PRE-NEED PLANS

1. Governing Law and State Policy

 Governing law is the Pre-Need Code of the Philippines
 Objectives
1) Regulate the establishment of pre-need companies and
place their operation on sound, efficient and stable basis
2) Derive the optimum advantage from them in the
mobilization of savings
3) Prevent and Mitigate, as far as practicable, for the
protection of planholders practices prejudicial to public
interest
4) Regulate, through an empowered agency, pre-need
companies based on prudential principles to promote
soundness, stability and sustainable growth of the pre-
need industry.
2. Pre-Need Plan Defined
 Are contracts, agreements, deeds, or plans for the benefit of the
planholders which provide for the performance of future
service/s, payment of monetary considerations or delivery of
other benefits at the time of actual need or agreed maturity
date, as specified therein, in exchange for cash or installment
amounts with or without interest or insurance coverage and
includes life, pension, education, interment and other plans,
instruments, contracts or deeds as may in the future be
determined by the Commission.
 Benefits received – The payment of monetary considerations
and or performance of future services which the pre-need
company undertakes to deliver either to the planholder or his
beneficiary at the time of actual need or agreed maturity date,
as specified in the pre-need plan.
3. Parties
 Pre-Need Company – Refers to any corporation registered with
the Commission and authorized/licensed to sell or offer to sell
pre-need plans. No person is allowed to operate a pre-need
company or engage in the business of a pre-need company
unless licensed by the Commission.
 Planholder – Refers to any natural or juridical person who
purchases pre-need plans from a pre-need company for whom
or for whose beneficiaries’ benefits are to be delivered, as
stipulated and guaranteed by the pre-need company.
 Beneficiary – Refers to the person designated by the planholder
as the recipient of the benefits in the pre-need plan.
 Other persons regulated by the commissioner
1) Sales Counselors – refers to natural persons who are
engaged in the sale of, or offer to sell, or counsel of
prospective planholders for the purpose of selling,
whether or not on commission basis, pre-need plans upon
the authority of the pre-need company.
2) Actuary – a professional duly accredited by the Insurance
Commission, who, among other things, deals with the
financial impact of risk and uncertainty and who has
been trained in mathematics and statistics in calculating
premiums, dividends, pensions, reserves, employee
benefits and risks.
3) General Agent – a corporation or entity engaged in the
sales of, or advising prospective planholders for the
purpose of selling pre-need company and/or performing
other acts and things in its behalf in the conduct of its
business as specified in the general agency agreement
executed by and between them.
4) Affiliate – refers to a person that directly or indirectly,
through one (1) or more intermediaries, controls, or is
controlled by, or is under common control with, the
person specified.
  Exercising control over a legal entity:
1) Owning either solely or together with affiliated persons
more than twenty-five percent (25%) of the outstanding
capital stock of a legal entity; and
2) Being an officer or director of such legal entity
 Suspension or revocation of authority – The commission may
suspend or revoke all certificates of authority granted to such
pre-need company, its officers and agents, after notice and
hearing in the following cases when the Commission is of the
opinion, upon examination or other evidence:
1) That any pre-need company is in an unsound condition
2) That it has failed to comply with the provisions of law or
regulations; or
3) That its condition or method of business is such as to
render its proceedings hazardous to the public or to its
planholders; or
4) That its paid-up capital stock is impaired or deficient
 The commission may not lift the order of suspension or
revocation of the said authority until the concerned pre-need
company shall have submitted a viable business plan showing
the company’s estimated receipts and disbursements, as well as
the basis therefor for the succeeding three years.
4. Kinds of Pre-Need Plans
1) Life Plans
2) Educational Plans
3) Memorial or Interment Plans
4) Other Plans Identified by the Commission.
i. Fixed Value Plans
ii. In-Force Plan
iii. Lapsed Plan
iv. Cancelled Plan
v. Schedule benefit Plans
vi. Contingent benefit Plans
5. Pre-Need Concept
 All forms, including amendments thereto, relating to the pre-
need plans shall be approved by the Commission. No pre-need
contracts or certificates shall be issued or delivered within the
Philippines unless in the form previously approved by the
Commission.
 Interpretation – Any doubt in the interpretation and
implementation of any provision in this Code shall be
interpreted in favor of the rights and interests of the planholder.
 A Pre-Need Plan is a contract of adhesion and the stipulations
are generally unilaterally prepared and imposed by company on
a take-it-or-leave-it basis. Thus, it should be liberally construed
in favor of the planholder.
 A contract of adhesion in that the stipulations therein were
unilaterally prepared ad imposed by private respondent on a
take-it-or-leave-it basis does not mean, that petitioner cannot
be bound by its terms nor can she unilaterall change it to suit
her whim. A contract of adhesion is “as binding as ordinary
contracts,the reason being that the party who adheres o the
contract is free to reject it entirely.”
6. Registration and Disclosure of Information
 No pre-need company can offer plans to the public unless the
same is registered with the Commission. “as the foregoing
provisions are necessary for the protection of investors and the
public in general, even the Pre-Need Code, which now governs
pre-need companies and their activities, contains similar
conditions for the regulation of pre-need plans.
 Disclosure of information is the function of Registration
Statements that are submitted to the Commission. Brochures
are likewise subject to the approval of the Commission.
Misleading statements in advertisements are likewise
prohibited. In addition, reportorial requirements are imposed on
pre-need companies.
  Within 45 days after the grant of a license to do business as a
pre-need company, and for every pre-need plan which the
company intends to offer for sale to the public, the pre-need
company must file with the Commission, among other things,
the following:
1) Duly Accomplished Registration Statement
2) Board Resolution authorizing the registration of the
applicant’s pre-need plan
3) Opinion of independent counsel on the legality of the
issue; and
4) Supporting documents such as Articles and By-Laws,
Trust Agreement, related contracts and other documents
specified by the Commission.
5) Audited Financial Statement accompanied by an audit
report of the certifying auditors as of a date not more than
90 days prior to the date of filing of the registration
statement; and
6) Actuarial Feasibility Study.
7. Consideration
 Pre-Need Companies are obligation to pay the benefits under the
Plan so long as the consideration agreed upon is paid by the
planholder in the form of cash or instalment amounts.
 The pre-need company must provide in all contracts issued to
planholders a grace period of at least sixty (60) days within
which to pay accrued instalments, counted form the due date of
the first unpaid instalment.
 Nonpayment of a plan within the grace period shall render the
plan a lapsed plan. Any payment by the planholder after the
grace period shall be reimbursed forthwith, unless the
planholder duly reinstates the plan.
 The planholder shall be allowed a period of not less than two (2)
years from the lapse of the grace period or a longer period as
provided in the contract within which to reinstate his plan. No
 cancellation of plans shall be made by the issuer during such
period when reinstatement may be effected.
 Within thirty (30) days from the expiration of the grace period
and within thirty (30) days from the expiration of the
reinstatement period, which is two (years)from the lapse of the
grace period, the pre-need company shall give written notice to
the planholder that his plan will be cancelled if not reinstated
within two (2) years.
 Failure to give either of the required notices shall preclude the
pre-need company from treating the plans cancelled.
8. Termination of the Plan
 With respect to the planholder, termination is a matter of right
and with the corresponding right to demand the termination
value of the plan
 With respect to the pre-need company, termination is always
subject to the consent of the planholder.
 Termination by Planholder – A planholder may terminate his
pre-need plan at any time by giving written notice to the issuer.
 A pre-need plan shall contain a schedule of termination
values to which the planholder is entitled to upon
termination. Such schedule of termination value shall be
required for all in-force pre-need plans and shall be fair,
equitable, and in compliance with the Commission
issuances. The termination value of the pre-need plan
shall be pre-determined by the actuary of the pre-need
company upon application for registration of the pre-need
plans with the Commission and shall be disclosed in the
contract.
 Termination by Pre-Need Company – Any offer by the pre-
need company to terminate the pre-need plan for consideration
exceeding the termination value provided in the plan contract
shall not require the prior approval of the Commission, provided
that the following concur:
 1) The consideration shall be below the pre-need reserves for
the specific plan
2) The offer is accepted by the planholder; and
3) The offer shall not prejudice the planholders who do not
avail of such offer
9. Claims Settlement
 The planholder is entitled to the benefits or proceeds of the
plans within the following period:
1) In the case of scheduled benefit plans, the proceeds of the
plan shall be paid immediately upon maturity of the
contract, unless such proceeds are made payable in
instalments or as an annuity, in which case the
instalments or annuities shall be paid as they become
due.
2) In the case of contingent benefit plans, the benefits shall
be paid by the pre-need company 30days upon
submission of all necessary documents.
 In the case of scheduled benefit plans, refusal or failure to pay
the claim within 15 days from maturity or due date will entitle
the beneficiary to collect interest on the proceeds of the plan for
the duration of the delay at the rate twice the legal interest
unless such failure or refusal to pay is based on the ground that
the claim is fraudulent.
 Delay in the payment will entitle the planholder to damages in
accordance with Section 28 of the Pre Need Code which
provides.
 In case of any litigation for the enforcement of any pre-
need plan, it shall be the duty of the Commission to
determine whether the payment of the claim of the
planholder has been unreasonably denied or withheld.
 If found to have unreasonably denied or withheld the
claim, the ore-need company shall be liable to pay
damages, consisting of actual damages, attorney’s fees
 and legal interest, to be computed from the date the claim
is made until it is fully satisfied.
 Provided, that the failure to pay any such claim within the
time prescribed in Section 26 hereof shall be considered
prima facie evidence of unreasonable delay in payment.
10. Unfair Claims Settlement
 No pre need company shall refuse, without just cause, to
pay or settle claims arising under coverages provided by its
plans nor shall any such company engage in unfair claim
settlement practices. Any of the following acts by a pre-
need company, if committed without just cause, shall
constitute unfair claims settlement practices and may
result in the suspension or revocation of the company’s
certificate of authority:
1) Knowingly misrepresenting to claimants pertinent facts or
plan provisions relating to coverage at issue;
2) Failing to acknowledge with reasonable promptness
pertinent communications with respect to claims arising
under it splan
3) Failing to adopt and implement reasonable standards for
the prompt investigation of claims arising under its plan
4) Failing to provide prompt, fair, and equitable settlement of
claims submitted in which liability has become
reasonably clear; or
5) Compelling planholders to institute suits or recover
amounts due under its plan by offering, without
justifiable reason, substantially less than the amounts
ultimately recovered in suits brought by them.
11. Trust Fund
 A fund set up from the planholders’ payments to pay for the
cost of benefits and services, termination values payable to
planholders and other costs necessary to ensure the delivery of
 the benefits or services to planholders as provided for in the
contracts.
 Trust fund is for the sole benefit of the planholders and cannot
be used to satisfy the claims of other creditors of the insolvent
pre-need corporation.
 This is consistent with the nature of a trust arrangement,
whereby there is a separation of interests in the subject matter
of the trust, the beneficiary having a equitable interest, and the
trustee having an interest which is normally legal interest.
12. Regulation of Pre-Need Companies
1) Regulations on the management of the pre-need company,
2) Rules on Licensing of Sales Counselors and General Agents,
3) Rule for accreditation of Actuaries,
4) Reportorial Requirements of Pre-Need Companies,
5) Examination of Pre-Need Companies by the Commission at least
once a year and whenever the needs of public interests so
demands,
6) Imposition of Financial Accounting Standards by the
Commission,
7) Rules on Conservatorship and Proceedings upon Insolvency,
and
8) Imposition of Administrative and Criminal Penalties
13. Pre-Need Companies in Distress
 It must be stressed that pre-need companies, as debtors, are
excluded from the operation of the FRIA and still governed by
the Pre-Need Code with respect to insolvency and rehabilitation.
 Appointment of Convervator
 Proceedings Upon Incolvency
 Commission’s Power to Assume Trustee Functions
 Liquidation
 A STAY ORDER issued by the court in a rehabilitation
proceeding involving a pre-need company applies to a claim for
 reimbursement of the tuition fees and other expenses allegedly
covered by a plan that was incurred by a planholder. The court
ruled that if it will allow the reimbursement action against
petitioner to proceed, and if planholder’s claim were granted,
the latter would be in a position to assert a preference over
other creditors. Certainl, the planholder’s “claim for
reimbursement cannot be considered as an ordinary expense of
petitioner for the conduct of its usual business operations.”

INSURANCE IMPORTANT PROVISIONS

1. Whenever used in this Code, the following terms shall have the
respective meanings hereinafter set forth or indicated, unless the
context otherwise requires:
a) A contract of insurance is an agreement whereby one
undertakes for a consideration to indemnify another against
loss, damage, or liability arising from an unknown or contingent
event.
A contract of suretyship shall be deemed to be a
insurance contract, within the meaning of this Code, only if
made by a surety who or which, as such, is doing an insurance
business as hereinafter provided.
b) The term doing an insurance business or transacting an
insurance business, within the meaning of this Code, shall
include:
1) Making or proposing to make, as insurer, any insurance
contract;
2) Making or proposing to make, as surety, any contract of
suretyship as a vocation and not as merely incidental to
any other legitimate business or activity of the surety
3) Doing any kind of business, including a reinsurance
business, specifically recognized as constituting the doing
of an insurance business within the meaning of this Code;
 4) Doing or proposing to do any business in substance
equivalent to any of the foregoing in a manner designed to
evade the provisions of his Code.
In the application of the provisions of this Coe, the fact
that no profit is derived from the making of insurance contracts,
areements or transactions or that no separate or direct
consideration is received therefor, shall not be deemed
conclusive to show that the making thereof does not constitute
the doing or transacting of an insurance business.
c) As used in this Code, the term Commissioner means the
Insurance Commission.
(Section 2)
2. What may be insured – Any contingent or unknown event, whether
past or future, which may damnify a person having a insurable
interest, or create a liability against him, may be insured against,
subject to the provisions of this chapter.
3. The consent of the spouse is not necessary for the validity of an
insurance policytaken out by a married person on his or her life or
that of his or her children.
4. All rights title and interest in the policy of insurance taken out by an
original owner on the life or health of the person insured shall
automatically vest in the latter upon the death of the original owner,
unless otherwise provided for in the policy.
(Section 3)
5. Every corporation, partnership, or association, duly authorized to
transact insurance business as elsewhere provided in this Code, may
be an insurer. (Section 6)
6. Unless the policy otherwise provides, where a mortgagor of property
effects insurance in his own name providing that the loss shall be
payable to the mortgagee, or assigns a policy of insurance to a
mortgagee, the insurance is deemed to be upon the interest of the
mortgagor, who does not cease to be a party to the original contract,
and any act of his, prior to the loss, which would otherwise avoid the
 insurance, wil have the same effect, although the property is in the
hands of the mrotgagee, but any act which, under the contract of
insurance, is to be performed by the mortgagor, may be performed by
the mortgagee therein named, with the same effect as if it had been
performed by the mortgagor. (Section 8)
7. If an insurer assents to the transfer of an insurance from a mortgagor
to a mortgagee, and, at the time of his assent, imposes further
obligations to the assignee, making a new contract with him, the acts
of the mortgagor cannot affect the right of said assignee. (Section 9)

DATA PRIVACY ACT

1. Policy – To protect the fundamental human right of privacy, of

communication while ensuring free flow of information to promote
innovation and growth.
2. The state recognizes the vital role of information and communications
technology in nation-building and its inherent obligation to ensure
that personal information in information and communications system
in the government and in the private sector are secured and protected.
3. Commission – The National Privacy Commission created by virtue of
the Data Privacy Act
4. Consent of the date subject – any freely given, specific, informed
indication of will, whereby the data subject agrees to the collection
and processing of personal information about and/or relating to him
or her.
5. Consent shall be evidenced by written, electronic or recorded means.
It may also be given on behalf of the date subject by an agent
specifically authorized by the data subject to do so.
6. Data subject – An individual whose personal information is processed
7. Direct Marketing – Communication by whatever means of any
advertising or marketing material which is directed to particular
individuals
8. Filing system – any act of information to natural or juridical person
to the extent that, although the information is not processed by
 equipment operating automatically in response to instructions given
for that purpose, the set is structured, either by reference to
individuals or by reference to criteria relating to individuals, in such a
way that specific information relating to a particular person is readily
accessible.
9. Information and Communications System – A system for
generating, sending, receiving, storing or otherwise processing
electronic date messages or electronic documents and includes the
computer system or other similar device by or which data is recorded,
transmitted or stored and any procedure related to the recording,
transmission or storage of electronic data, electronic message, or
electronic document.
10. Personal Information – refers to any information whether
recorded in a material form or not, from which the identity of an
individual is apparent or can be reasonably and directly ascertained
by the entity holding the information, or when put together with other
information would directly and certainly identify an individual.
11. Personal Information Controller
12. Personal Information Processor
13. Processing
14. Privileged information – Any and all forms of data which
under the Rules of Court and other pertinent laws constitute
privileged communication
15. Sensitive Personal Information
16. The data privacy act applies to the processing of all types of
personal information and to any natural and juridical person involved
in personal information processing including those personal
information controllers and processors who, although not found or
established in the Philippines, use equipment that are located in the
Philippines, or those who maintain an office, branch or agency in the
Philippines subject to the immediately succeeding paragraph.
17. The act does not apply to the following:
1) Information about any individual who is or was an officer or
employee of a government institution that relates to the position
or functions of the individual including:
i. The fact that the individual is or was an officer or
employee of the government institution
ii. The title, business address and office telephone number of
the individual
iii. The classification, salary range and responsibilities of the
position held by the individual
iv. The name of the individual on a document prepared by
the individual in the course of employment with the
government
2) Information about an individual who is or was performing
service under contract for a government institution that relates
to the services performed, including the terms of the contract,
and the name of the individual given in the course of the
performance of those services;
3) Information relating to any discretionary of a financial nature
such as the granting of a license or permit given by the
government to an individual, including the name of the
individual and the exact nature of the benefit
4) Persona; information processed for journalistic, artistic, literary,
or research purposes.
5) Information necessary in order to carry out the functions of
public authority which includes the processing of personal data
for the performance by the independent, central monetary
authority and law enforcement and regulatory agencies of their
constitutionally and statutorily mandated functions.
6) Information necessary for banks and other financial institutions
under the jurisdiction of the independent, central money
authority or Bangko Sentral ng Pilipinas to comply with
Republic Act. No. 9510, and Republic Act No. 9160, as
 amended, otherwise known as the Anti-Money Laundering Act
and other applicable laws; and
7) Personal Information originally collected from residents of
foreign jurisdictions in accordance with the laws of those foreign
jurisdictions, including any applicable data privacy laws, which
is being processed in the Philippines.
18. Protection Afforded to Journalists and Their Sources –
cannot be compelled to reveal the source of any news report or
information appearing in said publication which was related in any
confidence to such publisher, editor, or reporter.
19. May be applied outside the Philippines subject to
conditions.
20. Functions of the National Privacy Commission
1) Ensure Compliance of personal information controllers with the
provisions of this Act
2) Receive Complaints, institute investigations, facilitate or enable
settlement of complaints through the use of alternative dispute
resolution processes, adjudicate, award indemnity on matters
affecting any personal information, prepare reports on
disposition of complaints and resolution of any investigation it
initiates, and, in cases it deems appropriate, publicize any such
report.
3) Issue cease and desist orders, impose a temporary or
permanent ban on the processing of personal information
4) Compel or petition any entity, government agency or
instrumentality to abide by its orders or take action on a matter
affecting data privacy:
5) Monitor the compliance of other government agencies or
instrumentalities on their security and technical measures and
recommend the necessary action in order to meet minimum
standards for protection of personal information pursuant to
this Act
6) Coordinate with other government agencies and the private
sector on efforts to formulate and implement plans and policies
to strengthen the protection of personal information in the
country
7) Publish on a regular basis a guide to all laws relating to data
protection
8) Publish a compilation of agency system of records and notices,
including index and other finding aids
9) Recommend to the Department of Justice the prosecution and
imposition of penalties specified in Sections 25 to 29 of this Act
10) Review, approve, reject or require modification of privacy
codes voluntarily adhered to by personal information
controllers.
11) Provide assistance on matters relating to privacy or data
protection at the request of a national or local agency, a private
entity or any person;
12) Comment on the implication on data privacy of proposed
national or local statutes, regulations or procedures, issue
advisory opinions and interpret the provisions of this Act and
other data privacy laws
13) Propose legislation, amendments or modifications to
Philippine laws on privacy or data protection as may be
necessary
14) Ensure proper and effective coordination with data
privacy regulators in other countries and private accountability
agents, aprticipat in international and regional initiatives for
data privacy protection
15) Negotiate and contract with other data privacy authorities
of other countries for cross-border application and
implementation of respective privacy laws
16) Assist Philippine companies doing business abroad to
respond to foreign privacy ro data protection laws and
regulationsl and
 17) Generally perform such acts as may be necessary to
facilitate cross-border enforcement of data privacy protection.
21. The Commission shall act as a collegial body.
22. General Data Principles – The processing of personal
information shall be allowed, subject to compliance with the
requirements of this Act and other laws allowing disclosure of
information to the public and adherence to the principles of
transparency, legitimate purpose and proportionality.
23. Personal information must be:
a) Collected for specified and legitimate purposes determined and
declared before or as soon as reasonably practicable after
collection, and later processed in a way compatible with such
declared, specified and legitimate purposes only.
b) Processed fairly and lawfully
c) Accurate, relevant and, where necessary for purposes for which
it is to be used the processing of personal information, kept up
to date; inaccurate or incomplete date must be rectified,
supplemented, destroyed or their further processing restricted
d) Adequate and not excessive in relation to the purposes for
which they are collected and processed
e) Retained only for as long as necessary for the fulfilment of the
purposes for which the data was obtained or for the
establishment, exercise or defense of legal claims, or for
legitimate business purposes, or as provided by law; and
f) Kept in a form which permits identification of data subjects for
no longer than is necessary for the purposes for which the data
were collected and processed: Provided, that personal
information collected for other purposes may lie processed for
historical, statistical or scientific purposes, and in cases laid
down in law may be stored for longer periods: Provided further,
that adequate safeguards are guaranteed by said laws
authorizing their processing.
24. Criteria for Lawful Processing of Personal Information – The
processing of personal information shall be permitted only if not
otherwise prohibited by law, and when at least one of the following
conditions exists:
a) The data subject has given his or her consent
b) The processing of personal information is necessary and is
related to the fulfilment of a contract with the data subject or in
order to take steps at the request of the data subject prior to
entering into a contract
c) The processing is necessary for compliance with a legal
obligation to which the personal information controller is
subject
d) The processing is necessary to protect vitally important interests
of the data subject, including life and health
e) The processing is necessary in order to respond to national
emergency, to comply with the requirements of public order and
safety, or to fulfil functions of public authority which necessarily
includes the processing of personal data for the fulfilment of its
mandate; or
f) The processing is necessary for the purpose of the legitimate
interests pursued by the personal information controller or by a
third party or parties to whom the data is disclosed, except
where such interests are overridden by fundamental rights and
freedoms of the data subject which require protection under the
Philippine Consitution
25. Sensitive Personal Information and Privileged Information –
Prohibited except in the following cases:
a) The data subject has given his or her consent
b) The processing of personal information is necessary and is
related to the fulfilment of a contract with the data subject or in
order to take steps at the request of the data subject prior to
entering into a contract
 c) The processing is necessary for compliance with a legal
obligation to which the personal information controller is
subject
d) The processing is necessary to protect vitally important interests
of the data subject, including life and health
e) The processing is necessary in order to respond to national
emergency, to comply with the requirements of public order and
safety, or to fulfil; functions of public authority which
necessarily includes the processing of personal data for the
fulfilment of its mandate; or
f) The processing is necessary for the purposes of the legitimate
interests pursued by the personal information controller or by a
third party or parties to whom the data is disclosed, except
where such interests are overridden by fundamental rights and
freedoms of the data subject which require protection under the
Philippine Constitution.
26. Sensitive Personal Information and Privileged Information –
The processing of sensitive personal information and privileged
information shall be prohibited, except in the following cases:
a) The data subject has given his or her consent, specific to the
purpose prior to the processing, or in the case of privileged
information, all parties to the exchange have given their consent
prior to processing;
b) The processing of the same is provided for by existing laws and
regulations: Provided, that such regulatory enactments
guarantee the protection of the sensitive personal information
and the privileged information: Provided, further, That the
consent of the data subjects are not required by law or
regulation permitting the processing of the sensitive personal
information or the privileged information.
c) The processing is necessary to protect the life and health of the
data subject or another person, and the data subject is not
 legally or physically able to express his or her consent prior to
the processing
d) The processing is necessary to achieve the lawful and non-
commercial objectives of public organizations and their
associations: Provided, that such processing is only confined
and related to the bona fide members of these organizations or
their associations: Provided further, That the sensitive personal
information are not transferred to third parties: Provided finally,
that consent of the data subject was obtained prior to processing
e) The processing is necessary for purposes of medical treatment,
is carried out by a medical practitioner or a medical treatment
institution, and an adeaquate level of protection of personal
information is ensured; or
f) The processing concerns such personal information as is
necessary for the protection of lawful rights and interests of
natural or legal persons in court proceedings, or the
establishment, exercise or defense of legal claims, or when
provided to government or public authority.
27. Subcontract of Personal Information – Provided proper
safeguards are in place
28. Extension of Privileged Communication – personal
information controllers may invoke the principle of privileged
communication over privileged information that they lawfully control
or process. Subject to existing laws and regulations, any evidence
gathered on privileged information is inadmissible.
29. Rights of the Data Subject:
a) Be informed whether personal information pertaining to
him or her shall be, are being or have been processed;
b) Be furnished the information indicated hereunder before
the entry of his or her personal information into the
processing system of the personal information controller,
or at the next practical opportunity;
 1) Description of the personal information to be entered
into the system
2) Purposes for which they are being or are to be
processed
3) Scope and method of the personal information
processing
4) The recipients or classes of recipients to whom they
are or may be disclosed
5) Methods utilized for automated access, if the same is
allowed by the data subject, and the extent to which
such access is authorized
6) The identity and contact details of the personal
information controller or its representative
7) The period for which the information will be stored
8) The existence of their rights, to access, correction, as
well as the right to lodge a complaint before the
Commissione
Any information supplied or declaration made to the data
subject on these matters shall not be amended without prior
notification of data subject: Provided, that the notification under
subsection (b) shall not apply should the personal information
be needed pursuant to a subpoena or when the collection and
processing are for obvious purposes, including when it is
necessary or desirable in the context of an employer-employee
relationship, between the collector and the data subject, or
when the information is being collected and processed as a
result of legal obligation
c) Reasoable access to, upon demand, the following:
1) Contents of his or her personal information that were
processed
2) Sources from which personal information were
obtained
 3) Names and addresses of recipients of the personal
information
4) Manner by which such data were processed
5) Reasons for the disclosure of the personal information
to recipients
6) Information on automated processes where the data
will or likely to be made as the sole basis for any
decision significantly affecting or will affect the data
subject;
7) Datewhen his or her personal information concerning
the data subject were last accessed and modified; and
8) The designation, or name or identity and addreses of
the personal information controller.
d) Dispute the inaccuracy or error in the personal
information and have the personal information controller
correct it immediately and accordingly, unless the request
is vexatious or otherwise unreasonable. If the personal
information have been corrected, the personal information
controller shall ensure the accessibility of both the new
and the retracted information and the simultaneous
receipt of the new and retracted information by recipients
thereof: PROVIDED, that the third parties who have
previously received such processed personal information
shall be informed of its inaccuracy and its rectification
upon reasonable request of the data subject
e) Suspend, withdraw or order the blocking, removal or
destruction of his or her personal information from the
personal information controller’s filing system upon
discovery and substantial proof that the personal
information are incomplete, outdated, false, unlawfully
obtained, used for unauthorized purposes or are no longer
necessary for the purposes for which they were collected.
In this case, the personal information controller may
 notify third parties who have previously received such
processed personal information; and
f) Be indemnified for any damages sustained due to such
inaccurate, incomplete, outdated, false, unlawfully
obtained or unauthorized use of personal information
30. Transmissibility of Rights of the Data Subject –
31. Right to Data Portability – Right to obtain from the personal
information controller a copy of data undergoing processing in an
electronic or structured format, which is commonly used and allows
for further use by the data subject.
32. The above enumerations are not applicable if the processed
personal information are used only for the need of scientific and
statistical research and, on the basis of such, no activities are carried
out and no decisions are taken regarding the data subject: Provided,
That the personal information shall be held under strict confidentiality
and shall be used only for the declared purpose. Likewise, the
immediately preceding sections are not applicable to processing of
personal information gathered for the purpose of investigations in
relation to any criminal, administrative, or tax liabilities of a data
subject.
33. Security of Personal Information
34. Principle of Accountability – Each personal information
controller is responsible for personal information under its control or
custody, including information that have been transferred to a third
party for processing, whether domestically or internationally, subject
to cross-border arrangement and cooperation
35. Unauthorized Processing of Personal Information and
Sensitive Personal Information
36. Accessing Personal Information and Sensitive Personal
Information Due to Negligence
37. Improper Disposal of Personal Information and Sensitive
Personal Information
 38. Processing of Personal Information and Sensitive Personal
Information for Unauthorized Purposes
39. Unatuhorized Acces or Intentional Breach
40. Concealment of Security Breaches Involving Sensitive
Personal Information
41. Malicious disclosure – Any personal information controller or
personal information processor or any of its officials, employees or
agents, who, with malice or in bad faith, discloses unwarranted or
false information relative to any personal information or personal
sensitive information obtained by him or her, shall be subject to
imprisonment ranging from one (1) year and six (6) months to five (5)
years and a fine of not less than five hundred thousand pesos
(P500,000) but not more than One Million Pesos (P1,000,000)
42. Unauthorized disclosure
43. LargeScale – the maximum penalty in the scale of penalties
respectively provided shall be imposed when the personal information
of at least one hundred (100) persons is harmed, affected or involved
as the result of the above mentioned actions.

E-COMMERCE ACT

TRANSPORTATION LAW AQUINO SYLLABUS

PART 1 – COMMON CARRIERS

CHAPETR 1 – GENERAL CONSIDERATIONS

1. Definition of Contract of transportation

2. Parties
3. Elements
4. Perfection
5. Common carrier
6. Test
7. Characteristics
8. Effects of Charter Party
 9. Common Carrier Distinguished from Private Carrier
10. Common Carrier Distinguished from Other Contracts
11. Tramp Service and Line Service
12. Governing Laws
13. Nature of Business
14. Registered Owner Rule and Kabit System
15. Boundary System

CHAPTER 2 – OBLIGATIONS OF THE COMMON CARRIER

1. Basic Obligations of the Carrier

2. Duty to Accept goods for transport
3. Duty to Make Timely Delivery of the Goods
4. Place of Delivery
5. To whom Delivered
6. Duty to Passengers
7. Duty to Exercise Extraordinary Diligence
8. Extraordinary Diligence in Carriage by Sea
9. Extraordinary Diligence in Carriage of by Land
10. Carriage by Train
11. Railroad Crossing Cases
12. Passenger’s Baggages

CHAPTER 3 – OBLIGATIONS OF THE PASSENGER AND SHIPPER

1. Duty to Exercise Due Diligence

2. Duty to Disclose
3. Payment of Freight
4. Timely Loading and Unloading
5. Permits
6. Shipper’s Load and Count
7. Duties of Passenger

CHAPTER 4 – DEFENSES OF THE COMMON CARRIER

1. Kinds of Defenses
 2. Proximate Causation
3. Defenses in the Carriage of Goods
4. Fortuitous Event
5. Public Enemy
6. Nature of Goods and Improper Packing
7. Order of Public Authority
8. Defenses in Carriage of Passengers
9. Acts of Employees
10. Acts of Other Passengers and Third Persons
11. Acts of the Shipper or the Passenger
12. Notice of Claim
13. Prescription on Overland Transportation
14. Notice of Claim and Prescription in Air transportation

CHAPTER 5 – BILL OF LADING AND OTHER FORMALITIES

1. Concepts
2. Definition
3. Kinds of Bills of Lading
4. Nature of Bill of Lading
5. When Effective
6. Bill of Lading as Contract
7. Basic Stipulations
8. Prohibited and Limiting Stipulations
9. Bill of Lading as Receipt
10. Bill of Lading as Document of Title

CHAPTER 6 – ACTIONS AND DAMAGES IN CASE OF BREACH

1. Distinctions
2. Concurrent Causes of Action
3. Elements of Cause of Action Against the Carrier
4. Recoverable Damages
5. Actual or Compensatory Damages
6. Attorney’s Fees
 7. Interests
8. Moral Damages
9. Nominal Damages
10. Temperate or Moderate Damages
11. Liquidated Damages
12. Exemplary or Corrective Damages
13.

PART II – AVIATION LAW

CHAPTER 7 – THE AIRCRAFT AND CIVIL AVIATION

1. Applicable Laws
2. Civil Aviation
3. Registration of Aircraft
4. Recording of Conveyances
5. Marine Insurance
6. Air Transportation in General
7. Persons Involved in Air Transportation
8. Charter of Aircraft
9. Sovereignty and Air Freedoms

CHAPTER 8 – OBLIGATIONS OF CARRIER IN AIR TRANSPORTATION

1. Extraordinary Diligence in Air Transportation

2. Tariff System
3. Care of Baggage
4. Duty to Passenger
5. Inspection of Aircraft and Cargo

CHAPTER 9 – WARSAW CONVENTION

1. Binding Effect
2. Purpose
3. Constitutionality
4. Coverage
5. Meaning of International Transportation
 6. Period Covered by International Transportation
7. When Interenational Carrier is Liable
8. Limit of Liability
9. Tort Liability
10. Venue of Action
11. Notice of Claim or Complaint
12. Prescription
13. Successive Carriers
14. Formalities

PART III – MARITIME LAW

CHAPTER 10 – GENERAL CONCEPTS

1. Maritime Law: Defined

2. Real and Hypothecary Nature
3. Maritime Lien
4. Limited Liability Rule: No Vessel, No Liability
5. Protests
6. Admiralty Jurisdiction
7. Forfeiture Due to Smuggling
8. Marine Pollution
9. Marine Insurance

CHAPTER 11 – VESSELS

1. Definitions
2. Construction, Equipment, and Manning
3. Vessel as Personal Property
4. Acquisition
5. Nationality of Vessels
6. Registration of Vesels
7. Ship’s Manifest
8. Logboo
 9. Safety Regulations
10. Cabotage
11. Repair of Vessels

CHAPTER 12 – SHIP MORTGAGE AND MARITIME LIENS

1. Applicable Laws and rules

2. Meaning of Preferred Mortgage
3. Requirements for Preferred Mortgage
4. Maritime Lien
5. Preferred Claims
6. Who May Constitute Preferred Ship Mortgage
7. Mortgage of Vessel with Other Properties
8. Arrest and Foreclosure

CHAPTER 13 – PERSONS WHO TAKE PART IN MARITIME COMMERCE

1. Liability of Ship Owners and Ship Agents

2. Part Owners
3. Powers and Functions of Ship Agent
4. Captains and Masters of Vessels
5. Pilotage
6. Other Code of Commerce Provisions on Captains
7. Officers and Crew of Vessels
8. Minimum Safe Manning
9. Security of Tenure
10. Other Officers and Crew under the Code of Commerce

CHAPTER 14 – CHARTER PARTIES

1. Definition
2. Different Kinds of Charte Parties
3. Effect of Charter on Character of Carrier
4. Persons Who May Make Charter
5. Requisites of a Valid Charter Party
6. Freight
 7. Port of Unloading
8. Demurrage
9. Rights and Obligations of the Charter Parties
10. Replacement of Vessel
11. Effect of Bill of Lading
12. Freight
13. Code of Commerce Provisions

CHAPTER 15 – LOANS ON BOTTOMRY AND RESPONDENTIA

1. Definitions and Concept

2. Distinguished From Simple Loan
3. Authority to Constitute Loan on Bottomry
4. Form of the Loans
5. Consequences of Loss of Effects of the Loans
6. Preference
7. Code of Commerce Provisions

CHAPTER 16 – AVERAGES

1. Average in General
2. Simple Average
3. General Average
4. Requisites of General Average
5. Who Bears General Average
6. Effect of Negligence
7. Apportionment
8. Proof and Liquidation of Average:Code of Commerce
9. York-Antwerp Rules

CHAPTER 17 – COLLISSIONS

1. Definition
2. Zones in Collission
3. Applicable Laws
4. Rules on Liability
 5. Contriutory Negligence and Last Clear Chance Not Applicable
6. Specific rules Under the Code of Commerce
7. Sinking on the Way to Port
8. Presence of Pilots
9. Extent of Liability
10. Collission in Foreign Waters
11. Protest
12. Limited Liability Rule

CHAPTER 18 – ARRIVAL UNDER STRESS AND SHIPWRECKS

1. Arrival Under Stress

2. Shipwrecks
3. Charter Parties
4. Loan

CHAPTER 19 – SALVAGE

1. Governing Law
2. Definition
3. Rationale
4. Kinds of Salvage Services
5. Claim for Valid Salvage
6. Basis of Entitlement to Salvage Reward
7. Rights and Obligations of Salvors and Owners
8. The Salvage Law

CHAPTER 20 – CARRIAGE OF GOODS BY SEA

1. History
2. Applicable to International Shipping to the Philippines
3. Parties
4. Duties of Carrier
5. Document of Title Required
6. Notice of Claim and Prescriptive Period
7. Defenses and Immunities
 8. Waiver
9. Limiting Provisions
10. Right to Discharge Dangerous Cargo

PART IV – PUBLIC UTILITIES

CHAPTER 21 – PUBLIC SERVICE REGULATIONS

1. Concept
 A business or service engaged in regularly supply the public
with some commodity or service of public consequence such as
electricity, gas, water, transportation, telephone, or telegraph
service. The term implies public use and service.
 Public utilities are privately owned and operated businesses
whose services are essential to the general public. They are
enterprises that specifically cater to the needs of the public and
conduce to their comfort and convenience. As such, public
utility services are impressed with public interest and concern.
 The same is true with respect to the business of common carrier
which holds such a peculiar relation to the public interest that
there is imposed upon it the right of public regulation when
private properties are affected with public interest, hence, they
cease to be juris private only.
 When, therefore, one devotes his property to a use in which the
public has an interest, he, in effect grants to the public an
interest in that use, and must submit to the control by the
public for the common good, to the extent of the interest he has
this created.
 Meaning of Public Service under Public Service Act –
includes every person that now or hereafter may own, operate,
manage or control in the Philippines, for hire or compensation,
with general or limited clientele, whether permanent, occasional
or accidental, and done for general business purposes, any
 common carrier, railroad, street railway, traction railway,
subway motor vehicle, either for freight or passenger, or btoh
with or without fixed route and whether may be its classification,
freight or carrier service, of any class, express service,
steamboat, or steamship line, pontines, ferriesm and water craft,
engaged in the transportation of passengers o freight or both,
shipyard, marine railways, marine repair shop, warehouse wharf
or dock, ice plant, ice-refrigeration plant, canal, irrigation system,
gas, electric light, heat and power water supply and power,
petroleum, sewerage, system, wire, or wireless communications
system, wire or wireless broadcasting stations and other similar
public services: Provided, however, that a person engaged in
agriculture, not otherwise a public service, who owns a motor
vehicle and uses it personally and/or enters into a special
contract whereby said motor vehicle is offered for hire or
compensation to a third party or third parties engaged in
agriculture, not itself or themselves a public service, for operation
by the altter for a limited time and for a specific purpose directly
connected with the cultivation of his or their farm, the
transportation, processing, and marketing of agricultural
products of such third party or third parties shall not be
considered as operating a public service for the purpose of this
act.
 ELEMENTS:
1) The person must own, operate, manage, or control in the
Philippines public services which may include distribution
of goods or rendering of services to the public;
2) The ownership, operation, management or control must
be for hire or compensation; and
3) The ownership, operation, management or control must
be done for general business purposes.
 CHARACTERISTICS OF A PUBLIC SERVICE INCLUDE THE
FOLLOWING
 1) It is not required that the business is permanent because
the operation may be “permanent, occasional, or
accidental;
2) The business may be with general or limited clientele
 WITH RESPECT TO CARRIERS, THEY ARE CONSIDERED
PUBLIC SERVICE IF:
1) They transport either freight or passenger or both
2) Their service is with or without fixed route
3) Their classification may be freight or carrier service of any
class, express service, steamboat or steamship line,
pontines, ferries, and water craft.

 GENERAL BUSINESS PURPOSE – Caro V. Rilloraza, described

a “business” as “the means by which a party habitually or
regularly earns a livelihood of some gain, whereas in Collector of
Internal Revenue V. Manila Lodge, we declared that “the plain,
ordinary meaning of business is restricted to activites or affairs
where profit is the purpose, or livelihood is the motive.”
Substantially to the same effect is Collector of Internal Revenue
V. St.Paul’s Hospital, in which it was held that business is that
“which occupies time, attention, and labor of men for the
purpose of livelihood or profit.
 Water districts fall under the term “public utility” becauseits
primary function is to construct, maintain and operate water
resrvoirs and waterworks for the purpose of supplying water to
the inhabitants, as well as consolidate and centralize all water
supplies and drainage systems in the Philippines.
 NOT A PUBLIC UTILITY BY LAW – Laws may expressly
acknowledge that a particular activity is not a public utility.
 Under the EPIRA, the generation of electric power, a business
affected with public interest, was opened to private sector and
any new generation company is required to secure a certificate
of compliance from the Energy Regulatory Commission, as well
 as health, safety, and environmental clearances from the
concerned government agencies. Power generation shall not be
considred a public utility operation, and hence no franchise is
necessary. Foreign investors are likewise allowed entry into the
electric power industry.
 With the advent of privatization of the electric power industry
which resulted in its segregation into four sectors – generation,
transmission, distribution and supply – NPCs generation and
transmission functions were unbundled. Power geeration and
transmission were treated as separate sectors governed by
distinct rules under the new regulatory framework introduced
by EPIRA. The Natinal Transmission Corporation was created to
own and operate the transmission assets and perform the
transmission functions previously under NPC. While the NPC
continues to undertake missionary electrification programs
thorugh the SPUG, PSALM, was also created to liquidate the
assets and liabilities of NPC.
 The re-classification of a business that is originally regarded as
public utility into an entity that is not a public utility though a
concession agreement or any contract with a government
instrumentality, is not binding on the Courts and may be
declared unconstitutional. Besides, the mere fact that service is
rendered only under contrat does not prevent a company from
being considered a public utility. The mere fact that the
concessionaire operates under a contract does not remove it
from the concept of public utility if it is inherently so. It is up to
the Court to decide based on the evidence if the concessioner is
inherently such a public utility.
2. Constitutional Provisions
 CONSTITUTIONAL LIMITATIONS
1) No franchise, certificate, or any other form of
authorization for the operation of a public utility shall be
granted except to citizens of the Philippines or to
 corporations or associations organized under the laws of
the Philippines at least sixty per centum of whose capital
is owned by such citizens;
2) No franchise, certificate, or authorization shall be
exclusive in character
3) No franchise, certificate, or authorization shall be for a
longer period than fifty years;
4) A francshie or right shall be granted only under the
condition that it shall be subject to amendment,
alteration, or repeal by the Congress when the common
good so requires
5) The state shall encourage equity participation in public
utilities by the general public;
6) The participation of foreign investors in the governing
body of any public utility enterprise shall be limited to
their proportionate share in its capital;
7) All the executive and managing officers of such
corporation or association must be citizens of the
Philippines
8) In times of national emergency, when the public interest
so requires, the State may, during the emergency and
under reasonable terms prescribed by it, temporarily take
over or direct the operation of any privately owned public
utility or business affected with public interest
9) The State may, in the interest of national welfare or
defense, upon payment of just compensation, transfer to
public ownership utilities and other private enterprises to
be operated by the Government
10) The State shall regulate or prohibit monopolies
when the public interest so requires
11) Combinations in restraint of trade or unfair
competition are not allowed
3. Regulatory Agencies
 The power of the Public Service Commission are now distributed
among the different government agencies. These include the
following:
1) Department of transportation
2) Land Transportation Franchising Regulatory Board
3) The Land Transportation Office
4) Maritime Industry Authority
5) Philippine Coast Guard
6) National Telecommunications Commission
7) Energy Regulatory Commission
8) National Water Resources Council
9) Civil Aeronautics Baord
10) Civil Aviation Authority of the Philippines
11) Philippine Ports Authority
12) Local Water Utilites Administration
13) Toll Regulatory Board
4. Bases of Regulation of Public Utilities
 The police power of the State justifies the regulation of public
utilities. In other words, regulation of public utilities is founded
upon the police power of the State and statutes prescribing
rules for the control and regulation of public utilities are
considered valide exercise thereof.
 The exercise of police power is justified because whenever
private property is used for a public purpose and is affected
with public interest, it ceases to be juris private only and
becomes subject to regulation. The regulation is to promote the
common good. Submission to regulation may be withdrawn by
the owner by discontinuing use but as long as use of the
property is continued, the same is subject to public regulation.
5. Ownership of Public Utilities
 Ownership of public utilities is subject to regulation by the
State. Concerned government agencies may impose certain
 requirements to persons or entities who wish to operate as
public utilities. This may include capitalization requirement and
other similar impositions.
 Time When Ownership Must Commence – Event he mere
formation of a public utility corporation does not ipso facto
characterize the corporation as one operating a public utility.
 The Constitution does not prohibit the mere formation of a
public utility corporation without the required formation of
Filipino Capital. What it does prohibit is the granting of a
franchise or other form of authorization for the operatin of a
public utility to a corporation already in existence but without
the requisite proportion of Filipino Capital
 Voting Control Test and Beneficial Ownership Test – the
Supreme Court ruled in Gamboa V. Tevez, that “both the Voting
Control Test and the Beneficial Ownership Test must be applied
to determine whether the corporation is a ‘Philippine National.”
In other words, “Full beneficial ownership of the stocks, coupled
with voting rights is essential.” Ownership of at least sixty
percent (60%) of the sahres with voting rights must pertain to
Filipinos. If the requirement will not be imposed, the corporation
will not be imposed, the corporation will not be effectively
controlled by Filipinos in accordance with the mandate of
Section 11, Article XII, of the Constitution.
 OWNERSHIP OF FACILITIES – The limit imposed by the
Constitution on foreign equity applies only to the operation of a
public utility and not to ownership of the facilities. The Supreme
Court explained. – “In law, there is a clear distinction between
the operation of a public utility and the ownership of the facilities
and equipment used to serve the public..
Ownership is defined as a relation in law by virtue of
which a thing pertaining to one person is completely subjected to
his will in everything not prohibited by law or the concurrence
with the rights of another.
  The right to operate a public utility may exist independently and
separately from the ownership of the facilities thereof. One can
own said facilities without operating them as a public utility, or
conversely, one may operate a public utility without owning the
facilities used to serve the public. The devotion of property to
serve the public may be done by the owner or by the person in
control thereof who may not necessarily be the owner thereof.
 The dichotomy between the operation of a public utility and the
ownership of the facilities used to serve the public can be very
well appreciated when we consider the transportation Industry.
Enfranchised airline and shipping companies may lease their
aircraft and vessels instead of owning them themselves.
 Indeed, a mere owner and lessor of the facilities used by a
public utility is not a public utility.
 The reorganized business activity of WWW Communications INC.
Would not be considered a public utility. Hence, WWW
Communications INc. Does not require a franchise or certificate or
any other form of authorization before it can operate. Although
the company acquired telecommunications businesses and
broadcast media enterprises, this may mean that it is a
shareholder in the corporations conducting the business. On the
other hand, the plan to own the facilities does not convert the
company into a public utility. It is only when the company will
operate the business that a franchise is necessary.
 The nationalization requirement applies only if the private
respondent will operate the public utility. In this case, private
respondent will not run the light rail vehicles and collect fees from
the riding public. It will have no dealings with public and the
public will have no right to demand any services from it.

6. Definite Terms
  The term of the franchise to be given to public utilities is fifty
years at any given time. However, the appropriate government
body may extend the franchise.
 In issuing a certificate, the Commission must necessarily be
satisfied that the operation of the service under said certificate
during a definite period fixed therein will promote the public
interests in a proper and suitable manner.
7. Non0Exclusivity
 The Constituion likewise provides that the franchise cannot be
exclusive. For example, the Supreme Court declared null and
void Section 47 of P.D. 198, as amended which made the
franchise of water districts as exclusive. Section 47 states that “
no franchise shall be granted to any other person or agency for
domestic, industrial or commercial water service within the
district or any portion thereof unless and except to the extent
that the board of directors of said district consents thereto by
resolution duly adopted, such resolution, however, shall be
subject to review by the Administration.”
8. Subject to Modification or Amendment
 The Constitution provides that a franchise or right be granted
only under the condition that it shall be subject to amendment,
alteration, or repeal by the Congress when the common good so
requires.
 Must Carry Rule – Local Channels
 A franchise is a mere privilege that may be reasonably burdened
with some form of public service.
9. Take-Over of Public Utilities
 The take-over of public utilities by the State may be temporary
or permanent. Permanent take-over involves cases when the
public utilities are expropriated subject to payment of just
compensation. The Constitution provides that the State may, in
the interest of national welfare or defense, upon payment of just
 compensation, transfer to public ownership utilities and other
private enterprises to be operated by the Government.
 Temporary take-over happens in times of national emergency. In
such cases, when the public interest so requires, the State may,
during the emergency and under reasonabl terms prescribed by
it, temporarily take over or direct the operation of any privately
owned public utility or business affected with public interest.
 The Framers of Our Constitution deemed it wise to allow
Congress to grant emergency powers to the President, subject to
certain conditions, thus:
1) There must be a war or other emergency
2) The delegation must be for a limited period only
3) The delegation must be subject to such restrictions as the
Congress may prescribe
4) The emergency powers must be exercised to carry out a
national policy declared by Congress.
10. Monopolies and Unfair Competition
 The Constitution provides that State shall regulate or prohibit
monopilies when the public interest so requires. In addition,
combinations in restraint of trade or unfair competition are not
allowed under the Constituion.
 In one case, however, the Supreme Court ruled that the law
authorizing Philippine Ports Authority to take over arrastre and
stevedoring services in government-owned ports an cancel
permits issued to private operators is a valid exercise of police
power; it does not violate due process of law as the exercise of
police power is paramount over the right against non-
impairment of contracts. Moreover, a regulated monopoly is not
proscribed in industries affected with public interest such as in
port rendition of arrastres/stevedoring services in Philippine
Ports.
 In the Same case, the Supreme Court rejected the petitioner’s
allegation of unfair competition because private monopolies are
 not necessarily prohibited by the Constitution. Certain public
utilities must be given franchises for public interest and these
franchises do not violate the law against monopolies. There is
unfair competition as the entity authorized by PPA (1) was not a
competitor of the oppositor; (2) imposes the sametariff rates as
the oppositor; and (3) is operating in an entirely separate and
distinct port.
11. Regulations of Rates
 The regulation of public utilities includes the regulation of the
rates that they are charging the public. This aspect of regulation
is in line with the policy of the State to protect the public
against arbitrary and excessive rates while maintaining the
efficiency and quality of services rendered.
 The PSC has the power to
Fix and determine individual or joint rates, tolls, charges,
classifications, or schedules thereof, as well as commutation,
mileage, kilometrage, and other special rates which shall be
imposed observed and followed thereafter by any public service:
Provided, That the commission may, in its discretion, approve
rates proposed by public services provisionally and without
necessity of any hearing; but it shall call a hearing thereon within
thirty days, thereafter, upon publication and notice to the
concerns operating in the territory affected: Provided further, that
in case the public service equipment of an operatoris used
principally or secondarily for the promotion of a private business,
the net profits of said private business shall be considered in
realtion with the public service of such operator for the purpose of
fixing the rates.
 Public Interest V. Return of Investment – However, the power
to regulate rates does not give the State the right to prescribe
rates that are so low as to deprive the public utility of a
reasonable return on investment. Thus, the rates prescribed by
the State must be one that yields a fair return on the public
 utility upon the value of the property performing the service and
one that is reasonable to the public for the services rendered.
The fixing of just and reasonable rates involves a balancing of
the investor and the consumer interests.
 The thing devoted by the investor to the public use is not
specific property, tangible and intangible, but capital embraked
in an enterprise. Upon the capital so invested, the Federal
Constitution guarantees to the utility the opportunity to earn a
fair return. The Constitution does not guarantee to the utility
the opportunity to earn a return on the value of all items of
property used by the utility, or of any of them.
 The investor agrees, by embarking capital in a utility, that is
charges to the public shall be reasonable. His company is the
substitute for the State in the performance of the public service,
thus becoming a public servant. The compensation which the
Constitution guarantees an opportunity to earn is the
reasonable cost of conducting the business.
 While the power to fix rates is a legislative function, whether
exercised by the legislature itself or delegated through an
administrative agency, a determination of whether the rates so
fixed are reasonable and just is a purely judicial question and is
subject to the review of the courts.
 Police Power
 Non-Delegation
 Deregulation of Domestic Shipping Rates
 Prohibition against Discrimination – The law prohibits any
common carrier from making or giving any unnecessary or
unreasonable preference or advantage to any particular person,
company, firm, corporation, or locality, or any particular kind of
traffic, or to subject any particular person, company, firm,
corporation, or locality, or any particual kind of traffic, to any
undue or unreasonable prejudice or discrimination whatsoever.
 Reasonable and Just Standard in fixing rates – Reasonable
rates for public utilites are the ultimate object. The extent of
judicial interference is protection against unreasonable rates.
The public utility is entitled to a just compensation and a fair
return upon the value of its property while it is being used by
the public.
 The only standard, which the legislature is required to prescribe
for the guidance of the administrative authority, is that the rate
be reasonable and just. It has been held that even in the
absence of an express requirement as to reasonableness, this
standard may be implied. What is just and reasonable rate is a
question of fact calling for the exercise of discretion, good sense,
and a fair, enlightened, and independent judgment. The
requirement of reasonableness comprehends such rates that
must not be so low as to be confiscatory, or too high as to be
oppressive. In determining whether a rate is confiscatory, it is
essential also to consider the given situation, requirements and
opportunities of the utility.
 Operating Expenses
 Fixing Rates for Electric companies
 LTFRB – the board adopted two methods in rate determination
namely straight method and the add-on method.
 Provisional increase – An administrative agency may be
empowered by law to approve provisionally, when demanded by
urgent public need, rates of public utilities without a hearing.
The reason is easily discerned from the fact that provisional
rates are by their nature temporary and subject to adjustment
in conformity with the definitive rates approved after final
hearing.
 APPLICATION FOR PROVISIONAL RATE
1) The applicant must file with the ERC a verified
application/petition for rate adjustment. It must indicate
that a copy thereof was received by the legislative body of
 the LGU concerned. It must also include a certification of
the notice of publication thereof in a newspaper of general
circulation in the same locality.
2) Within 30 days from receipt of the application/petition or
the publication thereof, any consumer affected by the
proposed rate adjustment or the LGU concerned may file
its comment on the application/petition, as well as on the
motion for provisional rate adjustment.
3) If such comment is filed, the ERC must consider it in its
action on the motion for provisional rate adjustment,
together with the documents submitted by the applicant
in support of its application/petition. If no such comment
is filed within the 30-day period, then and only then may
the ERC resolve the provisional rate adjustment on the
basis of the documents submitted by the applicant.
4) However, the ERC need not conduct a hearing on the
motion for provisional rate adjustment. It is sufficient that
it consider the written comment, if there is any.
5) The ERC must resolve the motion for provisional rate
adjustment within 75 days from the filing of the
application/petition
6) Thereafter, the ERC must conduct a full-blown hearing on
the application/petition not later than 30 days from the
date of issuance of the provisional order. Effectively, this
provision limits the lifetime of the provisional order to
only 12 months.
 COLLECTION – After the proper regulatory body approves the
rate of the public utility, the public utility is obligated to collect
only the rates agreed upon. Overcharging is prohibited. The
public utility may be required to refund the amount that is in
excess of the approved rates.
12. Authority to Operate as Public Utility
 The power to authorize and control the operation of a public
utility is admittedly a prerogative of the legislature since
Congress is that branch of government vested with plenary
powers of legislation. The franchise is a legislative grant,
whether made directly by the legislature itself, or by any one of
its properly constituted instrumentalities. The grant, when
made, binds the public, and is, directly or indirectly, the act of
the State. Although there is no need for any Constitutional
Provision because the power of Congress flows from its plenary
powers, this power is also implicit from the Section 11 of Article
XII of the Consitution.
 Congress has granted certain administrative agencies the power
to grant licenses for, or to authorize the operation of certain
public utilities. With the growing complexity of modern life, the
multiplication of the subjects of governmental regulation, and
the increased difficulty of administering the laws, there is a
constantly growing tendency towards the delegation of greater
powers by the legislature, and towards the approval of the
practice by the courts. It is generally recognized that a franchise
may be derived indirectly from the State through a duly
designated agency, and to this extent, the power to grant
franchises has frequently been delegated, even to agencies other
than those of a legislative nature. In pursuance of this, it has
been held that privileges conferred by grant by local authorities
as agents for the state constitute as much a legislative franchis
as though the grant had been made by an act of the legislature.
 The trend of modern legislation is to vest the Public Service
Commissioner with the power to regulate and control the
operation of public services under reasonable rules and
regulations, and as a general rule, courts will not interfere with
the exercise of that discretion when it is just and reasonable
and founded upon a legal right.”
 LEGISLATIVE FRANCHISE AND CERTIFICATE OF PUBLIC
CONVENIENCE – A legislative franchise is a grant or privilege
from the sovereign power, while a CPC is a form of regulation
through the administrative agencies.
 The power to authorize and control the operation of a public
utility is admittedly a prerogative of the legislature, since
Congress is that branch of government vested with plenary
powers of legislation. The franchise is a legislative grant,
whether made directly by the legislature itself, or by any one of
its properly constituted instrumentalities. The grant, when
made, binds the public, and is, directly or indirectly, the act of
the State. Congress, by giving a Board or Administrative agency
the power to issue permits for the operation of a public utility,
has delegated to the said bdoy the authority to determint eh
capability and competence of a prospective domestic air
transport operator to engage in such venture. This is not an
instance of transforming the Board into a mini-legislative body,
with unbridled authority to choose who should be given
authority to operate a public utility like domestic air transport
services.
 CERTIFICATE OF PUBLIC CONVENIENCE AND NECESSITY –
A certificate of Public Convenience is different from a Certificate
of Public Convenience and Necessity. The former requires prior
issuance of municipal franchise while the latter does not.
However, the Rule on Certificate of Public Convenience and
Necessity as contemplated under Section 16(b) provides that the
Public Service Act is now obsolete. Section 16(b) provides that
the Public Service Commission had the power to approve,
subject to Constitutional limitations any franchise or privilege
granted by any political subdivision. These franchises were
previously issued by municipal corporations to public utilities
like electric street railways, telephone plant and line and electric
companies and other public utilities under Act. No. 667 as
 amended by Act. No 1022. However, these laws are no longer in
force. Hence, cities and municipalities no longer issue CPCNs
contemplated under the Public Service Act.
 Delegation to Local Government Units. – Cities and
municipalities are likewise given delegated authorities to grant
franchise to certain public utilities including franchise of
tricycle operators, ferries, and wharves.
 Basic rules on issuance of cpc under the pSA – A public
utility has for its object public service in general, the law, in
order to prevent the public from being unjustly exploited,
requires that every enterprise of such nature, before
commencing operations, shall obtain a certificate of public
convenience. The basic rule regarding the issuance of
certificates of public convenience are Sections 15 and 15(a) of
the Public Service Act. On the other hand, the issuance of a
certificate of public convenience and necessity is contemplated
in Section 16(b) of the same law.
 The issuance of a certificate of public convenience still
requires concurrenc of the following requisitesL
1) The applicant must be a citizen of the Philippines, or a
corporation or co-partnership, association or joint stock
company constituted and organized under the laws of the
Philippines, 60 per centum at east of the stock or paid-up
capital of which belong entirely to citizens of the
Philippinesl
2) The applicant must be financially capable of undertaking
the proposed service and meeting the responsibilities
incident to its operations; and
3) The applicant must prove that the operation of the public
service proposed and the authorization to do business will
promote the public interest in a proper and suitable
manner.

 13. Transfer of Certificate
 it should be noted in this connection that the applicable statute
may deny or grant to the operator the right to transfer a
franchise.
14. Revocation or Cancellation of Certificate
 Since the holding of a certificate of public convenience is just a
privilege, the same certificate may be revoked by the
administrative agency concerned. It is the condition of every
franchise that it is subject to amendment, alteration, or repeal,
when the common good so requires.
15. Transfer of Shares of Stocks
16. Due Process
17. Administrative Fines

CHAPTER 22 – POWERS OF ADMINISTRATIVE AGENCIES

1. Rule-Making and Quasi-Judicial Functions

2. Department of Transportation and Department of Information
and Communications Technology
3. LTFRB
4. LTO
5. Civil Aeronautics Board
6. Civil Aviation Authority of the Philippines
7. Maritime Industry Authority
8. Philippine Coast Guard
9. Philippine Ports Authority
10. National telecommunications Commission
11. Energy Regulatory Commission
12. Local Water Utilities Administration

TRANSPORTAION LAW DOCTRINES

1. Sps Perena V. SPs. Nicolas (bus operator) – A common carrier is a

person, corporation, firm or association engaged in the business of
 carrying or transporting passengers or goods or both, by land, water,
or air, for compensation, offering such services to the public
2. 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
conveyances used in the activity, but whether the undertaking is a
part of the activity engaged in by the carrier that he has held out to
the general public as his business or occupation.
3. Spouses Cruz V. Sun Holidays – Whether it is offered on a regular or
occasional basis, or whether it is offered to the general public or
solicits business only from a narrow segment of the general
population. The intent of the law is thus not to consider such
distinctions in determining whether a person or entity is a common
carrier or not.
4. The constancy of respondent’s ferry services in its resort operations is
underscored by its having its own Coco Beach boats. And the tour
packages it offers, which include the ferry services, may be availed of
by anyone who can afford to pay the same.
5. WestWind Shippinc CorporationV. UCPB General Insurance Co
and Asian Terminals – Customs Broker is a common carrier. A
customs broker has been regarded as a common carrier because
transportation of goods is an integral part of its business.
6. Article 1732 does not distinguish between one whose principal
business activity is the carrying of goods and one who does such
carrying only as an ancillary activity. It suffices that petitioner
undertakes to deliver the goods for pecuniary consideration. The
transportation of goods is an integral party of a customs broker, the
customs broker is also a common carrier.
7. Sanico V. Colipano (Amputated leg/Sit over a beer case in a bus) –
Only Sanico breached the contract of carriage. Since the cause of
action is based on a breach of a contract of carriage, the liability of
Sanico is direct as the contract is between him and Colipano. The
elements of a contract of carriage existed between Colipano and
Sanico: Consent, as shown when Castro, as employee of Sanico,
 accepted Colipano as a passenger when he allowed Colipano to board
the Jeepney, and as to Colipano, when she boarded the jeepny; Cause
or consideration, when Colipano, for her part, paid her fare; and
Object, the transportation of Colipano from the place of departure to
the place of destination.
8. Oriental Assurance Corp V. Ong – The petitioner’s claim is not
barred by prescription. The court, in a number of cases, has liberally
construed the requirement for filing a formal claim and allowed claims
filed even beyond the 15-day prescriptive period after finding that the
request for bad order survey or the provisional claim filed by the
consignee had sufficiently served the purpose of a formal claim.
9. The court stressed that an arrastre operator is a public utility,
discharging functions which are heavily invested with public interest.
Provisions limiting the liability of a public utility must be carefully
scrutinized and reasonably construed so as to protect the legitimate
interest of the public which the utility must serve.
10. Philam Insurance Co. V Heung-A Shipping Corp (Ovaltine) –
Heung-A is responsible for the damages. A charter party has been
defined as a contract by which an entire ship, or some principal part
thereof, is let by the owner to another person for a specified time or
use; a contract of affreightment by which the owner of a ship or other
vessel lets the whole or a part of her to a merchant or other person for
the conveyance of goods, on a particular voyage, in consideration of
the payment of freight.
11. Despite its contract of affreightment, HEUNG-A remained
responsible as the carrier, and hence answerable for the damages
incurred by the foods received for transportation.
12. Federal Phoenix Assurance Co. LTD V. Fortune Sea Carrier,
INC. (ABACA FIBERS IN RICKY REY TO ILLIGAN CITY FIRE) - As
correctly observed by the CA, the Time Charter Party agreement
executed by Fortune Sea and Northern Transport clearly shows that
the charter includes both the vessel and its crew thereby making
 Northern Transport the owner pro hac vice of M/V Ricky Rey during
the whole period of the voyage .
13. Conformably, M/V Ricky Rey was converted into a private
carrier notwithstanding the existence of the Time Charter Party
agreement with Northern Transport since the said agreement was not
limited to the ship only but extends even to the control of its crew.
Despite the denomination as Time Charter by the parties, their
agreement undoubtedly reflected that their intention was to enter into
a Bareboat Charter Agreement.
14. TORRES MADRID – BROKERAGE V. MITSUI (TMBI
SUBCONTRACTED BMT, BMT GOT HIJACKED) – TMBI admitted
that it was contracted to facilitate, process, and clear the shipments
from the customs authorities, withdraw them from the pier, then
transport and deliver them to Sony's warehouse in Laguna. That TMBI
does not own trucks and has to subcontract the delivery of its clients'
goods, is immaterial. As long as an entity holds itself to the public for
the transport of goods as a business, it is considered a common
carrier regardless of whether it owns the vehicle used or has to
actually hire one.
15. By subcontracting the cargo delivery to BMT, TMBI entered into
its own contract of carriage with a fellow common carrier. The cargo
was lost after its transfer to BMT's custody based on its contract of
carriage with TMBI. Following Article 1735, BMT is presumed to be at
fault. Since BMT failed to prove that it observed extraordinary
diligence in the performance of its obligation to TMBI, it is liable to
TMBI for breach of their contract of carriage.
16. ASIAN TERMINALS INC. V. ALLIED GUARANTEE (158 ROLLS
OF KRAFT LINERA PLUS 54 WERE DAMAGED) - In ruling against
ATI, the SC reiterated the hornbook doctrine, that in the performance
of its obligations, an arrastre operator should observe the same
diligence as that required of a common carrier and a
warehouseman. Accordingly, an arrastre operator must prove
that the losses were not due to its negligence or of its employees, and
 must prove that it exercised due care in handling the goods. This
burden, however, was not established by ATI adn it was found that
the additional damage of the 54 rolls occurred: (1) while the goods
were in its custody; (2) when they were in transition from ATI to
Dynamic; adn (3) during Dynamic’s custody.
17. LTFRB V. VALENZUELA (TRABSPORTATION NETWORK
COMPANIES AND TRANSPORTATION NETWORK VEHICLE
SERVICE ANGKAS) - Accordingly, it appears that it is practically
functioning as a booking agent, or at the very least, acts as a
third-party liaison for its accredited bikers. Irrespective of the
application's limited market scope, i.e., Angkas users, it remains that,
on the one hand, these bikers offer transportation services to willing
public consumers, and on the other hand, these services may be
readily accessed by anyone who chooses to download the Angkas app.
18. In this relation, DBDOYC posits that its accredited bikers are
private carriers as they do not hold out their services generally to the
public because they cannot just be hailed on the street as they only
contract via the Angkas online front. As such, the fact that its drivers
are not physically hailed on the street does not automatically render
Angkas-accredited drivers as private carriers. When they put
themselves online, their services are bound for indiscriminate public
consumption. In this case Article 1732 defining a common
carrier "carefully avoids making any distinction between a person
or enterprise offering transportation service on a regular or scheduled
basis and one offering such service on an occasional, episodic or
unscheduled basis."
19. the fact that the business of holding one's self out as a
transportation service provider, whether done through online
platforms or not, appears to be one which is imbued with public
interest and thus, deserves appropriate regulations. Hence Angkas is
considered as a common carrier.
20. HEIRS OF CATALINA P. MENDOZA V. ES TRUCKING AND
FORWARDERS - At the time of the incident, the vehicle was being
 used as a truck for hire without securing the necessary franchise or
certificate. It is clear that ES Trucking engaged in a truck for hire
business, offering their vehicles to transport the cargo of its
customers. Despite being registered as a private vehicle, the actual
use of the vehicle and the clientele to whom ES Trucking offers its
services remain controlling. A certificate of public convenience is not a
requisite for the incurring of liability under the Civil Code
provisions governing common carriers. That liability arises the
moment a person or firm acts as a common carrier.
21. In the selection of its prospective employees, the employer is
required to examine them as to their qualifications, experience, and
service records. In this case, ES Trucking did not require Timtim to
present any document other than his professional driver's license and
job application form. ES Trucking should not have been satisfied with
the mere possession of a professional driver's license.
22. GREENSTAR EXPRESS V. UNIVERSAL ROBINA
CORPORATION (BUS VS. L300) - the registered-owner rule must be
applied in a manner that it harmonizes with Article 2176 and 2180 of
the Civil Code. To hold the respondent liable under the registered
owner rule, the petitioner must first establish that the employer is the
registered owner of the vehicle in question. Then, if the petitioner
proves ownership, there arises a disputable presumption that the
requirements of Article 2180 have been proven. Article 2180 of the
Civil Code provides that the employers shall be liable for the damages
caused by their employees acting within the scope of their assigned
tasks.
23. ANNIE TAN V. GREAT HARVEST ENTERPRISES, INC. (SOYA
BEANS FROM MANILA TO QC) - In this case, Tan failed to observe
extraordinary diligence when she neglected vetting her driver or
providing security for the cargo and failing to take out insurance on
the shipment's value. Tan is liable for the value of the soya beans
because she failed to observe extraordinary diligence that is expected
from her as a common carrier.
24. MANAY JR. V. CEBU AIR (20 ROUND TRIP TICKETSFROM
CEBU PACIFIC) - When a common carrier, through its ticketing
agent, has not yet issued a ticket to the prospective passenger, the
transaction between them is still that of a seller and a buyer. The
obligation of the airline to exercise extraordinary diligence commences
upon the issuance of the contract of carriage. Ticketing, as the act
of issuing the contract of carriage, is necessarily included in the
exercise of extraordinary diligence. When an airline issues a ticket to a
passenger confirmed on a particular flight, on a certain date, a
contract of carriage arises, and the passenger has every right to
expect that he would fly on that flight and on that date. If he does not,
then the carrier opens itself to a suit for breach of contract of carriage.
Once a plane ticket is issued, the common carrier binds itself to
deliver the passenger safely on the date and time stated in the ticket.
25. The common carrier's obligation to exercise extraordinary
diligence in the issuance of the contract of carriage is fulfilled by
requiring a full review of the flight schedules to be given to a
prospective passenger before payment. Moreover, even assuming
that the ticketing agent encoded the incorrect flight information, it is
incumbent upon the purchaser of the tickets to at least check if all the
information is correct before making the purchase. Once tHe ticket is
paid for and printed, the purchaser is presumed to have agreed
to all its terms and conditions. Petitioners' flight information was
not written in fine print. It was clearly stated on the left portion
of the ticket above the passengers' names. If petitioners had exercised
even the slightest bit of prudence, they would have been able to
remedy any erroneous booking. To add, most of the petitioners were
balikbayans. It is reasonable to presume that they were adequately
versed with the procedures of air travel, including familiarizing
themselves with the itinerary before departure. Petitioners, in
failing to exercise the necessary care in the conduct of their affairs,
were without a doubt negligent. Thus, they are not entitled to
damages.
26. EASTERN SHIPPING LINES, INC. V. BPI AND MITSUI (sheet
metals) - It is settled in maritime law jurisprudence that cargoes while
being unloaded generally remain under the custody of the carrier.
Furthermore, 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 transported by them. Subject
to certain exceptions enumerated under Article 1734 of the Civil
Code, common carriers are responsible for the loss, destruction,
or deterioration of the goods.
27. The extraordinary responsibility of the common carrier lasts
from the time the goods are unconditionally placed in the possession
of, and received by the carrier for transportation until the same are
delivered, actually or constructively, by the carrier to the
consignee, or to the person who has a right to receive them. In
this case, the goods were damaged even before they were turned over
to ATI. Such damage was even compounded by the negligent acts of
petitioner and ATI which both mishandled the goods during the
discharging operations.
28. HEIRS OF OCHOA V. G&S TRANSPORT CORPORATION
(DROPPED DEAD IN EDSA) - What is clear from the records is that
there existed a contract of carriage between G & S, as the owner and
operator of the Avis taxicab, and Jose, as the passenger of said
vehicle. As a common carrier, G & S "is bound to carry [Jose Marcial]
safely as far as human care and foresight can provide, using the
utmost diligence of very cautious persons, with due regard for
all the circumstances." However, Jose was not able to reach his
destination safely as he died during the course of the travel.
29. ASIAN TERMINALS V. SIMON ENTERPRISES (SOYBEAN
MEAL IN SEA DREAM – FROM LOUISIANA TO MANILA) - Taking
into consideration the exceptions provided in Article 1734 of the Civil
Code, it is true that common carriers are presumed to have been at
fault or to have acted negligently if the goods transported by them are
lost, destroyed, or deteriorated, and that the common carrier must
 prove that it exercised extraordinary diligence in order to overcome the
presumption, the plaintiff must still, before the burden is shifted to
the defendant, prove that the subject shipment suffered actual
shortage.
30. G.V. FLORIDA TRANSPORT, INC. V. HEIRS OF ROMEO L.
BATTUNG, JR. (SHOT INSIDE THE BUS) - According to Mariano,
Jr. vs. Callejas, while the law requires the highest degree of
diligence from common carriers, it does not make the carrier,
however, an insurer of the absolute safety of its passengers. In
the same case, Article 1755 of the New Civil Code was
reiterated, stating that the duty of extraordinary care, vigilance, and
precaution in the carriage of passengers by common carriers to only
such as human care and foresight can provide.
31. SULPICIO LINES V. SESANTE (PRINCESS OF THE ORIENT
SANK NEAR FORTUNE ISLAND IN BATANGAS) - Article 1756 of the
Civil Code lays down the presumption of negligence against the
common carrier in the event of death or injury of its passenger. It
states that 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.
32. The mere proof of injury relieves the passengers from
establishing the fault or negligence of the carrier or its employees. The
presumption of negligence applies so long as there is evidence
showing that: (a) a contract exists between the passenger and the
common carrier; and (b) the injury or death took place during the
existence of such contract.
33. In such event, the burden shifts to the common carrier to prove
its observance of extraordinary diligence, and that an unforeseen
event or force majeure had caused the injury. For a common carrier to
be absolved from liability in case of force majeure, it is not enough
that the accident was caused by a fortuitous event. The common
 carrier must still prove that it did not contribute to the occurrence of
the incident due to its own or its employees' negligence.
34. LOADSTAR SHIPPING COMPANY VS. MALAYAN INSURANCE
COMPANY (AFFREIGHTMENT FOR DOMESTIC BULK TRANSPORT
OF PASAR’S COPPER CONCENTRATES) - If the effect of damage
on the goods consisted merely of diminution in value, the carrier
is bound to pay only the difference between its price on that
day and its depreciated value as provided under Art. 364 of the
Code of Commerce. Since the Contract of Affreightment between the
petitioners and PASAR is silent as regards the computation of
damages, whereas the bill of lading presented before the trial court is
undecipherable, the New Civil Code and the Code of Commerce shall
govern the contract between the parties.
35. SPOUSES FERNANDO V. NORTHWEST AIRLINES (ELITE
PLATINUM WORLD PERKS CARD NUMBER) - In an action based on
a breach of contract of carriage, the aggrieved party does not have to
prove that the common carrier was at fault or was negligent. All that
he has to prove is the existence of the contract and the fact of its
non-performance by the carrier. As the aggrieved party, the
Fernandos only had to prove the existence of the contract and the fact
of its non-performance by Northwest, as carrier, in order to be
awarded compensatory and actual damages. Therefore, having
proven the existence of a contract of carriage between Northwest and
the Fernandos, and the fact of non-performance by Northwest of its
obligation as a common carrier, it is clear that Northwest breached its
contract of carriage with the Fernandos.
36. CACHO V. MANAHAN (VEHICULAR ACCIDENT IN POGO,
ALAMINOS) - Manahan passed his driving examination, but the
examiner noted his slow reaction in stopping. Manahan's written
examination also points out that he cannot recognize traffic
signs indicating a narrow road. Manahan underwent a seven (7)-
day apprentice training. A few days after, Dagupan Bus gave Manahan
clearance to report for duty as a bus driver.
37. UNITRANS INTERNATIONAL FORWARDERS, INC.
INSURANCE COMPANY OF NORTH AMERICA, UNKNOWN
CHARTERER OF THE VESSEL M/S “DORIS WULF”, AND TMS
SHIP AGENCIES - In the instant case, considering that it is
undisputed that the subject goods were severely damaged, the
presumption of negligence on the part of the common carrier, i.e.,
Unitrans, arose. Hence, it had to discharge the burden, by way of
adequate proof, that it exercised extraordinary diligence over the
goods; it is not enough to show that some other party might
have been responsible for the damage. Unitrans failed to discharge
this burden. Hence, it cannot escape liability.
38. SEALOADER SHIPPING VS. GRAND CEMENT
MANUFACTURING CORPORATION - the doctrine of last clear
chances does not apply in this case. Such doctrine states that 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 opportunity to avoid the loss but failed to do so, is chargeable
with the loss. Negligence is defined as the failure to observe for
the protection of the interests of another person, that degree of
care, precaution, and vigilance which the circumstances justly
demand, whereby such other person suffers injury. The Court finds
that Sealoader was indeed guilty of negligence consisting in the lack of
a radio or any navigational communication facility aboard the D/B
Toploader as there was no radio communication tools on board
the D/B Toploader. Sealoader cannot pass to Grand Cement the
responsibility of casting off the mooring lines connecting the D/B
Toploader to the wharf.
39. TRANSIMEX VS. MAFRE ASIAN INSURANCE CO - Under Art.
1734(1) of the Civil Code, common carriers are responsible for the
loss, destruction, or deterioration of the goods, unless the same is due
to any of the following causes: (1) Flood, storm, earthquake,
lightning, or other natural disaster or calamity. Petitioner’s
 argument that bad weather is synonymous with storm as
contemplated by Art. 1734(1) is untenable. Jurisprudence has
ruled that the storm contemplated under Art. 1734(1) must have a
wind force of 48 to 55 knots. Neither is bad weather included
as an exemption in contemplation of the term ‘perils, dangers, and
accidents of the sea or other navigable waters’ under Sec. 4(2)(c) of the
COGSA. The perils contemplated must be weather that is so unusual,
unexpected and catastrophic as to be beyond reasonable expectation.
40. KEIHIN-EVERETT FORWARDING V. TOKIO MARINE
MALAYAN INSURANCE (HONDA) - hijacking of the goods is not
considered a fortuitous event or a force majeure. Nevertheless, a
common carrier may absolve itself of liability for a resulting loss
caused by robbery or hijacked if it is proven that the robbery or
hijacking was attended by grave or irresistible threat, violence or
force. In this case, Keihin-Everett failed to prove the existence of
the aforementioned instances.
41. PEOPLE V. EDGAR GO - under Article 1756 of the Civil
Code, in case of death or injuries to passengers, a common carrier is
presumed to have been at fault or to have acted negligently, unless it
proves that it observed extraordinary diligence. In addition, pursuant
to Article 1759 of the same Code, it is liable for the death of, or
injuries to passengers through the negligence or willful acts of the
former's employees. These provisions evidently refer to a civil action
based not on the act or omission charged as a felony in a criminal
case, but to one based on an obligation arising from other
sources, such as law or contract. Thus, the obligation of the
common carrier to indemnify its passenger or his heirs for injury or
death arises from the contract of carriage entered into by the common
carrier and the passenger.
42. In this case, the criminal action instituted against the
respondent involved exclusively the criminal and civil liability of
the latter arising from his criminal negligence as a responsible
officer of SLI.
43. ORIENT FREIGHT INTERNATIONAL INC. V. KEIHIN-
EVERETT FORWARDING COMPANY (VIDOE MONITORS AND CCTV
SYSTEMS) - The truck helper recounted how the engine of the truck
stalled and the driver was able to start the engine but thereafter, he
was nowhere to be seen. It should have become apparent that the
driver intended to hijack the vehicle by giving the false appearance of
an engine breakdown. Yet, Orient Freight dismissed the incident as
unit breakdown. Moreover, Orient Freight failed to adequately
report the incident to respondent and not conducting a
thorough investigation. Orient Freight had two days to conduct a
diligent inquiry about the incident before the newspaper was
published. It took them almost a month to discover that a
robbery indeed occurred. So, under the circumstances, the
defendant failed to exercise the degree of care, precaution and
vigilance which the situation demands.
44. The negligent act would give rise to a quasi-delict only when it
may be the basis for an independent action were the parties not
otherwise bound by a contract.
45. SPOUSES ESTRADA V. PHILIPPINE RABBIT BUS LINES, INC.
(DIONISION ESTRADA ARM AMPUTATD) - moral damages are not
recoverable in actions for damages predicated on a breach of contract,
unless death of a passenger results, or it is proved that the carrier
was guilty of fraud or bad faith, even if death does not result. In
this case, there was no evidence on record indicative of fraud or
bad faith on Philippine Rabbit's part. Bad faith should be established
by clear and convincing evidence.
46. DARINES V. QUINONES - In an action for breach of
contract, moral damages may be recovered only when a) death of a
passenger results; or b) the carrier was guilty of fraud and bad faith
even if death does not result; and that neither of these circumstances
were present in the case at bar. The CA correctly held that, since no
moral damages was awarded then, there is no basis to grant
exemplary damages and attorney's fees to petitioners. The principle
 that, in an action for breach of contract of carriage, moral damages
may be awarded only in case (1) an accident results in the death of
a passenger; or (2) the carrier is guilty of fraud or bad faith, is
pursuant to Article 1764, in relation to Article 2206(3) of the Civil
Code, and Article 2220.
47. SULPICIO LINES V. KARAAN - The award of temperate
damages was proper. Article 2224 of the Civil Code states that
temperate or moderate damages, which are more than nominal
but less than compensatory damages, may be recovered when the
court finds that some pecuniary loss has been suffered but its amount
cannot, from the nature of the case, be provided with certainty. The
records of this case establish that respondents suffered loss
during sinking of the vessel. However, no independent proof, other
than respondents' bare claims, were presented to provide a numerical
value to their loss. Absent a contrary proof which would justify
decreasing or otherwise modifying the amount pegged by the CA, the
Court was constrained to affirm the amounts it imposed as
temperate damages.
48. Exemplary damages should be awarded. In Sulpicio Lines, Inc.
v. Sesante et. al., the court ruled that in contracts and quasi-
contracts, the Court has the discretion to award exemplary
damages if the defendant acted in a wanton, fraudulent,
reckless, oppressive, or malevolent manner. Indeed, exemplary
damages cannot be recovered as a matter of right, and it is left to the
court to decide whether or not to award them. The CA is
correct when it stated that since petitioner failed to prove that it
had exercised the degree of extraordinary diligence required of
common carriers, it should be presumed to have acted in a reckless
manner. The records of the case support the conclusion that
petitioner was extremely remiss before and during the time of the
vessel's sinking. Petitioner did not dispute the CA's finding that
the vessel's Captain erroneously navigated the ship, and failed to
 reduce its speed considering the ship's size and the weather
conditions.
49. ACE NAVIGATION CO. INC. V. FGU INSURANCE
CORPORATION AND PIONEER INSURANCE AND SURETY
CORPORATION - a bill of lading is defined as "an instrument in
writing, signed by a carrier or his agent, describing the freight so as to
identify it, stating the name of the consignor, the terms of the contract
for carriage, and agreeing or directing that the freight to be delivered
to the order or assigns of a specified person at a specified place."
50. In this case, the original parties to the bill of lading are:
(a) the shipper CARDIA; (b) the carrier PAKARTI; and (c) the
consignee HEINDRICH. ACENAV, as admitted agent of CARDIA,
also became a party to the said contract of carriage. Article 586
of the Code of Commerce (CC) provides that the shipowner and the
ship agent shall be civilly liable for the acts of the captain and for the
obligations contracted by the latter to repair, equip, and
provision the vessel, provided the creditor proves that the
amount claimed was invested therein.
51. By ship agent is understood the person entrusted with the
provisioning of a vessel, or who represents her in the port in which
she may be found. In the present case, the obligation of ACENAV was
limited to informing the consignee HEINDRICH of the arrival of
the vessel in order for the latter to immediately take possession of
the goods. No evidence was offered to establish that ACENAV had a
hand in the provisioning of the vessel or that it represented the
carrier, its charterers, or the vessel at any time during the
unloading of the goods. Clearly, ACENAV's participation was
simply to assume responsibility over the cargo when they were
unloaded from the vessel. ACENAV was not a ship agent within the
meaning and context of Article 586 of the CC, but a mere agent of
CARDIA, the shipper. Thus, ACENAV is not liable.
52. DESIGNER BASKETS, INC. VS. AIR SEA TRANSPORT, INC.
AND ASIA CARGO CONTAINER LINES, INC. - A common carrier
 may release the goods to the consignee even without the
surrender of the bill of lading.
53. Although the general rule is that upon receipt of the goods, the
consignee surrenders the bill of lading, Article 353 of the Code
of Commerce provides two exceptions: When the bill of lading gets lost
or for other cause. In either case, the consignee must provide a receipt
to the carrier for the goods delivered. The DBI’s retention of the bill
coupled with the indemnity agreement entered into by the buyer and
the carrier resulted in substantial compliance with Article 353 of the
Code of Commerce. The Supreme Court further held that Art. 1733,
1734 & 1735 of the NCC, which speaks of the carrier’s liability for the
oss, destruction, or deterioration of the goods and the presumption of
negligence do not apply. The responsibility of the carrier under these
provisions lasts from the time the goods are unconditionally placed
in possession of, and received by the carrier for transportation,
until the goods are delivered by the carrier to the consignee. In this
case it is undisputed that the goods were timely delivered to the
proper consignee.
54. TSUNEISHI HEAVY INDUSTRIES VS. MISMARITIME CORP.
55. UCPB GENERAL INSURANCE CO. V. ABOITIZ
56. BENJAMIN CUA VS. WALLEM PHILIPPINES SHIPPING
57. INSURANCE COMPANY OF NORTH AMERICA V. ASIAN
TERMINALS
58. ASIAN TERMINALS V. PHILAM INSURANCE
59. PIONEER ISURANCE AND SURETY CORPORATION VS. APL
60. HENSON JR. VS. UCPB GENERAL INSURANCE
61. FILCON READY MIXED VS. UCPB GENERAL INSURANCE
62. EDNA DIAGO VS. BRITISH AIRWAYS - It is settled that the
Warsaw Convention has the force and effect of law in this
country. In Santos III v. Northwest Orient Airlines, we held that:
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 Warsaw
Convention applies because the air travel, where the alleged tortious
conduct occurred, was between the United Kingdom and Italy, which
are both signatories to the Warsaw Convention. Under Article 28(1) of
the Warsaw Convention, the plaintiff may bring the action for
damages before 1. the court where the carrier is domiciled; 2. the
court where the carrier has its principal place of business; 3.
the court where the carrier has an establishment by which the
contract has been made; or 4. the court of the place of destination.
63. the allegations of tortious conduct committed against an
airline passenger during the course of the international carriage
do not bring the case outside the ambit of the Warsaw
Convention.
64. NORTHWEST AIRLINES V. HESHAN
65. CATHAY PACIFIC AIRWAYS V. REYES
66. SPOUSES FERNANDO VS. NORTHWEST AIRLINES -
Northwest is in bad faith. While We agree that the discrepancy
between the date of actual travel and the date appearing on
the tickets of the Fernandos called for some verification,
however, the Northwest personnel failed to exercise the utmost
diligence in assisting the Fernandos. The actuations of
Northwest personnel in both subject incidents are
constitutive of bad faith. On the first incident, Jesus
Fernando even gave the Northwest personnel the number of his
Elite Platinum World Perks Card for the latter to access the ticket
control record with the airline’s computer for her to see that the
ticket is still valid. But Linda Puntawongdaycha refused to check
the validity of the ticket in the computer. As a result, the
Immigration Officer brought Jesus Fernando to the interrogation
room of the INS where he was interrogated for more than two (2)
hours. When he was finally cleared by the Immigration Officer, he
was granted only a twelve (12)-day stay in the United
States (US), instead of the usual six (6) months.
67. PHIL-NIPPON KYOEL V. ROSALITA GUDELOSAO - Is the
limited liability rule applicable in favor of petitioner? Held: No because
the provisions of the Code of Commerce have no application to the
Workmen’s Compensation Act. Art. 587 and 590 of the Code of
Commerce embodies the principle of limited liability in all cases
wherein the shipowner or agent may be held liable for the negligent or
illicit acts of the captain. These limit the liability of the owner
or agent to the value of the vessel, appurtenances and freightage
earned in the voyage, provided that the owner/agent abandons
the vessel. When the vessel is totally lost, the liability of the
owner/agent for damages will be extinguished because there is no
vessel to abandon. This rule does not apply where the
injury/death is due to the fault/negligence of the owner/captain;
where the vessel is insured, and; in workmen’s compensation claims.
The real and hypothecary nature of the liability of the owner or agent
was to confine the liability of the owner/agent to the vessel,
equipment, and freight/insurance, if any, so if the owner/agent
abandoned the ship, equipment and freight, liability is
extinguished. In this case, the claims for death benefits are embodied
under a POEA-SEC which makes it the same species as the
workmen’s compensation claims under the Labor Code, belonging to a
different realm from Maritime Law. The benefits under POEA-SEC are
not due to death through misconduct of captain of the ship nor
is it the liability as a result of collision nor the liability for wages
of the crew.
68. DELA TORRE V. THE HON.COURT OF APPEALS - The Limited
Liability Rule is the real and hypothecary doctrine in maritime law
where the shipowner or ship agent’s liability is held as merely co-
extensive with his interest in the vessel such that a total loss thereof
results in its extinction. In this jurisdiction, this rule is provided in
three articles of the Code of Commerce which are Articles 587, 590
and 837. The forerunner of the Limited Liability Rule under the
Code of Commerce is Article 587 which contempLates the liability to
 third persons who may have dealt with the shipowner, the agent or
even the charterer in case of demise or bareboat charter.
69.

INSURANCE CASES