Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

‘TWENTIETH CONGRESS
First Regular Session

1761

House Bill No.

Introduced by Rep. ANGELO MARCOS BARBA
2" District, Ilocos Norte

EXPLANATORY NOTE

The Philippine Ship Registry serves as both the armor and the badge of
Filipino-owned and manned ships and vessels. The Registry acts as the armor
of our flag-bearing maritime fleets against danger, fraudulence, and threat
that may happen at sea. At the same time, the Registry functions as a badge of
identity and honor. A ship or a vessel registered and recorded by virtue of the
Registry is granted identity and status in the international maritime
population. Having this conferment, a Filipino-owned and operated fleet shall
be entitled to the protection of the Philippine flag, the right to invoke the
diplomatic, consular, and naval protection of Philippine authorities, and the
right to invoke jurisdiction to undertake national and_ international
responsibilities of a flag State. Conclusively, a ship possessing such right
under the Philippine Ship Registry is ensured of identity and guaranteed
safety, even in the middle of the sea.

Hence, this bill.

This legislation not only mandates MARINA as the primary
implementing agency to concretize the Philippine Ship Registry, but also gives
directives in terms of enhancing and rationalizing the Philippine maritime
industry by establishing a Ship Registry and procedures for registration in
compliance with international standards. Succinctly, this bill is intended for
the development of the maritime industry through compliance with
international maritime conventions’ regulations and practices, thereby
achieving the country’s aim of becoming one of the leading and respected flag
states.

In light of the foregoing, the immediate passage of this measure is
earnestly sought.

ANGE! BARBA


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

‘TWENTIETH CONGRESS
First Regular Session

1761

House Bill No.

Introduced by Rep. ANGELO MARCOS BARBA
2" District, Ilocos Norte

AN ACT ESTABLISHING THE SCOPE AND PROCEDURE FOR,
PHILIPPINE SHIP REGISTRY, RECOGNITION AND
ENFORCEMENT OF MARITIME CLAIMS, AND LIMITATIONS OF
LIABILITY, AS WELL AS PROVIDING ESSENTIAL INCENTIVES,
WHICH COLLECTIVELY WILL PROMOTE A COMPREHENSIVE
AND ORDERLY PHILIPPINE SHIP REGISTRY SYSTEM FOR THE
REGULATION OF VESSELS CARRYING THE FLAG STATE

Be it enacted by the Senate and the House of Representatives of the
Philippines in Congress assembled:
TITLE
GENERAL PROVISIONS
CHAPTERI
POLICIES
SECTION 1. Short Title. - This Act shall be known as the “Philippine
Ship Registry System Act.”
SECTION 2. Declaration of Policy. ~ It is the policy of the State:

a. To establish the Philippines as a leading maritime nation and
respected flag State;

b. To ensure that Filipino-owned-and-manned maritime fleets or vessels
are strengthened and assisted to meet the minimum global standards
for reliability, safety, competitiveness, and effectiveness;

c. To provide protection to our merchant marine fleets, and help expand
Philippine international trade;

d. To encourage Philippine vessel acquisition, development,
modernization, and expansion through systemized and sustainable
programs;


e. To provide policies that will attract more ship owners to register under
Philippine flag, thus ensuring the country’s economic growth;

f. To align the tax structure for its domestic and overseas shipping fleet
to make it competitive; and,

g. To provide a mechanism for the early adoption and implementation of
international maritime regulations and conventions.

SECTION 3. Implementing Agency. — The Maritime Industry Authority
(MARINA) shall be the implementing agency of this Act. The MARINA shall
provide secretariat support in the enforcement of this Act.

CHAPTER I
DEFINITION OF TERMS

SECTION 4. Definition of Terms. ~ As used in this Act:

a. Arrest refers to the attachment of a vessel by judicial process through
an order of a competent court in order to secure the enforcement of a
maritime claim, which attachment shall produce the effect of detaining
or restricting the removal of a ship in execution or satisfaction of a
judgment;

b. Bareboat charter refers to a contract for the lease of a ship, for a
stipulated period of time, by virtue of which the bareboat charterer has
complete possession and control of the ship, including the right to
appoint the master and crew of the ship, for the duration of the lease;

¢. Bareboat charterer or charterer may be used interchangeable and
refers to any person, commercial partnership or corporation which
bareboat charters a Philippine flag vessel from another Philippine
national, or a vessel of compatible foreign registry, for its own use;

pe

Certificate of Philippine Registration refers to the document of
registration of a vessel registered in accordance with Section 13 of this
Act;

°

. Claimant refers to a person who asserts that a maritime claim exists in
his favor;

f. Court or Philippine court or competent court may be used
interchangeably and refers to a court of appropriate jurisdiction within
the territory of the Philippines;

g. De-registration refers to the act of deleting a ship from the Registry of
Ships of the Philippines and the cancellation of the Certificate of
Philippine registry in accordance with Section 21 of this Act;

e

.. Foreign flag vessel refers to a ship which is registered under the laws
of a country other than the Philippines and which is authorized to fly


m.

the flag of that country;

Foreign registry refers to the registry of ships of a country other than
the Philippines;

|. Maritime claim refers to any of the claims provided in this Act;

Maritime lien refers to a charge that attaches to a ship which rises
from a maritime claim against the ship, its owners, charterers,
managers, or operators that results in a demand for indemnity or
remuneration from the ship or its owners, charterers, managers, or
operators, and is enforceable by judicial action;

|. Mortgagee refers to the person, whether natural or juridical, in whose

a favor a ship mortgage is created in order to secure a principal
obligation;

Mortgagor refers to a ship owner who constitutes a ship mortgage
over a vessel or a vessel under construction registered in its name in
order to secure the fulfillment of a principal obligation;

. Philippine Flag Vessel refers to any vessel duly registered under

Philippine Laws and authorized to fly the Philippine flag;

. Philippine national refers to any individual who is a citizen of the

Philippines, or a commercial partnership or corporation organized
under the laws of the Philippines, at least 60% of the capital of which
is owned by citizens of the Philippines;

. Registration refers to the act of entering a ship in the Registry of Ships

of the Philippines in accordance with this Act;

|. Register of Ships of the Philippines or Register or Registry may be

used interchangeably and refers to the official public register
maintained by the MARINA which shall hold the record of all vessels
under Philippine laws;

. Record of Ship Mortgages and Encumbrances refers to the public

record maintained by the MARINA containing all details of the vessel's
mortgage and encumbrances;

. Seagoing vessel refers to any Philippine flag vessel of five hundred

(500) gross tons or more, authorized to carry passengers or cargo, or
both, in trade between a Philippine port and a foreign port, or between
two foreign ports;

Ship manager refers to any person, commercial partnership or

corporation to which the technical or commercial management, or
both such technical and commercial management, of a ship has been
entrusted by the ship owner and for that purpose is in charge of the
operation of the ship which may include vessel maintenance and


upkeep, crewing and passenger and cargo solicitations;

u. Ship mortgage refers to a contract executed by the owner of a ship
creating a security interest over a particular vessel or a vessel under
construction in order to secure the performance of a principal
obligatio

v. Ship owner refers to any person, commercial partnership, or
corporation authorized to own, operate, manage, control, lease, or
charter out, or otherwise engage in the business of shipping;

w. Ship operator refers to any person, commercial partnership, or
corporation authorized to operate, manage, or control a ship owned by
another;

x. Tonnage or Gross tonnage may be used interchangeably unless
otherwise indicated and refers to the ship’s gross tonnage calculated in
accordance with the tonnage measurement rules provided in the
applicable international convention on the tonnage measurement of
ships;

y. Unit of Account refers to the Special Drawing Rights (SDR) as defined
by the International Monetary Fund (IMF). The SDR is an
international reserve asset, created by the IMF in 1969 to supplement
its member countries’ official reserves;

z. Vessel or ship may be used interchangeably and refers to any boat,
craft, or artificial contrivance of floating in water, designed to be used,
or capable of being used, as a means of water transport for the carriage
of passengers or cargo, or both, utilizing its own motive power or that
of another, and shall include a ship under construction and for
purposes of this Act shall continue to be considered as personal
property. It excludes fishing vessels defined and regulated under
existing laws and bancas, sailboats, and other water-borne
contrivance of less than three (3) gross tons and not motorized:
Provided, That this does not include those owned and/or operated by
the Armed Forces of the Philippines (AFP) and by foreign
governments for military purposes: Provided further, That mobile
offshore platforms used in petroleum exploration and development,
such as mobile offshore drilling units and offshore production
platforms, shall be considered as ships when they are mobile and not
affixed to the seabed.

TITLE IL
SHIP REGISTRY

SECTION 5. The Philippine Ship Registry. - The Philippine Ship
Registry, hereinafter referred to as the “Registry,” is hereby established,
through which the State confers nationality, exercises its jurisdiction, protects



and enforces private rights, and undertakes the national and international
responsibilities of a flag State, over all ships flying the Philippine flag.

The Registry is comprised of the Register of Ships and the Record of Ship
Mortgages and Encumbrances. It shall be maintained by the MARINA in
accordance with the provisions of this Act, and the rules and regulations that
may be issued pursuant thereto. There shall be one Registry for all domestic
and international flag vessels.

CHAPTER I
REGISTRATION OF SHIPS

SECTION 6. Register of Ships. — A Register of Ships shall be kept and
maintained by the MARINA, which shall record essential ship information,
including the following:

. Name of vessel;
. Keel number;
Hull material;
. Principal dimensions;
Gross tonnage;
Net tonnage;
IMO number;
Official number;
Place of build;
Year of build;
. Name and address of registered owner, ship operator, bareboat
charterer, manager, or other person responsible for the ship;
Date of issuance of CPR;
m, Class of vessel;
n. A reference that encumbrances on the vessel appear in the primary
registry.

Fore mp eas op

In the case of second hand tonnage, the following additional data shall
likewise be listed in the Registry of Ships:

0. Place of previous registry;
p. Name of previous owner.

In the case of bareboat chartered vessels, the following additional data
shall also be listed in the Registry of Ships:

. Place of primary registry;

Name of registered owner appearing in the primary registry;

Name of the vessel as it appears in the primary registry;

. A reference that encumbrances on the vessel appear in the primary
registry;

u, Any material change of condition with respect to any of the preceding

items and any other fact required by regulation shall likewise be

recorded in the Registry of Ships.

rene


The MARINA may add to the required information to be submitted in
accordance with international standards.

SECTION 7. Effect of Registration. — Any ship registered under the
Philippine registry shall be entitled to the following:

a. Conferment of the nationality and status of a Philippine ship;
b. Entitlement to the protection of the Philippine flag;

¢. Entitlement to the right to invoke the diplomatic, consular, and naval
protection of Philippine authorities and the protection of the flag of the
Philippines;

d. Imposition of the duty to fly the Philippine flag;

e. Obligation to abide by all applicable laws, decrees, orders, rules, and
regulations of the Philippines;

f. Entitlement to the privilege to engage, consistently with the limitations
provided by law, in Philippine coastwise trade in accordance with
corollary permits, certificates and franchises that may be issued to the
vessel; and

g. Entitlement to the right to invoke the exercise of jurisdiction and
control by Philippine government authorities over all persons found on
board the vessel, or over any incident involving the penal or
disciplinary responsibility of the master or any member of the crew
whether the same arises from a crime or quasi-delict committed on
board the vessel or from any collision or other incident of navigation
concerning the ship.

SECTION 8. One Ship, One Registry Rule. — A ship may be registered
with only one ship register at any one time. Before entering the ship in the
Register, the MARINA shall ensure that any previous registration has been
deleted, or that the ship has been de-registered from any foreign registry.

In the case of a foreign flag ship under bareboat charter, the MARINA
shall ensure that the right to fly the flag of the former flag State is suspended
for the duration of its previous registration and nationality under the former
flag State, and indicating the particulars of any registered encumbrances
entered in the previous registry.

It is the duty of the owner, master, or agent of every ship in the Register to
inform the MARINA of any change in the facts pertaining to the ship and
entered therein.


SECTION 9. Who may register. —

a. All ships operating within the maritime territory and jurisdiction of the
Philippines, except transient foreign flag ships subject to such
regulations as the MARINA may prescribe, are mandated to be
registered with the Philippine registry: Provided, That they meet the
conditions for the grant of registration imposed by this Act and the
regulations pursuant hereto. This mandatory registration under the
Philippine Flag is particularly required in the following cases:

1. The ship is five hundred (500) gross tons or more;

2. The ship is owned by a qualified person, as may be determined by
the MARINA;

3.

The ship meets the requirements for safety, security, marine

environmental protection, crew nationality, training, certification, and
competency, and crew welfare.

b. Any other ship, including a foreign-owned ship, may also be registered
in accordance with this Act, provided the following conditions are
present:

1

2.

It is used only in international voyages;

It is managed by a qualified person residing in the Philippines, as
may be determined by the MARINA;

. It complies with the applicable provisions that govern the safety

and security of Philippine ships and persons on board;

. It complies with the applicable provisions that govern the terms

and conditions of employment on board Philippine flag vessels;
and,

; The ship employs full Filipino crew, unless otherwise authorized by

the MARINA, consistent with applicable treaties, conventions, and
internationally-accepted maritime and labor standards and
practices; Provided, however, That any exemption granted by the
MARINA must still require that at least majority of the crew of the
seagoing vessel are Filipinos.

. Additional incentives for payment of tax tonnage, under Section

hereof, shall be granted to the registered foreign-owned vessel
where the ship owner, manager, operator, or bareboat charterer
and all its crew officers, and employees have a valid, subsisting and
duly implemented collective bargaining agreement that conforms
to international labor standards, rules and conventions.

c. Vessels of a foreign registry that are covered by a bareboat charter may
be registered under the Philippine flag: Provided, That their


registration under the foreign flag of primary registration shall not be
abandoned, but shall be deemed suspended, for the duration of the
ship's registration under the Philippine flag.

SECTION 10. Licensure. — Every ship, regardless of size, intended to
be used in the carriage of passengers or cargo, or both, between ports and
places, in the coastal, internal, inland or sheltered waters of the Philippines,
shall be covered by a license to operate: Provided, That such ship is owned
by a citizen of the Philippines or a corporation or association organized
under the laws of the Philippines at least sixty percent (60%) of whose
capital is owned by such citizens and the ship meets the other conditions for
the grant of the license imposed by this Act and the regulations pursuant
hereto.

SECTION 11. Conditions for Registration. - No ship shall be
registered unless the following conditions are present, as determined by the
MARINA in accordance with this Act and regulations issued related thereto:

a. Proof of Ownership. - There must be satisfactory proof of
ownership and/or management by qualified persons.

b. Seaworthiness. — A ship must comply with the general requirements
for age, safety, security, navigation, manning, and protection and
preservation of the marine environment in accordance with national
and international standards for ships.

c. Manning. — A ship must be manned by a crew with such level of
skills and competencies as may be necessary in accordance with
applicable international maritime conventions, rules, and standards
as well as national law and regulations.

d. Labor and social conditions. ~ A ship must meet the labor and
social standards required by applicable international labor
conventions, rules and standards as implemented by the MARINA.

e. Management. — A ship must be managed by a person or entity that
is under the effective jurisdiction of the State.

f, Payment of fees and dues. - The applicant for ship registration
must pay the corresponding registration fees and tonnage dues as
may be imposed by the State.

SECTION 12. Documentary Requirements. - Every ship owner,
master or agent who opts to enroll a vessel for registry under the Philippine
flag shall submit to the MARINA the following documents:

a. Awritten application for registration;

b. A documentary proof of ownership over the vessel;


c. Proof of authority to enroll the ship for registry, if applicable;

d. A copy of a certification issued by a classification society showing
the ship is of a certain class, if existing and applicable; and

e. Such other necessary documents that may be required by the
MARINA in accordance with the best international shipping
practices or standards.

SECTION 13. Issuance of Certificate of Philippine Registration. —
No application for a Certificate of Philippine Registration shall be approved
and issued until the MARINA has made the proper evaluation that all the
conditions and documents required and mandated for registration under
this Act or regulations issued hereto have been complied with. The MARINA
or its deputized representative shall inspect the vessel and all its documents
and ensure that it is qualified for registration under this Act.

A certificate of Philippine registry shall be valid for a period of no
more than three (3) years, and may be continuously renewed for a similar
period: Provided, That all the requirements for registration or its renewal
are met. In case of a bareboat chartered vessel, the Certificate of Philippine
Registration shall be valid for a period of no more than three (3) years or the
period of the bareboat charter, whichever is shorter.

SECTION 14. Types of Registration. — Registration of a ship may be
permanent, provisional, or temporary in nature.

a, Permanent Registration. — Except as provided in the succeeding
sections, the registration of a ship and issuance of a Certificate of
Philippine Registration is deemed to be permanent until the ship is,
actually de-registered or deleted from the Register.

b. Provisional Registration. — Ship constructed and/or acquired
abroad, before being brought to the Philippines, may be issued a
Provisional Certificate of Philippine Registration and a provisional
tonnage certificate for conduction purposes.

c. Temporary Registration. —

The following may be issued a Temporary Certificate of Philippine
Registration:

1. Any ship about to be built, or under construction in the
Philippines;

2. Any ship owned and/or operated by an entity duly registered
with the Board of Investments (BOI) under pertinent investment
laws, rules and regulations, to be used exclusively for the purpose
of transporting raw materials and/or finished products within
Philippine waters as an essential element and operation in the
manufacturing, processing, or other business activity or project


registered by such entity with the BOI: Provided, That such
temporary registration applies only for the duration of such
business activity or project, and shall not exceed one (1) year,
renewable for another year: Provided, further, That the type of
ship used or service undertaken cannot be provided by a Philippine
ship owner;

3. Any ship that is operated and managed under a bareboat
charter: Provided, That in case of a foreign flag vessel
bareboat-chartered by a qualified person for operation in
Philippine waters, the ship may be temporarily registered with the
Registry for the duration of the charter: Provided further, That for
the duration of temporary registration with the Philippines, any
registration with a foreign flag State is suspended: Provided,
finally, That no ship under a bareboat charter shall be registered if,
after the effectivity of its charter, has undergone extensive
structural modification in a manner that affects its safety and
seaworthiness.

SECTION 15. Markings, Name, and Homeport. - All ships duly
registered according to the provisions of this Act shall have their
respective names plainly marked upon each side of the bow and stern;
and the homeport and International Maritime Organization (IMO)
number upon the stern.

SECTION 16. Change in Ownership of Ships. - In case of a sale of
a Philippine-flagged ship, the transferee shall present the bill of sale or
other certificate evidencing the transfer of ownership to the MARINA
within fifteen (15) days after its execution for appropriate recording in the
Register.

SECTION 17. Correction of Errors in the Registry. ~ Errors in
recording made in the Register shall be corrected in the following
manner:

a. Mere clerical errors without any effect on the meaning and
substance of the document shall be corrected by the appropriate
and designated officer of the MARINA who shall make the
necessary correction;

b. Any mistake or error that might affect the meaning and substance
of the documents shall be corrected by order of the MARINA after
notice to, and hearing of, the interested parties.

SECTION 18. Reconstitution of Lost Certificate. — If the Certificate
of Philippine Registration of a ship is lost or damaged, the owner, master,
or agent thereof may file an application with the MARINA for the issuance
of a replacement certificate. The replacement certificate shall indicate that
the original certificate is considered cancelled and revoked. If after the
issuance of the replacement certificate, the lost original certificate of
Philippine registry is found, it shall be the duty of the owner, master,


agent, or any person having possession of the original certificate to
‘surrender it to the MARINA.

SECTION 19. Suspension, Cancellation, or Revocation of Ship
Registration. — The registration of a Philippine flag vessel shall be
cancelled and its corresponding Certificate of Philippine Registration
shall be revoked in any of the following cases:

a

The Certificate of Philippine Registration was illegally or
fraudulently obtained;

. The ship is sold, transferred, and/or assigned to a person not

qualified to register ships in the Philippines under the provisions
of this Title or as may be determined by the MARINA;

In the case of a transfer of ownership over the ship, the new
transferee or assignee has properly applied for change of
ownership and/or registration;

. The ship is sold by the order of a competent court;

The ship is sold for scrapping;

The ship is determined by the MARINA to be unsafe and
unserviceable beyond repair;

. The bareboat charter of the ship has expired, or has been

cancelled or terminated for any reason, in which case, the
cancellation from the register of ships and revocation of the
certificate of Philippine registry shall be automatic;

. The ship has been declared lost or missing pursuant to a written

and notarized notice submitted by the owner, master, or agent of
a Philippine flag vessel to the MARINA, containing advice of such
loss and the probable cause thereof;

Gross violations of the safety, security, environment, and other
standards or requirements set by the MARINA;

The ship owner, manager, agent, or bareboat charterer is proven
to have given or submitted to the MARINA fabricated
information or fraudulent documents relative to the registration
or settlement of their fees or taxes;

. The ship has engaged in illegal activities;

The ship owner, manager, or bareboat charterer commits any
acts inimical to the national security or national interest of the
Philippines;


m. The ship is entered in a foreign registry without prior approval of
the MARINA.

SECTION 20. Inspection of the Register. - The Register of Ships
shall be open to public inspection during ordinary business hours, in the
offices of MARINA, and online. All documents and information provided
in connection with the registration of a ship are considered public
documents. Upon request and payment of reasonable fees, authenticated
copies of any document or instrument required to be filed under this Act,
including pertinent rules and regulations, or extracts thereof, shall be
furnished to any person.

SECTION 21. De-registration of Ships. — A ship which is or has
been registered in another State shall not be eligible for permanent
registration in the Philippines, unless:

a. A certificate has been issued by the former flag State to the effect
that the ship has been de-registered; or

b. A certificate has been issued by the former flag State to the effect
that the ship will be de-registered on the day when such new
registration is effected.

Except in the case of forced sales, a Philippine-flagged vessel shall
not be de-registered without the written consent of all holders of
registered mortgages.

If the de-registration of the vessel is obligatory in accordance with
this section, all holders of registered mortgages shall be notified by the
MARINA of the pending de-registration in order to enable such holders to
take appropriate action to protect their respective interests.

If the consent of the holders is not obtained, de-registration shall not
be implemented earlier than three (3) months after notice to such holders
of registered mortgages is given.

CHAPTER II
TAXES AND FEES

SECTION 22. Processing Fee. — A processing fee shall be paid by
the owner, master, or agent of ship sought to be registered when the
application for registration or when a renewal thereof is filed. The
processing fee shall be collected to cover administrative costs for handling
and processing the application. The processing fee shall be in such
reasonable amount as may be determined by the MARINA.

SECTION 23. Registration Fee. — A registration fee shall be
payable by the ship owner, master, or agent when the ship is first entered
in the Registry and shall be paid when the Certificate of Philippine
Registration is issued. The registration fee shall be fixed in such
reasonable amount as determined by the MARINA.


SECTION 24. Tonnage Tax Fees. - An annual tonnage tax fee shall
likewise be paid by the owner, manager, or bareboat charterer of the
vessel for the issuance and continued possession of a valid and subsisting
certificate of Philippine registration. The annual tonnage tax fee shall be
computed at the rate of US$o.10 per net register tonnage or its equivalent
in Philippine Peso based on the present or latest exchange rate posted by
the Bangko Sentral ng Pilipinas (BSP) on the date of payment of such
tonnage tax fees. The ship owner, master, or agent shall have the option
whether to pay in US dollars or in Philippine Peso.

For all vessels, if the owner, manager, or agent has satisfactorily
established with the MARINA compliance with the conditions stated in
Section 9, paragraph b, subsection 6 hereof, they shall enjoy an additional
incentive. In such case, the tonnage tax fees due from them shall be
reduced to the rate of US$o.08 per net register tonnage or its equivalent
in Philippine Peso based on the present or latest exchange rate posted by
the BSP on the date of payment of the tonnage tax fees: Provided, That if
the MARINA determines that the conditions for the additional incentive is
violated or proof shown for its existence is fabricated, the Certificate of
Philippine Registration may be revoked in accordance with Section 19,
paragraph g hereof.

SECTION 25. Adjustments in Fees and Taxes. ~ The MARINA may
review the rates for the processing fee, registration fee, and tonnage tax
fees from time to time, and with the approval of the Department of
Transportation (DOTr), may, by regulation, adjust or increase various
fees, but for a reasonable amount.

SECTION 26. Exemption from Duties and Taxes. - The
importation by the owner, manager, agent, or bareboat charterer of a
vessel, and the spare parts, steel/metal plates, and equipment needed for
the refurbishing, repair, and maintenance of such vessel shall be exempt
from the payment of import duties and taxes, value added taxes, and all
other pertinent taxes.

In the case of a registered vessel, the annual tonnage tax fees shall be
in lieu of any income tax due from the ship owner, manager, agent, or
bareboat charterer and the withholding tax due on the lease or bareboat
charter fees earned by the ship owner. Likewise, all crewing personnel of
the registered foreign-owned vessel shall be exempt from income tax and
all other taxes that may be imposed on their salaries and remuneration
received by reason of or in connection with their employment with the
ship owner, manager, or bareboat charterer of the registered
foreign-owned vessel.

CHAPTER III
RECORD OF SHIP MORTGAGES AND ENCUMBRANCES

SECTION 27. Record of Ship Mortgages and Encumbrances. -
MARINA shall maintain a Record of Ship Mortgages and Encumbrances


containing the details and documents regarding all transfers, mortgages,
encumbrances, or other documents proving or affecting the title to any
ship registered in the Register of Ships. All documents, certificates,
receipts, or acknowledgments cancelling or satisfying any such obligation
in whole or in part shall likewise be recorded. The date and time of
recording shall be expressly stated.

SECTION 28. Effect of Recording. — In order to be valid and
enforceable, or other right over a Philippine flag vessel, whether
permanent or temporary in nature, in favor of a person other than
registered ship-owner or his agent, must be entered into the Record.
Priority in time of recording determines the priority in rights between
different rights-holders.

SECTION 29. Requirements of Recording. - A ship mortgage,
encumbrance, or other rights shall be entered into the Record upon
submission to the MARINA of the following:

a. A copy of the contract or other instrument evidencing such
mortgage, encumbrance, or other rights, which contain all the
essential details thereof;

b. Acopy of the Certificate of Philippine Registration;

c. In case of a ship under construction, a copy of its Temporary
Certificate of Philippine Registration, or if such has not yet been
issued, a declaration stating the ship's name, the location of the
shipyard, the yard number, and the dimensions, and appropriate
deadweight of the vessel upon completion.

SECTION go. Annotation of Mortgages and Encumbrances. -
Upon request of the mortgagee, holder of the right, or his agent, and
submission of the necessary documents required in this Act for recording,
the MARINA shall cause the annotation of a ship mortgage, encumbrance,
or other right on the back of the corresponding Certificate of Philippine
Registry of the vessel concerned, referring to the entry number, date, and
time of entry, and nature or subject matter of the document as contained
in the Record.

If a new or replacement certificate is issued, the annotations upon
the previous certificate shall automatically be transferred and annotated
upon the back of the new or replacement certificate.

SECTION 31. Rights Over Vessels Under Construction. ~ Any right
in respect to a vessel under construction in the Philippines may be
entered and recorded after the keel has been laid or equivalent
construction work has been performed. Vessels under construction
contracted by a Philippine national may be registered in accordance with
the provisions of this Act. In order that the vessel may be the subject of
registration under this Act, it is necessary that the keel of the vessel must


have been laid and a keel number assigned by the shipyard at the time of
application.

SECTION 32. Inspection of the Record. - The Record shall be open
to public inspection during ordinary business hours in the offices of the
MARINA and online. Upon request and payment of reasonable fees,
extracts from the Record of Ship Mortgages and Other Rights, and/or
authenticated copies of any document or instrument required to be filed
under this Title and/or pertinent rules and regulations, or extracts
thereof, shall be furnished to any person.

TITLE IL
MARITIME LIENS AND ENCUMBRANCES,

CHAPTERI
MARITIME LIENS

SECTION 33. Nature of Maritime Liens. — Maritime liens arise
and are enforceable whether the claims secured by such liens are against
the owner, or against the demise or other charterer, manager, or operator
of the ship. Except in case of forced sale of the ship, the maritime liens
shall be attached to the ship notwithstanding any change of ownership,
registration, or flag.

SECTION 34. Claims Secured by Maritime Liens. ~ The following
claims, in relation to a ship, shall be secured by maritime liens on the
ship:

a. claims for wages and other sums due to the master, officers, and
other members of the ship’s complement in respect of their
employment on the ship;

b. claims in respect of loss of life or personal injury occurring,
whether on land or on water, in direct connection with the
operation of the ship;

c. claims based on tort and not capable of being based on contract,
in respect of loss or damage caused by the operation of the ship
other than loss of or damage to cargo, containers, and passengers’
effects carried on the ship;

d. claims for port, canal, and other waterway dues, tonnage dues,
light dues, pilotage dues, other public taxes, dues and charges of
the same character; and

e. claims relating to the salvage, wreck removal, and contribution in
general average.

SECTION 35. Claims Not Secured by Maritime Liens. - No
maritime lien shall attach to a ship to secure claims for damages in


connection with the carriage of oil or other hazardous or noxious
substances by sea for which compensation is payable to the claimants
pursuant to international conventions, local laws, or compulsory
insurance, or those which arose out of or which resulted from the
radioactive properties or a combination of radioactive properties with
toxic, explosive, or other hazardous properties of nuclear fuel, or of
radioactive produce or waste.

SECTION 36. Priority of Maritime Liens. - The maritime liens set
out in Section 33 hereof shall take priority over registered mortgages,
hypotheques, and charges. No other claims shall take priority over such
maritime liens or over such mortgages, hypotheques, or charges except as
may be specifically provided under this Act. The maritime liens set forth
shall rank equally as between themselves.

SECTION 37. Maritime Liens in case of Salvage, Wreck Removal,
or General Average Acts. — Maritime liens securing claims for salvage,
wreck removal and contribution to general average shall take priority over
all other maritime liens which have attached to the ship prior to the time
when the operations giving rise to the said liens were performed.

Such liens shall rank in the inverse order of the time when the claims
secured thereby accrued. Claims for contribution to general average shall
be deemed to have accrued on the date on which the general average act
was performed, while claims for salvage shall be deemed to have accrued
on the date on which the salvage operation was terminated.

In the event of a forced sale of a wreck of ship, following its removal
by the MARINA, the costs of such removal shall be paid out of the
proceeds of the sale before all other claims secured by maritime lien on
the ship. If at the time of the forced sale, the vessel is in the possession of
a ship-builder or a ship-repairer shall surrender possession of the ship to
the purchaser but is entitled to obtain satisfaction of a claim out of the
proceeds of the sale after the satisfaction of the claims of holder of
maritime liens mentioned in Section 34 hereof.

SECTION 38. Extinguishment of Maritime Liens. - Maritime liens
shall be extinguished after a period of one (1) year from the time when the
claims secured thereby arose unless, prior to the expiration of such
period, the ship has been arrested and the ownership thereof transferred
through a forced sale ordered by a competent court or tribunal.

The period of one (1) year shall not be subject to suspension or
interruption: Provided, That the time shall not run while the person
enforcing the is prevented from arresting the ship legally or by
circumstances beyond his control.

Maritime liens which arose prior to the effectivity of this Act shall be
extinguished one (1) year after the date of such effectivity.


SECTION 39. Rights of Retention. — The following persons, when
in possession of ship or ship that is under construction, shall have the
right to retain such ship or ship under construction, without need of a
court order:

a. a shipbuilder, to secure claims arising out of the construction of,
or other work carried out in relation to the ship; and

b. a ship repairer, to secure claims arising out of the repair of,
including the modification, conversion or reconstruction of the
ship, or other work carried out in relation to the ship, affected
during such possession.

SECTION 40. Extinguishment of Rights of Retention. ~ The rights
of retention under the preceding section shall be extinguished when:

a. the claim in respect of which said right has been exercised is met
or is otherwise discharged;

b. the ship ceases to be in the possession of the ship-builder or
ship-repairer as the case may be; or

c. the competent court orders the release of the ship.

SECTION 41. Assignment or Subrogation. ~ The assignment of or
subrogation to a claim secured by a maritime lien results in the
simultaneous assignment of or subrogation to such maritime lien.

Claimants holding maritime liens may not subrogated to the
compensation payable to the owner of the ship under an insurance
contract.

SECTION 42. Exclusions. — The provisions of this Title shall not
apply:

a. a claim for the enforcement of a maritime lien that is already
the subject of a pending case and which is sought to be
enforced under the provisions of Presidential Decree No. (PD
No.) 1521, or the Ship Mortgage Decree, at the time of the
effectivity of this Act;

b. a maritime lien which arose prior to the effectivity of this Act,
unless such lien has already prescribed.
CHAPTER II
SHIP MORTGAGES

SECTION 43. Application. - The provisions of this Chapter shall
apply to every mortgage wherever executed in respect of:


a. a ship that is registered in the Philippines; or
b. aship that is under construction in the Philippines.

SECTION 44. Subject of a Ship Mortgage. — Unless otherwise
stipulated, a ship mortgage shall include all property of the mortgagor
which appropriated to the ship and on board at the time when the
mortgage contract is entered into, or which is later substituted for such
property.

In case the ship is under construction, the ship mortgage shall
include all materials, machinery, and equipment owned by the mortgagor
that are within the premises of the builder's yard and distinctly identified
as intended to be incorporated into the ship under construction.

SECTION 45. Formal Validity. - A ship mortgage shall not be
valid unless it is made by or with the consent of the owner of the ship or
ship under construction, and in writing and signed by the mortgagor and
mortgagee. However, the ship mortgage may be validly made in the form
of an electronic document as defined by law. Except as otherwise
expressly provided in this Act, no other document for formal validity shall
be required in order for the ship mortgage to be binding and effective
upon the mortgagor and the mortgagee.

SECTION 46. Registration of Ship Mortgages. - Every
mortgage of a ship that is registered or under construction in the
Philippines shall, on proper application, be registered in the Record of
Mortgages and Encumbrances established in Section 27 hereof. If such
mortgage is not registered, it shall be unenforceable against the ship and
third persons.

All entries in the Register of Mortgages and Encumbrances
pertaining to the mortgage of a ship shall be annotated on the back of the
Certificate of Philippine Registration, stating the time and date of transfer
and the nature and subject matter of the encumbrance. All ship mortgages
shall be registered in the order in which they are filed, indicating the date
and time of registration.

The MARINA shall, upon the registration of a mortgage, issue two
(2) official copies of the relevant entry in the Registry to the mortgagor.
Each official copy of the entry shall bear the official time and date of the
registration of the mortgage. If a ship mortgage is transferred or
materially amended or if one mortgage is substituted for another, the
transfer, amendment or substitution that is not entered into the Record
shall be unenforceable against the ship and third persons.

SECTION 47. Disclosure by the Mortgagor. - Upon request of the
mortgagee prior to the execution of the mortgage to which they are
parties, the mortgagor shall provide in writing the details of any prior ship
mortgage and any maritime lien that is known to the mortgagor, upon the
ship which is the subject of the ship mortgage.


SECTION 48. Priority Between Ship Mortgages. — Ship mortgages
shall rank in the order of their being recorded with the Registry.

SECTION 49. Notification of De-registration of Subject of Ship
Mortgage. ~ Except in the case of a forced sale upon order of a competent
court, the de-registration of a ship shall not be permitted unless all
registered ship mortgages are first deleted, or the written consent of all
holders of such mortgages is obtained.

Where the de-registration of the ship is obligatory according to the
provisions of this Act or its implementing regulations, the MARINA shall
notify the holders of registered ship mortgages of the pending
de-registration in order to enable such holders to take appropriate action
to protect their interests. Unless the said holders consent to a shorter
period, the de-registration shall not be implemented until after a lapse of
a reasonable time from notification in writing, which shall not be less than
three (3) months.

There shall be no other requirements for formal validity except as
stated in the preceding paragraphs.

CHAPTER II
ENFORCEMENT OF MORTGAGE

SECTION 50. Grounds to Enforce a Ship Mortgage. ~ A
mortgagee shall be entitled to enforce the security represented by the ship
under a mortgage in the following cases:

a. The mortgagor defaults in the discharge of the indebtedness or
other obligations secured by the ship mortgage;

b. The mortgagor or any person in possession of the mortgaged
property substantially prejudices the security of the mortgagee by
any act or omission;

c. The mortgagor commits any breach of the mortgage contract
which, by the terms of the contract, entitles the mortgagee to
enforce the security.

SECTION 51. Remedies of Mortgages. — The enforcement of the
security under the mortgage may be carried out by:

a. Arresting the ship subject to the mortgage and applying for an
order for its forced sale by competent court; or

b. Foreclosing the mortgage; or

c. Any other manner stipulated in the mortgage contract.


SECTION 532. Arrest and Forced Sale of a Ship. - A mortgagee
entitled to enforce a mortgage, or a person exercising a maritime lien,
may bring a proceeding in rem against the ship which is the subject of the
mortgage or to which the maritime lien attaches, as the case may be,
before a competent court having jurisdiction over the ship. The petitioner
shall be entitled to apply to the court ex parte for an order for the arrest of
said ship.

The petitioner's claim shall be supported by an affidavit stating the
circumstances which shall be the basis to enforce the mortgage or lien. An
affidavit executed abroad must be duly authenticated. If the affidavit
satisfactorily establishes the petitioner's claim, the competent court shall
order the arrest of the ship.

The court may require the petitioner to post a bond or other security
before issuing the order of arrest. If so required, the bond or security shall
not exceed the amount of the mortgage debt or lien.

The court shall, after judgment, order the forced sale of the ship to.
satisfy the claim, unless the ship has been released in accordance with the
next succeeding section.

The rules on preliminary attachment under the Rules of Court shall
not apply in the arrest of ships.

SECTION 53. Release of Arrested Ship. — The court shall not
release the arrested ship prior to rendition of judgment unless the
mortgagor, the owner of the ship, or any person authorized to act on his
behalf or of any other person interested in the ship:

a. applies to the court for an order releasing the ship from arrest, by
making a cash deposit, and if the same is not possible upon
presentation of competent evidence, by filing a counter-bond or
security in an amount double the value of the claim, to secure the
payment of any judgment that the mortgagee may recover in the
action; or

b. proves that the arrest was improperly or irregularly made.

SECTION 54. Notice of Forced Sale of a Ship. - Prior to the forced
sale of a ship, the court shall give, or cause to be given, at least thirty (30)
days prior notice of the time and place of such sale, either in customary or
electronic form, to the following:

a. all holders of registered mortgages;

b. such holders of maritime liens whose claims have been notified to
the court and have not expired;

c. all other persons having an interest in the ship, whose interests
have been notified to the court.


SECTION 55. Effect of Forced Sale of a Ship.— In the event of the
forced sale of a ship, all mortgages, except those assumed by the
purchaser with the consent of the holders, and all liens and other
encumbrances of whatsoever nature, shall cease to attach to the ship but
shall attach to the proceeds of sale: Provided, That at the time of the sale,
the ship is in the jurisdiction of the Philippines, and the sale has been
effected in accordance with the laws of the Philippines.

Any charter party or contract for the use of the ship in existence at
the time of the forced sale shall be deemed to be terminated, without
prejudice to any claim the charterer may have against the owner of the
ship at the time of the sale.

SECTION 56. Bankruptcy Not Affecting Ship Mortgage. - The
mortgage of a ship is not affected by the bankruptcy or rehabilitation of
the mortgagor after the date of the registration of the mortgage.

SECTION 57. Distribution of the Proceeds. ~ The costs awarded by
the competent court and expenses arising out of the arrest and sale of the
ship shall be paid first out of the proceeds of such sale. Thereafter, the
following claims shall be satisfied out of the balance of the proceeds of the
sale in the order herein enumerated, observing also the preference among
each category of claims, established in Sections 34 and 36 hereof on
maritime liens and Section 46 hereof on ship mortgages:

a. maritime liens;
b. registered mortgages; and
c. rights of retention.

SECTION 58. Certificate of Release. - When a ship registered in
the Philippines has been the object of a forced sale in the same country,
the competent court having jurisdiction shall, at the request of the
purchaser, issue a certificate to the effect that the ship is sold free of all
mortgages, maritime liens, and other encumbrances, except those
assumed by the purchaser. Upon the production of the abovementioned
certificate, the MARINA shall delete all registered mortgages from the
Registry, except those assumed by the purchaser, or issue a certificate of
de-registration for the purpose of registration, as the case may be.

SECTION 59. Effect of the Forced Sale of a Ship in Foreign States.
~The forced sales in a foreign state of a ship registered in the Philippines
shall be recognized and effective in the Philippines: Provided, That the
procedure for such forced sale in that foreign state substantially
corresponds to the appropriate procedure set out herein.

CHAPTER IV
FOREIGN LIENS AND MORTGAGES


SECTION 60. Foreign Maritime Liens. — A claim governed by the
law of a State other than the Philippines and recognized by such law as
giving rise to a maritime lien or right of a similar nature against the
owner, or against the demise or other charterer, manager, or operator of a
ship, shall be recognized by and enforceable in the Philippines: Provided,
That said claim constitutes or corresponds substantially to a claim set out
in this Act. The provisions of this Act relating to maritime liens, including
priority, ranking of liens between themselves, and enforcement, shall also
apply to such claims.

SECTION 61. Foreign Mortgages. - A foreign mortgage, or any
mortgage or hypothee which relates to a ship of foreign registry, shall be
recognized and enforceable in the Philippines: Provided, That:

a. such mortgage has been effected and registered or otherwise
recorded in accordance with the law of the State where the ship is
registered;

b. such register and any instrument or document which are
required to be deposited are open to public inspection, and that
extracts of the register and copies of such instruments are
obtainable from the registrar; and

c. either the register or the loan agreement specifies:

1. the name and address of the person in whose favor the
mortgage has been effected or that it has been issued to bearer;

2. the amount secured by the mortgage or the manner of
calculating said amount;

3. the date of the mortgage; and

4, such other particulars, which, according to the law of the State
where the ship is registered, determine the rank in regard to
other registered mortgages.

All matters relating to the procedure for enforcement of foreign
mortgages shall be governed by this Act.

SECTION 62. Priority and Ranking of Foreign Mortgages. -
Foreign mortgages shall be subordinate to maritime liens as set out in this
Act.

The ranking of foreign-registered mortgages as between themselves,
and their effect as regards third parties, shall be governed by the law of
the State where the ship is registered.

TITLE IV
LIMITATION ON LIABILITY


CHAPTERI
RIGHT TO LIMIT LIABILITY

SECTION 63. Application. - The following may invoke the right to
limit their liability in accordance with the rules provided for in this Title
for the claims set out in the succeeding section:

b.

Ship owners;

Ship operators;

. Bareboat charterers;
|. Ship managers;

. Salvors with respect to claims set forth in Section 65 hereof;

Any person whose act, neglect, or default the ship owner, ship
operator, bareboat charterer, ship manager, or salvor is
responsible for; and

. Insurers who assume the liability of any ship owner, ship

operator, bareboat charterer, ship manager, or salvor.

They may invoke their right to limit liability against any claimant in
a judicial action who has sought the arrest of their vessels in order to
enforce a claim which is subject to limitation.

SECTION 64. Claims Subject to Limitation. — The following
claims made against the persons set forth in the preceding section or
against the ship, whatever the basis of liability may be, shall be subject to
the limitation of the liability:

a. Claims in respect of loss of life or personal injury, or loss of or

damage to property, including damage to harbor works, basins,
waterways, and aids to navigation, occurring on board or in
direct connection with the operation of the ship or with salvage
operations and consequential loss resulting therefrom;

. Claims in respect of loss resulting from delay in the carriage by

sea of cargo, passengers, or their luggage;

Claims in respect of other loss resulting from the infringement
of rights, other than contractual rights, occurring in direct
connection with the operation of the ship or of salvage
operations;

. Claims in respect of loss or damage arising from the raising,

removal, destruction, or the rendering harmless of a ship which
is sunk, wrecked or abandoned, including anything that is or has


been on board such ship;

e. Claims in respect of loss or damage resulting from the removal,
destruction, or rendering harmless of the cargo of the ship; and

f. Claims in respect of measures taken in order to avert or
minimize loss for which the person liable may limit his liability
in accordance with this Title, and any further loss caused by such
measures.

SECTION 65. Claims Not Subject to Limitation. — The following
claims shall not be subject to any limitation of liability in accordance
with this Title:

a. Claims arising from the contract of salvage or from any salvage
operation rendered in accordance with relevant Philippine law
on salvage or any applicable international salvage convention,
including any claim for special compensation payable under a
contract of salvage, or any contribution in general average;

b. Claims for oil pollution damage within the meaning of the
applicable convention covering the civil liability for oil pollution
damage or any amendment thereto which is in force;

c. Claims subject to any international convention governing or
prohibiting the limitation of liability for nuclear damages;

d. Claims against the ship owner of a nuclear ship for nuclear
damage;

e. Claims brought by employees against the ship owner, ship
operator, bareboat charterer, ship manager, or salvor, where
the duties of such employees are connected with the ship or
with the salvage operations, as the case may be, or their heirs,
successors, or assigns, if under the law governing the contract
of employment, the ship owner, ship operator, bareboat
charterer, ship manager, or salvor is not entitled to limit his
liability in respect of such claims, or if the law governing the
contract of employment permits a limit of liability grater than
that provided for in this Act.

SECTION 66. Conduct Barring Limitation. — Any shipowner,
ship operator, bareboat charterer, ship manager, or salvor, or any person
acting on their behalf, shall not be entitled to limit liability if it is proven
that the loss resulted from the personal act or omission of such ship
owner, ship operator, bareboat charterer, ship manager, or salvor, or any
person acting on their behalf, and such act or omission was committed
with the intent to cause such loss, or it was done recklessly and with the
knowledge that such loss would probably result.

SECTION 67. Counterclaims; Right to Set Off. - When a ship
owner, ship operator, bareboat charterer, ship manager, or salvor, who is
entitled to limit his liability, has a counterclaim against the claimant
arising out of the same occurrence, their respective claims shall be set off
against each other and the limits of liability shall only apply to the


balance of the claim, if any. The right to set off can be invoked only if
both parties are entitled to limit their respective liabilities and their
respective claims do not fall within the provisions of Sections 65 and 66
of this Act.

CHAPTER II
LIMITS OF LIABILITY

SECTION 68. General Limits. - The general limits of liability for
claims, other than for passenger claims, arising from any distinct
occasion shall be caleulated as follows:

a. In respect of claims for loss of life or personal injury:

1. Two million (2,000,000) units of account for a ship with a
tonnage not exceeding two thousand (2,000) tons;

2. For a ship with a tonnage in excess thereof, the following
amount, in addition to that mentioned in (a) (1):

i. For each additional ton from 2,001 to 30,000 tons, 800
units of account;
ii. For each additional ton from 30,001 to 70,000 tons, 600
units of account;

iii. For each additional ton in excess of 70,000 tons, 400
units of account.

b. In respect of any other claims:

1. One million (1,000,000) units of account for a ship with
a tonnage not exceeding 2,000 tons;

2. For a ship with a tonnage in excess thereof, the
following amount, in addition to that mentioned in (b)
():

i. For each additional ton from 2,001 to 30,000 tons,
400 units of account;

ii, For each additional ton from 30,000 to 70,000 tons,
300 units of account; and

iii, For each additional ton in excess of 70,000 tons, 200
units of account.

The MARINA, with the approval of the Secretary of
Transportation, may, by regulation, revise the limits of liability provided


for in this section to align such limits with applicable international
maritime conventions.

SECTION 69. Claims for Loss of Life in Excess of the Stipulated
Limit. — If the amount calculated in accordance with subsection (a) of the
preceding section is insufficient to pay in full all the claims for loss of life
or personal injury, the amount calculated in accordance with subsection
(b) shall be available for the payment of the unpaid balance of the claims
under subsection (a).

In this case, the unpaid balance for claims for loss of life and
personal injury shall rank ratably with all other claims falling under
subsection (b): Provided, That if there should be any claim arising from
damage to harbor works, basins and waterways, and aids to navigation,
these shall be satisfied first before any other claim falling under
subsection (b) are satisfied, including any unsatisfied claims for loss of
life or personal injury.

SECTION 70. Salvor’s Limit of Liability when not Operating
from a Ship. ~ The limit of liability for any salvor who is not operating,
from any ship or salvage tug, or who is operating solely on the ship to, or
in respect of, which he is rendering salvage services, shall be calculated in
accordance with the provisions of Section 69 of this Act applying a
tonnage of 1,500 tons.

SECTION 71. Limit of Liability for Passenger Claims. - The limit
of liability of a ship owner, ship operator, bareboat charterer, or ship
manager, for passenger claims relating to loss of life or personal injury
arising out of any distinct occasion, shall be an amount equivalent to One
hundred seventy-five (175) units of account multiplied by the number of
passengers which the ship is authorized to carry according to the ship’s
certificate.

Claims for loss of life or personal injury to passengers of a ship
shall mean any such claims brought by or on behalf of:

a. Any person carried on the ship under a contract of passenger
carriage; or

b. Any person carried on the ship who, with the consent of the
master, is accompanying a vehicle, or a shipment of live
animals, or other cargo which is covered by a contract for the
carriage of goods.

SECTION 72. Formula for Converting the Unit of Account to
Philippine Peso. - The unit of account mentioned in this Chapter shall be
converted to Philippine Pesos according to the value of the Philippine
Peso on the date the limitation fund is constituted, or payment is made,
or security is given. The equivalent value of the Philippine Peso shall be
calculated in accordance with the method of valuation applied by the
International Monetary Fund (IMF) for its operations and transactions
in effect on the applicable date.


SECTION 73. Aggregation of Claims for Loss of Life and
Personal Injury and for Other Claims. - The limits of liability for loss of
life and personal injury and for other claims determined in accordance
with Section 68 hereof shall apply to the aggregate of all claims which
arise on any distinct occasion against:

a. The ship owner, ship operator, bareboat charterer, or ship
manager, and any person whose act, neglect, or default such
ship owner, ship operator, bareboat charterer, or ship manager
is responsible for; or

b. The ship owner, ship operator, bareboat charterer, or ship
manager of a ship rendering salvage services from a ship or the
salvor or salvors operating from a salvage tug, and any person
whose act, neglect, or default the ship owner, ship operator,
bareboat charterer, ship manager, or salvor is responsible for;
or

¢. The salvor who is not operating from a ship or salvage tug or
who is operating solely on the ship to, or in respect of, which
the salvage services are rendered and any person whose act,
neglect, or default the salvor is responsible for.

CHAPTER II
LIMITS OF LIABILITY

SECTION 74. Creation of a Limitation Fund. ~Any person
entitled to limit his liability in accordance with Section 63 hereof and
who is alleged to be liable for a claim provided in Section 64 hereof may,
at any time during the hearing of the case or after the arrest of his vessel,
constitute a fund with the court in which legal proceedings have been
instituted for the satisfaction of the claim subject to limitation.

The fund shall be in an amount equivalent to the limits of liability
set forth in Sections 68, 70, and 71 hereof, as the case may be, together
with any interest due thereon from the date of the occurrence giving rise
to the liability until the date of the creation of the fund. The total amount
of the fund shall be subject to the rules on aggregation of claims set forth
in Section 73 of this Act.

Any fund created shall be available only for the payment of claims
in respect of which limitation of liability can be invoked.

SECTION 75. Insurance Indemnity Cover. — Every ship owner or
bareboat charterer shall be required to maintain adequate insurance
coverage or protection and indemnity coverage to meet the financial
responsibility for any liability which such ship owner or bareboat
charterer may incur for loss of or injury to human life, damage to
property, and to the marine environment. In determining the limits for


mandatory insurance coverage for seagoing ships, the MARINA shall
take into account and be guided by the applicable limits of liability
provided in relevant international conventions. In setting the limits for
mandatory insurance coverage coastwise vessels, the MARINA shall
consider the prevailing local social, economic, and other conditions in
the Philippines.

SECTION 76. Form of the Fund. - The fund may be created,
either by depositing the sum with a bank or other financial institution
designated by the court, or by providing a bond, or other security
acceptable to the court.

‘The fund constituted by any of the persons mentioned in Section
63, subsections (a), (b), (c), (d) or (e) shall likewise be deemed
constituted in favor of the persons mentioned in subsections (f) and (g)
of the same.

SECTION 77. Distribution of the Fund. - Subject to the
provisions of Sections 68 and 69 hereof, the limitation fund shall be
distributed among the claimants in proportion to their claims against the
fund as determined by the court.

SECTION 78. Subrogation of Rights. — If at any time before the
fund is distributed, the ship owner, ship operator, bareboat charterer,
ship manager or saivor, or their respective insurers, settles a claim made
against and payable by the fund, such person shall, up to the amount
paid, acquire by subrogation the rights which the claimant would have
enjoyed under this Title.

SECTION 79. Contingency Fund for Expected Claim. - Where
the ship operator, bareboat charterer, ship manager or salvor, or their
respective insurers, establishes that it may be compelled to pay a claim at
a later date, whether in whole or in part, and because of such payment,
the ship owner, ship operator, bareboat charterer, ship manager or
salvor, or their respective insurers, would have enjoyed a right of
subrogation if the claim has been paid before the fund was distributed,
the court having jurisdiction over the claim and in which the fund has
been constituted may order that a sufficient sum from the fund be
provisionally set aside to enable the person who has been subrogated to
the rights of the claimant to enforce his claim against the fund at such
later date.

SECTION 80. Bar to Other Actions. — Where a limitation fund
has been constituted in accordance with Section 74 hereof, any person
having made a claim against the fund shall be barred from enforcing
such claim against any other assets of the persons mentioned in Section
63 hereof and on whose behalf the fund has been constituted.

SECTION 81. Release from Arrest after the Constitution of the
Limitation Fund. ~ After a limitation fund has been constituted in
accordance with Section 74 of this Act, any ship or other property,


belonging to a shipowner, ship operator, bareboat charterer, ship
manager, or salvor on whose behalf the fund has been constituted, which
has been arrested or attached in accordance with Title III of this Act in
order to satisfy a claim which is enforceable against the fund or any other
bond or security given, may be released from arrest at the discretion of
the court. Such release shall, however, be mandatory if the limitation
fund has been constituted:

a. At the port where the occurrence took place;
b. If the occurrence took place out of port, at the first port of call
of the ship after such;

. At the port of disembarkation in respect of claims for loss of life
or personal injury;

d. At the port of discharge in respect of damage to cargo; or
e. At the port where the arrest is made.

The provisions of this section and of the immediately preceding
section shall apply only if the claimant may bring a claim against the
limitation fund before the court administering that fund and the fund is
actually available and freely transferable to the claimant in respect of the
claim.

TITLEV
ENFORCEMENT OR INVESTIGATION

SECTION 82. Report of Any Incident Involving a Philippine
Registered Ship. - When any Philippine flag vessel sustains an accident
or causes any accident involving the loss of life, material loss of property,
or serious injury to any person, or receives any damage affecting her
seaworthiness or her efficiency, or if it should cause any pollution or
damage to the marine environment, regardless of where such accident or
incident may occur, the ship owner, ship operator, bareboat charterer,
ship manager, agent, or master of such vessel shall immediately, after the
occurrence of the accident or incident, send a report of the accident or
incident or, in the case of seagoing vessels, to the head office of the
MARINA in the port of Manila, stating:

a. The name of the vessel;

b. The port to which the vessel belongs;

c. The place where the incident occurred;

d. The nature and probable cause of the incident;

e. The number and names of those who perished; and


f The estimated amount of loss or damage to the vessel, the
cargo, or the marine environment.

The ship owner, ship operator, charterer, ship manager, agent, or
master may be required to furnish such other information as shall be
called for.

TITLE VI
CASUALTY INVESTIGATION

SECTION 83. Marine Safety Investigation. — Following the
occurrence of an accident or incident involving a Philippine flag
coastwise or seagoing vessel resulting in the loss of life, material loss of
property, or serious injury to any person, or receives any damage
affecting her seaworthiness or her efficiency, or if it should cause any
pollution or damage to the marine environment, regardless of where
such accident or incident may occur, the MARINA on its own or through
a duly constituted independent group of suitably qualified safety
inspectors, shall immediately undertake a marine safety investigation.
This investigation shall be separate from any other form of investigation
that may be undertaken by any other government agency.

SECTION 84. Nature of the Investigation. — The investigation
undertaken in accordance with this Chapter shall not apportion blame or
determine liability but shall be conducted to determine the cause of the
accident and the identification of measures to prevent the occurrence of
similar marine casualties, accidents, or incidents in the future.

SECTION 85. Power of Safety Investigators to Investigate. ~
Maritime safety investigators appointed by the MARINA shall have full
powers to board the Philippine flag ship regardless of where it may ne
found, and interview the master and the crew and any other person
involved, and acquire such evidentiary material for purposes of
undertaking and completing the marine safety investigation.

SECTION 86. Amendment of Safety Regulations. — Following
completion of the safety investigation and upon a complete study of the
safety investigation report, the MARINA shall take measures to amend
its safety regulations to implement the recommendations made in the
report.

SECTION 87. Providing Reports to the International Maritime
Organization. - The MARINA, as competent authority, shall provide a
copy of the report to the IMO to enable a wide dissemination of
information and to assist the international maritime community to
address safety issues.

TITLE VIL
OPERATION OF VESSELS


SECTION 88. Ship Construction. — Every new building registered
under Philippine laws shall be constructed in accordance with standards
for ship construction set forth in international maritime conventions and
implemented through government regulations.

Ship construction shall be under the supervision of the MARINA or
a recognized organization appointed for the purpose. The recognized
organization shail oversee the construction of the ship and ensure that
the construction regulations provided in international maritime
conventions and those issued by the MARINA covering the structural
strength and integrity of all parts of the ship’s hull and its appendages, as
well as the safety and reliability of the main propulsion, steering systems
and auxiliary systems of the ship are followed.

SECTION 89. Navigation and Communications Equipment. ~
Every Philippine flag vessel shall have on board such navigation and
communication equipment and apparatus required by international
maritime convention for the safe navigation of ships. Every equipment
and apparatus that shall be required to be installed on board shall be
suited for the type, tonnage, power, means of propulsion, and trading
limitations of the particular ship.

SECTION 90. Equipment to Prevent Marine Pollution. — Every
Philippine flag vessel shall have on board equipment and apparatus to
prevent, reduce, or control pollution to the marine environment
emanating from ships. Every equipment and apparatus required to be
installed on board shall be suited for the type, tonnage, power, means of
propulsion, and trading limitations of the particular ship.

SECTION 91. Inspections and Surveys. - To ensure the proper
maintenance of the ship's hull, machinery, and equipment, its through
life compliance with international conventions and government
regulations, and its safe operation, every Philippine flag vessel shall be
subject to periodic inspections and surveys.

SECTION 92. Scope of Inspections and Surveys. - The
inspections and surveys shall be conducted in accordance with
international maritime convention and government regulations, and
shall include an inspection and survey of the ship’s:

a. Hullstructure;

b. Machinery and equipment;

c. Life-saving equipment;

d. Fire-fighting equipment; and

e. Radio and communications installations.


SECTION 93. Extent of Authority of Recognized Organization. —
‘The MARINA, in appointing a recognized organization or classification of
society to conduct the inspection and survey of ships, shall inform the
recognized organization of the specific responsibilities and conditions of
the authority delegated to it.

SECTION 94. Issuance of Certificates. — The recognized
organization, pursuant to the functions delegated to it by the MARINA,
shall have the authority to issue vessel certificates to every Philippine flag
vessel and for this purpose, the vessel certificates issued by such
recognized organization shall be deemed to have met the requirements of
this Act.

Copies of the vessel certificates shall be submitted to the MARINA
which shall, upon verification of compliance, issue a certificate of
inspection in favor of the complying vessel confirming the findings of the
recognized organization.

SECTION 95. Availability of Vessel Certificates. ~ The vessel
certificates mentioned in the immediately preceding section shall be
readily available on board the vessel for examination at all times.

TITLE VOL
MANNING REQUIREMENTS

SECTION 96. Citizenship of Crew. ~ Vessels engaged in
coastwise trade, as well as sea-going vessels, shall employ full Filipino
crew: Provided, however, That seagoing vessels shall be subject to the
exemption mentioned in Section 9b(5) hereof.

An exemption from this citizenship requirement on such terms and
conditions and for a limited period as may be determined by the
MARINA may be obtained from the MARINA upon written application
from the ship owner or operator. This exemption, however, shall not be
granted to coastwise vessels.

SECTION 97. Crew Competence. - Every member of the crew of
a Philippine flag vessel shall possess the appropriate certificate of
competency setting forth his competence to serve in the capacity and
perform the functions involved at the level of responsibility, for the
position held, for the type, tonnage, power, means of propulsion, and
trading limitations of the ship concerned.

The certificate of competency, as well as any endorsements thereto,
and any renewals thereof, shall be issued by the MARINA. The certificate
of competency shall attest to the fact that the seafarer, to whom it is
issued, meets the requirements for service, age, medical fitness training,
qualification, and examinations for the position held.

SECTION 98. Crew Deployment. - Crew deployment to
Philippine flagged seagoing vessels engaged in international or regional


trade shall continue to be undertaken by the Philippine Overseas
Employment Administration (POEA) in accordance with the appropriate
provisions of the Maritime Labor Convention (MLC).

TITLE IX
FINAL PROVISIONS

SECTION 99. Requisition of Vessels. - The President of the
Philippines may, in times of war and other national emergency, when the
public interest so requires, order the requisition of any and all vessels of
Philippine registry, absolutely or temporarily, for any naval or military
purpose. The Government shall pay the owner or operator of the vessel,
based on normal conditions at the time of requisition:

a. The fair market value, if the vessel is taken absolutely; or

b. The fair charter value, if the vessel is taken temporarily, for the
period commencing from the takeover by the Government to
the date the vessel is returned to its owner/operator.

SECTION 100. Streamlined and Rationalized Procedures. — To
ensure the effective implementation of this Act and the further
streamlining of processes to support the country’s competitiveness and
promote trade facilitation, the MARINA shall coordinate with the
Department of Foreign Affairs (DFA), Department of Labor and
Employment (DOLE), Department of Health (DOH), Department of
Interior and Local Government (DILG), Securities and Exchange
Commission (SEC), Philippine Overseas Employment Administration
(POEA), Bureau of Immigration, Board of Investments, Bureau of
Customs (BOC), Bureau of Internal Revenue (BIR), Philippine Ports
Authority (PPA), Philippine Coast Guard (PCG), Bureau of Fisheries and
Aquatic Resources (BFAR), Bureau of Quarantine, and other relevant
offices and agencies to further streamline policies, requirements,
processes, procedures, and national and local government fees, dues,
charges, tariffs, assessments, rates, and other levies, on the acquisition,
registration, and operation of vessels; the hiring, deployment, change,
and repatriation of crew; the construction, repairs, maintenance, and
recycling of ships; and other government and business processes
concerning vessels in the Philippine Registry.

SECTION 101. Implementing Rules and Regulations. ~ Within
sixty (60) days after the effectivity of this Act, the MARINA shall issue
the implementing rules and regulations as may be necessary to
implement the provisions of this Act.

SECTION 102. Administrative Offenses and Penalties. — To
ensure faithful compliance with the rules and regulations issued in
accordance with the preceding section, the MARINA, through summary
administrative proceedings, may identify, prohibit, and penalize such
acts and activities that may reduce the efficiency and reliability of the
Philippine Ship Registry, impede the effectiveness of the exercise of
Philippine jurisdiction and control over Philippine flag vessels, or



otherwise interfere with its duties and responsibilities as a flag State and
the implementation of this Title.

For this purpose, the MARINA is authorized to impose an
administrative fine of not less than Ten thousand pesos (PhP10,000.00)
but not more than Five hundred thousand pesos (Php500,000.00), as
well as the penalty of suspension, cancellation, or revocation of the
relevant certificates, for violations of this Act and such rules and
regulations that it may issue pursuant to this Act.

The range of fines shall be subject to review and revision every five
(5) years from the date of effectivity of this Act, but in no case shall any
increase exceed an amount equivalent to twenty percent (20%) of that
previously imposed.

SECTION 103. Transitory Provisions. - Every ship currently
registered under the laws of the Philippines and granted the privilege to
fly its flag shall be deemed to be registered under this Act insofar as its
registration is not inconsistent with the provisions of this Act and such
registration shall continue to be valid until its expiration unless sooner
revoked by the MARINA.

Any ship mortgage entered into in accordance with the provisions
of the Ship Mortgage Decree or the Chattel Mortgage Law shall continue
to be valid and effective and its registration shall be transferred to the
MARINA in accordance with the provisions of this Act. Nothing in the
transfer shall change or in any way alter or affect any preference a
registered mortgage may enjoy or the original date on which such
mortgage was entered in the registry.

SECTION 104. Separability Clause. — If, for any reason, any
section, subsection, clause, or term of this Act is held to be illegal,
invalid, or unconstitutional, such parts not affected by such declaration
shall remain in full force and effect.

SECTION 105. Repealing Clause. - The following laws are
hereby repealed:

a. Articles 573 to 585 of the Code of Commerce of 1888;
b. Sections 801 to 821 of Republic Act No. 1937;

c. Republic Act No. 913;

d. Republic Act No. 1407;

e. Republic Act No. 6106;

f. Republic Act No. 7471, as amended;


g. Republic Act No. 9301;

h. Presidential Decree No. 214;

i. Presidential Decree No. 760, as amended.

The provisions of the following laws covering the powers and
functions of the MARINA are hereby amended insofar as they are
inconsistent with Section 6 of this Act:

j. Presidential Decree No. 474, as amended;

k. Executive Order No. 125 and 125-A, as amended;

1. Section 10 of Republic Act No. 9295.

Section 14 of Republic Act No. 9295 is hereby amended insofar as it
is inconsistent with Section 51 of this Act.

Such other laws, presidential decrees, executive orders, issuances,
rules, and regulations or parts thereof, which are otherwise inconsistent
with the provisions of this Act are hereby repealed, amended, or modified
accordingly.

SECTION 106. Effectivity. - This Act shall take effect fifteen (15)

days after its publication in the Official Gazette or in a newspaper of
general circulation.

‘Approved,