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INTELLECTUAL PROPERTY LAW 6. Coordinate with other govt.

agencies and private sector efforts


to formulate and implement plans and policies to strengthen
Principal law: R.A. No. 8293 (IP Code of the Philippines) the protection of intellectual property rights in the country

Principal purpose: To protect and secure the exclusive rights of Cases in the IPO are called “inter-partes case”
scientists, inventors, artists and other gifted citizens to their intellectual
property and creations, particularly when beneficial to the people, for Composition of the IPO:
such periods as provided by law.  IPO is headed by the Director General
 To make sure that the inventors are given some form of  Each of the Bureau is headed by a Director and assisted by an
protection to their intellectual property. Assistant Director
 Ownership will not be absolute, except for trademark because
you can use it perpetually provided that you renew your Laws covered by the IP Code:
registration. Insofar as patents and copyrights are concerned, it 1. Law on Patents
will expire. 2. Law on Trademarks, Service Marks and Trade Names
3. Law on Copyright
Term of intellectual property rights consists of:
1. Copyright and related rights LAW ON PATENTS
2. Trademarks and service marks
3. Geographic indications Patent is the grant of exclusive right to make, use and sell patented object
4. Industrial designs personally or through others as well as the grant of right to effectively
5. Patents prohibit others from practicing the invention or profiting therefrom
6. Layout-designs (topographies) of integrated circuits, without owner's consent. Rights in the invention itself may be transferred
particularly for microchips and electronic items either separately or together, upon one person or many, and each may
7. Protection of undisclosed information independently of the others use the rights received. (Universal Food Corp.
vs. CA, 33 SCRA 1)
“Technological transfer arrangements”  Important word “sell” - if you can make and use something
 It refers to contracts or agreements involving the transfer of personally, then you cannot be accused of infringing a patent
systematic knowledge for the manufacture of a product, the kasi nasa bahay nyo lang. But the moment you manufacture
application of a process, or rendering of a service including and sell/distribute it, or the moment you become economically
management contracts; and the transfer, assignment or interested, on a particular product or invention, then that is
licensing of all forms of intellectual property rights, including when you commit patent infringement.
licensing of computer software except computer software
developed for mass market. Inventions that are patentable:
 Example: The florescent light was invented by one certain  Any technical solution of a problem in any field of human
Flores but he has no money to mass produce it, so he entered activity which is new, involves an inventive step and is
into an agreement with an investor/capitalist and come up industrially applicable shall be patentable. It may be, or may
with a technological transfer arrangement in order to protect relate to, a product, or process, or an improvement of any of the
his invention. The investor/capitalist can mass produce it, then foregoing. (Section 21)
he will pay Flores the corresponding royalties. Meanwhile, the  If a product is no longer new and yet it was registered and a
product goes into the public so there is some kind of a sharing corresponding letters of patent was issued, that particular
arrangement there on how much will go to the inventor and patent can be cancelled by filing an inter-partes case for the
how much will go to the investor/capitalist. cancellation for the letters of patent.
 Example: There are certain industrial parts in the Philippines
that uses certain technology or certain invented products. Element of NOVELTY:
When these are used in the Philippines and located in our  The element of novelty is an essential requisite of the
various industrial parts, we are not supposed to claim patentability of an invention or discovery. If a device or
ownership over these inventions or products but because of process has been known or used by others prior to its
these contracts, there can be a transfer of invention or discovery by the applicant, an application for a
technology/information. So the people working in the patent therefor should be denied.
factories, they get accustomed to how to use the different  An invention must possess the essential elements of novelty,
machines or products, which will later on transform into what originality and precedence, and for the patentee to be entitled
you call a transfer of technology/knowledge – and this is to the protection, the invention must be new to the world.
covered by a contract. (Manzano vs. CA, G.R. No. 113388)

Government office tasked to promote and protect IP rights: Non-patentable inventions:


Philippine Intellectual Property Office (IPO). 1. Discoveries, scientific theories and mathematical
2. Schemes, rules and methods of performing mental acts, playing
Functions of the IPO (Section 5): games or doing business and programs for computers
1. Examine applications for grant of letters patent for inventions 3. Methods for treatment of the human or animal body by surgery
and register utility models and industrial designs (Bureau of or therapy and diagnostic methods practiced on the human or
Patents) animal body (example:
2. Examine applications for the registration of marks, geographic 4. Plant varieties or animal breeds or essentially biological
indication, integrated circuits (Bureau of Trademarks / process for the production of plants or animals
Trademarks Office) 5. Aesthetic creations
3. Register technology transfer arrangements and settle disputes 6. Anything which is contrary to public order or morality (Section
involving technology transfer payments and implement 22)
strategies to promote and facilitate technology transfer
(Documentation, Info. and Technology Transfer Bureau) Examples:
4. Promote the use of patent information as a tool for technology  For #1 - 1+1=2; everything you throw up will go down
development  For #2 - hindi pwedeng sarilihin ang paglalaro ng chess kasi
5. Administratively adjudicate contested proceedings affecting kayo ang nakaisip na ang talon ng kabayo ay pa-“L.” So wala na
intellectual property rights (Bureau of Legal Affairs) maglalaro ng chess kung ang kabayo nyo pa-“L” ang talon
 For #3 - naisip niyong pag ininject ang isang particular Cancellation of Patent:
chemical sa katawan ay lumalaki ito, so wala na ibang doctor  A patent, being a grant of privilege by the government, may be
na pwedeng gumawa nito (you cannot apply for a patent if it cancelled based on the grounds specified by law:
would impede the development of science and technology); if a. That what is claimed as the invention is not new or
you learned that when applying a certain method of surgery, it Patentable
can easily cure or remove 100% any cancer cell so if such is b. That the patent does not disclose the invention in a
patented, no one can perform such method of surgery manner sufficiently clear and complete for it to be
 For #4 - crossbreeding of elephant and chiuaua, you will carried out by any person skilled in the art
produce a hybrid elephant; crossbreeding of apple and guava c. That the patent is contrary to public order or
 For #5 - yung manner of pag-make-up ng tao para lumiit yung morality (Section 61)
muka tignan  Effect of cancelled patent: Rights conferred by the patent or
 For #6 - eyeglass na tumatagos sa damit any specified claim/s cancelled shall terminate (Section 66)
 A person can no longer be accused of patent infringement if the
“First to File Rule” Patent being copied is already cancelled. That is why the
 If two (2) or more persons have made the invention separately registration of a Patent is very important.
and independently of each other, the right to the patent shall
belong to the person who filed an application for such Surrender of a Patent:
invention, or where two or more applications are filed for the  The owner of the patent, with the consent of all persons having
same invention, to the applicant who has the earliest filing date grants or licenses or other right, title or interest in and to the
or, the earliest priority date. (Section 29) patent and the invention covered thereby, which have been
 The moment you are already certain of an invention, you recorded in the Office, may surrender his patent or any claim
already need to file a petition before the Bureau of Patents for or claims forming part thereof to the Office for cancellation.
the registration of the product. To do this, you file the (Section 56)
corresponding papers with the IPO. The IPO will stamp the
date and time of filing, primarily because of the first to file rule. Remedies available to a true and actual owner who was deprived of
Two persons may file an application for the same product the patent without his consent or through fraud:
within the same day, hence the time element is material.  If a person, who was deprived of the patent without his
consent or through fraud is declared by final court order or
“Right of Priority” decision to be the true and actual inventor, the court shall
 An application for patent filed by any person who has order for his substitution as patentee, or at the option of the
previously applied for the same invention in another country true inventor, cancel the patent, and award actual and other
which by treaty, convention, or law affords similar privileges to damages in his favor if warranted. (Section 68)
Filipino citizens, shall be considered as filed as of the date of
filing of the foreign application. (Section 31) Rights conferred by a patent:
 Example: This is important for inventions abroad which are 1. If the subject matter of a patent is a product – to restrain,
being copied here in the Philippines. Suppose there is a prohibit and prevent any unauthorized person or entity from
product in the US, for example an Apple product, which is an making, using, offering for sale, selling or importing that
accessory to either a phone or a laptop which is new and product
registered in the US but not yet registered here in the 2. If the subject matter of a patent is a process – to restrain,
Philippines. When Apple decided to register the product prevent or prohibit any unauthorized person or entity from
worldwide and it was filed today here in the Philippines, it using the process, and from manufacturing, dealing in, using,
appears that 3 weeks ago there has been a corresponding selling or offering for sale, or importing any product obtained
application over the same invention filed by another directly or indirectly from such process
person/entity. Under the First to File Rule, such person/entity 3. To assign, or transfer by succession the patent, and to conclude
is entitled to the patent. But recognizing the Right of Priority, licensing contracts for the same (this is an attribute of
the one who has an earlier filing date in another jurisdiction ownership) (Section 71.2)
shall be preferred because the filing in another jurisdiction
shall be considered as the date of filing in the Philippines. “Prior User Rule”
 Requirements in order to claim Right of Priority:  Any prior user, who, in good faith was using the invention or
a. Local application expressly claims priority has undertaken serious preparations to use the invention in his
b. It is filed within 12 months from the date the earliest enterprise or business, before the filing date or priority date of
foreign application was filed the application on which a patent is granted, shall have the
c. A certified copy of the foreign application together right to continue the use thereof as envisaged in such
with an English translation is filed within 6 months preparations within the territory where the patent produces
from the date of filing in the Philippines its effect. (Section 73.1)
 Example: If the products was registered in the US, the  Example: In a factory, there are stages for the manufacturing of
application should be filed in the Philippines within the 12 a particular product. In the process, they came up with a
month period. If the application is filed on the 11th month, the particular invention that is an innovative product in the
filing will retroact to the date of filing in the US and it is not the preparation or continuation of the entire process in the factory.
date/month when it was filed in the IPO Philippines. However, it was not registered with the IPO but was being
used in the factory. What if such particular invention was
Contents of a Patent: registered by another person with the IPO, in good faith, not
 The patent shall be issued in the name of the Republic of the knowing that it has already invented, developed and being
Philippines under the seal of the Office and shall be signed by used by another. Under the First to File Rule, the owner of the
the Director, and registered together with the description, invention is the latter. But under the Prior User Rule, the
claims, and drawings, if any, in books and records of the Office. former is still allowed to continue using the invention but it
(Section 53) cannot be sold because he will then be prejudicing the right of
 Purpose: If and when the patent expires, everyone else can tap the registered patent owner.
your product because it is already outside the protection of the  The registered owner cannot prevent the prior user from using
law. the invention under the Prior User Rule. But the prior user
cannot sue the registered owner for the product that the latter
Term of a Patent: 20 years from the filing date of the application belatedly invented and had registered under the First to File
(Section 54) Rule.
The government or its authorized representative may use/exploit “Doctrine of Equivalents”
the invention even without agreement of the patent owner where:  The doctrine of equivalents provides that an infringement also
1. The public interest, in particular, national security, nutrition, takes place when a device appropriates a prior invention by
health or the development of other sectors, as determined by incorporating its innovative concept and, although with some
the appropriate agency of the government, so requires; or modification and change, performs substantially the same
2. A judicial or administrative body has determined that the function in substantially the same way to achieve substantially
manner of exploitation, by the owner of the patent or his the same result. (Smith Kline vs. CA, GR No. 126627)
licensee is anti-competitive. (Section 74.1)  Example: A patented his invention, a cellphone. B later
invented a cellphone but with a ribbon and an electric fan,
Patent Infringement: alleging that it is not similar with A’s invention. B is guilty of
 The making, using, offering for sale, selling, or importing a patent infringement by way of Doctrine of Equivalents because
patented product or a product obtained directly or indirectly it is still the same cellphone, functioning the same way but with
from a patented process, or the use of a patented process a little enhancement.
without the authorization of the patentee. (Section 76)
Rights over inventions may be assigned or transmitted:
Remedies available to a patentee whose rights were violated by an  Inventions and any right, title or interest in and to patents and
infringer: inventions covered thereby, may be assigned or transmitted by
 Any patentee, or anyone possessing any right, title or interest inheritance or bequest or may be the subject of a license
in and to the patented invention, whose rights have been contract. (Section 103.2)
infringed, may bring a civil action before a court of competent
jurisdiction, to recover from the infringer such damages THE LAW ON TRADEMARKS, SERVICE MARKS AND TRADE NAMES
sustained thereby, plus attorney's fees and other expenses of
litigation, and to secure an injunction for the protection of his “Mark”
rights. (Section 76.2)  Any visible sign capable of distinguishing the goods
(trademark) or services (service mark) of an enterprise and
A foreign national may file an action for infringement: shall include a stamped or marked container of goods. (Section
 Any foreign national or juridical entity who meets the 212.1)
requirements of Section 3 and not engaged in business in the
Philippines, to which a patent has been granted or assigned “Collective mark”
under this Act, may bring an action for infringement of patent,  Means visible signs designated as such in the application for
whether or not it is licensed to do business in the Philippines registration and capable of distinguishing the origin or any
under existing law. (Section 77) other common characteristic, including the quality of goods or
services of different enterprises which use the sign under the
Action for damages arising from infringement of a patent: control of the registered owner of the collective mark.
 Prescriptive period for the filing of an action: 4 years from
the institution of the action for infringement (Section 79) “Trade name”
 Notice of an existing patent is a requisite before one can  Means the name or designation identifying or distinguishing an
recover damages due to infringement: Damages cannot be enterprise.
recovered for acts of infringement committed before the  Example: SGV; ACCRA
infringer had known; or had reasonable grounds to know of
the patent (Section 80) How is a right in a mark acquired:
 The rights in a mark acquired through registration made
When a person is presumed to be an infringer:
validly in accordance with the provisions of trademarks law.
 It is presumed that the infringer had known of the patent if on (Section 122)
the patented product, or on the container or package in which
 When you register a trademark, it does NOT necessarily follow
the article is supplied to the public, or on the advertising
that you are already the owner of the trademark. (see
material relating to the patented product or process, are placed
Birkenstock case)
the words "Philippine Patent" with the number of the patent.
(Section 80)
Can the owner of a mark demand for its registration?
 No, the owner cannot demand that his mark registered.
Defenses available in an action for infringement:
Registration of a mark can be allowed only if all the
1. The patent issued was invalid
requirements imposed by law are complied with.
2. One of the grounds on which a petition for cancellation can be
 Even if you have registered a trademark but failed to comply
brought under Section 61 is present
with the requirements, then as if you have acquired the
a. That what is claimed as the invention is not new or
trademark fraudulently.
Patentable
b. That the patent does not disclose the invention in a
What can be used as evidence that the mark has become distinctive?
manner sufficiently clear and complete for it to be
carried out by any person skilled in the art  The IPO may accept as prima facie evidence that the mark has
c. That the patent is contrary to public order or become distinctive as used in connection with the applicant’s
morality goods or services in commerce, proof of substantially exclusive
and continuous use thereof by the applicant in commerce in
A criminal action can be maintained against an infringer: the phils for 5 years before the date on which the claim of
distinctiveness is made. (Section 123.2)
 If infringement is repeated by the infringer or by anyone in
connivance with him after finality of the judgment of the court  If you have been using the mark for a long period of time, that
against the infringer, the offenders shall, without prejudice to is more than enough in exchange for registration. So that even
the institution of a civil action for damages, be criminally liable one is able to beat another insofar as the registration of the
therefor and, upon conviction, shall suffer imprisonment for mark is concerned, still there is an issue as to who will own
the period of not less than six (6) months but not more than that especially if the one who was not able to register it ahead
three (3) years and/or a fine of not less than P100,000 but not has been using the mark for a long period of time. The use of
more than P300,000, at the discretion of the court. the mark is more important.
 Prescriptive period for a criminal action: 3 years (Sec. 84)
What must the applicant file as evidence of substantially exclusive “Trademark Infringement”
and continuous use of the mark?  Infringement is the use without consent of the trademark
 Applicant or registrant must file a declaration of actual use owner of any “reproduction, counterfeit, copy or colorable
(DAU) of the marks with evidence to that effect, as prescribed limitation of any registered mark or tradename in connection
by the regulations within 3 years from filing date of the with the sale, offering for sale, or advertising of any good,
application. Otherwise the application shall be refused or the business or services on or in connection with which such use is
mark shall be removed the register by the director (Sec. 124.2) likely to cause confusion or mistake or to deceive purchasers
 The DAU is a declaration that the applicant has been using the or others as to the source or origin of such goods or services, or
mark for a long period of time or has been using it in identity of such business; or reproduce, counterfeit, copy or
commerce. colorably imitate any such mark or tradename and apply such
reproduction, counterfeit, copy or colourable limitation to
Nature of the First to File Rule: labels, signs, prints, packages, wrappers, receptacles or
 The rule that the registration of a mark is prevented with the advertisements intended to be used upon or in connection with
filing of an earlier application for registration. This must not, such goods, business or services.”
however, be interpreted to mean that ownership should be  Implicit in this definition is the concept that the goods must be
based upon an earlier filing date. (EY Industrial vs. Shen Dar, so related that there is a likelihood either of confusion of goods
GR No. 184850) or business.
 Example: If there are two users of the same trademark “X.” A  A trademark infringement exists when the goods are so related
registered the trademark and was able to get a certificate of that the public may be, or is actually, deceived and misled that
trademark registration, but B has been using the same they came from the same maker or manufacturer. (Esso
trademark several years before the registration. Who owns the Standards vs. CA, GR No. L-29971)
trademark? B owns the trademark “X” because the registration
merely creates a prima facie presumption that he is the THE LAW ON COPYRIGHT
registered owner. That presumption may be overtaken by
evidence to show that B indeed owns the mark. “Copyright”
 Copyright is a form of intellectual property which gives the
The Philippines adheres to the Paris Convention: creator of an original work exclusive rights over a certain
 RA No. 8293 undoubtedly shows the firm resolve of the period of time in relation to that work, including its
Philippines to observe and follow paris convention by publication, distribution and adaptation.
incorporating the relevant portions of the Convention to
include persons whose internationally well-known mark, When does the protection for original intelletual creations
whether or not registered, is identical with or confusingly commence:
similar to or constitutes a translation of a mark that is sought  Original intellectual creations in the literary and artistic
to be registered or is actually registered. (Shangri-La vs. domain are protected from the moment of their creation.
Developers Group, GR No. 159938)
Works which are PROTECTED:
There is NO time limit for the filing of a Petition for Cancellation of a 1. Books, pamphlets, articles and other writings
registered trademark: 2. Periodicals and newspapers
 Both Sections 151 of RA No. 8293 or Article 6bis(3) of the Paris 3. Lecture, sermons, addresses, dissertations prepared for oral
Convention provides that no time limit is fixed for the delivery whether or not reduced in writing or other material
cancellation of marks registered or used in bad faith. (Shangri- form
La vs. Developers Group, GR No. 159938) 4. Letters
5. Dramatic, or dramatico-musical compositions; choreographic
Recourse of the applicant if an application for registration of a mark works or entertainment in dumb shows
is refused by the Director of Trademarks: 6. Musical compositions. w/ or w/o words
 The final decision of refusal of the Director of Trademarks shall 7. Works of drawing, painting, architecture, sculpture, engraving,
be appealable to the Director General in accordance with lithography or other works of art, models or designs for work
procedure fixed by the Regulations. (Section 133.3) of arts
 The applicant cannot go directly to the Court of Appeals or the 8. Original ornamental designs or models for articles of
Supreme Court, otherwise it will be dismissed for prematurity. manufacture, whether or not registrable as industrial design,
and other works of applied art
Recourse of the owner of a mark that was considered “abandoned:” 9. Illustrations, maps, plans, sketch, charts and 3 dimensional
 An abandoned application may be revived as a pending works relative to geography, topography, architecture or
application within 3 months from the date of abandonment science
upon good cause shown and the payment of the required fee. 10. Drawings or plastic works of a scientific or technical character
(Section 133.3) 11. Photogrpahic works including works produced by a process
 A mark is considered abandoned if the applicant failed to analogous to photography; lantern slides
renew the registration. 12. Audiovisual works and cinematogrpahics works an works
produced by a process analogous to cinematography or any
Recourse of the person whose right is affected by the registration of process for making audio visual recordings
the mark: 13. Pictorial illustrations and advertisement
 Any person who believes that he would be damaged by the 14. Computer programs
registration of a mark may, upon payment of the required fee 15. Other literacy, scholarly, scientific and artistic works
and within 30 days after the publication of the application for 16. Derivative works
the registration of the mark, file with the IPO an opposition to
the application for the registration of the mark. Works which are NOT protected:
 Example: McDonald’s vs. Mang Donald’s, Atty. Ceñiza ; P&G vs. 1. Any idea, procedure, system method or operation, concept,
Adamson & Adamson, “wings” principle, discovery or mere data as such even if they are
expressed, explained, illustrated or embodied in a work
2. News of the day and other miscellaneous facts having the
character of mere items of press information
3. Any official text of a legislative, administrative, or legal nature
as well as any official translation thereof (Section 175)
Examples: Examples:
 Mere ideas are not covered by copyright unless  If A wrote a novel while in the office and using the office laptop,
 “News of the day” cannot be copyrighted but the “newspaper” during break time, it is still owned by the maker thereof. Even
and “news feeds” can be copyrighted. (see the ABS-CBN case) if the maker used the office equipment and supplies, he still
owns the novel. Unless, if it was done in the performance of his
Can Government works be protected? regular duties as an employee.
 Under Section 176, no copyright shall subsist in any work of  If B was hired by Pixar to draw cartoons which will be sent to
the government of the Philippines. However, prior approval of Pixar in the US. Pixar owns B’s drawings.
the government agency or office wherein the work is created  If C was hired by Pixar as a lawyer, but while waiting for his
shall be necessary for exploitation of such work for profit. case to be called, he drew Nemo with Superman’s brief. C owns
Such agency or office may, among other things, impose as a the drawing because he was not asked to draw a cartoon.
condition of the payment of royalties.
Copyright over letters:
“Copy or economic rights”  In respect of letter, copyright shall belong to the writer subject
 Under Section 177, copyright or economic rights shall consists to the provision of Article 723 of the Civil Code:
of the exclusive right to carry out, authorized or prevent the o Letters and other private communications in writing
following acts: are owned by the person to whom they are
a. Reproduction of the work or substantial portion of addressed and delivered, but they cannot be
the work published or disseminated without the consent of
b. Dramatization, translation, adaptation, abridgment, the writer or his heirs. However, the court may
arrangement or other transformation of the work authorize the publication or dissemination if the
c. The first public distribution of the original and each public good or the interest of justice so requires.
copy of the work by sale or other forms of transfer  The same rule applies for photos or videos. The person to
of ownership whom they are addressed and delivered owns the photos or
d. Rental of the original or a copy of an audiovisual or videos given to her, but she cannot distribute, publish or
cinematographic work, a work embodied in sound disseminate.
recording, a computer program, a compilation of
date and other materials or a musical work in Nature of copyright infringement:
graphic form, irrespective of the ownership of the  Infringement of a copyright is a trespass on a private domain
original or the copy which is the subject of the rental owned and occupied by the owner of the copyright, and
e. Public display of the original or a copy of work therefore, protected by law, and infringement of copyright or
f. Public performance of the work piracy consists in the doing by any person, without the consent
g. Other communication to the public of the work of the owner of the copyright, of anything the sole right to do
(Section 5, PD No. 49a) which is conferred by statue on the owner of copyright.
(Columbia Pictures vs. CA, 261 SCRA 144)
Two rights insofar as copyright is concerned:
1. Economic rights (ownership) Is it a valid defense for the infringer that he did NOT know that he
2. Moral rights (belongs to one who really conceived or created was infringing a copyright?
the work)  NO. A copy of piracy is an infringement of the original, and it is
no defense that the pirate in such cases, did not know what
Examples: works he was indirectly copying, or did not know whether or
 Painting of Mona Lisa by Leonardo Da Vinci. If you buy the not he was infringing any copyright; he atleast knew that he
painting, you will be the owner of the painting. You have the was copying was not his, and he copied at his peril. (Columbia
economic right over the painting, you can sell it or place it on a Pictures vs. CA, 261 SCRA 144)
public exhibition. However, you cannot draw over the painting
of Mona Lisa because even if you have an economic right over Difference between letters of patent and copyright:
the painting as an owner, you cannot bastardize the painting  If the discoverer writes and publishes a book on a particular
itself. Otherwise, the maker can claim from the owner. medicine, he gains no exclusive right to the manufacture and
 A film in the Metro Manila Film Festival. The producer wants to sale of the medicine; If he desires to acquire such exclusive
show the film and put it in the general patronage (para mas right, he must obtain a patent for the mixture as a new art,
malaki ang kita, pwede manood ang mga bata), but the movie manufacture or composition of matter. He may copyright his
has scenes which are violent and not appropriate for children. book, if he pleases; but that only secures to him the exclusive
The MTRCB said that the film may be shown under a general right of printing and publishing his book. (Pearl & Dean vs.
patronage category provided that the violent scenes are Shoemart, GR No. 148222)
deleted. However, the director does not want to delete the  Yung copyright ng libro sa iyo; pero yung produkto na
violent scenes because it is his work of art (pag tinanggal iyon, magagawa base sa narration mo sa libro ay hindi sa iyo. A
apektado ang director). There is a clash of rights – the right of separate application for patent must be secured.
the producer (owner) and the right of the director (maker).
Which will prevail? That should be provided in the agreement
of the parties.

Rule on ownership of copyright:


1. In case of original literary or artistic works, copyright shall
belong to the author of the work.
2. In case of work of joint authorship, the co authors shall be the
original owners of the copyright and in the absence of
agreement, their right shall be governed by the rules on co-
ownership. Except if the work consists of part that can be used
separately and the auhor of each part can be identified, the
author of each part shall be the original owner of the copyright
in the parts he created.
KEY TAKE-AWAYS:
 Patents relate to new and useful inventions (product or
process)
 Trademarks relate to distinguishing marks, name, and signs
that identifies a product, brand, service other commercial
activities as belonging to the trademark owner
 Copyright relates to works on literary and artistic domain

For Patents:
 Philippines now adopts the “First to File” Rule
 For inventions, the period of grant is now 20 years
 For utility models, the period is 7 years, without renewal
 For industrial designs, the period is 5 years
 Penalty for violation ranging from 100k to 300k and/or 6
months to 3 years imprisonment

For Trademarks:
 Actual use before the filing of an application is NOT required
 The term of the grant is 10 years and renewable (practically it
is perpetual)
 Affidavit of actual use is required to be filed within 3 years
from the filing of application
 Penalty for violation increased ranging from 50k to 200k
and/or 2 to 5 years imprisonment

For Copyright:
 Registration is NOT an absolute necessity (because the
protection for original intellectual creations commence from
the moment of their creation)
 The term of protection is the entire lifetime of the creator and
50 years after his death
 Covers 2 kind of rights (copyrights/economic rights and moral
rights)
 Penalty ranging from 50k to 1.5M and/or imprisonment of 1 to
9 years, depending on the number of offenses committed
TRANSPORTATION LAW The true test for a common carrier is not the quantity or extent of the
business actually transacted, or the number and character of the
Principal Laws: conveyances used in the activity, but whether the undertaking is a part
1. Civil Code (Art. 1732 to 1763) of the activity engaged in by the carrier that he has held out to the
2. Portions of the Code of Commerce (Secs. 34 to 379, 573 to 736 general public as his business or occupation. If the undertaking is a
and 806 to 869) single transaction, not a part of the general business or occupation
3. Public Service Act engaged in, as advertised and held out to the general public, the
4. Land Transportation and Traffic Code individual or the entity rendering such service is a private, not a common,
5. Carriage of Goods by Sea Act (COGSA) carrier.
6. Warsaw Convention
The question must be determined by the character of the business
Topics for discussion: actually carried on by the carrier, not by any secret intention or mental
1. Common Carrier vs. Private Carrier reservation it may entertain or assert when charged with the duties and
a. To determine the applicable law obligations that the law imposes. (Asia Lighterage vs. CA, GR No. 147246;
b. To determine the standard of diligence required Sps. Pereña vs. Sps. Zarate, GR No. 157917)
c. To determine the burden of proof applicable
2. Chartering Arrangements (Time/Voyage Charter vs. bareboat Even, for example, there is an agreement between the common carrier
or demise) and the supposed passenger that the vehicle shall not be considered as a
a. Time/Voyage Charter remain a common carrier common carrier, that agreement will not make the common carrier no
i. Inarkila yung barko kasama ang crew longer a common carrier.
ii. The vessel remains to be a common
carrier kasi doon pa rin sa owner ng Determinants if a party is a common carrier:
vessel yung master and crew, nakikisakay 1. He must be engaged in the business of carrying goods for
lang kayo exclusively others as a public employment, and must hold himself out as
b. Bareboat/demise vessel becomes private carrier ready to engage in the transportation of goods for person
i. Hiniram yung barko therefore it becomes generally as a business and not as a casual occupation.
a private arrangement, hence it cannot be 2. He must undertake to carry goods of the kind to which his
considered a common carrier business is confined.
3. Contributory negligence 3. He must undertake to carry by the method by which his
4. Extraordinary diligence business is conducted and over his established roads.
5. Doctrine of Last Clear Chance 4. The transportation must be for hire. (First Phil. Ind’l. vs. CA,
6. Doctrine of Inscrutible Fault 300 SCRA 661; Asia Lighterage vs. CA, GR No. 147246)
7. Kabit System
8. Boundary System Why is it necessary to determine?
9. Warsaw Convention 1. To determine the applicable law
10. COGSA 2. To determine the standard of diligence required
3. To determine the burden of proof applicable (National Steel
COMMON CARRIER VS. PRIVATE CARRIER Corp. vs. CA, 283 SCRA 45)

“Common Carrier” Can a common carrier be converted into a private carrier by virtue
 Common carriers are persons, corporations, firms or of the time charter party agreement?
associations engaged in the business of carrying or  YES. The Time Charter Party agreement executed by the
transporting passengers or goods or both, by land, water, or parties clearly shows that the charter includes both the vessel
air, for compensation, offering their services to the public. and its crew thereby making the charterer the owner pro hac
(Article 1732, Civil Code) vice of M/V Ricky Rey during the whole period of the voyage.
As such, the master and all the crew of the ship were all made
“Private Carrier” subject to the direct control and supervision of the charterer.
 One who, without making the activity a vocation, or without (Federal Phoenix vs. Fortune Sea Carrier, GR No. 188118)
holding himself or itself out to the public as ready to act for all
who may desire his or its services, undertakes, by special The term “common carrier” is NOT limited to vehicles or vessels
agreement in a particular instance only, to transport goods or either by land, sea or water.
persons from one place to another either gratuitously or for  The definition of “common carriers” in the Civil Code makes no
hire. (Sps. Pereña vs. Sps. Zarate, GR No. 157917) distinction as to the means of transporting, as long as it is by
 The Supreme Court has classified a school bus service as a land, water or air. It does not provide that the transportation of
common carrier. (Sps. Pereña vs. Sps. Zarate, GR No. 157917) the passengers or goods should be by motor vehicle. In fact, in
the United States, oil pipe line operators are considered
Significant differences between a Common Carrier and a Private common carriers. (First Phil. Ind’l. vs. CA, 300 SCRA 661)
Carrier:  Examples of common carriers that are NOT vehicles or vessels
COMMON CARRIER PRIVATE CARRIER either by land, sea or water:
o The operator of a school bus operator/service (Sps.
Contracts of common carriage are The provisions on ordinary
Pereña vs. Sps. Zarate, GR No. 157917)
governed by the provisions on contracts of the Civil Code govern o Pipeline operators (First Phil. Ind’l. vs. CA, 300 SCRA
Common Carriers of the Civil Code, the contract of private carriage. 661)
Public Service Act and other special o Custom brokers and warehousemen (Calvo vs. UCPB,
laws relating to transportation. GR No. 148496; Schmitz Transport vs. Transport
A common carrier is required to The diligence required of a Venture, GR No. 150255)
observe extraordinary diligence, private carrier is only ordinary o A sole proprietor (involved in the business of buying of
and is presumed to be at fault or to diligence, that is, the diligence of scrap materials) may be a common carrier (De Guzman
have acted negligently in case of the a good father of a family. vs. CA, GR No. L-47822)
loss of the effects of passengers, or o Barge operators (Asia Lighterage vs. CA, GR No.
the death or injuries to passengers. 147246)
Therefore, it is incumbent upon the o A resorts owner offering tour package-contract which
common carrier to prove that it is includes ferry services for guests (Sps. Cruz vs. Sun
not negligent. Holidays, GR No. 186312)
Parties CANNOT agree to lessen the required diligence that a 3. In case of death of a passenger due to a breach of the
common carrier can observe: contract of carriage, the common carrier is liable to pay:
 Such stipulation is invalid. The law provides that no device, a. Indemnity for death
whether by stipulation, posting of notices, statements on b. Indemnity for loss of earning capacity
tickets, or otherwise, may dispense with or lessen the c. Moral damages (Victory Liner vs. Gammad, 444
responsibility of the common carrier as defined under Art. SCRA 355)
1755 of the Civil Code. (Sps. Pereña vs. Sps. Zarate, GR No.
157917) What should a common carrier do to avoid liability for the
death or injury to a passenger?
Standard required of common carriers in carrying out their tasks: o To successfully fend off liability in an action upon
 Common carriers, from the nature of their business and for the death or injury to a passenger, the common
reasons of public policy, are bound to observe extraordinary carrier must prove his or its observance of that
diligence in the vigilance over the goods and for the safety of extraordinary diligence; otherwise, the legal
the passengers transported by them, according to all the presumption that he or it was at fault or acted
circumstances of each case. (Article 1733, Civil Code) negligently would stand. (Sps. Pereña vs. Sps. Zarate,
GR No. 157917)
Presumption in case of death or injury to passengers transported
through a common carrier: 4. In case of loss, damage or destruction to goods
 In case of death of or injuries to passengers, common carriers transported through a common carrier: If the goods are lost,
are presumed to have been at fault or to have acted destroyed or deteriorated, common carriers are presumed to
negligently, unless they prove that they observed have been at fault or to have acted negligently, unless they
extraordinary diligence as prescribed in Articles 1733 and prove that they observed extraordinary diligence. (Article
1755. (Article 1756, Civil Code) 1735, Civil Code)

Liability of a common carrier: Instances when a common carrier can be absolved from
liability in case of loss, destruction or deterioration of the
1. In case of death or injury to passenger/s: Under Art. 1755, a goods:
common carrier is bound to carry the passengers safely as far a. Flood, storm, earthquake, lightning, or other natural
as human care and foresight can provide, using the utmost disaster or calamity
diligence of very cautious persons, with a due regard for all the b. Act of the public enemy in war, whether
circumstances. Thus, in case of death or injury sustained by a international or civil
passenger, the common carrier shall be liable. c. Act of omission of the shipper or owner of the goods
d. The character of the goods or defects in the packing
2. In case of death of a passenger whose death was wholly or in the containers
caused by the surreptitious act of a co-passenger: If the e. Order or act of competent public authority (Article
death was neither caused by any defect in the means of 1734, Civil Code)
transport or in the method of transporting, or to the negligent
or willful acts of common carrier’s employees, the common Causes of action that may arise from a negligent act of a common
carrier is NOT liable. It should be pointed out that the law does carrier:
not make the common carrier an insurer of the absolute safety 1. Culpa-contractual or negligence based on contract
of its passengers. (G.V. Florida vs. Heirs of Battung, GR No. 2. Cupla-aquiliana or negligence based on tort
208802) 3. Culpa-criminal or negligence based on a crime

However, in Fortune Express vs. CA (GR No. 119756), the “CONTRIBUTORY NEGLIGENCE”
carrier was made liable because it had already received  It is the conduct on the part of the injured party, contributing
intelligence reports from law enforcement agents that certain as a legal cause to the harm he has suffered, which falls below
lawless elements were planning to hijack and burn some of its the standard to which he is required to conform for his own
buses; and yet, it failed to implement the necessary protection. (Estacion vs. Bernardo, 483 SCRA 222)
precautions to ensure the safety of its buses and its passengers.  In the presence of contributory negligence, the one who
A few days later, one of the company's buses was caused the accident or the loss, damage or even death is NOT
indeed hijacked and burned by the lawless elements automatically exonerated. It depends on the circumstances.
pretending as mere passengers, resulting in the death of one of The Court may exercise their discretion depending on the
the bus passengers. Accordingly, the Court held that the level of the contributory negligence of the party damaged by
common carrier's failure to take precautionary measures to the accident.
protect the safety of its passengers despite warnings from law
enforcement agents showed that it failed to exercise the Who is negligent between the driver of a passenger bus that bumped
diligence of a good father of a family in preventing the attack the jeepney or the driver of the jeepney that was traversing a road
against one of its buses; thus, the common carrier was out of its allowed route?
rightfully held liable for the death of the aforementioned  Both are negligent. It is apparent that the proximate cause of
passenger. the accident is the passenger bus with contributory negligence
of the jeepney driver. The jeepney driver violated his franchise
No similar danger was shown to exist in G.V. Florida vs. Heirs by travelling along an unauthorized line/route and that the
of Battung (GR No. 208802) so as to impel petitioner or its passenger jeepney was overloaded with passengers, and the
employees to implement heightened security measures to deceased passenger was clinging at the back thereof. (Travel &
ensure the safety of its passengers. There was also no showing Tours vs. Cruz, GR No. 199282)
that during the course of the trip, Battung's killer made
suspicious actions which would have forewarned petitioner's “DOCTRINE OF LAST CLEAR CHANCE”
employees of the need to conduct thorough checks on him or  Where both parties are negligent but the negligent act of one is
any of the passengers. Common carriers should be given appreciably later than that of the other, or where it is
sufficient leeway in assuming that the passengers they take in impossible to determine whose fault or negligence caused the
will not bring anything that would prove dangerous to himself, loss, the one who had the last clear chance opportunity to
as well as his co-passengers, unless there is something that will avoid the loss but failed to do so, is chargeable with the loss.
indicate that a more stringent inspection should be made. (Sealoader Shipping vs. Grand Cement, GR No. 167363)
 The one who had the last clear chance to avoid the accident is When the contract of carriage begins:
presumed to be negligent. Although the other party may be  The victim, by stepping and standing in the platform of the bus,
considered as having contributed to the bringing about the is already considered a passenger and is entitled to all the
accident (contributory negligence). rights and protection pertaining to contract of carriage.
 This is applicable only if BOTH parties are at fault (Dangwa Trans. Co. vs. CA, 202 SCRA 574)
o When NOT applicable: Cars A and B are driving on
opposite sides. Car A was within its proper lane Examples:
while car B swerved to the opposite lane to overtake  Yung passenger, sumampa sa bus pero biglang umarangkada.
another car but collided head-on with car A. Here, Ang defense ng bus, hindi pa passenger dahil wala pang ticket
only car B is at fault. Hence, the doctrine of last clear at hindi pa bayad (for one to be a common carrier, dapat for
chance is NOT applicable. compensation). At that point there is already a contract of
 This is applicable only in a suit between the owners and carriage. The common carrier is liable.
drivers of colliding vehicles  Yung passenger na nasa LRT platform, nasagasaan at namatay.
 When the doctrine is NOT applicable: There is already a contract of carriage, following the Dangwa
o Where the party charged is required to act ruling.
instantaneously, and the injury cannot be avoided
by the application of all means at hand after the peril When the contract of carriage ends:
is or should have been discovered. (Achevara vs.  The relation of carrier and passenger continues until the
Ramos, GR No. 175172) passenger has been landed at the port of destination and has
o Where the passenger demands responsibility from left the vessel owner’s dock or premises.
the carrier to enforce its contractual obligations
(culpa-contractual), for it would be inequitable to Examples:
exempt the negligent driver and its owner on the  Yung passenger ng bus, pagdating sa terminal ay bumaba at
ground that the other driver was likewise guilty of umalis na ang bus. At that stage, the contract of carriage is not
negligence. (Tiu vs. Arriesgado, GR No. 437 SCRA yet terminated because the passenger is still within the
426) premises (terminal).

Is a certificate of public convenience required to hold a common “RIGHT OF WAY”


carrier liable for damages?  It is the right of one vehicle to proceed in a lawful manner in
 NO. A certificate of public convenience is NOT a requisite for preference to another approaching vehicle under such
the incurring of liability under the Civil Code provisions circumstances of direction, speed and proximity as to give rise
governing common carriers, which liability arises from the to a danger of collision, unless one of the vehicles grants
moment a person or firm acts as a common carrier, without precedence to the other. It is generally recognized that the
regard to whether or not such carrier has also complied with vehicle first entering an intersection is entitled to the right of
the requirements of the applicable regulatory statute and way, and it becomes the duty of the other vehicle likewise
implementing regulations and has been granted a certificate of approaching the intersection to proceed with sufficient care to
public convenience or other franchise. (Loadstar Shipping vs. permit the exercise of such right without danger of collisions.
CA, 315 SCRA 339) (Caminos vs. People, GR No. 147437)

“REGISTERED-OWNER RULE” Who has a right of way between an aircraft taxiing and an aircraft
 It states that the registration of motor vehicles, as required by taking off or about to take off?
law, was necessary “not to make said registration the operative  An aircraft taxiing on the maneuvering area of an aerodrome
act by which ownership in vehicles is transferred, but to permit shall give way to aircraft taking off or about to take off. (PAL vs.
the use and operation of the vehicle upon any public highway.” Pacific Airways, GR No. 170418)
 Its main aim is to identify the owner so that if any accident  Example: May isang eroplanong pababa and may isang
happens, or that any damage or injury is caused by the vehicle eroplanong nagtataxi and about to take-off. Ang may right of
on the public highways, responsibility therefor can be fixed on way ay ang eroplanong pababa. Dapat mag-give way yung
a definite individual, the registered owner. (Caraval Travel vs. eroplanong nasa baba palang (taxiing).
Abejar, GR No. 170631)
 It would be wrong to say that registration is only for purposes “KABIT SYSTEM”
of transferring the registration of the vehicle from the former  It is an arrangement whereby a person who has been granted a
owner to the new owner. The purpose of registration is to hold certificate of public convenience allows another person who
who is the registered owner of the vehicle liable in case that owns motor vehicles to operate under such franchise for a fee.
vehicle figures in an accident. (BTI vs. CA, GR No. 57493)

The registered owner CANNOT validly avoid liability for damages A “Kabit System” is contrary to public policy:
even if the driver was not authorized:  Although not penalized outright as a criminal offense, the kabit
 The registered owner of any vehicle is directly and primarily system is invariably recognized as being contrary to public
responsible to the public and third persons while it is being policy and, therefore, void and inexistent under Art. 1409 of
operated; and whether the driver is authorized or not by the the Civil Code. It is an abuse of a certificate of public
actual owner is irrelevant to determining the liability of the convenience, which is a special privilege granted by the
registered owner whom the law holds primarily and directly government. (Teja Marketing vs. IAC, GR No. L-65510)
responsible for any accident, injury or death caused by the  It is not illegal because there is no law that outright prohibits
operation of the vehicle in the streets and highway. (Villanueva the kabit system. But there is also no law which allows the
vs. Domingo, 438 SCRA 485) kabit system.
 Any party entering into a kabit system is considered to be
Who has the burden of proof? entering into a void agreement because it is not sanctioned by
 In an action for breach of contract of carriage, all that is law.
required is to prove the existence of such contract and its non
performance by the carrier through the latter’s failure to carry
the passenger safely to his destination. (Japan Airlines vs.
Simangan, 552 SCRA 341)
Rationale for the rule on “Kabit System”: What kind of relationship exists between the vehicle owner and the
 If a registered owner is allowed to escape liability by proving driver under the boundary system?
who the supposed owner of the vehicle is, it would be easy for  They have an employee-employer relationship and not of
him to transfer the subject vehicle to another who possesses lessor-lessee relationship. (Marquez vs. NLRC, GR No. 117495)
no property with which to respond financially for the damage  If it is a lease arrangement, the operator can easily deny
done. Thus, for the safety of passengers and the public who liability if the driver had an accident causing death or injury to
may have been wronged and deceived through the baneful a third person or damage to property. In a lease arrangement,
kabit system, the registered owner of the vehicle is not the lessor is not liable for the acts of the lessee. If the driver
allowed to prove that another person has become the owner will not be treated as an employee of the owner/operator, then
so that he may thereby relieved of responsibility. Subsequent the latter cannot be held liable for the injury or death of a third
cases affirm such basic doctrine. (Santos vs. Sibug, GR No. L- person. But if it will be considered as if there is an employer-
26815) employee relationship, under the vicarious liability rule, the
employer is liable for the acts of the employee. Which is why
Who can be held liable in case of accident? even if it is under a boundary system, the driver still appears to
 Although the registered owner is always liable, nevertheless be an employee of the owner or operator.
the actual operator can be held solidarily liable with the  The fact that the driver does not receive a fixed income, but
owner as a joint tort-feasor. (Jereos vs. CA, 117 SCRA 795) gets only the excess of the amount of fares collected by him
 The one who holds the certificate of public convenience can be over the amount that he pays for the jeep owner and that the
held solidarily liable with the owner of the vehicle. So that one gasoline consumed by the jeep is for the account of the driver –
who is engaged in a kabit system will be held liable, both are are not sufficient to withdraw the employer-employee
joint tort-feasors. relationship. (NLRC vs. Dinglasan, GR No. L-14183)
 Thus, both the owner and the “kabit” operator may be held
liable in case of an accident involving a vehicle operated under Why is the “boundary system” NOT recognized as a legal practice?
a “kabit system.”  Essentially, the “boundary system” seeks to exempt the
 Rationale for holding both liable: purported owner-lessor from the solidary liability rule
o The kabit system is against public policy. mandated of an employer for the negligent act of his employee
o The kabit operator and the owner should not profit under the quasi-delict provisions of Articles 2176 and 2180 of
from their personal arrangement at the expense of the Civil Code.
the public.  Likewise, the “boundary system” would exempt the registered
owner of a vehicle, as a mere lessor of equipment, from being
Can the Kabit system rule be used by the other party in the accident considered as a party in the common carrier operations of the
to avoid liability? purported lessee who is deemed to be the principal operator of
 NO, because the thrust of the law in enjoining the kabit system the common carrier operations to which the vehicle is being
is not to penalize the parties but to identify the party upon devoted to.
whom responsibility may be fixed in case of accident. It is for
the protection of the public. (Lim vs. CA, GR No. 125817) In case of “boundary system,” who is liable in case of accidents?
 Example: Two buses collided. The one at fault is the bus being  Both the operator and the driver are jointly and solidarily
operated under a certificate of public convenience and it liable.
collided with a bus under a kabit system arrangement. The  To exempt from liability the owner of a public vehicle who
Supreme Court held that although the other party is guilty of operates it under the “boundary system” on the ground that he
kabit, you can already escape liability because the other party is a mere lessor would be not only to abet flagrant violations of
is under a kabit system arrangement. The one who caused the the Public Service Law, but also to place the riding public at the
collision must suffer the loss, regardless if the other party is mercy of reckless and irresponsible drivers – reckless because
into a kabit system arrangement. The kabit system the measure of their earnings depends largely upon the
arrangement will only apply if the liability is being imposed number of trips they make, and hence, the speed at which they
upon the kabit operator or the owner of the vehicle that drive; and irresponsible because most if not all of them are in
entered into a kabit system arrangement. no position to pay the damages they might cause. (Hernandez
vs. Dolor, 435 SCRA 668)
“BOUNDARY SYSTEM”
 It is an arrangement whereby the registered owner of a vehicle MARITIME COMMERCE
allows another person to operate it as a common carrier under
a lease arrangement between, and thereby avoiding the COGSA is applicable to the Philippines:
establishment of either an employer-employee relationship or  The Carriage of Goods by Sea Act (COGSA), Public Act No. 521
that of a principal-agent relation. of the 74th US Congress, was accepted to be made applicable to
 Under this system, the driver is engaged to drive the all contracts for the carriage of goods by sea to and from
owner/operator’s unit and pays the latter a fee commonly Philippine ports in foreign trade by virtue of CA No. 65.
called boundary (fixed amount on a daily basis) for the use of (Insurance Co. of North America vs. Asian Terminals, GR No.
the unit. Whatever he earned in excess of that amount is his 180784)
income. (Paguio Transport vs. NLRC, GR No. 119500)
When is COGSA applicable?
Can a bus company deny liability for death caused on its passengers  It shall apply to every contract of carriage of goods by sea, the
due to the negligence of its bus driver under the boundary system on carrier in relation to the loading, handling, stowage, carriage,
the ground that the driver is not its employee? custody, care and discharge of such goods shall be subject to
 NO, the bus company shall be solidarily liable for the death or the responsibilities and liabilities and entitled to the rights and
injury of the passenger since the bus driver is deemed an immunities thereto. (Insurance Co. of North America vs. Asian
employee of the bus company under the boundary system. Terminals, GR No. 180784)
(Hernandez vs. Dolor, GR No. 160286)
 Notwithstanding that they are operating under a boundary When will the operation of COGSA end?
system, the court will still consider it as if there is an employer-  From the time when the goods have been discharged from the
employee relationship. ship and given to the custody of the arrastre operator, COGSA
shall no longer be applicable. (Insurance Co. of North America
vs. Asian Terminals, GR No. 180784)
In case of damage on the goods, is notice required? Is a stipulation limiting the carrier’s liability for loss of cargo
 YES, notice is required. Under Section 3(6) of the COGSA, notice allowed under COGSA?
of loss or damage must be filed within 3 days from delivery, if  YES, such stipulation in the bill of lading limiting respondents’
the loss or damage is NOT apparent. However, if the loss or liability for the loss of the subject cargoes is allowed under Art.
damage is apparent, notice must be given immediately so that 1749 of the Civil Code, and Sec. 4(5) of the COGSA. (Phil.
it would no longer be subject to investigation. (Belgian vs. Phil. Charter Insurance vs. Neptune Orient, GR No. 145044)
First Insurance Co., Inc., 432 Phil. 567)
 Unless notice of loss or damage and the general nature of such If the goods are damaged or has deteriorated without proper
loss or damage be given in writing to the carrier or his agent at explanation, who will be liable?
the port of discharge before or at the time of the removal of the  If no adequate explanation is given as to how the loss, the
goods into the custody of the person entitled to delivery destruction or the deterioration of the goods happened, the
thereof under the contract of carriage, such removal shall be carrier shall be held liable therefor.
prima facie evidence of the delivery by the carrier of the goods
as described in the bill of lading. (Philam Ins. Co. vs. Heung-A “BILL OF LADING”
Shipping, GR No. 187812)  It is the official document prepared and issued by the common
carrier to a shipper duly accepting the goods for shipment
Prescriptive period for filing an action under COGSA: containing information like item, quantity, value, vessel,
 In any event, the carrier and the ship shall be discharged from details, date, port, consigner, consignee, etc.
all liability in respect of loss or damage unless suit is brought  It is a contract to carry the goods to a destination based on
within 1 year after delivery of the goods, or the date when which seller can claim consideration and buyer can take
the goods should have been delivered. (Section 3(6)). delivery of the goods.
 Effect if no action is made within the prescriptive period:
The carrier and the ship shall be discharged from all liability. Nature of bill of lading:
 The parties can agree to extend the prescriptive period for  It is a written acknowledgement of the receipt of goods and an
filing an action: Jurisprudence has recognized the validity of agreement to transport and to deliver them at a specified place
an agreement between the carrier and the shipper/consignee to a person named or on his or her order. (Unsworth Transport
extending the 1 year period to file a claim. As far as the law is International vs. CA, GR No. 166250)
concerned, the 1 year period is only the minimum that the
parties may agree on. (Cua vs. W Allem Philippines Shipping, Three-fold character of a bill of lading:
GR No. 171337) 1. It is a receipt of the goods delivered to the carrier for shipment.
So as far as the seller is concerned, if he delivered the goods to
Who may avail of the defense of prescription? the carrier, the bill of lading is a proof that the carrier received
 Both the carrier and the shipper may put up the defense of the goods for shipment.
prescription if the action for damages is not brought within 1 2. It is a definition of the contract of carriage of goods.
year after the delivery of the goods or the date when the goods 3. It is a Document of Title to the goods described therein. Such
should have been delivered. that if the bill of lading is on the hands of the consignee, all that
 The consignee or legal holder of the bill may also invoke the the consignee has to do is to go to the carrier and show the bill
prescriptive period. (Belgian Overseas Chartering vs. Phil. First of lading. That is already a sufficient evidence that he is the
Insurance, GR No. 143133) owner of the goods
a. It is also a document of transfer, being freely
What is the nature of the relationship of an arrastre operator and a transferable but not a negotiable instrument in the
consignee? legal sense.
 Their relationship is akin to that between a warehouseman and b. It binds the carrier to its items, irrespective of who
a depositor. In instances when the consignee claims any loss, the actual holder is or the owner of the goods, may
the burden of proof is on the arrastre operator to show that it be at a specific moment. The holder of the bill of
complied with the obligation to deliver the goods and that the lading, under the law, is presumed to be the owner
losses were not due to its negligence or that of its employees. thereof. So once presented to the carrier, the latter is
(Asian Terminals, Inc. vs. Allied Guarantee, GR No. 182208) duty-bound to honor such bill of lading and to
release the goods accordingly.
Is the defense of prescription available to an arrastre operator?
 NO, the COGSA does not mention that an arrastre operator may Is the presentation and surrender of the bill of lading to the common
invoke the prescriptive period of 1 year; hence, it does not carrier by the consignee an absolute necessity before the goods can
cover the arrastre operator. (Insurance Co. of North America be released?
vs. Asian Terminals, GR No. 180784)  NO, a common carrier may release the goods to the consignee
even without the surrender of the bill of lading.
Package Limitation Rule under the COGSA:  GENERAL RULE: Upon receipt of the goods, the consignee
 The COGSA supplements the Civil Code by establishing a surrenders the bill of lading to the carrier and their respective
provision limiting the carrier’s liability in the absence of a obligations are considered cancelled.
shipper’s declaration of a higher value in the bill of lading.  EXCEPTIONS: The law provides two exceptions where the
(Unsworth Transport International vs. CA, GR No. 166250) goods may be released without the surrender of the bill of
 Unless the shipper has declared a higher value for the goods, lading because the consignee can no longer return it. These
the carrier can only be liable under the package limitation rule exceptions are when the bill of lading gets lost or for other
(maximum amount $500). cause. In either case, the consignee must issue a receipt to the
 Neither the carrier nor the ship shall in any event be or become carrier upon the release of the goods. Such receipts shall
liable for any loss or damage to or in connection with the produce the same effect as the surrender of the bill of lading.
transportation of goods in an amount exceeding $500 per (Designer Baskets, Inc. vs. Air Sea Transport, GR No. 184513)
package of lawful money of the United States, or in case of
goods not shipped in packages, or the equivalent of that sum in BAREBOAT CHARTER
other currency, unless the nature and value of such goods have  It is an arrangement for the chartering or hiring of a ship or
been declared by the shipper before shipment and inserted in boat, whereby no crew or provisions are included as part of the
the bill of lading. This declaration, if embodied in the bill of agreement; instead, the people who rent the vessel from the
lading, shall be prima facie evidence, but shall not be owner are responsible for taking care of such things.
conclusive on the carrier. (Section 4(5), COGSA)
BAREBOAT/DEMISE CHARTER TIME/VOYAGE CHARTERS Is the negligent act of the airline in not informing the passenger of
The owner gives possession of the The charterer charters the ship the cancellation of her flight covered by Warsaw Convention?
ship to the charterer and the (or part of it) for a particular  NO, the airlines’ negligent act of reconfirming the passenger’s
charterer hires its own master and voyage or for a set period of time. reservation days before departure and failing to inform the
crew. The bareboat charterer is The charterer can direct where latter that the flight had already been discontinued is not
sometimes called a “disponent the ship will go but the owner of among the acts covered by the Warsaw Convention, since the
owner.” the ship retains possession of the alleged negligence did not occur during the performance of the
ship through its employment of contract of carriage but, rather days before the scheduled
The giving up of possession of the the master and crew. flight. (PAL vs. Savillo, GR No. 14954)
ship by the owner is the defining
characteristic of a bareboad/demise When do the rights under the Convention prescribe?
charter.  The right to damages shall be extinguished if an action is not
brought within 2 years, reckoned from the date of arrival at
“DOCTRINE OF INSCRUTIBLE FAULT” the destination, or from the date on which the aircraft ought to
 It is the doctrine that holds that where two vessels collided and have arrived, or from the date on which the transportation
there is no proof as to who caused the accident or who stopped. (Article 29)
between the two is at fault, the court should rule that neither
party can maintain any action for compensation. Is there a notice requirement under the Convention?
 YES, in the case of damage, the person entitled to delivery must
WARSAW CONVENTION complain to the carrier forthwith after the discovery of the
damage, and, at the latest, within 3 days from the date of
The provisions of the Warsaw Convention is applicable to the receipt in the case of luggage and 7 days from the date of
Philippines: receipt in the case of goods. In the case of delay, the complaint
 It has the force and effect of law in this country. (Lhuillier vs. must be made at the latest within 14 days from the date on
British Airways, GR No. 171092) which the luggage or goods have been placed at his disposal.
 The Republic of the Philippines is a party to the Convention for (Article 26)
the Unification of Certain Rules Relating to International
Transportation by Air, otherwise known as the Warsaw For Airline Companies:
Convention. It took effect on February 13, 1933. The  The passenger of an airline company has every right to expect
Convention was concurred in by the Senate, through its that he be transported on that flight and on that date specified
Resolution No. 19, on May 16, 1950. The Philippine instrument in his ticket. If he is not transported under the terms agreed
of accession was signed by President Elpidio Quirino on upon, the airline company may be exposed to suit for breach of
October 13, 1950, and was deposited with the Polish contract. (China Airlines, Ltd. vs. CA, 453 Phil. 959)
government on November 9, 1950.
 The Convention became applicable to the Philippines on “Bump-offs”
February 9, 1951.  In case of bump-off, the passenger can hold the airline
 On September 23, 1955, President Ramon Magsaysay issued company liable for damages.
Proclamation No. 201, declaring our formal adherence thereto,  If the passenger is bumped off to higher accommodations:
“to the end that the same and every article and clause thereof The airline can be still held liable. The breach of contract of
may be observed and fulfilled in good faith by the Republic of carriage is not limited to either the bumping off of a passenger
the Philippines and the citizens thereof.” (Santos III vs. with confirmed reservation or the downgrading of a
Northwest Airlines, GR No. 101538) passenger’s seat accommodation from one class to a lower
class. Passengers have every right to waive such opportunity,
The cardinal purpose of the Warsaw Convention: have done so against their wishes. This notwithstanding that
 To provide uniformity of rules governing claims arising from the upgrading is for the better condition and definitely, for the
international air travel; thus, it precludes a passenger from benefit of the passengers. (Cathay Pacific vs. Sps. Vazquez, 399
maintaining an action for personal injury damages under local SCRA 207)
law when his or her claim does not satisfy the conditions of  A chance passenger cannot sue for damages if not given a seat
liability under the Convention. (PAL vs. Savillo, GR No. 14954) by the airline.

When is the Warsaw Convention applicable? “Over-booking”


 It applies to all international carriage of persons, luggage or  Over-booking of the aircraft’s seating capacity exceeding 10%
goods performed by aircraft for rewards. It applies equally to can be considered as an act of bad faith. Thus, the airline
gratuitous carriage by aircraft performed by an air transport company may be held liable for damages.
undertaking. (Article 1)
 It applies to “all international transportation of persons, Principle of Lex Loci Contractus
baggage or goods performed by any aircraft for hire.” It seeks  It provides that as a general rule, the law of the place where a
to accommodate or balance the interests of passengers seeking contract is made or entered into governs with respect to its
recovery for personal injuries and the interests of air carriers nature and validity, obligation and interpretation. Hence, the
seeking to limit potential liability. It employs a scheme of strict court should apply the law of the place where the airline
liability favoring passengers and imposing damage caps to tickets were issued, when the passengers are residents and
benefit air carriers. (PAL vs. Savillo, GR No. 14954) nationals of the forum and the tickets is issued in such State by
the defendant airline. (United Airlines vs. CA, 357 SCRA 99)
Is a claim for damages due to humiliation caused by airline
employees covered by Warsaw Convention?
 NO, there should be a distinction between the (1) damage to
the passenger’s baggage and (2) humiliation he suffered at the
hands of the airline’s employees. The first cause of action was
covered by the Warsaw Convention which prescribes in 2
years, while the second was covered by the provisions of the
Civil Code on torts, which prescribes in 4 years. (PAL vs.
Savillo, GR No. 14954)