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The decree is Presidential Decree No. 857, titled the Revised Charter of the Philippine Ports Authority. It reorganizes port administration and operations in the Philippines and revises Presidential Decree No. 505 (which had created the PPA), by substitution, thereby adopting the new charter as part of the laws of the land.
The principal office is located in Metropolitan Manila. The PPA may establish port management units and other offices elsewhere in the Philippines as necessary.
A “Port District” is the territorial jurisdiction under the control, supervision, or ownership of the Authority over an area (land or sea), declared as such in accordance with Section 5 of the decree.
Examples include: (1) coordinating and optimizing port planning, development, financing, construction, maintenance, and operation; (2) ensuring smooth flow of waterborne commerce through public or private ports; (3) promoting regional development through dispersal of industries and commercial activities; (4) fostering inter-island seaborne commerce and foreign trade; (5) redirecting port administration to total port district development including efficient utilization of the hinterland/tributary areas.
“Port” includes land and water areas and structures, equipment, and facilities connected with waterborne commerce. “Terminal Facility” includes seaport facilities such as wharves, piers, slips, docks, dry docks, bulkheads, basins, warehouses, cold storage, and loading/unloading equipment. These definitions matter because they determine the scope of PPA’s regulatory, operational, and financing powers.
Corporate duties include formulating a comprehensive port development plan, supervising/control/regulating and constructing/maintaining/operating port facilities/services, prescribing rules for ports (including private ports), licensing and regulating constructions within port districts, providing vessel and cargo-related services, administering foreshore rights/leas es, regulating pilotage, and providing training. Corporate powers include suing and being sued, adopting by-laws, making contracts, acquiring/disposing of property, exercising eminent domain, levying dues/rates/charges, reclaiming land, dredging, supplying water or bunkers, and generally exercising corporate powers consistent with the decree.
The Board consists of ex-officio members: the Secretary of Public Works, Transportation and Communications (Chairman), the General Manager (Vice-Chairman), the Director-General of NEDA, Secretary of Finance, Secretary of Natural Resources, and Secretary of Trade, plus one private sector representative appointed by the President. The private sector director serves for three years and is re-eligible.
Board members may receive a per diem as approved for each meeting actually attended, but it shall not exceed one thousand pesos during any one month for each member. No other allowances/compensation are allowed except actual travel expenses to and from residences for Board meetings.
The President appoints the General Manager and Assistant General Managers upon Board recommendation. All other officials/employees must be selected and appointed on the basis of merit and fitness under a merit system established immediately upon organization and consistent with Civil Service rules. Recruitment, transfer, promotion, and dismissal of personnel are governed by that merit system.
The General Manager implements and enforces PPA policies and manages day-to-day affairs, ensuring operational efficiency; signs contracts/approves expenditures within budget, submits annual budgets, and conducts studies for recommendations to the Board. Assistant General Managers assist the General Manager in implementing/enforcing policies and may perform other duties assigned.
Authorized capital is three billion pesos. Initial paid-up capital consists of the value of contributed or transferred government assets (port facilities, quays, wharves, equipment, and other properties, after accounting for loans/liabilities at takeover), plus an initial cash appropriation of P2 million from National Treasury and additional sums including working capital contributed by the Government.
The Authority may, after consultation with the Central Bank and Department of Finance and with approval of the President, raise funds through loans/credits/indebtedness or issue bonds/notes/debentures and other borrowing instruments, including pledges/mortgages/voluntary liens. Total outstanding indebtedness (principal) in local and foreign currency shall not exceed the net worth of the Authority unless expressly authorized by the President. The President is also authorized to guarantee payments of loans up to the amount authorized.
The President may, upon recommendation of the Authority, increase or decrease dues collectible by the Authority to protect government interest and provide a satisfactory return on assets, and may adjust schedules reflecting service costs. Upon the decree’s effectivity, initial schedules of dues (and certain storage/arrastre charges) remain those under specified Tariff and Customs Code provisions until revised by Presidential order upon recommendation of the Board.
No amount may be waived or reduced except: (1) where arrangements exist with a foreign government regarding vessels belonging to that foreign government not normally engaged in cargo/passenger conveyance; and (2) for vessels seeking shelter from inclement weather or entering for medical help and other maritime necessity.
If the master/owner/agent refuses or neglects to pay on demand, the Authority may distrain or arrest on its own authority the vessel and its tackle/apparel/furniture and detain it until amounts due are paid. It also has a lien on goods for certain charges: rates/charges payable for landed goods immediately on landing; for shipped goods before loading; for goods removed from premises on demand. The lien has priority over all other liens/claims except claims for duties and taxes due to the Government and expenses of the sale.
If goods placed on the Authority’s premises are not removed within the prescribed period after the legal permit for withdrawal/release from Customs custody (or the authority to load for exports) is issued, the Authority may, with prior concurrence of the Bureau of Customs, dispose of the goods to recover the lien. Proceeds are applied first to duties/taxes due to the Government, then sale expenses, then the Authority’s charges, then freight/lighterage/general average (imports) or domestic freight/lighterage/cartage (exports, with notice), and finally surplus (if any) to the legally entitled person on demand; if no demand is made within one year, the surplus becomes part of the Authority’s general funds and rights thereto are extinguished.
The Authority is exempt from payment of real property taxes imposed by the Republic of the Philippines and its agencies/instrumentalities/political subdivisions. However, no tax exemptions extend to subsidiaries it may organize. Investments in fixed assets are deductible for income tax purposes.
All existing and completed public port facilities, quays, wharves, docks, lands, buildings, and other property belonging to ports declared as Port Districts are transferred to the Authority. Intangible assets and related foreshore rights/powers/rights/interests/privileges belonging to the Bureau of Customs, Bureau of Public Works, and other agencies relating to port works/operations are also transferred subject to terms to be arranged (disagreements go to the President). Ongoing projects continue by the original agencies until completion, then are transferred under agreements. Upon transfer/acceptance, debts/liabilities/obligations related to these physical facilities/intangible assets/completed projects are likewise transferred or deemed incurred by the Authority.
The Coast Guard retains ownership of its properties and facilities necessary for enforcement of SOLAS-related safety laws found within ports/port districts, and continues to administer, operate, and maintain them and assume their obligations/liabilities. Other Coast Guard properties/facilities and related obligations within ports/port districts are deemed transferred to the Authority under the liability-transfer rule.
Any person who violates provisions or rules/regulations issued under the decree is punished by imprisonment for not less than one day but not more than six years and a fine of not less than P200 but not more than P100,000. If the offender is a government official/employee: in addition, perpetual disqualification from holding public office. If a juridical person: imprisonment and fine are imposed on its manager/director/representative/employee responsible. If an alien: deported immediately without further proceedings after serving sentence and paying fine. Any license/franchise/permit issued by the Authority is deemed withdrawn/revoked upon conviction.