AJA with IPO x IPAP Event

NFT ART AS AN AVENUE TO SHOWCASE PH TALENT

On the photo: Top row (L-R): AJA Law’s Managing Partner Atty. Joseph James Joaquino Jr., Mr. Luis Buenaventura, IPO Director General Rowel S. Barba, IPAP President Atty Alex Ferdinand S. Fider, IP Academy Director Frederick Romero

Bottom row (L-R): AJA Law’s Partner Atty. Mercedes Torrijos Joaquino, AJA’s Law’s Partner Atty. Pearl Ganzon Alcantara, IPAP Corporate Secretary Atty. Katrina V. Doble, and IPAP External Vice President Atty. Abelaine T. Alcantara

The Philippines is at the start of the NFT Art Story, with NFTs democratizing entry in the art field and allowing Filipinos to showcase their talent globally.

Luis Buenaventura, NFT artist and entrepreneur

In the Philippines, an ongoing survey by finance platform Finder states that around 2 million Filipinos own NFTs, with men twice more likely to own an NFT than women.1 In the United States, ownership of NFTs has doubled since 2021 with approximately 9 million saying they have owned NFTs, according to a recent survey by Security.org.2

Why have NFTs grown so popular, and what does this mean for Filipino artists?

The rise in non-fungible tokens or NFTs has attracted the attention of creatives who want to publish their art online, enthusiasts who are looking to invest in digital assets and intellectual property (IP) practitioners, and regulators who seek to protect the ownership and rights of artists and buyers alike. 

Virtual assets such as NFTs are described by the Bangko Sentral ng Pilipinas (BSP) as digital units that can be digitally traded, transferred, or used for payment or investment purposes.3 An NFT is a unique digital asset which could be a photo, painting, short video clip, animated GIF, collectible, etc. that can be bought with cryptocurrency. An original receipt or token is coded to the artwork, which causes the artwork to be non-fungible or non-replaceable. Once a sale is done, the transaction is recorded in a massive public ledger of cryptocurrency transactions or the blockchain.4

NFT webinar brings together crypto and IP experts

The Intellectual Property Office of the Philippines (IPOPHL), in partnership with the Intellectual Property Association of the Philippines (IPAP), organized a hybrid webinar event entitled “NFTs 101: How to Take Your Artwork to the Digital World” on September 29, 2022, which was attended by over 250 participants onsite and online.

IPOPHL Director General Rowel Barba welcomed the audience of lawyers, entrepreneurs, compliance officers, and IP practitioners. Entrepreneurs Mr. Luis Buenaventura of Yield Guild Games and Mr. Brian Poe Llamanzares of minting platform Artifract.io were invited as panel speakers to share their perspectives on cryptocurrency and selling NFT art. Attorneys Joseph James Joaquino, Jr. and Pearl Alcantara, founding partners of Alcantara Joaquino Alcantara Law (AJA Law), a law firm specializing in tech, media, e-commerce, and intellectual property rights, imparted insights on NFT limited use licenses, intellectual property rights and potential regulatory frameworks to navigate the crypto landscape.

When an artist wants to create an NFT, they can upload their artwork to NFT platforms like OpenSea, NiftyGateway, or MakersPlace. Similar to galleries or marketplaces, these platforms promote and curate their different artists who can mint the NFT, subject to “gas fees” which is paid to blockchain miners to process the transaction into the blockchain.5 Since NFT art is secured by blockchain technology, once an NFT is sold, the sale and all succeeding resales or transfers of ownership are recorded on the blockchain. Even if a reproduction of the artwork is posted somewhere on the Internet without the owners’ consent, the receipt coded to the non-fungible token will prove that the original NFT is with the buyer. Certain NFTs also give artists Droit de suite,6 the ability to receive royalties or a share from the resale value of their work in case of subsequent sales as stated in the Intellectual Property Code of the Philippines.7 

Atty. Alcantara, who has extensive experience in IP and corporate law, was quick to point out that when a buyer purchases an NFT, the buyer owns the token but does not own the underlying asset or the artwork. The copyrights of the underlying asset, whether a digital painting, video clip, or a photo, are retained by the artist. The buyer can enjoy limited use of the NFT art depending on rights granted by the NFT creator, e.g. downloading the artwork and reusing it as one’s avatar or as Facebook profile image. 

Promotion and Protection of NFT Artists encouraged by AJA Law

While access to cultural hubs like Tokyo or New York is somewhat limited for Filipino artists, Mr. Buenaventura believes that the entry of budding local talents can be democratized through NFT art. He started the CryptoPop Art Guild to boost support for over 200 underprivileged local artists: the organization provides artists the materials to create art, and host training on how artists can promote themselves in the crypto landscape.8

When Atty. Joaquino was asked about the future of NFTs in the country, he said that Filipinos are crypto-savvy and highly adaptable to new technology. With enterprises also entering the NFT scene, there has to be regulatory certainty and regulatory adaptability for blockchain technology to prosper. Having regulations in place will bring clarity and stability to businesses – they would have guidelines on how to operate legally in the country.

According to BSP Circular 1108, Virtual Asset Service Providers (VASPs) would need to secure a Certificate of Authority to operate as a money service business.3 However, a 3-year moratorium on VASP registration was imposed by the central bank starting September 1, 2022. BSP Governor Felipe Medalla said that the halt in accepting new registrations would shift the focus to “assessing existing VASPs’ overall performance and risk management systems”.9

Aside from regulatory uncertainty, another challenge NFT creators face is security. Atty. Joaquino warned that smart contracts, which contain the agreement and enforce ownership of the NFT, 10  could be hacked or exploited due to a loophole. Additionally, NFTs could be stolen in multiple ways such as a hacker getting access to one’s crypto wallet or an NFT creator mistakenly entering a phishing site that mirrors the legitimate NFT platform. Due to the anonymity of wallets, it is therefore difficult to detect if the NFT uploader is the original creator or if they have a full and absolute title to the artwork. In these instances, the rise of crypto insurance could be beneficial to the NFT creators.

For NFT enthusiasts who want to support artists or grow their crypto art collection, Atty. Alcantara encouraged buyers to conduct due diligence when purchasing NFT art and understand the rights that they are entitled to once they purchase an NFT. Mr. Llamanzares gave tips on selecting NFTs, “Look at the companies behind them. What are they trying to do? Who are the people that they are working with?”

PH still at the start of NFT Art Story

There is much uncertainty regarding NFTs and their utility as blockchain technology matures further and regulatory frameworks are established. NFT creators should be clear on the scope and usage that they are extending to their buyers, and are encouraged to consult IP professionals regarding their rights on the underlying assets. For anyone looking to begin their NFT art journey, the panel speakers shared some questions to ponder on,

“What type of project do I want to do?”

“What kinds of rights do I extend to my buyers for the NFTs I create?”

“What is my purpose in creating NFTs – to make money? To build a brand? To create a community? To democratize art?”

Despite the uncertainty, one thing is for sure: creativity will find a way to be discovered and shared. Whether that is through NFTs, social media, or more traditional channels, Filipino talent always shines through.

We hope this helped provide information on NFTs and how you can get started. Stay tuned for more articles. 

On the photo (L-R): AJA Law’s Lawyers; Atty. Jermile L. Salor, Atty, Mercedes Torrijos Joaquino, Atty. Pearl Ganzon Alcantara, and Atty. Joseph James Joaquino Jr.

If you have questions or would like to know more about NFTs, get in touch with us.

FOOTNOTES

1. Richard Laycock, (4 October 2022), [Key Filipino NFT adoption trends for September 2022], [Report] https://www.finder.com/ph/nft-statistics

2. Aliza Vigderman, (26 July 2022), [NFT Awareness and Adoption report], [Media report] https://www.security.org/digital-security/nft-market-analysis/#:~:text=In%202022%2C%20four%20percent%20of,100%20percent%20increase%20from%20202

3. Bangko Sentral ng Pilipinas, (21 January 2021), [Circular No. 1108, Series of 2021: Guidelines for Virtual Asser Service Providers], [Circular] https://www.bsp.gov.ph/Regulations/Issuances/2021/1108.pdf

4. Ethereum.org, [Sec. How do NFTs work?, Non-fungible Tokens] https://ethereum.org/en/nft/

5. Randy Ginsburg, (1 June 2022), [What are Gas Fees and How can we Fix Them?], [Blog post] https://nftnow.com/guides/what-are-gas-fees-and-how-can-we-fix-them/

6. AJA Law, (6 October 2022), [An Artist’s Right], [Article] https://www.ajalaw.ph/an-artists-right/

7. (6 June 1997) [Id. Sec. 2(m), Rule I. of Republic Act no. 8293 An Act Prescribing the Intellectual Property Code and Establishing the Intellectual Property Office, Providing for Its Power and Functions and for Other Purposes], [Law] https://www.officialgazette.gov.ph/1997/06/06/republic-act-no-8293/

8. Waren de Guzman, ABS-CBN (28 April 2022), [Filipino artists seen to benefit from NFT art: stakeholders], [News Article] https://news.abs-cbn.com/business/04/28/22/filipino-artists-seen-to-benefit-from-nft-art

9. Rappler.com, (12 August 2022), [BSP imposes 3-year moratorium on virtual asset service providers licensing] [Article] https://www.rappler.com/business/bangko-sentral-pilipinas-imposes-moratorium-virtual-asset-service-providers-licensing/

10. Binance.com, (5 August 2022) [All You Need to Know About NFT Smart Contracts], [Blog Post] https://www.binance.com/en/blog/nft/all-you-need-to-know-about-nft-smart-contracts-568745413587703085

5 Things You Need to Know About the SIM Registration Act

The Subscriber Identity Module (SIM) Registration Act is a new law that aims to mitigate the proliferation of text scams in the country. This is the first law signed by President Ferdinand “Bongbong” Marcos Jr.

The original bill was approved by the 18th Congress, however, former President Rodrigo R. Duterte vetoed the bill last April 2022 due to the last-minute insertion of the mandatory social media registration provision that required users to disclose their real name and phone numbers upon creation of the account. This provision is no longer in the current SIM Registration Act.

Under the current measure, all SIM cards sold are in a deactivated state, and end-users are required to register their SIMs with the concerned Public Telecommunication Entity (“PTE” or “Telcos”). 

Here’s what you need to know:

What information should you provide?

All new and existing SIM subscribers should fill out and provide the following details in an electronic registration form provided by Telcos:

  1. Full name
  2. Address
  3. Date of birth
  4. Sex
  5. Assigned mobile number and its serial number

To verify the identity of the SIM subscribers, they should also present a government-issued ID.

When buying a SIM for someone else, you must be authorized through a duly notarized Special Power of Attorney and present an original and true copy of any valid identification document with a photo of both the principal and representative.

Foreign nationals are required to register their name, nationality, passport number, and address in the Philippines. 

In case of Tourists visiting for not more than thirty (30) days, they are required to present their passport, proof of address in the Philippines, and return ticket to their own country or any other ticket showing the date and time of their departure from the Philippines.

For foreign nationals in the country who either work or study in the Philippines, they must present their passport, proof of address in the Philippines, Alien Employment Permit from the Department of Labor and Employment, Alien Certificate of Registration Identification Card or ACRI-Card from the Bureau of Immigration, school registration ID for students, or other pertinent documents.1 

For minors, the registration of a SIM shall be under the name of the minor’s parent or guardian, provided that the minor’s parent or guardian shall give their consent and register the SIM.

When should you register?

Since it is the responsibility of the Telco to provide the SIM Register, we are to wait for further announcements from them on when and how to register.

New SIM subscribers must register their SIMs as a prerequisite to its activation. 

On the other hand, all existing SIM subscribers must also register their SIMs within 180 days from the effectivity of the law. 

Failure to register will authorize immediate deactivation of the SIM. Deactivated SIM may only be revived after registration.

Who keeps your information?

The SIM Registration Act requires Telcos to keep the electronic registration form in their database. The database shall strictly serve as a SIM Register to be used by Telcos to process, activate or deactivate a SIM or subscription and shall not be used for any other purpose.

What are the safeguards in place to protect my information?

Telcos are mandated to ensure at all times the security and protection of the subscribers’ data. The Telcos shall comply with the minimum information security standards prescribed by the DICT consistent with internationally accepted cybersecurity standards and relevant laws, rules, and regulations.

The DICT shall establish and perform an annual audit on Telcos’ compliance with information security standards

Pursuant to SIM Registration Act, any information and data obtained in the registration process are treated as absolutely confidential and shall not be disclosed to any person.

How can someone access your records?

Notwithstanding the confidentiality clause, disclosure can be made in any of the following instances:

  1. In compliance with any law obligating the Telcos to disclose such information in accordance with the provisions of the Data Privacy Act of 2012;
  2. In compliance with a court order or legal process upon finding of probable cause;
  3. Upon the issuance of a subpoena by a competent authority pursuant to an investigation based on a sworn complaint that a specific mobile number was or is being used in the commission of a crime or that it was utilized as a means to commit a malicious, fraudulent or unlawful act, and that the complainant is unable to ascertain the identity of the perpetrator.
  4. With the written consent of the subscriber. 

More information on the workings of the law should be answered in the implementing rules and regulations to be issued by the National Telecommunications Commission (NTC), in close coordination with the DICT, Department of Trade and Industry (DTI), the National Privacy Commission (NPC), PTEs, and major consumer groups.2

FOOTNOTES

  1. Philstar Global, (10 October 2022), [A new law now requires SIM card registration. What happens next?], [News Article] ​https://www.philstar.com/headlines/2022/10/10/2215656/new-law-now-requires-sim-card-registration-what-happens-next
  2. Abarca, Charie Mae F., (10 October 2022), [IRR of SIM Registration Act to be crafted, polished in 60 days – NTC], [News Article] https://mb.com.ph/2022/10/10/implementing-rules-and-regulations-of-sim-registration-act-to-be-crafted-polished-in-60-days-ntc/​
What's new: A new law for filipino creatives

What’s New? A New Law for Filipino Creatives

Art Fair Philippines, (2020), [Collage of Visayan Artworks], [Photograph]1

Hollywood just featured the first film starring a Fil-Am cast in “Easter Sunday.” Years ago, the sensational song “Let It Go” was composed by a FilAm talent. Filipinos are working for Disney animation, Rachelle Ann Go is a successful theater actress in London, and Lea Salonga is one well-known Broadway actress for decades now. Clearly, the Filipinos do not lack creative talent. 

Assistant Secretary Glenn Peñaranda of DTI said “there are approximately 2 to 3 million creative freelancers working locally, while 1.5 million creatives handle international projects” 2. As early as 2009, the Creative Industries contributed 5.44% of the country’s GDP3 and has seen an increase as of present time. In 2019, the creative industry had a projected value of P1.27 trillion and accounts for 7% of the GDP (Gross Domestic Product) of the country.4

With the rise of the “gig economy”, where one does not have to be fully employed to work for any company, Filipinos have been able to secure multiple projects at a time which includes jobs for both domestic and international clients through digital means. Payment gateways Paypal, Payoneer, and Upwork estimate 1.12 to 1.5 million Filipinos are receiving salaries through creative gigs.5 Imagine the number of Filipinos that are highly productive already in this industry! It is also worth noting that due to the pandemic, a portion of the labor force lost their jobs and moved to contractual jobs that are home-based. While there is no official data yet regarding this, you can just observe your circles of family and friends and can attest that indeed, the creative industries have opened so many opportunities for profitable work.

We see that the country does not run low on talents, while the private sector, both locally and abroad, continues to need the creative work that Filipinos provide. Now, the government has taken notice and has taken the next step by legalizing provisions focused on growing the industry. The creative future looks bright as the Joint Foreign Chambers in the Philippines (JFC) affirms that “[w]ith the enactment of RA 11904, the Philippines is well-placed to reach its goal of becoming the leading creative economy in Southeast Asia by 2030.” 6

Number One Creative Economy in Southeast Asia in 8 years, are we ready?

Fortunately, Congress has begun to boost the Philippines to catch up with the fourth industrial revolution – as inevitably, the future is creative. The Philippine Creatives Industries Development Bill was authored and sponsored in July 2021 by a creative, Congressman Toff De Venecia. After a year of diligent work with various industry stakeholders, it became law on July 28, 2022, as Republic Act 11904 or the Philippine Creative Industries Development Act (PCIDA).

Rep. Christopher V.P. De Venecia on House of Representatives of the Philippines, Author and Sponsor of the Bill in Congress7

As the roll-out begins, we can expect more activity, visibility, and impact in the next months and years to come. We are hopeful that the present administration allocates sufficient budget so that the interesting and beneficial provisions of this law may serve the Filipino creatives. 

Dr. Bernardo M. Villegas, an expert in Economics, states that the implementation strategy should include working with the private sector and the academe. To grow the creative economy from  6.52% of GDP to 15% by 2030, a focus on exporting creative talents should be prioritized- this means that the academe must create programs centered on honing creative expertise among students, the local government and tourism offices shall create creative zones and cities where encouraging local businesses to invest in creative enterprises, events and festivals shall be an area of focus as well. [e]

There is no doubt that the Filipinos are talented. Private businesses are continually opening and expanding businesses that provide creative services. What we look forward to most now, especially with the passing of PCIDA, is an aggressive boost from the government’s efforts. Let us discuss this new law.

Is this law for you?

Creative industries are defined in the law as trades involving persons that produce cultural, artistic, and innovative goods and services originating in human creativity, skill, and talent and having a potential to create wealth and livelihood through the general and utilization of intellectual property.

Let us establish the various categories that belong in the creative industries:

  • Audiovisual Media Domain
  • Digital Interactive Media Domain
  • Creative Services Domain
  • Design Domain
  • Publishing and Printed Media Domain
  • Performing Arts Domain
  • Visual Arts Domain
  • Traditional Cultural Expressions Domain
  • Cultural Sites Domain
  • Other domains and industries that may be determined by the Philippine Creative 
  • Industries Council (Council)

What Should I Expect From It?

This new law mandates the national government to promote the developments and the rights afforded to the Philippines’ creative industry and Filipino creatives. Primarily, this law will execute the creation of a Philippine Creative Industries Development Council (PCIDC), an attachment agency to the Department of Trade and Industry (DTI).

How important is it for you to get acquainted with the PCIDC? Very! In fact, we suggest following them the moment PCIDC activates its online pages,  so you can track the different programs of this agency. Keep in mind that their mandate is to protect and nurture the excellence of the movers of the Philippine industry. As a vital contributor to the economy, it would be right for creatives to take advantage of the programs that will be funded and executed through the Council.

Who or What is PCIDC?

The Council is created to take charge of the promotion, development, and expansion of opportunities for the creative industries in the country. It has been given authority and is in charge of planning and policy formulation, issuance of guidelines in relation to private sector participation, and assistance in monitoring and protection of intellectual property rights and indigenous cultural properties being utilized for commercial purposes, among others.

The law further protects creative industries by establishing a Creative Workers’ Welfare Committee, which shall be responsible for ensuring that creative freelancers and workers have access to sustainable and dignified work in the creative industries.

Here is a run-through of all other rights provided under this law:

Infrastructure Support. Shared service facilities, infrastructure support programs to be provided under DTI and the Philippine Innovation Act. This will include provisions for subsidized rental schemes for studios and venues. Co-working spaces and other similar facilities and hardware that may be accessed by the creatives. The government shall give preference for Micro, Small, and Medium Enterprises (MSMEs) in fulfilling these.Research and Development (R&D) and Innovation Support. Entities may avail of the research and development support program of the Department of Science and Technology (DOST) that includes financial support for research projects related to the creative industries. 
Digitalization of the Creative Industries. This will include access to digital services and training platforms. Technical and financial assistance programs for digital content distributors, provision of high-speed infrastructure and bandwidth through the Department of Information and Communications Technology (DICT) and the National Telecommunications Commission (NTC). Access to Credit and Financial Statements. Government-owned, -controlled, or -supported financial institutions are mandated to give priority to creative industries in providing credit assistance and guarantee schemes.
Other Fiscal Incentives. Entities whose activities are listed in the Creative Industries Investment Priority Plan (CIIPP) may avail of fiscal incentives provided under the Corporate Recovery and Tax Incentives for Enterprises Act.Creative Voucher System. Creative voucher system shall be created in order for institutions to have a more systematic means of giving aid and support to creative industries entities. Again, MSMEs are to be given preference as suppliers.
Creative Instruction and Education. The Department of Education (DepEd), Commission on Higher Education (CHED), and Technical Education and Skills Development Authority (TESDA) are mandated to establish a Creative Educational Plan and supporting programs towards human resource development, audience capacity-building, and consumer empowerment. One-Stop Registration Center. The Negosyo Centers in LGUs shall extend its services as a one-stop shop for creative industries MSMEs or entrepreneurs in availing government services such as, but not limited to, intellectual property registration, product and business registration, loans, grants, and benefits programs.
Creative Industry Data and Information Management. The Philippine Statistics Authority shall set up a satellite account and a system of data collection and management for creative industries.The Philippine Creative Cities Network (PCCN). PCCN shall aid in incubating cities that wish to explore their creative resources, and in accelerating emerging creative cities towards the accreditation by the UNESCO to form part of the UNESCO Creative Cities Network.
Local and Cultural Arts Councils. All local government units (LGUs) shall establish a Local and Cultural Arts Council for better and more efficient implementation of this law.

Remember September!

Philippine Creative Industries Month is also established as a provision of this lawthis will be the month every year when raising awareness and the celebration of the creative industries is highlighted.

Sounds exciting right? 

It seems like our lawmakers want to maximize opportunities, support, and provisions for the creative industries and we are all onboard! We see both the demand from businesses and supply from talents grow. Now with the government’s laid out strategies and focus, this law is meant to be impactful in the day-to-day operations and growth of so many professionals. The nation’s goal is to continue to expand this industry and secure our spot as the top creative hub in Asia by 2030. We’re excited to catch up with the rest of the world!

If you are in this industry- whether old or new, we hope to remind you that you are entitled to valuable rights, not just as an artist but as one with business interests. There is a framework that  can allow you to commercialize your creative works and we can guide you through this so you may maximize the returns of your creative labor.  A legal team with knowledge and expertise in this specific industry can propel you and your team to navigate this industry better. As the country heads toward increasing opportunities for these creative industries,  our firm is eager to work and advocate for creatives like you to make sure that you are protected and can commercially benefit from your talents and hard work.

Indeed, the future is creative, what are you most excited about this new law? Share in the comments or send us a message if you have some questions!

FOOTNOTES

  1. Art Fair Philippines, (2020), [Collage of Visayan Artworks], [Photograph], link: https://www.adobomagazine.com/philippine-news/arts-long-overdue-visayan-art-takes-the-spotlight-in-this-years-art-fair-ph/
  2. Department of Trade and Industry, (12 August 2022), [Pinoy Creatives celebrate newly-adopted Creative Industries Development Act], [Article] link: https://www.dti.gov.ph/news/pinoy-creatives-celebrate-newly-adopted-creative-industries-development-act/
  3. Del Prados, (2015), [State of the Philippine Creative Industries], [Presentation] link: https://industry.gov.ph/wp-content/uploads/2015/05/8th-TID-Ms.-Del-Prados-Presentation-on-Creative-Industries.pdf
  4. Villegas, Bernardo, (29 March 2022), [A Strategic Plan for Creative Industries], [Article] link: https://www.bworldonline.com/opinion/2022/03/29/438841/a-strategic-plan-for-creative-industries/#:~:text=In%20a%202014%20Report%20by,the%202019%20GDP%20of%20P19.
  5. Villegas, Bernardo, (29 March 2022), [A Strategic Plan for Creative Industries], [Article] link: https://www.bworldonline.com/opinion/2022/03/29/438841/a-strategic-plan-for-creative-industries/#:~:text=In%20a%202014%20Report%20by,the%202019%20GDP%20of%20P19.
  6. Gomez, Eireene, (2022 August 16), [Foreign Chambers Laud RA 11904], (The Manila Times), [Article] link: https://www.manilatimes.net/2022/08/16/business/top-business/foreign-chambers-laud-ra-11904/1854721
  7. Press and Public Affairs Bureau, (2022) [Rep. Christopher V.P. De Venecia on House of Representatives of the Philippines], [Photograph] link: https://www.congress.gov.ph/photojournal/zoom.php?photoid=3600