PROVIDING FOR THE REORGANIZATION OF MARITIME FUNCTIONS IN THE PHILIPPINES, CREATING THE MARITIME INDUSTRY AUTHORITY, AND FOR OTHER PURPOSES.

WHEREAS, the efficient sea transport of raw materials,
products, commodities and people is vital to the growth of the
Philippine economy;

WHEREAS, the functions pertaining to the development and
regulation of shipping enterprises are fragmented among various
government agencies, resulting in inadequate and inefficient shipping
facilities, dependence on external shipping interests, maldistribution
of commodities, and piece-meal solutions;

WHEREAS, there is imperative need to modernize and expand
the Philippine merchant fleet, and to rationalize and improve their
operations in order to make them effective instruments in promoting
domestic production, inter-island and overseas trade, price
stabilization, and employment generation;

WHEREAS, it is urgently necessary to provide a strong
organizational framework to effect the accelerated and integrated
development and effective regulation of shipping enterprises;

NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the
Philippines, by virtue of the powers vested in me by the Constitution,
in order to effect the desired changes and reforms in the social,
economic and political structure of our society, do hereby decree and
order that the following be adopted and made part of the laws of the
land:

SECTION 1 Title.—This Decree shall be known as the
Maritime Industry Decree of 1974.

SEC. 1. Declaration of Policies and Objectives.—It is
hereby declared the policy of the State to accelerate the Integrated
development of the maritime industry of the Philippines to attain the
following objectives: (a) To increase production and productivity in the
various islands and regions of the archipelago through the provision of
effective sea linkage; (b) To provide for the economical, safe,
adequate and efficient shipment of raw materials, products, commodities
and people; (c) To enhance the competitive position of Philippine flag
vessel in the carriage of foreign trade; (d) To strengthen the balance
of payments position by minimizing the outflow of foreign exchange and
increasing dollar earnings; (e) To generate new and more job
opportunities.

For the attainment of these objectives, the Government through the
Maritime Industry Authority hereinafter created shall:

1. Adopt and implement a practicable and coordinated Maritime
   Industry Development Program which shall include, among others, the
   early replacement of obsolescent and uneconomic vessels; modernization
   and expansion of the Philippine merchant fleet, enhancement of
   domestic capability for shipbuilding, repair and maintenance; and the
   development of reservoir of trained manpower;
2. Provide and help provide the necessary; (i) financial
   assistance to the industry through public and private financing
   institutions and instrumentalities; (ii) technological assistance;
   and (iii) in general, a favorable climate for expansion of domestic
   and foreign investments in shipping enterprises; and
3. Provide for the effective supervision, regulation and
   rationalization of the organizational management, ownership and
   operations of all water transport utilities, and other maritime
   enterprises.

SEC. 3. Definition of Terms.—The terms, as
used, in this Decree, shall have the following meaning, unless the
context of the particular usage of the term indicates otherwise:

1. “Maritime Industry“, briefly referred to as “industry” in
   the broadest concept of the term.—All enterprises engaged in
   the business of designing, constructing, manufacturing, acquiring,
   operating, supplying, repairing and, or maintaining vessels, or
   component parts thereof; of managing and/or operating shipping lines,
   stevedoring arrastre and customs brokerage services, shipyards,
   drydocks, marine railways, marine repair shops, shipping and freight
   forwarding agencies and similar enterprises.
2. “Vessels” or watercraft”.—Any barge, lighter, bulk
   carrier, passenger ship, freighter, tanker, container ship, fishing
   boats or other artificial contrivance utilizing any source of motive
   power, designed, used or capable of being used as a means of water
   transportation operating either as a common contract carrier, including
   fishing vessels covered under Presidential Decree No. 43, except (i)
   those owned and/or operated by the Armed Forces of the Philippines and
   by foreign governments for military purposes, and (ii) bancas, sailboats
   and other waterborne contrivance of less than three gross tons capacity
   and not motorized.
3. “Philippine national“.—A citizen of the Philippines; or a
   partnership or association wholly owned by and composed of citizens of
   the Philippines; or a corporation organized under the laws of the
   Philippines of which at least sixty per cent of the capital stock
   outstanding and entitled to vote is owned and held by Philippine
   citizens; or a trustee of funds for pensions or other employee
   retirement or separation benefits, where the trustee is a Philippine
   national and at least sixty per cent of the funds will accrue to the
   benefit of the Philippine nationals: Provided, That where a
   corporation and its non-Filipino stockholders own stock in an
   enterprise, at least sixty per cent of the members of the governing
   board of both corporations must be Philippine nationals.
4. “Philippine flag vessel“.—A vessel or
   watercraft registered under Philippine laws.
5. “Foreign flag vessel.”—A vessel or watercraft registered
   under the laws of a country other than the Philippines.
6. “Philippine shipping companies.”—Philippine nationals
   registered and licensed under the laws of the Philippines to engage in
   the business of overseas and/or domestic water transportation.

A. MARITIME INDUSTRY AUTHORITY

SEC. 4. Maritime Industry Authority, Creation and
Organization.—There is hereby created a Maritime Industry Authority,
hereinafter referred to as the “Authority”, under the Office of the
President. It shall be composed of a governing board of directors to be
known as Maritime Industry Board and the Management.

The
Authority shall have general jurisdiction and control over all persons,
corporations, firms or entities in the maritime industry of the
Philippines and shall supervise, regulate in accordance with this
Decree.

The principal office of the Authority shall be in the
Greater Manila Area. Regional or branch offices may be established at
such other place or places within the Philippines as may be deemed
necessary by the Board.

SEC. 5. Maritime Industry
Development Program.—The Authority shall prepare and annually update
a Ten-Year Maritime Industry Development Program, hereinafter referred
to as “Program” which shall contain a rational and integrated
development of the maritime industry. The Authority shall submit the
same for approval by the President of the Philippines.

Upon
approval of the Program by the President, all government departments,
bureaus, agencies, and instrumentalities shall implement the same within
their respective jurisdictions. The Authority shall ensure that the
approved program is being effectively implemented by the participating
agencies. No government body or instrumentality shall adopt any policy
or take course of action contrary to or inconsistent with the Program.

B. MARITIME INDUSTRY BOARD

SEC. 6. Powers and Functions of the Board.—The
Maritime Industry Board shall have the following powers, functions, and
duties, among others:

1. To provide comprehensive policy guidance for the
   promotion and development of the maritime industry as provided for in
   this Decree;
2. To promulgate and prescribe such promotional and developmental
   rules and regulations, standards, guidelines and procedures and
   recommend laws or measures as may be necessary for the growth and
   effective regulation of shipping enterprises;
3. To formulate a comprehensive and practicable Maritime Industry
   Development Program for a ten-year period and review and update the
   same annually;
4. To prescribe specific policies in the determination of just
   and reasonable passenger fares, freight rates and other
   charges relative to the operation of inter-island vessels.
   Accordingly, the Board of Transportation shall exercise its rate fixing
   functions in accordance with such policies;
5. To recommend to the President that the State,
   through such agency or agencies as the President may designate,
   purchase, lease, manage, operate or requisition any vessel, ship
   or shipping enterprise, for national security purposes, to meet
   emergency situations or when the national interest so requires;
6. To approve contracts;
7. To approve the organizational structure, staffing pattern, and
   budget of the Authority upon the recommendation of the Administrator;
8. To appoint, discipline and remove, and determine the
   composition of the Authority technical staff and other personnel: Provided,
   That all regular professional and technical personnel in the Authority
   shall be permanent and career in status, but exempt from WAPCO and Civil
   Service rules and regulations: Provided, further, That the
   personnel shall be entitled to the benefits normally accorded to
   government employees, such as retirement, GSIS insurance, leave and
   similar matters: Provided, furthermore, That the appointments of
   personnel in the management below the rank of section chief shall be
   made by the Administrator, in accordance with the approved budget and
   staffing pattern and shall be noted by the Board: Provided, finally,
   That the Board or the Administrator may engage on contractual basis or
   other arrangements for the temporary services, and fix the compensation
   of highly qualified professionals, experts technical advisers or
   consulting firms;
9. To adopt a common seal for the Authority which shall be
   juridically noticed, determine the exact location of its office, and
   prescribe the rules and regulations to govern its proceedings;
10. To recommend to the President, through the National Economic
    and Development Authority, the grant of necessary incentives for the
    development of shipping and other related maritime enterprises; and
11. To perform such acts as are proper and necessary to implement
    this Decree.

SEC. 7. Composition and Organization.—The Board
shall be composed of eight members as follows: The Secretary of Trade,
the Secretary of Public Works, Transportation and Communications, the
Secretary of National Defense, the Executive Secretary, the Chairman of
the Board of Investments, the Chairman of the Development Bank of the
Philippines, the Chairman of the Board of Transportation and the
Maritime Administrator. The Chairman of the Board shall be appointed by
the President of the Philippines from among its members.

The
official next in rank to the regular members shall serve as permanent
alternate members, except that, in the absence of the Chairman, the
Board shall elect a temporary presiding officer. The alternate members
shall attend meetings of the Board and committees assigned to their
principals and receive the corresponding per diems whenever their
principal is absent or the said position is vacant.

The Board
shall meet regularly once a month and may hold special meetings to
consider urgent matters upon call of the Chairman or any three members
thereof. A majority shall constitute a quorum for the transaction of
business.

Each members shall receive a monthly commutable
allowance of five hundred pesos and per diem of one hundred for every
meeting of the Board or committee thereof actually attended: Provided,
That the total amount of per diems which each may receive shall not
exceed five hundred pesos a month.

C. MANAGEMENT

SEC. 8. Management Head.—The management of the
Authority shall be vested in the Maritime Administrator who shall be
directly assisted by the Deputy Administrator for Planning and a Deputy
Administrator for Operations hereinafter referred to as “Deputy
Administrators.”

SEC. 9. The Maritime Administrator and Deputy
Administrator.—The Maritime Administrator and Deputy Administrators
shall be appointed by the President for a term of six years:
Provided, That upon the expiration of their respective terms, they
shall continue to serve until their successor shall have been appointed
and qualified: Provided, further, That no vacancy shall be filled
except for the unexpired portion of the term: Provided, finally,
That the President may remove the Administrator and Deputy
Administrators from office for cause upon recommendation of the Board.

The Maritime Administrator and Deputy Administrators shall be citizens
of the Philippines, at least thirty-five years old on the date of their
appointment, of good moral character, or recognized executive ability
and competence in previous public or private employment, with adequate
training and experience in economic, technology, finance, law,
management, public utility, or in other phases or aspects of the
maritime industry. Until otherwise fixed by the Board, the Administrator
shall receive an annual salary of fifty thousand pesos and a monthly
commutable allowance of two thousand pesos. Each Deputy Administrator
shall receive an annual salary of forty thousand pesos and a monthly
allowance of one thousand five hundred pesos.

The Administrator
shall be directly responsible to the Board, and shall have powers,
functions and duties as provided in this Decree. The Deputy
Administrator shall be directly responsible to the Administrator, and
their respective powers, functions and duties shall be determined by the
Board, upon recommendation of the Administrator.

SEC. 10.
Authority to Administer Oath.—The Chairman of the Board, the
Administrator, the Deputy Administrators, the- Chief Legal Officer and
heads of divisions of the Authority shall have the power to administer
oaths for the transaction of official business.

SEC. 11. General Powers and Functions of the
Administrator.—Subject to the general supervision and control of the
Board, the Administrator shall have the following general powers,
functions and duties:

1. To implement, enforce and apply the policies, programs,
   standards, guidelines, procedures, decisions and rules and regulations
   issued, prescribed or adopted by the Board pursuant to this Decree;
2. To undertake researches, studies, investigations and other
   activities and projects, on his own initiative or upon instructions of
   the Board, and to submit comprehensive reports and appropriate
   recommendations to the Board for its information and action;
3. To undertake studies to determine present and future
   requirements for port development including navigational aids, and
   improvement of waterways and navigable waters in consultation with
   appropriate agencies;
4. To pursue continuing research and developmental
   programs on expansion and modernization of the merchant fleet and
   supporting facilities taking into consideration the needs of the
   domestic trade and the need of regional economic cooperation schemes;
   and
5. To manage the affairs of the Authority subject to the
   provisions of this Decree and applicable laws, orders, rules and
   regulations of other appropriate government entities.

SEC. 12. Specific Powers and Functions of the
Administrator.—In addition to his general powers and functions, the
Administrator shall:

1. Issue Certificate of Philippine Registry for all vessels being
   used in Philippine waters, including fishing vessels covered by
   Presidential Decree No. 43 except transient civilian vessels of foreign
   registry, vessels owned and/or operated by the Armed Forces of the
   Philippines or by foreign governments for military purposes, and bancas,
   sailboats and other watercraft which are not motorized, of less than
   three gross tons;
2. Provide a system of assisting various officers,
   professionals, technicians, skilled workers and seamen to be gainfully
   employed in shipping enterprises, priority being given to domestic
   needs;
3. In collaboration and coordination with the Department of
   Labor, to look into, and promote improvements in the working conditions
   and terms of employment of the officers and crew of vessels of
   Philippine registry, and of such officers and crew members who are
   Philippine citizens and employed by foreign flag vessels, as well as of
   personnel of other shipping enterprises, and to assist in the settlement
   of disputes between the shipowners and ship operators and such officers
   and crew members, and between the owner or manager of other
   shipping enterprises and their personnel;
4. To require any public water transport utility or
   Philippine flag vessels to provide shipping services to any coastal
   areas in the country where such services are necessary for the
   development of the area, to meet emergency sealift requirements, or when
   public interest so requires;
5. Investigate by itself or with the assistance of other
   appropriate government agencies or officials, or experts from the
   private sector, any matter within its jurisdiction, except marine
   casualties or accidents which shall be undertaken by the Philippine
   Coast Guard;
6. Impose, fix, collect and receive in accordance with the
   schedules approved by the Board, from any shipping enterprise or other
   persons concerned, such fees and other charges for the payment of its
   services;
7. Inspect, at least annually, the facilities of port and cargo
   operators and recommend measures for adherence to prescribed standards
   of safety, quality and operations;
8. Approve the sale, lease or transfer of management of vessels
   owned by Philippine Nationals to foreign owned or controlled
   enterprises;
9. Prescribe and enforce rules and regulations for the prevention
   of marine pollution in bays, harbors and other navigable waters of the
   Philippines, in coordination with the government authorities concerned;
10. Established and maintain, in coordination with the appropriate
    government offices and agencies, a system of regularly and promptly
    producing, collating, analyzing and disseminating traffic flows, port
    operations, marine insurance services and other information on maritime
    matters;
11. Recommend such measures as may be necessary for the regulation
    of the importation into and exportation from the Philippines of vessels,
    their equipment and spare parts;
12. Implement the rules and regulations issued by the Board of
    Transportation;
13. Compile and codify all maritime laws, orders, rules and
    regulations, decisions in leasing cases of courts and the Authority’s
    procedures and other requirements relative to shipping and other
    shipping enterprises, make them available to the public, and, whenever
    practicable to publish such materials;
14. Delegate his powers in writing to either of the Deputy
    Administrators or any other ranking officials of the Authority: Provided,
    That he informs the Board of such delegation promptly; and
15. Perform such other duties as the Board may assign, and such
    acts as may be necessary and proper to implement this Decree.

SEC. 13. Maritime Industry Manpower Needs.—The
Authority shall establish and support a system of maintaining and
developing a reservoir of trained manpower to meet the current and
future needs of the industry. For the attainment of this objective, it
shall undertake the following:

1. Evaluate, in collaboration with the Department of Education and
   Culture, the capability of maritime educational and training
   institutions and programs in the Philippines, including the Philippine
   Merchant Marine Academy, herein placed under the administrative
   supervision of the Authority, to supply shipping and shipyard manpower
   needs.
2. Inspect and evaluate periodically the standards,
   facilities and performance of the maritime educational and training
   programs of government and private schools and enterprises and recommend
   to the Department of Education and Culture and other
   appropriate government agencies such changes in the curriculum as may
   be necessary.
3. Conduct or arrange for the holding of pre-employment,
   on-the-job and other training programs to provide and upgrade shipping
   skills and techniques, with the cooperation and support of private
   enterprises and government agencies.
4. Provide incentives for education and training in shipping and
   shipbuilding fields, especially those which are not attractive to
   students such as naval architecture, including scholarships and
   fellowships, in the Philippines or abroad, with liberal grants for the
   entire duration of the course, to be sponsored directly or arranged by
   the Administration.

SEC. 14. Penalties.—Any person who gives false or
misleading data or information wilfully or through gross negligence,
conceals or falsifies a material fact, in any investigation, inquiry or
hearing, or other proceedings held pursuant to this Decree, shall be
punished with imprisonment of not less than two nor more than six months
and with a fine of not less than five hundred nor more than one
thousand pesos: Provided, however, That if the false or
misleading data or information shall have been given under oath, the
maximum penalty for giving false testimony or perjury shall be imposed.

D. MISCELLANEOUS PROVISIONS

SEC. 15. Auditor.—The Commission on Audit shall
be the ex-officio Auditor of the Authority and it shall appoint its
representative therein, who shall audit all accounts thereof.

SEC. 16. Reorganizational Changes.—

1. Department of Trade.—The Shipping and Freight
   Study Unit of the Department of Trade is hereby transferred to the
   Authority together with its applicable appropriations, records,
   equipment, property and such personal as may be necessary.
2. Bureau of Transportation.—The powers and functions
   pertaining to the development and supervision of maritime shipping of
   the Bureau of Transportation for Water are hereby transferred to
   the Authority. Accordingly the Water Transportation Division of the
   Bureau is hereby abolished.
3. National Development Company.—The powers and
   functions of the National Development Company relative to ship
   acquisition under Republic Act No. 1407, as amended, (Philippine
   Overseas Act of 1955) are hereby transferred to the Authority
   together with its applicable records, equipment and property.

In addition to the powers and functions herein transferred,
balances of all appropriations, funds, accounts and notes receivable
derived from shipping companies, equipment, records and supplies are
likewise transferred to the Authority.

SEC. 17. Retention
of the Functions and Powers of the Philippine Coast Guard.—Nothing
in this Decree shall be constructed to affect or delimit the present
functions and powers of the Philippine Coast Guard relative to maritime
affairs. All such functions and powers of the Philippine Coast Guard are
retained by it. Furthermore in the performance of its functions,
especially in the classification and inspection of vessels, the
Philippine Coast Guard will be assisted by the Authority: Provided,
That within two years from the issuance of this Decree, the President
may transfer to the Authority such regulatory functions of the
Philippine Coast Guard pertaining to maritime affairs as may be
necessary for the achievement of the aims and purposes of the Authority.
The Authority shall coordinate with the Philippine Coast Guard in the
exercise of supervision and regulation of the operations of water
transport utilities.

SEC. 18. Coordination with Other Agencies.—The
Authority shall coordinate with the Department of Labor, the Department
of Education and Culture and the National Manpower and Youth Council in
the exercise of its pertinent functions that have relation to the
functions of the above-mentioned agencies, particularly as these pertain
to the development of trained and qualified seamen for Philippine
vessels.

In order to strengthen its coordinative functions, the
Authority shall hire and train appropriate technical personnel which may
be assigned to other government agencies involved in the implementation
of laws, rules and regulations relative to maritime affairs.

SEC.
19. Transitory Provision.—Officials and employees of all
existing offices or agencies which are abolished or reorganized under
this Decree may be absorbed into the Authority on the basis of merit and
fitness: Provided, That employees who shall be laid off by
reason of this Decree shall be given gratuity equivalent to one month’s
salary for every year of service but in no case more than twenty-four
months salary, in addition to all benefits to which they are entitled
under existing laws and regulations.

To carry out the provisions
of this Section there is hereby appropriated the sum of Five-Hundred
Thousand Pesos out of the unappropriated funds in the National Treasury.

SEC. 20. Appropriations.—To carry out the provisions of
this Decree, there is hereby appropriated the sum of two million pesos
out of the funds in the National Treasury not otherwise appropriated.
Thereafter, the succeeding appropriations of the Authority shall be
included in the Annual Appropriations Act.

In addition to the
above, the Authority is hereby authorized to retain fifty per cent of
its collections from fees, charges and fines to defray any deficiency in
annual appropriations and to finance its other projects.

SEC.
21. Repealing and Separability Clauses.—All laws, decrees,
orders, rules and regulations, policies, programs or parts thereof,
which are inconsistent with any of the provisions of this Decree, are
hereby repealed or modified accordingly.

If for any reason any
section or provision of this Decree is declared to be unconstitutional
or invalid, the other sections or provisions hereof, which are not
affected thereby, shall continue in full force and effect.

SEC.
22. Effectivity.—This Decree shall take effect upon its
promulgation: Provided, That these portions hereof which may
require a transition period to assure the orderly transfer of powers and
functions shall take effect as stated in the implementing details: Provided,
further, That such implementing details shall be prepared by the
Board, in consultation with the government agency heads concerned, and
submitted to the President for approval within four months after
issuance of this Decree.

Done in the City of Manila, this 1st day
of June, in the year of Our Lord, nineteen hundred and seventy-four.