20TH CENTURY FOX FILM CORPORATION, PETITIONER, VS. COURT OF APPEALS, EDUARDO M. BARRETO, RAUL SAGULLO AND FORTUNE LEDESMA, RESPONDENTS.

20th Century Fox Film Corporation versus Court of Appeals

The Case

This is a petition brought by 20th Century Fox Film Corporation against the Court of Appeals and the owners of three video outlets, Eduardo Barreto, Raul Sagullo, and Fortune Ledesma. The petitioner asks the Supreme Court to reverse the lifting of three search warrants that the National Bureau of Investigation had obtained and used to raid the private respondents' establishments in connection with the government's anti-film piracy campaign. The case matters because it fixes the meaning of probable cause in the specific context of copyright piracy, and because it holds that the judge who issued a search warrant may, upon a later showing that he was misled, lift that warrant without committing grave abuse of discretion.

Procedural History

The National Bureau of Investigation filed three applications for search warrants against the video outlets of the private respondents. The applications were consolidated and heard by the Regional Trial Court of Makati, Branch 132, which issued the search warrants on September 4, 1985. After the raids, the private respondents moved to lift the warrants and to release the seized properties. The trial court granted the motion in an order dated October 8, 1985, lifting all three warrants and ordering the return of the seized articles. It denied the petitioner's motion for reconsideration on January 2, 1986.

The petitioner then filed a petition for certiorari with the Court of Appeals to annul those two orders. The Court of Appeals dismissed the petition. The petitioner came to the Supreme Court by petition for review, and the Court dismissed the petition and affirmed the Court of Appeals.

Facts

On August 26, 1985, 20th Century Fox, through counsel, sent a letter-complaint to the National Bureau of Investigation asking for assistance in the anti-film piracy campaign. The letter alleged that certain videotape outlets all over Metro Manila were engaged in the unauthorized sale and renting out of copyrighted films in videotape form, a violation of Presidential Decree Number 49, the Decree on the Protection of Intellectual Property.

The Bureau conducted surveillance and investigation of the outlets pinpointed by the petitioner, and then filed three applications for search warrants. The applications were heard by the Regional Trial Court of Makati, which issued the warrants on September 4, 1985. Armed with the warrants, Bureau agents accompanied by the petitioner's agents raided the outlets, seized the items described, and left an inventory with the private respondents.

On the private respondents' motion, the trial court lifted the warrants. It found that the Bureau's witnesses did not have personal knowledge of the alleged piracy, that the master tapes said to have been compared with the seized tapes were never shown to the court, and that one film named in a warrant, Cocoon, was not even registered or copyrighted in the Philippines. It also found that the raiding team had seized television sets, rewinders, and other ordinary video-store equipment that had nothing to do with piracy.

Issues

• Whether or not the trial court gravely abused its discretion in lifting the search warrants it had earlier issued upon a later finding that it had been misled on the existence of probable cause.
• Whether or not probable cause for a search warrant in a copyright piracy case requires the presentation to the judge of the master tapes or copyrighted films for comparison with the alleged pirated tapes.
• Whether or not the search warrants were general warrants for failing to describe with particularity the things to be seized.

Applicable Provisions

Section 2, Article III of the 1987 Constitution, which substantially reproduces Section 3, Article IV of the 1973 Constitution, provides:

The right of the people to be secure in their persons, houses, papers, and effects against unreasonable searches and seizures of whatever nature and for any purpose shall be inviolable, and no search warrant or warrant of arrest shall issue except upon probable cause to be determined personally by the judge after examination under oath or affirmation of the complainant and the witnesses he may produce, and particularly describing the place to be searched and the persons or things to be seized.

This is the provision whose requirements of probable cause, personal determination by the judge, and particular description govern the validity of the three warrants.

Ruling

On the first issue, the Court held that the trial court did not gravely abuse its discretion. The order finding probable cause is not final and does not constitute res judicata, so the judge may correct his own erroneous finding. Grave abuse of discretion means capricious and whimsical exercise of judgment equivalent to lack of jurisdiction, and the assailed orders were instead motivated by the rectification of an error that collided with constitutional rights.

On the second issue, the Court held that the master tapes had to be presented. Probable cause for a valid search was defined in Burgos as:

such facts and circumstances which would lead a reasonably discreet and prudent man to believe that an offense has been committed and that the objects sought in connection with the offense are in the place sought to be searched.

The Court stressed that the Constitution demands no less than personal knowledge by the complainant or his witnesses of the facts on which the warrant rests. Since the essence of copyright infringement is the similarity or substantial similarity of the pirated work to the copyrighted work, the applicant must show the copyrighted films to the judge so that the linkage between the two can be established. Mere allegations will not do, and the court cannot presume that copied tapes were reproduced from master tapes owned by the petitioner.

On the third issue, the Court held that the warrants were general warrants. They authorized seizure of television sets, video cassette recorders, rewinders, and tape cleaners, which are ordinary articles of a legitimate video rental business. Quoting Burgos, the Court noted that a warrant too general in its description is constitutionally objectionable, and it observed that the raid in fact swept in legitimate items.

Doctrine

First, probable cause for a search warrant means such facts and circumstances as would lead a reasonably discreet and prudent man to believe that an offense has been committed and that the objects sought are in the place to be searched. Second, the complainant and his witnesses must speak from personal knowledge of those facts. Third, in copyright piracy cases, probable cause requires that the copyrighted films or master tapes be presented to the judge for comparison with the alleged pirated copies, because infringement turns on similarity. Fourth, a warrant that describes the things to be seized so loosely as to reach articles of a legitimate business is a general warrant and is void under Section 2, Article III. Fifth, an order finding probable cause is interlocutory and not res judicata, so the issuing judge may lift the warrant upon discovering that he was misled.

Disposition

The petition was dismissed, and the decision and resolution of the Court of Appeals were affirmed, so the private respondents prevailed and the lifting of the search warrants stood.

Remember This

Memorize the line that in piracy cases the copyrighted work itself must be shown to the judge, for without it there is no probable cause. Examiners use this case to test probable cause, personal knowledge of witnesses, the general warrant doctrine, and the rule that a finding of probable cause is not res judicata.