SEVENTEENTH CONGRESS OF THE ) 
REPUBLIC OF THE PHILIPPINES 
)
First Regular Session 
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SENATE
S. B. No. 1 2 4 7
iStfif* of 
M1{
*16 
NOV 21 
P I 3 8
Rl «
Introduced by Senator JUAN MIGUEL F. ZUBIRI______
AN ACT
ALLOWING FOREIGN VESSELS TO ENGAGE IN  COASTWISE 
TRADE IN  THE COUNTRY AND FOR OTHER PURPOSES
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It is said that the Cabotage Laws in the country are one of the reasons that 
constraints our economic growth. High domestic shipping cost and Cabotage policies 
are closely linked. The protection enjoyed by the domestic shipping industry through 
Cabotage restrictions result in the lack of meaningful competition in the industry and 
weak incentives for operators to modernize and become competitive. Such situation 
calls for the liberalization of the shipping industry and the relaxing of the Cabotage 
Laws.
Allowing foreign vessels to participate in domestic coastwise trade of goods will 
not only increase the number of players and enhance competition but will also improve 
the country's logistics, which may lead to the opening of our sea transportation to 
agricultural sector and other industries. A meaningful competition is not only 
synonymous to the lowering of shipping cost but may also cause the improvement of 
our port facilities, inefficient port practices and even the modernization of domestic 
shipping lines. All will be for the greater advantage and benefit of our citizens.
In that regard, this proposal aims to repeal the pertinent provisions of the Tariff 
and Customs Code of the Philippines and the Domestic Shipping Development Act of 
2004 and thereby allowing foreign vessels to engage in coastwise trade subject to 
certain condition and regulations.
Thus, the passage of this bill is earnestly sought.
IGUEL F. ZUBIRI


SEVENTEENTH CONGRESS OF THE ) 
REPUBLIC OF THE PHILIPPINES 
)
First Regular Session 
)
Seiuiti
tSifit* of 
tirt.iHj
‘16 NOV 21 
PI :38
s.N* 1 2 3 * S0ENm7
R  I ' i
Introduced by Senator JUAN MIGUEL F. ZUBIRI
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AN ACT
ALLOWING FOREIGN VESSELS TO ENGAGE IN COASTWISE TRADE IN 
THE COUNTRY AND FOR OTHER PURPOSES
Be it enacted by the Senate and the House o f the Representatives o f the Phiiippines in 
Congress assembied:
SECTION 1. Short Tide. -  This act shall be known as the "Coastwise Trade A c t 
o f 2016."
SEC. 2. Declaration o f Policy. -  I t  is the policy o f the state to:
1. Allow the entry of foreign vessels to assist importers and exporters in enhancing
their competitiveness in the light of intensifying international trade
2. Lower the cost of shipping export cargoes from Philippine ports to the
international ports and vice versa; and
3. Ensure the continued viability of domestic and foreign shipping operations.
SEC. 3. Definition o f Terms. -  For purposes of this Act, the following terms are
hereby defined as follows:
a. "Clearance" refers to the compliance with the requirements of the Bureau of 
Customs for the release of import cargoes which include but not limited to 
the filling of import entry and payment of duties and taxes unless otherwise 
exempt therefrom;
b. "Coastwise Trade" refers to the sale or exchange of goods, articles, 
commodities or merchandise which are neither designated nor classified as 
export cargo nor import cargo;
c. "C ontainer" refers to a ship's to cargo that is of the Philippine origin 
intended for local consumption, or those which have not been duty declared 
for exportation to the Bureau of Customs at the port of origin, or those of 
foreign origin but which have been entered and cleared by the Bureau of 
Customs;
d. "Export Cargo" refers to the goods, articles, commodities, or merchandise 
duly declared to the Bureau of Customs at the port of origin as cargoes for 
foreign shipment to a foreign country;
e. "Foreign Cargo" refers to export or import cargo;
f. "Foreign Port" refers to a port place outside the jurisdiction of the 
Philippines;
g. "Foreign Trade" refers to the sale or exchange of goods, articles, 
commodities or merchandise which are either designated or classified as 
export or import cargo;
h. "Foreign Vessels" refers to vessels registered and documented in registries 
other than that of the Philippines;


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"Im p o rt Cargo" refers to the goods, articles, commodities or merchandise 
of foreign origin which are intended to be cleared at the final port of 
destination in the Philippines;
"P ort of Entry" refers to a place where foreign goods may be cleared 
through a customhouse or a place where an alien may be permitted to enter 
a country;
"Principal Port o f Entry" refers to the chief port of entry of the collection 
district wherein it is situated and is the permanent station of the collector of 
such port;
"Philippine Vessels" refers to vessel duly registered and documented in the 
Philippine registry; and
"Sub-ports o f Entry" refers to those ports granted by the Bureau of 
Customs aliowing a foreign vessel engaged in foreign trade to load and 
unload, or accept and process export or import cargoes.
SEC. 4. Coastwise Trade. - The right to engage in the Philippine coastwise trade 
shall no longer be limited to vessels carrying a certificate of Philippine registry.
For this purpose, foreign vessels may be allowed to transport passengers or 
cargoes between ports or places within the Philippine territorial waters even when a 
domestic vessel is available or suitable to provide the needed shipping service and 
whenever public interest warrants.
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Passengers or articles arriving from abroad on a foreign vessel may be carried by 
the same vessel through any port of entry to the port of destination in the Philippines. 
Passengers departing from the Philippines or articles intended for export may likewise 
be carried in a foreign vessel through a Philippine port; Provided, That the country 
where the foreign vessel is registered affords the same privileges to Philippine 
registered vessels.
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SEC. 5. Certificate o f Public Convenience. - All domestic and foreign ship owners 
or operators shall, upon approval of the application with the Maritime Industry Authority 
compliance of all requirements, be given the certificate of public convenience or any 
form of authorization for the carriage of cargoes or passengers, or both, in the domestic 
trade.
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SEC. 6. Clearance. - Upon compliance with such reasonable conditions as he 
may impose, the Commissioner of Customs may clear foreign vessels for any port and 
authorize and conveyance therein of either articles or' passengers brought from abroad 
upon such vessels. He may likewise, upon such conditions as he may impose, allow a 
foreign vessel to take cargo and passengers at any port and convey the same upon 
such vessel to a foreign port.
The clearance permitting vessels to engage in foreign trade to load or unload 
foreign cargoes to and from principal ports of entry or sub-ports in the country shall 
include the following instances:
a) Allowing an international cargo vessel to shift empty containers of any 
foreign lines if said vessel regularly calls at Manila and proceeds to 
Philippine outports; and
b) Allowing transhipment by an international vessel of cargo coming from or 
headed for a foreign port to and from any Philippine outport.


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SEC. 7. Regulatory Body. - The Maritime Industry Authority (MARINA) shall have 
the power and authority to issue certificate of public conveuience to qualified foreign 
and domestic ship operators, taking into consideration the economic and beneficial 
effect which the proposeservice shall have to the port, province or region which it 
proposes to serve, and the financial capacity of the domestic ship operator to provide 
and sustain safe, reliable, adequate, efficient and economic service in accordance with 
the standards set by the government regulation.
SEC. 8. Implementing Rules and Regulations. - Within sixty (60) Days from the 
approval of this Act, the Secretary of Finance shall, in consultation with the Bureau of 
Customs (BOC), Maritime Industry Authority (MARINA), Philippine Shipper's Bureau and 
Philippine Coast Guard, promulgate such rules and regulations necessary for effective 
implementation of this Act.
SEC. 9. Repealing Clause. - Sections 902 and 1099 of Republic Act No. 1937, 
otherwise known as the "Tariff and Customs Law of the Philippines," Section 5, 6, and 7 
of Republic Act No. 9295, otherwise known as "Domestic Shipping Development Act of 
2004," and all laws, decrees, executive orders, rules and regulations or other issuances, 
or parts thereof, inconsistent with this Act are hereby repealed or modified accordingly.
SEC. 10. Effectivity Clause. - This Act shall take effect fifteen (15) days after its 
publication in two (2) national newspapers of general circulation.
Approved,