PHILIPPINES Law and Practice Contributed by: Patricia A O Bunye, Anica Angela G Gomez, Angel Rae N Balbin and Bianca Marie J Angela M Rañola, Cruz Marcelo & Tenefrancia
tered with the SEC and comply with post-registration requirements, such as registration of the taxpayer with the Bureau of Internal Revenue and securing a business permit with the city or municipality where the corporation conducts its business. Other than the foregoing, there are no specific registration require - ments for franchisors and franchisees. As for franchise agreements, which are considered as TTAs, they generally do not need to be registered with the Documentation, Information and Technology Transfer Bureau (DITTB) of the IPOPHL if they com - ply with the requirements of Sections 87 and 88 of the IP Code on prohibited and mandatory clauses, respectively. Non-compliance with any of the provisions of Sec - tions 87 and 88 of the IP Code shall automatically render the franchise agreement unenforceable, unless an application for exemption has been filed with the DITTB and subsequently granted, and the franchise agreement is approved and registered with the DITTB. Section 91 of the IP Code provides that the parties may seek exemption from the application of Sections 87 and 88 by filing a request with the DITTB. Such exemption may be granted only in exceptional and meritorious cases where the arrangement will bring substantial benefits to the economy, such as high technology content, increase in foreign exchange earnings, employment creation, regional dispersal of industries and/or substitution with or use of local raw materials – or in the case of Board of Investments, registered companies with pioneer status. In cases where there are multiple franchise agree - ments, the IPOPHL requires that a separate request for registration and exemption should be made if the parties involved are different. Thus, in the case of a franchisor with multiple franchisees, each franchise agreement with a different franchisee must be regis - tered with the necessary exemption for it to be valid and enforceable. If the franchise agreement involves the licensing of trade marks, it must likewise be recorded with the Bureau of Trademarks (BOT) to be valid against third parties. Moreover, under Section 150 of the IP Code, the franchise agreement must provide for the effective
control by the franchisor of the quality of the goods or services of the franchisee in connection with which the mark is used. In the absence of such provision, or if such quality control is not effectively carried out, the franchise agreement shall not be valid. To record the trade mark licence agreement with the BOT, the DITTB must first issue a Certificate of Compliance certifying that the trade mark licence agreement is cleared for recordal with the BOT. In cases where the franchisee is an MSME, the fran - chise agreement must comply with the minimum terms and conditions set forth under Section 2 of EO No 192 and be registered with the DTI. EO No 192 further requires the franchisor to take responsibility for registering the franchise agreement with the DTI, and to submit an undertaking that all future agreements with MSME franchisees will likewise include the pre - The IPOPHL follows the same procedure for filing requests for the registration and recordal of franchise agreements. However, the parties must specify the subject of their request since the IPOPHL issues sepa - rate certificates for different purposes. In particular, there are three certificates issued by the IPOPHL in relation to franchise agreements. • First, for the registration of franchise agreements with the DITTB, the parties should request a Certificate of Registration, which is issued when a TTA has been granted certain exemptions from the application of Sections 87 and 88 of the IP Code. The Certificate of Registration is a mandatory requirement for a TTA that does not comply with the IP Code to be enforceable. • Second, the parties may request a Certificate of Compliance, which certifies that a TTA does not contain any of the prohibited clauses under Sec - tion 87 of the IP Code and conforms to all the man - datory provisions under Section 88 of the IP Code. In such instance, since the TTA complies with the IP Code, the parties are not required to register the TTA with the DITTB. However, the parties may vol - untarily request a Certificate of Compliance for the purposes of ensuring that the contract is enforce - able, and particularly that the parties may enforce scribed minimum terms and conditions. 3.2 Franchise Registration Process
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