Further Amending The Philippine Overseas Shipping Act Of 1955

Case Overview and Summary

Summary of Presidential Decree No. 214 Amending the Philippine Overseas Shipping Act of 1955

Objectives:
- Encourage and assist the Philippine merchant marine
- Foster development of the Philippine merchant marine
- Provide financial assistance for shipbuilding program
- Promote overseas shipping

Provisions:

• Allows Philippine citizens, associations, or corporations engaged in overseas shipping to freely constitute a mortgage, lien, or encumbrance on vessels and equipment for financing construction, acquisition, or purchase of vessels. (Sec. 11-1/2.a)

• Requirements for instrument of mortgage, lien, or encumbrance: (Sec. 11-1/2.b)
- Name of vessels
- Name of parties
- Time and date of reception
- Interest in vessel transferred or affected
- Amount and date of maturity of mortgage
- Copy furnished to Central Bank of the Philippines

• Mortgage, lien, or encumbrance constitutes a preferred maritime lien on the mortgaged vessel for the outstanding mortgage indebtedness. (Sec. 11-1/2.c)

• Preferred mortgage has priority over all claims against the vessel. (Sec. 11-1/2.d)

• Lien of preferred mortgage can be enforced by suit in rem or otherwise in the Philippines or any foreign country where the vessel is found, following the procedure of that country for enforcing ship mortgages constituting maritime liens. (Sec. 11-1/2.e)

• After judicial sale or public auction: (Sec. 11-1/2.f)
- All claims against the vessel are extinguished
- Claims attach to sale proceeds after satisfying preferred mortgage, in order of priority
- If proceeds insufficient, residue divided pro rata among creditors of same priority
- Unpaid credits enforceable by personal action against debtor
- Record of judicial sale inscribed in ship registry

• Repeals or modifies inconsistent provisions of other laws and regulations. (Sec. 2)