PHILIPPINES Law and Practice Contributed by: Valeriano Del Rosario, Daphne Ruby Grasparil, Patrick Sarmiento and Maria Francesca Bautista, VeraLaw
purchase or initial operation” of a vessel. However, a foreign ship mortgage over a documented foreign ship is recognised and can be enforced by the Philippine Admiralty courts. For national development, the Phil - ippine government, through the Development Bank of the Philippines, has actively financed ship acquisitions and ship-building for inter-island connectivity. 2.2 Ship Leasing Bareboat chartering arrangements were very popular in the Philippines prior to 2021 for a practical reason. Prior to 2021 the Philippines implemented restrictive cabotage regulations. Domestic ship operators were able to obtain a temporary Certificate of Philippine Registry for a bareboat chartered ship for use in the inter-island trade. In 2021 the Philippines liberalised the rules on ship ownership by removing the nationality requirement. Foreigners operating through a registered Philippine corporation may own and register a ship in the Philip - pines for inter-island trade. The use of the bareboat chartering programme has become a popular tool as part of a ship finance programme. For ships built overseas and financed by an overseas lender, a leas - ing transaction can easily be arranged. The lender can create an SPV to own the ships, and the SPV in turn bareboat charters the ship to the operating entity in the Philippines. The leasing arrangement is a well-worn path familiar to the ship operators, and is accepted and recognised by the government authori - ties. 3. Marine Casualties and Owners’ Liability 3.1 International Conventions: Pollution and Wreck Removal The Philippines is a signatory to the 1992 Civil Liability Convention and the 1992 Fund Convention. 3.2 International Conventions: Collision and Salvage The Philippines is not a signatory to either the 1910 Brussels Collision Convention or the 1989 Interna - tional Convention on Salvage.
However, regarding collisions, the Philippines adheres to and applies the 1972 International Regulations for Preventing Collisions at Sea (the “Collision Regula - tions”). The Collision Regulations are part of the Phil - ippine Merchant Marine Rules and Regulations of 1997, which were promulgated by MARINA. The rules on collision liability in the Philippines are set out in the Code of Commerce. The rule is basically all or nothing. If both vessels are to blame, each ship must bear its own loss, but both vessels are jointly and solidarily liable for the cargo loss on both vessels. To succeed in a collision claim, the claimant ship must be com - pletely blameless. The Philippines has its own domestic legislation on salvage. The Philippine Salvage Law is set out in Act No 2616, and the principles for a valid salvage service are no different from the concept as it exists in the United Kingdom – that is, the party performing the service must be a volunteer, there must be danger, and the service must be successful. 3.3 Convention on Limitation of Liability for Maritime Claims The Philippines is not a signatory to the 1976 Con - vention on Limitation of Liability for Maritime Claims. The domestic law on limitation of liability is set out in the Code of Commerce. The limitation amount is the value of the ship plus the value of the freight being earned during a voyage. If the ship has been dam - aged, the limitation amount would be the ship’s dam - aged value plus the value of the freight in the course of being earned. The right to limit liability has been curtailed by the 2003 judgment in Aboitiz v New India . This Supreme Court judgment clarified that, if there is a finding of any kind of unseaworthiness against the vessel, the owner loses the right to limit liability, regardless of whether the unseaworthiness arose through the owner’s fault or negligence. 3.4 Vienna Convention on the Law of Treaties As a party to the Vienna Convention, it is applicable in the Philippines. The Philippines signed the Convention in 1969 and eventually ratified it in 1972. The Philippines is not a signatory to the Convention on Limitation of Liability for Maritime Claims. Further - more, the Philippines is a civil law jurisdiction and has
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