RULES GOVERNING NON-VESSEL-OPERATING COMMON CARRIERS AND OCEAN FREIGHT FORWARDERS

Pursuant to the pertinent provisions of Presidential Decree No. 474,
otherwise known as the Charter of the Maritime Industry Authority, the
following rules are hereby promulgated:

SECTION 1.       No person, natural or juridical, shall
engage in the Philippines in the business of a non-vessel operating
common carrier or an ocean freight forwarder without a valid license for
this purpose from the Maritime Industry Authority.

SECTION 2.       Definition of Terms. — For purposes of
this Rules, the terms below shall have the following meaning, unless the
context indicates otherwise:

1.       Authority — Maritime Industry Authority created under Presidential Decree No. 474.

2.       Non-vessel-operating common carrier or NVOCC
— a common carrier that does not operate the vessels by which the ocean
transportation is provided, and is a shipper in its relationship with
an ocean carrier, but which issues bills of lading in its name to
shippers under its solicitation to whom it directly assumes the
liabilities and responsibilities of a carrier.

3.       Ocean Freight Forwarders

A. Is any person which holds himself out to the general public:

a.    to procure transportation of property for compensation, and to assemble and consolidate shipment of such property;

b.    to undertake breakbulk and distributing operations with respect to such consolidated shipments; and

c.    to perform ancillary services in connection with services mentioned in A and B.

B. If a freight forwarder

a.    Issues his own transport document, and not merely as an agent; or

b.    Undertakes liability for the performance of the
transport, e.g., by offering a fixed price without the obligation to
give account to the customer for his actual cost, he will become a
non-vessel operating carrier as defined in paragraph 2, above, of this
section and shall be subjected to the applicable law relating to
carriage of goods.

4.       Ocean common carrier — is a vessel operating common carrier; but the term does not include one engaged in tramping.

5.       Shipper — shall mean the owner or person for whose account the ocean transportation of cargo is provided.

6.       Consignee — to whom delivery may be lawfully made in accordance with the contract of carriage.

SECTION 3.       Specific Requirements . — No license shall be issued by the Authority unless the applicant meets all the following requirements:

a.    The applicant must be a Filipino citizen or
corporation/partnership at least 60% of the authorized capital of which
is owned by Filipino citizens, except for joint ventures with foreign
equity which are duly registered with the Board of Investments.

b.    The applicant for license must have been registered by
the Authority as a maritime enterprise under Memorandum Circular No. 9,
s. 1976.

c.    That in the case of non-vessel operating carrier, the
applicant shall present a Certificate of Insurance Cover for its
liability to cargoes, provided that, in lieu hereof, a performance bond
in the amount of P150,000.00 [is] secured from a surety company duly
registered with the Insurance Commission, and acceptable to the
Authority.

SECTION 4.       Application for a License . —
All applications shall be filed with the Authority in forms prescribed
for this purpose. The applicant for a license shall submit one (1) copy
each of the following documents in support of the applications:

1.       Resolution of the applicant Board of Director/letter of partners/proprietor authorizing the filing of the application.

2.       The Articles of Incorporation and By-Laws or Articles of
Partnership in case of partnership or registered Business Name and
Style of the proprietor in case of proprietorship.

3.       List of Directors and of the principal officers showing
at least a minimum of three (3) years experience in shipping together
with their respective bio-data.

SECTION 5.       Exemption from License . — A
person whose primary business is the sale of merchandise may forward
shipments of the merchandise for its own account without a license.

SECTION 6.       Filing. – Every
application shall be filed with the authority after payment of the
corresponding filing fee.  The name of the applicant and the filing date
and hour of its application shall be entered in the application Entry
book in the order in which the applications are received.

SECTION 7.       Renewal of License . — The
license issued pursuant hereto shall be renewed annually with the
Authority upon satisfaction of all relevant Authority requirements for a
licensed enterprise; failure to renew the license on time shall subject
the license to a surcharge equivalent to 25% of the filing fee for
every month of delay or fraction thereof and shall cause the suspension
of its operation.  The deadline for renewal of license shall be reckoned
from the date of its issuance.

SECTION 8.       Cancellation of License . — The
Authority may, after due notice and hearing, cancel the license to
operate as a licensed-NVOCC or ocean-freight forwarder on the following
grounds:

a.    Failure to maintain the qualifications and requirements for licensing as herein required;

b.    Willful or grossly negligent violation of any of the
general and specific terms and conditions for a licensed enterprise or
any provision of this circular;

c.    Willful or grossly negligent violation of any law, order, or regulation pertinent to its operation as such.

SECTION 9.       Operation Without License. — Any
person, natural or juridical, who in violation of Section 1 hereof,
shall engage in the business of a NVOCC or ocean freight forwarder,
without a valid license for the purpose from the Authority shall be
subject to a fine of not more than five thousand pesos (P5 ,000.00);
provided, however, that in addition to the imposition of such fine, the
business establishment of any such person shall be subject to temporary
closure, until and unless he shall have secured the required license.

Any carrier, shipper, or person who shall deal with, accommodate,
or transact business with a NVOCC or ocean freight forwarder who is not
duly licensed by the Authority shall be subject to a fine of not more
than three thousand pesos (P3 ,000.00).

SECTION 10.    Enforcement . — For the effective
enforcement of the provisions of this Circular, a Memorandum of
Agreement will be entered into by and among the Maritime Industry
Authority, the Bureau of Customs, Philippine Ports Authority, Philippine
Coast Guard, and other relevant agencies.

SECTION 11.    Effectivity . — These rules shall
take effect fifteen (15) days after its publication in two (2)
newspapers of general circulation in the Philippines.

Approved by the Maritime Industry Board in its meeting on August 23, 1984 .

Manila, Philippines.

Adopted: 23 Aug. 1984

(SGD.) VICTORINO A. BASCO
Administrator

(SGD.) JOSE P. DANS, JR.
Minister of Transportation and Communications