GUIDELINES FOR FOREIGN VESSELS INTENDING TO LAY-UP IN THE DIFFERENT PPA ADMINISTERED PORTS

1.1 Sections 6.a(ii) and 20 of P.D. No. 857, as amended.

1.2 PPA Administrative Order No. 07-89, as amended by PPA Administrative Order No. 08-89.

1.3 PPA BoardCom Resolution No. 2009-1169 confirming the function
and responsibility of PPA in designating lay-up areas for foreign
vessels in the different ports under its jurisdiction.

2. SCOPE

This Memorandum Circular shall apply to all foreign vessels due for
lay-up in PPA Administered lay-up areas and all persons or entities
engaged or interested to engage in the vessel lay-up trade.

3. DEFINITION OF TERMS

3.1 Laid-up vessels – Vessels which have been
decommissioned or otherwise unemployed and idle while waiting for better
business prospects for their operations.

3.2 Lay-up areas – The areas designated by PPA for vessels
that are laid-up. These are identified by the corresponding coordinates
in latitudes and longitudes.

3.3 Lay-up Agent – Any person or entity which are holders of
Permit to Operate as Lay-up Agent duly authorized by PPA to engage in
vessel lay-up trade.

3.4 PMO – Port Management Office

4. GENERAL PROVISIONS

4.1 Designated Lay-up Areas – The lay-up areas duly
designated by PPA in the different ports under its jurisdiction shall
be used as lay-up areas for foreign and domestic vessels.

4.2 Authorization as Lay-Up Agent – All foreign vessels
intending to lay-up shall be represented by an agent duly authorized by
PPA to engage in vessel lay-up trade.

4.3 Procedures for Laying-up – All laid-up foreign vessels
shall follow the guidelines prescribed in Article II, Sections 4, 5 and 6
of PPA Administrative Order No. 07-89 otherwise known as Designation of
Lay-Up Areas for PMOs.

5. SPECIFIC GUIDELINES

5.1 Filing of Application

Application for Permit to Operate as lay-up agent shall be filed in
the PMO which has jurisdiction over the designated lay-up area where the
foreign vessel shall be laid-up.

5.2 Management Competence Requirement

Applicant s for vessel lay-up agent, including its principal
officers, must have a minimum of one (1) year experience in
maritime-related field.

5.3 Technical Capability Requirement

The lay-up agent shall have readily-available equipment and facilities, whether owned or lease, such as tugboat, communication equipment
and such other equipment and facilities necessary for the effective
provision of lay-up services, all in serviceable and ready-line
condition.

5.4 Documentary Requirements

The following documentary requirements of the Authority shall be complied by the applicant:

a. Letter of Application:

b. Certified copy of Registration with SEC together with the
Articles of Incorporation and By-Laws specifically provided therein the
laying-up of vessel is one of the entity’s nature of business (for
Corporation/Partnership);

c. Certified copy of Registration of Business Name issued by the
Department of Trade and Industry reflecting therein that the laying-up
of vessels is included as one of his/ her business interests (for Single
Proprietorship);

d. Certified copy of the latest Audited Financial Statement submitted to BIR;

e. Certified list of readily-available equipment and facilities
together with supporting documents as proof of acquisition thereof;

f. Company profile with bio-data/resume of Principal Officers/Name
of Proprietor indicating their maritime-related experiences.

5.5 Approval and Issuance of Permit to Operate (PTO)

The PMO shall approve and issue the Permit to Operate as Lay-Up Agent
which shall be valid for a period of one (1) year. The PTO shall be
renewable upon request of the lay-up agent.

5.6 Performance Bond

To ensure faithful compliance of the authorized lay-up agent with its
obligations, the grantee shall post and submit to the Authority, one
(1) month upon execution of the PTO, a Performance Security Bond in the
amount of FIVE MILLION PESOS (P5M) in the form of either cash, manager’s
check, cashier’s check, bank guarantee/draft or surety bond, callable
upon demand.

5.7 Payment of Lay-Up Fee

A nominal lay-up fee of US$91.00 (plus VAT) per day per foreign
vessel, regardless of size, shall be charged by the Authority. The
authorized lay-up agent shall pay the lay-up fee on a monthly basis
payable on the 5^th day of the succeeding month. Failure of the lay-up
agent to pay the lay-up fee on time shall be subject to interests and
penalties in accordance with the existing regulations of PPA.

For payment in Philippine Peso denomination, the Foreign Currency
Exchange Rate (FCER) issued by the Commercial Services Department, PPA
Head Office (based on the 15-day average of the prescribed Bangko
Sentral ng Pilipinas FCER) prevailing at the time of the issuance of
invoice shall be used in determining the peso-value of dollar
denominated port charges due PPA.

5.8 Other PPA Charges

Aside from the lay-up rate, the following PPA charges shall likewise be collected:

5.8.1 Upon vessel’s arrival, port dues of US$0.081 per GRT per
call shall be collected. This is the amount assessed against a vessel
engaged in foreign trade based on its total GRT or part thereof,
including those engaged in barter trade for each entrance into and
departure from a port of entry in the Philippines.

5.8.2 An anchorage fee of U$0.020 per GRT per calendar day or
fraction thereof shall also be collected upon arrival of the vessel.
This is the amount assessed against a vessel engaged in international or
foreign trade, including those engaged in barter trade, that do not
berth but drop anchor at government port while waiting completion of
documents processed for lay-up.

5.8.3 Upon vessel’s departure, an anchorage fee of US$0.020 per GRT per calendar day or fraction thereof shall be collected. This is the
amount assessed against a vessel engaged in international or foreign
trade, including those engaged in barter trade, that do not berth but
drop anchor at government port while waiting completion of documents
processed for vessel’s departure at the anchorage area.

6. PENALTIES

Any person or entity violating the provisions of this Circular or the
terms and conditions stipulated in the Accreditation Certificate issued
to the lay-up agent shall be subject to the administrative fines and
penalties under Section 43 of P.D. 857, as amended by Executive Order
No. 513 and its implementing regulations.

7. SEPARABILITY CLAUSE

If for any reason, any sections or part of this Circular is deemed
invalid by competent Authority, the declared invalid section or part
thereof shall not affect the other sections or parts to which such
declaration or nullity does not apply or relate.

8. REPEALING CLAUSE

Any provision of existing PPA rules and regulations which are
inconsistent herewith shall be deemed amended or modified accordingly.

9. EFFECTIVITY

This Memorandum Circular shall take effect fifteen (15) days after its publication in a newspaper of general circulation.

Adopted: 10 June 2009

(SGD.) ATTY. OSCAR M.SEVILLA
General Manager

^[*] Text Available at Office of the National Administrative Register, U.P. Law Complex, Diliman, Quezon City.