RA 9295 - Domestic Shipping Development Act of 2004

(a) "Domestic shipping" shall mean the transport of passenger or cargo, or both, by ships duly registered and licensed under Philippine law to engage in trade and commerce between Philippine ports and within Philippine territorial or internal waters, for hire or compensation, with general or limited clientele, whether permanent occasional or incidental, with or without fixed routes, and done for contractual or commercial purposes;

(b) "Domestic trade" shall mean the sale, barter or exchange of goods, materials or products within the Philippines;

(c) "Domestic Ship Operator" or "Domestic Ship Owner" may be used interchangeably and shall mean a citizen of the Philippines, or a commercial partnership wholly owned by Filipinos, or a corporation at least sixty percent (60%) of the capital of which is owned by Filipinos, which is duly authorized by the Maritime Industry Authority (MARINA) to engage in the business of domestic shipping;

(d) "Shipper" shall mean any person, partnership or corporation who shall procure for itself the services of a domestic ship operator for the carriage of its cargo in the domestic trade upon payment of proper compensation;

(e) "MARINA" shall mean the Maritime Industry Authority;

(f) "Ship" or "Vessel" may be used interchangeably and shall mean any kind, class or type of craft or artificial contrivance capable of floating in water, designed to be used, or capable of being used as a means of water transport in the domestic trade for the carriage of passengers or cargo, or both, utilizing its own motive power or that of another;

(g) "Importation" shall mean the direct purchase, lease or charter of newly constructed or previously owned ships, or the purchase of ship's spare parts from foreign sources or from registered enterprises operating in special economic zones as this terms is defined in Republic Act No. 7916 entitled, "The Special Economic Zone Act of 1995,"

(h) "Spare parts" shall mean the replacement parts or components of vessel, including but not limited to its hull, engines, machineries, equipment, appurtenances, necessaries accessories, article, supplies, materials, steelplates, aluminum plates, other metal plates, communications, equipment, and other parts or components thereof, installed abroad the ships necessary for its safe and efficient navigation and operation;

(i) "Certificate of Public Convenience' shall mean the license on authority issued by MARINA to a domestic ship operator to engage in domestic shipping;

(j) "Cargo handling equipment' shall mean any machinery, gear or equipment used by the ship operator or a duly authorized and licensed port operator to service or handle cargo, on board the vessel at the port or in the terminal or container yard such as, but not limited to cranes, forklifts, top lifts, stackers, tractor heads, containers, pallet boards and the like, including all spare parts, replacement parts, appurtenances accessories, articles, supplies and materials thereof;

(k) "Shipbuilding" shall mean the design, construction, launching and outfitting of all types of ships and watercraft;

(l) "Ship repair" shall mean the overhaul, refurbishment renovation improvement, or alteration of the hull, machineries, equipment, outfits and components of all types of ships;

(m) "Shipyard" shall mean the shipbuilding or repair facilities which have the capability to lift vessels above the waterline in order to effect ship work on vessels, appendages, structure, machinery and equipment; and

(n) "Shipbuilder" or "Ship repairer" shall mean a citizen of the Philippines, or a commercial partnership owned by majority of Filipinos or a corporation incorporated under the laws of the Philippines, the capital of which is owned or controlled in any proportion by Filipinos or by foreign nationals, or by both such Filipinos or foreign nationals, or by corporations whether Filipino or foreign-owned, which is duly authorized by the MARINA to engage in the business of shipbuilding or ship repair or to otherwise operate a shipyard, graving dock or marine repair yard.

(a) Exemption from value-added tax on the importation and local purchase of passenger and/or cargo vessels of one hundred fifty (150) tons and above, including engine and spare parts of said vessels: Provided: That the vessels to be imported shall comply with the age limit requirement at the time of acquisition counted from the date of the vessels, original commissioning, as follows; 1) For passenger and/or cargo vessels, the age limit is fifteen (15) years old, 2) For tankers, the age limit is ten (10) years old, and 3) For high-speed passenger crafts, the age limit is five (5) years old; and

(b) Exemption from value-added tax on the importation of life saving equipment , safety and rescue equipment and communication and navigational safety equipment, steel plates and other metal plates including marine-grade aluminum plates, used for transport operations.

The importation of the articles under Section 4(a) and (b) of the Act shall be granted exemption from value-added tax subject to the following conditions: (1) That said articles are not manufactured domestically in sufficient quantity, of comparable quality and at reasonable prices; (2) That said articles are directly imported by a MARINA-registered domestic shipping operator; (3) That said articles are reasonably-needed and will be used exclusively by the registered domestic shipping operator in its transport operations; (4) That the approval of MARINA was obtained prior to the importation of said articles; and (5) That exemption from value-added tax on the importation of said articles shall be granted to all domestic shipping operators within a period of ten (10) years from the effectivity of this Act.

Any sale, transfer or disposition of articles covered under Section 4 (a) and (b) within ten (10) years from the effectivity of this Act to another registered shipping operator enjoying similar incentive shall require prior approval of MARINA. If the sale, transfer or disposition was made without prior approval of MARINA, both the vendor and the transferee or assignee shall be liable to pay twice the amount of value-added tax exemption given him: Provided, further, That if the sale transfer or disposition was made to nonexempt entity or to a party other than a registered domestic ship operator within ten (10) years from the effectivity of this Act, both the vendor and the transferee or assignee shall be solidarily liable to pay twice the amount of the value-added tax waived: Provided, finally. That the sale, transfer or disposition made after ten (10) years from the effectivity of this Act shall be made by informing MARINA in writing. The purchasers, transferees, or recipients shall be considered the importers thereof, who shall be liable for any internal revenue tax on such importation. The tax due on such importation shall constitute a lien on the article itself, and such lien shall be superior to all charges or liens on the goods, irrespective of the possessor thereof. The Bureau of Internal Revenue (BIR) shall be furnished with notice of actions taken by the MARINA.

(c) Net operating loss carry over. A net operating loss in any taxable year immediately preceding the current taxable year, which had not been previously offset as a deduction from gross income shall be carried over for the next three (3) consecutive taxable years immediately following the year of such loss subject to the pertinent provisions of the National Internal Revenue Code of 1997, as amended.

(d) Accelerated depreciation. Fixed assets my be depreciated as follows:

(1) Register vessels;

(2) Issue certificates of public convenience or any extensions or amendments thereto, authorizing the operation of all kinds. Classes and types of vessels in domestic shipping: Provided, That no such certificate shall be valid for a period of more than twenty-five (25) years;

(3) Modify, suspend or revoke at any time upon notice and hearing, any certificate, license or accreditation it may have issued to any domestic ship operator;

(4) Establish and prescribe routes, zones or areas of operations of domestic ship operators;

(5) Require any domestic ship operator to provide shipping services to any coastal area, island or region in the country where such services are necessary for the development of the area, to meet emergency sealift requirements, or when public interest so requires;

(6) Set safety standards for vessels in accordance with applicable conventions and regulations;

(7) Require all domestic ship operators to comply with operational and safety standards for vessels set by applicable conventions and regulations, maintain its vessels in safe and serviceable conditions, meet the standards of safety of life at sea and safe manning requirements, and furnish safe, adequate, efficient, reliable and proper service at all times;

(8) Inspect all vessels to ensure and enforce compliance with safety standards and other regulations;

(9) Ensure that all domestic ship operators shall have the financial capacity to provide and sustain safe, reliable, efficient and economic passenger or cargo service, or both;

(10) Determine the impact which any new service shall have to the locality it will serve;

(11) Adopt and enforce such rules and regulations which will ensure compliance by every domestic ship operator with required safety standards and other rules and regulations on vessel safety;

(12) Adopt such rules and regulations which ensure the reasonable stability of passengers and freight rates and, if necessary, to intervene in order to protect public interest;

(13) Hear and adjudicate any complaint made in writing involving any violation of this law or the rules and regulations of the Authority;

(14) Impose such fines and penalties on, including the revocations of licenses of any domestic ship operator who shall fail to maintain its vessels in safe and serviceable condition, or who shall violate or fail to comply with safety regulations;

(15) Investigate any complaint made in writing against any domestic ship operator, or any shipper, or any group of shippers regarding any matter involving violations of the provisions of this Act;

(16) Upon notice and hearing, impose such fines, suspend or revoke certificates of public convenience or other license issued, or otherwise penalize any ship operator, shipper or group of shippers found violating the provisions of this Act; and

(17) Issue such rules and regulations necessary to implement the provisions of this Act: Provided, That such rules and regulations cannot change or in any way amend or be contrary to the intent and purposes of this Act.

(1) Adequate insurance coverage for each passenger in an amount to be computer in accordance with existing laws, rules and regulations, and the total amount of such coverage shall be equivalent to the total number of passenger accommodations being offered by the vessel;

(2) Adequate insurance coverage for cargo in an amount to be computed in accordance with existing laws, rules and regulations, and the total amount of such coverage shall be equivalent to the total cargo capacity being offered by the vessel; and

(3) If a domestic ship operator should offer both passenger and cargo service, then the total insurance coverage shall be in the total sum equivalent to that stipulated in paragraphs (1) and (2) of this section. Provided, That if a domestic ship operator should operate more than one (1) vessels, the amount of insurance coverage required under this section, for purposes of providing financial capacity, shall be the amount equivalent to the total number of passenger accommodations, or total cargo capacity, or both, of the largest operating vessel which the domestic ship operator may have: Provided, further, That the total insurance coverage which may be required of any domestic ship operator shall not exceed the value of such vessel: Provided, finally, that adequate insurance coverage shall be obtained from any duly licensed insurance company or international protection and indemnity association.

(1) Operate without a valid certificate of public convenience, accreditation or other form of authority required by this Act;

(2) Refuse to accept or carry any passenger or cargo without just cause;

(3) Fail to maintain its vessels in safe and serviceable condition, or violate safety rules and regulations;

(4) Fail to obtain or maintain adequate insurance coverage;

(5) Fail to meet or maintain safe manning requirements; and

(6) Such other acts which the MARINA shall determine, after due notice and hearing, to be detrimental or prejudice to the safety, stability and integrity of domestic shipping.

(1) Suspend or revoke any certificate of public convenience, license, permit, accreditation, or other form of authority issued to any domestic ship operator who shall violate any provision of this Act or any rules and regulations issued pursuant thereto, or any condition impose on such certificate of public convenience, license, permit or accreditation;

(2) Impose a fine on a domestic ship operator who shall operate without a valid certificate of public convenience, license, permit, accreditation or other form of authority;

(3) Impose a fine on a domestic ship operator in an amount to be determined by the MARINA for refusing to accept, or to carry passengers or cargo, without just cause, or for engaging in any prejudicial, discriminatory or disadvantageous act towards any class of passengers or shippers;

(4) Impose a fine on any domestic ship operator in an amount to be determined by the MARINA, or suspend or revoke the certificate of public convenience of such domestic ship operator, or both, who shall fail to meet the standards of such safety or who refuses to comply with or violates safety regulations imposed by the MARINA or fails to maintain its vessels in safe and serviceable condition;

(5) Impose a fine on any domestic ship operator in an amount to be determined by the MARINA, or impose such other penalty, including the revocation of any certificate or license, who fails to procure or renew required insurance policies;

(6) Impose a fine on any domestic ship operator in an amount to be determined by the MARINA or impose such other penalty, including the revocation of any certificate or license who fails to meet or maintain safe manning requirements; and

(7) Impose such other fines and penalties the MARINA may deem necessary and appropriate in order to enforce the provision of this Act.

(a) Exemption from value-added tax on the importation of capital equipment, machinery, spare parts, life-savings ang navigational equipment, steel plates and other metal plates including marine -grade aluminum plates to be used in the construction, repair, renovation or alteration or any merchant marine vessel operated or to be operated in the domestic trade.

The importation of the above articles shall be granted exemption from value-added tax subject to the following conditions: (1) That said articles are not manufactured domestically in sufficient quantity, of comparable quality and at reasonable prices; (2) That said articles are directly imported by a MARINA-registered shipbuilders and ship repairer; (3) That said articles are reasonably needed and will be used exclusively by the registered shipbuilders and ship repairer; (4) That the approval of MARINA was obtained prior to the importation of said articles ; and (5) That shipbuilders and ship repairers may avail of the exemption from value-added tax provided herein within a period of ten (10) years from the approval of this Act.

Any sale, transfer or disposition of articles under Section 19 (a) within ten (10) years from the effectivity of this Act to another registered shipbuilder or repairer enjoying similar incentive shall require prior approval of MARINA. If the sale, transfer or disposition was made without prior approval of MARINA, both the vendor and the transferee or assignee shall be liable to pay twice the amount of the value-added tax exempt given him: Provided, further, That if the sale, tranfer or disposition was made to a nonexempt entity or to a party other than that a registered shipbuilder or repairer within ten (10) years from the effectivity of this Act, both the vendor and the transferee or assignee shall be solidarily liable to pay twice the amount of the value-added tax waived; Provided, finally, That the sale, transfer or disposition made after ten (10) years from the effectivity of this Act shall be made by Informing MARINA in writing. The purchaser, transferees or recipients shall be considered the Importers thereof, who shall be liable for any internal revenue tax on such importation. The tax due on such importation shall constitute a lien on the foods superior to all changes or liens on the goods, irrespective of the possessor thereof. The BIR shall be furnished with notice of actions taken by the MARINA.

(b) Net operating loss carry-over. A net operating loss in any taxable year immediately preceding the current taxable year, which had not been previously offset as a deduction from gross income shall be carried over as a deduction from gross income for the next three (3) consecutive taxable years immediately following the year of such loss subject to the pertinent provisions of the National Internal Revenue Code of 1997, as amemded;

(c) Accelerated depreciation. Fixed assets may be depreciated as follow:

Approved,

Approved: May 03, 2004