Republic of the Philippines
HOUSE OF REPRESENTATIVES
Batasan Hills, Quezon City

NINETEENTH CONGRESS
First Regular Session

House Bill No._7077

Introduced by

SPEAKER FERDINAND MARTIN G. ROMUALDEZ
HON. YEDDA MARIE K. ROMUALDEZ
and
HON. JUDE A. ACIDRE

AN ACT
PROVIDING FOR THE LEGAL FRAMEWORK AND MECHANISMS FOR
THE CREATION, OPERATION, ADMINISTRATION, AND COORDINATION
OF SPECIAL AGRICULTURAL GROWTH ZONES IN THE PHILIPPINES,
CREATING FOR THIS PURPOSE, THE PHILIPPINE AGRICULTURAL.
GROWTH ZONE AUTHORITY, AND FOR OTHER PURPOSES

EXPLANATORY Ni

Itis the policy of the State to ensure that all sectors of the economy and
all regions of the country shall be given optimum opportunity to maximize
agricultural productivity, promote efficiency and equity and accelerate the
modernization of the agriculture and fisheries sectors of the country, by
establishing, among others, special agricultural growth zones in selected areas
in the countryside, with the active participation of the private sector as
enshrined in the 1987 Constitution, to wit:

Section 20, Article Il provides that “The State recognizes the
indispensable role of the private sector, encourages private
enterprise, and provides incentives to needed investments.”

Section 8, Article XIII provides that “The State shall provide incentives
to landowners to invest the proceeds of the agrarian reform program
to promote industrialization, employment, creation, and privatization
of public sector enterprises. Financial instruments used as payment
for their lands shall be honored as equity in enterprises of their
choice.”


The State shall promote industrialization and full employment based on
sound agricultural development and agrarian reform, through industries that
make full and efficient use of human and natural resources, and which are
competitive in both domestic and foreign markets.

The proposed measure will establish the legal framework and
mechanisms for the administration and management of the Special Agricultural
Growth Zones (SAGZ) and assist in the preservation of natural resources and
biodiversity. It will guarantee the security of ownership, tenure, and income of
all farmer-landowners, especially agrarian reform beneficiaries and ensure that
all agricultural, commercial, and industrial arrangements are mutually
beneficial. It will modernize the agriculture sector by transforming the special
agricultural growth zones into highly developed agro-industrial, commercial,
investment, and financial centers, where highly trained workers and efficient
services will be available to agribusiness and agriculture-related enterprises.

Through the creation of SAGZ, the flow of investors, both foreign and
local, would generate employment opportunities and establish backward and
forward linkages among industries in and around the agricultural growth zones.
Financial and industrial cooperation between the Philippines and industrialized
countries through technology-intensive industries will modernize the country's
agricultural sector and improve productivity levels by utilizing new technological
and managerial know-how. Finally, it will open opportunities for people working
in the agricultural sector helping gain access to modern and developing
technologies needed for sustainable agriculture and enable them to have a
competitive advantage in the market.

Toward this end, the private sector shall play a major role in the
establishment of special agricultural growth zones by developing and utilizing
such areas to spur agricultural development and enhance the productivity of
agricultural lands awarded under the agrarian reform program.

In view of the foregoing, the immediate approval of this measure is
earnestly sought.

IDINAND' ff, ROMU. MARIE K. ROMUALDEZ
Representative Representative
First District, Leyte Party-List, Tingog Sinirangan

JUDE A/ACIDRE

Party-List, Jngog Sinirangan


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Batasan Hills, Quezon City

NINETEENTH CONGRESS
First Regular Session

36 Gil No, 1077

“House Bill No.

Introduced by

SPEAKER FERDINAND MARTIN G. ROMUALDEZ
HON. YEDDA MARIE K. ROMUALDEZ
and
HON. JUDE A. ACIDRE

AN ACT
PROVIDING FOR THE LEGAL FRAMEWORK AND MECHANISMS FOR
THE CREATION, OPERATION, ADMINISTRATION, AND COORDINATION
OF SPECIAL AGRICULTURAL GROWTH ZONES IN THE PHILIPPINES,
CREATING FOR THIS PURPOSE, THE PHILIPPINE AGRICULTURAL
GROWTH ZONE AUTHORITY, AND FOR OTHER PURPOSES.

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

Section 1. Short Title. - This Act shall be known as the “Philippine
Agricultural Growth Zone Act of 2022.”

Section 2. Declaration of Policy. — \t is the policy of the State to ensure
that all sectors of the economy and all regions of the country shall be given
optimum opportunity to maximize agricultural productivity, promote efficiency
and equity and accelerate the modernization of the agriculture and fisheries
sectors of the country, by establishing, among others, special agricultural
growth zones in selected areas in the countryside, with the active participation
of the private sector as mandated by the 1987 Constitution, namely:

“The State recognizes the indispensable role of the private sector,
encourages private enterprise, and provides incentives to needed
investments.” (Section 20, Article II)

“The State shall provide incentives to landowners to invest the proceeds
of the agrarian reform program to promote industrialization, employment,
creation, and privatization of public sector enterprises. Financial


instruments used as payment for their lands shall be honored as equity
in enterprises of their choice.” (Section 8 Article XIII)

Toward this end, the private sector shall play a major role in the
establishment of special agricultural growth zones by establishing and
developing such areas to spur agricultural development and enhance the
productivity of agricultural lands awarded under the agrarian reform program

The State shall promote industrialization and full employment based on
sound agricultural development and agrarian reform, through industries that
make full and efficient use of human and natural resources, and which are
competitive in both domestic and foreign markets.

Section 3. Purposes, intents and Objectives. \t shall be the purpose,
intent, and objective of this Act:

(a)

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To establish the legal framework and mechanisms for the
integration, coordination, planning, monitoring, and managing of
special agricultural growth zones, and the preservation of natural
resources and biodiversity;

To guarantee the security of ownership, tenure and income of all
farmer-landowners, especially agrarian reform beneficiaries and
ensure that all agricultural, commercial, and industrial arrangements
between farmer-landowners, farm workers and private investors are
mutually beneficial;

To modernize the agriculture sector by transforming the special
agricultural growth zones into highly developed agro-industrial,
commercial, investment, and financial centers, where highly trained
workers and efficient services will be available to agribusiness and
agriculture-related enterprises;

To promote the flow of investors, both foreign and local, into special
agricultural growth zones which would generate employment
opportunities and establish backward and forward linkages among
industries in and around the agricultural growth zones;

To promote financial and industrial cooperation between the
Philippines and industrialized countries through technology-
intensive industries that will modernize the country's agricultural
sector and improve productivity levels by utilizing new technological
and managerial know-how;

To promote people empowerment by strengthening people's
organizations, cooperatives, and NGOs and by establishing and


improving mechanisms and processes for their participation in
government decision-making and implementation;

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To open opportunities for people working in the agricultural sector
helping gain access to modern and developing technologies needed
for sustainable agriculture and enable them to have a competitive
advantage in the market.

Section 4. Definition of Terms. - For purposes of this Act, the following
terms are hereunder defined:

(a) “Agrarian Reform Lands” — refer to lands awarded under
Presidential Decree No. 27 and Republic Act No. 6657, and
subsequent laws on the matter;

(b) “Agribusiness Enterprise Arrangement (AEA)” - refers to the
entrepreneurial collaboration between farmer-landowners and
private investors in the implementation of an agriculturally-related
business venture involving agricultural lands including agrarian
reform lands distributed under the Comprehensive Agrarian Reform
Program (CARP) and other agrarian reform laws;

(c) “Agricultural Lands” — refer to lands devoted to or suitable for the
Cultivation of the soil, planting of crops, growing of trees, raising of
livestock, poultry, fish, or aquaculture production, including the
harvesting of such farm products, and other farm activities and
practices performed in conjunction with such farming operations by
persons whether natural or juridical and not classified by law as
mineral land, forest land, residential land, commercial land, or
industrial land;

(d) “Build-Operate-Transfer Scheme” - refers to an agribusiness
enterprise arrangement where the investor builds, rehabilitates or
upgrades, at his own cost, capital assets, infrastructure and facilities
applied 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-landowners;

(e) “Competitive Advantage” — refers to competitive edge in terms of
product quality and/or price. It likewise refers to the ability to produce
@ product with the greatest relative efficiency in the use of resources;

(f) “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 certain crops at pre-arranged agreement


involving volume, quality standards, selling price, delivery and other
terms and conditions;

(g) “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;

(h) “Growership Scheme” — refers to an agribusiness 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-arranged agreement involving
volume, quality standards, growership fee, delivery and other terms
and conditions;

(i) “Investors” — refer to the private individuals, corporations, non-
government organizations, farmer cooperatives/associations,
government owned and/or controlled corporations 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;

@) “Joint Venture Agreement Scheme” - refers to an agribusiness
enterprise arrangement where the farmer-landowners and investors
form a joint venture corporation (JVC) for the purpose of managing
farm operations;

(k) “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 definite period.

() “Management Contract Scheme” - refers to an agribusiness
enterprise arrangement where the farmer-landowners 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;

(m) “Marketing Agreement Scheme” — refers to an agribusiness
enterprise arrangement 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;


(0) “Special Agricultural Growth Zones (SAGZ)” — refers to adjoining
or adjacent parcels of agricultural land with a minimum total area 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, utilizing agricultural mechanization
technology. Physical infrastructure includes the overall design layout
of the area (e.g., field plot size, irrigation canal, farm drain, farm ditch,
farm roads, post-harvest facilities, etc.) while institutional
infrastructure consist of the commercial, financial, and social support
services necessary for the operationalization of contiguous farming
and other agribusiness and agro-industrial schemes;

(p) “Takeover” — refers to an act of the investor in controlling the
operation of the farm and/or assuming any of the responsibilities 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.

Section 5. Establishment of Special Agricultural Growth Zones. —
Special agricultural growth zones shall be established in a proclamation to be
issued by the President of the Philippines subject to the evaluation and
recommendation of the Secretary of Agriculture and in consultation with the
local government units, appropriate government agencies, concerned non-
government organizations (NGOs) and organized farmer groups.

Special agricultural growth zones shall be identified on the basis of the
following criteria:

(a) Agro-climatic and environmental conditions giving the area a
competitive advantage in the cultivation, culture, production and
processing of particular crops, animals, and aquatic products;

(b) Strategic location of the area for the establishment of agriculture
and/or fisheries infrastructure, industrial complexes, production, and
processing zones;

(c) Strategic location of the area for market development 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
beneficiaries and other small farmers and fisherfolk in the area.

The metes and bounds of each special agricultural growth zone are to
be delineated and more particularly described in a proclamation to be issued
by the President of the Philippines, upon the recommendation of the Philippine


Agricultural Zone Authority (PAZA), which shall be established under this Act,
in coordination with the municipal and / or city council, National Land Use
Coordinating Committee and / or the Regional Land Use Committee.

Section 6. Criteria for the Establishment of Special Agricultural
Growth Zones. - The establishment of special agricultural growth zones shall
be subject to the evaluation and recommendation of the PAZA, based on a
detailed feasibility and engineering study which must conform to the following
criteria:

(a) The proposed area must be identified as an agricultural growth
center with existing or having the potential for growing high-value
agro-industrial crops in the Medium-Term Philippine Development
Plan or by the Regional Development Council;

(b) The accessibility in the proposed special agricultural growth zones,
such as roads, railways, telephones, ports, airports and other
required transportation infrastructure, and the suitability and capacity
of the proposed site to absorb such improvements;

(c) The availability of water source and electric power supply for use of
the special agricultural growth zones;

(d) The extent of vacant lands available for industrial and commercial
development and future expansion of the special agricultural growth
zones as well as of adjacent lands available for development of
residential areas for the workers;

(e) The availability of skilled, semi-skilled and non-skilled trainable labor
force in and around the special agricultural growth zones;

(f) The area must have a significant competitive advantage over the
existing agricultural lands and its potential profitability can be
established;

(g) The area must be strategically located; and

(h) The area must be situated where controls can easily be established
to curtail smuggling activities.

Other areas which do not meet the foregoing criteria may be established
as special agricultural growth zones, Provided, That the said area shall be
developed only through local government and/or private sector initiative under
any of the schemes allowed in this Act, and without any financial exposure on
the part of the national government: Provided, further, That the area can be
easily secured to curtail smuggling activities: Provided, finally, That after five
(5) years the area must have attained a substantial degree of development, the
indicators of which shall be formulated by the PAZA.


Chapter II
GOVERNING STRUCTURE

Section 7. Creation of the Philippine Agricultural Zone Authority.
There is hereby created a body corporate to be known as the Philippine
Agricultural Zone Authority (PAZA) attached to the Department of Agriculture.

Section 8. General Powers and Functions of the Authority - The
Philippine Agricultural Zone Authority shall have the following powers and
functions:

(a) To operate, administer, manage, and develop special agricultural
growth zones according to the principles and provisions set forth in
this Act;

(b) To register, regulate and supervise the enterprises 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;

(d) In coordination with local government units concerned and
appropriate agencies, to construct, acquire, own, lease, operate and
maintain on its own or through contract, franchise, license, bulk
purchase from the private sector and build-operate-transfer scheme
or joint venture, adequate facilities and infrastructure, such as light
and power systems, water supply and distribution systems,
telecommunication and transportation, buildings, structures,
warehouses, roads, bridges, ports and other facilities for the
operation and development of special agricultural growth zones;

e

To create, operate and/or 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
or 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;

iC)

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To coordinate with the Department of Agriculture (DA), Department
of Agrarian Reform (DAR), Department of Environment and Natural
Resources (DENR), National Economic Development Authority
(NEDA), the Department of Trade and Industry (DTI), the


Department of Science and Technology (DOST), and the local
government units and appropriate government agencies for policy
and program formulation and implementation; and
(i) To monitor and evaluate the development and requirements of
special agricultural growth zones and recommend to the local
government units or other appropriate authorities the location,
incentives, basic services, utilities, and infrastructure required or to
be made available for said entities.
Section 9. Board of Directors. — The overall directions and thrusts of
PAZA shall be provided and approved, unless provided otherwise in this Act,
by its Board of Directors, hereinafter referred to as the Board.
The Board shall be composed of fifteen (15) members as follows:
(a) Secretary of the Department of Agriculture as Chairman;

(0) Director-General of the Philippine Agricultural Zone Authority as
Vice-Chairman;

(c) Undersecretary of the Department of Agrarian Reform;

(d) Undersecretary of the Department of Finance;

(e) Undersecretary of the Department of Labor and Employment;

(f) Undersecretary of Department of Interior and Local Government;

(g) Undersecretary of Department of Environment and Natural
Resources;

(h) Undersecretary of Department of Public Works and Highways;
(i) Undersecretary of Department of Science and Technology;
(j) Undersecretary of Department of Energy;

(k) Three (3) Deputy Directors-General of the Philippine Agricultural
Zone Authority;

()) Two (2) Private Sector Representatives to be appointed by the
President, upon the recommendation of the Board comprising of one
(1) representative each from the:

1. Farmer and farm worker sector
2. Investors and business sector

10


The term of the two (2) representatives from the private sector shall be
six (6) years: Provided, however, That they shall continue to hold office until
their successors shall have been appointed. All vacancies, prior to the
expiration of the term, shall be filled for the unexpired term only.

In case of the unavailability of the Secretary of the Department of
Agriculture to attend a particular board meeting, the Director General of PAZA
shall act as Chairman.

Members of the Board shall receive a per diem of not less than the
amount equivalent to the representation and transportation allowances of the
members of the Board and/or as may be determined by the Department of
Budget and Management: Provided, however, that per diems collected per
month does not exceed the equivalent of four (4) meetings.

Section 10. Functions and Powers of the PAZA Board. - The PAZA
Board of Directors shall have the following functions and powers:

(a) Set the general policies on the establishment and operations of
special agricultural growth zones, agro-industrial estates, export
processing zones, free trade zones, and the like;

(b) Review proposals for the establishment of special agricultural
growth zones based on the set criteria provided for in this Act and
endorse to the President the establishment of special agricultural
growth zone. Thereafter, it shall facilitate and assist in the
organization of said entities;

(c) Regulate and undertake the establishment, operation and
maintenance of utilities, other services and infrastructure in the
special agricultural growth zones, such as heat, light and power,
water supply, telecommunication, transport, toll roads and bridges,
port services, and the like and to fix just, reasonable and competitive
rates, charges and fees therefore;

(d) Approve the annual budget of the Philippine Agricultural Zone
Authority and the development plans for special agricultural growth
zones;

(e) Issue rules and regulations to implement the provisions of this Act in
so far as its power and functions are concerned;

(f) Exercise its powers and functions as provided for in this Act; and
(g) Render annual reports to the President and the Congress.

Section 11. Director-General.— The Philippine Agricultural Zone
Authority shall be headed by Director-General with the rank of Undersecretary

1


to be appointed by the President of the Philippines. He or she shall serve a term
of six (6) years from the date of his or her appointment unless removed for
cause. Provided, That no person shall be appointed as Chairperson unless he
or she is a Filipino citizen, of good moral character, of proven probity and
integrity and a holder of a degree in any of the following fields: agriculture,
economics, business, public administration, law, management or their
equivalent and have at least five (5) years relevant experience preferably in the
field of agriculture, economics, business, public administration, law,
management or their equivalent, and with at least ten (10) years relevant
working experience preferably in the field of agriculture, management or public
administration.

The Director-General shall be assisted by three Deputy Directors-
General, each for policy and planning, administration, and operation, who shall
be appointed by the PAZA Board upon the recommendation of the Director-
General. The Deputy Directors-General shall have the same qualifications as
the Director-General and shall perform such duties and functions as may be
assigned by the Director-General or as provided for by law.

Section 12. Powers and Functions of the Director-General. - The
Director-General shall act as chief executive officer and the overall coordinator
of the policies, plans and programs of special agricultural growth zones. As
such, he or she shall provide overall supervision over and general direction to
the development and operations of these special agricultural growth zones. He
or she shall determine the structure and the staffing pattern and personnel
complement of the PAZA and establish regional offices, when necessary,
‘subject to the approval of the PAZA Board.

In addition, he or she shall have the following specific powers and
responsibilities:

(a) To safeguard all the agricultural lands, buildings, records, monies,
credits and other properties and rights of special agricultural growth
zones;

(b) To ensure that all revenues of special agricultural growth zones are
collected and applied in accordance with its budget;

(c) To ensure that the investorsfirms and employees of special
agricultural growth zones are properly discharging 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;


(€) 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;

(f) 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;

(g) To acquire jurisdiction, as he may deem proper, over the protests,
complaints, and claims of the residents and enterprises in special
agricultural growth zones concerning administrative matters;

(h) To recommend to the Board the grant, approval, refusal, amendment
or termination of special agricultural growth zone franchises,
licenses, permits, contracts, and agreements in accordance with the
policies set by the Board;

0

To require owners of houses, buildings or other structures
constructed without the necessary permit whether constructed on
public or private lands, to remove or demolish such houses,
buildings, structures within sixty (60) days after notice and upon
failure of such owner to remove or demolish such house, building our
structure within said period, the Director-General or his authorized
representative may summarily cause its removal or demolition at the
expense of the owner, any existing law, decree, executive order and
other issuances or part thereof to the contrary notwithstanding;

¢

To take such emergency measures as may be necessary to avoid
fires, floods and mitigate the effects of storms and other natural or
public calamities;

(k) To prepare and make out plans for the physical and economic
development of special agricultural growth zones, including zoning
and land subdivision, and issue such rules and regulations which
shall be submitted to the Board for its approval; and

(!) To perform such other duties and exercise such powers as may be
prescribed by the Board, and to implement the policies, rules and
Tegulations set by the PAZA.

Section 13. Administration of Each Special Agricultural Growth
Zone — Except for privately-owned, managed or operated special agricultural
growth zones, each special agricultural growth zone shall be organized,
administered, managed, and operated by an Administrator with the assistance
of one (1) Deputy Administrator, both to be appointed by the Board upon
recommendation of the Director-General.


There shall be, for each special agricultural growth zone, an advisory
committee to be composed of:

(a) Local chief executive of the city or municipalities where the special
agricultural growth zone is located;

(b) Member representing the investors located in the special agricultural
growth zone;

(c) Member representing the farmer-landowners in the special
agricultural growth zones;

(d) Member representing the business sector in the periphery of the
special agricultural growth zone; and

(e) The PAZA-designated representative.

The advisory committee shall advise the special agricultural growth zone
management on matters pertaining to policy initiatives; and assist in settling
problems arising between labor and any enterprise in the special agricultural
growth zones.

Privately-owned special agricultural growth zones shall retain autonomy
and independence but shall be monitored by the PAZA for the implementation
of incentives and operations for adherence to the law.

Section 14. Personnel — The PAZA Board of Directors shall provide for
an organization and staff of officers and employees of the PAZA, and upon
recommendation of the Director-General, appoint and fix the remunerations
and other emoluments: Provided, That the Board shall have exclusive and final
authority to promote, transfer, assign and reassign officers of the PAZA, any
provision of existing law to the contrary notwithstanding: Provided, further, That
the director general may carry out removal of such officers and employees.

All positions in the PAZA shall be governed by a compensation, position
classification system and qualification standards approved by the Director-
General with the concurrence of the Board of Directors based on a
comprehensive job analysis and audit of actual duties and responsibilities. The
compensation plan shall be comparable with the prevailing compensation plans
in the private sector and shall be subject to the periodic review by the Board no
more than once every two (2) years without prejudice to yearly merit reviews or
increases based on productivity and profitability. The PAZA shall therefore be
exempt from existing laws, rules and regulations on compensation, position
classification, and qualification standards.

All officials and employees of the PAZA shall be selected and appointed

on the basis of merit and fitness in accordance with civil service law, rules, and
regulations. The recruitment, transfer, promotion, and dismissal of all its

14


personnel including temporary workers shall be governed by a merit system
that will be established by the PAZA in compliance with existing laws, rules,
and regulations.

The PAZA officers and employees including all members of the Board
shall not engage directly or indirectly in partisan activities or take part in any
election, except to vote.

Section 15. Investigation and Inquiries— Upon a written formal
complaint made under oath, which on its face provides reasonable basis to
believe that some anomaly or irregularity might have been committed, the
PAZA or the administrator of the special agricultural growth zone concerned,
shall have the power to inquire into the conduct of it firms or employees and to
conduct investigations, and for that purpose may subpoena witnesses,
administer oaths, and compel the production of books, papers, and other pieces
of evidence: Provided, That, the investigator(s) may grant immunity from
Prosecution to any person whose testimony or whose possessions of
documents or other evidence is necessary or convenient to determine the truth
in any investigation conducted by him or under the authority of the PAZA or the
administrator of the special agricultural growth zone concerned.

Section 16. Prohibition Against Holding Any Other Office — The
Director-General, Deputy Director-General, administrators, officials and staff or
assistants of the PAZA shall not hold any other office or employment within or
outside the PAZA during their tenure. They shall not, during their tenure, directly
or indirectly, practice any profession, participate in any business, or be
financially interested in any contract with, or in any franchise, or special
privilege granted by the PAZA or the national government, or any subdivision,
agency, or instrumentality thereof, including any government-owned-controlled
corporation, or its subsidiary.

Section 17. Disbursement of Funds — No money shall be paid out of
the funds of any special agricultural growth zone except in pursuance of the
budget as formulated and approved by the PAZA.

Section 18. Full Disclosure of Financial and Business Interests —
Each member of the PAZA Board, The Director-General, Deputy Director-
General, administrators, and their staff shall, upon assumption of office, make
full disclosure of their financial and business Interests.

15


Chapter Ill
OPERATIONS WITHIN THE SPECIAL AGRICULTURAL ZONES

Section 19. Agricultural Development Strategy of Each Special
Agricultural Growth Zone — The development priorities and strategy of each
special agricultural growth zone established pursuant to this Act shall be
formulated by the PAZA, in coordination with the Department of Agriculture, the
Department of Agrarian Reform, the Department of Trade and Industry, the
National Economic and Development Authority, and the local government units;
Provided, That such development strategy is consistent with the priorities of the
national government as outlined in the Medium-Term Philippine Development
Plan.

The development priorities and strategy for each special agricultural
growth zone shall take into consideration five (5) major factors:

(a) Increased farm productivity and profitability through land clustering
with a minimum of fifty (50) hectare cluster for synchronized farming
operations;

(b) Provision of required physical and institutional infrastructure and
other support services;

(c) Enhanced farming techniques, farm development and business
competitiveness through the integration of contiguous farming and
other agribusiness enterprise arrangements;

(d) Availability of accessible agricultural credit and financing programs
and modern farming information, inputs, technology, and machinery;
and

(e) Improved quality of life for farmers and farm workers by ensuring food
security, poverty alleviation, non-farm employment and social equity.

It shall be the policy of the government and the PAZA to encourage and
provide incentives and facilitate private sector participation in the construction
and operation of public utilities and infrastructure in the special agricultural
growth zones, using any of the schemes allowed in Republic Act No. 6957.

Section 20. Market Competitiveness and Sustainability — The PAZA,
in coordination with the Department of Agriculture, the Department of Agrarian
Reform, the Department of Trade and Industry, the National Economic and
Development Authority, and the local government units shall formulate medium
and long-term plans aimed at enhancing the competitiveness and sustainability
of each special agricultural growth zone based on, but not limited to, the
following goals and indicators of development:


(a) Increase in the volume, quality, and value of agriculture production
for domestic consumption and for exports;

(b) Reduction in post-harvest losses;

(c) Increase in the number, types, and quality of processed agricultural
products;

(d) Increase in the number of international trading partners in
agriculture and fishery products;

(e) Increase in the number of sustainable agriculture enterprises
engaged in domestic production, processing, marketing, and export
activities

(f) Increase in and wider level of entrepreneurship among farmers and
farmworkers in the area

(g) Increase in the number of farms engaged in diversified farming; and

(h) Reduced use of agro-chemicals that are harmful to health and the
environment.

Section 21. Survey of Resources — Prior to the creation of each special
agricultural growth zone, the PAZA, in consultation with the Department of
Agrarian Reform, the Department of Trade and Industry, the Department of
Environment and Natural Resources, Department of Science and Technology,
the concerned local government unit and the organized farmers and farm
worker groups, the private sector and communities shall conduct a survey of
the physical, natural assets and potentialities of the area covered by the
proposed special agricultural growth zone.

Section 22. Agribusiness Enterprise Arrangements. - The PAZA
shall provide farmer-landowners within designated special agricultural growth
zones, if they deem it the most economically and socially beneficial option
available to them, the option to enter into any of the following agribusiness
enterprise arrangements with private investors and locators with proven
competence in farm operations and management, high-end quality production
and productivity through the use of up-to-date technology and collateral
resources such as skilled manpower, adequate capital and credit, and access
to markets, consistent with the existing laws:

(a) Build-Operate-Transfer Scheme;
(b) Contract Growing Scheme;

(©) Growership Scheme;


(d) Joint Venture Agreement Scheme;

(e) Lease Agreement Scheme, provided that control over the agricultural
land shall always remain with the farmer-landowner;

(f) Marketing Scheme;
(g) Service Contract Scheme; and

(h) Any combination of the foregoing agribusiness enterprise
arrangements consistent with the provisions of this Act.

Section 23. Contracting Parties and Their Qualifications. - The
parties to an agribusiness enterprise arrangement shall possess the following
qualifications:

(a) Individual farmer-landowners who are in possession of their land,
including agrarian reform beneficiaries who hold an Emancipation
Patent (EP), or a Certificate of Land Ownership Award (CLOA) or
other tenurial instruments. However, in no case shall potential ARBs
be allowed to enter into an agribusiness enterprise arrangement or
any interim agreement prior to the award of the tenurial instrument
and the actual possession of the land;

(b) Organized farmer groups, including ARB cooperatives or
associations, who are the actual tillers shall have the legal
personality to transact or enter into any contract even if such entities
or actual tillers are not registered with the Cooperatives Development
Authority (CDA) or the Securities and Exchange Commission (SEC)
as the case may be.

For ARB cooperatives or associations with CLOAs in the name of the
organization, the Board of Directors/Trustees of such cooperative or
association shall secure the vote of approval by the general
membership in accordance with their Articles of
Cooperation/Association and By Laws. In the absence thereof, a vote
of approval of at least two-thirds (2/3) of the general membership
shall be secured.

(c) Prospective investor-locators must have valid registration with the
appropriate regulatory agencies, such as the SEC, CDA, and the
Department of Trade and Industry (DTI), good financial, technical,
and organizational standing for the past three (3) years; good track
record of competence for the past three (3) years in the industry
wherein the agribusiness enterprise arrangement shall conduct its
main activity; stable business relations; capability to manage and
operate the agribusiness enterprise arrangement undertaking;

18


consistent compliance with and no violation of any law, rule, and
regulation, and contract as the case may be.

If previously a contracting party to an agribusiness enterprise
arrangement, a prospective investor-locator must have proven
harmonious relationship with the other contracting party which
resulted to productive and mutually beneficial gains.

Any prospective investor-locator should neither have violated any law
pertaining to agrarian reform, nor impeded in any part of the agrarian
reform program implementation. In addition, the prospective investor
should not have prevented any ARB, actual tiller, or farmer from
exercising the rights under the agrarian reform program.

The necessary proof to establish the possession of the foregoing
qualifications shall be submitted to the PAZA which shall make the
necessary determination of eligibility. For this purpose, the PAZA
may call upon 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 final recommendation on the investors’
application.

Section 24. Mandatory Provisions of Agribusiness Enterprise
Arrangements. - Agribusiness enterprise arrangements within special
agricultural growth zones entered into under this Act, being imbued with public
interest, shall have the following mandatory provisions:

(a) The landholding subject of the agribusiness enterprise arrangement
shall be used exclusively for agricultural purposes and other related
activities comprising the subject matter of the arrangement; only two
thirds of the entire area shall be subjected to the arrangement, the
remaining one third portion shall be exclusively controlled and used
by the farmer-landowner or actual tillers with full support from the
government.

(b) The parties to the agribusiness enterprise arrangement shall
recognize the prerogative of a participating farmer or farmworker to
exercise the rights granted to them under agrarian reform laws in the
event of certain disputes over any of the terms set under the
arrangement;

(c) The agribusiness enterprise arrangement shall require and ensure
the direct participation of the farmer-landowner and farm workers in
the farm management and farm operations and shall include, among
others, capacity building programs aimed to facilitate the transfer of
technology and management techniques to the farmer-landowners;


(d) The agribusiness enterprise arrangement shall include provisions for
workers’ productivity and quality incentives for the employed farmer-
landowner and farm workers over and above the compensation from
the arrangement. The Inclusion of provisions for additional sources
of income for the farmer-landowner and farm workers in the
arrangement aside from the main or basic income-generating activity
therein are encouraged;

(e) For the duration of the contract, the investor shall provide funds
necessary to ensure ecological protection of the farm and safety of
its workers, particularly for the conservation and maintenance of land
quality, proper handling, storage and disposal of hazardous residues
and waste products, and proper protective and acceptable safe
methods of application of fertilizers and other chemicals: Provided,
That decisions as to the ecological protection of the farm and safety
of workers and the methods employed in the application of fertilizers,
pesticides and other chemicals, shall be mutually agreed upon by the
investor and farmer-landowner and farm workers.

(f) Further, participating farmers or farmworkers shall be provided with
crop insurance coverage and other forms of insurance and
healthcare, 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 property
taxes, annual land amortizations, poverty threshold, and nature of
the activity or 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 application and processing of the
agribusiness enterprise arrangement, as well as changes to the
physical attributes of the land;

(h) The agribusiness enterprise arrangement shall be subjected to
regular semi-annual monitoring by the PAZA and the DAR in order to
establish the continuing viability of the arrangement, compliance with
its terms and conditions and the promotion of rights Sand welfare of
the farmer-landowners and farm workers;

(

The review and/or renegotiation of the agribusiness enterprise
arrangement shall be undertaken upon request or petition of any of
the parties due to changes in the economic, political, and social
circumstances existing in the affected land area. Such changes could

20


result in such a material and fundamental alteration of the conditions,
assumptions, and bases relied upon by the parties during the signing
of the original 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.

@) Agribusiness enterprise arrangements within special agricultural
growth zones shall be subject to the approval of the PAZA Board.
Otherwise, it shall become void. No agribusiness enterprise
arrangements hall 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
enterprise arrangement;

(k) All. renegotiated/renewed/extended contracts and their effectivity
shall be subject to the same process of review and approval by the
PAZA Board in accordance with the rules and regulations issued
therefor;

(

The term of an agribusiness enterprise arrangement shall be for a
maximum period of twenty (20) years or may be 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;

(m)In addressing the food security concerns of the country, the parties
should agree that, in case of food shortage in the country, at least
fifty percent (50%) of the produce involving staple crops will
automatically be set aside for the domestic market. For purposes of

21


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 output 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.

(0) Consent of the other party in cases of transfer of rights and
responsibilities to a new party who shall likewise possess the
qualifications provided for in this Act, shall be secured.

(p) The PAZA shall have primary and exclusive jurisdiction in the
resolution of any and all disputes relating to the agribusiness
enterprise arrangements within 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 alll
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.

(1) 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 Land Reform Code”.

(s) Where the agribusiness enterprise arrangement requires the
employment of workers, the parties shall comply with labor laws,
tules and regulations particularly the prohibition on employment of 38
children fifteen years and below.

(t) Any and all permanent improvements as well as facilities 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 investor 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.

22


(v) In agribusiness enterprise arrangements involving contract growing,
there shall be a minimum buying 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 enterprise. The EP,
CLOA, or any title to the land of the farmer-landowner shall never be
used as a form of security to any such loan.

(x) In the case of agricultural lands awarded to ARBs, the proposed
agribusiness enterprise arrangement shall be subject to technical
review by the DAR as to compliance with legal requirements and as
to the feasibility of the venture. For this purpose, the DAR may call
upon other agencies and regulatory bodies such as the DA, SEC,
CDA, and DTI, among others, for technical assistance in this
evaluation.

(y) The provisions of the agribusiness enterprise arrangement, the
nature and the scope of the activities, the duties and the
responsibilities of the parties shall be clearly explained by the PAZA
to the farmer-landowner and farmworkers 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
availing the benefits contained in the arrangement.

(z) All agribusiness enterprise arrangements shall be strictly enforced
and monitored by the PAZA in coordination with the DAR.

Section 25. Control Over Agrarian Reform Lands. - In any
agribusiness enterprise venture, control over the agrarian reform land located
within a special agricultural growth zone shall always remain with the agrarian
reform beneficiaries. For this purpose, joint venture agreements between
agrarian reform beneficiaries and investors which result to a minority equity of
the agrarian reform beneficiaries shall not be allowed or approved by PAZA
Board without the recommendation of the DAE. Also, any provision of
permanent take-over in the arrangement that takes away the management of
the agricultural production in growership contract or contract growing
agreement shall be void.


Temporary takeover shall be limited to farm operations only and may be
allowed provided that all of the following conditions are present:

(a) Upon mutual agreement of the parties;

(b) The takeover shall only be for not more than three (3) cropping
cycles;

(c) When both parties mutually determine that the agreed quantity
and/or quality of production cannot be delivered by the farmer-
landowners.

Temporary takeover shall not take place during the transition to a new
production technology.

Section 26. Approval and Revocation of Agribusiness Enterprise
Arrangements. — All agribusiness enterprise arrangements within a special
agricultural growth zone, entered into between farmer-landowners and any
other person under this Act shall be approved by the PAZA Board.

Agribusiness enterprise arrangements within contracts may be revoked
by the PAZA Board based on the following grounds:

(a) Gross violation or non-compliance of the terms and conditions of
the contract such as:

1. Non-implementation of the human resources development
plan provisions;

2. Non-employment of the farmer-landowner;

3. Concealment of the true financial status of the enterprise; and

4. Commission of fraud in the application or implementation of
the arrangement

5. Other analogous cases.

(b) When, without justifiable reasons, the investor fails to provide
benefits and incentives stipulated in the approved contract, such as,
but not limited to, dividends accruing to farmer-landowner'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 agribusiness
enterprise arrangement is converted into or fragmented by non-
agricultural use without prior written consent of the farmer-landowner
and the PAZA;

24


(e) Any action resulting to the transfer of ownership of the landholding
subject of agribusiness enterprise arrangements to the investors;

(f) Acquisition or approval of agribusiness enterprise arrangements
through fraud, intimidation, coercion, and deceit;

(g) Other analogous or meritorious grounds.

Section 27. Support Services for Farmer-Landowners Entering
Agribusiness Enterprise Arrangements. —The PAZA shall establish a
Capacity Building Program for farmer-landowners entering into agribusiness
enterprise arrangements within special agricultural growth zones, with sufficient
funding from the General Appropriations Act. The purpose of the capacity
building program is to strengthen the farmer's ability to negotiate fairer terms
for agribusiness contracts, deal with markets, harness local and international
opportunities, and identify and act on onerous agreements to protect their
rights.

The program shall be formulated jointly by the PAZA DAR, DA, DTI,
Landbank of the Philippines, and CDA within sixty (60) days from the enactment
Of this law. It shall include the following components: acquisition and design of
technology for production and packaging, access and management of
production credit, organization of business units, registration of juridical entity
(cooperative, corporation or association), business ideation, organizational
development and strengthening, market linkages, product development and
value addition, certification of agricultural and food products and processes,
enterprise lawyering, and the review and renegotiation of onerous agreements.
The implementation of the capacity building program may be outsourced from
the private sector.

Section 28. Contiguous Farming Arrangements. — To boost the
production of high value agricultural crops to an industrial scale and increase
the productivity of farming within special agricultural growth zone, the PAZA
shall institutionalize the implementation of the contiguous farming arrangement.
The scheme shall include the consolidation of small farms including farms of
agrarian reform beneficiaries, as one larger farm, with a minimum area of thirty
(30) hectares within a two-kilometer radius, to take advantage of the economies
of scale in the production of industrial crops, such that the activities in the small
farms are aligned and implemented to ensure the efficient use of farm
machineries and equipment, deployment of workers, volume purchase of
inputs, financing, and other operational advantages, as well as recognition by
agricultural processors, government financial institutions, private investors, but
the ownership of each small farm remains with the landowners.

The PAZA in collaboration with concerned government agencies shall

provide common service facilities, such as farm machineries and implements,
grants or start-up funding for the needed production inputs, technology

25


adoption, livelihood and skills training and other development activities for the
block farm and its members, and other support activities that may be identified.

To ensure the success of, and compliance to the objectives of the
contiguous farming scheme, the PAZA shall:

(a) Develop guidelines for farms to qualify for and continue to participate
in the contiguous farming arrangement;

(b) Provide farm management, technical assistance, and professional
‘services support to consolidated farms, in coordination with the DA,
the DAR and other concerned government agencies;

(c) Monitor the development and productivity of consolidated farms; and

(d) Implement a certification system as a mechanism to access grants,
low interest financing, and other incentives and support from Official
Development Assistance (ODA); and market access of high value
priority crops.

Section 29. Agricultural Support Services. — The PAZA shall make
available other agricultural support services, program which shall include, the
following:

(a) Socialized Credit and Financing Services - Socialized credit and
financing shall be made available, through the Land Bank of the
Philippines (LBP), for the acquisition of production inputs, farm
machineries, and implements necessary for the continuous agricultural
production: Provided, That the loans shall be available to farmer-
landowners and enterprises duly registered 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;

(b) Farm Management, Technical Assistance and Professional Services —
The PAZA, the DA, the DAR, the Department of Labor and Employment
(DOLE), the Technical Education and Skills Development Authority
(TESDA), state universities and colleges (SUCs), and other concerned
private and nongovernment organizations (NGOs) shall formulate and
implement a deployment program of agricultural engineers, agriculturists
and farm technicians for the provision of farm management, technical
assistance and professional services to special agricultural growth
zones;

(c) Farm Mechanization Program. - The PAZA shall give priority to the
development and promotion of appropriate agricultural machinery and
other agricultural mechanization technologies to enhance agricultural
mechanization within special agricultural growth zones. Farmer-

26


landowners and agribusiness enterprises within special agricultural
growth centers shall be encouraged and trained to utilize appropriate
agricultural machineries and equipment necessary for the efficient
planting, cultivation, care, and maintenance, harvesting and processing
of high value agricultural crops.

Section 30. Research and Development — The PAZA shall pursue
and prioritize research and the development of effective, appropriate, and
efficient agricultural technologies. In coordination with the DA, DOST, DAR, DTI
State colleges and universities other government agencies, the PAZA shall give
priority and facilitate the funding of infrastructure necessary for research
facilities within special agricultural growth zones such as farm laboratories and
demonstration farms.

It shall consolidate and continuously update all relevant information and
data on a periodic basis and make such data available on the internet for easy
access to data on agriculture research and technology.

Section 31. Infrastructure Support — The Department of Public Works
and Highways, the Department of Transportation, the Department of Trade and
Industry and LGUs shall coordinate with the PAZA to address the infrastructure
requirements within special agricultural growth zones, in accordance with this
Act: Provided, That, the PAZA and the LGUs shall also strengthen its
agricultural engineering groups to provide the necessary technical and
engineering support in carrying out the smooth and expeditious implementation
of agricultural infrastructure projects.

Public infrastructure investments shall give preference to the kind, type
and model of infrastructure facilities that are cost-effective and will be useful for
the production, conservation, and distribution of most commodities and should
benefit the most number of agriculture producers and processors.

For infrastructure facilities primarily benefiting private investors, the
State shall facilitate the purchase and use of such utilities and shall keep to the
minimum the bureaucratic requirements for these types of investments. Private
investors include cooperatives or corporations of agriculture producers and
processors.

The PAZA shall coordinate with the DA, DPWH, LGUs and the farmer-
landowners in order to identify priority locations of farm-to-market roads and
other farm infrastructure required within the special agricultural growth zones It
shall identify appropriate post-harvest facilities and technology needed
including, shared service facilities for food processing and storage,
standardized sanitary markets and abattoirs.

The National Irrigation Administration (NIA), the Bureau of Soils and

Water Management, and concerned LGUs, in coordination with the PAZA, shall
construct appropriate, efficient, and cost effective irrigation facilities, pump and

27


other pressurized irrigation systems, rain capture and water impounding
facilities within special agricultural growth zones.

The Department of Transportation and Communications and the
Philippine Ports shall coordinate with the PAZA for the purpose of determining
priority seaports and airports and facilitating the installation of bulk-handling
and storage facilities, and other post-harvest facilities needed to enhance the
marketing of agriculture and fisheries products Provided, that seaports and
airports are also equipped with quarantine, sanitary and phytosanitary centers.

Section 32. Rural Energy, Communications and Water Utilities —
The PAZA coordinate with the Department of Energy (DOE), the Department
of Public Works and Highways (DPWH), the National Electrification
Administration (NEA) and the National Power Corporation (NPC) for the
identification and installation of appropriate types of energy sources particularly
in the use of non-conventional energy sources for the special agricultural
growth zone in order to enhance agriculture development in the area.

The PAZA shall coordinate with the DOTC to facilitate the installation of
telecommunication facilities in special agricultural growth zone. It shall likewise
Coordinate with the DPWH, MWSS, NIA and the LGUs for the identification and
installation of water supply system with the special agricultural growth zone for
agro-industrial uses to enhance agriculture development in the locality.

Section 33. Disaster and Calamity Relief and Rehabilitation
Assistance. — \n the event of a disaster or calamity affecting production, or
where a state of calamity has been declared in the province, the contract may
be temporarily suspended upon the request or petition of any of the parties and
the investor shall assist the farmer-landowners in disaster relief and
fehabilitation efforts. The existence of a valid agribusiness enterprise
arrangement shall not be used as a precondition for the granting or denial of
calamity loans or disaster relief funds by government agencies.

Section 34. Eminent Domain - The areas comprising a special
agricultural growth zone may be expanded or reduced when necessary. For
this purpose, the government shall have the power to acquire, either by
purchase, negotiation or condemnation proceedings, any private lands within
or adjacent to the special agricultural growth zone for:

(a) Consolidation of lands for zone development purposes;
(b) Acquisition of right of way to the special agricultural growth zone; and

(c) The protection of watershed areas and natural assets valuable to the
prosperity of the special agricultural growth zone.

28


Section 35. Protection of the Environment and Watershed Areas -
The PAZA, in coordination with the appropriate agencies, shall take concrete
and appropriate steps and enact the proper measure for the protection of the
local environment.

All watersheds that are sources of water for existing and potential
irrigable areas and recharge areas of major aquifers identified by the DA and
DENR shall be preserved as such at all times.

Section 36. Registration of Business Enterprises - Business
enterprises within a designated special agricultural growth zone shall register
with the PAZA to avail of all incentives and benefits provided for in this Act.

The PAZA shall establish a one stop shop center for the purpose of
facilitating the registration of new enterprises in the special agricultural growth
zones. Thus, all appropriate government agencies that are Involved In
registering, licensing, or issuing permits to investors shall assign their
representatives to the special agricultural growth zones to attend to the
investor's requirements.


Chapter IV
INCENTIVES TO INVESTORS AND ENTERPRISES

Section 37. Investors Visa. - Any foreign national who invests an
amount of two hundred thousand US dollars (US$ 200,000.00), either in cash
and/or equipment, in a registered agribusiness enterprise located within a
special agricultural growth zone shall be entitled to an investor's visa: Provided,
That the foreign national has the following qualifications:

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

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

(c) Must not be afflicted with any loathsome, dangerous or contagious
disease;

(d) Must not have been institutionalized for any mental disorder or
disability; and

(e) Must establish by verifiable and credible evidence his financial
capability and capacity.

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

The authority to issue visas and work permits shall remain with the
Bureau of Immigration (Bl) and the Department of Labor and Employment
(DOLE), respectively; Provided, That the BI and the DOLE shall implement
measures to expedite the processing of such visas and permits for workers in
the PAZA and coordinate with the PAZA for the purpose of improving ease of
doing business.

Section 38. Exemption from National and Local Taxes. - Except for
real property taxes, no taxes, local and national, shall be imposed on registered
enterprises operating within the special agricultural growth zone. In lieu thereof,
five percent (5%) of the gross income earned by all registered enterprises within
the special agricultural growth zone shall be paid and remitted as follows:

(a) Three percent (3%) to the National Government;

30


(b) Two percent (2%) which shall be directly remitted by the business
establishments to the treasurer's office of the municipality or city
where the enterprise is located.

Section 39. Fiscal Incentives. - Business establishments operating
within special agricultural growth zones may avail of the existing pertinent fiscal
incentives as provided for under Republic Act No. 7916, as amended by
Republic Act No. 8748, also known as the Special Economic Zone Act of 1995,
or those provided under Executive Order No. 226, as amended, otherwise
known as the Omnibus Investment Code of 1987: Provided, that it shall not be
inconsistent with any of the incentives granted under this Act; Provided, further,
That in the administration, implementation and monitoring of incentives, the
PAZA may impose its own conditions not otherwise prohibited by this Act and
other relevant laws.

Section 40. Applicable National and Local Taxes. — All persons and
services establishments in the special agricultural growth zone shall be subject
to national and local taxes under the National Internal Revenue Code and the
Local Government Code.

Section 41. Administration, Implementation and Monitoring of
Incentives. — For the proper administration, implementation and monitoring of
tax incentives provided under this law, the following are herein mandated:

(a) The PAZA shall be responsible for the administration, management,
enforcement, and implementation of the incentives granted to
registered agribusiness enterprises located in a special agricultural
growth zone; and

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

Section 42. Duration of Incentives. — Fiscal incentives under this Act
shall be terminated after a cumulative period of twenty (20) years from date of
registration or start of commercial operation, whichever is applicable, except
that it could be extended with regard to industries deemed indispensable to
national development and interest. The industries exempted from this provision
shall be determined by the PAZA, in consultation with other government
agencies.

Section 43. Sequential Availment of Incentives. - The income tax
holiday (ITH) incentive granted under Republic Act No. 11534, otherwise known
as the “Corporate Recovery and Tax Incentives for Enterprises” (CREATE) Act,
may be enjoyed by the registered enterprises under this Act: Provided, That the
ITH shall be availed prior to the availment of the five percent (5%) final tax on

31


gross income earned incentive under Section 39 of this Act. Provided, further,
That in the event a registered enterprise elects to avail the final tax incentive
contained in this Act, such registered enterprise shall be barred from availing
the ITH incentive under Republic Act No. 11534.

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

Section 44, Extension of Period of Availment. — \n the event that a
registered enterprise has suffered cessation or suspension of operations due
to force majeure, which has impaired its viability or profitability, the PAZA may
extend the period of validity of the incentives extended to such registered
enterprise.

Section 45. Banking Rules and Regulations. - Banks and financial
institutions to be established in the PAZA shall be under the supervision of the
Bangko Sentral ng Pilipinas (BSP) and subject to existing banking laws, rules
and regulations.

Section 46. Remittances. - In the case of foreign investments, a duly
registered entity or enterprise within the PAZA shall have the right to remit
earnings from the investment in the currency in which the investment was
originally made and at the exchange rate prevailing at the time of remittance,
subject to the provisions of Republic Act No. 7653, otherwise known as “The
New Central Bank Act’.

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Chapter V
ROLE OF OTHER GOVERNMENT AGENCIES

Section 47. Relations with the Regional Development Council-The
PAZA shall determine the development goals for special agricultural growth
Zones within the framework of national development plans, policies and goals,
and the Administrator of each special agricultural growth zones shall, upon
approval by the PAZA Board, submit the special agricultural growth zone plans,
programs, and projects to the Regional Development Council for inclusion in
and as inputs to the overall Regional Development Plan.

Section 48. Relations with Local Government Units - Except as
herein provided, the local government units comprising each special
agricultural growth zone shall retain their basic autonomy and identity. The
cities shall be governed by their respective charters and the municipalities shall
operate and function In accordance with Republic Act No. 7160, otherwise
known as the Local Government Code of 1991.

Section 49. Public-Private Partnerships in Special Agricultural
Zones — Privately-owned agro-industrial estates shall retain their autonomy
and independence and shall be monitored by the PAZA for the implementation
of incentives.

Section 50. Audit. - The Commission on Audit (COA) shall appoint a
full - time auditor in the PAZA or may assign such number of personnel as may
be necessary in the performance of their functions. The salaries and
emoluments of the assigned auditor and personnel shall be in accordance with
pertinent laws, rules and regulations


Chapter VI
MISCELLANEOUS PROVISIONS

Section 51. Appropriations - Any sum as may be necessary to
augment its capital outlay shall be included in the General Appropriations Act
to be treated as an equity of the national government.

‘Additional funding shall come from the following

(a) The proceeds from the rent of lands, buildings, and other properties
of the special agricultural growth zones concerned;

(b) The proceeds from fees, charges, and other revenue-generating
Instruments which the PAZA is authorized to impose and collect
under this Act;

(c) The proceeds from bonds which the PAZA authorized to float both
domestic and abroad; and

(d) The advance rentals, license fees, and other charges which the
PAZA is authorized to impose under this Act and which an investor
is willing to advance payment for.

Section 52. Applicability of National Laws — National laws shall
prevail vis-a- vis PAZA rules, regulations and standards, unless there is a clear
intent in this Act or other Acts of Congress to vest the PAZA specific powers
and privileges not otherwise allowed under existing laws.

Section 53. Authority of the President to Advance Initial Funding -
Subject to existing laws, the President of the Philippines is hereby authorized
to advance out of the savings of the Office of the President such funds as may
be necessary to effect the organization of special agricultural growth zones
which shall be reimbursed by the PAZA at reasonable terms and conditions.

Section 54. Implementing Rules and Regulations — The Department
of Agriculture, the National Economic and Development Authority, the
Department of Finance, the Bureau of Customs, the Department of Trade and
Industry, the Department of Environment and Natural Resources, the
Department of Agrarian Reform, the Department of Interior and Local
Government, the Philippine Agricultural Zone Authority, and the representatives
from the technical staff of the Committee on Economic Affairs of both Houses
of Congress shall formulate the implementing rules and regulations of this Act
within ninety (90) days after its approval. Such rules and regulations shall take
effect fifteen (15) days after their publication in a newspaper of general
circulation in the Philippines.


Section 55. Separability Clause — The provisions of this Act are hereby
declared separable, and in the event one or more of such provisions or part
thereof are declared unconstitutional, such declaration of unconstitutionality
shall not affect the validity of the other provisions thereof.

Section 56. Interpretation — The powers, authorities and functions that
are vested In the Philippine Agricultural Zone Authority (PAZA) and the special
agricultural growth zones concerned are intended to establish decentralization
of governmental functions and authority as well as an efficient and effective
working relationship between the special agricultural growth zones, the
National Government, and the local government units.

Section 57. Repealing Clause — All laws, acts, presidential decrees,
executive orders, proclamations and/or administrative regulations which are
inconsistent with the provisions of this Act, are hereby amended, modified,
superseded, or repealed accordingly.

Section 58. Effectivity. - This Act shall take effect upon its approval.

Approved,

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