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THIRTEENTH CONGRESS OF THE 
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IIEI’UUBLIC OF THE PI-IILII’I’XNES 
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Third Regulur Session 
(In substitution of Senate Bill No. 221 7, taking into consideration 
House Bill No. 5262) 
Prepared by the Committees on Econoniic Affairs; Local Government; Ways and 
Means; and Finance with Senators Enrilc, Roxas, Lirn, Rccto and Drilon 
as authors thereof. 
AN ACT 
ESTABLISHING THE SOUTHERN PALAWAN SPECIAL ECONOMIC 
ZONE IN THE PROVINCE OF PALAWAN, CREATING FOR THE 
PURPOSE THE SOUTHERN PALAWAN SPECIAL ECONOMIC ZONE 
AUTHORITY, APPROPRIATING FUNDS ‘THEREFOR AND FOR OTHER 
PURPOSES 
Be it enacted by the Senaie and House of Representatives of the Philippines in 
Congress assembled: 
Section 1. Short Title. - This Act shall be known as the “Southern Palawan 
Special Economic Zone Act of2007.” 
SCC. 2. Declaration of Policy. - It is hereby declared the policy of the State 
to actively encourage, promote, induce, and accelerate the sound and balanced 
industrial, economic and social developinent of the country in order to provide jobs to 
the people, especially those in rural areas, increase their productivity and their 
individual and fanlily income, and thereby improve the level and quality of their 
living conditions through the establishment, among others, of special economic zones 
in suilablc and strategic locations in the country and through measures that shall 
effectively attract legitimate and productive foreign investments. 
Sec. 3. Creation of the Soutlierii Palaivtm Special Economic Zone. - In 
pursuit of the foregoing declared policy and sub,ject to the concurrence of the 
concerned local government units of Southern Palawan affected by the zone, there is 
hereby established a Special Economic Zone, hereinafler referred to as the Southern 
Palawan Ecozone. The Southern Palawan Ecozone shall cover the entire area 
embraced by the Municipalities of Balabac, Brooke’s Point and Batarazd in the 
Province of Palawan. The specific metes and bounds of the Southern Palawan 
Ecozone shall be more particularly defined in a proclamation to be issued by the 
President of the Philippines, upon the recommendation of the Philippine Economic 
Zone Authority (I’EZA), provided that the lands embraced therein shall be public 
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Sec. 4. 
Governing Principles. - The Southern Palawan Special Economic 
Zone shall be managed and operated by the Southern I'alawan Special Economic 
Zone Authority, herein referred to as the SPELA, created under Section 10 of this 
Act, under the following principles: 
(a) 
Within the framework and limitations of the Constitution and 
applicable provisions of the Local Government Code, the Southern Palawan Ecozone 
shall be developed into and operated as a decentralized, self-reliant and self-sustaining 
industrial, comniercial/trading, agro-industrial, tourist, banking, financial and 
investment center with suitable residential areas. 
(b) 
The Southeiii Palawan Ecozone shall be provided with transportation, 
telecommunications and other facilities needed to attract legitimate and productive 
investments, generate linkage industries and employment opportunities for the people 
of the Province of Southern Palawan and its neighboring towns and cities. 
(c) 
The Southern Palawait Ecozone may establish mutually beneficial 
economic relations with other entities or enterprises within the country or, subject to 
the administrative guidance of the Department of Foreign Affairs (DFA), the 
Philippine Economic Zone Authority (PEZA) and/or the Department of Trade and 
Industry (DTI), with foreign entities or enterprises. 
(d) 
Foreign citizens and companies owned by non-Filipinos in whalever 
proportion may set up enterprises in the Soutlter~i Palawan Ecozone, either by 
themselves or in joint venture with Filipinos in any sector of industry, international 
trade and commerce within the Southern Palawan Ecozone. 
(e) 
The areas comprising the Southern Palawan Ecozone may be expanded 
or reduced when necessary. For this purpose, the SPEZA, in consultation with the 
local government units, shall have the power to acquire either by purchase, 
negotiation or condemnation proceedings, any private land within or adjacent to the 
Southern Palawan Ecozone for the following purposes: (a) consolidation of lands for 
Southern Palawan Ecozone development; (2) acquisition of right of way to the 
Southern Palawan Ecozone; and (3) the protection of watershed areas and natural 
assets valuable to the prosperity of the Southtern Palawan Ecozone. 
(f) 
Goods manuractured by an Southern Palawan Ecozone enterprise shall 
be made available Cor immediate retail sale in the domestic market, subject to the 
payment of corresponding taxes on raw materials and other regulations that may be 
formulated by the SPEZA, together with the PEZA, the Bureau of Customs and the 
DTI. However, in order lo protect domestic industries, a Negative List of industries 
shall be drawn up and regularly updated by P E A .  Enterprises engaged in industries 
included in such Negative List shall not be allowed to sell their products locally. 
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(g) 
The national government shall rnaintain its ability to coordinate with 
the Southern Palawan Ecozone and tile local government units. 
See. 5. Incentives To Registered Enterprises. - The Southern Paiawan Special 
Economic Zone Authority (SPEZA) may administer the following incentives to the 
registered enterprises located therein to the extent of the activity/project: 
(A) 
Income l a x  Holiday (ITH) - Registered enterprises shall be entitled to 
an income tax holiday from the start of their commercial operations to the extent of 
their activity under the following categories: 
Category A - Registered domestic enterprise located in highly developed 
areas, as determined by the Board of Investments (BOI), shall be entitled to a 
four-year income tax holiday. 
Category B - Registered domestic enterprise on the following shall be entitled 
to a six-year income tax holiday: 
(1) Located in less developed areas as defined by the BOI; or 
(2) Producinghendering new prodncts/services or having strong 
backward or forward linkages 
Category C - Registered export enterprise shall be entitled to a six- year 
income tax holiday: Provided, however, That if the export enterprise complies 
with the following: (1) large capital investments or sizeable employment 
generation, or (2) use high level of technology or (3) located outside Metro- 
Manila, it shall be entitled to an eight-year income tax holiday. 
Registered enterprises embarking on new investments that are listed in the 
current Investment Priorities Plan (IPP) shall be entitled to incentives provided herein 
pertaining to the new investments and subject to such terms and conditions as the BO1 
may determine. 
For this purpose, a registered enterprise shall be defined as any person, natural 
or juridical, licensed to do business in the Philippines and registered with the Southern 
Palawan Special Economic Zone Authority (SPEZA) to transact business within the 
Southern Palawan Special Economic Zone. A registered export enterprise shall be 
defined as any registered enterprise engaged directly or indirectly in the production, 
manufacture or trade of products or services which earns at least seventy percent 
(70%) of its normal operating revenues from the sale of its products or services 
abroad for foreign currency. A registered doniestic enterprise, meanwhile, shall be 
defined as any registered enterprise not falling nnder the definition of a registered 
export enterprise. 
Additional investments in the projcct shall be entitled to the income tax 
holidays corresponding to such investments as may be determined by the BOI. 
Additional income tax holiday may be granted for as long as the investment is made 
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on the same project: Provided, That the project is listed in the IPP at the same time the 
additional invcstmcnt in the prqjcct is made: Providerf, further, That the entitlement 
period for additional investments shall not exceed three times the period provided 
under this subsection: Provided, however, That the total ITH period for an export 
enterprise availing of an eight year ITH shall not exceed twenty (20) years. Any 
unused incentives shall therefore be deemed forfeited if not used during the incentive 
period. 
Enterprises registered with SPEZA are required to share in the special 
development fund of the BO1 for investment promotion projects of the government 
equivalent to one percent (1%) of the IT13 granted for every application. 
The Bureau of Internal Revenue (BIR) shall require a registered enterprise 
availing of ITI-I or Net Operating Loss Carryover (NOLCO) to secure a certificate of 
eligibility fiom the SPEZA before submitting its income tax return (ITR) with SPEZA 
for validation. 
Failure to secure certification and/or to file tlie TI" or NOLCO availment for 
validation by the SPEZA within forty-five (45) days from the last day of each 
statutory filing date for ITR shall muse the forfeiture of the availment for the taxable 
period. 
(B) 
Net Operating Loss Carryover (NOLCO) - Net operating loss of the 
business or enterprise during the first three years from start of commercial operations 
which have not been previously ofket as deduction from gross income shall be 
carried over as a deduction From gross income for the next five consecutive years 
immediately following the year of such loss: Provided, however, That operating loss 
resulting from availment of incentives provided in this Act shall not be entitled to 
NOLCO. 
Registered enterprises availing of the 1TH as herein provided shall not be 
entitled to avail or the NOLCO. 
(C) Imposition of a tax rate of five percent (5%) on Gross Income Earned 
(GIE) - Except for real property tax on land, no local and national taxes as prescribed 
under Republic Act No. 8424, also known as '''rile National Internal Revenue Code of 
1997, as Amended" such as income tax, excise tax, and franchise taxes, shall be 
imposed on registered enterprises operating within the Southern Palawan Ecozone. In 
lieu thereof, five percent (5%) ofthe gross income earned shall be paid as follows: 
(a) Three percent (3%) to the national government; 
(b) Two percent (2%) shall be remitted by the business establishments to tlie 
treasurer's office of the municipality or city where the enterprise is 
located; 
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All persons and service establishments in the Southern Palawan Ecozone shall 
be subject to natioiial and local Vaxcs under the National Internal Revenue Code of 
1997, as amended, and the Local Government Code. 
D. Accelerated Depreciation - Accelerated depreciation of plant, machinery 
and equipment that are reasonably needed and actually used for the production and 
transport of goods and services may be allowed using a rate not exceeding twice the 
rate which would have been used had the annual allowance been computed in 
accordance with the rules and regulations prescribed by the Secretary of Finance and 
the provisions of the National Internal Revenue Code (NIRC) of 1997, as amended. 
E. 
Capital Equipment Incentives - (I) Importations of capital equipment, 
spare parts, tools and dyc, or those required for pollution abatement and control, 
cleaner production and waste reduction including consigntnent thereof by registered 
enterprises upon the effectivity of this law, shall be exempted to the extent of one 
hundred percent (100%) of the taxes and customs duties: Provided, That the imported 
items thereof shall be used exclusively by the registered enterprise in its registered 
activity. Provided, further, That the importation of machinery and equipment and 
accoinpanying parts shall comply with the following conditions: 
1. 
comparable quality and at reasonable prices; 
ii. 
They are rcasoiiably needed and will be used exclusively by the 
registered enterprise in the manufacture of its products, unless prior approval 
of the SPEZA is secured for the part time utilization of said equipment in a 
non-registered activity to maximize usagc thereof or the proportionate taxes 
and duties are paid on a specific equip~nenl and machinery being permanently 
used for non-registered activities; and 
iii. 
the importation of such machinery, equipment and spare parts. 
Approval of the SPEZA must be secured before any sale, transfer or 
disposition of the imported capita1 equipment, mschinery or spare parts is made: 
Provided, That if such sale, transfer or disposition is made within the first five years 
from date of importation, any of the following conditions must be present: 
They are not manufactured domestically in sufficient quantity, of 
Approval of the SI’EZA was obtained by the registered enterprise for 
1) 
The same is made to another enterprise enjoying tax and duty 
exemption on imported capital equipment; 
‘The same is made to another enterprise, upon the payment of any 
taxes and duties on the nct book value of the capital equipment to 
be sold; 
2) 
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3 )  
The exportation of the capital equipment, machinery, spare parts or 
source docunieuts or those required for pollution abatement and 
control; or 
Proven technical obsolescence of the said equipment, machinery or 
spare parts. 
4) 
When the aforementioned sale, transfer or disposition is made under any of the 
conditions provided for in tlie foregoing paragraphs other ihan paragraph (2) herein, 
the registered firm shall not pay the taxes and duties waived on such items: Provided, 
furfher, That if the registered enterprises sell, transfer or dispose the aforementioned 
imported items without prior approval within five years from the date of importation, 
the registered enterprise and tlie vendec, transferee, or assignee shall be solidarily 
liable to pay twice the amoinit of the tax and duty exemption given it: Provided, 
jinully, That even if the sale, transfer or disposition of the capital equipment, 
machinery or spare parts is approved after five years fiom date of importation, the 
registered enterprises are still liable to pay the taxes and duties based on the net book 
value of the capital equipment, machinery or spare parts if any of the registration 
terms and conditions has been violated. Otherwise, they slid11 no longer be subject to 
the payment of the taxes and duties waived thereon. 
(2) 
The purchase of machinery, capital equipment, raw materials, supplies, 
parts and semi-finished products to be used in thc fabrication of machinery and capital 
equipment by a registered export-oriented enterprise from a domestic manufacturer 
shall be subject to zero percent (0%) value-added tax. 
The registered export-oriented enterprise shall be granted a tax credit 
equivalent to the amount of duties that would have been waived on the machinery; 
capital equipment; raw materials, supplies, parts and semi-finished products used in 
the fabrication ol machinery and capital equipment, had these items been imported, 
upon its submission to the DOF o f  the bill o€ materials evidencing the transaction 
value of such and other pertinent documents, for verification and proper endorsement. 
The availment by a registered export enterprise of the incentive stated under 
the immediately preceding two paragraphs shall be subject to the following 
conditions: (a) lhat said capital equipment, machinery and spare parts will be used 
exclusively by the registered enterprise in its rcgistered activity; (b) That the capital 
equipment or machinery where the raw materials, supplies, parts and semi-tinislied 
products were used would have qualified for lax and duty-free importation; and (c) 
That the approval of the SPEZA is obtained by the registered enterprise. If the 
registered enterprise sells, transfers or disposes o€ these machineries, capital 
equipment and spare parts, the provision in tlie preceding paragraphs for such 
disposition shall apply. 
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This incentive shall be deemed waived if application for tax credit under this 
subsection was not filed within one year Li-oni date of delivery 
F. 
The importation of source documents by information technology- 
registered enterprises shall be eligible for tax and duty free importation. 
G. 
Raw Materials Incentives - Every registered export-oriented enterprise 
shall enjoy a tax credit equivalent to the internal revenue taxes and customs duties 
paid on the supplies, raw materials and semi-manufactured products provided the 
same are not sufficient in quantity, quality or are not competitively priced in the 
Philippines and which ale used in the manufacture, processing or production of its 
export products forming part fhereol; exported directly and indirectly by the registered 
export-oriented enferprise, based on the actual taxes and duties paid for such 
materials/supplies/seini-in~uractured products by the registered enterprise. 
This incentive shall be deemed waived if application for tax credit under this 
subsection was not filed within one year from date of exportation of the final product. 
H. Incentives on Breeding Stoclts and Genetic Materials. - Importation of 
breeding stocks and genetic materials within ten (10) years from the date of 
registration of commercial operation of the enterprise shall be exempt from all taxes 
and duties: Provided, T‘hat such breeding stocks and genetic materials are reasonably 
needed in the registered activity; and approved by the SI’EZA. 
The availmcnt of the iiicenlivcs by the registered enterprise shall be subject to 
the following: (a) that said breeding stocks and genetic materials would have been 
qualified for tax and duty-free importation under the preceding paragraph; (b) that the 
breeding stocks and genetic materials are reasonably needed in the registered activity; 
(c) that approval of the SPEZA has been obtained by the registered enterprise; and (d) 
that the purchase is made within ten (10) years from the date of registration of 
commercial operation of the registered enterprise. 
This incentive shall be deemed waived if application for tax credit under this 
subsection is not filed within one year from date ofdelivery. 
I. 
Exemption from Wharfage Dues. - -I-iie provisions of law to the contrary 
notwithstanding, exports by a registered enterprise shall be exempted from wharfage 
dues. 
J. Deferred Imposition or the Minimum Corporate Income Tax. - The 
Minimum Corporate Income Tax (MCIT) or two percent (2%) of the gross income as 
of the end of the taxable year shall be imposed when the MCIT is greater than the 
income tax computed under the NIRC OF 1997, as amended, for the taxable year: 
Provided, however, That said MClT shall be imposed only alter the enterprise’s 
entitlement period to the income tax-based incentives has expired 
K. Tax Treatment of Merchandise in the Southern I’alawan Ecozone. I 
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a. Domestic merchandise sent from the Southern Palawan Ecozone to 
areas outside the said Ecozone shall, whether or not combined with or 
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made past o f  other articles likewise ol' local origin or manufactured in 
the Philippines while in the export processing zone, be subject to 
internal revenue laws of the Philippines as domestic goods sold, 
transferred or disposed of for local consumption. 
b. Merchandise sent from the Southern Palawan Ecozone to areas outside 
the said Ecozone shall,, whether or not combined with or made part of 
other articles while in the zone, be subject to rules and regulations 
governing imported merchandise. 'l'hc duties and taxes shall be based 
on the value of said imported materials (except when the final product 
is exempt). 
c. Articles produced or manufactured in the Southern Palawan Ecozone 
and exported therefrom shall, on subsequent importation into the 
customs territory, be subject to the import laws applicable to like 
articles manufactured in a foreign country. 
d. Unless the contrary is shown, merchandise taken out of the Southern 
Palawan Ecozone shall be considered for tax purposes to have been 
sent to customs territory. 
Tax 'Treatment of Raw Materials and Capital Equipment in the 
Southern Palawan Ecozone. - Importations of raw materials and capital equipment 
shall be treated as in the Omnibus Investments Code. Registered export oriented 
enterprise shall have access to the utilization ol' the bonded warehousing system in 
accordance with the rules and regulations of the Bureau of Customs. 
L. 
M. 
Employinent of Foreign Nationals. - Subject to the provisions of 
Section 29 of Commonwealth Act No. 613, as amended, a registered enterprise may 
employ foreign nationals in supervisory or technical positions for a period not 
exceeding ten (10) years from its registration: Provided, That when the majority of 
the capital stock of a registered enterprise is owned by foreign investors, the positions 
of the president, treasurer and general manager or their equivalents may be retained 
by foreign nationals beyond the period set €orth herein and such officer is the owner 
or a stockholder owning at least ten percent (10%) of'the outstanding capital stock of 
the registered enterprise and he remains the owner or maintains his stockholdings 
therein. 
Foreign nationals under employment contract within the purview of this 
incentive, their spouses and unmarried children under twenty-one (2 1) years of age, 
who are not excluded by Section 29 of Commonwealth Act No. 613, as amended, 
shall be permitted to enter and reside in the Philippines during the period of 
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employment of such foreign nationals. They shall be entitled to a multiple entry visa, 
valid for a period of three years, and shall bc allowed 10 enter and leave the 
Philippines withoul further documcntary requirements other than valid passports or 
other travel documents in the nature of’ passports. The validity of the multiple entry 
visa shall be extendible yearly. 
The said foreign nationals admitted under this provision, as well as their 
respective spouses and dependents shall be exempt from: 
(a) obtaining alien 
certificate of registration and immigration clearance certificates; and (b) securing the 
Alien Employment Permit (AEP) and all types of clearances, permits, licenses or their 
equivalents required by any government department or agency. 
Sec. 6. Incentive to Znvmtors. - Any foreign national covered under 
Subsection (M) of Section 5 of this Act, who invests an amount of US $ 150,000.00, 
either in cash and/or equipment, in a registered enterprise shall be entitled to an 
investor’s visa: Provided, That, 
(1) Me is at least eighteen (18) years of age; 
(2) He has not been convicted ofa crime involving moral turpitude; 
(3) He is not afflicted with any loathsome, dangerous or contagious disease; 
and 
(4) He has not been institutionalized for any mental disorder or disability. 
Provided, firrhkr, ’That in securing the investor’s visa, the alien-applicant shall be 
entitled to the same privileges provided for under paragraph (M), Section 5 hereof. 
As a holder of investor’s visa, an alien shall be entitled to reside in the 
Philippines whilc his investment subsists. For this purpose, he should submit an 
annual report, in the form duly prescribed for the purpose, to prove that he has 
maintained his investinent in the country. Should said alien withdraw his investments 
from the Philippines, then the investor’s visa issued to him shall automatically expire. 
Sec. 7. Administration, Implementation and Monitoring of Incentives. - 
The SPEZA shall be responsible for the administration and implementation of the 
incentives granted to its respective registered enterprises: 
Provided, That any 
incentive administration policy adopted by the BO1 for registered enterprises shall be 
uniformly applied by SPEZA. 
The following are the duties and responsibilities of the SPEZA in the 
administration of incentives: 
(A) ‘To adopt consistent procedures of administering incentives in 
accordance with the guidelines established by the BOI; 
To adopt and implement systems and procedures affecting trade and 
customs policies in accordance with the requirements established by the 
Department of Finance (DOF) and the BOI; 
(B) 
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(C) To submit information on registered enterprises to the DOF and the BO1 
as required by any of thesc agencies to ascertain consistency of 
investment policies and incentives, including their implementation as 
provided in paragraph (a) herein, and to ensure proper implementation of 
systems and procedures affecting trade and customs policies as provided 
in paragraph (b) herein; and 
To perform all other duties and responsibilities as may be required by 
the President oftlie Philippines. 
(D) 
For proper monitoring, the BO1 shall create a single database of all incentives 
provided by all incentives granting agencies, including SPEZA, and all information 
thereto. Double entry accounting sliall be done by the BO1 in recording all incentives 
granted by the government for transparency purposes. 
Sec. 8. Extension of Period of Availmeni. - The availment period of the 
iiicentives provided herein may be extended by SPEZA, in the event that the 
registered enterprise suffers operational force nzujeure or any event equivalent thereto, 
impairing its viability, provided that the availment period shall not exceed the 
duration of the said force mujeure or equivalent event. 
Sec. 9. Duration of Incentives. - Enterprises registered with SPEZA may 
enjoy ITH or NOLCO granted by the latter prior l o  the availment of the five percent 
(5%) GIE. 
Fiscal incentives under this Act shall be terminated after a cumulative period 
of twenty (20) years froin date of registration or start of commercial operation, 
whichever is applicable, except that it could be extended with regard to industries 
deemed indispensable to national development. 
The industries exempted from this provision shall be recommended by BOI, 
with the concurrence of the Secretaries of the Department of Finance and Trade and 
Industry. 
Sec. 10. Creciiion of 
the Sonlliern Palawan Special Economic Zone 
Ac&o&y. - There is hereby crealed a body corporate to be known as the Southern 
Palawan Special Economic Zone Authority, hereinafter referred to as the SPEZA, 
which shall manage and operate, in accordance with the provisions of this Act, the 
Southern Palawan Special Economic Zone. This corporate franchise shall expire in 
fifty (50) years counted from the first day of the fill11 (5"') calendar year afier the 
effectivity of this Act, unless otherwise extended by Congress. It shall be organized 
within one hundred eighty (1 80) days after the efrectivity of this Act. 
Sec. 11. Princiyaf Office of 
SPEZA. - The Southern Palawan Special 
Economic Zone Authority shall maintain its principal office in the Municipality of 
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Balabac, Province of Palawan, but it may establish branches within the Philippines as 
may be necessary Cor tlic proper conduct of its brrsincss. 
See. 12. i’owew and Furtctions of tlzc Surrtleer.tz Pidtwnit Special Economic 
Zone Authurity. - The Southern Palawan Special Economic Zone Authority shall 
have the following powers and functions: 
(a) To operate, administer, manage and develop the Southern Palawan 
Ecozone according to the principles and provisions set forth in this Act; 
(b) To register, regulate and supervise the enterprises in the Southern Palawan 
Ecozone in an efficient and decentralized manner, subject to existing laws; 
(c) To coordinate with local government units and exercise general 
supervision over the development plans, activities and operations of the 
Southern Palawan Ecozone; 
(d) To regulate and undertake the establishment, operation and maintenance 
of utilities, other services and infrastructure in the Southern Palawan 
Ecozone such as but not limited to heat, light and power, water supply, 
telccoiiimunications, transport, toll roads and bridges, port services, etc. 
and to fix just, rcasonable and coinpetitive rates, fares, charges and prices 
thereof; 
(e) To construct, acquire, own, lease, operate and maintain on its own or 
through contracts, fianchisc, licenses, bnlk purchase from the private 
sector or permits under any of the schemes allowed in Republic Act No. 
6957 (the Build-Operate-Transfer Law, as ainended by IL4 7718), or joint 
venture, adequate facilities and infrastructure required or needed for the 
operation and I devclopinent of the Southern Palawan Ecozone, in 
coordination with appropriate national and local government authorities 
and in conformity with applicable laws thereon; 
(f) To operate on its own, either directly or through a license to other 
tourism-related activities, including games, amusements, recreational and 
sports facilities; 
(g) Subject to the approval of the President and the Monetary Board of the 
Baiigko Sentral ng Pilipinas upon the recoininendation of the Department 
of Finance, to raise or borrow adequate and necessary funds from local or 
foreign sources to finance its projects and programs under this Act, and 
for that purpose to issue bonds, promissory notes, and other forins of 
securities, and to secure the same by a guarantee, plcdge, mortgage, deed 
oftrust, or an assignment of all or part of its property or assets; 
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(h) To protect, preserve, maintain and develop the virgin forests,. beaches, 
coral and coral reefs and maintain ccological balance within the Southern 
Palawan Ecozone; 
(i) To create, operate andor contract to operate such functional units of 
offices of tlie SPEZA as it may deem necessary; 
(i) To adopt, alter and use a corporate seal; inake contracts, leases, own, or 
otherwise dispose of personal or real properly; sue and be sued; and 
otherwise carry out its functions and duties as provided for in this Act; 
(I) To issue certificates of origin for products manufactured or processed in 
the Southern Palawan Ecozone in accordance with prevailing rules of 
origin, and the pertinent regulations of the I’EZA, DTI and/or the 
Department of Finance (DOF); 
(I) To issue worlting visas renewable every two (2) years to foreign 
executives and foreign technicians with highly specialized skills which no 
Filipinos possesses, as certified by the Department of Labor and 
Employment; 
(m) To report to the Bureau of Immigration the names of the foreigners who 
have becn granted permanent resident status and working visas within 
thirty (30) days after issuance of such grant; 
(11) To exercise such powers as maybe essential, necessary or incidental to the 
powers granted to it hereunder as well as those that shall enable it to carry 
out, implement and accomplish the purposes, objectives and policies of 
this Act; and 
(0) To issue rules and regulations consistent with the provisions of this Act as 
maybe necessary to accomplish and implement the purposes, objectives 
and policies provided liercin. 
Scc. 13. Banking Rules 
cind Regulations. - Existing laws and 
rules/regulations of‘ the Bnnglzo S’entrul ng Pilipinu (BSI’) shall apply to banks and 
financial institutions to be established in the Southern Palawan Ecozone, such as those 
governing foreign exchange and other concurrent account transactions (trade and non- 
trade), local and foreign borrowings, foreign investments, establishment and operation 
of local and foreign banks, foreign currency deposit units, orfshore banking units and 
other financial institutions under the supervision of the BSP. 
Sec. 14. Remittance of Earnings.- 
In tlie case of foreign investments, a 
registered enterprise in the SPEZA shall have the right to remit earnings from the 
investment in the currcncy in which the investment was originally made and at the 
exchange rate prevailing at the time of remittance, subject to the provisions of Section 
74 of Republic Act No. 265, as amended. 
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Sec. 15. Bourd of Directors of the Southern Puluwun Special Economic 
Zone Aufhority. - The powers of the Soulhcrii Palawan Spccial Economic Zone 
Authority shall be vested in and cxercised by a Board of Directors, hereinafter 
referred to as the Board, which shall be composed of thc following: 
a) The Chairman who shall, at the same time be the administrator of the 
SPEZA; 
b) A Vice-Chairnian who shall come from among the members of the Board; 
c) Members consisting oC 
(1) The Governor of the Province of' Southern Palawan; 
(2) The Congressional Representative of the district covering the site 
of the Southern Palawan Ecozone; 
(3) The mayors of the Municipalities of Balabac, Brooke's Point and 
Bataraza, Province of Palawan; 
(4) One (1) representative from the domestic invcstors; 
(5) One (1) representative from the foreign investors; and 
(6) Two (2) representatives from the workers working in Southern 
Palawan Ecozone. 
The Governor, the Congressional representative and the mayors of the 
Province of Southern Palawan shall serve as ex-officio membcrs of the Board, whose 
term in the Board coricsponds to their term as electecl of'ficials. 
The Chairman and Ihe members of the Board, except the ex-qficio members, 
shall be appointed by the President of the Philippines to serve lor a term of six (6) 
ycars, unless sooncr separated €rom scrvice due to death, voluntary resignation, or 
removal for cause. In case of death, resignation or removal for cause, the replacement 
shall serve only the unexpired portion of the term. 
Except for the represenlatives of the busincss and labor sectors, no person 
shall be appointed by the President of'the Philippines as a member of the Board unless 
he is a Filipino citizen, of good moral character, ot'proven probity and integrity, and a 
degree-holder in any of the Jbllowing fields: 
economics, business, public 
administration, law, maiwgxicnt or their equivalent, and with at least ten (10) years 
relevant working experience prelerably in the field of management or public 
administration. 
The Members of' the Board shall each receive per diem at rate to be 
determined by the Department of Budgct and Management in accordance with 
existing rules and regulations: Provided however, That the total per diem collected 
each month shall not exceed the equivalent per diem for four (4) meetings. Unless 
and until the President of the I'hilippines has fixed a higher per diem for the members 
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of the board, such per diem shall not be more than ten thousand pesos (Pl0,OOO.OO) 
for every Board meeting. 
Sec. 16. Powers nnd Duties of the Ciinirnznil-A(inz~nnislrutor. - The 
Chairman-Administrator shall lave the following powers and duties: 
4 
To direct and manage the affairs of the SPEZA in accordance with 
the policies of the Board; 
To establish the internal organization of the SPEZA under such 
conditions that the Board may prescribe; 
To submit an annual budget and necessary supplemental budget to 
the Board for its approval; 
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; 
b) 
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e) 
To submit to thc Board for its approval policies, systems, 
procedures, rules and regulations that are essential to the operation 
of the Southern Palawan Ecozone; 
To create a mechanism in coordination with relevant agencies for 
the promotion or industrial peace, the protection of the environment, 
and the advancenient of the quality of' life in the Southern Palawan 
Ecozonc; and 
To perform such other duties as may be assigned to him by the 
Board or which arc necessary or incidental to his office. 
f) 
s) 
Sec. 17. 
Orgnnizntion and Personnel. - The Board of Directors of the 
SPEZA shall provide for an organization and staff of its officers and employees. 
Upon recommendation of the Cliairiiian-Administrator, 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 Board shall have exclusive and final authority to promote, transfer, assign or 
reassign officers of the SPEZA, any provision of existing law to the contrary 
notwithstanding: Provided, ,furlher., 'I'hat the Chairman-Administrator may carry out 
removal of such officers and employees. 
The officers and employees of the SPEZA, 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 or the SPEZA, subject to Civil Service laws and 
regulations, shall be removed or suspended except for cause, as provided by law. 
Sec. 18. Ipso Facto Clniisc. - Sections 30-41 of Republic Act 7916, shall ipso 
facto apply to the Southern Palawan Special Economic Zone. 
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Sec. 19. Cupitnlizntion. - The Southern Palawan Special Economic Zone 
Authority shall have an authorized capital stock oi’One Uillion (1,000,000,000) no par 
shares with a miniilium issue of Ten Pesos (PlO.00) each, the majority shares of 
which shall be subscribed and paid ror by the NationaI Governinent and the Local 
Government Units (LGUs) embracing the Southern Palawan Special Economic Zone. 
,The Board of Directors of the SPEZA may, with the written concurrence of the 
Secretary of Finance, sell shares, representing not more than forty per centum (40%) 
of the capital stock of the SPEZA to the general public under such policy as the Board 
and the Secretary of Finance may cleterniine. The National Government and the LGUs 
shall in no case own less than sixty per centum (60%) of the total issued and 
outstanding capital ofthe Southern Palawan Special Economic Zone and Authority. 
The amount necessary to subscribe and pay for the shares of the National 
Government to the capital stock of the SPEZA shall be included in the Annual 
General Appropriations Act. For LGUs, the funds shall be taken from their internal 
revenue allotment and other local funds 
Sec. 20. Supervision. - l‘he Southern Palawan Special Economic Zone shall 
be under the direct control and supervision of the Philippine Economic Zone 
Authority (PEZA) for purposes of policy direction and coordination 
Sec. 21. 
Rekriionslr~~ 
with the Regionnl Developmertt Council. - The 
Southern Palawan Special Economic Zone Authority shall deteraiine the development 
goals for the Soutbern Palawan Ecozone within the framework of national 
development plans, policies and goals. The Administrator shall, upon approval by the 
Board, submit the Southern Palawan Ecozone plans, programs and projects to the 
Regional Development Council for inclusion and inputs lo the overall regional 
development plan. 
See. 22. Relntionsliip with Local Government Units.- 
Except as herein 
provided, the local government units comprising the Southern Palawan Special 
Economic Zone shall retain their basic autonomy and identity. The Municipalities of 
Balabac, Brooke’s Point and 13ataraza shall operate and function in accordance with 
the Local Government Code of 1991. In case of any conflict between the SPEZA and 
the Province of Southern Palawan on matters affecting the Southern Palawan Ecozone 
other than defense and security matters, the decision of the SI’EZA shall prevail. 
Sec. 23. lufer~rrfntiorz/Cons/ruc~~on. 
- The powers, authorities and functions 
that are vested in the SI’EZA are intended to decentralize governniental functions and 
authority and promotc an efficient and eCfective worlting relationship between the 
Southern Palawan Ecozone, the NG, and the local governnieet units. 
See. 24. Auditing. - The Commission on Audit shall appoint a representative 
who shall be a full time auditor of the SPEZA and assign such number of personnel as 
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may be necessary to assist said representative in the performance of hisher duties. 
The salaries and cmoluments on the assigncd auditor and personnel shall be in 
accordance with pertincnt laws, rtilcs and regulations. 
Sec. 25. Separability Clause. - If any provisions of this Act shall be held 
unconstitutional or invalid, the other provisions not otherwise affected shall remain in 
full force and effect. 
Sec. 26. Repealing Clause. - All laws, executive orders and issuances, or any 
parts thereof, which are iaconsistcnt herewith are hereby repealed or amended 
accordingly. 
Scc. 27. Effectivity Clausc. - This Act shall take effect upon its publication 
in at least one (I) newspaper of general circulation. 
Approved, 
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