Columbia Pictures Inc. V CA

Columbia Pictures vs.
CA
Facts:
Complainants thru counsel lodged a formal complaint with the
National Bureau of Investigation for violation of PD No. 49, as
amended, and sought its assistance in their anti-film piracy drive.
Agents of the NBI and private researchers made discreet surveillance
on various video establishments in Metro Manila including Sunshine
Home Video Inc. (Sunshine for brevity), owned and operated by Danilo
A. Pelindario with address at No. 6 Mayfair Center, Magallanes,
Makati, Metro Manila.
On November 14, 1987, NBI Senior Agent Lauro C. Reyes applied for a
search warrant with the court a quo against Sunshine seeking the
seizure, among others, of pirated video tapes of copyrighted films
all of which were enumerated in a list attached to the application;
and, television sets, video cassettes and/or laser disc recordings
equipment and other machines and paraphernalia used or intended to
be used in the unlawful exhibition, showing, reproduction, sale,
lease or disposition of videograms tapes in the premises above
described. In the hearing of the application, NBI Senior Agent Lauro
C. Reyes, upon questions by the court a quo, reiterated in substance
his averments in his affidavit. His testimony was corroborated by
another witness, Mr. Rene C. Baltazar. Atty. Rico V. Domingo's
deposition was also taken. On the basis of the affidavits and
depositions of NBI Senior Agent Lauro C. Reyes, Rene C. Baltazar and
Atty. Rico V. Domingo, Search Warrant No. 87-053 for violation of
Section 56 of PD No. 49, as amended, was issued by the court a quo.
The search warrant was served at about 1:45 p.m. on December 14,
1987 to Sunshine and/or their representatives. In the course of the
search of the premises indicated in the search warrant, the NBI
Agents found and seized various video tapes of duly copyrighted
motion pictures/films owned or exclusively distributed by private
complainants, and machines, equipment, television sets,
paraphernalia, materials, accessories all of which were included in
the receipt for properties accomplished by the raiding team. Copy of
the receipt was furnished and/or tendered to Mr. Danilo A.
Pelindario, registered owner-proprietor of Sunshine Home Video.
On December 16, 1987, a "Return of Search Warrant" was filed with
the Court.
A "Motion To Lift the Order of Search Warrant" was filed but was
later denied for lack of merit (p. 280, Records).
A Motion for reconsideration of the Order of denial was filed. The
court a quo granted the said motion for reconsideration and
justified it in this manner:
It is undisputed that the master tapes of the copyrighted films from
which the pirated films were allegedly copies (sic), were never
presented in the proceedings for the issuance of the search warrants
in question. The orders of the Court granting the search warrants
and denying the urgent motion to lift order of search warrants were,
therefore, issued in error. Consequently, they must be set aside.
(p. 13, Appellant's Brief)
Issue:
1. Does the petitioner have the legal standing in our courts,

they being foreign corporations not licensed to do business in the
Philippines?
2. Whether or not the ruling 20th Century Fox Film Corporation
vs. Court of Appeals, et al., promulgated on August 19, 1988, 36
that for the determination of probable cause to support the issuance
of a search warrant in copyright infringement cases involving
videograms, the production of the master tape for comparison with
the allegedly pirate copies is necessary- can be applied
retroactively to this case?
Held:
1. No. Any foreign corporation not doing business in the

Philippines may maintain an action in our courts upon any cause of
action, provided that the subject matter and the defendant are
within the jurisdiction of the court. It is not the absence of the
prescribed license but "doing business" in the Philippines without
such license which debars the foreign corporation from access to our
courts. In other words, although a foreign corporation is without
license to transact business in the Philippines, it does not follow
that it has no capacity to bring an action. Such license is not
necessary if it is not engaged in business in the Philippines.
There is no showing that, under our statutory or case law,
petitioners are doing, transacting, engaging in or carrying on
business in the Philippines as would require obtention of a license
before they can seek redress from our courts. No evidence has been
offered to show that petitioners have performed any of the
enumerated acts or any other specific act indicative of an intention
to conduct or transact business in the Philippines.
The ground available for barring recourse to our courts by an
unlicensed foreign corporation doing or transacting business in the
Philippines should properly be "lack of capacity to sue," not "lack
of personality to sue." Certainly, a corporation whose legal rights
have been violated is undeniably such, if not the only, real party
in interest to bring suit thereon although, for failure to comply
with the licensing requirement, it is not capacitated to maintain
any suit before our courts.
Lastly, on this point, we reiterate this Court's rejection of the
common procedural tactics of erring local companies which, when sued
by unlicensed foreign corporations not engaged in business in the
Philippines, invoke the latter's supposed lack of capacity to sue.
The doctrine of lack of capacity to sue based on failure to first
acquire a local license is based on considerations of public policy.
It was never intended to favor nor insulate from suit unscrupulous
establishments or nationals in case of breach of valid obligations
or violation of legal rights of unsuspecting foreign firms or
entities simply because they are not licensed to do business in the
country. 35
2. No. Mindful as we are of the ramifications of the doctrine of
stare decisis and the rudiments of fair play, it is our considered
view that the 20th Century Fox ruling cannot be retroactively
applied to the instant case to justify the quashal of Search Warrant
No. 87-053. Herein petitioners' consistent position that the order
of the lower court of September 5, 1988 denying therein defendants'
motion to lift the order of search warrant was properly issued,
there having been satisfactory compliance with the then prevailing
standards under the law for determination of probable cause, is
indeed well taken. The lower court could not possibly have expected
more evidence from petitioners in their application for a search
warrant other than what the law and jurisprudence, then existing and
judicially accepted, required with respect to the finding of
probable cause.
Article 4 of the Civil Code provides that "(l)aws shall have no
retroactive effect, unless the contrary is provided. Correlatively,
Article 8 of the same Code declares that "(j)udicial decisions
applying the laws or the Constitution shall form part of the legal
system of the Philippines."
In fine, the supposed pronunciamento in said case regarding the
necessity for the presentation of the master tapes of the
copyrighted films for the validity of search warrants should at most
be understood to merely serve as a guidepost in determining the
existence of probable cause in copyright infringement cases where
there is doubt as to the true nexus between the master tape and the
pirated copies. An objective and careful reading of the decision in
said case could lead to no other conclusion than that said directive
was hardly intended to be a sweeping and inflexible requirement in
all or similar copyright infringement cases. Judicial dicta should
always be construed within the factual matrix of their parturition,
otherwise a careless interpretation thereof could unfairly fault the
writer with the vice of overstatement and the reader with the
fallacy of undue generalization.
In the case at bar, NBI Senior Agent Lauro C. Reyes who filed the
application for search warrant with the lower court following a
formal complaint lodged by petitioners, judging from his affidavit
and his deposition, did testify on matters within his personal
knowledge based on said complaint of petitioners as well as his own
investigation and surveillance of the private respondents' video
rental shop. Likewise, Atty. Rico V. Domingo, in his capacity as
attorney-in-fact, stated in his affidavit 53 and further expounded
in his deposition 54 that he personally knew of the fact that
private respondents had never been authorized by his clients to
reproduce, lease and possess for the purpose of selling any of the
copyrighted films.
Both testimonies of Agent Reyes and Atty. Domingo were corroborated
by Rene C. Baltazar, a private researcher retained by Motion
Pictures Association of America, Inc. (MPAA, Inc.), who was likewise
presented as a witness during the search warrant proceedings. 55 The
records clearly reflect that the testimonies of the abovenamed
witnesses were straightforward and stemmed from matters within their
personal knowledge. They displayed none of the ambivalence and
uncertainty that the witnesses in the 20th Century Fox case
exhibited. This categorical forthrightness in their statements,
among others, was what initially and correctly convinced the trial
court to make a finding of the existence of probable cause.
It is evidently incorrect to suggest, as the ruling in 20th Century
Fox may appear to do, that in copyright infringement cases, the
presentation of master tapes of the copyrighted films is always
necessary to meet the requirement of probable cause and that, in the
absence thereof, there can be no finding of probable cause for the
issuance of a search warrant. It is true that such master tapes are
object evidence, with the merit that in this class of evidence the
ascertainment of the controverted fact is made through
demonstrations involving the direct use of the senses of the
presiding magistrate. Such auxiliary procedure, however, does not
rule out the use of testimonial or documentary evidence,
depositions, admissions or other classes of evidence tending to
prove the factum probandum, especially where the production in
court of object evidence would result in delay, inconvenience or
expenses out of proportion to its evidentiary value.
Of course, as a general rule, constitutional and statutory
provisions relating to search warrants prohibit their issuance
except on a showing of probable cause, supported by oath or
affirmation. These provisions prevent the issuance of warrants on
loose, vague, or doubtful bases of fact, and emphasize the purpose
to protect against all general searches. Indeed, Article III of our
Constitution mandates in Sec. 2 thereof that no search warrant 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 things to be seized; and Sec. 3 thereof
provides that any evidence obtained in violation of the preceding
section shall be inadmissible for any purpose in any proceeding.
It is worth noting that neither the Constitution nor the Rules of
Court attempt to define probable cause, obviously for the purpose of
leaving such matter to the court's discretion within the particular
facts of each case. Although the Constitution prohibits the issuance
of a search warrant in the absence of probable cause, such
constitutional inhibition does not command the legislature to
establish a definition or formula for determining what shall
constitute probable cause.

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Columbia Pictures vs.

1. Does the petitioner have the legal standing in our courts,

1. No. Any foreign corporation not doing business in the

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