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Henceforth, the following guidelines shall govern the issuance of Temporary Certificate of Philippine Registry (TCPR) for overseas vessels pursuant to P.D. 866/1711, to wit:

I
Applicant Qualifications

1.  Only Philippine nationals authorized to principally engage in overseas shipping and duly accredited by MARINA may charter and register any foreign-owned vessel under P.D. 866/1711.

2.  Applicant's principal officers, e.g., President, Vice-President for Operations, General Manager, Freight/Chartering Managers or their equivalents [shall] have at least three (3) years experience in both ship and shipping management.

II
Pre-Approval Conditions

1.  The applicant shall have an owner's equity or paid-up capital of at least P1.5M for the first three (3) chartered vessels and shall increase the same to P2.5M for the charter of additional vessels in excess of three.

2.  The corporate name of the company must be indicative of the principal purpose of the company as engaged in the business of chartering or overseas shipping, and any word or term included in such name as would create an impression that the company is merely an agent or auxiliary should be eliminated/amended.

3.  The applicant may bareboat charter vessels up to at most seven (7) vessels for every owned vessel of at least 5,000 DWT registered permanently under the Philippine flag.

4.  In cases where the applicant does not own any vessel it may initially bareboat charter five (5) vessels for a maximum of four (4) years per vessel.  The bareboat contracts shall not be extended beyond four (4) years maximum period unless the applicant acquires at least one (1) of at least 5,000 DWT vessels through direct purchase or through the conversion of the bareboat charter into a lease-irrevocable purchase financing scheme in which a downpayment of at least ten percent (10%) is required and no "balloon" payments shall be allowed beyond the first half of the charter period. Thenceforth, the company may bareboat charter up to seven (7) vessels provided it has at least one (1) vessel of at least 5,000 DWT under permanent Philippine registry, that is, the ratio of bareboat chartered tonnage to owned tonnage shall be maintained at maximum 7:1 in terms of number of vessels.

5.  In cases where the applicant owns the vessel to be bareboat chartered and where the vessels are registered under a foreign flag it may bareboat charter such vessels without limitations provided that evidence of ownership shall be submitted to MARINA .

6.  The vessel shall be classed by a recognized international classification society and shall have a valid Continuous Machinery Survey (CMS) and Continuous Hull Survey (CHS) at the time of application issued by an international accredited classification society.

7.  The vessel to be chartered shall not be more than 15 years old; however, in meritorious cases, it may be more than fifteen (15) but in no case more than twenty-five (25) years old.

8.  The technical, management, financial, and economic evaluation of the project shall be favorable. The applicant shall pay a filing fee of P4 ,000 per vessel. For an application involving vessels sixteen (16) years old and above, the applicant shall pay a filing fee of P5 ,000 per vessel. The age of the vessel shall reckoned from the date of the launching.

9.  Pro-forma bareboat (and time charter) contracts shall be in accordance with international chartering practices.

10.           Proof of payment of the withholding tax of 4.5% corresponding to previously chartered vessels of the company shall be or shall have been submitted.

III
Post-Approval Condition

1.  A certification by an internationally accredited classification society that the vessel's class is maintained shall be submitted to MARINA not later than thirty (30) days from approval of the charter.

2.  Copies of all duly executed and authenticated bareboat and time charter party shall be submitted to the MARINA not later than thirty (30) days from execution of the document and in no case later than six (6) months from approval of the charter.

3.  Copies of the duly executed lease-financing agreements shall be submitted not later than thirty (30) days after the MARINA approval of the request.

4.  That any and all documents and certificates issued to the vessel by the original flag of registry which are on board the vessel shall be removed from the vessel and taken possession of by the charterer within thirty (30) days after accepting delivery of the vessel.

5.  That the vessel after registration and acceptance of delivery shall immediately and at all times during the charter period utilize the Philippine flag and call sign duly authorized by the Philippine Coast Guard and National Telecommunications Commission, respectively.

6.  That a copy of the Certificate of Philippine Registry and Protocol Delivery and Acceptance shall be submitted to MARINA within ninety (90) days from receipt of approval of authority to charter.

7.  That the vessel's name shall be changed to a Filipino name, as may be required and approved by MARINA; and considering that the Filipino language is a combination of Filipino, English, Spanish and Malay, any name derived therefrom may be acceptable.

8.  That the vessel shall be completely manned by Filipino officers and crew and no foreign officer/crew shall be allowed on board except as supernumeraries; in cases of specialized vessels, foreign officers/crew may be allowed in lieu of the Filipino officers/crew only for a maximum period of six (6) months.

9.  That copies of all shipping articles shall be submitted to MARINA within thirty (30) days from execution.

10.           That a colored photograph (at different angles) showing the place of registry in the astern portion of the vessel be submitted to the MARINA within thirty (30) days after registration under Philippine flag.

11.           That not later than thirty (30) days from approval of the charter, the company shall submit to MARINA an oath of undertaking duly signed by its duly authorized representative pursuant to a resolution of the Board of Directors, which stipulates the following:

a.    As bareboat charterer, the company shall, after Philippine registration of the vessel and after accepting delivery remove from the vessel all documents and certificates issued to the vessel by the original flag of registry and shall take possession of said documents/certificates and the vessel shall immediately and at all times during the charter period utilize the Philippine flag and call sign duly issued and authorized;

b.    Should a violation be committed by the company, or by any officer on board, of the post-approval conditions, the approval of charter shall be cancelled and the vessel shall cease to be a Philippine-registered vessel and those involved shall be immediately relieved.

c.    Should the company violate the above conditions it shall be subject to an administrative fine in the amount of One Hundred Thousand Pesos (P100,000) and shall be barred for a maximum of five (5) years from bareboat chartering under P.D. 866/1711.

12.           That proof of quarterly payment of withholding tax shall be submitted to MARINA within forty-five (45) days after each quarter.

13.           The company shall comply with all laws, rules and regulations pertaining to Philippine flag vessels.

IV
Sanctions

1.  Any violation of the aforementioned Post-Approval Conditions, except conditions no. 4 and 5 which shall be dealt with separately, shall be meted the corresponding administrative fines, penalties, or forfeitures, as follows:

a.    For the first violation, by a fine of not more than P10,000.00.

b.    For the second violation, by a fine of not more than P20,000.00.

c.    For the continued willful neglect or refusal to comply with the post-approval conditions as required by MARINA, by a fine of not more than P20,000.00 per month (or a fraction thereof) of default or by revoking the approval of the bareboat charter contract or by cancellation of the Permanent Certificate of Philippine Registry (PCPR) of the vessel.

2.  Any violation of Post-Approval Conditions no. 4 and 5 shall be subject to an administrative fine in the amount of P100 ,000.00 and shall bar the company or firm bareboat chartering under P.D.s 866/1711 for a maximum period of five (5) years.

3.  For violation of other laws, rules and regulations pertaining to Philippine flag vessels, these shall be meted the same penalties and fines provided therein.

4.  For purposes of imposing fines, penalties, or forfeitures, the MARINA, through its Legal Office and the Office of Overseas Shipping shall conduct a hearing to enable the shipping entity to explain the circumstances of the violation.  The same offices shall adopt their own rules and procedures provided sufficient notice is given to all parties concerned.

5.  The findings and recommendations of the Offices concerned shall be forwarded to the Administrator who shall render the decision. Said decision shall become final and executory after the lapse of fifteen (15) days from receipt of decision unless the same is appealed within the said period to the Maritime Industry Authority Board, whose decision shall be final and immediately executory.

All existing MARINA Memorandum Circulars not inconsistent with this Circular shall remain in full force and effect.

This Circular shall take effect immediately.

Adopted: 23 April 1985

(SGD.) VICTORIANO A. BASCO
Administrator

(SGD.) JOSE P. DANS, JR.
Ministry of Transportation and Communications