Republic of the Philippines
HOUSE OF REPRESENTATIVES

Quezon City, Metro Manila OnE

Eighteenth Congress
First Regular Session

HOUSE BILL NO. 4138

Introduced by Representative Cyrille “Beng” F. Abueg-Zaldivar

EXPLANATORY NOTE

Section 20, Article II of the 1987 Philippine Constitution declares that, “the
State recognizes the indispensible role of the private sector, encourages, private
enterprise, and provides incentives for needed investments.” Bringing this
Constitutional policy to life, Republic Act (RA) No. 7916, otherwise known as the
“The Special Economic Zone Act of 1995,” provides for the establishment of special
economic zones in the country, particularly in rural areas, in order to promote their
development into agro-industrial, commercial, tourist, banking, investment and
financial centers.

This bill seeks the realization of the province of Palawan’s full eoconomic,
industrial, and tourism potential through the establishment of the Southern Palawan
Special Economie Zone.

The province’s vast potential as a growth center was recognized early on. In
fact, R.A. No. 7916, Section 5 (ee) initially identifies the province as an ecozone. The
bill’s objectives are evidently recognized as being important that the measure has been
brought both in the House of Representatives and the Senate several times over the
past two (2) decades.

During the Tenth (10) Congress, Congressman Alfredo Amor E. Abueg, Jr.
already introduced House Bill (H.B.) No. 6414, “An Act Creating a Special Economic
Zone and Free Port in Southern Palawan, Creating For This Purpose The Southern
Palawan Special Economic Zone Authority, Appropriating Funds Therefor, And For
Other Purposes.” The Lower House approved the bill on 26 August 1997 and
transmitted it to the Senate, which then referred it to its Committee on Economic
Affairs headed by then Senator Edgardo Angara.

During the Eleventh (11%) Congress, Congressman Abueg, then already
Deputy Speaker, re-filed the bill as HB No. 9738, co-authored by four (4) other
congressmen, After the Lower House’s approval, HB No. 9738 was transmitted to the
Senate where it was heard by the Committee on Economic Affairs headed by Senator

GAN
RECEIVED @\
sore, AUG, 2.2 2019”)


Loren Legarda. It is regrettable that Congress ended without the bill having been
approved. Nevertheless, Sen. Legarda herself authored a Senate version of the bill,
Senate Bill (S.B.) No. 674, having the same purpose, which unfortunately likewise did
not reach final approval

During the Thirteenth (13") Congress, Senator Juan Ponce Enrile authored S.B.
No. 2217 similarly seeking to establish a special economic zone in the province of
Palawan. The Senate’s Committees on Economic Affairs, Local Government, Ways
and Means, and Finance later prepared S.B. No. 2606, otherwise known as “An Act
Establishing the Southern Palawan Special Economic Zone in the Province of
Palawan, Creating for the Purpose the Southern Palawan Special Economic Zone
Authority, Appropriating Funds Therefor and For Other Purposes,” in substitution of
S.B. No. 2217. Senate Minority Floor Leader Juan Ponce Enrile, then Senators
Manuel Roxas and Alfredo Lim, and Senate President Franklin Drilon, authored S.B.
No. 2606, taking into consideration House Bill No. 5262 introduced by then Rep.
Abraham Kahlil Mitra.

Deputy Speaker Frederick F. Abueg re-filed the measure during the Sixteenth
(16") Congress as H.B. No. 2688 and during the Seventeenth (17") Congress as H.B.
No. 203. The bill passed on Third Reading on 20 May 2019, and was transmitted to
the Senate the following day. Unfortunately, the Senate could no longer deliberate on
the measure.

The main features of the bill include (1) the creation of a government agency
mandated to administer its operations and development, (2) a package of fiscal and
non-fiscal incentives for investments, and (3) the establishment of its principal office
in the Municipality of Balabac, where there is a sufficient availability of land areas for
the ecozone and free port.

Palawan is located in the Southern Tagalog Region, with a total land area of 1.4
million hectares, a population of 849,469 as of the 2015 national census excluding the
total population of Puerto Princesa City at 256,116, and the bounty of vast forest,
marine, and mineral resources. Many of its municipalities have untapped natural and
human resources valuable for further economic and tourism development. In addition,
the province is strategically positioned over a major sea trade route serving the
ASEAN region and major global economies. The Balabac Strait is 47 kilometers
offshore where international ships pass, bringing oil and other important cargo to
Japan, China, the Philippines, and other countries. The municipality of Balabac,
location of the proposed principal office the economic zone, has sufficient land area
for the economic zone and free port, deep waters where international ships can
navigate and dock, and is the location of the Melville international lighthouse.

Palawan has vast economic advantages attractive to both local and foreign
investors. It produces natural gas, and its further exploration and development are on-
going and a priority. The province is also known worldwide for its vast tourist
attractions. In fact, the island of Palawan has been voted multiple times as the best


island tourist destination in the world. Further developments in tourism, agriculture,
forestry, fisheries, real estate, mining, communications, transportation, education, and
manufacturing are already in the implementing stage, aside from the construction of
better roads, bridges, seaports, airports, and other infrastructure.

Palawan as a regional growth area has been recognized through its inclusion as
a key component of the Brunei Darussalam, Indonesia, Malaysia, and Philippines-East
ASEAN Growth Area (BIMP-EAGA). This is a sub-regional economic cooperation
initiative to accelerate economic development efforts in this sub-region strategically
proximate to each other that in the past have not fully benefited from the rapid
economic growth because of their geographical distance from the centers of
government. This links the province to significant economies in east Southeast Asia
with which it has had significant economic ties for centuries.

Considering the import and arduous journey of this bill, its immediate passage
is earnestly sought.

CYRILLE we F. pina aientiprea

Representative, 2" Dsitrict of Palawan


10
a

12
13

14
15

Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

EIGHTEENTH CONGRESS
First Regular Session

HOUSE BILL NO. 4138

Introduced by Representative Cyrille “Beng” F. Abueg-Zaldivar

AN ACT
ESTABLISHING THE SOUTHERN PALAWAN SPECIAL ECONOMIC
ZONE IN THE PROVINCE OF PALAWAN, CREATING FOR THE PURPOSE
THE SOUTHERN PALAWAN SPECIAL ECONOMIC ZONE AUTHORITY,
APPROPRIATING FUNDS THEREFOR AND FOR OTHER PURPOSES

Be it enacted by the Senate and the House of Representatives of the Philippines in the
Congress assembled:

CHAPTER 1
GENERAL PROVISIONS:

SECTION 1. Short Title. - This Act shall be known as the “Southern
Palawan Special Economic Zone Act."

SEC. 2. Declaration of Policy. - It is declared the policy of the State to
encourage, promote, and accelerate the sound and balanced industrial, economic
and social development of the country. The establishment of special economic
zones shall attract legitimate and productive foreign investments in strategic
locations in the country. It shall generate employment and increase productivity
and individual, as well as family incomes thereby enhancing the quality of life of
the Filipino people.

CHAPTER II
GOVERNING STRUCTURES

SEC. 3. Creation of the Southern Palawan Special Economic Zone
Authority. - There is hereby created a body corporate to be known as the
“Southern Palawan Special Economic Zone Authority” hereinafter referred to as

ny


wne

10
11
12
13
14
15
16

17
18
19
20

21
22
23
24

25
26

27
28

the SPEZA, which shall manage and operate the Southern Palawan Special
Economic Zone, in accordance with the provisions of this Act. This corporate
franchise shall expire in fifty (50) years counted from the first year after the
effectivity of this Act, unless otherwise extended by Congress. It shall be
organized within one hundred eighty (180) days after the effectivity of this Act.

SEC. 4. Capitalization. - The SPEZA shall have an authorized capital stock
of One Billion (1,000,000,000) no par shares with a minimum issue of Ten Pesos
(P10.00) each, the majority shares of which shall be subscribed and paid for by
the National Government and the Local Government Units (LGUs) embracing
the Southern Palawan Special Economic Zone. The Board of Directors of the
SPEZA may, with the written concurrence of the Secretary of Finance, sell shares,
representing not more than forty per centum (40%) of the capital stock of the
SPEZA to the general public under such policy as the Board and the Secretary of
Finance may determine. The National Government and the LGUs shall in no case
own less than sixty per centum (60%) of the total issued and outstanding capital of
the SPEZA.

‘The amount necessary to subscribe and pay for the shares of the National
Government to the capital stock of the SPEZA shall be included in the Annual
General Appropriations Act. For LGUs, the funds shall be taken from their
internal revenue allotment and other local funds.

SEC. 5. Principal Office of the SPEZA. - The SPEZA shall maintain its
principal office in the Municipality of Balabac, Province of Palawan, but it may
establish branches within the Philippines as may be necessary for the proper

conduct of its business.

SEC. 6. Powers and Functions of the SPEZA. - The SPEZA shall have the
following powers and functions:

a) To operate, administer, manage and develop the Southern Palawan Ecozone

according to the principles and provisions set forth in this Act,


@

© or 98

b)

°)

d)

e)

9)

To register, regulate and supervise the enterprises in the Southern Palawan
Ecozone in an efficient and decentralized manner, subject to existing laws;

To coordinate with LGUs and exercise general supervision over the
development plans, activities and operations of the Southern Palawan

Ecozone;

To regulate and undertake the establishment, construction, operation and
maintenance of public utilities, other services, and infrastructure in the
Southern Palawan Ecozone such as, but not limited to, heat, light and
power, shipping, barging, stevedoring, cargo handling, hauling,
warehousing, storage of cargo, port services or concessions, piers, wharves,
bulkheads, bulk terminals, mooring areas, storage areas, roads,
telecommunications transport, bridges, terminals, conveyors, water supply
and storage, sewerage, drainage, airport operations in coordination with the
Civil Aviation Authority of the Philippines (CAAP), and such other services
or concessions or infrastructure necessary or incidental to the
accomplishment of the objectives of this Act;

To construct, acquire, own, lease, operate and maintain on its own or
through contracts, franchise, licenses, bulk purchase from the private sector
or permits under any of the schemes allowed in Republic Act No. 6957 (the
Build-Operate-Transfer Law, as amended), or joint venture, adequate
facilities and infrastructure required or needed for the operation and
development of the Southern Palawan Ecozone, in coordination with
appropriate national and local government authorities and in conformity
with applicable laws thereon;

To approve plans, programs and projects of the Southern Palawan Ecozone
to be submitted to the Regional Development Council for inclusion and
inputs to the overall regional development plan;

To operate on its own, either directly or through licenses to others, tourism-


10
11
12
13
14
15

16
17

18
19
20
21

h)

)

k)

m)

related activities, including games, amusements, recreational and sports
facilities;

To raise or borrow, within the limitation provided by law, and subject to the
approval or opinion of the Monetary Board of the Bangko Sentral Ng
Pilipinas (BSP), as the case may be, adequate and necessary funds from local
or foreign sources, to finance its projects and programs under this Act and
for this purpose, to issue bonds, promissory notes and other forms of
securities, and to secure the same by a guarantee, pledge, mortgage, deed of
trust or an assignment of all or part of its property or assets;

To protect, preserve, maintain and develop the forests, beaches, coral and
coral reefs, and maintain ecological balance within the Southern Palawan
Ecozone. Notwithstanding the authority of the SPEZA to create rules for
such purpose, the rules and regulations of the Department of Environment
and Natural Resources (DENR) and other government agencies involved in
the above functions shall be implemented by the SPEZA;

To create, operate and/or contract to operate such functional units or offices
of the SPEZA as it may deem necessary;

To adopt, alter and use a corporate seal; contract, lease, buy, acquire, own or
otherwise dispose of personal and/or real property of whatever nature; sue
and be sued; and otherwise carry out its functions and duties as provided
for in this Act;

To issue certificates of origin for products manufactured or processed in the
Southern Palawan Ecozone in accordance with prevailing rules of origin
and the pertinent regulations of the Philippine Economic Zone Authority
(PEZA), the Department of Trade and Industry (DTI) and/or the
Department of Finance (DOF);

To establish one-stop shops for the issuance of all necessary permits,


10
11
aly)
13
14

15
16
17
18

19
20
21

22
23
24

25
26
27
28

n)

°)

P)

clearances, licenses, and other similar certifications to conduct such
activities intended to improve the ease of doing business within the
Southern Palawan Ecozone, in coordination with government agencies
having jurisdiction over activities therein: Provided, That all government
agencies are directed to provide and extend utmost and full cooperation to
the Southern Palawan Ecozone in the establishment of such one-stop shops;

To provide internal security to the Southern Palawan Ecozone in
coordination with the National government and affected LGU. For this
purpose, the SPEZA shall provide and establish its own internal security
and firefighting forces or hire others to provide the same. Military forces
sent by the national government for the purpose of defense shall not
interfere in the internal affairs of the Southern Palawan Ecozone and
expenditures for these military forces shall be borne by the National

Government;

To exercise such powers as may be essential, necessary or incidental to the
powers granted to it hereunder, as well as those that shall enable it to carry
out, implement and accomplish the purposes, objectives and policies of this
Act; and

To issue rules and regulations consistent with the provisions of this Act as
may be necessary to accomplish and implement the purposes, objectives
and policies provided herein.

SEC. 7. Board of Directors of the SPEZA. - The powers of the SPEZA

shall be vested in and exercised by a Board of Directors, hereinafter referred to as
the Board, which shall be composed of the following:

a)

b)

The Chairperson, who shall at the same time be the administrator of the
SPEZA;
A Vice-Chairperson, who shall come from among the members of the
Board;


23
24
25
26
27
28

29

©) Members consisting of:

1) The Governor or his/her representative from the Provincial Government
of Southern Palawan;

2) The mayors of the municipalities covered by the ecozone;

3) One (1) representative from the domestic investors;

4) One (1) representative from the foreign investors;

5) One (1) representative from the workers working in the Southern
Palawan Ecozone; and

6) Three (3) representatives of the private sector, coming from the residents
of the municipalities of Balabac, Brooke's Point and Bataraza.

Except for the representatives of the foreign and domestic investors, no
person shall be appointed by the President of the Philippines as member of the
Board unless he is a Filipino citizen, of good moral character, of proven probity
and integrity, and of recognized competence in some relevant fields in business,
banking, shipping, business or labor management, port operations, engineering,

or law.

‘The representative from the Provincial Government and the mayors of the
municipalities covered by the ecozone shall serve as ex-officio members of the
Board, whose term in the Board corresponds to their term as elected officials.

‘The Chairperson and members of the Board, except the ex-officio members,
shall be appointed by the President of the Philippines to serve for a term of six (6)
years, unless sooner separated from service due to death, incapacity, voluntary
resignation or removal for cause. In case of death, incapacity, voluntary
resignation or removal for cause, the replacement shall serve only the unexpired

portion of the term.

‘The Chairperson of the Board must be a Filipino citizen, of good moral


ao a wne

=

10
1

12
13

14
15

16
17

18
19

20
21

22
23
24

25
26

character, of proven probity and integrity, and a degree- holder in any of the
following fields: economics, business, public administration, law, management or
their equivalent, and with at least ten (10) years relevant working experience

preferably in the field of management or public administration.

The members of the Board shall each receive per diem at rates to be
determined by the Department of Budget and Management (DBM) in accordance
with existing rules and regulations: Provided, however, That the total per diem
collected each month shall not exceed the equivalent per diem for four (4)
meetings. Unless and until the President of the Philippines has fixed a higher per
diem for the members of the Board, such per diem shall not be more than ten
thousand pesos (P10,000.00) for every Board meeting.

SEC. 8. Powers and Duties of the Chairperson-Administrator. - The
Chairperson-Administrator shall have the following powers and duties:

a) To direct and manage the affairs of the SPEZA in accordance with the
policies of the Board;

b) To establish the internal organization of the SPEZA under such conditions
that the Board may prescribe;

c) To submit an annual budget and necessary supplemental budget to the
Board for its approval;

d) To submit within thirty (30) days after the close of each fiscal year an annual
report to the Board and such other reports as may be required;

e) To submit to the Board for its approval, policies, systems, procedures, rules
and regulations that are essential to the operation of the Southern Palawan

Ecozone;

f) To recommend to the Board the remuneration and other emoluments of its

officers and employees in accordance with existing laws on compensation

7


10
11
12
13

15
16
17

18
19

20

22

25
24

and position classification;

g) To create a mechanism in coordination with relevant agencies for the
promotion of industrial peace, the protection of the environment, and the
advancement of the quality of life in the Southern Palawan Ecozone; and

h) To perform such other duties as may be assigned to him by the Board or
which are necessary or incidental to his office.

SEC. 9. Organization and Personnel. - The Board of Directors of the SPEZA
shall provide for its organization and staff. The Board shall appoint and fix the
remuneration and other emoluments of its officers and employees in accordance
with existing laws on compensation and position classification. The Board shall
have exclusive and final authority to promote, transfer, assign, reassign or
remove officers of the SPEZA, any provision of existing law to the contrary
notwithstanding. The chairperson-administrator may carry out removal of such

officers and employees.

‘The officers and employees of the SPEZA, including all members of the
Board, shalll not engage directly or indirectly in partisan activities nor take part in
any election, except to vote.

No officer or employee of the SPEZA, subject to civil service laws and
regulations, shall be removed or suspended except for cause, as provided by law.

SEC. 10. Legal Counsel. - The SPEZA shall have its own internal legal
counsel under the supervision of the Government Corporate Counsel. When the
exigencies of its businesses and operations demand it, the SPEZA may engage
the services of an outside counsel either on a case to case or on a fixed retainer

basis.

SEC. 11. Legal Office.- The SPEZA shall have and maintain its own


aw ne

10

12
a3
14
15
16
at}

18
19
20
21

22
23
24
25

26

ry)

internal legal office, appropriate in number under the supervision of the
Government Corporate Counsel. When the exigencies of its businesses and
operations demand, the SPEZA may engage the services of an outside counsel

either on a case to case or a fixed retainer basis.

CHAPTER III
CREATION OF THE ECONOMIC ZONE

SEC. 12. Creation of the Southern Palawan Special Economic Zone - In
accordance with the foregoing declared policy and subject to the concurrence of
the concerned local government units of Palawan affected by the zone, there is
hereby established a Special Economic Zone, hereinafter referred to as the
Southern Palawan Ecozone. The Southern Palawan Ecozone shall cover the entire
area embraced by the Municipalities of Balabac, Brooke’s Point and Bataraza in
the Province of Palawan. ‘The specific metes and bounds of the Southern
Palawan Ecozone shall be more particularly defined in a presidential
proclamation that shall be issued for this purpose: Provided, That the lands
embraced therein shall be public lands and contiguous to one another, except
those adjoining municipalities or lands which are separated only by water.

SEC. 13. Governing Principles. - The Southern Palawan Special Economic
Zone shall be managed and operated by the Southern Palawan Special Economic
Zone Authority, hereinafter referred to as the SPEZA, created under Section 3 of
this Act, under the following principles:

a) Within the framework and limitations of the Constitution and applicable
provisions of the Local Government Code, the Southern Palawan Ecozone
shall be developed into and operated as a decentralized, self-reliant and self-
sustaining industrial, commercial/trading, agro-industrial, tourist, banking,

financial and investment center with suitable residential areas;

b) The Southern Palawan Ecozone shall be provided with transportation,


aw ne

wor 934 Hw

10
ia
12
13

14
15
16
17
18
19
20
21
22

2
24
25
26
27
28

°)

a)

O}

telecommunications and other facilities needed to attract legitimate and
productive investments, generate linkage industries and employment
opportunities for the people of Palawan and its neighboring towns and

cities;

‘The Southern Palawan Ecozone may establish a mutually beneficial
economic relations with other entities or enterprises within the country or,
subject to the administrative guidance of the Department of Foreign Affairs
(DFA), the PEZA, and/or the Department of Trade and Industry (DTI), with

foreign entities or enterprises;

Foreign citizens and companies owned by non-Filipinos in whatever
proportion may set up enterprises in the Southern Palawan Ecozone, either
by themselves or in a joint venture with Filipinos in any sector of industry,
international trade and commerce within the Southern Palawan Ecozone;

The Southern Palawan Ecozone shall be managed and operated as a separate
customs territory thereby ensuring the free flow or movement of goods and
capital within, into and out of its territory, and shall likewise provide
incentives such as tax and duty-free importations of raw materials, capital
and equipment to registered enterprises located therein. However,
exportation or removal of goods from the territory of the Southern Palawan
Ecozone to the other parts of the Philippine territory shall be subject to
customs duties and taxes under the Customs and Tariff Code and other
relevant tax laws of the Philippines;

‘The areas comprising the Southern Palawan Ecozone may be expanded or
reduced when necessary. For this purpose, the SPEZA, in consultation with
the LGUs, shall have the power to acquire either by purchase, negotiation or
condemnation proceedings, any private land within or adjacent to the
Southern Palawan Ecozone for the following purposes: (1) consolidation of
lands for zone development; (2) acquisition of right of way to the Southern

10


a

Soo ex 9

11
12
13

14

16
17
18
19

20
21
22
23
24
a5.
26
27

28

8)

h)

Palawan Ecozone; and (3) the protection of watershed areas and natural
assets valuable to the prosperity of the Southern Palawan Ecozone;

Goods manufactured by a Southern Palawan Ecozone enterprise shall be
made available for immediate retail sale in the domestic market, subject to
the payment of corresponding taxes on raw materials and other regulations
that may be formulated by the SPEZA together with the PEZA, the Bureau of
Customs (BOC) and the DTI. However, in order to protect domestic
industries, a Negative List of industries shall be drawn up and regularly
updated by PEZA. Enterprises engaged in industries included in such
Negative List shall not be allowed to sell their products locally;

‘The defense of the Southern Palawan Ecozone and the security of its
perimeter fence shall be the responsibility of the national government in
coordination with the SPEZA and the LGUs.

CHAPTER IV
INCENTIVES TO ECOZONE ENTERPRISES/INVESTORS

SEC. 14. Investors Visa. - Any foreign national who invests an amount of

two hundred thousand US dollars (US$200,000.00), either in cash and/or
equipment, in a registered enterprise shall be entitled to an investor's

visa: Provided, That the foreign national has the following qualifications:

2)
»)

°)
a)

°)

Must be at least eighteen (18) years of age;

Must not have been convicted by final judgment of a crime involving moral
turpitude;

Must not be afflicted with any loathsome, dangerous or contagious disease;
Must not have been institutionalized for any mental disorder or disability;
and

Must establish by verifiable and credible evidence his financial capability

and capacity.
As a holder of investor's visa, an alien shall be entitled to reside in the

may


aw ne

w

24
25
26
27
28
29

Philippines while his investment subsists. For this purpose, the alien should
submit an annual report, in the form duly prescribed for the purpose, to prove
that he has maintained his investment in the country. Should said alien withdraw
his investments from the Philippines, then the investor's visa issued to said alien
shall automatically expire and /or be withdrawn.

The authority to issue visas and work permits shall remain with the
Bureau of Immigration (BI) and the Department of Labor and Employment
(DOLE), respectively: Provided, That the BI and the DOLE shall implement
measures to expedite the processing of such visas and permits for workers in the
Southern Palawan Ecozone and coordinate with the SPEZA for the purpose of

improving ease of doing business.

SEC.15. Fiscal Incentives. - Registered enterprises operating within the
Southern Palawan Ecozone may be entitled to the existing pertinent fiscal
incentives as provided for under Republic Act No. 7916, as amended by Republic
Act No. 8748, also known as the Special Economic Zone Act of 1995, or those
provided under Executive Order No. 226, as amended, otherwise known as the
Omnibus Investment Code of 1987; and/or those that may be further granted as
the need and necessity arises by the appropriate government department, agency
or office: Provided, That in the administration, implementation and monitoring of
incentives, the SPEZA may impose its own conditions not otherwise prohibited
by this Act: Provided, further, That the SPEZA shall not be limited to the
conditions provided under Republic Act No. 7916, Republic Act No. 8748 or any
other related issuance, rule or regulation.

SEC. 16. Imposition of a Tax Rate of Five Percent (5%) on Gross Income
Earned.- No taxes, local and national, shall be imposed on business
establishments operating within the Southern Palawan Ecozone, including
income, withholding, donor's, percentage, and documentary stamp taxes. In lieu
thereof, and subject to Section 18 of this Act, said business establishments shall
pay a five percent (5%) final tax on their gross income earned: Provided, That the

12


10
1
12

13
14
15
16
17
18
19
20

Pa
22
23
24

26
27

proceeds from such final tax shall be shared by instrumentalities of the

government in accordance with the following percentages:

a)
’)

‘Three per centum (3%) to the National Government;

Two per centum (2%) shall be directly remitted by the business
establishments to the treasurer's office of the municipality or city where the

enterprise is located.

The SPEZA shall have the authority to grant income tax holiday and net

operating loss carry over subject to Section 18 of this Act and conditions as it may

have imposed pursuant to Section 15 of this Act.

SEC. 17. Administration, Implementation and Monitoring of Incentives. -

For the proper administration, implementation and monitoring of tax incentives

provided under this law, the following are herein mandated:

(a)

)

The SPEZA shall be responsible for the administration, management,
enforcement and implementation of the incentives granted to registered
enterprises: Provided, That the BOC shall set up and establish a customs
controlled area outside the gate of the Southern Palawan Ecozone to
facilitate payment of taxes on goods entering the Philippine customs
territory: Provided further, That notwithstanding the limitations in this Act,
the SPEZA and BOC may coordinate and jointly implement measures on
border protection; and

In the interest of enhancing transparency in the management and
accounting of tax incentives in the Southern Palawan Ecozone, the SPEZA
shall comply with the provisions of Republic Act No. 10708, otherwise
known as “The Tax Incentives Management and Transparency Act
(TIMTA)’ and its implementing rules and regulations.

SEC.18. Duration of Incentives. - Fiscal incentives under this Act shall be

terminated after a cumulative period of twenty (20) years from date of

13


aw ne

10
11
12

14

15
16
17
18

19
20
21
22

23
24
25
26
27
28

registration or start of commercial operation, whichever is applicable, except that
it could be extended with regard to industries deemed indispensable to national
development and interest. The industries exempted from this provision shall be
determined by the SPEZA, in consultation with other government agencies.

SEC. 19. Sequential Availment of Incentives. - Registered enterprises may
enjoy the income tax holiday (ITH) granted by the SPEZA prior to the availment
of the five percent (5%) final tax on gross income earned incentive: Provided, That
in the event a registered enterprise elects to avail of the final tax incentive, such
registered enterprise shall be barred from availing the ITH incentive.

Registered enterprises, if eligible, may register for incentives with other
investment promotion agencies: Provided, That registered enterprises electing to
avail of the incentives of other promotion agencies shall not be able to avail of the
incentives of the Southern Palawan Ecozone until the expiration of the incentives
with such other investment promotions agencies.

SEC. 20, Extension of Period of Availment. - In the event that a registered
enterprise has suffered cessation or suspension of operations due to force
majeure, which has impaired its viability or profitability, the SPEZA may extend
the period of validity of the incentives extended to such registered enterprise.

SEC. 21.Banking Rules and Regulations.- Banks and financial
institutions to be established in the Southern Palawan Ecozone shall be under the
supervision of the Bangko Sentral ng Pilipinas (BSP) and subject to existing
banking laws, rules and regulations.

SEC. 22. Remittances.- In the case of foreign investments, a duly
registered entity or enterprise within the Southern Palawan Ecozone shall have
the right to remit earnings from the investment in the currency in which the
investment was originally made and at the exchange rate prevailing at the time
of remittance, subject to the provisions of Republic Act No. 7653, otherwise
known as “The New Central Bank Act”.

14


eta at:

w

10
11

12
13
14
16
16
17
18

19
20
21

CHAPTER V
NATIONAL GOVERNMENT AND OTHER ENTITIES
SEC. 23. Supervision and Control. - For purposes of policy direction and
coordination, the SPEZA shall be under the direct control and supervision of the
Office of the President of the Philippines.

SEC. 24. Regional Development Council. - The SPEZA shall determine the
development goals for the Southern Palawan Ecozone within the framework of
national development plans, policies and goals. The Chairperson &
Administrator shall, upon approval by the Board, submit the Southern Palawan
Ecozone plans, programs and projects to the Regional Development Council for
inclusion and inputs to the overall regional development plan.

SEC. 25. Relationship with Local Government Units. - Except as herein
provided, the LGUs comprising the Southern Palawan Ecozone shall retain their
basic autonomy and identity. The Municipalities of Balabac, Bataraza and
Brooke's Point, Province of Palawan, shall operate and function in accordance
with the framework of the 1987 Constitution, Local Government Code of 1991,
and Republic Act No. 7898, as amended by Republic Act No. 10349, applicable
provisions of the Local Government Code, and this Act.

In case of any conflict between the SPEZA and the LGUs and the National
Government on matters affecting the Southern Palawan Ecozone, other than
national defense and security matters, the decision of the SPEZA shall prevail.

SEC. 26. Interpretation/Construction.- The powers, authorities and
functions that are vested in the SPEZA are intended to establish national self-
sufficiency and self-reliance in the advancement of and protection of the national
integrity, enhancement of national security, decentralization of governmental
functions and authority, and promote an efficient and effective working
relationship among the SPEZA, the National Government and the LGUs. Any
interpretation of this Act shall consider such intentions. In the event of conflict of

interpretation and provided the intentions cannot be harmonized, the provisions

15


13
14
iS
16

17
18
19

20
21
22

23
24
25

of this Act shall be construed in favor of an interpretation that would tend to
protect national security.

SEC. 27. Audit.- The Commission on Audit shall appoint a full - time
auditor in the SPEZA or may assign such number of personnel as may be
necessary in the performance of their functions.

CHAPTER VI
MISCELLANEOUS
SEC. 28. Implementing Rules and Regulations. - The DTI, DOF and the
National Economic Development Authority (NEDA) shall formulate the
implementing rules and regulations of this Act within ninety (90) days after its
approval. Such rules and regulations shall take effect fifteen (15) days after its
publication in a newspaper of general circulation in the Philippines.

SEC. 29. Applicability Clause. - Insofar as these are consistent with the
provisions of this Act, the provisions of Sections 30 to 41 of Republic Act No.
7916, otherwise known as "The Special Economic Zone Act of 1995", as amended,
shall likewise apply to the Southern Palawan Ecozone.

SEC. 30. Separability Clause. - If any provision of this Act shall be held
unconstitutional or invalid, the other provisions not otherwise affected shall
remain in full force and effect.

SEC. 31. Repealing Clause. - All laws, executive orders or issuances or
any part thereof, which are inconsistent herewith, are hereby repealed or

amended accordingly.

SEC. 32. Effectivity Clause.- This Act shall take effect after fifteen (15)
days following its complete publication in the Official Gazette or in two (2)
newspapers of general circulation whichever is earlier.

Approved,

16