Republic of the Philippines
House of Representatives
Quezon City
NINETEENTH
CONGRESS
FIRST REGULAR SESSION
House Bill No.
INTRODUCED BY REPRESENTATIVE BERNADETTE HERRERA-DY
EXPLANATORY NOTE
Excessive and unnecessary fees, charges and surcharges imposed as origin and destination
charges as well as unconscionable fees imposed on the management of empty containers
by international shipping lines which undermines the country's competitiveness. These
charges being imposed and collected at will by international shipping lines have enormous
impact on the economy as it (a) increases the cost of importing raw materials and
intermediate goods; (b) escalates the prices paid by the domestic consumer; (c) impairs the
government's collection of correct taxes; and, (d) undermines the privity of obligations
and contracts principle.
Through this Act, the Philippine Government asserts its inherent right to implement
and enforce compliance with existing local and international consumer trade laws; to
protect the interests of the consumer, promote general welfare and to establish standards
of conduct for business and industry as well as enforce the compliance with International
Commercial Terms (INCOTERMS) for the protection and fair treatment of Philippine
domestic manufacturers, exporters and importers.
In view of the foregoing, the passage of the bill is earnestly sought.
BERNADETTE HERRERA-DY
July 6, 2022
8:52 am
1397


Republic of the Philippines
House of Representatives
Quezon City
NINETEENTH
CONGRESS
FIRST REGULAR SESSION
House Bill No.
INTRODUCED BY REPRESENTATIVE BERNADETTE HERRERA-DY
AN ACT REGULATING THE APPLICATION OF LOCAL CHARGES (AT ORIGIN AND
DESTINATION) IMPOSED BY INTERNATIONAL SHIPPING LINES TO COMPLY WITH
EXISTING LAWS ON OBLIGATIONS AND CONTRACTS AND INTERNATIONAL
COMMERCIAL TERMINOLOGY (INCOTERMS) ESTABLISHING GUIDELINES
THEREFORE.
Be it enacted by the Senate and the House of Representatives in Congress assembled:
SECTION 1. Title— This Act shall be known as the Standardization of International
Shipping Local Charges Act.
SECTION 2. Declaration of Policies and Objectives — It is hereby the policy of the State
to promote the competitiveness of the Philippine economy and protect the domestic and
export-import sectors from excessive and unnecessary fees, charges and surcharges
imposed as origin and destination charges as well as unconscionable fees imposed on the
management of empty containers by international shipping lines.
Currently, these charges being imposed and collected at will by international shipping
lines have enormous impact on the economy as it
(a) increases the cost of importing raw materials and intermediate goods;
(b) escalates the prices paid by the domestic consumer;
(c) impairs the government's collection of correct taxes; and,
(d) undermines the privity of obligations and contracts principle.
1397


The Philippine Government asserts its inherent right to implement and enforce compliance
with existing local and international consumer trade laws; to protect the interests of the
consumer, promote general welfare and to establish standards of conduct for business and
industry as well as enforce the compliance with International Commercial Terms
(INCOTERMS) for the protection and fair treatment of Philippine Importers.
SECTION 3. Local charges (destination and origin) of international shipping lines doing
business in the Philippines — No origin and destination charges shall be billed and/or
charged by international shipping lines to Philippine consignees in the absence of a
contractual relationship with the carriers, and/or if they are not obligated to pay them under
INCOTERMS. For this purpose, all international shipping lines doing business in the
Philippines shall ensure that:
(a) The quoted freight rates shall be inclusive of all charges, such as but not limited to
terminal handling cost(THC), container imbalance cost(ClC), Emergency Cost
Recovery Charge (ECRC), Bunker Price Adjustments (BPA), Bunker adjustment
Factor (BAF), Bill of Lading fee (BL), Import Release Fee(lRF), Container Cleaning
(CC), Online Release Fee (ORF),
Emergency Bunker Surcharge (EBS), Seal Fee
(SF), Operation Recovery Cost (OCR), RateRestoration (RR).
(b) As a general rule, if the INCOTERMS used in the suppliers contract is in the
nature of "Freight Prepaid" then all charges due under INCOTERMS shall be
collected and paid by the shipper at origin. If the INCOTERM used in the suppliers
contract is on basis "Freight Collect" then all charges due under INCOTERM shall be
borne and paid by the consignee at destination;
(c) Other local charges of international shipping lines that do business in Philippine
ports on import and export cargoes must be transparently clarified and justified —
explaining therefore the nature of such charge/s and the corresponding local services
rendered in exchange for
such charges;
(d) This will likewise serve the purpose of correctly calculating the correct duties and
taxes
imposable on importations in accordance with Section 100 of Republic Act No. 10863
otherwise known as the Customs Modernization and Tariff Act (CMTA) clarifying that
duties and taxes are to be paid on the total cost of transport as part of the dutiable value.
SECTION 4. Taxation — All revenues generated by international shipping lines from
approved "local charges" for local services within the Philippines shall be imposed with
the appropriate taxes (income tax and VAT) in accordance with the applicable provisions
of the National Internal Revenue Code of the Philippines. BIR shall issue the necessary
guidelines for this purpose.
SECTION 5. Container deposits, demurrage and detention charges —


(a) Container Deposits l —All international shipping lines including, shipping agents and
general agents shall implement an expeditious procedure in refunding container deposits
upon the return of empty containers by consignees. For this purpose all container
deposits, posted with the shipping lines including their shipping agents and general
agents, shall be refunded within a period of fifteen (15) days following the receipt of the
empty containers in the yard or
container terminal of the shipping line.
(b) Demurrage and Detention Charges — The cost of recovery of all international
shipping line for detention and demurrage charges shall be limited to the actual lease cost
rate per day beyond the allowable free time granted by the shipping line to the consignee
but under no circumstances to exceed the depreciated market value of the container.
SECTION 6. Prohibited Acts — All international shipping lines are prohibited from doing
directly or indirectly any of the following acts that are contrary to laws governing
obligations and contracts:
Container deposits are not payments for services of shipping lines, they are funds posted
and entrusted to shipping lines for safekeeping to be refunded to the consignee upon the
return of the empty container to their possession.


(a) Impose an indirect lien and hold the release of the shipment of a consignee for
the reason that the consignee has an outstanding demurrage and detention
collectibles from the consignee corresponding to a previous and different
transaction with the shipping line;
(b) Withhold and hold the refund of container deposits posted by the consignee for
returned empty containers for the reason that the consignee has outstanding
demurrage and detention collectibles from the consignee corresponding to a
previous and different transaction with the shipping line.
SECTION 7. Role ofAgencies —The following Agencies of the Executive Branch are
directed to carry out the following functions to best achieve the purposes of this law:
(a) Department of Trade and Industry — As lead agency to protect the interests
of the consumer and implement to the full extent existing consumer trade laws
to curb unconscionable business practices; excessive and unnecessary fees,
charges and surcharges imposed as origin and destination charges as well as
unconscionable fees imposed on the management of empty containers by
international shipping lines.
(b) Bureau of Customs - Formulate and adopt policies and regulations
regarding charges that may be imposed by international shipping lines, regulate
the imposition of destination charges in the Philippines and require all shipping
lines to include all charges in their freight and other origin charges for the
proper calculation and collection the correct duties and taxes imposable on
importations.
(c) Bureau of Internal Revenue — Investigate and identify the different
destination charges or local charges being collected international shipping lines
that are considered local services activities within the Philippines and impose
the corresponding taxes on all revenues generated for local services within the
Philippines in accordance with the applicable provisions of the National
Internal Revenue Code of the Philippines and issued the necessary guidelines
for these transaction/s.


(d) Department of Justice - Philippine Competition Commission — Conduct
investigation and report on the purpose and activities of the international
shipping lines primarily determining
whether the imposition of these excessive destination charges are manipulated,
dictated and controlled by the international shipping lines in concert with each
other and thus, creating an anti-competitive industry and recommend sanctions
therefore.
SECTION
8.
Oversight
Committee
—
An
oversight
committee
composed
of
representatives from the following agencies is hereby created to ensure and monitor the
implementation of this Act:
1.Department of Trade and Industry as Co-Chairperson;
2.Department of Transportation as Co-Chairperson;
3.Department of Finance as Member;
4.Bureau of Customs as Member;
5.Bureau of Internal Revenue as Member;
6.Philippine Ports Authority as Member;
7.Department of Justice as Member;
8.Philippine Competition Commission as Member;
9.House Committee on Trade and Industry as Member; and
10.House Committee on Transportation as Member
SECTION 9. Separability Clause — If any provision of this Act is subsequently declared
invalid or unconstitutional, other provisions hereof which are not affected thereby shall
remain in full force and effect.
SECTION 10. Repealing Clause — All other laws, executive orders, issuances, rules and
regulations or parts thereof inconsistent with the foregoing rules and regulations are
repealed, amended, or modified accordingly.
SECTION 11. Effectivity— This Act shall take effect fifteen (15) days after its publication
in the Official Gazette or in a newspaper of general circulation.
Approved,