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Anti-Dummy Law Update

An alien cannot be elected as president/chairman or officer of a corporation that is engaged in a nationalised activity pursuant to the Anti-Dummy Law. This rule has been reiterated by the SEC in Opinion No. 16-02. The Anti-Dummy Law, however, allows an alien to be elected as director in proportion to his allowable participation or share in the corporation’s capital. 

SEC Reportorial Requirements

Petitions to set aside revocation orders pursuant to failure to comply with reportorial requirements may now be filed anytime subject to compliance with MC No. 5-2016. Thus, if you have a company that had its registration revoked because of failure to submit reportorial requirements  (e.g., general information sheet, audited financial statements, etc.), and the deadline to file the petition to revoke the order has lapsed, you may still proceed to do so. 

Online Gambling Update

The newly elected President of the Philippines has announced a crackdown on online gambling facilities. It appears from the statements made that the new President is against gambling in general. This policy may affect the Philippine gaming industry. 

Retail Trade Update

Sales to the general public, through a single outlet owned by a manufacturer of products manufactured, processed or assembled in the Philippines, irrespective of capitalisation is not considered as retail, pursuant to Section 3(d) of the Retail Trade law and Section 2(d) of its Implementing Rules and Regulations. Please refer to SEC Opinion No. 16-03. 

Advertising Services in Class 35

It has recently been the policy of the Intellectual Property Office (IPO) to issue office actions against trademark applications/registrations covering Class 35 clarifying whether the applicant or registrant is an advertising agency. The IPO has apparently taken the position that advertising in Class 35 is limited to advertising for others, such as an advertising agency. This sudden change in policy has resulted in the issuance of office actions even on existing registrations during the renewal process or when declarations of use are filed.  If one is not an advertising agency, the IPO will require the deletion of “advertising services” from the specification of services in Class 35. If you have similar issues, do not hesitate to contact us. 

Implementing Regulations of the Competition Act

The Philippine Competition Commission issued recently issued the rules and regulations to implement Republic Act No. 10667, or the Philippine Competition Act. The regulations came into force on June 18, 2016 after being published on JUne 3, 2018. A copy of the regulations may be downloaded here.

Proposed Amendments to Inter Partes Rules

The Intellectual Property of the Philippines has issued its proposed revisions to the rules governinig inter partes cases. Most of the proposed changes appear to be beneficial to foreign trademark owners, as follows:
1. Under current inter partes regulations, the maximum deadline to file an opposition is 90 days from the time the mark being opposed is published. In the proposed revision, an additional 30 days is given on “compelling grounds”. 
2. As Philippine inter pares rules require authentication of notarised opposition documents (e.g., notice of opposition, affidavit of witnesses, power of attorney) before the Philippine consulate, the proposed revisions now appear to allow the submission of mere notarised documents as the “authentication may be secured after the filing of the case provided that the execution of the documents aforementioned are done prior to such filing and provided further, that the authentication must be submitted before the issuance of the order of default or conduct of the preliminary conference under Section 13 of this Rule.” This will give foreign opposers more time to obtain the authentication of the required documents.
The proposed revisions, however, add another layer in the appeals process. Under current regulations, it is the Director of the Bureau of Legal Affairs that issues decisions in inter partes cases, and then the decision is appealable to the Director General of the Philippine Intellectual Property Office. The proposed revision will give the hearing/adjudication officers the authority to issue the decisions. Their decisions may then be appealed to the Director of the Bureau of Legal Affairs. The decision of the Bureau of Legal Affairs may then subsequently be appealed to the Director General. 

Stockholders’ Meeting Cannot be Conducted Via Teleconference

The SEC, in its Opinion No. 16-01, stated that under the present Corporation Code, a stockholder’s voting and appearance cannot be conducted via teleconferencing or videoconferencing. 
Section 51 of the Corporation Code provides that “stockholder’s or member’s meetings, whether regular or special, shall be held in the city or municipality where the principal office of the corporation is located, and if practicable in the principal office of the corporation.” Since this provision presupposes that the attendees to a stockholders’ or members’ meeting are in the same place during the meeting, it is in contrast to teleconferencing, where the participants are in different places although their communication with each other is facilitated through an electronic medium, making their presence in the meeting merely “virtual” or electronic.
On the other hand, the conduct of a meeting of the board or directors may be held anywhere in or outside the Philippines, unless the by-laws provide otherwise, per Section 53 of the Corporation Code. In this regard, SEC Memorandum Circular No. 15 Series of 2001 provides the guidelines for the conduct of board meetings through teleconferencing.  In addition, Section 47 of the Corporation Code permits the place of the directors’ meeting to be stipulated in the corporations’ by laws, but not in the case of stockholders’ meetings.
Clearly, the aforementioned provisions of law disallows stockholder’s voting and appearance conducted via teleconferencing. However, there are pending bills in Congress that proposed amendments to the Corporation code. This includes permitting the conduct of stockholders meetings through electronic means.