THIRTEENTH CONGRESS OF THE REPUBLIC ) 
OF THE PHILIPPINES 
1 
5 AUG23 P4 ' 
Second Regular Session 
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RECEIVED BY : -. -e--- 
SENATE 
S.No. 
2098 
Introduced by Senator Richard J. Gordon 
EXPLANATORY NOTE 
The recent pronouncement of the Supreme Court in Coconut Oil Refiners, Inc., et al. 
vs. Torres, et ai., G.R. No. 132527, 29 July 2005, and John Hay Peoples Alternative 
Coalition, et al. vs. Lim, et al., G.R. No. 119775,24 October 2003, on the lack of an express 
legislative grant of incentives to investors in Clark Special Economic Zone and other Special 
Economic Zones created pursuant to Republic Act No. 7227, as amended, except Subic 
Special Economic and Freeport Zone, has caused uncertainty among many investors in 
these special economic zones. 
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Because this unexpected development has been perceived as suddenly changing 
the rules in the middle of the game, some investors have threatened to shut down 
operations and layoff workers, with some already contemplating to leave the country. If this 
matter is not addressed soon, then development in these special economic zones will come 
to a halt as investors will be inclined to locate elsewhere. 
As a curative legislative measure, this bill seeks to amend Republic Act No. 7227, as 
amended, otherwise known as the Bases Conversion and Development Act of 1992, to 
clearly provide for incentives to investors in Clark Special Economic Zone and other Special 
Economic Zones created or to be created under this law. It intends to extend the incentives 
provided for in Republic Act No. 7916, as amended, or The Special Economic Zone Act of 
1995, to zones covered by Republic Act No. 7227, as amended, including Subic Special 
Economic and Freeport Zone, to provide uniformity of incentives to investors as well. This 
bill also includes the express grant of the Freeport status to the Poro Point Special 
Economic and Freeport Zone, ensuring the free flow or movement of goods and capital 
within, into and exported out of the Poro Point Special Economic and Freeport Zone, with 
the same incentives as the Subic Special Economic and Freeport Zone. 
To assuage the fear of investors brought about by the recent Supreme Court 
decisions and to ensure the continued development in these zones, the passage of this bill 
is earnestly sought. 
RICHARD J. GORDON 
Senator 
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THIRTEENTH CONGRESS OF THE REPUBLIC ) 
OF THE PHILIPPINES 
1 
5 AI$ 23 P4:\:! 
Second Regular Session 
1 
A 
SENATE 
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RECEIVED By : .+-.-- 
S. No. 
20 
Introduced by Senator Richard J. Gordon 
AN ACT AMENDING REPUBLIC ACT NO. 7227, AS AMENDED, OTHERWISE KNOWN 
AS THE BASES CONVERSION AND DEVELOPMENT ACT OF 1992 
Be if enacted by the Senate and fhe House of Representatives of fhe Philippines in 
Congress assembled: 
SECTION 1. Sec. 12 (c) of Republic Act No. 7227, as amended, otherwise known as 
the Bases Conversion and Development Act of 1992, is hereby amended to read as follows: 
"Sec. 12 Subic Special Economic Zone. - , , . 
... 
(c) The provisions of existing laws, rules and regulations to the 
contrary notwithstanding, no taxes, local and national, shall be imposed within 
the Subic Special Economic Zone. In lieu of paying taxes, three percent (3%) 
of the gross income earned by all businesses and enterprises within the Subic 
Special Economic Zone shall be remitted to the National Government, one 
percent (1%) each to the local government units affected by the declaration of 
the zone in proportion to their population area, and other factors. In addition, 
there is hereby established a development fund of one percent (1%) of the 
gross income earned by all businesses and enterprises within the Subic 
Special Economic Zone to be utilized for the development of municipalities 
outside the City of Olongapo and the Municipality of Subic, and other 
municipalities contiguous to the base areas. 
BUSINESSES AND ENTERPRISES WITHIN THE SUBIC SPECIAL 
ECONOMIC ZONE MAY ALSO AVAIL OF THE INCENTIVES AS PROVIDED 
FOR UNDER REPUBLIC ACT NO. 7916, AS AMENDED, OR THE SPECIAL 
ECONOMIC ZONE ACT OF 1995. 
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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; 
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Sec. 2. Sec. 15 of Republic Act No. 7227, as amended, otherwise known as the 
Bases Conversion and Development Act of 1992, is hereby amended to read as follows: 
"Sec. 15. 
Clark and other Special Economic Zones. - , 
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BUSINESS ESTABLISHMENTS OPERATING WITHIN CLARK 
SPECIAL ECONOMIC ZONE AND OTHER SPECIAL ECONOMIC ZONES 
CREATED OR TO BE CREATED UNDER THIS SECTION SHALL BE 
ENTITLED TO THE INCENTIVES AS PROVIDED FOR UNDER REPUBLIC 
ACT NO. 7916, AS AMENDED, OR THE SPECIAL ECONOMIC ZONE ACT 
OF 1995." 
Sec. 3. Section 15-A of Republic Act No. 7227, as amended, otherwise 
known as the Bases Conversion and Development Act of 1992, is hereby inserted to 
read as follows: 
"SEC. 15-A. PORO POINT SPECIAL ECONOMlC ZONE. - THE 
PORO POINT SPECIAL ECONOMIC AND FREEPORT ZONE CREATED 
UNDER PROCLAMATION NO. 216, HEREINAFTER REFERRED TO AS 
THE PORO POINT SPECIAL ECONOMIC ZONE, SHALL BE SUBJECT TO 
THE SAME POLICIES AS THE SUBIC SPECIAL ECONOMIC ZONE UNDER 
SECTION 12. THE PORO POINT SPECIAL ECONOMIC ZONE SHALL 
HAVE THE SAME FREEPORT STATUS AND ENJOY THE SAME 
INCENTIVES AS THE SUBlC SPECIAL ECONOMIC ZONE." 
Sec. 4. Transitory Provision. - The enjoyment of incentives and privileges in relation 
to Republic Act No. 7227, as amended, otherwise known as the Bases Conversion and 
Development Act of 1992, pursuant to executive issuances, including Executive Order No. 
80, BCDA Board Resolution No. 93-05-034, Executive Order No. 97-A, and Presidential 
Proclamation No, 420, prior to their declaration of invalidity by the Supreme Court shall be 
recognized as an operative fact. From that time forward, this Act shall have limited 
retroactive effect on the non-imposition of additional tax burden that may be imposed on 
investors on account of the invalidity of such executive issuances. 
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Sec. 5. Repealing Clause, -All laws, decrees, orders, rules and regulations or other 
issuances or parts thereof inconsistent with the provisions of this Act, including Section 50 
of Republic Act No. 7916, as amended, otherwise known as The Special Economic Zone 
Act of 1995, are hereby repealed or modified accordingly. 
Sec. 6. Separability Clause, - If any portion or provision of this Act is declared 
unconstitutional, the remainder of this Act or any provision not affected thereby shall remain 
in force and effect. 
Sec, 7. Effectivity. - This Act shall take effect after fifteen (15) days following the 
completion of its publication either in the Official Gazette or in a newspaper of general 
circulation in the Philippines. 
Approved, 
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