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INTERNATIONAL DEEP WATER COMMERCIAL FISHING FLEET – FUNDING & OPERATIONS

COMPREHENSIVE BUSINESS PLAN

ALL MATERIALS HEREIN SUBJECT TO FINAL NEGOTIATIONS

©2019-2020 Ruth Sto Domingo©

Zone 7, Sagrada,

Pili, Camarines Sur

4418 Republic of the Philippines

Tel +63 977 340 6881 (Globe)

Tel +63 921 495 4964 (Smart)

CONTACT US

Some rights reserved.

Published 2019

The views expressed in this publication are those of Ruth Tandaan Sto Domingo and do not necessarily reflect the views and policies of the subsidiaries, affiliates and/or other associates and/or all other people who may reasonably be construed to be working in cooperation with, for and/or on behalf of Ruth Tandaan Sto Domingo. This Copyright does not apply to copyright materials not owned and/or created by The Author in this publication. If the material is attributed to another source, please contact the copyright owner or publisher of that source for permission to reproduce it. The Author cannot be held liable for any claims that arise as a result of your use of the material. Please contact the author at the email address listed above if you have questions or comments with respect to content, or if you wish to obtain copyright permission to use the material contained herein.

54M LL

 

Total Investment to Date from base Investment Pool under the sole ownership and control of the Investor of Ten Million US Dollars with the initial reserve amount of the company held under the Total Cost Column and the actual Cash Outlay of the Investor under the Running Total column. The Reserve Amount for the Company to be held by Investor.

Company Cash Reserve

Actual Investor Outlay

USD $1,050,000.00

USD $08,950,000.00

         

Estimated Cost Per Voyage Per Vessel

Estimated Gross Return Based on 700 tonnes at USD $5.00 per Kilogram

Estimated Primary Net

Estimated Secondary Net

Estimated ROI to Investor

USD $1,800,000.00 Cost Per Voyage, allowing for variances for two longliners and one Longliner Factory vessel SEE (9) ON PAGE 11

USD $3,500,000.00

USD $1,700,000.00

USD $1,190,000.00

USD $952,000

Annual Return to Investor based on 80% of Secondary Net being based on four successfully completed Voyages per Year:

USD $14,000,000.00

USD $6,800,000.00

USD $4,760,000.00

USD $3,808,000.00 Projected Annual ROI to Investor

INTRODUCTION

Commercial Fishing Operations - Four Ship Fleet - Investment OpportunityThis document should not be viewed as a traditional business plan, but rather a Business Brief designed to highlight only the major aspects of operations, monetization and growth of the business for the purposes of obtaining working capital and for the prompt and profitable repayment of all Capital Investments. As such, the primary focus of this Business Plan regards the initial funding and the rapid repayment of those funds with a viable positive return of investment to adequately compensate the original Investor(s), in addition to the growth and expansion necessary and beneficial for the expansion of both funding and operations. The inclusion of the plans and programs for growth and expansion, will hopefully provide the Investors with a better sense of how much can be accomplished with their strategically invested funds.

The original owners have more than forty cumulative years working as government consultants and business specialists, primarily in the field of humanitarian and infrastructural development including Project and Operations Management roles in the Philippines and globally. In this day and age, as it becomes increasingly difficult to fund projects that are substantial and sustainable at sufficient levels to provide any meaningful assistance to the poor and impoverished persons in the Philippines, they have turned their attentions to more commercial endeavors. Not only does this make initial funding and the ROI substantially more viable, but it also allows for this group to facilitate a more immediate return of investment capital, profits and tax benefits to the investor. The two primary areas of focus thus must continue based on the ability to establish economic security, sustainability and prosperity in addition to a more sustainable means to continue efforts into the future for the direct benefit of the Investors and the people.

Thus, while there are a great many aspects of the business operation openly discussed here, it is very possible that the three most important sections for the Investor will be the current level of funding needed to be raised, the ability of the company to return those funds invested and sufficient levels of profit to make it beneficial for the Investor, and the ability to expand the operations into existing markets to further maximize returns. At the end of the day, we are all involved to diversify our Investment Portfolios, provide a better life financially for ourselves and our families, and to leave a positive and lasting mark making our society and our nation a better place for our children and our posterity.

The long term plans for growth and expansion are included because it is hoped that such a cooperative effort as that which is proposed herein, will allow for the eventual construction of sustainable developments in both Japan and the Philippines. For this reason, rather than seeking capital investors as originally envisioned, it has been deemed more beneficial to seek out like-minded equity investors and venture capitalists. In this way the primary focus of financial and economic viability will remain the priority, ensuring the continued return and a continual flow of positive financial returns for the companies involved. This will also create a viable, in-house solution for the leveraging of corporate assets for the expansion of the fleet and its economic potential for the purpose of long-term financial gains from minimal initial investments. At such a time as the corporation has reached a viable level of financial gains, a secondary focus on Public Relations and Sustainable Development can commence with operations in both the Philippines and in Japan if such options are a viable consideration therein.

It is important to note that this expansion will not occur until such a time as all Capital Investors have been paid off in full and until the Company has grown to a sufficient level to allow for the financial pursuit of both the commercial and more humanitarian ventures of the company. It should also be noted that the potential for positive Public Relations from such a venture should not be minimized as they will greatly enhance business and financial opportunities for all parties involved. Corporate Social Responsibility is an integral portion of the business plan, but it is imperative to remember that one must be able to provide for and support their own families before they can begin to help others as well. Thus, it is imperative that the financial and economic machinations are in place for the continued financial and economic viability of the corporation and investors first, with ventures into Sustainable Developments being established after such a time as the corporate venture is in a stronger position to undertake such ventures.

All details herein are subject to the negotiations by and between the Company and the Investor.

There is no adequate information available on private investments in the Philippine fisheries sector. However, based on the Philippine Fisheries Code and the fisheries sector Philippines plan, massive investments are urgently needed by the public and private sector, at all aspects of the fisheries industry including production, harvesting, processing, marketing, research and extension. FAO.org “INFORMATION ON FISHERIES MANAGEMENT IN THE REPUBLIC OF THE PHILIPPINES – 2017

TABLE OF CONTENTS

Table of Contents

INTRODUCTION 2

TABLE OF CONTENTS 4

EXECUTIVE SUMMARY 7

MISSION STATEMENT 8

VISION 8

INVESTMENT OPPORTUNITY 9

Capital Investors 9

Equity Investors 9

Venture Capitalists 10

Joint Venture 10

PHILIPPINE INVESTMENT 11

FINANCIAL STATEMENT AND PROJECTIONS 12

Funding Requirements and Reasoning 15

Investor Control of Funds 15

Escrow and Accounting Options 16

Purchase of Vessels 16

Importing Vessels 17

Licensing and Fees 17

Outfitting or Refitting Vessels 18

Auxiliary Equipment 18

Added Security and Safety Measures 20

Company Cash Reserve Fund 20

First Voyage 21

Capital Gains and Debt Payments 21

ABOUT THE COMPANY 23

Management Personnel 23

Business Controls 24

Accounting System 24

MARKETING PLAN 25

Fish Markets and Tuna Auctions 26

Seafood Wholesalers and Distributors 26

Specialized Foreign Buyers & Brokers 27

Retail Markets 27

MARKET COMPETITION 28

Philippine Fleet 29

Japanese Fleets 29

International Wholesalers 29

International Foreign Fleets 30

Pirate Operations 30

BUSINESS OPERATIONS 31

Strategic Fishing Plan 31

Combined Fleet Efforts 33

The Four Ship Solution 34

Crew and Vessel Competitions 35

Safety and Security 35

The Four Ship Solution 36

Factory Ships and On Board Processing 36

Vacuum Sealed and Ice Packed or Frozen 36

Vacuum Sealed Freezer Storage 37

Quality Control 37

Philippine Crews 38

In Port Cleaning 39

Licensing Requirements 39

Office and Office Personnel Responsibilities 40

Philippine Business Benefits 40

ABOUT THE VESSELS 42

Flagging Options for Ship Registration 42

Importance of Storage Capacity and Hold Space 43

Longliners 43

Processing or Factory Ships (Motherships) 44

Trawlers and Purse Seiners (Conversions) 44

Vessel Crews 45

Factory Ship Crew 45

Fleet Crew 46

Indigent and Homeless Job Placement 46

Philippine Labor Laws and Company Policy 47

Fleet Command Structure 47

Crew Share Calculations 48

SHORT TERM GROWTH AND EXPANSION 49

Asset Backed Securities 49

Fleet Expansion 49

Eastern Seaboard Freeport Zone and Port Facility 50

Retail Sales 50

Retail Restaurants and Food Stands 50

LONG TERM GROWTH AND EXPANSION 51

Japanese Sustainable Development 51

Verde Island Sustainable Development & Resort 52

Whole System Sustainable Development 53

Agricultural Security 53

Food Forests 54

Aquacultural Security 54

Coral Triangle Conservation Program 54

CHALLENGES OF BUSINESS OPERATIONS 56

GLOSSARY AND TERMS 57

REPUBLIC ACT NO. 8550 FEBRUARY 25, 1998 67

CHAPTER I 67

CHAPTER II 76

ARTICLE I 78

ARTICLE II 81

ARTICLE III 85

ARTICLE IV 88

CHAPTER III 89

ARTICLE I 89

ARTICLE II 92

CHAPTER IV 95

CHAPTER V 96

CHAPTER VI 98

CHAPTER VII 105

CHAPTER VIII 108

CHAPTER IX 110

REPUBLIC ACT NO. 10654 111

EXECUTIVE SUMMARY

The primary goal of this document is to present an adequate level of evidence for the financial and economic benefits of investment within this effort. In fact, the principal amount being requested would be paid back in full within a period just over one year in length, with everything paid above and beyond that being a positive return generated for and on behalf of the original Investor. Given the nature of the business however, it is necessary to borrow more than one hundred percent of the value of the business in the original investment, thus making more traditional bank financing impossible, though at the same time presenting an excellent opportunity for the more discerning investor.

Unlike the more traditional Business Plan, this document looks not only at the financial viability and potential for growth and expansion of the business, but also looks at the ultimate goals of the Parent Company to assist in the domestic eradication of poverty and the elevation of the median quality of life for all Filipinos. Such an undertaking is in reality, well within the realm of possibility … with the proper approach. However, as evidenced by a great many existing charities, the vast majority of time, energy and resources are devoted to finding an ever increasing pool of donors … in short, most of the money being donated under the auspices of charity, ends up being spent on lavish affairs to attract more donors. At the end of the day, only a pitifully small portion of the funds donated actually make it to those in need.

The first priority will be the payment in full of the Original Investor. After this, the obvious solution is in viable corporate business ventures under an established incorporation, with the parent incorporation under the ownership and control of a Foundation, with both the Corporate Entity and the Foundation heavily restricted by Corporate Bylaws, and establishing the foundation as the primary shareholder. Thus, seventy to eighty percent of the corporate proceeds will be able to be reinvested in humanitarian endeavors without any adverse impact on the Foundation and/or the standard operations of the corporate entity.

This however, also opens the door to the means to secure investment and guarantee this same eighty percent of the corporate proceeds back to the original investor in order to expedite not only a full return of the principal investment, but also a meaningful and substantial positive financial or capital gain for the original investor. Corporate Assets may be leveraged to create Asset Backed Securities to increase holdings and potential returns. This can be accomplished in cooperation with the Investor or after the Investor has been paid in full based on their needs and desires.

A potential return of eighty percent of the net income of the Company paid directly to the Investor ensures that the principal amount will be returned in a very short time to the Investor. This will further allow these funds to be reinvested and to generate additional proceeds for the investor at the same time. After the principal amount is repaid in full, positive proceeds continue to flow from the original investment, thus allowing for the same funds to generate additional capital gains in separate and new investments while they are still providing financial returns from their original investment.

MISSION STATEMENT

To create a large, mobile fleet capable of reaching International Waters anywhere around the globe. At the same time, to utilize innovative methods of storage that allow for the more valuable catches to be stored for lengthier periods of time so as to maximize the proceeds generated by the fleet in their voyages, expand time at sea and to allow for the ability to sell fish on the open auctions rather than being forced to sell to the fish canneries for reduced prices.

VISION

To maximize the profit potential and return of the fleet while providing premier quality products for select markets. Further, to establish Global Standards and Examples of Sustainable Developments within Japan and the Philippines. Finally, the establishment of a commercially viable and environmentally sustainable commercial fishery that optimizes returns to the local economy.

INVESTMENT OPPORTUNITY

While fish consumption in Japan has been slightly reduced over the last few years, it is still a primary component of the diet for the average Japanese person. However, the fleets and limitations of the Japanese Commercial Fleets have reached near peak capacity, forcing the introduction of additional options in order to ensure the continued provision of fresh, healthy and clean seafood products, including fish. While the initial proposal was slated to be one in search of Capital Investment, it appears upon closer examination, that a Joint Venture utilizing both Japanese and Philippine options may help to maximize both the ability of the corporate venture to be successful in its operations and its ability to generate a continual flow of positive capital gains more efficiently. This can be further expanded through the establishment of a Port Facility on the Eastern Shore of Central Luzon to move directly from cost to full retail sales.

Capital Investors

While the Japanese are well known and renowned across the world for their ability to see into the future and to work for long-term goals extending well beyond the lifetime of the individual, they are also, like any business oriented people, aware of the need to generate short term income. Such an investment opportunity as this may be ideally suited for more perspicacious Capital Investment groups as it will provide a viable return of nearly forty percent of the principal amount in the first year and a complete repayment of the principal amount in less than three years. Thus, it will be possible for the more discerning investor to have a very short term return of the initial capital investment, allowing for this capital funding to be reinvested and to strengthen their financial portfolio, while at the same time, continuing to provide financial and capital gains on the original investment. While this is merely a short-term strategy, it provides a very unique and economically beneficial scenario for the Capital Investor.

Equity Investors

The Equity Investor is generally seeking more of a long-term investment while retaining some ability to oversee and manage the investment, though at the same time not having to be burdened with all of the minutia of the daily details of running a separate and independent business venture. This is generally done through a position or positions on the Board of Directors, where as voting members, they will be allowed to determine the direction of the company without having to spend the necessary time dealing with the daily duties.

For an Equity Investment firm, this particular investment opportunity may present a very unique and beneficial perk. Given the long-term nature of the expansion, an Equity Investment firm that was interested in long-term venture capital investment opportunities may find this to be an excellent chance to make a smaller initial investment providing immediate returns, and at the same time, open the door for a much larger future investment with substantially more returns both economically and in the way of Public Relations. The Venture Capitalist is generally hesitant to invest large volumes of capital into any new business interest, whereas the Equity Investor may, when the conditions are such that they can retain a sufficient level of control and are assured of a feasible return on their initial investment.

This is a very unique opportunity for the more prescient equity investor to enter into a comparatively minor investment with substantial immediate gains, and the potential to determine the path and direction as the business grows and develops, to more fully and accurately determine the practicability of future investments and the potential for returns … economically and in terms of Public Relations, Marketing and the ability of such investments to in turn, attract more investors to their portfolio.

Venture Capitalists

Venture Capitalists are generally hesitant to invest in “new” companies, even in tried and true profitable ventures. Understandably, this may not be an ideal immediate solution for a Venture Capitalist, but given the long-term plans for growth and expansion including the creation of fully (Systemically) Sustainable Developments, certainly in the Philippines, though equally as likely in Japan, this investment opportunity may be the proverbial exception that proves the rule. While the company itself may be new, the owners are all experienced in their own rights, and the business methods and markets are proven and known quantities that will allow for an immediate and viable return on the initial capital investment, while allowing for the continued planning and development of the more long-term goals and strategies.

Joint Venture

The ideal solution would be a full Joint Venture with either an Equity Investor or a Venture Capitalist firm. This would allow for an existing or new business venture in Japan to partner with a newly formed Philippine corporate entity, or perhaps for the establishment of a wholly Philippine owned venture in either or both the Philippines and Japan. A Philippine Joint Venture, under the Philippine Laws of Joint Ventures and Partnerships within the Philippines would allow for the maximization of a reduction in tax liabilities, while still granting the Japanese portion of the ownership control of the corporate affairs through their place on the Board of Directors, in addition to the full retention of their financial and capital gains as shareholders.

Such an option as this would allow for the complete and unhindered cooperation as would be necessary to gain the full benefit of the combined fleets and both the more financially viable gains of the Japanese fish markets and the reduced tax and business costs associated with Philippine ventures. This option would further allow for a combined effort to strategically invest in both the Japanese and Philippine operations as per the individual needs of said operations, for an increased capital gains for all of the individual parties involved.

PHILIPPINE INVESTMENT

Philippine Investments can be difficult for some of those people who may not be overly familiar with the local laws and methods for conducting business. However, just as with the Japanese culture and society, the strong presence of select, domestic individuals on the Corporate Board can assist the corporate venture in ensuring that all of the domestic laws are followed and that any potential hurdles that an otherwise foreign firm may face, are quickly, easily and efficiently dealt with so as to allow for the corporate venture to function in the same manner that any domestically owned venture would, without any legal concerns other than those normal to any business interest.

Here again, the Philippine laws regarding Joint Ventures and Partnerships within the Philippines have been established to allow for just such a cooperative effort in order to attract foreign investments into the Philippines. Furthermore, the domestic ownership and management of the corporate venture, includes persons who are intimately familiar with the Philippine government, local laws, means of doing business here and internationally, and even into the realm of Program and Operations management. Their long record of conducting business within the Philippines has left them with all of the relevant contacts and relationships with the requisite officials to allow for the immediate commencement of operations without the delays as may otherwise present themselves.

All of the necessary groundwork has been laid for the importation of the ships, the inspections and other licensing requirements and even for the upgrading and refitting of the ships as may be necessary, though such undertakings will be finalized with private corporations. Furthermore, long term growth and expansion include options for the construction of a private island resort wherein the local commerce can all be filtered through the corporate venture for the direct capital gains of the corporate venture. Such an investment opportunity would include the ownership of a large, private island (consisting of 3600 Hectares) used to house exclusive resorts and other facilities, providing an ideal vacation getaway for Japanese tourists and business travelers as well as for the more affluent Filipino citizens.

Again, it is important to note that all of the necessary government relationships to accomplish such goals with a minimum of resistance have already been put in place through business and personal relationships that have been established over the course of years and even decades of operations within the Philippines.

FINANCIAL STATEMENT AND PROJECTIONS

The financial statements and forecasts as included herein, are merely for the sake of demonstrating the financial viability of the fishing industry. It should be noted that the current prosperity of commercial fishing industries is easily verified, even to a large degree, in more depleted, domestic waters for nations around the world. Given the less restrictive nature of fishing in International Waters, it can be clearly evidenced that the value and incomes will only increase, even more so as natural resources are depleted. However, the later introduction of numerous programs of sustainability, including sustainable aquaculture, will only further the financial gains and the public relations and marketing ability of the corporate venture. The original financial projections include only three longliners and one factory or processing ship, providing a complete return of the Principal Amount of Capital Investment to be returned in a period extending just beyond two years, and capital gains or profits after that time.

Furthermore, the ability to have Japanese firms purchasing surplus Japanese vessels, and the potential for more localized refitting, should increase the overall savings from the initial investment, while at the same time increasing the Cash Reserve of the Corporate Venture as set forth herein.

ORIGINAL INVESTMENT – IDEAL

EST. COST EACH

QUANTITY

TOTAL COST

RUNNING TOTAL

Three (3) Commercial Longliners with a minimum capacity of 150 metric tonnes of freezer and/or crushed ice storage space on board each vessel

USD $1,000,000.00

Three Vessels

USD $3,000,000.00

USD $3,000,000.00

One (1) Factory Ship or Processing Ship with a minimum capacity of 450 metric tonnes of freezer and/or crushed ice storage space on board

USD $1,500,000.00

One Vessel

USD $1,500,000.00

USD $4,500,000.00

Cost of delivery, licensing, taxation and importation of vessels to a select port in the Philippines (estimated to be valued at 25% of the actual cost of the vessels before any associated discounts and/or Tax Relief as has been discussed herein) (Cost of Delivery should be negotiated and included in the Sales Price of the Vessels)

USD $0,375,000.00

Four Vessels

USD $1,125,000.00

USD $05,625,000.00

Budget for Outfitting each ship to include any and all such demands of BFAR and the Inclusion of personal and vessel safety devices, upgrading and/or converting to longliner reels, new lines and other such improvements as shall be necessary to ensure no failures that would endanger the crew or that would prohibit the successful conclusion of the maiden or other immediate voyages. Actual Costs should be substantially lower, with these costs being covered in the latter portion of this documentation.

USD $400,000.00

Four Vessels

USD $1,600,000.00

USD $07,225,000.00

COSTS PER VOYAGE

COST EACH

QUANTITY

TOTAL COST

RUNNING TOTAL

Fuel Cost (Based on full retail cost, currently one US Dollar per liter) Use estimated at 2000 Liters per day per vessel for operations of the Main Engine and all generators for a period of 90 days. Actual operations should utilize substantially lower levels of fuel, these numbers are based on heavy use and all larger vessels with additional fuel supplies held as a reserve. Smaller vessels should consume less than 1200 liters daily and voyages should never extend more than two months or only two-thirds (or less) of what is estimated here.

USD $200,000.00

Four Vessels

USD $800,000.00

USD $08,025,000.00

Food Cost (Based on 50 Crew Members per Factory Vessel and 20 Crew Members for each Longliner) for a 90 day voyage, at fifteen US dollars per day food allowance per person with reserve supplies.

USD $0,150,000.00

Total Cost

USD $150,000.00

USD $08,850,000.00

Bait Cost per Voyage (9) – Based on Six kilograms of bait per hundred hooks for 45,000 hooks. Cost may be offset by the inclusion of a Trawler into the fleet which would allow the trawler to leave port first and catch bait for the fleet. Total Bait consumption estimated at 2.7 Tonnes at a cost of 600 US dollars per tonne for squid and mullet. Much of the bait will be used more than once with some even serving as food for the crew. Estimated Catch or “Hook Up” rates are based on catching fish on one out of every ten hooks daily.

USD $100,000.00

Three Vessels

USD $100,000.00

USD $08,950,000.00

Total Investment to Date from base Investment Pool under the sole ownership and control of the Investor of Ten Million US Dollars with the initial reserve amount of the company held under the Total Cost Column and the actual Cash Outlay of the Investor under the Running Total column. The Reserve Amount for the Company to be held by Investor.

Company Cash Reserve

Actual Investor Outlay

USD $1,050,000.00

USD $8,950,000.00

Estimated Cost Per Voyage Per Vessel

Estimated Gross Return Based on 700 tonnes at USD $5.00 per Kilogram

Estimated Primary Net

Estimated Secondary Net

Estimated ROI to Investor

USD $1,800,000.00 Cost Per Voyage, allowing for variances for two longliners and one Longliner Factory vessel

USD $3,500,000.00

USD $1,700,000.00

USD $1,190,000.00

USD $952,000

Annual Return to Investor based on 80% of Secondary Net being based on four successfully completed Voyages per Year:

USD $14,000,000.00

USD $6,800,000.00

USD $4,760,000.00

USD $3,808,000.00 Projected Annual Return to Investor

 

POINTS OF CLARIFICATION LISTED ON THE NEXT PAGE

 

  1. All costs are in US Dollars – For the sake of Convenience, Current values are based on Fifty Philippine Pisos being equivalent to One US Dollar.

  2. Tonnes refers to One Thousand Kilogram or Metric Tonnes

  3. Fuel Usage is measured in Liters per day and is based on estimates of approximately five hundred US gallons or approximately 1900 Liters of Fuel Consumption per day to power both the primary Engine(s) and all necessary generators

  4. Crew Size is based on an average estimated crew of fifty personnel on board each factory vessel and twenty personnel on board each longliner.

  5. Voyage Length is estimated herein at Ninety Days though actual voyages will ideally incorporate no more than forty days from start to finish allowing for additional voyages, reduced cost per voyage and increased profit margins

  6. The Differentiation between Primary Net Income and Secondary Net Income is explained within the glossary of this document and is based on the unique method of payment of the Crew based solely on performance and minus the initial cost of the voyage. Crew is paid 30% of the Primary Net Income, to be divided as shall be determined based on Crew Position, performance and other factors.

  7. The estimated return per voyage is based on a Worse-Case Scenario netting only five thousand US dollars per tonne for the harvest or five US dollars per kilogram. Actual amounts will vary, especially through the select utilization of Philippine based wholesale exporters who will bid on varied fish harvested; more specifically those that are ideally suited for the Asian Sashimi and Sushi markets. Special Focus should be granted to Tuna, Mahi Mahi and Lapu Lapu (Grouper) that are high value targets, potentially increasing sales potential. Furthermore, additional efforts to allow for the direct sale to full retail markets should substantially increase the income potential for operations.

  8. Estimated projected returns for a Capital Investor are based on an amount not less than Eighty Percent of Secondary Net Income or eighty percent of the Actual Profits generated by the Company. Actual returns may vary depending on the final terms and conditions as shall be negotiated.

  9. Total bait usage is slated to be two point seven tonnes per day but only during periods of fishing. This figure is based on six kilograms of bait per one hundred hooks, with 15,000 hooks on the Longliners. Each vessel should lift between five and ten metric tonnes per day of harvest to fill seven hundred and fifty metric tonnes of storage space, thus requiring an average estimated fishing time of 45 days total for a total bait estimation of 105 Metric Tonnes. This cost will be totally eliminated through the inclusion of a Trawler working as part of the fleet.

  10. Net Income: Net Income for the purposes of this and related documentation, is separated into Primary Net Income and Secondary Net Income due to the unique method of Production Based Payment for the commercial fishing crews and the requisite, though difficult to predict, cost of maintenance on the commercial fishing vessels.

  11. Primary Net Income: The primary Net Income is the total income of the voyage less the cost of food, fuel and bait and is used to calculate the payment for the crew of the fishing vessels. The crew will receive generally thirty percent of the Primary Net Income to be divided as Crew Shares, with larger shares being granted to more senior and requisite crew members such as the Captain, First Mate, Engineer and others.

  12. Secondary Net Income: The Secondary Net Income is the sum of the Primary Net Income less all additional costs for repairs and maintenance that must be completed in order to prepare the vessel for its next voyage. Such costs as further deducted will constitute repairs to fishing gear, motor oils, engine or generator repairs, repairs to freezer units and other such material as is necessary for the successful commencement and completion of further operations, in addition to any and all such standard business costs not directly related to the vessel. Among these are payroll for office personnel at such a time as additional personnel are added to the office, office supplies and equipment, taxes, licensing and other fees and any other such costs of doing business as shall be deemed to be necessary and beneficial for the continued lawful conduct of business operations.

  13. Insurance and Insurance costs are not possible to determine with any level of accuracy until such a time as the vessels have been selected, the number of crew members and other factors and variables are fully quantified.

  14. All of the facts and figures herein are based on the most expensive costs associated with conducting operations and should be substantially reduced in actual operations. For example, the average of five hundred US gallons or 1900 liters of fuel per day per vessel is just slightly above the average for the larger vessels. The smaller longliners with the more limited, one hundred and fifty tonne capacity should not likely utilize more than three hundred gallons per day. If there is any potential for over-estimating, it is based on the average return of five US dollars per kilogram, though this too is not excessive and should be a comparatively low figure. The inclusion of Mahi Mahi, Lapu Lapu or Grouper and the varieties of Tuna that can be targeted, should allow for a great many fish to be sold for substantially higher prices at the auctions in Cebu and Toyosu.

    The inclusion of a trawler into the fleet will also add to the overall costs, but should substantially reduce the cost of baits and baitfish and allow for an increase in catch. Should the Company Cash Reserve be sufficient and an adequate vessel be found, this purchase will be added to the three fleet ships already listed herein to again, increase the volume and the value of the marketable goods to be harvested.

Funding Requirements and Reasoning

There are some variables that can not yet be determined with any level of certainty. This is in large part due to the number of commercial fishing vessels that are constantly coming up for sale and being bought by competing organizations. In the case of commercial fishing, all of the accurate financial forecasts require many known quantities that are dependent on the specifications and capacity of the commercial fishing vessels being made operational. Matters such as fuel consumption, crew size, processing and even catching ability, all hinge on specific details about the vessels in use. This difficulty extends even to the level of licensing, insurance, import fees, inspection costs and a host of other factors that cannot be given until such a time as vessels are considered for purchase by both the Investor and the Company.

Given the inability to factor in all of these considerations, variables and allowances have been used with caution herein, most frequently presuming the higher levels of required financial investment and based on minimal returns for that investment. The need to borrow such an extent above the actual value of the vessels precludes the ability to seek out more traditional bank or mortgage financing and instead, requires the assistance of Capital Investors or other types of Investors. By factoring the highest possible costs and the lower estimates based on returns, this business and investor plan is limited to presenting only a “worst-case” scenario in terms of financing. However, this also indicates that if there are any changes in the actual numbers, they will generally work well in favor of the investors.

Investor Control of Funds

Unlike more traditional bank financing, where funds are released immediately to the company upon approval of the loan, the company seeks to work with the investor in order to ensure that the investor retains full control over their funds for as long as possible. Should the investor so desire, it is possible to use the services of Escrow Accounts and the accountants of choice, though it is believed that it will be more beneficial for all parties involved to allow for the Investor to retain full and complete control over their investment at all times.

It will be necessary for the agreed upon funds to be allotted to the company and to be earmarked for use by the company, though any and all expenses should be duly recorded and ultimately, approved directly by the Investor or their duly appointed representative. In the case of an Equity Investment, it should be possible for the Japanese firm to facilitate the purchase of the Surplus Commercial Fishing vessels from Japan without the need to send representatives of the company there to conduct such affairs. However, there will still, inevitably be expenses that occur during this process. As such, the funds should be allocated by the Investor, and the investor (or the Company, with partial or joint access to said funds, should the Investor not wish to be responsible for the accounting and other details) can pay for such costs as are incurred, adding this to the invested amount and deducting the cost of expenses from the Company Reserve Fund. At such a time as the details of the purchase have been finalized, the Investor can pay such amounts as have been negotiated directly, without the need to turn over cash reserves or relinquishing control over the funds to be invested.

Likewise, in the case of Philippine operations, there will be a working budget in order to facilitate all of the negotiations and other requirements for paperwork and licensing, and fees and other costs that must be made. As such, an accounting will take place and upon approval by the Investor and the Company, the Investor can pay most of the fees directly, again without having to relinquish control over the main body of funds. The company will never request up front fees or other release of funds without the direct oversight and management of the Investor. This is perhaps most easily accomplished through a dual signature requirement on all payments from the fund account, with the signature of a representative of the company and the investor being requisite for the issuance of any check or other financial instrument.

Escrow and Accounting Options

The options presented herein are presented solely as potential alternatives, wholly dependent upon the desires and requirements of the Investor and subject to the negotiations between the Investor and the Company.


It is generally held to be to the benefit of the Investor to establish a fund or otherwise establish a financial account for the Company receiving the investment, with the company having only limited access to the funds, generally requiring the approval and at least one signature from the Investor once operations have been approved. However, some Investment Firms do not wish to utilize their resources to handle the accounting of the Company receiving funds, so these concepts are all subject to the individual needs of the Investor and such terms and conditions as shall be negotiated by and between the Investor and the Company.

A third-party accounting firm may be a viable option, though this will also incur additional fees that may be better served remaining with the Investor or the Company. If Internal Accounting Options are not a viable alternative for the Investor, due to the cost of the utilization of their corporate resources or other factors, it may be possible to establish an account under the control of a representative duly elected by the Investor and the Company, with the signature of the representative for each firm required for any and all release of funds for approved purchases and expenditures. Such an option may allow for the Investor to retain full control over their funds, while at the same time minimizing the resources necessary to release said funds for purchases and expenditures as have been approved by the Investor and additional costs of accounting.

Purchase of Vessels

In the case that there is not a Joint Venture or Equity Investment approved for this operation, it will be necessary for Filipinos to travel to Japan and/or the Nordic countries in order to purchase the commercial fishing vessels. There are additional vessels in Africa that appear promising and well below the budget, though even those in Africa whom have worked in close cooperation with the owners are cautious about conducting business therein. However, the numerous Surplus Commercial Fishing vessels available for sale in Japan and a select few of the (fishing ships which, at the time of this writing, are) available in some of the Nordic countries, will require inspection and negotiations for their purchase.

Even in the event that there is a Joint Venture, there still may be some expenses incurred in acquiring the vessels necessary to establish the fleet. Rather than requesting “Operational Expenses” or others monies to be released by the Investor directly to the Company, it is believed that it may be more beneficial for the Investors to retain full control of their funds and to establish, through the company if so desired, a more viable means to “pay on the way” as funds are required for actual investments and operations.

Importing Vessels

Given the fact that all of the requisite licensing must be purchased and paid for before any ships can be imported for inspection, it will be beneficial to have a representative of the Investor living, either temporarily or permanently in the Philippines and/or Japan during this process. As such, the Investor Representative can take an active role in the negotiations with the requisite Government officials and gain a better understanding of how negotiations work in the Philippines, in addition to verifying that everything has been approved for the selected vessels before the final purchase of the commercial fishing vessels in question. In the event that a Joint Venture has been undertaken, there should most certainly be a representative present for and on behalf of the Japanese partner in the Joint Venture for the same purposes.

While the final selection of the vessels to be purchased must be among the primary considerations, once such a decision has been made, it will be necessary to immediately commence efforts in the Philippines to arrange for the importation, inspection and licensing of said vessels. All of the requisite paperwork will have to be in place before the new commercial fishing vessels can be imported in to the Philippines. Decisions should also be made regarding the outfitting and/or the refitting of these vessels before such a time as they are allowed to leave Japan for exportation to the Philippines. Some of the refitting may be better handled in Japan while some work may be sufficiently engaged within the Philippines after re-flagging and registering of the vessels under the Flag of the Philippines.

Licensing and Fees

There will be numerous fees that need to be paid to the Philippine government for the purposes of registering the vessels under the Philippine Flag, inspections, SEC Registration, in addition to other government agencies wherein the Company must be registered. As such, it is again imperative … or at least preferable, that a representative of the Investor be present to participate in these activities and the attainment of any and all of the requisite licensing. Additionally, in the event that a full Joint Venture has been undertaken, a representative of the Japanese firm should be present in order to ensure that all of the local paperwork is in order. Whether or not there will be a Philippine presence required in Japan depends on to what extent the Joint Venture has been undertaken and the scope of responsibility of the parties involved.

Outfitting or Refitting Vessels

It will be necessary to equip the vessels that are purchased, or in some cases, to reequip materials that are worn or where there are indications that replacement may be in order. Further, a selection of spare materials and equipment should always be kept on hand in order to ensure that breakdowns do not force an empty vessel to return to port. Such materials may include spare spools of mono-filament line, hooks, engine parts, motor oil and a host of other supplies that will not be provided with the purchase of the Surplus longliners. Provisions should also be made for the inclusion of large-scale machines for the ability to vacuum seal the larger fish or even all fish, and also for the ability to create fresh, potable water from the ocean water. Final decisions on the outfitting and refitting that will be necessary will not be readily made until such a time as the selection of available vessels are inspected and their potential deficiencies recorded. At such a time, the amount of outfitting and refitting necessary for the individual fishing vessels will be factored into the final decision as to whether or not to purchase any particular vessel.

Auxiliary Equipment

  1. Safety equipment should include substantially more than just life jackets and should be carefully reviewed and considered before the maiden voyage of any vessel. These safety devices should also be expanded to include saltwater activated radio beacons which will allow for anyone unfortunate enough to be swept or fall overboard to be outfitted with a beacon that will easily allow for them to be retrieved, even after dark. While such added safety measures are not requisite, they are certainly beneficial to morale, productivity and at the end of the day, preventing catastrophic and tragic loss of life that could readily be avoided.

  2. Kitchens will have to be fully stocked and supplied including potentially being refitted to adequately serve the requisite crew sizes needed for operations in International Waters in addition to pots, pans, plates and other sundry equipment that may not otherwise accompany the vessel at purchase. Further gear that will have to be purchased will include mattresses, sheets and other bedding materials, though personal items such as towels should be supplied by the crew members themselves. Toiletries should be allowed to be brought on board by the crew, but should also be made available in the on-board store.

  3. A sufficient amount of paint will need to be purchased for changing the registration information painted on the vessel itself, in addition to re-painting the name of the vessel as it is christened under the Philippine flag for operations. Sufficient time should be granted before the vessel sets sail to allow for shakedown cruises and a test of all gear, even if not in actual fishing conditions. This will also require the additional purchase of a substantial amount of fuel. The crew will need a limited level of training, though once at sea, programs will be implemented to cross train all crew members so as to avoid any potential loss of productivity in the case of injury or other detriment or loss to the crew.

  4. Additional supplies must include Personal Locator Beacons or PLB units, which typically run around twelve to fifteen hundred US dollars per unit. There should be a sufficient number on board to allot one to each and every crew member on board. Such units will have to be signed out, but should serve to bolster confidence and if someone does inadvertently get washed overboard, they will be easily located, even on a moonless night. These devices, while effective, should also be augmented by security gear designed to strap people to the ship in the event of bad weather working conditions, though such straps, like climbing gear, must be readily accessible and easily disengaged in the event of an emergency as well.

  5. It is very likely that lifeboats and other safety gear will have to be included in the purchases, as these are often inadequate on board, though necessary, not only in terms of licensing, but actual safety in the event that circumstances do extend beyond the control of the Captain. The actual equipment necessary for each ship under consideration, will again have to be determined at a later date only after more accurate decisions can be made in regards to the commercial vessels that are readily available at the time of final negotiations by and between the Investor(s) and the Company.

There are additional purchases which should also be made, including wet and cold weather gear for the crews, deck shoes, galoshes (or rubber boots) and other standard equipment required on board. While it is conceivable that some members of the crew will have their own gear, most will not. It is furthermore, unreasonable to demand that the crew be responsible for purchasing their own gear, at least for the initial voyages for the crew members. Additional and more personalized gear and options may be made available in the on-board store for the purchase of the crew, though these selections will also have to be purchased when outfitting the ship for her voyages and will add slightly to the original cost of operations, though should be well within the allotted budget for outfitting.

The online stores should also provide a wide selection of additional “comfort foods” and other wares readily available in the smaller convenience stores or “sari sari” stores commonly found in the Philippines. These goods should be made available to the crew at approximately the same prices for which they are sold in the local stores, not being overpriced merely because they are on board the ships and unable to shop elsewhere. While it is believed that cigarettes should be sold, alcohol and alcoholic beverages will be prohibited on board, with rare exception for the medic as a means to sterilize and cleanse tools and/or wounds should such a need arise.

Furthermore, crew members should be able to sign for items purchased, not only to encourage more purchases, but to prevent the need for cash on board that may prove too great a temptation for any crew members who may be less than totally honest in nature.

Added Security and Safety Measures

Drugs are not a major source of concern in the Philippines, though the drug cartels and dealers may be in other portions of the oceans. Furthermore, there are pirates to contend with, not only off the African Coast, but even (primarily) in the Southern portion of the Philippine Islands. Thus, it is not uncalled for, to have at least one member of the crew fully licensed and trained as an Armed Security Guard at the very least, or as a Security Expert with prior experience preferably. While many foreign ports prevent the presence of armed personnel on any ship utilizing their ports, such is not the case for Philippine flagged vessels in Philippine waters, and using Philippine ports. While the firearms should be kept under lock and key at all times when not in use, or when their presence is not required, it is not a bad idea to have them available in the event that they become necessary to protect the vessel and the crew.

In much the same way as one does not have lifeboats and life vests because one desires the boat to sink, like these other safety items, it is better to have them and not need them than to need them and not have them. Given that the primary fish markets are located in Cebu, where there is a common, armed uprising, and the fact that distant voyages may include waters off the coasts of the Americas, the coasts of Africa and other locations wherein drug dealers and/or pirates may be a reasonable concern, it is believed that such an option is not only prudent but necessary to ensure the safety of all personnel on board and indeed, of the commercial fishing vessels as well.

Company Cash Reserve Fund

As was previously noted herein, most of the estimates for expenditures are based on the top end or more expensive side of the estimate, while most of the forecasts for income are based on lower numbers. As such, there is likely to be what is hopefully a rather large discrepancy between the numbers herein and the amount actually needing to be invested by the investor. However, it has also been noted that there are frequently unforeseen circumstances that require immediate action in order to prevent a bad scenario from becoming worse. There are additional considerations as well, all of which must be factored in to the investment scenario in order to prepare for any possible contingency.

It is possible that future fuel purchases may need to be paid in cash until such a time as the company has built up a sufficient level of credit to allow for a thirty to ninety day invoicing of such purchases. It may also prove that some vendors will pay only based on an invoice, sometimes taking anywhere from thirty to ninety days to be paid. Such a seemingly minor detail could easily delay the next voyage for thirty to ninety days … enough time to complete nearly two voyages, and thus, costing the company (and the Investor) a major loss or at the very least, a major delay in capital gains.

What if a longline rig were to break and needed to be replaced? The one double-reel unit pictured herein above, costs an average of fifty thousand US dollars, but the ships cannot fish without this. It would be notably beneficial to have these funds stored in an escrow or other similar financial account wherein they could be utilized if necessary. Interest may or may not be paid on said account and expenditures from said account would be approved by the Investor, with the balance of these funds to be released after the Investment had been paid back in full, including the ROI.

First Voyage

The expenses for the first voyage will have to be paid for in cash or directly, though it may also prove to be necessary for the company to utilize the Company Cash Reserve as a means to pay for the second and potentially at least, even the third voyages in the case that purchases by the clients are invoiced with delayed payment. As such, the Company Cash Reserve will serve as a stand-by, ready to be utilized in the event that not all of the bills and/or payments initially occur as rapidly as hoped. The proposed budget for the first voyage is laid out in the financial section of this document, though the exact figures will not be determined until such a time as the actual vessels, capacities and crews are known and the final determination for fishing plans is established. The implementation of a straight fishing voyage to and from the Philippines will require substantially less preparation and a lower budget than proceeding with the Strategic Fishing plan as described further on in this document.

Capital Gains and Debt Payments

Debt Payments and Capital Gains can be paid back to the original Investor under numerous scenarios across the negotiated time frame. Among the most common means would be payment upon the successful completion of all transactions for any given voyage or payment on an annual basis. Some consideration has been given to quarterly payments, but given that this may transcend voyage lengths of the vessels, there is no guarantee or assurance that the amounts due will have been credited to the accounts of the company in time to facilitate such payments. Given the potential for such an established method of payment to lead to unpaid balances and an inability to make the payments in a timely fashion, this is not seen as being either prudent or beneficial for the Company or the Investor.

In the interest of the Investor, the immediate payment of amounts due to the Investor would be paid upon the successful completion of all voyages individually. In this way, the monies owed could be returned to the Investor immediately (or within 72 International Banking Hours) of the time the books for any given voyage were closed. Annual payments would more likely favor the company as they would have the ability to bank the funds for the better portion of a year, to accrue interest for and on behalf of the Company. Such determinations will again have to be made based upon the terms and conditions as shall be negotiated by and between the Investor and the Company.

ABOUT THE COMPANY

The proposed operational name for the Philippine corporate entity is “Lotty Loves”, though its eventual focus will expand far beyond the realm of fishing. Ideally, both wholesale and retail outlets should be established within the Philippines if not internationally (in Japan) as well.

Furthermore, the construction of a Wholesale seafood port along the Eastern seaboard in the Central Luzon region of the Philippines should also be a priority. This eastern seafood port may be more ideally suited for construction within the region around San Miguel Bay or perhaps, along the western shores of San Miguel Bay. Another ideal scenario may be within the area around Infanta or along Lamon Bay, which may serve to provide an equally well protected area, ideal for the loading and offloading of commercial fishing vessels and even other types of commercial ship traffic of a limited nature.

Such a port has long been proposed for the Philippines, though the lack of secured bays suitable for port areas along the eastern Seaboard along with a lack of infrastructural funding has proven insurmountable to the local population. Perhaps the most ideal location would be the Northwestern portion of Lamon Bay where an adequate level of protection against tidal surges and storms would be afforded to the port. These plans along with some others, are explained in further detail in the Expansion portion of this documentation.

Management Personnel

The persons selected for the ownership and management of the Philippine portion of the operations are all selected for their individual strengths for conducting business operations with a minimal level of hands-on intervention necessary from outside personnel. Among these experts are one individual who shall work as the Chief Operations Officer, who has an expansive knowledge regarding the logistics involved in both shipping and commercial fishing in addition to project management skills and infrastructural development experience. One individual who will work as the Corporate Secretary, has been selected due to their excellent experience and relationships within the Philippine Government in order to expedite all of the requisite paperwork and licensing required to commence operations.

The person selected to work as the Business Director has many years experience in both Point of Sale (POS) and Business to Business (B2B) sales. One other individual who will serve as the Chief Financial Officer has the capacity necessary to leverage the corporate assets to create asset backed securities and fund future expansion and additional endeavors without so much reliance on outside investors. Together, these people make up the backbone of the Administrative Staff for Philippine Operations and should serve to work hand-in-hand with their Japanese counterparts in order to form a cohesive, efficient international operation that is profitable for all of the parties involved.

Business Controls

The Business shall be wholly and completely open to the Investor(s) with books kept up to date and made available to the Investor(s) or even kept in electronic format to be presented to the Investor(s) for their personal accounting practices. Monthly, quarterly and annual records will be kept on file for a period of not less than ten years for accounting, taxes and record keeping purposes. After ten years, the record books will be archived so as to remain available for audit and/or review.

Accounting System

Currently there are two American Accounting firms that the founding members have used in the past. However, arrangements will be made in accordance with the needs and demands of the Investor(s) in order to fully comply with any and all terms of such agreements and/or contracts as shall be entered into by and between the Parties. In-house bookkeeping will be established primarily through the utilization of Quickbooks, though with localized access. A third-party accountant is also a possibility should the Investors request such an option, though it is seen by the current personnel as an added expense with very little benefit or value for the added cost. While the accounting will be difficult, it should not be any more difficult than any standard operations, and the deductions should be sufficient to allow for a greatly reduced tax liability without any need to provide and pay for costly, outside accounting services.

Conversely, there should be an allowance made for occasional an Uninterested, Third-Party Auditing firm to conduct annual Audits in order to assure the Investors that business activities are being conducted well within all of the legal constraints and without putting the funds of the Investors at risk at any time during operations.

MARKETING PLAN

The Marketing of the products harvested will be the key to the financial success of this entire venture. This is perhaps the greatest reason for a full Joint Venture between the Philippine and Japanese operations, as it will allow for a split approach to maximize both profitability and benefit utilizing the two fronts for maximum returns and relief concurrently.

The Philippine Markets should provide ample income from the longliners to cover any and all costs of production and commercial fishing ventures, in addition to providing a great tax relief to the Philippine operations, or to the tertiary Philippine corporation formed as part of a full joint venture. The key to profitability however, depends on the successful marketing of the more valuable products to sources other than the canneries and local brokers that will be the primary Philippine markets. Thus, the larger, more capable and capacious processing ships or factory ships will receive the vast majority of the larger fish in order to market them in the Japanese Market at Toyosu, and perhaps even to engage in the Tuna Markets and Auctions therein.

Meanwhile, additional markets will be actively pursued in the Philippines to increase the local market value within the markets for the Republic of the Philippines, including full retail markets. Among these will include many of the top end restaurants and hotels in and around Manila, Quezon City and Cebu, where the primary fish markets in the Southern Philippines (and indeed, among the most prevalent in all of the Philippines) exist in greater numbers.

Fish Markets and Tuna Auctions

The longliner fleet, when returning to the Philippines, should most likely focus on Manila and/or Cebu until such a time as there are viable fish markets and ports built and maintained along the Central Eastern seaboard of Luzon Island in the North.

The Free Economic Zone in Metro Manila offers an excellent opportunity to sell a great volume of the fish at wholesale prices, though still likely to be better than what will be gained from selling the fish to the canneries. While the fish auctions in Cebu may promise the potential for a better return, they also present a greater opportunity for lower sales returns based on the number of canneries with local buyers working the auctions in Cebu. This also takes into consideration the fact that the prime fish that have been harvested will generally be stored on the Processing Ship or Factory Vessel that will offload at the Toyosu Market in Japan, where hopefully, there will be parties to the Joint Venture in a better position to secure good prices for the fish being sold within that market.

If there is any potential downside to this marketing practice, it is that even tried and true methods will experience fluctuations in markets and prices. This is to be expected in both the Philippine and Japanese market places, though the Japanese markets tend to be more stable and profitable for the Company. Thus, it should also be maintained that there is a given need for the company to enter into the more localized direct wholesale and retail markets as well. Much of this work will be handled by the office staff while the longliners are finishing up their harvest and on the return to the Philippines. The ship captains can maintain constant contact with office personnel who will be in contact with brokers, to allow for the immediate sale and offloading of harvests upon the return of the vessels.

Seafood Wholesalers and Distributors

Many of the local seafood distributors will purchase seafood to be sold at full retail market value, directly from the ships coming in to port. These seafood brokers are readily available and listed in databases that include contact information. Upon knowing what the harvest is going to be on board the longliners, they will contact the office personnel before setting out on their return to the Philippine ports. As such, it is believed that this method may render the best prices for the harvest, while also expediting the ability to offload the products at the ports of choice. The added distances to different ports can be easily calculated, giving a solid value to the additional resources and costs to deliver to any particular market. Thus, it can easily be determined which markets will provide the best financial gain for the longliner fleets, independent of the profit margins for the Factory Vessel(s) marketing in Japan. Eventually, these efforts should focus on the establishment of a viable Fishing Port and Economic Zone on the Eastern Seaboard of Central Luzon in addition to full retail outlets for the sales of seafood harvested by the longliner fleet in this location.

Specialized Foreign Buyers & Brokers

There are numerous buyers and brokers in both the Philippines and Japan who seek out the best deals on fresh catches. These markets, while not the primary focus of the efforts of the company, should not be discounted either. However, they should be informed of the stock harvest that is being brought back to the ports and allowed an opportunity to place a preliminary bid on those goods.

Retail Markets

Future expansion must include a full retail storefront, even more ideally located within a new Fish Market and Port strategically located on the Central Eastern Seaboard of Luzon Island in the Northern Philippines. This may also include the creation of retail outlets in Japan as well, should the markets prove to be satisfactory and beneficial in the increased economic and financial prosperity of the Company. Such a venture however, may need to wait until the fleet can be sufficiently expanded to provide a wide variety and selection of various seafood, and not just the more limited varieties of fish being sought by the commercial fishing fleets. This venture may in fact, benefit even more through a cooperative effort with or even the creation of large-scale meat processing facilities and other means of providing a wide selection of meats and seafood directly to local markets.

MARKET COMPETITION

The Philippines is an important producer of fish in the world today, ranking 13th among the 51 top fish producing countries in 1996, with its total production of about 1.8 million metric tons, or a share of 1.9 % to the total world catch of 94.625 million metric tons. This figure however, can be greatly increased without further depleting the domestic natural and aquatic resources.

Although not a dominant player in the national economy, fisheries are nevertheless an important sector, with their contribution of US$ 1.8 billion into the National Domestic Economy, 2.7% percent to the country's Gross National Product (GNP) of US$ 68.2 billion (as of the year 2000). It also provides employment to about 1 million or 5 % of the total labor force. The production was mainly contributed by aquaculture fisheries, 34.3 percent, followed by commercial fisheries, 33.7 percent and municipal fisheries, 32 percent in 1998. There is no adequate information available on private investments in the Philippine fisheries sector. However, based on the Philippine Fisheries Code and the fisheries sector Philippines plan, massive investments are urgently needed by the public and private sector, in all aspects of the fisheries industry including production, harvesting, processing, marketing, research and extension.

The vast majority of the “commercial” fishing fleet in the Philippines consists of small wooden boats that are incapable of reaching out to the open water or deep water fishing areas wherein more fish are readily accessible. According to FAO.org only three percent of all Philippine fish are caught in International waters, leaving in-shore or shallow-water fishing grounds over-fished and sparsely populated by financially viable species with these numbers ever decreasing as the natural resources are further depleted.

The ability to fish in International Waters will allow for the continual fishing year round with very little in the way of direct fishing competition in the selected waters. As such, a virtual Philippine-level monopoly of prime fishing grounds can be maintained solely by the deep water commercial fishing fleet to be established by the company as proposed herein. Furthermore, the future establishment of a capable and complete commercial fleet will allow for the direct export to Japan and other markets where profits will be substantially increased above and beyond the limitations of the Domestic markets and domestic economic and financial concerns.

The largest direct competition for an ocean-going deep water Commercial Fishing Vessel or fleet will not come from within the Philippines, but from other commercial fishing vessels from other nations or seek only to harvest from the bountiful produce of the Philippines, without giving anything back to the people of the Philippines in return. A cooperative effort or even a full joint venture by and between vested Japanese and Philippine interests may provide a more viable, long-term and financially beneficial solution for both nations and the partners in such a joint venture undertaking.

Philippine Fleet

As was previously noted, given the fact that most (if not all) fishing voyages will be conducted in International Waters, the Philippine fleets of commercial fishing vessels are not going to be an area of major concern. The only time that there would be any major concern about competing Filipino fleets would be through efforts conducting fishing expeditions in the China Sea to the west of the Philippines. However, given the numerous nations laying incredulous (fishing and military) claims to these waters, and given the ability of such a fleet as that which is being proposed herein, it is both foolish and detrimental to actively work these waters. Add in the potential for encounters with Chinese military vessels and the numerous pirates active off the Southern Philippines, and it seems not only more prudent, but more profitable to focus on other waters well away from this hotly contested area.

Japanese Fleets

The Japanese Fleets may see more competition though certainly not among the worst. With the presence of a largely Japanese run crew on the Processing Ships and Factory Vessels, this competitive nature should be minimized to the degree that it is possible between ships and business interests that are competing, each with the other. There will of course be some competitive nature in play, though it will not have the same level of animosity as some of the more foreign fleets will present. While the Japanese shipping presence is large and expansive, it is not nearly as large nor nearly as dangerous as some of the fleets from other nations currently roaming the oceans of the world.

International Wholesalers

The International Wholesalers are not likely to be a major area of concern in most regards, but should be watched closely, most notably within the wholesale fish markets and auctions in Cebu. Given the nature by which many foreigners and many Filipinos are accustomed to handling business, there may be backroom deals being handled that do not necessarily reflect the best interests of the fleet or the company, but rather seek to take advantage of the existing relationships between the Brokers and the International Wholesalers for their direct benefit at the cost of the Fleet. This concern may prove to be unnecessary but it is believed it is best to be prepared for it. It may also be further mitigated by allowing for wholesalers to offer basic bids on the harvests before it is even decided which ports to use for offloading the catch.

International Foreign Fleets

There are numerous International Fleets and National Fleets from foreign powers that may present some areas of concern. Among the most prevalent of the threats in the open oceans are both the legal and illegal fishing fleets from both the Republic of China (also known as Taiwan) and the People’s Republic of China, with the latter being the substantially larger threat of the two. Given the numerous fishing fleets and the numerous national claims for the waters West of the Philippines, much of this can be avoided by merely avoiding these waters altogether, though there is still the potential for very real threats in the other oceans of the world as well.

The “Four Ship Solution” as described later in this document, is perhaps one of the best and most efficient means of dealing with the potential threats, and thwarting any outside efforts that may otherwise prove detrimental to the fishing operations and the company. The “Four Ship Solution” in part, will assist the fleet in outmaneuvering foreign flagged or illegal vessels that are seeking to interrupt commercial fishing operations. Furthermore, the combined efforts of the Captains and crews that have worked together, will allow for additional protection not only for the vessels and crews, but also for the fishing gear that may be in the water and may also be a target of both legally and illegally operating commercial fishing vessels in the oceans around the world.

Pirate Operations

While pirates may not be something that many people think too much about outside of the occasional movie experience, the fact remains that they are a very real and direct threat in many areas and oceans around the world. Among the most famous at present are the many pirates roaming the waters around Africa, though there are others as well. Pirates are routinely encountered in the Southern Philippines, as well as in Northern Indonesia. Drug Cartels routinely utilize otherwise innocent vessels and crews to transport dangerous and illegal drugs in what is effectively nothing short of piracy of a different sort, still putting both the vessels and the crews at risk. This risk can be greatly mitigated through the inclusion of personnel on board the vessels operating out of the Philippines who are trained, licensed guards with both military and police experience, some including nautical experience.

BUSINESS OPERATIONS

Regardless of whether the funding comes from a Capital Investor, an Equity Investor or takes place in the form of a full Joint Venture, Business Operations are going to, by necessity, take place more outside of the office than they will be within any single office location. While the commercial fishing operations will take place around the globe, those personnel who remain in Japan and the Philippines will remain critical members of the team, whose responsibilities will include finding buyers for the harvested catches and ensuring the best prices for those species harvested. While these may remain separate divisions within the company, all personnel will be key to the overall success of the Company.

Strategic Fishing Plan

Variations of this Strategic Fishing Plan are increasingly being used by many Third-World and Developing Nations in need of increasing their imports while at the same time minimizing cost, risk and other factors requisite for viable business operations. Fishing in Domestic Waters is generally substantially more costly and competitive, though it does tend to reduce some risks for operations. Conversely, fishing solely in International Waters does have some added risk, but also provides the potential for substantially greater financial benefit and overall gain.

Immediate goals should include a combination fleet consisting of not less than three longliners with a storage or freezer capacity not less than one hundred and fifty metric tonnes of fish storage. These should be combined with not less than one Processing Ship or Factory Trawler or Purse Seiner type vessel with a storage capacity of not less than four hundred and fifty metric tonnes of storage space for the seafood being harvested. Historically, Japanese (and other) fleets have generated substantially higher returns with larger vessels. While these ships may tend to spend longer periods of time at sea, they also have the means to prevent spoilage and waste and keep the harvest fresh enough to be sold to outlets other than canneries.

Furthermore, the combined capacities of such a fleet will allow for the three longliners to fish with one shallow horizontal line, one mid-depth horizontal line and one deep horizontal line. One longliner will be able to work in complete cooperation with the Factory Ship while the other Longliner runs different lines in order to vary the catch. Thus, while tuna may be the primary species, there can still be large catches of grouper and other valuable bottom fish harvested as well, while at the same time increasing shark, swordfish, mahi mahi and other equally valuable fish that do not run so deep even in international waters.

Additionally, the Processing Ship should be outfitted with the means to vacuum seal all fresh catches, most notably those larger fish that are more viable and more profitable in the sushi markets of Japan. The vacuum sealing of these fish, in combination with their storage in crushed ice, should prevent or at least greatly mitigate any potential loss in value between the time of catch and their introduction to the paying markets. This should increase their value and allow for this portion of the catch to be marketed for maximum profitability. Trawlers require substantially less work than the longliners, allowing for more time for the processing and storage of the catch for sale.

The four ships will work together to fill the Factory ship first, allowing for it to commence the longer voyage North to Japan while the smaller longliners once again fill their holds with harvests to be sold in the Philippines. A fleet comprised of such vessels will allow for the commencement of fishing operations literally anywhere in the world at virtually any time, allowing for what are effectively, unlimited operations insofar as such ships are not undergoing major repairs or otherwise prevented from operations. Given the exportation of Seamen from the Philippines, and the registration and operations under a Philippine Flag, the majority of all crews should be comprised of Filipinos, though the Processing Vessel or Factory Ship may allow for a larger Japanese contingent among its crew given that it will routinely be traversing Japanese waters and dealing with Japanese ports and officials.

The Factory ship, once full, will return its cargo directly to Japan where the markets are higher and the potential gain is much greater than within the Philippine markets. The smaller longliners will fill their holds one last time as the Processing Ship is being filled to capacity, allowing for the Processing Ship to move the larger harvest directly to Japanese markets, and the smaller longliners returning with their holds filled, to the still profitable Philippine markets. This should allow for the coordinated efforts to continue, with the Philippine ships being able to offload and refit for the next journey in less time than it takes for the larger Factory Ship. This should also allow for the Longliners to move back to a pre-selected location for the next journey and commence fishing operations, beginning to fill their holds before the arrival of the Factory Vessel on scene, where the larger, more desirable fish could be immediately transferred to the Factory Ship, starting the entire cycle over from the beginning.

Those Filipinos who would need to be replaced on the Factory Vessels, could more inexpensively be flown to and from Japan, allowing for the complete refitting of the Factory Vessel in Japan. The longliners on the other hand, would be refitted in the Philippines and be more immediately available to commence commercial fishing operations in the next selected area, filling their holds in preparation for offloading to the Processing Ship upon its arrival in the area. Refitting and outfitting in the Philippines should be substantially cheaper than outfitting the Factory Vessels in Japan and should not take as long to recommence operations or at least to get back under way.

It should be readily apparent that the number of longliners will be directly relevant to the speed with which the processing vessel will be able to make its runs to and from the Japanese markets. Presuming a capacity of the longliners to harvest ten tonnes per day from the oceans, and the operations of a seventy mile, fifteen thousand hook longline rig on each longliner, the more longliners that are in operation, the faster (and fresher) the catch that will be returned and sold to the Japanese markets. The continued operations of the longliners for the lower Philippine markets should prove to be sufficient to facilitate the reduction of tax liabilities for Philippine operations while at the same time, paying for all of the operations of the Longliner fleet and covering the operational costs of the Processing ships.

Ideally, this would allow for the Philippine based operations to pay for all Company expenses and to provide a limited margin of profits, though also allowing for the more profitable Japanese fish markets to provide the requisite profit margins for the company and to ensure that operations would be beneficial not only to the Company, but also to the original Investors. The ability of the Company to grow and expand is wholly dependent upon the ability to pay off any and all outside investors as quickly as possible, then to leverage the assets for expansion.

Combined Fleet Efforts

The idea of a combined fleet is certainly nothing new. However, the idea of taking such combined fleets to those International Water that allow for the more select harvesting of the most desirable fish is relatively new in comparison. The combination of different types of vessels has been ongoing for perhaps as long as commercial fishing has, though there should be at least some restrictions based on the limitations and restrictions of some types of fishing.

Ideally, a very limited number of trawlers and/or purse seiners may be utilized in order to reduce the cost of baits being used to cost of production. However, the increase in by-catch, generally consisting of less desirable, and occasionally even endangered, restricted or prohibited species, do not make them a viable option for combined fleet efforts. Furthermore, these types of vessels only have the ability to literally and figuratively scrape the surface of the oceans, leaving the larger, more profitable seafood untouched and unharvested. If these vessels are introduced at all, they should most likely be restricted to domestic waters, solely for the purpose of providing live bait at cost for the ocean-going vessels.

A comprehensive cost-benefit analysis will provide a sufficient level of information to determine whether or not the introduction of these vessels into the fleet is viable or not. However, there are currently numerous, large and capable trawlers that may be fully converted to longliners, given the request for funding for upgrades and refitting. These are all larger, ocean-going vessels that should be able to handle the rougher seas and weather any storms out on the open waters. These vessels should definitely be considered based largely on the level of work necessary to convert them to longliners and their storage and hold capacities for viable product storage.

The introduction of longliners into the fleet is imperative for a number of reasons. The longliners can reach down to depths around one hundred and fifty meters where prime tuna live and even place horizontal mainlines down along the bottom of the ocean floors where other, equally valuable fish thrive. Some of these fish can potentially sell for thousands or even tens of thousands of US dollars per fish. Other fish such as the larger grouper, can often sell for literally thousands of US dollars per tonne. While such sales should not be factored in to each and every voyage, the utilization of a fleet of longliners can certainly increase the potential for such catches. Furthermore, the separation of shipping and marketing will allow for the smaller, less profitable catches to be marketed in the lower Philippine markets while the larger, more profitable fish are stored on the processing vessel, increasing the overall profitability of the corporate venture and capital gains for all parties involved.

The financial projections included herein are based on an average return of five US dollars per kilogram of harvest total sales value. However, the retail value of the large, bottom feeding grouper in the Philippines is approximately four thousand dollars per tonne. The different tuna species, including the Southern Bluefin Tuna, can often sell for thousands (or even tens of thousands) of dollars per fish. Thus, while it is inevitable that a portion of the harvest will be sold to canneries at substantially reduced rates, even down to figures as low as six hundred US dollars per ton, five dollars per kilogram should by all rights be an exceedingly low figure given the combination of the Japanese and Philippine markets when properly worked together.

The Four Ship Solution

There are certain people who believe that the initial investment should focus on securing a singular, smaller and more inexpensive vessel and proceeding from there … among these, some of the people within the Company who feel that such an effort would make it substantially easier to find Investors. However, historically, such an effort would most likely be destined to failure or at least very limited in its potential for success. This is evidenced by numerous national reports and even numerous international reports by noted agencies such as the UN FOA. Many smaller fishing vessels, most notably those that were not part of a fleet, actually experience net losses in many recorded efforts.

This increased risk of loss is true throughout the Americas, Japan and even here in the Philippines as evidenced by the national and international reports of commercial fishing vessels. Furthermore, larger ships have consistently increased their gains as they have the capacity to fish in waters with less depleted resources and to move further into the oceans of the world than the smaller ships have the capacity to reach themselves. Thus, it should be seemingly feasible that the purchase of a single, larger vessel may in fact, be financially and economically sustainable and viable, but it would still face numerous limitations that would be more easily offset by the presence of even a small fleet consisting of at least four ships.

The establishment of the fleet of four vessels, consisting of three longliners with a storage capacity not less than one hundred and fifty tonnes each, and a factory ship configured as either a Trawler or a Purse Seiner, with a storage capacity not less than four hundred and fifty tonnes, should be sufficient to meet the needs of both the Investor and the Company. In such a fleet configuration, it is presumed that the three longliners should provide a sufficient level of income to cover fleet operations, while the Factory Ship, marketing to the more profitable international markets, would generate a substantial positive return for the fleet, with the longliners working to fill the holds of the larger factory vessel first, and then filling their own holds to be sold and marketed in the Philippines, maintaining a sufficient level of local or domestic Philippine operations to sustain the benefits of conducting business and shipping under the Philippine flag.

Crew and Vessel Competitions

One of the many advantages of having numerous ships within the fleet is the ability to stage a competition between the vessels and their crews. There could be any number of different competitions resulting in different awards for the crews and even for individual crew members. Among these would be the largest fish of a certain species, the largest daily catch, the first crew to fill its holds completely or pretty much any other challenge as may be directed from one crew to the other … though only such competitions as were sponsored by the Company would have officially sanctioned rewards to be paid for by the Company. Such competitions should serve to increase motivation, a sense of pride and increase the productivity of the fleet.

Safety and Security

Both the Republic of China (or Taiwan) and more notably, the People’s Republic of China have numerous illegal fleets operating in the oceans of the world. These vessels are often quite willing and capable of sabotaging the efforts, equipment and even the vessels and crews of competing fleets. The presence of three or even four ships together should serve as something of a deterrent, in addition to assisting in the protection of equipment that may otherwise be susceptible to damage inflicted by these illegal fishing fleets. Furthermore, if approached by other, less state-sponsored threats, such as may come from drug dealers, drug cartels or even pirates, a fleet of ships should have much more success of fending off any unwanted advances, and preventing the unwanted and unwarranted boarding of vessels that may lead to endangering their crews and/or the vessels.

The Four Ship Solution

The Four Ship Solution is more ideally suited for fishing operations above and beyond the issues of security. One ship can run horizontal longlines nearer to the surface, with one other ship running horizontal longlines slightly deeper and one running a horizontal longline along the bottom. Such a mixture of lines will allow for a much wider range of seafood and fish to be harvested, though care must be taken with the upper lines to reduce the introduction of bycatch including endangered tortoises and birds. Still, while the tuna are certainly among the most profitable of species, there are also a great many other varieties of fish that are still valuable, though must be fished utilizing different baits and/or tactics.

In the opening phase of operations, this may be best approached through the utilization of a Processor or Freezer Trawler of a sufficient size to meet the tonnage requirements for storage and marketing. A trawler could conceivably be beneficial to the fleet insofar as the ability to provide a continual source of bait for the longliners in addition to adding surface catch to the seafoods being harvested. However, such a setup on the primary vessel is not deemed to be an ideal solution as a longliner would be able to contribute to a vastly more profitable form of fishing through the utilization of horizontal longlines and still minimizing bycatch. Ultimately, the Processor or Factory Ship should most likely be configured as a Trawler or Seiner with plans for the future conversion to a longliner and the addition of a smaller trawler with a one hundred and fifty tonne storage capacity (or greater) into the fleet.

Factory Ships and On Board Processing

It is believed that the ongoing operations of the Longliners will allow for the factory ships to fill their much larger holds in substantially less time, allowing the more prime and profitable fish to be more quickly, freshly and valuably delivered to the markets. This should allow for an increased sales price in the Japanese auctions, and hopefully, serve to allow a fresher and more easily delivered product back to the Philippines via the longliners as well. Still, while some testing will be necessary, it is believed that there are perhaps much more efficient and effective means of storing the goods for longer than the projected eighteen days to market for each voyage.

Vacuum Sealed and Ice Packed or Frozen

In standard commercial fishing efforts, there are numerous ways in which the harvested catch may be processed or stored. However, many of these methods reduce the value of the Tuna and other equally profitable fish that can greatly reduce the potential income for vessels fishing on extended voyages. This potential loss can be somewhat mitigated through the use of airplanes to bring the fish to their final markets, though this adds a substantial cost to operations and again mitigates the potential for gain. One method that will allow for the fresh catch of the harvested seafood that is not often utilized, is the immediate vacuum sealing of all of the processed catch directly on board the Factory Ship.

Vacuum sealed fish stored in crushed ice in enclosed freezers, should be stored in a much fresher condition without the deterioration that can otherwise occur from direct freezing. The lack of any oxygen should also allow for the fish to be sealed in such a way that bacteria and other evidence of storage are effectively negated, allowing the harvests to be sold in a much fresher state and condition, increasing their market value. This will further prevent freezing that tends to reduce the overall quality of the flesh of the fish and subsequently, its final sales value.

Vacuum Sealed Freezer Storage

Quality freezers, whether on board a vessel or otherwise, are already units that are made to be semi-hermetically sealed. The only “weak spots” are the areas where the drain is located and the seal or the quality of the seal at least, surrounding the door or other opening(s). Should the tests at vacuum sealing the fish in bags prove to be successful, it would not be at all difficult to reengineer the freezers with a sealed drain cover and the installation of a valve. This configuration would allow for the freezers not only to be completely sealed, but for a vacuum to be created inside the freezer, removing all of the oxygen and any type of atmosphere which would allow for the degradation of the harvest. A combination of vacuum sealing the cargo and then storage in crushed ice rather than freezing, should allow for the catch to remain as fresh as the day it was caught for a much longer period of time, allowing for compensation should there be delays in getting to markets.

This type of independent vacuum system could feasibly be operated utilizing a singular, large vacuum pump or even individual pumps for one or two individual freezer units. The cost of engineering would not be at all excessive, with single, individual vacuum pumps capable of vacating the atmosphere in a single freezer being readily available for a few hundred US dollars and the plumbing supplies being readily available in almost any general hardware store.

Quality Control

All facilities on the ships and even shore-based facilities will maintain Hazard Analysis and Critical Control Point (HACCP) Standards to ensure safe food handling practices. Such standards may not be readily manageable during catch and processing but the areas will remain clean and clear and shall be fully cleaned and sanitized during and after use. Standard operating procedures on board all vessels will be the same as established precedent in similar operations in Alaska wherein the founding members of the Company have their personal experience.

Ideal rates for dry-freezing the fish should be established at roughly 0º Fahrenheit or -17º Celsius. Such rates will cause some loss of weight of the harvest, but should allow for the safe and complete storage of the catch for the required length of time to completely fill the holds or Freezer Space on board. After each use, the freezers must be fully and completely disinfected through the utilization of safe, commercial solutions. Fish, depending on the demands of the wholesalers, will likely be “gutted” or “dressed” before freezing, with one portion of the crew tasked with separating the catch as it is brought on board and a second portion of the crew dressing the fish. It is imperative that fish not be exposed for more than two hours before they are set and stored within the freezers, so this will take some practice on the parts of the crews before they become wholly proficient. It is also very important to note that most frozen fish will not last more than eighteen days in a hold before it begins to lose value at a rapid pace. In regards to business practices, the operations and practices shall be open to periodic inspections from the Investor(s) during regular business hours. All books shall be maintained both on-site and in electronic format, always readily available for review at any such time as something so simple as an email or phone request is sent regarding the need for such an inspection.

There is an old adage and observation that life on a longliner is short because it will work the crew to death … figuratively speaking of course. Conversely, it is also noted that life on a trawler tends to be short … because the crew will quickly become bored to death. Thus, utilizing a freezer trawler or other seiner type ship as the Factory Processing Vessel will allow for the productivity to be maximized, with the crew busy on-loading and processing the catch of the longliners, preventing the crew from being bored and maximizing the efficiency of the fleet as a whole.

Philippine Crews

Perhaps the most common “export” from the Philippines is manpower. This is notably true with the ever-increasing number of Philippine seamen and merchant marines on global shipping fleets around the world. Furthermore, allowances are made within Philippine law for the use of Philippine seamen in global operations, without labeling them as foreign workers or burdening them with the added costs of being a foreign worker. What this means is that local Filipino seamen can be hired at standard Filipino rates to work on any and all Filipino flagged vessels. Even in the opening phases of operations when a larger than standard crew may be necessary until a selection of crews can be further chosen based on experience and performance, this will allow for the manning of all of the vessels at rates substantially lower than those required to man the vessels with all Japanese or other experienced crews from among the more developed and industrialized nations.

Those (Factory Vessels and potentially other) ships that will constantly be navigating Japanese waters, should have an experienced Japanese Captain and perhaps a larger Japanese contingency among the crew, but can still utilize a great many of the Filipino seamen in order to reduce costs and still allow for the safe operations of the vessels. Those vessels that will be primarily working in support of the Factory Vessels and that will be docking and operating primarily out of the Philippines, can be run with entire crews comprised solely of Filipino citizens, again greatly reducing the overall cost of fishing operations.

In Port Cleaning

The ships will have to be thoroughly cleaned and sanitized upon return to the ports after such a time as the cargo has been offloaded. This should generally be conducted by the crews before such a time as they have left the ship, though there may be additional work that will be required as well. While it is believed that in terms of the Japanese port vessels, this should all be handled by the Filipino crew at large, with the supervision and participation of the Japanese members of the crew, there may be some exceptions. Within the Philippine ports, this cleaning will be a requisite part of the labor for the Filipino crews before such a time as they are allowed to consider their voyage to have officially ended.

For the sake of public relations and in the interest of generating a good name for the company, another option may be to hire the local indigent populations that frequent the Filipino ports. Providing these people with a good day of work, replete with food and wages, should assist the company and give it the ability to generate some good will and most likely, some positive press coverage as well. What this would mean in terms of free advertising may be in question, but what it would mean in terms of Public Relations should not be underestimated. The Filipino people seeking to help out other Filipinos who are perhaps less well off and more in need of assistance is certainly beneficial to the overall view of the company. Furthermore, this may provide an opportunity to hire formerly indigent people with oceanic experience, to supplement the crew in its endeavors. Again, the potential for positive public relations should never be discounted and it would tie in well with the ultimate programs of expansion in terms of Sustainable Development by the Company.

Licensing Requirements

The principal tool for fisheries management is the licensing system, covering both the license to fish and the license to operate the fishing vessels. For commercial fisheries, the registration, documentation, inspection and manning of the operation of all types of fishing vessels plying Philippine waters shall be in accordance with existing laws, rules and regulations. The commercial fishing boat license shall be effective for three years and the fishing gear that will be used in its commercial fishing operation shall also be licensed.

Various management efforts have been implemented for commercial fisheries in the Philippines. These include management of payaos (fish attraction devices), protection of juveniles and spawning grounds; regulation of mesh size and the use of super-lights, support fishing operations in international waters and seek early resolution of issues on disputed fishing grounds and territories. Among the support for ocean going commercial fishing vessels capable of fishing in International Waters are numerous tax breaks for the corporate owners.

There shall be no need for the immediate obtainment of Export Licenses as working through the existing international wholesalers will preclude any such need. However, long-term goals should include the pursuit of the capacity to create a logistical support arm for the commercial fleet allowing for the fleet to market more directly to the International Markets.

These would include both processing vessels to allow for the ships to sail for three months at a time, and to offload their cargo to processing vessels in addition to being able to refuel at sea. In such a fashion, the fleet would be able to stay at sea for three months at a time, reporting back to the port only for maintenance and for an exchange of crews. The processing ships would allow for the transportation of finished products either to warehouse and storage facilities on shore and/or for the direct export to overseas and international market for increased profit margins.

Office and Office Personnel Responsibilities

The office personnel will largely be responsible not only for bookkeeping and accounting, but for contacting potential buyers as the Longliners are making their way back to the Philippines, and determining which ports will be utilized for offloading. The other tasks will include responsibility for accurately invoicing sales, paying for invoiced purchases, ensuring that the monies owed to the Crew members are paid in full, and on occasion, providing assistance to the crew members and families of the crew members during such time as these services are necessary. This program may include the ability of crew members and/or their designated family member to collect a “Draw” or a small portion of their projected pay before such a time as the crew members receive their pay from the actual sale of products.

The office personnel will be further tasked with keeping in contact with their Japanese counterparts and ensuring that all company records are kept up to date and ready for review by the Investors. The office will further be utilized as a central location for storing surplus gear in order to minimize the requirements for storing vast quantities of materials on board the ships. This will include additional weather gear, safety devices and other materials that will be made available in the store on board the vessels only in a limited quantity. This may include rain gear, baseball hats and t-shirts and other similar items purchased in bulk but not viable to store in large quantities on board the vessels.

Philippine Business Benefits

There are numerous benefits to conducting a business venture of this nature under the Philippine flag and under Philippine laws. Certainly among the most beneficial reasons for conducting business in the Philippines is corporate tax rates that are generally anywhere between seventeen to twenty percent on average. When compared to an average of thirty percent corporate tax rates in Japan, the economic advantages should be readily apparent strictly from a business perspective.

Additionally, the fishing fleets of Japan have stretched out to the virtual extent of their legal limits within the constraints of the many domestic laws of Japan, combined with the numerous international treaties and other international agreements in cooperation with the United Nations and other NGO bodies. Unlike the Republic of China (or Taiwan) or the People’s Republic of China, the nation of Japan does not merely send forth vast fleets of illegal commercial fishing vessels, but still requires a constant supply of resources for its people and pays premium prices even higher than those paid in US markets.

As such, this cooperative effort or even a full Joint Venture would be exceedingly beneficial for both the Japanese investor and indeed, for the Japanese people as a whole, while at the same time providing a very real and tangible benefit to the Nation and the people of the Philippines.

ABOUT THE VESSELS

As has been previously, albeit very briefly noted, the size of the vessels and their individual storage capacity will directly impact the ability of the Company to be economically sustainable and capable of returning a beneficial and substantial Return Of Investment (ROI) to the Investors and for future growth and expansion. This is further reinforced by historical data that strongly indicates that the larger the vessels are, the more likely they will be to generate substantial and consistent economic benefit and capital gains for the owners and the Investors. The commercial fishing vessels are in every sense of the words, the very heart and soul of the commercial fishing operations.

Flagging Options for Ship Registration

The primary focus of this business plan is based on the flagging of all of the commercial fishing vessels within the Philippines. While there are numerous reasons for such a proposition, most of them economic in nature, there may be other possible options should a Philippine investment be less than desirable to any potential Investors. Vanuatu or the Tuamotu Islands are potential options that are available, though the requisite connections that are already in place within the Philippines would all have to be established anew in Vanuatu or even the Tuamotu Islands. Australia would be an option but the operations would again be facing the higher business operating costs and excessive levels of regulation. There may also be possible openings for such a venture in Panama and/or Costa Rica in Central America, though these options would have to be explored together with the Investor and with those personnel currently in place within those nations who have the capacity to facilitate such an option.

Importance of Storage Capacity and Hold Space

In all of the research that has been conducted, there are certain things that stand out as consistent and never-changing. Given the fact that if entire harvests are reduced to being sold to the canneries, the going rates are approximately six hundred US dollars per tonne. Anything less than one hundred and fifty tonnes of storage space on any active commercial fishing vessel stands a very real chance of working to establish nothing more than a net loss for the Company. If, at the time that funding has been assured, there are vessels that have a substantially larger holding capacity that are within the same price range, these vessels should receive top priority, even if they are currently listed as trawlers but can be refitted within the established budgets.

At the time of this writing there is one trawler for sale with a storage capacity of 1100M3 or eleven hundred cubic meters. This much storage space should allow for approximately six hundred and fifty tonnes of tuna. If only ten percent of that volume included high-value tuna, the returns would greatly increase over the price of a harvest destined largely for the canneries. Add in the more effective means of storing the seafood, the decreased amount of time necessary to fill the holds with fleet operations and the better quality of catch on return to the ports and it should be quite capable of maintaining a very profitable return for both the Company and the Investors.

This same vessel would be equally capable of storing roughly five hundred and fifty tonnes of grouper, slightly more Mahi Mahi, roughly seven hundred tonnes of halibut or other equally valuable fish which would provide an equally impressive financial return. Again however, for the storage space to remain profitable, the combination fleet efforts are imperative, as the three longliners or three longliners and a single trawler, would be capable of filling the holds much more rapidly and with a much wider selection of fish harvested. Another seemingly imperative task to ensure the maximum potential for success of the fishing voyages is the ability to utilize the different longliners in unison so as to provide for a wide variety of different fish, all of which can be brought fresh to the markets for sale. While Halibut and Rock Cod are extremely valuable, some of the waters for fishing would require Ice-Rated ships that tend to cost more, though may be available at such a time as the selection and the purchase of vessels will be determined.

Longliners

The longliners are imperative for the successful operations of the Company as they will allow for the wide variety of fish necessary to be harvested to avoid being forced to sell the catch to the canneries. Furthermore, these will allow for this same variety to be provided quite fresh to the more profitable markets such as the Toyosu Market in Japan. The longliners will not be able to scrape the surface of the oceans in the way that the trawlers can, but this, with the exception of baits and baitfish, is not necessarily a bad thing. It may be possible for the larger factory ships to retain a smaller net for trawling for bait and whatever may be scooped up in the process … releasing any unwanted and protected species in the process.

The savings in bait costs would certainly be substantial and beneficial for the overall operations and profitability. What the longliners would be able to do however, is to establish horizontal longlines at varying depths and along the bottom of the seafloor to catch all manner of fish and not to be quite so restricted when it came time to offload and sell the catch at the final ports of destination.

Processing or Factory Ships (Motherships)

The Processing Vessel or Factory Ship should be the proverbial “shining jewel” of the fleet, capable of hauling four hundred and fifty tonnes at least to the more valuable open markets and fish auctions. If there is any potential challenge to this method of fleet operations, it will be filling the holds and getting the fish to market before such a time as they have had the opportunity to begin the process of degradation and start losing value to all buyers but the canneries. Such a loss would not be catastrophic, but it would not bode well for future growth and expansion of the fleet. As was mentioned herein before, the addition of a fourth ship configured as a trawler into the fleet should be the more ideal solution for the Processing Ship.

With four vessels in the fleet, lifting an average of ten tonnes of harvested seafood per day, it will take up to ten to twelve days to fill the hold. This is well within the viable range of eighteen days for ensuring the freshness of the catch and making certain that the harvest remains viable for high-value customers. However, if there are delays, this could prove detrimental to the economic sustainability of the Company if arrangements are not made to prepare for such delays. Thus, the process of vacuum sealing the harvest and storing it in crushed ice as opposed to freezing it, should adequately compensate for any delays and maintain the quality demanded by the buyers, at a sufficient level of quantity to make it more economically beneficial to the Company.

Ideally, the longliners, or preferably, the longliners and a trawler, should serve together to reduce overall costs of operations, while at the same time working to fill the holds of the processing vessel more rapidly. In such a way, the operations of the smaller vessels should be sufficient to pay for all of the costs of operations while the processing vessels make their trips to Japan and provide a substantial financial gain for the investor and ensure the economic growth of the Company.

Trawlers and Purse Seiners (Conversions)

During the original purchase, it may be necessary (or merely beneficial) to purchase larger trawler or seiner type commercial fishing vessels and re-outfit them in a Longliner configuration. At the time of this writing, there are a great many trawlers that, even with the added cost of refitting, would fall well below the allotted budget and increase the hold capacity in some instances, by literally hundreds of tonnes. There is currently one trawler with a storage capacity of one thousand and one hundred cubic meters that is priced well enough that the engine could be replaced, it could be refitted into a longliner configuration and made seaworthy for less than the cost of some of the smaller longliners currently available for sale on the markets.

The vast majority of the more well kept vessels are already in Japan, though there are also some available in the Nordic markets as well, many of which are Ice rated and would allow for excursions even into the more harsh climates such as the North Atlantic or the Arctic and Polar regions where competition would be substantially lower and the harvests would remain equally (if not even more) valuable.

If it is at all possible, at least one trawler should be kept in a trawler or seiner configuration, though it will be imperative to maintain a minimum of three Longliners within the fleet. Not only does the trawler not require bait, but the trawler can provide bait for the longliner fleet at a greatly reduced cost, effectively limited to the cost of standard operations.

The three longliners as estimated herein, would require somewhere between one hundred and one hundred and ten tonnes of bait fish alone. This cost in and of itself, would reduce more than one hundred thousand of dollars from the operating budget for each voyage, and allow for a greater increase in potential returns. At the same time, it would add to the overall fleet capacity for daily catch weights and allow for the vessels to be filled faster, allowing the produce to return to market in a fresher and more valuable condition.

As additional fleets are added, it should be expected that they should have at least the three standard longliners, one factory vessel configured as a trawler or purse seiner before being established as a separate and independent fleet of vessels in operation for the Company.

Vessel Crews

The crews should be largely comprised of Philippine citizens given the nature of the business. However, there should also be exceptions most notably for the Factory Ship which will be routinely traveling to and from Japan, and refitting and offloading in Japanese Ports and potentially traveling in or near waters claimed by the Republic of China (Taiwan) or the People’s Republic of China.

Factory Ship Crew

The Factory Ship will be the one most commonly traversing through more hazardous waters, as navigation in and around Japan requires special navigation skills and knowledge. Furthermore, agreements between the Republic of China (Taiwan) and Japan, have rendered certain agreements and rules for navigating said waters. As such, the Captain of the Factory Ship must be Japanese, experienced and should be capable and willing to work with a Filipino Captain as a first mate … this primarily in order to appease the Philippine legal requirements for Philippine flagged vessels. However, this may also require the addition of other Japanese personnel into key positions within the vessel and for its operations. The pertinent laws and regulations will have to be closely examined and final decisions made based upon the prevailing laws and regulations in place at the time that funding is made available.

The Philippine Laws on Joint Ventures and Partnerships as structured, will allow for the presence on board those vessels to remain largely Japanese in terms of the command structure, but will still demand the presence of a majority Philippine crew. The Ships Command Structure, to remain in accordance with Philippine Law, may not have more than forty percent of Command Personnel of other than Filipino citizenry. Thus, forty percent of the command structure may be Japanese. In the area of more general crew members, the percentage of Filipino citizens must comprise at least ninety percent of the general crew. This may be restructured as necessary however, in order to expand the command structure of this vessel to allow for such accommodations, retaining overall command under Japanese authority.

The inclusion of a large portion of Filipino crew members will again help to reduce the overall cost of operations, which is beneficial to the Company and to the Investor. It is noted however, that this ship in particular should host as many Japanese crew as possible. However, it should also be noted, that should the vessels obtained be ice rated, there may be additional fishing grounds available to the Fleet operations that do not include traversing these waters. Such areas may include the Bering Sea and other polar or arctic regions that would allow for such operations to continue without the need to traverse the waters surrounding the Republic of China (Taiwan) or otherwise risking potentially hazardous scenarios. The presence of Halibut, Rock Cod and other valuable species in these regions should be sufficient to have them listed at least as potentially viable fishing grounds, depending on markets, market prices, market demands and other factors as shall be determined by the Company.

Fleet Crew

The vast majority of the fleet should be comprised of Filipinos, even to the extent that the largest majority of basic crew members on board the Factory Ships should be comprised of Filipino citizens. The crews of those vessels who will be operating primarily out of largely Filipino ports, should be captained and crewed primarily if not solely by Filipino citizens. In this way, any and all potential conflicts can be minimized within the Philippine area of operations and business conduct under Philippine Law. If a Japanese presence is required on these vessels, it should not exceed ten percent of the complement of the ship. Again however, it should be noted, that the inclusion of Filipino crew members will also greatly reduce the cost of operations, and as they are not considered Overseas Foreign Workers, will not burden the Company with the added cost normally associated with the Filipino Overseas Foreign Worker programs.

Indigent and Homeless Job Placement

The value of good public relations should never be underestimated. Give the people examples, but give them examples in the form of heroes, not examples which they must fear. Give them examples that inspire and motivate them and you will have won the battle for Public Relations, strong consumer following and the opportunity to capitalize on good works. In short, while these may be temporarily challenging, the long-term benefits to the Public Relations of the Company are in fact, one of the key reasons that both the short and long-term growth potential are so vast and profitable.

Given the long-term growth and expansion plans of the Company (as that is the purpose behind the formation of the Company) and its inclusion of numerous Indigent persons in the form of Indigenous tribes currently occupying private islands that are waiting and virtually begging to be developed and monetized, it is beneficial to begin the implementation of programs for the homeless and indigent classes, primarily among the Native, Indigenous and/or Aboriginal people of the Philippines as soon as it becomes economically feasible to do so.

More information about the proposed construction and ultimate goal of the Company is contained in the section marked Verde Island Sustainable Development for the review of the Investors. However, such an undertaking will require an initial investment not less than One Hundred Million US Dollars and will require a full Joint Venture with an established Venture Capitalist.

Philippine Labor Laws and Company Policy

Given the nature of Commercial Fishing, it should be noted that normal Labor Laws cannot reasonably be applied. As such, each and every crew member as shall be recruited, shall need to have issued to them, be given time (and assistance) to review, and even to seek legal counsel regarding the waiver of rights regarding Philippine Labor Laws and otherwise explaining all of the requisite rules and regulations of vessels operating in International Waters. These documents should fully explain the role and legal capacity of the Captain, the working conditions, the applied restrictions and any other such materials as shall be necessary to fully inform the potential crew members about what they can expect with life on board a commercial fishing vessel. Furthermore, each potential Crew Member shall receive, and upon their acceptance of the same, sign each page of said documentation, with one copy being retained in both electronic format and in hard copy by the Company, and one copy to be provided to the Crew Member. These documents should be made available at the very least in English, Tagalog and Japanese.

Fleet Command Structure

Under fleet operations, the fleet, when working together, the fleet will remain under the overall command of the Japanese Captain, though each vessel will remain independently under the command of its Filipino Captain. At any such time as the Fleet is operating and/or traversing within the domestic waters of the Republic of China (Taiwan), The People’s Republic of China or Japanese Waters, the Captain of the Factory Vessel shall remain in charge of the overall Fleet and its navigation and operations. Likewise, at any and all such times as the vessels and/or the Fleet are within Filipino waters, the senior Filipino Captain shall be in overall command of the fleet as a whole. This shall include command of both operations and navigation where such matters are applicable. In such conditions as crossing through the Panama Canal or other restricted areas, subject to the limited regulations therein, all vessels shall be under the appropriate command as legislated under the circumstances. Thus, in the example given of passage through the Panama Canal, all vessels would be under the independent guidance of the Pilots. Other examples may include Harbor Pilots in such ports and/or other locations wherein such a requisite is mandated.

Crew Share Calculations

The normal procedure for paying crew shares is based on calculations per vessel, and there may be no real need to change such a long standing tradition. However, it is possible that some concern would be given regarding the much larger sum paid to the crews of the Factory Vessels given their vastly larger storage capacity and their operations in larger and more profitable markets. The smaller fleet vessels will still need adequately trained and competent fishermen and other crew members, and may feel “cheated” or otherwise left wanting due to the constraints of the vessels on which they serve. As such, some possibilities for options have been discussed, though the final decisions would have to ultimately be made by the board of directors of the Company. Among the most common options are crew rotations or a combined fleet payment, totaling the value of all of the sales accumulated together. Given the cooperative nature of the fleet, this does not seem to be an unreasonable approach.

SHORT TERM GROWTH AND EXPANSION

The underlying purpose for the formation of the Company is the ultimate establishment of a Private Island, built in a Systemically Sustainable fashion, wherein all commerce on the island can be routed through the owners, while at the same time, allowing for a wholly sustainable ecotourist vacation resort can be established, catering to all budgets. This plan will not only provide for a semi-isolated economic system that will be beneficial to the company at every level, but will also provide direct access to international shipping lanes and allow for the establishment of numerous additional companies, all under the original banner of the now Incorporated corporate venture. In order to accomplish this feat however, it will be necessary first to take numerous, smaller steps to ensure the short term growth and expansion of the Company before the long-term growth projects can be finalized and implemented.

Asset Backed Securities

Some presumptions are made based on the original Investment coming from a Capital Investor rather than an Equity Investor or a Joint Venture partner. Among these is the utilization of the assets of the Fleet to be utilized for the creation of Asset Backed Securities. The operations of the fleet can be utilized for the backing of these securities, the securities can then be traded, and the capital used for the commencement of expanding operations. A modicum of caution is required, as market stability, like the price of many fish, does tend to fluctuate across both high and low values for stocks and securities. Ideally, the trade value of the Securities would allow for them to be paid off in full, though this is not necessarily a given factor. It may be that the Company should expect to go through a period of lower returns in favor of more long-term gains through the utilization of said securities. If however, the reverse is true and the Capital raised through the trade of the securities is sufficient to cover their ultimate payout, the capital utilized for the short term growth and expansion will be substantially more inexpensive than it would through more traditional and limited methods of funding.

Fleet Expansion

Fleet expansion should be among the first considerations, most especially if the Trawler has not yet been added to the fleet by this time. However, the expansion should also look to the possibility of the full and independent operations of two fleets of vessels so that more different areas can be covered and a wider selection of seafood harvested for market and sales. Consideration may also be given into the commencement of operations in other national regions, even for the express purpose of continuing to provide goods and services for the Japanese and even American markets. Such a position, having fleets and corporate entities strategically located around the globe, would allow for the continued operations for more profitable markets, while minimizing the costs of actual operations. Current markets and market trends should be carefully examined at such a time as this becomes an option, with additional consideration given to those foreign locations wherein the requisite connections are already in place to allow for the rapid deployment of such assets as may be required to commence operations as soon as possible.

Eastern Seaboard Freeport Zone and Port Facility

There have been numerous complaints about the lack of any viable Port facilities on the Eastern Seaboard of the island of Luzon in the Philippines. Granted, there are only a limited numbers of locations that would be ideally suited for such a locale, but the potential gain is substantial enough to make this an option worthy of consideration. The owners of the Tsukiji Market in Japan did not move to their new location in Toyosu on a whim, and they have not bought and paid for such a move without careful consideration regarding every detail of their operations.

As the owners of the overall project, while the Company would not be in control of market prices, the Company would have a direct benefit and capital gain from all market activities. This would further allow the company to expand into the area of Port Logistics, Global Shipping and a host of other, equally profitable ventures. The Eastern Seaboard, just north of Quezon will provide the necessary protection within a Bay for the creation of a port facility. The creation of this facility will not only generate a positive growth for the Company, but also allow for the operation of a full port facility including full retail sales locations and numerous stalls and stores that can be rented out to generate additional capital gains.

Retail Sales

Regardless of the establishment of a full Port Facility, an expansion into retail sales markets in both Japan and the Philippines should be considered as possible avenues of expansion for the Company. Many of the fleets in the United States of America operate exclusively to provide fresh catches for their own retail outlets. The business model is both well established and largely beneficial from an economic standpoint. The cost of getting the product to market is still present but there are no cost overruns or expenditures in the forms of loss through middlemen, agents or brokers. Effectively, the produce that is harvested, rather than being sold to the canneries for greatly reduced prices, can still be sold at full retail value. As products draw close to expiration, they can be sent to retail restaurants and even converted to fish cakes and other more easily preserved foods that can still be sold in retail restaurant style venues.

Retail Restaurants and Food Stands

The retail restaurants and even food stands are an excellent extension to the primary concerns of the Commercial Fishing Venture. Ideally, these food stands and at least one showcase restaurant would be housed in the Eastern Seaboard Port Facility, though that remains to be seen as to whether or not such a facility is constructed. Barring that, there are still numerous benefits to establishing these types of venues in both the Philippines and Japan. The capital of Manila and the Eastern Quezon Province would be equally ideal locations for showcase restaurants. However, those products and goods which were about to expire would be easily converted to fish cakes that can be sold for full retail value in food stands and other venues, many of which could be owned and operated by members of the formerly indigent classes assisted by the Company. In this manner, it would be possible to minimize waste and at the same time to maximize Public Relations and garner favor with the local population.

LONG TERM GROWTH AND EXPANSION

The ultimate portion of this business plan calls for a vast land development that is strategically located and ideal for both reasons of common business sense and for environmental and ecological preservation and conservation efforts. The completion of this phase of growth and expansion would allow the Company to establish itself as a Global Leader not only in the realm of Sustainable Development, but systemically sustainable expansion for all of the people of the world. While groups like the United Nations and others proclaim singular solutions as long as they work for the direct benefit of the United Nations and their financial backers, none of these programs offer systemically sustainable solutions.

Despite the great work that has been accomplished by the United Nations, none of these efforts have expanded beyond singular solutions to singular problems, often exacerbating additional concerns at the same time while providing very few sustainable, long-term solutions. The long term growth and expansion of the Company will focus on the establishment of Whole System (or Systemically) Sustainable Community Developments within the Republic of the Philippines and ideally, in other areas around the globe in a continuation of the efforts already underway by the Company.

What is proposed as the final stage of Growth and Development … though certainly not the final phase of Company expansion, is the creation of a Systemically Sustainable Community Development, with the first such community being built on Verde Island and Ambil Island in the Republic of the Philippines. The Community Developments are the result of almost forty years of research and studies including Sociological Studies, Environmental Studies, Ecological Studies, Humanitarian Impact Studies and a host of others. The focus of these studies has been a careful examination of the systems and programs in place that are ostensibly put in place to assist the people of the world.

Japanese Sustainable Development

The planning has not yet commenced on Sustainable Developments within the nation of Japan, but like the Philippines, though on the opposite end of the economical spectrum, Japan would be an ideal location for the placement of such a Community Development. Further work would have to be conducted to determine an ideal location, though such a location currently exists within the Philippines and extensive work has already been done to prepare the way for just such a construction there. Other options have already been negotiated in Vanuatu, The Tuamotu Islands

Verde Island Sustainable Development & Resort

Previous efforts were focused on obtaining and developing Ambil Island, not only as a port facility in an existing Freeport or Special Economic Zone, but also to grant direct access to international shipping lanes, build a world-class resort and to establish the first Systemically Sustainable Community Development in the world. However, in the last couple of years, Verde Island has come up for sale and offers an even more promising location for a world class, environmentally, economically and socially sustainable Community Development. At the same time, this would provide for a semi-isolated economic system that would rapidly expand the value of the Company. Verde Island is the namesake and central island of the Verde Island Passage in the Philippines. Of primary interest is the fact that much of this area is already considered to be a Freeport or Special Economic Zone, so any such zoning adjustments would be minimal at best.

While both Verde Island and Ambil Island are for sale, they are not going to be practical for most developers as they are largely occupied by “illegal squatters” in the form of indigenous tribal people of the Philippines. Among the many humanitarian efforts as have been undertaken by the owners of the Company are numerous works with the Tribal Government of the Philippines, a lawful body, duly recognized as the national Leadership council of the Tribal or Indigenous People. As such, their cooperation has already been guaranteed and their leadership is willing to work in full and complete cooperation with the company for the development of any or all of these lands.

The fact that the lands are situated on islands, further strengthens their economic benefit not only to the indigenous people living there, but to the Company as well. Given ownership of the entire island, the commerce would be largely owned and controlled by the Company. The establishment of a full resort on such a semi-isolated location would ensure that any and all monies spent by visitors to the resort would be spent with Company owned or controlled interests. As such, the entire economic system of the island would directly or indirectly benefit the company and/or the Investors.

Furthermore, to date, at least at the time of this writing, most of the potential buyers have been unable to gain the trust or cooperation of the Tribal people and the tribal government, leading to the land remaining for sale and undeveloped. It is also ideally situated for Sustainable Development given the existence in the Northern region of what is known internationally as the “Coral Triangle”. This location means that there is a literal tropical island paradise, in the middle of one of the most ecologically diverse aquasystems in the entire world, just waiting to be developed by the first one who can fund such an operation … that is, at least if they have the trust and cooperation of the Tribal Government as we do.

It should also be noted that the creation of a Sustainable Development does absolutely nothing to prevent the creation of a world class resort, with suitable facilities for all budgets, to be created in the middle of this virtual and literal paradise. As such, everything from a golf resort to a theme park to a man-made, wholly natural ecosystem such as the world has never seen before can all be developed and stand out as a Global example of what Systemic Sustainable Development has to offer for the future and benefit of humanity as a whole.

The resorts should not be limited only to land based activities however, though there will certainly be plenty of opportunity to develop the lands of the island or islands. However, a vast number of water based activities are also readily available from this location. The most diverse Coral Reef based ecological system in the world runs through the Verde Island Passage making for some very unique and world-class opportunities for diving and other open water sports activities. The presence of these water ways also allows for the opportunity to capture sport fishermen from around the world, with facilities on the island to meet any budget. Everything from Adult Entertainment venues to family friendly hotels, resorts and theme park would be easily accomplished as part of the long-term growth and expansion program established by the Company, all in a literal tropical island paradise.

Whole System Sustainable Development

Sustainable Development is best described as the ability to provide for the basic needs and desires of the population today, without adversely impacting the ability of future generations to do the same. While many current efforts claim to address the issue of Sustainable Developments, most are limited in nature and sadly lacking in many areas. This is primarily due to the fact that most (if not all) current efforts, focus on singular issues and not whole system sustainability. A system is determined to be Wholly or Systemically Sustainable only if it is Environmentally, Economically and Socially Sustainable in nature.

Agricultural Security

One of the focuses of the Community Development will be in regards to Agricultural Security. As such, virtually all of the local food supplies from production to full retail sales, will be owned and controlled by the Company. This will allow the Company to provide the local Indigenous Tribes with foods and business opportunities at a greatly reduced cost, while still supplying all of the local hotels, restaurants and even stores with retail priced goods including both meats and seafoods. However, food production on such a scale would destabilize local markets without a means to diversify and prevent flooding the market place. As such, this project will by necessity, create more opportunities … an actual need for the establishment of local, domestic and even international business interests in order to successfully market such goods. All of these ventures will not only provide financial gain for the company, but will serve to provide training, employment and even ownership opportunities for the local population.

Food Forests

Food Forests are credited by some, to be the work of Bill Mollison and David Holmgren of the Permaculture Institute of Australia. However, it should be noted that there is an existing food forest in Southern Morocco that has been in existence for more than two thousand years and one in Vietnam that has been in existence for at least three hundred years. This is not meant in any way to diminish the work of Bill Mollison and David Holmgren, though in reality, their work in regards to the food forests was fully quantifying them and providing the necessary groundwork and explanations for people to implement them more fully into modern society. It should also be noted that a great deal of the planning and design for the facilities on Ambil and/or Verde Island is a direct result of the work of these two people, and conducted in some length by students of these truly visionary pioneers of Sustainable Development.

Aquacultural Security

Large scale aquacultural security is also part of the efforts focused on Food Security and Environmental (and Economic) Sustainability. These efforts will include large scale fish farms and farms for shellfish and other seafoods that can be sold within the Community Development or exported to the global markets at large. While these projects will originally be somewhat limited in scope, future opportunities include the ability to create open water and even deep water fish farms and other more sustainable methods for raising and harvesting enough seafood for the entire world.

Coral Triangle Conservation Program

There are inevitably a great many financial gains to be had from the development of such a facility as the Verde Island Sustainable Community Development, though at the end of the day, the overall purpose of the project is systemic sustainability for humanity as a whole. It is overly relevant if the climate is changing as it has changed for as long as there has been an atmosphere surrounding our planet. What is relevant is that the human race is prepared for any change that may occur, and that the survival of the species is guaranteed no matter what may ultimately transpire. Conservation of the Planet and being better stewards of the environment is in reality, little more than common sense if we wish to ensure the survival of the species.

For such a venture to be truly successful however, it must transcend politics and even national boundaries. The efforts to conserve and protect the Coral Triangle are not restricted merely to the Coral Triangle, the Verde Island Passage or even to the Philippines. Rather, this facility must be built in order to provide the world with the proverbial “Light shining from the hilltop”. This facility must be built in order to establish a global showcase facility that demonstrates to the world that sustainable development is not a simplistic or singular process, but that complex and systemic challenges require complex and systemic solutions if they are to be effective.

This work is the culmination of nearly forty years of work and research by a great many people, some of whom have been with the effort since the beginning, many who have died over the years but left behind their portions of the legacy and others who continue to work to revise all of the data, analyze the facts and examine everything that works to understand why it works, and more importantly perhaps, to examine and study everything that society has done that has not worked … and why these programs have failed.

All of the work to be constructed in this venture, and much of the work on the Island, will be in full accordance with Executive Order 578 and in full cooperation with the Indigenous People currently living on these islands.

If there is any downside at all to the construction of such a Systemically Sustainable Development, it is that very few people are going to risk the capital necessary to finance such an operation. Thus, it seems that the only viable solution is the creation of a multinational corporation, capable of growth and expansion to the extent that it will be capable of not only funding this type of Development, but providing a shining beacon on the hill for all the world to follow, and introducing a new paradigm for all of humanity … one free of poverty and want where the success of society benefits the individual as much as the success of the individual benefits the society.

CHALLENGES OF BUSINESS OPERATIONS

The vast majority of normal concerns will be largely mitigated through Insurance. Among these will include the potential for on board accidents, up to and including loss of life of the crew members. This does not mean however, that every possible step should not be taken to prevent such catastrophes, only to recognize the reality that things do tend to happen, and some vessels are going to encounter natural and man-made mishaps that can by and large, be financially mitigated. Additional reductions in risk can also occur through the proper training of the crews and occasional drills on board to prepare for the event of any potential and foreseeable disastrous event.

There are certainly numerous concerns with the illegal fishing fleets that abound in International Waters, and while they should not be a daily concern, the threat potential is very real and should be considered in any and all operational plans. This may further be exacerbated if fishing excursions are undertaken anywhere near the African coastal waters and also in the waters surrounding the Americas … most notably from the waters surrounding the Southern United States on through all the way down into the Southern most regions of South America. The drug cartels have been known to “procure” the “cooperation” of fishing vessels for the movement of drugs and even for human smuggling.

The Chinese presence in Eastern Mexico and their heavy influence in both the drug cartels and the oil cartels should not be overlooked or casually dismissed despite the seemingly conspiratorial view of such beliefs for those that are not intimately familiar with these operations. These illicit connections are also often utilized for allowances to be made for the illegal fishing within the surrounding domestic and international waters by the illegal Chinese fishing fleets, so may potentially present threats on multiple fronts. It should be noted that virtually all of these prospective threats can be fully thwarted through the presence of a well-trained, armed security detail on the Philippine flagged vessels.

While this should never be the primary focus of the Company commercial fishing fleet, there is a sufficient threat level in all of these areas to justify such a presence, even more so if these same people are actively involved in the fishing operations, and merely work as security for added Crew Shares to be included in their paychecks. Among the many connections as have already been established by the owner, are a number of people who have military and police experience, but also have experience on fishing boats, though generally fishing only in Domestic Waters … though a couple of the leaders of this group do have additional experience as International Maritime Security Experts.

Among the more pressing concerns for the Company will be the continual ability to sell the fresh produce at the fish auctions in Japan without being reduced to have large volumes of the catch sold only to the canneries at greatly reduced costs. The ability to provide a viable ROI to the original investors and to maximize the potential for the Asset Backed Securities and their value to the Company depend on the ability to engage in top wholesale and even full retail markets with large portions of the catch. As progress is made, this effort will be made easier through the addition of the trawler and the operations of full retail stores and restaurants. This will allow the Company to move products directly from cost of production to full retail value, maximizing profits.

GLOSSARY AND TERMS

1982 UN Convention on the Law of the Seas: The United Nations Convention on the Law of the Sea (UNCLOS), also called the Law of the Sea Convention or the Law of the Sea treaty, is the international agreement that resulted from the third United Nations Conference on the Law of the Sea (UNCLOS III), which took place between 1973 and 1982.

Agricultural Security: Agricultural Security according to the FAO is when "all people, at all times, have physical and economic access to sufficient safe and nutritious food that meets their dietary needs and food preferences for an active and healthy life"

Aquacultural Security: Aquacultural Security is the farming of aquatic animals or plants, including breeding, raising and harvesting in all types of water environments in controlled conditions. It is used to produce food and commercial products, restore and create healthier habitats and rebuild threatened or endangered species populations.

Brine Storage: Brines typically refer to salt solutions, but glycols and other fluids fall into this category as well. These liquids, after flowing over the freezing product, circulate through a heat exchange where they give up heat to the vaporizing refrigerant. The cold brine (sometimes referred to as a secondary refrigerant or secondary coolant) is then pumped back to sprayers or immersion tanks where it removes heat from the freezing product. The product might be wrapped in a sealed package to prevent direct contact of the brine with the food. When brine directly contacts packages, some post-freeze cleaning would presumably be needed. One processor rinsed brine-frozen packages in freshwater, then beat the ice off of them to knock off the resulting ice, before packing the catch into cartons.

A common exception to the use of packaging is onboard tuna boats, and on some shrimp boats in southern waters, where whole fish or shrimp freeze in direct contact with refrigerated sodium chloride brine. Whether or not brine storage is a viable option will depend on the vessels selected for purchase.

Bycatch: Bycatch or By-catch is the harvesting of unintended species. An excess of bycatch will greatly decrease the value of the harvested seafood and should be avoided to the extent that it is possible. Furthermore, fishing such as is often done with Trawlers will result in bycatch that included protected species and as such, can result in legal concerns, fines and other issues that are more readily avoided with the utilization of commercial longliners.

Bureau of Fisheries and Aquatic Resources (BFAR): The regulatory agency in charge of Commercial Fishing Ventures for all Commercial Fishing Vessels under the Philippine Flag.

Catch Ceilings: Catch ceilings refer to the annual catch limits allowed to be taken, gathered or harvested from any fishing area in consideration of the need to prevent over-fishing and harmful depletion of breeding stocks of aquatic organisms. Fishing in International Waters will largely negate any adverse impact in regards to the existing Catch Ceilings imposed within Domestic Waters and Exclusive Economic Zones.

Central Pacific Ocean: The Central Pacific Ocean is that area not bordered directly by any substantial continental coastline or under the direct control and/or sphere of influence of any individual nation. It is further subdivided into the East Central Pacific Ocean and West Central Pacific Ocean in order to generate proximity to continental land masses and thus, to indicate some level of control over these vast expanses of the Central Pacific Ocean.

China: China may refer either to the People’s Republic of China or Mainland China as it is sometimes referred to, or refer to the Republic of China which is more commonly known internationally as Taiwan. For the sake of clarification herein, the term “China” shall not be used alone, but shall be used in the form of “The People’s Republic of China” when referring to Mainland China or “The Republic Of China (Taiwan)” when referring to Taiwan.

Commercial Fishing: Commercial Fishing is the taking of fishery species by passive or active gear for trade, business or profit beyond subsistence or sports fishing, to be further classified as:

  • Small scale commercial fishing - fishing with passive or active gear utilizing fishing vessels of 3.1 gross tons (GT) up to twenty (20) GT;

  • Medium scale commercial fishing - fishing utilizing active gears and vessels of 20.1 GT up to one hundred fifty (150) GT;

  • Large scale commercial fishing - fishing utilizing active gears and vessels of more than one hundred fifty (150) GT.

Commercial Fishing Licensing: Commercial Fishing Licensing is mandated by the Bureau of Fisheries and Aquatic Resources (BFAR) though separate and unique licensing, restrictions and limitations are implemented at the local level for any and all fishing ventures within Philippine Domestic Waters.

Coral Triangle: The Coral Triangle is an area considered the center of the world’s marine biodiversity. The Verde Island Passage is a conservation corridor that spans five provinces: Batangas, Occidental Mindoro, Oriental Mindoro, Marinduque and Romblon. The abundant fish and charismatic megafauna support over 7 million people in those provinces, whose livelihoods include fishing, aquaculture, and tourism. Efforts have been made to assist in the Philippine portion of the Coral Triangle, though funding remains tragically lacking as does the ability to enforce the limited actions as set forth and recommended in Executive Order 578.

Domestic Waters: Domestic Waters are those waters that are considered in accordance with Philippine and International Law to be considered an integral portion of the Philippines and under the direct jurisdiction of the Philippine Law. Natural Resources are being depleted to dangerous levels within the domestic waters surrounding the Philippines, requiring an increased presence of deepwater vessels capable of fishing in extended Exclusive Economic Zones outside of the domestic waters of the Philippines and into more International Waters.

Endangered Species: aquatic plants, animals, including some varieties of corals and sea shells in danger of extinction as provided for in existing fishery laws, rules and regulations or in the Protected Areas and Wildlife Bureau of the Department of Environment and Natural Resources (DENR. And in the Convention on the International Trade of Endangered Species of Flora and Fauna (CITES).

Exclusive Economic Zone or EEZ: An area beyond and adjacent to the territorial sea (or domestic waters) which shall not extend beyond 200 nautical miles from the baselines as defined under existing laws.

Executive Order 578: The Philippine national policy on biological diversity, prescribing its implementation throughout the country, particularly in the sulu sulawesi marine ecosystem and the verde island passage marine corridor.

Factory Ship (Or Processing Ship): A larger vessel, generally with a greatly increased storage capacity for the processing, storing and delivery of fresh seafood products to the local ports. The utilization of a processing ship allows for the fishing vessels themselves to spend more time at sea without having to dock to unload their cargoes. Depending upon the processing vessel, the storage capacity and the end markets, processing ships can increase profitability by as much as two hundred percent as opposed to fishing vessels alone which must dock as their holds are filled up close to capacity.

Food and Agriculture Organization of the United Nations (FAO): The FAO is tasked with the responsibilities of its role with regards to the monitoring and reporting on global marine resources and relevant environmental and ecological changes.

Freezer Capacity: Freezer capacity can be measured in gross tonnage though this may vary based on the size and density of the seafood harvested. Thus, freezer capacity is generally measured in cubic tonnes, cubic tons or M3, also known as Cubic Meters. Industry standards are roughly 0.8 tonnes per cubic meter, allowing for a general estimation of tonnage regarding the harvested catch.

Freezer Storage: Freezer Storage is one of the two preferred methods for storing fish caught at sea, especially in the earlier portions of a voyage; brine storage being the other preferred method. Individual freezers should have the capacity to freeze a minimal tonnage of fresh catch per day, with temperatures held at minus twenty-five degrees Celsius (Minus thirteen degrees Fahrenheit) or colder.

Fuel: The standard fuel or fuel oil utilized in commercial vessels is Diesel and/or Biodiesel. This is consistent for use for both the main engine(s) as well as on-board generators. Road-grade diesel is more ideally suited for the task as it will burn cleaner than the lower-grade fuel oils. Fuel Use can be measured in GPH or Gallons Per Hour, LPH or Liters Per Hour, or by weight of the fuel oil consumed over any given time.

  • Cubic Meters of Fuel Oil: One cubic meter of fuel oil is measured under an International Standard of 1000 Liters per Cubic Meter or Meter3. Thus, a commercial vessel with a fuel capacity of 330 Cubic Meters has the capacity to carry 330,000 Liters of fuel.

  • Weight and Measurement of Fuel Oil: Fuel Oil is measured in the standard Liter … or 1000 Milliliters throughout this document as Gallons may vary depending on locale.

  • Fuel Consumption: The average fuel consumption on most vessels is roughly fifty liters per hour for the Main Engine, plus any fuel that is consumed for generators, refrigeration and other uses. Using these figures as a basis, the average daily consumption of fuel listed herein is based on approximately 1500 Liters of Fuel Consumption per day.

GPH: Fuel consumption is occasionally measured as Gallons Per Hour or GPH, though this can be misleading given the varying nature of US and UK standards of measurement for the gallon unit. As such, fuel use will be measured in Liters of consumption, be it per hour or per day.

Gallon (UK): One UK Gallon is equivalent to 4.54609 Liters.

Gallon (US): One US Gallon is equivalent to 3.785411784 Liters.

Gross Tonnage: Gross tonnage includes the underdeck tonnage, permanently enclosed spaces above the tonnage deck, except for certain exemptions. In broad terms, all the vessel's 'closed-in' spaces expressed in volume terms on the bases of one hundred cubic feet (that equals one gross ton).

Hold: The “Hold” of a ship is its storage area. In the case of Commercial Fishing Vessels, a “Hold” may or may not include refrigerated storage areas for the harvested catch.

International Waters: International Waters are deemed to be any and all such bodies of ocean and/or sea that are outside of the direct control and regulation of the government of The Republic of the Philippines in accordance with both International Law and Philippine Law. Philippine Flagged Commercial Fishing Vessels also receive added tax incentives for fishing outside of the Two Hundred Mile Marker so as to reduce the strain and depletion of natural resources within the Domestic Waters of the Philippines and its Exclusive Economic Zone.

Liter: One liter is 1000 milliliters and is the common use of measurement for fuel in International Standards

Live Storage: A means wherein the catch or bait, either in part or in whole, is stored in live storage tanks to be delivered to the port of call or to be used in fishing. Live Storage Bait tanks are utilized for the use of Live Baits in fishing efforts while Live Storage Tanks are used to preserve the catch or harvested fish alive.

Long Ton: One long ton is equal to 1016.0469088 Kilograms

Longliner: This type of fishing vessel involves the use of a mainline which can be more than 100 km in length and from which as many as 3 000 branch lines, each with a baited hook (or Snood), are dangled in the water column. The mainline is kept afloat by a series of buoys attached at intervals. It can take up to 8 hours to set the net and 12 to retrieve it. The gear is passive, in that it captures whatever fish happen to take the bait. One set of the net can capture several species of tunas, plus other types of fish, particularly swordfish and marlins. The gear fishes mostly at depths between 100 and 150 meters, where temperatures are cool and the largest tuna are most often encountered. These large tunas, especially bigeye and bluefin, fetch very high prices in the sashimi markets of Japan. The majority of large longline vessels target bigeye tuna. The smaller longline vessels use shorter mainlines and fewer hooks than do the larger vessels. They operate mostly in nearshore waters, whereas the larger vessels fish throughout the world. These larger vessels are often supplied by tender vessels, and can stay at sea for extended periods. The largest longline fleets are those of Japan, followed by those of Taiwan, Province of China and Republic of Korea.

In terms of tonnage of tuna captured, longlining captures about 14% of the world catch of tunas.

Maximum Sustainable Yield (MSY): The MSY is the largest average quantity of fish that can be harvested from a fish stocks/resource within a period of time (e.g. one year) on a sustainable basis under existing environmental conditions.

Meter: One meter is equivalent to 1000 Millimeters or 39.37 inches. The volume of the hold of the ship is generally measured in Cubic Meters.

Meter Cubed (Cubic Meter or M3 or Meter3): A cubic meter of refrigerator, freezer or other storage space will generally be accepted to hold somewhere between .8 to 1.01 metric tonnes of fish, depending on the size, density and packing of said fish.

Metric Tonne: One Metric Tonne is 1000 Kilograms. In some instances, “ton” will be written to indicate the local weight wherein “tonne” will be written to indicate a more internationally accepted standard of one thousand kilograms.

Natural Resources: Any and all such resources that occur naturally, though tending to be limited or restricted in nature as to be capable of being depleted beyond recovery.

Net Income: Net Income for the purposes of this and related documentation, is separated into Primary Net Income and Secondary Net Income due to the unique method of Production Based Payment for the commercial fishing crews and the requisite, though difficult to predict, cost of maintenance on the commercial fishing vessels.

Net Tonnage: Net tonnage (often abbreviated as NT, N.T. or nt) is a dimensionless index calculated from the total moulded volume of the ship's cargo spaces by using a mathematical formula. Net tonnage is used to calculate the port duties and should not be taken as less than 30 per cent of the ship's gross tonnage.

Overseas Foreign Worker (OFW): The Filipino Overseas Foreign Worker is the most prevalent export of the Philippines. However, allowances are made, even for Filipino flagged vessels operating in distant, international and even foreign waters so that the Filipino crew members will not be listed as an OFW and thus, are not subject to the same heightened regulations, restrictions or costs that an OFW would be. This is merely an added economic benefit for the Company.

Pacific Ocean: In accordance with FAO standards for International Waters and related laws and regulations, the Pacific Ocean is that are which comprises the entirety of the Pacific Ocean, though this may be further subdivided into the segments known as the East Central Pacific Ocean, Northeast Pacific Ocean, Northwest Pacific Ocean, Southeast Pacific Ocean, Southwest Pacific Ocean and West Central Pacific Ocean in technical terms, and occasionally, by other more specific terms and/or subdivisions as necessary.

People’s Republic of China: China may refer either to the People’s Republic of China or Mainland China as it is sometimes referred to, or refer to the Republic of China which is more commonly known internationally as Taiwan. For the sake of clarification herein, the term “China” shall not be used alone, but shall be used in the form of “The People’s Republic of China” when referring to Mainland China or “The Republic Of China (Taiwan)” when referring to Taiwan.

Philippine waters: include all bodies of water within the Philippine territory such as lakes, rivers streams, creeks, brooks, ponds, swamps, lagoons, gulfs, bays and seas and other bodies of water now existing or which may hereafter exist in the provinces, cities, municipalities, and barangays and the waters around, between and connecting the islands of the archipelago regardless of their breadth and dimensions, the territorial sea, the sea beds, the insular shelves, and all other waters over which the Philippines has sovereignty and jurisdiction including the 200-nautical miles Exclusive Economic Zone and the continental shelf.

Philippines: The Philippines key geographical features include 7,107 islands (some note that this is only at low tide), its 17 460 km of coastline, 288 000 km² of coastal waters, 185,000 km² of shelf area, approximately 1.7 million km² of territorial seas, and the 2.3 million km² of marine waters in the exclusive economic zone (EEZ). The EEZ is approximately seven times the total land mass of the Philippines. Many of the islands are fringed with coral reefs and mangrove stands. There are approximately 1 500 municipalities in the Philippines, of which some 900 are rural, coastal communities, comprised of 10 000 barangays (small villages) and the others being larger urban centres. Fisheries management responsibility is split between the central government and the municipalities through the Philippine Fisheries Code 1998 for all fisheries outside 15 km from the coast, including foreign joint ventures, and the Local Government Code of 1991 whereby, coastal municipalities have management responsibility and control of the coastal areas out to 15 km for operations within the national legal framework. The Philippines shares major sea lanes for international marine traffic between Japan and the Middle East with its South China Seas neighbours4, earning it a strategic position in the maritime area of South East Asia. Regional organizations in the South China Sea area and also in the Western and Central Pacific Ocean area are potential tools that may be utilized for fisheries management for the Philippines.

Pole-and-line fishing: Pole-and-line fishing, which was developed in several separate regions of the world, involves use of a hook and line attached to the end of a pole, improving both leverage and reach. This general method of fishing has been used for centuries in the South Pacific, Japan, and the Maldives. However, what could be called modern pole and line fishing developed during the early twentieth century. At that time the Japanese developed larger pole-and-line vessels capable of travelling to any ocean where tuna occurred in fishable quantities. The vessels, which carry live bait in tanks of circulating seawater, can freeze their catches and stay at sea for three or four months. In some cases, when bait from cooler waters is carried into tropical areas in pursuit of tuna, the water in the bait tank is refrigerated in order to maintain a temperature similar to that of the water where the bait was captured thereby increasing the survival of the baitfish.

Primary Net Income: The primary Net Income is the total income of the voyage less the cost of food, fuel and bait and is used to calculate the payment for the crew of the fishing vessels. The crew will receive generally thirty percent of the Primary Net Income to be divided as Crew Shares, with larger shares being granted to more senior and requisite crew members such as the Captain, First Mate, Engineer and others.

Prohibited Species: Species which are protected by law and whose capture may result in legal and/or financial penalties against the vessel and/or the Company.

Processing Ship (Or Factory Ship): A larger vessel, generally with a greatly increased storage capacity for the processing, storing and delivery of fresh seafood products to the local ports. The utilization of a processing ship allows for the fishing vessels themselves to spend more time at sea without having to dock to unload their cargoes. Depending upon the processing vessel, the storage capacity and the end markets, processing ships can increase profitability by as much as two hundred percent as opposed to fishing vessels alone which must dock as their holds are filled up close to capacity.

Protected Species: Endangered, Rare and/or Threatened Species – fish, aquatic plants, including some varieties of corals and sea shells in danger of extinction as provided for existing fishery laws, rules and regulations or in the Protected Areas and Wildlife Bureau of the Department of Environment and Natural Resources (DENR) and in the Convention of the International Trade of Endangered Species of Flora and Fauna (CITES).

Purse Seiner: Purse-seine nets are set vertically in the water, with floats attached to the upper edge, while along the lower edge is a chain, for weight, and a series of rings, through which the pursing cable passes. Purse-seine nets can be as long as 1.5 km and more than 150 m deep. On sighting a school of tuna, a large skiff with the end of the net attached is released from the stern of the fishing vessel. The vessel encircles the school with the net. The cable is hauled aboard the vessel, causing the bottom of the net to close, and the fish are trapped inside the pursed net. Most of the net is then pulled aboard the vessel, confining the fish in a “sack,” from which they are transferred to the deck of the vessel. Tuna purse seiners vary in length between about 30 to 115 meters, and can pack on board up to 4 000 tonnes of frozen fish. However, most high-seas tuna seiners average about 70 to 80 meters in length and can carry about 1000 to 1500 tonnes of frozen tuna. Such vessels can fish throughout the oceans of the world, and make trips that last up to several months before returning to port. Many carry helicopters to improve their efficiency in finding and catching fish.

Republic of China (Taiwan): China may refer either to the People’s Republic of China or Mainland China as it is sometimes referred to, or refer to the Republic of China which is more commonly known internationally as Taiwan. For the sake of clarification herein, the term “China” shall not be used alone, but shall be used in the form of “The People’s Republic of China” when referring to Mainland China or “The Republic Of China (Taiwan)” when referring to Taiwan.

Secondary Net Income: The Secondary Net Income is the sum of the Primary Net Income less all additional costs for repairs and maintenance that must be completed in order to prepare the vessel for its next voyage. Such costs as further deducted will constitute repairs to fishing gear, motor oils, engine or generator repairs, repairs to freezer units and other such material as is necessary for the successful commencement and completion of further operations, in addition to any and all such standard business costs not directly related to the vessel. Among these are payroll for office personnel at such a time as additional personnel are added to the office, office supplies and equipment, taxes, licensing and other fees and any other such costs of doing business as shall be deemed to be necessary and beneficial for the continued lawful conduct of business operations.

Short Ton: One short ton equals 907.18474 kilograms

South Pacific Ocean: The South Pacific Ocean generally refers to that portion of the Pacific which borders and/or encompasses Oceania.

Storage Capacity: Fish carrying capacity or Storage Capacity is measured for most tuna fishing vessels as the tonnage of fish that can be stored on the vessel when it is fully loaded, or the storage area measured in cubic meters. Of course there is some variability in this, depending on the size of fish being stored. A 1000-ton vessel can store slightly more than that amount if the fish are small, and slightly less if they are large. Carrying capacity can be calculated for a vessel by examining its history of unloadings, and then taking some average of the maximum amounts unloaded. In the case of volumetric measures the shipyard-rated capacity of the fish holds are used. There is, of course, a correlation between the two measures, and one can be estimated from the other. For example, for the purse seine fleet operating in the eastern Pacific Ocean one cubic meter of storage capacity is equivalent to approximately 0.8 tonnes of carrying capacity, averaged over all sizes of tuna captured.

Sustainability: Sustainability is best defined as the ability to provide for the basic necessities and desires of the people in existence today without impeding the ability of future generations to accomplish the same.

Sustainable Development: A sustainable development is any development that is sustainable in nature. It is important however, to note that sustainability in any singular area may not indicate an overall, systemic level of sustainability.

Systemic Sustainability: Systemic Sustainability or Whole System Sustainability is any development wherein the entire construct is sustainable in three primary areas, Economically, Environmentally and Socially or Sociologically.

Tax Relief: Tax relief is available for the operations including the flagging of commercial vessels within the Republic of the Philippines, greatly reducing not only the initial tax liability, but also the overall tax liability of operations. The utilization of the fishing fleet solely in International Waters will allow for a further reduction of tax liabilities, reducing the overall corporate tax rate to an estimated seventeen percent or less. Further programs could be implemented at a later date in order to further decrease tax liabilities and corporate expenditures.

Tons: Tons can be measured in different fashions depending upon the locale. These units are known as either Long Tons, Short Tons or Metric Tonnes. The general standard of measurement for uniformity is the Metric Tonne which is only held to be a total of One Thousand Kilograms. One long ton is approximately 1016 kilograms while one short ton is just over 907 kilograms.

Tonnage: Tonnage is separated into two categories for Commercial Vessels, gross tonnage and net tonnage.

Tonnes: For the purpose of this and all related documentation, “Tonne” or “Tonnes” shall refer to the metric tonne and be equivalent to a total weight of one thousand kilograms.

Total Allowable Catch (TAC): is the maximum harvest allowed to be taken during a given period of time from any fishery area, or from any fishery species or group of fishery species, or a combination of area and species and normally would not exceed the MSY.

Vacuum Sealing: Sealing of an item in such a fashion so as to create a vacuum within the package, thus removing oxygen and any other potentially harmful gases or conditions which may otherwise allow for the growth of algae, bacteria or other detrimental growth or degradation which will reduce the value of the sealed materials.

West Central Pacific Ocean: The West Central Pacific Ocean is that area which encompasses any and all such waters of the Pacific Ocean that are under the direct control and sphere of influence of the Republic of the Philippines.

Western and Central Pacific Ocean Fisheries Commission (WCPF): The WCPF came into force in June 2004. The political commitment for responsible and sustainable fisheries in the Philippines has been weak in the past two decades, and with the exception of a few coastal areas where donor projects have a limited impact, this remains the unfortunate situation for the country. Its future capability to implement responsible and sustainable fisheries management practices as provided in the training workshops under FAO’s FISHCODE project attended by Philippine officials, will rely more with the few “champions” in the private sector than with the government agencies that are constrained by internal politicization of fisheries issues.

Western Pacific Warm Pool: The Western Pacific Warm Pool is one of the 56 biogeochemical provinces defined by Longhurst (1995) and corresponds to the definition of a Large Marine Ecosystem (LME), i.e. a zone of 200,000 sq. km. or more, characterised by distinct bathymetry, hydrography, productivity and trophically dependent populations. LMEs have been described as regional units for the management of fisheries in accordance with the principles of UNCLOS, and can provide a framework for the achievement of UNCED commitments (Lehody et. al., 1997). The Western Pacific Warm Pool is a zone of low productivity which can extend over 80° of longitude and which has the warmest surface waters of the world's oceans. It produces virtually 100 percent of the purse-seine catch, 90 percent of the pole-and-line catch and 60 percent of the longline catch of tunas in the region. The pool's boundaries are dynamic, moving in response to oceanographic features. The warm pool can undergo spectacular displacements of over 40° of

longitude (nearly 4,000 km) in less than 6 months as part of the El Niño/ La Niña phenomenon. Tuna abundance and yields are also displaced east-west by the same phenomena, and the geographic location of catches of the US purse-seine fleet can be accurately predicted several months in advance based on both the east-west movements of the 29°C isotherm, and variation in the Southern Oscillation index (a measure of the difference in barometric pressure between the eastern and western Pacific rims).

REPUBLIC ACT NO. 8550 FEBRUARY 25, 1998

AN ACT PROVIDING FOR THE DEVELOPMENT, MANAGEMENT AND CONSERVATION OF THE FISHERIES AND AQUATIC RESOURCES, INTEGRATING ALL LAWS PERTINENT THERETO, AND FOR OTHER PURPOSES

Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled:

Section 1. Title. - This Act shall be known as "The Philippine Fisheries Code of 1998."

CHAPTER I

Declaration of Policy and Definitions

Section 2. Declaration of Policy. - It is hereby declared the policy of the State:

(a) to achieve food security as the overriding consideration in the utilization, management, development, conservation and protection of fishery resources in order to provide the food needs of the population. A flexible policy towards the attainment of food security shall be adopted in response to changes in demographic trends for fish, emerging trends in the trade of fish and other aquatic products in domestic and international markets, and the law of supply and demand;

(b) to limit access to the fishery and aquatic resources of the Philippines for the exclusive use and enjoyment of Filipino citizens;

(c) to ensure the rational and sustainable development, management and conservation of the fishery and aquatic resources in Philippine waters including the Exclusive Economic Zone (EEZ) and in the adjacent high seas, consistent with the primordial objective of maintaining a sound ecological balance, protecting and enhancing the quality of the environment;

(d) to protect the rights of fisherfolk, especially of the local communities with priority to municipal fisherfolk, in the preferential use of the municipal waters. Such preferential use, shall be based on, but not limited to, Maximum Sustainable Yield (MSY) or Total Allowable Catch (TAC) on the basis of resources and ecological conditions, and shall be consistent with our commitments under international treaties and agreements;

(e) to provide support to the fishery sector, primarily to the municipal fisherfolk, including women and youth sectors, through appropriate technology and research, adequate financial, production, construction of postharvest facilities, marketing assistance, and other services. The protection of municipal fisherfolk against foreign intrusion shall extend to offshore fishing grounds. Fishworkers shall receive a just share for their labor in the utilization of marine and fishery resources;

(f) to manage fishery and aquatic resources, in a manner consistent with the concept of an integrated coastal area management in specific natural fishery management areas, appropriately supported by research, technical services and guidance provided by the State; and

(g) to grant the private sector the privilege to utilize fishery resources under the basic concept that the grantee, licensee or permittee thereof shall not only be a privileged beneficiary of the State but also active participant and partner of the Government in the sustainable development, management, conservation and protection of the fishery and aquatic resources of the country.

The state shall ensure the attainment of the following objectives of the fishery sector:

1. Conservation, protection and sustained management of the country's fishery and aquatic resources;

2. Poverty alleviation and the provision of supplementary livelihood among municipal fisherfolk;

3. Improvement of productivity of aquaculture within ecological limits;

4. Optimal utilization of offshore and deep-sea resources; and

5. Upgrading of post-harvest technology.

Section 3. Application of its Provisions. - The provisions of this Code shall be enforced in:

(a) all Philippine waters including other waters over which the Philippines has sovereignty and jurisdiction, and the country's 200-nautical mile Exclusive Economic Zone (EEZ) and continental shelf;

(b) all aquatic and fishery resources whether inland, coastal or offshore fishing areas, including but not limited to fishponds, fishpens/cages; and

(c) all lands devoted to aquaculture, or businesses and activities relating to fishery, whether private or public lands.lawphi1©

Section 4. Definition of Terms. - As used in this Code, the following terms and phrases shall mean as follows:

Constitution Statutes Executive Issuances Judicial Issuances Other Issuances Jurisprudence International Legal Resources AUSL Exclusive

1. Ancillary Industries - firms or companies related to the supply, construction and maintenance of fishing vessels, gears, nets and other fishing paraphernalia; fishery machine shops; and other facilities such as hatcheries, nurseries, feed plants, cold storage and refrigeration, processing plants and other pre-harvest and post-harvest facilities.

2. Appropriate Fishing Technology - adaptable technology, both in fishing and ancillary industries, that is ecologically sound, locally source-based and labor intensive.

3. Aquaculture - fishery operations involving all forms of raising and culturing fish and other fishery species in fresh, brackish and marine water areas.

4. Aquatic Pollution - the introduction by human or machine, directly or indirectly, of substances or energy to the aquatic environment which result or is likely to result in such deleterious effects as to harm living and nonliving aquatic resources, pose potential and/or real hazard to human health, hindrance to aquatic activities such as fishing and navigation, including dumping/disposal of waste and other marine litters, discharge of petroleum or residual products of petroleum or carbonaceous materials/substances, and other, radioactive, noxious or harmful liquid, gaseous or solid substances, from any water, land or air transport or other humanmade structure. Deforestation, unsound agricultural practices such as the use of banned chemicals and excessive use of chemicals, intensive use of artificial fish feed, and wetland conversion, which cause similar hazards and deleterious effects shall also constitute aquatic pollution.

5. Aquatic Resources - includes fish, all other aquatic flora and fauna and other living resources of the aquatic environment, including, but not limited to, salt and corals.

6. Artificial Reefs - any structure of natural or man-made materials placed on a body of water to serve as shelter and habitat, source of food, breeding areas for fishery species and shoreline protection.

7. Catch Ceilings - refer to the annual catch limits allowed to be taken, gathered or harvested from any fishing area in consideration of the need to prevent overfishing and harmful depletion of breeding stocks of aquatic organisms.

8. Closed Season - the period during which the taking of specified fishery species by a specified fishing gear is prohibited in a specified area or areas in Philippine waters.

9. Coastal Area/Zone - is a band of dry land and adjacent ocean space (water and submerged land. in which terrestrial processes and uses directly affect oceanic processes and uses, and vice versa; its geographic extent may include areas within a landmark limit of one (1. kilometer from the shoreline at high tide to include mangrove swamps, brackish water ponds, nipa swamps, estuarine rivers, sandy beaches and other areas within a seaward limit of 200 meters isobath to include coral reefs, algal flats, seagrass beds and other softbottom areas.

10. Commercial Fishing - the taking of fishery species by passive or active gear for trade, business & profit beyond subsistence or sports fishing, to be further classified as:

(1) Small scale commercial fishing - fishing with passive or active gear utilizing fishing vessels of 3.1 gross tons (GT) up to twenty (20) GT;

(2) Medium scale commercial fishing - fishing utilizing active gears and vessels of 20.1 GT up to one hundred fifty (150) GT; and

(3) Large commercial fishing - fishing utilizing active gears and vessels of more than one hundred fifty (150) GT.

11. Commercial Scale - a scheme of producing a minimum harvest per hectare per year of milkfish or other species including those raised in pens, cages, and tanks to be determined by the Department in consultation with the concerned sectors;

12. Coral - the hard calcareous substance made up of the skeleton of marine coelenterate polyps which include reefs, shelves and atolls or any of the marine coelenterate animals living in colonies where their skeletons form a stony mass. They include: (a. skeletons of anthozoan coelenterates characterized as having a rigid axis of compact calcareous or horny spicules, belonging to the genus corallium as represented by the red, pink, and white corals which are considered precious corals; (b. skeletons of anthozoan coelenterates characterized by thorny, horny axis such as the antipatharians represented by the black corals which are considered semi-precious corals; and (c. ordinary corals which are any kind of corals that are not precious nor semi-precious.

13. Coral Reef - a natural aggregation of coral skeleton, with or without living coral polyps, occurring in intertidal and subtidal marine waters.

14. Demarcated Areas - boundaries defined by markers and assigned exclusively to specific individuals or organizations for certain specified and limited uses such as:

(a) Aquaculture, sea ranching and sea farming;

(b) Fish aggregating devices;

(c) Fixed and passive fishing gears; and

(d) Fry and fingerlings gathering.

15. Department - shall mean the Department of Agriculture.

16. Electrofishing - the use of electricity generated by batteries, electric generators and other source of electric power to kill, stupefy, disable or render unconscious fishery species, whether or not the same are subsequently recovered.

17. Endangered Rare and/or Threatened Species - aquatic plants, animals, including some varieties of corals and sea shells in danger of extinction as provided for in existing fishery laws, rules and regulations or in the Protected Areas and Wildlife Bureau of the Department of Environment and Natural Resources (DENR. and in the Convention on the International Trade of Endangered Species of Flora and Fauna (CITES).

18. Exclusive Economic Zone (EEZ. - an area beyond and adjacent to the territorial sea which shall not extend beyond 200 nautical miles from the baselines as defined under existing laws.

19. FARMCs - the Fisheries and Aquatic Resources Management Councils.

20. Farm-to-Market Roads - shall include roads linking the fisheries production sites, coastal landing points and other post-harvest facilities to major market and arterial roads and highways.

21. Fine Mesh Net - net with mesh size of less than three centimeters (3 cm.. measured between two (2. opposite knots of a full mesh when stretched or as otherwise determined by the appropriate government agency.

22. Fish and Fishery/Aquatic Products - include not only finfish but also mollusks, crustaceans, echinoderms, marine mammals, and all other species of aquatic flora and fauna and all other products of aquatic living resources in any form.

23. Fish Cage - refers to an enclosure which is either stationary or floating made up of nets or screens sewn or fastened together and installed in the water with opening at the surface or covered and held in a place by wooden/bamboo posts or various types of anchors and floats.

24. Fish Corral or "Baklad" - a stationary weir or trap devised to intercept and capture fish consisting of rows of bamboo stakes, plastic nets and other materials fenced with split blood mattings or wire mattings with one or more enclosures, usually with easy entrance but difficult exit, and with or without leaders to direct the fish to the catching chambers, purse or bags.

25. Fish fingerlings - a stage in the life cycle of the fish measuring to about 6-13 cm. depending on the species.

26. Fish fry - a stage at which a fish has just been hatched usually with sizes from 1-2.5 cm.

27. Fish pen - an artificial enclosure constructed within a body of water for culturing fish and fishery/aquatic resources made up of poles closely arranged in an enclosure with wooden materials, screen or nylon netting to prevent escape of fish.

28. Fisherfolk - people directly or personally and physically engaged in taking and/or culturing and processing fishery and/or aquatic resources.

29. Fisherfolk Cooperative - a duly registered association of fisherfolk with a common bond of interest, who have voluntarily joined together to achieve a lawful common social or economic end, making equitable contribution to the capital requirement and accepting a fair share of the risks and benefits of the undertakings in accordance with universally accepted cooperative principles.

30. Fisherfolk Organization - an organized group, association, federation, alliance or an institution of fisherfolk which has at least fifteen (15. members, a set of officers, a constitution and by-laws, an organizational structure and a program of action.

31. Fisheries - refers to all activities relating to the act or business of fishing, culturing, preserving, processing, marketing, developing, conserving and managing aquatic resources and the fishery areas, including the privilege to fish or take aquatic resource thereof.

32. Fish Pond - a land-based facility enclosed with earthen or stone material to impound water for growing fish.

33. Fishing Boat/Gear License - a permit to operate specific types of fishing boat/gear for specific duration in areas beyond municipal waters for demersal or pelagic fishery resources.

34. Fishery Management Areas - a bay, gulf, lake or any other fishery area which may be delineated for fishery resource management purposes.

35. Fishery Operator - one who owns and provides the means including land, labor, capital, fishing gears and vessels, but does not personally engage in fishery.

36. Fishery Refuge and Sanctuaries - a designated area where fishing or other forms of activities which may damage the ecosystem of the area is prohibited and human access may be restricted.

37. Fishery Reserve - a designated area where activities are regulated and set aside for educational and research purposes.

38. Fishery Species - all aquatic flora and fauna including, but not restricted to, fish, algae, coelenterates, mollusks, crustaceans, echinoderms and cetaceans.

39. Fishing - the taking of fishery species from their wild state of habitat, with or without the use of fishing vessels.

40. Fishing gear - any instrument or device and its accessories utilized in taking fish and other fishery species.

(a) Active fishing gear - is a fishing device characterized by gear movements, and/or the pursuit of the target species by towing, lifting, and pushing the gears, surrounding, covering, dredging, pumping and scaring the target species to impoundments; such as, but not limited to, trawl, purse seines, Danish seines, bag nets, paaling, drift gill net and tuna longline.

(b) Passive fishing gear - is characterized by the absence of gear movements and/or the pursuit of the target species; such as, but not limited to, hook and line, fishpots, traps and gill nets across the path of the fish.

41. Fishing vessel - any boat, ship or other watercraft equipped to be used for taking of fishery species or aiding or assisting one (1. or more vessels in the performance of any activity relating to fishing, including, but not limited to, preservation, supply, storage, refrigeration, transportation and/or processing.

42. Fishing with Explosives - the use of the dynamite, other explosives or other chemical compounds that contain combustible elements or ingredients which upon ignition by friction, concussion, percussion or detonation of all or parts of the compound, will kill, stupefy, disable or render unconscious any fishery species. It also refers to the use of any other substance and/or device which causes an explosion that is capable of producing the said harmful effects on any fishery species and aquatic resources and capable of damaging and altering the natural habitat.

43. Fishing with Noxious or Poisonous Substances - the use of any substance, plant extracts or juice thereof, sodium cyanide and/or cyanide compounds or other chemicals either in a raw or processed form, harmful or harmless to human beings, which will kill, stupefy, disable or render unconscious any fishery species and aquatic resources and capable of damaging and altering the natural habitat.

44. Fishworker - a person regularly or not regularly employed in commercial fishing and related industries, whose income is either in wage, profit-sharing or stratified sharing basis, including those working in fish pens, fish cages, fish corrals/traps, fishponds, prawn farms, sea farms, salt beds, fish ports, fishing boat or trawlers, or fish processing and/or packing plants. Excluded from this category are administrators, security guards and overseers.

45. Food Security - refers to any plan, policy or strategy aimed at ensuring adequate supplies of appropriate food at affordable prices. Food security may be achieved through self-sufficiency (i.e. ensuring adequate food supplies from domestic production), through self-reliance (i.e. ensuring adequate food supplies through a combination of domestic production and importation), or through pure importation.

46. Foreshore Land - a string of land margining a body of water; the part of a seashore between the low-water line usually at the seaward margin of a low tide terrace and the upper limit of wave wash at high tide usually marked by a beach scarp or berm.

47. Fully-developed Fishpond Area - a clean leveled area enclosed by dikes, at least one foot higher than the highest floodwater level in the locality and strong enough to resist pressure at the highest flood tide; consists of at least a nursery pond, a transition pond, a rearing pond or a combination of any or all said classes of ponds, and a functional water control system and producing in a commercial scale.

48. Gross Tonnage - includes the underdeck tonnage, permanently enclosed spaces above the tonnage deck, except for certain exemptions. In broad terms, all the vessel's 'closed-in' spaces expressed in volume terms on the bases of one hundred cubic feet (that equals one gross ton).

49. Inland Fishery - the freshwater fishery and brackishwater fishponds.

50. Lake - an inland body of water, an expanded part of a river, a reservoir formed by a dam, or a lake basin intermittently or formerly covered by water.

51. Limited Access - a fishery policy by which a system of equitable resource and allocation is established by law through fishery rights granting and licensing procedure as provided by this Code.

52. Mangroves - a community of intertidal plants including all species of trees, shrubs, vines and herbs found on coasts, swamps, or border of swamps.

53. Maximum Sustainable Yield (MSY. - is the largest average quantity of fish that can be harvested from a fish stocks/resource within a period of time (e.g. one year. on a sustainable basis under existing environmental conditions.

54. Migratory species - refers to any fishery species which in the course of their life could travel from freshwater to marine water or vice versa, or any marine species which travel over great distances in waters of the ocean as part of their behavioral adaptation for survival and speciation:

(a) Anadromous species - marine fishes which migrate to freshwater areas to spawn;

(b) Catadromous species - freshwater fishes which migrate to marine areas to spawn.

55. Monitoring, control and surveillance -

(a) Monitoring - the requirement of continuously observing:

(1) fishing effort which can be expressed by the number of days or hours of fishing, number of fishing gears and number of fisherfolk;

(2) characteristics of fishery resources; and (3) resource yields (catch);

(b) Control - the regulatory conditions (legal framework) under which the exploitation, utilization and disposition of the resources may be conducted; and

(c) Surveillance - the degree and types of observations required to maintain compliance with regulations.ALF

56. Municipal fisherfolk - persons who are directly or indirectly engaged in municipal fishing and other related fishing activities.

57. Municipal fishing - refers to fishing within municipal waters using fishing vessels of three (3. gross tons or less, or fishing not requiring the use of fishing vessels.

58. Municipal waters - include not only streams, lakes, inland bodies of water and tidal waters within the municipality which are not included within the protected areas as defined under Republic Act No. 7586 (The NIPAS Law), public forest, timber lands, forest reserves or fishery reserves, but also marine waters included between two (2. lines drawn perpendicular to the general coastline from points where the boundary lines of the municipality touch the sea at low tide and a third line parallel with the general coastline including offshore islands and fifteen (15. kilometers from such coastline. Where two (2. municipalities are so situated on opposite shores that there is less than thirty (30. kilometers of marine waters between them, the third line shall be equally distant from opposite shore of the respective municipalities.

59. Non-governmental organization (NGO. - an agency, institution, a foundation or a group of persons whose purpose is to assist peoples organizations/associations in various ways including, but not limited to, organizing, education, training, research and/or resource accessing.

60. Payao - a fish aggregating device consisting of a loating raft anchored by a weighted line with suspended materials such as palm fronds to attract pelagic and schooling species common in deep waters.

61. Pearl Farm Lease - public waters leased for the purpose of producing cultured pearls.

62. People's Organization - a bona fide association of citizens with demonstrated capacity to promote the public interest and with identifiable leadership, membership and structure. Its members belong to a sector/s who voluntarily band themselves together to work for and by themselves for their own upliftment, development and greater good.

63. Person - natural or juridical entities such as individuals, associations, partnership, cooperatives or corporations.

64. Philippine waters - include all bodies of water within the Philippine territory such as lakes, rivers, streams, creeks, brooks, ponds, swamps, lagoons, gulfs, bays and seas and other bodies of water now existing or which may hereafter exist in the provinces, cities, municipalities, and barangays and the waters around, between and connecting the islands of the archipelago regardless of their breadth and dimensions, the territorial sea, the sea beds, the insular shelves, and all other waters over which the Philippines has sovereignty and jurisdiction including the 200-nautical miles Exclusive Economic Zone and the continental shelf.

65. Post-harvest facilities - these facilities include, but are not limited to, fishport, fishlanding, ice plants and cold storages, fish processing plants.

66. Purse Seine - a form of encircling net having a line at the bottom passing through rings attached to the net, which can be drawn or pursed. In general, the net is set from a boat or pair of boats around the school of fish. The bottom of the net is pulled closed with the purse line. The net is then pulled aboard the fishing boat or boats until the fish are concentrated in the bunt or fish bag.

67. Resource Rent - the difference between the value of the products produced from harvesting a publicly owned resource less the cost of producing it, where cost includes the normal return to capital and normal return to labor.

68. Sea farming - the stocking of natural or hatchery-produced marine plants or animals, under controlled conditions, for purposes of rearing and harvesting, but not limited to commercially-important fishes, mollusks (such as pearl and giant clam culture), including seaweeds and seagrasses.

69. Sea ranching - the release of the young of fishery species reared in hatcheries and nurseries into natural bodies of water for subsequent harvest at maturity or the manipulation of fishery habitat, to encourage the growth of the wild stocks.

70. Secretary - the Secretary of the Department of Agriculture.

71. Superlight - also called magic light, is a type of light using halogen or metal halide bulb which may be located above the sea surface or submerged in the water. It consists of a ballast, regulator, electric cable and socket. The source of energy comes from a generator, battery or dynamo coupled with the main engine.

72. Total Allowable Catch (TAC. - the maximum harvest allowed to be taken during a given period of time from any fishery area, or from any fishery species or group of fishery species, or a combination of area and species and normally would not exceed the MSY.

73. Trawl - an active fishing gear consisting of a bag shaped net with or without otter boards to open its opening which is dragged or towed along the bottom or through the water column to take fishery species by straining them from the water, including all variations and modifications of trawls (bottom, mid-water, and baby trawls) and tow nets.

CHAPTER II

Utilization, Management, Development, Conservation and Allocation System of Fisheries and Aquatic Resources

Section 5. Use of Philippine Waters. - The use and exploitation of the fishery and aquatic resources in Philippine waters shall be reserved exclusively to Filipinos: Provided, however, That research and survey activities may be allowed under strict regulations, for purely research, scientific, technological and educational purposes that would also benefit Filipino citizens.

Section 6. Fees and Other Fishery Charges. - The rentals for fishpond areas covered by the Fishpond Lease Agreement (FLA) and license fees for Commercial Fishing Boat Licenses (CFBL) shall be set at levels that reflect resource rent accruing from the utilization of resources and shall be determined by the Department: Provided, That the Department shall also prescribe fees and other fishery charges and issue the corresponding license or permit for fishing gear, fishing accessories and other fishery activities beyond the municipal waters: Provided, further, That the license fees of fishery activity in municipal waters shall be determined by the Local Government Units (LGUs) in consultation with the FARMCs. The FARMCs may also recommend the appropriate license fees that will be imposed.

Section 7. Access to Fishery Resources. - The Department shall issue such number of licenses and permits for the conduct of fishery activities subject to the limits of the MSY of the resource as determined by scientific studies or best available evidence. Preference shall be given to resource users in the local communities adjacent or nearest to the municipal waters.

Section 8. Catch Ceiling Limitations. - The Secretary may prescribe limitations or quota on the total quantity of fish captured, for a specified period of time and specified area based on the best available evidence. Such a catch ceiling may be imposed per species of fish whenever necessary and practicable: Provided, however, That in municipal waters and fishery management areas, and waters under the jurisdiction of special agencies, catch ceilings may be established upon the concurrence and approval or recommendation of such special agency and the concerned LGU in consultation with the FARMC for conservation or ecological purposes.

Section 9. Establishment of Closed Season. - The Secretary may declare, through public notice in at least two (2) newspapers of general circulation or in public service announcements, whichever is applicable, at least five (5) days before the declaration, a closed season in any or all Philippine waters outside the boundary of municipal waters and in bays, for conservation and ecological purposes. The Secretary may include waters under the jurisdiction of special agencies, municipal waters and bays, and/or other areas reserved for the use of the municipal fisherfolk in the area to be covered by the closed season: Provided, however, That this shall be done only upon the concurrence and approval or recommendation of such special agency and the concerned LGU and FARMC: Provided, further, That in municipal waters, fishery management areas and other areas reserved for the use of the municipal fisherfolk, closed season may be established by the concerned LGU in consultation with the FARMC for conservation or ecological purposes. The FARMCs may also recommend the establishment of closed seasons in municipal waters, fisheries management and other areas reserved for the use of the municipal fisherfolk.

Section 10. Introduction of Foreign Aquatic Species. - No foreign finfish, mollusk, crustacean or aquatic plants shall be introduced in Philippine waters without a sound ecological, biological and environmental justification based on scientific studies subject to the bio-safety standard as provided for by existing laws: Provided, however, That the Department may approve the introduction of foreign aquatic species for scientific/research purposes.

Section 11. Protection of Rare, Threatened and Endangered Species. - The Department shall declare closed seasons and take conservation and rehabilitation measures for rare, threatened and endangered species, as it may determine, and shall ban the fishing and/or taking of rare, threatened and/or endangered species, including their eggs/offspring as identified by existing laws in concurrence with concerned government agencies.

Section 12. Environmental Impact Statement (EIS). - All government agencies as well as private corporations, firms and entities who intend to undertake activities or projects which will affect the quality of the environment shall be required to prepare a detailed Environmental Impact Statement (EIS) prior to undertaking such development activity. The preparation of the EIS shall form an integral part of the entire planning process pursuant to the provisions of Presidential Decree No. 1586 as well as its implementing rules and regulations.

Section 13. Environmental Compliance Certificate (ECC). - All Environmental Impact Statements (EIS) shall be submitted to the Department of Environment and Natural Resources (DENR) for review and evaluation. No person, natural or juridical, shall undertake any development project without first securing an Environmental Compliance Certificate (ECC) from the Secretary of the DENR.

Section 14. Monitoring, Control and Surveillance of Philippine Waters. - A monitoring, control and surveillance system shall be established by the Department in coordination with LGUs, FARMCs, the private sector and other agencies concerned to ensure that the fisheries and aquatic resources in Philippine waters are judiciously and wisely utilized and managed on a sustainable basis and conserved for the benefit and enjoyment exclusively of Filipino citizens.

Section 15. Auxiliary Invoices. - All fish and fishery products must have an auxiliary invoice to be issued by the LGUs or their duly authorized representatives prior to their transport from their point of origin to their point of destination in the Philippines and/or export purposes upon payment of a fee to be determined by the LGUs to defray administrative costs therefor.

ARTICLE I

MUNICIPAL FISHERIES

Section 16. Jurisdiction of Municipal/City Government. - The municipal/city government shall have jurisdiction over municipal waters as defined in this Code. The municipal/city government, in consultation with the FARMC shall be responsible for the management, conservation, development, protection, utilization, and disposition of all fish and fishery/aquatic resources within their respective municipal waters.

The municipal/city government may, in consultation with the FARMC, enact appropriate ordinances for this purpose and in accordance with the National Fisheries Policy. The ordinances enacted by the municipality and component city shall be reviewed pursuant to Republic Act No. 7160 by the sanggunian of the province which has jurisdiction over the same.

The LGUs shall also enforce all fishery laws, rules and regulations as well as valid fishery ordinances enacted by the municipal/city council.

The management of contiguous fishery resources such as bays which straddle several municipalities, cities or provinces, shall be done in an integrated manner, and shall not be based on political subdivisions of municipal aters in order to facilitate their management as single resource systems. The LGUs which share or border such resources may group themselves and coordinate with each other to achieve the objectives of integrated fishery resource management. The Integrated Fisheries and Aquatic Resources Management Councils (FARMCs) established under Section 76 of this Code shall serve as the venues for close collaboration among LGUs in the management of contiguous resources.

Section 17. Grant of Fishing Privileges in Municipal Waters. - The duly registered fisherfolk organizations/cooperatives shall have preference in the grant of fishery rights by the Municipal/City Council pursuant to Section 149 of the Local Government Code: Provided, That in areas where there are special agencies or offices vested with jurisdiction over municipal waters by virtue of special laws creating these agencies such as, but not limited to, the Laguna Lake Development Authority and the Palawan Council for Sustainable Development, said offices and agencies shall continue to grant permits for proper management and implementation of the aforementioned structures.

Section 18. Users of Municipal Waters. - All fishery related activities in municipal waters, as defined in this Code, shall be utilized by municipal fisherfolk and their cooperatives/organizations who are listed as such in the registry of municipal fisherfolk.

The municipal or city government, however, may, through its local chief executive and acting pursuant to an appropriate ordinance, authorize or permit small and medium commercial fishing vessels to operate within the ten point one (10.1) to fifteen (15) kilometer area from the shoreline in municipal waters as defined herein, provided, that all the following are met:

(a) no commercial fishing in municipal waters with depth less than seven (7) fathoms as certified by the appropriate agency;

(b) fishing activities utilizing methods and gears that are determined to be consistent with national policies set by the Department;

(c) prior consultation, through public hearing, with the M/CFARMC has been conducted; and

(d) the applicant vessel as well as the shipowner, employer, captain and crew have been certified by the appropriate agency as not having violated this Code, environmental laws and related laws. In no case shall the authorization or permit mentioned above be granted for fishing in bays as determined by the Department to be in an environmentally critical condition and during closed season as provided for in Section 9 of this Code.

Section 19. Registry of Municipal Fisherfolk. - The LGU shall maintain a registry of municipal fisherfolk, who are fishing or may desire to fish in municipal waters for the purpose of determining priorities among them, of limiting entry into the municipal waters, and of monitoring fishing activities an/or other related purposes: Provided, That the FARMC shall submit to the LGU the list of priorities for its consideration. Such list or registry shall be updated annually or as may be necessary, and shall be posted in barangay halls or other strategic locations where it shall be open to public inspection, for the purpose of validating the correctness and ompleteness of the list. The LGU, in consultation with the FARMCs, shall formulate the necessary mechanisms for inclusion or exclusion procedures that shall be most beneficial to the resident municipal fisherfolk. The FARMCs may likewise recommend such mechanisms.

The LGUs shall also maintain a registry of municipal fishing vessels by type of gear and other boat particulars with the assistance of the FARMC.

Section 20. Fisherfolk Organizations and/or Cooperatives. - Fisherfolk organizations/cooperatives whose members are listed in the registry of municipal fisherfolk, may be granted use of demarcated fishery areas to engage in fish capture, mariculture and/or fish farming: Provided, however, That an organization/cooperative member whose household is already in possession of a fishery right other than for fish capture cannot enjoy the fishing rights granted to the organization or cooperative.

Section 21. Priority of Resident Municipal Fisherfolk. - Resident municipal fisherfolk of the municipality concerned and their organizations/cooperatives shall have priority to exploit municipal and demarcated fishery areas of the said municipality.

Section 22. Demarcated Fishery Right. - The LGU concerned shall grant demarcated fishery rights to fishery organizations/cooperatives for mariculture operation in specific areas identified by the Department.

Section 23. Limited Entry Into Overfished Areas. - Whenever it is determined by the LGUs and the Department that a municipal water is overfished based on available data or information or in danger of being overfished, and that there is a need to regenerate the fishery resources in that water, the LGU shall prohibit or limit fishery activities in the said waters.

Section 24. Support to Municipal Fisherfolk. - The Department and the LGUs shall provide support to municipal fisherfolk through appropriate technology and research, credit, production and marketing assistance and other services such as, but not limited to training for additional/supplementary livelihood.

Section 25. Rights and Privileges of Fishworkers. - The fishworkers shall be entitled to the privileges accorded to other workers under the Labor Code, Social Security System and other benefits under other laws or social legislation for workers: Provided, That fishworkers on board any fishing vessels engaged in fishing operations are hereby covered by the Philippine Labor Code, as amended.

ARTICLE II

COMMERCIAL FISHERIES

Section 26. Commercial Fishing Vessel License and Other Licenses. - No person shall operate a commercial fishing vessel, pearl fishing vessel or fishing vessel for scientific, research or educational purposes, or engage in any fishery activity, or seek employment as a fishworker or pearl diver without first securing a license from the Department, the period of which shall be prescribed by the Department: Provided, That no such license shall be required of a fishing vessel engaged in scientific, research or educational purposes within Philippine waters pursuant to an international agreement of which the Philippines is a signatory and which agreement defines the status, privileges and obligations of said vessel and its crew and the non-Filipino officials of the international agency under which said vessel operates: Provided, further, That members of the crew of a fishing vessel used for commercial fishing except the duly licensed and/or authorized patrons, marine engineers, radio operators and cooks shall be considered as fisherfolk:

Provided, furthermore, That all skippers/master fishers shall be required to undertake an orientation training on detection of fish caught by illegal means before they can be issued their fishworker licenses:

Provided, finally, That the large commercial fishing vessels license herein authorized to be granted shall allow the licensee to operate only in Philippine waters seven (7) or more fathoms deep, the depth to be certified by the NAMRIA, and subject to the conditions that may be stated therein and the rules and regulations that may be promulgated by the Department.

Section 27. Persons Eligible for Commercial Fishing Vessel License. - No commercial fishing vessel license shall be issued except to citizens of the Philippines, partnerships or to associations, cooperatives or corporations duly registered in the Philippines at least sixty percent (60%) of the capital stock of which is owned by Filipino citizens. No person to whom a license has been issued shall sell, transfer or assign, directly or indirectly, his stock or interest therein to any person not qualified to hold a license.

Any such transfer, sale or assignment shall be null and void and shall not be registered in the books of the association, cooperative or corporation. For purposes of commercial fishing, fishing vessels owned by citizens of the Philippines, partnerships, corporations, cooperatives or associations qualified under this section shall secure Certificates of Philippine Registry and such other documents as are necessary for fishing operations from the concerned agencies: Provided, That the commercial fishing vessel license shall be valid for a period to be determined by the Department.

Section 28. Commercial Fishing Vessel Registration. - The registration, documentation, inspection and manning of the operation of all types of fishing vessels plying Philippine waters shall be in accordance with laws, rules and regulations.

Section 29. Registration and Licensing of Fishing Gears Used in Commercial Fishing. - Before a commercial fishing vessel holding a commercial fishing vessel license may begin fishing operations in Philippine waters, the fishing gear it will utilize in fishing shall be registered and a license granted therefor. The Department shall promulgate guidelines to implement this provision within sixty (60) days from approval of this Code.

Section 30. Renewal of Commercial Boat License. - The commercial fishing boat license shall be renewed every three (3) years.

The owner/operator of a fishing vessel has a period of sixty (60) days prior to the expiration of the license within which to renew the same.

Section 31. Report of Transfer of Ownership. - The owner/operator of a registered fishing vessel shall notify the Department in writing of the transfer of the ownership of the vessel with a copy of such document within ten (10) days after its transfer to another person.

Section 32. Fishing by Philippine Commercial Fishing Fleet in International Waters. - Fishing vessels of Philippine registry may operate in international waters or waters of other countries which allow such fishing operations: Provided, That they comply with the safety, manning and other requirements of the Philippine Coast Guard, Maritime Industry Authority and other agencies concerned: Provided, however, That they secure an international fishing permit and certificate of clearance from the Department: Provided, further, That the fish caught by such vessels shall be considered as caught in Philippine waters and therefore not subject to all import duties and taxes only when the same is landed in duly designated fish landings and fish ports in the Philippines: Provided, furthermore, That landing ports established by canneries, seafood processors and all fish landing sites established prior to the effectivity of this Code shall be considered authorized landing sites: Provided, finally, That fishworkers on board Philippine registered fishing vessels conducting fishing activities beyond the Philippine Exclusive Economic Zone are not considered as overseas Filipino workers.

Section 33. Importation of Fishing Vessels or Construction of New Fishing Boats. - Prior to the importation of fishing vessels and the construction of new fishing vessels, the approval/clearance of the Department must first be obtained.

Section 34. Incentives for Municipal and Small-Scale Commercial Fisherfolk. - Municipal and small-scale commercial fisherfolk shall be granted incentives which shall include, but are not limited to, the following:

(a) at least ten percent (10%) of the credit and the guarantee funds of government financing institutions shall be made available for post-harvest and marketing projects for the purpose of enhancing our fisherfolk competitiveness by reducing post-harvest losses. Qualified projects shall include, but shall not be limited to, ice plants, cold storage, canning, warehouse, transport and other related infrastructure projects and facilities;

and

(b) the Department shall undertake the following programs:

1. a capability-building program for targeted parties shall be developed by the Department to promote greater bankability and credit worthiness of municipal and small-scale commercial fishers. Such program shall include organizing activities, technology transfer, and skills training related to commercial fishing as well as credit management. Groups and cooperatives organized under the program shall have priority access over credit and guarantee funds established under this Code; and

2. an information campaign shall be conducted to promote the capability building and credit programs. The campaign shall ensure greater information dissemination and accessibility to targeted fisherfolk.

Section 35. Incentives for Commercial Fishers to Fish Farther into the Exclusive Economic Zone. - In order to encourage fishing vessel operators to fish farther in the EEZ and beyond, new incentives for improvement of fishing vessels and acquisition of fishing equipment shall be granted in addition to incentives already available from the Board of Investments (BOI). Such incentives shall be granted subject to exhaustive evaluation of resource and exploitation conditions in the specified areas of fishing operations. The incentive shall include, but not be limited to:

(a) long term loans supported by guarantee facilities to finance the building and acquisition and/or improvement of fishing vessels and equipment;

(b) commercial fishing vessel operators of Philippine registry shall enjoy a limited period of tax and duty exemptions on the importation of fishing vessels not more than five (5) years old, equipment and paraphernalia, the period of exemption and guidelines shall be fixed by the Department within ninety (90) days from the effectivity of this Code;

(c) commercial fishing operator of Philippine registry engaged in fisheries in the high seas shall be entitled to duty and tax rebates on fuel consumption for commercial fisheries operations. Guidelines shall be promulgated within ninety (90) days from the effectivity of this Code by the Department; and

(d) all applicable incentives available under the Omnibus Investment Code of 1987: Provided, That the fishing operation project is qualified for registration and is duly registered with the BOI.

Section 36. Complement of Fishing Vessels. - Every commercial fishing vessel of Philippine registry when actually operated, shall be manned in accordance with the requirements of the Philippine Merchant Marine rules and regulations.

Section 37. Medical Supplies and Life-Saving Devices. - All fishing vessels shall be provided with adequate medical supplies and life-saving devices to be determined by the Occupational Safety and Health Center: Provided, That a fishing vessel of twenty (20) GT or more shall have as a member of its crew a person qualified as a first aider duly certified by the Philippine National Red Cross.

Section 38. Reportorial Requirements. - Each commercial fishing vessel shall keep a daily record of fish catch and spoilage, landing points, and quantity and value of fish caught, and off-loaded for transshipment, sale and/or other disposal. Detailed information shall be duly certified by the vessel's captain and transmitted monthly to the officer or representative of the Department, at the nearest designated landing point.

Section 39. Report of Meteorological and Other Data. - All vessels and crafts passing navigational lanes or engaged in fisheries activity shall be required to contribute to meteorological and other data, and shall assist the Department in documentation or reporting of information vital to navigation and the fishing industry.

Section 40. Color Code and Radio Frequency. - For administrative efficiency and enforcement of regulations, registered fishing vessels shall bear a color code as may be determined by the Department and may be assigned a radio frequency specific and distinct to its area of operation.

Section 41. Passage. - Commercial and other passage not in the regular conduct of fisheries activity shall be made at designated navigational lanes.

Section 42. Transshipment. - Foreign fishing vessels wishing to avail of land, air and sea facilities available in the Philippines to transport fishery products which are caught outside Philippine territorial waters to its final destination shall call only at duly designated government-owned or -controlled regional fishport complexes after securing clearance from the Department.

Section 43. Operation of Radio Communication Facilities on Board Fishing Vessels. - The Department shall promulgate guidelines in the operation of radio communication facilities on board fishing vessels and the assignment of radio frequencies specific and distinct to area of operation in coordination with the National Telecommunications Commission.

Section 44. Use of Superlight. - The number and wattage of superlights used in commercial fishing vessels shall be regulated by the Department: Provided, That the use of superlights is banned within municipal waters and bays.

ARTICLE III

AQUACULTURE

Section 45. Disposition of Public Lands for Fishery Purposes. - Public lands such as tidal swamps, mangroves, marshes, foreshore lands and ponds suitable for fishery operations shall not be disposed or alienated. Upon effectivity of this Code, FLA may be issued for public lands that may be declared available for fishpond development primarily to qualified fisherfolk cooperatives/associations: Provided, however, That upon the expiration of existing FLAs the current lessees shall be given priority and be entitled to an extension of twenty-five (25) years in the utilization of their respective leased areas. Thereafter, such FLAs shall be granted to any Filipino citizen with preference, primarily to qualified fisherfolk cooperatives/associations as well as small and medium enterprises as defined under Republic Act No. 8289: Provided, further, That the Department shall declare as reservation, portions of available public lands certified as suitable for fishpond purposes for fish sanctuary, conservation, and ecological purposes: Provided, finally, That two (2) years after the approval of this Act, no fish pens or fish cages or fish traps shall be allowed in lakes.

Section 46. Lease of Fishponds. - Fishpond leased to qualified persons and fisherfolk organizations/cooperatives shall be subject to the following conditions:

(a) Areas leased for fishpond purposes shall be no more than 50 hectares for individuals and 250 hectares for corporations or fisherfolk organizations;

(b) The lease shall be for a period of twenty-five (25) years and renewable for another twenty-five (25) years: Provided, That in case of the death of the lessee, his spouse and/or children, as his heirs, shall have preemptive rights to the unexpired term of his Fishpond Lease Agreement subject to the same terms and conditions provided herein provided that the said heirs are qualified;

(c) Lease rates for fishpond areas shall be determined by the Department: Provided, That all fees collected shall be remitted to the National Fisheries Research and Development Institute and other qualified research institutions to be used for aquaculture research development;

(d) The area leased shall be developed and producing on a commercial scale within three (3) years from the approval of the lease contract: Provided, however, That all areas not fully producing within five (5) years from the date of approval of the lease contract shall automatically revert to the public domain for reforestation;

(e) The fishpond shall not be subleased, in whole or in part, and failure to comply with this provision shall mean cancellation of FLA;

(f) The transfer or assignment of rights to FLA shall be allowed only upon prior written approval of the Department;

(g) The lessee shall undertake reforestation for river banks, bays, streams, and seashore fronting the dike of his fishpond subject to the rules and regulations to be promulgated thereon; and

(h) The lessee shall provide facilities that will minimize environmental pollution, i.e., settling ponds, reservoirs, etc: Provided, That failure to comply with this provision shall mean cancellation of FLA.

Section 47. Code of Practice for Aquaculture. - The Department shall establish a code of practice for aquaculture that will outline general principles and guidelines for environmentally-sound design and operation to promote the sustainable development of the industry. Such Code shall be developed through a consultative process with the DENR, the fishworkers, FLA holders, fishpond owners, fisherfolk cooperatives, small-scale operators, research institutions and the academe, and other potential stakeholders. The Department may consult with specialized international organizations in the formulation of the code of practice.

Section 48. Incentives and Disincentives for Sustainable Aquaculture Practices. - The Department shall formulate incentives and disincentives, such as, but not limited to, effluent charges, user fees and negotiable permits, to encourage compliance with the environmental standards and to promote sustainable management practices.

Section 49. Reversion of All Abandoned, Undeveloped or Underutilized Fishponds. - The DENR, in coordination with the Department, LGUs, other concerned agencies and FARMCs shall determine which abandoned, underdeveloped or underutilized fishponds covered by FLAs can be reverted to their original mangrove state and after having made such determination shall take all steps necessary to restore such areas in their original mangrove state.

Section 50. Absentee Fishpond Lease Agreement Holders. - Holders of fishpond lease agreements who have acquired citizenship in another country during the existence of the FLA shall have their lease automatically cancelled and the improvements thereon to be forfeited in favor of the government and disposed of in accordance with rules and regulations promulgated thereon.

Section 51. License to Operate Fish Pens, Fish Cages, Fish Traps and Other Structures for the Culture of Fish and Other Fishery Products. - Fish pens, fish cages, fish traps and other structures for the culture of fish and other fishery products shall be constructed and shall operate only within established zones duly designated by LGUs in consultation with the FARMCs concerned consistent with national fisheries policies after the corresponding licenses thereof have been secured. The area to be utilized for this purpose for individual person shall be determined by the LGUs in consultation with the concerned FARMC: Provided, however, That not over ten percent (10%) of the suitable water surface area of all lakes and rivers shall be allotted for aquaculture purposes like fish pens, fish cages and fish traps; and the stocking density and feeding requirement which shall be controlled and determined by its carrying capacity: Provided, further, That fish pens and fish cages located outside municipal waters shall be constructed and operated only within fish pen and fish cage belts designated by the Department and after corresponding licenses therefor have been secured and the fees thereof paid.

Section 52. Pearl Farm Leases. - The foregoing provisions notwithstanding, existing pearl farm leases shall be respected and allowed to operate under the terms thereof. New leases may be granted to qualified persons who possess the necessary capital and technology, by the LGUs having jurisdiction over the area.

Section 53. Grant of Privileges for Operations of Fish Pens, Cages, Corrals/Traps and Similar Structures. - No new concessions, licenses, permits, leases and similar privileges for the establishment or operation of fish pens, fish cages, fish corrals/traps and other similar structures in municipal areas shall be granted except to municipal fisherfolk and their organizations.

Section 54. Insurance for Fishponds, Fish Cages and Fish Pens. - Inland fishponds, fish cages and fish pens shall be covered under the insurance program of the Philippine Crop Insurance Corporation for losses caused by force majeure and fortuitous events.

Section 55. Non-Obstruction to Navigation. - Nothing in the foregoing sections shall be construed as permitting the lessee, licensee, or permittee to undertake any construction which will obstruct the free navigation in any tream, river, lakes, or bays flowing through or adjoining the fish pens, fish cages, fish traps and fishponds, or impede the flow of the tide to and from the area. Any construction made in violation hereof shall be removed upon the order of the Department in coordination with the other government agencies concerned at the expense of the lessee, licensee, or occupants thereof, whenever applicable. The Department shall within thirty (30) days after the effectivity of this Code formulate and implement rules and regulations for the immediate dismantling of existing obstruction to navigation.

Section 56. Non-Obstruction to Defined Migration Paths. - Nothing in the foregoing sections shall be construed as permitting the lessee, permittee, or licensee to undertake any construction which will obstruct any defined migration path of migratory fish species such as river mouths and estuaries with a distance determined by the concerned LGUs in consultation with and upon the recommendation of the FARMCs.

Section 57. Registration of Fish Hatcheries and Private Fishponds, etc. - All fish hatcheries, fish breeding facilities and private fishponds must be registered with the LGUs which shall prescribe minimum standards for such facilities in consultation with the Department: Provided, That the Department shall conduct a yearly inventory of all fishponds, fish pens and fish cages whether in public or private lands: Provided, further, That all fishpond, fish pens and fish cage operators shall annually report to the Department the type of species and volume of production in areas devoted to aquaculture.

ARTICLE IV

POST-HARVEST FACILITIES, ACT IVITIES AND TRADES

Section 58. Comprehensive Post-harvest and Ancillary Industries Plan. - The Department shall conduct a regular study of fisheries post-harvest operations and ancillary industries, in the formulation of a comprehensive plan for post-harvest and ancillary industries. It shall take into account among others, the following:

(a) detailed and clear guidelines on the distribution, construction, maintenance and use of post-harvest infrastructure facilities;

(b) extension of credit and incentives for post-harvest operations;

(c) promotion and strengthening of semi-processing, processing and handling;

(d) development of domestic fishmeal industry;

(e) development of fisheries ship-building and repair as a viable industry;

(f) development and strengthening of marketing facilities and activities, including the pricing system, with emphasis on collective marketing and the elimination of middlemen;

(g) increased participation of cooperatives and non-governmental organizations in post-harvest operations and ancillary industries; and

(h) integration of fisheries post-harvest operations into the national fisheries plan.

Section 59. Establishment of Post-Harvest Facilities for Fishing Communities. - The LGUs shall coordinate with the private sector and other concerned agencies and FARMCs in the establishment of post-harvest facilities for fishing communities such as, but not limited to, municipal fish landing sites, fish ports, ice plants and cold storage and other fish processing establishments to serve primarily the needs of municipal fisherfolk: Provided, That such post-harvest facilities shall be consistent with the Comprehensive Post-harvest and Ancillary Industries Plan.

Section 60. Registration and Licensing of all Post-Harvest Facilities. - All post-harvest facilities such as fish processing plants, ice plants, and cold storages, fish ports/landings and other fishery business establishments must register with and be licensed by the LGUs which shall prescribe minimum standards for such facilities in consultation with the Department.

Section 61. Importation and Exportation of Fishery Products. -

(a) Export of fishery products shall be regulated whenever such exportation affects domestic food security and production: Provided, That exportation of live fish shall be prohibited except those which are hatched or propagated in accredited hatcheries and ponds;

(b) To protect and maintain the local biodiversity or ensure the sufficiency of domestic supply, spawners, breeders, eggs and fry of bangus, prawn and other endemic species, as may be determined by the Department, shall not be exported or caused to be exported by any person;

(c) Fishery products may be imported only when the importation has been certified as necessary by the Department in consultation with the FARMC, and all the requirements of this Code, as well as all existing rules and regulations have been complied with: Provided, That fish imports for canning/processing purposes only may be allowed without the necessary certification, but within the provisions of Section 61(d) of this Code; and

(d) No person, shall import and/or export fishery products of whatever size, stage or form for any purpose without securing a permit from the Department. The Department in consultation with the FARMC shall promulgate rules and regulations on importation and exportation of fish and fishery/aquatic resources with the Government's export/import simplification procedures.

Section 62. Instruments of Weights and Measures, and Quality Grades/Standards. - Standards for weights, volume and other measurements for all fishery transactions shall be set by the Department.

All fish and fishery products for export, import and domestic consumption shall meet the quality grades/standards as determined by the Department.

The LGU concerned shall, by appropriate ordinance, penalize fraudulent practices and unlawful possession or use of instruments of weights and measures.

CHAPTER III

Reconstitution of The Bureau of Fisheries and Aquatic Res ources and Creation of Fisheries and Aquatic Resources Management Councils

ARTICLE I

RECONSTITUTION OF THE BUREAU OF FISHE RIES AND AQUATIC RESOURCES

Section 63. Creation of the Position of Undersecretary for Fisheries and Aquatic Resources. - There is hereby created in the Department of Agriculture the position of Undersecretary for Fisheries and Aquatic Resources, solely for the purpose of attending to the needs of the fishing industry, to be appointed by the President. Such Undersecretary shall have the following functions:

(a) set policies and formulate standards for the effective, efficient and economical operations of the fishing industry in accordance with the programs of the government;

(b) exercise overall supervision over all functions and activities of all offices and instrumentalities and other offices related to fisheries including its officers;

(c) establish, with the assistance of the director, such regional, provincial and other fishery officers as may be necessary and appropriate and organize the internal structure of BFAR in such manner as is necessary for the efficient and effective attainment of its objectives and purposes; and

(d) perform such other functions as may be necessary or proper to attain the objectives of this Code.

Section 64. Reconstitution of the BFAR. - The Bureau of Fisheries and Aquatic Resources (BFAR) is hereby reconstituted as a line bureau under the Department of Agriculture.

Section 65. Functions of the Bureau of Fisheries and Aquatic Resources. - As a line bureau, the BFAR shall have the following functions:

(a) prepare and implement a Comprehensive National Fisheries Industry Development Plan;

(b) issue licenses for the operation of commercial fishing vessels;

(c) issue identification cards free of charge to fishworkers engaged in commercial fishing;

(d) monitor and review joint fishing agreements between Filipino citizens and foreigners who conduct fishing activities in international waters, and ensure that such agreements are not contrary to Philippine commitment under international treaties and convention on fishing in the high seas;

(e) formulate and implement a Comprehensive Fishery Research and Development Program, such as, but not limited to, sea farming, sea ranching, tropical/ornamental fish and seaweed culture, aimed at increasing resource productivity, improving resource use efficiency, and ensuring the long-term sustainability of the country's fishery and aquatic resources;

(f) establish and maintain a Comprehensive Fishery Information System;

(g) provide extensive development support services in all aspects of fisheries production, processing and marketing;

(h) provide advisory services and technical assistance on the improvement of quality of fish from the time it is caught (i.e. on board fishing vessel, at landing areas, fish markets, to the processing plants and to the distribution and marketing chain);

(i) coordinate efforts relating to fishery production undertaken by the primary fishery producers, LGUs, FARMCs, fishery and organizations/cooperatives;

(j) advise and coordinate with LGUs on the maintenance of proper sanitation and hygienic practices in fish markets and fish landing areas;

(k) establish a corps of specialists in collaboration with the Department of National Defense, Department of the Interior and Local Government, Department of Foreign Affairs for the efficient monitoring, control and surveillance of fishing activities within Philippine territorial waters and provide the necessary facilities, equipment and training therefor;

(l) implement an inspection system for import and export of fishery/aquatic products and fish processing establishments, consistent with international standards to ensure product quality and safety;

(m) coordinate with LGUs and other concerned agencies for the establishment of productivity enhancing and market development programs in fishing communities to enable women to engage in other fisheries/economic activities and contribute significantly to development efforts;

(n) enforce all laws, formulate and enforce all rules and regulations governing the conservation and management of fishery resources, except in municipal waters, and to settle conflicts of resource use and allocation in consultation with the NFARMC, LGUs and local FARMCs;

(o) develop value-added fishery-products for domestic consumption and export;

(p) recommend measures for the protection/enhancement of the fishery industries;

(q) assist the LGUs in developing their technical capability in the development, management, regulation, conservation, and protection of the fishery resources;

(r) formulate rules and regulations for the conservation and management of straddling fish stocks and highly migratory fish stocks; and

(s) perform such other related functions which shall promote the development, conservation, management, protection and utilization of fisheries and aquatic resources.

Section 66. Composition of BFAR. - As a line bureau, the BFAR shall be headed by a Director and assisted by two (2) Assistant Directors who shall supervise the administrative and technical services of the bureau respectively. It shall establish regional, provincial and municipal offices as may be appropriate and necessary to carry out effectively and efficiently the provisions of this Code.

Section 67. Fisheries Inspection and Quarantine Service. - For purposes of monitoring and regulating the importation and exportation of fish and fishery/aquatic resources, the Fisheries Inspection and Quarantine Service in he BFAR is hereby strengthened and shall have the following functions:

(a) conduct fisheries quarantine and quality inspection of all fish and fishery/aquatic products coming into and going out of the country by air or water transport, to detect the presence of fish pest and diseases and if found to harbor fish pests or diseases shall be confiscated and disposed of in accordance with environmental standards and practices;

(b) implement international agreements/commitments on bio-safety and bio-diversity as well as prevent the movement or trade of endemic fishery and aquatic resources to ensure that the same are not taken out of the country;

(c) quarantine such aquatic animals and other fishery products determined or suspected to be with fishery pests and diseases and prevent the movement or trade from and/or into the country of these products so prohibited or regulated under existing laws, rules and regulations as well as international agreements of which the Philippines is a State Party;

(d) examine all fish and fishery products coming into or going out of the country which may be a source or medium of fish pests or diseases and/or regulated by existing fishery regulations and ensure that the quality of fish import and export meet international standards; and

(e) document and authorize the movement or trade of fish and fishery products when found free of fish pests or diseases and collect necessary fees prescribed by law and regulations.

ARTICLE II

THE FISHERIES AND AQUATIC RESOURCES MANAGEMENT COUNCILS (FARMCs)

Section 68. Development of Fisheries and Aquatic Resources in Municipal Waters and Bays. - Fisherfolk and their organizations residing within the geographical jurisdiction of the barangays, municipalities or cities with the concerned LGUs shall develop the fishery/aquatic resources in municipal waters and bays.

Section 69. Creation of Fisheries and Aquatic Resources Management Councils (FARMCs). - FARMCs shall be established in the national level and in all municipalities/cities abutting municipal waters as defined by this Code. The FARMCs shall be formed by fisherfolk organizations/cooperatives and NGOs in the locality and be assisted by the LGUs and other government entities. Before organizing FARMCs, the LGUs, NGOs, fisherfolk, and other concerned POs shall undergo consultation and orientation on the formation of FARMCs.

Section 70. Creation and Composition of the National Fisheries and Aquatic Resources Management Council (NFARMC). - There is hereby created a National Fisheries and Aquatic Resources Management Council hereinafter referred to as NFARMC as an advisory/recommendatory body to the Department. The NFARMC shall be composed of fifteen (15) members consisting of:

(a) the Undersecretary of Agriculture, as Chairman;

(b) the Undersecretary of the Interior and Local Government;

(c) five (5) members representing the fisherfolk and fishworkers;

(d) five (5) members representing commercial fishing and aquaculture operators and the processing sectors;

(e) two (2) members from the academe; and

(f) one (1) representative of NGOs involved in fisheries.

The members of the NFARMC, except for the Undersecretary of Agriculture and the Undersecretary of the Interior and Local Government, shall be appointed by the President upon the nomination of their respective organizations.

Section 71. Terms of Office. - The members of NFARMC, except the Undersecretary of Agriculture and the Undersecretary of the Interior and Local Government, shall serve for a term of three (3) years without reappointment.

Section 72. Functions of the NFARMC. - The NFARMC shall have the following functions:

(a) assist in the formulation of national policies for the protection, sustainable development and management of fishery and aquatic resources for the approval of the Secretary;

(b) assist the Department in the preparation of the National Fisheries and Industry Development Plan; and

(c) perform such other functions as may be provided by law.

Section 73. The Municipal/City Fisheries and Aquatic Resources Management Councils (M/CFARMCs). - The M/CFARMCs shall be created in each of the municipalities and cities abutting municipal waters. However, the LGU may create the Barangay Fisheries and Aquatic Resources Management Councils (BFARMCs) and the Lakewide Fisheries and Aquatic Resources Management Councils (LFARMCs) whenever necessary. Such BFARMCs and LFARMCs shall serve in an advisory capacity to the LGUs.

Section 74. Functions of the M/CFARMCs. - The M/CFARMCs shall exercise the following functions:

(a) assist in the preparation of the Municipal Fishery Development Plan and submit such plan to the Municipal Development Council;

(b) recommend the enactment of municipal fishery ordinances to the sangguniang bayan/sangguniang panlungsod through its Committee on Fisheries;

(c) assist in the enforcement of fishery laws, rules and regulations in municipal waters;

(d) advise the sangguniang bayan/panlungsod on fishery matters through its Committee on Fisheries, if such has been organized; and

(e) perform such other functions which may be assigned by the sangguniang bayan/panlungsod.

Section 75. Composition of the M/CFARMC . - The regular member of the M/CFARMCs shall be composed of:

(a) Municipal/City Planning Development Officer;

(b) Chairperson, Agriculture/Fishery Committee of the Sangguniang Bayan/Panlungsod;

(c) representative of the Municipal/City Development Council;

(d) representative from the accredited non-government organization;

(e) representative from the private sector;

(f) representative from the Department of Agriculture; and

(g) at least eleven (11) fisherfolk representatives (seven (7) municipal fisherfolk, one (1) fishworker and three

(3) commercial fishers) in each municipality/city which include representative from youth and women sector. The Council shall adopt rules and regulations necessary to govern its proceedings and election.

Section 76. The Integrated Fisheries and Aquatic Resources Management Councils (IFARMCs). - The IFARMCs shall be created in bays, gulfs, lakes and rivers and dams bounded by two (2) or more municipalities/cities.

Section 77. Functions of the IFARMCs. - The IFARMC shall have the following functions:

(a) assist in the preparation of the Integrated Fishery Development Plan and submit such plan to the concerned Municipal Development Councils;

(b) recommend the enactment of integrated fishery ordinances to the concerned sangguniang bayan/panlungsod through its Committee on Fisheries, if such has been organized;

(c) assist in the enforcement of fishery laws, rules and regulations in concerned municipal waters;

(d) advice the concerned sangguniang bayan/panlungsod on fishery matters through its Committee on Fisheries, if such has been organized; and

(e) perform such other functions which may be assigned by the concerned sangguniang bayan/panlungsod.

Section 78. Composition of the IFARMCs. - The regular members of the IFARMCs shall be composed of the following:

(a) the chairperson of the Committee on Agriculture/Fisheries of the concerned sangguniang bayan/panlungsod;

(b) the Municipal/City Fisheries Officers of the concerned municipalities/cities;

(c) the Municipal/City Development Officers of the concerned municipalities/cities;

(d) one (1) representative from NGO;

(e) one (1) representative from private sector; and

(f) at least nine (9) representatives from the fisherfolk sector which include representatives from the youth and women sector.

The Council shall adopt rules and regulations necessary to govern its proceedings and election.

Section 79. Source of Funds of the FARMCs. - A separate fund for the NFARMC, IFARMCs and M/CFARMCs shall be established and administered by the Department from the regular annual budgetary appropriations.

CHAPTER IV

Fishery Reserves, Refuge and Sanctuaries

Section 80. Fishing Areas Reserves for Exclusive Use of Government. - The Department may designate area or areas in Philippine waters beyond fifteen (15) kilometers from shoreline as fishery reservation for the exclusive use of the government or any of its political subdivisions, agencies or instrumentalities, for propagation, educational, research and scientific purposes: Provided, That in municipalities or cities, the concerned LGUs in consultation with the FARMCs may recommend to the Department that portion of the municipal waters be declared as fishery reserves for special or limited use, for educational, research, and/or special management purposes. The FARMCs may recommend to the Department portions of the municipal waters which can be declared as fisheries reserves for special or limited use for educational, research and special management purposes.

Section 81. Fish Refuge and Sanctuaries. - The Department may establish fish refuge and sanctuaries to be administered in the manner to be prescribed by the BFAR at least twenty-five percent (25%) but not more than forty percent (40%) of bays, foreshore lands, continental shelf or any fishing ground shall be set aside for the cultivation of mangroves to strengthen the habitat and the spawning grounds of fish. Within these areas no commercial fishing shall be allowed. All marine fishery reserves, fish sanctuaries and mangrove swamp reservations already declared or proclaimed by the President or legislated by the Congress of the Philippines shall be continuously administered and supervised by the concerned agency: Provided, however, That in municipal waters, the concerned LGU in consultation with the FARMCs may establish fishery refuge and sanctuaries. The FARMCs may also recommend fishery refuge and sanctuaries: Provided, further, That at least fifteen percent (15%) where applicable of the total coastal areas in each municipality shall be identified, based on the best available scientific data and in consultation with the Department, and automatically designated as fish sanctuaries by the LGUs in consultation with the concerned FARMCs.

CHAPTER V

Fisheries Research and Development

Section 82. Creation of a National Fisheries Research and Development Institute (NFRDI). - In recognition of the important role of fisheries research in the development, management, conservation and protection of the country's fisheries and aquatic resources, there is hereby created a National Fisheries Research and Development Institute (NFRDI).

The Institute shall form part of the National Research and Development Network of the Department of Science and Technology (DOST).

The Institute, which shall be attached to the Department shall serve as the primary research arm of the BFAR. The overall governance of the Institute shall be vested in the Governing Board which shall formulate policy guidelines for its operation. The plans, programs and operational budget shall be passed by the Board. The Board may create such committees as it may deem necessary for the proper and effective performance of its functions. The composition of the Governing Board shall be as follows:

(a) Undersecretary for Fisheries - Chairman

(b) BFAR Director - Vice Chairman

(c) NFRDI Executive Director - Member

(d) PCAMRD Executive Director - Member

(e) Representative from the academe - Member

(f) four (4) representatives from the private sector who shall come from the following subsectors: - Members

Municipal Fisherfolk

Commercial Fishing Operator

Aquaculture Operator

Post-Harvest/Processor

The NFRDI shall have a separate budget specific to its manpower requirements and operations to ensure the independent and objective implementation of its research activities.

Section 83. Qualification Standard. - The Institute shall be headed by an Executive Director to be appointed by the President of the Philippines upon the recommendation of the governing board. The Executive Director shall hold a Doctorate degree in fisheries and/or other related disciplines. The organizational structure and staffing pattern shall be approved by the Department: Provided, however, That the staffing pattern and remunerations for scientific and technical staff shall be based on the qualification standards for science and technology personnel.

Section 84. Research and Development Objectives. - Researches to be done by the NFRDI are expected to result in the following:

(a) To raise the income of the fisherfolk and to elevate the Philippines among the top five (5) in the world ranking in the fish productions;

(b) to make the country's fishing industry in the high seas competitive;

(c) to conduct social research on fisherfolk families for a better understanding of their conditions and needs; and

(d) to coordinate with the fisheries schools, LGUs and private sectors regarding the maximum utilization of available technology, including the transfer of such technology to the industry particularly the fisherfolk.

Section 85. Functions of the NFRDI . - As a national institute, the NFRDI shall have the following functions:

(a) establish a national infrastructure unit complete with technologically-advanced features and modern scientific equipment, which shall facilitate, monitor, and implement various research needs and activities of the fisheries sector;

(b) provide a venue for intensive training and development of human resources in the field of fisheries, a repository of all fisheries researches and scientific information;

(c) provide intensive training and development of human resources in the field of fisheries for the maximum utilization of available technology;

(d) hasten the realization of the economic potential of the fisheries sector by maximizing developmental research efforts in accordance with the requirements of the national fisheries conservations and development programs, also possibly through collaborative effort with international institutions; and

(e) formally establish, strengthen and expand the network of fisheries-researching communities through effective communication linkages nationwide.

CHAPTER VI

Prohibitions and Penalties

Section 86. Unauthorized Fishing or Engaging in Other Unauthorized Fisheries Activities. - No person shall exploit, occupy, produce, breed, culture, capture or gather fish, fry or fingerlings of any fishery species or fishery products, or engage in any fishery activity in Philippine waters without a license, lease or permit. Discovery of any person in an area where he has no permit or registration papers for a fishing vessel shall constitute a prima facie presumption that the person and/or vessel is engaged in unauthorized fishing: Provided, That fishing for daily food sustenance or for leisure which is not for commercial, occupation or livelihood purposes may be allowed.

It shall be unlawful for any commercial fishing vessel to fish in bays and in such other fishery management areas which may hereinafter be declared as over-exploited.

Any commercial fishing boat captain or the three (3) highest officers of the boat who commit any of the above prohibited acts upon conviction shall be punished by a fine equivalent to the value of catch or Ten thousand pesos (P10,000.00) whichever is higher, and imprisonment of six (6) months, confiscation of catch and fishing gears, and automatic revocation of license.

It shall be unlawful for any person not listed in the registry of municipal fisherfolk to engage in any commercial fishing activity in municipal waters. Any municipal fisherfolk who commits such violation shall be punished by confiscation of catch and a fine of Five hundred pesos (500.00).

Section 87. Poaching in Philippine Waters. - It shall be unlawful for any foreign person, corporation or entity to fish or operate any fishing vessel in Philippine waters.

The entry of any foreign fishing vessel in Philippine waters shall constitute a prima facie evidence that the vessel is engaged in fishing in Philippine waters.

Violation of the above shall be punished by a fine of One hundred thousand U.S. Dollars (US$100,000.00), in addition to the confiscation of its catch, fishing equipment and fishing vessel: Provided, That the Department is empowered to impose an administrative fine of not less than Fifty thousand U.S. Dollars (US$50,000.00) but not more than Two hundred thousand U.S. Dollars (US$200,000.00) or its equivalent in the Philippine Currency.

Section 88. Fishing Through Explosives, Noxious or Poisonous Substance, and/or Electricity. -

(1) It shall be unlawful for any person to catch, take or gather or cause to be caught, taken or gathered, fish or any fishery species in Philippine waters with the use of electricity, explosives, noxious or poisonous substance such as sodium cyanide in the Philippine fishery areas, which will kill, stupefy, disable or render unconscious fish or fishery species: Provided, That the Department, subject to such safeguards and conditions deemed necessary and endorsement from the concerned LGUs, may allow, for research, educational or scientific purposes only, the use of electricity, poisonous or noxious substances to catch, take or gather fish or fishery species: Provided, further, That the use of poisonous or noxious substances to eradicate predators in fishponds in accordance with accepted scientific practices and without causing adverse environmental impact in neighboring waters and grounds shall not be construed as illegal fishing.

It will likewise be unlawful for any person, corporation or entity to possess, deal in, sell or in any manner dispose of, any fish or fishery species which have been illegally caught, taken or gathered.

The discovery of dynamite, other explosives and chemical compounds which contain combustible elements, or noxious or poisonous substances, or equipment or device for electro-fishing in any fishing vessel or in the possession of any fisherfolk, operator, fishing boat official or fishworker shall constitute prima facie evidence, that the same was used for fishing in violation of this Code. The discovery in any fishing vessel of fish caught or killed with the use of explosive, noxious or poisonous substances or by electricity shall constitute prima facie evidence that the fisherfolk, operator, boat official or fishworker is fishing with the use thereof.

(2) Mere possession of explosive, noxious or poisonous substances or electrofishing devices for illegal fishing shall be punishable by imprisonment ranging from six (6) months to two (2) years.

(3) Actual use of explosives, noxious or poisonous substances or electrofishing devices for illegal fishing shall be punishable by imprisonment ranging from five (5) years to ten (10) years without prejudice to the filing of separate criminal cases when the use of the same result to physical injury or loss of human life.

(4) Dealing in, selling, or in any manner disposing of, for profit, illegally caught/gathered fisheries species shall be punished by imprisonment ranging from six (6) months to two (2) years.

(5) In all cases enumerated above, the explosives, noxious or poisonous substances and/or electrical devices, as well as the fishing vessels, fishing equipment and catch shall be forfeited.

Section 89. Use of Fine Mesh Net. - It shall be unlawful to engage in fishing using nets with mesh smaller than that which may be fixed by the Department: Provided, That the prohibition on the use of fine mesh net shall not apply to the gathering of fry, glass eels, elvers, tabios, and alamang and such species which by their nature are small but already mature to be identified in the implementing rules and regulations by the Department.

Violation of the above shall subject the offender to a fine from Two thousand pesos (P2,000.00) to Twenty thousand pesos (P20,000.00) or imprisonment from six (6) months to two (2) years or both such fine and imprisonment at the discretion of the court: Provided, That if the offense is committed by a commercial fishing vessel, the boat captain and the master fisherman shall also be subject to the penalties provided herein: Provided, further, That the owner/operator of the commercial fishing vessel who violates this provision shall be subjected to the same penalties provided herein: Provided, finally, That the Department is hereby empowered to impose upon the offender an administrative fine and/or cancel his permit or license or both.

Section 90. Use of Active Gear in the Municipal Waters and Bays and Other Fishery Management Areas. - It shall be unlawful to engage in fishing in municipal waters and in all bays as well as other fishery management areas using active fishing gears as defined in this Code.

Violators of the above prohibitions shall suffer the following penalties:

(1) The boat captain and master fisherman of the vessels who participated in the violation shall suffer the penalty of imprisonment from two (2) years to six (6) years;

(2) The owner/operator of the vessel shall be fined from Two thousand pesos (P2,000.00) to Twenty thousand pesos (20,000.00) upon the discretion of the court.

If the owner/operator is a corporation, the penalty shall be imposed on the chief executive officer of the Corporation.

If the owner/operator is a partnership the penalty shall be imposed on the managing partner.

(3) The catch shall be confiscated and forfeited.

Section 91. Ban on Coral Exploitation and Exportation. - It shall be unlawful for any person or corporation to gather, possess, sell or export ordinary precious and semi-precious corals, whether raw or in processed form, except for scientific or research purposes.

Violations of this provision shall be punished by imprisonment from six (6) months to two (2) years and a fine from Two thousand pesos (P2,000.00) to Twenty thousand pesos (20,000.00), or both such fine and imprisonment, at the discretion of the court, and forfeiture of the subject corals, including the vessel and its proper disposition. The confiscated corals shall either be returned to the sea or donated to schools and museums for educational or scientific purposes or disposed through other means.

Section 92. Ban on Muro-Ami Other Methods and Gear Destructive to Coral Reefs and Other Marine Habitat.

- It shall be unlawful for any person, natural or juridical, to fish with gear method that destroys coral reefs, seagrass beds, and other fishery marine life habitat as may be determined by the Department. "Muro-Ami" and any of its variation, and such similar gear and methods that require diving, other physical or mechanical acts to pound the coral reefs and other habitat to entrap, gather or catch fish and other fishery species are also prohibited. The operator, boat captain, master fisherman, and recruiter or organizer of fishworkers who violate this provision shall suffer a penalty of two (2) years to ten (10) years imprisonment and a fine of not less than One hundred thousand pesos (P100,000.00) to Five hundred thousand pesos (P500,000.00) or both such fine and imprisonment, at the discretion of the court. The catch and gear used shall be confiscated.

It shall likewise be unlawful for any person or corporation to gather, sell or export white sand, silica, pebbles and any other substances which make up any marine habitat.

The person or corporation who violates this provision shall suffer a penalty of two (2) years to ten (10) years imprisonment and a fine of not less than One hundred thousand pesos (P100,000.00) to Five hundred thousand pesos (P500,000.00) or both such fine and imprisonment, at the discretion of the court. The substance taken from its marine habitat shall be confiscated.

Section 93. Illegal Use of Superlights. - It shall be unlawful to engage in fishing with the use of superlights in municipal waters or in violation of the rules and regulations which may be promulgated by the Department on the use of superlights outside municipal waters.

Violations of this provision shall be punished by imprisonment from six (6) months to two (2) years or a fine of Five thousand pesos (P5,000.00) per superlight, or both such fine and imprisonment at the discretion of the courts. The superlight, fishing gears and vessel shall be confiscated.

Section 94. Conversion of Mangroves. - It shall be unlawful for any person to convert mangroves into fishponds or for any other purposes.

Violation of the provision of this section shall be punished by imprisonment of six (6) years and one (1) day to twelve (12) years and/or a fine of Eighty thousand pesos (P80,000.00): Provided, That if the area requires rehabilitation or restoration as determined by the court, the offender should also be required to restore or compensate for the restoration of the damage.

Section 95. Fishing in Overfished Area and During Closed Season. - It shall be unlawful to fish in overfished area and during closed season.

Violation of the provision of this section shall be punished by imprisonment of six (6) months and one (1) day to six (6) years and/or fine of Six thousand pesos (P6,000.00) and by forfeiture of the catch and cancellation of fishing permit or license.

Section 96. Fishing in Fishery Reserves, Refuge and Sanctuaries. - It shall be unlawful to fish in fishery areas declared by the Department as fishery reserves, refuge and sanctuaries.

Violation of the provision of this section shall be punished by imprisonment of two (2) years to six (6) years and/or fine of Two thousand pesos (P2,000.00) to Twenty thousand pesos (P20,000.00) and by forfeiture of the catch and the cancellation of fishing permit or license.

Section 97. Fishing Or Taking of Rare, Threatened or Endangered Species. - It shall be unlawful to fish or take rare, threatened or endangered species as listed in the CITES and as determined by the Department.

Violation of the provision of this section shall be punished by imprisonment of twelve (12) years to twenty (20) years and/or a fine of One hundred and twenty thousand pesos (P120,000.00) and forfeiture of the catch, and the cancellation of fishing permit.

Section 98. Capture of Sabalo and Other Breeders/Spawners. - It shall be unlawful for any person to catch, gather, capture or possess mature milkfish or "sabalo" and such other breeders or spawners of other fishery species as may be determined by the Department: Provided, That catching of "sabalo" and other breeders/spawners for local breeding purposes or scientific or research purposes may be allowed subject to guidelines to be promulgated by the Department.

Violation of the provision of this section shall be punished by imprisonment of six (6) months and one (1) day to eight (8) years and/or a fine of Eighty thousand pesos (P80,000.00) and forfeiture of the catch, and fishing equipment used and revocation of license.

Section 99. Exportation of Breeders, Spawners, Eggs or Fry. - Exportation of breeders, spawners, eggs or fry as prohibited in this Code shall be punished by imprisonment of eight (8) years, confiscation of the same or a fine equivalent to double the value of the same, and revocation of the fishing and/or export license/permit.

Section 100. Importation or Exportation of Fish or Fishery Species. - Any importation or exportation of fish or fisheries species in violation of this Code shall be punished by eight (8) years of imprisonment, a fine of Eighty thousand pesos (P80,000.00) and destruction of live fishery species or forfeiture of non-live fishery species in favor of the department for its proper disposition: Provided, That violator of this provision shall be banned from being members or stock holders of companies currently engaged in fisheries or companies to be created in the future, the guidelines for which shall be promulgated by the Department.

Section 101. Violation of Catch Ceilings. - It shall be unlawful for any person to fish in violation of catch ceilings as determined by the Department. Violation of the provision of this section shall be punished by imprisonment of six (6) months and one (1) day to six (6) years and/or a fine of Fifty thousand pesos (P50,000.00) and forfeiture of the catch, and fishing equipment used and revocation of license.

Section 102. Aquatic Pollution. - Aquatic pollution, as defined in this Code shall be unlawful. Violation of the provision of this section shall be punished by imprisonment of six (6) years and one (1) day to twelve (12) years and/or a fine of Eighty thousand pesos (P80,000.00) plus an additional fine of Eight thousand pesos (P8,000.00) per day until such violation ceases and the fines paid.

Section 103. Other Violations. - The following fisheries activities shall also be considered as a violation of this Code:

(a) Failure to Comply with Minimum Safety Standards. - The owner and captain of a commercial fishing vessel engaged in fishing who, upon demand by proper authorities, fails to exhibit or show proof of compliance with the safety standards provided in this Code, shall be immediately prevented from continuing with his fishing activity and escorted to the nearest port or landing point. The license to operate the commercial fishing vessel shall be suspended until the safety standard has been complied with.

(b) Failure to Conduct a Yearly Report on all Fishponds, Fish Pens and Fish Cages. - The FLA of the holder who fails to render a yearly report shall be immediately cancelled: Provided, That if the offender be the owner of the fishpond, fish pen or fish cage, he shall be subjected to the following penalties: (1) first offense, a fine of Five hundred pesos (P500.00) per unreported hectare; (2) subsequent offenses, a fine of One thousand pesos (1,000.00) per unreported hectare.

(c) Gathering and Marketing of Shell Fishes. - It shall be unlawful for any person to take, sell, transfer, or have in possession for any purpose any shell fish which is sexually mature or below the minimum size or above the maximum quantities prescribed for the particular species.

(d) Obstruction to Navigation or Flow and Ebb of Tide in any Stream, River, Lake or Bay. - It shall be unlawful for any person who causes obstruction to navigation or flow or ebb of tide.

(e) Construction and Operation of Fish Corrals/Traps, Fish Pens and Fish Cages. - It shall be unlawful to construct and operate fish corrals/traps, fish pens and fish cages without a license/permit.

Subject to the provision of subparagraph (b) of this section, violation of the above-enumerated prohibited acts shall subject the offender to a fine ranging from Two thousand pesos (P2,000.00) to Ten thousand pesos (P10,000.00) or imprisonment from one (1) month and one (1) day to six (6) months, or both such fine and imprisonment, upon the discretion of the court:

Provided, That the Secretary is hereby empowered to impose upon the offender an administrative fine of not more than Ten thousand pesos (P10,000.00) or to cancel his permit or license, or to impose such fine and to cancel his permit or license, in the discretion of the Secretary:

Provided, further, That the Secretary, or his duly authorized representative, and law enforcement agents are hereby empowered to impound with the assistance of the Philippine Coast Guard, PNP-Maritime Command:

Provided, finally, That any person who unlawfully obstructs or delays the inspection and/or movement of fish and fishery/aquatic products when such inspection and/or movement is authorized under this Code, shall be subject to a fine of not more than Ten thousand pesos (P10,000.00) or imprisonment of not more than two (2) years, or both such fine and imprisonment, upon the discretion of the court.

Every penalty imposed for the commission of an offense shall carry with it the forfeiture of the proceeds of such offense and the instruments or tools with which it was committed.

Such proceeds and instruments or tools shall be confiscated and forfeited in favor of the Government, unless they be the property of a third person not liable for the offense, but those articles which are not subject of lawful commerce shall be destroyed.

Section 104. Commercial Fishing Vessel Operators Employing Unlicensed Fisherfolk or Fishworker or Crew. - The owner/operator of a commercial fishing vessel employing unlicensed fisherfolk or fishworker shall be fined Five hundred pesos (P500.00) each for every month that the same has been employed and/or One thousand pesos (P1,000.00) for every month for each unlicensed crew member who has been employed.

Section 105. Obstruction of Defined Migration Paths. - Obstruction of any defined migration paths of anadromous, catadromous and other migratory species, in areas including, but not limited to river mouths and estuaries within a distance determined by the concerned FARMCs shall be punished by imprisonment of seven (7) years to twelve (12) years or a fine from Fifty thousand pesos (P50,000.00) to One hundred thousand pesos (P100,000.00)or both imprisonment and fine at the discretion of the court, and cancellation of permit/license, if any, and dismantling of obstruction shall be at his own expense and confiscation of same.

Section 106. Obstruction to Fishery Law Enforcement Officer. - The boat owner, master or operator or any person acting on his behalf of any fishing vessel who evades, obstructs or hinders any fishery law enforcement officer of the Department to perform his duty, shall be fined Ten thousand pesos (P10,000.00). In addition, the registration, permit and/or license of the vessel including the license of the master fisherman shall be canceled.

Section 107. Promulgation of Administrative Orders. - For purposes of fishery regulation or other fishery adjustments, the Department in consultation with the LGUs and local FARMCs, shall issue Fishery Administrative Orders or regulations for the conservation, preservation, management and sustainable development of fishery and aquatic resources.

CHAPTER VII

General Provisions

Section 108. Fisherfolk Settlement Areas. - The Department shall establish and create fisherfolk settlement areas in coordination with concerned agencies of the government, where certain areas of the public domain, specifically near the fishing grounds, shall be reserved for the settlement of the municipal fisherfolk. Nothing in this section shall be construed to vest ownership of any resettlement area to a municipal fisherfolk for whom said areas may have been reserved for or had been actually granted to.

Section 109. Municipal Fisheries Grant Fund. - For the development, management and conservation of the municipal resources, there is hereby created a Fishery Grant Fund to finance fishery projects of the LGUs primarily for the upliftment of the municipal fisherfolk. The amount of One hundred million pesos (P100,000,000.00) is hereby appropriated out of the Department's allocation in the General Appropriations Act (GAA) to support the Grant Fund.

For this purpose, the Department may seek financial assistance from any source and may receive any donation therefore.

Section 110. Fishery Loan and Guarantee Fund. - Pursuant to Section 7, Article XIII of the Constitution, there is hereby created a Fishery Loan and Guarantee Fund with an initial of One hundred million pesos (P100,000,000.00), which shall be administered by the Land Bank of the Philippines. The fund shall be made available for lending to qualified borrowers to finance the development of the fishery industry under a program to be prescribed by the Department.

For the same purpose, the Department may seek financial assistance from any source and may receive any donation therefrom.

Section 111. Fishing Vessels Development Fund. - There is hereby created a Fishing Vessels Development Fund to enhance the building and/or acquisition of fishing vessels. This shall be a long-term loan facility that shall be administered by the Development Bank of the Philippines. The amount of Two hundred and fifty million pesos (P250,000,000.00) per year for five (5) years is hereby appropriated out of the Department's allocation in the GAA to support this Development Fund.

Section 112. Special Fisheries Science and Approfishtech Fund. - The Department shall provide subsidy for full technical and financial support to the development of appropriate technology, both in fishery and ancillary industries, that are ecologically sound, locally source-based and labor intensive, based on the requirement and needs of the FARMCs. An initial amount of One hundred million pesos (100,000,000.00) shall be authorized for the purpose of a Special Fisheries Science and Approfishtech Fund, and thereafter shall be included in the GAA.

Section 113. Aquaculture Investment Fund. - An Aquaculture Investment Fund in the minimum amount of Fifty million pesos (P50,000,000.00) shall be established for soft loans which shall be extended to municipal fisherfolk and their organization who will engage in aquaculture, and for the development of underdeveloped or underutilized inland fishponds.

Section 114. Other Fisheries Financing Facilities. - In addition to fisheries credit guarantee, grant and other similar facilities granted under this Code, qualified Filipino fisherfolk and fisheries enterprises shall enjoy such other facilities granted them under existing and/or new laws, specially as to rural credit, with preference being given to fisheries cooperatives.

Section 115. Professionalization of Fisheries Graduates. - There is hereby created a Fisheries Board of Examiners in the Professional Regulation Commission to upgrade the Fisheries Profession: Provided, however, That those who have passed the Civil Service Examination for Fisheries shall automatically be granted eligibility by the Fisheries Board of Examiners: Provided, further, That they have served the industry in either public or private capacity for not less than five (5) years: Provided, finally, That the first Board Examination for B.S. Fisheries Graduates shall be conducted within one (1) year from the approval of this Code.

Section 116. Upgrading of State Fisheries Schools/Colleges. - The Department, in coordination with the Commission on Higher Education (CHED), Department of Education, Culture and Sports (DECS), and Technical Education and Skills Development Authority (TESDA), shall upgrade State Fisheries Schools/Colleges which provide both formal and non-formal education: Provided, however, That the CHED shall incorporate Approfishtech in the curricula of fisheries schools/colleges.

The Department and the CHED shall jointly formulate standards to upgrade all fisheries schools/colleges. Fisheries schools/colleges that do not meet minimum standards shall be closed.

Section 117. Inclusion of Fisheries Conservation Subjects in School Curriculum. - Fisheries conservation subjects shall be incorporated in the curricula of elementary and secondary schools both private and public.

Section 118. Educational campaign at all levels. - The Department, the CHED, the DECS and the Philippine Information Agency shall launch and pursue a nationwide educational campaign to:

(a) help realize the policies and implement the provisions of this Code;

(b) promote the development, management, conservation and proper use of the environment;

(c) promote the principle of sustainable development; and

(d) promote the development of truly Filipino-oriented fishing and ancillary industries.

Section 119. Infrastructure Support. - The Department in cooperation with concerned agencies shall:

(a) prepare and implement a nationwide plan for the development of municipal fishing ports and markets;

(b) prioritize the construction of farm-to-market roads linking the fisheries production sites, coastal landing points and other post-harvest facilities to major market and arterial roads/highways;

(c) identity community infrastructure facilities such as fish landing ports, ice plant and cold storage facilities in consultation with fishery cooperatives/associations and prepare plans and designs for their construction that would be consistent with international environmental impact;

(d) establish and maintain quality laboratories in major fish ports and prescribe the highest standards for the operation and maintenance of such post-harvest facilities;

(e) arrange and make representations with appropriate funding institutions to finance such facilities for the use of the fishery cooperatives/associations;

(f) develop and strengthen marketing facilities and promote cooperative marketing systems; and

(g) promote and strengthen local fisheries ship-building and repair industry.

Section 120. Extension Services. - The Department shall develop cost-effective, practical and efficient extension services on a sustained basis, in addition to those provided by state educational institutions, especially to municipal fisherfolk in undeveloped areas, utilizing practicable and indigenous resources and government agencies available, and based upon a system of self-reliance and self-help.

Section 121. Protection of Sensitive Technical Information. - The Department shall take such measures as may be necessary in order to protect trade, industrial and policy information of Filipino fisherfolk, fisheries owners/operators, entrepreneurs, manufacturers and researchers, when disclosure of such information will injure the competitiveness or viability of domestic fisheries.

Section 122. Assistance in Collecting Information. - The Department, in coordination with other government entities concerned, may require Filipino representatives abroad and foreign-based personnel to assist in the collection of fisheries data and information.

Section 123. Charting of Navigational Lanes and Delineation of Municipal Waters. - The Department shall authorize the National Mapping and Resource Information Authority (NAMRIA) for the designation and charting of navigational lanes in fishery areas and delineation of municipal waters. The Philippine Coast Guard shall exercise control and supervision over such designated navigational lanes.

Section 124. Persons and Deputies Authorized to Enforce this Code and Other Fishery Laws, Rules and Regulations. - The law enforcement officers of the Department, the Philippine Navy, Philippine Coast Guard, Philippine National Police (PNP), PNP-Maritime Command, law enforcement officers of the LGUs and other government enforcement agencies, are hereby authorized to enforce this Code and other fishery laws, rules and regulations. Other competent government officials and employees, punong barangays and officers and members of fisherfolk associations who have undergone training on law enforcement may be designated in writing by the Department as deputy fish wardens in the enforcement of this Code and other fishery laws, rules and regulations.

Section 125. Strengthening Prosecution and Conviction of Violators of Fishery Laws. - The Department of Justice (DOJ) shall embark on a program to strengthen the prosecution and conviction aspects of fishery law enforcement through augmentation of the current complement of state prosecutors and through their continuous training and reorientation on fishery laws, rules and regulations.

Section 126. Foreign Grants and Aids. - All foreign grants, aids, exchange programs, loans, researches and the like shall be evaluated and regulated by the Department to ensure that such are consistent with the Filipinization, democratization and industrialization of fishing industry and the development of the entire country.

Section 127. Mandatory Review. - The Congress of the Philippines shall undertake a mandatory review of this Code at least once every five (5) years and as often as it may deem necessary, to ensure that fisheries policies and guidelines remain responsive to changing circumstances.

CHAPTER VIII

Transitory Provisions

Section 128. Moratoria. - The Department shall, upon the recommendation of the Bureau, have the power to declare a moratorium on the issuance of licenses for commercial fishing vessels to operate in specified area or areas in Philippine waters for a limited period of time if there are indications of overfishing brought about by a decrease in the volume and sizes of fish caught therein or for conservation or ecological purposes.

No new licenses and similar privileges on exploitation of specific fishery areas in Philippine waters and aquaculture production areas shall be issued in accordance with this Code. Such moratoria shall not exceed five (5) years from the effectivity of this Code.

Section 129. Formulation of Implementing Rules and Regulations. - An Inter-agency Committee is hereby created to formulate rules and regulations for the full implementation of this Code within ninety (90) days of its effectivity: Provided, however, That the formulated rules and regulations shall be submitted to both Houses of Congress for information and guidance. Such rules and regulations shall take effect upon publication in a newspaper of general circulation.

The Inter-agency Committee shall be composed of the following:

(a) Secretary of Agriculture as Chairman;

(b) Secretary of the Interior and Local Government;

(c) Secretary of Environment and Natural Resources;

(d) Secretary of Justice;

(e) Secretary of Finance;

(f) Secretary of Budget and Management;

(g) Secretary of Labor and Employment;

(h) Secretary of National Defense;

(i) Commissioner of Civil Service Commission;

(j) Director of BFAR;

(k) Executive Director of PCAMRD;

(l) General Manager of PFDA;

(m) One (1) representative from each of the following:

(a.1) The League of Provinces;

(a.2) The League of Cities;

(a.3) The League of Municipalities;

(a.4) The Liga ng mga Barangay;

(n) Representative of the municipal fisherfolk;

(o) Representative of the commercial fishers;

(p) Representative of the non-government organizations involved in fishing concerns; and

(q) A representative from the academe coming from the specialized fisheries institution.

CHAPTER IX

Final Provisions

Section 130. Appropriation. - The sum necessary to effectively carry out the provisions of this Act during the first year of implementation shall be sourced from the budget of the DA/BFAR and other agencies performing fisheriesrelated functions: Provided, however, That such amount as may be necessary to carry out the provisions of Sections 79, 109, 110, 111, 112, 113 are hereby appropriated out of the unappropriated funds of the National Treasury. The Congress of the Philippines shall provide for the appropriations of the Department, the NFRDI and the Fisheries Scholarship Program for the succeeding years to be included in the annual GAA.

Section 131. Repealing Clause. - Presidential Decree No. 704, as amended by Presidential Decree Nos. 1015 and 1058, Presidential Decree No. 977, as amended, Executive Order No. 967, Series of 1984, Executive Order No. 116, Series of 1987, Executive Order No. 292, Series of 1987, Executive Order No. 473, Series of 1991 and other xisting laws except Republic Act No. 7611, decrees, executive orders, and rules and regulations or parts thereof, which are inconsistent with this Code, are hereby repealed or modified accordingly.

Section 132. Separability Clause. - If any portion or provision of this Code is declared unconstitutional or invalid, the other portions or provisions hereof, which are not affected thereby, shall continue in full force and effect.

Section 133. Effectivity. - This Code shall take effect fifteen (15) days after its publication in the Official Gazette or in two (2) newspapers of general publication.

Approved: February 25, 1998

REPUBLIC ACT NO. 10654

Republic of the Philippines

CONGRESS OF THE PHILIPPINES

Metro Manila

Sixteenth Congress

Second Regular Session

Begun and held in Metro Manila, on Monday, the twenty-eighth day of July, two thousand fourteen.

REPUBLIC ACT NO. 10654

AN ACT TO PREVENT, DETER AND ELIMINATE ILLEGAL, UNREPORTED AND UNREGULATED FISHING,

AMENDING REPUBLIC ACT NO. 8550, OTHERWISE KNOWN AS "THE PHILIPPINE FISHERIES CODE OF 1998," AND FOR OTHER PURPOSES

Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled:

Section 1. Section 2 of Republic Act No. 8550, otherwise known as "The Philippine Fisheries Code of 1998", is

hereby amended, as follows:

"SEC. 2. Declaration of Policy. – It is hereby declared the policy of the State:

(a) x x x x x x

(c) To ensure the rational and sustainable development, management and conservation of the fishery and aquatic resources in Philippine waters including the Exclusive Economic Zone (EEZ) and in the adjacent high seas, consistent with the primordial objective of maintaining a sound ecological balance, protecting and enhancing the quality of the environment. The Philippines shall pursue its commitment to international conventions and cooperate with other states and international bodies, in order to conserve and manage threatened , aquatic species, straddling and highly migratory fish stocks and other living marine resources;

x x x

(f) To adopt the precautionary principle and manage fishery and aquatic resources, in a manner consistent with the concept of an ecosystem-based approach to fisheries management and integrated coastal area management in specific natural fishery management areas, appropriately supported by research, technical services and guidance provided by the State; and

x x x."

Section 2. Section 3 of the same Act is hereby amended, as follows:

"SEC. 3. Application of its Provisions. – The provisions of this Code shall be enforced in:

(a) all Philippine waters including other waters over which the Philippines has sovereignty and jurisdiction, and the country’s 200-nautical mile Exclusive Economic Zone (EEZ) and continental shelf;

(b) all aquatic and fishery resources whether inland, coastal or offshore fishing areas, including, but not limited to, fishponds, fish pens/cages;

(c) all lands devoted to aquaculture, or businesses and activities relating to fishery, whether private or public lands; and

(d) all Philippine flagged fishing vessels operating in areas governed by a Regional Fisheries Management Organization (RFMO), in the high seas, or in waters of other coastal states."

Section 3. Section 4 of the same Act is hereby amended, as follows:

"SEC. 4. Definition of Terms. – As used in this Code, the following terms and phrases shall mean as follows:

(1) x x x

x x x

(12) Community Service – means any service or activity that is performed for the benefit of the community or its institutions in lieu of payment of fine imposed as administrative or criminal penalty.

(13) Conservation and Management Measures – means measures to conserve and manage living marine resources that are adopted and applied consistently with the relevant rules of international law including those reflected in conventions, RFMO resolutions and laws of other coastal states where Philippine flagged vessels fish.

(14) x x x

(15) x x x

(16) x x x

(17) x x x

Constitution Statutes Executive Issuances Judicial Issuances Other Issuances Jurisprudence International Legal Resources AUSL Exclusive

(18) Distant Water Fishing – means fishing in the high seas or in waters of other states.

(19) x x x

(20) x x x

(21) x x x

(22) x x x

(23) x x x

(24) x x x

(25) x x x

(26) x x x

(27) x x x

(28) x x x

(29) x x x

(30) x x x

(31) x x x

(32) x x x

(33) x x x

(34) x x x

(35) Fisheries Observer – refers to a person duly authorized by the Philippine government or under a Regional Observer Program of the RFMO, to collect scientific, technical or fishing-related data, and other information that may be required by the government or the RFMO and/ or in compliance to a conservation and management measure.

(36) x x x

(37) Fishing Vessel/Gear License – refers to a permit to operate specific types of fishing vessel/gear for specific duration in areas beyond municipal waters for demersal or pelagic fishery resources.

(38) x x x

(39) x x x

(40) x x x

(41) x x x

(42) x x x

(43) x x x

(44) Fishing Gear – refers to any instrument or device and its accessories utilized in taking fish and other fishery species.

(a) Active Fishing Gear – is a fishing device characterized by the pursuit of the target species by towing, pushing the gears, surrounding, covering, dredging, and scaring the target species to impoundments; such as, but not limited to, trawl, purse seines, Danish seines, paaling and drift gill net.

(b) Passive Fishing Gear – is characterized by the absence of pursuit of the target species; such as, but not limited to, hook and line, fishpots, traps and gill nets set across the path of the fish.

(45) Fishing Light Attractor – refers to a fishing aid which employs lights using, among others, mercury vapor, high pressure sodium vapor, standard tungsten, tungsten halogen, fluorescent or light-emitting diode, that are attached to a structure above water or suspended underwater to attract both fish and members of their food chain to specific areas in order to harvest them.

(46) x x x

(47) x x x

(48) x x x

(49) x x x

(50) x x x

(51) x x x

(52) x x x

(53) x x x

(54) Harvest Control Rules – refers to actions or set of actions to be taken to achieve a medium or long term target reference point while avoiding reaching or breaching a limit reference point.

(55) Illegal Fishing – means fishing activities conducted by Philippine fishing vessels operating in violation of Philippine laws, Regional Fisheries Management Organization resolutions, and laws of other coastal states.

(56) x x x

(57) x x x

(58) x x x

(59) x x x

(60) Marine Protected Area – means a defined area of the sea established and set aside by law, administrative regulation, or any other effective means in order to conserve and protect a part of or the entire enclosed environment through the establishment of management guidelines. It is considered a generic term that includes all declared areas governed by specific rules or guidelines in order to protect and manage activities within the enclosed area.

(61) x x x

(62) x x x

(63) x x x

(64) x x x

(65) x x x

(66) x x x

(67) x x x

(68) x x x

(69) x x x

(70) x x x

(71) x x x

(72) x x x

(73) Port State Measures – refers to the requirements established or interventions undertaken by port states, which a Philippine flagged or foreign fishing vessel must comply with as a condition for the use of ports within the port state.

(74) x x x

(75) x x x

(76) Reference Points – means benchmark values often based on indicators such as fishery stock size or the level of fishing that serves as standard to compare estimates of a fishery stock size and fishing mortality over time depending on the biological characteristics of the species. Reference points can mark:

(a) a limit or a level that should be avoided;

(b) a target, which should be achieved and maintained; or

(c) a trigger that signals the need to take prescribed actions.

(77) Regional Fisheries Management Organization (RFMO) – means a multi-lateral organization with responsibility to coordinate management and establish conservation and management measures for highly migratory fish stocks, fish stocks that straddle national fisheries management boundaries and other high seas species.

(78) x x x

(79) x x x

(80) x x x

(81) x x x

(82) Serious Violation – means any of the following violations of the provisions of this Code:

(a) Fishing without a valid license, authorization or permit;

(b) Fishing without reporting the catch or misreporting the catch;

(c) Fishing in a closed area or during a closed season;

(d) Fishing of prohibited species;

(e) Fishing with the use of prohibited gear or methods;

(f) Falsifying, concealing or tampering with vessel markings, identity or registration to conceal vessel identity or lack of registration;

(g) Concealing, tampering or disposing of evidence relating to an investigation of a violation;

(h) Assaulting, resisting, intimidating, harassing, seriously interfering with, or unduly obstructing or delaying a fisheries law enforcer, authorized inspector or observer or other duly authorized government officer;

(i) Intentionally tampering with or disabling the vessel monitoring system; and

(j) Committing multiple violations which taken together constitute a serious disregard of this Code.

(83) Superlight – also called magic light, refers to a type of light using halogen or metal halide bulb which may be located above the sea surface or submerged in the water. It consists of a ballast, regulator, electric cable and socket. The source of energy comes from a generator, battery or dynamo coupled with the main engine.

(84) x x x

(85) Transhipment – refers to the transfer of all or any fish or fishery product from one fishing vessel to another.

(86) x x x

(87) Unregulated Fishing – refers to fishing activities conducted by:

(a) Vessels without nationality but operated by Filipino and/or Filipino corporation;

(b) Philippine flagged fishing vessels operating in areas managed by RFMOs to which the Philippines is not a party to; or

(c) Philippine flagged fishing vessels operating in areas or fish stocks where there are no applicable conservation and management measures.

(88) Unreported Fishing – refers to fishing activities which have not been reported, or have been misreported to the Department, in contravention of national laws and regulations of the Philippines, or undertaken in the area of competence of a relevant RFMO which have not been reported or have been misreported, in contravention of the reporting procedures of that organization and further elaborated by regulations to be promulgated by the Department."

Section 4. Section 6 of the same Act is hereby amended, as follows:

"SEC. 6. Fees and Other Fishery Charges. – The rentals for fishpond areas covered by the Fishpond Lease Agreement (FLA) or other tenurial instrument and license fees for Commercial Fishing Vessel Licenses (CFVL) shall be set at levels that reflect resource rent accruing from the utilization of resources and shall be determined by the Department: Provided, That the Department shall also prescribe fees and other fishery charges and issue the corresponding license or permit for fishing gear, fishing accessories and other fishery activities beyond the municipal waters: Provided, further, That the license fees of fishery activity in municipal waters shall be determined by the Local Government Units (LGUs) in consultation with the FARMCs. The FARMCs may also recommend the appropriate license fees that will be imposed."

Section 5. Section 7 of the Act is hereby amended, as follows:

"SEC. 7. Access to Fishery Resources. – The Department shall issue such number of licenses and permits for the conduct of fishery activities subject to harvest control rules and reference points as determined by scientific studies or best available evidence. Preference shall be given to resource users in the local communities adjacent or nearest to the municipal waters."

Section 6. Section 8 of the Act is hereby amended, as follows:

"SEC.8. Harvest Control Rules and Reference Points. – The Secretary may establish reference points and harvest control rules in a fishery management area or for a fishery: Provided, however, That in municipal waters and fishery management areas, and waters under the jurisdiction of special agencies, Harvest Control Rules and Reference Points may be established upon the concurrence and approval or recommendation of such special agency and the concerned LGU in consultation with the FARMC for conservation or ecological purposes."

Section 7. Section 14 of the Act is hereby amended, as follows:

"SEC. 14. Monitoring, Control and Surveillance (MCS) of Fishing in all Philippine Waters and Philippine Flagged Distant Water Fishing Vessels. – A monitoring, control and surveillance system shall be established by the Department in coordination with LGUs, FARMCs, the private sector and other agencies concerned to ensure that the fisheries and aquatic resources in Philippine waters are judiciously and wisely utilized and managed on a sustainable basis and conserved for the benefit and enjoyment exclusively of Filipino citizens. The MCS system shall encompass all Philippine flagged fishing vessels regardless of fishing area and final destination of catch."

Section 8. Section 30 of the same Act is hereby amended, as follows:

"SEC. 30. Renewal of Commercial Fishing Vessel License. – The commercial fishing vessel license shall be renewed every three (3) years. The owner/operator of a fishing vessel has a period of sixty (60) days prior to the expiration of the license within which to renew the same."

Section 9. Section 31 of the same Act is hereby amended, as follows:

"SEC. 31. Transfer of Ownership. – The owner/operator of a registered fishing vessel shall notify the Department in writing of any intention to transfer the ownership of the vessel within ten (10) days before its intended transfer to another person. Failure of the owner to do so shall not extinguish any existing or pending sanction or liability with respect to said fishing vessel.

Section 10. Section 32 of the same Act is hereby amended, as follows:

"SEC. 32. Distant Water Fishing. – Fishing vessels of Philippine registry may engage in distant water fishing as defined in this Code:

Provided, That they comply with the safety, manning and other requirements of the Philippine Coast Guard, Maritime Industry Authority and other agencies concerned: Provided, however, That they secure a fishing permit, gear license and other clearances from the Department:

Provided, further, That the fish caught by such vessels shall be considered as caught in Philippine waters and therefore not subject to all import duties and taxes only when the same is landed in duly designated fish landings and fish ports in the Philippines:

Provided, furthermore, That landing ports established by canneries, seafood processors and all fish landing sites established prior to the effectivity of this Code shall be considered authorized landing sites:

Provided, finally, That fishworkers on board Philippine registered fishing vessels conducting fishing activities beyond the Philippine Exclusive Economic Zone are not considered as overseas Filipino workers.

Distant water fishing vessels shall comply with the monitoring, control and surveillance requirements, conservation and management measures, and fishing access conditions of the Department, the RFMO, or other coastal states."

Section 11. Section 33 of the same Act is hereby amended, as follows:

"SEC. 33. Importation, Construction of New Fishing Vessels and Gears and Conversion of Other Vessels. – Prior to the importation or the construction of new fishing vessels or gears, or the conversion into a fishing vessel, the approval/clearance of the Department must first be obtained in order to manage fishing capacity."

Section 12. Section 38 of the same Act is hereby amended, as follows:

"SEC. 38. Reportorial Requirements. – Each commercial fishing vessel shall keep a daily record of fish catch and spoilage, landing points, and quantity and value of fish caught, and off-loaded for transhipment, sale and/ or other disposal. Detailed information shall be duly certified by the vessel’s captain and transmitted to BFAR within the period prescribed in the implementing rules and regulations promulgated by the Department. Failure to comply shall result to administrative and penal sanctions."

Section 13. Section 42 of the Act is hereby deleted and replaced with a new Section 42, to read as follows:

"SEC. 42. Port State Measures. – The Department is authorized to adopt port state measures that must be complied with by foreign fishing vessels. These measures shall include: prior notification of port entry; use of designated ports; restrictions on port entry and landing or transhipment of fish; restrictions on supplies and services; catch and other documentation requirements; port inspections; and other related measures.

Transhipment by Philippine Flagged Fishing Vessels shall be regulated by the Department in a manner consistent with the Philippines’ commitment to conventions and international agreements."

Section 14. Section 44 of the same Act is hereby amended, as follows:

"SEC. 44. Use of Superlight or Fishing Light Attractor. – The number and candle light power or intensity of superlight and fishing light attractor used in commercial fishing vessels shall be regulated by the Department: Provided, That the use of superlight is banned within municipal waters and bays. The use of fishing light attractor in municipal waters shall be regulated by the local government units."

Section 15. Section 62 of the same Act is hereby amended, as follows:

"SEC. 62. Trade-Related Measures. – Standards for weights, volume, quality and other measurements for all fishery transactions and trade shall be set by the Department. All fish and fishery products for export, import and domestic consumption shall meet the quality grades/standards and labeling and information requirements as determined by the Department. The LGU concerned shall, by appropriate ordinance, penalize fraudulent practices and unlawful possession or use of instrument of weights and measures.

The Department may prescribe trade-related measures to reduce or eliminate trade in fish and fishery products derived from illegal, unregulated and unreported (IUU) fishing."

Section 16. Section 65 of the same Act is hereby amended, as follows:

"SEC. 65. Functions of the Bureau of Fisheries and Aquatic Resources. – As a line bureau, the BFAR shall have the following functions:

(a) prepare and implement a Comprehensive National Fisheries Industry Development Plan;

x x x

(r) formulate and implement rules and regulations for the conservation and management of straddling fish stocks, highly migratory fish stocks and threatened living marine resources such as sharks, rays and ludong, inter alia, in the Philippine Exclusive Economic Zone, territorial sea, archipelagic and internal waters, in coordination with LGUs and integrated/municipal/city Fisheries and Aquatic Resources Management Councils;

(s) train, designate and deploy fisheries observers in Philippine flagged fishing vessels engaged in commercial fishing in Philippine waters or distant water fishing to ensure compliance with conservation and management measures adopted by RFMOS and by the Department;

(t) implement boarding and inspection protocols upon Philippine flagged fishing vessels in order to promote observance to international treaty obligations on food safety, to curb illegal, unreported and unregulated fishing, and to comply with conservation and management measures;

(u) adopt an appropriate monitoring, control, surveillance and traceability system for municipal fishing vessels supplying exporters with concurrence of the local government units;

(v) adopt and implement a national plan of action to manage fishing capacity, implement the international code of conduct for responsible fisheries, and declare fishery management areas as overexploited in coordination with the LGUs and FARMCs;

(w) require performance bonds and impose and collect reasonable fees and charges for laboratory services, inspection, deployment of fisheries observers, and catch documentation and validation, taking into account the balance required between recovering the costs of services rendered and the socioeconomic impact of their imposition, upon prior consultation with stakeholders;

(x) hear and decide administrative cases before it;

(y) determine the appropriate levels of administrative and other sanctions, particularly for serious violations, that deprive offenders of economic benefits from their violations of the laws, rules and regulations;

(z) initiate the criminal prosecution of offenses committed in violation of this Code regardless of their situs; and

(aa) perform such other related functions which shall promote the development, conservation, management, protection and utilization of fisheries and aquatic resources."

Section 17. Chapter VI of Republic Act No. 8550 is hereby repealed and replaced with a new Chapter VI to read as follows:

"CHAPTER VI

PROHIBITIONS AND PENALTIES

Section 86. Unauthorized Fishing. – (a) It shall be unlawful for any person to capture or gather or to cause the capture or gathering of fish, fry or fingerlings of any fishery species or fishery products without license or permit from the Department or LGU.

Except in cases specified under this Code, it shall also be unlawful for any commercial fishing vessel to fish in municipal waters.

The discovery of any person in possession of a fishing gear or operating a fishing vessel in a fishing area where he has no license or permit shall constitute & prima facie presumption that the person is engaged in unauthorized fishing: Provided, That fishing for daily food sustenance or for leisure which is not for commercial, occupation or livelihood purposes may be allowed.

Upon a summary finding of administrative liability, the boat captain and the three (3) highest officers of the commercial fishing vessel and the owner or operator who violate this provision shall be penalized with confiscation of catch and gear, and an administrative fine of five (5) times the value of the catch or the amount indicated below, whichever is higher:

(1) Fifty thousand pesos (P50,000.00) to One hundred thousand pesos (P100,000.00) for smallscale commercial fishing;

(2) One hundred fifty thousand pesos (P150,000.00) to Five hundred thousand pesos (P500,000.00) for medium-scale commercial fishing; and

(3) One million pesos (P1,000,000.00) to Five million pesos (P5,000,000.00) for large-scale commercial fishing.

Upon conviction by a court of law, the boat captain and the three (3) highest officers of the commercial fishing vessel shall suffer the penalty of imprisonment of six (6) months and confiscation of catch and gear and twice the amount of the administrative fine.

(b) It shall be unlawful for any person not listed in the registry of municipal fisherfolk to engage in any commercial fishing activity in municipal waters.

Upon a summary finding of administrative liability, the offender of this provision shall be punished with an administrative fine equivalent to twice the value of catch or Five thousand pesos (P5,000.00), whichever is higher, and confiscation of the catch and fishing gear: Provided, That if the offender fails to pay the fine, he shall render community service.

Section 87. Engaging in Unauthorized Fisheries Activities. – It shall be unlawful for any person to exploit, occupy, produce, breed or culture fish, fry or fingerlings of any fishery species or fishery products or construct and operate fish corrals, fish traps, fish pens and fish cages or fishponds without a license, lease or permit.

The discovery of any person engaging in any of the above activities without a lease, license or permit shall constitute & prima facie presumption that the person is engaged in unauthorized fisheries activity. Upon a summary finding of administrative liability, the offender shall be penalized with an administrative fine of Five hundred thousand pesos (P500,000.00) to One million pesos (P1,000,000.00), the dismantling or removal of the structure at the expense of the offender, the rehabilitation of the area affected by the activity and confiscation of stocks.

Upon conviction by a court of law, the offender shall suffer the penalty of imprisonment of six (6) months, a fine equivalent to twice the amount of the administrative fine, the dismantling or removal of the structure at the expense of the offender, the rehabilitation of the area affected by the activity and confiscation of stocks.

Section 88. Failure to Secure Fishing Permit Prior to Engaging in Distant Water Fishing. – (a) It shall be unlawful for any person to fish in the high seas, in the territorial seas, archipelagic waters, and Exclusive Economic Zones of other states using a Philippine flagged fishing vessel without first securing a fishing permit from the Department and authorization from the coastal state.

The discovery of any person in possession of a fishing gear or operating a fishing vessel in the abovementioned areas without a fishing permit from the Department or authorization from the coastal state shall constitute a prima facie presumption that the person is in violation of this provision.

(b) It shall be unlawful for an owner or operator, and the three (3) highest officers, of a commercial fishing vessel to commit acts that are in contravention of the terms and conditions stated in the fishing permit or as may be promulgated by the Department.

Upon a summary finding of administrative liability, the owner, operator, and the three (3) highest officers of the commercial fishing vessel who violate this section, shall be punished with confiscation of the catch and gear and an administrative fine equivalent to five (5) times the value of the catch or the amount indicated below, whichever is higher:

(1) Two million pesos (P2,000,000.00) to Nine million pesos (P9,000,000.00) for smallscale commercial fishing;

(2) Ten million pesos (P10,000,000.00) to Fifteen million pesos (P15,000,000.00) for medium-scale commercial fishing; and

(3) Sixteen million pesos (P16,000,000.00) to Twenty million pesos (P20,000,000.00) for large-scale commercial fishing vessels less than seven hundred fifty (750) gross tons, and Twenty-five million pesos (P25,000,000.00) to Forty-five million pesos (P45,000,000.00) for large-scale commercial fishing vessels seven hundred fifty (750) gross tons or more.

Upon conviction by a court of law, the three (3) highest officers of the commercial fishing vessel shall suffer the penalty of imprisonment of six (6) months and a fine equivalent to twice the amount of the administrative fine, and confiscation of catch and gear.

Section 89. Unreported Fishing. – It shall be unlawful for any person to engage in unreported fishing or to fail to comply with the reportorial requirements in Section 38 of this Code.

Upon a summary finding of administrative liability, the owner or operator of the municipal or commercial fishing vessel and the three (3) highest officers of the commercial fishing vessel who commit unreported fishing within waters of national jurisdiction shall be punished by an administrative fine equivalent to the value of the catch or the amount indicated below, whichever is higher:

(1) Five thousand pesos (P5,000.00) for municipal fishing: Provided, That if the offender fails to pay the fine, he shall render community service;

(2) One hundred thousand pesos (P100,000.00) for small-scale commercial fishing;

(3) Two hundred thousand pesos (P200,000.00) for medium-scale commercial fishing; and

(4) Five hundred thousand pesos (P500,000.00) for large-scale commercial fishing.

In case of unreported fishing committed in waters beyond national jurisdiction, the owner, operator, and the three (3) highest officers of the commercial fishing vessel shall be penalized with an administrative fine equivalent to five (5) times the value of the catch or the amount indicated below, whichever is higher:

(1) Two million pesos (P2,000,000.00) to Nine million pesos (P9,000,000.00) for small-scale commercial fishing;

(2) Ten million pesos (P10,000,000.00) to Fifteen million pesos (P15,000,000.00) for mediumscale commercial fishing; and

(3) Sixteen million pesos (P16,000,000.00) to Twenty million pesos (P20,000,000.00) for largescale commercial fishing vessels less than seven hundred fifty (750) gross tons, and Twenty-five million pesos (P25,000,000.00) to Forty-five million pesos (P45,000,000.00) for large-scale commercial fishing vessels seven hundred fifty (750) gross tons or more. Upon conviction by a court of law, the three (3) highest officers of the commercial fishing vessel shall suffer the penalty of imprisonment of six (6) months and a fine equivalent to twice the amount of the administrative fine, and confiscation of catch and gear.

Section 90. Unregulated Fishing. – It shall be unlawful for any person to engage in unregulated fishing in waters within and beyond national jurisdiction.

Upon a summary finding of administrative liability, the owner, operator, of the municipal or commercial fishing vessel and the three (3) highest officers of the commercial fishing vessel who commit unregulated fishing within waters of national jurisdiction shall be punished by confiscation of catch and gear and an administrative fine equivalent to the value of the catch or amount indicated below, whichever is higher:

(1) Five thousand pesos (P5,000.00)) for municipal fishing: Provided, That if the offender fails to pay the fine, he shall render community service;

(2) One hundred thousand pesos (P100,000.00) for small-scale commercial fishing;

(3) Two hundred thousand pesos (P200,000.00) for medium-scale commercial fishing; and

(4) Five hundred thousand pesos (P500,000.00) for large-scale commercial fishing.

In case of unregulated fishing committed in waters beyond national jurisdiction, the owner, operator, and the three (3) highest officers of the commercial fishing vessel shall be penalized with confiscation of catch and gear, and an administrative fine equivalent to five (5) times the value of the catch or the amount indicated below, whichever is higher:

(1) Two million pesos (P2,000,000.00) to Nine million pesos (P9,000,000.00) for small-scale commercial fishing;

(2) Ten million pesos (P10,000,000.00) to Fifteen million pesos (P15,000,000.00) for mediumscale commercial fishing; and

(3) Sixteen million pesos (P16,000,000.00) to Twenty million pesos (P20,000,000.00) for largescale commercial fishing vessels less than seven hundred fifty (750) gross tons, and Twenty-five million pesos (P25,000,000.00) to Forty-five million pesos (P45;000,000.00) for large-scale commercial fishing vessels seven hundred fifty (750) gross tons or more.

Upon conviction by a court of law, the three (3) highest officers of the commercial fishing vessel shall suffer the penalty of imprisonment of six (6) months and a fine equivalent to twice the amount of the administrative fines, confiscation of catch and gear.

Section 91. Poaching in Philippine Waters. – It shall be unlawful for any foreign person, corporation or entity to fish or operate any fishing vessel in Philippine waters.

The entry of any foreign fishing vessel in Philippine waters shall constitute a prima facie presumption that the vessel is engaged in fishing in Philippine waters.

Upon a summary finding of administrative liability, any foreign person, corporation or entity in violation of this section shall be punished by an administrative fine of Six hundred thousand US dollars (US$600,000.00) to One million US dollars (US$1,000,000.00) or its equivalent in Philippine currency.

Upon conviction by a court of law, the offender shall be punished with a fine of One million two hundred thousand US dollars (US$1,200,000.00), or its equivalent in Philippine currency, and confiscation of catch, fishing equipment and fishing vessel.

If the offender is caught within internal waters, an additional penalty of imprisonment of six (6) months and one (1) day to two (2) years and two (2) months shall be imposed. If apprehended for the second time within internal waters, the offender shall be punished with imprisonment of three (3) years and a fine of Two million four hundred thousand US dollars (US$2,400,000.00) or its equivalent in Philippine currency: Provided, That no foreign person shall be deported without the payment of the imposed judicial and/or administrative fines and service of sentence, if any.

Section 92. Fishing Through Explosives, Noxious or Poisonous Substance, or Electricity. – (a) It shall be unlawful for any person to catch, take or gather or cause to be caught, taken or gathered fish or any fishery species in Philippine waters with the use of explosives, noxious or poisonous substance such as sodium cyanide, which will kill, stupefy, disable or render unconscious fish or fishery species:

Provided, That the Department, subject to such safeguards and conditions deemed necessary and with the endorsement from the concerned LGUs, may allow, for research, educational or scientific purposes only, the use of poisonous or noxious substances to catch, take or gather fish or fishery species:

Provided, further, That the use of poisonous or noxious substances to eradicate predators and pests in fishponds in accordance with accepted scientific practices and without causing adverse environmental impact in neighboring waters and grounds shall not be construed as illegal fishing.

The discovery of dynamite, other explosives and chemical compounds which contain combustible elements, or noxious or poisonous substances, or equipment or device for electrofishing in any fishing vessel or in the possession of any fisherfolk, operator, fishing boat official or fishworker shall constitute a prima facie presumption that any of these devices was used for fishing in violation of this Code.

The discovery in any fishing vessel of fish caught or killed with the use of explosives, noxious or poisonous substances, or by electricity shall constitute a prima facie presumption that the fisherfolk, operator, boat official or fishworker is fishing with the use thereof.

Upon a summary finding of administrative liability, any person found liable for the actual use of explosives, noxious or poisonous substances shall be punished with confiscation of catch including those not caught illegally if co-mingled with those caught illegally, gear, explosives and noxious or poisonous substances, or electrofishing devices and paraphernalia and gear, and an administrative fine equivalent to five (5) times the value of the catch or the amount of fine indicated below whichever is higher:

(1) Thirty thousand pesos (P30,000.00) for municipal fishing;

(2) Three hundred thousand pesos (P300,000.00) for small-scale commercial fishing;

(3) One million five hundred thousand pesos (P1,500,000.00) for medium scale commercial fishing; and

(4) Three million pesos (P3,000,000.00) for large scale commercial fishing. Upon conviction by a court of law, the offender shall be punished with imprisonment from five (5) to ten (10) years, confiscation of catch, including those not caught illegally if co-mingled with those caught illegally, gear, explosives and noxious or poisonous substances, or electrofishing devices and paraphernalia, gear, and a fine equivalent to twice the amount of the administrative fine, without prejudice to the filing of separate criminal cases when the use of the same result to physical injury or loss of human life.

The actual use of electrofishing devices for illegal fishing shall be punished with imprisonment of six (6) months and a fine of Five thousand pesos (P5,000.00).

(b) It shall be unlawful for any person to possess explosives, and noxious or poisonous substances for illegal fishing.

Upon a summary finding of administrative liability, the offender shall be punished with confiscation of catch, gear, and an administrative fine equivalent to five (5) times the value of the catch or the amount indicated below whichever is higher:

(1) Ten thousand, pesos (P10,000.00) for municipal fishing;

(2) One hundred thousand pesos (P100,000.00) for small-scale commercial fishing;

(3) Five hundred thousand pesos (P500,000.00) for medium scale commercial fishing; and

(4) One million pesos (P1,000,000.00) for large scale commercial fishing.

Violation of this provision shall be punished with imprisonment from six (6) months to two (2) years, and a fine equivalent to twice the amount of the administrative fine and confiscation of catch and gear.

Section 93. Use of Fine Mesh Net. – It shall be unlawful to engage in fishing using nets with mesh smaller than that which may be determined by the Department: Provided, That the prohibition on the use of fine mesh net shall not apply to the gathering of fry, glass eels, elvers, tabios, and alamang and other species that by their nature are small but already mature, as identified in the implementing rules and regulations by the Department.

The discovery of a fine mesh net in a fishing vessel shall constitute a prima facie presumption that the person or fishing vessel is engaged in fishing with the use of fine mesh net.

Upon a summary finding of administrative liability, the Department shall penalize the owner, operator, captain or master fisherman in case of commercial fishing vessel, or the municipal fisherfolk, with confiscation of the catch and fishing gear, and an administrative fine equivalent to three (3) times the value of the catch or the value indicated below, whichever is higher:

(1) Twenty thousand pesos (P20,000.00) for municipal fishing: Provided, That if the municipal fisherfolk fails to pay the fine, he shall render community service;

(2) Fifty thousand pesos (P50,000.00) for small-scale commercial fishing;

(3) One hundred thousand pesos (P100,000.00) for medium-scale commercial fishing;

(4) Two hundred thousand pesos (P200,000.00) for large-scale commercial fishing.

Upon conviction by a court of law, the captain or master fisherman in case of commercial fishing vessel, or the municipal fisherfolk, shall be punished by imprisonment of six (6) months to two (2) years and a fine equivalent to twice the administrative fine, and confiscation of catch and gear.

Section 94. Fishing in Overexploited Fishery Management Areas. – It shall be unlawful for any person to fish in fishery management areas declared as overexploited.

Upon a summary finding of administrative liability, the offender shall be punished with confiscation of catch and fishing gears, and an administrative fine equivalent to the value indicated below:

(1) Three (3) times the value of catch or Twenty thousand pesos (P20,000.00), whichever is higher, for municipal fishing: Provided, That if the offender fails to pay the fine, he shall render community service;

(2) Five (5) times the value of catch or One hundred thousand pesos (P100,000.00), whichever is higher, for small-scale commercial fishing;

(3) Five (5) times the value of catch or Three hundred thousand pesos (P300,000.00), whichever is higher, for medium-scale commercial fishing;

(4) Five (5) times the value of catch or Five hundred thousand pesos (P500,000.00), whichever is higher, for large-scale commercial fishing.

Upon conviction by a court of law, the offender shall be punished by imprisonment of six (6) months and one (1) day to six (6) years and fine of Five hundred thousand pesos (P500,000.00) to Five million pesos (P5,000,000.00), confiscation of the catch and fishing equipment used, and cancellation of fishing permit or license.

Section 95. Use of Active Gear in Municipal Waters, Bays and Other Fishery Management Areas. – It shall be unlawful to engage in fishing in municipal waters and in all bays as well as other fishery management areas using active fishing gears as defined in this Code.

Upon a summary finding of administrative liability, the owner, operator, boat captain and master fisherman of the vessel, or the chief executive officer in a corporation, or the managing partner in a partnership shall be punished with confiscation of the catch and fishing gears, and a fine three (3) times the value of the catch or the value indicated below, whichever is higher:

(1) Twenty thousand pesos (P20,000.00) for municipal fishing: Provided, That if the offender fails to pay the fine, he shall render community service;

(2) Fifty thousand pesos (P50,000.00) for small-scale commercial fishing;

(3) One hundred thousand pesos (P100,000.00) for medium-scale commercial fishing; and

(4) Five hundred thousand pesos (P500,000.00) for large-scale commercial fishing.

Upon conviction by a court of law, the offender shall be punished with imprisonment of two (2) years to six (6) years and fine equivalent to twice the administrative fine, confiscation and forfeiture of fishing gear and catch.

Section 96. Ban on Coral Exploitation and Exportation. – It shall be unlawful for any person or corporation to gather, possess, commercially transport, sell or export ordinary, semi-precious and precious corals, whether raw or in processed form, except for scientific or research purposes. It shall also be unlawful for any person, corporation or entity to commit any activity that damage coral reefs. Upon a summary finding of administrative liability, the owner/operator of the fishing vessel/s, boat captain, master fisherman, and recruiter or organizer of fishworkers shall be punished with an administrative fine equivalent to eight (8) times the value of the corals gathered, possessed, commercially transported, sold, or exported, or the amount of Five hundred thousand pesos (P500,000.00) to Ten million pesos (P10,000,000.00), whichever is higher, and forfeiture of the subject corals. The offender shall also pay compensation for the restoration of the damaged corals reefs.

Upon conviction by a court of law, the boat captain, master fisherman, and recruiter or organizer of fishworkers, shall be punished by imprisonment from ten (10) years to twenty (20) years and a fine equivalent to twice the administrative fine and forfeiture of the subject corals.

The offender shall also be required to pay the cost of restoration of the damaged coral reefs based on available studies and as determined by the Department.

Section 97. Ban on Muro-ami, Other Methods and Gear Destructive to Coral Reefs and Other Marine Habitat. – (a) It shall be unlawful for any person, natural or juridical, to fish with gear or method that destroys coral reefs, seagrass beds, and other fishery marine life habitat as may be determined by the Department. ‘Muro-ami’ and any of its variation, and such similar gears and methods that require diving, other physical or mechanical acts to pound the coral reefs and other habitat to entrap, gather or catch fish and other fishery species are also prohibited.

Upon a summary finding of administrative liability, the owner, operator, boat captain, master fisherman, and recruiter or organizer of fishworkers who violate this provision shall suffer the penalty of an administrative fine equivalent to five (5) times the value of the fish caught or Two million pesos (P2,000,000.00), whichever is higher, and confiscation of catch and gear. The fishworkers who serve as pounders shall be penalized with a fine of Twenty thousand pesos (P20,000.00) or community service in case of failure to pay the fine.

Upon conviction by a court of law, the boat captain, master fisherman, and recruiter or organizer of fishworkers shall be punished with imprisonment of two (2) years to ten (10) years and a fine equivalent to twice the amount of the administrative fine.

(b) Except in cases allowed by law, it shall be unlawful for any person, natural or juridical, to gather, possess, commercially transport, sell or export coral sand, coral fragments, coral rocks, silica, and any other substances which make up any marine habitat.

Upon a summary finding of administrative liability, the person or corporation who violates this provision shall be punished with an administrative fine of Five million pesos (P5,000,000.00) or five (5) times the value of the coral rocks, sand, or silica gathered, possessed, commercially transported, sold, or exported, whichever is higher, and confiscation of the substance.

Upon conviction by a court of law, the offender shall suffer the penalty of imprisonment from two (2) years to ten (10) years and a fine equivalent to twice the administrative fine, confiscation of catch or substances and equipment or gear used.

Section 98. Illegal Use of Superlights or Fishing Light Attractor. – It shall be unlawful to engage in fishing with the use of superlight in municipal waters, or to fish with fishing light attractor using candlelight power or intensity beyond the standards set by the Department in consultation with the LGUs for fishing in municipal waters, or in violation of the rules promulgated by the Department for fishing with the use of superlight or fishing light attractor outside municipal waters.

Upon a summary finding of administrative liability, the offender shall be punished by a fine of Twenty thousand pesos (P20,000.00) per superlight or fishing light attractor, and confiscation of catch, superlight or fishing light attractor and gears: Provided, That if the offender is a municipal fisherfolk, he may render community service in lieu of fine.

Upon conviction by a court of law, the offender shall be punished with imprisonment from six (6) months to two (2) years and a fine of Forty thousand pesos (P40,000.00) per superlight or fishing light attractor, and confiscation of catch, superlight or fishing light attractor and gears: Provided, That if the offender is a municipal fisherfolk, he may render community service in lieu of fine or imprisonment.

Section 99. Conversion of Mangroves. – It shall be unlawful for any person to convert mangroves into fishponds or for any other purpose.

Upon a summary finding of administrative liability, the offender shall be penalized with a fine equivalent to the ecological value of a hectare of mangrove based on available studies or administrative fine of Ten million pesos (P10,000,000.00) per hectare, whichever is higher: Provided, That if the area requires rehabilitation or restoration as determined by the Department, the offender shall also be required to restore or pay for the restoration of the damaged area.

Upon conviction by a court of law, the offender shall pay a base fine of Eighty thousand pesos (P80,000.00), a fine equivalent to the administrative penalties, and shall suffer the penalty of imprisonment of six (6) months and one (1) day to twelve (12) years: Provided, That if the area requires rehabilitation or restoration as determined by the court, the offender shall also be required to restore or pay for the restoration of the damage. The offender shall be liable for environmental damages computed at Five hundred thousand pesos (P500,000.00) per hectare per year until the area is restored.

Section 100. Fishing During Closed Season. – It shall be unlawful to fish during closed season.

Upon a summary finding of administrative liability, the offender shall be punished with confiscation of catch and gear and an administrative fine of:

(1) Three times the value of the catch or Twenty thousand pesos (P20,000.00) for municipal fishing, whichever is higher: Provided, That if the offender fails to pay the fine, community service shall be rendered;

(2) Five times the value of the catch or One hundred thousand pesos (P100,000.00), whichever is higher for small-scale commercial fishing;

(3) Five times the value of catch or Three hundred thousand pesos (P300,000.00), whichever is higher for medium-scale commercial fishing; and

(4) Five times the value of catch or Five hundred thousand pesos (P500,000.00), whichever is higher for large-scale commercial fishing.

Upon conviction by a court of law, the offender shall be punished with imprisonment of six (6) months and one (1) day to six (6) years, confiscation of catch and gear, and fine twice the amount of the administrative fine and cancellation of license or permit.

Section 101. Fishing in Marine Protected Areas, Fishery Reserves, Refuge and Sanctuaries. – It shall be unlawful to fish in marine protected areas, fishery reserves, refuge, or fish sanctuaries as declared by the Department or the LGUs.

Upon a summary finding of administrative liability, the offender shall be punished with confiscation of catch and gear, and administrative fine of twice the value of the catch or the amount indicated below, whichever is higher:

(1) Twenty thousand pesos (P20,000.00) for municipal fishing: Provided, That if the offender fails to pay the fine, community service shall be rendered;

(2) Two hundred thousand pesos (P200,000.00) for small-scale commercial fishing;

(3) Six hundred thousand pesos (P600,000.00) for medium-scale commercial fishing; and

(4) One million pesos (P1,000,000.00) for large-scale commercial fishing.

Upon conviction by a court of law, violation of this provision shall be punished by imprisonment of two

(2) years to six (6) years and a fine twice the amount of the administrative fine, confiscation of catch and gear, and cancellation of license or permit.

Section 102. Fishing or Taking of Rare, Threatened or Endangered Species. –

(a) It shall be unlawful to fish or take, catch, gather, sell, purchase, possess, transport, export, forward or ship out aquatic species listed in Appendix I of the Convention on the International Trade in Endangered Species of Wild Flora and Fauna (CITES), or those categorized by the International Union for Conservation of Nature and Natural Resources (IUCN) as threatened and determined by the Department as such. Upon a summary finding of administrative liability, the Department shall penalize the offender with a fine equivalent to five times (5) times the value of the species or Five hundred thousand pesos (P500,000.00) to Five million pesos (P5,000,000.00), whichever is higher, and forfeiture of the species.

Upon conviction by a court of law, the offender shall be punished by imprisonment of twelve (12) years and one (1) day to twenty (20) years and a fine equivalent to twice the administrative fine, forfeiture of the species and the cancellation of fishing permit.

(b) It shall be unlawful to fish, take, catch, gather, sell, purchase, possess, transport, export, forward or ship out aquatic species listed in CITES Appendices II and III if scientific assessments show that population of the species in the wild cannot remain viable under pressure of collection and trade: Provided, That the taking or fishing of these species from the wild for scientific research, or conservation breeding simultaneous with commercial breeding may be allowed.

Upon a summary finding of administrative liability, the Department shall penalize the offender with a fine equivalent to three (3) times the value of the species or Three hundred thousand pesos (P300,000.00) to Three million pesos (P3,000,000.00), whichever is higher, and forfeiture of the species.

Upon conviction by a court of law, the offender shall be punished by imprisonment of five (5) to eight (8) years and a fine equivalent to twice the administrative fine and forfeiture of the species.

(c) It shall be unlawful to gather, take, possess, transport, or export, forward or ship out captive-bred species that have been transplanted to the wild.

Upon a summary finding of administrative liability, the offender shall be penalized with a fine equivalent to three (3) times the value of the species or Three hundred thousand pesos (P300,000.00) to Three million pesos (P3,000,000.00), whichever is higher, and forfeiture of the species.

Upon conviction by a court of law, the offender shall be punished by imprisonment of five (5) to eight (8) years, a fine equivalent to three (3) times the value of the species or Three million pesos (P3,000,000.00), whichever is higher, and forfeiture of the species.

Should the violation be committed by a vessel manned by more than two (2) persons, the captain, master, and two highest ranking officers of the vessel involved in the fishing or taking of such protected marine life shall be presumed to have committed the prohibited act.

Section 103. Capture of Sabalo and Other Breeders/Spawners. – It shall be unlawful for any person to catch, gather, capture or possess mature milkfish or sabalo and other breeders or spawners of other fishery species as may be determined by the Department: Provided, That catching of sabalo and other breeders/spawners for local breeding purposes or scientific or research purposes may be allowed subject to guidelines that shall be promulgated by the Department.

Upon a summary finding of administrative liability, an offender shall be punished with a fine equivalent to five (5) times the value of the sabalo, other breeders, or spawners gathered or captured, or Five hundred thousand pesos (P500,000.00), whichever is higher, and forfeiture of catch and gear.

Upon conviction by a court of law, the offender shall be punished by imprisonment of six (6) months and one (1) day to eight (8) years and a fine equivalent to twice the amount of the administrative fine, forfeiture of catch and fishing equipment used, and suspension or revocation of license.

Section 104. Exportation of Breeders, Spawners, Eggs or Fry. – Exportation of breeders, spawners, eggs or fry as prohibited in this Code shall be punished under this Act: Provided, That the export of hatchery-bred or captive-bred breeder, spawner, egg or fry, may be allowed subject to the regulations to be promulgated by the Department.

Failure on the part of the shipping or forwarding company from whose possession the breeders, spawners, eggs, or fry are discovered or seized to fully cooperate in the investigation conducted by concerned government authorities on the matter shall create a presumption that there is connivance or conspiracy between the company and the shipper to violate the provisions of this section.

Upon a summary finding of administrative liability, the offender shall be punished with an administrative fine equivalent to three (3) times the value of the breeders, spawners, eggs, or fry exported or One hundred thousand pesos (P100,000.00) to Five hundred thousand pesos (P500,000.00), whichever is higher, confiscation of breeders, spawners, eggs or fry, suspension or revocation of license for commercial fishing and/or registration as exporter.

Upon conviction by a court of law, the offender shall be punished by imprisonment of eight (8) years to ten (10) years, confiscation of breeders, spawners, eggs or fry, a fine equivalent to twice the amount of the administrative fine, revocation of the fishing license, and/or suspension or revocation of registration as exporter.

Section 105. Importation or Exportation of Fish or Fishery Species. – Any importation or exportation of fish or fishery species in violation of this Code shall be unlawful.

Failure on the part of the shipping or forwarding company from whose possession the fish or fishery species imported or exported are discovered or seized to fully cooperate in the investigation conducted by concerned government authorities shall create a presumption that there is connivance or conspiracy between the shipping company and the shipper to perpetrate the aforementioned offense.

Upon a summary finding of administrative liability, the offender shall be punished with an administrative fine of five (5) times the value of the species or Three hundred thousand pesos (P300,000.00) to Five hundred thousand pesos (P500,000.00), whichever is higher, and forfeiture and/or destruction of the species.

Upon conviction by a court of law, the offender shall be punished with eight (8) years of imprisonment and fine of twice the administrative fine, forfeiture and/or destruction of the species: Provided, That offenders shall be banned from being members or stockholders of companies currently engaged in fisheries or companies to be created in the future, the guidelines for which shall be promulgated by the Department.

Section 106. Violation of Harvest Control Rules. – It shall be unlawful for any person to fish in violation of harvest control rules as determined by the Department.

Upon a summary finding of administrative liability, the offender shall be punished with confiscation of catch and fishing gear, revocation of license and an administrative fine of:

(1) Three times the value of the catch or Twenty thousand pesos (P20,000.00) for municipal fishing, whichever is higher: Provided, That if the offender fails to pay the fine, community service shall be rendered;

(2) Five times the value of the catch or One hundred thousand pesos (P100,000.00) whichever is higher for small-scale commercial fishing;

(3) Five times the value of the catch or One million pesos (P1,000,000.00), whichever is higher for medium-scale commercial fishing; and

(4) Five times the value of the catch or Five million pesos (P5,000,000.00), whichever is higher, for large-scale commercial fishing.

Upon conviction by a court of law, the offender shall be punished with imprisonment of six (6) months and one (1) day to six (6) years and a fine twice the administrative fine, confiscation of catch and fishing gear, and revocation of license.

Section 107. Aquatic Pollution. – Aquatic pollution, as defined in this Code, shall be unlawful. Upon a summary finding of administrative liability, the offender shall be punished with fine of Three hundred thousand pesos (P300,000.00) to Five hundred thousand pesos (P500,000.00) and an additional fine of Fifteen thousand pesos (P15,000.00) per day until the violation ceases and the fines are paid, the imposition of cease and desist order, closure or suspension of the development, construction or facility, or cessation of operations, or disconnection of water supply. The order may be issued ex parte pending resolution of the case.

Upon conviction by a court of law, the offender shall be punished with imprisonment of six (6) years and one (1) day to twelve (12) years and a fine twice the amount of the administrative fine and an additional fine of Fifteen thousand pesos (P15,000.00) per day until the violation ceases and the fines are paid, the imposition of cease and desist order, closure or suspension of the development, construction or facility, or cessation of operations, or disconnection of water supply. The order may be issued ex parte pending resolution of the case.

Section 108. Failure to Comply with Minimum Safety Standards. – The owner and captain of a commercial fishing vessel engaged in fishing who, upon demand by proper authorities, fails to exhibit or show proof of compliance with the safety standards provided in this Code shall be liable administratively and criminally.

Upon apprehension, the fishing vessel shall be escorted to the nearest port or landing point and prevented from continuing with the fishing activity.

Upon a summary finding of administrative liability, the offender shall be punished with an administrative fine of One hundred thousand pesos (P100,000.00) and suspension or cancellation of permit or license and impoundment of the vessel until the safety standard has been complied with.

Upon conviction by a court of law, the offender shall suffer the penalties of imprisonment from one (1) month and one (1) day to six (6) months and a fine of twice the amount of the administrative fine, suspension or cancellation of permit or license and impoundment of the vessel until the safety standard has been complied with.

Section 109. Failure to Submit a Yearly Report on All Fishponds, Fish Pens and Fish Cages. – It shall be unlawful for owners and operators of fishponds, fishpens and fish cages to fail to submit an annual report to the Department pursuant to Section 57 of this Code.

Upon summary finding of administrative liability, the owner of the fishpond, fishpen or fish cage shall be imposed a fine of Five thousand pesos (P5,000.00) per unreported hectare. In case the fishpond is covered by FLA, nonsubmission of a report for two (2) consecutive years shall result to its cancellation.

Upon conviction by a court of law, the offender shall be punished with twice the amount of the administrative fine.

Section 110. Gathering and Marketing of Shell Fishes or Other Aquatic Species. – It shall be unlawful for any person to gather, take, sell, transfer, possess, commercially transport, export, forward or ship out any sexually mature shell fish or other aquatic species identified by the Department, or below the minimum size, or above the maximum quantities prescribed for the species. Other parameters for the protection of heavily traded aquatic species may be promulgated by the Department.

Upon a summary finding of administrative liability, the penalty of an administrative fine equivalent to the value of the species or Fifty thousand pesos (P50,000.00), whichever is higher, and confiscation of the same, cancellation of permit or license shall be imposed upon the offender.

Upon conviction by a court of law, the offender shall be punished by imprisonment from one (1) month and one (1) day to six (6) months and fine equivalent to twice the amount of the administrative fine, and cancellation of the permit or license.

Section 111. Obstruction to Navigation or Flow or Ebb of Tide in any Stream, River, Lake or Bay. – It shall be unlawful for any person to cause obstruction to navigation or flow or ebb of tide.

Upon a summary finding of administrative liability, the offender shall be punished with a fine of Two hundred thousand pesos (P200,000.00) and the dismantling of the obstruction, fish corrals/traps, fish pens or fish cages at the expense of the offender.

Upon conviction by a court of law, the offender shall be punished with imprisonment from one (1) month and one (1) day to six (6) months and fine of twice the amount of the administrative fine, confiscation of stocks and dismantling of the obstruction, fish corrals/traps, fish pens or fish cages at the expense of the violator.

Section 112. Noncompliance with Good Aquaculture Practices. – Fishery operations involving the breeding and farming of fish and other fishery species shall comply with good aquaculture practices and the guidelines for environmentally-sound design and operation for the sustainable development of the aquaculture industry which shall be promulgated by the Department.

Upon a summary finding of administrative liability, the offender who commits any violation of the rules and regulations, or provisions thereof, shall be punished with an administrative fine of Ten thousand pesos (P10,000.00) to One hundred thousand pesos (P100,000.00) per day until the violation ceases and the fines are paid.

Upon conviction by a court of law, the offender shall be punished with imprisonment of three (3) years and fine of twice the amount of the administrative fine.

Section 113. Commercial Fishing Vessel Operators Employing Unlicensed Fisherfolk, Fishworker or Crew. –

(a) The owner or operator of a commercial fishing vessel employing unlicensed fisherfolk or fishworker or crew shall, upon a summary finding of administrative liability, be fined Four thousand pesos (P4,000.00) for each unlicensed fisherfolk or fishworker or crew and suspension or revocation of license for commercial fishing.

(b) It shall likewise be unlawful for Philippine flagged fishing vessels engaged in distant water fishing to employ unlicensed fisherfolk or fishworker or crew.

The owner and operator of the distant water fishing vessel, upon a summary finding of administrative liability, shall be fined Forty thousand pesos (P40,000.00) for each unlicensed fisherfolk, fishworker or crew and suspension or cancellation of license.

The owner and operator of the commercial fishing vessel or distant water fishing vessel shall upon conviction by a court of law, be fined with twice the amount of the administrative fine and suspension or cancellation of license.

Section 114. Obstruction of Defined Migration Paths. – It shall be unlawful for any person to obstruct any defined migration path of anadromous, catadromous and other migratory species.

Upon a summary finding of administrative liability, the offender shall be punished with an administrative fine of One hundred fifty thousand pesos (P150,000.00) to Five hundred thousand pesos (P500,000.00), dismantling of the obstruction at the expense of the offender, and the suspension or revocation of the permit or license.

Upon conviction by a court of law, the offender shall be punished with imprisonment of seven (7) years to twelve (12) years and fine of twice the amount of the administrative fine, dismantling of the obstruction at the expense of the offender, and the suspension or revocation of the permit or license.

Section 115. Obstruction to Fishery Law Enforcement Officer. – The fishing vessel owner, master or operator or any other person acting on behalf of any fishing vessel who assaults, resists, intimidates, harasses, seriously interferes with, or unduly obstructs or delays a fishery law enforcement officer, authorized inspector or observer, the deputized fishwarden of the LGU, or any lawfully-boarding government officers, in the exercise of their duties shall be penalized under this Code. Any person who does not allow any authorized officer or an observer to exercise any of the legal duties shall be deemed to be obstructing that officer or person.

Upon a summary finding of administrative liability, the offender shall be punished with cancellation of license or permit and an administrative fine of One million pesos (P1,000,000.00) for fishing vessels operating in Philippine waters or Two million pesos (P2,000,000.00) for fishing vessels operating beyond Philippine waters.

Upon conviction by a court of law, the offender shall be punished with imprisonment from six (6) months to two (2) years and a fine twice the amount of the administrative fine and cancellation of license or permit.

Section 116. Noncompliance with Fisheries Observer Coverage. – (a) It shall be unlawful for Philippine distant water fishing vessel to sail without a fisheries observer on board as required by RFMO conservation and management measures.

(b) It shall be unlawful for commercial fishing vessels to sail without a fisheries observer in compliance with this Code and the rules and regulations promulgated by the Department.

Upon a summary finding of administrative liability, an offender shall be punished with a fine of Five hundred thousand pesos (P500,000.00) and forfeiture of the catch and gear.

Upon conviction by a court of law, the offender shall be punished with imprisonment of one (1) month and one (1) day to six (6) months and fine of twice the amount of the administrative fine, confiscation of catch and suspension or cancellation of license.

Section 117. Noncompliance with Port State Measures. – No foreign fishing vessel shall be allowed entry without providing at least twenty-four (24)-hour prior notice. When a foreign fishing vessel is granted entry, failure to provide a catch report shall be deemed unlawful. It shall likewise be unlawful for any person to fail to comply with other rules on port state measures promulgated by the Department in coordination with port state authorities.

Failure to comply with the 24-hour period may result in denial of permission to enter or use of port facilities and the vessel may be subject to onboard inspection and/or impoundment.

Section 118. Failure to Comply with Rules and Regulations on Conservation and Management

Measures. – It shall be unlawful for any person to fail to comply with conservation and management measures adopted in rules and regulations to be promulgated by the Department pursuant to international conventions, RFMO resolutions and laws of coastal states where Philippine vessels fish.

Upon a summary finding of administrative liability, violation of the rules and regulations promulgated by the Department shall be punished with confiscation of catch and suspension or cancellation of license or permit and an administrative fine of twice the value of the catch or the amount indicated below whichever is higher:

(1) Twenty thousand pesos (P20,000.00) for municipal fishing or community service in case of failure to pay the fine;

(2) One million pesos (P1,000,000.00) for small-scale commercial fishing;

(3) Two million five hundred thousand pesos (P2,500,000.00), for medium-scale commercial fishing; and

(4) Five million pesos (P5,000,000.00), for large-scale commercial fishing.

Upon conviction by a court of law, the offender shall be punished with imprisonment of six (6) months and fine twice the amount of the administrative fine, and confiscation of the catch and suspension or cancellation of license.

Section 119. Noncompliance with Vessel Monitoring Measures. – No municipal, commercial or distant water fishing vessel shall engage in fishing activity without complying with the vessel monitoring measures promulgated by the Department in coordination with the LGUs: Provided, That for vessels operating in Philippine waters, only the catcher vessel shall be covered by this requirement. It shall also be unlawful to intentionally tamper with, switch off or disable the vessel monitoring system.

Upon a summary finding of administrative liability, the fishing vessel owner, master or any other person acting on behalf of the vessel owner shall be punished with confiscation of catch, suspension or revocation of the license and an administrative fine equivalent to twice the value of the catch or the amount indicated below, whichever is higher:

(1) Ten thousand pesos (P10,000.00) for municipal fishing or community service in case of failure to pay the fine;

(2) Two hundred fifty thousand pesos (P250,000.00) for small-scale commercial fishing;

(3) Five hundred thousand pesos (P500,000.00) for medium-scale commercial fishing; and

(4) Two million five hundred thousand pesos (P2,500,000.00) for large-scale commercial fishing.

In case of violation committed in waters beyond national jurisdiction, the administrative fine shall be equivalent to five times the value of the catch or twice the amount indicated above, whichever is higher.

Upon conviction by a court of law, the master or any other person acting on behalf of the vessel owner shall be punished with imprisonment of six (6) months to two (2) years and fine twice the amount of the administrative fine, confiscation of catch and suspension or revocation of the license.

Section 120. Constructing, Importing or Converting Fishing Vessels or Gears Without Permit from the Department. – It shall be unlawful for any person to construct or import fishing vessels or gears or to convert other vessels into fishing vessels without permit from the Department.

Upon a summary finding of administrative liability, the offender shall be imposed the penalty of an administrative fine of:

(1) Fifty thousand pesos (P50,000.00) for small-scale commercial fishing;

(2) Five hundred thousand pesos (P500,000.00) for medium-scale commercial fishing; and

(3) Two million five hundred thousand pesos (P2,500,000.00) for large-scale commercial fishing.

Upon conviction by a court of law, the offender shall suffer the penalty of imprisonment from one (1) month and one (1) day to six (6) months and fine of twice the amount of the administrative fine.

Section 121. Use of Unlicensed Gear. – Any person who uses a fishing gear or method for commercial fishing without license from the Department shall, upon a summary finding of administrative liability, be fined from Two hundred thousand pesos (P200,000.00) to Five hundred thousand pesos (P500,000.00) per gear depending on the seriousness of the violation.

Upon conviction by a court of law, the offender shall be imposed the penalty of fine from Four hundred thousand pesos (P400,000.00) to One million pesos (P1,000,000.00) depending on the seriousness of the violation.1âwphi1

Section 122. Falsifying, Concealing or Tampering with Vessel Markings, Identity or Registration. – It shall be unlawful for any person to falsify, conceal vessel identity or lack of registration or tamper with the vessel markings, identity or registration.

Upon a summary finding of administrative liability, the offender shall be imposed the penalty of confiscation of catch and suspension or cancellation of license and an administrative fine of:

(1) Ten thousand pesos (P10,000.00) for municipal fishing or community service in case of failure to pay the fine;

(2) One hundred thousand pesos (P100,000.00) for small-scale commercial fishing;

(3) One million pesos (P1,000,000.00) for medium-scale commercial fishing; and

(4) Five million pesos (P5,000,000.00) for large-scale commercial fishing.

In case of violation by distant water fishing vessels, the administrative fine shall be twice the amount indicated above.

Upon conviction by a court of law, the offender shall suffer the penalty of imprisonment from two (2) years to six (6) years and a fine equivalent to twice the amount of the administrative fine, confiscation of catch and suspension or cancellation of license.

Section 123. Concealing, Tampering or Disposing of Evidence Relating to an Investigation of a Violation. – It shall be unlawful for any person to conceal, tamper or dispose evidence relating to an investigation of a violation.

Upon a summary finding of administratively liability, the offender shall be punished with suspension or cancellation of license and an administrative fine of:

(1) Ten thousand pesos (P10,000.00) for municipal fishing or community service in case of failure to pay the fine;

(2) One hundred thousand pesos (P100,000.00) for small-scale commercial fishing;

(3) One million pesos (P1,000,000.00) for medium-scale commercial fishing; and

(4) Five million pesos (P5,000,000.00) for large-scale commercial fishing.

In case of violation by distant water fishing vessels, the administrative fine shall be twice the amount indicated above.

Upon conviction by a court of law, the offender shall be imposed the penalty of imprisonment from five (5) years to ten (10) years and fine equivalent to twice the administrative fine, and suspension or cancellation of the license.

Section 124. Noncompliance with the Requirements for the Introduction of Foreign or Exotic Aquatic Species. – It shall be unlawful to import, introduce, or breed, foreign or exotic aquatic species without the conduct of risk analysis and prior approval of the Department.

Upon a summary finding of administrative liability, the offender shall be punished with a fine of Two hundred thousand pesos (P200,000.00) to Six million pesos (P6,000,000.00) and confiscation and destruction of the foreign or exotic species. Should the species become invasive and result to predation of native aquatic biota, loss of income or damage to the habitat, the offender shall bear the costs of containment, eradication and/or restoration.

Upon conviction by a court of law the offender shall suffer the penalty of imprisonment of six (6) years to (12) years and fine from Four hundred thousand pesos (P400,000.00) to Twelve million pesos (P12,000,000.00), confiscation of foreign or exotic species and the costs for containment, eradication or restoration.

Section 125. Failure to Comply with Standards and Trade-Related Measures. – It shall be unlawful forany person to fail to comply with standards for weights, volume, quality and other requirements for all fishery transactions and trade and trade-related measures prescribed by the Department.

Upon a summary finding of administrative liability, the offender shall be punished with an administrative fine of Fifty thousand pesos (P50,000.00) to Two million pesos (P2,000,000.00), depending on the seriousness, extent and volume of trade associated with the violation, confiscation of the shipment or fishery products and suspension or revocation of registration or license.

Upon conviction by a court of law, the offender shall suffer the penalty of imprisonment from six (6) months to two (2) years and a fine from One hundred thousand pesos (P100,000.00) to Four million pesos (P4,000,000.00) depending on the seriousness, extent and volume of trade associated with the violation, confiscation of the shipment or fishery products and suspension or revocation of registration or license.

Section 126. Possessing, Dealing in or Disposing Illegally Caught or Taken Fish. – It shall be unlawful to ship, commercially transport, offer for sale, sell, import, export, or have custody, control, or possession of, or to deal in or in any manner dispose of any fish or species caught, taken or retained in violation of this Code.

The discovery of any fish or species caught with the use of explosives or noxious or poisonous substances shall constitute a prima facie presumption that the possessor, seller, fish dealer, transporter, importer, or exporter thereof has knowledge that the fish or species was caught or taken in violation of this Code.

Upon a summary finding of administrative liability, the offender shall be punished with an administrative fine of Fifty thousand pesos (P50,000.00) to Two hundred thousand pesos (P200,000.00) or five (5) times the value of fish or species, whichever is higher, and confiscation of the same.

Upon conviction by a court of law, the offender shall suffer the penalty of imprisonment from six (6) months to two (2) years, and fine of eight (8) times the value of the species or from One hundred thousand pesos (P100,000.00) to Five hundred thousand pesos (P500,000.00), whichever is higher and confiscation of the fish or fishery products and suspension or revocation of registration or license.

Section 127. Unauthorized Disclosure of Sensitive Technical Information. – Data from the vessel monitoring system or vessel monitoring measure and other related data arising therefrom shall be considered as sensitive technical information. Any unauthorized disclosure of said data including all other data referred to in Section 155 in this Code, by any person shall be penalized with imprisonment of six (6) months and one day to six (6) years, removal from office and forfeiture of all retirement benefits, where applicable.

Section 128. Other Violations. – In addition to the prohibitions in this Code, the Department, in consultation with the LGUs, local FARMCs and NFARMC, shall issue fishery administrative orders or regulations for the conservation, preservation, management and sustainable development of fisheries and aquatic resources.

Violation of administrative orders or regulations promulgated by the Department or any provision thereof shall subject the offender to a fine of One hundred thousand pesos (P100,000.00) to Five million pesos (P5,000,000.00), depending on the socioeconomic impact and seriousness of the violation, volume and value of the fisheries product, damage to the environment due to the violation, and the habituality of the offender.

Section 129. Escalation Clause. – The fines herein prescribed shall be increased by at least ten percent (10%) every three (3) years to compensate for inflation and to maintain the deterrent function of such fines."

Section 18. A new Chapter VII on administrative adjudication is hereby inserted after Chapter VI of Republic Act No. 8550, to read as follows:

"CHAPTER VII

ADMINISTRATIVE ADJUD ICATION

Section 130. Administrative Adjudication. – The Department is hereby empowered to impose the administrative fines and penalties provided in this Code.

For this purpose, the Department shall organize and designate the composition of the Adjudication Committee, which shall be composed of the bureau director as chairperson and four (4) other members to be designated by the Secretary. The Adjudication Committee shall be supported by sufficient number of staff to enable it to perform its mandate.

The Committee shall promulgate rules and regulations for the conduct of administrative adjudication and the disposition of confiscated catch, gears, equipment and other paraphernalia. It shall also issue subpoena duces tecum and ad testificandum in administrative cases before it.

Section 131. Commencement of Summary Administrative Action. – The Department shall, on its own instance or upon verified complaint by any person, institute administrative proceedings against any person who violates any order, rule or regulation issued by the Department, pursuant to this Code.

Section 132. Power to Issue Cease and Desist Orders and to Summarily Evict Without the Necessity of Judicial Order. – The Department shall, subject to the requirements of administrative due process, issue cease and desist order/s upon violator/s and to summarily eject, without the necessity of judicial order, the holder of FLA, other tenurial instrument, permit or license from areas of the public domain covered by such FLA, tenurial instrument, permit or license.

Section 133. Authority of the Director of the BFAR or the Duly Authorized Representative to Issue Notice of Violation and Order Confiscation. – In all cases of violations of this Code or other fishery laws, rules and regulations, the Director of the BFAR or the duly authorized representative, may issue notice of violation and order the confiscation of any fish, fishery species or aquatic resources illegally caught, taken or gathered, and all equipment, paraphernalia and gears in favor of the Department, academic institutions or LGUs and to dispose of the same in accordance with pertinent laws, rules, regulations and policies on the matter.

Section 134. Prohibition on the Issuance of Temporary Restraining Orders, Preliminary Injunctions, and Preliminary Mandatory Injunctions. – No injunction or restraining order from the Municipal Trial Courts and Regional Trial Courts shall lie against the Department and BFAR upon the ex parte motion or petition filed by any person or entity in the exercise by the Department and BFAR of its regulatory functions in support of the implementation of this Code.

Section 135. Accompanying Administrative Sanctions for Serious Violations. – The Adjudication Committee may impose the following additional sanctions to the administrative penalties imposed for serious violations:

(1) confiscation of fishing gear;

(2) impoundment of fishing vessel;

(3) temporary suspension or permanent revocation of license or permit;

(4) temporary or permanent ban from the availment of applicable duty and tax rebates;

(5) inclusion in the IUU fishing vessel list;

(6) denial of entry and other port services;

(7) blacklisting; and

(8) increase in the amount of fines but not to exceed five (5) times the value of the catch. In case of repeated violations within a five-year period, the amount of fine may be increased up to eight

(8) times the value of the catch.

During the pendency of the administrative or the criminal case, the Department may impound the vessel/conveyance, gear and other paraphernalia used in the commission of the offense.

In applying these accompanying sanctions, the Department shall take into account the seriousness of the violation as defined in Paragraph 82 of Section 4 of this Code, the habituality or repetition of violation, manner of commission of the offense, severity of the impact on the fishery resources and habitat, socioeconomic impact, cases of concealment or destruction of evidence, eluding arrest, resisting lawful orders, and other analogous circumstances.

The overall level of sanctions and accompanying sanctions shall be calculated in a manner that is proportionate, effective and dissuasive to deprive the offender of the economic benefits derived from the serious violation.

Section 136. Lien Upon Personal and Immovable Properties of Violators. – Fines and penalties imposed pursuant to this Code shall constitute a lien upon the personal and immovable properties of the violator.

Section 137. Community Service. – In case the offender is a municipal fisherfolk or has no property over which the Department may impose the fines and penalties prescribed for the offense, community service may be rendered in lieu of the fine. The Department shall promulgate the rules and regulations for this purpose, taking into account that the service should be rendered in accordance with needs of the community where the offense is committed and computed based on the fine and the prevailing minimum wage in the community, among others.

Section 138. Citizen’s Suits. – For the purposes of enforcing the provisions of this Code and its implementing rules and regulations, any citizen may file an appropriate civil, criminal or administrative action in the proper courts/bodies against:

(a) Any person who violates or fails to comply with the provisions of this Code, and its implementing rules and regulations;

(b) The Department or other implementing agencies with respect to orders, rules and regulations issued inconsistent with this Act; and

(c) Any public officer who willfully or grossly neglects the performance of a duty specifically enjoined by this Code and its implementing rules and regulations; or abuses authority in the performance of duty; or, in any manner improperly performs duties under this Code and its implementing rules and regulations: Provided, however, That no suit can be filed until after fifteen (15) days notice has been given the public officer and the alleged offender and no appropriate action has been taken thereon.

Section 139. Strategic Lawsuit Against Public Participation (SLAPP) in the Enforcement of this Act. – A legal action filed to harass, vex, exert undue pressure, or stifle any legal recourse that any person, institution, or the government has taken or may take in the enforcement of this Code shall be treated as a Strategic Lawsuit Against Public Participation (SLAPP).

The hearing on the defense of a SLAPP shall be summary in nature, the affirmative defense of a SLAPP shall be resolved within thirty (30) days after the summary hearing. If the court dismisses the action, the court may award damages, attorney’s fees, and costs of suit under a counterclaim if such has been filed. The dismissal shall be with prejudice.

If the court rejects the defense of a SLAPP, the evidence adduced during the summary hearing shall be treated as evidence of the parties on the merits of the case. The action shall proceed in accordance with the Rules of Court.

The Rules of Procedure for Environmental Cases shall govern the procedure in civil, criminal, and special civil actions involving the enforcement or violations of this Code including actions treated as a SLAPP as provided in this section.

Section 140. Fisheries National Administrative Register. – The Adjudication Committee shall enter in a Fisheries National Administrative Register, which shall be publicly available, all decisions, resolutions or orders involving violations of this Code, particularly serious violations committed by Philippine flagged vessels or by Philippine nationals and cases on poaching or involving foreigners, including the penalties imposed."

Section 19. Section 108 of the Code is hereby renumbered as Section 141 and a new Section 142 is hereby inserted after to read, as follows:

"SEC. 142. Fisheries Management Fund. – A Fisheries Management Fund is hereby established to enhance the budget for: the conservation, preservation, protection, management, development and regulation of the fishery and aquatic resources; research and development and capability building of the various stakeholders including provision for scholarships; supplementary livelihood for poverty alleviation; and improvement of productivity and processes of the various stakeholders. It shall be administered by the Bureau of Fisheries and Aquaric Resources as a special account in any government financial institution.

It shall be funded from administrative fines and penalties imposed under this Code, from the proceeds of the sale of forfeited fish, fishing gears, paraphernalia and fishing vessels, and contributions in the form of endowments, grants and donations to the fund, which shall be exempted from donor and other taxes, charges or fees imposed by the government.

The Fund shall be exclusively utilized as follows:

(a) fifteen percent (15%) for the purchase, upgrade and maintenance of vessels, communication and other equipment used for the monitoring, control and surveillance of Philippine waters and distant water fishing;

(b) five percent (5%) for the payment of litigation expenses, cost of conveyance of witnesses and other costs due to cases filed by or against the Republic of the Philippines in international courts arising from the implementation of this Code or where apprehending party or parties become respondents or defendants in any tribunal or court of law;

(c) twenty-five percent (25%) for the operating costs and capacity building of the NFARMC, IFARMCs and C/MFARMCs and payment for the cost of rehabilitation, medical expenses for injury, or indemnity for death of law enforcement officers, including deputized volunteers, distributed as follows: five percent (5%) to the NFARMC, five percent (5%) to all IFARMCs, five percent (5%) to all C/MFARMCs, and ten percent (10%) to C/MFARMCs for the apprehension and successful prosecution of a fisheries offense;

(d) five percent (5%) for the continued upgrading of laboratory facilities and equipment;

(e) five percent (5%) for the research and development activities of the NFRDI;

(f) five percent (5%) for the capability development of BFAR personnel, deputized law enforcement agencies and volunteers, and stakeholders;

(g) ten percent (10%) for scholarship grants for children of fisherfolks and fishworkers in fish catch, aquaculture, fishing and fish processing;

(h) fifteen percent (15%) for livelihood programs for production enhancement and poverty alleviation; and

(i) fifteen percent (15%) for assistance to fishermen in the form of shared facilities."

Section 20. Renumbering of the Remaining Chapters and Sections of Republic Act No. 8550. – Sections 109 to 133 of Republic Act No. 8550 are hereby renumbered as Sections 143 to 167 accordingly.1âwphi1 Chapters VII, VIII and IX of the same Act are hereby renumbered as Chapter VIII, IX and X, respectively.

Section 21. Implementing Rules and Regulations. – The Department of Agriculture, in consultation with concerned government agencies and stakeholders, shall promulgate the implementing rules and regulations of this Act, within six (6) months from the effectivity of this Act.

Section 22. Separability Clause. – If any portion of this Act is declared unconstitutional or invalid, the portions or provisions which are not affected shall continue to be in full force and effect.

Section 23. Repealing Clause. – All laws, decrees, executive orders and rules and regulations or parts thereof which are inconsistent with this Act are hereby repealed or modified accordingly.

Section 24. Effectivity. – This Act shall take effect fifteen (15) days after its complete publication in at least two (2) newspapers of general circulation.

Approved,

(Sgd.) FELICIANO BELMONTE JR.

Speaker of the House of Representatives

(Sgd.) FRANKLIN M. DRILON

President of the Senate

This Act which is a consolidation of Senate Bill No. 2414 and House Bill No. 4536 was finally passed by the Senate and the House of Representatives on December 1, 2014.

(Sgd.) MARILYN B. BARUA-YAP

Secretary General

House of Representatives

(Sgd.) OSCAR G. YABES

Secretary of Senate

Approved:

BENIGNO S. AQUINO III

President of the Philippines

Lapsed into law on FEB 27 2015

Without the signature of the President, In accordance with Article VI, Section 27 (1) of the Constitution.

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