Philippine Ports Authority Charter PD 857

Policy, objectives, and purpose

The State implements an integrated program for the planning, development, financing, and operation of Ports or Port Districts for the entire country under Section 2.
The program must coordinate, streamline, improve, and optimize port planning, development, financing, construction, maintenance, and operation of ports, port facilities, port physical plants, and all equipment connected with port operations (Section 2).
The State must ensure a smooth flow of waterborne commerce through the country’s ports for international and domestic trade, whether public or private (Section 2).
The program must promote regional development by dispersing industries and commercial activities across regions (Section 2).
The program must foster inter-island seaborne commerce and foreign trade (Section 2).
The decree redirects port administration beyond harbor development and cargo handling to total port district development, including encouraging full and efficient utilization of the port’s hinterland and tributary areas (Section 2).
The Authority must ensure proper collection and accounting of all income and revenues from dues, rates, and charges for use of facilities and services, adequate to cover costs (including operating and maintenance, administration, and overhead), and to realize a reasonable return on assets employed (Section 2).

Key definitions and covered terms

“Authority” means the Philippine Ports Authority created by the decree (Section 3).
“Board” means the Board of Directors of the Authority (Section 7) (Section 3).
“Functions” includes powers and duties (Section 3).
“Port District” means the territorial jurisdiction under the Authority’s control, supervision, or ownership over an area (land or sea), declared as such in accordance with Section 5, including any port within the district (Section 3).
“Port” means a place where ships may anchor or tie up for shelter, repair, loading or discharge of cargo, or other activities connected with waterborne commerce, including related land and water areas, structures, equipment, and facilities (Section 3).
“Navigable waters,” “Anchorage,” “Terminal Facility,” “Basin,” “Dock,” “Drydock,” “Pier,” “Warehouse,” “Transit Shed,” “Wharf,” “Transportation Facility,” “Lighter,” “Vessel,” “Goods,” “Dues,” and “Rates” are defined to govern interpretation of the decree’s port and charge-related provisions (Section 3).
“Dues” includes harbor fees, tonnage and wharfage dues, berthing charges, port dues, and any other dues or fees imposed by existing law or the decree (Section 3).
“Rates” means rates or charges including any toll or rent under existing law or imposed by the Authority by virtue of the decree for facilities used or services rendered (Section 3).

Creation, attachment, and port districts

A body corporate named the Philippine Ports Authority is created (Section 4).
The Authority is attached to the Department of Public Works Transportation and Communications (Section 4).
The Authority’s principal office is in Metropolitan Manila, and it may establish port management units and other offices elsewhere in the Philippines as necessary (Section 4).
The Authority may submit to the President, through the National Economic and Development Authority, applications to declare specific areas as Port Districts (Section 5).
Applications for Port District declaration must include a survey plan showing the geographical location and properly delineated boundaries of the area(s) (Section 5).

Corporate powers and governance

The Authority’s corporate duties include comprehensive port development planning in coordination with the National Economic and Development Authority, including an annual renewal and update of the plan (Section 6).
The Authority must supervise, control, regulate, construct, maintain, operate, and provide necessary facilities or services in ports vested in or belonging to the Authority (Section 6).
The Authority must prescribe rules, regulations, procedures, and guidelines governing establishment, construction, maintenance, and operation of all other ports, including private ports (Section 6).
The Authority must license, control, regulate, and supervise any construction or structure within any Port District (Section 6).
The Authority must provide port services in Port Districts and their approaches, including:
- berthing, towing, mooring, moving, slipping, or docking vessels;
- loading or discharging vessels;
- sorting, weighing, measuring, storing, warehousing, or otherwise handling goods (Section 6).
The Authority must exercise control of or administer foreshore rights or leases vested in it, and coordinate with the Bureau of Lands or other agencies for foreshore development (Section 6).
The Authority must control, regulate, and supervise pilotage and pilots in any Port District (Section 6).
The Authority must provide or assist in training programs and facilities for its staff and for port operators and users to ensure efficient discharge of functions (Section 6).
The Authority may perform acts or provide services proper or necessary to carry out the decree (Section 6).
The Authority’s corporate powers include, among others:
- to sue and be sued, adopt and use a corporate seal, and adopt/amend/repeal by-laws (Section 6);
- to create/alter its organization or Port Management Unit with qualified personnel (Section 6);
- to make and enter contracts (Section 6);
- to acquire, purchase, own, lease, mortgage, sell, or otherwise dispose of land and port properties (Section 6);
- to exercise eminent domain to expropriate land or areas surrounding ports/harbors vital or necessary for total port district development (Section 6);
- to levy dues, rates, or charges for premises, works, appliances, facilities, or services provided by the Authority or organizations concerned with port operations (Section 6);
- to reclaim, excavate, enclose, raise lands vested in it; and to dredge or provide dredging services within Port Districts or elsewhere (Section 6);
- to supply water or bunkers for ships (Section 6);
- to obtain insurance or require insurance for its property and/or goods in its custody (Section 6);
- to generally transact business necessary, and exercise corporate powers under the Corporation Law insofar as consistent with the decree (Section 6).

Board composition, meetings, and per diem

The Authority’s corporate powers are vested in a Board of Directors (Section 7).
The Board consists of:
- the Secretary of Public Works, Transportation and Communications as Chairman;
- the General Manager as Vice-Chairman;
- the Director-General of National Economic and Development Authority;
- the Secretary of Finance;
- the Secretary of Natural Resources; and
- the Secretary of Trade (Section 7).
Ex-officio members include the directors listed under subsections (i) to (vi) (Section 7).
One private sector director is appointed by the President for fitness based on knowledge or experience (Section 7).
When the President-appointed private-sector director under subsections (iii) to (vi) is absent, the concerned director designates the officer next in rank in the department or office to act as director (Section 7).
The private sector director serves three (3) years from appointment and is eligible for reappointment (Section 7).
Board members or alternates receive a per diem for each Board meeting actually attended, subject to:
- per diems not exceeding one thousand pesos during any one month for each member (Section 7);
- no other allowances or compensation, except actual travel expenses to and from residences for Board meetings (Section 7).

Management and operational control

The President appoints the General Manager and Assistant General Managers upon the recommendation of the Board (Section 8).
All other officials and employees are selected and appointed on merit and fitness under a comprehensive and progressive merit system established immediately upon organization and consistent with Civil Service rules and regulations (Section 8).
Recruitment, transfer, promotion, and dismissal of Authority personnel, including temporary workers, are governed by the merit system (Section 8).
The General Manager determines staffing pattern and number of personnel (subject to Board approval), defines duties and responsibilities, and fixes salaries and emoluments (Section 8).
For professional and technical positions, the General Manager recommends salaries and emoluments comparable to similar positions in other government-owned corporations, notwithstanding existing rules on wage and position classification (Section 8).
The General Manager appoints and removes personnel below the rank of Assistant General Manager, subject to Board approval (Section 8).
The General Manager’s salary is to be determined by the Board and approved by the President (Section 8).
The number of Assistant General Managers shall not exceed three (3); each Assistant General Manager receives salary determined by the Board and approved by the President (Section 8).
The General Manager is responsible to the Board and must implement and enforce Authority policies, programs, guidelines, procedures, decisions, rules and regulations (Section 9).
The General Manager manages day-to-day affairs and ensures operational efficiency of ports under Authority jurisdiction and ownership (Section 9).
The General Manager signs contracts, approves expenditures and payments within budget provisions, and performs acts necessary for operations of the Authority or its ports (Section 9).
The General Manager submits an annual budget to the Board for Recurrent Income and Expenditure and Estimated Capital Expenditure not later than two months before the commencement of the ensuing fiscal year (Section 9).
The General Manager conducts research, studies, investigations, and related projects and submits comprehensive reports and recommendations to the Board (Section 9).
Assistant General Managers assist the General Manager in implementing and enforcing policies and related duties as assigned (Section 9).

Capital, finance, accounts, and reporting

The Authority’s authorized capital is three billion pesos (Section 10).
The initial paid-up capital consists of:
- the value of assets and other properties contributed or transferred by Government (including port facilities, quays, wharves, equipment), valued at the date of contribution/transfer and after deducting or taking into account Authority loans and liabilities at the time of takeover; and
- an initial cash appropriation of P2 million from National Treasury, plus further sums including working capital contributed by the Government (Section 10).
Any revenue or income balance at year-end is applied to create a general reserve or such other reserves the Authority deems appropriate (Section 11).
The Authority may invest funds not immediately required in discharging obligations or functions in government securities approved by the Board (Section 12).
The Authority may raise funds (loans, credits, indebtedness, or issue bonds/notes/debentures/securities and other borrowing instruments) after consultation with the Central Bank and Department of Finance and with approval of the President; it may also create pledges, mortgages, and other voluntary liens or encumbrances on assets (Section 13).
Loans create a charge on all Authority revenues and assets and rank pari passu among themselves, while having priority over other claims or charges on revenues and assets (Section 13).
Total outstanding indebtedness (principal amounts in local and foreign currency) cannot exceed the Authority’s net worth, unless expressly authorized by the President (Section 13).
The President may guarantee, in the name and on behalf of the Republic of the Philippines, payments of Authority loans or indebtedness up to the amount authorized (Section 13).
Interests paid or payable by the Authority on loans or other indebtedness are exempt from taxes of whatsoever nature (Section 13).
Each year, the Board prepares and adopts annual estimates of income and expenditures and capital expenditure for the ensuing year; supplementary estimates may be adopted at Board meetings (Section 14).
The Board keeps proper accounts and records, maintains accounts under a commercial system of accounting, and prepares annual statements of account (Section 15).
Accounts are kept and made up to 31 December each year, and the annual statement must present a true and fair value of the Authority’s financial position and results of operations (Section 15).
The Commission on Audit audits the Authority’s accounts; for international contractual commitments, the Board may engage persons or firms authorized by law to audit (Section 16).
The auditor’s remuneration, compensation, or expenses are paid out of Authority revenue as determined by the Board (Section 16).
The auditor sends an annual report to the Board as soon as practicable but not later than three months after submission for audit; the auditor may also submit periodical or special reports (Section 17).
The Board submits to the President an annual report dealing with activities and operations during the preceding year, together with the Auditor’s Report and related information on proceedings and policies (Section 18).

Dues, rates, charges, and payment enforcement

The President may increase or decrease dues collectible by the Authority upon recommendation of the Authority to protect Government interest and provide satisfactory return on assets, and may adjust schedules to reflect service costs (Section 19).
Upon coming into operation of the decree, dues on all Philippine ports remain those under Parts 1, 2, 3 and 6 of Title VII of Book II of the Tariff and Customs Code, until the President orders adjusted dues upon recommendation of the Board (Section 19).
The Authority may impose, fix, prescribe, increase or decrease rates, charges, or fees for use of Authority port premises, works, appliances, equipment, and for port facilities and services rendered by the Authority or any private organization within a Port District (Section 20).
Upon coming into operation of the decree, storage and arrastre charges in all ports remain those under Parts 4 and 5 of Title VII Book II of the Tariff and Customs Code, until the President orders revised rates upon recommendation of the Board (Section 20).
The Authority regulates port service rates and charges so that, taking one year with another, they furnish adequate working capital and produce an adequate return on Authority assets (Section 20).
In regulating rates for individual ports, the Authority considers the development needs of the port’s hinterland (Section 20).
All dues, fees, charges, and other sums imposed and collected accrue to the Authority and are disposed of in accordance with the decree (Section 20).
The Authority’s dues/rates/charges may be waived or reduced only for:
- State arrangements with a foreign government for vessels of that foreign government not normally engaged in cargo or passenger conveyance; and
- vessels seeking shelter from inclement weather, entering for medical help, or other maritime necessity (Section 21).
If a vessel master, owner, or agent refuses or neglects to pay on demand, the Authority may, in addition to other lawful remedies, distrain or arrest the vessel and tackle, apparel, or furniture and detain it until payment is made (Section 22).
Rate and charge payment timing and lien rules require:
- landing goods: payable immediately on landing;
- shipping goods: payable before loading;
- goods removed: payable on demand (Section 23).
The Authority has a lien on goods for rates and charges and may detain them until fully paid; the lien has priority over all other liens and claims except Government duties and taxes and expenses of sale (Section 23).
If goods placed on Authority premises are not removed within the prescribed period after legal permit for withdrawal/release from Customs custody, or the Authority’s authority to load for exports is issued by the Bureau of Customs, the Authority may, with prior concurrence of the Bureau of Customs, dispose of the goods to recover the lien (Section 24).
Sale proceeds are applied in this order:
- first: payment of duties and taxes due to the Government;
- second: expenses of sale;
- third: rates, charges, and fees due to the Authority for the goods;
- fourth: freight, lighterage, or general average on the importation voyage, or for exports domestic freight, lighterage and cartage, with due notice to the Authority;
- finally: rendering surplus on demand to the person legally entitled (Section 24).
If no demand for surplus is made within one year from the date of sale, surplus becomes part of the Authority’s general funds and rights to it by the entitled person are extinguished (Section 24).
The Authority is exempt from real property taxes imposed by the Republic of the Philippines, its agencies, instrumentalities, or political subdivisions, with:
- no tax exemptions extended to any Authority subsidiaries that may be organized; and
- fixed-asset investments deductible for income tax purposes (Section 25).

Port regulations and harbor master powers

The Authority may make rules and regulations for planning, development, construction, maintenance, control, supervision, and management of ports and Port Districts, for services provided therein, for maintenance of good order, and for carrying out the decree’s purposes (Section 26).
The Authority may provide separate regulations for each category of ports or port districts (Section 26).
The Authority may regulate the conveyance, loading, discharging, and storage of dangerous goods within ports, Port Districts, and approaches to the port, including separate regulations by port/port-district category (Section 27).
Through the Harbor Master of a port or Port District, and under regulations under Sections 26 and 27, the Harbor Master may:
- direct where a vessel shall be berthed, moored, or anchored and the method of anchoring;
- direct removal of a vessel from a berth or anchorage to another and set the time for removal; and
- regulate mooring of vessels within the port and approaches (Section 28).
Existing rules, regulations, or orders relating to matters covered by Sections 26, 27, and 28 remain applicable until new Authority rules are promulgated, and any reference in other laws to a customs official or other officials is treated as a reference to an equivalent Authority official (Section 29).

Transfer of assets, liabilities, and staff

All existing and completed public port facilities—including quays, wharves, docks, lands, buildings, and other property, movable or immovable—belonging to ports declared as Port Districts are transferred to the Authority under transitory provisions (Section 30).
All intangible assets, powers, rights, foreshore rights, interests, and privileges belonging to the Bureau of Customs, Bureau of Public Works, and other agencies relating to port works or port operations are transferred to the Authority under transitory provisions, subject to terms arranged between the Authority and the agencies; disagreements are elevated to the President (Section 31).
All ongoing port and port facility construction projects are continued by the responsible agency until completion; after completion, projects are transferred to the Authority under an agreement among agencies; disagreements are elevated to the President (Section 32).
Upon transfer and acceptance by the Authority of the physical facilities, intangible assets, and completed projects, all debts, liabilities, and obligations of the Bureau of Customs, Bureau of Public Works, and other concerned government agencies/entities regarding those matters are transferred to or deemed incurred by the Authority (Section 33).
The Philippine Coast Guard retains ownership of properties and facilities necessary for enforcing SOLAS safety rules within ports and Port Districts, continues to administer/operate/maintain them, and retains corresponding obligations and liabilities; all other Coast Guard properties and facilities within ports and Port Districts and their related obligations and liabilities are transferred to the Authority as in Section 33 (Section 34).
Officials and employees of abolished or reorganized offices/agencies/subordinate units may be absorbed by the Authority based on merit and fitness.
Qualified employees under both the Authority and the reorganized office/agency/unit may transfer or remain, or elect separation with benefits under existing laws; those not qualifying are retained in the office or agency where the unit was abolished (Section 35).
Terminated officials and employees due to the decree receive gratuities of one month’s salary for every year of continuous satisfactory service, not exceeding twelve months, based on the highest salary received, in addition to benefits under existing laws (Section 36).

Construction and dredging arrangements

The Bureau of Public Works executes for the Authority the detailed design, contract document preparation and advertisement, construction supervision of port terminal facilities and port works, and dredging of public ports vested in the Authority (Section 37).
When there are no qualified bidders and the project is less than two hundred thousand pesos (P200,000.00), the Bureau of Public Works may undertake construction through force account (Section 37).
The Authority performs rehabilitation or maintenance works (including maintenance dredging) using its own personnel or a private contractor, whichever is more advantageous to port and shipping operations (Section 37).
The Authority allocates and controls all funds for execution of all construction, rehabilitation, and maintenance works mentioned in Section 37 (Section 37).

Transitory operations and Customs transfer; repeal

Until the President declares the Authority fully operational, the Bureau of Customs and the Division of Ports and Harbors of the Bureau of Public Works may continue, in coordination with the Authority, port operations and port works deemed necessary by the Authority (Section 38).
The Authority may undertake a phased or gradual takeover of those port operations or port works at any time it deems necessary (Section 38).
During the transitional period, the budget for staff operations and other expenses relating to port operations or port works of the Bureau of Customs or Bureau of Public Works must be submitted to the Authority for information and guidance before implementation (Section 38).
Expenses and charges during the transitional period are paid out of Authority funds or other allocated funds in the Annual Appropriations Act or other sources (Section 38).
Current budget provisions, funds, and allocations of Bureau of Customs, Bureau of Public Works, and other agencies for port planning, maintenance, and operations expenses (including retirement funds), port works and port development outlays, existing balances, and subsequent collections from port operations are transferred to the Authority under transfer arrangements to be negotiated among agencies (Section 38).
Disagreements relating to transfer in the transitional period are elevated to the President for decision (Section 38).
All transitional arrangements including transfers of property, funds, rights, powers, and liabilities do not extend beyond Fiscal Year 1977 (Section 38).
The Tariff and Customs Code is modified to transfer to and vest in the Authority the Bureau of Customs’ powers, duties, and jurisdiction on:
- all dues, fees and rates collectible under Title VII, excluding Part VII;
- general supervision, control, and regulation of matters relating to operation and issuance of permits or licenses to construct ports, port facilities, warehouses, and other facilities within port districts;
- all other Bureau of Customs powers, duties, and jurisdiction for matters concerning port facilities, port operations, or port works (Section 39).
All other powers, rights, duties, functions, jurisdictions, and properties and appropriations of any government agency, authority, or instrumentality pertaining to port facilities, port operations, or port works are transferred to and vested in the Authority (Section 40).
Repeal applies to all inconsistent laws, decrees, letters of instructions, orders, rules and regulations, policies, programs, or parts thereof, including:
- R.A. No. 4567 creating the San Fernando Port Authority and R.A. No. 4663 as amended by R.A. No. 6086 creating the Cagayan de Oro Port Authority;
- Sections 26 and .27 of Presidential Decree No. 458;
- Act No. 3592 as amended, creating the Port Work Fund;
- Presidential Decree No. 505;
- Section 711 as far as port administration is concerned; Section 3304 and other inconsistent provisions of the Tariff and Customs Code, without prejudice to Section 38 of the decree;
- Section 3 (a) as far as it concerns stevedoring, arrastre and customs brokerage services;
- the whole of Section 11 (c) of Presidential Decree No. 474 creating the Maritime Industry Authority (Section 41).

Enforcement, penalties, and separability

Any person who violates any provision of the decree or any rule and regulation issued by the Authority is punished by imprisonment of not less than one day but not more than six years and a fine of not less than two hundred pesos but not more than one hundred thousand pesos (Section 43).
If the offender is a government official or employee, the offender is perpetually disqualified to hold any public office in addition to imprisonment and fine (Section 43).
If the offender is a juridical person, imprisonment and fine are imposed on its manager, director, representative, or employee responsible for the violation (Section 43).
If the offender is an alien, the alien is deported immediately without further proceedings, after serving sentence and paying the fine (Section 43).
Any license, franchise, authority, or permit issued by the Authority is deemed withdrawn and revoked upon conviction of the holder (Section 43).
The decree’s invalidity of any section or provision does not affect the validity of other sections; the unaffected provisions continue in force (Section 42).