Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

EIGHTEENTH CONGRESS
First Regular Session

4473

House Bill No.

Introduced by Hon. Francis Gerald Aguinaldo Abaya

EXPLANATORY NOTE

The Philippine Congress passed Republic Act No. 7227 known as the Bases
Conversion and Development Act of 1992. Under the said law, the Subic Bay
Metropolitan Authority (SBMA) was created to develop and manage the Freeport which
provides tax and duty-free privileges and incentives to business locators in the special
economic zone. During the 17 Congress, committee hearings were held and
discussion on certain revisions of the law may be had in order to maximize the potential
of SBMA.

This bill provides for the inclusion of certain municipalities to the Subic Special
Economic Zone. There is also a need to specify that the zone shall be subject to customs.
duties and taxes under the Customs Modernization and Tariff Act as well as other
provisions exempting all registered business enterprises within the zone from national
and local taxes of any kind and nature. In lieu of such exemption, the registered business
enterprises shall pay a five percent (5%) tax on gross income earned. These provisions
seek to improve the revenue collection of local government units (LGUs) that are within
the zone.

The proposed measure also introduces a law enforcement department which
shall exercise police authority within the Subic Bay Freeport Zone in accordance with
the guidelines laid down in the bill. With this, public safety and security within the zone
are enhanced and thereby attracting more foreign and local investments.

Lastly, the bill embodies inclusive participation by apportioning additional seats
to the Board of Directors of SBMA from representatives of various LGUs as well as from
indigenous peoples. Through this, more stakeholders can express their interests that
shall affect the implementation of policies

In view of the foregoing, immediate approval of this bill is earnestly sought

FRANCIS GERALD AGUINALD! AYA

Representative, First District, Cavite


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

EIGHTEENTH CONGRESS
First Regular Session

House Bill No. eis

Introduced by Hon. Francis Gerald Aguinaldo Abaya

AN ACT REVITALIZING THE BASES CONVERSION DEVELOPMENT, AMENDING
FOR THE PURPOSE REPUBLIC ACT NO. 7227, OTHERWISE KNOWN AS THE
“BASES CONVERSION AND DEVELOPMENT ACT OF 1992” AS AMENDED

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

SECTION 1. Section 12 of Republic Act No. 7227, as amended, is hereby
further amended to read as follows:

“Sec. 12. Subic Special Economic Zone. — Subject to the concurrence
by resolution of the sangguniang panlungsod of the City of Olongapo and the
sangguniang bayan of the Municipalities of Subic, Morong, and Hermosa, there
is hereby created a Special Economic and Free-port Zone consisting of the City
of Olongapo and the Municipality of Subic, Province of Zambales, the lands
occupied by the Subic Naval Base and its contiguous extensions as embraced,
covered, and defined by the 1947 Military Bases Agreement between the
Philippines and the United States of America as amended, and within the
territorial jurisdiction of the Municipalities of Morong and Hermosa, Province of
Bataan, hereinafter referred to as the SUBIC Special Economic Zone whose
metes and bounds shall be delineated in a proclamation to be issued by the
President of the Philippines. Within thirty (30) days after the approval of this
Act, each local government unit shall submit its resolution of concurrence to join
the Subic Special Economic Zone to the Office of the President. Thereafter, the
President of the Philippines shall issue a proclamation defining the metes and
bounds of the zone as provided herein

“THE MUNICIPALITIES OF SAN ANTONIO, SAN MARCELINO AND
CASTILLEJOS OF THE PROVINCE OF ZAMBALES AND THE
MUNICIPALITIES OF MORONG, HERMOSA, AND DINALUPIHAN OF THE
PROVINCE OF BATAAN MAY, BY RESOLUTION OF THEIR RESPECTIVE
SANGGUNIANG BAYAN, CEDE IN WHOLE OR IN PART, FOR A PERIOD
OF NOT LESS THAN FIFTY (50) YEARS, THEIR ENTIRE MUNICIPAL
TERRITORY TO THE SUBIC SPECIAL ECONOMIC ZONE.


“The abovementioned zone shall be subject to the following policies:

a) Within the framework and subject to the mandate and limitations
of the Constitution and the pertinent provisions of the Local Government Code,
the Subic Special Economic Zone shall be developed into a self-sustaining,
industrial, commercial, financial, and investment center to generate
employment opportunities in and around the zone and to attract and promote
Productive foreign AND DOMESTIC investments;

b) The Subic Special Economic Zone shall be operated and
managed as a separate customs territory ensuring free flow or movement of
goods and capital within, into, and exported out of the Subic Special Economic
Zone, as well as provide incentives such as tax and duty-free importations of
raw materials, capital, and equipment. However, exportation or removal of
goods from the territory of the Subic Special Economic Zone to the other parts
of the Philippine territory shall be oe to — duties and taxes under

No. 10863, OTHERWISE KNOWN AS “THE “CUSTOMS MODERNIZATION
AND TARIFF ACT,” the National Internal Revenue Code of 1997, as amended,
and other relevant tax laws of the Philippines’

c) The provision of existing laws, rules, and regulations to the
contrary notwithstanding, no national and local taxes OF ANY KIND OR
NATURE shall be imposed within the Subic Special Economic Zone. In lieu of
said taxes, a five percent (5%) tax on gross income earned shall be paid by all
REGISTERED business enterprises within the Subic Special Economic Zone
and shall be remitted as follows: three percent (3%) to the National
Government; and two percent (2%) to the Subic Bay Metropolitan Authority
(SBMA) for distribution to the local government units affected by the declaration
of and contiguous to the zone, namely: the City of Olongapo and the
municipalities of Subic, San Antonio, San Marcelino, and Castillejos of the
Province of Zambales; and the municipalities of Morong, Hermosa, and
Dinalupihan of the Province of Bataan, on the basis of population (50%) 40%,
land area (25%) 40%, and equal sharing (25%) 20%.

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

d) No exchange control policy shall be applied and free markets for
foreign exchange — gold, securities, and futures shall be allowed and
maintained in the Subic Special Economic Zone.

e) The Central Bank, through the Monetary Board, shall supervise
and regulate the operations of banks and other financial institutions within the
Subic Special Economic Zone;

f) Banking and finance shall be liberalized with the establishment of
foreign currency depository units of local commercial banks and offshore
banking units of foreign banks with minimum Central Bank regulation;


9) Any investor within the Subic Special Economic Zone whose
continuing investment shall not be less than Two hundred fifty thousand dollars
($250,000), fhis/her}- THE INVESTOR'S spouse and dependent children under
twenty-one (21) years of age, shall be granted permanent resident status within
the Subic Special Economic Zone. They shall have freedom of ingress and
egress to and from the Subic Special Economic Zone without any need of
peal authorization from the Bureau of Inmiggaton fand peo The

may ASS issue ania visas renewable every two 2) years to foreign
‘executives and other aliens possessing highly-technical skills which no Filipino
within the Subic Special Economic Zone possesses, as certified by the
Department of Labor and Employment. The names of aliens granted permanent
residence status and working visas by the {Subie-Bay-Metropolitan Authority}
SBMA shall be reported to the Bureau of Immigration [and Deportation] within
thirty (30) days after issuance thereof.

h) The defense of the zone and the security of its perimeters shall
be the responsibility of the national government in coordination with the [Subic

paguep spe aes SBMA. aod pee ere ogre ear enero etal

THE EVENT THAT AN ASSISTANCE OF THE MILITARY Is NECESSARY,
THE EXPENSES SHALL BE BORNE BY THE NATIONAL GOVERNMENT.
THE MILITARY SHALL NOT INTERFERE IN THE INTERNAL AFFAIRS OF
SBMA EXCEPT TO PROVIDE THE NECESSARY SECURITY AND
DEFENSE.

THE SBMA SHALL PROVIDE AND ESTABLISH ITS OWN LAW
ENFORCEMENT DEPARTMENT WHICH SHALL EXERCISE THE
FOLLOWING POLICE AUTHORITY WITHIN THE SUBIC BAY FREEPORT
ZONE:

an MAINTAIN PEACE AND ORDER, ENSURE PUBLIC SAFETY

AND IMPLEMENT ALL LAWS, AND RULES AND
REGULATIONS OF THE SBMA;

2. REGULATE THE INGRESS AND EGRESS TO, FROM, AND
WITHIN THE SUBIC BAY FREEPORT ZONE;

3. EXERCISE THE GENERAL POWERS TO CONDUCT SEARCH
AND SEIZURE WITHIN THE SUBIC BAY FREEPORT ZONE IN
ACCORDANCE WITH THE CONSTITUTION AND PERTINENT
LAWS; AND

4. EFFECT THE ARREST OF CRIMINAL OFFENDERS,
INVESTIGATE AND PREVENT CRIMES OCCURRING WITHIN
THE SUBIC BAY FREEPORT ZONE AND ASSIST IN THE
PROSECUTION THEREOF;

THE SBMA SHALL ALSO PROVIDE AND ESTABLISH ITS OWN
FIREFIGHTING FORCE WHICH SHALL HAVE THE SAME FUNCTIONS AS.



THE BUREAU OF FIRE PROTECTION WITHIN THE SUBIC BAY FREEPORT
ZONE;

i) __ Except as herein provided, the local government units comprising
the Subic Special Economic Zone shall retain their basic autonomy and identity.
The cities shall be governed by their respective charters and municipalities shall
operate and function in accordance with Republic Act No. 7160, otherwise
known as the Local Government Code of 1991.”

SEC. 2. Section 13 of Republic Act No. 7227, as amended, is hereby further

amended to read as follows:

“Sec. 13. The Subic Bay Metropolitan Authority.

@) Creation of the Subic Bay Metropolitan Authority. - A body
corporate to be known as the Subic Bay Metropolitan Authority (SBMA) is
hereby created as an operating and implementing arm of the Conversion
Authority.

b) _, Powers and Functions of the {Sub Bay Motrpoltan-Authoriy]

SBMA. -

Ieee Meareatnate eet cucteeremtetng ee stacy EXCEPT AS
OTHERWISE PROVIDED HEREIN, THE SBMA SHALL HAVE AUTHORITY
AND JURISDICTION OVER ALL ECONOMIC ACTIVITIES WITHIN THE
SUBIC SPECIAL ECONOMIC ZONE. IT SHALL EXERCISE THE
FOLLOWING POWERS AND FUNCTIONS:

1. To operate, administer, manage, and develop the ship
repair and ship building facility, container port, oil storage, and refueling
facility and Cubi Air Base within the Subic Special Economic and
Freeport Zone as a free market in accordance with the policies set forth
in Section 12 of this Act;

a TO INSPECT AND REGISTER, UNDER THE FLAG OF
THE REPUBLIC OF THE PHILIPPINES, LEISURE SHIPS, AND
PLEASURE YACHTS OF ANY SHIP OWNER, WHETHER A
NATURAL OR JURIDICAL PERSON, AND IRRESPECTIVE OF
NATIONALITY OR DOMICILE. FOR THIS PURPOSE, THE SBMA
SHALL ADMINISTER AND MAINTAIN AN OPEN REGISTER OF
LEISURE SHIPS AND PLEASURE YACHTS SUBJECT ONLY TO
SUCH RULES AND REGULATIONS TO BE PROMULGATED BY THE
SBMA IN CONSULTATION WITH THE DEPARTMENT OF
TRANSPORTATION WITHOUT PREJUDICE To THE
REQUIREMENTS OF THE CONSTITUTION;

{2}3. To accept any local or foreign investment, business, or
enterprise AND ADMINISTER AND IMPLEMENT INCENTIVES
GRANTED TO ITS REGISTERED BUSINESS ENTERPRISES, subject
only to such rules and regulations to be promulgated by the [Subic

Authority] SBMA {in—conformity—withthe—policies—of the Conversion


Autherity} without prejudice to the nationalization requirements provided
for in the Constitution;

{3}4. To undertake [and-regulate-the-establishment_operation

‘] ON ITS OWN OR THROUGH CONTRACT,
FRANCHISE, LICENSE, OR PERMIT, TO FIX AND IMPOSE JUST
AND REASONABLE RATES FARES, CHARGES AND OTHER
PRICES FOR THE ESTABLISHMENT, OPERATION, AND
MAINTENANCE OF UTILITIES, FACILITIES, INFRASTRUCTURE,
SERVICES, BUSINESSES, ACTIVITIES, AND CONCESSIONS IN
THE SUBIC SPECIAL ECONOMIC ZONE PERTAINING TO THE
FOLLOWING:
i. ELECTRONIC, WEB, AND CLOUD DATA OPERATORS
AND PROVIDERS AND TELECOMMUNICATIONS:
PROVIDED, THAT THE NATIONAL
TELECOMMUNICATIONS COMMISSION SHALL
CONTINUE TO EXERCISE ITS POWER TO REGULATE
AND SUPERVISE THE QUALITY, SAFETY,
RELIABILITY, SECURITY, COMPATIBILITY, AND
INTER-OPERABILITY OF PUBLIC
TELECOMMUNICATIONS, RADIO STATIONS FOR
BOTH PRIBATE AND PUBLIC USE, RADIO
SPECTRUM, RADIO AND TELEVISION BROADCAST
STATIONS, CABLE TELEVISIONS AND PAY
TELEVISIONS WITHIN THE SUBIC SPECIAL
ECONOMIC ZONE;
ji, SHIPPING AND MARITIME BUSINESS AND
ACTIVITIES, INCLUDING STEVEFORING AND PORT
TERMINAL SERVICES OR CONCESSIONS:
PROVIDED, THAT THE MARITIME INDUSTRY
AUTHORITY SHALL CONTINUE TO EXERCISE ITS.
POWER TO REGULATE AND SUPERVISE THE
SHIPBUILDING AND SHIP REPAIR OF ANY
MERCHANT MARINE VESSEL OPERATED OR TO BE
OPERATED IN THE DOMESTIC TRADE AND THE
DOMESTIC SHIPPING INDUSTRY WITHIN THE SUBIC
SPECIAL ECONOMIC ZONE;
iii, | AIRPORT OPERATIONS: PROVIDED, THAT THE CIVIL
AVIATION AUTHORITY OF THE PHILIPPINES SHALL
CONTINUE TO EXERCISE ITS POWER TO REGULATE


AND SUPERVISE THE SAFETY, QUALITY,
RELIABILITY, AND AFFORDABILITY OF AIR
TRANSPORT SERVICES FOR THE RIDING PUBLIC
WITHIN THE SUBIC SPECIAL ECONOMIC ZONE;

iv. ALL OTHER FACILITIES, INFRASTRUCTURE,
SERVICES, BUSINESSES, ACTIVITIES, AND
CONCESSIONS INSIDE THE SUBIC SPECIAL
ECONOMIC ZONE;

{4}5. To construct, acquire, own, lease, operate, and maintain
on its own or through contract, franchise, license permits bulk purchase
from the private sector and build-operate-transfer scheme or joint-
venture the required utilities and infrastructure in coordination with local
government units and appropriate government agencies concerned and
in conformity with existing applicable laws therefore:

{5}6. To adopt, alter, and use a corporate seal; to contract, lese,
sell, dispose, acquire, and own properties; to sue and be sued in order
to carry out its duties and functions as provided for in this Act and to
exercise the power of eminent domain for public use and public purpose:

{6]7. Within the limitation provided by law, to raise and/or borrow
the necessary funds from local and international financial institutions and
to issue bonds, promissory notes, and other securities for that purpose
and to secure the same guarantee, pledge, mortgage, deed of trust, or
assignment of its properties held by the [Subic-Authority] SBMA fpr the
purpose of financing its projects and programs within the framework and
limitations of this Act;

f78. To operate directly or indirectly or ISSUE licenseS TO
OPERATE tourism-related Peace Une AND activities, [subject

A {J including games,

[and] amusements, aiseon RECREATIONAL AND SPORTS
FACILITIES SUCH AS horse racing, dog racing, [and] casino [gambling

Gonversion—Authority:] AND ONLINE GAMING, GOLF COURSES,
DUTY FREE STORES, AND OTHERS, WITHIN THE SUBIC SPECIAL
ECONOMIC ZONE AND UNDER PRIORITIES AND STANDARDS SET

ere predioal es Shera) UNDERTAKE AND REGULATE THROUGH
FRANCHISE, LICENSE, OR PERMIT, AND SET OR GIC JUST,
REASONABLE, AND COMPETITIVE RATES, FARES, AND
CHARGES FOR THE ESTABLISHMENT, OPERATION, AND
MAINTENANCE OF OTHER SERVICES, INCLUDING EDUCATIONAL.
AND MEDICAL INSTITUTIONS AND INFRASTRUCTURE SUCH AS


WATER SUPPLY AND DISTRIBUTION, LAND TRANSPORTATION,
TOLL ROADS, AND BRIDGES WITHIN THE SUBIC SPECIAL
ECONOMIC ZONE SUBJECT TO COMPLIANCE WITH THE
REQUIREMENTS OF THE DEPARTMENT OF EDUCATION ,
COMMISSION ON HIGHER EDUCATION AND THE DEPARTMENT
OF HEALTH; AND TO ESTABLISH AND CONDUCT FORMAL AND
INFORMAL TRAINING OR EDUCATIONAL COURSES: PROVIDED,
THAT FORMAL COURSES SHALL BE SUBJECT TO
ACCREDITATION OR APPROVAL BY THE APPROPRIATE
GOVERNMENT AGENCY FOR RECOGNITION OF CREDITS [];

{9}10. To protect, PRESERVE, maintain and develop the virgin
forests within the baselands which will be proclaimed AND
MAINTAINED as a national park and subject to a permanent total log
ban, and for this purpose, the rules and regulations of the Department of
Environment and Natural Resources and other government agencies
directly involved in the above functions shall be implemented by the
[Subic Authority} SBMA;

{49}11. To adopt and implement measures and standards for
environmental pollution control of all areas within its territory, including,
[but-notimited] to all bodies of water and to enforce the same. For which
purpose the [SubicAutherity} SBMA shall create an Ecology Center
land} THAT SHALL ISSUE THE ENVIRONMENTAL COMPLIANCE
CERTIFICATE FOR ALL NON-ENVIRONMENTALLY CRITICAL
ACTIVITIES AND PROHECTS, TREE CUTTING PERMIT,
DISCHARGE PERMIT, AND PERMIT TO OPERATE AIR POLLUTION
SOURCE AND INSTALLATION IN THE SUBIC SPECIAL ECONOMIC
ZONE;

12. TO RECLAIM LANDS IN THE SUBIC SPECIAL
ECONOMIC ZONE, NOT LIMITED TO FORESHORE AND
SUBMERGED AREAS, BY DREDGING, FILLING, OR OTHER MEANS
IN COMPLIANCE WITH ALL ENVIRONMENTAL LAWS AND
GUIDELEINES, AND TO ACQUIRE, DEVELOP, IMPROVE,
ADMINISTER, DEAL IN, SUBDIVIDE, AND LEASE RECLAIMED
LANDS INSIDE THE SUBIC SPECIAL ECONOMIC ZONE:
PROVIDED, THAT THE LAND RECLAIMED BY A REGISTERED
ENTERPRISE IN EXCESS OF TWENTY (20) HECTARES OR THE
ACTUAL COST OF WHICH EXCEEDS ONE BILLION PESOS
(P1,000,000,000) MAY BE LEASED BY THE SBMA TO SAID
REGISTERED ENTERPRISE FOR A PERIOD OF NINETY-NINE (99)
YEARS;

13. TO PROVIDE FOR, OPERATE, OR ADMINISTER SUCH
SERVICES, AS MAY BE NECESSARY FOR THE EFFICIENT,
ECONOMICAL, AND BENEFICIAL UTILIZATION OF THE
RECLAIMED AREAS IN THE SUBIC SPECIAL ECONOMIC ZONE;


14. UNLESS OTHERWISE PROVIDED IN THIS ACT, TO BE
THE SINGLE AUTHORITY RESPONSIBLE FOR THE
IMPLEMENTATION AND ENFORCEMENT OF THIS ACT, ITS
IMPLEMENTING RULES AND REGULATIONS (IRR) AND OTHER
ISSUANCES PROMULGATED BY THE SBMA BOARD OF
DIRECTORS; THE NATIONAL BUILDING CODE OF THE
PHILIPPINES AND ITS IRR; AND THE FIRE CODE OF THE
PHILIPPINES AND ITS IRR; INSOFAR AS THESE LAWS, RULES
AND REGULATIONS ARE APPLICABLE TO THE SBMA, THE SUBIC
SPECIAL ECONOMIC ZONE, AND SUBIC BAY FREEPORT
BUSINESS ENTERPRISES, LOCATORS, RESIDENTS, AND
STAKEHOLDERS; AND

{44}15. To exercise such powers as may be essential, necessary,
or incidental to the powers granted to it hereunder as well as to carry out
the policies and objectives of this Act.
©) Board of Directors. — The powers of the {Subic Authority] SBMA

shall be vested in and exercised by a Board of Directors f;

[hereinafter referred
composed of ffifteen-{45}] SEVENTEEN (17)

members, fte-wit} AS FOLLOWS:

tojinthe Subic Special Economic Zone} A PROFESSIONAL MANAGER,
AS A FULL-TIME CHAIRPERSON WHO SHALL ALSO BE THE
ADMINISTRATOR AND CHIEF EXECUTIVE OFFICER OF THE
SBMA. THE COMPENSATION OF THE ADMINISTRATOR AND
CHIEF EXECUTIVE SHALL BE DETERMINED BY THE SBMA
BOARD OF DIRECTORS SUBJECT TO THE APPROVAL OF THE
SECRETARY OF BUDGET AND MANAGEMENT;

= Two (2) representatives from the National Government;

3 Five (5) representatives from the private sector {coming

ONE (1) REPRESENTATIVE EACH FROM THE FOLLOWING LOCAL
GOVERNMENT UNITS THAT ELECTED TO JOIN THE SUBIC
SPECIAL ECONOMIC ZONE: THE CITY OF OLONGAPO AND THE
MUNICIPALITIES OF CASTILLEJOS, SAN ANTONIO, SAN
MARCELINO, AND SUBIC OF THE PROVINCE OF ZAMBALES; AND
THE MINICIPALITIES OF MORONG, HERMOSA, AND DINALUPIHAN
OF THE PROVINCE OF BATAAN; PROVIDED, THAT SUCH
REPRESENTATIVE MUST BE A RESIDENT AND REGISTERED
VOTER OF THE LOCAL GOVERNMENT UNIT BEING
REPRESENTED; AND


5. ONE REPRESENTATIVE FROM THE INDIGENOUS

PEOPLES RESIDING WITHIN THE SUBIC BAY FREEPORT ZONE.

The fehairman-and-the}] members of the Board OF DIRECTORS shall be
appointed by the President to serve for a FIXED term of six (6) years, unless
sooner removed for cause except for the representatives of the local
government units who shall serve for a FIXED term of three (3) years. In case
of removal for cause, the replacement shall serve only the unexpired portion of
the term. IN THE EXIGENCY OF THE SERVICE, THE MEMBERS OF THE
BOARD OF DIRECTORS SHALL CONTINUE TO SERVE IN A HOLD-OVER
CAPACITY UPON THE EXPIRATION OF THEIR RESPECTIVE TERMS
UNTIL THEIR REPLACEMENTS SHALL HAVE BEEN APPOINTED AND
QUALIFIED.

No person shall be appointed as a member of the Board OF
DIRECTORS unless fhe] THE MEMBER is a Filipino citizen, of good moral
character, AT LEAST A COLLEGE GRADUATE, and of recognized
competence in relevant fields including, but not limited to, economics,
FINANCE, management, international relations, law, fer} engineering (4,
ENVIRONMENT AND ECOLOGY, OR INDIGENOUS PEOPLES

EXCEPT THE CHAIRPERSON, THE MEMBERS OF THE BOARD OF
DIRECTORS SHALL BE ENTITLED TO PER DIEMS, ALLOWANCES AND
OTHER BENEFITS IN ACCORDANCE WITH EXISTING POLICIES,
PRINCIPLES, AND RULES GOVERNING THE COMPENSATION OF
MEMBERS OF THE BOARD OF DIRECTORS IN GOVERNMENT-OWNED
AND CONTROLLED CORPORATIONS AS MAY BE FORMULATED BY THE
GOVERNANCE COMMISSION FOR GOVERNMENT-OWNED OR
CONTROLLED CORPORATIONS.

ffe}] (D) Capitalization. - The {Subie-Authority] SBMA shall have an
authorized capital stock of Twenty billion pesos (P20,000,000,000) divided into


twenty thousand (20,000) no-par shares fully subscribed and paid up by the
Republic of the Philippines with:

XXXXX

(2) All other assets which have the President may transfer to the [Subic
Authority} SBMA as part of the equity contribution of the Government; and

XxxXxXXx"

SEC. 3. Section 14 of Republic Act No. 7227, as amended, is hereby further

amended to read as follows:

“Sec. 14. Relationship with the Conversion Authority and the Local
Government Units.

a) The provisions of existing laws, rules, and regulations to the
contrary notwithstanding, the {Subie—Authority} SBMA shall exercise
administrative powers, rule-making and disbursement of funds over the Subic
Special Economic Zone in conformity with the oversight function of the
Conversion Authority

b) In case of conflict between the {Subic Authority] SBMA and the
local government units concerned on the matters affecting the Subic Special
Economic Zone other than defense and security, the decision of the {Subic

Authority] SBMA shall prevail.”

SEC. 4. Section 15 of Republic Act No. 7227, as amended, is hereby further

amended to read as follows:

“Sec. 14. Clark and Other Special Economic Zones (CSEZ). — x x x x.

XXXXX

The provisions of existing laws, rules, and regulations to the contrary
notwithstanding, no national and local taxes shall be imposed on registered
business enterprises within the CFZ. In lieu of said taxes, a five percent (5%)
tax on gross income [earned] shall be paid by all registered business
enterprises within the CFZ and shall be directly remitted as follows: three
percent (3%) to the National Government, and two percent (2%) to the
treasurer's office of the municipality or city where they are located.

XXXXX"

SEC. 5. The Supreme Court shall designate a branch of the Regional Trial

Court and/or Municipal Trial Court in each of the local government units comprising
the Subic Special Economic Zone to handle cases filed by or involving the SBMA or
its residents or registered business enterprises on any matter or incident occurring
within the Subic Special Economic Zone.

SEC. 6. Within ninety (90) days from the effectivity of this Act, the following shall

promulgate the necessary rules and regulations for the implementation of the specific
provisions of this Act:

a) The Department of Finance, in coordination with the Bureau of

10


Internal Revenue, and in consultation with the SBMA and CDC, for the
necessary rules and regulations implementing Sections 1 and 4 of this Act but
only insofar as it amends Section 12 (c) and Section 15 of Republic Act No.
7227, as amended;

b) The National Commission on Indigenous Peoples, in coordination
and consultation with the SBMA, for the necessary rules and regulations
implementing Section 3 of this Act but only insofar as it provides for the
designation of one (1) seat in the SBMA Board of Directors to represent the
indigenous peoples residing within the Subic Bay Freeport Zone; and

c) The SBMA for the necessary rules and regulations implementing
all the other provisions of this Act.

SEC. 7. Separability Clause. — Should any provision herein be declared

unconstitutional, the other provisions not affected shall remain in full force and effect.

SEC. 8. Repealing Clause. — All laws, decrees, orders, issuance, rules and

regulations or part thereof inconsistent with the provisions of this Act are hereby
repealed, amended or modified accordingly.

SEC. 9. Effectivity. - This Act shall take effect fifteen (15) days after its

Publication in the Official Gazette or in any newspaper of general circulation.

Approved,