Intellectual Property Fundamentals

Intellectual property rights protect the creations of the human mind and grant exclusive ownership to creators. The Philippine intellectual property system aims to protect and secure intellectual property rights while promoting national development and the common good.

Intellectual property is categorized as either original (no previous owner, like a new creation) or derivative (transferred from a previous owner). Understanding the difference between a mode of acquiring ownership and a title is important—title is the legal justification, while mode is the actual means of transfer.

There are various ways to acquire ownership (OLD TIPS):

• Occupation (keeping what you catch or hunt)
• Law (legal provisions like pledges)
• Donation (gifts)
• Tradition (consequence of contracts like sales)
• Intellectual Creation $protected by Articles 721-724$
• Prescription (passage of time)
• Succession (triggered by death)

💡 Intellectual property doesn't just protect creators—it plays a critical social function by facilitating technology transfer, attracting foreign investment, and ensuring market access for innovations.

Banking Examination and Regulation

Banks undergo various examinations to ensure they comply with banking laws and protect depositors. These examinations can be regular (conducted by the Monetary Board and PDIC every 12 months) or special (conducted by PDIC when closure is threatened).

The examination process includes investigating potential fraud and irregularities, resulting in a Final Report of Examination (FRE). This report may lead to Prompt Corrective Action (PCA) against unsound banking practices through cease and desist orders or fines.

If PCA fails, or if a bank experiences serious financial problems, more serious actions may be taken. A bank may be considered for closure if it has:

• Dormant accounts for 60+ days
• Suspended payments
• Is unable to pay liabilities as they fall due
• Has liabilities exceeding realizable assets

The banking regulatory framework involves several co-regulators, including the Anti-Money Laundering Council (AMLC), Philippine Competition Commission (PCC), PDIC, BSP, SEC, and others working together to ensure the stability of the financial system.

⚠️ When a bank fails, the PDIC ensures depositors are protected up to ₱500,000 per depositor, making it critical to understand how your deposits are insured and the priority of claims.

Data Privacy Act

The Data Privacy Act (RA 10173) protects individuals' personal information in the Philippines. The law applies to both natural and juridical persons who control or process personal information, requiring appropriate organizational, physical, and technical controls.

The National Privacy Commission (NPC) oversees implementation, led by a Privacy Commissioner who must have 35+ years of experience, good moral character, and expertise in IT and data privacy. Two Deputy Commissioners assist with data privacy systems and personnel.

Personal information processing requires consent from the data subject unless it falls under specific exceptions like:

• Compliance with legal obligations
• Response to national emergencies
• Protection of life and health
• Fulfillment of legitimate interests

The law gives data subjects important rights, including:

• Right to be informed about how their data is used
• Right to access their own data
• Right to object to processing
• Right to rectify errors
• Right to erasure or blocking of data
• Right to file complaints and seek damages

🔐 Organizations must report data breaches involving sensitive personal information within 72 hours to the NPC—a crucial requirement that helps protect individuals from identity fraud.

Electronic Commerce Act

The Electronic Commerce Act (RA 8792) establishes a legal framework for electronic transactions in the Philippines. The law is guided by four key principles: form equivalence (electronic documents are legally valid), functional equivalence (electronic documents are treated the same as physical ones), technology neutrality (covering both old and new technology), and media neutrality (not discriminating based on medium).

The law applies to both commercial and non-commercial transactions, domestically and internationally. It establishes penalties for hacking, unauthorized access, interference (like ransomware), and piracy.

Key concepts include:

• Electronic data message: information that's electronically created, sent, received, or stored
• Electronic document: a representation of information that can prove facts, establish rights, or fulfill obligations
• Electronic signature: used to identify the originator or recipient, with digital signatures providing enhanced security through private/public key pairs

The law recognizes that electronic communications can be used to establish rights, extinguish obligations, and prove facts—giving legal validity to digital transactions.

📱 Electronic transactions are now foundational to business operations—understanding the legal framework protects you when conducting business online or through digital means.

Corporate Governance

Corporate governance provides the framework for how companies are directed and controlled. In the Philippines, the Code of Corporate Governance (RCCG) applies to corporations with:

1. Equity or debt securities required to be regulated by SEC
2. Assets exceeding 50 million, with 200+ shareholders $100+ equity holders$
3. Equities listed on an exchange
4. Grantees of secondary licenses from SEC

The code establishes key principles around board governance, disclosure and transparency, internal control and risk management, and stakeholder relationships. The board of directors must be competent and working (P1), with clear responsibilities and accountabilities (P2).

Board committees should have formal charters (P3) and directors must show commitment (P4) and independence (P5). Regular performance assessment (P6) and high ethical standards (P7) are required.

Companies must implement corporate disclosure policies (P8), maintain external audit standards (P9), and report on non-financial and sustainability issues (P10). They should establish comprehensive communication channels (P11), develop strong internal controls (P12), and ensure shareholders' rights are protected (P13).

👥 Good corporate governance isn't just about compliance—it creates trust with stakeholders and improves company performance by ensuring decisions are made with proper oversight.

Ease of Doing Business

The Ease of Doing Business and Efficient Government Service Delivery Act (RA 11032) aims to reduce bureaucratic red tape and improve government service delivery. The law promotes integrity and accountability in public service and establishes measures for transparency in government transactions.

The Anti-Red Tape Authority (ARTA) implements and monitors compliance across the Executive Department, GOCCs, and LGUs, supported by an Advisory Council that provides policy guidance. Key reforms include:

1. Unified Business Application Form and Business One Stop Shop (BOSS) to streamline business applications
2. Central Business Portal for data capture and Philippine Business Database for document storage
3. Citizen's Charter that includes zero-contact policy, accountability measures, and complaint procedures
4. Strict processing time limits for government services:
   • Simple transactions: 3 working days
   • Complex transactions: 7 working days
   • Highly technical: 20 working days

For specific services, the law sets clear timelines: Barangay/LGU permits (7 days), Sanggunian approvals (20 days), and Fire Safety certificates (7 days).

⏱️ When government agencies fail to process applications within the prescribed period, applications are deemed automatically approved—a powerful incentive for agencies to improve efficiency!

Securities Regulation Code

The Securities Regulation Code aims to develop the capital market, democratize wealth, and protect investors in the Philippines. The SEC requires the registration of securities, securities market professionals, and markets unless they qualify for exemptions.

Securities represent shares, interests, or participation in corporations or profit-making ventures, categorized as either equity or debt. The Howey Test identifies an investment contract as having: (1) an investment of money, (2) in a common enterprise, (3) with expectation of profit, (4) primarily through others' efforts.

The code provides investor protection through several mechanisms:

• Reportorial requirements for registered issuers, public companies, and publicly listed companies
• Disclosure requirements for owners of at least 5% of shares
• Prohibitions against manipulative schemes and fraudulent practices
• Insider trading regulations preventing those with non-public material information from trading

The code also regulates tender offers, which become mandatory when acquiring 15% of a public company or 35% within a 12-month period, ensuring minority shareholders receive fair treatment.

📊 Understanding securities regulations is crucial for investors—they provide safeguards against fraud and ensure transparency in capital markets, helping you make informed investment decisions.

Batas Pambansa Blg. 22 (Bouncing Checks Law)

BP 22 makes it unlawful to issue checks without sufficient funds. It differs from estafa (under the Revised Penal Code), as BP 22 is mala prohibita (wrong because it's prohibited) while estafa is mala in se (inherently wrong).

For BP 22, the elements are simpler than estafa:

1. Issuing a check:
   • Without sufficient funds, or
   • With insufficient funds for value on account
2. Knowledge of insufficient funds at the time of issue
3. The check is subsequently dishonored upon presentment
4. The issuer fails to make good the amount within 5 banking days after receiving notice of dishonor

After receiving notice of dishonor, the issuer has 5 banking days to deposit or arrange payment for the check. Failure to do so creates a presumption of knowledge of insufficient funds.

Penalties for BP 22 include:

• Imprisonment of 30 days to 1 year
• Fine up to double the amount of the check or ₱200,000 (whichever is higher)
• Or both imprisonment and fine

📝 Even if you don't intend to deceive, issuing checks without sufficient funds is still punishable under BP 22—always ensure you have adequate funds before issuing checks.

Anti-Money Laundering Act

The Anti-Money Laundering Act (AMLA) aims to prevent the Philippines from becoming a money laundering site and facilitates cooperation with international investigations. The Anti-Money Laundering Council (AMLC), comprised of the BSP Governor, Insurance Commissioner, and SEC Chairperson, oversees implementation.

Money laundering involves three stages:

1. Placement - introducing illegal proceeds into the financial system
2. Layering - conducting complex transactions to disguise the source
3. Integration - reintroducing "clean" money into the legitimate economy

The law requires preventive measures from covered institutions:

• Customer identification - verifying client identities before transactions
• Record keeping - maintaining transaction records for 5 years
• Transaction reporting - filing reports for:
  • Covered transactions $exceeding ₱500,000, ₱1M/₱5M for casinos, ₱7.5M for real estate$
  • Suspicious transactions (reported next working day after detection)
  • Realty transactions (exceeding ₱500,000)

The AMLC has powers to investigate, freeze accounts with court orders, and file forfeiture cases. All information handled by AMLC remains confidential even after staff separation.

🔍 Financial institutions use a risk-based approach to detect suspicious transactions—unusual patterns like "breaking up" large transactions into smaller ones under ₱500,000 are red flags for potential money laundering.

Obligations and Contracts: General Principles

Obligations can be classified in various ways, including simple vs. compound (having one or multiple objects), conjunctive vs. disjunctive (requiring all or just one of several prestations), and joint vs. solidary (divided among parties or binding all parties to the entire obligation).

The nature of obligations affects how they must be performed:

• Indivisible obligations cannot be partially performed, except in specific cases like metric units or analogous cases
• Alternative obligations give the debtor the right to choose between options (unless stipulated otherwise)
• Facultative obligations allow the debtor to substitute the principal obligation with another

When obligations are breached, remedies include:

• Specific performance - requiring exact fulfillment
• Substitute performance - having a third party perform at debtor's expense
• Equivalent performance - monetary compensation
• Rescission - cancellation of the contract

Penalty clauses may be included in contracts to establish predetermined damages, though courts may reduce penalties that are iniquitous or unconscionable.

⚖️ The law presumes obligations are joint (divided equally), not solidary—if you want all parties to be responsible for the entire obligation, this must be expressly stated in the contract.