QuestionsQuestions (PPA ADMINISTRATIVE ORDER NO. 05-2007)
It is anchored on Presidential Decree No. 857 (as amended), OGCC Opinion No. 010 (1996) and Opinion No. 210 (1997), and BoardCom Resolution No. 2007-1094 confirmed by Board Resolution No. 2109 (31 July 2007). It regulates the revised guidelines for the temporary transfer of the management, operation, maintenance, and development of certain PPA ports to qualified LGUs and government corporations (GCs).
The Order allows LGUs to participate to strengthen implementation and harmonize LGU empowerment under RA 7160 with PPA’s statutory jurisdiction under PD 857, while keeping PPA’s responsibility for providing vital transport network linkages and services.
It covers ports under PPA’s administrative jurisdiction that generally cater only to domestic vessels and cargoes and are not categorized by PPA as vital/priority ports or among ports programmed for development into international standards. Vital/priority/international-standard ports are excluded.
Eligible ports are those that cater only to domestic vessels/cargoes with an annual cargo throughput not more than 50,000 metric tons over a 3-year period, and are not categorized by PPA as vital or priority ports or among ports programmed for development into international standards.
Ports within the municipality and jurisdiction of the LGU are eligible.
Preference is given to the LGU where the port is situated. A GC may be considered when endorsed by the LGU through appropriate resolutions of the Sangguniang Bayan/Sangguniang Panlungsod.
The authority is for a term of three (3) years.
The subcontract term must not exceed the stipulated period of the MOA. The LGU/GC must also secure prior approval from PPA in any case that such services are contracted out to a third party.
Minimum capitalization: Php 250,000.00 to Php 500,000.00. Working capital: Php 50,000.00 to Php 100,000.00.
It must have necessary cargo handling equipment/tools/gears/personnel; management and supervisory officers must have at least three (3) years relevant technical and management experience; and it must maintain well-trained/skilled workers in every category of port operations. It must also have a Port Operation Section to exclusively handle port operations activities.
It is 10% of the LGU/GC’s collection from all domestic Wharfage, Storage and Usage Fees. The LGU/GC must pay it quarterly on or before the 10th day after the end of each quarter to the supervising PMO or its authorized depository bank.
All revenues accrue to the LGU/GC. Of the domestic port charges, the remaining 90% is considered income of the LGU/GC after the 10% Supervision Fee.
A performance security in the amount of Php 100,000.00 secured from GSIS or a reputable surety/insurance company, posted in favor of PPA to guarantee payment of the quarterly Supervision Fee.
Examples: (1) Failure to account and remit Supervision Fee; (2) Failure to undertake development/repairs/maintenance of covered ports/facilities; (3) Change of control without prior PPA approval; (4) Engagement in or knowing failure to prevent smuggling/illegal activities; (5) Refusal to provide books and records to PPA/COA; (6) Imposing/collecting unauthorized fees/charges; (7) Violation of DILG MC 2006-70; (8) Other MOA/Order violations; (9) Violations committed by subcontracted third parties.
PPA may take over to protect public interest, including: emergency situations like strike/lockout/stoppage lasting over one week; violation of MOA terms or PPA rules; cancellation/suspension/termination of MOA; when directed by a court of law; or other cases where PPA deems takeover warranted to protect and/or promote public interest.
LGU/GC coordinates with PMO, gathers data, and submits request/letter of intent. PMO recommends through PDO with documentary requirements (LGU letter, approved port delineation/SB resolution, PMO justification/certification, PMO/PDO recommendation). District Manager indorses to Head Office with justifications. If approved in principle, a Transition Committee is convened via a PDO Special Order; TWG assists. TC compiles data, organizes/train staff, assesses readiness (3–6 months), and submits evaluation reports including TC certification and draft MOA. PDO indorses turnover after satisfactory assessment; AGM for Operations reviews and may recommend approval or indorse to the Board if MOA deviates.
Only PPA-prescribed tariffs may be charged. Authority to impose, fix, prescribe, increase, or decrease port charges remains with PPA.
Disputes are to be submitted to arbitration under the ADR Act (RA 9285) before the Department of Justice; the venue of arbitration is Metro Manila.