MICROSOFT CORPORATION, PETITIONER, VS. ROLANDO D. MANANSALA AND/OR MEL MANANSALA, DOING BUSINESS AS DATAMAN TRADING COMPANY AND/OR COMIC ALLEY, RESPONDENT.

Microsoft versus Manansala

The Case

This is a petition for review on certiorari brought by Microsoft Corporation against Rolando Manansala and Mel Manansala, who do business as Dataman Trading Company and Comic Alley. Microsoft asked the Supreme Court to reverse the Court of Appeals, which had affirmed the Department of Justice in dismissing Microsoft's criminal complaint for copyright infringement under the old Decree on Intellectual Property. The case matters because it settles a question of statutory construction every bar candidate should know: does the crime of copyright infringement require proof that the accused himself printed or copied the protected work, or is the mere unauthorized sale of pirated copies enough? The Court answers that question and, in doing so, teaches how the conjunctive word "and" in a statute may be read as "or" to avoid an absurd result.

Procedural History

Microsoft filed an affidavit-complaint with the Department of Justice for violation of Section 29 of the Decree on Intellectual Property. The State Prosecutor dismissed the charge for lack of evidence, reasoning that there was no proof that the respondent himself printed or copied the software for sale, and recommended instead a charge under the Revised Penal Code. Microsoft moved for partial reconsideration, arguing that printing or copying is not essential to the crime. The prosecutor denied the motion, and the Department of Justice, on petition for review, likewise denied Microsoft's appeal.

Microsoft then went to the Court of Appeals on certiorari, alleging grave abuse of discretion amounting to lack or excess of jurisdiction. The Court of Appeals denied the petition and affirmed the orders of the Department of Justice. Microsoft moved for reconsideration, which was also denied. Microsoft then elevated the matter to the Supreme Court by petition for review on certiorari.

Facts

Microsoft is the copyright and trademark owner of all rights relating to its software, including its various programs and their user guides and manuals. Rolando Manansala, doing business as Dataman Trading Company and Comic Alley, was engaged, without authority from Microsoft, in distributing and selling Microsoft computer software programs.

On November 3, 1997, a private investigator accompanied by an agent of the National Bureau of Investigation made a test purchase of six CD-ROMs containing Microsoft programs from the respondent's premises. On the strength of that test purchase, the agent applied for a search warrant. The warrant was issued on November 17, 1997, and served on the respondent's premises on November 19, 1997, yielding several illegal copies of Microsoft programs.

Microsoft then filed its affidavit-complaint with the Department of Justice. The State Prosecutor dismissed the charge, finding that while the respondent was selling Microsoft software bearing Microsoft's copyrights and trademarks, there was no proof that the respondent was the one who actually printed or copied the products for sale. That dismissal, affirmed by the Department of Justice and by the Court of Appeals, gave rise to this appeal.

Issues

• Whether or not the Court of Appeals erred in holding that all the acts enumerated in Section 5 of the Decree on Intellectual Property must be present and proven before a person may be held liable for copyright infringement.
• Whether or not the mere selling of pirated computer software, without proof that the seller printed or copied it, constitutes copyright infringement and supplies probable cause to charge the offender.
• Whether or not the Department of Justice committed grave abuse of discretion in dismissing the criminal charge for copyright infringement.

Applicable Provisions

Section 5 of the Decree on Intellectual Property defines copyright as an exclusive right, and it is the provision the Court construes:

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; it not reproduced in copies for sale, to sell any manuscript or any record whatsoever thereof; (D) To make any other use or disposition of the work consistent with the laws of the land.

This provision bears on the case because the Court holds that the performance of any one of these acts without the owner's consent is already infringement, so the sale of pirated copies suffices.

Section 2 of the same Decree enumerates the classes of protected works, and it matters because it shows that computer programs are among them:

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 encyclopedic 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; (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, illustration, advertising copies, labels, tags, and box wraps; (P) Dramatization, 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) Collection 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 bears on the case because the Court uses it to expose the absurdity of the Court of Appeals' reading, since a computer program cannot be photographed or photo-engraved as a condition of infringement.

Ruling

On the first issue, the Court holds that the Court of Appeals erred. It is true that the conjunctive word "and" denotes a joinder or union, unlike the disjunctive "or" which signals independence. But a more important rule of statutory construction dictates that laws should be construed in a manner that avoids absurdity or unreasonableness. The Court quotes its own teaching:

Nothing is better settled then that courts are not to give words a meaning which would lead to absurd or unreasonable consequence.

Thus, the conjunctive "and" should not be taken in its ordinary acceptation, but should be construed like the disjunctive "or" if the literal interpretation would pervert or obscure the legislative intent. To require that every act in Section 5(a) be present would mean that a computer program must first be photographed, photo-engraved, or pictorially illustrated before infringement could be committed, which invites ridicule and defies logic and common sense.

On the second issue, the Court holds that the mere sale of illicit copies is enough. The gravamen of copyright infringement is not merely the unauthorized manufacture of intellectual works but rather the unauthorized performance of any of the acts covered by Section 5. As the Court puts it, infringement is a trespass on a private domain owned and occupied by the owner of the copyright. Any person who performs any of the acts under Section 5 without the owner's prior consent renders himself civilly and criminally liable. The sale of the pirated software by itself showed probable cause; there was no need to prove who copied or reproduced the programs.

On the third issue, the Court holds that the Department of Justice committed grave abuse of discretion. While the determination of probable cause by the public prosecutor is generally not subject to judicial scrutiny because it is an executive function, an exception lies when the determination is tainted with grave abuse of discretion. Here the prosecutor and the Department of Justice acted whimsically and arbitrarily in disregarding the settled rules on probable cause, flagrantly ignoring acts sufficient to engender a well-founded belief that the crime had been committed and that the respondent was probably guilty.

Doctrine

Copyright infringement is committed by the unauthorized performance of any of the acts enumerated in Section 5 of the Decree on Intellectual Property, not by all of them together. The gravamen is the unauthorized doing of any single act, so the mere sale of pirated copies, without proof that the seller printed or copied them, is sufficient to constitute infringement and to establish probable cause. The conjunctive "and" in a statute may be read as the disjunctive "or" when a literal reading would produce an absurd or unreasonable result, for it is a cardinal rule that statutes must be construed to avoid absurdity. Finally, the prosecutor's finding of probable cause is generally beyond judicial review, but grave abuse of discretion is the recognized exception.

Disposition

The Supreme Court granted Microsoft's petition, reversed and set aside the decision of the Court of Appeals, directed the Department of Justice to render the proper resolution charging the respondents in accordance with the decision, and ordered the respondents to pay the costs of suit.

Remember This

Memorize this line: the gravamen of copyright infringement is the unauthorized performance of any of the acts under Section 5, so sale alone of pirated software is infringement. Examiners use this case to test statutory construction, specifically when the conjunctive "and" may be read as "or" to avoid an absurd result, and to test the exception to the non-reviewability of the prosecutor's finding of probable cause.