FOURTEENTH CONGRESS OF THE REPUBLIC ) 
OF THE PHILIPPINES 
1 
First Regular Session 
) 
Y 
Introduced by Senator Richard J. Gordon 
EXPLANATORY NOTE 
The State is primarily tasked to promote entrepreneurship and create job 
opportunities through full and efficient use of its resources. Infrastructure assets such as 
the three airports in Subic, Clark and Manila, two seaports in Subic and Manila, and one 
connecting highway and railway in Luzon, when integrated and optimized effectively and 
efficiently, and vast idle lands nearby, when utilized gainfully as Special Economic Zones to 
accommodate industrial, agricultural, tourism and other enterprises with the direct 
participation of the local government units and the private sector as collective stakeholders, 
could become an economic engine of growth to encourage entrepreneurship and 
investments and create job and business opportunities. 
The State must be aggressive in taking advantage of the strategic infrastructure in 
Subic, Clark and Manila as international transportation hubs. The development of Special 
Economic Zones in the municipalities nearby, bordering the highway and railway and 
connected to the airports and seaports in Subic, Clark and Manila must be encouraged as 
this will bring jobs to the people and work to the workers and promote a rising standard of 
living and an improved quality of life for all. The development of these Special Economic 
Zones will embody a decentralized local government and private sector-led development 
that will display the potential that can be achieved when local people set their own priorities 
and initiatives. Overcrowded areas will be decongested, as industries will be dispersed to 
other locations in Luzon, because of the global accessibility and direct access of Subic, 
Clark and Manila to domestic and foreign markets worldwide by air, by land and by sea. 
To fully utilize Subic, Clark and Manila as international service and logistic centers in 
the Asia-Pacific region, a law strengthening and expanding the powers of the Subic Bay 
Metropolitan Authority and the Clark Development Corporation, allowing them to develop 
other Special Economic Zones in Luzon to optimize the three airports in Subic, Clark and 
Manila, two seaports in Subic and Manila, and one connecting highway and railway in 
Luzon, and for other purposes must be enacted to emDower the local communities to chart 
their own destinies and ensure local growth and natioi 


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FOURTEENTH CONGRESS OF THE REPUBLIC ) 
OF THE PHILIPPINES 
) 
Firsf Regular Session 
) 
SENATE 
S. No.' 
Introduced by Senator Richard J. Gordon 
AN ACT STRENGTHENING AND EXPANDING THE POWER§ OF THE SUBIC BAY 
METROPOLITAN AUTHORITY AND THE CLARK DEVELOPMENT CORPORATION, 
ALLOWING THEM TO DEVELOP OTHER SPECIAL ECONOMIC ZONES IN LUZON TO 
OPTIMIZE THE THREE (3) AIRPORTS IN SUBIC, CLARK AND MANILA, TWO (2) 
SEAPORTS IN SUBlC AND MANILA, AND ONE (1) CONNECTING HIGHWAY AND 
RAILWAY IN LUZON, AND FOR OTHER PURPOSES 
Be it enacted by the Senate and the House of Representafives of the Philippines in 
Congress assembled: 
SECTION 1. Short Title. - This act shall be known as the "3-2-1 Luzon Global 
Corridor Act of 2007." 
Sec. 2. 
Policy. - It is hereby declared the policy of the State to promote 
entrepreneurship and investments and encourage the creation of job and business 
opportunities through strengthening and expanding the powers of the Subic Bay 
Metropolitan Authority and the Clark Development Corporation, allowing them to develop 
other Special Economic Zones in Luzon to optimize the three airports in Subic, Clark and 
Manila, two seaports in Subic and Manila, and one connecting highway and railway in 
Luzon, and for other purposes. 
Sec. 3. Purposes. - This Act shall have the following purposes: 
(1) To promote entrepreneurship and investments and create job and business 
(2) To optimize the three airports in Subic, Clark and Manila, two seaports in Subic 
opportunities; 
and Manila, and one connecting highway and railway in Luzon; 
Special Economic Zones; 
(4) To develop enterprise initiative and foster national and local pride in the local 
government units and the private sector as collective stakeholders and pioneers for change 
in the development of the Subic Special Economic and Freeport Zone, the Clark Special 
(3) To encourage the local government units and the private sector to establish 
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Economic Zone and other Special Economic Zones by adhering to the principle of global 
competitiveness that makes fast, friendly, flexible and forward-looking business; 
(5) To decongest overcrowded areas by dispersing industries to the Subic Special 
Economic and Freeport Zone, the Clark Special Economic Zone and other Special 
Economic Zones; and 
(6) To lessen dependency on the national government and make the local 
government units, the Subic Bay Metropolitan Authority, the Clark Development Corporation 
and other subsidiaries self-sustaining, income-generating and revenue-contributing entities. 
Sec. 4. Subic Special Economic and Freeport Zone. - The Subic Special 
Economic and Freeport Zone consists of the City of Olongapo and the Municipality of Subic, 
Province of Zambales, the lands occupied by the Subic Naval Base and its contiguous 
extensions as embraced, covered, and defined by the 1947 Military Bases Agreement 
between the Philippines and the United States of America, as amended, and within the 
territorial jurisdiction of the municipalities of Morong and Hermosa, Province of Bataan. The 
Subic Special Economic and Freeport Zone is developed, operated, administered, and 
managed by the Subic Bay Metropolitan Authority as a special economic and freeport zone, 
ensuring the free flow of goods and capital in accordance with prescribed rules and 
regulations, to generate employment opportunities in and around the zone, and to attract 
and promote productive local and foreign investments. 
Sec. 5. Clark Special Economic Zone. - The Clark Special Economic Zone 
consists of the Clark military reservations and its contiguous extensions as embraced, 
covered and defined by the 1947 Military Bases Agreement between the Philippines and the 
United States of America, as amended, located within the territorial jurisdiction of Angeles 
City, Municipalities of Mabalacat and Porac, Province of Pampanga, and the municipality of 
Capas, Province of Tarlac. The Clark Special Economic Zone is developed, operated, 
administered, and managed by the Clark Development Corporation as a Special Economic 
Zone, forming part of the growth triad connecting with Subic and Manila as a buffer to in- 
migration to the metropolis and envisioned as a new industrial townsite and a major civil 
aviation complex for international passenger and cargo. 
Sec. 6. Incentives and Privileges. - The Subic Bay Metropolitan Authority and the 
Clark Development Corporation shall have the power to grant the following incentives and 
privileges: 
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(1) The Subic Special Economic and Freeport Zone and the Clark Special Economic 
Zone shall be operated and managed as separate customs territories ensuring the free flow 
or movement of goods and capital within, into and exported out of the Subic Special 
Economic and Freeport Zone and Clark Special Economic Zone, as well as provide 
incentives such as tax and duty-free importations of raw materials, capital and equipment. 
However, exportation or removal of goods from the territory of the Subic Special Economic 
and Freeport Zone and Clark Special Economic Zone to the other parts of the Philippine 
territory shall be subject to customs duties and taxes under the Tariff and Customs Code 
and other relevant tax laws of the Philippines; 
(2) The provision of existing laws, rules and regulations to the contrary 
notwithstanding, no taxes, local and national, including final withholding taxes on dividends 
to an investor’s parent company, and branch profit remittances to an investor’s head office, 
shall be imposed within the Subic Special Economic and Freeport Zone and Clark Special 
Economic Zone. In lieu of paying taxes, a final tax of five percent (5%) on gross income 
earned shall be imposed on all businesses and enterprises within the Subic Special 
Economic and Freeport Zone and Clark Special Economic Zone: Provided, That of the five 
percent (5%) final tax on adjusted gross income earned, three percent (3%) shall be 
remitted to the national government, one percent (1%) shall be divided by the local 
government units to the Subic Special Economic and Freeport Zone and the Clark Special 
Economic Zone in proportion to their population area, land area and equal sharing factors, 
and the balance of one percent (1%) shall be remitted to a development fund to be utilized 
for the development of municipalities outside and contiguous to the Subic Special Economic 
and Freeport Zone and the Clark Special Economic Zone. 
Adjusted gross income earned is defined as gross income less direct costs in the 
production and operation of an investor. The Subic Bay Metropolitan Authority, the Clark 
Development Corporation and’the Bureau of Internal Revenue shall, within three (3) months 
from the approval of this Act, promulgate joint rules and regulations that will define the direct 
costs for the various manufacturing, utilities, trading, storage and transshipment, retail and 
tourism, financial, information technology and other service industries operating in the Subic 
Special Economic and Freeport Zone and Clark Special Economic Zone, recognizing that 
direct costs will differ for each industry depending on the best practices of each industry 
concerned. 
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In case of conflict between national and local laws, on the one hand, and tax 
exemption privileges in the Subic Special Economic and Freeport Zone and Clark Special 
Economic Zone, on the other hand, the same shall be resolved in favor of the Subic Special 
Economic and Freeport Zone and Clark Special Economic Zone. Income tax holidays and 
other incentives and privileges available under existing laws may also be granted to 
investors in the Subic Special Economic and Freeport Zone and Clark Special Economic 
Zone under the same terms and conditions as are available to investors in Special 
Economic Zones governed by the Philippine Economic Zone Authority and to investors 
registered with the Board of Investments; 
(3) No exchange control policy shall be applied and free markets for foreign 
exchange, gold, securities and future shall be allowed and maintained in the Subic Special 
Economic and Freeport Zone and Clark Special Economic Zone; 
(4) The Bangko Senfral ng Pilipinas shall supervise and regulate the operations of 
banks and other financial institutions within the Subic Special Economic and Freeport Zone 
and Clark Special Economic Zone; 
(5) Banking and finance shall be liberalized with the establishment of foreign 
currency depository units of local commercial banks and offshore banking units of foreign 
banks with minimum regulation; 
(6) Any investor within the Subic Special Economic and Freeport Zone whose 
continuing investment shall not be less than two hundred fifty thousand United States 
dollars (US$250,000), the spouse and dependent children under twenty-one (21) years of 
age, shall be granted permanent resident status within the Subic Special Economic and 
Freeport Zone and Clark Special Economic Zone. They shall have freedom of ingress and 
egress to and from the Subic Special Economic and Freeport Zone and Clark Special 
Economic Zone without any need of special authorization from the Bureau of Immigration. 
The Subic Bay Metropolitan Authority and the Clark Development Corporation may also 
issue working visas renewable every two years to foreign executives and other aliens 
possessing highly technical skills, which no Filipino within the Subic Special Economic and 
Freeport Zone and Clark Special Economic Zone possesses. The names of aliens granted 
permanent residence status and working visas by the Subic Bay Metropolitan Authority and 
the Clark Development Corporation shall be reported to the Bureau of Immigration within 
thirty (30) days after the issuance thereof; 
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(7) The defense of the zone and the security of its perimeters shall be the 
responsibility of the national government in coordination with the Subic Bay Metropolitan 
Authority and the Clark Development Corporation. The Subic Bay Metropolitan Authority 
and the Clark Development Corporation shall provide and establish their own internal 
security and firefighting forces; and 
(8) Except as herein provided, the local government units comprising the Subic 
Special Economic and Freeport Zone and Clark Special Economic Zone shall retain their 
basic autonomy and identity. In case of conflict between the Subic Special Economic and 
Freeport Zone and the Clark Special Economic Zone, on the one hand, and the local 
government units, on the other hand, on matters affecting the Subic Special Economic and 
Freeport Zone and the Clark Special Economic Zone, including land and zoning disputes, 
the former shall prevail. 
Sec. 7. Powers and Functions. - The Subic Bay Metropolitan Authority and the 
Clark Development Corporation shall each be vested with the following powers and 
functions, which shall in no way diminish any power already granted to and enjoyed at 
present by the Subic Bay Metropolitan Authority and the Clark Development Corporation: 
(1) To prepare, adopt and implement a comprehensive and detailed master plan, 
which includes zoning and urban planning, in consultation and coordination with the 
appropriate national agencies and the local government units, for the sound and balanced 
development of the zones, to promote the economic and social development of the local 
communities in particular and the country in general; 
(2) To accept any local or foreign investment, business or enterprise, subject only to 
such limitations as provided in the Constitution; 
(3) To prioritize job creation; 
(4) To prescribe a strike moratorium; 
(5) To maintain industrial peace and require earnest efforts toward a compromise in 
case of labor disputes with the effect that if it is shown that no earnest efforts were in fact 
made, the labor case must be dismissed; 
(6) To generate its own revenues and be self-sustaining; 
(7) To invest its funds and other assets; 
(8) To construct, acquire, own, lease, operate and maintain on its own or through 
contract, franchise, license permit, build-operate-transfer or joint-venture the required 
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utilities and infrastructure facilities, and to fix just and reasonable rates, fares, charges and 
other prices therefor; 
(9) To develop other Special Economic Zones in Luzon within the same legal 
framework and mechanisms as Republic Act No. 7916, as amended, or the Special 
Economic Zone Act of 1995; 
(IO) To manage and operate Special Economic Zones and other development 
programs and projects; 
(1 1) To raise and borrow the necessary funds from local and international financial 
institutions and to issue bonds, promissory notes and other securities for that purpose and 
to secure the same by guarantee, pledge, mortgage, deed of trust or assignment of 
properties: 
(12) To establish subsidiaries and serve as holding company of such subsidiaries: 
(13) To enter into, make, perform and carry out contracts of every class, kind and 
description which are necessary or incidental to the realization of this Act with any person, 
firm or corporation, private or public, or with foreign government entities; 
(14) To exercise the right of eminent domain; 
(1 5) To adopt, implement and enforce ecological and environmental standards and 
measures for environmental pollution control and issue environmental compliance 
certificates; 
(16) To provide, establish and accredit security and firefighting forces, and formulate 
(17) To establish one-stop shops for investors that promote fast, friendly, flexible and 
(18) To promulgate rules and regulations and perform such other powers and 
functions as may be necessary, appropriate or incidental to this Act. 
Sec. 8. Other Special Economic Zones. - The creation, development and 
management of other Special Economic Zones in the nearby areas to accommodate 
industrial, agricultural, tourism and other enterprises may be developed as industrial zones, 
agricultural zones, tourism zones or any appropriate mix-use zones through private 
initiative, local government initiative, national government initiative, or any other 
development initiative within the same legal framework and mechanisms as Republic Act 
No. 7916, as amended, or the Special Economic Zone Act of 1995, governed by the Subic 
Bqy Metropolitan Authority and the Clark Development Corporation. 
and implement public safety measures to ensure safety and preserve peace and order: 
forward-looking business; and 
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Sec. 9. Subsidiaries. - The Subic Bay Metropolitan Authority and the Clark 
Development Corporation shall each have the power to form, establish, organize and 
maintain subsidiaries to implement the provisions of this Act. Such subsidiaries shall be 
formed in accordance with Philippine law. 
Sec. 10. Supervision. - The Subic Bay Metropolitan Authority and the Clark 
Development Corporation shall be under the general supervision of the President of the 
Philippines. 
Sec. 11. Exemption from the Salary Standardization Law. - The salaries and 
benefits of employees in the Subic Bay Metropolitan Authority and the Clark Development 
Corporation shall be fixed by the Board of Directors and shall be exempt from Republic Act 
No. 6758, as amended, or the Salary Standardization Law, provided that the difference 
between the salaries prescribed in the Salary Standardization Law and the salaries of 
employees in the Subic Bay Metropolitan Authority and the Clark Development Corporation 
fixed by the Board of Directors shall be taken from the earnings of the Subic Bay 
Metropolitan Authority and the Clark Development Corporation and not from the National 
Treasury. 
Sec. 12. Legal Counsel. -Without prejudice to the hiring of an outside counsel, the 
Government Corporate Counsel shall be the ex officio legal counsel of the Subic Bay 
Metropolitan Authority and the Clark Development Corporation. In the event that highly 
specialized legal skills that cannot be provided for by the Office of the Government 
Corporate Counsel are required, as may be determined by the Subic Bay Metropolitan 
Authority and the Clark Development Corporation, the services of outside counsel, whose 
compensation shall be approved by the Board of Directors, may be engaged and no further 
consent or approval of the Office of the Government Corporate Counsel shall be required. 
Sec. 13. Injunction and Restraining Order. -The implementation of the provisions 
of this Act is of national interest. 
Thus, no project, bidding and undertaking in 
implementation of the provisions of this Act shall be restrained or enjoined by interlocutory 
or final order except by the Supreme Court of the Philippines. 
Sec. 14. Repealing Clause. - Republic Act No. 7227, as amended, and all laws, 
decrees, orders, rules and regulations or other issuances or parts thereof inconsistent with 
the provisions of this Act are hereby repealed or modified accordingly. 
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circulation in the Philippines. 
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Approved, 
Sec. 15. Separability Clause. - If any portion or provision of this Act is declared 
unconstitutional, the remainder of this Act or any provisions not affected thereby shall 
remain in force and effect. 
Sec. 16. Effectivity. - This Act shall take effect after fifteen (15) days following the 
completion of its publication either in the Official Gazette or in a newspaper of general 
9