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R.A.9295

TodayisSaturday,March21,2015

RepublicofthePhilippines
CongressofthePhilippines
MetroManila
TwelfthCongress
ThirdRegularSession

BegunandheldinMetroManila,onMonday,thetwentyeightdayofJuly,twothousandthree.
RepublicActNo.9295May03,2004
ANACTPROMOTINGTHEDEVELOPMENTOFPHILIPPINEDOMESTICSHIPPING,SHIPBUILDING,SHIP
REPAIRANDSHIPBREAKING,ORDAININGREFORMSINGOVERNMENTPOLICIESTOWARDSSHIPPINGIN
THEPHILIPPINESANDFOROTHERPURPOSES.
BeitenactedbytheSenateandHouseofRepresentativesofthePhilippinesinCongressassembled:
CHAPTERI
GENERALPROVISIONS
SECTION1.ShortTitle.ThisActshallbeknownasthe"DomesticShippingDevelopmentActof2004."
SEC.2.DeclarationofPolicy.TheStaterecognizethatshippingisanecessaryinfrastructure,whichisvitalto
theeconomicdevelopmentofourcountry.
ThePhilippinesneedsastrongandcompetitivedomesticmerchantfleetownedandcontrolledbyFilipinosorby
corporations at least sixty percent (60%) of the capital of which is owned by Filipinos and manned by qualified
Filipino officers and crew which shall: (a) bridge our islands by ensuring safe, reliable, efficient, adequate and
economicpassengerandcargoservices(b)encouragethedispersalofindustryandtheeconomicdevelopment
of our regional communities by ensuring the availability of regular, reliable and efficient shipping services (c)
ensurethegrowthofexportsbyprovidingnecessary,competitiveandeconomicaldomesticsealinkage(d)serve
as a naval and military auxiliary in times of war and other national emergencies and (e) function as an
employmentsupportbaseforourFilipinoseafarers.
To attain these objectives, it is hereby declared to the policy of the State to (a) promote Filipino ownership of
vesselsoperatedunderthePhilippineflag(b)attractprivatecapitaltoinvestintheshippingindustrybycreatinga
healthyandcompetitiveinvestmentandoperatingenvironment(c)providenecessaryassistanceandincentives
for the continued growth of the Philippine domestic merchant marine fleet (d) encourage the improvement and
upgrading of the existing domestic merchant marine fleet and Filipino crew to meet international standards (e)
ensure the continued viability of domestic shipping operations and (f) encourage the development of a viable
shipbuilding and ship repair industry to support the expansion and modernization of the Philippine domestic
merchantmarinefleetanditsstrictadherencetosafetystandardswhichwillensuretheseaworthinessofallsea
bornestructures.
SEC.3.DefinitionofTerms.AsusedinandforpurposesofthisAct,thefollowingterms,whetherinsingularor
pluralareherebydefinedasfollows:
(a)"Domesticshipping"shallmeanthetransportofpassengerorcargo,orboth,byshipsdulyregistered
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
citizenofthePhilippines,oracommercialpartnershipwhollyownedbyFilipinos,oracorporationatleast
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sixtypercent(60%)ofthecapitalofwhichisownedbyFilipinos,whichisdulyauthorizedbytheMaritime
IndustryAuthority(MARINA)toengageinthebusinessofdomesticshipping
(d)"Shipper"shallmeananyperson,partnershiporcorporationwhoshallprocureforitselftheservicesofa
domestic ship operator for the carriage of its cargo in the domestic trade upon payment of proper
compensation
(e)"MARINA"shallmeantheMaritimeIndustryAuthority
(f) "Ship" or "Vessel" may be used interchangeably and shall mean any kind, class or type of craft or
artificialcontrivancecapableoffloatinginwater,designedtobeused,orcapableofbeingusedasameans
ofwatertransportinthedomestictradeforthecarriageofpassengersorcargo,orboth,utilizingitsown
motivepowerorthatofanother
(g)"Importation"shallmeanthedirectpurchase,leaseorcharterofnewlyconstructedorpreviouslyowned
ships,orthepurchaseofship'ssparepartsfromforeignsourcesorfromregisteredenterprisesoperatingin
specialeconomiczonesasthistermsisdefinedinRepublicActNo.7916entitled,"TheSpecialEconomic
ZoneActof1995,"
(h)"Spareparts"shallmeanthereplacementpartsorcomponentsofvessel,includingbutnotlimitedtoits
hull, engines, machineries, equipment, appurtenances, necessaries accessories, article, supplies,
materials,steelplates,aluminumplates,othermetalplates,communications,equipment,andotherpartsor
components thereof, installed abroad the ships necessary for its safe and efficient navigation and
operation
(i)"CertificateofPublicConvenience'shallmeanthelicenseonauthorityissuedbyMARINAtoadomestic
shipoperatortoengageindomesticshipping
(j)"Cargohandlingequipment'shallmeananymachinery,gearorequipmentusedbytheshipoperatoror
adulyauthorizedandlicensedportoperatortoserviceorhandlecargo,onboardthevesselattheportor
intheterminalorcontaineryardsuchas,butnotlimitedtocranes,forklifts,toplifts,stackers,tractorheads,
containers, pallet boards and the like, including all spare parts, replacement parts, appurtenances
accessories,articles,suppliesandmaterialsthereof
(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,outfitsandcomponentsofalltypesofships
(m)"Shipyard"shallmeantheshipbuildingorrepairfacilitieswhichhavethecapabilitytoliftvesselsabove
thewaterlineinordertoeffectshipworkonvessels,appendages,structure,machineryandequipmentand
(n) "Shipbuilder" or "Ship repairer" shall mean a citizen of the Philippines, or a commercial partnership
ownedbymajorityofFilipinosoracorporationincorporatedunderthelawsofthePhilippines,thecapitalof
whichisownedorcontrolledinanyproportionbyFilipinosorbyforeignnationals,orbybothsuchFilipinos
orforeignnationals,orbycorporationswhetherFilipinoorforeignowned,whichisdulyauthorizedbythe
MARINAtoengageinthebusinessofshipbuildingorshiprepairortootherwiseoperateashipyard,graving
dockormarinerepairyard.
CHAPTERII
INVESTMENTINCENTIVES
SEC. 4. Investment Incentives. To insure the continued viability of domestic shipping, and to encourage
investmentsinthedomesticshippingindustry,thefollowingincentivesshallbegrantedtoqualifieddomesticship
operators:
(a) Exemption from valueadded 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/orcargovessels,theagelimitisfifteen(15)yearsold,2)Fortankers,theagelimitisten(10)years
old,and3)Forhighspeedpassengercrafts,theagelimitisfive(5)yearsoldand
(b) Exemption from valueadded tax on the importation of life saving equipment , safety and rescue
equipment and communication and navigational safety equipment, steel plates and other metal plates
includingmarinegradealuminumplates,usedfortransportoperations.
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TheimportationofthearticlesunderSection4(a)and(b)oftheActshallbegrantedexemptionfromvalue
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
importedbyaMARINAregistereddomesticshippingoperator(3)Thatsaidarticlesarereasonablyneeded
and will be used exclusively by the registered domestic shipping operator in its transport operations (4)
ThattheapprovalofMARINAwasobtainedpriortotheimportationofsaidarticlesand(5)Thatexemption
fromvalueaddedtaxontheimportationofsaidarticlesshallbegrantedtoalldomesticshippingoperators
withinaperiodoften(10)yearsfromtheeffectivityofthisAct.
Anysale,transferordispositionofarticlescoveredunderSection4(a)and(b)withinten(10)yearsfrom
theeffectivityofthisActtoanotherregisteredshippingoperatorenjoyingsimilarincentiveshallrequireprior
approvalofMARINA.Ifthesale,transferordispositionwasmadewithoutpriorapprovalofMARINA,both
the vendor and the transferee or assignee shall be liable to pay twice the amount of valueadded tax
exemption given him: Provided, further, That if the sale transfer or disposition was made to nonexempt
entityortoapartyotherthanaregistereddomesticshipoperatorwithinten(10)yearsfromtheeffectivity
ofthisAct,boththevendorandthetransfereeorassigneeshallbesolidarilyliabletopaytwicetheamount
ofthevalueaddedtaxwaived:Provided,finally.Thatthesale,transferordispositionmadeafterten(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
revenuetaxonsuchimportation.Thetaxdueonsuchimportationshallconstitutealienonthearticleitself,
andsuchlienshallbesuperiortoallchargesorliensonthegoods,irrespectiveofthepossessorthereof.
TheBureauofInternalRevenue(BIR)shallbefurnishedwithnoticeofactionstakenbytheMARINA.
(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
subjecttothepertinentprovisionsoftheNationalInternalRevenueCodeof1997,asamended.
(d)Accelerateddepreciation.Fixedassetsmybedepreciatedasfollows:
(i)Totheextentofnotmorethantwiceasfastasthenormalrateofdepreciationordepreciatedat
normalrateofdepreciationiftheexpectedlifeisten(100yearsorlessor
(ii)Depreciationoveranynumberofyearsbetweenfive(5)yearsandtheexpectedlifeifthelatteris
morethanten(10)years,andthedepreciationthereonallowedasdeductionfromtaxableIncome:
Provided, That the domestic shipping operator notifies the BIR at the beginning of the depreciation
periodwhichdepreciationrateallowedbythissectionwillbeused.
CHAPTERIII
DEREGULATIONOFTHEDOMESTICSHIPPINGINDUSTRYAUTHORITY
OFTHEMARITIMEINDUSTRYAUTHORITY
SEC.5.AuthoritytoOperate.Nofranchise,certificateoranyotherformauthorizationforthecarriageofcargo
orpassenger,orbothinthedomestictrade,shallbegrantedexceptofdomesticshipownersoroperators.
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
territorialwaters,exceptuponthegrantSpecialPermitbytheMARINAwhennodomesticvesselsisavailableor
suitabletoprovidetheneededshippingserviceandpublicinterestwarrantsthesame.
SEC.7.IssuanceofAuthoritytooperate.theMARINAshallhavethepowerandauthoritytoissuecertificates
ofpublicconveniencetoqualifieddomesticshipoperators,takingintoconsiderationtheeconomicandbeneficial
effectwhichtheproposedservicesshallhavetotheportprovinceorregionwhichitproposestoserve,andthe
financial capacity of the domestic ship operator to provide and sustain safe, reliable, adequate, efficient and
economicserviceinaccordancewiththestandardssetbythegovernmentregulation.
Every domestic ship operator shall state in its application the route it proposes to serve, and the service it
proposestooffer.Domesticshipoperatorswhodonotintendtooperateinafixedrouteshallneverthelessstate
initsapplicationtheserviceitproposestooffer.
SEC.8.DeregulationoftheDomesticShippingIndustry.Inordertoencourageinvestmentsinthedomestic
shipping industry by existing domestic ship operators and attract new investment from new operators and
investors, domestic ship operators are hereby authorized to establish their own domestic shipping rates:
Provided,Thateffectivecompetitionisfosteredandpublicinterestisserved.
The MARINA shall monitor all shipping operations and exercise regulatory intervention where it is established
afterdueprocessthatpublicinterestneedstobeprotectedandsafeguarded.
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SEC.9.SafetyStandards. All vessels operate by domestic ship operators shall at all times be in seaworthy
conditionproperlyequippedwithadequatelifesaving,communication,safetyandotherequipmentoperatedand
maintainedinaccordancewiththestandardssetbyMARINA,andmannedbydulylicensedandcompetentvessel
crew.
The MARINA shall have the power to inspect vessels and all equipment on board to ensure compliance with
safetystandards.
SEC.10.JurisdictionPowerandDutiesofMARINA.TheMARINAshallhavethepowerandauthorityto:
(1)Registervessels
(2) Issue certificates of public convenience or any extensions or amendments thereto, authorizing the
operationofallkinds.Classesandtypesofvesselsindomesticshipping:Provided,Thatnosuchcertificate
shallbevalidforaperiodofmorethantwentyfive(25)years
(3)Modify,suspendorrevokeatanytimeuponnoticeandhearing,anycertificate,licenseoraccreditation
itmayhaveissuedtoanydomesticshipoperator
(4)Establishandprescriberoutes,zonesorareasofoperationsofdomesticshipoperators
(5)Requireanydomesticshipoperatortoprovideshippingservicestoanycoastalarea,islandorregionin
thecountrywheresuchservicesarenecessaryforthedevelopmentofthearea,tomeetemergencysealift
requirements,orwhenpublicinterestsorequires
(6)Setsafetystandardsforvesselsinaccordancewithapplicableconventionsandregulations
(7)Requirealldomesticshipoperatorstocomplywithoperationalandsafetystandardsforvesselssetby
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,
reliableandproperserviceatalltimes
(8)Inspectallvesselstoensureandenforcecompliancewithsafetystandardsandotherregulations
(9) Ensure that all domestic ship operators shall have the financial capacity to provide and sustain safe,
reliable,efficientandeconomicpassengerorcargoservice,orboth
(10)Determinetheimpactwhichanynewserviceshallhavetothelocalityitwillserve
(11) Adopt and enforce such rules and regulations which will ensure compliance by every domestic ship
operatorwithrequiredsafetystandardsandotherrulesandregulationsonvesselsafety
(12)Adoptsuchrulesandregulationswhichensurethereasonablestabilityofpassengersandfreightrates
and,ifnecessary,tointerveneinordertoprotectpublicinterest
(13)Hearandadjudicateanycomplaintmadeinwritinginvolvinganyviolationofthislawortherulesand
regulationsoftheAuthority
(14) Impose such fines and penalties on, including the revocations of licenses of any domestic ship
operatorwhoshallfailtomaintainitsvesselsinsafeandserviceablecondition,orwhoshallviolateorfailto
complywithsafetyregulations
(15)Investigateanycomplaintmadeinwritingagainstanydomesticshipoperator,oranyshipper,orany
groupofshippersregardinganymatterinvolvingviolationsoftheprovisionsofthisAct
(16)Uponnoticeandhearing,imposesuchfines,suspendorrevokecertificatesofpublicconvenienceor
otherlicenseissued,orotherwisepenalizeanyshipoperator,shipperorgroupofshippersfoundviolating
theprovisionsofthisActand
(17) Issue such rules and regulations necessary to implement the provisions of this Act: Provided, That
suchrulesandregulationscannotchangeorinanywayamendorbecontrarytotheintentandpurposesof
thisAct.
CHAPTERIV
RATES
SEC.11.Rates. Every domestic ship operator shall have the right to fix its own passenger pr cargo rates, or
both.
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SEC.12.GovernmentCargo.Everydomesticshipoperatorshallhavetheobligationtocarrymailonmutually
agreed terms and conditions and preferential, negotiated conditions shall be given for the carriage of other
governmentcargo.
SEC.13.MonopolizedRoutes. The MARINA shall have the authority to draw up such rules and regulations
necessaryforserviceinmonopolizedroutestodeterminethefairnessofpassengerandcargoratesneededto
sustaintheservicetakingintoconsiderationtheeconomicandbeneficialeffectwhichtheserviceshallhavetothe
port,province,islandorregionitproposestoserve,thevolumeofpassengersandcargoavailable,theleveland
qualityofserviceofferedbytheshipoperator,andtheavailableportfacilitiesandterminalhandlingservices.
CHAPTERV
COMPULSORYINSURANCECOVERAGE
SEC.14.CompulsoryInsuranceCoverageforPassengerandCargo.Tomeetitsfinancialresponsibilityfor
anyliabilitywhichadomesticshipoperatormayincurforanybreachofthecontractofcarriage,everydomestic
shipoperatorshallberequiredtosubmitannuallythefollowing
(1) Adequate insurance coverage for each passenger in an amount to be computer in accordance with
existinglaws,rulesandregulations,andthetotalamountofsuchcoverageshallbeequivalenttothetotal
numberofpassengeraccommodationsbeingofferedbythevessel
(2)Adequateinsurancecoverageforcargoinanamounttobecomputedinaccordancewithexistinglaws,
rulesandregulations,andthetotalamountofsuchcoverageshallbeequivalenttothetotalcargocapacity
beingofferedbythevesseland
(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
amountequivalenttothetotalnumberofpassengeraccommodations,ortotalcargocapacity,orboth,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
suchvessel:Provided,finally,thatadequateinsurancecoverageshallbeobtainedfromanydulylicensed
insurancecompanyorinternationalprotectionandindemnityassociation.
SEC.15.OtherInsuranceCoverage.theMARINAshallhavethepowertorequireeveryshipoperatortoobtain
suchothercompulsoryinsurancecoveragenecessarytoadequatelycoverclaimsfordamages.
CHAPTERVI
PROHIBITEDACTANDPRACTICES
SEC.16.ProhibitedActsandPracticesofDomesticShipOperators.theMARINAshallhavethepowerto
imposesuchfinesandpenaltiesagainsteverydomesticshipoperatorwhoshall:
(1) Operate without a valid certificate of public convenience, accreditation or other form of authority
requiredbythisAct
(2)Refusetoacceptorcarryanypassengerorcargowithoutjustcause
(3)Failtomaintainitsvesselsinsafeandserviceablecondition,orviolatesafetyrulesandregulations
(4)Failtoobtainormaintainadequateinsurancecoverage
(5)Failtomeetormaintainsafemanningrequirementsand
(6)SuchotheractswhichtheMARINAshalldetermine,afterduenoticeandhearing,tobedetrimentalor
prejudicetothesafety,stabilityandintegrityofdomesticshipping.
CHAPTERVII
FEE,FINESANDPENALTIES
SEC.17.Fees. The MARINA shall have the power to impose, fix, collect and receive, in accordance with the
schedules approved by its Board, such fees necessary for the licensing, supervision, regulation, inspection,
approval and accreditation of domestic ship operators and the promotion and development of the country's
maritimeindustry.TheMARINAshallhavethepowertoestablishandmanageatrustfundforthispurpose.
FeesprescribedbytheMARINAunderthissectionshallbeimposedandcollectedinordertorecoverthecostfor
renderingtheserviceandshallnotbeusedinordertoimposeapenaltyonthedomesticshipoperator.Excessive
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fees,multiplefeesandduplicativefeesshallatalltimesbeavoided.
ThesupervisionfeeprovidedinSection40(e)ofCommonwealthActNo.146insofarasthesameappliestothe
operation,management,controlandregulationofvessels,steamboats,steamshiplines,ferries,watercraftand
thelike,isherebyrepealed.
SEC.18.FinesandPenalties.TheMARINA,uponnoticeandhearingandadeterminationoftheexistenceof
any breach or violation of the provisions of this Act or any rules and regulations issued pursuant thereto, shall
havethepowerandauthorityto:
(1)Suspendorrevokeanycertificateofpublicconvenience,license,permit,accreditation,orotherformof
authorityissuedtoanydomesticshipoperatorwhoshallviolateanyprovisionofthisActoranyrulesand
regulations issued pursuant thereto, or any condition impose on such certificate of public convenience,
license,permitoraccreditation
(2) Impose a fine on a domestic ship operator who shall operate without a valid certificate of public
convenience,license,permit,accreditationorotherformofauthority
(3)ImposeafineonadomesticshipoperatorinanamounttobedeterminedbytheMARINAforrefusing
to accept, or to carry passengers or cargo, without just cause, or for engaging in any prejudicial,
discriminatoryordisadvantageousacttowardsanyclassofpassengersorshippers
(4) Impose a fine on any domestic ship operator in an amount to be determined by the MARINA, or
suspendorrevokethecertificateofpublicconvenienceofsuchdomesticshipoperator,orboth,whoshall
fail to meet the standards of such safety or who refuses to comply with or violates safety regulations
imposedbytheMARINAorfailstomaintainitsvesselsinsafeandserviceablecondition
(5)ImposeafineonanydomesticshipoperatorinanamounttobedeterminedbytheMARINA,orimpose
such other penalty, including the revocation of any certificate or license, who fails to procure or renew
requiredinsurancepolicies
(6)ImposeafineonanydomesticshipoperatorinanamounttobedeterminedbytheMARINAorimpose
suchotherpenalty,includingtherevocationofanycertificateorlicensewhofailstomeetormaintainsafe
manningrequirementsand
(7) Impose such other fines and penalties the MARINA may deem necessary and appropriate in order to
enforcetheprovisionofthisAct.
CHAPTERVIII
SHIPBUILDING
Sec.19.ShipbuildingandShipRepairInvestmentIncentives.Toencourageinvestmentsandtoandensure
thedevelopmentofaviableshipbuildingandshiprepairindustry,thefollowingincentivesareherebygranted:
(a)Exemptionfromvalueaddedtaxontheimportationofcapitalequipment,machinery,spareparts,life
savingsangnavigationalequipment,steelplatesandothermetalplatesincludingmarinegradealuminum
plates to be used in the construction, repair, renovation or alteration or any merchant marine vessel
operatedortobeoperatedinthedomestictrade.
The importation of the above articles shall be granted exemption from valueadded 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
exclusivelybytheregisteredshipbuildersandshiprepairer(4)ThattheapprovalofMARINAwasobtained
prior to the importation of said articles and (5) That shipbuilders and ship repairers may avail of the
exemptionfromvalueaddedtaxprovidedhereinwithinaperiodoften(10)yearsfromtheapprovalofthis
Act.
Anysale,transferordispositionofarticlesunderSection19(a)withinten(10)yearsfromtheeffectivityof
thisActtoanotherregisteredshipbuilderorrepairerenjoyingsimilarincentiveshallrequirepriorapprovalof
MARINA.Ifthesale,transferordispositionwasmadewithoutpriorapprovalofMARINA,boththevendor
andthetransfereeorassigneeshallbeliabletopaytwicetheamountofthevalueaddedtaxexemptgiven
him:Provided,further,Thatifthesale,tranferordispositionwasmadetoanonexemptentityortoaparty
otherthanthataregisteredshipbuilderorrepairerwithinten(10)yearsfromtheeffectivityofthisAct,both
the vendor and the transferee or assignee shall be solidarily liable to pay twice the amount of the value
addedtaxwaivedProvided,finally,Thatthesale,transferordispositionmadeafterten(10)yearsfromthe
effectivity of this Act shall be made by Informing MARINA in writing. The purchaser, transferees or
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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
changesorliensonthegoods,irrespectiveofthepossessorthereof.TheBIRshallbefurnishedwithnotice
ofactionstakenbytheMARINA.
(b) Net operating loss carryover. 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
carriedoverasadeductionfromgrossincomeforthenextthree(3)consecutivetaxableyearsimmediately
followingtheyearofsuchlosssubjecttothepertinentprovisionsoftheNationalInternalRevenueCodeof
1997,asamemded
(c)Accelerateddepreciation.Fixedassetsmaybedepreciatedasfollow:
(i)Totheextentofnotmorethantwiceasfastasthenormalrateofdepreciationordepreciatedat
normalrateofdepreciationiftheexpectedlifeisten(10)yearsorlessor
(ii)Depreciatedoveranynumberofyearsbetweenfive(5)yearsandtheexpectedlifeifthelatteris
morethanten(10)years,andthedepreciationthereonallowedasdeductionfromtaxableincome.
Provided, That the registered shipbuilder and ship repairer notifies the BIR at the beginning of the
depreciationperiodwhichdepreciationrateallowedbythissectionwillbeused.
SEC.20.RestrictionsonVesselImportation.Ten(10)yearsfromtheeffectivedateofthisActandeveryyear
thereafter,theMARINAshallevaluateanddeterminetheprogressivecapabilityofMARINAregisteredshipyards
tobuildandconstructnewvesselsforthedomestictrade.
Inthefirstyearofevaluation,theMARINAshalldeterminethecapabilityofMARINAregisteredshipyardstobuild
newvesselsbelow500GRT.If,uponevaluation,thecapabilityofMARINAregisteredshipyardstobuildclassed
vessels below 500 GRT in quantities sufficient to meet domestic demand is proven, then all domestic ship
operatorsshallbediscouragedfromimportingneworpreviouslyownedvesselsthatarelessthan500GRTfor
the domestic trade and vessels built in MARINAregistered shipyards shall be given priority for entry in the
PhilippinesRegistryandallowedtooperateinthedomestictrade.
The MARINA shall undertake a yearly evaluation of the progressive capabilities of all MARINAregistered
shipyards to build larger classed vessels for the domestic trade in quantities sufficient to meet the demand of
domesticshipownersandshallcorrespondinglyadjustthesizeofvesselswhichmaybesourcedfromMARINA
registeredshipyards.
CHAPTERIX
TRANSITORYPROVISIONS
SEC.21.PeriodofTransition.UpontheapprovalofthisActexistinglineroperatorsshallcontinuetooperatein
theirroute.
SEC. 22. Classification of Vessels in the Domestic Trade. A vessels, whether newly built or previously
owned, which are acquired or after the effectivity of this Act shall be classed by a government recognized
classificationsocietyonthedateofacquisitionpriortotheoperationinthedomestictrade.
SEC.23.Retirement of Old Vessels. Immediately upon the approved of this Act, the MARINA shall prepare
andimplementamandatoryvesselretirementprogramforallunclassedvesselsthatfailtomeettheclassification
standardsofagovernmentrecognizedclassificationsociety.
All vessels which have attained the maximum vessel age stipulate by MARINA's mandatory vessel retirement
programandwhichdonotcarryaclasscertificateissuedbyagovernmentrecognizedclassificationsocietyshall
notbeallowedtooperateinthedomestictradeandshallbeautomaticallydelistedfromthePhilippineRegistry.
CHAPTERX
FINALPROVISIONS
SEC.24.Temporary TakeOver of Operations. In times of national emergency, when the public interest so
requires,theStatemayduringemergenciesandunderreasonabletermsprescribedbyit,temporarytakeoveror
directtheoperationsoranyvesselengagedindomestictradeandcommerce,orprescribeitsratesorroutesof
operation. Immediately upon the cessation of the emergency, the State shall immediately reinstate to the
domestic ship operation of its vessel under the same terms and conditions prior to the occurrence of the
emergency.
SEC.25.SeparabilityClause.If,foranyreason,anysection,subsection,sentence,clauseortermofthisActis
heldtobeillegalinvalidorunconstitutional,suchpartsnotaffectedbysuchdeclarationshallremaininfullforce
andeffect.
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SEC.26.RepealingClause.TheprovisionsofCommonwealthActNo.146,insofarasthesameappliestothe
operation,managementcontrolandregulationofvessels,steamboats,steamships,lines,ferries,watercraftand
thelike,aswellastheprovisionsofPresidentialDecreeNo.474,ExecutiveOrderNos.125and125A,andsuch
other laws, presidential decrees, executive orders, issuances, rules and regulations or parts thereof, which are
inconsistentwiththeprovisionsofthisActareherebyrepealed,amendedormodifiedaccordingly.
SEC.27.Effectivity.ThisActshalltakeeffectafterfifteen(15)daysfollowingitspublicationinatleasttwo(2)
newspapersofgeneralcirculation.

Approved,
FRANKLINDRILON
PresidentoftheSenate

JOSEDEVENECIAJR.
SpeakeroftheHouseof
Representatives

This Act which is a consolidation of Senate Bill No. 2731 and House Bill No. 5563 was finally passed by the
SenateandHouseofRepresentativesonFebruary6,2004andFebruary7,2004,respectively.
OSCARG.YABES
SecretaryofSenate

ROBERTOP.NAZARENO
SecretaryGeneral
HouseofRepresenatives

Approved:May03,2004
GLORIAMACAPAGALARROYO
PresidentofthePhilippines
TheLawphilProjectArellanoLawFoundation

http://www.lawphil.net/statutes/repacts/ra2004/ra_9295_2004.html

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