Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

SIXTEENTH CONGRESS
Second Regular Session

HOUSE BILL NO. 5397

Introduced by Representative FERDINAND L. HERNANDEZ

EXPLANATORY NOTE

Republic Act No. 7227, otherwise known as the Bases Conversion Development Act of
1992, established the Subic Bay Freeport Zone (SBFZ) and Subic Special Economic Zone (SSEZ)
as a self-sustaining, industrial, commercial, financial and investment center, and created the Subic
Bay Metropolitan Authority (SBMA) as its operating and implementing arm.

R.A. No. 7227 envisioned the creation of these zones “fo accelerate the sound and
balanced conversion into alternative productive civilian uses" and “to enhance the benefits to be
derived from said properties in order to promote the economic and social development of Central
Luzon in particular and the country in general’.

Twenty-Three (23) years after the passage of RA. No. 7227, the authority and
independence of SBMA remains to be fully realized. This is due in part to the overlapping authority
and jurisdiction by other government agencies and instrumentalities like the Maritime Industry
Authority (MARINA), Philippine Reclamation Authority (PRA), and Department of Environment and
Natural Resources (DENR), among others.

This bill seeks to further amend’ R.A. No. 7227 by reaffirming and strengthening the
powers of the Subic Bay Metropolitan Authority (SBMA) to attain its mandate as an industrial,
commercial, financial and investment center that is self-sustaining and autonomous that will serve
as a platform to further spur local and national development.

Its the intention of this bill to fine-tune R.A. 7227 to harness its own resources to maximize
the full potential of the SBMA by amending specific provisions that are deemed no longer
responsive with the current circumstances. After all, it is said that ‘our business and thinking must
always stay up to date with the changes of the world” in creating an attractive investment climate

It is in the premise of global competitiveness and economic growth and development that
this bill is filed and its immediate passage earnestly sought.

+ amended by R.A. No. 9400, March 20, 2007.


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

SIXTEENTH CONGRESS.
Second Regular Session

HOUSE BILLNO.__5397

Introduced by Representative FERDINAND L, HERNANDEZ

AN ACT
RATIONALIZING THE POWERS OF THE SUBIC BAY METROPOLITAN AUTHORITY,
AMENDING FOR THE PURPOSE REPUBLIC ACT NO. 7227, OTHERWISE KNOWN AS
THE BASES CONVERSION AND DEVELOPMENT ACT OF 1992, AS AMENDED

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

SECTION 1. Section 12 (c) of Republic Act No. 7227, otherwise known as the “Bases
Conversion and Development Act’, as amended, is hereby amended read as follows:

"SECTION 12. Subic Special Economic Zone.- xxxx XXXX —_XXXX

(c) The provision of existing laws, rules and regulations to the

contrary notwithstanding, no national and local taxes shall be
imposed within the Subic Special Economic Zone. In lieu of
saidtaxes ALL OTHER NATIONAL AND LOCAL TAXES, a
five percent (5%) tax on gross income earned shall be paid
by all business enterprises within the Subic Special Economic
Zone and shall be remitted as follows: three—percent-{3%)
ONE PERCENT (1%) to the National Government, andtwo
percent{2%) TWO PERCENT (2%) to the Subic Bay
Metropolitan Authority (SBMA) AND TWO PERCENT (2%)
for distribution to the local government units affected by the
declaration of and contiguous to the zone, namely: the City of
Olongapo and the municipalities of Subic, San Antonio, San
Marcelino and Castillejos of the Province of Zambales; and
the municipalities of Morong, Hermosa and Dinalupihan of the


Province of Bataan, on the basis of population (50%), land
area (25%), and equal sharing (25%). "

SEC. 2. Section 13 (b), Subsection (3), (11), (12) and (13) of Republic Act No, 7227, as
amended, is hereby amended to read as follows:
“SEC. 13. The Subic Bay Metropolitan Authority. — xxx XXXX —XXXX

(b) Powers and functions of the Subic Bay Metropolitan Authority.-
The Subic Bay Metropolitan Authority, otherwise known as the
Subic Authority, HAVING AUTHORITY AND JURISDICTION
OVER ALL BUSINESS AND ECONOMIC ACTIVITIES WITH
THE SUBIC BAY FREE PORT, shall have the following
powers and functions:

XXX HOOUKK 00K

(3) To undertake and regulate the establishment, operation
and maintenance of _ utilities; —ether—senices
TELECOMMUNICATIONS, infrastructure AND OTHER
SERVICES in the Subic Special Economic Zone
including shipping and MARITIME related business
BUSINESSES AND ACTIVITIES, stevedoring and port
terminal services or concessions, incidental thereto and
airport operations in coordination with the Civil
Aeronautics Board, and to fix AND IMPOSE just and
reasonable fees, fares, charges and other prices
therefor.

XXXX XXXK XXXK

(11) TO RECLAIM LANDS IN THE SUBIC SPECIAL
ECONOMIC ZONE, BUT NOT LIMITED TO
FORESHORE AND SUBMERGED AREAS, BY
DREDGING, FILLING OR OTHER MEANS, AND TO
ACQUIRE, DEVELOP, IMPROVE, ADMINISTER,


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(12)

(13)

SEC. 3. Section 13, Paragraph (c), Subparagraphs 1 and 3 of Republic Act No. 7227,

DEAL-IN, SUBDIVIDE AND LEASE RECLAIMED
LANDS INSIDE THE ZONE; TO PROVIDE FOR,
OPERATE OR ADMINISTER SUCH SERVICES AS
MAY BE NECESSARY FOR THE EFFICIENT,
ECONOMICAL AND BENEFICIAL UTILIZATION OF
THE RECLAIMED AREAS IN THE ZONE;

TO PROVIDE FOR, OPERATE, OR ADMINISTER
SUCH SERVICES, AS MAY BE NECESSARY FOR
THE EFFICIENT, ECONOMICAL AND BENEFICIAL
UTILIZATION OF THE RECLAIMED AREAS IN THE
SUBIC BAY FREEPORT; AND

To exercise such powers as may be essential,
necessary of incidental to the powers granted to it
hereunder as well as to carry out the policies and
objectives of this Act.

as amended is hereby further amended to read as follows:

"SEC 13. The Subic Bay Metropolitan Authority. — xxxx  xxxx — XXxXx

(c) Board of Directors.- The powers of the Subic Authority shall be

vested in and exercised by a Board of Directors, hereinafter

referred to

as the Board, which shall be composed of fifteen (15)

members, to wit:

()

Representatives of the local government units that
concur to join the Subic Special Economic Zone,
SPECIFICALLY: THE CITY OF OLONGAPO AND
THE MUNICIPALITY OF SUBIC OF THE PROVINCE
OF ZAMBALES; AND THE MUNICIPALITIES OF
MORONG, HERMOSA AND DINALUPIHAN OF THE
PROVINCE OF BATAAN;


14

XXXX XXXX XXXX

(2) Five (5) representatives from the private sector
coming from the-present-naval-stations,publie- works
center,—ship—repair—facility,—naval-supply-depot-and
naval-air-stations TOURISM, MANUFACTURING AND
PRODUCTION, MARITIME AND AVIATION, TRADE
AND INDUSTRY, AND LOGISTICS SECTORS; and

XXXX XXXX XXXK

Sec. 4. A new subsection (f) under Section 13 is hereby inserted, amending Republic
Act No. 7227, as amended, to read as follows:

(f) OTHER OFFICERS AND EMPLOYEES. - ALL POSITIONS IN
THE SUBIC AUTHORITY SHALL BE GOVERNED BY THE
COMPENSATION, POSITION CLASSIFICATION SYSTEM AND
QUALIFICATION STANDARDS APPROVED BY ITS BOARD OF
DIRECTORS BASED ON A COMPREHENSIVE JOB ANALYSIS OF
ACTUAL DUTIES AND RESPONSIBILITIES AT PAR WITH THAT
OF THE BASES CONVERSION AND DEVELOPMENT AUTHORITY
(BCDA) OR THE CONVERSION AUTHORITY. THE
COMPENSATION PLAN SHALL BE COMPARABLE WITH THE
PREVAILING COMPENSATION PLANS IN THE PRIVATE SECTOR
AND SHALL BE SUBJECT TO PERIODIC REVIEW BY THE
BOARD OF DIRECTORS OF THE SUBIC AUTHORITY ONCE
EVERY TWO (2) YEARS, WITHOUT PREJUDICE TO YEARLY
MERIT OR INCREASES BASED ON THE SUBIC AUTHORITY’S
PRODUCTIVITY AND PROFITABILITY, THE SUBIC AUTHORITY
SHALL, THEREFORE, BE EXEMPT FROM EXISTING LAWS,
RULES AND REGULATIONS ON COMPENSATION, POSITION
CLASSIFICATIONS AND QUALIFICATION STANDARDS.


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HOWEVER, THE SUBIC AUTHORITY SHALL ENDEAVOR TO
MAKE ITS SYSTEM CONFORM AS CLOSELY AS POSSIBLE
WITH THE PRINCIPLES UNDER REPUBLIC ACT NO. 6758 OR
THE COMPENSATION AND POSITION CLASSIFICATION ACT OF
1999 OTHERWISE KNOWN AS THE SALARY STANDARDIZATION
LAW, AS AMENDED.

SEC. 5. Implementing Rules and Regulations.- Within ninety (90) days from the effectivity
of this Act, the following shall promulgate the necessary rules and regulations for the
implementation of the provisions of this Act:

(a) The Department of Finance, in coordination with the Bureau of Internal
Revenue, and in consultation with the SBMA, for the necessary rules and
regulations implementing Section 1 of this Act;

(b) The SBMA, in coordination with the Bases Conversion and Development
‘Authority (BCDA), for the necessary rules and regulations implementing
Section 2 of this Act;

(c) The Department of Budget and Management and the Civil Service
Commission, in coordination with the SBMA, and in consultation with the
BCDA, for the necessary rules and regulations implementing Section 4 of
this Act;

SEC. 6. Repealing Clause. - All laws, executive order or administrative orders, rules and
regulations or parts thereof, which are inconsistent with this Act, are hereby amended,
repealed or modified accordingly

SEC. 7. Separability Clause.- If any provision of this Act is subsequently declared
unconstitutional, the validity of the remaining provisions thereof shall remain in full force

and effect.

SEC. 8. Effectivity. - This Act shall take effect after fifteen (15) days following its
publication in the Official Gazette or in any newspaper of general circulation.

Approved,