Midterm Pointers

Question 1

These are shares, participation or interests in a corporation or in a commercial enterprise or profit-making venture and evidenced by a certificate, contract, instruments, whether written or electronic in character.

Answer 1

Securities

Question 2

What is the main feature of a security?

This feature makes them attractive and desirable and necessitates the protection of the investing public.j

Answer 2

A person purchases or acquires the same in the expectation of obtaining passive income or asset appreciation, that is income or gain obtained through the effort of another person.

Question 3

Securities include…

(7)

Answer 3

1. Shares of stocks, bonds, debentures, notes evidences of indebtedness, asset-backed securities.
2. Investment contracts, certificates of interest or participation in a profit sharing agreeemnt, certificates of deposit for a future subscription;
3. Fractional undivided interests in oil, gas, or other mineral rights;
4. Derivatives like option and warrants;
5. Certificates of assignments, certificates of participation, trust certificates, voting trust certificates or similar instruments
6. Proprietary or nonproprietary membership certificates in corporations; and
7. Other instruments as may in the future be determined by the Commission.

Question 4

It provides that securities shall not be sold or offered for sale or distribution within the Philippines, without a registration statement duly filed with and approved by the SEC (Commission).

Answer 4

Securities Regulations Code (SRC)

Question 5

Power of the Commission

Securities and Exchange Commission

Answer 5

The Commission may audit the financial statements, assets, and other information of firm applying for registration of its securities whenever it deems the same necessary to insure full disclosure or to protect the interest of the investors and the public in general.

Question 6

Payment of the filing fees

Answer 6

Shall not exceed 1/10 of 1% of the aggregate price at which such securities are proposed to be offered.

Question 7

Securities EXEMPT from Registration

(GGRIB)

Answer 7

1. Any security issued or guaranteed by the Government of the Philippines
2. Any security issued or guaranteed by the government of any country with which the Philippines maintains diplomatic relations, or by any state, province or political subdivision thereof on the basis of reciprocity: Provided, that the SEC may require compliance with the form and content for disclosures the SEC may prescribe.
3. Certificates issued by a receiver or by a trustee in bankruptcy duly approved by the proper adjudicatory body.
4. Any security or its derivatives the sale or transfer of which, by law, is under the supervision and regulation of the Office of the Insurance Commission, Housing and Land Use Rule Regulatory Board, or the Bureau of Internal Revenue
5. Any security issued by a bank except its own shares of stock.

Question 8

Reportorial Requirements

Answer 8

1. Annual report composed of a Balance Sheet, Profit and Loss Statement, and a Statement of Cash Flows certified by a CPA and a management discussion and analysis of results of operation.
2. Other periodical reports for interim fiscal periods and current reports on significant developments of the issuer as the SEC may prescribe as necessary to keep current information on the operation of the business and financial condition of the issuer.

Question 9

The reportorial requirements shall apply to an issuer:

Answer 9

1. Which has sold a class of its securities pursuant to a registration
2. With a class of securities listed for trading in an Exchange
3. With assets of at least Fifty million pesos or such other amount as the SEC shall prescribe, and having** two hundred (200)** or more holders each holding at least one hundrer (100) share of a class of its equity securities:

Question 9

When shall the obligation of the issuer to file to report be terminated?

Answer 9

the obligation of such issuer to file report shall be terminated ninety (90) days after notification to the SEC by the issuer that the number of its holders holding at least one hundred (100) share reduced to less than one hundred (100)

Question 10

It is committed whenever an insider, in possession of a material non-public information, transacts on the securities.

Answer 10

Insider Trading

Question 11

Who is considered an Insider?

Answer 11

1. The issuer
2. A director or officer or a person controlling the issuer
3. A person whose relationship or former relationship to the issuer gives or gave him access to material non-public information
4. A government employee, or director, or officer of an exchange, clearing agency, and/or self-regulatory organization who has access to material non-public information.
5. A person who learns such information by a communication from any of the foregoing insiders.

Question 12

Exceptions to Insider Trading

Answer 12

A person in possession of material non-public information can buy or sell securities:
1. When he can prove that the information was not gained from an insider;
2. If the other party is identified and that he:
a. Disclosed the information; or
b. Had reason to believe that the other party is also in possession of the information

Question 13

Fraudulent Transactions and Other Market Manipulations

(11)

Answer 13

1. Wash Sale
2. Matched Order
3. Marking the close
4. Painting the tape
5. Squeezing the float
6. Hype and dump
7. Boiler Room Operations
8. Circulating or Disseminating Information on Share Price Movement
9. Making False or Misleading Statements
10. Pegging or Fixing or Stabilizing the price of security
11. Short sale

Question 14

It refers to a person or organization who controls the collection, holding, processing or use of personal information, including a person or organization who instructs another person or organization to collect, hold, process, use, transfer, or disclose personal information on his or her behalf.

Answer 14

Personal information controller

Question 15

Personal information controller excludes:

Answer 15

1. A person or organization who performs such functions as instructed by another person or organization; and
2. An individual who collects, holds, processes or uses personal information in connection with the individual’s personal, family or household affairs.

Question 16

Data Privacy Act Scope of Application

Applicability

Answer 16

1. The processing of all types of personal information and
2. to any natural and juridical person involved in personal information processing including those personal information controllers and processors who, although not found or established in the Philippines, use equipment that are located in the Philippines, or those who maintain an office, branch or agency in the Philippines subject to the immediately succeeding paragraph.

Question 17

Data Privacy Act does not apply to:

(7)

Answer 17

1. Information about any individual who is or was an officer or employee of a government institution that relates to the position or functions of the individual, including:
   * a. The fact that the individual is or was an officer or employee of the government institution;
   * b. The title, business address and office telephone number of the individual
   * c. The classification, salary range and responsibilities of the position held by the individual; and
   * d. The name of the individual on a document prepared by the individual in the course of employment with the government;
2. Information about an individual who is or was performing service under contract for a government institution that relates to the services performed, including the terms of the contract, and the name of the individual given in the course of the performance of those services;
3. Information relating to any discretionary benefit of a financial nature such as the granting of a license or permit given by the government to an individual, including the name of the individual and the exact nature of the benefit;
4. Personal information processed for journalistic, artistic, literary or research purposes;
5. Information necessary in order to carry out the functions of public authority which includes the processing of personal data for the performance by the independent, central monetary authority and law enforecement and regulatory agencies of their constitutionally and statutorily mandated functions.
6. Information necessary for banks and other financial institutions under the jurisdiction of the independent, central monetary authority or Bangko Sentral ng Pilipinas to comply with the CISA and Republic Act No. 9160, as amended, otherwise known as the Anti-Money Laundering Act and other applicable laws; and
7. Personal information originally collected from residents of foreign jurisdictions in accordance with the laws of those foreign jurisdictions, including any applicable data privacy laws, which is being processed in the Philippines.

Question 18

Sensitive Personal Information

Answer 18

1. About an individual’s race, ethnic origin, marital status, age, color, and religious, philosophical or political affiliations;
2. About an individual’s health, education, genetic or sexual life of a person, or to any proceeding for any proceeding for any offense committed or alleged to have been committed by such person, the disposal of such proceedings, or the sentence of any court such proceedings;
3. Issued by government agencies peculiar to an individual which includes, but not limited to, social security numbers, previous or current health records, licenses or its denials, suspension or revocation, and tax returns; and
4. Specifically established by an executive order or an act of Congress to be kep classified

Question 19

Rights of the Data Subject

(8)

Answer 19

1. Right to Informed Consent
2. Right to Object
3. Right to Withhold Consent
4. Right to Access
5. Right to Correction
6. Right to Erasure
7. Right to Damages
8. Right to Data Portability

Question 20

Transmissibility of Rights of the Data Subject

Answer 20

The lawful heirs and assigns of the data subject may invoke the rights of the data subject for which he or she is an heir or assignee at any time after the death of the data subject or when the data subject is incapacitated or incapable of exercising the rights as enumerated.

Question 21

Non-applicability of Rights

Data Privacy

Answer 21

1. If the processes personal information are used only for the needs of scientific and statistical research and, on the basis of such, no activities are carried out and no decisions are taken regarding the data subject: Provided, that the personal inforamtion shall be held under strict confidentiality and shall be used only for the declared purpose; and
2. To processing of personal information gathered for the purpose of investifation in relation to any criminal, administrative or tax liabilities of a data subject.

Question 22

Unauthorized Processing

Unlawful acts and penalties

Answer 22

Any person who process personal information without the consent of the data subject, or without being authorized under the Data Privacy Act or any existing law.
Penalties:
* Personal information - 1 to 3 years Imprisonment - Fine P500,000 to 2,000,000
* Sensitive Personal Information - 3 to 6 years Imprisonment - Fine P500,000 to P4,000,000

Question 23

Access

Unlawful Act and Penalties

Answer 23

Any person who, due to negligence, provided access to personal information without being authorized under the Data Privacy Act or any existing law.
Penalties:
* Personal information - 1 to 3 years Imprisonment - Fine P500,000 to 2,000,000
* Sensitive Personal Information - 3 to 6 years Imprisonment - Fine P500,000 to P4,000,000

Question 24

Unauthorized Disclosure | Unlawful Act and Penalties

Answer 24

Any personal information controller or personal information processor or any of its officials, employees or agents, who discloses to a third party personal or sensitive personal information, not covered by malicious disclosure above, without the consent of the data subject. **The Penalties** * Personal information - 1 to 3 years Imprisonment - Fine P500,000 to 1,000,000 * Sensitive Personal Information - 3 to 5 years Imprisonment - Fine P500,000 to P2,000,000

Question 25

Concealment of Security Breaches Involving Sensitive Personal Information | Unlawful Acts and Penalties

Answer 25

Any person who, after having knowledge of a security breach and of the obligation to notify the Commission, **intentionally or by omission conceals the fact of such security breach**. The penalty shall be imprisonment of **1 year and 6 months to 5 years and a fine of P500,000 to P1,000,000**.

Question 26

Extent of Liability | Unlawful Act and Penalties

Answer 26

1. Juridical Persons - imposed upon **responsible officers**. If the offender is a juridical person, the court may suspend or revoke any of its rights under the Data Privacy Act. 2. Alien - **deported** without further proceedings 3. Large-Scale - **Maximum penalty** shall be imposed when the personal information of **at least 100 persons is harmed**, affected or involved as the result of the mentioned sanctions. 4. Public Official or Employee - In addition to the penalties prescribed, shall suffer **perpetual or temporary absolute disqualification from office** 5. Offense Committed by Public Officer - Accessory penalty consisting in the **disqualification to occupy public office** for a term **double the term of criminal penalty** 6. Restitution - governed by the provisions of the new civil code.

Question 27

It is a grant issued by the government to an inventor, designer or maker, the right to exclude others from making, using or selling his invention, design or utility model within the country for a specific term, in exchange of his patentable disclosure.

Answer 27

Patent

Question 28

Subject matter of right: New, useful and industrially applicable inventions Where right is to be registered: IPO Protection starts: Application Duration of right: 20 years

Answer 28

PATENT

Question 29

Grounds for Cancellation of Patent | (3)

Answer 29

1. Invention is not new (no novelty) 2. The patent did not disclose the invention in a manner sufficiently clear and complete for it to be carried out by any person skilled in the art. 3. Contrary to public order or morality.

Question 30

Patent Rights: A patent shall confer on its owner the following exclusive rights: | (4)

Answer 30

1. Where the subject matter of a patent is a **product**, to **restrain, prohibit and prevent any unauthorized** person or entity from **making, using, offering for sale, selling or importing that product.** 2. Where the subject matter of a patent is a **process**, to **restrain, prevent or prohibit any unauthorized** person or entity from **using the process**, and from manufacturing, dealing in, using selling or offering for sale, or importing any product obtained directly or indirectly from such process. 3. The **right to assign**, or **transfer by succession** the patent, and 4. **Right to conclude licensing contracts** for the same.

Question 31

What is Doctrine of Equivalents? | Kinds of Infringement

Answer 31

With some modification and change, but SUBSTANTIALLY THE SAME: a. Function b. Way/Means/Principle or Mode of Operation c. Result

Question 32

It provides that an infringement also takes place when **a device appropriates a prior invention** by incorporating its innovative concept and, although with some modification and change, **performs substantially the same function in substantially the same way to achieve substantially the same result**. Identity of result does not amount to infringement of patent unless the invention being questioned operates in substantially the same way or by substantially the same means as the patented one, even though it performs the same function and achieves the same result. In other words, the principle or mode of operation must be the same or substantially the same. ## Footnote It requires the satisfaction of the function-means-and-result test, the patentee having the burden to show that all three components of such equivalency test are met.

Answer 32

Doctrine of Equivalents

Question 33

It is the issuance of a license by the Director General of the IPO to exploit a patented invention without the permission of the patent holder, either by manufacture or through parallel importation.

Answer 33

Compulsory Licensing

Question 34

What are the grounds for compulsory licensing? | (6)

Answer 34

1. National emergency/circumstances of extreme urgency 2. Public interest so requires 3. The use of the patent is anti-competitive 4. Public non-commerical use without satisfactory reasons 5. Invention is not being worked in the PH on a commercial scale without satisfactory reasons (importation counts as working or using) 6. Demand for patented drugs and medicine is not being met to an adequate extent and/or reasonable terms, as determined by DOH.

Question 35

It means any visible sign capable of distinguishing the goods (trademark) or service (service mark) of an enterprise and shall include a stamped or marked container of goods. ## Footnote Acquired through registration

Answer 35

Mark

Question 36

Rights of an owner of a well-known mark: (Theory of Dilution)

Answer 36

The exclusive right of the owner of a well-known mark which is registered in the Philippines, shall extend to goods and services which are not similar to those in respect of which the mark is registered.

Question 37

Requisites for Rights of an owner of a well-known mark (theory of dilution) | (2)

Answer 37

1. That use of that mark in relation to those goods or services would **indicate a connection** between those goods or services and the owner of the registered mark; and 2. That the **interest of the owner** of the registered mark are **likely to be damaged** by such use.

Question 38

What are considered Original Works?

Answer 38

Literary and artistic works, hereinafter referred to as "works," are original intellectual creations in the literary and artistic domain protected from the moment of their creation and shall include in particular: 1. Books, pamphlets, articles and other writings; 2. Periodicals and newspapers; 3. Lectures, sermons, addresses, dissertations prepared for oral delivery, whether or not reduced in writing or other material form; 4. Letters; 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. Illustrations, maps, plans, sketches, charts and three-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 cinematrographic works and works produced by a process analogous to cinematography or any process for making audio-visual recordings; 13. Pictorial illustrations and advertisements 14. Computer programs; and 15. Other literary, scholarly, scientific and artistic works.

Question 39

What are the objectives of the E-Commerce Act? | (3)

Answer 39

1. to **facilitate domestic and international dealings, transactions, arrangements, agreements, contracts and exchanges and storage of information** through the utilization of electronic, optical and similar medium, model, instrumentality and technology. 2. to **recognize the authenticity and reliability** of **electronic data messages** or **electronic documents** related to such activities and 3. to **promote the universal use of electronic transactions** in the government and by the general public.

Question 40

Who is the originator?

Answer 40

It refers to a **person by whom, or on whose behalf**, the electronic document **purports to have been created, generated and/or sent**. The term **does not include** a person acting as an **intermediary** with respect to that electronic document.

Question 41

It refers to any **distinctive mark**, characterstic and/or sound in electronic form, **representing the identity of a person** and attached to or **logically associated with the electronic data message** or electronic document or any methodology or procedures employed or adopted by a person and executed or adopted by such person with the **intention of authenticating or approving an electronic data message or electronic document**.

Answer 41

Electronic Signature

Question 42

It refers to a **secret code** which **secures and defends sensitive information** that crossover public channels into a form decipherable only with a matching electronic key.

Answer 42

Electronic Key

Question 43

Legal Recognition of Electronic Data Messages

Answer 43

Information **shall not be denied validity** or enforceability solely **on the ground that it is in the form of electronic data** message purporting to give rise to such legal effect, or that it is merely incorporated by reference in that electronic data message.

Question 44

Legal Recognition of Electronic documents

Answer 44

Electronic documents shall have **legal effect, validity or enforceability** as any other document or legal writing, and: a. Where the **law requires a document to be in writing**, that requirement is met by an electronic document if the said electronic document: * i. maintains its **integrity and reliability** and * ii. **can be authenticated** so as to be usable for subsequent reference, in that: 1. The electronic document has **remained complete and unaltered**, apart from the addition of any endorsement and any authorized change, or any change which arises in the normal course of communication, storage and display; and 2. The electronic document is **reliable** in the light of the **purpose** for which it was generated and in the light of all relevant circumstances. b. Paragraph (a) applies whether the requirement therein is in the **from of an obligation** or whether the **law simply provides consequences for the document not being presented or retained** in its original from. c. Where the law requires that a document be **presented or retained in its original form**, that requirement is met by an electronic document if- i. There exists a **reliable assurance** as to the **integrity** of the document from the time **when it was first generated in its final from**; and ii. That document is **capable of being displayed** to the person to whom it is to be presented: Provided, That no provision of the Act shall apply to vary any and all requirements of existing laws on formalities required in the execution of documents for their validity. ## Footnote For evidentiary purposes, an **electronic document** shall be the **functional equivalent of a written document** under existing laws. The Act does not modify any statutory any statutory rule relating to admissibility of electronic data massages or electronic documents, except the rules relating to authentication and best evidence.

Question 45

Electronic Signature

Answer 45

An **electronic signature** on the electronic document shall be **equivalent to the signature of a person** on a WRITTEN DOCUMENT if: a. the signature is an **electronic signature** and b. **proved** by showing that a **prescribed procedure**, not alterable by the parties interested in the electronic document, **existed** under which- i. A **method** is used **to identify the party** sought to be bound and to indicate said party's access to the electronic document necessary for his consent or approval through the electronic signature; ii. Said method is **reliable and appropriate for the purpose** for which the electronic document was generated or communicated, in the light of all circumstances, including any relevant agreement; iii. It is **necessary for the party sought to be bound**, in order to proceed further with the transaction to have executed or provided the electronic signature; and iv. The **other party is authorized and enable to verify the electronic signature** and to **make the decision to proceed** with the transaction authenticated by the same.

Question 46

Presumption Relating to Electronic Signatures

Answer 46

In any proceedings involving an electronic signature, it shall be presumed that, a. The electronic signature is the **signature of the person to whom it correlates**; and b. The electronic signature was **affixed by that person** with the **intention of signing or approving** the electronic document **unless** i. the **person relying** on the electronically designed electronic document **knows or has notice of defects** in/or **unreliability** of the signature or ii. **reliance** on the electronic signature is **not reasonable under the circumstances**.

Question 47

Actions Related to Contracts of Carriage of Goods

Answer 47

It applies to any action in connection with, or in pursuance of, a contract of carriage of goods, including but not limited to: a. (i) furnishing the marks, number, quantity or weight of goods; (ii) stating or declaring the nature or value of goods; (iii) issuing a receipt for goods; (iv) confirming that goods have been loaded; b. (i) notifying a person of terms and conditions of the contract; (ii) giving instructions to a carrier; c. (i) claiming delivery of goods; (ii) authorizing release of goods; (iii) giving notice of loss of, or damage to goods; d. giving any other notice or statement in connection with the performance of the contract; e. undertaking to deliver goods to a named person or a person authorized to claim delivery; f. granting, acquiring, renouncing, surrendering, transferring or negotiating rights in goods; g. acquiring or transferring rights and obligations under the contract.

Question 48

Government Use of Electronic Data Messages, Electronic Documents and Electronic Signature

Answer 48

a. accept the creation, filing or retention of such documents in the form of electronic data messages or electronic documents; b. issue permits, licenses, or approval in the form of electronic data messages or electronic documents; c. require and/or accept payments, and issue receipt acknowledging such payments, through systems using electronic data messages or electronic documents; or d. transact the government business and/or perform governmental factions using electronic data messages or electronic documents, and for the purpose, are authorized to adopt and promulgate, after appropriate public hearing and with due publications in newspapers of general circulation, the appropriate rules, regulations, or guidelines, to, among others, specify – 1. the manner and format in which such electronic data messages or electronic documents shall be filed, created, retained or issued; 2. where and when such electronic data messages or electronic documents have to signed, the use of an electronic signature, the type of electronic signature required; 3. the format of an electronic data message or electronic document and the manner the electronic signature shall be affixed to the electronic data messages or electronic documents; 4. the control processes and procedures appropriate to ensure adequate integrity, security and confidentiality of electronic data messages or electronic documents or records of payments; 5. other attributes required to electronic data messages or electronic documents; and 6. the full or limited use of the documents and papers for compliance with the government requirements: provided, That the Act shall be itself mandate any department of the government, organ of state or statutory corporation to accept or issue any document in the form of electronic data messages or electronic documents upon the adoption, promulgation and publication of the appropriate rules, regulations or guidelines.

Question 49

Time of Dispatch of Electronic Data Messages or Electronic Documents

Answer 49

General rule: the **dispatch** of an electronic data message or electronic document occurs when it **enters an information system outside the control of the originator** or of the person who sent the electronic data message or electronic document on behalf of the originator.

Question 50

Time of Receipt of Electronic Data Messages or Electronic Documents

Answer 50

a. Upon **entry in the designated information system** b. Upon **retrieval by the addressee**: i. There is a designated information system, but the **originator and the addressee are both participants** in the designated information system; ii. The electronic message or electronic document enters an information system of the address that is **not the designated information system**; c. Upon **entry in the information system of the addressee** - the parties **did not designate an information system**

Question 51

Place of Dispatch and Receipt of Electronic Data Messages or Electronic Documents

Answer 51

1. **dispatched** at the place where the **originator has its place of business** and 2. **received** at the place where the **addressee has its place of business**. a. Originator or addressee has **more than one place of business** - **closest relationship** to the underlying transaction or, when there is nor underlying transaction, **principal** place of business b. **Does not have** a place of business - **habitual residence**; or c. The **"usual place of residence"** in relation to a body corporate, means that **place where it is incorporated** or otherwise legally constituted.