Banking Laws and Intellectual Property

Quiz 4

What is the primary purpose of RA No. 1405 (Secrecy of Bank Deposits Law)?

The purpose is to encourage people to deposit their money in banking institutions, discourage private hoarding, and ensure the money is utilized by banks for authorized loans to assist in the country's economic development.

What specifically is covered as "absolutely confidential" under RA No. 1405?

All deposits of whatever nature with banks or banking institutions in the Philippines, including investments in bonds issued by the Government of the Philippines, its political subdivision, and its instrumentalities, are considered absolutely confidential. Trust accounts are also covered.

Who is prohibited from disclosing information concerning bank deposits under RA No. 1405?

Any official or employee of a banking institution is prohibited from disclosing any information concerning said deposits

List the exceptions to the Bank Secrecy Law for Peso deposits provided under RA 1405.

1. Upon written permission of the depositor.

2. In cases of impeachment.

3. Upon order of a competent court in cases of bribery or dereliction of duty of public officials.

4. Upon the order of a competent court in cases where the money deposited or invested is the subject of litigation.

List other key exceptions for examining Peso deposits (non-RA 1405 specific).

Upon order of a competent court or tribunal in cases involving unexplained wealth under RA 3019 (Anti-Graft Act);

In cases of violation of AMLA;

Specific serious offenses like kidnapping for ransom, comprehensive dangerous drugs act, hijacking, destructive arson, murder, terrorism, and financing of terrorism.

When may the Commissioner of Internal Revenue (BIR) inquire into bank deposits?

For the purpose of determining the net estate of a deceased depositor or if there is an offer of compromise tax liability by reason of financial inability.

When can regulatory bodies examine bank deposits without violating RA 1405?

When the examination is made in the course of a special or general examination of the bank and is specifically authorized by the Monetary Board, or when examination is made by the PDIC when there is a finding of unsafe or unsound practices.

Does the garnishment of a bank deposit violate RA No. 1405?

No, garnishment does not violate RA 1405 because the disclosure is only incidental to the execution process and it is not the intention of Congress to place Philippine currency bank deposits beyond the reach of the creditor.

What is the penalty for violating RA No. 1405?

Imprisonment of not more than five years or a fine of not more than twenty thousand pesos or both, in the discretion of the court.

What is the PDIC and when was it created?

The PDIC (Philippine Deposit Insurance Corporation) is a government instrumentality created in 1963 by virtue of Republic Act 3591 to insure the deposits of all banks entitled to the benefits of insurance.

What are the three main functions of the PDIC?

Deposit insurer (providing permanent and continuing insurance coverage),

Co-regulator of banks (empowered to examine and investigate banks),

and Receiver and liquidator of closed banks.

What is the maximum insurance coverage provided by the PDIC per depositor?

The maximum insurance coverage shall not exceed P500,000.

What specific risk does PDIC insurance cover?

The coverage of the insurance is bank closure ordered by the Monetary Board

Explain the "Per depositor, per capacity rule" in determining the insured amount.

All deposits in the bank maintained in the same right and capacity for the depositor's benefit (either in their own name or in the name of others) shall be added together in determining the insured amount (up to P500,000 maximum).

How are joint accounts insured relative to individual accounts?

Joint accounts are insured separately from any individually owned deposit account. They shall be divided into as many equal shares as there are individuals or entities, unless a different sharing is stipulated in the document of deposit.

What is the effect of payment of an insured deposit by the PDIC?

The PDIC shall be subrogated to all rights of the depositor against the closed bank to the extent of such payment.

What is the period for a depositor to file a claim with the PDIC?

Two years from the actual takeover of the closed bank.

Define money laundering.

Money laundering is the process of making illegally obtained funds from illegal activities appear as clean money or originating from legal sources.

What are the three stages of money laundering?

1. Placement (inserting dirty money into a financial institution, considered the riskiest part).

2. Layering (sending money through transactions to change its form and make it difficult to trace).

3. Integration (money re-enters the mainstream economy appearing legitimate).

What are the state policies concerning AMLA?

To protect and preserve the integrity and confidentiality of bank accounts, and to ensure that the Philippines shall not be used as a money laundering site for the proceeds of any unlawful activity.

List examples of unlawful activities defined under AMLA.

Kidnapping for ransom, Qualified theft, Bribery, Malversation of public funds, Plunder, Comprehensive dangerous drugs Act, Terrorism and conspiracy to commit terrorism, and similar offenses punishable under the penal laws of other countries.

What constitutes a "Covered Transaction" for general banking institutions?

A transaction in cash or equivalent monetary instrument involving a total amount in excess of Five hundred thousand pesos (P500,000) within one banking day.

What defines a "Suspicious Transaction"?

A transaction, regardless of amount, where circumstances exist such as: no underlying legal or trade obligation or economic justification; the client is not properly identified; the amount is not commensurate with the client's financial capacity; or the transaction is structured to avoid reporting requirements.

List the primary obligations of covered persons under AMLA.

Customer identification, Record keeping (5 years from transaction date, or 5 years from closing for closed accounts), and Reporting of covered and suspicious transactions to the Anti-Money Laundering Council (AMLC).

When may the AMLC inquire into bank deposits with a court order?

Upon ex parte (done with respect to or in the interests of one side only or of an interested outside party) application by the AMLC before the Court of Appeals, when it has been established that there is probable cause that the deposit is related to anti-money laundering or unlawful activity.

When may the AMLC inquire into bank deposits without a court order?

In cases involving Kidnapping for ransom, Comprehensive dangerous drugs act, Hijacking, destructive arson and murder, and Terrorism and conspiracy to commit terrorism.

What is the maximum total period for a Freeze Order issued by the Court of Appeals upon petition by the AMLC?

The total period of the freeze order shall not exceed six (6) months.

What is the definition of a Patentable Invention?

Any technical solution of a problem in any field of human activity which is new, involves an inventive step, and is industrially applicable.

Define the three requisites of a patentable invention.

New: Must not form part of prior art.

Inventive Step: Must not be obvious to a person skilled in the art.

Industrially Applicable: Can be produced and used in any industry.

What is the term of a Patent?

Twenty (20) years from the filing date of the application, without renewal.

Who owns the patent for an invention created by an employee in the course of their employment contract?

The Employee if the inventive activity is not part of their regular duties (even if they use the employer's facilities). The Employer if the invention is the result of performing the employee's regularly-assigned duties (unless there is a contrary agreement).

Explain the "First to File Rule" for patents.

The right to a patent belongs to the person who has the earliest filing date or the earliest priority date, even if two or more persons made the invention separately and independently of each other.

Distinguish between Literal Infringement and the Doctrine of Equivalents.

Literal Infringement: Every limitation recited in a patent claim is found in the infringing device or process (they are exactly the same).

Doctrine of Equivalents: The infringing device performs substantially the same function in substantially the same way to achieve substantially the same result, although with some modification.

How is ownership of a Trademark/Service Mark acquired, and how does this differ from a Trade Name?

Trademark/Service Mark ownership is acquired through registration (with actual use required within 3 years of filing). A Trade Name is acquired by use (registration is not required).

What is the duration of a Trademark registration?

Ten (10) years from the date of registration, renewable for 10 years without limitation on renewal.

Explain the Doctrine of Secondary Meaning.

A word or phrase originally incapable of exclusive appropriation (like a generic word) might become registrable if it has been used so long and exclusively by one producer that, in the trade, the word or phrase has come to mean that the article was his product.

What are the two tests used to determine Trademark Confusion?

1. Dominancy test: Focuses on the prevalent, dominant features of the marks.

2. Holistic test: Focuses on the entirety of the marks.

Differentiate Trademark Infringement from Unfair Competition in terms of requirements.

Infringement: Unauthorized use of the mark;

• registration is a requirement; fraudulent intent is not a requirement.

Unfair Competition: Passing off one’s goods as those of another (misrepresentation);

• registration is not a requirement; fraudulent intent is a requirement.

What are the elements of a copyrightable work, and when does copyright protection begin?

Elements:

Originality (must owe its origin to the author) and

Expression (must be embodied in a permanent medium, like recorded or written).

Protection: Starts from the moment of creation (even if unregistered).

List two examples of works that are protected as "Derivative Works."

Dramatizations, translations, adaptations, abridgments, arrangements, and other alterations of literary or artistic works; or Collections and compilations that are original due to the selection or arrangement of their contents.

List three examples of works that are Non-copyrightable.

Idea, procedure, system, method of operation, concept, principle, discovery or mere data as such;

Format or mechanics of a television show;

News of the day (mere items of press information);

Official text of legislative, administrative or legal nature;

Work of the Government of the Philippines (statutes, rules, etc.).

What is the Right to Participate in the Gross Proceeds of the Sale or Lease of the Original Work?

In every subsequent sale or lease of an original painting, sculpture, or manuscript, the author or their heirs have an inalienable right to participate to the extent of five percent (5%) of the gross proceeds.

List examples of the Moral Rights of an author.

To require that authorship be attributed to him; To make alterations of his work prior to or withhold it from publication; To object to any distortion or mutilation of his work which would be prejudicial to his honor or reputation; To restrain the use of his name with respect to any work not of his own creation.