Republic of the Philippines 
House of Representatives 
Quezon City 
NINETEENTH CONGRESS 
First Regular Session 
HOUSE BILL NO. ______ 
Introduced by Representative MERCEDES K. ALVAREZ, MNSA 
EXPLANATORY NOTE 
During the previous administration, the Philippine Economic Zone Authority 
(PEZA) aimed to have military reservation areas converted as defense industrial economic 
zones. Alongside, PEZA has also planned to transform military areas such as Fort 
Bonifacio, Camp Evangelista, and Maguindanao into defense industrial complexes to 
manufacture military weapons and equipment. 
This bill seeks to establish a special defense economic zone (SpeDEZ) and 
mutually beneficial economic relations with other entities within the country inside the 
government arsenal defense industrial estate of Camp Gen. Antonio Luna to reduce import 
dependence and invite investors and defense industries to manufacture military aircraft, 
seacraft, weapons, equipment, software, hardware, uniforms, among others which the 
military and the police will be needing. 
The establishment and operation of the SpeDEZ will help sustain the Armed 
Forces of the Philippines’ (AFP) modernization program in line with the national policy of 
defense self-reliance. 
Support of this is earnestly requested from my colleagues. 
MERCEDES K. ALVAREZ, MNSA 
Sixth District, Negros Occidental 
December 12, 2022
5:01 pm
6623


 Republic of the Philippines 
House of Representatives 
Quezon City 
NINETEENTH CONGRESS 
First Regular Session 
HOUSE BILL NO. ______ 
Introduced by Representative MERCEDES K. ALVAREZ 
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) AND APPROPRIATING FUNDS 
THEREFOR ANS FOR OHER PURPOSES 
Be it enacted by the Senate and House of Representatives of the Philippines in 
Congress assembled: 
SECTION 1. Short Title. - This Act shall be known as the "SPECIAL DEFENSE 
ECONOMIC ZONE (SpeDEZ) ACT". 
SEC. 2. Declaration of Policy. — It is hereby declared the policy of the State to 
develop a self-reliant and independent national economy effectively controlled by 
Filipinos. The State recognizes the indispensable role of the private sector, 
encourages the participation of private enterprise, and provides incentives to needed 
investments.  Further, the State actively encourages, promotes and accelerates the 
sound and balanced industrial, economic and social development of the country 
through the establishment, of special economic zones in suitable and strategic 
locations in the country. In so doing, the State is able to attract legitimate and 
productive foreign investments that provide jobs especially to those in the rural areas, 
improve productivity and family incomes, and thereby improving the level and quality 
of living conditions of the people. 
6623


SEC. 3. Creation of the Special Defense Economic Zone — There is hereby 
created a special economic zone in Camp General Antonio Luna, Lamao, 
Municipality of Limay in the Province of Bataan, hereinafter referred to as the Special 
Defense Economic Zone (SpeDEZ), for investments in defense, military, law 
enforcement, and defense-related advanced technologies, information and 
communications technology, research and development and their support industries. 
The SpeDEZ shall cover the Government Arsenal Industrial Estate inside Camp 
General Antonio Luna located in the Municipality of Limay, Province of Bataan 
measuring approximately three hundred seventy (370) hectares, including the 
seventy (70) hectares of land within which the Government Arsenal (GA), as created 
by Republic Act 1884, otherwise known as "An Act to Establish A Government 
Arsenal, Provide for its Operation and for Other Purposes" operates, the portions 
allocated for the expansion of the GA, areas where existing manufacturing facilities 
for defense material and equipment are located, subjeto compliance with Section 5(k) 
of this Act, and all other areas which may be declared as part of the SpeDEZ in 
compliance with Section 5(h) of this Act: Provided, That the GA shall remain a line 
bureau of the Department of 
National Defense (DND) in accordance with Republic Act 1884, Executive Order No. 
292, Series of 1987, otherwise known as the "Administrative Code of the Philippines", 
Republic Act No. 7898, as amended by Republic Act No. 10349, otherwise known as 
the "AFP Modernization Act', Executive Order No. 303 series of 2004, and other 
prevailing laws and executive issuances. Except for necessary coordination on 
matters of mutual and higher securityconcerns emanating from the very nature of 
their respective mandates, the operations of the GA shall remain independent of the 
management of the SpeDEZ, and the Special Defense Economic Zone Authority 
(SpeDEZ), as created by this Act, shall not interfere with the activities conducted in 
the seventy (70) hectare area on which the GA maintains and operates its buildings 
and structures: Provided, further, That the SpeDEZ shall not be expanded nor 
operated to the prejudice of the GA and the GA shall not be expanded nor operated 
to the prejudice of the SpeDEZ. The GA and the SpeDEZA shall continuously 
coordinate to ensure smooth and seamless operations involving the SpeDEZ and the 
Gal; Provided finally, That investors who intend to do business in the GA area may 
do so only upon written consent of the GA prior to registration with the SpeDEZA. 
SEC. 4. Creation of the Special Defense Economic Zone Authority. - There 
is hereby created a specialized and independent body corporate to be known as the 
Special Defense Economic Zone Authority (SpeDEZA) 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 be exclusively utilized for the Armed Forces 
of the Philippines Modernization Program and the self-reliant defense posture 


programs of the national government. 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 hub for decentralized, self-reliant and self-sustaining industrial, commercial,
trading, research, development, engineering, information and communications
technology and financial investment 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 units and instrumentalities of the government: Provided
further, That no assistance or partnership 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) 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, 
That 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 finally, 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, 
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 "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 (CMTA), as amended, and the National Internal Revenue Code 
(NtRC) 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 (LGUs) for defense and security 
purposes shall be exempt from all customs duties, national and local 
taxes:Provided, finally, that subject to coordination with the BOC, customs 
transit to and from the SpeDEZ, through 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 LGUs, 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, 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 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 LGUs shall utilize 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, 
through the AFP and the GA, in coordination with the SpeDEZA. 
 
SEC. 6. Powers and Functions of the SpeDEZA. - The SpeDEZA shall have 
the following functions 


 
 
 
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, AND 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, ha 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 the profile of 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; 
 
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 SpeDEZ, 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, 
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 Partnerships, 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 ensure that the area covered by the SpeDEZ is secure at all times: 
Provided, 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 finally, 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; 
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 provided by law. 


 
 
 
SEC. 7. Board of Directors of the SpeDEZA. - The powers of the SpeDEZA shall  
be vested in and exercised by a Board of Directors, hereinafter referred to as the 
Board, which shall be composed of the following: 
 
a) The Secretary of the DND who shall be the ex officio Chairman; 
 
b) The Administrator of the SpeDEZA as Vice-Chairman: Provided, That in the 
absence of the Chairman, the Vice Chairman shall preside over the meetings of 
the Board; 
 
c) Members who shall consist of the following: 
1. Assistant Secretary for Plans and Programs (ASPP) of the DND; 
2. Assistant Secretary for Acquisition, Installations and Logistics (ASAIL) 
of the DND; 
3. Director of the GA; 
4. One (1 ) representative from the investors within the SpeDEZ; 
5. One (1) representative from the workers working in the SpeDEZ; 
6. One (1 ) representative from the province of Bataan; 
7. One (1) representative from the municipality of Limay, Bataan; 
8. One (1 ) representative from the legislative district covering the site of 
the SpeDEZ; and 
9. Two (2) independent directors with proven expertise in defense and 
security strategies to be recommended by the SpeDEZA Board. 
 
In the event that the position of the ASPP, ASAIL of the DND, or Director of the 
GA becomes vacant, the designated Acting ASPP, ASAIL or Director of the GA 
shall serve as member of the Board. 
 
In the event the Chairman and Vice-Chairman are unable to attend 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 the presence 
of a 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 
one 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 following fields: economics, business, public 
administration, law, management, military science, or their equivalent, and with 
29 at least ten (10) years relevant working experience preferably in the field of 
management or public administration. 
 
 The members of the Board, except the ex-officio member 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; 


 
 
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 the 
Revised Administrative Code of 1987 on the Civil Service Commission or the 
Civil Service Law. Upon the recommendation of the Chairman and Administrator 
of SpeDEZA 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, That the Chairman and Administrator shall exercise 
administrative supervision over the employees of the SpeDEZA. 
 
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. 
 
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, That LGUs within whose territorial jurisdictions 
the SpeDEZA is located for the purpose of this Act shall refer to all local 
governments 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, 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 the 
modernization of the GA. 
 
 
SEC. 13. Investors Visa. - Any foreign national who invests an amount of Two 
hundred thousand US dollars (US$200,OOO.OO), either in cash and/or 
equipment, in a registered enterprise shall be entitled to an investors visa: 
Provided, That the foreign national has the following qualifications: 
 
a) Must be at least eighteen (18) years of age; 
 
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 one's financial capability 
and capacity. 
As a holder of investor's visa, an alien shall be entitled to reside in the Philippines 
while the investment subsists. For this purpose, the alien should submit an 
annual report, in the form duly prescribed for the purpose, to prove that the 
investor has maintained the investment in the country. Should said alien 


 
 
withdraw the investments from the Philippines, then the investor's visa issued to 
said alien shall automatically expire and /or be withdrawn. 
 
 
 The authority to issue visas and work permits shall remain with the Bureau of 
Immigration (Bl) and the Department of Labor and Employment (DOLE), 
respectively: Provided, That the Bl 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 special defense  
economic zone may be entitled to existing pertinent fiscal incentives granted 
under Executive Order No. 226, as amended, otherwise known as the Omnibus 
Investments Code of 1987. 
 
SEC.15. Imposition ofa Tax Rate ofFive Percent (5%) on Gross Income Earned.     
The provision of existing laws, rules and regulations to the contrary 
notwithstanding, no 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 
DNDAFP 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 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, Implementation and Monitoring of Incentives. For the  
proper administration, implementation and monitoring of tax incentives provided 
under this Act, 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 adopt and implement systems 
and procedures governing defense and military trade and shall comply with 
established customs policies: Provided further, That the BOC shall set up and 
establish a custom 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 
finally, That notwithstanding the limitations in this Act, the SpeDEZA and the 
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 the rules and regulations 
issued to implement it. 
SEC. 17. 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. 18. 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", as 
amended. 
 
 
SEC. 19. 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, the Armed Forces of the Philippines (AFP), 
the Philippine Coast Guard (PCG), and the Philippine National Police (PNP) are 
hereby directed to procure their defense equipment and materiel, whenever 
available and practicable, from defense manufacturers and suppliers 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 or suppliers registered with the SpeDEZA 
subject to existing laws, rules, regulations and guidelines.In implementing this 
Section, the SpeDEZA, the DND, AFP, PCG, and PNP shall jointly formulate the 
mechanics for the selection of manufacturers/suppliers to be awarded with multi-
year contracts: Provided, That registration with the SpeDEZA and location in the 
SpeDEZ of the manufacturing or distribution operations of such manufacturer or 
supplier of the defense equipment and materiel to be procured in the SpeDEZ 
shall be a condition precedent for the award of the multi-year contracts. 
 
 
SEC. 20. Countenrade — 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,Department of Trade and Industry (DTI), and other concerned 
offices, shall identify or develop a list of goods and services or industries which 
may be subject to a countertrade. 
 
 
SEC. 21. Capitalization. - The SpeDEZA shall have an authorized capital stock of  
three billion pesos 
 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 shall form 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 annual General Appropriations 
Act. 


 
 
 
 
SEC. 22. Regional Development Council. - The SpeDEZA shall determine the 
development goals for the SpeDEZ within the framework of national 
development plans, policies and goals. The Chairman and Administrator of the 
SpeDEZA shall, upon approval by the Board, submit the SpeDEZA plans, 
programs and projects to the Regional Development Council for inclusion and 
inputs to the overall regional development plan. 
 
 
SEC. 23. 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 
Constitution, Local Government Code of 1991, Republic Act No. 7898, as 
amended by Republic Act No. 10349, and applicable provisions of 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. 24. Legal Office. - The SpeDEZA shall have and maintain its own internal 
legal office, appropriate in number under the supervision of the Government 
Corporate Counsel. When the exigencies of its businesses and operations 
demand, the SpeDEZA may engage the services of an outside counsel either on 
a case to case or a fixed retainer basis. Such engagement shall 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. 25. Interpretation/Construction. - The powers, authorities and functions that  
are vested in the SpeDEZA are intended to enhance national security and 
promote self-reliance in the advancement of and protection of the national 
territorial integrity, uphold the 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 protects and promotes national 
security. 
 
 
SEC. 26. 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. 27. Transitory Provisions. The SpeDEZA shall be responsible for the  
operation, administration, management and development of the SpeDEZ. The 
SpeDEZA shall effects the transfer herein provided in a manner that will ensure 
the least disruption of ongoing programs of the GA. 
 
 
SEC. 28. Implementing Rules and Regulations. - The SpeDEZA, DTI, DOF,  
DND, PNP, PCG, and the LGU shall formulate the implementing rules and 
regulations to implement this Act within ninety (90) days after its approval. Such 
rules and regulations shall take effect fifteen (15) days after its publication in a 
newspaper of general circulation in the Philippines. 
 
 
SEC. 29. Applicability Clause. — 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. 
 
 
SEC. 30. Separability Clause. - If any provision of this Act shall be held  
unconstitutional or invalid, the other provisions not otherwise affected shall 
remain in full force and effect. 
 
SEC. 31. Repealing Clause. - All laws, executive orders or issuances or any part  
thereof, which are inconsistent herewith, are hereby repealed or amended 
accordingly. 
 
 
SEC. 32. Effectivity. - This Act shall take effect fifteen (15) days after its 
publication in the Official Gazette or in a newspaper of general circulation. 
 
 
SEC. 33. Supervision and Control. - For purposes of policy direction and 
coordination, the SpeDEZA shall be under the direct control and supervision of the 
Office of the President of the Philippines. 
 
 
Approved,