Microsoft Corporation vs. Manansala

The unauthorized sale of pirated computer software constitutes copyright infringement under Section 29 of Presidential Decree No. 49 without requiring proof that the seller personally reproduced the copies, because Section 5 grants the copyright owner exclusive rights to multiple acts including selling, and the unauthorized performance of any one such act constitutes infringement; the conjunctive "and" in Section 5(a) should be construed as disjunctive "or" to avoid absurd results where certain classes of works cannot be subjected to all enumerated acts.

Microsoft Corporation holds copyright and trademark rights to various computer software programs including MS-DOS, Microsoft Windows, Microsoft Office, and others. Rolando D. Manansala and/or Mel Manansala conducted business as Dataman Trading Company and/or Comic Alley at the University Mall Building in Manila, engaging in the distribution and sale of Microsoft software without authorization from Microsoft.

• The Test Purchase: On November 3, 1997, private investigator John Benedict A. Sacriz, accompanied by an NBI agent, purchased six CD-ROMs containing various Microsoft computer programs from the premises of Rolando Manansala.
• The Search and Seizure: Based on the test purchase, an NBI agent applied for a search warrant, which was issued on November 17, 1997. The warrant was served on November 19, 1997, yielding several illegal copies of Microsoft programs.
• The Complaint: Microsoft filed an Affidavit-Complaint with the DOJ based on the search results, charging Manansala with violation of Section 29 of P.D. No. 49 for copyright infringement.
• The Prosecutor's Resolution: The State Prosecutor dismissed the charge in a Resolution dated March 20, 2000, finding that while Manansala sold Microsoft software bearing the company's copyrights and trademarks, there was no proof that he was the one who printed or copied the products for sale. The prosecutor recommended charging violation of Article 189 of the Revised Penal Code (unfair competition) instead.
• The DOJ Affirmance: The DOJ denied Microsoft's Motion for Partial Reconsideration on May 15, 2001, and subsequently denied the Petition for Review on January 27, 2003, sustaining the dismissal for lack of evidence of copying or reproduction by the respondent.
• The CA Ruling: The Court of Appeals affirmed the DOJ dismissal in its February 27, 2004 Decision, interpreting Section 5(a) of P.D. No. 49 as requiring all enumerated acts (to print, reprint, publish, copy, distribute, multiply, sell, and make photographs) to be present and proven, rather than treating them as separate or independent acts.

• Nature of Copyright Infringement: Microsoft maintained that printing or copying was not essential to the crime of copyright infringement under Section 29 of P.D. No. 49, and that the mere selling of pirated computer software constituted copyright infringement.
• Statutory Interpretation: Petitioner argued that the acts enumerated in Section 5(a) of P.D. No. 49 were separate and independent rights, such that the unauthorized performance of any single act (such as selling) constituted infringement, notwithstanding the use of the conjunctive "and" in the provision.
• Grave Abuse of Discretion: Microsoft contended that the DOJ committed grave abuse of discretion amounting to lack or excess of jurisdiction in dismissing the charge for copyright infringement, as the existence of illegal copies in Manansala's possession and the unauthorized sale thereof provided sufficient basis for a well-founded belief that the crime had been committed.

• Literal Statutory Construction: Respondent countered that Section 5(a) of P.D. No. 49, which uses the conjunctive "and" to connect the enumerated acts (print, reprint, publish, copy, distribute, multiply, sell, and make photographs), required all such acts to be present and proven to establish copyright infringement.
• Lack of Evidence: Respondent argued that since Microsoft failed to allege and adduce evidence showing that Manansala personally copied, replicated, or reproduced the software programs, the charge under Section 29 of P.D. No. 49 could not stand, and the sale alone of pirated copies did not constitute the offense.

• Elements of Copyright Infringement: Whether the unauthorized sale of pirated computer software constitutes copyright infringement under Section 29 of Presidential Decree No. 49 without proof that the seller personally reproduced the copies.
• Statutory Construction: Whether the conjunctive "and" in Section 5(a) of Presidential Decree No. 49 requires the presence of all enumerated acts or may be construed as disjunctive to avoid absurd results.
• Grave Abuse of Discretion: Whether the DOJ committed grave abuse of discretion in dismissing the copyright infringement charge for lack of evidence of copying or reproduction.

• Elements of Copyright Infringement: The unauthorized sale of pirated computer software constitutes copyright infringement under Section 29 of P.D. No. 49. Section 5 grants the copyright owner the exclusive right to print, reprint, publish, copy, distribute, multiply, sell, and make photographs of the work, and the commission of any of these acts without consent constitutes actionable infringement. The gravamen of the offense is not merely the unauthorized manufacturing but the unauthorized performance of any act covered by Section 5.
• Statutory Construction: The conjunctive "and" in Section 5(a) should not be taken in its ordinary acceptation but should be construed like the disjunctive "or" because a literal interpretation requiring all enumerated acts to be present would lead to absurd results. Certain classes of works protected under Section 2 of P.D. No. 49, such as computer programs, cannot be subjected to acts like photographing, photo-engraving, or pictorial illustration, making it impossible to satisfy a literal "and" requirement for all acts.
• Grave Abuse of Discretion: The DOJ committed grave abuse of discretion in dismissing the charge. The existence of pirated copies in Manansala's store and the test purchase establishing unauthorized sale were sufficient to engender a well-founded belief that copyright infringement had been committed. The public prosecutor and DOJ acted whimsically or arbitrarily in disregarding settled jurisprudential rules on finding probable cause by requiring proof of copying or reproduction when the sale itself was established.

• Copyright Infringement as Trespass on Private Domain: Copyright infringement consists in the doing by any person, without the consent of the owner, of anything the sole right to do which is conferred by statute on the owner. The gravamen of copyright infringement is not merely the unauthorized manufacturing of intellectual works but rather the unauthorized performance of any of the acts covered by Section 5 of P.D. No. 49.
• Construction of the Conjunctive "And": While the conjunctive word "and" ordinarily denotes a joinder or union of words, phrases, or clauses, it should be construed like the disjunctive "or" if the literal interpretation of the law would pervert or obscure the legislative intent or lead to absurd results. Courts must construe statutes to avoid absurdity or unreasonableness, rejecting literal interpretations that would be unjust or lead to absurd consequences.
• Probable Cause Determination: The determination of probable cause by the public prosecutor is generally not subject to judicial scrutiny as it is an executive function; however, an exception exists when the determination is tainted with grave abuse of discretion, defined as acting whimsically or arbitrarily in disregard of settled rules of law.

• "Infringement of a copyright is a trespass on a private domain owned and occupied by the owner of the copyright, and, therefore, protected by law, and infringement of copyright, or piracy, which is a synonymous term in this connection, consists in the doing by any person, without the consent of the owner of the copyright, of anything the sole right to do which is conferred by statute on the owner of the copyright."
• "The 'gravamen of copyright infringement,' according to NBI-Microsoft Corporation v. Hwang, is not merely the unauthorized manufacturing of intellectual works but rather the unauthorized performance of any of the acts covered by Section 5. Hence, any person who performs any of the acts under Section 5 without obtaining the copyright owners prior consent renders himself civilly and criminally liable for copyright infringement."
• "The conjunctive 'and' should not be taken in its ordinary acceptation, but should be construed like the disjunctive 'or' if the literal interpretation of the law would pervert or obscure the legislative intent."
• "To hold, as the CA incorrectly did, that the legislative intent was to require that the computer programs be first photographed, photoengraved, or pictorially illustrated as a condition for the commission of copyright infringement invites ridicule."

• Columbia Pictures, Inc. v. Court of Appeals, G.R. No. 110318, August 28, 1996, 261 SCRA 144 — Cited for the definition of copyright infringement as a trespass on a private domain and the concept of piracy as synonymous with infringement.
• NBI-Microsoft Corporation v. Hwang, G.R. No. 147043, June 21, 2005, 460 SCRA 428 — Cited for the principle that the gravamen of copyright infringement is the unauthorized performance of any act covered by Section 5 of P.D. No. 49, not merely unauthorized manufacturing.
• Aguilar v. Department of Justice, G.R. No. 197522, September 11, 2013, 705 SCRA 629 — Cited for the exception to the general rule that probable cause determinations are not subject to judicial scrutiny when tainted with grave abuse of discretion.
• Automotive Parts & Equipment Company, Inc. v. Lingad, G.R. No. L-26406, October 31, 1969, 30 SCRA 248 — Cited for the principle that courts should not give words a meaning which would lead to absurd or unreasonable consequences, and that literal interpretation is to be rejected if it would be unjust or lead to absurd results.

• Section 5, Presidential Decree No. 49 (Decree on Intellectual Property) — Defines copyright as consisting of the exclusive right to print, reprint, publish, copy, distribute, multiply, sell, and make photographs, photo-engravings, and pictorial illustrations of the works, among other acts. The Court interpreted this provision to mean that the unauthorized performance of any of these acts constitutes infringement.
• Section 29, Presidential Decree No. 49 — Penalizes copyright infringement. The Court held that selling pirated software falls under this provision.
• Section 2, Presidential Decree No. 49 — Enumerates classes of works protected by copyright, including computer programs under subsection (n), which the Court used to demonstrate the absurdity of requiring all acts in Section 5(a) to be present for every class of work.
• Article 189, Revised Penal Code — The provision for unfair competition that the prosecutor recommended charging instead of copyright infringement; the Court held this was inappropriate as the facts supported copyright infringement.

• Maria Lourdes P.A. Sereno (Chief Justice)
• Presbitero J. Velasco, Jr.
• Teresita J. Leonardo-De Castro
• Estela M. Perlas-Bernabe