Title
Microsoft Corp. vs. Masala
Case
G.R. No. 166391
Decision Date
Oct 21, 2015
Microsoft sued Rolando Manansala for selling pirated software. Courts initially dismissed the case, but the Supreme Court ruled that unauthorized sale alone constitutes copyright infringement, reversing prior decisions.
copyright infringement
pirated copies
criminal charge

Case Summary (G.R. No. 166391)

Factual Background

Microsoft Corporation owned copyrights and trademarks in various computer programs and their manuals, including Windows, Word, Excel, and other named software. Rolando D. Manansala, doing business as DATAMAN TRADING COMPANY and/or COMIC ALLEY, sold computer software at premises in University Mall Building, Taft Avenue, Manila. A private investigator and an NBI agent purchased six CD-ROMs from the respondent during a test-purchase on November 3, 1997. The NBI agent applied for a search warrant based on that purchase. The search warrant issued November 17, 1997, was executed on November 19, 1997, and yielded several unauthorized copies of Microsoft programs. Microsoft Corporation filed an Affidavit-Complaint with the Department of Justice based on the seizure.

Proceedings Before the Department of Justice

A public prosecutor in the Department of Justice recommended dismissal of the charge for violation of Section 29, P.D. 49 in a resolution dated March 20, 2000, stating that while the records showed the respondent sold Microsoft software bearing the complainant's copyrights and trademarks, there was no proof the respondent printed or copied the products; the prosecutor recommended charging the respondent for violation of Article 189 of the Revised Penal Code instead. Microsoft Corporation filed a Motion for Partial Reconsideration arguing that printing or copying was not essential to a charge for copyright infringement. The public prosecutor denied that motion on May 15, 2001. The DOJ later denied the petition for review filed by the petitioner on January 27, 2003, effectively sustaining dismissal of the copyright infringement charge.

Proceedings in the Court of Appeals

Dissatisfied, Microsoft Corporation sought certiorari relief in the Court of Appeals to annul the DOJ orders for grave abuse of discretion. The Court of Appeals dismissed the petition and affirmed the DOJ resolutions by decision promulgated February 27, 2004, holding that the acts enumerated in Section 5(a) of P.D. 49 were joined by the conjunctive "and" and therefore, to establish liability, all enumerated acts—including printing, copying, multiplying, selling, and making photographs or pictorial illustrations—must be shown. The Court of Appeals concluded that the petitioner failed to prove that the respondent did the copying or reproduction and that sale alone of pirated copies did not constitute actionable copyright infringement under P.D. 49. A motion for reconsideration was denied on December 6, 2004.

Issue Presented

Whether the DOJ and the Court of Appeals gravely abused their discretion in dismissing the copyright infringement charge under Section 29, Presidential Decree No. 49 on the ground that the petitioner did not prove the respondent engaged in printing, copying, or reproducing the software, given that the respondent sold illicit copies.

Petitioner's Contentions

Microsoft Corporation contended that the literal requirement of printing or copying was not essential to the crime of copyright infringement under Section 29, P.D. 49. The petitioner argued that the acts enumerated in Section 5 are independent and that the mere selling of pirated computer software constitutes an infringement actionable under P.D. 49. The petitioner further maintained that the DOJ's dismissal for lack of evidence ignored established jurisprudence on what constitutes the gravamen of copyright infringement.

Respondent and DOJ Position as Adopted Below

The public prosecutor and the Court of Appeals relied on a literal reading of the conjunctive "and" in Section 5(a) and concluded that liability required proof of all enumerated acts, including copying or reproducing. They therefore found the evidence insufficient to support a charge of copyright infringement where the petitioner had not established that the respondent physically copied or reproduced the software, reasoning that sale alone of pirated copies did not meet the statutory threshold.

Ruling of the Supreme Court

The Supreme Court granted the petition for review on certiorari. The Court held that the DOJ committed grave abuse of discretion in dismissing the charge for lack of evidence. The Court reversed and set aside the Court of Appeals decision dated February 27, 2004, and directed the Department of Justice to render the proper resolution to charge the respondent Rolando D. Manansala and/or Mel Manansala, doing business as DATAMAN TRADING COMPANY and/or COMIC ALLEY in accordance with the Supreme Court's decision. The Court also ordered the respondents to pay the costs of suit.

Legal Basis and Reasoning

The Court reiterated the general rule that the prosecutor's determination of probable cause is an executive function not ordinarily subject to judicial review but recognized the exception when the determination is tainted with grave abuse of discretion, citing Aguilar v. Department of Justice, G.R. No. 197522, September 11, 2013. The Court examined Section 5 of P.D. 49, which defines copyright as an exclusive right to perform acts that include "to print, reprint, publish, copy, distribute, multiply, sell, and make photographs, photo-engravings, and pictorial illustrations of the works." The Court found settled jurisprudence in Columbia Pictures, Inc. v. Court of Appeals, G.R. No. 110318, August 28, 1996, and NBI-Microsoft Corporation v. Hwang, G.R. No. 147043, June 21, 2005, that the gravamen of copyright infringement is the unauthorized performance of any of the acts covered by Section 5, not merely the unauthorized manufacturing of intellectual works. Applying those principles, the Court concluded that any person who performs any of the acts under Section 5 without the copyright owner's prior consent renders himself civilly and criminally liable. The Court rejected the Court of Appeals' strict conjunctive reading of "and" in Section 5(a). It invoked rules of statutory construction that avoid absurd or unreasonable results and held that the conjunctive "and" must be construed like the disjunctive "or" when a literal reading would pervert legislative intent or yield absurdity. The Court observed that a literal construction would require photography or pictorial illustration of computer programs to establish infringement, which would be absurd and inconsistent with the legislative purpose of protecting classes o

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