There is this ATO regulation issued sometime in 1982, IIRC, which require 4-6 airline seats, depending on size, BAC or Hawker Siddeley, to be vacant for VIPs, usually reserved for gov't officials. They remained unfilled until 2 hours prior to departure. To fill them up in the last minute, airline overbooks 4-6 seats, which we often heard as "chance passengers". Their transport is dependent upon the VIPs not showing up.
In one CAB case against CEB that I know, it argued they were not bound by said regulation because they are a private carrier, unlike PAL which was a government owned airline. The case was settled with CEB providing travel voucher, which is more than the plane fare paid. So no penalty was imposed on the airline.
However, PAL continued that practice in 1992 after privatization, this time you pay the fare difference for business class seats. Sometime in 2002 i think, PAL introduce the practice of overbooking seats, which you find them now. Noticed the offer given by PAL is way better than the fare you paid, provided you defer your travel to another date? Fact is, they already earned more by accepting a high paying passenger to fly on that date, at your expense, should you surrender your seat.
A different scenario however happens when you book flights on low cost carrier. So AO1 was born to answer abuses, known as Joint DOTC-DTI Administrative Order No. 1 Series of 2012, otherwise known as the “Air Passenger Bill of Rights”, which took effect on 21 December 2012, which you can see
here.
Liability would not arise however, if delay or cancellation is caused by acts of god, (ie typhoon, thunderstorm, flood, volcanic eruption, etc) or airport closure due to fortuitous events, like power interruptions.
At best, airlines will just reschedule you to the next available flights, special or regular, which sometimes is months away, basically defeating the purpose of your travel.
For PAL, PR5xxx is special flight, categorize either as chartered, replacement, delivery, or rescue.