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Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

os

2" Regular Session
SEVENTEENTH CONGRESS

HOUSE BILL No,6379

Introduced by REP. EMI G. CALIXTO-RUBIANO

Explanatory Note

In passing Republic Act No. 7227 or the Bases Conversion and Development Act of 1992, the
intention of the 9! Congress, among others, was for the establishment of a “Freeport” in its real and
international concept as an “altemative productive use” of the Clark and Subic military reservations,
their extensions and other military baselands covered by the 1947 Military Bases Agreement between
the Philippines and the United States of America to enhance the benefits derived from said properties
in order to promote the economic and social development of Central Luzon in particular and the
country in general. Thus, the following mandates and principles were, among others, provided under
said law in the SBMA's operation of the SSEZ:

1. The SSEZ shall be “developed into a self-sustaining, industrial, commercial,
financial and investment center to generate employment opportunities in and
around the zone and to attract and promote productive foreign investments”
[Section 12 (a) of Republic Act No. 7227};

2. The SSEZ shall be “operated and managed as a separate customs territory
ensuring free flow or movement of goods and capital within, into and exported out of
the Subic Special Economic Zone, as well as provide incentives such as tax and
duty-free importations of raw materials, capital and equipment” [Section 12 (b) of
Republic Act No. 7227},

3. No taxes, local and national, are imposed within the SSEZ. In lieu of paying
taxes, locators or locating investors at SSEZ pay only five percent (5%) of their
gross income earned to the government. In case of conflict between national and
local laws with respect to tax exemption privileges in the SSEZ, the same shall be
resolved in favor of the latter [Section 12 (c) of Republic Act No. 7227}:

4. No exchange control policy shall be applied and free markets for foreign
exchange, gold, securities and future shall be allowed and maintained in the SSEZ.


[Section 12 (d) of Republic Act No. 7227];

5. 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 with minimum Central Bank regulation at SSEZ. [Section 12 (f) of
Republic Act No. 7227];

6. Any investor within the SSEZ whose continuing investment shall not be less
than Two hundred fifty thousand dollars ($250,000), his/her spouse and dependent
children under twenty-one (21) years of age, shall be granted permanent resident
status within the SSEZ. They shall have freedom of ingress and egress to and from
the SSEZ without any need of special authorization from the Bureau of Immigration
and Deportation. The SBMA may also issue working visas renewal every two (2)
years to foreign executives and other aliens possessing highly-technical skills which
No Filipino within the SSEZ possesses, as certified by the Department of Labor and
Employment. [Section 12 (g) of Republic Act No. 7227] and;

7. The SBMA shall have its own internal security and firefighting forces at SSEZ
[Section 12 (h) of Republic Act No. 7227]

Relatedly, in creating the SBMA as the implementing arm of the government and to make the
ideals set by Republic Act No. 7227 come into reality, Republic Act No. 7227 granted upon the SBMA
all-encompassing powers in its operation, management and development of the SSEZ into “alternative
productive uses” all in keeping towards the ideal framework of a Freeport where there is minimum
government or outside intervention on trade, investments, and freeport operations.

This bill seeks to fortify and reaffirm the powers granted to the Subic Bay Metropolitan
Authority (SBMA) by Republic Act No. 7227, as the operating and implementing arm of the
Government over the Subic Bay Freeport Zone (SBFZ) and the Subic Special Economic Zone (SSEZ).
It likewise seeks to reinforce the SBMA’s capability to fulfill to its fullest sense its mandate of creating a
“self — sustaining” Freeport out of the SSEZ and make the SBMA's Board composition updated with
the current times.

In view of the foregoing, the passage of this bill is earnestly sought.

Bh

EMI G. CALIXTO-RUBIANO
Representative

Lone District of Pasay City


Republic of the Philippines

House of Representatives
Quezon City, Metro Manila

SEVENTEENTH CONGRESS

Second Regular Session
6379

HOUSE BILL No.

Introduced by REPRESENTATIVE EMI CALIXTO-RUBIANO

AN ACT AMENDING REPUBLIC ACT NO. 7227,
AS AMENDED BY REPUBLIC ACT NO. 9400,
OTHERWISE KNOWN AS
THE BASES CONVERSION AND DEVELOPMENT ACT OF 1992

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

SECTION 1. Sections 12 (c) and (h) of Republic Act No. 7227, as amended, are
hereby further amended as follows:

“SEC. 12. Subic Special Economic Zone. — xxxx Xxxx XXxxx

(c) The provision of existing laws, rules and regulations to the contrary
notwithstanding, no national and local taxes shall be imposed within the
Subic Special Economic Zone. In lieu of
LOCAL taxes, a five percent (5%) tax on gross income earned shall be paid
by all REGISTERED business enterprises within the Subic Special Economic
Zone and shall be remitted as follows: ONE PERCENT (1%) to the National
Government, TWO PERCENT (2%) TO THE SUBIC BAY METROPOLITAN
AUTHORITY and two percent (2%) TO BE COLLECTED BY THE SUBIC
OLITAN AUTHORITY FOR DISTRIBUTION to the local
government units affected by the declaration of and contiguous to the Zone,



namely: the City of Olongapo and the municipalities of Subic, San Antonio,
San Marcelino and Castillejos in the Province of Zambales; and the
municipalities of Morong, Hermosa and Dinalupihan in the Province of
Bataan, on the basis of population (50%), land area (25%), and equal
sharing (25%)

In case of conflict between national and local laws with respect to tax
‘exemption privileges in the Subic Special Economic Zone, the same shall be
resolved in favor of the latter;

(Q)XXXX xxx 00x

(h) The defense of the zone and the security of its perimeter shall be the
responsibility of the National Government in coordination with the Subic Bay
Metropolitan Authority. THERE IS HEREBY CREATED A SUBIC BAY
METROPOLITAN AUTHORITY POLICE WHICH SHALL BE ORGANIZED,
MAINTAINED, SUPERVISED, AND UTILIZED BY, AND BE AN INTEGRAL
PART OF THE PHILIPPINE NATIONAL POLICE, ITS PRIMARY PURPOSE IS

LAW ENFORCEMENT AND MAINTENANCE OF PEACE AND ORDER IN THE
IC SPECI, -CONOMK INI .EMISES.

HOOK XK XXX"

SECTION 2. Sections 13 (b), and its subsections (3), (10), (11), (12), (13) and (14) of
Republic Act No. 7227, as amended, are hereby further amended as follows:

“SEC. 13. Subic Bay Metropolitan Authority. — xxxx xxx xxx

(b) Powers and Functions of the Subic Bay Metropolitan Authority. - The Subic
Bay Metropolitan Authority, otherwise known as the Subic Authority,
HAVING AUTHORITY AND JURISDICTION OVER ALL BUSINESS AND
ECONOMIC ACTIVITIES WITHIN THE SUBIC SPECIAL ECONOMIC
ZONE (SSEZ), EXCEPT AS OTHERWISE HEREIN PROVIDED, shall have

the following powers and functions:

2000 00% X00K

(3) TO UNDERTAKE, REGULATE AND TO FIX AND IMPOSE JUST AND
REASONABLE RATES, FARES, CHARGES AND OTHER PRICES
FOR THE FOLLOWING:

(a) ESTABLISHMENT, OPERATION AND MAINTENANCE _ OF

UTILITIES, FACILITIES, INFRASTRUCTURE, SERVICES,
BUSINESSES, ACTIVITIES AND CONCESSIONS IN THE SSEZ
PERTAININ’ T :COMMUNICATION: THEREFOR;

PROVIDED THAT, THE NATIONAL TELECOMMUNICATIONS
COMMISSION (NTC) SHALL CONTINUE TO EXERCISE ITS

POWER TO REGULATE AND SUPERVISE THE QUALITY,
SAFETY, RELIABILITY, SECURITY, COMPATIBILITY AND INTER-

2


OPERABILITY OF PUBLIC TELECOMMUNICATIONS, RADIO
STATIONS FOR BOTH PRIVATE AND PUBLIC USE, RADIO
SPECTRUM, RADIO AND TELEVISION BROADCAST STATIONS,
CABLE TELEVISIONS AND PAY TELEVISIONS WITHIN SSEZ;

(b) ESTABLISHMENT, OPERATION _AND MAINTENANCE _ OF
UTILITIES, FACILITIES, INFRASTRUCTURE, _ SERVICES.
BUSINESSES, ACTIVITIES AND CONCESSIONS IN THE SSEZ
PERTAINING TO SHIPPING AND MARITIME BUSINESS AND
ACTIVITIES INCLUDING STEVEDORING AND PORT TERMINAL
SERVICES OR CONCESSIONS; PROVIDED THAT, THE
MARITIME INDUSTRY AUTHORITY (MARINA) SHALL CONTINUE
TO EXERCISE ITS POWER TO REGULATE AND SUPERVISE
THE SHIPBUILDING AND SHIP REPAIR OF ANY MERCHANT
MARINE VESSEL OPERATED OR TO BE OPERATED IN THE

DOMESTIC TRADE AND THE DOMESTIC SHIPPING INDUSTRY
WITHIN THE SSEZ;

(©) ESTABLISHMENT, OPERATION AND MAINTENANCE _OF
UTILITIES, FACILITIES, INFRASTRUCTURE, SERVICES.
BUSINESSES, ACTIVITIES AND CONCESSIONS IN THE SSEZ
PERTAINING TO AIRPORT OPERATIONS; PROVIDED THAT, THE
CIVIL AVIATION AUTHORITY OF THE PHILIPPINES (CAAP)
SHALL CONTINUE TO EXERCISE ITS POWER TO REGULATE
AND SUPERVISE THE SAFETY, QUALITY, RELIABILITY AND
AFFORDABILITY OF AIR TRANSPORT SERVICES FOR THE
RIDING PUBLIC WITHIN THE SSEZ;

(d) ESTABLISHMENT, OPERATION AND MAINTENANCE OF ALL
OTHER FACILITIES, INFRASTRUCTURES. SERVICES,
BUSINESSES, ACTIVITIES AND CONCESSIONS INSIDE SSEZ;

(8) xxxx Xxxx 000%;

(10)

(1)

To adopt and implement measures and standards for environmental
Pollution control of all areas within its territory including but not limited to
all bodies of water and to enforce the same. For which Purpose, the
Subic Authority shall create an Ecology Center THAT SHALL ISSUE
THE ENVIRONMENTAL COMPLIANCE CERTIFICATE FOR ALL
NON-ENVIRONMENTALLY CRITICAL ACTIVITIES IN THE SUBIC
SPECIAL ECONOMIC ZONE.

TO RECLAIM LANDS IN THE SUBIC SPECIAL ECONOMIC AND
FREEPORT ZONE, NOT LIMITED TO FORESHORE AND
SUBMERGED AREAS, BY DREDGING, FILLING OR OTHER
MEANS, AND TO ACQUIRE, DEVELOP, IMPROVE, ADMINISTER

DEAL — IN, SUBDIVIDE AND LEASE RECLAIMED LANDS INSIDE
THE ZONE;



(12) TO PROVIDE FOR, OPERATE, OR ADMINISTER SUCH SERVICES,
AS MAY BE NECESSARY FOR THE EFFICIENT, ECONOMICAL AND.

BENEFICIAL UTILIZATION OF THE RECLAIMED AREAS IN THE
SBF;

(13) UNLESS OTHERWISE PROVIDED IN THIS ACT, TO BE THE SINGLE
AUTHORITY RESPONSIBLE FOR THE IMPLEMENTATION AND
ENFORCEMENT OF THIS ACT, ITS IMPLEMEN LES ANI
REGULATIONS (IRR) AND OTHER RULES AND REGULATIONS
PROMULGATED BY THE SBMA BOARD OF DIRECTORS IN SO
FAR AS IT IS APPLICABLE TO THE SBMA, THE SSEZ AND SBF
BUSINESS ENTERPRISES, LOCATORS, RESIDENTS AND
STAKEHOLDERS: AND

(14) To exercise such powers as may be essential, necessary or incidental to
the powers granted to it hereunder as well as to carry out the policies
and objectives of this Act.

YOXK XXX XXX"

SECTION 3. Sections 13 (c) and (d) of Republic Act No. 7227, as amended, are
hereby further amended as follows:

“SEC. 13. Subic Bay Metropolitan Authority. — xxx xxxx xxxx

(C) Board of Directors - The powers of the ‘Subic Authority shall be vested in and
exercised by a Board of Directors, hereinafter Teferred to as the Board,
which shall be composed of fifteen (15) members, to wit:

(1) One (1) representative from each of the following local government units that
concur to join the Subic Special Economic Zone: THE CITY OF OLONGAPO
AND THE MUNICIPALITY OF SUBIC OF THE PROVINCE OF

ZAMBALES: AND THE MUNICIPALITIES OF MORONG, HERMOSA AND
DINALUPIHAN OF THE PROVINCE OF BATAAN:

(2) Two (2) representatives from the National Government: AND

(3) EIGHT (8) representatives from the private sector coming from TOURISM,
MANUFACTURING, MARITIME, AVIATION, TRADE AND INDUSTRY.
LOGISTICS, INFORMATION AND COMMUNICATIONS TECHNOLOGY

AND FINANCE SECTORS.

THE MEMBERS OF THE BOARD shail be appointed by the President to
Serve for a FIXED term of six (6) years, unless sooner removed for cause,

except for the representatives of the local government units who shall serve
for a FIXED term of three (3) years. In case of removal for cause, the
replacement shall serve only the unexpired portion of the term

No person shall be appointed as a member of the Board unless he is a

4


Filipino citizen, of good moral character, and of recognized competence in
relevant fields including, but not limited to economics, FINANCE,
management, international relations, law or engineering,

THE COMPENSATION OF THE MEMBERS OF THE BOARD SHALL BE
IN ACCORDANCE WITH EXISTING POLICIES, PRINCIPLES AND RULES
GOVERNING THE COMPENSATION OF MEMBERS OF THE BOARD OF
DIRECTORS/TRUSTEES IN GOVERNMENT-OWNED AND. CONTROLLED
CORPORATIONS AS MAY BE FORMULATED BY THE GOVERNANCE
COMMISSION FOR GOVERNMENT OWNED OR CONTROLLED
CORPORATIONS.

XXX XXX XKXX"

SECTION 4. Implementing Rules and Regulations. — Within ninety (90) days from the
effectivity of this Act, the following shall promulgate the necessary rules and regulations for
the implementation of the specific provisions of this Act:

(b) The SBMA, in coordination with the Office of the President and the Bases
Conversion and Development Authority (BCDA), for the necessary rules and
regulations implementing all the other provisions of this Act.

SECTION 5. Repealing Clause. — All laws, decrees, orders, rules and regulations or
other issuances or parts thereof inconsistent with the provisions of this Act, are hereby
repealed or modified accordingly.

SECTION 6. Separability Clause. - If any provision of this Act is subsequently declared
oflect utional, the validity of the remaining provisions hereof shall remain in full fore ancl
effect

SECTION 7. Effectivity. — This Act Shall take effect fifteen (15) days after its publication

in the Official Gazette or in any two (2) newspaper of general circulation whichever comes
earlier.

Approved.