FURTHER AMENDING THE PHILIPPINE OVERSEAS SHIPPING ACT OF 1955.

WHEREAS, one of the present needs of our country is a
well-developed merchant marine that would more effectively assist in the
development of our national economy;

WHEREAS, our shipping industry, facing fierce competition
with the more advanced and developed shipping industries of other maritime
countries, needs government assistance in its efforts at expansion;

WHEREAS, Republic Act No. 1407, otherwise known as “The
Philippine Overseas Shipping Act of 1955,” has for its objectives to encourage
and assist the Philippine merchant marine, foster its development, provide
financial assistance in its shipbuilding program and promote shipping in every
way possible;

WHEREAS, Republic Act No. 6106, amending Republic Act No.
1407, which allows the mortgage of Philippine vessels to shipbuilders or lending
institutions for the construction or purchase of ships on deferred payment
basis, has been amended by inserting Section 11 1/2; and

WHEREAS, there are certain provisions in Section 11 1/2
which act as deterrents in the procurement of additional vessels;

NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the
Philippines, by virtue of the powers in me vested by the Constitution as
Commander-in-Chief of all the Armed Forces of the Philippines, and pursuant to
Proclamation No. 1081, dated September 21, 1972, and General Order No. 1, dated
September 22, 1972, do hereby decree and order the amendment of Section 11 1/2
of Republic Act No. 6106 amending Republic Act No. 1407, as amended, as
follows:

“SEC. 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 percent 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.

“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 the maritime liens on vessels documents under the
laws of said country.

“f) After the bill of judicial sale of 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 after
satisfying the preferred mortgage herein provided. 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.”

SEC. 2. The provisions of Commonwealth Act Numbered Six
hundred and six, as amended by Republic Act Numbered Nine hundred and thirteen;
the Code of Commerce, particularly Articles 580 and 584 thereof; and all other
acts, executive orders and regulations inconsistent herewith are hereby repealed
or modified accordingly.”

This Decree shall take effect immediately.

Done in the City of Manila, this 16th day of June, in the year of Our Lord,
nineteen hundred and seventy-three.

			(Sgd.) FERDINAND E. MARCOS President Republic of the Philippines
	By the President:
	(Sgd.) ROBERTO V. REYES
		Assistant Executive Secretary