(NAR) VOL. 15 NOS. 3-4 / OCTOBER - DECEMBER 2004
1.1 Bridge our islands by ensuring safe, reliable, efficient, adequate and economical passenger and cargo service; 1.2 Encourage the dispersal of industry and the economic development of our regional communities by ensuring the availability of regular, reliable and efficient shipping services; 1.3 Ensure the growth of exports by providing necessary, competitive and economical domestic sea linkages; 1.4 Serve as naval and military auxiliary in times of war and other national emergencies; and, 1.5 Function as an employment support base for our Filipino seafarers.
2.1. Promote deregulation in the domestic shipping industry, encourage effective competition, free enterprise and market driven rates that are sensitive to the demands of the public; 2.2. Promote Filipino ownership of vessels operated under the Philippine flag; 2.3. Attract private capital to invest in the shipping industry by creating a healthy and competitive investment and operating environment; 2.4. Provide necessary assistance and incentives for the continued growth of the Philippine domestic marine fleet; 2.5. Encourage the improvement and upgrading of the existing domestic merchant marine fleet and Filipino crew to meet international standards; 2.6. Ensure the continued viability of domestic shipping operations; and, 2.7. Encourage the development of a viable shipbuilding and ship repair industry to support the expansion and modernization of the Philippine domestic merchant marine fleet and its strict adherence to safety standards which will ensure the seaworthiness of all sea-borne structures.
"Act" refers to Republic Act No. 9295, entitled: "An Act Promoting the Development of Philippine Domestic Shipping, Shipbuilding, Ship Repair, and Ship Breaking, Ordaining Reforms in Government Policies Towards Shipping in the Philippines, and For Other Purposes", otherwise known as the "Domestic Shipping Development Act of 2004";
"Administration" refers to the Maritime Industry Authority or MARINA;
"Capital Equipment" refers to the shipyard equipment and machinery, including major components thereof, and other mechanical or electrical apparatus, whether fixed or movable, needed for the construction, repair, or breaking of ships;
"Cargo Handling Equipment" refers to any machinery, gear or equipment used by the ship operator or a duly authorized and licensed port operator to service or handle cargo, on board the vessel, at the pier, or in the terminal or container yard such as, but not limited to, cranes, forklifts, top lifts, stackers, tractor heads, containers, pallet boards, and the like, including all spare parts, replacement parts, appurtenances, accessories, articles, supplies and materials thereof;
"Classed Ships" refer to ships that are designed, constructed and/or maintained in accordance with the rules and standards of a MARINA-recognized or accredited classification society;
"Classification Society" refers to a non-profit organization recognized or accredited by the MARINA, which has the capability and competence to determine the fitness for continued service of a ship's hull structure, mechanical and electrical equipment, provide classification and construction design as well as periodic through-life compliance verification of ships with the rules and standards set by the organization, issue necessary certifications required by the regulations of the Authority and by international conventions and codes of the International Maritime Organization (IMO), as well as provide such services comprising technical support, research and development on ship design and maintenance;
"Commissioning of the Ship" refers to the ceremony mandating the beginning of active service of the ship or beginning of the ship's active service, which may refer to the date of launching, if available, or year built;
"Certificate of Public Convenience (CPC)" refers to an authority granted to a sole proprietor, partnership, cooperative, corporation, association to provide shipping service over a specified area or route, and leaving to it the flexibility to deploy ships to perform such service;
"Domestic Shipping" refers to the transport of passengers or cargo, or both, by ships duly registered and licensed under Philippine law to engage in trade and commerce between Philippine ports and within Philippine territorial or internal waters, for hire or compensation, with general or limited clientele, whether permanent, occasional or incidental, with or without fixed routes, and done for contractual or commercial purposes.
"Domestic Ship Operator" or "Domestic Ship Owner" which may be used interchangeably shall refer to a citizen of the Philippines, or a commercial partnership wholly owned by Filipinos, or a corporation at least sixty percent (60%) of the capital of which is owned by Filipinos, which is duly accredited by the MARINA under Memorandum Circular No. 79/79-A or their subsequent amendments to engage in the business of domestic shipping, which may include cooperative or association duly registered with relevant government agency;
"Domestic Trade" refers to the sale, barter or exchange of goods, materials or products within the Philippines;
"Effective Competition" refers to the state where the market is able to function effectively and bring about economic efficiency with the concurrence of all of the following conditions:
- Market forces operate freely as when market is able to perform its price allocation function properly;
- No barriers to entry/exit; and,
- Level playing field is when operators are on the same plane and no operator can wield power to abuse the market by having the ability to manipulate or dictate rates or carrying capacity of ships.
"Engine" refers to the main propulsion engine and/or the auxiliary engine of a ship;
"High Speed Passenger Craft" refers to a craft capable of maximum speed in meters per second (m/s) equal to or exceeding:SEE Image, Page 1990
excluding craft the hull of which is supported completely clear above the water surface in non-displacement mode by aerodynamic forces generated by ground effect.
"Importation" refers to the direct purchase, lease or charter of newly constructed or previously owned ships, or the purchase of a ship's spare parts, from foreign sources or from registered enterprises operating in special economic zones as this term is defined in Republic Act No. 7916 entitled "The Special Economic Zone Act of 1995". Importation also includes the purchase of navigational, communication, safety, rescue and life saving equipment, shipyards' capital equipment, machinery and its spare parts;
"Insurance Company" refers to any corporation or entity duly authorized/licensed under Philippine laws to engage in the business of marine insurance and duly registered with the Insurance Commission;
"Safety Appliances and Equipment" refers to those appliances/equipment (i.e. navigational, communication, fire fighting, life-saving) referred to in SOLAS 1974, Chapter III, Sections A and B, and the PMMRR 1997 Chapters VII, IX, X and XI or their amendments, and other relevant safety rules, regulations and codes;
"MARINA-registered Domestic Shipowner/Operator" refers to accredited Domestic Shipowner/Operator under MARINA MC 79/79-A or their subsequent amendments.
"MARINA-registered Shipyards, Shipbuilders and/or Ship Repairers" refers to licensed shipyards, shipbuilders and/or ship repairers under MARINA MC 95 or its subsequent amendments;
"Metal Plates" refers to the steel plates, marine-grade aluminum plates or other metal plates, used for the construction, repair, renovation, conversion or alteration of the ship;
"Missionary Route" refers to a route involving one or more areas that have either an existing non-regular shipping service or no existing shipping services due to geographic limitations and absence of economic and market viability;
"Monopoly" refers to a form of market structure in which one or only a few entities/companies dominate the total shipping service in a particular route/link;
"Ship" or "Vessel" which may be used interchangeably shall refer to any kind, class or type of craft or artificial contrivance capable of floating in water, designed to be used, or capable of being used, as a means of water transport in the domestic trade for the carriage of passengers or cargo, or both, utilizing its own motive power or that of another;
"Shipbuilding" refers to the design, construction, launching and outfitting of all types of ships and watercraft;
"Shipper" any person, partnership or corporation, or third party who are doing business of forwarding or consolidation, who shall procure for itself the services of a domestic shipowner/operator for the carriage of its cargo in the domestic trade upon payment of proper compensation;
"Ship repair" refers to the overhaul, refurbishment, renovation, improvement, or alteration of the hull, machineries, equipment, outfits and components of all types of ships;
"Shipyard" refers to the shipbuilding or repair facilities which have the capability to put vessels out of water in a drydock or to put vessels above the water surface in order to effect ship work on vessels, appendages, structure, machinery and equipment;
"Shipbuilder" or "Ship repairer" refers to a citizen of the Philippines, or a commercial partnership owned by majority of Filipinos, or a corporation incorporated under the laws of the Philippines, the capital of which is owned or controlled in any proportion by Filipinos or by foreign nationals, or by corporation whether Filipino or foreign-owned, which is duly authorized by the MARINA to engage in the business of shipbuilding or ship repair or to otherwise operate a shipyard, graving dock or marine repair yard; and
"Spare Parts" refers to the replacement parts or components of a vessel, including but not limited to its hull, engines, machineries, equipment, appurtenances, necessaries, accessories, articles, supplies, materials, steel plates, aluminum plates, other metal plates, communications equipment, and other parts or components thereof, installed aboard the ship necessary for its safe and efficient navigation and operation.
1.1 Register vessels;
1.2 Issue certificates of public convenience, or any extensions or amendments thereto, authorizing the operation of all kinds, classes and types of vessels in domestic shipping: Provided, That no such certificate shall be valid for a period of more than twenty-five (25) years;
1.3 Modify, suspend or revoke at any time, upon notice and hearing, any certificate, license or accreditation it may have issued to any domestic shipowner/operator;
1.4 Establish and prescribe routes, zones of areas of operations of domestic shipowners/operators;
1.5 Require any domestic shipowner/operator to provide shipping services to any coastal area, island or region in the country where such services are necessary for the development of the area, to meet emergency sealift requirements, or when public interest so requires;
1.6 Set safety standards for vessels in accordance with applicable conventions and regulations;
1.7 Require all domestic shipowners/operators to comply with operational and safety standards for vessels set by applicable conventions and regulations, maintain its vessels in safe and serviceable condition, meet the standards of safety of life at sea and safe manning requirements, and furnish safe, adequate, efficient, reliable and proper service at all times;
1.8 Inspect all vessels to ensure and enforce compliance with safety standards and other regulations;
1.9 Ensure that all domestic shipowners/operators shall have the financial capacity to provide and sustain safe, reliable, efficient and economical passenger or cargo service, or both;
1.10 Determine the impact which any new service shall have to the locality it will serve;
1.11 Adopt and enforce such rules and regulations which will ensure compliance by every domestic shipowner/operator with required safety standards and other rules and regulations on vessels safety;
1.12 Adopt such rules and regulations which ensure the reasonable stability of passengers and freight rates and, if necessary, to intervene in order to protect public interest;
1.13 Hear and adjudicate any complaint made in writing involving any violation of the law or the rules and regulations of the Authority;
1.14 Impose such fines and penalties on, including the revocation of licenses of, any domestic shipowner/operator who shall fail to maintain its vessels in safe and serviceable condition, or who shall violate or fail to comply with safety regulations;
1.15 Investigate any complaint made in writing against any domestic shipowner/operator, or any shipper, or any group of shippers regarding any matters involving violations of the provisions of the Act and this IRR;
1.16 Upon notice and hearing, impose such fines, suspend or revoke certificates of public convenience or other license issued, or otherwise penalize any shipowner/operator, shipper or group of shippers found violating the provisions of the Act and this IRR; and,
1.17 Issue rules and regulations necessary to implement the provisions of the Act and this IRR: Provided, that the rules and regulations cannot change or in any way amend or be contrary to the intent and purposes of the Act and this IRR.
1.1 Value-Added Tax (VAT) Exemption - All MARINA-registered domestic shipowners/operators shall be exempt from payment of VAT for the following:1.1.1 Importation of passenger and/or cargo ships 150 GT and above, including engine and spare parts of the particular ship(s) imported; provided, that the ships to be imported shall comply with the following requirements:
Type
Maximum Age from original date of commissioning Passenger and/or Cargo Ships 15 years oldTankers 10 years oldHigh Speed Passenger Crafts 5 years old
1.1.2 Importation of life-saving equipment, fire fighting systems, safety and rescue equipment, communication and navigational safety equipment, steel plates, and other metal plates including marine-grade aluminum plates, used for transport operations.
1.1.3 Importation of Cargo Handling Equipment that are reasonably needed and be used exclusively by the registered domestic shipowner/operator in its transport operations.
1.1.4 Sale, Transfer or Disposition of articles covered under 1.1.1 to 1.1.3 hereof.
1.2 Net Operating Loss Carry Over - A net operating loss in any taxable year immediately preceding the current taxable year, which had not been previously offset as a deduction from gross income shall be carried over for the next three (3) consecutive taxable years immediately following the year of such loss subject to the pertinent provisions of the National Internal Revenue Code of 1997, as amended.
The MARINA-registered domestic shipowner/operator availing of this incentive shall furnish the MARINA in writing on or before the end of May each year and every year thereafter a copy of the Audited Annual Operating (Financial) Report stamped received by the BIR.
1.3 Accelerated Depreciation - Fixed assets may be depreciated as follows:1.3.1 To the extent of not more than twice as fast as the normal rate of depreciation or depreciated at normal rate of depreciation if the expected life is ten (10) years or less; or
1.3.2 Depreciation over any number of years between five (5) years and the expected life if the latter is more than ten (10) years, and the depreciation thereon allowed as deduction from taxable income.
The MARINA-registered domestic shipowner/operator availing of this incentive can depreciate their fixed assets in two (2) methods, above-cited, who shall notify the BIR at the beginning of the depreciation period which depreciation method will be used. Copy of such notice to the BIR shall be submitted to the MARINA.
3.1 Said articles are not manufactured domestically in sufficient quantity, of comparable quality and at reasonable prices, to be determined by the MARINA;
3.2 Said articles are directly imported by a MARINA-registered domestic shipowner/operator;
3.3 Said articles are reasonably-needed and will be used exclusively by the registered domestic shipowner/operator in its transport operations;
3.4 The approval of MARINA was obtained prior to the importation of said articles;
3.5 The applicant/importer shall comply with relevant rules and regulations of the Bureau of Customs; and,
3.6 Exemption from VAT on the importation of said articles shall be granted to all MARINA registered domestic shipowners/operators within a period of ten (10) years from the effectivity of the Act.
4.1 Any sale, transfer or disposition of articles within ten (10) years from the effectivity of the Act to another MARINA-registered domestic shipowners/operators enjoying similar incentive shall require prior approval of MARINA;
4.2 Any sale, transfer or disposition made to non-exempt entity or to a party other than a MARINA-registered domestic shipowner/operator, within ten (10) years from the effectivity of the Act, both the vendor and the transferee or assignee shall be solidarily liable to pay twice the amount of VAT waived;
4.3 Any sale, transfer or disposition made after ten (10) years from the effectivity of the Act shall be made by informing MARINA in writing. Purchasers, transferees or recipients shall be considered the importers thereof, who shall be liable for any internal revenue tax on such importation. Tax due on such importation shall constitute a lien on the goods superior to all charges or liens on the goods, irrespective of the possessor thereof;
4.4 Failure to secure an Authority to Sell, Transfer or Dispose from MARINA prior to sale, transfer or disposition, both the vendor and the transferee or assignee shall be liable to pay twice the amount of VAT exemption given him.
5.1 All applications for Authority to Import shall be filed under oath with the MARINA together with the submission of a Sworn Certification that the conditions under Sections 3.1 to 3.3 hereof are present and the required documents covering applications for (a) Importation of Ships and (b) Importation of Engine, Spare Parts, Equipment, Cargo Handling Equipment, and/or Plates prescribed under MARINA MC 169 entitled, Streamlined Checklist of Documentary Requirements and Rationalized Standard Processing Time, or its subsequent amendments and proof of payment of processing fee per MARINA MC 183 or its subsequent amendments.The authority to import shall be valid within ninety (90) days from the date of opening of the Letter of Credit or submission of proof of payment of acquired articles;
5.2 All applications to sell, transfer or dispose of articles imported under 1.1.1 to 1.1.3 hereof shall be filed with MARINA together with the submission of the following documents:5.2.1 Sale, Transfer or Disposition of Imported Shipsa. Letter of Application;
b. Duly notarized Memorandum of Agreement (MOA)/Deed of Sale (DOS) or Bill of Sale (BOS);
c. Duly notarized resolution of the company's Board of Directors, certified by the Board Secretary, authorizing the filing of application and authorizing the signatory to the MOA/DOS or BOS to act for and in behalf of the vendor/seller, if applicable;
d. Copy of Certificates of Ownership and Vessel Registry (CO/CVR); and;
e. Proof of payment of processing fee per MARINA MC 183 or its subsequent amendments.
5.2.2 Sale, Transfer or Disposition of Imported Engine, Spare Parts, Equipment, Cargo Handling Equipment, and/or Platesa. Letter of Application;
b. Duly notarized Memorandum of Agreement (MOA)/Deed of Sale (DOS) or Bill of Sale (BOS); and,
c. Proof of payment of processing fee per MARINA MC 183 or its subsequent amendments.
6.1. Duly accomplished MARINA-prescribed Application Form for Availment of VAT-Exemption; and,
6.2. Proof of payment of processing fee in the amount of Php300.00.
7.1 Submission of a Quarterly Report on the utilization, sale, transfer or disposition of articles imported or sold, transferred or disposed under the Act and this IRR on or before the 15th of the month after the end of each quarter.
7.2 Submission on or before 15th of January each year a Summarized Report on the utilization, sale, transfer or disposition of articles imported or sold, transferred or disposed under the Act and this IRR.
3.1 Permanent Addition or Deletion of a route/port/link; or,
3.2 Permanent Addition/Reduction/Replacement of Ship/Fleet or Change in Ship's Name; or,
3.3 Change in the legal personality of the grantee of the CPC, merger, consolidation of the entity/company, including sale, transfer or disposition to existing CPC grantees; or,
3.4 Change in name of the entity/corporation/partnership/cooperative.
Years of Operation Validity of CPC More than 10 years 25 years More than 5 years up to 10 years 15 years 5 years and below 10 years
6.1 Must be a MARINA-registered shipowner/operator per MARINA MC 79/79-A or their subsequent amendments;
6.2 Must be financially capable to provide and sustain safe, reliable, adequate, efficient and economical service in undertaking the proposed shipping service. The applicant is deemed financially capable if it can be shown that there is excess in capitalization using the formula below, unless revised/amended:Capitalization = (Equity - fixed assets net of long-term liabilities) + total depreciation
6.3 Must provide a service that has economic and beneficial effect on the port, province or region it proposes to serve, to be determined by the MARINA on the basis of any of the documents enumerated in subsection 7.1.6 herein.
7.1 For New/Extension/Renewal of CPC:7.1.1 Duly accomplished Application Form prescribed by the MARINA;
7.1.2 Copy of Certificate of Accreditation under MC 79/79-A and their amendments;
7.1.3 Updated/Latest Articles of Incorporation and By-Laws for corporations; or Articles of Partnership for partnerships; or DTI Certificate of Registration of Business Name for single proprietorships; or Articles of Cooperation for cooperatives;
7.1.4 Financial Statements;
7.1.5 Ship's Documents:
- Certificate of Vessel Registry (CVR);
- Certificate of Ownership (CO); and,
- Coastwise License (CWL) or Bay and River License (BRL), or Pleasure Yacht License (PYL);
7.1.6 Any of the following documents showing economic and beneficial effect:
- The estimated port dues and charges that are expected to be paid for the proposed service, and the estimated increase in the volume of passengers and cargoes to be transported in the route proposed to be served; or,
- The estimated amount of taxes to be paid to the local government units where the intended service will be provided; or,
- Sangguniang Bayan/Panlalawigan Resolution on the perceived economic benefit to the town/province where the applicant proposes to serve; or,
- The estimated number of employment that may be generated in the proposed service; or,
- Any study showing probable economic/beneficial effect to the port, province or region it proposes to serve.
7.1.7 Ship Safety Documents:a. Ship Safety Certificates;a.1 For Passenger Ships:i. Passenger Ship Safety Certificate; and,
ii. Minimum Safe Manning Certificate;
a.2 For Cargo Ships:i. Cargo Ship Safety Certificate; and,
ii. Minimum Safe Manning Certificate;
a.3 For Tankers:i. Cargo Ship Safety Construction Certificate;
ii. Cargo Ship Safety Equipment Certificate;
iii. Certificate of Fitness; and,
iv. Minimum Safe Manning Certificate;
a.4 For Tugs, Dredgers and Barges:i. Cargo Ship Safety Certificate; and,
ii. Minimum Safe Manning Certificate;
a.5 For High Speed Crafts:i. High Speed Craft Safety Certificate; and,
ii. Minimum Safe Manning Certificate;
a.6 For Other Ships:i. Passenger/Cargo Ship Safety Certificate; and,
ii. Minimum Safe Manning Certificate;
a.7 Such other certificates/documents as may be prescribed by the MARINA.
b. Class Certificate;
c. Radio/Ship Station License (RSL/SSL);
d. Document of Compliance (DOC); and,
e. Safety Management Certificate (SMC);
7.1.8 Passenger and/or Cargo Insurance Coverage;
7.1.9 Other additional insurance and/or P&I Cover;
7.1.10 Civil Liability Convention (CLC) Certificate for Tankers and Barges carrying Persistent Oil; 7.1.11 Certificate of Compliance under MARINA MC Nos. 65/65-A; 121; 134; 150; and 196, including compliance with MARINA MC Nos. 72; 98; 135; and 136, as applicable, and their subsequent amendments; 7.1.12 Pictures of the ship, showing the name, port side, starboard side and astern view (with the size of 5" x 7"); and, 7.1.13 Proof of Payment of Processing Fee(s) pursuant to MARINA MC 183 and its subsequent amendment(s);
7.2 For Amendment of CPC:It is understood that the requirements stated in the preceding subsections 7.1.5 as applicable, 7.1.7 up to 7.1.12 must be valid for the duration of the ship's operation. The duly renewed/updated/valid requirements shall be submitted within fifteen (15) days prior to their expiration.
7.2.1 Permanent Addition or Deletion of a route/port/link:
a. Application for Amendment of CPC stating the reason(s) thereof; b. For additional route/port/link, documents showing economic and beneficial effect pursuant subsection 7.1.6 of this Rule; c. Proof of Payment of Processing Fee(s) pursuant to MARINA MC 183 and its subsequent amendment(s);
7.2.2 Permanent Addition/Reduction/Replacement of Ship/Fleet or Change in Ship's Name:
a. Application for Amendment of CPC identifying the ship to be added/deleted/replaced and reason(s) thereof;
b. Financial Statements to reflect changes/adjustments in the capitalization requirement, as applicable;
c. Relevant documents under subsection 7.1.5, 7.1.7 up to 7.1.12, as applicable;
d. Proof of Payment of Processing Fee(s) pursuant to MARINA MC 183 and its subsequent amendment(s);
7.2.3 Change in the legal personality of the grantee of the CPC in cases enumerated under Section 3.3 hereof:
a. Application Form stating the change in the legal personality of the grantee of the CPC, merger, consolidation or sale, transfer, or disposition to existing CPC grantees;
b. Amended Certificate of Accreditation under MARINA MC 79/79-A and their subsequent amendments;
c. Amended Articles of Incorporation/Partnership and SEC Certificate of Registration or New Certificate of Registration of Business Name for Single Proprietorship or Amended Articles of Cooperation and CDA Certificate of Registration;
d. Ship documents/ship safety certificates under Section 7.1.5, 7.1.7 up to 7.1.12 showing the new registered owner, as applicable;
e. Proof of Payment of Processing Fee(s) pursuant to MARINA MC 183 and its subsequent amendment(s);
7.2.4 Change in name of the entity/corporation/partnership/ cooperative:
a. Application Form stating the change in name of the entity/corporation/partnership/cooperative;
b. Amended Articles of Incorporation/Partnership and SEC Certificate of Registration or New Certificate of Registration of Business Name for Single Proprietorship or Amended Articles of Cooperation and CDA Certificate of Registration;
c. Ship documents/ship safety certificates under Section 7.1.5, 7.1.7 up to 7.1.12 showing the new registered owner, as applicable;
d. Proof of Payment of Processing Fee(s) pursuant to MARINA MC 183 and its subsequent amendment(s);
Section 8. Jurisdictional Requirements - Proof of compliance with the jurisdictional requirements will be presented by applicant in a summary proceeding, as follows:8.1 Affidavit of publication with the newspaper clipping;
8.2 Copy of the whole newspaper where the Order was published;
8.3 Photographs showing proof of the required posting of Order.
Section 9. Procedure and Standard Processing Time in the Issuance of CPC and/or Amendments/Extensions/Renewals - The following procedure, and standard processing time in the issuance of CPC and/or amendments/ extensions/renewals thereof are hereby adopted:
9.1 Procedure in the Issuance of CPC:9.1.1 For New/Extension/Renewal:
- The application for issuance of CPC shall be filed with the Central Office or the Maritime Regional Office where the applicant has its principal place of business or office;
- Only applications with complete and valid documentary requirements as provided in Section 7 hereof shall be accepted. Applications with incomplete requirements shall be returned to the applicant;
- For liner operations, the applicant shall state in its application the name(s) of the ship(s), route(s) it proposes to serve, and the service it proposes to offer. For tramp and other types of operations, the applicant shall state in its application the name(s) of the ship(s), the proposed area(s) of operation and the service it proposes to offer;
- Upon acceptance of the application, an Order shall be issued requiring the applicant to cause the publication of said Order containing therein the name(s) of the ship, the type of service, ship's routing pattern, sailing frequency(ies), sailing schedule(s) and the rate(s) to be adopted, in any of the five (5) major newspaper of national circulation, if the route(s)/area(s) of operation to be served is national and/or inter-regional in scope. If the route(s)/area(s) to be served is local or intra-regional in scope, publication in a newspaper of local circulation is sufficient;
- The applicant shall simultaneously cause the posting of the aforementioned Order in conspicuous places of the affected ports, ships, grantee's premises, passenger terminals and ticketing offices;
- The MARINA shall cause the posting of such Order at the MARINA Central or Regional Offices and/or the MARINA website;
- The Applicant shall present the jurisdictional, qualification and documentary requirements in a summary proceeding to be conducted in the MARINA Central or Regional Office where the application was filed, within seven (7) days from date of publication/posting. Applicant will be required to make a written Formal Offer of Evidence (FOE) and submit his application for resolution/decision;
- Upon favorable evaluation of the jurisdictional, qualification and documentary requirements prescribed under Sections 6, 7 and 8 hereof, a Decision granting the Application and attaching the CPC will be issued to the applicant indicating therein the period of validity of the CPC, name of operator, name of ship, and routing pattern;
- An applicant who does not meet the jurisdictional/ qualification/documentary requirements shall be issued an Order of Denial, or shall in writing, be required to rectify noted deficiencies, or to submit document(s) deemed necessary;
- Any subsequent change in the ship's sailing frequency(ies), sailing schedule(s) and rate(s) shall be published and posted seven (7) days before adoption thereof, and proof thereof shall be submitted to MARINA for posting in the website.
9.1.2 For Amendment:
- The application for amendment of CPC stating therein the specific amendment sought to be approved shall be filed with the Central Office or the Maritime Regional Office where the applicant has its principal place of business or office;
- Only applications with complete and valid documentary requirements as provided in subsection 7.2 hereof shall be accepted. Applications with incomplete requirements shall be returned to the applicant. A subsequent Order shall be issued requiring the applicant to publish and post the amended application.
- In cases falling under Sections 3.1 and 3.2 hereof, upon acceptance of the application for amendment of CPC, the applicant shall cause the publication of the Order stating therein the applicable amendments under Section 3 being sought, in any of the five (5) major newspaper of national circulation, if the route(s)/area(s) of operation to be served is national and/or inter-regional in scope. If the route(s)/area(s) to be served is local or intra-regional in scope, publication in a newspaper of local circulation is sufficient;
- The applicant shall simultaneously cause the posting of the aforementioned Order in conspicuous places of the affected ports, vessels, grantee's premises, passenger terminals and ticketing offices;
- The MARINA shall cause the posting thereof at the MARINA Central or Regional Offices and/or the MARINA website;
- The Applicant shall submit compliance with the jurisdictional, qualification and documentary requirements in a summary proceeding to be conducted in the MARINA Central or Regional Office where the application was filed, within seven (7) days from date of publication/posting;
Applicant will be required to make a written Formal Offer of Evidence and submit the application for resolution/decision- Upon favorable evaluation of the jurisdictional, qualification and documentary requirements prescribed under Sections 6 and 7.2 hereof, a corresponding Rider for instances falling under Sections 3.1 and 3.2 hereof or a new Decision with CPC for instances falling under Sections 3.3 and 3.4 hereof showing the amendments will be issued to the applicant;
- An applicant who does not meet the jurisdictional/ qualification/documentary requirements shall be issued an Order of Denial, or shall in writing be required to rectify noted deficiencies, or to submit document(s) deemed necessary.
9.2 Standard Processing Time in the Issuance of CPC - The MARINA shall issue the CPC within fifteen (15) working days upon acceptance of the written Formal Offer of Evidence (FOE) and declaration that the case is submitted for decision and after favorable evaluation of the jurisdictional, qualification and documentary requirements.
2.1 There is no available Philippine-registered ship to transport the cargo to meet the shipping requirement as determined by the MARINA; or, 2.2 There is no suitable Philippine-registered ship to meet the specific requirements of the shipper or consignee, as determined by MARINA; or, 2.3 In instances when public interest warrants, as determined by the MARINA.
4.1. Pre-Approval Documentary Requirements:
4.1.1 Letter of Application;
4.1.2 Fixture Note/Contract of Affreightment/Time/Voyage Charter Agreement indicating the charter hire of the subject ship;
4.1.3 Duly notarized Resolution of the company's Board of Directors, certified by the Board Secretary, authorizing the filing of the application and designating the officials/authorized representatives to represent the applicant-company/registered owner;
4.1.4 Valid Certificate of Ship Original Registry/Nationality (for foreign flag only);
4.1.5 Class Certificate/Latest Survey report;
4.1.6 Crew list indicating STCW certificates (number and Validity) of the crew required certification;
4.1.7 Certified true copy of P&I/Insurance Coverage, as applicable;
4.1.8 SEC Registration (for branch offices of foreign owners/ charterers/ship representative);
4.1.9 Other related documents/contracts that would trace the operation/project involving the utilization of the ship (if there are two or more other companies involved in the project);
4.1.10 Proof of payment of processing fee of Php 120,000.00 minimum/month/ship of Php 500.00/50 GT or fraction thereof, whichever is higher.
4.2 Post-Approval Documentary Requirements:
4.2.1 Duly notarized/authenticated Fixture Note/Contract of Affreightment/Time or Voyage Charter Agreement (notarized only if document is executed in the Philippines); and,
4.2.2 Proof of payment of tax on non-resident foreign corporation/entity not engaged in trade or business in the Philippines but deriving income pursuant to Section 28-B of RA 8424.
2.1. Upon the effectivity of this IRR, all shipowners/operators with Entity/Company CPC shall submit under oath with the MARINA their Notice for the adoption of initial/subsequent upward or downward adjustment of deregulated rates as defined in the Act and this IRR, in a prescribed form, which shall indicate, among others, the name of covered ship(s), authorized route(s)/link(s), rate(s) per route/link and the grounds for the adjustment;
2.2. All shipowners/operators shall cause the publication of their Notice submitted to the MARINA in any of the five (5) major newspapers of national circulation, if the route(s)/area(s) of operation to be served is national and/or inter-regional in scope. If the route(s)/area(s) to be served is local or intra-regional in scope, publication in a newspaper of local circulation is sufficient;
2.3. All shipowners/operators shall likewise cause the posting of any initial/subsequent upward or downward adjustment of deregulated rates, including the effectivity thereof, in all conspicuous places at the affected port(s), vessel(s), company premises, passenger terminals and ticketing office(s).
The MARINA shall cause the posting thereof at the MARINA Central or Regional Offices and/or the MARINA website; and,
2.4. The upward or downward adjusted rate shall take effect seven (7) calendar days from the publication in accordance with Section 2.2 hereof.
3.1 Inspect books and records of the shipowners/operators;
3.2 Assess the rates charged vis-à-vis the level and quality of service provided through the implementation of an amended Passenger Service Rating System (PSRS) and Cargo Service Rating System (CSRS); and,
3.3 Assess the Quarterly Report and the audited Annual Report of Operations and Finances, together with the copy of the Official Receipt (OR) of Quarterly and Monthly Common Carrier's Tax and other related tax payments to the BIR, which are hereto required to be submitted by domestic shipowners/operators, fifteen (15) days after each quarter and every June 30th of the following year, respectively.
4.1 Monopoly of a route/link, lack of effective competition in a route/link, and practices which constitute combinations in restraint of trade; or,
4.2 Any complaint against the rates charged and/or services rendered by the shipowners/operators provided sufficient basis/justification is submitted; or,
4.3 Any adverse findings/recommendations as a result of monitoring activities undertaken by the MARINA under Section 3 above; or,
4.4 Other analogous instances.
1.1. Adequate insurance coverage for each passenger in the amount not less than two hundred thousand pesos (Php 200,000.00) per manifested passenger, and the total amount of such coverage shall be equivalent to the total authorized number of passengers of the ship(s); 1.2. Adequate insurance coverage for cargo, in an amount to be computed in accordance with existing laws, rules and regulations, and the total amount of such coverage shall be equivalent to the total cargo capacity being offered by the vessel; 1.3. If a domestic shipowner/operator should offer both passenger and cargo service, then the total insurance coverage shall be in the total sum equivalent to that stipulated in paragraphs (1.1) and (1.2) of this Section; and
1.1 Operate without a valid certificate of public convenience, accreditation or other form of authority required by the Act and this IRR;
1.2 Refuse to accept or carry any passenger or cargo without just cause, except for tramp operations;
1.3 Fail to maintain its vessels in safe and serviceable condition, or violate safety rules and regulations;
1.4 Fail to obtain or maintain adequate insurance coverage;
1.5 Fail to meet or maintain safe manning requirements;
1.6 Fail to submit the required Quarterly Report and an audited Annual Report of Operations and Finances, attaching the copy of the Official Receipt (OR) of Quarterly and Monthly Common Carriers Tax Payments to the Bureau of Internal Revenue;
1.7 Such other acts which the MARINA shall determine, after due notice and hearing, to be detrimental or prejudicial to the safety, stability and integrity of domestic shipping;
1.8 All prohibited acts defined under existing MARINA Circulars that are not inconsistent with this IRR shall remain in full force and effect.
1.1 Suspend or revoke any certificate or public convenience, license, permit, accreditation, or other form of authority issued to any domestic shipowner/operator who shall violate any provision of the Act or any rules and regulations issued pursuant thereto, or any condition imposed on such certificate of public convenience, license, permit or accreditation;
1.2 Impose a fine on a domestic shipowner/operator who shall operate without a valid certificate of public convenience, license, permit, accreditation, or other form of authority;
1.3 Impose a fine on a domestic shipowner/operator in an amount to be determined by the MARINA for refusing to accept, or to carry passengers or cargo, without just cause, or for engaging in any prejudicial, discriminatory or disadvantageous act towards any class of passengers or shippers;
1.4 Impose a fine on any domestic shipowner/operator in an amount to be determined by the MARINA, or suspend or revoke the certificate of public convenience of such domestic shipowner/operator, or both, who shall fail to meet the standards of such safety or who refuses to comply with or violates safety regulations imposed by the MARINA or fails to maintain its vessels in safe and serviceable condition;
1.5 Impose a fine on any domestic shipowner/operator in an amount to be determined by the MARINA, or impose such other penalty, including the revocation of any certificate or license, who fails to procure or renew required insurance policies;
1.6 Impose a fine on any domestic shipowner/operator in an amount to be determined by the MARINA, or impose such other penalty, including the revocation of any certificate or license who fails to meet or maintain safe manning requirements;
1.7 Revoke, cancel, suspend, Certificate of Public Convenience, license, or otherwise refuse or deny action on application for availment of VAT exemption or other privileges for failure to submit the required Audited Quarterly/Annual Report of Operations and Finances in the case of corporation and/or partnership and to submit proof of Quarterly/Annual Tax Payments to the BIR; and,
1.8 Impose such other fines and penalties the MARINA may deem necessary and appropriate in order to enforce the provisions of the Act.
1.1 Value-Added Tax (VAT) Exemption - All MARINA-registered shipbuilders and/or ship repairers shall be exempt from payment of value added tax for the importation of capital equipment, machinery, spare parts, life-saving, navigational equipment, steel plates, and other metal plates including marine-grade aluminum used and installed in the construction, repair, renovation, or alteration of any merchant marine ships operated or to be operated in the domestic trade.
1.2 Net Operating Loss Carry Over - The net operating loss in any taxable year immediately preceding the current taxable year, which had not been previously offset as a deduction from gross income shall be carried over as a deduction from gross income for the next three (3) consecutive taxable years immediately following the year of such loss, subject to the pertinent provisions of the National Internal Revenue Code of 1997, as amended.
1.3 Accelerated Depreciation - Fixed assets may be depreciated as follows:
1.3.1. To the extent of not more than twice as fast as the normal rate of depreciation or depreciated at normal rate of depreciation if the expected life is ten (10) years or less; or 1.3.2. Depreciation over any number of years between five (5) years and the expected life if the latter is more than ten (10) years, and the depreciation thereon allowed as deduction from taxable income.
3.1. Said articles are not manufactured domestically in sufficient quantity, of comparable quality and at reasonable prices;
3.2. Said articles are directly imported by a MARINA-registered shipbuilder and ship repairer;
3.3. Said articles are reasonably-needed and will be used exclusively by the registered shipbuilder and ship repairer;
3.4. The approval of MARINA was obtained prior to the importation of said articles;
3.5. The applicant/importer shall comply with relevant rules and regulations of the Bureau of Customs; and,
3.6. The shipbuilders and ship repairers may avail of the exemption from value-added tax provided herein within a period of ten (10) years from the approval of the Act.
4.1 Any sale, transfer or disposition of articles under Section 19(a) of the Act within ten (10) years from its effectivity to another MARINA-registered shipbuilder or repairer enjoying similar incentive shall require prior approval of MARINA;
4.2 Any sale, transfer or disposition made to non-exempt entity or to a party other than a MARINA-registered shipbuilder or ship repairer, within ten (10) years from the effectivity of the Act, both the vendor and the transferee or assignee shall be solidarily liable to pay twice the amount of VAT waived;
4.3 Any sale, transfer or disposition made after ten (10) years from the effectivity of the Act shall be made by informing MARINA in writing. Purchasers, transferees or recipients shall be considered the importers thereof, who shall be liable for any internal revenue tax on such importation. Tax due on such importation shall constitute a lien on the goods superior to all charges or liens on the goods, irrespective of the possessor thereof.
4.4 Failure to secure an Authority to Sell, Transfer or Dispose from MARINA prior to sale, transfer or disposition, both the vendor and the transferee or assignee shall be liable to pay twice the amount of VAT exemption given him.
5.1 All applications for Authority to Import shall be filed under oath with the MARINA together with the submission of a Sworn Certification that the conditions under 3.1 to 3.3 hereof are present and the following documents:5.1.1 Letter of Application;
5.1.2 Pro-forma invoice;
5.1.3 Duly notarized Memorandum of Agreement (MOA)/Deed of Sale (DOS) or Bill of Sale (BOS);
5.1.4 Duly notarized resolution of the company's Board of Directors, certified by the Board Secretary, authorizing the filing of application and authorizing the signatory to the MOA/DOS or BOS to act for and in behalf of the vendor/seller;
5.1.5 For capital equipment such as floating docks or service boats, in addition to the foregoing documents, the following shall likewise be submitted:a) certificate of registry or nationality or builder's certificate/building contract; and,
b) latest survey report or class certificate.
5.1.6 Proof of payment of processing fee in the amount equivalent to 1% of the FOB value in the Pro-forma Invoice or Php10,000.00, whichever is lower.
5.2.1 Letter of Application;
5.2.2 Duly notarized Memorandum of Agreement (MOA)/Deed of Sale (DOS) or Bill of Sale (BOS);
5.2.3 Duly notarized resolution of the company's Board of Directors, certified by the Board Secretary, authorizing the filing of application and authorizing the signatory to the MOA/DOS or BOS to act for and in behalf of the vendor/seller, if applicable and,
5.2.4 Proof of payment of processing fee in the amount of Php5,000.00.
6.1 Duly accomplished MARINA-prescribed Application Form for availment of VAT-Exemption; and,
6.2 Proof of payment of processing fee in the amount of Php300.00.
7.3 Submission of a Quarterly Report on the utilization, sale, transfer or disposition of articles imported or sold, transferred or disposed under the Act and this IRR on or before the 15th of the month after the end of each quarter.
7.4 Submission on or before 15th of January each year a Summarized Report on the utilization, sale, transfer or disposition of articles imported or sold, transferred or disposed under the Act and this IRR.