COA audit sparks dispute with Davao port operator over revenue sharing scope

State auditors say Globalport Davao Terminal Incorporated failed to remit nearly P70 million in government revenue shares, interest, penalties, and taxes based on income earned from non-core port services

DAVAO CITY, Philippines – A dispute over the scope of government revenue-sharing at the Sasa Port in Davao has emerged after state auditors flagged its operator over the non-remittance of millions of pesos in unpaid dues from non-core service revenues, a claim the firm denied, citing contract terms and tariff guidelines.

The Commission on Audit (COA) said the port operator, Globalport Davao Terminal Incorporated (GDTI), which manages and operates the port, failed to remit nearly P70 million in government revenue shares, interest, penalties, and taxes based on income earned from non-core port services.

COA said the firm only remitted some P98.25 million in government shares from core services like arrastre, stevedoring, special services, and hustling between July 2022 and June 2024, excluding value-added tax.

But the company failed to remit shares from income earned through bagging, piling, equipment rental, storage, reefer services, weighbridge operations, and other ancillary services, state auditors said in a 102-page report released on June 3.

“After evaluation of the MGIRs (Monthly Gross Income Reports), it was disclosed that there were unremitted government shares amounting to P40,447,755.85,” the auditors said.

On top of the unremitted government P40.4-million share, the audit team computed more than P7.89 million in interest, P16.62 million in penalties, and over P4.85 million in value-added tax liabilities, bringing the total amount to some P69.820 million as of March this year.

GDTI has disputed the findings, insisting it has “always remitted the applicable government share.” 

Citing Philippine Ports Authority Board Resolution No. 3156, the company said the revenue-sharing scheme applies only to core services that are “directly related to the movement and management of cargo,” such as arrastre, stevedoring, mooring, and hustling. 

It argued that other income-generating activities fall under non-core services and are not covered by the revenue-sharing provision under its Port Terminal Management Contract (PTMC).

The port operator also pointed to the 2013 Tariff Rates for the Port of Sasa, which it said excluded bagging, storage, reefer services, weighbridge operations, and ancillary charges from the computation of the government share. 

Under an interim agreement, such rates remain in force until the full turnover of Berths 1 and 2 and the implementation of Tier 2 rates.

COA, however, rejected the argument, pointing out that the PPA resolution recommending a 10% share for domestic cargo and 20% for international “did not stipulate that the government shares shall cover only the core services.”

“It comprises/covers all services, thus, purported GDTI’s suggestion to exclude other cargo related services and ancillary services from government shares is unfounded and finds no basis under existing issuances or regulations,” the auditors said.

COA said that since GDTI is responsible for both the management and operation of the port under its PTMC, it must also account for revenues from non-core services unless such services are provided by another contractor.

“Considering that GDTI collects fees from port users for ancillary services, it is proper that it shall remit and pay the corresponding government share. The Audit Team maintains its stand and recommends that GDTI remit to PPA the amount of P40,447,755.85 arising from the revenue of other cargo related/ancillary services plus interest and penalty,” the report read. – Rappler.com