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INTELLECTUAL PROPERTY
 What is the principal law that governs Intellectual Properties?
o R.A. No. 8293 AS AMENDED
 Principal Purpose
o To protect and secure the exclusive rights of scientists, investors
and other gifted citizens to their IP and creations, particularly
when beneficial to the people.
o To ensure that the investors/creators will benefit from the
protection of law in order for them to be encouraged to create
more or invent more.
o It is also cognizant of the fact that science will be developed
through intellectual property protection.
o The interest of the investors will run contrary to the public but then
IP must be protected. Their right or entitlement to intellectual
property is protected, however limited for a given period of time.
 Intellectual Property
o What does TTA mean?
 An inventor may have a product but he cannot
manufacture such product due to cost consideration.
 A contract or agreement involving transfer of systematic
knowledge for the manufacture of a product, the
application of a process, or lending of a service including
mgmt contract; and the transfer, assignment or licensing
of all forms of IP including licensing of computer
software.
 So that the owners of the products in the US, when they
bring it here in the PI, these products will not be copied,
and will be protected under this arrangement.
 IPO
o Principal government agency for IP.
o Functions: 1) issue letters of patent and register utility models; 2)
examine of registration of marks, geographic indications, etc.; 3)
register TTA and settle disputes; 4) promote the use of patent
information as a tool for technology development; 5)
administratively adjudicate contested proceeding affecting IP
rights; 6) coordinate with other govt agencies.
o Bureaus of IPO: 1) BoP; 2) BoT; 3) BLA; 4) DITTB; 5) EDP
Bureau; 6) administrative financial and personnel services bureau.
o IPO is headed by Dir Gen. In case of appeal in matters of inter
partes cases, appeal on the decision of the Bureaus is made only
to the Dir Gen, such that, if you lose your case to the BLA, your
remedy is to file an appeal to Dir Gen.
 What are laws covered by IP?
o Patents
o Trademarks, Service Marks and Tradenames
o Copyright
 Patents
o Grant of exclusive right to make use and sell patented object
personally or through others as well as the grant of right to
effectively prohibit others from practicing the invention or profiting
therefrom without the owner’s consent.
 Are all inventions patentable?
o Any technical solution to a problem in any field of human activity,
which is NEW, involves an INVENTIVE STEP and is
INDUSTRIALLY APPLICABLE.
o Is novelty required for the patentability of an invention/discovery?
 The element of novelty is an essential requisite of
patentability of an invention or discovery.
o An invention must possess the essential elements of novelty,
originality and precedence, and for the patentee to be entitled to
the protection of the invention, which must be new to the world.
o The very first requirement that the applicant must satisfy is the
issue of NOVELTY/ORIGINALITY. If it is merely an improvement
of an exisiting invention, that will not qualify.
 Non-patentable = SEC. 22
 What is the “First to File Rule”
If two (2) or more persons have made the invention separately and
independently of each other, the right to the patent shall belong to the
person who filed an application for such invention, or where two or more
applications are filed for the same invention, to the applicant who has the
earliest filing date or the earliest priority date.
 What is the so-called “Right to Priority”? Sec. 31
o If the application is filed by another inventor in another country,
this rule in priority will be given preference.
o Requirements: 1) local application expressly claiming priority; 2)
filed within 12 months from the date of the earliest foreign
application is filed; 3) patent shall be issued in the name of the
Republic under the seal of the office.
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o Term of patent: 20 years from the filing date of the application
(Sec. 54).
o May patents be cancelled? Yes. On what grounds? 1) invention is
not new or patentable; 2) patent does not disclose the invention in
a manner sufficiently clear and complete
o Note that the inventor has to disclose every bit of information
related to his invention. If he fails to do this, the IPO thru the BoP
will deny the application.
o What is the effect of a cancelled patent? Sec. 66
o Can a patent be surrendered? Sec. 56
 Remedies available to a true and actual inventor who was deprived of the
patent without his consent or through fraud: Sec. 68
 Rights conferred by a patent: Sec. 71.2
 IP is property in itself therefore it can be assigned or transferred.
 Prior User Rule: Sec. 73.1
o You can disqualify the whole world from using their product. The
Prior User Rule is a minor exception to such rule. The prior user
can continue using his product without being accused of
infringement.
 Can the government use an invention? Yes. Sec. 74.1
 Patent Infringement
o Remedies of patentee whose rights have been infringed: Sec.
76.2
o Can a foreign national file an action for infringement? Sec. 77
o Is notice of an existing patent a necessary requisite before one
can recover damages due to infringement? Sec. 80
o How would you know that a product is patented? Product must
indicate that it is patented. When you produce a similar product,
that is already registered, there is already a presumption of
infringement.
 What are the defenses available in infringement?
 Can a criminal action be maintained? Yes. Sec. 84
 Is there a prescriptive period for a criminal action? Yes. 3 years.
 Doctrine of Equivalents = Smith Kline v. CA
 Can rights over inventions be assigned/transmitted? Yes. Sec. 103.2
 TRADEMARK
o Mark, Collective Mark & Trade Name
o How is a right over a mark acquired? Sec. 122. This is the
distinction between trademark and copyrights. In copyright,
registration is not indispensable. In trademark, however, you do
not apply the same rule. You have to register before you can
claim ownership.
o Can the owner of a mark demand for its registration? No. The
owner cannot demand. Registration will only be allowed upon
compliance with the law.
o What can be used as evidence that the mark has become
distinctive? For you to register a mark, it must have acquired
distinctiveness, such that, that mark is already associated with the
product in the minds of the people. The IPO may accept as prima
facie evidence that the mark has become distinctive as used in
connection with the goods or service for 5 years.
o What must the applicant file as evidence of substantial and
exclusive use? Sec. 124.2
o Nature of the First to File Rule: the rule that registration of a mark
is prevented with the filing of an earlier application for registration.
This must not, however, be interpreted to mean that ownership
should be based upon an earlier filing date.
o Does the Philippines adhere to the Paris Convention? Shangri-La
Int’l Hotel Management v. Developers Group of Co., Inc.
o Is there at time limit for the filing of a petition for cancellation of a
registered trademark? None. Shangri-La Int’l Hotel Management
v. Developers Group of Co., Inc.
o Recourse of the owner of a mark that has been abandoned: Sec.
133.4
o Recourse of the person whose right is affected by the registration
of the mark: Pay the required fee and within 30 days after the
publication of the application for the registration of the mark, file
with the IPO an opposition to the application for the registration of
the mark.
o Trademark Infringement: Esso Standard v. CA
o When does trademark infringement exist? When the goods are so
related that the public may be or is actually deceived and misled
that they came from the same maker or manufacturer.
 COPYRIGHT
o Unlike in the case of a patent where there is a tangible product; in
a trademark where there is a visible mark; in the case of a
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copyright, it must be something more than that. It may include
paintings, sculpture, and writings.
o When does protection for original intellectual creations
commence? From the moment of their creation.
o What are included in the protection?
 Take note of ABS-CBN v. Gozon, which involves TV
footages. Are they covered by copyright?
o What works are not protected? Sec. 175
o Can government works be protected? Sec. 176.
o Two kinds of copyrights? Economic (Sec. 177) and Moral Rights
o If there was PAYMENT for the playing of the song, there is
copyright infringement if there was no prior approval. However, if
it was just played while you were eating where no fees were
charged, then there is no infringement.
o Who owns the copyright over letters? In respect of letters, the
copyright shall belong to the writer subject to the provisions of Art.
723 of the CC.
 Mr. Garcia and Mr. Aquino became lovers. They wrote
several letters for four years til they broke up. Mr. Garcia
asked for the return of the letters. Mr. Aquino told Mr.
Garcia that the letters exchanged belong to her because
“it reminds her of Mr. Garcia”. Who owns the letters? The
letters belong to the one to whom it is addressed (Art.
723).
o What is the nature of copyright infringement? Columbia Pictures
v. CA
o Is it a valid defense for the infringer that he did not know that he
was infringing a copyright? No. Habana v. Robles
o What is the difference between letters of patent and copyright?
Pearl & Dean v. Shoemart
 An inventor wrote a book about the creation of a certain
medicine. Someone manufactured medicine similar to
the one described in the book. Was there infringement?
None. Registration only covers the book not the formula.
o Trademarks relate to distinguishing marks, names and signs that
identify a product.
 Actual use before application is no longer required
 Before, the rule was you have to have your trademark
used in commerce before you can register. Now there is
such rule is NO LONGER controlling.
 Term of grant is 10 years BUT renewable. It’s as if you
have a perpetual right over your trademark.
 Affidavit of actual use is required to be filed within 3
years from filing of application.
 Penalty for trademark infringement
o Copyright relates to works on literary and artistic domain.
 Registration is not an absolute necessity.
 Term of protection is the entire lifetime of the creator plus
50 years after his death.
 Covers 2 kinds of rights:
 Economic Rights
 Moral Rights
 Ex: Rosanna Roces used to pose nude for
painters. The usual agreement provides that
after Miss Roces is painted, the painting
belongs to her. What is the so-called economic
right in this example? The economic right
belongs to the painter such that the painter can
say, “You cannot copy my creation. That’s my
painting.” But the actual painting itself belongs
to Rosanna Roces.
 Penalty for infringement

 KEY TAKE-AWAY POINTS:

o Patents relate to new and useful inventions.
 Philippines now adopt the First to File Rule NOT the First
to Use Rule
 For inventions, period of grant is now 20 years with no
extension.
 Utility model – 7 years
 Industrial design – 5 years
 Penalty for infringement = ranging from 100K to 300K
and/or 6 mos. And 3 years imprisonment.
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LETTERS OF CREDIT & TRUST RECEIPTS
Imagine a situation like this (Transnational Business Transaction):
Letters of Credit
C – Issuing Bank (IB)
A – Importer B – Supplier
Medical equipments – CitiScan Machine US-Based Company
Collecting Bank/Notifying Bank
 A wanted to purchase medical equipments from B. A’s principal desire is to
get the equipment. B wants to deliver and get paid. Who takes the first
move?
 How do you facilitate a trade transaction when there are differences in
terms of their concerns?
 There is actually a third party in this scenario – the Issuing Bank. The
importer will get LC from the IB. IB will forward the request to the
Correspondent Bank. The Correspondent Bank may be a Notifying Bank.
The Correspondent Bank will talk to B. The Notifying Bank will notify the
supplier that there is a LC.
 LC does not necessarily mean that there are Trust Receipts (TR). TR may
exist for local transactions. In the case of TR, you have a situation where
you have a:
BANK
BUYER (B) SELLER (S)
Trust Receipt (TR)
 B would like to purchase. S would like to sell. B does not have funds so he
goes to the bank. The bank, however, will require a collateral. Sometimes,
the B does not have enough collateral. So B says “Why don’t I just put up
as collateral the things that I will buy from S?” And if they agree, the Bank
will now use a TR.
 Example: Toyota Motors Cubao (TMC), a car dealer, would like to buy
several vehicles from Toyota Motors Philippines (TMP). To facilitate such
the transaction, the bank will come in. If the bank will not come in, B will not
be able to buy from S. TR will be an available commercial document that
will protect the Bank. There is a legal fiction wherein the bank is the true
owner of the vehicles that B wants to purchase. Such that, if B sells his
items, he should return to the owner whatever amount derived from the
same.
 What is a LC? PNB v. SMC, 2014
o “It is an instrument issued by a bank in behalf of a customer
authorizing the beneficiary to draw a draft or drafts which should
be honored upon presentation to the bank, if drawn in accordance
with the terms and conditions specified in the LC”.
o Purpose: To insure certainty of payment by substituting the
undertaking of the bank with the undertaking of the customer of
the bank under the underlying contract.
 What is the principal purpose? MWSS v. Daway
 Very important is the concept that in a LC, all that has to be done is to
present the documents, as indicated in the LC by the seller. When the
seller issues this LC, and lay there the conditions, compliance with those
conditions will be sufficient to hold the issuing bank liable for the amount
stated in the LC.
 The use of credits in commercial transactions serves to reduce the risk of
nonpayment of the purchase price under the contract for the sale of goods.
(Transfield Phils v. Luzon Hydro)
 Parties: Buyer (B), Seller (S) and Issuing Bank (IB).
 Difference between Irrevocable LC or a Confirmed LC.
o In an irrevocable LC, the issuing bank may not, without the
consent of the beneficiary, revoke its undertaking under the letter.
o In a confirmed LC, the correspondent bank gives an absolute
assurance to the beneficiary that whatever happens, “I will pay for
it”. It is the bank where the seller does its business. ‘Pag
confirmed LC, it is the confirming bank that is making the
undertaking. (Prudential Bank v. IAC)
 What is the so-called Independence Principle?
o Assures the seller or the beneficiary of prompt payment
o BPI v. De Reny: If ever there is an issue with respect to the
performance by the seller of the terms in the principal contract, it
will not have any bearing with respect to the LC. For as long as
the seller can produce the required documents indicated in the
LC, and present it to the confirming bank, the IB can no longer
say that “We will not pay.”
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o Does the IB have any discretion? Can it refuse payment on the
basis of a notice issued by the buyer? No.
o Dispute between B and S should not affect the LC.
o Take note three relationships: (1) B & S; (2) B & IB; (3) IB & S.
Each one is independent of the other. If there is an issue between
the parties, it should not affect the other relationships. In
construing independence principle, have a good handle of the 3
relationships.
o The relationship between the S and the IB
- Example: Suppose the LC indicates that certain
documents have to be submitted in its original form, and
the S provided the IB the documents but could not
produce anymore the original. The goods, however, were
delivered to the warehouse of the B. Nung ayaw ibigay
nung banko, the S contacted B and told him not to get
the goods because it hasn’t been paid by the IB. Is S
correct? No. Independence Principle. B does not care
about the agreement between S and IB.
o The LC is separate and distinct from the underlying transaction.
(PNB v. SMC)
 Fraud Principle is the exception. It exists when the S (beneficiary) for the
purpose on drawing on the credit, fraudulently presents to the confirming
bank, documents that contain expressly/impliedly material representations
of fact that to his knowledge are untrue.
o What is the effect of the B’s failure to procure thre LC to the main
contract? Can the buyer rescind the contract? No. The LC is
independent from the Contact of Sale (CoS). Failure of the buyer
to open the LC does not prevent birth of the CoS.
o In case the buyer was not able to pay its obligation under the LC,
can the bank take possession of the goods covered by the said
LC? No. The opening of the LC did not vest ownership of the
goods in the bank in the absence of a TR agreement. (Transfield
v. Hydro Corp)
o LoC v. Guarantee: these two commercial devices share a
common purpose. In guarantee, upon the obligor’s default, the
guarantor or the surety undertakes to complete the obligor’s
performance. Notice of default is not required in the case of the
LC. (Prudential Bank v. IAC)
Trust Receipt Law
 PD 115 is the governing law.
 What is a TR? Written or printed document signed by the entrustee in favor
of the entruster whereby thre latter releases goods/documents/instruments
over which he holds absolute title or security interest to the possession of
the former, upon the trustee’s promise to hold said goods in trust for the
entruster and to sell or dispose of the goods.
 TR Law defines a TR as a transaction between the entruster and entrustee
whereby the entruster who owns or holds absolute title or secure interest
over certain goods/documents/instruments, releases them to the entrustee
upon execution of the document called TR, where the latter binds himself
to sell or dispose of the goodd/documents/instruments and use the
proceeds to pay the amount due the entruster.
 One of its most important purposes is “to declare the misuse and/or
missapropriation of goods/proceeds realized from the sale of goods,
documents or instruments released under TR as a criminal offense
punishable under the law”.
 Violation of TR gives rise to a criminal charge of Estafa.
 TR Transaction: Sec. 4, PD 115
 TR Transaction: Anthony Ng v. Pp
o Money received under the obligation involving the duty to turn it
over to the owner of the merchandise sold.
o Merchandise received under the obligation to return it to the
owner.
 Principal parties: Entruster & Entrustee
 Entruster: Ching v. SoJ. It is entitled to the proceeds of the goods
 Who is the owner of the articles subject of trust receipt? Entrustee. Loan
and security features. To consider the entruster the owner from the
inception of the transaction would be to disregard the loan feature thereof.
(Rosario Textile Mills Corp v. Home Bankers Savings)
 What are thre obligations of the entrustee?
o Hold the documents/goods/instruments and dispose of them
strictly in accordance with terms of TR;
o Receive the proceeds in trust for the entruster and turn over the
same to the entruster;
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o Insure the goods for their total value against loss, fire, theft,
pilferage or other casualties;
o Keep said goods or the proceeds therefrom whether in money or
whatever form, separate and capable of indentification as property
of the entruster;
o Return the goods, documents or instruments in the event of non-
sale or upon demand of the entruster;
o Observe all other terms and conditions of the TR not contrary to
the provisions of the decree.
(Ching v. SoJ)
 BAR: There is an agreement between S and B. There was a TR issued.
While in the process of delivering the goods to the entrustee, the goods
were hijacked. The entrustee is claiming that it doesn’t have liability
because there is no act of dominion of the goods due to non-delivery. If at
all, there was an act of God. The law requires that if you are the entrustee,
you need to insure the goods. So B’s failure to insure the goods will not
allow him to escape the provisions of the PD 115.
 What is the effect of novation of a TR agreement? Philippine Bank v. Ong
 Can deposits in savings account opened by the buyer subsequent to the
TR be applied to outstanding obligation under the TR account? No.
Metrobank v. Tonda, 2000.
 In a TR transaction, can the entruster (w/ actual and juridical possession of
the goods) subsequently avail of the right to demand from the entrustee the
deficiency of the account covered by the TR? Yes. Entruster may cancel
the trust, take possession of the goods/documents/instruments subject of
the trust.
 Mere possession does not amount to foreclosure.
 If a trust receipt was issued for the purchase of construction of materials to
be used for the construction of an immovable property, will the transaction
be considered a loan or a TR transaction? Loan not a trust receipt (LBP v.
Perez, 2012)

 If you are the borrower, pag nabenta ung isang unit ng Camry at yun ay
fini-nance ng Metrobank, huwag mo ibayad kay BDO kasi Metrobank
nagbayad niyan.

 Assuming there was a TR issued in favor of one businessman for resale

purposes, problem is that there was a sudden economic upheaval. What
will happen now with the TR obtained? Under the law, the businessman
has the obligation to return the goods. Suppose the businessman would
like to return the goods to the one who financed it (bank), what is the rule?
The return of the goods would be at the option of the entruster.

 What is the effect of the violation of any of the undertakigs of the decree?
Metrobank v. Gonzales, 2009

 If the violation of the TR Law is committed by a corporation, to whom may

the penalty be imposed? Crisologo v. China Bank, 2012

 What is the loan & security feature of the TR transaction? A bank extends
a loan covered by the LC, with the TR as a security transaction. TR is the
security agreement pursuant to which the bank acquires security interest
over the goods. (Sps. Vintola v. Insular Bank)

 In the event of default by the entrustee on his obligaton under the TR

agreement, is it absolutely necessary for the entruster to cancel the trust
and take possession of the goods to be able to enfoce his right
thereunder? No. South City Homes v. Finance Corporation.
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TRANSPORTATION LAW  Common Carrier – Art. 1732

 Test to determine if a party is common carrier: First Phil v. CA, 1998
 Pertinent laws: o You cannot escape the liability of a common carrier even if you
o Principal Law = Art. 1732 to 1763 don’t have a franchise.
o Portions of the Code of Commerce o Why is it necessary to determine if the party is a CC? National
o PSA Steel Corp. v. CA
o LTC o What are some examples of CC that are not vehicles or vessels
o COGSA either by land, sea, or water?
o Warsaw Convention  School bus operator (Sps. Teodoro v. Zarate, 2012)
 Pipeline operators (First Phil Corp. v. CA)
 Common Carrier v. Private Carrier  Custom brokers and warehousemen are considered CC
(Calvo v. UCPB)
C.C. P.C.  Sole proprietor may be a common carrier (De Guzman v.
 Law on Common  Law on Obligations and CA)
Carrier Contracts  Barge operators
 Extraordinary  Ordinary Diligence is  Resorts owner offering tour package contract which
Diligence is required. required. includes ferry services for guest is a common carrier
 Common Carrier has  Plaintiff has the burden of (Sps. Dante v. Sun Holiday)
the burden of proof that it proof. o Can parties agree by stipulation to lessen the degree of diligence
exercised diligence that a CC can observe? No.
required. o What is the standard required of CC in carrying out their tasks?
Extraordinary diligence
o What is the presumption in case of death or injury to passengers
transported through a CC? Negligence (art. 1756)
 BB/demise – vessel becomes private carrier o What is the rule with respect to the liability of CC in case of
o Chartering the boat; minus the crew and any other items. death/injury? Art. 1755; DAMAGES; Victory Liner Inc. v. Gammad
o What should a CC to avoid death or injury? Teodor v. Sps. Zarate
 T/V Charter remain public or common carrier o What is the rule for loss, damage or destruction to goods? Art.
o Exclusive use of the vessel but it will not remove the concept of 1735
common carrier. o What COA may arise from a negligenct act of CC?
 Culpa Contractual
 Principles you need to MASTER:  Culpa aquiliana
o Contributory Negligence = Estacion v. Bernardo  Culpa criminal
o Extraordinary Diligence o Can the CC use the Doctrine of LCC against its passenger? NO.
o Doctrine of Last Clear Chance = PNR v. Brunty; Sealoder It is applicable only in a suit between the owners and drivers of
Shipping Corp v. Cement Msg. Corp. colliding vehicles.
o Doctrine of Inscrutible Fault o Is a Certificate of Public Convenience (CPC) required to make a
o Kabit System CC liable for damages? No. (Loadstar Shipping v. CA)
o Boundary System o Can a registered owner escape liabilty for damages if the driver
o Warsaw Convention was not authorized? No. The registered owner is directly and
o COGSA primarily liable whether the driver is authorized or not. (Villanueva
v. Domingo)
o Burden of proof: Japan Airlines v. Simangan

 When does the Contract of Carriage begin? Dangwa Trans Co. v. CA

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 Is a stipulation limtiing the carrier’s liability for loss of

 How about the passenge of LRT while climbing the stairs, is he already cargo allowed under COGSA? Yes.
considered a passenger? Yes. Would-be passenger is included.
o What is a bill of lading?
 When does the Contract of Carriage end? Abotiz Shipping v. CA
o Bareboat Charter v. Time/Voyage Charter
 What is Right of Way?
o When two vehicles are approaching an intersection, who has the o Doctrine of Inscrutable Fault
right of way? Always the one on the right as against the one on  When parties in a maritime collision cannot establish
the left. their evidence. Bakit? Nalubog na eh.
o The one who approached the intersection. (Camino v. PP)
 Warsaw Convention (WC)
 Who has the right of way between an aircraft taxiing or aircraft taking off or o How did the WC become part of the Philippine Law?
about to take off? The one who is about to take off. (PAL v. Pacific  Santos III v. Northwestern Airlines
Airways)
o This is to limit the liability of airlines.
 What is “Kabit System”?
o BTI v. CA o Note Article 1, WC.
o Is the “Kabit System” legal? No. Teja Marketing v. IAC
o Rationale for the rule on Kabit System: Dizon v. Octavio o Is a claim for damages due to humiliation caused by airline
o Who can be held liable in case of accident? Registered Owner employees covered by WC?
(Jereos v. CA) and Kabit Operator
o Can the Kabit System rule be used by the other party in the o When do the rights under the Convention prescribe? 2 years
accident to avoid liability? No.
o Is there a notice requirement to the Convention? FedEx
 Boundary System Corporation v. AHAC
o Paguio v. NLRC
o What kind of relationship exists between vehicle owner and the o Bump-offs = unseating the passenger for unjustifiable reasons;
driver under the boundary system? Yes. Martinez v. NLRC & the passenger can hold the airline liable
NLRC v. Dinglasan  Would the airline be liable for bumping off passengers to
o Purpose: This is to protect the interest of the public. higher accomodations? Yes. Cathay Pacific Airways v.
o Why is boundary system not recognized as a legal practice? It Sps. Vasquez
exempts the registered owner of a vehicle, which is in violation of
the Public Service Act. o Overbooking
o Who is liable in case of accidents? Both the operator and the
driver are solidarily liable. o The principle of Lex Loci Contractus shall apply in cases involving
airlines. (United Airlines v. CA)
 Maritime Commerce
o When is COGSA?
 Damages and loss of cargo and passengers availing of
maritime travels
 Sec. 1, Title 1 of CA 65
 If there is/are damage/s on the goods, is notice required?
If yes, when should it be given? Depends whether it is
apparent (immediately) or hidden (3 days).