmnancc
Article 11, paragraph ( 1)

71
C-35I/ 12; ECLJ:EU:C:2014: I IQ.
Decision 22 G.R. No. 233918

Scope ofthe Right

(I) Authors of dramatic, dramatico-musical and musical works shall enjoy
the exclusive right of authorizing:
(i) Lhe public performance of their works, including such
public performance by any means or process;
(ii) any communication to the public of the performance of
their works.

The scope of these rights was explained in the 1978 WIPO Guide to
the Ben1e Convention:

11.4. However, it goes on to speak of "including such public performance

by any means or process", and this covers performance by means of
recordings; there is no difference for this purpose between a dance hall
with an orchestra playing the latest tune and the next-door discotheque
where the customers use coins to choose their own music. In both. public
performance takes place. The inclusion is general and covers all recordings
(discs, cassettes, tapes, video grams, etc.) though public performance by
means of cinematographic works is separately covered-see Article 14(1)
(ii)." [underscoring supplied]

11.5. The second leg of this right is the communication to the public of a
performance of the work. It covers all public communication except
broadcasting which is dealt with in Article ll 6bis. For example, a
broadcasting organisation broadcasts a chamber concert. Article ll 6bis
applies. But if it· or some other bo~y diffuses the music by landline to
subscribers this is a matter for Article 11. 72 (Underscoring supplied)

Article 11 bis of the Berne Convention further provides for the

exclusive right, among others, of authorizing the "the public communication
by loudspeaker or any other analogous instrument transmitting by sign,
sound or images, the broadcast of the work." Again, the relevant portions of
the 1978 WIPO Guide to the Berne Convention provide this explanation:

. -
11 bis. l. This provision is of particular importance in view of the place
now taken by broadcasting (which. it must be remembered. includes both
radio and television) iri. the world of information and entertainment. It is
the fourth of the author's exclusive rights to be recognised by the
Convention, the other three being those of translation, reproduction and
public performance. The Rome Revision (1928) was the first to recognise
the right "of authorising the communication of... works to the public by
radio and television". Slightly muddled in its tenns, the text was like
broadcasting itself-in its infancy. it was in Brussels (1948) that the
subject was more fully considered and the right broken down into its
various facets in order to take account of the various ways and techniques

72
WIPO - Guide to the Berne Convention, pp. 64-65.
Decision ?''
_.) G.R. No. 233918

by which it might b exploited. Neither Stockholm nor Paris made any

change, other than o provide a more ·suitable translation in the newly
authentic English tex .

XXX

11 bis.2. Thi~ par graph divides the right into three.

of a work

}Vireless diffusion of signs, sounds or images. It applies to both sound and

television . broatlcastt What .matters is- the emission of signals; it is
immaterial whether dr not the are in fact received."

XXX

l l bis. l .I. Finally, the third case dealt with in this paragraph is that in
which the work whi h has been broadcast i~!-,licly communicated e.g.,
b louds eaker or otherwise to the ublic. This case is becoming more
common. In places where people gather (cafes, restaurants, tea-rooms,
hotels, large shops, trains, aircraft, etc.) the practice is growing of
providing broadcast programmes. . There is also an increasing use of
copyright works for dvertisirig purposes in public places. The question is
whether the licence iven by the author to the broadcasting station covers,
in addition, all the use made of the broadcast, which may or may not be for
commercial ends.

11 bis, I).. The C nvention's answer is "no". Just as, in the case of a
relay o( a broadcast bv wire, an additional audience is created (paragraph
1 ii so in .this dse too the work is made erce tible to listeners and
perhaps viewers) ot er than those contemplated by the author when his
permissio11., was given. Although, by definition, the number of people
receiving ,1° broadcast cmmot. br ascertained with any certainty, the author
thinks of h1,;; licencd to broadcast as covering only the direct audience
receiving ihf: signal \.lrithin the family drcle. Once this reception is done in
order to entertain a i ider circle, often for profit, an additional section of
the public is enabled lto enjoy the work and it ceases to be merely a matter
of broadc_asting. Tlf author is given control over this new public
performance of h!s _work. 73 (Underscoring_suppli~d)

In sum, public p .rfonnance right includes broadcasting of the work

[music] and specifically!covers the use of loudspeakers. This is the very act
Anrey is_complained ofl infringing. As to whether Anrey also infringed on
FILSCAP's right tc,r communicate to the public, given the factual scenario of
the case, this should be i nswercd i11 the negative.

The infringing ac s wok place on 2008. At tli.e time, the IPC defines
"communication to the public or '\:ommunicate to the public" as:

73
Id. at 68-69.
Decision- 24 G.R. No. 233918

Sec. 171. Definitions. - For the purpose of this Act, the following terms
have the following meaning:

XXX

171.3. "Communication to the public" or "communicate to the

public" means the making of a work available to the public by wire or
wireless means in such a way that members of the public may access these
works from a place and time individually chosen by them;

And, in relation to performances and sound recordings, Sec. 202.9 of the

same law defines "communication to the public" as:

202.9. "Communication to the public of a performance or a sound

recording" means the transmission to the public, by any medium,
otherwise than by broadcasting, of sounds of a performance or the
representations of sounds fixed in a sound recording. For purposes of
Section 209, "communication to the public" includes making the sounds or
representations of sounds fixed in a sound recording audible to the public.

The text of Section 171.3, particularly the phrase "the making of a

work available to the public by wire or wireless means in such a way that
members of the public may access these works from a place and time
individually chosen by them" was lifted from Article 8 of the WIPO
Copyright Treaty (WCT) 74 of which the Philippines became a member in
2002. Article 8 reads:

Article 8
Right of Communication to the Public

Without prejudice to the provisions of Articles 11 (1 )(ii), 11 bis(l )(i) and

(ii), 11 ter(l )(ii), 14(1 )(ii) and 14bis(l) of the Berne Convention, authors of
literary and artistic works shall enjoy the exclusive right of authorizing any
communication to the public of their works, by wire or wireless means,
including the making available to the public of their works in such a way
that members of the public may acce·ss these works from a place and at a
time individually chosen by them. (Underscoring supplied)

Apparently, the phrase "the public may access these works from a
place and time individually chosen by them" refers to interactive on-demand
systems like the Internet It does not refer to other traditional forms like
broadcasting and transmitting of signals where a transmitter and a receiver
are required as discussed in the WIPO Guide to the Berne Convention. Here
is the WIPO explanation of the WCT:

74
<https://wipolex.wioo.int/en/text/295166> (visited July 20, 2022).
 Decision 25 G.R. No. 233918

The WIPO CopyrJ bt 'I rcaty (\IT Ji is a special agreement under the
Berne Convention t~at I
deals with the protection ·of works and the rights of
their authors in the di ital environment."

"As to the righ.ts gra ted to authors, apart from the rights recognized by the
Berne Corivention, the Treaty also grants: (i) the right of distribution; (ii)
the right of rental; a-Act (iii j a broader right of communication to the public.

''The right of communication to the public is the right to authorize any

communication to the pi.1_5lic, by_ wire or wireless means, including "the
making available to !the public of works in a way that the members of the
public may _a~cess tlie work from a place and at a time individually chosen
by them". Jhe quoted expression covers, in particular, on-demand,
interactive commun~cation through the Internet. 75 (Underscoring supplied)

Prior to amendm nt of the IPC by RA 103 72, communication to the

public is defined as the making of a work available to the public by wire or
wireless means in such a way that members of the public may access these
works from a place and time individually chosen by them. The WIPO, on the
other hand, limited this to interactive op-demand systems like the internet.
• I·

1
The phrase, ' ot~er communication to the public," however, still
pertains to the advanc9d methods of communication such as the internet.
The use of the word '·o~her" is simply to segregate its application from the
traditional method~ ofcpmmunication such as performing the radio out loud
to the public or by met ns of loudspea~e~s. T~e I~C under RA 8293 made
use of the word "otHer" only to d1stmgmsh 1t from what has been
traditionally considered part of the public performance rights of the
copyright owner under the· Act 3134.
- - I
It should be noted that prior to the adoption of the IPC through RA
8293, the Philippines ~nly had Act 3134, or the Copyright Law of the
Philippine Island, whi9h was patterned from the US Copyright Law of
1909. 76 Act.3134 never mentioned of the right to communicate to the public.
Nonetheless, case la'.,v l in the · US 77 and even the Berne Convention78
considers the right to cuhJmunicate as part of the author's right to exploit the
public performance oft . e copyrighted work.

It is clear that Sebtion 1·n.: 0f the IPC on "Other communication to

the public of the wor. ," covers only the original definition of the term

- ----·-· ··-··--· .
75
<https://www.wipo. in Utrc::atit: ;ien/i /wct'su111111ar.y wet.html -, (visited July 20, 2022).
76
<https :/iwww.ipoph iI.gov.Qh!n ws/thc-i:.lJ:_0 1lectual-12.[operty-s ys tem-a-brief-h istory-'2/> ( visited on
August 9, 2022), ·
77
Supra note 65.
78
Supra note 70.
Decision 26 G.R. No. 233918

"Communication to the Public" under Sec. 171.3, i.e. on demand, interactive

communication through the Inte111et. Thus, insofar as this case is concerned,
it is suggested that "Public Performance" under Section 177.6 includes any
communication to the public as defined in Section 171.6 and under Article
11 and Article llbis of the Berne Convention as explained in the 1978
"'1PO Guide to the Berne Convention. On the other hand, "Other
communication to the public" under Section 177.7 covers all other
"communication to the public" as defined in Section 171.3 and not covered
in Section 171.6. In particular, the term "Other communication to the public"
includes interactive on-demand systems and digital sharing on the Internet.

Exemptions and limitations to

copyright infringement

The question now is, whether the case falls under any of the
exceptions or limitations on copyright. Our IPC only lists the limitations on
copyright:

Sec. 184. Limitations on Copyright. -

184.1. 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. I 0(1 ), P. D.
No. 49)

(b) The making of quotations from a published work if they are compatible
with fair use and only to the extent justified for the purpose, including
quotations from newspaper articles and periodicals in the form of press
summaries: Provided, That the source and the name of the author, if
appearing on the work, are mentioned; (Sec. 11, Third Par., P. D. No. 49)

(c) The reproduction or communication to the public by mass media of

articles on current political, social, economic, scientific or religious topic,
lectures, addresses and other works of the same nature, which are delivered
in public if such use is for information purposes and has not been expressly
reserved: Provided, That the source is clearly indicated; (Sec. 11, P. D. No.
49)

(d) The reproduction and communication to the public of literary, scientific

or artistic works as part of reports of current events by means of
photography, cinematography or broadcasting to the extent necessary for
the purpose; (Sec. 12, E D. No. 49)

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

communication to the public, sound recording or film, if such inclusion is
Decision 27 G.R. No. 233918

made by way of illustration for teaching purposes and is compatible with

fair use: Provided, That the source and of the name of the author, if
appearing in the work, are mentioned;

(f) The recording made in schools, universities, or educational institutions

of a work included ~1 a broadcast for the use of such schools, universities
or educational institutions: Provided, That such recording must be deleted
within a reasonable period after they were first broadcast: Provided,
further, That such recording may not be made from audiovisual works
which are part of the general cinema repertoire of feature films except for
brief excerpts of the work; ·

(g) The making of ephemeral

I
recordings by a broadcasting organization by
means of its own facilities and for use in its own broadcast;

(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;

(i) The public perfor)11ance or' the communication to the public of a work,
in a place where no admission fee is charged in respect of such public
performance or communication, by a club or institution for charitable or
educational purpose only, whose aim is not profit making, subject to such
other limitations as may be provided in the Regulations; (n)

U) Public display of he original or a copy of the work not made by means

of a film, slide, television image or otherwise on screen or by means of any
other device or proce s: Provided, That either the work has been published,
or, that original or the copy displayed has been sold, given away or
otherwise transferred to another person by the author or his successor in
title; and

(k) Any use made of a work for the purpose of any judicial proceedings or
for the giving of professional advice by a legal practitioner.

None of these aJply in this case. While the RTC considered Anrey
exempt from copyright infringement under paragraph (i) of the above
provision since it doe1s not charge admission fees, 79 We find this a
misapplication considering that the exemption only applies to institutions for
charitable and educational purposes. 80

On the other hand, the CA ruled that Anrey was exempt from
obtaining a license sincd it is a small business establishment using only t_wo
loudspeakers. The CA f1-pparently based . it on US law and jurisprudence
exempting small busines establishments.

79
Rollo, p. 443. I
80
INTELLECTUAL PROPERTY CODE OF THE PHILIPPINES, Sec. 184.1 (i).
Decision 28 G.R. No. 233918

We disagree. The exemption granted under US law cannot be

extended to determine ";hether or not an individual or entity in the
Philippines·· is exempt from - obtainlng a license or from copyright
infringement. · Intellectual properly is primarily a private right. Being a
private right, its protection would depend on the .national law of the country
it seeks to enforce protection for. Put it simply, the rights and exemptions on
FILSCAP:s copyright shall be governed by Philippine law, even though
some or most of the clients it represents are abroad.

Besides, .this conclusion disregards the .fact that some of the songs
which FJLSCAP seeks to enforce its economic rights, and which Anrey
admits, are local songs whose copyrights are owned and assigned by local
composers to FILSCAP. 81 Thus, it is erroneous to extend the exemption
granted under foreign copyright laws to these public performances. It is
settled that in the enforcement of a private right, the national law of the State
shall govern. If We extend those exemptions to Anrey even if they are not
expressed under the local statute, then We would, in effect, be legislating on
such exemptions and usurp the functions of lawmakers.

Radio reception transmitted through

loudspeakers to enhance profit does
not constitute, und is not analogous to,
fair use

Neither does the unauthorized transmission of the radio broadcast,

which plays copyrighted music, for commercial purposes be treated as fair
use. Section 184 of the IPC provides for the limitations on copyright or such
acts that do not constitute copyright infrir1gement. As discussed, the public
performances of the copyrighted works in this case were not done privately
or made strictly for a charitable or religious institution or society; 82 for
information purposes; 83 as part of reports of current events; 84 for teaching
purposes; 85 for public interest; 86 or for charitable or educational purpose; 87
or for any judicial proceeding or giving of profe5sional legal advice. 88

In this case, th~i reception w::.i.s transmitted through loudspeakers

within Anrey's restaurants. _Anrey's restaurants are commercial

81 SeeTSN, JJ fone:?014.
82
INTELLECTUAL PROPERTY CODE OF THE PHILIPPINES, Sec. 184(a).
83
Id. at Sec. l 84(c).
84
ld. at Se,. 184(d).
85 Id. at Sec. 184(e) & (f).
86
Id. at $ec, l 84(hJ.
" Id. at Sec. 184(i).
88 Id. at Sec, 184(k).
Decision 29 G.R. No. 233918

establishments' open ··to the public. :\.nrey is engaged in the business of

running restaurants, ·w h se end.:.goal is clearly profit making. While Anrey
does not directly e-harge a fee for playing radio broadcasts over its speakers,
such reception -i_s clearl clone to enhance profit-by providing entertainment
to the public, particularly its customers, who pay for the dining experience in
~ey's rest~urants. M9reover, .the ~u~·chase and maintenance costs of the
rad10 transm1_tters :and l~u.dsp~_akers m its restaurants, although they may not
be as significant as thos°f of live perfonnances or hiring an in-house DJ, are
still operating or business expenses on the part of Anrey. Surely, Anrey
would not put up such rcldio reception and loudspeakers if not to enhance the
overall ambiance and qining experience in its establishments, all for the
purpose of economic gain. Clearly, this does not fall under any of the
limitations in Section 18 of the IPC.

Meanwhile, Secti n 185 of the IPC provides for the fair use of a
copyrighted work, i.e., the use must be for criticism, comment, news
reporting, teaching including multiple copies for classroom use, scholarship,
research, and similar burposes. In determining whether the use of a
I
copyrighted work amo nts to fair use; the factors to be considered shall
of
include: (1) the purpose and character the use, including whether such use
is of a commercial nature or is for non-profit educational purposes; (2) the
nature of the copyright d work; (3) the amount and substantiality of the
portion used in relatio to the copyrighted work as a whole; and ( 4) the
e
effect of the use upon t potential market for or value of the copyrighted
work. 89 ·

In J4BS-CBN Cor1·,_v. Gozon,90 the Court expounded on these factors.

Under the first factor, the Court stated· that "commercial use of the
copyrighted work can e weighed against fair use." 91 As to the second
factor, if the nature of he copyrighted work is creative than factual, then
fair use will be weighe~ against the user. As to the third, the Court stated
that "an exact r~produ tion -,?f a copyrighted work, compared to a small
portion of it, can resu t in the conclusion that its use is not fair." In
relatio_n to this, the Cou1f cited as an example of use that is not fair where the
use of "a copy of a work. produced purely for economic gain." And as to the
Jf
fourth factor,· if the use the copyrighted work "had or will have a negative
impact on the copyrightJd work's market, then the use is deemed unfair."

Section 107 of the US Copyright Act provides for the same four
factors to be comjdere , in determining whether the use of a copyrighted

89 Id. at Sec. J 85,

90
755 Phil. 709 (2015).
91
Id. at 758.
Decision 30 G.R. No. 233918

work is fair use. In US Songs, Inc. v. Downside Lenox, Inc. ,92 the US District
Court for the Northern District of Georgia held that the defendants therein
completely failed to demonstrate how their use of the copyrighted songs, by
broadcasting or playing them by means of radio-over-loudspeakers system
throughout a public bar and restaurant area, constitutes as fair use. The Court
held that the use in this case cannot be characterized as fair use as defined
under Section 107 of the US Copyright Law. This is because "[f]irst, the
performances in question were made at a bar and restaurant, clearly a
commercial venture. Second, the songs were played in their entirety, not
portions thereof."

On the second fair use factor, the recent case of Google v. Oracle, 93
made a distinction between copyrights that have a functional purpose against
the creative and artistic types. The Supreme Court of the United States
(SCOTUS) ruled that computer programs differ to some extent from many
other copyrightable work because _computer programs always serve a
functional purpose. Because of this difference, the SCOTUS accorded lesser
protection to computer programs "by providing a context-based check that
keeps the copyright monopoly afforded to computer programs within its
lawful bounds'." The fact that computer programs are primarily functional
makes it difficult to· apply traditional copyright concepts in that
technological world. Copyright's protection may be stronger where the
copyrighted material is fiction, not _fact, where it consists of a motion
picture, rather than a news broadcast, or where it serves an artistic rather
than a utilitarian function. 94 Music falls under the more artistic and creative
aspect that deserve more protection than other copyright works.

Finally, the US case of Campbell v. Acuff-Rose Music, Inc., 95 ruled

that as to the fourth factor in determining fair use, courts must also consider
"'whether unrestricted and widespread conduct of the sort engaged in by the
defendant ... would result in a substantially adverse impact on the potential
market' for the original." 96 Moreover, the SCOTUS held that fair use is an
affirmative defense, and thus the party invoking it carries the burden of
demonstrating fair use of the copyrighted works.

It may prove helpful in illustrating the four factors on fair use if we

apply them to our day-to-day activities, to wit:

92
771 F. Supp. 1220 (N.D. Ga. 1991).
93
593U.S.~(202J)
94
Id. at p. 15; see also Stewartv. Abend, 495 U.S. 207 at 237-238 (1990), Harper & Row, Publishers, Inc.
v. Nation Enterprises, 471 U.S. 539 at 563 (1985).·
95
51 O U.S. 569 (1994).
96
Id. at 590.
 Decision 31 G.R. No. 2339 18

(1) An organkation t:stabiished to promote awareness of

the hardships endured · by street children arranges an
enclos~d gallJry in the high school cafe~eria showcasing
its membersj · photographs of street · children. The
organization charges a viewing fee of 10 pesos to visitors
to raise funds to cover its administrative and operational
expense§. To ·mprove the atmosphere of the gallery, the
organization lays the entire album of _Smokey Mountain
. which.in_clu_d~ . the song "Paraiso."
• : ' • ' • • I • •

· (2) A taxi driver listens to the radio inside his car for his
own indulgenbe but regularly receives huge tips from his
passengers fo playing music through his radio.

(3) A small-c{'1·inderia owner sings the entirety of her

favorite songi all day to entertain her customers who
keep coming l:l,ack.
I
(4) A teenager · plays the Eraserheads album in the
background ti improve the ambiance in a garage sale.

A custome sings all the hit songs of Queen onstage in

( 5)
a karaoke bar where more than 500 customers regularly
go every nigh 97 1•

As explained by }\ssociate Justice Alfredo Benjamin S. Caguioa, in

the first, second, and l~st examples, although the purpose for playing or
singing the c.;opyrighted ·ongs is not transformative, considering the personal
and noncommercial or donprofit natu·re of the intended purpose for listening
to and playing music ih the gallery venue: inside a car, and in a karaoke bar,
the first factor should L> weighed in favor of fair use. In the first example,
although the organizaticiln charges a viewing fee, the same is not for profit
since the purpose is to cover the organization's administrative and
operational expenses. Similarly, the money earned by the taxi driver from
tips received from his µiusic-loving passengers is merely incidental, and
should not be weighed a . ainst a finding of fair use.98

In all these examp les:· both the second and third fair use factors should
1
be weighed against a finding of fair use. Following the rulings of the US
Court, th~ Fai~: Us~ Dpctrine · should find lesser. application in case of
reproduct10n ot .creative orks s_u ch as songs or music. 99
1
- - - - - - -···-·-----
97 Supra note 28.
98 Id
99 Id.
Decision 32 G.R. No. 233918

Lastly, the fourth and .rnost important element should favor a finding
of fair use for all of the exatnples. First, the playing of songs will unlikely
affect the potential ~arket for the original and derivative works since the use
of copyTighted songs are only done for a limited period .of time, i.e., during
the duration of.the gallery, ·the car ride; and the garage sale. In addition, the
public performance; Le., the singing of copyrighted songs, are only done by
small-scale users and should not cause considerable harm to the potential
market of the original or derivative works. 100 ·

The present case is far from analogous from the above examples.
Neither does /\nrey's use permissible under Section 185 of the IPC on fair
use: for comment, criticism, news reporting, teaching, scholarship, research
and similar uses. And assuming that_ Section 185 applies, the four-factor
application and analysis would not favor fair use.

First, the purpose and character of the use of the copyrighted songs
are undeniably commercial, being played throughout the restaurants of
Amey, which ..are open to the public, for the entertainment of Anrey's
customers. Commercial use exchidesfair use and should be weighed against
it.

Second, the nature of the copyrighted songs is creative rather than

factual, and thus fair use is weighed against the user, Anrey.

Third, an exact reproduction of the copyrighted songs are made when

they are played by means of radio-over-loudspeakers, and not just small
portions thereof, supporting the conclusion that their use is not fair. The fact
that some customers may not hear or listen to the entire copyrighted music
played -in the radio reception is not significant. The fact remains that the
copyrighted music from the radio- reception transmitted through the
loudspeakers is exactly reproduced or played in whole, and not just portions
thereof.

Fourth, th,; use of the c:opyrighted songs in this case could "result in a
substantially adverse impact on the potential market for the [subject
copyrighted songs]!' The unrestricted and widespread conduct of playing
copyrighted music by means of radio-over-loudspeakers in public
commercial places for entertainment of the public would substantially
impact restaurants, bars, clubs, ';)J1d other commercial establishments, which
are potential market for the subject copyrighted songs. Such use should thus
be deemed unfair. · ·

100 Id.
Decision :·U G.R. No. 233918

The foregoing arialysis docs not favor fair use of the copyrighted
works of FILS CAP. ·Thf ·playing of copyrighted music by means of radio-
over-loudspeak~rs in a l o!nm~rci~l setting is not analogous to fair use as to
exempt Anrey from copyright 19frmgement.

Besides, the prov sion .on fair use, should be read together, and must
be in hannony wi_th Sec . .184.2, thus:

"The provisions of lhis section shall be interpreted in such a way as to

allow the wo'r k to ,bb used in a manner· which does not conflict with the
normal exploitation lo f the work and does not unreasonably prejudice the
right holder's legitim te interests."

The free use by commercial establishments of radio broadcasts is

beyond the normal ex .Joitation of the copyright holder's creative work.
Denying the petition ould gravely affect the copyright holder's market
where instead of paying!royalties, they use free radio reception. If we apply
this exception to restaw:~nts in tbis case, it will also affect other uses in
similar establishments ]:ike malls, department stores, retail stores, lounges
and the like. It will hav a huge economic impact on the music industry in
general.

It is worthy to note that FILSCAP has granted licenses to numerous

businesses, including -hpt not limited to: ( l) malls and retail stores; (2)
hotels, resorts, and inrls; (3) music lounges; (4) transport services; (5)
hospitals; (6) amusemen~ centers; (7) restaurants; and (8) wellness centers. 101

It follows that sh uld there be a pronouncement expressly exempting

radio reception for co~ niercial use from the license requirement and
payment of the proper ~fees to copyright owners, a significant number of
these businesses may~o .L to resort to broadcast copyrighted music through
the radio instead. The c' ear result of this is that other businesses would be
allowed to profit, no Incl! ter how minimal, using another's work, with lesser
income to songwriters composers, and artists. Likewise, entities with
operations similar to that conducted by FILSCAP, if any, may likewise be
I
negatively affect_e<l. by s c~ a_ n1hng. . _

This would be contrary to the provisions of our intellectual property

laws, which expressly lim
to protect the rights of copyright owners over
their intellectual property .and creations.

10 1
<https://1'ilscap.org/v,J2_-cont~nlil'uplo ads(~022LQl~2(1l 1-Li;;c-of-Lit:ensees.pd f:~ (visited June 5, 2022).
Decision 34 G.R. No. 233918

Comparisons overseas_: the dispute

mechanism by the WTO

A look into how the other member states and signatories to the Berne
Convention and TRIPS Agreement perceive transmissions embodying a
perfonnance or display of a work communicated to the public without the
copyright owner's consent justifies Our position on the matter.

In the EU, particularly the case of Phonographic Performance

(Ireland) Ltd v. Ireland, 102 involving phonogram producers, the CJEU
resolved the issue of whether a hotel operator which provides in guest
bedrooms televisions and/or radios to-which it distributes a broadcast signal,
a "user" making a "communication to the public of a broadcast phonogram.
The CJEU first stressed that a "user" makes an act of communication "when
it intervenes, in full knowledge of the consequences of its action, to give
access to a broadcast containing the protected work to its customers."
Accordingly, in the absence of the intervention, the customers would not, in
principle, be able to enjoy the broadcast work even if they are within the
area covered by the broadcast.

The CJEU proceeded to confirm that indeed, the action of the hotel in
giving access to the broadcast work to its customers constitutes an additional
service which has an influence on its standing, and ultimately, ori. the price of
its rooms. As to whether the hotel operator must pay equitable remuneration
in addition to that paid by the broadcaster, the CJEU ruled that "a hotel
operator which carries out an act of communication to the public transmits a
protected work to a new public, that is to say, to a public which was not
taken into account by the authors of the protected work when they
authorized its use by communication- to the original public." Therefore, it
was concluded that the hotel operator must likewise pay equitable
remuneration to the phonogram producers.

Although involving an online platform, the ruling of the England and

Wales Court of Appeal - Civil Division (England and Wales CA) in Tuneln
Inc. v. Warner Music UK Ltd. & Anor 103 is similarly instructive. In this case,
the claimants either represent, own, or hold exclusive licenses to copyrights
in sound recordings of music. On the other hand, defendant Tunein is a
company that operates Tunein Radio, which enables users in UK to access
radio stations from around the world by broadcasting the same on the
internet.

10
2 EUECJ C-162110 [2012].
103
EWCA Civ 441 [2021].
Decision 35 G.R. No . 233918

The England an Waks_ CA ,)arified that every transmission or

retransmission 0f the work by a specific technical means must be
individually aµthorized by the copyright holder. Further, for purposes of
determining.whether the e is "communication," the appellate court explained
that the work must be _rliade avaiiable to the public in such a way that they
may access it, whether o~ not they actually access the work. It confirmed that
there is commupication Ito .the public in the "transmission of television and
radio broadcasts, and sof nd recordings included therein, to the customers of
hotels, public houses, :pas, cafe-restaurants and rehabilitation centres by
means of . -
television
. .. .
~
and radio
.
sets". As Tuneln is a different kind of
communication targeted at a different public in a different territory, the court
concluded that the right of the copyright holders in this case were violated.

I
In the OS.11 case 104 the CJEU introduced the dichotomy between the
"new public," or a public which was not taken into account by the authors of
the protected works when they authorized use through communication to the
"original public." This divide led to the logical conclusion that what was
critical, for purposes of fhe CJEUrs reso_lution, was to determine whether the
spa establishmenf·had a existing license with the collecting agency. Since
the spa establishment· was transmitting the protected works to a "new
public," it would be· reqiuired to obtain a license separate from those duly
authorized by the copyilight owners in the communication to the "original
public." Applying this by analogy to the instant case, it is immaterial
whether the commercir.l broadcasting station, from which the alleged
infringer was obtaining rhe protected works: had an existing license. What is
relevant is the determination of whether the alleged infringer had duly paid
the fees for the commumcation or performance of the copyrighted works.
. I . .
Elsewhere, the US' introduction of the business exemption triggered
the dispute mechanism t y the World Trade Organization (WTO), an agency
which has entere,J into ~ cooperation agreement with the WIPO to facilitate
the implementation of the TRIPS Agreement among nations. 10 5 On January
26, 1999, a ·request for bonsultation was initiated under the auspices of the
WTO by the European Communities and their member states against the US.
The request relates to s bction 110(5) of the US Copyright Act, as amended
by the Fairness in Music Licensing Act, particularly the so-called business
exemption prmiision, w* ch is alleged to be inconsistent with the obligations
of the US under the 1[RlPS Agreement and the Berne Convention. The
European Communities t eq uested the establishment of a panel, and the panel
was established by the l Dispute Settlement Body on l.Vlay 26, 1999. The

104 Supra note 71.

105
<-https://www.wto .or~it:nglish/1t'atOQ_<.:.l.1•.ill~ .illt..:13 c. l1lm~: <·; 1s1ted July 11 , "2022).
Decision 36 G.R. No. 233918

Panel's Report was circulated on June.15, 2000. 106 As stated in the Summary
of Key Panel Findings, the Panel essentially found that:

xxx the "business exemption" did not meet the requirements of Art.
13: (i) the exemption did not qualify as a "certain special case" under Art.
13, as its scope in respect of potent~al users covered "restaurants" (70 per
cent of eating and drinking establishments and 4 5 per cent of retail
establishments), which is one of the main types of establishments intended
to be covered by Art. l lbis(l)(iii); (ii) second, the exemption "conflicts with
a normal exploitation of the work" as the exemption deprived the right
holders of musical works of compensation, as appropriate, for the use of
their work from broadcasts of radio and television; and (iii) in light of
statistics demonstrating that 45 to 73 per cent of the relevant establishments
fell within the business exemption, the United States failed to show that the
business exemption did not unreasonably prejudice the legitimate interests
of the right holder. Thus, the business exemption was found inconsistent
with Berne Convention Art. llbis(l)(iii) and ll(l)(ii). 107

It is notable in this case that the US did not appeal the Panel's Report
and thus the case proceeded to the compliance and implementation stages
where arbitration was used to evaluate both the reasonable period of time for
the implementation and the award of damages due. The Arbitrator awarded
3.3 million USD for three years at issue in the case. The decision has yet to
be fully implemented. 108

The foregoing shows that even the business exemption provided under
Section 110(5)(b) of the US Copyright Act, as amended, which essentially
allows the amplification of music broadcasts, without an authorization and a
payment of a fee, by food service and drinking establishments and by retail
establishments, provided that their size does not exceed a certain square
footage limit, and also allows such amplification of music broadcasts by
establishments above this square footage limit, provided that certain
equipment limitations are met, 109 was considered to be inconsistent with the
TRIPS Agreement and the Berne Convention. Thus, the same violates the
rights of copyright owners.

Applying this same logic domestically, the PSA recorded a total of

957,620 business enterprises operating in the country. Of these, 952,969
(99 .51 %) are Micro, Small, and l\1edium Enterprises (MSMEs) and only
4,651 (0.49%) are large enterprises. Micro enterprises constitute 88. 77%

106
<https://www.wto.org/english/tratop_ e/dispu_e/cases_ e/ds 160_ e.htm:C: (visited July 8, 2022).
107
<https://www.v,,to.org/english/tratop_ e/dispu_e/cases_ e/1 pagesum_ e/ds 160sum_ e.pdf'.::. (visited July 8,
2022).
108
Maria Strong, Enforcement Tools in the U.S. Government Toolbox, 40 Colum. J.L. & Arts 359 (2017),
<https://academiccommons.co]umbia.edu/doi/10.7916/D8Tl5G7N/download> (visited July 8, 2022).
109
<https://www.wto.org/englis!,Jtratop e/dispu e/cases_ e/ds 160_ e.htm> (visited July 8, 2022).
Decision J7 G.R. No. 233918

(850,127) of total MSME ·estal--lj_shments, followed by small enterprises at

10.25% (98,.12~) and medium .~nterprises at _0.49% (4,716). 110 This means
that an exemption cove ing MSMEs to use copyrighted work by means of
radio-over-loudspeakers _would be most unfair to the author or right holder
as it would have_a huge-['mpact on the economic value of the work.

In .AUstraliii, th~ ouse Committee and the Australasian Performing

Right Association .agre}d to , implement a policy granting complimentary
licenses to smair businesses· causing public performances of copyright music
in the following. circum~tances: a) the means of performance is by the use of
a radio or television set b) the business employs fewer than 20 people; and
1
c) the music is not intended to be heard by customers of the business or by
the general public. 111 ~ his voluntary solution was a1Tived at after the
Committee recognized the need for the state to preserve its international
obligations and to avoid the· introduction of legislation similar to the
American business exerpption, which in turn, might throw it open to action
through the dispute reso[ution and enforcement measures of the WTO. 112
I

. I. ,.
Clearly, the majprity vi~w is to require business establishments
separate licenses in order 'to play radio broadcasts as background music, and
any unauthorized perfotmance or communication of these broadcasts to the
public constitutes copyr{ght infringement. Member states are critical against
deviations from this line of thought since this would create unfavorable
inequities on copyright bnforcement among member states.

e ess, 0. ur1 prest~nt pos1t1on

N everthl · · ·
1s ·
consistent "h th e maJonty
wit . . of
the member states;. onk which accords respect to treaty obligations and
recognizes the hard J~rk put tbrrn;gh not just hy artists, but also by
composers, authors, pu~lishers ~nd everyone responsible for making music.

Music is intangib~e, and at times it is difficult to appreciate something

you cannot see or hold. But music has its rewards, it can deliver a wide-
range of benefits. From lreeli11g in customers or to as little as letting someone
enjoy the meal with the radio on, rather than having that meal in silence, and
most of the time, that is all it takes to have one happy repeat customer.

Music is intn.ngihle, ·but its benefits are real. Businesses should pay for
such benefit. ·

110 <hltps:/iwww.dt1.go·s !_i1/re:,Ot r..:e~/:.n:~me -sraris ti,;s/ ~ (.-., isiwd July 20. 20:'.2).
111 Chapter 5, Distinguishing Bet\•Vl!en Di1e<.:t and Indirect Playing of Mvsic. p. 94.
112 Id. at 62.
Decision 38 G.R. No. 233918

Possible amendments ._under the

Intellectual Property Code . .·

Our function is to interpret the law and to adjudicate the rights of the
parties in the ca~e at bar, The present framework on · copyright enables
copyright owners to license the public performance or further
communication to the public of sound recordings played over the radio as
part of their economic rights, unless it is fair use.

We understand that the-very broad definition -of a public performance

in the IPC is a cause for concern. By the mere definition of what a public
performance is, listeners of a radio station, to some extent, risks copyright
infringement. Our foreign counterparts have recognized this dilemma and
some have already taken steps to addr~ss this situation.

Neither the Berne Convention nor the TRIPS Agreement prohibit

States from the introduction of limitations or exceptions on copyright.
However, such limitations or exceptions cannot exceed a de minimis
threshold or limitations that are of minimal significance to copyright owners.
At present, the WTO employs three-step test in determining whether the
limitation or exception on the rights of an owner exceed the threshold: they
(1) must be confined to certain special cases, (2) cannot conflict with a
normal exploitation of the work, and (3) cannot unreasonably prejudice the
legitimate interests of the right holder. 113 These conditions are to be applied
on a cumulative basis; if any one step is not met, the exemption in question
will fail the test and be found to violate the TRIPS Agreement. 114
We no longer wish to discuss each of these steps in length, but
Congress should take them into consideration, in the event it chooses to
introduce changes in the IPC that affects may affect any of the given rights
of copyright owners.

Remedies for Infringement

Finally, this Decision will not be complete without adjudicating the

monetary claims and damages daimed by FILSCAP against Anrey for
infringement of its copyright. Section 216 of the IPC, prior to its amendment
by RA l 03 72,. provides for the following remedies:

SECT!ON 216. Remedies.far ll?f'ringemen!.

- - · - - - - - - - - - ·--.
113
-
World lntell_ectirnl Pi operty Organi ;ati0n LVJlPO]. WIPO 'Study on Limitations and Exceptions of
Copyright and Related Rights in the Digital Envirc•nment, SCCR/9/7, April 5, 2003.
114
Id. at 50:
Decision 39 G.R. No. 233918

216.1. Any person nfring_ing a rjg!11 protected under this law shall be
liable:
I·
(a) To an tnjunctiud restr:aining such infringement The court may also
order the : _Jefe~d~fit1 to .- desist from an infringement; among others, to
prevent the entry in~o the channels of commerce of imported goods that
involve an infringement, immediately after customs clearance of such
goods. : · I .- · ·. -
(b) To pay to the c.u[lpyri~ht proprietor or his assigns or heirs such actual
darirnges, ·inGlu<;iing l~gal. costs and ·other:, expens~s, as he may have
incurred due · to the mfringement as 'well as· the profits the infringer may
' '

have made due to such infringement, and in proving profits the plaintiff
shall be required to J rove sales only and the defendant shall be required to
prove every elementjof cost which he claims, or, in lieu of actual damages
and profits, such damages which to the court shall appear to be just and
shall not be regarded as penalty.

XXX

(e) Such other tem1s and conditions, including the payment of moral and
exempl?}ry damages,!which the court may deem proper, wise and equitable
XXX

In its Amended G:'.omplai'nt, FILSCAP seeks to recover the following

monetary awards:

a) Pl8,900.00 asicompensatory damages

b) PJ00,000.00 as nominal damages
c) Pl00,000.00 as exemplary damages
d) PS0,000.00 as attorney's fees and litigation expenses
1

Being the assignee of the copyright of its members, FILSCAP is

entitled to demand public performance license fees as damages from Anrey.
Based on the Amended Complaint, and as substantiated by the testimonies 11 5
of its witnesses, FILSCAP demanded the amount of Pl 8,900.00, which
represent the fees that should have been paid had Anrey obtained the
appropriate licenses for its three stores, or P6,300.00 per store. This amount
is based on the rate cards prevailing at the time for restaurants playing
mechanical music only, whose ~eating capacity is less than a hundred. 11 6

Actual damages is -awarded for the purpose of repairing a wrong that

was done, compensating for the injury inflicted, and replacing the loss

- - - - - --.----..
115
Rollo, pp. 212-216.
11 6
Records, Vol. II, p. 54\>.
Decision 40 G.R. No. 233918

caused by the virong that was done_l1 7 It includes "all_ damages that the
plaintiff may show he has suffered in respect to his property, business, trade,
profession·, or occupation." 118

Article 2200 of the Civil Code provides that actual damages

comprehends the value qfthe loss suffered and the profits which the obligee
failed to obtain.- Hence ' "there are two kinds
. ,.
of actual damages: (1) the loss of
what a person possesses (dano emergente); and (2) the failure to receive as a
benefit that woufd have pertained to him or her (lucro cesante). 119

"Luera cesante is usually the price which the thing could have
commanded on the date that the obligation should have been fulfilled and
was not." 120 The actual amount of loss must "be proved with a reasonable
degree of certainty, premised upon competent proof and the best evidence
obtainable by the injured party." 12 1

In this case, the right of FILSCAP to license public performance of

the subject copyrighted musical works, the public performance of such
works in Anrey's restaurants without license from FILSCAP, and the refusal
of Amey to pay the annual license fees for said works were duly established.
Clearly, FILSCAP was deprived license fees due to Anrey's acts of
infringement. FILSCAP failed to receive the benefit of license fees from
Anrey, which publicly performed without license or authority the subject
copyrighted works in the latter's restaurants for the benefit of its customers
and to enhance i1s profit.

The luc;ro cesante or the amount of license fees which FILSCAP

failed to receive from Anrey is dctem1ined by the price or rate of license fees
which the subject copyrighted works could hav~ commanded on the dates
when Anrey played the same in its restaurants:

The price or ra1e-ofthcl1Cense fees or royalties ofFILSCAP are based

on its rate cards, which provide fixed amounts according to the nature of
public perfommnce of the copyrighted works, i.e., live and/or mechanical
public performance, and the size of the establishment or place where the
public performance will be conducted. However, the rates are annual fees

117 Algarra v, Sande/a.,·~ 27 PhJl 284 (19' J4), citing _,1-;~idd v. lvfumter, J 1 T~x Civ. Appl. 341, 32 S. W., 417,
0

and Reid v. Tenvil/lge;; 116 N. Y., 5."30; 22 ~- £-., 1091.

118
Id, citing ·Gen. Star. I\1inn., 1894, Se1...- )418.
119 PNOC.Shipping and Transport Ctirp i-· Court ofAppr1af,<c, 358~Phil. 38', )3 (1998)_
120
Associated Realty J):_eyelopmeni Co-_, Inc. v. Court C?fAppeuls, 121 Phil. S5, 69 (1965).
121
Universal Jnternationa? Jnvestment (BVf) Limited v. Ray BurttJn Development Corp., 799 Phil. 420,437
(2016), citing Integrated P11ckag1rw Corp. v Cour! ofAppeals, 388 Phil. 835 (2000).
Decision 41 G.R. No. 233918

that normally authorize~ a~xess to wlrnt FU .SCAP boasts to over twenty

million songs in its repertoire. -

Also, the Monitoring Reports submitted by FILSCAP only confirmed

that copyrighted rp.usic was played in Anrey's Session Road and Abanao
Extension branches. I 22 Even the Amended Complaint failed to allege that
copyright~d rri:u~ic w,as played in the SM Baguio branch.

Furthermore, the evidence on record proved public performance on 12

occasions: 6 songs in 2 ·different days in 2 locations only. Clearly, the annual
license fees demanded by FILS CAP appears inequitable, especially if We are
to consider Anrey's seemingly valid position on a difficult question of law.

The last portion of Section 216.l(b) states that "in lieu of actual
damages and profits, such damages which to the court shall appear to be just
and shall not be regarded as penalty." This may be likened to temperate
damages which is normally awarded in the absence of competent proof on
the amount of actual damages suffered. 1-2-3 ·

Such amount is usually left to the discretion of the courts but the same
should be reasonable, bearing in mind that temperate damages should be
more than nominal but less than compensatory. 124 To Our mind, an award of
temperate damages equivalent to PJ 0.000.00 is just and reasonable
considering. that: (1) the license fees were charged annually and Anrey was
only shown to have publicly performed FILSCAP's songs on two different
days; and (2) the license fees represents the use of over 20 million songs on
FILSCAP's repertoire: and Anrey was only shown to have publicly
performed FILSCAP's 12 songs in tot.al.

FILSCAP also claims for the payment of nominal damages, in the

amount of P300,000.00, for blatantly violating its public performance rights.
But in this case, temperate or moderate -damages has been awarded to
FILSCAP. Nominal damages are 'recoverable where a legal right is
technically violated and must be vindicated against an invasion that has
produced no actual present loss·of any kind or where there has been a breach
of contract and no substantial injury or actual damages whatsoever have
been or can be shown. 125

- -------,---~-... .
122
Rollo, pp. 7.'i-80.
123 CIVIL CODE, Anh: k. 222<1 .
124 Id.
125
Franciscov. Ferre,; 405 Phil. '/41 . 75 , i,~l\Ui)
Decision 42 G.R. No. 233918

is
The purpose· of norniHal damag~s to vindicate· or recognize a right
that has been violated,- in order to preclude further contest thereof; and not
for the purpose of indemnifying the plaintiff for any loss suffered by him. 126
Temperate damages are given when some pecuniary loss has been suffered
but its amount cannot be proven with certainty. Thus, in the same way that
nominal damages cannot co-exist with actual-or compensatory damages, 127
nominal damages are improper when·_ temperate damages have been
awarded. 128

Neither has FILSCAP shown the.right to recover exemplary damages.

The purpose of exemplary damages is to serve as a deterrent to serious
wrongdoings, and as a vindication of undue sufferings and wanton invasion
of the rights of an injured or a punishment for those guilty of outrageous
conduct. In torts and qnasi-delicts, exemplary damages may be granted if the
defendant acted with gross negligence. 129 The element of gross negligence
was not proven in this case, hence, FILSCAP's 'Pl00,000.00-claim for
exemplary damages should likewise be denied.

On the othe; hand, the .payment of attorney's fees is justified pursuant

to Sec. 216.1 (b) of the IPC, as amended, which entitles the copyright
proprietor or his assigns or heirs to, in addition to actual damages, legal
costs and other expenses. This award is not based on speculation but is real
since the record is clear that FILSCAP was forced to litigate in order to
protect its interest, as demonstrated by the several demand letters it sent and
was ignored by Anrey. It also presented during trial vouchers for the legal
expenses it gradually incurred in litigating the case, 130 while the amounts
have been stipulated upon by the parties during the course of the trial. 131
Clearly, the award of-attorney's fees is justified in this case, including the
amount of 'PS0,000.00 prayed for.

Finally, the monetary award should earn legal interest in accordance

with the computation laid down in Nacar v. Gallery Frames, 132 thus: the rate
of 12% per annum from th() date. FILSCAP filed the Complaint on
September 8, 2009 until June 30, 2013, and thereafter, 6% per annum from
July 1, 2013 ur,til finality of this judgment. Furthermore, once this judgment
has become final and executory, the monetary award shall be subject to legal
interest at the rate of6% per annum from such finality until fully satisfied.

126
Vda. De Medina 1,: CreSenCia, 99 Phi!_ 506 (] 956).
127
Armovit v. Court a/Appeals. 263 Phil. ,; 12 ( 1990).-
128 See Seven Brothns Shipping Corpor{)t/lm v, DMC Con.Strur:rion Resources Inc., 748 Phil. 692 (20·14).
129
CIVIL CODE, Artkie 223 l.
130 Records, Vol I, pp.443-520.
131 TSN, August 23, 2011, p. 8.
132 716 Phil. 267 (2013).
Decision 43 G.R. No. 233918

WHEREFORE, premises considered, the instant petition is

GRANTED. The assailed Decision dated April 19, 2017 and Resolution
dated August 3, 2017 promulgated by the Court of Appeals (CA) in CA-G.R.
CV No. 105430, affirming the Decision dated April 15, 2015 and Order
dated June 30, 2015 rendered ·by Branch 6, Regional Trial Court (RTC) of
Baguio City, are hereby REVERSED and SET ASIDE.

Accordingly, respondent Anrey, Inc., is hereby ORDERED to pay the

Filipino Society of Composers, Authors, and Publishers, Inc. Pl0,000.00 as
temperate damages for the unlicensed public performance of the copyrighted
songs on FILSCAP's repertoire and ?50,000.00 as attorney's fees, plus
interest at the rate of 12% per annum from September 8, 2009 until June 30,
2013, and thereafter, 6% per annum from July 1, 2013 until the finality of
this judgment. Such amount shall be subject to interest at the rate of 6% per
annum reckoned from the date of finality of this judgment until fully
satisfied. Costs against Am·ey, Inc.

Let a copy of this Decision be furnished the Intellectual Property

Office of the Philippines for tp.eir guidance and information, a$ well as the
House of Representatives and the Senate of the Philippines as reference for
possible statutory amendments on the Intellectual Property Code without
violating the State's commitments under the Berne Convention and the
TRIPS Agreement.

SO ORDERED.
Decision 44 G.R. No. 233918

WE CONCUR:·

G. GESMUNDO

No part
HENRI JEAN PAUL B. INTING
Associate Justice
o~=-
MARIO V. LOPEZ
Associate Justice

sq,..5<=:::?_
SAMUEL H. GAERLAN RIC~~- ROSARIO
Associate Justice A sociate Justice

JHOSE~PEZ
Associate Justice

~~
JO~AS P. MARQUEZ
. ~ssociate Justice .

s~
. .
Decision 45 G.R. No. 233918

C'ERTIFICATION

Pursuant to Sectiop. 13, Aiiicle VIII of the Constitution, I certify that

the conclusions in the above Decision had been reached in consultation
before the case was assigned to the writer of the opinion of the Comi.

M:.f.IA. .wlrr::\ ~1 . c:nrry--~T~.\

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 EN BANC

G.R. No. 222537 - COSAC, INC., petitioner, versus FILIPINO

SOCIETY OF COMPOSERS, AUTHORS AND PUBLISHERS, INC.,
respondent.

Promulgated:

February 28, 2023

x- - - - - - - - - - - - - - - -. - - - - - - - - - - - - - - - - - -

SEPARATE CONCURRING OPINION

CAGUIOA, J.:

I concur.

This case involves a similar issue as FILSCAP v. Anrey1 (Anrey), which

likewise stemmed from a third party's unauthorized exercise of the authors'
copyright. The role of respondent Filipino Society of Composers, Authors and
Publishers, Inc. (FILSCAP) in relation to its members who own the music
copyright involved in this case is summarized as follows:

x x x [FILSCAP] x x x is a "non-stock, non-profit association of

composers, lyricists, and music publishers" accredited by the [Intellectual
Property Office of the Philippines (IPOPHL)] to perform the role of a
[Collective Management Organization (CMO)], and is a member of the
Paris-based International Confederation of Societies of Authors and
Composers (Confederation Internationale des Societes d'Auteurs et
Compositeurs or CISAC), the umbrella organization of all composer
societies worldwide. Being the designated CMO of composers, lyricists,
and music publishers, FILSCAP assists in "protecting the intellectual
property rights of its members by licensing performances of their copyright
music." For this purpose, FILSCAP gets assigned the copyright by its
members, and, as assignee, then collects royalties which come in the form
of license fees from end-users who intend to "publicly play, broadcast,

G.R. No. 233918, August 9, 2022. Penned by Associate Justice Rodi! V. Zalameda, with Chief Justice
Alexander G. Gesmundo and Associate Justices Ramon Paul L. Hernando, Samuel H. Gaerlan, Ricardo
R. Rosario, Jhosep Y. Lopez, Japar B. Dimaampao, and Jose Midas P. Marquez concurring.
Associate Justice Caguioa submitted his Separate Concurring Opinion, joined in by Associate Justice
Antonio T. Kho, Jr.
Senior Associate Justice Marvic M.V.F. Leonen and Associate Justice Amy C. Lazaro-Javier
dissented, submitting their respective Dissenting Opinions.
Associate Justice Maria Filomena D. Singh expressed both concurrence and dissent.
Associate Justice Mario V. Lopez on official leave but left his vote to concur. Associate Justice Henri
Jean Paul B. Inting took no part.
Separate Concurring Opinion 2 G.R. No. 222537

stream, and to a certain extent (reproduce) any copyrighted local and

international music of its members." 2

The controversy in the instant case started when a representative from

FILSCAP monitored Off the Grill Bar and Restaurant (Off the Grill), a
commercial establishment in Quezon City owned and operated by petitioner
COSAC, Inc. (COSAC). These monitoring activities led to the discovery that
CO SAC was playing copyrighted music in its establishment without obtaining
from FILSCAP the necessary license or paying the corresponding fees. 3

FILSCAP sent demand letters infonning COSAC of its obligations

under Republic Act No. (R.A.) 8293 4 otherwise known as the Intellectual
Property Code (IP Code) and demanded the payment of the appropriate
amount of license fees and/or that COSAC obtain the necessary license from
FILSCAP. 5

COSAC, however, refused to heed the demand, prompting FILSCAP

to file a Complaint6 for copyright infringement and damages. In its Answer,7
COSAC questioned FILS CAP' s authority to enforce music copyright and -
without explicitly raising as defenses any of the exceptions to copyright
infringement under the law - denied that it had committed copyright
infringement. 8

I concur that COSAC should be held liable for copyright infringement.

As stated in the ponencia, "for an act to be considered as copyright
infringement, it must not fall under Section 177 of the [IP Code
(Copyright or Economic Rights)], and at the same time must not be
covered by Sections 184 (Limitations on Copyright) and 185 (Fair Use [of
a Copyrighted Work])." 9

These two conditions are clearly present in this case. For ease of
reference and to allow for the sufficient elaboration of the relevant issues, the
succeeding discussion will be divided into the following topics:

I. COSAC exercised without authority the authors' exclusive rights under

Section 177 (Copyright or Economic Rights).
a. The law itself distinguishes the right of "public performance"
from the right of "communication to the public," either right
being enforceable through FILS CAP.

2 J. Caguioa, Separate Concurring Opinion in FILSCAP v. Anrey, id. at l.

3
Ponencia, p. 2.
4 AN ACT PRESCRIBING THE INTELLECTUAL PROPERTY CODE AND ESTABLISHING THE INTELLECTUAL
PROPERTY OFFICE, PROVIDING FOR ITS POWERS AND FUNCTIONS, AND FOR OTHER PURPOSES, approved
on June 6, 1997.
5 Rollo, pp. 60-63 and 71.
6 Id. at 37-43.
7
Id.at72-74.
8
Ponencia, p. 3.
9 Id. at 34. (Emphasis supplied)
Separate Concurring Opinion 3 G.R. No. 222537

II. CO SAC' s acts are not covered by Sections 184 (Limitations on

Copyright) and 185 (Fair Use of a Copyrighted Work).

a. The Court is called upon not to simply discuss the provisions on

copyright protection, but to extensively delve into its existing
limitations.

b. Limitations on copyright

c. Fair Use

1. Fair Use Doctrine

11. Fair Use in the Philippines

m. The Four Fair Use Factors

1. First Factor: Purpose and Character of Use

2. Second Factor: Nature of Copyrighted Work

3. Third Factor: Amount and Substantiality of the

Portion Used

4. Fourth Factor: Effect of the Use Upon the Potential

Market for or Value of the Copyrighted Work

d. Why COSAC is not exempted from liability for copyright

infringement

III. There must be reasonable considerations for quantifying the damages

awarded in copyright infringement cases.

DISCUSSION

I. COSAC EXERCISED WITHOUT

AUTHORITY THE AUTHORS'
EXCLUSIVE RIGHTS UNDER SECTION
177 (COPYRIGHT OR ECONOMIC
RIGHTS)
 Separate Concurring Opinion 4 G.R. No. 222537

In Microsoft Corp. v. Manansala, 10 the Court clarified that the

"gravamen of copyright infringement" is not merely the unauthorized
manufacturing of intellectual works[,] but rather the unauthorized
performance of any of the exclusive economic rights of the copyright
11
owner. There is no question that COSAC had exercised the copyright
owners' exclusive rights under Section 177 by carrying out the following acts,
as summarized and defined in the table below:

COSAC's Acts Infringed Right of the Authors

Hiring a live band to Section 177. Copyright or Economic Rights. -

perform copyrighted Subject to the prov1s10ns of Chapter VIII,
musical compositions copyright or economic rights shall consist of the
exclusive right to carry out, authorize or prevent
(NB.: The fact that COSAC the following acts:
had directly caused the
musical compositions to be
played - as opposed to
xxxx
being a mere passive party
that happened to reap 177 .6. Public performance of the work;
unexpected rewards due to XXX
having strangers/bands
playing music m its
establishment - 1s
evidenced by
COSAC's
witness' own admission
Section 171.6 of the IP Code.
under oath that it regularly
"Public Performance" xx xis xx x otherwise
hires and pays entertainers to
play live music. 12) performing the work x x x by means of any x x x
process xx x at a place or at places where persons
outside the normal circle of a family and that
family's closest social acquaintances are or can be
present, irrespective of whether they are or can be
present at the same place and at the same time, or
at different places and/or at different times xx x.
Playing of copyrighted Section 177. Copyright or Economic Rights. -
musical compositions Subject to the prov1s1ons of Chapter VIII,
contained m sound copyright or economic rights shall consist of the
recordings exclusive right to carry out, authorize or prevent
the following acts:
(NB.: As admitted under
oath by COSAC' s witness, xxxx
COSAC uses a projector to
display "MTV."13 There is 177.6. Public performance of the work; and
no indication whether this is

10
G.R. No. 166391, October 21, 2015, 773 SCRA 345.
11
See id. at 352. Citations omitted.
12
Ponencia, pp. 19-20.
13
Id. at 20.
Separate Concurring Opinion 5 G.R. No. 222537

a broadcast of the channel or 177.7. Other communication to the public of the

whether COSAC is merely work . (S ec. 5 , p .D . N o. 49 a)
projecting a recorded
footage thereof.)

Section 171.6 of the IP Code. "Public

Performance" xx x is xx x in the case of a sound
recording, making the recorded sounds audible at
a place or at places where persons outside the
normal circle of a family and that family's closest
social acquaintances are or can be present,
· irrespective of whether they are or can be present
at the same place and at the same time, or at
different places and/or at different times x x x.

AND/OR

Section 171.3 of the IP Code. "Communication

to the public" or "communicate to the public"
means the making of a work available to the
public by wire or wireless means in such a way
that members of the public may access these
works from a place and time individually chosen
by themr.l

A.

The law itself distinguishes the right of "public

performance" from the right of "communication to
the public, " either right being enforceable through
FJLSCAP

As will be elaborated below, I agree with the ponencia that "it would
be more judicious to say, specifically for this case, that COSAC infringed the
[public] performing rights of the copyright owners." 14 Notably, this
expression encompasses both "right of public performance" and "right of
communication to the public," as can be seen in FILSCAP's deeds of
assignment, viz. :

1. DEFINITIONS

a) "Copyright work" shall mean and include -

xxxx

b) "right of public performance" shall, as provided in

Section 171.6 of [the IP Code] xx x

14
ld.atl9.
 Separate Concurring Opinion 6 G.R. No. 222537

c) "right of communication to the public" shall

mean the right xx x per Section 171.3 o[f] [the IP Code]

d) The expression "public performing rights" shall

mean (b) [right of public performance] and (c) [right
of communication to the public] above. 15 (Emphasis and
underscoring in the original)

Despite having a collective tenn to refer to both these rights, the Court
must still take pains to proactively distinguish them lest these exclusive rights
be conflated with one another. While not raised as an issue, it is important to
dispel the misconception that only the right of public perfonnance is generally
involved when "[a] copyrighted musical work is 'played or performed live
through [the] performer or mechanically through any audio or audiovisual
player or device such as a CD player, VCD player, DVD player, cassette
player, television set or radio player. "' 16

The distinction between these two rights - the right of public

performance and the right of communication to the public - I had earlier
extensively discussed in my Separate Concurring Opinion in Anrey, viz.:

The foregoing provisions suggest that the public performance right

and the right to communicate to the public are separate and distinct rights
which are available to, and may separately be exploited by the author.
This is clear from first, the separate designation of these rights under
the "menu" of economic rights under Section 177 of the IP Code, and
second, the "exclusionary" definition of "public performance" in
Section 171.6, which expressly requires that "the performance xx x be
perceived without the need for communication [to the public] within
the meaning of Subsection 171.3 [of the IP Code]."

x x x [This] is likewise supported by the following provisions of the

IP Code involving the rights of performers, producers of sound recordings,
and broadcasting organizations. x x x

xxxx

Notably, under Section 209 of the IP Code, performers and

producers of sound recordings are entitled to remuneration whenever (i) a
sound recording is published for commercial purposes, or (ii) when
reproductions of such sound recordings are (a) "used directly for
broadcasting or for other communication to the public" (i.e., right to
communicate to the public), or (b) "publicly perfom1ed with the intention
of making and enhancing profit" (i.e., right of public performance). In other
words, performers and producers would be entitled to remuneration for
three distinct activities, which is clear from the use of the conjunction "or."
Otherwise stated, if the intention was to only entitle the performers and
producers to one remuneration for all of these activities combined, then the
conjunction "and" should have been used. This further underscores that
Sections 177.6 and 177.7 in relation to Sections 171.3 and 171.6 of the IP

15
Id. at 38-39.
16
Id. at 4; Testimony ofFILSCAP's witness, Ferdinand Gorospe. Emphasis supplied.
Separate Concurring Opinion 7 G.R. No. 222537

Code actually recognize two separate and distinct rights that may
independently be exploited by an author or copyright owner.

xxxx

x x x [I]t must further be underscored that the public performance

right and right to communicate to the public are not only separate and
distinct - they are also ingeniously delineated or segregated by the IP Code
based on the means of transmission or making available of the work, i.e.,
whether the performance or communication is made by "wire or wireless
means." xx x

I expound.

First, it should be stressed at the onset that the definition of public

performance under Section 171.6 is exclusionary in relation to Section
171.3, i.e., in order to constitute "public performance," the performance
must be "perceive[able] without the need for communication within the
meaning of Subsection 171.3." Conversely, if an aspect of a performance
can be perceived by the public by means of "communication" as
defined under Section 171.3, i.e., "by wire or wireless means in such a
way that members of the public may access these works from a place
and time individually chosen by them," then this aspect of the
performance would only be a "communication to the public" and would
not therefore constitute a "public performance."

Second, the foregoing conclusion is also supported by the text of

The Berne Convention for the Protection of Literary and Artistic Works
(Berne Convention), to which the Philippines is a signatory.xx x

xxxx

x x x [U]nder the Berne Convention, public performance and any

communication of such performance is covered by Article 11 thereof.
However, similar to how the IP Code is worded, if the public
communication is via a specific mode or means of transmission, i.e., by
means of broadcasting or other "wireless diffusion," by wire or
rebroadcasting (if the communication is made by an organization other than
the original one), or by loudspeaker or any other analogous instrument of
the broadcast of the work, then the same will fall under A1iicle 1 lbis.

In fact, the foregoing stance is made clear by the WIPO in its

explanatory guide to the Berne Convention (WIPO Guide). Anent the
difference of Article 11 from Article 11 bis of the Berne Convention, the
WIPO remarked as follows:

11.4. However, [Article 11] goes on to speak of"including

such public performance by any means or process", and this
covers performance by means of recordings; there is no
difference for this purpose between a dance hall with an
orchestra playing the latest tune and the next-door
discotheque where the customers use coins to choose their
own music. In both, public performance takes place. The
inclusion is general and covers all recordings (discs,
cassettes, tapes, videograms, etc.) though public
Separate Concurring Opinion 8 G.R. No. 222537

performance by means of cinematographic works 1s

separately covered-- see Article 14(1)(ii).

11.5. The second leg of this right is the communication to

the public of a performance of the work. It covers all
public communication except broadcasting which is
dealt with in Article llbis. For example, a broadcasting
organisation broadcasts a chamber concert. Article 11 bis
applies. But if it or some other body diffuses the music by
landline to subscribers, this is a matter for Article 11. x x x

Furthermore, the WIPO Guide also states that Article l lbis, which
covers the author's right to communicate one's work by means of
broadcasting, is "the fourth of the author's exclusive rights xx x, the other
three being those of translation, reproduction and public performance."
Anent the "broadcasting right," the WIPO elucidates that this right includes
one primary right to authorize the broadcast of one's work via wireless
means, and two [secondary] rights to authorize (i) the subsequent
communication of said broadcast, by wire or rebroadcast, by an
organization other than the one which originally made the broadcast, and
(ii) the communication of the same broadcast via loudspeaker or a television
screen to a "new public." xx x

xxxx

Parsed, while the communication of a "performance" may fall under

Article 11 of the Berne Convention (governing public performance), this is
only true if the performance can be perceived without the need for
communication within the meaning of Article 11 bis - very much like how
Section 171.6 of the IP Code is worded. On the other hand, under the Berne
Convention, if the communication to the public is made either (i) via
broadcast or by any other means of wireless diffusion, (ii) whether by wire
or not, by an organization other than the one who originally made the
broadcast, or (iii) through a broadcast of the work through a loudspeaker,
television screen, or other analogous instrument, then Article l lbis applies.
Put simply, one clear similarity between the structure of the Berne
Convention and the IP Code is that both categorically separate the
concept of "public performance" from "broadcasting," such that a
work that is conveyed to the public solely via radio broadcast does not
constitute an exercise of the author's right of "public performance,"
but rather of the author's right of "lb]roadcasting and other wireless
communications, public communication of broadcast by wire or
rebroadcast, public communication of broadcast by loudspeaker or
analogous instruments[,]" or, as referred to under the IP Code, the
author's right to "communicate to the public."

Applying the foregoing principles to our jurisdiction, this means that

under the IP Code, as under the Berne Convention, the single act of
broadcasting of musical compositions contained in sound[/audiovisual]
recordings, either by the original broadcaster or "by an organization other
than the original one[,]" or by other business establishments solely "by
loudspeaker[, television,] or any other analogous instrument" (as worded in
Article I Ibis of the Berne Convention), is actually an exercise of the
author's right to "communicate to the public" his or her work under Section
171.3 of the IP Code. This is clear from the wording of Section 171.3 of the
IP Code which specifically defines "communication to the public" as the
Separate Concurring Opinion 9 G.R. No. 222537

"making of a work available to the public by wire or wireless means x x

x," and from the wording of Section 202.7 of the IP Code which defines
"broadcasting" as a mode of "transmission by wireless means for the
public reception of sounds[.]" As well, by the wording of Section 171.6 of
the IP Code, this may also mean that such act does not constitute an
exercise of an author's public performance right.

In other words, based on the IP Code's definition of these two rights,

as further clarified by the Berne Convention, broadcasting a musical
composition over the [television or] radio or communicating the same in
some other "wire or wireless means x x x" would simply constitute an
exercise of the right to "communicate to the public." On the other hand,
playing a sound recording of a musical composition to an audience through
other dissimilar or "non-broadcast" means, i.e., through a jukebox or CD
player, even if the same is ultimately perceived by the audience through a
loudspeaker or other analogous instrument, would only constitute "public
performance." After all, the sound recording in this situation can be
perceived by the public without the need of communication by "wire or
wireless means in such a way that members of the public may access these
works from a place and time individually chosen by them."

xxxx

To be sure, there are cases where a single performance could

constitute both public performance and communication to the public. For
instance, if a band performs a musical composition live before a studio
audience, and the same performance is either simultaneously or
subsequently broadcasted over the radio by a broadcasting station, then the
band's performance results in both a public performance and
communication to the public. In this example, the act of directly performing
the musical composition before the audience is itself a public performance,
while the act of broadcasting the performance (not the actual performance
itself) is a communication to the public. Thus, while there is only one
performance, there are actually two acts which respectively result in the
exercise of two separate economic rights.

In other words, unless there is a showing that the music being played
via radio[/television] is not simply a x x x recording [of a musical
composition] but rather, being played live before a studio audience, then the
playing of a radio[/television] broadcast as background music would only
constitute a "communication to the public." 17 (Emphasis and underscoring
supplied)

Thus, in the case at bar, considering that COSAC had hired bands to
play live music and played MTV in its establishment (but it is not sure whether
this was a broadcast or a recorded footage), the ponencia is therefore correct
in saying that COSAC had infringed the public performing rights of the
copyright owners, i.e., their right of public performance and/or their right of
communication to the public.

II. COSAC'S ACTS ARE NOT COVERED

BY SECTIONS 184 (LIMITATIONS ON

17 J. Caguioa, Separate Concurring Opinion in FILSCAP v. Anrey, supra note lat 44-5 I. Citations omitted.
Separate Concurring Opinion G.R. No. 222537

COPYRIGHT) AND 185 (FAIR USE OF A

COPYRIGHTED WORK)

A.

The Court is called upon not to simply discuss the

provzszons on copyright protection, but to
extensively delve into its existing limitations

As mentioned, to determine whether copyright infringement has been

committed, the acts in question "x x x must not be covered by Sections 184
(Limitations on Copyright) and 185 (Fair Use [of a Copyrighted Work])." 18
Clearly, therefore, in resolving the main issue of copyright infringement, the
Court is called upon to consider and delve into the exceptions to copyright
infringement (i.e., the Limitations on Copyright under Section 184 of the IP
Code and Fair Use of a Copyrighted Work under Section 185 of the IP Code)
because they are crucial in determining whether copyright infringement
exists.

Notably, even if COSAC has not explicitly raised as affirmative

defenses the exceptions to copyright infringement, its defense is akin to an
exception under the law, as will be discussed in more detail below. In any
event, the fact that COSAC did not expressly raise these exceptions as issues
in the present case is of no moment, as explained in the following disquisition:

In the first place, Spouses Campos v. Republic explains that the

Court may consider issues not raised by the parties if these are necessary at
arriving at a just decision, serve the interest of justice, and necessary to rule
on the questions properly assigned as errors:

xxxx

Secondly, for the immediate protection of the general public against

an overly expansive interpretation of the coverage of music copyright
protection, the Court's verdict must also xx x expound on and construe
more definitively the guardrails already recognized under the law. This
is part and parcel of the Court's function not only to adjudicate the rights of
the parties but also, or more so, to interpret the law for the guidance of all.
XXX

xxxx

Lastly, the discussion of the exceptions to copyright infringement is

necessary - especially for this landmark case - for the Court to balance
the competing interests involved in copyright protection. xx x Section 2 of
the IP Code underscores that the ultimate objective of having an intellectual
property system, which includes the means of protecting copyrights, is to
benefit society[.] xx x

xxxx

18
Ponencia, p. 34.
Separate Concurring Opinion- 11 G.R. No. 222537

Section 177 of the IP Code makes it clear that a copyright over

protected works is a bundle of exclusive economic rights in favor of the
author. Generally speaking, these comprehensively encompass the several
means by which copyrighted material may be used[.] xx x

xxxx

Section 21 7 of the IP Code, in turn, provides penal sanctions for

copyright infringement:

xxxx

Based on the foregoing, it may be readily concluded that these penal

sanctions pertain to wide-ranging conduct, including acts involving
copyrighted material which are arguably commonplace in today's world.
This, in effect, further narrows the already thin line dividing infringement
and allowable use or reproduction. 19 x x x (Emphasis supplied)

To further make apparent this dividing line between infringement and

allowable use or reproduction, therefore, it is imperative to emphasize why
COSAC's acts neither fall under Section 184 (Limitations on Copyright) nor
Section 185 (Fair use of a Copyrighted Work).

B.

Limitations on Copyright

The following discussion aptly highlights and explains the relevant

portions of Section 184:

Section 184 of the IP Code reads:

SECTION 184. Limitations on Copyright. - 184.1.

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)

xxxx

(i) The public performance or the

communication to the public of a work, in
a place where no admission fee is charged
in respect of such public performance or
communication, by a club or institution
for charitable or educational purpose

19 J. Caguioa, Separate Concurring Opinion in FJLSCAP v. Anrey, supra note 1 at 4-7. Citation omitte
Separate Concurring Opinion 12 G.R. No. 222537

only, whose aim is not profit making,

subject to such other limitations as may
be provided in the Regulations[.]

This Section expressly provides for specific situations involving the

use of copyrighted material which do not constitute infringement.

In this regard, particularly relevant to x x x the issue in this case -

are paragraphs (a) and (i) of Section 184.1, which respectively involve (i)
"the recitation or performance" of a work in private places, and (ii) the
"public performance" and/or "communication to the public" of copyrighted
works in public or publicly accessible places. Under these paragraphs, in
order for a recitation, performance and/or communication of a work to be
exempt, the following requisites should be present:

Under Section 184.1 (a):

(i) The recitation or performance is done

(a) privately and free of charge or (b)
made strictly for a charitable or
religious institution or society; and

(ii) The work has been lawfully made

accessible to the public prior to the
recitation or performance[.]

Under Section 184 . 1 (i):

(i) The place where the public

performance and/or communication
to the public is made does not charge
any admission fee in respect of such
performance or communication;

(ii) The public performance and/or

communication to the public is made
by a club or institution: (a) for
charitable or educational purpose
only; and (b) whose aim is not profit
making; and

(iii) Such other requirements that may be

prescribed under the implementing
rules and regulations promulgated by
the · Director General of the
IPO[PHL].

Regarding the first requisite of Section 184 .1 (a), for this exemption
to apply, the recitation or performance should be done privately and
completely free of charge - unless the same is made strictly for a charitable
or religious institution or society. Cornllarily, a person could avail of the
exemption under Section 184. 1(a) even if the recitation or performance
were to be done publicly and/or for compensation, provided that the same
is made strictly for a charitable or religious institution or society.
 Separate Concurring Opinion 1.3 G.R. No. 222537

Notably; the IP Code does not specifically define the term

"privately." Since Congress did not assign a statutory definition to the term
"privately," this tem1 should thus be understood in its plain and ordinary
sense, i.e., "relating or belonging to an individual, as opposed to the public
or the government"[.] Considering, however, that the term "public," the
commonly accepted antonym of "private," is given a technical meaning
elsewhere in the IP Code, then resort could also be made to this definition
in order to construe what "privately" as contemplated under Section
184.l(a) means. In this regard, Section 171.6 of the IP Code provides that
a performance of a sound recording will be deemed as "public" if it would
entail "making the recorded sounds audible at a place or at places where
persons outside the normal circle of a family and that family's closest social
acquaintances are or can be present, irrespective of whether they are or can
be present at the same place and at the same time, or at different places
and/or at different times."

In other words, construing "privately" in its ordinary sense (i.e., as

the opposite of "publicly"), and coupled with the definition of "public"
under Section 171.6, then this tenn should simply be understood to refer to
situations where the work is not made "audible at a place or at places where
persons outside the normal circle of a family and that family's closest social
acquaintances are or can be present." After all, it is a settled principle of
statutory construction that "words used in x xx [a] statute must be given
their ordinary meaning except where technical terms are employed." As
well, the law must not be read in truncated parts, and "the whole and every
part thereof must be considered in fixing the meaning of any of its parts in
order to produce a harmonious whole."

Meanwhile, regarding the first requisite of Section 184.l(i), in

contrast with the first requisite of Section 184. l(a), it should be clarified
that based on the plain text of paragraph (i) of Section 184, charging an
admission fee, per se, does not take out an otherwise allowable
"perfom1ance" or "communication" from this exemption. Rather, the
admission fee must specifically be "charged in respect of such performance
or communication." Thus, if an admission fee is charged for some other
purpose not otherwise related to the performance or communication, then
the latter could still be exempt under this paragraph.

Anent the second requisite of Section 184.1 (i), it must be

underscored that not only must the club or institution be for a "charitable or
educational purpose," but it must also be "non-profit." Thus, to be exempt,
the club or institution must not only first qualify as either a charitable
institution, i.e., it "provide[s] for free goods and services to the public which
would otherwise fall on the shoulders of government," or an educational
institution, i.e., it must be a school, seminary, college or similar educational
establishment under the formal school system; but also, said club or
institution must likewise be "non-profit," such that "no net income or asset
accrues to or benefits any member or specific person, with all [its] net
income or asset[ sJ devoted to the institution's purposes and all its activities
conducted not for profit " 20 (Emphasis in the original)

C.

Fair Use
20
Id. at 9-13. Citations omitted.
Separate Concurring Opinion 14 G.R. No. 222537

On the other hand, Section 185 of the IP Code has been explained as
follows:

i. Fair Use Doctrine

Aside from the specific exceptions and limitations contemplated

under Section 184 of the IP Code, the law also provides a statutory
framework that may be used as a guide in determining whether an
unlicensed use of a copyrighted work falls within fair use and consequently,
outside the scope of copyright infringement. Specifically, Section 185
provides as follows: ·

SECTION 185. Fair Use of a Copyrighted Work. -185.1.

The fair use of a copyrighted work for criticism, comment,
news reporting, teaching including multiple copies for
classroom use, scholarship, research, and similar purposes is
not an infringement of copyright x x x. In determining
whether the use made of a work in any particular case is fair
use, the factors to be considered shall include:

(a) The purpose and character of the use,

including whether such use is of a
commercial nature or is for non-profit
educational purposes;
(b) The nature of the copyrighted work;
(c) The amount and substantiality of the
portion used in relation to the copyrighted
work as a whole; and
(d) The effect of the use upon the potential
market for or value of the copyrighted
work.

xxxx

Before delving into the relevant judicial interpretations made by the

US Courts, it should first be emphasized that the four fair use factors set out
in Section 185 of our IP Code are an exact reproduction of the factors listed
in the counterpart provision of the US Copyright Act of 1976, to wit:

Section 107. Limitations on the exclusive rights: Fair use

Notwithstanding the provisions of sections 106 and 106A,

the fair use of a copyrighted work, including such use by
reproduction in copies or phonorecords or by any other
means specified by that section, for purposes such as
criticism, comment, news reporting, teaching (including
multiple copies for clm:sroom use), scholarship, or research,
is not an infringement of copyright. In determining whether
the use made of a work in any particular case is a fair use the
factors to be considered shall include -

(1) the purpose and character of the

use, including whether such use is of a
Separate Concurring Opinion 15 G.R. No. 222537

commercial nature or is for nonprofit

educational purposes;
(2) the nature of the copyrighted work;
(3) the amount and substantiality of the
portion used in relation to the
copyrighted work as a whole; and
(4) the effect of the use upon the potential
market for or value of the copyrighted
work.

The fact that a work is unpublished shall not itself bar a

finding of fair use if such finding is made upon consideration
of all the above factors·. x x x

Accordingly, reference to US cases is not only proper, but also

imperative.

[Second], it should be pointed out that, as held in the case of

Campbell, each of the four factors is not individually conclusive and should
be weighed along with the other factors for purposes of establishing a case
of fair use.

1. First Factor: The Purpose and Character of Use

The first factor to consider in determining whether an unlicensed use

or reproduction of a copyrighted work is in accordance with fair use is the
purpose and character of the use, including whether such use is of a
commercial nature or is for nonprofit educational purposes. In
Campbell, the SCOTUS clarified the core value behind an enquiry as to the
purpose and character of the new work:

x x x The central purpose of this investigation is to see, in

Justice Story's words, whether the new work merely
"supersede[s] the objects" of the original creation x xx,
or instead adds something new, with a further purpose
or different character, altering the first with new
expression, meaning, or message; it asks, in other words,
whether and to what extent the new work is 'transformative.'
Although such transformative use is not absolutely
necessary for a finding of fair use, the goal of copyright, to
promote science and the arts, is generally furthered by the
creation of transformative works. Such works thus lie at the
heart of the fair use doctrine's guarantee of breathing space
within the confines of copyright, x x x and the more
transformative the new work, the less will be the
significance of other factors, like commercialism, that
may weigh against a finding of fair use. x xx

Speaking of commercial purpose, the SCOTUS also clarified [their]

ruling in Son_v Corp. of America v. Universal Studios, Inc., and further
elucidated that the commercial character of a work does not per se make it
unfair. At the same time, "the mere fact that a use is educational and not for
profit does not insulate it from a finding of infringement." In shedding this
light, the Court stated, as follows:
Separate Concurring Opinion 16 G.R. No. 222537

The langm1f:', of the statub makes dear that the commercial

or nonprofit educational purpose of a work is only one
element of the first factor enquiry into its purpose and
character. Section 107 ( 1) uses the term "including" to begin
the dependent clause referring to commercial use, and the
main clause _speaks of a broader investigation into "purpose
and character." Aswe explained in Harper & Row, Congress
resisted attempts to narrow the ambit of this traditional
enquiry by adopting categories of presumptively fair use,
and it urged courts to preserve the breadth of their
traditionally ample view of the universe ofrelevant evidence
xx x If, indeed, commerciality carried presumptive force
against a finding of fairness, the presumption would
swallow nearly all of the illustrative uses listed in the
preamble paragraph of § 107, including news reporting,
comment, criticism, teaching, scholarship, and research,
since these activities "are generally conducted for profit
in this country." Congress could not have intended such a
rule, which certainly is not inferable from the common-law
cases, arising as they did from the world of letters in which
Samuel Johnson could pronounce that "no man but a
blockhead eyer wrote, except for rp_oney." xx x
. , .

In Harper & Row, xx x the SCOTUS explained that "the crux of

the profit/nonprofit distinction is not whether the sole motive of the use is
monetary gain, but whether the user stands to profit from exploitation
of the copyrighted material without paying the customary price."

In other words, if the new work clearly has transformative use and
value, a finding of fair use is more likely even if the user stands to profit
from his or her new work. Conversely, if the new work merely supplants
the object of the original work, i.e., it has no transformative value, and is
commercial in nature, the first factor will most likely be weighed against a
finding of fair use. Needless to state, if the new work has transformative use
and value, and was created for a noncommercial purpose or use, the scale
will highly likely be swayed in favor of fair use.

Applying the ruling of the SCOTUS in Campbell, we may use as

illustrative, not limitative., examples of transformative use those listed in
the preamble of Section 185 of the IP Code, i.e., for criticism, comment,
news reporting, teaching, scholarship, research, and similar purposes.

In Campbell, the [US Court] held that parodies which are "less
ostensibly humorous fo1m~: of criticism[ s]," have transformative value and
served an entirely different function. The x x x Court x x x in Hustler
Magazine, Inc., v. Moral J,.,fajority, Inc. x x x held that defendants
reproduced and distributed copies of a single page from Hustler Magazine,
Inc. 's magazine for a different purpose- "to defend himself (Jerry Falwell)
against such dcrogiltory personal attacks." Similarly, the xx x Court xx x
in The Author's Guild, Inc v. Haihitrust x x x ruled that the creation of a
full-text searchable databa3c of books is "a quintessentially transformative
use" and the same should not be considered as a substitute for the books
searched. In the same line, the x x x Court x x x in Kelly v. Arriba-Soft x x
x ruled that the reproduction of plaintiff's photos as thumbnail images
served an entirely different purpose - "as a tool to help index and improve
access to images on the internet and their related web sites." In the seminal
 l..,
Separate Concurring Opinion., ' I G.R. No. 222537

case of Field v. Google, inc. x x x, the x x x Court x x x also ruled that

Google's use of"cached" hnks has transformative use such as: (1) it enables
the users to temporarily access an inaccessible page; (2) it allows users to
identify changes made to a particular website; and (3) it "allows users to
understand why a page was responsive to their original query."

On the other hand, in Harper & Row, the [US Court] ruled that the
respondent's intended purpose for the unauthorized use of the unpublished
manuscripts was simply to "[supplant] the copyright holders' commercially
valuable right of first publication," and thus, without any transformative use
or value. In Twin Peaks Productions, Inc. v. Publications International Ltd.
x x x, the US Court x x x held that a book which simply summarizes the
plots of plaintiff's teleplay has no transformative value.

Taking into consideration the other fair use factors, [the] US Courts
sustained the user's claim of fair use in Campbell, Hustler Magazine, The
Author's Guild, Kelly, and Field, but denied the same in Harper & Row and
Twin Peaks.

2. Second Factor: Nature of Copyrighted Work

The second fair use factor involves the assessment of the nature of
the copyrighted work. "This factor calls for recognition that some works
are closer to the core of intended copyright protection than others, with the
consequence that fair use is more difficult to establish when the former
works are copied."

In the case of Stewart v. Abend x x x, the SCOTUS ruled that there

is a higher probability for the fair use defense to fly in case of factual works
than works of fiction and fantasy, since the law generally recognizes a
greater need to disseminate the former than the latter. Considering that a
motion picture based on a fictional short story is more creative than factual,
the fair use defense was given less weight. This ruling is affirmed in Twin
Peaks, which involved a televised work of fiction.

In addition, in Harper & Row, the [US Court] stated that the fact
that the copied work is unpublished is a ~ignificant element of its "nature,"
since "the scope of fair use is narrower with respect to unpublished works."

While even substantial quotations might qualify as

fair use in a review of a published work or a news account
of a speech that had been delivered to the public or
disseminated to the press, x x x the author's right to
control the first public appearance of his expression
weighs against such use of the work before its release.
The right of first publication encompasses not only the
choice whether to publish at all, but also the choices of when,
where, and in what fom1 first to publish a work. (Emphasis
in the original)

This ruling was affirmr:;d by the lJ S Courts in Salinger v. Random

House, Inc, and Love v. i(witny, where defendants' unauthorized
reproduction of unpublished letters and manuscripts were weighed against
fair use.
Separate Concurring Opinion 18 G.R. No. 222537

In the recent case l 1f Google LLC' 1. Oracle America, Inc. xx x, the

SCOTUS placed the copied "decla6ng code" farther from the core of
copyright compared to other computer programs. Given this, the application
of fair use was held to "[ unlikely undermine] the general copyright
protection that Congress provided for computer programs."

The foregoing judicial interpretations may be applied by analogy in

similar cases or used as guide when this Court or the public is confronted
with copyright infringement and fair use cases. As a rule, the closer the work
is to the core of copyright protection - i.e., the more creative, imaginative,
or original the copied work is, the more likely will fair use be rejected as a
defense against infringement.

3. Third Factor: Amount and Substantiality of the Portion Used

The third fair use factor asks whether the amount and
substantiality of the portion used in relation to the copyrighted work as
a whole is reasonable. The SCOTUS, in Google LLC, ruled that the
"substantiality" factor "will generally weigh in favor of fair use where
xx x the amount of copying was tethered to a valid, and [transformative
purpose]." Thus,

this factor calls for thought not only about the quantity of
the materials used, but about their quality and
importance, too. In Harper & Row, for example, the Nation
had taken only some 300 words out of President Ford's
memoirs, but we signaled the significance of the quotations
in finding them to amount to "the heart of the book," the part
most likely to be newsworthy and important in licensing
serialization. We also agree with the Court of Appeals
that whether "a substantial portion of the infringing
work was copied verbatim" from the copyrighted work is
a relevant que::,tion, for it may reveal a dearth of
transformative character or purpose under the first
factor, or a greater likelihood of market harm under the
fourth; a work composed primarily of an original,
particularly its heart, with little added or changed, is more
likely to be a merely superseding use, fulfilling demand for
the original. x x x

In Campbell, the SCOTUS also clarified that the third fair use factor
must be examined in relation to the first factor, which is the purpose and
character of use. Thus, in this case, the Comi held that a parody, which
should necessarily "conjure up" at least enough of that original "to make
the object of its critical wit recognizable," is fair use. This is consistent with
the US Court's statement in Field that "even copying of entire works should
not weigh against a fair use finding where the new use serves a different
function from the rniginal.'' Thus, the xx x Court x. xx further stated:

x x x GiJogfo 1s use f.if imtirc Web pages in its

Cached Jinks sen t,s multipJe tnmsformative and socially
valuable purp11st:s. The~e purposes could not be
effectively acco:;:npHshed by using only portions of the
'Web pages. ,vjtho.ut, -allowing access to the whole of a
Web page, the Gpogle Cached Hnk cannot assist Web
users (an<l content owners) by offering access to pages
Separate Concurrrng Opu\; :: 10 G.R. No. 222537

that are oth~rw i.,:-., Hnavaila bJc. N0r could use of less than
the whole page ass1sl in the archivdl 0r comparative purposes
of Google's "Cached" links. Finally, Google's offering of
highlighted search terms in cached copies of Web pages
would not allow users to understand why a Web page was
deemed germane if less than the whole Web page were
provided x xx. Because Google use~ no more of the works
than is necessary in allowing access to them through
"Cached" links, the third fair use factor is neutral,
despite the fact that Google allowed access to the entirety
of Field's works. (Emphasis and underscoring in the
original) · ·

4. Fourth Factor: The Effect of the Use Upon the Potential Market for or
Value of the Copyrighted Work

The last factor, according to the case of Harper & Row, is

"undoubtedly the? ~ingle most important element of fair use." "It requires
courts to considef:hot only the extent of market harm caused by the
particular actions of the alleged infringer, but also 'whether unrestricted
and widespread conduct of the sort engaged in by the defendant x x x
would result in a substantially adverse impact on the potential market'
for the original" and derivative works. .

The [Court], in Crimpbell stated that "when a commercial use

amounts to mere duplication of the entirety of the original, it clearly
supersedes the object of the original and serves as a market replacement
for it, making it likely that cognizable market harm to the original will
occur."

In Hustler Magaz.ine, the US Court x x x held that in order to

determine the potential hann to a copyrighted work, the courts should focus
on whether the infringing use: (1) "tends to diminish or prejudice the
potential sale of the work; (2) tends to interfere with its marketability of the
work; or (3) fulfill the demand for the original work." In this case, the US
Court considered the following factors in concluding that the impact of
defendant's use of plaintiff's work was nil: (a) the plaintiff's work was first
issued or released long before defendant's mailings went out; (b) "the effect
on the marketability of back issues of the magazine is de minimis because
it is only one page of a publication"; and (c) defendant's uses did not cause
plaintiff any competitive injury since defendant was not selling or
distributing copies of the ad parodies to plaintiff's followers.

In Google LLC, the SCOTUS found that Google's new smartphone

platform is not a market substitute for Java SE, and accordingly, weighed
the fourth factor in favor of fair use.

On the other hand, in the case of Harper & Row, the [Court] held
that "if the defenJant's work adveri5fjy affects the value of any of the rights
in the copyrighted work (in this cast~ the adaptation and serialization right)
the use is not fair." Similarly, in Stewart, the [Court] ruled that the rerelease
of a film based on .f;l story impinged on respondent's ability to market new
versions o~the story, and consequently, c:aused market harm to respondent.

In Twin Peaks, tht: x x x Comi x. x x weighed the fourth factor

against fair use and held tk,t;
 ' '
Separate Concurring Opinion 70 G.R. No. 222537

xx x It is :/ :,afo generalization that copyright holders,

as a class, wish to continue to sell the copyrighted work and
may also wish to prepare or license such derivative works as
book versions or films. In this case, the Book may interfere
with the primary market for the copyrighted works and
almost certainly · interferes with legitimate markets for
derivative works. It is possible that a person who had
missed an episode of "Twin Peaks" would find reading
the Book an adequate substitute, and would not need to
rent the videotape of that episode in order to enjoy the
next one x x x. A copyright holder's protection of its
market for derivative works of course cannot enable it to
bar publication of works_ of comment, criticism, or news
reporting whose commercial success is enhanced by the
wide appeal of the copyrighted work. The author of"Twin
Peaks" cannot preserve for itself the entire field of
publishable works that wish to cash in on the "Twin Peaks"
phenomenon. But it may rightfully claim a favorable
weighting of the fourth fair use factor with respect to a book
that reports the plot in such extraordinary detail as to risk
impairment of the market for the copyrighted works
themselves or derivative works that the author is entitled to
license. 21 (Emphasis in the original)

D.

Why COSAC is not exempted from liability for copyright

ir,fringement

In its defense, COSAC claims that it did not commit infringement

because "once the music is played in the airvvaves, it becomes public
property." 22 Clearly, this exception is not included in Section 184 of the IP
Code. Even assuming that COSAC's defense may be generously construed as
akin to Section 184(a)23 because the copyrighted work being performed has
been "lawfully made accessible to the public," it is readily apparent that
COSAC cannot fall under this specific limitation on copyright because it is
not done privately and COSAC is not a charitable or religious institution or
society.

Neither can COSAC's acts be classified as falling under the fair use
doctrine.

First, COSAC's use of said musical works was primarily commercial

in nature, considering that 1t was made to improve the ambiance of the
establishment and the experi,~nce of its customers. More importantly,
COSAC's use of the crrpyrighted mu.::'.ic has no transformative value since it

21 Id. at 13-29. Citations omitted.

22 Ponencia, p. 7.
23 JP Code, Section 184(a) provides: ''The rtcitation or performance of a work, once it has been lawfully
made accessible to the public, if dun0 privately anrl free, of charge or if made strictly for a charitable or
religious institution or society; (S~c, 10(1), P.D. No. 49l,''
Separate Concurnng Opinion 21 G.R. No. 222537

merely supplants the ()bjecl oftlie rn;\g)oal \\'Ork. As discussed in the previous
section, a commr:rcia] and non-transformative use of a copyrighted work will
more likely be weighed against a finding of fair use.

Second, CO SAC' s infringement involved musical compositions, which

are creative and not factual works. Since creative works like these are what
copyright primarily intends to protect, the second factor on the nature of
copyrighted work clearly does not weigh in favor of COSAC.

Third, it is undisputed that COSAC had used the entirety of at least 25 24

copyrighted musical compositions when it was monitored in two separate
days.

Fourth, if allowed by the Court unchecked, COSAC' s unauthorized acts

of using musical compositions -- whether by hiring live bands or by playing
sound recordings (broadcasted or otherwise) - to enhance its establishment
will indubitably have an adverse effect on the potential market for said
musical compositions. If all bars and restaurants like COSAC may freely
exploit copyrighted music in this manner, no other commercial establishment,
big or small, will understand the need t~ secure licenses for using copyrighted
music. Moreover, if unrestricted, COSAC 's manner of use will significantly
reduce the value of the copyrighted work. Unrestricted free use of copyrighted
music means that there is zero value attached to the authors' works. This will
ultimately work to the prejudice of the authors who - despite having exerted
substantial effort, time, and resources - . . will not receive any economic
benefits from sharing their works with the rest of the society. While exposure
and fame in favor of the creators are arguably reasonable incentives, they do
not pay the authors' hills .

Clearly, COSAC's acts cannot be classified as fair use because all four
factors (i.e., The Purpose and Character of Use, Nature of Copyrighted Work,
Amount and Substantiality of the Portion Used, and The Effect of the Use
Upon the Potential Market for or Value of the Copyrighted Work) weigh
against this finding.

III. THERE MUST BE REASONABLE

CONSIDERATIONS FOR QUANTIFYING
THE DAMAGES AWARDED IN
COPYRIGHT INFRINGEMENT CASES

Proceeding from the discussions above, COSAC is clearly liable for

copyright infringement because (i) COSAC exercised without authority the
authors' exclusive "public performing rights," i.e., their rights of "public
performance''.) and/or "communication to the public" and (2) its acts are neither
covered by the limitations 011 copyright nor the fair use doctrine.

24
Ponencia, pp. 6-7.
 Separate Concnning Opimon G.R. No. 222537

. . The nature of damage;:; awarded by the Court in a similar copyright

mfrmgement case has been discussed as follows:

Section 2 J 6 of the JP Code enumerates the remedies for

infringement. Specifically, paragraph (b) provides how the award to be paid
should be computed, viz.:

SECTION 216. Remediesfor Infringement. --216.1.

Any person infringing a right protected under this law shall
be liable:

xxxx

(b) Pay to the copyright proprietor or his

assigns or. hei_rs SlJCh. actual -damages,
including legal costs and other expenses, as
he may have incurred due to the infringement
as well as the profits. the infringer may have
made due to such , infringement, and in
proving profits the plaintiff shall be required
to prove sales only and the defendant shall be
required to prove every element of cost which
he claims, or, in lieu of actual damages and
profits, such damages which to the court shall
appear to be just and shall not be regarded as
penalty.

As seen in the provision, there are two alternative awards that courts
may order the infringer to pay to the copyright proprietor or his assigns,
namely:

(i) actual damages, including legal costs and other

expenses, as he may have incurred due to the
infringement as well as the profits the infringer may
have made due to such infringement, and in proving
profits the plaintiff shall be required to prove sales
only and the defendant shall be required to prove
every element of cost which he claims; or, in lieu of
actual damages and profits,

(ii) damages which to the court shall appear to be just

and shall not be regarded as penalty.xx x

Notably, Section 216 of the IP Code mirrors the rules on awarding

actual damages prescribed under the Civil Code. Thus, if the Court were to
award a copyright owner actual damages, such damages "must not only be
capable of proof, but mu::it actually be proved with reasonable degree of
certainty." Fmther, to be recoverable, the Court "cannot simply rely on
speculation, conjectme, or guesswork in determining the amount of
damages[,]" such that there must be '·competent proof' of the actual amount
ofloss incurred. OtherwisP,, in the absence of such "competent proof', or if
the amount of such loss "cannot be proved with certainty[,]" temperate
damages wfoch must he "reasonable unrl.er the circumstances" should
instead be awarded. 25 (Emphasis in the original)

25
J. Caguioa, Separate Concurring Opinion in FlLSCAP 1'. Anny, supra note 1 at 66-67.
Separate Concurring Opinion 23 G.R. No. 222537

Here, the detretal po:nion of the pcmencia orders the award of the
following amounts to FlLSCA!\ viz.;

WHEREFORE, the Petition for Review on Certiorari is hereby

DENIED. The assailed May 28, 2015 Decision and January 14, 2016
Resolution of the Court of Appeals in CA-G.R. CV No. 101415 are
AFFIRMED with MODIFICATIONS. The monetary award in the amount
of P317,050.00 as damages for unpaid license fees/royalties in favor of the
Filipino Society of Composers, Authors and Publishers, Inc. is DELETED.
Instead, petitioner COSAC, Inc., is ORDERED to indemnify the Filipino
Society of Composers, A urhors and Publishers, Inc. temperate damages in
the amount of P300,000.00. This amount shall be subject to interest at the
rate of 12% per annum from February 13, 2006 until June 30, 2013, and at
the rate of 6% per annum from July 1, 2013 until the date of finality of this
judgment. Thereafter, all 'the monetary amounts shall be subject to interest
at the rate of 6% per annum from the date of finality of this judgment until
full satisfaction ofthe samc. 26

The ponencia justifies the amount of the award as follows:

Thence, the amount which should be awarded to FILSCAP should be

based on the following considerations: (1) the 500-seating capacity of Off
the Grill; (2) based on FILSCAP's matrix, the royalty fee of Pl 70.00/day
for lounges/bars/pubs which play copyrighted songs live and mechanically;
(3) FILSCAP's assertion that it demanded from COSAC to pay license fees
since October 2003, until the filing of the complaint on February 13, 2006
(although it is unclear when FILSCAP first discovered COSAC's acts of
infringement); (4) FILSCAP's monitoring agent identified only 25
copyrighted songs which were played at Off the Grill without the requisite
license and payment of fees; (5) to acknowledge FILSCAP's members who
are copyright owners, and FILS CAP' s authority to enforce their rights; and,
(6) to balance the interests between copyright owners and the society, in
that the award of just damages is "[a] not too excessive as to scare away
other people from carrying out legitimate acts involving copyrighted music,
BUT [b] not too minimal -as to give the wrong impression that the State
accords little value to copyrighted musical work and that creators do not
deserve to be compensated with reasonable economic rewards for sharing
their creations to the society."27

I fully concur with the amount awarded and the considerations

enumerated by the ponencia for the fol1owing reasons:

1) It is proper to delete the award of P3 l 7,050.00 as actual

damages for unpaid license fees/royalties. Apart from a lack
of competent evidence, a closer l0ok at the royalty fees being
charged by FlLSCAP hardly justifies awarding this amount.
If FU.SCAP's royulty fers for lounges/bars/pubs that play
copyrighted songs live and n1cchanically for 500 persons or
more is pegged at the daily rate c;:if Pl70.00,28 the award of
P317,050.00 as .-;1.mpaid dami:iges/royalties'~ amounts to

26
Ponencia, p. 51.
27
Id. at 50. Citations omitted.
28
Id. at 4.
Separate Concmri11g _Opini'un 24 G.R. No. 222537

awarding 1,865 days' worth of royalty fees or more than five

years' worth of royalties.

There is no indication in the complaint as to when FILSCAP

first discovered COSAC's acts of infringement. There is only
an allegation that as early as 2003, 29 FILSCAP had formally
advised COSAC of its obligations under the IP Code. The
complaint for copyright infringement was then filed on
February 13, 2006. ln effect, the filing of the complaint was
made around three years (more or less 1,095 days) after
COSAC was informed of its obligation to pay license fees.
Assuming that there is dear proof that COS AC continuously
played music in its establishment every day for three years,
despite being informed of its obligation to pay license fees, it
should have paid roughly around Pl86,150.00 maximum in
royalties to FII,SCAP.

As discussed, however, awarding unpaid license

fees/royalties would be inappropriate due to the lack of
competent proof to substantiate actual/compensatory
damages. Thus, I agree ·with the ponencia' s deletion of the
award of P3 l 7,050.00 and its award of temperate damages
instead.

2) As found by the Regional Trial Court, "FILS CAP is a [non-

stock and] non-profit corporation because everything it
collect[ s] is distributed back to its members and affiliate
performing rights soc1et1es abroad less only the
administrative expenses which cannot exceed 30% of total
collection, withholding tax and 5% deduction for the socio-
cultural fund of its members." 30

As it stands, FILS CAP is the only CMO accredited by the IPO

to '"collectively administer, license, and enforce the
reproduction right (Sec. 177 .1, IP Code), the transformation
right (Sec. 177 .2, IP Code), the first public distribution right
(Sec. 177 .3, IP Code), the public performance right (Sec.
177 .6, IP Code), an:d the communication to the public right
(Sec. l 77. 7, IP Code) of composers, lyricists, music
publishers and other music copyright owners." 31 Put simply,
its memb~rs who are music copyright owners - in duding.
those who cannot afford to enforce their own copyrights
and coiled royaltks -~ n~ly on FILS CAP to secure royalties
and enforce their tights.

29 Rollo, p. 39.
30
Id. at 75.
31 Certificate of Accredita•.io1, Registr;1tiori No. CMO-2-?0211, available at <https://www.ipophil.gov.ph
/co llective-management-·ocganizatinr\s/>.
Separate Concurring Opirn,,n G.R. No. 222537

3) In keeping with the goal of balancing competing interests

between the copyright owners and the society at large, the
Court should endeavor to ensure that the award of temperate
damages is not too _excessive as to scare away other people
from carrying out legitimate acts involving copyrighted music
BUT not too minimal as to give the wrong impression that the
State accords little value to copyrighted musical work and that
creators do not deserve to be compensated with reasonable
economic rewards for sharing their ere ·ons to the society.

In view of the foregoing reasonsi I vot

NS.CAGUIOA
.,

3&epnblic of tbe fHJilippinen

~upren1e QCourt
:fflllrm ilR

EN BANC

PHILIPPINE HOME CABLE G.R. No. 188933

HOLDINGS, INC.,
Petitioner, Present:

GESMUNDO, Chief Justice,

LEONEN,
CAGUIOA,
HERNANDO,
LAZARO-JAVIER,
INTING,
-versus- ZALAMEDA,
LOPEZ, M.,
GAERLAN,
ROSARIO,
LOPEZ, J.,
DTMAAMPAO,
MARQUEZ,
KHO, JR., and
FILIPINO SOCIETY OF SlNGH, JJ.
COMPOSERS, AUTHORS &
PUBLISHERS, INC., Promulgated:

x------------ Respondent. ________________ ~ ------x

DECISION

LEONEN, J.:

When a cable television system operator transmits a musical

composition fixed in an audiovisual derivative work over a channel they
control and operate, the operator is making that work accessible to members
of the public from a place or time individually chosen by them. This is the
essence of the "communication to the public" right in the Intellectual Property
/c#
 Decision 2 G.R. No. 188933

Code.

This resolves a Petition for Review' under Rule 45 of the Rules of

Court, assailing the February 27, 2009 Decision 2 and July 21, 2009
Resolution 3 of the Court of Appeals, Manila, in CA-G.R. CV No. 81083. The
Court of Appeals affirmed, with modification, the October 20, 2003 Decision 4
of the Regional Trial Court of Quezon City, Branch 90, finding Philippine
Home Cable Holdings, Inc. civilly liable for copyright infringement.

Philippine Home Cable Holdings, Inc. (Home Cable) is a domestic

corporation engaged primarily in the business of installing, operating, and
maintaining a community antennae television system, commonly known as
"cable television. " As part of its business as a cable television system
operator, it enters into channel distribution agreements with international
broadcasters or originators. The international broadcasters or originators'
channels are thus shown to Home Cable's fee-paying subscribers.
Particularly, Home Cable had a channel distribution agreement with Satellite
Television Asian Region Limited (Star TV) for VIVA Cinema, a 24-hour
Tagalog movie channel, 5 and a cable TV service affiliation agreement with
Cable Box Office Shows and Systems (Cable Box) for "HBO service, WB
television series/mini-series/animation, Hollywood Channel service, ESPN
service, CNN International & TNT Cartoon Network services, CNBC & NBC
services, MTV Asia service and MGM GOLD NETWORK." 6

In 1995 , Home Cable-then operating as Singing Makulay, Inc.-

executed a Memorandum of Agreement with Precision Audio Video Service,
Inc. (Precision Audio), a domestic corporation that produced and distributed
videoke laser disc recordings. 7 Based on the agreement, Home Cable
purchased 24 volumes of laser discs containing videoke materials from
Precision Audio. 8 The contents of these laser discs would be made available
on Home Cable's channel 38 for approximately five hours per day, excluding
time allotted for advertising. Precision Audio was given 60 seconds of ai1iime
for its own advertisements, while Home Cable reserved the right to air other
paid advertisements on the channel. 9 Under the terms of this agreement,
Home Cable was responsible for and in control of operating channel 38,
including providing the equipment such as laser disc and VHS players. 10 In

Rollo, pp. 9-49.

Id. at .s 1- 75. ! he Decision was penned by Assoc iate Ju stice Romeo F. Barza, and concurred in by
Associate Ju stices Josefin a Guevara-Salonga and Arcange lita M. Romill a- Lontok of the Ninth Division
Court of Appea ls, Manil a. '
lei. at 77- 78. :he Reso~ution was penn ed by Assoc iate Ju stice Romeo F. Barza, and concurred in by
Assoc iate Ju sti ces Josef ma Guevara-Salonga and Arcange lita M. Romill a-Lontok of the Form er Ninth
Division, Court of Appea ls, Manil a.
Id. at 301 - 3 11 . The Dec ision was penn ed by Ju dge Reynaldo B. Daway.
Id. at 79- 92.
<, Id. at I 00.
Id. at 11 2- 11 3.
Id. at 11 2.
' Id. at 11 3.
10
/d.atll 2.

'--....,,.
Decision 3 G.R. No. 188933

turn, Precision Audio guaranteed that it had full copyri ght over all the laser
discs and that it had already acquired all necessary permits from relevant
government agencies for the laser discs. 11

A year later, Home Cable again executed a Memorandum of

Agreement 12 with Precision Audio, this time for the operation of channels 22,
32, and 52. This agreement also provided for Home Cable's responsibility
and control over the three channels, content for which were to be provided by
Precision Audio's videoke laser discs. 13 As such, from 1997 to 1998, Home
Cable carried Home Pinoy Karaoke on channel 22, playing Filipino songs,
and Home English Karaoke on channel 32, which played English songs. 14

The Filipino Society of Composers, Authors, and Publishers, Inc.

(Filscap) is a non-stock and non-profit domestic association of Filipino
composers, authors, and publishers. 15 As found by the Regional Trial Court:

. .. . It had acquired by assignment, mandate, grant or by any other means,

the representation and performance rights, mechanical reproduction and
film synchronization rights into the musical compositions and/or literary
works written and/or published by composers, authors and/or publishers
affili ated to it as a society and/or to s imilar affiliated musical societies
existing in foreign countries, like the American Society of Composers,
Authors and Publishers, Inc. (ASCAP), Broadcast Music, Inc. (BMI) ,
Performing Right Society Limited (PRSL), Australasian Performing Right
Association Limited and Gesselschaft for Musikalische of Germany . . ...
[Filscap] is re presenting or has represented practica ll y [all] Filipino
composers and has forty-five (45) foreign reciprocal agreements. It is
granting or has granted licenses and is collecting or has collected royalties
for the mechanical [production] of the above-mentioned compositions and
works and is allotting and distributing or has allotted and distributed such
royalties to their respective composers, authors and publishers. It has
brought legal action for the protection of composers, authors and publishers
of musical works against piracies of any kind , among other things[.] 16

In July 1997, Filscap monitored Home Cable and found that its
members ' and foreign affiliates' musical compositions were being played on
channels 22 and 32. 17 It sent letters to Home Cable advising that Home Cable
obtain a license from Fi lscap and pay the license fees for the continued use of
its musical compositions on Home Cable's channels, 18 but Home Cable did
not respond. 19 Then, on January 12 and 13 , 1998, Filscap monitored channels
22 and 32 and again found that Home Cable continued to play its members'

11
Id. at 11 3.
12
ld. atll5- 116.
11
Id. at 11 5.
11
' Id. at 52.
is Id.
16
Id. at 30 I .
17
Id. at 52.
ix Id. at 53.
19
Id. at 302.
 Decision 4 G.R. No. 188933
A.

musical compositions despite not securing a license from Filscap.20

Thus, on February 16, 1998, Filscap filed with the Regional Trial Court
a Complaint for injunction and damages 21 against Home Cable. In its
Complaint, it alleged that Home Cable "has been playing or otherwise
performing or communicating to the public musical works included in the
Filscap repe1toire and despite full knowledge and nature of [Filscap's]
existing right and ownership of the public performance right and the
communication to the public right of said musical works in the
Philippines(.]" 22 As a result of Home Cable's alleged infringement of
Filscap's copyright over the musical works, Filscap demanded at least PHP
1,000,000.00 in actual damages in the form of recovery of unpaid license fees
from August 16, 1997 until the filing of the Complaint, 23 as well as exemplary
damages and attorney's fees. 24

In its Answer to the Complaint, Home Cable argued that Filscap was
not the real party in interest; that its secondary transmission of channels 22
and 32 was not public performance under copyright law; that Filscap's rights
did not include the right of communication of the work to the public; and that
Filscap or its principals had already been paid for Home Cable's use of the
copyrighted materials.25

Following a trial, the Regional Trial Com1 issued its Decision 26 finding
Home Cable liable for copyright infringement. The dispositive po11ion of the
Decision stated:

WHEREFORE, judgment is rendered ordering the defendant to pay

to the plaintiff the following sums of money, to wit: a) PhP 1,000,000.00 in
the concept of dam ages that appear to be just, in lieu of actual damages ; b)
PhPl ,000,00.00 [sic] as exemplary damages; c) PhPS00,000.00 as
reasonabl e attorney 's fees and expenses of litigation, plus costs of suit.

Moreover, the defendant, its agents, representatives, assignees and

persons acting in its behalf and under its authority is or are ordered to cease
and desist from using, or causing to be used, any musical work included in
the repertoire of the plaintiff.

Ali other claims, including all counterclaims, are dismissed for lack
of lega l and/or factual basi s.

SO ORDERED.27

- - - - -- -- -
21, Id.
21
Id. at 12 1- 124 .
22
Id. at 123 .
D lei.
24
Id. at 124.
25
Id. at 302 .
21
' /d.at301 - 3 11 .
27
Id. a1 3 I I.
 Decision 5 . G.R. No. 188933

Upon appeal, the Court of Appeals modified the Regional Trial Court's
Decision. While it affirmed the trial court's finding of copyright infringement,
it reduced the damages awarded to Filscap. The Court of Appeals found that
the award of actual damages did not have any basis; thus, Filscap was entitled
only to PHP 500,000.00 in moderate damages. 28 It also reduced the exemplary
damages to PHP 500,000.00 29 and the attorney's fees to PHP 100,000.00. 30
The dispositive portion of the Court of Appeals' Decision stated:

WHEREFORE, in view of the foregoing , the Decision, dated

October 20 , 2003 , of Branch 90 of the Regional Trial Court of Quezon City
in Civil Case No. Q-98-33511 is hereby MODIFIED so that the amount of
Pl ,000,000.00 as actual damages is DELETED and in lieu thereat:
temperate damages in the amount of PS00,000.00 is awarded. Further, the
amount of P 1,000,000.00 as exemplary damages is also REDUCED to
f->500 ,000.00 and the award of attorney 's fees is likewise REDUCED to
Pl 00,000.00. ln all other respects, said judgment is hereby AFFIRMED.

SO ORDERED. 3 1

Home Cable's Motion for Reconsideration was denied on July 21,

32
2009.

On September 14, 2009, Home Cable filed before this Court a Petition
for Review on Certiorari 33 under Rule 45 of the Rules of Court, assailing the
Decision and Resolution of the Court of Appeals.

In its Petition for Review, Horne Cable argues the following: First, that
this Court should apply its ruling in the January 19, 2009 case of ABS-CBN
Broadcasting Corp. v. Philippine Multi-Media System, Inc .34; second, that
Home Cable 's retransmission of channels 22 and 32 were retransmissions that
did not constitute copyright infringement; third, that Filscap did not hold the
communication to the public rights over its principals' musical compositions;
and finally, thrrt Home Cable, as a cable television systems operator, does not
exercise financial or editorial responsibility over the content of programs it
retransmits.

According to Horne Cable, it was a cable television system operator

which functions were limited by its mandate and the National
Telecommunications Commission's rules and regulations for cable television
services. 35 It points out that in ABS-CBN Broadcasting Corp. v. Phil. Multi-
Media System, inc., this Court had held that retransmission by a broadcast

28
Id at 72- 73 .
~:) Id. at 73 .
.l U Jd. at 73 - 74 .
}' Id. at 74 .
32
Id. at 77--78.
13
Id. at 9-43.
,~ 596 Phil. 283 - 3 14 (2009) [Per J. Ynares-Santiago, Third Division) .
3
' Rolin. p. 22.
 Decision 6 G.R. No. 188933

service did not constitute copyright infringement. 36 Home Cable argues that
in light of the "must-carry" provision in National Telecommunications
Commission's Memorandum Circular No . 4-08-88 , liability for copyright
infringement lies with broadcasting organizations and other off-air television
channels should they broadcast Filscap's materials without a license or sans
compensation, not with entities like Hom e Cable. 37

Further, Home Cable claims that Precision Audio should have been
impleaded as an indispensable party. It points out that in their M emoranda of
Agreement, Precision Audio g uaranteed the full copyright of laser disc
rnaterials. 38 For the same reasons, Star TV and Cable Box must likewise be
impleaded as indispensable parties. 39

Moreover, it argues that Filscap did not have a cause of action against
it, because 10 copyright owners 40 did not assign to Filsca p the " right to
communicate to the public" in the ir Deeds of Assi g nment. 4 1 To Home C able,
Filscap's authority was limited only to enforcing these copyright owners'
"performing rights," namely the right to perform the work in public, to
broadcast the work, and to cause the work to be transmitted to subscribers to
a diffusion service. 42 Similarly, the reciprocal agreements with foreign
societies did not expressly mention the enforcement of rights against cable
services. 43 Hence, Filscap did not have the capac ity to enforce the present
action aga inst Home Cable .

Finally, Home Cable claims that Precision Audio was the broadcasting
party that provided materials to Home Cable's videoke channels 38, 22, 32,
and 52 , and that it only provided the medium for the transmission .44 It claims
that its control only extended to operating the equipment used for transmitting
the broadcast signals, such as the music camp karaoke and laser disc
materials .45 According to Home Cable:

Petitioner has no control over the contents of materials which it may

transmit through the videoke channels because the laser di sc materials from
Precision al., eady contain a compilation of songs per vo lume. Petitioner
received videoke lase r di sc material s consisting of volumes of songs and
never represented itself as the origin or author o f these volumes of
copyrighted works. Only Precision has control and se lection of the songs
which appear in all the volumes subj ect of the agreement. In fact, the very
same MOAs grant videoke programming exc lusivity to Precision to the

Jr, Id. at 24.

:si Id. a~ 26 .
3
~ Id. at ?6---27 .
19
ld. at 27 .
se Id. at JO: FreJc!\e Agu il ar, Rache_l Alejandro, George Canseco, Jose Mari Cha n, Wence,;lao T. Cornejo,
Danny Jav ier, Jungee Marcelo, Jun Pr.redes, Freddie Saturno, and Yen<1ncio "Vehn ee" A. Sarurno.
"
1
:d a.1 29- JC .
4: Id.
~
3
lei. at 3 1- 33.
1
•~ Id. at 33 - JLl
45
ld.at34.
 Decision 7 G .R. No. 188933

exclusion of any other person or entity engaged in the same programming

concept as Precision. 46

Filscap filed its Comment47 on January 6, 2010 . First, it argues that

ABS-CBN Broadcasting Corp. v. Philippine Multi-Media System, Inc. could
not be applied retroactively; second, Horne Cable's retransmission was a
broadcast or rebroadcast that was a public performance or a communication
to the public under the Intellectual Property Code; third, Home Cable was
liable for copyright infringement because it had control over the content of
the programs it broadcast, notwithstanding the "must carry" rule; and fourth ,
Filscap was the real pa1iy in interest as it represented the copyright owners
and foreign societies.

According to Filscap, while Section 177 of Republic Act No. 8293 does
not use the term "broadcasting right," its equivalent is either or both the
"public performance" and "communication to the public" rights. 48 Horne
Cable's retransmission of works through the simultaneous relay of broadcast
signals exercised both these exclusive rights, without the consent or authority
granted by the copyright holder over those works. 49

Filscap also points out that Horne Cable's witnesses all admit that Home
Cable's retransmission "(a) gives [it] the power to choose which program
provider to deal with and thus, control the broadcast content being shown
through its cable facilities; (b) makes works available to the general public by
wire and in effect, transmits sounds and images or programs broadcast; ( c)
allows the public to access said works from a place and time individually
chosen by then1; ( d) creates additional audience and (e) earns it profit." 50

Further, Fi lscap argues that it has proved that it may represent Filipino
composers and music publishers based on the provisions of the deeds of
assigru11ents executed with them. 51 To Filscap, the "do all acts" clause in these
deeds grants it the power to license the composers' and music publishers'
works, and to do other acts to administer and enforce their performing rights,
including filing complaints such as the one in this case. 52 These deeds of
assignment all define "performing rights" as "the right to perform a work in
public, to broadcast such a work or to include such a work in a cable
programme service." 53 Filscap claims that the reason why "communication
to the public': was not a right included in the definition in the deeds of
assignment is because this right was not included in Presidential Decree No.
49, the copyright law in force at the time these deeds were executed.

4 r, Id
•
7
/d.at61 4- 643 .
JR /c/. at 6 i ; .
1
' '! Id. at 618- 6 ! 9.
50
Id. at 620.
5: Id. at 628 .
52
Id. at. 629.
51
Id. at 630 .
 Decision 8 G.R. No. 188933

Nonetheless, it argues that the assignment of the right to "cause the work to
be transmitted to subscriber[s] to a diffusion service" in the deeds is analogous
to the "communication to the public" right. 54

Home Cable filed its Reply 55 on February 15 , 2010, arguing that its
retransmission did not constitute control and management over program
content. Because it had acted in compliance with the National
Telecommunications Commission's "must carry" rule, its actions were a
statutory limitation on copyright and did not constitute copyright
infringement. 56

Home Cable also argues that only performing rights under Section 203
of the Intellectual Property Code were assigned by composers and music
publishers to Filscap; hence, it cannot sue on their behalf over alleged
infringement of the economic rights under Section 177. 57

The issue to be resolved in this case is whether or not Philippine Home

Cable Holdings, Inc. committed copyright infringement.

Article II, Section 17 of the Constitution mandates that the State give
to
priohty education, science and technology, arts, culture, and sports:

SECTION 17. The State shall give priority to education, science

and technology, arts, culture, and sports to foster patriotism and nationalism,
accderate socia l progress, and promote total human liberation and
development.

In relation to this, Article XIV, Section 13 provides for the protection

and security of intellectual property and creations:

SECTION 13. The State shall protect and secure the exclusive ri ghts
of scientists, inventors, artists, and other gifted citizens to their intell ectual
property and creations, particularly when beneficial to the people, fo r such
per iod as may be provided by law.

An important aspect of intellectual property rights is that their

protection subsists only "for such period as may be provided by law." 58 As
with other intellectual property rights, the metes and bounds of protection for
works covered by_copyright are defined and governed by existing law. In
.Joaquin v. Dri!on:) 9

54
Id. a t 635- 636.
55
hi al 650- 669 .
''' Id at G59.
57
Id. at 662-664 .
8
' C0]\;~·1.,art. XJV ,sec . lJ.
51
' 36 1 Phil. 900 ( ! 999,1 [PP.r I. Mendoza, Second Divi s ion].
 Decision 9 G.R. No. 188933

. 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. 60

An early system for the protection of creative works through copyright

was established in Act No. 3134, the Copyright Law of the Philippine Islands.
This law was superseded by Presidential Decree No. 49, the Decree on
Intellectual Property. Later, in 1996, Congress passed Republic Act No. 8293,
otherwise known as the Intellectual Prope1iy Code, which consolidated the
then-disparate laws and decrees on various intellectual property rights,
including copyright. Amendments were made to the Intellectual Property
Code in succeeding years to be responsive to technological developments and
public policies. 61

Under the Intellectual Property Code, "original intellectual creations in

the literary and artistic domain" or literary and artistic works are protected
from the moment of their creation :

SECTION 172. Literary and Artistic Works. - 172. 1. Literary and

artistic works, hereinafter referred to as "wo rks", 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 entertaim11ent in dumb shows ;

(t) 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 ornamentctl designs or models for

articles of manufacture, whether or not registrable as an
industrial design, and other works of applied art;

6
'> /d.at9 .14
1
'• E.g .. Republic Act No. 9150 , Republic Act No . 9502 , and Republic Act No . I 0372.
Decision 10 G.R. No. 188933

·(i) Illustrati ons, maps, plans, sketches, charts and

three-dimensional works relati ve to geography, topo graphy,
architecture or sci ence;

( j) Drawings or plastic wo rks of a scientifi c or

technical character;

(k) Photographic works including works produced

by a process analogous to photography; lantern slides ;

(1) Audio visual works and cinematographic wo rks

and works produced by a process analogous to
cinem atography or any process fo r makin g audio-vi sual
recordings;

(m) Pictorial illustrations and adverti sements ;

(n) Computer programs; and

(o) Other literary, scholarl y, scientific and artistic

works.62

The type of work subject of the case must be identified. This Court has
previously denied the protections of copyright law to works which fall outside
the exclusive enumeration in Subsection 172.1 , such as dating game show
form ats ,63 light boxes, 64 and utility models, a ll of w hich were not works of
applied art. 65 The Intellectual Property Code a lso has provisions which apply
only to certain types of works, such as writings, 66 audiovisual works, 67 works
of architecture,68 or computer programs.69

In this case, videoke may appear to be an audiovisual work under

Subsection 172.1 (I), in line with the word being a portmanteau of "video" and
" karaoke." Yet a typical videoke of a song is not one single object, having
discrete components: a set of moving images, the song's lyrics superimposed
over the moviHg images, and a musical composition in instrumental format
synchronized to the superimposed lyrics . Each of these components may be
separately protected by copy right: the mov ing images as a cinematographic
work in Subsection 172. 1(l), the lyrics as writing in Subsection 172.1(a), and
the musical composition in Subsection 172.1 (f). The videoke itself is a form
of audiovisual derivative w ork, also protected by copyright by virtue of
Subsection i 73 . .l (a) .70 Additionally, if a laser disc contains a collection of

62
Republi c Ac.t No . 8293 ( 1996), sec. 172 .
6
:i Joaquin v. D1·ilan, 36 1 Ph il. 900 ( 1999) [ Per J. M endoza, Second D iv ision] .
64
Pearl & Dean (Phil.).,._ Slw emarl , 456 Phi:. 474 (2003) [Per J. CorOil3, T hird Di v ision] .
5
<> Ching v Salinas, '.'i(•O Phil. 678 (7. 005 ) [Per J. Ca ll ejo. Sr., Second Divi sion] .
I,(, l::::.g., INTELLEC 'lJ /.:... PROPERTY Ca DE, subsecti on 188.2
7
1, E.g., INT!C: i.Ll"CT Ul\i.. PRO!'l-'RTY CODI.:, subsecti ons I 78. S and 2 I 3.6
GR E.g.,. (NTELLl::CTUAL PR(.'PERTY CODE, sec. 186, subsecti on I 87 .2(a)
(,') E.g., INTELLECTU/,i, PROPERTY CODE, sec. l 89.
70
INl T: 1..LFCTlJi\ l. P i~O Pl' RT'i Co rn: subse..:rion 173 . I (a) states:
Decision 11 G.R. No. 188933

videoke, the collection may be a derivative work if the originality

requirements of Subsection 173 . l(b) are met. 71 Yet, it must be noted that
derivative works do not affect the force of or extend any subsisting copyright
on the original works used in the derivate work, and the copyright protection
over the derivative works does not imply by itself the right to use the original
works. 72 Moreover, the videoke itself is distinct from the laser disc in which
it is fixed .73

74
Here, respondent claims that the subject works were musical works,
or musical compositions under Subsection 172. l(f). Consequently, this Comi
confines its discussion to the subject musical compositions, the identification
and copyright subsistence of which are uncontested.

The Intellectual Property Code enumerates in Section 177 the economic

rights that comprise copyright:

SECTION 177. Copyright 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 . .i. 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 di stribution 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 rentai ; (n)

177.5. Public display of the original or a copy of the work;

Sec. 173 . Derivative Works. - 173.1 . The following derivative works shall also be protected by
copyright:
(a) Dramat1zatio11s, tran slations, adaptations, abridgements, arran ge ments, and other alterations of
literary or arti stic works; and ....
71
INTELLECTUAL PROPERTY CODE, subsection 173. I(b), which states:
Sec. 173 . Derivative Works. - 173 . 1. The following derivative works shall also be protected by
co pyri ght: ... .
(b) C0 !lection s of literary, scholarly or artistic works, and compilations of data and other material s
which are original by reaso n of the selection or coordination or arrangement of the ir contents.
72
INTEl.! .1-:CTU/\ L PROPLJZTY CODE, subsection 173 .2, which states:
173 .2. The works referred to in paragraphs (a) and (b) of Subsection 173.1 shall be protected as new
works: l'rovided. however, That such new work shall not affect the force of any subsisting copyright
upon th e original works emp loyed or any part th erP.of. or be construed to imply any right to such use of
the original works, or to secure or extend copyright in such original works.
73
INTELLLCTUA L. PROPE !'(TY CODE, sec. 181, which states:
Sec. I81. Cupyright anJ Material Object. - - The copyright is di stinct from the property in the
materi al object subject to it. Consequ entl y, the transfer or assignment of the copyright shall not itself
constitute a transfer of the material object. Nor shall a transfer or assignment of the sole copy or of one
or severa l copies of th e work imply transfer or assignment of the copyright.
74
Rollo, p 302.
Decision 12 G.R. No. 188933

177.6. .Public performance of the work; and

177. 7. Other communication to the public of the work[.]

Should any person, without the consent or authority of the copyright

holder, exercise any of these economic rights, they may be liable for copyright
infringement. This expands the scope of copyright infringement from merely
the unauthorized duplication of a literary, artistic, or scientific work to the
unauthorized performance of the acts in Section 177. 75 In Habana v. Robles: 76

.. .. 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 copyri ght, 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 copyri ght, of anything the so le ri ght to do which 1s
conferred by statute on the owner of the copyright. 77

To uphold a copyright infringement claim , the following must be

proved: first, the complainant or plaintiff's ownership of a validly copyrighted
material, and second, the defendant or respondent's exercise of any the
enumerated economic rights without the consent of the copyright owner or
holder. 78 For the second element, it must further be shown that the exercise
of the economic right was inconsistent with any of the limitations on
copyright 79 and permissible unauthorized reproductions and importations. 80
75
NBl-/11/icroso/i Corp. v. Hwang, 499 Phil. 423 , 438 (2005) [Per J. Carpio, First Division], Microsoji
Corp. v. Manansala, 772 Phil. 14, 21 (2015) [Per J. Bersamin , First Division].
76
369 Phil. 764 ( 1999) [Per J. Pardo, First Division] .
77
Id. at 779 .
78
Olano v. Lim Eng.Cc, 783 Phil. 234,25 0 [Per J. Reyes, Third Division] .
n A BS-CBN Corporatwn v. Gozon, 75 5 Phil. 709, 723 (2015) [Per J. Lea nen , Seco nd Division] .
80
INTELLECTUA :.. PROPERTY CODE, secs. 187- 190, whi ch state:
Sec. 187 . Reprod;;ction o/Published 1-'Vork. - 187. 1. Notwithstanding the provision of Section 177,
and subj ect to th e provisions of Subsection 187 .2 . the private reproduction of a published work in a
singl e copy, where the reproduction is made by a natural person exc lu sively for research and private
study, shall be permitted , without the authori zation of th e owner of copyright in the work .
187 .2. The permiss ion granted under Subsection 187.1 shall not ex tend to th e reproduction of:
(a) A work of architecture in th e fo rm of building or other construction ;
(b) An entire book, or a substantial part thereof, or ofa mu sica l work in graphic form
by reprographi c means;
(c) A compilation of data and other materi als;
(d) A c::>mputer program except as prov ided in Section 189; and
(e) Any work in cases where reproduction would unreaso nab ly conflict with a normal
expl oi tati on of the work or would otherwise unreasonab ly prej udice the leo itim ate interests
of~eau~or. b

Sec. 18 8. Reprograph,c Reproduction by Libraries. - 188.1 . Notwithstand ing the provisions of

Subsection 177 .6, any library or archive whose activities are not for profit may, without the authori zation
of th e author of copyright owner, make a single copy of th e work by reprographic reproduction :
(a) Where the work by reason of its frag il e character or rarity cannot be lent to use r in
its orig in al fo rm ;
( b) Where the works are i3o lated arti cles contained in com;:iosite wo rks or bri ef
p~rti_on~ of nther pl!b iished W•)rks and the reprodu ction is necessa1y to suppl y th em, wh en
this 1s consi dererl expedient, tn persons requesting their loan for purposes of researcli or
~tudy in stead of iendin g th e volumes or bookl els which contain them· and
(c) Wl:ere the maki!•g of such c1 copy is in order to preservP. and , if necessary in th e
event that it 1s lost, dcst:-oyed 0r re11derecl unu sab le, repl ace a copy, or to rep lace, in the
Decision 13 G.R. No. 188933

Alternatively, the defendant or respondent may prove that its exercise of the
economic right fal"ls within fair use. 81

ermanent col lection of another similar library or archive, a copy whi ch has bee n lost,
destroyed or rendered unusable and copies are not avai lab le with the publisher.
188.2. Notwithstanding the above provisions, it shall not be permiss ible to produce a volume of a
work publi shed in severa l vo lum es or to produce missin g tomes or pages of magazines or simi lar works.
unless the volume, tome or part is out of stock: Provided, That every library which, by law , is entitled to
receive copies of a printed work, sha ll be entitled , when special reasons so require, to reproduce a copy
of a published work which is considered necessary for the collection of the library but which is out of
stock .
SECTION 189. Reproduction of Computer Program . - 189.1. Notwithstanding the provi sion s of
Section 177. th . :: reproduction in one ( I) back-up copy or adaptation of a computer program shall be
permitted, w ithout the author ization of the author of, or other owner of copyright in , a computer program.
by the lawfu l owner of th at computer program: Pmvided, That the copy or adaptat ion is necessary fo r:
(a) Th e use of the computer progra m in conjunction with a computer for the purpose,
and to t!1 e extent, for which the computer program has been obtained ; and
(b) Archiva l purposes, and , for the replacement of the lawfully owned copy of the
computer program in the event that the lawfully obtained copy of th e computer progra m is
lost, destroyed or rendered unusable.
189.2. No copy or adaptation mention ed in this Section shall be used for any purpose other than the
ones determined in this Section, and any such copy or adaptation sha ll be destroyed in the event that
continued possess ion of the copy of the computer program ceases to be lawful.
189.3 . T hi s provision shall be without prejudice to the app lication of Section 185 whenever
appropriate.
Sec. 190. Importation for Personal Purposes. - 190. 1. Notwithstanding the provision of
Subsection ! 77 .6. but subject to the Iimitation under the Subsection 185 .2, the importation of a copy of
a work by an .inctividual fo r his personal purposes shal l be permitted without the auth orization of the
author of, or oth r-:r m-vner of copyright in, the work under the following circumstances:
(a) When ..::opies of the work are not avai lab le in the Philippin es and:
(i) Not more than one (I) copy at one time is imported for strictly
individua! use on ly; or
( ii ) The importation is by authority of and for the use of the Philippine
Government; or
( ii i) Th e i111p0rtation, consisting of not more than three (3) such copies
or li ke nesses in any one invoice, is not fo r sale but fo r the use on ly of any
re ligiou s, charitable, or educationa l soc iety or in stitution duly incorporated
or registered, or is fo r the encouragement of the fine arts, or for any state
school, college, university, or free public library in the Philippines.
(b) When such copies fo rm parts of librari es and personal baggage be longing to
persons or families arriving from foreign countries and are not intended for sale: Provided,
0

That such copies do not exceed three (3 ).

190.2 . Copies imported as.allowed by this Section may not lawfully be used in any way to violate
the rights of owner the copyright or annul or limit the protection secu red by this Act, and such unl awfu l
use shal l be deemeci 1111 infringement and shall be puni shable as such without prejudice to the proprietor's
right of act ion.
190.3 . Subject to the approval of the Secretary of Finance, th e Comm iss ioner of Customs is hereby
empowered to n,i!kf.: rules and regulations for preventing the importati on of art icl es the importation of
which is prohibited under this Section and under treati es and convent ions to which the Philipp ines may
be a party and for se izing and condemning and disposing of the same in case they are discovered after
they have been imported.
81
INTELLECTU/\L PROPERTY CODE, sec. 185 , which states:
Sec. 185 . Fair Use cf a Copynghted Work. - 185.1 . The fair use of a copyrighted work for
criticism , comm ent, news reporting, teachi11g including multiple copies for classroom use. scholarship.
research, and si111 i lar purposes is not an in fringemer.t of copyright. Decompilation , which is understood
here to be th e rep1educt ion of th e code and translation of the fo rm s of th e computer program to achieve
the inter-operability of an independently created computer program with other program s may al so
constitu te fair use. In dete rminin g whether the use made ofa work in any particular case is fai r use, th e
factors to be co n5;dereci shall include
(a) ·:be p•.1rpose and character of the use, includmg whether such use is of a
co mmercial nature 01 is for non-profit ed ucational purposes,
(bi The nature o~the coryri;hter:I work:
(c) Th:o ;i1;10unt and sul~sta11tia li ty of the portion used in relation to the co pyrighted
work as a v1ho le ; and
(dJ T:1e effect of the use upon the potential market for or \' alue or the copyrighted
work .
Decision 14 G.R. No. 188933

As to the first element, petitione1· does not make any claim as to the
invalidity of copyright subsisting in the subject musical compositions.
Instead, what petitioner challenges is respondent's right to sue it for alleged
unauthori zed "public performance" or " communication to the public" of
works which "performing rights" 82 were assigned to respondent.

Section 180 of the Intellectual Property Code states that copyright may
be assigned, in whole or in party, and within the ass ignment's scope, the
assignee is entitled to all the assignor's rights and remedies. 83 Moreover,
copyright owners may designate a society to enforce on their behalf their
copyright and moral rights. 84

This Court has recognized respondent's legal standing to sue for

copyright infringement, noting that the Intellectual Property Office of the
Philippines has accredited it as a collective management organization: 85

Being the government-accredited CMO for music

creators/c0pvri ght owners, FILSCAP assists music users in getting the
necessary authori zation to publicly play, broadcast and stream copyri ghted
local and foreign songs in the Philippines. It is created exactly for the
purpose of protecting the intellectual property rights of its members by
licensing performances of their copyright music. With [Filscap] , the
individual composer would have a difficult time enforcing their ri ghts
against an infringer, not to menti on the expenses and time involved in
purs uing such cases. But [F il scap] eases this burden away by handling these
concerns. In addition, [Filscap ], acts as an agency for the composers who
deal w ith any party who desires to obtain public perform ance ri ghts and
pri v il eges.

The mechanics behind [Filscap 's] role is plain and si mple. Copyri ght
holders assign their rights to [Fil scap]. Filscap enters into reciprocal
agreements with foreign societies such as the American soc iety of
Composers, Authors and Publi shers (ASCAP), BMI, A ustralian Performing
Right Association (APRA), Performing Right Society Limited (PRS) of the
United Kingdom and Foreningen Svenska Tonsattares Internationella

. 185.2. The fact that a work is unpubli shed sha ll not by itse lf bar a hi1ding of fa ir use if such findin g
1s mad e upon con siJeration of alI th e above facto rs.
82
Rollo, p. 499.
83
I NTEU... ECTU/\L PROPERTY CODE, sec. 180, whi ch states:
Sec. 180. Righ1s of Assignee. - : 80. 1. The copyri ght may be ass igned in whole or in part. Within
the scope of the ass_ignm ent, th e ass ignee is entitled to all the rights and remedi es which the ass ignor had
with respect to the copyright.
i 80 2. The copyr igh t is not deem ed assig.1ed inter vivas in whole or in part unless there is a written
indi cati on c,f suc h intenti on .
180 .3 . The s11 1)mi ss ion of a litera ry, ph otograp hic or artistic wo rk to a newsp:.per, magazin e or
perio~ical fo;· publ;cation shall co nstitute onl y a li ce nse to make a sin 6 1e publication unless a greater
nght ts ex pres~ ly granted . If two (2) or more persons jointly own a copyright or any part thereof, neith er
of th e 0wners ~ha ll be Entitled to grant li censes without th e prior written consent of th e other owner or
owners.
84
INTELL.FC'fU /1L P1WP12RT Y CODE, sec. I!U. which states :
. Sec. 1_83. D esiAnalion af'So~iely. - The copyright own ers or th eir hei rs may des ignate a society of
. artists, wn r~rs or co•nposers to enfo!'..:e 1hei r economic rights and morn.I rights on their beh alf.
8
° Fils cap 1•. A/11'ey, I nc., G.R. No. 2339 18 , August 11 , 2022, p. 8 [Per J . Za lameda, En Banc].
Decision 15 G.R. No. 188933

Muskibydi (STIM) of Sweden, whose roles are similar to [Filscap] , Being

the assignee of the copyright, it then collects royalties through the form of
license fees fi·om anyone who intends to publicly play, broadcast, stream ,
and to a certain extent (reproduce) any copyrighted local and international
music of its members and the members of its affiliate foreign societies. In
return, [Filscap] does an accounting of all license fees collected and then
distributes them to its members and the members of its affiliate foreign
societies. 86

Petitioner's contention that what the composers and music publishers

assigned to respondent were "neighboring rights" in Section 203 is erroneous.
Considering the type of works involved, their authors, and the phrasing of the
deeds of assignment, it is evident that economic rights under Section l 77 were
assigned to respondent.

Section 203 of the Intellectual Property Code enumerates the rights of

performers:

SECTION 203. Scope of Performers ' Rights. - Subject to the

provisions of Section 212, performers shall enjoy the following exclusive
rights:

20.3. I . As regards their performances, the right of authorizing:

(a) The broadcasting and other communication to

the public of their performance; and

(b) The fixation of their unfixed performance.

203 .2. The right of authorizing the direct or indirect reproduction of

their performances fixed in sound recordings, in any manner or form;

203.:3 Subject to the provisions of Section 206, the right of

authorizing the: first public distribution of the original and copies of their
performance fixed in the sound recording through sale or rental or other
forms of transfer of ownership;

203 .4. The right of authorizing the commercial rental to the public
of the original and copies of their performances fixed in sound recordings,
even after distribution of them by, or pursuant to the authorization by the
performer; and

201.5 . The right of authorizing the making available to the public

of their performances fixed in sound recordings, by wire or wireless means,
in such a way that members of the public may access them from a place and
time individu_ally chosen by them.

Performers are defined in Subsection 202.1 as "actors, singers, /

musicians, dancers, and other persons who act, sing, declaim, p lay in,
interpret, or otherwise perform literary and artistic work." For purposes of
 Decision 16 G.R. No. 188933

Chapter XII on the rights of performers, producers of.sound recordings and

broadcasting ·organizations, these performers have rights over their
performances separate from the right to perform or publicly communicate the
literary or artistic work, which is vested in the author of the work. Hence:

Develo pments in technology, including the process of preserving

once ephemera l works and disseminating them, resulted in the need to
provide a new kind of protection as di stinguished from copyright. The
designation " nei ghboring ri ghts" was abbreviated from the phrase " rights
neighboring to copyright." Neighboring or related rights are of equal
importance w ith copyright as established in the different conventions
covering both kinds of rights. 87

Here, respondent does not represent performers of the subject musical

compos1t1ons. Consistent with its mand ate, it is a collective management
organization for composers, authors, and publishers in the field of musical
compositions. This is clear based on the definition of "copyright work" in the
deed of assignment it enters into with its affiliates or members:

a) the ex pression "copyright work" shall mean any musical work

whether no w or existing hereafter composed and such words as are
associated with any musical works and shall include the vocal and
instrumental music in any c inematographic film , the wo rds and/or music of
any mono logue having a musical introduction and/or acco mpaniment, the
musical accompaniment of any non-musical play, and any part of any such
work, words, music, or accompaniment as aforesaid. 88

That respondent pertains to rights under Section 177 of the Intellectual

Property Code and not the neighboring rights in Section 203 is also apparent
in the scope of "performance" that respondent's affiliates and members have
assigned respondent to administer or enforce:

c) the expression "performance" includes, unless otherwise stated,

any mode of acoustic presentation, including any such presentation by
means [ot] broadcasting or cause of a wo rk to be transmitted to subscribers
to a diffusion service, or by the exhibition of a cinematographic film , or by
the use of a so und recording, or by any other means, and references to
" perform" and " performing" shall be construed accordingly.89

Respondent claims that the lack of explicit reference to the right to

communicat_e the work to the public is because, at the time when the deeds
were written, the prevailing copyright law was Presidential Decree No. 49 ,
which enumeration of economic ri ghts predate_d many technological /}
developments that may have an effect on literary, artistic, and scientific works: /

:;-; ABS-CBN Carp :;ra!iun v. Cozon, 755 Phil. 709, 75 1 ('.2015) [Per J. Leonen. Second Division].
Kx Rollo, p. 498.
s•; I d.
Decision 17 G.R. No. 188933

SECTION 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 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;

(0) To make any other use or disposition of the work consistent

with the laws of the land. 90

In this regard, Section 239.3 of the Intellectual Property Code extended

its provisions to works in which copyright protection was obtained prior to its
effectivity and which copyright is still subsisting:

SECTION 239. Repeals. - ....

239.3. The provi sions of thi s Act shall apply to works in which
copyright protection obtained prior to the effectivity of this Act is
subsisting: Provided, That the application of this Act shall not result in the
diminution of such protection.

Moreover, the wording of the deeds of assignments indicates that

among the rights assigned to respondent by the copyright holders was the right
to broadcast or cause a work to be transmitted to subscribers to a diffusion
service. Even without the use of the specific phrase "communication to the
public," respondent is plainly the assignee who may authorize others who
wish to do these acts with respect to the copyright holders' musical
compositions, or demand compensation in case these acts were done without
their consent or authority.

The second element of copyright infringement is similarly present in

this case.

ln respondent's Complaint, it alleged that petitioner has been "playing

or otherwise performing or communicating to the public" the subject musical
compositions. Both the Regional Trial Court91 and the Court of Appeals 92
determined that petitioner did both when it cablecast-engaged in program
origination of.--the two karaoke chan:1els. But the application of Section 177

90
Pres identia! Decree No. 49 ( 1972), sec. 5.
~
1
Rollo, pp. 309- J I0 .
92
Id. at 68.
 Decision 18 G.R. No. 188933

is inexact. Based on petitioner's acts complained of, only an infringement of

the "communication to the public" right has been committed.

Our country's early law on copyright, Act No. 3134, granted to

copyright holders a broad exclusive performance right, without limitation as
to manner, method, or intent to or actual profit. Thus, Section 3(c) stated:

SECTION 3. The proprietor of a copyright or his heirs or assigns

shall have the exclusive ri ght:

(c) To exhibit, perform, represent, produce, or

reproduce the copyrighted work in any manner or by any
method whatever .fhr profit or otherwise; if not reproduced
in copies for sale, to sell any manuscripts or any record
whatsoever thereof; .... (Emphasis supplied)

Then, on August l, 1951 , the Philippines' accession to the 1948

revision to the Berne Convention for the Protection of Literary and Artistic
Works became effective. 93 Known as the Brussels Act, the 1948 revision
included a provision on the exclusive right of an author of a dramatic,
dramatico-musical, or musical work to its public presentation and public
performance, and the public distribution thereof:

Article 11
(1) The a uthors of dramatic, dramatico-musical or musical works
shall enjoy the exclusive right of authorizing: i. the public presentation and
public performance of their works ; ii. the public distribution by any means
of the presentation and performance of their works. The application of the
provisions of Articles 11 bis and 12 is, however, reserved.

(2) Authors of dramatic or dramatico-musica l works, during the foll

term of their rights over the original works, shall enjoy the same rights with
respect to translations thereof.

(3) In order to enjoy the protection of this Article, authors shall not
be bound, when publishing their works, to forbid the public presentation or
performance thereof 94

Article l lbis of the Brussels Act, meanwhile, provided for the

parameters of the exclusive right to the communication to the public by wire
or wireless means of a literary or artistic work:

Article I 1his
( I) Authors of literary and artistic works shall have the exclusive
right of Jt.:thor:zing: i. the radio-diffusion of their works or the
com munication thereof to t!1e pt!blic by any other mecms of wireless
diffus.ion i)f signs, sounds or images; ii. Any communication to the public,
whether ove r wi res o r n0t, of the radio-diffusion of the work, when the

•i.1 Proclan,at ion No . I 3 7 ( 1955'1.

'i-l Brussels Acr ( 1948), art. I ! . ,
 Decision 19 G.R. No. 188933

comrirnnication is made by a body other than the original one; u1. The
commtm\cation to the public by loudspeaker or any other similar instrument
transmitting, by signs, sounds or images, the radio-diffusion of a work .

. (2) It shall be a matter for legislation in the countries of the Union

to determine the conditions under which the rights mentioned in the
preceding paragraph may be exercised, but these conditions shall apply only
in the countries where they have been prescribed. They shall not in any
circumstances be prejudicial to the moral right of the author, nor to his right
to obtain just renumeration which, in the absence of agreement, shall be
fixed by competence authority.9 5

Later, the Berne Convention was revised in the Paris Act of 1971.
Article 1 I of the Paris Act separated the public performance and
communication to the public of the performance rights :

Article 11
(1) Authors of dramatic, dramatico-musical and musical works shall
enjoy the exi::lusive right of authorizing:

(i) the public performance of their works, including

such public performance by any means or process;

(ii) any communication to the public of the

performance of the ir works.

(2) Authors of dramatic or dramatico-musical works shall enjoy,

during the full term of theirrights in the original works, the same rights with
respect to translations thereof.

Further, Article 11 bis of the Paris Act refined the communication to the
public right introduced in the Brussels Act:

Article 11bis
(1: J\:.1thors of literary and artistic works shall enjoy the exclusive
ri g ht of authorizing:

(i) the broadcasting of their works or the

communication thereof to the public by any other means of
wireless diffusion of signs, sounds or images;

(i i) any communication to the public by wire or by

re broadcasting of the broadcast of the work, when thi s
c0111J11unication is made by an organization other than the
original one;

(iii) the public communication by loudspeaker or

any other analogous instrument transmitting, by signs,
so und s or images, the broadcast of the work.

95
Brusseis Act ( 1948), art. I I hi\·.
 Decision 20 G.R. No . 188933

(2) Tt shall be a matter for legislation in the countries of the Union

to determine the conditions under which the rights mentioned in the
preceding paragraph may be exercised, but these conditio ns shall apply only
in the countries where they have been prescribed. They shall not in any
circumstances be prejudicial to the moral rights of the author, nor to his
right to obtain equitable remuneration which, in the absence of agreement,
shall be fixed by competent authority.

(3) In the absence of any contrary stipu lation, permission granted in

accordance with paragraph ( 1) of this Article shall not imply permission to
record , by means of instruments recording sounds or images, the work
broadcast. It sha ll , however, be a matter for legislation in the co untries of
the Union to determine the regu latio ns for ephemeral recordings made by a
broadcasting organization by means of its own facilities and used for its
own broadcasts. The preservation of these recordings in official archives
may, on the ground of their exceptional documentary character, be
authorized by such legislation.

fn 1972, at a time when the Philippines' accession to the Berne

Convention was still only to the Brussels Act, the Philippines aga in modified
its law on copyright through Presidential Decree No. 49. Section 5 thereof
substantiallyretained Section 3 of Act No. 3134:

SECTION 5. Copyright shall consist in the excl usive right;

(A) To print, reprint, publish, copy, distribute,

multiply , se ll , and make photographs, photo-engravings, and
pictorial iII ustrations 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 if it
be i'l. mod el or design ;

(C) To exhibit, pe,form , represent, produce, or

reproduce, the work in any manner or by any method
whatever/or profit or otherwise; it not reproduced in copies
for ~a le, 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. (Emphas is
supplied)

O~ April l 4, 1980, the Philippines acceded to the Paris Act. The treaty
entered mto force on July 16, 1980, with the declaration that the accession /
wou ld not apply to Articies l to 21 and the Append ix of the Paris Act. 96 / (

% Berne Notification l\Jo. 9_8, Accession by the Repub lic of the Philippines to the Paris Act ( 1971) (with
the exception_ o'. Arti::les I to 21 and the Appendix), Apri l 16, 1980, availah/e at
hrtps://v,ww.w 1po. mt/treaties/en/notification s/berne/treaty berne 98.html (last accessed on February
'.28, 202'.l) - -
 Decision 21 G.R. No . 188933

Following a 1993 bilateral agreement with the United States of America

in order to remove the Philippines from the "Special 301" priority watch list,97
the Philippines agreed to submit amendments to its copyright law in the areas
of sound recordings and computer programs, among others, and to begin the
process of accession to the substantive portions of the Paris Act. 98 On March
18, 1997, the Philippines finally extended its accession to Articles 1 to 21 and
the Appendix of the Paris Act, with those articles entering into force on June
18, 1997. 99

Consequently, Republic Act No . 8293 in 1997 for the first time

statutoril y recogn ized the Philippines ' obligations in accordance with
international conventions, treaties, and other agreements 100 involving
intellectual property , transforrning 10 1 rel evant provisions of the Paris Act and
including amendments to strengthen copyright protection in the Philippines
according to the United States' recommendations.

Notably , the modern formulation of the "communication to the public"

ri ght-including the distinct " making available" right- in international

,17
The ·'Special 30 ! " priority watch list is part of the " Special 30 I" Report, "an annu al review of th e globa l
state of [intellect ual property] protection and enforce ment" issued by th e Office of th e United Sta tes
Trade Representative, and names countries deemed by the United States to have in suffic ient intell ectual
property protections or enforcement of inte ll ectu al property rights. See USTR Releases 2022 Spec ial 30 I
Report on Intell ectu al Property Protection and Enforce ment, April 27, 2002, available al
https ://ustr.gov/ a bout-us/ po Ii cy-offi ces/press-o ffi ce/press-re Ieases/2 022/ apr i1/ustr-re Ieases-2022-
speciaI-30 I -report-intellectual-property-protection-and-enfo rcement (last accessed on February 28,
2023).
'JK
Agreement Between th e Un ited States of America and the Philippines, Effected by Exchange of Letters
at Mani la and Washin gton, April 6, I 993, pp. 2-3, available at https://www.state.gov/wp-
content/upl oads/20 19/12/93 -406-Phi lippin es- lntell ectual-Property-Notes. pd f (l ast accessed on February
28, 2023).
Bern~ Notificat ion No. 179, Dec laration by the Republi c of the Philippines Ex tend ing the Effects of its
l) l )

Access ion of th e P.:iris Act ( I 97 I) to Arti cles I to 2 1 and the Appendi x, March I 8. 1997, available al
https://www .wipo. int/treat ies/en/noti fications/berne/treaty _be rne _ 179 .htm I (last accessed on February
28, 2023).
100 Republic Act No. 8293, secs . 2 and 3, which state:
Sec . 2 . Declarnlion of Slate Policy. -- The State recogni zes that an effective intell ectual and
industrial property system is vital to th e development of domestic and creative act ivity, facilitates
transfer of tec hno logy, attracts foreig n in vestments. a nd ensu res marke t access for our products. It sh a l I
protect and secure the exc lu sive ri ghts of scienti sts, inventors, artists and other gifted citize ns to their
inte llectual property and creations, particularly when beneficia l to the people, fo r such periods as

/
provid ed in thi s Act.
The use of int~ll ectu al property bears a soc ial fun ct ion. To thi s encl , th e State shall promote the
diffus ion of know ledge and inform ation fo r the promotion of national deve lopment and progress and the
common good .
It is also th e poli cy of th e State to streamli ne admi nistrative procedures of reg istering patents,
trade1r,,;rks and copyright, to liberalize th e reg istra tion 0 11 th e transfer of techn ology, and to enh ance the
enfo rceme11t of intf" ll ectual property rights in the Philippi nes.
Sec. 3. lnternation al Co nven tions and Reciproci ty. - Any person who is a natio nal or who is
domicil ed ,1r bas a rea l and effective industrial establishment in ,1 c0untry whi ch is a party to any
conventi on. !reaty or agreement relat ing to intellectual property ri gl1 ts o!· the repress ion of un fa ir
compet iti on, to which th e Philippines is also a party, or extends rec iproca l rights to nat ionals of the
Philippines by law, sha ll be entitled to benefits to the extent necessary to give effect to any provis ion of
suc!1 convention, treaty or reciprocal law, in addit ion to the rig hts to which any owner of an intellectual
property right is otherwi se entitled by thi s Act.
101 See. e.g., PanRilinan v. Cay etano, G.R. Nos. 238875. 239483 & 240954, Ma rch 16, 202 1 [Per J. Leanen,
En Bancl
Decision 22 G .R. No. 18893 3

intellectual property law 102 was form alized in the World Intellectual Property
Organization (WIPO) Copyright Treaty, which sought to make copyright
protections responsive to the advent of new technologies , 103 and the WIPO
Performances and Phonograms Treaty, which sought to protect the ri ghts of
performers and producers of phonograms. 104 In pai1icul ar, Article 8 of the
WIPO Copyri ght Treaty stated:

Article 8
Ri ght of Communication to the Pu blic
Witho ut prejudice to the provis ions of Art icles 1 l (l)(ii), l lhis( l )(i)
and (ii), 1 lter( l )(ii), 14( l )(ii) and 14bis( l ) of the Be rne Conve nti on,
a uthors of literary and artistic works shall enj oy the exclusive ri ght of
a uthoriz ing any communicati on to the pu blic of the ir wo rks, by wi re o r
wire less m eans, including the mak ing avail ab le to the public of their wo rks
in such a way that mem bers of the public may access these works fro m a
pl ace and at a time indi vidually chosen by them .

102
The " communi cati on to the public" right, separate and d ist in ct fro m th e "public perfo rmance" ri ght,
lik ew ise exists in oth er jurisdicti ons. Among th e Assoc iat ion of So utheast As ian Nati ons (ASEA N), th e
copyright laws of Cambodi a (Law on Copyri ght and Re lated Rights. arti cles 2(c) and 2( i)), In dones ia
(Law of th e Republi c of Indones ia No. 28 (20 14), artic le 9.), Laos (Law on Inte ll ectual Property
(amended), arti cle I02)), Myanm ar (Pyidaungsu Hluttaw Law No. 15/20 19, chapter I 0( 18)), Malays ia
(Act 332 (Copyri ght Act 198 7), arti cle 3 ), Singapore (Copyri ght Act, s 7( I)), and Vi etn am (Law No .
50/2005/QH I I, article 20) all recogni ze a "communi cation to the publi c" economic right separate fro m
a "p ublic performa nce" right. See The ASEAN Secretariat, ASEAN In te ll ectu al Pro perty Rights
Enfo rce ment Handbook (2020), available at
https://www .aseanip .org/Portals/O/ASEAN%20 IPR%2 0Enfo rcement%20H andbook_with%20 ISBN%2
0and%2 0Logo%20F in a l.pd f (last accessed on Fe bru ary 28, 2023). The Euro pean Union Directi ve
200 1/29/EC, known as th e InfoSoc Directi ve, prov ides in Arti cle 3 the " ri ght of communication to th e
publi c of works and right of making ava ilabl e to the public other subject-matter", whil e Austra li a
impl emented the "communi cation to th e pub lic" right in its Copyright Amendment (D igital Agenda) Act
2000. Converse ly, the Uni ted States has not carved out a "commu nicati on to the public" or "mak ing
ava il abl e to the public" right separate from th e extant " public perfo rmance" right in its fede ral copyri ght
law, Titl e 17 of the U.S . Code; in stead, th e Uni ted States Supreme Co urt in ABC, Inc. v. Aereo, Inc. (573
U.S. 43 I (20 14 )) has he ld that the statutory scope of " pub lic perfo rmance" encompassed th e activ ities
of a broadcaster, a viewer of th e broadcast, and a cab le system operator. In deed, in 20 16, the Uni ted
States Copyr ight Office, th ro ugh the Register of Copyri ghts, subm itted a repo11 to the United States
Congress th at co nclt.,ded that the scope of Section I06, as wri tten and then in terpreted by United States
courts, " coli ective ly· meet and adequate ly prov ide th e substance of the makin g ava il abl e right." (U nited
States Copyri ght O ffi ce, "The Mak ing Availabl e Right in th e United States, A Report of the Reg ister of
Copyrights", p. 4 avai labl e at https://www .copyright.gov/docs/mak in g__ ava il able/mak ing-ava ilabl e-
right. pdf (201 6)) The Copyright Office report used the ph rase " maki ng ava il ab le right" because, in
intern ati ona l ime llectua l property law, the essence of th e commu nicat ion to the pub lic right is "the
mak ing avail able to the public of works in such a way that members of th e publi c may access these
wo rks fro m a place and at a time indi vidually chosen by th em." (Id. at I)
103
WIPO Copyright Treaty, Preamble, which states, in part:
The Contract ing Parti es,
Des irin g to deve lop and maintain th e protecti on of th e ri ghts of auth ors in the ir literary and arti stic
wo rks in a manner as effective and uni fo rm as poss ible,
Recogni zin g th e need to introdu ce new intern ational rul es and clarify the interpretation of certain
ex istin g rules in order to pro vide adequate so lu tions to th e questi ons raised by new economi c, socia l, C
cultural and techn oiog ica l deve lopments, /
Recognizin g tile profo und impact of the deve lopmen t and convergence of in format ion and
communi cotion techno log ies on the creation and use of li terary and art istic works,
104
WIPO Performances and Phonogra ms Treaty, Pream bl e, whi ch sta tes in part:
The Contract ing Parties,
Des iring lo deve lop and mai nta in th e protecticrn of the rights of performers and prod ucers of
ph1Jnograms 111 a mann er as effect;ve and un iform as poss ible,
Reccgr. izi ng the need to introduce new intern at ional rules in orJer to prov ide adequate so lu tions to
the quest ions raised by economi c, socia l, cul1ura l and technologica l deve lopments,
Recogniz ing the profo und i111pact of the deve lopment and co nve rgence of in fo rm at ion and
c.o rnrnuni cat ion i-ec hn o logies on th e producti on and use of perfo rm ances and phonograms.
 Decision 23 G.R. No. 188933

Both treaties were concluded in 1996. Although the Philippines

acceded to the WIPO Copyright Treaty1° 5 and the WIPO Performances and
Phonograms Treaty 106 only on July 4, 2002, it had already, in a sense,
unilaterally integrated these treaties' contemplation of a "communication to
the public" in domestic legislation via Section 171.3 of the Intellectual
Property Code.

As a result, in a divergence from both Act No. 3134 and Presidential

Decree No. 49, Republic Act No. 8293 not only modified the scope of the
performance right into the "public performance" right, but also granted the
"communication to the public" among the Code's new economic rights, by
way of the distinct "making available" formulation.

Here, petitioner's act of cablecasting the karaoke channels cannot be

considered an exercise of the public performance rights over the subject
musical compositions. Concededly, the works were performed by means of
certain processes, and because the musical compositions were fixed in sound
recordings in a videoke format, they were made audible "at a place or at places
where persons outside the normal circle of a family and that family's closest
sociai acquaintances are or can be present, irrespective of whether they are or
can be present at the same place and at the same time, or at different places
and/or at different times." However, the fact that "performance" of the
musical composition requires the process described in Subsection 171.3-
using wireless means to make the musical compositions available to the
members of the public in such a way they may access these compositions from
a place and time individually chosen by them-in order to be perceived places
the act complained of outside Subsection 171.6.

It must be noted that a later amendment to the Intellectual Property

Code, in Republic Act No. J 0372, further expanded the scope of
"communication to the public" to include broadcasting, rebroadcasting,
retransmitting by cable, and retransmitting by satellite:

' Communication to the public ' or 'communicate to the public·

means any communication to the public, including broadcasting,
rebroadcasting, retransmitting by cable, and retransmitting by satellite, and
includes the making of a work available to the public by wire or wireless
means in such a way that members of the public may access these works
from 1 place and time individually chosen by them. 107

105
WCT Notifi,~atiun No. 38, Acr.:ession by the Republic of the Philippines. Jul y 4, 2002, uvailuhle at
https://ww·,v.w1p('. inr/t:-eati esien/notitication:;,lwct/trcaty _ wct_3 8.htm I l la , t acr.:essed on f ebruary 28,
f
2023).
11
' (.- WPPT Notificf'l tion No. 37, Acce ss ion by the Republic of the Philippin es . July 4. 2002, ovoilahli! al
https :/.1www.wipo.int/trea~ics/e:1/not1fication s/'.•. pµ~/tr~aty _ wppt__37.htm i ( last accessed ::in Febru ary 28.
1

2023 ).
107
Repub lic .<\c l N0. 10372, SP, C . /4 .
 Decision 24 G.R. No. 188933

Nonetheless, even prior to the amendment, playing a musical

composition, fixed in an audiovisual derivative work, over cable television to
pay ing subscribers is making that work accessible to members of the public
from a plac·e or time individually chosen by them. This is the essence of the
"communication to the public" right.

To evade liability, petitioner argues that its transmission of the subject

musical compositions is not an infringing act. It anchors its theory on ABS-
CBN Broadcasting Corp. v. Phil. Multi-Media System, Inc., 108 decided after
the promulgation of the Comi of Appeals' Decision, in which this Court held
that the carriage by cable television systems of other broadcasters' free-to-air
signals was not copyright infringement. 109 ·

Petitioner 's contention has no merit. The dissimilarity between the

facts in this case and ABS-CBN Broadcasting Corp. v. Phil. Multi-Media
System, Inc. must lead this Court to different conclusions.

Section 6 of the National Telecommunications Commission

Memorandum Circular No. 4-08-88 110 states the "must carry" rule :

Section 6. Carriage of Television Broadcast Signals.

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.

Section 2.3 of Memorandum Circular No . 4-08-88 defines a television

broadcast station as "any television broadcast station authorized to operate on
a channel regularly allocated to a community."

In ABS-CBN Broadcasting Corp. v. Phil. Multi-Media System, inc., th is

Court stated that, when cable television systems comply with the "must carry"
rule, they do not rebroadcast the free-to-air signals and do not act as
broadcasting organizations:

Under the Rome Convention, rebroadcasting is " the simultaneous

broadcasting by one broadcasting organization of the broadcast of another
broadcasting organization." The Working Paper prepared by the Secretariat
of the Standing Committee on Copyright and Related Rights defines
broadca~t1ng organizatir.ns as "entiiies that take the financial and editorial

596 Phil. n:; i2009) [Per J. Ynares-Sa•1tiago , Third Division] .

118
'
10
') Id. at 296- 207 .
l llJ OI .
t 1erw1 se known c1s t11e Revi sect Rul es and Regulatio11 s Govern ing Cabl e Televi sion Systems in th e
Philippin es.
 Decision 25 G.R. No. 188933

responsibility for the selection and arrangement at: and investment in, the
transmitted content." 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. PMS!
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 bases to its viewers. Clearly, PMSI does
not perform the functions of a broadcasting organization; this, it cannot be
said that it is engaged in rebroadcasting Channels 2 and 23.

Thus, while the Rome Convention gives broadcasting organizations

the right to authorize or prohibit the rebroadcasting of its broadcast,
however, this protection does not extend to cable retransmission. The
retransmission of ABS-CBN 's signals by PMSI- which functions
essentiall;1 as a cable television-does not therefor constitute rebroadcasting
in violation of the farmer 's intellectual property rights under the IP Code. 111

At the outset, petitioner is not acting in compliance with the National

Telecommunication Commission's "must carry" rule when it distributes
channels from entities such as Star TV and Cable Boss. Petitioner's obligation
to carry these channels is not pursuant to the requirements of Memorandum
Circular No. 4-08-88, but because of contracts it entered into where it pays to
transmit Star TV and Cable Boss' channels on its system. Those channels are
not the "television broadcast stations" contemplated in Section 6.2.1 of
Memorandum Circular No. 4-08-88, especially because they are not free-to-
air TV signals like the ones subject of the case in ABS-CBN Broadcasting
Corp. v. Phil. Afulti-Media, Inc.

More accurately, the Star TV and Cable Boss channels are akin to
"premium channels" that are bought from channel providers and transmitted
on an as-is basis to its viewers. 112 Notwithstanding the lack of regulatory
obligation such as the "must carry" rule , it is evident from petitioner's
distribution agreements with Star TV and Cable Boss that petitioner merely
retransmits signals that these entities provide and is prohibited from
modifying those programs. 11 3 In that regard, ABS-CBN Broadcasting Corp.
v. Phil. .Multi-l'vfedia Inc. 's concept of"retransmission" applies to the situation
with the Star TV and Cable Boss channels that petitioner carries.
/
However, this reasoning does not apply to channels 22 and 32, the
videoke channels on Home Cable's lineup. An examination of the agreements
11 1
A/JS-C /JN Broadca~ting Corp. v. Phil. !it/ulti-lvfediu ,'ly.1te111, Inc., 596 Phil. 283 , 300- 301 (2009) [Per J.
Ynares-Santiago, Third Division].
i1
2 Id. at 300 .
11
' Rollo , p 89.
 Decision 26 G.R. No. 188933

with Precision Audio shows that Precision Audio was only obliged to sell
videoke laser discs to petitioner, and petitioner has responsibility and control
over the channels:

I. The FIRST PARTY agrees to sell, and the SECOND PARTY

agrees to purchase on cash basis the new releases of videoke laser disc
materials of TWO THOUSAND PESOS (P2,000.00), Philippine Currency.
Further the SECOND PARTY shall make available to FIRST PARTY the
'
Channels mentioned below free of program fee charges the promotion
solely of the FIRST PARTY 's products.

2. The SECOND PARTY shall be responsible for and in control of

the operation of Channels 22 [PINOY KTV] , 32 [ENGLISH KTV], and 52
[CHIN ESE KTV]. It shall be responsible for providing the equipment
(music camp karaoke and laser disc materials) necessary for the satisfactory
operation of the above mentioned Channels. 11 4

As observed by the Court of Appeals :

Thus, unlike other channels which it merely retransmits to its

subscribers such as CNN (Cable News Network), BBC (British
Broadcasting Corporation), HBO (Home Box Office), Cinemax, Discovery,
and National Geographic and the like, the [petitioner] operated and
controlled the karaoke channels from which it played or " cablecasted" the
videoke laser disc materials which it had brought. In effects, the [petitioner]
was acting as a broadcaster in the case at bar. Hence its argument that it is
merely retransmitting programs and is, thus, not liable for copyright
infringement does not apply to the particular circumstances of the case at
bar. 11 5

Consistent with Section 181 of the Intellectual Property Code,

petitioner's purchase of the laser discs from Precision Audio as part of their
agreements' IIJ did not by itself transfer or assign the copyright of the fixed
musical compositions in those laser discs. Assuming 1hat Precision Audio's
production and distribution of the videoke laser discs was with the copyright
holders' consent, only the economic rights to adapt the musical compositions
to videoke format, reproduce the fixation in laser disc, and sell the laser discs
were granted to Precision Audio, unless the terms of the license state that
additional rights were included.

Moreover, if the licenses for the musical compositions did include any
public performance or communication to the public rights, those rights were
not for P rec ~sion ~budiohto subli~ehnseh to a third party such as petitioner unless ,;/
express 1ya 1Joweu y t e copyng t older or licensor. If these were the case ~ .,,.-
with the laser discs here, then petitioner fai led to allege and prove it.

11 1
• Id. ct 115 .
'I ) Id. at 70 .
11
=• Id. at 11] , 11 5.
 Decision 27 G.R. No. 188933

To emphasize, copyright over an original work is unaffected even when

that work is used in a derivative work. And the grant of copyright protection
to the derivative work does not by itself make the use of the original work, or
any part of it, lawful absent the copyright holder's consent. Precision Audio
may warrant that it holds the copyrights to the videoke works fixed in the laser
discs purchased by petitioner, and it may license or assign any of the videoke's
economic rights to petitioner as part of the sale, but that does not affect the
copyright over the underlying musical composition which is a component of
the videoke . At most, Precision Audio validly granted to petitioner the right
to publicly perform or communicate to the public the videoke, but not the
composite original works which economic rights were held by others, such as
the composers, authors, or publishers that respondent represents .

Precision Audio is not an indispensable party to this case. The Rules of

Court provide:

Rule 3, SEC.7. Compulsory .Joinder of Indispensable Parties. -

Parties-in-interest without whom no final determination can be had of an
action shall be joined either as plaintiffs or defendants.

In Boston Equity Resources, Inc. v. Court of Appeals: 117

An indispensable party is one who has such an interest in the

controversy or subject matter of a case that a final adjudication cannot be
made in his or her absence, without injuring or affecting that interest. He or
she is a party who has not only an interest in the subject matter of the
controversy, but "an interest of such nature that a final decree cannot be
made without affecting [that] interest or leaving the controversy in such a
condition that its final determination may be wholly inconsistent with equity
and good conscience. It has also been considered that an indispensable party
is a pers011 in whose absence there cannot be a determination between the
parties already before the court which is effective, complete or equitable. "
Further, an indispensable party is one who must be included in an action
before it may properly proceed.

On the other hand, a " person is not an indispensable party if his

interest in the controversy or subject matter is separable from the interest of
the other parties, so that it will not necessarily be directly or injuriously
affected by a decree which does complete justice between them. Also, a
person is not an indispensable party if his presence would merely permit
complete relief between him or her and those already parties to the action,
or if he or she has no interest in the subject matter of the action." It is not a
sufficient reason to declare a person to be an indispensable party simply
because his or her presence will avoid multiple litigations.

Applying the foregoing pronouncements to the case at bar, it is clear

that the estate of Manuel is not an indispensable party to the collection case,
for the simple rea on that the obligation of Manuel and hi s wife, respondent
herein, is soliJary. 118

11 7
711 Phil.45 1 (20l 3)[PerJ. Perez.SecondDivisionl.
11 8
/c/.at 469-470.
 Decision 28 G.R. No . 188933

Petitioner's liability for copyright infringement is separate and distinct

from Precision Audio's, if there is any. As stated above, the economic right
that petitioner infringed is the right to communicate the subject musical
compositions to the public, and this finding is in no way affected or altered by
any act or omission of Precision Audio. Petitioner's liability can be
determined without need to implead Precision Audio. With regard to the
warranties made by Precision Audio in the Memoranda of Agreement, the
Court of Appeals correctly held that "[i]f any, the said guarantee merely gives
the defendant-appellant the right to go after Precision Audio Video Services,
Inc., for possible reimbursement."' 19

No other limitation to copyright exists in this case. Petitioner has also

not raised the defense of fair use. Therefore, its unauthorized exercise of the
copyright holders' communication to the public rights as a result of
cablecasting the two karaoke channels is copyright infringement.

Whenever copyright infringement is proved, damages shall be

awarded :

SECTION 216. Remedies for lnji-ingement. - 216.1. Any person

infringing a right protected under this law shall be liable:

(b) Pay to the copyright proprietor or his assigns or heirs such actual
damages, including legal costs and other expenses, as he may have incurred
due to the infringement as well as the profits the infringer may have made
due to such infringement, and in proving profits the plaintiff shall be
required to prove sales only and the defendant shall be required to prove
every element of cost which he claims, or, in lieu of actual damages and
profits, such damages which to the court shall appear to be just and shall not
be regarded as penalty.

We affirm the Court of Appeals ' modification of the award of damages,

though it must be noted that the trial court did not award "actual damages" but
"just damages in lieu of actual damages" 120 as stated in Section 216.1 (b ). Just
damages may pertain to temperate or moderate damages, when actual or
compensatory damages are not sufficiently proven. Under Section 216. 1(b ), a
court is given the discretion as to the amount and kind of damages it can
impose. Nonetheless, there is no reason to disturb the Court of Appeals'
modified award of temperate damages. Article 2224 of the Civil Code
provides:

Article 222.!l-. Temperate or moderate damages, which are more than

nominal but less than compensatory damages, may be recovered when the
court finds that some pecuniary loss has been suffered but its amount can
not, from the nature of the case, be proved with certainty.
11 1
' Rollo, p. 7 1.
120
Id. at 3 I I.
Decision 29 G.R. No. 188933

In Sam,bar vs. Levi Strauss & Co. : 121

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. 122

The award of exemplary damages and attorney's fees are also proper
and reasonable under the circumstances.

However, the interest to be imposed on the monetary award in favor of

respondent must be adjusted in view of this Court's Resolution in Lara s Gifts
& Decors, Inc. v. Midtown Industrial Sales, Inc., 123 the relevant portions of
which state:

Witb regard to an award of interest in the concept of actual and

compensatory damages, the rate of interest, as well as the accrual thereof,
is imposed, as follows:

B. Jn obligations not cons1st111g of loans or

forbearances of money, goods or credit:

2. For unliquidated claims:

Compensatory interest on the amount of damages

awarded may be imposed in the discretion of the court at the
rate of 6% per annum. No compensatory interest, however,
shall be adjudged on unliquidated claims or damages until
the dt::mand can be established with reasonable certainty.
Thus, when such certainty cannot be so reasonably
established at the time the demand is made, the interest shall
begin ·to run only from the date of the judgment of the trial
court (at which time the quantification of damages may be
deemed tc have been reasonably ascertained) until full
payn:cnt. The actual base for the computation of the interest
shall , in any case, be on the principal amount finally
adj ~.idged. 124

All intellectual property rights are not mere economic exercises. Our
Constitution and · laws recognize their social function and benefit to the
common good. Copyright, in particular, is linked with culture:

... . Copyright is profoundly intertwined with culture. Many, if not all ,

·- - - - - ·- - - - -
12
; 428 Phil. 425 (2002) [Per J. Quisimbing, Second DivisionJ.
in Id. al 437.
2
: , G.R. No. 22.i 43 .?•: Septemb :::r 20. 2022 fPer J. Leon en , En Banc].
124
Id. at20- 2 l.
 Decision 30 G.R. No. 188933

copyrighted works can and do shape identities of persons, groups,

communities, and nations. Copyri g ht is not merely economic; it also
embodies " discursive power- the right to create, and control, cultural
meanings. " The State recognizes this not just with copyright law, but also
with laws that promote and protect art, literature, culture workers, and the
preservation and development of national cultural heritage. So-called
"factual works" are part of the express ion, speech, and the press explicitly
protected in our Bill of Ri ghts, while artistic creations enjoy State patronage
and constitute cultural treasures . 125

To encourage the creation, proliferation, and innovation of literary,

artistic, and scientific works, our laws have designed a regime of protection
that balances the incentives to an individual for disclosing their works and the
eventual benefit to the public once the protections lapse and these works
become freely available. 126 An essential component of this balance is
certainty of enforcing creators' rights against unauthorized trespass:

Intellec tual property ri ghts, such as copyright and the neighboring

right against rebro adcasting, establish an artificial and limited monopoly to
reward creativity. Without these legall y enforceable rights, creators will
have extrr.me difficulty recovering their costs and capturing the surplus or
profit of their works as reflected in their markets . This, in turn, is based on
the theory that the possibility of gai n due to creative wo rk creates an
incentive which may improve efficiency or s imply enhance consumer
welfare or utility...

These, however, depend on the certainty of enforcement. Creativity,

by its very nature, is vulnerab le to the free rider problem. It is easily
replicated despite the costs to and efforts of the original creator. The more
useful the creation is in the market, the greater the propensity that it will be
copied. The most creative and inventive individuals are usually those who
are unabl e to recover on their creations. 127

Awareness of, and compliance with, intellectual property laws is the

obligation of all persons, natural or juridical. To attain the advantages
provided by society's scientists, inventors, a1iists, and other gifted citizens,
there must first be respect for and enforcement of their rights.

ACCORDINGLY, the Petition for Review on Certiorari is DENIED.

The Decision and Resolution of the Court of Appeals, Manila, in CA-G.R. CV
No . 81083 are AFFIRMED WITH MODIFICATION . Philippine Home
Cable Holdings, Inc. is ordered to pay Filipino Society of Composers, Authors
& Publishers. Inc. PHP 500,000.00 as temperate damages, PHP 500,000 .00 as
exemplary darnages, and PHP 100,000.00 in attorney's fees. Interest at the
rate of six percent (6%) p er annum shall be imposed on the sum of the /l
monetary awards from October 20, 2003, the date 0f the Reg ional Trial Court / "
______ _______ .,

125
J. Leonen, Di ssenting Opinion in Filscap 1·. Am ey. Inc., G .R. No. 233 918 , August 11 , 2022 , p. 5- 6 (Per
.I . Za lamcda, E,, 3ancJ.
!l!J Id. at 2--3.
127
A BS-C BN C orpora.'i;m v. Go:::on . 7.55 Ph ii. 700, 774 - 775 ('.W 15) [Per J. Leon en, Seco nd Di vision] .
Decision 31 G.R. No. 18893 3

Decision, until full payment.

SO ORDERED.

WE CONCUR:

FR S. CAGUIOA

AMY Ct ~ ~JER
A~sociate Justice

~MUEL H. GA~N RICAR

Associate Justice

JHOSE~OPEZ RB. DIMAA

Associate Justice Associate Justice
Decision 32 G.R. No . 188933

' /
,.,--:;----::;;;-/~
Jo~As P. ~ z --------------=-~ o T. KHO J R ~----
Associate Justice Associate Justice

Pursuant to Section 13 , Article VIII of the Constitution, I certify that

the conclusions in the above Decision had been reached in consultation before
the case was assigned to the writer of the opinion of the court.

CERTIFIED TRU c py
,-~ / : . _ (!
UENNfEL'YN c'.~
SC Chief Jud1c1al St2ff Off.cc r
Office of the Clerk of Co urt
Supreme Co urt of he p 11lipµ1nes
 EN BANC

G.R. No. 188933 - PHILIPPINE HOME CABLE HOLDINGS, INC.,

petitioner, versus FILIPINO SOCIETY OF COMPOSERS, AUTHORS
AND PUBLISHERS, INC., respondent.

Promulgated:

February 21, 2023

x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - (.___ - - -

CONCURRING OPINION

CAGUIOA, J.:

I concur.

This case involves petitioner Philippine Home Cable Holdings, Inc.

(Home Cable), a domestic company operating cable television, 1 and
respondent Filipino Society of Composers, Authors and Pub Iishers, lnc.
(FILSCAP), a non-stock, non-profit domestic association of Filipino
composers, authors, and publishers duly accredited by the Intellectual
Property Office of the Philippines (IPOPHIL) as a Collective Management
Organization (CMO),2 which assists in protecting the intellectual property
rights of its members . FILSCAP's role in enforcing the copyright of its
members is as follows:

[FILSCAP] x x x is a "non-stock, non-profit assoc1at1on of

composers, lyricists, and music publishers" accredited by the [IPOPHIL] to
perform the role ofa [CMO], and is a member of the Pari s-based International
Confederation of Societies of Authors and Composers (Confederation
Internationale des Societes d 'A uteurs et Compositeurs or ClSAC), the
umbrella organization of all composer societies worldwide. Being the
designated CMO of composers, lyricists, and music publishers, FILSCAP
assists in ''protecting the intellectual properiy rights of its members by
licensing performances oftheir copyright music. " For this purpose, FILSCAP
gets ass igned the copyright by its members, and, as assignee, then collects
royalties which come in the form of license fees from end-users who intend
to "publicly play, broadcast, stream, and to a certain extent (reproduce) any
copyrighted local and international music of its members.•·3

In 1995, Horne Cable executed a Memorandum of Agreement with

Precision Audio Video Service, Inc. (Precision Audio), a domestic
corporation that produced and distributed videoke laser disc recordings, to

See poncncia, p. 2.
See id . at 3 and 14 ; see ::i lso ./. Caguioa. Separate Co ncurring Opinion in FILSCA P v .4 nrey. Inc., G.R.
No. 231 918, Augu st9.2022, p. I .
./. Cagu ioa. Sep;ira!e Concurring Opinion in FILSCrlP v. Anrey, Inc.. id. C itation s omitted .
 Concurring Opinion 2 G.R. No. 188933

purchase laser discs containing videoke materials to be made available on

Channel 38 for five (5) hours per day. 4 Pertinently, as stated in their
agreement, Home Cable was responsible for and in control of operating
Channel 38. 5 A year later, Home Cable executed a similar Memorandum of
Agreement with Precision Audio for the operation of Channels 22, 32, and 52,
which also provided for Home Cable's responsibility and control over the
three (3) channels, the contents of which were to be provided by Precision
Audio's videoke laser discs. 6

In July 1997, FILSCAP monitored Home Cab le and found that the
musical compositions of its members and foreign affiliates were being played
on Channels 22 and 32 .7 It sent letters to Home Cable requesting the latter to
obtain a license for the continued use of the musical compositions, but these
were unheeded. 8 A year later, on January 12 and 13, 1998, FILSCAP again
monitored the same channels and discovered that Home Cable continued to
play musical compositions without having secured licenses from FILSCAP.9

On February 16, i 998, FILSCAP filed with the Regional Trial Court
(RTC) a complaint for injunction and damages against Home Cable,
demanding at least Pl ,000,000.00 in actual damages for unpaid license fees
from August 16, 1997 until the filing of the complaint in February 1998, as
well as exemplary damages and attorney's fees . 10

The RTC, the Court of Appeals (CA), and the ponencia uniformly find
Home Cable liable for copyright infringement, to which I concur. However,
unlike the lower courts, the ponencia correctly highlights important points
regarding the economic rights of the copyright owner, viz.:

fn respondent ' s Complaint, it alleged that petitioner has been

" playing or otherwise performing or communicating: to the public" the
subject musical compositions. Both the fRTC] and the [CA] determined
th~t- p~titioner did both when it cablecast[ed]- engaged in program
ongmat1on of- the two karaoke[/videoke] channels. But the application of
Section 177 is inexact. x x x (OJnly an infringement of the
"communication to the public" right has been committed.

xxxx

As a result, xx x Republic Act No . 8293 not only modified the scope

of the performance right into the "public performance" right, but also
grants the "communication to the public" among the Code ' s new
economic rights, by way of the distinct ''making available" formulation .

See ponencia, p. 2.
Id .
<,
Id. at 3.
Id.
Id .
9
Id. at 3-4 .
10
Id . al 4.
 Concurring Opinion 3 G.R. No. 188933

Here, petitioner ' s act of cablecasting the karaoke(/videoke] channels

cannot be considered an exercise of the public performance rights over the
subj ect musical compositions. Concededly, the works were performed by
means of certain processes, and because the musical compositions were
fixed in sound recordings in a videoke format, they were made audible "at
a place or at places where persons outside the normal circle of a family and
that family ' s closest social acquaintances are or can be present, irrespective
of whether they are or can be present at the same place and at the same time,
or at different places and/or at different times." However, the fact that
[thcJ "'performance" of the musical composition requires the process
described in Subsectiori 171.3-using wireless means to make the
musical compositions available to the members of the public in such a
way they may access these compositions from a place and time
individually chosen by them-in order to be perceived places the act
complained of outside Subsection 171.6.

1t must be noted a later amendment to the Intellectual Property Code,

in Republic Act No . I 0372, further expanded the scope of "communication
to the public" to include broadcasting, rebroadcasting, retransmitting by
cabl e, and retransmitting by satellite:

xxxx

Nonetheless, even prior to the amendment, playing a musical

compQsition, fixed in an audiovisual derivative work, over cable
tclevisior. to paying subscribers is making that work accessible to
members of the public from a place or time individually chosen by
them. This is the essence of the "communication to the public" right. 11
(Emphasis supplied)

Two important points are highlighted by the ponencia above: (I) the
exclusive rights of ''public performance" and "communication to the public"
are separate and distinct from each other; and (2) even prior to the amendment
of the Intellectuai Property (IP) Code 12 by Republic Act (R.A.) No. 103 72, 13
broadcasting musical c01T1positions was already corn::idered an exercise of the
author's right of "communication to the public."

I expound on these key points below.

1. The right of "public performance"

and the right of "communication to
the public" are two separate and
distinct rights.

- - - -- - --- -'- -
;
1
!d. at 17-18 and 23-24.
I~ R.A . No. 8293 , A N A c r PR ESCR IIJI N(i ., HI: I NT!: 1.1.ECTUAL PR OPERT Y CODE AND EST/\8 LI SHl r-IG TII E
I NTELLECT ~ 1'\ L PRC!'ERTY O FFICE , PROVIDI NG FOR ITS POWERS AND FUNCTI ONS, /\ ND FOR OTI IER
PURPOSES, otherwise known as the " ]NT ELL.ECTU /\ 1. PRO PERTY C ODE OF Tl IE Pt·IILll'l'I NES," approved on
June 6, 1997.
I} A N A c r J\Mti N DING C ERTAI N PRG\I ISI0NS OF R El'UHLIC A c r No . 8793, 0 TIIER W1SE KNO WN P.S TH E
" I N'I L·.LI !£Tl •.'\I . Pf<Ol'ERTY C ODE 01· Tl 1: : P! 11 1,ll'l'IN ES" , /\ N D f()R OTHER PURPOSES, approved on
f-cbru ary28, 201 3.
 Concurring Opinion 4 G.R. No. 188933

As correctly shown in the ponencia, the IP Code differentiates the rights

of"public performance" and "communication to the public." 14 That the public
performance right and right to communicate to the public are separate and
distinct rights which are available to, and may separately be exploited by, the
author is made clear by several provisions in the IP Code. 15

First, Section 177 of the IP Code separately designates these rights

under the "menu" of economic rights pert;:iining to the copyright holder, 16 viz.:

Chapter V.

COPYRIGHT OR ECONOMIC RIGHTS

SEC. 177. Copyright or Economic Rights. --- Subject to the

provisions of Chapter VIII, copyright or economic rights shall consist of the
exclusive right to carry out, authorize m prevent the following acts:

177.1. Reproduction of the work or substantial p~rtion of the work ;

l 77.2. · Dramati:2.atior., translation, adaptation, abridgn:.ent,

m:rangcment t)r otl1er transformation of the work ;

177.3. The first public distribution of the originnl 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 coiilpilation 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. Pubiic display of the original or a copy oft he work;

177.6. Public performance of the work; and

177.7. Other communication to the public of the work. (Sec. 5,

P.O. No. 49a) (Emphasis supplied)

Second , a scrutiny of the quoted definitions of "public performance"

and "communic:1tion 10 the -public" in the IP Code makes it apparer.t that the
definition of "puhlic performance" in Section 171.6 is exclusionary in the
sense that it "expressly requires that 'the performance x x x be perceived
without the need for communication [to the public J within the meaning of
Subsection 171.3 [of the IP Code]. "' 17 Thus, "if an aspect of a performance
can be perceived by the pubiic by means of 'coinmunication' as defined under
Section 171.3, i.e., ' b):' wire or wireless means in such a way that members of
the public may acr,;ess these works from a pl ace ar!d time individually chosen
by them,' then this aspect of the performance would only be a 'communication
to the public '- and would not therefore constitute a 'public perforn:ance. '" 18
__________ ___ _;__

:., See ponencfa , pr. l.15 ·23.

15
J. Caguio&, Separate Concurring Opinion in FILSCA I' v. Anrev, supra 11ute 2, at 44.
16 Id. .. .
i1 Id .
IR Id. at 45. Citation omitted.
 Concurring Opinion 5 G.R. No. 188933

Third, the prov1s10ns of the IP Code on the rights of performers,

producers of sound recordings, and broadcasting organizations also make it
clear that the rights of "public performance" and "communication to the
public" are separate and distinct from each other. 19 As discussed in my
Separate Concurring Opinion in FILSCAP v. Anrey, Inc. 20 :

CHAPTER XII

Rights of Performers, Producers of Sounds Recordings

and Broadcasting Organizations

xxxx

SECTION 202.9. ''Communication to the ·public of a

performance or a sound recording" means the transmission
to the' public, by any medium , otherwise than by
broadcasting, of sounds of a performance or the
representations of sounds fixed in a sound recording. For
purposes of Section 209, "communication to the public"
includes making the sounds or representations of sounds
fixed in a sound recording audible to the public .

xxxx

SECTION 209. Communication to the Public. - -- If a sound

recording pubiished for commercial purposes, or a
reproduction of such sound recording, is used directly for
broadcasting or for other communication to the public, or is
publicly performed with the intention of making and
enhancing profit, a single equitable remuneration for the
performer or performers, and the producer of the sound
recording shall be paid by the user to both th e performers
and the produce1·, who, in the absence of any agreement shal i
share equally.xx x

Notaoly, under Section 209 of the IP Code, performers and

producers of so und recordings aie entitled to remuneration whenever (i) a
sound recording is published for conimercial purposes, or (ii) when
reproductions of s uch sound recordings are (a) " used directly for
brnadcasting or · for other communication to the public" (i.e ., right to
comrnunicde:: to tb.e· pablic), '.Jr (b) '·publicly pertorn,ed with the intention
of making and e n~ancing profit" (i.e., right of public performance). In other
words, performers and producers would be entitled tc remuneration for
three distinct activities, which is clear from the use of the conjunction "or" .
Otherwise ·stated, if the intention was to C)f1]y entitle the performers and
producers to one renrnne1 ation for all of these activities co mbined, th e n the
conjunction "and'' should have been used. This furthr:r underscores that
Sectioi1s 1n:G and 177.7 in relation to Sections 171.3 «nd 171.6 of th ~ IP
Code actualiy r~cognizc two · separate and distinct rights that may
independently be exploited by an author or copyright owner.21 (Emphasis
omitted) ·

19
Id . at 44 .
20
S•Jpra note 2.
21
Id. at 44--45. Citation rnnittcd .
 Concurrii1g Opinior.. 6 G.R. No. 188933

This distinction between the rights of "public performance" and

"communication to the public" is further highlighted in the Berne Convention,
which the Philippines formally acceded to in 1950 and which became
effective in respect of the Philippines on August 1, 1951. 22 The Senate of the
Philippines, by its Resolution No. 21 dated May 16, 1950, likewise concurred
in the accession thereto by the Philippines. 23 Thereafter, the President, by
Proclamation No. 13 7 dated Iv1arch 15, 1955, made public the Philippines'
accession to the Berne Convention "to the end that the same and every article
and clause thereof may be observed and fulfilled with good faith by the
Republic of the Philippines and the citizens thereof." 24 The following
disquisition explains how the IP Code's separation of "public performance"
and "communication to the public" mirrors how the Berne Convention
likewise separates·the two rights:

x x x Articles 11 and 11 bis of the Berne Convention, which

recognize the performance right and broadcasting right, respectively,
provide:

Article 11
[Certoin Rights in Dramatic and Mw;1cal Works: 1. Right
of Pub!ic Performance and of communication to the public
of a pl:!rformance xx x]

(l) Authors of dramatic, ciramatico-musical

and musical works shall enjoy the
exclusive right of authorizing:

(i) the public performance of their

works, including such public
performance by any mea ns or
process ;

(ii) any communication to the

public of the performance of
their works. x x x

Article Hbis
[Broadcasting and Related Rights: i. Broadcasting and
other wire!ess communications, public communication of
broadcast by wire or rebroadcast 1 oublic communication of
broadcast by loudspeaker or anJ!ogous instruments x x x]

( 1) Authors of Iiterary and artistic works

shall er!.joy the exclL;sive r:ght of
authori:~ing: .

22
Procianw(ion No. 137 , M AK ING PU13L.I C THE AcCESSIQt,J OF Tl IE R EPUBLIC OF ";!·Ir. PHIL: Pi' INES TO Tl IE
BERNE FOR THE PIWTECTION OF Li TERARY ANO ARTISTIC WORKS, R t: VISl'D AT
BIHISSi::L.S JUN!: · . 26, I 9 •:18 , dated March 15 , 1955 , available at
<-https://www.offi~1a!g,.z'.!tte.g0v.ph/dcwn!oad s.1 : 955/03marLl.9~03l~PR.OC-O I TZ.:.8c.M. pdf>: see
also Wire Adrn1n1steied Treaties. Co ntra..:ting Prrties to the Berne WOIU.D
i NTl: Li.FCTU'\I. PROPERT Y . ORCI\NIZ1\T'ON . avn ·•a••l n
<https: //wipo!ex.~ipo .int!en/treaties/Shov,RcsL,lb?s~a·r~h wh~t=C& tr~:-ttv ici ~l •••v at
2
:: Proclarn ation ~~o. 13 7, id . -- ·-
2-1 id.
Concurring Opinion G.R. Nn. l 88933

(i) the broadcasting of their works

or the communication thereof
to the public by any other means
of wire less diffusion of signs,
sounds or images ;

(ii) any communication to the public

bv wire or bv rebroadcasting of
the ;;roadcast of the work, when
this comm;.mication is made by
an organization other than the
original one;

(iii) the public communication by

loudspeaker or any other
analogous instrument
-transmitting, IJy signs, sounds
or images, the broadcast of the
work.

(2) It shall be a matter for legislation in lhe

countries of the Union t0 determiPe the
condition.:; under which the rights
mentioned in the prc.:eding paragraph
may be exercised, but these conditions
shall apply only in the countries where
they have been prescribed . They shall not
in any circumstances be prejudicial to th e
moral rights of the author, nor to his right
to obtain equitable remuneration which,
in the absence of agreement, shall be
fixed by competent authority.xx x

Thus, under the Berne Convention, public petformance and any

communication of such pcdormance i~ covered by Article 11 thereof.
However, <;imilat to how the IP Ccicle is wcrdec!, if the public
communication is via a spe_,jfic mode oi· means of trnnsmissi on, i.e., by
means of !Jroadcasting or other " wireless diffusion','' by wire or
rebroadcasting (if the conimunication is made by an organization other than
the original one), or by loudspeaker or any other analo1:;ous instrument of
the broadcast of the ·.vork. then the s:ime will fall under Article I : bis .

ln fact, the foreg0ing stance is made clear by the WIPO in its

exp lanatory guide to the Berne . C0n:venti0n (WJP() Guide) . Anent the
difference l1f Article 11 from Article i l bis of the Berne Conver.tion, Lhe
WIPO remarked as follow s:

11-4. .However, [Art1de i l] goes -on ro speak 0f '•induding

Sli·:'.: h publi"c J'.) ':.'tfnrinanci:: hy any me:u1s or process", and this
covers performance ny means 0f' recordings ; there is no
difference for this purpose between a dance ha ll ,,vith an
Qrclw~tra playing the latest tune and the next-door
discoJheoae where the customers use (;Gins to choose theii·
Q_~;vn musi8. In both, public pcrtorrnance takes place. The
inclusion is ge!1eral and covers all recordings (discs,
cc1ssettes, tapes, v id::oograrr.s, etc.) though public
Concurring Opinio;~ . 8 G.R. No. 188933

.. performance by means of cinematographic works 1s

sepc1rateiy covered-sec> A rticl e 14(1 )(ii).

l 1.5. The second leg of this right is the communkation to

the public of a performance of the WQrk. It covers all
public communication except broadcasting which is
dealt with in Article I Ibis. For examp le, a broadcasting
org,misa1.:ion brcadcasts a chan,bcr concert. Artic le l 1his
app!.1es. But if it or some other body diffuses th~ r.1usic by
lamilinc to subscribers, thi s is a matter for A.rticlc 1 l. x ,~ x

Furthermore, the WIPO G uide: a lso states that Articl e 1 I his, w hi ch

covers the author's right • to communicate one's wo rk by means of
broadcasting, is "the fourth of the a uthor's exclusive rights x x x, the other
three being th()Se of translation, reproduction and public performance ." Anent
the '·broadcasting right," the WIPO elucidates that this right includes one
primary rig!1t to authorize the broadcast of"one's·work "via wireless means,
and two other righrs to authorize (i) the subsequent communicatioil of said
broadcast, by wire or rebroadcast, by an organization other than the one
which oTrgitu'llly:made the broadcast, a:1d (ii) the communication of the same
broadcast via loucbpeaker or a television screen to a "new pt1blic ." T hus:

11 bi.,·. I . This provision is 0f par~icu lar im portar,ce in view of

the place now taken by broadcasting (whi ch, it must be
remembered, includes both radio and tel ev ision) i11 the world
of infr> rmation and entertainment. It i§ the fourth of the
autlwr's exclusive rights to be recognised by the
·Convention, the other three being those of translation,
.r ~roduction and public performance. The Rcme
Revision ( 1928) was the first to recognise the right "af
authorising the commur:.ication of xx ): works to ·tbe public
by radio and television" . Slightly muddled in its terms, the
text' was li ke broadrnsting itse!f - in its infancy. It was in
Brusc;i.~ ls ( 1948) that tlw subject ww; m-Jre fu ll y considered
aiid t,1e ri~ilt lm., ken dl)WI1 into :its various face1s in order to
take ::1ccoum of the various wap .and techn ig·nes by which
jt might Jw exploited. Neither Stockho lm nor ·Paris made
a ny change, other than to provide a more suitable trans lation
iri the: ?-iewly authentic Engli sh text.

xx.xx

11 bis.3. The pri:nary right is to authorise the broackasting of

a work and the communication thereof to the pc1b! ic by any
other means ofwirnless diffusion ot'signs, sounds or images.
It app:ies fo hr.1th so ll nd ;1nc.~ television broadcasts . What
or
rnatte•·s istlt~ emi ssio n :::igr!ab; it is. immateria l whether O!"
n61 they Hi e i11 fftct i"f"c eived .

I l bisA. A second::iry right is the s..ibscquent· u::;e of this

emission: the author has the exclusive 1:ight to authorise
communication cf the broadcast to the public , either by wi re
(a CA. TV system) or witho ut, ff the communication is made
bv :m organi-;,nion other th..,.n the original one. -
Concurring Opinion . 9 . G.R. No . 188933

11 bis.5. Finally the third exclusive right is to authorise the

public communication of the broadcast by louds peaker or on
a t';!]evision screen.

xxxx

11 bis.9 . In other words, this pa ragraph demands that the

a uth or sha ll enjoy the exclusive right to autl1c,rise the
. broadcasting of his work and, once bro~drnst, the
communication to the public. whether by wire or not, if
this is done by an organisation other than that which
broadcast it. This act of wire diffusion differs from that
covered in Article 11(1). The latter covers the case in
which the wire diffusion company itself originates the
programme, whereas Article 1 lbis deals with the
diffusion of someone else's broadcast.

1 I his. I 0. For example, a company in a given country,

usually for profit, recei ves the signals sent through the ethe r
by a television: station in the same or another country and
rebys them by wire to its subscribers. T his i-~~ covered by
Articie llbi.t (1 )(ii). But if this • company sends out
prognnnmes w hich it has itself originated, it is Articie ·11
which applies. What matters is whether or not a second
organisation takes part in the dis tribution of the broad cast
pr,)grarnm cs to the public. (A working pa rty which mei in
Pans in June 1977 considered the copyright a nd
nei ghbouring rights probl ems caused by the di stribution of
television p;·ogramm es by cable.) The task of di stin guishing
between such a practice and the mere recepti on of
programmes by a community aerial was left to nati o na l laws.

1 I his. 1-l. Finally, th e third case dealt with in this paragraph

is that which the work which has been broadcast is 'publicl y
comnH.inicated e.g., by loudspeaker or otherwise, to the
pt:bl:c. rhis case is becoming more commor.. In places
,.-vhe.-e peop le gather (cafes, restaurants, tea-roo :11s, hotels,
large shops, trains, a ircraft:, etc.) the practice is growing of
pro v iding broadcast programmes. There is alsc an i11.creasing
use of copyright works for adverti sing purposes i!1 public
pl aces. The question is whether the licence gi. ven by the
a uth or to the broadcas ting station covers, in add.ition, a ll the
use made of the broadcast, which may or may 1wt be for
commercial e nd s.

1 lbis.12 . The Convention ' s ai:swer is " no". Just as, in the
case of re lay of a broadcast by wirt::, an additi0r:al aud ience
is ·created (paragraph (I) (ii)). rn, in this case too ; the work is
made pc;·ceptible to iistene rs (and perhaps vie,.ve rs) othei·
than thost co ntemplated by the 3.uth or when his pe; mission
was given. A lthough, by definiti on, the numbrr t1f people
!'eceivin ;:; · a broadcast cannot be ascertained with any
certainty, the author thin ks of hi s licence to broadcast as
covedrig only the direct audience receiv ir:g the sif;r:.a l withi;1
ihe [arnily ci1·de. Once thi s receptioi1 is done in order to
entertti in a wider circle, often for pre fit , an additional se~ti o n
of th e . public is ena bl ed to enjoy lhe wo rk a nd it ceases
Concurring Opinion G.R. No. 188933

merely a 1T1atter of broadcasting. The author is given cdntrol

over this new public performance of his work.

l lbis.13. Music has already been used as an example, but

the right clearly covers all other works as well - plays,
operas, lectures and other oral works. Nor is it confined to
entertainment; instruction is no less important. What matters
is whether the wo rk which has been broadcast is then
publicly corn!nunicated by loudspeaker or by some
analogous instrument e.g., a television screen.

Parsed, while the communication of a " performance" may fall under

Article 11 of the Berne Convention (governing public performance), this is
only true if the performance can be perceived without the need for
communication within the meaning of Article 11bis - very much like how
Section 171.6 of the IP Code is worded. On the other hand, under the Berne
Convention, if the communication to the public is made either (i) via
broadcast or by any other means of wireless diffusion, (ii) whether by wire
or not, by an organization other than the one who originally made the
broadcast, or (iii) through a broadcast of the work throu gh a loudspeaker,
televi sio\1 screen, Oi' other analogous instrument, then Article 11 bis applies.
Put s imply, on(: clear similarity between the structure of the Berne
Convention arad the IP Code is that both c~,tegoricaHy separate the
concept of "public performance" from "broadcasting," such that a
work that is conveyed to the public solely via radio [or television]
broadcast does not constitute an exercise of the author's right of
"public performance," but rather of the author's right of
"lb]roadcasting and other wireless communications, public
communication of· broadcast by wire or rebroadcast, public
communication of broadcast · by loudspeaker or analogous
instruments!,!" or~ as referred to under the IP Code, the author's right
to '1 communicate to the public."

Applyi11g·1:he foregoing principles to our jurisdiction., this means that

und er the IP Cod~, as under the Berne Convention, the s ingle actof
broadcastin g of musical compositions contained in sound [or audiovisual]
recordings, either by the original broadcaster or " by an org2m ization other
than the original one[,]" or by other business establishments sole ly " by
loudspeaker or any other analogous instrument" (as woi·;:icd in Article I Ibis
of the Berne Convention), is actually an exercise of the author's right to
"com1rn.111ic;;-ite to the publ!c" his or her work under Section 171.3 of the fP
Code. This is clear from the wording of Section 171.3 of the IP Code which
specifically defines "communication to the public" as the " making of a work
available to the !Jublic by wire or wireless means x x x," and from the
wording of Sec::tion 202.7 or the IP Code which defines " bro adcasting" as a
mode of "transmission by wireless means for the pubiic rec~ption of
soundsf .]" As well, by the wording ·o f Section 171.6 ·o f the IP Codt:, this
may also in.can that such act · does not constitut~ an exercise of an
author's public pcrfo!"mance right.

In other words, based on the IP Code ' s defi niti01i of these two rights,
as further d arified by the Berne Convention , broadcasting a musical
composition over the radio lor television] or communicating the sarne in
some ether ''wire or wire less means x x x" would simply constitute an
exerci se of the right to "communicate to the public." xx x

x x xx
 Concurring Opinion 11 G.R. No. 188933

Being a contracting party to the Berne Convention, the Philippines

must recognize not only the distinction between the rights of public
performance and communication to the public, as already discussed above,
but also the scope and nature of the exclusive rights recognized under
Article 11 bis of the Berne Convention, namely - (i) the right to authorize
the broadcast cf one's work via wireless means, (ii) the right to authori ze
the subsequent communication of said broadcast, by wire or rebroadcast, by
an organizatiou other than t!1e one which originall y mad e the broadcast, and
(iii) the ri ght to a uthorize the co!nmunication of the ~ame broadcast via
loudspeaker or a television screen to a ''new public. " This recognition is
vital " to the end that the [Berne Convention], and every article and clause
thereof may be observed and fulfill ed in good faith by the Republic of the
Philippines a11'd the citizens thereo f. " 25 (Emphasis and underscoring in the
original)

In sum, the ponencia is correct in holding that the lower courts'

application of Section 177 - i.e., ruling that Home Cable had exercised both
"public performance" right and "communication to the public" right - is
inexact. 26 Haine Cable did not exercise both rights when it "cablecasted," or
engaged in the prograni origination of, the two videoke channels. Instead,
Home Cable only committed copyright infringement. by exercising without
authority the authors' exc lusive economic right of "communication to the
public." 27

II. Even prior to the amendment of the

IP Code by R.A. · No. 10372,
broadcasting musical compositions
was already considered an exercise
of the right of "communication to the
public."

The pohehcia's 3tatemcnt regarding this amendrnent bears repeating

not only for easy reference but also for well-deserved emphasis:

It must be noted a later amendment to the [IP] Code, in [R.A.] :No.

I 0372 , further expanded the sco pe of " communication to the public'' to
include · broadcasting, re broadcastin g, retransm1ttmg by cable,
[broadcasting] and retransmitting by satellite:

xxxx

Nonetheless, even prior to the amendment, playing a musical

composition, fixeC, in an audiovisua l derivative y.,o_rk, oYer cabk
tl,:! levision I() _pay ing suhscribers is making tliat work accessible to
membc::rf of lhe public from a place or time indivichially chosen by
them . This is the essence of the "communication to ihe public" right. 28
(E mpha s is sup1:i lied)

25
ld . at 46-s,·, and 57. ~~itat io ns om itted.
26
Ponencia, pp. 17- i g_
27
See id. at 18.
28 Id . at 23 -24.
 Concurring Opinion 12 G.R. No. 188933

A table comparing the definition of "communication to the public"

before and after the amendment introduced by R.A. No. l 0372 is included
below:

R.A. No. 8293 or the IP Code, approved
on June 6, 1997; took effect on January l,
1998
SEC. 171. Definitions. - xx x
R.A. No. 8293 or the IP Code, as
amended by R.A. No. 10372, approved
or~ Pebruary ~8, 20 13 ; took effect on
March 22, 2013
--
" SEC. 171. Definitions .- xx x

xxxx ·'] 71. 3. 'Communication to the

171.3. "Communication to the
public" or " communicate to the public"
means the making of a work available to the
public by wire or wireless means in such a
way that members of the public may access
these works from ·a place and time
individually chosen by them[.]
public ' or 'communicate to the public '
means any communication to the nublic 2
including broadcasting2 rebroadcasting2
retransmitting by cable 2 broadcasting
and retransmitting by satellite 2 and
includes the making of a work available to
the public by v1ire or wireless means in
such a way that members of the public may
access these wo rks from a place and time
individually chosen by them[.]" (Emphasis
and undersco ring supplied)

To be sure, the amendment introduced by R.A. No . 10372, insofar as

Section 171.3 is concerned, was not meant to substantially alter the nature of
the authors ; right of "communication to the public. " It merely explicitly
codified for. further clarification what was already contained in the law:
broadcasting videoke songs, among other ac1.s, is making the work available
to the public by wire or wireless means in such a way that members of the
.public may access these works from a place and time individua lly chosen by
them. Put simply, even before the amendment, " brcadcas1.ing,:· , among other
acts, was already recognized by the IP Code as an exercise of the right of
"communication to the public ." The phrase "the public may access these
works from a place and time individually chosen by them" in the definition of
"cornrnunication to the public" onl y means that it allows the members of the
public to access copyrighted works - regardless cf whether the works were
specifically chosen by the members of the public -_ - in places and times
chosen by such members.

Here, in Home Cable's act of broadcasting the videoke songs, the end-
users and 2.udienccs appear to have no ultimate control or choice over what
videoke songs are played. End-use rs and viewers cannot request Home Cable
to play certain chosen songs because, logically, Home Cable can only play the
songs in the order compiled by Precision Audio. This is clear from Home
Cable's own allegation that it " has no control over the contents of materials x
x x because the laser d isc materi als from Precision [Audio] already contain a
compilation of songs per volurne." 29 This element of end-user control or

29
Id. at 6.
Concurring Opinion 13 G .R. No . 188933

choice of musical works to be played, however -- such as in services that

offer on-demand, interactive communication through the internet - was
never an integral element of "communication to the public," even prior to the
amendment introduced by R.A. No. I 03 Tl . Prior to the amendment, members
of the public were still able to access musical compositions fixed in
audiovisual works or videoke songs, including those not selected by them, in
places and times chosen by such members (e.g., in t:1e comfort of their own
homes at 7:00 p.m. every weekday night) because of Home Cable's act of
exercising the authors' right of "communication to the public."

In view of the foregoing, I concur with the ponencia, and vote to DENY
the Petition .

lVHN S. CAGUIOA

CERTIFIED TRU. COPY

µf1,-vt-
(!, .
{JENN fE1fN C. SJi'G Uln
SC Chief Jud 1c 1a l St af f Offic e r
Office of t he Clerk of Court
Supreme Co urt of the Pi1ilippines
 EN BANC

..
G.R. No. 188933 - (PHILIPPINE HOME CABLE HOLDINGS,
INC., Petitioner, v. FILIPINO SOCIETY OF COMPOSERS, AUTHORS,
& PUBLISHERS, INC., Respondent)

Promulgated: February 21, 2023

x--------------------- - -------------------------

CONCURRENCE

LAZARO-JAVIER, J.:

I concur in the ponencia. My Opinion in Filipino Society of Composers,

Authors and Publishers, inc. v. Anrey, Inc. 1 is not controlling. In Anrey, my
Opinion is that respondent did not appropriate the rights of public performance
and communication to the public when they turned on the radio within the hearing
distance of their customers. In contrast, herein petitioner was clearly involved in
the communication to the public of copyrighted songs as defined in the
Intellectual Property Code -

171.3 . 'Communication to the public' or 'communicate to the public'

means any communication to the public, including broadcasting, rebroadcasting,
retransmitting by cable, broadcasting and retransmitting by satellite, and includes the
making of a work available to the public by wire or wireless means in such a way
that members of the public may access these works from a place and time
individually chosen by them;

202.9. "Communication to the public of a performance or a sound

recording" means the transmission to the public, by any medium, otherwise than
by broadcasting, of sounds of a performance or the representations of sounds fixed
in a sound recording. For purposes of Section 209, "communication to the public"
includes making the sounds or representations of sounds fixed in a sound
recording audible to the public.

SECTION 209. Communication to the Public. - If a sound recording

published for commercial purposes, or a reproduction of such sound recording, is
used directly for broadcasting or for other communication to the public, or is
publicly performed with the intention of making and enhancing profit, a single
equitable remuneration for the performer or performers, and the producer of the sound
recording shall be paid by the user to both the performers and the producer, who, in the
absence of any agreement shall share equally.

1
G.R . No. 233918 , August 09 , 2022.
 Petitioner' s act of transmitting the videokes by cable or broadcast 1s
expressly covered by the definitions quoted above.

My only misgiving about this case, which is not the ponente's fau lt, is the
absence of a ruling on how to measure the amount of damages for infringements
of this kind. None of the parties raised any issue about damages apart from their
arguments on liability. I myself have no suggestion to offer since I do not wish to
appear as lawyering for either of them . This state of affairs of our jurisprudence,
however, must not stand for Jong as we strive to break out of this inertia.

Thus, I vote to deny the petition and affirm the decision of the Court of
Appeals.

CERTIFIED TRUE CO y

Ci&Nt~
r ,_
SC Chief Jud1c 1al St ;iff ·r
Offi ce of the Clerk oi Cot1rt
Supreme Court of he P: 1, 1-t1rnc:,
 EN BANC

G.R. No. 188933 - Philippine Home Cable Holdings Inc.

Petitione,~ v. Filipino Society of Composers, Authors and Publishers
(FILSCAP), In c., Respondent.

Promulgated:
February 21, 2023
x---------------------------------

SEPARATE CONCURRING OPINION

ZALAMEDA, J.:

I concur.

The case presents an opportunity to make further distinctions between

two related but still distinct economic rights of an author: 1) public
performance and 2) right to communicate the work to the public. 1

The case of FJLSCAP v. Anrey, Inc. (Anrey case)2 was the very first
case to make a distinction between these two rights.

In Anrey, what was complained as infringing is the act of playing radio

broadcasts by a commercial establishment using loudspeakers (radio-over-
loudspeakers ). The Court En Banc applied the accumulation of legislative
history, treaties, international conventions, and other secondary sources in
determining that the specific right infringed is FILSCAP's right to public
performance, and not the right to "communication to the public."

We made an exhaustive discussion on this score but to sum it all up,

there is an overlap between the right to public performance and the right to
communicate to the public, with the right to public performance being the
broader of these rights. In fact, the Berne Convention considered the right to
communicate the protected work publicly, as part of the public performance
rights of an author, thus :

ARTI CLE 11

Right of Public Performance

Article 11 , paragraph (1)

1
See Di ssenting Opinion of Justice Leonen , p. 14.
G.R. No . 2339 18, 09 August 2022.
Separate Concurring Opinion 2 G.R. No. 188933

Scope <~/"the Right

(I) Authors of dramatic, dramatico-musica l and musical works shall
enjoy the exclusive ri ght of authori z ing:
(i) the public perfo rm ance of their wo rks, includin g such public
performance by any means or process;
(ii) any communicati on to the public of the perform ance of their
works.

Originally, the Berne Convention did not recognize public

communication as a right separate and independent from the author's right to
public performance. This is clear from the World Intellectual Property
Organization (WIPO) Guide to the Berne Convention which states that the
author's right to public performance is split into two: 1) the right to
authorize the public performance of his work; and 2) the right to
communication to the public of a performance of the work.

11.3. The paragraph splits the right into two. The author has the exclusive
ri ght to authori se public performance of hi s work. xx x .

xxxx

11 .5. The second leg of this right is the communication to the public of a
performance of the wo rk . It covers all public communication exce pt
broadcasting w hich is dealt w ith in A rticl e 11 bis.

In fact the Berne Convention only recognizes four (4) exclusive rights
of an author: 1) translation; 2) reproduction; 3) pub! ic performance; and 4)
broadcasting. 3 The Berne Convention does not mention the right to public
communication as a separate and independent economic right of an author.
Not that such ri ght does not exist. What it means is, generally, the ri ght to
public communication would, depending on its use, fall under the author's
right to public performance OR the right to broadcasting. This is the exact
reason why both provisions of the Berne Convention on public performance
and broadcasting contain references to public communication:

ART ICLE 11

Right o.l Public Perfor mance

A rti c le 11 , para graph ( 1)

Scope o_fthe Right

(I) Authors of dramatic, drarn atico-musical and musica l wo rks shall
enjoy the exclusive ri ght of authori zing :

(i) the publi c perfo rmance of their wo rks, including such public

3
Id .
 ,.,
Separate Concurring Opinion :) G.R. No. I 88933

performance by any means or process;

(ii) any communication to the public of the performance of their
works.

ARTICLE I 1bis

Right of Broadcasting

Article 11 bis, paragraph (1)

Scope of the Right

(1) Authors of literary and artistic works shall enjoy the exclusive
right of authorizing:
(i) the broadcasting of their works or the communication thereof to
the public by any other means of wireless diffusion of signs, sounds or
images;
(ii) any communication to the public by wire or by rebroadcasting
of the broadcast of the work, when this communication is made by an
organization other than the original one;
(iii) the public communication by loudspeaker or any other
analogous instrument transmitting, by signs, sounds or images, the
broadcast of the work.

The confusion lies on the import of Subsection 177.7 of the

Intellectual Prope1iy Code (IPC), which mentions the "other communication
to the public of the work" as one of the economic rights of an author.
Specifically, if such right is supposed to be subsumed under either the right
to public performance or broadcasting. In order to understand this better, it
is necessary to look into the historical details of the provision's origin.

In 2002, the Philippines became a member of WIPO. As a member,

the State had to adhere to the WIPO Copyright Treaty (WCT). The Treaty
led to changes in our copyright law. In particular, Section 171.3 of Republic
Act No. (RA) 8293 4 was lifted directly from Article 8 of the WCT. 5 Article 8
reads:

Artie.le 8
Right of Communication to the Public

Without prejudice to the provisions of Articles 1l(l)(ii), 11 bis(l)(i) and

(ii), 1lter(I )(ii), 14( I )(ii) and l 4bis( 1) of the Berne Convention, authors of
literary and artistic works shall enjoy the exclusive right of authorizing any
communication to the public of their works, by wire or wireless means,

4
Entitled: ·'A N A c r PRESC RIB IN<..i TI IE I NT[ LI.ECTUA I. P RO l'EIHY C{)DE AND EST/\ll l..l SI II NG THE I NTELLECTUA L.
P ROPERT Y Q1:i:1cE, Pl<0VIDINC FOR ITS POW[RS ,\NI) F UNCTIONS. AND FOR OTI 11':R P UHf'OSES.'' Approved: 06
Jun e 1997.
5
Avail able at https ://wipolex.wipo.in t/en/text/295166, ( last accessed on Jul y 20, 2022).
 Separate Concurring Opinion 4 G.R. No. 188933

including the making available to the puhlic of their works in such a way
that members of the public may access these works from a place and at a
time individually chosen by them. (Underscoring supplied.)

But even without such amendment, the right to communicate to the

public has been recognized, as part of the public performance right. So what
exactly is the purpose of Article 8 of the WCT. Apparently, it was introduced
as a band-aid solution to cover situations in the ever-growing and fast-paced
digital environment. The explanatory note to the WCT strengthens this
point:

The WIPO Copyright Treaty (WCT) is a special agreement under the

Berne Convention that deals with the protection of works and the rights of
their authors in the digital environment."

"As to the rights granted to authors, apart from the rights recognized by the
Berne Convention, the Treaty also grants: (i) the right of distribution; (ii)
the right of rental; and (iii) a broader right of communication to the public.

"The right of communication to the public is the right to authorize any

communication to the public, by wire or wireless means, including "the
making available to the public of works in a way that the members of the
public may access the work from a place and at a time individually chosen
by them". The quoted expression covers, in particular, on-demand,
interactive communication through the Internet. 6 (Underscoring supplied.)

As a result of the accumulation of treaties, international conventions,

legislative history and other secondary sources, We made the following
distinctions: if "public communication" was done using traditional forms
such as radio-over-loudspeakers, then the right involved is the public
performance right under Sec. 177 .6. On the other hand, if the
communication was done in the digital landscape such as the Internet, then
the right violated is the separate economic right to publicly communicate the
work under Sec. 177.7.

To illustrate, a streaming service in the United Kingdom (UK) named

TVCatchup offers live streams of free-to-air UK television broadcasts over
the Internet. The UK High Court refen-ed to the Court of Justice of the
European Union (CJEU) whether TVCatchup's streaming activities were a
communication to the public. The CJEU held that the retransmission of
protected works and broadcasts over the Internet was a new communication
to the public and therefore must be authorised by the authors concerned. 7

Another illustrative case is Nils Svensson v. Retriever Sverige AB. 8

6
Available at https: //www.wipo.int/treaties/en/ ip/wct/summary_ wet.html , (last accessed 21 February
2023).
7
ITV v. TVCatchup, CJEU 7.3.2013, C-607/ 11.
8
CJEU 2.13.2014 , C-466/ 12.
 Separate Concurring Opinion 5 G.R. No. 188933

The applicants, all journalists, wrote press articles that were published in the
Goteborgs-Posten newspaper and on the Goteborgs-Posten website.
Retriever Sverige operates a website that provides its clients, according to
their needs, with lists of clickable Internet links (hyperlinks) to articles
published by other websites. Those articles were freely accessible on the
Goteborgs-Posten newspaper site. And when you click those links, you get
redirected to another site in order to access the work in which he is
interested. The CJEU held that the activity of linking to third party works on
the internet is described as an act of public communication, irrespective of
the type of link (the judgment makes no distinctions) users may have before
them .

Unauthorized links to radio streams also violates the right to

communication to the public. In Tuneln Inc. v. Warner Music UK Ltd. &
Anor9 the claimants either represent, own, or hold exclusive licenses to
copyrights in sound recordings of music. On the other hand, defendant
Tuneln is a company that operates Tuneln Radio, which enables users in UK
to access radio stations from around the world by broadcasting the same on
the internet. The England and Wales Court of Appeals (CA) clarified that
every transmission or retransmission of the work by a specific technical
means must be individually authorized by the copyright holder. Further, for
purposes of determining whether there is "communication," the appellate
court explained that the work must be made available to the public in such a
way that they may access it, whether or not they actually access the work. It
confirmed that there is communication to the public in the "transmission of
television and radio broadcasts, and sound recordings included therein, to
the customers of hotels, public houses, spas, cafe-restaurants and
rehabilitation centres by means of television and radio sets". As Tuneln is a
different kind of communication targeted at a different public in a different
territory, the court concluded that the rights of the copyright holders in this
case were violated.

What is complained as infringing in this case is the cablecasting of

videoke laser disc recordings 10 done by Philippine Home Cable Holdings,
Inc. (Home Cable), pursuant to an agreement with Precision Audio Videoke
Service. These videoke recordings were played by Home Cable in three of
its cable channels (the Home Cable Case).

The IPC does not specifically define cablecasting but secondary

sources define the act as:

" [C]ablecasting" means the transm1ss1on by wire for public

reception of sounds, images or sounds and images or of the

9
[2021] EWCA Civ 441.
'
0
Ponencia, p. 2.
Separate Concurring Opinion 6 G.R. No. 188933

representations thereof. Transmission by wire of encrypted signals is

"cablecasting'' where the means for decrypting are provided to the public
by the cablecasting organization or with its consent. "Cablecasting" shall
not be understood as including transmissions over computer networks or
any transmission where the time and place of reception may be
11
individually chosen by members of the public; xx x.

In Anrey, what was involved is a secondary transmission of a radio

broadcast and We perceived such secondary transmission as a public
performance. On the other hand, the present Home Cable case involves an
original transmission made by Home Cable. For the ponente, cablecasting
falls under the right to public communication for this amounts to making
that work accessible to members of the public from a place or time
individually chosen by them, which is the very essence of the
"communication to the public" right in the 1PC. 12

Perhaps this statement is taken from the 1997 version of Sec. 171.3 of
the IPC which states :

"Communication to the public" or "communicate to the public" means the

making of a work available to the public by wire or wireless means in
such a way that members of the public may access these works from a
place and time individually chosen by them.

Due to its very restricted application, Member States has regarded this
as the restricted right of "making available to the public" the copyrighted
material. In the U.S., this right is reserved to control interactive, on-demand
dissemination of copyrighted works over the Internet, including provision of
access to streams or downloads. 13 Also, the European Union, under Recitals
24-27 of Article 3, Directive 2001/29/EC provide a background on this right:

(24) The right to make available to the public subject-matter referred to in

Article 3(2) should be understood as covering all acts of making available
such subject-matter to members of the public not present at the place where
the act of making available originates, and as not covering any other acts.

(25) The legal uncertainty regarding the nature and the level of protection
of acts of on-demand transmission of copyright works and subject-matter
protected by related rights over networks should be overcome by providing
for harmonised protection at Community level. It should be made clear that
all rightholders recognised by this Directive should have an exclusive right
to make available to the public copyright works or any other subject-matter
by way of interactive on-demand transmissions. Such interactive on-
demand transmissions are characterised by the fact that members of the

11
Article 2, Proposed Draft WIPO Treaty on the Protection of Broadcasting Organizations and
Cablecasting Organizations.
· Porzencia, p. 1.
12

u The Making Available Right in the United States, U.S . Copyright Office (2016), p. 15.
 Separate Concurring Opinion 7 G.R. No. 188933

public may access them from a place and at a time individually chosen by
them.
(26) With regard to the making availa ble in on-demand services by
broadcasters of their radio or television productions incorporating music
from commercial phonograms as an integral part thereof, collective
licensing arrangements are to be encouraged in order to facilitate the
clearance of the rights concerned.
(27) The mere provision of physical facilities for enabling or making a
communication does not in itself amount to communication within the
meaning of this Directive.

However, We noticed that the ponencia used the disjunctive word

"OR" when the law used the conjunctive word "AND" in the plu·ase "from a
place and time individually chosen by them." This has the tendency to
significantly change the meaning of the provision.

The provision uses the word "AND" which implies that the
transmission of the protected work should be accessible by the public with
discretion not just to the place, but also discretion to the time. This for me is
the exact essence of the "communication to the public" right under RA 8293,
which should be limited to On-Demand platforms (such as Netflix, Spotify,
or Youtube) since these platforms offer discretion to access communication
of the work at a place AND time of their own choosing. It is only the
Internet that makes such discretion possible.

Even the Intellectual Property Office of the Philippines (IPOPHIL)

recognizes such distinction. In an official publication issued by the IPOPHIL
for the WIPO, the IPOPHIL enumerates public performance and public
communication right, on the one hand; and the making of the works
available on the Internet for on-demand access by the public, on the other; as
among the economic rights of the copyright owner. 14

Finally, the ponencia made reference to the definition under RA 10372

of "communication to the public" which includes "broadcasting,
rebroadcasting, retransmitting by cable, broadcasting and retransmitting by
satellite." 1)

Following the above disquisitions, I agree with the ponente that the
right infringed is the "communication to the public" right. If we are to
harmonize the definition of "communication to the public" under RA 8293

14
See p. 18, Creative Expression, An Introduction to Copyright and Related Rights fo r Sm all and
Medium-sized Enterprises, Intellectual Property for Business Se ries Number 4, IPOPHIL (2 010).
Available at https://www.wipo.int/export/s ites/www/s meien/doc u ments/gu ides/customi zation/creative
_ex pression_phil.pdf, (last accessed 15 February 2023).
'
5
Ponencia, p. 18.
 Separate Concurring Opinion 8 G.R. No. 188933

with the present definition of the term under RA 103 72, 16 then it may very
well be argued that the modern day formulation of the term should prevail.

The definition of the term "communication to the public" under RA

10372 is the result of the State 's joint accession to the WCT 17 and the WIPO
Performances and Phonograms Treaty (WPPT) 18 in 04 July 2002. Although
RA 10372 took effect as an amendment to the IPC only in 22 March 2013, 19
both the WCT and the WPPT were concluded in 1996. As the ponencia
states, in a sense both treaties were integrated in our domestic legislation
even before the amendment to the IPC was made by RA 10372. 20

In fine, the acts constituting "communication to the public" under RA

10372 reflects the true scope of the "communication to the public" right.
Having said this, I would like to tread on this very carefully so as not to
undesirably overexpand the coverage of this right.

There are only five vari ations in which the expanded "communication
to the public" covers: 1) broadcasting; 2) rebroadcasting; 3) retransmitting
by cable; 4) broadcasting and retransmitting by satellite; and 5) making the
work available to the public by wire or wireless means in such a way that
members of the public may access these works from a place and time
individually chosen by them. The fifth is known as the limited right of
"making the work available" to the public the coverage of which have been
sufficiently discussed above.

Broadcasting has been defined by RA 10372 (which was lifted from the
WPPT) 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. 2 1 The last
phrase should be interpreted as retransmitting by satellite under the fourth
enumeration.

Our law does not define rebroadcasting but Article 3(g) of the Rome
Convention defines "rebroadcasting" as the "simultaneous broadcasting by

16
E ntitl e d: " A N ACT AMENDING CElrl /\ iN P RUVIS J()NS UF R EPLJ[3 1..J C ACT No. 8293. OTIII.-.RWISE K NOWN ,\S
TIIF I NT EI.L.ECflJ/\ 1. P ROPERTY Corn: OF TII[ Pi II l.ll'PIN[S , 28
A ND FOi( OTIIER P URPOSES." A ppro v e d:
Febru ary 20 13.
17
WCT Notifi cati on No. 38, Accession by the Repub li c of the Ph ilipp ines", 04 July 2002, ava il able at
https://www. wipo.int/treaties/en/n0t ifi cati ons/wct/treaty__wct__38. htm I, (last accessed 2 1 February
2023).
18
WCT Notification No. 37, Access ion by the Republi c of the Philippines", 04 July 2002, avail able at
https://www. wipo.int/treaties/en/not ifica rions/wct/treaty_ wct_3 7.html, (last accessed 2 1 February
2023).
19
Sec. 32, RA 10372.
20
See Ponencia, p. 23
21
Sec . 202. 7 of the IPC (as amend ed).
 Separate Concurring Opinion 9 G.R. No. 188933

one broadcasting organization of the broadcast of another broadcasting

organization." We acceded to the Rome Convention on 25 June 1984. 22
Likewise, the Rome Convention is integrated in the WPPT. Rebroadcasting
under the Rome Convention is limited to over-the-air transmissions.

Retransmitting by cable or cable retransmission is the communication

to the public by wire of a broadcast by an organization other than the
original one. 23 Cable-originated transmissions or cablecasting is not
specifically enumerated but some states accord them protection the same
way as broadcasting. 24

Following a rundown of these definitions, how this impacts the Court's

ruling in the Anrey case is completely negligible. Radio-over-loudspeakers,
for obvious reasons, does not amount to broadcasting, rebroadcasting,
retransmission by satellite. Neither does it amount to retransmission by
cable. Although it uses cable wires, it does not amount to cable
retransmission. Besides, the Berne Convention sees this as a separate and
distinct act, apart from broadcasting, and rebroadcasting. 25

From the foregoing disquisitions, I humbly submit my vote to DENY

the Petition.

Cl:HTIFH:O l RUE co 1 y
~ lqc,~
SC Chie f Jud1c 1al St;:iff Office r
Of fic e of t he Cler k of Cour t
Suprem e Cou r t of the Phi l1pp1nes

22
WIPO-Administered Treaties, " Contracting Parties > Rome Convention", avai lable at
https: // www.wipo.int/wipolex/enitreaties/ShowResults?search __what= C&treaty_ id= 17, (last accessed 21
February 202J).
23
Article I Ibis (l)(ii) of the Berne Convention.
24
See note 12, WIPO Standing Committee on Copyright and Related Rights, " Protection of Broadcasting
Organizations: Terms and Concenpts,". 8 th session, Gen e va, 04 to 08 November 2022.
25
See Article 11 bis, Berne Convention .
G.R. No. 188933- PHILIPPINE HOME CABLE HOLDINGS, INC.,
Petitioner, v. FILIPINO SOCIETY OF COMPOSERS, AUTHORS AND
PUBLISHERS, INC., Respondent.

Promulgated:
February 21, 2023
x--------------------------------------------------- ·---x

CONCURRING OPINION

SINGH, J.:

I concur with the ponencia 's findings that Philippine Home Cable
Holdings, Inc. (Home Cable) is guilty of copyright infringement. In arriving
at this conclusion, the Senior Associate Justice, Hon. Marvic Mario Victor F.
Leonen, aptly distinguished the provisions of Republic Act No. 8293 or the
Intellectual Property Code (IP Code) on "public performance" and
"communication to the public" to determine the existence of infringement.
Nonetheless, I wish to add to the discussions of these issues, in defining the
economic right transgressed by Home Cable.

Copyright infringement is committed by any person who shall use

original literary or artistic works, or derivative works, without the copyright
owner's consent in such a manner as to violate the latter's copyright or
economic rights. 1 Sec. 177 of the IP Code enumerates these as follows:

SECTION 177. Copyright or Economic Rights. - Subject to the

provisions of Chapter VIII , copyright or economic rights shall consist of the
exclusive right to cany out, authori ze 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;

Olai10 v. Lim Eng Co, G.R. No. 195 835, 14 March 2016.
Concurring Opinion 2 G.R. No. 188933

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 a copy of the work;

177.6. Public performance of the work ; and

177.7. Other communication to the public of the work. (Sec. 5, P.D. No.
49a)

I submit that it is important to identify the specific economic right

violated in this case, to properly narrow down the legal and jurisprudential
bases for our findings.

Distinction between public

performance and communication to
the public

In my separate and concurring opm1on in Filipino Society of

Composers, Authors and Publishers, inc. v. Anrey, inc. ,2 I explained that the
key distinction between "public performance" and "communication to the
public" lies in the method that the copyrighted work is made available to the
public.

Section 171.6 of the IP Code defines "public performance," "in the case
of a sound recording," as "making the recorded sounds audible at a place
or at places where persons outside the normal circle of a family and that
family's closest social acquaintances are or can be present, irrespective of
whether they are or can be present at the same place and at the same time, or
at different places and/or at different times, and where the performance can
be perceived without the need for communication within the meaning of
Subsection 171.3."

Under Section 171.3 of the IP Code, "communication to the public" or

"communicate to the public" refers to "the making of a work available to the
public by wire or wireless means in such a way that members of the public
may access these works from a place and time individually chosen by them."
Section 202.9 of the IP Code fu11her defines "communication to the public of
a performance or a sound recording" as "the transmission· to the public, by

G.R. No. 233918 , August 9, 2022.

Concurring Opinion 3 G.R. No. 188933

any medium, otherwise than by broadcasting, of sounds of a performance

or the representations of sounds fixed in a sound recording."

The ponencia explained that pursuant to Section 177 of the IP Code,

Home Cable is liable for copyright infringement under Section 171.3 having
cablecasted the copyrighted materials of Filipino Society of Composers,
Authors And Publishers, Inc (Filscap) via "communication to the public."
Home Cable's act of "allegedly cablecasting the karaoke channels cannot be
considered an exercise of the public performance right over the subject
musical compositions. Concededly, the works were performed by means of
certain processes, and because the musical compositions were fixed in sound
recordings in a videoke format, they were made audible "at a place or at places
where persons outside the normal circle of a family and that family's closest
social acquaintances are or can be present, irrespective of whether they are or
can be present at the same place and at the same time, or at different places
and/or at different times." 3 The ponencia reasons that these "performances"
fall within the scope of Subsection 171.3, and not under Subsection 171 .6.

I agree.

Here, Home Cable broadcasted the copyrighted musical compositions

to its customers through its two cable channels, or through wire or wireless
means . Clearly, this act falls squarely within the definition of Section 171.3
of the IP Code on "communication to the public." This method of making
music available to the public cannot constitute "public performance" since
Section 171.6 specifies that the public performance of a sound recording must
be perceived "without the need for communication within the meaning of
Subsection 171.3 ." This is because the definition of public performance under
Section 171.6 excludes communication to the pub! ic under Section l 71 .3.
Cablecasting through its karaoke channels, considered as premium channels
and not mere free-to-air TV signals, is not the "public performance"
contemplated by the IP Code.

This is in accord with the Berne Convention for the Protection of

Literary and Artistic Works, to which the Philippines is a party, 4 and its
accompanying Guide which separates the concept of public performance and
broadcasting, that is, communication to the public.

Let me underscore that while the Court may take guidance from foreign
courts in developing local jurisprudence, it is always vigilant in applying any
such learnings to properly fit our domestic laws. In this case, by the fact that
our IP Code specifically distinguishes the economic right of "public

Decision, p. 23.
See Treaties, https://www. ipoph iI.gov .ph/re ference/phi Iippin e-acceded-intel lectual-property-
treaties/.
Concurring Opinion 4 G.R. No. 188933

performance" and "other communication to the public," we must be careful to

maintain these distinctions.

Thus, I concur with the ponencia's finding that Philippine Home Cable
Holdings, Inc. is liable for copyright infringement against the Filipino Society
of Composers, Authors and Publishers, Inc., and I vote to DENY the Petition.

-Rr FILOMENA
,,- / /' Associate Justice

v/

CERTIFIED TRUE COPY

SC Chief Jud1c 1al Staff Office r

Offic e of the Clerk of Court
Supreme Court of the Pl ilippines