REPUBLIC ACT NO. 7471 - AN ACT TO
PROMOTE THE DEVELOPMENT OF PHILIPPINE OVERSEAS SHIPPING
Section 1. Title. — This Act shall be known and cited as the
"Philippine Overseas Shipping Development Act."
Sec. 2. Declaration of Policy. — It is hereby
declared the policy of the Government of the Philippines to:
(a) Develop and maintain a Philippine Metropolitan
Marine composed of well-equipped, safe and modern vessels most suited
for, Philippine requirements and conditions, manned by qualified
Filipino officers and crew, and owned and operated under the Philippine
flag by citizens of the Philippines or by associations or corporations
organized under the laws of the Philippines, at least sixty percent
(60%) of the capital of which is owned by citizens of the Philippines;
(b) Assist in the development, recovery and expansion
of Philippine overseas shipping capable of meeting the requirements of
the expanding international trade of the Philippines;
(c) Provide assistance to Philippine Shipping
enterprises and encourage the long range vessel acquisition development
modernization and expansion through private investments without direct
government financial assistance; and
(d) Create a Healthy climate to attract private
enterprises.
Sec. 3. Definition. — As used this Act:
(a) "Philippine overseas shipping" means the
transport of goods and/or passengers by a ship owned and operated under
the Philippine flag by a Philippine shipping enterprise, except when
the ship is operated solely between ports in the Philippines;
(b) "Philippine shipping enterprise" means a citizen
of the Philippines or an association or corporation organized under the
laws of the Philippines, at least sixty percent (60%) of the capital of
which is owned by citizens of the Philippines and engaged exclusively
in Philippine overseas shipping;
(c) "MARINA" means the Maritime Industry Authority;
(d) "Monetary authority" means the Central Bank of
the Philippines and any other agency in charge of foreign exchange
controls; and
(e) "Regulation" means the rules and regulations
promulgated pursuant to Section 10 hereof.
Sec. 4. Foreign Exchange Requirements. — Foreign
exchange requirements of Philippine Shipping enterprises for the
purchase of oceangoing vessels for registration under the Philippine
flag, for repair or improvement of vessels, for importation of engines,
spare parts, accessories, supplies, containers and for other expenses
required for the operation of vessels in foreign ports or in the high
seas, when recommended by the MARINA, shall be made available to the
Philippine shipping enterprise subject to the regulations.
Sec. 5. Acquisition of Oceangoing Vessels. —
Philippine shipping enterprises may likewise acquire oceangoing vessels
for Philippine overseas shipping upon approval by the MARINA, subject
to the guidelines prescribed in the regulations: provided, that:
(a) The funds utilized in the acquisition of the
vessel are financed from sources other than the Philippine banking
system;
(b) No guaranty of the monetary authority or of any
Philippine government or private financial institution is granted or
extended for the purpose;
(c) The vessel serves as sole collateral for the
financing of the vessel and no other asset of the Philippine shipping
enterprise is pledge, mortgaged, or used as security in case of
default;
(d) All foreign exchange requirements for the
servicing of the loan, the operation, maintenance and repair of the
vessel, the purchase of supplies and related equipment shall be
financed solely from earnings derived from the operation of the vessel
and no foreign exchange shall be made available by the monetary
authority and the Philippine banking system for these purposes;
(e) Mortgage documents and/or other financial
agreements shall be filed with the monetary authority and such other
government agencies in charge of such mortgage formalities; and
(f) Any excess foreign exchange earning shall be
inwardly remitted and surrendered to the Philippine banking
system.
Sec. 6. Exemption from Import Duties and Taxes. —
The importation by a Philippine shipping enterprise of oceangoing
vessels for registration under the Philippine flag shall be exempt from
the payment of import duties and taxes. The spare parts for the repair
and/or overhaul of vessels shall likewise be exempt from the payment of
import duties and taxes: provided, that such items are destined or
consigned either to:
(a) A Philippine dry-docking or repair facility,
accredited by the MARINA and registered as a customs-bonded warehouse,
which will undertake the necessary repairs and works on the vessel; and
(b) The vessel in which the items are to be
installed: provided That, if such items are found in locations other
than the two (2) aforementioned ones or in places not authorized by
customs, the person or entity in possession of such items shall be
subject to full duties and taxes, including surcharges and
penalties.
Local manufactures or dealers who sell machinery, equipment, materials
and spare parts to a Philippine shipping enterprise shall be entitled
to tax credits for the full amount of import duties and taxes actually
paid thereon, or on parts or components thereof, subject to the
approval of the Secretary of Finance, upon the recommendation of the
MARINA.
Sec. 7. Exemption from Income Tax. — A Philippine
shipping enterprise shall be exempt from payment of income tax on
income derived from Philippine overseas shipping for a period of ten
(10) years from the date of approval of this Act: provided, that:
(a) The entire net income, after deducting not more
than ten percent (10%) thereof for distribution of profits or
declaration of dividends, which would otherwise be taxable under the
provisions of Title II of the National Internal Revenue Code, is
reinvested for the construction, purchase, or acquisition of vessels
and related equipment and/or in the improvement of modernization of its
vessels and related equipment in accordance with the regulations; and
(b) The cumulative amount so reinvested shall not be
withdrawn for a period of ten (10) years after the expiration of the
period of income tax exemption or until the vessel or related equipment
so acquired have been fully paid, whichever date comes earlier.
Any amount not so invested or withdrawn prior to the expiration of the
period stipulated herein shall subject to the corresponding income tax,
including penalties, surcharges and interests.
Sec. 8. Registration and Deletion of Vessels. —
All vessels owned by Philippine shipping enterprises and availing of
the incentives under this Act shall be registered under the Philippine
flag. Said vessels can only be deleted from the Philippine registry
after the MARINA has determined that:
(a) No other Philippine shipping enterprise is
interested in acquiring the vessel; or
(b) The vessel has to be scrapped.
Sec. 9. Requisition of Vessels. — The President of
the Philippines may, in times of war and other national emergency,
requisition absolutely or temporarily, for any naval or military
purpose, any and all vessels of the Philippine registry. 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.
In case of disagreement, such fair value shall be determined by an
arbitration committee composed of:
(a) One (1) member to be appointed by the MARINA;
(b) One (1) member to be appointed by the owner or
operator of the vessel; and
(c) One (1) member to be appointed by the two (2)
members so appointed.
The decision of the arbitration committee shall be final and binding on
both parties.
SECTION 10. Rules and Regulations. — The MARINA, in
consultation with the monetary authority and the Department of Finance,
shall jointly formulate and promulgate the rules and regulations
necessary for the implementation of this Act taking into consideration
the policies and programs of the Government for the development of the
Philippine overseas shipping.
SECTION 11. Annual Report. — The MARINA, in
coordination with the monetary authority and the Department of Finance,
shall submit an annual report to the President of the Philippines and
the Congress of the Philippines on the implementation of this Act,
which report shall include:
(a) The amount of foreign exchange earned, acquired
and spent by Philippine shipping enterprises;
(b) The amount of income tax and import duties and
taxes for which exemption have been granted;
(c) The additional oceangoing vessels constructed,
purchased or acquired, the improvement made thereon and the additional
related equipment procured; and
(d) Such other information as the MARINA may deem
necessary or the President of the Philippines may require.
SECTION 12. Penal Provisions. — Violation of the
provisions of this Act or the rules and regulations promulgated to
implement the same shall be punished by a fine of not more than Ten
thousand pesos (P10,000) or imprisonment for not more than five (5)
years, or both such fine and imprisonment, at the discretion of the
court.
If the violation is committed by an association or corporation, the
penalties prescribed hereunder shall be imposed on the president the
chief executive officer and the other officials and employees
responsible for the violation.
If the violation is committed by a government official or employee, he
shall, in addition to the penalties prescribed hereunder, be dismissed
from the government service with all administrative penalties accessory
thereto.
SECTION 13. Repealing Clause. — All laws, executive
orders, regulations, or parts thereof, inconsistent with the provisions
of this Act are hereby repealed, amended or modified accordingly.
SECTION 14. Effectivity Clause. — This Act shall take
effect fifteen (15) days after its publication in at least two (2)
newspapers of general circulation.
Approved: May 5,
1992
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