Microsoft Corporation and Lotus Development Corporation vs. Maxicorp, Inc.

Probable cause for a search warrant requires facts and circumstances, based on the personal knowledge of the complainant and witnesses as examined under oath by the judge, that would lead a reasonably prudent man to believe an offense has been committed and that the objects sought are in the place to be searched; it does not require proof beyond reasonable doubt or conclusive evidence of sale. A search warrant that is partially defective in describing some items may be severed, with the sufficiently described items remaining valid and the defective portion cut off.

Petitioners Microsoft Corporation and Lotus Development Corporation are software copyright owners who initiated complaints against Maxicorp, Inc. for copyright infringement under Section 29 of Presidential Decree No. 49 and unfair competition under Article 189 of the Revised Penal Code. The offenses charged contemplate several overt acts, including copying, assembling, packaging, marketing, and offering for sale counterfeit products. The dispute concerns search warrants issued in connection with those alleged offenses.

On 25 July 1996, NBI Agent Dominador Samiano, Jr. filed several applications for search warrants in the RTC against Maxicorp for alleged violation of Section 29 of PD 49 and Article 189 of the RPC. After conducting a preliminary examination of the applicant and his witnesses, Judge William M. Bayhon issued Search Warrants Nos. 96-451, 96-452, 96-453 and 96-454, all dated 25 July 1996. Armed with the warrants, NBI agents conducted a search of Maxicorp’s premises on the same day and seized property fitting the description stated in the warrants.

On 2 September 1996, Maxicorp filed a motion to quash the search warrants, alleging that there was no probable cause for their issuance and that the warrants were in the form of “general warrants.” The RTC denied the motion on 22 January 1997 and also denied Maxicorp’s motion for reconsideration. The RTC found probable cause after examining NBI Agent Samiano, John Benedict Sacriz, and computer technician Felixberto Pante. The three testified on what they discovered during their respective visits to Maxicorp, and NBI Agent Samiano presented certifications from petitioners that they had not authorized Maxicorp to perform the witnessed activities using petitioners’ products.

During the preliminary examination, NBI Agent Samiano testified that he saw Maxicorp display and offer for sale counterfeit software in its premises; that he saw how the counterfeit software were produced and packaged within Maxicorp’s premises; and that he was certain the products were counterfeit because Maxicorp sold them to customers without the accompanying ownership manuals, license agreements, and certificates of authenticity. Sacriz testified that during his visits to Maxicorp, he witnessed several instances when Maxicorp installed petitioners’ software into computers it had assembled, and that he saw the sale of petitioners’ software within Maxicorp’s premises. Petitioners never authorized Maxicorp to install or sell their software. Pante, the computer technician, demonstrated to the judge the presence of petitioners’ software on the computer unit that NBI Agent Samiano had purchased, and a comparison was made between petitioners’ genuine software and Maxicorp’s software pre-installed in that computer unit.

On 24 July 1997, Maxicorp filed a petition for certiorari with the Court of Appeals seeking to set aside the RTC’s order. On 23 December 1998, the Court of Appeals reversed the RTC’s order denying Maxicorp’s motion to quash. The Court of Appeals held that NBI Agent Samiano failed to present during the preliminary examination conclusive evidence that Maxicorp produced or sold the counterfeit products, and pointed out that the sales receipt NBI Agent Samiano presented as evidence that he bought the products from Maxicorp was in the name of a certain “Joel Diaz.” The Court of Appeals also relied on Sacriz’s admission that he did not buy counterfeit goods from Maxicorp. Petitioners moved for reconsideration, but the Court of Appeals denied the motion on 29 November 1999. Hence, this petition.

• Questions of Law: Petitioners countered that all the issues they presented in the petition involve questions of law and pointed out that the facts are not in dispute.
• Legal Personality: Petitioners maintained that they have legal personality to file the petition; the general rule that the Office of the Solicitor General represents the People admits an exception, and Columbia Pictures Entertainment, Inc. vs. Court of Appeals allows a petitioner-complainant in a Rule 45 petition to argue its case in lieu of the Solicitor General where there is grave error by the lower court or lack of due process.
• Probable Cause: Petitioners argued that the Court of Appeals erred in reversing the RTC based on the fact that the sales receipt was not in NBI Agent Samiano’s name, and that the Court of Appeals disregarded the overwhelming evidence the RTC considered in determining probable cause.

• Questions of Law: Maxicorp assailed the petition as defective since it failed to raise questions of law; it insisted that the arguments petitioners presented are questions of fact, which the Supreme Court should not consider in a Rule 45 petition for review.
• Legal Personality: Maxicorp argued that petitioners have no legal personality to file the petition since the proper party to do so in a criminal case is the Office of the Solicitor General as representative of the People of the Philippines.
• Probable Cause: Maxicorp countered that the Court of Appeals did not err in reversing the RTC and maintained that the entire preliminary examination that the RTC conducted was defective.
• General Warrants: Maxicorp argued that the warrants issued against it are too broad in scope and lack the specificity required with respect to the objects to be seized.

• Questions of Law: Whether the petition raises questions of law.
• Legal Personality: Whether petitioners have legal personality to file the petition.
• Probable Cause: Whether there was probable cause to issue the search warrants.
• General Warrants: Whether the search warrants are “general warrants.”

• Questions of Law: Partly yes. The issues of legal personality and the nature of the warrants are questions of law; probable cause is a question of fact, but the Court may review it because the findings of the Court of Appeals conflict with those of the RTC.
• Legal Personality: Yes. A petitioner-complainant in a Rule 45 petition may argue its case in lieu of the Solicitor General where the lower court committed grave error or denied due process, as in Columbia Pictures Entertainment, Inc. vs. Court of Appeals.
• Probable Cause: Yes. The Court of Appeals erred in reversing the RTC; probable cause existed based on the personal testimonies and evidence showing acts of infringement and unfair competition, and probable cause does not require proof beyond reasonable doubt.
• General Warrants: No as to paragraph (e); yes as to paragraph (c). Paragraph (e) sufficiently identified the articles by their relation to the offense, but paragraph (c) was all-embracing and not limited to items connected to copyright infringement or unfair competition; a partially defective warrant is severable.

• Questions of Law: Rule 45 covers questions of law; questions of fact are not reviewable, and findings of fact of the Court of Appeals are final and conclusive subject to exceptions. A question of law exists when the doubt centers on what the law is on a certain state of facts and is capable of resolution without reviewing the probative value of evidence; a question of fact exists when the doubt centers on the truth or falsity of alleged facts or requires re-evaluation of credibility or relevance of circumstances. Of the three main issues, legal personality and the nature of the warrants are questions of law. Probable cause is a question of fact because its resolution requires inquiry into the probative value of the evidence presented before the RTC, including the TSNs and documentary evidence. Nevertheless, the Court could resolve it under the exception where the findings of the Court of Appeals conflict with those of the RTC.
• Legal Personality: The general rule is that the Office of the Solicitor General represents the People in criminal cases. Under Columbia Pictures Entertainment, Inc. vs. Court of Appeals, however, a petitioner-complainant in a Rule 45 petition may argue its case before the Court in lieu of the Solicitor General if the lower court committed grave error or there was lack of due process. This prevents a complainant who actively participated in the prosecution from becoming powerless to pursue a remedy due to circumstances beyond its control. The circumstances were sufficiently similar to warrant application of the doctrine.
• Probable Cause: Probable cause means such reasons, supported by facts and circumstances, as will warrant a cautious man in the belief that his action and the means taken in prosecuting it are legally just and proper. For a search warrant, it requires facts and circumstances that would lead a reasonably prudent man to believe that an offense has been committed and that the objects sought are in the place to be searched. The judge must personally examine under oath the complainant and witnesses; the oath must refer to the truth of facts within their personal knowledge; reliable information is insufficient; mere affidavits are not enough. The Court of Appeals reversed the RTC based on two findings: the sales receipt was in the name of “Joel Diaz,” and Sacriz admitted he did not buy counterfeit goods from Maxicorp. These did not negate probable cause. The offenses charged—copyright infringement under Section 29 of PD 49 and unfair competition under Article 189 of the RPC—contemplate several overt acts, and sale is only one. NBI Agent Samiano and Sacriz testified from personal knowledge that Maxicorp displayed and offered counterfeit software for sale, produced and packaged counterfeit software, and installed petitioners’ software into assembled computers without authorization. Their testimonies, coupled with object and documentary evidence, were sufficient. The computer unit purchased from Maxicorp had pre-installed petitioners’ software; Sacriz affirmed the purchase; Pante demonstrated the presence of the software; and a comparison was made between genuine and Maxicorp software. Even disregarding the receipt in the name of “Joel Diaz,” which petitioners explained was NBI Agent Samiano’s alias, sufficient evidence remained. Sacriz’s failure to purchase did not eliminate probable cause because infringement and unfair competition cover copying, assembling, packaging, marketing, and offering for sale. Probable cause is concerned with probability, not absolute or moral certainty, and does not require proof beyond reasonable doubt or a specific kind of evidence. The RTC complied with the constitutional and procedural requirement to examine the applicant and witnesses personally and thoroughly. The findings of the judge who conducted the examination deserve great weight and should be overturned only upon proof that the judge disregarded the facts before him or ignored the clear dictates of reason; no such impropriety appeared.
• General Warrants: A search warrant must particularly state the place to be searched and the objects to be seized. The purpose is to limit the articles to those particularly described, leaving law officers no discretion and preventing unreasonable searches and seizures. Under Section 4, Rule 126 of the Rules of Criminal Procedure, a search warrant shall issue in connection with one specific offense, and the articles described must bear a direct relation to that offense. The warrant need only be specific as far as the circumstances will ordinarily allow; the description need not be technically accurate or precise. Paragraph (e) was not a general warrant because the articles were sufficiently identified physically and by their relation to the offense—those used or intended for use in the illegal and unauthorized copying of petitioners’ software. The cases cited by the Court of Appeals were inapplicable because they involved particular circumstances, such as a licensed distributor, a warrant for all business transactions, or appliances generally connected with a legitimate business. Paragraph (c), however, lacked particularity: it covered all items bearing Microsoft copyrights or trademarks, including property used for personal or other purposes and property Maxicorp may have legitimately bought, without limiting seizure to products used in copyright infringement or unfair competition. No law requires a warrant partially defective in specifying some items to be nullified as a whole; a search warrant is severable, and the sufficiently described items remain valid. Under Section 3(2), Article III of the Constitution, evidence obtained through unreasonable searches and seizures is inadmissible; thus, items seized under paragraph (c) not falling under paragraphs (a), (b), (d), (e), or (f) should be returned to Maxicorp.

• Probable Cause for a Search Warrant — Probable cause means such reasons, supported by facts and circumstances, as will warrant a cautious man in the belief that his action and the means taken in prosecuting it are legally just and proper. For a search warrant, it requires facts and circumstances that would lead a reasonably prudent man to believe that an offense has been committed and that the objects sought are in the place to be searched. The judge must personally examine under oath the complainant and witnesses, whose oath must refer to facts within their personal knowledge; reliable information and mere affidavits are insufficient. Probable cause is concerned with probability, not absolute or moral certainty, and does not require proof beyond reasonable doubt or a fixed kind of evidence. The findings of the judge who conducted the examination deserve great weight. Applied here, the testimonies of NBI Agent Samiano and Sacriz, plus object and documentary evidence, established probable cause despite the receipt being in another name and Sacriz not having purchased counterfeit goods.
• Question of Law vs. Question of Fact — A question of law exists when the doubt or difference centers on what the law is on a certain state of facts and is capable of being resolved without reviewing the probative value of the evidence. A question of fact exists when the doubt centers on the truth or falsity of alleged facts, or requires re-evaluation of the credibility of witnesses or the existence and relevance of surrounding circumstances. Rule 45 petitions should cover only questions of law, and findings of fact of the Court of Appeals are final and conclusive subject to exceptions. The Court applied this by treating legal personality and the nature of the warrants as questions of law, and probable cause as a question of fact, but reviewed the latter because the findings of the Court of Appeals conflicted with those of the RTC.
• Legal Personality of a Private Complainant in a Criminal Case — The general rule is that the Office of the Solicitor General represents the People of the Philippines in criminal cases. Under the exception established in Columbia Pictures Entertainment, Inc. vs. Court of Appeals, a petitioner-complainant in a Rule 45 petition may argue its case before the Court in lieu of the Solicitor General if the lower court committed grave error or there was lack of due process. This avoids leaving a complainant who actively participated in the prosecution powerless to pursue a remedy due to circumstances beyond its control. The Court found the circumstances sufficiently similar to apply the exception.
• Particularity of Search Warrants and General Warrants — A search warrant must particularly state the place to be searched and the objects to be seized, and under Section 4, Rule 126 of the Rules of Criminal Procedure, it must issue in connection with one specific offense, with the articles described bearing a direct relation to that offense. The description need only be specific as far as the circumstances will ordinarily allow and need not be technically accurate or precise. Paragraph (e) of the warrants met this standard because it identified the articles physically and by their relation to the illegal copying of petitioners’ software. Paragraph (c) did not, because it covered all items bearing Microsoft copyrights or trademarks without limiting them to those connected to copyright infringement or unfair competition.
• Severability of a Partially Defective Search Warrant — No provision of law requires that a warrant partially defective in specifying some items sought to be seized, but particular as to other items, be nullified as a whole. A partially defective warrant remains valid as to the items specifically described, and the insufficiently described items may be cut off without destroying the whole warrant. The Court applied this by upholding the warrants except as to paragraph (c) and ordering the return of items seized under paragraph (c) that did not fall under paragraphs (a), (b), (d), (e), or (f), pursuant to the exclusionary rule in Section 3(2), Article III of the Constitution.
• Overt Acts in Copyright Infringement and Unfair Competition — Copyright infringement under Section 29 of Presidential Decree No. 49 and unfair competition under Article 189 of the Revised Penal Code are not limited to the act of selling counterfeit goods. They cover a range of acts, including copying, assembling, packaging, marketing, and offering for sale. The Court used this principle to hold that Sacriz’s failure to purchase counterfeit software did not eliminate probable cause, because the witnesses testified to other overt acts committed within Maxicorp’s premises.

• "Probable cause means \"such reasons, supported by facts and circumstances as will warrant a cautious man in the belief that his action and the means taken in prosecuting it are legally just and proper.\"" — This passage states the general definition of probable cause that the Court applied to the search warrant proceedings.
• "The determination of probable cause does not call for the application of rules and standards of proof that a judgment of conviction requires after trial on the merits. As implied by the words themselves, \"probable cause\" is concerned with probability, not absolute or even moral certainty." — This passage explains why the Court of Appeals erred in requiring conclusive evidence of sale at the preliminary examination stage.
• "It is only required that a search warrant be specific as far as the circumstances will ordinarily allow." — This passage states the standard for particularity of search warrants, under which paragraph (e) was upheld.
• "Still, no provision of law exists which requires that a warrant, partially defective in specifying some items sought to be seized yet particular with respect to the other items, should be nullified as a whole. A partially defective warrant remains valid as to the items specifically described in the warrant." — This passage articulates the severability rule applied to paragraph (c) of the search warrants.

• Columbia Pictures Entertainment, Inc. vs. Court of Appeals, G.R. No. 111267, 20 September 1996, 262 SCRA 219 — Controlling precedent for the exception allowing a petitioner-complainant in a Rule 45 petition to argue its case in lieu of the Solicitor General where the lower court committed grave error or denied due process; also cited in the particularity analysis.
• Paterno vs. Paterno, G.R. No. 63680, 23 March 1990, 183 SCRA 630 — Cited as illustrative of the distinction between questions of law and questions of fact, particularly that issues requiring weighing of evidence are factual.
• Ramos, et al. vs. Pepsi-Cola Bottling Co. of the Phils., et al., 125 Phil. 701 (1967) — Cited for the exceptions to the rule that findings of fact of the Court of Appeals are final and conclusive, including conflicting findings of the trial court and the appellate court.
• United States vs. Addison, 28 Phil. 566 (1914) — Cited for the definition of probable cause as reasons supported by facts and circumstances warranting a cautious man’s belief that his action is legally just and proper.
• Burgos, Sr., et al. vs. The Chief of Staff, AFP, et al., 218 Phil. 754 (1984) — Cited for the standard of probable cause for a search warrant: facts and circumstances that would lead a reasonably prudent man to believe an offense has been committed and the objects sought are in the place to be searched.
• People vs. Salanguit, G.R. Nos. 133254-55, 19 April 2001, 356 SCRA 683 — Cited for the rule that a partially defective warrant remains valid as to the items specifically described.
• Uy vs. Bureau of Internal Revenue, G.R. No. 129651, 20 October 2000, 344 SCRA 36 — Cited for the rule that a search warrant is severable, and insufficiently described items may be cut off without destroying the whole warrant.
• Columbia Pictures, Inc. vs. Flores, G.R. No. 78631, 29 June 1993, 223 SCRA 761 — Distinguished; the warrant there was too broad because the defendant was a licensed distributor of video tapes, unlike Maxicorp.
• Bache & Co. (Phil.), Inc., et al. vs. Judge Ruiz, et al., 147 Phil. 794 (1971) — Distinguished; the warrant there authorized seizure of records pertaining to all business transactions, whereas the warrant here related to the specific offense.
• 20th Century Fox Film Corp. vs. Court of Appeals, Nos. L-76649-51, 19 August 1988, 164 SCRA 655 — Distinguished; the warrant there merely listed articles and involved appliances generally connected with a legitimate business.
• People vs. Rubio, 57 Phil. 384 (1932) — Cited for the rule that a search warrant need only be specific as far as the circumstances will ordinarily allow.
• Kho vs. Hon. Makalintal, 365 Phil. 511 (1999) — Cited for the rule that the description of property to be seized need not be technically accurate or precise.

• Section 1, Rule 45, 1997 Rules of Civil Procedure — Provides that a petition for review should cover questions of law. The Court used this to distinguish questions of law from questions of fact and to explain why probable cause was generally not reviewable, except under the conflicting-findings exception.
• Section 29, Presidential Decree No. 49 — Punishes copyright infringement. This was one of the offenses charged against Maxicorp and part of the basis for the search warrant applications.
• Article 189, Revised Penal Code — Punishes unfair competition. This was the other offense charged against Maxicorp and part of the basis for the search warrant applications.
• Section 4, Rule 126, Rules of Criminal Procedure — Requires a search warrant to issue in connection with one specific offense and the articles described to bear a direct relation to that offense. The Court applied this in assessing whether the warrants were general warrants.
• Section 3(2), Article III, 1987 Constitution — Provides the exclusionary rule rendering inadmissible evidence obtained through unreasonable searches and seizures. The Court applied it by ordering the return of items seized under the defective paragraph (c) of the search warrants.

Davide, Jr., Quisumbing, Ynares-Santiago, and Azcuna, JJ., concur.