Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

SIXTEENTH CONGRESS
First Regular Session

HOUSE BILL NO. 2863

Introduced by REP. MARCELINO “MARCY” R. TEODORO

EXPLANATORY NOTE

‘The State recognizes that the shipping industry plays a vital role in the economic expansion
and prosperity of our country. That we are an archipelago hugely dependent on agriculture
and exports makes the case for an efficient and competitive shipping infrastructure even
more compelling and immediate.

‘This bill allows for a reasonable liberalization of present restrictions on foreign vessels to
engage in the coastwise trade. It seeks to permit foreign-built, foreign-owned, and foreign-
crewed or operated vessels to transport cargo between ports within Philippine territorial
waters, subject to:

(a) Equitable regulatory requirements for Certificate of Public Convenience,
Provisional Authority or Special Permits to Operate.

(b) Reasonable clearance requirements by the Commissioner of Customs
granting authority for the transhipment of export or import cargo upon such
vessels, which shall be covered by the similar rules being observed by
domestic shipping companies.

(©) Phased-in entry of foreign vessels to domestic shipping routes by allowing
them only access to major Philippine ports for the first three (3) years
following the passage of this bill.

It seeks to amend and repeal earlier restrictions laid down in Republic Act 9295, known as
The Domestic Shipping Development Act of 2004, and Republic Act 1937, known as The
Tariff and Customs Code:

(a) Sections 5, 6 and 7 of Republic Act 9295, known as The Domestic Shipping
Development Act of 2004, as follows:


(b)

“SEC. 5. Authority To Operate. - No franchise, certificate or any other form
authorization for the carriage of cargo or passenger, or both in the domestic
trade, shall be granted except of domestic ship owners or operators.”

"SEC. 6. Foreign Vessels Engaged in Trade and Commerce in the Philippines
Territorial Waters. - No foreign vessel shall be allowed to transport
passengers or cargo between ports or place within the Philippine territorial
waters, except upon the grant of Special Permit by the MARINA when no
domestic vessels is available or suitable to provide the needed shipping
service and public interest warrants the same.”

“SEC. 7. Issuance of Authority To Operate. - The MARINA shall have the power
and authority to issue certificates of public convenience to qualified domestic
ship operators, taking into consideration the economic and beneficial effect
which the proposed services 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 government regulation.

“Every domestic ship operator shall state in its application the route it
proposes to serve, and the service it proposes to offer. Domestic ship
operators who do not intend to operate in a fixed route shall nevertheless
state in its application the service it proposes to offer.”

Sec. 902 and 1009 of Republic Act No. 1937, known as The Tariff and
Customs Code of the Philippines.

“Sec, 902. Vessels Eligible For Coastwise Trade. - The right to engage in the
Philippines coastwise trade is limited to vessels carrying a certificate of
Philippine Registry.”

“Sec. 1009. Clearance of Foreign Vessels To and From Coastwise Ports. ~
Passengers or articles arriving from abroad upon a foreign vessel may be
carried by the same vessel through any port of entry to the port of
destination in the Philippines; and passengers departing from the Philippines
or articles intended for export may be carried in a foreign vessel through a
Philippine port.

“Upon such reasonable condition as he may impose, the Commissioner may
clear foreign vessels for any port and authorize the conveyance therein of
either articles or passengers brought from abroad upon such vessels; and 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.”


(©) All Relevant Implementing Rules and Regulations, circulars and Flag
Administration Advisories.

With the lifting of these restrictions insofar as transport and movement of cargo are
concerned, it is hoped the following economic gains will be achieved in a short span of
time:

© Intensify trade liberalization by creating an environment of maritime
transport without barriers;
Foster a culture of mutuality and equal exchange of privileges
Increase efficiency as a result of open market competition and level playing
field.

* Enable ship owners and operators to be globally competitive

* Encourage the entry of foreign investors or players which, in turn, spur jobs
creation, spike government revenues, and promote tourism

* Spur modernization of port and navigational infrastructure

Improvement in the economic fundamentals of the country remain unfelt by the
marginalized sectors. This bill, when enacted, aims to lower significantly transport base
costs, and make prices of domestic goods reasonable and affordable. It envisions a spur in
growth of our export industries as their prices become competitive, bringing with them
more jobs and livelihood, Our country’s economic gains then become all-inclusive.

With the concrete gains in our coastwise trade, undertaking improvement in port
infrastructure is also envisioned as an effect of the proposed measure; hence earliest
passage of this bill is earnestly sought.

MARCELINO “MARCY” R. TEODORO

Representative
4s District, Marikina City


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

SIXTEENTH CONGRESS
First Regular Session

House piino, 226 3

Introduced by REP. MARCELINO “MARCY” R. TEODORO

AN ACT
ORDAINING REFORMS IN PHILIPPINE DOMESTIC SHIPPING TRADE BY
ALLOWING FOREIGN VESSELS TO ENGAGE IN THE TRANSPORT OF
CARGOES, AND FOR OTHER PURPOSES

SECTION 1, Short Title. ~ This Act shall be known as the “Liberalization of Domestic
Shipping Cargo Trade Act of 2013."

SEC. 2, Declaration of Policy. It is the policy of the State to:

(1) To promote a liberalized policy by allowing entry of foreign vessels to engage in
the domestic shipping trade for transport of cargoes.

(2) To enhance competitiveness of the Philippine domestic shipping industry by
modernization of fleet and development of ports and other maritime
infrastructure.

(3) To promote investment, trade and employment generation.

(4) To enhance efficiencies as well lower transportation costs for the greater
economic benefit.

SEC. 3. Authority to Operate. - A franchise, certificate or any other form of authorization for
the carriage of cargo or passengers, or both, in the domestic trade shall be granted to
domestic ship owners or operators

SEC. 4. Foreign Vessels Engaged in Trade and Commerce in Philippine Territorial Waters. ~
Foreign vessels shall be allowed to transport cargoes between ports or places within the
Philippine Territorial waters, subject to the following:


(1) They shall secure a Certificate of Public Convenience from MARINA to operate in
the domestic shipping trade,

(2)The foreign vessels and its foreign crew complement shall be subject to
Philippine laws on shipping, ports, taxation, customs, immigration, quarantine,
labor, penal and other applicable laws, rules and regulations.

SEC. 5. Issuance of Certificate of Public Convenience and Authority to Operate, - The MARINA
shall have the power to issue a certificate of Philippine Registry and certificate of public
convenience to qualified domestic and foreign ship operators, taking into consideration the
economic and beneficial effect which the proposed service shall have to the port, province
or region which it proposed to serve, and the financial capacity of the ship operator to
provide and sustain safe, reliable, adequate, efficient and economic service in accordance
with the standards set by government regulation,

Each ship operator shall state in its application the route it proposes to serve, and the
service it proposes to offer. Ship operators who do not intend to operate in a fixed route
shall nevertheless state in its application the service it proposes to offer.

SEC. 6. Phased-in Entry of A Foreign Vessel to Domestic Shipping Routes . - For the first three
(3) years from the effectivity of this Act, the foreign vessel shall only be allowed to operate
in primary routes, involving the following major ports:

(1) Port of Manila in Luzon,

(2) Port of Batangas in Luzon,

(3) Port of Subic in Luzon

(4) Port of Cebu In Visayas,

(5) Port of lloilo in Visayas,

(6) Port of Cagayan De oro in Mindanao,

(7) Port of Davao in Mindanao,

(8) Port General Santos in Mindanao,

(9) Port of Zamboanga in Mindanao

(10) Other major ports as may be later determined by MARINA

Thereafter, the foreign vessel shall be allowed to operate also in secondary and tertiary
routes as established by MARINA.

Sec. 7, Implementing Rules and Regulations. ~ Within sixty (60) days from the effectivity of
this Act, the Secretary of Finance and Secretary of Transportation and Communication,
jointly, in coordination with Maritime Industry Authority (MARINA), Philippine Ports
Authority (PPA)/Cebu Ports Authority (CPA), Bureau of Customs, Bureau of Internal


Revenue, Bureau of Immigration and Deportation, Bureau of Quarantine, Philippine Coast
Guard, shall promulgate such rules and regulation necessary for the effective
implementation of this Act.

Sec. 8. Separability Clause. ~ If, for any reason, any section, subsection, sentence, clause or
term of this Act is held to be illegal, valid or unconstitutional, such parts not affected by
such declaration shall remain in full force and effect,

SEC. 9. Repealing Clause. - Sections 5, 6 and 7 of Republic Act 9295, otherwise known as
the “Domestic Shipping Development Act of 2004", and Sections 902 and 1009 of Republic
Act No, 1937, otherwise known as the "Tariff and Customs Code of the Philippines”, and all
laws, decrees, executive orders, rules and regulations or other issuances, or part thereof,
inconsistent with this Act are hereby repealed or modified accordingly.

SEC. 10. Effectivity. - This Act shall take effect fifteen days after its publication in two (2)
national newspapers of general circulation.

Approved.