1
Authority

a. Presidential Decree No. 857, as amended

b. OCGCC Opinion No. 010, series of 1998 and Opinion No. 210, series of 1997

c. Resolution adopted by the PPA/LGU Workshop dated 20 June 1998

d. Board Excom Res. No. 98-529 dated 28 January 1998 and Board Res. No. 1705 dated 26 february 1998

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Scope:

This Order covers government ports outside the PPa Port System which Local Government Units (LGUs) and Government Corporations may be authorized to manage, operate, maintain and develop in accordance herewith. The authority to manage, operate, maintain and develop these ports shall be covered by a corresponding Memorandum of Agreement (MOA), attached and incorporated herein by reference as Annex "A"^* , between PPA and the LGU or the government corporation concerned.

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Purpose

a. To prescribe the administrative procedure in transferring the management, operation, maintenance and development of ports outside the PPA and Port System to the LGUs.

b. To give more meaning and substance to the concept  of LGU empowerment, to include government corporations, as herein defined, without the PPA abandoning its statutory responsibility over ports.

c. To harmonize LGU empowerment pursuant to Republic Act 7160 and government corporation vis-avis the statutory jurisdiction of the PPA over government ports, pursuant to Presidential Decree No. 857, as amended and OGCC Opinion No. 010, series of 1996.

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Definition of Terms

For purposes of this Order, the following terms shall mean or be understood to mean, as follows;

a. Cargo handling services refer to handling services such as arrastre, stevedoring and porterage.

b. Cargo throughout refers to total volume of cargo discharged or loaded at the port.

c. Dockage fee at berth refers to the amount assessed against a vessel engaged in international or foreign trade, including those engaged in barter trade, for mooring or berthing at a pier, wharf bulkhead, river or channel marginal wharf at any national port in the Philippines, or for mooring or making fast to a vessel so berthed.

d. Dockage fee at anchorage refers to the amount assessed against a vessel engaged in international or foreign trade including those engaged in barter trade that do not berth but drop anchor at either a government or privately owned port whether operated exclusively or commercially.

e. Government Corporation refers to government-owned or controlled corporation tasked by its charter to implement a program for the economic development of a specific territory and its operation of a port facility isd directly or indirectly necessary, incidental or conducive to the attainment of its corporate goal and objectives.

f. Government Ports refer to public ports constructed, owned and maintained by the national government and under the jurisdiction of the PPA.

g. LGU refers to the Local Government Unit as defined in the Local Government Code of the Philippines.

h. Management Fee refers to the amount paid by the PPA to the LGU or government corporation, which is equivalent to (90%) percent of its collection from wharfage, port dues, dockage fee and usage fee.

i. MOA refers to the Memorandum of Agreement entered into by and between PPA and LGU or government corporation concerned.

j. Municipal Ports refer to public ports constructed owned and maintained by the municipal government.

k. PD 857, as amended, refers to the revised charter of the Philippine Ports Authority.

l. Port Charges refer to port dues, dockage fee at berth, dockage fee at anchorage,

m. Port Dues refer to the amount assessed against a vessel engaged in foreign trade based on its total GRT or part thereof, including those engaged in barter trade for each entrance into and departure from a port of  entry in the Philippines.

n. Port related services refer to those services other than cargo handling and pilotage services performed inside the port, including its harbors/fairways and extensions involving provision, application and use of equipment, facility utility manpower/expertise and goods.

o. PPA refers to the Philippine Ports Authority.

p. PPA Port System refers to a list of ports over which the Philippine Ports Authority exercise jurisdiction and authority and accpet responsibility for all functional areas of development to include planning and design, financing /loan servicing, rehabilitation/new construction/repair/ maintenance, dredging, port administration/management/operations, regulation, revenue collection and all other activities relevant thereto.

q. PPA takeover refers to the assumption by PPA of the management and operations of arrastre, stevedoring and porterage services from a contractor or operator for cause in order to protect and promote public interest.

r. Republic Act no. 7160 refers to the local Government Code of 1991.

s. Usage fee refers to the amount assessed against a vessel engaged in domestic trade for berthing, for making fast to a vessel so berthed or for mooring at an anchorage area.

t. Wharfage refers to a charge on all cargoes whether containerized or not coming in/going out or transhipped through a port on the basis of the total metric or revenue tonnage whichever is applicable.

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General Guidelines

a. The folowing ports may be managed, operated, maintained and developed by LGUs and government corporations.

1. Government ports which, under the provisions of P.D. 857, as amended, are under the jurisdiction of the PPA but which are outside the updated PPA Ports system and with an average annual cargo throuhout of not more than 50,000 metric tons over a 3-year period.

2. Only ports, within the municipality and jurisdiction of the LGU may be managed, operated, maintained and developed by said LGU.

b. The PPA shall act on any application from the LGU or government corporation for the transfer of the management, operations, maintenance and development of a port within (90) days from receipt hereof, provided that the application is approved and supported by a Sanggumiamg Resolution for such purpose.

c. Ports qualified to be operated and managed by LGUs or government corpoations may be the subject  of a MOA between the PPA and the LGU or government corporation concerned. The contents of the MOA shall be in accordance with this guidelines.

d. When both the LGU and a government corporation signify to PPA the intention to operate and manage a port, preference shall be given to the LGU where the port is situated. A government corporation may be considered for the award of the management and operation of the port when endorsed by the LGU through appropriate resolution of the Sangguniang Bayan. Provided, however, that failure of the LGU concerned to act on any application from the government corporation within 90 calendar days shall be construed as an implied recommendation from the LGU.

e. The authority of the LGUs or the government corporations to manage, operate, maintain and develop a government port, including the rendition of cargo handling and related services, shall be for aterm of (5) years.

f. cargo handling and related services contracted out to third parties by the LGUs or government corporations shallhave aterm not to exceedthe stipulated period of the MOA between PPA and LGU or government corporation. Provided, that the LGU or government corporation shall secure the prior approval of PPA, in any and all cases that cargo handling or related services are contracted out to a third party. the contract between the LGU or government corporation and its subcontractor shall be in such form and terms acceptable to PPA.

g. The repair and maintenance of ports, including maintenance dredging, managed and operated by LGUs or government corporations pursuant to this Order shall be the sole and primary responsibility of said LGUs or government corporations.

h. All development plans for the port by the LGU or government corporation shall have prior approval of PPA and shall conform with the overall master plan for all the ports nationwide.

i. Unless already covered by law or presidential issuances, these ports shall be properly delineated giving the exact location of the port zone through an approved resolution of the Sangguniang Bayan or Sangguniang Panglunsod concerned.

j. Powers, duties, functions, obligations and responsibilities of LGUs or government corporations so authorized to manage, operate, maintain and develop a port under these guidelines;

1.The LGU or government corporation may, on its own, by contract or otherwise, operate cargo handling and other related services within the port or undertake any port related economic activity therein.

2. The LGU or government corporation shall be allowed to collect port charges, fees and other dues prescribed by the PPA for the use of the port and for services rendered thereat, through the Municipal Treasurer who shall be deputized by the PPA. All revenues of the port shall accrue to the LGU or government corporation, with the exception of wharfage, port dues, dockage fee and usage fee, payment of which may be made to the LGU or government corporation who shall issue the provisional receipt therefor and thereafter turn over the collected revenue for the quarter to the PPA on the tenth  (10th) day of the first month of the following quarter, who shall issue the corresponding Official Receipt.

For the management and operation of the port, the LGU or government corporation shall be paid by the PPA a management fee equivalent to ninety (90%) percent of its collection from wharfage, port dues, dockage fee and usage fee. From the quarterly remittance prescribed in the foregoing paragraph, the LGU may deduct the 90% from the collection as payment of management fee which may be retained by the LGU.

3. The LGU or government corporation shall, at its own expense and without reimbursement from PPA, pay all taxes, fees and other impositions which may be levied by the government, its agencies or political subdivisions upon the premises and improvements of the port.

4. All existing contracts/agreements entered into by PPA concerning the port and/or the services thereat shall be respected by the LGU or government corporation for the duration thereof.

5. All existing port premises and structures shall continue to belong to the PPA. Likewise, improvements in the port introduced by the LGU or government corporation shall become the property of the Authority without any obligation on the part of the latter of reimbursing the former for the cost thereof.

6. The LGU or government corporation shall make available at all times during office hours, for inspection, examination and audit by the PPA, the Commission on Audit and other government agencies exercising visitorial powers, all books or accounts and records pertaining to the management , operation, maintenance and development of the port. The authority to inspect, examine and audit shall be exercised by the officials concerned pursuant to and within the limits of the duties and functions vested upon their respective offices by express provision of law.

7. The PPA may, without prejudice to other remedies against the LGU or government corporation, extrajudicially suspend, cancel or terminate the MOA on any of the following grounds:

a. Failure of the LGU or government corporation to account and/or remit to the PPA its collection of wharfage, port dues, dockage fee and usage fee in accordance with para. 5-i(2) hereof.

b. Failure of the LGU or government corporation to undertake the repairs and/or maintenance of the areas and structures subject to the MOA.

c. Change of control arising from the sale, assignment, transfer or other disposition of the LGU's or government corporation's interests in the MOA.

d. If the LGU or government corporation through any of its officials or employees, by taking advantage of their free access to the port premises and vessels calling at the port, engage in or knowingly fails to take action to prevent the commission of smuggling and other illegal activities.

e. Refusal of the LGU or government corporation to make available to the PPA, the Commission on Audit and other government agencies exercising visitorial powers, its books of accounts and records pertaining to the management and operations of the subject port.

f. Any violation that may bve directly or indirectly imputable to or committed by third parties to whom the LGU or government corporation may have contracted out the MOA.

g. Violation or non-performance of other terms and conditions of the MOA.

8. The PPA shall take over the mangement and operation of the port from the LGU if the former deems it necessary to protect public interest. The PPA takeover shall be warranted under the following instances:

a. In case of emergency such as strike, lockout, stoppage of work and other causes of similar nature which will continue without letup for over a week with the LGU or government corporation showing no capability to resolve it.

b. In case of violation of any of the terms and conditions of the MOA or the Authority's rules and regulations.

c. In case of cancellation, suspension or termination of the MOA.

d. When so directed by a court of law.

e. In such other cases when the Authority deems that the takeover is warranted in order to protect and/or promote public interest as provided in Section 12.03, paragraph 4 of PPA Administrative Order No. 10-81.

k. The Department of Justice (DOJ) shall have jurisdiction over any action involving any clause or provision of the Order or the MOA whose decision shall be appealable to the Office of the President.

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Port Tariff

a. the authority to impose, fix, prescribe, increase or decrease port charges for the use of port facilities and provision of services rendered in port transferred to the LGU shall continue to remain with the PPa.

b. Any adjustment in existing cargo handling tariff, to include tariff setting for such ports without prescribed  cargo handling tariff, shall be recommended by the LGU to PPA for approval.

c. In ports transferred to LGUs with no cargo handling tariff, the existing restructured tariff in the nearest government port shall temporarily apply, provided that the LGU concerned shall, within three months after signing of an agreeement, submit to PPA a proposed cargo handling tariff for such port for approval.

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Procedure for the Turnover of Ports

a. Interested LGU shall coordinate with the Port Management Office (PMO) concerned, review these regulations, gather all information and data about the port of terminal it is interested in, and submit its request or letter of intent. The full import of the policy and regulations must be adequately discussed.

b. The Port Manager concernerd shall submit its recommendation thru the District Manager concerned, justifying as needed.

c. the district Manager concerned shall indorse the same to Head Office (Attn:AGM for Operations), together with justifications and attaching the draft MOA.

d. Upon approval in principle by the General Manager, a directive will be sent to the District Manager concerned to convene a Transition Committee which shall ensure compilation of data on the port; assist the LGU to organize and train the staff involved on the operation of the port in accordance with these guidelines; and conduct assessment as to the readiness of the LGU to operate and administer, the port within 3 to 6 months after its creation.

e. Upon satisfactory assessment by the Transition Committee, the District Manager shall indorse the turnover, and forward the report to the Head Office (Attn:AGM for Operations)

f. an appropriiate turnover ceremony shall be scheduled by the General Manager for this purpose after the approval of such turnover of the port to the LGU by the PPA Board of Directors.

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Use of Letter Stationery and Standard Sign board

Corollary with the authority to operate and manage the port covered by a corresponding MOA, the LGU or government corporation shall use a standard letter stationery as prescribed in Annex "B"^* for all transactions relating to the operations and management of the transferred port by the LGU or government corporation. Similarly, the LGU shall prepare and post a sign board at the gate of the port/terminal office of the transferred port, following the standard design, size of the sign board, size of letterings, and use of the LGU seal, as prescribed herein Annex "C" ^* .

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Compliance and Regulations

During tnhe term of the MOA, the LGU or government corporation shall strictly comply with all applicable laws, policies, guidelines and regulations which are now or may hereafter be promulgated by the government and the PPA.

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Organization

a. The LGU or government corporation concerned, through the Sangguniang Bayan or Sangguniang Panglunsod, shall be responsible for the organization of its manpower requirement.

b. As a precondition to the actual take over of a port by the LGU or government corporation, all concerned personnel tasked to manage and operate the port shall undertake appropriate training with the PPA.

The cost of such training shall be borne by the LGU or government corporation concerned.

c. The organization for the port shall include those positions indicated Annex "D"^* to ensure that the basic functions of port operations, port engineering and maintenance and billing and collections of port charges are carried out efficiently.

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Renewal of Agreement

The agreement entered into between PPA and the LGU or government corporation may be renewed for another term at the option of PPA under such terms and conditions as the parties may agree.

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Separability Clause:

If any provision of this Order or the application of such provision to any person or circumstances is declared invalid, the other provisions hereof or the application of such provision shall not be affected by such declaration.

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Repealing Clause:

All policies, rules and regulations or parts thereof inconsistent herewith, are deemed repealed or modified accordingly.

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Effectivity

This order shall take effect fifteen (15) days following the completion of its publication in a newspaper  of general circulation.

Adopted: 5 Aug. 1998

(SGD.) JUAN O. PENA
General Manager

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