I.

PHILIPPINE DEPOSIT INSURANCE CORPORATION

What is the Philippine Deposit Insurance Corporation

PDIC is a government instrumentality created in 1963 by virtue of Republic Act

3591 to insure the deposits of all banks which are entitled to the benefits of
insurance.

The PDIC now has the authority to help depositors:

a. have quicker access to their insured deposits should their bank close;
b. resolve problem banks while still open;
c. hasten the liquidation process for closed banks; and
d. mete out stiffer sanctions and penalties against those who engage in unsafe
and unsound banking practices.

The PDIC is an attached agency of the Department of Finance.

      
What is PDIC’s overall mandate?

PDIC exists to provide deposit insurance coverage for the depositing public to
help promote public confidence and stability in the economy. It ensures prompt
payment of insured deposits, exercises complementary supervision of banks,
adopts responsive resolution methods, and applies efficient management of
receivership and liquidation functions.

Are all banks members of PDIC?

Membership of banks to PDIC is mandatory; hence, all operating banks are

members of PDIC.
      
What is an insured deposit?

The term ‘insured deposit’ means the amount due to any bona fide depositor for
legitimate deposits in an insured bank net of any obligation of the depositor to
the insured bank as of date of closure, but not to exceed P500,000.00.

A joint account shall be insured separately from any individually-owned deposit

account.

R.A. No. 9576 stipulates that PDIC will not pay deposit insurance for the following
accounts or transactions:

1. Investment products such as bonds, securities and trust accounts;

2. Deposit accounts which are unfunded, fictitious or fraudulent;
3. Deposit products constituting or emanating from unsafe and unsound
banking practices;
4. Deposits that are determined to be proceeds of an unlawful activity as
defined under the Anti-Money Laundering Law.

What is PDIC’s maximum deposit insurance coverage?

Effective June 1, 2009, the maximum deposit insurance coverage is P500,000 per
depositor. All deposit accounts by a depositor in a closed bank maintained in the
same right and capacity shall be added together.

When should the depositor of a closed insured bank file his claim with PDIC?

The depositor of the closed insured bank has 24 months from date of bank
takeover to file his deposit insurance claim.

How long does it take PDIC to settle a claim for insured deposit?

PDIC aims to pay valid claims as soon as possible. Prior to payout, claims are
examined thoroughly. This is to protect the Deposit Insurance Fund (DIF) which is
the source of insurance payments. Sometimes, depositors mistakenly assume that
the payouts are sourced from their deposits. This is not the case. The payouts are
from PDIC’s own funds.

The claim for insured deposit should be settled within six (6) months from the
date of filing provided all requirements are met but the claim must be filed
within twenty-four (24) months after bank takeover. The six-month period shall
not apply if the documents of the claimant are incomplete or if the validity of the
claim requires the resolution of issues of facts and law by another office, body or
agency, independently or in coordination with PDIC.
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II.REPUBLIC ACT NO.1405 SECRECY OF BANK DEPOSITS

AN ACT PROHIBITING DISCLOSURE OF OR INQUIRY INTO, DEPOSITS WITH ANY
BANKING INSTITUTION AND PROVIDING PENALTY THEREFOR

PURPOSE OF THE LAW:

The purpose of this law is to encourage deposit in banking institutions; and

discourage private hoarding so that banks may lend such funds and assist in the
economic development of the country. (Sec. 1 Rep. Act No. 1405)

PROHIBITED ACTS:

1.Examination/inquiry/looking into all deposits of whatever nature with banks or

banking institutions in the Philippines (including investment in bonds issued by
the government) by any person, government official or office (Sec. 2)

(i) Deposits refer to money or funds placed with a bank that can be withdrawn on
the depositor’s order or demand, such as deposit accounts in the form of savings,
current and time deposits. Deposits are characterized as being in the nature of a
simple loan. The placing of deposits in a bank creates a creditor-debtor
relationship between the depositor and the bank. As such, the bank, being the
debtor, has the obligation to pay a certain sum of money to the depositor, being
the creditor.

(ii) Investments in Government Bonds refer to investments in bonds issued by the

Government of the Philippines, its political subdivisions and its instrumentalities.
Government bonds are debt securities which are unconditional obligations of the
State, and backed by its full taxing power. Government bonds include treasury
bills, treasury notes, retail treasury bonds, dollar linked peso notes, and other
risk-free bonds.

2. Disclosure by any official or employee of any banking institution to any

authorized person of any information concerning said deposit. (Sec. 3)

THE FOLLOWING ARE LIABLE UNDER THIS LAW:

(i) Any person or government official who, or any government bureau or office
that, examines, inquires or looks into a bank deposit or government bond
investment in any of the instances not allowed in Section 2;

(ii) Any official or employee of a banking institution who makes a disclosure

concerning bank deposits to another in any instance not allowed by law (Sec. 3,
Rep. Act No. 1405); and

(iii) Any person who commits a violation of any of the provisions of the law (Sec.
5, Rep. Act No. 1405). Any bank official, director, employee or agent who discloses
information relative to funds or properties in the custody of the bank may also be
held liable under the applicable provisions of the General Banking Law, Thrift
Banks Act and Rural Banks Act.

EXCEPTIONS UNDER THE LAW ON SECRECY OF BANK DEPOSITS

Section 2 of Republic Act No. 1405 provides that bank deposits and government
bond investments may be examined, inquired and looked into in the following
instances:
(a) Upon written permission or consent in writing by the depositor. For consent to
be valid, it should be made knowingly, voluntarily and with sufficient awareness
of the relevant circumstances and likely consequences.

(b) In cases of impeachment of the President, Vice President, members of the

Supreme Court, members of the Constitutional Commission (Commission on
Elections, Civil Service Commission and Commission on Audit) and the
Ombudsman for culpable violation of the Constitution, treason, bribery, graft and
corruption, other high crimes or betrayal of public trust. (Art. XI, Sec. 2, 1987
Philippine Constitution)

(c) Upon order of a competent court in cases of bribery or dereliction of duty of

public officials.

(d) In cases where the money deposited or invested is the subject matter of the
litigation. The money deposited should be the very thing in dispute. (Mellon Bank,
N.A.v. Magsino, 190 S.C.R.A. 633 [1990])

PENALTIES FOR VIOLATION

The penalty of imprisonment of not more than 5 years or a fine of not more than
20,000 pesos or both, in the discretion of the court shall be imposed upon any
official or employee of a banking institution who, upon conviction, was found to
have violated R.A. 1405.

III. GENERAL BANKING LAW OF 2000

REPUBLIC ACT NO. 8791            

AN ACT PROVIDING FOR THE REGULATION OF THE ORGANIZATION AND

OPERATIONS OF BANKS, QUASI-BANKS, TRUST ENTITIES AND FOR OTHER
PURPOSES

Declaration of Policy. - The State recognizes the vital role of banks providing an
environment conducive to the sustained development of the national economy
and the fiduciary nature of banking that requires high standards of integrity and
performance. In furtherance thereof, the State shall promote and maintain a
stable and efficient banking and financial system that is globally competitive,
dynamic and responsive to the demands of a developing economy. (n)

A. Definition and Classification of Banks. -

"Banks" shall refer to entities engaged in the lending of funds obtained in the
form of deposits. (2a)

Banks shall be classified into:

(a) Universal banks - participates in many kinds of banking activities and is

both a commercial bank and an investment bank as well as providing other
financial services such as insurance. These are also called full-service
financial firms, although there can also be full-service investment banks
which provide wealth and asset management, trading, underwriting,
researching as well as financial advisory.

A universal bank has the same powers as a commercial bank with the
following additional powers: the powers of an investment house as
provided in existing laws and the power to invest in non-allied enterprises

(b) Commercial banks- financial institution that provides various financial

service, such as accepting deposits and issuing loans. Commercial bank
customers can take advantage of a range of investment products that
commercial banks offer like savings accounts and certificates of deposit.
The loans a commercial bank issues can vary from business loans and auto
loans to mortgages.

In addition to having the powers of a thrift bank, a commercial bank has the
power to accept drafts and issue letters of credit; discount and negotiate
promissory notes, drafts, bills of exchange, and other evidences of debt;
accept or create demand deposits; receive other types of deposits and
deposit substitutes; buy and sell foreign exchange and gold or silver bullion;
acquire marketable bonds and other debt securities; and extend credit.
(c) Thrift banks, composed of: (i) Savings and mortgage banks, (ii) Stock
savings and loan associations, and (iii) Private development banks, as
defined in the Republic Act No. 7906 (hereafter the "Thrift Banks Act");

A thrift bank has the power to accept savings and time deposits, act as a
correspondent with other financial institutions and as a collection agent for
government entities, issue mortgages, engage in real estate transactions
and extend credit. In addition, thrift banks may also maintain checking
accounts, act as a depository for government entities and local government
units and engage in quasi-banking and money market operations subject to
the approval of the Bangko Sentral. Thrift banks are generally smaller in
scale than universal and commercial banks.

(d) Rural banks, as defined in Republic Act No. 73S3 (hereafter the "Rural
Banks Act");

(e) Cooperative banks, as defined in Republic Act No 6938 (hereafter the

"Cooperative Code");

Rural and cooperative banks are the more popular type of banks in the rural
communities. Their role is to promote and expand the rural economy in an
orderly and effective manner by providing the people in the rural
communities with basic financial services. Rural and cooperative banks
help farmers through the stages of production, from buying seedlings to
marketing of their produce. Rural banks and cooperative banks are
differentiated from each other by ownership. While rural banks are
privately owned and managed, cooperative banks are organized/owned by
cooperatives or federation of cooperatives.

A rural bank has the power to provide adequate credit facilities to farmers
and merchants or to cooperatives of such farmers and merchants and, in
general, to the people of the rural communities of which the rural bank
operates in.
 (f) Islamic banks as defined in Republic Act No. 6848, otherwise known as
the "Charter of Al Amanah Islamic Investment Bank of the Philippines"; and

(g) Other classifications of banks as determined by the Monetary Board of

the Bangko Sentral ng Pilipinas. (6-Aa)

e.g. Development Bank of the Philippines

Land Bank of the Philippines
- Both were characterized as “special and unique government banks”
subject to supervision and regulation of the Bangko Sentral pursuant to
Section 25 of the New Central Bank Act1

BANKING ACTIVITIES IN GENERAL

1. Deposit-taking
2. Lending

OTHER BANKING ACTIVITIES

1. Receive in custody funds, documents, and valuable objects
2. Act as financial agent of their customers (buy and sell shares, evidences of
indebtedness, all types of securities)
3. Make collections and payments for the account of others
4. (Upon prior approval of Monetary Board) act as managing agent, adviser,
consultant or administrator of investment management/ advisory/
consultancy accounts
5. Rent out safety deposit boxes
6. Perform such other services not incompatible with the banking business

B. Loans

Limit on loans – Loans that may be extended to any person, partnership,

association, corporation or other entity shall not exceed twenty (20%) percent
of the net worth of such bank.

1
 -may be increased by additional 10% provided such liabilities are secured by
trust receipts, shipping documents, warehouse receipts or other similar
documents transferring or securing title covering readily marketable, non-
perishable goods.

Restriction on Bank Exposure to Directors, Officers, Stockholders and their

Related Interest (DOSRI)– No bank director or officer borrow from such bank
nor shall become a guarantor, endorser or surety for loans, or in any manner be
an obligor or incur contractual liability to the bank except with the written
approval of the majority of all the directors excluding the director concerned.

1. Related Interest shall refer to any of the ff:

a. Spouse or relative within the first degree of consanguinity or
affinity, or relative by legal adoption
b. Partnership where the director, officer, stockholder or his Spouse
or relative within the first degree of consanguinity or affinity, or
relative by legal adoption, is a general partner
c. Co-owner of the property to be used as collateral/security
d. Corporation, association or firm of which director or officer or his
spouse is also a director or officer
e. Corporation, association or firm of which any or a group of
directors or officers or their spouses and relative within the first
degree control more than 20% of the subscribed capital
f. Corporation, association or firm wholly owned or majority-owned
or controlled by an related entity or a group or related entities
g. Corporation, association or firm which owns or controls at least
20% of the subscribed capital stock of a substantial stockholder of
the lending bank
h. Corporation, association or firm in which the lending bank and/or
its subsidiary holds or owns at least 20% of the subscribed capital
of such corporation
 2. Individual ceiling – loans and other credit accommodations shall be
limited to an amount equivalent to their respective unencumbered
deposits and book value of their paid-in capital contribution in the bank,
provided, that the unsecured loans and other credit accommodations to
each of the bank’s DOSRI shall not exceed 30% of their respective total
loans
3. BSP ruling on DOSRI loans to finance priority programs needed to
support economic growth under the Philippine Development Plan/Public
Investment Program
a. Higher individual and unsecured limits of 25% and 12.5% of the
net worth of the lending bank

Loans and Other Credit Accommodations Against Real Estate – except as the
Monetary Board may otherwise prescribe, shall not exceed 75% of the
appraised value of the real estate plus 60% of the appraised value of the
insured improvements

Loans and Other Credit Accommodations on Security of Chattels and

Intangible Properties - except as the Monetary Board may otherwise prescribe,
shall not exceed 75% of the appraised value of the security

Requirement for Grant of Loans

a. Debtor’s capacity to fulfill his commitments

b. Statement of Assets and Liabilities and of their income and
expenditures

Foreclosure of Real Estate Mortgage

-Right of redemption of the mortgagor within one year after the sale of the
real property mortgaged to redeem the property after paying:

a. the amount due under the deed of mortgage

b. interest
 c. costs and expenses incurred by the bank from the sale and custody of the
property less the income derived therefrom

C. Single Borrower Limit (SBL)-Circular No. 0425, Series of 2004

1. Credit Exposure Limit – shall at no time exceed twenty-five (25%)
percent of the net worth of the lending bank
2. may be increased by an additional ten percent (10%) provided
that the additional liabilities are adequately secured by trust
receipts, shipping documents, warehouse receipts or other similar
documents

IV. ANTI-MONEY LAUNDERING ACT

Republic Act No. 9160 otherwise known as The Anti-Money Laundering Act of
2001 was signed into law on September 29, 2001 and took effect on October 17,
2001. The implementing Rules and Regulations took effect on  April 2, 2002. On
March 7, 2003, R.A. No. 9194 (An Act Amending R.A. No. 9160) was signed into
law and took effect on March 23, 2003. The revised Implementing Rules and
Regulations took effect on September 7, 2003. 

Money Laundering is a crime whereby the proceeds of an unlawful

activity as defined in the AMLA are transacted or attempted to be
transacted to make them appear to have originated from legitimate
sources.
Money Laundering Offenses and Penalties    

 Knowingly transacting or attempting to transact any monetary

instrument/property which represents, involves or relates to the
proceeds of an unlawful activity. Penalty is 7 to 14 years      imprisonment
and a fine of not less than P3M but not more than twice the value of the
monetary instrument/property. 
 Knowingly performing or failing to perform an act in relation to any
monetary instrument/property involving the proceeds of any unlawful
activity as a result of which he facilitated the offense of money laundering.
 Penalty is 4 to 7 years imprisonment and a fine of not less than P1.5M but
not more than P3M. 
 Knowingly failing to disclose and file with the AMLC any monetary
instrument/property required to be disclosed and filed. Penalty is 6 months
to 4 years imprisonment or a fine of not less than P100,000 but not more
than P500,000, or both.

Unlawful Activity is the offense which generates dirty money or property. It

is commonly called the predicate crime. It refers to any act or omission or
series or combination thereof involving or having direct relation to the
following:

Predicate Crimes/Unlawful Activities

   
 Kidnapping for ransom
 Drug trafficking and related offenses
 Graft and corrupt practices  
 Plunder    
 Robbery and Extortion
 Jueteng and Masiao
 Piracy
 Qualified theft
 Swindling
 Smuggling
 Violations under the Electronic Commerce Act of 2000
 Hijacking; destructive arson; and murder, including those perpetrated by
terrorists against non-combatant persons and similar targets
 Fraudulent practices and other violations under the Securities Regulation
Code of 2000
 Felonies or offenses of a similar nature that are punishable under the penal
laws of other countries.
 Terrorism financing and organizing or directing others to commit terrorism
financing (R.A. 10168).
 Attempt/conspiracy to commit terrorism financing and organizing or
directing others to commit terrorism financing (R.A. 10168).
 Attempt/conspiracy to commit dealing with property or funds of
designated person.
  Accomplice to terrorism financing or conspiracy to commit terrorism
financing.
 Accessory to terrorism financing.

Other Offenses/Penalties

Failure to keep records is committed by any responsible official or employee of a

covered institution who fails to maintain and safely store all records of all
transactions of said institution, including closed accounts, for five (5) years from
the date of the transaction/closure of the account. Penalty is 6 months to 1 year
imprisonment or a fine of not less than P100,000 but not more than P500,000, or
both.

Covered Institutions

Covered Institutions are those mandated by the AMLA to submit covered and
suspicious transaction reports to the AMLC.

   These are:

 Banks and all other entities, including their subsidiaries and affiliates,
supervised and regulated by the Bangko Sentral ng Pilipinas
 Insurance companies, pre-need companies and all other institutions
supervised or regulated by the Insurance Commission
 Securities dealers and other entities

Covered & Suspicous Transactions

Covered transactions are single transactions in cash or other equivalent monetary

instrument involving a total amount in excess of Five Hundred Thousand
(P500,000) Pesos within one (1) banking day

Suspicious transactions are transactions with covered institutions, regardless of

the amounts involved, where any of the following circumstances exists: 

 there is no underlying legal/trade obligation, purpose or economic

justification; the client is not properly identified;
 the amount involved is not commensurate with the business or financial
capacity of the client;
  the transaction is structured to avoid being the subject of reporting
requirements under the AMLA;
 there is a deviation from the client’s profile/past transactions;
 the transaction is related to an unlawful activity/offense under the AMLA;
and transactions similar or analogous to the above.

Who Should Register In the AMLC Reporting Procedure?

Covered Persons Supervised or Regulated by the Bangko Sentral ng Pilipinas

(BSP)

 Banks;
 Offshore banking units;
 Quasi-banks;
 Trust entities;
 Non-stock savings and loan associations;
 Pawnshops;
 Foreign exchange dealers;
 Money changers;
 Money remittance or transfer companies;
 Electronic money issuers; and
 All other persons and their subsidiaries and affiliates supervised or regulated by
the BSP.

V. NEW CENTRAL BANK ACT – REPUBLIC ACT NO. 7653

A. Legal Tender power over coins and note – all notes and coins issued by the
Bangko Sentral shall be fully guaranteed by the Government of the Republic of
the Philippines and shall be legal tender in the Philippines for all debts, both
public and private.

BSP Circular No. 537, Series of 2006

1. One Thousand Pesos (P 1,000.00) for denominations of P1, P5 and P10

coins
 2. One Hundred Pesos (P 100.00) for denominations of 5, 10 and 25 cents

B. Conservatorship

A bank is places under conservatorship whenever, on the basis of a report

submitted by the appropriate supervising or examining department, the
Monetary Board finds that a bank or a quasi-bank is in a state of continuing
inability or unwillingness to maintain a condition of liquidity deemed adequate to
protect the interest of depositors and creditors.

a. Appointment of a conservator by the Monetary Board.

b. Powers and duties of a Conservator:
i. will take charges of the assets, liabilities and management of
the bank
ii. reorganize the management, collect all monies and debts due
said institution
iii. exercise all powers necessary to restore its viability
iv. Shall report and be responsible to the Monetary Board
v. Shall have the power to overrule or revoke the actions of the
previous management and BOD of the bank
c. Qualification-Should be competent and knowledgeable in bank
operations and management
d. Conservatorship shall not exceed one (1) year
e. Compensation-to be fixed by the Monetary Board, the amount shall
not exceed 2/3 of the salary of the bank President in one year,
payable in 12 equal monthly payments
f. The Monetary Board may appoint a conservator connected with the
Bangko Sentral, in which case he shall not be entitled to receive any
remuneration or emolument from the Bangko Sentral during the
conservatorship.
g. The expenses attendant to the conservatorship shall be borne by the
bank or quasi-bank concerned.
h. When terminated? The Monetary Board shall terminated the
conservatorship when:
 i. It is satisfied that the institution can continue to operate on its
own and the conservatorship is no longer necessary;
ii. on the basis of the report of the conservator or of its own
findings, determine that the continuance in business of the
institution would involve probable loss to its depositors or
creditors, in which case the provisions of Section 30
(Receivership) shall apply.

C. Receivership and Closures

1. Grounds : The Monetary Board may summarily and without need for
prior hearing forbid the institution from doing business in the Philippines
and designate the Philippine Deposit Insurance Corporation as receiver of
the banking institution.

(a) is unable to pay its liabilities as they become due in the ordinary
course of business: Provided, That this shall not include inability to pay
caused by extraordinary demands induced by financial panic in the banking
community;

(b) has insufficient realizable assets, as determined by the Bangko

Sentral, to meet its liabilities; or

(c) cannot continue in business without involving probable losses to

its depositors or creditors; or

(d) has willfully violated a cease and desist order under Section 37
that has become final, involving acts or transactions which amount to fraud
or a dissipation of the assets of the institution;

         2. Receiver:

a. Banking institution – PDIC

b. For a quasi-bank, any person of recognized competence in
banking or finance

3. Powers and Duties:

 a. shall immediately gather and take charge of all the assets and
liabilities of the institution, administer the same for the benefit of
its creditors;
b. exercise the general powers of a receiver under the Revised Rules
of Court but shall not, with the exception of administrative
expenditures, pay or commit any act that will involve the transfer
or disposition of any asset of the institution;
c. shall determine as soon as possible, but not later than ninety (90)
days from take over, whether the institution may be rehabilitated
or otherwise placed in such a condition so that it may be
permitted to resume business with safety to its depositors and
creditors and the general public subject to prior approval of the
Monetary Board.
d. If the receiver determines that the institution cannot be
rehabilitated or permitted to resume business in accordance
with the next preceding paragraph, the Monetary Board shall
notify in writing the board of directors of its findings and direct
the receiver to proceed with the liquidation of the institution.

4. Liquidation proceedings – Regional Trial Court

a. file petition ex parte for assistance in the liquidation of the
institution pursuant to a liquidation plan adopted by the
Philippine Deposit Insurance Corporation for general application
to all closed banks
b. In case of quasi-banks, the liquidation plan shall be adopted by
the Monetary Board.
c. Upon acquiring jurisdiction, the court shall, upon motion by the
receiver after due notice, adjudicate disputed claims against the
institution, assist the enforcement of individual liabilities of the
stockholders, directors and officers, and decide on other issues as
may be material to implement the liquidation plan adopted.
d. The receiver shall pay the cost of the proceedings from the assets
of the institution.
e. convert the assets of the institutions to money, dispose of the
same to creditors and other parties, for the purpose of paying the
debts of such institution in accordance with the rules on
 concurrence and preference of credit under the Civil Code of the
Philippines ;
f. receiver may, in the name of the institution, and with the
assistance of counsel as he may retain, institute such actions as
may be necessary to collect and recover accounts and assets of,
or defend any action against, the institution.
g. The assets of an institution under receivership or liquidation shall
be deemed in custodia legis in the hands of the receiver and shall,
from the moment the institution was placed under such
receivership or liquidation, be exempt from any order of
garnishment, levy, attachment, or execution.
h. The actions of the Monetary Board taken under this section or
under Section 29 of this Act shall be final and executor

VI. INTELLECTUAL PROPERTY LAW

OBJECTIVE: It shall protect and secure the exclusive rights of scientists, inventors,
artists and other gifted citizens to their intellectual property and creations,
particularly when beneficial to the people,

4.1. The term "intellectual property rights" consists of:

[a] Copyright and Related Rights;

[b] Trademarks and Service Marks;

[c] Geographic Indications;

[d] Industrial Designs;

[e] Patents;

[f] Layout-Designs (Topographies) of Integrated Circuits; and

[g] Protection of Undisclosed Information (n) [TRIPS].

A. Law on Patents

Sec. 21. Patentable Inventions. - Any technical solution of a problem in any

field of human activity which is new, involves an inventive step and is
industrially applicable shall be patentable. It may be, or may relate to, a
product, or process, or an improvement of any of the foregoing. (Sec. 7, R.
A. No. 165a)

Sec. 22. Non-Patentable Inventions. - The following shall be excluded from

patent protection:
22.1. Discoveries, scientific theories and mathematical methods;
22.2. Schemes, rules and methods of performing mental acts, playing
games or doing business, and programs for computers;
22.3 Methods for treatment of the human or animal body by surgery or
therapy and diagnostic methods practiced on the human or animal body.
This provision shall not apply to products and composition for use in any of
these methods;
22.4. Plant varieties or animal breeds or essentially biological process for
the production of plants or animals. This provision shall not apply to micro-
organisms and non-biological and microbiological processes.
22.5. Aesthetic creations; and
22.6. Anything which is contrary to public order or morality. (Sec. 8, R. A.
No. 165a)

Sec. 23. Novelty. - An invention shall not be considered new if it forms part
of a prior art. (Sec. 9, R. A. No. 165a)

Sec. 24. Prior Art. - Prior art shall consist of:

24.1. Everything which has been made available to the public anywhere in
the world, before the filing date or the priority date of the application
claiming the invention; and
24.2. The whole contents of an application for a patent, utility model, or
industrial design registration, published in accordance with this Act, filed or
effective in the Philippines, with a filing or priority date that is earlier than
the filing or priority date of the application: Provided, That the application
which has validly claimed the filing date of an earlier application under
Section 31 of this Act, shall be prior art with effect as of the filing date of
such earlier application: Provided further, That the applicant or the
inventor identified in both applications are not one and the same. (Sec. 9,
R. A. No. 165a)
Sec. 28. Right to a Patent. - The right to a patent belongs to the inventor,
his heirs, or assigns. When two (2) or more persons have jointly made an
invention, the right to a patent shall belong to them jointly. (Sec. 10, R. A.
No. 165a)

Sec. 29. First to File Rule. - If two (2) or more persons have made the
invention separately and independently of each other, the right to the
patent shall belong to the person who filed an application for such
invention, or where two or more applications are filed for the same
invention, to the applicant who has the earliest filing date or, the earliest
priority date. (3rd Sentence, Sec. 10, R. A. No. 165a.)

Sec. 30. Inventions Created Pursuant to a Commission. -

30.1. The person who commissions the work shall own the patent, unless
otherwise provided in the contract.
30.2. In case the employee made the invention in the course of his
employment contract, the patent shall belong to:
(a) The employee, if the inventive activity is not a part of his regular duties
even if the employee uses the time, facilities and materials of the employer.
(b) The employer, if the invention is the result of the performance of his
regularly-assigned duties, unless there is an agreement, express or implied,
to the contrary. (n)

Sec. 31. Right of Priority. - An application for patent filed by any person who
has previously applied for the same invention in another country which by
treaty, convention, or law affords similar privileges to Filipino citizens, shall
be considered as filed as of the date of filing the foreign application:
Provided, That: (a) the local application expressly claims priority; (b) it is
filed within twelve (12) months from the date the earliest foreign
application was filed; and (c) a certified copy of the foreign application
together with an English translation is filed within six (6) months from the
date of filing in the Philippines. (Sec. 15, R. A. No. 165a)
 

Sec. 71. A patent shall confer on its owner the following exclusive rights:
 (a) Where the subject matter of a patent is a product, to restrain,
prohibit and prevent any unauthorized person or entity from making,
using, offering for sale, selling or importing that product;
(b) Where the subject matter of a patent is a process, to restrain,
prevent or prohibit any unauthorized person or entity from using the
process, and from manufacturing, dealing in, using, selling or offering
for sale, or importing any product obtained directly or indirectly from
such process.

71.2. Patent owners shall also have the right to assign, or transfer by
succession the patent, and to conclude licensing contracts for the same.
(Sec. 37, R. A. No. 165a)

B. Law on Trademark, Service Marks and Trade Names

121.1. "Mark" means any visible sign capable of distinguishing the goods
(trademark) or services (service mark) of an enterprise and shall include a
stamped or marked container of goods; (Sec. 38, R. A. No. 166a)

121.2. "Collective mark" means any visible sign designated as such in the
application for registration and capable of distinguishing the origin or any
other common characteristic, including the quality of goods or services of
different enterprises which use the sign under the control of the registered
owner of the collective mark; (Sec. 40, R. A. No. 166a)

121.3. "Trade name" means the name or designation identifying or

distinguishing an enterprise; (Sec. 38, R. A. No. 166a)

123.1. A mark cannot be registered if it:

(a) Consists of immoral, deceptive or scandalous matter, or matter
which may disparage or falsely suggest a connection with persons,
living or dead, institutions, beliefs, or national symbols, or bring them
into contempt or disrepute;
(b) Consists of the flag or coat of arms or other insignia of the
Philippines or any of its political subdivisions, or of any foreign
nation, or any simulation thereof;
(c) Consists of a name, portrait or signature identifying a particular
living individual except by his written consent, or the name,
signature, or portrait of a deceased President of the Philippines,
during the life of his widow, if any, except by written consent of the
widow;
(d) Is identical with a registered mark belonging to a different
proprietor or a mark with an earlier filing or priority date, in respect
of:
(i) The same goods or services, or
(ii) Closely related goods or services, or
(iii) If it nearly resembles such a mark as to be likely to deceive
or cause confusion;
(e) Is identical with, or confusingly similar to, or constitutes a
translation of a mark which is considered by the competent authority
of the Philippines to be well-known internationally and in the
Philippines, whether or not it is registered here, as being already the
mark of a person other than the applicant for registration, and used
for identical or similar goods or services: Provided, That in
determining whether a mark is well-known, account shall be taken of
the knowledge of the relevant sector of the public, rather than of the
public at large, including knowledge in the Philippines which has
been obtained as a result of the promotion of the mark;
(f) Is identical with, or confusingly similar to, or constitutes a
translation of a mark considered well-known in accordance with the
preceding paragraph, which is registered in the Philippines with
respect to goods or services which are not similar to those with
respect to which registration is applied for: Provided, That use of the
mark in relation to those goods or services would indicate a
connection between those goods or services, and the owner of the
registered mark: Provided further, That the interests of the owner of
the registered mark are likely to be damaged by such use;
(g) Is likely to mislead the public, particularly as to the nature,
quality, characteristics or geographical origin of the goods or
services;
(h) Consists exclusively of signs that are generic for the goods or
services that they seek to identify;
 (i) Consists exclusively of signs or of indications that have become
customary or usual to designate the goods or services in everyday
language or in bona fide and established trade practice;
(j) Consists exclusively of signs or of indications that may serve in
trade to designate the kind, quality, quantity, intended purpose,
value, geographical origin, time or production of the goods or
rendering of the services, or other characteristics of the goods or
services;
(k) Consists of shapes that may be necessitated by technical factors
or by the nature of the goods themselves or factors that affect their
intrinsic value;
(l) Consists of color alone, unless defined by a given form; or
(m) Is contrary to public order or morality.

C. Law on Copyright

Sec. 172. Literary and Artistic Works. -

172.1 Literary and artistic works, hereinafter referred to as "works", are

original intellectual creations in the literary and artistic domain protected
from the moment of their creation and shall include in particular:
(a) Books, pamphlets, articles and other writings;
(b) Periodicals and newspapers;
(c) Lectures, sermons, addresses, dissertations prepared for oral delivery,
whether or not reduced in writing or other material form;
(d) Letters;
(e) Dramatic or dramatico-musical compositions; choreographic works or
entertainment in dumb shows;
(f) Musical compositions, with or without words;
(g) Works of drawing, painting, architecture, sculpture, engraving,
lithography or other works of art; models or designs for works of art;
(h) Original ornamental designs or models for articles of manufacture,
whether or not registrable as an industrial design, and other works of
applied art;
(i) Illustrations, maps, plans, sketches, charts and three-dimensional works
relative to geography, topography, architecture or science;
(j) Drawings or plastic works of a scientific or technical character;
 (k) Photographic works including works produced by a process analogous to
photography; lantern slides;
(l) Audiovisual works and cinematographic works and works produced by a
process analogous to cinematography or any process for making audio-
visual recordings;
(m) Pictorial illustrations and advertisements;
(n) Computer programs; and
(o) Other literary, scholarly, scientific and artistic works.

172.2. Works are protected by the sole fact of their creation, irrespective of
their mode or form of expression, as well as of their content, quality and
purpose. (Sec. 2, P. D. No. 49a)

Sec. 177. Copy or Economic Rights. - Subject to the provisions of Chapter VIII,
copyright or economic rights shall consist of the exclusive right to carry out,
authorize or prevent the following acts:

177.1. Reproduction of the work or substantial portion of the work;

177.2 Dramatization, translation, adaptation, abridgment, arrangement or
other transformation of the work;
177.3. The first public distribution of the original and each copy of the work
by sale or other forms of transfer of ownership;
177.4. Rental of the original or a copy of an audiovisual or cinematographic
work, a work embodied in a sound recording, a computer program, a
compilation of data and other materials or a musical work in graphic form,
irrespective of the ownership of the original or the copy which is the
subject of the rental; (n)
177.5. Public display of the original or a copy of the work;
177.6. Public performance of the work; and
177.7. Other communication to the public of the work (Sec. 5, P. D. No.
49a)

Sec. 178. Rules on Copyright Ownership. - Copyright ownership shall be governed

by the following rules:

178.1. Subject to the provisions of this section, in the case of original

literary and artistic works, copyright shall belong to the author of the work;
178.2. In the case of works of joint authorship, the co-authors shall be the
original owners of the copyright and in the absence of agreement, their
rights shall be governed by the rules on co-ownership. If, however, a work
of joint authorship consists of parts that can be used separately and the
author of each part can be identified, the author of each part shall be the
original owner of the copyright in the part that he has created;
178.3. In the case of work created by an author during and in the course of
his employment, the copyright shall belong to:
(a) The employee, if the creation of the object of copyright is not a
part of his regular duties even if the employee uses the time, facilities
and materials of the employer.
(b) The employer, if the work is the result of the performance of his
regularly-assigned duties, unless there is an agreement, express or
implied, to the contrary.