PORT LABOR TRUST FUND

PPA Memo Circular No. 05-95, dated January 31, 1995, requires all
cargo handling operators to put up a Port Labor Trust Fund. A number of
cargo handling operators, however, have failed to comply with this
requirement.

In order to ensure full compliance with the Port Labor Trust Fund
(PLTF) requirement, and provide proper guidance to all cargo handling
operators concerned, the following guidelines shall be observed

1.         Definition of Terms. — The following terms shall be understood to mean as follows:

1.1       Port Labor Trust Fund (PLTF) — refers to the
sum of money set aside by a cargo handling company and deposited in
trust with a bank to finance the benefits of Port workers who resign,
retire or who have been terminated due to changes in cargo handling
operators.

1.2       Port Workers — refers to workers and employees
of companies or entities authorized by the Authority to engage in
arrastre and stevedoring services. Said port workers and employees must
be duly registered by its cargo handling company employer with the
Social Security System.

1.3       Cargo Handling Company — refers to any
individual, partnership or corporation presently authorized by the
Authority to provide cargo handling services at government ports.

1.4       Authority — refers to the Philippine Ports Authority (PPA) created by Presidential Decree No. 857, as amended.

2.         General Guidelines

2.1    Every authorized cargo handling company operating in a
government port under the jurisdiction of the Philippine Ports Authority
shall put up the Port Labor Trust Fund as provided for in PPA
Memorandum Circular No. 05-95;

2.2    The amount of PLTF to be put up shall be sufficient to
cover at least the retirement and separation benefits of all portworkers
to be computed on actuarial basis;

2.3    For the actuarial computation of the PLTF, the following shall be taken into account,

2.3.1    Total number of workers

2.3.2    Average age in years

2.3.3    Average years of past service (to get the past service liability)

2.3.4    Retirement benefit of 22.5 days per annum per worker or
as provided for in the Collective Bargaining Agreement, if any,
whichever is higher.

2.4    After the actuarial amount of retirement benefits for past
services has been computed, the necessary fund corresponding to said
amount of retirement benefits shall be set aside and deposited in trust
with a bank acceptable to the Authority. Every year thereafter, the
amount of retirement benefits for the preceding year shall also be
computed and deposited in the said trustee bank.

For information and reference, the actuarial valuation of
retirement benefits in Manila and Cebu for past and present services
showed that the annual cost of retirement benefits represent 4.1% and
3.5% of the total annual payroll cost, respectively.

2.5    The Trust Fund shall be used only to finance the benefits
of laborers who resign, retire or have been retrenched or whose services
have been terminated due to changes in cargo-handling operators.

2.6    For purposes of tax exemption, the cargo handling companies
shall coordinate with their respective trustee banks for the
registration of their Trust Funds with the Bureau of Internal Revenue.

2.7    The essential features and the terms and conditions of this
Memorandum Circular shall be contained in the trust agreement between
the bank and the cargo handling company.

All cargo handling operators shall be given up to December 31, 2000
to put up the Trust Fund. The Authority shall impose sanctions against
cargo handling companies who fail to put up the said Trust Fund. These
sanctions may include cancellation of contract or the takeover of the
operations of said cargo handling companies, among others.

The Port District Managers, thru the Port Managers, shall be
responsible for the close supervision, monitoring and strict compliance
of this Order. They shall likewise submit to the AGM for Operations, a
list of cargo handling companies who fail to fulfill the above
requirements.

This Order shall take effect immediately.

Adopted: 29 May 2000

(SGD.) JUAN O PEÑA
General Manager