Pursuant to the pertinent provisions of RA 7621 and CPA Board Resolution No. 41-99, in the interest of maximizing the use of CPA port real estate in the Port of Cebu, the following policy and guidelines in the leasing of CPA Real Estate Properties are hereby prescribed for the guidance of all concerned:

SECTION 1. Declaration of Policies - It is hereby the declared policy of the CPA that:

1.1 In the leasing out of its real estate properties, priority shall be given to port related activities or to companies engaged mainly in port-related businesses, as follows:

1.1.1. traditional maritime and primary port services, such as but not limited to, cargo handling services, storage, ro-ro and reefer service, passenger terminal services, shipping, and porterage services;

1.1.2. direct maritime/port operations support services, such as but not limited to, warehousing, cargo consolidation, chandling, trucking and brokerage;

1.1.3. indirect maritime/port operations support services, such as but not limited to, fuel stations, canteens, and banks.

1.2 Operational areas may be leased (for any term) only if all of the following are present:

1.2.1 when the purpose of the lease is for traditional maritime and primary port services as stated in par. 1.1.1. above;

1.2.2. where port services will be enhanced thereby;

1.2.3 where the Authority will derive more benefit in terms of payment of rental or fees;

In the lease of operational areas, the lessee shall engage the services of a duly licensed cargo handling operator in the area.

1.3 As a general rule, lease contracts/permits to occupy shall be on a year-to-year basis.

1.4 Medium-term leases (2-5 years) and long-term leases (6-15 years) shall be subjected to public bidding, where any of the following instances are present:

1.4.1 when the area involved is operational in nature;

1.4.2 when the area involved is more than 1,000 sq. meters;

1.4.3 when the minimum rental involves an amount of at least P50,000 per month;

1.4.4 when there is more than one applicant for a particular area or lot;

1.5 lease of open spaces or properties used as passenger terminal by shipping companies shall, in addition to the rental, be charged at least 20% of the terminal/service fee collected for every passenger or user thereof or Two Pesos (P2.00), whichever is higher, whether such terminal/service fee is collected separately or otherwise by the terminal operator. Where no terminal/service fee is collected, a minimum of two pesos (P2.00) per passenger or user shall nevertheless be charged on the terminal operator in addition to the rental.

1.6 rental charges or pricing shall take into consideration the current market prices of similar properties in the city and other nearby areas;

1.7 there shall be minimal leasing of areas or spaces for advertisement billboards and the like and the same shall take into consideration both safety and aesthetic factors. Management shall determine the specific areas where these billboards may be allowed to be put.

1.8 only government officer performing functions directly related to port operations may be allowed to lease or occupy CPA premises and they shall be charged 50% of the applicable rental.

SECTION 2. Basic Conditions - Lease contracts/permits to occupy shall contain the following basic terms and conditions:

2.1 late payments of rental dues shall be subject to interest charges of 1% per month, and to penalty charges of 1% per month;

2.2 before occupying the leased area, the lessee must make an advance rental for two (2) months and for one (1) month deposit;

2.3 all rental rates shall be subject to increase at the rate of not less than 15% of the annual rental;

2.4 the lessee shall not, without the written consent of CPA, sublease or assign in whole or in part the property under lease;

2.5 the lessee shall be responsible for the maintenance and upkeep of the leased premises;

2.6 the lessee shall not store flammable or hazardous materials within the leased premises;

2.7 the lessee shall not engage in illegal or unlawful activities within the leased premises;

2.8 ownership of all improvements made by the lessee on the land shall automatically be vested in the CPA at the end of the lease period free from all liens and encumbrances, unless otherwise provided in the contract;

2.9 the lessee shall not mortgage or otherwise encumber any of the improvements made by it on the property;

2.10 without the written consent of the CPA, the leased area shall not be used for any activity or purpose other than for the activity or purpose for which the lease was granted;

2.11 buildings and structures shall be insured by the lessee with the GSIS in favor of the CPA;

2.12 all taxes, fees, or charges, that may be due from the lease premises shall be for the account of the lessee;

2.13 cost of insurance for leased buildings/structures shall be for the account of the lessee in favor of the CPA;

2.14 the lessee shall post a performance bond of ten (10%) of the annual rental issued by the GSIS in favor of the CPA;

2.15 the lessee shall hold the CPA free and harmless from any and all claims in connection with its occupancy of the lease premises or in the operation thereof;

2.16 other conditions as may be reasonable and necessary which the CPA may deem proper to impose;

2.17 in cases of court action in connection with the lease contract/permit to operate, venue shall be only in the courts of Cebu City to the exclusion of all other courts.

SECTION 3. Compliance with CPA Rules - A lessee shall comply with existing rules and regulations of the CPA, or which the latter may hereafter issue.

SECTION 4. Cancellation/Termination of Lease Contract - The CPA shall have the right, without need of judicial action of proceedings, to revoke/cancel the lease contract/permit to occupy at any time during the lease period by serving 30-days written notice to the lessee in the following cases:

4.1 non-compliance with any of the terms and conditions thereof or violation of any CPA rules and regulations or law;

4.2 if at anytime during the lease period, the lessee is not using the property for the purpose for which it was originally intended;

4.3 if the cancellation/revocation is deemed to be for the public benefit and interest.

SECTION 5. Reservation - Nothing herein provided shall preclude the CPA, during the term of the contract of lease/permit to occupy, from prescribing other terms and conditions or rules and regulations, as it may deem necessary for the public interest or benefit. Such terms and conditions or rules and regulations shall form part of the original contract/permit and shall be deemed an amendment or modification of the original lease contract/permit to occupy insofar as these are inconsistent with the lease contract/permit to occupy.

SECTION 6. Saving Clause - Any provision of this memorandum circular declared by competent authority to be invalid shall not affect the other parts to which such declaration does not relate.

SECTION 7. Repealing Clause - All CPA rules and regulations, policies, guidelines, memoranda or circular inconsistent herewith are hereby repealed accordingly.

SECTION 8. Effectivity - This Memorandum Circular shall take effect after two publications, once a week, in a newspaper of general circulation.

Adopted: 13 Jan. 1999

(SGD.) ANTONIO J.B. ELUMIR, JR.
General Manager