M.Y. Intercontinental Trading Corporation, Tedwin T. Uy, and Allianz Marketing and Publishing Corporation vs. St. Mary's Publishing Corporation and Jerry Vicente S. Catabijan

A forged Deed of Assignment does not transfer copyright because it lacks the copyright owner's consent; copyright registration does not vest ownership but only creates rebuttable prima facie proof; and unauthorized importing, marketing, and selling of copyrighted books constitute copyright infringement. The trial court also erred in refusing to resolve petitioners' compulsory counterclaim, which arose from the same transaction and did not require payment of docket fees.

St. Mary's Publishing Corporation is the copyright owner of the subject textbooks, with Jerry Vicente S. Catabijan as its Publisher and President. Sometime in 2005, Catabijan entered a business venture with M.Y. Intercontinental Trading Corporation and Tedwin T. Uy to fund the printing of St. Mary's Publishing's books in China, where M.Y. Intercontinental was the agent and sole distributor of Fujian New Technology Color Making and Printing Company, Ltd. The parties executed a financing agreement, Contract Reference No. SMPCMY 76M 009, for the principal loan amount of PHP 76,748,494.68 representing printing costs, with interest and post-dated checks as payment. St. Mary's Publishing issued authorities to Fujian to print its textbooks.

St. Mary's Publishing Corporation is the copyright owner of Pagpapaunlad ng Kasanayan sa Pagbasa (Binagong Edisyon) 1 to 6 and Developing Reading Power Enhanced-Combined Edition 1 to 6, the subject textbooks. Jerry Vicente S. Catabijan, its Publisher and President, entered a business venture with M.Y. Intercontinental Trading Corporation and Tedwin T. Uy sometime in 2005 to fund the printing of St. Mary's Publishing's books in China. M.Y. Intercontinental was the agent and sole distributor of Fujian New Technology Color Making and Printing Company, Ltd., where the books would be printed, and St. Mary's Publishing issued several authorities to Fujian to print its textbooks. The parties entered into a financing agreement under Contract Reference No. SMPCMY 76M 009 for a principal loan amount of PHP 76,748,494.68 representing printing costs of a predetermined quantity of books, without prejudice to additional orders. The principal loan amount was the reference amount for interest payments of 2% per month payable since December 2008, computed on a diminishing basis, with principal payable to M.Y. Intercontinental's designated bank from December 2008 to June 2010 through post-dated checks. To avail of the loan, St. Mary's Publishing allegedly issued purchase orders in favor of M.Y. Intercontinental, and M.Y. Intercontinental confirmed the availability of funds through the delivery of books required by St. Mary's Publishing. The contract provided that any delay in payment would incur a penalty of 2.5% based on the unpaid portion of the principal loan amount for every month of delay.

In 2009, St. Mary's Publishing issued several authorities to print its textbooks in favor of Fujian. It also issued a December 7, 2009 purchase order amounting to PHP 11,347,781.08 for Developing Reading Power (ECE) and Pagpapaunlad ng Kasanayan sa Pagbasa for Grades 1 to 6. St. Mary's Publishing started defaulting in its obligations, resulting in the non-delivery of books subject of the purchase order. To address St. Mary's Publishing's failure to pay, several contracts were executed. Catabijan executed a Declaration of Pledge of real properties of St. Mary's Publishing with an undertaking by way of a February 26, 2010 promissory note. St. Mary's Publishing pledged its collectibles from its sale of books from multiple accounts to be applied to its 2008 and 2009 unpaid obligations to M.Y. Intercontinental and Uy. Real properties in Sta. Cruz, Manila and Lemery, Batangas, St. Mary's Publishing's collection from claims for flood damages, and its current inventory of stocks of textbooks were pledged to petitioners as partial payment should it incur default. To ensure St. Mary's Publishing's ability to pay the promissory note, the publishing house opened its books to petitioners showing its accounts receivables, bank statements, and inventory, with weekly reporting requirements. However, more post-dated checks of St. Mary's Publishing bounced. To prevent the breakdown of the parties' relationship, they entered into a Memorandum of Agreement on March 12, 2010. They agreed to open a joint bank account where all of St. Mary's Publishing's collectibles for 2009 and 2010 would be deposited. Seventy percent of the proceeds would be applied to St. Mary's Publishing's obligations to petitioners; however, if the balance was not sufficient to answer for the demandable amount, the deficiency could be applied from the 30% share of St. Mary's Publishing.

Sometime in April 2010, Catabijan allegedly gave a signed Deed of Assignment of all its copyright to Uy as a prelude to the execution of a dacion en pago which failed to materialize. Uy claimed that he reluctantly received the Deed of Assignment because he was not engaged in the publishing business. Eventually, M.Y. Intercontinental registered the Deed of Assignment under its name. Copyright Registration Nos. A2012-24 to A2012-35 over the subject textbooks were issued in favor of M.Y. Intercontinental on January 18, 2012. The textbooks subject of the December 7, 2009 purchase order were no longer delivered due to St. Mary's Publishing's failure to pay. On the other hand, there was also no demand from St. Mary's Publishing to deliver the books because it treated the contract as rescinded during a meeting on April 21, 2010. On October 22, 2010, M.Y. Intercontinental's attorney-in-fact, Atty. Marie Ann Carmen F. Ferrer, filed a petition for declaratory relief before the Regional Trial Court of Mandaluyong. In the declaratory relief case, the Regional Trial Court held that M.Y. Intercontinental was an unpaid seller, recognized its lien over the subject books covered in the December 7, 2009 purchase order, and held that as an unpaid seller it had the right to resell these textbooks and rescind the contract to print considering that St. Mary's Publishing had been in default for an unreasonable length of time. The Regional Trial Court also applied the doctrine of first sale in Bobbs-Merill Co. vs. Stratus, an American jurisprudence, and held that copyright of the subject textbooks passed from St. Mary's Publishing to M.Y. Intercontinental when the former contracted with the latter for printing.

In 2012, St. Mary's Publishing learned that M.Y. Intercontinental sold the subject textbooks to the City of Cabuyao for PHP 14,110,800.00 through a purported Certificate of Copyright Registration under St. Mary's Publishing's name. It also learned that Fujian authorized M.Y. Intercontinental to market and sell the subject textbooks in the Philippines, and that Allianz imported and sold the subject textbooks. On March 13, 2013, St. Mary's Publishing filed a complaint for copyright infringement against M.Y. Intercontinental, Uy, Fujian, and Allianz before the Regional Trial Court of Manila, Branch 24. During trial, Catabijan testified that his father owned several copyrights of the subject textbooks, all of which were eventually assigned to St. Mary's Publishing; that Anita Bagabaldo, author of the subject textbooks, executed a Deed of Assignment of the copyright in favor of St. Mary's Publishing, which the latter registered in the National Library; and that St. Mary's Publishing secured accreditation from the Department of Education authorizing it to sell the textbooks to government offices without bidding. Catabijan denied executing the Deed of Assignment in favor of M.Y. Intercontinental, claiming that his signature was forged. He filed a criminal case for falsification of public documents before the Office of the City Prosecutor of Manila and presented separate reports from the Quezon City Police District and National Bureau of Investigation, both finding that the signature in the Deed of Assignment was not the same as Catabijan's authentic signature. He also sent a letter to the National Library for the cancellation of M.Y. Intercontinental's copyright, but it was denied. St. Mary's Publishing presented Bagabaldo, who testified that she was an in-house author and managing editor of St. Mary's Publishing, that she wrote the subject textbooks and executed an Absolute Deed of Assignment of their copyright in favor of her employer, and that the company expanded the medium of the content of the subject textbooks to e-books, audio books, pamphlets, comics, novels, and articles. St. Mary's Publishing also presented Joseph Sebua, its Corporate Secretary and Administrative Officer, who secured documents confirming M.Y. Intercontinental's sale of the company's textbooks to the Department of Education, Zamboanga City, Municipality of Matnog in Sorsogon, and Municipality of Cabuyao, Laguna. Uy testified that M.Y. Intercontinental's business venture with St. Mary's Publishing started in 2005, when he and M.Y. Intercontinental provided funds and printing services for St. Mary's Publishing; that the relationship turned sour in 2010 because of St. Mary's failure to pay the costs of printing in 2009 and issuance of several bouncing checks; that the parties executed documents to settle St. Mary's Publishing's claim, including a Declaration of Pledge and Undertaking and a Memorandum of Agreement in 2010; that Catabijan delivered a signed copy of the Deed of Assignment of Copyright because he felt ashamed that he was unable to pay his obligations; that Uy was hesitant to accept the Deed of Assignment at first, but Catabijan insisted; that the Deed of Assignment was notarized on March 29, 2010; and that Uy applied a copyright registration on January 18, 2012 under the name of M.Y. Intercontinental.

The trial court found that the Deed of Assignment was not properly notarized: there was no notarial seal on the pages of the instrument without its photographically reproducible mark, it lacked the serial number of the commission of the notary, and the acknowledgement did not reflect the community tax certificate of the person who attested to the document before the notary public. The trial court considered it a private document whose authenticity must be established under the Rules of Court, Rule 132, Section 20, and the defendants, having the burden to authenticate the Deed, failed to present the notary public. The trial court also observed that the signatures in the documents submitted by Catabijan differed from his purported signature in the Deed of Assignment, and it appreciated the findings of the Crime Laboratory Office of the Philippine National Police and the National Bureau of Investigation that the signatures were not made by one and the same person. The trial court did not find Uy's lone testimony credible due to inconsistencies in his statements and the belated registration of the Deed of Assignment. Considering the totality of the evidence, the trial court held that the Deed of Assignment was forged and the copyright of petitioner based on the Deed of Assignment was void. It held that Fujian committed copyright infringement when it authorized M.Y. Intercontinental to sell St. Mary's Publishing's books in the Philippines, because at that time St. Mary's Publishing was the copyright owner of the subject textbooks, and it relied on the Berne Convention for the Protection of Literary and Artistic Works to hold Fujian, a foreign corporation, liable. It also held Allianz liable for infringement for printing, publishing, and selling copies of St. Mary's Publishing's Development Reading Power Supplements K+12 Compliance Textbooks (Revised Edition), which is the same book except for the copyright page and cover. The Regional Trial Court awarded actual damages equivalent to 20% of the gross selling price of the books covered under the December 7, 2009 purchase order, using the Department of Education's mandated selling price of PHP 300.00 and deducting overhead costs, printing, royalties, customs brokerage fees, taxes, and other expenses, and awarded moral damages of PHP 1,000,000.00, exemplary damages of PHP 2,000,000.00, attorney's fees of PHP 500,000.00, legal costs, and other expenses. The Court of Appeals sustained these findings.

• Validity of Copyright Registration: Petitioners contended that they did not commit copyright infringement because M.Y. Intercontinental is the holder of a valid and existing certificate of copyright registration, which constitutes prima facie proof of ownership and remains valid until annulled in a separate proceeding; no order cancelled their certificate.
• Declaratory Relief Ruling: Petitioners argued that the trial court should not have disregarded the findings in the declaratory relief case, and that the infringement case was a mere afterthought without a real cause of action.
• Unjust Enrichment and Debt: Petitioners maintained that invalidating the Deed of Assignment while sustaining the award would result in unjust enrichment; the lower courts should have acknowledged St. Mary's Publishing's debt, raised as a compulsory counterclaim, because the Deed was used to pay that debt.
• Forgery Responsibility: Petitioners asserted that even assuming forgery, there was no proof or allegation that Uy was responsible; the forgery could have been committed by Catabijan since the Deed was already signed when Uy received it, and petitioners themselves sought the National Bureau of Investigation's examination of the Deed.
• Damages Computation: Petitioners assailed the award, arguing there was no proof that 301,000 books were sold at PHP 300.00 each; the declaratory relief case adjudged their right to import and resell the books covered by the December 7, 2009 purchase order; and the award was unjust given St. Mary's Publishing's millions in debt.
• Compulsory Counterclaim: Petitioners argued that the trial court erred in refusing to resolve their compulsory counterclaim based on non-payment; they paid docket fees as directed for a permissive counterclaim, although such fees are prohibited in intellectual property rights cases; their claim was compulsory because it arose out of and related to the subject matter.
• Injunctive Relief: Petitioners sought a temporary restraining order and preliminary injunction against execution of the trial court's award.

• No Question of Law: Respondents alleged that the Petition raised no question of law; the Court of Appeals did not commit any error of law because both lower courts' decisions were based on facts and the evidence on record, and there was no special reason to review the Court of Appeals decision.
• No Legal Transfer of Copyright: Respondents countered that there was no legal transfer of copyright from St. Mary's Publishing to petitioners, and the copyright owner holds the exclusive rights to distribute, sell, and promote the books to petitioners' exclusion.

• Validity of Deed of Assignment: Whether the Deed of Assignment purportedly executed by St. Mary's Publishing in favor of M.Y. Intercontinental is genuine and valid, and whether it transferred copyright.
• Copyright Infringement: Whether petitioners committed copyright infringement in importing, marketing, and selling the subject textbooks.
• Effect of Declaratory Relief Ruling: Whether the Regional Trial Court of Mandaluyong's declaratory relief ruling is binding in the infringement case and affects the award of damages.
• Damages: Whether the trial court correctly awarded actual or just damages, moral and exemplary damages, attorney's fees, and costs.
• Compulsory Counterclaim: Whether petitioners' counterclaim should have been resolved in the infringement case and whether it is compulsory.

• Validity of Deed of Assignment: No. The Deed was forged, and a contract with a forged signature is fictitious and void ab initio for lack of consent; it did not transfer St. Mary's Publishing's copyright to M.Y. Intercontinental.
• Copyright Infringement: Yes. Without a valid assignment, petitioners had no right to import, market, or sell the textbooks; these acts violated St. Mary's Publishing's exclusive economic rights under Section 177 of the Intellectual Property Code.
• Effect of Declaratory Relief Ruling: No. The declaratory relief ruling was not binding; the Court of Appeals had reversed it, and the contract between the parties was primarily a loan and a contract for a piece of work, not a sale that allowed resale of the books.
• Damages: Yes. The award of 20% of total sales as just and reasonable damages, plus moral and exemplary damages, attorney's fees, and costs, was proper given the forgery and bad faith.
• Compulsory Counterclaim: Yes. Petitioners' counterclaim for unpaid loan obligations was compulsory, arose from the same transaction, and should have been resolved; the case was remanded for that purpose.

• Validity of Deed of Assignment: The Court sustained the lower courts' factual finding that Catabijan's signature on the Deed was forged. The trial judge personally compared Catabijan's signatures on the documents on record and found significant differences; the Quezon City Police District Crime Laboratory and the National Bureau of Investigation also concluded that the questioned and sample signatures were not written by one and the same person. Uy's lone testimony was not credible due to inconsistencies and the belated registration of the Deed. Under Article 1318 of the Civil Code, consent is an essential requirement for the perfection of a contract; a contract with a forged signature is a fictitious contract and void ab initio under Article 1409(2). Because there was no consent, the Deed did not transfer any copyright to M.Y. Intercontinental. Copyright registration does not vest ownership; it only provides prima facie proof of the facts stated, which was rebutted by the forgery finding. The 2020 Revised Rules of Procedure for Intellectual Property Rights Cases also provide that registration and deposit do not carry the presumption of ownership. Thus, the certificates issued in M.Y. Intercontinental's name had no basis and should be cancelled under IPOPHL Memorandum Circular No. 2020-025.

• Copyright Infringement: Copyright owners have exclusive economic rights, including reproduction and first public distribution by sale or other transfer under Section 177. Assignment may be in whole or in part but must be in writing under Section 180. Infringement is doing, without the owner's consent, anything the sole right to do is conferred by statute on the owner. Olaño vs. Lim Eng Co requires (1) ownership of a validly copyrighted material by the complainant and (2) infringement of the copyright by the respondent. Section 216 lists modes of infringement: direct infringement, benefiting from infringement, and inducing, causing, or materially contributing to infringement. Liability is strict; lack of intent to infringe is not a defense. St. Mary's Publishing's ownership was undisputed. Fujian authorized M.Y. Intercontinental to sell and market the textbooks and issued commercial documents facilitating importation; Allianz marketed and sold the books. The authorities to print did not include importing books and selling them to the public. Without a valid Deed of Assignment, petitioners had no right to sell these books, and their unauthorized importation, marketing, and sale infringed St. Mary's Publishing's exclusive economic rights.

• Effect of Declaratory Relief Ruling: Petitioners invoked the Regional Trial Court of Mandaluyong's declaratory relief ruling, but they misled the Court by presenting it as final and executory. Records showed that an appeal had already been submitted for decision before the Court of Appeals, and the Court took judicial notice of the Court of Appeals decision promulgated on January 6, 2021, which reversed the Regional Trial Court of Mandaluyong's ruling. The Court of Appeals held that declaratory relief was not available because there was already a breach in St. Mary's Publishing's obligation when the case was filed and M.Y. Intercontinental had adequate remedies, such as an action for breach of contract or specific performance with damages. Moreover, the contract was primarily a loan with payment of interest for the costs of printing St. Mary's Publishing's books, not a sale. It also had elements of a contract for a piece of work under Article 1713, and Article 1467 distinguishes a contract of sale from a contract for a piece of work when goods are manufactured specially for the customer and upon special order, not for the general market. Under Article 1731, an unpaid contractor has a right to retain the subject of the work by way of pledge until payment, but this right arises from performing the work or furnishing the materials, not by virtue of the owner's failure to pay. There is no right to resell the books under Article 1731 by mere operation of law; otherwise, the exclusive economic rights of the copyright owner would be prejudiced. Thus, petitioners had no right to sell the books covered by the December 7, 2009 purchase order.

• Damages: Section 216.1 of the Intellectual Property Code allows actual damages, profits, or just damages, plus moral and exemplary damages, legal costs, and expenses. The trial court awarded 20% of total sales, or PHP 18,060,000.00, based on the PHP 300.00 mandated selling price multiplied by 301,000 books. Since petitioners did not prove the actual costs incurred, the Court found 20% of total sales just and reasonable. Moral damages under Article 2217 require bad faith; exemplary damages under Article 2232 require wanton, fraudulent, reckless, oppressive, or malevolent conduct and entitlement to moral, temperate, or compensatory damages under Article 2234; Article 2223 makes exemplary damages discretionary. Attorney's fees under Article 2208 may be awarded when exemplary damages are granted or when the plaintiff was compelled to litigate. Bad faith was present in the forging of the Deed. Petitioners' claim that Catabijan forged his own signature was unsupported. Under Pacasum vs. People, possession and use of a falsified document raises the presumption that the possessor or user is the material author of the falsification. Petitioners used and benefited from the forged Deed, offered no evidence to rebut the presumption, and thus responsibility for the forgery fell on them. The awards were proper.

• Compulsory Counterclaim: Rule 6, Section 7 of the Rules of Court defines a compulsory counterclaim as one arising out of or connected with the transaction or occurrence constituting the subject matter of the opposing party's claim and not requiring third parties over whom the court cannot acquire jurisdiction. It is auxiliary to the main action. The tests are: (1) whether the issues of fact or law raised by the claim and counterclaim are largely the same; (2) whether res judicata would bar a subsequent suit absent the compulsory counterclaim rule; (3) whether substantially the same evidence would support or refute the claim and counterclaim; and (4) whether there is a logical relation between them. Petitioners' counterclaim for St. Mary's Publishing's loan obligations under Contract Reference No. SMPCMY 76M 009 and the December 7, 2009 purchase order arose from the same financing and printing transaction as the infringement claim; the issues were intertwined and the same evidence would be relitigated. The Rules of Procedure for Intellectual Property Rights Cases allow compulsory counterclaims. Payment of docket fees is not required for compulsory counterclaims; the trial court indirectly treated the counterclaim as permissive by requiring fees. The case was remanded to determine the propriety of the compulsory counterclaims.

• Forged Deed of Assignment and Absence of Consent — A contract with a forged signature is fictitious and void ab initio because consent, an essential requisite under Article 1318 of the Civil Code, is absent; conveyances by virtue of a forged signature or a fictitious deed of sale are void ab initio. The Court applied this to the Deed of Assignment purportedly executed by Catabijan in favor of M.Y. Intercontinental, holding that it did not transfer St. Mary's Publishing's copyright.
• Copyright Registration Does Not Vest Ownership — Registration of copyright is notice and creates only prima facie proof of the facts stated, which may be rebutted by contrary evidence; failure to register does not remove copyright protection, and under the 2020 Revised Rules of Procedure for Intellectual Property Rights Cases, registration or deposit does not carry the presumption of ownership nor is it a condition sine qua non to an infringement claim. The Court held that the certificates in M.Y. Intercontinental's name did not confer rights beyond the forged Deed, and the prima facie proof was destroyed by the forgery finding.
• Copyright Infringement and Exclusive Economic Rights — A copyright owner has exclusive economic rights, including reproduction and first public distribution by sale or other transfer under Section 177 of the Intellectual Property Code. Infringement is committed by any person who, without the owner's consent, does anything the sole right to do is conferred by statute on the owner. A claim requires (1) ownership of validly copyrighted material and (2) infringement by respondent. Modes include direct infringement, benefiting from infringement, and inducing, causing, or materially contributing to infringement. Liability is strict; lack of intent is not a defense. The Court applied this to petitioners' unauthorized importation, marketing, and sale of the textbooks.
• Unpaid Contractor's Right of Retention Does Not Include Right to Resell — Under Article 1731 of the Civil Code, one who has executed work upon a movable has a right to retain it by way of pledge until paid; this right arises from performing the work or furnishing materials, not from the owner's failure to pay. There is no right to resell the books by mere operation of law, as this would prejudice the copyright owner's exclusive economic rights. The Court applied this to reject petitioners' claim that they could sell the books as unpaid sellers.
• Presumption Against Possessor or User of Forged Document — If a person had in his possession a falsified document and made use of it, taking advantage and profiting thereby, the presumption is that he is the material author of the falsification, unless rebutted. The Court applied this to petitioners, who used and benefited from the forged Deed of Assignment and offered no evidence to rebut the presumption.
• Compulsory Counterclaim — A compulsory counterclaim arises out of or is connected with the transaction or occurrence constituting the subject matter of the opposing party's claim and does not require third parties over whom the court cannot acquire jurisdiction. It is auxiliary to the main action and does not require payment of docket fees. The tests are: (1) whether the issues of fact or law raised by the claim and counterclaim are largely the same; (2) whether res judicata would bar a subsequent suit absent the compulsory counterclaim rule; (3) whether substantially the same evidence will support or refute the claim and counterclaim; and (4) whether there is a logical relation between them. The Court applied this to petitioners' unpaid loan claims, which arose from the same transaction as the infringement case.
• Damages in Copyright Infringement — Section 216.1 of the Intellectual Property Code allows actual damages, profits, or just damages, plus moral and exemplary damages, legal costs, and expenses. Moral damages require bad faith under Article 2217; exemplary damages require wanton, fraudulent, reckless, oppressive, or malevolent conduct and entitlement to moral, temperate, or compensatory damages under Articles 2232 and 2234; attorney's fees may be awarded under Article 2208 when exemplary damages are granted or the plaintiff was compelled to litigate. The Court upheld the 20% of total sales as just and reasonable damages and the moral, exemplary, and attorney's fees awards.

• "A forged Deed of Assignment does not confer rights to the assignee for lack of consent of the copyright owner. Notwithstanding its registration before the National Library, the Deed does not operate as a valid transfer of the exclusive economic rights which belong to the copyright owner. Unauthorized importing, marketing, and selling of books constitute copyright infringement." — This opening passage states the core ratio: a forged assignment cannot transfer copyright despite registration, and unauthorized commercial acts constitute infringement.
• "Copyright registration does not vest ownership of the copyright. Failure to register does not remove copyright protection under the law, but this does make the owner liable to pay a fine." — This passage defines the limited effect of copyright registration and rejects the argument that a certificate of registration by itself establishes ownership.
• "Consent is an essential requirement for the perfection of a contract. A contract with a forged signature is a fictitious contract, and \"conveyances by virtue of a forged signature or a fictitious deed of sale are void ab initio.\"" — This passage supplies the contract-law basis for invalidating the Deed of Assignment and for holding that no copyright was transferred.
• "For a claim of copyright infringement to prevail, the evidence on record must demonstrate: (1) ownership of a validly copyrighted material by the complainant; and (2) infringement of the copyright by the respondent." — This passage states the two requisites of a copyright infringement claim, which the Court applied to affirm liability.

• Habana vs. Robles, 369 Phil. 764 (1999) — Cited for the principle that copyright protection ensures the creator's personal and economic gain and that reproduction and enforcement are necessary for the full enjoyment of the creator's rights.
• Ching vs. Salinas, 500 Phil. 628 (2005) — Cited for the rule that a copyright certificate provides prima facie evidence of originality, validity, and ownership, but the presumption merely shifts the burden of proof and may be rebutted; no rebuttable presumption of validity arises where other evidence casts doubt.
• Olaño vs. Lim Eng Co, G.R. No. 195835, March 14, 2016 — Cited for the two requisites of a copyright infringement claim: ownership of a validly copyrighted material and infringement by respondent.
• Columbia Pictures, Inc. vs. Court of Appeals, 329 Phil. 875 (1996) — Cited for the definition of copyright infringement as doing, without the owner's consent, anything the sole right to do is conferred by statute on the owner.
• ABS-CBN Corporation vs. Gozon, 755 Phil. 709-782 (2015) — Cited for the rule that the Intellectual Property Code prescribes strict liability in civil and criminal copyright infringement, and lack of intention to infringe is not a defense.
• Go Chan vs. Heirs of Baba, 456 Phil. 569 (2003) — Cited for the rule that conveyances by virtue of a forged signature or a fictitious deed of sale are void ab initio.
• Pacasum vs. People, 603 Phil. 612 (2009) — Cited for the presumption that a person who possesses and uses a falsified document, taking advantage and profiting thereby, is the material author of the falsification.
• Metals Engineering Resources Corp. vs. Court of Appeals, 280 Phil. 298 (1991) — Cited for the rule that a compulsory counterclaim is auxiliary to the main action and derives jurisdictional support from it; if the main action is dismissed for lack of jurisdiction, the compulsory counterclaim must likewise be dismissed.
• Financial Building Corp. vs. Forbes Park Association, Inc., 392 Phil. 895 (2000) — Cited for the four tests to determine whether a counterclaim is compulsory.
• Sun Insurance Office, Ltd. vs. Asuncion, 252 Phil. 280 (1989) — Cited for the rule that payment of docket fees vests jurisdiction and that permissive counterclaims require docket fees, while compulsory counterclaims do not.
• Cabalero vs. Cantos, 338 Phil. 105 (1997) — Cited for the rule that payment of docket fees is not required in compulsory counterclaims.
• Optimum Motor Center Corp. vs. Tan, 580 Phil. 244 (2008) — Cited for the rule that the unpaid contractor's right of retention under Article 1731 arises from performing the work or furnishing materials, not from the owner's failure to pay.
• Ganancial vs. Cabugao, G.R. No. 203348, July 6, 2020 — Cited for the requirement that the person claiming moral damages must show clear and convincing evidence of bad faith.
• Bobbs-Merill Co. vs. Stratus, 210 U.S. 339 (1908) — Cited by the Regional Trial Court for the first sale doctrine, which it applied to allow resale; the Supreme Court did not adopt that application in finding infringement.
• People vs. Sendaydiego, 171 Phil. 114 (1978) — Cited in Pacasum vs. People for the presumption against the possessor or user of a falsified document.
• Spouses Pajares vs. Remarkable Laundry and Dry Cleaning, 806 Phil. 39 (2017) — Cited for the remedies available upon breach of contract: specific performance, rescission, and/or damages.

• Section 177, Intellectual Property Code — Defines copyright or economic rights, including reproduction and first public distribution by sale or other transfer. Applied to hold that petitioners' unauthorized importation, marketing, and sale infringed St. Mary's Publishing's exclusive rights.
• Section 180.1 and 180.2, Intellectual Property Code — Allow assignment or license in whole or in part and entitle the assignee to the rights and remedies of the assignor, but require a written indication of intention. Applied to the Deed of Assignment, which was void for forgery and therefore transferred no rights.
• Section 216, Intellectual Property Code (as amended by Republic Act No. 10372) — Defines infringement modes: direct infringement, benefiting from infringement, and inducing, causing, or materially contributing to infringement. Applied to petitioners' acts.
• Section 216.1, Intellectual Property Code — Provides remedies for infringement, including injunction, actual damages or profits or just damages, moral and exemplary damages, legal costs, and expenses. Applied to uphold the damages award.
• Article 1318, Civil Code — Requires consent, object, and cause for a contract. Applied to hold that the forged Deed lacked consent and was not perfected.
• Article 1409(2), Civil Code — Declares absolutely simulated or fictitious contracts inexistent and void from the beginning. Applied to the forged Deed of Assignment.
• Article 1467, Civil Code — Distinguishes a contract of sale from a contract for a piece of work when goods are manufactured specially for the customer upon special order. Applied to characterize the printing arrangement as a contract for a piece of work.
• Article 1713, Civil Code — Defines a contract for a piece of work. Applied to the printing agreement.
• Article 1731, Civil Code — Gives an unpaid contractor a right to retain the movable by way of pledge until paid. Applied to hold that petitioners had no right to resell the books by operation of law.
• Article 2217, Civil Code — Allows moral damages for physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation, and similar injury caused by a wrongful act or omission. Applied to uphold moral damages due to bad faith.
• Article 2232, Civil Code — Allows exemplary damages when the defendant acted in a wanton, fraudulent, reckless, oppressive, or malevolent manner. Applied to uphold exemplary damages.
• Article 2234, Civil Code — Requires entitlement to moral, temperate, or compensatory damages before exemplary damages may be considered. Applied to support exemplary damages.
• Article 2223, Civil Code — States exemplary damages cannot be recovered as a matter of right. Applied to the discretionary award.
• Article 2208, Civil Code — Governs attorney's fees and litigation expenses. Applied to uphold attorney's fees.
• Rule 6, Section 7, Rules of Court — Defines a compulsory counterclaim. Applied to petitioners' unpaid loan claims.
• Rule 132, Section 20 and Section 22, Rules of Court — Govern authentication of private documents and handwriting comparison. Applied by the trial court in finding forgery.
• Section 2, 2020 Revised Rules of Procedure for Intellectual Property Rights Cases (A.M. No. 10-3-10-SC) — Provides that registration and deposit do not carry the presumption of ownership and are not a condition sine qua non to an infringement claim. Applied to reject petitioners' reliance on their certificates.
• Section 2, IPOPHL Memorandum Circular No. 2020-025 — Provides grounds for cancellation of a certificate of copyright registration, including a final court decision. Applied to order cancellation of M.Y. Intercontinental's certificates.
• Berne Convention for the Protection of Literary and Artistic Works — Relied on by the trial court to hold Fujian, a foreign corporation, liable. The Supreme Court noted this in its recital of the trial court's ruling.

Lazaro-Javier, M. Lopez, J. Lopez, and Kho, Jr., JJ., concur.