Constitutional and Maritime Policy Basis
- Executive Order No. 185 is grounded on Section 19, Article XII of the Constitution, which directs the State to regulate or prohibit monopolies when the public interest so requires and forbids combinations in restraint of trade or unfair competition.
- Executive Order No. 185 implements the State policy found in Presidential Decree No. 474 (Maritime Industry Decree of 1974) to accelerate the integrated development of the Philippine maritime industry.
- Presidential Decree No. 474 declares objectives including: increasing production and productivity through effective sea linkage; ensuring economical, safe, adequate, and efficient shipment of raw materials, products, commodities, and people; and strengthening the competitive position of Philippine flag vessels.
- Presidential Decree No. 474 also assigns MARINA to provide supervision, regulation, and rationalization of organizational management, ownership, and operations of water transport utilities and other maritime enterprises.
Liberalized Entry Through Competition
- Executive Order No. 185 liberalizes entry of new operators into the domestic water transport industry to enhance competition and produce reasonable rates and improved service quality.
- Competition is declared as the norm to open the industry to new investments and to stimulate economic activity, provided it is not ruinous.
- Executive Order No. 185 levels the playing field for both existing and new operators.
- MARINA is the implementing authority for rules and regulations to carry out Executive Order No. 185.
Minimum Two Operators Per Route-Links
- All routes/links must have a minimum of two (2) operators.
- Routes/links presently serviced by only one (1) operator must be opened for entry to additional operators.
- Routes/links that are monopolized or cartelized, as determined by MARINA, must be opened for entry to additional operators.
- All routes/links serviced by any operator for an aggregate period of at least five (5) years must be opened for entry to additional operators without limit.
Encouraged Entry on Developmental Routes
- Entry of operators into developmental routes as determined by MARINA is encouraged.
- An operator that pioneers a certain technological level/type of shipping service in a developmental route is authorized to charge market-accepted freight and passage rates differing from the authorized fork-tariff, if availed of.
- The operator must apply with MARINA for the adjustment in or adoption of such rates, and MARINA’s approval is required for the authorized rates.
- After five (5) years of such operation, the continued authorization of those rates and/or adjustments depends on a MARINA evaluation.
Deregulation for Newly-Acquired Vessels
- An existing or new operator that acquires a vessel through importation, bareboat charter with option to purchase, lease-purchase, or local construction must be granted a Certificate of Public Convenience (CPC)/Provisional Authority (PA) to operate the vessel in any route.
- The newly acquired vessel is allowed to operate in a route even if it is already being served by existing franchised operators for less than five (5) years.
- The rule applies including developmental routes.
- The CPC application must be filed using the prescribed application for CPC, and basic requisites prior to issuance must be complied with.
- On filing the CPC application, presumption of public need is accorded in favor of the applicant.
- The presumption is especially triggered when one or more of the enumerated conditions are shown:
- The operation introduces innovative, technologically-advanced, or pioneering shipping services, including fast ferries, cruise vessels, container vessels, and RoRo vessels, or employment of modern and efficient on-board cargo handling equipment as an integral part of the vessel’s operation.
- The operation introduces improvements in the quality of service in the applied route/link.
- The vessel deployed is an improvement over existing vessels in terms of age, size, capacity, hull material, and other technical features.
- The operation fosters cost-effective competitive shipping service in the route.
- The operation serves priority tourist links identified by the Department of Tourism in its Tourism Master Plan.
- The route/link warrants additional operators/services as determined by MARINA or pertinent local government units, including cases supported by:
- duly verified and legitimate public clamor for additional shipping services, where existing operators have not been sensitive to increased demand and only offer capacity increases after another operator provides additional services; or
- cases where existing authorized operators abandoned operations in the route.
- Any oppositor to the CPC/PA application must bear the burden of proving that there is no need for the proposed service.
- After issuance of the CPC, the vessel must continuously serve its franchised route for at least one (1) year.
Amendments in Routing, Ports, Schedules
- Authorized routing pattern changes may be made by an existing authorized operator through any of the following:
- omission or deletion of port(s);
- addition of other port(s);
- omission and subsequent addition of port(s);
- changing the sequence of port calls; or
- retention of the authorized routing pattern with addition of one or more ports.
- MARINA must review any vacated port(s) or link(s)/route(s) resulting from a rerouting or route amendment to determine adequacy or sufficiency of the remaining existing shipping services.
- MARINA approval applies to applications for the above changes for existing franchised liner vessels, subject to all requirements:
- No conflict in sailing schedules with other affected operators in the applied route/link must result; otherwise, MARINA must prescribe motu proprio sailing schedules that best serve public interest and convenience.
- No route or link may be left unserviced due to rerouting or route amendment, unless the applicant deploys a substitute vessel or other authorized operators continue serving the route/link.
- Shipping service in the previous route/link must have been continuously rendered by the vessel for at least one (1) year from issuance of the CPC.
- If the rerouting or route amendment is caused by deployment of a newly acquired vessel into the operator’s authorized route, the liberalized entry policy under the newly-acquired vessel rule applies.
New Routes and Temporary Authorities
- If no newly-acquired vessel is involved and a rerouting or route amendment application is filed where an entirely new route or link will be served, a new CPC application must be filed.
- In granting CPC for an entirely new route/link under those circumstances, entry depends on proof that one or more of the enumerated conditions under the newly-acquired vessel presumption framework has been proven to obtain.
- Priority in granting CPC for a given route is given to newly-acquired vessels brought into the fleet, subject to the newly-acquired vessel rule.
- For cases where only a temporary authority has been issued pending resolution of the basic CPC application, an application for route amendment or rerouting may be filed and considered by MARINA.
- Any amended authority issued from such temporary proceedings is subject to a one (1) year maximum period per issuance, cumulatively reckoned from the first PA issued in the original application.
Government Coordination Obligations
- All government departments, offices, agencies, and instrumentalities, including government-owned or controlled corporations, must assist and coordinate with MARINA in implementing Executive Order No. 185.
- The Executive Order expressly includes entities such as: the Board of Investments, Bureau of Customs, Bureau of Fisheries and Aquatic Resources, Bureau of Plant Industry, Bureau of Animal Industry, National Quarantine Office, Philippine Navy, and the Philippine National Police.
Revocation, Rulemaking, and Effectivity
- Executive Order No. 185 revokes or amends all executive, department, and other agency issuances, including any provisions thereof, that are inconsistent with it.
- MARINA is directed to issue rules and regulations to implement Executive Order No. 185.
- Executive Order No. 185 takes effect fifteen (15) days after its publication once in a newspaper of general circulation.