A general introduction to shipping law and practice in Philippines

A general introduction to shipping law and practice in Philippines
VeraLaw (Del Rosario Raboca Gonzales Grasparil) June 14 2022 https://www.lexology.com/library/detail.aspx?g=131b48c7-225f-4539-a9a6-c...

Commercial overview of the shipping industry

There are two sides to the Philippine shipping industry, and both can only be described in superlative terms. On the one hand, the Philippines, an archipelagic country of over 7,000 islands, has a flourishing domestic shipping industry. In 2020, the Philippine domestic operating fleet consisted of 29,974 registered vessels, which moved people and cargo throughout the archipelago.2 The domestic industry, however, is probably most remembered for the ill-fated collision between the passenger ferry Doña Paz and the petroleum product tanker, Vector, which happened on 20 December 1987 and resulted in over 4,000 deaths – the worst disaster at sea in peacetime. As could be expected, it spawned numerous litigations in the Philippines and the United States.

On the other hand, the Philippines is the top provider of both seafarers and officers to the world's merchant marine fleet, whereas Indonesia took third place for ratings and fifth for officers, and China was third for officers and fourth for ratings.3

In 2019, the Philippines deployed 507,730 seafarers internationally, however, due to the covid-19 pandemic, based on the preliminary data as of 5 January 2021, the numbers dwindled to 217,223 in 2020.4 As in the rest of the world in 2020, however, the global covid-19 pandemic greatly affected seafarer deployment. At the peak of the Philippine lockdown, instead of being able to deploy seafarers on the average of 45,000 monthly, reports show only approximately 20,000 were deployed in total for March to June 2020.5 Figures were at their lowest on April 2020 with only 597 deployed due to the lockdowns and travel restrictions in the Philippines and countries abroad.6 Considering the very low figures of deployment and the government realising and prioritising the plight of seafarers, various government agencies, including the Department of Foreign Affairs, Department of Transportation and Department of Health, had issued Joint Circular No. 1, Series of 2020 on the Guidelines for the Establishment of the Philippine Green Lane to facilitate the speedy travel of Seafarers.7 Thereafter, the industry slowly picked up starting from the third quarter of 2020.8

In 2021, the Philippines earned over US$31.417 billion from overseas Filipino workers, which presented a 5.1 per cent growth rate compared to the previous year, and of that total, over US$6.545 billion came from Filipino seafarers.9 In 2021, the remittances of overseas Filipino workers constituted 8.9 per cent of the Philippines' GDP.10 The largest port in the Philippines is Manila, which is located on the island of Luzon in the northern part of the country. In central Philippines, the Philippines' second-largest city, Cebu, serves as the main hub for the distribution of goods within the central islands. Davao and Cagayan de Oro are the major ports in the southern Philippines' island of Mindanao, which is largely the source of Philippine agricultural exports.

In December 2021, the Philippines imported US$11.483 billion (free on board value) worth of goods, while at the same time exporting goods worth US$6.270 billion.11 This trade is almost entirely dependent on shipping, which is the vital link between the islands of the Philippines and the rest of the world.

General overview of the legislative framework

The Philippines is a civil law country. The New Civil Code of the Philippines,12 which was enacted in 1949, was based on the Spanish Civil Code. The Philippines is no longer a Spanish-speaking country, so all enacted laws are in English and court proceedings are conducted in English. The Philippines also has a Code of Commerce, which is based on the Spanish Code of Commerce 1885. The Law on Obligations and Contracts is part of the Civil Code, while the rules on domestic carriage of goods are set out in both the Civil Code and the Code of Commerce. The latter also provides for the law on charter parties, collision and general average. Salvage is covered under a special law.

The Philippines also follows the system of judicial precedents, and therefore the decisions of the Philippine Supreme Court, written in English, interpreting the provisions of the Civil Code, the Code of Commerce and other legislation, have the force of law. For carriage of goods to and from Philippine ports in foreign trade, the Philippines adopted the United States Carriage of Goods by Sea Act of 1936 (the Philippine COGSA),13 which is basically the Hague Rules.

The Philippines is a major provider of seafarers to the world's merchant marine fleet. More recent shipping-related legislation has tended to be in relation to overseas Filipino workers. On 13 March 2014, the Philippine Congress enacted Republic Act No. 10635,14 establishing the Maritime Industry Authority (MARINA), a single maritime administration responsible for the implementation and enforcement of the International Convention on Standards of Training, Certification and Watchkeeping for Seafarers 1995 (the STCW Convention), as amended, and the international agreements or covenants related thereto.

In August 2012, the Philippines became the 30th member country of the International Labour Organization to adopt the Maritime Labour Convention of 2006 (MLC). The adoption of the MLC, the 'seafarer's bill of rights', was a concrete effort to protect the rights of Filipino seafarers at home and overseas. By doing so, the Philippine government recognised the significant contribution of Filipino seafarers to the growth of the country's economy.15