III. Licensing and Other Regulatory Provisions
SECTION 13. Licensing and Registration. – Any person, establishment or entity shall, prior to engaging in one or more of the businesses or activities enumerated hereunder, register with, and secure the appropriate licenses from the OMB:
(a) Importation, exportation, acquisition, sale or distribution of optical media, manufacturing equipment, parts and accessories and manufacturing materials used or intended for use in the mastering, manufacture or replication of optical media;
(b) Possession or operation of manufacturing equipment, parts and accessories, or the possession, acquisition, sale or use of manufacturing materials for the mastering, manufacture or replication of optical media; and
(c) The mastering, manufacture, replication, importation or exportation of optical media.
With respect to the preceding paragraph (c), the licenses issued by the OMB are conditions precedent for securing the necessary business permits, licenses or registration from the appropriate authorities, and shall also be a necessary requirement to the release of manufacturing equipment, parts and accessories, and materials intended for use in mastering and/or manufacturing optical media, from customs or economic zones exercising independent customs laws.
Those engaged or intending to engage in more than one of the abovementioned activities and/or conduct or intend to conduct business in more than one location shall separately register with and secure the license from the OMB for every business activity at each place of business.
No business activity registered and licensed by the OMB for a specific place of business shall be conducted in a place and/or location other than that indicated in the license, without the prior written approval of the OMB. The registration and license issued by the OMB shall be prominently displayed at the designated place of business.
SECTION 14. Form, Term, Amendment and Renewal of License. – Every license shall be in a form prescribed by the OMB and shall be valid for a period of three (3) years subject to conditions as the OMB may impose. The OMB may amend or renew a license upon application made by the licensee in accordance with this Act. Failure to register and obtain a license from the OMB shall automatically cancel any permit, license or registration issued by any national or local government unit, agency or office.
SECTION 15. Grounds for Non-issuance or Non-renewal of License. – The OMB may refuse to grant a license, or to renew a license, upon the following grounds:
(a) The applicant has failed to comply with any requirement imposed by the Board pursuant to this Act and its implementing rules and regulations;
(b) The applicant or, in the case of juridical persons, any of its officers, directors, managers, shareholders, or partners, is convicted by final judgment of an offense under this Act or any law relating to the protection of intellectual property rights;
(c) The application involves a place, location or premises where an offense has been committed under this Act or under any law relating to the protection of intellectual property rights: Provided, That the offenders have finally been convicted of such offense;
(d) The applicant has furnished the OMB with any false or misleading information in connection with any application for or renewal of a license; or
(e) The applicant has been previously issued a license that has been cancelled for cause within the preceding five (5) years from the date of the application.
The OMB shall decide whether or not to grant or renew a license within fifteen (15) working days from the filing of the application.
SECTION 16. Grounds for Suspension or Cancellation of License. – The OMB may, motu proprio or upon motion of any interested party, after notice and bearing, suspend or cancel a license on any of the grounds provided in the preceding section, and on any of the following grounds:
(a) when requested by the license holder;
(b) when the license holder has ceased to engage in the activities authorized under the license or in the place, location or premises indicated in the license;
(c) when the license holder has been convicted of an offense under this Act or under any other law relating to the protection of intellectual property rights; or
(d) when the license bolder is in breach of, or is unable to comply with any of the conditions prescribed in the license.
SECTION 17. Registration of Present Licenses. – All existing establishments or entities in the Philippines engaged in activities enumerated in Section 13 shall, within thirty (30) calendar days after the effectivity of the rules and regulations implementing this Act, register with and secure the necessary licenses from the OMB.
SECTION 18. Source Identification (SID) Codes. – The OMB shall determine, develop and/or adopt a system of Source Identification (SID) codes that is of international recognition and acceptance.
The OMB shall prescribe SID codes for all persons, establishments or entities registered with and licensed by the OMB to engage in the mastering, manufacture or replication of optical media, including such other codes as it may determine or require. Such codes shall be applied to each and every optical media mastered, manufactured or replicated including glass masters, stampers or other parts used for the manufacture of optical discs.
The SID Codes shall be visible and legible and must conform to such specifications as prescribed by the OMB.
IV. Penal Provisions
SECTION 19. Offenses and Penalties. –
(a) Imprisonment of at least three (3) years but not more than six (6) years, and a fine of not less than Five hundred thousand pesos (Php 500,000.00) but not exceeding One million five hundred thousand pesos (Php 1,500,000.00), at the discretion of the Court, shall be imposed on any person, natural or juridical, who shall:
(1) Engage in the importation, exportation, acquisition, sale or distribution of, or possess or operate manufacturing equipment, parts and accessories without the necessary licenses from the OMB;
(2) Engage in the mastering, manufacture, replication, importation or exportation of optical media without the necessary licenses from the OMB;
(3) By himself, or through another, cause the mastering, manufacture or replication of any intellectual property in optical media intended for commercial profit or pecuniary gain without authority or consent of the owner thereof;
(4) Engage in the mastering, manufacture or replication of optical media without affixing or installing in the resulting products the SID Code, and/or such other codes prescribed, assigned and authorized by the OMB. The absence of the codes prescribed, assigned and authorized by the OMB in any optical media shall be prima facie evidence that said optical media are in violation of this Act;
(5) Engage in the mastering, manufacture or replication of optical media using, affixing or installing in the resulting products false SID or other codes. The presence of false or unauthorized codes shall be prima facie evidence that said optical media are in violation of this Act;
(6) Engage in the mastering, manufacture or replication of optical media using, affixing or installing in the products the SID Codes, and/or other codes that have been assigned by the OMB to another person, or, having been assigned and authorized said codes by the OMB, allow or authorize another person, establishment or entity to use, affix or install such codes in the latter’s products;
(b) Imprisonment of at least one (1) year but not more than three (3) years, and a fine of not less than One hundred thousand pesos (Php 100,000.00) but not exceeding Five hundred thousand pesos (Php 500,000.00), at the discretion of the Court, for the following offenses:
(1) Engaging in the importation, exportation, sale, or distribution of, or possess or acquire in commercial quantities manufacturing materials used or intended for use in the mastering, manufacture or replication of optical media without the necessary licenses from the OMB;
(2) Knowingly performing or rendering the service of mastering, manufacture or replication of optical media, after having been licensed by the OMB, to any person, in respect of any intellectual property, who does not have the consent by the owner of the intellectual property or his representatives or assigns;
For this purpose, any person, establishment or entity that is licensed by the OMB to engage in the abovementioned activities shall be considered to have acted in good faith in respect of any transaction entered into by him in respect to the preceding paragraph, if he notifies the OMB of such transaction within five (5) working days from receipt of the order, furnishing to the OMB all material information thereof;
(3) Refusing to submit to inspection by the OMB, or surrender for preventive custody any optical media, equipment, manufacturing materials including parts, accessories and paraphernalia found during inspection operations to be in violation of the provisions of this Act;
For purposes of this subsection, violators who employ armed resistance against authorized agents of the OMB shall be penalized under other applicable laws in addition to those provided in this Act; and
(c) Imprisonment of at least thirty (30) days but not more than ninety (90) days or a fine of not less than Twenty-five thousand pesos (Php 25,000.00) but not exceeding Fifty thousand pesos (Php 50,000.00), at the discretion of the Court:
(1) Knowingly possessing items of the same content or title, produced in violation of this Act, and used for the purpose of sale, rental, distribution or any other commercial purpose with the intent to profit;
(2) Engaging in the sale, rental, distribution, importation, exportation of, or any other commercial activity involving optical media that are in violation of this Act.
(d) For subsequent offenses in Section 19(a), uniform imprisonment of six (6) years but not more than nine (9) years and a fine of not less than One million five hundred thousand pesos (Php1,500,000.00) but not exceeding Three million pesos (Php3,000,000.00), at the discretion of the Court, shall be imposed.
(e) For subsequent offenses in Section 19(b), uniform imprisonment of three (3) years but not more than six (6) years and a fine of not less than Five hundred thousand pesos (Php500,000.00) but not exceeding One million five hundred thousand pesos (Php1,500,000.00), at the discretion of the Court, shall be imposed.
The offenses listed under this section shall be punished without prejudice to the application of appropriate penalties or sanctions provided under Section 216 and such other appropriate sections of the IP Code or Republic Act No. 8792 also known as the Electronic Commerce Act, the Revised Penal Code or other applicable laws.
SECTION 20. Determination of Penalties. – In determining the number of years of imprisonment, or amount of fine to be imposed, the Court shall consider the size of the operations of the offender, the value of the articles involved in the violation, and the period of violation. In imposing administrative penalties, the OMB shall likewise consider the said circumstances.
SECTION 21. Persons Liable. – If the offender is an alien, the person shall immediately be deported after serving his sentence, and shall, thereafter, be refused entry into the country.
If the offender is a government official or employee, he shall suffer perpetual disqualification from public office and forfeiture of his right to vote and participate in any public election for ten (10) years.
Should the offense be committed by a juridical person, the stockholder, chairperson, president, officer, director, trustee, partner or manager responsible for such violation, shall be liable.
SECTION 22. Enforcement. – The OMB may solicit the direct assistance of other agencies, the managing authorities in the economic zones and instrumentalities of the national and local governments, and may deputize, for a limited period, the heads or personnel of such agencies and instrumentalities to perform enforcement functions of the OMB. The government agencies and instrumentalities deputized or providing assistance in the enforcement functions for the OMB, insofar as such functions are concerned, shall be subject to the direction and supervision of the OMB.
SECTION 23. Disposal of Seized Materials. – Any optical media, equipment or materials found to be in violation of the provisions of this Act, and any books, records or paraphernalia providing evidence of any violation committed by any person, establishment or entity, shall be confiscated and forfeited in favor of the government and shall be disposed in accordance with pertinent laws and regulations: Provided, That confiscated optical media may, pending consideration of the case, be immediately destroyed upon final determination by the OMB in an administrative case, or by a court in a civil or criminal case, that the same are in violation of this Act: Provided, further, That a sufficient representative sample shall be retained for evidentiary purposes.
The retained representative sample shall remain in custodia legis until the final resolution of proceedings thereon.
Equipment and materials imported in violation of this Act shall be subject to seizure and immediate disposal by the Bureau of Customs.
IV. Transitory Provisions
SECTION 24. The Videogram Regulatory Board (VRB) and Secretariat. – The incumbent Chairperson, Vice-Chairperson, members of the Board and Secretariat shall continue to perform their duties and functions in a hold-over capacity, and shall receive their corresponding salaries and benefits until such time that the new Chairperson and at least majority of the Board shall have been appointed and qualified.
The present officials and employees of the VRB shall be given priority, on the basis of experience, merit and fitness, in appointments to new positions to which they may qualify under the new staffing pattern: Provided, That those who shall be given new appointments shall be entitled to all compensation and benefits due them under existing laws: Provided, farther, That those who shall be separated from service shall receive all separation pay and benefits due them under existing laws.
The transition period shall not exceed six (6) months after the effectivity of this Act.
SECTION 25. Transfer of Funds, Assets, Liabilities and Records. – All unexpended appropriations, real and personal property, contracts, records, documents and assets and liabilities of the VRB shall be transferred to the OMB.
SECTION 26. Regulation of Magnetic Media. – The provisions of this Act shall apply mutatis mutandis to the regulation of magnetic media.
SECTION 27. Classification of Motion Pictures and Cinematographic Works. – The classification for audience suitability of motion pictures and cinematographic works in optical media including related publicity materials thereto shall be the function of the Movie and Television Review and Classification Board (MTRCB).
SECTION 28. Prosecution of Pending Cases. – For the purpose of this Act, all pending cases for violation of Presidential Decree No. 1987 shall continue to be prosecuted.
V. Miscellaneous Provisions
SECTION 29. Organizational Structure. – The organizational structure and staffing pattern of the OMB shall be established in coordination with the Department of Budget and Management (DBM) and in accordance with Civil Service laws, rules and regulations.
SECTION 30. Period of Implementation. – The OMB and the DBM shall prepare the necessary work programs to cover the staggered implementation of this Act for a period not exceeding five (5) years.
SECTION 31. Appropriations. – The appropriations for the VRB under the current General Appropriations Act shall be used to carry out the initial implementation of this Act. Thereafter, such sums as may be necessary for its implementation shall be included in the annual General Appropriations Act.
SECTION 32. Annual Report. – The OMB shall, within ninety (90) days after the end of every fiscal year, submit to the President and to Congress an annual report on its accomplishments under this Act, together with its plans and recommendations to improve and develop its capability to enforce the provisions of this Act, and a complete accounting of transactions with respect to the use of income.
SECTION 33. Congressional Oversight Committee on the OMB. – The Congressional Oversight Committee on the Optical Media Board (COC-OMB) shall be composed of the Chairs of the Senate Committees on Public Information and Mass Media and Trade and Commerce and the House of Representatives Committees on Trade and Industry and Public Information, and two (2) members each from the Senate and the House of Representatives who shall be designated by the Senate President and the Speaker of the House of Representatives: Provided, That one (1) of the two (2) Senators and one (1) of the two (2) House Members shall be nominated by the respective Minority Leaders of the Senate and the House of Representatives.
The COC-OMB is hereby mandated to oversee the implementation of this Act for a period of five (5) years. For this purpose, the COC-OMB shall set the guidelines and overall framework for the monitoring of the implementation of this Act and shall adopt its internal rules of procedure.
The Secretariat of the COC-OMB shall be drawn from the existing Secretariat personnel of the Senate and House of Representatives Committees comprising the COC-OMB.
To carry out the powers and functions of the COC-OMB, the initial sum of Five million pesos (Php 5,000,000.00) shall be charged against the current appropriations of Congress. Thereafter, the amount necessary for its continued operations shall be included in the annual General Appropriations Act.
SECTION 34. Implementing Rules and Regulations. – The OMB shall, within three (3) months from the effectivity of this Act, submit to the COC-OMB, the implementing rules and regulations (IRR) governing this Act. The COC-OMB shall approve the IRR within thirty (30) days.
SECTION 35. Separability Clause. – If, for any reason, any provision of this Act is declared invalid or unconstitutional, the other sections or provisions not so declared shall remain in full force and effect.
SECTION 36. Repealing Clause. – Presidential Decree No. 1987 is hereby repealed. Presidential Decree No. 1986 or the MTRCB Law and all other laws, rules, regulations, decrees, executive orders and other issuances or parts thereof which are inconsistent with the provisions of this Act are hereby repealed or modified accordingly.
SECTION 37. Effectivity. – This Act shall take effect fifteen (15) days after its publication in the Official Gazette or in at least two (2) newspapers of general circulation.
