ACCELERATING THE DEMONOPOLIZATION AND PRIVATIZATION PROGRAM FOR GOVERNMENT PORTS IN THE COUNTRY

WHEREAS, Article XII, Section 19 of the Constitution declares that “the
State shall regulate or prohibit monopolies when the public interest so
requires. No combinations in restraint of trade or unfair competition shall be
allowed;”

WHEREAS, the Philippine Ports Authority (PPA) is mandated by Section 2 of
its Charter, Presidential Decree No. 857, as amended, to optimize port
financing and development to ensure the smooth flow of waterborne commerce
passing thru the country’s ports;

WHEREAS, operation of cargo handling and port services by a single cargo
handling or port service contractor tends to breed inefficiency; and

WHEREAS, there is a need to accelerate the demonopolization and
privatization programs initiated by the Government for all ports under the
administration of the PPA.

NOW, THEREFORE, I, FIDEL
V. RAMOS, President of the Republic of the
Philippines, by virtue of the powers vested in me by law, do hereby order:

Section 1. Demonopolization
Program. – The Department of Transportation and Communications (DOTC),
through the PPA, shall accelerate the demonopolization and liberalization of
all government ports in the country by allowing and encouraging competition in
the provision of cargo handling and other port services in every government
port or terminal facility, consistent with cargo volume, revenue and physical
configuration of the port or terminal facility.

Under this program, shipowners,
ship operators, charterers or other users shall have the option to contract or
engage the services of the PPA-authorized cargo handler or port service
contractor of their choice. Towards this end, the PPA shall:

a. Respect all existing cargo
handling or port service contracts with the PPA but shall not renew these upon
their expiration including those contracts with a renewal option on the part of
the PPA;

b. Award or grant, through
competitive public bidding, non-exclusive multi-year contracts of sufficient
duration to allow the cargo handling or port service contractor to realize a
reasonable return on its investments in equipment and other facilities; and

c. Allow the participation of
cooperatives as cargo handling or port service contractors in ports where
manual labor is predominantly employed due to low volumes or the nature of
cargo being handled.

Section 2. Privatization
Program. – The DOTC, as the lead agency, through the PPA, shall encourage
and expand the participation of the private sector in the operation,
maintenance and development of all government ports in the country through the
following:

a. Capital leases to allow the
private sector to operate, maintain and develop port facilities and to charge
appropriate rates for services provided to users;

b. Cargo licenses to private
companies to undertake cargo handling services in ports which cannot be
considered under the capital lease concept for strategic and economic reasons.
Tariffs shall also be deregulated and shall be based on negotiations between
cargo handling companies and users;

c. Service contracts to private
companies with the manpower, logistics and expertise to efficiently carry out
dredging, port security, and other such services to the private sector in the
ports;

d. Tariff review to eliminate
charges on private ports and promote private sector investment in the
development of other private ports in the country.

In all of the above
undertakings, the DOTC, through the PPA, shall ensure that the government shall
realize a reasonable return on its investments.

Section 3. Preparation of
a National Port Transport Plan. – The DOTC shall prepare a
comprehensive National Port Transport Plan responsive to the needs of regional
development and compatible with the Privatization Program, in coordination with
the National Economic and Development Authority (NEDA) and the PPA, integrating
an intermodal transport network that will efficiently and effectively link
road, rail, sea and air transport systems.

The National Port Transport Plan
shall be maintained on a 15-year cycle and the initial plan shall be submitted
to the Office of the President within one (1) year from the issuance of this
Executive Order.

All local government units and national
government agencies shall notify the PPA of all port projects undertaken
pursuant to Republic Act No. 7718 for proper coordination and consolidation
into the National Port Transport Plan.

Section 4. Cartels and
Unfair Trade Practices. – In the implementation of the
Demonopolization and Privatization Programs, the PPA shall ensure that free
access to the ports is allowed to all sectors of the industry and that there
shall be no discrimination in the provision and availment of services or
contracts.

There shall be no interlocking
stockholders, directors or officers or common management between or among cargo
handlers, port service contractors or other port-related companies operating in
the port or terminal facility. Circumstances indicating such discriminatory
behavior, cartel or similar arrangements, or unfair trade practices that defeat
the objectives of this Executive Order shall be a ground for the suspension or
cancellation of any cargo handling or port service contract with the PPA.

Section 5. Redundancy
Provision. – The PPA shall adopt appropriate measures to protect the
interests of redundant and displaced PPA and port personnel resulting from the
implementation of the Demonopolization and Privatization Programs. Towards this
end, the PPA shall provide redundancy or separation benefits as may be
authorized under existing laws. Likewise, the PPA shall ensure that the welfare
and security of tenure of port workers are assured in every port that is
privatized.

Section 6. Other
Agencies Assistance. – All government departments, offices,
agencies or instrumentalities, government-owned or -controlled corporations,
including but not limited to the Department of Trade and Industry, the
Department of Finance, the Department of Public Works and Highways, the
Department of Environment and Natural Resources, the NEDA, the Bureau of
Customs and the Maritime Industry Authority are hereby ordered to assist and
coordinate with the DOTC and the PPA in the implementation of this Executive
Order.

Section 7. Implementing
Rules. – The PPA, with the approval of the DOTC, shall prepare the
necessary rules and regulations to implement this Executive Order.

Section 8. Repealing
Clause. – This Executive Order repeals or amends all executive,
department and other agency issuances or any provision thereof inconsistent
herewith.

Section 9. Effectivity.
– This Executive Order shall take effect fifteen (15) days after its
publication in a newspaper of general circulation.

DONE in the City of Manila, this 28th day of November in the year of Our
Lord, Nineteen Hundred and Ninety-Four.

(Sgd.) FIDEL
V. RAMOS
President of the Philippines

By the President:

(Sgd.) TEOFISTO T. GUINGONA, JR.
Executive Secretary

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