Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City, Metro Manila

Sixteenth Congress
First Regular Session

2146

HOUSE BILL NO.

Introduced by Honorable Joaquin M. Chipeco, Jr.

EXPLANATORY NOTE

In his Fourth (4") State-of-the-Nation Address (SONA), President
Aquino expressed as part of the legislative agenda of his administration
during the second half of his term the amendment or repeal of the so-
called Cabotage Law, to wit:

“Zlalapit ko na rin po sa ating Kongreso ang ilang batas na
makakatulong sa pagpapatuloy ng nasimulan nating pagbabago
Maamyendahan na po sana ang Cabotage Law, upang mas mapalakas
ang kumpetisyon, at mapababa ang gastos sa transportasyon ng ating
mga sakahan at industriya.”

In essence, the Cabotage Law allows a country to reserve coastwise
trade to national flag carriers to the exclusion of foreign vessels. In the
Philippines, this rule is found in our Tariff and Customs Code,
specifically Section 902, The main intent of the law is to protect the
domestic shipping industry,

However, certain sectors of our society have called for the
amendment or even repeal of the cabotage principle. For one, it has been
observed that at present shipping goods from Mindanao to Taiwan,
Malaysia or Hong Kong is even cheaper compared with transporting the
same from Mindanao to Manila, The amendment of the cabotage law is
envisioned to foster competition in the shipping industry and thus lower
the cost of transporting goods and passengers, at least in so far as cargoes
intended for export and import are concerned. The resulting competition
is also expected to address the various inefficiencies of the domestic
shipping industry by forcing the same to adjust to the more open business
climate. Incidents of maritime disasters, hopefully, would also be
lessened by a more competitive environment in the shipping industry.


Without allowing foreign vessels to outrightly engage in coastwise
trade in the Philippines, which might run afoul of the nationalistic
provisions of our Constitution, this bill nonetheless aims to spur
international trade by removing archaic, unfair and costly policies and
practices in the shipping industry

In view of the foregoing, the early approval of this bill is earnestly

requested,
M. Loken JR.

resentative
econd District of Laguna



Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City, Metro Manila

Sixteenth Congress
First Regular Session

HOUSE BILL NO. 2146

Introduced by Honorable Joaquin M. Chipeco, Jr.

AN ACT
ALLOWING VESSELS OF FOREIGN REGISTRY ENGAGED IN
THE SHIPPING OF CARGOES AND PASSENGERS TO AND
FROM THE COUNTRY TO CONVEY THE SAME TO AND
FROM PRINCIPAL PORTS OF ENTRY/SUB-PORTS IN THE
COUNTRY

Be it enacted by the Senate and the House of Representatives of the
Philippines in Congress assembled:

SECTION. 1, The provisions of any law to the contrary
notwithstanding, vessels of foreign registry engaged in the shipping of
cargoes for export and import, as well as passengers, to and from the
country are hereby allowed to convey said cargoes and passengers to and
from principal ports of entry/sub-ports in the country. Such act of
transshipment of cargoes and passengers between ports in the country
shall not be deemed coastwise trade prohibited or restricted under the

cabotage law.


SEC. 2. In order for any foreign vessel to avail of the benefits
under this Act, proof of full compliance with the country’s customs,

immigration and other pertinent laws must duly presented.

SEC. 3, The Secretary of Finance shall, in coordination with the
Bureau of Customs, Maritime Industry Authority, and the Philippine
Coast Guard, issue the necessary rules and regulations to implement the

provisions of this Act.

SEC. 4. The pertinent provisions of Republic Act No. 1937,
otherwise known as the Tariff and Customs Code of the Philippines, and
Republic Act No. 9295, otherwise known as the Domestic Shipping
Development Act of 2004, and all laws, decrees, executive orders, rules
and regulations and other issuances or parts thereof inconsistent with the
provisions of this Act are hereby repealed, modified or amended

accordingly.

SEC. 5. This Act shall take effect fifteen (15) days after its

publication either in the Official Gazette or in two (2) newspapers of

general circulation,

Approved,