EXECUTIVE SUMMARY
A.
Introduction
The Intellectual Property Office of the Philippines (IPOPHL) was created by
virtue of Republic Act No. 8293, the “Intellectual Property Code of the Philippines”,
which was signed into law on June 6, 1987 and took effect on January 1, 1998. The said
law abolished the Bureau of Patents, Trademarks and Technology Transfer (BPTT) of the
Department of Trade and Industry (DTI). All unexpended funds, properties, equipment,
records and personnel of BPTT were transferred to the IPOPHL.
The IPOPHL’s vision is an Intellectual Property-conscious Philippines in a
demystified, development-oriented, and democratized Intellectual Property (IP) system in
2020 and it’s missions are a knowledge-driven government organization that works
towards economic, technological, and socio-cultural development by communicating,
enabling, and ensuring the effective use of the Intellectual Property System in all levels
of society for the creation, protection, utilization, and enforcement of Intellectual
Property.
IPOPHL was mandated to perform the following major functions: (a) examine
applications for grant of letters patent for inventions and register utility models and
industrial designs; (b) examine applications for the registration of marks, geographic
indication, integrated circuits; (c) register technology arrangements and settle disputes
involving technology transfer covered by the provisions of Republic Act No. 8293 on
Voluntary Licensing and develop/implement strategies to promote and facilitate
technology transfer; (d) promote the use of patent information as a tool for technology
development; (e) publish regularly in its own publication the patents, marks, utility
models and industrial designs; issued and approved, and the technology transfer
arrangements registered; (f) administratively adjudicate contested proceedings affecting
intellectual property rights; and (g) coordinate with other government agencies and the
private sector efforts to formulate and implement plans and policies to strengthen the
protection of intellectual property rights in the country.
In an effort to provide a conducive work environment for its employees and a
more modern and safe venue for its clients, IPOPHL moved from Makati City to its new
home in McKinley Hill at Fort Bonifacio, Taguig City in May 2011.
The Agency is headed by Director General (DG) Ricardo R. Blancaflor, who
manages and directs all functions of the Office, subject to the supervision of the Secretary
of DTI. The DG is assisted by two Deputy Directors General (DDG) and the Directors of
the six (6) operating bureaus, namely: (1) Bureau of Patents; (2) Bureau of Trademarks;
(3) Bureau of Legal Affairs; (4) Documentation, Information and Technology Transfer
Bureau; (5) Management Information Service; and (6) Financial Management and
Administrative Service.
Of the remaining 297 authorized itemized permanent positions under the Personal
Itemization and Plantilla of Personnel approved by the Department of Budget and
Management (DBM), only 244 were filled up as of December 31, 2012.
B.
Financial Highlights
IPOPHL financial condition, results of operation and sources and application of
funds for the year compared with that of the previous year are as follows:
Particulars
Financial Condition
Assets
Liabilities
Government Equity
Results of Operations
Income
Expenses
Net Income
2012
2011
Increase
(Decrease)
P 1,083,701,227.21
42,080,882.36
1,041,620,344.85
P1,000,033,207.95
46,193,416.27
953,839,791.68
P83,668,019.26
(4,112,533.91)
87,780,553.17
P418,349,502.29
326,743,601.88
91,605,900.41
P402,465,857.34
351,837,851.98
50,628,005.36
P15,883,644.95
(25,094,250.10)
40,977,895.05
P520,000,000.00
418,350,421.64
101,649,578.36
P (20,260,000.00)
(82,158,969.19)
61,898,969.19
Sources and Application of Funds
Agency Operating Budget
Utilization
Balance
P499,740,000.00
336,191,452.45
163,548,547.55
IPOPHL stopped receiving funds sourced from the General Appropriations of the
Government since CY 2006. Funds for its operations were then sourced from its income
collections.
The IPOPHL derived its income from registration fees on patents for inventions,
trademarks, technology transfers, and the interest income on short-term investments
placed in government depository banks. As authorized under RA No. 8293, the IPOPHL
deposited the fees collected in a separate account or fund, from which disbursements for
its operations were sourced.
The IPOPHL also disbursed the total amount of P9,793,533.38 out of the P10
million funds received from the DTI Central Office in CY 2010 for the implementation of
the operations of the National Committee on Intellectual Property Rights (NCIPR).
C.
Operational Highlights
For the year under audit, IPOPHL reported the following significant
accomplishments which were verified on a sampling basis shown on the next page.
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Performance Indicator
CY 2012
CY 2011
Increase
(Decrease)
%
Patent
Applications
Received
Granted
2,994
1,115
3,196
1,135
(202)
(20)
1.73%
Received
Registered
19,453
14,632
18,611
13,486
842
1,146
2.76%
Received
Granted
715
422
674
395
41
27
0.41%
Received
Granted
1,225
1,061
1,112
665
113
396
26.81%
Received
Disposed
278
295
556
243
(278)
52
62.41%
Trademarks
Applications
Utility Model
Applications
Industrial Design
Applications
IP Cases
Filed/ Disposed
Other special projects/activities conducted and accomplished by the IPOPHL
were:
•
Adopted Industrial Property Automation System (IPAS) as one of IPOPHL’s
initiatives to ensure that quality and timely service is consistently provided.
The Philippines is the first IP Office in Asia to use the latest version of IPAS;
•
IPOPHL now boasts of being the only IP Office in Asia with two Alternative
Dispute Resolution Mechanisms – Mediation and Arbitration;
•
More than 170 professionals in different fields from 64 institutions and
universities have joined the Innovation and Technology Satellite Offices
(ITSOs) information;
•
IPOPHL institutionalized the amendments of the Intellectual Property Code of
the Philippines, which seeks to create a Bureau of Copyright in the IPOPHL,
which will be responsible for regulating collective management entities and
agents on behalf of artists and provide enforcement powers to IPOPHL,
among others.
•
IPOPHL created new program to increase IP awareness and utilization in the
country by exploring the role of the IP system in the protection of
geographical origin and possesses qualities, reputation, or characteristics that
are essentially attributable to that origin.
•
Leading the advocacy for IP policy and legislative agenda, another IPOPHL
achievement in 2012 is the Philippines’ accession to the Madrid Protocol. The
Madrid Protocol is an international filing system that facilitates the
registration of marks in several countries through a single application filed
with the IPOPHL.
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•
D.
Entered into an agreement with several agencies and organizations for the
effective enforcement of IP as a move to combat counterfeiting and piracy.
Scope of Audit
The audit covered the accounts and operations of the IPOPHL for CY 2012 and
aimed to (a) determine whether the financial statements present fairly the financial
position and results of operations; (b) ascertain the extent of compliance with pertinent
laws, rules and regulations; (c) identify agency improvement opportunities to enhance
operational processes/procedures; and (d) determine the extent of implementation of prior
year’s audit recommendations.
E.
Auditor’s Report
The Auditor rendered a qualified opinion on the fairness of the presentation of the
financial statements of the IPOPHL due to the various deficiencies noted in audit as
follows:
1.
Payments/Deposits of P370,507.45 made to the Land Bank of the Philippines
(LBP)-Makati Branch from applicants of Trademarks in CYs 2010 to 2012
were not yet recorded in the books due to non-submission of the details by the
bank to the agency which understated Cash in Bank – Local Currency,
Savings Account (LCSA) and income accounts by the same amount as of
year-end. (Observation No. 2)
2.
The P566,146.43other supplies issued for CY 2012 were not recorded in the
books due to the non-submission of the Report of Supplies and Materials
Issued (RSMI) by the Supply Section to the Accounting Division as required
under Section 62 of the Manual on the NGAS, Volume II which resulted in
overstatement and understatement of the balance of Other Supplies Inventory
account and the total of Office Supplies Expenses account, respectively, by
that amount as of year-end.(Observation No. 3)
3.
The existence and accuracy of the P91,100,955.88 balances of Furniture and
Fixtures and IT Equipment and Software accounts as of year-end which
represents 56% of the total Property, Plant and Equipment (PPE) accounts
could not be established since the physical count for these accounts was not
yet completed. (Observation No. 4)
For the above observations, we recommended that the:
•
Director of Financial Management and Administrative Service (FMAS)
request the LBP-Makati Branch to furnish IPOPHL copies of the list of
depositors who tendered payments for comparison with the applicants of
trademarks and patents to determine the nature of income and the names
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of applicants who made such payments for subsequent recording in the
books.
F.
•
(a) Supply Officer prepare monthly the RSMI and submit to the
Accountant for recording; (b) Accountant, upon receipt and verification of
the RSMI, record promptly all issuances; and (c) Supply Officer and the
Accountant, on a regular periodic basis, (i) reconcile their books on
inventory accounts; and (ii) adjust their records accordingly.
•
Supply Officer complete the physical inventory report of all PPE accounts
and render a report thereon, copy furnished the Accountant to support the
reported book balances of property.
Other Significant Observations and Recommendations
1.
The reliability of the statistics reported in the Annual Report on the number of
applications received and the income collected from trademarks and patents
for CY 2012 was doubtful due to discrepancy of the data in the reports
generated by Management Decision Support System (MDSS), e-NGAS, and
the Planning Section which were used in the preparation of the Annual
Report. (Observation No. 1)
We recommended that management require the concerned offices to
extensively review each system, investigate and verify where the discrepancy
occurs/emanates and take the appropriate actions to ensure the accuracy of the
data/information reported in the Annual Report.
4.
The official website of the IPOPHL has no Transparency Seal and therefore
does not contain the required information needed to enhance transparency and
enforce accountability thus, violating the Transparency Seal Provision under
Section 93 of RA No. 10155, the General Appropriations Act for FY 2012.
(Observation No. 5)
We recommended that the Web Administrator include in the IPOPHL’s
official website the information needed to enhance transparency and enforce
accountability as required under the Transparency Seal provision of RA No.
10155.
5.
IPOPHL did not allocate at least 1% of its budget for programs and projects
for Senior Citizens and Differently-Abled Persons contrary to Section 29 of
the General Provisions of RA No. 10155 hence, no activities for the said
Program were planned or undertaken during the year.(Observation No. 6)
We recommended that management formulate plans, programs and projects
and integrate at least 1% of the budget to agency’s regular activities that
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would address the concerns of the senior citizens and differently-abled
persons.
6.
Of the P24,987,000.00 budget allocated for GAD in CY 2012, which is
equivalent to 5% of the total appropriations of IPOPHL of P499,740,000.00
during the year, only P4,628,849.62 or 18.53% was utilized which was not in
accordance with Section 28 of the General Provisions of R.A. No. 10155.
Further, the performance data/information stated in the GAD report were
inadequate to determine the extent of accomplishments of the targets for the
year. (Observation No. 7)
We reiterated our recommendation and management agreed to
(a) improve the reporting of GAD accomplishments to generate meaningful
GAD reports that adhere to the guidelines provided in DBM/NEDA/NCRFW
Joint Circular No. 2004-1; and (b) utilize in full the budget for GAD activities.
The observations and recommendations were discussed with the officials
concerned in an exit conference conducted on April 29, 2013. Management views and
reactions were incorporated in the report, where appropriate.
G.
Implementation of Prior Year’s Audit Recommendations
Of the ten audit recommendations contained in the 2011 Annual Audit Report,
two were fully implemented; seven were partially implemented while one was not
implemented at year-end the details of which are shown in Part III of this report. The
recommendations, which were not implemented and partially implemented, are reiterated
in Part II of this report since these affect the presentation of the assets in the financial
statements.
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