The Philippines is a country surrounded by water and, naturally, operates several ports, both intended for passenger and cargo use. As such, the Philippines has a multitude of shipping-related business, which would lead to the reasonable assumption that it has a clear procedure in handling admiralty and/or maritime cases. This, unfortunately, is not the case as the Philippines had no clear procedural recourse relating to shipping-related case.

This void had recently been recognized by the Supreme Court of the Philippines, which led to the passing of Administrative Matter No. 19-08-14-SC, otherwise known as “The Rules of Procedure for Admiralty Cases”. In issuing the same, the Supreme Court of the Philippines aims to, inter alia, “provide parties in cases in admiralty and maritime jurisdiction a fast, reliable and efficient means of recourse to Philippine courts.”

VERALAW, as one of the foremost shipping law firms in the Philippines, has summarized the pertinent portions of Administrative Matter No. 19-08-14-SC below for easy reference.

1.        Effectivity

The Rules took effect last 01 January 2020 following its publication in the Official Gazette or in two papers of national circulation.

2.        Courts designated as Special Admiralty Courts

Administrative Matter No. 19-08-14-SC designates certain Metropolitan and Regional Trial Courts as Special Admiralty Courts depending on the amount of the claim. Under Section 19(3) of the Judiciary Reorganization Act of 1980, Regional Trial Courts shall have exclusive original jurisdiction over “all actions in admiralty and maritime jurisdiction where the demand or claim exceeds Three Hundred Thousand Pesos (₱300,000.00) or, in Metro Manila, where such demand of claim exceeds Four Hundred Thousand Pesos (₱400,000.00)”. Claims that do not exceed these amounts shall be handled by Metropolitan Trial Courts.

Admiralty Cases are also defined under Section 5 of Administrative Matter No. 19-08-14-SC.

3.        In Rem and In Personam Actions defined and distinguished

The actions that are considered in rem and in personam are categorically defined in Sections 6 and 7, respectively, of Rule 1 of Administrative Matter No. 19-08-14-SC. Thus:

“Section 6. Actions in rem. – Actions in rem may be filed, even if the ship may be located outside the Philippines, in the following cases:

(a) Any claim to the possession or ownership of a ship or any share therein;

(b) Any question arising between the co-owners of a ship as to possession, employment, or earnings of that ship, including the settlement of any account outstanding and unsettled between the parties in relation to the ship;

(c) Any claim in respect of a mortgage of or charge on a ship or any share therein;

(d) Any claim for the attachment, forfeiture or condemnation of a ship, or for the restoration of a ship;

(e) Any claim on the basis of a maritime lien or other charge on any ship, or other property for the amount claimed; and

(f) Enforcement of an arbitral award or foreign judgment against a ship.

Section 7. Actions in personam. – At the plaintiff’s option, an action in personam may also be filed where the defendant has his or her habitual residence or place of business in the Philippines, in the following instances:

(a) Any claim for damage done/inflicted by a ship;

(b) Any claim for damage received/sustained by a ship;

(c) Any claim for loss of life or personal injury sustained as a result of: 

i. any defect in a ship or in her equipment; and

ii. the wrongful acts or omissions of the owners, charterers, or persons in possession or control of a ship, or the master or crew thereof, or any other  person  for  whose  wrongful  acts  or  omissions  the  owners, charterers, or persons in possession or control of a ship are responsible, provided, that said acts or omissions are conducted in the navigation or management of the ship, in the loading, carriage or discharge of goods on, in or from the ship, or in the embarkation, carriage, or disembarkation of persons on, in or from the ship;

(d) Any claim for loss or damage to goods carried in a ship;

(e) Any claim arising out of any agreement relating to the carriage of goods in a ship or to the use or hire of a ship;

(f) Any claim in the nature of salvage of a ship, including claims for services rendered in saving life from a ship or any aircraft or in preserving cargo, apparel or wreck as are authorized to be made in connection with a ship or aircraft;

(g) Any claim in the nature of towage in respect of a ship;

(h) Any claim in the nature of pilotage in respect of a ship;

(i) Any claim in respect of goods or materials supplied to a ship for her operation or maintenance;

(j) Any claim in respect of the construction, repair or equipment of a ship of dock charges or dues;

(k) Any claim by a master, shipper, charterer, or agent in respect of disbursements made on account of a ship;

(l) Any claim arising out of an act which is or is claimed to be a general average act;

(m) Any claim arising out of bottomry; and

(n) Any claim arising out of a charter party of whatever kind.”

The foregoing distinction between in rem and in personam is particularly important when it comes to service of summons and in applying for a Warrant of Arrest.

4.       An action may be both in rem and in personam

Administrative Matter No. 19-08-14-SC states that actions may be both in rem and in personam, i.e., an action against the ship and its owner, charterer, or other person in possession or control thereof.

5.       Complaint must specify all evidence supporting the cause of action

Section 3, Rule 2 of Administrative Matter No. 19-08-14-SC requires a verified complaint to specify all evidence supporting the cause of action, such as affidavits of witnesses, authenticated documentary evidence, and object evidence. Furthermore, the authenticated documentary evidence must be attached to the Complaint.

6.       Complaint must be served upon the Ship’s Register or Consulate

Under Section 6, Rule 2 of Administrative Matter No. 19-08-14-SC, the plaintiff is required to furnish a copy of the Complaint to the Ship’s Register with which the ship is registered upon the filing of said Complaint. In the absence of a Ship’s Register, a copy of the Complaint shall be furnished upon the consulate of the Ship’s flag. In either case, proof of service shall be attached to the Complaint.

Manner of service will depend on the ship’s registry. In case the ship is of Philippine Registry, service shall be made by sending a copy of the complaint, including its attachments, personally or by personal courier upon the Maritime Industry Authority. For foreign-registered ships, the complaint and its attachments shall be sent to the consulate of the ship’s flag state or, if allowed by the Ship’s Registry, by sending through electronic means.

7.       Service of Writs of Summons is different for in rem actions

Administrative Matter No. 19-08-14-SC prescribes that Writ of Summons, and not just ordinary summons, will issue in in rem cases whereby the same must be served on the ship against which the action is brought. If the ship has been sold already by the sheriff upon lawful order of the court, the Writ of Summons shall be served with the Ship’s Registry.

In case of service upon the ship, the same is effected as follows:

a.            by serving the same personally upon the ship’s captain or master on board the ship while it is within the jurisdiction of the Philippines;

b.            by affixing a copy of the writ for a short time on any mast of the ship or on the outside of any suitable part of the vessel’s superstructure, visible to all who may board or enter the vessel;

c.             by affixing a copy of the writ in a sheltered, conspicuous part of the vessel visible to the person in actual possession and control thereof, such as the windows in front of the wheelhouse or bridge of the vessel; and

d.            in the case of cargo or freight in the custody of a person, by leaving the writ with such person.

For in personam cases, summons shall be served in accordance with the Rules of Court insofar as they are not incompatible with Administrative Matter No. 19-08-14-SC. In case of an action both in rem and in personam, both the Writ of Summons and ordinary summons shall issue.

8.       An answer must be verified and filed within ten (10) calendar days from receipt of the writ or summons

Under Section 12, Rule 2 of Administrative Matter No. 19-08-14-SC, a defendant only has ten (10) calendar days from receipt of the writ or summons to file an answer. The answer must be verified as well.

9.       Motions for extension of time to file pleading (including an answer) is not allowed

Under Section 2, Rule 2 of Administrative Matter No. 19-08-14-SC, a motion for extension of time to file any pleadings, affidavits or any other paper is prohibited.

10.    The Admiralty Court may, on its own, submit the case for judgment on the pleadings or summary judgment.

Under Section 4, Rule 3 of Administrative Matter No. 19-08-14-SC, the Admiralty Court may, motu proprio, submit the case for judgment on the pleadings or summary judgment without need of position paper or memoranda.

11.    Administrative Matter No. 19-08-14-SC prescribes rules in arresting vessels, cargoes, and/or freight in actions in rem

Both plaintiff and defendant (in case of counterclaim) may apply for a Warrant of Arrest of vessels, cargoes, and/or freight in actions in rem pursuant to Section 1, Rule 6 of Administrative Matter No. 19-08-14-SC. Once issued, the Warrant of Arrest shall be valid for a period of twelve (12) months from the date of its issuance.

In order to be issued a Warrant of Arrest, the applicant must file an affidavit in accordance with Section 2, Rule 6 of Administrative Matter No. 19-08-14-SC, to wit:

In addition to the foregoing, the applicant must also give a bond or security executed in favor of the Admiralty Court in the amount of thirty percent (30%) of the claim but in no case less than Five Million Pesos (PhP5,000,000.00).

12.    Notice and hearing must be afforded to the owner, master, or person in actual possession and control of the property

Unlike the rules on attachment, Administrative Matter No. 19-08-14-SC requires that due notice and hearing must be afforded unto the owner, master, or person in actual possession and control of the property before any Warrant of Arrest may issue.

This notwithstanding, the plaintiff may request for an ex parte issuance of a Warrant of Arrest in cases of extreme urgency where he may suffer irreparable or gross inconvenience on account of the mobility of the ship, cargo, or freight.

13.    Arresting party must pay all port fees and charges during the period of arrest

Under Section 4, Rule 6 of Administrative Matter No. 19-08-14-SC, the arresting party shall pay all port charges, fees, and expenses for preservation and maintenance of the ship or cargo during its arrest until its release or sale.

14.    Warrant of Arrest may be lifted upon filing of a bail bond

Similar to the rules on attachment, a Warrant of Arrest may be lifted once a sufficient bail bond is filed to answer for the arresting party’s claims and approved by the Admiralty court.

15.    Administrative Matter No. 19-08-14-SC prescribes Special Proceedings for a Limitation Action

Administrative Matter No. 19-08-14-SC prescribes special proceedings for a limitation action, i.e., when a shipowner, charterer, or person in possession and control of the ship seeks to limit his liability to the full amount of the limitation fund constituted for the purpose by filing a verified complaint. Said limitation fund is constituted, by order of the court, either by making a deposit to the court or by producing a letter of undertaking from a Protection and Indemnity Club.

In order to avail of the limitation action, the shipowner, charterer, or person in possession and control of the ship must abandon the vessel with all her appurtenances, equipment, and freightage.

The full text of Administrative Matter No. 19-08-14-SC can be downloaded here. For any queries and/or clarifications, you may reach us at veralaw@veralaw.com.ph or call (+632) 8550-1888. Please be advised that Metropolitan Manila is under an Enhanced Community Quarantine in view of the COVID-19 pandemic until 30 April 2020 by order of the Philippine government.