REPUBLIC ACT No. 1407
AN ACT TO BE KNOWN AS "THE PHILIPPINE OVERSEAS SHIPPING ACT OF NINETEEN HUNDRED AND FIFTY-FIVE."
Section 1. Declaration of policy. Shipping commands a transcendental position in the economic development and growth of a nation. One of the urgent needs of the Philippines is a well-balanced Philippine merchant marine (a) sufficient to carry the expanding international trade of the Philippines in time of peace, (b) capable of serving as a naval and military auxiliary in time of war and national emergency, (c) 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 per cent of the capital of which is owned by citizens of the Philippines, and (d) composed of the best equipped, safest and most suitable types of modern vessels, and manned with trained and efficient Filipino officers and crew. To attain this objective it is hereby declared to be the policy of the Government of the Philippines: (a) to encourage and assist vessels of Philippine registry engaged in international trade; (b) to foster the development and encourage the maintenance of such a Philippine merchant marine; (c) to provide financial aid and assistance in long-range ship-building program, and at all times, to promote shipping in such other respects as may be required to attract private capital and enterprise to the shipping industry and create a healthy climate to attract private enterprise to invest in the overseas transportation; and (d) to do whatever may be necessary, from time to time, to attain these objectives.
The Republic of the Philippines, in common with other maritime nations, recognizes the international character of shipping in foreign trade and existing international practices in maritime transportation, and declares it to be part of its national policy to cooperate with other friendly nations in the maintenance and improvement of such practices.
Section 2. In pursuance of the above-declared policy any citizen of the Philippines, or any association or corporation organized under the laws of the Philippines, at least sixty per cent of the capital of which is owned by citizens of the Philippines, engaged or which shall engage exclusively in the overseas shipping business, and in the construction of modern boats for overseas service shall be exempt from the payment of income tax on income derived from his or its shipping business for a period of ten years from the date of approval of this Act, provided that all those who avail themselves of the loan assistance in this Act shall invest all net profits realized during that period in the construction, purchase, or acquisition of additional vessels and equipment and/or in the improvement of its vessels and equipment.
Section 3. There is hereby appropriated out of any funds in the National Treasury not otherwise appropriated or from loans which may be contracted either locally or abroad for the purpose, by the National Development Company through an agency of the Philippine Government, for the fiscal year ending June thirty, nineteen hundred and fifty-six, and for each of the four fiscal years thereafter, the sum of twenty million pesos annually for the construction, purchase, or acquisition of ocean-going vessels for the purpose of resale, lease or charter to persons, associations or corporations referred to in section two of this Act. The fund may also be invested in loans to citizens of the Philippines or to associations or corporations organized under the laws of the Philippines, at least sixty per cent of the capital of which is owned by citizens of the Philippines, for the purpose of financing the construction, purchase, or acquisition and operation by such citizens, associations or corporations of ocean-going vessels.
Section 4. The administration and investment of the annual sums appropriated, pursuant to section three of this Act, shall be vested in the National Development Company, which is hereby authorized and empowered to acquire ocean-going vessels for resale upon an irrevocable contract to purchase such vessels; to make from the said sums the loans referred to above; to make or cause to be made studies and investigations of the person or entity applying for the loan of the shipping service to be established; and to determine the advisability of making said loan.
Section 5. All loans authorized under this Act shall be upon the security of a preferred mortgage on the vessel for the acquisition of which such loans are made, including its equipment, and the certificate or any other form of authorization for the operation of such vessels and the shipping service of the borrower. All said loans shall be self-liquidating within a period not to exceed twenty years and shall bear interest at the rate of not more than four and one-half per cent per annum: Provided, however, That such loans shall not exceed seventy-five per cent of the cost of the vessels: Provided, further, That such vessels shall be fully insured: Provided, finally, That no rights acquired under this Act by the vendee, lessee or charterer of the vessel shall, during the existence of the contractual agreement, be transferred or otherwise encumbered in favor of third parties without the consent of the National Development Company.
Section 6. All moneys representing payments of principal and interest on loans made pursuant to this Act shall be considered as special fund to be used exclusively to carry out the provisions of this Act.
Section 7. The National Development Company is authorized and empowered to bid for and purchase at any foreclosure or other sale, or otherwise to acquire the vessels, including all other equipment, certificate or authorization, for the operation of such vessels, pledged or mortgaged to secure any loan made pursuant to this Act; to pay the purchase price and any costs and expenses incurred in connection therewith from the sums authorized in section three of this Act; to accept title to any vessel, including all its property and equipment, certificate or authorization for its operation, so purchased or acquired in the name of the Government of the Philippines; to lease or charter on bare-boat basis for an amount which, if computed annually, shall not exceed seven per cent of the total cost of such vessel and equipment and for such period as may be deemed necessary or advisable to protect the investment therein; and to sell such vessel and all its property, certificate or authorization for its operation, so acquired, upon such terms and for such consideration as the National Development Company shall determine to be reasonable. The sale of vessels shall be made only to responsible persons who are citizens of the Philippines, or associations or corporations organized under the laws of the Philippines, at least sixty per cent of the capital of which is owned by citizens of the Philippines, who agree to maintain such lines upon such terms of payment and other conditions as may be deemed just and necessary to secure and maintain the service of said lines.
Section 8. For the purpose of making the studies and investigations herein provided for, the National Development Company may request and utilize, with the approval of the proper heads of departments, free of charge, such services of national officers and employees and of officers and employees of any government-owned or controlled corporation as are available, and such services shall be considered to have been rendered to the departments, bureaus or offices in which they are employed.
Section 9. The National Development Company is empowered to issue the necessary rules and regulations to carry out the provisions and purposes of this Act subject to the limitations imposed in this Act. It shall present to the Congress at the close of each fiscal year a full report of its activities under this Act.
Section 10. The President of the Philippines may in time of war and other national emergency, take possession, absolutely or temporarily, for any naval or military purpose, of any and all vessels of Philippine registry. The Government shall pay the person whose vessels has been taken, upon ascertainment by agreement or otherwise, the fair actual value based upon normal conditions at the time of taking the interest of such person in every vessel taken absolutely, or if taken for a limited period, the fair charter value under normal conditions for such period. In case of disagreement, as to such fair value it shall be determined by appraisers, one to be appointed by the National Development Company, one by the person whose vessel has been taken, and a third by the two so appointed. The finding of such appraisers shall be final and binding upon both parties.
Section 11. For the purpose of this Act, an ocean-going vessel of Philippine registry is deemed to be engaged in international trade when it undertakes the carriages of goods and/or passengers from the Philippines to a foreign port, or from a foreign port to either another port or a Philippine port.
Section 12. All dollars required by ocean-going vessels of Philippine registry or by operators of ocean-going vessels of Philippine registry for the purchase of vessels, repair and improvement, engines, spare parts, accessories, supplies and other expenses required for the operation of the vessels in foreign ports or in the high seas, when recommended by the National Economic Council, shall be made available by the Central Bank of the Philippines or by any other agency in charge of dollar controls, subject to the rules and regulations of the Central Bank, free of exchange tax, and that all such engines, spare parts, accessories, supplies and materials needed for the repair or construction of vessels shall be exempt from the special import tax: Provided, That previous certification by the National Shipyards and Steel Corporation shall be issued to the effect that the above-mentioned vessels, repair and improvement, engines, spare parts, accessories and supplies cannot be furnished by the National Shipyards and Steel Corporation. All dollars acquired or spent by the owners of said vessels shall be properly accounted for to the Central Bank of the Philippines or to any other agency in charge of dollar controls.
Section 13. All laws, executive orders and regulations, or parts thereof, which are inconsistent with this Act are hereby repealed.
Section 14. This Act shall take effect upon its approval.
Approved: September 9, 1955
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