Filipino Society of Composers and Publishers vs. Wolfpac Communications, Inc.

The act of providing a "pre-listening function" for copyrighted song samples on a commercial website constitutes "communication to the public" under the Intellectual Property Code, as it makes the work available for public access at a time and place of the user's choosing. However, such use qualifies as fair use, as it serves a transformative, informational purpose for consumer decision-making and does not act as a market substitute for the copyrighted work.

Filipino Society of Composers and Publishers (FILSCAP), a collective management organization, holds the exclusive public performance and communication rights to a repertoire of musical works. Wolfpac Communications, Inc. (Wolfpac) aggregates and distributes mobile content, including ringback tones, for telecom operators. Wolfpac entered into memoranda of agreement with certain composers, members of FILSCAP, to convert their musical works into downloadable ringtones. On its website, Wolfpac provided a "pre-listening function" allowing potential customers to listen to a 20-second sample of a ringtone before downloading. FILSCAP demanded licensing fees and royalties, alleging this constituted a public performance. Wolfpac refused, leading to a complaint for copyright infringement and damages.

• Nature of Parties: FILSCAP is a collective management organization and assignee of copyright owners, authorized to enforce public performance and communication rights. Wolfpac is a content aggregator that markets and distributes mobile applications and ringtones.
• The Agreements: Wolfpac entered into memoranda of agreement with composers (FILSCAP members) to "convert the Content into a form which can be downloaded through Caller Ring Tune Service, and to offer and sell the same to the general public." The agreements expressly reserved all rights not granted.
• The Pre-Listening Function: Wolfpac operated a website where potential consumers could listen to a 20-second sample of a ringback tone before downloading it. FILSCAP discovered this and demanded licensing fees, alleging it was a public performance.
• Wolfpac's Defense: Wolfpac argued the pre-listening function was not a public performance but a communication to the public, and that it was justified under the fair use doctrine and the agreements with the composers.
• RTC Ruling: The RTC found the pre-listening function constituted communication to the public, not public performance, and that it qualified as fair use. It dismissed the complaint.

• Public Performance: FILSCAP argued that Wolfpac's pre-listening function, by making copyrighted song samples audible to an unlimited number of people via the internet, constituted a public performance requiring a license and payment of royalties.
• Fair Use Inapplicable: FILSCAP contended the fair use doctrine did not apply because the pre-listening function served a purely commercial purpose (marketing) and had no legitimate public purpose.
• Scope of Agreement: FILSCAP maintained the memoranda of agreement only granted Wolfpac mechanical reproduction rights to create and sell ringtones, not the separate right to communicate the works to the public via a pre-listening function.

• Communication to the Public, Not Performance: Wolfpac countered that the pre-listening function was a communication to the public, as users could access the samples from a place and time of their choosing, and that this was distinct from public performance.
• Fair Use Defense: Wolfpac argued the use was fair because: (a) the samples had no independent commercial value; (b) the purpose was to allow consumers to make an informed purchase decision; and (c) it did not harm the market for the ringtones.
• Authority from Agreements: Wolfpac asserted that the right "to offer and sell" the ringtones inherently included the right to market them via a pre-listening function.

• Nature of the Right: Whether the act of providing a pre-listening function for copyrighted song samples on a website constitutes "public performance" or "communication to the public" under the Intellectual Property Code.
• Copyright Infringement & Fair Use: Whether Wolfpac's use of the samples without a specific license constitutes copyright infringement, or whether it is justified under the fair use doctrine.

• Nature of the Right: The pre-listening function constitutes communication to the public, not public performance. The act of making the samples available on a website fulfills the first element of "making the work available to the public." The public's ability to access the samples at a time and place of their individual choosing fulfills the second element. Wolfpac's role ended at providing the means of access; the actual performance (making the sound audible) was done privately by the individual user.
• Copyright Infringement & Fair Use: Wolfpac violated the composers' exclusive communication to the public right because the memoranda of agreement only authorized reproduction and sale of ringtones, not their free public sampling. The general clause "to offer and sell" did not impliedly include this separate right, especially given the express reservation of all other rights. However, the infringement claim fails because the use qualifies as fair use. Applying the four-factor test: (1) The purpose was transformative and informational (consumer protection), not purely commercial; (2) The nature of the work was creative, weighing against fair use; (3) The 20-second portion, while substantial, was reasonable for the informational purpose; (4) The use did not harm the potential market, as the sample could not substitute for the full ringtone. On balance, the factors favor fair use.

• Communication to the Public vs. Public Performance — Under the IP Code, these are separate rights. Communication to the public involves making a work available by wire or wireless means for public access at a time and place of the user's choosing. Public performance involves reciting, playing, or making a work audible at a place where persons outside a normal family circle can be present. The test focuses on who is capable of receiving/perceiving the work and the means of access.
• Fair Use Doctrine — The use of a copyrighted work without permission may not be infringement if it is for purposes such as criticism, comment, news reporting, teaching, scholarship, or research. Courts consider four non-exclusive factors: (1) purpose and character of the use (including whether it is transformative); (2) nature of the copyrighted work; (3) amount and substantiality of the portion used; (4) effect upon the potential market. A finding of commercial use does not automatically preclude fair use.

• "The pre-listening function provides potential consumers with comprehensive information on the ringback tones. It can confirm the title of the work, its artist or composer." — Illustrates the transformative, informational purpose central to the fair use finding.
• "What is prohibited is a public performance, not performance per se." — Clarifies the distinction between the infringing act (public performance) and a private act by an individual.
• "The agreement presupposes that the public can only hear the composers' musical works after purchasing the ringtones. It did not sanction the use of ringtones in the pre-listening function for marketing or advertising purposes." — Explains why the agreements did not cover the infringing act.

• FILSCAP v. Anrey, 927 Phil. 577 (2022) — Applied to distinguish public performance (playing radio broadcasts over loudspeakers in a restaurant) from communication to the public. Also used to apply the fair use factors to music.
• Philippine Home Cable Holdings, Inc. v. FILSCAP, G.R. No. 188933, February 21, 2023 — Controlling precedent for the test distinguishing communication to the public (cablecasting karaoke channels) from public performance.
• FILSCAP v. COSAC, G.R. No. 222537, February 28, 2023 — Cited for the principle that playing sound recordings in a commercial establishment constitutes public performance.
• ABS-CBN Corporation v. Gozon, 755 Phil. 709 (2015) — Relied upon for the framework of the fair use doctrine and the transformative use test.

• Section 171.3, Intellectual Property Code — Defines "communication to the public" as making a work available by wire or wireless means for public access at a time and place of their choosing.
• Section 171.6, Intellectual Property Code — Defines "public performance" as the recitation, playing, or making of a work audible at a place where the public can be present.
• Section 177, Intellectual Property Code — Enumerates the copyright owner's exclusive economic rights, including public performance (177.6) and communication to the public (177.7).
• Section 185, Intellectual Property Code — Provides the fair use defense and the four-factor test for determining its applicability.
• Articles 1370, 1372, 1374, Civil Code — Cited for rules on contract interpretation, holding that the general grant "to offer and sell" could not be construed to include the distinct right of communication to the public via a pre-listening function.

Gesmundo, C.J., Inting, Gaerlan, Rosario, J. Lopez, Marquez, and Kho, Jr., JJ., concur. Leonen, SAJ. and Caguioa, JJ., see concurring opinion. Dimaampao, J., see separate concurring opinion.

• Lazaro-Javier, J. — Concurred with the finding that the pre-listening function was communication to the public and fair use, but dissented on the interpretation of the memoranda of agreement, opining that the right "to offer and sell" should be construed to include the pre-listening function as a necessary marketing tool.
• Zalameda and Singh, JJ. — Filed separate concurring and dissenting opinions, the details of which are not fully elaborated in the main decision text provided.