AN ACT AMENDING REPUBLIC ACT NUMBERED ONE THOUSAND FOUR HUNDRED SEVEN, AS AMENDED, TO PRESCRIBE THE RULES FOR FINANCING THE ACQUISITION OR CONSTRUCTION OF VESSELS TO BE USED FOR OVERSEAS SHIPPING, TO ALLOW THE CREATION OF A MARITIME LIEN THEREON, AND FOR OTHER PURPOSES.
Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled:
"Section 11 1/2. a. Any citizen of the Philippines, or any association or corporation organized under the laws of the Philippines, at least seventy-five 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, may, for the purpose of financing the construction, acquisition or purchase of vessels for use in overseas shipping, freely constitute a mortgage or any other lien or encumbrance on such vessels and its equipment with any bank or other financial institutions, domestic or foreign.
"b. The instrument of mortgage, lien or encumbrance shall be recorded in the registry of vessels in the order of their reception and shall show:
1. The name of the vessels;
2. The name of the parties;
3. The time and date of reception of the instrument;
4. The interest in the vessel transferred or affected; and
5. The amount and date of maturity of any mortgage.
A copy of the instrument of mortgage shall be furnished the Central Bank of the Philippines.
"c. Any mortgage, lien or encumbrance constituted in accordance with this Act is a preferred mortgage and shall constitute a maritime lien upon the mortgaged vessel in the amount of the outstanding mortgage indebtedness secured by such vessel.
"d. A preferred mortgage shall have priority over all claims against the vessel, except the following preferences in the order stated:
1. Judicial costs of the proceedings;
2. Taxes due the Philippine Government;
3. Salaries and wages of the Captain and Crew of the vessel during its last voyage;
4. General average or salvage including contract salvage; bottomry loans; and indemnity due shippers for the value of goods transported but which were not delivered to the consignee;
5. Costs of repair and equipment of the vessel, and provisioning of food, supplies and fuel during the last voyage; and
6. Preferred mortgages registered prior in time.
"e. The lien of a preferred mortgage may be enforced by suit in rem or otherwise in the Philippines, or in any foreign country in which the vessel shall be found pursuant to the procedure of said country for the enforcement of ship mortgages constituting maritime liens on vessels documented under the laws of said country.
"f. After the bill of judicial sale at public auction has been executed, all claims against the vessel in favor of the creditors shall be considered extinguished, and such claim shall thereafter attach, in like amount and in accordance with their respective priorities to the proceeds of the sale. If the proceeds of the judicial sale should not be sufficient to pay all the creditors included in one number or grade, the residue shall be divided among them pro rata. All credits not paid, whether fully or partially, shall subsist as ordinary credits enforceable by personal action against the debtor. The record of the judicial sale shall be inscribed in the registry of vessels."
Approved, August 4, 1969.
