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THIRTEENTH CONGRESS OF' THE REPUBLIC 
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OF THE PHILIPPINES 
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First Regular Session 
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S E N A ' T E  
Introduced by Senator Edgardo J. Angara 
EXPLANATORY NOTE 
This Act provides for the creation of an Authority that will negotiate 
with interested private investors and be responsible for the construction, 
operation, management and administration of the Quezon Canal and the. 
Canal Zone from the Municipality of Atimonan to the Municipality of 
Unisan, both in the Province of Quezon. 
The Quezon Canal will provide a by-pass or short cut for ocean 
vessels coming from the eastern side of Luzon to Manila and the China 
Sea. It will also provide cheaper and faster transport of products from 
Luzon's eastern coastal towns to the metropolitan markets. 
The Canal will increase the volume of inter-island shipping and 
trade between , the coastal towns of Quezon, Marinduque, Mindoro 
Batangas and Bicol Region. The untapped regions north of the Province 
of Quezon and the marine resources of Lamon Bay, Polillo Strait and 
Tayabas Bay will be open to development. 
The Canal Zone is envisioned as a major transhipment center to 
and from the United States, Japan and the ASEAN countries. 
Export 
processing facilities and light industries in the Canal Zone will boost our 
export potential and increase our industrial productivity. 
It will 
contribute immensely to the growth of our country's international trade 
and commerce. 
Furthermore, the Canal will stimulate the growth of 
tourist centers in the region. 
The Canal will increase the capability of the Philippine coast Guard 
to patrol and safeguard our eastern coastline. 
Employment opportunities will be generated by the above- 
mentioned activities. 
The construction phase alone will require 
thousands of workers; other spin-off projects such as light industries 
and other facilities in the industrial area within the Canal Zone will 
provide long-term employment and economic benefits. In all, the Canal 
is expected to open an era of prosperity and peace in the region. 
Early approval of this bill is earnestly requested. 
EDGARDO J. ANGARA 


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THIRTEENTH CONGRESS OF THE REPUBLIC 
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OF THE PHILIPPINES 
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First Regular Session 
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Introduced by Senator Edgardo J .  Angara 
AN ACT 
CREATING THE QUEZON CANAL ZONE AUTHORITY, DEFINING ITS 
POWERS AND FUNCTION AND FOR OTHER PURPOSES 
Be it enacted by the Senate and House of 
Representatives of the 
Philippines in Congress assembled: 
SECTION 1. 
Creation of the Quezon Canal Zone Authority. - 
There is hereby created a public corporation to be known as the "Quezon' 
Canal Zone Authority," hereinafter referred to as the Authority. 
The 
functions of the Authority are hereby declared to be governmental. 
SEC. 2. Territorial Jurisdiction. - The territorial jurisdiction of 
the Authority shall cover an area approximately five (5) kilometres wide, 
twenty (20) kilometres long including the rivers and waterways from the 
Municipality of Atimonan to the Municipality of Unisan, across the 
narrow isthmus of the Province of Quezon. However, the Congress of the 
Philippines, upon recommendation of the Authority, may extend, reduce, 
alter or vary the territorial limits of the Authority if such amendments 
are necessary or will contribute to the attainment of its objectives. 
SEC. 3. Principal Office. - The principal offices of the Authority 
shall be in the Canal Zone. It may establish branches and agencies 
within the Philippines as may be necessary for the proper conduct of it6s 
business. 
SEC. 4. 
Purposes and Specific Powers. - The purposes and 
specific powers of the Authority are: 
(a) 
To acquire, own, lease, construct, reconstruct, repair, equip, 
maintain, administer and operate the canal, wharves, docks, piers, 
quays, and the approaches to and appurtenances thereof, terminals, 
warehouses, refrigeration, storage plants, equipment and other 
structures or facilities necessary or useful in said commerce and in the 
transportation and storage of goods, wares and merchandise in the 
Authority, 
including 
land 
reclamation 
and 
the 
improvement, 
development, deepening and dredging of the harbours, waterways, 
causeways, and fairways therein, and all approaches thereto; 
(b) To grant the use or to rent, lease or let, for a consideration, all 
such port facilities including stevedoring and port terminal services, or 


any concession properly incident thereof or in connection with the 
receipt, delivery, shipment and transfer in transit, weighing, marlting, 
tagging, ventilating, fumigating, refi-igerating, icing, storing and handling 
of goods, wares and merchandise including embarking and disembai-lting 
of passengers and their baggages to any person, association or 
corporation under such tej-ms and conditions it may deem proper, after 
public bidding; 
(c) To assess and collect harbor, tonnage, wharfage, berthillg and 
storage charges and fees, fix and collect the rentals for the lease, 
occupancy or use of buildings, structures, warehouses, lands and other 
properties of the Authority, fix the fees for the issuance of permits and 
the rendering of other services not enumerated herein: Provided, That 
until the Authority has fixed otheiwise, the rates of harbor, tonnage, 
wharfage, berthing and storage charges or fees as now provided by law 
shall be followed and enforced; 
When essential to the proper administration of its corporate 
affairs or when necessary for the proper transportation of its business or 
for carrying out the purposes of this Act and of said-Authority, to 
contract indebtedness and issue bonds, subject to the conditions set 
forth in Section 
19: 
Provided, however, That the outstanding 
indebtedness of the Authority shall not exceed forty percent (40%) of the 
total assets of the Authority and at all times to be guided by principles of 
sound management; 
Subject to the general jurisdiction of the local government unit 
concerned, to exercise police authority within the area under its control 
and jurisdiction as provided in Section 2; 
(Q 
To create and operate, and/or contract to operate such 
agencies, functional units, offices and departments of the uthority as 
purposes of this Act; 
(9) To appoint and employ such officers and employees as may be 
necessary to carry out and employees as may be necessary to cariy out 
the purposes of the Authority, to prescribe their duties and fix their 
compensation. 
SEC. 5. General Powers. - The Authority shall have the following 
general powers: 
(a) To adopt, alter and use a corporate seal which shall be 
judicially noticed; make contracts, lease, own or otherwise dispose of 
personal and real property; sue and be sued; and otherwise do and 
perform any and all things that may be necessary or proper to carry out 
tht! purposes of the Authority; 
(b) To do all such other things and to transact all such business 
directly or indirectly necessary, incidental or conducive to the attainment 
of the purposes of the Authority; and 
(c) In general, to exercise all the powers of a corporation under the 
Corporation Code in so far as they are not inconsistent with the 
provisions of this Act. 
SEC. 6. Capitalization. - The authorized capital of the Authority 
shall consist of: 
(a) 
Fixed assets of the ports presently covered in Section 2; 
(d) 
(e) 
may be deemed necessary or useful for the furtherance o 3 any of the 


(b) 
(c) 
Ten percent (10%) of the unappropriated surplus of the 
Portworks Special Fund as of the end of December 31, 1994. 
All public lands within the Canal Zone which shall be valued 
at. market costs (values) and transferred to the Authority and such other 
appropriation that may be approved by the President of the Philippines. 
The capital and assets of the Authority shall be available for the general 
debts of the National Government. 
The Authority shall accept equity contributions from private 
landowners in the Canal Zone, up to seventy percent (70%) to eighty 
percent (80%) of their current market values, which shall be in the form 
of pteferred shares of stock. 
SEC. 7. 
Governing Body, Appointment and Removal. - The 
corporate powers of the Authority shall be vested in, and exercised by, a 
Board of Directors, hereinafter referred to as the "Board", composed of 
fifteen ( 15) members; 
The Secretary of Finance, or his nominee, who shall serve in 
alternate terms of two (2) years each with the Director-General of the 
National Development Authority, or his nominee. 
After the first term of two (2) years, the Secretaiy of Finance shall 
be replaced by the Director-General of the National Developiiient 
Authority who shall serve in the Board again for two (2) years, and so on. 
The Secretary of Public Woi-ks, or his nominee, who shall 
sei-ve in alternate terms of two (2) years each with the Secretaiy of 
Transportation and Communications, or his nominee, to follow the same 
schedule as in (a) above; 
(c) The Secretary of Natural Resources, or his nominse who shall 
serve in alternate terms of two (2) years each with the SecrePpy of Trade 
and Industry, or his nominee, to follow the same schedule as in (a) 
above; 
The Secretay of National Defense, or his nominee to come, 
alternately, from the Philippine Navy and the Coast Guard, who shall 
serve for a term of three (3) years; 
The Chairman of the Regional Development Council, Region 
IV who shall serve for a term of three (3) years; 
The Governor, Province, of Quezon, who shall sei-ve for a 
term of three (3) years. 
The Representatives, Third Congressional District of Quezon, 
who shall seive for a term of three (3) years; 
(d) 
(a) 
(b) 
(d) 
(e) 
(0 
(g) 
' 
(i) 
(j) 
(k) 
The Mayor, Municipality of Atimonan, who shall serve for a 
term of three (3) years; 
The Mayor, Municipality of Unisan, who shall serve for a 
term of three (3) years; 
The Administrator of the Authority, who shall act as the 
Vice-Chairman, and shall serve in a concurrent capacity during his term 
as Administrator; 
The Director for Public Affairs of the Authority, who shall 
sei-ve as member of the Board during his term as Director for Public 
Affairs; 
(1) 
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(m) An individual from the private sector, to represeiit the 
shipping industry, who shall serve for a term of (2) years; 
(n) 
An individual from the private sector, to represent the labor 
sector, who shall serve a term of two (2) years; 
(0) 
An individual, from the private sector, to represent the 
environmental concern group, who shall serve for a term of (2) years. 
The members of the Board shall be appointed by the President of 
the Philippines, with their terms of office as designated in their 
appointments: Provided, That any person chosen to fill a vacancy shall 
serve only for the unexpired term of the director whom he succeeds. 
Directors may be suspended or removed for cause of the President of the 
Philippines. 
SEC. 8. Chairman of the Board. - The Directors shall annually 
elect a Chairman from among themselves. 
SEC. 9. 
Meetings and Quorum. - The shall hold one regular 
meeting monthly and such special meetings provided for j,n the by-laws. 
Eight (8) members of the Board shall constitute a quorum and the vote of 
eight (8) members shall be necessmy for the adoption of any rule, 
resolution or decision or any other Act of the Board. 
SEC. 10. 
Per Diems and Allowances. - 
The Chairman and 
members of the Board shall receive a per diem of Eight Hundred Pesos 
(P800.00) and Five Hundred Pesos (P500.00), respectively exclusive of 
traveling expenses, for each day of meeting actually attended by them: 
Provided, That in no case shall the total per diem exceed Eight Thousand 
Pesos (P8,OOO.OO) for the Chairman and Five Thousand Pesos 
(P5,OOO.OO) for each director per month. 
Prohibitions for Directors. - No director $hall, at the 
same time, be employed by the Authority in any capacity whatsoever, 
except as may be authorized by the President of the Philippines. 
Whenever any director has a personal or business interest in the 
discussion or resolution of any matter, or any of his relatives within the 
third degree or consanguinity or second degree of affinity has such 
interest, such director shall abstain himself in the discussion or 
resolution of any matter and must retire from the meeting during the 
deliberation. The withdrawal of such director shall be noted in the 
minutes of the meeting. 
SEC. 12. Powers and Duties of the Board. - The Board shall have 
the following powers and duties: 
'a 
SEC. 11. 
, 
(a) 
To promulgate policies and to prescribe, amend and repeal 
thd by-laws, rules and regulations governing the manner in which the 
general business of the Authority may be exercised; 
(b) 
To approve the annual and such supplemental budgets 
which may be submitted to the President, in the form and manner 
prescribed by ' the Department of Budget and Management, including 
such explanation and data as may be required to justify the 
appropriation; 
(c) 
To render annual reports to the President and such special 
reports as may be requested; 
(d) 
To appoint, on recommendation of the Administrator, the 
departrhent heads as established in the organization of the Authority; 
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(e) 
SEC. 13, 
To adopt rules and procedures and fix a time and place for 
holding meetings. 
Administrator of the Authority. - The Chief Executive 
Officer of the Authority shall be an Administrator, to be appointed by the 
President of the Philippines. The Administrator shall serve as Vice- 
Chairman of the Board of Directors in a concurrent Capacity. 
The 
Administrator 
shall 
receive 
an 
annual 
salary 
and 
representation allowances exclusive of traveling expenses, to be 
determined by the Board. He shall not receive additional compensation 
as Vice-chairman of the Board. 
SEC. 14. Powers and Duties of Administrator. - The Administrator 
shall have the following powers and duties: 
(a) 
To implement, enforce and apply the policies, prograns, 
guidelines, procedures, decisions, rules and regulations promulgated, 
prescribed, issued or adopted by the Authority; 
To direct and manage the affairs and bUysiness of the 
Authority in the spirit and intent of this Act and in pursuance of the 
policies of the Board; 
(c) 
To submit within ten (10) days after the close of each fiscal 
year, an annual report to the Board and such other reports as may be 
required; 
(d) 
To submit an annual budget and necessary supplemental 
budgets to the Board for its approval; 
(e) 
To appoint, promote, remove, suspend, or otherwise 
discipline for cause the officers and employees of the Authority, subject 
To establish an internal organization of the Authority under 
such conditions that the Board may prescribed: Provided, That any 
major reorganization shall be subject to the approval of the Board; 
(g) 
To delegate his authority, under such conditions as the 
Board may prescribe; 
(h) 
To sign contracts, to approve expenditures and payments 
within the budget provisions, and generally to do any and all acts or 
things for the proper operation of the Authority; 
(i) 
To perform such other duties as may be assigned to him by 
the Board. 
SIX. 15. 
Management and Staff. - The Administrator shall, 
subject the approval of the Board, determine the staffing pattern and the 
number of personnel in the Authority, define their duties and 
responsibilities and subject to confirmation by the Board, fix their 
salaries and emoluments that are comparable to those of similar 
positions in other government-owned or-controlled corporations, the 
provisions of existing rules and regulations on wage and position 
classification notwithstanding. 
All other officials and employees of the Authority shall be selected 
and appointed on the basis of merit and fitness based on a 
comprehensive and progressive merit system to be established by the 
Authority ilnlnediately upon its organization and consistent with Civil 
Service rules and regulations: Provided, however, That all professional 
(b) 
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rib. 
to such rules as may be promulgated by the Board; 
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(f) 


and technical positions shall be considered policy determining, primarily 
confidential and highly technical in nature. The recruitment, transfer, 
promotion and dismissal of all personnel of the Authority, including 
temporary workers, shall be governed by such merit system. 
The Administrator shall, subject to Civil Service laws and wage and 
position classification and other rules and regulations in relation thereto. 
SEC. 16.Exemption from Civil Service Law and Classification 
Office. - Officers and employees of the Authority shall not be subject to 
Civil Service laws and wage and position classification and other rules 
and regulations in relation thereto. 
SEC. 17. , Internal Audit. - Internal auditing of the Authority's 
accounts and transactions shall be the sole responsibility of the 
Authority. 
SEC. 18. 
Audit of Funds. - No funds of the Authority shall be 
used to pay for the salaries or expenses of the Commission on Audit in 
excess of one-third of the total accounting costs of the Kuthority. Any 
audit by the Commission on Audit shall be conducted on post-audit 
basis, and the Authority shall be entitled to disburse its funds without 
prior approval'from the Chairman of the Commission on Audit. The 
results of such audit shall be transmitted to the Board. 
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SEC. 19. Power to Issue Bonds or Incur Indebtedness. - 
(a) 
Domestic Indebtedness - Whenever the Board deems it 
advisable and necessary for the Authority to issue bonds to carry out 
approved capital investment projects, it shall, by resolution, so manifest 
and declare, stating the purpose for which the loan or is%e is tg be 
applied and citing the project study devised for the purpose. In order for 
such resolution to be valid, it shall be passed by the affirmative vote of at 
least eight (8) members of the Board and approved by the President upon 
the recommendation of the Secretary of Finance, after consultation with 
the Monetary Board. 
The Secretary of Finance, in coiisultation with the Monetary Board, 
shall prescribe the form, the rate of interest, the denominations, 
securities, negotiability, convertibility, call and redemption features, and 
all other terms and conditions of issuance, placement, sale, servicing, 
redemption and payment of all bonds issued under the authority of this 
Act. 
The bonds issued under the authority of this Section may be made 
payable both as to the principal and interest, in Philippine currency or 
on headily convertible foreign currency. 
Nothing in this Section shall be interpreted to mean that the 
Secretary of Finance, in the redemption of securities, is prevented from 
applying the lottery principle by which bonds drawn by lot, may be 
redeemed before maturity either at their face value or above. The 
Republic of the Philippines hereby guarantees the payment by the 
Authority of both the principal and the interest in case. the Authority fails 
to do so; and there are hereby appropriated, out of the general funds in 
the Philippine Treasury not otherwise appropriated, the sums necessary 
to make the payments guaranteed by this subsection: Provided, That the 
sum so paid by the Republic of the Philippines shall be refunded by the 
Authority. 
(b) Foreign Loans - The Authority is being authorized to contract 
loans, credits, and indebtedness from foreign governments, foreign 
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agreed, for the accomplishment of its purposes, the total principal 
amount of which outstanding at any time, exclusive of interest and other 
charges, shall not exceed forty percent (40%) of its total assets, United 
States dollars or its equivalent in other foreign currencies at the time the 
loans, credits and indebtedness are incurred. 
i 
The President of the Philippines, by himself or through any 
representative duly designated by him in writing, is hereby authorized to 
guarantee, absolutely and unconditionally as primary obligor and not as 
surety merely, in the name and on behalf of the Republic of the 
Philippines, the payment of the loans, credits, indebtedness herein 
authorized, as well as the performance of any or all of the obligations 
undertaken by the Authority pursuant to any agreement entered into in 
connection therewith on such terms and conditions as he shall deem 
proper and reasonable. 
In the negotiation and contracting of any loan, credit or 
indebtedness under this subsection, the President of the Philippines 
may, when made a condition to the granting of such loans, credits or 
indebtedness, agree to waive the application of any Taw granting 
preferences or imposing restrictions on international competitive bidding, 
including among others, Act No. 423, Commonwealth Act No. 138, 
Commonwealth Act No. 541, and Republic Act No. 5183: Provided, 
however, That in every case where competitive bidding is agreed upon in 
the purchase of machineries, equipment, materials and supplies 
financed out of proceeds of such loans, credits and indebtedness, 
preference may be granted in favor of such machinery, equipment, 
materials or supplies produced, processed or manufactured in the 
Philippines, at such rate and in such manner as may be agreed upon 
from time to time with the institution providing financing for the project. 
The bonds issued under subsection (a) as we$ as logns, 
credits and indebtedness contracted under subsection (b) of this Section, 
and the payment of the principal, interest and other charges thereon, as 
well as the importation of machinery, equipment, materials and supplies 
by the Authority, paid from the proceeds of any loan, credit or 
indebtedness incurred under this Act, shall be exempt from all taxes, 
fees, imposts and other charges and restrictions, by the. Republic of the 
Philippines or any of its agencies and political subdivision. Said bonds 
shall be receivable as security in any transaction with the Government, 
its subdivisions, agencies and instrumentalities, in which such security 
is required. 
, 
(c) 
SEC. 20. Eminent Domain. - For the acquisition of rights of way 
and property for the construction of the canal, wharves, piers, docks, 
qudys, warehouses and other terminal facilities, structures and 
approaches thereto, the Authority shall have the right and power to 
acquire the same by purchase by negotiation, or by condemnation 
proceedings. Should the Authority elect to exercise the right of eminent 
domain, condemnation proceedings shall be maintained by and in the 
name of Authority and it may proceed in the manner provided by law. 
SEC. 2 1, 
Transf'er of Personnel, Records, Functions, Rights, 
Assets and Liabilities. - All books, records and documents which 
appertain to the ports administration in the Canal Zone and all 
personnel assigned to the sub-port within the Canal Zone are hereby 
transferred to the Authority, subject to the organization that may be 
effected. 
The priority use of all lands and of all facilities owned by the 
National Government, its agencies and instrumentalities, including those 
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Provided, however, That the Board shall, as soon as constituted, make 
an inventory of all such facilities and identify those facilities which were 
constructed and financed wholly or partly from general funds of the 
National Government, as distinguished from those financed wholly by the 
Portworks Special Funds, indicating therein the physical condition and 
relative book value thereof. 
Upon such inventor$, all properties and facilities generated, by 
financing wholly out of the Portworks Special Funds shall be transferred 
to the Authority without reimbursement to the original agencies having 
control over them; and for all the properties and facilities that were 
financed partly or wholly from the general fund or bond fund of the 
Government, the Authority, by virtue of this Section, may secure transfer 
of ownership thereof by providing a systematic schedule or repayment of 
the corresponding share of the general 
fund or both fund of the 
Government , the' Authority, by virtue of this Section, may secure 
transfer of ownership thereof by providing a systematic schedule or 
repayment of the corresponding share of the general fund invested 
therein, including interests in the case of the latter. 
The Authority shall, upon consultation with the depxrtment head 
concerned, reserve and make available within the port district such area 
or areas necessary for the proper operation of the Bureau of Customs, 
Quarantine, Immigration or any of the national, city or municipal 
government agency which, by reason of the nature of its duties and 
functions, require the establishment and operation of such office. 
All appropriations for the Authority and ten percent 26 (10%) of the 
surplus of the Portworks Special Funds are hereby transferred to the 
Authority, which shall administer the same effective upon the date of 
constitution of the Board of Directors. All income or revenue accruing 
heretofore to the Portworks Special Funds collected by the Authority 
shall first accrue to the Authority to defray the following e%eizses; (1) 
Cost of port administration, operation, maintenance, repair work and 
dredging; (2) Payment of interest on, and in the redemption of, previous 
construction loans on properties or facilities transferred to the Authority 
pursuant to this Section; (3) Purchase of new equipment; and (4) Costs of 
approved new construction work as detailed in the Authority's annual 
budget: Provided, That any balance thereof shall be turned over to the 
Portworks Special Funds. 
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SEC. 22. 
Repealing Clause. - All laws, decrees, orders, 
proclamation, and rules and regulations or parts thereof which are 
inconsistent with any of the provisions of this Act are hereby repealed or 
modified accordingly. 
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SEC. 23. Effectivity. - This Act shall take effect fifteen (15) days 
Approved. 
from its publication in two (2) newspapers of general circulation.