PPA facing corruption raps over North Harbor feud

The operator of Manila North Harbor is threatening to file graft and corruption charges against officials of the Philippine Ports Authority (PPA) amid the latter’s move to stop the port from handling lucrative international cargo.

Manila North Harbor Port Inc. (MNHPI), controlled by conglomerate San Miguel Corp., told PPA to “immediately cancel and rescind” Memorandum Order 08-2016, which directed port offices, harbor pilots, shipping lines and agents not to handle international cargo at the Manila North Harbor.

“Otherwise, we shall institute appropriate criminal and administrative actions against you and all those responsible, for violation of the Anti-Graft and Corrupt Practices Act with the Office of the Ombudsman,” said MNHPI, through the Diaz Del Rosario & Associates law office, in a letter addressed to PPA officer-in-charge Raul Santos dated June 23, 2016.

“This is without prejudice to our client filing the appropriate complaint for damages against you and the PPA for depriving our client of its clear positive right under the law to render international terminal services for the benefit of the government and port users in Manila,” the demand letter read.

The firm also told PPA to issue a new order allowing terminal services for foreign vessels as provided under Republic Act 10668, which amended provisions of the 50-year-old Cabotage Law.

Turf war

The issue started out as a turf war between the PPA and the Bureau of Customs (BOC).

In line with provisions of RA 10668, the BOC allowed MNHPI to handle foreign shipments at the country’s busiest port. The amended law lifted certain restrictions and allowed foreign vessels to “sail internal Philippine waters, to dock at any Philippine port to discharge foreign cargos for import in the Philippines and to load cargoes for export to international ports.”

By handling international cargo, Manila North Harbor was poised to compete with the Manila port operations of International Container Terminal Services Inc. and Asian Terminals Inc.

Among the arguments raised by the PPA earlier was that “MNHPI’s contract was the result of a competitive public bidding in 2009 where the terms of the bid parameters limit the cargo handling operations to domestic cargoes only.”

MNHPI disputed this, saying in its demand letter that while the operator was operating domestic terminal services, “there is no explicit or implicit prohibition in the concession contract which bars MNHPI from handling foreign vessels and cargos.” It added the contract also took into account possible changes in the law, which was what occurred with RA 10668.

Clear violation

“Your act in issuing the PPA memo order is a clear violation of the law which has caused and continues to cause undue injury not only to the government, nay the PPA itself of which you are in charge, but also the private stakeholders who use the ports,” MNHPI’s lawyers said.

Last week, Customs Commissioner Alberto Lina also defended a decision allowing Manila North Harbor to handle foreign cargo.

“Under existing laws, the opening or closing of a ‘port of entry’ is an exclusive customs function and BOC has jurisdiction and authority over vessels engaged in foreign trade and over goods subject of importation, including its means of transport,” Lina said in the statement.

Lina added BOC did not grant “concessions” similar to those granted by the PPA.