QuestionsQuestions (Republic Act No. 8560)
The short title is the “Domestic Shipping Development Act of 2004.” Its policy is to promote a strong and competitive Philippine domestic merchant fleet owned/controlled by Filipinos and manned by qualified Filipino officers and crew, and to support safe, reliable, efficient and economic passenger and cargo service, export growth, regional economic dispersal, naval/military auxiliary capability in emergencies, and employment for Filipino seafarers—through incentives, deregulation with safeguards, and safety/viability measures.
It is the transport of passengers and/or cargo (for hire or compensation) by ships duly registered and licensed under Philippine law, between Philippine ports and within Philippine territorial or internal waters, with general or limited clientele (permanent/occasional/incidental; fixed or not), for contractual or commercial purposes.
A Philippine citizen; or a commercial partnership wholly owned by Filipinos; or a corporation at least 60% of whose capital is owned by Filipinos; duly authorized by MARINA to engage in domestic shipping.
A foreign vessel is not allowed to transport passengers/cargo between ports within Philippine territorial waters except upon a Special Permit by MARINA when no domestic vessel is available or suitable and public interest warrants it.
MARINA issues CPCs to qualified domestic ship operators considering (1) economic/beneficial effect on the port/province/region to be served and (2) the operator’s financial capacity to provide and sustain safe, reliable, adequate, efficient and economic service per government standards.
Domestic ship operators are authorized to establish their own domestic shipping rates, provided that effective competition is fostered and public interest is served. MARINA monitors operations and may intervene after due process to protect public interest.
Vessels must always be seaworthy, properly equipped with adequate life-saving, communication, safety and other equipment, operated and maintained per MARINA standards, and manned by duly licensed and competent crew. MARINA may inspect vessels and equipment for compliance.
Yes. MARINA may modify, suspend or revoke any certificate/license/accreditation it issued at any time upon notice and hearing.
Among others: (a) VAT exemption on importation/local purchase of passenger/cargo vessels of 150 tons and above (including engines and spare parts) subject to vessel age limits; (b) VAT exemption on importation of specified equipment/materials (life-saving, safety/rescue, communication and navigational safety equipment, steel plates and marine-grade aluminum plates), subject to conditions; plus net operating loss carry-over and accelerated depreciation.
The vessels must comply with age limit requirements at the time of acquisition counted from original commissioning: passenger/cargo vessels—15 years; tankers—10 years; high-speed passenger crafts—5 years, and the VAT exemption applies to vessels of 150 tons and above, including engines/spare parts, subject to further statutory conditions.
Both the vendor and transferee/assignee are liable to pay twice the amount of VAT exemption granted.
Operators must submit annually adequate insurance coverage: (1) for each passenger (computed per existing laws/rules so total equals total passenger accommodations offered) and (2) for cargo (total equals cargo capacity offered). If both passenger and cargo, coverage is the sum. If multiple vessels, the required coverage for proof of financial capacity is based on the largest operating vessel. Coverage must be obtained from a duly licensed insurance company or an international protection and indemnity association, and total coverage cannot exceed the value of such vessel.
Examples include operating without a valid CPC/accreditation/authority; refusing to accept/carry passengers or cargo without just cause; failing to maintain vessels in safe and serviceable condition or violating safety rules; failing to obtain or maintain adequate insurance; failing to meet/maintain safe manning requirements; and other acts MARINA finds detrimental or prejudicial to safety, stability and integrity of domestic shipping.
For monopolized routes, MARINA may draw rules to determine fairness of passenger/cargo rates needed to sustain the service, considering factors such as economic/beneficial effect to the locality, volume of passengers/cargo, level/quality of service, and available port facilities and terminal handling services.
MARINA evaluates progressive shipyard capability yearly. In the first year, MARINA determines capability to build classed vessels below 500 GRT in quantities sufficient for domestic demand. If proven, domestic ship operators are discouraged from importing new/previously owned vessels less than 500 GRT for the domestic trade, and vessels built in MARINA-registered shipyards get priority for entry in the Philippine Registry and are allowed to operate. Future evaluations adjust permissible vessel sizes sourced from MARINA-registered shipyards.
MARINA must implement a mandatory retirement program for unclassed vessels that fail to meet classification standards of a government-recognized classification society. Vessels reaching the maximum age stipulated and lacking a class certificate are not allowed to operate in the domestic trade and are automatically delisted from the Philippine Registry.
During national emergencies when public interest requires, the State may temporarily take over or direct operations of vessels engaged in domestic trade and commerce under reasonable terms, and may prescribe rates or routes. Once the emergency ceases, the State must reinstate operations to the domestic ship operator under the same terms/conditions prior to the emergency.