Comprehensive Guide on Copyrights in the Philippines under Mercantile and Taxation Laws

I. Overview of Copyright Law in the Philippines

Copyright is a form of intellectual property that grants creators exclusive rights to their literary, artistic, and scholarly works. In the Philippines, copyright protection is primarily governed by the Intellectual Property Code of the Philippines (Republic Act No. 8293), which provides comprehensive rules on the scope, ownership, and enforcement of copyright, as well as the penalties for infringement. RA 8293 aligns Philippine copyright laws with global standards, notably under the Berne Convention for the Protection of Literary and Artistic Works and the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS).

II. Key Concepts in Philippine Copyright Law

Protected Works
Copyright protection applies to original intellectual creations in the literary, scientific, and artistic domains. These include:
- Books, pamphlets, articles, and other writings;
- Periodicals and newspapers;
- Lectures, sermons, addresses, dissertations prepared for oral delivery;
- Musical compositions, with or without words;
- Dramatic or dramatico-musical compositions, choreographic works;
- Artistic works, such as paintings, sculptures, drawings, and works of architecture;
- Photographic and cinematographic works;
- Illustrations, maps, plans, sketches, and three-dimensional works relative to geography, topography, and architecture;
- Audio-visual works and sound recordings;
- Broadcasts and computer programs;
- Derivative works and compilations that feature original selection, coordination, or arrangement.
Non-Protected Works
Certain works are not eligible for copyright, including:
- Ideas, procedures, systems, methods, concepts, principles, discoveries, or mere data as such;
- News of the day and other miscellaneous facts;
- Official texts of legislative, administrative, or legal nature, as well as their official translations.

III. Rights Granted to Copyright Owners

Economic Rights Economic rights enable the copyright owner to control and monetize their work. These rights include:
- Reproduction – The right to make copies of the work.
- Derivative Works – The right to create adaptations, modifications, or other derivative works.
- Distribution – The right to distribute copies to the public.
- Public Performance – The right to perform the work in public.
- Public Display – The right to display the work publicly.
- Digital Transmission – The right to communicate the work via electronic means.
Moral Rights Moral rights are personal to the author and include:
- Attribution – The right to be recognized as the author.
- Integrity – The right to object to any derogatory modifications.
- Alteration Prevention – The right to prevent others from altering or distorting the work.
Duration of Protection
- For Original Works: Lifetime of the author plus 50 years after their death.
- For Joint Works: 50 years from the death of the last surviving author.
- For Audiovisual Works: 50 years from the date of publication.
- For Anonymous or Pseudonymous Works: 50 years from the date of publication.
- For Photographic Works and Applied Art: 50 years from publication.
Transfer of Copyright
Copyright is transferrable through assignment, licensing, or inheritance. Transfers must be documented in writing and require the author's consent.

IV. Exceptions and Limitations (Fair Use Doctrine)

Under Section 185 of the IP Code, specific uses of copyrighted work are permitted without authorization. These exceptions include:

Educational Use – Reproduction for teaching purposes.
News Reporting – Use in news reporting, commentary, or criticism.
Library and Archive Use – Reproduction by libraries or archives for preservation.
Parody and Satire – Limited use for transformative purposes.
Research and Private Study – Copying for personal, non-commercial research.

V. Copyright Infringement

Definition and Acts of Infringement
Infringement occurs when someone uses copyrighted work without permission or violates the exclusive rights of the owner. Common infringements include:
- Unauthorized reproduction, distribution, or display of copyrighted works.
- Creating unauthorized derivative works.
- Digital infringement, such as illegal downloads and streaming.
Penalties and Remedies
Violators are subject to both civil and criminal penalties:
- Civil Penalties – Damages, injunctions, and payment of profits earned from infringement.
- Criminal Penalties – Fines ranging from PHP 50,000 to PHP 500,000 and imprisonment from one to nine years, depending on the nature and extent of the infringement.
Additional Remedies under the IP Code
- Injunctions – Court orders to stop infringing activities.
- Destruction of Infringing Goods – Destruction or disposal of infringing copies.
- Payment of Damages – Compensatory damages or statutory damages, whichever is greater.

VI. Copyright Collective Management

The Philippines allows collective management organizations (CMOs) to manage the rights of multiple copyright holders. CMOs, like the Filipino Society of Composers, Authors, and Publishers (FILSCAP), facilitate licensing, collection of royalties, and enforcement of rights on behalf of authors and creators.

VII. Tax Implications of Copyright Income

Income Tax on Royalties
Authors and copyright holders in the Philippines must report royalties as part of their taxable income. Under the National Internal Revenue Code (NIRC):
- Resident Citizens – Taxed on royalties at a rate of 10%.
- Non-Resident Aliens – Subject to a 25% final withholding tax on royalties from Philippine sources.
VAT on Licensing and Transfer of Copyrights
Licensing and transfer of copyright are VATable transactions, subject to the 12% VAT rate if the licensor is a VAT-registered entity. Exemptions may apply for educational materials and government-recognized organizations.
Withholding Tax on Foreign Royalties
Foreign entities earning royalties from Philippine sources are subject to withholding tax. Tax treaties may reduce this rate, but applicable procedures for claiming treaty benefits must be followed.

VIII. Copyright and E-Commerce

Online Infringement and Liability
Digital copyright violations have surged with the advent of e-commerce. The Philippine Cybercrime Prevention Act of 2012 (RA 10175) and the Electronic Commerce Act of 2000 (RA 8792) provide specific mechanisms for dealing with digital copyright infringement.
Notice and Takedown Procedures
Platforms must establish notice and takedown systems, allowing copyright holders to notify service providers of infringing content. Providers must promptly remove infringing material to avoid liability.
Digital Rights Management (DRM)
The law recognizes DRM tools as enforceable mechanisms. Circumvention of DRM is considered an infringement, and violators are subject to the same penalties applicable to other forms of copyright violations.

IX. Practical Tips for Copyright Holders

Registration
Although copyright protection is automatic upon creation, authors are encouraged to register their works with the National Library or the Intellectual Property Office of the Philippines (IPOPHL). Registration provides additional evidentiary value in infringement cases.
Regular Monitoring
Copyright owners should monitor the use of their work, especially online. Tools like IPOPHL’s Intellectual Property Rights Enforcement Office (IEO) offer support in handling complaints and enforcement requests.
Legal Representation
Authors and copyright owners are advised to engage IP lawyers or copyright experts to navigate licensing, enforce rights, and handle disputes effectively.

This comprehensive guide should serve as a solid foundation for understanding the scope and enforcement of copyright laws in the Philippines, as well as the rights, protections, and legal implications for creators under Philippine mercantile and taxation laws.