TIEZA - Governance Commission for GOCCs

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15 November 2012
Departnent of Tourism Bldg.
T.M. lGlawAve., Ermita Manila 1000
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:
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 @[email protected] 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
(3) Clearty, based on the legislative intent, the TEZS to be designsled by
TIEZA should not be at a loiver or disadvantageous pooition
rBc6iv€d by rhe Commbsbn
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
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.
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
- 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.
equity including, but not limited lo, the Government Service lnsurance
System and the Social Security System.
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
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
(a) Organized as either as stock or non-stock corporation;
(b) Vested with functions relating to public needs; and
by the
Government directly
The TIEZA satisfies all the foregoing requisites, thus:
(a) The TIEZA is a non-stock corporation, created under
9593, to
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
[Philippine Tourism Authority] under Presidential Decree
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."
presidential Decree
No. 1 89 dated May
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.
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:
RepuD/ic Act No. 9593,
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.
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
ne Phitippines,
speciat Econoiic zonii
Authotity, and For Other Purposes,2l February 1995'
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
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'
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
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
Twin Ace Hotdings Cotporction v. Rulina and Compary, G.R No.'160191,June8,2006'490SCRA368'376'
Sec. 3 (q), R.A. No. 9593.
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
" i;;;; i;;. n;"rn.
'*'f 2790
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
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
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.
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
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,
Secretary, Depaftment of Budget and
Management (DBM)