OBLIGATIONS, CONTRACTS &

INTELLECTUAL PROPERTY LAW

ACCOUNTANCY INTENSIVE REVIEW
SUMMER 2016
 KINDS OF OBLIGATION UNDER THE CIVIL CODE

• 1. CIVIL OBLIGATION – A JURIDICAL NECESSITY TO GIVE, TO DO ,OR NOT TO DO.

2. NATURAL OBLIGATION – ONE WHICH IS BASED ON EQUITY AND NATURAL LAW

 ELEMENTS OF AN OBLIGATION
(CODE: PA PJ)
• 1. PASSIVE SUBJECT(DEBTOR/OBLIGOR) – IS THE PERSON WHO HAS THE DUTY TO PERFORM
THE OBLIGATION.
• 2. ACTIVE SUBJECT (CREDITOR/OBLIGE) – IS THE PERSON WHO HAS THE RIGHT TO DEMAND
PERFORMANCE OF THE OBLIGATION
• 3. PRESTATION – IS THE SUBJECT MATTER OF THE OBLIGATION.
• 4.JURIDICAL TIE(VINCULUM JURIS/SOURCES OF OBLIGATION) – IS THE REASON WHY THE
OBLIGATION EXISTS
 SOURCES OF OBLIGATION
(A.K.A VINCULUM JURIS/JURIDICAL TIES)
CODE: LA CO QUA DE QUA
• 1. LAW – IS A REASONABLE RULE OF ACTION, JUST AND OBLIGATORY, PROMULGATED BY COMPETENT
AUTHORITIES FOR COMMON OBSERVANCE AND BENEFIT.
• 2. CONTRACTS – IS THE MEETING OF THE MINDS BETWEEN TWO PERSONS WHEREBY ONE BINDS HIMSELF
WITH RESPECT TO THE OTHER TO GIVE SOMETHING OR TO RENDER SOME SERVICE.
• 3. QUASI-CONTRACTS – IS A JURIDICAL RELATION WHICH GIVES RISE TO THE PAYMENT OF INDEMNITY FOR A
CERTAIN LAWFUL, VOLUNTARY AND UNILATERAL ACT IN ORDER TO PREVENT UNJUST ENRICHMENT
• 4. DELICT/CRIME(INTENTIONAL) – ACTS/OMISSIONS PUNISHABLE BY LAW.
• 5. QUASI-DELICT(UNINTENTIONAL) – WHOEVER WILL CAUSE DAMAGE OR INJURY TO ANOTHER DUE TO HIS
FAULT OR NEGLIGENCE MUST PAY FOR THE DAMAGE DONE.
 OBLIGATION TO GIVE (REAL OBLIGATION)

• AN OBLIGATION TO GIVE MAY CONSIST IN THE GIVING OF A DETERMINATE OR

INDETERMINATE THING
• CREDITOR’S RIGHT TO DEMAND FOR THE DELIVERY OF THE THING(PERSONAL RIGHT) BEGINS
ONLY FROM THE TIME OF MATURITY, BUT OWNERSHIP OVER THE THING(REAL RIGHT) IS
ACQUIRED ONLY AFTER DELIVERY OF THE THING BECAUSE OWNERSHIP CAN ONLY BE
TRANSFERRED THROUGH DELIVERY.
• AN OBLIGATION TO GIVE A DETERMINATE THING ALSO INCLUDES THE DELIVERY OF ITS
ACCESSIONS AND ACCESSORIES.
 OBLIGATION TO DO(POSITIVE PERSONAL
OBLIGATION)
• THE DEBTOR MUST DO IT PROPERLY IN ACCORDANCE WITH THE AGREEMENT OTHERWISE,HE
SHALL BE LIABLE FOR DAMAGES.
• THE DEBTOR CANNOT BE COMPELLED TO PERFORM AN OBLIGATION.
 OBLIGATION NOT TO DO(NEGATIVE PERSONAL
OBLIGATION)
• WHEN THE OBLIGATION CONSISTS IN NOT DOING, AND THE OBLIGOR DOES WHAT HAS BEEN
FORBIDDEN HIM, IT SHALL BE UNDONE AT HIS EXPENSE.
• THE REMEDY OF THE CREDITOR IN CASE THE DEBTOR DOES WHAT IS FORBIDDEN HIM IS TO FILE
AN ACTION IN COURT TO STOP HIM FROM DOING IT.
 SOURCES OF LIABILITY FOR DAMAGES
(CODE: FIND C)
• 1. FRAUD – IS THE INTENTIONAL DECEPTION TO EVADE THE PERFORMANCE OF THE
OBLIGATION. INCIDENTAL AND FRAUD BY CONCEALMENT ONLY.
• 2. NEGLIGENCE – IS THE OMISSION OF THAT DILIGENCE REQUIRED BY THE NATURE OF AN
OBLIGATION AND CORRESPONDS TO THE CIRCUMSTANCES OF THE PERSON, TIME AND PLACE.
• 3. DELAY – IS THE NON-PERFORMANCE OF THE OBLIGATION AFTER DEMAND
GEN. RULE: NO DEMAND NO DELAY
• EXCEPT : R TOLD
a. IN RECIPROCAL OBLIGATION WHEN ONE IS READY, BUT THE OTHER IS NOT,DELAY BY THE
OTHER BEGINS
b. WHEN TIME IS THE ESSENTIAL MOTIVE IN THE ESTABLISHMENT OF THE OBLIGATION.
c. WHEN THE OBLIGATION SO PROVIDES.
d. WHEN THE LAW DECLARES
e. WHEN DEMAND WOULD BE USELESS

4. CONTRAVENTION OF THE TENOR OF THE OBLIGATION – DEBTOR MUST COMPLY WITH WHAT
IS INCUMBENT UPON HIM, OTHERWISE, HE SHALL BE LIABLE FOR DAMAGES.
 DIFFERENT KINDS OF OBLIGATION
CODE: PU CO OP JO SO AL FADI IN OPCLA
• 1. PURE OBLIGATION
• 2. CONDITIONAL OBLIGATION
• 3. OBLIGATION WITH A PERIOD
• 4. JOINT OBLIGATION
• 5. SOLIDARY OBLIGATION
• 6.ALTERNATIVE OBLIGATION
• 7. FACULTATIVE OBLIGATION
• 8. DIVISIBLE OBLIGATION
• 9. INDIVISIBLE OBLIGATION
• 10. OBLIGATION WITH A PENAL CLAUSE
 EXTINGUISHMENT OF OBLIGATION
CODE: PA LO RE ME CO NO
• 1. PAYMENT OR PERFORMANCE
• 2. LOSS OF THE SPECIFIC THING DUE
• 3. REMISSION OR CONDONATION OF DEBT
• 4. MERGER OR CONFUSION OF RIGHTS
• 5. COMPENSATION
• 6. NOVATION
 SPECIAL FORMS OF PAYMENT
CODE: DA PA AP TE CON
• 1. DATION IN PAYMENT
• 2. PAYMENT BY CESSION
• 3. APPLICATION OF PAYMENT
• 4. TENDER OF PAYMENT AND CONSIGNATION
 CONTRACTS

• THE MEETING OF THE MINDS BETWEEN TWO PERSONS WHEREBY ONE BINDS HIMSELF WITH
RESPECT TO THE OTHER TO GIVE SOMETHING OR TO RENDER SOME SERVICE.
 ELEMENTS OF CONTRACTS
CODE: NEA
• 1. NATURAL ELEMENTS – WARRANTY AGAINST EVICTION AND WARRANTY AGAINST HIDDEN
DEFECTS

• 2. ESSENTIAL ELEMENTS – CONSENT, OBJECT AND CAUSE/CONSIDERATION

• 3. ACCIDENTAL ELEMENTS – STIPULATION BY THE PARTIES

 STAGES OF CONTRACT
CODE: PPC/ CBT
• 1. PREPARATION OR CONCEPTION
• 2. PERFECTION OR BIRTH
• 3. CONSUMMATION, TERMINATION/DEATH
 BASIC PRINCIPLES OF CONTRACT

• 1. FREEDOM OR LIBERTY TO CONTRACT – PARTIES ARE FREE TO GIVE ANY TERMS AND CONDITIONS AS LONG
AS THEY ARE NOT CONTRARY TO LAW, MORALS, GOOD CUSTOMS, PUBLIC ORDER OR PUBLIC POLICY.
• 2.OBLIGATORY FORCE – CONTRACTS MUST BIND BOTH PARTIES;ITS VALIDITY AND COMPLIANCE CANNOT BE
LEFT TO THE WILL OF ONE OF THEM.
• 3.PERFECTION BY MERE CONSENT- IS THE GENERAL RULE AND IS ALSO CALLED CONSENSUAL CONTRACT
• 4. MUTUALITY OF CONTRACT – BOTH PARTIES ARE MUTUALLY BOUND
• 5. RELATIVITY OF CONTRACT – CONTRACT IS BINDING BETWEEN THE PARTIES, THEIR HEIRS AND ASSIGNS.
 VICES OF CONSENT
CODE: VIIMFU
• 1. VIOLENCE
2. INTIMIDATION
3. INCAPACITY
• 4. MISTAKE
• 5.FRAUD(CAUSAL FRAUD)
• 6. UNDUE INFLUENCE
 KINDS OF DEFECTIVE CONTRACTS
CODE: RE VO UN VO
• 1. RESCISSIBLE CONTRACTS (LEAST DEFECTIVE) - THERE ARE NO DEFECTS IN THE ELEMENTS OF A CONTRACT BUT DAMAGES
OR INJURIES ARE SUFFERED BY ANOTHER PERSON.
REMEDY: CANCELLATION OF THE CONTRACT

2. VOIDABLE – CONSENT IS DEFECTIVE

REMEDIES: RATIFICATION AND ANNULMENT OF THE CONTRACT

3. UNENFORCEABLE CONTRACT – A. ONE WHICH IS HAS BEEN ENTERED WITHOUT AUTHORITY OR EXCESS OF IT, B.
VIOLATES THE STATUTE OF FRAUD C. BOTH PARTIES ARE INCAPABLE OF GIVING CONSENT
REMEDY: RATIFICATION BUT BEFORE RATIFICATION, IT CANNOT BE ENFORCED IN THE COURT
VOID OR INEXISTENT CONTRACT – IS ONE WHERE THE
OBJECT OR CAUSE IS DEFECTIVE /VOID OR WHERE
ONE, SOME OR ALL OF THE ESSENTIAL ELEMENTS OF A
CONTRACT ARE MISSING/INEXISTENT.
• EXAMPLES:
• A. THOSE WHOSE CAUSE , OBJECT, OR PURPOSE IS CONTRARY TO LAW, MORALS, GOOD
CUSTOMS, PUBLIC ORDER OR PUBLIC POLICY
• B. THOSE WHOSE OBJECT IS OUTSIDE THE COMMERCE OF MEN
• C. THOSE WHICH CONTEMPLATE AN IMPOSSIBLE SERVICE
• D. THOSE EXPRESSLY PROHIBITED OR DECLARED VOID BY LAW
• E. THOSE WHICH ARE ABSOLUTELY SIMULATED OR FICTITIOUS
• F. THOSE WHOSE OBJECT OR CAUSE DID NOT EXIST AT THE TIME OF THE TRANSACTION
• G.THOSE WHERE THE INTENTION OF THE PARTIES RELATIVE TO THE PRINCIPAL OBJECT OF THE
CONTRACT CANNOT BE ASCERTAINED.
 INTELLECTUAL PROPERTY LAW

A. DIFFERENCES BETWEEN COPYRIGHTS TRADEMARKS AND PATENT

INTELLECTUAL PROPERTIES DEFINITION

• TRADEMARK - ANY VISIBLE SIGN CAPABLE OF DISTINGUISHING THE GOODS (TRADEMARK) OR SERVICES
(SERVICE MARK) OF AN ENTERPRISE AND SHALL INCLUDE A STAMPED OR MARKED CONTAINER OF GOODS.
• TRADENAME - THE NAME OR DESIGNATION IDENTIFYING OR DISTINGUISHING AN ENTERPRISE.
• COPYRIGHT - LITERARY AND ARTISTIC WORKS WHICH ARE ORIGINAL INTELLECTUAL CREATIONS IN THE LITERARY AND
ARTISTIC DOMAIN PROTECTED FROM THE MOMENT OF THEIR CREATION.
• PATENTABLE INVENTIONS - ANY TECHNICAL SOLUTION OF A PROBLEM IN ANY FIELD OF HUMAN ACTIVITY WHICH IS NEW,
INVOLVES AN INVENTIVE STEP AND IS INDUSTRIALLY APPLICABLE. (KHO V. CA, G.R. NO. 115758, MAR. 11, 2002).
 WHAT IS PATENT?

• A STATUTORY GRANT WHICH CONFERS TO AN INVENTOR OR HIS LEGAL SUCCESSOR, IN

RETURN FOR THE DISCLOSURE OF THE INVENTION TO THE PUBLIC, THE RIGHT FOR A LIMITED
PERIOD OF TIME TO EXCLUDE OTHERS FROM MAKING, USING, SELLING OR IMPORTING THE
INVENTION WITHIN THE TERRITORY OF THE COUNTRY THAT GRANTS THE PATENT. EXAMPLES :
• WHAT ARE NOT PATENTABLE INVENTIONS?
• A: PAD‐SCAD
• DISCOVERIES, SCIENTIFIC THEORIES AND MATHEMATICAL METHODS

• IN THE CASE OF DRUGS AND MEDICINES, MERE DISCOVERY OF A NEW FORM OR NEW PROPERTY OF A KNOWN
SUBSTANCE WHICH DOES NOT RESULT IN THE ENHANCEMENT OF THE EFFICACY OF THAT SUBSTANCE

• SCHEMES, RULES AND METHODS OF PERFORMING MENTAL ACTS, PLAYING GAMES OR DOING BUSINESS, AND
PROGRAMS FOR COMPUTERS

• METHODS FOR TREATMENT OF THE HUMAN OR ANIMAL BODY

• PLANT VARIETIES OR ANIMAL BREEDS OR ESSENTIALLY BIOLOGICAL PROCESS FOR THE PRODUCTION OF PLANTS OR
ANIMALS. THIS PROVISION SHALL NOT APPLY TO MICRO‐ORGANISMS AND NON‐BIOLOGICAL AND
MICROBIOLOGICAL PROCESSES

• AESTHETIC CREATIONS
 • OWNERSHIP OF A PATENT
• WHO IS ENTITLED TO A PATENT?
• A:
• INVENTOR, HIS HEIRS, OR ASSIGNS.
• JOINT INVENTION – JOINTLY BY THE INVENTORS. (SEC. 28, IPC)

• 2 OR MORE PERSONS INVENTED SEPARATELY AND INDEPENDENTLY OF EACH OTHER – TO THE PERSON WHO FILED AN
APPLICATION;

• 4. 2 OR MORE APPLICATIONS ARE FILED – THE APPLICANT WHO HAS THE EARLIEST FILING DATE OR, THE EARLIEST PRIORITY DATE.
FIRST TO FILE RULE. (SEC. 29, IPC)
• 5. INVENTIONS CREATED PURSUANT TO A COMMISSION – PERSON WHO COMMISSIONS THE WORK, UNLESS OTHERWISE
PROVIDED IN THE CONTRACT. (SEC. 30.1, IPC)
• 6. EMPLOYEE MADE THE INVENTION IN THE COURSE OF HIS EMPLOYMENT CONTRACT:
• A. THE EMPLOYEE, IF THE INVENTIVE ACTIVITY IS NOT A PART OF HIS REGULAR DUTIES EVEN IF THE EMPLOYEE USES THE TIME,
FACILITIES AND MATERIALS OF THE EMPLOYER.
• B. THE EMPLOYER, IF THE INVENTION IS THE RESULT OF THE PERFORMANCE OF HIS REGULARLY‐ASSIGNED DUTIES, UNLESS THERE IS
AN AGREEMENT, EXPRESS OR IMPLIED.
 WHAT IS THE “FIRST TO FILE” RULE?

• 1. 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
• 2. WHERE TWO OR MORE APPLICATIONS ARE FILED FOR THE SAME INVENTION, TO THE
APPLICANT WHICH HAS THE EARLIEST FILING DATE. (SEC. 29, IPC)
• WHAT CONSTITUTES INFRINGEMENT OF PATENT?

• MAKING, USING, OFFERING FOR SALE, SELLING OR IMPORTING A PATENTED

PRODUCT OR A PRODUCT OBTAINED DIRECTLY OR INDIRECTLY FROM A
PATENTED PROCESS; OR
• USE OF A PATENTED PROCESS WITHOUT AUTHORIZATION OF THE OWNER OF
THE PATENT (SEC. 76, IPC)
WHAT IS A TRADEMARK AND HOW DOES IT DIFFER
FROM A TRADE NAME?
• ANY VISIBLE SIGN CAPABLE OF DISTINGUISHING THE GOODS (TRADEMARK) OR SERVICES
(SERVICE MARK) OF AN ENTERPRISE. A TRADE NAME IS A NAME OR DESIGNATION IDENTIFYING
OR DISTINGUISHING AN ENTERPRISE.
• WHAT IS TRADEMARK INFRINGEMENT?

• A: THE USE WITHOUT CONSENT OF THE TRADEMARK OWNER OF ANY A) REPRODUCTION, B)

COUNTERFEIT, C) COPY OR D) COLORABLE IMITATION OF ANY REGISTERED MARK OR TRADENAME IN
CONNECTION WITH THE SALE, OFFERING FOR SALE, OR ADVERTISING OF ANY GOODS, BUSINESS OR
SERVICES ON OR IN CONNECTION WITH WHICH SUCH USE IS LIKELY TO CAUSE CONFUSION OR
MISTAKE OR TO DECEIVE PURCHASERS OR OTHERS AS TO THE SOURCE OR ORIGIN OF SUCH GOODS
OR SERVICES, OR IDENTITY OF SUCH BUSINESS; OR REPRODUCE, COUNTERFEIT, COPY OR COLORABLY
IMITATE ANY SUCH MARK OR TRADENAME AND APPLY SUCH REPRODUCTION, COUNTERFEIT, COPY OR
COLORABLE LIMITATION TO LABELS, SIGNS, PRINTS, PACKAGES, WRAPPERS, RECEPTACLES OR
ADVERTISEMENTS INTENDED TO BE USED UPON OR IN CONNECTION WITH SUCH GOODS, BUSINESS
OR SERVICES (ESSO STANDARD EASTERN V. CA, G.R. NO. L‐29971, AUG. 31, 1982)
• WHAT DISTINGUISHES INFRINGEMENT OF TRADEMARK FROM UNFAIR COMPETITION?

• A: INFRINGEMENT OF
• TRADEMARK UNFAIR COMPETITION
• UNAUTHORIZED USE OF A TRADEMARK. - THE PASSING OFF OF ONE’S GOODS AS THOSE OF
ANOTHER.
• FRAUDULENT INTENT IS UNNECESSARY. - FRAUDULENT INTENT IS ESSENTIAL.
• PRIOR REGISTRATION OF THE TRADEMARK- REGISTRATION IS NOT NECESSARY. (DEL MONTE
IS A PREREQUISITE TO THE ACTION. CORP. V. CA, G.R. NO. 78325, JAN. 23, 1990)
 WHAT IS COPYRIGHT?
• A RIGHT OVER LITERARY AND ARTISTIC WORKS WHICH ARE ORIGINAL INTELLECTUAL CREATIONS IN
THE LITERARY AND ARTISTIC DOMAIN PROTECTED FROM THE MOMENT OF CREATION. (SEC. 171.1,
IPC)
• WHAT ARE THE ELEMENTS OF COPYRIGHTABILITY?
• A:
• ORIGINALITY – MUST HAVE BEEN CREATED BY THE AUTHOR’S OWN SKILL, LABOR, AND JUDGMENT
WITHOUT DIRECTLY COPYING OR EVASIVELY IMITATING THE WORK OF ANOTHER. (CHING KIAN
CHUAN V. CA, G.R. NO. 130360, AUG. 15, 2001)
• EXPRESSION – MUST BE EMBODIED IN A MEDIUM SUFFICIENTLY PERMANENT OR STABLE TO PERMIT
IT TO BE PERCEIVED, REPRODUCED OR COMMUNICATED FOR A PERIOD MORE THAN A TRANSITORY
DURATION
• WHAT ARE COPYRIGHTABLE WORKS?

• LITERARY AND ARTISTIC WORKS

• BOLD‐MAN‐GAS‐PAP‐CO
• A. BOOKS, PAMPHLETS, ARTICLES AND OTHER WRITINGS
• B. LECTURES, SERMONS, ADDRESSES, DISSERTATIONS PREPARED FOR ORAL DELIVERY, WHETHER OR NOT
REDUCED IN WRITING OR OTHER MATERIAL FORM
• C. LETTERS
• D. DRAMATIC, CHOREOGRAPHIC WORKS
• E. MUSICAL COMPOSITIONS
• F. WORKS OF ART
• G. PERIODICALS AND NEWSPAPERS
• H. WORKS RELATIVE TO GEOGRAPHY, TOPOGRAPHY, ARCHITECTURE OR SCIENCE
• I. WORKS OF APPLIED ART
• J. WORKS OF A SCIENTIFIC OR TECHNICAL CHARACTER
• K. PHOTOGRAPHIC WORKS
• L. AUDIOVISUAL WORKS AND CINEMATOGRAPHIC WORKS
• M. PICTORIAL ILLUSTRATIONS AND ADVERTISEMENTS
• N. COMPUTER PROGRAMS; AND
• O. OTHER LITERARY, SCHOLARLY, SCIENTIFIC AND ARTISTIC WORKS. (SEC. 172.1, IPC)
• DERIVATIVE WORKS

• A. DRAMATIZATIONS, TRANSLATIONS, ADAPTATIONS, ABRIDGEMENTS, ARRANGEMENTS, AND OTHER

ALTERATIONS OF LITERARY OR ARTISTIC WORKS;

• B. COLLECTIONS OF LITERARY, SCHOLARLY, OR ARTISTIC WORKS AND COMPILATIONS OF DATA AND

OTHER MATERIALS WHICH ARE ORIGINAL BY REASON OF THE SELECTION OR COORDINATION OR
ARRANGEMENT OF THEIR CONTENTS. (SEC. 173)
 NON‐COPYRIGHTABLE WORKS

• IDEA, PROCEDURE, SYSTEM, METHOD OR OPERATION, CONCEPT, PRINCIPLE, DISCOVERY OR MERE

DATA AS SUCH
• NEWS OF THE DAY AND OTHER ITEMS OF PRESS INFORMATION
• ANY OFFICIAL TEXT OF A LEGISLATIVE, ADMINISTRATIVE OR LEGAL NATURE, AS WELL AS ANY
OFFICIAL TRANSLATION THEREOF
• PLEADINGS
• DECISIONS OF COURTS AND TRIBUNALS – THIS REFERS TO ORIGINAL DECISIONS AND NOT TO
ANNOTATED DECISIONS SUCH AS THE SCRA OR SCAD AS THESE ALREADY FALL UNDER THE
CLASSIFICATION OF DERIVATIVE WORKS, HENCE COPYRIGHTABLE
• ANY WORK OF THE GOVERNMENT OF THE PHILIPPINES
• GR: CONDITIONS IMPOSED PRIOR THE APPROVAL OF THE GOVERNMENT AGENCY OR OFFICE
WHEREIN THE WORK IS CREATED SHALL BE NECESSARY FOR EXPLOITATION OF SUCH WORK FOR
PROFIT. SUCH AGENCY OR OFFICE, MAY, AMONG OTHER THINGS, IMPOSE AS CONDITION THE
PAYMENT OF ROYALTIES.
• XPN: NO PRIOR APPROVAL OR CONDITIONS SHALL BE REQUIRED FOR THE USE OF ANY PURPOSE
OF STATUTES, RULES AND REGULATIONS, AND SPEECHES, LECTURES, SERMONS, ADDRESSES, AND
DISSERTATIONS, PRONOUNCED, READ, OR RENDERED IN COURTS OF JUSTICE, BEFORE
ADMINISTRATION AGENCIES, IN DELIBERATIVE ASSEMBLIES AND IN MEETINGS OF PUBLIC
CHARACTER. (SECTION 176, IPC)
• TV PROGRAMS, FORMAT OF TV PROGRAMS (JOAQUIN V. DRILON, G.R. NO. 108946, JAN. 28,
1999)
• SYSTEMS OF BOOKKEEPING; AND
• STATUTES.
THANK YOU!!!