WITH less than a month before the Duterte administration takes over, Customs Commissioner Alberto Lina usurped the authority of the Philippine Ports Authority by entering into a midnight deal to allow Manila North Harbour Port Inc. to engage in international trade, a Customs official said Thursday.
On June 2, 2016, Lina issued Customs Memorandum Order 12-2016 ordering the bureau to assume jurisdiction over MNHPI to operate as an authorized Customs facility or ACF and permitting the company to engage in international trade when it has an existing exclusive contract with the PPA only to engage in domestic trade, the source said.
Lina invoked Republic Act 10668, allowing foreign vessels to transport and co-load foreign cargoes for domestic transshipment and RA 10863 or the Customs Modernization and Tariff Act
(CMTA), whose implementing rules and regulations or IRR has yet to be subjected to a public hearing involving other stakeholders.
“This is not only a midnight deal, it is a sweetheart deal. Lina invoked RA 10863 in an internal memo issued on June 2 to allow MNHPI to engage in international trade. The public hearing on RA 10863’s IRR is set on June 10 yet Lina is already invoking the law in granting concessions to MNHPI,” the Customs official, who requested anonymity, told The Standard.
The source also accused Lina of “railroading” the IRR as Lina only called for a one-day hearing on Friday and sent out notice only a day in advance.
“For a law with 1,800 sections, the one-day hearing and one-day advanced notice smacks of railroading,” the source said.
The source said that under the same laws, the bureau’s rule-making power cannot impair or diminish any concession contract.
“Under the same laws that Lina was invoking, BOC’s jurisdiction over certain ports is limited only to those ports that are not within the exclusive jurisdiction of other regulatory bodies. Since MNHPI is under the PPA, then BOC may not validly exercise jurisdiction over MNHPI,” the source said.
The PPA is under the Department of Transportation and Communications while the BOC is under the Department of Finance.
MNHPI was owned by businessman Reghis Romero II but his ownership is being contested by his son reelected 1Pacman party-list Rep. Mikee Romero. A legal battle is ongoing between the father and son, but the son has sold MNHPI to Ramon Ang, president and chief operating officer of San Miguel Corp.
Lina said RA 10668 grants him the power to authorize any foreign vessel to take or convey import or export cargoes at any Philippine port authorized by a government contract to handle domestic, import or export cargo.
“The MNHPI, the cargo handling operator of the sub-port of North Harbor, is a grantee of a Certificate of Authority to Operate as an Authorized Customs Facility (ACF) issued on 1 December 2015,” Lina said in his internal memo, a copy of which was obtained by the The Standard.
It was also Lina that issued the certificate to MNHPI in December.
On Nov. 19, 2009, the PPA granted MNHPI the sole and exclusive right to manage, operate, develop and maintain the Manila North Harbor for 25 years reckoning on the first day of the commencement of operations renewable for another 25 years.
Under the contract, MNHPI was to provide and undertake domestic terminal services at the Manila North Harbor which includes, but is not limited to cargo handling services, passenger terminal management, parking services, berth management, storage management, water distribution system, security services and ancillary services.
The PPA is responsible for the issuance of all vessels’ clearance. The PPA was also expected to exercise its regulatory powers over MNHPI in the implementation of port rules and regulations.
“The right PPA granted to MNHPI is only limited to the management, operation, development and maintenance of domestic terminals. Thus, under the contract, MNHPI is allowed to engage only in domestic trade,” the source said.
However, the source said, Lina’s order usurped the PPA’s powers by assuming jurisdiction over NMHPI and granted it the permit to engage in international trade.
“By allowing MNHPI to operate as ACF, the BOC effectively extends rights to MNHPI, which are not contained in its contract, thus in violation of the rule against impairment of contracts,” the source said.
“The BOC may not, through an administrative issuance, exercise jurisdiction over MNHPI,” the source added.
The source said the purpose of the “non-impairment clause” of the Constitution was to safeguard the integrity of contracts against unwarranted interference by the state.
“As a rule, contracts should not be tampered with by subsequent laws that would change or modify the rights and obligations of the parties. Impairment is anything that diminishes the efficacy of the contract. By awarding the Certificate of Authority to MNHPI and the subsequent issuance of CMO 12-2016, Lina is modifying or impairing the terms and conditions for which MNHPI was granted the authority to operate Manila North Harbor under the contract with PPA,” the Customs official said.
If a law may not be allowed to impair the terms of contracts entered into by parties, a mere administrative issuance cannot grant rights, which would contravene contract rights and obligations such as that between MNHPI and the PPA, the source said.
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