MICROSOFT V. FARAJALLAH
G.R. No. 205800 Sept. 10, 2014 J. Carpio
[Art III - Sec. 2] Created by: James C.
Petitioners Respondents
Microsoft Corporation; Adobe Systems Inc. Samir Farajallah, Virgilio D.C. Herce, Rachel P. Follosco,
[directors of New Fields (Asia Pacific) Inc]
Recit Ready Summary
Microsoft​ and ​Adobe​ are the ​copyright owners​ of Microsoft and Adobe computer softwares, respectively. Both companies
received information​ that a ​New Fields Inc.​ is ​using unlicensed or illegally reproduced copies​ of their software. In
response, they hired another company to investigate the tip. ​Two experts​ trained to spot unlicensed software and a police
inspector were able to use two computers owned by New Fields, under a legitimate business pretext. The experts saw that
the ​serial numbers of the software on two computers were similar.​ This was an indication that the software was ​illegally
reproduced.

The police inspector later applied for two ​search warrants​ against New Fields. The warrants were issued, resulting in the
seizure​ of 83 computers. New Fields filed a ​motion to quash the warrants,​ alleging that the warrant applicant had no
personal knowledge of the information and that there was no probable cause for the issuance. Both the RTC and CA quashed
the warrants.

The Supreme Court ​upheld the search warrants​ and reversed the CA and RTC. The Court said that as a general rule,
hearsay information​ ​cannot be the basis for issuance of search warrants. ​The ​exception​ is when hearsay information
(here, the informant's tip) is ​followed up personally​ by the recipient. In this case, the tip was ​investigated​ and​ verified
personally​ by the two experts and the police inspector. They personally found signs that the software was invalid. Thus,
probable cause and personal knowledge are both present.
Facts of the Case
1. Microsoft and Adobe are U.S.-based companies that own all the rights to Microsoft and Adobe software products,
respectively. In 2009, both companies received information that New Fields Inc (a Philippine company) was using
unlicensed versions of their software.

2. Microsoft and Adobe engaged Orion Support Inc (OSI) to verify the information. OSI assigned experts who were
trained to spot unauthorized software. The experts went to New Fields, along with an inspector from the PNP
Criminal Investigation and Detection Group (CIDG).

3. Under a legitimate business pretext, the experts and the CIDG inspector were able to use two computers of New
Fields. They discovered that the serial numbers of the installed software were similar, indicating that only one
installer was used on the two computers. This was illegal because an installer must only be used on a single
computer, unless licensed by Microsoft/Adobe. The computers also did not have the Certificates of Authenticity
issued by Microsoft. [Software identified: Windows XP, Microsoft Word, and Adobe Acrobat].

4. On these findings, the CIDG inspector applied for a search warrant. The warrants were issued and served, resulting
in the seizure of 83 computer units with unlicensed software.

5. New Fields filed a motion to quash the warrants, alleging that the warrant applicant had no personal knowledge of
the information and that there was no probable cause for the issuance. Both the RTC and CA quashed the warrants.

Definition of Motion to Quash [not in case]: Basically, it is an attempt to invalidate something. From another case: ​“A motion to
quash an Information is the mode by which an accused assails the validity of a criminal complaint or Information filed against
him for insufficiency on its face in point of law, or for defects which are apparent in the face of the Information.” ​Note: What is
being quashed in this case is the search warrant (there was no information filed yet), but I think the effect is still the same.

Issues​ ​[Omitted the purely procedural issue re: 3-day notice of motion] Ruling
1. Whether the search warrants should be quashed No
Rationale/Analysis/Legal Basis
1. No, the search warrants should not be quashed. Generally, hearsay information cannot be used as the basis for the
issuance of a search warrant, unless personally followed up and verified by the recipient. In this case, the CIDG
inspector and the two experts were able to personally verify the tip received by Microsoft and Adobe. The evidence
showed that there were indications that the software was unauthorized. There was thus personal knowledge and
probable cause.
2. Side Note: the existence of probable cause is a factual issue not reviewable by the SC, unless falling within
exceptions. Here, the exception is “grave abuse of discretion in the appreciation of facts.” The CA misappreciated
facts when it found that the applicant and witnesses had no personal knowledge of the facts supporting the warrant
application.
Disposition
Petition granted. RTC and CA quashal of the warrants reversed and set aside.