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Position Paper on RA 10083 or the law creating the Aurora Pacific Economic Zone and Freeport Authority

Position Paper on RA 10083 or the law creating the Aurora Pacific Economic Zone and Freeport Authority

Feb 12, 2012

Position Paper on RA 10083 or the law creating the Aurora Pacific Economic Zone and Freeport Authority


Republic Act 10083 creates Aurora Pacific Economic Zone and Freeport Authority (APECO). It amends RA 9490, which created the Aurora Special Economic Zone.  RA 9490 legislates the creation of the Special Economic Zone (SEZ) on 500 hectares of public agricultural lands (Section 3) covering Barangays Esteves, Dibet and Dibacong of the Municipality of Casiguran, Aurora. The new law expands the SEZ to 12,427 hectares covering more barangays of Casiguran.

Republic Act 10083 is objectionable on substantial and procedural grounds:

On substantial grounds:

  1. RA 10083 creates a territory within the Philippines but is beyond the powers of the National Government and the Local Government Units (LGUs).
  2. RA 10083 uses taxpayers’ money for private purposes.
  3. RA 10083 violates at least four (4) national legislations, namely RA 7160, RA 8371, RA 8435 and RA 9700.
  4. RA 10083 contradicts public policy.
  5. RA 10083 confiscates private properties without due process.
  6. RA 10083 abolishes LGUs against the procedure outlined by RA 7160.

On procedural grounds:

  1. The law was railroaded.
  2. The area is excessive.
  3. Harassment and misinformation on the ground.

RA 10083 creates a territory within the Philippines but is beyond the powers of the National Government and the Local Government Units (LGUs).

The law creates a separate customs and taxation territory with the Philippines (Section 3, E).  It means that national and local laws, especially those pertaining to tax and customs, generally do not apply inside the SEZ (Section 4). As a consequence, the Philippine government has no jurisdiction to enforce its laws with regard to the operation of the SEZ. Laws like the preservation of the environment, social justice, labor and other regulations will be secondary to the rules and policies formulated by the APECO within the SEZ. Even the National Defense shall only be limited to the perimeter of the SEZ (Section 3, I).

The APECO has broad powers to expand the land area when deemed necessary. It does not require new legislation. The law explicitly gives the APECO power to purchase, negotiate and condemn any private land within or adjacent to the SEZ for the purpose of consolidation, right of way or protection of watershed and national assets. The APECO also has the power to reclaim any foreshore lands under water (normally, this is the power of the Philippine Reclamation Authority). Thus, the APECO can consolidate and expand without any limit. This is even greater than the power of LGUs to expand their territory, which requires legislative action.

The APECO has broad powers to issue three-year working visas to foreign executives and technicians. This function normally belongs to the Department of Foreign Affairs and the Bureau of Immigration. However, the law grants the APECO the same powers as that of the national agencies.

The APECO can also issue licenses, set fees, heat, light and power, water supply, telecommunications, mobile, Internet, and other data facilities inside the SEZ. These utilities are highly profitable ventures, as their operation within the SEZ is made even more advantageous since they would not be regulated by the National Government. Also, the APECO has the power to operate through subsidiary, or concession or license to other tourism-related activities, including games, amusements and nature parks, recreational and sports facilities. This power allows lottery operators to locate inside the SEZ but their operation can be outside through online facilities. This can be beyond the control and regulation of the National Government and creates leaks in the collection of taxes and fees.

The APECO is also authorized to raise or borrow from local or foreign sources to finance its projects to issue bonds, promissory notes, to secure the same by guarantee, pledges, mortgage, deed of trust, assignment of all or part of its property or assets. This provision implies that the approval of the Bangko Sentral ng Pilipinas is not required in securing the above funds; thus, resulting in a possible contradiction with the Constitution on Article 12, Section 21 which states—“Foreign loans may only be incurred in accordance with law and the regulation of the monetary authority.”

The APECO can create and establish subsidiaries, affiliates or other entities for the operation of ancillary activities/services that it is authorized to undertake, even private entities. Hence, the APECO can multiply itself and create layers of entities to do business. The privileges of the APECO, a specialized autonomous economic entity (more than the ARMM and CAR) can be enjoyed by favored private entities.


RA 10083 uses taxpayers’ money for private purposes.

It is equally alarming and absurd that the APECO is declared as a non-profit entity for purposes of tax exemption (Section 6). It beggars the question on why the government will spend/invest almost P600 million from the General Appropriations for an entity that is not profitable. Taxpayers’ money is spent on a non-profitable venture without a clear public purpose, and for the private benefit of business. Aside from the capitalization coming from the budget of the National Government, the APECO enjoys a 30 percent share (or 1 ½ percent part of the 5 percent) from the tax collected from the registered operators inside the SEZ. The tax imposed is special, which is 5 percent of the gross income. Forty percent will go to the National Government and the remaining 30 percent will be shared between the municipality of Casiguran and the Province of Aurora.

In other words, the APECO is given a share from the taxes collected and hefty exemption privileges. Under the law, the privileges of the Subic, Clark, Zamboanga and Bases Conversion Free ports shall be enjoyed by the APECO. Thus, government resources, income and assets will be channeled to private purposes whose beneficiaries include big corporations and the APECO officers.

The Presidents appoints the APECO president and chief operating officer. The Board of Directors is composed of the governor, congressperson, mayor, investor, worker, and a prominent resident of Aurora and a prominent citizen of the Philippines. The latter suggests that just one family, as demonstrated in the case of Aurora, may fill key positions. Also, there is no objective standard in determining who is a prominent citizen. It creates an arbitrary classification of officers which is not germane to the position. Being a prominent resident is not indicative of the competency of the officer. A member of the board is entitled to at least P10,000 per month as honorarium.


RA 10083 violates at least four (4) national legislations, namely RA 7160, RA 8371, RA 8435 and RA 9700.

The creation of the SEZ underwent no consultation. The stakeholders comprised of farmers, fisher folk, the Dumagats, and Local Government Units (LGUs), three barangays and the Municipality of Casiguran, were not at all consulted in the creation of the SEZ. Such is a clear violation of the Local Government Code when it says—

“SEC. 26. Duty of National Government Agencies in the Maintenance of Ecological Balance. – It shall be the duty of every national agency or government-owned or -controlled corporation authorizing or involved in the planning and implementation of any project or program that may cause pollution, climatic change, depletion of non-renewable resources, loss of crop land, rangeland, or forest cover, and extinction of animal or plant species, to consult with the local government units, nongovernmental organizations, and other sectors concerned and explain the goals and objectives of the project or program, its impact upon the people and the community in terms of environmental or ecological balance, and the measures that will be undertaken to prevent or minimize the adverse effects thereof.”

Moreover, there was no approval by the LGUs affected as required by the Local Government Code–

“SEC. 27. Prior Consultations Required.- No project or program shall be implemented by government authorities unless the consultations mentioned in Sections 2 (c) and 26 hereof are complied with, and prior approval of the Sanggunian concerned is obtained: Provided, That occupants in areas where such projects are to be implemented shall not be evicted unless appropriate relocation sites have been provided, in accordance with the provisions of the Constitution.”

In addition, a number of farmers displaced by the construction of the airport and office of the APECO have not been relocated to appropriate relocation sites as mandated by RA 7160.

RA 10083 also violates the provision of the Indigenous Peoples Rights Act (RA 8371). The land of the Dumagats who are the Indigenous Peoples in the area were included in the expanded SEZ without their Free, Prior and Informed Consent as required by the law.

The SEZ also covers prime agricultural lands, which are protected areas under the Agriculture and Fisheries Modernization Act (RA 8435). The latter prohibits the alteration or destruction of these areas. With the establishment of the SEZ, these irrigated lands will be destroyed. At least 300 hectares of irrigated lands and agricultural lands that can be irrigated will be converted into the SEZ. These types of lands are declared non-negotiable for conversion under the new CARPER law (RA 9700) and the Presidential Moratorium on Conversion. The declaration of the APECO law making the area an SEZ is a breach of the CARPER law.


RA 10083 contradicts public policy.

The Constitution upholds agrarian reform and agriculture as the vehicle for rural development. Consolidation of ownership, which the APECO would employ, is contrary to the distribution of land to small farmers. The policy on food security is also undermined by the massive conversion of prime agricultural lands to industrial and economic zones. The public policy on preferential use by small fishers of marine resources is also defied with the establishment of an exclusive Freeport to leave out small fishers. The crucial participation of sectors in the course of their development was also overlooked. Only privileged families and foreign investors (not from Aurora) are pushing for the establishment of the APECO utilizing public funds.


RA 10083 confiscates private properties without due process.

The previous ASEZA law covers 500 hectares of public agricultural lands. When surveyed on ground, it was found out that the 500 hectares covered by the law are not all public. Private titled lands owned by small farmers, mostly agrarian reform beneficiaries, were included, despite the issuance of certificates of titles registered with the Registry of Deeds that have become indefeasible. The assertion of the APECO that these private lands are covered by the SEZ and already taken away by law constitutes undue taking and is prohibited by the Constitution. The declaration by the new APECO law is sweeping and broad, and does not distinguish the private and public lands.


RA 10083 abolishes LGUs against the procedure outlined by RA 7160.

The LGUs affected, especially the three barangays and even half of the municipality, will be under the jurisdiction of the APECO which as previously mentioned, has certain autonomy more than that of the LGU. This would either diminish or effectively abolish the covered LGUs upon the establishment of the SEZ. The areas controlled by the barangays would be reduced and the population will be relocated. The resulting abolition would be undertaken by a process not in accordance with the Local Government Code (Section 9 of RA 7160).


The law was railroaded.

Procedurally, when the law was still a bill discussed in the Senate and House of Representatives there was no indication that important stakeholders were invited to the hearings. Upon finally learning of the bill, local stakeholders even sent a letter to Senator Edgardo Angara and Rep. Sonny Angara, who were the principal sponsors in Congress, to express their objection to the establishment of the APECO. However, the objection was ignored because of the endorsement from the Sangguniang Panlalawigan of Aurora through Governor Bella Angara-Castillo of the SEZ.  There was no committee hearing in the House of Representatives and Senate to extensively discuss the benefits and objections to the project.


The area is excessive.

Why need an enormous area of land or expand a non-profitable enterprise? There are no records or evidence to support the need to expand the SEZ from 500 hectares to 13, 852 hectares, given that there are fundamental questions on the previous law. The current use of the land is already highly productive, generating tons of rice for Aurora and providing jobs to many people. The government has already invested much in the development of the agricultural lands by providing irrigation and agriculture support infrastructure. In fact, the Department of Agrarian Reform has declared it an Agrarian Reform Community, indicating that the government has considerably invested in the area to develop productivity. Converting the area into an SEZ would only negate these investments and critically reduce the capability of the community to produce food. A better plan would have to attract investors or create jobs to the undeveloped “marginal” lands.


Harassment and misinformation on the ground

According to local residents, there is a massive disinformation campaign by the APECO to confuse the small farmers and Indigenous peoples and drive them away from their lands using the new law. They are told that the APECO can acquire their lands whether the affected communities object to it or not. Legally, the APECO has to show the necessity in an expropriation case before it can secure private property; thus it is given authority to violate the property and human rights of the basic sectors using government funds.


(The Draft of this Position Paper was prepared by Atty. Aison Garcia of Saligan, an alternative legal NGO, in 2010. Atty. Garcia was one of the first figures in civil society who supported the anti-APECO struggle in Casiguran)

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