G.R. No. 195835 . March 14, 2016.
SISON OLAÑO, SERGIO T. ONG, MARILYN O. GO, AND JAP FUK HAI, PETITIONERS, VS. LIM ENG CO, RESPONDENT.

FACTS

The petitioners are officers/directors of Metrotech Steel Industries, Inc. The respondent, Lim Eng Co, is the Chairman of LEC Steel Manufacturing Corporation. In 2002, LEC was invited to submit design plans for hatch doors for the Manansala Project. LEC submitted shop plans/drawings and a diskette. After consultations, final shop plans were submitted on January 15, 2004, copied to the contractor SKI-First Balfour Joint Venture (SKI-FB), and stamped approved on February 3, 2004. LEC was subcontracted to manufacture and install hatch doors for floors 7-22. LEC later learned Metrotech was subcontracted for floors 23-41. On June 24, 2004, LEC demanded Metrotech cease infringing its intellectual property rights, but Metrotech refused, claiming it used drawings provided by SKI-FB. On July 2, 2004, LEC deposited the final shop plans with the National Library and was issued Certificates of Copyright Registration on July 6, 2004 (for plans/drawings under Section 172(i) of R.A. No. 8293 ) and on December 9, 2004 (for ornamental designs/models under Section 172(h)). The NBI, upon LEC’s request, secured a search warrant against Metrotech on August 13, 2004, leading to confiscation of hatch doors and machines. The respondent filed a Complaint-Affidavit for copyright infringement with the DOJ on August 13, 2004. The RTC quashed the search warrant on September 8, 2004. The petitioners denied infringement, arguing the hatch doors were functional, not copyrightable, and that no patent or design registration existed for them. The DOJ investigating prosecutor initially dismissed the complaint on August 18, 2005. Upon review, the DOJ reversed itself on January 27, 2006, finding probable cause. The petitioners moved for reconsideration, and the DOJ reversed again on March 10, 2006, finding no probable cause and directing the withdrawal of any information. The respondent’s motion for reconsideration was denied on May 25, 2006. The respondent filed a petition for certiorari with the CA. The CA granted the petition on July 9, 2010, annulled the DOJ Resolutions of March 10, 2006 and May 25, 2006, and found probable cause for copyright infringement. The CA held the DOJ’s vacillating findings constituted grave abuse of discretion and ruled that LEC’s copyright ownership and the petitioners’ manufacture of hatch doors based on LEC’s works were sufficient for probable cause. The petitioners appealed to the Supreme Court.

ISSUE

Whether the Court of Appeals erred in finding that the Department of Justice committed grave abuse of discretion in its Resolutions dated March 10, 2006 and May 25, 2006, which found no probable cause for copyright infringement against the petitioners.

RULING

The Supreme Court GRANTED the petition, REVERSED and SET ASIDE the Decision of the Court of Appeals, and REINSTATED the Department of Justice Resolutions dated March 10, 2006 and May 25, 2006, which found no probable cause and directed the withdrawal of the information.
The Court held that the DOJ did not commit grave abuse of discretion. The determination of probable cause is an executive function, and courts should not interfere absent a clear case of arbitrariness. The DOJ’s reversal of its own finding was based on its re-evaluation of the evidence, specifically the nature of the hatch doors. The Court found that the hatch doors, as utilitarian or functional articles, are not copyrightable. Copyright protection extends to the original plans/drawings themselves as pictorial/graphic works under Section 172(i), but not to the useful article depicted therein. For the useful article itself to be copyrightable as an “original ornamental design or model” under Section 172(h), it must incorporate artistic or aesthetic features that can be identified separately from, and are capable of existing independently of, the utilitarian aspects of the article. The evidence, including photographs, showed the hatch doors were plain metal doors with standard functional components (hinges, locks, jambs) devoid of any distinct artistic or ornamental design. The mere registration of a copyright certificate does not conclusively prove copyrightability; it is the court’s duty to determine if the work is truly copyrightable. Since the hatch doors lacked separable artistic features, they were not protected under Section 172(h). The petitioners’ alleged act of manufacturing hatch doors based on functional drawings provided by the contractor did not constitute copyright infringement of the pictorial/graphic works (the plans), as there was no showing they copied the plans themselves. The CA erred in making its own independent finding of probable cause and substituting its judgment for that of the DOJ. The DOJ’s finding of no probable cause was not arbitrary or capricious.