Question & AnswerQ&A (EXECUTIVE ORDER NO. 59)
The main policy objective is to pursue an accelerated program for the modernization and development of government ports in partnership with the private sector, focusing on unification and rationalization of facility operators and service providers, encouraging investment in port infrastructure and facilities, and ensuring labor benefits.
The Philippine Ports Authority (PPA) is mandated to implement an integrated program for the planning, development, financing, and operation of ports pursuant to Presidential Decree No. 857.
The PPA must require all existing facility operators and service providers to unify into one corporation through merger, consolidation, buyout, joint venture, or other similar means.
They must provide technical or management expertise, contribute capital equipment or financial resources, or generate significant transshipment traffic. Additionally, no single corporation can own more than 30% of the capital stock of a unified operator, except in specific conditions where the investor has an existing permit or regularly serves the port.
Yes, the PPA can exercise its authority under its charter to grant the unified contractor a contract to manage, operate, and develop the entire government port without the need for public bidding.
The unified contractor must adopt a stock option plan reserving five percent (5%) of its total outstanding capital stock for labor and employees, including those retrenched due to redundancy. Furthermore, at the beginning of the fifth year of the contract, the contractor must start a divestment program offering at least 30% of its authorized capital stock to the public.
The unified contractor must provide all port services (berth allocation, cargo handling, port security, etc.), grant subleases, undertake repairs and maintenance, finance and develop port infrastructure, attract new port clients, and provide security services within its operational area.
The PPA retains regulatory functions such as approving port development plans, prescribing safety standards, setting tariffs, managing harbor traffic, collecting port and vessel charges, auditing operations, monitoring contract compliance, and maintaining police functions.
The contract must ensure the port operates as a common user, multi-purpose facility; require the unified contractor to pay fixed and variable fees to PPA; specify collection of vessel and port charges at private port rates; hold the contractor liable for payment of charges due; transfer ownership of permanent improvements to the government upon contract expiration; and require compliance with applicable laws and regulations.
The PPA must ensure labor protection including legitimate rights under labor law. Existing operators are responsible for past and retirement benefits; if insolvent, the unified contractor assumes these obligations. The unified contractor must absorb existing labor, respect collective bargaining agreements, provide voluntary retirement options, retraining programs, and social amelioration funds for port labor.