Republic of the Philippines
RECEIVE, “A
HOUSE OF REPRESENTATIVES 3 nov? ig
Quezon City
TINE: ie
SEVENTEENTH CONGRESS
First Regular Session

House Bil. 4462

Introduced by Representative Jose Enrique S. Garcia 111

EXPLANATORY NOTE

It is hereby declared norm and policy of the State to pursue an independent
foreign policy, the paramount consideration shall be to secure national sovereignty,
territorial integrity, national interest, and the right to self-determination. Further,
the State to actively encourage, promote, induce and accelerate a sound and balanced
Industrial, economic and social development of the country. In order to provide jobs
to the people especially those in the rural areas, increase productivity and individual
and family income, and thereby improve the level and quality of living conditions
through the establishment, among others, of special economic zones in suitable and
strategic locations in the country and through measures that will attract legitimate
and productive foreign investments.

Itis also the declared principle and Tenet of the State to develop a self-reliant
and independent national economy, effectively encourages private enterprise, and
provides incentives to needed investments with the determined purpose of
autonomy, equitable distribution of opportunities, income, and wealth; a sustained
increase in the amount of goods and services produced by the nation for the benefit
of the people; and an expanding productivity as the key to raising the quality of life
for all, especially the underprivileged.

This avant-garde and progressive measure is a first for the country and in the
south-east Asian Region. The establishment and creation of a SPECIAL ECONOMIC
DEFENSE ZONE, a specialized industry granted with a special and independent
authority to readily compete with international arena in terms of, among others,
CONVENTIONAL ARMS and/or WEAPONS research, development, production and
distribution, and other related products for military and defense. Reinvigorating the
statutory mandate in Republic Act No. 7898, otherwise known as “An Act Providing
for the Modernization of the Armed Forces of the Philippines and for other



The development of a self-reliant and credible strategic

The SPECIAL ECONOMIC DEFENSE ZONE is a necessary undertaking,
timely and an eamest patriotic effort to synergize government and _ private
enterprises, domestic and international, to have a globally competitive centralized
government sanctioned arms industry that produces conventional weapons and
equipment, for domestic use and export. It will bolster our country’s innate
capability, competence and proficiency in the field of arms research, development
and manufacturing. Laying credence and support to “TIWALA SA GAWANG
PILIPINO”

Moreover, in our pursuit to establish and make available a venue and attract
more qualified domestic and foreign investors with appropriate incentives, such as
among others, by providing the exceedingly competitive investment climate and
facility, safe and protected zone, opportunities for more investment portfolios, and
increase in financial capability of the designated authority.

This bill will highly strengthen and greatly fortify our economic and defense
capability and viability with the international or global market and would elevate the
country into a diverse and multi-investment hub.

The passage of this timely and nationalistic bill is earnestly sought.

REP. JOSE ENRIQUE S. GARCIA III


ounwene

Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City
SEVENTEENTH CONGRESS

First Regular Session

House BiftNo, 4462 _

). Garcia UT

by Representative Jose Enrig

AN ACT CONVERTING THE GOVERNMENT ARSENAL LOCATED
IN Camp Gen. Antonio Luna, LAMAO, MUNICIPALITY OF LIMAY,
PROVINCE OF BATAAN, INTO, AND CREATING AND ESTABLISHING
THE SPECIAL ECONOMIC DEFENSE ZONE (SpEDZ), creating for this
purpose SPECIAL ECONOMIC DEFENSE ZONE AUTHORITY (SpEDZA),
appropriating funds therefor and for other purposes.

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

Section 1.Short Title.- This Act shall be known as the "SPECIAL
ECONOMIC DEFENSE ZONE (SpEDZ) Act of 2016”.

Section 2. Declaration of Policy. — It is hereby declared the policy
of the State to pursue an independent foreign policy, the paramount
consideration shall be to secure national sovereignty, territorial
integrity, national interest, and the right to self-determination. Further,
the State to actively encourage, promote, induce and accelerate a sound and balanced
Industrial, economic and social development of the country. In order to provide j
to the people especially those in the rural area
and family income, and thereby improve the level and quality of living conditions
through the establishment, among others, of special economic zones in suitable and
strategic locations in the country and through measures that will attract legitimate
and productive foreign investments.

Section 3. Conversion of the Government Arsenal (GA) into the
Special Economic Defense Zone (SpEDZ) - The existing GOVERNMENT
ARSENAL (GA) of the Philippines located in the Camp Gen. Antonio Luna, LAMAO,
MUNICIPALITY OF LIMAY, PROVINCE OF BATAAN, shall be converted INTO a
SPECIAL ZONE, AND thereby CREATING AND ESTABLISHING THE SPECIAL
ECONOMIC DEFENSE ZONE (SpEDZ). The SpEDZ shall cover the

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Municipality of LIMAY, Province of Bataan. And all other areas which may be
declared as part of SpEDZ in compliance with section 4(¢).

Section 4. Governing Principles. - ‘The SpEDZ shall be managed and

operated under the following principles:

(a) Within the framework and limitations of the Constitution, REPUBLIC ACT
NO. 7898 otherwise known as “AN ACT PROVIDING FOR THE
MODERNIZATION OF THE ARMED FORCES OF THE PHILIPPINES AND
FOR OTHER PURPOSES”, REPUBLIC ACT NO. 10349, otherwise known as
“AN ACT AMENDING REPUBLIC ACT NO. 7898, ESTABLISHING THE
REVISED AFP MODERNIZATION PROGRAM AND FOR OTHER
PURPOSES”, applicable provisions of the Local Government Code, the SpEDZ
shall be developed into and operated as a decentralized, self - reliant and self-
sustaining industrial, commercial - trading, defense/military - Industrial,
defense/military - Manufacturing, defense/military — Research, Development
and Engineering _defense/military - financial and investment center with
suitable residential areas:

(b) The SpEDZ 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 of the Province of Bataan and its neighboring
towns and cities;

(©) The SpEDZ may establish mutually beneficial economic defense relations
with other entities or enterprises within the country or with foreign entities or
enterprises;

(@) Foreign citizens and companies owned by non - Filipinos may whatever
proportion may set up enterprises In the SpEDZ either by themselves or in
Joint venture with Filipinos in any sector of industry, international trade and.
commerce within the SpEDZ territorial jurisdiction;

(e) The SpEDZ shall be managed and operated as a separate customs
territory ensuring free flow or movement of necessary goods and products;
and capital within, into and out of its territory;

() The SpEDZ 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 SpEDZ to the other parts of the Philippine territory 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;


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(g) The areas comprising the SpEDZ may be expanded or reduced when
necessary. For this purpose, the SpEDZ Authority which will be created
under this Act, with the concurrence of the DND, DILG, AFP, PNP and the
appropriate and affected local government units (LGU’s) and approval of the
board, in accordance and in compliance with existing national laws and local
ordinances shall have the power to acquire, procure, and/or increase, expand
either by purchase, negotiation or condemnation proceedings, any private or
public lands and/or their respective water territories, if any for the following
purposes: (1) consolidation of lands for SpEDZ. development; (2) acquisition
of right of way or access to the SpEDZ; and if necessary and appropriate (3)
the protection and safeguard of watershed areas and the maintenance and
improvement of its water yield and natural assets valuable to the prosperity of
the SpEDZ and the respective LGU, the effective management of solid and
water waste in compliance with existing national laws and local ordinances,
and its impact to adjacent areas within the local government concerned. The
municipal waters of up to 15 kilometers from the low water mark area of the
municipalities concerned shall be deemed included in the territorial waters of
the SpEDZ.

The LGU and together with SpEDZ shall provide for AN IMMEDIATE
AND RESPONSIVE MECHANISM TO UNDERTAKE BEST
MANAGEMENT PRACTICE THROUGH COASTAL ZONE
MANAGEMENT PROGRAM to address THE ABUSE AND inappropriate
exploitation of the natural environment and disruptive land use within the
jurisdiction of the SpEDZ.

(h) Products and Goods researched and developed, engineered manufactured

by the SpEDZ FAB 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 SpEDZ
Authority, together with DND, DILG, AFP, PNP, the Philippine Economic
Zone Authority (PEZA), the Bangko Sentral ng Pilipinas (BSP), the
Department of Finance (DOF), the Bureau of Customs (BOC) and the
Department of Trade and Industry (DTI) 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 industries included in such negative list shall not be
allowed to sell their products locally; and

(i) The defense of the FAB and the security of its perimeter fence shall be the
responsibility of the National Government in coordination with the SpEDZ,
Authority and the LGUs.


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Section 5. Fiscal Incentives. - ‘The registered enterprises operating within
the SpEDZ may be entitled to the existing pertinent fiscal incentives as provided for
under Republic Act No. 7916, as amended by Republic Act No. 8748, also known as
the Special Economic Zone Act of 1995, or those provided under Executive Order No.
226, as amended, otherwise known as the Omnibus Investment Code of 1987; and/or
those that may be further granted as the need and necessity arises by the appropriate
government department, agency or office.

Section 6. Imposition of a Tax Rate of Five Percent (5%) on Gi
Income Earned. - No taxes, local and national, shall be imposed on busi
establishments operating within the SpEDZ. In lieu thereof, said business
establishments shall pay a five percent (5%) final tax on their gross income earned in
the following percentages:

ross

(a) One per centum (1%) to the National Government;

(b) One per centum (1%) to the Province of Bata

0;

(0) One per centum (1%) to the treasurer's office of the Municipality of Limay;
andzavuphit

(a) Two per centum (2%) to the Authority of the Special Economic
Defense Zone of Bataan.

Section 7. Incentive to Investors. - Any foreign national who invests an
amount of Two hundred thousand US dollars (US$200,000.00), either in cash
and/or equipment, in a registered enterprise shall be entitled to an investor's
visa: Provided, That he has the following qualifications:

(a) Heis at least eighteen (18) years of age;

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

(c) He is not afflicted with any loathsome, dangerous or contagious disease;
(d) He has not been institutionalized for any mental disorder or disability.

(c) He can establish by verifiable and credible evidence his financial capability
and capacity

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



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Section 8. Administration, Implementation and Monitoring of
Incentives. - For the proper administration, implementation and monitoring of tax
incentives provided under this law, the following are herein mandated: (a) The
SpEDZ Authority (SpEDZA) shall be responsible for the administration,
management, enforcement and implementation of the incentives granted to its
respective duly registered entities and enterprises. Among others, it shall adopt and
implement systems and procedures affecting defense/military trade and the
appropriate customs policies. The BOC shall set up and establish a custom's
controlled area outside the gate of the SpEDZ to facilitate payment of taxes on goods
entering the Philippine customs territory; and (b) The SpEDZ Authority
(SpEDZA) shall likewise submit to the DOF its annual tax expenditures based on
the tax incentives granted to its registered enterprises. The DOF, for its part, shall
create a single database of all incentives provided by the governing authority. The
DOF and the DND shall, jointly, monitor the incentives granted to the duly registered
entities and enterprises and submit all annual report/s to the President.

Section 9. Extension of Period of Availment. - The availment period of
the incentives provided herein may be extended by SpEDZ Authority (SpEDZA),
in the event that the duly registered entities and enterprises has suffered operational
force majeure that has impaired its viability, or equivalent thereto.

Section 10. Duration of Incentives.- The duly registered entities
es registered with SpEDZ he INCOME TAX HOLIDAY (ITH) or
the NET OPERATING LOSS CARRYOVER (NOLCO) granted by the authority prior
to the availment of the five percent (5%) GROSS INCOME EARNED (GIE). Fiscal
incentives under this Act shall be terminated after a cumulative period of twenty (20)
years from date of registration or start of commercial operation, whichever is
applicable, except that it could be extended with regard to industries deemed
indispensable to national development and interest. The industries exempted from
this provision shall be determined by the SpEDZ Authority (SpEDZA).

Section 11. Creation of the Special Economic DEFENSE ZONE
Authority. (SpEDZA). - There is hereby created a specialized and independent
body corporate to be known as the A Special Economic Defense Zone
Authority, hereafter referred to as the SpEDZA which shall manage and operate
the SpEDZ, in accordance with the provisions of this Act.

Section 12. Principal Office of the SpEDZA.- The SpEDZA shall
maintain its principal office in Camp Gen. Antonio Luma, Municipality of Lamao,
Province of Bataan, but it may establish liaison offices within the Philippines as may
be necessary for the proper conduct of its business.

Section 13. Powers and Functions of the SpEDZA.- The SpEDZA
shall have the following functions:


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. To adopt, alter, use a corporate seal, to contract, lease, buy, sell,

acquire, own and dispose properties of whatever nature;

. 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;

.. To operate, administer, manage, develop, m accordance with Executive

Order No. 525, as amended, the SpEDZ according to the principles
and provisions set forth in this Act and to coordinate with the LGUs for
the development plans, activities and operation of the SpEDZ;

. To recommend to the President the issuance of a proclamation to fix

and delimit the site of the SpEDZ;

. To register, regulate and supervise the entities and enterprises in the

SpEDZ in an competent, efficient and decentralized manner, subject
to existing laws;

‘To coordinate with the LGUs and exercise general supervision over the
development plans, activities and operations of the SpEDZ;

. To Establish, administer, operate and maintain the Government

Arsenal;

. To Formulate plans and programs to achieve self-sufficiency and self-

reliance in small arms, mortars and other advancer weapons and
munitions research development and production;

To research, design, develop, engineer, manufacture, procure, stockpile
and allocate arms, mortars and other weapons and munitions without
the necessity of obtaining any permits or licenses;

To create, develop, devise ways and means for the efficient and
proficient mobilization of civilian industry to augment the production
of the Government Arsenal in times of emergency;

k. To authorize or undertake, on its own or through others, and to

regulate the establishment, construction, operation and maintenance of
public utilities, services, and infrastructure in the SpEDZ such as
shipping, barging, stevedoring, cargo, handling, hauling, warehousing,
storage of cargo, port services or concessions, piers, wharves,
bulkheads, bulk terminals, mooring areas, storage areas, roads,
bridges, reclamation projects, terminals, conveyors, water supply and
storage, sewerage, drainage, airport operations in coordination with the
Civil Aeronautics Board, and 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

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the SpEDZ shall be given priority in the awarding of contracts,
franchises, licenses, or permits for the establishment, operation and
maintenance of utilities, services and infrastructure in the SpEDZ;

To license, set fees, regulate and undertake the establishment,
operation and maintenance of utilities, other services, educational and
medical Institutions and infrastructure in the SpEDZ such as, but not
limited to, heat, light and power, water supply, telecommunications,
mobile, internet and other data facilities, transport, toll roads and
bridges, port services, etc., and to fix just, reasonable and competitive
rates, fares, charges and prices thereof;

.. To construct, acquire, own, lease, operate and maintain on its own or

through contracts, franchises, licenses, bulk purchase from the private
sector and build - operate - transfer scheme, or under a Joint venture
with the private sectors, any or all of the public utilities and
infrastructure required or needed for the operation and development of
the SpEDZ, in coordination with appropriate national and local
government authorities and in conformity with applicable laws and
thereon;

. To raise or borrow, within the limitation provided by law, adequate and

necessary funds from local or foreign sources, 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 secnre the same
by a guarantee, pledge, mortgage, deed of trust, or an assignment of all
or part of its property or assets;

. To provide security for the SpEDZ in coordination with the national

and local governments. For this purpose, the SpEDZ may establish
and maintain its security forces and firefighting capability or hire
others to provide the same. In the event that an assistance of the
military force is necessary, it shall not interfere in the internal affairs of
the SpEDZ except to provide the necessary security and defense, and
their expenses shall be borne by the National Government;

. To protect, preserve, maintain and develop the virgin forests, beaches,

coral and coral reefs, and maintain ecological balance within the FAB.
For this purpose, the rules and regulations of the Department of
Environment and Natural Resources (DENR) and other government
agencies involved in the above functions shall be implemented by the
SpEDZ;

. To create, operate and/or contract to operate such functional units or

offices of the SpEDZ as it may deem necessary;

‘To issue certificates of origin for products manufactured or processed
in the SpEDZ;


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s. To Issue rules and regulations consistent with the provisions of this Act
as may be necessary to implement and accomplish the purposes,
objectives and policies provided herein;

t. To exercise such powers as may be essential, ncecssary or incidental to
the powers granted to it hereunder as well as those that shall enable It
to carry out, implement and accomplish the purposes, objectives and
policies of this Act;

u. To be vested with other powers enjoyed or exercised by other free port
zone authorities; and

v. To perform such other functions as may be provided by law.

Section 14. Board of Directors of the SpEDZ.- The powers of the
SpEDZA shall be vested in and exercised by a Board of Directors, hereinafter
referred to as the Board, which shall be composed of the following:

(a) The chairman who shall, at the same time, be the administrator of the
SpEDZA;

(b) A vice chairman who shall come from among the members of the Board;
() Members consisting of:

i)

Two (2) representatives from the National Government form the

DND and DILG, respectively;

2) One (1) representative from the Province of Bataan;

3) One (1) representative from the district covering the site of the
SpEDZA;

4) One (1) representative from the Municipality of Lamao, Province
of Bataan;

5) One (1) representative from the AFP currently enlisted or in
active service;

6) One (1) representative from the PNP currently enlisted or in
active service;

7) One (1) representative from the domestic investors;

8) One (1) representative from the foreign investors; and

9) One (1) representative from the workers working in the SpEDZ.

The chairman and the members of the Board, shall be appointed by the
President of the Philippines to serve for a term of six (6) years, unless sooner
separated from service due to death, voluntary resignation or removal for
cause. In case of death, resignation or removal for cause, the replacement
shall serve only the unused portion of the term.



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Except for the representatives of the business and labor sectors, no person
shall be appointed by the President of the Philippines as a 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:
economics, business, public administration, law, management, military
science, or their equivalent, and with at least ten (10) years relevant working
experience preferably m the field of management or public administration.

The members of the Board shall each receive per diem at rates to be
determined by the Department of Budget and Management (DBM) in
accordance with existing rules and regulations: Provided, however, that, the
total per diem collected each month shall not exceed the equivalent per diem
for four (4) meetings.

Section 15. 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 SpEDZ in accordance with the
policies of the Board;

(b) To establish the internal organization of the SpEDZ under such
conditions that the Board may prescribe;

(© To submit an annual budget and necessary supplemental budget to the
Board for Its approval;

(d) 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;

(c) To submit to the Board for its approval policies, systems, procedures, rules
and regulations that are essential to the operation of the SpEDZ;

() To create a mechanism m coordination with relevant agencies for the
promotion of industrial peace, the protection of the environment, and the
advancement of the quality of life m the SpEDZ; and

(g) To perform such other duties as may be assigned to him by the Board or
which are necessary or incidental to his offi

Section 16. Organization and Personnel.- The SpEDZA Board of
Directors shall provide for an organizational structure and appoint employees,
subject to the civil service law. Upon the recommendation of the chairman -
administrator and with the approval of the Secretary of the DTI, the Board shall
appoint and fix the remuneration and other emoluments of its officers and
employees in accordance with existing laws on compensation and position

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classification: Provided, That the Board shall exercise administrative supervision on
their employees.

The officers and employees of the SpEDZA, 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 SpEDZA, subject to civil service laws and
regulations, shall be removed or suspended except for cause, as provided by law.

Section 17.Special Labor Center.- A special Labor center shall be
established within the SpEDZ. This Special center shall endeavor to and be
responsible to pro-actively play a vital role in the studying and amicably settling
professional, labor relations issues and disputes, interpretation of employment
service contracts, and monitoring work, work place, hygiene and safety standards
within the SpEDZ most especially in the duly registered entities and enterprises.
The Special Labor Center shall comprise a labor office, an industrial health and
safety office, an inspection/investigative and disputes office, and an enforcement
office.

Section 18.Banking Rules and Regulations.— For financial
transactions within the SpEDZ the existing banking laws and rules/regulations of
the BSP shall apply to banks and financial institutions to be established within the
SpEDZ.

Section 19. Remittances.- In the case of foreign investments, a duly
registered entity or enterprise within the SpEDZ shall have the right to remit
earnings from the investment in the currency m which the investment was originally
made and at the exchange rate prevailing at the time of remittance, subject to the
provisions of Section 74 of Republic Act No. 265, as amended.

Section 20. Applicability Clause. - The provisions of Sections 30-41 of
Republic Act No. 7916, otherwise known as "The Special Economic Zone Act of
1995", as amended, shall likewise apply to the SpEDZ.

Section 21. Capitalization. - The SpEDZ shall have an authorized capital
stock of THREE billion pesos (Php3,000,000,000.00), with option to. increase
capitalization upon the discretion of the SpEDZ, divided into thirty thousand
(30,000) no - par shares fully subscribed and paid up by the Republic of the
Philippines with: (a) All lands embraced and covered by the SpEDZ, as well as
permanent improvements and fixtures upon proper inventory not otherwise
alienated, conveyed, or transferred to another government agency; (b) All other
assets which the President may transfer to the SpEDZ as part of the equity
contribution of the government; and (c) Cash contribution by the government in the
amount of Five hundred million pesos (Php500,000,000.00) a year for the next five



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(5) years, which is hereby appropriated out of any fund in the National Treasury not
otherwise appropriated.

Section 22. Supervision and Control. - For purposes of policy direction
and coordination, the SpEDZ shall be under the direct control and supervision of
the Office of the President of the Philippines.

Section 23. Regional Development Council.- The SpEDZ_ shall
determine the development goals for the SpEDZ within the framework of national
development plans, policies and goals. The administrator shall, upon approval by the
Board, submit the SpEDZ plans, programs and projects to the Regional
Development Council for inclusion and inputs to the overall regional development
plan.

Section 24. Relationship with Local Government Units. - Except as
herein provided, the Municipality of Limay in the Province of Bataan shall operate
and function in accordance with the, framework of the 1987 Constitution, Local
Government Code of 1991, and REPUBLIC ACT NO. 7898 otherwise known as “AN
ACT PROVIDING FOR THE MODERNIZATION OF THE ARMED FORCES OF THE
PHILIPPINES AND FOR OTHER PURPOSES”, REPUBLIC ACT NO. 10349,
otherwise known as “AN ACT AMENDING REPUBLIC ACT NO. 7898,
ESTABLISHING THE REVISED AFP MODERNIZATION PROGRAM AND FOR
OTHER PURPOSES”, applicable provisions of the Local Government Code, the
SpEDZ

In case of any conflict between the SpEDZ and the local government units
(LGUs) and the National Government (NG) on matters affecting the SpEDZ other
than national defense and security matters, the decision of the SpEDZ shall prevail.

Section 25. Legal Office. - The SpEDZA shall have and maintain its own
internal legal office, appropriate in number under the supervision of the Government
Corporate Counsel. When the exigencies of its businesses and operations demand,
the SpEDZA may engage the services of an outside counsel either on a case to case
ona fixed retainer basis.

Section 26. Interpretation/Construction. - The powers, authorities and
functions that are vested in the SpEDZA, are intended to establish, national self-
sufficiency and self-reliance in the advancement of and protection of National
Integrity, decentralization of governmental functions and authority and promote an
efficient and effective working relationship between the SpEDZA, the National
Government and the LGU.

Section 27. Audit. - The Commission on Audit shall appoint a full - time
auditor in the SpEDZA or may assign such number of personnel as may be
necessary in the performance of their functions.

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Section 28. Transitory Provisions. - All properties, assets, funds, rights,
obligations, and liabilities of the GOVERNMENT ARSENAL are hereby transferred
to the SpEDZA, except for the liabilities that are not properly accounted for as per
the reports coming from the Commission on Audit, which shall be retained by the
PEZA.

The SpEDZA shall be responsible for the operations, administration,
management and development of the SpEDZ. The SpEDZA shall effect the transfer
herein provided m a manner that will ensure the least disruption of ongoing
programs of the Government Arsenal. The qualified and necessary personnel of the
Government Arsenal shall be transferred to and absorbed by _ the
SpEDZA; Provided, That the tenure, rank, salaries and privileges of such personnel
are not reduced or adversely affected. The personnel whose services are not retained
by the SpEDZA shall be granted separation pay and retirement and other benefits
they are entitled to under existing laws but in no case shall the separation pay be less
than the current one (1) month salary for every year of service.

In the period prior to the actual assumption of duties by the SpEDZA, all
officers and employees of the Government Arsenal shall continue to exercise their
functions and discharge their duties and responsibilities. The Government Arsenal
shall be deemed abolished upon the organization of the SpEDZA.

Section 29. Implementing Rules and Regulations. - The DTI, the DOF,
DND, the LGU and the Department of the Interior and Local Government shall
formulate the implementing rules and regulations of this Act within ninety (90) days
after its approval. Such rules and regulations shall take effect fifteen (15) days after
their publication in a newspaper of general circulation in the Philippines.

Section 30. Separability Clause. - If any provision of this Act shall be
held unconstitutional or invalid, the other provisions not otherwise affected shall
remain m full force and effect.

Section 31. Repealing Clause.— Republic Act No.1884,otherwise known.
as “An Act to Establish A Government Arsenal, Provide For its Operation and for
Other Purpose” are hereby amended. All laws, executive orders or issuances or any
part thereof which are inconsistent herewith are hereby repealed or amended
accordingly.

Section 32. Effectivity Clause. - This Act shall take effect after fifteen (15)
days following its complete publication in the Official Gazette or in two (2)
newspapers of general circulation whichever is earlier

APPROVED.