Philippines
Shipowner Eligibility
Vessels are entitled to obtain a Certificate of Philippine Registry if they are owned by citizens of the Philippines or by corporations or associations organized and existing under the laws of the Philippines provided that 60% of its capital stock is owned by citizens of the Philippines. Vessels registered in the Philippines and which operate in a coastwise trade or on the high seas are barred from employing aliens as officers or crew members. Moreover, shipping companies cannot appoint foreign citizens as President, Vice President, Treasurer, Auditor, etc. However, foreign citizens can be elected as members of the Board of Directors in proportion to their number of shareholdings in the corporation. The controlling interest of a corporation or association shall not be considered as held by Philippine citizens if any of the following is true:
• Less than 60% of the capital or capital stock is held by such citizens or such capital or capital stock is subject to any trust or fiduciary obligation in favor of any person not a citizen of the Philippines.
• Less than 60% of the capital or capital stock entitled to vote is in the hands of citizens of the Philippines.
• By means of any contract or agreement, more than 40% of the capital or capital stock can be voted directly or indirectly in favor or any person not a citizen of the Philippines.
• By any other means, the control of more than 40% of the capital or capital stock of the association or corporation is conferred upon or allowed to be exercised by any person not a Philippine citizen.
The fact that a shipowning company has foreign shareholders does not of itself prevent that corporation from being treated as a domestic corporation qualified for Philippine registry of its vessels, as long as the foreign ownership does not exceed 40% of its capital stock.
About the Flag
The Republic of the Philippines is an archipelago composed of more than 7,100 islands located between the Philippine Sea and the South China Sea. The country is a member of ASEAN, the UN, and the IMO. Manila is the capital, and Filipino and English are both official languages. It has a presidential-republican form of government with the President as Head of State. Legislative power is vested in a bicameral Congress (House of Senate and House of Representatives). The legal system is mainly based on Spanish and Anglo-American laws.
Being an archipelago, maritime transportation is one of the cheapest and principal modes of transporting passengers and goods to the major islands of the country, as well as serving as a vital link to international trade. The Philippines is primarily an agricultural nation with a light manufacturing sector as well. The Philippine peso is the official currency. Major trading partners include the United States and Japan. Principal exports are electronics, textiles, coconut products, copper, and fish. The Philippine Coast Guard is the agency vested with the exclusive authority over the registration and documentation of Philippine vessels. However, contracts or transactions which evidence ownership or which affect the title of registered vessels must first be approved by the Philippine Maritime Industry Authority known as MARINA.
Company Formation
The Corporation Code of the Philippines (Batas Pambansa Bilang 68) requires that any corporation formed under Philippine Laws must file with the Securities and Exchange Commission its Articles of Incorporation which must state the name, residence, and nationalities of the incorporators as well as the members of the board of directors. The corporation may have at least 5 but not less than 15 incorporators who are of legal age, the majority of whom are residents of the Philippines and a registered owner of at least one share of stock in the corporation. Only natural persons are allowed to be incorporators of a corporation; however, juridical persons may be stockholders of another corporation.
Upon incorporation, the corporation may have at least 5 but not more than 15 members of the Board of Directors who shall act as such until the first regular directors are duly elected. Every director of the corporation must own at least one share of the corporation’s capital stock which must be registered in his name on the book of the corporation; otherwise, he ceases to be a director.
Members of the board of directors are elected from among the stockholders on record and may hold office for a term of one year or until their successors are elected and qualified or unless removed from office by a 2/3 vote of the stockholders representing at least 2/3 of the outstanding capital stock made at a regular meeting or at a special meeting held for the purpose. The corporation through its directors may elect corporate officers whose functions and responsibilities are provided by the corporation code and the bylaws either expressly or implied as well those inherent to the respective position. A corporate officer has a term of one year unless the bylaws provide for a longer term. Officers can be removed for cause by the board of directors at any time before the expiration of their term. Their nonelection is not deemed to be a dismissal, but a termination of their term.
A corporation may be a stock or nonstock corporation. However, shipping companies must be duly registered stock corporations whose shares of stocks may be with or without par value. The Articles of Incorporation may provide that a number of shares be preferred with preferences in the distribution of the assets of the corporation in case of liquidation and in the distribution of dividends. Preferred shares of stocks may be issued only with a par value. The corporation may, upon incorporation or within one month upon receipt of its Certificate of Incorporation from the Securities and Exchange Commission, adopt its bylaws. The bylaws of the corporation may provide among other things the time, place and manner of calling and conducting a regular or special meeting of the directors; the time, place and manner of calling and conducting a regular and special meeting of the stockholders; and the election of directors and officers.
Regular stockholders’ meetings are held annually on a date fixed in the bylaws while special meetings of the stockholders may be held any time. Regular and special stockholders’ meetings shall be held in the city or municipality where the principal office of the corporation is located. Regular meetings of the board of directors are to be held monthly, while a special meeting may be held at any time. This meeting may be made within or outside of the Philippines. If at least 60% of a corporation’s or association’s capital is owned by Filipino citizens, it will be allowed to engage in both domestic and overseas shipping enterprises. 75% of the capital stock of companies engaged in both overseas and domestic recruitment must be owned by Filipino citizens. Shipping companies cannot appoint foreign citizens as president, vice president, treasurer, auditor, etc. but may elect them as members of the Board of Directors in proportion to their number of share holdings in the corporation. Shipping and/or crewing companies are considered as wholly engaged in nationalized activities upon which Philippine laws prohibit the employment of non-citizens in managerial positions or as officers of the corporations.
Taxation
Shipping enterprises and shipowners organized in and existing under Philippine laws are subject to a tax of 35% of their taxable income derived from all sources within and outside the Philippines. It is important to note that foreign corporations organized and existing under the laws of any foreign country engaged in trade or business within the Philippines shall be subject to a tax of 35% of the taxable income derived in the Philippines. International carriers doing business in the Philippines shall pay a tax of 2 1/2% on their "Gross Philippine Billings" which is based on gross revenues whether for passenger, cargo, or mail originating from the Philippines regardless of the place of sale or payments of the passage or freight documents.
Moreover, a qualified Philippine shipping enterprise is exempted from payment of value added tax on importations of vessels for registration under the Philippine flag and spare parts for the repair and/or overhaul of vessels. In the quest of the government to avoid the imposition of double taxation against its citizenry, various tax treaties have been entered into by the Philippines with Australia, Denmark, Finland, France, Germany, Indonesia, Italy, Japan, Korea, Malaysia, New Zealand, Singapore, Spain, Sweden, the United Kingdom, and the United States of America. Any tax paid by a Filipino citizen and/or foreigner in the course of business or trade in a foreign country is credited as payment of their tax due in the Philippines.
Registration and Documentation
All vessels of more than 3 GRT used in Philippine waters, not being transient or foreign registered, shall be registered with MARINA. It shall be the duty of the master, owner, or agent to apply to MARINA for the registration within 15 days after the vessel becomes subject to such registration. Philippine laws exempt small ships from the registration requirement. Thus, a vessel of 3 GRT or less shall not be registered unless the owner shall so desire, nor shall documents or licenses of any kind be required for such vessel. All undocumented vessels shall be numbered in such form as prescribed by MARINA.
The registration of a vessel is to be effected by application to the regional office of MARINA located at its home port if the same is a port of entry or at the port of entry of the district of the vessel’s home port. In the Register of Vessels, which is kept at each port of entry, several facts concerning each registered vessel are to be noted, such as: name of the vessel; net tonnage; name, citizenship, nationality, and residence of the owner; date of issuance of the Certificate of Philippine Registry, if any, etc. In addition, a separate record of transfer and encumbrances of vessels is kept at each district or regional office of MARINA. A Philippine national or Philippine corporation seeking to register a vessel which is over 3 GRT to be used in Philippine waters must submit to the appropriate MARINA office the following original documents:
• Builder’s Certificate or any document signifying ownership
• Application for official number
• Application for a marine document to engage in trade of the Republic of the Philippines
• Oath of Citizenship of Individual Owner (Form 545), for vessels owned by individual persons
• Affidavit of Corporate Ownership (Form 544), for vessels owned by corporations
Registration with MARINA does not mean, however, that a Certificate of Philippine Registry allowing it to trade internationally will be issued. Existing Philippine regulations impose stringent requirements for the issuance of a Certificate of Philippine Registry, regardless of the intended activity of the vessel. In essence, the owner seeking issuance of a Certificate of Registry after registration must establish that the vessel is of domestic ownership and is more than 15 GRT. If a Certificate of Registry is desired and the vessel was built in the Philippines, the following original documentation should be submitted to MARINA:
• Builder’s Certificate or any document signifying ownership
• Owner’s Oath on Documentation (Philippine Coast Guard [PCG] Form No. 523)
• Application for Assignment of Name (Form 520)
• Application for Official Number (Form 340)
• +• Application for Marine Documents to engage in Trade of the Republic of the Philippines (Form 521)
• Oath of Citizenship of Individual Owner (Form 545), if applicable
• Affidavit of Corporate Ownership (Form 544), if applicable
• Certificate of Inspection (Form 530)
If a Certificate of Registry is desired and the vessel was constructed and acquired abroad, the following original documents must be submitted to MARINA prior to the date the owner desires for registration:
• Application for Registration
• Articles of Incorporation duly certified by the Philippine Securities and Exchange Commission if owned by a corporation
• Board resolution authorizing the person to represent the corporation or letter of authority
• Affidavit of Citizenship for corporation or individual owner
• Memorandum of Agreement of the transfer of ownership of the vessel
• Particulars of the vessel
• Application for Assignment of Name
• Application for Official Number
If the application is found in order, the Commandant shall endorse the same to the Secretary of Foreign Affairs with the request that the application be transmitted to the Philippine Consulate in the country where the vessel is located and to advise said office to approve and issue a Provisional Certificate of Philippine Registry upon presentation and submission of the following original documents:
• Bill of Sale or Builder’s Certificate (to be legalized by Consul and returned to owner)
• Protocol of Delivery & Acceptance (to be legalized by Consul and returned to owner)
• Protocol of Inventory of the vessel (to be legalized by Consul and returned to owner)
• Admeasurement Certificate including calculation sheets for tonnage admeasurement, asperformed by either the builders or the official headmasters of the country where the ship is built
• Provisional Load Line Certificate by recognized classification society under whose class the vessel was constructed
• Ship Safety Radio Telephony Certificate, if any
• Ship Safety Radio Telegraphy Certificate
• Certificate of Inspection or equivalent certificate pursuant to SOLAS 1960 issued by the government where the vessel was built
• Inclining test experiment with calculations and trim stability calculations for all service loading conditions
In those cases, within 15 days upon arrival of the vessel in the Philippines, the master, owner, or agent of the vessel shall apply with the MARINA office of the intended home port for a permanent Certificate of Registry. The following original documents are to be submitted:
Provisional Certificate of Philippine Registry
• Legalized Bill of Sale or Builder’s Certificate
• Legalized Protocol of Delivery and Acceptance
• Legalized Protocol of Inventory of the Vessel
• Certificate of Admeasurement including calculation sheets for tonnage measurement, as performed by the official admeasurer, of the country where the ship is built or acquired
• Provisional Load Line Certificate issued by authorized classification society under whose rules the vessel is constructed or acquired
• Certificate of Inspection or equivalent certificate pursuant to SOLAS 1960 issued by the government of the county where the vessel was built or acquired
• Inclining test experiment with calculations and trim stability calculations for all service loading conditions
• Ship Safety Radio Telephony Certificate, if any
• Ship Safety Radio Telegraphy Certificate
• Consular invoice
• Permit to deliver imported goods (Philippine Bureau of Customs formal entry)
Bareboat Charter Registration
Under Presidential Decree (PD) 760, as amended by PD 866 and PD 1711, a foreign owned vessel bareboat chartered to a Philippine company is entitled to fly the Philippine flag for periods of at least one year, provided:
a. MARINA has granted approval;
b. the operation of the vessel is entirely in the hands of Philippine nationals and free from any participation or interference from the foreign owner; and
c. the vessel is crewed completely by a Filipino crew (except in the case of specialized vessels).
Vessel and Yacht Eligibility & Survey Requirements
For further information, contact the registry.
Crewing
The Philippine Code of Commerce provides that the crew of a vessel must be 4/5 comprised of Filipinos except where the vessel is in a foreign port, in which case, the captain may complete the crew with foreigners provided the consent of the Consul or maritime authorities has been obtained. However, Philippine vessels operating in coastwise trade or on the high seas shall not employ any officer or any member of its crew who is not a Filipino citizen.
Mortgages
Ship mortgages in the Philippines are governed by Presidential Decree No. 1521 otherwise known as "The Ship Mortgage Decree of 1978" which was promulgated on 11 June 1978. A ship mortgage may be constituted by either a Filipino citizen or by an association or corporation organized under Philippine laws with at least 60% of its capital owned by Filipino citizens. This mortgage may be constituted over vessels of Philippine registry for the purpose of financing the construction, acquisition, purchase, or initial operation of vessels. A mortgage over a vessel must be recorded with MARINA to be valid against any person. Otherwise, it will only be valid as against the mortgagor, his heirs or assigns and to other persons having actual notice thereof. When recorded, the ship mortgage has a preferred status in respect to the whole vessel as of the date of recordation. The law also gives this status to those vessels holding a provisional Certificate of Philippine Registry.
Fees
For more information, contact one of the following organizations:
Registration
Maritime Industry Authority (MARINA)
Mr. Emerzon Lorenzo
984 Parkview Plaza, Taft Avenue corner Kalaw Street
Manila, Philippines
Tel: (632) 5239078
Email: emlorenzo2003@yahoo.com
Website: http://marina.gov.ph
Company Formation
Securities and Exchange Commission
SEC Building, ESDA, Greenhills
Mandaluyong City, Metro Manila
Philippines
Tel: (632) 584-0923
Fax: (632) 584-5293
Email: mis@sec.gov.ph
Website: http://www.sec.gov.ph
Taxation Information
Bureau of Internal Revenues
Industry and Investments Building
385 Senator Gil Puyat Avenue, Makati City
1200 Metro Manila, Philippines
Email: nerbac@boi.gov.ph
Website: http://www.boi.gov.ph/
Shipowners' Association
Filipino Shipowners' Association
Atty. Augusto Y. Arreza
Executive Secretary
Room 503, Victoria Building
429 United Nations Avenue
Ermita 1000 Manila
Philippines
Tel: (632) 523-7269
Fax: (632) 524-3164
Email: filiship@info.com.ph
Website: http://www.filipinoshipowners.com.ph/
Contact
Maritime Industry Authority
Office of the Administrator
VADM ROBERT A EMPEDRAD AFP (Ret)
Administrator
MARINA Building, Bonifacio Drive cor. 20th Street, Port Area, Manila, Philippines
Tel: (02) 523-9078
Tel 2: (02) 526-0971
Tel 3: (02) 524-2895
Email: oadm@marina.gov.ph
Deputy Administrator for Opertations
Nanette Z. Villamor-Dinopol
Tel: (02) 524-7718
Tel 2: (02) 400-1355
Email: odao@marina.gov.ph
Address:
984 Parkview Plaza
Taft Avenue, corner Kalaw Street Manila, Philippines
http://marina.gov.ph/
Stockholm Agreement 96
IMO Convention 48
* IMO amendments 91
* IMO amendments 93
SOLAS Convention 74
SOLAS Protocol 78
SOLAS Protocol 88
LOAD LINES Convention 66
LOAD LINES Protocol 88
TONNAGE Convention 69
COLREG Convention 72
CSC Convention 72
CSC amendments 93
SFV Protocol 93
STCW Convention 78
STCW-F Convention 95
SAR Convention 79
STP Agreement 71
STP Protocol 73
IMSO Convention 76
INMARSAT OA 76
INMARSAT amendments 94
INMARSAT amendments 98
IMSO amendments 2006
IMSO amendments 2008
FACILITATION Convention 65
MARPOL 73/78 (Annex I/II)
MARPOL 73/78 (Annex IV)
MARPOL 73/78 (Annex V)
MARPOL Protocol 97 (Annex VI)
London Convention 72
London Convention Protocol 96
INTERVENTION Convention 69
INTERVENTION Protocol 73
CLC Convention 69
CLC Protocol 76
CLC Protocol 92
FUND Convention 71
FUND Protocol 92
FUND Protocol 2003
NUCLEAR Convention 71
MARPOL 73/78 (Annex III)
PAL Protocol 76
PAL Protocol 90
PAL Protocol 02
LLMC Convention 76
LLMC Protocol 96
SUA Convention 2005
SUA Protocol 2005
SALVAGE Convention 89
OPRC Convention 90
HNS Convention 96
OPRC/HNS 2000
BUNKERS CONVENTION 01
ANTI FOULING 01
BALLASTWATER 2004
NAIROBI WRC 2007
HONG KONG CONVENTION
HNS PROT 2010
Cape Town Agreement 2012
SUA Convention 88
SUA Protocol 88
IMO Conventions
Status of Conventions Philippines
IMO Convention 48 x
SOLAS Convention 74 x
SOLAS Protocol 78 x
SOLAS Protocol 88 x
SOLAS Agreement 96
LOAD LINES Convention 66 x
LOAD LINES Protocol 88 x
TONNAGE Convention 69 x
COLREG Convention 72 x
CSC Convention 72
CSC amendments 93
SFV Protocol 93
Cape Town Agreement 2012
STCW Convention 78 x
STCW-F Convention 95
SAR Convention 79
STP Agreement 71 x
Space STP Protocol 73
IMSO Convention 76 x
INMARSAT OA 76 x
IMSO amendments 2006
IMSO amendments 2008
FACILITATION Convention 65
MARPOL 73/78 (Annex I/II) x
MARPOL 73/78 (Annex III) x
MARPOL 73/78 (Annex IV) x
MARPOL 73/78 (Annex V) x
MARPOL Protocol 97 (Annex VI) x
London Convention 72 x
London Convention Protocol 96 x
INTERVENTION Convention 69
INTERVENTION Protocol 73
CLC Convention 69
CLC Protocol 76
CLC Protocol 92 x
FUND Protocol 76
FUND Protocol 92 x
FUND Protocol 2003
NUCLEAR Convention 71
PAL Convention 74
PAL Protocol 76
PAL Protocol 90
PAL Protocol 02
LLMC Convention 76
LLMC Protocol 96
SUA Convention 88 x
SUA Protocol 88 x
SUA Convention 2005
SUA Protocol 2005
SALVAGE Convention 89
OPRC Convention 90 x
HNS Convention 96
HNS PROT 2010
OPRC/HNS 2000
BUNKERS CONVENTION 01
ANTI FOULING 2001 x
BALLASTWATER 2004 x
NAIROBI WRC 2007
HONG KONG CONVENTION
x= ratification
d=denunciation