of lh<*
NINETEENTH CONGRESS OF THE ) 
REPUBLIC OF THE PHILIPPINES ) 
First Regular Session 
)
•22 JUL-7 P5--13
SENATE 
Senate Bill No. 207
RtCElVEDBV.__
INTRODUCED BY SENATOR RONALD "BATO" DELA ROSA
AN ACT
ESTABLISHING A SPECIAL DEFENSE ECONOMIC ZONE (SpeDEZ) INSIDE THE 
GOVERNMENT ARSENAL DEFENSE INDUSTRIAL ESTATE LOCATED IN CAMP 
GEN. ANTONIO LUNA, LAMAO, MUNICIPALITY OF LIMAY, PROVINCE OF 
BATAAN, CREATING FOR THIS PURPOSE THE SPECIAL DEFENSE ECONOMIC 
ZONE AUTHORITY (SpeDEZA), APPROPRIATING FUNDS THEREFOR AND FOR 
OTHER PURPOSES
EXPLANATORY NOTE
Section 19, Article II of the 1987 Constitution provides that "The State shall 
develop a self-reliant and independent national economy effectively controlled by 
Filipinos." Further, the State recognizes the indispensable role of the private sector, 
encourages the participation of private enterprise, and provides incentives to needed 
Investments.1
This measure seeks to establish the Special Defense Economic Zone Authority 
(SpeDEZA) which shall manage, maintain, and operate the Special Defense Economic 
Zone (SpeDEZ), to be located in Camp General Antonio Luna, Lamao, Municipality of 
□may. Province of Bataan, primarily for the purpose of providing key opportunities 
and Incentives for local and international defense contractors to locate their operations 
in the subject defense real estate.
The powers, authorities and functions that are vested in the SpeDEZA are 
intended to establish national self-sufficiency and self-reliance in the advancement of
1 Section 20, Article II of the 1987 Constitution.
w


and protection of the national integrity, enhancement of national security, 
decentralization of governmental functions and authority, and promote an efficient 
and effective working relationship between the SpeDEZA, the national government 
and the LGUs.
On 27 June 2022, the Authority of the Freeport Area of Bataan (AFAB) and the 
Government Arsenal (GA) signed a Memorandum of Agreement on the proposed 
declaration of the Defense Industrial Estate as the newest expansion area of the 
Freeport Area of Bataan (FAB). With the execution of the Memorandum of Agreement, 
the AFAB has been successfully appointed and engaged to market and transact with 
investors within the GA FAB Expansion Area that may either be defense or non-defense 
locators and enterprises.2
The passage of this bill will provide a complementary stream of income to 
support the AFP Modernization Program, while creating job opportunities, pursuing 
infrastructure development and encouraging direct foreign investments. Twill not only
In view of the foregoing, the passage of this bill is urgently sought.
RONALCr^^B^^DELA ROSA
https://www.pna.gov.ph/articles/1177677


NINETEENTH CONGRESS OF THE 
REPUBLIC OF THE PHIUPPINES 
First Regular Session
)
SENATE 
S. No. S07
■41* ,
'>f.(8ftur ot tl‘f tr f rl r«’
■22 JUL-7 P5:13
RLCEIVr;D3>
INTRODUCED BY SENATOR RONALD "BATO" DELA ROSA
AN ACT
ESTABLISHING A SPECIAL DEFENSE ECONOMIC ZONE (SpeDEZ) INSIDE THE 
GOVERNMENT ARSENAL DEFENSE INDUSTRIAL ESTATE LOCATED IN CAMP 
GEN. ANTONIO LUNA, LAMAO, MUNICIPALITY OF LIMAY, PROVINCE OF 
BATAAN, CREATING FOR THIS PURPOSE THE SPECIAL DEFENSE ECONOMIC 
ZONE AUTHORITY (SpeDEZA), 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 “Special Defense Economic
2 
Zone (SpeDEZ) Act of 2022,f.
3
4 
Sec. 2. Declaration of Policy. - It is hereby declared the policy of the State to develop
5 
a self-reliant and independent national economy effectively controlled by Filipinos. The
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State recognizes the indispensable role of the private sector, encourages the participation
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of private enterprise, and provides incentives to needed investments. To this end, State
8 
shall promote the preferential use of Filipino labor, domestic materials and locally
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produced goods and adopt measures to help make them more competitive. Further, the
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State actively encourages, promotes and accelerates the sound and balanced industrial,
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economic and social development of the country through the establishment, among
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others, of special economic zones in suitable and strategic locations in the country. In so
13 
doing, the State is able to attract legitimate and productive foreign investments with the
14 
objectives of providing jobs especially to those in the rural areas, increasing productivity


1 
and individual family Income, and thereby improving the level and quality of living
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conditions of the people.
3
4 
Sec. 3. Creation of the Special Defense Economic Zone (SpeDEZ) - There is hereby
5 
created a special economic zone in Camp General Antonio Luna, Lamao, Municipality of
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Limay in the Province of Bataan, referred to as the Special Defense Economic Zone
7 
(SpeDEZ), for investments in defense, military, law enforcement, and defense-related
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advanced technologies, information and communications technology, research and
9 
development and their support industries. The SpeDEZ shall cover the Government
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Arsenal Industrial Estate inside Camp General Antonio Luna located in the Municipality of
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Limay, Province of Bataan, measuring approximately three hundred seventy (370)
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hectares. Including the seventy (70) hectares of land within which the Government
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Arsenal (GA), created pursuant to Republic Act No. 1884, otherwise known as "An Act to
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Establish A Government Arsenal, Provide for its Operation and for Other Purposes"
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operates, the portions allocated for the expansion of the GA, and all other areas which
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may be declared as part of the SpeDEZ In compliance with Section 5(h) of this Act:
17 
Provided, That the GA shall remain a line bureau of the Department of National Defense
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(DND) in accordance with Republic Act No. 1884, Executive Order No. 292, Series of
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1987, otherwise known as the "Administrative Code of the Philippines", Republic Act No.
20 
7898, as amended by Republic Act No. 10349, otherwise known as the "AFP
21 
Modernization Act", Executive Order No. 303 series of 2004, and other prevailing laws
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and executive issuances. Except for necessary coordination on matters of mutual and
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higher security concerns emanating from the very nature of their respective mandates,
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the operations of the GA shall remain independent of the management of the SpeDEZ,
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and the Special Defense Economic Zone Authority (SpeDEZA), in accordance with this
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Act, shall not interfere with the activities conducted in the seventy (70) hectare area on
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which the GA maintains and operates its buildings and structures (the "GA area");
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Provided further, That the SpeDEZ shall not be expanded nor operated to the prejudice
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of the GA and the GA shall not be expanded nor operated to the prejudice of the SpeDEZ.
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The GA and the SpeDEZA shall continuously coordinate to ensure smooth and seamless
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operations involving the SpeDEZ and the GA; Provided finally, That investors who intend
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to do business in the GA area may do so only upon written consent of the GA prior to
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registration with the SpeDEZA.


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Sec. 4. Creation of the Special Defense Economic Zone Authority (SpeDEZA). - There 
is hereby created a specialized and independent body corporate to be known as the 
Special Defense Economic Zone Authority which shall manage and operate the SpeDEZ 
In accordance with the provisions of this Act. The SpeDEZA shall be considered a 
government instrumentality vested with corporate powers.
Notwithstanding Section 3 of Republic Act No. 7656, otherwise known as "An Act 
Requiring Government-Owned or Controlled Corporations to Declare Dividends under 
Certain Conditions to the National Government, and for other Purposes", all dividends 
remitted by the SpeDEZA shall exclusively be for the Armed Forces of the Philippines 
Modernization Program and in no case, shall dividends remitted by the SpeDEZA be used 
otherwise.
Sec. 5. Governing Principles. - The SpeDEZ shall be managed and operated under 
the following principles:
a) Within the framework and limitations of the Constitution, Republic Act No. 1884, 
Republic Act No. 7898, as amended by Republic Act No. 10349, Republic Act 
No. 10697, otherwise known as the "Strategic Trade Management Act", 
Executive Order No. 303, Series of 2004, and applicable provisions of the Local 
Government Code, the SpeDEZ shall be developed into and operated as a 
decentralized, self-reliant and self-sustaining Industrial, commercial, trading, 
research, development, engineering, information and communications 
technology and financial Investment center exclusive for defense, military and 
law enforcement commercial activities and investments, with provision for 
suitable residential, educational, recreational, and commercial areas;
b) Notwithstanding the autonomy provided in Section 5(a) of this Act, the SpeDEZ 
may continue to be provided by the national government and local governments 
with transportation, telecommunications and other facilities needed to attract 
legitimate and productive investments, generate linkage with industries and 
employment opportunities for the people of the Province of Bataan and its 
neighboring towns and cities; Provided, That the autonomy and self-reliance of 
the SpeDEZ shall not be a hindrance to assistance nor partnerships with other
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units and instrumentalities of the government; Provided further, That no 
assistance or partnership shall be construed as a waiver of the autonomy of the 
SpeDEZA;
c) The SpeDEZA may establish mutually beneficial economic defense relations with 
other investment promotion agencies, entities or enterprises within the country 
or with foreign entities or enterprises; Provided, That the SpeDEZA shall seek 
clearance from the DND and administrative guidance from the Department of 
Foreign Affairs (DFA) as to relations with foreign entities or enterprises;
d) Foreign citizens and companies owned by non-Filipinos may set up enterprises 
in the SpeDEZ with foreign ownership of up to the percentage allowed by law, 
subject to the approval of SpeDEZA, either by themselves or In joint venture 
with Filipinos or the GA in the defense and security industry within the territorial 
jurisdiction of the SpeDEZ; Provided, That the SpeDEZA may require individual 
locators to be subject to the provisions and limitations provided for by the 
Strategic Trade Management Act, Foreign Investment Act and the Regular 
Foreign Investment Negative List issued by the President; Provided further,
the SpeDEZA may require a minimum investment in freely convertible currencies 
from any enterprise seeking registration as a locator of the SpeDEZ. All 
investments in the SpeDEZA shall fall under the priorities, thrusts and limits 
provided for in this Act; Provided finaiiy. That all investments that do not directly 
or indirectly further defense, military and law enforcement investments shall be 
prohibited from doing business within the SpeDEZ except for businesses that 
cater to or support the locators, their employees, and the residents of the 
SpeDEZ;
e) Subject to the limitations In this Act and its implementing rules and regulations, 
the SpeDEZ 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; Provided, That subject to Section 14 of this 
Act, the SpeDEZ and all activities conducted therein shall be exempt from 
payment of all national and local taxes; Provided further. That in accordance 
with Sections 301 and 817 of Republic Act No. 10863, otherwise known as the
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"Customs Modernization and Tariff Act", the Bureau of Customs (BOC) shall 
continue to exercise border protection and customs control authority over the 
customs territory adjacent to the SpeDEZ and to this end shall consult, 
coordinate, cooperate with the SpeDEZA to enhance its protection and control 
capacity and ensure compliance with customs laws and regulations;
f) 
The SpeDEZA shall provide incentives, such as tax and duty-free admissions of 
raw materials, capital and equipment to registered enterprises of the SpeDEZ; 
Provided, That exportation or removal of goods from the territory of the SpeDEZ 
to the other parts of the Philippine territory shall be subject, as applicable, to 
customs duties and taxes under the Customs Modernization and Tariff Act, as 
amended, and the National Internal Revenue Code of 1997, as amended; 
Provided further, that sales of good from the SpeDEZ to the Armed Forces of 
the Philippines (AFP), Philippine National Police (PNP) and local government 
units (LCDs) for defense and security purposes shall be exempt from all customs 
duties, national and local taxes; Provided finaiiy, that subject to coordination 
with the BOC, customs transit to and from the SpeDEZ, thru the Port of Lamao 
or other ports, shall also be considered tax and duty-free;
g) 
As far as practicable, enterprises located within the SpeDEZ shall acquire a 
certain percentage of their raw material requirements locally produced within 
the Philippines as determined by the SpeDEZA;
h) The areas comprising the SpeDEZ may be expanded or reduced when necessary 
to improve its investment promotion capacity, ensure public order and safety, 
consolidate lands for SpeDEZ development, acquire right of way or access 
necessary and appropriate to the SpeDEZ, protect and safeguard watershed 
areas or maintain and improve water yield for the benefit of the SpeDEZ and 
LCDs, manage solid and water waste in compliance with existing national laws 
and local ordinances, and promote the public good. For this purpose, the 
SpeDEZA, with the concurrence of the appropriate and affected LGUs in the 
Province of Bataan and in accordance and in compliance with existing national 
laws and local ordinances, shall have the power to acquire, procure, increase,
or otherwise expand, either by purchase, negotiation or condemnation
5


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proceedings, any private or public lands and their respective water territories 
within the Province of Bataan; Provided, That when applicable, the municipal 
waters of up to fifteen (15) kilometers from the low water mark area of the 
edge of the SpeDEZ shall be deemed included in the territorial jurisdiction of 
the SpeDEZ; Provided further, That the SpeDEZA and the relevant LCDs shall 
provide for immediate and responsive mechanisms, best management practices 
and suitable environmental protection programs for land and coastal zone 
management to address any abuse and/or exploitation of the natural 
environment within the territorial jurisdiction of the SpeDEZ;
i) 
Products and goods researched and developed, engineered or manufactured by 
registered enterprises may be made available in the domestic market, subject 
to the limitations in this Act and its implementing rules and regulations, payment 
of corresponding duties, customs and taxes on raw materials, approval by the 
DND or the PNP in accordance with Republic Act No. 10697 and the Regular 
Foreign Investment Negative List Issued by the President, other regulations that 
may be formulated by the SpeDEZA, and other applicable regulations and 
limitations imposed in accordance with law by the DND, AFP, PNP, Bangko 
Sentral ng Pilipinas (BSP), Department of Finance (DOF), BOC and Department 
of Trade and Industry (DTI); Provided, That in cooperation with the SpeDEZA, 
the DND and PNP shall provide and Implement measures to improve ease and 
cost of doing business within the SpeDEZ and enhance the investment 
promotion capacity of the SpeDEZA; Provided further, That in order to protect 
domestic industries, a negative list of industries shall be drawn up and regularly 
updated by the SpeDEZA; Provided finally. That enterprises engaged in 
industries Included In such negative list shall not be allowed to sell their products 
locally, notwithstanding the registration of such enterprises in the SpeDEZ; and
j) 
Subject to Section 6(n) of this Act, the defense of the SpeDEZ and the security 
of its perimeter fence shall be the responsibility of the National Government, 
thru the AFP and the GA, in coordination with the SpeDEZA.
Sec. 6. Powers and Functions of the SpeDEZA. - The SpeDEZA shall have the
33 following functions:


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a) To adopt, alter, and use a corporate seal;
b) To contract, lease, buy, sell, acquire, own and dispose properties of whatever 
nature; Provided, That real properties that form part of the original Camp 
General Antonio Luna shall not be disposed of or encumbered; Provided further, 
That expansion areas may be disposed of or encumbered by the SpeDEZA;
c) 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;
d) To exercise the power of eminent domain for public use and public purpose;
e) To operate, administer, manage, develop, in accordance with Executive Order 
No. 525, as amended, the SpeDEZ according to the principles and provisions 
set forth in this Act;
f) 
To recommend to the President the Issuance of a proclamation or any executive 
issuance to fix or delimit the metes and bounds of the SpeDEZ; Provided, that 
such proclamation shall not be required to expand the SpeDEZ pursuant to 
Section 5(h) of this Act;
g) To register, regulate and supervise the entities and enterprises in the SpeDEZ 
in a competent and efficient manner that, as far as practicable, balances ease 
of doing business and sound restriction or regulation of activities; the SpeDEZA 
may also register, regulate, and supervise defense related enterprises outside 
of the SpeDEZ territory as defined in Section 3 and Section 5(h) of this Act. 
Provided, That the SpeDEZA shall submit to the DND a quarterly report on 
locators and other registered enterprises of the SpeDEZ.
h) To formulate and exercise general and sole supervision over the implementation 
of the development plans, activities and operations of the SpeDEZ; Provided, 
That the SpeDEZA may coordinate with LGUs when necessary to promote 
development In the SpeDEZ;


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i) 
To authorize or undertake, on its own or through others, and regulate the 
establishment, construction, operation and maintenance of public utilities, 
services, and infrastructure in the SpeDEZ 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 Philippine Ports Authority (PPA), the Civil Aviation 
Authority of the Philippines (CAAP), and the AFP, and such other services or 
concessions or infrastructure necessary or incidental to the accomplishment of 
the objectives of this Act; Provided, That the registered enterprises of the 
SpeDEZ 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 SpeDEZ;
j) 
To issue license, set fees, regulate the establishment, operation, and 
maintenance of utilities, educational and medical institutions, infrastructure 
related to military, defense and law enforcement investments and other services 
in the SpeDEZ such as, heat, light and power, water supply, 
telecommunications, mobile, Internet and other data facilities, transport, toll 
roads and bridges and port services, and to fix just, reasonable and competitive 
rates, fares, charges and prices thereof;
k) 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 joint venture with the private sector, any or all of 
the public utilities and infrastructure required or needed for the operation and 
development of the SpeDEZ, including transportation, access and connection 
to, and out of the SpeDEZA, in coordination with appropriate national and local 
government authorities and in conformity with applicable laws;
l) 
To raise or borrow, within the limitation provided by law, and subject to the 
approval or opinion of the Monetary Board of the BSP, as the case may be.


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adequate and necessary funds from local or foreign sources, to finance its 
projects and programs under this Act, and for this purpose, to issue bonds, 
promissory notes, and other forms of securities, and to secure the same by a 
guarantee, pledge, mortgage, deed of trust, or an assignment of all or part of 
its property or assets subject to Section 6(b) of this Act;
m) To enter into Public-Private Partnership, Build-Operate-Transfer schemes or any 
of its variants, management contract, joint venture, co-production, or similar 
agreements with local or foreign entities for the management and operation of 
the SpeDEZ, a portion thereof, or any enterprise registered therein to ensure 
the viability of the SpeDEZ;
n) To provide internal security to the SpeDEZ, in coordination with the National 
Government and affected LGUs; Provided, That for this purpose, the SpeDEZA 
shall provide and establish its own internal security and firefighting forces and 
identify and reserve facilities and areas within the SpeDEZ for the AFP, which 
shall be responsible for the perimeter security of the SpeDEZ, through the GA; 
Provided further. That in the event that the assistance of the AFP or PNP is 
necessary, the AFP or PNP shall not interfere in the internal affairs of the 
SpeDEZA, except to provide the necessary security and defense, or law 
enforcement assistance, as the case may be; Provided finaiiy, That expenses of 
the AFP or PNP in the SpeDEZ shall be borne by the national government;
o) To protect, preserve, maintain and develop the forests, beaches, coral and coral 
reefs, and maintain ecological balance within the SpeDEZ; Provided, That 
notwithstanding the authority of the SpeDEZA to create rules for such 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 SpeDEZA; Provided further, That the 
SpeDEZA shall create an Ecology Center for such purpose;
p) To create, operate or contract to operate such functional units or offices of the 
SpeDEZA as it may deem necessary;


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q) To issue certificates of origin for products manufactured or processed in the 
SpeDEZ;
r) 
To issue rules and regulations necessary to implement and accomplish the 
purposes, objectives and policies provided herein, in consultation with DND, 
DTI, DOF and other relevant government agencies;
s) To appropriately zone the SpeDEZ and provide for buffer zones when necessary 
and reserve areas for housing;
t) 
To establish one-stop shops for the issuance of all necessary permits, 
clearances, licenses, and other similar certifications to conduct such activities 
intended to improve the ease of doing business within the SpeDEZ, in 
coordination with government agencies having jurisdiction over activities in the 
SpeDEZ not otherwise solely reserved to the SpeDEZA; Provided, That all 
government agencies are directed to provide and extend utmost and full 
cooperation to the SpeDEZA in the establishment of such one-stop shops; and
u) To perform such other functions as may be necessary to carry out the provisions 
of this Act.
Sec. 7. Composition of the SpeDEZA. - The powers of the SpeDEZA shall be vested 
in and exercised by a Board of Directors which shall be composed of the following:
a) The Secretary of the DND who shall be the ex-officio Chairman;
b) The Undersecretary of National Defense of the DND as the Vice-Chairman; 
Provided, That in the absence of the Chairman, the Vice-Chairman shall preside 
over the meetings of the Board of the SPeDEZA;
c) Members who shall consist of:
1. 
DND Undersecretary;
2. 
DND Undersecretary;
10


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3. 
DND Undersecretary;
4. 
DND Assistant Secretary;
5. 
DND Assistant Secretary;
6. 
Director of Government Arsenal;
7. 
Director of the Office of Strategy, Capability and Technology;
8. 
DND Chief of Legal Affairs;
9. 
One (1) representative from the from the investors within the SpeDEZ;
10. 
One (1) representative from the workers In the SpeDEZ;
11. 
One (1) representative from the Province of Bataan;
12. 
One (1) representative from the Municipality of Limay, Bataan;
13. 
One (1) representative from the legislative district covering the site of 
the SpeDEZ;
14. 
One (1) representative from the Department of Trade and Industry;
15. 
One (1) representative from the Department of Finance.
In the event of abolition of concerned DND Office, SND has the authority to appoint 
the replacement to maintain majority members of the Board of Directors from the DND.
In the event the Chairman and Vice-Chairman are unable to attend the board 
meeting, the members present constituting a quorum shall elect amongst themselves the 
Presiding Officer for that particular meeting. The Presiding Officer shall not have voting 
rights except to break a tie. For the purpose of determining quorum, vacant seats shall 
not be considered.
Except those coming from the DND and GA, 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.
All members of the Board shall be Filipino citizens and no person shall be appointed 
by the President of the Philippines as a member of the Board unless he is of good moral 
character and proven probity and integrity. Except for the representatives of the DND,
GA and workers, members of the Board are required to be degree holders in any of the
11


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following fields: economics, business, public administration, law, management, military 
science, or their equivalent, and with at least ten (10) years relevant working experience 
preferably in 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, That the total per diem collected each month shall not exceed 
the equivalent per diem for four (4) meetings.
Sec. 8. Administrator of the SpeDEZA - The SpeDEZA shall have an Administrator 
with a rank of Department Undersecretary who shall be appointed by the President of 
the Philippines. The Administrator shall be at least forty (40) years of age, of proven 
probity and integrity, and a degree holder in any of the following fields: economics, 
business, public administration, law, management or their equivalent, with at least ten 
(10) years relevant working experience, preferably in the field of business, management, 
or public administration.
Sec. 9. Powers and Duties of the Administrator. - The Administrator shall have the 
following powers and duties:
a) To direct and manage the affairs of the SpeDEZA in accordance with the policies 
of the Board;
b) To establish the internal organization of the SpeDEZA under such conditions 
that the Board may prescribe;
c) 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;
e) To submit to the Board for its approval policies, systems, procedures, rules and
regulations that are essential to the operation of the SpeDEZA;
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f) 
To create a mechanism for coordination with relevant agencies for the 
promotion of industrial peace, the protection of the environment, and the 
advancement of the quality of life in the SpeDEZ;
g) To preside at the meetings of the Board of the SpeDEZA In the absence of the 
Chairman;
h) To directly administer and supervise the operations and day-to-day business 
activities of the SpeDEZA;
i) 
To execute, on behalf of the SpeDEZA, all contracts, agreements and other 
instruments affecting its interests and duly approved by the Board; and
j) 
To perform such other duties as may be assigned to him by the Board or which 
are necessary or Incidental to his office.
Sec. 10. Principal Office of the SpeDEZA. - The SpeDEZA shall maintain its principal 
office in Camp Gen. Antonio Luna, Municipality of Limay, Province of Bataan, but it may 
establish liaison offices within the Philippines as may be necessary for the proper conduct 
of its business.
Sec. 11. Organization and Personnel. - The Board of the SpeDEZA shall provide for 
an organizational structure and appoint employees, subject to applicable provisions of 
the civil service laws and regulations. Upon the recommendation of the Chairman and 
Administrator and with the approval of the Secretary of the DBM, 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 classification; Provided,!^^^ 
the Chairman and Administrator shall exercise administrative supervision on its 
employees.
The officers and employees of the SpeDEZA, including all members of the Board, 
shall not engage directly or indirectly in partisan activities nor take part in any election, 
except to vote.
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No officer or employee of the SpeDEZA, subject to civil service laws and regulations, 
shall be removed or suspended except for cause, as provided by law.
Sec. 12. Special Labor Center. - A Special Labor Center shall be established within 
the SpeDEZ. This Center shall endeavor and be responsible to pro-actively play a vital 
role In 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 SpeDEZ, particularly of the duly registered 
entities and enterprises. The Special Labor Center shall comprise of a labor office, an 
industrial health and safety office, an inspection/investigative and disputes office, and an 
enforcement office.
In order to support the economic and employment generation thrusts of the LGUs, 
the SpeDEZA shall implement policies and programs that will serve to prioritize for 
employment in the SpeDEZ, workers who are residents of stakeholder LGUs. Registered 
enterprises shall, as far as practicable, source all its labor needs from the stakeholder 
LGUs of the SpeDEZ, subject to existing laws and regulations; Provided/J\\dit "stakeholder 
LGUs" for the purpose of this Act shall refer to all local government units which (1) derive 
a share In the five percent (5%) final tax imposition within the SpeDEZ, (2) host 
expansion areas of the SpeDEZ in accordance with Section 5(g) or Section 6(f) of this 
Act, and/or (3) host registered enterprises of the SpeDEZ pursuant to section 6(g) of this 
act;
The SpeDEZA and, as far as practicable, the locators and registered enterprises of 
the SpeDEZ, shall prioritize for employment qualified former personnel of the GA who 
have been terminated or removed from the service due to modernization of the GA.
Sec. 13. Investors V\SB. - Any foreign national who Invests an amount of at least 
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 the foreign 
national has the following qualifications:
a) Must be at least eighteen (18) years of age;
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b) Must not have been convicted by final judgment of a crime involving moral 
turpitude;
c) 
Must not be afflicted with any loathsome, dangerous or contagious disease;
d) Must not have been institutionalized for any mental disorder or disability; and
e) Must 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 in the Philippines 
while his investment subsists. For this purpose, the alien 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, the investor's visa issued to him shall automatically expire and/or be 
withdrawn.
The authority to issue visas and work permits shall remain with the Bureau of 
Immigration (BI) and the Department of Labor and Employment (DOLE), respectively; 
Provided, That the BI and the DOLE shall implement measures to expedite the processing 
of such visas and permits for workers in the SpeDEZ and coordinate with the SpeDEZA 
for the purpose of improving ease of doing business.
Sec. 14. Fiscal Incentives. - Registered enterprises of the SpeDEZ 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; Provided, That in the administration, implementation and monitoring of incentives, 
the SpeDEZA may Impose its own conditions not otherwise prohibited by this Act; 
Provided further. That the SpeDEZA shall not be limited to the conditions provided under 
Republic Act No. 7916, Republic Act No. 8748 or any other related issuance, rule or 
regulation.
Sec. 15. Imposition of a Tax Rate of Five Percent (5%) on Gross Income Earned. - 
The provision of existing laws, rules and regulations to the contrary notwithstanding, no
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taxes, local and national, shall be imposed on business establishments operating within 
the SpeDEZ including but not limited to all taxes covered in Titles II, III, IV, V, VI, and 
VII of Republic Act No. 8424 otherwise known as the "National Internal Revenue Code" 
and all amendments and successors thereto, and all taxes covered under titles I and II 
of Book II of Republic Act No. 7160 otherwise known as the "Local Government Code" 
and all amendments and successors thereto. In lieu thereof, and subject to Section 16 of 
this Act, said business establishments shall pay a five percent (5%) final tax on their 
gross income earned; Provided, That the proceeds from such final tax shall be shared by 
instrumentalities of the government in accordance with the following percentages:
a) Three per centum (3%) to the National Government, particularly to the DND- 
AFP Modernization Program;
b) One half per centum (.5%) to the Province of Bataan;
c) One half per centum (.5%) to the Treasurer's Office of the Municipality of Limay; 
and
d) Three fourth per centum (.75%) to the SpeDEZA: Provided, That any surplus In 
the operating, administrative and development expenses shall be remitted to 
the Armed Forces of the Philippines Modernization Program if such surplus is 
left unutilized for a period exceeding five (5) years.
e) One fourth per centum (.25%) to the Defense Research Fund.
For enterprises registered with the SpeDEZA but located in the territory of another 
investment promotion agency pursuant to a mutually beneficial economic defense relation 
established with such promotion agency in accordance with Section 5(c) of this act, the 
one per centum (1%) share from the five per centum (5%) final tax on gross income 
earned shall be equally divided between the SpeDEZA and the investment promotion 
agency concerned.
The SpeDEZA shall have the authority to grant income tax holiday and net operating 
loss carry over subject to Section 16 of this Act and conditions as it may have Imposed 
pursuant to Section 13 of this Act.
SpeDEZ enterprises deemed as priority investments, as may be determined by the
SpeDEZA, with the exception of those included in the negative list drawn up as provided
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for in Section 5(i) of this Act, may generate up to one hundred percent (100%) of their 
income from sources within the customs territory but without loss of eligibility to avail of 
the incentives in this act, subject to Section 5(f) of this act.
Sec. 16. Administration, Impiementation 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 SpeDEZA shall be responsible for the administration, management, 
enforcement and implementation of the incentives granted to registered enterprises; 
Provided, That the SpeDEZA shall, among others, adopt and implement systems and 
procedures affecting defense/military trade and the appropriate customs policies; 
Provided further, That the BOC shall set up and establish a customs controlled area 
outside the gate of the SpeDEZ or other registered enterprises of the SpeDEZ operating 
outside its territory to facilitate payment of taxes on goods entering the Philippine 
customs territory; Provided finaiiy. That notwithstanding the limitations In this Act, 
the SpeDEZA and BOC may coordinate and jointly implement measures on border 
protection; and
(b) In the interest of enhancing transparency in the management and accounting 
of tax incentives in the SpeDEZ, the SpeDEZA shall comply with the provisions of Republic 
Act No. 10708, otherwise known as "The Tax Incentives Management and 
Transparency Act (TIMTA)" and its implementing rules and regulations.
Sec. 17. Duration of Incentives. - 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; Provided, That such 20-year period may 
be extended with regard to industries deemed indispensable to national development and 
interest. The industries exempted from this provision shall be determined by the 
SpeDEZA, In consultation with other government agencies. There shall be no limit to the 
enjoyment of the Income tax holiday and NOLCO except for the sequential availment 
under Section 17 of this Act and the 20-year period as provided in this section.
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Sec. 18. Sequential Availment of Incentives. - Registered enterprises may enjoy the 
income tax holiday (ITH) granted by the SpeDEZA prior to the availment of the five 
percent (5%) final tax on gross Income earned incentive; Provided, That in the event a 
registered enterprise elects to avail of the final tax incentive, such registered enterprise 
shall be barred from availing the ITH incentive.
Registered enterprises, if eligible, may register for incentives with other investment 
promotion agencies; Provided, That registered enterprises electing to avail of the 
Incentives of other promotion agencies shall not be able to avail of the incentives of the 
SpeDEZ until the expiration of the Incentives with such other investment promotion 
agencies.
Sec. 19. Extension of Period of Availment - In the event that a registered enterprise 
has suffered cessation or suspension of operations due to force majeure, which has 
impaired its viability or profitability, the SpeDEZA may extend the period of validity of the 
incentives extended to such registered enterprise.
The SpeDEZA may also extend the period of validity of incentives to a registered 
enterprise which enter into and fund research and development undertaking, technology 
sharing, or other similar arrangements with investment promotion agencies, government 
agencies and instrumentalities, local government units, and educational institutions under 
such terms and conditions as the SpeDEZA may prescribe.
Sec. 20. Banking Rules and Regulations. - Banks and financial institutions to be 
established in the SpeDEZ shall be under the supervision of the BSP and shall be subject 
to existing banking laws, rules and regulations.
Sec. 21. Remittances. - In the case of foreign investments, a duly registered entity 
or enterprise within the SpeDEZ shall have the right to remit earnings from the Investment 
in the currency in which the investment was originally made and at the exchange rate 
prevailing at the time of remittance, subject to the provisions of Republic Act No. 7653, 
otherwise known as "The New Central Bank Act".
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Sec. 22. Multi-Year Contracts and Other Contractual Arrangements - To spur the 
development of SpeDEZ as a self-reliant and self-sustaining defense investment hub 
where duly qualified and selected locators are provided with guaranteed market access, 
the DND, AFP, PCG and PNP are hereby directed to procure their defense equipment and 
material, whenever available and practicable, from defense industries registered with the 
SpeDEZA. For this purpose, the DND, AFP, PCG, and PNP are authorized to enter into 
multi-year contracts and other multi-year contractual arrangements with 
manufacturers/suppliers registered with the SpeDEZA under such terms and conditions 
to be provided In the Implementing rules and regulations of this Act.
The SpeDEZA, the DND, AFP, PCG, and PNP shall jointly formulate the guidelines 
for the selection of manufacturers/suppliers to be awarded with multi-year contracts. 
Provided, that registration with the SpeDEZA and location of operation and manufacture 
of the defense equipment and material to be procured in the SpeDEZ shall be a condition 
precedent for the award of the multi-year contracts.
The selection of manufacturers/suppliers eligible for multi-year contracts with the 
government shall be exempt from the provisions of Republic Act No. 9184 otherwise 
known as the "Government Procurement Reform Act" and its implementing rules and 
regulations. The length of the multi-year contracts shall be agreed upon by the 
contracting parties taking Into consideration the period within which the 
manufacturer/supplier may recoup its Investment together with a reasonable rate of 
return. Provided, that the execution of the multi-year contract shall not preclude the 
manufacturer/supplier concerned from accepting and filling in orders from other clients 
as long as the fulfillment of its obligations under the multi-year contract are not adversely 
affected.
Sec. 23. Countertrade - Whenever applicable and practicable, any of the 
countertrade arrangements defined in Executive Order No. 120 should be explored in 
pursuing defense related acquisitions. The SpeDEZA In consultation with the DND, DTI, 
and other concerned offices, shall identify or develop a list of goods/services or industries 
which may be subject to a countertrade.
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Sec. 24. Capitalization. - The SpeDEZA shall have an authorized capital stock of 
Three Billion Pesos (P3,000,000,000.00) to be subscribed wholly by the national 
government.
In addition, all lands embraced and covered by the SpeDEZ, including permanent 
improvements and fixtures, upon proper Inventory by the GA or AFP, as the case may be, 
not otherwise alienated, conveyed or transferred to another government agency and all 
other assets which the President may transfer to the SpeDEZA as part of the equity 
contribution of the government.
The annual subscription of the national government to the capital stock of the 
SpeDEZA shall be included In the General Appropriations Act.
Sec. 25. Supervision and Control. - For purposes of policy direction and coordination, 
the A-BASE shall be under the direct control and supervision of the Office of the President 
of the Philippines.
Sec. 26. Regional Development Council. - The SpeDEZA shall determine the 
development goals for the SpeDEZ within the framework of national development plans, 
policies and goals.
Sec. 27. Relationship with Local Government Units. - Except as herein provided, the 
Municipality of Limay in the Province of Bataan and such other local government units 
where registered enterprises of the SpeDEZ conduct business shall operate and function 
In accordance with the framework of the 1987 Constitution, Local Government Code of 
1991, and Republic Act No. 7898, as amended by Republic Act No. 10349, applicable 
provisions of the Local Government Code, and this Act.
In case of any conflict between the SpeDEZA, the LGUs and the national government 
on matters affecting the SpeDEZA, other than national defense and security matters, the 
decision of the SpeDEZA shall prevail.
Sec. 28. Legal Office. - The SpeDEZA shall have and maintain its own internal legal
office, appropriate in number under the supervision of the Government Corporate
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Counsel. When the exigencies of its businesses and operations demand, the SpeDEZA 
may engage the services of an outside counsel either on a case to case or a fixed retainer 
basis. Such engagement shall not require further approval and concurrence of the Office 
of the Government Corporate Counsel or the Office of the Solicitor General and the 
Commission on Audit.
Sec. 29. Interpretation/Construction. - The powers, authorities and functions that 
are vested in the SpeDEZA are intended to establish national self-sufficiency and self- 
reliance in the advancement of and protection of the national Integrity, enhancement of 
national security, decentralization of governmental functions and authority, and promote 
an efficient and effective working relationship between the SpeDEZA, the national 
government and the LGUs. Any interpretation of this Act shall consider such intentions. 
In the event of conflict of interpretation and provided the Intentions cannot be 
harmonized, the provisions of this Act shall be construed in favor of an interpretation that 
would tend to protect national security.
Sec. 30. Audit - The Commission on Audit shall appoint a full-time auditor in the 
SpeDEZA or may assign such number of personnel as may be necessary in the 
performance of its functions.
Sec. 31. Transitory Provisions. - The SpeDEZA shall be responsible for the operation, 
administration, management and development of the SpeDEZ. The SpeDEZA shall effect 
the transfer herein provided in a manner that will ensure the least disruption of ongoing 
programs of the GA.
Sec. 32. Impiementing Ruies and Reguiations. - The SpeDEZA, DTI, DOF, DND, 
GU shall formulate the implementing rules and regulations of this Act within ninety 
(90) days after its approval.
Sec. 33. Appiicabiiity Cause. - Insofar as these are consistent with the provisions of 
this Act, the provisions of Sections 30 to 41 of Republic Act No. 7916, otherwise known 
as "The Special Economic Zone Act of 1995", as amended, shall likewise apply to the 
SpeDEZ.
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Sec. 34. Separability Clause. - If any provision of this Act shall be held 
unconstitutional or invalid, the remaining parts or provisions not otherwise affected shall 
remain in full force and effect.
Sec. 35. Repealing Clause. - All laws, executive orders, issuances, rule and 
regulations, or any part thereof, which are inconsistent with the provisions of this Act, 
are hereby repealed or modified accordingly.
Sec. 36. 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.
Approved,
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