This article analyses how American colonial-era cabotage laws (1899–1946) entrenched monopolies in the Philippine maritime industry, exemplified by firms like Compañía Marítima. Despite partial liberalization via Republic Act No. 10668 (2015), protections for domestic operators persisted until 2024, when foreign vessels were first permitted on domestic routes. Through an examination of colonial and legislative records, this study reveals how post-colonial elites perpetuated colonial institutions under the guise of nationalist rhetoric, sustaining high costs, weak competition, and a recurring pattern of maritime disasters. Institutional mechanisms such as the 1936 Public Service Act reinforced this path dependence. Applying the framework of Acemoglu and Robinson's ‘Colonial Origins of Comparative Development’ (2001), the article argues that the Philippine cabotage regime evolved from an extractive colonial institution into a rent-seeking system protecting elite interests. In doing so, it contributes to broader debates on the persistence of colonial economic structures in South East Asian maritime policy.