Republic of the Philippines

House of Representatives
Quezon City

SIXTEENTH CONGRESS
First Regular Session

HOUSE BILL NO. 2623

Introduced by Honorable Cresente C. Paez and Honorable
Anthony M. Bravo

EXPLANATORY NOTE

The cabotage provision of the Tariff and Customs Code provides:

Sec 902, Vessels eligible for coastwise trade ~The right to engage in the
Philippine coastvise trade is limited to vessels carrying a certificate of Philippine
registry

Sec 905. Transportation of Passengers and Articles between Philippine Ports
Passengers shall not be received at one Philippine port for any other such port by a
vessel not licensed for the coastwise trade, except upon special permission previously
granted by the Collector; and subject to the same qualification, articles embarked at
4 domestic port shall not be transported to any other port in the Philippines, either
directly or by way of a foreign port, or for any part of the voyage, in any other vessel
than one licensed for the coastwise trade

The provisions limit the maritime transfer of good and passengers. Cabotage has
resulted in the deterioration of the maritime sector as the players became complacent

because of the protection they expect from the government during challenging times.



The Philippines is an archipelago of 7,107 islands and has a coastline with a length of
235,937 square kilometers. Out of its 76 provinces, the country has 55 coastal provinces
Industry data show that there are more than 4,000 ships, most of which operate as passenger-
cargo liners, in the domestic trade. ‘These facts highlight how important the maritime

industry is to our country.

This bill seeks to enhance the maritime industry, allow more foreign investors in the
country, increase port revenues, expand the employment opportunities of the Filipinos and
produce more competitive services from local players, This bill also creates a foreign vessel

financing fiand to promote the development of the local shipping industry.

It is for this reason that the approval of this bill be immediately sought

HON. coi PAEZ HON. ANTHONY M. BRAVO

oY


Introduced by Honorable Cresente C. Paez and Honorable
Anthony M. Bravo

AN ACT AMENDING THE CABOTAGE PROVISIONS OF RA 1937, CUSTOMS
AND TARIFF CODE OF 1978, AS AMENDED

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

SECTION 1, Title. This Act shall be known as the “Open Philippine Waters Act of
2013”.

SECTION 2, Declaration of Policy. Itis declared the policy of the State to allow
more foreign investors in the country by opening the Philippine waters to foreign vessels
engaged in coastwise trade, to increase port revenues and produce more competitive services

from local players in the shipping industry.

SECTION 3. Definition of Terms
a. __Coastwise trade or cabotage ~
i, the carriage of passengers by vessel from any place in the Philippines to

any other place in the Philippine territory


ii, the carriage of goods by vessel, from one place in the Philippines to any
other place in the Philippines, either directly or via a place outside the
Philippines and includes the carriage of goods in relation to the
exploration, exploitation or transportation of the mineral or non-living
natural resources of the Philippines
iii, the engaging, by vessel, in any other marine transportation activity of a
commercial nature in Philippine waters and, the carriage of any goods or
substances whether or not of commercial value within Philippine waters
b. foreign vessel ~ a vessel other than a Philippine vessel
c. vessel ~ includes any description of vessel, ship, boat, hovercraft or craft, used or
capable of being used solely or partly for marine navigation and used for the
carriage on through or under water of persons or property without regard to
method
d, Exclusive Economic Zone of the Philippines. - The area defined under the
United Nations Convention on the Law of the Sea which stretches from the
baseline of the coast up to two hundred (200) nautical miles into the sea.

SECTION 4, Coastwise Trade, ‘The right to engage in the Philippine coastwise trade
shall not be limited to vessels carrying a certificate of Philippine registry

Foreign vessels may engage in the domestic coastal carriage of cargo and passengers
within Philippine waters, or any point within the waters of the exclusive economic zone of
the Philippines;

SECTION 5. Registration. Every vessel intended for use under this Act shall be duly
registered by the Maritime Industry Authority (MARINA) and shall meet all the requirements
for eligibility as set forth under the Tariff and Customs Code of the Philippines. A certificate
of public convenience or certificate of public convenience and necessity shall then be issued

to the eligible vessels

Foreign vessels who wanted to engage in coastwise trade shall register with MARINA
subject to the requirements set forth in the Implementing Rules and Regulations of this Act;


SECTION 8. Fund beneficiaries. The beneficiaries of the fund shall be Filipino

citizens and shipping companies owned by Filipinos

SECTION 9. Employment of local crew. Foreign shipping companies who will
engage in the coastwise trading shall employ local crew in their vessels

SECTION 10. Separability Clause - If, for any reason, any section or provision of
this Act is declared unconstitutional or invalid, the other sanctions or provisions hereof shall

continue to be in full force and effect.

SECTION 11. Repealing Clause - All laws, decrees, executive orders, proclamations,
rules and regulations or parts thereof inconsistent are hereby repealed

SECTION 12. Effectivity - This act shall take effect fifteen (15) days upon its

publication in two (2) newspapers of general circulation.

Approved.