FOURTEENTH CONGRESS OF THE 
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First Regular Session 
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REPUBLIC OF THE PHILIPPINES 
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7 
JUN 30 P3 :?SI 
SENATE 
S. B. No. 2 1  
Introduced bv SENATOR EDGARDO J. ANGARA 
EXPLANATORY NOTE 
This Act provides for the creation of an Authority that will negotiate 
with interested private investors and be responsible for the construction, 
operation, management and administration of the Quezon Canal and the 
Canal Zone from the Municipality of Atimonan to the Municipality of Unisan, 
both in the Province of Quezon. 
The Quezon Canal will provide a by-pass or short cut for ocean vessels 
coming from the eastern side of Luzon to Manila and the China Sea. It will 
also provide cheaper and faster transport of products from Luzon's eastern 
coastal towns to the metropolitan markets. 
The Canal will increase the volume of inter-island shipping and trade 
between, the coastal towns of Quezon, Marinduque, Mindoro, Batangas and 
Bicol Region. The untapped regions north of the Province of Quezon and the 
marine resources of Lamon Bay, Polillo Strait and Tayabas Bay will be open 
to development. 
The Canal Zone is envisioned as a major transhipment center to and 
from the United States, Japan and the ASEAN countries. Export processing 
facilities and light industries in the Canal Zone will boost our export 
potential and increase our industrial productivity. It will contribute 
immensely to the growth of our country's international trade and commerce. 
Furthermore, the Canal will stimulate the growth of tourist centers in the 
region. 
The Canal will increase the capability of the Philippine coast Guard to 
patrol and safeguard our eastern coastline. 
Employment opportunities will be generated by the abovementioned 
activities. The construction phase alone will require thousands of workers; 
other spin-off projects such as light industries and other facilities in the 
industrial area within the Canal Zone will provide long-term employment 
and economic benefits. In all, the Canal is expected to open an era of 
prosperity and peace in the region. 
Early approval of this bill is earnestly requested. 
w/n- 
EDGARDO J. ANGARA 
Senator 


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FOURTEENTH CONGRESS OF THE 
1 
First Regular Session 
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'3 3 " 
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7 JljN 30 i , .__, 
REPUBLIC OF THE PHILIPPINES 
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Introduced by SENATOR EDGARDO J. ANGARA 
AN ACT CREATING THE QUEZON CANAL ZONE AUTHORITY, 
DEFINING ITS POWERS AND FUNCTION AND FOR OTHER 
PURPOSES 
Be it enacted by the Senate and House of Representatives of the 
Philippines in Congress assembled: 
SECTION 1. Creation of the Quezon Canal Zone Authority. - 
There is hereby created a public corporation to be known as the "Quezon' 
Canal Zone Authority," hereinafter referred to as the Authority. The 
functions of the Authority are hereby declared to be governmental. 
SECTION 2. Territorial Jurisdiction. - The territorial jurisdiction 
of the Authority shall cover an area approximately five (5) kilometers wide, 
twenty (20) kilometers long including the rivers and waterways from the 
Municipality of Atimonan to the Municipality of Unisan, across the narrow 
isthmus of the Province of Quezon. However, the Congress of the Philippines, 
upon recommendation of the Authority, may extend, reduce, alter or vary the 
territorial limits of the Authority if such amendments are necessary or will 
contribute to the attainment of its objectives. 
SECTION 3. Principal Office. - The principal offices of the Authority 
shall be in the Canal Zone. It may establish branches and agencies within the 
Philippines as may be necessary for the proper conduct of its business. 
SECTION 4. Purposes and Specific Powers. - The purposes and 
specific powers of the Authority are: 
(a) To acquire, own, lease, construct, reconstruct, repair, equip, 
maintain, administer and operate the canal, wharves, docks, 
piers, quays, and the approaches to and appurtenances thereof, 
terminals, warehouses, refrigeration, storage plants, equipment 
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and other structures or facilities necessary or useful in said 
commerce and in the transportation and storage of goods, wares 
and merchandise in the Authority, including land reclamation and 
the improvement, development, deepening and dredging of the 
harbors, waterways, causeways, and fairways therein, and all 
approaches thereto: 
(b) To grant the use or to rent, lease or let, for a consideration, all such 
port facilities including stevedoring and port terminal services, or 
any concession properly incident thereof or in connection with the 
receipt, delivery, shipment and transfer in transit, weighing, 
marking, tagging, ventilating, fumigating, refrigerating, icing, 
storing and handling of goods, wares and merchandise including 
embarking and disembarking of passengers and their baggage to 
any person, association or corporation under such terms and 
conditions it may deem proper, after public bidding; 
(c) To assess and collect harbor, tonnage, wharfage, berthing and 
storage charges and fees, fix and collect the rentals for the lease, 
occupancy or use of buildings, structures, warehouses, lands and 
other properties of the Authority, fix the fees for the issuance of 
permits and the rendering of other services not enumerated 
herein: Provided, That until the Authority has fixed otherwise, 
the rates of harbor, tonnage, wharfage, berthing and storage 
charges or fees as now provided by law shall be followed and 
enforced; 
(d) When essential to the proper administration of its corporate affairs 
or when necessary for the proper transportation of its business or 
for carrying out the purposes of this Act and of said-Authority, to 
contract indebtedness and issue bonds, subject to the conditions 
set forth in Section 19: Provided, however, That the outstanding 
indebtedness of the Authority shall not exceed forty percent (40%) 
of the total assets of the Authority and at all times to be guided by 
principles of sound management; 
(e) Subject to the general jurisdiction of the local government unit 
concerned, to exercise police authority within the area under its 
control and jurisdiction as provided in Section 2; 
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(f) To create and operate, and/or contract to operate such agencies, 
functional units, offices and departments of the Authority as 
purposes of this Act; 
(g) To appoint and employ such officers and employees as may be 
necessary to carry out and employees as may be necessary to 
carry out the purposes of the Authority, to prescribe their duties 
and fix their compensation. 
SECTION 5. General Powers. - The Authority shall have the 
following general powers: 
(a) To adopt, alter and use a corporate seal which shall be judicially 
noticed; make contracts, lease, own or otherwise dispose of 
personal and real property; sue and be sued; and otherwise do and 
perform any and all things that may be necessary or proper to 
carry out the purposes of the Authority; 
(b) To do all such other things and to transact all such business 
directly or indirectly necessary, incidental or conducive to the 
attainment of the purposes of the Authority; and 
(c) In general, to exercise all the powers of a corporation under the 
Corporation Code in so far as they are not inconsistent with the 
provisions of this Act. 
SECTION 6. Capitalization. - The authorized capital of the 
Authority shall consist of: 
(a) Fixed assets of the ports presently covered in Section 2; 
(b) Ten percent (10%) of the unappropriated surplus of the Portworks 
Special Fund as of the end of December 31, 1994. 
(c) All public lands within the Canal Zone which shall be valued at 
market costs (values) and transferred to the Authority and such 
other appropriation that may be approved by the President of the 
Philippines. The capital and assets of the Authority shall be 
available for the general debts of the National Government. 
(d) The Authority shall accept equity contributions from private 
landowners in the Canal Zone, up to seventy percent (70%) to 
eighty percent (80%) of their current market values, which shall 
be in the form of preferred shares of stock. 
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SECTION 7. Governing Body, Appointment and Removal. - The 
corporate powers of the Authority shall be vested in, and exercised by, a 
Board of Directors, hereinafter referred to as the "Board", composed of fifteen 
(15) members; 
(a) The Secretary of Finance, or his nominee, who shall serve in 
alternate terms of two (2) years each with the Director-General of 
the National Development Authority, or his nominee. 
After the first term of two (2) years, the Secretary of Finance shall be 
replaced by the Director-General of the National Development Authority who 
shall serve in the Board again for two (2) years, and so on. 
C.) The Secretary of Public Works, or his nominee, who shall serve in 
alternate terms of two (2) years each with the Secretary of 
Transportation and Communications, or his nominee, to follow the 
same schedule as in (a) above; 
(e) The Secretary of Natural Resources, or his nominee who shall serve 
in alternate terms o f  two (2) years each with the Secrecy of Trade 
and Industry, or his nominee, to follow the same schedule as in (a) 
above; 
(d) The Secretary of National Defense, or his nominee to come, 
alternately, from the Philippine Navy and the Coast Guard, who 
shall serve for a term of three (3) years; 
(e) The Chairman of the Regional Development Council, Region IV who 
shall serve for a term of three (3) years; 
(0 The Governor, Province, of Quezon, who shall serve for a term of 
three (3) years. 
(g) The Representatives, Third Congressional District of Quezon, who 
shall serve for a term of three (3) years; 
(h) The Mayor, Municipality of Atimonan, who shall serve for a term of 
three (3) years; 
(i) The Mayor, Municipality of Unisan, who shall serve for a term of 
three (3) years; 
(j) The Administrator of the Authority, who shall act as the Vice- 
Chairman, and shall serve in a concurrent capacity during his 
term as Administrator; 
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(k) The Director for Public Affairs of the Authority, who shall serve as 
member of the Board during his term as Director for Public 
Affairs; 
(1) An individual fi-om the private sector, to represent the shipping 
industry, who shall serve for a term of (2) years; 
(m) An individual from the private sector, to represent the labor sector, 
who shall serve a term of two (2) years; 
(n) An individual, from the private sector, to represent the 
environmental concern group, who shall serve for a term of (2) 
years. 
The members of the Board shall be appointed by the President of the 
Philippines, with their terms of office as designated in their appointments: 
Provided, that any person chosen to fill a vacancy shall serve only for the 
unexpired term of the director whom he succeeds. Directors may be 
suspended or removed for cause of the President of the Philippines. 
SECTION 8. Chairman of the Board. - The Directors shall annually 
elect a Chairman from among themselves. 
SECTION 9. Meetings and Quorum. - The Board shall hold one 
regular meeting monthly and such special meetings provided for in the by- 
laws, Eight (8) members of the Board shall constitute a quorum and the vote 
of eight (8) members shall be necessary for the adoption of any rule, 
resolution or decision or any other Act of the Board. 
SECTION 10. Per Diems and Allowances. - The Chairman and 
members of the Board shall receive a per diem of Eight Hundred Pesos 
(P800.00) and Five Hundred Pesos (P500.00), respectively exclusive of 
traveling expenses, for each day of meeting actually attended by them: 
Provided, that in no case shall the total per diem exceed Eight Thousand 
Pesos (P8,OOO.OO) for the Chairman and Five 
Thousand Pesos 
(P5,OOO.OO) for each director per month. 
SEC 11. Prohibitions for Directors. - No director shall, at the same 
time, be employed by the Authority in any capacity whatsoever, except as 
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may be authorized by the President of the Philippines. Whenever any director 
has a personal or business interest in the discussion or resolution of any 
matter, or any of his relatives within the third degree or consanguinity or 
second degree of affinity has such interest, such director shall abstain himself 
in the discussion or resolution of any matter and must retire from the 
meeting during the deliberation. The withdrawal of such director shall be 
noted in the minutes of the meeting. 
SECTION 12. Powers and Duties of the Board. - The Board shall 
have the following powers and duties: 
(a) To promulgate policies and to prescribe, amend and repeal the by- 
laws, rules and regulations governing the manner in which the 
general business of the Authority may be exercised; 
(b) To approve the annual and such supplemental budgets, which may 
be submitted to the President, in the form and manner prescribed 
by the Department of Budget and Management, including such 
explanation and data as may be required to justify the 
appropriation; 
(c) To render annual reports to the President and such special reports 
as may be requested; 
(d) To appoint, on recommendation of the Administrator, the 
department heads as established in the organization of the 
Authority; 
(e) To adopt rules and procedures and fix a time and place for holding 
meetings. 
SECTION 13. Administrator of the Authority. - The Chief 
Executive Officer of the Authority shall be an Administrator, to be appointed 
by the President of the Philippines. The Administrator shall serve as Vice- 
Chairman of the Board of Directors in a concurrent Capacity. The 
Administrator shall receive an annual salary and representation allowances 
exclusive of traveling expenses, to be determined by the Board. He shall not 
receive additional compensation as Vice-chairman of the Board. 
SECTION 14. Powers and Duties of Administrator. - The 
Administrator shall have the following powers and duties: 
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(a) To implement, enforce and apply the policies, programs, guidelines, 
procedures, decisions, rules and regulations promulgated, 
prescribed, issued or adopted by the Authority; 
(b) To direct and manage the affairs and business of the Authority in 
the spirit and intent of this Act and in pursuance of the policies of 
the Board; 
(c) To submit within ten (10) days after the close of each fiscal year, an 
annual report to the Board and such other reports as may be 
required; 
(d) To submit an annual budget and necessary supplemental budgets 
to the Board for its approval; 
(e) To appoint, promote, remove, suspend, or otherwise discipline for 
cause the officers and employees of the Authority, subject to such 
rules as may be promulgated by the Board; 
(0 To establish an internal organization of the Authority under such 
conditions that the Board may prescribed: Provided, that any 
major reorganization shall be subject to the approval of the Board; 
(g) To delegate his authority, under such conditions as the Board may 
prescribe; 
(h) To sign contracts, to approve expenditures and payments within 
the budget provisions, and generally to do any and all acts or 
things for the proper operation of the Authority; 
(i) To perform such other duties as may be assigned to him by the 
Board. 
SECTION 15. Management and Staff. - The Administrator shall, 
subject the approval of the Board, determine the staffing pattern and the 
number of personnel in the Authority, define their duties and responsibilities 
and subject to confirmation by the Board, fix their salaries and emoluments 
that are comparable to those of similar positions in other government-owned 
or-controlled corporations, the provisions of existing rules and regulations on 
wage and position classification notwithstanding. 
All other officials and employees of the Authority shall be selected and 
appointed on the basis of merit and fitness based on a comprehensive and 
progressive merit system to be established by the Authority immediately 
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upon its organization and consistent with Civil Service rules and regulations: 
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Provided, however, That all professional and technical positions shall be 
considered policy determining, primarily confidential and highly technical in 
nature. The recruitment, transfer, promotion and dismissal of all personnel of 
the Authority, including temporary workers, shall be governed by such merit 
system. 
The Administrator shall, subject to Civil Service laws and wage and 
position classification and other rules and regulations in relation thereto. 
SECTION 
16. Exemption from Civil Service Law 
and 
CZassification Office. - Officers and employees of the Authority shall not be 
subject to Civil Service laws and wage and position classification and other 
rules and regulations in relation thereto. 
SECTION 17. Internal Audit. - Internal auditing of the Authority's 
accounts and transactions shall be the sole responsibility of the Authority. 
SECTION 18. Audit of Funds. - No funds of the Authority shall be 
used to pay for the salaries or expenses of the Commission on Audit in excess 
of one-third of the total accounting costs of the Authority. Any audit by the 
Commission on Audit shall be conducted on post-audit basis, and the 
Authority shall be entitled to disburse its funds without prior approval from 
the Chairman of the Commission on Audit. The results of such audit shall be 
transmitted to the Board. 
SECTION 19. Power to Issue Bonds or lncur Indebtedness. - 
(a) Domestic Indebtedness - Whenever the Board deems it advisable 
and necessary for the Authority to issue bonds to carry out 
approved capital investment projects, it shall, by resolution, so 
manifest and declare, stating the purpose for which the loan or 
issue is to be applied and citing the project study devised for the 
purpose. In order for such resolution to be valid, it shall be passed 
by the affirmative vote of at least eight (8) members of the Board 
and approved by the President upon the recommendation of the 
Secretary of Finance, after consultation with the Monetary Board. 
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The Secretary of Finance, in consultation with the Monetary Board, 
shall prescribe the form, the rate of interest, the denominations, securities, 
negotiability, convertibility, call and redemption features, and all other terms 
and conditions of issuance, placement, sale, servicing, redemption and 
payment of all bonds issued under the authority of this Act. 
The bonds issued under the authority of this Section may be made 
payable both as to the principal and interest, in Philippine currency or on 
headily convertible foreign currency. 
Nothing in this Section shall be interpreted to mean that the Secretary 
of Finance, in the redemption of securities, is prevented from applying the 
lottery principle by which bonds drawn by lot, may be redeemed before 
maturity either at their face value or above. The Republic of the Philippines 
hereby guarantees the payment by the Authority of both the principal and 
the interest in case the Authority fails to do so; and there are hereby 
appropriated, out of the general funds in the Philippine Treasury not 
otherwise appropriated, the sums necessary to make the payments 
guaranteed by this subsection: Provided, That the sum so paid by the 
Republic of the Philippines shall be refunded by the Authority. 
(b) Foreign Loans - The Authority is being authorized to contract loans, 
credits, and indebtedness from foreign governments, foreign 
agreed, for the accomplishment of its purposes, the total principal 
amount of which outstanding at any time, exclusive of interest 
and other charges, shall not exceed forty percent (40%) of its total 
assets, United States dollars or its equivalent in other foreign 
currencies at the time the loans, credits and indebtedness are 
incurred. 
The President of the Philippines, by himself or through any 
representative duly designated by him in writing, is hereby authorized to 
guarantee, absolutely and unconditionally as primary obligor and not as 
surety merely, in the name and on behalf of the Republic of the Philippines, 
the payment of the loans, credits, indebtedness herein authorized, as well as 
the performance of any or all of the obligations undertaken by the Authority 
pursuant to any agreement entered into in connection therewith on such 
terms and conditions as he shall deem proper and reasonable. 
In the negotiation and contracting of any loan, credit or indebtedness 
under this subsection, the President of the Philippines may, when made a 
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condition to the granting of such loans, credits or indebtedness, agree to 
waive the application of any Taw granting preferences or imposing 
restrictions on international competitive bidding, including among others, Act 
No. 423, Commonwealth Act No. 138, Commonwealth Act No. 541, and 
Republic Act No. 5183: Provided, however, That in every case where 
competitive bidding is agreed upon in the purchase of machineries, 
equipment, materials and supplies financed out of proceeds of such loans, 
credits and indebtedness, preference may be granted in favor of such 
machinery, equipment, materials or supplies produced, processed or 
manufactured in the Philippines, at such rate and in such manner as may be 
agreed upon from time to time with the institution providing financing for the 
project. 
(c) The bonds issued under subsection (a) as well as loans, credits and 
indebtedness contracted under subsection (b) of this Section, and 
the payment of the principal, interest and other charges thereon, 
as well as the importation of machinery, equipment, materials 
and supplies by the Authority, paid from the proceeds of any loan, 
credit or indebtedness incurred under this Act, shaIl be exempt 
from all taxes, fees, imposts and other charges and restrictions, by 
the Republic of the Philippines or any of its agencies and political 
subdivision. Said bonds shall be receivable as security in any 
transaction with the Government, its subdivisions, agencies and 
instrumentalities, in which such security is required. 
SECTION 20. Eminent Domain. - For the acquisition of rights of 
way and property for the construction of the canal, wharves, piers, docks, 
quays, warehouses and other terminal facilities, structures and approaches 
thereto, the Authority shall have the right and power to acquire the same by 
purchase by negotiation, or by condemnation proceedings. Should the 
Authority elect to exercise the right of eminent domain, condemnation 
proceedings shall be maintained by and in the name of Authority and it may 
proceed in the manner provided by law. 
SECTION 21. Transfer of Personnel, Records, Functions, Rights, 
Assets and Liabilities. - All books, records and documents which appertain 
to the ports administration in the Canal Zone and all personnel assigned to 
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the sub-port within the Canal Zone are hereby transferred to the Authority, 
subject to the organization that may be effected. 
The priority use of all lands and of all facilities owned by the National 
Government, its agencies and instrumentalities, including those provided, 
however, that the Board shall, as soon as constituted, make an inventory of 
all such facilities and identify those facilities which were constructed and 
financed wholly or partly from general funds of the National Government, as 
distinguished from those financed wholly by the Portworks Special Funds, 
indicating therein the physical condition and relative book value thereof. 
Upon such inventory, all properties and facilities generated, by 
financing wholly out of the Portworks Special Funds shall be transferred to 
the Authority without reimbursement to the original agencies having control 
over them; and for all the properties and facilities that were financed partly 
or wholly from the general fund or bond fund of the Government, the 
Authority, by virtue of this Section, may secure transfer of ownership thereof 
by providing a systematic schedule or repayment of the corresponding share 
of the general fund or both fund of the Government , the' Authority, by virtue 
of this Section, may secure transfer of ownership thereof by providing a 
systematic schedule or repayment of the corresponding share of the general 
fund invested therein, including interests in the case of the latter. 
The Authority shall, upon consultation with the department head 
concerned, reserve and make available within the port district such area or 
areas necessary for the proper operation of the Bureau of Customs, 
Quarantine, Immigration or any of the national, city or municipal 
government agency which, by reason of the nature of its duties and functions, 
require the establishment and operation of such office. 
All appropriations for the Authority and ten percent 26 (10%) of the 
surplus of the Portworks Special Funds are hereby transferred to the 
Authority, which shall administer the same effective upon the date of 
constitution of the Board of Directors. All income or revenue accruing 
heretofore to the Portworks Special Funds collected by the Authority shall 
first accrue to the Authority to defray the following expenses; (1) Cost of port 
administration, operation, maintenance, repair work and dredging; (2) 
Payment of interest on, and in the redemption of, previous construction loans 
on properties or facilities transferred to the Authority pursuant to this 
Section; (3) Purchase of new equipment; and (4) Costs of approved new 
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construction work as detailed in the Authority's annual budget: Provided, 
That any balance thereof shall be turned over to the Portworks Special 
Funds. 
SECTION 22. Repealing Clause. - All laws, decrees, orders, 
proclamation, and rules and regulations or parts thereof which are 
inconsistent with any of the provisions of this Act are hereby repealed or 
modified accordingly . 
SECTION 23. Effectivity. - This Act shall take effect fifteen (15) days 
from its publication in two (2) newspapers of general circulation. 
Approved, 
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