Republic of the Philippines
HOUSE OF REPRESENTATIVE
Quezon City, Metro Mania
NINETEENTH CONGRES S
First Regular Session
HouseBinNo.      8299
Introduced by Representative Eduardo Roa Rama, ]r.
EXPLANATORY NOTE
In a 2021 statistical report, around 52.32% of Filipinos live in rural areas; most
of them poor and accounts for the 13.2% of the latest poverty rate of the Philippines
as of March 2023. The incidence of poverty is much higher among rural inhabitant
compared to urban residents. Agriculture is the primary, if not the only, source of
income  for  poor  Fhipinos  living  in  rural  areas.  These  people  mainly  rely  on
sustenance farring and fishing for their livdih.ood. Those who Cam from furfung
or fishing earn very little in the process, as most famefs do not own the land they till
and fisher folk do not have the proper facilities for sustainable fishing. It is a fact that
the agriculture sector is one of the most fragre of systems, as it is affected by natural
calamities  all year round.  Farmers  and  fisherfolk remain vulnerable during these
catastrophes as they may not have sufficient knowledge or infrastmcture to cope
with the ever-increasing severity of the calamities that has happened in the country.
Based on the Philippine Statistics Authority repoi-t in 2021, the agriculture
industry contributes to a 10.2% share in the Phihppines' Gross Domestic Product,
yet this industry is behind on development and modernization programs offered by
the government.
Thus, this bill seeks to establish a legal homework and mechanisms for the
administration and management of the Special Abchcultural Grovth Zones (SAGZ)
and assist in the preservation of natui-al resources and biodiversity. It also seeks to
guarantee the security of ownership, tenure and income of all farmer-landowners,
especially agrarian reform beneficiaries and cnsurc that all agricultural, commercial,
and industrial arrangements between farmer-landowners, fami workers and private
investors are mutually beneficial.
Ultimately, this bill will modernize the agriculture sector by transforming the
special agricultural growth zones into highly developed agro-industrial, commercial,


investment, and financial center, where highly trained workers and efficient services
win be available to agribusiness and agriculture-related enterprises. In effect, it will
promote  the  flow  of investofs,  both  foreign  and  local,  into  special  agricultural
growth  zones  which  would  generate  employment  opportunities  and  establish
backward  and  forward  linkage  among industries  in  and  around  the  agricultural
growth zones.
In view of the foregoing, the inmediate approval of rfus measure is earnestly
sought.
EDUARDO ROA RAMA, ]R.


Republic of the Phihippines
HOUSE 0F REPRESENTATIVES
Quczon City, Metro Manila
NINETEENTH CONGRESS
First Regular Session
HOUSEBILLNo.        8299
Introduced by Representative Eduardo Roa Rama, ]r.
JEN ACT
PROVIDING FOR THE LEGAL FRAMEWORK AND MECHANISMS
FOR THE CREATION, OPERATION, ADINISTRATI0N, AND
COORDINATION 0F SPECIAL AGRICULTURAL GROWTH ZONES
IN THE PHILIPPINES, CREATING FOR THIS PURPOSE, THE
PHILIPPINE AGRICULTURAL GROWTH ZONE AUTHORITY, AND
FOR OTHER PURPOSES
Be  it  encicted  ky  the  Senate  afld  the  Ho14Se  Of  the I+apreJentatiue  Of  the  Pbilipp.lneJ  in
CtJngreJI  aJJembled:.
1                  Section  1.  Short  Title.  -  This  Act  shall  be  known  as  the  "Philippine
2     Agricultural Growth zone Act of2022."
3                  Section 2. Declaration of policy. -It is the policy of the State to  erisure
4      that all sectors of the economy and all realons ofthc country shall be given optimum
5      opportunity to maximize agricultural productivity, promote efficiency and equity and
6      accelerate the modernization of the agriculture and fisheries sector of the country,
7      by establishing, among other, special agricultural growih zone in  selected areas in
8      the countryside, with the active pardcipation of the private sector as mandated by
9      the 1987 Constitution, namely:
10                  "The state recognizes the indispensable role of the private sector, encourages
11                   private enterprise, and provides incentives to needed investments.''  (Section
12                   20, Article Il)
13                  "The state shall provide incentives to landowners to invest the proceeds of
14                  the  agrarian  reform  program  to  promote  industrialization,  employment,
15                  creation, and privatization of public sector enterprises. Financial instruments
16                  used as payment for their lands shah be honored as equity in enterprises of
17                   their choice." (Section 8, Ardcle XIII)
3


1                  Toward this end, the private sector shall play a major role in the establishment
2      of special agi-icultural growth zories by estabhishing and  developing such areas  to
3      spur  agricultural  development  and  enharice  the productivity of agricultural lands
4      awarded under the agrarian reform program.
5                  The  State  shall  promote  industrialization  and  full  employment  based  on
6      sound agricultural development and agrarian reform, through industries that make
7      full and efficient use of human and natural resources, and which are competitive in
8      botli domestic and foreign markets.
9                 Section 3.  Purposes,  Intents and objectives.  -it shall be the purpose,
10      intent, and objective ofdis Act:
11             (a) To   establish   the  legal   framework  and  mechanisms   for  the  integration,
12                  coordination,  planning,  monitoing,  and  managing  of  special  agricultural
13                   growth zones, and the preservation of natural resources and biodiversity;
14            a To guarantee the  security of ownership, tenure  and income  of all  farmer-
15                  landowners,  especiany  agrarian  reform  beneficiaries  and  ensure  that  all
16                  agricultural,   commercial,   and   industrial   arrangements   between   farmer-
17                  landowners, farm workers and private investors are mutually beneficial;
18            (c) To modemize the agriculture sector by transforrfung the special agricultural
19                  growth zones into highly developed agro-industrial, commercial, investment,
20                  and financial center, where highl}T trained workers and efficient services will
21                   be available to agribusiness and agriculture-related enterprises;
22            (d) To  promote  the  flow  of  investors,  both  foreign  and  local,  into  special
23                  agricultural growth zones which would generate employment opportunities
24                  and establish backward and forward linkage among industries in and around
25                  the agricultural growth zones;
26            (e) To promote financial and industrial cooperation between the philippines and
27                  industrialized  countries   through  technology-intensive  industries   that  will
28                  modernize the country's  agricultural sector and improve productivity levels
29                  by uulizing new technoloalcal and managerial know-how;
30            (I)  To promote people empowerment by strengthening people's organizations,
31                  cooperatives, and NGOs and by establishing and improving mechanisms and
32                  processes   for   their   participation   in   government   decision-making   and
3 3                   implementation;
4


(i) To open opportunities for people working in the agricultural sector helping
gain  access  to  modem  and developing technoloalcs needed for  sustainable
agriculture and enable them to have a competitive advantage in the market.
4                 Section 4. Definition of Terms. -For purposes of this Act, the following
5      terms are hereunder defined:
6            (a) Agrarian Reforms Lands refer to lands awarded under presidential Decree
7                  No. 27 and Republic Act No. 6657, and subsequent laws on the matter;
8           Q)Agribusiness     Enterprises    Arrangement     (AEA)     refers     to     the
9                  entrepreneurial    collaboration    between    farmer-landowners    and    private
10                  investors in the implementation of an agriculturally-related business venture
11                  involving agricultural lands including agrarian reform lands distributed under
12                 the comprehensive Agrarian Reform program  (CARP)  and  other agrarian
13                    reform laws;
14            (c) Agricultural Lands refers to lands devoted to or suitable for the cultivation
15                  of the soil, planting of crops, growing of trees, raising of hvestock, poultry,
16                  fish,  or  aquacultural  production,  including  the  harvesting  of  such  farm
17                  products, and other farm activities and practices performed in conjunction
18                  with such farming operations by persons whether natural or juridical and not
19                   classified by law as mineral land, forest land, residential land, commercial land,
20                   or industrial land;
(d) Build-Operate-Transfer   Scheme   refers   to   an   agribusiness   enterprise
arrangement where the investof builds, rehabilitates or upgrades, at his own
cost,  capital  assets,  infrastructure  and  facilides  apphed  to  the  production,
processing and marketing of agricultural products and operates the same for
a  fixed  period  after  which  ownership  thereof is  conveyed  to  the  farmer-
landownefs;
(e) Competitive  Advantage  refers  to  competitive  edge  in  terms  of product
quality and/or price. It likewise refers to the ability to produce a product with
the greatest relative efficiency in the use of resources;
(I)  Contract  Growing  Scheme  refers  to  agribusiness  enterprise arrangement
where the investor provides farm inputs and technology at reasonable cost in
exchange for the farmer-landowner's commitment to produce ceftaln crops
at pre-arranged agreement involving volume, quality standards, selling price,
delivery and other terms and conditions;
® Equity refers to the value of the shares subscribed to and paid for by each
party in relation to the authorized capital stock of a joint venture corporation;
5


th) Growership Scheme refers to an agribusincss enterprise arrangement where
the investor supplies all the inputs and required technology for the production
of certain crops, with no cost to the farmer-landowner, in exchange for the
latter's commitment to produce particular crops at pre-alfanged agreement
involving volume, quality standards, growership fee, dehvery and other terins
and conditions;
(i)  Investor§  refer  to  the  private  individuals,  corporations,  non-govcmmcnt
organization, farmer cooperatives/associations, govcfnment owned and/of
controlled coapofations or any entity duly authorized by law, that are willing
and  able  to  contribute  their  capital,  equipment  and  facilities,  technology,
and/or management services in an agricultural enterprise scheme;
a)  Joint  Venture  Agreement  Scheme  refers  to  an  agribusiness  enterprise
affangement where the farmer-landowners and investors form a joint venture
corporation OVC) for the purpose of manadng farm operations;
® Lease Agreement Scheme refers to an agribusiness enterprise arrangement
where the farmer-landowners bind themselves to give the investor general
control over the use and management of the land for a certain amount and
for a dcflnite period;
a)  Management   Contract   Scheme   refers   to   an   agribusiness   enterprise
arrangement  where   the   farmer-landowner   contract   the   services   of  an
individual, partnership or corporation in order to  assist in the management
and operation of the farm in exchange for a fixed wage or commission;
(in)           Marketing Agreement scheme refers to an agribusiness enterprise
agreement where  farmer-landowners  engage the investor to  promote their
produce in exchange for commission on actual sales;
(n) Service Contract Scheme refers to an agribusiness enterprise arrangement
where the farmer-owners engage the services of a contractor for mechanized
land preparation, cultivation, harvesting, processing, post-harvest operations
and/or other farm activities for a fee;
(o) Special Agricultural Growth Zones (SAGZ) refers to adjoining or adjacent
parcels of agricultural land with a mininum total areas of fifty (50) hectares
for the synchronized production of a particular crop, such as but not limited
to rice, corn, sugarcane, coconut, and high value commercial crops, utiliziflg
agricultural  mechanization  technology.  Physical  infrastructure  includes  the
overall  design  layout  of  the  area  (e.g.,  post-harvest  fachities,  etc.)  while
institutional  infrastructure  consist  of the  commercial,  financial,  and  social
6


support services necessary for the operationahzation of contiguous farming
and other agribusiness and agro-industrial schemes;
® Takeover refers to an act of the investor in controlling the operation of the
farm and/or assuming any of the responsibihities of the farmer-landowners in
an agribusiness enterprise scheme; and
(q) Transfer refers to the conveyance of the use and possession of agricultural
lands from one person or entity to another.
8                Section  5.  Establishment  of  Special  Agricultural  Growth  Zones.  -
9      Special agricultural growth zones shall be established in a proclamation to be issued
10      by the president of the phihppines subject to the evaluation and recommendation
11      of the secretary ofAgriculturc and in consultation with the local government units,
12      appropriate   government   agencies,   concerned   non-government   organizations
13      QTGOs) and organized farmer groups.
14                  Special  agricultural  growth  zones  shall  be  identified  on  the  basis  of  the
15       following criteria:
(a) Agro-climatic  and  environmental  conditions dving  the  area  a  competitive
advantage in the cultivation, culture, production and processing of particular
crops, animals, and aquatic products;
@) Stratealc  location  of the  area  for  the  establishment  of agriculture  and/or
fisheries  infrastructure,  industrial  complexes,  production,  and  processing
Zones;
(c) Stratealc location of the area for market devclopmcnt and market networking
both at the local and international levels; and
(d) Dominant presence  of agrarian reform  communities  (ARCs)  and/or  small
owner-cultivators and amortizing owners/agrarian reform beneficiarics and
other small farmers and fisherfolk in the area.
27             The  metes  and  bounds  of each  special  agricultural  growih  zone  are  to  be
28      delineated and more particularly described in  a proclamation to be issued by the
29      President   of   the   Philippines,   upon   the   recommendation   of   the   Philippine
30      Agricultural zone Authority @AZA), which shall be established under this Act, in
31      coordination   with   the   municipal   and/or   city   council,   National   Land   Use
32      Coordinating committee and/or the Regional Land use committee.
7


1                 Section 6. Criteria for the Establishment of special Agricultural Growth
2      Zones. -The establishment of special agricultural growth zones shall be subject to
3      the evaluation and recommendation of the PAZA, based on a detailed feasibtry and
4      enalneering study which must confirm to the following criteria:
5            (a) The proposed area must be identified as an agricultural growth center with
6                  existing of having the potential for growing high-value agro-industrial crops
7                  in  the  Medium-Term  Phihippine  Development  Plan  or  by  the  Rcalonal
8                 Development council;
9            a) The accessibility in the proposed special agricultural growth zones,  such as
10                  roads, railways, telephones, ports, airports and other required transportation
11                   infrastructure, and the suitability and capacity of the proposed site to absorb
12                  such improvements;
13             (c) The  availability  of water  source  and  electric  power  supply  for  use  of the
14                  special agricultural growl zones;
15            (d)The   extend   of  vacant   lands   available   for   industrial   and   commercial
16                  development and future expansion of the special agricultural growih zones as
17                  well as of adjacent lands available for development of residential areas for the
18                    workers;
19             (e) The availability of skilled, send-skilled and non-skilled trainable labor force in
20                  and around the special agricultural growth zones;
21             (I)  The  area  must have  a  significant  competitive  advantage  over  the  existing
22                  agricultural lands and its potential profitability can be established;
23             (i) The area must be stratealcally located; and
24            th) The area must be situated where control can easily be established to curtail
25                   smuggling activitie s.
26                  Other areas which do not meet the foregoing criteria may be established as
27      special agricultural growth zones, Pro#z.JCJ, that the said area shall be developed only
28      through ]ocal government and/or private sector initiative under any of the schemes
29      allowed in this Act, and without any financial exposure on the part of the national
30      government: Prp„.Jcc/,/z/rd4Gr, that the area can be easily secured to curtail smuggling
31       activities:  P7tw/.dec7, u¢#j/dy,  that  are  five  (5)  years  the  area  must  have  attained  a
32      substantial degree of development, the indicators of which shall be formulated by
33      thepAZA.
8


Chapter 11
GOVERNING STRUCTURE
3                Section 7.  Creation of the PhiHppine Agricultural Zone Authority.  -
4      There is hereby created a body corporate to be known as the philippine Agricultural
5      Zone Authority ¢AZA) attached to the Department of Agriculture.
6                Section  8.  General  Powers  and  Functions  of  the  Authority.  -  The
7      Philippine  Agricultural  Zone  Authority  shall  have  the   following  powers  and
8      functions:
(a) To  operate,  administer,  manage,  and  develop  special  agricultural  growth
zones according to the principles and provisions set forth in this Act;
a) To   realster,   regulate   and   supervise   the   entcaprises   located   in   special
agricultural growth zones in an efficient and decentralized manner;
(c) To coordinate with local government units and exercise general supervision
over the development, plans, activities, and operations of special agricultural
growth zones;
16            (d) In  coordination  with  local  government  units  concerned  and  appropriate
17                  agencies, to construct, acquire, own,lease, operate and maintain on its own
18                  or through contract, franchise, hicense, bulk purchase from the private sector
19                  and  build-opcratc-transfer  scheme  or  joint venture,  adequate  facilities  and
20                  infrastructure, such as light and power systems, water supply and distribution
21                   systems,    telecommunication    and    transportation,    buildings,    structures,
22                  warehouse,  roads,  bridges,  port  and  other  facilities  for  the  operation  and
23                  development of special agricultural growth zones;
31
32
33
34
(e) To  create, operate and/of contract to  operate such agencies and functional
units or offices of the authority as it may deem necessary;
(f)  To  adopt,  alter  and  use  a  corporate  seal;  make  contracts,  lease,  own  of
otherwise dispose of personal or real property; sue and be sued; and otherwise
carry out its duties and functions as provided for in this Act;
® To coordinate the formulation and preparation of the development plans of
the different entities mentioned above;
th) To  coordinate with  the  Department of Agriculture  @A),  Department  of
Agrarian   Reform   OAR),   Department   of   Environment   and   Natural
Resources  @ENR), National Economic Development Authority QIEDA),
the Department of Trade and Industry @TI), the Department of Science and
9


Technology  @OST),  and  the  local  government  units   and  appropriate
government     agencies     for     policy     and     program     formulation     and
implementation; and
4            (i)  To  monitor  and  evaluate  the  development  and  requirements  of  special
5                  agricultural growth zones and recommend to the local government units or
6                  other appropriate authorities the location, incentives, basic services, utilities,
7                  and infrastructure required or to be made available for said entities.
8                 Section 9. Board of Directors. -The overall directions and thrusts ofpAZA
9      shall be provided and approved, unless provided otherwise in this Act, by its Board
10      of Directors, hereinafter referred to as the Board.
11             The Board shall be composed of fifteen (15) members as follows:
12            (a) Secretary of the Department of Agriculture as chairman;
13            a) Director-general  of  the  philippine  Agricultural  zone  Authority  as  vice-
14                   Chairman;
15            (c) Undersecretary of the Department of Agrarian Reform;
16            (d) Undersecretary of the Department of Finance;
17            (e) Undersecretary of the Department of Labor and Employment;
18            (f)  Undersecretary of the Department of Interior and Local Government;
19            ® Undersecretary of Department of Environment and Natural Resources;
20            th) Undersecretary of Department of public works and Highways;
21             (i)  Undersecretary of Department of science and Technology;
22            ¢)  Undefsecfetary of Department of Energy;
23            ® Thee  (3)  Deput}t  Directors-General  of  the  Philippine  Agricultural  Zone
24                  Auth o rity;
25            0  Two  (2)  Private  sector Representatives  to  be  appointed by the president,
26                  upon the recommendation of the Board comprising of one (1) representative
27                   each from the:
28                               1.   Farmer and farm worker sector
29                                2.   Investors and business sector
30                  The term of the two (2) representative from the private sector shall be six (6)
31      years:   Provided,  however,  that  they   shall  continue  to   hold  office  unul  their
32      successors shall have been appointed. All vacancies, prior to the expiration of the
33      term, shall be fllcd for the unexpired term only.
34                  In case of the unavailabhity of the secretary of the Department of Agriculture
35      to  attend  a particular board  meeting,  the Director  General of PAZA  shall  act as
36      Chairman.
10


1                  Members of the Board shall receive a per diem of not less than the amount
2      equivalent to the representation and transportation allowances of the members of
3      the  Board  and/or  as  may  be  determined  by  the  Department  of  Budget  and
4      Management:  Provided,  however,  that per  diems  collected  per  month  does  not
5      exceed the equivalent offour (4) meetings.
6                Section 10. Function and power of the PAZA Board. -The PAZA Board
7      of Directors shall have the following functions and powers:
8                  (a) Set  the  general policies  on  the  establishment and operations  of special
9                         agricultural growih zones, agro-industrial estates, export processing zones,
10                         free trade zones, and the like;
11                   a) Review  proposals  for  the  estabhshment  of special  agricultural  growth
12                        zones based on the set criteria provided for in this Act and endorse to the
13                         President    the    establishment   of   special    agricultural   growth    zone.
14                         Thereafter, it shall facilitate and assist in the organization of said entities;
15                  (c) Regulate and undertake the estabhishment, operation and maintenance of
16                        uulities, other services and infrastructure in the special agricultural growth
17                        zones,  such  as heat, light and power, water  supple, telecommunicatiofl,
18                        transport, toll roads and bridges, port services, and the like and to fix just,
19                         reasonable and competitive rates, charges and fees therefore;
24
25
(d) Approve the annual budget of the Philippine Agricultural Zone Authority
and the development plans for special agricultural growhi zones;
(e) Issue m]es and regulations to implement the provisions of this Act in so
far as its power and functions are concerned;
(I)  Exercise its powers and functions as provided for in this Act; and
(g) Render annunl reports to the President and the Congress.
26                 Section 11. Director-General. -The philippine Agricultural zone Authority
27      shall  be  headed  by  Director-General  with  the  rank  of  Undersecretary  to  be
28      appointed by the president of the philippines. He or she shall serve a term of six (6)
29      years from the date of his or her appointment unless removed for cause. Provided,
30      That no person  shall be  appointed  as  Chairperson  unless  he  of  she is  a Filipino
31      citizen, of good moral character, of proven probity and integrity and a holder of a
32      degree  in  any  of  the  following  fields:  agriculture,  economics,  business,  pub]jc
33      administration,law management of their equivalent and have at least frve (5) years
34      relevant experience preferably in the field of agriculture, economics, business, public
35      administration, law, management or their equivalent, and with at least ten (10) years
11


1      relevant working experience preferably in the field of agriculture, management or
2      public administration.
3                  'The Director-General  shall be assisted by three Deputy Directors-General,
4      each for policy and planning, administration, and operation, who shall bc appointed
5      by  the  PAZA  Board  upon  the  recommendation  of  the  Director-General.  The
6      Deputy-General and shall have the same qualifications as the Director-General and
7      shall perform such duties and function as may be assigned by the Director-general
8      orasprovidedforbylaw.
9                Section  12.  Powers  and  Functions  of  the  Director-General.  -  the
10      Director-General shall act as chief executive officer and the overall coordinator of
11      the policies, plans and programs of special agricultural growth zones. As such, he or
12      she shall provide overall supervision over and general drection to the development
13      and operations of these special agricultural growth zones. He or she shall determine
14      the structure and the stafflng pattern and personnel complement of the PAZA and
15      establish  regional  offices, when  necessary,  subject  to  the  approval  of the  PAZA
16      Board.
17                  In   addition,   he   or   she   shall   have   the   following   specific   powers   and
18       responsibilities:
30
31
32
33
(a) To safeguard a.11 the agricultural lands, buildings, records, monies, credits
and other properties and rights of special agricultural growth zones;
a) To  ensure  that  all  revenues  of  special  agricultural  growth  zones  arc
collected and applied in accordance with its budget;
(c) To ensure that the investors/firms and employees of special agricultural
growth zones are properly dischafalng their respective duties;
(d) To give such information and recommend such measures to the Board, as
he shall deem advantageous to special agricultural growth zones;
(e) To  submit to the Board, the ongoing and proposed projects, work and
financial program, annual budget of receipts, and expenditures of special
agricultural growth zones;
®  To represent special agricultural growth zones in all its business matters
and   sign   on  its   behalf  after  approval  of  the  Board,  all  its   bonds,
borrowings,  contracts,  agreements,  and  obligations  made in  accordance
with this Act;
12


1                  ® To  acquire  jurisdiction,  as  he  may  deem  proper,  over  the  protests,
2                        complaints,   and   claims   of  the   residents   and   enterprises   in   special
3                        agricultural growth zones concerning administrative matters;
4                  th) To recommend to the Board the grant, approval, refusal, amendment or
5                         termination  of  special   agricultural  growth   zone   franchises,  1icensers,
6                        permits, contracts, and agreement in accordance with the pohicies  set by
7                         the Board;
8                  (i)  To require owners  of houses, buildings  or other structures  constructed
9                        without the necessary permit whether constructed on public or private
10                        lands, to remove or demolish such houses, buildings, structures with sixty
11                        (60)  days  after  notice  and  upon  falure  of  such  owner  to  remove  or
12                        demolish such house, building our structure with said period, the Director-
13                        General or his authorized representative may summarily cause its removal
14                        or  demolition  at  the  expense  of. the  owner,  any  existing  law,  decree,
15                        executive  order  and  other  issuances  or  part  thereof  to  the  contrary
16                         notwithstanding;
17                  0  To  take  such  emergency  measures  as  may be  necessary  to  avoid  flfes,
18                        floods  and  mitigate  the  effects  of storms  and  other  natural  or  public
19                           calamities;
20                  ®To   prepare   and   make   out   plans   for   the   physical   and   economic
21                         development of special  agricultural growth  zones, including zoning and
22                        land  subdivision,  and  issue  such  rules  and  regulations  which  shall  be
23                        submitted to the Board for its approval; and
24                  a)  To  perform  such  othcf  duties  and  exercise  such  powers  as  may  be
25                        prescribed  by  the  Board,  and  to  implement  the  policies,  rules   and
26                        regulations set by the PAZA.
27                Section 13. Administration of Each special Agricultural Growth zone.
28      -  Except  for  privately-owned,  managed  or  operated  special  agricultural  growth
29      zones,  each  special  agricultural  growth  zone  shall  be  organized,  adrfunistered,
30      managed, and operated by an Administrator with the assistance of one (1) Deputy
31      Administrator,  both  to  be  appoint  by  the  Board  upon  recommendation  of the
32      Director-General.
33                  There   shall  be,   for  each   special  agricultural  growth  zone,  an  advisory
34      committee to be composed of:
35                   (a) Local  chief  executive  of  the  city  or  municipalities  where  the  special
36                         agricultural growth zone is located;
13


1                  a) Member  representing  the  investors  located  in  the  special  agricultural
2                        growth zone;
3                  (c) Member  representing  the  farmer-landowners  in  the  special  agricultural
4                      growl zones;
5                  (d) Member representing the business  sector in the periphery of the special
6                        agricultural growth zone; and
7                   (e) The PAZA-designated representative.
8                  The  advisory  committee  shall  advise  the  special  agricultural  growth  zone
9        management  on  matters  pertaining  to  policy  initiatives;  and  assist  in  settling
10        problems arising between labor and any enterprise in the special agricultural growth
11           zones.
12                  Privately-owned special agricultural growth zones shall retain autonomy and
13        independence but  shall be monitored  by the PAZA  for  the implementation  of
14        incentives and operations for adherence to the law.
15                  Section 14. Personnel. -The PAZA Board of Directors shall provide for an
16        organization  and  staff  of  officers  and  employees  of  the  PAZA,  and  upon
17        recommendation of the Director-General, appoint and fix the remunerations and
18        other emoluments: Provided, that the Board shall have exclusive and fmal authority
19        to promote, transfer, assign and reassign officers of the PAZA, any provision of
20        existing law to the contrary notwithstanding: Pfovided, further, that the Director-
21         General may carry out removal of such offices and employees.
22                  All positions in the PAZA  shall be governed by a compensation, position
23        classification system and qunlification standards approved by the Director-General
24        with  the  concurrence  of the  Board  of Director based  on  a  comprehensive  job
25         analysis and audit of actual duties and responsibilities. The compensation plan shall
26        be comparable with the prevailing compensation plans in the private sector and
27        sham be subject to the periodic review by the Board no more than once every two
28         (2)   years   without   prejudice   to   yearly  merit   reviews   or   increases   based   on
29        productivity and profitability. The PAZA shall therefore be exempt from existing
30        laws,   rules   and   regulations   on   compensation,   position   classification,   and
31         qualification standards.
32                  All officials and employees of the PAZA shall be selected and appointed on
33         the  basis  of merit  and  fltness  in  accordance  with  civil  service  law,  niles,  and
34        regulations. The recruitment, transfer, promotion, and dismissal ofall its personnel
35        including  temporary workers  shah  be  governed by  a  merit  system  that will  be
36        established by the PAZA in compliance with existing laws, rules, and regulations.
14


I                  The PAZA officers and employees including all members of the Board shall
2        not engage directly or indirectly in partisan activities or take pact in any election,
3         except to vote.
4                 Section 15. Investigation and Inquiries. -upon a written formal complaint
5        made under oath, which on its face provides reasonable basis to believe that some
6        anomalyor irregularity might have been committed, the PAZA or the administrator
7        of the special agricultural growth zone concerned, shall have the power to inquire
8        into the conduct of it firms or employees and to conduct investigations, and for
9        that   purpose   may   subpoena   witnesses,   administer   oaths,   and   compel   the
10        production of books, papers, and  other pieces  of evidences:  Provided, that, the
11         investigator(s)   may  grant  immunity  from  proseculon   to   any  person  whose
12        testimony or whose possessions of documents or other evidence is necessary of
13        convenient to determine the truth in any investigation conducted by him or under
14        the authority of the PAZA of the administrator of the special agricultural growth
15         zone concerned.
16                Section  16.  Prohibition  Against  Holding  Any  Other  Office.  -  The
17        Director~Genefal, Deputy Director-General, administrators, officials and staff or
18        assistants of the PAZA shall not hold any other office or employment widin or
19        outside the PAZA during their tenure. They shall not, during their tenure, directly
20        or indirectly, practice any profession, participate in any business, or bc financially
21         interested in any contract with, or in any franchise, or special privilege granted by
22        the   PAZA   or   the   national   government,   or   any   subdivision,   agency,   or
23        jnstrumcntality thereof, including any government-owned-controlled corporation,
24         or its subsidiary.
25                 Section 17. Disbursement of Funds. -No money shall be paid out of the
26        finds of any special agricultural growth zone except in pursuance of the budget as
27        formulated and approved by the PAZA.
28                    Section  18.  Full  Disclosure  of Financial  and  Business  Interests.  -
29            Each  member  of the  PAZA  Board,  the  Director-General,  Deputy  Director-
30            General, adrinistrators, and their staff shall, upon assumption of office, make
31             full disclosure of their financial and business interests.
32                                                                   Chapter Ill
33            OPERATIONS WITHIN THE SPECIAL AGRICULTURAL ZONES
34                 Section   19.   Agricultural   Development   Strategy   of  Each   Special
35        Agricultural Growih Zone. -The development priorities and strategy of each
36        special agricultural growl zone established pursuant to this Act shall be formulated
37        by the PAZA, in coordination with the Department of Agriculture, the Department
15


1        of  Agrarian  Reform,  the  Department  of  Trade  and  Industry,  the  National
2        Economic Development Authority, and the local government units; Provided, that
3         such   development  strategy  is   consistent  with   the   priorities   of  the  national
4        government as oudined in the Medium-Term philippine Development plan.
5                  The development priorities and strategy for each special agricultural growth
6         zone shall take into consideration five (5) major factors:
(a) Increased farm productivity and profitability through land clustering with a
minimum of fifty (50) hectares cluster for synchronized farming operations;
a) Provision  of required  physical  and  institutional  infrastructure  and  other
support services;
(c) Enhances     farming    techniques,     farm     development     and     business
competitiveness through the integration  of contiguous farming and other
agribusiness enterprise arrangements;
(d) Availabilit}+  of accessible  agricultural  credit  and  finaflcing  programs  and
modem farming information, inputs, technology, and machinery; and
(e) Improved  quality of life  for  farmers  and  farm  worker  by ensuring  food
security, poverty alleviation, non-farm employment and social equity.
18                  It shall be the po]ic}' of the government and  the PAZA to  encourage and
19      provide incentives and facilitate private sector participation in the construction and
20      operation  of public  utilities  and  infrastructure  in  the  special  agricultural  growth
21       zones, using any of the schemes allowed in Republic ActNo. 6957.
22                Section 20. Market competitiveness and sustalnability. -The PAZA, in
23      coordination  with  the  Department  of Agriculture,  the  Department  of Agrarian
24      Reform,  the  Department  of  Trade  and  Industry,  the  National  Economic  and
25      Development Authority, and the local government units  shall formulate medium
26      and long-term plans aimed at enhancing the competitiveness and sustainability of
27      each  special agricultural growth zone based on, but not limited to, the following
28      goals and indicators of development:
31
32
(a) Increase  in  the volume,  quality,  and  value  of agriculture  production  for
domestic consumption and for exports;
a) Reduction in post-harvest losses;
(c) Increase in the number, types, and quality of processed agricultural products;
16


(d) Increase in the number of international trading partners in agriculture and
fishery products;
(e) Increase  in  the  number  of sustalnable  agriculture  enterprises  engaged  in
domestic production, processing, marketing, and export activities;
©  Increase  in   and  wider  level  of  entfepreneurship   among  farmers   and
farmworkers in the area;
® Increase in the number of farms engaged in diversified farming; and
th)Reduced   use   of   agro-chemical   that   are   harmful   to   health   and   the
environment.
10                  Section 21.  Survey of Resources.  -Prior to  the  creation  of each  special
11      agricultural  growth  zone,  the  PAZA,  in  consultation  with  the  Department  of
12      Agrarian  Reform,  the  Department  of Trade  and  Industry,  the  Department  of
13      Environment and Natural Resources, Department of science and Technology, the
14      concerned  local  government  unit  and  the  organized  farmers  and  farm  worker
15      groups, the private sector and communities shall conduct a survey of the physical,
16      natural  assets  and  potentialities  of  the  area   covered  by  the  proposed   special
17      agricultural growth zone.
18                 Section 22. Agribusiness Enterprise Arrangements. -The PAZA shall
19      provide farmer-landowners within designated  special agricultural growth zones, if
20      they deem it the most economically and socially beneficial option available to them,
21      the option to enter into any of the following agribusiness enterprise arrangements
22      with private investors and locatofs with proven competence in farm operations and
23      management, high-end quality production and productivity through the use of up-
24      to-date  technology  and  collateral  resources  such  as  skilled  manpower,  adequate
25      capital and credit, and access to markets, consistent with the existing laws:
26            (a) BulJd-Operate-Transfer scheme;
27            a) Contract Growing scheme;
28            (c) Growership scheme;
29            (d) Joint venture Agreement scheme;
30            (e) Lease Agreement scheme, provided that control over the agricultural and
31                   shall always remain with the farmer-landowner;
32             (I)  Marketing scheme;
33             (i) Service contract scheme; and
34            th) Any combination of the foregoing agribusiness enterprise arrangements
35                  consistent with the provisions of this Act.
17


1                 Section 23. Contracting parties and Their Qualifications. -The parties
2      to an agribusiness enterprise arrangement shall possess the following qualifications:
3            (a) Individual farmer-landowners who are in possession of their land, including
4                 agrarian reform beneflciaries who hold an Emancipation patent qp),  or a
5                  Certificate of Land ownership Award (CLOA) or otheftenurial instruments.
6                  However,  in  no  case  shall  potential  ARBs  be  allowed  to  enter  into  an
7                  agribusiness  enterprise  arrangement  or  any interim  agreement prior to  the
8                  award of the tenurial instrument and the actual possession of the land;
9            ® Organized farmer groups, including ARB cooperatives of associations, who
10                  are the actual ullers  shall have the legal personality to transact or enter into
11                   any contract even if such entities or actual tillers are not realstered with the
12                  Cooperatives Development Authority (CDA) or the securities and Exchange
13                   Commission (SEC) as the case may be.
14                  For  ARB  cooperatives  or  associations  with  CLOAs  in  the  name  of the
15                  organization,   the  Board   of  Directors/Trustees   of  such   cooperative   or
16                  association  shall secure the vote of approval by the general membership ifl
17                  accordance with their Articles of cooperation/Association and By Ijaws. In
18                  the absence thereof,  a vote of approval of at least two-thirds  (2/3)  of the
19                   general membership shall be secured.
2o            (c) Prospective    investor-locators    must    have    valid    rcedstration    with    the
21                  appropriate regulatory agencies, such as the SEC, CDA, and the Department
22                  of Trade and Industry  @TI), good  financial, technical,  and organizational
23                  standing for the past three (3) years; good track record of competence for the
24                  past  three   (3)  years  in  the  industr}'  wherein  the  agribusiness  enterprise
25                   arrangement   shall   conduct   its   main   activity;   stable   business   relations;
26                  capability  to  manage  and  operate  the  agribusiness  enterprise  arrangement
27                  undertaking; consistent compliance with and no violation of any law, rule, and
28                  regulation, and contract as the case may be.
29                  If previously a contracting party to an agribusiness enterprise arrangement, a
30                  prospective investor-locator must have proven harmonious relationship with
31                  the  other  contracting  party  which  resulted  to  productive  and  mutually
32                   beneficial gains.
33                  Any  prospective  investor-locator  should  neither  have  violated   any  law
34                  pertaining to agrarian reform, nor impeded in any part of the agrarian reform
35                  program implementation.  In  addition,  the prospective investor  should not
36                  have prevented any ARB, actual tiller, or farmer from exercising the rights
37                  under the agrarian reform program.
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3
4
5
6
7
The necessary proof to establish the possession of the foregoing qualifications
shall be submitted to the PAZA which shall make the necessary determination
of eligrbhity. For this purpose, the PAZA may call up on other agencies and
regulatory bodies such as the DA, DAR, SEC, CDA, and DTI, among others,
for  technical  assistance.  In  this  evaluation.  Such  findings  shall  then  be
forwarded to the PAZA Board which shall make the fmal recommendation
on the investors' apphcation.
8                 Section    24.    Mandatory    Provisions    of   Agribusiness    Enterprise
9     Arrangements. -Agribusincss enterprise arrangements within special agricultural
10      growth zones entered into under this Act, being imbued with pubhc interest, shall
11      have the following mandatory provisions:
12            (a) The landholding subject of the agribusiness enterprise arrangement shah be
13                   used   exclusively   for   agricultural   purposes   and   other   related   activities
14                  comprising  the  subject matter of the  arrangement;  only two  thirds  of the
15                  entire  area  shall bc  subjected  to  the  arrangement,  the  remaining one  third
16                  portion shall be exclusively controlled and used by the farmer-landowner of
17                  actual tiHers with full support from the government.
18            a) The  parties  to  the  agribusiness  enterprise  arrangement  shall  recognize  the
19                  prerogative  of a  pardcipating  farmer  of  fafmwofkef  to  exercise  the  rights
20                  granted to them under agrarian reform laws in the event of certain disputes
21                   over any of the terms set under the arrangement;
22            (c) The agribusiness  enterprise arrangement shall require and ensure the direct
23                  participation   of  the   farmer-landowner   and   farm  workers   in   the   farm
24                  management and farm operations and shall include, among others, capacit}'
25                  building   programs   aimed   to   facilitate   the   transfer   of  technolog}t   and
26                  management techniques to the farmer-landowners;
27            (d) The agribusiness enterprise arrangement shall include provisions for workers'
28                  productivity and quality incentives for the employed farmer-landowner and
29                  farm workers over and above the compensation from the arrangement. The
30                  Inclusion  of provisions  for  additional  sources  of income  for  the  farmer-
31                  landowner and farm workers in the alfangement aside from the main or basic
32                  income-generating activity therein are encouraged;
33            (e) For the duration of the contract, the investof shall provide funds necessary to
34                  ensure ccolostcal protection of the farm and safety of its workers, particularly
35                  for  the  conservation  and  maintenance  of  land  quahity,  proper  handling,
36                  storage and disposal  of hazardous residues and waste products, and proper
37                  protective and acceptable safe methods of apphcation of ferdlizers and other
38                  chemicals: Provided, That decisions as to the ecoloalcal protection of the farm
19


and  safety  of workers  and  the  methods  employed  in  the  apphcation  of
fertilizers, pesticides and other chemicals,  shall be mutually agreed upon by
the investor and farmer-landowner and farm workers.
(I)  Further, participating farmers  or  farmworkers  shah  be provided with  crop
insurance  coverage and  other  forms  of insurance and  healthcafe, housing,
education,  and  other benefits.  In  determining the  amount  of the  benefits
stated above, the following factors should be considered: the market value of
similarly situated lands, real propert}t taxes, annual land amortizations, poverty
threshold, and nature of the activity of the business under the agribusiness
enterprise arrangement. In any and all instances, the amount of the lease of
the  land  in  the  arrangement  must  be  regularly  and  periodically  increasing
based on a schedule subject to the approval of the PAZA;
(g) There   shall  be   a  review   during  the   first   quarter  of  the   year   and/or
renegotiation of the critical terms of the agribusiness enterprise arrangement
by  the  contracting  parties  to  allow  for  some  changes  in  the  economic
assumptions  and in  consideration  of prevailing economic  conditions at the
time of apptication and processing of the agribusiness enterprise arrangement,
as well as changes to the physical attributes of the land;
th) The agribusiness enterprise arrangement shall be subjected to  regular semi-
annual  monitoring by  the  PAZA  and  the  DAR in  order  to  estabhsh  the
continuing  viabjljty  of  the  arrangement,  comphiance  with  its  terms  and
conditions   and   the   promotion   of.  rights   Sand  welfare   of  the   farmer-
landowners and farm workers;
(i)  The review and/or renegodation of the agribusiness enteaprise arrangement
sham  be undertaken  upon  request  or petition  of any of the parties  due  to
changes in the economic, pohitical, and social circumstances existing in the
affected  land   area,   Such   changes   could   result  in   such   a  material   and
fundamental alteration of the conditions, assumptions, and bases relied upon
by the parties during the signing of the orialnal contract or agreement;
Specific grounds for a request for contract review may include:
1.   Drastic change in price fluctuations as indicated by at least 20 percent
inflation;
2.   Declaration by the National Government or the Local Government Unit
of the area where the land is located as a "calamity disaster area"; and
3.   Other meritorious grounds as determined by the PAZA Board.
0  Agribusiness entci:prise arrangements within special agricultural growth zones
shad  be  subject  to  the  approval  of the  PAZA  Board.  Otherwise,  it  shah
20


become void. No agribusiness enterprise arrangcment shall be implemented
without the approval of the PAZA Board. No arrangement shall be renewed
or extended without the approval of the PAZA Board which shall have the
power  to  approve  and  disprove  all  applications  for  the  approval  of  an
agribusiness  enterprise  arrangement. The PAZA Board  shall  also have  the
power to revoke or rescind the existing grant of approval for an agribusiness
enteaprise arrangement;
qc) All  renegotiated/renewed/extended  contracts  and  their  effectivity  shah  be
subject to the same process of review and approval by the PAZA Board in
accordance with the niles and regulations issued therefor:
a)  The term of an agribusiness enterprise arrangement shall be for a maximum
period of twenty (20) years or may bc mutually agreed upon by all parties, but
not exceeding the duration of the agricultural activity to be undertaken on the
land: Provided, That the arrangement shall not contain any clause providing
for its  automatic  renewal,  otherwise,  the  automatic  renewal  clause  is  void.
Renewal of the arrangement shall likewise not be implied, and shall always be
subject to the written agreement of the parties;
All agribusiness  enterprise arrangement contracts must contain a provision
allowing the farmer to rescind the arrangement upon violation of any of its
terms  and  conditions  by  either  of  the  contracting  parties,  as  well  as  for
violation of agrarian reform and other laws. Such rescission shall be initiated
through a petition filed with the PAZA;
(in)            In addressing the food  security concerns of the country, the parties
should agree that, in case of food shortage in the country, at least flfty percent
(50%) of the produce involving staple crops will automatically be set aside for
the domestic market. For purposes of enforcement, the PAZA Board may
invoke said provision, if and when necessary.
(n) The roles and responsibilities of the PAZA, the farmer-landowner and the
investor  shall  be  clearly  identified  in  the  contract  as  well  as  the  expected
ouq]ut from each party. It must be clear that successors-in- interest of both
the  investors  and  the  farmer-landowner  are  bound  by  the  terms  of  the
contract.
(o) Consent of the other party in cases of transfer of fights and responsibinties to
a new party who shall likewise possess the qualifications pfovidcd for in this
Act, shall be secured.
® The PAZA shall have primary and exclusive jurisdiction in the resolution of
any and all disputes relating to the agribusiness enterprise arrangements within
21


special   agricultural   growth   zones.   There   shall  be   no   provision   in   the
arrangement where the PAZA o shall be directly or indirectly deprived of its
jurisdiction on any and all matters pertaining to the arrangement.
(q) Terms  and  conditions  of  the  contract  governing  agribusiness  enterprise
arrangement  shall  be  made  known  to  all  parties.  The  contract  shall  be
translated  to  the  language  known  to  the  farmer-  landowners.  Terms  and
conditions for pre~termination of contracts shall be clearly stipulated in the
contract.
(r)  In case  of lease agreements, the rental shall be at least 25% of the  average
normal harvest pursuant to  Sec.  34 of RA 3844, otherwise known  as  "The
Agricultural Ijand Reform Code".
(s) Where the agribusiness enterprise arrangement requires the employment of
workers,  the  parties  shall  comply  with  labor  laws,  rules  and  regulations
particularly the prohibition on employment of 38 children flftcen years and
below.
(t)  Any  and  all  permanent  improvements  as  well  as  facihies  and  equipment
purchased under the agribusiness enterprise arrangement involving lease of
the lands  shall be  owned by  participating farmer-owner  at the  end  of the
agribusiness enterprise arrangement.
(u) There  shall  be  no  provision  in  the  agribusiness  enterprise  arrangement
involving the lease of lands where the investof shall be excused from paying
the lease and the guaranteed share of the farmer-landowner or farmworker in
the  arrangement due to  any events which  could not be  foreseen  or which
though foreseen, were inevitable.
(v) In  agribusiness  enterprise  arrangements  involving  contract  growing,  there
shall be a minimum bu}ing price and there shall be no maximum buying price.
In relation to this, the parties and the PAZA shall consider the selling prices
of  commodities  as  well  as  the  prices  of inputs.  Also,  there  shall  be  no
provision which prevents the farmer- landowners or farm workers to manage
the farms. There shall also be no provision where the production inputs are
charged to the farmer-landowner.
(w)In  no instance shall  the farmer-landowner be made liable to pay any loan
obligation incurred by the investor for the arrangement. In no instance shall
any property  of the  farmer-landowner  be  used  as  a  security  for  any loan
incurred for the business cnteaprise. The EP, CLOA, or any title to the land
of the farmer-landowner shall never be used a s a form of security to any such
loan.
22


1             (x) In the case of agricultural lands awarded to ARBs, the proposed agribusiness
2                  enterprise arrangement shall be subject to technical review by the DAR as to
3                  comphiance with legal requirements  and as  to the feasibdity of the venture.
4                  For this purpose, the DAR may call upon other agencies and regulatory bodies
5                  such as the DA, SEC, CDA, and DTI, among others, for technical assistance
6                   in this evaluation.
7            ty) The provisions of the agribusiness enterprise arrangement, the nature and the
8
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12
13
14
scope of the activities, the duties and the responsibilities of the parties shall
be clearly explained by the PAZA to the farmer-landowner and farmwofkers
participating in  the arrangement in  order to  ensure  that  said  they  shall be
entering the arrangement voluntarily, intelligently, and knowingly. In no way
shall any party to the arrangement require the acquiescence by the other to
duly enter into a particular arrangement as a prior requirement for avalhing the
benefits contained in the arrangement.
15             (z) All   agribusiness   enterprise   arrangements   shall   be   strictly  enforced   and
16                 monitored by the PAZA in coordination with the DAR.
17                 Section 25. Control over Agrarian Reform Lands. -In any agribusiness
18      enteaprise venture, control  over the  agrarian reform land located within  a  special
19      agricultural growl zone shall always remain with the agrarian reform beneficiaries.
20      For this purpose, joint venture agreements between agrarian reform beneficiaries
21      and investors which result to a minority equity of the agrarian refdrm beneficiaries
22      shall not be allowed or approved by PAZA Board without the recommendation of
23      the DAE. Also, any provision of permanent take-over in the arrangement that takes
24      away  the  management  of the  agricultural  production  in  growership  contract  or
25      contract growing agreement shall be void.
26                 Temporary takeover shall be limited to  farm  operations  only and  may be
27      allowed provided that all of the following conditions arc present:
28            (a) Upon mutual agreement of the parties;
29            a) The takeover shall only be for not more than three (3) cropping cycles;
30            (c) When both parties mutually determine that the agreed quantity and/or quality
31                  of production cannot be ddivered by the farmer-landowners.
32                  Temporary  takeover  shall  not  take  place  during  the  transition  to  a  new
33      production technology.
34                 Section  26.   Approval   and  Revocation   of  Agribusiness   Enterprise
35      Arrangements.   --   All   agribusiness   enterprise   arrangements   within   a   special
36      agricultural growth zone, entered into between  farmer-landowners and any other
37      person under cris Act shall be approved by the PAZA Board.
23


1                  Agribusiness enterprise arrangements within contracts may be revoked by the
2      PAZA Board based on the following grounds:
(a) Gross  violation  or  non-compliance  of  the  terms  and  conditions  of  the
contract such as:
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1.   Non-implementation   of  the   human   resources   development   plan
provisions;
2.   Non-employment of the farmer-landowner;
3.   Concealment of the true flnancial status of the enterprise;
4.   Comnrission  of  fraud  in  the  application  or  implementation  of the
arrangement; and
5.   Other analogous cases.
® When, without justiflable reasons, the investor falls to provide benefits and
incentives  stipulated in the  approved contract,  such as,  but not hmited  to,
dividends  accruing  to  farmer-landownef's  equity  shares,  production,  and
quality  incentives.  For  this  purpose,  situations  beyond  the  control  of the
investor, such as force majeure, are considered as justifiable reasons;
(c) When the agribusiness enterprise arrangements are no longer financially and
economically viable;
(d) When a portion of the commercial farm subject of the agribusjness enterprise
arrangement is converted into or fragmented by non- agricultural use without
prior written consent of the farmer-landowner and the PAZA;
(e) Any action resulting to the transfer of ownership of the landholding subject
of agribusiness enterprise arrangements to the investors;
(I)  Acquisition  or  approval  of  agribusiness  enterprise  arrangements  through
fraud, intimidation, coercion, and deceit;
(D Other analogous or meritorious grounds.
28                 Section   27.    Support   Services   for   Farmer-Landowners   Entering
29     Agribusiness Enterprise Arrangements. -The PAZA shall establish a capacity
30      Building  Program  for  farmer-landowners  entering  into   agribusiness  enterprise
31      arrangements wihin special agricultural growth zones, with sufficient funding from
32      the General Appropriations Act. The purpose of the capacity building program is to
33      strengthen the farmer's  ability to negotiate  fairer terms  for agribusiness contracts,
34      deal with markets, harness local and international opportunities, and identify and act
35      on onerous agreements to protect their rights.
24


1                 The  program  shall  be  formulated  joindy by  the  PAZA  DAR,  DA,  DTI,
2      Landbank of the Philippines, and CDA within sixty (60) days from the enactment
3      of this law.  It  shall include  the  following  components:  acquisition  and design  of
4      technology for production and packaging, access and management of production
5      credit,  organization  of business  units,  realstration  of juridical  entity  (cooperative,
6      corporation  or  association),  business  ideation,  organizational  development  and
7      strengthening,    market   linkages,    product    development    and   value    addition,
8      certification of agricultural and food products and processes, enterprise lawyering,
9      and the review and renegotiation of onerous agreements. The implementation of the
I 0      capacity building program may be outsourced from the private sector.
11                 Section   28.   Contiguous   Farming   Arrangements.   -   To   boost   the
12      production  of high value a.gricultural crops to an industrial scale and increase the
13      productivity of. farming within  special  agricultural growth  zone,  the  PAZA  shall
14      institutionalize  the  implementation  of the  contiguous  farming arrangement.  The
15      scheme  shall include the consolidation of small  farms including farms of agrarian
16      reform beneficiaries, as one larger farm, with a mininum area of thirty (30) hectares
17      within a two-kilometer radius, to  take  advantage of the economies  of scale in the
18      production of industrial crops, such that the activities in the small farms are ahgned
19      and implemented to  ensure the efficient use  of farm machineries arid equipment,
20      deployment of workers, volume purchase of inputs, financing, and other operational
21      advantages, as well as fecogrition by agricultural processors, government financial
22      institutions, private investors, but the ownership of each small farm remains with
23      thelandowners.
24                  The  PAZA  in  collaboration  with   concerned  government  agencies   shall
25      provide common service facihties, such as farm machineries and implements, grants
26      or  start-up   funding  for  the  needed  production  inputs,  technology  adoption,
27      hvelihood and s]al]s training and other development acdvities for the block farm and
28      its members, and other support activities that may be identified.
29                  To ensure the success of, and compliance to the objectives of the contiguous
30      farming scheme, the PAZA shall:
31             (a) Develop guidelines for farms to quahfy for and continue to participate in the
3 2                  contiguous farming arrangement,
33            ® Provide  farm  management,  technical  assistance,  and  professional  services
34                  support to consolidated farms, in coordination with the DA, the DAR and
3 5                  other concerned government agencies;
36            (c) Monitor the development and productivity of consolidated farms; and
37             (d) Implement a certiflcation system as a mechanism to access grants, low interest
38                  financing,  and  other  incentives  and  suppo.tt  from  Official  Development
39                  Assistance (ODA); and market access of high value priority crops.
25


1                 Section  29.  Agricultural  Support  Services.  -  The  PAZA  shall  make
2      available  other  agricultural  support  services,  program  which  shall  include,  the
3      following:
4           (a) Socialized credit and Financing services -Socialized credit and financing
5
6
7
8
9
10
11
shall be made available, through the Land Bank of the Philippines qBP), for
the  acquisition  of  production  inputs,  farm  machineries,  and  implements
necessary  for  the  condnuous  agricultural  production:  Provided,  That  the
loans shall be available to firmer- landowners and enterprises duly fealstered
with  the  PAZA  and  located  within  a  special  agricultural  growth  zone:
Provided, further, That farmer- landowners and enterprises cannot be granted
another loan until the loan is fully paid;
12           a) Farm Management, Technical Assistance and professional services -
13
14
15
16
17
18
19
The PAZA, the DA, the DAR, the Department of Labor and Employment
POLE),   the   Technical   Education   and   Skills   Development  Authority
(rESDA), state universities and colleges (SUCs), and other concerned private
and nongovernment organizations QIGOs) shall formulate and implement a
deployment   program   of  agricultural   endneefs,   agricultufists   and   farm
technicians for the provision of farm management, tcchrical assistance and
professional services to special agricultural growth zones;
2o           (c) Farm  Mechanization  Program  -The  PAZA  shall give  priority  to  the
21                  development and promotion of appropriate agricultural machinery and other
22                  agricultural      mechanization      technoloales      to      enhance      agricultura.1
23                  mechanization widin special agricultural growth zones. Farmer-landowners
24                  and agribusiness enterprises within special agricultural growth centers shall be
25                  encouraged  and  trained  to  udize  appropriate  agricultural machineries  and
26                  equipment   necessary   for   the   efficient   planting,   cultivation,   care,   and
27                  maintenance, harvesting and processing of high value agricultural crops.
28                 Section 30.  Research and Development. -The PAZA  shall pursue and
29      prioritize  research  and  the  development  of  effective,  appropriate,  and  efficient
30      agricultural technoloales.  In coordination with the DA,  DOST, DAR, DTI  state
3]       colleges and universities  other government agencies, the PAZA shall give  priority
32      and facihtate the  funding of infrastructure  necessary for research  fachities within
33      special agricultural growth zones such as farm laboratories and demonstration farms.
34                  It shall consolidate and continuously update all relevant information and data
35      on a periodic basis and make such data available on the internet for easy access to
36      data on agriculture research and technology.
37                 Section 31. Infrastructure support. -The Department of public works and
38      Highways,  the  Department  of  Transpottation,  the  Department  of  Trade  and
26


1      Industry and LGUs shall coordinate with the PAZA to address the infrastructure
2      requirements within special agricultural growth zones, in accordance with this Act:
3      Provided,  That,  the  PAZA  and  the  LGUs  shall  also  strengthen  its  agricultural
4      engineering groups to provide the necessary technical and cnginccring support in
5      carrying   out   the    smooth    and    expeditious    implementation    of   agricultural
6      infrastructure projects.
7                  Pubhic infrastructure investments shall alve preference to the kind, type and
8      model of infrastructure  facilities  that are cost-effective  and will be useful  for the
9      production, conservation, and distribulon of most commodities and should benefit
10      the most number of agriculture producers and processors.
11                   For infrastructure  facilities  primarily beneflting private  investors,  the  State
12      shall facilitate the purchase and use of such utilities and shall keep to the minimum
13      the  bureaucratic  requirements  for  these  types  of investments.  Private  investors
14      include cooperatives or corporations of agriculture producers and processors.
15                 The PAZA shall coordinate with  the DA, DPWH, LGUs and the  farmer-
16      landowners in order to identify priority locadons of farm-to-market roads and other
17      farm  infrastructure  required  witliin  the  special  agricultural  growth  zones  It  shall
I 8      identify appropriate post-harvest facih.ties and technology needed including, shared
19      service facilities for food processing and storage, standardized sanitary markets and
20      abattoirs.
21                  The National Irrigation Administration QIIA), the Bureau of soils and water
22      Management, and concerned LGUs, in coordination with the PAZA, shall construct
23      appropriate,   efficient,   and   cost-effective   irrigation   facilities,   pump   and   other
24      pressurized irrigation systems, rain capture and water impounding facilities within
25      special agricultural growth zones.
26                 The Department of Transportation and the philippine ports shah coordinate
27      with the PAZA for the purpose of determining priorityT seaports and airports and
28      facilitating the installation of bulk-handling and storage  facilities,  and other post-
29      harvest  facilities  needed  to  enhance  the  marketing  of  agriculture  and  fisheries
30      products.  Provided,  that seaports  and alaports  are  also  equipped with  quarantine,
31       sanitary and phytosanitary centers.
32                Section 32. Rural Energy, Communications and water utilities. -The
33      PAZA coordinate with the Department of Energy @OE), the Department of public
34      Works and Highways @PWH), the National Electriflcation Administration (NEA)
35      and the National power corporation (NPC) for the identification and installation of
36      appropriate  types  of energy  sources  particularly  in  the  use  of non-conventional
37      energy  sources   for  the  special  agricultural  growth  zone  in   order  to  enhance
38      agriculture development in the area.
27


1                  The PAZA shall coordinate with the DOTC to fachitate the installation of
2      telecommunication  facilities  in  special  agricultural  growth  zone.  It  shall  hkewise
3      coordinate with the DPWH, MWSS, NIA and the LGUs for the identification and
4      installation of water supply system with the special agricultural growth zone for agro-
5      industrial uses to enhance agriculture development in the locality.
6                Section 33. Disaster and calamity Relief and Rehabilitation Assistance.
7      - In the event of a disaster or calamity affecting production, or where a  state of
8      calamit}t  has  been  declared  in  the  province,  the  contract  may  be   temporaril}T
9      suspended upon the request or petition of any of the parties and the investor shall
10      assist   the   farmer-landowners  in   disaster   relief  and   rehabilitation   efforts.  The
11       existence  of  a  valid  agribusiness  enterprise  arrangement  shall  not  be  used  as  a
12      precondition for the granting or denial of calamity loans or disaster relief funds by
13      government agencies.
14                  Section 34. Eminent Domain. -The areas comprising a special agricultural
15      growth  zone may be expanded of reduced when necessary.  For this purpose, the
16      government  shall  have  the  power  to  acquire,  either by purchase,  negotiation  or
17      condermation  proceedings,  any  private  lands  within  or  adjacent  to  the  special
18      agricultural growth zone for:
19             (a) Consoridation of lands for zone development purposes;
20            a) Acquisition of right of way to the special agricultural growth zone; and
21             (c) The   protection   of  watershed   areas   and   natural   assets   valuable   to   the
22                  prospedty of the special agricultural growth zone.
23                Section 35. Protection of the Environment and watershed Areas. -The
24      PAZA,  in  coordination  with  the  appropriate  agencies,  shall  take  concrete  and
25      appropriate  steps  and  enact the  proper  measure  for  the  protection  of the  local
26      environmen t.
27                  All watersheds that are sources of water for existing and potential irrigable
28      areas and recharge areas ofmajof aquifers identified by the DA and DENR shall be
29      preserved as such atall times.
3o                 Section 36. Registration of Business Enterprises. -Business enterprises
31      within a designated special agricultural growth zone shall register with the PAZA
32      to avail of all incentives and benefits provided for in this Act.
33                  The  PAZA  shall  estabhsh  a  one  stop  shop  center  for  the  purpose  of
34      facilitating  the  redsttation  of new  enterprises  in  the  special  agricultural  growth
35      zones. Thus, all appropriate govcmment agencies that are  involved in regi`stering,
36      licensing,  or  issuing permits  to  investors  shall  assign  their representatives  to  the
37      special agricultural growth zones to attend to the investor's requirements.
28


Chapter IV
INCENTIVES T0 INVESTORS AND ENTERPRISES
3                 Section 37. Investors visa. -Any foreign national who invests an amount
4      of two hundred thousand LTs dollars (US$ 200,000.00), either in cash and/or
5      equipment, in a registered agribusiness enterprise located within a special
6      agricultural growth zone shall be entitled to an investor's visa: Provided, That the
7      foreign national has the following qualiflcations:
8             (a) Must be at least eighteen (18) years of age;
9            a) Must not have been convicted by final judgment of a crime involviflg moral
10                   turpitude;
11             (c) Must not bc afflicted with any loathsome, dangerous or contaalous disease;
12            (d) Must not have been institutionalized for any mental disorder or disability; and
13             (e) Must establish by verifiable and credible evidence his financial capabihty and
14                     capacity.
15                   As  a  holder  of investor's  visa,  an  alien  shall  be  entitled  to  reside  in  the
16      Philippines while his investment subsists. For this purpose, the ahien should subrfut
17      an annual report, ni the form duly prescribed for the purpose, to prove that he has
18      malntalncd his investment in the country. Should said alien withdraw his investments
19      from the philippines, then the investor's visa issued to said alien shall automatically
20      expire and/or be withdrawn,
21                  The authority to issue visas and work permits shall remain with the Bureau of
22      Immigration   @D   and  the  Department  of  Labor  and  Employment   @OLE),
23      respectively; Provided, That the 81  and the DOLE  shall implement measures to
24      expedite the processing of such visas  and permits  for workers in  the PAZA and
25      cot)rdinate with the PAZA for the purpose of improving ease of doing business.
26                 Section 38. Exemption from National and Local Taxes. -Except for real
27      property'  taxes,   no   taxes,  local  and   national,   shall  be  imposed   on   registered
28      enterprises operating within the special agricultural growth zone. In lieu thereof, fivc
29      percent  (5°/o)  of the gross  income  earned by all  redstefcd  enterprises within  the
30      special agricultural growl zone shall be paid and remitted as follows:
31             (a) Three percent (3%) to the National Government;
32            @)Two   percent   (2%)   which   shall   be   directly   remitted   by   the   business
33                   establishments to the treasurer's office of the municipality or city where the
34                   enterprise is located.
35                  Section 39. Fiscal Incentives. -Business establishments operating within
36      special agricultural growl zones may avail of the existing pettinent fiscal incentives
37      as provided for under Repubhic Act No.  7916,  as  amended by Republic Act No.
29


1      8748, also known as the Special Economic Zone Act of 1995,  of those provided
2      under Executive  Order No.  226,  as  amended, otherwise known as the  Omnibus
3      Investment code of 1987: Provided, that it shall not be inconsistentwith any of the
4      incentives granted  under this Act;  Provided,  further,  That in  the  admiristradon,
5      implementation  and  monitoring  of incentives,  the  PAZA  may  impose  its  own
6      conditions not otherwise prohibited by this Act and other relevant laws.
7                 Section  40.  Applicable  National  and  Local  Taxes.  ~  All  persons  and
8      services  establishments  in the  special agricultural growth  zone  shall  be  subject to
9      national and local taxes under the National Internal Revenue Code and the Local
10      Governmentcode.
11                 Section   41.   Administration,   Implementation   and   Monitoring   of
12      Incentives. -For the proper administration, implementation and monitoring of tax
13      incentives provided under this law, the following are herein mandated:
14            (a) The   PAZA   shall   be   responsible   for   the   administration,   management,
15                  enforcement,  and  implementation  of the  incentives  granted  to  registered
16                  agribusiness enterprises located in a special agricultural growth zone; and
I 7            a) In the interest of enhancing transparency in the management and accounting
18                  of tax incentives, the PAZA shall comply with the provisions of Republic Act
19                  No.   10708,  otherwise  known  as  "The  Tax  Incentives   Management  and
20                  Transparency Act (rlMTA)" and its implementing rules and regulations.
21                  Section 42. Duration of Incentives. -Fiscal incentives under this Act shall
22      be terminated after a cumulative period of twenty (20) years from date ofrealstration
23      or  start of commercial operation, whichever is  applicable,  except that it could be
24      extended with regard to industries deemed indispensable to national development
25      and interest. The industries exempted from this provision shall be determined by the
26      PAZA, in consultation with other government agencies.
27                 Section 43. Sequential Availment of Incentives. -The income tax holiday
28      ¢TH)  incentive  granted under Republic Act No.11534,  otherwise known  as  the
29      "Corporate Recovery and Tax Incentives for Enterprises"  (CREATE) Act, may be
30      enjoyed by the realstered enterprises under this Act: Provided, That the ITH  shall
31      bc availed prior to the availment of the five percent (5%) fmal tax on gross income
32      earned incentive under section 39 of this Act. Provided, further, That in the event a
33      realstered enterprise elects to avail the final tax incentive contained in this Act, such
34      realstered enterprise shall be barred from availing the ITH incentive under Republic
35       ActNo.11534.
36                  Rcalstered  enterprises,  if  ehedble,  may  register  for  incentives  with  other
37      investment  promotion  agencies:  Provided,  That realstered  enterprises  electing  to
30


I      avail of the incentives of other promotion agencies shall not be able to avail of the
2      incentives  of the  PAZA  until  the  expiration  of the  incentives  with  such  other
3      investment promotions ageflcies.
4                Section  44.  Extension  of Period  of Availment.  - In  the  event  that  a
5      feLSstered enterprise has suffered cessation or suspension of operations due to force
6      majeure, which has impaired its viability of pfofitabirity, the PAZA may extend the
7      period of validity of the jncendves extended to such realstered enterprise.
8                 Section  45.  Banking  Rules  and  Regulations.  -  Banks  and  financial
9      insrfutions  to  be estabhshed in the PAZA shall be under the  supervision of the
10      Bangko  Sentral ng Pilipinas  asp)  and subject to  existing banking laws, rules and
11       regulations.
12                 Section  46.  Remittances.  -In  the  case  of  foreign  investments,  a  duly
13      registered entity or enterprise within the PAZA shall have the right to remit earnings
14      from the investment in the currency in which the investment was orialnally made
15      and  at  the  exchange  rate  prevailing  at  the  time  of  remittance,  subject  to  the
16      provisions ofRepublic Act No. 7653, otherwise known as "The New central Bank
17       Act".
Chapter V
ROLE OF OTHER GOVERNMENT AGENCIES
20                Section 47. Relations with the Regional Development council. -The
21      PAZA shall determine the development goals for special agricultural growth zones
22      within the  framework of national development plans, policies  and goals, and the
23      Administrator of each special agricultural growth zones shall, upon approval by the
24      PAZA  Board,  submit the  special  agricultural growth  zone  plans,  programs,  and
25      projects to the Regional Development council for inclusion in and as inputs to the
26      overall Realonal Development plan.
27                 Section 48. Relations with Local Government units. -Except as herein
28      provided, the local government units  comprising each  special  agricultural growth
29      zone shall retain their basic autonomy and identity. The cities shall be governed by
30      their  respective  charters  and  the  municipahties   shall  operate  and  function   in
31      accordance with Republic Act No. 7160, otherwise known as the Local Government
32      Codeofl991.
33                Section 49. Public-Private partnerships in special Agricultural zones. -
34      Privately-owned    agro-industrial    estates     shall    retain    their    autonomy    and
35      independence  and  shall  be  monitored  by  the  PAZA  for  the  implementation  of
3 6      incentives.
31


1                  Section 50. Audit. -The commission on Audit (COA) shall appoint a full -
2      time auditor in  the PAZA  or may assign  such  number of personnel a  s  may be
3      necessary in the performance of their functions. The salaries and emoluments of the
4      assigned auditor and personnel shall be in accordance with pertinent laws, rules and
5      regulations
Chapter VI
MISCELI.ANEOU S PROVISIONS
8                  Section 51. Appropriations. -Any sum as may be necessary to augment its
9      capital outlay shall be included in the General Appropriations Act to be treated as
10      an equity of the national government.
11                  Additional finding shall come from the following:
12                 (a) The proceeds from the rent of lands, buildings, and other properties of the
13                       special agricultural growl zones concerned;
14                 ®The    proceeds    from    fees,    charges,    and    other    revenue-generating
15                      Instruments which the PAZA is authorized to impose and couect under
16                          this Act;
17                 (c) The  proceeds  from  bonds  which  the  PAZA  authorized  to  float  both
18                       domestic and abroad; and
19                 (d) The advance  rentals, hicense  fees,  and other charges which the PAZA is
20                       authorized to impose under this Act and which an invcstor is wilting to
21                       advance payment for.
22                Section 52. Applicability of National Laws. -National laws shall prevail vis-
23      a-vis PAZA mles, regulations and standards, unless there is a clear intent ifl this Act
24      or other  Acts  of Congress  to vest the PAZA  specific powers  and  privileges  not
25      otherwise allowed under existing laws.
26                Section 53. Authority of the president to Advance Initial Funding-Subject to
27      existing laws, the president of the philippines is hereby authorized to advance out
28      of the savings of the office of the president such finds as may be necessary to ef-fect
29      the organization of special agricultural growth zones which shall be reimbursed by
30      the PAZA at reasonable terms and conditions.
31               Section 54. Implementing Rules and Regulations. -The Department of
32     Agriculture, the National Economic and Development Authority, the Department
33      of Finance, the Bureau of Customs,  the Department of Trade  and Industry, the
34      Department of Environment and Natural Resources, the Department of Agrarian
35      Reform,  the  Department   of  Interior  and  Local   Government,  the  Philippine
36      Agricultural zone Authority, and the representatives from the technical staff of the
37      Comndttee on Economic Affairs of both Houses of congress shall formulate the
32


1      implementing  rules  and  regulations  of this  Act within  ninety  (90)  days  after  its
2      approval.  Such  rules  and regulations  shall  take  effect  fifteen  (15)  days  after  their
3      pubhcation in a newspaper of general circulation in the phhippines.
4                Section  55.  Separability  Clause.  -The provisions  of this Act are hereby
5      declared separable, and in the event one or more of such provisions or part thereof
6      are declared unconstitutional, such declaration of unconstitutionality sham not affect
7      the validity of the other provisions thereof.
8                Section 56. Interpretation. -The powers, authorities and functions that are
9      vested  In  the  Philippine  Agricultural  Zone  Authority  @AZA)  and  the  special
10      agricultural growth  zones  concerned  are  intended  to  estabhsh  decentralization  of
11      governmental functions and authority as well as an efficient and effective working
12      relationship    between    the    special    agricultural   growth    zones,    the    National
13      Government, and the local government units.
14                 Section 57. Repealing clause. -All laws, acts, presidential decrees, executive
15      orders, proclamations and/or administrative regulations which are inconsistent with
16      the provisions of this Act, are hereby amended, modified, superseded, or repealed
17       accordingly.
18                 Section 58. Effectivity. -This Act shall take effect upon its approval.
Approved.
33