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

SEVENTEENTH CONGRESS
Second Regular Session

HOUSE BILL No. __6339

Introduced by:
REPRESENTATIVES PANTALEON D. ALVAREZ, KARLO ALEXEI B.
NOGRALES, RUWEL PETER S. GONZAGA, MERCEDES C. CAGAS, LORNA
P. BAUTISTA-BANDIGAN, JOEL MAYO Z. ALMARIO, MARIA CARMEN S.
ZAMORA

AN ACT
DEVELOPING DAVAO GULF AND ITS SURROUNDING AREAS, CREATING
FOR THE PURPOSE THE DAVAO GULF DEVELOPMENT AUTHORITY WITH
THE DAVAO GULF SPECIAL ECONOMIC FREEPORT ZONE AND THE
ISLAND GARDEN CITY OF SAMAL AS AN ECOTOURISM ZONE UNDER ITS
JURISDICTION, PRESCRIBING ITS POWERS AND FUNCTIONS, AND
APPROPRIATING FUNDS THEREFOR

EXPLANATORY NOTE

This bill seeks to realize the potential of Davao Gulf and its surrounding local
government units as a vibrant economic hub by establishing the Davao Gulf
Development Authority with the Davao Gulf Special Economic Freeport Zone and

the Island Garden City of Samal as an ecotourism zone under its jurisdiction.


The Davao Gulf is a vast expanse of water (308,000 ha.) that touches Davao
City and alll (5) five provinces of Region XI: Davao del Sur, Davao del Norte, Davao
Oriental, Davao Occidental, and Compostela Valley. It is the life source of more than
five million people, it is blessed with natural resources and provides the avenue for
the trade of goods. Further, the gulf is a beautiful place where white-sand beaches,

islands, pristine sanctuaries, and numerous dive sites are located.

The Davao Gulf also boasts of a healthy marine ecosystem and diverse
underwater habitats that host various species of marine flora and fauna. Thus,
tourism has the potential to be one of the major economic contributors to the Davao
Gulf and its surrounding areas, and is seen to flourish further if the appropriate
development strategies are implemented. However, it is important to note that any
type of development near the shoreline must comply with the existing
environmental requirements so as not to negatively alter the ecology and
biodiversity of the ecosystem. Moreover, any type of development must consider

sustainable conservation, and preservation of the area and its resources.

It is recognized that there is a need for the creation of an oversight authority
to implement the necessary programs and monitor the development of the Davao
Gulf so it can achieve its full potential. The Davao Gulf Development Authority will
also ensure the technical feasibility, economic possibility, political viability, and
administrative operability of the sustainable development of the Gulf.

A network of marine protected areas will also be established and the land use
of the foreshore lands, 3 kilometers from the 20-meter easement from the shore,
would be reclassified as industrial, commercial, residential and tourism. It is
intended that this proposed measure will help transform the Davao Gulf and its
surrounding areas into a dynamic economic hub.


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

PANTALEON D. AREZ

4
KARLO ALEXEI NOGRALES RUWEL S. GONZAGA
MERCE\ Seas LORNA P. BAUTISTA-BANDIGAN

OEL QZ. ALMARIO MARIA C, [ORA


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Constitution Hills, Quezon City
SEVENTEENTH CONGRESS

Second Regular Session

HOUSE BILL NO. 6339

Introduced by
REPRESENTATIVES PANTALEON D. ALVAREZ, KARLO ALEXEI B.
NOGRALES, RUWEL PETER S. GONZAGA, MERCEDES C. CAGAS, LORNA
P, BAUTISTA-BANDIGAN, JOEL MAYO Z. ALMARIO, MARIA CARMEN S.
ZAMORA.

AN ACT
DEVELOPING DAVAO GULF AND ITS SURROUNDING AREAS, CREATING
FOR THE PURPOSE THE DAVAO GULF DEVELOPMENT AUTHORITY WITH
THE DAVAO GULF SPECIAL ECONOMIC FREEPORT ZONE AND THE
ISLAND GARDEN CITY OF SAMAL AS AN ECOTOURISM ZONE UNDER ITS
JURISDICTION, PRESCRIBING ITS POWERS AND FUNCTIONS, AND
APPROPRIATING FUNDS THEREFOR

Be it enacted by the Senate and House of Representatives of the Philippines in Congress
assembled:
CHAPTER I
GENERAL PROVISIONS
SECTION 1. Short Title. - This Act shall be known as “Davao Gulf

Development Authority Act.”

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SEC. 2. Declaration of Policy. ~ It is hereby declared the policy of the State to
pursue the acceleration of the economic, social, and political development of local
government units (LGUs) through the establishment of special development and
administrative areas in suitable and strategic locations such as the Davao Gulf and

its surrounding areas without prejudice to the autonomy of the affected LGUs.

The State further recognizes that in order to generate more jobs and improve
the quality of living conditions of the people in the surrounding areas of Davao
Gulf, it is imperative to attract legitimate and productive local and foreign
investments. Towards this end, the State shall undertake measures to adopt and
implement sustainable and progressive development strategies in Davao Gulf and
the surrounding LGUs to induce and accelerate a sound and balanced industrial,
economic and social development in the area that will benefit the people therein,

and the country in general.
CHAPTER II
DAVAO GULF DEVELOPMENT AUTHORITY

SEC. 3. Creation of the Davao Gulf Development Authority. - There is hereby
created the Davao Gulf Development Authority, herein referred to as the Authority,

which shall be vested with the powers of a corporation.

The Authority shall be organized within thirty (30) days after approval of this

Act and shall have a term of fifty (50) years from its organization.

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The Authority shall establish its principal office in Tagum City, Davao del

Norte and may put up such branches as may be necessary.

Congress, by a joint resolution, may dissolve the Authority whenever in its

judgment the primary purpose for its creation has been accomplished.

SEC. 4. Objectives of the Davao Gulf Development Authority. - The Authority

shall have the following objectives:

(a) To adopt, prepare and implement a comprehensive and detailed
development plan embodying a list of projects to promote the economic and social
development of the Davao Gulf and the surrounding areas therein;

(b) To encourage the active participation of the private as well as the
public sector in developing the Davao Gulf and the surrounding areas;

(©) To establish a mechanism in coordination with the appropriate LGUs
to effect meaningful consultation regarding the plans, programs and projects to be
implemented in the Davao Gulf area and its extensions and the surrounding
communities as envisioned in this Act; and

(a) To plan, implement programs and undertake the adjustment,
relocation or resettlement of the people living in the area as may be deemed
necessary and beneficial to the development of Davao Gulf, in coordination with the

appropriate government agencies and LGUs.

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SEC. 5. Powers of the Davao Gulf Development Authority. - The Authority

shall exercise the following powers:

(a) To succeed in its corporate name, to sue and be sued in such corporate
name and to adopt, alter and use a corporate seal which shall be judicially noticed;

(b) To enter into, make, perform and carry out contracts of every class,
kind and description which are necessary or incidental to the realization of its
purposes with any person, firm or corporation, private and public and with foreign
government entities;

() _ Toadopt, amend and repeal its by-laws;

(4) To contract loans, indebtedness, credit and issue commercial papers
and bonds, in any local or convertible foreign currency from any international
financial institutions, foreign government entities, and local or foreign private
commercial banks or similar institutions under terms and conditions prescribed by
laws, rules and regulations;

(e) To construct, own, lease, operate and maintain public utilities as well
as infrastructure facilities;

() To acquire, hold, administer and lease real and personal properties,
including agricultural lands, property rights and interests and encumber lease,
mortgage, sell, alienate or otherwise dispose of the same at the highest fair market

value it may deem appropriate;

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(g) To receive donations, grants, bequeaths and assistance of all kinds from
local and foreign government, and the private sector;

(h) To exercise the right to eminent domain;

(i) To exercise oversight functions over the Davao Gulf area in accordance
with the provisions of this Act and by subsequent executive issuances within the
framework of the declared policies of this Act;

() To identify, collect and manage the fees collected in relation to its
functions;

(k) To promulgate all necessary rules and regulations; and

(!) To perform such other powers as may be necessary and proper carry

out the purposes of this Act.

SEC. 6. Board of Directors. - (a) The Authority’s overall directions and
thrusts shall be provided and approved by the Board of Directors, hereinafter
referred to as the Board, which shall be composed of six (6) ex officio members and

seven (7) appointive members.
(b) The following shall be the ex officio members of the Board:
(1) Director General of the National Economic and Development
Authority, as chairperson;
(2) Secretary of Public Works and Highways, as vice chairperson;
(3) Secretary of Tourism;

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(4) Secretary of Environment and Natural Resources;
(5) Secretary of Agriculture; and
(6) Secretary of Transportation, as members.

‘The ex officio members of the Board may designate alternates who shall be the
officials’ next-in-rank and whose acts shall be considered the acts of their principals.

(c) The following are the appointive members of the Board:

(1) Three (3) representatives from the private sector residing, in
Davao City or in any of the five (5) provinces surrounding the Davao Gulf,
specifically Davao del Sur, Davao del Norte, Davao Oriental, Davao
Occidental and Compostela Valley;

(2) Two (2) representatives from the Mindanao academic sector; and

(3) Two (2) representatives from non-government organizations,
which have their principal office and are operating in Davao City or in any of
the five (5) provinces surrounding the Davao Gulf.

SEC. 7. Appointment of Members of the Board. - Except for ex officio members,
the other members of the Board shall also be appointed by the President of the
Philippines. In shortlisting the nominees for the appointive members of the Board,
the President of the Philippines shall give utmost consideration to the nominees
recommended by the local chief executives of Davao City and the five (5) provinces
surrounding Davao Gulf as provided under Section 6 (c), recommending at least

three (3) names for every vacant position.

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The members of the Board may receive compensation, per diems, allowances,

and incentives in accordance with the guidelines promulgated by the GCG.

SEC. 8. Powers and Functions of the Board. ~ The Board as the governing and
policy-making body of the Authority and shall exercise the following powers and
functions:

(a) Determine the organizational structure of the Authority, define the
duties and responsibilities of all officials and employees and adopt a compensation
and benefit scheme at least equivalent to that of the Bangko Sentral ng Pilipinas;

(b) Prepare the annual and supplemental budgets, if necessary, of the
Authority; and

(©) Submit an annual report on the operation and accomplishments of the
Authority to the President of the Philippines, Senate President, and Speaker of the
House of Representatives.

SEC. 9. Meetings of the Board; Quorum. - The Board shall meet regularly once
every month at its principal office. There must be a three-day notice to all members
using electronic or traditional means before every meeting. The Board may also
conduct special or emergency meetings whenever necessary and in compliance with
the prior notification requirement.

There shall be quorum whenever majority of the ex-officio members and

majority of the appointive members of the Board are present for the transaction of

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corporate business, and every decision of at least a majority of the directors present
in a meeting at which there is a quorum shall be valid as a corporate act, except for
the election of officers which shall require the vote of a majority of all the members

of the Board.

SEC. 10. Powers and Functions of the Chairperson. - The Chairperson shall

exercise the following powers and functions:

(a) Call and preside over the meetings of the Board and see to it that the
policies, programs and rules and regulations promulgated by the Board are properly
implemented;

(b) Call on stakeholders in the formulation and implementation of a
comprehensive and integrated plan for the development of the Davao Gulf
investment programs and the preparation of investment programming priorities,
annual reports and other pertinent documents approved by the Authority;

(©) Identify solutions to key issues and concerns, taking into account
related risks, affected parties and impact, in coordination with the Board and key
stakeholders;

(a) Represent the Board in all dealings or transactions with other
government agencies and offices, and with the private sector;

(c) Accept, on behalf of the Authority, donations, contributions, grants and

bequests or gifts, in cash or in kind, from foreign governments, international

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agencies or organizations, private entities or any individual for purposes that will
realize the mandate of the Authority; and

() Call on any government agency or office, LGUs and the host
communities to assist the Authority in addressing issues and concerns relating to

the implementation of the programs, projects and activities of the Authority.

SEC. 11. Executive Director. - The Authority shall have an Executive Director
who shall be elected by the Board from its appointive members. The Executive
Director must possess either:

(a) A career service executive eligibility or career executive service officer
eligibility;

() A post-graduate degree related to law, management or public
administration; or

(©) Aminimum of ten (10) years of management experience.

The Executive Director shall be the Chief Operating Officer of the Authority
and shall be entitled to receive a salary in accordance with the guidelines
Promulgated by the GCG, and shall serve for a fixed term of one (1) year, unless
sooner removed by the Board for cause.

The Executive Director shall be responsible for the effective implementation
of the policies promulgated by the Board and shall also direct and supervise the

day-to-day operations of the Authority.

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SEC. 12. Powers and Functions of the Executive Director. - The Executive

Director shall exercise the following powers and functions:

(a) Supervise administrative operations including the disbursement of
funds of the Authority, subject to the usual accounting and auditing procedures,
and to submit reports thereon;

(b) Supervise the monitoring and timely implementation of Mindanao-
wide or Mindanao-specific inter-regional programs, projects and activities;

(c) Execute and administer the policies and measures approved by the
Board;

(d) Appoint all the employees of the Authority, subject to the approval of
the Board, and to remove, dismiss or otherwise discipline for cause, such employees
in accordance with the standard guidelines for recruitment, employment, and
discipline under existing civil service laws, rules and regulations;

(e) _ Represent the Authority in all dealings with the offices, agencies, and
instrumentalities of the government and with all the persons and entities, public or
private;

(f) Sign agreements or contracts on behalf of the Authority, including
those for expert and consultant services and other reports of accountabilities
emanating from the Authority; and

(g) Perform such other functions that the Board may direct to carry out the

provisions of this Act.

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SEC. 13. Capitalization and Compensation. - The Authority shall have an
authorized capital stock of five hundred million (500,000,000) no par shares with a
minimum issue value of One hundred pesos (P100.00) each. The National
Government shall initially subscribe and fully pay three hundred million
(300,000,000) shares of such capital stock. The initial amount necessary to subscribe
and pay for the shares of stock shall be included in the annual General
Appropriations Act of the year following its enactment into law and thereafter. The
Board 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
Authority. The Board may, with the written concurrence of the Secretary of Finance,
sell shares representing not more than forty per centum (40%) of the capital stock of
the Authority to the general public with such annual dividend policy as the Board
and the Secretary of Finance may determine. The National Government shall in no
case own less than sixty per centum (60%) of the total issued and outstanding capital

stock of the Authority.

SEC. 14. Merit System. - All officials and employees of the Authority shall be
elected 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 personnel including temporary workers shall be governed by a
merit system that will be established by the Authority in compliance with existing

laws, rules and regulations.

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CHAPTER II
DEVELOPMENT OF DAVAO GULF

SEC. 15. Davao Gulf Master Plan. - Within one hundred twenty (120) days
from the effectivity of this Act, the Authority, in coordination with Department of
Environment and Natural Resources (DENR) and the Department of Tourism, shall
conduct a full survey of the flora and fauna, both in land and water, found around
the Davao Gulf area. The Authority, must thereafter provide a master plan for the
development of the Davao Gulf area and the conservation of the flora and fauna
found therein within six (6) months from the conduct of the full survey required in
this Section. The Authority shall furnish the President of the Philippines, the Senate
President, and the Speaker of the House of Representatives a copy of the survey and

the development plan.

SEC. 16. Conversion and Reclassification of Lands. - The metes and bounds
of the area covered by this section shall be determined by the DENR. There shall be
an easement from the low water line along the coast and extending up to twenty (20)
meters into the coast ices the entire Davao Gulf reckoned from the Municipality of
Talaguton extending eastward to Malita, Malalag, Padada, Hagonoy, Digos City,
Santa Cruz, Davao City, Panabo City, Carmen, Tagum, Maco, Mabini, Pantukan,

Banaybay, Lupon, San Isidro and ending at the Municipality of Governor Generoso.

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The land use beginning at the end of the easement and extending inwards for
a distance of three (3) kilometers is hereby converted into disposable and alienable
lands and classified as industrial, commercial, and residential. However, the
construction of port facilities along the shorelines shall be exempted from the 20-
meter easement and allowed within the three-kilometer distance of the easements

which shall be determined by the Authority.

SEC. 17, Davao Gulf Special Economic Freeport Zone. - There is hereby
created the Davao Gulf Special Economic and Freeport Zone, hereinafter referred to
as the Freeport Zone, consisting of the cities of Panabo, Tagum, Davao, Island
Garden City of Samal and all the islands within the Davao Gulf, and Digos, and the
municipalities of Carmen, Mabini, Maco, Pantukan, Banaybanay, Lupon, San Isidro,
Governor Generoso, Sta. Cruz, Hagonoy, Padada, Sta. Maria, Malita, Don

Marcelino, and Jose Abad Santos.

Within thirty (30) days after the approval of this Act, each LGU comprising
the Freeport Zone shall submit its resolution to the Office of the President on its
concurrence to be part of the Freeport Zone and shall identify a contiguous area in
their respective jurisdiction that shall form part of the Freeport zone. Thereafter, the
President of the Philippines shall issue a proclamation defining the metes and

bounds of the Freeport Zone as provided herein.

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SEC. 18. Governing Principles of the Davao Gulf Special Economic Zone. -
The Freeport Zone shall be managed and operated within the framework and
subject to the mandate and limitations of the 1987 Constitution and the pertinent
provisions of Republic Act No. 7160, also known as the “Local Government Code of
1991.” The Freeport Zone shall be developed into a self-sustaining, industrial,
commercial, financial, agro-industrial, banking and investment center to generate
employment opportunities in and around the Freeport Zone and to attract and

promote productive local and foreign investments.

The Authority, in the management of the Freeport Zone shall be guided by the

following policies:

(a) The Freeport Zone shall continue to be provided with transportation,
telecommunications and other facilities needed to attract legitimate and productive
investments, generate linkage industries and employment opportunities for the
people residing in the areas comprising the Freeport Zone and its neighboring
towns and cities;

(b) The Freeport Zone may establish mutually beneficial economic
relations with other entities or enterprises within the country or with foreign entities

or enterprises;

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(©) The Freeport Zone shall be managed and operated as a separate
customs territory ensuring free flow or movement of goods and capital within, into
and out of its territory;

(a) The Freeport Zone shall provide incentives such as tax and duty-free
importations of raw materials, capital and equipment to registered enterprises
located therein. However, exportation or removal of goods from the territory of the
Freeport Zone to the other parts of the Philippines shall be subject to customs duties
and taxes under the Tariff and Customs Code of the Philippines, as amended, and
the National Internal Revenue Code (NIRC) of 1997, as amended;

(e) The Bangko Sentral ng Pilipinas, through the Monetary Board, shall
supervise and regulate the operations of banks and other financial institutions
within the Freeport Zone;

() Banking and finance shall be liberalized with the establishment of
foreign currency depository units of local commercial banks and offshore banking
units of foreign banks, subject to regulations by the Bangko Sentral ng Pilipinas;

(g) The areas comprising the Freeport Zone may be expanded or reduced
when necessary. For this purpose, the Authority, with the concurrence of the LGUs
comprising the Freeport Zone and in accordance with existing laws and local
ordinances, shall have the power to acquire either by purchase, negotiation or
condemnation proceedings, any private lands within or adjacent to the area

comprising the Freeport Zone for the following purposes:

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(1) Consolidation of lands for development by the Authority;

(2) Acquisition of right of way by the Authority; and

(3) Protection of watershed areas and the maintenance and improvement
Of its yield and natural assets valuable to the prosperity of the Freeport Zone, the
management of solid and water waste and its impact to adjacent areas within the
LGU concerned.

The Authority and the LGUs comprising the Freeport Zone shall provide for a
mechanism to address inappropriate exploitation of the natural environment and
disruptive land use within the jurisdiction of the Authority.

(h) Goods manufactured by enterprises within the Freeport Zone 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 Authority, together with the Philippine Economic Zone Authority
(PEZA), the Bangko Sentral ng Pilipinas, the Department of Finance, the Bureau of
Customs (BOC) and the Department of Trade and Industry, in accordance with the
NIRC of 1997, as amended, and the Tariff and Customs Code of the Philippines, as
amended. However, in order to protect the domestic industries, a negative list of
industries shall be drawn up and regularly updated by the PEZA. Enterprises
engaged in industries included in such negative list shall not be allowed to sell their

products locally; and

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(i) The defense of the Freeport Zone and the security of its premises shall
be the responsibility of the National Government in coordination with the Authority

and the LGUs comprising the Freeport Zone.
CHAPTER III
SUSTAINABILITY PLAN FOR DAVAO GULF

SEC. 19. Marine Protected Area. - The Davao Gulf is hereby declared as a
marine protected area (MPA) for purposes of sustaining the marine resources
therein. The Davao Gulf, as an MPA, shall be under the jurisdiction and

management of the Authority.

Inter-tidal areas shall be reserved for the establishment of mangrove swamp
forest reserves as part of the MPA, where possible. If the municipalities border each
other in such a way that their respective coastlines form a contiguous body, the
concerned LGUs may jointly establish and administer the MPA as to reach the
optimum size and arrangement of a large zone marine protected area. In case of

disagreement, the decision of the Authority shall prevail.

SEC. 20. No-Take Zone and Spatial Planning. - The Authority, in coordination
with the DENR-Coastal Marine Division (CMD), shall identify the no-take zone
where extraction and other fishing activities are prohibited. This zone shall be at

least ten percent (10%) but not more than fifteen percent (15%) of the total area of

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the Davao Gulf. Spatial planning shall also be conducted by the DENR-CMD

wherein zones for traditional fishing, ecotourism and no-take zones are identified.
No commercial fishing shall be allowed within Davao Gulf.

SEC. 21. Responsible Entities. - The concerned LGUs, along with members of
the community and civil society, the Bureau of Fisheries and Aquatic Resources, the
DENR-CMD, the Fisheries and Aquatic Resources Management Councils and the
private sector, as well as the Authority shall be responsible for the designation,
establishment and management of the MPAs within municipal waters, based on a

co-management scheme that accommodates the interests of all the stakeholders.

SEC. 22. Funding for Marine Protected Areas. - The initial funding for the
establishment of the MPA shall be provided for by the Authority. Funds for the
sustainable management of the MPA shall also be included in the regular budget of

the Authority.

SEC. 23. Management of Existing Marine Protected Areas. - The DENR shall
continue to manage MPAs established under the National Integrated Protected
Areas System and all initial components of the system that have passed the
requirements pursuant to Republic Act No. 7586, otherwise known as the “National

Integrated Protected Areas System Act of 1992.”

All marine protected areas, fishery reserves, fishery refuges or sanctuaries and

mangrove swamp forest reserves previously declared or proclaimed by the

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President, or legislated as such by the Congress of the Philippines, may continue to

be supervised by the agency charged with its administration.

SEC. 24. Maintenance of MPA; Liability of Local Officials. - If a coastal LGU
fail to maintain an existing MPA under the jurisdiction of the LGU, the mayor, the
vice mayor and the members of the sanggunian of the concerned LGU shall be liable
for prosecution under Republic Act No. 3019, otherwise known as the “Anti-Graft
and Corrupt Practices Act” and Republic Act No. 6713, otherwise known as the “Code
of Conduct and Ethical Standards for Public Official and Employees” and other applicable

laws.

SEC. 25. Ecotourism Zone. - For purposes of conserving the flora and fauna in
the Davao Gulf as well as promoting the growth and strengthening the local
economy, the Island Garden City of Samal shall be declared an ecotourism zone.
Further, there shall be a (20) twenty meter easement from the low water line along

the coast of the Island Garden City of Samal as determined by the DENR.

The Secretary of Tourism shall include in the department's program the
implementation of this section, the funding of which shall be included in the annual
General Appropriations Act. The Secretary of Tourism may also utilize internally

generated funds of the department for the implementation of this section.

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CHAPTER IV
CLARIFICATION OF JURISDICTION

SEC. 26. Bookkeeping, Reportorial Requirements and Customs. - All
enterprises in the Freeport Zone shall keep regular and accurate records of their
transactions, and maintain books of accounts and allied documents in accordance
with the bookkeeping rules and regulations prescribed by the Bureau of Internal
Revenue (BIR) and the BOC upon prior notification and coordination with the
Authority. For this purpose, the Authority, at its instance or jointly with the BIR or
the BOC, is authorized to conduct, at any time during office hours, any audit,
checking or inventory count for the verification and reconciliation of the records

with the inventory of articles in the Freeport Zone.

The provisions of Title IX on the Requirements of Keeping Books of Accounts
and Records, Title X on the Statutory Penalties and Offenses, both of the NIRC, as
amended, as well as their implementing rules and regulations, shall apply to all
enterprises in the Freeport Zone.

Persons, baggage, vehicles and cargo entering and leaving the Freeport Zone
are subject to search by BOC officials as a condition to enter or leave the Freeport
Zone. BOC officials are authorized to examine any merchandise held by the

enterprises in the Freeport Zone during regular business hours.

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The Authority may secure the assistance of or coordinate with BOC officials
when arresting persons in the Freeport Zone for violations of customs laws for
which the arrest is authorized concerning articles in the customs territory destined
to the Freeport Zone or articles which have been removed from the Freeport Zone

and destined to the customs territory.

SEC. 27. Security in the Davao Gulf Special Economic and Freeport Zone. -
The Philippine National police (PNP), Philippine Coast Guard (PCG) and the
‘Armed Forces of the Philippines (AFP), in coordination with the Authority, shall
provide a special patrol unit for the security of the Freeport Zone. The number of

officers shall be determined by the PNP, PCG, and AFP.

SEC. 28. Auditor. - The Commission on Audit (COA) shall appoint a
representative who shalll be a full-time auditor of the Authority and its subsidiaries,
and assign such number of personnel as may be necessary to assist the COA
representative in the performance of duties. The assigned auditor and personnel of
COA shall render an annual report to the President of the Philippines and to

Congress on the business activities, transactions and operations of the Authority.

SEC. 29. Separability Clause. - If any provision or part thereof is declared
unconstitutional, the remainder of this Act or any provision not affected shall

remain in full force and effect.

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SEC. 30. Repealing Clause. - All law, presidential decrees, executive orders,
rules and regulations or parts thereof inconsistent with the provisions of this Act are

hereby repealed, amended or modified accordingly.

SEC. 31. Effectivity. - This Act shall take effect immediately after its

publication in the Official Gazette or in a newspaper of general circulation.

Approved,

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