INTELLECTUAL PROPERTY LAW 6. Coordinate with other govt.
agencies and private sector efforts
Principal law: R.A. No. 8293 (IP Code of the Philippines)
Principal purpose: To protect and secure the exclusive rights of
scientists, inventors, artists and other gifted citizens to their intellectual
property and creations, particularly when beneficial to the people, for
such periods as provided by law.
 To make sure that the inventors are given some form of
protection to their intellectual property.
 Ownership will not be absolute, except for trademark because
you can use it perpetually provided that you renew your
registration. Insofar as patents and copyrights are concerned, it
will expire.
Term of intellectual property rights consists of:
1. Copyright and related rights
2. Trademarks and service marks
3. Geographic indications
4. Industrial designs
5. Patents
6. Layout-designs (topographies) of integrated circuits,
particularly for microchips and electronic items
7. Protection of undisclosed information
“Technological transfer arrangements”
 It refers to contracts or agreements involving the transfer of
systematic knowledge for the manufacture of a product, the
application of a process, or rendering of a service including
management contracts; and the transfer, assignment or
licensing of all forms of intellectual property rights, including
licensing of computer software except computer software
developed for mass market.
 Example: The florescent light was invented by one certain
Flores but he has no money to mass produce it, so he entered
into an agreement with an investor/capitalist and come up
with a technological transfer arrangement in order to protect
his invention. The investor/capitalist can mass produce it, then
he will pay Flores the corresponding royalties. Meanwhile, the
product goes into the public so there is some kind of a sharing
arrangement there on how much will go to the inventor and
how much will go to the investor/capitalist.
 Example: There are certain industrial parts in the Philippines
that uses certain technology or certain invented products.
When these are used in the Philippines and located in our
various industrial parts, we are not supposed to claim
ownership over these inventions or products but because of
these contracts, there can be a transfer of
technology/information. So the people working in the
factories, they get accustomed to how to use the different
machines or products, which will later on transform into what
you call a transfer of technology/knowledge – and this is
covered by a contract.
Government office tasked to promote and protect IP rights:
Philippine Intellectual Property Office (IPO).
Functions of the IPO (Section 5):
1. Examine applications for grant of letters patent for inventions
and register utility models and industrial designs (Bureau of
Patents)
2. Examine applications for the registration of marks, geographic
indication, integrated circuits (Bureau of Trademarks /
Trademarks Office)
3. Register technology transfer arrangements and settle disputes
involving technology transfer payments and implement
strategies to promote and facilitate technology transfer
(Documentation, Info. and Technology Transfer Bureau)
4. Promote the use of patent information as a tool for technology
development
5. Administratively adjudicate contested proceedings affecting
intellectual property rights (Bureau of Legal Affairs)
to formulate and implement plans and policies to strengthen
the protection of intellectual property rights in the country
Cases in the IPO are called “inter-partes case”
Composition of the IPO:
 IPO is headed by the Director General
 Each of the Bureau is headed by a Director and assisted by an
Assistant Director
Laws covered by the IP Code:
1. Law on Patents
2. Law on Trademarks, Service Marks and Trade Names
3. Law on Copyright
LAW ON PATENTS
Patent is the grant of exclusive right to make, use and sell patented object
personally or through others as well as the grant of right to effectively
prohibit others from practicing the invention or profiting therefrom
without owner's consent. Rights in the invention itself may be transferred
either separately or together, upon one person or many, and each may
independently of the others use the rights received. (Universal Food Corp.
vs. CA, 33 SCRA 1)
 Important word “sell” - if you can make and use something
personally, then you cannot be accused of infringing a patent
kasi nasa bahay nyo lang. But the moment you manufacture
and sell/distribute it, or the moment you become economically
interested, on a particular product or invention, then that is
when you commit patent infringement.
Inventions that are patentable:
 Any technical solution of a problem in any field of human
activity which is new, involves an inventive step and is
industrially applicable shall be patentable. It may be, or may
relate to, a product, or process, or an improvement of any of the
foregoing. (Section 21)
 If a product is no longer new and yet it was registered and a
corresponding letters of patent was issued, that particular
patent can be cancelled by filing an inter-partes case for the
cancellation for the letters of patent.
Element of NOVELTY:
 The element of novelty is an essential requisite of the
patentability of an invention or discovery. If a device or
process has been known or used by others prior to its
invention or discovery by the applicant, an application for a
patent therefor should be denied.
 An invention must possess the essential elements of novelty,
originality and precedence, and for the patentee to be entitled
to the protection, the invention must be new to the world.
(Manzano vs. CA, G.R. No. 113388)
Non-patentable inventions:
1. Discoveries, scientific theories and mathematical
2. Schemes, rules and methods of performing mental acts, playing
games or doing business and programs for computers
3. Methods for treatment of the human or animal body by surgery
or therapy and diagnostic methods practiced on the human or
animal body (example:
4. Plant varieties or animal breeds or essentially biological
process for the production of plants or animals
5. Aesthetic creations
6. Anything which is contrary to public order or morality (Section
22)
Examples:
 For #1 - 1+1=2; everything you throw up will go down
 For #2 - hindi pwedeng sarilihin ang paglalaro ng chess kasi
kayo ang nakaisip na ang talon ng kabayo ay pa-“L.” So wala na
maglalaro ng chess kung ang kabayo nyo pa-“L” ang talon
  For #3 - naisip niyong pag ininject ang isang particular
chemical sa katawan ay lumalaki ito, so wala na ibang doctor
na pwedeng gumawa nito (you cannot apply for a patent if it
would impede the development of science and technology); if
you learned that when applying a certain method of surgery, it
can easily cure or remove 100% any cancer cell so if such is
patented, no one can perform such method of surgery
 For #4 - crossbreeding of elephant and chiuaua, you will
produce a hybrid elephant; crossbreeding of apple and guava
 For #5 - yung manner of pag-make-up ng tao para lumiit yung
muka tignan
 For #6 - eyeglass na tumatagos sa damit
“First to File Rule”
 If two (2) or more persons have made the invention separately
and independently of each other, the right to the patent shall
belong to the person who filed an application for such
invention, or where two or more applications are filed for the
same invention, to the applicant who has the earliest filing date
or, the earliest priority date. (Section 29)
 The moment you are already certain of an invention, you
already need to file a petition before the Bureau of Patents for
the registration of the product. To do this, you file the
corresponding papers with the IPO. The IPO will stamp the
date and time of filing, primarily because of the first to file rule.
Two persons may file an application for the same product
within the same day, hence the time element is material.
“Right of Priority”
 An application for patent filed by any person who has
previously applied for the same invention in another country
which by treaty, convention, or law affords similar privileges to
Filipino citizens, shall be considered as filed as of the date of
filing of the foreign application. (Section 31)
 Example: This is important for inventions abroad which are
being copied here in the Philippines. Suppose there is a
product in the US, for example an Apple product, which is an
accessory to either a phone or a laptop which is new and
registered in the US but not yet registered here in the
Philippines. When Apple decided to register the product
worldwide and it was filed today here in the Philippines, it
appears that 3 weeks ago there has been a corresponding
application over the same invention filed by another
person/entity. Under the First to File Rule, such person/entity
is entitled to the patent. But recognizing the Right of Priority,
the one who has an earlier filing date in another jurisdiction
shall be preferred because the filing in another jurisdiction
shall be considered as the date of filing in the Philippines.
 Requirements in order to claim Right of Priority:
a. Local application expressly claims priority
b. It is filed within 12 months from the date the earliest
foreign application was filed
c. A certified copy of the foreign application together
with an English translation is filed within 6 months
from the date of filing in the Philippines
 Example: If the products was registered in the US, the
application should be filed in the Philippines within the 12
month period. If the application is filed on the 11th month, the
filing will retroact to the date of filing in the US and it is not the
date/month when it was filed in the IPO Philippines.
Contents of a Patent:
 The patent shall be issued in the name of the Republic of the
Philippines under the seal of the Office and shall be signed by
the Director, and registered together with the description,
claims, and drawings, if any, in books and records of the Office.
(Section 53)
 Purpose: If and when the patent expires, everyone else can tap
your product because it is already outside the protection of the
law.
Term of a Patent: 20 years from the filing date of the application
(Section 54)
Cancellation of Patent:
 A patent, being a grant of privilege by the government, may be
cancelled based on the grounds specified by law:
a. That what is claimed as the invention is not new or
Patentable
b. That the patent does not disclose the invention in a
manner sufficiently clear and complete for it to be
carried out by any person skilled in the art
c. That the patent is contrary to public order or
morality (Section 61)
 Effect of cancelled patent: Rights conferred by the patent or
any specified claim/s cancelled shall terminate (Section 66)
 A person can no longer be accused of patent infringement if the
Patent being copied is already cancelled. That is why the
registration of a Patent is very important.
Surrender of a Patent:
 The owner of the patent, with the consent of all persons having
grants or licenses or other right, title or interest in and to the
patent and the invention covered thereby, which have been
recorded in the Office, may surrender his patent or any claim
or claims forming part thereof to the Office for cancellation.
(Section 56)
Remedies available to a true and actual owner who was deprived of
the patent without his consent or through fraud:
 If a person, who was deprived of the patent without his
consent or through fraud is declared by final court order or
decision to be the true and actual inventor, the court shall
order for his substitution as patentee, or at the option of the
true inventor, cancel the patent, and award actual and other
damages in his favor if warranted. (Section 68)
Rights conferred by a patent:
1. If the subject matter of a patent is a product – to restrain,
prohibit and prevent any unauthorized person or entity from
making, using, offering for sale, selling or importing that
product
2. If the subject matter of a patent is a process – to restrain,
prevent or prohibit any unauthorized person or entity from
using the process, and from manufacturing, dealing in, using,
selling or offering for sale, or importing any product obtained
directly or indirectly from such process
3. To assign, or transfer by succession the patent, and to conclude
licensing contracts for the same (this is an attribute of
ownership) (Section 71.2)
“Prior User Rule”
 Any prior user, who, in good faith was using the invention or
has undertaken serious preparations to use the invention in his
enterprise or business, before the filing date or priority date of
the application on which a patent is granted, shall have the
right to continue the use thereof as envisaged in such
preparations within the territory where the patent produces
its effect. (Section 73.1)
 Example: In a factory, there are stages for the manufacturing of
a particular product. In the process, they came up with a
particular invention that is an innovative product in the
preparation or continuation of the entire process in the factory.
However, it was not registered with the IPO but was being
used in the factory. What if such particular invention was
registered by another person with the IPO, in good faith, not
knowing that it has already invented, developed and being
used by another. Under the First to File Rule, the owner of the
invention is the latter. But under the Prior User Rule, the
former is still allowed to continue using the invention but it
cannot be sold because he will then be prejudicing the right of
the registered patent owner.
 The registered owner cannot prevent the prior user from using
the invention under the Prior User Rule. But the prior user
cannot sue the registered owner for the product that the latter
belatedly invented and had registered under the First to File
Rule.
The government or its authorized representative may use/exploit
the invention even without agreement of the patent owner where:
1. The public interest, in particular, national security, nutrition,
health or the development of other sectors, as determined by
the appropriate agency of the government, so requires; or
2. A judicial or administrative body has determined that the
manner of exploitation, by the owner of the patent or his
licensee is anti-competitive. (Section 74.1)
Patent Infringement:
 The making, using, offering for sale, selling, or importing a
patented product or a product obtained directly or indirectly
from a patented process, or the use of a patented process
without the authorization of the patentee. (Section 76)
Remedies available to a patentee whose rights were violated by an
infringer:
 Any patentee, or anyone possessing any right, title or interest
in and to the patented invention, whose rights have been
infringed, may bring a civil action before a court of competent
jurisdiction, to recover from the infringer such damages
sustained thereby, plus attorney's fees and other expenses of
litigation, and to secure an injunction for the protection of his
rights. (Section 76.2)
A foreign national may file an action for infringement:
 Any foreign national or juridical entity who meets the
requirements of Section 3 and not engaged in business in the
Philippines, to which a patent has been granted or assigned
under this Act, may bring an action for infringement of patent,
whether or not it is licensed to do business in the Philippines
under existing law. (Section 77)
Action for damages arising from infringement of a patent:
 Prescriptive period for the filing of an action: 4 years from
the institution of the action for infringement (Section 79)
 Notice of an existing patent is a requisite before one can
recover damages due to infringement: Damages cannot be
recovered for acts of infringement committed before the
infringer had known; or had reasonable grounds to know of
the patent (Section 80)
When a person is presumed to be an infringer:
 It is presumed that the infringer had known of the patent if on
the patented product, or on the container or package in which
the article is supplied to the public, or on the advertising
material relating to the patented product or process, are placed
the words "Philippine Patent" with the number of the patent.
(Section 80)
Defenses available in an action for infringement:
1. The patent issued was invalid
2. One of the grounds on which a petition for cancellation can be
brought under Section 61 is present
a. That what is claimed as the invention is not new or
Patentable
b. That the patent does not disclose the invention in a
manner sufficiently clear and complete for it to be
carried out by any person skilled in the art
c. That the patent is contrary to public order or
morality
A criminal action can be maintained against an infringer:
 If infringement is repeated by the infringer or by anyone in
connivance with him after finality of the judgment of the court
against the infringer, the offenders shall, without prejudice to
the institution of a civil action for damages, be criminally liable
therefor and, upon conviction, shall suffer imprisonment for
the period of not less than six (6) months but not more than
three (3) years and/or a fine of not less than P100,000 but not
more than P300,000, at the discretion of the court.
 Prescriptive period for a criminal action: 3 years (Sec. 84)
“Doctrine of Equivalents”
 The doctrine of equivalents provides that an infringement also
takes place when a device appropriates a prior invention by
incorporating its innovative concept and, although with some
modification and change, performs substantially the same
function in substantially the same way to achieve substantially
the same result. (Smith Kline vs. CA, GR No. 126627)
 Example: A patented his invention, a cellphone. B later
invented a cellphone but with a ribbon and an electric fan,
alleging that it is not similar with A’s invention. B is guilty of
patent infringement by way of Doctrine of Equivalents because
it is still the same cellphone, functioning the same way but with
a little enhancement.
Rights over inventions may be assigned or transmitted:
 Inventions and any right, title or interest in and to patents and
inventions covered thereby, may be assigned or transmitted by
inheritance or bequest or may be the subject of a license
contract. (Section 103.2)
THE LAW ON TRADEMARKS, SERVICE MARKS AND TRADE NAMES
“Mark”
 Any visible sign capable of distinguishing the goods
(trademark) or services (service mark) of an enterprise and
shall include a stamped or marked container of goods. (Section
212.1)
“Collective mark”
 Means visible signs designated as such in the application for
registration and capable of distinguishing the origin or any
other common characteristic, including the quality of goods or
services of different enterprises which use the sign under the
control of the registered owner of the collective mark.
“Trade name”
 Means the name or designation identifying or distinguishing an
enterprise.
 Example: SGV; ACCRA
How is a right in a mark acquired:
 The rights in a mark acquired through registration made
validly in accordance with the provisions of trademarks law.
(Section 122)
 When you register a trademark, it does NOT necessarily follow
that you are already the owner of the trademark. (see
Birkenstock case)
Can the owner of a mark demand for its registration?
 No, the owner cannot demand that his mark registered.
Registration of a mark can be allowed only if all the
requirements imposed by law are complied with.
 Even if you have registered a trademark but failed to comply
with the requirements, then as if you have acquired the
trademark fraudulently.
What can be used as evidence that the mark has become distinctive?
 The IPO may accept as prima facie evidence that the mark has
become distinctive as used in connection with the applicant’s
goods or services in commerce, proof of substantially exclusive
and continuous use thereof by the applicant in commerce in
the phils for 5 years before the date on which the claim of
distinctiveness is made. (Section 123.2)
 If you have been using the mark for a long period of time, that
is more than enough in exchange for registration. So that even
one is able to beat another insofar as the registration of the
mark is concerned, still there is an issue as to who will own
that especially if the one who was not able to register it ahead
has been using the mark for a long period of time. The use of
the mark is more important.
What must the applicant file as evidence of substantially exclusive
and continuous use of the mark?
 Applicant or registrant must file a declaration of actual use
(DAU) of the marks with evidence to that effect, as prescribed
by the regulations within 3 years from filing date of the
application. Otherwise the application shall be refused or the
mark shall be removed the register by the director (Sec. 124.2)
 The DAU is a declaration that the applicant has been using the
mark for a long period of time or has been using it in
commerce.
Nature of the First to File Rule:
 The rule that the registration of a mark is prevented with the
filing of an earlier application for registration. This must not,
however, be interpreted to mean that ownership should be
based upon an earlier filing date. (EY Industrial vs. Shen Dar,
GR No. 184850)
 Example: If there are two users of the same trademark “X.” A
registered the trademark and was able to get a certificate of
trademark registration, but B has been using the same
trademark several years before the registration. Who owns the
trademark? B owns the trademark “X” because the registration
merely creates a prima facie presumption that he is the
registered owner. That presumption may be overtaken by
evidence to show that B indeed owns the mark.
The Philippines adheres to the Paris Convention:
 RA No. 8293 undoubtedly shows the firm resolve of the
Philippines to observe and follow paris convention by
incorporating the relevant portions of the Convention to
include persons whose internationally well-known mark,
whether or not registered, is identical with or confusingly
similar to or constitutes a translation of a mark that is sought
to be registered or is actually registered. (Shangri-La vs.
Developers Group, GR No. 159938)
There is NO time limit for the filing of a Petition for Cancellation of a
registered trademark:
 Both Sections 151 of RA No. 8293 or Article 6bis(3) of the Paris
Convention provides that no time limit is fixed for the
cancellation of marks registered or used in bad faith. (Shangri-
La vs. Developers Group, GR No. 159938)
Recourse of the applicant if an application for registration of a mark
is refused by the Director of Trademarks:
 The final decision of refusal of the Director of Trademarks shall
be appealable to the Director General in accordance with
procedure fixed by the Regulations. (Section 133.3)
 The applicant cannot go directly to the Court of Appeals or the
Supreme Court, otherwise it will be dismissed for prematurity.
Recourse of the owner of a mark that was considered “abandoned:”
 An abandoned application may be revived as a pending
application within 3 months from the date of abandonment
upon good cause shown and the payment of the required fee.
(Section 133.3)
 A mark is considered abandoned if the applicant failed to
renew the registration.
Recourse of the person whose right is affected by the registration of
the mark:
 Any person who believes that he would be damaged by the
registration of a mark may, upon payment of the required fee
and within 30 days after the publication of the application for
the registration of the mark, file with the IPO an opposition to
the application for the registration of the mark.
 Example: McDonald’s vs. Mang Donald’s, Atty. Ceñiza ; P&G vs.
Adamson & Adamson, “wings”
“Trademark Infringement”
 Infringement is the use without consent of the trademark
owner of any “reproduction, counterfeit, copy or colorable
limitation of any registered mark or tradename in connection
with the sale, offering for sale, or advertising of any good,
business or services on or in connection with which such use is
likely to cause confusion or mistake or to deceive purchasers
or others as to the source or origin of such goods or services, or
identity of such business; or reproduce, counterfeit, copy or
colorably imitate any such mark or tradename and apply such
reproduction, counterfeit, copy or colourable limitation to
labels, signs, prints, packages, wrappers, receptacles or
advertisements intended to be used upon or in connection with
such goods, business or services.”
 Implicit in this definition is the concept that the goods must be
so related that there is a likelihood either of confusion of goods
or business.
 A trademark infringement exists when the goods are so related
that the public may be, or is actually, deceived and misled that
they came from the same maker or manufacturer. (Esso
Standards vs. CA, GR No. L-29971)
THE LAW ON COPYRIGHT
“Copyright”
 Copyright is a form of intellectual property which gives the
creator of an original work exclusive rights over a certain
period of time in relation to that work, including its
publication, distribution and adaptation.
When does the protection for original intelletual creations
commence:
 Original intellectual creations in the literary and artistic
domain are protected from the moment of their creation.
Works which are PROTECTED:
1. Books, pamphlets, articles and other writings
2. Periodicals and newspapers
3. Lecture, sermons, addresses, dissertations prepared for oral
delivery whether or not reduced in writing or other material
form
4. Letters
5. Dramatic, or dramatico-musical compositions; choreographic
works or entertainment in dumb shows
6. Musical compositions. w/ or w/o words
7. Works of drawing, painting, architecture, sculpture, engraving,
lithography or other works of art, models or designs for work
of arts
8. Original ornamental designs or models for articles of
manufacture, whether or not registrable as industrial design,
and other works of applied art
9. Illustrations, maps, plans, sketch, charts and 3 dimensional
works relative to geography, topography, architecture or
science
10. Drawings or plastic works of a scientific or technical character
11. Photogrpahic works including works produced by a process
analogous to photography; lantern slides
12. Audiovisual works and cinematogrpahics works an works
produced by a process analogous to cinematography or any
process for making audio visual recordings
13. Pictorial illustrations and advertisement
14. Computer programs
15. Other literacy, scholarly, scientific and artistic works
16. Derivative works
Works which are NOT protected:
1. Any idea, procedure, system method or operation, concept,
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:
 Mere ideas are not covered by copyright unless
 “News of the day” cannot be copyrighted but the “newspaper”
and “news feeds” can be copyrighted. (see the ABS-CBN case)
Can Government works be protected?
 Under Section 176, no copyright shall subsist in any work of
the government of the Philippines. However, prior approval of
the government agency or office wherein the work is created
shall be necessary for exploitation of such work for profit.
Such agency or office may, among other things, impose as a
condition of the payment of royalties.
“Copy or economic rights”
 Under Section 177, copyright or economic rights shall consists
of the exclusive right to carry out, authorized or prevent the
following acts:
a. Reproduction of the work or substantial portion of
the work
b. Dramatization, translation, adaptation, abridgment,
arrangement or other transformation of the work
c. The first public distribution of the original and each
copy of the work by sale or other forms of transfer
of ownership
d. Rental of the original or a copy of an audiovisual or
cinematographic work, a work embodied in sound
recording, a computer program, a compilation of
date and other materials or a musical work in
graphic form, irrespective of the ownership of the
original or the copy which is the subject of the rental
e. Public display of the original or a copy of work
f. Public performance of the work
g. Other communication to the public of the work
(Section 5, PD No. 49a)
Two rights insofar as copyright is concerned:
1. Economic rights (ownership)
2. Moral rights (belongs to one who really conceived or created
the work)
Examples:
 Painting of Mona Lisa by Leonardo Da Vinci. If you buy the
painting, you will be the owner of the painting. You have the
economic right over the painting, you can sell it or place it on a
public exhibition. However, you cannot draw over the painting
of Mona Lisa because even if you have an economic right over
the painting as an owner, you cannot bastardize the painting
itself. Otherwise, the maker can claim from the owner.
 A film in the Metro Manila Film Festival. The producer wants to
show the film and put it in the general patronage (para mas
malaki ang kita, pwede manood ang mga bata), but the movie
has scenes which are violent and not appropriate for children.
The MTRCB said that the film may be shown under a general
patronage category provided that the violent scenes are
deleted. However, the director does not want to delete the
violent scenes because it is his work of art (pag tinanggal iyon,
apektado ang director). There is a clash of rights – the right of
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.
Examples:
 If A wrote a novel while in the office and using the office laptop,
during break time, it is still owned by the maker thereof. Even
if the maker used the office equipment and supplies, he still
owns the novel. Unless, if it was done in the performance of his
regular duties as an employee.
 If B was hired by Pixar to draw cartoons which will be sent to
Pixar in the US. Pixar owns B’s drawings.
 If C was hired by Pixar as a lawyer, but while waiting for his
case to be called, he drew Nemo with Superman’s brief. C owns
the drawing because he was not asked to draw a cartoon.
Copyright over letters:
 In respect of letter, copyright shall belong to the writer subject
to the provision of Article 723 of the Civil Code:
o Letters and other private communications in writing
are owned by the person to whom they are
addressed and delivered, but they cannot be
published or disseminated without the consent of
the writer or his heirs. However, the court may
authorize the publication or dissemination if the
public good or the interest of justice so requires.
 The same rule applies for photos or videos. The person to
whom they are addressed and delivered owns the photos or
videos given to her, but she cannot distribute, publish or
disseminate.
Nature of copyright infringement:
 Infringement of a copyright is a trespass on a private domain
owned and occupied by the owner of the copyright, and
therefore, protected by law, and infringement of copyright or
piracy consists in the doing by any person, without the consent
of the owner of the copyright, of anything the sole right to do
which is conferred by statue on the owner of copyright.
(Columbia Pictures vs. CA, 261 SCRA 144)
Is it a valid defense for the infringer that he did NOT know that he
was infringing a copyright?
 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
works he was indirectly copying, or did not know whether or
not he was infringing any copyright; he atleast knew that he
was copying was not his, and he copied at his peril. (Columbia
Pictures vs. CA, 261 SCRA 144)
Difference between letters of patent and copyright:
 If the discoverer writes and publishes a book on a particular
medicine, he gains no exclusive right to the manufacture and
sale of the medicine; If he desires to acquire such exclusive
right, he must obtain a patent for the mixture as a new art,
manufacture or composition of matter. He may copyright his
book, if he pleases; but that only secures to him the exclusive
right of printing and publishing his book. (Pearl & Dean vs.
Shoemart, GR No. 148222)
 Yung copyright ng libro sa iyo; pero yung produkto na
magagawa base sa narration mo sa libro ay hindi sa iyo. A
separate application for patent must be secured.
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
common carrier can observe:
 Such stipulation is invalid. The law provides that no device,
whether by stipulation, posting of notices, statements on
tickets, or otherwise, may dispense with or lessen the
responsibility of the common carrier as defined under Art.
1755 of the Civil Code. (Sps. Pereña vs. Sps. Zarate, GR No.
157917)
Standard required of common carriers in carrying out their tasks:
 Common carriers, from the nature of their business and for
reasons of public policy, are bound to observe extraordinary
diligence in the vigilance over the goods and for the safety of
the passengers transported by them, according to all the
circumstances of each case. (Article 1733, Civil Code)
Presumption in case of death or injury to passengers transported
through a common carrier:
 In case of death of or injuries to passengers, common carriers
are presumed to have been at fault or to have acted
negligently, unless they prove that they observed
extraordinary diligence as prescribed in Articles 1733 and
1755. (Article 1756, Civil Code)
Liability of a common carrier:
1. In case of death or injury to passenger/s: Under Art. 1755, a
common carrier is bound to carry the passengers safely as far
as human care and foresight can provide, using the utmost
diligence of very cautious persons, with a due regard for all the
circumstances. Thus, in case of death or injury sustained by a
passenger, the common carrier shall be liable.
2. In case of death of a passenger whose death was wholly
caused by the surreptitious act of a co-passenger: If the
death was neither caused by any defect in the means of
transport or in the method of transporting, or to the negligent
or willful acts of common carrier’s employees, the common
carrier is NOT liable. It should be pointed out that the law does
not make the common carrier an insurer of the absolute safety
of its passengers. (G.V. Florida vs. Heirs of Battung, GR No.
208802)
However, in Fortune Express vs. CA (GR No. 119756), the
carrier was made liable because it had already received
intelligence reports from law enforcement agents that certain
lawless elements were planning to hijack and burn some of its
buses; and yet, it failed to implement the necessary
precautions to ensure the safety of its buses and its passengers.
A few days later, one of the company's buses was
indeed hijacked and burned by the lawless elements
pretending as mere passengers, resulting in the death of one of
the bus passengers. Accordingly, the Court held that the
common carrier's failure to take precautionary measures to
protect the safety of its passengers despite warnings from law
enforcement agents showed that it failed to exercise the
diligence of a good father of a family in preventing the attack
against one of its buses; thus, the common carrier was
rightfully held liable for the death of the aforementioned
passenger.
No similar danger was shown to exist in G.V. Florida vs. Heirs
of Battung (GR No. 208802) so as to impel petitioner or its
employees to implement heightened security measures to
ensure the safety of its passengers. There was also no showing
that during the course of the trip, Battung's killer made
suspicious actions which would have forewarned petitioner's
employees of the need to conduct thorough checks on him or
any of the passengers. Common carriers should be given
sufficient leeway in assuming that the passengers they take in
will not bring anything that would prove dangerous to himself,
as well as his co-passengers, unless there is something that will
indicate that a more stringent inspection should be made.
3. In case of death of a passenger due to a breach of the
contract of carriage, the common carrier is liable to pay:
a. Indemnity for death
b. Indemnity for loss of earning capacity
c. Moral damages (Victory Liner vs. Gammad, 444
SCRA 355)
What should a common carrier do to avoid liability for the
death or injury to a passenger?
o To successfully fend off liability in an action upon
the death or injury to a passenger, the common
carrier must prove his or its observance of that
extraordinary diligence; otherwise, the legal
presumption that he or it was at fault or acted
negligently would stand. (Sps. Pereña vs. Sps. Zarate,
GR No. 157917)
4. In case of loss, damage or destruction to goods
transported through a common carrier: If the goods are lost,
destroyed or deteriorated, common carriers are presumed to
have been at fault or to have acted negligently, unless they
prove that they observed extraordinary diligence. (Article
1735, Civil Code)
Instances when a common carrier can be absolved from
liability in case of loss, destruction or deterioration of the
goods:
a. Flood, storm, earthquake, lightning, or other natural
disaster or calamity
b. Act of the public enemy in war, whether
international or civil
c. Act of omission of the shipper or owner of the goods
d. The character of the goods or defects in the packing
or in the containers
e. Order or act of competent public authority (Article
1734, Civil Code)
Causes of action that may arise from a negligent act of a common
carrier:
1. Culpa-contractual or negligence based on contract
2. Cupla-aquiliana or negligence based on tort
3. Culpa-criminal or negligence based on a crime
“CONTRIBUTORY NEGLIGENCE”
 It is the conduct on the part of the injured party, contributing
as a legal cause to the harm he has suffered, which falls below
the standard to which he is required to conform for his own
protection. (Estacion vs. Bernardo, 483 SCRA 222)
 In the presence of contributory negligence, the one who
caused the accident or the loss, damage or even death is NOT
automatically exonerated. It depends on the circumstances.
The Court may exercise their discretion depending on the
level of the contributory negligence of the party damaged by
the accident.
Who is negligent between the driver of a passenger bus that bumped
the jeepney or the driver of the jeepney that was traversing a road
out of its allowed route?
 Both are negligent. It is apparent that the proximate cause of
the accident is the passenger bus with contributory negligence
of the jeepney driver. The jeepney driver violated his franchise
by travelling along an unauthorized line/route and that the
passenger jeepney was overloaded with passengers, and the
deceased passenger was clinging at the back thereof. (Travel &
Tours vs. Cruz, GR No. 199282)
“DOCTRINE OF LAST CLEAR CHANCE”
 Where both parties are negligent but the negligent act of one is
appreciably later than that of the other, or where it is
impossible to determine whose fault or negligence caused the
loss, the one who had the last clear chance opportunity to
avoid the loss but failed to do so, is chargeable with the loss.
(Sealoader Shipping vs. Grand Cement, GR No. 167363)
  The one who had the last clear chance to avoid the accident is
presumed to be negligent. Although the other party may be
considered as having contributed to the bringing about the
accident (contributory negligence).
 This is applicable only if BOTH parties are at fault
o When NOT applicable: Cars A and B are driving on
opposite sides. Car A was within its proper lane
while car B swerved to the opposite lane to overtake
another car but collided head-on with car A. Here,
only car B is at fault. Hence, the doctrine of last clear
chance is NOT applicable.
 This is applicable only in a suit between the owners and
drivers of colliding vehicles
 When the doctrine is NOT applicable:
o Where the party charged is required to act
instantaneously, and the injury cannot be avoided
by the application of all means at hand after the peril
is or should have been discovered. (Achevara vs.
Ramos, GR No. 175172)
o Where the passenger demands responsibility from
the carrier to enforce its contractual obligations
(culpa-contractual), for it would be inequitable to
exempt the negligent driver and its owner on the
ground that the other driver was likewise guilty of
negligence. (Tiu vs. Arriesgado, GR No. 437 SCRA
426)
Is a certificate of public convenience required to hold a common
carrier liable for damages?
 NO. A certificate of public convenience is NOT a requisite for
the incurring of liability under the Civil Code provisions
governing common carriers, which liability arises from the
moment a person or firm acts as a common carrier, without
regard to whether or not such carrier has also complied with
the requirements of the applicable regulatory statute and
implementing regulations and has been granted a certificate of
public convenience or other franchise. (Loadstar Shipping vs.
CA, 315 SCRA 339)
“REGISTERED-OWNER RULE”
 It states that the registration of motor vehicles, as required by
law, was necessary “not to make said registration the operative
act by which ownership in vehicles is transferred, but to permit
the use and operation of the vehicle upon any public highway.”
 Its main aim is to identify the owner so that if any accident
happens, or that any damage or injury is caused by the vehicle
on the public highways, responsibility therefor can be fixed on
a definite individual, the registered owner. (Caraval Travel vs.
Abejar, GR No. 170631)
 It would be wrong to say that registration is only for purposes
of transferring the registration of the vehicle from the former
owner to the new owner. The purpose of registration is to hold
who is the registered owner of the vehicle liable in case that
vehicle figures in an accident.
The registered owner CANNOT validly avoid liability for damages
even if the driver was not authorized:
 The registered owner of any vehicle is directly and primarily
responsible to the public and third persons while it is being
operated; and whether the driver is authorized or not by the
actual owner is irrelevant to determining the liability of the
registered owner whom the law holds primarily and directly
responsible for any accident, injury or death caused by the
operation of the vehicle in the streets and highway. (Villanueva
vs. Domingo, 438 SCRA 485)
Who has the burden of proof?
 In an action for breach of contract of carriage, all that is
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)
When the contract of carriage begins:
 The victim, by stepping and standing in the platform of the bus,
is already considered a passenger and is entitled to all the
rights and protection pertaining to contract of carriage.
(Dangwa Trans. Co. vs. CA, 202 SCRA 574)
Examples:
 Yung passenger, sumampa sa bus pero biglang umarangkada.
Ang defense ng bus, hindi pa passenger dahil wala pang ticket
at hindi pa bayad (for one to be a common carrier, dapat for
compensation). At that point there is already a contract of
carriage. The common carrier is liable.
 Yung passenger na nasa LRT platform, nasagasaan at namatay.
There is already a contract of carriage, following the Dangwa
ruling.
When the contract of carriage ends:
 The relation of carrier and passenger continues until the
passenger has been landed at the port of destination and has
left the vessel owner’s dock or premises.
Examples:
 Yung passenger ng bus, pagdating sa terminal ay bumaba at
umalis na ang bus. At that stage, the contract of carriage is not
yet terminated because the passenger is still within the
premises (terminal).
“RIGHT OF WAY”
 It is the right of one vehicle to proceed in a lawful manner in
preference to another approaching vehicle under such
circumstances of direction, speed and proximity as to give rise
to a danger of collision, unless one of the vehicles grants
precedence to the other. It is generally recognized that the
vehicle first entering an intersection is entitled to the right of
way, and it becomes the duty of the other vehicle likewise
approaching the intersection to proceed with sufficient care to
permit the exercise of such right without danger of collisions.
(Caminos vs. People, GR No. 147437)
Who has a right of way between an aircraft taxiing and an aircraft
taking off or about to take off?
 An aircraft taxiing on the maneuvering area of an aerodrome
shall give way to aircraft taking off or about to take off. (PAL vs.
Pacific Airways, GR No. 170418)
 Example: May isang eroplanong pababa and may isang
eroplanong nagtataxi and about to take-off. Ang may right of
way ay ang eroplanong pababa. Dapat mag-give way yung
eroplanong nasa baba palang (taxiing).
“KABIT SYSTEM”
 It is an arrangement whereby a person who has been granted a
certificate of public convenience allows another person who
owns motor vehicles to operate under such franchise for a fee.
(BTI vs. CA, GR No. 57493)
A “Kabit System” is contrary to public policy:
 Although not penalized outright as a criminal offense, the kabit
system is invariably recognized as being contrary to public
policy and, therefore, void and inexistent under Art. 1409 of
the Civil Code. It is an abuse of a certificate of public
convenience, which is a special privilege granted by the
government. (Teja Marketing vs. IAC, GR No. L-65510)
 It is not illegal because there is no law that outright prohibits
the kabit system. But there is also no law which allows the
kabit system.
 Any party entering into a kabit system is considered to be
entering into a void agreement because it is not sanctioned by
law.
Rationale for the rule on “Kabit System”:
 If a registered owner is allowed to escape liability by proving
who the supposed owner of the vehicle is, it would be easy for
him to transfer the subject vehicle to another who possesses
no property with which to respond financially for the damage
done. Thus, for the safety of passengers and the public who
may have been wronged and deceived through the baneful
kabit system, the registered owner of the vehicle is not
allowed to prove that another person has become the owner
so that he may thereby relieved of responsibility. Subsequent
cases affirm such basic doctrine. (Santos vs. Sibug, GR No. L-
26815)
Who can be held liable in case of accident?
 Although the registered owner is always liable, nevertheless
the actual operator can be held solidarily liable with the
owner as a joint tort-feasor. (Jereos vs. CA, 117 SCRA 795)
 The one who holds the certificate of public convenience can be
held solidarily liable with the owner of the vehicle. So that one
who is engaged in a kabit system will be held liable, both are
joint tort-feasors.
 Thus, both the owner and the “kabit” operator may be held
liable in case of an accident involving a vehicle operated under
a “kabit system.”
 Rationale for holding both liable:
o The kabit system is against public policy.
o The kabit operator and the owner should not profit
from their personal arrangement at the expense of
the public.
Can the Kabit system rule be used by the other party in the accident
to avoid liability?
 NO, because the thrust of the law in enjoining the kabit system
is not to penalize the parties but to identify the party upon
whom responsibility may be fixed in case of accident. It is for
the protection of the public. (Lim vs. CA, GR No. 125817)
 Example: Two buses collided. The one at fault is the bus being
operated under a certificate of public convenience and it
collided with a bus under a kabit system arrangement. The
Supreme Court held that although the other party is guilty of
kabit, you can already escape liability because the other party
is under a kabit system arrangement. The one who caused the
collision must suffer the loss, regardless if the other party is
into a kabit system arrangement. The kabit system
arrangement will only apply if the liability is being imposed
upon the kabit operator or the owner of the vehicle that
entered into a kabit system arrangement.
“BOUNDARY SYSTEM”
 It is an arrangement whereby the registered owner of a vehicle
allows another person to operate it as a common carrier under
a lease arrangement between, and thereby avoiding the
establishment of either an employer-employee relationship or
that of a principal-agent relation.
 Under this system, the driver is engaged to drive the
owner/operator’s unit and pays the latter a fee commonly
called boundary (fixed amount on a daily basis) for the use of
the unit. Whatever he earned in excess of that amount is his
income. (Paguio Transport vs. NLRC, GR No. 119500)
Can a bus company deny liability for death caused on its passengers
due to the negligence of its bus driver under the boundary system on
the ground that the driver is not its employee?
 NO, the bus company shall be solidarily liable for the death or
injury of the passenger since the bus driver is deemed an
employee of the bus company under the boundary system.
(Hernandez vs. Dolor, GR No. 160286)
 Notwithstanding that they are operating under a boundary
system, the court will still consider it as if there is an employer-
employee relationship.
What kind of relationship exists between the vehicle owner and the
driver under the boundary system?
 They have an employee-employer relationship and not of
lessor-lessee relationship. (Marquez vs. NLRC, GR No. 117495)
 If it is a lease arrangement, the operator can easily deny
liability if the driver had an accident causing death or injury to
a third person or damage to property. In a lease arrangement,
the lessor is not liable for the acts of the lessee. If the driver
will not be treated as an employee of the owner/operator, then
the latter cannot be held liable for the injury or death of a third
person. But if it will be considered as if there is an employer-
employee relationship, under the vicarious liability rule, the
employer is liable for the acts of the employee. Which is why
even if it is under a boundary system, the driver still appears to
be an employee of the owner or operator.
 The fact that the driver does not receive a fixed income, but
gets only the excess of the amount of fares collected by him
over the amount that he pays for the jeep owner and that the
gasoline consumed by the jeep is for the account of the driver –
are not sufficient to withdraw the employer-employee
relationship. (NLRC vs. Dinglasan, GR No. L-14183)
Why is the “boundary system” NOT recognized as a legal practice?
 Essentially, the “boundary system” seeks to exempt the
purported owner-lessor from the solidary liability rule
mandated of an employer for the negligent act of his employee
under the quasi-delict provisions of Articles 2176 and 2180 of
the Civil Code.
 Likewise, the “boundary system” would exempt the registered
owner of a vehicle, as a mere lessor of equipment, from being
considered as a party in the common carrier operations of the
purported lessee who is deemed to be the principal operator of
the common carrier operations to which the vehicle is being
devoted to.
In case of “boundary system,” who is liable in case of accidents?
 Both the operator and the driver are jointly and solidarily
liable.
 To exempt from liability the owner of a public vehicle who
operates it under the “boundary system” on the ground that he
is a mere lessor would be not only to abet flagrant violations of
the Public Service Law, but also to place the riding public at the
mercy of reckless and irresponsible drivers – reckless because
the measure of their earnings depends largely upon the
number of trips they make, and hence, the speed at which they
drive; and irresponsible because most if not all of them are in
no position to pay the damages they might cause. (Hernandez
vs. Dolor, 435 SCRA 668)
MARITIME COMMERCE
COGSA is applicable to the Philippines:
 The Carriage of Goods by Sea Act (COGSA), Public Act No. 521
of the 74th US Congress, was accepted to be made applicable to
all contracts for the carriage of goods by sea to and from
Philippine ports in foreign trade by virtue of CA No. 65.
(Insurance Co. of North America vs. Asian Terminals, GR No.
180784)
When is COGSA applicable?
 It shall apply to every contract of carriage of goods by sea, the
carrier in relation to the loading, handling, stowage, carriage,
custody, care and discharge of such goods shall be subject to
the responsibilities and liabilities and entitled to the rights and
immunities thereto. (Insurance Co. of North America vs. Asian
Terminals, GR No. 180784)
When will the operation of COGSA end?
 From the time when the goods have been discharged from the
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?
 YES, notice is required. Under Section 3(6) of the COGSA, notice
of loss or damage must be filed within 3 days from delivery, if
the loss or damage is NOT apparent. However, if the loss or
damage is apparent, notice must be given immediately so that
it would no longer be subject to investigation. (Belgian vs. Phil.
First Insurance Co., Inc., 432 Phil. 567)
 Unless notice of loss or damage and the general nature of such
loss or damage be given in writing to the carrier or his agent at
the port of discharge before or at the time of the removal of the
goods into the custody of the person entitled to delivery
thereof under the contract of carriage, such removal shall be
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
Shipping, GR No. 187812)
Prescriptive period for filing an action under COGSA:
 In any event, the carrier and the ship shall be discharged from
all liability in respect of loss or damage unless suit is brought
within 1 year after delivery of the goods, or the date when
the goods should have been delivered. (Section 3(6)).
 Effect if no action is made within the prescriptive period:
The carrier and the ship shall be discharged from all liability.
 The parties can agree to extend the prescriptive period for
filing an action: Jurisprudence has recognized the validity of
an agreement between the carrier and the shipper/consignee
extending the 1 year period to file a claim. As far as the law is
concerned, the 1 year period is only the minimum that the
parties may agree on. (Cua vs. W Allem Philippines Shipping,
GR No. 171337)
Who may avail of the defense of prescription?
 Both the carrier and the shipper may put up the defense of
prescription if the action for damages is not brought within 1
year after the delivery of the goods or the date when the goods
should have been delivered.
 The consignee or legal holder of the bill may also invoke the
prescriptive period. (Belgian Overseas Chartering vs. Phil. First
Insurance, GR No. 143133)
What is the nature of the relationship of an arrastre operator and a
consignee?
 Their relationship is akin to that between a warehouseman and
a depositor. In instances when the consignee claims any loss,
the burden of proof is on the arrastre operator to show that it
complied with the obligation to deliver the goods and that the
losses were not due to its negligence or that of its employees.
(Asian Terminals, Inc. vs. Allied Guarantee, GR No. 182208)
Is the defense of prescription available to an arrastre operator?
 NO, the COGSA does not mention that an arrastre operator may
invoke the prescriptive period of 1 year; hence, it does not
cover the arrastre operator. (Insurance Co. of North America
vs. Asian Terminals, GR No. 180784)
Package Limitation Rule under the COGSA:
 The COGSA supplements the Civil Code by establishing a
provision limiting the carrier’s liability in the absence of a
shipper’s declaration of a higher value in the bill of lading.
(Unsworth Transport International vs. CA, GR No. 166250)
 Unless the shipper has declared a higher value for the goods,
the carrier can only be liable under the package limitation rule
(maximum amount $500).
 Neither the carrier nor the ship shall in any event be or become
liable for any loss or damage to or in connection with the
transportation of goods in an amount exceeding $500 per
package of lawful money of the United States, or in case of
goods not shipped in packages, or the equivalent of that sum in
other currency, unless the nature and value of such goods have
been declared by the shipper before shipment and inserted in
the bill of lading. This declaration, if embodied in the bill of
lading, shall be prima facie evidence, but shall not be
conclusive on the carrier. (Section 4(5), COGSA)
Is a stipulation limiting the carrier’s liability for loss of cargo
allowed under COGSA?
 YES, such stipulation in the bill of lading limiting respondents’
liability for the loss of the subject cargoes is allowed under Art.
1749 of the Civil Code, and Sec. 4(5) of the COGSA. (Phil.
Charter Insurance vs. Neptune Orient, GR No. 145044)
If the goods are damaged or has deteriorated without proper
explanation, who will be liable?
 If no adequate explanation is given as to how the loss, the
destruction or the deterioration of the goods happened, the
carrier shall be held liable therefor.
“BILL OF LADING”
 It is the official document prepared and issued by the common
carrier to a shipper duly accepting the goods for shipment
containing information like item, quantity, value, vessel,
details, date, port, consigner, consignee, etc.
 It is a contract to carry the goods to a destination based on
which seller can claim consideration and buyer can take
delivery of the goods.
Nature of bill of lading:
 It is a written acknowledgement of the receipt of goods and an
agreement to transport and to deliver them at a specified place
to a person named or on his or her order. (Unsworth Transport
International vs. CA, GR No. 166250)
Three-fold character of a bill of lading:
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
the carrier, the bill of lading is a proof that the carrier received
the goods for shipment.
2. It is a definition of the contract of carriage of goods.
3. It is a Document of Title to the goods described therein. Such
that if the bill of lading is on the hands of the consignee, all that
the consignee has to do is to go to the carrier and show the bill
of lading. That is already a sufficient evidence that he is the
owner of the goods
a. It is also a document of transfer, being freely
transferable but not a negotiable instrument in the
legal sense.
b. It binds the carrier to its items, irrespective of who
the actual holder is or the owner of the goods, may
be at a specific moment. The holder of the bill of
lading, under the law, is presumed to be the owner
thereof. So once presented to the carrier, the latter is
duty-bound to honor such bill of lading and to
release the goods accordingly.
Is the presentation and surrender of the bill of lading to the common
carrier by the consignee an absolute necessity before the goods can
be released?
 NO, a common carrier may release the goods to the consignee
even without the surrender of the bill of lading.
 GENERAL RULE: Upon receipt of the goods, the consignee
surrenders the bill of lading to the carrier and their respective
obligations are considered cancelled.
 EXCEPTIONS: The law provides two exceptions where the
goods may be released without the surrender of the bill of
lading because the consignee can no longer return it. These
exceptions are when the bill of lading gets lost or for other
cause. In either case, the consignee must issue a receipt to the
carrier upon the release of the goods. Such receipts shall
produce the same effect as the surrender of the bill of lading.
(Designer Baskets, Inc. vs. Air Sea Transport, GR No. 184513)
BAREBOAT CHARTER
 It is an arrangement for the chartering or hiring of a ship or
boat, whereby no crew or provisions are included as part of the
agreement; instead, the people who rent the vessel from the
owner are responsible for taking care of such things.
 BAREBOAT/DEMISE CHARTER TIME/VOYAGE CHARTERS
The owner gives possession of the The charterer charters the ship
ship to the charterer and the (or part of it) for a particular
charterer hires its own master and voyage or for a set period of time.
crew. The bareboat charterer is The charterer can direct where
sometimes called a “disponent the ship will go but the owner of
owner.” the ship retains possession of the
ship through its employment of
The giving up of possession of the the master and crew.
ship by the owner is the defining
characteristic of a bareboad/demise
charter.
“DOCTRINE OF INSCRUTIBLE FAULT”
 It is the doctrine that holds that where two vessels collided and
there is no proof as to who caused the accident or who
between the two is at fault, the court should rule that neither
party can maintain any action for compensation.
WARSAW CONVENTION
The provisions of the Warsaw Convention is applicable to the
Philippines:
 It has the force and effect of law in this country. (Lhuillier vs.
British Airways, GR No. 171092)
 The Republic of the Philippines is a party to the Convention for
the Unification of Certain Rules Relating to International
Transportation by Air, otherwise known as the Warsaw
Convention. It took effect on February 13, 1933. The
Convention was concurred in by the Senate, through its
Resolution No. 19, on May 16, 1950. The Philippine instrument
of accession was signed by President Elpidio Quirino on
October 13, 1950, and was deposited with the Polish
government on November 9, 1950.
 The Convention became applicable to the Philippines on
February 9, 1951.
 On September 23, 1955, President Ramon Magsaysay issued
Proclamation No. 201, declaring our formal adherence thereto,
“to the end that the same and every article and clause thereof
may be observed and fulfilled in good faith by the Republic of
the Philippines and the citizens thereof.” (Santos III vs.
Northwest Airlines, GR No. 101538)
The cardinal purpose of the Warsaw Convention:
 To provide uniformity of rules governing claims arising from
international air travel; thus, it precludes a passenger from
maintaining an action for personal injury damages under local
law when his or her claim does not satisfy the conditions of
liability under the Convention. (PAL vs. Savillo, GR No. 14954)
When is the Warsaw Convention applicable?
 It applies to all international carriage of persons, luggage or
goods performed by aircraft for rewards. It applies equally to
gratuitous carriage by aircraft performed by an air transport
undertaking. (Article 1)
 It applies to “all international transportation of persons,
baggage or goods performed by any aircraft for hire.” It seeks
to accommodate or balance the interests of passengers seeking
recovery for personal injuries and the interests of air carriers
seeking to limit potential liability. It employs a scheme of strict
liability favoring passengers and imposing damage caps to
benefit air carriers. (PAL vs. Savillo, GR No. 14954)
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)
Is the negligent act of the airline in not informing the passenger of
the cancellation of her flight covered by Warsaw Convention?
 NO, the airlines’ negligent act of reconfirming the passenger’s
reservation days before departure and failing to inform the
latter that the flight had already been discontinued is not
among the acts covered by the Warsaw Convention, since the
alleged negligence did not occur during the performance of the
contract of carriage but, rather days before the scheduled
flight. (PAL vs. Savillo, GR No. 14954)
When do the rights under the Convention prescribe?
 The right to damages shall be extinguished if an action is not
brought within 2 years, reckoned from the date of arrival at
the destination, or from the date on which the aircraft ought to
have arrived, or from the date on which the transportation
stopped. (Article 29)
Is there a notice requirement under the Convention?
 YES, in the case of damage, the person entitled to delivery must
complain to the carrier forthwith after the discovery of the
damage, and, at the latest, within 3 days from the date of
receipt in the case of luggage and 7 days from the date of
receipt in the case of goods. In the case of delay, the complaint
must be made at the latest within 14 days from the date on
which the luggage or goods have been placed at his disposal.
(Article 26)
For Airline Companies:
 The passenger of an airline company has every right to expect
that he be transported on that flight and on that date specified
in his ticket. If he is not transported under the terms agreed
upon, the airline company may be exposed to suit for breach of
contract. (China Airlines, Ltd. vs. CA, 453 Phil. 959)
“Bump-offs”
 In case of bump-off, the passenger can hold the airline
company liable for damages.
 If the passenger is bumped off to higher accommodations:
The airline can be still held liable. The breach of contract of
carriage is not limited to either the bumping off of a passenger
with confirmed reservation or the downgrading of a
passenger’s seat accommodation from one class to a lower
class. Passengers have every right to waive such opportunity,
have done so against their wishes. This notwithstanding that
the upgrading is for the better condition and definitely, for the
benefit of the passengers. (Cathay Pacific vs. Sps. Vazquez, 399
SCRA 207)
 A chance passenger cannot sue for damages if not given a seat
by the airline.
“Over-booking”
 Over-booking of the aircraft’s seating capacity exceeding 10%
can be considered as an act of bad faith. Thus, the airline
company may be held liable for damages.
Principle of Lex Loci Contractus
 It provides that as a general rule, the law of the place where a
contract is made or entered into governs with respect to its
nature and validity, obligation and interpretation. Hence, the
court should apply the law of the place where the airline
tickets were issued, when the passengers are residents and
nationals of the forum and the tickets is issued in such State by
the defendant airline. (United Airlines vs. CA, 357 SCRA 99)