COMMERCIAL REVIEW: INTELLECTUAL PROPERTY CODE

IPC CASES:

1. ABS vs. GMA (2015)

2. GMA vs. Central CATV (2014)

1. ABS vs. GMA (2015)

ABS-CBN Corp., petitioner vs. GMA Pres. and CEO Atty. Felipe Gozon, GMA Vice
President and COO Gilberto Duavit Jr., Marissa L. Flores, Jessica A. Soho, GMA
Head of News Operations Grace Dela Peña-Reyes, GMA News Program Manager John Oliver
Manalastas, et. al., respondents.

G.R. No. 195956, 1 March 2015

Ponente: Justice Marvic F. Leonen

FACTS

On August 13, 2004, petitioner ABS-CBN filed a criminal complaint against respondent GMA for (alleged)
act of copyright infringement under Sections 177 and 211 of the Intellectual Property Code (RA 8293, as
amended), because the respondent aired footage of the arrival and homecoming of OFW Angelo dela
Cruz at NAIA from Iraq without the petitioner's consent. ABS-CBN stated that it has an agreement with
Reuter's that the petition will contribute news and content that it owns and makes to Reuters in exchange
of the latter's news and video material, and Reuters will ensure that ABS-CBN's materials cannot be aired
in the country.

The respondent was a subscriber of Reuter's and CNN live feeds. After it received the live feed of Angelo
Dela Cruz's arrival and homecoming from Reuter's, it immediately aired the video from that news feed.
The respondent alleged that its news staff was not aware that there was (a news embargo) agreement
between ABSCBN and Reuters. Respondent alleged that it was not also aware that it aired petitioner's
footage.

Assistant City Prosecutor Dindo Venturanza issued resolution on 3 December 2004 which found probable
cause to indict Dela Peña-Reyes and Manalastas. The respondents appealed the Prosccutor's resolution
before DOJ. DOJ Secretary Raul M. Gonzalez ruled in favor of respondents in his resolution dated 1
August 2005 and held that good faith may be raised as a defense in the case.

Meanwhile, DOJ Acting Secretary Alberto C. Agra issued a resolution on 29 June 2010 which reversed
Sec. Gonzalez's resolution and found probable cause to charge Dela Peña-Reyes, Manalastas, as well
as to indict Gozon, Duavit, Jr., Flores, and Soho for violation of the Intellectual Property Code (due to
copyright infringement).

The Court of Appeals rendered a decision on 9 November 2010, which granted the Petition for Certiorari
to reverse and set aside DOJ Sec. Alberto Agra's resolution and a prayer for issuance of a temporary
restraining order and/or Writ of Preliminary Injunction.

The appellate court stated that the petitioner has copyright of its news coverage, but respondents’ act of
airing five (5) seconds of the homecoming footage without notice of the “No Access Philippines”
restriction of the live Reuter's video feed, was undeniably attended by good faith and thus, serves to
exculpate from criminal liability under the Intellectual Property Code.

ISSUES

W/N there is probable cause to find respondents to be held liable criminally for the case of copyright
infringement under the Intellectual Property Law (RA 8293, as amended)?

HELD

The Supreme Court PARTIALLY GRANTED ABS-CBN’s petition and ordered RTC Q.C. Branch 93 to
continue with the criminal proceedings against Grace Dela PeñaReyes and John Oliver Manalastas due
to copyright infringement.

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The other respondents, Atty. Felipe Gozon, Gilberto Duavit Jr., Marissa L. Flores, and Jessica A. Soho
were held not liable for the (criminal) act of copyright infringement. The Court held that their mere
membership in GMA7's Board of Directors does not mean that they have knowledge, approval, or
participation in the criminal act of copyright infringement., as there is a need for their direct/active
participation in such act. Also, there was lack of proof that they actively participated or exercised moral
ascendancy over Manalastas and Dela Cruz-Pena.

Contrary to GMA’s contention, the Supreme Court deemed GMA's mere act of rebroadcast of ABS-CBN’s
news footage (arrival and homecoming of OFW Angelo dela Cruz at NAIA from Iraq last 22 July 2004) for
2 mins and 40 secs.without the latter's authority creates probable cause to find GMA's news personnel
Manalastas and Dela Peña-Reyes criminally liable for violating provisions of Intellectual Property Code
(Section 216-217 of RA 8293, as amended) that imposes strict liability for copyright infringement, since
they have not been diligent in their functions to prevent that footage from being aired on television. They
knew that there would be consequences in carrying ABS-CBN’s footage in their broadcast – which is why
they allegedly cut the feed from Reuters upon seeing ABS-CBN’s logo and reporter.

The difference of an act mala in se and mala prohibita was stated in the present case. Acts mala in se
requires presence of criminal intent and the person's knowledge of the nature of his/her act, while in acts
mala prohibita, presence of criminal intent and the person's knowledge is not necessary. The Court also
stated that Philippine laws on copyright infringement does not require criminal intent (mens rea) and does
not support good faith as a defense. Thus, the act of infringement and not the intent is the one that
causes the damage.

It held that ABS-CBN's video footage is copyrightable because it is under “audiovisual works and
cinematographic works and works produced by a process analogous to cinematography or any process
for making audiovisual recordings.” It also stated that news or the event itself is not copyrightable. The
Court differentiated idea and expression – idea meant as “a form, the look or appearance of a thing” while
expression is its reality or the “external, perceptible world of articulate sounds and visible written symbols
that others can understand.” Thus, the Supreme Court stated that “only the expression of an idea is
protected by copyright, not the idea itself”, citing the US Supreme Court's decision in Baker vs Selden
(101 U.S. 99). In the present case, expression applies to the event captured and presented in a specific
medium via cinematography or processes analogous to it.

The Court also gave the four-fold test under the Fair Use Doctrine (stated in section 185 of RA 8293 or
the Intellectual Property Code, as amended) to determine fair use:

a. The purpose and character of the use, including whether such use is of a commercial nature or
is for non-profit educational purposes;

b. The nature of the copyrighted work;

c. The amount and substantiality of the portion used in relation to the copyrighted work as a whole;
and

d. The effect of the use upon the potential market for or value of the copyrighted work.
Fair use, which is an exception to copyright owner’s monopoly of the work's usage, was defined by the
Supreme Court as privilege to use the copyrighted material in a reasonable manner without the copyright
owner's consent or by copying the material's theme or idea rather than its expression.

It also said that determination of whether the Angelo dela Cruz footage is subject to fair use is better left
to the trial court where the proceedings are currently pending.

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2. GMA vs. Central CATV

The must carry rule mandates that the local television (TV) broadcast signals of an authorized TV
broadcast station, such as the GMA Network, Inc., should be carried in full by the cable antenna
television (CATV) operator, without alteration or deletion. In this case, the Central CATV, Inc. was found
not to have violated the must-carry rule when it solicited and showed advertisements in its cable
television (CATV) system. Such solicitation and showing of advertisements did not constitute an
infringement of the “television and broadcast markets” under Section 2 of E.O. No. 205.

Facts:
Sometime in February 2000, GMA Network, Inc. (GMA), together with the Kapisanan ng mga Brodkaster
ng Pilipinas, Audiovisual Communicators, Incorporated, Filipinas Broadcasting Network and Rajah
Broadcasting Network, Inc. (complainants), filed with the NTC a complaint against Central CATV, Inc.
(Central CATV) to stop it from soliciting and showing advertisements in its cable television (CATV)
system, pursuant to Section 2 of Executive Order (EO) No. 205. Under this provision, a grantee’s
authority to operate a CATV system shall not infringe on the television and broadcast markets. GMA
alleged that the phrase “television and broadcast markets” includes the commercial or advertising market.

In its answer, Central CATV admitted the airing of commercial advertisement on its CATV network but
alleged that Section 3 of EO No. 436 expressly allowed CATV providers to carry advertisements and
other similar paid segments provided there is consent from their program providers.

After GMA presented and offered its evidence, Central CATV filed a motion to dismiss by demurrer to
evidence claiming that the evidence presented by the complainants failed to show how Central CATV’s
acts of soliciting and/or showing advertisements infringed upon the television and broadcast market.

The NTC granted Central CATV’s demurrer to evidence and dismissed the complaint. It ruled that since
EO No. 205 does not define “infringement,” EO No. 436 merely clarified or filled in the details of the term
to mean that the CATV operators may show advertisements, provided that they secure the consent of
their program providers. In the present case, the documents attached to Central CATV’s demurrer to
evidence showed that its program providers have given such consent.

The NTC added that since the insertion of advertisements under EO No. 436 would result in the alteration
or deletion of the broadcast signals of the consenting television broadcast station, its ruling necessarily
results in the amendment of these provisions. The second paragraph 9 of Section 3 of EO No. 436 is
deemed to amend the previous provisional authority issued to Central CATV, as well as Sections 6.2.1
and 6.4 of the NTC’s Memorandum Circular (MC) 40888. Sections 6.2.1 and 6.4 require the CATV
operators within the Grade A or B contours of a television broadcast station to carry the latter’s television
broadcast signals in full, without alteration or deletion. This is known as the “must-carry rule.”

GMA went to the CA, which, in turn, upheld the NTC ruling. Hence, GMA filed a petition for review on
certiorari before the Supreme Court.

GMA alleges that the NTC gravely erred in failing to differentiate between EO No. 205, which is a law,
and EO No. 436 which is merely an executive issuance. An executive issuance cannot make a
qualification on the clear prohibition in the law, EO No. 205.

On the other hand, Central CATV contends that EO No. 205 does not expressly prohibit CATV operators
from soliciting and showing advertisements. The non-infringement limitation under Section 2 thereof,
although couched in general terms, should not be interpreted in such a way as to deprive CATV operators
of legitimate business opportunities. Also, EO No. 436, being an executive issuance and a valid
administrative legislation, has the force and effect of a law and cannot be subject to collateral attack.

Issue: Whether Central CATV, as a CATV operator, could show commercial advertisements in its CATV
networks.

Ruling: Yes. Central CATV could show commercial advertisements in its CATV networks.
First, EO No. 205 is a law while EO No. 436 is an executive issuance. The NTC and the CA proceeded
from the wrong premise that both EO No. 205 and EO No. 436 are statutes.
EO No. 205 was issued by President Corazon Aquino. At the time of the issuance of EO No. 205,
President Aquino was still exercising legislative powers. EO No. 436, on the other hand, is an executive
order which was issued by President Ramos in the exercise purely of his executive power. In short, it is
not a law. In considering EO No. 436 as a law, the NTC and the CA hastily concluded that it has validly
qualified Section 2 of EO No. 205 and has amended the provisions of MC 40888. Following this wrong
premise, the NTC and the CA ruled that Central CATV has a right to show advertisements under Section
3 of EO No. 436. While Central CATV indeed has the right to solicit and show advertisements, the NTC
and the CA incorrectly interpreted and appreciated the relevant provisions of the law and rules. The Court
seeks to correct this error by ruling that MC 40888 alone sufficiently resolves the issue on whether

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Central CATV could show advertisements in its CATV networks. In other words, EO No. 436 is not
material in resolving the substantive issue before us.

Second, the CATV operators are not prohibited from showing advertisements under EO No. 205 and its
implementing rules and regulations, MC 40888.

MC 40888 has sufficiently filled in the details of Section 2 of EO No. 205, specifically the contentious
proviso that “the authority to operate [CATV] shall not infringe on the television and broadcast markets.” It
is clear from Section 6.1 of MC 040888 that the phrase “television market” connotes “audience” or
“viewers” in geographic areas and not the commercial or advertising market as what GMA claims.

The kind of infringement prohibited by Section 2 of EO No. 205 was particularly clarified under Sections
6.2, 6.2.1, 6.4(a)(1) and 6.4(b) of MC 040888, which embody the “mustcarry rule.” This rule mandates
that the local TV broadcast signals of an authorized TV broadcast station, such as GMA, should be
carried in full by the CATV operator, without alteration or deletion.

MC 40888 mirrored the legislative intent of EO No. 205 and acknowledged the importance of the CATV
operations in the promotion of the general welfare. The circular provides in its whereas clause that the
CATV has the ability to offer additional programming and to carry much improved broadcast signals in the
remote areas, thereby enriching the lives of the rest of the population through the dissemination of social,
economic and educational information, and cultural programs. Unavoidably, however, the improved
broadcast signals that CATV offers may infringe or encroach upon the audience or viewer market of the
freesignal TV. This is so because the latter’s signal may not reach the remote areas or reach them with
poor signal quality. To foreclose this possibility and protect the freeTV market (audience market), the
mustcarry rule was adopted to level the playing field. With the mustcarry rule in place, the CATV networks
are required to carry and show in full the free-local TV’s programs, including advertisements, without
alteration or deletion. This, in turn, benefits the public who would have a wide range of choices of
programs or broadcast to watch. This also benefits the freeTV signal as their broadcasts are carried
under the CATV’s much-improved broadcast signals thus expanding their viewer’s share.

The Court finds that the Sections 6.2, 6.2.1, 6.4(a)(1) and 6.4(b) of MC 40888, which embody the “must
carry rule,” are the governing rules in the present case. Under these rules, the phrase “television and
broadcast markets” means viewers or audience market and not commercial advertisement market as
claimed by GMA. Therefore, Central CATV’s act of showing advertisements does not constitute an
infringement of the “television and broadcast markets” under Section 2 of EO No. 205.