Paltik, in Tagalog, refers to any home-made or locally-produced firearm, commonly found in many households, criminal organizations, and even cash-strapped police precincts in the Philippines.
While in the '60s and '70s, paltik weapons were usually crude, spot-welded contraptions made from lengths of pipe, rubber and carved pieces of wood, these are now referred to as sumpak, and paltik now specifically refers to cheap knock-offs of foreign firearms.
There is a growing paltik industry in the Ilocos and Visayan regions which manufacture cheap copies of more expensive imported firearms, most commonly Smith & Wesson revolvers. While these new paltiks often cannot be distinguished from their imported counterparts by a layman, they are often unreliable, as they are machined from inferior steel, with crude hand tools.
Indeed, according to one gunsmith featured in a TV special, the customer would supply the metal (most likely pieces of engine blocks, or similar scrap) and they would make the gun to order, depending on the customer's specifications. This gunsmith even showed off some unusual weapons, including a 5-shot S&W revolver lookalike chambered for 5.56 mm (most likely utilizing commonly available M-16 rounds) and a copy of an Uzi submachinegun, also chambered for 5.56 mm.
There has recently been a large demand for paltiks from Taiwan, Hong Kong, Shanghai, and Japan, allegedly buyers from the Chinese Triads and the Yakuza. Tokyo police have acknowledged that most illegal arms entering Japan come from the Philippines. Despite the unreliability and lack of quality, paltiks are popular due to their untraceability (no serial numbers, as well as unusual ballistic profiles).
While arms control laws do exist, these are commonly not easily enforced, given the corrupt government and police. Some local politicians have even taken to quietly financing this arms trade, and several full-fledged armament manufacturers have sprung up near Cebu City, most notably Armscor, Damanco, and World MPC. These manufacturers not only make firearms and ammunition, but also supply knock-off gun parts and accessories.
Some facts taken from "Visiting Gun Makers in the Philippines, AFTE 2000" (http://www.firearmsid.com/AFTE2000/AFTE2000%20Thursday.htm), and a Probe Team special on GMA-7.