FOURTEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
First Regular Session 
) 
) 
) 
SENATE 
S.B.No. 1422 
Introduced by Senator Loren Legarda 
EXPLANATORY NOTE 
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This bill seeks to create an economic zone in Southern Palawan, particularly 
in the municipalities of Bataraza, Brookes Point and Balabac to encourage the 
development of the countryside into agro-industrial, commercial, tourist, banking, 
investment and financial center. 
The prospect for the growth of Southern Palawan as the country's major 
trader's destination is promising. Due to its strategic location, it can serve as 
gateways to other markets in the Asian region. As shown in an article found at the 
official website of the Mindanao Economic Development Council, Kudat, a town 
located on the coast of the northernmost part of Sabah, is about 137 nautical miles 
away from Brooke's Point, a municipality along the southeastern section of 
mainland Palawan. Traders from both areas can reach each other in approx;.mately 
12 hours voyage by sea. These two proximate municipalities can serve as strategic 
gateways to bigger markets. Kudat is seen as an entry point for Philippine traders to 
expand trade to neighboring areas in Labuan, Sandakan, Kota Kinabalu and even 
Brunei Darussalam. Brooke's POhlt, on the other hand, could serve as gateway for 
Malaysian traders to other parts of Southern Palawan, particularly the 
municipalities of Bataraza, Balabac, Rizal, and Quezon. 
Based on initial prospects, Palawan can potentially trade marine products, 
corn, fruits, coconut, virgin coconut oil, cashew nuts and seaweeds while Kudat can 
bring in noodles, cooking oil and other grocery items. 
Brooke's Point is the only municipality in Southern Palawan which has a port 
facility that can accommodate ~maller type of ocean-going vessels. In fact, the 
proposed Brooke's Point- Kudat Shipping Services has recently been adopted as a 
priority project of the BIMP-EAGA Transport, Infrastructure, leT Development 
(TIID) Cluster during the 3rd Meeting of the Cluster held 27-28 March 2006, in 
Pontianak, Indonesia. 
With its vast territory - total land area is 1.4 million hectares, considered the 
Philippine's largest province - and pristine environment - it hosts two World 
Heritage sites: the Puerto Princesa Subterranean River National Park (1999) and the 
Tubbataha Reef Marine Park (1993) - the province is a major tourist destination. But 
it is its strategic location for trade and commerce that must likewise be tapped to 
fully maximize its growth and development. 
This bill aims to do just that by offering a set of incentives to attract foreign 
investors in the Southern Palawan, to wit: 
1 


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


FIFTEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
First Regular Session 
) 
) 
) 
SENATE 
S.B. No.1422 
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III 
JUL 13 P 4 :14 
RECEIVEO BY:F 
Introduced by Senator Loren Legarda 
AN ACT 
CREATING A SPECIAL ECONOMIC ZONE AND FREEPORT IN SOUTHERN 
PALAWAN, CREATING FOR THIS PURPOSE THE SOUTHERN PALAWAN 
ECOZONE 
AND 
FREEPORT 
AUTHORITY, 
APPROPRIATING 
FUNDS 
THEREFOR, AND FOR OTHER PURPOSES 
, 
Be it enacted by the Senate and the House of Representatives of the Philippines in 
Congress assembled: 
1 
SECTION 1. Short Title. - This Act shall be known as the "Southern 
2 
Palawan Special Economic Zone and Free Port Act of 2010". 
3 
4 
SEC. 2. Declaration of Policy. - it is hereby declared the policy of the State to 
5 
actively encourage, promote and accelerate a so~nd and balanced industrial, 
6 
economic and social development of the country in order to provide jobs to the 
7 
people, increase productivity aJ}d incomes, and improve the level and quality of 
8 
living conditions through the establishment of special economic zones and free ports 
9 
in suitable and strategic locations in the country and through measures that shall 
. 10 
effectively attract legitimate and productive foreign investments. It is likewise the 
11 
policy of the State to enhance regional economic cooperation as means of bolstering 
12 
the country's own industrial development and to establish facilities with which such 
13 
cooperation can materialize. 
14 
15 
SEC. 3. Creation of the Southern Palawan Special Economic Zone and Free 
16 
Port. - in the pursuit of the foregoing declared policy, there is hereby established a 
17 
special economic zone and free port in Southern Palawan, to be known as the 
18 
Southern Palawan Economic Zone and Free Port herein referred to as the Zone, 
19 
which shall cover the municipalities of Balabac, Bataraza and Brooke's Point. 
20 
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SEC. 4. Governing Principles. - The Southern Palawan Economic Zone shall 
2 
be managed and operated by the Southern Palawan Special Economic Zones and 
3 
Free Port Authority herein created and referred to as SPEZA, under the following 
4 
principles: 
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6 
a. Under the framework and limitations of the Constitution and applicable 
7 
provisions of the Local Government Code, the Zone shall be developed into 
8 
and operated as decentralized, self-reliant and self sustaining industrial, 
9 
commercial/ trading, agro-industrial, tourist! recreational, banking, financial 
10 
and investment center with the corresponding residential areas in order to 
11 
create employment opportunities in and around and to effectivity encourage 
12 
and attract legitimate and productive foreign investments; 
13 
14 
b. Except as otherwise provided herein, the local government units totally or 
15 
partially embraced within the Zone shall retain and maintain their basic 
16 
autonomy and identity. The municipalities of Balabac, Baltaraza and Brooke's 
17 
Point shall operate and function in accordance with Republic Act No. 7160, 
18 
otherwise known as the Local Government Code of 1991, insofar as the areas 
19 
within their respective jurisdiction covered in this Act are concerned 
20 
21 
The Zone shall be managed and operated as a separate customs territory 
22 
outside the customs territory of the Philippines to ensure and facilitate the free flow 
23 
or movement of machinery, good,S, articles and capital within, into and exported out 
24 
of the Zone. However, exportation or removal of goods, articles and capital from the 
25 
Zone to other parts of the Philippine territory shall be subject to customs duties and 
26 
taxes under the Customs and Tariff Code and other relevant tax laws of the 
27 
Philippines. 
28 
29 
The areas comprising the Zone may be expanded or reduced when necessary. 
30 
For this purpose, the SPEZA, in consultation with the local government units, shall 
31 
have the power to acquire either by purchase, negotiation or condemnation 
32 
proceedings, any private lands within or adjacent to the Zone for the following 
33 
purposes: 
• 
34 
a. Consolidation of lands for zone development; 
35 
b. Acquisition of right of way to the Zone; and 
2 


1 
c. The protection of watershed areas and natural assets valuable to the 
2 
prosperity of the Zone. 
3 
4 
The Zone shall be provided with transportation, telecommunications and 
5 
other facilities needed to attract legitimate and productive foreign investments, 
6 
generate linkage with industries and create employment opportunities for the 
7 
people of the province of Palawan. 
8 
9 
The Zone may establish :r;nutually beneficial economic relations with other 
10 
entities or enterprise within the country or, subject to the administrative guidance of 
11 
the Department of Foreign Affairs (DFA), the Philippine Economic Zone Authority 
12 
(PEZA) and! or the Department of Trade and Industry (DTI), with foreign entities or 
13 
enterprises. 
14 
15 
Foreign citizens and companies owned by non-Filipinos may set up 
16 
enterprise in the Zone, either by themselves or in jOint venture with Filipinos in 
17 
whatever proportion in any sector of industry, international trade and commerce 
18 
within the Zone. 
19 
• 
20 
Goods manufactured by a Zone enterprise shall be made available for 
21 
immediate retail sale in the domestic market, subject to the payment of 
22 
corresponding taxes on raw materials and other regulations that may be formulated 
23 
by the SPEZA together with the PEZA, the Bureau of Customs and the DTI. 
24 
However, in order to protect the domestic industry, there shall be a negative list of 
25 
industries that will be drawn up and regularly updated by the PEZA. Enterprises 
26 
engaged to industries included in such negative list shall not be allowed to sell their 
27 
products locally. 
28 
29 
The defense of the Zone and the security of its perimeter fence shall be the 
30 
responsibility of the national government in coordination with the SPEZA and local 
31 
government units. 
32 
33 
SEC.5. Incentives. - Investors and business enterprises within the ZONE 
34 
shall be entitled to the following ihcentives: 
35 
3 


, . 
, 
~. 
1 
a. Resident Status and Visa. Any foreign investor who establishes a business 
2 
enterprise within the Zone and who maintains capital investment of not less 
3 
than one hundred fifty thousand United States dollars (US$150,OOO.OO) shall 
4 
be granted, along with his or her spouse, dependents, and unmarried 
5 
children below twenty-one (21) years of age, permanent resident status 
• 
6 
within the Zone and freedom of ingress and egress to and from the Zone 
7 
without any need of any special authorization from the Bureau of 
8 
Immigration. Working Visas renewable every two (2) years shaH be issued to 
9 
foreign executives and foreign technicians with highIy specialized skills 
10 
which no Filipino possesses, as certified by the Department of Labor and 
11 
Employment. 
12 
The foregoing is without prejudice to a foreigner acquiring permanent 
13 
residence status in the Philippines in accordance with the applicable 
14 
immigration, retirement, and other related laws. 
15 
16 
b. Fiscal Incentives. Business' establishments within the Zone shall be entitled to 
17 
the existing fiscal incentives as provided for under Presidential Decree No. 
18 
66, the law creating the Export Processing Zone Authority (EPZA), or those 
19 
provided under Book IV of Executive Order No. 226, otherwise known as the 
20 
"Special Economic Zone Act of 1995", as amended by RA 8748. 
21 
22 
c. Taxation. Except for real property taxes on land owned by developers, no 
23 
taxes, local and national induding final withholding taxes on dividend to a 
24 
. business establishment's parents company and branch profit remittances to a 
25 
business establishment's head office, shall be imposed on business 
26 
establishments operating within the Zone. In lieu thereof, said business 
27 
establishments shall pay to the national government a tinal tax of eight 
28 
percent (8%) of the net taxable income as determined in accordance with the 
29 
provisions of the National Internal Revenue Code, as amended, to be divided 
30 
as follows: 
31 
(1) Four percent (4%) shall be paid immediately to the National Government; 
32 
(2) One percent (1 %) to the Province of Palawan; and 
33 
(3) One percent (1 %) to the municipalities of Balabac, Bataraza and Brooke's 
34 
Point; 
35 
(4) Two percent (2%) to the Southern Palawan Special Economic Zone and 
36 
Free Port Authority which shall be created under this Act: Provided, 
4 


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however, That the preferential tax herein granted shall not apply to 
offshore transactions as well as transaction within the Zone itself with 
SPEZA investors and residents: Provided further, That the domestic 
manufacturing firms or foreign firms and their local subsidiaries that 
export more than thirty percent (30%) of their total production in terms of 
volume per year to the customs territory of the Philippines shall not be 
allowed to enjoy the income tax incentive herein granted: Provided 
furthermore, That the final tax of eight per centum (8%) of net taxable 
income may only be increased by Congress after ten (10) years from the 
effectivity of the amended tax and fiscal incentives of this Act; and 
Provided finally, That in no case shall the final tax to be imposed exceed 
fifteen per centum (15%) of the net taxable income as determined in 
accordance with the provisions of the National Internal Revenue code, as 
amended. 
In cases of conflict between the local and national tax laws on the one 
hand, and the tax inceNtives herein granted on the other, the same shall be 
resolved in favour of the latter. 
19 
d. Banking Rules and Regulations. Existing banking laws, specifically 
20 
Presidential Decree No. 1034 and Republic Act No. 6426 and their 
21 
implementing rules and regulations amended, and pertinent Banko Sentral 
22 
ng Pilipinas (BSP) circulars, rules and regulations shall apply, on foreign 
23 
exchange transactions in the current account transactions (trade and non-
24 
trade), local and foreign borrowings, foreign investments, establishments and 
25 
operation of local and foreign banks, foreign currency deposit units (FCDUs), 
26 
offshore banking units (OBUs) and other financial institutions under the 
27 
supervision of the BSP: Provided, That FCDUs of local commercial banks and 
28 
OBUs of foreign banks shall enjoy minimum regulation by the BSP. 
29 
30 
e, Profit Remittance, Without prior BSP approval, after tax profits and other 
31 
earnings or foreign investments in enterprises in the Zone; Provided, 
32 
however, that such foreign investments in said enterprises have been 
33 
previously registered with the BSP. 
34 
35 
SEC. 6. Ipso Facto Clause. - Sections 30 to 42 of Republic Act No. 7916 shall 
36 
ipso facto apply to the Southern Palawan Special Economic Zone and Free Port. 
5 


, 
) 
34 
35 
e. To recommend to the President the issuance of a proclamation to fix and 
36 
delimit the site of Zone; 
6 


1 
f. To issue certificates of origin for products manufactured or processed in the 
2 
Zone in accordance witl). prevaiUng rules of origin, and the pertinent 
3 
regulations of PEZA, DTI and/ or the Department of Finance (DOF); 
4 
5 
g. To approve, accept, accredit and allow any local or foreign business, 
6 
enterprise or investment in the Zone subject only to such rules and 
7 
regulations as SPSEZA may promulgate from time to time in conformity with 
8 
the provisions of this Act and the limitations provided in the Constitution; 
9 
10 
h. To authorize or undertake, on its own or through others, and regulate the 
11 
establishment, operation and maintenance of public utilities, services and 
12 
infrastructure in the Zone such as shipping, ship building, ship registry and 
• 
13 
every matter related or attended thereto, barging, stevedoring, cargo 
14 
handling, hauling warehousing, storage of cargo, port services or concessions, 
15 
piers, wharves, bulkheads, bulk terminals, conveyors, water supply and 
16 
storage, sewerage, drainage, airport operations, such other services or 
17 
concessions or infrastructure necessary or incidental to the accomplishment 
18 
of the objectives of this Act: Provided, however, That the private investors in the 
19 
Zone shall be given priority in the awarding of contracts, franchises, licenses 
20 
or permits for the establishments, operation and maintenance of utilities, 
21 
services and infrastructure in the Zone; 
22 
23 
!. To construct, acquire, own" lease, operate and maintain on its own or 
24 
through others by virtue of contracts, franchises, licenses, or permits under 
25 
the build-operate-transfer scheme or under a joint venture with the private 
26 
sector any or all of the public utilities and infrastructure required or needed 
27 
in the Zone, in coordination with appropriate national and local government 
28 
authorities and in conformity with applicable laws thereon; 
29 
30 
j. To operate on its own, either directly or through a subsidiary entity, or license 
31 
32 
33 
34 
to others, , tourism-related activities, including games, amusements, 
recreational and sports facilities such as golf courses, and others, under 
priorities and standards set by SPSEZA; 
35 
k. To maintain ecological balance, and promote sustainable development in 
36 
Palawan while preserving, developing, maintaining and protecting the 
7 


• • 
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environment particularly the virgin forests, marine resources, beaches, 
minerals and mineral deposits including precious metals, coral and corals 
reefs within the Zone. The virgin forests within the Zone shall be proclaimed 
as national park and shall be covered by a permanent total log ban. For this 
purpose, the rules and regulations of the Department of Environment and 
Natural Resources and other government agencies involved in the above 
functions shall be implemented by the SPSEZA, including the issuance of 
environmental certificates, free patents and leasehold rights over government 
lands and mining, drilling and timber licenses: Provided, That all legal 
restrictions imposed for the conveyance, use, lease or other disposition of free 
patents issued prior to the effectivity of this Act may be lifted should be the 
SPSEZA deem it necessary to carry its mandate under this Act; 
14 
1. 
To adopt, implement and enforce reasonable measures and standards to 
15 
control pollution within the Zone; 
16 
17 
m. To establish and maintain a security force and firefighting capability or hire 
18 
others to provide the same for the defense and security of the Zone; 
19 
20 
n. To form, establish, organize and maintain subsidiary corporations, as its 
21 
business and operations may require, whether under the laws of the 
22 
Philippines or not; 
23 
24 
o. To report to the Bureau of Immigration the names of foreigners who have 
25 
been granted permanent resident status and working visas within thirty (30) 
26 
days after issuance of such grant; 
27 
28 
p. To formulate and approve the organization and budget as submitted by the 
29 
Chairman-Administrator; 
30 
31 
q. To regulate and undertake the establishment, operation and maintenance of 
32 
public utilities services and infrastructure in the Zone such as heat, light and 
33 
power, water supply telecommunications, transport, toll roads and bridges, 
34 
port services, etc. and to fix just, reasonable and competitive rates, charges 
3S 
and prices thereof; 
36 
8 


1 
r. To directly negotiate with and grant foreign and/ or international airlines and 
2 
carriers entry permits and landing rights into the port; 
3 
4 
s. To provide, in cooperation with the Department of Tourism, non-fiscal 
5 
incentives to tourism-related businesses operating within the Zone; 
6 
7 
t. To charge reasonable fees for the provision of other services and the 
8 
maintenance of infrastructure and utilities; 
9 
10 
U. To impose reasonable fines and penalties for violations of the provisions of 
11 
this Act, the rules and regulations to be established by the SPSEZA or any 
12 
other law that the SPSEZA is tasked to enforce; and 
13 
14 
v. To issue rules and regulations consistent with the provisions of this Act as 
15 
may be necessary to accomplish and implement the purposes, objectives and 
16 
policies prOVided. 
17 
18 
SEC. 9. Non-Profit Character of the Southern Palawan Special Economic 
19 
Zone Authority. - The Southern Palawan Special Economic Zone and Free Port 
20 
Authority shall be a non-profit institution and shall devote the use of its returns 
21 
from capital investments as well as excess revenues from its operations, for the 
22 
development, improvement, and maintenance and other related expenditures of the 
23 
SPSEZA to pay its indebtedness, and obligations and in furtherance and effective 
24 
implementation of the policies provided for in this Act. In consonance with this, the 
25 
SPSEZA is hereby declared exempt from the payment of all taxes, duties, fees, 
26 
imports, charges costs and service fees in any court or administrative proceedings in 
27 
which it may be a party. 
28 
29 
The foregoing exemptions may, however" be entirely or partially lifted by the 
30 
President of the Philippines upon the recommendation of the Secretary of Finance, 
31 
not earlier than five (5) years from the effectivity of this Act, if the President shall 
32 
find the SPSEZA to be self sustaining and financially capable by then to pay taxes, 
33 
customs, duties,fees and other charges after providing for debt service requirements 
• 
34 
of the SPSEZA and of its projected capital and operating expenditures. 
35 
9 


1 
SEC. 10. Board of Directors of the Southern Palawan Special Economic Zone 
2 
and Free Port Authority. The powers of the SPSEZA shall be vested in and exercised 
3 
by a Board of Directors, herein after referred to as the Board, which shall be 
4 
composed of the following: 
5 
6 
a. The Secretary of the Department of Trade and Industry or his duly 
7 
authorized representative, as ex officio member of the Board of Directors; 
8 
9 
b. The Director General of th\, National Economic Development Authority or his 
10 
duly authorized representative, as ex officio member of the Board; 
11 
12 
c. Two (2) other representatives of the National Government, as ex officio 
13 
members; 
14 
15 
d. The administrator of SPSEZA who shall serve as the ex-officio Chairman of the 
16 
Board; 
17 
18 
e. The Chairman of the Palawan Council for Sustainable Development as ex 
19 
officio members; 
20 
21 
f. The mayors of the municipalities of Balabac, Bataraza and Brooke's Point as 
22 
ex officio members; 
23 
24 
g. Two (2) representatives from the labor sector from among the workers in the 
25 
Zone; 
26 
27 
h. Two (2) representatives from the business and investments sectors; and, 
28 
29 
i. Three (3) representatives from the private sector coming from the residents of 
30 
Balabac, Bataraza and Brooke's Point. 
31 
32 
The Chairman-Administrator and members of the Board, except the ex officio 
33 
members, shall be appointed by the President of the Philippines to serve for a term 
34 
of six (6) years, unless sooner removed for cause, the replacement shall serve only 
35 
the unexpired portion of the term. The Vice Chairman shall be elected from among 
36 
the member of the Board. 
10 


I til' 
1 
Except for the representatives of the business and investment sectors, no 
2 
person shall be appointed by the President of the Philippines as member of the 
3 
Board unless he is a Filipino citizen, of good moral character, of proven probity and 
4 
integrity, and a degree holder in any of the following fields; economic, business, 
5 
public administration, law, management or their equivalent, and with at least ten 
• 
6 
(10) years relevant working experience preferably in the field of management or 
7 
public administration. 
8 
9 
For purposes of determining a quorum during the meetings of the Board, a 
10 
quorum shall exist despite the non-attendance of the appointed member of the 
11 
Board whenever the latter's duly authorized representative is present thereat, and 
12 
attends such meeting on the member's behalf. 
13 
14 
The members of the Board, except the Chairman-Administrator whose 
15 
compensation shall be determined by the Board, shall each receive a per diem of not 
16 
more than Ten Thousand Pesos (P10,000.00) for every Board meeting actually 
17 
. attended, unless and until the President of the Philippines has fixed a higher per 
18 
diem for the members of the Board: Provided, however, That the total per diem 
19 
collected each month shall not exceed the equivalent per diem for four (4) meetings. 
20 
21 
SEC. 11. SPSEZA Administrator and Chief Executive Officer. The President 
22 
of the Philippines shall appoint a full-time professional and competent 
23 
administrator and chief executive officer of the Southern Palawan Special Economic 
24 
Zone and Free Port Authority who shall serve for a term of six (6) years, unless 
25 
sooner removed for cause or dies or resigns voluntarily. In case of death, resignation 
26 
or removal for cause the replacement shall serve the unexpired portion of the term. 
27 
The compensation of the Administrator and Chief Executive Officer shall be 
28 
determined by the Board of Directors. 
29 
30 
SEC. 12. Powers and Duties of the Chairman-Administrator. The Chairman-
31 
Administrator shall have the following powers and duties: 
32 
a. To direct and manage the affairs of the SPSEZA in accordance with the 
33 
policies of the Board; 
34 
35 
b. To establish the internal organization of the SPSEZA under conditions that 
36 
the Board may prescribe 
11 


• 
1 
c. To submit and annual budget and necessary supplemental budget to the 
2 
Board for its approval; 
3 
4 
d. To submit within thirty (30) days after the close of each fiscal year an annual 
5 
report to the Board and such other reports as may be required; 
6 
7 
e. To submit to the Board for its approval policies, systems procedures, rules 
8 
and regulations that are essential to the operation of the Zone; 
9 
10 
f. To create a mechanism in coordination with relevant agencies for the 
11 
promotion of industrial peace, the protection of the environment, and the 
12 
advancement of the quality of life in the Zone; and 
13 
14 
g. To perform such other duties as may be assigned to him by the Board or 
15 
which are necessary or incidental to his office. 
16 
17 
SEC. 13. Personnel. The Board of Directors of the SPSEZA shall provide for 
18 
an organization and staff of its officers and employees and the corresponding 
19 
qualification standards in accordance with Civil Service Laws and other pertinent 
20 
laws. Upon recommendation of the Chairman/Administrator, the Board shall 
21 
appoint and fix the remuneration and other emoluments in accordance with 
22 
Republic Act No. 6758, otherwise known as the Salary Standardization Law: 
23 
Provided, That the Board shall .have exclusive and final authority to promote, 
24 
transfer, assign or reassign officers of the SPSEZA in accordance with Civil Service 
25 
Law and Rules: Provided, further, That the Chairman-Administrator may carry out 
26 
removal of such officers and employees as authorized by the Board. 
27 
28 
The officers and employees of the SPSEZA, including all members of the 
29 
Board, shall not engage directly or indirectly in partisan activities nor take part in 
30 
any election, except to vote. 
31 
32 
No officer or employee of the SPSEZA, subject to Civil Service laws and 
33 
regulations, shall be removed or suspended except for cause, as provided by law. 
34 
35 
SEC. 14. Capitalization. - The Southern Palawan Special Economic Zone and 
36 
Free Port Authority shall have an authorized capital stock of Two Billion 
12 


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• 
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(2,000,000,000.00) no par shares with a minimum value of Ten Pesos (PI0.00) each. 
2 
The initial amount of Two Hun'dred Fifty Million Pesos (P250,OOO,OOO.OO) shall be 
3 
sourced from the share of the Province of Palawan from the natural gas revenues in 
4 
Camago-Malampaya andl or other from its share in oil and natural wealth. 
S 
6 
The Board of Directors of SPSEZA may, from time to time, and with the 
7 
written concurrence of the Secretary of Finance, increase the issue value of the 
8 
shares representing the capital stock of the SPSEZA. The Board of Directors of 
9 
SPEZA, with the written concurrence of the Secretary of Finance, may sell shares 
10 
representing not more than forty percent (40%) of the capital stock of SPSEZA to the 
11 
general public with such annual dividend policy as the Board and Secretary of 
12 
Finance may determine. The National Government shall, in no case, own less than 
13 
sixty percent (60%) of the total issued and outstanding capital stock of the SPSEZA. 
14 
15 
All unoccupied government-owned lands as of the creation of Southern 
16 
Palawan Economic Zone and Free Port, faIling within its jurisdiction, shall also be 
17 
included as part of the equity of the National Government in SPSEZA and may be 
18 
disposed of by the SPSEZA: Provided, That in case of absolute sale or conveyance, the 
19 
SPSEZA shall seek the approval of the Office of the President: Provided, That all 
20 
lands owned by SPSEZA shall not be included in land reform. 
21 
22 
SEC. 15. Supervision and Coordination of Development Plans. -
For 
23 
purposes of policy direction and coordination, the Southern Palawan Special 
24 
Economic Zone and Free Port shall be under the direct control and supervision of 
25 
the Office of the President. 
26 
27 
SEC. 16. Legal Counsel. - The provisions of existing laws, orders or issuances, 
28 
particularly Republic Act No. 2327, as amended, Executive Order No. 29, series of 
29 
1987, and Administrative Order No. 130, series of 1994, to the contrary 
30 
withstanding, the SPSEZA shall have its own internal legal counsel completely 
31 
independent from the Office of the Government Corporate counsel who shall act as 
32 
the legal adviser of SPSEZA and its subsidiaries and who shall be solely responsible 
, 
33 
for reviewing contracts entered into by the SPSEZA and its subsidiaries. The internal 
34 
legal counsel shall represent SPsEZA and its subsidiaries in all judicial and 
35 
administrative proceedings. When the exigencies of its business and operations 
13 


1 
demand it, the SPSEZA may engage the services of an outside counsel either on a 
2 
case to case basis or on a fixed retainer. 
3 
4 
SEC. 17. Relationship with the Palawan Council for Sustainable 
5 
Development. - The SPSEZA shall determine the development goals for the Zone 
6 
within the framework of natio~al development plans, policies and goals. The 
7 
administrator shall, upon approval by the Board, submit Zone plans, programs and 
8 
projects to the Palawan Council for Sustainable Development for inclusion and 
9 
input to the overall development plan of the province. 
10 
11 
SEC. 18. Relationship with Local Government Units. - Excerpt as herein 
12 
provided, the local government units comprising the Zone shall retain their basic 
• 
13 
autonomy and identity. The municipalities of Balabac, Bataraza and Brooke's Point 
14 
shall operate and function in accordance with the Local Government Code of 1991. 
15 
In case of any conflict between the Authority and the Province of Palawan on 
16 
matters affecting the Zone other than the defense and security matters, the decision 
17 
of the SPSEZA shall prevail. 
18 
19 
SEC. 19. Audit. The Commission on Audit shall appoint a representative who 
20 
shall be a full time auditor of the SPSEZA and its subsidiaries in which it controls a 
21 
majority of the shares of stock, and assign such number of personnel as may be 
22 
necessary to assist said representative in the performance of his/her duties. The 
23 
salaries and emoluments of the assigned auditor and personnel of the Commission 
24 
on Audit shall be in accordance with pertinent laws, rules and regulations. The 
25 
Commission on Audit shall render an annual report to the President of the 
26 
Philippines and to Congress on the business activities, transactions and operations 
27 
of the SPSEZA. 
28 
29 
To ensure the expeditious implementation of the economic policy and 
30 
purpose embodied in this Act, the Commission on Audit, in cooperation with 
31 
SPSEZA, shall formulate special' rules on audit, disbursement of funds, bidding 
32 
procurement of goods and services, accounting, use of government equipment and 
33 
resources and the like, towards realizing the aforesaid needs. 
34 
35 
SEC. 20. Retention of All Earnings. - The SPSEZA shall retain all earnings 
36 
from all its activities, regulatory or proprietary, and need not remit the same to the 
14 


" 
.' 
1 
national treasury. Such earnings shall be considered as corporate income which 
2 
SPSEZA may invest in its various infrastructure or special projects, and corporate 
3 
undertakings. 
4 
5 
SEC. 21. Injunctions, Restraining Orders and other Interlocutory Orders. -
6 
The development of the Southern Palawan Special Economic Zone and Free Port is a 
7 
national government priority and, therefore, no injunctions, restraining orders and 
8 
other interlocutory orders, which seek to stop or interrupt any contract entered into 
9 
or project undertaken by SPSEZA may be issued by any court of law or quasi-
10 
judicial body except by the Supreme Court of the Philippines. 
11 
12 
SEC. 22. Interpretation and Construction. - The powers, authorities and 
13 
functions that are vested in the SPSEZA are intended to establish decentralization of 
14 
government functions and authority and promote an efficient and effective working 
15 
relationship among the Zone, the national government and the local government 
16 
units. 
17 
18 
SEC. 23. Implementing Rules and Regulations. - The Philippine Economic 
19 
Zone Authority; Department of Trade and Industry, Finance, Foreign Affairs, Labor 
20 
and Employment, Interior and Local Government, Agriculture, Agrarian Reform, 
21 
Public Works and Highways, Science and Tedmology, and Energy, Bureau of 
22 
Immigration; Bureau of Customs; National Economic and Development Authority; 
23 
Banko Sentral ng Pilipinas; Palawan Council for Sustainable Development, and 
24 
representatives from the technical staff of the Committee on Economic Affairs of 
25 
Both Houses of Congress and other concerned agencies shall formulate the 
26 
implementing rules and regulations of this Act within ninety (90) days after its 
27 
approval. Such rules and regulations shall take effect fifteen (15) days after their 
28 
publication in a newspaper of general circulation in the Philippines. 
29 
30 
SEC. 24. Separability Clau!ie. - If any part, section or provision of this Act is 
31 
declared invalid or unconstitutional, other parts or provisions hereof not affected 
32 
thereby shall continue to be in full force and effect. 
33 
34 
SEC. 25. Repealing Clause. All laws, executive orders or issuances or any 
35 
parts thereof which are inconsistent herewith are hereby repealed or amended 
36 
accordingly. 
15 


1 
SEC. 26. Effectivity Clause. - This Act shall take effect upon its publication in 
2 
at least one (1) newspaper of general circulation. 
3 
4 
Approved, 
16