Quisumbing Torres

A TTA that conforms to the prohibited and mandatory clauses need not be registered with the IPO. However, there are practical benefits to registering a compliant TTA, particularly for license agreements. These are: The registration will serve as evidence that the agreements are compliant with the IP Code and are enforceable in this respect. Philippine courts generally lend great weight to findings of administrative agencies like the Documentation Information and Technology Transfer Bureau (DITTB).In the event of litigation over the Agreement, the DITTB ruling may be used as evidence of the enforceability of the Agreement; Registration will allow the Licensee to source currency for royalty payments from the Philippine banking system. Philippine Central Bank regulations provide that banks and foreign exchange companies must require purchasers of foreign currencies that will be used for royalty payments to submit the relevant certificate of registration issued by the DITTB; If the Licensor intends to avail of tax treaty relief with respect to royalty income derived under the agreements, a DITTB registration or certificate of compliance must be submitted to the Philippine Bureau of Internal Revenue in support of an application for tax treaty relief; and If the agreement involves the licensing of a trademark, the registration will facilitate the recordal of the agreement against the Philippine trademark applications or registrations for the licensed marks. Under the IP Code, a trademark license agreement that is not recorded will have no effect against third parties. Thus, the non-recordation of a trademark license may render the registration of the mark(s) covered by the license vulnerable to cancellation actions by third parties due to non-use. The IP Code specifically provides that a trademark registration may be cancelled any time if the registered owner of the mark, without legitimate reason, fails to use the mark in the Philippines or cause it to be used in the Philippines under license during an uninterrupted period of three years or longer.

X.

LABOR LAW

Philippine labor law recognizes the rights of both workers and management. Thus, labor law recognizes the workers right to a just share in the fruits of production and managements right to a reasonable return on investments.

1.

Labor Standards

The Labor Code of the Philippines (the Labor Code) lays down the minimum terms, conditions, and benefits of employment that employers must provide or comply with and to which the employees are entitled as a matter of right. 1.1 Work Hours Normal Hours of Work. The normal hours of work should not exceed eight hours in a work day. Employees are entitled to at least 60 minutes time off from work for their regular meals. Overtime Pay. Any work done in excess of eight hours in a work day must be paid an overtime rate based on the applicable basic rate. The Labor Code enumerates the specific instances when an employee may be required to render overtime work and the corresponding overtime pay rate. These overtime pay rates may vary depending on whether the overtime work is rendered on a regular work day, holiday, or rest day.

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Night Shift Differential. An employee must be paid a night shift differential equivalent to a certain rate of his regular wage for work done between 10 p.m. and 6 a.m. Premium Pay for Rest Day or Holiday Work. All employees are generally entitled to a rest period of not less than 24 consecutive hours for every six consecutive normal working days. For work done on rest days and special holidays, the Labor Code requires the employer to pay a certain amount as additional compensation based on the regular wage of the employee. The rules on work hours are not applicable to managerial employees, among others.

1.2

Wages

Under the minimum wage law in the Philippines, minimum wages vary according to the location of the business. The minimum wage rate in each region of the country varies and is prescribed by the Regional Tripartite Wages and Productivity Boards. Wages are generally paid in cash at least twice a month (usually on the 15th and the last day of every month). 1.3 1.4 Other Compulsory Benefits Holiday Pay Service Incentive Leave Thirteenth Month Pay Retirement Benefits Military Training Leave Maternity Leave Paternity Leave Parental Leave Leave Due to Violence

Rule on Non-Diminution of Employment Benefits

If an employee benefit has been granted by reason of employer practice or policy, the benefit becomes part of the terms and conditions of employment and cannot be unilaterally withdrawn or discontinued by the employer, despite the absence of a legal or contractual requirement to grant the said benefit. The following criteria may be used to ascertain the existence of a binding and enforceable employer practice or policy under Philippine law: a. b. c. The act of the employer was done for a long period of time or was consistently repeated; The act was done deliberately, knowingly, and consistently; and The act was not a product of erroneous interpretation or construction of a doubtful or difficult question of law.

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2.

Labor Relations

As a general rule, employees have the right to form and join unions and to engage in concerted activities for their collective protection. Certain classes of employees, however, such as managerial and confidential employees, may not form or become members of labor unions. A labor union has to be registered with the Department of labor and Employment for it to enjoy all the rights granted by law to labor unions. It may register as an independent labor union or as a charter of a federation or national union. Employees, through their union representatives, may negotiate and enter into collective bargaining agreements (CBA) with their employers. The employees negotiate the terms and conditions of their employment in CBAs. Employees, under specified circumstances, have the right to strike in accordance with law. Corollarily, the employer, under specified circumstances, also has the right to lock-out employees. Aside from labor unions, employees may also form and join workers associations and other mutual aid and benefit associations for legitimate purposes, other than collective bargaining.

3.

Welfare Legislation
a. b. c. Employees Compensation and State Insurance Fund (ECSIF). This provides for the benefits in case of work-related illness or injury; National Health Insurance Act (NHIA). This provides for the benefits for non-work related illness; Social Security Law. This provides employees in the private sector a more comprehensive benefits program which includes sickness, disability, retirement and funeral benefits; and Pag-IBIG Fund. This provides housing loans to employees in the private sector.

d.

Under the foregoing welfare legislations, the employer is required to register itself and its employees with the Social Security System (SSS; the SSS also administers the ECSIF), the Philippine Health Insurance Corporation (PhilHealth; PhilHealth administers the NHIA), and the Pag-IBIG Fund. The employer and the employee both contribute to the common fund from which the benefits are sourced. The employer is required to deduct the employees contribution and remit the same to the SSS, PhilHealth, and Pag-IBIG Fund, together with the employers contribution. The contributions are based on the salary of the employee. Contributions for the ECSIF are shouldered by the employer alone. There are other special laws in the Philippines that govern specific sectors of Philippine labor such as the Migrant Workers and Overseas Filipinos Act of 1995.

4.

Classification of Employment

The Labor Code and jurisprudence classify employment status into regular, project, seasonal, casual, probationary, and fixed-term. The employment status of an employee is not determined by the specific designation given to it in the employment contract but by the nature of the work being performed by the employee.

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An employment is presumed to be regular or permanent in nature, unless the legal requirements for the other types of employment are strictly observed. For instance, a probationary employee must be provided with written standards for regular employment at the time he is first engaged. Otherwise, he shall be deemed a regular employee from the start of his employment. The classification of an employee is important because under Philippine law, the causes for terminating an employer-employee relationship would depend upon the classification of the employee.

5.

Termination of Employment

Corollary to the employers right to hire, terminate, and discipline employees is the employees right to security of tenure. The employees right to security of tenure demands that they be removed only for any of the just or authorized causes defined under the Labor Code (called substantive due process) and only after the employer observes procedural due process. In the Philippines, a dismissed employee has the right to question the validity of his dismissal. Once questioned before the proper labor authorities, the employer must establish the validity of the dismissal by proving that the termination was due to a just and/or authorized cause and that the termination was done after complying with due process. An employee who is unjustly dismissed from work without a legally defined cause is entitled to the following: a. b. reinstatement without loss of seniority rights and other privileges; payment of full back wages, including allowances and other benefits or their monetary equivalent, computed from the time his compensation was withheld from him up to the time of his actual reinstatement.

Even if there may have been a just or authorized cause for termination, an employee who is dismissed without procedural due process is entitled to nominal damages, the amount of which is subject to the discretion of the court. For this purpose, the court will take into consideration the relevant circumstances of each case, particularly the gravity of the employers failure to follow due process requirements. The nominal damages serve as a penalty on the employer for its failure to comply with the requirements of procedural due process for terminating employment.

6.

Contract of Employment

Although not required, it is best to put the employment contract between the employer and the employee in writing. This will protect the employer in the event of a future disagreement as to the terms and conditions of employment. It is also advisable for the employer to have an employment handbook which contains the rules and regulations that will govern the employment relation.

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