4 Management

Republic of the Philippines

System
Department of Science and Technology ISO 9001:2008

PHILIPPINE COUNCIL FOR INDUSTRY, ENERGY AND EMERGING TOVRheinlartd

CERTIFIED
TECHNOLOGY RESEARCH AND DEVELOPMENT (PCIEERD) 9 ID 9105079522

1 3 1:EC 2017
PCIEERD Administrative Order No _2. 0 17,156
Series of 2017

Subject : GUIDELINES FOR THE PROVISION OF PCIEERD GRANTS-IN-AID

FUNDS FOR PRIVATE ORGANIZATIONS AND INDUSTRY
PARTNERS

I. Purpose

In many developed countries like the US, Europe, Japan and Republic of Korea,
industry undertakes their own research and covers substantial research expenditure.
Thus, we see results of this investment of industry in the creation and translation into
globally competitive products.

Aligned with the trend towards participative research coming from industry in the
above countries and the government's thrust of public-private partnership, PCIEERD
intends to further enhance its engagement with private organizations (PO) by providing
support to research and development initiated by industry. The research and
development efforts should be directed towards the commercialization of new products,
modification of existing products that lead to substantially improved marketability, or the
improvement of existing processes that may provide a new source of revenue to the
business.

The Technology Transfer Act, RA 10055 of 2009, an Act Providing the Framework
and Support System for the Ownership, Management, Use and Commercialization of
Intellectual Property Generated from Research and Development Funded by Government
and Other Purposes, allowed private organizations to participate in publicly funded
research and development. In Section 4.i, a Research and Development Institute or
Institution (RDI) is defined as "a public or private organization, association, partnership,
joint venture, higher education institution or corporation that performs R&D activities
and is duly registered and/or licensed to do business in the Philippines, or otherwise with
legal personality in the Philippines". Specifically for private RDIs, the entities should be
owned solely by the citizens of the Philippines, corporations or associations with at least
sixty percent of the capital of which is owned by such citizens.

Further, the DOST Guidelines for Grants-in-Aid Funds, AO 009 series of 2017,
provides eligibility to private organizations to avail funding for R&D under the DOST
Grants-In-Aid (CIA) program by defining "Proponent" as an agency or organization that
prepares and submits project proposals for DOST approval and assistance. This includes
the private sector, non-government organizations and private research and development
organizations. The Guidelines refer to DOST singly, or any or all its attached agencies,
PCIEERD included. The Grants-In-Aid, on the other hand, refers to funds allocated to

4th and 5th Levels, Science Heritage Bldg., Science Community Complex, Gen. Santos Ave., Bicutan, Taguig City 1631
Tel. Nos.: 837-2935; 837-7516; 837-0071; 553-8637; 837-2071 locs. 2100-2109; 2020-2121
Fax: (632) 837-6154
programs/projects by the DOST and all its grant-giving units, including its Regional
Offices and Sectoral Councils such as PCIEERD.

With reference to the above policies and guidelines, PCIEERD thereby provides
private organizations opportunities to participate in publicly funded research and to avail
of the PCIEERD GIA program as a legitimate proponent. However, the DOST System,
PCIEERD included, has always been proposal-driven and this guideline shall cover
provisions on qualifications, technology ownership and commercialization which shall
form part of the Memorandum of Agreement of an approved Project of PCIEERD.

II. Definition of Terms

For the purpose of these guidelines, the following terms shall be defined as follows:

Filipino Corporation refers to corporations or associations with at least 60% of

the capital owned solely by the citizens of the Philippines.

Private organization (PO) refer to a profit-oriented organization, association,

partnership, joint venture, or corporation that performs R&D activities and is
duly registered and/or licensed to do business in the Philippines, or otherwise
with legal personality in the Philippines.

Intellectual Property (IP) refers to intangible assets resulting from the

creative work of an individual or organization. IP also refers to creations of
the mind, such as inventions, literary and artistic works, and symbols, names,
images, and designs used in commerce.

Intellectual Property Rights (IPR) refers to those rights recognized and

protected in Republic Act No. 8293, otherwise known as the "Intellectual
Property Code of the Philippines".

Counterpart funding refers to the proponent's share of the project in a public-

private partnership.

III. Rationale

1. The government acts as a catalyst in the development of industries in the

country and does not intervene for the purpose of profit nor gets involved in
profit—making businesses.

2. The government protects and diffuses knowledge generated by Filipinos.

 Private organizations are in the best position to determine market needs and
commercialize technologies.

The Philippine Council for Industry, Energy and Emerging Technology

Research and Development (PCIEERD) is mandated to formulate policies,
plans and programs as well as in the implementation of strategies in the
industry, energy and emerging technology sectors through the following S&T
programs:
Policy Development and Advocacy
Support for Research and Development
Human Resource and Institution Development
S&T Information Dissemination and Promotion
Support for Technology Transfer and Commercialization

The PCIEERD's mission is to lead and partner with the public and private
institutions in generating S&T policies, strategies and technologies and has
formalized its industry investment in research through counterpart support in
the implementation of research programs/projects. Further, the PCIEERD
collaborates with both public and private organizations in the deployment and
commercialization of technologies.

PCIEERD, together with the DOST and other funding agencies provide
support for technology transfer, commercialization and diffusion. Technology
diffusion is recognized worldwide as necessary for generating economy-wide
benefits from innovation in terms of productivity gains and job creation.
Under the DOST Guidelines, knowledge and technologies are diffused through
various channels and involve a broad range of private and public institutions
through technology transfer, capacity building for innovation, and enterprise
development to name a few.

Lastly, the PCIEERD encourages its industry partners to pursue commercialization

after completion of a PCIEERD-funded technology development initiative.

IV. Qualifications and other Requirements of Private Organization Proponent

A. Qualifications

In addition to the DOST Guidelines for the Grants-In-Aid (GIA) Funds, Section 4.2.8
and following applicable provisions of COA Circular 2012-001 or the Revised Documentary
Requirements for Common Government Transactions, Section 2.1 Application
Requirements for People's Organization/Non-Government Organizations, the following
qualifications shall be required for private organization (PO) proponents availing of
PCIEERD GIA:
 1. Has demonstrated capability to conduct R&D and differentiate research from
their regular business operations; provided, that ownership and nationality
requirements under the Constitution and pertinent laws, including Republic
Act 10055 or the Philippine Technology Transfer Act of 2009, are complied
with.

2. Has legal personality to issue an official receipt for the receipt of grants-in-aid
for research and development activities.

Has submitted an Authenticated copy of the Articles of Incorporation showing

the original incorporators/organizers and the Secretary's certificate of
incumbent officers, together with the certificate of Filing with the SEC and/or
valid Business permits and Licenses in the case of partnerships.

Has submitted latest copies of Income Tax Returns and statement of financial
reports.

Commits to cultivate revenues from commercialization back to research in the

Philippines or remit to PCIEERD as agreed in the Memorandum of Agreement
(MOA).

Disclosure of other businesses, if any.

Has issued a Sworn affidavit of the secretary of the PO that none of its
incorporators, organizers, directors or officers is an agent of or related by
consanguinity or affinity up to the fourth civil degree to the PCIEERD officer
authorized to process and/or approve proposed MOA, and release of funds.

B. Counterpart Funding

The PO shall provide counterpart funds as specified in the MOA which the
proponent undertakes promptly to make available funds and other resources,
in addition to the government GIA funds, required for the project.

The PO has funding equivalent to 20% of the total project cost, which shall
be in the form of labor, land for the project site, facilities and equipment to
be used in the project.

V. Disposition of Equipment and Income during and after the Project

Implementation Stage

A. Equipment Ownership
 Equipment purchased from the grant shall remain as property of PCIEERD
following the DOST Guidelines for the Grants-In-Aid (GIA) Funds, Section 8.3,
unless:

1.1 The equipment is donated to another government body capable of

supporting and monitoring the implementation and/or
commercialization of PCIEERD-funded research.

1.2 The equipment is covered by the provisions on refund mechanism

as stated in Section 6.3.5 of the DOST Grants-In-Aid Guidelines.

The procurement of equipment shall follow government procurement

procedures in accordance with the provisions of RA 9184 or The Government
Procurement Reform Act.

If the project is prematurely terminated, and the funds were not used as
originally intended or the PO signified intention to refund the equipment:

3.1. Funds shall be refunded to PCIEERD with 12% penalty charge per
annum.

3.2. If the project beneficiary is unable to refund the total amount due
to PCIEERD, equipment procured under the project shall be
pulled-out or collect other forms of payment, otherwise PCIEERD
shall institute legal proceedings.

3.3. Repayment shall commence six (6) months after the start of the
project or not later than 12 months after the release of project
funds. All refunds should be fully paid within three (3) to five (5)
years depending on the expected Return of Investment (ROI) of
the project.

3.4. The PCIEERD shall own the acquired equipment under the project
until the refund has been paid fully and ownership has been
transferred to the beneficiary.

Financial records shall be subjected to visitorial audit and examination by

PCIEERD representatives and the Commission on Audit (COA).

Agreed terms and conditions for refund shall be stipulated in the

Memorandum of Instruction/Memorandum of Agreement (MOI/MOA).

B. Disposition of Income

1. Any income derived from business activities as a result of the project shall be
 used to fund/augment additional and/or existing activities related thereto
upon approval of PCIEERD. In no case shall the income earned under a
project be used to fund a new project not related to the original intent of the
fund.

All income earned in relation to the project should be reported to PCIEERD.

Request to use the income to continue project implementation shall be

submitted within one (1) month before the expected date of completion. It
shall be supported with financial reports (FR) and valid justification to be
used as basis in preparing a new or revised Line Item Budget.

VI. Ownership and Protection of Intellectual Property (IP) Rights

A. Ownership

All intellectual properties resulting from projects implemented by a private

organization shall be governed by Republic Act 10055, or the Technology
Transfer Act of 2009; its Implementing Rules and Regulations (IRR); DOST
Administrative Order No. 004 s. 2015 or the DOST IP Policy; and the PCIEERD
Administrative Order No. 2015-123 s. 2015 or the Disclosure and Protection of
Intellectual Properties (IPs) Generated from PCIEERD-Assisted and Monitored
Projects.

Ownership of resulting intellectual property shall belong to the PO following

provisions on exclusivity in the Joint DOST-DTI-IPOPHL AO 001 Series of
2012. However, access for purposes of research may be granted to a public
research organization with the approval and endorsement of PCIEERD.

B. Protection of IPR

Proponent shall, at its own expense:

Identify, protect, and manage any intellectual property that might be

generated from a project.

Incorporate in its Technology Transfer Protocol or in the absence of such shall

follow the PCIEERD AO No. 2015-123 s. 2015 Guidelines on the Disclosure
and Protection of Intellectual Properties (IPs) Generated from PCIEERD-
Assisted and Monitored Projects, immediately upon establishing the proof of
concept or technology.

Secure appropriate IP protection for the product, including trademark, as

soon as possible but in no case beyond three (3) months from the
abovementioned confidential disclosure to PCIEERD. An application through
the Patent Cooperation Treaty (PCT) for multiple country protection is highly
encouraged.
 All IPs filed shall be maintained by paying the appropriate fees on time.

Be authorized, within a reasonable time, to keep confidential from the public

any document or information relating to potential IPRs that are not yet fully
protected by law.

In case of failure to disclose and seek protection of the resulting IPRs within
the timeframe agreed, the PCIEERD shall assume the rights to the potential
IP.

In case the PO ceases to become a Filipino, the PCIEERD shall assume rights
to the potential IPRs.

PCIEERD shall:

Protect government interest by ensuring that project proponent or PO falls

within the criteria of RDIs under the DOST Guidelines for the Grants-In-Aid
(GIA) Funds, Section 4.2.8 Application Requirements for Private
Organization/Non-Government Organizations and requirements with the COA
Circular No. 2012-001 Series of 2012 on the Revised Documentary
Requirements for Common Government Transactions.

Secure appropriate IPR protection for the product of research, in case the
proponent fails to do so within the allowed period, whereupon the PCIEERD
shall assume the rights to the potential IPR, without prejudice to the rights of
the proponent under the Technology Transfer Act, RA 10055 of 2009.

Withhold from public disclosure any information relating to the potential

intellectual property that may result from the project, until such time that an
application for protection of IP has been filed.

C. Commercialization

A notice in the MOA or Technology Transfer agreement stating that: "The

intellectual property under this transaction was created with support from the
Republic of the Philippines under (identify the agreement/s) awarded by
(identify the GFA/s). The Republic of the Philippines has certain rights in the
intellectual property under Art. VII of the Philippine Technology Transfer Act
of 2009."

For POs that were granted with R&D funds under the PCIEERD GIA program,
an exclusive license is necessary and appropriate as the same will provide an
incentive to the PO to bear the risks of commercial development. Before the
completion of the project, an exclusive Technology Transfer agreement
should already be signed.
 3. However, the monopoly rights conferred by the intellectual property coupled
with exclusivity may limit the public's access to said IP. The following
provisions will be included in the MOA and subsequent Technology Transfer
Agreement before the completion of the project.

Access for purposes of research may be granted to a public research

organization with the approval and endorsement of PCIEERD.

Provisions which reserve the right of the PCIEERD or PO to grant a

license to third parties to address unmet market needs.

The provisions for prohibited clauses and mandatory clauses set forth
in Sections 87 and 88 of Republic Act 8293 or IP Code of the
Philippines shall be included in the ensuing Technology Transfer
agreement as necessary.

Notify PCIEERD of all IPR applications, licenses, and assignments

made in all applicable territories.

f. An automatic review will be conducted after one year and upon

attainment of set milestones.

4. Report annually to PCIEERD on the progress of IP and/or IPR

commercialization efforts and all agreements entered and licenses granted.

VII. Revenue Sharing

Aside from complying with Rule 12, Section 1 of the IRR of RA 10055, in the
Memorandum of Agreement, the PCIEERD and the PO shall incorporate provisions for
revenue sharing, consistent with Rule 15 of the IRR and the following principles:

A notice in the MOA on the revenue sharing provision shall be included as

such:

"The PCIEERD shall have a share in all revenues from the commercialization
of IPs and IPRs from the research and development funded by PCIEERD."

The PCIEERD and the PO shall mutually agree upon the terms of the revenue
sharing; provided that, in no case will the total share of PCIEERD be greater
than the share of the PO; Provided, that a percentage (%) of the PO's
revenues subject to the Memorandum of agreement and upon consultation
with the PO shall be remitted to PCIEERD or reverted back to the research
fund of the PO. Provided, further, that the use and scope of use of royalty
payments reverted back as research funds shall be approved by PCIEERD.
 Monetary revenues shall include but not limited to royalty payments,
proceeds from sale of IP or technology, upfront technology transfer fees, etc.

Where practicable, all non-monetary revenues shall be converted to cash

value. The PO shall have the discretion to determine the cash conversion
value of the non-monetary benefits. In determining, whether non-monetary
grants shall form part of the revenue, the provisions of the Technology
Transfer Protocol of the PO shall prevail. In the absence of such, provisions
shall be included in the MOA.

VIII. Disposition and Termination of Grants

Failure to comply with the applicable laws, rules and regulations, particularly
those governing GIA programs and projects shall be considered grounds for
the termination of the grant; and

It is understood that these guidelines are consistent with the existing

Implementing Guidelines for CIA Programs and Projects. In case of conflict,
the CIA guidelines shall prevail.

Issues not expressly addressed herein, policies/procedures concerning POs as

proponents availing support under the PCIEERD Grants-In-Aid Program shall be referred
to the Office of the Executive Director who is charged with administering these
guidelines.

This Administrative Order shall take effect immediately and supersedes all other
issuances inconsistent herewith.

6,-6
CARLO$ PRIMO C.ILID, Ph.D.
Executive Director

Pnilippin ou cil for Industry. Emil, and Enter ing

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