Question & AnswerQ&A (Republic Act No. 9298)
The short title of Republic Act No. 9295 is the "Domestic Shipping Development Act of 2004."
The Act recognizes shipping as vital infrastructure for economic development and aims to promote a strong and competitive domestic merchant fleet owned and controlled by Filipinos or Filipino-majority corporations to ensure safe, reliable, efficient, and economically viable domestic shipping services.
Domestic Shipping refers to the transport of passengers or cargo, or both, by ships duly registered and licensed under Philippine law, engaged in trade and commerce between Philippine ports and within Philippine territorial or internal waters for hire or compensation.
A Domestic Ship Operator is a citizen of the Philippines, a commercial partnership wholly owned by Filipinos, or a corporation at least sixty percent (60%) owned by Filipinos, duly authorized by the Maritime Industry Authority (MARINA) to engage in domestic shipping.
Qualified domestic ship operators are entitled to exemptions from value-added tax on importation and local purchase of certain vessels and equipment, net operating loss carry over for three years, and accelerated depreciation of fixed assets.
Passenger and/or cargo vessels must be 15 years old or less, tankers 10 years old or less, and high-speed passenger crafts 5 years old or less to qualify for VAT exemption.
No foreign vessel may transport passengers or cargo between Philippine ports unless granted a Special Permit by MARINA, which is issued only when no domestic vessel is available, and public interest warrants such allowance.
MARINA has powers to register vessels, issue certificates of public convenience, modify, suspend or revoke licenses, regulate routes, set safety standards, inspect vessels, ensure financial capacity of operators, hear complaints, impose fines and penalties, and promulgate necessary implementing rules and regulations.
Yes, domestic ship operators are authorized to fix their own rates provided effective competition is fostered and public interest is served. MARINA monitors shipping operations to protect the public interest and may intervene if necessary.
They must submit annually adequate insurance coverage for passengers and cargo based on vessel capacity to cover liabilities for breaches of contract of carriage. Insurance must be obtained from duly licensed companies or international protection and indemnity associations.
Operating without valid authority, refusing passengers or cargo without just cause, failing to maintain vessels in safe condition, failing to maintain insurance coverage, failing safe manning requirements, and other acts detrimental to safety and stability of domestic shipping.
MARINA may, after notice and hearing, suspend or revoke certificates or licenses, impose fines, or take other measures to enforce regulations against violating domestic ship operators or shippers.
Shipbuilders and ship repairers may avail VAT exemptions on importation of capital equipment, machinery, spare parts, and materials used in ship construction and repair, net operating loss carry over, and accelerated depreciation of fixed assets.
MARINA shall evaluate the capability of registered shipyards to build new vessels for domestic trade and, if proven capable, domestic operators will be discouraged from importing vessels below a certain Gross Register Tonnage, giving priority to locally built vessels.
All vessels must be seaworthy, equipped adequately for life-saving and communication, properly maintained, operated by licensed competent crew, and subject to MARINA inspections to ensure compliance with safety standards.
Every domestic ship operator has the obligation to carry mail on mutually agreed terms, and must give preferential and negotiated conditions for carrying other government cargo.
Vessels unclassed or failing government-recognized classification society standards, or exceeding the maximum age set by MARINA, shall not be allowed to operate in domestic trade and shall be delisted from the Philippine Registry.
In times of national emergency or when public interest requires, the State can temporarily take over or direct vessel operations and prescribe rates or routes, but must reinstate operations to the operator immediately after emergency cessation.