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    TEFASCO v. PPA

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    Ry Chan
    This case involves a dispute between Terminal Facilities and Services Corporation (TEFASCO) and the Philippine Ports Authority (PPA) regarding wharfage dues and berthing fees. TEFASCO operates private port facilities in Davao City. In 1975, TEFASCO proposed building additional facilities to ease congestion at government ports, which PPA approved. However, PPA later imposed a 10% (later reduced to 6%) share of TEFASCO's income from port services, which was not part of the original agreement. The court ruled the imposed fees were unlawful as PPA has no authority to collect income shares not outlined in the regulatory permit. The purpose of the agreement was to address

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    TEFASCO v. PPA

    Uploaded by

    Ry Chan
    22 views2 pages
    This case involves a dispute between Terminal Facilities and Services Corporation (TEFASCO) and the Philippine Ports Authority (PPA) regarding wharfage dues and berthing fees. TEFASCO operates private port facilities in Davao City. In 1975, TEFASCO proposed building additional facilities to ease congestion at government ports, which PPA approved. However, PPA later imposed a 10% (later reduced to 6%) share of TEFASCO's income from port services, which was not part of the original agreement. The court ruled the imposed fees were unlawful as PPA has no authority to collect income shares not outlined in the regulatory permit. The purpose of the agreement was to address

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    Original Title

    49. TEFASCO v. PPA

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    This case involves a dispute between Terminal Facilities and Services Corporation (TEFASCO) and the Philippine Ports Authority (PPA) regarding wharfage dues and berthing fees. TEFASCO operates private port facilities in Davao City. In 1975, TEFASCO proposed building additional facilities to ease congestion at government ports, which PPA approved. However, PPA later imposed a 10% (later reduced to 6%) share of TEFASCO's income from port services, which was not part of the original agreement. The court ruled the imposed fees were unlawful as PPA has no authority to collect income shares not outlined in the regulatory permit. The purpose of the agreement was to address

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    22 views2 pages

    TEFASCO v. PPA

    Uploaded by

    Ry Chan
    This case involves a dispute between Terminal Facilities and Services Corporation (TEFASCO) and the Philippine Ports Authority (PPA) regarding wharfage dues and berthing fees. TEFASCO operates private port facilities in Davao City. In 1975, TEFASCO proposed building additional facilities to ease congestion at government ports, which PPA approved. However, PPA later imposed a 10% (later reduced to 6%) share of TEFASCO's income from port services, which was not part of the original agreement. The court ruled the imposed fees were unlawful as PPA has no authority to collect income shares not outlined in the regulatory permit. The purpose of the agreement was to address

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 2

    Terminal Facilities and Services Corporation vs Philippine Ports Authority

    February 27, 2002


    GR 135369

    FACTS:

    This is a consolidated case questioning the decision ordering the PPA to pay TEFASCO
    representing wharfage dues and berthing fees. TEFASCO is a domestic corporation organized
    and existing under the laws of the Philippines with principal place of business at Barrio Ilang,
    Davao City. It is engaged in the business of providing port and terminal facilities as well as
    arrastre, stevedoring and other port-related services at its own private port at Barrio Ilang.
    Sometime in 1975 TEFASCO submitted to PPA a proposal for the construction of a specialized terminal
    complex with port facilities and a provision for port services in Davao City. To ease the acute congestion in the
    government ports at Sasa and Sta. Ana, Davao City, PPA welcomed the proposal and organized an inter-
    agency committee to study the plan. The committee recommended approval thereof and its report stated that
    TEFASCO Terminal is a specialized terminal complex. The specialized matters intended to be captured are:
    (a) bananas in consideration of the rate of spoilage; (b) sugar; (c) fertilizers; (d) specialized movement of beer
    in pallets containerized handling lumber and plywood.

    ISSUE: 

    Whether or not the legality of the imposed government share and the MOA stipulating a
    schedule of TEFASCO's arrears for and imposing a reduced rate of government share is just?

    RULING:

    No, they also declare void the imposition by PPA of ten percent (10%), later reduced to six
    percent (6%), government share out of arrastre and stevedoring gross income of TEFASCO. This
    exaction was never mentioned in the contract, much less is it a binding prestation, between
    TEFASCO and PPA. What was clearly stated in the terms and conditions appended to PPA
    Resolution No. 7 was for TEFASCO to pay and/or secure from the proper authorities "all fees
    and/or permits pertinent to the construction and operation of the proposed project." The
    government share demanded and collected from the gross income of TEFASCO from its arrastre
    and stevedoring activities in TEFASCO's wholly owned port is certainly not a fee or in any event
    a proper condition in a regulatory permit. Rather it is an onerous "contractual stipulation"47 which
    finds no root or basis or reference even in the contract aforementioned.

    We stress that the cause of the contract between TEFASCO and PPA was, on the part of the
    former, to engage in the business of operating its privately-owned port facilities, and for the
    latter, to decongest port traffic in Davao City and concomitantly to enhance regional trade. The
    records of the project acceptance made by PPA indicate that the contract was executed not to
    earn income for PPA or the government as justification for the subsequent and unfair imposition
    of government share in the arrastre and stevedoring gross income of TEFASCO. Hence this
    charge was obviously an after-thought conceived by PPA only after the TEFASCO port had
    already begun its operations. The sharing scheme only meant that PPA would piggy back
    unreasonably on the substantial investment and labor of TEFASCO. As the scheme was
    subsequently stipulated on percentage of gross income, it actually penalized TEFASCO for its
    hand work and substantial capital expenditures in the TEFASCO port and terminal.

    Moreover, PPA is bereft of any authority to impose whatever amount it pleases as government


    share in the gross income of TEFASCO from its arrastre and stevedoring operations. As an
    elementary principle of law, license taxation must not be "so unreasonable to show a purpose to
    prohibit a business which is not itself injurious to public health or morals.

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