WHAT IS MEANT BY “FAIR USE”?

ANSWER: A fair use, in its most general sense, is the act of copying of

copyrighted materials done for purposes such as commenting, criticizing,
or parodying a copyrighted work without the permission from the
copyright owner. It is used as a defense under copyright infringement.
The Four Factors of Fair Use, are also observed in the Philippine
judicial system in considering fair use. These are:
(1) the purpose and character of your use,
(2) the nature of the copyrighted work,
(3) the amount and substantiality of the portion taken, and
(4) the effect of the use upon the potential market.

So what does the law allow as Fair Use?

ANSWER: If you performed your favorite Eraserheads hit music in your
family reunion last Christmas, and you didn’t charge them a fee to hear
you sing, that’s fair use.
If you’re delivering a keynote address to fellow graduates as Class
Valedictorian and you borrowed the quote of your favorite writer, leader,
philosopher or author, that’s fair use - so long as you credit the original
creator whether in the written speech or in the delivery. (Accg. to Ninoy
Aquino; Theodoro Roosevelt once said; let us not forget what Edgar
Allan Poe said..)
Other instances that may be considered fair use are situations wherein
the original work is cited or imitated for personal use and
education. Example: thesis, dissertation, research and reaction papers.
Various situations in real life point to actual instances for fair use but the
balance of the right-holder and the user, is at the core of the discussion.
The rights of a copyright owner - i.e. the economic right and the moral
rights - merit a separate in-depth discussion but understanding both sides
of copyright, as we delve into the role of  both creator and end-user of the
intellectual property, serves as a useful guide when to give credit where it
is due, and when to use them with proper recognition to serve our
purpose. 

Will you be allowed to import books, DVDs, and CDs from abroad?
Yes. In fact, the amendments to the Intellectual Property Code have
removed the original limitation of three copies when bringing legitimately
acquired copies of copyrighted material into the country. Only the
importation of pirated or infringed material is illegal. As long as they were
legally purchased from legitimate source, you can bring to the Philippine
jurisdiction as many copies you want, subject to Customs regulations i.e.
payment of correct tariff and customs duties.

IS THERE A COPYRIGHT LAW ON THE INTERNET?

ANSWER: Yes. The Philippines had acceded to the WIPO Copyright
Treaty and WIPO Performances and Phonograms Treaty (collectively
known as the “WIPO Internet Treaties” in March 2002. The treaties
entered into force here on October 4, 2002. The Internet Treaties were
formulated to update and improve the protection afforded by the existing
copyright treaties. They ensure that the copyright holders will continue to
be protected when their works are disseminated through the Internet.

WHAT COPYRIGHTED WORKS MAY BE DEPOSITED WITH THE

IPOPHIL?
ANSWER:
(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 work 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
(o) Other literary, scholarly, scientific and artistic works.

WHAT IS A COPYRIGHT?
ANSWER: Copyright is the legal protection extended to the owner of the
rights in an original work. “Original work” refers to every production in the
literary, scientific and artistic domain.
Among the literary and artistic works enumerated in the IP Code includes
books and other writings, musical works, films, paintings and other works,
and computer programs.
Copyright laws grant authors, artists and other creators automatic
protection for their literary and artistic creations, from the moment they
create it.

WHEN DOES COPYRIGHT PROTECTION START? DO YOU NEED

REGISTRATION OF YOUR WORK TO ENJOY COPYRIGHT
PROTECTION?
ANSWER: In the Philippines, copyright need not be registered to be
protected. The legal protection is given the moment   a work is created. 
However, there are advantages to registering one’s copyright.  Being an
official public record, copyright registration easily establishes one’s
ownership over a copyright. As such, a copyright registration helps
facilitate transactions involving the ownership and transfer of the
copyright such as sale, assignment and licensing.  Moreover, in an action
involving copyright infringement, the copyright registration is evidence
that copyright subsists in the work and that the public is notified thereof.
The owner of the copyright may file an application for issuance of
certificate of registration and deposit of copies or reproduction of the
works with the Copyright Division of the National Library and the
Supreme Court Library.  This may also be done through the Bureau of
Copyright and Related Rights of the Intellectual Property Office.

WHO OWNS THE COPYRIGHT?

ANSWER: Generally, the author of the work holds the copyright to it but
different rules may apply in the following situations:
The work was created during and under the course of employment
The employee owns the copyright if it was created
The work is commissioned
The copyright belongs to different stakeholders in audiovisual works
(producer, author of a scenario, music composer, film director, author of
the work adapted into the audiovisual form) but subject to stipulations by
the creators.
In joint authorship, the co-authors are the copyright holders and in the
absence of an agreement, rules of co-ownership applies ,except if the
work’s parts can be used separately, and the corresponding authors can
be identified in which case, each author has copyright over his own part.

WHAT RIGHTS ARE COVERED BY COPYRIGHT?

ANSWER: Copyright protects both original and derivative works.
“Original work” refers to every production in the literary, scientific and
artistic domain. The literary and artistic works include: books and other
writings, music, paintings, sculptures, movies, photos, ornamental
designs, computer programs and other literary and artistic works.

“Derivative work” refers to works based upon one or more

preexisting works. It includes dramatizations, translations, adaptations,
abridgments, collections of literary, scholarly or artistic works.

WHAT ARE THE TWO (2) TYPES OF RIGHT COVERED UNDER

COPYRIGHT?
Economic - Rights that enable the author to earn from his work, and
gives him control over the use of it, such as in its:
Reproduction
Transformation First public distribution
Rental
Public display
Public performance
Other communication to the public of the work.
Moral - Rights that govern the author’s connection to his work
Right of Attribution
Right of Alteration
Right of Integrity (object to any prejudicial distortion)
Right to restrain use of his name.

WHAT ARE RIGHTS RELATED TO COPYRIGHT?

ANSWER: Persons / entities other than the author of a work, by virtue of
their contributing substantial creative, technical or organizational skill in
the process of making the work available to the public, are also vested
with related rights or neighboring rights
These rights are those enjoyed by (a) performers; (b) producers of sound
recordings; and (c) broadcasting organizations.

WHAT ARE THE LIMITATIONS TO COPYRIGHT?

ANSWER: Copyright protection is not intended to give the copyright
owner absolute control over all possible exploitation of his work. The law
provides for limitations (“statutory fair uses”) on the economic rights of
authors comprising of acts which do not constitute copyright infringement
even if done without the consent of the copyright holder.
Works That Are Not Protected By Copyright:  
No copyright protection extends to any idea, procedure, system method
or operation, concept or principle, discovery or mere data, news,
miscellaneous facts, or any official text of a legislative, administrative or
legal nature including official translations thereof (Sec. 175, IP Code).

WHAT CONSTITUTES COPYRIGHT VIOLATION?

ANSWER: Copyright infringement occurs when there is a violation of the
economic rights granted to the copyright owner, or to the owners of
related rights. It may also consist in aiding or abetting such infringement.
Example: Photocopying of select pages of a reference book for personal
use in school activity is “fair use” but the moment you sell those
photocopies to your classmates, it becomes infringement of copyright
because there is violation of economic right already.
Another Example: If you transfer music from a lawfully acquired CD into
a computer, then download it to a portable device for personal use, then
you didn’t commit infringement. But the moment you make multiple
copies of the CD to sell, then infringement occurs.

Is the reproduction of copyrighted material for personal purposes

punishable by this law?
No. Infringement in this context refers to the economic rights of the
copyright owner. So, if you transfer music from a lawfully acquired CD
into a computer, then download it to a portable device for personal use,
then you didn’t commit infringement. But if, for example, you make
multiple copies of the CD to sell, then infringement occurs.

Is the possession of, for example, a music file procured through an

infringing activity a violation of this law?
ANSWER: Only if it can be proven that the person benefitting from the
music file has knowledge of the infringement, and the power and ability to
control the person committing the infringement.

WHAT IS JAILBREAKING?  IS IT ILLEGAL?

Jailbreaking is the act of removing restrictions imposed by the
manufacturer to allow the installation of an unauthorized software.
ANSWER: No. Jailbreaking or rooting by themselves are not illegal.
However, downloading pirated material, or committing infringement with a
“jailbroken” phone increases the penalty and damages imposed on the
person found guilty of infringement.
Jailbreaking (for iOS) and rooting (for Android) are examples of
decompilation, the process of removing the vendor-imposed limitations of
tablets, mobile devices and other electronic gadgets. Though not illegal,
decompilation may be in violation of your operating system’s terms of
use, and therefore may void your warranty.

ARE MALL OWNERS LIABLE FOR INFRINGEMENT ACTIVITIES OF

THEIR TENANTS?
ANSWER: Mall owners are not automatically penalized for the infringing
acts of their tenants. When a mall owner or lessor finds out about an
infringement activity, he or she must give notice to the tenant, then he or
she will be afforded time to act upon this knowledge. Any inaction despite
knowledge is an act of tolerance or misfeasance which becomes
punishable, so much so that the mall owner benefits from the rental
payments of the infringing tenants.
As we mentioned earlier, the law requires that one must have both
proven knowledge of the infringement, and the ability to control the
activities of the infringing person, to be held liable. The mall owner must
also have benefited from the infringement.

Is it legal for the Intellectual Property Office (IPO) to visit businesses

to conduct searches based on reports, information, and
complaints?
ANSWER: The IPO may visit establishments based on reports and
complaints; this in itself is constitutional. However, if the IPO intends to
perform a search and seizure, it must comply with constitutional
requirements, such as having a search warrant. A warrant wouldn’t be
required, however, if the IPO is accompanied by the Bureau of Customs
or the Optical Media Board—two agencies that can perform a search and
seizure on their own right without a warrant (per Republic Act No. 1937
and 9239, respectively).

TERM OF COPYRIGHT PROTECTION

How long does copyright protection last?
(1) Generally, copyright protection lasts during the life of the author
and for fifty (50) years after his death (Sec 213.1, IP Code).
(2) In case of works of joint authorship, the economic rights shall be
protected during the life of the last surviving author and for fifty (50)
years after his death (Sec 213.2 IP Code).
(3) In case of anonymous or pseudonymous works, the copyright shall
be protected for fifty (50) years from the date on which the work was
first lawfully published: Provided, that where, before the expiration of
the said period, the author’s identity is revealed or is no longer in doubt,
copyright protection shall last  during the life of the author and for fifty (50)
years after his death or in case of joint authorship, the economic rights
shall be protected during the life of the last surviving author and for fifty
(50) years after his death; Provided further, that such works if not
published before, shall be protected for fifty (50) years counted from
making of the work (Sec 213.3, IP Code).
(4) In case of works of applied art, the protection shall be for a period
twenty-five (25) years from the date it was made (Sec. 213.4, IP
Code).
(5) In case of photographic works and audio visual works including
those produced by process analogous to photography or any process for
making audio-visual recordings, protection shall be for fifty (50) years
from publication of the work and if unpublished, fifty (50) years from
the making (Sec 213.5 and 213.6, IP Code).
(6) In case of sound recordings, rights granted by the Intellectual
Property Code to performers and producers of sound recordings expire
after the lapse of fifty (50) years from the end of the year in which
the performance took place; and in cases of sound or image and sound
recordings and for performances incorporated therein, fifty (50) years
from the end of the year in which the recording took place (Sec 215.1, IP
Code).
(7) In case of broadcasts, the term shall be twenty (20) years from the
date the broadcast took place (Sec 215.2, IP Code).

WHAT IS A PATENT?
ANSWER: A Patent is a grant given by the government to
inventors/applicants in return for disclosing an Invention. It is a legal right
to exclusively exploit the invention for the life of the patent. The term of
protection for a Patent is (20) years from the date of filing in the
Philippines, with no possibility of renewal.

CAN YOU PATENT AN IDEA OF A NEW INVENTION?

ANSWER: No, an idea of a new invention alone cannot be patented. To
qualify for patent protection, an invention has to be applied to a product
or process. For an invention to be patentable, it should meet the three
criteria: it must be new, involves an inventive step and is industrially
applicable.

WHAT IS A PATENTABLE INVENTION?

ANSWER: A Patentable Invention is any technical solution to a problem
in any field of human activity which is new, inventive, and useful. An
Invention may relate to a product (e.g. machine, device, an article of
manufacture, a composition of matter, a microorganism), process or
method, (e.g. a method of use, method of manufacturing, a non-biological
process, a microbiological process), computer-related inventions, and
improvement of any of the foregoing.

CAN I OBTAIN A PATENT FOR A PRODUCT DESIGN?

ANSWER: It is not possible to obtain patent protection for the mere
outward appearance of an article, that is, a shape configuration, pattern
or ornamentation because a patent protects the functional application of
a product. Instead, an Industrial Design registration may be a more
appropriate option.
However, if the outward appearance has a functional application as
opposed to a mere visual purpose, it may be possible to obtain patent
protection, subject to the patentability requirements of novelty, inventive
step and industrial application.

WHY IS IT IMPORTANT TO APPLY FOR A GRANT OF PATENT?

ANSWER: A patent is an exclusive right that gives the inventor the right
to exclude others from making, using, or selling the product of his
invention during the life of the patent. Patent owners may also give
permission to, or license, other parties to use their inventions on mutually
agreed terms. Owners may also sell their invention rights to someone
else, who then becomes the new owner of the patent.

CAN YOU STILL COMMERCIALIZE OR USE YOUR INVENTION EVEN

WITHOUT A PATENT?
ANSWER: Yes, you can commercialize or use your invention without
patent protection. However, once your invention is made known to the
public, you may not be able to obtain a patent if you decide to apply for
protection later because your invention can no longer be considered as
"new".

WHAT ARE THE CRITERIA FOR PATENTABLE WORK?

ANSWER: The Intellectual Property Code of the Philippines sets three
conditions for an invention to be deemed patentable: it has to be:
(1) New (if should not yet form part of the domain of prior art. Prior art is
any evidence that your invention is already known to the anyone. Prior
art does not need to exist physically or be commercially available. It is
enough that someone, somewhere, sometime previously has described
or shown or made something that contains a use of technology that is
very similar to your invention.  (Examples: Vendo Machines; Drones;
coffee maker; color and shape shorter, cooling and heating devices)
(2) Involves an inventive step (An invention involves an inventive step
if, having regard to prior art, it is not obvious to a person skilled in the art
at the time of the filing date or priority date of the application claiming the
invention.) (Example: If A is applying for patent of his medicinal
solution that will generate hair grow within 24 hours, but UNILAB
already had registered a similar product a week before that, no
Patent shall be granted.)
(3) Industrially applicable (An invention that can be produced and used
in any industry is considered industrially applicable.)

WHAT MAY NOT BE PATENTED?

ANSWER: The following are considered non-patentable: 
Discoveries, scientific theories and mathematical methods;
Schemes, rules and methods of performing mental acts, playing games
or doing business, and programs for computers;
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;
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.
Aesthetic creations; and
Anything which is contrary to public order or morality. (Example:
Chemicals that would kill any form of human or other significant
life; any tools or device that would aid in creation of  harmful
bacteria or virus; etc.)

WHAT IS A TRADEMARK?
ANSWER: A trademark is a word, a group of words, sign, symbol, or a
logo that identifies and differentiates the source of the goods or services
of one entity from those of others. Thus, a mark (1) must be a visible sign
and (2) must be capable of distinguishing one’s goods and services from
those of another.

WHY IS TRADEMARK REGISTRATION IMPORTANT?

ANSWER: A trademark protects a business’ brand identity in the
marketplace. Registration of it gives the owner the exclusive rights to
prevent others from using or exploiting the mark in any way.
Aside from functioning as a ‘source-identifier’, the mark may be a source
of revenue for the owner in the form of royalties obtained through
franchising or licensing of the registered TM for use by others.

WHY SHOULD YOU REGISTER YOUR TRADEMARK IMMEDIATELY?

ANSWER: The Philippine trademark system follows a first-to-file rule,
meaning the rights to the trademark is given to the party who first filed for
registration of the mark.

BRIEF HISTORY - TRADEMARK

A "trademark" is defined under R.A. 166, the Trademark Law, as
including "any word, name, symbol, emblem, sign or device or any
combination thereof adopted and used by a manufacturer or merchant to
identify his goods and distinguish them from those manufactured, sold or
dealt in by others.  This definition has been simplified in R.A. No. 8293,
the Intellectual Property Code of the Philippines, which defines a
"trademark" as "any visible sign capable of distinguishing goods."  In
Philippine jurisprudence, the function of a trademark is to point out
distinctly the origin or ownership of the goods to which it is affixed; to
secure to him, who has been instrumental in bringing into the market a
superior article of merchandise, the fruit of his industry and skill; to assure
the public that they are procuring the genuine article; to prevent fraud and
imposition; and to protect the manufacturer against substitution and sale
of an inferior and different article as his product.
Modern authorities on trademark law view trademarks as performing
three distinct functions: (1) they indicate origin or ownership of the articles
to which they are attached; (2) they guarantee that those articles come up
to a certain standard of quality; and (3) they advertise the articles they
symbolize. 
Symbols have been used to identify the ownership or origin of articles for
several centuries.  As early as 5,000 B.C., markings on pottery have been
found by archaeologists. Cave drawings in southwestern Europe show
bison with symbols on their flanks.  Archaeological discoveries of ancient
Greek and Roman inscriptions on sculptural works, paintings, vases,
precious stones, glassworks, bricks, etc. reveal some features which are
thought to be marks or symbols. These marks were affixed by the creator
or maker of the article, or by public authorities as indicators for the
payment of tax, for disclosing state monopoly, or devices for the
settlement of accounts between an entrepreneur and his workmen. 
In the Middle Ages, the use of many kinds of marks on a variety of goods
was commonplace. Fifteenth century England saw the compulsory use of
identifying marks in certain trades. There were the baker's mark on bread,
bottlemaker's marks, smith's marks, tanner's marks, watermarks on
paper, etc.  Every guild had its own mark and every master belonging to it
had a special mark of his own. The marks were not trademarks but police
marks compulsorily imposed by the sovereign to let the public know that
the goods were not "foreign" goods smuggled into an area where the
guild had a monopoly, as well as to aid in tracing defective work or poor
craftsmanship to the artisan. For a similar reason, merchants also used
merchants' marks. Merchants dealt in goods acquired from many sources
and the marks enabled them to identify and reclaim their goods upon
recovery after shipwreck or piracy. 
With constant use, the mark acquired popularity and became voluntarily
adopted. It was not intended to create or continue monopoly but to give
the customer an index or guarantee of quality.  It was in the late 18th
century when the industrial revolution gave rise to mass production and
distribution of consumer goods that the mark became an important
instrumentality of trade and commerce.  By this time, trademarks did not
merely identify the goods; they also indicated the goods to be of
satisfactory quality, and thereby stimulated further purchases by the
consuming public.  Eventually, they came to symbolize the goodwill and
business reputation of the owner of the product and became a property
right protected by law.  The common law developed the doctrine of
trademarks and tradenames "to prevent a person from palming off his
goods as another's, from getting another's business or injuring his
reputation by unfair means, and, from defrauding the
public."  Subsequently, England and the United States enacted national
legislation on trademarks as part of the law regulating unfair trade.  It
became the right of the trademark owner to exclude others from the use
of his mark, or of a confusingly similar mark where confusion resulted in
diversion of trade or financial injury. At the same time, the trademark
served as a warning against the imitation or faking of products to prevent
the imposition of fraud upon the public. 
Today, the trademark is not merely a symbol of origin and goodwill; it is
often the most effective agent for the actual creation and protection of
goodwill. It imprints upon the public mind an anonymous and impersonal
guaranty of satisfaction, creating a desire for further satisfaction. In other
words, the mark actually sells the goods.  The mark has become the
"silent salesman," the conduit through which direct contact between the
trademark owner and the consumer is assured. It has invaded popular
culture in ways never anticipated that it has become a more convincing
selling point than even the quality of the article to which it refers.  In the
last half century, the unparalleled growth of industry and the rapid
development of communications technology have enabled trademarks,
tradenames and other distinctive signs of a product to penetrate regions
where the owner does not actually manufacture or sell the product itself.
Goodwill is no longer confined to the territory of actual market
penetration; it extends to zones where the marked article has been fixed
in the public mind through advertising. Whether in the print, broadcast or
electronic communications medium, particularly on the
Internet,  advertising has paved the way for growth and expansion of the
product by creating and earning a reputation that crosses over borders,
virtually turning the whole world into one vast marketplace.

WHAT TYPES OF MARK MAY BE REGISTERED AS A TRADEMARK

IN THE PHILIPPINES?
ANSWER: In the Philippines, the following are types of marks that may
be registered as a TM:
 Word mark
Figurative mark
Figurative mark with words
3D mark
Stamped or marked container of goods
In any of the above types, generally, the distinctiveness of the mark is the
key point of consideration for grant of registration. Note that under the
present IP Code (RA 8293), other forms of marks such as sound marks
and scent marks are not yet registrable with the IPOPHL.

WHAT MARKS CANNOT BE REGISTERED AS TRADEMARK?

ANSWER: 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;   Ex. Those depicting vagina, penis or similar
scandalous appearance.
(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;   Ex. Philippine Flag, symbol of any gov’t. agency
or instrumentality, emblem of the Philippine army, or symbol of the
United Nations.
(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 to be well-known internationally and in the
Philippines;
(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.

WHAT REMEDIES ARE AVAILABLE FOR INFRINGEMENT OF

INTELLECTUAL PROPERTY RIGHT?
ANSWER: There are remedies available to owners of registered marks
from infringers such as Civil and criminal actions for infringement, unfair
competition, false or fraudulent declaration and false designation of
origin. 
There are also Administrative Actions before the Bureau of Legal Affairs
of the IPO for violation of IP (infringement, unfair competition, false
designation of origin) under Section 10.2 of the IP Code and Inter Partes
Cases (opposition, cancellation) and/ or Border Measure before the
Bureau of Customs.

WHAT IS THE PERIOD OF PROTECTION OF A TRADEMARK

REGISTRATION?
ANSWER: The period of protection is ten (10) years from the date of
issuance and is renewable for a period of ten (10) years at a time.
IS IT REQUIRED THAT MY TRADEMARK COVER GOODS OR
SERVICES THAT I AM PRESENTLY SELLING?
ANSWER: No. An application for registration may be based on actual
use or intended use of a mark in Philippine commerce.

WHAT IF I AM NOT YET USING MY TRADEMARK? CAN I FILE AN

APPLICATION ALREADY?
ANSWER: Yes. Prior use of a mark in the Philippines is not necessary to
file an application. The use of mark becomes necessary only after the
application for its registration has been filed because a Declaration of
Actual Use (“DAU”) in Philippine commerce is required to be submitted
within 3 years from filing date. Hence, you may already file an application
for registration.

WHAT IS FIRST-TO-FILE RULE?

ANSWER: First-to-file rule means that whoever was first to file for
registration of the mark, the rights to the trademark is given to that party.
In relation to this, the minimum requirements to secure a filing date for a
trademark application are:
An express or implicit indication that the registration of a mark is sought;
The identity of the applicant;
Contact details of the applicant or its agent/representative;
A reproduction of the mark; and
The list of the goods or service
Subject to the provisions on priority right, the filing date of an
application shall be the date on which the Office received the indications
above (either in English or Filipino) and the filing fee.
In other words, a dutifully accomplished application form and promptly
paid fees is a must.
====================
CASE: In 2014, x developed a butterfly design that he uses as
remarkable logo of his brand of RTWs. The said logo was made
known and became popular to the public for the next 5 years but did
not register it for TM protection. In January 2020, Y copied the same
logo and have it registered as TM for his own brand of shoes.
Alarmed, X objected and filed his own application arguing that he
has been using the same logo since 2014. Q: Who has a better right
between X and Y?
ANSWER: Y has the better right than X over the said logo because
he is the first-to-file for its TM registration. Whoever was first to file
for registration of the mark, the rights to the trademark is given to
that party.
=========================
WHAT IS A PRIORITY RIGHT OR A CONVENTION PRIORITY?
ANSWER: A priority right in TM application is a time-limited right arising
from a first filing in another country. The subsequent applications will be
regarded as if they had been filed on the same day as the first
application; that is, they have priority over applications for the same mark
filed by others during the six-month period of priority claim. When filing
the subsequent application, the applicant must claim the priority of the
first application in order to make use of the right of priority.

The Paris Convention, provides the basis for this "Priority Right", hence
likewise called "Convention Priority."
====================
EX: Johnny is a Filipino businessman in California, USA. He started
selling a unique brand of apparels using the trademark “HB” with
the logo of a hawkbill as its symbol. He had it registered in the IPO-
USA on June 05, 2000. Counting 6-months from June 05, 2000,
which means until December 05, 2000, is the so-called   “convention
priority”  in favor of Johnny if in case he will also have his TM
registered in the IPO-Philippines. It is as if he filed the same
application here on June 05, 2000.

CASE 1: In 2002, Refractories Corp. of the Philippines was patented.

In 2003, Industrial Refractories Corp. of the Philippines was formed
on the same line of business. Is the latter confusingly similar with
the former?
ANSWER: YES BEC. THE WORD “INDUSTRIAL” IS JUST A MERE
DESCRIPTION OF THE NATURE OF THE BUSINESS. WITH OR
WITHOUT IT, IT CREATES A DAMAGING SENSE OF DOUBT OR
CONFUSION TO A CORPORATE NAME THAT HAS ALREADY BEEN
EXISTING.

CASE 2: PHILLIPS INC. has been in the industry of lights for many
years. Phillips Sy came up with his own lighting products and he
wants to call it STANDARD PHILLIPS INC., the latter from his very
own name. PHILLIPS contended that it was confusingly similar but
Phillips Sy argued that he is entitled to use his very own name. Is
the latter confusingly similar with the former?
ANSWER: YES BEC. ONE COULD NOT HAVE AN EXCLUSIVE USE
OF HIS NAME ESPECIALLY SO IF THAT NAME IS SO COMMON
THAT IT WAS ALREADY LONG EXISTING FOR BUSINESS USE.
FURTHER, THE USE OF THE ADDED WORD “STANDARD” IS
OBVIOUSLY RESORTED TO MERELY SET OUT A VERY SLIM
DIFFERENCE YET THE EFFECT OF WHICH STILL CONFUSES THE
PUBLIC CONSUMERS.

CASE 3: CROCOS is a well-known mark in the industry as a

registered popular brand of clothing owned by Crocos Fashion Inc.
X, a veteran chef on the other hand applied for registration of mark
“CROCOS” at the Intellectual Property Office for the burger that he
is planning to sell to the public. He plans to introduce it as
“CROCOS BURGER”. Crocos Fashion is opposing X’s
application. Q: Should the application for registration of X be
allowed?
ANSWER: NO. because it violates the Confusion of Business Test. The
goods of the contending parties are actually different although claiming
under the same trademark but the one with prior registration has the
better right and should prevail. The danger if registration will be allowed
is that the defendant’s product may be falsely assumed to originate from
the plaintiff who is the owner of the similar trademark. Since the
trademark is well-known and identified to one person, the buying public
may patronize it under a false belief that it belongs to the same owner.
(Societe Des Prod Nestle vs. Dy citing Sterling Products vs.
Farbenfabriken Bayer, 2010)

2 TYPES OF CONFUSION IN TRADEMARK INFRINGEMENT:

(1) Confusion of Goods – provides that the ordinarily prudent
purchaser will be induced to buy the similarly marked product under
false belief that he is buying the one which he thought is.  Here, the
products are similar.
Ex. Cadbury is a well-known registered mark of chocolates. If another
person will apply for registration of “Cadburry” Chocolates, it will not be
allowed because the public may be confused as to which one is he
buying for good to the prejudice of the authentic owner.
The danger of CONFUSION OF GOODS  is that the poorer quality of
the product one bought adversely reflects on the reputation of the
original trademark owner.

(2) Confusion of Business – provides that the products are

different but are selling under the same trademark. This is likewise
not allowed. The one who owns the registered well-known mark has
the right to debunk the use of it by the other person even if a totally
different product is involved.
(Societe Des Prod Nestle vs. Dy citing Sterling Products vs.
Farbenfabriken Bayer, 2010)

The danger of CONFUSION OF BUSINESS is that the defendant’s

product may be falsely assumed to originate from the plaintiff who
is the owner of the similar trademark. Also, the public may falsely
assume that there is a personal or business connection between the
original trademark owner and the other claimant, which connection
does not actually exist. Therefore, the likelihood of deprivation of
potential profit is similarly high even if the products are different but
being registered under the same well-known mark.
The evil brought by the CONFUSION OF BUSINESS is actually
similar with the evil of CONFUSION OF GOODS.

Ex. Jollibee is of course a well-known registered mark of fast food. If

another person will apply for registration of “Jollibee Shoes”, it will not be
allowed because the public may falsely assume that the shoes are also
product of Jollibee Fast Food or at least there is a connection between
them when in fact there is none. Hence, Jollibee food lovers may tend to
also buy the shoes under that false belief.

THE BANK SECRECY LAW

Q: Do deposits in the Philippine banks have confidentiality? Can they be
examined and scrutinized by anyone out of mere curiosity? 
A:  Yes, deposits in the Philippine banks enjoy a great degree of confidentiality
and they cannot be scrutinized or inquired upon by anyone out of mere
curiosity.  Republic Act No. 1405, or the bank secrecy law that was approved as
early as 1955,  prohibits the disclosure of, or inquiry into,  all deposits in banks
and banking institutions  in the Philippines.  This has been the government’s
way of building depositors’ trust and confidence, encourage Filipino citizens to
patronize banking industry and improve the stability of economic condition in
the country.
Section 2 of the bank secrecy law provides that all deposits in whatever nature
with banks or banking institutions are of an  “absolutely confidential nature and
may not be examined, inquired or looked into by any person, government
official, bureau or office.”
 
EXCEPTIONS TO THE COVERAGE OF BANK SECRECY:

1. If there is a written consent of the depositor,

2. In cases of impeachment,
3. Upon order of a competent court in cases of bribery or dereliction
of duty of public officials, or;
4. In cases where the money deposited or invested is the subject
matter of litigation.
---------------------------------------------
All deposits of whatever nature with banks or banking institutions in the
Philippines including investments in bonds issued by the Government of the
Philippines, its political subdivisions and its instrumentalities, are hereby
considered as of an absolutely confidential nature and may not be
examined, inquired or looked into by any person, government official,
bureau or office, except upon written permission of the depositor, or in
cases of impeachment, or upon order of a competent court in cases of
bribery or dereliction of duty of public officials, or in cases where the money
deposited or invested is the subject matter of the litigation.
 

It shall be unlawful for any official or employee of a banking institution to

disclose to any person other than those mentioned above any information
concerning said deposits.
 
Any violation of this law will subject offender upon conviction, to an
imprisonment of not more than five (5) years or a fine of not more than
twenty thousand pesos (P20,000.00) or both, in the discretion of the court.
============================  
QUESTION: Is there a conflict between the purpose of Republic Act No.
1405 (a general law) and Republic Act No. 6426 (a special law) insofar as the
confidentiality of bank deposits is concerned?
 

NONE. As a background, Republic Act No. 1405 was enacted in 1955.

Section 2 thereof was first amended by Presidential Decree No. 1792 in
1981 and further amended by Republic Act No. 7653 in 1993. It now reads:
 

Section 2. All deposits of whatever nature with banks or banking

institutions in the Philippines including investments in bonds issued by the
Government of the Philippines, its political subdivisions and its
instrumentalities, are hereby considered as of an absolutely confidential
nature and may not be examined, inquired or looked into by any person,
government official, bureau or office, except upon written permission of the
depositor, or in cases of impeachment, or upon order of a competent court
in cases of bribery or dereliction of duty of public officials, or in cases where
the money deposited or invested is the subject matter of the litigation.
 

On the other hand, Section 8 of Republic Act No. 6426, which was enacted
in 1974, and amended by Presidential Decree No. 1035 and later by
Presidential Decree No. 1246, provides:
 

Section 8. Secrecy of Foreign Currency Deposits. – All foreign currency

deposits authorized under this Act, as amended by Presidential Decree No.
1035, as well as foreign currency deposits authorized under Presidential
Decree No. 1034, are hereby declared as and considered of an absolutely
confidential nature and, except upon the written permission of the
depositor, in no instance shall foreign currency deposits be examined,
inquired or looked into by any person, government official, bureau or office
whether judicial or administrative or legislative or any other entity whether
public or private; Provided, however, That said foreign currency deposits
shall be exempt from attachment, garnishment, or any other order or
process of any court, legislative body, government agency or any
administrative body whatsoever. (As amended by PD No. 1035, and further
amended by PD No. 1246, prom. Nov. 21, 1977.)
 

Now, Republic Act No. 1405 provides for four (4) exceptions when records
of deposits may be disclosed. These are under any of the following
instances: a) upon written permission of the depositor, (b) in cases of
impeachment, (c) upon order of a competent court in the case of bribery or
dereliction of duty of public officials or, (d) when the money deposited or
invested is the subject matter of the litigation, and e) in cases of violation of
the Anti-Money Laundering Act (AMLA), the Anti-Money Laundering
Council (AMLC) may inquire into a bank account upon order of any
competent court. On the other hand, the lone exception to the non-
disclosure of foreign currency deposits, under Republic Act No. 6426, is
disclosure upon the written permission of the depositor.
 

These two laws both support the confidentiality of bank deposits. There is
no conflict between them. Republic Act No. 1405 was enacted for the
purpose of giving encouragement to the people to deposit their money in
banking institutions and to discourage private hoarding so that the same
may be properly utilized by banks in authorized loans to assist in the
economic development of the country. It covers all bank deposits in the
Philippines and no distinction was made between domestic and foreign
deposits.
 

Thus, Republic Act No. 1405 is considered a law of general application. On

the other hand, Republic Act No. 6426 was intended to encourage deposits
from foreign lenders and investors. It is a special law designed especially for
foreign currency deposits in the Philippines. A general law does not nullify a
specific or special law. Generalia specialibus non derogant. 
TRUTH IN LENDING ACT - BACKGROUND
It has been said that one of the greatest disservice you can do a man is to lend
him money that he can’t pay back.
Republic Act No. 3765, aptly entitled “Truth in Lending Act”, aims to protect
the public from lack of awareness of the true cost of credit by requiring from
the creditor the disclosure of full information incident to a credit transaction.
A creditor is required to supply to the borrower prior to each credit transaction
a clear statement in writing of the following information: the amount of the
loan or credit service extended; any down payment or trade-in made;
individually itemized charges, fees and other related costs; the total amount to
be financed or amount of loan extended; the interest or finance charge to be
paid, expressed in terms of pesos and centavos; and  the percentage that the
interest or finance charge bears to the total amount to be financed. The
interest must be expressed as a simple annual rate.
It is not just banks and other financial institutions that must follow these
requirements. Any person in the business of extending loans, or selling or
renting property or services on a time, credit, or installment basis, either as
principal or as agent, is required to make the same written disclosure. Thus, if
you are acquiring a vehicle under a financing scheme, or purchasing a mobile
phone on installment basis, the seller is required to provide you the information
enumerated above.
The creditor’s failure to comply with these requirements does not mean that
the debt is forgiven, or that the goods purchased on credit or installment basis
are deemed fully paid. The transactions remain valid and enforceable. The
lender, however, will have no right to collect such charge or increases thereof,
even if stipulated in the promissory note (Development Bank of the Philippines
vs Arcilla, 462  SCRA 599).
In one case decided by the Supreme Court, although the creditor failed to state
the penalty charges in the disclosure statement, the penalty charges were
upheld because the borrower signed a promissory note detailing the penalty
charges. Since the promissory note was signed on the same date as the
disclosure statement, and the promissory note is an acknowledgment of a debt
and commitment to repay it on the date and under the conditions that the
parties agreed on, the same is a valid contract.
In another case, the Supreme Court held that a promissory note which grants
the creditor the power to unilaterally fix the interest rate means that the
promissory note does not contain a clear statement in writing of the finance
charge. Such provision is illegal not only because it violates the principle of
mutuality of contracts but it also contravenes the Truth in Lending law (UCPB
vs Veloso, 530 SCRA 567).
In case there is a violation, the borrower may file a civil case for recovery of
damages in the amount of Php 100 or of twice the finance charged required by
the creditor, whichever is greater, but not to exceed P2,000. A criminal case
may also be filed against the creditor. The action to recover the penalty should
be brought within one year from the date of the occurrence of the violation and
may be instituted by the aggrieved private person separately and
independently from the criminal offense.
With the disclosure required by law, it is expected that borrowers are able to
weigh the pros and cons of borrowing. Such information allows them to
evaluate their options in arriving at business decisions. Thus, even in matters of
credit, knowing the truth sets us free.
 

TRUTH IN LENDING ACT - SALIENT

FEATURES
REPUBLIC ACT No. 3765 -- AN ACT TO REQUIRE THE DISCLOSURE OF
FINANCE CHARGES IN CONNECTION WITH EXTENSIONS OF CREDIT known
as the "Truth in Lending Act."
Approved: 22 June 1963
 Salient Provisions of Republic Act No. 3765 (“Truth in Lending Act”)

  It is the policy of the State to protect its citizens from a lack of awareness of
the true cost of credit to the user by assuring a full disclosure of such cost with
a view of preventing the uninformed use of credit to the detriment of the
national economy.

Definition of Terms
  “Board” means the Monetary Board of the Central Bank of the
Philippines.
 “Credit” means any loan, mortgage, deed of trust, advance, or
discount; any conditional sales contract; any contract to sell, or sale
or contract of sale of property or services, either for present or future
delivery, under which part or all of the price is payable subsequent to
the making of such sale or contract; any rental-purchase contract;
any contract or arrangement for the hire, bailment, or leasing of
property; any option, demand, lien, pledge, or other claim against, or
for the delivery of, property or money; any purchase, or other
acquisition of, or any credit upon the security of, any obligation of
claim arising out of any of the foregoing; and any transaction or series
of transactions having a similar purpose or effect.
 “Finance charge” includes interest, fees, service charges, discounts,
and such other charges incident to the extension of credit as the
Board may be regulation prescribe.
 “Creditor” means any person engaged in the business of extending
credit (including any person who as a regular business practice makes
loans or sells or rents property or services on a time, credit, or
installment basis, either as principal or as agent) who requires as an
incident to the extension of credit, the payment of a finance charge.
 “Person” means any individual, corporation, partnership, association,
or other organized group of persons, or the legal successor or
representative of the foregoing, and includes the Philippine
Government or any agency thereof, or any other government, or of
any of its political subdivisions, or any agency of the foregoing.
Each person to whom credit is extended, prior to the consummation of the
transaction, shall be furnished a clear statement in writing setting forth, to the
extent applicable and in accordance with rules and regulations prescribed by
the Monetary Board, the following information:

 the cash price or delivered price of the property or service to be

acquired;
 the amounts, if any, to be credited as down payment and/or trade-in;
 the difference between the amounts set forth under clauses (1) and
(2);
  the charges, individually itemized, which are paid or to be paid by
such person in connection with the transaction but which are not
incident to the extension of credit;
 the total amount to be financed;
 the finance charge expressed in terms of pesos and centavos; and
 the percentage that the finance charge bears to the total amount to
be financed expressed as a simple annual rate on the outstanding
unpaid balance of the obligation.
The disclosure statement in writing is a required attachment to the credit
transaction contract.  The borrower has a right to demand a copy of the
disclosure statement.
Section 6. (a) Any creditor who in connection with any credit transaction fails
to disclose to any person any information in violation of this Act or any
regulation issued thereunder shall be liable to such person in the amount of
P100.00 or in an amount equal to twice the finance charged required by such
creditor in connection with such transaction, whichever is the greater, except
that such liability shall not exceed P2,000.00 on any credit transaction. Action
to recover such penalty may be brought by such person within one year from
the date of the occurrence of the violation, in any court of competent
jurisdiction. In any action under this subsection in which any person is entitled
to a recovery, the creditor shall be liable for reasonable attorney's fees and
court costs as determined by the court.
(b) Except as specified in subsection (a) of this section, nothing contained in this
Act or any regulation contained in this Act or any regulation thereunder shall
affect the validity or enforceability of any contract or transactions.
(c) Any person who willfully violates any provision of this Act or any regulation
issued thereunder shall be fined by not less than P1,000.00 or more than
P5,000.00 or imprisonment for not less than 6 months, nor more than one (1)
year or both.
(d) No punishment or penalty provided by this Act shall apply to the Philippine
Government or any agency or any political subdivision thereof.
(e) A final judgment hereafter rendered in any criminal proceeding under this
Act to the effect that a defendant has willfully violated this Act shall be prima
facie evidence against such defendant in an action or proceeding brought by
any other party against such defendant under this Act as to all matters
respecting which said judgment would be an estoppel as between the parties
thereto.

THE CRIME OF MONEY LAUNDERING: ITS

BACKGROUND AND PUNISHABLE ACTS
All Sections
No unread replies.No replies.

Q: What is Anti-Money Laundering Council (AMLC)?

A:  The  Anti-Money Laundering Council  (AMLC) is the agency of the
Government of the Philippines that is tasked to implement the mandatory
provisions of  Republic Act No. 9160, also known as the “Anti-Money
Laundering Act of 2001” (AMLA), as amended, and  Republic Act No. 10168,
also known as the “Terrorism Financing Prevention and Suppression Act of
2012” (TFPSA).
It serves as the Philippines' central anti-money laundering/counter-terrorism
financing (AML/CTF) authority. As such, it functions as the AML/CTF regulator
and supervisor, financial intelligence unit, and primary law enforcement agency
of the Philippines against money laundering and terrorist financing.
The AMLC may refer to (1) the government agency or (2) the Council, which
heads the said government agency.
-----------------------------------------------------
Q: What is money laundering?
A:  Money laundering is an act or series or combination of acts whereby
proceeds of an unlawful activity, whether in cash, property or other assets, are
converted, concealed or disguised to make them appear to have originated from
legitimate sources. One way of laundering money is through the financial
system. Republic Act No. 9160, otherwise known as the Anti-Money Laundering
Act of 2001 (AMLA), as amended, defined money laundering as  a scheme
whereby proceeds of an unlawful activity are transacted or attempted to be
transacted, thereby making them appear to have originated from legitimate
sources.
--------------------------------------------------------
Q: What makes Money Laundering a crime?
A:  Money laundering itself is a crime because it allows criminals to preserve and
enjoy the proceeds of their predicate crimes, thus providing them with the
incentives and the means to continue their illegal activities. At the same time, it
provides them the opportunity to appear in public like legitimate entrepreneurs.
Organized crime, through money laundering, is known to have the capacity to
destabilize governments and undermine their financial systems. It is thus a
threat to national security.
-----------------------------------------------------
Q: Give the historical background of anti-money laundering policies in the
country:
A:  The Philippines enacted Republic Act (R.A.) No. 9160 (The Anti-Money
Laundering Act of 2001), which took effect on 17 October 2001. Certain
provisions of AMLA were amended by R.A. No. 9194 (An Act Amending R.A.
9160) effective 23 March 2003. It has also issued the Revised Implementing
Rules and Regulations (RIRR) implementing R.A. No. 9160, as amended.
-------------------------------------------------------
Q: How is money laundered through the financial system?

1. By Placement– involves initial placement or introduction of the illegal

funds into the financial system. Financial institutions are usually used
at this point.
2. By Layering– involves a series of financial transactions during which
the dirty money is passed through a series of procedures, putting layer
upon layer of persons and financial activities into the laundering
process. Ex. wire transfers, use of shell corporations, etc.
3. By Integration– the money is once again made available to the
criminal with the occupational and geographic origin obscured or
concealed. The laundered funds are now integrated back into the
legitimate economy through the purchase of properties, businesses and
other investments.
-----------------------------------------
Q: What are considered unlawful activities under the AMLA, as amended?
A:  There are 14 unlawful activities or predicate crimes covered by the AMLA.
These are, in the order enumerated in the law:

1. Kidnapping for ransom

2. Drug offenses
3. Graft and corrupt practices
4. Plunder
5. Robbery and extortion
6. Jueteng and masiao
7. Piracy on the high seas
8. Qualified theft
9. Swindling
10. Smuggling
11. Electronic Commerce crimes
12. Hijacking, destructive arson and murder, including those perpetrated
against non-combatant persons (terrorist acts)
13. Securities fraud; and
14. Felonies or offenses of a similar nature punishable under penal laws of
other countries.
The foregoing predicate crimes are associated to the acts of money laundering
which our government is keenly monitoring through suspicious covered
transactions.
--------------------------------------------------------
NOTE: A predicate crime is an offense that is a component of a more serious
crime. It serves as a tool or instrument to actualize or achieve the evil end of
another crime. For example, producing unlawful funds is the primary
offense and money laundering is the predicate offence. The term “predicate
offense” is usually used in referenced to money laundering or terrorism
financing activities.
------------------------------------------------------ 
Q: What are covered transactions under AMLA?
A:  Transaction with covered institutions in cash or other equivalent monetary
instruments involving a total amount in excess of P500,000.00 within one (1)
business day.
-------------------------------------------------------
Q: What are the covered institutions?

1. Banks, offshore banking units, quasi-banks, trust entities, non-stock

savings and loan associations, pawnshops, and all other institutions,
including their subsidiaries and affiliates supervised and/or regulated
by the Bangko Sentral ng Pilipinas (BSP);

2. Insurance companies, holding companies and all other institutions

supervised or regulated by the Insurance Commission (IC); and

3. Securities dealers, brokers, pre-need companies, foreign exchange

corporations, investment houses, trading advisers, as well as other
entities supervised or regulated by the Securities and Exchange
Commission (SEC).
-----------------------------------------------------
NOTE: The covered institutions shall monitor and report to AMLC two (2)
things namely covered transactions;  and suspicious transactions as
hereinafter discussed.
-----------------------------------------------------
Q: What are the salient features of our AMLA?

1. It criminalizes money laundering, meaning it makes money laundering

a crime, and provides penalties for its commission, including hefty fines
and imprisonment.

2. It states clearly the determination of the government to prevent the

Philippines from becoming a haven for money laundering, while
ensuring to preserve the integrity and confidentiality of good bank
accounts.

3. It creates an Anti-Money Laundering Council (AMLC) that is tasked to

oversee the implementation of the law and to act as a financial
intelligence unit to receive and analyze covered and suspicious
transaction reports.
 4. It establishes the rules and the administration process for the
prevention, detection and prosecution of money laundering activities.

5. It relaxes the bank deposit secrecy laws authorizing the AMLC and the
Bangko Sentral ng Pilipinas access to deposit and investment accounts
in specific circumstances.

6. It requires covered institutions to report covered and suspicious

transactions and to cooperate with the government in prosecuting
offenders. It also requires them to know their customers and to safely
keep all records of their transactions.

7. It carries provisions to protect innocent parties by providing penalties

for causing the disclosure to the public of confidential information
contained in the covered and suspicious transactions.

8. It establishes procedures for international cooperation and assistance

in the apprehension and prosecution of money laundering suspects.

THE ANTI-MONEY LAUNDERING

COUNCIL
Q: What are the powers/authorities of Anti-Money Laundering Council
(AMLC)?
A:  The AMLC is the Philippines’ financial intelligence unit, which is tasked to
implement the AMLA. It is composed of the Governor of the Bangko Sentral ng
Pilipinas (BSP) as Chairman & the Commissioner of the Insurance Commission
(IC) and the Chairman of the Securities and Exchange Commission (SEC) as
members. The AMLC is authorized to:

1. Require and receive covered or suspicious transaction reports from

covered institutions.

2. Issue orders to determine the true identity of the owner of any

monetary instrument or property that is the subject of a covered or
suspicious transaction report, and to request the assistance of a
foreign country if the Council believes it is necessary.
 3. Institute civil forfeiture and all other remedial proceedings through the
Office of the Solicitor General.

4. Cause the filing of complaints with the Department of Justice or the

Ombudsman for the prosecution of money laundering offenses.

5. Investigate suspicious transactions, covered transactions deemed

suspicious, money laundering activities and other violations of the
AMLA.

6. Secure the order of the Court of Appeals to freeze any monetary

instrument or property alleged to be the proceeds of unlawful activity.

7. Implement such measures as may be necessary and justified to

counteract money laundering.

8. Receive and take action on any request from foreign countries for
assistance in their own anti-money laundering operations.

9. Develop educational programs to make the public aware of the

pernicious effects of money laundering and how they can participate in
bringing the offenders to the fold of the law.

10. Enlist the assistance of any branch of government for the prevention,
detection and investigation of money laundering offenses and the
prosecution of offenders. In this connection, the AMLC can require
intelligence agencies of the government to divulge any information
that will facilitate the work of the Council in going after money
launderers.

11. Impose administrative sanctions on those who violate the law, and the
rules, regulations, orders and resolutions issued in connection with the
enforcement of the law.
-----------------------------------------------------
Q:  What are the Customer Identification Requirements – KYC (Know Your
Customer Rule) among the covered institutions?
A:  Under AMLA, the covered institutions shall:
 1. Establish and record the true identity of their clients based on official
documents.

2. In case of individual clients, maintain a system of verifying the true

identity of their clients.

3. In case of corporate clients, require a system verifying their legal

existence and organizational structure, as well as the authority and
identification of all persons purporting to act in their behalf.

4. Establish appropriate systems and methods based on internationally

compliant standards and adequate internal controls for verifying and
recording the true and full identify of their customers.
-----------------------------------------------------
Q: What are the Record-Keeping Requirements?
A:  All covered institutions shall:

1. Maintain and safely store all records of all their transactions for 5
years from the transaction dates;
2. Ensure that said records/files contain the full and true identity of the
owners or holders of the accounts involved in the covered transactions
and all other identification documents;
3. Undertake the necessary adequate measures to ensure the
confidentiality of such files;
4. Prepare and maintain documentation, in accordance with client
identification requirements, on their customer accounts, relationships
and transactions such that any account, relationship or transaction
can be so reconstructed as to enable the AMLC and/or the courts to
establish an audit trail for money laundering;
5. Maintain and safely store all records of existing and new accounts and
of new transactions for 5 years from October 17, 2001 or from the
dates of the accounts or transactions, whichever is later;
6. Anent closed accounts, preserve and safely store the records on
customer identification, account files and business correspondence for
at least 5 years from the dates they were closed;
 7. If a money laundering case based on any record kept by the covered
institution has been filed in court, retain said files until it is confirmed
that the case has been finally resolved or terminated by the court; and
8. Retain records as originals in such forms as are admissible in court.

---------------------------------------------------------
Q: What are “suspicious transactions”? How is it differentiated from
“covered transactions” under AMLA?
A: Under AMLA, the mandatory  “covered transactions”  are those involving
cash or other equivalent monetary instruments in excess of P500,000.00 within
one (1) business day. The covered institution has the duty to report the same to
AMLC.
On the other hand,  “suspicious transactions”  are those involving an amount of
less than P500T in one (1) business day but circumstances are present that are
sufficient to call the attention of the authorities. Thus, the covered institution
still has the duty to monitor and report the same to AMLC.
 

Indeed, transactions shall still be considered “suspicious” and must alert the
attention of the covered institutions, regardless of the amount involved,
where the following circumstances exist:
1. if there is no underlying legal or trade obligation, purpose or economic
justification;
2. if the client is not properly identified;
3. if the amount involved is not commensurate with the business or financial
capacity of the client;
4. if taking into account all known circumstances, it may be perceived that
the client’s transaction is structured in order to avoid being the subject of
reporting requirements under the Act;
5. if any circumstance relating to the transaction which is observed to
deviate from the profile of the client and/or the client’s past transactions
with the covered institution;
6. the transaction is in any way related to an unlawful activity or offense
under this Act that is about to be, is being or has been committed; or
7. any transaction that is similar or analogous to the foregoing.
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NOTE: Hence, it is mandatory for covered institutions to monitor and
report transactions involving amount in excess of P500T in one business
day. Nonetheless, even if the transaction is less than said amount, the duty
to monitor and report still applies for as long the same falls within the
character of a suspicious one.
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Q: What are the reporting requirements?
A:  Covered institutions shall report to the AMLC all “covered transactions” and
“suspicious transactions” within five (5) working days from occurrence thereof,
unless the Supervision Authority (the BSP, the SEC, or the Insurance
Commission) prescribes a longer period not exceeding ten (10) working days.
Should a transaction be determined to be both a covered transaction and a
suspicious transaction, it shall be reported as suspicious transaction.
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Q: How is reporting done?
A:  The reports on covered and/or suspicious transactions shall be accomplished
in the prescribed formats and submitted within five (5) business days from
occurrence of the transactions in a secured manner to the AMLC in electronic
form, either via diskettes, leased lines, or through internet facilities. The
corresponding hard copy for suspicious transactions shall be sent to AMLC at
the 5th Floor EDPC Building, Bangko Sentral ng Pilipinas Complex, Manila,
Philippines.
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Q: What is the penalty for failure to report covered or suspicious
transactions?
A:  Any person, required to report covered and suspicious transactions who
failed to do so will be subjected to penalty of 6 months to 4 years imprisonment
or a fine of not less than P= 100,000.00 but not more than P= 500,000.00, or
both. (RA 9160)
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Q: Are there confidentiality restrictions on the reporting of covered
transaction and/or suspicious transaction?
A:  Yes. When reporting covered transactions or suspicious transactions to the
AMLC, covered institutions and their officers and employees, are prohibited
from communicating, directly or indirectly, in any manner or by any means, to
any person, entity, the media, the fact that a covered or suspicious transaction
report was made, the contents thereof, or any other information in relation
thereto. Neither may such reporting be published or aired in any manner or form
by the mass media, electronic mail, or other similar devices. In case of violation,
the concerned personnel of the covered institution or media is criminally liable.
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Q: What are the other offenses punishable under the AMLA, as amended?
1. 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
transactions for 5 years from the dates the transactions were made or when the
accounts were closed. The penalty is 6 months to 1 year imprisonment or a fine
of not less than P= 100,000.00 but not more than P= 500,000.00, or both.
2. Malicious reporting  is committed by any person who, with malice or in bad
faith, reports or files a completely unwarranted or false information regarding a
money laundering transaction against any person. The penalty is 6 months to 4
years imprisonment and a fine of not less than P= 100,000.00 but not more
than P= 500,000.00. The offender is not entitled to the benefits of the
Probation Law.
3. Breach of Confidentiality. For this offense, the penalty is 3 to 8 years
imprisonment and a fine of not less than P= 500,000.00 but not more than P=
1 million. In case the prohibited information is reported by media, the
responsible reporter, writer, president, publisher, manager, and editor-in-chief
are held criminally liable.
4. Administrative offenses.  The AMLC, after due investigation, can impose fines
from P=100,000.00 to P=500,000.00 on officers and employees of covered
institutions or any person who violates the provisions of the AMLA as amended,
its IRR and orders and resolutions issued pursuant thereto.