FOURTEENTH CONGRESS OF THE 
1 
REPUBLIC OF THE PHILIPPINES 
) 
First Regular Session 
) 
S.B. No. 
5 
Introduced by Senator Loren Legarda 
EXPLANATORY NOTE 
This bill seeks to create an economic zone in Southern Palawan, particularly in 
the municipalities of Bataraza, Brookes Point and Balabac to encourage the 
development of the countryside into ago-industrial, commercial, tourist, banking, 
investment and financial center. 
The prospect for the growth of Southern Palawan as the country's major trader's 
destination is promising. Due to its strategic location, it can serve as gateways to other 
markets in the Asian region. As shown in an article found at the official website of the 
Mindanao Economic Development Council, Kudat, a town located on the coast of the 
northernmost part of Sabah, is about 137 nautical miles away from Brooke's Point, a 
municipality along the southeastern section of mainland Palawan. Traders froin both 
areas can reach each other in approximately 12 hours voyage by sea. These two 
proximate municipalities can serve as strategic gateways to bigger markets. Kudat is 
seen as an entry point for Philippine traders to expand trade to neighborkg areas in 
Labuan, Sandakan, Kota Kinabalu and even Brunei Darussalam. Brooke's Point, on the 
other hand, could serve as gateway for Malaysian traders to other parts of'Southern 
Palawan, particularly the municipalities of ?.-,taram, Balabac, Rizal, and Quezon. 
Based on initial prospects, Palawan can potentially trade marine products, corn, 
fruits, coconut, virgin coconut oil, cashew nuts and seaweeds while Kudat can bring in 
noodles, cooking oil and other grocery items. 
Brooke's Point is the only municipality in Southern Palawan which has a port 
facility that can accommodate smaller type of ocean-going vessels. In fact, the'proposed 
Brooke's Point- Kudat Shipping Services has recently been adopted as a priority project 
of the BIMP-EAGA Transport, Infrastructure, ICT Development (TIID) Cluster during 
the 3rd Meeting of the Cluster held 27-28 March 2006, in Pontianak, Indonesia.' 
With its vast territory - total land area is 1.4 million hectares, considered the 
Philippiiie's largest province - and pristine environment - it hosts two World Heritage 
sites: the Puerto Princesa Subterranean River National Park (1999) and the Tubbataha 
Reef Marine Park (1993) - the province is a major tourist destination. E d  it i s  its 
strategic location for trade and commerce that must likewise be tapped to fully 
maximize its growth and development. 


This bill aims to do just that by offering a set of incentives to attract foreigl- 
investors in the Southern Palawan, to wit: 
a. Resident Status and Visa; 
b. Fiscal Incentives. Business establishments within the Zone shall be entitled to 
the existing fiscal incentives as provided for under Presidential Decree No. 
66, the law creating the Export Processing Zone Authority (EPZA), or those 
provided under Book IV of Executive Order No. 226, otherwise known as the 
“Special Economic Zone Act of 1995”, as amended by RA 8748; and 
c. Taxation. Except for real property taxes on land owned by developers, no 
taxes, local and national including final withholding taxes on dividend to a 
business establishment’s parents company and branch profit remittances to a 
business establishment’s heac! ’ office, shall be imposed on business 
establishments operating within the Zone. In lieu thereof, a final tax of eight 
percent (8%) of the net taxable income shall be imposed by the national 
government to be divided as follows: 
(1) 
(3) 
(3) 
(4) 
Four percent (4%) shall be paid immediately to the National 
Government; 
One percent (1%) 
to the Province of Palawan; and 
One percent (1%) 
to the municipalities of Balabac, Bataraza 
and Brooke’s Point; 
Two percent (2%) to the Southern Palawan Special Econohic 
Zone and Free Port Authority which shall be created under 
this Act 
In view of the foregoing, the passage of this bill is earnestly sought. 
Senator 


FOURTEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
First Regular Session 
S E N A T E  
S.B. No. 160 
Introduced by Senator Loren Legarda 
AN ACT 
CREATING A SPECIAL ECONOMIC 7QNE AND FREEPORT IN SOUTHERN 
PALAWAN, CREATING FOR THIS PURPOSE THE SOUTHERN PALAWAN 
ECOZONE 
AND 
FREEPORT 
AUTHORITY, 
APPROPRIATING 
FUNDS 
THEREFOR, AND FOR OTHER PURPOSES 
Be it enncted by the Senate nnd the House of Representatives in Congvess nssembled: 
SECTION 1. Short Title. - This Act shall be known as the "Soutlzern Pnln71mn 
Special Economic Zone nnd Free Povt Act of 2007" 
SEC. 2. Declaration of Policy. - it is hereby declared the policy of the State to 
actively encourage, promote and accelerate a sound and balanced industrial, economic 
and social development of the country in order to provide jobs to the people, increase 
productivity and incomes, and improve the level and quality of living conditions 
through the establishment of special economic zones and free ports in suitable and 
strategic locations in the country and through measures that shall effectively attract 
legitimate and productive foreign investmmts. It is likewise the policy of the State to 
enliance regional economic cooperation as means of bolstering the country's own 
industrial development and to establish facilities with which such cooperation can 
materialize. 
SEC. 3. Creation of the Southern Palawan Special Economic Zone and Free Port. 
- in the pursuit of the foregoing declared policy, there is hereby established a special 
economic zone and free port in Southern Palawan, to be known as the Southern 
Palawan Economic Zone and Free Port herein referred to as the Zone, which shall cover 
the municipalities of Balabac, Bataraza and Brooke's Point. 
SEC. 4. Governing Principles. - The Southern Palawan Economic Zone shall be 
inanaged and operated by the Southern Palawan Special Economic Zones and Free Port 
Authority herein created and referred to as SPEZA, under the following principles: 
a. Under the framework and limitations of the Constitution and applicable 
provisions of the Local Government Code, the Zone shall be developed into 
pe. 3 


and operated as decentralized, self-reliant and self sustaining industrial, 
commercial/ trading, ago-industrial, touristlrecreational, banking, financial 
and investment center with the corresponding residential areas in order to 
create employment opportunities in and around and to effectivity encourage 
and attract legitimate and productive foreign investments; 
b. Except as otherwise provided herein, the local government units totally OT 
partially embraced within the Zone shall retain and maintain their basic 
autonomy and identity. The municipalities of Balabac, Baltaraza and Brooke’s 
Point shall operate and function in accordance with Republic Act No. 7160, 
otherwise known as the Local Government Code of 1991, insofar as the areas 
within their respective jurisdiction covered in fhis Act are concerned 
The Zone shall be managed and operated as a separate customs territory outside 
the customs territory of the Philippines to ensure and facilitate the free flow or 
movement of machinery, goods, articles and capital within, into and exported <Jut of the 
Zone. However, exportation or removal of goods, articles and capital from the Zone to 
other parts of the Philippine territory shall be subject to customs duties and taxes under 
the Customs and Tariff Code and other relevant tax laws of the Philippines. 
The areas comprising the Zone may be expanded or reduced when necessary. 
For this purpose, the SPEZA, in consultation with the local government units, shall have 
the power to acquire either by purchase, negotiation or condemnation proceedings, any 
private lands within or adjacent to the Zone for the following purposes: 
Consolidation of lands for zone development; 
Acquisition of right of way to the Zone; and 
The protection of watershed areas and natural assets valuable to the 
prosperity of the Zone. 
a. 
b. 
c. 
The Zone shall be provided with transportation, telecommunications and other 
facilities needed to attract legitimate and productive foreign investments,’ generate 
linkage with industries and create employment opportunities for the people of tlie 
province of Palawan. 
The Zone may establish mutually beneficial economic relations with other 
entities or enterprise within the country or, subject to the administrative guidance of tlie 
Department of Foreign Affairs (DFA), the Philippine Economic Zone Authority (PEZA) 
and/or the Department of Trade and Industry (DTI), with foreign entities or 
enterprises. 
Foreign citizens and companies owned by non-Filipinos may set up enterprise in 
the Zone, either by themselves or in joint venture with Filipinos in whatever proportion 
in any sector of industry, international trade and commerce within the Zone. 
Goods manufactured by a Zone enterprise shall be made available for immediate 
retail sale in the domestic market, subject to the payment of corresponding taxes on raw 
materials and other regulations that may be formulated by the SPEZA together with the 
PEZA, the Bureau of Customs and the DTI. However, in order to protect the domestic 
industry, there shall be a negative list of industries that will be drawn up and regularly 
updated by the PEZA. Enterprises engaged to industries included in such negative list 
shall not be allowed to sell their products locally. 
,. . 1 
1L. , 


The defense of the Zone and the security of its perimeter fence shall be the 
responsibility of the national government in coordination with the SPEZA and local 
government units. 
SEC.5. Incentives. - Investors and business enterprises within the ZONE shall be 
entitled to the following incentives: 
a) 
Resident Status and Visa. Any foreign investor who establishes a business 
enterprise within the Zone and who maintains capital investment of not 
less than 
one hundred 
fifty thousand 
United States dollars 
(US$150,000.00) shall be granted, along with his or her spouse, 
dependents, and unmarried children below twenty-one (21) years of age, 
permanent resident status within the Zone and freedom of ingress a i d  
egress to and from the Zone without any need of any special authorization 
from the Bureau of Immigration. Working Visas renewable every two (2) 
years shall be issued to foreign executives and foreign technicians with 
highly specialized skills which no Filipino possesses, as certified by the 
Department of Labor and Employment. 
The foregoing is without prejudice to a foreigner acquiring 
permanent residence status in the Philippines in accordance with the 
applicable immigration, retirement, and other related laws. 
Fiscal Incentives. Business establishments within the Zone shall be entitled 
to the existing fiscal incentives as provided for under Presidential Decree 
No. 66, the law creating the Export Processing Zone Authority (EPZA), or 
those provided under Book IV of Executive Order No. 226, otherwise 
known as the “Special Economic Zone Act of 1995”, as amended by RA 
8748. 
b) 
c) 
Taxation. Except for real property taxes on land owned by developers, no 
taxes, local and national including final withholding taxes on dividend to 
a business establishment’s parents company and branch profit remittances 
to a business establishment’s .head office, shall be imposed on business 
establishments operating within the Zone. In lieu thereof, said business 
establishments shall pay to the national government a final tax of eight 
percent (8%) of the net taxable income as determined in accordance with 
the provisions of the National Internal Revenue Code, as amended, to be 
divided as follows: 
(1) Four percent (4%) shall be paid immediately to the National 
(2) 
(3) 
(4) 
Government; 
One percent (1%) 
to the Province of Palawan; and 
One percent (1%) to the municipalities of Balabac, Bataraza 
and Brooke’s Point; 
Two percent (2%) to the Southern Palawan Special Economic 
Zone and Free Port Authority which shall be created under 
this Act; Provided, however, that the preferential tax herein 
granted shall not apply to offshore transactions as well’ as 
transaction within the Zone itself with SPEZA investors and 
residents; Provided further, the domestic manufacturing 
1,- 
J 


firms or foreign firms and their local subsidiaries that export 
more than thirty percent (30%) of their total production in 
terms of volume per year to the customs territory of the 
Philippines shall not be allowed to enjoy the income tax 
incentive herein granted; Provided furthermore, that the 
final tax of eight per centum (8%) of net taxable income may 
only be increased by Congress after ten (10) years from the 
effectivity of the amended tax and fiscal incentives of this 
Act; and provided, finally, that in no case shall the final tax 
to be imposed exceed fifteen per centum (15%) of the net 
taxable income as determined in accordance with the 
provisions of the National Internal Revenue code, as 
amended. 
In cases of conflict between the local and national tax laws on the one 
hand, and the tax incentives herein granted on the other, the same shall be 
resolved in favour of the latter. 
d) 
Banking Rules and Regulations. Existing banking laws, specifically 
Presidential Decree No. 1034 and Republic Act No. 6426 and their 
implementing rules and regulations amended, and pertinent Banko 
Sentral ng Pilipinas (BSP) circulars, rules and regulations shall apply on 
foreign exchange transactions in the current account transactions (trade 
and non-trade), local and foreign borrowings, foreign investments, 
establishments and operation of local and foreign banks, foreign currency 
deposit units (FCDUs), offshore banking units (OBUs) and other financial 
institutions under the supervision of the BSP: Provided: FCDUs of local 
commercial banks and OBUs of foreign banks shall enjoy minimum 
regulation by the BSP. 
Profit Remittance. Without prior BSP approval, after tax profits and other 
earnings or foreign investments in enterprises in the Zone; Provided, 
however, that such foreign investments in said enterprises have been 
previously registered with the BSP. 
e) 
SEC. 6. Ipso Facto Clause. - Sections 30-42 of Republic Act No. 7916 shall ipso 
facto apply to the Southern Palawan Special Economic Zone and Free Port. 
SEC. 7. Creation of the Southern Palawan Special Economic Zone and Free Port 
Authority. - A body corporate to be known as the Southern Palawan Special Economic 
Zone and Free Port Authority, herein after referred to as the SPEZA, is hereby created 
to manage and operate the Southern Palawan Special Economic Zone and Free Port, in 
accordance with the provisions of this Act. This corporate franchise shall expire in fifty 
(50) years counted from tlie first day of the fifth year after the effectivity of this Act, 
unless otherwise extended by Congress. It shall be organized within one hundred 
eighty (180) days after the effectivity of this Act. 
SEC. 8. Powers and Functions of the Southern Palawan Special Economic Zone 
and Port Authority. - The Southern Palawan Special Economic Zone and Free Port 
Authority sliall have tlie following powers and functions: 


a. To operate, administer, and manage the Zone according to the principles and 
provisions set forth in this Act; 
b. To adopt, alter and use a corporate seal; to contract, lease, buy, sell acquire 
own and/ or otherwise dispose of movable or immovable as well as 
persunal or real property of whatever nature (incIuding but not limited to 
shares of stock or participation in private corporations or in limited 
partnerships, or in joint ventures with limited liability ), bonds, precious 
metals in bullions, ingots, and easily convertible foreign exchange; 
c. To sue and be sued in order to carry out its duties, responsibilities, privileges, 
powers and functions as granted and provided for in this Act; and to exercise 
the power of eminent domain for public use and public purpose; 
d. To raise or borrow adequate and necessary funds from local U i  foreign 
sources within the limitation provided by law, to finance its projects and 
programs under this Act, and for that purpose to issue bonds, promissory 
notes, and other forms of securities, and to secure the same by guarantee, 
pledge, mortgage, deed of trust or an assignment of all part of its property or 
assets; 
e. To recommend to the President the issuance of a proclamation to fix and 
delimit the site of Zone; 
f. To issue certificates of origin for products manufactured or processed in the 
Zone in accordance with prevailing rules of origin, and the pertinent 
regulations of PEZA, DTI and/or the Department of Finance (DOF); 
g. To approve, accept, accredit and allow any local or foreign business, 
enterprise or investment in the Zone subject only to such rules and 
regulations as SPEZA may promulgate from time to time in conformity with 
tlie provisions of this Act and the limitations provided in the Constitution; 
11. To authorize or undertake, on its own or through others, and regulate the 
establishment , operation and maintenance of public utilities, services and 
infrastructure in the Zone such as shipping, ship building, ship registry and 
every matter related or attended thereto, barging, stevedoring, cargo 
handling, hauling warehousing, storage of cargo, port services or concessions, 
piers, wharves, bulkheads, buIk terminals, conveyors, water supply and 
storage, sewerage, drainage, airport operations, such other services or 
concessions or infrastructure necessary or incidental to the accomplishment 
of the objectives of this Act: Provided, however, that the private investors in 
the Zone shall be given priority in the awarding of contracts, franchises, 
licenses or permits for the establishments, operation and maintenance of 
utilities, services and infrastructure in the Zone; 
To construct, acquire, own,, lease, operate and maintain on its own or 
through others by virtue of contracts, franchises, licenses, or permits under 
the build-operate-transfer scheme or under a joint vent~~re 
with the private 
sector any or all of tlie public utilities and infrastructure required or needed 
in the Zone, in coordination with appropriate national and local government 
authorities and in conformity with applicable laws thereon; 
i. 
Pb. 7 


j. To operate on its own, either directly or through a subsidiary entity, or license 
to others, , tourism-related activities, including games, amusements, 
recreational and sports facilities such as golf courses, and otheys, under 
priorities and standards set by SPEZA; 
k. To maintain ecological balance, and promote sustainable development in 
Palawan while preserving, developing, maintaining and protecting the 
environment particularly the virgin forests, marine resources, beaches, 
minerals and mineral deposits including precious metals, coral and corals 
reefs within the Zone. The virgin forests within the Zone shall be proclaimed 
as national park and shall be covered by a permanent total log ban. For this 
purpose, the rules and regulations of the Department of Environment and 
Natural Resources and other government agencies involved in the above 
functions shall be implemented by the SPEZA, including the issuance of 
environmental certificates, free patents and leasehold rights over government 
lands and mining, drilling ant: timber licenses; Provided, that all legal 
restrictions imposed for the conveyance, use, lease or other disposition of free 
patents issued prior to the effectivity of this Act may be lifted should be the 
SPEZA deem it necessary to carry its mandate under this Act; 
1. To adopt, implement and enforce reasonable measures and standards to 
control pollution,within the Zone; 
m. To establish and maintain a security force and firefighting capability or hire 
others to provide the same for the defense and security of the Zone; 
n. To form, establish, organize and maintain subsidiary corporations, as its 
business and operations may require, whether under the laws of the 
Philippines or not; 
0. To report to the Bureau of Immigration the names of foreigners who have 
been granted permanent resident status and working visas within thirty (30) 
days after issuance of such grant; 
p. To formulate and approve the organization and budget as submitted by the 
Chairman- Administrator; 
q. To regulate and undertake the establishment, operation and maintenance of 
public utilities services and infrastructure in the Zone such as heat, light and 
power, water supply telecommunications, transport, toll roads and bridges, 
port services, etc. and to fix just, reasonable and competitive rates, charges 
and prices thereof; 
r. To directly negotiate with and grant foreign and/or international airlines and 
carriers entry permits and landing rights into the port; 
s. To provide, in cooperation with the Department of Tourism, non-fiscal 
incentives to tourism-related businesses operating within the Zone; 
t. To charge reasonable .fees for the provision of other services and the 
maintenance of infrastructure and utilities; 


u. To impose reasonable fines and penalties for violations of the provisions of 
this Act, the rules and regulations to be established by the SPEZA or any 
other law that the SPEZA is tasked to enforce; and 
v. To issue rules and regulations consistent with the provisions of this Act as 
may be necessary to accomplish and implement the purposes, objectives and 
policies provided. 
SEC. 9. Non-Profit Character of the Southern Palawan Special Economic Zone 
Authority. - The Southern Palawan Special Economic Zone and Free Port Authority 
shall be a non-profit institution and shall devote the use of its returns from capital 
investments as well as excess revenues from its operations, for the development, 
improvement, and maintenance and other related expenditures of the SPEZA to pay its 
indebtedness and obligations and in furtherance and effective implementation of the 
policies provided for in this Act. In consonmnce with this, the SPEZA is hereby declared 
exempt from the payment of all taxes, duties, fees, imports, charges costs and service 
fees in any court or administrative proceedings in which it may be a party. 
The foregoing exemptions may, however,, be entirely or partially lifted by the 
President of the Philippines upon the recommendation of the Secretary of Finance, not 
earlier than five (5) years from the effectivity of this Act, if the President shall find the 
SPEZA to be self sustaining and financially capable by then to pay taxes, customs, 
duties, fees and other charges after providing for debt service requirements of the 
SPEZA and of its projected capital and operating expenditures. 
SEC. 10. Board of Directors of the Southern Palawan Special Economic Zone and 
Free Port Authority. The powers of the SPEZA shall be vested in and exercised by a 
Board of Directors, herein after referred to as the Board, which shall be composed of the 
following: 
a. 
The secretary of the Department of Trade and Industry or his duly 
authorized representative, as ex officio member of the Board of Directors; 
The Director General of the National Economic Development Authority or 
his duly authorized representative, as ex officio member of the Board; 
Two (2) other representatives of the National Government, as 'ex officio 
members; 
b. 
c. 
d. 
The administrator of SPEZA who shall serve as the ex-officio chairman of 
the Board; 
e. 
The Chairman of the Palawan Council for Sustainable Development as ex 
officio members; 
f. 
The mayors of the municipalities of Balabac, Bataraza and Brooke's Point 
as ex-officio members; 
g. 
Two (2) representatives from the labor sector from among the workers in 
the Zone; 
Two (2) representatives from the business and investments sectors; alld, 
h. 
Pg. 9 


The Administrators/Chairinan and members of the Board, except the ex officio 
members, shall be appointed by the President of the Philippines to serve for a term of 
six (6) years, unless sooner removed for cause, the replacement shall sene only the 
unexpired portion of the term. The Vice-chairman shall be elected from among the 
member of the Board. 
Except for the representatives of the business and investment sectors, no person 
shall be appointed by the President of the PhiIippines as member of the Board unless he 
is a Filipino citizen, of good moral character, of proven probity and integrity, and a 
degree holder in any of the following fields; economic, business, public administration, 
law, management or their equivalent, and with at least ten (10) years relevant working 
experience preferably in the field of management or public administration. 
For the purpose of determining a quorum during the meetings of the Board, a 
quorum shall exist despite the non-attendance of the appointed member of the Board 
whenever the latter's duly authorized representative is present thereat, and attends 
such meeting on the member's behalf. 
The members of the Board, except the Administration/Chairman whose 
compensation shall be determined by the Board, shall each receive a per diem of not 
more than Ten Thousand Pesos (P10,OOO.OO) for every Board meeting actually attended, 
unless and until the President of the Philippines has fixed a higher per diem for the 
members of the Board: Provided, however, that the total per diem collected each month 
shall not exceed the equivalent per diem kL 
lour (4) meetings. 
SEC. 11. SPEZA Administrator and Chief Executive Officer. The President of the 
Philippines shall appoint a full-time professional and competent administrator and 
chief executive officer of the Southern Palawan Special Economic Zone and Free Port 
Authority who shall serve for a tenm of six (6) years, unless sooner removed for cause or 
dies or resigns voluntarily. In case of death, resignation or removal for cause the 
replacement c!-.dI 
serve the unexpired portion of the term. The compensation of the 
Administrator and Chief Executive Officer shall be determined by the Board of 
Directors. 
SEC. 12. Powers and Duties of the Chairman-Administrator. The Chairman- 
Administrator shall have the following powers and duties: 
a. 
To direct and manage the affairs of the SPEZA in accordance with the 
policies of the Board; 
To establish the internal organization of the SPEZA under conditions that 
the Board may prescribe 
To submit and annual budget and necessary supplemental budget to the 
Board for its approval; 
To submit within thirty (30)'days after the close of each fiscal year an 
annual report to the Board and such other reports as may be required; 
To submit to the Board for its approval policies, systems procedures, rules 
and regulations that are essential to the operation of the Zone; 
b. 
c. 
d. 
e. 


f. 
To create a mechanism in coordination with relevant agencies for the 
promotion of industrial peace, the protection of the environment, and the 
advancement of tlie quality of life in the Zone; and 
To perform such other duties as may be assigned to him by the Board or 
which are necessary or inti?--!-' to his office. 
g. 
SEC. 13. Personnel. The Board of Directors of the SPEZA shall provide for an 
organization and staff of its officers and employees and the corresponding qualification 
standards in accordance with Civil Service Laws and other pertinent laws. Upon 
recominendation of the Chairnian/Administrator, the Board shall appoint and fix the 
remuneration and other emoluments in accordance with RA 6758, otherwise known as 
the Salary Standardization Law: Provided, That the Board shall have exclusive and final 
authority to promote, transfer, assign or reassign officers of the SPEZA in accordance 
with Civil Service Law and Rules: Provided, further, That the Chairman-Administrator 
may carry out removaI of such officers and employees as authorized by the Board. 
The officers and employees of the SPEZA, including all members of the Board, 
shall not engage directly or indirectly in partisan activities nor take part in any election, 
except to vote. 
No officer or employee of the SPEZA, subject to Civil Service laws and 
regulations, shall be removed or suspended except for cause, as provided by law. 
SEC. 14. Capitalization. - The Southern Palawan Special Economic Zone and Free 
Port Authority shall have an authorized capital stock of two billion (2,000,000,000.00) 
no 
par shares with a minimum value of Ten Pesos (P10.00) each. The initial amount of two 
Imndred and fifty million pesos (P250,000,000.00) shall be sourced from the s h e  of the 
Province of Palawan from tlie natural gas revenues in Camago-Malampaya and/ or 
other from its share in oil and natural wealth. 
The Board of Directors of SPEZA may, from time to time, and with the written 
concurrence of the Secretary of Finance, increase the issue value of the shares 
representing the capital stock of the SPEZA. The Board of Directors of SPEZA, with the 
written concurrence of the Secretary of Finance, may sell shares representing'not more 
than forty percent (40%) of the capital stock of SPEZA to the general public with such 
annual dividend policy as the Board and Secretary of Finance may determine. The 
National Government shall, in no case, own less than sixty percent (60%) of the total 
issued and outstanding capital stock of the SPEZA. 
All unoccupied government-owned lands as of the creation of Southern Palawan 
Economic Zone and Free Port, falling % v L  
1 . .:s jurisdiction, shall also be included as 
part of 1:he equity of the national government in SPEZA and may be disposed of by the 
SPEZA: Provided, That in case of absolute sale or conveyance, the SPEZA shall seek the 
approval of the Office of the President: Provided that all lands owned by SPEZA shall 
not be included in land reform. 
..1. 
. 
SEC. 15. Supervision and Coordination of Development Plans. - For purposes of 
policy direction and coordination, the Southern Palawan Special Economic Zone and 
Free Port shall be under the direct control and supervision of the Office of the President. 
SEC. 16. Legal Counsel - The provisions of existing laws, orders or issuances, 
particularly R.A. No. 2327, as amended, Executive Order No. 29, series of 1987, and 


Administrative Order No. 130, series of 1994, to the contrary withstanding, the SPEZA 
shall have its own internal legal counsel completely independent from the Office of the 
Government Corporate counsel who shall act as the legal adviser of SPEZA and its 
subsidiaries and who shall be solely responsible for reviewing contracts entered into by 
the SPEZA and its subsidiaries. The internal legal counsel shalI represent SPEZA and 
its subsidiaries in all judicial and administrative proceedings. When the exigencies of its 
business and operations demand it, the %,-LA may engage the services of an outside 
counsel either on a case to case basis or on a fixed retainer. 
SEC. 17. Relationship with the Palawan Council for Sustainable Development. - 
The SPEZA shall determine the development goals for the Zone within the framework 
of national development plans, policies and goals. The administrator shall, upon 
approval by the Board, submit Zone plans, programs and projects to the Palawan 
Council for %stainable Development for inclusion and input to the overall 
development plan of the province. 
SEC. 18. Relationship with Local Government Units. - Excerpt as herein 
provided, the local government units comprising the Zone shall retain their basic 
autonomy and identity. The municipalities of BaIabac, Bataraza and Brooke's yoiiit shaII 
operate and function in accordance with the Local Government Code of 1991. 'In case of 
any conflict between the Authority and the Province of Palawan on matters affecting 
the Zone other than the defense and security matters, the decision of the SPEZA shall 
prevail. 
SIX. 19. Auditing. The Commissiokl i n  Audit shaII appoint a representative who 
shall be a full time auditor of the SPEZA and its subsidiaries in which it controls a 
majority of the shares of stock, and assign such number of personnel as may be 
necessary to assist said representative in the performance of his/her duties. The salaries 
and emoluments of the assigned auditor and personnel of the Commission on Audit 
shall be in accordance with pertinent laws, rules and regulations. The Commission on 
Audit shall render an annual report to the President of the Philippines and to Congress 
on the busines; activities, transactions and operations of the SPEZA. 
To ensure the expeditious implementation of the economic policy and purpose 
embodied in this Act, the Commission on Audit, in cooperation with SPEZA, shall 
formulate special rules on audit, disbursement of funds, bidding procurement of goods 
and services, accounting, use of government equipment and resources and the like, 
towards realizing the aforesaid needs. 
SEC. 20. Retention of all earnings. - The SPEZA shall retain all earnings from all 
its activities, regulatory or proprietary, and need not remit the same to thc national 
treasury. Such earnings shall be considered as corporate income which SPEZA may 
invest in its various infrastructure or speciaiprojects, and corporate undertakings. 
SEC. 21. Injunctions, Restraining Orders and other interlocutory orders. - The 
development of the Southern Palawan Special Economic Zone and Free 'Port is a 
national government priority and, therefore, no injunctions, restraining orders and 
other interlocutory orders tvhich seek to stop or interrupt any contract entered into or 
project undertaken by SPEZA may be issued by any court of law or quasi-judicial body 
except by the Lpreme Court of the Philippines. 
SEC. 22. lnterpretation/Construction. - The powers, authorities and functions 
that are vested in the SPEZA are intended to establish decentralization of government 


functions and authority and promote an efficient and effective working relationsliip 
among the Zone, the national government and the local government units. 
SEC. 23. Implementing Rules and Regulations. - The Philippine Econamic Zone 
Authority; Department of Trade and Industry, Finance, Foreign Affairs, Labor and 
Employment, Interior and Local Government, Agriculture, Agrarian Reform, Public 
Works and Highways, Science and Technnlagy, and Energy, Bureau of Immigration; 
Bureau of Customs; National Economic and Development Authority; Banko Sentral ng 
Pilipinas; Palawan Council for Sustainable Development, and representatives from the 
technical staff of the Committee on Economic Affairs of Both Houses of Congress and 
other concerned agencies 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 
tlte Philippines. 
SEC. 24. Separability Clause. - If any provisions of this Act shall be held 
unconstitutional or invalid, the other provisions not otherwise affected shall remain in 
full force and effect. 
SEC. 25. Repealing Clause. All laws, executive orders or issuances or 'any parts 
thereof which are inconsistent herewith are hereby repealed or amended accordingly. 
SEC. 26. Effectivity Clause. - This Act shall take effect upon its publication in at 
least one (1) newspaper of general circulation. 
Approved,