COSAC, Inc. vs. Filipino Society of Composers, Authors and Publishers, Inc.

A person who allows the public performance of copyrighted musical works in a commercial establishment without the copyright owner's or assignee's authorization commits copyright infringement, and the assignee's right to enforce such copyright is not contingent upon the registration or publication of the deed of assignment in the IPO Gazette.

FILSCAP, a non-stock corporation and collective management organization, is authorized by local and foreign copyright owners through deeds of assignment and reciprocal representation agreements to enforce their performing rights. COSAC owned and operated Off the Grill Bar and Restaurant in Quezon City. FILSCAP's monitors discovered that on February 3, 2005, and January 13, 2006, the establishment played copyrighted musical works from FILSCAP's repertoire via a live band and as background music without securing the required public performance license. Despite demand letters, COSAC refused to comply, prompting FILSCAP to file a complaint for infringement and damages.

• Nature of the Parties: FILSCAP is a non-stock, non-profit society of composers, authors, and publishers authorized to enforce performing rights. COSAC is a corporation owning Off the Grill Bar and Restaurant.
• The Infringing Acts: On February 3, 2005, and January 13, 2006, FILSCAP's agent monitored Off the Grill and documented the live performance and mechanical playing of 25 copyrighted musical works under FILSCAP's repertoire.
• COSAC's Defense: COSAC argued that FILSCAP lacked standing as a real party-in-interest because the deeds of assignment were not published in the IPO Gazette as allegedly required by Section 182 of the Intellectual Property Code (IPC). It also claimed the bands controlled the song selection and that music played publicly becomes public property.
• FILSCAP's Evidence: FILSCAP presented deeds of assignment from local composers, reciprocal representation agreements with foreign societies, certifications from the National Library and ICSAC, and the Fiche Internationale database listing the works.
• Lower Court Findings: Both the RTC and CA found that FILSCAP had valid authority through the assignments and that publication in the IPO Gazette was not mandatory. They held COSAC liable for infringement.

• Necessity of Publication: COSAC argued that Section 182 of the IPC requires publication in the IPO Gazette of the deed of assignment to inform the public of FILSCAP's authority to collect royalties, and failure to do so renders the assignment void against third parties.
• Defective Authority: COSAC maintained that FILSCAP's authority as assignee was vague and unsupported by evidence.
• Lack of Control: COSAC contended it had no control over the songs performed by the live bands and should not be held liable.
• Damages and Counterclaim: COSAC asserted that the damages and attorney's fees awarded were baseless and excessive, and that its counterclaim for being unnecessarily dragged into litigation should have been granted.

• Permissive Filing: FILSCAP countered that the use of "may" in Section 182 of the IPC makes filing with the National Library discretionary, not mandatory. Publication is only required if filing is done.
• Copyright Protection from Creation: FILSCAP argued that under the IPC and the Berne Convention, copyright subsists from the moment of creation, and registration is for record purposes only, not a condition for enforcement.
• Real Party-in-Interest: FILSCAP asserted that as the assignee of the copyright owners' performing rights, it is entitled to all rights and remedies, including the right to sue for infringement.
• Infringement Established: FILSCAP maintained that COSAC's acts of publicly performing copyrighted works without a license constitute infringement, and COSAC, as the establishment owner, is liable.

• Validity of Assignment and Standing: Whether FILSCAP, as assignee, is a real party-in-interest entitled to sue for infringement despite the non-publication of the deeds of assignment in the IPO Gazette.
• Commission of Infringement: Whether COSAC committed copyright infringement by publicly performing copyrighted musical works without FILSCAP's license.
• Award of Damages: Whether the award of actual damages for unpaid license fees/royalties was proper, and what damages, if any, should be awarded.

• Validity of Assignment and Standing: The filing of a deed of assignment with the National Library under Section 182 of the IPC is permissive, not mandatory. Non-publication in the IPO Gazette does not invalidate the assignment or preclude the assignee from enforcing the copyright. FILSCAP, as the recorded assignee, is a real party-in-interest.
• Commission of Infringement: COSAC committed copyright infringement. The elements were met: (1) valid copyright over the musical works, and (2) infringement by COSAC. COSAC, as the establishment owner, allowed the public performance of copyrighted works without a license, constituting both direct infringement (playing sound recordings) and vicarious infringement (profiting from the live bands' performances). The acts did not fall under the limitations on copyright or fair use.
• Award of Damages: The award of actual damages (P317,050.00) for unpaid license fees was deleted because FILSCAP failed to prove the actual amount of loss with reasonable certainty. However, in lieu of actual damages, the Court awarded temperate damages of P300,000.00 pursuant to Section 216.1(b) of the IPC, as some pecuniary loss was evident but unquantifiable.

• Copyright Protection from Creation — Copyright over original literary and artistic works, including musical compositions, subsists from the moment of their creation and is not subject to any formality such as registration or publication for its enjoyment and exercise, in accordance with the Berne Convention and Sections 172 and 178 of the IPC.
• Discretionary Registration of Assignment — The filing of a duplicate of a copyright assignment or exclusive license with the National Library under Section 182 of the IPC is permissive ("may"), not mandatory. Its purpose is for recording and notice, and failure to file does not invalidate the assignment or preclude the assignee from enforcing rights.
• Primary and Secondary Copyright Infringement — While the IPC prior to RA 10372 did not expressly categorize infringers, the phrase "any person infringing" is broad enough to include both those who directly commit infringing acts (primary) and those who benefit from, induce, or materially contribute to infringement by another (secondary). Vicarious liability may attach where the defendant has the right and ability to supervise the infringing activity and a direct financial interest therein.
• Temperate Damages in Lieu of Unproven Actual Damages — Where some pecuniary loss is evident but the exact amount cannot be proven with certainty, temperate (or "just" damages under the IPC) may be awarded. The amount must be reasonable and based on the circumstances of the case.

• "The filing of a duplicate copy of the deed of assignment or the reciprocal representation agreement with the National Library is not required. Instead, filing a duplicate copy of the deed or agreement with the National Library is discretionary on the part of either the author or the assignee." — This clarifies the non-mandatory nature of registration for copyright assignments.
• "COSAC is a primary infringer, and also a secondary infringer under the concept of vicarious infringement. This is because as owner of Off the Grill, it allowed the commission of infringing acts when it permitted musical artists or bands to perform copyrighted music... and played sound recordings as background music... without first procuring a license." — This establishes the dual basis for the establishment owner's liability.
• "Even if it failed to substantiate its entitlement to actual damages, according to RA 8293... FILSCAP can still claim some form of compensation... 'in lieu of actual damages and profits, such damages which to the court shall appear to be just'... For this Court, 'just damages' is a form of compensation akin to temperate damages." — This links the statutory provision for "just damages" to the Civil Code concept of temperate damages.

• FILSCAP v. Tan, 232 Phil. 426 (1987) — Distinguished. The Court noted that Tan was decided under old copyright laws requiring registration, which led to the works entering the public domain. The ruling is inapplicable under the current IPC, which protects works from creation.
• NBI-Microsoft Corporation v. Hwang, 499 Phil. 423 (2005) — Cited for the principle that the gravamen of copyright infringement is the unauthorized performance of any of the exclusive economic rights under the IPC.
• ABS-CBN Corporation v. Gozon, 755 Phil. 709 (2015) — Cited for the four-factor test to determine fair use of a copyrighted work under Section 185 of the IPC.
• Nacar v. Gallery Frames, 716 Phil. 267 (2013) — Applied for the computation of legal interest on monetary awards.

• Section 177, Republic Act No. 8293 (Intellectual Property Code) — Defines the exclusive economic rights of a copyright owner, including the right to authorize or prevent the public performance of the work. This was the basis for finding that COSAC's unauthorized performance constituted infringement.
• Section 182, Republic Act No. 8293 (Intellectual Property Code) — Provides that an assignment or exclusive license may be filed with the National Library. The Court interpreted the word "may" as permissive, ruling that registration is not a prerequisite for the assignee's right to sue for infringement.
• Section 216.1(b), Republic Act No. 8293 (Intellectual Property Code) — Allows the court to award, in lieu of actual damages and profits, "such damages which to the court shall appear to be just." This was the statutory basis for awarding temperate damages.
• Sections 184 & 185, Republic Act No. 8293 (Intellectual Property Code) — Enumerate the limitations on copyright and the fair use doctrine. The Court held that COSAC's commercial use of the music did not fall under any of these exceptions.

Gesmundo, C.J., Gaerlan, Rosario, J. Lopez, Dimaampao, Marquez, Kho, Jr., and Singh, JJ., concur. Leonen, SAJ., Caguioa, and Zalameda, JJ., see separate concurring opinion. Lazaro-Javier, J., please see concurrence. Inting and M. Lopez,* JJ., no part.

• Leonen, SAJ. — In his Separate Concurring Opinion, he emphasized the distinction between the copyright in a musical composition and the rights in a sound recording (fixation). He cautioned against automatically imposing solidary liability on an establishment for the acts of independent live bands, noting that the expanded liability for infringement was only introduced by RA 10372, which was not applicable to this case.
• Caguioa, J. — In his Separate Concurring Opinion, he provided an extensive analysis of the fair use doctrine and the factors for determining "just damages." He agreed that temperate damages were proper and suggested using the factors for statutory damages under the amended Section 216 of the IPC as a guide for quantification.
• Zalameda, J. — Issued a Separate Concurring Opinion, the details of which are not summarized in the main decision.