‘DRAFT UNDER REVIEW’: Dumangas eyes port revenue deal with PPA before 2027

ILOILO CITY — The Dumangas local government unit (LGU) says it has been coordinating with the Philippine Ports Authority (PPA) since July 2023 on a Memorandum of Agreement (MOA) for the Dumangas Port, and is now reviewing a draft it hopes to sign before the year ends.

“The LGU has been coordinating with the PPA regarding the MOA since as early as July 2023. Last January 2026, representatives of the LGU met personally with the PPA to discuss the terms, and both parties reached a common understanding regarding the general direction of the agreement,” Mayor Braeden John Biron said in a two-page reply to Daily Guardian dated Oct. 27, 2026.

“The LGU received the PPA’s updated draft MOA on 15 October 2026, which is now under review,” he added.

“With the draft MOA now under review, the LGU aims to finalize the agreement within the year, subject to the mutual agreement of the parties,” Biron said.

The reply came after the Commission on Audit (COA), in its 2025 annual audit report, urged the LGU to sign a binding MOA with the PPA, after the two agencies’ records on port revenues differed by PHP 131.628 million. 

No MOA, no remittance

Biron said the LGU has not paid the PPA’s share of port revenues because the agreement has yet to be signed.

“The LGU has not yet remitted any amount to the PPA because there is no established legal basis for the disbursement at this time,” he said.

“Under applicable government accounting and auditing rules, public funds may only be released when supported by a valid legal basis and the necessary documentation. In this case, the basis for the payment will be the MOA between the LGU and the PPA,” Biron added.

The mayor said the unremitted money stays in municipal hands.

“The corresponding amounts are recognized in the LGU’s books as payables to the PPA and remain with the LGU. The LGU fully intends to settle the PPA’s share once the MOA is executed and the accounts have been reconciled,” he said. 

Two sets of books

COA traced the discrepancy to the absence of a legally enforceable agreement defining each party’s share of port revenues.

The variance led state auditors to issue a qualified opinion on Dumangas’ financial statements for the year ended Dec. 31, 2025, with the unestablished inter-agency payable cited as a primary basis.

The Dumangas LGU recorded PHP 128.935 million in liabilities owed to the PPA as of Dec. 31, 2025.

The PPA, on the other hand, recorded a receivable of PHP 260.563 million from the LGU as of the same date, leaving a PHP 131.628-million variance.

Of the PHP 128.935 million payable recorded by the LGU, PHP 14.753 million has remained outstanding for more than two years, dating back to 2022.

Biron said the LGU could not yet accept the PPA’s figure.

“The LGU is not yet in a position to confirm the PPA’s computation. The LGU and the PPA are currently reconciling their respective records concerning the port charges collected and the shares due to each party. The difference in the figures arises from the different profit-sharing assumptions applied by the two offices,” he said.

He added that, pending the MOA, the LGU booked the PPA’s share based on “the status quo arrangement initially discussed, which followed the sharing scheme between the PPA and the previous cargo handling operator.”

“The final amount will be determined upon completion of the reconciliation and in accordance with the terms of the MOA,” Biron said.

Shifting revenue-sharing ratios

The audit found that municipal accounting personnel computed the LGU’s liabilities using provisional revenue-sharing ratios that changed over the years, without a signed agreement or formal authorization.

The LGU applied a 90-10 split in its favor in 2022 and 2023, a 65-35 split in 2024, and an equal 50-50 split in 2025.

Biron confirmed that no ratio has been approved.

“There is no approved sharing ratio at this time. The ratios reflected in the LGU’s books for 2022 to 2025 are provisional accounting estimates used to recognize the PPA’s possible share and do not constitute a final determination of the amount due,” he said.

“These ratios were adjusted over the years to adopt a more conservative position while negotiations between the parties were ongoing. The definitive sharing scheme will be established in the MOA, which is still being finalized,” he added.

Responding to COA’s confirmation request, the PPA said it computed its PHP 260.563-million claim under PPA Memorandum Order No. 14-2010, which sets an 80-20 sharing scheme in favor of the port authority.

The LGU disputes that the order applies to Dumangas.

“Based on the LGU’s assessment, PPA Memorandum Order No. 14-2010 does not squarely apply to the LGU’s situation. The issuance covers LGUs that applied for and were awarded cargo handling operations as operators. In the LGU’s case, the port was turned over by virtue of a Supreme Court decision,” Biron said.

“This is one of the matters currently being addressed with the PPA through the MOA, and the LGU remains open to arriving at a sharing arrangement that is fair and acceptable to both parties,” he added.

The PPA said standard operating guidelines fall under PPA Administrative Order No. 08-2020, but no MOA has been executed for the Dumangas Port because of its unique operational circumstances and the lack of specific court or agency directives.

Despite the LGU’s non-remittance, the PPA said it has continued to issue monthly statements of account and replenish tickets to avoid disrupting seaport operations.

Seaport fees

Municipal records show the port generated PHP 52,368,156.87 in seaport system fees in 2025, down from PHP 62,251,625.91 in 2024 — a drop of about PHP 9.88 million, or nearly 16%.

Biron said the lower figure does not mean the port collected less.

“The decline is attributable to an accounting adjustment on the recognition of income and does not reflect a decrease in actual collections. Total collections have, in fact, increased by approximately 5% from 2024 to 2025,” he said.

“What changed was the portion recognized by the LGU as payable to the PPA, consistent with the LGU’s conservative approach on the profit-sharing scheme,” he added.

No formal agreement

The port was turned over to the municipality by virtue of a Supreme Court decision, with the LGU taking over supervision and operations from a private operator in 2022.

The case dates back to 2005, when the PPA moved to take over cargo handling services from the United Dumangas Port Development Corp. (UDPDC), which had operated at the port under temporary permits since December 2000.

In an Aug. 12, 2015, ruling, the Supreme Court reinstated a 2007 decision of the Dumangas Regional Trial Court Branch 68 that gave the municipality the operation of the port’s cargo handling services, subject to reimbursing UDPDC for its equipment and improvements.

The high court also voided a 2008 compromise agreement between the PPA and the municipality, ruling that it was not executed in accordance with law and was disadvantageous to both the municipality and UDPDC.

The Dumangas Port operates under the Municipal Economic Enterprise Development Office.

It is the municipality’s only revenue-generating local economic enterprise operating at a profit.

Under PPA Administrative Order No. 05-2007, the temporary transfer of port management and operations to an LGU requires an executed MOA that defines responsibilities and ensures the lawful allocation of revenues.

Despite operating the port for several years, the LGU has not executed an approved MOA or formal contract with the PPA covering management responsibilities and income sharing.

COA flagged the same lapse in its 2024 audit report, recommending that local officials expedite the finalization and approval of an agreement with the PPA.

Binding MOA, reconciliation

In the 2025 report, COA reiterated the need to resolve the discrepancy and to comply with International Public Sector Accounting Standards.

Auditors directed the LGU to work with PPA management in drafting and signing an agreement that defines exact sharing percentages, computation bases, coverage periods, and remittance procedures.

COA also ordered the municipal accountant to reconcile records with the PPA immediately, resolve the PHP 131.628-million variance, and make the necessary book adjustments.

The auditors further recommended that the LGU disclose in its financial statements the nature of the payable, the absence of an executed contract, and the discrepancy between the two agencies’ records.

According to the report, the LGU set a target of August to December 2026 to coordinate with the PPA, finalize negotiations, execute the MOA, and reconcile the accounts.

The mayor said the municipality accepts the audit findings.

“The LGU respects the Commission on Audit’s qualified opinion and accepts its recommendations. The LGU will include the recommended disclosures in its next annual financial statements. The execution of the MOA and the reconciliation of accounts with the PPA are expected to address the matters raised in the audit,” he said.