Y Ottrrr 0f tlr lJIrsrbnrt ot tlll l]l]ltrpplIrg COMMISSION GOVERNANCE ()\!N ()li ( ()N (:()Rl()Rr\l ()R (;()Vf f l()N\ I R()l I I I) ID RNN,1t! T RE[fiUtN0 C0pt Rdra?g,lHii H , rHlrf Corpoud, fH., Rt*9hc tdE 15 November 2012 OFFICE OF THF SECRETARY HOt{. RAtOt{ R.JTmENEZ Chal/7,/,an TOUR!S]f, I]{FRASTRUCTURE AND ENTERPRISE ZONE AUTHORITY Departnent of Tourism Bldg. T.M. lGlawAve., Ermita Manila 1000 NOV 22 IrIEZI) RE: REcLAssrFtcAnoN oF THE TouRtsm INFRASTRUCTRE ANp ENTERPREE ZoilE AurHoruw (TIEZAI Dear Secretary Jimenez, We reply to your letters dated 3 and 24 S€ptemb€r 2012,' refening to our letter dated 30 July 2012 addressed to the Secretary of Tourism and the TouRts INFR srRUcruRE ar{D ENTERPREE ZoNE Arm{oRrw (TIEZA) Chairman of the Board, Ramon R. Jimenez where the Commission advised the TIEZA of its reclassification as an 'economic zone authoritf to the "commercial, trade and tourism sec1ol". You request reconsideration of such reclassification because 'the implication of the reclassification is that TIEZA shall no longer be considered as an economic zone authority, and shall therefore be covered by Republic Act (R.A.) No. 10149.' As basis therefor, you state the following facts and principles which support your position: (1) The legislative intent of Republic Act 9593 otherwise knoryn as the Tourism Act of 2009" is that, the Tourism Enterprise Zones (TEZs) which are to be desbnated by TIEZA are in the same nature as economic zones on tourism identified by the Philippine Economic Zone Authority (PEZA); (2) ln the sponsorship speech of [Republic Act No. 9593] [the] then Senator and Chairman of the Cornmittee on Tourism said that: xxx b t is rBason that the ITIEZA] will c'€,ated to bing in domestic and intemational inve*ments to devabp entire tanism zones, to build hofels and rBsorts, malls and muse/'//I1.g and all sorts of dher touism enterprises. The @n@ot of fflEZAl bonows heavilv ftom a framewo* /t ,b for that has b&n proven to v,totl( thdt of the Subb Bav Metroditan Authoritv (SBMA) and the Philiooine Eanornic Zone Authoritv (PEZAI, xxx (3) Clearty, based on the legislative intent, the TEZS to be designsled by TIEZA should not be at a loiver or disadvantageous pooition lofidally rBc6iv€d by rhe Commbsbn m 13 and 25 S€dsmbo.2012, rEp€ctvely. compared to the other economic zones, because to do so will defeat the objective of [R.A. No.] 9593 of making tourism an engine of national develoPment and growth; (4) The criteria of TEZs under [R.A. No.] 9593 and Ecozones under RA 7916 are very similar; (5) The incentives granted by TIEZA are similar to PEZA, and to an extent far better than the latter; (6) !nsofarl as the Appointment of Appointive Directors are concerned lsection 15 of R.A. No. 10149] provides that all Appointive Directors of GOCCs and their subsidiaries shall be appointed by the President of the Philippines from a shotilist DreDared bv the GCG On the other hand, Section 65 of R.A. [No.] 9593 explicitly provides that the appointment of flve (5) representative directors shall be made by the President, uDon the recommendalion of the Touism Conaress frcm a list of at least lhrere nonrinees per group as enumerated in Section 672 of the said law; (7) R.A. No. 10149 is a general law that covers the governance and management of government-owned and or controlled corporations in general, while R.A. No. 9593 is a specific law that tackles on tourism ind the creation and composition of TIEZA, and the rules is that on a specific matter the special law shall prevail over the general law' which shall be resorted to only to supply deficiencies in the former' ln order to supplement your position on the matter, you likewise sent the commission a letter dated 24 september 2012, wherc you attached a copy of House Resolution No. 2790 to clarify the legislative intent of R.A. No. 9593 or the Tourism Act of 2009 and that based on such, the legislative intent was not only to create a similar system to that of PEZA, but improving the same in order to provide superior incentives to tourism investors in the country. Section4(onCoverage)ofR.A.No.1014g,providesthat"ThisActshallbe applicable to all GOCCs, GiCPs/GCEs, and government financial institutions [GFls], iriituOing their subsidiaries." The Act also refers to all three terms (GOCC, BICP/GCE and GFI) with the generic term "GOCC". The Act defines under Section 3 the terms "GFls", "GlCPs/GCEs" and "GOCCs" as follows: (m\ Govemment Financiat lnstitutions (GFI) rcler to'financial institutions or corporalions in which lhe government directly or indirectly owns majority of lhe capital stock and which are either ('l registered with or directly ) supervised by the Bangko Sentral ng Pilipinas; or (2) collecting or transacting funds or contributions from the public and places them in linancial inslruments or assets such as deposits, loans, bonds and groups: - The live (5) representative directors shall repres€nt each ofthe following Tourism estate development and management seNices; Accommodation enlerPrises; Air, Sea and land toudsm transport seNices; Traveland tours enterprises; and Other tourism enterprises , Sec. 67. RepreSentative Directors. (a) (b) (c) (d) (e) equity including, but not limited lo, the Government Service lnsurance System and the Social Security System. (n'1 Government lnstrumentalities with Corporate Powers (GlCPy Government Corporate Entities (GCE) refer to inslrumentalities or agencies of the government, which are neither corporations nor agencies integrated within the departmental framework, but vested by law with special functions or jurisdiction, endowed with some if not all corporate powers, administering special funds, and enjoying operalional autonomy usually through a charter including, but not limited to, the following: x x x. (ol Government-Owned or -Controlled Corporation (GOCC) rcfets lo any agency organized as a stock or non-stock corporation, vested with functions relating to public needs whether governmental or proprietary in nature, and owned by the Government of the Republic of the Philippines directly or through its instrumentalities either wholly or, where applicable as in the case of stock corporations, to the extent of at least a majority of its outstanding capital stock: Provided, however, That for purposes of this Act, the term "GOCC' shall include GICP/GCE and GFI as defined herein. While it is clear that TIEZA does not fall within the definitions of "GFl" or "GICP/GCE' under section 3(m) and (n) quoted above, it falls with the definition of species,,Gocc" under section 3(o) quoted above, which has the following essential elements: (a) Organized as either as stock or non-stock corporation; (b) Vested with functions relating to public needs; and (c) Owned by the Government directly or through its instrumentalities. The TIEZA satisfies all the foregoing requisites, thus: (a) The TIEZA is a non-stock corporation, created under 9593, to R A' No' ut; SEc. 63. Ihe Touism lnfrastructure and Enterpise zone Authority' Under the supervision of the Secretary and attached to the Department for purposes of program and policy coordinalion shall be a body cotporaie known as the Tourism lnfrastructure' and Enterprise Zone Authority (TIEZA). Section 64 of R.A. No. 9593 further specifles that the "TIEZA shall continue to exercise functions previously exercised by the (P'D') [Philippine Tourism Authority] under Presidential Decree government to be a be deemed No. 564" and that it will infrastructure corporation under the provisions of Executive Order No. 292, otherwise known as the Administrative Code of 1987'" The PTA is a GOCC created under P.D. No. 564." 3 presidential Decree No. 1 89 dated May 1 1 N o. 564, Revising tha Chaier of the Phitippine Touism Authorily Crcated under Prcsidential oectee , 1973, 2 Octobet 197 4. (b) R.A. No.9593 provides that "the TIEZA shall be a body corporate which shall designate, regulate and supervise the TEZs established under [R.A. No. 9593] as well as develop, manage and supervise tourism infrastructure projects in the country." The TIEZA shall supervise and regulate the cultural, economic and environmentally sustainable development of TEZs toward the primary objective of encouraging investments therein. Further, it shall ensure strict compliance of the TEZ operator with the approved development plan. Thus, the TIEZA shall have the power to impose penalties for failure or refusal of the tourism enterprises to comply with the approved development plan, which shall also be considered a violation of the terms of accreditation. (c) The TIEZA is the designated corporate arm of the Department of Tourism (DOT) for purposes of regulating and supervising tourism enterprise zones established pursuant to R.A. No. 9593' lt is likewise tasked to continue the mandate provided for the Philippine Tourism Authority under P.D' No. 564 which was formerly the corporate body attached to the DOT. Based on the foregoing, there is no legal doubt that the TIEZA is a GOCC' having met all the requisites of a Gocc falling under the jurisdiction of the GovEi1nuce CoMMtsStoN FoR GOCCS (GCG). lt was organized through a charter,o vested with governmental functions relating to public needs which includes, among others, to,,designate, regulate and supervise TEZs" as well as to develop, manage and supervise infrastructure projects in the country.s The TIEZA is a body corporate imbued with corporate po*"rs and managed and controlled by a Board of Directors.6 Definition ol an "Economic Zone Authori There is no doubt that section 4 of R.A. No. '10149 excludes from its coverage ,,economic zone authorities". The essence of the request for among other reconiideration is that TIEZA is constituted and operates as an "economic zone authority," and therefore should also be excluded from the coverage of R.A. No. 10149. An,,economic zone authoit|, is a designated body with authority to set general policies on the establishment and operations of ECOZONES, and among others, industrial estates, export processing zones and free trade zones. According to R.A. proposals for the Nto- zgto,, an Economic Zone Authority is one that reviews the establishment of ECOZONES and regulates the establishment, operation and maintenance of utilities, and other services and infrastructure in the ECOZONE. section 13 of R.A. No. 7916 likewise provides that Economic Zone Authority, such as PEZA, shall have the following powers and functions: 1 .no RepuD/ic Act No. 9593, iiiiiii An Acl Declaing a Nationat Policy fot Touism as an Engino ol lnveslfient, Employmenl" Growlh the Depatlne;t ot rouism ancl s Anached Agencies to Effectively Eflicientlv o"r"tip-ent, and stengtheni;lg tmptement That Policy, and Approp.ialing Funds Therclor 13 May 2009 ' 64. R.A. No. 9593. 'Sec. 5 Secs. 64 and 64, R.A. No. 9593 , n.l. No.iSfO, An Act providing for the Legat Frcmework ancl Mechanisms fot the Crcatbn, Oryrction, Administtation, Ci,iiatiin it li ne Phitippines, speciat Econoiic zonii Authotity, and For Other Purposes,2l February 1995' ara crcatng tot lhis Putpose, The Philippine Economic zone (a) To operate, administer, manage and develop the ECOZONE according to the principles and provisions set forth in this Act; (b) To register, regulate and supervise the enterprises in the ECOZONE in an efficient and decentralized manner; (c) To coordinate with local government units and exercise general supervision over the development, plans, activities and operations of the ECOZONES, industrial estates, export processing zones, free trade zones, and the like; (d) ln coordination with local government units concerned and appropriate agencies, to construct, acquire, own, lease, operate and maintain on its own or through contract, franchise, license, bulk purchase from the private sector and build-operate{ransfer scheme or .ioint venture, adequate facilities and infrastructure, such as light and power systems, water supply and distribution systems, telecommunication and transportation, buildings, structures, warehousq,s, roads, bridges, ports and other facilities for the operation and development of the ECOZONE; (e) To create, operate and/or contract to operate such agencies and functional units or offices of the authority as it may deem necessary; (f) To adopt, alter and use a corporate seal; make contracts, lease, own or otherwise dispose of personal or real property; sue and be sued; and otherwise carry out its duties and functions as provided for in this Act; (g) To coordinate the formulation and preparation of the development plans of the different entities mentioned above; (h) To coordinate with the National Economic Development Authority (NEDA), the Department of Trade and lndustry (DTl), the Department of Science and Technology (DOST), and the local government units and appropriate government igencies for policy and program formulation and implementation; and (i) To monitor and evaluate the development and requirements of entities in subsection (a) and recommend to the local government units or other appropriate authorities the location, incentives, basic services, utilities and infrastructure required or to be made available for said entities' ln accordance with the definition provided for under R'A' No' 7916, an defined as selected areas economic zone authority oversees ECOZONES, which are'be developed into agrowlth highly developed or which have the potential to investment and banking, commercial, industriil,' lndustrial tourisUrecreational, financial centers. An ECOZONE may contain any or all of the following: lndustrial Estates (lEs), Export Processing Zones (EPZs), Free Trade Zones, and TourisURecreational Centers. Pursuant however, to the Tourism Act of 2009, all TEZs created pursuant to section 59 of the Act, and including those formerly created under R.A. No. 7916, are s Twin Ace Hotdings Cotporction v. Rulina and Compary, G.R No.'160191,June8,2006'490SCRA368'376' Sec. 3 (q), R.A. No. 9593. ro Sec.4(a), R.A. No. 7916. " Sec 64 R.A. No.9593. r'tO. zglO. " Sec. ta, Resolution No 2790 deliberation' '3 Sen. Richard Gordon, in his speech during the House Chatto;Committeethairperson of the House Committee on Tourism, during the House Resolution e a.l " i;;;; i;;. n;"rn. deliberation. No. '*'f 2790 c.R. iiiii-iiipt", (5'ed., 2OO3). No. 168g6, Juty 23, aOOB,559 SCRA519,531, citing R. Agpalo, Statutory Construction 124 now brought under the sote and exclusive jurisdiction of the TIEZA. TEZs include enterprises related to tourism, which have needs vastly different from those of the manufacturing industry, and whose grants of incentives have to be specifically tailored to such. TIEZA ls Not an Economic Zone Authoritv While the PEZA is also a GOCC, it is, by express provision of Sec.4 of R.A. NO. 10149 excluded from the GCG's jurisdiction. Following rules on statutory construction where all exemptions must be strictly construed, the TIEZA, being an Enterprise Zone Authority, does not fall under any of the exclusions provided for under R.A. No. 10.149. A cardinal rule in statutory construction is that when the law is clear and free from any doubt or ambiguity, there is no room for construction or interpretation; there is only room for application.8 ln this particular case, it is clear that R.A. No. 10'149 does not exclude Enterprise Zone Authorities for if it did, it would have unequivocally included the same in its enumeration under Section 4 thereof. Moreover, TEZs, as regulated by the TIEZA are separate and distinct lrom Special Economic Zones (SEZs). TEZs are created under R.A No. 9593, on the oiher hand, SEZs are created under R.A. No. 7916. fEZs are defined as areas intended as the vehicle to coordinate actions of the public and private sectors to address development barriers, attract and focus investments on specific geographic areas and upgrade product and service quality.'g On the other hand, SEZs are defined as selected areas with highly developed or which have potential to be developed into agro-industrial, industrial, tourisurecreational, commercial, banking, investment and financial centers... and may contain any or all of the following: industrial estates (lEs), export processing zones (EPZs), and ftee trade zones and tourist recreational centers".'o TIEZA's mandate is to establish and supervise TEZs and to develop, manage and supervise tourism infrastructure projects in the country'" ln contrast, PEZA's primary function pertains to the operation, administration and management of SEZs." while it may seem like the TIEZA is similar with the PEZA, or that it's framework was patterned ifter the PEZA, the legislative intention behind the creation of the TIEZA in 2009 was to separate the TEZs from the jurisdiction of the PEZA as the pEZA is ,,insufficient to deal with the needs of a tourism zone".t' The creation of the TIEZA was to accommodate the fact that "tOUrism enterprises have needs vastly different from those of the manufacturing industry", which can be better supervised by the Department of Tourism as the expert in that field, and "the grant of the incentives must be tailored to meet those needs." Moreover, the TIEZA was "created to facilitate investments and oversee management of zones to ensure sustainable development." The TIEZA was created in order to "streamline the expertise of the Tourism Department" in order to "encourage [and] strengthen the investment [on the] tourism sector." The distinction between the TIEZA and PEZA is even made clearer by section 85 (b) of R.A. No. 9593, to ut: (b) The Department and the DTI shall promulgate rules and regulations to govern the relationship between TEZS created under this Act, and economic zones created under Republic Acl No. 7227 , otherwise known as the Bases Conversion and Development Act of '1992, and Republic Act No. 7916, as amended, otherwise known as the Special Economic Zone Act of 1995, where an area comprising a TEZ overlaps, falls within or encompasses that of an economic zone'. Provided, That such rules and regulations shall consider the special nature and requirements of tourism in relation to other industries, establishments and operations in economic zones. TEZS proclaimed as such prior to the passage of this Act shall be transfetred to the supervision of the TIEZA. (emphasis supPlied) It cannot therefore be mistaken thal the clear intbntion of the law was to from the TIEZA to differentiate separate and distinguish the TEZs from the SEZs and the PEZA. As the statute is clear, plain, and free from ambiguity, it must be given its literal meaning and applied without attempted interpretation otherwise known in statutory construction as verba tegis non est recedendum, "from the words of a statute there should be no departure."'s The distinction therefore made under the Tourism Act of 2009 was recognized under the same Legislature which subsequently enacted R.A. No. 1 0149 in 201 1 which expressly and unequivocally excludes from its coverage "Economic Zone Authorities" but not "Tourism Enterprise Zones Authorities". It is also worth mentioning that even the office of the Executive secretary (oES) and the Department of Budget and Management (DB) both recognize the fact in"t tne TIEZA is under the jurisdiction of the GCG. The OES concurred with the recommendation of the GCG to approve the request of TIEZA to fill up Twenty-one (21) Plantilta positions in its Memorandum dated 21 September 20'12, wtile the on 2 Ociober 2012, transmitted the proposed reorganization of the TIEZA, as a GOC| under the coverage of the GCG, for the review and evaluation of the GCG. b3i/, Appointive Members of the TIEZA are Appointed by the Piesident from a Shortlist Prepared bv the GCG Your letter states that there is a "conflict" as regards Section 15 of R'A' No' 10149 which states that the Appointive Directors in Goccs shall be appointed by the president from a shortlist prepared by the GCG while Section 65 of R.A. No. 9593 states that "the appointment of five (5) representative directors shall be made by the president, upon ihe recommendation of the Tourism Congress from a. list of at least three (3) nominees per group as enumerated in Section 67 of the said law"' The repealing clause however of R.A' No. 10149, under Section 32 thereof, explicily states thit "the charters of GOCCs under exlsting laws, executive orders inituOing Executive Order No. 323, Series of 2000, administrative orders, rules, regulati6ns, decrees and other issuances or parts thereof which are inconsistent with thE provisions [of R.A. No. 10149] are hereby revoked, repealed or modifled accordingly., ln particular, section '17 of R.A. No. 10149 provides that "Any provision in the ch-arters of each Gocc to the contrary notwithstanding, the term of office of each Appointive Director shall be for one ('l) year, unless sooner removed for cause." There should be a harmonization of what seems to be conflicting provisions of Sections 15 and 17 of R.A. No. 10'149, with that of Section 65 of R.A. No. 9593' and every attempt should be made to put into effect the provisions of the two statutes. Therefore, in spite of the fact that the shortlist of nominees for the Appointive Directors of the TIEZA Board shall still be prepared by the GCG for the President of the Philippines, the GCG shall still include in the shortlist the recommendation of the Tourism Congress from a list of at least three (3) nominees per group as enumerated in Section 67 of R.A. No. 9593, as they constltute the minimum qualifications for such Board positions. lt goes without saying that all nominees for the TIEZA Board must have the favorable endorsement of the Tourism Secretary, as head of the Supervising Agency of TIEZA. Accordingly, the GCG maintains and reiterates its position that the TIEZA is distinct from an Economic Zone Authority, and therefore, under the express jurisdiction of the GCG. Very truly yours, Chairman .^k{'K,,fi(' RAINIER B. BUTALID Commissioner (DOF) FLORENCIO B. ABAD Secretary, Depaftment of Budget and Management (DBM)
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