Professional Documents
Culture Documents
DSDSD
DSDSD
Example: Indications which identify wine as coming from a specific region in France
5. LAYOUT DESIGNS
(TOPOGRAPHIES) OF
INTEGRATED CIRCUITS
6. PROTECTION OF Natural and legal persons shall have the possibility of preventing information lawfully within their
UNDISCLOSED control from being disclosed to, acquired by, or used by others without their consent in a manner
INFORMATION contrary to honest commercial practices (i.e., breach of contract, breach of confidence,
fraudulent inducement, etc.) so long as the information:
a. Is secret in the sense that it is not, as a body or in the precise configuration and
assembly of its components, generally known among or readily accessible to persons
within the circles that normally deal with the kind of information in question;
b. Has commercial value because it is secret; and
c. Has been subject to reasonable steps under the circumstances, by the person lawfully
in control of the information, to keep it secret
7. INDUSTRIAL DESIGNS Any composition of lines or colors or any three-dimensional form, whether or not associated
with lines or colors
CONCEPTS:
8. Utility model Models of implement or tools of any industrial product even if not possessed of the quality of invention but
which is of “ practical utility”
9. “Drugs and Any chemical compound or biological substance, other food, intended for use in the treatment, prevention,
medicines” or diagnosis of disease in humans or animals
KHO v. CA: Trademark, copyright, and patents are different intellectual property rights that cannot be interchanged with one another.
A trademark is 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. In relation thereto, a trade name means the name or designation identifying or
distinguishing an enterprise. Meanwhile, the scope of copyright is confined to literary and artistic works which are original intellectual
creations in the literary and artistic domain protected from the moment of creation. Patentable inventions, on the other hand, refer to
any technical solution of a problem in any field of human activity which is new, involves an inventive step and is industrially applicable.
COPYRIGHT: Right over literary and artistic works which are original intellectual creations in the literary and artistic domain protected
from the moment of creation
UNPROTECTED WORKS: The trade name and container of a medicated cream is the proper subject of trademark. Hence, copyright
and patent registration of the name and container would not guarantee the registrant the right to the exclusive use of the same, not
being the proper subjects thereof
Patentable inventions refer to any technical solution of a problem in any field of human activity which is new, involves an inventive step
and is industrially applicable
THE INTELLECTUAL PROPERTY OFFICE (IPO) – THE BODY THAT ADMINISTERS THE POLICIES SOUGHT TO BE
IMPLEMENTED UNDER THE IPC
Functions of the IPO:
1. Examine applications for grant of letters patent for inventions and register utility models and industrial designs
2. Examine applications for the registration of marks, geographic indications, integrated circuits
3. Register technology transfer arrangements and settle disputes involving technology transfer payments
4. Promotes the use of patent information as a tool for technology development
5. Punish regularly in its own publication the patents, marks, utility models and industrial designs, issued and approved, and the
technology transfer arrangement registered
6. Administratively adjudicate contested proceedings affecting intellectual property rights
1
ARTalactac
7. Coordinate with other government agencies and the private sector to strengthen the protection of intellectual property rights in the
country
8. Original jurisdiction over disputes relating to the term of a license involving the author’s rights
9. Enforcement functions supported by other government agencies like the PNP, NBI, and Bureau of Customs
10. Visitorial powers
COPYRIGHT
DEFINITIONS:
COPYRIGHT Right over literary and artistic works which are original intellectual creations in the literary and artistic domain
protected from the moment of creation
Author natural person who has created the work
Collective work which has been created by two (2) or more natural persons at the initiative and under the direction of another
Work with the understanding that it will be disclosed by the latter under his own name and that contributing natural
persons will not be identified
Joint Work work prepared by two or more authors with the intention that their contributions be merged into inseparable or
interdependent parts of a unitary whole, i.e., medical textbook that is jointly authored by two or three experts
Work of an artistic creation with utilitarian functions or incorporated in a useful article, whether made by hand or produced
Applied Art on an industrial scale
Performers actors, singers, musicians, dancers, and other persons who act, sing, declaim, play in, interpret, or otherwise
perform literary and artistic work
Letters and other private communications in writing are owned by the person to whom they are addressed and delivered, but they cannot
be published or disseminated without the consent of the writer or his heirs
WHEN RIGHTS OVER COPYRIGHTS ARE CONFERRED: from the moment of creation
- The work is deemed created if something original is expressed in a fixed manner
DURATION OF COPYRIGHT:
1. Literary artistic works and during the life of the creator and for fifty (50) years after his death
derivative works
2. Joint creation the economic rights shall be protected during the life of the last surviving author and for fifty
(50) years after the death of the last surviving author
3. Anonymous or a until the end of fifty (50) years following the date of their first publication
pseudonymous work the fifty (50) year duration commences from January 1 following the date of publication
4. Work of applied art twenty-five (25) years from the date of making
5. Photographic works fifty (50) years from the publication of the work, or from making if unpublished
(the same term is given to audio-visual works produced by photography or analogous
processes)
6. Broadcast twenty (20) years from the date of broadcast
COPYRIGHTABLE OBJECTS
LITERARY AND ARTISTIC WORKS DERIVATIVE WORKS
1. Books, pamphlets, articles, and other writings 1. Dramatizations, translations, adaptations, abridgments,
2. Periodicals and newspapers arrangements, and other alterations of literary or artistic works
3. Lectures, sermons, addresses, dissertations prepared for 2. Collection of literary, scholarly or artistic works, and compilations
oral delivery, whether or not reduced in writing or other of fata and other materials which are original by reason of their
material form selection or coordination arrangement of their contents
4. Letters – this includes electronic messages and sms (text)
messages
2
ARTalactac
5. Dramatic or dramatico-musical compositions;
choreographic works or entertainment in dumb shows
6. Musical compositions, with or without words
7. Works of drawing, painting, architecture, sculpture,
engraving, lithography or other works of art; models or
designs for works of art
8. Original ornamental designs or models for articles of
manufacture, whether or not registrable as an industrial
design, and other works of applied art
9. Illustration, maps, plans, sketches, charts and three (3)
dimensional works relative to geography, topography,
architecture or science
10. Drawings or plastic works of a scientific or technical
character
11. Photographic works including works produced by a
process analogous to photography; lantern slides
12. Audiovisual works and cinematographic works and works
produced by a process analogous to cinematography or
any process for making audiovisual records
13. Pictorial illustrations and advertisements
14. Computer programs
15. Other literary, scholarly, scientific and artistic works
UNPROTECTED WORKS: Any idea, procedure, system, method or operation, concept, principle, discovery or mere data as such, even
if they are expressed, explained, illustrated or embodied in a work
EXAMPLES:
1. Format of a television game show
2. Format of presentation of names in a telephone directory
3. Another person can still paint the painting of the oath taking of a president even if there is another person who previously painted the
same scene
4. New of the day and other miscellaneous facts having the character of mere items of press information
5. Any official text of a legislative, administrative or legal nature, as well as any official translation
6. Any work of the Government of the Philippines
o However, prior approval of the government agency or office wherein the work is created shall be necessary for exploitation
of such work for profit. Such agency or office may, among other things, impose as a condition the payment of royalties. No
prior approval or conditions shall be required for the use of any purpose of statutes, rules and regulations, and speeches,
lectures, sermons, addresses, and dissertations, pronounced, read or rendered in courts of justice, before administrative
agencies, in deliberative assemblies and in meetings of public character
PEARL & DEAN [PHIL.] v. SHOEMART: UNPROTECTED WORKS: Copyright registration over a drawing or pictorial illustration
which depicts light boxes or box-type electrical devices protects the drawing but not the light box depicted there
PURPOSES OF PATENT LAW: The patent law has a three-fold purpose: first, patent law seeks to foster and reward invention; second,
it promotes disclosures of inventions to stimulate further innovation and to permit the public to practice the invention once the patent
expires; third, the stringent requirements for patent protection seek to ensure that ideas in the public domain remain there for the free
use of the public.
The law attempts to strike an ideal balance between the two interests: The patent system thus embodies a carefully crafted bargain
for encouraging the creation and disclosure of new useful and non-obvious advances in technology and design, in return for the
exclusive right to practice the invention for a number of years. The inventor may keep his invention secret and reap its fruits indefinitely.
In consideration of its disclosure and the consequent benefit to the community, the patent is granted. An exclusive enjoyment is
guaranteed him for 17 years, but upon the expiration of that period, the knowledge of the invention inures to the people, who are thus
enabled to practice it and profit by its use.
PREJUDICIAL DISCLOSURE: Whatever right one has to the invention covered by the patent arises alone from the application date.
Thus, if the inventor voluntarily discloses it, such as by offering it for sale, the world is free to copy and use it with impunity. Ideas, once
disclosed to the public without the protection of a valid patent, are subject to appropriation without significant restraint.
For example, there would be prejudicial disclosure if the inventor secured a copyright certificate for drawings that depicted light boxes.
On the assumption that the light boxes are patentable inventions, there would be prejudicial disclosure to the public by submitting the
engineering drawing thereof to the National Library for purposes of registering his copyright
3
ARTalactac
original and each other derogatory newspaper publisher, sale or rental or other forms of transfer of
copy of the work action in relation but such writer or artist ownership
4. Rental of the original to, his work which retains his copyright on 4. The right of authorizing the commercial
or a copy of an would be the piece rental to the public of the original and
audio-visual or prejudicial to his copies of their performances fixed in sound
cinematographic honor or reputation recordings or audiovisual works or fixations,
work 4. Restrain the use of even after distribution of them by, or
5. Public display of the his name with pursuant to the authorization by the
original or a copy of respect to any performer
the work work not of his own 5. The right of authorizing the making
6. Public performance creation or in a available to the public of their performances
of the work distorted version of fixed in sound recordings or audiovisual
7. Other his work works or fixations, by wire or wireless
communication to means, in such a way that members of the
the public of the work public may access them from a place and
time individually chosen by them
6. MORAL RIGHTS OF PERFORMERS – the
right to claim to be identified as the
performer of his performances. Exception:
where the omission is dictated by the
manner of the use of the performance, and
to object to any distortion, mutilation or
other modification of his performances that
would be prejudicial to his reputation
FAIR USE: privilege to use the copyrighted material in a reasonable manner without the consent of the copyright owner or as copying
the theme or ideas rather than their expression
- Fair use of a copyrighted work for criticism, comment, news reporting, teaching including multiple copies for classroom use,
scholarship, research and similar purpose is NOT an infringement of copyright
4
ARTalactac
Transformative Test: generally used in reviewing the purpose and character of the
usage of the copyrighted word. This court must look into whether the copy of the works
adds “new expression, meaning or message” to transform it into something else
“Meta-use” can occur without necessarily transforming the copy-righted work used – for
the kind of use that does not necessarily transform the original work by adding
expressing, meaning, or message, but only changes the purposes of the work.
Example: There is meta-use of photos if a news story consisted about the photos
themselves or at least a public reaction to them
2. NATURE OF THE COPYRIGHTED If the nature of the work is more factual than creative, then fair use will be weighed in
WORK favor of the user
3. AMOUNT AND SUBSTANTIALLY OF An exact reproduction of copyrighted work, compared to a small portion of it, can result
THE PORTIONS USED in the conclusion that its use is not fair. There may also be cases where, though the
entirely of the copyrighted work is used without consent, its purpose determines that the
usage is still fair.
IMPORTATION FOR PERSONAL PURPOSES: The importation of a copy of a work by an individual for his personal purposes shall be
permitted without the authorization of the author of, or other owner of copyright
INFRINGEMENT
Where there is piracy or substantial reproduction
If so much is taken the value of the original work is substantially diminished or the labors of the
HOW MADE
original author are substantially and to an injurious extent appropriated by another
RE-TRANSMISSION Must Carry Rule: The NTC requires satellite and cable television provided to carry all local
stations
While the Rome Convention gives broadcasting organization the right to authorize or prohibit
rebroadcasting of its broadcast, this protection does not extend to satellite or cable
retransmission
means any technology, device or component that, in the normal course of its operation, restricts
acts in respect of a work, performance or sound recording, which are not authorized by the
authors, performers or producers of sound recordings concerned or permitted by law
Example: Jailbreak or rooting is not by itself illegal. However, they are usually in violation of a
warrant and they can also increase the penalty for infringement of copy right if it can be
established that it was used in infringing the copyright
A lessor or owner of the place (such as a mall) where the infringement of copyright may be
committed may be held liable only if it can be established that he or she:
INFRINGEMENT BY LESSOR 1. benefitted from the infringing activity
2. has been given notice of the infringing activity and a grace period to act on the same
3. has the right and ability to control the activities of the person who is doing the infringement
Reproduction or distribution of published articles or materials in a specialized format (but with
FORMAT FOR THE BLIND
indication of the original owner and of the date of the original publication) exclusively for the
5
ARTalactac
use of the blind, visually and reading impaired persons on a non-profit basis shall NOT
constitute infringement
ABS-CBN v. PMMSI: INFRINGEMENT: Re-transmission. A corporation that provides satellite television service is not infringing the
broadcasting and copyright of the television station if the satellite television provider merely carries or simultaneously retransmits the
signals transmitted by the television station in its unaltered form pursuant to the Must Carry Rule. Under the Must Carry Rule, the NTC
requires satellite and cable television provided to carry all local stations. While the Rome Convention gives broadcasting organization
the right to authorize or prohibit rebroadcasting of its broadcast, this protection does not extend to satellite or cable retransmission.
TRADEMARK
TRADEMARK 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
TRADE NAME name or designation identifying or distinguishing an enterprise
BASIC REQUIREMENTS:
1. There must be a visible sign
2. It must be capable of distinguishing the goods of an enterprise (DISTINCTIVENESS)
FUNCTIONS
1. To indicate the origin of the goods to which they are attached
2. To guarantee the standard of quality of the goods
3. To advertise the goods
Actual use
- Prior use in the Philippines is not required before registration
- There must be actual use after registration.
o The registrant shall file a declaration of actual use of the mark with evidence to that effect within three (3) years from the
filing date of application otherwise it may be cancelled
o The registrant is required to file a declaration of actual use and evidence to that effect, or shall show valid reasons for non-
use within one (1) year from the fifth anniversary date of registration
- Certificate of registration of a mark shall be prima facie evidence of the validity of the registration, the registrant’s ownership of the
mark, and of the registrant’s exclusive right to use the same
o Registrant’s right may be questioned by a person who has a better right, including a prior actual user
- Registration is also not important to protect the goodwill that identifies in the mind of the public the goods he manufactures or deals
in
- Registration of a mark is NOT necessary for purposes of filing a case for unfair competition or false designation of origin
o Unfair competition is present when:
§ There is passing off of a product format of another
§ Giving goods (or service) the appearance of goods of another
6
ARTalactac
9. Shapes
LIMITATIONS
A generic or descriptive mark may later acquire the characteristic of distinctiveness and can later be
registered if it acquires a meaning which is different from its ordinary connotation.
DOCTRINE OF There must be exclusive and continuous use for a period of at least five (5) years
SECONDARY MEANINGS
Examples:
1. “Selecta” for bakery products
2. “Ang Tibay” for shoes
Although they cannot be registered by themselves, generic and descriptive marks, colors and shapes
COMPOSITE MARKS may be part of the composite mark but there should be disclaimer and the person who registers them
as part of a mark will not acquire ownership thereto
Marks may be registered even if they are contractions of or coined from generic and descriptive terms
CONTRACTIONS AND
COINED MARKS
Examples: “Salonpas”
Generic and descriptive terms may also be registered as trademarks if they are used in an arbitrary or
fanciful manner
ARBITRARY USE
Examples:
1. “Ivory” is generic for elephant tusk but arbitrary and can be registered for soap
2. “Papa” for ketchup
INTERNATIONALLY WELL-KNOWN MARKS: The persons who may question the mark (that is, oppose registration, petition for the
cancellation thereof, sue for unfair competition) include persons whose internationally well-known mark, whether or not registered, is
identical with or confusingly similar to constitutes a translation of a mark that is sought to be registered or is actually registered
- There is also protection for internationally known marks registered in the Philippines for goods that are not similar with respect to
which registration is applied for
Foreign marks that are not registered are still accorded protection against infringement and/or unfair competition under the Paris
Convention and Nice Convention
RIGHTS CONFERRED:
1. The right to the exclusive use of the mark for one’s own goods or services
2. The right to prevent others from the use of the same mark for identical goods or services in the course of trade
3. The right to the exclusive use of one’s already registered mark even for goods or services into which one’s venture expands, if used
by others for dissimilar products is likely to damage the business interests of the first venture
DURATION: ten (10) years subject to indefinite renewal for periods of ten (10) years each
INFRINGEMENT
ELEMENTS OF TRADEMARK INFRINGEMENT:
1. The trademark being infringed is registered in the Intellectual Property Office; however, in infringement of trade name, the same
need not be registered
2. The trademark or trade name is reproduced, counterfeited, copied, or colorably imitated by the infringer
3. The infringing mark or trade name is used in connection with the sale, offering for sale, or advertising of any goods, business or
services; or the infringing mark or trade name is applied to labels, signs, prints, packages, wrappers, receptacles or advertisements
intended to be used upon or in connection with such goods, business or services
4. The use or application of the infringing mark or trade name is likely to cause confusion or mistake or to deceive purchasers or other
as to the goods or services themselves or as to the source or origin of such goods or services or the identity of such business
5. It is without the consent of the trademark or trade name owner or the assignee
TYPES OF CONFUSION
CONFUSION OF GOODS CONFUSION OF BUSINESS
When an otherwise prudent purchaser is induced to purchase Wherein the goods of the parties are different but the defendant’s
one product in the belief that he is purchasing another, in product can reasonably (though mistaken) be assumed to originate
which case defendant’s goods are then bought as the from the plaintiff, thus deceiving the public into believing that there is
plaintiff’s and its poor quality reflects badly on the plaintiff’s some connection between the plaintiff and defendant which, in fact,
reputation does not exist
MIGHTY CORPORATION v. E&J GALLO: CONFUSION OF GOODS: When an otherwise prudent purchaser is induced to purchase
one product in the belief that he is purchasing another, in which case defendant’s goods are then bought as the plaintiff’s and its poor
quality reflects badly on the plaintiff’s reputation.
HOLISTIC TEST: The Holistic Test requires the entirely of the marks in question be considered in resolving confusing similar.
Comparison of words is not the only determining factor. The trademarks in their entirety as they appear in their respective labels or
hand tags must also be considered in relation to the goods to which they are attached. The discerning eye of the observer must focus
not only on the predominant words but also on the other features appearing in both labels in order that he may draw his conclusion
whether one is confusingly similar to other.
USE OF IDENTICAL MARKS NOT NECESSARILY PROHIBITED: The mark which contains the word GALLO can be used for
cigarettes without infringing the rights of the owner of another mark which also contains the same word but which was registered for
wine. It was noted that the dominant feature of the GALLO cigarette trademark is the device of a rooster and the name of the
manufacturer are clearly stated. The labels for the GALLO wine are diverse.
RELATED GOODS AND NON-RELATED; VARIABLES TO CONSIDER: It has been held that where the products are different, the
prior owner’s chance of success is a function of many variables:
1. strength of his mark
2. degree of similarity between the two marks
3. reciprocal of defendant’s good faith in adopting its own mark
4. quality of defendant’s product
5. proximity of the products
6. likelihood that the prior owner will bridge the gap
7
ARTalactac
7. actual confusion
8. sophistication of the buyers
TEST:
The Court must consider:
1. the resemblance between the trademarks – MOST IMPORTANT FACTORS
2. the similarity of the goods to which the trademarks are attached
3. the likely effect on the purchaser
4. the registrant’s express or implied consent and other fair and equitable considerations
If the competing trademark contains the main, essential or dominant Comparison of words is not the only
features of another, and confusion or deception is likely to result, determining factor
infringement takes place.
The trademarks in their entirety as they
Duplication or imitation is not necessary; nor is it necessary that the appear in their respective labels or hand
infringing label should suggest an effort to imitate. tags must also be considered in relation to
the goods to which they are attached.
The question is whether the use of the marks involved is likely to cause
confusion or mistake in the mind of the public or deceive purchaser. The discerning eye of the observer must
focus not only on the predominant words but
CONTROLLING TEST also on the other features appearing in both
labels in order that he may draw his
conclusion whether one is confusingly
similar to other.
1. “McJoy” and “Big Mack” infringe the trademark of McDonald’s and the
latter’s dominant feature is “Mc” or “Mac”
2. “Master Flavor” is an infringement of the registered marks “Master
Roast” and “Master Roast”
3. The use of the stylized “S” by respondent in its Strong rubber shoes
infringes on the mark already registered by Sketchers USA with the
IPO. While it is undisputed that petitioner’s stylized “S” is within an oval
examples design, the Court ruled that the dominant feature of the trade is the
stylized “S”, as it precisely the stylized “S” which catches the eye of
the purchaser. Thus, even if respondent did not use an oval design,
the mere fact that it used the same stylized “S,” the same being the
dominant feature of Sketcher USA’s trademark, already constitutes
infringement under the Dominancy Test
4. The dominant feature of the mark “Papa Ketsarap” is “Papa,” hence,
“Papa Boy” for other sauces cannot be registered
MCDONALD’S CORP. v. L.C. BIG MAK BURGER, INC.: DOMINANCY TEST: The Dominancy test is now embodied in Section 155
of the IPL and is therefore the controlling test
GREAT WHITE SHARK ENT. v. CAVALDE, JR.: HOLISTIC TEST: The Holistic Test requires the entirely of the marks in question be
considered in resolving confusing similar. Comparison of words is not the only determining factor. The trademarks in their entirety as
they appear in their respective labels or hand tags must also be considered in relation to the goods to which they are attached. The
discerning eye of the observer must focus not only on the predominant words but also on the other features appearing in both labels
in order that he may draw his conclusion whether one is confusingly similar to other.
AURAL EFFECTS/IDEM SONANS RULE: In dominancy test, what are taken into account are signs, color, design, peculiar shape or
name, or some special easily remember earmarks of the brand that readily attracts and catches the attention of the ordinary consumer.
- The aural effect of the words and letters contained in the marks should be considered in determining the issue of confusing similarity.
EXAMPLES OF CONFUSINGLY SIMILAR MARKS: EXAMPLES OF NOT CONFUSINGLY SIMILAR:
1. PYCNOGENOL is confusingly similar to PCO- LOLANE is not a colorable imitation of ORLANE due to distinct visual and
GENOL aural differences using the dominancy test
2. “DERMALINE DERMALINE, INC.” is confusingly
similar to “DERMALIN”
3. “NANNY” is confusingly similar to “NAN”; “NAN is
the prevalent feature”
DERMALINE, INC. v. MYRA PHARMACEUTICALS: AURAL EFFECTS/IDEM SONANS RULE: In dominancy test, what are taken
into account are signs, color, design, peculiar shape or name, or some special easily remember earmarks of the brand that readily
attracts and catches the attention of the ordinary consumer.
EXAMPLES OF CONFUSINGLY SIMILAR MARKS: “DERMALINE DERMALINE, INC.” is confusingly similar to “DERMALIN”
EXPANSION OF BUSINESS RULE: The protection to which the owner of a trademark is entitled is not limited to guarding his goods
or business from actual market competition with identical or similar products of the parties, but extends to all cases in which the use
by a junior appropriator of a trademark or trade name is likely to lead to a confusion of source as where prospective purchasers would
be misled into thinking that the complaining party has extended his business into the field or is in any way connected with the activities
of the infringer; or when it forestalls the normal potential expansion of his business.
SOCIETE DES PRODUIT NESTLÉ S.A. v. MARTIN DY, JR.: “NANNY” is confusingly similar to “NAN”; “NAN is the prevalent feature”
8
ARTalactac
EXPANSION OF BUSINESS RULE: The protection to which the owner of a trademark is entitled is not limited to guarding his goods
or business from actual market competition with identical or similar products of the parties, but extends to all cases in which the use
by a junior appropriator of a trademark or trade name is likely to lead to a confusion of source as where prospective purchasers would
be misled into thinking that the complaining party has extended his business into the field or is in any way connected with the activities
of the infringer; or when it forestalls the normal potential expansion of his business.
EXPANSION OF BUSINESS RULE: The protection to which the owner of a trademark is entitled is not limited to guarding his goods or
business from actual market competition with identical or similar products of the parties, but extends to all cases in which the use by a
junior appropriator of a trademark or trade name is likely to lead to a confusion of source as where prospective purchasers would
be misled into thinking that the complaining party has extended his business into the field or is in any way connected with the
activities of the infringer; or when it forestalls the normal potential expansion of his business.
CANON KABUSHIKI KAISA v. CA and NRS RUBBER CORPORATION: USE OF IDENTICAL MARKS NOT NECESSARILY
PROHIBITED: The registration of the trademark CANNON was allowed for sandals despite the prior registration of the same for paints,
chemical products, toner and dyestuff
The mere fact that the products both fall under the same category of goods under the Nice Classification of Goods does not by itself result
in the finding of infringement.
- The emphasis should be on the similarity of the products involved
o NOT on the arbitrary classification or general description of their properties or characteristics
Examples:
1. The Court allowed the trademark registration of “KOLIN” over its specific goods of television sets and DVD players although another
corporation has a prior registration for automatic voltage regulator; converter recharger; stereo booster; AC-DC regulated power
supply, step-down transformer, and PA amplified AC-DC that also belongs to Class 9 of the Nice Classification of Goods
2. The Court ordered the approval of Acoje Mining’s application for registration of the trademark LOTUS for its soy sauce even through
Philippine Refining Company has prior registration and use of such identical mark for its edible oil which, like soy sauce, also belonged
to Class 47
3. The Court upheld the Patent’s Director’s registration of the same trademark CAMIA for Ng Sam’s ham under Class 47, despite
Philippine Refining Company’s prior trademark registration and actual use of such mark on its lard, butter, cooking oil (all of which
belonged to Class 47), abrasive detergents, polishing materials and soaps
4. The Court dismissed Hickok’s petition to cancel private respondent’s HICKOK trademark registration for its Marikina shoes as against
petitioner’s earlier registration of the same trademark for handkerchiefs, briefs, belts and wallets
RELATED GOODS AND NON-RELATED: Confusion of goods is evident where the litigants are actually in competition
- However, confusion of business may arise between non-competing interests and goods that are related or would tend to indicate a
connection between the foods and the owner of the mark
Non-competing goods may be those which, though they are not in actual competition, are so related
RELATED GOODS to each other that it can reasonably be assumed that they originate from one manufacturer, in which
case, confusion of business can arise out of the use of similar marks
(No single factor is preeminent):
1. The business (and its location) to which the goods belong
2. The class of product to which the goods belong
3. The product’s quality, quantity, or size, including the nature of the package, wrapper or container
4. The nature and cost of the articles
5. The descriptive properties, physical attributes or essential characteristics with reference to their
RELATED GOODS HOW
form, composition, texture or quality
DETERMINED
6. The purpose of the goods
7. Whether the article is bought for immediate consumption, that is, day-to-day household items
8. The fields of manufacture
9. The conditions under which the article is under purchased
10. The channels of trade through which the goods flow, how they are distributed, marketed,
displayed, and sold
Where the products are different, the prior owner’s chance of success is a function of many variables:
9. strength of his mark
10. degree of similarity between the two marks
11. reciprocal of defendant’s good faith in adopting its own mark
VARIABLE TO CONSIDER
12. quality of defendant’s product
13. proximity of the products
14. likelihood that the prior owner will bridge the gap
15. actual confusion
9
ARTalactac
16. sophistication of the buyers
INTERNATIONALLY WELL- Other persons or entities cannot use the internationally “well-known” mark even for unrelated goods
KNOWN MARK
IMPORTATION OF MEDICINE: There is no infringement of trademarks or trade names of imported or sold drugs and medicines as well
as imported or sold off-patent drugs and medicines which bear marks that have not been tampered, unlawfully modified or infringed upon
USE OF CONTAINER: The mere unauthorized use of a container bearing a registered trademark in connection with the sale, distribution
or advertising of goods or services which is likely to cause confusion, mistake or deception among the buyers or consumers can be
considered as trademark infringement.
- Trademark infringement is committed when one LPG dealer refilled the LPG containers bearing the registered marks of the trademark
owner, without the consent of the latter
PROTECTION OF TRADE NAME: A trade name (including a corporate name) need not be registered with the IPO before an infringement
suit may be filed by its owner against the owner of an infringing trademark
Example: The trademark “San Francisco Coffee” is an infringement of the trade name “San Francisco Coffee & Roastery, Inc.” even if
the said trade name is not registered with the IPO
COFFEE PARTNERS, INC. v. SAN FRANCISCO COFFEE AND ROASTERY, INC.: PROTECTION OF TRADE NAME: Example:
The trademark “San Francisco Coffee” is an infringement of the trade name “San Francisco Coffee & Roastery, Inc.” even if the said
trade name is not registered with the IPO
UNFAIR COMPETITION:
UNFAIR This involves employing deception or any other means contrary to good faith by which a person passes off his
COMPETITION goods or business or service for those of one who has already established goodwill thereto
ESSENTIAL 1. Confusing similarity in the general appearance of the goods
ELEMENTS 2. Fraud or intent to deceive the public and defraud a competition
Whether the acts of the defendant have the intent of deceiving or are calculated to deceive the ordinary buyer
TEST
making his purchases under the ordinary conditions of the particular trade to which the controversy relates
SUPERIOR COMMERCIAL ENTERPRISES, INC. v. KUNNAN ENTERPRISES, LTD.: Test of unfair competition: Whether the acts
of the defendant have the intent of deceiving or are calculated to deceive the ordinary buyer making his purchases under the ordinary
conditions of the particular trade to which the controversy relates
INTER PARTES CASES: These are contested cases filed before the Intellectual Property Office
Include:
1. Opposition against the registration of a mark published for opposition
2. Petition to cancel the registration of a mark
PATENTS: include:
1. petition to cancel an invention patent, utility model registration, industrial design registration or any claim or parts of a claim
2. petition for compulsory licensing
PATENTS
PATENTABLE any technical solution of a problem in any field of human activity which is new, involves an inventive step and is
INVENTION industrially applicable
1. A technical solution of a problem in any field of human activity
REQUISITES 2. It must be novel invention
3. Industrially applicable
10
ARTalactac
The patent law has a three-fold purpose: first, patent law seeks to foster and reward invention; second, it promotes
disclosures of inventions to stimulate further innovation and to permit the public to practice the invention once the
patent expires; third, the stringent requirements for patent protection seek to ensure that ideas in the public
domain remain there for the free use of the public.
The law attempts to strike an ideal balance between the two interests: The patent system thus embodies a
PURPOSES
carefully crafted bargain for encouraging the creation and disclosure of new useful and non-obvious advances in
technology and design, in return for the exclusive right to practice the invention for a number of years. The
inventor may keep his invention secret and reap its fruits indefinitely. In consideration of its disclosure and the
consequent benefit to the community, the patent is granted. An exclusive enjoyment is guaranteed him for 17
years, but upon the expiration of that period, the knowledge of the invention inures to the people, who are thus
enabled to practice it and profit by its use.
TERM OF A 20 years from the filing date of application
PATENT
DEFINITIONS:
1. Novel that which does not form part of the prior act
2. “Prior act” a. that which has been made available to the public anywhere in the world before the filing fate or the
priority date of application
b. that which forms part of an application whether for patent, utility model or industrial designed, effective
in the Philippines
Provided, That the inventor or applicants are not the same and the contents of the application are published
in accordance with the requirements of patent application rules and the filing date of prior art is earlier
3. 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
In case of drugs and medicine, there NO inventive step if the invention results from:
a. Mere discovery of a new form or new property of a known substance which does not result in the
enhancement of the known efficacy of that substance
b. Mere discovery of any new property or new use for a known substance
c. Mere use of a known process unless such known process results in a new product that employs at least
one new reactant
4. Person skilled in presumed to be an ordinary practitioner aware of what was common general knowledge in the art at the
the Art relevant date.
He is presumed to have knowledge of all references that are sufficiently related to one another and to the
pertinent art and to have knowledge of all arts reasonably pertinent to the particular problems with which the
inventor was involved
He is presumed also to have had at his disposal the normal means and capacity to routine work and
experimentation
5. Industrial an invention that can be produced and used in any industry
applicability
FIRST TO FILE RULE: If two or more persons have made the invention separately and independently of each other, the right to the
patent shall belong to the person who first filed an application for such invention
11
ARTalactac
Condition: The act does not significantly prejudice the economic interest of the owner of the patent
The act consists of making or using exclusively for experimental use of the invention for scientific purposes
EXPERIMENTAL USE or educational purposes and such other activities directly related to such scientific or educational
experimental use
Testing, using, making or selling the invention including any data related thereto of drugs and medicine,
DRUGS AND solely for purposes reasonably related to the development and submission of information and issuance of
MEDICINE approvals by government regulatory agencies required under any law of the Philippines or of another country
that regulates the manufacture, construction, use or sale of any product
MEDICINE Preparation for individual cases, in a pharmacy or by a medical professional, of a medicine in accordance
INDIVIDUAL with a medical prescription after a drug or medicine has been introduced in the Philippines or anywhere else
PREPARATION in the world by the patent owner, or. by any party authorized to use the invention
The exclusive right of the patent owner is exhausted after the first authorized sale, meaning, the purchaser
PATENT may thereafter use, repair and resell the product
EXHAUSTION - However, the purchaser may not reconstruct the product from the parts of products that were already
used
INFRINGEMENT
making, using, offering for sale, selling, or importing a patented product or a product obtained directly
INFRINGEMENT or indirect from a patented process, or the use of a patented process without the authorization of the
patentee
1. restrain the unauthorized entity from making, using offering for sale, selling or importing the product
2. to prevent or prohibit the use of the process or from selling, offering for sale or importing product
THE PATENTEE SHALL
obtained from the process
HAVE THE EXCLUSIVE
3. recover damages in a civil action for infringement which can be equivalent to royalty or an amount
RIGHT:
that does not exceed 3 times the amount of actual damages
4. to ask that the court to order that the infringing products or goods to be destroyed
STEPTS IN DETERMINING 1. Determine if there is literal infringement. If there is literal infringement, the defendant is liable
THE PRESENCE OF 2. If there is no literal infringement, then the doctrine of equivalents should be applied
INFRINGEMENT
There is infringement of patent under this test if one makes, uses or sells an item that contains all the
elements of the patent claim.
The principle or mode of operation must be the same or substantially the same.
Requires satisfaction of the function-means-and-result test, the patentee having the burden to show
DOCTRINE OF that all three components of such equivalency test are met
EQUIVALENTS
Cannot be applied when the infringing invention is clearly beyond what is written in the claim
When the language of the patentee’s claims is clear and distinct. The patentee is bound thereby and
may not claim anything beyond them. And so are the courts bound, such that they may not add to or
detract from the claims matters not expressed or necessarily implied, nor may they enlarge the patent
beyond the scope of that which the inventor claimed and the patent office allowed, even if the patentee
may have been entitled to something more than the words it had chosen would include
COMPULSORY LICENSING
a license issued by the Director General of the Intellectual Property Office to exploit a
COMPULSORY LICENSING patented invention without the permission of the patent holder, either by manufacture or
through parallel importation
1. National emergency or other circumstances of extreme urgency
2. Where the public interest, in particular, national security, nutrition, health or the
GROUNDS
development of other vital sectors of the national economy as determined by the
appropriate agency of the Government, so requires
12
ARTalactac
3. Where a judicial or administrative body has determined that the manner of exploitation
by the owner of the patent or his licensee is anti-competitive
4. In case of public non-commercial use of the patent by the patentee, without satisfactory
reason
5. If the patented invention is not being worked in the Philippines on a commercial scale,
although capable of being worked, without satisfactory reason: Provided, That the
importation of the patented article shall constitute working or using the patent
6. Where the demand for patented drugs and medicines is not being met to an adequate
extent and on reasonable terms, as determined by the Secretary of the Department of
Health
IN WHOSE FAVOR granted to any person who has shown his capability to exploit the invention
TIME WHEN APPLICATION FOR before the expiration of a period of four (4) years from the date of filing of the application or
COMPULSORY LICENSE CANNOT three (3) years from the date of the patent whichever period expires last
BE APPIED
The Compulsory license will only be granted after the petitioner has made efforts to obtain
authorization from the patent owner on reasonable commercial terms and conditions but
such efforts have not been successful within a reasonable period of time
TRADE SECRETS
plan or process, tool, mechanism or compound known only to its owner and those of his employees to whom it is
necessary to confide it
includes secret formula or process not patented, but known only to certain individuals using it in compounding
some article of trade having a commercial value
TRADE
SECRETS may consist of any formula, pattern, device, or compilation of information that:
1. is used in one’s business
2. gives the employer an opportunity to obtain an advantage over competitor who do not possess the
information
can be a:
13
ARTalactac
1. chemical composition
2. formulation
3. ingredients
4. price list
5. catalogue
6. specialized customer list
14
ARTalactac
BANKING & RELATED LAWS
BANKING
entities engaged in the lending of funds obtained in the form of deposits form the public
BANKS - required that banks are stock corporations and that its fund are obtained from the public
o deposits of 20 or more persons
entities engaged in the borrowing of funds through the issuance, endorsement or assignment with
recourse or acceptance of deposit substitutes for purposes of relending or purchasing of receivables
and other obligations
QUASI-BANKS
Deposit substitutes: alternative forms of obtaining funds from the public, other that deposits, through
the issuance, endorsement, or acceptance of debt instruments for the borrower’s own account, for the
purpose of relending or purchasing of receivables and other obligation
A bank has a vital role in providing an environment conducive to the sustained national economy.
Banking is fiduciary in nature that requires high stands of integrity and performance
CLASSIFICATION OF BANKS
1. UNIVERSAL BANKS banks that have authority to exercise, in addition to the powers and functions of commercial
banks, powers of an investment house and the power to invest in non-allied enterprises
2. COMMERCIAL BANKS banks that are given all such power necessary to engage in commercial banking in addition
to general corporate powers; commercial banking includes the power to accept drafts, issue
letter of credits, discounting and negotiation of negotiable instruments and evidence of debt,
accept and create demand deposits and the like
3. RURAL BANKS banks that are created to make needed credit available and readily accessible in the rural
areas for the purpose of promoting comprehensive rural development
4. THRIFT BANKS include savings and mortgage banks, private development banks, and stock savings and
loans association
5. COOPERATIVE BANKS banks that primarily provide financial, banking and credit services to cooperative
organizations and their members
6. ISLAMIC BANKS
7. OTHER CLASSIFICATION OF
BANKS AS DETERMINED BY
THE MB OF THE BSP
DISTINCTIONS:
as to capitalization different minimum capitalization requirements
as to purpose Some of the banks have specific purposes and social functions.
RURAL BANKS – meant to hasten rural development
as to powers or functions There are functions and powers that are not exercised by one that are exercise by others
Some banks may exercise certain powers only upon prior approval of the Monetary Board
UNIVERSAL BANKS and COMMERCIAL BANKS – can create and accept demand deposits without
separate authority; may be involved in quasi-banking functions
OTHER BANKS – must secure authority from the Monetary Board
UNIVERSAL BANKS – may act as an investment house
15
ARTalactac
ENTRY OF FOREIGN BANKS
FULL ENTRY OF FOREIGN BANKS IN THE PHILIPPINES: to create a more competitive environment and encourage greater foreign
participation
The Monetary Board may authorize foreign banks to operate in the Philippine banking system through any one of the following modes of
entry:
1. by acquiring, purchasing or owning up to 100% of the voting stock of an existing bank
2. by investing in up to 100% of the voting stocks of a new banking subsidiary incorporated under the laws of the Philippines
3. by establishing branches with full baking authority
FUNCTIONS OF BANK
Basic Function Other Functions
DEPOSIT LOAN Universal banks and commercial banks (as well as other banks depending on the type of bank
FUNCTION FUNCTION and/or the corresponding authority given by the Monetary Board may also exercise any of the
following functions:
1. Receive in custody funds, documents, and valuable objects
2. Act as financial agent and buy and sell, by order of and for the account of their customers,
shares, evidences of indebtedness and all types of securities
3. Make collections and payments for the account of others and perform such other services for
their customers as are not incompatible with banking business
4. Upon prior approval of the Monetary Board, act as managing agent, adviser, consultant or
administrator of investment management/ advisory/ consultancy accounts
5. Rent out safety deposit boxes – this is special type of deposit and not mere lease; hence it
cannot be stipulated that the bank is relieved from any liability
PROHIBITED ACTS:
1. engaging in insurance business
2. outsourcing of functions
Example: a bank cannot hire another company to accept deposit
DEPOSIT FUNCTION
Fixed, savings and current deposits of money in banks and similar institutions shall be governed by the
provisions concerning simple loan
SIMPLE LOAN
BANK – debtor
DEPOSITOR – creditor
1. The bank can make use as its own the money deposited. Said amount is not being held in trust for the
depositor nor is it being kept for safekeeping
2. Third persons who may have a right to the money deposited cannot hold the bank responsible unless there
is a court order or garnishment. The duty of the bank is to its creditor-depositor and not to third persons. IF
a third person has a valid right over the money deposited, he must prove the same before a court of
competent jurisdiction
CONSEQUENCES:
3. The officers of the bank cannot be held liable for estafa if they authorized the use of the money deposited
by the depositor. There would be no liability for estafa under Article 315(1)(b) of the RPC even if the bank
failed to return the amount deposited
4. The bank has the right to compensation. It can set off the deposits with the indebtedness of the depositor
that are due and demandable
5. Deposits are common preferred credit
GUINGONA v. CITY FISCAL OF MANILA: CONSEQUENCES OF SIMPLE LOAN: The officers of the bank cannot be held liable for
estafa if they authorized the use of the money deposited by the depositor. There would be no liability for estafa under Article 315(1)(b)
of the RPC even if the bank failed to return the amount deposited
DEPOSITORS:
MINORS MARRIED WOMAN
They can open bank accounts in their own right provided that: They are allowed to open bank
1. they are at least seven years of age accounts without the assistance of
2. they are able to read and write and have sufficient discretion their husbands
3. they have not otherwise disqualified by any other incapacity
4. the accounts should only be saving or time deposits
Parents may nevertheless deposit for their minor children and guardians for their wards
Thrift Banks – if any guardian shall give notice in writing to any thrift bank not to make payments
of deposits, dividends, or interest to the minor of whom he is the guardian, then such payment
shall be made only to the guardian
KINDS OF DEPOSITS:
1. DEMAND DEPOSITS all those liabilities of banks which are denominated in Philippine currency and are subject to
payment in legal tender upon demand by presentation of checks subject to the following rules:
a. Generally, only a universal bank or commercial bank can accept or create demand
deposits
b. A bank, other than a universal bank or commercial bank cannot accept demand deposits
except upon prior approval of the Monetary Board
c. Temporary overdrawing against current accounts shall not be allowed unless caused by
normal bank charges and other fees incidental to handling such accounts
d. Drawing against uncollected deposits (i.e., uncleared checks) are generally prohibited
2. SAVINGS ACCOUNT This is the most common type of deposit and is usually evidence by a passbook
16
ARTalactac
a. Banks are prohibited from issuing/accepting withdrawal slips or any other similar
instruments designed to effect withdrawals of saving deposits without requiring the
depositors concerned to present their passbooks and accomplishing the necessary
withdrawal system
b. The requirement of presentation of passbook is usually included in the terms and
conditions printed in the passbook. A bank is negligent if it allows the withdrawal without
requiring the presentation of a passbook
3. NEGOTIABLE ORDER OF interest-bearing deposit account that combine the payable on demand feature of checks and
WITHDRAWAL ACCOUNTS investment feature of saving account
(NOW) ACCOUNTS
4. TIME DEPOSITS an account with fixed term
INTERESTS: Demand, savings, NOW accounts, time deposits and deposit substitutes shall not be subject to interest ceiling
OTHER ACCOUNTS: Bank accounts may be opened by one individual or by two or more persons.
- Whenever two or more persons open an account, the same may be an “and/or account? or an “and” account
Joint accounts may be subject of a survivorship agreement whereby the co-depositors agree to permit either of them to withdrawn
the whole deposit during their lifetime and transferring the balance to the survivor upon the death of one of them.
VITUG v. CA: Joint accounts may be subject of a survivorship agreement whereby the co-depositors agree to permit either of them
to withdrawn the whole deposit during their lifetime and transferring the balance to the survivor upon the death of one of them.
A news reporter that reported what he overheard from the conversation of two bank employees about a
bouncing check of a depositor is NOT violating the law
A bank depositor may be inquired into in the following cases:
1. When there is written permission of the depositor or investor; Example: A stockholder cannot inspect the
bank deposits of his corporation without the consent of the latter; his right to inspect as shareholder is
subject to bank secrecy law
2. Impeachment cases
3. Upon the order of a competent court in cases of bribery or dereliction of duty of public officials
4. Upon the order of a competent court in cases where the money deposited or invested is the subject of
litigation
5. Upon order of the competent court or tribunal in cases involving explained wealth under the Anti-Graft and
Corrupt Practices Act – note that not all violations of R.A. 3019 fall under the exceptions; the exception
applies even if the unexplained wealth was placed in another person’s name
6. Upon inquiry by the Commissioner of Internal Revenue for the purpose of determining the net estate of a
deceased depositor
7. Upon the order of a competent court, by the Anti-Money Laundering Council where there is probable cause
of money laundering; Example: A Committee of the House of Representative is not authorized to order
the examination of deposits
8. Examination by the Anti-Money Laundering Council (AMLC) even without court order, in the three cases
EXCEPTIONS
mentioned in Section 11 of the Anti-Money Laundering Act
9. Disclosure to the Treasurer of the Philippines for dormant deposits for at least ten (10) years under the
Unclaimed Balances Act
10. Report of banks to AMLC of covered and/or suspicious transactions
11. Upon order of the Court of Appeals, examination by law enforcement officers in terrorism cases under the
Human Security Act
12. Investigation where AMLC is authorized to look into or examine deposits and investments with any banking
institution or non-bank financial institution and their subsidiaries and affiliates without court order
13. Philippine Deposit Insurance Corporation’s inquiry into and examination of deposit accounts and all
information related thereto in case thereto in case there is a finding of unsafe or unsound banking practice
under Eighth paragraph of Section 8 of R.A. No. 3591 as amended by R.A. No. 9576
14. Examination and inquiry into deposit records by PDIC when there is failure of prompt corrective action as
declared by the Monetary Board due to capital deficiency
15. When there is a waiver in case of DOSRI loans
16. Disclosure to the BSP in the course of examination to ensure compliance with the Anti-Money Laundering
Act and testing of numbered accounts
17
ARTalactac
Non-disclosure without Court order of any information relative to the funds or properties of its clients is also
required.
- However, bank deposits shall continue to be governed by the Law on Secrecy of Bank Deposits
Examples: A bank cannot disclose matters relating to the trust accounts of the client with the bank both under
Section 55(b) of the GBL and R.A. No. 1405.
One of the exceptions is when there is a written waiver. Mere silence is not sufficient and failure to object
during the proceedings where a bank deposit is involved does not amount to waiver. In the case an insolvent
where a receiver is appointed, the conformity of the receiver is necessary for the written waiver to be valid
SUBJECT MATTER The inquiry into bank deposits allowable under R.A. No. 1405 must be premised on the fact that the money
OF LITIGATION deposited in the account is itself the subject of the action
EJERCITO v. SANDIGANBAYAN: Non-disclosure without Court order of any information relative to the funds or properties of its
clients is also required. However, bank deposits shall continue to be governed by the Law on Secrecy of Bank Deposits
Examples: A bank cannot disclose matters relating to the trust accounts of the client with the bank both under Section 55(b) of the
GBL and R.A. No. 1405.
BSP GROUP, INC. v. SALLY GO: SUBJECT MATTER OF LITIGATION: Example: The criminal Information filed with the trial court
charged the accused with qualified theft by abusing his employer’s trust and confidence and stealing cash in the amount of
P1,534,135.50. On the premise that the accused had deposited the stolen amounts to her personal banking account, the prosecution
moved for the issuance of subpoena duces tecum ad testificandum against the respective managers or records custodians of the
bank. The trial court granted the motion and issued the corresponding subpoena. The Supreme Court ruled that there is violation of
the law on secrecy bank deposits. The High Court explained that the admission of testimonial and documentary evidence relative to
respondent’s Security Bank account serves no other purpose than to establish the existence of such account, its nature and the amount
kept in it. It constitutes an attempt by the prosecution at an impermissible inquiry into a bank deposit account the privacy and
confidentiality of which is protected by law.
GARNISHMMENT
Bank accounts may be garnished by the creditors of the depositor. There is no violation of the Law
GARNISHMENT on Secrecy of Bank Deposits if the accounts are garnished. The amount of the deposit is actually not
disclosed and the intent of the legislature does not cover garnishment
DEPOSITS THAT ARE 1. Foreign Currency Deposits
EXEMPT FROM 2. Those exempt under the Rules of Civil Procedure like provision for the family for four months
GARNISHMENT
SALVACION, ET. AL. v. CENTRAL BANK OF THE PHILIPPINES: DEPOSIT THAT ARE EXEMPT FROM GARNISHMENT;
FOREIGN CURRENCY DEPOSITS: The Supreme Court ruled, by way of exception, that foreign currency deposits of an American
tourist who was found guilty of repeatedly raping a 12-year old child is subject to garnishment
DEPOSIT INSURANCE
DEPOSIT INSURANCE All deposit liabilities of banks are insured with the Philippine Deposit Insurance Corporation
the unpaid balance of money or its equivalent received by a bank in the usual course of business and
for which it has given or is obliged to give credit to a commercial, checking, savings, time or thrift
account, evidenced by passbook, certificate of deposit or other evidence of deposit or issued in
accordance with BSP rules and regulations and other applicable laws.
DEPOSIT
include such other obligations of a bank, which, consistent with banking usage and practices, the PDIC
Board shall determine and prescribe by regulations to be deposit liabilities of the bank
In the case of any negotiable certificate of deposit, the owner or holder thereof shall be recognized as
a depositor ONLY if his name is registered as owner/ holder thereof in the books of the issuing bank
the amount due to any bona fide depositor for legitimate deposits in an insured bank as of the date of
INSURED DEPOSIT closure but not to exceed P500,000.00
18
ARTalactac
Full payment of the amount of the insured deposit will be made by PDIC subject to payment of the
depositor’s obligation to the bank, if any, thereafter
Yes, the maximum deposit insurance cover may be adjusted in such amount, for such a period, and/or
for such deposit products, provided the following are complied with:
CAN THE MAXIMUM 1. The Monetary Board has determined that there is a condition that there is a condition that threatens
DEPOSIT INSURANCE BE the monetary and financial stability of the banking system that may have systemic consequences
ADJUSTED? 2. The adjustments are approved by a unanimous vote of the Board of Directors of PDIC in a meeting
called for the purpose and chaired by the Secretary of Finance
3. The adjustments are approved by the President of the Philippines
The PDIC shall not pay deposit insurance for the following accounts or transactions, whether
denominated, documented, recorded or booked as deposit by the bank:
1. The amount in excess of the insured deposit of P500,000.00
2. Deposit that is payable in a place outside the Philippines (Examples: in foreign branches)
3. Investment products such as bonds and securities, trust accounts, and other similar instruments
4. Deposit accounts or transactions which are fictitious or fraudulent
5. Deposit accounts or transactions constituting, and/or emanating from, unsafe and unsound
banking practice/s as determined by PDIC’s Board after notice and hearing and publication of
cease and desist order
DEPOSITS NOT COVERED 6. Deposits that are determined to be the proceeds of an unlawful activity as defined under Anti-
BY INSURANCE Money Laundering Law
7. Deposits accounts that resulted from splitting of deposit
8. Money placements by the head office of a foreign bank in its branch in the Phils., because there
is only one entity
9. Inter-branch deposits: refer to funds of one branch or the Head Office of a bank in another branch.
These branches are part of one and the same juridical entity
10. When the transfer of funds of a branch in the Philippines of a foreign bank, which resulted in inter-
branch transactions, took place in the books of accounts of the branch in the head office located
abroad, the inter-branch transaction is not covered by deposit insurance because it is payable
outside the Philippines
occurs whenever a deposit account with an outstanding balance of more than P500,000.00 under the
name of a person is broken down and transferred to two or more accounts in the names of persons or
entities who have no beneficial ownership in the transferred deposits within 120 days immediately
SPLITTING OF DEPOSIT preceding or during a bank-declared bank holiday or immediately preceding a closure order issued by
the Monetary Board for the purpose of availing of the maximum deposit insurance coverage.
This a CRIMINAL ACT and the deposits are not entitled to any insurance payment
There shall be added together all deposits in the bank maintained in the same right and capacity for
his benefit either in his own name or in the name of others
1. A joint account regardless of whether the conjunction “and,” “or,” “and/or” is used, shall be insured
separately from any individually-owned deposit account
2. If the account is held jointly by two or more natural persons, or by two or more juridical persons or
DETERMINATION OF entities, the maximum insured deposit shall be divided into as many equal shares as there are
AMOUNT DUE individuals, juridical persons or entities, unless a different sharing is stipulated in the document of
deposit
3. If the account is held by a juridical person or entity jointly with one or more natural persons, the
maximum insured deposit shall be presumed to belong entirely to such juridical person or entity
4. The aggregate of the interest of each co-owner over several joint accounts, whether owned by the
same or different combinations of individuals, juridical persons or entities, shall likewise be subject
to the maximum insured deposit of P500,000.00
The proceeds of the insurance shall be paid by the PDIC within six months to the depositor counted
from the filing of the claim whenever the insured bank is closed on account of insolvency; otherwise
the concerned officer, director or employee of PDIC shall have criminal liability if there is grave abuse
of discretion, gross negligence, bad faith or malice
An insured bank shall be deemed to have been closed on account of insolvency when ordered closed
WHEN PAYMENT IS MADE by the Monetary Board of the BSP
The claim must be filed within two years from actual takeover by the receiver
The insurance coverage may be terminated if a bank does not comply within 30 days from receipt of
notice, with a cease and desist order issued by the PDIC related to a deposit-related unsafe or unsound
banking practice
PHILIPPINE DEPOSIT INSURANCE CORP. v. CA: The liability of the PDIC for insured deposits rests upon the existence of deposits
with the insured bank, not on the negotiability or non-negotiability of the certificates evidencing these deposits. In fact, the claimant
cannot recover even if he can present a negotiable certificate of deposit if there is actually no deposit
PDIC did not validly reject the claim. MB Bank and its client should be given the benefit of the doubt that they were not aware that the
Monetary Board Resolution had been passed. Mere conjectures that MB Bank had actual knowledge of its impending closure did not
suffice. The Resolution could not thus have nullified the transactions that were entered into prior to the receipt of the Resolution of MB
Bank.
19
ARTalactac
2. PDIC can institute corrective actions if no as the purchase of assets of assumption of liabilities as a mode of
corrective action is implemented by the Monetary liquidation
Board 3. Banks shall ordered closed by the Monetary Board shall no longer be
3. PDIC is authorized to terminate the insured status rehabilitated
of a bank if the latter engages in unsafe and
unsound banking practices
4. PDIC to implement “resolution” as a preventive
mechanism in relation to banks with problems
UNCLAIMED BALANCES: include credits or deposits of money, bullion, security or other evidence of indebtedness of any kind, and
interest thereon with banks, buildings and loads associations, and trust corporations, as hereinafter defined, in favor of any person known
to be dead or who has not made further deposits or withdrawals during the preceding 10 years or more.
Deposits that have become dormant for a period of 10 years may be escheated in favor of the government
- There should be notice to the depositor of the unclaimed balance.
- The bank (including building and loan associations and trust companies) is required to report (sworn statement) to the Treasurer of
the Philippines the existence of such deposits. The Treasurer will in turn inform the Solicitor General who will then initiate the proper
escheat proceedings in Court.
- Publication of a list of unclaimed balanced
- Such unclaimed balances, together with the increase and proceeds thereof, shall be deposited with the Treasurer of the Philippines
to the credit of the Government of the Philippines to be used as the Congress may direct
RCBC v. HI-TRI DEV. CORP.: UNCLAIMED BALANCES: There should be notice to the depositor of the unclaimed balance.
DOSRI ACCOUNTS
Restrictions (not a total prohibition) are imposed on borrowings and security arrangement by directors,
DOSRI ACCOUNTS
officers and stockholders of the bank and their related interest (hence, the term DOSRI)
1. The borrower is a director, officer or any stockholder of a bank (and related interests)
2. He contracts a loan or any form of financial accommodation
3. The loan or financial accommodation is from:
a. his bank
b. a bank that is a subsidiary of a bank holding company of which both his bank and lending
REQUISITES UNDER
bank are subsidiaries
ARTICLE 26, NCBA
c. a bank in which a controlling proportion of the shares is owned by the same interest that owns
a controlling proportion of the shares of his bank
4. The loan or financial accommodation of the director, officer or stockholder, singly or with that of his
related interest, is in excess of 5% of the capital and surplus of the lending bank or in the maximum
amount permitted by law, whichever is lower
20
ARTalactac
their related interest. The Manual of Regulations for
Banks provided that the aggregate of 15% of the total loan
portfolio of the bank or 100% of the combined capital
account whichever is lower
5. Individual The outstanding loans, credit accommodations and
Ceilings guarantees which a bank may extend to each of its
stockholders, directors, or officers and their related
interests, shall be limited to an amount equivalent to their
respective unencumbered deposits and book value of
their paid-in capital contribution in the bank
COLLATERALS
Value of Collaterals: The loan shall not exceed 75% of the appraised value of the real property plus 60% of the appraised value of the
improvement or 75% of the appraised value of the chattel
- The collateral value cap may, however, be reduced by the Monetary Board, or increased in special cases
Foreclosure of Mortgage:
Redemption Period for Natural Persons Redemption Period for Juridical Persons
The mortgagor or debtor, who is a natural person, whose A juridical person, whose property has been sold
real property has been sold for the full or partial payment of pursuant to an extrajudicial foreclosure, shall have
REDEMPTION his obligation shall have the right within one year after the the right to redeem the property but not after the
PERIOD sale of the real estate, to redeem the property. The one- registration of the certificate of foreclosure sale with
year redemption period should be counted from the date of the proper Register of Deed which in case shall be
the registration of the certificate of same with the Register more than three months after foreclosure, whichever
of Deeds is earlier
Redemption may be exercised by paying the amount due under the mortgage deed, with interest thereon at the
REDEMPTION
rate specified in the mortgage, and all the costs and expenses incurred by a bank or institution from the sale and
PRICE
custody of said property less the income derived therefrom
The purchaser at the auction sale concerned whether in a judicial or extrajudicial foreclosure shall have the right
POSSESSION to enter upon and take possession of such property immediately after the date of the confirmation of the auction
sale and administer the same in accordance with law
Any petition in court to enjoin or restrain the conduct of foreclosure proceedings instituted pursuant to this provision
INJUNCTION
shall be given due course only upon the filing by the petitioner of a bond in an amount fixed by the court conditioned
AND BOARD
that he will pay all the damages which the bank may suffer by the enjoining or the restraint of the foreclosure
Shares: No bank shall purchase or acquire shares of its own capital or accept its own shares as a security for a loan, except when
authorized by the Monetary Board
- In every case the stock so purchased or acquired shall, within six months from the time of its purchase or acquisition, be sold or
disposed of at a public or private sale
OWNERSHIP OF BANKS
FOREIGN OWNERSHIP FILIPINO STOCKHOLDINGS STOCKHOLDINGS OF FAMILY GROUPS
OR RELATED INTERESTS
Individuals and Non- Foreign Banks limiting ownership and control law does not prohibit ownership of the stock
banks of the voting stock of a domestic by members of the same family or related
control up to 40% of the not subject to 40% bank to a maximum of 40% - interests
voting stock of a domestic limitation shall apply to Filipinos and
bank domestic non-bank stockholdings of individuals related to each
foreign banks may corporations other within the fourth degree of
percentage of foreign-owned acquire 100% of the - refer to individual equity consanguinity or affinity, legitimate or
voting stock shall be voting stocks of an participation common-law shall be considered family
determined by the existing bank or grounds or related interest and must be fully
citizenship of the individual invest in up to 100% disclosed in all transactions by such
stockholders in that bank of the voting stocks individuals, corporations or related groups
of a new subsidiary with the bank
the citizenship of the
corporation which is a
stockholder in a bank shall
follow the citizenship of the
controlling stockholders of
the corporation
- Controlling
stockholders:
individuals holding more
21
ARTalactac
than 50% of the voting
stock of the bank
PARTICULARS OWNERSHIP
CEILING
1. Voting shares of stock of a foreign individual or a foreign non-bank corporation in:
a. UB/KB and TB 40%
b. RB 60%
2. Aggregate ownership of the voting shares of stock of foreign individual and/or foreign non-bank corporation
in:
a. UB/KB 40%
b. TB/RB 60%
3. Voting shares of stock of a qualified foreign bank in UB, KB, TB and RB 100%
4. Combined ownership of the voting shares of stock of qualified foreign banks in UB, KB, TB and RB 100%
5. Voting shares of stock of a Filipino individual or a Philippine non-bank corporation in:
a. UB/KB and TB 40%
b. RB 60%
Voting shares of stock of a qualified Philippine corporation in UB, KB, TB and RB prior to effectivity of
R.A. No. 10641 60%
c. Combined ownership of an individual and corporation/s which is/are wholly-owned or a majority of
the voting shares of stock of which is owned by such individual in:
i. UB/KB/TB 40%
ii. RB 60%
Independent director: a person other than an officer or employee of the bank, its subsidiaries or affiliates or
related interest
COMPOSITION OF Non-Filipino citizens may become members of the board of directors of a bank to the extent of the foreign
BOARD participation in the equity of said bank
GENERAL RULE: No appointive or elective public official, whether full-time or part-time, shall at the same
time serve as officer of any private bank, save in cases where such service is incident to financial assistance
provided by the government or a government-owned or controlled corporation to the bank or unless otherwise
provided under existing laws
EXCEPTION: Section 5 of the Rural Banks Act of 1992 provides that nothing in the said Act “shall be construed
as prohibiting any appointive or elective official from serving as director, officer, consultant or in any capacity
in the bank”
The meetings of the board of directors may be conducted through modern technologies such as, but not
MEETINGS
limited to, teleconferencing and video-conferencing
Fit and Proper Rule: The Monetary Board is authorized to pass rules providing for the qualifications and
disqualifications of individuals elected or appointed bank directors or officers and to disqualify those found
unfit after due notice.
QUALIFICATIONS
In determining whether an individual is fit and proper to hold the position of a director or officer of a bank,
regard shall be given to his integrity, experience, education, training, and competence
A bank may acquire, hold or convey real property under the following circumstances:
1. Such as shall be mortgaged to it in good faith by way of security of debts
2. Such as shall be conveyed to it in satisfaction of debts previously contracted in the course of its dealings
22
ARTalactac
3. Such as it shall purchase at sales under judgments, decrees, mortgages, or trust deeds held by it and such as it shall purchase to
secure debts due it
Any real property acquired or held under the circumstances enumerated in the above paragraph shall be disposed of by the bank within
a period of five years or as may be prescribed by the Monetary Board.
- After said period, the bank may continue to hold the property for its own use, subject to the limitations mentioned earlier, that is, the
investment should not be more than 50% of the combined capital accounts
LOANS TO BANKS
LOANS WITHOUT COLLATERAL EMERGENCY LOANS
The BSP may extend loans and advances to banking The BSP, upon the approval of at least five members of the Monetary Board,
institutions for a period of not more than seven days may also grant emergency loans or advances in the amount not exceeding
without any collateral for the purpose of providing 50% of the bank’s total deposits and deposit substitutes. The loans shall be
liquidity. released in two or more tranches
CONSERVATORSHIP
Whenever, on the basis of a report submitted by the appropriated 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, the Monetary Board
GROUNDS
may appoint a conservator with such powers as the Monetary Board shall deem necessary.
The closure can be based on the report of the head of the supervising and examining department of the BSP
1. immediately gather and take charge of all the assets and liabilities of the institution, and administer the
DUTIES OF same for the benefit of its depositors and creditors
RECEIVER 2. exercise the general powers of a receiver under the Revised Rules of Court
3. proceed with the liquidation of the bank and dispose of the assets and wind up the affairs of the bank
No prior hearing is necessary in appointing a receiver and in appointing a receiver and in closing the bank
CLOSE-NOW-
HEAR-LATER It is enough that subsequent judicial review is provided for
SCHEME - to require such previous hearing would not only be impractical but would tend to defeat the very purpose
of the law when it invested the Monetary Board with authority
23
ARTalactac
A judge, officer of the course or any person who shall issue, order, process or cause the
issuance or implementation of the garnishment order, levy, attachment or execution, shall be
liable under Section 27 of the PDIC law.
Collaterals securing the loans and advances granted by the Bangko Sentral ng Pilipinas shall
not be included in the assets of the closed bank for distribution to other creditors. The proceeds
in excess of the amount secured shall be returned by the BSP to the receiver
The employer-employee relationship between the closed bank and its employees shall be
deemed terminated upon service of the notice of closure of the bank in accordance with the
PDIC law.
ON LABOR RELATIONS
Payment of separation pay or benefits provided for by law shall be made from available assets
of the bank in accordance with the Rules on Concurrence and Preference of Credits under the
Civil Code or other laws
The receiver may cancel, terminate, rescind or repudiate any contract of the closed bank that
CONTRACTUAL OBLIGATIONS is not necessary for the orderly liquidation of the bank, or is grossly disadvantageous to the
closed bank, or for any ground provided by law
The liability of a bank to pay interest on deposits and all other obligations as of closure shall
cease upon its closure by the Monetary Board without prejudice to the first paragraph of
Section 85 of the New Central Bank Act.
The receiver shall have the authority, without need for approval of the liquidation court, to
ON INTEREST PAYMENTS assign, as payment to secured creditors, the bank assets serving as collaterals to their
respective loans up to the extent of the outstanding obligations, including interest as of date
of closure of the bank, as validated by the receiver.
The valuation of the asset shall be based on the prevailing market value of the collaterals as
appraised by an independent appraiser on an ‘as in where is’ basis
LIABILITY FOR PENALTIES AND From the time of closure, the closed bank shall not be liable for the payment of penalties and
SURCHARGES FOR LATE surcharges arising from the late payment or non-payment of real property tax, capital gains
PAYMENT AND NONPAYMENT OF tax, transfer tax and similar charges
TAXES
The receiver may impose, on behalf of the closed bank, charges and fees for services
BANK CHARGES AND FEES ON
rendered after bank closure, such as, but not limited to the execution of pertinent deeds and
SERVICES
certifications
Except for actions pending before the Supreme Court, actions pending for or against the
closed bank in any court or quasi-judicial body shall, upon motion of the receiver, be
ACTIONS PENDING FOR OR
suspended for a period not exceeding 180 days and referred to mandatory mediation. Upon
AGAINST THE CLOSED BANK
termination of the mediation, the case shall be referred back to the court or quasi-judicial body
for further proceedings
The execution and enforcement of a final decision of a court other than the liquidation court
against the assets of a closed shall be stayed.
FINAL DECISIONS AGAINST THE
CLOSED BANK The prevailing party shall file the final decision as a claim with the liquidation court and settled
in accordance with the Rules on Concurrence and Preference of Credits under the Civil Code
or other laws
Payment of docket and other court dee relating to all cases or actions filed by the receiver with
any judicial or quasi-judicial bodies shall be deferred until the action is terminated with finality.
DOCKET AND OTHER COURT
Any such fees shall constitute as a first lien on any judgment in favor of the closed bank or in
FEES
case of unfavorable judgment, such fees shall be paid as liquidation costs and expenses
during the distribution of the assets of the closed bank
JUDICIAL REVIEW
The actions of the Monetary Board taken under Section 30 or under Section 29 of the NCBA shall be final
REMEDY UNDER
and executory, and may not be restrained or set aside by the court except on petition for certiorari on the
SECTION 30 OF
ground that the action taken was in excess of jurisdiction or with such grave abuse of discretion as to amount
NCBA
to lack or excess of jurisdiction
The power and authority of the Monetary Board to close banks and liquidate them thereafter when public
GROUND: GRAVE
interest so requires is an exercise of police power of the State. Police power, however, may not be exercised
ABUSE OF
arbitrarily or unreasonably and could be set aside if it is either capricious, discriminatory, whimsical, arbitrary,
DISCRETION
unjust, or is tantamount to a denial of due process and equal protection clauses of the Constitution
The petition for certiorari may only be filed by the stockholders of record representing the majority of capital
stock within 10 days from receipt by the board of directors of the institution of the order directing receivership,
WHO MAY
liquidation or conservatorship
QUESTION
The petition may not be filed by the receiver or the conservator that was appointed
24
ARTalactac
capacity such as in an agency, guardianship, administratorship or wills, properties or estates, executorship,
receivership, and other similar services which do not create or result in a trusteeship
A trust entity, in addition to the general powers incident to corporations, shall have the power to:
1. Act as trustee on any mortgage or bond issued by any municipality, corporation, or any body politic and
to accept and execute any trust consistent with law
2. Act under the order or appointment of any court as guardian, receiver, trustee, or depositary of the
estate of any minor or other incompetent person, and as receiver and depositary of any moneys paid
into court by parties to any legal proceedings and of property of any kind which may be brought under
POWERS OF TRUST the jurisdiction of the court
ENTITY 3. Act as the executor of any will when it is named the executor thereof
4. Act as administrator of the estate of any deceased persons, with the will annexed, or as administrator
of the estate of any deceased person when there is no will
5. Accept and execute any trust for the holding, management, and administration of any estate, real or
personal, and the rents, issues and profits thereof
6. Establish and manage common trust funds, subject to such rules and regulations as may be prescribed
by the Monetary Board
The law prohibits the integration of the properties and funds of all the other businesses of the bank with
those of the trust business.
The trust business and all funds, properties or securities received by any trust entity, properties or securities
SEPARATION OF
received by any trust entity as executor, administrator, guardian, trustee, receiver, or depositary shall be
TRUST BUSINESS
kept separate and distinct from the general business including all other funds, properties, and assets of such
OF BANKS
trust entity.
The accounts of all such funds, properties, or securities shall likewise be kept separate and distinct from the
accounts of the general business of the trust entity
The corporate powers specified in Section 5 of the New Central Bank Act are as follows:
1. the power to adopt, alter and use a corporate seal which shall be judicially noticed
2. to enter into contracts
CORPORATE POWERS
3. to lease or own real and personal property
4. to sell or otherwise dispose of its real and personal property
5. to sue and be sued
6. to perform any and all things that may be necessary or proper to carry out the purposes of the
New Central Bank Act
7. to compromise, condone or release, in whole or in part, any claim of or settled liability
Operations and activities of banks shall be subject to supervision of the BSP.
Section 4 of the GBL provides that “supervision” shall include the following:
1. Issuance of rules of conduct or the establishment of standards of operation for uniform
application to all banking and financial institutions
2. The conduct of examination of the bank and its wholly owned or controlled enterprise
The PDIC may also conduct a regular annual examination upon prior approval of the MB. Special
BANK SUPERVISION
Examination without prior MB approval may be made by PDIC if there is an impending bank
closure
3. Overseeing to ascertain that laws and regulations are complied with
4. Regular investigation which shall not be oftener than once a year from the last date of
examination to determine whether an institution is conducting its business on a safe or sound
basis
5. Inquiring into the solvency and liquidity of the institution
25
ARTalactac
6. Enforcing prompt corrective action
The BSP is designated as the official depositary of the Government, its political subdivisions and
instrumentalities
- authorized to engage the services of the other banking institutions to act as its agent
- authorized to act as agent of the Government, its instrumentalities and subdivisions in the
BANKER AND FINANCIAL issuance of securities representing the obligations of the Government, its instrumentalities and
ADVISION OF subdivisions
GOVERNMENT
The BSP is likewise the financial advisor of the Government
- Section 123 of the NCBA provides that before undertaking any credit operation abroad, the
Government, through the Secretary of Finance, shall request the opinion, in writing, of the
Monetary Board on the monetary implications of the contemplated action
The Governor shall be the chief executive officer of the BSP.
RELATED LAWS
PDIC v. PHIL. COUNTRYSIDE RURAL BANK: PHILIPPINE DEPOSIT INSURANCE CORPORATION; PRIMARY FUNCTIONS: to
act as (1) deposit insurer, (2) co-regulator of banks, and (3) receiver and liquidator of closed banks.
EXAMINATION: Examination involves an evaluation of the current status of a bank and determines its compliance with the set
standards regarding solvency, liquidity, asset valuation, operations, systems, management, and compliance with banking laws, rules
and regulations. Such a process then involves an intrusion into a bank’s records.
INVESTIGATION: Investigation is conducted based on specific findings of certain acts or omissions which are subject of a complaint
or a Final Report of Examination made by PDIC. Investigation does not involve a general evaluation of the status of bank. An
investigation zeroes in on specific acts and omissions uncovered via an examination, or which are cited in a complaint. Although it
also involves a detailed evaluation, an investigation centers on specific acts of omissions and, thus, requires a less invasive
assessment.
PRIOR CONSENT FOR EXAMINATION: An examination of banks requires the prior consent of the Monetary Board, whereas an
investigation does not require prior MB consent
REASONS WHY PRIOR CONSENT OF BSP IS NOT NECESSARY FOR INVESTIGATION:
1. Time is always of essences, and it is prudent to expedite the proceedings if an accurate conclusion is to be arrived at, as an
investigation is only as precise as the evidence on which it is based
2. An investigation is based on reports of examination and an examination is conducted with prior Monetary Board approval
3. A lengthy process provide unscrupulous individuals the opportunity to cover their tracks
26
ARTalactac
6. A lengthy process provide unscrupulous individuals the
opportunity to cover their tracks
The powers of PDIC as receiver includes the power to collect loans and other claims of the closed bank, and for the purpose, modify,
compromise or restructure the terms and conditions of such loans or claims as may be deemed advantageous to the interest of the
creditors and claimants of the closed
The liability of the banks for deposits and all other obligations as of closure shall cease upon closure by the Monetary Board
27
ARTalactac
monetary instruments or 19. Violations of Sections
properties, supervised or 4 to 6 of the Anti-
regulated by the SEC Trafficking in
4. The following Designated Non-Financial Persons Act of 2003
Businesses and Professions (DNFBPs): 20. Violations of Sections
a. Jewelry deals, dealers in precious 78 to 79 of the
metals, and dealers in precious Revised Forestry
stones Code of the
b. Company service providers Philippines
which, as a business, provide any 21. Violations of Sections
of the following services to third 86 to 106 of the
parties: Philippine Fisheries
i. acting as a formation Code of 1998
agent of juridical 22. Violations of Sections
persons 101 to 107 of the
ii. acting as (or arranging Philippine Mining Act
for another person to act of 1995
as) a director or 23. Violations of Section
corporate secretary of a 27(c), (e), (f), (g), and
company, a partner of a (i) of the Wildlife
partnership, or a similar Resources
position in relation to Conservation and
other juridical persons Protection Act
iii. providing a registered 24. Violations of Section
office; business address 7(b) of the National
or accommodation, Caves and Cave
correspondence or Resources
administrative address Management
for a company, a Protection Act
partnership or any other 25. Violation of the Anti-
legal person or Carnapping Act
arrangement 26. Violations of Sections
iv. acting as (or arranging 1, 3, and 5 of the
for another person to act Laws on Illegal/
as) a nominee share- Unlawful Possession,
holder for another Manufacture, Dealing
person In, Acquisition or
c. Persons, including lawyers and Disposition of
accountants, who provide any of Firearms,
the following services: Ammunition or
i. Managing of client Explosives
money, securities or 27. Violation of P.D. No
other assets 1612
ii. Management of bank, 28. Violation of Section
savings, securities or 65 of the Migrant
other assets Workers and
iii. Organization of Overseas Filipinos
contributions for the Act of 1996
creation, operation or 29. Violation of the
management of Intellectual Property
companies Code of the
iv. Creation, operation or Philippines
management of juridical 30. Violation of Section 4
persons or of the Anti-Photo and
arrangements, and Video Voyeurism of
buying and selling Act of 2009
business entities 31. Violation of the Anti-
Child Pornography
Casino – refers to a business authorized by the Act of 2009
appropriate government agency to engage in 32. Violations of Sections
gaming operations: 5, 7, 8, 9, 10(c), (d)
1. “Internet-based casinos”: casinos in which and (e), 11, 12, and
persons participate by the use of remote 14 of the Special
communication facilitates such as, but not Protection of
limited to, internet, telephone, television, radio Children Against
or any other kind of electronic or other Abuse, Exploitation
technology for facilitating communication and Discrimination
2. “Ship-based casino”: casinos, the operation of 33. Fraudulent practices
which is undertaken on board a vessel, ship, and other violations
boat or any other water-based craft wholly or under Securities
partly intended for gambling Regulation Code of
2000
NOT COVERED – Lawyers and accountants who 34. Felonies or offenses
are: of a similar nature
1. authorized to practice their profession in the that are punishable
Philippines under the penal laws
2. engaged as independent legal or accounting of other countries
professionals, in relation to information
concerning their clients, or where disclosure of
information would compromise client
confidences or the attorney-client relationship
28
ARTalactac
“Independent legal or accounting
professionals”: lawyers and accountants
working in a private firm or as sole practitioners
who by way of business provide purely legal,
notarial or accounting services to their clients
The Court of Appeals should act on the petition to freeze within 24 hours from filing of the petition.
- If the application is filed a day before a nonworking day, the computation of the 24-hours period shall exclude the nonworking days
If no case is filed against a person whose account has been frozen within the period determined by the Court of Appeals, not exceeding
six months, the freeze order shall be deemed ipso facto lifted
REMEDY: A person whose account has been frozen may file a motion to lift the freeze order and the court must resolve this motion
before the expiration of the freeze order
No court shall issue a temporary restraining order or a writ of injunction against any freeze order, except the Supreme Court
The freeze order is without prejudice to an asset preservation order that the Regional Trial Court having jurisdiction over the appropriate
anti-money laundering case or civil forfeiture case may issue on the same account depending upon the circumstances of the case, where
the Court of Appeals will remand the case and its records
The freeze order or asset preservation order issued under this Act shall be limited only to the amount of cash or monetary instrument
or value of property that the court finds there is probable cause to be considered as proceeds of his predicate offense
- shall not apply to amounts in the same account in excess of the amount or value of the proceeds of the predicate offense
29
ARTalactac
The authority of AMLC to inquire into or examine the main account and the related accounts shall comply with the requirements of Article
III, Sections 2 and 3 of the 1987 Constitution
- Section 11 of the AMLA providing for ex-parte application and inquiry by the AMLC into certain bank deposits and investments does
not violate substantive due process, there being no physical seizure of property involved at that stage
o It is the preliminary and actual seizure of the bank deposits or investments in question which brings these within reach of
the judicial process, specifically a determination that the seizure violated due process
- There is also no violation of the right to privacy
o The Supreme Court explained that the law provides safeguards before a bank inquiry order is issued, ensuring adherence
to the general state policy of preserving the absolutely confidential nature of Philippine bank accounts:
1. The AMLC is required to establish probable cause as basis for its ex parte application for bank inquiry order
2. The CA, independent of the AMLC’s demonstration of probable cause, itself makes a finding of probable cause
that the deposits or investments are related to an unlawful activity under Section 3(i) or a money laundering
offense under Section 4 of the AMLA
3. A bank inquiry court order ex parte for related accounts is preceded by a bank inquiry court order ex parte for
the principal account which court order ex parte for related accounts is separately based on probable cause
that such related account is materially linked to the principal account inquired into
4. The authority to inquire into or examine the main or principal account and the related accounts shall comply
with the requirements of Article III, Sections 2 and 3 of the Constitution
REPUBLIC v. EUGENIO: Inquiry into deposits under Section 11 does not require a pre-existing criminal case.
Section 4: Any creditor shall furnish to each person to whom credit is extended, prior to the consummation of
the transaction, a clear statement in writing setting forth, to the extent applicable and in accordance with rules
and regulations prescribed by the Board, the following information:
1. cash price or delivered price of the property or service to be acquired
2. amounts, if any, to be credited as down payment and/or trade-in
3. difference between the amount set forth under clauses (1) and (2)
4. charges, individually itemized, which are paid or to be paid by such person in connection with the
DISCLOSURE
transaction but which are not incident to the extension of credit
REQUIREMENT
5. total amount to be financed
6. finance charge expressed in terms of pesos and centavos
7. percentage that the finance bears to the total amount to be financed expressed as a simple annual rate
on the outstanding unpaid balance of the obligation
The imposition of interest and finance charges is VOID if not disclosed in the disclosure statement
1. Although penalty charges are not stated in the disclosure statement, reference to the penalty charges in
the promissory note constitutes substantial compliance with the disclosure requirement of the Truth in
Lending Act
2. Even if disclosed, exorbitant interest rate may be declared unconscionable
to protect users of credit from lack of awareness of the true cost thereof, proceeding from the experience that
RATIONALE banks are able to conceal such true cost by hidden charges, uncertainty of interest rates, deduction of interests
from the loaned amount, and the like
Truth in Lending Act may also be violated if the agreement provides for an escalation clause on interest which
is dependent solely on the will of the bank
ESCALATION
CLAUSE
Example: the following provision is void: “The interest shall be at the rate indicative of (the bank’s) retail rate
or as determined by the Branch Head of the Bank
Subsequent compliance with the disclosure requirement cannot be deemed in substantial compliance with
SUBSEQUENT the Truth in Lending Act
COMPLAINCE
Example: The bank gave the details only when demand for payment was being made
Violation of the Truth in Lending Act gives rise to both criminal and civil liabilities.
The penalty therefor is an amount of P100.00 or in an amount equal to twice the finance charge required by
the creditor in connection with such transaction, whichever is greater
LIABILITY
- except that the liability shall not exceed P2,000,000.00 on any credit transaction
The action to recover such penalty may be instituted by the aggrieved private person separately and
independently from the criminal case for the same offense
PRESCRIPTIVE One years from the date of demand
PERIOD - not from the date of execution of the promissory note
DEFINITION:
1. CREDIT - any loan, mortgage, deed of trust, advance, or discount
- any conditional sales contract
- any contract to sell, or sale or contract of sale or 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, 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
30
ARTalactac
2. FINANCE interest, fees, services, charges, discounts, and such other charges incident to the extension of credit as the
CHARGE Board may, by regulation, prescribe
3. CREDITOR 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
includes credit transacrtions pursuant to an open-end credit plan other than a seller credit card
31
ARTalactac
shall not exceed 30 days form the expiration of the
original period
TERRORISM: committed by any person who commits an act punishable under any of the following provisions of the Revised Penal Code
thereby sowing and creating a condition of widespread and extraordinary fear and panic among the populace, in order to coerce the
government to give in to an unlawful demand:
1. Article 122 (Piracy in General and Mutiny in the High Seas or in the Philippine Waters)
2. Article 134 (Rebellion or Insurrection)
3. Article 134-A (Coup d’etat), including acts committed by private persons
4. Article 248 (Murder)
5. Article 267 (Kidnapping and Serious Illegal Detention)
6. Article 324 (Crimes Involving Destruction)
7. P.D. No. 1613 (The Law on Arson)
8. R.A. No. 6969 (Toxic Substances and Hazardous and Nuclear Waste Control Act of 1990)
9. R.A. No. 5207 (Atomic Energy Regulatory and Liability Act of 1968)
10. R.A. No. 6235 (Anti-Piracy and Anti-Highway Robbery Law of 1974)
11. P.D. No. 1866 (Decree Codifying the Laws on Illegal and Unlawful Possession, Manufacture, Dealing in, Acquisition or Disposition
of Firearms, Ammunitions or Explosives)
THE TERRORISM FINANCING AND PREVENTION AND SUPPRESION ACT (R.A. No. 10168)
R.A. No. 10168 imposes criminal liability on any person who, directly or indirectly, willfully and without lawful
excuse, possesses, provides, collects or uses property or funds or makes available property, funds or
financial service or other related services, by any means, with the unlawful and willful intention that they
should be used, in full or in part:
1. to carry out or facilitate the commission of any terrorist act
FINANCING OF
2. by a terrorist organization, association or group
TERRORISM
3. by an individual terrorist
The penalty is also imposed on any person who organizes or directs others to commit financing of terrorism
If the property or funds subject of the freeze order under the immediately preceding paragraph are found to
be in any way related to financing of terrorism or act of terrorism committed within the jurisdiction of the
Philippines, said property or funds shall be the subject of civil forfeiture proceedings
32