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 and equipment, priorities 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, handling, 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 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;

1.2.3  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 duty licensed cargo handling operator in the area.

1.3       Shipping Companies and cargo handling operators maybe allowed, subject to the issuance of Permit to Occupy (PTO) to occupy an area of not more than 50 sq.m. per PTO without rental upon approval of the General Manager, for their operational use such as but not limited to temporary shelter of the passengers, clinic, checkers booth and canteen if operated by the portworkers ™ cooperative subject to the following conditions:

1.3.1 The structure to be put up shall be movable/not permanent in nature

1.3.2 The structures shall be for the safety and convenience of the port users

1.3.3 Where there are no alternative facilities offered by CPA

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

1.5       Medium term leases (2-5 years) and long-term leases may be granted subject to the approval of the Cebu Port Commission.

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 installed.

1.8       Government offices performing functions directly related to port operations may be allowed to lease or occupy CPA premises without payment of rental but subject to terms and conditions as may be imposed by the Authority and approved by the Cebu Port Commission.

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       The lessee shall be required to post a security deposit as follows:

2.2.1   For leases of CPA equipment:

            Upon execution of contract, the lessee shall post a security deposit in cash equivalent to three (3) months deposit and one (1) month advance rental.

2.2.2   For leases of CPA owned buildings and structures:

            Upon execution of contract, the lessee shall post a security deposit in cash equivalent to two (2) months deposit and one (1) month advance rental

2.2.3   For leases of open space or open storage areas:

            Upon execution of contract, the lessee shall post a security deposit in cash equivalent one (1) month deposit and one (1) month advance rental

2.3       As may be consistent with prevailing economic conditions, all rental rates shall be subject to increase of not more than 15% of the annual rental, subject to supplementary guidelines to be issued by the General Manager

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 properties.

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

2.7       Leased premises or properties shall not be used in illegal or unlawful activities

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       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;

2.10    The lessee shall hold the CPA free and harmless from any and all claims in connection with its occupancy of the leased premises and the use of the equipment or in the operation thereof;

2.11    Other conditions as may be reasonable and necessary which the CPA may deem proper to impose;

2.12    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 or 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 for 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: 26 Sept. 2002

(SGD.) MARIANO C.J. MARTINEZ
General Manager